8-K
First Foundation Inc. (FFWM)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):February 15, 2023
FIRST FOUNDATION INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36461 | 20-8639702 |
|---|---|---|
| (State or other jurisdiction<br><br> <br>of incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification Number) |
| 200 Crescent Court, Suite 1400 | ||
| --- | --- | |
| Dallas, Texas | 75201 | |
| (Address of principal executive offices) | (Zip Code) |
(469) 638-9636
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| x | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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 | NASDAQ Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ¨
| Item 8.01 | Other Events. |
|---|
On February 15, 2023, Driver Management Company LLC (“Driver”) sent a letter dated January 15, 2023 (the “February 15^th^ Letter”) to Max Briggs, Lead Director of First Foundation Inc. (the “Company”), inquiring about Christopher Naghibi’s past service on the board of directors of Friendly Hills Bancorp, a California based bank. On February 21, 2023, Driver sent a second letter (the “February 21^st^ Letter”) to Mr. Briggs regarding Mr. Naghibi and the Depository Institution Management Interlocks Act (12 U.S.C. §§ 3201 et seq.) and the Board of Governors of the Federal Reserve System’s related rule (12 CFR § 212) (together, the “Interlocks Rule”).
On February 23, 2023, the Company’s counsel sent a letter (the “February 23^rd^ Letter”) to Driver’s counsel stating that the Company evaluated the Interlocks Rule and its various exceptions and concluded that there was no violation of the Interlocks Rule. Further, the February 23^rd^ Letter confirmed that the Company evaluated, and continues to evaluate on an ongoing basis, potential conflicts of interest for all members of the executive management team, including Mr. Naghibi.
The descriptions of the February 15^th^ Letter, the February 21^st^ Letter and the February 23^rd^ Letter contained in this Item 8.01 are summaries and are qualified in their entirety by reference to the full text of the February 15^th^ Letter, the February 21^st^ Letter and the February 23^rd^ Letter, which are filed as Exhibits 99.1, 99.2 and 99.3 respectively, to this Current Report on Form 8-K and are incorporated by reference herein.
Important Additional Information
The Company, its directors and certain of its executive officers are participants in the solicitation of proxies from the Company’s stockholders in connection with its upcoming 2023 Annual Meeting of Stockholders (the “2023 Annual Meeting”). The Company intends to file a definitive proxy statement and a BLUE universal proxy card with the Securities and Exchange Commission (the “SEC”) in connection with any such solicitation of proxies from the Company’s stockholders. STOCKHOLDERS OF THE COMPANY ARE STRONGLY ENCOURAGED TOREAD SUCH PROXY STATEMENT, ACCOMPANYING BLUE UNIVERSAL PROXY CARD AND ALL OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETYWHEN THEY BECOME AVAILABLE AS THEY WILL CONTAIN IMPORTANT INFORMATION. The Company’s definitive proxy statement for the 2022 Annual Meeting of Stockholders contains information regarding the direct and indirect interests, by security holdings or otherwise, of the Company’s directors and executive officers in the Company’s securities. Information regarding subsequent changes to their holdings of the Company’s securities can be found in the SEC filings on Forms 3, 4 and 5, which are available on the Company’s website at www.ff-inc.com or through the SEC’s website at www.sec.gov. Information can also be found in the Company’s other SEC filings, including its Annual Report on Form 10-K for the year ended December 31, 2022 (when it becomes available). Updated information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the definitive proxy statement and other materials to be filed with the SEC in connection with the 2023 Annual Meeting. Stockholders will be able to obtain the definitive proxy statement, any amendments or supplements to the proxy statement and other documents filed by the Company with the SEC at no charge at the SEC’s website at www.sec.gov. Copies will also be available at no charge on the Company’s website at www.ff-inc.com.
| Item 9.01 | Financial Statements and Exhibits. |
|---|---|
| Exhibit No. | Description |
| --- | --- |
| 99.1 | Letter, dated January 15, 2023 and sent to First Foundation Inc. on February 15, 2023, from Driver Management Company LLC |
| 99.2 | Letter, dated February 21, 2023, from Driver Management Company LLC to First Foundation Inc. |
| 99.3 | Letter, dated February 23, 2023, from J. Dean of Sheppard, Mullin, Richter & Hampton LLP to A. Freedman of Olshan Frome Wolosky LLP |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
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 hereunto duly authorized.
| FIRST FOUNDATION INC. | ||
|---|---|---|
| Date: February 24, 2023 | ||
| By: | /s/ Scott F. Kavanaugh | |
| Scott F. Kavanaugh | ||
| President and Chief Executive Officer |
Exhibit 99.1
January 15, 2023
Mr. Max Briggs
Lead Director
c/o Ms. Kelly Rentzel
Executive Vice President, General Counsel and Secretary
First Foundation Inc.
