First Foundation (US:FFWM)2021-11-05 17:34Financial Performance - For the three months ended September 30, 2021, net income was $37.2 million, an increase from $30.9 million in the same period of 2020, representing a 20.8% growth [118]. - Income before taxes for the three months ended September 30, 2021, was $51.9 million, up from $43.1 million in 2020, reflecting an increase of $8.8 million or 20.4% [118]. - For the nine months ended September 30, 2021, net income was $85.6 million, compared to $62.0 million in 2020, marking a 37.7% increase [120]. - Noninterest income for the three months ended September 30, 2021, was $30.680 million, compared to $23.641 million in 2020, showing a significant increase of 29.6% [118]. - Net interest income for the nine months ended September 30, 2021, was $171.326 million, compared to $144.932 million in 2020, reflecting an increase of 18.1% [120]. Loan and Deposit Growth - Total loans increased by $501 million in the nine months ended September 30, 2021, due to $2.7 billion in originations and $56 million in loan purchases, partially offset by $1.8 billion in payoffs and $419 million in loan sales [112]. - Total deposits rose by $932 million, and total revenues increased by 21% compared to the nine months ended September 30, 2020 [113]. - Deposits grew by $932 million, with commercial deposits increasing by $1.1 billion, while wholesale deposits decreased by $223 million [143]. - The company reported a net increase of $932 million in deposits during the nine months ended September 30, 2021 [174]. Asset Management - The company reported a total of $7.935 billion in assets as of September 30, 2021, up from $7.018 billion in 2020, representing a growth of 13.0% [122]. - Total assets increased by $778 million during the nine months ended September 30, 2021, primarily due to an increase in loans and cash [141]. - Total Assets Under Management (AUM) increased by $502 million (10.2%) during the nine months ended September 30, 2021, resulting from $344 million in new accounts and $362 million in portfolio gains, offset by $204 million in terminations and net withdrawals [134]. Credit Quality - The provision for credit losses decreased to $(417) thousand in Q3 2021 from $1.548 million in Q3 2020, indicating improved credit quality [118]. - The total allowance for credit losses (ACL) related to loans was $20,985,000 as of September 30, 2021, down from $24,200,000 as of December 31, 2020 [167]. - The ACL represented 0.40% of total loans outstanding as of September 30, 2021, compared to 0.50% as of December 31, 2020 [160]. Operational Changes - The COVID-19 pandemic has caused significant economic disruptions, affecting customer loan obligations and demand for services, with approximately 20% of corporate employees still working remotely [116]. - The company continues to implement safety protocols and alternative procedures, such as electronic signatures, to maintain effective internal controls over financial reporting [116]. - The company’s financial condition at September 30, 2021, is compared to December 31, 2020, indicating significant changes in operations [112]. Expenses and Staffing - Compensation and benefit costs accounted for 57% of total noninterest expense in Banking and 78% in Wealth Management for the nine months ended September 30, 2021 [117]. - Noninterest expense for Wealth Management for the nine months ended September 30, 2021 was $17.441 million, compared to $16.735 million in the same period in 2020, indicating a 4.2% increase [138]. - Noninterest expenses for Wealth Management increased by $1.2 million (24.5%) in Q3 2021 compared to Q3 2020, mainly due to higher compensation and benefits [138]. - The number of Full-Time Equivalents (FTE) in Banking increased to 485.0 in Q3 2021 from 424.8 in Q3 2020, reflecting staffing growth to support increased loans and deposits [137]. Capital and Liquidity - FFB's CET1 capital ratio was 11.31% as of September 30, 2021, with actual capital amounting to $666.68 million, exceeding the required ratio of 4.50% [180]. - The total risk-based capital ratio for FFB was 11.71% as of September 30, 2021, with actual capital of $698.42 million, surpassing the minimum requirement of 8.00% [180]. - FFB had $23.4 million of available liquidity as of September 30, 2021, along with a revolving line of credit, indicating strong financial resources [183]. Future Outlook - The proposed merger with TGR Financial is expected to close in the fourth quarter of 2021, subject to regulatory approvals, with an exchange ratio of 0.6068 shares of FFI common stock for each share of TGR Financial common stock [114]. - The company expects continued growth in total assets as a result of its growth strategy in banking operations [140]. - The company intends to explore opportunities for growth, which may include opening additional offices or acquiring complementary businesses [186].