Monday, October 19, 2020

Commerce Home Mortgage Raises $50,000,000 of Preferred Equity to Expand Access to Capital to Minority and Low-Income Americans

IRVINE, Calif.--()--Commerce Home Mortgage, LLC (“Commerce”) – one of America’s largest Community Development Financial Institutions (“CDFI”) – announced today the pricing and closing of a private placement (the “Offering”) of $50 million of cumulative, perpetual preferred equity units (the “Preferred Equity Units”) by a consortium of socially responsible ESG Investors, including community and regional banks.

Commerce will use the net proceeds from the Offering to increase lending to Black, Latino, Indigenous and other minority and low-income borrowers and communities – including those in persistent poverty counties. Commerce expects to grow its lending to well over $10 billion in 2021 to further its community development mission of lending to the unbanked.

Rev. Everett Bell, Chair of Commerce’s Community Advisory Board, stated, “We are excited to partner with these socially responsible banks to increase access to capital for minority and low-to-moderate income communities often left behind by traditional financial institutions. This capital raise supports our mission to address the needs of Black, Latino and historically underserved communities across the country. We thank our new partners for their participation in our commitment to bringing greater social equity to many of the communities that we serve.”

Steven Sugarman, Founder of The Capital Corps, LLC – the CDFI-certified venture fund that acquired Commerce in 2018 – added, “Strong capital partners are critical to Commerce’s ability to expand access to capital to underserved minority and low-income borrowers. We are inspired to have earned the support of the ESG Investors who invested in this offering. Raising capital on terms consistent with the most creditworthy financial institutions ratifies our community efforts, contributes to our strength and soundness, and empowers us to expand our lending to well over $10 billion in 2021. This Offering is a win-win-win for Commerce, its new capital partners, and underbanked borrowers in need of Commerce’s critical financial services.”

The Preferred Equity Units bear a cumulative, preferred return of 5.00% per annum, paid quarterly (and subject to an annual adjustment based on CRA lending credit earned by bank investors).

Performance Trust Capital Partners served as exclusive financial advisor to Commerce and sole placement agent in the Offering. Michelman & Robinson, LLP served as Commerce’s legal counsel and Hunton Andrews Kurth LLP served as Performance Trust’s legal counsel in the Offering.

About Commerce Home Mortgage, LLC

Commerce Home Mortgage, founded in 1993, is a national mortgage banking company that is certified by the United States Department of the Treasury and the State of California as a Community Development Financial Institution.

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About The Capital Corps, LLC

The Capital Corps, founded in 2017, is a CDFI general partner venture fund that seeks to give credit to the American dream by expanding access to capital to prime, underbanked borrowers. The Capital Corps is certified by the United States Department of the Treasury and the State of California as a Community Development Financial Institution and oversees its subsidiary, Commerce Home Mortgage, as its managing member.

For more information:

No Offer or Solicitation

This press release does not constitute an offer to sell, a solicitation of an offer to sell or the solicitation of an offer to buy any securities. There will be no sale of securities in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements about our expectations, beliefs, plans, predictions, protections, forecasts, objectives, assumptions or future events or performance are not historical facts and may be forward-looking. Forward-looking statements are typically, but not exclusively, identified by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will, “should,” “seeks,” “likely,” “intends” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and you should not rely on them as predictions of future events. The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within our local market areas; our ability to mitigate our risk exposures; our ability to maintain our historical earnings trends; our ability to successfully identify and address the risks associated with any possible future acquisitions, including risks related to integration; changes in management personnel; interest rate risk; credit risk associated with our loan portfolio; deteriorating asset quality and higher loan charge-offs; time and effort necessary to resolve nonperforming assets; inaccuracy of the assumptions and estimates we make in establishing reserves for probable loan losses and other estimates and projections; lack of liquidity; fluctuations in the fair value and liquidity of the securities we hold for sale; impairment of investment securities, goodwill, other intangible assets or deferred tax assets; our risk management strategies; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the accuracy of our financial statements and related disclosures; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against us or to which we become subject; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations, and their application by our regulators; governmental monetary and fiscal policies; and increases in our capital requirements.

While forward-looking statements reflect our good-faith beliefs, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law.


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