10-Q

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, 2025

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
(State or other jurisdiction<br>of incorporation or organization)	​	(I.R.S. Employer<br>Identification Number)
​	​	​
5221 N. O’Connor Blvd ., Suite 1375 **** Irving , Texas	​	75039
(Address of principal executive offices)	​	(Zip Code)

​

Registrant’s telephone number, including area code: ( 469 ) 638-9636

Securities registered pursuant to Section 12(b) of the Act:

​

​	​	​	​	​
Title of each class	****	Trading Symbol(s)	****	Name of each exchange on which registered
Common Stock	​	FFWM	​	New York Stock Exchange

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

​

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒    No  ☐

​

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​

​	​	​	​	​
​	​	​	​	​
Large accelerated filer	☐	​	Accelerated filer	☒
Non-accelerated filer	☐	​	Smaller reporting company	☐
​	​	​	Emerging growth company	☐

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

​

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐    No   ☒

​

As of August 4, 2025, the registrant had 82,386,071 shares of common stock, $0.001 par value per share, outstanding.

​

​

​

Table of Contents FIRST FOUNDATION INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2025

TABLE OF CONTENTS

​

​	​	​		​		​
​					Page No.
Part I. Financial Information			​		​
Item 1.	Financial Statements		​		1
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		​		38
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		​		67
Item 4.	Controls and Procedures		​		67
​			​		​
Part II. Other Information			​		​
Item 1	Legal Proceedings		​		69
Item 1A	Risk Factors		​		69
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds		​		69
Item 5	Other Information		​		69
Item 6	Exhibits		​		70
​			​		​
SIGNATURES			​		S-1

​

​

​ (i)

Table of Contents PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

FIRST FOUNDATION INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​	​	2025		​	2024		​
​	​	​	(unaudited)	​	​	​	​
ASSETS		​			​		​
Cash and cash equivalents	​	$	1,055,614	​	$	1,016,132	​
​	​	​	​	​	​	​	​
Securities available-for-sale ("AFS"), at fair value (amortized cost of $1,485,810 and $1,335,225 at June 30, 2025 and December 31, 2024 respectively; net of allowance for credit losses of $651 and $4,134 at June 30, 2025 and December 31, 2024 respectively)	​		1,469,122	​		1,313,885	​
Securities held-to-maturity ("HTM") (fair value of $604,367 and $636,840 at June 30, 2025 and December 31, 2024, respectively)	​	​	663,807	​	​	712,105	​
Loans held for sale ("LHFS")	​		476,727	​		1,285,819	​
Loans held for investment	​		7,548,323	​		7,941,393	​
Less: Allowance for credit losses	​		(37,560)	​		(32,302)	​
Total loans held for investment, net	​		7,510,763	​		7,909,091	​
​	​	​	​	​	​	​	​
Investment in Federal Home Loan Bank ("FHLB") stock	​	​	50,077	​		37,869	​
Accrued interest receivable	​	​	50,538	​	​	54,804	​
Deferred taxes	​		87,006	​		76,650	​
Premises and equipment, net	​		35,890	​		35,806	​
Real estate owned ("REO")	​	​	6,210	​	​	6,210	​
Bank owned life insurance	​	​	50,686	​	​	49,993	​
Core deposit intangibles	​	​	2,947	​	​	3,558	​
Derivative assets	​	​	—	​	​	5,086	​
Other assets	​		128,975	​		138,257	​
Total Assets	​	$	11,588,362	​	$	12,645,265	​
​	​	​	​	​	​	​	​
LIABILITIES AND SHAREHOLDERS’ EQUITY	​			​		​	​
Liabilities:	​			​		​	​
Deposits	​	$	8,593,693	​	$	9,870,279	​
Borrowings	​		1,669,315	​		1,425,369	​
Subordinated debt	​	​	173,490	​	​	173,459	​
Derivative liabilities	​	​	8,689	​	​	—	​
Accounts payable and other liabilities	​		92,549	​		122,795	​
Total Liabilities	​		10,537,736	​		11,591,902	​
​	​	​	​	​	​	​	​
Shareholders’ Equity	​		​	​		​	​
Preferred stock, $0.001 par value, 29,811 shares issued and outstanding at June 30, 2025 and December 31, 2024	​	​	87,649	​	​	87,649	​
Common stock, $0.001 par value; 200,000,000 **** shares authorized at June 30, 2025 and December 31, 2024; 82,386,071 shares and 82,365,388 shares issued and outstanding, respectively	​		82	​		82	​
Additional paid-in-capital	​		852,982	​		849,509	​
Retained earnings	​		124,244	​		125,038	​
Accumulated other comprehensive loss	​		(14,331)	​		(8,915)	​
Total Shareholders’ Equity	​		1,050,626	​		1,053,363	​
Total Liabilities and Shareholders’ Equity	​	$	11,588,362	​	$	12,645,265	​

(See accompanying notes to the consolidated financial statements)

​ 1

Table of Contents FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(In thousands, except share and per share amounts)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Quarter Ended					​	Six Months Ended					​
​	​	June 30,					​	June 30,					​
​	​	2025		​	2024		​	2025		​	2024		​
Interest income:		​			​		​	​			​		​
Loans	​	$	100,166	​	$	120,244	​	$	206,666	​	$	238,688	​
Securities	​		23,646	​		17,975	​		44,741	​		37,749	​
FHLB Stock, fed funds sold and interest-bearing deposits	​		13,313	​		12,695	​		27,460	​		24,930	​
Total interest income	​		137,125	​		150,914	​		278,867	​		301,367	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Interest expense:	​		​	​		​	​		​	​	​	​	​
Deposits	​		67,318	​		91,388	​		140,637	​		185,880	​
Borrowings	​		18,020	​		13,992	​		32,954	​		29,862	​
Subordinated debt	​	​	1,705	​	​	1,705	​	​	3,395	​	​	3,410	​
Total interest expense	​		87,043	​	​	107,085	​		176,986	​		219,152	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net interest income	​		50,082	​		43,829	​		101,881	​		82,215	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Provision (reversal) for credit losses	​	​	2,366	​		(806)	​		5,783	​		(229)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net interest income after provision for credit losses	​		47,716	​		44,635	​		96,098	​		82,444	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Noninterest income:	​		​	​	​	​	​	​	​	​	​	​	​
Asset management, consulting and other fees	​		8,601	​		9,183	​		17,520	​		17,797	​
(Loss) gain on sale of loans	​	​	(10,405)	​	​	415	​	​	(10,405)	​	​	678	​
Gain on sale of securities available-for-sale	​	​	—	​	​	983	​	​	4,702	​	​	1,204	​
Capital market activities	​	​	(289)	​	​	836	​	​	2,542	​	​	1,673	​
Gain on sale of REO	​	​	—	​	​	—	​	​	—	​	​	679	​
Other income	​		3,431	​		2,241	​		6,581	​		4,310	​
Total noninterest income	​		1,338	​		13,658	​		20,940	​		26,341	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Noninterest expense:	​		​	​		​	​		​	​		​	​
Compensation and benefits	​		22,890	​		19,095	​		47,998	​		38,502	​
Occupancy and depreciation	​		8,333	​		9,026	​		16,778	​		18,113	​
Professional services and marketing costs	​		7,238	​		3,667	​		13,145	​		7,057	​
Customer service costs	​		12,983	​		16,104	​		28,034	​		26,842	​
Other expenses	​		8,480	​		7,737	​		15,690	​		15,724	​
Total noninterest expense	​		59,924	​		55,629	​		121,645	​		106,238	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
(Loss) income before income taxes	​		(10,870)	​		2,664	​		(4,607)	​		2,547	​
Income tax benefit	​		(3,180)	​		(421)	​		(3,813)	​		(1,331)	​
Net (loss) income	​	$	(7,690)	​	$	3,085	​	$	(794)	​	$	3,878	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net income per share:	​			​			​		​	​		​	​
Basic	​	$	(0.09)	​	$	0.05	​	$	(0.01)	​	$	0.07	​
Diluted	​	$	(0.09)	​	$	0.05	​	$	(0.01)	​	$	0.07	​
Shares used in computation:	​		​	​			​		​	​		—	​
Basic	​		82,386,071	​		56,523,640	​		82,379,878	​		56,504,148	​
Diluted	​		82,386,071	​		56,532,465	​		82,379,878	​		56,515,844	​

(See accompanying notes to the consolidated financial statements)

​ 2

Table of Contents

FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY - UNAUDITED

(In thousands, except share amounts)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Common Stock				****	Preferred Stock				​	Convertible Warrants				​	Additional		****	​	​	****	Accumulated Other		****	​	​
​	​	Number	​	​	​	​	Number	​	​	​	​	Number	​	​	​	​	Paid-in		​	Retained		​	Comprehensive		​	​	​
​	****	of Shares	****	Amount		****	of Shares	​	Amount		​	of Warrants	​	Amount		​	Capital		****	Earnings		****	Income (Loss)		****	Total
Balance: December 31, 2024	​	82,365,388	​	$	82	​	29,811	​	$	87,649	​	6	​	​	51,004	​	$	798,505	​	$	125,038	​	$	(8,915)	​	$	1,053,363
Net loss	​	—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(794)	​	​	—	​	​	(794)
Other comprehensive loss	​	—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	(5,416)	​	​	(5,416)
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	3,473	​	​	—	​	​	—	​	​	3,473
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock grants – vesting of restricted stock units	​	28,312	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Repurchase of shares from restricted shares vesting	​	(7,629)	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Balance: June 30, 2025	​	82,386,071	​	$	82	​	29,811	​	$	87,649	​	6	​	$	51,004	​	$	801,978	​	$	124,244	​	$	(14,331)	​	$	1,050,626
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance: March 31, 2025	​	82,386,071	​	$	82	​	29,811	​	$	87,649	​	6	​	$	51,004	​	$	800,142	​	$	131,935	​	$	(10,201)	​	$	1,060,611
Net loss		—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(7,690)	​	​	—	​	​	(7,690)
Other comprehensive loss		—	​		—	​	—	​	​	—	​	—	​	​	—	​		—	​		—	​		(4,130)	​		(4,130)
Stock based compensation		—	​		—	​	—	​	​	—	​	—	​	​	—	​		1,836	​		—	​		—	​		1,836
Other	​	—	​	​	—	​	​	​	​	​	​	​	​	​	​	​	​	—	​	​	(1)	​	​	—	​	​	(1)
Balance: June 30, 2025	​	82,386,071	​	$	82	​	29,811	​	$	87,649	​	6	​	$	51,004	​	$	801,978	​	$	124,244	​	$	(14,331)	​	$	1,050,626
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance: December 31, 2023	​	56,467,623	​	​	56	​	—	​	​	—	​	—	​	​	—	​	​	720,899	​	​	218,575	​	​	(14,187)	​	​	925,343
Net income	​	—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	3,878	​	​	—	​	​	3,878
Other comprehensive income	​	—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	—	​	​	4,239	​	​	4,239
Stock based compensation	​	—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	1,057	​	​	—	​	​	—	​	​	1,057
Cash dividend	​	—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	(1,132)	​	​	—	​	​	(1,132)
Issuance of common stock:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Stock grants – vesting of restricted stock units		93,780	​		1	​	—	​	​	—	​	—	​	​	—	​		—	​		—	​		—	​		1
Repurchase of shares from restricted shares vesting		(18,021)	​		—	​	—	​	​	—	​	—	​	​	—	​		(142)	​		—	​		—	​		(142)
Balance: June 30, 2024	​	56,543,382	​	$	57	​	—	​	$	—	​	—	​	$	—	​	$	721,814	​	$	221,321	​	$	(9,948)	​	$	933,244
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance: March 31, 2024	​	56,511,864	​	$	57	​	—	​	$	—	​	—	​	$	—	​	$	721,362	​	$	218,802	​	$	(11,487)	​	$	928,734
Net income		—	​	​	—	​	—	​	​	—	​	—	​	​	—	​	​	—	​	​	3,085	​	​	—	​	​	3,085
Other comprehensive income		—	​		—	​	—	​	​	—	​	—	​	​	—	​		—	​		—	​		1,539	​		1,539
Stock based compensation		—	​		—	​	—	​	​	—	​	—	​	​	—	​		452	​		—	​		—	​		452
Cash dividend		—	​		—	​	—	​	​	—	​	—	​	​	—	​		—	​		(566)	​		—	​		(566)
Issuance of common stock:			​			​	​	​	​	​	​	​	​	​	​	​			​			​			​		​
Stock grants – vesting of restricted stock units		31,518	​		—	​	—	​	​	—	​	—	​	​	—	​		—	​		—	​		—	​		—
Balance: June 30, 2024	​	56,543,382	​	$	57	​	—	​	$	—	​	—	​	$	—	​	$	721,814	​	$	221,321	​	$	(9,948)	​	$	933,244

(See accompanying notes to the consolidated financial statements)

​ 3

Table of Contents FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS) - UNAUDITED

(In thousands)

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Quarter Ended June 30,					​	Six Months Ended June 30,					​
​	​	2025		​	2024		​	2025		​	2024		​
Net (loss) income		$	(7,690)	​	$	3,085		$	(794)	​	$	3,878	​
Other comprehensive (loss) income, net of tax:		​			​			​			​		​
Unrealized holding (losses) gains on securities arising during the period		​	(1,611)		​	1,282		​	4,154		​	(966)	​
Reclassification adjustment for gain included in net income		​	—		​	(695)		​	(3,327)		​	(852)	​
Total change in unrealized (loss) gain on available-for-sale securities	​	​	(1,611)	​	​	587	​	​	827	​	​	(1,818)	​
Unrealized (loss) gain on cash flow hedge arising during this period	​	​	(2,257)	​	​	1,068	​	​	(5,760)	​	​	6,267	​
Amortization of unrealized (loss) gain on securities transferred from available-for-sale to held-to-maturity	​	​	(262)	​	​	(116)	​	​	(483)	​	​	(210)	​
Total other comprehensive (loss) income		​	(4,130)		​	1,539		​	(5,416)		​	4,239	​
Total comprehensive (loss) income	​	$	(11,820)	​	$	4,624	​	$	(6,210)	​	$	8,117	​

(See accompanying notes to the consolidated financial statements)

​ 4

Table of Contents

FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)

​

​	​	​	​	​	​	​	​
​	​	For the Six Months Ended					​
​	​	June 30,					​
​	​	2025		​	2024		​
Cash Flows from Operating Activities:		​			​		​
Net (loss) income	​	$	(794)	​	$	3,878	​
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:	​		​	​		​	​
Provision (reversal) for credit losses - loans	​		6,417	​		952	​
Provision (reversal) for credit losses - securities AFS	​	​	(66)	​	​	(878)	​
Stock–based compensation expense	​		3,473	​		1,057	​
Depreciation and amortization	​		2,217	​		2,384	​
Deferred tax benefit	​		(8,434)	​		(6,599)	​
Amortization of premium (discount) on securities	​	​	1,855	​	​	(11,112)	​
Amortization of core deposit intangible	​		611	​		726	​
Amortization of mortgage servicing rights - net	​		3,284	​		1,138	​
Gain on sale of REO	​		—	​		(679)	​
Loss (gain) on sale of loans	​		10,405	​		(678)	​
Gain on sale of securities available-for-sale	​		(4,702)	​		(1,204)	​
Loss (gain) from hedging activities	​		7,110	​		(1,673)	​
Change in fair value of LHFS	​	​	(15,403)	​	​	—	​
Amortization of OCI - securities transfer to HTM	​	​	(483)	​	​	(210)	​
Decrease in accrued interest receivable and other assets	​		6,633	​		10,259	​
(Decrease) increase in accounts payable and other liabilities	​		(28,931)	​		728	​
Net cash used in operating activities	​		(16,808)	​		(1,911)	​
Cash Flows from Investing Activities:	​			​			​
Net decrease in loans	​		399,346	​		81,580	​
Proceeds from sale of loans	​		806,919	​		8,770	​
Proceeds from sale of REO	​		—	​		2,850	​
Purchase of premises and equipment	​		(2,387)	​		(1,536)	​
Disposals of premises and equipment	​	​	86	​	​	1	​
Proceeds from sale of land	​	​	—	​	​	1,650	​
Loss on sale of land	​	​	—	​	​	391	​
Purchases of securities AFS	​		(703,278)	​		(1,564,389)	​
Proceeds from sale of securities available-for-sale	​		470,940	​		749,020	​
Maturities of securities AFS	​		85,519	​		423,979	​
Maturities of securities HTM	​	​	47,378	​	​	33,984	​
Impairment of securities AFS	​	​	(3,416)	​	​	—	​
Net increase in FHLB stock	​		(12,208)	​		(13,197)	​
Net cash provided by (used in) investing activities	​		1,088,899	​		(276,897)	​
Cash Flows from Financing Activities:	​			​			​
(Decrease) increase in deposits	​		(1,276,586)	​		67,412	​
Proceeds from FHLB & FRB advances	​		1,600,000	​		2,793,475	​
Repayments on FHLB & FRB advances	​	​	(1,350,000)	​	​	(2,465,402)	​
Net increase in subordinated debt	​	​	31	​	​	31	​
Net decrease in repurchase agreements	​	​	(6,054)	​	​	(20,577)	​
Dividends paid	​		—	​		(1,132)	​
Repurchase of stock	​		—	​		(142)	​
Net cash (used in) provided by financing activities	​		(1,032,609)	​		373,665	​
Increase in cash and cash equivalents	​		39,482	​		94,857	​
Cash and cash equivalents at beginning of year	​		1,016,132	​		1,326,629	​
Cash and cash equivalents at end of period	​	$	1,055,614	​	$	1,421,486	​
Supplemental disclosures of cash flow information:	​			​			​
Cash paid during the period for:	​			​			​
Income taxes	​	$	—	​	$	270	​
Interest	​	​	158,710	​	​	181,281	​
Noncash transactions:	​		​	​			​
Right of use lease assets and liabilities recognized	​	​	—	​	​	3,608	​
Chargeoffs against allowance for credit losses - loans	​	​	895	​	​	862	​
Chargeoffs against allowance for credit losses - securities	​	​	3,361	​	​	—	​
Mortgage servicing rights from loan sales	​	​	2,574	​	​	—	​

(See accompanying notes to the consolidated financial statements)

​ 5

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation

First Foundation Inc. (“FFI”) is a financial services holding company whose operations are conducted through its wholly owned subsidiaries:  First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB” or the “Bank”) and the wholly owned subsidiaries of FFB, First Foundation Public Finance (“FFPF”), First Foundation Insurance Services (“FFIS”) and Blue Moon Management, LLC (collectively the “Company”).  FFI also has two inactive wholly owned subsidiaries, First Foundation Consulting and First Foundation Advisors, LLC.  FFI is incorporated in the state of Delaware.  The corporate headquarters for FFI is located in Irving, Texas.  The Company provides a comprehensive platform of financial services to individuals, businesses and other organizations and has offices in California, Nevada, Florida, Texas, and Hawaii.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates.

The accompanying unaudited consolidated financial statements include the accounts of the Company as of June 30, 2025 and December 31, 2024, and for the six months ended June 30, 2025 and 2024, and include all information and footnotes required for interim financial reporting presentation.  All intercompany accounts and transactions have been eliminated in consolidation. The results for the 2025 interim periods are not necessarily indicative of the results expected for the full year.  These financial statements assume that readers have read the most recent Annual Report on Form 10-K filed with the SEC which contains the latest available audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2024.

Significant Accounting Policies

The accounting and reporting policies of the Company are based upon GAAP and conform to predominant practices within the banking industry.  We have not made any changes in our significant accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024 filed with the SEC.

New Accounting Pronouncements

Recent Accounting Guidance Not Yet Effective

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU 2023-09, Income Taxes (Topic 740 – Improvements to Income Tax Disclosures.  The FASB issued this Update to enhance the transparency and decision usefulness of income tax disclosures. The amendments to this Update address investor requests for more transparency about income tax information through improvements to income tax disclosures primarily related to the rate reconciliation and income taxes paid.  The amendments in this Update are effective for annual periods beginning after December 15, 2024, and are not expected to have a material impact on the Company’s consolidated financial statements.

​ 6

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

NOTE 2: FAIR VALUE MEASUREMENTS

Assets Measured at Fair Value on a Recurring Basis

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s estimates for market assumptions.  These two types of inputs create the following fair value hierarchy:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.  An active market is a market in which transactions occur with sufficient frequency and volume to provide pricing information on an ongoing basis.  A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever possible.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.  Valuations may be determined using pricing models, discounted cash flow methodologies, or similar techniques. 7

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The following tables show the recorded amounts of assets and liabilities measured at fair value on a recurring basis as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Fair Value Measurement Level
(dollars in thousands)	​	Total		​	Level 1		​	Level 2		​	Level 3
June 30, 2025:		​			​			​			​
Investment securities available-for-sale:		​			​			​			​
Collateralized mortgage obligations	​	$	204,419	​	$	—	​	$	204,419	​	$	—
Agency mortgage-backed securities	​		1,089,071	​		—	​		1,089,071	​		—
Municipal bonds	​		46,209	​		—	​		46,209	​		—
SBA securities	​	​	7,889	​	​	—	​	​	7,889	​	​	—
Beneficial interests in FHLMC securitization	​	​	841	​	​	—	​	​	—	​	​	841
Corporate bonds	​		119,701	​		—	​		119,701	​		—
U.S. Treasury	​	​	992	​	​	992	​	​	—	​	​	—
Total investment securities available for sale at fair value on a recurring basis	​	$	1,469,122	​	$	992	​	$	1,467,289	​	$	841
​	​	​	​	​	​	​	​	​	​	​	​	​
Derivative liabilities:	​	​	​	​	​	​	​	​	​	​	​	​
Interest rate swap and cash flow hedge	​	$	8,689	​	$	—	​	$	8,689	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​	​	​	​	​	​	​	​	​	​	​	​
Investment securities available-for-sale:	​			​			​			​
Collateralized mortgage obligations	​	$	9,842	​	$	—	​	$	9,842	​	$	—
Agency mortgage-backed securities	​	​	1,121,626	​	​	—	​	​	1,121,626	​	​	—
Municipal bonds	​		45,535	​		—	​		45,535	​		—
SBA securities	​		9,145	​		—	​		9,145	​		—
Beneficial interests in FHLMC securitization	​		1,242	​		—	​		—	​		1,242
Corporate bonds	​	​	125,817	​	​	14,100	​	​	111,717	​	​	—
U.S. Treasury	​		678	​		678	​		—	​		—
Total investment securities available for sale at fair value on a recurring basis	​	$	1,313,885	​	$	14,778	​	$	1,297,865	​	$	1,242
​	​	​	​	​	​	​	​	​	​	​	​	​
Derivatives assets:	​			​			​			​
Cash flow hedge	​	$	5,086	​	$	—	​	$	5,086	​	$	—

​

The decrease in Level 3 assets from December 31, 2024 was due to securitization paydowns in the FHLMC portfolio in the year-to-date period ended June 30, 2025.

Assets Measured at Fair Value on a Nonrecurring Basis

From time to time, we may be required to measure other assets at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

Loans. Loans measured at fair value on a nonrecurring basis include collateral dependent loans held for investment. The specific reserves for these loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Internal discounted cash flow analyses are also utilized to estimate the fair value of these loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity. When the fair value of the collateral is based on an observable market price or a current appraised value, we 8

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

measure the impaired loan at nonrecurring Level 2.  When an appraised value is not available, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price or a discounted cash flow has been used to determine the fair value, we measure the collateral-dependent loan at nonrecurring Level 3.  Loans for which an appraised value is not available include commercial loans which are secured by non-real estate assets such as accounts receivable and inventory.  To establish fair value for these loans, we apply a recovery factor against eligible receivables and inventory.  This recovery factor may be either increased or decreased subject to additional support and analysis of the quality of receivables and the companies owing the receivables.  The total collateral-dependent loans were $26.2 million and $27.0 million at June 30, 2025 and December 31, 2024, respectively. Specific reserves related to these loans totaled $0.5 million and $0.7 million at June 30, 2025 and December 31, 2024, respectively.

Real Estate Owned (REO). The fair value of REO is based on external appraised values that include adjustments for estimated selling costs and assumptions of market conditions that are not directly observable, resulting in a Level 3 classification.  Real estate owned classified as Level 3 totaled $6.2 million at June 30, 2025 and December 31, 2024, respectively.

Mortgage Servicing Rights. When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount.  Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.  If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.  All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. At June 30, 2025, there was no valuation allowance on the mortgage servicing rights.  Significant assumptions in the valuation of these Level 3 mortgage servicing rights as of June 30, 2025, included prepayment rates ranging from 20% to 30% and a discount rate of 10%.

Loans Held for Sale. Loans held for sale are accounted for at the lower of amortized cost or fair value.  The fair value for loans held for sale is based upon a discounted cash flow model which involves estimating the future cash flows from the loans in the portfolio and discounting to a present value.  Contractual cash flows associated with the loans are adjusted to reflect certain assumptions, such as prepayment, default, and loss severity assumptions, to form expected prepayment and credit-adjusted expected cash flows.  The expected cash flows are then discounted to present value at a rate of return which considers other costs and risks, such as market risk and liquidity.  The carrying amount and fair value of loans held for sale were $477 million and $1.3 billion, respectively at June 30, 2025 and December 31, 2024.

Significant assumptions in the valuation of these Level 3 loans held for sale as of June 30, 2025, included prepayment rates of 5% and 20% for fixed-rate and floating-rate loans, respectively; discount rates ranging from 2.50% to 5.85%; and an annual expected loss assumption rate of 0.05%.  These assumptions applied to 89.8% of the total principal balance of the loan portfolio.  The remaining 10.2% of the principal balance of the loan portfolio consisted of twenty loans that were rated as substandard, and for which separate assumptions were used to account for the lower credit quality of the loans.  Significant assumptions in the valuation of these Level 3 loans held for sale as of December 31, 2024, included prepayment rates of 5% and 15% for fixed-rate and floating-rate loans, respectively; discount rates ranging from 2.10% to 6.25%; and annual expected loss assumption rate of 0.05%.  These assumptions applied to 97.4% of the total principal balance of the loan portfolio.  The remaining 2.6% of the principal balance of the loan portfolio consisted of seventeen loans that were rated as substandard, and for which separate assumptions were used to account for the lower credit quality of the loans. 9

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

Fair Value of Financial Instruments

FASB ASC 825-10, “Disclosures about Fair Value of Financial Instruments” requires disclosure of the fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate such value. The methodologies for estimating the fair value of financial assets and financial liabilities measured at fair value on a recurring and non-recurring basis are discussed above. The estimated fair value amounts have been determined by management using available market information and appropriate valuation methodologies and are based on the exit price notion set forth by ASU 2016-01. In cases where quoted market prices are not available, fair values are based on estimates using present value or other market value techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. The aggregate fair value amounts presented below do not represent the underlying value of the Company.

