First Foundation (FFWM) Q4 2024 earnings summary

Executive summary

• CEO transition in late November and appointment of a new director with regulatory expertise, with a focus on reviewing operations, risk standards, and repositioning the balance sheet for sustainability and growth.

• Total assets at $12.6B, deposits at $9.9B, and loans at $9.2B as of Q4 2024.

• Sold $489 million in multifamily loans held for sale at a premium to book value, exceeding fair-value pricing expectations, as part of a strategy to reduce CRE exposure.

• Adjusted net loss of $13.9 million and reported net loss attributable to common shareholders of $14.1 million for Q4 2024, impacted by higher charge-offs and a prior LOCOM adjustment.

• July 2024 capital raise of $228 million and conversion of Series A and B preferred shares strengthened capital and flexibility.

Financial highlights

• Net interest margin improved to 1.58% in Q4, up from 1.5% in Q3 and 1.17% in Q1 2024.

• Net interest income rose to $51.3 million in Q4, with total interest income at $152.5 million and noninterest income at $13.4 million.

• Noninterest expense increased to $67.0 million in Q4, with an efficiency ratio of 103.1%.

• Provision for credit losses rose, with $17.1 million in net charge-offs, mainly from three commercial relationships and the first multifamily loan charge-off in company history.

• Tangible book value per common share was $11.68 at Q4 end, or $9.36 as converted after preferred share conversions.

Outlook and guidance

• Continued NIM improvement and lower deposit costs expected in 2025, supported by further loan sales and runoff of $1.9 billion in brokered CDs.

• Additional multifamily loan sales planned for the first half of 2025, with strong market demand anticipated.

• Allowance for credit losses coverage ratio expected to increase as the balance sheet shifts toward commercial loans.

• Management remains optimistic about transitioning the balance sheet and developing new business lines.