FFWM - Earnings call transcript Q4 2021

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Operator

Greetings and welcome to the First Foundation’s Fourth Quarter 2021 Earnings Conference Call. Today’s call is being recorded. At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation. [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 the 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 included Harbor statements today’s in forward-looking subject Safe to statement These

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

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

Scott Kavanaugh

you XXXX thank We like call. and us. Hello, for to would to joining you of our welcome earnings all fourth quarter conference

am As financial we has with highlighted to accomplish of was temporarily completion, on report fourth And the moving our did several report, we through projects delivered Complicating out. which and share reporting me of to matters important frankly, the able cases results branches, Herculean results we When many Foundation. effort and the the of this the while couple we our were were today. I We before this from some Omicron, close our had I a off lot many where due Yet entire had strong quarter financial we pleased there same initiatives quarter rise days team, am our had strong to the departments what entire into still in a reported, all and our which at let a projects, hit capped quarter, departments, First these impressed we year. of to team time. planned all for had were earnings for year started, how I the parts. been for of our great of get another underway details there

into organization. few mean on details and metrics, I me those – Before financial of they for finance of a our let the the projects get touch what

This Florida. a of Financial on with couple closed transaction our important First, things. transaction TGR in we means

into met strategically We markets some Florida. key are within in with now state, another business-friendly expand – to positioned ability the

We knows to employees – is bankers, who also pleased were able local the have we a team we community. of are local we Keeping do. experienced very team something the

transaction can this base complementary whether very it services us a services. additional solid wealth trust addition, client access that In management to offer gives be banking solutions, we or to,

looking – to in actively build our recruit from are talent services We out additional to Florida locations. these

expansion we LPO Another retail second Dallas important office into are our And to Plano project the in our to in XXXX services. business-friendly year, trust in Irving. ton the retail and open planning in an moved and opened as and was and as principal in a know, We Texas. quarter, of first our commercial of well a wealth quarter is you management opportunity another for state, which branch as this our Texas, banking, has

are heard me about excited You’ve say it before, Texas. really we

We invest in and well California. across to Hawaii, continue as our markets Nevada

clients experience, attract better the we how We quarter transforms our also our lives XXXX. our of terrific. target the app of And all insights Foundation fourth by adoption with mobile can the app First and banking financial been facets clients This environment. help team solution gain into deliver complementary their now new will in our clients This the without Bank has launched new in services. leaving app

client something quarters. you’re our This future tool. to relationships this with more hear is We expect about important likely to new in deepen

on our continue strengthen position. of without sub strategic we recently of our us stakeholders. to In our offering allow existing $XXX our growth and plan feel source to attractive close debt capital addition, will diluting This successful capital our the to announced execute million equity future

bank, through There cover. other our I a our completed Program. also Community securitization the and preparedness Giving kickoff in the Mac loans, continuation our loans, PPP XXXX Freddie of of our of that projects. of important and with host didn’t Fiserv remaining projects $XX were multifamily of billion NYDIG the majority working successful we completed we The project Bitcoin a the following XXXX, for During becoming

our days, we most client of are did We fact, to have and that In slated to commitment months. I this I the reinforces technology. much other say activity past completed. complete. our truly just mentioned strategic XX the to occurred This in projects be enhancing plan projects on that remarkable. our And the to would experience XX XX take years which it is in banks want

team have place. we So in testament experienced the to

grow and and successfully none our to operate contributions. in second pleased Our with ability our everyone’s bank industry, is to am I

me now, quarter. our on for financial some let the related to results Okay touch details

for on average earnings assets was Total the $X.XX over or for quarter a Our a million average tangible XX.X% XX% Return $XX.X year quarter, was million revenues increase prior the were were $XX.X return fourth the share. share quarter. strong equity Each on our we I’m also that by per quarter. $XX.XX. per pleased our of payment to announce remained to dividend from increased contributed success. $X.XX to our in XX% and tangible prior at the value business $X.XX book share X.XX%,