Fair value estimates are made at a discrete point in time based on relevant market information and other information about the financial instruments. Because no active market exists for a significant portion of our financial instruments, fair value estimates are based in large part on judgments we make primarily regarding current economic conditions, risk characteristics of various financial instruments, prepayment rates, and future expected loss experience. These estimates are subjective in nature and invariably involve some inherent uncertainties. Additionally, unexpected changes in events or circumstances can occur that could require us to make changes to our assumptions and which, in turn, could significantly affect and require us to make changes to our previous estimates of fair value.

In addition, the fair value estimates are based on existing on-and off-balance sheet financial instruments without attempting to estimate the value of existing and anticipated future customer relationships and the value of assets and liabilities that are not considered financial instruments, such as premises and equipment and other real estate owned.

The following methods and assumptions were used to estimate the fair value of financial instruments:

Cash and Cash Equivalents. The fair value of cash and cash equivalents approximates its carrying value.

*Interest-Bearing Deposits with Financial Institutions.*The fair value of interest-bearing deposits maturing within ninety days approximate their carrying values.  These financial instruments are classified as a component of cash and cash equivalents in the accompanying consolidated balance sheets.

*Investment Securities Available-for-Sale.*Investment securities available for sale are measured at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. When a market is illiquid or there is a lack of transparency around the inputs to valuation, the securities are classified as Level 3 and reliance is placed upon external third-party models, and management judgment and evaluation for valuation. Level 1 investment securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 investment securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Investment securities classified as Level 3 include beneficial interests in FHLMC securitizations. Significant assumptions in the valuation of these Level 3 securities as of June 30, 2025 included a prepayment rate of 20% and a discount rate of 6.25%.  Significant assumptions used in the valuation of these Level 3 investment securities as of December 31, 2024 included a prepayment rate of 20% and a discount rate of 6.87%.

​ 10

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

Investment Securities Held-to-Maturity.  Investment securities held-to-maturity are carried at amortized cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity.  Investment securities held-to-maturity consist of agency mortgage-backed securities issued by government sponsored entities.  Fair value is determined based upon the same independent pricing model utilized for valuation of Level 2 investment securities available-for-sale.

Investment in Equity Securities. The fair value on investment in equity securities is the carrying amount and is  evaluated for impairment on an annual basis.

Loans Held for Investment. The fair value for loans with variable interest rates is the carrying amount. The fair value of fixed-rate loans is derived by calculating the discounted value of future cash flows expected to be received by the various homogeneous categories of loans or by reference to secondary market pricing. All loans have been adjusted to reflect changes in credit risk.

Accrued Interest Receivable. The fair value of accrued interest receivable on loans and investment securities approximates its carrying value.

*Derivative Instruments (Cash Flow Hedge).*The Bank entered into a pay-fixed, receive-variable interest rate swap agreement with a counterparty.  This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  We estimate the fair value of this agreement based on inputs from a third-party pricing model, which incorporates such factors as the Treasury curve, the secured overnight financial rate (“SOFR”), and the pay rate on the interest rate swaps.  The fair value of this derivative instrument is based on a discounted cash flow approach.  The observable nature of the inputs used in deriving its fair value results in a Level 2 classification.

At June 30, 2025, the fair value of the hedge was ($2.9) million and is classified as derivative liabilities on the accompanying balance sheet.

*Derivative Instruments (Interest Rate Swap).*On January 29, 2025, the Bank entered into an interest rate swap agreement with an institutional counterparty to hedge the interest rate risk to earnings associated with fair value changes in the valuation allowance of loans held for sale. The hedging instrument is a pay-fixed, receive-variable amortizing interest rate swap agreement with an original notional amount of $1.0 billion.  In the second quarter of 2025, the Company partially terminated $625 million notional amount in conjunction with the sale of $858 million principal balance of multifamily loans held for sale, resulting in $375 million notional amount remaining.  We estimate the fair value of this agreement based on inputs from a third-party pricing model, which incorporates such factors as the Treasury curve, the secured overnight financial rate (“SOFR”), and the pay rate on the interest rate swaps. The fair value of this derivative instrument is based on a discounted cash flow approach. The observable nature of the inputs used in deriving its fair value results in a Level 2 classification.

At June 30, 2025, the fair value of the hedge was ($5.8) million and is classified as derivative liabilities on the accompanying balance sheet.

Deposits. The fair value of demand deposits, savings deposits, and money market deposits is defined as the amounts payable on demand resulting in a Level 1 classification. The fair value of fixed maturity certificates of deposit is estimated based on the discounted value of the future cash flows expected to be paid on the deposits resulting in a Level 2 classification.

Borrowings. The fair value of borrowings is the carrying value of overnight FHLB advances and federal funds purchased that approximate fair value because of the short-term maturity of these instruments, resulting in a Level 2 11

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

classification. The fair value of borrowings in the form of FHLB putable advances also approximates carrying value and are classified as Level 2 instruments.

*Subordinated debt.*The fair value of term borrowings is derived by calculating the discounted value of future cash flows expected to be paid out by the Company resulting in a Level 3 classification.

Accrued Interest Payable.  The fair value of accrued interest payable on deposits, borrowings, and subordinated debt approximates its carrying value.

The following table sets forth the estimated fair values and related carrying amounts of our financial instruments as of:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Carrying		​	Fair Value Measurement Level
(dollars in thousands)	​	Value		​	1		​	2		​	3		​	Total
June 30, 2025:		​			​			​			​			​
Assets:		​			​			​			​			​
Cash and cash equivalents	​	$	1,055,614	​	$	1,055,614	​	$	—	​	$	—	​	$	1,055,614
Securities AFS, net	​		1,469,122	​		992	​		1,467,289	​		841	​		1,469,122
Securities HTM	​	​	663,807	​	​	—	​	​	604,367	​	​	—	​	​	604,367
Loans held for sale	​		476,727	​		—	​	​	—	​		476,727	​		476,727
Loans held for investment, net	​		7,510,763	​		—	​		44,196	​		7,335,483	​		7,379,679
Investment in equity securities	​		11,799	​		—	​		—	​		11,799	​		11,799
Accrued interest receivable	​	​	50,538	​	​	50,538	​	​	—	​	​	—	​	​	50,538
Liabilities:	​			​			​			​			​
Deposits	​	$	8,593,693	​	$	6,744,399	​	$	1,856,771	​	$	—	​	$	8,601,170
Borrowings	​		1,669,315	​		—	​		1,696,461	​		—	​		1,696,461
Subordinated debt	​	​	173,490	​	​	—	​	​	—	​	​	156,564	​	​	156,564
Accrued interest payable	​	​	18,273	​	​	18,273	​	​	—	​	​	—	​	​	18,273
Derivative liabilities	​	​	8,689	​	​	—	​	​	8,689	​	​	—	​	​	8,689
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Assets:	​			​			​			​			​
Cash and cash equivalents	​	$	1,016,132	​	$	1,016,132	​	$	—	​	$	—	​	$	1,016,132
Securities AFS, net	​		1,313,885	​		14,778	​		1,297,865	​		1,242	​		1,313,885
Securities HTM	​	​	712,105	​	​	—	​	​	636,840	​	​	—	​	​	636,840
Loans held for sale	​		1,285,819	​		—	​		—	​		1,285,819	​		1,285,819
Loans held for investment, net	​		7,909,091	​		—	​		16,663	​		7,595,925	​		7,612,588
Investment in equity securities	​		11,798	​		—	​		—	​		11,798	​		11,798
Accrued interest receivable	​	​	54,804	​	​	54,804	​	​	—	​	​	—	​	​	54,804
Derivative assets	​	​	5,086	​	​	—	​	​	5,086	​	​	—	​	​	5,086
Liabilities:	​			​			​			​			​		​
Deposits	​	$	9,870,279	​	$	7,476,826	​	$	2,389,896	​	$	—	​	$	9,866,722
Borrowings	​		1,425,369	​		—	​		1,430,337	​		—	​		1,430,337
Subordinated debt	​	​	173,459	​	​	—	​	​	—	​	​	142,631	​	​	142,631
Accrued interest payable	​		27,701	​		27,701	​		—	​		—	​		27,701

​

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

NOTE 3: SECURITIES

The following table provides a summary of the Company’s securities AFS portfolio as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Amortized		​	Gross Unrealized					​	Allowance for		​	Estimated
(dollars in thousands)	​	Cost		​	Gains		​	Losses		​	Credit Losses		​	Fair Value
June 30, 2025:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Collateralized mortgage obligations	​	$	205,981	​	$	—	​	$	(1,562)	​	$	—	​	$	204,419
Agency mortgage-backed securities	​	​	1,093,563	​	​	243	​	​	(4,735)	​	​	—	​	​	1,089,071
Municipal bonds	​	​	48,749	​	​	—	​	​	(2,540)	​	​	—	​	​	46,209
SBA securities	​	​	7,945	​	​	4	​	​	(60)	​	​	—	​	​	7,889
Beneficial interests in FHLMC securitization	​		841	​	​	—	​	​	—	​	​	—	​		841
Corporate bonds	​		127,732	​	​	—	​	​	(7,380)	​	​	(651)	​		119,701
U.S. Treasury	​		999	​	​	6	​	​	(13)	​	​	—	​		992
Total	​	$	1,485,810	​	$	253	​	$	(16,290)	​	$	(651)	​	$	1,469,122
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Collateralized mortgage obligations	​	$	11,121	​	$	—	​	$	(1,279)	​	$	—	​	$	9,842
Agency mortgage-backed securities	​	​	1,126,861	​	​	2,308	​	​	(7,543)	​	​	—	​	​	1,121,626
Municipal bonds	​	​	48,921	​	​	—	​	​	(3,386)	​	​	—	​	​	45,535
SBA securities	​	​	9,236	​	​	2	​	​	(93)	​	​	—	​	​	9,145
Beneficial interests in FHLMC securitization	​		4,619	​		—	​		—	​		(3,377)	​		1,242
Corporate bonds	​		133,767	​		—	​		(7,193)	​		(757)	​		125,817
U.S. Treasury	​		700	​		—	​		(22)	​		—	​		678
Total	​	$	1,335,225	​	$	2,310	​	$	(19,516)	​	$	(4,134)	​	$	1,313,885

​

The following table provides a summary of the Company’s securities HTM portfolio as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Amortized		​	Gross Unrecognized					​	Allowance for		​	Estimated
(dollars in thousands)	​	Cost		​	Gains		​	Losses		​	Credit Losses		​	Fair Value
June 30, 2025:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Agency mortgage-backed securities	​	$	663,807	​	$	—	​	$	(59,440)	​	$	—	​	$	604,367
Total	​	$	663,807	​	$	—	​	$	(59,440)	​	$	—	​	$	604,367
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Agency mortgage-backed securities	​	$	712,105	​	$	—	​	$	(75,265)	​	$	—	​	$	636,840
Total	​	$	712,105	​	$	—	​	$	(75,265)	​	$	—	​	$	636,840

​

As of June 30, 2025, the tables above include $392.0 million in agency mortgage-backed securities pledged as collateral to the state of Florida to meet regulatory requirements; $1.9 million in U.S. Treasury and agency mortgage-backed securities pledged as collateral to various states to meet regulatory requirements related to the Bank’s trust operations; $259.0 million of agency mortgage-backed securities pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into from 2018 and 2021; and $73.6 million in securities consisting of SBA securities, collateralized mortgage obligations, and agency mortgage-backed securities pledged as collateral for repurchase agreements obtained from a prior bank acquisition. A total of $1.1 billion in SBA and agency mortgage-backed securities, collateralized mortgage obligations, corporate and municipal bonds are pledged as collateral to the Federal Reserve Bank’s discount window from which the Bank may borrow.

​ 13

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

As of December 31, 2024, the tables above include $325.7 million in agency mortgage-backed securities pledged as collateral to the state of Florida to meet regulatory requirements; $1.3 million in U.S. Treasury securities pledged as collateral to various states to meet regulatory requirements related to the Bank’s trust operations; $256.5 million of agency mortgage-backed securities pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into from 2018 and 2021; and $77.3 million in securities consisting of SBA securities, collateralized mortgage obligations, and agency mortgage-backed securities pledged as collateral for repurchase agreements obtained from a prior bank acquisition. A total of $916.8 million in SBA and agency mortgage-backed securities, collateralized mortgage obligations, corporate and municipal bonds are pledged as collateral to the Federal Reserve Bank’s discount window from which the Bank may borrow.

We monitor the credit quality of these securities by evaluating various quantitative attributes. The credit quality indicators the Company monitors include, but are not limited to, credit ratings of individual securities and the credit rating of United States government-sponsored enterprises that guarantee the securities. Credit ratings express opinions about the credit quality of a security. Securities rated investment grade, as defined by nationally recognized statistical rating organizations (“NRSROs”), are generally considered by the rating agencies and market participants to be low credit risk.  As of June 30, 2025, all of the Company’s securities were either investment grade or were issued by a U.S. government agency or government-sponsored enterprise (“GSE”) with an investment grade rating, with the exception of two corporate bonds having a combined market value of $32.0 million and one agency commercial mortgage-backed security with a marked value of $841 thousand which were below investment grade.

The tables below indicate the gross unrealized losses and fair values of our securities AFS portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Securities with Unrealized Loss at June 30, 2025
​	​	Less than 12 months					​	12 months or more					​	Total
​	​	Fair		​	Unrealized		​	Fair		​	Unrealized		​	Fair		​	Unrealized
(dollars in thousands)		Value			Loss			Value			Loss			Value			Loss
Collateralized mortgage obligations	​	$	197,644	​	$	(459)	​	$	6,775	​	$	(1,103)	​	$	204,419	​	$	(1,562)
Agency mortgage-backed securities	​	​	996,966	​	​	(4,476)	​	​	3,803	​	​	(259)	​	​	1,000,769	​	​	(4,735)
Municipal bonds	​	​	492	​	​	(8)	​	​	45,488	​	​	(2,532)	​	​	45,980	​	​	(2,540)
SBA securities	​	​	204	​	​	—	​	​	6,646	​	​	(60)	​	​	6,850	​	​	(60)
Corporate bonds	​	​	19,876	​	​	(124)	​	​	100,476	​	​	(7,256)	​	​	120,352	​	​	(7,380)
U.S. Treasury	​	​	—	​	​	—	​	​	487	​	​	(13)	​	​	487	​	​	(13)
Total	​	$	1,215,182	​	$	(5,067)	​	$	163,675	​	$	(11,223)	​	$	1,378,857	​	$	(16,290)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Securities with Unrealized Loss at December 31, 2024
​	​	Less than 12 months					​	12 months or more					​	Total
​	​	Fair		​	Unrealized		​	Fair		​	Unrealized		​	Fair		​	Unrealized
(dollars in thousands)		Value			Loss			Value			Loss			Value			Loss
Collateralized mortgage obligations		$	2,874		$	(51)		$	6,968		$	(1,228)		$	9,842		$	(1,279)
Agency mortgage-backed securities	​	​	719,329	​	​	(7,218)	​	​	4,280	​	​	(325)	​	​	723,609	​	​	(7,543)
Municipal bonds	​	​	2,129	​	​	(101)	​	​	43,405	​	​	(3,285)	​	​	45,534	​	​	(3,386)
SBA securities	​	​	614	​	​	(1)	​	​	7,739	​	​	(92)	​	​	8,353	​	​	(93)
Corporate bonds	​	​	14,242	​	​	(758)	​	​	112,333	​	​	(6,435)	​	​	126,575	​	​	(7,193)
U.S. Treasury		​	—	​		—	​		678	​		(22)	​		678	​		(22)
Total	​	$	739,188	​	$	(8,129)	​	$	175,403	​	$	(11,387)	​	$	914,591	​	$	(19,516)

​

​ 14

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

Unrealized losses in the securities AFS portfolio have not been recognized into income because the securities are either of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, or the decline in fair value is largely due to changes in discount rates and assumptions regarding future interest rates. The fair value is expected to recover as the bonds approach maturity.

The tables below indicate the gross unrecognized losses and fair value of our securities HTM portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrecognized loss position.

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Securities with Unrecognized Loss at June 30, 2025
​	​	Less than 12 months					​	12 months or more					​	Total
​	​	Fair		​	Unrecognized		​	Fair		​	Unrecognized		​	Fair		​	Unrecognized
(dollars in thousands)		Value			Loss			Value			Loss			Value			Loss
Agency mortgage-backed securities	​	$	—	​	$	—	​	$	604,367	​	$	(59,440)	​	$	604,367	​	$	(59,440)
Total	​	$	—	​	$	—	​	$	604,367	​	$	(59,440)	​	$	604,367	​	$	(59,440)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Securities with Unrecognized Loss at December 31, 2024
​	​	Less than 12 months					​	12 months or more					​	Total
​	​	Fair		​	Unrecognized		​	Fair		​	Unrecognized		​	Fair		​	Unrecognized
(dollars in thousands)		Value			Loss			Value			Loss			Value			Loss
Agency mortgage-backed securities	​	$	15,440	​	$	(61)	​	$	621,400	​	$	(75,204)	​	$	636,840	​	$	(75,265)
Total	​	$	15,440	​	$	(61)	​	$	621,400	​	$	(75,204)	​	$	636,840	​	$	(75,265)

​

During the six-month period ended June 30, 2025, $466 million par value of securities available-for-sale were sold, resulting in a gain on sale of securities available-for-sale of $4.7 million. During the six-month period ended June 30, 2024, $747.8 million par value of securities available-for-sale were sold, resulting in gross realized gains of $1.4 million and gross realized losses of $0.2 million.

​ 15

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The following is a rollforward of the Company’s allowance for credit losses related to investments for the following periods:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​		​	Beginning		​	Provision (Reversal)		​	​		​	​		​	Ending
(dollars in thousands)	​	​	Balance	​	​	for Credit Losses	​	​	Charge-offs	​	​	Recoveries	​	​	Balance
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three Months Ended June 30, 2025:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Beneficial interests in FHLMC securitization	​	$	3,361	​	$	—	​	$	(3,361)	​	$	—	​	$	—
Corporate bonds	​	​	666	​	​	(15)	​	​	—	​	​	—	​	​	651
Total		$	4,027		$	(15)		$	(3,361)		$	—		$	651
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2025:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Beneficial interests in FHLMC securitization	​	$	3,377	​	$	(16)	​	$	(3,361)	​	$	—	​	$	—
Corporate bonds	​	​	757	​	​	(106)	​	​	—	​	​	—	​	​	651
Total		$	4,134		$	(122)		$	(3,361)		$	—		$	651
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three Months Ended June 30, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Beneficial interests in FHLMC securitization	​	$	6,593	​	$	(91)	​	$	—	​	$	—	​	$	6,502
Corporate bonds	​	​	1,318	​	​	(478)	​	​	—	​	​	—	​	​	840
Total	​	$	7,911	​	$	(569)	​	$	—	​	$	—	​	$	7,342
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Beneficial interests in FHLMC securitization	​	$	6,818	​	$	(316)	​	$	—	​	$	—	​	$	6,502
Corporate bonds	​	​	1,402	​	​	(562)	​	​	—	​	​	—	​	​	840
Total		$	8,220		$	(878)		$	—		$	—		$	7,342

​

During the six-month periods ending June 30, 2025 and June 30, 2024, the Company recorded a provision (reversal) for credit losses of ($122) thousand and ($878) thousand, respectively.  During the quarter ended June 30, 2025, an interest-only strip security was written down to its fair value resulting in a charge-off of $3.4 million to the provision. There were no charge-offs recorded for the year-ago quarter or six-month period ended June 30, 2024.

On a quarterly basis, the Company engages with an independent third party to perform an analysis of expected credit losses for its municipal and corporate bond securities in order to supplement our own internal review. As of June 30, 2025, the analysis concluded and the Company concurred that fourteen corporate bonds were impacted by credit loss, for which $106 thousand was recorded as reversal of provision to the allowance for credit losses (“ACL”) related to available-for-sale securities and that no municipal bond securities were impacted by credit loss. The ACL related to available-for-sale securities totaled $651 thousand and $4.1 million as of June 30, 2025 and December 31, 2024, respectively. 16

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The amortized cost and fair value of investment securities AFS by contractual maturity were as follows for the periods indicated:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	1 Year or		****	More than 1 Year		****	More than 5 Years		****	More than		****	​	​	****
(dollars in thousands)	​	Less		​	through 5 Years		​	through 10 Years		​	10 Years		​	Total		****
June 30, 2025	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortized Cost:		​			​			​			​			​		​
Collateralized mortgage obligations	​	$	—	​	$	216	​	$	417	​	$	205,348	​	$	205,981	​
Agency mortgage-backed securities	​	​	—	​	​	2,525	​	​	—	​	​	1,091,038	​	​	1,093,563	​
Municipal bonds	​	​	2,604	​	​	20,552	​	​	24,497	​	​	1,096	​	​	48,749	​
SBA securities	​	​	—	​	​	485	​	​	111	​	​	7,349	​	​	7,945	​
Beneficial interests in FHLMC securitization	​	​	—	​	​	841	​	​	—	​	​	—	​	​	841	​
Corporate bonds	​	​	3,005	​	​	57,969	​	​	61,236	​	​	5,522	​	​	127,732	​
U.S. Treasury	​		500	​	​	499	​	​	—	​	​	—	​		999	​
Total	​	$	6,109	​	$	83,087	​	$	86,261	​	$	1,310,353	​	$	1,485,810	​
Weighted average yield	​		2.67	%		5.53	%		3.10	%		5.34	%		5.21	%
Estimated Fair Value:	​			​			​			​			​			​
Collateralized mortgage obligations	​	$	—	​	$	205	​	$	394	​	$	203,820	​	$	204,419	​
Agency mortgage-backed securities	​	​	—	​	​	2,463	​	​	—	​	​	1,086,608	​	​	1,089,071	​
Municipal bonds	​	​	2,602	​	​	19,881	​	​	22,872	​	​	854	​	​	46,209	​
SBA securities	​	​	—	​	​	484	​	​	111	​	​	7,294	​	​	7,889	​
Beneficial interests in FHLMC securitization	​	​	—	​	​	841	​	​	—	​	​	—	​	​	841	​
Corporate bonds	​	​	2,932	​	​	56,452	​	​	56,578	​	​	4,390	​	​	120,352	​
U.S. Treasury	​		487	​	​	505	​	​	—	​	​	—	​		992	​
Total	​	$	6,021	​	$	80,831	​	$	79,955	​	$	1,302,966	​	$	1,469,773	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	1 Year or		****	More than 1 Year		****	More than 5 Years		****	More than		****	​	​	****
(dollars in thousands)	​	Less		​	through 5 Years		​	through 10 Years		​	10 Years		​	Total		****
December 31, 2024	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortized Cost:		​			​			​			​			​		​
Collateralized mortgage obligations	​	$	—	​	$	276	​	$	154	​	$	10,691	​	$	11,121	​
Agency mortgage-backed securities	​	​	48	​	​	2,992	​	​	—	​	​	1,123,821	​	​	1,126,861	​
Municipal bonds	​	​	2,594	​	​	14,874	​	​	29,218	​	​	2,235	​	​	48,921	​
SBA securities	​	​	—	​	​	418	​	​	388	​	​	8,430	​	​	9,236	​
Beneficial interests in FHLMC securitization	​	​	—	​	​	4,619	​	​	—	​	​	—	​	​	4,619	​
Corporate bonds	​	​	—	​	​	61,961	​	​	66,282	​	​	5,524	​	​	133,767	​
U.S. Treasury	​		200	​		500	​		—	​		—	​		700	​
Total	​	$	2,842	​	$	85,640	​	$	96,042	​	$	1,150,701	​	$	1,335,225	​
Weighted average yield	​		1.99	%		5.83	%		3.01	%		5.50	%		5.34	%
Estimated Fair Value:	​			​			​			​			​			​
Collateralized mortgage obligations	​	$	—	​	$	256	​	$	150	​	$	9,436	​	$	9,842	​
Agency mortgage-backed securities	​	​	47	​	​	2,882	​	​	—	​	​	1,118,697	​	​	1,121,626	​
Municipal bonds	​	​	2,573	​	​	14,120	​	​	27,065	​	​	1,777	​	​	45,535	​
SBA securities	​	​	—	​	​	416	​	​	388	​	​	8,341	​	​	9,145	​
Beneficial interests in FHLMC securitization	​	​	—	​	​	4,619	​	​	—	​	​	—	​	​	4,619	​
Corporate bonds	​	​	—	​	​	60,318	​	​	61,889	​	​	4,367	​	​	126,574	​
U.S. Treasury	​		200	​		478	​		—	​		—	​		678	​
Total	​	$	2,820	​	$	83,089	​	$	89,492	​	$	1,142,618	​	$	1,318,019	​

​ 17

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The amortized cost and fair value of investment securities HTM by contractual maturity were as follows for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	1 Year or		****	More than 1 Year		****	More than 5 Years		****	More than		****	​	​	****
(dollars in thousands)	​	Less		​	through 5 Years		​	through 10 Years		​	10 Years		​	Total		****
June 30, 2025	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortized Cost:		​			​			​			​			​		​
Agency mortgage-backed securities	​	$	—	​	$	5,752	​	$	9,027	​	$	649,028	​	$	663,807	​
Total	​	$	—	​	$	5,752	​	$	9,027	​	$	649,028	​	$	663,807	​
Weighted average yield	​		—	%		1.08	%	​	1.77	%		2.22	%	​	2.21	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Estimated Fair Value:	​			​			​			​			​			​
Agency mortgage-backed securities	​	$	—	​	$	5,476	​	$	8,329	​	$	590,562	​	$	604,367	​
Total	​	$	—	​	$	5,476	​	$	8,329	​	$	590,562	​	$	604,367	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	1 Year or		****	More than 1 Year		****	More than 5 Years		****	More than		****	​	​	****
(dollars in thousands)	​	Less		​	through 5 Years		​	through 10 Years		​	10 Years		​	Total		****
December 31, 2024	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortized Cost:		​			​			​			​			​		​
Agency mortgage-backed securities	​	$	—	​	$	4,542	​	$	8,900	​	$	698,663	​	$	712,105	​
Total	​	$	—	​	$	4,542	​	$	8,900	​	$	698,663	​	$	712,105	​
Weighted average yield	​		—	%		0.99	%		1.58	%		2.24	%	​	2.22	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Estimated Fair Value:	​			​			​			​			​			​
Agency mortgage-backed securities	​	$	—	​	$	4,287	​	$	8,128	​	$	624,425	​	$	636,840	​
Total	​	$	—	​	$	4,287	​	$	8,128	​	$	624,425	​	$	636,840	​

​

​

NOTE 4: LOANS

The following is a summary of our loans held for investment as of:

​

​	​	​	​	​	​	​
​	****	June 30,		​	December 31,
(dollars in thousands)	****	2025		****	2024
Outstanding principal balance:	​		​	​		​
Loans secured by real estate:		​			​
Residential properties:		​			​
Multifamily	​	$	3,288,093	​	$	3,341,823
Single-family	​		822,508	​		873,491
Total real estate loans secured by residential properties	​		4,110,601	​		4,215,314
Commercial properties	​		818,738	​		904,167
Land and construction	​		43,361	​		69,246
Total real estate loans	​		4,972,700	​		5,188,727
Commercial and industrial loans	​		2,568,621	​		2,746,351
Consumer loans	​		1,544	​		1,137
Total loans	​		7,542,865	​		7,936,215
Premiums, discounts and deferred fees and expenses	​		5,458	​		5,178
Total	​	$	7,548,323	​	$	7,941,393

​

The Company’s loans held for investment portfolio is segmented according to loans that share similar attributes and risk characteristics.  In addition, the Company’s loans held for sale portfolio, which is not included in the table above, and consisting entirely of multifamily loans, totaled $0.5 billion at June 30, 2025 and $1.3 billion at December 31, 2024, respectively. 18

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

Loans secured by real estate include those secured by either residential or commercial real estate properties, such as multifamily and single-family residential loans; owner occupied and non-owner occupied commercial real estate loans; and land and construction loans.

