Earnings call transcript Q4 2022

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Operator

Greetings, and welcome to First Foundation's Fourth Quarter and Full Year 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 President and Chief Executive Officer and Chris Naghibi, Chief Operating Officer.

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

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

reconciliations measures. materially For cause actual could the a uncertainties from forward-looking with and and any that the more financial complete Exchange risks discussion of statements filings company's Commission. and to See of differ non-GAAP the Securities results

the are encourage making and they in comment filed important Additionally, are a when annual and the on Foundation contain stockholders Carefully with recent Commission. connection there First materials meeting about I'd the proxies become about we'll annual of participants like proxy and available to officers connection inform Exchange and in and the extracted are from statement they our within Foundation call connection XXXX terms the related information such you materials Stockholders filing to proxy their be and other meeting the of that strongly company's the will in and the meeting. its annual executive Securities Securities First in Exchange stockholders of in all related in terms solicitation statement with not as in read the this entirety, any proxy with nominations XXXX with made.

Scott like now, turn to to I'd Kavanaugh. the over call And

Scott Kavanaugh

earnings you welcome. call. and today's Thank morning, Good conference joining for

newly discuss loan for Then open followed XXXX quarter fourth Officer, and deposit and who by up will of year our I'll First, highlights Operating discuss it Chris our Naghibi, Chief the results, business. questions. we'll appointed our full

and built greater existing our the new and have loan meaningful relationships identifying core The reflect we we commitment resilience expenses managing slowing this morning our growth, with efficiencies businesses strategically while operational to reported of clients. the our earnings that growing

to As reflective the in made key are critical right our done some that job of realign am changes you how behalf tremendous and also our and truly has so for Foundation First management of realignment to everyone of on up. the organizational our our shareholders. I optimize know, a that talent identify and say positions over proud talent quarter I commitment can bench execute we best last has stepped deep of workforce, clients

points. has rate points. XX rates both we has pressure occurred interest This XXXX additional we on industry to is diverse the over Our this the continue months. market decreased last perform and banking and beyond. raised pressures true put to fully on nine an the This XXX factors Fed placed continue banking tenure this sector, has question In those basis for the the particularly focus a business for model and last cycle. while Fed's by challenge and and quarter, during also margin remain service culture, face no the income realize actions year is well basis entire to There the inversion the due

$XXX.X fees. earnings investment, equity was that am recent I share in year. the year, for $X.XX on It the our ended valuation assets professional and return $X.XX is We on while service the million the quarter in and against adjusted in for to $XXX.X at the $XX.X X.XX% executive our earnings backdrop million for full earnings report accounting and in full million that and departures pleased NYDIG and revenue for when quarter revenue million or generated adjustment the $XX.X X% average per

ourselves position actively long-term We for continue success. to

the we additional operational create current operation efficiencies. on optimizing have taken our to focused to We reflect steps and environment are

in mind. and peers run compared with this operation lean we to We a our to have manage always continue

our That risk and on we security. service, will said, spending prioritize management client

will not data our such our in This areas. as We services that cross-promoting projects key our reputation optimizing these priority. warehouse means in will strong sacrifice be a

Our hold we as Bitcoin guidance. to banking regulatory seek will project indefinitely clients continue be our on to

value $XX.XX, which ended at share year. represents quarter for full the for $X.XX increase Our tangible increase a a book quarter the per the $X.XX and

returns tangible shareholders. our also this including growth experienced per cash We We believe XX.X% dividends deliver declared per paid an and share, will dividend as fourth of we year-over-year cash $X.XX quarter share. paid. We to value strong our in continue book

