First Foundation Announces Second Quarter Results

IRVINE, Calif.--()--First Foundation Inc., a financial services company that provides investment management, wealth planning, consulting, trust and banking services primarily to high-net-worth individuals and businesses, today announced its financial results for the quarter and six months ended June 30, 2014.

Net income for the quarter and six months ended June 30, 2014 for First Foundation, which has two wholly owned operating subsidiaries, First Foundation Advisors and First Foundation Bank, was $1.3 million, or $0.16 per diluted share, and $2.7 million, or $0.34 per diluted share, respectively, as compared to net income of $1.9 million, or $0.24 per diluted share, and $2.9 million, or $0.38 per diluted share for the quarter and six months ended June 30, 2013, respectively. Included in the results for the second quarter of 2014 is $1.0 million of expenses related to a cancelled initial public offering (“IPO”). If that offering had been completed, rather than cancelled, those costs would have been netted against the gross proceeds of offering and not recorded as an expense. Excluding these IPO expenses, net income for the quarter and six months ended June 30, 2014 would have been $1.8 million, or $0.23 per diluted share, and $3.3 million, or $0.41 per diluted share, respectively.

For the quarter and six months ended June 30, 2014, total revenues, which consist of net interest income and noninterest income, increased 10% and 15%, respectively as compared to the corresponding periods in 2013. During the first six months of 2014, assets under management at First Foundation Advisors increased 27% on an annualized basis, and consolidated loans and deposits increased 23% and 14%, respectively, on an annualized basis.

“The continued growth in our assets under management, loans and deposits is the driver of our revenue growth,” stated Scott Kavanaugh, Chief Executive Officer of First Foundation. “As a result of these increased revenues, First Foundation Advisors is now contributing to our bottom line growth, and, excluding the $1.0 million in IPO costs, our income before taxes for the first six months of 2014 was 20% higher than the corresponding period in 2013. As our sales pipelines continue to be strong, we do not anticipate any slowdown in our growth rates during the remainder of 2014,” Mr. Kavanaugh added.

About First Foundation

First Foundation, a financial institution founded in 1990, provides integrated investment management, wealth planning, consulting, trust and banking services. The company is headquartered in Irvine with offices in Irvine, Newport Beach, Pasadena, West Los Angeles, San Diego, Palm Desert and the Imperial Valley in California, and Las Vegas, Nevada. 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 and 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 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; and 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. 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 2013 Annual Report on Form 10-K that we filed with the SEC on March 25, 2014, and readers of this news release are urged to review that additional information contained in that Annual Report. 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 2013 Annual Report, whether as a result of new information, future events or otherwise, except as may be required by law.

 

FIRST FOUNDATION INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

     
(dollars in thousands)

June 30, 2014
(unaudited)

December 31,
2013

 
Cash and cash equivalents $ 19,407 $ 56,954
Securities available-for-sale (“AFS”)   118,324     59,111  
 
Loans, net of deferred fees 1,007,828 903,645
Allowance for loan and lease losses (“ALLL”)   (10,150 )   (9,915 )
Net loans   997,678     893,730  
 
Premises and equipment, net 2,674 3,249
Investment in FHLB stock 9,165 6,721
Deferred taxes 10,260 12,052
Real estate owned (“REO”) 1,285 375
Other assets   5,599     5,168  
Total Assets $ 1,164,392   $ 1,037,360  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Liabilities:
Deposits $ 857,165 $ 802,037
Borrowings 208,279 141,063
Accounts payable and other liabilities   7,423     7,498  
Total Liabilities   1,072,867     950,598  
 
Commitments and contingencies - -

Shareholders’ Equity

Common Stock, par value $.001: 20,000,000 shares authorized; 7,734,514 and
7,733,514 shares issued and outstanding at June 30, 2014 and December 31,
2013, respectively

8 8
Additional paid-in-capital 76,632 76,334
Retained earnings 14,719 11,990
Accumulated other comprehensive income (loss), net of tax   166     (1,570 )
Total Shareholders’ Equity   91,525     86,762  
 
Total Liabilities and Shareholders’ Equity $ 1,164,392   $ 1,037,360  
 
 

FIRST FOUNDATION INC.

