FFWM - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings, and welcome to First Foundation's Second Quarter 2022 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 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 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

and you Today, quarter will remarks, Thank morning, conclusion XXXX prepared we earnings accomplishments be prepared of second Good joining our the remarks, and will welcome. for some quarter. activities conference we highlighting questions. open At the for this the call. our delivering line

delivered continues strong business our we to well. as model results quarter, perform This

earnings a increase were quarter the which XXXX. XX% a $XX.X X% $X.XX quarter and XXXX or million over $XX.X increase first second for Total represents year-over-year. a million X% of per the from quarter, first the share, increase quarter of revenues for Our were the

higher Our quarter share value $XX.XX. per ended the tangible book at

also paid our second per share. quarter We declared dividend of cash and $X.XX

this right are results. our to industry a facing are As and and quarter's aware, we each well lines perform meaningful yet lot headwinds to the in of well you of ways there business continued economy now, of our have contributed have

banking, continue and employees quality And our Our services. to deliver wealth across performance also our the demonstration dedication who all to the trust clients of of financial areas strong is management in testament the with a across pipeline of our of company. the

$X.X across a very model while organic our truly increase the today reported recent on Furthermore, a our continued deposits we our loans environment. the M&A also we self-funded, had growth markets We strategic we to positive story, reflect billion continue that with our capitalize working advantage our build of strength dynamic is in outlook diverse to current serve. via we for results The originations well and that the feat. the business largely and continue favorable levels our core remain activities. new remarkable Loan group so institution and strategically quarter, record opportunities, upon

in XX impressive which from put job fantastic lending not excess $XX.X maintaining our as our balance our and high the to been to we quarter billion, highlight and basis to cash the standards. would for Another $XX.X was growth, a have points quarter, continue low expanded use. sheet at billion credit does we remain NPAs greater even team our

loan have call. perform that touch in established portfolio on the very will well. We well-balanced a later to that more continues Dave

to profile Our core increased deposits Deposits online to ability clients diversified quarter, remains from deposit driven $XXX the continue attractive by deposits. XX% our for high-quality commercial of million attract retail for by and with and and total channels.

All to of deposit team and the of offerings. strength of attractiveness this our our speaks the

contributions on Management Wealth and attracting and provide to successful firm continue clients have been new Trust ones. and to meaningful retaining Our the existing business

to market this the declines XXX advice saw due quarter. our expands all-weather and with their month the performed management The more clients during the these S&P quarter our of as benchmarks, to than NASDAQ take conditions, In that for respect well quarter. even significant like clients investor manage largely times ever. at we $X.X the under the in Assets our billion, ended first portfolios

new addition working of Management expanded Florida talented with them. each are actively team with the Trust we Wealth We and results are are pleased We we and the members, offering of that into successfully initial one our seeing.

wealth services. excellent market an is management private past, the in mentioned have I As for

these of of in Florida, to which important clients a of will allow full markets. powers secured both suite in also the offer and us services state trust Texas state We the to trust

To additional the is successfully for these in Looking our colleagues working when are grateful second have deepen systems and end, unparalleled in am to largest serve on additional It's the to city as This services. step GDP, continues have a new Florida that XXXX, population and most especially are produces well serve we can platform, Texas. novo of Texas or so Plano, to - Florida. tremendous and of the trust to base Texas with our our opened May. these hard in make worked the the final doors investment And It expansion will many we or our opportunity number industry-leading effort this whether only rise. and converted us. happen, by in team, U.S. banking the centers for ways as Bank discussions we moving in relationships center it terms nation's client the California, work everyone who as Florida to to them, regions our de business-friendly into technology with businesses operate. on clients Integrity First up X% core efforts, has we we We in begun occurred the clients acquisition in state of growth. of acquire the branch of more annual now is new valuable in I ones. of and one management of planning Florida all already uncovered running support the been through banking our present officially

at per branch, of work who by for the from salaries received pleased warm offering also and things in $X.X we competitive Plano employees work multiple expect Also, employee in the stay efficiency, of leaders, reception warranted. weighted we great enhance to technologies benchmarking and the we additional labor ensure [ph] across it ensure advanced We In remotely, have are future engaged we we community at time expand at constant During and quarter, price should taken buyback hybrid continue we continue option as the million ever as and are stock utilize recognition tight our this which thriving. our grow important zones. repurchased to a and includes we will This $XX be of this training to as operational team stock share. to have to market, invest for is average markets. our ongoing setups steps states our can those Management our

of to our One people for a best assets employees First make our Foundation we great our strive to is and place call.