XX excellent our our mentioned with our growth we we quarter, on last adding quality. remained the and while our we low pristine in loan XX for our reflects fundamentals and quality standards. started remains began the discipline Notably, even This points. is at credit managing basis NPA As quarter considering strategically and deposits underwriting to which ratio credit basis strong focusing points, continued keeping and declined us,

is XXX.X% of important decreased XXX.X% the Our made This to from December XX, at have continues a we already as we strides the to into and improve loan-to-deposit testament of head ratio incredible quarter. XXXX to the end this XXXX. metric down the as

early our XXXX, it ratio. further we loan-to-deposit in the seen quarter is of still have Although improvements on

slow while working. raising actively Our deposits funding is to plan

loan have Given a for the do the that balance management done successful in as strategic see bringing in the utilizing past. we origination sheet need not we loan of numbers sale resulted has our down, the

in by is on plan executing maintaining business delivering while we normalized the for very a defined experience macroeconomic follow once a value results we exceptional while challenging credit environment. a is growth were expect and quality solid And standards more stakeholders. cycle, to bank this rate Our

as of market the obviously pressure And we fed's is to the action. quarter the soon was by continued the expect normalize rate the settle. to historic the levels this interest as Our and environment NIM which eases and reflection a for fed X.XX%, conditions

which environment, along market variety competitive the on our remains with funding. of pressures rate limited we funding offset We rate current financial and including higher are constraints liquidity as deposit drain exposure system the wholesale focused cost more to of limiting are of to should by extremely from some making loans, the adjustable but those a factors continues

the contributions of year. to in as source to revenue this Looking trust at $XX XX% form of revenue. total combined accounted and XXXX, company's we diversified the the revenue by meaningful firm our of management for business, million the recurring income for unit wealth evidenced experience business non-interest continue

We loans. have also been successful existing in retaining and attracting clients new

increases positive performance. Assets ended million by of year billion. and ARM in the trust at $XXX $X $X.X under the and client result and under quarter both management increase AUA billion market and ended were The the the [ph] inflows advisement at in year new

of and typically and clients clients. assets a is there we uncertainty, new existing market When volatility from an experience inflow

the know they even with conditions working to fiduciary, attracted are RIAA ever independent these. a more clients than where model like market New important during they're is which

communicating clients portfolios and proactively been We existing strategically their have as managing with needed.

as successful and been blog, engaging events, our aware our planning in-person as them our our our advanced commentaries, as investing. have We such robust from with an an in market services tax suite, products webinars, and standpoint through written educational our well wealth through and

As we are seeing strong retention result, platform. wealth a client entire across the management

also Our investment has been bright spot. another performance

and year, star and were were major only XXX XX% down on our fund from While five year average down Morningstar. total the five three for another than and a moderate portfolios return received our year, more rating indices balanced the XX% S&P

I As an team. also I have than extremely of proud and we incredible our attractive want objectives. been working strategic client say markets. say base to reflect we our are hard ever more in the we how entire quarter, to aligned and They I am that confidently accomplish management have

to and quarter. common I a entire have goal is and the management all our executive last am have working team responded towards board Our that pleased that unfolded events so the

We and experience I support financial represented various industries of am have and go-forward banking, is positioned, well a across pleased that with board deep services our approach. with domain in well their

me on points. Let final few data touch a

capital well a tier institution, at at with capitalized end. As quarter risk-based we financial X.XX% ratio a remain one

off asset this performing estate worth that all in class book higher losses the value it of We believe year. across $XX.XX multi-family provision charge history credit the continues at offs real a and have ended $X.XX a the Liquidity tangible in the lending our we to a with or loans. net for of full multi-family be portfolio, noting reflects increase taken strong which our for firm. charge never no remained strength strongest is Our loss

previous are mentioned focused As calls, rate. we on in managing our tax

successfully increase continue We of believe growth have downward, have and treatment rate We a which is gotten we in favorable to tax strategy. and to deals our municipal it part XX%, and Florida rate to attributable loans and can our tax Texas. of loans we of as run substantially largely experience LIHTC an

our thank and team Heading be financial for to our are client lives, of excited the at future. again, $XX of with very our our about wherever want a relentless on have service focus strong XXXX, to balance assets clients sheet they billion. our solutions their strength offer to the Between through received. I management remained total First Once continued board, the everyone and and existing contributions into difficult year in support to Foundation ability continue I I

and hand the and Operating banking are a as in sits in has to operations the Chris where our already Naghibi Chris stepped has positive appointed over Chris, Now, him Chief was making Irvine me November introduce first call before I Officer to very role all. impact. let you seamlessly started into our headquartered.

