[Part I. Financial Information](index=3&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The report presents unaudited consolidated financial statements and accompanying notes for the period [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) Consolidated Balance Sheet Highlights (In thousands) | Metric | September 30, 2019 (unaudited) | December 31, 2018 | | :--- | :--- | :--- | | Cash and cash equivalents | $268,446 | $67,312 | | Securities available-for-sale ("AFS") | $1,042,940 | $809,569 | | Net loans | $4,353,708 | $4,274,669 | | Total Assets | $6,358,346 | $5,840,412 | | Deposits | $5,170,566 | $4,532,968 | | Borrowings | $520,000 | $708,000 | | Total Shareholders' Equity | $604,360 | $559,184 | [Consolidated Income Statements - Unaudited](index=4&type=section&id=CONSOLIDATED%20INCOME%20STATEMENTS%20-%20UNAUDITED) Consolidated Income Statement Highlights (In thousands, except per share amounts) | Metric | Quarter Ended Sep 30, 2019 | Quarter Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Total interest income | $62,614 | $58,047 | $186,466 | $149,864 | | Total interest expense | $19,482 | $14,321 | $60,400 | $35,619 | | Net interest income | $43,132 | $43,726 | $126,066 | $114,245 | | Provision for loan losses | $172 | $9 | $1,943 | $4,147 | | Total noninterest income | $13,982 | $11,104 | $31,578 | $27,070 | | Total noninterest expense | $32,694 | $33,967 | $97,921 | $96,937 | | Net income | $17,356 | $14,707 | $41,025 | $28,829 | | Basic Net income per share | $0.39 | $0.33 | $0.92 | $0.70 | | Diluted Net income per share | $0.39 | $0.33 | $0.91 | $0.69 | [Consolidated Statement of Changes in Shareholders' Equity - Unaudited](index=5&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY%20-%20UNAUDITED) Shareholders' Equity Changes (In thousands) | Metric | Balance: December 31, 2018 | Net income (9M 2019) | Other comprehensive income (9M 2019) | Cash dividend (9M 2019) | Balance: September 30, 2019 | | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock | $44 | — | — | — | $45 | | Additional paid-in-capital | $431,832 | — | — | — | $433,426 | | Retained earnings | $128,461 | $41,025 | — | $(6,694) | $162,792 | | Accumulated other comprehensive income (loss), net of tax | $(1,153) | — | $9,250 | — | $8,097 | | Total Shareholders' Equity | $559,184 | $41,025 | $9,250 | $(6,694) | $604,360 | [Consolidated Statements of Comprehensive Income - Unaudited](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20-%20UNAUDITED) Consolidated Comprehensive Income (In thousands) | Metric | Quarter Ended Sep 30, 2019 | Quarter Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net income | $17,356 | $14,707 | $41,025 | $28,829 | | Other comprehensive income (loss), net of tax | $2,038 | $(2,397) | $9,250 | $(9,485) | | Total comprehensive income | $19,394 | $12,310 | $50,275 | $19,344 | [Consolidated Statements of Cash Flows - Unaudited](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20-%20UNAUDITED) Consolidated Cash Flow Highlights (In thousands) | Metric | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $47,146 | $42,387 | | Net cash used in investing activities | $(269,292) | $(342,894) | | Net cash provided by financing activities | $423,280 | $235,048 | | Increase (decrease) in cash and cash equivalents | $201,134 | $(65,459) | | Cash and cash equivalents at end of period | $268,446 | $54,935 | [NOTE 1: BASIS OF PRESENTATION](index=8&type=section&id=NOTE%201%3A%20BASIS%20OF%20PRESENTATION) The note details the basis of presentation, confirms GAAP adherence, and discusses the impact of new accounting standards - The consolidated financial statements include First Foundation Inc (FFI) and its wholly owned subsidiaries: First Foundation Advisors (FFA), First Foundation Bank (FFB), First Foundation Insurance Services (FFIS), and Blue Moon Management, LLC[24](index=24&type=chunk) - The adoption of **ASU 2016-13 (CECL model)** is expected to have a significant impact on the Company's recording of its allowance for loan losses, effective for annual periods beginning after December 15, 2019[38](index=38&type=chunk) [NOTE 2: ACQUISITIONS](index=9&type=section&id=NOTE%202%3A%20ACQUISITIONS) The note details the 2018 acquisition of PBB Bancorp, its accounting treatment, and financial impact - On June 1, 2018, the Company acquired PBB Bancorp and its subsidiary Premier Business Bank to **expand operations in Southern California**[39](index=39&type=chunk) - The acquisition resulted in the recognition of **$61 million in goodwill**[40](index=40&type=chunk) PBB Acquisition Pro Forma Net Income (In thousands) | Metric | Nine Months Ended September 30, 2018 (Pro Forma) | | :--- | :--- | | Net income | $35,150 | - For the period from June 1, 2018, to September 30, 2018, PBB operations contributed approximately **$10.5 million in revenues** and **$7.3 million in net income** to the Company's results[51](index=51&type=chunk) [NOTE 3: FAIR VALUE MEASUREMENTS](index=11&type=section&id=NOTE%203%3A%20FAIR%20VALUE%20MEASUREMENTS) The note describes the company's fair value measurement framework and provides detailed tables of recurring and nonrecurring measurements - Fair value measurements are categorized into **Level 1** (quoted prices in active markets), **Level 2** (significant other observable inputs), and **Level 3** (significant unobservable inputs)[52](index=52&type=chunk)[53](index=53&type=chunk) Total Assets at Fair Value on a Recurring Basis (In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total assets at fair value on a recurring basis | $1,043,297 | $809,921 | | - Level 1 | $760 | $849 | | - Level 2 | $992,499 | $443,844 | | - Level 3 | $50,038 | $365,228 | - The decrease in **Level 3 assets** from December 31, 2018, was primarily due to a change in the pricing methodology of agency mortgage-backed securities[57](index=57&type=chunk) - Collateral dependent impaired **Level 3 loans increased to $25.5 million** at September 30, 2019, from $12.8 million at December 31, 2018[61](index=61&type=chunk) [NOTE 4: SECURITIES](index=15&type=section&id=NOTE%204%3A%20SECURITIES) The note provides a detailed summary of the Company's available-for-sale (AFS) securities portfolio and treatment of unrealized losses Securities AFS Portfolio Summary (In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Amortized Cost | $1,031,495 | $811,198 | | Gross Gains | $14,407 | $14,292 | | Unrealized Losses | $(2,962) | $(15,921) | | Estimated Fair Value | $1,042,940 | $809,569 | - **Unrealized losses** on agency mortgage-backed securities and beneficial interests in FHLMC securitizations were not recognized into income due to high credit quality and management's intent not to sell[84](index=84&type=chunk) - As of September 30, 2019, **$151 million of agency mortgage-backed securities** are pledged as collateral for the Bank's obligations under loan sales and securitization agreements[82](index=82&type=chunk) [NOTE 5: LOANS](index=17&type=section&id=NOTE%205%3A%20LOANS) The note details the composition of the loan portfolio, including information on credit-impaired, delinquent, and restructured loans Loan Portfolio Composition (Outstanding principal balance, In thousands) | Loan Category | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total real estate loans | $3,780,566 | $3,811,119 | | Commercial and industrial loans | $566,390 | $449,805 | | Consumer loans | $16,505 | $22,699 | | Total loans | $4,363,461 | $4,283,623 | Purchased Credit Impaired Loans (Carrying amount, In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total purchased credit impaired loans | $4,791 | $7,081 | Delinquent and Nonaccrual Loans (In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Past Due and Nonaccrual | $29,697 | $28,030 | | Percentage of total loans | 0.68% | 0.65% | Troubled Debt Restructurings (TDRs) (In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total TDRs | $6,296 | $4,851 | [NOTE 6: ALLOWANCE FOR LOAN LOSSES](index=20&type=section&id=NOTE%206%3A%20ALLOWANCE%20FOR%20LOAN%20LOSSES) The note provides a roll-forward of the allowance for loan losses (ALLL) and details the risk categorization of loans Allowance for Loan Losses (ALLL) Roll Forward (In thousands) | Metric | Quarter Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2019 | Year Ended Dec 31, 2018 | | :--- | :--- | :--- | :--- | | Beginning Balance | $20,200 | $19,000 | $18,400 | | Provision for Loan Losses | $172 | $1,943 | $4,220 | | Charge-offs | $(1,279) | $(2,213) | $(4,189) | | Recoveries | $1,407 | $1,770 | $569 | | Ending Balance | $20,500 | $20,500 | $19,000 | Loan Risk Categories (In thousands) | Risk Category | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Pass | $4,320,593 | $4,236,469 | | Special Mention | $2,532 | $24,193 | | Substandard | $14,803 | $10,183 | | Impaired | $25,533 | $12,778 | | Total Loans | $4,363,461 | $4,283,623 | - The **ALLL represented 0.52%** of total loans outstanding (excluding acquired loans) as of September 30, 2019, compared to 0.51% at December 31, 2018[188](index=188&type=chunk) [NOTE 7: LOAN SALES AND MORTGAGE SERVICING