Oct 2, 2025 6:55 AM Eastern Daylight Time First Foundation Inc. Announces Third Quarter 2025 Earnings Conference Call Details Share IRVINE, Calif.--(BUSINESS WIRE)--First Foundation Inc. (NYSE: FFWM) ("First Foundation†), a financial services company with two wholly owned operating subsidiaries, First Foundation Advisors and First Foundation Bank, announced today that it will release its third quarter 2025 earnings results before the market opens on Thursday, October 30, 2025. At 11:00AM ET / 8:00AM PT on ...

Core Insights - First Foundation reported a loss of $0.09 per share for Q2 2025, contrasting with expectations of a profit of $0.02 per share [1] Financial Performance - The financial results indicate a significant deviation from market expectations, highlighting potential challenges faced by the company during the quarter [1]

Part I. Financial Information [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for Q2 2025, including balance sheets, operations, cash flows, and notes on accounting policies and key items | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$11,588,362** | **$12,645,265** | | Total loans held for investment, net | $7,510,763 | $7,909,091 | | Loans held for sale | $476,727 | $1,285,819 | | **Total Liabilities** | **$10,537,736** | **$11,591,902** | | Deposits | $8,593,693 | $9,870,279 | | Borrowings | $1,669,315 | $1,425,369 | | **Total Shareholders' Equity** | **$1,050,626** | **$1,053,363** | | (In thousands, except per share amounts) | Quarter Ended June 30, 2025 | Quarter Ended June 30, 2024 | | :--- | :--- | :--- | | Net interest income | $50,082 | $43,829 | | Provision for credit losses | $2,366 | $(806) | | Total noninterest income | $1,338 | $13,658 | | Total noninterest expense | $59,924 | $55,629 | | **Net (loss) income** | **$(7,690)** | **$3,085** | | **Diluted EPS** | **$(0.09)** | **$0.05** | [Note 2: Fair Value Measurements](index=10&type=section&id=NOTE%202%3A%20FAIR%20VALUE%20MEASUREMENTS) Details fair value measurements using a three-level hierarchy, with tables for recurring and non-recurring assets and liabilities, mostly Level 2 Fair Value of Financial Instruments (June 30, 2025) | (In thousands) | Carrying Value | Fair Value | | :--- | :--- | :--- | | **Assets** | | | | Securities AFS, net | $1,469,122 | $1,469,122 | | Securities HTM | $663,807 | $604,367 | | Loans held for sale | $476,727 | $476,727 | | Loans held for investment, net | $7,510,763 | $7,379,679 | | **Liabilities** | | | | Deposits | $8,593,693 | $8,601,170 | | Borrowings | $1,669,315 | $1,696,461 | | Subordinated debt | $173,490 | $156,564 | [Note 3: Securities](index=19&type=section&id=NOTE%203%3A%20SECURITIES) Details AFS and HTM securities portfolios, including cost, fair value, and credit loss allowance, with AFS at $1.47B and HTM at $664M Securities Portfolio Summary (June 30, 2025) | (In thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Allowance for Credit Losses | Estimated Fair Value | | :--- | :--- | :--- | :--- | :--- | :--- | | **AFS Total** | **$1,485,810** | **$253** | **$(16,290)** | **$(651)** | **$1,469,122** | | **HTM Total** | **$663,807** | **$—** | **$(59,440)** | **$—** | **$604,367** | - During the six months ended June 30, 2025, the company sold **$466 million** par value of AFS securities, resulting in a gain of **$4.7 million**[58](index=58&type=chunk) - The allowance for credit losses on investments decreased from **$4.1 million** at year-end 2024 to **$651 thousand** at June 30, 2025, primarily due to a **$3.4 million** charge-off of an interest-only strip security that was previously reserved for[60](index=60&type=chunk)[61](index=61&type=chunk) [Note 4: Loans](index=27&type=section&id=NOTE%204%3A%20LOANS) Details the $7.5B loan portfolio by type, credit quality, and troubled debt restructurings, with real estate loans as the largest portion Loans Held for Investment Composition | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Multifamily | $3,288,093 | $3,341,823 | | Single-family | $822,508 | $873,491 | | Commercial properties | $818,738 | $904,167 | | Commercial and industrial loans | $2,568,621 | $2,746,351 | | **Total** | **$7,548,323** | **$7,941,393** | - Total past due and nonaccrual loans decreased to **$49.8 million** (**0.66%** of total loans) at June 30, 2025, from **$70.4 million** (**0.89%** of total loans) at December 31, 2024[70](index=70&type=chunk) - During the first six months of 2025, the company sold loans with an unpaid principal balance of **$858 million**, resulting in a net loss on sale of **$10.4 million**[69](index=69&type=chunk) [Note 5: Allowance for Credit Losses](index=34&type=section&id=NOTE%205%3A%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) Explains CECL methodology for ACL for loans, detailing its rollforward, with ACL increasing to $37.6M due to a $5.6M provision Rollforward of Allowance for Credit Losses - Loans (Six Months Ended June 