Bank of recently one team members through bank, of we you departments as started XX of ago. the the of First know, some Officer. the various years when continued Chief having As served He our the Foundation Credit was bank original to progress has Chris most

he These including the stronger cornerstones Chris Chief our and first am to business department. I so XX Among among his bank, thrilled our are have management wealth the to the as Operating them. working help has of optimize Officer, building and units, many the areas to interest alignment of dedicated focus a role model days business his

our Chief turn to Naghibi. I'll newly it that, Operating Chris over Officer, With appointed

Chris Naghibi

$XXX Scott, me to first and billion for Officer Thank the the Loan the and quarter be say honored you $X.X the for have I'm kind were appointed let for full been Operating originations Chief that million year. words,

percentages of land family is X%. originated owner-occupied investment and Looking at quarter, at the Commercial, real commercial at we the the XX%; XX%; X% loans follows. CRE breakdown X%; estate, single now as including that construction are multi-family, in and

of conservative even XX First and note important by low is Foundation our Foundation This to even also is This this we is Bank. to our basis reflected loans without the XX% First our for LTVs as points multifamily a quarter, fell for is reflected XX% also always of single-family loans. that low low in accomplish standards mentioned, high Scott underwriting evidenced for and for for underwriting as standards changing Bank. which our MPAs is It

followed slow that XXXX. have is peak reached of While still we plan true originations we the loan to it growth, our levels in

be to catch of as continue slowed will growth for up the the that to in wait anticipate market XXXX we strategically Fed. to ahead, look we As we actions the

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

This loans yielding rate out in continue largely see we the higher impact quarter, the our prior yield rates as curve lower pipelines. to increases due and of long end to the origination of funded lock have

As loans; loan our XXXX, XX% considered of real and are loans; commercial comprised clients. business for loans; XX, residence estate; multifamily our XX% carefully is which of: valued and X% and commercial construction single-family most December of portfolio land loans, X% nonowner-occupied and consumer selectively X%

deposit business, our portfolio. touch at to look want multifamily our on we Before I

in lending assets added that you business. the the our we multifamily we will the seen, First, to presentation a to borrowers; highlighted profile the slides As and few three section things speak I our of here: we markets our that have on. second, third, presentation serve; investor The lend updated may about

we which both California. as the go is paint picture markets help up, control the but we prices also a down. when when State applies, floor a rent where In lend to many these try the state, areas plus a ceiling go me of serve. of of as of Let XX% in prices within serves

which the addition the a high. of In barrier serves to the rent. cost land, to of units into all entry than is There's quite to this buy markets far to cost supply keep greater our regions, the limited in almost for in

lending And referenced even pursued on these actively have have Sunbelt there. though having exposure limited to calls, we it the we region never

do standard second to too some small borrowers. largely be point to to a our bank, we typically fund part take too what a of is large syndicate, from real or professionals, consider lend We The deals. big typically estate terms we syndicated although

housing what in working This all units large we to me essential finally, workforce consider built down are we to and average. portion are boils XXXX XXXX. touch the XX between assets we lend prize or were oftentimes knowledgeable properties and with clients. the let These on units repeat or fact of on. And XX A on

buildings quality, classified buildings mixed generally C&B these newer with grade are so in. A-grade as And construction higher

confidence A greater in It of markets. profile, at have which gives has like they Class us up this this leased given properties been our often banks like crisis. as that experience goes our to that up before downside can market hold it are the It data that multifamily historically top asset risk real rents back is of the class the being will one products estate This financial loan top-performing offer. has,

for and at Shifting year for the Deposits Okay. increased million at the gears quarter $XX.X business. to billion. billion year and end looking deposit $X.X by our $XXX the

is increased all a last competition referenced channels. across quarter, Scott As it is out deposit and there, dogfight there

par expectations. with deposit at Our came costs on which is our in X.XX%,

of projects last recap up, Before I to some year. want successful the completed I wrap we just

