First Foundation Inc. - FORM 8-K - EX-99.1

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8-K - 8-K - First Foundation Inc.	d51443d8k.htm

Exhibit 99.1

First Foundation Announces 2015 Third Quarter Earnings

•

Completion of public offering provides capital for continued growth

•

Revenue growth in excess of 20%

•

Book value per share up 26% year to date

IRVINE, CA – First Foundation Inc. (NASDAQ: FFWM), a financial services company with two wholly-owned operating subsidiaries, First Foundation Advisors and First Foundation Bank, which collectively provide investment management, wealth planning, consulting, insurance, trust and banking services primarily to high net-worth individuals and businesses, today reported its financial results for the quarter ended September 30, 2015.

“First Foundation continued to deliver positive results in the third quarter while making material investments in our people, products, and technology” said CEO Scott F. Kavanaugh. “I am pleased with the growth opportunities that exist in all areas of the platform.”

Financial Highlights

•

The Company completed a public offering of common stock in August 2015, raising $131 million (net of underwriters discount and offering expenses). The Company used a portion of the proceeds to pay off our $30 million term loan. This offering increased the Company’s share count by approximately 80%, impacting the comparability of the earnings per share results;

•

Net income for the quarter ended September 30, 2015 was $2.8 million, or $0.21 per fully diluted share, as compared to $2.7 million, or $0.32 per fully diluted share for the quarter ended September 30, 2014, an increase of 4%. For the nine months ended September 30, 2015, net income was $8.3 million, or $0.84 per fully diluted share, as compared to $5.4 million, or $0.66 per fully diluted share for the nine months ended September 30, 2014, an increase of 55%;

•

Total revenues, which consist of net interest income and noninterest income, increased by 25% and 22%, respectively, for the quarter and nine months ended September 30, 2015 as compared to the corresponding periods in 2014;

•

Total loans increased by $479 million in the first nine months of 2015, equivalent to an annualized growth rate of 45%;

•

Tangible book value increased from $12.66 per share at December 31, 2014 to $15.96 per share at September 30, 2015; and

•

To support the Company’s continuing growth and to leverage the additional capital raised in the public offering, First Foundation has made significant investments in staffing. As a result, noninterest expenses increased 29% during the third quarter of 2015 when compared to the third quarter of 2014, due primarily to a 27% increase in total employees during 2015; in addition, included in noninterest expenses are $0.3 million of one-time costs related to the Pacific Rim Bank acquisition.

About First Foundation

First Foundation, a financial institution founded in 1990, provides integrated investment management, wealth planning, consulting, insurance, trust and banking services. The Company is headquartered in Irvine, California with offices in Newport Beach, Pasadena, West Los Angeles, Oakland, San Diego, Palm Desert and the Imperial Valley in California, in Las Vegas, Nevada and in Honolulu, Hawaii. For more information, please visit our website at www.ff-inc.com.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” The forward looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward looking statements contained in this news release and could cause us to make changes to our future plans. Those risks and uncertainties include, but are not limited to, the risk of incurring loan losses, which is an inherent risk of the banking business; the risk that the economic recovery in the United States will stall or will be adversely affected by domestic or international economic conditions and the risk that the Federal Reserve Board will continue to keep interest rates low, any of which could adversely affect our interest income and interest rate margins and, therefore, our future operating results; the risk that the performance of our investment management business or of the equity and bond markets could lead clients to move their funds from or close their investment accounts with us, which would reduce our assets under management and adversely affect our operating results; and the risk that we do not successfully integrate Pacific Rim Bank’s business and customers or otherwise fail to achieve anticipated business enhancements related to the acquisition. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in Item 1A, entitled “Risk Factors” in our 2014 Annual Report on Form 10-K for the fiscal year ended December 31, 2014 that we filed with the SEC on March 16, 2015, and other documents we file with the SEC from time to time. We urge readers of this news release to review the Risk Factors section of that Annual Report. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today’s date, or to make predictions based solely on historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this news release or in the above-referenced 2014 Annual Report on Form 10-K, whether as a result of new information, future events or otherwise, except as may be required by law or NASDAQ rules.

Contact:

John Michel

Chief Financial Officer

First Foundation Inc.

949-202-4160

Email: jmichel@ff-inc.com

FIRST FOUNDATION INC.