30, 2025) | (In thousands) | Amount | | :--- | :--- | | **Beginning Balance (Dec 31, 2024)** | **$32,302** | | Provision for Credit Losses | $5,585 | | Charge-offs | $(895) | | Recoveries | $568 | | **Ending Balance (June 30, 2025)** | **$37,560** | [Note 9: Deposits](index=42&type=section&id=NOTE%209%3A%20DEPOSITS) Breaks down the Company's deposit base by type, showing total deposits decreased to $8.6B from $9.9B, with a slight rate decrease Deposit Composition | (In thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Noninterest-bearing | $1,467,203 | $1,956,628 | | Interest-bearing Demand | $1,672,287 | $1,995,397 | | Money market and savings | $3,604,909 | $3,524,801 | | Certificates of deposit | $1,849,294 | $2,393,453 | | **Total Deposits** | **$8,593,693** | **$9,870,279** | [Note 15: Segment Reporting](index=51&type=section&id=NOTE%2015%3A%20SEGMENT%20REPORTING) Summarizes key operating results for Banking and Wealth Management segments, with Banking reporting a $7.8M pre-tax loss and Wealth Management a $0.4M pre-tax income Segment (Loss) Income Before Income Taxes (Q2 2025 vs Q2 2024) | (In thousands) | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Banking | $(7,753) | $3,280 | | Wealth Management | $371 | $2,106 | | Other | $(3,488) | $(2,722) | | **Total** | **$(10,870)** | **$2,664** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=54&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's narrative on financial performance and condition, detailing Q2 2025 net loss drivers, strategic reductions, NIM, credit quality, liquidity, and capital [Overview](index=57&type=section&id=Overview) Reports a $7.7M net loss for Q2 2025, a shift from Q2 2024 income, with total assets decreasing by $1.1B due to loan sales, reducing liabilities - The company reported a net loss of **$7.7 million** in Q2 2025, compared to net income of **$3.1 million** in Q2 2024[138](index=138&type=chunk) - Total assets decreased by **$1.1 billion** (**8.4%**) since year-end 2024, largely due to a **$1.2 billion** decrease in total loans, driven by the sale of **$858 million** in multifamily loans held for sale[139](index=139&type=chunk) - Total liabilities decreased by **$1.1 billion** (**9.1%**), mainly from a **$1.3 billion** reduction in deposits, as proceeds from loan sales were used to pay down high-cost deposits[140](index=140&type=chunk) [Results of Operations](index=57&type=section&id=Results%20of%20Operations) Q2 2025 net loss driven by a $10.4M loss on loan sales, with net interest income growing and NIM expanding to 1.68%, despite increased noninterest expense - The Q2 2025 net loss was primarily caused by a **$10.4 million** loss on the sale of **$858 million** in multifamily loans held for sale, as part of a strategy to reduce exposure to low-coupon fixed-rate loans[144](index=144&type=chunk) Net Interest Margin Analysis | | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Interest Income | $50,082 | $43,829 | | Net Interest Rate Spread | 0.82% | 0.44% | | Net Interest Margin | 1.68% | 1.36% | [Financial Condition](index=74&type=section&id=Financial%20Condition) The balance sheet contracted in H1 2025, with assets and liabilities decreasing by $1.1B from loan sales and deposit reductions, maintaining a stable loan-to-deposit ratio - Total assets decreased by **$1.1 billion** in the first six months of 2025, mainly from the sale of **$858 million** in multifamily loans[173](index=173&type=chunk) - Total deposits decreased by **$1.3 billion**, with significant reductions in higher-cost specialty deposits (**$826 million**) and brokered deposits (**$591 million**)[191](index=191&type=chunk) - The loan-to-deposit ratio was **93.4%** at June 30, 2025, nearly unchanged from **93.5%** at December 31, 2024[217](index=217&type=chunk) [Delinquent Loans, Nonperforming Assets and Provision for Credit Losses](index=85&type=section&id=Delinquent%20Loans%2C%20Nonperforming%20Assets%20and%20Provision%20for%20Credit%20Losses) Credit quality improved with nonaccrual loans decreasing to $34.6M, while ACL for loans increased to $37.6M, or 0.50% of loans, reflecting a $5.6M provision - Nonaccrual loans decreased from **$40.4 million** at year-end 2024 to **$34.6 million** at June 30, 2025[204](index=204&type=chunk) Allowance for Credit Losses (ACL) Ratios | | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | ACL for Loans (in thousands) | $37,560 | $32,302 | | ACL as % of Loans Held for Investment | 0.50% | 0.41% | | ACL as % of Nonaccrual Loans | 108% | 80% | [Liquidity and Capital Resources](index=88&type=section&id=Liquidity%20and%20Capital%20Resources) Maintains strong liquidity and capital, with $2.1B in unused borrowing capacity, and both holding company and bank exceeding all regulatory capital requirements - The company had **$2.1 billion** in unused borrowing capacity as of June 30, 2025, including lines with the FHLB, Federal Reserve, and