About First Foundation

First Foundation Inc. operates as a financial services company that provides a comprehensive platform of financial services to individuals, businesses and other organizations. The company conducts its operations in California, Nevada, Florida, Texas, and Hawaii. The company’s integrated platform provides banking products and services, investment advisory and wealth management services and trust services to effectively and efficiently meet the financial needs of its clients. The company provides business banking products and services to small to moderate-sized businesses and professional firms, and consumer banking products and services to individuals and families. The company’s investment advisory and wealth management and trust services provide it with a stable source of diversified, fee-based, recurring revenues. The company’s strategy is to build strong and stable long-term client relationships, one at a time, by delivering high quality banking and trust products and services and investment advisory and wealth management services. The primary role of the company’s bankers, relationship managers and loan officers, in addition to attracting new clients, is to develop and maintain a strong relationship with their clients and to coordinate the services it provides to their clients. The company takes a team approach to delivering its platform of services to its clients. The company’s bankers, relationship managers and loan officers work as a team to deliver its products and services, with each member of the team responsible for managing the delivery of products and services in their area of expertise. This allows the company to provide more tailored solutions while operating in a safe and sound manner. The company has created compensation structures that encourage and reward its bankers, relationship managers and loan officers to work together as a team to provide the client with the products and services they desire. The company intends to continue to grow its business by marketing its services directly to prospective new clients; obtaining new client referrals from existing clients, professional and fiduciary referrals and through referral agreements with asset custodial firms; adding experienced bankers, relationship managers and loan officers who may have established client relationships that it can serve; cross-selling its services among its wealth management and banking clients; and making opportunistic acquisitions of banks and/or establishing de novo offices in select markets within and outside its existing market areas. The company’s broad range of financial products, services, and digital delivery are more consistent with those offered by larger financial institutions, while its high level of personalized service, accessibility and responsiveness to its clients are more typical of the services offered by community banks and boutique investment advisory and wealth management firms. This combination of an integrated platform of comprehensive financial services and products and personalized and responsive service, coupled with its continual enhancements of its digital platform, differentiates it from many of its competitors and has contributed to the growth of its client base and its business. Banking Business Through FFB, the company offers a wide range of loan products, deposit products, treasury management products and services, and trust services. The company also provides trust services to clients using its California, Hawaii, Nevada, Florida, and Texas trust powers. Those services, which consist primarily of the management of trust assets, complement the investment and wealth management services that FFA offers to the company’s clients. Additionally, trust service fees provide additional sources of noninterest income for it. Investment Advisory and Wealth Management Business FFA is a fee-based investment advisor which provides investment advisory and wealth management services primarily to high net-worth individuals, their families and their family businesses, and other affiliated organizations. FFA strives to provide its clients with a high level of personalized service by its staff of experienced relationship managers. FFA’s operations comprise the investment advisory and wealth management segment of the company’s business. Banking Products and Services Through FFB, the company offers a wide range of loan products, deposit products, treasury management products and services, and trust services. The company’s loan products are designed to meet the credit needs of its clients in a manner that, at the same time, enables it to effectively manage the credit and interest rate risks inherent in its lending activities. The company’s lending products are the primary drivers of revenues and earnings for the consolidated entity. As such, the company is committed to offering market competitive lending products that: meet the needs of its clients; are underwritten in a prudent manner; and provide an adequate return based on their size and credit risk. Deposits represent the company’s principal source of funds for making loans and acquiring other interest-earning assets. The company maintains a client-focused approach by recruiting and retaining experienced and qualified banking personnel, who are described as relationship bankers, commercial bankers, small business bankers, regional directors of loan production for multifamily and non-owner occupied commercial real estate, specialty deposit bankers, and branch managers. FFB has bankers in each location across the platform sourcing loan and deposit business to cultivate and develop quality banking relationships from existing and potential clients, as well as a digital bank platform that attracts new deposit clients across the country. FFB’s banking platform focuses on program-specific products and clients, with an emphasis on digital delivery. Loan Products and Services The company has established a lending platform that provides financing solutions to its strong and stable client relationships, including individuals, businesses, and other entities. Each of the company’s office locations are focused on serving the businesses and clients within their market area. The company’s lending activities serve the credit needs of individuals, owners of multifamily and commercial real estate properties, small to moderate