First Foundation (FFWM) 8-K First Foundation Inc. Reports Fourth Quarter and Full Year 2021 Results

First Foundation Inc. (NASDAQ: FFWM) January 31, 2022

‌Exhibit 99.1

FIRST FOUNDATION INC. REPORTS FOURTH QUARTER AND FULL YEAR 2021 RESULTS

● Fourth quarter net income of $23.9 million and earnings per share of $0.51.

● Total revenues of $75.8 million in fourth quarter 2021.

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4Q21 Key Financial Data

Profitability Metrics	4Q21	3Q21	4Q20
Return on average assets (%)	1.15	1.88	1.33
Return on average common equity (%)	11.3	19.9	13.0
Return on tangible common equity (%) (a)	13.4	22.9	15.3
Net interest margin (%)	3.17	3.07	3.19
Efficiency ratio (%) (a)	51.0	41.9	49.0
Income Statement (b)	4Q21	3Q21	4Q20
Net interest income	$61,958	$59,187	$51,712
Noninterest income	$13,830	$30,680	$11,362
Net income attributable to common	$23,876	$37,226	$22,366
Diluted earnings per common share	$0.51	$0.83	$0.50
Dividends declared per common share	$0.09	$0.09	$0.07
Balance Sheet (b)	4Q21	3Q21	4Q20
Average total loans	$6,150,095	$6,060,153	$5,132,081
Average total deposits	$7,152,563	$7,103,619	$5,670,959
Net charge-off ratio	0.07%	(0.01)%	0.02%
Tangible book value per share (a)	$14.92	$14.96	$13.44
Tier 1 Leverage Ratio	7.84%	8.16%	8.98%
(a) See Non-GAAP Financial Measures
(b) Dollars in thousands, except per share data

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Return on average assets of 1.15%.

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Return on average tangible equity of 13.4%.

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Tangible book value per share of $14.92.

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Net interest margin of 3.17%; 19% growth in net interest income year-over-year.

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Deposit costs remained low at of 0.15%.

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Record quarterly originations of $1.2 billion and full year originations of $3.9 billion.

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Increased first quarter dividend payment 22%, from $0.09 in the prior quarter, to $0.11 per share.

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 $23.9 million, including $1.1 million of merger related expenses, or $0.51 per diluted share, for the fourth quarter of 2021, compared to net income of $37.2 million, including $0.4 million of merger related expenses, or $0.83 per diluted share, for the third quarter of 2021.  Additionally, First Foundation Inc. announced today that its Board of Directors has approved the payment of a quarterly cash dividend of $0.11 per common share, payable on February 17, 2022 to common shareholders of record as of February 10, 2022.

Scott F. Kavanaugh CEO

“First Foundation delivered another strong quarter of results as highlighted by several key metrics, including earnings per share of 51 cents and revenue of $76 million,” said Scott F. Kavanaugh, CEO of First Foundation Inc. “While 2021 was a year filled with uncertainty, our ability to generate the results we reported today is a testament to our strong team and the value of our sustainable business model. Clients have come to rely on First Foundation for high quality solutions and advice across the many facets of their financial lives. Looking ahead, our banking, wealth management, and trust businesses are experiencing record levels of interest as we continue to attract new clients. Our expansion into Florida and our build-out in Texas are off to a great start and have tons of potential for future growth, and we continue to invest in our existing locations across California, Nevada, and Hawaii. Also, the launch of our new mobile app allows us to offer many of the future -forward solutions of a fintech but in the secure environment of a more traditional financial institution. I am very excited about the future of First Foundation and believe we are well positioned going in 2022.”

David DePillo President

“The fourth quarter marked an important milestone for our bank as we solidified our positioning as a premier regional bank with locations from coast to coast,” said David DePillo, President of First Foundation Inc. “The integration of our operations in Florida has just begun, but we are already starting to see meaningful benefits. Our ability to serve clients with local expertise across our geographic footprint allows us to continue to grow our diverse, high-quality loan portfolio while maintaining a solid base of core deposits. Originations experienced another record year, up 57% as compared to last year, and our deposit levels remain solid with our loan-to-deposit ratio at 84%. This is all a testament to the amazing team we have in place at First Foundation.”

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.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

4Q21 Highlights

Financial Results:

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Total revenues were $75.8 million in the quarter, an increase of 20% from the fourth quarter of 2020, and a decrease of 16% from the third quarter of 2021. The decrease was due to an $18.1 million gain on sale of loans related to the securitization of $419 million of multifamily loans during the third quarter.  

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Nonperforming assets (“NPAs”) to total assets decreased to 0.14%.

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Return on average tangible equity of 13.4%.

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Return on average assets of 1.15%.

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Efficiency ratio of 51.0% for the quarter and 47.5% for the full year 2021.