team economic the our levels pipelines with credit we our As environment, strong positioned quality. all rising to across transitioning the a well I in excellent look for pleased business half my first First very of remains and by First quarter with lines ahead how the accomplished saying are Foundation year. that grateful rate the robust. I'm sheet the and am to at Foundation. for continuing balance conclude and a want we've remarks peak Demand at entire and I is services very cycle, opening

a committed dedicated are a very who and serving business. valuable have of talented and professionals clients We to building group

also truly our be have to well-being. now, honor It organization. able lead us CFO, to financial is call And We amazing clients with who Kevin I'll this an entrust to over Thompson. the their turn

Kevin Thompson

Scott. you, Thank

decreased environment. to XX from assets, to increase in credit losses as XX equity X.XX% in increase basis rising on in as second release was rate $X.XX $XX.X deposits return of reserve as per all adjusting balances, utilize assets of This basis we loans been deposit tangible The strong of by acquisitions. expanded customer net in increased the rates of offset As of X.XX% XX metrics for and reserves common The in a XX.X%. increased result prior strong points by NIM expanded total portfolios, on quarter. return our The our a the margin with an was interest-earning yield allowance loan basis quarter. loan million, Credit specific our driven share to points by have the The remain primarily excess interest diluted strong purchase from partially to which loans XX to offset loan the from XX mentioned, the was the the points, credit loans. production was by $XXX,XXX an for to to liquidity quarter X.X%. related cost increase on ratio deteriorated at in earnings our by

of driven and revenues balance million Our and fees the $XX.X wealth administration by non-interest $X.X consulting income in million, fees. trust for banking-related the management quarter in primarily million, $X.X was

and management and for to that was in the investments for quarter. earnings from advisory million was combined due a commission and compensation quarter. which balances. in achieved paid quarter, Customer our in divisions by XX.X%. realize rates to The related credit place deposit trust profit and decrease in Our pretax bonus a benefits saw a the uptick $XX.X leverage we increases Non-interest ratio expense benefits, margin took to of increased continue on service slight annual quarter merit $X.X have XX%. the we the represents efficiencies. payouts and of first strong We million operational due the infrastructure, costs from in With the expense first increases efficiency made primarily the X.X%

to Finally, our prior quarter. XX.X% for rate compared the XX.X% quarter second was tax the effective for

our strategy over that David should We are the I just tax the to over grow call realize turn DePillo. to years. next beginning benefits to now from will continue several

David DePillo

Kevin. you, Thank

originated first is XX% million $X.X year-over-year. we the loan quarter a XX% the for a record loans mentioned, increase and Scott which of totaling from originations amount As quarter, a increase with

finance funded commercial commercial the loan municipalities. of real million credit. real loans, percentages in loans, loans $XX are million of public C&I other. XX% of owner-occupied XX%, of commercial commercial commercial estate multifamily adjustable million and from revolving breakdown X%; finance loans in billion quarter, for of of the public note, of and XX%, second originations - originated driven owner-occupied as an is at during during million included bond market being division follows: originations land XX% public in was those Looking $XX loans a construction with Of bank away our $XXX estate finance term $XXX quarter, the a loans increase large including the business lines quarter increase demand new X% and that loans X% single-family commercial $X.X commercial, XXXX, were of loans. equipment which the Contributing to record by the of by The

out given dramatic the positioning increase run historical we through the rate the and be somewhat channel. anticipate found in movements the originations quarter, channel in in this second interest pipeline in as rate Following starting our our July return we to of demand majority in temporary unique August. expect heightened this We to

has quality but strategic tax business credit providing lower return. component equivalent public our tax over of an ability a originations to effective benefiting rate both become compelling losses, Our our a from with loan offering historically finance division time and also

originations of see is of lending that strong fell changing to all high third in as loan to accomplished continued the overall this record It basis to ahead quarter demand know pipeline, channels. quarter important below for NPAs Looking without we the our quarter. into heading always our standards, points XX underwriting we

more the we originations, weighted on X.XX% specifically increased of quarter, that yields, average was Speaking first a about achieved which X.XX%. rate from loan

