First Foundation Inc. (NYSE:FFWM) Q3 2023 Earnings Conference Call October 26, 2023 11:00 AM ET Company Participants Scott Kavanaugh - President and CEO Jamie Britton - CFO Chris Naghibi - COO Conference Call Participants David Feaster - Raymond James Andrew Terrell - Stephens Inc. Adam Butler - Piper Sandler Gary Tenner - D.A. Davidson Operator Greetings, and welcome to First Foundation's Third Quarter 2023 Earnings Conference Call. Today's call is being recorded. Speaking today will be Scott Kavanaugh, F ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36461 FIRST FOUNDATION INC. (Exact name of Registrant as specified in its charter) | Delaware | 20-8639702 | | ...

| --- | --- | --- | --- | |-------------------------------------------------------------|---------------|----------------------------------------------------|-----------------------------------------| | Multifamily Loan Characteristics(1) \nAverage Loan Size | $3.28 Million | Single Family Real Estate \nAverage Loan Size(5) | Loan Characteristics(1) \n$678 Thousand | | Average LTV(2) | 54% | Average LTV (2) | 49% | | Average DSCR (3) | 1.42x | Median FICO (4) | 764 | | % Delinquent | 0.00% | % Delinquent | ...

First Foundation Inc. (NYSE:FFWM) Q2 2023 Earnings Conference Call July 27, 2023 11:00 AM ET Company Participants Scott Kavanaugh - President and CEO Chris Naghibi - Chief Operating Officer Amy Djou - Interim Chief Financial Officer Conference Call Participants David Feaster - Raymond James Andrew Terrell - Stephens Gary Tenner - D.A. Davidson Adam Butler - Piper Sandler Operator Greetings. And welcome to First Foundation’s Second Quarter 2023 Earnings Conference Call. Today’s call is being recorded. Speaki ...

