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News   Press Releases

First Foundation Announces 2015 Third Quarter Earnings

FFWM | October 22, 2015

  • Completion of public offering provides capital for continued growth
  • Revenue growth in excess of 20%
  • Book value per share up 26% year to date

First Foundation Inc. (NASDAQ: FFWM), a financial services company with two wholly-owned operating subsidiaries, First Foundation Advisors and First Foundation Bank, which collectively provide investment management, wealth planning, consulting, insurance, trust and banking services primarily to high net-worth individuals and businesses, today reported its financial results for the quarter ended September 30, 2015.

“First Foundation continued to deliver positive results in the third quarter while making material investments in our people, products, and technology,” said CEO Scott F. Kavanaugh. “I am pleased with the growth opportunities that exist in all areas of the platform.”

Financial Highlights

  • The Company completed a public offering of common stock in August 2015, raising $131 million (net of underwriters discount and offering expenses). The Company used a portion of the proceeds to pay off our $30 million term loan. This offering increased the Company’s share count by approximately 80%, impacting the comparability of the earnings per share results;
  • Net income for the quarter ended September 30, 2015 was $2.8 million, or $0.21 per fully diluted share, as compared to $2.7 million, or $0.32 per fully diluted share for the quarter ended September 30, 2014, an increase of 4%. For the nine months ended September 30, 2015, net income was $8.3 million, or $0.84 per fully diluted share, as compared to $5.4 million, or $0.66 per fully diluted share for the nine months ended September 30, 2014, an increase of 55%;
  • Total revenues, which consist of net interest income and noninterest income, increased by 25% and 22%, respectively, for the quarter and nine months ended September 30, 2015, as compared to the corresponding periods in 2014;
  • Total loans increased by $479 million in the first nine months of 2015, equivalent to an annualized growth rate of 45%;
  • Tangible book value increased from $12.66 per share at December 31, 2014 to $15.96 per share at September 30, 2015; and
  • To support the Company’s continuing growth and to leverage the additional capital raised in the public offering, First Foundation has made significant investments in staffing. As a result, noninterest expenses increased 29% during the third quarter of 2015 when compared to the third quarter of 2014, due primarily to a 27% increase in total employees during 2015; in addition, included in noninterest expenses are $0.3 million of one-time costs related to the Pacific Rim Bank acquisition.

About First Foundation

First Foundation, a financial institution founded in 1990, provides integrated investment management, wealth planning, consulting, insurance, trust and banking services. The Company is headquartered in Irvine, California, with offices in Newport Beach, Pasadena, West Los Angeles, Oakland, San Diego, Palm Desert and the Imperial Valley in California; in Las Vegas, Nevada; and in Honolulu, Hawaii. For more information, please visit our website at www.ff-inc.com.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets, are "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "project," or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may." The forward-looking statements in this news release 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 news release 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 loan losses, which is an inherent risk of the banking business; the risk that the economic recovery in the United States will stall or will be adversely affected by domestic or international economic conditions and the risk that the Federal Reserve Board will continue to keep interest rates low, any of 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; and the risk that we do not successfully integrate Pacific Rim Bank’s business and customers or otherwise fail to achieve anticipated business enhancements related to the acquisition. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in Item 1A, entitled “Risk Factors” in our 2014 Annual Report on Form 10-K for the fiscal year ended December 31, 2014 that we filed with the SEC on March 16, 2015, and other documents we file with the SEC from time to time. We urge readers of this news release to review the Risk Factors section of that Annual Report. 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 news release, 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 news release or in the above-referenced 2014 Annual Report on Form 10-K, whether as a result of new information, future events or otherwise, except as may be required by law or NASDAQ rules.

                       

FIRST FOUNDATION INC.

CONSOLIDATED BALANCE SHEETS - Unaudited

(in thousands, except share and per share amounts)

 
September 30,

2015

December 31,

2014

ASSETS
 
Cash and cash equivalents $ 206,338 $ 29,692
Securities available-for-sale (“AFS”) 360,559 138,270
Loans held for sale   108,903     -  
 
Loans, net of deferred fees 1,536,005 1,166,392
Allowance for loan and lease losses (“ALLL”)   (11,300 )   (10,150 )
Net loans   1,524,705     1,156,242  
 
Investment in FHLB stock 17,820 12,361
Deferred taxes 11,969 9,748
Premises and equipment, net 2,397 2,187
Real estate owned (“REO”) 4,492 334
Goodwill and intangibles 2,481 197
Other assets   9,083     6,393  

Total Assets

$ 2,248,747   $ 1,355,424  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Liabilities:
Deposits $ 1,321,527 $ 962,954
Borrowings 660,000 282,886
Accounts payable and other liabilities   9,924     10,088  
Total Liabilities   1,991,451     1,255,928  
 
Commitments and contingencies - -
 

Shareholders’ Equity

Common Stock, par value $.001: 20,000,000 shares authorized; 15,962,686 and 7,845,182 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively 16 8
Additional paid-in-capital 226,796 78,204
Retained earnings 28,714 20,384
Accumulated other comprehensive income, net of tax   1,770     900  
Total Shareholders’ Equity   257,296     99,496  
 
Total Liabilities and Shareholders’ Equity $ 2,248,747   $ 1,355,424  
 
 
           

FIRST FOUNDATION INC.

