First Foundation (FFWM) 8-K First Foundation Inc. Reports Second Quarter 2021 Results

First Foundation Inc. (NASDAQ: FFWM) July 27, 2021

Exhibit 99.1

FIRST FOUNDATION INC. REPORTS SECOND QUARTER 2021 RESULTS

● Second quarter net income of $26.1 million and earnings per share of $0.58.

● Total revenues of $71.9 million in second quarter 2021.

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2Q21 Key Financial Data

Profitability Metrics	2Q21	1Q21	2Q20
Return on average assets (%)	1.40	1.25	1.06
Return on average common equity (%)	14.4	12.7	11.3
Return on tangible common equity (%) (a)	16.7	14.9	13.6
Net interest margin (%)	3.20	3.16	2.96
Efficiency ratio (%) (a)	47.3	51.5	53.0
Income Statement (b)	2Q21	1Q21	2Q20
Net interest income	$57,910	$54,229	$48,447
Noninterest income	$14,035	$11,908	$8,969
Net income attributable to common	$26,054	$22,355	$17,854
Diluted earnings per common share	$0.58	$0.50	$0.40
Dividends declared per common share	$0.09	$0.09	$0.07
Balance Sheet (b)	2Q21	1Q21	2Q20
Average total loans	$5,780,494	$5,383,745	$5,475,796
Average total deposits	$6,683,371	$6,104,727	$5,234,330
Net charge-off ratio	0.01%	(0.01)%	0.03%
Tangible book value per share (a)	$14.27	$13.84	$12.16
Tier 1 Leverage Ratio	8.32%	8.58%	8.22%
(a) See Non-GAAP Financial Measures
(b) Dollars in thousands, except per share data

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Return on average assets of 1.40%.

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Return on average tangible equity of 16.7%.

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Tangible book value per share increased to $14.27.

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Net interest margin of 3.20%; 20% growth in net interest income year-over-year.

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Deposit costs of 0.20%; 0.18% in June.

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Third straight record quarter of loan originations, topping $1.0 billion for the first time.

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Efficiency ratio of 47%.

DALLAS, TX – First Foundation Inc. (NASDAQ: FFWM), a financial services company with two wholly-owned operating subsidiaries, First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB”), reported net income of $26.1 million, including $1.2 million of merger related expenses, or $0.58 per diluted share, for the second quarter of 2021, compared to net income of $22.4 million, or $0.50 per diluted share, for the first quarter of 2021.  Additionally, First Foundation Inc. announced today that its Board of Directors has approved the payment of a quarterly cash dividend of $0.09 per common share, payable on August 20, 2021 to common shareholders of record as of August 9, 2021.

Scott F. Kavanaugh CEO

“This quarter once again showed the strength of our offering,” said Scott F. Kavanaugh, CEO of First Foundation Inc. “We delivered solid performance across our business as we generated $72 million in revenue while continuing to invest in our people, technology, and expansion into new markets. The continued focus on creating a diversified balance sheet has proven successful as loan originations totaled a record $1.1 billion for the quarter, with our C&I division contributing a solid $336 million of new loans. Business and commercial loans accounted for 30% of originations during the quarter. We also saw an increase in core deposits, which represent 98% of our total deposits. Assets under management hit a peak level of $5.3 billion, while trust assets under advisement ended the quarter at $1.2 billion. With our diversified business model and our geographic footprint, which includes a growing presence in Texas and future expansion into Florida, we feel we are well-positioned for growth in very attractive markets.”

David DePillo President

“As we continue to expand our commercial and business banking offering, we are experiencing record levels of originations and deposit gathering,” said David DePillo, President of First Foundation Inc. “We funded our largest ever amount of loans in one quarter, while we continued to maintain strong asset quality as evidenced by the decrease of our nonperforming assets from 24 to 20 basis points. We also grew deposits by $861 million during the quarter as deposit costs fell to 18 basis points at the end of June. Our digital and technology investments across the Company are going well as they continue to enhance the client experience, strengthen the security of our network, and help us drive operational efficiencies.”

Investor contact: Kevin Thompson, kthompson@ff-inc.com | 949-202-4164
Media contact: Tyler Resh, tresh@ff-inc.com | 949-202-4131

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

2Q21 Highlights

Financial Results:

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Total revenues were $71.9 million in the quarter, an increase of 9% from the first quarter of 2021 and an increase of 25% from the second quarter of 2020.  

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Nonperforming assets (“NPAs”) to total assets decreased to 0.20% from 0.24% in the first quarter.

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Return on average tangible equity of 16.7%.

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Return on average assets of 1.40%.

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Efficiency ratio of 47.3% for the quarter.

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Total tangible shareholders’ equity of $640 million, tangible book value of $14.27 per share, an increase of 3% from the first quarter of 2021, and tangible common equity to tangible assets of 8.15%.

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Net interest margin (“NIM”) of 3.20% for the quarter.

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Advisory and Trust divisions achieved a record combined pre-tax profit margin of 23% in the quarter.

Other Activity:

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Acquisition of TGR Financial is on track with anticipated closing in 4Q21 and core systems conversions in 2Q22.  At close, Gary L. Tice, TGR Financial’s Chairman and CEO, will join the First Foundation board of directors; in addition, Garrett Richter, current CEO and President of the banking subsidiary – First Florida Integrity Bank – will join the First Foundation management team as Market President of Florida.