RIGHTS](index=23&type=section&id=NOTE%207%3A%20LOAN%20SALES%20AND%20MORTGAGE%20SERVICING%20RIGHTS) The note details the Company's loan sales activities, gains recognized, and the creation of mortgage servicing rights (MSRs) - For the first nine months of 2019, FFB recognized a **$4.2 million gain** on the sale of **$551 million of multifamily loans**[111](index=111&type=chunk) - **Mortgage servicing rights of $1.9 million** were recorded in the first nine months of 2019 from loan sales[111](index=111&type=chunk) - Swap agreements entered into to reduce interest rate risk were closed out in September 2019 at a **cost of $19.9 million**, which reduced the gain on sale[112](index=112&type=chunk) - Mortgage servicing rights totaled **$7.4 million** at September 30, 2019, up from $6.4 million at December 31, 2018[113](index=113&type=chunk) [NOTE 8: DEPOSITS](index=24&type=section&id=NOTE%208%3A%20DEPOSITS) The note summarizes the Company's deposit balances by type and their weighted average rates Deposit Balances and Rates (In thousands) | Deposit Type | September 30, 2019 Amount | September 30, 2019 Weighted Average Rate | December 31, 2018 Amount | December 31, 2018 Weighted Average Rate | | :--- | :--- | :--- | :--- | :--- | | Noninterest-bearing demand deposits | $1,532,105 | — | $1,074,661 | — | | Interest-bearing demand deposits | $350,344 | 0.670% | $317,380 | 0.798% | | Money market and savings | $1,316,899 | 1.367% | $1,190,717 | 1.115% | | Certificates of deposits | $1,971,218 | 2.221% | $1,950,210 | 2.142% | | Total | $5,170,566 | 1.240% | $4,532,968 | 1.270% | - The weighted average rate of interest-bearing deposits **increased from 1.67%** at December 31, 2018, **to 1.76%** at September 30, 2019[178](index=178&type=chunk) - As of September 30, 2019, the Bank held **$1.2 billion in brokered deposits**[179](index=179&type=chunk) [NOTE 9: BORROWINGS](index=24&type=section&id=NOTE%209%3A%20BORROWINGS) The note outlines the Company's borrowing structure, including outstanding balances, interest rates, and collateral arrangements Borrowings Summary (In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | FHLB term advance | $500,000 | $703,000 (overnight) | | Holding company line of credit | $20,000 | $5,000 | | Total Borrowings | $520,000 | $708,000 | - The FHLB term advance outstanding at September 30, 2019, matures in September 2020 and bears an **interest rate of 1.77%**[117](index=117&type=chunk) - FHLB advances are primarily collateralized by loans secured by multifamily and commercial real estate properties with a **carrying value of $3.7 billion**[118](index=118&type=chunk) - The Bank's total borrowing capacity from the FHLB was **$2.5 billion** at September 30, 2019[118](index=118&type=chunk) [NOTE 10: LEASES](index=25&type=section&id=NOTE%2010%3A%20LEASES) The note details the adoption of ASU 2016-02 (Topic 842) and its impact on the consolidated balance sheet - The Company adopted ASU 2016-02, Leases (Topic 842), on January 1, 2019, recognizing a **right-of-use (ROU) asset of $21.1 million** and a corresponding **lease liability of $22.7 million**[123](index=123&type=chunk)[125](index=125&type=chunk) Supplemental Lease Information (In thousands) | Metric | September 30, 2019 | | :--- | :--- | | Operating lease asset | $17,644 | | Operating lease liability | $19,191 | | Operating lease cost | $4,437 | | Weighted average lease term | 4.72 years | | Weighted average discount rate | 5.76% | [NOTE 11: EARNINGS PER SHARE](index=26&type=section&id=NOTE%2011%3A%20EARNINGS%20PER%20SHARE) The note provides calculations for basic and diluted earnings per share (EPS) for the reported periods Earnings Per Share (In thousands, except per share amounts) | Metric | Quarter Ended Sep 30, 2019 | Quarter Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net income | $17,356 | $14,707 | $41,025 | $28,829 | | Basic common shares outstanding | 44,639,481 | 44,405,094 | 44,602,368 | 41,288,804 | | Diluted common shares outstanding | 44,935,308 | 44,852,107 | 44,876,614 | 41,790,656 | | Basic Earnings per share | $0.39 | $0.33 | $0.92 | $0.70 | | Diluted Earnings per share | $0.39 | $0.33 | $0.91 | $0.69 | [NOTE 12: SEGMENT REPORTING](index=27&type=section&id=NOTE%2012%3A%20SEGMENT%20REPORTING) The note presents key operating results for the Company's two reportable business segments: Banking and Wealth Management - The Company operates in two reportable business segments: **Banking** (First Foundation Bank and First Foundation Insurance Services) and **Wealth Management** (First Foundation Advisors)[134](index=134&type=chunk) Income (Loss) Before Taxes on Income by Segment (In thousands) | Segment | Quarter Ended Sep 30, 2019 | Quarter Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Banking | $24,890 | $21,801 | $60,244 | $43,358 | | Wealth Management | $738 | $1,071 | $1,366 | $2,587 | | Other | $(1,380) | $(2,018) | $(3,830) | $(5,714) | | Total | $24,248 | $20,854 | $57,780 | $40,231 | [NOTE 13: SUBSEQUENT EVENTS](index=27&type=section&id=NOTE%2013%3A%20SUBSEQUENT%20EVENTS) The note reports a quarterly cash dividend declared by the Board of Directors subsequent to the reporting period - On October 29, 2019, the Board of Directors declared a **quarterly cash dividend of $0.05 per common share**, payable on December 16, 2019[135](index=135&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition and operational results, covering key metrics, segments, and risk management [Overview and Recent Developments](index=29&type=section&id=Overview%20and%20Recent%20Developments) - During Q3 2019, the Company sold **$551 million of multifamily loans** through securitization, sold **$284 million of lower yielding securities**, and purchased **$576 million of securities**[147](index=147&type=chunk) - For the first nine months of 2019, loan originations totaled **$1.4 billion**, total deposits increased by **$638 million**, and total revenues **grew by 12% year-over-year**[147](index=147&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Net Income and Income Before Taxes (In thousands) | Metric | Quarter Ended Sep 30, 2019 | Quarter Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net income | $17,356 | $14,707 | $41,025 | $28,829 | | Income before taxes | $24,248 | $20,854 | $57,780 | $40,231 | - The **effective tax rate** for the nine months ended September 30, 2019, was **29.0%**, compared to 28.3% for the corresponding period in 2018[149](index=149&type=chunk) - **Banking segment's income before taxes increased by $16.9 million** for the first nine months of 2019, driven by higher net interest income, lower provision for loan losses, and higher noninterest income[153](index=153&type=chunk) - **Wealth Management segment's income before taxes decreased by $1.2 million** for the first nine months of 2019, due to lower noninterest income and higher noninterest expenses[153](index=153&type=chunk) [Net Interest Income](index=30&type=section&id=Net%20Interest%20Income) This section analyzes the components of net interest income, average balances, yields, and resulting interest rate spreads Net Interest Income and Spreads | Metric | Quarter Ended Sep 30, 2019 | Quarter Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $43,132 | $43,726 | $126,066 | $114,245 | | Net Interest Rate Spread | 2.27% | 2.60% | 2.31% | 2.50% | | Net Yield on Interest-earning Assets | 2.89% | 3.12% | 2.87% | 2.97% | - The **decrease in net interest rate spread** was primarily due to an increase in the cost of interest-bearing liabilities, partially offset by an increase in the yield on interest-earning assets[158](index=158&type=chunk)[159](index=159&type=chunk) - The **yield on interest-earning assets increased** due to higher yields on securities and new loans bearing higher interest rates[158](index=158&type=chunk)[159](index=159&type=chunk) [Provision for Loan Losses](index=33&type=section&id=Provision%20for%20Loan%20Losses) This section discusses the provision for loan losses and reports net charge-offs and recoveries Provision for Loan Losses and Net Charge-offs (In thousands) | Metric | Quarter Ended Sep 30, 2019 | Quarter Ended Sep 30, 2018 | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | :--- | :--- | | Provision for loan losses | $172 | $9 | $1,943 | $4,147 | | Net recoveries (charge-offs) | $128 (net recoveries) | Negligible (net charge-offs) | $(443) (net charge-offs) | $(3,500) (net charge-offs) | [Noninterest Income](index=33&type=section&id=Noninterest%20Income) This section provides a breakdown of noninterest income for both the Banking and Wealth Management segments Noninterest Income by Segment (In thousands) | Metric | Banking Q3 2019 | Banking Q3 2018 | Banking 9M 2019 | Banking 9M 2018 | Wealth Management 9M 2019 | Wealth Management 9M 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total noninterest income | $8,173 | $5,079 | $14,638 | $8,586 | $17,886 | $18,932 | | Gain (loss) on sale of loans | $4,218 | $1,364 | $4,218 | $419 | N/A | N/A | | Trust fees | $1,305 | $1,054 | $3,790 | $2,808 | N/A | N/A | | Asset management fees | N/A | N/A | N/A | N/A | $17,886 | $18,932 | - **Banking's noninterest