originations, and our quality premier a deposits $X only the record shape transformation operations originations a by and taken strengthened strong our growth, $X year. and XX% for TGR grew of following total the that as position and the in loan for another the the banking is of the million billion this which again billion record our I’ve $X.X quarter. quarter of diversification in billion Financial business the in in $X.X quarter quarter really accounted hit originated we evidence offering acquisition before, as close for of year, mentioned billion, the of our the of reached another bank. billion has Our the of experienced This fourth $X.X yet while by $XXX quarter regional high has but C&I model quarter

businesses business up. to finance, these our finance We also saw ramp contributions – equipment continue from builder finance and as public teams,

and loans ensure proud quarter. an done to Our I’m job points has team ability our basis high quality generate to decreasing levels, to remain is industry-leading underwriting for of, MPAs incredible very something the XX

deposits, funding for continues of points XX% cost while favorable, core deposit quarter. total our funding at deposits, costs for with basis of XX accounts the our at to be Looking low remaining our

Our ratio quarter. the end of improved at XX% loan to the to deposit

Our accounts. attractive deposit attributable reduction continues to in be deposits, profile to broker business increase a operating an and our related in more

investment both terms our Looking and at a our in and in portfolios. had returns quarter wealth management new strong business, we of positive clients year,

fourth management ended XXX under by increased million record billion. in $X.X and Assets quarter, the a year at assets the

for trust record quarter. a management and saw of combined Additionally, our wealth businesses XX% pre-tax profitability the

I of as we are quarter now several to this this projects close would even out numbers value. that year, at reporting completed scale very face important business. and our about team are great Kevin say accomplished for the challenge how provide that maintain comparison. I shows of delivered to some ability will everyone profitability strong the all rose our – But level enough several even numbers we adjusted remind for across this we hitting can’t results. Our ease to Again,

completed, what technology the we I’ve our our as projects we us commitment our positions mentioned, and All team serve our well our clients. to services, expansion, of

honor markets today’s indicate truly serving comprised to help to our And working across clients. wonderful be clients to serve. Our is well an about model be is organization, lives. lead our model and we I that their designed wherever It our continue excited the very this are results extraordinary of is business able dynamic financial in they diverse to professionals very future.

call Now, Kevin. our CFO, the let to me over turn

Kevin Thompson

$X.XX in share was you, Earnings Scott. the diluted per Thank quarter. fourth

Day loss tangible As equity expenses Scott approximately TGR few closing merger TGR from Deteriorated strong return a Non-Purchase around The Credit were place is common often related would there the been merger. on million been at related especially have XXth, of X for XX%. December were return took return statement impacts to loans. a non-interest weeks on expenses XX.X%. are of of These called mentioned, include Adjusting $X.X equity good acquisitions. our for assets recognition considering related the on and one-time have metrics the only related double with to loan Financial. X.X% billion CECL $X.X in well return expense provision a as would our CECL as acquisition of income These assets acquisition count the common X.XX% items, so tangible our on to these on This the

performance of the year proud very for our XXXX. full We’re of

return and for on was XX.X% our equity Our X.XX% assets return tangible was on the year. common full

in NYDIG, solutions which Our investments really strategic to quarters is and talent Bitcoin leverage our announced metrics. root providing banks in have evidenced our an is few A ago, and industry our in technology, leader related institutions. investment in we operational and taken processes

very are in to increased slightly and cost work was this on the are and quarter. X.XX% slightly a average improving gain these of with the increased investment a investment interest customers, excited $X.X implement very quarter, pleased The strategic which in we our recognized we to due balances, funds net yields, While in quarter. improving cash services lower loan NYDIG the to that continue for has to we value million our to margin