CONSOLIDATED INCOME STATEMENTS - Unaudited

(in thousands, except share and per share amounts)

     
For the Quarter

Ended June 30,

For the Six Months

Ended June 30,

2014   2013 2014   2013
 
Interest income:
Loans $ 10,227 $ 10,084 $ 20,331 $ 19,003
Securities 550 153 942 176
Fed funds sold and interest-bearing deposits   154     113     333     175
Total interest income   10,931     10,350     21,606     19,354
 
Interest expense:
Deposits 838 765 1,642 1,547
Borrowings   277     97     398     127
Total interest expense   1,115     862     2,040     1,674
 
Net interest income 9,816 9,488 19,566 17,680
 
Provision for loan losses - 686 235 1,308
                     
Net interest income after provision for loan losses   9,816     8,802     19,331     16,372
 
Noninterest income:
Asset management, consulting and other fees 5,202 4,625 10,241 8,911
Other income   1,214     585     1,726     832
Total noninterest income   6,416     5,210     11,967     9,743
 
Noninterest expense:
Compensation and benefits 8,034 7,013 16,514 14,265
Occupancy and depreciation 1,804 1,519 3,632 2,842
Professional services and marketing costs 2,099 986 3,348 2,031
Other expenses   1,934     1,507     2,923     2,283
Total noninterest expense   13,871     11,025     26,417     21,421
 
Income before taxes on income 2,361 2,987 4,881 4,694
Taxes on income   1,094     1,135     2,152     1,784
Net income $ 1,267   $ 1,852   $ 2,729   $ 2,910
 
Net income per share:
Basic $ 0.16 $ 0.25 $ 0.35 $ 0.39
Diluted $ 0.16 $ 0.24 $ 0.34 $ 0.38
Shares used in computation:
Basic 7,734,231 7,414,205 7,733,874 7,395,699
Diluted 8,101,764 7,752,800 8,098,308 7,683,402
 
   

FIRST FOUNDATION INC.

SELECTED FINANCIAL INFORMATION

(in thousands, except share and per share amounts)

 

As of and for the
Year Ended
December 31,
2013

As of and for the Six Months
Ended June 30,

2014(5)   2013
Unaudited Unaudited

Selected Income Statement Data:

Net interest income $ 19,566 $ 17,680 $ 35,674
Provision for loan losses 235 1,308 2,395
Noninterest Income:
Asset management, consulting and other fees 10,241 8,911 18,240
Other 1,726 832 1,584
Noninterest expense 26,417 21,421 43,622
Income before taxes 4,881 4,694 9,481
Net income(1) 2,729 2,910 7,851
 

Share and Per Share Data:

Net income per share:
Basic $ 0.35 $ 0.39 $ 1.06
Diluted 0.34 0.38 1.01
Tangible book value per share(2) $ 11.80 $ 10.26 $ 11.18
Shares outstanding at end of period 7,734,514 7,414,527 7,733,514
 

Selected Balance Sheet Data:

Cash and cash equivalents $ 19,407 $ 40,277 $ 56,954
Loans, net of deferred fees 1,007,828 798,606 903,645
Allowance for loan and lease losses (“ALLL”) (10,150 ) (8,900 ) (9,915 )
Total assets 1,164,392 894,648 1,037,360
Noninterest-bearing deposits 211,603 185,092 217,782
Interest-bearing deposits 645,562 534,839 584,255
Borrowings - FHLB Advances 187,000 84,000 134,000
Borrowings – term note 21,279 7,438 7,063
Shareholders’ equity 91,525 76,396 86,762
 

Selected Performance and Capital Ratios:

Return on average assets - annualized 0.60 % 0.68 % 0.86 %
Return on average equity - annualized 7.4 % 7.7 % 10.2 %
Net yield on interest-earning assets 3.66 % 4.29 % 4.04 %
Efficiency ratio (3) 80.2 % 78.1 % 78.6 %
Noninterest income as a % of total revenues 38.0 % 35.5 % 35.7 %
Tangible common equity to tangible assets(2) 7.84 % 8.51 % 8.34 %
 

Other Information:

Assets under management (end of period) $ 2,946,926 $ 2,356,917 $ 2,594,961
NPAs to total assets 0.46 % 0.40 % 0.32 %
Charge-offs to average loans - annualized 0.00 % 0.19 % 0.10 %
Ratio of ALLL to loans(4) 1.03 % 1.20 % 1.16 %
 

(1) Reflects effective tax rates of 44.0% and 38.0% for the six months ended June 30, 2014 and 2013, respectively, and 17.2% for the year ended December 31, 2013.

(2) Tangible common equity, (also referred to as tangible book value) and tangible assets, are equal to common equity and assets, respectively, less $0.2 million of intangible assets as of June 30, 2014, and less $0.3 million of intangible assets as of December 31, 2013 and June 30, 2013.

(3) The efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.

(4) 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.

(5) 2014 results include $1.0 million in costs related to a cancelled initial public offering, a $0.7 million gain on sale of REO and a related $0.7 million expense representing a payout of these gains to the prior shareholders of an acquired company under a holdback agreement. These items have been excluded from the computation of the return on average assets, return on average equity and the efficiency ratio.

Contacts

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

Sharing

Contacts

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