CONSOLIDATED INCOME STATEMENTS - Unaudited

(in thousands, except share and per share amounts)

 
For the Quarter

Ended September 30,

For the Nine Months

Ended September 30,

2015       2014 2015       2014
 
Interest income:
Loans $ 15,634 $ 11,404 $ 41,097 $ 31,735
Securities 1,107 799 2,744 1,741
FHLB Stock, fed funds sold and deposits   367     181     1,418     514
Total interest income   17,108     12,384     45,259     33,990
 
Interest expense:
Deposits 1,328 953 3,366 2,595
Borrowings   319     284     1,137     682
Total interest expense   1,647     1,237     4,503     3,277
 
Net interest income 15,461 11,147 40,756 30,713
 
Provision for loan losses 570 - 1,473 235
                     
Net interest income after provision for loan losses   14,891     11,147     39,283     30,478
 
Noninterest income:
Asset management, consulting and other fees 5,870 5,812 17,642 16,053
Other income   998     925     1,850     2,651
Total noninterest income   6,868     6,737     19,492     18,704
 
Noninterest expense:
Compensation and benefits 10,870 8,764 29,440 25,278
Occupancy and depreciation 2,561 1,867 6,486 5,499
Professional services and marketing costs 1,481 1,192 4,051 4,540
Other expenses   2,044     1,272     4,311     4,195
Total noninterest expense   16,956     13,095     44,288     39,512
 
Income before taxes on income 4,803 4,789 14,487 9,670
Taxes on income   2,041     2,130     6,157     4,282
Net income $ 2,762   $ 2,659   $ 8,330   $ 5,388
 
Net income per share:
Basic $ 0.22 $ 0.34 $ 0.87 $ 0.70
Diluted $ 0.21 $ 0.32 $ 0.84 $ 0.66
Shares used in computation:
Basic 12,623,924 7,735,350 9,534,056 7,734,372
Diluted 13,074,935 8,240,424 9,926,445 8,188,633
 
 
           

FIRST FOUNDATION INC.

SELECTED FINANCIAL INFORMATION - Unaudited

(in thousands, except share and per share amounts)

 
For the Quarter

Ended September 30,

For the Nine Months

Ended September 30,

        2015       2014       2015       2014
Selected Income Statement Data:            
Net interest income $ 15,461 $ 11,147 $ 40,756 $ 30,713
Provision for loan losses 570 - 1,473 235
Noninterest Income:
Asset management, consulting and other fees 5,870 5,812 17,642 16,053
Other 998 925 1,850 2,651
Noninterest expense 16,956 13,095 44,288 39,512
Income before taxes 4,803 4,789 14,487 9,670
Net income 2,762 2,659 8,330 5,388
Net income per share:
Basic $ 0.22 $ 0.34 $ 0.87 $ 0.70
Diluted 0.21 0.32 0.84 0.66
 
Selected Performance Ratios:
Return on average assets - annualized 0.59 % 0.87 % 0.68 % 0.63 %
Return on average equity - annualized 5.8 % 11.5 % 8.1 % 7.9 %
Net yield on interest-earning assets 3.43 % 3.73 % 3.45 % 3.68 %

Efficiency ratio(2)

75.9 % 73.1 % 73.5 % 77.6 %
Noninterest income as a % of total revenues 30.8 % 37.8 % 32.4 % 37.8 %
 
Other Information:
Loan originations $ 213,489 $ 150,386 $ 626,128 $ 389,890
Charge-offs to average loans - annualized 0.00 % - % 0.03 % - %
 
                                September 30,

2015

         

December 31,

2014

Selected Balance Sheet Data:
Cash and cash equivalents $ 206,338 $ 29,692
Loans, net of deferred fees 1,536,005 1,166,392
Allowance for loan and lease losses (“ALLL”) (11,300 ) (10,150 )
Total assets 2,248,747 1,355,424
Noninterest-bearing deposits 322,859 246,137
Interest-bearing deposits 998,668 716,817
Borrowings - FHLB Advances 660,000 263,000
Borrowings – term note - 19,886
Shareholders’ equity 257,296 99,496
 
Selected Capital Data:
Tangible common equity to tangible assets(1) 11.34 % 7.33 %
Tangible book value per share(1) $ 15.96 $ 12.66
Shares outstanding at end of period 15,962,686 7,845,182
 
Other Information:
Assets under management (end of period) $ 3,294,677 $ 3,221,674
Number of employees 269 211
Loan to deposit ratio 123.6 % 118.9 %
Nonperforming assets to total assets 0.29 % 0.11 %
Ratio of ALLL to loans(3) 0.76 % 0.87 %
 
(1)    

Tangible common equity (also referred to as tangible book value) and tangible assets are equal to common equity and assets, respectively, less $2.5 million and $0.2 million of intangible assets as of September 30, 2015 and December 31, 2014, respectively.

