First Foundation (US:FFWM)2023-11-07 16:00Financial Position - As of September 30, 2023, the company reported total assets of $13.1 billion, a slight increase from $13.0 billion at December 31, 2022, primarily due to a $0.6 billion increase in available-for-sale investment securities[122] - Total liabilities increased to $12.1 billion, up from $11.9 billion at year-end 2022, driven by a $0.4 billion increase in deposits[123] - Shareholders' equity decreased to $0.9 billion from $1.1 billion, largely due to a net loss of $201.6 million for the nine months ended September 30, 2023, which included a $215.3 million goodwill impairment charge[124] - The company’s total liabilities included $10.8 billion in deposits and $1.2 billion in borrowings and subordinated debt as of September 30, 2023[123] - The total assets as of September 30, 2023, were $12.9 billion, compared to $11.8 billion as of September 30, 2022[137] - The total liabilities and equity stood at $13,051,564 as of September 30, 2023[159] Loans and Credit Quality - Total loans decreased by $0.4 billion to $10.3 billion, with $1.2 billion in loan originations offset by $1.6 billion in loan payoffs and paydowns during the nine months ended September 30, 2023[122] - The loan portfolio is concentrated in California (73.2%), Florida (8.9%), and Texas (3.7%), with 85.8% of loans made to borrowers in these states[171] - The estimated fair value of total loans was $10.28 billion as of September 30, 2023[169] - The total past due loans amounted to $38.247 million, which is 0.37% of total loans, compared to $31.087 million or 0.29% as of December 31, 2022[181] - The provision for credit losses for the three months ended September 30, 2023, was a reversal of $1.922 million, with total charge-offs of $1.183 million and recoveries of $815 thousand[183] - The ACL for loans decreased by $4.5 million from December 31, 2022, to September 30, 2023, indicating improved credit quality[184] Income and Expenses - Combined net income for Q3 2023 was $2.2 million, a decrease of $26.8 million compared to $29.0 million in Q3 2022[129] - Net interest income decreased by $35.7 million in the Banking segment, contributing to a total net income before taxes decline of $39.3 million[129] - Wealth Management net income before taxes increased to $2.3 million in Q3 2023 from $0.5 million in Q3 2022, driven by a $0.7 million increase in noninterest income[129] - For the nine months ended September 30, 2023, the combined net loss was $201.6 million, compared to a net income of $93.2 million for the same period in 2022[131] - The $329.2 million decrease in net income before taxes was primarily due to a $215.3 million goodwill impairment charge recorded in Q2 2023[131] - Noninterest income for Banking decreased to $4.6 million in Q3 2023 from $5.7 million in Q3 2022, a decline of 19.8%[146] Dividends and Shareholder Returns - The company announced a quarterly cash dividend of $0.01 per common share, to be paid on November 16, 2023[125] - The Company paid a total of $8.5 million in dividends during the nine months ended September 30, 2023, including $6.2 million for Q4 2022 and $2.2 million for Q1 and Q2 2023[206] - The Company paid $24.8 million in dividends ($0.44 per share) in 2022[207] - The total amount of dividends and stock repurchases is limited to 50% of FFI's net income for the current twelve-month period[207] Liquidity and Capital - The available liquidity ratio was 34.8%, exceeding the minimum policy requirement of 25%[190] - As of September 30, 2023, the CET1 capital ratio was 9.70%, exceeding the required 4.50% for well-capitalized status[203] - FFB's total risk-based capital ratio was 11.66% as of September 30, 2023, above the required 8.00%[203] - The company had secured unused borrowing capacity of $880.7 million under the Federal Reserve Bank credit line and $2.0 billion with the FHLB[188] Investment Activities - Investing activities used net cash of $106.9 million, primarily due to $617.5 million in purchases of U.S. Treasury and GNMA mortgage-backed securities[193] - The company did not make any purchases of investment securities during the nine months ended September 30, 2023[166] Operational Efficiency - Customer service costs and compensation and benefits accounted for 38% and 31% of total combined noninterest expenses, respectively[126] - Noninterest expense in Banking for Q3 2023 was $58.0 million, an increase of 8.4% from $53.6 million in Q3 2022[151] - Average Banking full-time equivalents (FTEs) decreased to 508.5 in Q3 2023 from 648.7 in Q3 2022, reflecting staffing reductions[153] Market Conditions and Risks - The Company is exposed to financial risks, particularly interest rate risk, as detailed in its Annual Report on Form 10-K[209] - The company’s management estimates of expected credit losses are influenced by historical charge-off experience and current economic conditions, which may lead to future adjustments[185]