Commercial and industrial loans are loans to businesses where the operating cash flow of the business is the primary source of payment.  This segment includes commercial revolving lines of credit and term loans, municipal finance loans, equipment finance loans and SBA loans.

Consumer loans include personal installment loans and line of credit, and home equity lines of credit.  These loan products are offered as an accommodation to clients of our primary business lines.

Loans with a collateral value totaling $170.6 million and $176.0 million were pledged as collateral to secure borrowings with the Federal Reserve Bank at June 30, 2025 and December 31, 2024, respectively.  Loans with a market value of $3.1 billion and $4.1 billion were pledged as collateral to secure borrowings with the FHLB at June 30, 2025 and December 31, 2024, respectively.

During the six-month period ended June 30, 2025, loans totaling $858 million in unpaid principal balance were sold, resulting in a net loss on sale of loans of $10.4 million.  During the six-month period ended June 30, 2024, loans totaling $8.1 million in unpaid principal balance were sold, resulting in a net gain on sale of loans of $678 thousand.

The following table summarizes our delinquent and nonaccrual loans as of:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Past Due and Still Accruing								​	​	​	​	Total Past		​	​	​	​	​	​
​	​	​	​	​	​	​	​	90 Days		​	​	​	​	Due and		​	​	​	​	​	​
(dollars in thousands)		30–59 Days			60-89 Days			or More			Nonaccrual			Nonaccrual			Current			Total
June 30, 2025:		​			​			​			​			​			​			​
Real estate loans:		​			​			​			​			​			​			​
Residential properties	​	$	10,858	​	$	—	​	$	—	​	$	18,779	​	$	29,637	​	$	4,090,114	​	$	4,119,751
Commercial properties	​		3,180	​		—	​		355	​		6,006	​		9,541	​		808,801	​		818,342
Land and construction	​		—	​		—	​		—	​		—	​		—	​		43,317	​		43,317
Commercial and industrial loans	​		637	​		168	​		—	​		9,842	​		10,647	​		2,554,717	​		2,565,364
Consumer loans	​		—	​		—	​		—	​		—	​		—	​		1,549	​		1,549
Total	​	$	14,675	​	$	168	​	$	355	​	$	34,627	​	$	49,825	​	$	7,498,498	​	$	7,548,323
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Percentage of total loans	​		0.19	%		0.00	%		0.00	%		0.46	%		0.66	%			​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​			​			​			​			​			​			​
Real estate loans:	​			​			​			​			​			​			​
Residential properties	​	$	7,083	​	$	—	​	$	—	​	$	23,324	​	$	30,407	​	$	4,193,994	​	$	4,224,401
Commercial properties	​		7,944	​		428	​		12,900	​		7,946	​		29,218	​		874,463	​		903,681
Land and construction	​		—	​		—	​		—	​		—	​		—	​		69,134	​		69,134
Commercial and industrial loans	​		997	​		617	​		—	​		9,174	​		10,788	​		2,732,226	​		2,743,014
Consumer loans	​		—	​		—	​		—	​		—	​		—	​		1,163	​		1,163
Total	​	$	16,024	​	$	1,045	​	$	12,900	​	$	40,444	​	$	70,413	​	$	7,870,980	​	$	7,941,393
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Percentage of total loans	​		0.20	%		0.01	%		0.16	%		0.51	%		0.89	%			​

​ 19

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The following table summarizes our nonaccrual loans as of:

​

​	​	​	​	​	​	​
​	​	Nonaccrual		​	Nonaccrual
​	​	with Allowance		​	with no Allowance
(dollars in thousands)		for Credit Losses		****	for Credit Losses
June 30, 2025:	​		​	​
Real estate loans:	​	​	​	​	​	​
Residential properties	​	$	1,363	​	$	17,416
Commercial properties	​	​	585	​	​	5,421
Commercial and industrial loans	​		9,834	​		8
Total	​	$	11,782	​	$	22,845
​	​	​	​	​	​	​
December 31, 2024:	​		​	​
Real estate loans:	​	​	​	​	​	​
Residential properties	​	$	1,420	​	$	21,904
Commercial properties	​	​	3,449	​	​	4,497
Commercial and industrial loans	​		9,174	​		—
Total	​	$	14,043	​	$	26,401

​

The Company provides modifications to borrowers experiencing financial difficulty, which may include interest rate reduction, term extensions, principal forgiveness, other-than-insignificant payment delays, or a combination of any of these items. A loan modification or refinancing results in a new loan if the terms of the new loan are at least as favorable to the lender as the terms with customers with similar collection risks that are not refinancing or restructuring their loans and the modification to the terms of the loan are more than minor. If a loan modification or refinancing does not result in a new loan, it is classified as a loan modification. 20

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the six-month periods ended June 30, 2025 and 2024, respectively with related amortized cost balances, respective percentage share of the total class of loans, and the related financial effect:

​

​	​	​	​	​	​	​	​
​	​	June 30, 2025:
​	​	Term Extension
​	​	​	Amortized Cost Basis	​	% of Total Class of Loans	​	Financial Effect
Residential loans	​	$	36	​	0.001	%	1 loan with 4 months of payment deferrals.
Commercial real estate loans	​	$	411		0.05	%	1 loan with 6 month term extension.
Commercial and industrial loans	​	$	4,679	​	0.18	%	1 loan with payment deferral of 151 months with 50% payments until paid in full; 8 loans with payment deferrals of either 2 or 3 months with $100 monthly payments; 2 loans with payment deferrals of 2 months; 3 loans with term extensions and payment deferrals ranging from 12 to 52 months.
Total	​	$	5,126	​	​	​	​
​	​	​	​	​	​	​	​
​	​	Combination
​	​	​	Amortized Cost Basis	​	% of Total Class of Loans	​	Financial Effect
Commercial and industrial loans	​	$	291	​	0.01	%	4 loans with extensions of loan maturity of 2 and 3 months and payment deferral.
Total	​	$	291	​	​	​	​
​	​	​	​	​	​	​	​
​	​	Total
​	​	​	Amortized Cost Basis	​	% of Total Class of Loans	​	​
Residential loans	​	$	36	​	0.001	%	​
Commercial real estate loans	​	​	411		0.05	%	​
Commercial and industrial loans	​	​	4,970	​	0.19	%	​
Total	​	$	5,417	​	​	​	​
​	​	​	​	​	​	​	​
​	​	June 30, 2024:
​	​	Term Extension
​	​	​	Amortized Cost Basis	​	% of Total Class of Loans	​	Financial Effect
Commercial real estate loans	​	$	12,900		1.30	%	1 loan with term extension of 10 months.
Commercial and industrial loans	​	$	1,269	​	0.04	%	4 loans with various extensions of loan maturity ranging from 3 to 62.5 months. 1 loan with 3-month extension and 3-month forbearance. 1 loan with $100 payments through 3 months.
Total	​	$	14,169	​	​	​	​
​	​	​	​	​	​	​	​
​	​	Combination
​	​	​	Amortized Cost Basis	​	% of Total Class of Loans	​	Financial Effect
Commercial and industrial loans	​	​	7,183	​	0.01	%	4 loans with various extensions of loan maturity ranging from 6 to 19 months and payment deferral. 1 loan with 5 month forbearance followed by interest rate reduction. 1 loan with $100 payments through 3 months with payment deferral.
Total	​	$	7,183	​	​	​	​
​	​	​	​	​	​	​	​
​	​	Total				​	​
​	​	​	Amortized Cost Basis	​	% of Total Class of Loans	​	​
Commercial real estate loans	​	​	12,900		1.30	%	​
Commercial and industrial loans	​	​	8,452	​	0.05	%	​
Total	​	$	21,352	​	​	​	​

​

​ 21

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The following table presents the amortized cost basis of loans that had a payment default during the six-month period ended June 30, 2025 which were modified in the previous twelve-month period of July 1, 2024 to June 30, 2025:

​

​	​	​	​	​	​	​
​	​	June 30, 2025:
​	​	Term Extension
​	​	​	# of Loans Defaulted	​	​	Amortized Cost Basis
Commercial and industrial loans	​	​	2	​	$	66
Total	​	​	2	​	$	66
​	​	​	​	​	​	​
​	​	Combination
​	​	​	# of Loans Defaulted	​	​	Amortized Cost Basis
Commercial and industrial loans	​	​	1	​	$	154
Total	​	​	1	​	$	154
​	​	​	​	​	​	​
​	​	Total
​	​	​	# of Loans Defaulted	​	​	Amortized Cost Basis
Commercial and industrial loans	​	​	3	​	$	220
Total	​	​	3	​	$	220
​	​	​	​	​	​	​

​

None of the loans modified during the twelve-month period of July 1, 2023 to June 30, 2024 subsequently had a payment default during the six-month period ended June 30, 2024.

The following table presents the payment status of our loan modifications made during the previous twelve-month periods ended July 1, 2024 to June 30, 2025 and July 1, 2023 to June 30, 2024, respectively:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	30-89 Days		​	90+ Days		​	​	​	​	​	​
(dollars in thousands)	​	​	Current	​	Past Due		​	Past Due		​	​	Nonaccrual	​	Total
June 30, 2025:		​			​			​			​	​	​	​
Residential loans		$	39	​	$	—	​	$	—	​	$	—	​	$	39
Commercial real estate loans		​	—	​	​	—	​	​	—	​	​	411	​	​	411
Commercial and industrial loans		​	2,069	​	​	—	​	​	—	​	​	8,284	​	​	10,353
Total		$	2,108	​	$	—	​	$	—	​	$	8,695	​	$	10,803
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	30-89 Days		​	90+ Days		​	​	​	​	​	​
(dollars in thousands)	​	​	Current	​	Past Due		​	Past Due		​	​	Nonaccrual	​	Total
June 30, 2024:		​			​			​			​	​	​	​
Residential loans		$	247	​	$	—	​	$	—	​	$	—	​	$	247
Commercial real estate loans		​	13,515	​	​	—	​	​	—	​	​	—	​	​	13,515
Commercial and industrial loans		​	13,635	​	​	—	​	​	—	​	​	8,055	​	​	21,690
Total		$	27,397	​	$	—	​	$	—	​	$	8,055	​	$	35,452

​

​ 22

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

​

NOTE 5: ALLOWANCE FOR CREDIT LOSSES

The Company accounts for ACL related to loans held for investment in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to record an estimate of current expected credit losses (“CECL”) for loans at the time of origination.  The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated balance sheet.

The measurement of the ACL is performed by collectively pooling and evaluating loans with similar risk characteristics. The quantitative CECL model estimates credit losses by applying pool-specific probability of default (“PD”) and loss given default (“LGD”) rates to the expected exposure at default ("EAD") over the contractual life of the loans.  A significant portion of the ACL is calculated and measured on a collective pool basis, representing $7.4 billion or approximately 98.1% of the total blended loans held for investment portfolio as of June 30, 2025.  Pooled loan segments consisted of multifamily, commercial, single-family, non-owner occupied commercial real estate, and construction loans.  The remaining portion of the loan portfolio, representing $121 million or approximately 1.6% of the total blended loan portfolio, consisted of small homogeneous loan portfolios which has its quantitative reserve calculated separately based on historical loss factors for the respective portfolios or, if no historical loss is available, based on peer group historical losses.  These loan portfolios include equipment finance, land, consumer and commercial small balance loans.  In addition, collateral dependent loans totaling $26.2 million or approximately 0.3% of the total blended portfolio are separately valued based on the fair value of the underlying collateral.

As of December 31, 2024, the ACL was calculated and measured on a collective pool basis, representing $7.8 billion or approximately 97.6% of the total blended loans held for investment portfolio. Pooled loan segments consisted of multifamily, commercial, single-family, non-owner occupied commercial real estate, and construction loans. The remaining portion of the loan portfolio, representing $164.7 million or 2.1% of the total blended loan portfolio, consisted of small homogeneous loan portfolios which has its quantitative reserve calculated separately based on historical loss factors for the respective portfolios or, if no historical loss is available, based upon peer group historical losses. These loan portfolios include equipment finance, land, consumer and commercial small balance loans. In addition, collateral dependent loans totaling $27.0 million or 0.3% of the total blended portfolio were separately valued based on the fair value of the underlying collateral.

The measurement also incorporates qualitative components such as internal and external risk factors that may not be adequately assessed in the quantitative model.  Qualitative adjustments primarily relate to segments of the loan portfolio deemed by management to be of a higher-risk profile or other factors where management believes the quantitative component of the ACL model may not be fully reflective of levels deemed adequate in the judgment of management.  Qualitative adjustments may also relate to uncertainty as to future macroeconomic conditions and the related impact on certain loan segments.  Management reviews the need for an appropriate level of quantitative adjustments on a quarterly basis, and as such, the amount and allocation of qualitative adjustments may change in future periods.  Management applies a two-year time horizon in its ACL model at which there is a gradual reversion back to historical loss experience over a two year period.

For purposes of calculating the ACL, the Company has elected to include deferred loan fees and expenses in the loan balance and exclude accrued interest from loan balances. 23

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The following is a rollforward of the allowance for credit losses related to loans held for investment for the following periods:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Provision		​	​	​	​	​	​	​	​	​
​	****	Beginning		****	(Reversal) for		****	​	​	****	​		****	Ending
(dollars in thousands)	​	Balance		​	Credit Losses		​	Charge-offs		​	Recoveries		​	Balance
Three Months Ended June 30, 2025:		​			​		​	​			​			​
Real estate loans:		​			​		​	​			​			​
Residential properties	​	$	6,544	​	$	236	​	$	—	​	$	—	​	$	6,780
Commercial properties	​		5,861	​	****	529	​		—	​		—	​		6,390
Land and construction	​		46	​	****	47	​		—	​		—	​		93
Commercial and industrial loans	​		22,739	​	****	1,680	​		(492)	​		357	​		24,284
Consumer loans	​		10	​	****	3	​		—	​		—	​		13
Total	​	$	35,200	​	$	2,495	​	$	(492)	​	$	357	​	$	37,560
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2025:	​			​			​			​			​
Real estate loans:	​			​			​			​			​
Residential properties	​	$	7,216	​	$	(442)	​	$	—	​	$	6	​	$	6,780
Commercial properties	​		6,683	​	****	(293)	​		—	​		—	​		6,390
Land and construction	​		61	​	****	32	​		—	​		—	​		93
Commercial and industrial loans	​		18,333	​	****	6,284	​		(895)	​		562	​		24,284
Consumer loans	​		9	​	****	4	​		—	​		—	​		13
Total	​	$	32,302	​	$	5,585	​	$	(895)	​	$	568	​	$	37,560
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three Months Ended June 30, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Real estate loans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential properties	​	$	8,374	​	​	639	​	​	—	​	​	—	​	$	9,013
Commercial properties	​	​	4,597	​	​	1,489	​	​	—	​	​	—	​		6,086
Land and construction	​	​	66	​	​	11	​	​	—	​	​	—	​		77
Commercial and industrial loans	​	​	16,251	​	​	(1,930)	​	​	(369)	​	​	152	​		14,104
Consumer loans	​	​	7	​	​	8	​	​	—	​	​	—	​		15
Total	​	$	29,295	​	$	217	​	$	(369)	​	$	152	​	$	29,295
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2024:	​			​			​			​			​
Real estate loans:	​			​			​			​			​
Residential properties	​	$	9,921	​	$	(908)	​	$	—	​	$	—	​	$	9,013
Commercial properties	​		4,148	​		1,938	​		—	​		—	​		6,086
Land and construction	​		332	​		(255)	​		—	​		—	​		77
Commercial and industrial loans	​		14,796	​		(133)	​		(862)	​		303	​		14,104
Consumer loans	​		8	​		6	​		—	​		1	​		15
Total	​	$	29,205	​	$	648	​	$	(862)	​	$	304	​	$	29,295

​

The Company maintained an allowance for unfunded loan commitments totaling $1.7 million and $1.3 million at June 30, 2025 and December 31, 2024, respectively, which is included in accounts payable and other liabilities.  The allowance is calculated based mostly on loss rates for the type of loan/collateral in which the loan commitment relates with a drawdown probability applied to the available credit balance based on utilization rates for the prior year.

​ 24

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The Company’s primary regulatory agencies periodically review the allowance for credit losses and such agencies may require the Company to recognize additions to the allowance based on information and factors available to them at the time of their examinations.  Accordingly, no assurance can be given that the Company will not recognize additional provisions for credit losses with respect to the loan portfolio.

​

A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral.  Collateral dependent loans are evaluated individually to determine expected credit losses and any ACL allocation is determined based upon the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs (if applicable).  The following table presents the amortized cost basis of collateral dependent loans and the related ACL allocated to these loans as of the dates indicated:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	Equipment/		​	​	​	​	​	ACL
(dollars in thousands)	​	Real Estate		​	Cash		​	Receivables		​	Total		​	​	Allocation
June 30, 2025:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans secured by real estate:		​			​		​	​			​		​	​	​
Residential properties	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Multifamily	​	$	1,449	​	$	—	​	$	—	​	$	1,449	​	$	—
Single-family	​	​	15,967	​	​	—	​	​	—	​	​	15,967	​	​	—
Commercial real estate loans	​	​	5,421	​	​	—	​	​	—	​	​	5,421	​	​	—
Commercial loans	​		8	​		—	​		3,339	​		3,347	​		509
Total	​	$	22,845	​	$	—	​	$	3,339	​	$	26,184	​	$	509
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans secured by real estate:		​			​		​	​			​		​	​	​
Residential properties	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Multifamily	​	$	2,802	​	$	—	​	$	—	​	$	2,802	​	$	—
Single-family	​	​	15,856	​	​	—	​	​	—	​	​	15,856	​	​	—
Commercial real estate loans	​	​	4,497	​	​	—	​	​	—	​	​	4,497	​	​	—
Commercial loans	​		—	​		—	​		3,935	​		3,935	​		697
Total	​	$	23,155	​	$	—	​	$	3,935	​	$	27,090	​	$	697

​

​ 25

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

Credit Risk Management

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as loans secured by multifamily or commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Pass: Loans classified as pass are strong credits with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions above and smaller, homogeneous loans not assessed on an individual basis. 26

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

The following tables present risk categories of loans held for investment based on year of origination, and includes gross charge-offs in accordance with ASU 2022-02 as of the dates presented:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	Revolving		​	​	​
(dollars in thousands)		2025			2024			2023			2022			2021			Prior			Loans			Total
June 30, 2025:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans secured by real estate:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Multifamily	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	60,610		$	87,402	​	$	534		$	1,679,791		$	731,151	​	$	488,825		$	—		$	3,048,313
Special mention	​	​	—	​	​	—	​	​	—	​	​	21,402	​	​	48,611	​	​	54,576	​	​	—	​	​	124,589
Substandard	​	​	—	​	​	—	​	​	—	​	​	5,998	​	​	14,601	​	​	100,410	​	​	—	​	​	121,009
Total		$	60,610		$	87,402	​	$	534		$	1,707,191		$	794,363	​	$	643,811		$	—		$	3,293,911
Gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Single-family	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	618	​	$	5,400	​	$	9,400		$	240,404		$	247,346	​	$	267,671		$	37,121		$	807,960
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	526	​	​	526
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	17,196	​	​	158	​	​	17,354
Total		$	618		$	5,400	​	$	9,400		$	240,404		$	247,346	​	$	284,867		$	37,805		$	825,840
Gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial real estate	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	—		$	3,123	​	$	2,377		$	210,730		$	101,932	​	$	467,033		$	—		$	785,195
Special mention	​	​	—	​	​	—	​	​	—	​	​	7,722	​	​	1,171	​	​	12,941	​	​	—	​	​	21,834
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	3,118	​	​	8,195	​	​	—	​	​	11,313
Total		$	—		$	3,123	​	$	2,377		$	218,452		$	106,221	​	$	488,169		$	—		$	818,342
Gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Land and construction	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	—		$	122	​	$	—	​	$	33,542		$	4,373	​	$	5,136		$	—		$	43,173
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	144	​	​	—	​	​	144
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total		$	—		$	122	​	$	—		$	33,542		$	4,373	​	$	5,280		$	—		$	43,317
Gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	3,334		$	63,857	​	$	106,996	​	$	907,490		$	169,743	​	$	99,280		$	1,083,838		$	2,434,538
Special mention	​	​	—	​	​	627	​	​	4,465	​	​	9,719	​	​	52,670	​	​	657	​	​	9,713	​	​	77,851
Substandard	​	​	1,575	​	​	2,438	​	​	40,037	​	​	23	​	​	296	​	​	2,226	​	​	6,380	​	​	52,975
Total		$	4,909		$	66,922	​	$	151,498		$	917,232		$	222,709	​	$	102,163		$	1,099,931		$	2,565,364
Gross charge-offs	​	$	—	​	$	32	​	$	352	​	$	290	​	$	210	​	$	11	​	$	—	​	$	895
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Consumer	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	70		$	—	​	$	591		$	—		$	102	​	$	44		$	742		$	1,549
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total		$	70		$	—	​	$	591		$	—		$	102	​	$	44		$	742		$	1,549
Gross charge-offs	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total loans	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	64,632		$	159,904	​	$	119,898		$	3,071,957		$	1,254,647	​	$	1,327,989		$	1,121,701		$	7,120,728
Special mention	​	​	—	​	​	627	​	​	4,465	​	​	38,843	​	​	102,452	​	​	68,318	​	​	10,239	​	​	224,944
Substandard	​	​	1,575	​	​	2,438	​	​	40,037	​	​	6,021	​	​	18,015	​	​	128,027	​	​	6,538	​	​	202,651
Total		$	66,207		$	162,969	​	$	164,400		$	3,116,821		$	1,375,114	​	$	1,524,334		$	1,138,478		$	7,548,323
Gross charge-offs	​	$	—	​	$	32	​	$	352	​	$	290	​	$	210	​	$	11	​	$	—	​	$	895

​ 27

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	Revolving		​	​	​
(dollars in thousands)		2024			2023			2022			2021			2020			Prior			Loans			Total
December 31, 2024:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Loans secured by real estate:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Multifamily	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	101,311		$	539	​	$	1,701,974		$	749,864		$	369,887	​	$	241,935		$	—		$	3,165,510
Special mention	​	​	—	​	​	—	​	​	—	​	​	47,090	​	​	18,572	​	​	8,623	​	​	—	​	​	74,285
Substandard	​	​	—	​	​	—	​	​	13,231	​	​	—	​	​	18,234	​	​	76,185	​	​	—	​	​	107,650
Total		$	101,311		$	539	​	$	1,715,205		$	796,954		$	406,693	​	$	326,743		$	—		$	3,347,445
Gross charge-offs	​	$	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	657	​	​	—	​	$	657
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Single-family	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	5,410		$	9,441	​	$	247,252		$	255,096		$	90,422	​	$	203,116		$	44,580		$	855,317
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	510	​	​	510
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	21,104	​	​	25	​	​	21,129
Total		$	5,410		$	9,441	​	$	247,252		$	255,096		$	90,422	​	$	224,220		$	45,115		$	876,956
Gross charge-offs	​	$	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial real estate	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	3,784		$	2,398	​	$	217,827		$	115,582		$	136,414	​	$	378,101		$	—		$	854,106
Special mention	​	​	—	​	​	—	​	​	1,637	​	​	1,299	​	​	7,966	​	​	4,795	​	​	—	​	​	15,697
Substandard	​	​	—	​	​	12,900	​	​	—	​	​	—	​	​	845	​	​	20,133	​	​	—	​	​	33,878
Total		$	3,784		$	15,298	​	$	219,464		$	116,881		$	145,225	​	$	403,029		$	—		$	903,681
Gross charge-offs	​	$	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	964	​	​	—	​	$	964
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Land and construction	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	125		$	24,970	​	$	32,877		$	4,444		$	1,035	​	$	5,683		$	—		$	69,134
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total		$	125		$	24,970	​	$	32,877		$	4,444		$	1,035	​	$	5,683		$	—		$	69,134
Gross charge-offs	​	$	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	$	—
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	66,699		$	151,580	​	$	972,111		$	234,062		$	88,657	​	$	27,220		$	1,147,464		$	2,687,793
Special mention	​	​	690	​	​	3,400	​	​	9,430	​	​	24,087	​	​	—	​	​	605	​	​	7,602	​	​	45,814
Substandard	​	​	2,593	​	​	31	​	​	28	​	​	422	​	​	12	​	​	2,218	​	​	4,103	​	​	9,407
Total		$	69,982		$	155,011	​	$	981,569		$	258,571		$	88,669	​	$	30,043		$	1,159,169		$	2,743,014
Gross charge-offs	​	$	572	​	​	622	​	​	1,310	​	​	795	​	​	3,437	​	​	4,530	​	​	5,504	​	$	16,770
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Consumer	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	89		$	5	​	$	—		$	107		$	—	​	$	49		$	913		$	1,163
Special mention	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Substandard	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—
Total		$	89		$	5	​	$	—		$	107		$	—	​	$	49		$	913		$	1,163
Gross charge-offs	​	$	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	​	23	​	$	23
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Total loans	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Pass		$	177,418		$	188,933	​	$	3,172,041		$	1,359,155		$	686,415	​	$	856,104		$	1,192,957		$	7,633,023
Special mention	​	​	690	​	​	3,400	​	​	11,067	​	​	72,476	​	​	26,538	​	​	14,023	​	​	8,112	​	​	136,306
Substandard	​	​	2,593	​	​	12,931	​	​	13,259	​	​	422	​	​	19,091	​	​	119,640	​	​	4,128	​	​	172,064
Total		$	180,701		$	205,264	​	$	3,196,367		$	1,432,053		$	732,044	​	$	989,767		$	1,205,197		$	7,941,393
Gross charge-offs	​	$	572	​	​	622	​	​	1,310	​	​	795	​	​	3,437	​	​	6,151	​	​	5,527	​	$	18,414

​

​ 28

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

NOTE 6: CORE DEPOSIT INTANGIBLES

Core deposit intangibles are intangible assets having definite useful lives arising from whole bank acquisitions.  Core deposit intangibles are amortized on an accelerated method over their estimated useful lives, ranging from 7 to 10 years.  At June 30, 2025 and December 31, 2024, core deposit intangible assets totaled $2.9 million and $3.6 million, respectively, and we recognized $611 thousand and $756 thousand in core deposit intangible amortization expense for the six-month periods ended June 30, 2025 and June 30, 2024, respectively.

