First Foundation (US:FFWM)2025-11-10 21:32Financial Performance - For the quarter ended September 30, 2025, the Company reported a net loss of $146.3 million, compared to net losses of $7.7 million and $82.2 million for the prior and year-ago quarters, respectively [154]. - Revenue totaled $63.6 million for the quarter ended September 30, 2025, compared to $51.4 million and ($56.5 million) for the prior and year-ago quarters, respectively [154]. - Noninterest income totaled $17.5 million for the quarter ended September 30, 2025, compared to $1.3 million and ($105.6 million) for the prior and year-ago quarters, respectively [154]. - The combined net loss for the third quarter of 2025 was $146.3 million, compared to a net loss of $82.2 million for the same quarter in 2024 [162]. - Net interest income for the nine-month period ended September 30, 2025, increased by $16.6 million to $148.0 million compared to $131.3 million in the prior year [168]. - Net interest income for the third quarter of 2025 was $46.1 million, down from $49.1 million in the same quarter of the previous year [174]. - Interest income decreased to $134.7 million for Q3 2025, down from $157.2 million in Q3 2024, a decrease of 14.8% [175]. - Noninterest income for Banking was $10.8 million for Q3 2025, compared to a loss of $112.9 million for the year-ago quarter, which included a $117.5 million LOCOM adjustment [183]. Credit Losses and Provisions - Provision for credit losses totaled $65.0 million for the quarter ended September 30, 2025, compared to $2.4 million and $0.3 million for the prior and year-ago quarters, respectively [154]. - The provision for credit losses for the third quarter of 2025 was $65.0 million, significantly higher than $0.3 million for the year-ago quarter, reflecting changes in accounting estimates [163]. - For the nine-month period ended September 30, 2025, the total provision for credit losses was $70.8 million, a significant increase from $53 thousand in the prior year [169]. - The provision for credit losses for loans included $69.6 million in provision expense, with net charge-offs of $0.9 million, representing 0.01% of average loans on an annualized basis [169]. - The allowance for credit losses (ACL) for loans held for investment was $101.9 million as of September 30, 2025, compared to $29.3 million at the same date in 2024 [232]. - The total past due and nonaccrual loans amounted to $68.5 million as of September 30, 2025, representing 0.94% of total loans [228]. Assets and Liabilities - Total assets decreased by $0.7 billion or 5.8% at September 30, 2025, compared to December 31, 2024, largely due to a $1.5 billion decrease in total loans [155]. - As of September 30, 2025, total liabilities decreased by $0.6 billion or 5.2% to $11.0 billion, primarily due to a $0.6 billion decrease in deposits [156]. - Total shareholders' equity declined to $0.9 billion from $1.1 billion at December 31, 2024, with a net loss of $147.1 million during the nine-month period ended September 30, 2025 [157]. - The company reported $1,063.4 million in shareholders' equity as of September 30, 2025, compared to $1,188.7 million at December 31, 2024 [195]. - Total deposits decreased by approximately $577 million to $9.3 billion as of September 30, 2025, compared to $9.9 billion at December 31, 2024 [217]. Mergers and Acquisitions - The Company executed a merger agreement with FirstSun Capital Bancorp, with an estimated transaction value of $785 million [145]. - Following the merger, FirstSun stockholders will own 59.5% and FFI stockholders will own 40.5% of the combined company [145]. Loan Portfolio - The Company had total loans of $7.7 billion at September 30, 2025, down from $9.2 billion at December 31, 2024 [155]. - Loans held for investment decreased by $639 million, with loan fundings totaling $700 million offset by loan payments and payoffs of $1.4 billion [209]. - Multifamily loans accounted for $3.27 billion, representing 44.8% of total loans as of September 30, 2025, up from 42.1% at December 31, 2024 [208]. - The loan portfolio included $3.3 billion in multifamily loans, with an average current loan-to-value (LTV) ratio of 53.7% [210]. - The loan portfolio also comprised $824 million in single-family residential real estate loans, with an average current LTV ratio of 53.6% [211]. Capital and Liquidity - As of September 30, 2025, FFB's common equity tier 1 ratio was 13.14%, significantly exceeding the minimum requirement of 4.50% for well-capitalized institutions [259]. - FFB's total risk-based capital ratio was 14.39% as of September 30, 2025, well above the required minimum of 8.00% [259]. - The company maintained capital ratios necessary to satisfy capital conservation buffer requirements as of the indicated dates [260]. - The available liquidity ratio was 51.4% as of September 30, 2025, exceeding the minimum policy requirement of 25% [239]. - The Bank's liquidity management includes maintaining lines of credit with the FHLB, Federal Reserve Bank, and correspondent banks to address unplanned funding needs [236][239]. Expenses - The total noninterest expense for Banking was $50.2 million for Q3 2025, a decrease of $3.0 million compared to $53.2 million in Q3 2024, primarily due to a $9.9 million reduction in customer service costs [190]. - Compensation and benefits expense in Banking increased by $11.3 million for the nine-month period ended September 30, 2025, compared to the prior year, driven by increased staffing levels [192]. - Wealth Management's noninterest expense rose to $6.4 million in Q3 2025, up from $5.8 million in Q3 2024, largely due to a $0.7 million increase in compensation and benefits [191]. Future Outlook - The company may seek additional borrowings or sell shares to fund future growth opportunities, subject to market conditions [263]. - The company has no material commitments for capital expenditures as of September 30, 2025, but plans to pursue growth opportunities through potential acquisitions or new office openings [263].