First Foundation Inc. Quarterly Report on Form 10-Q for the Quarterly Period Ended March 31, 2024

Press release · 05/10 12:40

First Foundation Inc. has reported a net income of $1.2 million for the quarter ended March 31, 2024, with total assets of $1.5 billion and total liabilities of $1.2 billion. The company’s revenue for the quarter was $1.4 billion, and it had 56.5 million shares of common stock outstanding as of May 2, 2024. The company is an accelerated filer and has not elected to use the extended transition period for complying with new or revised financial accounting standards.

Company Overview

First Financial Bankshares is a financial holding company that operates First Financial Bank and other financial services subsidiaries. For the first quarter of 2024, the company reported:

Net income of $0.8 million, down significantly from $2.5 million in Q4 2023 and $8.5 million in Q1 2023
Net interest income of $38.4 million, down from $42.5 million in Q4 2023 and $58.8 million in Q1 2023
Net interest margin of 1.17%, down from 1.36% in Q4 2023 and 1.83% in Q1 2023
Noninterest income of $12.7 million, compared to $13.9 million in Q4 2023 and $11.7 million in Q1 2023
Noninterest expense of $50.6 million, down from $55.9 million in Q4 2023 and $59.3 million in Q1 2023

The decrease in net income and net interest income was primarily driven by higher interest expense on deposits and borrowings.

Financial Condition

At March 31, 2024, First Financial had:

Total assets of $13.6 billion, up from $13.3 billion at December 31, 2023
Total loans of $10.1 billion, down from $10.1 billion at December 31, 2023
Total deposits of $10.6 billion, down slightly from $10.7 billion at December 31, 2023
Borrowings of $1.7 billion, up from $1.4 billion at December 31, 2023

The increase in borrowings funded an increase in cash and investment securities to enhance on-balance sheet liquidity. The loan to deposit ratio was 94.8% at March 31, 2024 compared to 95.2% at December 31, 2023.

Asset Quality and Provision for Loan Losses

Nonperforming loans totaled $17.8 million or 0.18% of total loans at March 31, 2024 compared to 0.12% of total loans at December 31, 2023
Net charge-offs were 0.01% of average loans (annualized) in Q1 2024
Allowance for credit losses was 0.29% of total loans, unchanged from December 31, 2023
Recorded $0.6 million provision for credit losses in Q1 2024

Capital and Liquidity

Maintains capital ratios above regulatory requirements for “well-capitalized” status
Has over $2.6 billion of unused borrowing capacity
Cash and unencumbered securities provide liquidity of 44.3% of total assets, exceeding internal policy

Net Interest Income Sensitivity

Assumed Rate Change	Estimated Change in NII
+100 basis points	-8.51%
+200 basis points	-15.87%
-100 basis points	0.12%
-200 basis points	-0.76%

The results indicate net interest income is more sensitive to rising interest rates in the near term. Economic value of equity sensitivity was within board limits across all rate shock scenarios.

In summary, First Financial reported decreased profitability in Q1 2024 driven by margin compression from higher funding costs. Asset quality remains relatively stable but bears monitoring amid a challenging economic environment. The company maintains a solid capital and liquidity position to withstand financial stress.