correspondent banks[201](index=201&type=chunk)[210](index=210&type=chunk) Regulatory Capital Ratios (June 30, 2025) | Ratio | FFI (Consolidated) | FFB (Bank) | Well-Capitalized Minimum (Bank) | | :--- | :--- | :--- | :--- | | Common equity tier 1 ratio | 11.08% | 13.91% | 6.50% | | Tier 1 Leverage ratio | 8.29% | 9.49% | 5.00% | | Tier 1 risk-based capital ratio | 12.13% | 13.91% | 8.00% | | Total risk-based capital ratio | 14.70% | 14.41% | 10.00% | [Quantitative and Qualitative Disclosures About Market Risk](index=98&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Directs readers to the 'Interest Rate Risk Management' section in Item 2 for detailed disclosures on market risk - The report refers to the 'Interest Rate Risk Management' section in Item 2 for its quantitative and qualitative disclosures about market risk[238](index=238&type=chunk) [Controls and Procedures](index=98&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were not effective due to a material weakness in ACL internal control, with remediation measures underway - Management concluded that disclosure controls and procedures were not effective as of June 30, 2025, due to a material weakness in internal control over financial reporting[240](index=240&type=chunk) - The company is implementing corrective measures, including engaging a professional services firm to address deficiencies in the allowance for credit loss (ACL) process[241](index=241&type=chunk) Part II. Other Information [Legal Proceedings](index=101&type=section&id=Item%201.%20Legal%20Proceedings) The company is not aware of any legal proceedings expected to have a material adverse effect on its business or financial condition - The company is not aware of any legal proceedings expected to have a material adverse effect on its operations or financial condition[246](index=246&type=chunk) [Risk Factors](index=101&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K - There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report on Form 10-K[247](index=247&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=101&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Notes the $75M authorized stock repurchase program, with no shares repurchased during Q2 2025 - The company has a **$75 million** stock repurchase program authorized, but no shares were repurchased in the second quarter of 2025[248](index=248&type=chunk) [Other Information](index=101&type=section&id=Item%205.%20Other%20Information) No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during Q2 2025[249](index=249&type=chunk) [Exhibits](index=102&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with the Form 10-Q, including corporate governance documents and CEO/CFO certifications - This section lists all exhibits filed with the report, such as the Certificate of Incorporation, Bylaws, and CEO/CFO certifications[251](index=251&type=chunk)

Financial Data and Key Metrics Changes - The company reported a net loss of $7.7 million for the second quarter, compared to a net income of $6.9 million in the first quarter [5][6] - Adjusted pre-provision net revenue was $3.6 million, representing a 12 basis point return on assets [6][21] - The net interest margin (NIM) for the second quarter was 1.68%, a slight increase from the previous quarter [17][21] Business Line Data and Key Metrics Changes - The company reduced its commercial real estate (CRE) held for sale loans by a total of $858 million during the second quarter [6][10] - New loan balances funded in the quarter amounted to $256 million, with an average yield of 7.18%, primarily in commercial and industrial (C&I) loans [8][10] - Non-performing loans remained stable at 35 basis points, and net charge-offs were low at $135,000 [8][24] Market Data and Key Metrics Changes - Assets under management at the end of the quarter were $5.3 billion, slightly up from the previous quarter [10] - Trust assets under advisement were stable at $1.2 billion [10] - Digital banking deposits surpassed $1 billion for the first time, representing 12% of total deposits as of June 30 [12] Company Strategy and Development Direction - The company is focused on reducing its CRE concentration and growing C&I loans, which is expected to result in a higher allowance for credit losses (ACL) over time [10][24] - The strategic initiatives include improving core funding and accelerating growth in private banking and wealth management [10][11] - The company aims to be fully exited from the held for sale CRE portfolio by the end of 2025 [7][17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future performance despite the current net loss, citing strong core financial performance [6][27] - The company remains well-capitalized with a common equity Tier 1 ratio of 11.1% and a leverage ratio of 8.3% [12][25] - Management anticipates continued margin expansion and expects the NIM to exit 2025 between 1.8% and 2.2% [26] Other