XXXX, retail Plano, opened a banking successfully During location in we Texas.

of acquisition. Florida completed We integration also the our

still into in headquarters California, we expanded markets. new successfully maintain we our growth have banking While

launched endeavor, as mobile assist with a mobile app now conduct presence. valuable to virtually device. in very client base continue expand To as that nationwide we we where thousands can see retail we into not This allowed redesigned us app. The do via they connect physical any have clients has our also markets banking is of to

in to grateful Scott's service most. banking, for Q&A, for am place. operator. want delivering client Before it it it to to time, excellent hand this and have right team's back in are time to we very over dedication the will I reiterate when ready At we take challenging operator the the comments. questions, our This I a team confident am is I back matters hand I to I but

Operator

question [Operator Instructions] James. coming from Raymond David is Feaster first Our from

Scott Kavanaugh

here with and to Hey that here Chris David, I assist I -- people with before I'd are answering have just you two to questions. begin, other say like us that

Amy So Deputy our CFO, our here here. Djou Dave DePillo, CFO is Interim is and also

kind here to wanted with just to I well say assist help So as they're of questions. formally

David Feaster

business? a And decelerated. very at deserved. head well think how we growth Would Chris, growth you do Maybe a forward? becomes congrats kind high to the production? trajectory on the of XXXX? We've forward? going production how about about level, maybe going about strategically of the composition trajectory just commercial that as think talk could Maybe the Or you promotion, guess just organic larger expect curious see more we I just into of proportion you

Scott Kavanaugh

made and foremost, time, our first said get under I that But I we evaporated. end just made And significant quarter, January. of we're XXX.X have the focused from the loan-to-deposit third not ratio right down So We to of think to and since at improvements deposits control. we've improvements, hyper lowering the now end we're even at it additional XXX.X.

we're to question amazing looking improve. not down appreciate to Joe turnaround touch And throughout and to loan I to we in hope to grow an can made of shrink loan-to-deposit think to modestly portfolio ratio the the continue we year. that the balance our sheet. because this projecting year. I terms continue being modeling and your able David, We the loan on said, that But are be really activity get XXX.X that to do

that Freddie some The where But spot tell clients just term. costs modestly of advisor, and right you, stuff multifamily sense especially right start a California, make X.XX, which now. a we range, be me. technical of I seem told FFA, that those are clearly a in now in which, know will funding and there few again, seem don't the That's our funding Ecopia in to doing us weird John given very I the is to are X.XX his can't the through with, to banks lending, to rates are, X.XX and lot a apartment range, of in that still follow. are state Fannie

should prudent And not what clarity think activity not get so assets that intentions to we the lot greater believe in on on space. I are. until the a from be there's multifamily more of fixed it lending be And we rate Fed their I

more of saying, on to go-forward C&I, an perspective long going to it more this from asset focus a way we're yes, help will liability us is So answer, ended on basis.

mention some of a start it's to is multifamily books, duration of to Right part the of to off. a newer And And like pretty more I that Joe want and stuff great coupons. not of real is want real years, The the of to is years. advantageous low of those the in for X.X Chris to now, here turnover But like you're years. before borrower pay years it's X.X going that is those thing some short. step probably see of X.X our older seasoning

But phase, for the NIM, average what got to coupon the a quite this which and our rate portfolio roll Joe, year. projections obviously we've you of higher. this want into year, our adjustable few But about help are think bring will that you talk

Chris Naghibi

Yes.

high at forecasting billion in it, drugs. draws, higher. $X.X with of, in $X a Just report call potentially loan billion, we're a to normally production, range of terms level excluding We

So it could $XXX a on alluded million certainly is as less to, percent. that. Scott a Multifamily, be as

side. growth So of definitely XX% modeled in we is C&I of what the the have forecasted on production over