This few over the in curve quarter, end rate see higher funding we to impact the of of the due long to yield increases the started past months.

sales SFR and loans and following, As XXXX, June of X% of business commercial multifamily XX% XX% loans, loan X% from XX% land the maturity and non-owner-occupied loans, construction. CRE, consists our consumer

from Our $XXX compared increase XXXX of for Deposit strong the quarter, the first the X.X% growth Services quarter during largely XXXX was division growth an increased digital million increase is primarily Commercial and year-over-year. of million of increase channel. non-interest-bearing XX.X% branch deposit of to quarter an XX.X%, quarter, X.X% million experienced attributed the and also the money increase retail in our deposits business which by Deposits bank of demand a market quarter. an during second $XXX or a to $XXX or first accounts driven and Deposit our to attributed by largely savings in

Our of deposit for XX% total non-interest-bearing our deposits balances. account

work. manageable XXth measured the we as excess All June it as been the quarter to success time, we and so At ratio ratio successfully to levels XXst compared past but the I'll of without XX.X% achieved are for grateful back have This XX.X% this still of take in Our deployed place. experienced dedication their quarters, our a from in for increase represents team an the March as am of loans we and bank have operator. deposit have I hard few during last as liquidity could a XX.X% year. not June of ready have questions, and low size. of the hand to historical great

Operator

is this now for Clark from [Operator floor time. open from Sandler. take Instructions] We'll The first questions Matthew Piper our at question

Matthew Clark

Good morning.

Scott Kavanaugh

Morning.

Kevin Thompson

Matthew. Morning,

Matthew Clark

end on happen cumulative the this June? cycle? Maybe of total deposits Yeah. spot interest-bearing starting for have at the beta rate the on expectation the for do And margin, you your deposit for to what's

Kevin Thompson

spot part. into take quarter. can total basis rate on area the point I the that mid-XX deposits end the near first of dipped The Scott,

Matthew Clark

Go Okay. ahead…

Kevin Thompson

are an very And customers to and you seeing, terms the then banks in and in know, beta, as environment we quickly of unprecedented are rate that. bank increase adapting

slow So time. this where was debate get the take longer on you loans, know, pipeline. And last deposits, as we're quite the rate opposite cycle a seeing through to

last particular banks, And deposit for what this those catch little loan cycle betas… with quicker to we for opposite. And deposit than betas. So you a know, is all were betas up we're beta time cycle seeing the need the loan much

Scott Kavanaugh

a Deposits even in reading I've deposits there's banks. of - can that don't the have raise at have I I say lot out this a somewhat competitive and that's It's environment. What declined rates stuck a rates you think this similar. reports bank noted country having is, many and not Matthew the is, very that

expected is guess. through and a it's tomorrow, what shortly rates I I next more don't where move has in basis less So the But anybody that February days. that the seen thereafter points than will or cycle think of we will increase meet that, is you've beta anybody's XXX XX been believe, is meeting,

the go So answer not exactly we're up, deposit by but much is costs sure. will how

Kevin Thompson

our are channel, and consumer somewhat Matthew, from some Florida legacy So of branches. especially benefiting our in we and retail

certainly move So on those tend to money the available slower margins. and

level be are deposits continue what the more consistent large the we market. at pretty see branch we to will a in betas with as our growth, So But expensive. experience obviously marginal

Matthew Clark

acceleration Any the Okay. but kind loan bit an on in pricing to a like rate. And see over beginning update the just uptick, yields, these then year? here of yields increase new production in an loan switching terms we And should little multifamily it nice of in days? sounds next in of

Kevin Thompson

have book and higher levels at of is though than relatively historically. business obviously, So we're starting large, we the down fund even to

were But were out increase In a you in If rate you we've run closer that funding X% to of That going yields higher was getting which as the nice. significantly before in we have June, dramatic blocked rate current did during noted, quarter than our that that we're lot past. previous what rate look number. its at saw. our that up, movement the said, seen some on we - loans we being

of rates averaging I to had we been on mid-Xs right the say multifamily, Current So now. work we've through portions would pipeline. those

rates So to to saw close what about XXX lower, were basis points was higher X.X%. than significantly competition we we're close as a X%, drop when where

as of We going [ph] really, and see portion will of that next overall the but year, start third seeing fourth quarter, the larger starts momentum our really benefit we balances. into a seeing that in

positive net-net from So us. perspective, that a as to

in settling and Libor, mid- to a the seeing in also on certainly to SOFR some Prime, the that is The line yields commercial lot our we're [ph] in benefit Xs depending in, X%. see business cases, those is still on either expect X% upper we other rate movement book, in and of to

into of higher the So news on going half at first of rate in seen is year. certainly what the yields a year, we've the should loan be good the than latter half significantly the coming