Part I [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) For the first quarter of 2023, First Foundation Inc. reported a significant decrease in net income to $8.5 million from $30.8 million year-over-year, driven by substantial net interest margin compression as interest expenses surged Consolidated Balance Sheet Highlights (Unaudited) | Account | March 31, 2023 (In thousands) | December 31, 2022 (In thousands) | | :--- | :--- | :--- | | **Total Assets** | **$13,616,184** | **$13,014,179** | | Cash and cash equivalents | $1,317,129 | $656,494 | | Net loans | $10,638,708 | $10,692,462 | | **Total Liabilities** | **$12,482,446** | **$11,879,801** | | Deposits | $10,051,706 | $10,362,612 | | Borrowings | $2,294,600 | $1,369,936 | | **Total Shareholders' Equity** | **$1,133,738** | **$1,134,378** | Consolidated Income Statement Highlights (Unaudited) | Account | Three Months Ended March 31, 2023 (In thousands) | Three Months Ended March 31, 2022 (In thousands) | | :--- | :--- | :--- | | Net interest income | $58,755 | $74,494 | | Provision for credit losses | $417 | $(792) | | Noninterest income | $11,698 | $15,427 | | Noninterest expense | $59,340 | $47,618 | | **Net income** | **$8,496** | **$30,836** | | **Diluted EPS** | **$0.15** | **$0.55** | [Note 3: Securities](index=17&type=section&id=Note%203%3A%20Securities) As of March 31, 2023, the company held $223.6 million in available-for-sale (AFS) securities and $847.0 million in held-to-maturity (HTM) securities, with significant unrealized losses and pledges as collateral Securities Portfolio Summary (March 31, 2023) | Portfolio | Amortized Cost (in thousands) | Estimated Fair Value (in thousands) | Gross Unrealized/Unrecognized Losses (in thousands) | | :--- | :--- | :--- | :--- | | Available-for-Sale (AFS) | $243,635 | $211,324 | $(20,139) | | Held-to-Maturity (HTM) | $847,036 | $766,907 | $(80,129) | - The allowance for credit losses on investments increased to **$12.3 million** at the end of Q1 2023 from **$11.4 million** at year-end 2022, with a provision of **$0.8 million** recorded during the quarter[56](index=56&type=chunk) - As of March 31, 2023, a total of **$841.6 million** in securities and loans are pledged as collateral to the Federal Reserve's discount window, and **$184.2 million** in securities are pledged for repurchase agreements[47](index=47&type=chunk) [Note 4: Loans](index=26&type=section&id=Note%204%3A%20Loans) The total loan portfolio was $10.7 billion as of March 31, 2023, slightly decreasing from year-end 2022, with multifamily loans comprising the largest segment and an increase in delinquent loans Loan Portfolio Composition (in thousands) | Loan Category | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Multifamily | $5,332,815 | $5,341,596 | | Single family | $1,008,657 | $1,016,498 | | Commercial properties | $1,155,624 | $1,203,292 | | Commercial and industrial | $2,985,984 | $2,984,748 | | **Total Loans** | **$10,653,108** | **$10,709,180** | - Total past due and nonaccrual loans were **$48.3 million** (**0.45%** of total loans) at March 31, 2023, an increase from **$31.1 million** (**0.29%** of total loans) at December 31, 2022[63](index=63&type=chunk) [Note 5: Allowance for Credit Losses](index=29&type=section&id=Note%205%3A%20Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses (ACL) on loans decreased to $31.1 million as of March 31, 2023, resulting in a net reduction of provision for credit losses despite net charge-offs ACL Rollforward for Loans (Q1 2023, in thousands) | Description | Amount | | :--- | :--- | | Beginning Balance (Dec 31, 2022) | $33,731 | | Provision for (Reduction of) Credit Losses | $(939) | | Charge-offs | $(2,003) | | Recoveries | $306 | | **Ending Balance (Mar 31, 2023)** | **$31,095** | - The ACL for loans as a percentage of total loans was **0.29%** at March 31, 2023, compared to **0.31%** at December 31, 2022[149](index=149&type=chunk) [Note 8: Deposits](index=36&type=section&id=Note%208%3A%20Deposits) Total deposits decreased by $311 million during the first quarter to $10.1 billion, primarily due to a decline in noninterest-bearing demand deposits, while the weighted average rate on total deposits increased Deposit Composition (in thousands) | Deposit Type | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Noninterest-bearing | $2,263,412 | $2,736,691 | | Interest-bearing Demand | $2,364,213 | $2,568,850 | | Money market and savings | $2,997,666 | $3,178,230 | | Certificates of deposit | $2,426,415 | $1,878,841 | | **Total Deposits** | **$10,051,706** | **$10,362,612** | - The weighted average rate paid on total deposits rose to **2.726%** at March 31, 2023, from **2.177%** at December 31, 2022[83](index=83&type=chunk) [Note 9: Borrowings](index=36&type=section&id=Note%209%3A%20Borrowings) Total borrowings significantly increased to $2.3 billion at March 31, 2023, from $1.4 billion at year-end 2022, primarily