Important Information - The company experienced a modest gain from the June securitization of $481 million of CRE loans, which was more favorable than the earlier loan sale [15][17] - Customer service costs decreased to $12.9 million from $15.1 million in the prior quarter, primarily due to a reduction in MSR deposits [23][24] - The company is undergoing management changes, with searches for key executive positions ongoing [13][46] Q&A Session Summary Question: Optimization of the balance sheet and future sales - Management indicated a focus on reducing CRE concentration and stabilizing the balance sheet, with no immediate plans for further asset sales [31][33] Question: Private banking initiative and talent acquisition - Management expressed optimism about the private banking initiative, highlighting ongoing recruitment efforts and early successes in client acquisition [36][38] Question: Balance sheet contraction and future asset levels - Management expects the balance sheet to reach a trough by the end of the year, with potential for growth into 2026 [40][42] Question: Management turnover and filling key roles - Management acknowledged turnover as part of the transition and emphasized the need for new leadership to align with the company's strategic direction [45][46] Question: Plans for reducing high-cost deposits - Management plans to continue reducing high-cost deposits, with expectations for further reductions in the coming months [49][52] Question: Loan yields and cash position - Total loan yields exited the quarter just under 4.70%, and management is comfortable with the current cash position, anticipating stability moving forward [58][62]

Financial Performance & Strategic Transformation - First Foundation reported a net loss in Q2 2025, largely due to $12.1 million pre-tax impacts from loan sales[13] - Adjusting for loan transactions, the company's "core" EPS was $0.01[13] - Core PPNR was $3.6 million in Q2 2025, compared to $9.7 million in Q1 2025[13] - The company successfully sold $858 million of CRE loans during Q2 2025[8, 12] Asset Quality & Capital Management - Net charge-offs were less than 1 bps (0.00%) in Q2 2025, indicating strong credit performance[13] - Total nonperforming assets decreased by 9.1% compared to Q1 2025, reaching $40.8 million, or 0.35% of total assets[22] - CET1 ratio improved to 11.08% in Q2 2025, compared to 10.63% in Q1 2025 and 9.68% in Q3 2024[13] Deposit & Funding Strategy - Higher-cost MSR deposits were reduced by $0.5 billion, a 50% decrease, and wholesale deposits decreased by $0.2 billion, a 9% decrease[13] - The company exited $540 million of higher-cost MSR deposits (~4.60%) following loan transactions[32] - 60% of the $1.4 billion brokered CD portfolio is scheduled to mature over the next 18 months, with a weighted average interest rate of ~4.9%[32]

Financial Performance - First Foundation (FFWM) reported a quarterly loss of $0.09 per share, missing the Zacks Consensus Estimate of $0.02, compared to earnings of $0.06 per share a year ago, representing an earnings surprise of -550.00% [1] - The company posted revenues of $51.42 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 20.28%, and down from year-ago revenues of $57.49 million [2] - Over the last four quarters, First Foundation has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] Stock Performance - First Foundation shares have lost about 21.6% since the beginning of the year, while the S&P 500 has gained 8.2% [3] - The current status translates into a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the coming quarter is $0.03 on $65.9 million in revenues, and $0.15 on $265.3 million in revenues for the current fiscal year [7] - The estimate revisions trend for First Foundation was mixed ahead of the earnings release, which could change following the company's report [6] Industry Context - The Zacks Industry Rank for Banks - Southwest is currently in the top 15% of over 250 Zacks industries, indicating that the industry outlook can materially impact stock performance [8]

[Second Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Foundation%20Inc.%20Reports%20Second%20Quarter%202025%20Results) [Key Financial Data and Highlights](index=1&type=section&id=2Q25%20Key%20Financial%20Data%20and%20Highlights) First Foundation Inc. reported a net loss of $7.7 million for Q2 2025, driven by a strategic sale of $858 million in Commercial Real Estate (CRE) loans, while improving Net Interest Margin to 1.68% and strengthening capital to 14.70% Q2 2025 Key Financial Metrics | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | **Net (Loss) Income** | ($7.7M) | $6.9M | $3.1M | | **(Loss) Earnings Per Share** | ($0.09) | $0.08 | $0.05 | | **Net Interest Margin (%)** | 1.68 | 1.67 | 1.36 | | **Total Loans** | $8.03B | $9.00B | $10.09B | | **Total Deposits** | $8.59B | $9.56B | $10.76B | | **Total Risk-Based Capital Ratio (%)** | 14.70 | 14.04 | 12.60 | - The company executed a significant strategic move by selling approximately **$858 million in CRE loans** held for sale at an average price of 94.0%, resulting in a pre-tax revenue impact of **($12.1) million** and an after-tax net income impact of **($8.7) million**[2](index=2&type=chunk)[7](index=7&type=chunk) - Proceeds from the loan sales were used to reduce high-cost deposits by approximately **$865 million**, leading to a **9 basis point sequential decrease** in the cost of deposits to **2.95%**[4](index=4&type=chunk)[7](index=7&type=chunk) - Maintained strong liquidity with **$3.5 billion in total liquidity** and a ratio of liquidity to uninsured/uncollateralized deposits of **2.70x**[2](index=2&type=chunk)[5](index=5&type=chunk) [Executive Commentary](index=1&type=section&id=Executive%20Commentary) Management emphasized significant progress in its strategic plan during Q2 2025, highlighting material reductions in CRE concentration and high-cost deposits, with projected NIM expansion to 1.80-1.90% by Q4 2025 - CEO Thomas C. Shafer stated the company is on track to completely exit its held-for-sale CRE portfolio by the end of 2025 and has materially improved its CRE concentration from a high of over **600%**[3](index=3&type=chunk) - CFO Jamie Britton conveyed that the full benefit of the quarter's actions on Net Interest Margin (NIM) has not yet been realized and expressed confidence that NIM will improve to a range of **1.80-1.90% by Q4 2025**[3](index=3&type=chunk) [Detailed Financial Analysis](index=5&type=section&id=Detailed%20Financial%20Analysis) [Loans](index=5&type=section&id=Loans) Total loan balances decreased to $8.0 billion due to the sale of $858 million in multifamily CRE loans, while new loan fundings increased to $256 million at an average yield of 7.18% Loan Portfolio Composition (in billions) | Category | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Total Loans | $8.0 | $9.0 | $10.1 | | Loans Held for Investment | $7.5 | $7.7 | - | | Loans Held for Sale | $0.5 | $1.3 | - | - Sold **$858 million of multifamily loans** with a weighted average interest rate of **3.92%**, resulting in a **$10.4 million loss on sale**, as part of a larger strategy to sell **$1.9 billion in CRE loans** reclassified in August 2024[17](index=17&type=chunk) - Loan fundings for the quarter totaled **$256 million** at an average yield of **7.18%**, an increase from **$180 million at 7.09%** in the prior quarter, with C&I loans accounting for **80% of total fundings**[16](index=16&type=chunk)[18](index=18&type=chunk) [Investment Securities](index=6&type=section&id=Investment%20Securities) The investment securities portfolio stood at $2.1 billion, with combined unrealized and unrecognized losses decreasing to $53.9 million, and the average yield improving to 4.34% - Investment securities totaled **$2.1 billion** as of June 30, 2025, with the balance decreasing due to **$75 million in principal paydowns** and no new purchases or sales during the quarter[19](index=19&type=chunk) - Combined tax-effected unrealized/unrecognized losses on the AFS and HTM portfolios improved to **$53.9 million (2.52% of the portfolio)** from **$57.5 million** in the prior quarter, mainly due to lower treasury rates[20](index=20&type=chunk)[21](index=21&type=chunk) - The average yield on the investment securities portfolio increased to **4.34%** in Q2 2025, up from **4.30%** in Q1 2025 and **4.00%** in Q2 2024[21](index=21&type=chunk) [Deposits and Borrowings](index=6&type=section&id=Deposits%20and%20Borrowings) Total deposits decreased by nearly $1 billion to $8.6 billion due to a strategic reduction of higher-cost deposits, leading to a lower cost of deposits at 2.95%, while borrowings remained stable at $1.7 billion Deposit Balances (in billions) | Date | Total Deposits | | :--- | :--- | | June 30, 2025 | $8.6 | | March 31, 2025 | $9.6 | | June 30, 2024 | $10.8 | - The decrease in deposits was primarily due to a **$975 million reduction in higher-cost deposits**, including a **$784 million decline in specialty deposits** and a **$191 million decrease in brokered deposits**[22](index=22&type=chunk) - Cost of deposits declined to **2.95%** for the quarter, compared to **3.04%** in Q1 2025 and **3.49%** in Q2 2024[24](index=24&type=chunk) - Borrowings remained stable at **$1.7 billion**, and the company maintained total unused borrowing capacity of **$2.1 billion** from various sources[25](index=25&type=chunk)[27](index=27&type=chunk) [Private Wealth Management and Trust Assets](index=8&type=section&id=Private%20Wealth%20Management%20and%20Trust%20Assets) Assets Under Management (AUM) increased to $5.3 billion, driven by performance gains and new accounts, while Trust Assets Under Advisement (AUA) remained stable at $1.2 billion AUM and AUA Balances (in billions) | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Assets Under Management (AUM) | $5.3 | $5.1 | $5.5 | | Assets Under Advisement (AUA) | $1.2 | $1.2 | $1.1 | - The quarterly change in AUM consisted of **$83 million in new accounts**, **$184 million in net withdrawals**, and **$335 million in performance gains**[28](index=28&type=chunk) [Net Interest Income and Net Interest Margin](index=8&type=section&id=Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Net interest income (NII) slightly decreased to $50.1 million due to lower average interest-earning assets, but Net Interest Margin (NIM) expanded to 1.68% for the sixth consecutive quarter NII and NIM Performance | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Net Interest Income | $50.1M | $51.8M | $43.8M | | Net Interest Margin (NIM) | 1.68% | 1.67% | 1.36% | - The decrease in NII was caused by a drop in average interest-earning assets to **$11.9 billion** from **$12.3 billion** in the prior quarter[29](index=29&type=chunk) - NIM expansion was driven by a **9 basis point decrease** in the average rate paid on interest-bearing liabilities, which outpaced the **2 basis point decrease** in the yield earned on interest-earning assets[30](index=30&type=chunk)[31](index=31&type=chunk) [Noninterest Income](index=8&type=section&id=Noninterest%20Income) Noninterest income fell sharply to $1.3 million, primarily due to a $10.4 million loss on the sale of $858 million in multifamily loans, despite stable asset management fees Noninterest Income Breakdown (in millions) | Category | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | **Total Noninterest Income** | **$1.3** | **$19.6** | **$13.7** | | Loss on sale of loans | ($10.4) | - | $0.4 | | Asset management & other fees | $8.6 | $8.9 | $9.2 | | Capital market activities | ($0.3) | $2.8 | $0.8 | - The primary driver for the decrease in noninterest income was the **$10.4 million loss** recorded from the sale of multifamily loans held for sale[32](index=32&type=chunk) [Noninterest Expense](index=10&type=section&id=Noninterest%20Expense) Noninterest expense decreased to $59.9 million, mainly due to lower customer service costs reflecting the exit of high-cost deposits, though the efficiency ratio rose to 116% due to reduced revenue Noninterest Expense Breakdown (in millions) | Category | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | **Total Noninterest Expense** | **$59.9** | **$61.7** | **$55.6** | | Compensation and benefits | $22.9 | $25.1 | $19.1 | | Customer service costs | $13.0 | $15.1 | $16.1 | | Professional services & marketing | $7.2 | $5.9 | $3.7 | - Customer service costs decreased due to lower average balances and rates paid on depository accounts, linked to the reduction in high-cost specialty deposits[38](index=38&type=chunk) - The efficiency ratio increased to **116.0%** from **86.0%** in the prior quarter, heavily impacted by the **$12.1 million reduction** in total revenue from the loan sale transactions[39](index=39&type=chunk)[2](index=2&type=chunk) [Income Tax Expense](index=10&type=section&id=Income%20Tax%20Expense) The company recorded an income tax benefit of $3.2 million in Q2 2025, with an effective tax rate of 29.3%, primarily driven by the pre-tax loss and tax benefits from investments Income Tax (Benefit) | Period | Income Tax (Benefit) | Effective Tax Rate | | :--- | :--- | :--- | | 2Q25 | ($3.2M) | 29.3% | | 1Q25 | ($0.6M) | (10.1%) | | 2Q24 | ($0.4M) | (15.8%) | - The effective tax rate and benefit were predominantly driven by the pretax loss and benefits from low-income housing tax credits and tax-exempt income[41](index=41&type=chunk) [Asset Quality](index=12&type=section&id=Asset%20Quality) Asset quality remained strong and improved slightly, with nonperforming assets to total assets decreasing to 0.35% and the allowance for credit losses increasing to 0.50% of total loans held for investment Key Asset Quality Ratios | Metric | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Nonperforming assets to total assets | 0.35% | 0.36% | 0.18% | | Allowance for credit losses to total loans HFI | 0.50% | 0.46% | 0.29% | | Net charge-offs to average loans (annualized) | 0.003% | 0.01% | 0.01% | - Total nonperforming assets decreased to **$40.8 million** from **$44.9 million** at the end of the prior quarter[42](index=42&type=chunk) [Capital](index=12&type=section&id=Capital) The company's capital ratios strengthened, with the Total risk-based capital ratio increasing to 14.70%, while tangible book value per common share saw a slight decrease to $11.65 due to the net loss First Foundation Inc. Regulatory Capital Ratios | Ratio | 2Q25 (preliminary) | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Common equity tier 1 | 11.08% | 10.63% | 10.30% | | Tier 1 leverage | 8.29% | 8.12% | 7.08% | | Total risk-based capital | 14.70% | 14.04% | 12.60% | - Shareholders' equity totaled **$1.05 billion**, a decrease from **$1.06 billion** in the prior quarter, primarily due to the **$7.7 