FFWM - Earnings call transcript Q3 2021

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Operator

Greetings, and welcome to the First Foundation's Third Quarter 2021 Earnings Conference Call. Today's call is being recorded. [Operator Instructions].

Speaking today will be Scott Kavanaugh, First Foundation's Chief Executive Officer; Kevin Thompson, Chief Financial Officer; and David DePillo, President.

Before I hand the call over to Scott, please note that management will make certain predictive statements during today's call that reflect their current views and expectations about the company's performance and financial results. made earnings the release. are including harbor statements today's in forward-looking subject safe to statement, These

In include non-GAAP some financial addition, of measures. the discussion may

Kavanaugh. uncertainties over company's results now to more could reconciliations any Commission. of a complete And measures. of I to the and risks For turn See Securities financial the Exchange discussion forward-looking statements like cause with the differ to and actual Scott non-GAAP materially filings call from would the that and

Scott Kavanaugh

thank joining to to Third Call. for and welcome all Quarter Conference like Hello, We would you us. Earnings of our you XXXX

We success. to will some questions. regarding businesses as comments respond another and had our our quarter strong activities, be providing We each will our then to we of prepared contributed

$XX.X increase from second for $X.XX $XX.X quarter or were revenues XXXX. earnings per the XX% for Total the the a million were million quarter of quarter, share. Our

ended an tangible higher value book quarter at the tangible equity representing $XX.XX, common per Our on return year-to-date. share XX.X%

Our improve, efficiency quarter. and for the ratio was XX.X% continues to

quarter our share. per We also $X.XX of cash dividend declared third

I and Texas warm next There in is year. grateful and which our our are on excellent we Integrity opportunity which in acquisition final early we opening First retail are for fourth regulatory talked our Foundation wait reception. efforts expansion receive including which quarter; Texas, opening Irving, about last for approval to our Plano, quarter, so we of Bank, in First on anticipate still While progress in expect branch the office Florida we making in we LPO for the much

to who expansion our the team with in states. at Texas other like in we region now and to new this in expand bankers, as in recruiting serve opportunities we actively our Texas got expansion was located us with opportunity the say the wealth larger. Being But and focused affords location want feel can we our Florida, as clients into I presence Dallas. now managers as with Florida, the state used across area the I are up our are well We West. experienced our the Rockies in others Texas also confident and soon look ramp to We the just to join to corporate and regions. from speaking in presence

we Florida across to Speaking is merger us anticipate Similar the complete, in Integrity First excited and efforts in core the lead growth quarter of Florida, of great are our are XXXX. having the Bank we the second there Once employees join very the help system opportunities in conversion Florida. state about state. Texas, of the

California area. growth. successful. have business in We funding with offering incredible remain loans and into of opening and to management $XXX in for Hawaii which are regional Hawaii. our business-friendly commercial accounted We of strong offering that regions in challenging the by taken C&I the story. Florida Angeles said, presence is position us our to and has from deposits, seeking us phase we done high-quality has our another our a really million clients. as individuals strategy proven trust of many transformation branch attracting only wealth originated are firms helps quarter quarter Oaks that an amidst set last of services these the Texas to both for serve part our continue mentioned diversification operations There our other Florida really expanded California, as successful committed our the Expanding recently powers this Nevada again of Texas. of next trust and to our quarter. evidenced and and the has and such a in our our states apart important be we the total in an also and That Nevada businesses proven business Sherman model Los in high-quality play the our state, in to and I very be environment of also This originations, the offering shape to top-performing trust Even bank. strengthened location job yet for opportunities great teams has XX% and of

