First Foundation Announces 2018 Second Quarter Financial Results
Jul. 30, 2018
IRVINE, Calif.--(BUSINESS WIRE)--Jul 30, 2018--First Foundation Inc. (NASDAQ: FFWM), a financial services company with two wholly-owned operating subsidiaries, First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB”), announced today its financial results for the quarter and six months ended June 30, 2018. As we present certain non-GAAP measures in this release, the reader should refer to the non-GAAP reconciliations set forth below under the section “Use of Non-GAAP Financial Measures.”
Earnings for the second quarter of 2018 were impacted by $3.8 million of acquisition costs related to the closing of the acquisition of PBB Bancorp (“PBB”), $1.5 million of balance sheet restructuring costs and $3.5 million of loan chargeoffs.
“We have been able to maintain strong growth in both our loan production and revenues while we continue to work through a challenging interest rate environment,” said Scott F. Kavanaugh, CEO. “We used this quarter as an opportunity to start a process to restructure our balance sheet to better position us for 2019 and beyond.”
Financial Results:2018 second quarter compared to 2017 second quarter: Net interest income was $36.2 million, an increase of 30%Total revenues were $43.2 million, an increase of 15%Income before taxes was $6.8 million as compared to $14.3 millionEarnings were $5.1 million as compared to $9.6 millionEarnings per fully diluted share were $0.12 as compared to $0.28 2018 year to date compared to 2017 year to date: Net interest income was $70.5 million, an increase of 31%Total revenues were $86.5 million, an increase of 21%Income before taxes was $19.4 million as compared to $23.4 millionEarnings were $14.1 million as compared to $15.7 millionEarnings per fully diluted share were $0.35 as compared to $0.46 2018 Financial ratios: Return on average tangible equity of 7.5% for the first six monthsReturn on average assets of 0.57% for the first six monthsEfficiency ratio of 68.4% for the first six monthsTotal tangible shareholders’ equity of $418 million, tangible book value of $9.41 per share, and tangible common equity to tangible assets of 7.12%, in each case, as of June 30, 2018
Other Activity:Loan originations totaled $551 million for the second quarter and $971 million for the first six months of 2018. Deposits increased by $1.2 billion during the first six months of 2018, including $478 million of deposits added from the PBB acquisition. Assets under management (“AUM”) at FFA decreased by $86 million during the first six months as new accounts were offset by fund withdrawals and account terminations.
“We had a record quarter of loan production and our balance sheet restructuring will allow us to maintain a high level of loan originations as it reduces our loan concentrations,” said David DePillo, President of First Foundation Bank. “The $3.5 million in chargeoffs relate to a legacy commercial relationship and a relationship from one of our acquisitions. As a result, we do not believe there are any significant credit issues in our portfolio.”
DetailsTotal loans, including loans held for sale, increased $1.1 billion in the first six months of 2018 as a result of $971 million of originations and $522 million of loans added from the PBB acquisition, which were partially offset by the sale of $52 million of multifamily loans and payoffs or scheduled payments of $323 million. The $711 million growth in deposits during the first six months of 2018 (excluding the deposits acquired in the PBB acquisition) included specialty deposits growth of $218 million, branch deposits growth of $48 million and wholesale deposits growth of $445 million. The $86 million decrease in AUM during the first six months of 2018 was the net result of $135 million of new accounts and terminations and net withdrawals of $220 million.
About First Foundation
First Foundation, a financial institution founded in 1990, provides personal banking, business banking and private wealth management. The Company has offices in California, Nevada and Hawaii with headquarters in Irvine, California. For more information, please visit www.firstfoundationinc.com.
We have two business segments, “Banking” and “Investment Management and Wealth Planning” (“Wealth Management”). Banking includes the operations of FFB and First Foundation Insurance Services, and Wealth Management includes the operations of FFA. The financial position and operating results of the stand-alone holding company, FFI, are included under the caption “Other” in certain of the tables that follow, along with any consolidation elimination entries.
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," "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 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 that the balance sheet restructuring may not be completed as planned on a timely basis or at all; the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that we will not be able to continue our internal growth rate; the risk that we will not be able to access the securitization market on favorable terms or at all; the risk that the economic recovery in the United States will stall or will be adversely affected by domestic or international economic conditions and risks associated with the Federal Reserve Board taking actions with respect to interest rates, 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; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships. 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 2017 Annual Report on Form 10-K for the fiscal year ended December 31, 2017 that we filed with the SEC on March 16, 2018, 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 and the Risk Factors section of 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 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 2017 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.
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