​

NOTE 7: DERIVATIVE ASSETS AND LIABILITIES

On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty to hedge against our exposure to changes in interest rates as part of our overall interest rate risk management strategy.  On the date the agreement was entered into, the derivative was designated as a cash flow hedge, as it was undertaken to manage the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  At inception and on a quarterly basis thereafter, an assessment is performed to determine the effectiveness of the derivative at reducing the risk associated with the hedged exposure.  A cash flow hedge designated as highly effective is carried at fair value on the balance sheet with the portion of change in fair value of the cash flow hedge considered highly effective recognized in accumulated other comprehensive income (“AOCI”).  If the cash flow hedge becomes ineffective, the portion of the change in fair value of the cash flow hedge considered ineffective is reclassified from AOCI to earnings.

The hedging instrument is a pay-fixed, receive variable interest rate swap agreement having a beginning notional amount of $450 million.  The Bank pays quarterly interest at a fixed-rate of 3.583% and receives quarterly interest payments calculated at the Daily Simple SOFR over the same period.  The original term of the agreement is five years, expiring on February 1, 2029.  On March 28, 2024, the original hedge position notional amount was reduced by $100 million, and a corresponding amount of the hedged item was simultaneously de-designated, resulting in the recording of a gain of $1.7 million, classified as capital markets activities on the accompanying statements of operations.

At June 30, 2025, the fair value of the cash flow hedge was ($2.9) million and is classified as derivative liabilities with a corresponding amount classified as a component of AOCI on the accompanying balance sheet.  At December 31, 2024, the fair value of the cash flow hedge was $5.1 million and is classified as derivative assets with a corresponding amount classified as a component of AOCI on the accompanying balance sheet.

On January 29, 2025, the Bank entered into an interest rate swap agreement with an institutional counterparty to hedge the interest rate risk to earnings associated with the fair value changes in the valuation allowance of loans held for sale.  The hedging instrument is a pay-fixed, receive-variable amortizing interest rate swap agreement with a notional amount of $1.0 billion.  In the second quarter of 2025, the Company partially terminated $625 million notional amount in conjunction with the sale of $858 million principal balance of multifamily loans held for sale, resulting in $375 million notional amount remaining and recognition of a $7.1 million realized loss on partial termination, which is included as a component of capital markets activity on the consolidated statements of operations.  The Bank pays quarterly interest at a fixed-rate of 4.03% and receives quarterly interest payments calculated at the Daily Simple SOFR over the same period.  The term of the agreement is four years, expiring on January 29, 2029.  Since the fair value changes of the valuation allowance for loans held for sale already flow through earnings, the Bank has elected to not designate the hedge for hedge accounting to ensure that changes in the derivative’s value are reported in current earnings each period.

At June 30, 2025, the fair value of the hedge was ($5.8) million and is classified as derivative liabilities on the accompanying balance sheet. 29

Table of Contents

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

NOTE 8: LOAN SALES AND MORTGAGE SERVICING RIGHTS

The Company has retained servicing rights for the majority of the loans sold and recognized mortgage servicing rights in connection with multifamily loan sale transactions that have occurred in the current and prior years.  As of June 30, 2025, mortgage servicing rights totaled $7.9 million with no valuation allowance.  At December 31, 2024, mortgage servicing rights totaled $6.4 million with no valuation allowance.  Mortgage servicing rights are classified as a component of other assets in the accompanying consolidated balance sheets. The amount of loans serviced for others totaled $2.1 billion and $1.3 billion at June 30, 2025 and December 31, 2024, respectively.  Servicing fees collected for the six-month periods ended June 30, 2025 and 2024 totaled $2.1 million and $1.2 million, respectively.

There were no loan sale or purchase transactions that resulted in the recognition of mortgage servicing rights in the six-month period ended June 30, 2024.

​

NOTE 9: DEPOSITS

The following table summarizes the outstanding balance of deposits and average rates paid thereon as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	June 30, 2025				​	December 31, 2024				​	​
​	​	​	​	​	Weighted	​	​	​	​	Weighted	​	​
(dollars in thousands)	​	Amount		​	Average Rate	​	Amount		​	Average Rate	​	​
Demand deposits:		​					​					​
Noninterest-bearing	​	$	1,467,203		—	​	$	1,956,628		—	​	​
Interest-bearing	​		1,672,287		2.99	%		1,995,397		3.29	%	​
Money market and savings	​		3,604,909		3.55	%		3,524,801		3.60	%	​
Certificates of deposit	​		1,849,294		4.50	%		2,393,453		4.72	%	​
Total	​	$	8,593,693		3.04	%	$	9,870,279		3.09	%	​

​

The following table provides the remaining maturities of certificate of deposit accounts of greater than $250,000 as of:

​

​	​	​	​	​	​	​
​	​	June 30, 2025		​	December 31, 2024
Large Denomination Certificates of Deposit Maturity Distribution	​	(dollars in thousands)
​	​	​	​	​	​	​
3 months or less		$	65,181	​	$	76,691
Over 3 months through 6 months	​	​	59,578	​		44,619
Over 6 months through 12 months	​	​	76,369	​		92,960
Over 12 months	​	​	541	​		13,417
Total	​	$	201,669	​	$	227,687

​

Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 13.4% and 19.7% of our total deposits as of June 30, 2025 and December 31, 2024, respectively.  The composition of our large depositor relationships includes mortgage servicing clients who have maintained long-term depository relationships with us. The balances in these depository accounts are subject to seasonal inflows and outflows, common in the mortgage servicing industry.

Accrued interest payable on deposits, which is included in accounts payable and other liabilities, was $18.3 million and $27.7 million at June 30, 2025 and December 31, 2024, respectively. 30

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

NOTE 10: BORROWINGS

The Bank has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”), and other institutions.  At June, 2025, our borrowings consisted of $1.0 billion in FHLB putable advances at the Bank, $650 million of FHLB term advances at the Bank, and $19 million in repurchase agreements at the Bank.  At December 31, 2024, our borrowings consisted of $1.0 billion in FHLB putable advances at the Bank, $400 million of FHLB term advances at the Bank, and $25 million in repurchase agreements at the Bank.

FHLB Advances

The FHLB putable advances outstanding at June 30, 2025 had a weighted average remaining life of 5.75 years and a weighted average interest rate of 3.74%. The putable advances can be called quarterly until maturity at the option of the FHLB at various put dates. $300 million attained its first quarterly put date in March 2025 and $700 million attained its first quarterly put date in June 2025, for which none of the puts were exercised.

The FHLB term advances outstanding at June 30, 2025 consist of the following:

​

$250 million in a one-month fixed-rate advance maturing on July 7, 2025 at an interest rate of 4.55%.

$300 million in a three-year fixed-rate advance maturing on May 28, 2027 at an interest rate of 4.95%.

$100 million in a five-year fixed-rate advance maturing on June 28, 2028 at an interest rate of 4.21%.

​

FHLB advances are collateralized primarily by loans secured by single-family, multifamily, and commercial real estate properties with a market value of $3.1 billion as of June 30, 2025.  The Bank’s total unused borrowing capacity from the FHLB as of June 30, 2025 was $612 million.  As of June 30, 2025, the Bank had in place $126 million in letters of credit from the FHLB, $116 million of which is used as collateral for the 2025 and 2024 multifamily loan sale/securitizations, and $10 million of which is used as collateral for public fund deposits.

The FHLB putable advances outstanding at December 31, 2024 had a weighted average remaining life of 6.25 years and a weighted average interest rate of 3.74%. The FHLB term advances outstanding at December 31, 2024 consisted of: $300 million in a three-year fixed-rate advance maturing on May 28, 2027 at an interest rate of 4.95%, and $100 million in a five-year fixed-rate advance maturing on June 28, 2028 at an interest rate of 4.21%. FHLB advances outstanding at December 31, 2024 were collateralized primarily by loans secured by single-family, multifamily, and commercial real estate properties with a market value of $4.1 billion. The Bank’s total unused borrowing capacity from the FHLB at December 31, 2024 was $1.7 billion. The Bank had in place $69 million in letters of credit from the FHLB, $59 million of which is used as collateral for the 2024 multifamily loan sale/securitization, and $10 million of which is used as collateral for public fund deposits.

Federal Reserve Bank Borrowings

The Bank has a secured line of credit with the Federal Reserve Bank including the secured borrowing capacity through the Federal Reserve Bank’s Discount Window, and Borrower-in-Custody (“BIC”) programs.  At June 30, 2025, and December 31, 2024, the Bank did not have any borrowings outstanding under any of the Federal Reserve Bank programs. The Bank had secured unused borrowing capacity under this agreement of $1.3 billion and $1.1 billion as of June 30, 2025 and December 31, 2024, respectively. 31

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

Uncommitted Credit Facilities:

The Bank has a total of $240 million in borrowing capacity through unsecured federal funds lines, ranging in size from $20 million to $100 million, with six correspondent financial institutions. At June 30, 2025 and December 31, 2024, there were no balances outstanding under these arrangements.

Holding Company Line of Credit:

FFI has entered into a loan agreement with an unaffiliated lender that provides for a revolving line of credit for up to $20 million maturing in June 2026. The loan bears an interest rate of Prime rate, plus 50 basis points (0.50%). FFI’s obligations under the loan agreement are secured by, among other things, a pledge of all of its equity in the Bank. As of June 30, 2025 and December 31, 2024, there were no balances outstanding under this agreement.

Repurchase Agreements:

The repurchase agreements are treated as overnight borrowings with the obligations to repurchase securities sold reflected as a liability. The investment securities underlying these agreements remain in the Company’s securities AFS portfolio. As of June 30, 2025 and December 31, 2024, the repurchase agreements are collateralized by investment securities with a fair value of approximately $73.6 million and $77.3 million, respectively.

NOTE 11: SUBORDINATED DEBT

At June 30, 2025 and December 31, 2024, FFI had two issuances of subordinated notes outstanding with an aggregate carrying value of $173 million.  At June 30, 2025 and December 31, 2024, FFI was in compliance with all covenants under its subordinated debt agreements.  The following table summarizes the outstanding subordinated notes as of the dates indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Current	​	​	Current		​	​	Carrying Value
​	​	Stated	​	Interest	​	​	Principal		​	​	June 30,	​	​	December 31,
(dollars in thousands)	​	Maturity	​	Rate	​	​	Balance		​	2025		​	2024
Subordinated notes					​	​	​			​	​	​	​
Subordinated notes due 2032, 3.50% per annum until February 1, 2027, 3-month SOFR + 2.04% thereafter.	​	February 1, 2032		3.50	%	​	$	150,000		$	148,418	​	$	148,298
Subordinated notes due 2030, 6.0% per annum until June 30, 2025, 3-month SOFR + 5.90% thereafter.	​	June 30, 2030		6.00	%	​		24,165		​	25,072	​	​	25,161
Total	​	​		​	​	​	$	174,165		$	173,490	​	$	173,459

​

​

NOTE 12: INCOME TAXES

For the six-month period ended June 30, 2025, the Company recorded an income tax benefit of $3.8 million which generated an effective tax rate of 82.8%.  For the six-month period ended June 30, 2024, the Company recorded an income tax benefit of $1.3 million and had an effective tax rate of -52.3%.  The changes in the effective tax rate were predominately due to the changes in pretax income, as well as the impact of tax-exempt interest income and tax benefits associated with low-income housing tax credit investments. The effective tax rates differ from the combined federal and state statutory rates for the Company of 27.8% and 28.2% for the six-month periods ended June 30, 2025 and June 30, 2024 respectively due primarily to various permanent tax differences, including tax-exempt income, tax credits from low-income housing tax credit investments, and other items that impact our effective tax rate.

The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. The Company has experienced cumulative losses over the past three years, primarily due to 32

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

the significant increase in market rates experienced since 2022 and the mark-to-market adjustment related to the transfer of approximately $1.9 billion of multifamily loans from loans held for investment to loans held for sale in the third quarter of 2024. However, the Company has not recorded a valuation allowance against its deferred tax assets, as it has implemented a tax planning strategy that is expected to generate sufficient taxable income to realize these assets. This strategy includes dispositioning the aforementioned multifamily loans transferred to loans held for sale. Removing these relatively low-yielding assets from the balance sheet will improve profitability, either through the reduction of high-cost funding or reinvestment of proceeds into higher-yielding assets. Management has evaluated the feasibility of this strategy under current tax laws and considers it both prudent and objectively verifiable. The Company will continue to monitor its performance and reassess the need for a valuation allowance if necessary.

​

Deferred tax assets totaled $87.0 million and $76.7 million at June 30, 2025 and December 31, 2024, respectively.

​

NOTE 13: SHAREHOLDERS’ EQUITY

FFI is a holding company and does not have any direct operating activities. Any future cash flow needs of FFI are expected to be met by its existing cash and cash equivalents and dividends from its subsidiaries. The Bank is subject to various laws and regulations that limit the amount of dividends that a bank can pay without obtaining prior approval from bank regulators. Additionally, under the terms of the holding company line of credit agreement, FFI may only declare and pay a dividend if the total amount of dividends and stock repurchases does not exceed 50% of FFI’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the current twelve-month period.  FFI’s cash and cash equivalents totaled $7.7 million at June 30, 2025 and December 31, 2024.

​

On July 8, 2024, the Company raised approximately $228 million of gross proceeds in an equity capital raise (“July 2024 Capital Raise”) with certain investors. In the July 2024 Capital Raise, the Company sold and issued to the investors: (a) 11,308,676 shares of common stock at a purchase price per share of $4.10 (on July 1, 2024, the day before the announcement of the July 2024 Capital Raise, the closing price of the common stock was $6.47); (b) 29,811 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series A Noncumulative Convertible Preferred Stock (the “Series A Preferred Stock”), at a price per share of $4,100, and each share of which is convertible into 1,000 shares of common stock, and all of which shares of Series A Preferred Stock represent the right (on an as converted basis) to receive approximately 29,811,000 shares of common stock; (c) 14,490 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series B Noncumulative Preferred Stock (the “Series B Preferred Stock”), at a price per share of $4,100, each share of which is convertible into 1,000 shares of common stock, and all of which shares of Series B Preferred Stock represent the right (on an as converted basis) to receive approximately 14,490,000 shares of common stock; and (d) Issued Warrants, affording the holder thereof the right, until the seven-year anniversary of the issuance of such Issued Warrant, to purchase for $5,125 per share, 22,239 shares of Series C non-voting, common-equivalent preferred stock (the “Series C NVCE Stock”). Each share of Series C NVCE Stock is convertible into 1,000 shares of common stock, all of which shares of Series C NVCE Stock, upon issuance, will represent the right (on an as converted basis) to receive approximately 22,239,000 shares of common stock. The investors were subject to a 180-day lock-up period with respect to the securities purchased. Net proceeds from the July 2024 Capital Raise of $214.5 million, consisting of the $228 million gross proceeds less issuance costs of $13.5 million, were allocated amongst the newly issued equity instruments under the relative fair value method. Under the relative fair value method, each equity instrument was allocated a portion of the net proceeds based on the proportion of its fair value to the sum of the fair values of all of the equity instruments covered in the allocation.

​

On September 30, 2024, stockholders approved and adopted an amendment to the Company’s certificate of incorporation, as amended, to increase the number of authorized shares of common stock from 100,000,000 shares to 200,000,000 shares and also approved the issuance of shares of common stock in connection with the July 2024 Capital Raise pursuant to NYSE listing rules. As a result of these approvals, all of the issued and outstanding shares of the Series B Preferred Stock automatically converted into shares of common stock as of the close of business on October 2, 2024, in accordance with the terms of the Certificate of Designation for the Series B Preferred Stock. In addition, the quarterly non- 33

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

cumulative cash dividend (annual rate of 13%) and liquidation preference rights of the Series A Preferred Stock ceased to apply. Shares of Series A Preferred Stock (a) are now entitled to receive dividends at the same time and on the same terms as shares of common stock in accordance with the Certificate of Designation for the Series A Preferred Stock, and (b) rank as equal to shares of common stock in any liquidation of the Company. Furthermore, the Company will not be required to issue any cash-settled warrants to the investors who participated in the July 2024 Capital Raise. At June 30, 2025 and December 31, 2024, there were no declared dividends outstanding with respect to the Series A Preferred Stock.

​

​

NOTE 14: EARNINGS PER SHARE

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if contracts to issue common stock were exercised or converted into common stock that would then share in earnings. As part of the aforementioned July 2024 Capital Raise, the Company issued warrants (See Note 13: Shareholders’ Equity) which are considered for potential dilution. In addition to the warrants, other contingent shares issuable include restricted stock units issued by the Company under its equity incentive plans.

​

For the three-month period ended June 30, 2025, the average common share price was below the $5.125 per share exercise price (on an as-converted basis) of the warrants.  For the six-month period ended June 30, 2025, the average common share price was above the $5.125 per share exercise price (on an as-converted basis) of the warrants.  As the average common share price was above the $5.125 per share exercise price (on an as-converted basis) of the warrants for the six-month period June 30, 2025, the warrants would have been included in the dilutive share count and diluted earnings per share for the six-month period ended June 30, 2025, if the Company had positive earnings for the period.  In addition, 8,825 and 11,696 in restricted stock units are included in diluted shares for the three-month and six-month periods ended of June 30, 2024, respectively.

​

There were no stock options outstanding as of June 30, 2025 and June 30, 2024, respectively.

​

The following table sets forth the Company’s unaudited earnings per share calculations for the three-month and six-month periods ended June 30:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Three Months Ended					​	Three Months Ended					​
​	​	June 30, 2025					​	June 30, 2024					​
(dollars in thousands, except per share amounts)	​	Basic		​	Diluted		​	Basic		​	Diluted		​
Net (loss) income		$	(7,690)		$	(7,690)		$	3,085		$	3,085	​
Weighted average basic common shares outstanding	​		82,386,071	​		82,386,071	​		56,523,640	​		56,523,640	​
Dilutive effect of options, restricted stock, warrants, and contingent shares issuable	​	​	​	​	​	—	​	​	​	​	​	8,825	​
Diluted common shares outstanding	​			​		82,386,071	​			​		56,532,465	​
Net (loss) income per share	​	$	(0.09)	​	$	(0.09)	​	$	0.05	​	$	0.05	​

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Six Months Ended					​	Six Months Ended
​	​	June 30, 2025					​	June 30, 2024
(dollars in thousands, except share and per share amounts)	​	Basic		​	Diluted		​	Basic		​	Diluted
Net (loss) income		$	(794)		$	(794)		$	3,878		$	3,878
Weighted average basic common shares outstanding	​		82,379,878	​		82,379,878	​		56,504,148	​		56,504,148
Dilutive effect of options, restricted stock, warrants, and contingent shares issuable	​	​	​	​	​	—	​	​	​	​	​	11,696
Diluted common shares outstanding	​			​		82,379,878	​			​		56,515,844
Net (loss) income per share	​	$	(0.01)	​	$	(0.01)	​	$	0.07	​	$	0.07

​

​

​ 34

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

NOTE 15: SEGMENT REPORTING

For the three and six months ended June 30, 2025 and 2024, the Company had two reportable business segments: Banking (FFB) and Wealth Management (FFA). The results of FFI and any elimination entries are included in the column labeled Other. The reportable segments are determined by products and services offered and the corporate structure.  Business segment earnings before taxes are the primary measure of the segment’s performance as evaluated by management.  Business segment earnings before taxes include direct revenue and expenses of the segment as well as corporate and inter-company cost allocations.  Allocations of corporate expenses, such as finance and accounting, data processing and human resources are calculated based on estimated activity or usage levels.  The management accounting process measures the performance of the operating segments based on the Company’s management structure and is not necessarily comparable with similar information for other financial services companies.  If the management structures and/or the allocation process changes, allocations, transfers, and assignments may change.

In accordance with ASU 2023-07 “*Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”,*the significant expenses shown in the tables below are those that are regularly provided to the chief operating decision maker (“CODM”) who regularly uses them, along with other information in assessing the segments’ performance and in decisions regarding the allocation of resources.  With respect to ASU 2023-07, the CODM for the Company is the 35

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

Chief Executive Officer.  The following tables show key operating results for each of our business segments used to arrive at our consolidated totals for the following periods:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​	****	Wealth		****	​	​	****	​	​
(dollars in thousands)	​	Banking		​	Management		​	Other			Total
Three Months Ended June 30, 2025:		​			​			​			​
Interest income	​	$	137,125	​	$	—	​	$	—	​	$	137,125
Interest expense	​		85,338	​		—	​		1,705	​		87,043
Net interest income	​		51,787	​		—	​		(1,705)	​		50,082
Provision for credit losses	​		2,366	​		—	​		—	​		2,366
Noninterest income	​		(5,384)	​		7,077	​		(355)	​		1,338
Noninterest expense	​	​	​	​	​	​	​		​	​		​
Compensation and benefits	​	​	17,517	​	​	5,124	​	​	249	​	​	22,890
Customer service costs	​	​	12,983	​	​	—	​	​	—	​	​	12,983
Professional services and marketing costs	​	​	5,844	​	​	928	​	​	466	​	​	7,238
Other	​	​	15,446	​	​	654	​	​	713	​	​	16,813
(Loss) income before income taxes	​	​	(7,753)	​	​	371	​	​	(3,488)	​	​	(10,870)
Income tax (benefit) expense	​	​	(2,336)	​	​	107	​	​	(951)	​	​	(3,180)
Net (loss) income	​	$	(5,417)	​	$	264	​	$	(2,537)	​	$	(7,690)
​	​	​	​	​	​	​	​	​	​	​	​	​
Three Months Ended June 30, 2024:	​			​			​			​
Interest income	​	$	150,914	​	$	—	​	$	—	​	$	150,914
Interest expense	​		105,380	​		—	​		1,705	​		107,085
Net interest income	​		45,534	​		—	​		(1,705)	​		43,829
Provision (reversal) for credit losses	​		(806)	​		—	​		—	​		(806)
Noninterest income	​		6,241	​		7,790	​		(373)	​		13,658
Noninterest expense	​		​	​		​	​		​	​		​
Compensation and benefits	​	​	14,821	​	​	4,079	​	​	195	​	​	19,095
Customer service costs	​	​	16,104	​	​	—	​	​	—	​	​	16,104
Professional services and marketing costs	​	​	2,656	​	​	926	​	​	85	​	​	3,667
Other	​	​	15,720	​	​	679	​	​	364	​	​	16,763
Income (loss) before income taxes	​	​	3,280	​	​	2,106	​	​	(2,722)	​	​	2,664
Income tax (benefit) expense	​	​	(255)	​	​	594	​	​	(760)	​	​	(421)
Net income (loss)	​	$	3,535	​	$	1,512	​	$	(1,962)	​	$	3,085

​ 36

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FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Six Months Ended June 30, 2025 - UNAUDITED

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​	****	Wealth		****	​	​	****	​	​
(dollars in thousands)	​	Banking		​	Management		​	Other			Total
Six Months Ended June 30, 2025:		​			​			​			​
Interest income	​	$	278,867	​	$	—	​	$	—	​	$	278,867
Interest expense	​		173,591	​		—	​		3,395	​		176,986
Net interest income	​		105,276	​		—	​		(3,395)	​		101,881
Provision for credit losses	​		5,783	​		—	​		—	​		5,783
Noninterest income	​		7,026	​		14,626	​		(712)	​		20,940
Noninterest expense	​		​	​	​	​	​	​	​	​	​	​
Compensation and benefits	​	​	38,343	​	​	10,846	​	​	(1,191)	​	​	47,998
Customer service costs	​	​	28,034	​	​	—	​	​	—	​	​	28,034
Professional services and marketing costs	​	​	10,339	​	​	2,037	​	​	769	​	​	13,145
Other	​	​	30,200	​		1,278	​		990	​		32,468
(Loss) income before income taxes	​	​	(397)	​	​	465	​	​	(4,675)	​	​	(4,607)
Income tax expense (benefit)	​	​	(2,709)	​	​	146	​	​	(1,250)	​	​	(3,813)
Net income (loss)	​	$	2,312	​	$	319	​	$	(3,425)	​	$	(794)
​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2024:	​			​			​			​
Interest income	​	$	301,367	​	$	—	​	$	—	​	$	301,367
Interest expense	​		215,742	​		—	​		3,410	​		219,152
Net interest income	​		85,625	​		—	​		(3,410)	​		82,215
Provision (reversal) for credit losses	​		(229)	​		—	​		—	​		(229)
Noninterest income	​		11,924	​		15,139	​		(722)	​		26,341
Noninterest expense	​	​	​	​	​	​	​	​	​	​	​	​
Compensation and benefits	​	​	29,993	​	​	8,174	​	​	335	​	​	38,502
Customer service costs	​	​	26,842	​	​	—	​	​	—	​	​	26,842
Professional services and marketing costs	​	​	5,188	​	​	1,827	​	​	42	​	​	7,057
Other	​	​	31,818	​	​	1,359	​	​	660	​	​	33,837
Income (loss) before income taxes	​	​	3,937	​	​	3,779	​	​	(5,169)	​	​	2,547
Income tax (benefit) expense	​	​	(966)	​	​	1,081	​	​	(1,446)	​	​	(1,331)
Net income (loss)	​	$	4,903	​	$	2,698	​	$	(3,723)	​	$	3,878

​

​

​

​

​

​ 37

Table of Contents ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to facilitate the understanding and assessment of significant changes and trends in our businesses that accounted for the changes in our results of operations in the three and six months ended June 30, 2025 as compared to our results of operations in the three and six months ended June 30, 2024; and our financial condition at June 30, 2025 as compared to our financial condition at December 31, 2024. This discussion and analysis is based on and should be read in conjunction with our consolidated financial statements and the accompanying notes thereto contained elsewhere in this report and our audited consolidated financial statements for the year ended December 31, 2024, and the notes thereto, which are set forth in Item 8 of our Annual Report on Form 10-K which we filed with the Securities and Exchange Commission (“SEC”) on March 17, 2025.

