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First Foundation Announces 2019 Full Year Results

  • Earnings per share: $0.34 for the quarter, $1.25 for the year
  • Annual earnings of $56 million, year over year growth of 31%
  • Annual revenues of $212 million, year over year growth of 11%
  • Loan production of $553 million for the fourth quarter, $1.9 billion for the year
  • Tangible book value per share: $11.57 at December 31, 2019, a 12% increase from prior year

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 year ended December 31, 2019. 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."

"2019 was another strong year across all aspects of our business," said Scott F. Kavanaugh, CEO. "Banking and trust revenues experienced record years and our assets under management ended the year at peak levels. We have been able to elevate our brand through successful digital marketing efforts and our financial performance is a reflection of the valuable franchise we have created for our clients, employees, and stockholders. With the economy in a solid place and our business model performing well, I believe we are well-positioned for the year ahead."

Highlights

Financial Results:

  • 2019 fourth quarter compared to 2018 fourth quarter:
    • Total revenues were $54 million, an increase of 8%
    • Net interest income was $44 million, an increase of 6%
    • Income before taxes was $22 million, an increase of 9%
    • Earnings were $15 million, an increase of 8%
    • Earnings per fully diluted share were $0.34, compared to $0.31
  • 2019 compared to 2018 (full year):
    • Total revenues were $212 million, an increase of 11%
    • Net interest income was $170 million, an increase of 9%
    • Income before taxes was $79 million, an increase of 32%
    • Earnings were $56 million, an increase of 31%
    • Earnings per fully diluted share were $1.25, compared to $1.01
  • 2019 Financial ratios:
    • Return on average tangible equity of 11.9% for the quarter (annualized), 11.5% for the year
    • Return on average assets of 0.96% for the quarter (annualized), 0.91% for the year
    • Efficiency ratio of 58.6% for the quarter, 61.9% for the year
    • Total tangible shareholders’ equity of $517 million, tangible book value of $11.57 per share, and tangible common equity to tangible assets of 8.31%, in each case, as of December 31, 2019

Other Activity:

  • Loan originations totaled $553 million for the quarter, $1.9 billion for the year
  • Deposits increased by $358 million in 2019
  • Declared and paid cash dividend of $0.05 per share in fourth quarter, $0.20 per share for the year
  • Net interest margin ("NIM"): 2.88% for the fourth quarter; 2.87% for the year
  • Assets under management ("AUM") at FFA increased by $504 million in 2019 to $4.4 billion
  • AUM for our Trust operations increased by $146 million, or 20%, during 2019, with an increase in trust fees of 33%

"I am very pleased with our loan and deposit accomplishments in 2019," said David DePillo, President. "Our accomplishments included record loan originations, higher deposit balances, increased loan yields, lower deposit costs and lower borrowing costs. In addition, we maintained strong credit quality as evidenced by our non-performing assets ratio decreasing to 20 basis points as of the end of the year. Lastly, we were able to increase our operating efficiencies and enhance our digital banking offerings, which will continue to be a focus in 2020."

Details

  • Total loans, including loans held for sale, increased $254 million in 2019 as a result of $1.9 billion of originations which was partially offset by the sale of $551 million of multifamily loans and payoffs or scheduled payments of $1.1 billion.
  • The $358 million growth in deposits during 2019 included increases in branch deposits of $138 million and specialty deposits of $222 million and a $2 million decrease in wholesale deposits.
  • The $504 million increase in AUM at FFA during 2019 was the net result of $285 million of new accounts, $691 million of portfolio gains and terminations and net withdrawals of $473 million.

