FIRST FOUNDATION INC. FIRST FOUNDATION INC. REPORTS FIRST QUARTER 2022 RESULTS
| ● | First quarter net income of $30.8 million and earnings per share of $0.55. |
| ● | Total revenues of $89.9 million in first quarter 2022. |
| ● | Board of Directors has authorized a $75 million stock repurchase program. |
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1Q22 Key Financial Data |
Profitability Metrics | 1Q22 | 4Q21 | 1Q21 | |||
Return on average assets (%) | 1.18 | 1.15 | 1.25 | |||
Return on average common equity (%) | 11.5 | 11.3 | 12.7 | |||
Return on tangible common equity (%) (a) | 14.7 | 13.4 | 14.9 | |||
Net interest margin (%) | 3.00 | 3.17 | 3.16 | |||
Efficiency ratio (%) (a) | 53.1 | 51.0 | 51.5 | |||
Income Statement (b) | 1Q22 | 4Q21 | 1Q21 | |||
Net interest income | $74,494 | $61,958 | $54,229 | |||
Noninterest income | $15,427 | $13,830 | $11,908 | |||
Net income attributable to common | $30,836 | $23,876 | $22,355 | |||
Diluted earnings per common share | $0.55 | $0.51 | $0.50 | |||
Dividends declared per common share | $0.11 | $0.09 | $0.09 | |||
Balance Sheet (b) | 1Q22 | 4Q21 | 1Q21 | |||
Average total loans | $7,529,037 | $6,150,095 | $5,383,745 | |||
Average total deposits | $8,939,759 | $7,152,563 | $6,104,727 | |||
Net charge-off ratio | 0.00% | 0.07% | (0.01)% | |||
Tangible book value per share (a) | $15.21 | $14.92 | $13.84 | |||
Tier 1 Leverage Ratio | 9.14% | 8.53% | 8.58% | |||
(a) See Non-GAAP Financial Measures | ||||||
(b) Dollars in thousands, except per share data |
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Return on average assets of 1.18%.
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Return on average tangible equity of 14.7%.
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Tangible book value per share of $15.21.
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Net interest margin of 3.00%.
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Deposit costs remained low at 0.15%.
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Near record quarterly originations of $1.1 billion; 50% growth year-over-year.
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DALLAS, TX - First Foundation Inc. (NASDAQ: FFWM), a financial services company with two wholly-owned operating subsidiaries, First Foundation Advisors ("FFA") and First Foundation Bank ("FFB"), reported net income of $30.8 million, or $0.55 per diluted share, for the first quarter of 2022, compared to net income of $23.9 million, including $1.1 million of merger related expenses, or $0.51 per diluted share, for the fourth quarter of 2021. Additionally, First Foundation Inc. announced today that its Board of Directors has approved the payment of a quarterly cash dividend of $0.11 per common share, payable on May 16, 2022 to common shareholders of record as of May 6, 2022, and has authorized a $75 million stock repurchase program.
Scott F. Kavanaugh CEO | "First Foundation experienced a strong start to 2022, driven by growth in core deposits and near-record loan originations," said Scott F. Kavanaugh, CEO of First Foundation Inc. "I am very pleased at the contributions from all facets of our business. As we expand into business-friendly markets, such as Texas and Florida, we are attracting new clients who are interested in our offerings and appreciate our client-centric business model. We are also deepening our relationship with existing clients through our diverse and broad set of high-quality financial solutions, including trust and wealth management. We believe our ability to consistently grow according to our business plan, while generating long-term results, makes us a valuable option for our clients and stakeholders." |
David DePillo President | "We are continuing to see strong demand for all of our banking solutions," said David DePillo, President of First Foundation Inc. "Our loan portfolio continues to perform well, and we have a solid level of core deposits across a diverse client base. Credit quality remains strong, even as we originate a record amount of loans. This contributes to the strength and stability of our institution, which gives us great confidence in being able to navigate the changing rate environment and the transitioning economy. As we look ahead to next quarter, we are excited about completing several key strategic projects, including bringing Bitcoin to banking and the conversion of systems related to the acquisition of TGR Financial, Inc. and its banking subsidiary." |
Investor contact: Kevin Thompson, kthompson@ff-inc.com | 949-202-4164 |
FIRST FOUNDATION INC. |
1Q22 Highlights | |
Financial Results: | |
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Total revenues were $89.9 million in the quarter, an increase of 19% from the fourth quarter of 2021, and an increase of 36% from the first quarter of 2021.
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Nonperforming assets ("NPAs") to total assets was 0.16%.
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Return on average tangible equity of 14.7%.
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Return on average assets of 1.18%.
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Efficiency ratio of 53.1% for the quarter.
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Total tangible shareholders' equity of $859 million, tangible book value of $15.21 per share and tangible common equity to tangible assets of 8.38%.
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Net interest margin ("NIM") was 3.00% for the quarter, negatively impacted by excess liquidity.
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Advisory and Trust divisions achieved a combined pre-tax profit margin of 21% in the quarter.
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Other Activity: | |
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Core systems conversions for TGR Financial are still on track to occur in May 2022.
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The allowance for credit losses for loans decreased by $954 thousand in the quarter to $32.8 million, down from $33.8 million in the prior quarter, primarily as a result of the payoff of Purchased Credit Deteriorated ("PCD") loans with specific reserves related to prior acquisitions.
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Loan originations totaled $1.1 billion for the quarter, a near record quarter for us; C&I originations of $482 million, were 42% of the total quarterly originations.
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Transferred $917 million of AFS securities to HTM during the quarter.
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Core deposits increased to 99% of total deposits from 98% the prior year, with 72% of core deposits attributed to commercial business deposits.
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Cost of deposits held steady at 0.15% from the prior quarter, and decreased from 0.31% in the prior year.