Forward-Looking Statements

Statements contained in this report that are not historical facts or that discuss our expectations, beliefs or views regarding our future financial performance or future financial condition, or financial or other trends in our business or in the markets in which we operate, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Often, they include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Such forward-looking statements are based on current information that is available to us, and on assumptions that we make, about future events or economic or financial conditions or trends over which we do not have control. In addition, our businesses and the markets in which we operate are subject to a number of risks and uncertainties. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this report and could cause us to make changes to our future plans.

The principal risks and uncertainties to which our businesses are subject are discussed in this Item 2 and under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024. Therefore, you are urged to read not only the information contained in this Item 2, but also the risk factors and other cautionary information contained under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, which qualify the forward-looking statements contained in this report.

Also, our actual results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements contained in this report and not to make predictions about our future financial performance based solely on our historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this report or in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, except as may otherwise be required by applicable law or government regulations.

​ 38

Table of Contents Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP and accounting practices in the banking industry. Certain of those accounting policies are considered critical accounting policies because they require us to make estimates and assumptions regarding circumstances or trends that could materially affect the value of those assets, such as economic conditions or trends that could impact our ability to fully collect our loans or ultimately realize the carrying value of certain of our other assets. Those estimates and assumptions are made based on current information available to us regarding those economic conditions or trends or other circumstances. If changes were to occur in the events, trends or other circumstances on which our estimates or assumptions were based, or other unanticipated events were to occur that might affect our operations, we may be required under GAAP to adjust our earlier estimates and to reduce the carrying values of the affected assets on our balance sheet, generally by means of charges against income, which could also affect our results of operations in the fiscal periods when those charges are recognized. Management has identified our most critical accounting policies and accounting estimates as: allowance for credit losses – investment securities, allowance for credit losses – loans, and deferred income taxes.

Allowance for Credit Losses – Investment Securities – The ACL on investment securities is determined for both held-to-maturity and available-for-sale classifications of the investment portfolio in accordance with ASC 326, and is evaluated on a quarterly basis. The ACL for held-to-maturity investment securities is determined on a collective basis, based on shared risk characteristics, and is determined at the individual security level when we deem a security to no longer possess shared risk characteristics. Under ASC 326-20, for investment securities where we have reason to believe the credit loss exposure is remote, such as those guaranteed by the U.S. government or government sponsored entities, a zero-loss expectation is applied, and a company is not required to estimate and recognize an ACL.

For securities available-for-sale (“AFS”) in an unrealized loss position, we first evaluate whether we intend to sell, or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the security amortized cost basis is written down to fair value through income. If neither criterion is met, we are required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. In determining whether a security’s decline in fair value is credit related, we consider a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security; and (v) the ability of the issuer of the security to make scheduled principal and interest payments. If, after considering these factors, the present value of expected cash flows to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, we record the decline in fair value through other comprehensive income, net of related income tax effects. We have elected to exclude accrued interest receivable on securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of a security is confirmed or when either of the criterion regarding intent or requirement to sell is met. See Note 3: Securities in the consolidated financial statements for additional information related to our allowance for credit losses on securities AFS.

​ 39

Table of Contents Allowance for Credit Losses – Loans Held for Investment. Our ACL for loans held for investment is established through a provision for credit losses charged to expense and may be reduced by a recapture of previously established loss reserves, which are also reflected in the statement of income. Loans are charged against the ACL when management believes that collectability of the principal is unlikely. The ACL represents management’s estimate of current expected credit losses over the remaining expected life of the loans held for investment. The ACL involves significant judgment on a number of matters including assessment of key credit risk characteristics, assignment of credit ratings, valuation of collateral, the determination of remaining expected life, incorporation of historical default and loss experience, and a development and weighting of macroeconomic forecasts. The Company reviews baseline and alternative economic scenarios from Moody’s and quarterly projections of federal funds target rates from the FOMC for consideration as quantitative factors and applies a two-year time horizon prior to gradually reverting to our historical loss experience, which continues to be deemed reasonable and supportable. While we use the best information available to make this evaluation, future adjustments to our ACL may be necessary if there are significant changes in economic or other conditions that can affect the collectability in full of loans in our loan portfolios. See Note 5: Allowance for Credit Losses, in the consolidated financial statements for additional information related to the Company’s allowance for credit losses on loans held for investment.

Deferred Income Taxes. We record as a “deferred tax asset” on our balance sheet an amount equal to the tax credit and tax loss carryforwards and tax deductions (collectively “tax benefits”) that we believe will be available to us to offset or reduce income taxes in future periods. Under applicable federal and state income tax laws and regulations, tax benefits related to tax loss carryforwards will expire if they cannot be used within specified periods of time. Accordingly, the ability to fully use our deferred tax asset related to tax loss carryforwards to reduce income taxes in the future depends on the amount of taxable income that we generate during those time periods. At least once each year, or more frequently, if warranted, we make estimates of future taxable income that we believe we are likely to generate during those future periods. If we conclude, on the basis of those estimates and the amount of the tax benefits available to us, that it is more likely than not that we will be able to fully utilize those tax benefits prior to their expiration, we recognize the deferred tax asset in full on our balance sheet. On the other hand, if we conclude on the basis of those estimates and the amount of the tax benefits available to us that it has become more likely than not that we will be unable to utilize those tax benefits in full prior to their expiration, then we would establish a valuation allowance to reduce the deferred tax asset on our balance sheet to the amount with respect to which we believe it is still more likely than not that we will be able to use to offset or reduce taxes in the future. The establishment of such a valuation allowance, or any increase in an existing valuation allowance, would be effectuated through a charge to the provision for income taxes or a reduction in any income tax credit for the period in which such valuation allowance is established or increased.

For complete discussion and disclosure of other accounting policies, see Note 1: Summary of Significant Accounting Policies of the Company’s consolidated financial statements in both this quarterly filing as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

We have two business segments, “Banking” and “Investment Management and Wealth Planning” (“Wealth Management”). Banking includes the operations of FFB, FFIS, FFPF, and Blue Moon Management LLC and Wealth Management includes the operations of FFA. The financial position and operating results of the stand-alone holding company, FFI, are included under the caption “Other” in certain of the tables that follow, along with any consolidation elimination entries.

​ 40

Table of Contents Overview

For the quarter ended June 30, 2025, the Company reported a net loss of $7.7 million, compared to net income of $6.9 million and $3.1 million for the prior and year-ago quarters, respectively. Net interest income after provision for credit losses totaled $47.7 million for the quarter ended June 30, 2025, compared to $48.4 million and $44.6 million for the prior and year-ago quarters, respectively. Net interest margin (“NIM”) was 1.68% for the quarter ended June 30, 2025, compared to 1.67% and 1.36% for the prior and year-ago quarters, respectively. Provision (reversal) for credit losses totaled $2.4 million for the quarter ended June 30, 2025, compared to $3.4 million and ($806) thousand for the prior and year-ago quarters, respectively. Noninterest income totaled $1.3 million for the quarter ended June 30, 2025, compared to $19.6 million and $13.7 million for the prior and year-ago quarters, respectively. Noninterest expense totaled $59.9 million for the quarter ended June 30, 2025, compared to $61.7 million and $55.6 million for the prior and year-ago quarters, respectively.

At June 30, 2025, the Company had total assets of $11.6 billion, including $8.0 billion of total loans, net of deferred fees and allowance for credit losses, $1.1 billion of cash and cash equivalents, $1.5 billion in investment securities available-for-sale, and $0.7 billion in investment securities held-to-maturity. This compares to total assets of $12.6 billion, including $9.2 billion of total loans, net of deferred fees and allowance for credit losses, $1.0 billion of cash and cash equivalents, $1.3 billion in investment securities available-for-sale, and $0.7 billion in investment securities held-to-maturity at December 31, 2024. Cash and cash equivalents represented approximately 9.1% of total assets at June 30, 2025, compared to 8.0% at December 31, 2024. Total assets decreased $1.1 billion or 8.4% at June 30, 2025 compared to December 31, 2024. The decrease in total assets was largely due to a $1.2 billion decrease in total loans, offset by a $0.1 billion increase in total investment securities. The decrease in total loans was largely due to the sale of $858 million in multifamily loans held for sale during the quarter as part of the Company’s continued strategy to reduce its exposure to low-coupon fixed rate loans and concentration in commercial real estate (“CRE”) loans and high-cost deposits. In addition, the decrease in total loans was due to loan payments and payoffs on the loans held for investment portfolio totaling $808 million, offset by new loan fundings of $436 million for the six-month period ended June 30, 2025.

At June 30, 2025, the Company had total liabilities of $10.5 billion, including $8.6 billion in deposits, $1.7 billion in borrowings, $173 million in subordinated debt, and $101.2 million in other liabilities. This compares to total liabilities of $11.6 billion, including $9.9 billion in deposits, $1.4 billion in borrowings, $173 million in subordinated debt, and $123 million in other liabilities at December 31, 2024. Total liabilities decreased $1.1 billion or 9.1% at June 30, 2025, compared to December 31, 2024. The decrease was largely due to a $1.3 billion decrease in deposits, offset by a $0.2 billion increase in borrowings. Proceeds from the aforementioned loan sales were used to pay down high-cost deposits during the quarter. Our loan to deposit ratio was 93.4% as of June 30, 2025 compared to 93.5% as of December 31, 2024.

At June 30, 2025, the Company had total shareholders’ equity of $1.05 billion, relatively unchanged from December 31, 2024. During the six-month period ended June 30, 2025, shareholder’s equity activity included $794 thousand net loss and a $5.4 million increase in accumulated other comprehensive loss, offset by a $3.5 million increase in additional paid-in-capital from recurring accruals for stock equivalent awards. The increase in accumulated other comprehensive loss was due to a $5.8 million loss associated with derivative assets, offset by $0.3 million in holding gains on the investment securities portfolio arising during the period.

Results of Operations

The primary sources of revenue for Banking are net interest income, fees from its deposits and trust services, gains on the sale of loans and investment securities available-for-sale, certain loan fees, and consulting fees. The primary sources of revenue for Wealth Management are asset management fees assessed on the balance of assets under management (“AUM”). 41

Table of Contents The following table shows key operating results for each of our business segments for the quarter ended June 30:

​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​	****	Wealth		****	​	​	****	​	​	​
(dollars in thousands)	****	Banking		****	Management		****	Other		****	Total		​
2025:		​			​			​			​		​
Interest income	​	$	137,125	​	$	—	​	$	—	​	$	137,125	​
Interest expense	​		85,338	​		—	​		1,705	​		87,043	​
Net interest income	​		51,787	​		—	​		(1,705)	​		50,082	​
Provision for credit losses	​		2,366	​		—	​		—	​		2,366	​
Noninterest income	​		(5,384)	​		7,077	​		(355)	​		1,338	​
Noninterest expense	​	​	51,790	​		6,706	​		1,428	​		59,924	​
(Loss) income before income taxes	​	​	(7,753)	​	​	371	​	​	(3,488)	​	​	(10,870)	​
Income tax (benefit) expense	​	​	(2,336)	​	​	107	​	​	(951)	​	​	(3,180)	​
Net (loss) income	​	$	(5,417)	​	$	264	​	$	(2,537)	​	$	(7,690)	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​
2024:	​			​			​			​			​
Interest income	​	$	150,914	​	$	—	​	$	—	​	$	150,914	​
Interest expense	​		105,380	​		—	​		1,705	​		107,085	​
Net interest income	​		45,534	​		—	​		(1,705)	​		43,829	​
Provision (reversal) for credit losses	​		(806)	​		—	​		—	​		(806)	​
Noninterest income	​		6,241	​		7,790	​		(373)	​		13,658	​
Noninterest expense	​	​	49,301	​	​	5,684	​	​	644	​	​	55,629	​
Income (loss) before income taxes	​	​	3,280	​	​	2,106	​	​	(2,722)	​	​	2,664	​
Income tax (benefit) expense	​	​	(255)	​	​	594	​	​	(760)	​	​	(421)	​
Net income (loss)	​	$	3,535	​	$	1,512	​	$	(1,962)	​	$	3,085	​

​

​ 42

Table of Contents Second Quarter of 2025 Compared to Second Quarter of 2024

Combined net loss for the second quarter of 2025 was $7.7 million, compared to net income of $3.1 million for the year-ago quarter. Combined net loss before income taxes for the second quarter of 2025 was $10.9 million, compared to combined net income before taxes of $2.7 million for the year-ago quarter. The $10.8 million decrease in combined net income before taxes from the year-ago quarter was primarily due to a decrease in net income before taxes in the Banking segment of $11.0 million, resulting primarily from a decrease in noninterest income of $11.6 million. Noninterest income during the quarter was impacted by the recording of a $10.4 million loss on the sale of $858 million in multifamily loans held for sale, primarily due to the pricing received being at a discount when compared to the previous quarter’s market valuation and other one-time loan sale components. The $858 million in loans sold were part of the original $1.9 billion in multifamily CRE loans transferred in August 2024 from loans held for investment to loans held for sale, as part of the Company’s strategic plan to reduce its exposure to low-coupon fixed-rate loans and concentration in CRE loans. Net interest income increased $6.2 million from the year-ago quarter. Interest income decreased $13.8 million or 9.1% from the year-ago quarter but was offset by a decrease in interest expense of $20.0 million or 19.0% from the year-ago quarter. Net interest income, noninterest income, and noninterest expense are discussed in more detail in the tables that follow. The decrease in Wealth Management net income before taxes of $1.7 million was primarily due to a $0.7 million decrease in noninterest income and a $1.0 million increase in noninterest expense. The decrease in noninterest income was due to a reduction in investment advisory fees, as average quarterly AUM balances decreased to $5.2 billion for the second quarter of 2025 compared to $5.4 billion for the year-ago quarter. The increase in noninterest expense was due to an increase in compensation and benefits expense.

Provision for credit losses. The provision for credit losses represents our estimate of the amount necessary to be charged against the current period’s earnings to maintain the ACL for loans and investments at a level that we consider adequate in relation to the expected lifetime credit losses in the loan and investment portfolios. The provision for credit losses for loans is impacted by changes in loan balances as well as changes in estimated loss assumptions and charge-offs and recoveries. The amount of the provision for loans also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions and certain other subjective factors that may affect the ability of borrowers to meet their repayment obligations to us. For the second quarter of 2025, we recorded total provision for credit losses of $2.4 million, compared to a reversal of $806 thousand for the year-ago quarter. The provision for credit losses for the second quarter of 2025 consisted of $2.4 million in provision expense for loans, net of $0.1 million in net charge-offs. The $2.4 million in provision expense for loans is reflective of higher reserves for the commercial loan portfolio and overall increase in model-calculated loss factors. At June 30, 2025, the allowance for credit losses on the loan portfolio was $37.6 million or 0.50% of total loans held for investment, compared to $32.3 million and 0.41% at December 31, 2024. For the second quarter of 2025, we recorded net charge-offs of $0.1 million or 0.003% of average loans on an annualized basis compared to $0.2 million or 0.01% of average loans on an annualized basis for the year-ago quarter.

In the second quarter of 2025, an interest-only strip security was written down to its fair value resulting in a charge-off of $3.4 million to the amount of allowance for credit losses pertaining to securities on the balance sheet. There was no income statement impact to this write-down as the amount was previously reserved within the allowance for credit losses. 43

Table of Contents The following table shows key operating results for each of our business segments for the six months ended June 30:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​	****	Wealth		****	​	​	****	​	​
(dollars in thousands)	****	Banking		****	Management		****	Other		****	Total
2025:		​			​			​			​
Interest income	​	$	278,867	​	$	—	​	$	—	​	$	278,867
Interest expense	​		173,591	​		—	​		3,395	​		176,986
Net interest income	​		105,276	​		—	​		(3,395)	​		101,881
Provision for credit losses	​		5,783	​		—	​		—	​		5,783
Noninterest income	​		7,026	​		14,626	​		(712)	​		20,940
Noninterest expense	​		106,916	​		14,161	​		568	​	​	121,645
(Loss) income before income taxes	​	​	(397)	​	​	465	​	​	(4,675)	​	​	(4,607)
Income tax (benefit) expense	​	​	(2,709)	​	​	146	​	​	(1,250)	​	​	(3,813)
Net income (loss)	​	$	2,312	​	$	319	​	$	(3,425)	​	$	(794)
​	​	​	​	​	​	​	​	​	​	​	​	​
2024:	​			​			​			​
Interest income	​	$	301,367	​	$	—	​	$	—	​	$	301,367
Interest expense	​		215,742	​		—	​		3,410	​		219,152
Net interest income	​		85,625	​		—	​		(3,410)	​		82,215
Provision (reversal) for credit losses	​		(229)	​		—	​		—	​		(229)
Noninterest income	​		11,924	​		15,139	​		(722)	​		26,341
Noninterest expense	​	​	93,841	​	​	11,360	​	​	1,037	​	​	106,238
Income (loss) before income taxes	​	​	3,937	​	​	3,779	​	​	(5,169)	​	​	2,547
Income tax (benefit) expense	​	​	(966)	​	​	1,081	​	​	(1,446)	​	​	(1,331)
Net income (loss)	​	$	4,903	​	$	2,698	​	$	(3,723)	​	$	3,878

​

Six Months Ended June 30, 2025 Compared to Six Months Ended June 30, 2024

Combined net loss for the six-month period ended June 30, 2025 was $794 thousand, compared to net income of $3.9 million for the year-ago period. Combined net loss before income taxes for the six-month period ended June 30, 2025 was $4.6 million, compared to combined net income before taxes of $2.5 million for the year-ago period. The $7.1 million decrease in combined net income before taxes from the year-ago period was primarily due to a decrease in net income before taxes for the Banking segment of $4.3 million and a $3.3 million decrease in net income before taxes for the Wealth Management segment. The Banking segment decrease in net income before taxes was primarily due to a $13.1 million increase in noninterest expense, a $4.9 million decrease in noninterest income, and a $6.0 million increase in provision for credit losses, offset by a $19.7 million increase in net interest income. The increase in noninterest expense was due largely to a $8.4 million increase in compensation and benefits expense and a $5.2 million increase in professional services. The Wealth Management segment decrease in net income before taxes was primarily due to a $2.8 million increase in noninterest expense. Net interest income, noninterest income, and noninterest expense are discussed in more detail in the tables that follow.

Provision for credit losses. For the six-month period ended June 30, 2025, we recorded total provision for credit losses of $5.8 million, compared to a reversal of $229 thousand for the year-ago period. The provision for credit losses for the six-month period ended June 30, 2025 consisted of $5.3 million in provision expense for loans, (net of $0.3 million in net charge-offs) and $0.4 million in provision expense for unfunded commitments, offset by a $0.1 million reversal of provision for investment securities. The $5.3 million in provision expense for loans is reflective of higher reserves for the commercial loan portfolio and overall increase in model-calculated loss factors. For the six-month period ended June 30, 2025, we recorded net charge-offs of $0.3 million or 0.01% of average loans on an annualized basis compared to $0.6 million or 0.01% of average loans on an annualized basis for the year-ago period.

​ 44

Table of Contents Net Interest Income. The principal component of the Company’s earnings is net interest income, which is the difference between the interest and fees earned on loans and investments (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities). Net interest margin is net interest income as a percentage of average interest-earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income and net interest margin. The net interest rate spread is the yield on average interest-earning assets minus the cost of average interest-earning liabilities. Our net interest income, net interest rate spread, and net interest margin are sensitive to general business and economic conditions. We manage net interest income through affecting changes in the mix of interest-earning assets as well as the mix of interest-bearing liabilities, changes in the level of interest-bearing liabilities in proportion to interest-earning assets, and the growth and maturity of earning assets. For further discussion on our interest rate risk management practices, see “Interest Rate Risk Management” within this Item 2.

The following tables set forth information regarding (i) the total dollar amount of interest income from interest-earning assets and the resultant average yields on those assets; (ii) the total dollar amount of interest expense and the average rate of interest on our interest-bearing liabilities; (iii) net interest income; (iv) net interest rate spread; and (v) net interest margin for the three and six months ended June 30:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Three Months Ended June 30:																​
​	****	2025								2024								​
​	​	Average		​	​	​	​	Average	​	Average		​	​	​	​	Average	​	​
(dollars in thousands)	****	Balances		****	Interest		****	Yield /Rate	****	Balances		****	Interest		****	Yield /Rate	****	​
Interest-earning assets:	​		​	​		​	​		​		​	​		​	​			​
Loans, including LHFS	​	$	8,632,593	​	$	100,166		4.65	%	$	10,100,556	​	$	120,244		4.77	%	​
Securities AFS	​		1,507,718	​		19,596		5.20	%		1,032,930	​		13,637		5.28	%	​
Securities HTM	​	​	673,390	​	​	4,050	​	2.41	%	​	765,208	​	​	4,338	​	2.27	%	​
Cash, FHLB stock, and fed funds	​		1,101,976	​		13,313		4.85	%		949,911	​		12,695		5.38	%	​
Total interest-earning assets	​		11,915,677	​		137,125		4.61	%		12,848,605	​		150,914		4.71	%	​
Noninterest-earning assets:	​		​	​					​			​					​	​
Nonperforming assets	​		38,126	​	​	​			​		18,250	​					​	​
Other	​		294,797	​	​	​			​		270,167	​					​	​
Total assets	​	$	12,248,600	​	​	​			​	$	13,137,022	​					​	​
Interest-bearing liabilities:	​			​					​			​					​	​
Demand deposits	​	$	1,813,809	​	$	13,514		2.99	%	$	2,495,789	​	$	25,173		4.06	%	​
Money market and savings	​		3,590,856	​		31,620		3.53	%		3,355,351	​		33,419		4.01	%	​
Certificates of deposit	​		1,902,739	​		22,184		4.68	%		2,699,891	​		32,796		4.89	%	​
Total interest-bearing deposits	​		7,307,404	​		67,318		3.70	%		8,551,031	​		91,388		4.30	%	​
Borrowings	​		1,739,483	​		18,020		4.16	%		1,365,629	​		13,992		4.12	%	​
Subordinated debt	​	​	173,480	​	​	1,705	​	3.94	%	​	173,418	​	​	1,705	​	3.95	%	​
Total interest-bearing liabilities	​		9,220,367	​		87,043		3.79	%		10,090,078	​		107,085		4.27	%	​
Noninterest-bearing liabilities:	​			​					​			​					​	​
Demand deposits	​		1,850,748	​	​	​			​		1,986,557	​	​	​			​	​
Other liabilities	​		130,047	​	​	​			​		134,279	​	​	​			​	​
Total liabilities	​		11,201,162	​	​	​			​		12,210,914	​	​	​			​	​
Shareholders’ equity	​		1,047,438	​	​	​			​		926,108	​	​	​			​	​
Total liabilities and equity	​	$	12,248,600	​	​	​			​	$	13,137,022	​	​	​			​	​
Net Interest Income	​	​	​	​	$	50,082		​	​		​	​	$	43,829		​	​	​
Net Interest Rate Spread	​		​	​		​	​	0.82	%		​	​		​	​	0.44	%	​
Net Interest Margin	​		​	​		​	​	1.68	%		​	​		​	​	1.36	%	​

​

​ 45

Table of Contents

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Six Months Ended June 30:
​	****	2025								2024
​	​	Average		​	​	​	​	Average	​	Average		​	​	​	​	Average	​
(dollars in thousands)	****	Balances		****	Interest		****	Yield /Rate	****	Balances		****	Interest		****	Yield /Rate	****
Interest-earning assets:	​		​	​		​	​		​		​	​		​	​
Loans, including LHFS	​	$	8,879,573	​	$	206,666		4.67	%	$	10,098,491	​	$	238,688		4.74	%
Securities AFS	​		1,386,455	​		36,335		5.24	%		1,100,559	​		28,988		5.27	%
Securities HTM	​	​	686,067	​	​	8,406	​	2.45	%	​	772,363	​	​	8,761	​	2.27	%
FHLB stock, fed funds and deposits	​		1,159,343	​		27,460		4.78	%		953,983	​		24,930		5.26	%
Total interest-earning assets	​		12,111,438	​		278,867		4.62	%		12,925,396	​		301,367		4.67	%
Noninterest-earning assets:	​		​	​					​			​					​
Nonperforming assets	​		41,258	​	​	​			​		16,859	​					​
Other	​		268,342	​	​	​			​		266,940	​					​
Total assets	​	$	12,421,038	​	​	​			​	$	13,209,195	​					​
Interest-bearing liabilities:	​			​					​			​					​
Demand deposits	​	$	1,881,892	​	$	28,503		3.05	%	$	2,666,374	​	$	53,940		4.07	%
Money market and savings	​		3,587,507	​		63,858		3.59	%		3,267,160	​		64,156		3.95	%
Certificates of deposit	​		2,057,596	​		48,276		4.73	%		2,786,193	​		67,784		4.89	%
Total interest-bearing deposits	​		7,526,995	​		140,637		3.77	%		8,719,727	​		185,880		4.29	%
Borrowings	​		1,611,784	​		32,954		4.12	%		1,465,730	​		29,862		4.10	%
Subordinated debt	​	​	173,472	​	​	3,395	​	3.95	%	​	173,410	​	​	3,410	​	3.95	%
Total interest-bearing liabilities	​		9,312,251	​		176,986		3.83	%		10,358,867	​		219,152		4.25	%
Noninterest-bearing liabilities:	​			​					​			​					​
Demand deposits	​		1,938,314	​	​	​			​		1,791,071	​					​
Other liabilities	​		119,276	​	​	​			​		135,248	​					​
Total liabilities	​		11,369,841	​	​	​			​		12,285,186	​					​
Shareholders’ equity	​		1,051,197	​	​	​			​		924,009	​					​
Total liabilities and equity	​	$	12,421,038	​	​	​			​	$	13,209,195	​					​
Net Interest Income	​	​	​	​	$	101,881		​	​			​	$	82,215			​
Net Interest Rate Spread	​		​	​		​	​	0.79	%			​				0.42	%
Net Interest Margin	​		​	​		​	​	1.67	%			​				1.26	%

​ 46

Table of Contents Net interest income is impacted by the volume (changes in volume multiplied by prior rate), interest rate (changes in rate multiplied by prior volume) and mix of interest-earning assets and interest-bearing liabilities. The following table provides a breakdown of the changes in net interest income due to volume and rate changes for the three and six months ended June 30, 2025, as compared to the three and six months ended June 30, 2024:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Quarter Ended								​	​	Six Months Ended							​
​	​	June 30, 2025 vs. 2024								​	June 30, 2025 vs. 2024								​
​	****	Increase (Decrease) due to								​	Increase (Decrease) due to								​
(dollars in thousands)	****	Volume		****	Rate		****	Total		****	Volume		****	Rate		****	Total		​
Interest earned on:		​			​			​		​	​			​			​		​
Loans, including LHFS	​	$	(17,212)	​	$	(2,866)	​	$	(20,078)	​	$	(28,658)	​	$	(3,364)	​	$	(32,022)	​
Securities AFS	​		6,175	​		(216)	​		5,959	​		7,493	​		(146)	​		7,347	​
Securities HTM	​	​	(541)	​	​	253	​	​	(288)	​	​	(1,019)	​	​	664	​	​	(355)	​
Cash, FHLB stock, and fed funds	​		1,952	​		(1,334)	​		618	​		4,939	​		(2,409)	​		2,530	​
Total interest-earning assets	​		(9,626)	​		(4,163)	​		(13,789)	​		(17,245)	​		(5,255)	​		(22,500)	​
Interest paid on:	​			​			​			​			​		​	​			​
Demand deposits	​		(5,888)	​		(5,771)	​		(11,659)	​		(13,735)	​		(11,702)	​		(25,437)	​
Money market and savings	​		2,440	​		(4,239)	​		(1,799)	​		5,798	​		(6,096)	​		(298)	​
Certificates of deposit	​		(9,254)	​		(1,358)	​		(10,612)	​		(17,348)	​		(2,160)	​		(19,508)	​
Borrowings	​		3,875	​		153	​		4,028	​		2,976	​		116	​		3,092	​
Subordinated debt	​	​	5	​	​	(5)	​	​	—	​	​	(17)	​	​	2	​	​	(15)	​
Total interest-bearing liabilities	​		(8,822)	​		(11,220)	​		(20,042)	​		(22,326)	​		(19,840)	​		(42,166)	​
Net interest (expense) income	​	$	(804)	​	$	7,057	​	$	6,253	​	$	5,081	​	$	14,585	​	$	19,666	​

​

Net interest income was $50.1 million for the second quarter of 2025, compared to $43.8 million for the year-ago quarter. The overall increase in net interest income from the year-ago period was primarily driven by rates paid on interest-bearing liabilities decreasing faster than rates earned on interest-earning assets.