Our $XX.X to of X.XX% legacy was the million $X.X quarter. of $XX.X points. an the an increase This X in legacy offset Financial, down of losses continued basis to the by The of balance have acquisition the and quarter remain. of to in loan funding increase fees reduction in credit income in points Bank’s $XX sheet loan with discipline allowance PPP related recorded increase in million of PPP quarter, to improvements the $X.X added Purchase related in the Deteriorated Non-Purchase in of Loans. the resulted loans acquired the for by Credit scenario loan $XX.X loans loans, of additional $XX Deteriorated associated total fee remaining. yields of PPP of in due million for Credit increased million the million the the with loans a We loan credit a or loans outlook we net $XXX,XXX basis cost the allowance million allowance legacy due in loans million through PPP We in this, and acquisition $XXX,XXX earned offset in million decrease related was to and loans of acquisition for of $X.X portfolio to of economic million and – $XX of losses TGR Financial, balances. pay was addition We TGR X

to now were other will the our the was ratio profit XX.X% combined very the $XXX,XXX. fees management increased efficiency and $X.X the merger. margin million expenses of was over strong Non-interest of $X.X a fees achieved related of to professional small quarter, DePillo. revenues very XX%. advisory the in The were expense full for strong in year. of for Asset million divisions and and With million Financial I trust million record around $X.X quarter non-interest corresponding expense $XX.X results, pre-tax XX% weeks turn and TGR only our two the call David to at with

David DePillo

Thank you, Kevin.

sheet team team projects As quarter The place. did job of billion premier in to our as an we fourth the continues we in loans transformation our Overall, really completion the Scott incredible fourth of are and client in positioned diverse bank in a very a some the base. important well those nicely addressing balance regional and testament a quarter. $X.X to projects we is a have mentioned, generated servicing develop the today record

those of this C&I balance teams loans, commercial million overall anticipated generated balance finance – higher continue for comprised credit, shift yields, The for C&I to commercial estate total diversify a that fundings lines loans move owner all more These the are while finance loans. million $XXX that to of $XX Furthermore, equipment previous of or quarter revolving rate term quality be real quarter. commercial loans, fourth our generate Consistent our quarter, in our strong us that’s in to high with which million million noted occupied fundings business remaining loans loans, million and quarter portfolio. $XXX $XX to own of continue of C&I of we adjustable this last our with $XX sheet strategic were neutral. XX% calls, continue of of loans we were the loans As is delivered. XX% were and public

Looking loans follows. more X% originated broadly loans we the the It single are in as XX%, second $XXX And Texas in in family year this our as we lending we is in of $XXX multifamily gaining that X% activities million quarter, as at XX%, other. the originated steam breakdown and is year-end, for a of had state. $X.X Commercial noting Texas. also million billion percentage worth

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

to note XX portfolio at forbearances were at quarter, total successful our while at approximately consistency from year-end. the resolved I’m very loans. of low all forbearances As be in or has of legacy points resolved been the with deferrals and that and mentioned, XX ratio our basis remains NPA pleased TGR points this basis were in inherited today. ended These acquisition will $XX million Financial quarter deferrals our approach and all

PPP of net to XX% At touch loans. there’s end our of forgiven, remains be been loans PPP recognized. have total the the PPP income that briefly on me Let $XXX,XXX quarter, about fee of only and

at remaining total Our $XX.X $XX.X Financial. added PPP through million balance PPP acquisition of which loans stands million, the of includes TGR

a we at versus defending originations on the the to versus volumes, yield for rate experienced Even while Looking strong and committed slight average teams have quarter the we levels We despite yield on the We enter as achieving as portfolio ahead, third new originations quarter, quarter, on X.XX%. of our to was dip as our expect payoffs various last yield X.X% stabilized. consistent which lending record this pipeline a with quarter, only weighted the the overall remains first remain at we strong drive business. weighted average quarter in X.X% continue still experienced production quarter origination this portfolio. the X.XX%