We in of this from this, is while to offering. and finance our $XXX up new We finance our excited and equipment lending accomplished million running and $XX contributions continue business. generating strong, and having builder also to in be million saw We're and bring teams offering as our officially part which beginning our really all single-family respectively. multifamily team, about loans,

high-quality generate securitization team at business our and quarter. the the job multifamily at afford the low touch proud of our stay high is for loan incredible I'm important has NPAs to us basis done to and industry-leading pipeline. ability lending something composition underwriting an will successful of points continue an in the be loan our a coming current meet the ensure to we levels, another model We of, very loans. our million XX Our solutions These for of had loans our in strong sales on opportunity more markets part demand Dave and of serve. to portfolio $XXX

where brokered basis to were to accounts. attractive funding deposit our This for of deposit and an XX in accounts funding in of is to more significant core points our deposits deposits, operating a favorable cost and quarter. business-related the our continues deposits, increase reduction XX% our at be profile decreased cost Looking total attributable

zero XX% end Home advances, Bank quarter. remains the We Loan continue to at our the the time, have while of at same ratio Federal at loan-to-deposit

trust combined at level. a offering was management offering, to ending under the This private have us XX% business at of and net new meaningful assets proving value the services and clients adding our by additional straight is management the this organic business provides reached sources business, management Looking and the third wealth the growth management, company. in-house for for quarter. $XXX to for wealth trust wealth of be generates our levels $X.X profitable at investment and million for of which our quarter we as billion. management rest experienced is includes margin profit planning peak This revenue quarter wealth the of also scale The pretax important

to Fiserv NYDIG into pursue to bring offering the continue with We collaboration and Bitcoin our cryptocurrency banking. through

We in working QX. official are is in with with our closely this the we regulators scope coming the solution, on and launch our months rollout track believe to of on the

We this as are to and have Fiserv on with such initiative. industry-leading grateful firms NYDIG partnered

teams solutions any our security Speaking education technology, is employees. online, protocols and us secured our both clients. for leverage to in the our vigilant threats clients. allow offer fraud strictest security with for our of in remain it We our about investments we supplement to this and partners, branch or prevention clients our for Whether technology and best-in-class industry the

clients. All to of as our I've best well serve us we mentioned, what services, technology to our our seek position and expansion our commitment

First As with opening I results have my conclude before, the Foundation. dynamic of pleased model designed that diverse is model their working very to how our markets they to the by said lives. across wherever is entire And well our I help am today's serve. clients remarks in indicate team I saying want business financial are we and

the building to that have serving each committed and best We to valuable people business a very group and this for a are place are to committed great clients we place work of who able lead about our now organization, the very I'm of to our It's employees. one over truly an future. honor to this turn and Thompson. be call our CFO, I every Kevin excited will to making

Kevin Thompson

assets $XXX,XXX strong of was of quarter X.XX% return included Scott. share mortgage with $XX.X $XXX $X.XX in million. of Earnings expenses Financial. rights on million, per diluted our we third including associated to million the you, the a Thank Related return TGR servicing of tangible quarter acquisition on $X.X of a The related gain booked of common XX.X%. to multifamily securitization equity loan of this at

resulting yield equivalent past, average maintained XX loan the with decreased schedule which our funding we our net Mac cash loan from securities new been with basis a quarter. has detailing and of provided to in cash yield the loan Freddie the release X.X%. the As balances quarter. largely due points in X.XX% in We in practice discipline We higher last the X.XX% to increasing million interest fundings. was production quarter, earnings The of $XXX approximate margin an purchased to average in

have $XXX Excluding million the X.X% loans or would securitization, compared quarter. increased to prior the

in investments $X.X remain. of decreased PPP $X.X rate dropping XX by Our the of quarter, losses activity. We cost from PPP FFBs decrease to net fees an for result the that credit million of $XX The million securities. to and by income loan allowance faster-than-expected XX of environment lower loans basis credit we result million, losses prepayments in for low from projected for points. as flows continued earned the was in the interest $XX that was fee deposits million strip balances This million which quarter of loans and of in for interest-only cash to $XXX,XXX the increase offset of a allowance related quarter, to $X have securitization impacted the on a

rights an recognized allowance reasons. the the also on We quarter $XXX,XXX valuation in to same servicing mortgage due

a year-to-date FTE lower production advisory in Asset Scott and very loan that and increase wealth Efficiency trust higher will commission achieved million in $X.X $X.X largely due Noninterest quarter, was benefits ratio expenses strong to expense mentioned, This combined in at to divisions over was of X.X% call pretax to $XX.X production. margin management and to management due from turn in fees David as XX.X%. I our deferred now quarter. divisions, to the DePillo. profit increased the were accruals strong due XX%. a seasonally lower other and the million of strong million. revenues And with compensation increased