Interest income decreased to $137.1 million for the second quarter of 2025, compared to $150.9 million for the year-ago quarter. The decrease in interest income was due to a decrease in average yield earned on interest-earning assets, as well as a decrease in average interest-earning asset balances. Yields on interest-earning assets averaged 4.61% for the second quarter of 2025, compared to 4.71% for the year-ago quarter, a decrease of 0.10% or 10 basis points. Average interest-earning asset balances decreased $0.9 billion or 7.2% to $11.9 billion for the second quarter of 2025, compared to $12.8 billion for the year-ago quarter. The decrease in average interest-earning asset balances was due primarily to a $1.5 billion decrease in loans, offset by a $0.4 billion increase in securities AFS and HTM and a $0.2 billion increase in cash, FHLB stock, and fed funds balances. The decrease in loan balances was primarily due to the sale of $858 million in multifamily CRE loans during the second quarter of 2025 as part of the Company’s strategy to reduce its exposure to low-coupon fixed-rate loans and concentration in CRE loans. In August 2024, the Company transferred $1.9 billion in multifamily CRE loans from loans held for investment to loans held for sale and has sold $1.3 billion of the transferred amount to date, including the $858 million sold in the second quarter of 2025. The increase in securities AFS and HTM balances was primarily due to the purchase of $701 million in securities AFS, including agency mortgage-backed and collateralized mortgage obligation securities in the first quarter of 2025, which impacted overall second quarter average balances. The decrease in yields on interest-earning assets was primarily due to a decrease in yield on loans, which decreased to 4.65% for the second quarter of 2025, compared to 4.77% for the year-ago quarter. New loan fundings totaled $256 million at an average yield of 7.18% for the second quarter of 2025, compared to new loan fundings of $515.7 million at an average yield of 8.19% for the year-ago quarter. Yields on the combined AFS and HTM securities portfolio increased to 4.34% for the second quarter of 2025, compared to 4.00% for the year-ago quarter. The increase in combined yields was due to the acquisition of higher-yielding agency mortgage-backed and collateralized mortgage obligation securities AFS.

​ 47

Table of Contents Interest expense decreased to $87.0 million for the second quarter of 2025, compared to $107.1 million for the year-ago quarter. The decrease in interest expense was due to decreases in both average interest-bearing liability balances as well as average rates paid on such balances. Average interest-bearing liability balances, consisting of interest-bearing deposits, borrowings, and subordinated debt, decreased 8.6% to $9.2 billion for the second quarter of 2025, compared to $10.1 billion for the year-ago quarter. Rates on interest-bearing liability balances averaged 3.79% for the second quarter of 2025, compared to 4.27% for the year-ago quarter, a decrease of 0.48% or 48 basis points. The decrease in average interest-bearing liability balances was primarily due to a $1.2 billion decrease in average interest-bearing deposits, offset by a $0.4 billion increase in average borrowings. The decrease in average interest-bearing deposits was primarily driven by a decrease in higher-cost brokered deposit balances, which were able to mature without being replaced, aided by the $1.3 billion in multifamily CRE loan sales since August 2024. Rates on interest-bearing liability balances decreased primarily due to the reduction in higher-cost brokered deposit balances. Average balances and rates paid on borrowings increased to $1.7 billion and 4.16%, respectively for the second quarter of 2025, compared to $1.4 billion and 4.12%, respectively for the year-ago quarter. Average borrowings increased as the Company locked-in lower-rate term borrowings in the second half of 2024 and utilized the borrowings primarily to purchase higher-yielding, high-quality securities to improve the balance sheet’s rate profile and more efficiently enhance recurring revenue.

The 0.48% decrease in average rate paid on interest-bearing liability balances, offset by the 0.10% decrease in average yield earned on interest-earning assets, resulted in an expansion of NIM for the second quarter of, 2025, compared to the year-ago quarter. NIM was 1.68% for the second quarter of 2025 compared to 1.36% for the year-ago quarter.

Net interest income was $101.9 million for the six-month period ended June 30, 2025, compared to $82.2 million for the year-ago period. The overall increase in net interest income from the year-ago period was primarily due to decreases in both the average interest-bearing liability balances and average rates paid on such balances, relative to the decreases in   average interest earning asset balances and average rates earned on such balances.

Interest income decreased to $278.9 million for the six-month period ended June 30, 2025, compared to $301.4 million for the year-ago period. The decrease in interest income was due to a decrease in average yield earned on interest-earning assets, as well as a decrease in average interest-earning asset balances. Yields on interest-earning assets averaged 4.62% for the six-month period ended June 30, 2025, compared to 4.67% for the year-ago period, a decrease of 0.05% or 5 basis points. Average interest-earning asset balances decreased $0.8 billion or 6.3% to $12.1 billion for the six-month period ended June 30, 2025, compared to $12.9 billion for the year-ago period. The decrease in average interest-earning asset balances was due primarily to a $1.2 billion decrease in loans, offset by a $0.3 billion increase in securities AFS and HTM and a $0.2 billion increase in cash, FHLB stock, and fed funds balances. The decrease in loan balances was primarily due to the sale of $858 million in multifamily CRE loans during the second quarter of 2025 as part of the Company’s strategy to reduce its exposure to low-coupon fixed-rate loans and concentration in CRE loans. In addition, loan payoffs and payments totaling $839 million outpaced new loan fundings totaling $436 million for a net decrease in loan balances of $403 million for the six-month period ended June 30, 2025. The increase in securities AFS and HTM balances was primarily due to the purchase of $701 million in securities AFS, including agency mortgage-backed and collateralized mortgage obligation securities in the first quarter of 2025. The decrease in yields on interest-earning assets was primarily due to a decrease in yield on loans, which decreased to 4.67% for the six-month period ended June 30, 2025, compared to 4.74% for the year-ago period. New loan fundings totaled $436 million at an average yield of 7.14% for the six-month period ended June 30, 2025, compared to new loan fundings of $817 million at an average yield of 8.26% for the year-ago period.

​ 48

Table of Contents Interest expense decreased to $177.0 million for the six-month period ended June 30, 2025, compared to $219.2 million for the year-ago period. The decrease in interest expense was due to decreases in both average interest-bearing liability balances as well as average rates paid on such balances. Average interest-bearing liability balances, consisting of interest-bearing deposits, borrowings, and subordinated debt, decreased 10.1% to $9.3 billion for the six-month period ended June 30, 2025, compared to $10.4 billion for the year-ago period. Rates on interest-bearing liability balances averaged 3.83% for the six-months ended June 30, 2025, compared to 4.25% for the year-ago period, a decrease of 0.42% or 42 basis points. The decrease in average interest-bearing liability balances was primarily due to a $1.2 billion decrease in average interest-bearing deposits, offset by a $0.1 billion increase in average borrowings. The decrease in average interest-bearing deposits was primarily driven by a decrease in higher-cost brokered deposit balances, which were able to mature without being replaced, aided by the $1.3 billion in multifamily CRE loan sales that have taken place since the loans were reclassified from loans held for investment to loans held for sale in August 2024.  Rates on interest-bearing liability balances decreased primarily due to the reduction in higher-cost brokered deposit balances.  Average balances and rates paid on borrowings increased to $1.6 billion and 4.12%, respectively for the six-months ended June 30, 2025,  compared to $1.5 billion and 4.10%, respectively for the year-ago period.

Noninterest income. Noninterest income for Banking includes fees charged to clients for trust services and deposit services, consulting fees, prepayment and late fees charged on loans, gain (loss) on sale of loans, securities, and REO, and gains and losses from capital market activities, including those associated with changes in the valuation of the loans held for sale portfolio. The following table provides a breakdown of noninterest income for Banking for the three and six months ended June 30, 2025 and 2024:

​

​	​	​	​	​	​	​
(dollars in thousands)	****	2025		****	2024
Three Months Ended June 30:	​	​	​	​	​	​
Trust and consulting fees	​	$	1,802	​	$	1,671
Loan related fees	​		2,257	​		1,537
Deposit charges	​		526	​		460
Gain (loss) on sale of loans	​	​	(10,405)	​	​	415
Gain on sale of securities available-for-sale	​	​	—	​	​	983
Capital market activities	​	​	(289)	​	​	837
Loss on sale of assets	​	​	—	​	​	(391)
Other	​		725	​		729
Total noninterest income	​	$	(5,384)	​	$	6,241
​	​	​	​	​	​	​
Six Months Ended June 30:	​	​	​	​	​	​
Trust and consulting fees	​	$	3,442	​	$	3,199
Loan related fees	​		3,912	​		2,470
Deposit charges	​		1,000	​		930
Gain (loss) on sale of loans	​		(10,405)	​		678
Gain on sale of securities available-for-sale	​	​	4,702	​	​	1,204
Capital market activities	​	​	2,542	​	​	1,673
Loss on sale of assets	​	​	—	​	​	(391)
Gain on sale of REO	​	​	—	​	​	679
Other	​		1,833	​		1,482
Total noninterest income	​	$	7,026	​	$	11,924

​

​ 49

Table of Contents Noninterest income in Banking was ($5.4) million for the second quarter of 2025, compared to $6.2 million for the year-ago quarter. Noninterest income for the second quarter includes a $10.4 million loss on the sale of $858 million principal balance of multifamily CRE loans during the quarter as part of the Company’s continued strategy to reduce its exposure to low-coupon fixed-rate loans and concentration in CRE loans. The $10.4 million loss on sale of loans was primarily due to the pricing received being at a discount when compared to the previous quarter’s market valuation as well as $1.7 million in one-time loan sale components. Capital markets activities generated a loss of $0.3 million for the second quarter of 2025 and consist of $2.1 million in unrealized gains on the valuation of our loans held for sale portfolio, net of corresponding net realized and unrealized derivative losses of $2.4 million. The fair value of the loans held for sale portfolio at June 30, 2025 was 94.6%, compared to 94.5% at March 31, 2025, resulting in the $2.1 million in unrealized gains. During the quarter, the Bank partially terminated $625 million notional amount of the original $1.0 billion notional amortizing interest rate swap derivative which was entered into in the first quarter of 2025. This partial termination resulted in $7.1 million in realized derivative losses and was offset by $4.7 million in unrealized gains on the remaining $375 million notional balance of the amortizing interest rate swap derivative, resulting in the net realized and unrealized derivative losses of $2.4 million. Noninterest income in Banking was $7.0 million for the six-month period ended June 30, 2025, compared to $11.9 million for the year-ago period. In addition to the aforementioned loss on the sale of loans, noninterest income for the six-month period ended June 30, 2025 also includes $4.7 million in gains on the sale of securities available-for-sale, which occurred in the first quarter of 2025. Excluding the current period’s loss on the sale of loans and gain on sale of securities available-for-sale, noninterest income would have been $12.7 million for the six-month period ended June 30, 2025, compared to $10.7 million (excluding $1.2 million in gain on sale of securities available-for-sale) for the year-ago period, an increase of $2.0 million. The $2.0 million increase in adjusted noninterest income was due primarily to increases in trust and consulting fees, loan related fees, deposit charges, capital market activities, and other noninterest income, offset by prior period one-time noninterest income components which included gain on sale of REO and loss on sale of assets.

Noninterest income for Wealth Management includes fees charged to high net-worth clients for managing their assets and for providing financial planning consulting services. The following table provides the amounts of noninterest income for Wealth Management for the three and six months ended June 30, 2025 and 2024:

​

​	​	​	​	​	​	​
(dollars in thousands)	****	2025		****	2024
Three Months Ended June 30:	​	​	​	​	​	​
Noninterest income	​	$	7,077	​	$	7,790
​	​	​	​	​	​	​
Six Months Ended June 30:	​	​	​	​	​	​
Noninterest income	​	$	14,626	​	$	15,139

​

Noninterest income for Wealth Management was $7.1 million for the second quarter of 2025, compared to $7.8 million for the year-ago quarter. The $0.7 million decrease in noninterest income was due primarily to a $0.7 million decrease in fees earned on AUM balances as average AUM balances earning fees decreased slightly from $5.4 billion per month for the second quarter of 2024 to $5.2 billion per month for the second quarter of 2025. Noninterest income for Wealth Management was $14.6 million for the six-month period ended June 30, 2025, compared to $15.1 million for the year-ago period. The $0.5 million decrease in noninterest income was due primarily to a $0.5 million decrease in fees earned on AUM balances as average AUM balances earning fees decreased from $5.4 billion per month for the six-month period ended June 30, 2024 to $5.2 billion per month for the six-month period ended June 30, 2025. 50

Table of Contents The following table summarizes the activity in our AUM for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Existing account		​	​	​	​	​	​	​	​	​	​	​	​
​	​	Beginning		​	Additions/		​	New		​	​	​	​	​	​	​	​	​
(dollars in thousands)		Balance		****	Withdrawals		****	Accounts		****	Terminations		****	Performance		****	Ending balance
Three Months Ended June 30, 2025:	​		​	​			​			​			​			​
Fixed income	​	$	1,579,573	​	$	(37,092)	​	$	33,455	​	$	(29,025)	​	$	(13,566)	​	$	1,533,345
Equities	​		2,675,895	​		1,721	​		11,795	​		(71,242)	​		333,839	​		2,952,008
Cash and other	​		803,536	​		(10,246)	​		37,487	​		(37,983)	​		14,848	​		807,642
Total	​	$	5,059,004	​	$	(45,617)	​	$	82,737	​	$	(138,250)	​	$	335,121	​	$	5,292,995
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2025:	​		​	​			​			​			​			​
Fixed income	​	$	1,650,723	​	$	46,128	​	$	44,736	​	$	(50,741)	​	$	(157,501)	​	$	1,533,345
Equities	​	​	2,932,526	​	​	(308,476)	​	​	17,296	​	​	(27,140)	​	​	337,802	​	​	2,952,008
Cash and other	​		862,631	​		(100,155)	​		47,455	​		(46,666)	​		44,377	​		807,642
Total	​	$	5,445,880	​	$	(362,503)	​	$	109,487	​	$	(124,547)	​	$	224,678	​	$	5,292,995
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three Months Ended June 30, 2024:	​		​	​			​			​			​			​
Fixed income	​	$	1,810,358	​	$	(35,397)	​	$	12,032	​	$	(18,142)	​	$	(10,761)	​	$	1,758,090
Equities	​	​	2,864,273	​	​	39,564	​	​	10,748	​	​	(19,872)	​	​	52,920	​	​	2,947,633
Cash and other	​		791,545	​		(33,553)	​		12,250	​		(6,389)	​		19,143	​		782,996
Total	​	$	5,466,176	​	$	(29,386)	​	$	35,030	​	$	(44,403)	​	$	61,302	​	$	5,488,719
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2024:	​		​	​			​			​			​			​
Fixed income	​	$	1,849,056	​	$	(56,474)	​	$	29,884	​	$	(19,867)	​	$	(44,509)	​	$	1,758,090
Equities	​	​	2,609,033	​	​	43,646	​	​	47,337	​	​	(29,260)	​	​	276,877	​	​	2,947,633
Cash and other	​		791,859	​		(60,735)	​	​	26,413	​	​	(12,273)	​	​	37,732	​		782,996
Total	​	$	5,249,948	​	$	(73,563)	​	$	103,634	​	$	(61,400)	​	$	270,100	​	$	5,488,719

​

AUM balances were $5.3 billion at June 30, 2025, compared to $5.5 billion at June 30, 2024. The $153 million decrease in AUM during the six-month period ended June 30, 2025 was the net result of $109 million of new accounts, $225 million of performance gains, and terminations and net withdrawals of $487 million.

Noninterest Expense. The following table provides a breakdown of noninterest expense for Banking and Wealth Management for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Banking					​	Wealth Management
(dollars in thousands)	​	2025		​	2024		​	2025		​	2024
Three Months Ended June 30:	​	​	​	​	​	​	​	​	​	​	​	​
Compensation and benefits		$	17,517		$	14,821		$	5,124		$	4,079
Occupancy and depreciation	​		7,872	​		8,526	​		461	​		500
Professional services and marketing	​		5,844	​		2,656	​		928	​		926
Customer service costs	​		12,983	​		16,104	​		—	​		—
Other	​		7,574	​		7,194	​		193	​		179
Total noninterest expense	​	$	51,790	​	$	49,301	​	$	6,706	​	$	5,684
​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30:	​	​	​	​	​	​	​	​	​	​	​	​
Compensation and benefits		$	38,343		$	29,993		$	10,846		$	8,174
Occupancy and depreciation	​		15,897	​		17,112	​		881	​		983
Professional services and marketing	​		10,339	​		5,188	​		2,037	​		1,827
Customer service costs	​		28,034	​		26,842	​		—	​		—
Other	​		14,303	​		14,706	​		397	​		376
Total noninterest expense	​	$	106,916	​	$	93,841	​	$	14,161	​	$	11,360

​

​ 51

Table of Contents Noninterest expense in Banking was $51.8 million for the second quarter of 2025, compared to $49.3 million for the second quarter of 2024. The $2.5 million increase in noninterest expense was largely due to the $2.7 million increase in compensation and benefits expense and a $3.2 million increase in professional services and marketing expense, offset by a $3.1 million decrease in customer service costs. The $2.7 million increase in compensation and benefits expense was largely due to an increase in staffing levels as well as investments made to bring in and retain institutional knowledge needed to organize around the Company’s strategic initiatives and strengthen the Company going forward. Average Banking FTEs were 507.0 for the second quarter of 2025, compared to 490.2 for the year-ago quarter. The increase in professional services and marketing expense was largely due to consulting expense related to internal strategic initiatives.  The decrease in customer service costs was due to a decrease in the average balances of depository accounts receiving earnings credits as well as a decrease in the average rates paid on such accounts.

Noninterest expense in Wealth Management was $6.7 million for the second quarter of 2025, compared to $5.7 million for the year-ago quarter. The increase was due primarily to a $1.0 million increase in compensation and benefits expense, primarily due to higher commission expense.

Noninterest expense in Banking was $106.9 million for the six-month period ended June 30, 2025, compared to $93.8 million for the year-ago period. The $13.1 million increase in noninterest expense was largely due to a $8.4 million increase in compensation and benefits expense and a $5.1 million increase in professional services and marketing expense. The $8.4 million increase in compensation and benefit costs was largely due to an increase in staffing levels as well as investments made to bring in and retain institutional knowledge needed to organize around the Company’s strategic initiatives and strengthen the Company going forward. Average Banking FTEs were 505.2 for the six-month period ended June 30, 2025, compared to 491.3 for the year-ago period. Staffing levels had been maintained at reduced levels throughout 2024, prior to additions to the headcount being made in the first half of 2025 to help facilitate the Company’s strategic initiatives. The increase in professional services and marketing was largely attributable to increases in external accounting and information technology and infrastructure expenses.

Noninterest expense in Wealth Management was $14.2 million for the six-month period ended June 30, 2025, compared to $11.4 million for the year-ago period. The $2.8 million increase in noninterest expense in Wealth Management was largely due to an increase in compensation and benefits expense due to investments made to retain institutional knowledge in the competitive wealth management industry. Average Wealth Management FTEs were 57.4 for the six-month period ended June 30, 2025, compared to 62.6 for the year-ago period. 52

Table of Contents Financial Condition

The following table shows the financial position for each of our business segments, and of FFI and elimination entries used to arrive at our consolidated totals which are included in the column labeled Other and Eliminations, as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​	****	Wealth		****	Other and		****	​	​
(dollars in thousands)	​	Banking		​	Management		​	Eliminations		​	Total
June 30, 2025:	​		​	​		​	​		​	​		​
Cash and cash equivalents	​	$	1,055,183	​	$	18,119	​	$	(17,688)	​	$	1,055,614
Securities AFS, net	​		1,469,122	​		—	​		—	​		1,469,122
Securities HTM	​	​	663,807	​	​	—	​	​	—	​	​	663,807
Loans held for sale	​		476,727	​		—	​		—	​		476,727
Loans held for investment, net	​		7,510,763	​		—	​		—	​		7,510,763
Investment in FHLB stock	​		50,077	​		—	​		—	​		50,077
Accrued interest receivable	​	​	50,538	​	​	—	​	​	—	​	​	50,538
Deferred taxes	​		79,123	​		(3,141)	​		11,024	​		87,006
Premises and equipment	​		35,627	​		127	​		136	​		35,890
Real estate owned ("REO")	​	​	6,210	​	​	—	​	​	—	​	​	6,210
Bank owned life insurance	​	​	50,686	​	​	—	​	​	—	​	​	50,686
Core deposit intangibles	​	​	2,947	​	​	—	​	​	—	​	​	2,947
Other assets	​		106,875	​		578	​		21,522	​		128,975
Total assets	​	$	11,557,685	​	$	15,683	​	$	14,994	​	$	11,588,362
​	​	​	​	​	​	​	​	​	​	​	​	​
Deposits	​	$	8,619,040	​	$	—	​	$	(25,347)	​	$	8,593,693
Borrowings	​		1,669,315	​		—	​		—	​		1,669,315
Subordinated debt	​	​	—	​	​	—	​	​	173,490	​	​	173,490
Derivative liabilities	​	​	8,689	​	​	—	​	​	—	​	​	8,689
Intercompany balances	​		(1,030)	​		(2,096)	​		3,126	​		—
Accounts payable and other liabilities	​		72,837	​		3,051	​		16,661	​		92,549
Shareholders’ equity	​		1,188,834	​		14,728	​		(152,936)	​		1,050,626
Total liabilities and equity	​	$	11,557,685	​	$	15,683	​	$	14,994	​	$	11,588,362
​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​		​	​		​	​		​	​		​
Cash and cash equivalents	​	$	1,015,832	​	$	20,668	​	$	(20,368)	​	$	1,016,132
Securities AFS, net	​		1,313,885	​		—	​		—	​		1,313,885
Securities HTM	​		712,105	​		—	​		—	​		712,105
Loans held for sale	​	​	1,285,819	​	​	​	​	​	​	​	​	1,285,819
Loans held for investment, net	​		7,909,091	​		—	​		—	​		7,909,091
Investment in FHLB stock	​		37,869	​		—	​		—	​		37,869
Accrued interest receivable	​	​	54,804	​	​	—	​	​	—	​	​	54,804
Deferred taxes	​		69,669	​		(3,004)	​		9,985	​		76,650
Premises and equipment	​		35,492	​		178	​		136	​		35,806
Real estate owned ("REO")	​		6,210	​	​	—	​	​	—	​		6,210
Bank owned life insurance	​	​	49,993	​	​	​	​	​	​	​	​	49,993
Core deposit intangibles	​	​	3,558	​	​	—	​	​	—	​	​	3,558
Derivative assets	​	​	5,086	​	​	​	​	​	​	​	​	5,086
Other assets	​		112,485	​		524	​		25,248	​		138,257
Total assets	​	$	12,611,898	​	$	18,366	​	$	15,001	​	$	12,645,265
​	​	​	​	​	​	​	​	​	​	​	​	​
Deposits	​	$	9,898,339	​	$	—	​	$	(28,060)	​	$	9,870,279
Borrowings	​		1,425,369	​		—	​		—	​		1,425,369
Subordinated debt	​	​	—	​	​	—	​	​	173,459	​	​	173,459
Intercompany balances	​		(1,031)	​		(2,046)	​		3,077	​		—
Accounts payable and other liabilities	​		100,549	​		2,406	​		19,840	​		122,795
Shareholders’ equity	​		1,188,672	​		18,006	​		(153,315)	​		1,053,363
Total liabilities and equity	​	$	12,611,898	​	$	18,366	​	$	15,001	​	$	12,645,265

​

Our consolidated balance sheet is primarily affected by changes occurring in our Banking operations as our Wealth Management operations do not maintain significant levels of assets or liabilities.

​ 53

Table of Contents During the six-month period ended June 30, 2025, total assets decreased by $1.1 billion primarily due to decreases in total loans, offset by an increase in total investment securities. The decrease in total loans was largely due to the sale of $858 million in multifamily loans held for sale during the period. During the six-month period ended June 30, 2025, total liabilities decreased by $1.1 billion, primarily due to a decrease in deposits, offset by an increase in borrowings. Proceeds from the aforementioned loan sales were used to paydown high-cost deposits during the period. During the six-month period ended June 30, 2025, total shareholders’ equity remained relatively unchanged.

For additional information on the changes in total assets, liabilities, and shareholders’ equity, see “Overview” within this Item 2.