200 Crescent Court, Suite 1400
Dallas, TX 75201
Mr. Briggs,
It has recently come to my attention that Christopher Naghibi, who was appointed as chief operating officer of First Foundation Bank (“FF Bank”) on December 6, 2022 and who previously served as chief credit officer FF Bank since October 2014, was appointed to the board of directors of Friendly Hills Bancorp (“FHLB”) on December 22, 2021 pursuant to the terms of Settlement Agreement between FHLB and Frank Kavanaugh, a shareholder of FHLB.^1^ It appears that Mr. Naghibi served on the board of FHLB, as well as its banking subsidiary, Friendly Hills Bank, until September 6, 2022.^2^
Both First Foundation Inc., (“FFWM”) and FHLB operate in the Los Angeles-Long Beach-Anaheim, CA, Riverside-San Bernadino-Ontario, CA and San Diego-Chula Vista-Carlsbad, CA metropolitan statistical areas (“MSAs”) and, I presume, are competitors. Attached as Exhibit A is a map showing FFWM’s and FHLB’s branches in those MSAs.
Please confirm whether the board of directors (the “Board”) of FFWM was aware of Mr. Naghibi’s service on the board of directors of FHLB. To the extent the Board was aware of Mr. Naghibi’s service on the board of directors of another bank operating in the same markets as FFWM, Mr. Naghbibi’s ostensible employer, please indicate whether the Board considered that service to create a conflict of interest and, if so, what if any steps were taken to mitigate that conflict of interest.
In addition, please indicate whether Frank Kavanaugh has (or had in the past) any borrowing relationship with FFWM and, if so, whether Mr. Naghibi, as chief credit officer of FF Bank, played any role in approving or monitoring any loans made to FFWM.
Mr. Naghibi appears to have taken down his LinkedIn profile and does not reference his service on the board of directors of FHLB on the bio section of either www.chrisnaghibi.com^3^or www.blackcrowninc.com,^4^ the website of Black Crown Inc. and Black Crown Law APC, a “disruptive collective of attorneys, property managers, real estate agents and contractors who handle home sales and purchases, commercial and multifamily real estate brokerage, primarily for high net-worth and celebrity clients” of which Mr. Naghibi is founder and chief executive officer. To the extent that the Chris Naghibi who is currently serving as chief operating officer of FF Bank is not the same Chris Naghibi who served on the board of directors of FHLB, please let me know as soon as possible.
Thank you in advance for your prompt attention to this matter.
| Driver Management Company LLC |
|---|
| /s/ J. Abbott R. Cooper |
^1^ https://www.globenewswire.com/en/news-release/2021/12/22/2356811/28099/en/Friendly-Hills-Bancorp-Announces-Hiring-of-Chief-Executive-Officer-and-Settlement-With-Shareholder-Frank-Kavanaugh.html
^2^ https://www.globenewswire.com/en/news-release/2022/09/06/2510491/28099/en/Friendly-Hills-Bancorp-Announces-Changes-To-Its-Board.html.
^3^ http://chrisnaghibi.com/#Bio.
^4^ https://blackcrowninc.com/agents/christopher-m-naghibi-esq/.
Soundview Plaza
1266 East Main Street, Suite 700R
Stamford, CT 06902
Exhibit A
2
Exhibit 99.2
February 21, 2023
Mr. Max Briggs
Lead Director
c/o Ms. Kelly Rentzel
Executive Vice President, General Counsel and Secretary
First Foundation Inc.
200 Crescent Court, Suite 1400
Dallas, TX 75201
Mr. Briggs,
Reference is made to my letter dated February 15, 2023, regarding Christopher Naghibi’s service, from December 22, 2021 until September 6, 2022, as a director of both Friendly Hills Bancorp and its banking subsidiary Friendly Hills Bank (together “Friendly Hills”) while simultaneously serving as chief credit officer of First Foundation Bank, the banking subsidiary of First Foundation, Inc. (together “FFWM”).