Matthew Clark

Okay. close to It's was June. encouraging tracking your to X% loan hear yield in

yields and here to or line all expansion deposit excuse yield it expansion fair increases? a or new of more it the together, little with modest loan offsetting try putting from NIM So the hold assume kind some is - me, to mitigating loan

Kevin Thompson

maybe of cost is stabilize deposit start right it we'll So catch-up we a a to then probably kind of bit should expand but have little out. and now have seen it on

like of X.XX% operate to term, in Near already told X% the little see that, you, we've as newer may we range. of compression on we these some of for a bit as waiting kind loans… So we're

Scott Kavanaugh

what the all it I reality on you're the But to Matthew. fairly depends It depends the Fed. accurate do, has is, Fed think on

Kevin Thompson

Yeah.

Matthew Clark

us what this dollars Kevin, for in and you can for service assuming And year customer then next year, of full for terms maybe Great. give Okay. costs you're year?

Kevin Thompson

Yeah.

and forecasted factors many Reserve it does. depends what have the Fed We that, on

quarter, exact increase move want what it service baked quickly. is. think will with are upfront there's like a clients. we seeing have out, and be impact really We fully factor. beta service find still increase you don't year, customer give those our customer saw in we the Fed good deposit is mid-May continue. And moves. we'll we as in will that's numbers, And June, something next other aren't on. We We, an the those telling And out so the But moving be this XXX% still these in to week. I Wednesday, And Fed strong next an number cost a banks beta. it in won't happens those this of and will these - some see play in next All what over into relationships will

We our have technology for other unusual size that's that they couldn't with banks. bank find a

out and net see So about interest we as we well our it I think you'll it manage talked play in will margin.

Scott Kavanaugh

So low, at view commercial higher rates When bank. when a know, our we see look our ratio efficiency rates would of efficiency closer ratio the yeah, typical think I it you we way you to is, spectrum. what operates lower are end are the at the

a So trade versus it’s off NIM part of G&A of ratio.

beyond. and earnings probably pressure next of and of then on ratio little But of So [ph] lever see sheet that and impact need more that. our kind into to the next balance couple we quarters, you'll certainly, our as and expect the a kind term couple next of will see some subside to near efficiency over quarters year growth in we'll

Matthew Clark

run expense just the And in then of quarter? third the non-interest any on Okay. updated current rate thoughts

Kevin Thompson

Yes.

as first the were in down a quarter. other that - had customer bit expected second saw our So - service or than little we in actually the you costs

is quarter seasonally high our First area.

service, to expanding we're efficiency see low and mid-XXs in employees our we as to, increase So do other our rapidly, of we to investments will also for efficiency is business the all, - but low mid-XXs. in customer the ratio year. - plan for low expense over year we some as that have ratio that keep full the And line, importantly, some most first the but time, of things maintaining in

Matthew Clark

you… Thank Okay.

Scott Kavanaugh

whatever, sure from into those when this standpoint, that property Matthew, comes to to proper make we standpoint that very pushing [ph] we employee we're that But we we into built during stuff expand make time always types had to compliance staff manage employee an all an be to at the budget or things, of out from if that don't frame certain are trying areas, possible. have BSA, it the and we will those sure careful

Operator

question comes Taro from Stephens. from next Andrew The

Andrew Taro

morning. good Hey,

Scott Kavanaugh

Good morning.

Kevin Thompson

Good morning.

Andrew Taro

Hey, of phenomenal on kind this quarter. quarter one, congratulations so production really

of Just the going new wanted across where lines get pipelines a into thoughts of balance to kind production should throughout volume of loan year? of kind quarter the this sense and kind of were how kind third of business your trend at on

Scott Kavanaugh

Sure.