million net loss**[46](index=46&type=chunk) - Tangible book value per common share (non-GAAP) was **$11.65** as of June 30, 2025, compared to **$11.77** as of March 31, 2025[46](index=46&type=chunk) [Consolidated Financial Statements](index=18&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Balance Sheets](index=18&type=section&id=Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased to $11.6 billion, driven by reductions in loans held for sale and total deposits, while total liabilities also decreased and shareholders' equity slightly declined Selected Balance Sheet Items (in billions) | Item | June 30, 2025 | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | :--- | | **Total Assets** | **$11.59** | **$12.59** | **$13.71** | | Cash and cash equivalents | $1.06 | $1.01 | $1.42 | | Total loans, net | $7.99 | $8.96 | $10.06 | | **Total Liabilities** | **$10.54** | **$11.53** | **$12.78** | | Deposits | $8.59 | $9.56 | $10.76 | | **Total Shareholders' Equity** | **$1.05** | **$1.06** | **$0.93** | [Consolidated Statements of Operations](index=20&type=section&id=Consolidated%20Statements%20of%20Operations) For Q2 2025, the company reported a net loss of $7.7 million, a significant shift from the prior quarter, primarily due to a sharp drop in noninterest income from a $10.4 million loss on loan sales Quarterly Statement of Operations (in millions) | Item | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Net interest income | $50.1 | $51.8 | $43.8 | | Provision for credit losses | $2.4 | $3.4 | ($0.8) | | Noninterest income | $1.3 | $19.6 | $13.7 | | Noninterest expense | $59.9 | $61.7 | $55.6 | | **Net (Loss) Income** | **($7.7)** | **$6.9** | **$3.1** | [Supplemental Information](index=15&type=section&id=Supplemental%20Information) [Segment Reporting](index=24&type=section&id=Segment%20Reporting) The Banking segment reported a net loss of $5.4 million for Q2 2025, heavily impacted by loan sales, while the Wealth Management segment generated a net income of $0.3 million Net (Loss) Income by Segment (in millions) | Segment | 2Q25 | 1Q25 | 2Q24 | | :--- | :--- | :--- | :--- | | Banking | ($5.4) | $7.7 | $3.5 | | Wealth Management | $0.3 | $0.1 | $1.5 | | Other and Eliminations | ($2.5) | ($0.9) | ($2.0) | [Non-GAAP Financial Measures Reconciliation](index=28&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) The report provides reconciliations for non-GAAP measures, highlighting an adjusted net loss of $7.5 million, an efficiency ratio of 116.0%, and tangible book value per common share of $11.65 Key Non-GAAP Reconciliations for Q2 2025 | Metric | GAAP Value | Non-GAAP Value | | :--- | :--- | :--- | | Net (Loss) Income | ($7.7M) | ($7.5M) (Adjusted) | | Return on Average Assets | (0.25)% | (0.24)% (Adjusted) | | Book Value Per Share | $12.75 | $11.65 (Tangible) | | Efficiency Ratio | N/A | 116.0% | - Adjusted net income (loss) is calculated by adding back non-cash expenses like the amortization of intangible assets and their associated tax effects[67](index=67&type=chunk) - Tangible common equity and tangible book value per share are calculated by excluding intangible assets and preferred stock from shareholders' equity, which management believes provides a better measure of the company's capital adequacy[71](index=71&type=chunk)

Core Viewpoint - The market anticipates First Foundation (FFWM) will report a year-over-year decline in earnings despite an increase in revenues for the quarter ended June 2025 [1][3]. Earnings Expectations - First Foundation is expected to report quarterly earnings of $0.02 per share, reflecting a year-over-year decrease of 66.7% [3]. - Revenues are projected to be $64.5 million, which is an increase of 12.2% compared to the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has remained unchanged over the last 30 days, indicating that analysts have not significantly altered their initial projections [4]. - The Most Accurate Estimate for First Foundation is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -100.00%, suggesting a bearish outlook from analysts [11]. Earnings Surprise History - In the last reported quarter, First Foundation was expected to post earnings of $0.02 per share but actually delivered $0.09, resulting in a surprise of +350.00% [12]. - Over the past four quarters, the company has exceeded consensus EPS estimates three times [13]. Predictive Indicators - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [9]. - The current Zacks Rank for First Foundation is 3, which complicates the prediction of an earnings beat given the negative Earnings ESP [11]. Market Reaction - The upcoming earnings report on July 31 could lead to a stock price increase if the results exceed expectations, while a miss could result in a decline [2]. - Other factors beyond earnings results may also influence stock movement, as stocks can decline despite an earnings beat or rise despite a miss [14].