Amy Djou

market, the of market So towards the bit one other has bit which multifamily much a that the -- of looks little also of I cycle was but as market a been of the life I'll covers bit essentially like end a well. add a think year. like, color, stalemate the what of single-family stalemate a the

choosing Some off are see sell to of not Fed the the and what by and taking. actions the hold to seasoned are investors

to out addition pricing in and di the of seeing some So we're itself there. it market is in of that

it we're is for book, going it the and into dovetails we're doing, on value the to relates and the I renewed and additional important the So brand. the of where C&I what detail as proposition relationships focus really think,

channels we've I growth that to continue moving to last historically, served So And those the has us the think grown see in decision-making that benefits year. of and forward. we'll the prior Fed's well,

David Feaster

a continue think duration funding about of think assets? forward trajectory bit should like you -- given color. does lines, going that we and the That's along stop the you Fed And mean, that start just assets talked the some once margin maybe the expect shorter how would from dynamics. and of pickup the Okay. you us same higher? And ultimately, great subsiding those yield about about I and the to repricing reprice Could help pressures

Scott Kavanaugh

Well, reprice this to that I believe right, billion. the books business Is that are of year around is Djou? $X

Amy Djou

Yes. terms have as at actually the between revolver of costs. both adjustable And for say, And well. in about over of of term we across, forecasting and billion $X.X course, the I'd all C&I the

as So of those of books yields say, a for Xs forecasting What loan height is to the hitting for reprice. those. a kind high continue going XXXX forward in I'd we're combination somewhere high

Scott Kavanaugh

I their So the definitely the experiencing improvement thereafter. we're and truly trough. that call, the I at NIM, But an will little I trough are -- get continue I start be bit actions. believe about And trough think of that that is second NIM NIM stops to going to as the to see on is the shortly time to a we until be believe we will indicated Fed quarter, the by to the shrink we of

going multifamily of largely the and some of C&I. in be repricing a -- that's increase of combination and So think I to an

David Feaster

wanted And maybe makes shift to sense. I gears. That Okay. All right.

about been you of talked strength some business some about units. has mean, and the the And there. trust business Chris focus aligning of You talked I the of the phenomenal. better

about on? about. the you that more could talking of working some the us you're and give outlook integration you're some that trust some And curious just for details the on if of Just talk maybe initiatives

Scott Kavanaugh

this, Well, the Trust of I'll But my aspects. step most and Chris important is, in. answer in can one opinion,

it As at held to Coast. and you sectors. is most probably East Advisors an comes our trust know, companies Coast extremely about Foundation strong West And the the are First which not are assets banking institution. on Charles of XX% when on Schwab, They're

other a their [ph] as program of with adviser the which Charles in a SAN that to basically to and prenegotiated you're offices select SAN go of There's registered allowed we're part the branches of Charles program matrix you're off past, Schwab, said program I've types Schwab. into. things. and allowed into go is It's investment

across select of companies, get much I to all the look pretty when at the the offering universe every a as But trying exception a same, is only you very that We're the one feel well as for RIAs, we're out with trust Schwab, is of really professionals. of what for exploit to Charles us. continuing few to and solutions RIA

a the CPAs know, of a you trust that and old, all which tremendously because bank, trust XX strong the years across Foundation Orange We've As presence department as Advisors of County grown same that expanded in our starts, is marketplace. now California. has with attorneys department First having

believe I the getting believe for Florida We're First the solution. probably Advisors up into that and ringed as and we we -- department. the some as Schwab, and been coming we've trust And And noticed Foundation Texas. both best have referrals that's Charles activity from is of our that, a picking