About First Foundation

First Foundation, (NASDAQ: FFWM), 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.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, dividends, 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 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; the risk that we may be unable or that our board of directors may determine that it is inadvisable to pay future dividends; 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 2018 Annual Report on Form 10-K for the fiscal year ended December 31, 2018 that we filed with the SEC on March 1, 2019, 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 2018 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)

 

 

December 31,
2019

 

December 31,
2018

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

65,387

 

 

$

67,312

 

Securities available-for-sale ("AFS")

 

 

1,014,966

 

 

 

809,569

 

Loans held for sale

 

 

503,036

 

 

 

507,643

 

 

 

 

 

 

 

 

 

 

Loans, net of deferred fees

 

 

4,547,633

 

 

 

4,293,669

 

Allowance for loan and lease losses ("ALLL")

 

 

(20,800

)

 

 

(19,000

)

Net loans

 

 

4,526,833

 

 

 

4,274,669

 

 

 

 

 

 

 

 

 

 

Investment in FHLB stock

 

 

21,519

 

 

 

20,307

 

Deferred taxes

 

 

11,079

 

 

 

13,251

 

Premises and equipment, net

 

 

8,355

 

 

 

9,145

 

Real estate owned ("REO")

 

 

 

 

 

815

 

Goodwill and intangibles

 

 

97,191

 

 

 

99,482

 

Other assets

 

 

66,070

 

 

 

38,219

 

Total Assets

 

$

6,314,436

 

 

$

5,840,412

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Deposits

 

$

4,891,144

 

 

$

4,532,968

 

Borrowings

 

 

743,000

 

 

 

708,000

 

Accounts payable and other liabilities

 

 

66,423

 

 

 

40,260

 

Total Liabilities

 

 

5,700,567

 

 

 

5,281,228

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

 

Common Stock, par value $.001: 70,000,000 shares authorized; 44,670,743 and 44,496,007 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively

 

 

45

 

 

 

44

 

Additional paid-in-capital

 

 

433,775

 

 

 

431,832

 

Retained earnings

 

 

175,773

 

 

 

128,461

 

Accumulated other comprehensive income (loss), net of tax

 

 

4,276

 

 

 

(1,153

)

Total Shareholders’ Equity

 

 

613,869

 

 

 

559,184

 

 

 

 

 

 

 

 

 

 

Total Liabilities and Shareholders’ Equity

 

$

6,314,436

 

 

$

5,840,412

 

 

 

 

 

 

 

 

 

 

FIRST FOUNDATION INC.

CONSOLIDATED INCOME STATEMENTS - Unaudited

(in thousands, except share and per share amounts)

 

 

 

 

 

 

 

For the Quarter

Ended December 31,

 

For the Year

Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

54,123

 

 

$

50,360

 

 

$

220,951

 

 

$

186,211

 

Securities

 

 

7,304

 

 

 

6,279

 

 

 

25,004

 

 

 

16,855

 

FHLB Stock, fed funds sold and deposits

 

 

867

 

 

 

803

 

 

 

2,805

 

 

 

4,240

 

Total interest income

 

 

62,294

 

 

 

57,442

 

 

 

248,760

 

 

 

207,306

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits

 

 

15,763

 

 

 

13,378

 

 

 

64,182

 

 

 

38,776

 

Borrowings

 

 

2,643

 

 

 

2,699

 

 

 

14,624

 

 

 

12,920

 

Total interest expense

 

 

18,406

 

 

 

16,077

 

 

 

78,806

 

 

 

51,696

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

 

43,888

 

 

 

41,365

 

 

 

169,954

 

 

 

155,610

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Provision for loan losses

 

 

694

 

 

 

73

 

 

 

2,637

 

 

 

4,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income after provision for loan losses

 

 

43,194

 

 

 

41,292

 

 

 

167,317

 

 

 

151,390

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management, consulting and other fees

 

 

7,424

 

 

 

7,251

 

 

 

28,658

 

 

 

28,748

 

Gain on sale of loans

 

 

 

 

 

 

 

 

4,218

 

 

 

419

 

Other income

 

 

2,774

 

 

 

1,450

 

 

 

8,900

 

 

 

6,604

 

Total noninterest income

 

 

10,198

 

 

 

8,701

 

 

 

41,776

 

 

 

35,771

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

16,531

 

 

 

16,117

 

 

 

69,933

 

 

 

67,508

 

Occupancy and depreciation

 

 

5,420

 

 

 

5,255

 

 

 

20,905

 

 

 

19,779

 

Professional services and marketing costs

 

 

1,644

 

 

 

2,003

 

 

 

7,417

 

 

 

8,583

 

Customer service costs

 

 

4,266

 

 

 

3,628

 

 

 