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Total tangible shareholders’ equity of $842 million, tangible book value of $14.92 per share, an increase of 11% in 2021, and tangible common equity to tangible assets of 8.44%.

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Net interest margin (“NIM”) increased to 3.17% for the quarter, as excess liquidity was deployed.

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Advisory and Trust divisions achieved a record combined pre-tax profit margin of 25% in the quarter.

Other Activity:

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Completed the acquisition of TGR Financial; core systems conversions are on track to occur in May 2022.  

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Provision for credit losses was impacted by the Day 1 provision of $5.6 million for Non-Purchase Credit Deteriorated (“PCD”) loans related to the acquisition of TGR Financial.

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Recognized $1.1 million of merger expenses related to the TGR Financial acquisition during the quarter.

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Recognized $1.1 million on gain of other equity investment in NYDIG, through a valuation adjustment.

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Earned $561 thousand of net PPP fee income in 4Q21; $618 thousand of fees from $51 million of loans remain.

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The allowance for credit losses for loans increased by $12.8 million in the quarter to $33.8 million, up from $21.0 million in the prior quarter, primarily as a result of the acquisition of TGR Financial.

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Loan originations totaled $1.2 billion for the quarter, a record quarter for us; C&I originations of $518 million, also a record for us, were 43% of the total quarterly originations.

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Forbearances and deferrals increased to 0.22% of total loans, to a total of $16.2 million, from 0.06% and $3.4 million in the prior quarter solely as a result of the acquisition of TGR Financial. No forbearances and deferrals remain on FFB’s legacy portfolio.  

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Core deposits increased to 99% of total deposits from 94% the prior year, with 71% of core deposits attributed to commercial business deposits.

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Cost of deposits held steady at 0.15% from the prior quarter, but decreased from 0.41% the prior year.

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Assets under management (“AUM”) at FFA increased to $5.7 billion, while trust assets under advisement (“AUA”) at FFB were $1.3 billion.

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Announced closing of subordinated notes for gross proceeds of $150 million in January 2022.

Spotlight / Year in Review

2021 Vision List – Outperforming Stock

Bank & Thrift Sm-All Stars Class of 2021

First Foundation Inc. (FFWM) made B Riley’s Vision List which is a list of the top-24 stocks across all industries selected by analysts to outperform the small-cap benchmark Russell 2000 Index in the current year. Each year analysts are tasked to identify a single, immutable pick to outperform based on a set of defined criteria.

The Sm-All Stars represent the top performing small-cap banks and thrifts in the country. This is the second time FFWM was one of 35 banks chosen. According to Piper Sandler, banks selected have superior performance metrics in growth, profitability, credit quality and capital strength.

Barron’s and CNBC Top 100 Independent Advisors

Bank Director Best Small Regional Bank

First Foundation Advisors (FFA) was selected as America’s top independent financial advisor, as identified by Barron's. Also, FFA was included in The CNBC FA 100 which recognizes the advisory firms that top the list when it comes to offering a comprehensive planning and financial service that helps clients navigate through their complex financial life.

First Foundation Bank (FFB) was selected as the Top 4 small regional bank in the nation in the most recent ranking by Bank Director. The list selected the top 10 banks in each peer group based on several metrics provided by S&P Global Market Intelligence as of year-end 2020 and then studied and ranked each bank further for its performance in the four subcategories that contribute to overall performance: leadership, board, innovation, and growth.

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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

Details

Loans

Loans increased $1.6 billion, or 27.5%, compared to the prior quarter, to $7.4 billion as of December 31, 2021, and increased $2.1 billion, or 39.5%, compared to December 31, 2020.  The increase was impacted by the acquisition of TGR Financial, which added $1.06 billion in gross loans, or $1.05 billion of net loans held for investment after purchase accounting adjustments.  Loan balances were also affected by loan fundings, which in the fourth quarter of 2021 were $1.2 billion, an increase of $411 million, or 51.2%, from the third quarter of 2021 and an increase of $498 million, or 69.6%, from the fourth quarter of 2020.  Contributing to loan originations during the quarter, our C&I division funded $518 million of new commercial loans during the fourth quarter of 2021, of which 55% were adjustable commercial revolving lines of credit. The remaining C&I originations were comprised of $129 million of commercial term loans, $46 million of public finance loans, $32 million of owner occupied commercial real estate loans, and $25 million of equipment finance leases.  We funded no additional PPP loans during the quarter. Loan balances during the fourth quarter of 2021 were also impacted by loan payoffs of $670 million, compared to payoffs of $583 million in the third quarter of 2021 and $534 million in the fourth quarter of 2020. The current pipeline remains very strong going into the first quarter.