driven by an increase in FHLB advances to bolster liquidity Borrowings Composition (in thousands) | Borrowing Type | March 31, 2023 | December 31, 2022 | | :--- | :--- | :--- | | FHLB advances | $2,000,000 | $805,000 | | Subordinated notes | $174,000 | $174,000 | | Repurchase agreements | $101,000 | $171,000 | | Holding company line of credit | $20,000 | $20,000 | | Federal funds purchased | $0 | $200,000 | | **Total Borrowings** | **$2,295,000** | **$1,370,000** | [Note 11: Segment Reporting](index=39&type=section&id=Note%2011%3A%20Segment%20Reporting) In Q1 2023, the Banking segment's income before taxes fell sharply to $13.3 million from $44.0 million year-over-year, while the Wealth Management segment's income also decreased to $1.2 million from $1.7 million Segment Income Before Taxes (in thousands) | Segment | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :--- | :--- | :--- | | Banking | $13,290 | $43,953 | | Wealth Management | $1,226 | $1,701 | [Note 12: Subsequent Events](index=39&type=section&id=Note%2012%3A%20Subsequent%20Events) Subsequent to the quarter's end, on April 27, 2023, the Board of Directors declared a quarterly cash dividend of $0.02 per common share, a significant reduction from the previous dividend of $0.11 per share - On April 27, 2023, the Board of Directors declared a quarterly cash dividend of **$0.02** per common share, payable on May 19, 2023[93](index=93&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=40&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the significant decline in profitability to severe net interest margin (NIM) compression, which fell to 1.83% from 3.00% a year prior, as funding costs rose faster than asset yields - Management directly links the **$0.3 billion** decrease in deposits and the corresponding increase in borrowings to deposit outflows following the closures of Silicon Valley Bank and Signature Bank in mid-March 2023[110](index=110&type=chunk) - Net interest margin (NIM) contracted to **1.83%** for Q1 2023, compared to **3.00%** for Q1 2022, as the average rate on interest-bearing liabilities increased by **3.09%** while the average yield on interest-earning assets increased by only **1.13%**[122](index=122&type=chunk) - The loan-to-deposit ratio was **106.1%** at quarter-end, which management notes was elevated due to end-of-period deposit outflows, stating the average ratio for the quarter was a more normalized **100.3%**[160](index=160&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=71&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no material changes to its quantitative and qualitative disclosures about market risk since the end of the previous fiscal year, December 31, 2022 - There have been no material changes to the company's market risk disclosures since December 31, 2022[171](index=171&type=chunk) [Item 4. Controls and Procedures](index=72&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on an evaluation as of March 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2023, the company's disclosure controls and procedures were effective at a reasonable assurance level[174](index=174&type=chunk) - No changes in internal control over financial reporting occurred during the first quarter of 2023 that materially affected, or are reasonably likely to materially affect, internal controls[175](index=175&type=chunk) Part II [Item 1A. Risk Factors](index=72&type=section&id=Item%201A.%20Risk%20Factors) The company updated its risk factors to address recent banking industry turmoil, including the potential for eroded customer confidence leading to further deposit outflows and the risk of realizing significant losses on its securities portfolio if forced to sell to meet liquidity needs - A new risk factor highlights that adverse developments, such as the recent failures of other banks, have eroded customer confidence and could materially impact liquidity, funding costs, and operations[178](index=178&type=chunk) - The company explicitly notes the risk that if it were required to sell securities from its portfolio to meet liquidity needs, it could incur significant losses due to the large unrealized loss position caused by rising interest rates[179](index=179&type=chunk)[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=74&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company has a stock repurchase program authorized by the Board of Directors on April 26, 2022, allowing for the repurchase of up to $75 million of its common stock, with no shares repurchased under the prior plan during the first quarter of 2023 - A stock repurchase program authorizing up to **$75 million** in common stock repurchases was approved in April 2022 and remains active[182](index=182&type=chunk) [Item 6. Exhibits](index=75&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate governance documents and certifications by the CEO and CFO as required by the Sarbanes-Oxley Act