size businesses and professional firms in its market areas. As a result, the company offers a variety of loan products consisting of multifamily and single family residential real estate loans, commercial real estate loans, commercial term loans and lines of credit, and consumer loans. The company’s lending platform is focused on three primary channels: Commercial Real Estate (CRE), defined as multifamily residential, owner and non-owner occupied commercial real estate, land and construction; Commercial and Industrial (C&I), defined as term and revolving credit/lines of credit for small to moderate-sized businesses, professional firms, and municipal agencies; Consumer defined as loan products to individuals, including single family residential real estate loans and home equity lines of credit and other consumer-related loans focused on the current and prospective clients of its platform. CRE Loan Channel: Loans originated under the CRE loan channel are supported by the underlying cash flow from operations of the related real estate collateral. The loan types under this channel consist of multifamily residential, non-owner occupied CRE and land and construction. Residential Mortgage Loans – Multi-family: The company makes multi-family residential mortgage loans for terms up to 30 years for 5+ unit properties. These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in many cases these loans have initial fixed-rate periods ranging from 3 to 10 years and adjust thereafter based on an applicable index. These loans generally have interest rate floors, payment caps, and prepayment penalties. The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the subject real estate collateral cash flow, the character and creditworthiness of the borrower and guarantors, loan-to-value and debt service coverage ratios, borrower liquidity and credit history. In addition, the company performs stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends, such as rental rates, values and vacancy rates. The company typically requires full or limited recourse from the owners of the entities to which it makes such loans. CRE Loans – Non-owner Occupied : The company’s commercial real estate loans are secured by first trust deeds on nonresidential real property with terms generally up to 10 years. The company typically focus on multi-tenant industrial, office and retail real estate collateral with strong, stable tenancy, strong, stable historical cash flow and located in stable, submarket locations with strong demand. The company will consider special-purpose lending on a limited basis for its existing client base. These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in many cases these loans have initial fixed-rate periods ranging from 3 to 10 years and adjust thereafter based on an applicable index. These loans generally have interest rate floors, payment caps, and prepayment penalties. The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the subject real estate collateral cash flow, the character and creditworthiness of the borrower and guarantors, loan-to-value and debt service coverage ratios, borrower liquidity and credit history. In addition, the company performs stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends, such as lease rates, values and absorption rates. The company typically requires full recourse from the owners of the entities to which it makes such loans. Land and Construction: Land and construction loans are provided to borrowers with extensive construction experience and/or as an accommodation to existing or potential clients of the platform; however, some such loans were obtained through acquisition of other banks. There is not a separate sales effort to generate land and construction loans. These loans are custom tailored to fit the individual needs of each specific request. The company typically considers construction loan requests for urban infill multifamily properties and owner-occupied single family primary residences in the submarket locations where it has experience and offer permanent real estate loans. Land and construction loans are secured by first trust deeds on real property. These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in some rare cases these loans have fixed interest rates for short periods and adjust thereafter based on an applicable index. These loans generally have interest rate floors, payment caps, and prepayment penalties. The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the character and creditworthiness of the borrower and guarantors, loan to value and debt service coverage ratios, borrower liquidity and credit history. In addition, the company performs stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as lease rates, values and absorption rates. The company typically requires full recourse from the owners of the entities to which it makes such loans. C&I Loan Channel: Loans originated under the C&I loan channel are generally supported by the cash flows generated from the business operations of the entity to which the loan is made, and, except for loans secured by owner occupied CRE, are generally secured by non-real estate assets, such as equipment, inventories or accounts receivable. The C&I loan channel is focused on developing quality full-service business banking relationships, including loans and deposits, by offering commercial products for small to moderate-sized businesses across the banking platform. This allows the company to provide support for small to mid-sized businesses in its market areas. The typical C&I loan client utilizes more than one element of its platform, including almost all such clients using its deposit products and services. The company typically focuses on C&I clients that are manufacturers, distributors, wholesalers, importers and professional service companies. Commercial Real Estate Loans - Owner Occupied: Owner occupied CRE loans are generally made to businesses that have demonstrated a history of profitable operations. To qualify for such loans, prospective borrowers generally must have operating cash flow sufficient to meet their obligations as they become due, good payment histories, proper balance sheet management of key cash flow drivers, and experienced management. The company’s commercial real estate loans are secured by first trust deeds on nonresidential real property, typically