Cash and cash equivalents. Cash and cash equivalents, which primarily consist of funds held at the Federal Reserve Bank or at correspondent banks, including fed funds, increased by $39.5 million at June 30, 2025, compared to December 31, 2024. Changes in cash and cash equivalents are primarily affected by the funding of loans, investments in securities, and changes in our sources of funding including deposits and borrowings.

Securities available for sale. The following table provides a summary of the Company’s AFS securities portfolio as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Amortized		****	Gross Unrealized						Allowance for			Estimated
(dollars in thousands)	****	Cost		****	Gains		****	Losses		****	Credit Losses		****	Fair Value
June 30, 2025:	​		​	​		​	​		​	​	​	​	​		​
Collateralized mortgage obligations	​	$	205,981	​	$	—	​	$	(1,562)	​	$	—	​	$	204,419
Agency mortgage-backed securities	​	​	1,093,563	​	​	243	​	​	(4,735)	​	​	—	​	​	1,089,071
Municipal bonds	​	​	48,749	​	​	—	​	​	(2,540)	​	​	—	​	​	46,209
SBA securities	​	​	7,945	​	​	4	​	​	(60)	​	​	—	​	​	7,889
Beneficial interests in FHLMC securitization	​		841	​		—	​		—	​		—	​		841
Corporate bonds	​		127,732	​		—	​		(7,380)	​		(651)	​		119,701
U.S. Treasury	​		999	​		6	​		(13)	​		—	​		992
Total	​	$	1,485,810	​	$	253	​	$	(16,290)	​	$	(651)	​	$	1,469,122
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​			​			​		​	​		​	​
Collateralized mortgage obligations	​	$	11,121	​	$	—	​	$	(1,279)	​	$	—	​	$	9,842
Agency mortgage-backed securities	​	​	1,126,861	​	​	2,308	​	​	(7,543)	​	​	—	​	​	1,121,626
Municipal bonds	​	​	48,921	​		—	​		(3,386)	​		—	​		45,535
SBA securities	​	​	9,236	​	​	2	​	​	(93)	​	​	—	​	​	9,145
Beneficial interest in FHLMC securitization	​		4,619	​		—	​		—	​		(3,377)	​		1,242
Corporate bonds	​		133,767	​		—	​		(7,193)	​		(757)	​		125,817
U.S. Treasury	​		700	​		—	​		(22)	​		—	​		678
Total	​	$	1,335,225	​	$	2,310	​	$	(19,516)	​	$	(4,134)	​	$	1,313,885

​

Excluding allowance for credit losses, the increase in AFS securities in the six-month period ended June 30, 2025, was due primarily to the purchase of $701 million in securities, offset by $466 million in sales and $129 million in principal paydowns and maturities. The $701 million in securities purchased consisted of agency mortgage-backed securities and collateralized mortgage obligations. The $466 million in sales consisted solely of agency mortgage-backed securities. During the six-month period ended June 30, 2025, the net unrealized loss position of the portfolio improved from $17.2 million in net unrealized losses as of December 31, 2024, to $16.0 million in net unrealized losses as of June 30, 2025. 54

Table of Contents Securities held to maturity. The following table provides a summary of the Company’s HTM securities portfolio as of:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	Amortized		****	Gross Unrecognized						Allowance for			Estimated
(dollars in thousands)	****	Cost		****	Gains		****	Losses		****	Credit Losses		****	Fair Value
June 30, 2025:	​		​	​		​	​		​	​	​	​	​		​
Agency mortgage-backed securities	​	$	663,807	​	$	—	​	$	(59,440)	​	$	—	​	$	604,367
Total	​	$	663,807	​	$	—	​	$	(59,440)	​	$	—	​	$	604,367
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​			​			​		​	​		​	​
Agency mortgage-backed securities	​	$	712,105	​	$	—	​	$	(75,265)	​	$	—	​	$	636,840
Total	​	$	712,105	​	$	—	​	$	(75,265)	​	$	—	​	$	636,840

​

The decrease in HTM securities in the six-month period ended June 30, 2025, was due to principal payments received. There were no purchases of investment securities or other additions to the portfolio during the six-month period ended June 30, 2025. During the six-month period ended June 30, 2025, the net unrealized loss position of the portfolio improved from $75.3 million in net unrealized losses as of December 31, 2024, to $59.4 million in net unrealized losses as of June 30, 2025. The decrease in net unrealized loss position of the portfolio was largely driven by the fall in the 10-year Treasury yield which is the benchmark that agency mortgage-backed securities follow. The 10-year Treasury yield fell 33 basis points to 4.30% as of June 30, 2025, from 4.63% as of December 31, 2024.

​

The scheduled maturities of securities AFS, and the related weighted average yields, were as follows, as of June 30, 2025:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	1 Year or		****	More than 1 Year		****	More than 5 Years		****	More than		****	​	​	****
(dollars in thousands)	​	Less		​	through 5 Years		​	through 10 Years		​	10 Years		​	Total		****
Amortized Cost:	​		​	​		​	​		​	​		​	​		​
Collateralized mortgage obligations	​	$	—	​	$	216	​	$	417	​	$	205,348	​	$	205,981	​
Agency mortgage-backed securities	​	​	—	​	​	2,525	​	​	—	​	​	1,091,038	​	​	1,093,563	​
Municipal bonds	​	​	2,604	​	​	20,552	​	​	24,497	​	​	1,096	​	​	48,749	​
SBA securities	​	​	—	​	​	485	​	​	111	​	​	7,349	​	​	7,945	​
Beneficial interests in FHLMC securitization	​	​	—	​	​	841	​	​	—	​	​	—	​	​	841	​
Corporate bonds	​	​	3,005	​	​	57,969	​	​	61,236	​	​	5,522	​	​	127,732	​
U.S. Treasury	​		500	​		499	​		—	​		—	​		999	​
Total	​	$	6,109	​	$	83,087	​	$	86,261	​	$	1,310,353	​	$	1,485,810	​
Weighted average yield	​		2.67	%		5.53	%		3.10	%		5.34	%		5.21	%
Estimated Fair Value:	​			​			​			​			​			​
Collateralized mortgage obligations	​	$	—	​	$	205	​	$	394	​	$	203,820	​	$	204,419	​
Agency mortgage-backed securities	​	​	—	​	​	2,463	​	​	—	​	​	1,086,608	​	​	1,089,071	​
Municipal bonds	​	​	2,602	​	​	19,881	​	​	22,872	​	​	854	​	​	46,209	​
SBA securities	​	​	—	​	​	484	​	​	111	​	​	7,294	​	​	7,889	​
Beneficial interests in FHLMC securitization	​	​	—	​	​	841	​	​	—	​	​	—	​	​	841	​
Corporate bonds	​	​	2,932	​	​	56,452	​	​	56,578	​	​	4,390	​	​	120,352	​
U.S. Treasury	​		487	​		505	​		—	​		—	​		992	​
Total	​	$	6,021	​	$	80,831	​	$	79,955	​	$	1,302,966	​	$	1,469,773	​

​ 55

Table of Contents The scheduled maturities of securities HTM, and the related weighted average yields were as follows, as of June 30, 2025:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	1 Year or		****	More than 1 Year		****	More than 5 Years		****	More than		****	​	​	****
(dollars in thousands)	​	Less		​	through 5 Years		​	through 10 Years		​	10 Years		​	Total		****
June 30, 2025	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Amortized Cost:		​			​			​			​			​		​
Agency mortgage-backed securities	​	$	—	​	$	5,752	​	$	9,027	​	$	649,028	​	$	663,807	​
Total	​	$	—	​	$	5,752	​	$	9,027	​	$	649,028	​	$	663,807	​
Weighted average yield	​		—	%		1.08	%	​	1.77	%		2.22	%	​	2.21	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Estimated Fair Value:	​			​			​			​			​			​
Agency mortgage-backed securities	​	$	—	​	$	5,476	​	$	8,329	​	$	590,562	​	$	604,367	​
Total	​	$	—	​	$	5,476	​	$	8,329	​	$	590,562	​	$	604,367	​

See Note 3: Securities of the notes to the consolidated financial statements for additional information on our investment securities portfolio.

​

Loans. The following table sets forth our loans held for investment, by loan category, as of:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	****	June 30, 2025				​	December 31, 2024
​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Percentage of	​	​	​	​	Percentage of	​
(dollars in thousands)	****	Amount		​	Total Loans	​	Amount		​	Total Loans	​
Outstanding principal balance:		​		​		​	​		​	​	​
Loans secured by real estate:		​		​		​	​		​	​	​
Residential properties:		​		​		​	​		​	​	​
Multifamily	​	$	3,288,093	​	43.6	%	$	3,341,823	​	42.1	%
Single family	​		822,508	​	10.9	%		873,491	​	11.0	%
Total real estate loans secured by residential properties	​		4,110,601	​	54.5	%		4,215,314	​	53.1	%
Commercial properties	​		818,738	​	10.8	%		904,167	​	11.4	%
Land and construction	​		43,361	​	0.6	%		69,246	​	0.9	%
Total real estate loans	​		4,972,700	​	65.9	%		5,188,727	​	65.4	%
Commercial and industrial loans	​		2,568,621	​	34.1	%		2,746,351	​	34.6	%
Consumer loans	​		1,544	​	0.0	%		1,137	​	0.0	%
Total loans	​		7,542,865	​	100.0	%		7,936,215	​	100.0	%
Premiums, discounts and deferred fees and expenses	​		5,458	​	​	​		5,178	​	​	​
Total	​	$	7,548,323	​	​	​	$	7,941,393	​	​	​

​

The table above excludes loans held for sale which totaled $0.5 billion at June 30, 2025 and $1.3 billion at December 31, 2024, and consisted entirely of multifamily loans which were reclassified from loans held for investment in August, 2024. Loans held for sale, net of deferred fees, are accounted for at the lower of amortized cost or fair value. During the six-month period ended June 30, 2025, $858 million principal balance in loans held for sale were sold.

Loans held for investment decreased by $393 million, as a result of loan fundings totaling $436 million, offset by loan payments and payoffs of $808 million, and reclassifications to loans held for sale of $20.5 million during the six-month period ended June 30, 2025.

At June 30, 2025, $3.3 billion of the loan portfolio consisted of multifamily loans.  Adjustable-rate and variable-rate loans comprised 85% of the portfolio and fixed-rate loans comprised 15% of the portfolio at June 30, 2025.  The portfolio consists principally of small-balance (average loan size of $3.9 million) loans on non-luxury essential housing apartment stock, with the average property consisting of 22 units. 56

Table of Contents At June 30, 2025, $819 million of the loan portfolio consisted of loans secured by commercial real estate properties, consisting of non-owner occupied and owner-occupied loans, respectively. Non-owner occupied CRE loans totaled approximately $528 million and consisted of a diversified mix of retail, office, hospitality, industrial, medical, and other real estate loans.

At June 30, 2025, $2.6 billion of the loan portfolio consisted of C&I loans consisting of commercial business lines of credit ($1.1 billion), municipal financing loans ($986 million), commercial business term loans ($367 million) and equipment finance loans ($110 million).

As of June 30, 2025, the combined loan portfolio (including those included in loans held for sale) is largely concentrated in the geographic markets in which we operate.  As of June 30, 2025, approximately 85.0% of the loans in the portfolio were made to borrowers who live and/or conduct business in California (70.2%), Florida (8.3%), Texas (5.1%), and Nevada (1.4%).

The following table presents contractual maturity information for loans held for investment, net of premiums, discounts and deferred fees and expenses as of June 30, 2025:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	Loans With a Scheduled
​	​	Scheduled Maturity											​	Maturity After One Year
​	​	​	Due in One Year	​	​	Due After One Year	​	​	Due After Five	​	​	Due After	​	​	Loans With	​	​	Loans With
(dollars in thousands)	​	​	or Less		​	Through Five Years	​	​	to 15 Years	​	​	15 Years	​	​	Fixed Rates	​	​	Adjustable Rates
Loans secured by real estate:		​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential properties:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Multifamily	​	$	6,699	​	$	9,953	​	$	488,139	​	$	2,789,123	​	$	474,643	​	$	2,812,572
Single family	​	​	957	​	​	5,298	​	​	6,898	​	​	812,684	​	​	60,421	​	​	764,459
Total real estate loans secured by residential properties	​	​	7,656	​	​	15,251	​	​	495,037	​	​	3,601,807	​	​	535,064	​	​	3,577,031
Commercial properties	​	​	111,080	​	​	345,884	​	​	251,233	​	​	110,145	​	​	407,695	​	​	299,566
Land and construction	​	​	33,896	​	​	5,227	​	​	—	​	​	4,194	​	​	5,053	​	​	4,369
Total real estate loans	​	​	152,632	​	​	366,362	​	​	746,270	​	​	3,716,146	​	​	947,812	​	​	3,880,966
Commercial and industrial loans	​	​	207,642	​	​	1,339,831	​	​	318,174	​	​	699,717	​	​	1,316,682	​	​	1,041,040
Consumer loans	​	​	1,428	​	​	44	​	​	1	​	​	76	​	​	63	​	​	58
Total loans held for investment, net	​	$	361,702	​	$	1,706,237	​	$	1,064,445	​	$	4,415,939	​	$	2,264,557	​	$	4,922,064

​

See Note 4: Loans of the notes to the consolidated financial statements for additional information on our loan portfolio.

Deposits. The following table sets forth information with respect to our deposits and the average rates paid on deposits, as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	June 30, 2025				****	December 31, 2024					​
​	​	​	​	​	Weighted	​	​	​	​	Weighted	​	​
(dollars in thousands)	****	Amount		****	Average Rate	****	Amount		****	Average Rate	****	​
Demand deposits:	​		​	​		​		​	​		​	​
Noninterest-bearing	​	$	1,467,203		—	​	$	1,956,628		—	​	​
Interest-bearing	​		1,672,287		2.99	%		1,995,397		3.29	%	​
Money market and savings	​		3,604,909		3.55	%		3,524,801		3.60	%	​
Certificates of deposit	​		1,849,294		4.50	%		2,393,453		4.72	%	​
Total	​	$	8,593,693		3.04	%	$	9,870,279		3.09	%	​

​

Total deposits decreased by approximately $1.3 billion to $8.6 billion at June 30, 2025, compared to $9.9 billion at December 31, 2024. During the six-month period ended June 30, 2025, higher-cost specialty deposits, largely consisting of MSR and servicing deposit accounts, decreased by approximately $826 million, with $540 million of the decrease occurring in the month of June, 2025. In addition, during the six-month period ended June 30, 2025, high-cost brokered deposits decreased by approximately $591 million. Finally, during the six-month period ended June 30, 2025, retail branch, digital banking, and corporate deposits increased by approximately $141 million. 57

Table of Contents At June 30, 2025, the deposit mix consisted of the following:  noninterest-bearing (17%), interest-bearing (19%), money market and savings (42%), certificates of deposit (22%).  At December 31, 2024, the deposit mix consisted of the following:  noninterest-bearing (20%), interest-bearing (20%), money market and savings (36%), certificates of deposit (24%).  The weighted average rates of all interest-bearing deposits decreased compared to December 31, 2024.  Combined weighted average rate for all deposit account categories decreased to 3.04% at June 30, 2025, compared to 3.09% at December 31, 2024.

At June 30, 2025, deposits by channel consisted of the following:  retail branches (29%), specialty banking (27%), digital banking (12%), and wholesale (22%).  At December 31, 2024, deposits by channel consisted of the following: retail branches (26%), specialty banking (32%), digital banking (9%), and wholesale (33%).

The Bank may utilize brokered deposits (included in wholesale channel) as a source of funding and as a component of its overall liquidity management process. The Bank held brokered deposits totaling $2.6 billion and $3.2 billion at June 30, 2025 and December 31, 2024, respectively including insured cash sweep (“ICS”) accounts totaling $1.0 billion at June 30, 2025 and December 31, 2024, which are classified as brokered deposit accounts for regulatory reporting purposes.  The weighted average rates paid on non-ICS and ICS brokered deposit balances were 4.38% and 2.74%, respectively for accounts held at June 30, 2025.  The weighted average rates paid on non-ICS and ICS brokered deposit balances were 4.15% and 3.10%, respectively for accounts held at December 31, 2024.

Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 13.4% and 19.7% of our total deposits as of June 30, 2025 and December 31, 2024, respectively. The composition of our large depositor relationships includes mortgage servicing clients who have maintained long-term depository relationships with us.  The balances in these depository accounts are subject to seasonal inflows and outflows, common in the mortgage servicing industry.

The deposits held by the Bank are insured by the FDIC Deposit Insurance Fund 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.  Insured and collateralized deposits comprised approximately 85% of total deposits at June 30, 2025.

The following table sets forth the estimated deposits exceeding the FDIC insurance limit:

​	​	​	​	​	​	​
​	​	June 30, 2025		​	December 31, 2024
​	​	​	​	​	​	​
(dollars in thousands)	​	Amount		​	Amount
Uninsured deposits		$	1,930,692	​	$	2,401,646

​

The following table sets forth the maturity distribution of certificates of deposit as of June 30, 2025:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​	​	​	Over Three	​	​	Over Six	​	​	​	​	​	​
Large Denomination Certificates of Deposit	​	​	Three Months	​	​	Months Through	​	​	Months Through	​	​	Over	​	​	​
Maturity Distribution	​	​	or Less	​	​	Six Months	​	​	Twelve Months	​	​	Twelve Months	​	​	Total
Certificates of deposit of $250,000 or less	​	$	223,599	​	$	177,755	​	$	476,420	​	$	769,851	​	$	1,647,625
Certificates of deposit of more than $250,000	​	​	65,181	​	​	59,578	​	​	76,369	​	​	541	​	​	201,669
Total	​	$	288,780	​	$	237,333	​	$	552,789	​	$	770,392	​	$	1,849,294

​

*Borrowings.*At June 30, 2025, our borrowings consisted of $1.0 billion in FHLB putable advances at the Bank, $650 million of FHLB term advances at the Bank, and $19 million in repurchase agreements at the Bank.  At December 31, 2024, our borrowings consisted of $1.0 billion in FHLB putable advances at the Bank, $400 million of FHLB term advances at the Bank, and $25 million in repurchase agreements at the Bank.

The average balance of borrowings and the weighted average interest rate on such borrowings were $1.6 billion and 4.12%, respectively for six-month period ended June 30, 2025. The average balance of borrowings and the weighted average interest rate on such borrowings were $1.5 billion and 4.09%, respectively for the year ended December 31, 2024.   At June 30, 2025, total borrowings represented 14.4% of total assets, compared to 11.3% at December 31, 2024. 58

Table of Contents As of June 30, 2025, our unused borrowing capacity was $2.1 billion, which consisted of $1.9 billion in available lines of credit with the FHLB and the Federal Reserve Bank’s discount window, $240 million in borrowing capacity through unsecured federal funds lines with six correspondent financial institutions, and $20 million in available borrowing capacity through a line of credit arrangement that our holding company maintains with an unaffiliated lender. For additional information about borrowings, see Note 10: Borrowings to the consolidated financial statements.

Subordinated debt. At June 30, 2025 and December 31, 2024, FFI had two issuances of subordinated notes with an aggregate carrying value of $173 million. For additional information about subordinated debt, see Note 11: Subordinated Debt to the consolidated financial statements.

Delinquent Loans, Nonperforming Assets and Provision for Credit Losses

Loans are considered past due following the date when either interest or principal is contractually due and unpaid. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal and, generally, when a loan becomes contractually past due for 90 days or more with respect to principal or interest. However, the accrual of interest may be continued on a well-secured loan contractually past due 90 days or more with respect to principal or interest if the loan is in the process of collection or collection of the principal and interest is deemed probable. The following tables provide a summary of past due and nonaccrual loans as of:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	90 Days		​	​	​	​	Total Past Due		​	​	​	​	​	​
(dollars in thousands)	****	30–59 Days		****	60-89 Days		****	or More		****	Nonaccrual		****	and Nonaccrual		****	Current		****	Total
June 30, 2025:		​			​			​			​			​			​			​
Real estate loans:		​			​			​			​			​			​			​
Residential properties	​	$	10,858	​	$	—	​	$	—	​	$	18,779	​	$	29,637	​	$	4,090,114	​	$	4,119,751
Commercial properties	​		3,180	​		—	​		355	​		6,006	​		9,541	​		808,801	​		818,342
Land and construction	​		—	​		—	​		—	​		—	​		—	​		43,317	​		43,317
Commercial and industrial loans	​		637	​		168	​		—	​		9,842	​		10,647	​		2,554,717	​		2,565,364
Consumer loans	​		—	​		—	​		—	​		—	​		—	​		1,549	​		1,549
Total	​	$	14,675	​	$	168	​	$	355	​	$	34,627	​	$	49,825	​	$	7,498,498	​	$	7,548,323
Percentage of total loans	​		0.19	%		0.00	%		0.00	%		0.46	%		0.66	%			​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​			​			​			​			​			​			​
Real estate loans:	​			​			​			​			​			​			​
Residential properties	​	$	7,083	​	$	—	​	$	—	​	$	23,324	​	$	30,407	​	$	4,193,994	​	$	4,224,401
Commercial properties	​		7,944	​		428	​		12,900	​		7,946	​		29,218	​		874,463	​		903,681
Land and construction	​		—	​		—	​		—	​		—	​		—	​		69,134	​		69,134
Commercial and industrial loans	​		997	​		617	​		—	​		9,174	​		10,788	​		2,732,226	​		2,743,014
Consumer loans	​		—	​		—	​		—	​		—	​		—	​		1,163	​		1,163
Total	​	$	16,024	​	$	1,045	​	$	12,900	​	$	40,444	​	$	70,413	​	$	7,870,980	​	$	7,941,393
Percentage of total loans	​		0.20	%		0.01	%		0.16	%		0.51	%		0.89	%			​

​ 59

Table of Contents The following table summarizes our nonaccrual loans as of:

​

​	​	​	​	​	​	​
​	​	Nonaccrual		​	Nonaccrual
​	​	with Allowance		​	with no Allowance
(dollars in thousands)		for Credit Losses		****	for Credit Losses
June 30, 2025	​		​	​
Real estate loans:	​	​	​	​	​	​
Residential properties	​	$	1,363	​	$	17,416
Commercial properties	​	​	585	​	​	5,421
Commercial and industrial loans	​		9,834	​		8
Total	​	$	11,782	​	$	22,845
​	​	​	​	​	​	​
December 31, 2024	​		​	​
Real estate loans:	​	​	​	​	​	​
Residential properties	​	$	1,420	​	$	21,904
Commercial properties	​	​	3,449	​	​	4,497
Commercial and industrial loans	​		9,174	​		—
Total	​	$	14,043	​	$	26,401

​

Nonaccrual loans totaled $34.6 million as of June 30, 2025, compared to $40.4 million as of December 31, 2024.  The ratio of nonaccrual loans to total loans outstanding (including LHFS) was 0.43% at June 30, 2025 and December 31, 2024, respectively. 60

Table of Contents Allowance for Credit Losses. The following table summarizes the activity in our ACL related to loans held for investment for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	Provision		​	​	​	​	​	​	​	​	​	​
​	​	Beginning		​	(Reversal) for		​	​	​	​	​	​	​	Ending		​
(dollars in thousands)	****	Balance		****	Credit Losses		​	Charge-offs		****	Recoveries		****	Balance		​
Three months ended June 30, 2025:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Real estate loans:		​			​		​	​			​			​		​
Residential properties	​	$	6,544	​	$	236	​	$	—	​	$	—	​	$	6,780	​
Commercial properties	​		5,861	​		529	​		—	​		—	​		6,390	​
Land and construction	​		46	​		47	​		—	​		—	​		93	​
Commercial and industrial loans	​		22,739	​		1,680	​		(492)	​		357	​		24,284	​
Consumer loans	​		10	​		3	​		—	​		—	​		13	​
Total	​	$	35,200	​	$	2,495	​	$	(492)	​	$	357	​	$	37,560	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net (charge-offs) recoveries	​	​	​	​	​	​	​	​	​	​	​	​	​	$	(135)
Net (charge-offs) recoveries to average loans	​	​	​	​	​	​	​	​	​	​	​	​	​	​	0.006	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2025	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Real estate loans:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Residential properties	​	$	7,216	​	$	(442)	​	$	—	​	$	6	​	$	6,780	​
Commercial properties	​	​	6,683	​	​	(293)	​	​	—	​	​	—	​	​	6,390	​
Land and construction	​	​	61	​	​	32	​	​	—	​	​	—	​	​	93	​
Commercial and industrial loans	​	​	18,333	​	​	6,284	​	​	(895)	​	​	562	​	​	24,284	​
Consumer loans	​	​	9	​	​	4	​	​	—	​	​	—	​	​	13	​
Total	​	$	32,302	​	$	5,585	​	$	(895)	​	$	568	​	$	37,560	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net (charge-offs) recoveries	​	​	​	​	​	​	​	​	​	​	​	​	​	$	(327)	​
Net (charge-offs) recoveries to average loans	​	​	​	​	​	​	​	​	​	​	​	​	​	​	0.01	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Three months ended June 30, 2024:	​			​			​			​			​			​
Real estate loans:	​			​			​			​			​			​
Residential properties	​	$	8,374	​	$	639	​	$	—	​	$	—	​	$	9,013	​
Commercial properties	​		4,597	​		1,489	​		—	​		—	​		6,086	​
Land and construction	​		66	​		11	​		—	​		—	​		77	​
Commercial and industrial loans	​		16,251	​		(1,930)	​		(369)	​		152	​		14,104	​
Consumer loans	​		7	​		8	​		—	​		—	​		15	​
Total	​	$	29,295	​	$	217	​	$	(369)	​	$	152	​	$	29,295	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net (charge-offs) recoveries	​	​	​	​	​	​	​	​	​	​	​	​	​	$	(217)	​
Net (charge-offs) recoveries to average loans	​	​	​	​	​	​	​	​	​	​	​	​	​	​	0.01	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Six Months Ended June 30, 2024:	​			​			​			​			​			​
Real estate loans:	​			​			​			​			​			​
Residential properties	​	$	9,921	​	$	(908)	​	$	—	​	$	—	​	$	9,013	​
Commercial properties	​		4,148	​		1,938	​		—	​		—	​		6,086	​
Land and construction	​		332	​		(255)	​		—	​		—	​		77	​
Commercial and industrial loans	​		14,796	​		(133)	​		(862)	​		303	​		14,104	​
Consumer loans	​		8	​		6	​		—	​		1	​		15	​
Total	​	$	29,205	​	$	648	​	$	(862)	​	$	304	​	$	29,295	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Net (charge-offs) recoveries	​	​	​	​	​	​	​	​	​	​	​	​	​	$	(558)	​
Net (charge-offs) recoveries to average loans	​	​	​	​	​	​	​	​	​	​	​	​	​	​	0.01	%

​

​ 61

Table of Contents The allowance for credit losses for loans held for investment totaled $37.6 million as of June 30, 2025, compared to $29.3 million at June 30, 2024 and $32.3 million as of December 31, 2024.  Our ACL for loans held for investment represented 0.50% of total loans held for investment outstanding at June 30, 2025, compared to 0.29% of total loans held for investment outstanding at June 30, 2024 and 0.41% of total loans held for investment outstanding at December 31, 2024.  Our ACL for loans held for investment represented 108% of total nonaccrual loans outstanding at June 30, 2025, compared to 155% of total nonaccrual loans outstanding at June 30, 2024 and 80% of total nonaccrual loans outstanding at December 31, 2024, respectively.  Activity for the six-month period ended June 30, 2025 included provision for credit losses of $5.6 million, charge-offs of $895 thousand, and recoveries of $568 thousand.  The $5.3 million in provision recorded (net of charge-offs and recoveries) primarily reflects higher reserves for the commercial loan portfolio due to increased model-calculated loss factors.