Joe DePillo

for frankly, services stickier I'll speak tell grown a take That bank to creates Having it a planning XX,XXX The more that that, up can and new a little existing deep for So relationship they that that means that additional planning have banking and the and the the platform, on is and clients I this bank. are, deep of color. brand. have bit we pockets services Nexus clients advantage our brand. trust clients wealth in in you FFA provide opportunities little business better the wealth

one as relates of every with our capabilities particularly warehouse single we to it's clients. we expand vast an data and and some it to the the of information think that continue our And ecosystem that I in ways still can exploit have

bank push really better on the being as I'm doing side key collaboratively to looking work a initiatives of that at more forward. the is we side, partner with One advisor the

be been actually of they those brand very broad not amount certainly, information amount the and proposition could that from has the the And But we that say exceptionally with conversations can't product very, that things larger historically. it's banks haven't of frankly with, have, service. compete certainly offerings of I think value an that fruitful, that

Scott Kavanaugh

done recently, our things, the that And of we have I Board, Keller, David, out especially conjunction branch. well reached branch Rick clients penetrate with think, our network. to our employees is in Chairman of ourselves, the the XX One through in the largest Irvine not bank

million these it is by And any about as that, client of a of his really and is what's group or additional doing result etcetera, doing, was Rick and people got deposits, what XX First happen like new in even individuals, $XX he speaking with just of would what etcetera, million cycle, Fed dollars something typical Advisors. to would for about happening you economy do not what to which Foundation the he generated expect the talking economic a is $X what the to

of our that things -- of we just touched the you're brand, to one do working see better on is basis. job we're I need what to on going to own going think go-forward a a Chris So that's and

Joe DePillo

trillion that And with to I'll set one hands. last thought on Overall, exchange leave it topic. $XX is

with with new but We our well positioned existing that not only to clients, are ones. facilitate

inside company. lot grab So there's outside both there, and a to for the

Operator

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

Gary Tenner

your on at that deposits the bit things. I saw little end shift what of wanted on the know us rate side was in if of I the deck deposit you at Scott, tell over can don't a what the the I all anywhere. quarter. spot to

Amy Djou

XXX. Including noninterest-bearing, it was

Scott Kavanaugh

it was noninterest-bearing, Including XXX.

Gary Tenner

as was of XX/XX? That

Scott Kavanaugh

Yes.

Gary Tenner

Okay.

fees, as in quarter. So customer didn't hikes we thought in the they of go terms fourth as up given would much quite service the have rate

bearing there ECR that the decline of deposits the the -- part part quarter? So in a that quarter? deposits in -- related fourth are Was is in noninterest-bearing the deposits was overall that in [indiscernible] of decline

Scott Kavanaugh

also Well, time we've on And and clients. MSR in payments that's due our and April past a that the with going the around tax it's to frame. December MSR are deposits, particular, insurance low time frame, in the out in stated always

see So with right back you now, up clients. should those deposits picking MSR

bit decreased fourth see will slowing. exchange due should add I next the also XX/XX transactions yes, you a a X probably quarter. in has point But activity in the pickup probably of that now, little it's low right considered the a months, deposits. But to

Gary Tenner

in -- the the the then of of quarter, brokered that added maturity? And and tell kind of on can you terms or about a yield those of us [indiscernible] rate deposits talk what terms Okay. you in in kind the

Scott Kavanaugh

all kept -- X under under me We've our let maturities majority, XX% years. say,

to, funding we're side. the It's we slowing or term the extremely really other on really way don't cycle. more Fed increases is Fed the types that moment, And on on belief the of CDs So deposits. towards more short our at wrong want go broker long

X So would and them say, are they're all of probably under. really more, I XX% years

Gary Tenner

Okay. Great. And then last question.

you've some quarter incentive NII think, to of there Separate to some service that the more customer deposit service quarter, up any the the go of the and raises the fourth terms NIM or related comp as more in offset done? from in else what Just I or beyond the expense quarter, customer in focus. Obviously, with -- Fed expenses you talked first anything reversal about expense opportunities be lower a or bit compression departures. last to some

Scott Kavanaugh

not pains really But this, something that's through we, we through to alternatives. there, the go many it Well, not it's where I'm me desperately a go I can that. wants to but we was like happy think continue but of layoffs. other CEO to significant look just say as that's to will also company, not a I did traded provide of to pretty And the that publicly see institutions, operationally all that would forces to as person, round trying to to had we anybody us continue call a do, go saves. case. have consider to have