office, industrial or warehouse. These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in some cases these loans have fixed interest rates for periods ranging from 3 to 15 years and adjust thereafter based on an applicable indices and terms. These loans generally have interest rate floors, payment caps, and prepayment penalties. The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the character and creditworthiness of the borrower and guarantors, loan-to-value and debt service coverage ratios, borrower liquidity and credit history and the trends in balance sheet and income statement management. In addition, the company performs stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as lease rates, values and absorption rates. The company typically requires full recourse from the owners of the entities to which it makes such loans. Commercial Loans: The company offers commercial term loans and commercial lines of credit to its clients. Commercial loans generally are made to businesses that have demonstrated a history of profitable operations. Commercial loans are underwritten based on a variety of underwriting criteria, including an evaluation of the character and creditworthiness of the borrower and guarantors, debt service coverage ratios, historical and projected client income, borrower liquidity and credit history, and the trends in income and balance sheet management. In addition, the company performs stress testing for changes in interest rates and other factors and review general economic trends in the client’s industry. The company typically requires full recourse from the owners of the entities to which it makes such loans. Equipment Financing: The company offers equipment financing to provide financing solutions, including equipment finance agreements and leases for a full range of business equipment, and source the business through third party originators, including equipment brokers, lessors and other referral sources. The majority of the equipment financing business will be for acquiring machines, tools, vehicles, furniture, tenant improvement remodeling/expansion/upgrade and computers. The typical equipment finance loan will be smaller in size, typically less than $100,000; will have terms ranging from 3 to 7 years; will carry fixed-rates; and will be secured by the underlying equipment and other assets of the borrower. Shared National Credits Lending: The company may participate in multi-bank transactions referred to as Shared National Credits or Participations where a financial institution determines an individual loan is too large for it to be made alone. These loans consist principally of commercial lines of credit and commercial term loans and are typically originated and led by other larger banks to which FFB will be a participant in the transaction. The loans are sourced through relationships with originating lenders, as well as through the purchase of loans in the secondary market. These loans generally are made to businesses that have demonstrated a history of profitable operations. Syndicated/Participated term loans are either fixed-rate loans or adjustable-rate loans with interest rates tied to a variety of independent indexes and are generally made for terms ranging from one to seven years subject to the useful life of the asset financed. Lines of credit are adjustable-rate loans with interest rates tied to a variety of independent indexes and are generally made with terms from one to five years, and contain various covenants, including possible requirements that the borrower maintain liquidity requirements with advances tied to periodic reviews. These loans are underwritten independently by the company based on a variety of underwriting criteria, including an evaluation of the character and creditworthiness of the borrower, debt service coverage ratios, historical and projected client income, borrower liquidity and credit history, and the trends in income and balance sheet management. In addition, the company performs stress testing for changes in interest rates and other factors and review general economic trends in the client’s industry. Small Business Lending and USDA Lending: The bank is approved as a Small Business Administration (SBA) lender and as a United States Department of Agriculture (USDA) lender. The company is committed to its small business commercial lending to serve its communities and small businesses that operate in its network of retail branch locations. As government guaranteed programs, the company must comply with underwriting guidelines, servicing and monitoring requirements, and terms and conditions set forth under the related programs standard operating procedures. SBA loans follow the company’s underwriting guidelines established for non-SBA commercial and industrial loans and meet the underwriting criteria set forth by the SBA. The company has also established a small balance portfolio loan program, up to a maximum loan amount of $250,000, to meet the requirements of its small business clients through a streamlined underwriting process. Consumer Loan Channel: The consumer channel for FFB offers single family residential loans, home equity lines of credit, personal lines of credit and other consumer related products. Single-family loans comprise a substantial majority of the balances in this channel. Residential Mortgage Loans – Single-family: The company offers single family residential mortgage loans that in most cases take the form of non-conforming jumbo and super-jumbo loans. These loans are generally adjustable-rate loans with initial fixed-rate periods ranging from 3 to 10 year terms and terms of the loan not exceeding 30 years. These loans generally have interest rate floors and payment caps. The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the character and creditworthiness of the borrower and guarantors, loan-to-value and debt to income ratios, borrower liquidity, income verification and credit history. In addition, the company performs stress testing for changes in interest rates and other factors and review general economic trends, such as market values. Consumer Loans: The company offers consumer loans and line of credit products as an accommodation to clients of its primary business lines, including personal installment loans and lines of credit, and home equity lines of credit designed to meet