First Foundation Inc. (NYSE:FFWM) Q1 2023 Earnings Conference Call April 27, 2023 11:00 AM ET Company Participants Scott Kavanaugh - President and CEO Chris Naghibi - COO Amy Djou - Interim CFO Conference Call Participants David Feaster - Raymond James Gary Tenner - D.A. Davidson Andrew Terrell - Stephens Adam Butler - Piper Sandler Operator Greetings, and welcome to the First Foundation's First Quarter 2023 Earnings Conference Call. Today's call is being recorded. Speaking today will be Scott Kavanaugh, Fi ...

Financial Overview - As of December 31, 2022, First Foundation Inc. had total assets of $13.0 billion, loans of $10.7 billion, deposits of $10.4 billion, assets under management of $5.0 billion, and trust assets under advisement of $1.3 billion[17]. - As of December 31, 2022, total deposits amounted to $10.36 billion, with a weighted average interest rate of 2.177%[52]. - The five largest bank depositors accounted for 20% of total deposits as of December 31, 2022, increasing liquidity risk if any large depositor withdraws funds[162]. - As of December 31, 2022, the bank's trust assets under administration (AUA) totaled $1.3 billion[55]. - The bank's investment advisory and wealth management services have seen assets under management (AUM) grow at a compound annual growth rate of 8% over the four years ending December 31, 2022[60]. Loan Portfolio - The total loans outstanding as of December 31, 2022, were $10.7 billion, with multifamily loans making up 49.9% and commercial and industrial loans accounting for 27.9%[30]. - As of December 31, 2022, the recorded investment balance for loans secured by real estate was $7.7 billion, representing 72.1% of total loans[30]. - Loans secured by multifamily and commercial real estate represented approximately 61% of outstanding loans as of December 31, 2022, making the company vulnerable to downturns in the real estate market[158]. - Approximately 88% of the loans in the loan portfolio were made to borrowers in California (73%), Florida (10%), Texas (4%), and Nevada (1%) indicating significant geographic concentration risk[148]. - The bank offers a small balance portfolio loan program with a maximum loan amount of $250,000 to support small business clients[46]. Revenue Sources - Investment advisory and wealth management services accounted for approximately 11% of total revenue in 2022, providing a stable source of diversified, fee-based, recurring revenues[17]. - Trust service fees provide additional sources of noninterest income, complementing the investment and wealth management services offered[25]. Competitive Landscape - The banking and investment advisory market is highly competitive, dominated by major banks such as Wells Fargo, JP Morgan Chase, and Bank of America, which have greater financial resources and higher lending limits[62]. - The company competes primarily on the basis of personal service, offering a "one-on-one" approach that larger competitors often do not provide[63]. - The company believes its competitive advantage lies in offering services through an integrated platform, which is rare among local and regional banks[65]. - The company maintains pricing in line with principal competitors while focusing on high levels of personal service rather than competing solely on price[66]. Regulatory Environment - FFB is subject to primary supervision and regulation by the FDIC and the DFPI, affecting its operations and compliance requirements[74]. - The company must obtain prior approval from the Federal Reserve for significant acquisitions, including more than 5% of voting securities of any bank[76]. - The Capital Rules require banks to maintain a capital conservation buffer of an additional 2.5% of Common Equity Tier 1 (CET-1) on top of minimum risk-weighted asset ratios[80]. - The company is required to maintain capital at or above certain prescribed levels to avoid regulatory restrictions and ensure financial stability[70]. - The FDIC has established guidelines for maintaining appropriate capital levels, which could limit the amount of dividends FFB may pay[102]. Risk Factors - Economic conditions and government policy responses could have a material adverse effect on the company's business, financial condition, and results of operations[147]. - Changes in interest rates could reduce net interest margins and net interest income, impacting overall earnings[149]. - The company may incur significant losses due to ineffective hedging of interest rate risk, which requires sophisticated models and continual monitoring[157]. - The company faces intense competition from larger banks and financial institutions, which may affect its ability to attract and retain clients[178]. - Cybersecurity breaches and fraudulent activities could lead to significant financial losses and damage to the company's reputation[187]. Operational Challenges - The company is subject to significant estimates and assumptions in financial reporting, which if inaccurate, could materially affect its financial condition[181]. - Technology and marketing costs may increase operating expenses without a corresponding increase in revenues, adversely affecting financial results[186]. - The company must maintain effective anti-money laundering programs, with deficiencies potentially leading to fines and reputational damage[213]. - Compliance with privacy and data protection laws could increase operational costs and restrict business opportunities, impacting financial performance[214]. Employee and Management - As of December 31, 2022, the Company had approximately 713 full-time employees, with no employees covered by a collective bargaining agreement[130]. - The Company emphasizes customer relationships and personalized service as a key part of its business strategy, which relies on the quality of service provided by its employees[131]. - Loss of key personnel or inability to attract qualified staff could adversely impact the company's future financial performance[180]. Future Outlook - The company plans to grow through acquisitions, but there is no assurance of success, and such strategies may involve significant risks[164]. - Future legislation may impact the regulatory structure and operational costs for the Company, potentially altering its business strategy and competitive balance[127]. - New lines of business or products may involve significant risks and uncertainties, potentially impacting profitability and operational effectiveness[172].

Company Overview - First Foundation manages \$5.0 billion in assets, advises on \$13.0 billion in bank assets, and has \$1.3 billion in trust assets under advisement[5] - The company operates in five states: California, Texas, Nevada, Hawaii, and Florida, with 31 branch/office locations and 713 employees[18] - The company focuses on commercial banking, wealth management, and trust solutions, targeting business owners, real estate investors, and high-net-worth individuals[6, 8] Loan Portfolio and Growth - The company's loan portfolio is diversified, with 50% in multifamily, 32% in commercial business, 9% in single-family, and 7% in CRE investment loans as of 4Q22[8, 95] - Commercial business originations accounted for 49% of total originations in 2022, representing a 78% increase year-over-year[8, 130] - The company has a strong presence in California, with 71% of total loans concentrated in the state as of 4Q22[9] Deposit Base and Funding - Core deposits account for 87% of the company's total deposits, with 72% of the core deposit base made up of commercial business deposits as of 4Q22[8] - Non-interest-bearing accounts represent 26% of the company's deposit base as of 4Q22[8] - The company's digital deposit channel has \$789 million in balances as of December 31, 2022, reaching a new, younger client audience[185] Financial Performance - The company reported a return on average assets (ROAA) of 0.96% and a return on average tangible common equity (ROATCE) of 13.0% in 2022[8] - The company's efficiency ratio was 58.6% in 2022[8] - In 2022, 14% of total revenue was derived from recurring noninterest income[8, 212]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-36461 FIRST FOUNDATION INC. (Exact name of Registrant as specified in its charter) Delaware 20-8639702 (St ...

First Foundation Inc. (NYSE:FFWM) Q3 2022 Results Conference Call October 25, 2022 11:00 AM ET Company Participants Scott Kavanaugh - CEO and Vice Chairman Kevin Thompson - Executive VP and CFO David DePillo - President Conference Call Participants Matthew Clark - Piper Sandler Gary Tenner - D.A. Division Andrew Terrell - Stephens David Feaster - Raymond James Operator Greetings, and welcome to First Foundation's Third Quarter 2022 Earnings Conference Call. Today's call is being recorded. At this time, all ...