Investment Securities

Investment securities increased $300 million, or 33.3%, from the prior quarter, to $1.2 billion as of December 31, 2021, and increased $387.1 million, or 47.5%, compared to December 31, 2020. The increases in the balance of investment securities compared to the third quarter of 2021 and fourth quarter of 2020 were primarily driven by securities purchases in the fourth quarter of 2021 and the result of $221.8 million of investment securities, net of the fair value adjustment, acquired in connection with the acquisition of TGR Financial.

The allowance for credit losses for investments increased by $0.3 million from the prior quarter, to $10.4 million as of December 31, 2021, from $10.1 million as of September 30, 2021, and increased $3.2 million, from $7.2 million as of December 31, 2020. The increase from the fourth quarter of 2020 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 were $8.8 billion as of December 31, 2021, an increase of $2.0 billion, or 28.7%, compared to the prior quarter, and an increase of $2.9 billion, or 49.0%, compared to the fourth quarter of 2020. Deposit growth during the fourth quarter of 2021 compared to the fourth quarter of 2020 was primarily driven by an increase of $1.6 billion, or 98%, in non-interest bearing demand deposits, an increase of $1.4 billion, or 157%, in interest bearing demand deposits, and an increase in money market and savings accounts of $212.9 million, largely attributable to our commercial deposit services division, and retail branches and the acquisition of TGR financial which contributed $2.2 billion of deposits after purchase accounting adjustments.  The increases in deposits were offset by a reduction in CDs of $310.4 million, primarily due to our intentional run-off of higher cost brokered deposits. Noninterest-bearing demand deposits measured 37.2% of total deposits as of December 31, 2021, compared to 43.8% of total deposits as of September 30, 2021, while core deposits increased by $2.0 billion compared to the linked quarter, and measured 99% of total deposits as of December 31, 2021, and 98% of total deposits as of September 30, 2021. Commercial business deposits were 71% of total core deposits as of December 31, 2021.

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FIRST FOUNDATION INC.
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Our loan to deposit ratio measured 84.1% as of December 31, 2021, compared to 84.9% as of September 30, 2021 and 89.8% as of December 31, 2020.

Borrowings were $210.1 million as of December 31, 2021, compared to $12.5 million as of September 30, 2021, and $269.0 million as of December 31, 2020. Borrowings increased compared to the linked quarter due to a $6 million draw on the Company’s line of credit, $25.7 million of subordinated notes, net of the fair market value adjustment, and $165.9 million of repurchase agreements associated with deposit customers both assumed in the TGR Financial acquisition.

Private Wealth Management and Trust Assets

AUM at FFA increased by $252 million in the fourth quarter, to $5.7 billion, and was primarily the net result of $80 million of new accounts, $38 million of net withdrawals, and $210 million in portfolio gains. AUA at FFB’s Trust Department increased $48.4 million, to $1.3 billion, during the fourth quarter of 2021.  The Advisory and Trust divisions achieved a combined pre-tax profit margin of 25% in the quarter.

Net Interest Income

Net interest income was $62.0 million for the fourth quarter of 2021, compared to $59.2 million in the third quarter of 2021 and $51.7 million in the fourth quarter of 2020.  Interest income from loans increased 3.1% to $58.5 million for the fourth quarter of 2021 compared to $56.8 million in the third quarter in 2021, and increased 13.5% compared to $51.5 million for the fourth quarter of 2020, driven primarily by higher average loan balances. Interest income from investment securities and interest-earning cash was $6.2 million for the fourth quarter of 2021, compared to $5.2 million for the third quarter of 2021, and $6.4 million in the fourth quarter of 2020. The linked quarter change was due primarily to an increase in average investment securities balances.

Interest expense decreased 2.6% to $2.7 million for the fourth quarter of 2021, compared to $2.8 million for the third quarter of 2021, and decreased 56.1% compared to $6.2 million for the fourth quarter of 2020. The decreases in interest expense were driven primarily by 2.3% and 54.3% decreases in interest expense on deposits compared to the third quarter of 2021 and fourth quarter of 2020, respectively. The decreases in interest expense on deposits were due to decreases in average rates on interest-bearing deposits, which were partially offset by higher average deposit balances.

Net Interest Margin

Net interest margin was 3.17% in the fourth quarter of 2021, as compared to 3.07% in the third quarter of 2021, and 3.19% in the fourth quarter of 2020. The NIM increased in the linked quarter due to an increase in interest earning assets. The increase was primarily driven by a six basis point increase in loan yields, from 3.74% in the third quarter of 2021, to 3.80% in the fourth quarter of 2021.

Noninterest Income

Noninterest income decreased 54.9% to $13.8 million in the fourth quarter of 2021, compared to $30.7 million in the third quarter of 2021.  Noninterest income during the third quarter of 2021 included an $18.1 million gain on sale of loans related to the securitization of $419 million of multifamily loans during the quarter.  On an adjusted basis, excluding the above mentioned gain during the third quarter of 2021, noninterest income increased $1.3 million, or 10.2%, during the fourth quarter of 2021 compared to the third quarter of 2021.  In addition, noninterest income increased 21.7% compared to $11.4 million in the fourth quarter of 2020.