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Recognized $1.2 million of merger expenses related to the TGR Financial acquisition during the quarter.

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Completed the holding company headquarters relocation to Dallas, Texas. Texas buildout underway with the opening of our first loan production office in Irving.

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Forbearances and deferrals decreased to 0.11% of total loans, to a total of $6.7 million, from 0.32% and $17.8 million in the prior quarter.

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During the 2Q21, an additional $58.9 million or 34% of the total $171 million PPP loans funded in the first round were forgiven, bringing the total forgiven to $140.6 million or 82% of the total.

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As part of the second round of PPP requests starting at the beginning of 2021, we have processed approximately 300 loans with balances in excess of $56 million to date.  Clients are currently being invited to apply for forgiveness.

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We recognized an additional $905 thousand of net PPP fee income in 2Q21 or 16% of the total original projected $5.8 million net fees; total fees realized to date are 77% of the total $227 million first and second round PPP loans funded.

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Loan originations totaled $1.1 billion for the quarter, a third straight record quarter for the Company.  Contributing to our record loan originations were C&I originations of $336 million for the quarter.

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Completed sale of $133 million of multifamily loans, recognizing a $3.3 million gain.

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The allowance for credit losses for loans decreased by $1 million in the quarter to $22.2 million, down from $23.2 million in the prior quarter, resulting from improvement in the economic scenario outlook.

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Core deposits increased to 98% of total deposits from 78% the prior year.

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Cost of deposits decreased to 0.20% from 0.31% in the prior quarter. Of the $892 million increase in core deposits, $884 million, or 99% were attributed to commercial business deposits.

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Declared and paid cash dividend of $0.09 per share in the quarter.

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Assets under management (“AUM”) at FFA increased to $5.32 billion, while trust assets under advisement (“AUA”) at FFB increased to $1.24 billion.

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Recognized a $1.3 million valuation allowance on mortgage servicing rights as a result of changes in the interest rate environment and prepayment speeds.

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Details

Loans

Loans increased $381 million, or 6.8%, compared to the prior quarter, to $6.0 billion as of June 30, 2021, and increased $346 million, or 6.1%, compared to June 30, 2020.  New loan fundings in the second quarter of 2021 were a quarterly record for FFB totaling $1.1 billion, an increase of $367 million, or 48.0%, from the first quarter of 2021 and an increase of $432 million, or 61.6%, from the second quarter of 2020. Contributing to our record quarter of loan originations, our C&I division funded $336 million of new commercial loans during the second quarter of 2021, of which 57% were adjustable commercial revolving lines of credit. The remaining C&I originations were comprised of $73 million of commercial term loans, $34 million of public finance loans, $27 million of equipment finance leases, and $10 million of owner occupied commercial real estate loans.  Included in commercial term loans originations is $10.1 million of second round PPP fundings. Loan growth during the second quarter of 2021 was also impacted by loan payoffs of $752 million, compared to payoffs of $500 million in the first quarter of 2021 and $366 million in the second quarter of 2020. The current pipeline remains strong in 2021.

Investment Securities

Investment securities decreased $12.2 million, or 1.6%, from the prior quarter to $745.9 million as of June 30, 2021, and decreased $117.9 million, or 13.7%, compared to June 30, 2020. The decreases in the balance of investment securities compared to the first quarter of 2021 and second quarter of 2020 were primarily driven by elevated prepayments in our agency mortgage backed securities portfolio.

The allowance for credit losses for investments increased by $0.2 million from the prior quarter, to $9.1 million as of June 30, 2021. The increase was a result of the lower interest rate environment and faster than expected prepayments that negatively impacted the projected cash flows on FFB’s interest-only strip securities.   

Deposits and Borrowings

Deposits increased $861 million, or 13.8%, during the second quarter of 2021, to $7.1 billion compared to the prior quarter, and increased $1.5 billion, or 25.8%, compared to the second quarter of 2020. Deposit growth during the second quarter of 2021 was primarily driven by an increase of $1.1 billion, or 50%, in non-interest bearing demand deposits, largely attributable to our commercial deposit services division, and retail branches.  The increases in deposits were offset by a reduction in interest bearing demand deposits of $116 million, also attributable to our commercial deposit services division, a reduction in money market and savings accounts of $28 million, largely from the digital bank channel, in addition to a reduction in CDs of $89 million, primarily due to our intentional run-off of higher cost brokered deposits. Noninterest-bearing demand deposits measured 46.1% of total deposits as of June 30, 2021, compared to 34.9% of total deposits as of March 31, 2021, while core deposits increased by $892 million, and measured 98% of total deposits as of June 30, 2021 and March 31, 2021.

The $861 million growth in deposits during the second quarter of 2021 included increases in the commercial deposit services division of $859 million and retail branch deposits of $76 million, which were partially offset by a $31 million decrease in wholesale brokered deposits and digital bank channel deposits of $43 million. Of the $892 million increase in core deposits, $884 million, or 99% were attributed to commercial business deposits from both our commercial deposit services channel serving complex treasury management commercial customers, and from our business banking customers served by our retail branches. Commercial business deposits were 74% of total core deposits as of June 30, 2021.  

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Our loan to deposit ratio measured 84.6% as of June 30, 2021, compared to 90.1% as of March 31, 2021 and 100.3% as of June 30, 2020.