17,858

 

 

 

15,077

 

Other expenses

 

 

3,812

 

 

 

3,135

 

 

 

13,481

 

 

 

16,128

 

Total noninterest expense

 

 

31,673

 

 

 

30,138

 

 

 

129,594

 

 

 

127,075

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before taxes on income

 

 

21,719

 

 

 

19,855

 

 

 

79,499

 

 

 

60,086

 

Taxes on income

 

 

6,505

 

 

 

5,726

 

 

 

23,260

 

 

 

17,128

 

Net income

 

$

15,214

 

 

$

14,129

 

 

$

56,239

 

 

$

42,958

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

$

0.32

 

 

$

1.26

 

 

$

1.02

 

Diluted

 

$

0.34

 

 

$

0.31

 

 

$

1.25

 

 

$

1.01

 

Shares used in computation:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

44,661,852

 

 

 

44,476,829

 

 

 

44,617,361

 

 

 

42,092,361

 

Diluted

 

 

45,014,092

 

 

 

44,871,146

 

 

 

44,911,265

 

 

 

42,567,108

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRST FOUNDATION INC.

SELECTED FINANCIAL INFORMATION - Unaudited

(in thousands, except share and per share amounts and percentages)

 

 

 

 

 

 

 

For the Quarter

Ended December 31,

 

For the Year

Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

Selected Income Statement Data:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

43,888

 

 

$

41,365

 

 

$

169,954

 

 

$

155,610

 

Provision for loan losses

 

 

694

 

 

 

73

 

 

 

2,637

 

 

 

4,220

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Asset management, consulting and other fees

 

 

7,424

 

 

 

7,251

 

 

 

28,658

 

 

 

28,748

 

Gain (loss) on sale of loans

 

 

 

 

 

 

 

 

4,218

 

 

 

419

 

Other

 

 

2,774

 

 

 

1,450

 

 

 

8,900

 

 

 

6,604

 

Noninterest expense

 

 

31,673

 

 

 

30,138

 

 

 

129,594

 

 

 

127,075

 

Income before taxes

 

 

21,719

 

 

 

19,855

 

 

 

79,499

 

 

 

60,086

 

Net income

 

 

15,214

 

 

 

14,129

 

 

 

56,239

 

 

 

42,958

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.34

 

 

$

0.32

 

 

$

1.26

 

 

$

1.02

 

Diluted

 

 

0.34

 

 

 

0.31

 

 

 

1.25

 

 

 

1.01

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selected Performance Ratios:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets - annualized

 

 

0.96

%

 

 

1.01

%

 

 

0.91

%

 

 

0.81

%

Return on average equity - annualized

 

 

10.0

%

 

 

10.4

%

 

 

9.6

%

 

 

9.1

%

Return on average tangible equity – annualized(1)

 

 

11.9

%

 

 

12.8

%

 

 

11.5

%

 

 

10.6

%

Net yield on interest-earning assets

 

 

2.88

%

 

 

3.05

%

 

 

2.87

%

 

 

2.99

%

Efficiency ratio (2)

 

 

58.6

%

 

 

60.2

%

 

 

61.9

%

 

 

64.4

%

Noninterest income as a % of total revenues

 

 

18.9

%

 

 

17.4

%

 

 

19.7

%

 

 

18.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan originations

 

$

553,212

 

 

$

505,084

 

 

$

1,932,462

 

 

$

1,844,209

 

Charge-offs (recoveries) / average loans - annualized

 

 

0.03

%

 

 

0.01

%

 

 

0.02

%

 

 

0.08

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 press release.

(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 press release.

FIRST FOUNDATION INC.