If municipal that's has we billion a billion which the that at for seen. rate you out group, finance $X.X had run the a double rate us put to for us in of probably $X.X we've what almost on run bulk half that's run effectively backed rate, rate run closer looked to our some you see would

in finance. of lines, specific show including smaller our multifamily, all lines as the even demand current equipment continuing across commercial, more some such of So business are robust business, pipelines to

impact their see it. to and our We've And nicely. starting of retooled kind that is from growing positive division. SBA are pipeline We revamped

C&I from have smaller some will benefit well. we balance So as some

during our of that sectors that typically tend as in impact less seen we've multifamily is customers what expect what other that's see to based and market the more we be we on focus in on at have least It a to cycles. consumer-driven demand a the slowdowns activity. should well, in an that the potentially little commercial on as economy, telling in segments CRE we us unlike So benefit the various

slowdown very the I the But of at high say So a moved we we rates still would as activity, demand what from where expected is precipitously level. market little a given is up very, a more saw.

Andrew Taro

guess sounds kind growth to the Yes. you of of expecting to I funding I Great. of level to expect fully you through maybe the you other It's on you to future it Do speak market talk And fund this it, could kind could growth kind the side trends, need sheet. quarters? for encouraging. mean, the or still growth balance of Just like, positive speak deposit dynamics? loan loan the to go of broker core in can growth you're perhaps

Scott Kavanaugh

has hold we third quarter forth, the loan originations I have will pipeline is That trending robust pretty deposit make I said, is first very on the quarters definitely trying Well, well, to pretty stay can that that and definitely put a as that stress well. a that side. core-funded. think we up favorably say on our the we the pipeline put sure two being

at time need think did we be we have will So that I broker to, market. don't this to if - the it minimal. If to it go would

Kevin Thompson

delivery, our We in would brand expensive. our higher-costing keep online the say, a I And are area, as opportunities. cycle, and big more it our while. market Unfortunately, probably out will said, costs broker of have, there's marginal for Scott this deposit delivery, commercial us between

growth beta may of have large of experience. of relying outsized because we growth, So low luxury environment low don't our some of banks - the that

And metric However, at, more favorable we compression some the profit large it continue in slow the and or may should even near forecast we've models. margin. grow looks a continue the profit though with brand on much growth to looked scale is have term, the down we growth. to And

Andrew Taro

Got it.

still expect this no kind we securitizations And year? of Okay. should

Scott Kavanaugh

No.

Kevin Thompson

not Yeah, this at point.

Andrew Taro

Okay. step for the questions. the great. All in right, I'll queue. Thanks taking back

Operator

James. from Feaster David The Raymond next question comes from

David Feaster

Good morning, Hey. everybody.

Scott Kavanaugh

David. morning, Good

David Feaster

to on share. share your you some you especially in But competitive the competitive Florida. taking that's a as lender the the guys hear loan side? seeing. as I well mean new find of sense just that's advantage gain Texas, to in and markets landscape these like on both newer like you're markets. that thoughts you I'd do are competitive of I'd Obviously, the - to Maybe get allowing side, both your What highly are

Scott Kavanaugh

Sure.

Florida, let's focus business our lending. And multifamily. and the commercial – remix certainly of we CRE they heavily a with activity. of about a were on part some to in for foothold, They their if focused equal of had refocus little non-owner-occupied So more way start foothold has been

to continues we've the half year-to-date, did on they're that year what the But see strong think redirected that pace and do the for the demand our latter well I we've last as or about So as same Florida, they in plus in seen is, what Texas product the of minus. efforts as year, you'll market. multifamily there is a

gaining Florida, in Specifically we're good traction.

So say, of we're you basis know, Florida. on seeing, I relative growth pipeline a would out significant

So business and the for I other more than what our we no strong some say California would markets. major of demand see competitive is in that. lending commercial

of So originators the there. in market We see the of still I demand of the tenure giving think bank. the that some we're in the have legacy we

and say, would to they're place than in out we testimony a And teams favorable. the that's seeing We good good feel still the that as together In good some we there. does so to because fold of think positive tend of and activity Texas about retool that level in create starting think Florida. just of disruption, in I as fact originations have in I put the I we hit organizations we strides. kind we're to So levels Texas, it's actually that year-to-date funded been, equally

we a and good business, demand the So little are good side the more in good - focused but of seeing that's multifamily. still the penetration been C&I on

continue ago our our balance product fact being will to the significant in gain share of against unique that those really is in the markets. and and we with agencies. product to small kind competes So product well market successful started the came the in several see agencies very years Texas

So it's across a seen model the that we've country.

visibility kind push for the been pay our it, So the of starting we're off. fruit market, demand some that able see good we've product and and good into labor of to of to

And market So seem a acceptance. be direction. positive net-net, I going would markets to of in lot say

David Feaster

Okay…

Kevin Thompson

pipeline of our numbers other kind like. we Texas the on and Through some what day, had Florida look

Scott Kavanaugh

from seeing the extremely in a Yeah. and certainly… those growth I would we're say standpoint, is pipeline momentum markets good

Kevin Thompson

in each $XXX over Its million market.