No Federal Home Loan Bank (FHLB) advances were outstanding as of June 30, 2021, compared to $5 million as of March 31, 2021, and $760 million as of June 30, 2020. Borrowings decreased during the quarter as cash provided by the increase in deposits, which exceeded the growth in our assets, was used to pay down our borrowings at FFB.

Private Wealth Management and Trust Assets

AUM at FFA increased by $292 million in the second quarter, to $5.3 billion, and was the net result of $161 million of new accounts, $275 million of portfolio gains, and terminations and net withdrawals of $144 million. AUA at FFB’s Trust Department increased $44.4 million to $1.2 billion during the second quarter of 2021.  The Advisory and Trust divisions achieved a record combined pre-tax profit margin of 23% in the quarter.

Net Interest Income

Net interest income was $57.9 million for the second quarter of 2021, compared to $54.2 million and $48.4 million in the first quarter of 2021 and second quarter of 2020, respectively.  Interest income from loans increased 4.6% to $56.0 million for the second quarter of 2021 compared to $53.5 million in the first quarter in 2021, and increased 1.5% compared to $55.1 million for the second quarter of 2020, driven primarily by higher average loan balances. Interest income from investment securities and interest-earning cash decreased by 3.4%, to $5.4 million for the second quarter of 2021, compared to $5.6 million for the first quarter of 2021, and decreased 20.2%, compared to $6.8 million in the second quarter of 2020, driven primarily by a decrease in average investment securities balances.

Interest expense decreased 28.8% to $3.5 million for the second quarter of 2021, compared to $4.9 million for the first quarter of 2021, and decreased 74.1% compared to $13.5 million for the second quarter of 2020. The decreases in interest expense were driven primarily by 26.7% and 69.0% decreases in interest expense on deposits compared to the first quarter of 2021 and second quarter of 2020, respectively, to $3.4 million for the second quarter of 2021. The decreases in interest expense on deposits was also due to 10 and 81 basis point decreases in average rates on interest-bearing deposits, that were partially offset by higher average balances of deposits, compared to the first quarter of 2021 and second quarter of 2020, respectively. Interest expense on FHLB advances decreased $0.2 million compared to the prior quarter due to payoffs on FHLB advances.

Net Interest Margin

Net interest margin increased four basis points to 3.20% in the second quarter of 2021 from 3.16% in the first quarter of 2021, and increased 24 basis points from 2.96% in the second quarter of 2020. The linked quarter and year to year quarterly changes in NIM reflects the current low interest rate environment, which positively impacted our NIM, as our cost of funds have fallen faster than the yield on our earnings assets between these two periods.

Noninterest Income

Noninterest income increased 17.9% to $14.0 million in the second quarter of 2021, compared to $11.9 million in the first quarter of 2021. In addition, noninterest income increased 56.5% compared to $9.0 million in the second quarter of 2020.

Noninterest income during the second quarter of 2021 was comprised primarily of $6.9 million of investment advisory fees from Wealth Management, $1.9 million of trust administrative and consulting fees, $3.3 million in gains of sales of loans, $1.3 million of loan and servicing fees, and $0.4 million of deposit account fees. Other

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income decreased in the linked quarter, as we recognized a $1.3 million valuation allowance on mortgage servicing rights as a result of changes in the interest rate environment and prepayment speeds. Income related to Wealth Management increased in the second quarter of 2021, when compared to the first quarter of 2021 and the second quarter of 2020, due primarily to higher levels of fees earned on AUM.  Loan and servicing fees in the second quarter of 2021 increased compared to the second quarter of 2020 due to higher loan volume.  

Noninterest Expense

Noninterest expense increased 3.2% to $35.6 million for the second quarter of 2021, compared to $34.5 million for the first quarter of 2021, and increased 15.1%, compared to $30.9 million for the second quarter of 2020. Compensation and benefits were $20.2 million in the second quarter of 2021, a $1.3 million decrease compared to $21.5 million in the first quarter of 2021, due to merit increases, annual bonus, and commission payouts in the first quarter. Noninterest expenses for Wealth Management decreased by $0.3 million in the linked quarter also due to lower compensation and benefits costs. In addition, noninterest expense included $1.2 million of one-time merger expenses during the quarter related to the TGR Financial acquisition.

Our efficiency ratio for the second quarter of 2021 was 47.3%, compared to 51.5% for the first quarter of 2021 and 53.0% in the second quarter of 2020.

Income Tax Expense

We recorded an income tax expense of $10.2 million in the second quarter of 2021, compared to an income tax expense of $8.9 million in the first quarter of 2021, and an income tax expense of $7.3 million in the second quarter of 2020. Our effective tax rate for the second quarter of 2021 was 28.2%, compared to 28.5% for the first quarter of 2021, and 28.9% for the second quarter of 2020.

Asset Quality

Total nonperforming assets were $16.2 million as of June 30, 2021, compared to $16.6 million as of March 31, 2021, and $15.5 million as of June 30, 2020. Our ratio of nonperforming assets to total assets was 0.20% as of June 30, 2021, compared to 0.24% as of March 31, 2021, and 0.22% as of June 30, 2020. Total delinquent loans decreased $7.8 million, to $2.6 million as of June 30, 2021, compared to $10.4 million as of March 31, 2021.