David DePillo

Thank you, Kevin.

we of diverse million like mentioned, we help develop for mentioned, As that, regional commercial I disposed reiterate seeing as generated $XXX more as our loans base. XX% bank, a sheet continues for sheet of to C&I transformation business of $XXX transformation our positioned detail quarter. lending in key in our been client portfolio. are originations our And Overall, sort quarter, This third to Scott to in and would the that well totaling we million of balance loan diversify a nicely. balance loans. today, continues accounted the have premier Adding a to us our the that some to the has

sheet we quarter's We experienced our highs believe year balance the which quarter real higher is $XX in loans, the the quarter. of estate and strategic move close during were is we or a commercial adjustable While shift the to our million of that last anticipate are of for we loans lines million quarter, this more number, quarter. commercial finance strong credit, new loans, the largely The revolving for production last loans. generated of of high-quality They as expect us C&I rate see We public months. loans off had still were all finance slowdown and neutral. of diversify typical commercial this C&I projections. were Of million million we above fundings [indiscernible] is of PPP business very loan to fourth $XX this loan our comprised quarter continuing annual loans portfolio. to reflects to continue our no at summer from fundings remaining a with the $XX XX% it strong record term loan slightly while equipment that yields note, loans generate the Consistent $XX

commercial XX%; at loans in owner-occupied multifamily the real percentage are as other. were originated broadly the more Looking third quarter, C&I, in and of estate X% the XX%; XX%; follows: the single-family breakdowns that million including $XXX

loans We continue high underwriting with originating high-quality on standards. focus to

basis over our It's at total loan prior forbearance loan expect our loans XX months from to basis mentioning XX mentioned, into $X.X basis to also worth total decreased million we of to the points strong summer and in quarter. $X.X X the to points continue ahead quarter. taper cyclicality the fourth points of the pipeline remain remains deferrals quarter, increase. to that low As very and and and heading million NPAs a demand The for seasonal

loan about yields. specifically more Speaking

X.XX%. from the yield we weighted average a which achieve XX while quarter, originations, up basis on improved defending This ability strong X.XX% our second to mentioned, our continues points of portfolio. to demonstrate loan As still rate on volumes, achieved the

balances X% single-family, consumer As and multifamily consist loans, held of loans, XX% and September XX% to XX% commercial non-owner CRE, maturity XX, our X% of construction. land and occupied business loans

subject and with making we our along ended outflows. to our Our to very $X.X in was This represents deposit as accounts be and reductions large a in reduction favorable. well deposit deposits our perform business billion profile outflows. certain continues profile that improve done deposits seasonal quarter deposit also overall volatile programmatic programmatic inflows to not of of The continues less deposits to the including cost combination deposit lowering and

Our customers business deposits by served of balances during offset Core deposits. commercial branches. of deposits reduction treasury in complex The increases group retail deposits $XXX for quarter the of total total million noninterest-bearing XX% the and accounted were $XXX in third million, included retail XX% in for continue service deposits XX% September the of for Commercial decreases our by our of account XXXX from to in branches XX. our management banking channel customers serving of business total as deposits. core deposits deposit

improve Our of another XX for reached and cost low of basis the to quarter. favorable deposits has continued points

liquidity on during as the As Kevin margin. dragged quarter X.XX% mentioned, excess NIM the was slightly the