income increased by $6.0 million** for the first nine months of 2019, primarily due to a $3.8 million higher gain on sale of loans and a $1.0 million increase in trust fees[164](index=164&type=chunk) - **Wealth Management's noninterest income decreased by $1.0 million** for the first nine months of 2019, mainly due to lower levels of assets under management (AUM)[165](index=165&type=chunk) [Noninterest Expense](index=34&type=section&id=Noninterest%20Expense) This section details noninterest expenses for both Banking and Wealth Management segments Noninterest Expense by Segment (In thousands) | Metric | Banking Q3 2019 | Banking Q3 2018 | Banking 9M 2019 | Banking 9M 2018 | Wealth Management 9M 2019 | Wealth Management 9M 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total noninterest expense | $26,397 | $27,530 | $78,785 | $76,896 | $16,508 | $16,333 | | Compensation and benefits | $12,613 | $13,215 | $39,774 | $38,028 | $12,549 | $12,283 | | Customer service costs | $5,920 | $4,854 | $13,592 | $11,449 | — | — | - Banking's noninterest expense decreased in Q3 2019 due to lower compensation costs and a **$1.2 million FDIC deposit insurance fee refund**, partially offset by increased customer service costs[166](index=166&type=chunk) - For the first nine months of 2019, Banking's noninterest expense increased due to staffing and expansion costs, partially offset by a **$4.1 million decrease in merger-related costs** and the FDIC refund[168](index=168&type=chunk) [Financial Condition](index=36&type=section&id=Financial%20Condition) - **Total assets increased by $518 million** during the first nine months of 2019, primarily driven by increases in cash, securities, and loans[171](index=171&type=chunk) - **Total deposits grew by $638 million** in the first nine months of 2019, including increases in branch, specialty, and wholesale deposits[171](index=171&type=chunk) - **Borrowings decreased by $188 million** during the first nine months of 2019, as deposit growth exceeded asset growth, allowing for debt reduction[171](index=171&type=chunk) [Cash and Cash Equivalents, Certificates of Deposit and Securities](index=37&type=section&id=Cash%20and%20Cash%20Equivalents%2C%20Certificates%20of%20Deposit%20and%20Securities) This section discusses changes in cash, cash equivalents, and the available-for-sale (AFS) securities portfolio - **Cash and cash equivalents increased by $201 million** during the first nine months of 2019[173](index=173&type=chunk) - **Securities AFS increased by $233 million** year-to-date, following a securitization of multifamily loans and subsequent securities purchases[171](index=171&type=chunk) - As of September 30, 2019, **$151 million of agency mortgage-backed securities** were pledged as collateral[174](index=174&type=chunk) [Loans](index=38&type=section&id=Loans) This section provides an overview of the loan portfolio composition and changes, including originations, sales, and payoffs - **Total loans**, including loans held for sale, **increased by $75 million** during the first nine months of 2019[177](index=177&type=chunk) - Loan originations totaled **$1.4 billion** in the first nine months of 2019, partially offset by **$551 million in loan sales** and **$749 million in payoffs/scheduled payments**[177](index=177&type=chunk) [Deposits](index=38&type=section&id=Deposits) This section details deposit balances by type and their weighted average rates Deposit Balances and Weighted Average Rates (In thousands) | Metric | September 30, 2019 Amount | December 31, 2018 Amount | September 30, 2019 Weighted Average Rate | December 31, 2018 Weighted Average Rate | | :--- | :--- | :--- | :--- | :--- | | Total Deposits | $5,170,566 | $4,532,968 | 1.240% | 1.270% | - The weighted average rate of interest-bearing deposits **increased from 1.67%** at December 31, 2018, **to 1.76%** at September 30, 2019[178](index=178&type=chunk) - As of September 30, 2019, **brokered deposits amounted to $1.2 billion**[179](index=179&type=chunk) [Borrowings](index=38&type=section&id=Borrowings) This section describes the Company's borrowing structure, including FHLB advances and lines of credit - **Total borrowings decreased from $708 million** at December 31, 2018, **to $520 million** at September 30, 2019[180](index=180&type=chunk) - The average balance of FHLB advances and other borrowings outstanding was **$640 million** for the first nine months of 2019, with a weighted average interest rate of **2.50%**[180](index=180&type=chunk) [Delinquent Loans, Nonperforming Assets and Provision for Credit Losses](index=39&type=section&id=Delinquent%20Loans%2C%20Nonperforming%20Assets%20and%20Provision%20for%20Credit%20Losses) This section provides detailed information on past due loans, nonperforming assets, and the allowance for loan losses (ALLL) Delinquent and Nonaccrual Loans (In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Past Due and Nonaccrual | $29,697 | $28,030 | | Percentage of total loans | 0.68% | 0.65% | Troubled Debt Restructurings (TDRs) (In thousands) | Metric | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total TDRs | $6,296 | $4,851 | Loan Risk Categories (In thousands) | Risk Category | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Impaired Loans | $25,533 | $12,778 | - The **Allowance for Loan Losses (ALLL) increased to $20.5 million** at September 30, 2019, from $19.0 million at December 31, 2018[188](index=188&type=chunk) [Liquidity](index=42&type=section&id=Liquidity) This section outlines the Company's liquidity management strategy and identifies primary sources of liquidity - The Bank's unused lines of credit available to draw down totaled **$1.9 billion** at September 30, 2019[196](index=196&type=chunk) - The **loan-to-deposit ratio** at the Bank was **94%** at September 30, 2019, a decrease from 106% at December 31, 2018[200](index=200&type=chunk) [Off-Balance Sheet Arrangements](index=43&type=section&id=Off-Balance%20Sheet%20Arrangements) This section details the Company's off-balance sheet commitments, including commitments to fund loans and standby letters of credit Off-Balance Sheet Commitments (In thousands, as of September 30, 2019) | Commitment Type | Amount | | :--- | :--- | | Commitments to fund new loans | $69,640 | | Commitments to fund under existing loans, lines of credit | $464,458 | | Commitments under standby letters of credit | $10,737 | - The Bank was obligated on **$231 million of letters of credit to the FHLB**, used as collateral for public fund deposits[201](index=201&type=chunk) [Capital Resources and Dividend Policy](index=43&type=section&id=Capital%20Resources%20and%20Dividend%20Policy) This section reviews the Company's capital adequacy ratios against regulatory requirements and outlines the dividend policy - As of September 30, 2019, both the Company (FFI) and First Foundation Bank (FFB) **exceeded all minimum required capital ratios** and qualified as a well-capitalized depository institution[205](index=205&type=chunk) FFB Capital Ratios vs. Well Capitalized Requirements (In thousands, as of September 30, 2019) | Capital Ratio | FFB Actual Amount | FFB Actual Ratio | To Be Well Capitalized Amount | To Be Well Capitalized Ratio | | :--- | :--- | :--- | :--- | :--- | | CET1 capital ratio | $508,516 | 10.65% | $310,354 | 6.50% | | Tier 1 leverage ratio | $508,516 | 8.33% | $305,390 | 5.00% | | Tier 1 risk-based capital ratio | $508,516 | 10.65% | $381,974 | 8.00% | | Total risk-based capital ratio | $531,881 | 11.14% | $477,468 | 10.00% | - The Company paid a **quarterly cash dividend of $0.05 per common share** in the first three quarters of 2019, with the intention to continue quarterly dividends[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Disclosures regarding market risk remain materially unchanged from the previous annual report - There have been **no material changes** to the Company's quantitative and qualitative disclosures about market risk since December 31, 2018[213](index=213&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) The company confirms the effectiveness of its disclosure controls and procedures with no material changes reported - The Company's disclosure controls and procedures were **effective as of September 30, 2019**, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[215](index=215&type=chunk) - There was **no change in internal control over financial reporting** during the quarter ended September 30, 2019, that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting[216](index=216&type=chunk) [Part II. Other Information](index=46&type=section&id=Part%20II.%20Other%20Information) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) Risk factors remain materially unchanged from those disclosed in the company's latest Annual Report - There have been **no material changes** in the risk factors disclosed in Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2018[218](index=218&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=46&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company provides an update on its stock repurchase plan, reporting no activity during the quarter - The Company adopted a stock repurchase plan on October 30, 2018, authorizing the repurchase of up to **2,200,000 shares** of common stock[219](index=219&type=chunk) - **No shares were repurchased** during the quarter ended September 30, 2019[219](index=219&type=chunk) - As of September 30, 2019, **2,162,900 shares remained available for repurchase** under the plan[219](index=219&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the report, including required officer certifications - The exhibits include Certifications of the Chief Executive Officer and Chief Financial Officer under **Sections 302 and 906 of the Sarbanes-Oxley Act of 2002**[221](index=221&type=chunk) - **Inline XBRL Instance Document** and Taxonomy Extension Schema are also included as exhibits[221](index=221&type=chunk) [SIGNATURES](index=48&type=section&id=SIGNATURES) The report is formally concluded with the signature of an authorized company officer - The report was signed by **John M. Michel, Executive Vice President and Chief Financial Officer**, on November 7, 2019[227](index=227&type=chunk)