Our allowance for credit losses for loans was $22.3 million, or 0.40% of total loans, as of June 30, 2021, compared to $23.2 million, or 0.45%, as of March 31, 2021 and $28.1 million, or 0.55%, as of June 30, 2020. The linked quarter decrease in the allowance for credit losses for loans was a result of improvement in the economic scenario outlook. Net charge-offs during the second quarter of 2021 were $0.1 million, or 0.01% of average loans annualized, compared to net recoveries of $0.2 million, or (0.01)% of average loans annualized, for the first quarter of 2021, and $0.4 million, or 0.03% of average loans annualized, for the second quarter of 2020.  

The ratio of the allowance for credit losses for loans to total nonperforming assets was 137.6% as of June 30, 2021, compared to 139.3% as of March 31, 2021 and 181.3% as of June 30, 2020.

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Capital

As of June 30, 2021, FFB exceeded all Basel III minimum regulatory capital requirements necessary to be considered a "well-capitalized" depository institution, as summarized in the table below:

	As of						Well-Capitalized
	June 30,		March 31,		June 30,		Regulatory
(unaudited)	2021 1		2021		2020		Requirements
Tier 1 leverage ratio	8.32	%	8.58	%	8.22	%	5.00	%
Common Equity Tier 1 ratio	11.09	%	11.14	%	10.53	%	6.50	%
Tier 1 risk-based capital ratio	11.09	%	11.14	%	10.53	%	8.00	%
Total risk-based capital ratio	11.66	%	11.73	%	11.12	%	10.00	%
Tangible common equity to tangible assets ratio 2	8.15	%	8.91	%	7.70	%	N/A	%

(1) Regulatory capital ratios are preliminary until filing of our June 30, 2021 FDIC call report.

(2) Tangible common equity is a non-GAAP financial measure. See disclosures regarding “Use of Non-GAAP Financial Measures” included as a separate section in this report.

Shareholders' equity totaled $734.0 million as of June 30, 2021, an increase from $714.4 million and $638.7 million as of March 31, 2021 and June 30, 2020, respectively. Our tangible book value per common share increased $0.43 to $14.27 as of June 30, 2021, compared to $13.84 as of March 31, 2021, and increased $2.11 compared to $12.16 as of June 30, 2020.

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Earnings Call Info

The Company will host a conference call at 8:00 a.m. PT / 11:00 a.m. ET on July 27, 2021 to discuss its financial results. Analysts and investors may participate in the question-and-answer session. The call will be broadcast live over the Internet and can be accessed by visiting First Foundation’s website and clicking on “Investor Relations” and “Events & Presentations” https://investor.ff-inc.com/events-and-presentations/default.aspx.  The conference call can be accessed by telephone at (866) 342-6659 using conference ID 7543199.  It is recommended that participants dial into the conference call approximately ten minutes prior to the call. For those who are unable to participate during the live call, an archive of the call will be available for replay.

About First Foundation

First Foundation Inc. (NASDAQ: FFWM) and its subsidiaries offer personal banking, business banking, and private wealth management services, including investment, trust, insurance, and philanthropy services. This comprehensive platform of financial services is designed to help clients at any stage in their financial journey. First Foundation is comprised of an extraordinary team of financial professionals united around a single cause: to enable growth-minded individuals and businesses to boldly live the life they imagined and preserve the legacy they have worked so hard to build. The financial products and services offered by First Foundation are more consistent with those offered by larger financial institutions, while its high level of personalized service, accessibility, and responsiveness to clients are more aligned with community banks and boutique wealth management firms. This combination of an integrated platform of comprehensive financial services and the products along with personalized service differentiates First Foundation from many of its competitors and has contributed to the growth of its client base and business. Services are offered through bank and/or wealth management branch offices in California, Texas, Nevada, and Hawaii. Learn more at firstfoundationinc.com, or connect with us on LinkedIn and Twitter.  

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Forward-Looking Statements

This report includes forward-looking statements within the meaning of the “Safe-Harbor” provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our expectations and beliefs about our future financial performance and financial condition, our dividend policy, as well as trends in our business and markets. Forward-looking statements often 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." The forward-looking statements in this report are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. 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. Those risks and uncertainties include, but are not limited to, the risk of incurring credit losses, which is an inherent risk of the banking business; the negative impacts and disruptions resulting from the COVID-19 pandemic on our colleagues, clients, the communities we serve and the domestic and global economy, which may have an adverse effect on our business, financial position and results of operations; the risk that we will not be able to continue our internal growth rate; the performance of loans currently on deferral following the expiration of the respective deferral periods; the risk that we will not be able to access the securitization market on favorable terms or at all; changes in general economic conditions, either nationally or locally in the areas in which we conduct or will conduct our business; risks associated with the Federal Reserve Board taking actions with respect to interest rates, which could adversely affect our interest income and interest rate margins and, therefore, our future operating results; the risk that the performance of our investment management business or of the equity and bond markets could lead clients to move their funds from or close their investment accounts with us, which would reduce our assets under management and adversely affect our operating results; the risk that we may be unable or that our board of directors may determine that it is inadvisable to pay future dividends; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships.  