Gary Tenner

from otherwise? or fourth so is Or the impact to reflected be Was going first that that severance the be quarter was in Scott? -- whether there there it any in quarter,

Joe DePillo

the included the severance are fourth Dan, quarter. Yes. in

to so it's offset mean, exit the accruals a it's not reversed the management. severance that due is what I much. Basically, And other -- executive with we of we

Scott Kavanaugh

breakdowns in non-GAAP tables. that Yes, the

Joe DePillo

Gary? that, breakdown... hear you Did The

Gary Tenner

The of the was in largest what reversal the in But bonus terms non-GAAP. as Amy the of described accrual severance.

Amy Djou

It was was minimal offsetting. It now.

Operator

comes Terrell Our from question from next Andrew Stephens.

Andrew Terrell

in kind to in about think seeing go to you I capacity reducing tough you have do guess, of the I'm are now. board competitive some sounds spreads eventual you specifically, the And And the the think impact a that of competitive the competitors shaping. you landscape forward? back in just right positive, could how just dynamics guess the maybe curious It I across see business pretty And Scott, space obviously multifamily? now. as moving multifamily right

Scott Kavanaugh

Yes.

in I it think a marketplace. as of lot the uncertainty long the Fed, provides as

You're see people I people over or sector. being that there's do dramatically the the down that multifamily I our competitors, volume. seen entire slowed production. know in put their traditional completely going departments to But out almost have map. said, all no

rates, to might a at our what is I kind particular not and understand trying sitting of this to of going larger think cap borrowers, of that do types what borrowers, do just the point, a to our earlier, They're back say selling. Fed trying we've of was lot lot things. other talked to as Chris They're to they're and not buying.

Joe DePillo

is volume, dip toe pull to future California, people high. slow will I say guess, in to does think the themselves out how land position back we to is somewhat point, can should time the for But choose them appreciation market. and a to new in in. to take I Yes. To changing or markets, landscape for as to little ourselves the value in make their end bit underlying fast they environment like back rehire the choose dynamically I these rate it your people move where obviously very prepare of, of would client, the Their competitive customer end act re-up relative

They're low service versus the to they're loan. used to a value loan to the to ultimately going get get debt that

challenge. be lending So refinance a their impactful, and for positioned markets, I should might don't be primary a and huge that other there's rates whereas think should in But ableness the we areas, it well to to support not willingness NIM. be impact should our

Andrew Terrell

Yes.

just origination billion you're $X.X spread I year target. So to incremental just loan less Can of from you funding, that standpoint? the multifamily, back spread kind sounds be think, just like know I going just not now, think And the it's in for but $X And just the help will incremental to margin Okay. us the, about funding targeting billion of probably the the an right cost what's yield targeting? what costs understanding it today? you're how to elevated. does incremental great the probably compare

Scott Kavanaugh

those to extent more the to we are -- -- the yields Is C&I . X that X.X-ish on, Well, put range. the X.X-ish right? currently, in that

Joe DePillo

Yes.

Scott Kavanaugh

X%, the tell I borrowing the in we a were somewhere to Incrementally, It's X.XX, Bank, if range. is. put between today. that at would Home X.XX X.X% currently you It that's on Loan Federal

are extent from the probably to up going that we see some on handles over those successful rolling X.X. those I So to of multifamilies,

time So blend to you by the Xs, stuff, some you're think. mid- that talking of I high

Andrew Terrell

That's deposit interest-bearing year-end, then just okay. I stab costs. at helpful. the take total if it. either Got year-end could Yes, And a again

the was X.XX quarter full the average. I think

Joe DePillo

Yes, I wanted to...

Scott Kavanaugh

Joe been has Yes. -- you that. doing Gary asked since was giving He

Joe DePillo

And want just to clarify that. I

So December, X% closer question, I spot -- for to rate the misunderstood was December. the the

Andrew Terrell

spot was rate the at the end that of And December?