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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

Noninterest income during the fourth quarter of 2021 was comprised primarily of $7.5 million of investment advisory fees from Wealth Management, $2.1 million of trust administrative and consulting fees, $2.3 million of loan and servicing fees, $0.5 million of deposit account fees and other income of $1.4 million. Other income increased in the linked quarter, primarily due to a $1.1 million gain on other equity investment in NYDIG, through a valuation adjustment. Income related to Wealth Management increased in the fourth quarter of 2021, when compared to the third quarter of 2021 and the fourth quarter of 2020, due primarily to higher levels of fees earned on AUM.  Loan and servicing fees in the fourth quarter of 2021 decreased compared to the linked quarter and the fourth quarter in 2020 due to lower prepayment fees.  

Noninterest Expense

Noninterest expense increased 3.0%, to $39.6 million for the fourth quarter of 2021, compared to $38.4 million for the third quarter of 2021, and increased 26.1%, compared to $31.4 million for the fourth quarter of 2020. Compensation and benefits were $22.9 million in the fourth quarter of 2021, compared to $23.2 million in the third quarter of 2021, and $17.8 million in the fourth quarter of 2020.  The increase from the fourth quarter of 2020 was due to a 14.1% increase in FTE, and higher commission accruals due to strong year-to-date production in wealth management and other divisions. In addition, noninterest expense in the fourth quarter of 2021 included $1.1 million of one-time merger related expenses related to the TGR Financial acquisition.

Our efficiency ratio for the fourth quarter of 2021 was 51.0%, compared to 41.9% for the third quarter of 2021 and 49.0% in the fourth quarter of 2020. The efficiency ratio for the fourth quarter of 2021 excludes a $1.1 million gain on other equity investments.

Income Tax Expense

We recorded an income tax expense of $8.5 million in the fourth quarter of 2021, compared to an income tax expense of $14.7 million in the third quarter of 2021, and an income tax expense of $9.6 million in the fourth quarter of 2020. Our effective tax rate for the fourth quarter of 2021 was 26.2%, compared to 28.3% for the third quarter of 2021, and 30.0% for the fourth quarter of 2020. The lower effective tax rate in the fourth quarter was driven largely by the effect of favorable permanent differences associated with the exercise of executive stock options offset negatively by the capitalization of certain merger expenses for tax purposes.

Asset Quality

Total nonperforming assets were $8.3 million as of December 31, 2021, compared to $18.7 million as of September 30, 2021, and $20.6 million as of December 31, 2020. Our ratio of nonperforming assets to total assets was 0.14% as of December 31, 2021, compared to 0.24% as of September 30, 2021, and 0.30% as of December 31, 2020. Total delinquent loans were $4.0 million as of December 31, 2021, compared to $4.3 million as of September 30, 2021 and $2.8 million as of September 30, 2020.

Our allowance for credit losses for loans was $33.8 million, or 0.49% of total loans, as of December 31, 2021, compared to $21.0 million, or 0.40%, as of September 30, 2021 and $24.2 million, or 0.50%, as of December 31, 2020. The linked quarter increase in the allowance for credit losses for loans was a result of $15.1 million in additional allowance for credit losses associated with the acquisition of TGR Financial, of which $5.6 million was related to Non-PCD loans and $9.5 million was related to PCD loans.  This increase due to the acquisition was offset by a reduction in allowance of $2.4 million related to our legacy loan portfolio, due to an improvement in the economic scenario outlook, offset by an increase in legacy loan balances. Net charge-offs during the fourth quarter of 2021 were $1.1 million, or 0.07% of average loans annualized, compared to net recoveries of $0.1 million, or

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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

(0.01)% of average loans annualized, for the third quarter of 2021, and $0.2 million of net charge-offs, or 0.02% of average loans annualized, for the fourth quarter of 2020.  

The ratio of the allowance for credit losses for loans to total nonperforming assets was 405.5% as of December 31, 2021, compared to 112.2% as of September 30, 2021 and 117.3% as of December 31, 2020.