Further, statements about the potential effects of the proposed acquisition of TGR Financial on our business, financial results, and condition may constitute forward-looking statements and are subject to the risk that the actual effects may differ, possibly materially, from what is reflected in the forward-looking statements due to factors and future developments which are uncertain, unpredictable and in many cases beyond our control, including the possibility that the proposed merger does not close when expected or at all because required regulatory, shareholder or other approvals, financial tests or other conditions to closing are not received or satisfied on a timely basis or at all; changes in our or TGR Financial's stock price before closing, including as a result of each company’s financial performance prior to closing or transaction-related uncertainty, or more generally due to broader stock market movements, and the performance of financial companies and peer group companies; the occurrence of any event, change or other circumstance that could give risk to the right of one or both of the parties to terminate the merger agreement; the risk that the benefits from the proposed merger may not be fully realized or may take longer to realize than expected or be more costly to achieve, including as a result of changes in general economic and market conditions, interest and exchange rates, monetary policy, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which we and TGR Financial operate; our ability to promptly and effectively integrate the companies’ businesses; reputational risks and the reaction of the companies' customers, employees and counterparties to the proposed merger; diversion of management time on merger-related issues; lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net earnings; and that the COVID-19 pandemic, including uncertainty and volatility in financial, commodities and other markets, and disruptions to banking and other financial activity, could harm our or TGR Financial's

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business, financial position and results of operations, and could adversely affect the timing and anticipated benefits of the proposed merger.  

Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our 2020 Annual Report on Form 10-K for the fiscal year ended December 31, 2020 that we filed with the SEC on February 26, 2021, and other documents we file with the SEC from time to time. We urge readers of this report to review those reports and other documents we file with the SEC from time to time. Also, our actual financial 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 and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this report, which speak only as of today's date, or to make predictions based solely on historical financial performance. We also disclaim any obligation to update forward-looking statements contained in this report or in the above-referenced reports, whether as a result of new information, future events or otherwise, except as may be required by law or NASDAQ rules.

Additional Information About the Merger and Where to Find It

This report does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. Investors and security holders are urged to carefully review First Foundation's public filings with the SEC, including but not limited to its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, proxy statements and Current Reports on Form 8-K. The documents are filed with the SEC and may be obtained free of charge at www.sec.gov, at First Foundation's website at firstfoundationinc.com under the "Investor Relations" link, or writing First Foundation at 18101 Von Karman Ave., Suite 700, Irvine, CA 92612; Attention: Kevin Thompson.

ln connection with the proposed merger transaction, First Foundation filed with the SEC a registration statement on Form S-4 that includes a joint proxy statement of First Foundation and TGR Financial, and a prospectus of First Foundation, which are referred to as the joint proxy statement/prospectus, as well as other relevant documents concerning the proposed transaction. Before making any voting or investment decision, investors and security holders are urged to carefully read the entire registration statement and joint proxy statement/prospectus, as well as any amendments or supplements to these documents, because they contain important information about the proposed transaction. A definitive joint proxy statement/prospectus will be sent to the shareholders of First Foundation and TGR Financial seeking required shareholder approvals. Investors and security holders will be able to obtain the registration statement and the joint proxy statement prospectus, and any other documents First Foundation files with the SEC free of charge as described in the preceding paragraph.

First Foundation, TGR Financial, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from First Foundation and TGR Financial shareholders in favor of the approval of the transaction. Information about the directors and executive officers of First Foundation and their ownership of First Foundation common stock is set forth in the proxy statement for First Foundation's 2021 annual meeting of stockholders, as previously filed with the SEC. Additional information regarding the interests of those participants and other persons who may be deemed participants in the transaction may be obtained by reading the joint proxy statement/prospectus regarding the proposed merger.

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Contacts
Investors	Media
Kevin L. Thompson EVP, Chief Financial Officer 949-202-4164 kthompson@ff-inc.com	Tyler J. Resh SVP, Director of Marketing and Strategy 949-202-4131 tresh@ff-inc.com

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CONSOLIDATED BALANCE SHEETS

(unaudited)

	June 30,		March 31,		June 30,
(in thousands, except share and per share amounts)	2021		2021		2020
ASSETS
Cash and cash equivalents	$	969,646	$	468,026	$	414,179
Securities available-for-sale ("AFS")		745,850		758,097		863,778
Allowance for credit losses - investments		(9,116)		(8,878)		(2,371)
Net securities		736,734		749,219		861,407
Loans held for sale		498,319		513,054		527,970
Loans held for investment		5,512,888		5,117,206		5,136,812
Allowance for credit losses - loans		(22,272)		(23,180)		(28,129)
Net loans		5,490,616		5,094,026		5,108,683
Investment in FHLB stock		17,250		17,250		23,598
Deferred taxes		9,618		6,941		9,194
Premises and equipment, net		8,183		7,817		8,188
Goodwill and intangibles		94,454		94,864		96,181
Other assets		114,314		100,635		91,893
Total Assets	$	7,939,134	$	7,051,832	$	7,141,293
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	7,106,802	$	6,245,821	$	5,647,841
Borrowings		20,000		12,000		764,600
Accounts payable and other liabilities		78,314		79,581		90,131
Total Liabilities		7,205,116		6,337,402		6,502,572
Shareholders’ Equity:
Common Stock		45		45		45
Additional paid-in-capital		435,201		434,346		432,791
Retained earnings		287,997		265,970		200,582
Accumulated other comprehensive income (loss)		10,775		14,069		5,303
Total Shareholders’ Equity		734,018		714,430		638,721
Total Liabilities and Shareholders’ Equity	$	7,939,134	$	7,051,832	$	7,141,293

Page 11 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

CONSOLIDATED INCOME STATEMENTS

(unaudited)