XXXX, As XX% XX% occupied loans, XX% our – of XXth, business XXst, multifamily excuse commercial September and XXXX construction. loans, of consists to portfolio owner December X% maturity me, XX% of line consumer, held CRE,

retail from combination quarter billion typical to that for group. serving closing non-interest-bearing XX% business December served XX% our business service XX% our – represents and profile seasonal the the improve treasury our billion customers a And which contributed be deposits, banking deposits deposit in Commercial TGR core deposit by our commercial The favorable. very of continues continue acquisition deposits channel our accounted by Financial, our Our XXst. to customers, management of complex deposits. for of continues were business now outflows with accounting ended in note, deposits Core offset branches approximately $X.X total our also well. slightly perform deposits Of of total we $X.X deposits of in to commercial – deposits deposits. as of from year-end

have remain have to low – As points core to continued low at deposits with our quarter. and said, remain – last core continued stabilized XX costs basis and have consistent deposit the

liquidity prior X.XX% was to improved the acquisition during as from cash of our the NIM our legacy mentioned, quarter, Financial excess deployed. Kevin As to TGR

quarter liquidity funding While drag the inherited likely yields deploy are the to NIM fourth work the end to stabilizing, additional TGR in the quarter of excess loan the we Financial excess. next from short-term provide as a into

for Finally, the the work. operator. hard Scott, team we’re the will achieved not very have we grateful ready take success hand been to in place, it great the I like this without quarter have all and At I’m the in to questions. time, dedication back could

Operator

ahead. James. Instructions] And And at our this Please Feaster for Raymond now questions. David go with time, open [Operator from take question first we we are will

David Feaster

everybody. Hey. Good morning,

Kevin Thompson

Good morning –

Scott Kavanaugh

Good morning.

Kevin Thompson

Good morning, David.

David Feaster

– Pipelines growth – to like loan pretty phenomenal. good. you sound outlook. I Maybe markets. growth expansion just know the higher We they’re growth due has on mean, been some got starting they’re on

loans we Just and could growth know in just the has amount about curious how and maybe think the Texas And organic pipeline from just of head pipeline? into non-multifamily you is touch maybe do You Florida you on how ‘XX? much how that changed? and composition as the

Scott Kavanaugh

– Dave?

David DePillo

across into all Sure. product at types, year Pipeline going record multifamily. the is levels including

would the expect with in to for of for we what proportionately line we’ve this seen So, year fall kind fundings year.

platform. spread XX% multifamily – XX probably know the C&I little about a our remainder across bit our XX% consumer and and you So in to

to that they a that to mix a CRE have primary plan the into that more we of lending was residential year acquisition market. and next with due that – the continue to add along focus expect they TGR C&I in expand traditional We little some to also

up know nice but what we to have I out that equally fact to continuing in Texas coming expect very just greater good with numbers of recently, year would is, would continue some in last level. relationships income a added not Texas teams C&I that know closely traditionally due C&I, you only the say had property, very C&I build. – I year to round So, the channel but pretty you even or to we track this to at

Texas, So, of what certainly have is, say the our we to to be those like the rate to in to going by a that Florida year, expectations end But build to-date. on higher are than would fundings we for run while modeled we ramp basis. expect really a it’s continue long-term to take the a significantly levels at would to we

I historical now of wide achieved state they expect and due increase what as from is and balance will that across a of that their as So, sheet, availability. previously offer product to greater they would numbers a we to pretty a think had have a depth to larger levels far much that deep

So, out very Typically, would say know into of quarter year. the I is excited the clean pipelines. fourth about a heading you we’re

entered we in However, than with prior we’ve stronger this year the pipelines in – years. seen

David Feaster

color. you you growth we good And the – going do on the if you an got early about about had Okay. acquisition. just expense some have know maybe Where with we’ve update could you ‘XX? that throughout can how you kind inflationary give obviously, core we think you know just expense pressures if we expenses, of us just rate as you think on know run give kind the of then know a and That’s investments stand upgrade of still cost then forward the And innings. – an obviously just in the it’s savings, helpful integration do you how of us