into I to we likely to finally, next on. starting NIM a a trend again, While quarter, yields on quarter. improving up continue additional will loan to want strategic last funding working on are the drag few from projects touch the And liquidity excess provide are

to getting them, and will access project mobile access opportunity and experience will to add held security, in consumer their and of most launching. our close other to one clients place. accounts benefit they're give Our online the enhance convenient at accounts for institutions view is where This

mentioned, we the looking clients thoughtful banking cryptocurrency NYDIG very with project for access within and traditional continues to Bitcoin a forward. to have move Fiserv Scott As successfully system. offering to plan

scale. our warehouse Our been data important have ability initiatives part very of to

for dynamic have We take we are experience This workflows to drive decision enterprise processes will clients our without digital to I back And achieved data on success we and the more leverage continue warehouse the finally, hand with it through strategy a connect service data Scott, to sources and Like a am We the in time, of critical scalable team API the technology. that dedication our ready new the to information great provides to I leverage level. place. have AI effective operator. work. to for data an efficiency using and all grateful integration of delivery the not At provide making. and and been quarter clients hard the for the would this questions. more

Operator

And we'll B. take our Steve Riley first with Moss from Instructions]. question Securities. [Operator

Stephen Moss

years XX basis of call the kind days or pricing of here. moved, just Maybe loan or seeing curious on you're pricing you're these starting month as of with, the about you Dave, touched Kind how what last X improving in kind thinking so? it, points

David DePillo

as interesting What's we've previous kind bit in effect there's to a little calls, lag discussed of of the market.

for So competition it the to takes adjust. a while

a So the we on especially kind little of X-year. we're around range-bound bit of feel pricing that a and level, in X-

Our as improving level. pricing or to time, expectations continue that slightly time see see at we'll are to the expectations we'll to above continue drive But But lower. can from see we yields. current is our competition

loans As we of improve. those of levels to we lending, all aspect variable. are percentage mix to to modestly that real see those our C&I But estate think one important are I is starting

change, So to when positive get on move. benefits end as that we should we continues see the interest short rates

of expectations should some the improvement. start But kind it's net-net additional seeing are board. mix across we guess So I a

Scott Kavanaugh

touched First I Florida ago, Dave where with we've liability the comment sensitive. perspective, be we're Steve, think Today Integrity, or based combination TGRF important couple that put a of sensitive. us of that on. like Only we liability we feel should were asset years almost an that that's pretty And we'll completely on position a the an in neutral. from asset we that done, some research of believe just

the X just balance from looked. transformation the ago huge a with way years that's sheet So

Stephen Moss

there? basically I thinking of your That's year. origination this the next pipeline, guys then for in you if billion any to absolutely. you're $X curious target loan No, have how type expect thoughts terms you Kind fair. hear with just And maybe of achieve Right. year, about updated

David DePillo

So on growth against expect that our current this levels our forecasting, year. included we've origination we modest

the in been newer we haven't expected significant some So increases. factored have coming compounded of volume on that have of growth. we The - board, groups that kind

these we've come the groups from say guess, some expect still new years. I the the groups strong experience we we as I what definitely those in, lift is would next past, upside originations well. as So should And in is experienced few as through

Stephen Moss

groups, Okay. FTEs hiring of up over releases X% know were on number I guys the a several I And new release, mentioned then those in had And know last you over the quarter-over-quarter. months. you've

of Just hire will. kind of us what if color you geography give any curious, to and the line, as type incremental you people those where business

David DePillo

We've our board. conservative in the Texas. across been of Texas up bring stand a effort kind operation to - obviously, up had funding It's in

But an the finance quarter, builder well. to new as and in I our probably we've as were California state Texas. we've up both staff say that as were starting C&I in in So would and hired are of groups, California portion last as amount in well significant equal group mentioned,

So say, California. and it's kind equal of would in, I between Texas

deposit as obviously, have levels to we compliance, operations staffing up, $XX over some go going additional areas are to and origination for complete mark. requirements as services, expectation both well as are and loan additional staffing support and of as that other help up billion well higher risk we into programmatic expected We adding scale to for audit infrastructure as we're the the as expect merger we

Operator

Feaster our take David Raymond from next We'll with James. question

David Feaster

And wanted still And in there? in new builder been to just follow innings the sense Texas I we're of just early and within production question. the get that sounds finance LPO equipment the maybe in up on it last how has like finance. a

you is And into? production that considering the whether capacity you're verticals other any on those what Just think any there? there's And updates expanding themes?