CONSOLIDATED BALANCE SHEETS - Unaudited

(in thousands, except share and per share amounts)


	September 30, 2015			December 31, 2014
ASSETS

Cash and cash equivalents	$	206,338		$	29,692
Securities available-for-sale (“AFS”)		360,559			138,270
Loans held for sale		108,903			—

Loans, net of deferred fees		1,536,005			1,166,392
Allowance for loan and lease losses (“ALLL”)		(11,300	)		(10,150	)

Net loans		1,524,705			1,156,242

Investment in FHLB stock		17,820			12,361
Deferred taxes		11,969			9,748
Premises and equipment, net		2,397			2,187
Real estate owned (“REO”)		4,492			334
Goodwill and intangibles		2,481			197
Other assets		9,083			6,393

Total Assets	$	2,248,747		$	1,355,424

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Deposits	$	1,321,527		$	962,954
Borrowings		660,000			282,886
Accounts payable and other liabilities		9,924			10,088

Total Liabilities		1,991,451			1,255,928

Commitments and contingencies		—			—

Shareholders’ Equity
Common Stock, par value $.001: 20,000,000 shares authorized; 15,962,686 and 7,845,182 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively		16			8
Additional paid-in-capital		226,796			78,204
Retained earnings		28,714			20,384
Accumulated other comprehensive income, net of tax		1,770			900

Total Shareholders’ Equity		257,296			99,496

Total Liabilities and Shareholders’ Equity	$	2,248,747		$	1,355,424

FIRST FOUNDATION INC.

CONSOLIDATED INCOME STATEMENTS - Unaudited

(in thousands, except share and per share amounts)


	For the Quarter Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
Interest income:
Loans	$	15,634	$	11,404	$	41,097	$	31,735
Securities		1,107		799		2,744		1,741
FHLB Stock, fed funds sold and deposits		367		181		1,418		514

Total interest income		17,108		12,384		45,259		33,990

Interest expense:
Deposits		1,328		953		3,366		2,595
Borrowings		319		284		1,137		682

Total interest expense		1,647		1,237		4,503		3,277

Net interest income		15,461		11,147		40,756		30,713
Provision for loan losses		570		—		1,473		235

Net interest income after provision for loan losses		14,891		11,147		39,283		30,478

Noninterest income:
Asset management, consulting and other fees		5,870		5,812		17,642		16,053
Other income		998		925		1,850		2,651

Total noninterest income		6,868		6,737		19,492		18,704

Noninterest expense:
Compensation and benefits		10,870		8,764		29,440		25,278
Occupancy and depreciation		2,561		1,867		6,486		5,499
Professional services and marketing costs		1,481		1,192		4,051		4,540
Other expenses		2,044		1,272		4,311		4,195

Total noninterest expense		16,956		13,095		44,288		39,512

Income before taxes on income		4,803		4,789		14,487		9,670
Taxes on income		2,041		2,130		6,157		4,282

Net income	$	2,762	$	2,659	$	8,330	$	5,388

Net income per share:
Basic	$	0.22	$	0.34	$	0.87	$	0.70
Diluted	$	0.21	$	0.32	$	0.84	$	0.66
Shares used in computation:
Basic		12,623,924		7,735,350		9,534,056		7,734,372
Diluted		13,074,935		8,240,424		9,926,445		8,188,633

FIRST FOUNDATION INC.

SELECTED FINANCIAL INFORMATION - Unaudited

(in thousands, except share and per share amounts)


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
Selected Income Statement Data:
Net interest income	$	15,461		$	11,147		$	40,756		$	30,713
Provision for loan losses		570			—			1,473			235
Noninterest Income:
Asset management, consulting and other fees		5,870			5,812			17,642			16,053
Other		998			925			1,850			2,651
Noninterest expense		16,956			13,095			44,288			39,512
Income before taxes		4,803			4,789			14,487			9,670
Net income		2,762			2,659			8,330			5,388
Net income per share:
Basic	$	0.22		$	0.34		$	0.87		$	0.70
Diluted		0.21			0.32			0.84			0.66
Selected Performance Ratios:
Return on average assets - annualized		0.59	%		0.87	%		0.68	%		0.63	%
Return on average equity - annualized		5.8	%		11.5	%		8.1	%		7.9	%
Net yield on interest-earning assets		3.43	%		3.73	%		3.45	%		3.68	%
Efficiency ratio ⁽²⁾		75.9	%		73.1	%		73.5	%		77.6	%
Noninterest income as a % of total revenues		30.8	%		37.8	%		32.4	%		37.8	%
Other Information:
Loan originations	$	213,489		$	150,386		$	626,128		$	389,890
Charge-offs to average loans - annualized		0.00	%		—	%		0.03	%		—	%


	September 30, 2015			December 31, 2014
Selected Balance Sheet Data:
Cash and cash equivalents	$	206,338		$	29,692
Loans, net of deferred fees		1,536,005			1,166,392
Allowance for loan and lease losses (“ALLL”)		(11,300	)		(10,150	)
Total assets		2,248,747			1,355,424
Noninterest-bearing deposits		322,859			246,137
Interest-bearing deposits		998,668			716,817
Borrowings - FHLB Advances		660,000			263,000
Borrowings – term note		—			19,886
Shareholders’ equity		257,296			99,496
Selected Capital Data:
Tangible common equity to tangible assets⁽¹⁾		11.34	%		7.33	%
Tangible book value per share⁽¹⁾	$	15.96		$	12.66
Shares outstanding at end of period		15,962,686			7,845,182
Other Information:
Assets under management (end of period)	$	3,294,677		$	3,221,674
Number of employees		269			211
Loan to deposit ratio		123.6	%		118.9	%
Nonperforming assets to total assets		0.29	%		0.11	%
Ratio of ALLL to loans⁽³⁾		0.76	%		0.87	%

(1)	Tangible common equity, (also referred to as tangible book value) and tangible assets, are equal to common equity and assets, respectively, less $2.5 million and $0.2 million of intangible assets as of September 30, 2015 and December 31, 2014, respectively.