(2) The efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.
(3) This ratio excludes loans acquired in an acquisition as GAAP requires estimated credit losses for acquired loans to be recorded as discounts to those loans.
 
 
           

FIRST FOUNDATION INC.

SEGMENT REPORTING - Unaudited

(in thousands)

 
For the Quarter

Ended September 30,

For the Nine Months

Ended September 30,

2015       2014 2015       2014
Banking:
Interest income $ 17,108 $ 12,384 $ 45,259 $ 33,990
Interest expense   1,509     1,014     3,829     2,753  
Net interest income 15,599 11,370 41,430 31,237
Provision for loan losses 570 - 1,473 235
Noninterest income 1,839 967 4,501 2,780
Noninterest expense   11,653     8,216     28,138     22,773  
Income before taxes on income $ 5,215   $ 4,919   $ 16,320   $ 12,923  
 
Wealth Management:
Noninterest income $ 5,171 $ 5,113 $ 15,426 $ 14,400
Noninterest expense   4,685     4,351     13,950     13,576  
Income before taxes on income $ 486   $ 762   $ 1,476   $ 824  
 
Other and Eliminations:
Interest income $ - $ - $ - $ -
Interest expense   138     223     674     524  

Net interest income

(138 ) (223 ) (674 ) (524 )
Noninterest income (142 ) (141 ) (435 ) (390 )
Noninterest expense   618     528     2,200     3,163  
Income before taxes on income $ (898 ) $ (892 ) $ (3,309 ) $ (4,077 )
 
 
     

FIRST FOUNDATION INC.

ROLLING INCOME STATEMENTS - Unaudited

(in thousands)

 
For the Quarter Ended

September 30,

2014

     

December 31,

2014

     

March 31,

2015

     

June 30,

2015

     

September 30,

2015

 
Interest income:
Loans $ 11,404 $ 12,405 $ 12,101 $ 13,362 $ 15,634
Securities 799 804 815 822 1,107
FHLB Stock, fed funds sold and deposits   181     199       242       809       367
Total interest income   12,384     13,408       13,158       14,993       17,108
 
Interest expense:
Deposits 953 991 923 1,115 1,328
Borrowings   284     316       364       454       319
Total interest expense   1,237     1,307       1,287       1,569       1,647
 
Net interest income 11,147 12,101 11,871 13,424 15,461
 
Provision for loan losses - - 150 753 570
                                 
Net interest income after provision for loan losses   11,147     12,101       11,721       12,671       14,891
 
Noninterest income:
Asset management, consulting and other fees 5,812 5,745 5,850 5,922 5,870
Other income   925     300       354       498       998
Total noninterest income   6,737     6,045       6,204       6,420       6,868
 
Noninterest expense:
Compensation and benefits 8,764 8,272 9,180 9,390 10,870
Occupancy and depreciation 1,867 1,826 1,957 1,968 2,561
Professional services and marketing costs 1,192 1,455 1,058 1,512 1,481
Other expenses   1,272     1,442       1,163       1,104       2,044
Total noninterest expense   13,095     12,995       13,358       13,974       16,956
 
Income before taxes on income 4,789 5,151 4,567 5,117 4,803
Taxes on income   2,130     2,145       1,941       2,175       2,041
Net income $ 2,659   $ 3,006     $ 2,626     $ 2,942     $ 2,762
 
Net income per share:
Basic $ 0.34 $ 0.39 $ 0.33 $ 0.36 $ 0.22
Diluted $ 0.32 $ 0.37 $ 0.32 $ 0.35 $ 0.21
Shares used in computation:
Basic 7,735,350 7,744,940 7,855,457 8,070,386 12,623,924
Diluted 8,240,424 8,195,144 8,211,145 8,425,029 13,074,935
 
 
           

FIRST FOUNDATION INC.

SELECTED INFORMATION: INTEREST MARGIN - Unaudited

(in thousands)

 
For the Quarter

Ended September 30,

For the Nine Months

Ended September 30,

2015       2014 2015       2014
 
Average Balances:
Loans $ 1,562,960 $ 1,038,829 $ 1,378,191 $ 978,725
Securities 190,107 133,430 154,538 96,111
Deposits 1,298,268 906,865 1,120,730 855,415
Borrowings 334,022 206,320 334,260 178,709
 
Average Yield / Rate
Loans 4.00 % 4.39 % 3.98 % 4.33 %
Securities 2.33 % 2.37 % 2.37 % 2.42 %
Deposits 0.41 % 0.42 % 0.40 % 0.41 %
Borrowings 0.38 % 0.55 % 0.45 % 0.51 %
 
Net Interest Rate Spread 3.30 % 3.58 % 3.33 % 3.54 %
 
Net Yield on Interest-earning Assets 3.43 % 3.73 % 3.45 % 3.68 %
 

First Foundation Inc.
John Michel
Chief Financial Officer
949-202-4160
jmichel@ff-inc.com

Copyright Business Wire 2015
Business Wire
October 22, 2015 - 9:00 AM EDT

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