Scott Kavanaugh

touch expenses? you the don’t why on Kevin,

Kevin Thompson

integration. can bet. Yeah, the And about talk Dave you more

strong transaction, of type adds very across work team to that we the higher – of want normally with going so have to this they’re normal lot Financial very First grow in very that go to number retain a far well, a our employees out lot a integration of than May. finished the of in team, a TGR to able because so question, pleased at market is that very of pleased your as in talent a been and to would integration part country, in we we of much with

that hope $XX asset So we you make on we’ve a modeled we’re that. we And know to we’re I that we the logistics into track so want mark, – talent expense a perspective from improve had to billion retained perspective reductions, and for an time. be retained for dip expense sure that as can But XX% we talents. from believe again, we’ve lot of regulatory prepared ready over to

their a know, $X million You so. run or quarter rate was

we save expenses. many so And do expect those of to

how Our expecting that $XX plays the based in we’ll and the run forward expense we’re year, going currently million $XX rate cetera. out loan et growth, see on to for for million non-interest year,

David DePillo

still even and billion. – first the being efficiency be a over combination all with an around to from of from XX% look, $XX So standpoint, efficiency, expect we

expectation with commensurate percentage. expect be grow to line traditionally our some other relatively what to as – financial seen expenses are so we’ve unlike expense So is reporting outsized our we revenues will our that a growth, institutions in

for As growth. acquired Kevin mentioned you this know we

have employees through is our core additional we significant to – additional the and And planned size. of very saves some platform management our the It’s we some So would restructuring – retention But there. off we for any we structure. those cost are that after add very due initial not structure we conversion to market, in did find to a some in this most legacy do what that many, probably costs as the savings over on from do will some that our would that relative in costs basis turnover additional a migration, resources see of some ability an low overall at that’s time we absorbed probably offset migrations. still system on of May, that will able year, likely was plan still being and the cost have be institution say, this that. roll now But have in going of we’ve contracts and it our to cost to in been saves many acquisitions to involved forward would the are efficient cost

far, good so – So, so operation an from just

Scott Kavanaugh

about, as we some I their of deposits, Those Market retention Gary yeah some Area the you know made their also decision better the on were with – is who very Tice in for does you Board. was loss in – Kevin in the CEO, just the guys going cost And just that’s along we’re Also than I’m clients. Florida. relationships like really important that were relationships. everybody now very that clients particular, think pleased management I maintaining Dave a Richter, Garrett team, well. talked look, the to et President and of knowing is the know, remained those the you strong and saves cetera, think modeled of And do average know we and who

optimistic very on that. I’m So

David Feaster

hopefully slowing like color. some helpful on expected loan the better trough TGRF. That’s through was maybe And about puts lot drag yields the extremely just or touching you from margin. a us at XX-year. then the commentary margin, and it maybe move the maybe decline – new with given and is know hopefully from the some just It the you into liquidity of inflection appreciate Could the at that’s walk than a least takes just and great, sounds seeing we’re

thoughts margin? rate any just remind forma the could you Just of the on pro And us sensitivity?

David DePillo

if we interesting those securities, tremendous loans or – yielding anything sensitive average of the we have One to what we if obviously cash we’re have two points, pickup. can a margin is areas. I XX into effectively earning, redeploy on if don’t You basis is, know amount it’s know

to the a see of lot margin So that. related pickup you’ll

interest ago, relatively we a a other due had on we was environment rate low a drag of margin off little the basis there when The rapid bit years yielding higher ran. few that paying to is, from loans

impact got still margin, for those the overhang, were a starting had – years our liquidity much as benefit as ago to loans now but significantly we were our not So several impact.