Financial Performance - Total revenues rose by 16% in the first six months of 2019 compared to the same period in 2018[149]. - Net income for the quarter ending June 30, 2019, was $12.4 million, up from $5.1 million in the same quarter of 2018[151]. - Income before taxes for the first six months of 2019 was $33.5 million, compared to $19.4 million in the first six months of 2018[151]. - The effective tax rate for the first six months of 2019 was 29.4%, compared to 27.1% for the same period in 2018[152]. Loan and Asset Growth - Total loans increased by $452 million during the first six months of 2019, driven by $893 million in originations[149]. - Total assets grew to $6,097,178 thousand, up from $5,217,346 thousand year-over-year[158]. - Total loans, including loans held for sale, reached $4.631 billion as of June 30, 2019, up from $4.294 billion at the end of 2018[179]. - Total real estate loans increased to $4.044 billion as of June 30, 2019, compared to $3.811 billion at the end of 2018[179]. Interest Income and Rates - Net interest income for Banking segment was $83.048 million for the first six months of 2019, an increase from $71.554 million in 2018[155]. - Net interest income increased 16% from $36.8 million in Q2 2018 to $42.0 million in Q2 2019, driven by a 15% increase in interest-earning assets[162]. - The net yield on interest-earning assets was 2.86% for the first six months of 2019, compared to 2.89% in the same period of 2018[162]. - The net interest rate spread decreased from 2.45% in the first six months of 2018 to 2.33% in the first six months of 2019[162]. Noninterest Income and Expenses - Noninterest income for Wealth Management segment was $11.713 million for the first six months of 2019, down from $12.660 million in 2018[155]. - Noninterest income in Banking for Q2 2019 was $3.471 million, a significant increase of $2.521 million compared to Q2 2018, driven by higher trust fees and loan-related fees[165]. - Total noninterest income for the first six months of 2019 was $6.465 million, up $3.0 million from the same period in 2018, primarily due to increased trust and loan fees[166]. - Total noninterest expense in Banking for the first six months of 2019 was $52.388 million, up from $49.366 million in the same period of 2018, due to staffing and expansion costs[171]. Capital and Equity - Shareholders' equity increased to $570,778 thousand from $432,454 thousand year-over-year[158]. - Shareholders' equity decreased to $586.703 million as of June 30, 2019, from $559.184 million at the end of 2018[174]. - FFI's CET1 capital ratio was 10.84%, exceeding the required 4.50% for well-capitalized institutions[208]. - FFB's total risk-based capital ratio was 11.54% as of June 30, 2019, above the 8.00% minimum requirement[208]. Loan Quality and Provisions - Provision for loan losses was $1.771 million for the first six months of 2019, a decrease from $4.138 million in the same period of 2018[155]. - Provisions for loan losses were $1.2 million for Q2 2019, down from $2.5 million in Q2 2018, indicating improved loan portfolio quality[163]. - Total past due and nonaccrual loans amounted to $21.204 million as of June 30, 2019, with a total loan portfolio of $4.62 billion[186]. - The total allowance for loan losses (ALLL) increased to $20,200,000 as of June 30, 2019, from $19,000,000 at the end of 2018, reflecting a provision for loan losses of $1,231,000 during the quarter[192]. Deposits and Borrowings - Deposits grew by $211 million, with specialty deposits increasing by $248 million and wholesale deposits by $62 million, partially offset by a $99 million decrease in branch deposits[174]. - Borrowings increased by $174 million to support loan growth, with the outstanding balance on the holding company line of credit at $20 million as of June 30, 2019[174]. - The bank held $1.3 billion in brokered deposits as of June 30, 2019[183]. - Borrowings increased to $862 million in overnight FHLB advances as of June 30, 2019, up from $703 million at December 31, 2018[184]. Cash Flow and Liquidity - Cash flows provided by operating activities for the six months ended June 30, 2019, amounted to $24,000,000, an increase from $16,000,000 in the same period of 2018[200]. - Financing activities provided net cash of $381,000,000 during the six months ended June 30, 2019, driven by a $211,000,000 increase in deposits and $159,000,000 in FHLB advances[202]. - The company’s liquidity management focuses on generating cash to meet funding needs, with $1.6 billion in available lines of credit as of June 30, 2019[199]. Dividends and Future Plans - The Company paid a quarterly cash dividend of $0.05 per common share in the first and second quarters of 2019, with intentions to continue this practice[211]. - There were no material commitments for capital expenditures as of June 30, 2019, but the Company intends to explore growth opportunities through acquisitions or new offices[212].

[PART I — FINANCIAL INFORMATION](index=3&type=section&id=Part%20I.%20Financial%20Information) This section presents the unaudited consolidated financial statements of First Foundation Inc. for the quarter ended March 31, 2019, along with management's discussion and analysis of financial condition and results of operations, market risk disclosures, and controls and procedures. [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents the unaudited consolidated financial statements of First Foundation Inc. for the quarter ended March 31, 2019, including balance sheets, income statements, statements of changes in shareholders' equity, comprehensive income, and cash flows, along with detailed notes explaining accounting policies, acquisitions, fair value measurements, and specific financial instrument details [Consolidated Balance Sheets](index=3&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) This section provides a snapshot of the company's financial position at March 31, 2019, and December 31, 2018, detailing assets, liabilities, and shareholders' equity | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | |:---|:---|:---| | **ASSETS** ||| | Cash and cash equivalents | $80,693 | $67,312 | | Securities available-for-sale | $788,160 | $809,569 | | Loans held for sale | $613,528 | $507,643 | | Net loans | $4,316,865 | $4,274,669 | | Total Assets | $6,001,204 | $5,840,412 | | **LIABILITIES AND SHAREHOLDERS' EQUITY** ||| | Deposits | $4,568,702 | $4,532,968 | | Borrowings | $800,000 | $708,000 | | Total Liabilities | $5,432,961 | $5,281,228 | | Total Shareholders' Equity | $568,243 | $559,184 | | Total Liabilities and Shareholders' Equity | $6,001,204 | $5,840,412 | - Total Assets increased by **$160.8 million (2.75%)** from December 31, 2018, to March 31, 2019, driven by increases in loans held for sale and net loans[9](index=9&type=chunk) - Total Liabilities increased by **$151.7 million (2.87%)** from December 31, 2018, to March 31, 2019, primarily due to increases in deposits and borrowings[9](index=9&type=chunk) [Consolidated Income Statements](index=4&type=section&id=CONSOLIDATED%20INCOME%20STATEMENTS%20-%20UNAUDITED) This section presents the company's financial performance for the quarters ended March 31, 2019, and March 31, 2018, detailing revenues, expenses, and net income | Metric | For the Quarter Ended March 31, 2019 (in thousands) | For the Quarter Ended March 31, 2018 (in thousands) | YoY Change (in thousands) | YoY Change (%) | |:---|:---|:---|:---|:---|\n| Total interest income | $60,544 | $43,319 | $17,225 | 39.76% | | Total interest expense | $19,497 | $9,051 | $10,446 | 115.41% | | Net interest income | $41,047 | $34,268 | $6,779 | 19.78% | | Provision for loan losses | $540 | $1,688 | $(1,148) | -67.90% | | Net interest income after provision for loan losses | $40,507 | $32,580 | $7,927 | 24.33% | | Total noninterest income | $8,465 | $8,982 | $(517) | -5.76% | | Total noninterest expense | $32,945 | $28,988 | $3,957 | 13.65% | | Income before taxes on income | $16,027 | $12,574 | $3,453 | 27.46% | | Taxes