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Assets under management ("AUM") at FFA ended the quarter at $5.5 billion, while trust assets under advisement ("AUA") at FFB were $1.3 billion.
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Closed subordinated note issuance in January 2022 for gross proceeds of $150 million at note rate of 3.50%.
Spotlight 2021 Vision List - Outperforming Stock Bank & Thrift Sm-All Stars Class of 2021 First Foundation Inc. (FFWM) made B Riley's Vision List which is a list of the top-24 stocks across all industries selected by analysts to outperform the small-cap benchmark Russell 2000 Index in the current year. Each year analysts are tasked to identify a single, immutable pick to outperform based on a set of defined criteria. The Sm-All Stars represent the top performing small-cap banks and thrifts in the country. This is the second time FFWM was one of 35 banks chosen. According to Piper Sandler, banks selected have superior performance metrics in growth, profitability, credit quality and capital strength. Barron's and CNBC Top 100 Independent Advisors Top Performing Bank in 2021 with Assets Greater than $10B First Foundation Advisors (FFA) was selected as one of America's top independent financial advisors, as identified by Barron's. Also, FFA was included in The CNBC FA 100 which recognizes the advisory firms that top the list when it comes to offering a comprehensive planning and financial service that helps clients navigate through their complex financial life. First Foundation Bank ranked as the 6th best performing bank in 2021 with assets greater than $10B. S&P Global Market Intelligence calculated scores for each bank on key metrics, including returns, growth, and efficiency but placed a premium on the strength and risk profile of balance sheets. |
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FIRST FOUNDATION INC. |
Details |
Loans
Loans increased $491 million, or 6.6%, to $7.9 billion as of March 31, 2022, compared to $7.4 billion as of December 31, 2021, and increased $2.3 billion, or 40.3%, compared to $5.6 billion as of March 31, 2021. The year over year increase was impacted by the acquisition of TGR Financial in the fourth quarter of 2021, which added $1.06 billion in gross loans, or $1.05 billion of net loans held for investment after purchase accounting adjustments. Loan balances were also affected by loan fundings, which in the first quarter of 2022 were $1.1 billion, a decrease of $65 million, or 5.4%, from the fourth quarter of 2021 and an increase of $383 million, or 50.0%, from the first quarter of 2021. Contributing to loan originations during the quarter, our C&I division funded $482 million of new commercial loans during the first quarter of 2022, of which 49% were adjustable commercial revolving lines of credit. The remaining C&I originations were comprised of $125 million of commercial term loans, $76 million of public finance loans, $15 million of owner occupied commercial real estate loans, and $28 million of equipment finance leases.Loan balances during the first quarter of 2022 were also impacted by loan payoffs of $657 million, compared to payoffs of $670 million in the fourth quarter of 2021 and $500 million in the first quarter of 2021. The current pipeline continues to remain very strong going into the second quarter.
Investment Securities
Investment securities were $1.2 billion as of March 31, 2022 and December 31, 2021, and increased $431.3 million, or 56.9%, compared to $749.2 million as of March 31, 2021. The increase in the balance of investment securities compared to the first quarter of 2021 was primarily driven by securities purchases in the fourth quarter of 2021, as excess liquidity from the TGR Financial acquisition was deployed, and the result of $221.8 million of investment securities, net of the fair value adjustment, acquired in connection with the acquisition. $917 million in securities, with $39.7 million in unrealized losses, were transferred from available-for-sale to held-to-maturity in the first quarter of 2022.
The allowance for credit losses for investments increased by $0.3 million from the prior quarter, to $10.7 million as of March 31, 2022, from $10.4 million as of December 31, 2021, and increased $1.8 million, from $8.9 million as of March 31, 2021. The increase was a result of faster than expected prepayments that negatively impacted the projected cash flows on interest-only strip securities.
Deposits and Borrowings
Deposits were $9.0 billion as of March 31, 2022, an increase of $146 million, or 1.7%, compared to $8.8 billion as of December 31, 2021, and an increase of $2.7 billion, or 43.4%, compared to $6.2 billion as of March 31, 2021. Deposit growth during the first quarter of 2022 compared to the first quarter of 2021 was primarily driven by an increase of $1.1 billion, or 51%, in non-interest bearing demand deposits, an increase of $1.4 billion, or 140%, in interest bearing demand deposits, and an increase in money market and savings accounts of $307.4 million, largely attributable to our commercial deposit services division, and retail branches, and the acquisition of TGR Financial, which contributed $2.2 billion of deposits after purchase accounting adjustments. The increases in deposits were offset by a reduction in CDs of $125.9 million, primarily due to our intentional run-off of higher cost brokered deposits. Noninterest-bearing demand deposits measured 36.8% of total deposits as of March 31, 2022, compared to 37.2% of total deposits as of December 31, 2021, while core deposits increased by $146 million compared to the linked quarter, and measured 99% of total deposits as of March 31, 2022 and December 31, 2021. Commercial business deposits were 72% of total core deposits as of March 31, 2022.
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FIRST FOUNDATION INC. |
Our loan to deposit ratio measured 88.2% as of March 31, 2022, compared to 84.1% as of December 31, 2021 and 90.1% as of March 31, 2021.
Borrowings were $326.0 million as of March 31, 2022, compared to $210.1 million as of December 31, 2021, and $12 million as of March 31, 2021. Borrowings increased in the first quarter of 2022 compared to the linked quarter primarily due to the addition of $150 million in subordinated debt, offset partially by the $18.5 million paydown on First Foundation Inc.'s, and $13 million decrease in repurchase agreements.
Private Wealth Management and Trust Assets
AUM was $5.5 billion as of March 31, 2022, compared to $5.7 billion as of December 31, 2021. There were $123 million of new accounts and $13 million of net withdrawals in the first quarter of 2022. AUA at FFB's Trust Department increased $127.1 million, to $1.3 billion, compared to the first quarter of 2021. The Advisory and Trust divisions achieved a combined pre-tax profit margin of 21% in the quarter.