the needs of its clients. Consumer loans are either fixed-rate loans or adjustable-rate loans with interest rates tied to a variety of independent indexes and are made for terms ranging from one to ten years. The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the character, creditworthiness and credit history of the borrower and guarantors, debt to income ratios, borrower liquidity, income verification, and the value of any collateral securing the loan. Repayment of consumer loans are largely dependent on the borrower’s ongoing cash flows and financial stability and, as a result, generally pose higher credit risks than the other loans that the company makes. For all of its loan offerings, the company utilizes a comprehensive approach in its underwriting process. This includes the requirement that all factors considered in its underwriting be appropriately documented. In its underwriting, the company’s primary focus is always on the primary, secondary and tertiary sources of repayment, which include the subject real estate collateral cash flow, the business/borrower’s ability to repay and value of the subject collateral securing the loan. However, because its underwriting process allows the company to view the totality of the borrower’s capacity to repay, concerns or issues in one area can be compensated for by other favorable financial criteria. This personalized and detailed approach allows it to better understand and meet its clients’ borrowing needs. The company handles substantially all of its loan processing, underwriting and servicing at its administrative office in Irvine, California. Deposit Products and Services Deposit Products: The company offers a wide range of deposit products, including personal and business checking, savings accounts, interest-bearing demand deposit accounts, money market accounts and time certificates of deposit. Deposit Services: The company’s deposit services include the following: Treasury Management: The company’s comprehensive suite of Treasury Management (TM) products and services provide its customers the tools to bank with it conveniently without having the need to visit one of its offices and are necessary to attract complex commercial and specialty deposit clients. These products and services include bill pay, check/payee/ACH positive pay, wire origination, internal and external transfers, account reconciliation reporting, remote deposit capture, mobile banking, mobile deposit, lockbox, cash vault services and merchant processing. Online Banking: FFB offers Online Banking and Mobile Banking services to consumer, small business and commercial clients. The consumer online platform offers account management, internal and external transfers, consumer loan payments, electronic documents, bill pay, real-time alerts, P2P payments and requests, credit score reporting and debit card management. The business online platform allows the company’s business clients to be more productive by offering ease of access to account information, electronic documents, transfer and funds management, real-time alerts, user administration, and reporting tools. These clients can also leverage most TM services as integrated solutions through business online. Online Account Opening: FFB utilizes a platform for online account acquisition. The bank offers checking, savings, money market and CDs, as well as complementary products such as ATM/debit cards and eStatements through the system. Deposit Delivery Channels: The company’s deposit products and services are delivered through the following delivery channels: Retail Banking: The retail banking delivery channel is made up of 29 banking offices located throughout the company’s market areas. The company attempts to place its banking offices in strategic locations to establish a presence in its target markets, rather than saturating a market with numerous banking offices. The sales activities at the company’s banking offices are led by the bankers and branch managers located at the offices. In addition to a branch manager, each banking office has a strong operations manager and staff to serve the clients of the office, to provide support to the bankers and branch managers in their sales efforts and to maintain the operational integrity of their offices. In addition to the sales activities of the bankers and branch managers, the company provides marketing support through periodic deposit campaigns and targeted marketing programs tailored to the region in which the banking office is located. Specialty Deposits: The specialty deposits channel focuses on banking large complex commercial customers and fiduciaries who manage intricate deposit relationships. This team consists of bankers with industry expertise in the company’s targeted specialty niches, which include, but are not limited to escrow, title, 1031 exchange accommodators, contractor retention escrows, commercial property management and homeowners associations, as well as financial institutions and mortgage servicers, commercial borrowers, EB-5 projects, and political treasurers. The nature of the specialty deposit customer is generally complex and typically requires a larger volume of transactional servicing needs and reporting requirements. These customers are supported exclusively by the experts in the company’s commercial client services team. This team is responsible for establishing new accounts, maintenance of existing accounts, monitoring accounts, account reporting, review and acceptance of depository agreements and other account related contracts. This team possesses a thorough understanding of legal documentation for complex organizations and legal and regulatory banking requirements for niche industries, balance bank control accounts, ledger posting, and funds disbursement. Digital Bank: The digital bank channel offers consumers high-yield savings accounts, checking accounts, money market accounts, and certificates of deposits through the company’s online account opening. These digital bank products are offered to consumers across all 50 states and enable FFB to target Millennial, Gen Z, and more digitally savvy prospects with increased efficiency and are supported by a dedicated digital bank operations team. Contents Trust Services: FFB is licensed to provide trust services to clients in California, Florida, Hawaii, Nevada, and Texas. Those