	For the Quarter Ended						For the Six Months Ended
	June 30,		March 31,		June 30,		June 30,
(in thousands, except share and per share amounts)	2021		2021		2020		2021		2020
Interest income:
Loans	$	55,979	$	53,531	$	55,134	$	109,510	$	110,018
Securities		4,927		5,206		6,539		10,133		13,536
FHLB Stock, fed funds sold and deposits		497		401		259		898		716
Total interest income		61,403		59,138		61,932		120,541		124,270
Interest expense:
Deposits		3,387		4,623		10,914		8,010		25,560
Borrowings		106		286		2,571		392		5,395
Total interest expense		3,493		4,909		13,485		8,402		30,955
Net interest income		57,910		54,229		48,447		112,139		93,315
Provision for credit losses		44		360		1,367		404		5,431
Net interest income after provision for credit losses		57,866		53,869		47,080		111,735		87,884
Noninterest income:
Asset management, consulting and other fees		8,748		8,349		6,733		17,097		14,495
Gain on sale of loans		3,324		—		—		3,324		—
Other income		1,963		3,559		2,236		5,522		5,149
Total noninterest income		14,035		11,908		8,969		25,943		19,644
Noninterest expense:
Compensation and benefits		20,203		21,526		18,288		41,729		38,145
Occupancy and depreciation		5,710		6,160		5,855		11,870		11,367
Professional services and marketing costs		3,907		2,122		2,049		6,029		3,803
Customer service costs		2,353		1,770		1,622		4,123		3,994
Other expenses		3,444		2,933		3,123		6,377		6,500
Total noninterest expense		35,617		34,511		30,937		70,128		63,809
Income before taxes on income		36,284		31,266		25,112		67,550		43,719
Taxes on income		10,230		8,911		7,258		19,141		12,654
Net income	$	26,054	$	22,355	$	17,854	$	48,409	$	31,065
Net income per share:
Basic	$	0.58	$	0.50	$	0.40	$	1.08	$	0.70
Diluted	$	0.58	$	0.50	$	0.40	$	1.07	$	0.69
Shares used in computation:
Basic		44,792,358		44,707,718		44,620,716		44,750,272		44,645,189
Diluted		45,101,958		45,012,205		44,812,369		45,057,330		44,882,520

Page 12 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

SELECTED CONSOLIDATED FINANCIAL DATA AND ASSET QUALITY

(unaudited)

	For the Quarter Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,
(in thousands, except share and per share amounts and percentages)	2021			2021			2020			2021			2020
Selected Financial Data:
Return on average assets		1.40	%		1.25	%		1.06	%		1.32	%		0.94	%
Return on average equity		14.4	%		12.7	%		11.3	%		13.6	%		9.9	%
Return on average tangible equity (1)		16.7	%		14.9	%		13.3	%		15.8	%		11.7	%
Efficiency ratio (2)		47.3	%		51.5	%		53.0	%		49.3	%		55.6	%
Net interest margin		3.20	%		3.16	%		2.96	%		3.18	%		2.94	%
Cost of deposits		0.20	%		0.31	%		0.84	%		0.25	%		1.01	%
Loan to deposit ratio		84.6	%		90.1	%		100.3	%		84.6	%		100.3	%
Noninterest income as a % of total revenues		19.5	%		18.0	%		15.6	%		18.8	%		17.4	%
Loan originations	$	1,132,664		$	765,298		$	701,090		$	1,897,962		$	1,364,258
Assets under management		5,319,862			5,027,989			4,292,252			5,319,862			4,292,252
Tangible common equity to tangible assets (1)		8.15	%		8.91	%		7.70	%		8.15	%		7.70	%
Book value per share	$	16.38		$	15.95		$	14.31		$	16.38		$	14.31
Tangible book value per share		14.27			13.84			12.16			14.27			12.16
Asset Quality:
Nonperforming assets
Nonaccrual loans	$	16,187		$	16,642		$	15,512		$	16,187		$	15,512
Total nonperforming loans	$	16,187		$	16,642		$	15,512		$	16,187		$	15,512
Loans 30 - 89 days past due	$	2,630		$	9,464		$	14,527		$	2,630		$	14,527
Accruing loans 90 days or more past due		—			1,211			-			—			—
Nonperforming assets to total assets		0.20	%		0.24	%		0.22	%		0.20	%		0.22	%
Loans 30 - 89 days past due to total loans		0.05	%		0.18	%		0.28	%		0.05	%		0.28	%
Allowance for credit losses to loans held for investment		0.40	%		0.45	%		0.55	%		0.40	%		0.55	%
Allowance for credit losses to nonaccrual loans		137.6	%		139.6	%		181.3	%		137.6	%		181.3	%
Net charge-offs (recoveries) to average loans - annualized		0.01	%		(0.01)	%		0.03	%		0.00	%		0.02	%

(1) Tangible equity is a non-GAAP financial measure. See disclosures regarding “Use of Non-GAAP Financial Measures” included as a separate section in this report.

(2) Efficiency Ratio is a non-GAAP financial measure: See disclosures regarding “Use of Non-GAAP Financial Measures” included as a separate section in this report.