Mr. Naghibi’s simultaneous service (the “Naghibi Interlock”) as a director of Friendly Hills and chief credit officer of FFWM would appear to constitute a prohibited “interlock” under the Depository Institution Management Interlocks Act (12 U.S.C. §§ 3201 et seq.) and the Board of Governors of the Federal Reserve System’s related rule (12 CFR § 212)(together, “Interlocks Rule”). Please indicate whether FFWM submitted an exemption request with respect to the Naghibi Interlock to the appropriate federal depository regulatory agency or determined that an applicable statutory or regulatory exemption existed.
Absent any response, I can only assume that the board of directors (the “Board”) of FFWM was unaware of the Naghibi Interlock, raising ever more questions regarding whether the Board has been exercising the appropriate duty of care in overseeing FFWM’s business and adding regulatory to the growing list of risks (that includes interest rate and liquidity) that the Board has failed to manage.
Thank you in advance for your prompt attention to this matter.
| Driver Management Company LLC |
|---|
| /s/ J. Abbott<br> R. Cooper |
Soundview Plaza
1266 East Main Street, Suite 700R
Stamford, CT 06902
Exhibit 99.3
| Sheppard, Mullin, Richter & Hampton LLP<br><br> 650 Town Center Drive, 10^th^ Floor<br><br> Costa Mesa, California 92626-1993<br><br> 714.513.5100 main<br><br> 714.513.5130 fax<br><br> www.sheppardmullin.com |
|---|
| Joshua A. Dean <br><br> 714.424.8292 direct<br><br> jdean@sheppardmullin.com |
| --- |
February 23, 2023
VIA ELECTRONIC MAIL
Olshan Frome Wolosky LLP
1325 Avenue of the Americas
New York, New York 10019
afreedman@olshanlaw.com
Attention: Andrew Freedman, Esq.
Re: Letters to Max Briggs, dated January 15, 2023 and February 21, 2023
Dear Mr. Freedman:
I am responding to the letters from your client, Driver Management Company, LLC, dated January 15, 2023 and February 21, 2023, addressed to Max Briggs, which Driver Management Company, LLC sent by email on February 16, 2023 and February 21, 2023, respectively, regarding Christopher Naghibi’s service on the board of directors of Friendly Hills Bancorp and a presumed borrowing relationship between a private individual and First Foundation Bank (the “Bank”). Mr. Briggs forwarded your client’s letters to us as regulatory counsel for the Bank and First Foundation Inc. (the “Company”).
Although it is the Company’s policy to keep the details of its internal employment discussions confidential, please be assured that the board of directors of the Company and the Bank (collectively, the “Board”) has in place thorough management candidate evaluation processes, which include extensive diligence of all members of the executive management team. Further, the Board’s Audit Committee evaluates potential conflicts of interest prior to the appointment of executive officer candidates and continues to evaluate any potential conflicts on an ongoing basis. Again, while the Company does not typically disclose the details of its processes and discussions regarding potential management candidates and personnel, the Company can confirm that the Board and the Audit Committee evaluated Mr. Naghibi in accordance with these procedures.
In your client’s letters, your client asserts that Mr. Naghibi’s simultaneous position with the Bank and Friendly Hills Bancorp appears to constitute a violation of the Depository Institution Management Interlocks Act (12 U.S.C. §§ 3201 et seq.) and the Board of Governors of the Federal Reserve System’s related rule (12 CFR § 212) (together, “InterlocksRule”). However, your client has failed to consider the various exemptions to the Interlocks Rule, including the Small Market Share Exemption (12 CFR §§ 212.5 and 348.5) and the institutions’ market share information, which is publicly available.^1^ The Board evaluated the Interlocks Rule and its various exceptions, and concluded there was no violation of the Interlocks Rule.
Olshan Frome Wolosky LLP
February 23, 2023
Page 2
With respect to any possible borrowing relationship between the Bank and any private individuals, the Bank’s policy is to keep the identities of all potential, current and past customers confidential to protect their privacy and personal information.
Very truly yours,
| /s/ Joshua A. Dean |
|---|
Joshua A. Dean
for SHEPPARD, MULLIN, RICHTER & HAMPTON LLP
| cc: | Max<br> Briggs, First Foundation Inc. |
|---|
Matthew W. Moran, Vinson & Elkins L.L.P.
^1^ https://www.fdic.gov/bank/statistical/.