David DePillo

group board on on certainly fourth Texas to the we'll see don't the the we put with in and quarter, coming Well, quarter. last - started why numbers start numbers

a for probably expectation, million $XXX have this rate is we would now, run group, will we're of we they're starting start million. a them, we're current million, to would at - quicker. to group expect on from say consider there. our the So them staffing of to next kind $XXX Their year their that based would what year. finance from we I million And build normal number revolve to from consistent expect first and first quarter hitting equally on we But talking going the builder $XXX group would and loans going out least fund then $XXX loans

So the as in as property we the natural area. income balances see won't quite build fast

is C&I in Our out LA starting to group loans area fund the as well.

- them. are from have expectations a Our significant hopefully, number we'll pretty

As far in adding some as to looked financing we in in growth our may in traditional core our hopefully what there any growth we're consistent added. products. ancillary a I area in products. our level lending originations, businesses you'll have growth in bit would be we've within equipment SBA, C&I of the new a at product strategically staffing And that offering. expansion for verticals, mortgage continued growth to growth across I we where income really to a going consistent pretty holistic haven't C&I, originations, then in had other little say, groups our property is think consistent and But and see consumer. We've see opportunity consumer residential core We're other getting, and consumer again our and new finance expand

future. would business at add I line don't that foreseeable say we to the any we in that So least expect see new

Scott Kavanaugh

with continue vertical us which at geographic I add, for I'm think And that but comfortable well. expansion will lines. know the be growth I rather geography, what into see expansion important lines think we're quite it's can Dave. don't as I in with about I in. I to feel think we we some - be seeing this would new point to honest. more than

David Feaster

and just the Okay. touch just and thoughts wanted guys TGRF securitization, forward. then strength does your That And all given going for just makes of additional your on term? securitizations near just given expansion then on to that the you appetite inclusion change the at sales curious And have loan in Texas, diversified seen, sense. production the that

Scott Kavanaugh

Dave?

David DePillo

in property been Yes, opening product certainly. order comments offering. to Scott balance his It's - holistically mentioned our to income in as a strategy

So balance a need capability. we have that large that our have far clients outstrip sheet can

So it's CRE as loans for us continue to been vow concentration as customers make our great well those more somewhat line. a in keep to to

we originate to how we going on is really to growth our markets, and of product, could forward, Certainly, that's we great And typically core are net it we'll of these have additive strategy. act deliver more. between So is But increase forward. expand going as opportunity is level to securitize model as continue NII at opportunity sale growth, there expectations loan about is our we same - a continue the into an money. to to securitizations balancing other least our which make the what size our gain and

to However, are would same earning sheet time, to we that normalized core still we balance need of as that dealing sure are overhang grow to start can at the what we and good we to continue as consider quality we make a have our deposits deploy spread. bigger going into loans well with an

getting little cash. the of at margins of least a temporarily because Our overhang impacted,

with we're So of I net-net excess forward. balancing is going I of guess, going - think it's normalized kind status forward. And quo earnings kind gain

Scott Kavanaugh

our growth staying estate don't to legal opportunities guidelines And within have that any limit want function sure It we've we working Dave away any turn one we business don't to with commercial more really of to as we're a is real just the the group, regulators lending of client. discussed. with make more because said, kind