on income | $4,768 | $3,598 | $1,170 | 32.52% | | Net income | $11,259 | $8,976 | $2,283 | 25.44% | | Basic Net income per share | $0.25 | $0.23 | $0.02 | 8.70% | | Diluted Net income per share | $0.25 | $0.23 | $0.02 | 8.70% | - Net income increased by **25.44% year-over-year**, reaching **$11.3 million** in Q1 2019, primarily driven by higher net interest income and a significantly lower provision for loan losses[12](index=12&type=chunk) - Total interest expense more than doubled (**115.41% increase**) due to higher deposit and borrowing costs, partially offsetting the strong growth in total interest income[12](index=12&type=chunk) [Consolidated Statement of Changes in Shareholders' Equity](index=5&type=section&id=CONSOLIDATED%20STATEMENT%20OF%20CHANGES%20IN%20SHAREHOLDERS'%20EQUITY%20-%20UNAUDITED) This section outlines the changes in the company's shareholders' equity from December 31, 2018, to March 31, 2019, reflecting net income, dividends, and other comprehensive income | Metric | December 31, 2018 (in thousands) | March 31, 2019 (in thousands) | |:---|:---|:---|\n| Total Shareholders' Equity (Beginning Balance) | $559,184 | $559,184 | | Net income | $11,259 | $11,259 | | Other comprehensive income | $(759) | $(759) | | Stock based compensation | $692 | $692 | | Cash dividend | $(2,230) | $(2,230) | | Issuance of common stock (Exercise of options) | $97 | $97 | | Issuance of common stock (Stock grants) | $0 | $0 | | Total Shareholders' Equity (Ending Balance) | $568,243 | $568,243 | - Shareholders' equity increased by **$9.059 million** from December 31, 2018, to March 31, 2019, primarily due to net income, partially offset by cash dividends and other comprehensive loss[15](index=15&type=chunk) [Consolidated Statements of Comprehensive Income](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME%20-%20UNAUDITED) This section presents the total comprehensive income for the quarters ended March 31, 2019, and March 31, 2018, combining net income with other comprehensive income or loss | Metric | For the Quarter Ended March 31, 2019 (in thousands) | For the Quarter Ended March 31, 2018 (in thousands) | |:---|:---|:---|\n| Net income | $11,259 | $8,976 | | Other comprehensive income (loss) | $(759) | $(5,264) | | Total comprehensive income | $10,500 | $3,712 | - Total comprehensive income significantly increased to **$10.5 million** in Q1 2019 from **$3.7 million** in Q1 2018, driven by higher net income and a reduced other comprehensive loss[18](index=18&type=chunk) [Consolidated Statements of Cash Flows](index=7&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS%20-%20UNAUDITED) This section details the cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2019, and March 31, 2018 | Cash Flow Activity | For the Three Months Ended March 31, 2019 (in thousands) | For the Three Months Ended March 31, 2018 (in thousands) | |:---|:---|:---|\n| Net cash provided by operating activities | $11,192 | $10,076 | | Net cash used in investing activities | $(123,412) | $(249,065) | | Net cash provided by financing activities | $125,601 | $295,951 | | Increase in cash and cash equivalents | $13,381 | $56,962 | | Cash and cash equivalents at end of period | $80,693 | $177,356 | - Net cash provided by operating activities increased slightly to **$11.2 million** in Q1 2019 from **$10.1 million** in Q1 2018[22](index=22&type=chunk) - Net cash used in investing activities decreased significantly from **$(249.1) million** in Q1 2018 to **$(123.4) million** in Q1 2019, primarily due to a lower net increase in loans and no purchases of AFS securities in 2019[22](index=22&type=chunk) - Net cash provided by financing activities decreased from **$296.0 million** in Q1 2018 to **$125.6 million** in Q1 2019, mainly due to a smaller increase in deposits and no proceeds from stock sales in 2019[22](index=22&type=chunk) [Note 1: Basis of Presentation](index=8&type=section&id=NOTE%201%3A%20BASIS%20OF%20PRESENTATION) This note describes the entities included in the consolidated financial statements and the accounting standards adopted or pending adoption - The consolidated financial statements include First Foundation Inc. (FFI) and its wholly-owned subsidiaries: First Foundation Advisors (FFA), First Foundation Bank (FFB), First Foundation Insurance Services (FFIS), and Blue Moon Management, LLC[25](index=25&type=chunk) - The Company adopted ASU 2019-01 (Leases) and ASU 2018-13 (Fair Value Measurement) which are not expected to have a significant impact on consolidated financial statements[29](index=29&type=chunk)[30](index=30&type=chunk) - ASU 2018-19 (Credit Losses) is expected to impact credit loss accounting, and ASU 2016-13 (CECL model) may have a significant but currently undeterminable impact on the allowance for loan losses, both effective after December 15, 2019[31](index=31&type=chunk)[33](index=33&type=chunk)[35](index=35&type=chunk) [Note 2: Acquisitions](index=9&type=section&id=NOTE%202%3A%20ACQUISITIONS) This note details the acquisition of PBB Bancorp in June 2018, including the consideration paid, assets acquired, liabilities assumed, and the resulting goodwill and intangible assets - On June 1, 2018, the Company acquired PBB Bancorp and its subsidiary Premier Business Bank (PBB) to expand operations in Southern California, issuing **5,234,593 shares of common stock** with a fair value of **$19.39 per share**[36](index=36&type=chunk) - The acquisition resulted in **$61 million of goodwill** and a core deposit intangible of **$6.7 million**, which will be amortized over 10 years[37](index=37&type=chunk)[44](index=44&type=chunk) PBB Acquisition: Assets Acquired and Liabilities Assumed (June 1, 2018) | Item | PBB Book Value (in thousands) | Fair Value Adjustments (in thousands) | Fair Value (in thousands) | |:---|:---|:---|:---|\n| Total assets acquired | $609,221 | $54,737 | $663,958 | | Total liabilities assumed | $562,481 | $(22) | $562,459 | | Excess of assets acquired over liabilities assumed | $46,740 | $54,759 | $101,499 | | Consideration: Stock issued | | | $101,499 | - Pro forma net income for the three months ended March 31, 2018, would have increased by **$0.4 million** to **$11.407 million** if the PBB acquisition had occurred on January 1, 2018[45](index=45&type=chunk)[47](index=47&type=chunk) [Note 3: Fair Value Measurements](index=10&type=section&id=NOTE%203%3A%20FAIR%20VALUE%20MEASUREMENTS) This note explains the methodologies and categorization of assets and liabilities measured at fair value, distinguishing between recurring and nonrecurring measurements across Level 1, 2, and 3 inputs - Fair value measurements are categorized into Level 1 (quoted prices in active markets), Level 2 (observable inputs other than Level 1 prices), and Level 3 (significant unobservable inputs)[51](index=51&type=chunk)[52](index=52&type=chunk) Assets Measured at Fair Value on a Recurring Basis (March 31, 2019) | Asset Category | Total (in thousands) | Level 1 (in thousands) | Level 2 (in thousands) | Level 3 (in thousands) | |:---|:---|:---|:---|:---|\n| Investment securities available for sale | $788,160 | $499 | $757,045 | $30,616 | | Investment in equity securities | $399 | $399 | $0 | $0 | | Derivatives: Interest rate swaps | $10,196 | $0 | $10,196 | $0 | | Total assets at fair value on a recurring basis | $798,755 | $898 | $767,241 | $30,616 | - The decrease in Level 3 assets from December 31, 2018, was due to a change in pricing methodology for agency mortgage-backed securities, reclassifying some from Level 3 to Level 2[53](index=53&type=chunk) - Impaired loans and Real Estate Owned (REO) are measured at fair value on a nonrecurring basis, primarily classified as Level 3 due to unobservable inputs[57](index=57&type=chunk)[58](index=58&type=chunk) [Note 4: Securities](index=14&type=section&id=NOTE%204%3A%20SECURITIES) This note provides a summary of the company's securities available-for-sale (AFS) portfolio, including amortized cost, fair value, and unrealized gains and losses Securities AFS Portfolio Summary (March 31, 2019 vs. December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | |:---|:---|:---|\n| Amortized Cost | $790,863 | $811,198 | | Gross Gains | $6,184 | $14,292 | | Unrealized Losses | $(8,887) | $(15,921) | | Estimated Fair Value | $788,160 | $809,569 | - Total estimated fair value of AFS securities decreased by **$21.409 million (2.64%)** from December 31, 2018, to March 31, 2019[74](index=74&type=chunk) - Unrealized losses in agency mortgage-backed securities and FHLMC securitizations are not recognized into income due to high credit quality, management's intent not to sell, and expected recovery as bonds approach maturity[78](index=78&type=chunk) [Note 5: Loans](index=16&type=section&id=NOTE%205%3A%20LOANS) This note details the composition of the loan portfolio by category and provides an analysis of delinquent and nonaccrual loans, highlighting changes in credit quality Loan Portfolio Summary (March 31, 2019 vs. December 31, 2018) | Loan Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | |:---|:---|:---|\n| Multifamily | $1,987,690 | $1,956,935 | | Single family | $903,992 | $904,828 | | Commercial properties | $902,060 | $869,169 | | Land | $59,917 | $80,187 | | Commercial and industrial loans | $454,849 | $449,805 | | Consumer loans | $17,693 | $22,699 | | Total loans | $4,326,201 | $4,283,623 | | Premiums, discounts and deferred fees and expenses | $9,864 | $10,046 | | Total | $4,336,065 | $4,293,669 | - Total loans increased by **$42.396 million (0.99%)** from December 31, 2018, to March 31, 2019, primarily driven by growth in multifamily and commercial property loans[83](index=83&type=chunk) Delinquent and Nonaccrual Loans (March 31, 2019 vs. December 31, 2018) | Status | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | |:---|:---|:---|\n| 30–59 Days Past Due | $4,526 | $15,055 | | 60-89 Days Past Due | $1,278 | $424 | | 90 Days or More Past Due | $0 | $1,035 | | Nonaccrual | $15,537 | $11,516 | | Total Past Due and Nonaccrual | $21,341 | $28,030 | | Percentage of total loans | 0.49% | 0.65% | - Total past due and nonaccrual loans decreased by **$6.689 million (23.86%)** from December 31, 2018, to March 31, 2019, improving the overall credit quality[87](index=87&type=chunk) [Note 6: Allowance for Loan Losses](index=18&type=section&id=NOTE%206%3A%20ALLOWANCE%20FOR%20LOAN%20LOSSES) This note provides a roll-forward of the allowance for loan losses (ALLL) and categorizes loans by risk, offering insights into the company's credit risk management Allowance for Loan Losses Roll Forward (Q1 2019 vs. Q1 2018) | Metric | Q1 2019 (in thousands) | Q1 2018 (in thousands) | |:---|:---|:---|\n| Beginning Balance | $19,000 | $18,400 | | Provision for Loan Losses | $540 | $1,688 | | Charge-offs | $(548) | $(88) | | Recoveries | $208 | $0 | | Ending Balance | $19,200 | $20,000 | - The provision for loan losses decreased significantly to **$0.54 million** in Q1 2019 from **$1.688 million** in Q1 2018, reflecting lower estimated losses[91](index=91&type=chunk) - The Allowance for Loan Losses (ALLL) increased slightly to **$19.2 million** at March 31, 2019, from **$19.0 million** at December 31, 2018[91](index=91&type=chunk) Loans by Risk Category (March 31, 2019) | Loan Category | Pass (in thousands) | Special Mention (in thousands) | Substandard (in thousands) | Impaired (in thousands) | Total (in thousands) | |:---|:---|:---|:---|:---|:---|\n| Real estate loans: Residential properties | $2,886,943 | $2,928 | $0 | $1,811 | $2,891,682 | | Real estate loans: Commercial properties | $880,599 | $6,696 | $5,821 | $8,944 | $902,060 | | Real estate loans: Land | $58,418 | $0 | $802 | $697 | $59,917 | | Commercial and industrial loans | $440,126 | $918 | $3,309 | $10,496 | $454,849 | | Consumer loans | $17,693 | $0 | $0 | $0 | $17,693 | | Total | $4,283,779 | $10,542 | $9,932 | $21,948 | $4,326,201 | [Note 7: Loan Sales and Mortgage Servicing Rights](index=21&type=section&id=NOTE%207%3A%20LOAN%20SALES%20AND%20MORTGAGE%20SERVICING%20RIGHTS) This note discusses the company's loan sales activities and the valuation of mortgage servicing rights (MSRs), including related servicing fees - FFB had no loan sales during the first three months of 2019, compared to **$674 million** in multifamily loan sales in 2018, which generated a gain of **$0.4 million**[107](index=107&type=chunk) - Mortgage servicing rights (MSRs) were **$6.1 million** at March 31, 2019, down from **$6.4 million** at December 31, 2018, while loans serviced for others remained stable at **$1.3 billion**[107](index=107&type=chunk) - Servicing fees decreased to **$0.4 million** for Q1 2019 from **$1.1 million** in Q1 2018[107](index=107&type=chunk) [Note 8: Deposits](index=22&type=section&id=NOTE%208%3A%20DEPOSITS) This note provides a breakdown of deposits by type and their weighted average interest rates, illustrating changes in funding composition and cost Deposits Summary (March 31, 2019 vs. December 31, 2018) | Deposit Type | March 31, 2019 Amount (in thousands) | March 31, 2019 Weighted Average Rate | December 31, 2018 Amount (in thousands) | December 31, 2018 Weighted Average Rate | |:---|:---|:---|:---|:---|\n| Noninterest-bearing demand | $1,114,596 | — | $1,074,661 | — | | Interest-bearing demand | $307,854 | 0.790% | $317,380 | 0.798% | | Money market and savings | $1,175,986 | 1.180% | $1,190,717 | 1.115% | | Certificates of deposits | $1,970,266 | 2.276% | $1,950,210 | 2.142% | | Total | $4,568,702 | 1.338% | $4,532,968 | 1.270% | - Total deposits increased by **$35.734 million (0.79%)** from December 31, 2018, to March 31, 2019, with noninterest-bearing demand deposits showing notable growth[110](index=110&type=chunk) - The weighted average rate on total deposits increased from **1.270% to 1.338%**, reflecting rising interest rates[110](index=110&type=chunk) [Note 9: Borrowings](index=22&type=section&id=NOTE%209%3A%20BORROWINGS) This note outlines the company's borrowing activities, including the types of borrowings, their balances, and associated interest rates, as well as available borrowing capacity - Borrowings increased to **$800 million** at March 31, 2019, from **$708 million** at December 31, 2018, primarily due to an increase in overnight FHLB advances[111](index=111&type=chunk) - The average balance of overnight FHLB advances during Q1 2019 was **$636 million**, with a weighted average interest rate of **2.57%**, up from **1.55%** in Q1 2018[111](index=111&type=chunk) - The Bank's total borrowing capacity from the FHLB was **$2.3 billion** at March 31, 2019, with **$1.5 billion** in unused lines of credit[111](index=111&type=chunk) [Note 10: Leases](index=22&type=section&id=NOTE%2010%3A%20LEASES) This note describes the adoption of new lease accounting standards and its impact on the financial statements, including the recognition of right-of-use assets and lease liabilities - The Company adopted ASU 2016-02 (Topic 842, Leases) on January 1, 2019, recognizing a right-of-use (ROU) asset of **$21.1 million** and a corresponding lease liability of **$22.7 million**, eliminating a **$1.6 million** deferred rent liability[112](index=112&type=chunk)[115](index=115&type=chunk) Supplemental Lease Information (March 31, 2019) | Metric | Amount (in thousands) | |:---|:---|\n| Operating lease asset (classified as other assets) | $20,015 | | Operating lease liability (classified as other liabilities) | $21,644 | | Operating lease cost (classified as occupancy and equipment expense) | $1,188 | | Weighted average lease term | 3.12 years | | Weighted average discount rate | 5.53% | | Operating cash flows | $1,497 | [Note 11: Earnings Per Share](index=24&type=section&id=NOTE%2011%3A%20EARNINGS%20PER%20SHARE) This note provides a calculation of basic and diluted earnings per share for the quarters ended March 31, 2019, and March 31, 2018, based on net income and outstanding shares Earnings Per Share (Q1 2019 vs. Q1 2018) | Metric | Q1 2019 | Q1 2018 | |:---|:---|:---|\n| Net income (in thousands) | $11,259 | $8,976 | | Basic common shares outstanding | 44,540,865 | 38,577,271 | | Diluted common shares outstanding | 44,798,306 | 39,124,732 | | Basic Earnings per share | $0.25 | $0.23 | | Diluted Earnings per share | $0.25 | $0.23 | - Basic and diluted EPS increased by **$0.02** to **$0.25** in Q1 2019, reflecting the **25.44% increase** in net income[120](index=120&type=chunk) [Note 12: Segment Reporting](index=25&type=section&id=NOTE%2012%3A%20SEGMENT%20REPORTING) This note presents the financial results for the company's two reportable segments, Banking and Wealth Management, for the quarters ended March 31, 2019, and March 31, 2018 - The Company operates with two reportable segments: Banking (FFB and FFIS) and Wealth Management (FFA)[123](index=123&type=chunk) Segment Operating Results (Q1 2019 vs. Q1 2018) | Metric (in thousands) | Banking 2019 | Banking 2018 | Wealth Management 2019 | Wealth Management 2018 | |:---|:---|:---|:---|:---|\n| Net interest income | $41,062 | $34,799 | $0 | $0 | | Noninterest income | $2,994 | $2,557 | $5,731 | $6,414 | | Noninterest expense | $26,587 | $21,811 | $5,518 | $5,817 | | Income (loss) before taxes on income | $16,929 | $13,857 | $213 | $597 | - Banking segment's income before taxes increased by **$3.072 million (22.17%)** in Q1 2019, driven by higher net interest income and lower loan loss provision[123](index=123&type=chunk) - Wealth Management's income before taxes decreased by **$0.384 million (64.32%)** due to lower noninterest income[123](index=123&type=chunk) [Note 13: Subsequent Events](index=25&type=section&id=NOTE%2013%3A%20SUBSEQUENT%20EVENTS) This note discloses significant events that occurred after the balance sheet date but before the financial statements were issued - On May 2, 2019, the Board of Directors declared an initial quarterly cash dividend of **$0.05 per common share**, payable on June 17, 2019[124](index=124&type=chunk) [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=26&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section provides a detailed discussion and analysis of the Company's financial condition at March 31, 2019, compared to December 31, 2018, and results of