First Foundation (US:FFWM)2022-05-09 18:11Part I. Financial Information Financial Statements The unaudited consolidated financial statements for Q1 2022 present the company's financial position, performance, and cash flows, with notes detailing key accounting policies and the TGR Financial acquisition Consolidated Financial Statements First Foundation Inc. reported $10.47 billion in total assets and $30.8 million net income for Q1 2022, driven by loan growth, despite a $190.0 million net cash outflow from increased lending Consolidated Balance Sheet Highlights (unaudited) | Account | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Assets | $10,474,796 | $10,196,204 | | Net Loans | $7,364,642 | $6,872,952 | | Total Deposits | $8,957,518 | $8,811,960 | | Total Liabilities | $9,392,221 | $9,132,153 | | Total Shareholders' Equity | $1,082,575 | $1,064,051 | Consolidated Income Statement Highlights (unaudited) | Metric | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Net Interest Income | $74,494 | $54,229 | | Provision for Credit Losses | ($792) | $360 | | Noninterest Income | $15,427 | $11,908 | | Noninterest Expense | $47,618 | $34,511 | | Net Income | $30,836 | $22,355 | | Diluted EPS | $0.55 | $0.50 | Consolidated Cash Flow Summary (unaudited) | Cash Flow Activity | Three Months Ended March 31, 2022 (in thousands) | Three Months Ended March 31, 2021 (in thousands) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $40,339 | $32,619 | | Net Cash used in Investing Activities | ($483,366) | ($265,075) | | Net Cash from Financing Activities | $252,980 | $70,775 | | Decrease in Cash | ($190,047) | ($161,681) | Notes to the Consolidated Financial Statements These notes detail significant accounting policies, the TGRF acquisition, the $917 million securities transfer, $7.4 billion loan portfolio growth, and subsequent events like the $0.11 dividend and $75 million stock repurchase program - The TGR Financial, Inc. acquisition was completed on December 17, 2021, for $283 million, primarily in stock, and accounted for under the purchase method, recognizing goodwill353637 - Effective January 1, 2022, $917 million in securities were transferred from available-for-sale (AFS) to held-to-maturity (HTM) at amortized cost73 Loan Portfolio Composition | Loan Category | March 31, 2022 (in thousands) | December 31, 2021 (in thousands) | | :--- | :--- | :--- | | Total Real Estate Loans | $5,619,195 | $5,284,728 | | Commercial and Industrial Loans | $1,754,279 | $1,598,422 | | Consumer Loans | $9,760 | $10,834 | | Total Loans (Principal Balance) | $7,383,234 | $6,893,984 | - Post-quarter, on April 26, 2022, a $0.11 per share quarterly cash dividend was declared, and a new $75 million stock repurchase program was authorized118119 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes Q1 2022 financial performance, highlighting a 37% increase in net interest income from loan growth, a provision reversal, and robust capital ratios well above regulatory requirements Results of Operations Q1 2022 net income rose to $30.8 million, driven by a $20.3 million increase in net interest income and a $0.8 million provision reversal, despite higher noninterest expenses post-TGRF acquisition Net Interest Income Analysis (Q1 2022 vs Q1 2021) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net Interest Income | $74,494 thousand | $54,229 thousand | | Net Interest Margin | 3.00% | 3.16% | | Avg. Interest-Earning Assets | $9,939,673 thousand | $6,870,328 thousand | | Cost of Interest-Bearing Liabilities | 0.32% | 0.45% | - The reversal of provision for credit losses in Q1 2022 stemmed from an improved economic scenario outlook146 - Wealth Management noninterest income increased by $1.4 million year-over-year due to higher billable AUM, though total AUM decreased by $225 million to $5.46 billion due to market performance149150151 Financial Condition Total assets grew to $10.47 billion by March 31, 2022, driven by a $491 million increase in loans, funded by deposits and borrowings, while the loan-to-deposit ratio rose to 88% - Total loans and loans held for sale increased by $491 million in Q1 2022, driven by $1.1 billion in originations, partially offset by $657 million in payoffs and payments157167 - Total deposits grew by $146 million in Q1 2022, primarily due to an increase in corporate deposits157 - Borrowings increased by $116 million in Q1 2022, mainly from the issuance of $150 million in subordinated debt157 Credit Quality and Allowance for Credit Losses Credit quality remained stable, with past due and nonaccrual loans at 0.24% of total loans, and the Allowance for Credit Losses (ACL) decreasing to $32.8 million or 0.44% of total loans Credit Quality Metrics | Metric | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total Past Due & Nonaccrual Loans | $17,501 thousand | $13,656 thousand | | % of Total Loans | 0.24% | 0.20% | | Allowance for Credit Losses (ACL) | $32,822 thousand | $33,776 thousand | | ACL as % of Total Loans | 0.44% | 0.49% | Liquidity and Capital Resources The company maintained strong liquidity with $3.2 billion in credit lines and robust capital, with both FFI and FFB exceeding all regulatory requirements and FFB being well-capitalized Key Capital Ratios (FFI Consolidated) | Ratio | March 31, 2022 | Regulatory Minimum for Adequacy | | :--- | :--- | :--- | | CET1 Capital Ratio | 10.98% | 4.50% | | Tier 1 Leverage Ratio | 8.52% | 4.00% | | Tier 1 Risk-Based Capital Ratio | 10.98% | 6.00% | | Total Risk-Based Capital Ratio | 13.68% | 8.00% | - As of March 31, 2022, FFB's capital ratios exceeded minimums to qualify as a well-capitalized depository institution199 Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in the company's quantitative and qualitative disclosures about market risk since the December 31, 2021 Annual Report on Form 10-K - No material changes occurred in the company's quantitative and qualitative disclosures about market risk since December 31, 2021205 Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022208 - No material changes were made to the internal control over financial reporting during Q1 2022209 Part II. Other Information Risk Factors No material changes occurred in the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021 - No material changes occurred in the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021211 Unregistered Sales of Equity Securities and Use of Proceeds A new $75 million stock repurchase program was authorized on April 26, 2022, replacing a prior authorization, with no shares repurchased during Q1 2022 - A new $75 million stock repurchase program was authorized on April 26, 2022, replacing the prior 2018 program212 Exhibits This section lists all exhibits filed with or incorporated by reference into the Form 10-Q, including corporate governance documents and CEO/CFO certifications - The report lists filed exhibits, including CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and Inline XBRL data files216