were that cycled the a through, through So, refinancing portion of the loans assets the significant those those XXX basis lose as points Xs you’d cycled into we’re mid mid majority and the portfolio. in already on in they Xs, have saying

we of now interest we’ll would portfolio deposits lack the expectations impact you But, the actually not see out by with in to would impact our in the know more, funds and higher again to increase you those going quarter, I that probably we’ve increases see to of much yield’s due this bottoming that TGR. So we cost on stabilize low wholesale last us. offset and as the the as rates of experienced and that’ll as start of acquisition the a beta cycle to we sensitivity somewhat second start gathered expect starting funding, cycle of us through rise say lot into to know rate asset yield starting

in And we’re better Maybe a – our much, now. much know will about maintain we’re is where margin bit stabilize current think margin. I you little So, to at our our probably a – position forecast

David Feaster

you. Okay. That’s helpful. Thank

Operator

And go ahead. our B. Moss next come Please Securities. will Steve Riley with question from

Steve Moss

morning. Good

Scott Kavanaugh

Good Steve. morning,

Steve Moss

guess you it what sounds is you back the in originations north like are just pipe guys level here, circling of $X are just like for for sounds so implying I billion – with as to year goes, thinking? XXXX Maybe quarter first kind growing things the $X.X of – the the with pipeline origination maybe production billion expect the it

David DePillo

is – we if that depending run would billion may to $X always I see probably rapidly, look happens what little I the in could relatively a say at start of a would low over the rates our people’s accelerate billion little our the a aspirational on Fed, we around know, rate if in some $X activity up we market catch of beyond you expectations, start they is with billion. $X modeling reactions certainly the kind think [ph] raising to say as [$X.X] new you I an expectations one that is bit environment, would but to billion number, the of rate of know but

Scott Kavanaugh

is Here’s CPRs Steve, are the good declining. thing

is If that hopefully law know little you – with bit. a So there a us raising that rates helps

David DePillo

us be to Got get to – something

Steve Moss

All of activity. then helpful. expansion right, you the maybe just And in know terms that’s

– Just kind both you’re of of the expanding expanding Kind excuse me in maybe of pace you curious additional markets into markets curious Florida into bit a for guys and Texas? of on touched and the – hires little Florida. thinking

Scott Kavanaugh

Yeah.

So just are there’s do pretty to no way for activity, falls would to in But you something, continue lot lap. Florida going our you know both in definitely unless coverage a we’ve you you got teams there we know find know look we that mean, going say, look Texas continuing like us see for markets. we I we’re to Texas another that all and markets. I continue to hopeful there. in and won’t something expand predominantly California, always know Nevada, we’re can on M&A in Hawaii felt good one those And that or – whole doubt we’re Florida. won’t our to probably

starting gain some to the particular, on we’re like management investment and trust I know, You services. feel traction in

previously Florida. going that trust sectors. We what will some candidates both up we in good later those – But second are of our get had pretty in be turned looking think are powers this can’t seeking to I those we quarter or But first we have our we’re part trust operational, think quarter. gain we’ve there. the powers said in which it be branch to we in Texas, till until

You good starting some find know, C&I we’re to teams.

So we’re and going to continue either to – you to know up ramp try

David DePillo

– Strategically

Scott Kavanaugh

deal. M&A difficulty] [technical

David DePillo

opportunity and we’re obviously we focus talked little as of we But grow. now. and coast first, to our growth Austin and west find strategically, migrating the additional I as easy looking San Florida kind – Strategically, really of and adjacent at west Florida Dallas, along in so Scott think see little such would us coast on markets bit Metroplex is lifting. right for resources Antonio markets the the probably of in lot is panhandle of north a of great

Steve Moss

thank great. Nice the Well, for quarter. you Okay, all color. very much

Scott Kavanaugh

Thank you.

Operator

comes Please our go Clark next ahead. question And Matthew Piper Sandler. with from

Matthew Clark

morning, Good guys. Hey.