SELECTED FINANCIAL INFORMATION - Unaudited

(in thousands, except share and per share amounts and percentages)

 

 

 

December 31,

2019

 

December 31,
2018

 

Selected Balance Sheet Data:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

65,387

 

 

$

67,312

 

 

Loans held for sale

 

 

503,036

 

 

 

507,643

 

 

Loans, net of deferred fees

 

 

4,547,633

 

 

 

4,293,669

 

 

ALLL

 

 

20,800

 

 

 

19,000

 

 

Total assets

 

 

6,314,436

 

 

 

5,840,412

 

 

Noninterest-bearing deposits

 

 

1,192,481

 

 

 

1,074,661

 

 

Interest-bearing deposits

 

 

3,698,663

 

 

 

3,458,307

 

 

Borrowings

 

 

743,000

 

 

 

708,000

 

 

Shareholders’ equity

 

 

613,869

 

 

 

559,184

 

 

 

 

 

 

 

 

 

 

 

 

Selected Capital Data:

 

 

 

 

 

 

 

 

 

Tangible common equity to tangible assets(3)

 

 

8.31

%

 

 

8.01

%

 

Tangible book value per share(3)

 

$

11.57

 

 

$

10.33

 

 

Shares outstanding at end of period

 

 

44,670,743

 

 

 

44,496,007

 

 

 

 

 

 

 

 

 

 

 

 

Other Information:

 

 

 

 

 

 

 

 

 

Assets under management (end of period)

 

$

4,438,252

 

 

$

3,934,700

 

 

Number of employees

 

 

485

 

 

 

482

 

 

Loan to deposit ratio

 

 

103

%

 

 

106

%

 

Nonperforming assets to total assets

 

 

0.20

%

 

 

0.21

%

 

Ratio of ALLL to loans(4)

 

 

0.49

%

 

 

0.51

%

 

 

 

 

 

 

 

 

 

 

 

(3) Tangible common equity and tangible book value are non-GAAP financial measures. See disclosures regarding "Use of Non-GAAP Financial Measures" included as a separate section in this press release.

(4) This ratio excludes certain acquired loans for which GAAP requires estimated credit losses to be recorded as discounts to those loans.

FIRST FOUNDATION INC.

SEGMENT REPORTING - Unaudited

(in thousands)

 

 

 

 

 

 

 

For the Quarter

Ended December 31,

 

For the Year

Ended December 31,

 

 

2019

 

2018

 

2019

 

2018

Banking:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

62,294

 

 

$

57,442

 

 

$

248,760

 

 

$

207,306

 

Interest expense

 

 

18,318

 

 

 

15,886

 

 

 

78,450

 

 

 

49,935

 

Net interest income

 

 

43,976

 

 

 

41,556

 

 

 

170,310

 

 

 

157,371

 

Provision for loan losses

 

 

694

 

 

 

73

 

 

 

2,637

 

 

 

4,220

 

Noninterest income

 

 

4,206

 

 

 

2,736

 

 

 

18,844

 

 

 

11,322

 

Noninterest expense

 

 

25,582

 

 

 

23,882

 

 

 

104,367

 

 

 

100,778

 

Income before taxes on income

 

$

21,906

 

 

$

20,337

 

 

$

82,150

 

 

$

63,695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wealth Management:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income

 

$

6,262

 

 

$

6,327

 

 

$

24,136

 

 

$

25,247

 

Noninterest expense

 

 

5,423

 

 

 

5,337

 

 

 

21,931

 

 

 

21,670

 

Income before taxes on income

 

$

839

 

 

$

990

 

 

$

2,205

 

 

$

3,577

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other and Eliminations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

$

 

 

$

 

 

$

 

 

$

 

Interest expense

 

 

88

 

 

 

191

 

 

 

356

 

 

 

1,761

 

Net interest income

 

 

(88

)

 

 

(191

)

 

 

(356

)

 

 

(1,761

)

Noninterest income

 

 

(270

)

 

 

(362

)

 

 

(1,204

)

 

 

(798

)

Noninterest expense

 

 

668

 

 

 

919

 

 

 

3,296

 

 

 

4,627

 

Income before taxes on income

 

$

(1,026

)

 

$

(1,472

)

 

$

(4,856

)

 

$

(7,186

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

FIRST FOUNDATION INC.

ROLLING INCOME STATEMENTS - Unaudited

(in thousands, except share and per share amounts)

 

 

 

 

 

For the Quarter Ended

 

 

 

December 31,

2018

 

 

March 31,

2019

 

June 30,

2019

 

 

September 30,

2019

 

 

 

December 31,

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

50,360

 

 

$

53,835

 

 

$

56,510

 

 

$

...