Net Interest Income
Net interest income was $74.5 million for the first quarter of 2022, compared to $62.0 million in the fourth quarter of 2021 and $54.2 million in the first quarter of 2021. Interest income from loans increased 23.1% to $72.0 million for the first quarter of 2022 compared to $58.5 million in the fourth quarter of 2021, and increased 34.6% compared to $53.5 million for the first quarter of 2021, driven primarily by higher average loan balances. Interest income from investment securities and interest-earning cash was $7.1 million for the first quarter of 2022, compared to $6.2 million for the fourth quarter of 2021, and $5.6 million in the first quarter of 2021. The linked quarter and prior year quarter changes were due primarily to an increase in average securities balances.
Interest expense increased 70.3% to $4.7 million in the first quarter of 2022, compared to $2.7 million in the fourth quarter of 2021, and decreased 5.3% compared to $4.9 million in the first quarter of 2021. The linked quarter increase in interest expense was driven primarily by a 24.8% increase in interest expense on deposits and a $1.3 million increase in interest expense on borrowings. Interest expense on deposits increased from the linked quarter due to a $1.3 billion increase in the average balance of demand deposits. The increase in demand deposits was primarily due to the deposits acquired in the TGR Financial acquisition in the fourth quarter in 2021. Interest expense on borrowings increased due to the addition of $150 million in subordinated debt in the first quarter of 2022.
Net Interest Margin
Net interest margin ("NIM") was 3.00% in the first quarter of 2022, compared to 3.17% in the fourth quarter of 2021, and 3.16% in the first quarter of 2021. The NIM decrease was primarily driven by an increase in average excess liquidity during the quarter brought on by the acquisition of TGR Financial, bringing our average fed funds and cash deposit balances up by $553 million quarter over quarter, earning an average rate of 0.25%. Loan yields increased 0.04% and interest earnings on deposits costs decreased by 0.02% in the linked quarter.
Noninterest Income
Noninterest income increased 11.5% to $15.4 million in the first quarter of 2022, compared to $13.8 million in the fourth quarter of 2021 and increased 29.6%, compared to $11.9 million in the first quarter of 2021.
Noninterest income during the first quarter of 2022 was comprised primarily of $8.0 million of investment advisory fees from Wealth Management, $2.2 million of trust administrative and consulting fees, a $1.1 million gain on a
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FIRST FOUNDATION INC. |
sale-leaseback transaction, $2.6 million of loan and servicing fees, $0.6 million of deposit account fees and other income of $0.9 million. Income related to Wealth Management increased in the first quarter of 2022 compared to the fourth quarter of 2021 and the first quarter of 2021, due primarily to higher levels of fees earned on AUM.
Noninterest Expense
Noninterest expense increased 20.4%, to $47.6 million for the first quarter of 2022, compared to $39.6 million for the fourth quarter of 2021, and increased 38.0%, compared to $34.5 million for the first quarter of 2021. Compensation and benefits were $29.8 million in the first quarter of 2022, compared to $22.9 million in the fourth quarter of 2021, and $21.5 million in the first quarter of 2021. The increase in compensation and benefits in the first quarter of 2022 was primarily due to a 20.5% increase in average FTE largely associated with the TGR Financial acquisition, as the fourth quarter in 2021 only reflected approximately two weeks of TGR Financial compensation and benefits, and due to merit increases and annual bonus and commission payouts in the first quarter.
Our efficiency ratio for the first quarter of 2022 was 53.1%, compared to 51.0% for the fourth quarter of 2021 and 51.5% in the first quarter of 2021. The efficiency ratio for the first quarter in 2022 excludes a $1.1 million gain on a sale-leaseback transaction and the fourth quarter of 2021 excludes a $1.1 million gain on other equity investments and $1.1 million in merger related costs.
Income Tax Expense
We recorded an income tax expense of $12.3 million in the first quarter of 2022, compared to an income tax expense of $8.5 million in the fourth quarter of 2021, and an income tax expense of $8.9 million in the first quarter of 2021. Our effective tax rate for the first quarter of 2022 was 28.4%, compared to 26.2% for the fourth quarter of 2021, and 28.5% for the first quarter of 2021.
Asset Quality
Total nonperforming assets were $10.8 million as of March 31, 2022, compared to $8.3 million as of December 31, 2021, and $16.6 million as of March 31, 2021. Our ratio of nonperforming assets to total assets was 0.16% as of March 31, 2022, compared to 0.14% as of December 31, 2021, and 0.24% as of March 31, 2021. Total delinquent loans were $6.7 million as of March 31, 2022, compared to $5.3 million as of December 31, 2021 and $10.4 million as of March 31, 2021.
Our allowance for credit losses for loans was $32.8 million, or 0.44% of total loans, as of March 31, 2022, compared to $33.8 million, or 0.49%, as of December 31, 2021 and $23.2 million, or 0.45%, as of March 31, 2021. The linked quarter decrease in the allowance for credit losses for loans was a result of the payoff of PCD loans with $672 thousand of specific reserves related to prior acquisitions, and of a reduction in allowance of $282 thousand related to the remaining loan portfolio, due to an improvement in the economic scenario outlook, offset partially by an increase in loan balances. Net charge-offs during the first quarter of 2022 were $11,000, compared to net charge-offs of $1.1 million, or 0.07% of average loans annualized, for the fourth quarter of 2021, and $0.2 million of net recoveries, or (0.01)% of average loans annualized, for the first quarter of 2021.
The ratio of the allowance for credit losses for loans to total nonperforming assets was 302.7% as of March 31, 2022, compared to 405.5% as of December 31, 2021 and 139.6% as of March 31, 2021.
