First Foundation Announces 2015 Second Quarter Earnings

  • Earnings report illustrates another quarter of strong, consistent growth
  • Earnings per share achieve year over year increase of 119%

IRVINE, Calif.--()--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 June 30, 2015.

“Driven by the high demand for all of our solutions, First Foundation saw another quarter of strong growth,” said CEO Scott F. Kavanaugh. “The banking, wealth management, and trust divisions are all contributing to the success of the company in meaningful ways. Our consistent results reflect a continued focus on serving the complex and evolving needs of our clients, while enhancing profitability and returns for our shareholders.”

Financial Highlights

  • Net income for the quarter ended June 30, 2015 was $2.9 million, or $0.35 per fully diluted share, as compared to $1.3 million, or $0.16 per fully diluted share for the quarter ended June 30, 2014, an increase of 119% in fully diluted earnings per share.
  • For the six months ended June 30, 2015, net income was $5.6 million, or $0.67 per fully diluted share, as compared to $2.7 million, or $0.34 per fully diluted share for the six months ended June 30, 2014, an increase of 104% in fully diluted earnings per share.
  • Income before taxes increased by 117%, or $2.8 million, and 98%, or $4.8 million, for the quarter and six months ended June 30, 2015, respectively as compared to the corresponding periods in 2014.
  • Total revenues, which consist of net interest income and noninterest income, increased by 22% and 20%, respectively, for the quarter and six months ended June 30, 2015 as compared to the corresponding periods in 2014.
  • Strong demand for our banking products and services occurred in the first six months of 2015 as evidenced by the growth of our loans which increased by $240 million in the first six months of 2015, equivalent to an annualized growth rate of 41%.
  • Tangible book value increased from $12.66 per share at December 31, 2014 to $13.62 per share at June 30, 2015.

In addition, First Foundation Bank completed the acquisition of Pacific Rim Bank and announced the hiring of David DePillo as its President during the second quarter of 2015. The acquisition of Pacific Rim Bank was accretive to tangible book value. First Foundation Bank also designated $113.3 million of its multifamily loans as held for sale for use in a structured loan sale and securitization it is currently working on with one of the federal agencies.

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, 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; 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; and the risk that the approvals required for our pending merger with Pacific Rim Bank will not be obtained, in which event the merger would have to be abandoned. 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. 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)

 
     

June 30,
2015

 

December 31,
2014

ASSETS
 
Cash and cash equivalents $ 172,844 $ 29,692
Securities available-for-sale (“AFS”)   144,250     138,270  
 
Loans, net of deferred fees 1,405,918 1,166,392
Allowance for loan and lease losses (“ALLL”)   (10,800 )   (10,150 )
Net loans   1,395,118     1,156,242  
 
Loans held for sale 113,325 -
Investment in FHLB stock 13,290 12,361
Deferred taxes 12,518 9,748
Premises and equipment, net 2,349 2,187
Real estate owned (“REO”) 4,492 334
Goodwill and intangibles 2,375 -
Other assets   8,704     6,590  
Total Assets $ 1,869,265   $ 1,355,424  
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
Liabilities:
Deposits $ 1,266,318 $ 962,954
Borrowings 472,250 282,886
Accounts payable and other liabilities   8,695     10,088  
Total Liabilities   1,747,263     1,255,928  
 
Commitments and contingencies - -

Shareholders’ Equity

Common Stock, par value $.001: 20,000,000 shares authorized;
8,785,533 and 7,845,182 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

9 8
Additional paid-in-capital 95,854 78,204
Retained earnings 25,952 20,384
Accumulated other comprehensive income, net of tax   187     900  
Total Shareholders’ Equity   122,002     99,496  
 
Total Liabilities and Shareholders’ Equity $ 1,869,265   $ 1,355,424  
 
 

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,

2015   2014 2015   2014
 
Interest income:
Loans $ 13,362 $ 10,227 $ 25,463 $ 20,331
Securities 822 550 1,637 942
FHLB Stock, fed funds sold and deposits   809     154     1,051     333
Total interest income   14,993     10,931     28,151     21,606
 
Interest expense:
Deposits 1,115 838 2,038 1,642
Borrowings   454     277     818     398
Total interest expense   1,569     1,115     2,856     2,040
 
