Transaction Overview - FirstSun Capital Bancorp (FSUN) will acquire First Foundation Inc (FFWM) in a 100% stock transaction, with FFWM stockholders receiving 016083 shares of FSUN for each FFWM share[36] - The aggregate deal value is approximately $785 million[36] - The combined entity is projected to have approximately $17 billion in pro forma total assets[20] - The pro forma combined Southwest branch footprint will include 70 existing Sunflower Bank branches and 22 First Foundation branches[22] Financial Highlights - The transaction is expected to result in over 30% EPS accretion by 2027[20] - The combined company is projected to achieve a 2027E Return on Average Tangible Common Equity (ROATCE) of 133% and a Return on Average Assets (ROAA) of 145%[20] - Pro forma tangible common equity to tangible assets (TCE/TA) is projected to be 96%[20] Strategic Rationale - The merger will accelerate FirstSun's expansion strategy in Southern California (SoCal)[19] - A balance sheet re-positioning plan aims to unlock First Foundation's core franchise by reducing risk[23] - The combined company will have a presence in 8 of the top 10 largest MSAs in the Central & Western US[27] Balance Sheet Adjustments - Approximately $34 billion in on-balance sheet downsizing is expected to be completed concurrent with closing[36] - The re-positioning plan includes reducing approximately $856 million of brokered deposits and approximately $11 billion of higher-rate/non-relationship deposits[52]

Core Viewpoint - Halper Sadeh LLC is investigating the fairness of the merger between FirstSun Capital Bancorp and First Foundation Inc. for FirstSun shareholders, who will own 59.5% of the combined entity upon completion of the transaction [1]. Group 1: Investigation Details - The investigation focuses on whether FirstSun and its board violated federal securities laws or breached fiduciary duties by not obtaining the best possible consideration for shareholders and failing to disclose all material information necessary for assessing the merger [3]. - Halper Sadeh LLC may seek increased consideration for shareholders, additional disclosures, and other relief related to the proposed transaction [4]. Group 2: Legal Rights and Contact Information - FirstSun shareholders are encouraged to contact Halper Sadeh LLC to learn about their legal rights and options regarding the merger [2]. - The firm operates on a contingent fee basis, meaning shareholders would not incur out-of-pocket legal fees or expenses [4].

Core Points - The Ademi Firm is investigating First Foundation for potential breaches of fiduciary duty and other legal violations related to its transaction with FirstSun [1][3] - In the transaction, First Foundation shareholders will receive 0.16083 shares of FirstSun common stock for each share of First Foundation stock owned, resulting in FirstSun stockholders owning 59.5% and First Foundation stockholders owning 40.5% of the combined company [2] - The transaction includes $17.5 million in cash consideration for warrant holders, and First Foundation insiders will continue to receive substantial benefits as part of change of control arrangements [2] Transaction Details - The transaction agreement imposes significant penalties on First Foundation if it accepts a competing bid, which raises concerns about the board of directors' fulfillment of their fiduciary duties to all shareholders [3]

Core Viewpoint - FirstSun Capital Bancorp is set to acquire First Foundation in an all-stock transaction valued at $785 million, indicating a trend of increasing mergers and acquisitions among regional banks amid ongoing credit conditions [1] Group 1: Acquisition Details - The acquisition deal is structured as an all-stock transaction [1] - The total value of the deal is reported to be $785 million [1] Group 2: Industry Context - The announcement reflects a broader trend of accelerating mergers and acquisitions within the regional banking sector [1] - This trend is occurring against a backdrop of challenging credit conditions [1]

Core Viewpoint - FirstSun Capital Bancorp and First Foundation Inc. have announced a definitive merger agreement, indicating a strategic move to enhance their market presence and operational capabilities in the financial services sector [1]. Group 1: Company Overview - FirstSun Capital Bancorp is the holding company for Sunflower Bank, N.A., based in Dallas [1]. - First Foundation Inc. operates two wholly-owned subsidiaries: First Foundation Advisors and First Foundation Bank, located in Irvine, California [1]. Group 2: Merger Details - The merger between FirstSun Capital Bancorp and First Foundation Inc. is positioned as a significant development in the financial services industry, aiming to leverage combined resources and expertise [1].

Core Viewpoint - First Foundation Inc. has appointed Dean R. Glassberg as Executive Vice President and Chief Credit Officer of First Foundation Bank, effective October 14, 2025, to enhance its credit strategy and risk governance [1] Company Summary - First Foundation Inc. operates two wholly-owned subsidiaries: First Foundation Advisors and First Foundation Bank [1] - The new Chief Credit Officer will oversee credit strategy, risk governance, underwriting standards, portfolio monitoring, and credit operations at First Foundation Bank [1]

Core Points - First Foundation Inc. will release its third quarter 2025 earnings results on October 30, 2025, before the market opens [1] - CEO Thomas C. Shafer will host a discussion regarding the financial results and recent activities at 11:00 AM ET on the same day [2] - The earnings call will be accessible via a live webcast and telephone for participants wishing to engage in the Q&A session [3][4] Company Overview - First Foundation Inc. operates through two wholly owned subsidiaries, First Foundation Advisors and First Foundation Bank, providing a range of financial services including personal banking, business banking, and private wealth management [6] - The company differentiates itself by offering a comprehensive platform of financial products combined with a high level of personalized service, which is more aligned with community banks and boutique wealth management firms [6]

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]