Core Perspective - Dr. Anosh Ahmed's foundation is launching a relief initiative to assist families affected by recent floods in Texas, focusing on financial assistance, support for grieving families, and home reconstruction for uninsured residents [1][3]. Group 1: Relief Initiative Details - The relief initiative includes direct financial assistance to families who have lost loved ones, shelter and essential supplies for displaced residents, and home rebuilding assistance for uninsured families [5][6]. - The foundation will collaborate with churches, community organizations, and first responders to ensure effective outreach [6]. - A special "Texas Strong: America First Gala" will be hosted in Dallas to raise additional funds and awareness for the relief efforts [7]. Group 2: Focus on Specific Groups - The relief plan prioritizes veterans, police officers, and military families in housing and aid programs, reflecting a commitment to support those who serve [8]. - The initiative also includes providing mental health and grief counseling resources for affected individuals [9]. Group 3: Foundation Background - The Anosh Supports America First Foundation was established to uphold American values and support military, law enforcement, first responders, and patriotic communities [3][4]. - Dr. Anosh Ahmed emphasizes that the foundation's mission extends into disaster relief, reinforcing the belief that helping those in need is a fundamental American act [3].

Financial Performance - For the quarter ended March 31, 2025, the Company reported net income of $6.9 million, compared to a net loss of $14.1 million for the quarter ended December 31, 2024[144]. - Combined net income for Q1 2025 was $6.9 million, a significant increase from $793 thousand in Q1 2024[150]. - The company experienced a $6.4 million increase in combined net income before taxes, primarily due to a $6.7 million increase in net income in the Banking segment[150]. - The provision for credit losses totaled $3.4 million for the quarter ended March 31, 2025, significantly lower than $20.6 million for the quarter ended December 31, 2024[144]. - The provision for credit losses for Q1 2025 was $3.4 million, significantly higher than $577 thousand in the same quarter last year, reflecting increased reserves for the commercial loan portfolio[160]. Income and Expenses - Net interest income after provision for credit losses totaled $48.4 million for the quarter ended March 31, 2025, an increase from $30.7 million and $37.8 million for the quarters ended December 31, 2024 and March 31, 2024, respectively[144]. - Noninterest income totaled $19.6 million for the quarter ended March 31, 2025, compared to $13.4 million and $12.7 million for the quarters ended December 31, 2024 and March 31, 2024, respectively[144]. - Noninterest expense in Banking was $55.1 million for Q1 2025, compared to $44.5 million in the prior year, largely due to a $5.7 million increase in compensation and benefits[165]. - Noninterest expense in Wealth Management increased to $7.5 million in Q1 2025 from $5.7 million in Q1 2024, primarily driven by a $1.6 million rise in compensation and benefits[168]. Assets and Liabilities - Total assets remained essentially unchanged at $12.6 billion as of March 31, 2025, with a $0.2 billion increase in total investment securities offset by a $0.2 billion decrease in total loans[145]. - At March 31, 2025, total liabilities were $11.5 billion, a decrease from $11.6 billion at December 31, 2024, primarily due to a $0.3 billion decrease in deposits[146]. - Total shareholders' equity increased to $1.06 billion at March 31, 2025, from $1.05 billion at December 31, 2024[147]. - The company reported a total of $9.561 billion in deposits as of March 31, 2025, reflecting a decrease from the previous quarter[171]. - The company’s total loans held for investment amounted to $7.649 billion as of March 31, 2025[170]. Loan and Deposit Metrics - The loan to deposit ratio was 94.1% as of March 31, 2025, compared to 93.5% as of December 31, 2024[146]. - The allowance for credit losses on the loan portfolio was $35.2 million, or 0.46% of total loans held for investment, up from $32.3 million and 0.41% at the end of 2024[160]. - Total deposits decreased by approximately $309 million to $9.56 billion at March 31, 2025, largely due to a $400 million decrease in higher-cost brokered deposits[186]. - The weighted average rate for all interest-bearing deposits decreased to 2.93% at March 31, 2025, down from 3.09% at December 31, 2024[187]. Capital and Ratios - As of March 31, 2025, FFI's Common Equity Tier 1 ratio was 10.63%, exceeding the required 4.50%[225]. - FFB's Common Equity Tier 1 ratio was 13.29% as of March 31, 2025, significantly above the 4.50% minimum requirement[225]. - FFB had $594 million in excess capital above the well-capitalized requirement for the Common Equity Tier 1 ratio as of March 31, 2025[226]. - The Total Risk-Based Capital Ratio for FFB was 13.74% as of March 31, 2025, exceeding the 8.00% requirement[225]. - FFB's Tier 1 Leverage Ratio was 9.28% as of March 31, 2025, above the required 4.00%[225]. Strategic Initiatives - The company intends to explore opportunities for growth, including opening additional offices or acquiring complementary businesses[229]. - The company may seek additional borrowings or sell shares to raise funds for future growth opportunities[229].