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FIRST FOUNDATION INC. |
Capital
As of March 31, 2022, FFB exceeded all Basel III minimum regulatory capital requirements necessary to be considered a "well-capitalized" depository institution, as summarized in the table below:
As of | Well-Capitalized | ||||||||
March 31, | December 31, | March 31, | Regulatory | ||||||
(unaudited) | 20221 | 2021 | 2021 | Requirements | |||||
Tier 1 leverage ratio | 9.14 | % | 8.53 | % | 8.58 | % | 5.00 | % | |
Common Equity Tier 1 ratio | 12.24 | % | 11.49 | % | 11.14 | % | 6.50 | % | |
Tier 1 risk-based capital ratio | 12.24 | % | 11.49 | % | 11.14 | % | 8.00 | % | |
Total risk-based capital ratio | 12.76 | % | 12.04 | % | 11.73 | % | 10.00 | % | |
Tangible common equity to tangible assets ratio2 | 8.38 | % | 8.44 | % | 8.91 | % | N/A | % |
| (1) | Regulatory capital ratios are preliminary and subject to change until filing of our March 31, 2022 FDIC call report. |
| (2) | Tangible common equity is an FFI non-GAAP financial measure. See disclosures regarding "Use of Non-GAAP Financial Measures" included as a separate section in this report. |
Shareholders' equity totaled $1.08 billion as of March 31, 2022, an increase from $1.06 billion and $714.4 million as of December 31, 2021 and March 31, 2021, respectively. Our tangible book value per common share was $15.21 as of March 31, 2022, compared to $14.92 as of December 31, 2021, and increased $1.37, compared to $13.84, as of March 31, 2021. The linked quarter increase in tangible book value per common share was attributable to positive EPS of $0.55 during the quarter, offset by $0.11 dividends per share and $0.11 per share of AOCI reduction due to unrealized losses in the AFS securities portfolio during the first quarter of 2022.
Stock Repurchase Program
On April 22, 2022, the Board of Directors of First Foundation authorized a stock repurchase program, pursuant to which First Foundation may repurchase up to $75 million of its common stock. This stock repurchase program replaces and supersedes the stock repurchase program approved by the Board of Directors on October 30, 2018, which had authorized First Foundation to repurchase up to 2,200,000 shares of its common stock.
Under the new stock repurchase program, shares of common stock may be repurchased by First Foundation from time to time in open market transactions or in privately negotiated transactions as permitted under applicable rules and regulations. The extent to which First Foundation repurchases its shares and the timing of such repurchases will depend on market conditions and other considerations as may be considered in First Foundation's sole discretion. The stock repurchase program, which has no stated expiration date for repurchases, does not obligate First Foundation to repurchase any specific number of shares and may be modified, suspended or discontinued at any time without notice.
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FIRST FOUNDATION INC. |
Earnings Call Info |
The Company will host a conference call at 8:00 a.m. PT / 11:00 a.m. ET on April 26, 2022 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. The call will be broadcast live over the Internet and can be accessed by visiting First Foundation's website and clicking on "Investor Relations" and "Events & Presentations" https://investor.ff-inc.com/events-and-presentations/default.aspx. The conference call can be accessed by telephone at (866) 831-8713 using conference ID FFWMQ122. It is recommended that participants dial into the conference call approximately ten minutes prior to the call. For those who are unable to participate during the live call, an archive of the call will be available for replay. |
About First Foundation
First Foundation Inc. (NASDAQ: FFWM) and its subsidiaries offer personal banking, business banking, and private wealth management services, including investment, trust, insurance, and philanthropy services. This comprehensive platform of financial services is designed to help clients at any stage in their financial journey. The broad range of financial products and services offered by First Foundation are more consistent with those offered by larger financial institutions, while its high level of personalized service, accessibility, and responsiveness to clients is more aligned with community banks and boutique wealth management firms. This combination of an integrated platform of comprehensive financial products and personalized service differentiates First Foundation from many of its competitors and has contributed to the growth of its client base and business. Learn more at firstfoundationinc.com, or connect with us on LinkedIn and Twitter.
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FIRST FOUNDATION INC. |
Forward-Looking Statements
This report includes forward-looking statements within the meaning of the "Safe-Harbor" provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets. Forward-looking statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," "outlook," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could," or "may." The forward-looking statements in this report are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this report and could cause us to make changes to our future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring credit losses, which is an inherent risk of the banking business; the negative impacts and disruptions resulting from the COVID-19 pandemic on our colleagues, clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; the risk that we will not be able to continue our internal growth rate; the performance of loans currently on deferral following the expiration of the respective deferral periods; the risk that we will not be able to access the securitization market on favorable terms or at all; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; risks associated with the Federal Reserve Board taking actions with respect to interest rates, which could adversely affect our interest income and interest rate margins and, therefore, our future operating results; the risk that the performance of our investment management business or of the equity and bond markets could lead clients to move their funds from or close their investment accounts with us, which would reduce our assets under management and adversely affect our operating results; the risk that we may be unable or that our board of directors may determine that it is inadvisable to pay future dividends at historic levels or at all; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships.
Further, statements about the potential effects of the TGR Financial, Inc. ("TGR Financial") acquisition on our business, financial results, and condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in the forward-looking statements due to factors and future developments which are uncertain, unpredictable and in many cases beyond our control, including the risk that the benefits from the acquisition may not be fully realized or may take longer to realize than expected or be more costly to achieve, including as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which we and TGR Financial operate; our ability to promptly and effectively integrate the companies' businesses; reputational risks and the reaction of the companies' customers, employees and counterparties to the acquisition; diversion of management time on integration-related issues; and lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net earnings.
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FIRST FOUNDATION INC. |
Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021 that we filed with the SEC on February 28, 2022, and other documents we file with the SEC from time to time. We urge readers of this report to review those reports and other documents we file with the SEC from time to time. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this report, which speak only as of today's date, or to make predictions based solely on historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this report or in the above-referenced reports, whether as a result of new information, future events or otherwise, except as may be required by law or NASDAQ rules.
