First Foundation (US:FFWM)2022-07-26 20:22Financial Data and Key Metrics Changes - Earnings for Q2 2022 were $33.3 million or $0.59 per share, a 7% increase over Q1 2022 [5] - Total revenues reached $95.2 million, a 6% increase from Q1 2022 and a 32% increase year-over-year [5] - Tangible book value per share increased to $15.61 [5] - Return on assets was strong at 1.24% with a return on tangible common equity of 15.5% [20] - Net interest margin expanded by 18 basis points to 3.18% [21] - Non-interest income for the quarter was $13.4 million, primarily driven by wealth management revenues [23] Business Line Data and Key Metrics Changes - Loan originations totaled a record $2.2 billion, a 96% increase from Q1 2022 and a 98% increase year-over-year [27] - Wealth Management and Trust business contributed significantly, with assets under management ending at $4.8 billion [12] - Non-interest expense was $48.8 million, a slight increase of 2.5% from Q1 2022 [24] Market Data and Key Metrics Changes - Deposits increased by $581 million for the quarter, a 6.5% increase from Q1 2022 and a 34.2% increase year-over-year [34] - Non-interest-bearing deposits accounted for 38% of total deposit balances [36] - The loan-to-deposit ratio was 98.8% as of June 30, compared to 88.2% as of March 31 [36] Company Strategy and Development Direction - The company is focusing on organic growth opportunities while capitalizing on recent M&A activities [7] - Expansion efforts include entering the Florida market and opening a new branch in Texas [16][14] - The company aims to maintain a strong balance sheet and excellent credit quality in a rising rate environment [18] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds facing the industry but expressed confidence in the company's performance across all business lines [6] - The outlook remains positive with robust demand for services and a strong pipeline across business lines [18] - Management is optimistic about opportunities in the second half of 2022 [107] Other Important Information - The company repurchased $2.5 million of stock at a weighted average price of $21 per share [16] - The effective tax rate for Q2 was 27.9%, down from 28.4% in the prior quarter [26] - The company is investing in technology to enhance operational efficiency [16] Q&A Session Summary Question: Inquiry about interest-bearing deposit rates and deposit beta expectations - Management noted that the spot rate on total deposits dipped into the mid-30 basis point area near the end of the quarter and highlighted the unprecedented increase in the rate environment [38][40] Question: Update on loan yields and multifamily pricing - Loan yields increased, with multifamily rates averaging mid-4s, and management expects to see benefits in the latter half of the year [44][45] Question: Competitive landscape in Texas and Florida - Management discussed strong demand for multifamily products in Florida and Texas, with significant pipeline growth [67][70] Question: Expectations for organic growth and loan growth rates - Management expects low to mid-20s loan growth rate for next year, emphasizing the strength of the lending team [77] Question: Update on the Nidec partnership and rollout - The integration is on track, with an internal employee pilot currently underway [78] Question: Impact of hiring plans on expansion in Texas and Florida - Management confirmed that hiring will continue as needed to support expansion efforts [85]