Scott Kavanaugh

morning. Good

Kevin Thompson

morning. Good

David DePillo

morning. Good

Matthew Clark

How pre-pandemic the line this First was from compared one loan to ratio quarter. at for growth on higher C&I that me point? and that how’s utilization this much of

David DePillo

I don’t companies bass big lot related There have accordions. larger of some probably There’s or chunk I that so was or But new get renewals the were more probably was, them. line new but exact borrowing by numbers we credits. credits expansions – it’s review, XX% would a for could expansion the of from access. say a needing

was expansion expansion significant it productivity. portion of for on for of borrowings would of – So, the based levels – I really say higher company

Matthew Clark

And know your on it analysis neutral. that? sure think beta you filings, how let us relatively great. maybe your out might you what Okay, that Not And you’ve in rate though know deposit that the assumed is beta you’ve know assumed you in you sensitivity do play the know, cycle? but deposit what could then in you

Scott Kavanaugh

Kevin?

Kevin Thompson

merger talking you company beta And Yes. related overall are our or our beta?

Matthew Clark

deposit know you first I Well, maybe for would the on data but get it cycle, in think be margin you kind just assumed points. would XXX the – then your filings on – or that’s you of basis to want you – we the – your how what I the know guess And the you we’d would the sensitivity on the I know, thoughts deposit take know under you side?

Kevin Thompson

Understood. Yes.

like beta, XX% be a But extended banks, the we the is a our with using, now, to core more set over we’re be over relationship balance – beta, happen position yet we up out. we’re the need current to time, model as that to increases deposit period to consistent slow way. this still on either we plays XX% deposit we’re and colonial to and the And Add handle currently model your model increase we actually of low, deposits, to this we assuming time, – it and consistent seeing neutral will fairly the fairly a I based point, believe in we be But the rate point increase beta XX%, think decay, able as over more transition year. of how numbers that of curve well a environment, these cycle, I that not anticipate about So time. until we deposits, outpacing yield rate our start depends will think your being sheet whether yield that much rate betas to – it – beta having deposit quite time see happen. last loan and other

David DePillo

is of guess long of end the to the news and curve buyer good salary I expectations rates. reacted the

loan deposit run adjust. have we starts before to the should rate So some on side side the

Kevin Thompson

Agreed.

Matthew Clark

each the that expenses. should loan a also should you knowing then And – run costs $X.X with I $XX remix shifting million you your too, hike It this rate think of sounds would included in run like to just help service opportunity rate growth million have to about How million think. $XX with in of – year? you know right you rate customer have we that that know expenses

David DePillo

it’s for hike it’s although we – zero hike. to artificially fairly out static, going because would little higher But That costs. I those a on That’s didn’t think to right, bottom what go Kevin. don’t, we than increase it’s

way of the a have bit little we on That’s right – up. room So

Kevin Thompson

current And those know average, are made expense we the is environment. rate numbers assuming non-interest year static you for the in million interest $XX

we said, think the over some as low – and time. deposit in we beta those see So as will extended it’s I we somewhat

David DePillo

rate half it. maybe into the adjustments of Yeah model

Matthew Clark

just tax presence Okay. Florida rate, And the how with in your that should then we about and growing think Texas? on rate

Kevin Thompson

as over moving down or then more for XX% of loan anticipate have so California. We out year we and production this time

Matthew Clark

Okay, you. thank

Operator

next And ahead. Tenner go Instructions] [Operator take DA Gary Davidson. Please from with question we’ll our

Gary Tenner

follow-up Can I you today balance and wonder thinking loan you the a morning. gave know about Good side know the kind reaction now on floors just of you that’ll – just thoughts of give us on some deposits then Thanks. just floating I acts? on you consolidated a impact any sense sheet. of to the rate that’ll of sensitivity. you rate rate lag portfolio the know had loans in percent the

David DePillo

breakdown loans? of our the Kevin is actuals have you which float rate Do

Kevin Thompson

Yeah.

however So year first about five XX% of rest adjustable. those adjustable fixed, – –within we Many have is the their

David DePillo

period. difficulty] [Technical

Kevin Thompson

periods. Yeah,

So, of yield new much add low on it’s it to the deposit I so a the It curve. of that existing in really anticipate have to the durations, lot that fact, deploy. a moving that lot high production – quick, the the we you competition portfolio too on balances see more that’s needle a banks depends shouldn’t majority moving is, depends and know know you we

be a that may still rates. anticipate deposit loan So I little delayed well, quicker as but yields moving than