Contacts | |
Investors | Media |
Kevin L. Thompson EVP, Chief Financial Officer 949-202-4164 kthompson@ff-inc.com | Tyler J. Resh SVP, Director of Marketing and Strategy 949-202-4131 tresh@ff-inc.com |
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FIRST FOUNDATION INC. |
CONSOLIDATED BALANCE SHEETS
(unaudited, except for December 31, 2021)
(in thousands, except share and per share amounts) | March 31, | December 31, | March 31, | ||||||
2022 | 2021 | 2021 | |||||||
ASSETS | |||||||||
Cash and cash equivalents | $ | 931,710 | $ | 1,121,757 | $ | 468,026 | |||
Securities available-for-sale ("AFS") | 269,030 | 1,201,777 | 758,097 | ||||||
Securities held-to-maturity ("HTM") | 920,408 | - | - | ||||||
Allowance for credit losses - investments | (10,743) | (10,399) | (8,878) | ||||||
Net securities | 1,178,695 | 1,191,378 | 749,219 | ||||||
Loans held for sale | 501,424 | 501,436 | 513,054 | ||||||
Loans held for investment | 7,397,464 | 6,906,728 | 5,117,206 | ||||||
Allowance for credit losses - loans | (32,822) | (33,776) | (23,180) | ||||||
Net loans | 7,364,642 | 6,872,952 | 5,094,026 | ||||||
Investment in FHLB stock | 17,250 | 18,249 | 17,250 | ||||||
Deferred taxes | 18,047 | 20,835 | 6,941 | ||||||
Premises and equipment, net | 35,904 | 37,920 | 7,817 | ||||||
Real estate owned ("REO") | 6,210 | 6,210 | - | ||||||
Goodwill and intangibles | 223,239 | 222,125 | 94,864 | ||||||
Other assets | 197,675 | 203,342 | 100,635 | ||||||
Total Assets | $ | 10,474,796 | $ | 10,196,204 | $ | 7,051,832 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||
Liabilities: | |||||||||
Deposits | $ | 8,957,518 | $ | 8,811,960 | $ | 6,245,821 | |||
Borrowings | 325,969 | 210,127 | 12,000 | ||||||
Accounts payable and other liabilities | 108,734 | 110,066 | 79,581 | ||||||
Total Liabilities | 9,392,221 | 9,132,153 | 6,337,402 | ||||||
Shareholders' Equity: | |||||||||
Common Stock | 57 | 56 | 45 | ||||||
Additional paid-in-capital | 720,846 | 720,744 | 434,346 | ||||||
Retained earnings | 365,604 | 340,976 | 265,970 | ||||||
Accumulated other comprehensive income (loss) | (3,932) | 2,275 | 14,069 | ||||||
Total Shareholders' Equity | 1,082,575 | 1,064,051 | 714,430 | ||||||
Total Liabilities and Shareholders' Equity | $ | 10,474,796 | $ | 10,196,204 | $ | 7,051,832 |
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FIRST FOUNDATION INC. |
CONSOLIDATED INCOME STATEMENTS
(unaudited)
For the Quarter Ended | ||||||||||
(in thousands, except share and | March 31, | December 31, | March 31, | |||||||
per share amounts) | 2022 | 2021 | 2021 | |||||||
Interest income: | ||||||||||
Loans | $ | 72,027 | $ | 58,532 | $ | 53,531 | ||||
Securities | 6,360 | 5,696 | 5,206 | |||||||
Cash, FHLB Stock, and Fed Funds | 757 | 460 | 401 | |||||||
Total interest income | 79,144 | 64,688 | 59,138 | |||||||
Interest expense: | ||||||||||
Deposits | 3,358 | 2,690 | 4,623 | |||||||
Borrowings | 1,292 | 40 | 286 | |||||||
Total interest expense | 4,650 | 2,730 | 4,909 | |||||||
Net interest income | 74,494 | 61,958 | 54,229 | |||||||
Provision for credit losses | (792) | 3,879 | 360 | |||||||
Net interest income after provision for credit losses | 75,286 | 58,079 | 53,869 | |||||||
Noninterest income: | ||||||||||
Asset management, consulting and other fees | 10,197 | 9,612 | 8,349 | |||||||
Other income | 5,230 | 4,218 | 3,559 | |||||||
Total noninterest income | 15,427 | 13,830 | 11,908 | |||||||
Noninterest expense: | ||||||||||
Compensation and benefits | 29,821 | 22,938 | 21,526 | |||||||
Occupancy and depreciation | 8,567 | 6,680 | 6,160 | |||||||
Professional services and marketing costs | 3,417 | 3,495 | 2,122 | |||||||
Customer service costs | 1,788 | 2,140 | 1,770 | |||||||
Other expenses | 4,025 | 4,311 | 2,933 | |||||||
Total noninterest expense | 47,618 | 39,564 | 34,511 | |||||||
Income before taxes on income | 43,095 | 32,345 | 31,266 | |||||||
Taxes on income | 12,259 | 8,469 | 8,911 | |||||||
Net income | $ | 30,836 | $ | 23,876 | $ | 22,355 | ||||
Net income per share: | ||||||||||
Basic | $ | 0.55 | $ | 0.51 | $ | 0.50 | ||||
Diluted | $ | 0.55 | $ | 0.51 | $ | 0.50 | ||||
Shares used in computation: | ||||||||||
Basic | 56,465,855 | 46,751,427 | 44,707,718 | |||||||
Diluted | 56,565,845 | 46,881,101 | 45,012,205 |
Page 11 of 20
FIRST FOUNDATION INC. |
SELECTED CONSOLIDATED FINANCIAL DATA AND ASSET QUALITY
(unaudited)
For the Quarter Ended | ||||||||||