Capital

As of December 31, 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
	December 31,		September 30,		December 31,		Regulatory
(unaudited)	2021 1		2021		2020		Requirements
Tier 1 leverage ratio	7.84	%	8.16	%	8.98	%	5.00	%
Common Equity Tier 1 ratio	11.49	%	11.17	%	11.63	%	6.50	%
Tier 1 risk-based capital ratio	11.49	%	11.17	%	11.63	%	8.00	%
Total risk-based capital ratio	12.04	%	11.71	%	12.25	%	10.00	%
Tangible common equity to tangible assets ratio 2	8.44	%	8.80	%	8.75	%	N/A	%

(1) Regulatory capital ratios are preliminary and subject to change until filing of our December 31, 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 $1.1 billion as of December 31, 2021, an increase from $766.8 million and $695.7 million as of September 30, 2021 and December 31, 2020, respectively. Our tangible book value per common share was $14.92 as of December 31, 2021, compared to $14.96 as of September 30, 2021, and increased $1.48, compared to $13.44, as of December 31, 2020. The linked quarter decrease in tangible book value per common share was attributable to the closing of TGR Financial and the issuance of 11,352,614 new common shares, in addition to the creation of $128.4 million of additional goodwill and intangibles during the fourth quarter of 2021.

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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

Earnings Call Info

The Company will host a conference call at 8:00 a.m. PT / 11:00 a.m. ET on January 31, 2022 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) 518-6930 using conference ID FFWMQ421.  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. The broad range of 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 is more aligned with community banks and boutique wealth management firms. This combination of an integrated platform of comprehensive financial products and personalized service differentiates First Foundation from many of its competitors and has contributed to the growth of its client base and business. Learn more at firstfoundationinc.com, or connect with us on LinkedIn and Twitter.  

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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

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 TGR Financial, Inc. (“TGR Financial”) acquisition 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 risk that the benefits from the acquisition 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 acquisition; diversion of management time on integration-related issues; and lower than expected revenues, credit quality deterioration or a reduction in real estate values or a reduction in net earnings.

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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

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.

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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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

CONSOLIDATED BALANCE SHEETS

(unaudited, except for December 31, 2020)

(in thousands, except share and per share amounts)	December 31,		September 30,		December 31,
	2021		2021		2020
ASSETS
Cash and cash equivalents	$	1,121,757	$	783,376	$	629,707
Securities available-for-sale ("AFS")		1,201,777		901,746		814,671
Allowance for credit losses - investments		(10,399)		(10,098)		(7,245)
Net securities		1,191,378		891,648		807,426
Loans held for sale		501,436		501,433		505,404
Loans held for investment		6,906,728		5,308,959		4,803,799
Allowance for credit losses - loans		(33,776)		(20,985)		(24,200)
Net loans		6,872,952		5,287,974		4,779,599
Investment in FHLB stock		18,249		17,250		17,250
Deferred taxes		20,835		11,247		8,603
Premises and equipment, net		37,920		8,091		8,012
Real estate owned (“REO”)		6,120		—		—
Goodwill and intangibles		222,125		94,083		95,296
Other assets		203,342		139,961		105,863
Total Assets	$	10,196,204	$	7,735,063	$	6,957,160
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	8,811,960	$	6,844,978	$	5,913,433
Borrowings		210,127		12,500		269,000
Accounts payable and other liabilities		110,066		110,754		79,016
Total Liabilities		9,132,153		6,968,232		6,261,449
Shareholders’ Equity:
Common Stock		56		45		45
Additional paid-in-capital		720,744		436,835		433,941
Retained earnings		340,976		321,184		247,638
Accumulated other comprehensive income (loss)		2,275		8,767		14,087
Total Shareholders’ Equity		1,064,051		766,831		695,711
Total Liabilities and Shareholders’ Equity	$	10,196,204	$	7,735,063	$	6,957,160

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FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

CONSOLIDATED INCOME STATEMENTS

(unaudited)

	For the Quarter Ended						For the Year Ended
(in thousands, except share and	December 31,		September 30,		December 31,		December 31,
per share amounts)	2021		2021		2020		2021		2020
Interest income:
Loans	$	58,532	$	56,781	$	51,549	$	224,823	$	216,798
Securities		5,696		4,606		6,045		20,435		25,688
Cash, FHLB Stock, and Fed Funds		460		602		336		1,960		1,405
Total interest income		64,688		61,989		57,930		247,218		243,891
Interest expense:
Deposits		2,690		2,753		5,884		13,453		39,432
Borrowings		40		49		334		481		7,815
Total interest expense		2,730		2,802		6,218		13,934		47,247
Net interest income		61,958		59,187		51,712		233,284		196,644
Provision for credit losses		3,879		(417)		(233)		3,866		6,746
Net interest income after provision for credit losses		58,079		59,604		51,945		229,418		189,898
Noninterest income:
Asset management, consulting and other fees		9,612		9,313		7,602		36,022		29,465
Gain on sale of loans		—		18,135		—		21,459		15,140
Other income		4,218		3,232		3,760		12,972		10,042
Total noninterest income		13,830		30,680		11,362		70,453		54,647
Noninterest expense:
Compensation and benefits		22,938		23,241		17,809		87,908		73,868
Occupancy and depreciation		6,680		6,427		6,473		24,977		23,892
Professional services and marketing costs		3,495		2,700		2,165		12,224		8,045
Customer service costs		2,140		2,512		1,728		8,775		7,445
Other expenses		4,311		3,514		3,199		14,202		12,528
Total noninterest expense		39,564		38,394		31,374		148,086		125,778
Income before taxes on income		32,345		51,890		31,933		151,785		118,767
Taxes on income		8,469		14,664		9,567		42,274		34,398
Net income	$	23,876	$	37,226	$	22,366	$	109,511	$	84,369
Net income per share:
Basic	$	0.51	$	0.83	$	0.50	$	2.42	$	1.89
Diluted	$	0.51	$	0.83	$	0.50	$	2.41	$	1.88
Shares used in computation:
Basic		46,751,427		44,819,743		44,641,800		44,639,430		44,639,430
Diluted		46,881,101		45,002,937		44,957,611		44,900,805		44,900,805