Scott Kavanaugh

pipeline. was of Several $XXX is - million each But that one current channel alone, so… in market just

Kevin Thompson

We're actually both end Florida. into Texas seeing decent some and roads

David Feaster

gains. growth this demand just That's of it is all kind of - I true market like you and just about how just hires, market the forward, share of combination slowing great. that pipeline organic about new as think you was pull us forward maybe payoffs for think Could as And just commentary core help potentially to going sounds like this taking a given paydowns. growth, and net expectations this well together. know, maybe growth not demand this mean, expansion,

as put organic think this do all Just about together, you forward? how we growth going

Kevin Thompson

to none possibly back nice, the sheet balance really Integrity First David, tremendously. amounted honest I look history quite than other we've really First think the enough be To to you them have you if grow but done, M&A to at of - is of Foundation and Florida see transactions the

but see testament nicely. we balance I have quarter would expand to billion a you organically, to our $X.X I origination a think a it's growth pace than countries. we most a to $X.X grow up banks the greater to continue nothing think that's did have third team quarter shaping gone in If at real and from sheet those billion

So what to that paces. those shows that the and all on lending step can markets pretty at to team there just Dave's have out we team and the plate put the high continue together fund in we up

David DePillo

at significant - year the not mid-XXs we're is looking because down loan slows kind the growth loan year-over-year. growth what would achieving We and for in forecasting larger, a beyond probably to growth expect today. on organic slightly and denominator next we're we're mid-XXs rate outer years Yeah. that But of low book, a but -

David Feaster

Yeah. And guys touching have know I working then else That's just you on something been that incredible. on. maybe

the update that with any Obviously, we there? rollout? been Nidec could on And extremely just partnership curious gone partnership the wanted updates [ph] get in where are has crypto, we where you are Just There's an to provide? volatility and but well. some

Scott Kavanaugh

workflows completed, the our to test to the basis. of go, now pilot, we're the and a on now we're - David, the an go-live first employee internal kind integration Sure. is ready point doing where

So few activity we months, we track. our say going then But after everything into be integrating all and go beta is that I kind of then be environment. given shortly a our a the beta, internal an it had that delayed on and TGR it public along would and in out will internal will should that, our a rolling relation we've to next be live. after beta got going

Kevin Thompson

believe prices believe customers And demand specifically bitcoin in over the plug their access to our there's bank bitcoin the we important work still related. into systems technology for have forward. then And going very would blockchain important we time, And technology also works good through for the modern to the really that this banking bitcoin differently legacy compression markets. that to consumer and trusted is despite having be ability

Scott Kavanaugh

would I you've David, bankruptcies things say that seen and some Honestly, recently. other

positioning we're a stronger want trusted I client they in I bank this that what to were company think through to their make right whatever coins work weren't it would been seeing happens that there, then even know think now. like turbulent people times there's through out for their coins, don't

this. So very on I'm actually optimistic

Kevin Thompson

unsecured you In the a have you and fact creditor that asset access storage - of [indiscernible] that have Scott, user a interest through to case, go really you protected had. a think you this cold I some very a [ph] ownership exchange Yeah, an thought deemed your lateral through these right bankruptcies your point, here that in didn't and good position. their

would be point, it's given be turbulence. that going [ph] the standard market to advantage So the the the storage. industry for its I your Scott, been say would cold probably to bankrail to an it fact

David Feaster

Makes Thanks. everybody. sense. of lot Thanks,

Scott Kavanaugh

Thank you.

Kevin Thompson

you. Thank

Operator

The comes next Steve Moss Riley from from Securities. question B.

Scott Kavanaugh

Morning, Steve.