(in thousands, except share and per share amounts | March 31, | December 31, | March 31, | |||||||
and percentages) | 2022 | 2021 | 2021 | |||||||
Selected Financial Data: | ||||||||||
Return on average assets | 1.18 | % | 1.15 | % | 1.25 | % | ||||
Return on average equity | 11.5 | % | 11.3 | % | 12.7 | % | ||||
Return on average tangible equity (1) | 14.7 | % | 13.4 | % | 14.9 | % | ||||
Efficiency ratio (2) | 53.1 | % | 51.0 | % | 51.5 | % | ||||
Net interest margin | 3.00 | % | 3.17 | % | 3.16 | % | ||||
Cost of deposits | 0.15 | % | 0.15 | % | 0.31 | % | ||||
Loan to deposit ratio | 88.2 | % | 84.1 | % | 90.1 | % | ||||
Noninterest income as a % of total revenues | 17.2 | % | 18.2 | % | 18.0 | % | ||||
Loan originations | $ | 1,147,855 | $ | 1,213,137 | $ | 765,298 | ||||
Assets under management | 5,455,742 | 5,680,605 | 5,027,989 | |||||||
Tangible common equity to tangible assets (1) | 8.38 | % | 8.44 | % | 8.91 | % | ||||
Book value per share | $ | 19.16 | $ | 18.86 | $ | 15.95 | ||||
Tangible book value per share | 15.21 | 14.92 | 13.84 | |||||||
Asset Quality: | ||||||||||
Nonperforming assets | ||||||||||
Nonaccrual loans | $ | 10,843 | $ | 8,330 | $ | 16,603 | ||||
Total nonperforming loans | $ | 10,843 | $ | 8,330 | $ | 16,603 | ||||
Loans 30 - 89 days past due | $ | 6,658 | $ | 5,326 | $ | 10,351 | ||||
Accruing loans 90 days or more past due | - | - | 1,211 | |||||||
Nonperforming assets to total assets | 0.16 | % | 0.14 | % | 0.24 | % | ||||
Loans 30 - 89 days past due to total loans | 0.09 | % | 0.08 | % | 0.18 | % | ||||
Allowance for credit losses to loans held for investment | 0.44 | % | 0.49 | % | 0.45 | % | ||||
Allowance for credit losses to nonaccrual loans | 302.70 | % | 405.5 | % | 139.3 | % | ||||
Net charge-offs (recoveries) to average loans - annualized | - | % | 0.07 | % | (0.01) | % |
| (1) | Tangible equity is a non-GAAP financial measure. See disclosures regarding "Use of Non-GAAP Financial Measures" included as a separate section in this report. |
| (2) | Efficiency Ratio is a non-GAAP financial measure: See disclosures regarding "Use of Non-GAAP Financial Measures" included as a separate section in this report. |
Page 12 of 20
FIRST FOUNDATION INC. |
SEGMENT REPORTING
(unaudited)
For the Quarter Ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
(in thousands) | 2022 | 2021 | 2021 | |||||||
Banking: | ||||||||||
Interest income | $ | 79,144 | $ | 64,688 | $ | 59,138 | ||||
Interest expense | 3,413 | 2,700 | 4,848 | |||||||
Net interest income | 75,731 | 61,988 | 54,290 | |||||||
Provision for credit losses | (792) | 3,879 | 360 | |||||||
Noninterest income | 7,531 | 5,358 | 5,309 | |||||||
Noninterest expense | 40,101 | 32,440 | 28,579 | |||||||
Income before taxes on income | $ | 43,953 | $ | 31,027 | $ | 30,660 | ||||
Wealth Management: | ||||||||||
Noninterest income | $ | 8,345 | $ | 7,897 | $ | 6,923 | ||||
Noninterest expense | 6,644 | 5,908 | 5,731 | |||||||
Income before taxes on income | $ | 1,701 | $ | 1,989 | $ | 1,192 | ||||
Other and Eliminations: | ||||||||||
Interest income | $ | - | $ | - | $ | - | ||||
Interest expense | 1,237 | 30 | 61 | |||||||
Net interest income | (1,237) | (30) | (61) | |||||||
Noninterest income | (449) | 575 | (324) | |||||||
Noninterest expense | 873 | 1,216 | 201 | |||||||
Income before taxes on income | $ | (2,559) | $ | (671) | $ | (586) |
Page 13 of 20
FIRST FOUNDATION INC. |
LOAN AND DEPOSIT BALANCES
(unaudited)
March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
(in thousands) | 2022 | 2021 | 2021 | 2021 | 2021 | ||||||||||
Loans: | |||||||||||||||
Outstanding principal balance: | |||||||||||||||
Loans secured by real estate: | |||||||||||||||
Residential properties: | |||||||||||||||
Multifamily | $ | 3,284,003 | $ | 2,886,055 | $ | 2,518,151 | $ | 2,814,446 | $ | 2,425,182 | |||||
Single Family | 911,438 | 933,445 | 818,968 | 812,728 | 844,532 | ||||||||||
Subtotal | 4,195,441 | 3,819,500 | 3,337,119 | 3,627,174 | 3,269,714 | ||||||||||
Commercial properties | 1,264,221 | 1,309,200 | 669,912 | 665,166 | 701,920 | ||||||||||
Land and construction | 159,533 | 156,028 | 63,706 | 56,603 | 57,227 | ||||||||||
Total real estate loans | 5,619,195 | 5,284,728 | 4,070,737 | 4,348,943 | 4,028,861 | ||||||||||
Commercial and industrial loans | 1,754,279 | 1,598,422 | 1,217,078 | 1,142,766 | 1,063,937 | ||||||||||
Consumer loans | 9,760 | 10,834 | 9,468 | 9,645 | 14,243 | ||||||||||