Net interest income 13,424 9,816 25,295 19,566
 
Provision for loan losses 753 - 903 235
                     
Net interest income after provision for loan losses   12,671     9,816     24,392     19,331
 
Noninterest income:
Asset management, consulting and other fees 5,922 5,202 11,772 10,241
Other income   498     1,214     852     1,726
Total noninterest income   6,420     6,416     12,624     11,967
 
Noninterest expense:
Compensation and benefits 9,390 8,034 18,570 16,514
Occupancy and depreciation 1,968 1,804 3,925 3,632
Professional services and marketing costs 1,512 2,099 2,570 3,348
Other expenses   1,104     1,934     2,267     2,923
Total noninterest expense   13,974     13,871     27,332     26,417
 
Income before taxes on income 5,117 2,361 9,684 4,881
Taxes on income   2,175     1,094     4,116     2,152
Net income $ 2,942   $ 1,267   $ 5,568   $ 2,729
 
Net income per share:
Basic $ 0.36 $ 0.16 $ 0.70 $ 0.35
Diluted $ 0.35 $ 0.16 $ 0.67 $ 0.34
Shares used in computation:
Basic 8,070,386 7,734,231 7,963,515 7,733,874
Diluted 8,425,029 8,145,097 8,318,227 8,141,641
 
 

FIRST FOUNDATION INC.

SELECTED FINANCIAL INFORMATION - Unaudited

(in thousands, except share and per share amounts)

 
     

For the Quarter
Ended June 30,

 

 

For the Six Months
Ended June 30,

 

        2015   2014   2015   2014
Selected Income Statement Data:    
Net interest income $ 13,424 $ 9,816 $ 25,295 $ 19,566
Provision for loan losses 753 - 903 235
Noninterest Income:
Asset management, consulting and other fees 5,922 5,202 11,772 10,241
Other 498 1,214 852 1,726
Noninterest expense 13,974 13,871 27,332 26,417
Income before taxes 5,117 2,361 9,684 4,881
Net income 2,942 1,267 5,568 2,729
Net income per share:
Basic $ 0.36 $ 0.16 $ 0.70 $ 0.35
Diluted 0.35 0.16 0.67 0.34
 
Selected Performance Ratios:
Return on average assets - annualized 0.74 % 0.45 % 0.74 % 0.50 %
Return on average equity - annualized 10.8 % 5.6 % 10.6 % 6.1 %
Net yield on interest-earning assets 3.46 % 3.57 % 3.47 % 3.66 %
Efficiency ratio (2) 70.4 % 78.5 % 72.1 % 80.2 %
Noninterest income as a % of total revenues 32.4 % 39.5 % 33.3 % 38.0 %
 
Other Information:
Loan originations $ 249,968 $ 147,697 $ 412,639 $ 239,504
Charge-offs to average loans - annualized 0.08 % 0.00 % 0.04 % 0.00 %
 
                      June 30,

2015

 

December 31,
2014

Selected Balance Sheet Data:
Cash and cash equivalents $ 172,844 $ 29,692
Loans, net of deferred fees 1,405,918 1,166,392
Allowance for loan and lease losses (“ALLL”) (10,800 ) (10,150 )
Total assets 1,869,265 1,355,424
Noninterest-bearing deposits 272,405 246,137
Interest-bearing deposits 993,913 716,817
Borrowings - FHLB Advances 443,000 263,000
Borrowings – term note 29,250 19,886
Shareholders’ equity 122,002 99,496
 
Selected Capital Data:
Tangible common equity to tangible assets(1) 6.41 % 7.33 %
Tangible book value per share(1) $ 13.62 $ 12.66
Shares outstanding at end of period 8,785,533 7,845,182
 
Other Information:
Assets under management (end of period) $ 3,380,999 $ 3,221,674
Number of employees 252 211
Loan to deposit ratio 119.1 % 118.9 %
Nonperforming assets to total assets 0.36 % 0.11 %
Ratio of ALLL to loans(3) 0.80 % 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 $0.2 million of intangible assets as of June 30, 2015 and December 31, 2014.
(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 June 30,

 

 

For the Six Months
Ended June 30,

 