David DePillo

add, it's it's our year. important ability that a the to think, I'll is, process the I takes competitive appreciate advantage, to securitize entire

we're year's hard work now, preparing the really next through year. we'll securitization, For

is vendors assist our And that advantage. having with process think, to It's I outside We people can and be ability competitive complex process in that. a that company that that that us very off. not every number have the a bank of lever who will an involved expertise, in and really pull underappreciated

David Feaster

launch Glad track crypto still to to this touch is And point. those lines, I of the kind great soon. partnership. hear to just on a on wanted along That's that same

have the you And to kind of rolled occurs? gotten at guys time changed that benefits expecting more be and on has as scope deepened, that your NYDIG get you're to an all? know you line thoughts what update And the of has on of as to rollout? - And rollout maybe that just products wanted FIS partnership the expect then of and what this Just out kind first?

David DePillo

We'll series our Yes. well. update. bit a about would upset had getting digital mobile we app And of And really the products give expansion Fiserv you was entire we if they little financial working we a first we're have FIS, view customers actually, wallet didn't that a core but an is are provider, or delivery also of to we it be mention accomplish as consider their to What of with providing modern-day trying market. talked to our what our really consider for relationship. a and consolidated would would XXX what NYDIG

products with Bitcoin to a execute that, execution entity get once currencies Fiserv with in As delivery. have of be the in traditional ability sure other I we've rewards great them able opportunities settles of giving as that That's things probably that reporting and far first core probably There's we in, product regulators accelerated launch you'll be down with our additional programs. and our see delivery product the more well make to provide to that delivery channel. got potentially delivering. And bank dozen really our of done, as are to road a part think first our obviously very road. is then as first, NYDIG where NYDIG of through the focus down products the will through But comfortable the it's will as

Scott Kavanaugh

banks important in growth being adoption the The XXX% of in technology fastest very adopted at to clients, it's was And of assets It's a believe for digital We assets. history. involved our rate are for adoption add. year. I'll heights a history, year. internet's digital in be the mainstream adoption the XX%

They Our deal of mainstream their the in trusted process. products with with just sticking to adviser. add for Bitcoin don't We're this more first over mover to some and the a with within services industry. want providing believe, area, complex we opportunities - in this bank adding deal our environment now in to very really exchanges, have conservative but with want knitting, our and of then investment potential time clients,

Operator

[Operator Instructions]. And from with Tenner D.A. we'll Davidson. question Gary take our next

Gary Tenner

I I'm some little bearing David, you $XXX a bit. in non-interest up have versus up were the curious quarter. deposit through, September and the gone kind deposits. $X.X bit but think, kind million as on mean a quarter XX XX, guess, second swings, on non-interest-bearing at wild billion you into of year-to-date, portfolio talking I this still March down of I this

more. You kind talked source transitory. wonder about bit at I quarter some a group was don't commercial of that deposit services least delve there Because short-term I second just any of But of that that. expectations little could into being recall the you growth if being discussion about

David DePillo

made mentioned, a And at volatility. from And accept as our depositors our the all a demand XX% would balancing act. deposits. deposits them. of core amounts consciously And cap some higher great from it's of larger that to board. of we that deposits we to And amount great have we tremendous business decision what look As of effectively mentioned, we're is are seeing continuing customers we about we're that because

So of of those what of we, the as are mentioned, made some conscious decision lower most and those a And relationships bearing. non-interest would take. exit we to limits

to However, other service related them. they do costs have

were us them So earnings - we they interest little of of them by in - some limiting typical credits size excuse by and me, of costing in some by them clients. a more volatility focused on and our some than

higher want long larger had it. have jerk be a would quarter Because for to has grow Scott to our we and of the DA runoff deposits expectations we than we these slowdown as improve way too with rate securitization, like though big see. have act. is to sure don't the road, it knee balances, balances time And needed. fundings runoff see even greater a as some that of to larger we see to we in But we say this make then sure are. higher develop effort cosmetically balancing wanted So much where was clients. financial could it MSR would that we typically them we at that those we that And didn't But to a balances metrics. deposits, mentioned And we the takes we what much we will outsized - of obviously a our we But past, expect. that's conscious of than of just related demand it's to no cash in seasonal clients, they're and down lower make the some and our the lower

Scott Kavanaugh

Yes.