Under the CECL methodology, on which our ACL for loans is based, estimates of expected credit losses over the life of a loan are determined and utilized considering the effect of various major factors.  The major factors considered in evaluating losses are historical charge-off experience, delinquency rates, local and national economic conditions including macroeconomic forecasts, the borrower’s ability to repay the loan and timing of repayments, and the value of any related collateral.  Management’s estimate of fair value of the collateral considers current and anticipated future real estate market conditions, thereby causing these estimates to be particularly susceptible to changes that could result in a material adjustment to results of operations in the future.  Provisions for credit losses are charged to operations based on management’s evaluation of estimated losses in its loan portfolio.

In addition, the FDIC and the California Department of Financial Protection and Innovation, as integral parts of their examination processes, periodically review the adequacy of our ACL. These agencies may require us to make additional provisions for credit losses, over and above the provisions that we have already made, the effect of which would be to reduce our income.

Liquidity

Liquidity management focuses on our ability to generate, on a timely and cost-effective basis, cash sufficient to meet the funding needs of current loan demand, deposit withdrawals, principal and interest payments with respect to outstanding borrowings and to pay operating expenses. Liquidity management also includes the ability to manage unplanned decreases or changes in funding sources, as well as abnormal and unexpected needs. To meet such abnormal and unexpected needs, lines of credit are maintained with the FHLB, the Federal Reserve Bank, and correspondent banks.  Liquidity management is both a daily and long-term function of funds management. Liquidity management takes into consideration liquid assets, which includes: cash and cash equivalents; unencumbered eligible investment securities; and investment securities pledged under the Federal Reserve Bank’s discount window program which can be drawn at-will. Liquidity management also takes into consideration available liquidity sources such as available unused funds from both the FHLB and Federal Reserve Bank credit lines. The Bank’s Federal Reserve Bank credit line is secured by pledged collateral in the form of qualifying loans and investment securities. As of June 30, 2025, the Bank had secured unused borrowing capacity of $1.3 billion under this agreement. The Bank’s unused borrowing capacity with the FHLB as of June 30, 2025 was $0.6 billion. The Bank had a total of $240 million in unused borrowing capacity available through its correspondent bank lines of credit as of June 30, 2025.

We monitor our liquidity in accordance with guidelines established by our Board of Directors and applicable regulatory requirements. Our need for liquidity is affected by our loan activity, net changes in deposit levels and the maturities of our borrowings. The principal sources of our liquidity consist of deposits, loan interest and principal payments and prepayments, investment management and consulting fees, proceeds from borrowings, and sales of FFI common stock. The remaining balances of the Bank’s lines of credit available to draw down totaled $2.1 billion at June 30, 2025.

We believe our liquid assets and available liquidity sources are sufficient to meet current funding needs and that we have the ability to manage unplanned decreases or changes in funding sources, as well as abnormal and unexpected needs. We regularly monitor liquidity to ensure levels are in compliance with minimum requirements established by our Board of Directors. As of June 30, 2025, our available liquidity ratio was 42.0%, which is above our minimum policy requirement of 25%. We regularly model liquidity stress scenarios to ensure that adequate liquidity is available, and have contingency funding plans in place, which are reviewed and tested on a regular, recurring basis. 62

Table of Contents Cash Flows from Operating Activities. During the six-month period ended June 30, 2025, operating activities used net cash of $20.2 million. Changes in accrued interest receivable and other assets as well as changes in accounts payable and other liabilities accounted for most of the cash flows used in operating activities.

Cash Flows from Investing Activities. During the six-month period ended June 30, 2025, investing activities provided net cash of $1.1 billion, primarily due to $807 million in net proceeds from the sale of loans held for sale and $399 million in reduced loan balances, offset by $0.1 billion in proceeds on sale of securities and maturities of securities, net of purchases.

Cash Flows from Financing Activities. During the six-month period ended June 30, 2025, financing activities used net cash of $1.0 billion, consisting primarily of a net decrease of $1.3 billion in deposits, offset by a net increase of $0.3 billion in FHLB and FRB advances.

Ratio of Loans to Deposits. The relationship between gross loans and total deposits can provide a useful measure of a bank’s liquidity. Since repayment of loans tends to be less predictable than the maturity of investments and other liquid resources, the higher the loan-to-deposit ratio the less liquid are our assets. On the other hand, since we realize greater yields on loans than we do on other interest-earning assets, a lower loan-to-deposit ratio can adversely affect interest income and earnings. As a result, our goal is to achieve a loan-to-deposit ratio that appropriately balances the requirements of liquidity and the need to generate a fair return on our assets. At June 30, 2025 and December 31, 2024, the loan-to-deposit ratios at FFB were 93.4%, and 93.5%, respectively.

Off-Balance Sheet Arrangements

The following table provides the off-balance sheet arrangements of the Company as of June 30, 2025:

​

​	​	​	​
(dollars in thousands)		​	​
Commitments to fund new loans	​	$	15,995
Commitments to fund under existing loans, lines of credit	​	​	970,296
Commitments under standby letters of credit	​		25,364

​

Some of the commitments to fund existing loans, lines of credit and letters of credit are expected to expire without being drawn upon. Therefore, the total commitments do not necessarily represent future cash requirements. As of June 30, 2025, FFB was obligated on $126 million of letters of credit, consisting of a $116 million letter of credit to Freddie Mac as collateral for the 2024 and 2025 multifamily loan sale/securitization, and a $10 million letter of credit to the FHLB used as collateral for public fund deposits.

Interest Rate Risk Management

Interest rate risk (“IRR”) refers to the vulnerability of an institution’s financial condition to movements in interest rates. Excessive IRR poses a significant threat to an institution’s earnings and capital. Changes in interest rates affect an institution’s earnings by altering interest-sensitive income and expenses. Changes in interest rates also affect the underlying value of an institutions’ assets, liabilities, and off-balance sheet instruments because the present value of future cash flows (and in some cases, the cash flows themselves) change when interest rates change. The Board of Directors of the Bank has adopted a policy to govern the management of the Bank’s exposure to IRR. This policy is an integral part of the Bank’s overall asset/liability management. The goals of this policy are to (1) optimize profits through the management of IRR; (2) limit the exposure of the Bank’s earnings and capital to fluctuations in interest rates; and (3) ensure that the Bank’s management of IRR meets applicable regulatory guidelines.

We assess our interest rate exposure within our major balance sheet categories individually, as well as in our balance sheet holistically, focusing on the interest rate sensitivity of our assets and liabilities.  Our processes identify potential areas of vulnerability, particularly those influenced by fluctuations in market interest rates.  Our IRR assessment process considers the repricing and liquidity characteristics of various financial instruments, including loans, investment securities, deposits, and borrowings.  We establish a desired risk profile that aligns with our strategic goals and the prevailing interest rate environment.  This profile considers factors such as the mix of fixed and floating rate assets and 63

Table of Contents liabilities, taking into account our outlook on interest rates.  We set clear policy limits and guidelines that guide our IRR management strategies, consistent with regulatory guidance.  We employ various strategies to mitigate IRR by managing our asset and liability mix, including adjusting the duration of our assets to align with our liabilities.  Our IRR management process is dynamic and includes regular monitoring and review.  Our management team conducts ongoing assessments of asset and liability maturities and repricing characteristics, ensuring they remain consistent with our desired risk profile.  By proactively identifying, assessing, and managing IRR, we aim to maintain stability of our financial performance, protect interests of our stakeholders, and ensure our continued ability to meet the financial needs of our customers.

The following table sets forth the interest-earning assets and interest-bearing liabilities on the basis of when they reprice or mature as of June 30, 2025:

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Less than		​	From 1 to		​	From 3 to		​	​	​	​	​	​
(dollars in thousands)	****	1 year		****	3 Years		****	5 Years		****	Over 5 Years		****	Total
Interest-earnings assets:	​		​	​		​	​		​	​		​	​		​
Cash equivalents	​	$	1,053,128	​	$	—	​	$	—	​	$	—	​	$	1,053,128
Securities, FHLB stock		​	690,494		​	350,392		​	269,754		​	829,475		​	2,140,115
Loans, including LHFS		​	3,659,284		​	2,629,082		​	910,177		​	735,596		​	7,934,139
Interest-bearing liabilities:		​			​			​			​			​
Deposits:		​			​			​			​			​
Interest-bearing checking		​	(2,204,916)		​	(261,592)		​	(37,736)		​	(6,583)		​	(2,510,827)
Money market and savings		​	(2,505,382)		​	(938,210)		​	(133,970)		​	(26,712)		​	(3,604,274)
Certificates of deposit		​	(1,085,044)		​	(739,114)		​	(113,450)		​	(4)		​	(1,937,612)
Borrowings		​	(269,315)		​	(400,000)		​	(1,000,000)		​	—		​	(1,669,315)
Net: Current Period	​	$	(661,751)	​	$	640,558	​	$	(105,225)	​	$	1,531,772	​	$	1,405,354
Net: Cumulative	​	$	(661,751)	​	$	(21,193)	​	$	(126,418)	​	$	1,405,354	​

​

As of June 30, 2025, the Company is considered liability sensitive as exhibited by the table above. However, the extent to which our net interest margin will be impacted by changes in prevailing interest rates will depend on a number of factors, including how quickly interest-earning assets and interest-bearing liabilities react to interest rate changes. It is not uncommon for rates on certain assets or liabilities to lag behind changes in the market rates of interest. Additionally, prepayments of loans and early withdrawals of certificates of deposit could cause interest sensitivities to vary. As a result, the relationship or “gap” between interest-earning assets and interest-bearing liabilities, as shown in the above table, is only a general indicator of interest rate sensitivity and the effect of changing rates of interest on our net interest income is likely to be different from that predicted solely on the basis of the interest rate sensitivity analysis set forth in the above table.

Our IRR position is regularly measured using two methods: (i) Net Interest Income (“NII”) and (ii) Economic Value of Equity (“EVE”).  Consistent with regulatory requirements, the Bank has established Board of Directors-approved IRR limits for NII simulations and EVE calculations.  These analyses are reviewed quarterly by the Asset/Liability Committee  and the Board of Directors.  If the analyses project changes which are outside our pre-established IRR limits, we may: (i) revise existing limits to address the changes in the Bank’s IRR, with the recommended limits being prudent and consistent with the Board’s risk tolerance; or (ii) retain the existing limits and implement a plan for an orderly return to compliance with these limits, where corrective actions may include, but are not limited to, restructuring the maturity profile of the Bank’s investment portfolio, changing deposit pricing, initiating off-balance sheet hedging actions, or adjusting the repricing characteristics of the loan portfolios.

The NII simulation is used to measure and evaluate potential changes in our net interest income resulting from changes in interest rates.  The model measures the impact over a range of instantaneous shocks in 100 basis points increments to our net interest income over a 12-month forecast period.  The Board-approved limits on NII sensitivity and the actual computed changes to our NII based on the +/- 100 and +/- 200 basis points hypothetical interest rate scenarios as of June 30, 2025 are shown below:

​ 64

Table of Contents

​	​	​	​	​	​	​
​	****	Estimated Increase	****	​	​	****
​	****	(Decrease) in Net	​	​	​	​
Assumed Instantaneous Change in Interest Rates	****	Interest Income	​	​	Board Limits	​
+ 100 basis points		(9.16)	%	​	(20.00)	%
+ 200 basis points		(16.31)	%	​	(25.00)	%
- 100 basis points		(0.36)	%	​	(10.00)	%
- 200 basis points		(1.39)	%	​	(20.00)	%

​

The modeled one-year NII results indicate that the Bank is more earnings sensitive in the rising rate shock scenarios of 100 through 200 basis points. The NII modeled results above are in compliance with the IRR limits.

The EVE measures the sensitivity of our market value equity to simultaneous changes in interest rates.  EVE is derived by subtracting the economic value of the Bank’s liabilities from the economic value of its assets, assuming current and hypothetical interest rate environments.  EVE is based on all of the future cash flows expected to be generated by the Bank’s current balance sheet, discounted to derive the economic value of the Bank’s assets and liabilities.  These cash flows may change depending on the assumed interest rate environment and the resulting changes in other assumptions, such as prepayment speeds.  The Bank has established IRR limits which specify the maximum EVE sensitivity allowed under current interest rates and for a range of hypothetical interest rate scenarios each in 100 basis point increments.  The hypothetical scenarios are represented by immediate, permanent, parallel movements in the term structure of interest rates.  The Board-approved limits on EVE sensitivity and the actual computed changes to our EVE based on the +/- 100 and +/- 200 basis points hypothetical interest rate scenarios as of June 30, 2025 are shown below:

​	​	​	​	​	​	​
​	****	Estimated Increase	****	​	​	****
​	****	(Decrease)	​	​	​	​
​	​	in Economic	​	​	​	​
Assumed Instantaneous Change in Interest Rates	​	Value of Equity	​	​	Board Limits	​
+ 100 basis points		(3.99)	%	​	(15.00)	%
+ 200 basis points		(10.92)	%	​	(25.00)	%
- 100 basis points		(0.62)	%	​	(15.00)	%
- 200 basis points		(3.12)	%	​	(20.00)	%

​

The results of the EVE are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. These could include, but are not limited to, non-parallel yield curve shifts, changes in market interest rate spreads and the actual reaction to changes in interest rate levels of interest-earning assets and interest-bearing liabilities. It is not uncommon for rates on certain assets or liabilities to lag behind changes in the market rates of interest. Additionally, prepayments of loans and early withdrawals of certificates of deposit could cause interest sensitivities to vary.

The EVE modeled results above are in compliance with the EVE limits. The EVE is an interest rate risk management tool, and the results are not necessarily an indication of our actual future results. Actual results may vary significantly from the results suggested by the table above. Loan prepayments and deposit attrition, changes in our mix of earning assets or funding sources, and future asset/liability management decisions, among others, may vary significantly from our assumptions.

The results of these analyses and simulations do not contemplate all of the actions that we may undertake in response to changes in interest rates. In response to actual or anticipated changes in interest rates, we have various alternatives for managing and reducing the Bank’s exposure to interest rate risk, such as entering into hedges and obtaining long-term fixed-rate FHLB advances.

Capital Resources and Dividend Policy

The capital rules applicable to United States based bank holding companies and federally insured depository institutions (“Capital Rules”) require the Company (on a consolidated basis) and FFB (on a stand-alone basis) to meet specific capital adequacy requirements that, for the most part, involve quantitative measures, primarily in terms of the ratios of their capital to their assets, liabilities, and certain off-balance sheet items, calculated under regulatory accounting 65

Table of Contents practices. For additional information regarding these Capital Rules, see Item 1 “Business Capital Requirements Applicable to Banks and Bank Holding Companies” included in our Annual Report on Form 10-K for the year ended December 31, 2024.

In addition, prompt corrective action regulations place a federally insured depository institution, such as FFB, into one of five capital categories on the basis of its capital ratios: (i) well-capitalized; (ii) adequately capitalized; (iii) undercapitalized; (iv) significantly undercapitalized; or (v) critically undercapitalized. A depository institution’s primary federal regulatory agency may determine that, based on certain qualitative assessments, the depository institution should be assigned to a lower capital category than the one indicated by its capital ratios. At each successive lower capital category, a depository institution is subject to greater operating restrictions and increased regulatory supervision by its federal bank regulatory agency.

The following table sets forth the capital and capital ratios of FFI (on a consolidated basis) and FFB as of the respective dates indicated below, as compared to the respective regulatory requirements applicable to them:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	****	​	​	​	​	****	​	​	​	​		To Be Well Capitalized
​	​	​	​	​	​	​	For Capital				​	Under Prompt Corrective				​
​	​	Actual				​	Adequacy Purposes				​	Action Provisions				​
(dollars in thousands)	****	Amount		****	Ratio	****	Amount		****	Ratio	****	Amount		****	Ratio	****
FFI	​		​	​		​		​	​		​		​	​
June 30, 2025:		​					​					​				​
Common equity tier 1 ratio	​	$	923,967		11.08	%	$	375,354		4.50	%	​				​
Tier 1 Leverage ratio	​		1,011,616		8.29	%		488,248		4.00	%	​				​
Tier 1 risk-based capital ratio	​		1,011,616		12.13	%		500,472		6.00	%	​				​
Total risk-based capital ratio	​		1,226,565		14.70	%		667,296		8.00	%	​				​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​		​		​	​		​		​		​				​
Common equity tier 1 ratio	​	$	919,044		10.09	%	$	410,043		4.50	%	​				​
Tier 1 Leverage ratio	​		1,006,693		7.59	%		530,338		4.00	%	​				​
Tier 1 risk-based capital ratio	​		1,006,693		11.05	%		546,724		6.00	%	​				​
Total risk-based capital ratio	​		1,215,691		13.34	%		728,966		8.00	%	​				​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
FFB	​		​		​	​		​		​		​				​
June 30, 2025:	​		​		​	​		​		​		​				​
Common equity tier 1 ratio	​	$	1,156,088		13.91	%	$	373,891		4.50	%	$	540,065		6.50	%
Tier 1 Leverage ratio	​		1,156,088		9.49	%		487,266		4.00	%		609,082		5.00	%
Tier 1 risk-based capital ratio	​		1,156,088		13.91	%		498,522		6.00	%		664,696		8.00	%
Total risk-based capital ratio	​		1,197,547		14.41	%		664,696		8.00	%		830,870		10.00	%
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2024:	​		​		​	​		​		​	​		​		​	​
Common equity tier 1 ratio	​	$	1,147,475		12.64	%	$	408,553		4.50	%	$	590,132		6.50	%
Tier 1 Leverage ratio	​		1,147,475		8.67	%		529,373		4.00	%		661,717		5.00	%
Tier 1 risk-based capital ratio	​		1,147,475		12.64	%		544,737		6.00	%		726,316		8.00	%
Total risk-based capital ratio	​		1,183,015		13.03	%		726,316		8.00	%		907,895		10.00	%

​

As of each of the dates set forth in the above table, the Company exceeded the minimum required capital ratios applicable to it and FFB’s capital ratios exceeded the minimums necessary to qualify as a well-capitalized depository institution under the prompt corrective action regulations. The required ratios for capital adequacy set forth in the above table do not include the Capital Rules’ additional capital conservation buffer, though each of the Company and FFB maintained capital ratios necessary to satisfy the capital conservation buffer requirements as of the dates indicated.

As of June 30, 2025, the amount of capital at FFB in excess of amounts required to be well capitalized for purposes of the prompt corrective action regulations was $616 million for the common equity tier 1 ratio, $547 million for the leverage ratio, $491 million for the tier 1 risk-based capital ratio and $367 million for the total risk-based capital ratio.

The amount and declaration of future cash dividends are subject to approval by our Board of Directors and certain regulatory restrictions which are discussed in Item 1 “Business—Supervision and Regulation—Dividends and Stock Repurchases” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2024. During the quarter and six-month periods ended June 30, 2025 there were no dividends declared or paid. 66

Table of Contents We had no material commitments for capital expenditures as of June 30, 2025. However, we intend to take advantage of opportunities that may arise in the future to grow our businesses, which may include opening additional offices or acquiring complementary businesses that we believe will provide us with attractive risk-adjusted returns. As a result, we may seek to obtain additional borrowings and to sell additional shares of our common stock to raise funds which we might need for these purposes. There is no assurance, however, that, if required, we will succeed in obtaining additional borrowings or selling additional shares of our common stock or other securities on terms that are acceptable to us, if at all, as this will depend on market conditions and other factors outside of our control, as well as our future results of operations. See Item 1A, “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2024 for information regarding the impact that future sales of our common stock may have on the share ownership of our existing stockholders.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For quantitative and qualitative disclosures regarding market risk in the Company’s portfolio, please see Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations – Interest Rate Risk Management above.

ITEM 4.CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

​

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information, is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.  In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

​

In accordance with SEC rules, an evaluation was performed under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness, as of June 30, 2025, of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of June 30, 2025, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure, as a result of the material weakness in our internal control over financial reporting described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.

​

We are actively implementing corrective measures, including hiring additional personnel and enhancing our financial oversight processes to address the material weakness in our internal control over financial reporting described in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.  These measures include engaging with a professional services firm during the second quarter of 2025 to assist management with the material weakness pertaining to the allowance for credit loss (“ACL”) as noted in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2024.  The scope of the engagement included:  (1) assessment of the current state ACL process, documentation, control activities, and estimation risk factors; (2) identification of gaps, associated recommendations, and a plan to address such gaps; (3) documenting the existing ACL process documentation; and (4) identifying, implementing, and documenting enhancements to the ACL process during the second half of 2025.  Management expects the scope of the work to address the ACL deficiencies.

​ 67

Table of Contents Changes in Internal Control Over Financial Reporting

​

There were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2025, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

​

​ 68

Table of Contents PART II — OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

In the ordinary course of business, we are subject to claims, counter claims, suits and other litigation of the type that generally arise from the conduct of financial services businesses. We are not aware of any threatened or pending litigation that we expect will have a material adverse effect on our business operations, financial condition or results of operations.

ITEM 1A.RISK FACTORS

We disclosed certain risks and uncertainties that we face under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2024, which we filed with the SEC on March 17, 2025. There have been no material changes in these risk factors from those disclosed in such Annual Report on Form 10-K.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 26, 2022, the Company announced that its Board of Directors authorized a stock repurchase program, pursuant to which the Company may repurchase up to $75 million of its common stock. This plan has no stated expiration date. This stock repurchase program replaces and supersedes the stock repurchase program approved by the Board of Directors on October 30, 2018, which had authorized the Company to repurchase up to 2,200,000 shares of its common stock. No shares were repurchased by the Company during the three months ended June 30, 2025.

ITEM 5.OTHER INFORMATION

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the second quarter of 2025.

​

​ 69

Table of Contents

ITEM 6.EXHIBITS

​	​	​
Exhibit No.		Description of Exhibit
​	​	​
3.1	​	Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 29, 2015).
​	​	​
3.2	​	Certificate of Amendment to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 3, 2024).
​	​	​
3.3	​	Certificate of Designations for Series A Noncumulative Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
​	​	​
3.4	​	Certificate of Designations for Series B Noncumulative Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
​	​	​
3.5	​	Certificate of Designations for Series C NVCE Stock (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
​	​	​
3.6	​	Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on February 27, 2024).
​	​	​
31.1(1)	​	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
​	​	​
31.2(1)	​	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
​	​	​
32.1(1)	​	Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002
​	​	​
32.2(1)	​	Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002
​	​	​
101.INS	​	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
​	​	​
101.SCH	​	Inline XBRL Taxonomy Extension Schema
​	​	​
101.CAL	​	Inline XBRL Taxonomy Extension Calculation Linkbase
​	​	​
101.DEF	​	Inline XBRL Taxonomy Extension Definition Linkbase
​	​	​
101.LAB	​	Inline XBRL Taxonomy Extension Labels Linkbase
​	​	​
101.PRE	​	Inline XBRL Taxonomy Extension Presentation Linkbase
​	​	​
104	​	Cover Page Interactive Data File (embedded within the Inline XBRL document)
(1)	Filed herewith.
---	---

* Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.

​

​ 70

Table of Contents SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​

​	​	​
​	FIRST FOUNDATION INC.<br><br>(Registrant)
​	​
Dated: August 11, 2025	By:	/s/    JAMES BRITTON
​	​	James Britton
​	​	Executive Vice President and<br>Chief Financial Officer<br><br>(Principal Financial Officer)

​

​

​ S-1

Exhibit 31.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Thomas C. Shafer, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of First Foundation Inc. for the quarter ended June 30, 2025;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
---	---
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
---	---
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
---	---

Date: August 11, 2025

​

​	​
​	/s/ THOMAS C. SHAFER
​	Thomas C. Shafer
​	Chief Executive Officer

​

Exhibit 31.2

CERTIFICATIONS OF CHIEF FINANCIAL OFFICER

UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, James Britton, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of First Foundation Inc. for the quarter ended June 30, 2025;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
---	---
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
---	---
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
---	---
(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
---	---
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
---	---
(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
---	---
(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
---	---
5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
---	---
(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
---	---
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
---	---

Date: August 11, 2025

​

EVIN THOMPSON	​
​	/s/ JAMES BRITTON
​	James Britton
​	Executive Vice President and<br><br>Chief Financial Officer

​

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

UNDER

SECTION 906 OF THE SARBANES-OXLEY ACT

FIRST FOUNDATION INC.

Quarterly Report on Form 10-Q

for the Quarter ended June 30, 2025

The undersigned, who is the Chief Executive Officer of First Foundation Inc (the “Company”), hereby certifies that (i) the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, as filed by the Company with the Securities and Exchange Commission (the “Quarterly Report”), to which this Certification is an Exhibit, fully complies with the applicable requirements of Section 13(a) and 15(d) of the Exchange Act; and (ii) the information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 11, 2025

​

​	​
​	/s/ THOMAS C. SHAFER
​	Thomas C. Shafer
​	Chief Executive Officer
​	​
​	A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

​

Exhibit 32.2

CERTIFICATIONS OF CHIEF FINANCIAL OFFICER

UNDER

SECTION 906 OF THE SARBANES-OXLEY ACT

FIRST FOUNDATION INC.

Quarterly Report on Form 10-Q

for the Quarter ended June 30, 2025

The undersigned, who is the Chief Financial Officer of First Foundation Inc. (the “Company”), hereby certifies that (i) the Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, as filed by the Company with the Securities and Exchange Commission (the “Quarterly Report”), to which this Certification is an Exhibit, fully complies with the applicable requirements of Section 13(a) and 15(d) of the Exchange Act; and (ii) the information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 11, 2025

EVIN THOMPSON
​	/s/ JAMES BRITTON
​	James Britton
​	Executive Vice President and<br><br>Chief Financial Officer
​
​	A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

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