Page 13 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

SEGMENT REPORTING

(unaudited)

	For the Quarter Ended							For the Six Months Ended
	June 30,		March 31,		June 30,			June 30,
(in thousands)	2021		2021		2020		2021		2020
Banking:
Interest income	$	61,403	$	59,138	$	61,932	$	120,541	$	124,270
Interest expense		3,387		4,848		13,435		8,235		30,875
Net interest income		58,016		54,290		48,497		112,306		93,395
Provision for credit losses		44		360		1,367		404		5,431
Noninterest income		7,199		5,309		3,635		12,508		8,294
Noninterest expense		28,868		28,579		25,042		57,447		51,286
Income before taxes on income	$	36,303	$	30,660	$	25,723	$	66,963	$	44,972
Wealth Management:
Noninterest income	$	7,240	$	6,923	$	5,631	$	14,163	$	12,119
Noninterest expense		5,372		5,731		5,404		11,103		11,569
Income before taxes on income	$	1,868	$	1,192	$	227	$	3,060	$	550
Other and Eliminations:
Interest income	$	—	$	—	$	—	$	—	$	—
Interest expense		106		61		50		167		80
Net interest income		(106)		(61)		(50)		(167)		(80)
Noninterest income		(404)		(324)		(297)		(728)		(769)
Noninterest expense		1,377		201		491		1,578		954
Income before taxes on income	$	(1,887)	$	(586)	$	(838)	$	(2,473)	$	(1,803)

Page 14 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

LOAN AND DEPOSIT BALANCES

(unaudited)

	For the Quarter Ended
	June 30,		March 31,		December 31,		September 30,		June 30,
(in thousands)	2021		2021		2020		2020		2020
Loans
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	2,814,446	$	2,425,182	$	2,247,542	$	2,084,175	$	2,556,332
Single Family		812,728		844,532		806,014		818,436		839,537
Subtotal		3,627,174		3,269,714		3,053,556		2,902,611		3,395,869
Commercial properties		665,166		701,920		747,807		770,964		774,939
Land and construction		56,603		57,227		55,832		57,722		65,094
Total real estate loans		4,348,943		4,028,861		3,857,195		3,731,297		4,235,902
Commercial and industrial loans		1,142,766		1,063,937		918,676		858,744		875,464
Consumer loans		9,645		14,243		18,888		18,399		18,640
Total loans		5,501,354		5,107,041		4,794,759		4,608,440		5,130,006
Deferred fees and expenses		11,534		10,165		9,040		6,883		6,806
Total	$	5,512,888	$	5,117,206	$	4,803,799	$	4,615,323	$	5,136,812
Loans held for sale	$	498,319	$	513,054	$	505,404	$	512,598	$	527,970
Deposits
Demand deposits:
Noninterest-bearing	$	3,276,901	$	2,182,714	$	1,655,847	$	1,890,028	$	1,770,382
Interest-bearing		896,224		1,012,448		871,289		396,938		411,053
Money market and savings		2,256,952		2,284,994		2,407,401		1,922,264		1,643,871
Certificates of deposits		676,725		765,665		978,896		1,254,583		1,822,535
Total	$	7,106,802	$	6,245,821	$	5,913,433	$	5,463,813	$	5,647,841

Page 15 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST, YIELD AND RATES

(unaudited)

	For the Quarter Ended									For the Six Months Ended
	June 30,			March 31,			June 30,			June 30,
(in thousands, except percentages)	2021			2021			2020			2021			2020
Average Balances:
Loans	$	5,780,494		$	5,383,745		$	5,475,796		$	5,583,216		$	5,278,974
Securities		741,967			772,204			919,788			757,002			959,707
Total interest-earnings assets		7,249,514			6,870,328			6,550,312			7,060,968			6,347,055
Deposits: interest-bearing		3,932,358			4,173,990			3,791,997			4,052,506			3,748,952
Deposits: noninterest-bearing		2,751,013			1,930,737			1,442,333			2,343,141			1,354,331
Borrowings		12,980			206,085			810,844			108,999			746,890
Average Yield / Rate:
Loans		3.88	%		3.99	%		4.03	%		3.93	%		4.17	%
Securities		2.66	%		2.70	%		2.84	%		2.68	%		2.82	%
Total interest-earnings assets		3.39	%		3.45	%		3.78	%		3.42	%		3.92	%
Deposits (interest-bearing only)		0.35	%		0.45	%		1.16	%		0.40	%		1.37	%
Deposits (noninterest and interest-bearing)		0.20	%		0.31	%		0.84	%		0.25	%		1.01	%
Borrowings		3.26	%		0.56	%		1.28	%		0.73	%		1.45	%
Total interest-bearing liabilities		0.35	%		0.45	%		1.18	%		0.41	%		1.38	%
Net Interest Rate Spread		3.04	%		3.00	%		2.61	%		3.01	%		2.53	%
Net Interest Margin		3.20	%		3.16	%		2.96	%		3.18	%		2.94	%

Page 16 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

Use of Non-GAAP Financial Measures

To supplement our unaudited condensed consolidated financial statements presented in accordance with GAAP, we use certain non-GAAP measures (including, but not limited to, non-GAAP net income and non-GAAP financial ratios) of financial performance. These supplemental performance measures may vary from, and may not be comparable to, similarly titled measures by other companies in our industry. Non-GAAP financial measures are not in accordance with, or an alternative for, GAAP. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. A non-GAAP financial measure may also be a financial metric that is not required by GAAP or other applicable requirement.

