- Record loan and deposit growth
- Earnings per share of $0.20
- Revenue growth of 35%
IRVINE, Calif.--(BUSINESS WIRE)--First Foundation Inc. (NASDAQ: FFWM), a financial services company with two wholly-owned operating subsidiaries, First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB”), announced today its financial results for the quarter and six months ended June 30, 2016.
“We are pleased with this quarter’s financial results,” said Scott F. Kavanaugh, CEO. “Our banking business experienced record growth and our wealth management business demonstrated resiliency in the face of a volatile market environment.”
John Hakopian, President of First Foundation Advisors, stated, “The market uncertainty in the second quarter posed challenges in growing assets under management and revenues. Despite this, we were able to bring in new clients, manage our costs and maintain profitability in the second quarter.”
- Loans and loans held for sale increased $707 million during the first six months of 2016 due to record originations of $520 million and $899 million during the quarter and six months ended June 30, 2016. Due to the success of our specialty deposit group in raising deposits and growth in deposits at our branches, we experienced record growth in deposits of $492 million and $743 million during the quarter and six months ended June 30, 2016.
- Net income for the second quarter of 2016 increased 13% as compared to the second quarter of 2015. Net income for the second quarter of 2016 was $3.3 million or $0.20 per fully diluted share, as compared to $2.9 million, or $0.35 per fully diluted share for the second quarter of 2015. Net income for the first six months of 2016 increased 28% as compared to the first six months of 2015. Net income for the first six months of 2016 was $7.1 million or $0.43 per fully diluted share, as compared to $5.6 million, or $0.67 per fully diluted share for the first six months of 2015. The comparability of earnings per share is impacted by the approximately 80% increase in share count resulting from the public offering completed in the third quarter of 2015.
- The Company entered an agreement to sell $265 million of loans secured by multifamily properties which provided for changes in pricing based upon changes in rates on certain treasury swap indices. In an effort to reduce the interest rate risk associated with this agreement, the Company entered into a swap agreement. Effective June 20, 2016, in conjunction with the finalization of pricing under the agreement, the Company closed out its swap position. As a result of changes in interest rates, the Company paid $2.4 million, including fees, to counterparties under the swap agreement, and the pricing to be received by the Company on the loan sale increased by $2.2 million. Because the swap agreement closed during the second quarter, the Company recognized an after tax expense of $1.4 million, which is equivalent to $0.08 per fully diluted share. This sale of loans is expected to close on July 28, 2016.
- Total revenues, which consist of net interest income and noninterest income, increased by $7.0 million or 35% in the second quarter of 2016 as compared to the second quarter of 2015 as higher net interest income of $8.5 million, was partially offset by the $2.4 million of costs to close out the swap as discussed above, which are included in noninterest income. Total revenues increased by $15.3 million or 40% in the first six months of 2016 as compared to the first six months of 2015 primarily as a result of higher net interest income of $16.0 million. The higher levels of net interest income for the both the quarter and six month periods were the result of higher levels of interest-earning assets.
- Assets under management (“AUM”) at FFA, which totaled $3.5 billion at June 30, 2016, increased by $57 million during the first six months of 2016 in spite of a volatile market as new account growth of $129 million and portfolio gains of $134 million were partially offset by net withdrawals and account terminations of $206 million.
- Noninterest expense in the second quarter of 2016 increased by $5.9 million as compared to the second quarter of 2015 due to costs related to the operations of Pacific Rim Bank (“PRB”), which was acquired by the Company in June of 2015, increased staffing, higher legal costs, costs associated with opening new offices in both Northern and Southern California and costs associated with the increased levels of loans and deposits.
“I am proud of our entire team’s contribution to this quarter’s record growth in loans and deposits,” said David DePillo, President of First Foundation Bank. “As we take into account the effects of seasonality and expected market conditions, we anticipate loan origination volume may decline slightly in coming quarters from these record levels.”
About First Foundation
First Foundation, a financial institution founded in 1990, provides personal banking, business banking and private wealth management. The Company has offices in California, Nevada and Hawaii with headquarters in Irvine, California. For more information, please visit www.ff-inc.com.
We have two business segments, “Banking” and “Investment Management and Wealth Planning” (“Wealth Management”). Banking includes the operations of FFB and First Foundation Insurance Services, and Wealth Management includes the operations of FFA. The financial position and operating results of the stand-alone holding company, FFI, are included under the caption “Other” in certain of the tables that follow, along with any consolidation elimination entries.
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 we will not be able to continue our internal growth rate; the risk that we will not be able to access the securitization market on favorable terms or at all; 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 2015 Annual Report on Form 10-K for the fiscal year ended December 31, 2015 that we filed with the SEC on March 15, 2016, 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 2015 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.