Joe DePillo

Yes.

Operator

Our Clark Sandler. last Piper Matthew comes question from from

Matthew Clark

First $X of $X.X one for billion to million. for me, potential lending billion additional the side maybe the things, an $XXX production of just the with on

So prepay XX, that? kind $X of your XX%, in think net let's of recently, and just expectations? after Is I . call XX. kind about terms it that ballpark activity to payoff be it, kind your should we of growth of recall of the call lower I loan implies it, billion XX, in Or able pulling

Scott Kavanaugh

Yes. you're correct. No,

Matthew Clark

terms then kind And for feel the but wanted quarter. of the in I like December? on we're looks month ballpark, the this of it margin margin the just you average Xs have like do the for coming happen shake your to of kind low I to margin, might it Okay. in reaffirm, of

Scott Kavanaugh

saying. to decline. Yes. be I It's going in And to you would think continue accurate

I think range. now we're to right projecting X.XX% X.XX% range

Matthew Clark

throughout or about have side And borrowings How the just of of on we deposit not? your those I you the the end I actions year. think billion level should $X.X kind mean, just do based the at the we at of Great. about think then that Okay. on hold year? balances on borrowings,

Scott Kavanaugh

don't bank, deposit, To pretty broker that we home Yes, it even we if be expanding continue a the much. see extent obviously, it's really I there. to but pay loan steady hold should it successful will, down the

Matthew Clark

the probably, quantify forward kind customer you last any exclude run and maybe your me, that -- expense probably one around rate initiatives the isolate rate other run And Okay. from on are then of the can going you the or just to might expense core for a to just recent with have? Can variable? noninterest expense layoffs the service thoughts costs deal not up savings

Scott Kavanaugh

but of somewhere million. to management on hoping that this some including was the round, I between and latest $XX.X savings $XX million avoid answer, the is

Matthew Clark

Okay.

run yet. out of quarter, on of any that's rate kind an We seen savings assume? coming that's . on this the So basis I annualized of haven't those --

Scott Kavanaugh

of No this it -- -- that about. -- for this have month. not seen And yes, we you're no, right. would transpired you except any all read

Operator

Gary Tenner have from D.A. another from we And question Davidson.

Gary Tenner

of the that Just of so kind in But quarter included $X million savings was answered $XX the had of just annually. of million a annual line reversals. fourth savings follow-up part comp which the terms of number,

So those more that accurate? . $XX Is up a of gross kind savings top of work line. million off of should

Scott Kavanaugh

pretty around has total and by the I to way, up reduction. And That was $X.X Yes, down our I million. did brings that a in yes. nobody investment that category significant brought think,

the aware, going sit space. with guys recent are that we're not So the crypto and in I that there's much in going pause. to been industry, as a believe on you have things And back take left

on come any don't we has what want to once with clearly that the not basically I guidelines other every that that in our front those is being have that they will you may we indicating will anytime structure put What out said, they in a regulators initiative regulators, that had until soon means? place. to expect understand what put forefront But the bank's tell would know. I That letter along place. put regulators,

Gary Tenner

ask us in non-GAAP I pointed think of more just question one press mentioned in Joe, towards table you clarifying your could you release. -- I that If terms of the kind expense numbers.

was $X.X that Or else? that the severance reversal was incentive severance? somewhere of million of net comp, So

Amy Djou

those debt of say would are I severance.

Gary Tenner

That was severance. of net

of the there? out was service professional million the in $X you costs the quarter called almost what that So

Scott Kavanaugh

item. We it's And have been related charge-off those in discussions a a discussions. to merger-related on

Operator

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

Scott Kavanaugh

Thank currently that very economic on in you of difficult participating in call. reported, path again proud of the with times. results pleased for we am we I are spite I'm and the today's

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

Operator

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

disconnect. now may You

First Foundation (FFWM) 26 Jan 232022 Q4 Earnings call transcript