First Foundation (FFWM)2024-10-30 02:00Financial Data and Key Metrics Changes - The company reported a net loss attributable to common shareholders of 1.23 per share for both basic and diluted shares [11] - Tangible book value per share ended the quarter at 16.43 in the previous quarter [11] - Net interest margin increased to 1.5% from 1.36% in the previous quarter [13] - Total deposits decreased to 10.8 billion in the previous quarter [15] - Non-performing assets to total assets ratio increased to 0.33% from 0.18% in the previous quarter [18] Business Line Data and Key Metrics Changes - Interest income totaled 150.9 million in the previous quarter [12] - C&I loans accounted for 90% of loan fundings during the quarter [19] - Loan balances ended the quarter at 10.1 billion in the previous quarter [19] - Wealth and trust-related fees remained stable at 4.3 billion [16] - Core non-brokered deposits increased to 64% from 62% in the previous quarter [15] - Non-interest-bearing demand deposits increased to 21% of total deposits from 20% in the previous quarter [15] Company Strategy and Development Direction - The company is focused on reducing exposure to low coupon fixed-rate loans and commercial real estate [7] - A balance sheet realignment involved moving 1.9 billion of multifamily loans from held for investment to available for sale [6] - The company plans to explore loan sales and securitizations in 2025 to unlock value [51][52] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the potential for reduced funding costs in the fourth quarter following the Federal Reserve's rate cut [10] - The company is committed to maintaining a disciplined approach to core expenses while pursuing strategic investments for future growth [47] - Management believes that the current economic environment presents opportunities for growth, particularly in C&I lending [60] Other Important Information - The company completed a 228 million capital raise during the quarter [6] - A 117.5 million charge related to the fair value adjustment on the multifamily loans was recorded [42] - The company is exploring direct private party loan sales to reduce fixed-rate asset exposure [55] Q&A Session Summary Question: Timeline for optimizing loans - Management indicated that there is no set timeline for optimizing loans but is willing to take time to ensure best execution [90][92] Question: Impact of ECR deposits on expenses - Management confirmed that ECR deposits are around 1.4 billion to $1.5 billion and will respond quickly to rate cuts [96] Question: Growth trajectory excluding multifamily move - Management plans to add bankers in key markets to enhance organic growth, particularly in C&I lending [99] Question: ACL methodology review - Management acknowledged a more pragmatic approach to ACL increases over time, balancing regulatory and accounting considerations [102] Question: Use of proceeds from securitization - Proceeds from securitization will be used to reduce exposure to wholesale funding [105]