Page 11 of 20

FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

SELECTED CONSOLIDATED FINANCIAL DATA AND ASSET QUALITY

(unaudited)

	For the Quarter Ended									For the Year Ended
(in thousands, except share and per share amounts	December 31,			September 30,			December 31,			December 31,
and percentages)	2021			2021			2020			2021			2020
Selected Financial Data:
Return on average assets		1.15	%		1.88	%		1.33	%		1.41	%		1.26	%
Return on average equity		11.3	%		19.9	%		13.0	%		14.4	%		13.0	%
Return on average tangible equity (1)		13.4	%		22.9	%		15.3	%		16.9	%		15.5	%
Efficiency ratio (2)		51.0	%		41.9	%		49.0	%		47.5	%		49.3	%
Net interest margin		3.17	%		3.07	%		3.19	%		3.15	%		3.03	%
Cost of deposits		0.15	%		0.15	%		0.41	%		0.20	%		0.73	%
Loan to deposit ratio		84.1	%		84.9	%		89.8	%		84.1	%		89.8	%
Noninterest income as a % of total revenues		18.2	%		34.1	%		18.0	%		23.2	%		21.7	%
Loan originations	$	1,213,137		$	801,963		$	715,181		$	3,913,061		$	2,493,401
Assets under management		5,680,605			5,428,737			4,926,791			5,680,605			4,926,791
Tangible common equity to tangible assets (1)		8.44	%		8.80	%		8.75	%		8.44	%		8.75	%
Book value per share	$	18.86		$	17.06		$	15.58		$	18.86		$	15.58
Tangible book value per share		14.92			14.96			13.44			14.92			13.44
Asset Quality:
Nonperforming assets
Nonaccrual loans	$	8,330		$	18,706		$	20,628		$	8,330		$	20,628
Total nonperforming loans	$	8,330		$	18,706		$	20,628		$	8,330		$	20,628
Loans 30 - 89 days past due	$	3,965		$	4,290		$	2,650		$	3,965		$	2,650
Accruing loans 90 days or more past due		—			—			152			—			152
Nonperforming assets to total assets		0.14	%		0.24	%		0.30	%		0.14	%		0.30	%
Loans 30 - 89 days past due to total loans		0.06	%		0.08	%		0.05	%		0.06	%		0.05	%
Allowance for credit losses to loans held for investment		0.49	%		0.40	%		0.50	%		0.49	%		0.50	%
Allowance for credit losses to nonaccrual loans		405.5	%		112.2	%		117.3	%		405.5	%		117.3	%
Net charge-offs (recoveries) to average loans - annualized		0.07	%		(0.01)	%		0.02	%		0.01	%		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 12 of 20

FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

SEGMENT REPORTING

(unaudited)

	For the Quarter Ended						For the Year Ended
	December 31,		September 30,		December 31,		December 31,
(in thousands)	2021		2021		2020		2021		2020
Banking:
Interest income	$	64,688	$	61,989	$	57,930	$	247,218	$	243,891
Interest expense		2,700		2,753		6,179		13,688		47,078
Net interest income		61,988		59,236		51,751		233,530		196,813
Provision for credit losses		3,879		(417)		(233)		3,866		6,746
Noninterest income		5,358		23,202		5,297		41,068		31,567
Noninterest expense		32,440		31,488		25,784		121,375		102,019
Income before taxes on income	$	31,027	$	51,367	$	31,497	$	149,357	$	119,615
Wealth Management:
Noninterest income	$	7,897	$	7,857	$	6,371	$	29,917	$	24,510
Noninterest expense		5,908		6,338		5,043		23,349		21,778
Income before taxes on income	$	1,989	$	1,519	$	1,328	$	6,568	$	2,732
Other and Eliminations:
Interest income	$	—	$	—	$	—	$	—	$	—
Interest expense		30		49		39		246		169
Net interest income		(30)		(49)		(39)		(246)		(169)
Noninterest income		575		(379)		(306)		(532)		(1,430)
Noninterest expense		1,216		568		547		3,362		1,981
Income before taxes on income	$	(671)	$	(996)	$	(892)	$	(4,140)	$	(3,580)

