First Foundation has appointed Thomas C. Shafer as CEO after the retirement of longtime chief Scott F. Kavanaugh, the company said Friday.
With the change, effective immediately, Kavanaugh steps down from his role after nearly 15 years, and Shafer becomes CEO of the company and its subsidiary, First Foundation Bank. Shafer also joined the boards of the company and the bank, according to a Securities and Exchange Commission filing Thursday.
Kavanaugh’s “decision to retire is not the result, in whole or in part, of any disagreement with the Company on any matters relating to the Company’s operations, policies or practices,” Dallas-based First Foundation noted in the filing.
Kavanaugh said he is confident First Foundation will “thrive” under Shafer’s leadership.
Shafer thanked the board and Kavanaugh for the “confidence they have shown in me to lead this great organization.”
Shafer’s résumé points to a history of leading banks that became acquisition targets.
Shafer, a 40-year industry veteran, joins First Foundation after having retired in 2022 as co-president of commercial banking at Huntington Bank.
Before Huntington acquired TCF in June 2021, Shafer served as CEO of TCF National Bank and vice chair of TCF Financial Corp.’s board from October 2020 until the merger occurred. Shafer also served as TCF’s chief operating officer.
Shafer also served in various executive roles at Chemical Bank, including serving as its president and CEO from 2017 to 2019, according to his LinkedIn profile, before that bank merged with TCF in August 2020.
He’s also been president and COO of Talmer Bank and Trust — which Chemical acquired — and president and CEO of First Place Bank, which was acquired by Talmer.
Piper Sandler analyst Matthew Clark wrote in a research note that Shafer is well-regarded and his “strong leadership at other institutions, ability to fix certain distressed situations,” and track record of generating shareholder value through “a roll-up strategy” could make First Foundation a potential sale candidate “sooner than previously anticipated.”
In July, a group of investors led by Fortress Investment Group pumped $228 million into First Foundation to bolster its balance sheet as its exposure to long-term, fixed-rate multifamily loans crimped earnings while interest rates surged. The roughly $13.4 billion-asset lender reported a loss of $82.2 million for the third quarter.
“With the recent capital raise completed and the plan in place for the optimization of its balance sheet, we believe Mr. Kavanaugh has left the bank well positioned for Mr. Shafer to continue with the turnaround,” analysts David P. Feaster Jr., Eric Spector and Liam Coohill at Raymond James wrote in a research note. “Ultimately, we believe Mr. Kavanaugh is leaving the bank in capable hands given Mr. Shafer’s experience running larger banks and executing on M&A transactions, and we expect him to continue to execute on the plan management and the Board has in place.”
Shafer will receive an annual base salary of $1.09 million, subject to annual review, and will be eligible for a yearly bonus of 1.5 times his base salary, based on certain performance targets. He also receives 500,000 restricted stock units, half of which will vest on the second anniversary of the grant, with the remaining portion vesting on the third anniversary during his tenure at the company.
“I am confident that [Shafer] will be able to guide the company to achieve our strategic objectives,” Max Briggs, First Foundation’s board chairman, said in a statement Friday. “As one of our founders, Scott’s leadership and vision built the multi-state, financial services company that First Foundation is today.”