operations for the quarter ended March 31, 2019, compared to the same period in 2018, covering critical accounting policies, recent developments, and a breakdown of performance by business segment [Overview and Recent Developments](index=27&type=section&id=Overview%20and%20Recent%20Developments) This section provides a high-level summary of the company's performance and key strategic actions during the quarter - The Company declared and paid its first quarterly cash dividend of **$0.05 per common share** in Q1 2019[136](index=136&type=chunk) - Total loans, including loans held for sale, increased by **$148 million** in Q1 2019 due to **$400 million** in originations, partially offset by **$256 million** in payoffs/scheduled payments[137](index=137&type=chunk) - Total revenues (net interest income and noninterest income) increased by **14%** in Q1 2019 compared to Q1 2018[137](index=137&type=chunk) [Results of Operations](index=27&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including net interest income, provision for loan losses, noninterest income, and noninterest expense, for the quarter ended March 31, 2019, compared to the prior year - Consolidated net income for Q1 2019 was **$11.3 million**, up from **$9.0 million** in Q1 2018, with income before taxes increasing to **$16.0 million** from **$12.6 million**[138](index=138&type=chunk) - The effective tax rate for Q1 2019 was **29.7%**, compared to **28.6%** for Q1 2018[138](index=138&type=chunk) - Banking's income before taxes increased by **$3.1 million**, while Wealth Management's decreased by **$0.4 million**[141](index=141&type=chunk) [Net Interest Income](index=28&type=section&id=Net%20Interest%20Income) This subsection analyzes the components of net interest income, including interest-earning assets, interest-bearing liabilities, and net interest rate spread Net Interest Income Analysis (Q1 2019 vs. Q1 2018) | Metric | Q1 2019 | Q1 2018 | Change | |:---|:---|:---|:---|\n| Net Interest Income (in thousands) | $41,047 | $34,268 | $6,779 | | Net Interest Rate Spread | 2.36% | 2.56% | -0.20% | | Net Yield on Interest-earning Assets | 2.88% | 2.96% | -0.08% | | Average Interest-earning Assets (in thousands) | $5,687,224 | $4,620,086 | $1,067,138 | | Average Interest-bearing Liabilities (in thousands) | $4,142,227 | $3,057,075 | $1,085,152 | - Net interest income increased by **$6.8 million (19.78%)** for Banking, driven by a **23% increase** in interest-earning assets, despite a decrease in net interest rate spread[144](index=144&type=chunk) - The net interest rate spread decreased from **2.56% to 2.36%** due to a higher increase in the cost of interest-bearing liabilities (**1.20% to 1.91%**) compared to the yield on interest-earning assets (**3.76% to 4.27%**)[144](index=144&type=chunk) [Provision for loan losses](index=30&type=section&id=Provision%20for%20loan%20losses) This subsection discusses the provision for loan losses, reflecting changes in loan growth and credit quality - The provision for loan losses decreased to **$0.5 million** in Q1 2019 from **$1.7 million** in Q1 2018, reflecting slower growth in loans subject to ALLL (**65% lower growth** in Q1 2019)[147](index=147&type=chunk) [Noninterest income](index=30&type=section&id=Noninterest%20income) This subsection analyzes the various components of noninterest income for both the Banking and Wealth Management segments Noninterest Income Breakdown (Q1 2019 vs. Q1 2018) | Category (in thousands) | Banking 2019 | Banking 2018 | Wealth Management 2019 | Wealth Management 2018 | |:---|:---|:---|:---|:---|\n| Trust fees | $1,185 | $822 | N/A | N/A | | Loan related fees | $1,145 | $564 | N/A | N/A | | Deposit charges | $202 | $120 | N/A | N/A | | Gain on sale of loans | $0 | $545 | N/A | N/A | | Asset management fees | N/A | N/A | $5,731 | $6,414 | | Total Noninterest Income | $2,994 | $2,557 | $5,731 | $6,414 | - Banking's noninterest income increased by **$0.4 million**, driven by higher trust and loan fees, offsetting the absence of loan sale gains in Q1 2019[148](index=148&type=chunk) - Wealth Management's noninterest income decreased by **$0.7 million**, primarily due to lower billable Assets Under Management (AUM)[149](index=149&type=chunk) [Noninterest Expense](index=30&type=section&id=Noninterest%20Expense) This subsection examines the trends in noninterest expenses, including compensation, occupancy, and other operating costs, for both segments Noninterest Expense Breakdown (Q1 2019 vs. Q1 2018) | Category (in thousands) | Banking 2019 | Banking 2018 | Wealth Management 2019 | Wealth Management 2018 | |:---|:---|:---|:---|:---|\n| Compensation and benefits | $14,309 | $12,539 | $4,234 | $4,267 | | Occupancy and depreciation | $4,241 | $3,577 | $587 | $548 | | Customer service costs | $3,389 | $2,771 | $0 | $0 | | Other expenses | $3,408 | $1,698 | $169 | $187 | | Total Noninterest Expense | $26,587 | $21,811 | $5,518 | $5,817 | - Banking's noninterest expense increased by **$4.8 million (22.01%)**, driven by higher compensation and benefits (**14% increase** due to PBB acquisition and growth), occupancy and depreciation, customer service costs, and other expenses (including FDIC insurance and core deposit intangible amortization)[152](index=152&type=chunk) - Wealth Management's noninterest expense decreased by **$0.3 million**, mainly due to lower legal costs related to 2018 litigation[152](index=152&type=chunk) [Financial Condition](index=31&type=section&id=Financial%20Condition) This section provides an in-depth analysis of the company's balance sheet, including assets, liabilities, and capital resources, as of March 31, 2019 - Total assets increased by **$161 million** in Q1 2019, primarily due to a **$148 million increase** in loans and loans held for sale[155](index=155&type=chunk) - Deposits grew by **$36 million**, with increases in specialty and wholesale deposits partially offset by a decrease in branch deposits[155](index=155&type=chunk) - Borrowings increased by **$92 million** to support loan growth[155](index=155&type=chunk) [Cash and cash equivalents, certificates of deposit and securities](index=32&type=section&id=Cash%20and%20cash%20equivalents%2C%20certificates%20of%20deposit%20and%20securities) This subsection discusses the changes in cash and cash equivalents, certificates of deposit, and securities, and their impact on liquidity - Cash and cash equivalents increased by **$13 million** during Q1 2019, influenced by loan funding, securities investments, and changes in funding sources[156](index=156&type=chunk) [Securities available for sale](index=32&type=section&id=Securities%20available%20for%20sale) This subsection provides an overview of the securities available for sale portfolio, including changes in amortized cost and fair value Securities AFS Portfolio Summary (March 31, 2019 vs. December 31, 2018) | Metric | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | |:---|:---|:---|\n| Amortized Cost | $790,863 | $811,198 | | Estimated Fair Value | $788,160 | $809,569 | - The fair value of AFS securities decreased by **$21.409 million (2.64%)** from December 31, 2018, to March 31, 2019[157](index=157&type=chunk) [Loans](index=33&type=section&id=Loans) This subsection details the composition and growth of the loan portfolio, including loans held for sale Loan Portfolio Summary (March 31, 2019 vs. December 31, 2018) | Loan Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | |:---|:---|:---|\n| Total loans | $4,326,201 | $4,283,623 | | Total (including premiums, discounts, etc.) | $4,336,065 | $4,293,669 | - Total loans, including loans held for sale, increased by **$148 million** in Q1 2019, driven by **$400 million** in originations[160](index=160&type=chunk) [Deposits](index=33&type=section&id=Deposits) This subsection analyzes the changes in total deposits and their weighted average interest rates, including the volume of brokered deposits Deposits and Average Rates (March 31, 2019 vs. December 31, 2018) | Deposit Type | March 31, 2019 Amount (in thousands) | March 31, 2019 Weighted Average Rate | December 31, 2018 Amount (in thousands) | December 31, 2018 Weighted Average Rate | |:---|:---|:---|:---|:---|\n| Total Deposits | $4,568,702 | 1.338% | $4,532,968 | 1.270% | - Total deposits increased by **$35.734 million (0.79%)** in Q1 2019, with the weighted average interest rate on interest-bearing deposits rising from **1.67% to 1.77%**[161](index=161&type=chunk) - As of March 31, 2019, the Bank held **$1.3 billion** in brokered deposits[162](index=162&type=chunk) [Borrowings](index=33&type=section&id=Borrowings) This subsection details the company's borrowing activities, including FHLB advances, their average balances, and weighted average interest rates - Borrowings increased to **$800 million** at March 31, 2019, from **$708 million** at December 31, 2018, primarily due to FHLB advances[163](index=163&type=chunk) - The average balance of FHLB advances was **$636 million** in Q1 2019 (weighted average rate **2.57%**), compared to **$693 million** in Q1 2018 (weighted average rate **1.55%**)[163](index=163&type=chunk) [Delinquent