I think up pace to, to to lot. if we deposits. be we we're I'll I bit a people their on a like regards feel little And sit the hands honestly, could asking especially wanted in so with We've to do you're reluctant some because to anything. candid. real them to then and asking opportunities people, hire been just of not hiring had And some somebody here pick Texas. do we've

to that's world-class kind So happening a I right have, to of now. what's - problem us but that's think it's

Gary Tenner

out any volatility bag Okay. those of XX? balance some terms balance do Or appreciate that. the is the more kind out to relationships, your of at higher Would kind I work in or of of higher sheet. those there that off you of is settled to that say work management of or September of active

David DePillo

we'll There's done quarter have relationship. MSR on. of I going traditional rundown some fourth things of Obviously, now. that on in would is that say our for couple we're the a kind

deploy slug we They as some overhang of us for help great of liquidity well, obviously cash. have there's of close So TGR. to the demand going that will excess into pretty then And a that. large but with a excess with

back in are relationships in the just booking of normal market course. kind we've So and

expect that, on of color the way So your rundown. from we Any much programmatic perspective? don't in Scott,

Scott Kavanaugh

Yes, right. I think you're

squeezed exceptional I'm deposit an very I bottom making favorable think is I the active done the line can. to now that out money much. job we've keep that I can it. we the already, And up to it's continue deposits down portfolio we pipelines to getting expect as as much wouldn't down. cost our turn that's work. to on and put as We've And think, about as come be got blood of see loan sure we we of

Gary Tenner

then incremental side And Appreciate there. and the of that. me kind question for asset portfolio, some terms securities in the investment second of

with more you some pointed quarter, And have you $XXX liquidity This cash. coming as TGR. out, million over excess of

think where So be sized don't that incremental more obviously, point? portfolio lean this solid kind your you investments to some year, curve with next securities be? of expect over would I Or to growth loan the we is you at into want it a to but steeper

Scott Kavanaugh

reality the of has is about loan as million super Dave this make But deposit successful can and as $XXX incredible it. side we added securities our making Look, of we on as the is, an growth, pipeline done so robust sure securitization. the job on been we've of

and more. recently discussed MBSs have adding added some have We

As or vanilla guys comes have I'm guy you of lot cash don't complex that don't flow. plain know, a I when lot to like things securities. it a of a

them. to a that have So i.e., P&I means mainly securities monthly that mortgage-backed

we are and off more with excess it say liquidity. some we of would let would of Dave reasonable have that soak to some excess I allows would run over to So think the up where that time catch we the securities those deposits that on up frame a mortgage-backed probably kind add to be

David DePillo

yield run X.X% do can points and relative favorable in think, is large be the of Yes, their strategically, mentioned, as larger basis their as fairly XX of balances cash earning cash loans. more because that or, we'll never I much high a a But on on as on security run, Scott security, a lot flows those. certainly it, banks as call portfolio quickly much

just run not So loans over strategy used time off. cash as into back those dissimilar few a reinvested too and they from years flows we a it's

push we expect - in additional a So significant to but don't securities.