(2)	The efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income.

(3)	This ratio excludes loans acquired in an acquisition as GAAP requires estimated credit losses for acquired loans to be recorded as discounts to those loans.

FIRST FOUNDATION INC.

SEGMENT REPORTING - Unaudited

(in thousands)


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
Banking:
Interest income	$	17,108		$	12,384		$	45,259		$	33,990
Interest expense		1,509			1,014			3,829			2,753

Net interest income		15,599			11,370			41,430			31,237
Provision for loan losses		570			—			1,473			235
Noninterest income		1,839			967			4,501			2,780
Noninterest expense		11,653			8,216			28,138			22,773

Income before taxes on income	$	5,215		$	4,919		$	16,320		$	12,923

Wealth Management:
Noninterest income	$	5,171		$	5,113		$	15,426		$	14,400
Noninterest expense		4,685			4,351			13,950			13,576

Income before taxes on income	$	486		$	762		$	1,476		$	824

Other and Eliminations:
Interest income	$	—		$	—		$	—		$	—
Interest expense		138			223			674			524

Net interest income		(138	)		(223	)		(674	)		(524	)
Noninterest income		(142	)		(141	)		(435	)		(390	)
Noninterest expense		618			528			2,200			3,163

Income before taxes on income	$	(898	)	$	(892	)	$	(3,309	)	$	(4,077	)

FIRST FOUNDATION INC.

ROLLING INCOME STATEMENTS - Unaudited

(in thousands)


	For the Quarter Ended
	September 30, 2014		December 31, 2014		March 31, 2015		June 30, 2015		September 30, 2015
Interest income:
Loans	$	11,404	$	12,405	$	12,101	$	13,362	$	15,634
Securities		799		804		815		822		1,107
FHLB Stock, fed funds sold and deposits		181		199		242		809		367

Total interest income		12,384		13,408		13,158		14,993		17,108

Interest expense:
Deposits		953		991		923		1,115		1,328
Borrowings		284		316		364		454		319

Total interest expense		1,237		1,307		1,287		1,569		1,647

Net interest income		11,147		12,101		11,871		13,424		15,461

Provision for loan losses		—		—		150		753		570

Net interest income after provision for loan losses		11,147		12,101		11,721		12,671		14,891

Noninterest income:
Asset management, consulting and other fees		5,812		5,745		5,850		5,922		5,870
Other income		925		300		354		498		998

Total noninterest income		6,737		6,045		6,204		6,420		6,868

Noninterest expense:
Compensation and benefits		8,764		8,272		9,180		9,390		10,870
Occupancy and depreciation		1,867		1,826		1,957		1,968		2,561
Professional services and marketing costs		1,192		1,455		1,058		1,512		1,481
Other expenses		1,272		1,442		1,163		1,104		2,044

Total noninterest expense		13,095		12,995		13,358		13,974		16,956

Income before taxes on income		4,789		5,151		4,567		5,117		4,803
Taxes on income		2,130		2,145		1,941		2,175		2,041

Net income	$	2,659	$	3,006	$	2,626	$	2,942	$	2,762

Net income per share:
Basic	$	0.34	$	0.39	$	0.33	$	0.36	$	0.22
Diluted	$	0.32	$	0.37	$	0.32	$	0.35	$	0.21
Shares used in computation:
Basic		7,735,350		7,744,940		7,855,457		8,070,386		12,623,924
Diluted		8,240,424		8,195,144		8,211,145		8,425,029		13,074,935

FIRST FOUNDATION INC.

SELECTED INFORMATION: INTEREST MARGIN - Unaudited

(in thousands)


	For the Quarter Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
Average Balances:
Loans	$	1,562,960		$	1,038,829		$	1,378,191		$	978,725
Securities		190,107			133,430			154,538			96,111
Deposits		1,298,268			906,865			1,120,730			855,415
Borrowings		334,022			206,320			334,260			178,709

Average Yield / Rate
Loans		4.00	%		4.39	%		3.98	%		4.33	%
Securities		2.33	%		2.37	%		2.37	%		2.42	%
Deposits		0.41	%		0.42	%		0.40	%		0.41	%
Borrowings		0.38	%		0.55	%		0.45	%		0.51	%

Net Interest Rate Spread		3.30	%		3.58	%		3.33	%		3.54	%

Net Yield on Interest-earning Assets		3.43	%		3.73	%		3.45	%		3.68	%

First Foundation Inc. - FORM 8-K - EX-99.1 - October 23, 2015

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