Loans, Nonperforming Assets and Provision for Credit Losses](index=34&type=section&id=Delinquent%20Loans%2C%20Nonperforming%20Assets%20and%20Provision%20for%20Credit%20Losses) This subsection provides an analysis of delinquent loans, nonperforming assets, and troubled debt restructurings, indicating the overall credit quality Past Due and Nonaccrual Loans (March 31, 2019 vs. December 31, 2018) | Status | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | |:---|:---|:---|\n| Total Past Due and Nonaccrual | $21,341 | $28,030 | | Percentage of total loans | 0.49% | 0.65% | - Total past due and nonaccrual loans decreased by **$6.689 million (23.86%)** from December 31, 2018, to March 31, 2019[165](index=165&type=chunk) Troubled Debt Restructurings (TDRs) (March 31, 2019 vs. December 31, 2018) | Loan Type (in thousands) | March 31, 2019 Total | December 31, 2018 Total | |:---|:---|:---|\n| Commercial real estate loans | $2,709 | $2,755 | | Commercial and industrial loans | $2,018 | $2,096 | | Total TDRs | $4,727 | $4,851 | [Allowance for Loan Losses](index=36&type=section&id=Allowance%20for%20Loan%20Losses) This subsection details the activity in the allowance for loan losses (ALLL) and discusses the methodology for determining the provision for loan losses Allowance for Loan Losses Activity (Q1 2019 vs. Q1 2018) | Metric (in thousands) | Q1 2019 | Q1 2018 | |:---|:---|:---|\n| Beginning Balance | $19,000 | $18,400 | | Provision for Loan Losses | $540 | $1,688 | | Charge-offs | $(548) | $(88) | | Recoveries | $208 | $0 | | Ending Balance | $19,200 | $20,000 | - The ALLL represented **0.51%** of total loans outstanding as of both March 31, 2019, and December 31, 2018, excluding acquired loans[171](index=171&type=chunk) - The provision for loan losses is based on management's estimates, economic models, historical experience, and current conditions, subject to potential adjustments by regulatory agencies[172](index=172&type=chunk)[173](index=173&type=chunk) [Liquidity](index=37&type=section&id=Liquidity) This subsection assesses the company's liquidity position, including available lines of credit, the loan-to-deposit ratio, and cash flows from operating, investing, and financing activities - The Bank's remaining lines of credit available to draw down totaled **$1.5 billion** at March 31, 2019[179](index=179&type=chunk) - The loan-to-deposit ratio at the Bank was **108%** at March 31, 2019, up from **106%** at December 31, 2018, indicating slightly lower liquidity but potentially higher yields[183](index=183&type=chunk) - Operating activities provided **$11 million** in net cash in Q1 2019, while investing activities used **$123 million**, and financing activities provided **$126 million**[180](index=180&type=chunk)[181](index=181&type=chunk)[182](index=182&type=chunk) [Off-Balance Sheet Arrangements](index=38&type=section&id=Off-Balance%20Sheet%20Arrangements) This subsection discloses the company's off-balance sheet commitments, such as loan commitments and standby letters of credit Off-Balance Sheet Arrangements (March 31, 2019) | Commitment Type (in thousands) | Amount | |:---|:---|\n| Commitments to fund new loans | $45,950 | | Commitments to fund under existing loans, lines of credit | $380,230 | | Commitments under standby letters of credit | $11,695 | - The Bank was obligated on **$231 million** of letters of credit to the FHLB, used as collateral for public fund deposits, including **$213 million** from the State of California[185](index=185&type=chunk) [Capital Resources and Dividend Policy](index=38&type=section&id=Capital%20Resources%20and%20Dividend%20Policy) This subsection provides an overview of the company's capital ratios, compliance with regulatory requirements, and its dividend policy FFI Capital Ratios (March 31, 2019) | Capital Ratio | Actual Amount (in thousands) | Actual Ratio | Regulatory Requirement Ratio | |:---|:---|:---|:---|\n| CET1 capital ratio | $471,912 | 10.92% | 4.50% | | Tier 1 leverage ratio | $471,912 | 8.15% | 4.00% | | Tier 1 risk-based capital ratio | $471,912 | 10.92% | 6.00% | | Total risk-based capital ratio | $493,038 | 11.41% | 8.00% | - Both FFI and FFB exceeded all minimum required capital ratios and qualified as 'well-capitalized' depository institutions as of March 31, 2019[188](index=188&type=chunk) - FFI made capital contributions of **$5 million** to FFB in Q1 2019 and had **$11.6 million** of available capital remaining[189](index=189&type=chunk) - The Company intends to continue paying quarterly dividends, subject to Board approval and regulatory restrictions, including a limit of **50% of net income** for dividends and stock repurchases over a twelve-month period[191](index=191&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=40&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) This section states that there have been no material changes to the Company's quantitative and qualitative disclosures about market risk since December 31, 2018, as detailed in its Annual Report on Form 10-K - No material changes in market risk disclosures since December 31, 2018[194](index=194&type=chunk) [ITEM 4. CONTROLS AND PROCEDURES](index=40&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) This section confirms the effectiveness of the Company's disclosure controls and procedures as of March 31, 2019, and reports no material changes in internal control over financial reporting during the quarter - The Company's disclosure controls and procedures were effective as of March 31, 2019, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[196](index=196&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2019[197](index=197&type=chunk) [PART II — OTHER INFORMATION](index=40&type=section&id=Part%20II.%20Other%20Information) This section includes disclosures on risk factors, unregistered sales of equity securities, and a list of exhibits filed with the Form 10-Q, along with required signatures. [ITEM 1A. RISK FACTORS](index=40&type=section&id=ITEM%201A.%20RISK%20FACTORS) This section states that there have been no material changes in the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018 - No material changes in risk factors since the December 31, 2018 Annual Report on Form 10-K[199](index=199&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=40&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) This section reports that the Company did not repurchase any shares under its stock repurchase plan during the first quarter of 2019, with 2,164,700 shares remaining authorized for repurchase - The Company did not repurchase any shares under its stock repurchase plan during Q1 2019[200](index=200&type=chunk) - As of March 31, 2019, **2,164,700 shares** remained available for repurchase under the plan adopted on October 30, 2018[200](index=200&type=chunk) [ITEM 6. EXHIBITS](index=41&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the Form 10-Q, including organizational documents, certifications from the CEO and CFO, and XBRL financial materials - Exhibits include Certificate of Incorporation, Bylaws, CEO/CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and XBRL financial materials[202](index=202&type=chunk) [SIGNATURES](index=42&type=section&id=SIGNATURES) This section contains the required signatures for the Form 10-Q, confirming its submission by an authorized officer of First Foundation Inc - The report is signed by John M. Michel, Executive Vice President and Chief Financial Officer, on behalf of First Foundation Inc. on May 8, 2019[207](index=207&type=chunk)

Financial Performance - As of March 31, 2019, Loans reached $4.9 billion[4], Deposits totaled $4.6 billion[4], and Total Assets amounted to $6.0 billion[4] - For the quarter ended March 31, 2019, Revenue was $49.5 million[4] and Net Income was $11.3 million[4] - The Return on Average Assets (ROAA) was 0.76%[4], and the Return on Average Tangible Equity was 9.7%[4] for the quarter ended March 31, 2019 - The efficiency ratio for the quarter ended March 31, 2019, was 66.7%[4] - Net Interest Income increased from $34.3 million in Q1 2018 to $41.0 million in Q1 2019[8] Growth and Composition - Loan production was $400 million for the three months ended March 31, 2019[5] - Deposit growth was $36 million for the three months ended March 31, 2019[5] - Revenue growth was 14% for the three months ended March 31, 2019, compared to the corresponding period in 2018[5] - Noninterest-Bearing Demand Deposits accounted for 24% of total deposits as of March 31, 2019[13] - As of March 31, 2019, Multifamily loans constituted 40% ($1.997 billion) of the loan portfolio[12] Assets and Wealth Management - Assets Under Management (AUM) was $4.1 billion as of March 31, 2019[4] - Trust Assets Under Management (AUM) reached $776 million as of March 31, 2019[19]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 Commission file number: 001-36461 FIRST FOUNDATION INC. (Exact name of registrant as specified in its charter) Delaware 20-8639702 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 18101 Von Karman Avenue, Suite 700 Irvine, CA 92612 92612 (Address of ...