services, which consist primarily of the management of trust assets, complement the investment advisory and wealth management services that FFA offers to the company’s clients and, as a result, provide it with cross-selling opportunities. Wealth Management Products and Services FFA is a fee-based investment advisor which provides investment advisory and wealth management services primarily for individuals and their families, family businesses and other affiliated organizations (including public and closely-held corporations, family foundations and private charitable organizations). Through FFA, the company provides clients with personalized services designed to enable them to reach their personal and financial goals by coordinating its investment advisory and wealth management services with risk management and estate and tax planning services that are provided by outside service providers, for which it does not receive commissions or referral fees. The company’s investment advisory and wealth management team strives to create diversified investment portfolios for its clients that are individually designed, monitored and adjusted based on the discipline of fundamental investment analysis. The company focuses on creating investment portfolios that are commensurate with a client’s objectives, risk tolerance and time horizon, using traditional investments, such as individual stocks and bonds and mutual funds. The company also provides comprehensive and ongoing advice and coordination regarding estate planning, retirement planning and charitable and business ownership issues. Changes in the company’s AUM reflect additions from new clients, the gains or losses recognized from investment results, additional funds received from existing clients, withdrawals of funds by clients, and terminations. Securities Portfolio As of December 31, 2023, the company’s securities portfolio included collateralized mortgage obligations; agency mortgage-backed securities; municipal bonds; SBA securities; beneficial interests in FHLMC securitization; corporate bonds; and the U.S. Treasury. Supervision and Regulation As a bank holding company, the company is subject to regulation and examination by the Board of Governors of the Federal Reserve System (the Federal Reserve Board or FRB) and the Federal Reserve Bank of Dallas (FRBD) under delegated authority from the FRB. The company is a registered bank holding company subject to regulation under the Bank Holding Company Act of 1956, as amended (the Holding Company Act). Pursuant to the Holding Company Act, the company is subject to supervision and periodic examination by, and are required to file periodic reports with the Federal Reserve. The bank is a California state-chartered bank and is subject to regulation and examination by the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection & Innovation (DFPI). FFB is a California state-chartered bank and is subject to regulation and examination by the Federal Deposit Insurance Corporation (FDIC) and the California Department of Financial Protection & Innovation (DFPI) and the Consumer Financial Protection Bureau (CFPB). FFB also is a member of the Federal Home Loan Bank of San Francisco (FHLB), which provides it with a source of funds in the form of short-term and long-term borrowings. FFA is a California corporation that began operating as a fee-based registered investment advisor under the Investment Advisers Act of 1940 (Investment Advisers Act) in 1990, and is subject to regulation by the Securities and Exchange Commission, (SEC), under that Act. Because FFB is a California state-chartered bank, the company is deemed to be a bank holding company within the meaning of Section 1280 of the California Financial Code. As such, the company is subject to examination by, and may be required to file reports with, the DFPI. FFB is subject to primary supervision, periodic examination and regulation by the FDIC, which is its primary federal banking regulator, and the DFPI, because FFB is a California state-chartered bank. The deposits of FFB are insured by the FDIC’s Deposit Insurance Fund (the DIF), up to applicable limits. The Dodd-Frank Act permanently increased the maximum deposit insurance amount for banks, savings institutions and credit unions to $250,000 per depositor. FFB is subject to Sections 23A and 23B of, and Federal Reserve Regulation W under, the Federal Reserve Act, which impose restrictions on any extensions of credit to, or the issuance of a guarantee or letter of credit on behalf of, the company or any of its other subsidiaries; the purchase of or investments in company stock or other company securities; the taking of company securities as collateral for the loans that FFB makes; the purchase of assets from the company or any of its other subsidiaries and transactions between a bank and its financial subsidiaries, as well as other affiliates. The company and FFB are subject to the Bank Secrecy Act, as amended by the USA PATRIOT Act, which gives the federal government powers to address money laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers and mandatory transaction reporting obligations. FFI and FFB have each adopted policies and procedures to comply with the Bank Secrecy Act. The company and FFB are subject to a broad range of federal and state consumer protection laws and regulations prohibiting unfair or fraudulent business practices, untrue or misleading advertising and unfair competition. Those laws and regulations include the Home Ownership and Equity Protection Act of 1994; the Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act; the Truth in Lending Act; the Equal Credit Opportunity Act; the Fair Housing Act; the Home Mortgage Disclosure Act; the Real Estate Settlement Procedures Act; the National Flood Insurance Act; and the Secure and Fair Enforcement for Mortgage Licensing Act of 2008. FFA is a registered investment advisor under the Investment Advisers Act and the SEC’s regulations promulgated thereunder. FFA is also subject to regulation under the securities laws and fiduciary laws of certain states and the Employee Retirement Income Security Act of 1974 (ERISA), and to regulations promulgated thereunder, insofar as it is a ‘fiduciary’ under ERISA with respect to certain of its clients. History First Foundation Inc. was founded in 1985. The company was incorporated in 2006.