First Foundation (US:FFWM)2021-08-06 16:38Financial Performance - Total loans increased by $702 million in the six months ended June 30, 2021, due to $1.9 billion in originations and $56 million in loan purchases, partially offset by $1.3 billion in payoffs or scheduled payments [112]. - Total deposits rose by $1.2 billion, and total revenues increased by 22% compared to the six months ended June 30, 2020 [113]. - Net income for the three months ended June 30, 2021, was $26.1 million, up from $17.9 million in the same period in 2020, reflecting a significant increase in profitability [118]. - Income before taxes for the three months ended June 30, 2021, was $36.3 million, compared to $25.1 million in the prior year, driven by higher net interest income and lower provision for credit losses [118]. - Income before taxes for the first six months of 2021 was $67,550,000, up from $43,719,000 in 2020, marking a substantial increase of 54.5% [121]. - Net interest income for 2021 was $57,910,000, an increase from $48,447,000 in 2020, representing a growth of 19.1% [119]. - Noninterest income for the first six months of 2021 was $25,943,000, an increase from $19,644,000 in 2020, reflecting a growth of 32.1% [121]. - The provision for credit losses decreased significantly to $404,000 in 2021 from $5,431,000 in 2020, indicating improved asset quality [121]. Assets and Liabilities - Total assets increased to $7,459,348,000 in 2021 from $6,742,588,000 in 2020, representing a growth of 10.6% [123]. - Total liabilities and equity stood at $7,939,134 thousand as of June 30, 2021 [144]. - Shareholders' equity increased to $734,018 thousand as of June 30, 2021 [144]. - Total interest-bearing liabilities decreased to $3,945,338,000 in 2021 from $4,602,841,000 in 2020, a reduction of 14.3% [123]. - The total allowance for credit losses as of June 30, 2021, was $22,272,000, with $19,907,000 allocated for collectively evaluated loans [170]. Deposits and Loans - Deposits grew by $1.2 billion, including a $1.3 billion increase in commercial deposits and a $119 million increase in branch deposits [146]. - Loans and loans held for sale increased by $702 million during the six months ended June 30, primarily due to $1.9 billion in originations and $56 million in loan purchases, partially offset by payoffs of $1.2 billion [154]. - The loan-to-deposit ratio was 84.6% as of June 30, 2021, compared to 89.8% as of December 31, 2020 [178]. Operational Changes and Challenges - The COVID-19 pandemic has caused economic disruptions, impacting customer loan obligations and demand for services, with ongoing safety protocols in place [116]. - The company continues to operate under a Pandemic Response Business Continuity Plan, with approximately 20% of corporate employees working remotely [116]. - The company has implemented alternative procedures, such as electronic signatures, to maintain effective internal controls over financial reporting processes during the pandemic [116]. Mergers and Acquisitions - The proposed merger with TGR Financial is expected to close in the fourth quarter of 2021, subject to regulatory and shareholder approvals, with an exchange ratio of 0.6068 shares of FFI common stock for each share of TGR Financial common stock [114]. - The company intends to pursue growth opportunities, including the proposed acquisition of TGR Financial [189]. Expenses and Compensation - Compensation and benefit costs accounted for 57% of total noninterest expense in Banking and 77% in Wealth Management for the six months ended June 30, 2021 [117]. - Total noninterest expense for the six months ended June 30, 2021, was $57.4 million, up from $51.3 million in the same period of 2020, driven by increases in compensation and benefits [141]. - For the three months ended June 30, 2021, total noninterest expense was $28.9 million, an increase from $25.0 million in the same period of 2020, primarily due to higher compensation and benefits, professional services, and marketing expenses [140]. Capital and Liquidity - The company's CET1 capital ratio was 11.59% as of June 30, 2021, exceeding the regulatory requirement of 4.50% [183]. - The total risk-based capital ratio for the company was 12.17% as of June 30, 2021, surpassing the minimum requirement of 8.00% [183]. - The company had $14.4 million in available liquidity as of June 30, 2021, along with a revolving line of credit [186]. - The company’s liquidity management focuses on generating cash to meet funding needs, with available lines of credit totaling $3.0 billion as of June 30, 2021 [174].