  2015   2014 2015   2014
Banking:
Interest income $ 14,993 $ 10,931 $ 28,151 $ 21,606
Interest expense   1,273     888     2,320     1,739  
Net interest income 13,720 10,043 25,831 19,867
Provision for loan losses 753 - 903 235
Noninterest income 1,384 1,887 2,662 2,929
Noninterest expense   8,566     7,615     16,485     14,557  
Income before taxes on income $ 5,785   $ 4,315   $ 11,105   $ 8,004  
 
Wealth Management:
Noninterest income $ 5,188 $ 4,662 $ 10,255 $ 9,287
Noninterest expense   4,550     4,383     9,265     9,225  
Income before taxes on income $ 638   $ 279   $ 990   $ 62  
 
Other and Eliminations:
Interest income $ - $ - $ - $ -
Interest expense   296     227     536     301  
Net interest income (296 ) (227 ) (536 ) (301 )
Provision for loan losses - - - -
Noninterest income (152 ) (133 ) (293 ) (249 )
Noninterest expense   858     1,873     1,582     2,635  
Income before taxes on income $ (1,306 ) $ (2,233 ) $ (2,411 ) $ (3,185 )
 
 

FIRST FOUNDATION INC.

ROLLING INCOME STATEMENTS - Unaudited

(in thousands)

 
      For the Quarter Ended

June 30,
2014

 

September 30,
2014

 

December 31,
2014

 

March 31,
2015

 

June 30,
2015

 
Interest income:
Loans $ 10,227 $ 11,404 $ 12,405 $ 12,101 $ 13,362
Securities 550 799 804 815 822
FHLB Stock, fed funds sold and deposits   154     181       199       242       809
Total interest income   10,931     12,384       13,408       13,158       14,993
 
Interest expense:
Deposits 838 953 991 923 1,115
Borrowings   277     284       316       364       454
Total interest expense   1,115     1,237       1,307       1,287       1,569
 
Net interest income 9,816 11,147 12,101 11,871 13,424
 
Provision for loan losses - - - 150 753
                                 
Net interest income after provision for loan losses   9,816     11,147       12,101       11,721       12,671
 
Noninterest income:
Asset management, consulting and other fees 5,202 5,812 5,745 5,850 5,922
Other income   1,214     925       300       354       498
Total noninterest income   6,416     6,737       6,045       6,204       6,420
 
Noninterest expense:
Compensation and benefits 8,034 8,764 8,272 9,180 9,390
Occupancy and depreciation 1,804 1,867 1,826 1,957 1,968
Professional services and marketing costs 2,099 1,192 1,455 1,058 1,512
Other expenses   1,934     1,272       1,442       1,163       1,104
Total noninterest expense   13,871     13,095       12,995       13,358       13,974
 
Income before taxes on income 2,361 4,789 5,151 4,567 5,117
Taxes on income   1,094     2,130       2,145       1,941       2,175
Net income $ 1,267   $ 2,659       3,006       2,626     $ 2,942
 
Net income per share:
Basic $ 0.16 $ 0.34 $ 0.39 $ 0.33 $ 0.36
Diluted $ 0.16 $ 0.32 $ 0.37 $ 0.32 $ 0.35
Shares used in computation:
Basic 7,734,231 7,735,350 7,744,940 7,855,457 8,070,386
Diluted 8,145,097 8,240,424 8,195,144 8,211,145 8,425,029
 

FIRST FOUNDATION INC.

SELECTED INFORMATION: INTEREST MARGIN - Unaudited

(in thousands)

 
     

For the Quarter
Ended June 30,

 

For the Six Months
Ended June 30,

2015   2014 2015   2014
 
Average Balances:
Loans $ 1,365,711 $ 970,211 $ 1,284,291 $ 948,175
Securities 137,382 90,462 136,460 77,142
Deposits 1,103,150 846,594 1,045,455 831,809
Borrowings 362,544 177,622 334,381 164,674
 
Average Yield / Rate
Loans 3.92 % 4.22 % 3.97 % 4.29 %
Securities 2.39 % 2.44 % 2.40 % 2.44 %
Deposits 0.41 % 0.40 % 0.40 % 0.40 %
Borrowings 0.50 % 0.62 % 0.49 % 0.49 %
 
Net Interest Rate Spread 3.34 % 3.42 % 3.34 % 3.52 %
 
Net Yield on Interest-earning Assets 3.46 % 3.57 % 3.47 % 3.66 %

Contacts

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

Contacts

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