Total loans | 7,383,234 | 6,893,984 | 5,297,283 | 5,501,354 | 5,107,041 | ||||||||||
Deferred fees and expenses | 14,230 | 12,744 | 11,676 | 11,534 | 10,165 | ||||||||||
Total | $ | 7,397,464 | $ | 6,906,728 | $ | 5,308,959 | $ | 5,512,888 | $ | 5,117,206 | |||||
Loans held for sale | $ | 501,424 | $ | 501,436 | $ | 501,433 | $ | 498,319 | $ | 513,054 | |||||
Deposits: | |||||||||||||||
Demand deposits: | |||||||||||||||
Noninterest-bearing | $ | 3,296,118 | $ | 3,280,455 | $ | 2,995,570 | $ | 3,276,901 | $ | 2,182,714 | |||||
Interest-bearing | 2,429,202 | 2,242,684 | 945,654 | 896,224 | 1,012,448 | ||||||||||
Money market and savings | 2,592,437 | 2,620,336 | 2,290,380 | 2,256,952 | 2,284,994 | ||||||||||
Certificates of deposits | 639,761 | 668,485 | 613,374 | 676,725 | 765,665 | ||||||||||
Total | $ | 8,957,518 | $ | 8,811,960 | $ | 6,844,978 | $ | 7,106,802 | $ | 6,245,821 |
Page 14 of 20
FIRST FOUNDATION INC. |
CONSOLIDATED LOAN FUNDING AND YIELDS
(unaudited)
For the Quarter Ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
(in thousands, except percentages) | 2022 | 2021 | 2021 | |||||||
Loan Funding Balances: | ||||||||||
Loans secured by real estate: | ||||||||||
Residential properties: | ||||||||||
Multifamily | $ | 549,198 | $ | 579,414 | $ | 320,288 | ||||
Single family | 57,215 | 74,992 | 38,629 | |||||||
Subtotal | 606,413 | 654,406 | 358,917 | |||||||
Commercial properties: | ||||||||||
Non-owner occupied CRE | 30,340 | 28,770 | 49 | |||||||
Owner-occupied CRE | 15,333 | 31,715 | 8,930 | |||||||
Subtotal | 45,673 | 60,485 | 8,979 | |||||||
Land and construction | 28,651 | 11,994 | 2,533 | |||||||
Total real estate loans | 680,737 | 726,885 | 370,429 | |||||||
Commercial and industrial loans | 467,012 | 486,120 | 396,600 | |||||||
Consumer loans | 160 | 131 | 269 | |||||||
Total | $ | 1,147,909 | $ | 1,213,136 | $ | 767,298 | ||||
Loan Funding Yields: | ||||||||||
Loans secured by real estate: | ||||||||||
Residential properties: | ||||||||||
Multifamily | 3.27 | % | 3.20 | % | 3.33 | % | ||||
Single family | 3.16 | % | 3.26 | % | 3.28 | % | ||||
Subtotal | 3.26 | % | 3.21 | % | 3.33 | % | ||||
Commercial properties: | ||||||||||
Non-owner occupied CRE | 3.13 | % | 3.20 | % | 4.13 | % | ||||
Owner-occupied CRE | 4.08 | % | 3.78 | % | 3.76 | % | ||||
Subtotal | 3.45 | % | 3.51 | % | 3.76 | % | ||||
Land and construction | 4.46 | % | 4.71 | % | 5.69 | % | ||||
Total real estate loans | 3.32 | % | 3.26 | % | 3.35 | % | ||||
Commercial and industrial loans | 3.43 | % | 3.56 | % | 3.35 | % | ||||
Consumer loans | 2.86 | % | 3.92 | % | 0.00 | % | ||||
Total | 3.36 | % | 3.38 | % | 3.35 | % |
Page 15 of 20
FIRST FOUNDATION INC. |
CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST, YIELD AND RATES
(unaudited)
For the Quarter Ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
(in thousands, except percentages) | 2022 | 2021 | 2021 | |||||||
Average Balances: | ||||||||||
Cash, FHLB Stock, and Fed Funds | $ | 1,212,777 | $ | 659,730 | $ | 714,379 | ||||
Securities | 1,197,859 | 994,701 | 772,204 | |||||||
Loans | 7,529,037 | 6,150,095 | 5,383,745 | |||||||
Total interest-earnings assets | 9,939,673 | 7,804,526 | 6,870,328 | |||||||
Deposits: interest-bearing | 5,624,620 | 4,076,354 | 4,173,990 | |||||||
Deposits: noninterest-bearing | 3,315,139 | 3,076,209 | 1,930,737 | |||||||
Borrowings | 301,236 | 32,808 | 206,085 | |||||||
Average Yield / Rate: | ||||||||||
Cash, FHLB Stock, and Fed Funds | 0.25 | % | 0.28 | % | 0.23 | % | ||||
Securities | 2.12 | % | 2.29 | % | 2.70 | % | ||||
Loans | 3.84 | % | 3.80 | % | 3.99 | % | ||||
Total interest-earnings assets | 3.19 | % | 3.31 | % | 3.45 | % | ||||
Deposits (interest-bearing only) | 0.24 | % | 0.26 | % | 0.45 | % | ||||
Deposits (noninterest and interest-bearing) | 0.15 | % | 0.15 | % | 0.31 | % | ||||
Borrowings | 1.74 | % | 0.48 | % | 0.56 | % | ||||
Total interest-bearing liabilities | 0.32 | % | 0.26 | % | 0.45 | % | ||||
Net Interest Rate Spread | 2.88 | % | 3.05 | % | 3.00 | % | ||||
Net Interest Margin | 3.00 | % | 3.17 | % | 3.16 | % |
Page 16 of 20
FIRST FOUNDATION INC. |
Use of Non-GAAP Financial Measures
To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures (including, but not limited to, non-GAAP net income and non-GAAP financial ratios) of financial performance. These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company's performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirement.