We believe that these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures (as applicable), provide meaningful supplemental information regarding our performance by providing additional information used by management that is not otherwise required by GAAP or other applicable requirements. Our management uses, and believes that investors benefit from referring to, these non-GAAP financial measures in assessing our operating results and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate a comparison of our performance to prior periods. We believe these measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. However, these non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, net income or other financial measures prepared in accordance with GAAP. In the information below, we have provided a reconciliation of, where applicable, the most comparable GAAP financial measures to the non-GAAP financial measures used in this report, or a reconciliation of the non-GAAP calculation of the financial measure.

Page 17 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

NON-GAAP RETURN ON AVERAGE TANGIBLE COMMON EQUITY (ROATCE)

(unaudited)

Return on average tangible common equity was calculated by excluding core deposit intangible amortization expense and the associated tax adjustment from net income and excluding average goodwill and intangibles assets from the average shareholders’ equity during the associated periods.  

The table below provides a reconciliation of the GAAP measure of return on average equity to the non-GAAP measure of return on average tangible common equity:

	For the Quarter Ended									For the Six Months Ended
(in thousands, except percentages)	June 30,			March 31,			June 30,			June 30,
	2021			2021			2020			2021			2020
Average stockholder's equity	$	724,233		$	704,421		$	632,149		$	714,312		$	627,571
Less: Average goodwill and intangible assets		94,655			95,080			96,421			94,868			96,677
Average tangible common equity	$	629,578		$	609,341		$	535,728		$	619,444		$	530,894
Net Income	$	26,054		$	22,355		$	17,854		$	48,409		$	31,065
Plus: Amortization of intangible assets expense		410			432			492			842			1,011
Less: Tax effect on amortization of intangible assets expense		119			125			143			244			294
Net Income available to common shareholders	$	26,345		$	22,662		$	18,203		$	49,007		$	31,782
Return on Average Equity(1)		14.4%	%		12.7%	%		11.3%	%		13.6%	%		9.9	%
Return on Average Tangible Common Equity(2)		16.7%	%		14.9%	%		13.6%	%		15.8%	%		12.0	%
Tax rate utilized for calculating tax effect on amortization of intangible assets expense		29.0	%		29.0	%		29.0	%		29.0	%		29.0	%

(1) Annualized net income divided by average shareholders’ equity.

(2) Annualized adjusted net income available to common shareholders divided by average tangible common equity.

Page 18 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

NON-GAAP EFFICIENCY RATIO

(unaudited)

Efficiency ratio is a non-GAAP financial measurement determined by methods other than in accordance with U.S. GAAP.  This figure represents the ratio of noninterest expense, less amortization of intangible assets expense and merger related costs, to the sum of net interest income before allowance for credit losses and total noninterest income, less net gain (loss) from the sale of other real estate owned and net gain (loss) from the sale of securities.

The table below provides a calculation of the non-GAAP measure of efficiency ratio:

	For the Quarter Ended									For the Six Months Ended
(in thousands, except percentages)	June 30,			March 31,			June 30,			June 30,
	2021			2021			2020			2021			2020
Total noninterest expense	$	35,617		$	34,511		$	30,937		$	70,128		$	63,809
Less: Amortization of intangible assets expense		410			432			492			842			1,011
Less: Merger related costs		1,166			-			-			1,166			-
Adjusted Noninterest expense	$	34,041		$	34,079		$	30,445		$	68,120		$	62,798
Net interest income	$	57,910		$	54,229		$	48,447		$	112,139		$	93,315
Plus: Total noninterest income		14,035			11,908			8,969			25,943			19,644
Adjusted Revenue	$	71,945		$	66,137		$	57,416		$	138,082		$	112,959
Efficiency Ratio		47.3	%		51.5	%		53.0	%		49.3	%		55.6	%

Page 19 of 20

FIRST FOUNDATION INC.
SECOND QUARTER 2021 RESULTS

NON-GAAP TANGIBLE COMMON EQUITY RATIO & TANGIBLE BOOK VALUE PER SHARE

(unaudited)

Tangible common equity ratio and tangible book value per share are non-GAAP financial measurements determined by methods other than in accordance with U.S. GAAP.  Tangible common equity ratio is calculated by taking tangible common equity which is shareholders’ equity excluding the balance of goodwill and intangible assets and dividing by tangible assets which is total assets excluding the balance of goodwill and intangible assets. Tangible book value per share is calculated by dividing tangible common equity by basic common shares outstanding, as compared to book value per share, which is calculated by dividing shareholders’ equity by basic common shares outstanding.

The table below provides a reconciliation of the GAAP measure of equity to asset ratio to the non-GAAP measure of tangible common equity ratio and the GAAP measure of book value per share to the non-GAAP measure of tangible book value per share:

(in thousands, except per share amounts)	June 30,			March 31,			June 30,
	2021			2021			2020
Stockholder's equity	$	734,018		$	714,430		$	638,721
Less: Goodwill and intangible assets		94,454			94,864			96,181
Tangible Common Equity	$	639,564		$	619,566		$	542,540
Total assets	$	7,939,134		$	7,051,832		$	7,141,293
Less: Goodwill and intangible assets		94,454			94,864			96,181
Tangible assets	$	7,844,680		$	6,956,968		$	7,045,112
Equity to Asset Ratio		9.25	%		10.13	%		8.94	%
Tangible Common Equity Ratio		8.15	%		8.91	%		7.70	%
Book value per share	$	16.38		$	15.95		$	14.31
Tangible book value per share		14.27			13.84			12.16
Basic common shares outstanding		44,819,743			44,782,155			44,625,324

Page 20 of 20