Just as we'll continue portfolio. we grow, that to bolster

Scott Kavanaugh

Now the that actually to do that, degree NIM improves. we

lot yields think anything side people in of a as the think or was - this saw of interest NIM XXX I driven well. But loan were successful else, cash, some people us. largely income overhang the It's it's they our And to by of if thinking net compress not. yes, I really it were quarter.

say, be excess should which would a so out, would favorable. And drive up to think help I if of little NIM bit deploy I liquidity, some the would back just we even that soak

Operator

And we'll next Chiaverini take question Securities. David Wedbush our with from

David Chiaverini

follow-up a continue excess of it to with a how were off you little the quarter. could NIM what mentioning liquidity And mentioned help start the conversation, I'll liquidity work, may excess on the just Actually, bit you about about earlier NIM. putting in on drag to the in fourth

and and a way kind Or given but was another? we should of the you tough are it's kind flattish push curious, of here or from NIM to pull? leaning one I So gauge, I assume know

David DePillo

on have a - in flattish start for are and do cash bit, a balance. and I But little they rise. think for acquisition sitting we to us we we're then a larger stand-alone, the as probably the coming

from little So drag - there. from them when we'll on we'll close of rise it our depending And then gradually at - closes. expect expectations a probably we bit will

Kevin Thompson

our They'll mid-Xs. loan we deposit monitor - dilutive a settling in cash of seasonal I really mid-XXX large our the being us. the net and the into kind quarter, which benefit whose margin But you XXX the TGR more on NIM flattish end control up deposits in we Then a deploy basis. of year bit we agree. to actually Dave of so and interest would kind had be continue of some legacy referenced have anticipate add in outflows will. portfolio, is to as a little this But fourth you we'll to as probably we next growth little range.

David Chiaverini

next margin, gain the on just and be a had Great. of I $XX margin, sale to the end, like I X%, And securitization of helpful. year's to gain Is on Very sale how follow-up is that curious, think the on high I calculate we it how then million. that we the is and was middle of that that over securitization? the that? - we look the Is that about at about as kind range? think should should

Scott Kavanaugh

this we we can and pretty points more really is put been. do the were which tight much what, end. XX were extremely do new, securitization had see loans or on. which on or securities. to that pool, The really with coupon on they year, XX-year pool so. reason in sudden, at the price which the had early not current and out, say to and way. the of able it hedge didn't what hedge X- needle that the did basis threaded then a really said the we fact into a lowest We high a to we I every Spreads it is all dictated kind the moves of And levels at that It's securitization, XX-year, the And we're sitting

I favorable. that so And you and think all very take it was

said to kind at would But you If just greater. I little we threaded look - not if be I X%. would years, think year. of prior you're it's going But it I say the was I mean, hedging, - we've a needle say this

David DePillo

- environment, typically, to spreads it in credit depending the That's we've to than then call around tighter, seen the the expect Just wider add, tranche. they and be mid-XXs, And it, it seen we somewhere X%. we've that. we've at, came current on

we the when then out a of over quarters it and translates as And in we pricing I a into locked Scott Three at little tighter. percent points X-year few a over points. then to basis mentioned, XX gapped X. significantly - So think, was,

basis XX another there. that's So points

of coupon, on depending be duration. that X% the if execution excess you're could points So X of

- if hedge favorable hit - just said, seasonality environment. narrow like didn't Scott we are going was So spreads credit if of never because we just the pool going to in, and the or current, know a of be wide we we

So short, gain. we or probably could that's we the high watermark other. long a way But be story for surprised think one

Scott Kavanaugh

could We No might points sale. gain [indiscernible]. sell get the entire X if we portfolio on

David DePillo

We lot - a but of much lot capital have cash. a too

Scott Kavanaugh

right. That's

Operator

call turn Kavanaugh will Mr. remarks. time to today's over for our And allotted Scott this closing back concludes for question-and-answer session. the I

Scott Kavanaugh

again call. the I'm our of of you I'm employees reported, results participating well in today's for proud done. we very job and the and proud Thank very

are All I'm are the very pleased we business of lines with our path doing on. and well. that

found report and great Thank Relations As a section remainder earnings of can on be reminder, have presentation your Investor a and you, investor day. our of our the website.

Operator

does conclude you. Thank for Thank program. today's this participation. you And your

any time. at disconnect may You

First Foundation (FFWM) 26 Oct 212021 Q3 Earnings call transcript