David DePillo

would C&I points probably are loans say yielding issue and to not will a There higher XX between floors the yields have impact any to would we’re some adjustments paying I prepays a had cycled those, short since as much XX points. issue, more tremendous. the basis curve. on start the of dramatic mentioned, rates. that slight higher coming Scott those on loans end – basis of that those of The floor may anywhere of Yeah, than would the new the bigger – we’ll is, off, XXX and be have I I to Because lag our at now – the through, environment on previous say to to think us not those were of rates loan those net our have for slow I wider benefit kind majority – – the get starting loans

Gary Tenner

– increase that And Thank Is of some there then Okay. of you of full terms result changes know funds issued second you of in of – in just the that portion the a borrowed question XX/XX. the kind any any as repaid terms that in kind be you. or at would of

Scott Kavanaugh

what me that to most borrowings. tried repay was of we if repay to could. Correct on sheet – Kevin, I’m wrong, the TGRF balance to tried We’ve but everything we came we’ve everything –

Kevin Thompson

correct. that’s – That’s

Scott Kavanaugh

received at And had deal. we very down next the we the day that we paid a the holding debt – bank But company. the loan the sub it proceeds from

So I could. think we down that we’ve paid everything

David DePillo

of wanted you’re that you a give to the around? environment recap Yeah,

Kevin Thompson

Scott’s that acquisition year with $XX and you from TGR, way agreements The is subordinated million repurchase the company a there deposits some appreciate customers to remaining much At debt holding of of that a Yeah, million like rest bet. different point, line. doing. came that $X are really of TGR end, are the actually was doing we the customers inherited in

David DePillo

the I majority. that’s think

Kevin Thompson

of it. the Majority That’s

Gary Tenner

color. you. Thank the appreciate Okay,

Kevin Thompson

Thanks.

Operator

take Capital] [Coral [ph] the we’ll next Please with And from [Neff] question ahead. go Brad [ph].

Unidentified Participant

you. thank Yeah,

me what clean in reminded say, like our goals a year, XXXX profitability just so on ROE your maybe in are, You and basis? ROA

Scott Kavanaugh

I on and don’t mean, X.XX% X.XX% between know that Dave, probably on think I equity, somewhere between common I much. generate to could changed you disagree? would average and Kevin, XX% somewhere it’s XX% assets, – you return on hope we

David DePillo

ROA X.XX% number of is kind extraneous items. some know Probably more our normalized you is

Kevin Thompson

That’s right.

David DePillo

what But where that’s ROA Fed and quickly much – the in yeah a environment costs know X.XX% have but deposit will like kind to. ROE is moves you of attract how reaction how pretty mid-teens our and also depends we stabilized

Unidentified Participant

seems So the big. of range kind

to what So from Is upwards a X.XX%. normalized that ROA from to hearing? I’m X.XX%

David DePillo

Could has dramatic be outside outside gains pretty as our had those ROA, that gains items bolster other impact. swings our on have – potentially historically some high helped that that have as securities some We’ve depending ROE. an could know – you securities had some that of we’ve in that because a

swing. or without So, biggest you’d where that depending that’s on probably strategy see with the

Unidentified Participant

– But could possibly gains, it should of be security so to I X.XX%. okay, possibly with think Yeah, upwards it X.XX%? okay

Scott Kavanaugh

XXX% yeah.

Unidentified Participant

it. you. Appreciate Okay, Thank got it.

Scott Kavanaugh

you. Thank

Operator

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

Scott Kavanaugh

that proud in Thank we Very you call. of our today’s results again for participating reported.

that path are and doing on. well very lines business we’re Our pleased the I’m

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

Operator

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

time. You at any may disconnect

First Foundation (FFWM) 31 Jan 222021 Q4 Earnings call transcript