First Foundation (FFWM, Financial) has reported a first-quarter revenue of $71.3 million, surpassing market expectations of $64.19 million. The company's tangible book value per common share rose slightly to $11.77 from $11.68 at the end of the previous quarter. Additionally, the net interest margin improved to 1.67%, up from 1.58% in the earlier quarter.
The company's leadership expressed optimism about its recent financial performance. The CEO highlighted their satisfaction with returning to profitability, emphasizing ongoing efforts to enhance profitability, manage commercial real estate exposure, and expand private banking and commercial franchises. The CFO noted the company's strong start to the year, citing progress in reducing the multifamily portfolio, which is expected to reduce reliance on expensive deposits and support further net interest margin expansion.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for First Foundation Inc (FFWM, Financial) is $6.83 with a high estimate of $9.00 and a low estimate of $5.50. The average target implies an upside of 37.49% from the current price of $4.97. More detailed estimate data can be found on the First Foundation Inc (FFWM) Forecast page.
Based on the consensus recommendation from 4 brokerage firms, First Foundation Inc's (FFWM, Financial) average brokerage recommendation is currently 2.8, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for First Foundation Inc (FFWM, Financial) in one year is $1.69, suggesting a downside of 66% from the current price of $4.97. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the First Foundation Inc (FFWM) Summary page.
FFWM Key Business Developments
Release Date: January 30, 2025
- Net Interest Margin: Improved from 1.5% in Q3 to 1.58% in Q4.
- Net Charge-Offs: Recorded $17.1 million, with $13.4 million from three commercial relationships.
- Allowance for Credit Losses (ACL): Increased to 0.41% of total loans from 0.36% in the prior quarter.
- Interest Income: Declined from $157.2 million in Q3 to $152.5 million in Q4.
- Interest Expense: Decreased by $6.9 million, contributing to a $2.2 million increase in net interest income.
- Wealth and Trust Fees: $9.3 million in Q4, consistent with $9.2 million in Q3.
- Assets Under Management: Ended the quarter at $5.4 billion.
- Noninterest Expense: Totaled $49.2 million, up from $41.3 million in Q3.
- Tangible Book Value Per Share: Ended the quarter at $11.68, down $2.11 from the previous quarter.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- First Foundation Inc (FFWM, Financial) successfully executed a $489 million multifamily loan securitization at a premium price, indicating strong demand and effective portfolio management.
- The company reported a modest improvement in net interest margin, increasing from 1.5% in the third quarter to 1.58% in the fourth quarter.
- First Foundation Inc (FFWM) is actively working to diversify its loan portfolio and reduce commercial real estate concentration, which is expected to improve its risk profile and financial performance.
- The Wealth and Trust business continues to be a stable source of fee income, with consistent performance in the fourth quarter.
- The company is investing in strengthening its platforms and recommitting to integrated client support, which is expected to enhance future growth opportunities.
Negative Points
- First Foundation Inc (FFWM) recorded $17.1 million in net charge-offs, with $13.4 million attributable to three long-standing commercial relationships, indicating challenges in credit risk management.
- The company experienced a decline in loan interest income due to a reduction in loan balances, impacting overall financial performance.
- Provision for credit losses was significantly higher this quarter, reflecting ongoing challenges in managing credit risk.
- Noninterest expenses increased, driven by higher compensation and benefits expenses, impacting overall profitability.
- The tangible book value per common share declined, ending the quarter at $11.68 per share, down from the previous quarter.