We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures (as applicable), provide meaningful supplemental information regarding our performance by providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, net income or other financial measures prepared in accordance with GAAP. In the information below, we have provided a reconciliation of, where applicable, the most comparable GAAP financial measures to the non-GAAP financial measures used in this report, or a reconciliation of the non-GAAP calculation of the financial measure.
Page 17 of 20
FIRST FOUNDATION INC. |
NON-GAAP RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE)
(unaudited)
Return on average tangible common equity was calculated by excluding core deposit intangible amortization expense and the associated tax adjustment from net income and excluding average goodwill and intangibles assets from the average shareholders' equity during the associated periods.
The table below provides a reconciliation of the GAAP measure of return on average equity to the non-GAAP measure of return on average tangible common equity:
For the Quarter Ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
(in thousands, except percentages) | 2022 | 2021 | 2021 | |||||||
Average shareholders' equity | $ | 1,069,096 | $ | 844,089 | $ | 704,421 | ||||
Less: Average goodwill and intangible assets | 222,276 | 126,002 | 95,080 | |||||||
Average tangible common equity | $ | 846,820 | $ | 718,087 | $ | 609,341 | ||||
Net Income | $ | 30,836 | $ | 23,876 | $ | 22,355 | ||||
Plus: Amortization of intangible assets expense | 509 | 365 | 432 | |||||||
Less: Tax effect on amortization of intangible assets expense | 148 | 106 | 125 | |||||||
Net Income available to common shareholders | $ | 31,197 | $ | 24,135 | $ | 22,662 | ||||
Return on Average Equity(1) | 11.5 | % | 11.3 | % | 12.7 | % | ||||
Return on Average Tangible Common Equity(2) | 14.7 | % | 13.4 | % | 14.9 | % | ||||
Tax rate utilized for calculating tax effect on amortization of intangible assets expense | 29.0 | % | 29.0 | % | 29.0 | % |
| (1) | Annualized net income divided by average shareholders' equity. |
| (2) | Annualized adjusted net income available to common shareholders divided by average tangible common equity. |
Page 18 of 20
FIRST FOUNDATION INC. |
NON-GAAP EFFICIENCY RATIO
(unaudited)
Efficiency ratio is a non-GAAP financial measurement determined by methods other than in accordance with U.S. GAAP. This figure represents the ratio of noninterest expense, less amortization of intangible assets expense and merger related costs, to the sum of net interest income before allowance for credit losses and total noninterest income, less net gain on other equity investments and net gain on a sale-leaseback transaction.
The table below provides a calculation of the non-GAAP measure of efficiency ratio:
For the Quarter Ended | ||||||||||
March 31, | December 31, | March 31, | ||||||||
(in thousands, except percentages) | 2022 | 2021 | 2021 | |||||||
Total noninterest expense | $ | 47,618 | $ | 39,564 | $ | 34,511 | ||||
Less: Amortization of intangible assets expense | 509 | 365 | 432 | |||||||
Less: Merger related costs | (35) | 1,056 | - | |||||||
Adjusted Noninterest expense | $ | 47,144 | $ | 38,143 | $ | 34,079 | ||||
Net interest income | $ | 74,494 | $ | 61,958 | $ | 54,229 | ||||
Plus: Total noninterest income | 15,427 | 13,830 | 11,908 | |||||||
Less: Net gain on other equity investments | 1,069 | - | ||||||||
Less: Net gain on sale-leaseback | 1,111 | - | - | |||||||
Adjusted Revenue | $ | 88,810 | $ | 74,719 | $ | 66,137 | ||||
Efficiency Ratio | 53.1 | % | 51.0 | % | 51.5 | % |
Page 19 of 20
FIRST FOUNDATION INC. |
NON-GAAP TANGIBLE COMMON EQUITY RATIO & TANGIBLE BOOK VALUE PER SHARE
(unaudited)
Tangible common equity ratio and tangible book value per share are non-GAAP financial measurements determined by methods other than in accordance with U.S. GAAP. Tangible common equity ratio is calculated by taking tangible common equity which is shareholders' equity excluding the balance of goodwill and intangible assets and dividing by tangible assets which is total assets excluding the balance of goodwill and intangible assets. Tangible book value per share is calculated by dividing tangible common equity by basic common shares outstanding, as compared to book value per share, which is calculated by dividing shareholders' equity by basic common shares outstanding.
The table below provides a reconciliation of the GAAP measure of equity to asset ratio to the non-GAAP measure of tangible common equity ratio and the GAAP measure of book value per share to the non-GAAP measure of tangible book value per share:
March 31, | December 31, | March 31, | ||||||||
(in thousands, except per share amounts) | 2022 | 2021 | 2021 | |||||||
Shareholders' equity | $ | 1,082,575 | $ | 1,064,051 | $ | 714,430 | ||||
Less: Goodwill and intangible assets | 223,239 | 222,125 | 94,864 | |||||||
Tangible Common Equity | $ | 859,336 | $ | 841,926 | $ | 619,566 | ||||
Total assets | $ | 10,474,796 | $ | 10,196,204 | $ | 7,051,832 | ||||
Less: Goodwill and intangible assets | 223,239 | 222,125 | 94,864 | |||||||
Tangible assets | $ | 10,251,557 | $ | 9,974,079 | $ | 6,956,968 | ||||
Equity to Asset Ratio | 10.34 | % | 10.44 | % | 10.13 | % | ||||
Tangible Common Equity Ratio | 8.38 | % | 8.44 | % | 8.91 | % | ||||
Book value per share | $ | 19.16 | $ | 18.86 | $ | 15.95 | ||||
Tangible book value per share | 15.21 | 14.92 | 13.84 | |||||||
Basic common shares outstanding | 56,514,168 | 56,432,070 | 44,782,155 |
Page 20 of 20
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First Foundation Inc. published this content on 26 April 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 April 2022 11:11:03 UTC.
