First Foundation (FFWM) Q3 2024 earnings summary

Executive summary

• Reported a net loss of $82.2 million for Q3 2024, or $1.23 per share, primarily due to a $117.5 million LOCOM adjustment from reclassifying $1.9 billion in multifamily loans to held for sale; adjusted net income (excluding LOCOM and other adjustments) was $2.7 million.

• Completed a $228 million capital raise in July 2024, strengthening capital ratios and increasing shareholders' equity to $1.1 billion.

• Total assets were $13.4 billion at September 30, 2024, with $10.3 billion in deposits and $9.9 billion in loans, serving five states with 31 locations.

• Strategic focus on reducing multifamily loan concentration, expanding C&I lending, and growing recurring revenue.

• Management remains optimistic about future earnings improvement and balance sheet flexibility.

Financial highlights

• Net interest income for Q3 2024 was $49.1 million, up from $43.8 million in the prior quarter, with net interest margin rising to 1.50% from 1.36% sequentially.

• Interest income rose to $157.2 million, up from $150.9 million in Q2 and $144.8 million in Q3 2023.

• Noninterest income was negative $112.9 million in Q3 2024 due to the LOCOM adjustment; excluding this, noninterest income was $11.9 million.

• Noninterest expense increased to $60.2 million, mainly due to higher customer service costs.

• Efficiency ratio was 98.1% for Q3 2024, up from 96.1% in Q2.

Outlook and guidance

• Management expects continued improvement in earnings and performance, citing optimism in the rate environment and flexibility from the capital raise and loan reclassification.

• Securitization of $500 million in loans targeted for completion in Q4, with additional sales and securitizations possible in 2025.

• No set timeline for full disposition of held-for-sale loans; focus is on best execution and flexibility.

• Ongoing focus on diversifying revenue, reducing wholesale funding, and expanding in high-growth markets.

• 4Q26 targets include ROAA of 0.90–1.00%, ROTCE of 10–12%, CRE concentration below 400%, and Tier 1 capital ratio of 12–13%.