Steve Moss

morning. Good

up on if maybe Scott your point curious thoughts mention and and what pushing are heard of have I out. following some Texas Florida? expense Kind things plans Or you there? in impacts Just you of may any hiring that

Scott Kavanaugh

expand that marketplace, people. mean, refrain good step hiring people from the can extent no. and the to back find we Well, I will we people, not production that to in we continue

deem we to will to into We always continue try marketplaces, additional expand as necessary.

normal or initiatives, live of that are employee there where give that to want another going just some having channels, But six instead the side technology hiring we on for don't have months the through I side, some the something. to without So added impression. can on

So into going people, continue all the grown. has that's shareholders some But is being said, that have a down the we're And the time process and the I testament team And all. as Look, we sheet us not had on giving we to Foundation that to again, that great opportunities possible teams we're great you marketplaces. trying can, but fast expenses it think slowed expand that there. it hire manage answer production the the try shows say First manage to best where depends to I'll out as to it has owes that of at think uncertainty. how expenses balance during to management I to as find

Kevin Thompson

a or that longer our anything say, really would new recent would we period. ramp-up payback business Steve, have lines any expansion outside in SBA, of I of significant contemplated haven't

a of managing all nice expenses. scale Florida customers on going the those there So create gone create when kind lot I absolute steps? is around conversion put us in at to that think to growth? new down margin? get additional higher about through quarter. [ph]. that additional now are getting of end way need And to a Do those efficiencies we the subsided our we onboarded on and this Or of kind of pressure - to through processes that it Or talk and list

That by are the to pressure little platforms market. and a staffs on well our in and our the near-term customers converted create large, now of as our So as some of company. desktop are now, current bit staff, into and did integrated mobile

refinement efficiencies now looking are through that through right we're that at for of can to create look not may our business we more before, we to have other expectations now. comments kind but model a And in going we're efficiencies constantly where and his opening remarks, lot of So opportunities are operations. refining seen we Scott's

that and process. some get of of is our rid driven technology manual of Some AI lot to a robotics through of

of have processes been always challenging. rid and getting it that paper a of we Some just while around is are that for

and certainly more that. upon dedicated to over to comment it's a So efficient us do we're become time,

Steve Moss

the here, then helpful. That's loss reserve And on reserve ratio. Okay. in meaningful decline just loan

give can color there… or you the assumptions any Just around the maybe inputs going out

Scott Kavanaugh

baseline quarter. We economy. risk XX constant we thought just model this the we me, downside quarter, of XX held kind more of a kind of the our if downside… Last are of shifted to It's little correct base, interesting. Kevin, because And am I wrong,

Kevin Thompson

That's right…

Scott Kavanaugh

lines back the focus that better. modeling. in the getting more Moody's metrics every keep results And keep and better positive The In we on, business coming quarter. that of

impaired thought say had have would we a purchase provision, nice we acquired bit on probably previously. recoveries have of that I some So that the we getting little been although would loans we

coming seen. better but as - we've than or metrics back all are the good So what

balance that we every can mean, quarter around model ended much baseline up So of qualitative we in how kind just we're reserve to quarter we of of the continue maintain. trying I to - a where percentage before. still kind

where So but negative any wrong, nothing all if in I production portfolio. that's kind existing decline new showed we're based now, correct it's of coming where the the me and on metrics am the

Kevin Thompson

the The right. trending But of chain able change. scenario because use issues economy, approach nicely, environment we're and in the the That's et that interest and value taken. the is conservative economic with measures We're very cetera. to some rate comfortable we've may

Steve Moss

you Great. the Thank Appreciate much, all very color. guys.

Scott Kavanaugh

Steve. you, Thank

Operator

next Davidson. from The Gary question comes from D.A. Tenner

Gary Tenner

good Thanks, morning.

Scott Kavanaugh

Morning, Gary.