Page 13 of 20

FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

LOAN AND DEPOSIT BALANCES

(unaudited)

	For the Quarter Ended
	December 31,		September 30,		June 30,		March 31,		December 31,
(in thousands)	2021		2021		2021		2021		2020
Loans:
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	2,886,055	$	2,518,151	$	2,814,446	$	2,425,182	$	2,247,542
Single Family		933,445		818,968		812,728		844,532		806,014
Subtotal		3,819,500		3,337,119		3,627,174		3,269,714		3,053,556
Commercial properties		1,309,200		669,912		665,166		701,920		747,807
Land and construction		156,028		63,706		56,603		57,227		55,832
Total real estate loans		5,284,728		4,070,737		4,348,943		4,028,861		3,857,195
Commercial and industrial loans		1,598,422		1,217,078		1,142,766		1,063,937		918,676
Consumer loans		10,834		9,468		9,645		14,243		18,888
Total loans		6,893,984		5,297,283		5,501,354		5,107,041		4,794,759
Deferred fees and expenses		12,744		11,676		11,534		10,165		9,040
Total	$	6,906,728	$	5,308,959	$	5,512,888	$	5,117,206	$	4,803,799
Loans held for sale	$	501,436	$	501,433	$	498,319	$	513,054	$	505,404
Deposits:
Demand deposits:
Noninterest-bearing	$	3,280,455	$	2,995,570	$	3,276,901	$	2,182,714	$	1,655,847
Interest-bearing		2,242,684		945,654		896,224		1,012,448		871,289
Money market and savings		2,620,336		2,290,380		2,256,952		2,284,994		2,407,401
Certificates of deposits		668,485		613,374		676,725		765,665		978,896
Total	$	8,811,960	$	6,844,978	$	7,106,802	$	6,245,821	$	5,913,433

Page 14 of 20

FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

CONSOLIDATED LOAN FUNDING AND YIELDS

(unaudited)

	For the Quarter Ended									For the Year Ended
	December 31,			September 30,			December 31,			December 31,
(in thousands, except percentages)	2021			2021			2020			2021			2020
Loan Funding Balances:
Loans secured by real estate:
Residential properties:
Multifamily	$	579,414		$	356,589		$	377,233		$	1,983,858		$	1,326,384
Single family		74,992			78,794			59,305			257,715			198,325
Subtotal		654,406			435,383			436,538			2,241,573			1,524,709
Commercial properties:
Non-owner occupied CRE		28,770			13,035			8,090			41,836		��	8,133
Owner-occupied CRE		31,715			25,350			14,824			75,575			42,206
Subtotal		60,485			38,385			22,914			117,411			50,339
Land and construction		11,994			7,443			3,493			23,156			19,632
Total real estate loans		726,885			481,211			462,945			2,382,140			1,594,680
Commercial and industrial loans		486,120			320,749			250,046			1,527,869			891,320
Consumer loans		131			121			2,082			3,050			6,544
Total	$	1,213,136		$	802,081		$	715,073		$	3,913,059		$	2,492,544
Loan Funding Yields:
Loans secured by real estate:
Residential properties:
Multifamily		3.20	%		3.33	%		3.40	%		3.26	%		3.58	%
Single family		3.26	%		3.31	%		3.46	%		3.28	%		3.70	%
Subtotal		3.21	%		3.32	%		3.40	%		3.26	%		3.60	%
Commercial properties:
Non-owner occupied CRE		3.20	%		4.17	%		4.24	%		3.51	%		4.24	%
Owner-occupied CRE		3.78	%		3.74	%		4.25	%		3.81	%		4.37	%
Subtotal		3.51	%		3.88	%		4.25	%		3.70	%		4.35	%
Land and construction		4.71	%		5.00	%		5.49	%		4.96	%		5.24	%
Total real estate loans		3.26	%		3.39	%		3.46	%		3.30	%		3.64	%
Commercial and industrial loans		3.56	%		3.56	%	��	3.91	%		3.51	%		3.36	%
Consumer loans		3.92	%		3.29	%		4.13	%		3.96	%		4.19	%
Total		3.38	%		3.46	%		3.62	%		3.38	%		3.54	%

Page 15 of 20

FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 2021 RESULTS

CONSOLIDATED AVERAGE BALANCE SHEET, INTEREST, YIELD AND RATES

(unaudited)