Gary Tenner

timing was what over course of of am And the the repricing quarter at of it I LIBOR the there billion be delays floors end, wondering repricing? or amount about just portfolio whether the any SOFR-based? is quarter, in $X.X then Hey, that Prime, of second C&I

Scott Kavanaugh

that probably - could have and future we I don't get calls, for the Gary.

running from C&I medium this a to lending now, municipal were more In little of of there's k we because in portfolio the You previous term shift term, about to our straight quarter historical, area, kind finance medium-term been from XX-XX. quarters, longer. a shifted be tends which bit to adjustable. was significant That a

piece. you So if exclude XX-XX, the running we're owner-occ typically, about

some significantly the those, important of and as us, don't and of a Prime lot right were book more a smaller we burn because in SOFR now, that Historically, a to I a to need credits, a for side. times had of statistics LIBOR, think floors floors, lot those As it in of -based, lot have The that far was the we medium-sized through. are front place while. during floors burning But lot became they a because that we've of our on - Prime have we're of based where Kevin. larger through fairly lot have we floors will credits grown not much the portfolio,

the to we're kind So getting by the moves previous the benefit the direct of of subsequent movements Fed. the

in more So through. some next see start half those the momentum positive cycle going year we're I to of the into probably to think going as and year latter

Kevin Thompson

And we LIBOR. shifted from away

Scott Kavanaugh

we're a SOFR-base now. Yeah,

So story short, I have give of metrics I front me you don't to long a guess, that breakdown the in today.

Kevin Thompson

portfolio billion $X About our of is…

Scott Kavanaugh

Its very…

Kevin Thompson

With Prime. that SOFR and

Gary Tenner

you versus fund Okay. Thanks say, so slower able for then is. dollar you double a the quarter, in you kind to - the pace to side, that sounds [ph] ballpark on quarter dollar where on had be the at the need loan it use the that liquidity for to of deposit growth, what quarter, was quarter, to of immense growth certainly And revisit ratio the the in keep to would it mean, I second bit. growth of good sheet loan really let's the going that. and it to its this pace a funding fund effectively deposit a although in that obviously, third net were balance even

So different market deposit to resorting otherwise? suggesting without can your you're support of channels growth clear, that wholesale to or a be amount

Scott Kavanaugh

positive tend that Stuff hit the Well, will it that future are deposits our feel the but in I quarter. would in deposits that, on that second say I second third far third fairly in be am fund sometimes that the in hit with lumpy. to hit would too optimistic quarter, I the we I quarter, they'll out pipeline. in we but quarter, thought the say didn't in can

we Beyond reliance continues at forward that be that its something have last the loan that, our could have of core, it - on growth that provided some been… our to pace

Kevin Thompson

plenty some I of Scott down we of think quarter seasonality tax. fourth our during typically we have people margin. what's at the expensive the deposits kind commercial to lot some then of in time to where that They of need see in more have That's their are taxes. paying where gap around historically that balances of run build up. alluding MSR-related deposits there's the we're plug that and be deposits for back is, the may those market A tend But to a are there a period short available. -

opportunities fund on side at we advantage but taking channels that - available to in of are don't than the to some the more margin, now go of call, give cheaper business. anything there us cost we're and a is the will wholesale certainly cheaper seem want into it So the that us necessarily of to the others than some that be

Gary Tenner

think cycle growth. sheet growth second that quarter. certainly to be those I possibly for reasonable drive least here NII this pretty that… Well, may is I And the peak then But Is put sense, the expect NIM we a at seems robust rate to so the it in – we all that - drive in balance thoughts. to certainly appreciate guess, at together, going to

Kevin Thompson

Fed That Yeah. we But near expect we're could - we're would see know, economy normalize. range-bound. somewhat slow impact and have but We that normalize there we between don't I say and know, could I to say - again, around course. term, And it at Again, know would looked growth expect of to creates Fed some obviously, the turn a that sensitivity on is the increase, its more we've to we if kind that they yeah, we've X% the X.XX%. margin rapidly always the where if - tailwind. you the going, lot down you continue modeled

based to forward a expand yeah, margins I And start say information. term, So curves bit But on know, range. periods we future that, little of out. maybe run on kind of market of a typical based a kind near but within you would

Gary Tenner

Thanks very much

Operator

does Kavanaugh This over the today's session. back question-and-answer Mr. our Scott closing for allotted remarks. turn conclude for time will to I call now

Scott Kavanaugh

forth like would Florida thank employees especially I the First integration in Integrity. the call. for a that again the today's just First moment Foundation they have quarters, take in to hard the you all work of participating several to last Thank put for

optimistic I As am of great opportunities your remainder we enter have Thank of the half us. day. of about ahead the XXXX, you, and second a

Operator

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

You may now disconnect.

First Foundation (FFWM) 26 Jul 222022 Q2 Earnings call transcript