	For the Quarter Ended									For the Year Ended
	December 31,			September 30,			December 31,			December 31,
(in thousands, except percentages)	2021			2021			2020			2021			2020
Average Balances:
Cash, FHLB Stock, and Fed Funds	$	659,730		$	924,232		$	498,963		$	756,658		$	262,090
Securities		994,701			715,505			849,585			806,456			902,085
Loans		6,150,095			6,060,153			5,132,081			5,846,315			5,333,968
Total interest-earnings assets		7,804,526			7,699,890			6,480,629			7,409,429			6,498,143
Deposits: interest-bearing		4,076,354			3,976,057			3,834,901			4,039,247			3,755,796
Deposits: noninterest-bearing		3,076,209			3,127,562			1,836,058			2,725,631			1,595,669
Borrowings		32,808			5,393			260,611			63,681			612,583
Average Yield / Rate:
Cash, FHLB Stock, and Fed Funds		0.28	%		0.26	%		0.27	%		0.26	%		0.54	%
Securities		2.29	%		2.58	%		2.85	%		2.53	%		2.85	%
Loans		3.80	%		3.74	%		4.01	%		3.85	%		4.06	%
Total interest-earnings assets		3.31	%		3.22	%		3.57	%		3.34	%		3.75	%
Deposits (interest-bearing only)		0.26	%		0.27	%		0.61	%		0.33	%		1.04	%
Deposits (noninterest and interest-bearing)		0.15	%		0.15	%		0.41	%		0.20	%		0.73	%
Borrowings		0.48	%		3.38	%		0.51	%		0.75	%		1.28	%
Total interest-bearing liabilities		0.26	%		0.28	%		0.60	%		0.34	%		1.08	%
Net Interest Rate Spread		3.05	%		2.95	%		2.97	%		3.00	%		2.68	%
Net Interest Margin		3.17	%		3.07	%		3.19	%		3.15	%		3.03	%

Page 16 of 20

FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 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.
FOURTH QUARTER AND FULL YEAR 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 Year Ended
	December 31,			September 30,			December 31,			December 31,
(in thousands, except percentages)	2021			2021			2020			2021			2020
Average shareholders' equity	$	844,089		$	748,156		$	687,116		$	759,101		$	649,031
Less: Average goodwill and intangible assets		126,002			94,268			95,515			104,355			96,209
Average tangible common equity	$	718,087		$	653,888		$	591,601		$	654,746		$	552,822
Net Income	$	23,876		$	37,226		$	22,366		$	109,511		$	84,369
Plus: Amortization of intangible assets expense		365			372			439			1,579			1,895
Less: Tax effect on amortization of intangible assets expense		106			108			127			458			549
Net Income available to common shareholders	$	24,135		$	37,490		$	22,678		$	110,632		$	85,715
Return on Average Equity(1)		11.3%	%		19.9%	%		13.0%	%		14.4%	%		13.0%	%
Return on Average Tangible Common Equity(2)		13.4%	%		22.9%	%		15.3%	%		16.9%	%		15.5%	%
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.
FOURTH QUARTER AND FULL YEAR 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.

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

	For the Quarter Ended									For the Year Ended
	December 31,			September 30,			December 31,			December 31,
(in thousands, except percentages)	2021			2021			2020			2021			2020
Total noninterest expense	$	39,564		$	38,394		$	31,374		$	148,086		$	125,778
Less: Amortization of intangible assets expense		365			372			439			1,579			1,895
Less: Merger related costs		1,056			384			-			2,606			-
Adjusted Noninterest expense	$	38,143		$	37,638		$	30,935		$	143,901		$	123,883
Net interest income	$	61,958		$	59,187		$	51,712		$	233,284		$	196,644
Plus: Total noninterest income		13,830			30,680			11,362			70,453			54,647
Less: Net gain on other equity investments		1,069			-			-			1,069			-
Adjusted Revenue	$	74,719		$	89,867		$	63,074		$	302,668		$	251,291
Efficiency Ratio		51.0	%		41.9	%		49.0	%		47.5	%		49.3	%

Page 19 of 20

FIRST FOUNDATION INC.
FOURTH QUARTER AND FULL YEAR 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:

	December 31,			September 30,			December 31,
(in thousands, except per share amounts)	2021			2021			2020
Shareholders' equity	$	1,064,051		$	766,831		$	695,711
Less: Goodwill and intangible assets		222,125			94,083			95,296
Tangible Common Equity	$	841,926		$	672,748		$	600,415
Total assets	$	10,196,204		$	7,735,063		$	6,957,160
Less: Goodwill and intangible assets		222,125			94,083			95,296
Tangible assets	$	9,974,079		$	7,640,980		$	6,861,864
Equity to Asset Ratio		10.44	%		9.91	%		10.00	%
Tangible Common Equity Ratio		8.44	%		8.80	%		8.75	%
Book value per share	$	18.86		$	17.06		$	15.58
Tangible book value per share		14.92			14.96			13.44
Basic common shares outstanding		56,432,070			44,955,139			44,667,650

Page 20 of 20