​

Exhibit 99.1

FIRST FOUNDATION INC. REPORTS FOURTH QUARTER AND FULL YEAR 2022 RESULTS

​

​

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 earnings per share of $0.31 for the quarter and $1.96 for the full year, and on an adjusted basis $0.35 for the quarter and $2.02 for the full year (see “Use of Non-GAAP Financial Measures” below).  Net income was $17.4 million for the quarter and $110.5 million for the year.  Total revenues were $81.9 million for the quarter and $366.9 million for the full year. The fourth quarter of 2022 included a $6.25 million valuation adjustment on the NYDIG equity investment, incentive compensation reversal due to recent executive departures, and professional service costs.  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 16, 2023, to common shareholders of record as of February 6, 2023.

​

​

​

​

​

Page 2 of 19

​

Loans

Loans increased $371 million, or 3.6%, compared to the prior quarter, to $10.7 billion as of December 31, 2022, and increased $3.3 billion, or 44.8% compared to December 31, 2021.  The increases in loan balances were primarily due to a decreased impact from loan payoffs as loan fundings declined over each period, consistent with our strategy to slow loan growth.  Total loan fundings in the fourth quarter of 2022 were $849 million, a decrease of $757 million, or 47.2% from the third quarter of 2022 and a decrease of $364 million, or 30%, from the fourth quarter of 2021.   Loan payoffs totaled $478 million during the quarter, compared to payoffs of $672 million in the third quarter of 2022 and $670 million in the fourth quarter of 2021.

Contributing to loan originations during the fourth quarter, our commercial business division funded $433 million of new commercial loans during the quarter, of which 85% were adjustable commercial revolving lines of credit.

Investment Securities

Investment securities were $1.1 billion as of December 31, 2022, compared to $1.1 billion as of September 30, 2022, and $1.2 billion as of December 31, 2021.

The allowance for credit losses for investments decreased by $0.08 million from the prior quarter, to $11.4 million as of December 31, 2022, compared to $11.5 million as of September 30, 2022, and increased $1.0 million, compared to $10.4 million as of December 31, 2021. The increase year-over-year was the result of faster than expected prepayments that negatively impacted the projected cash flows on interest-only strip securities.

Deposits and Borrowings

Deposits were $10.4 billion as of December 31, 2022, compared to $9.5 billion as of September 30, 2022, and $8.8 billion as of December 31, 2021.  Deposit growth during the fourth quarter of 2022 compared to the third quarter of 2022 was primarily driven by increases in wholesale deposits and deposits from our digital banking sector of $1.1 billion and $185.2 million respectively, offset by decreases in the retail, commercial services, and corporate deposit sectors of $215.5 million, $211.5 million and $50.2 million respectively.  Noninterest-bearing demand deposits measured 26.4% of total deposits as of December 31, 2022, compared to 37.2% of total deposits as of September 30, 2022, while core deposits decreased by $292 million compared to the third quarter, and measured 86.7% of total deposits as of December 31, 2022, compared to 97.0% of total deposits as of September 30, 2022. Commercial business deposits were 72% of total core deposits as of December 31, 2022.

Our loan to deposit ratio measured 103.5% as of December 31, 2022, compared to 108.4% as of September 30, 2022, and 84.1% as of December 31, 2021.

Borrowings were $1.4 billion as of December 31, 2022, compared to $1.5 billion as of September 30, 2022, and $210.1 million as of December 31, 2021. The increase in borrowings compared to the prior year quarter was primarily due to the addition of $805.0 million in FHLB advances to fund the increase in new loan volume and strategically increase on-balance sheet liquidity.

Private Wealth Management and Trust Assets

AUM was $5.0 billion as of December 31, 2022, compared to $4.6 billion as of September 30, 2022.  There were $277.0 million of new accounts and $103.8 million of net withdrawals in the fourth quarter of 2022. AUA at FFB’s Trust Department was $1.3 billion as of December 31, 2022, and $1.2 billion as of September 30, 2022. The Advisory

Page 3 of 19

​

and Trust divisions achieved a combined pre-tax profit margin of 32% in the quarter,  largely impacted by a decrease in compensation and benefits in the quarter due to the reversal of accruals for incentive compensation.

Net Interest Income

Net interest income decreased in the fourth quarter by $13.0 million, from $87.7 million in the third quarter of 2022, to $74.7 million in the fourth quarter of 2022, and increased by $12.7 million, from $62.0 million in the fourth quarter of 2021.  Interest income from loans increased 13% to $115.0 million for the fourth quarter of 2022 compared to $101.0 million in the third quarter of 2022 and increased 96.5% compared to $58.5 million for the fourth quarter of 2021.  Loan interest income increases were driven by increases in both average loan balances and interest rates. Interest income from investment securities and interest-earning cash was $11.0 million for the fourth quarter of 2022, compared to $7.8 million for the third quarter of 2022, and $6.2 million in the fourth quarter of 2021.  The increase in the fourth quarter compared to prior periods was largely driven by increases in both the average cash balances and interest rates earned on such balances at the Federal Reserve.  

Interest expense increased 143.4% to $51.3 million in the fourth quarter of 2022, compared to $21.1 million in the third quarter of 2022, and increased from $2.7 million in the fourth quarter of 2021. The fourth quarter increase in interest expense was driven primarily by a 134.4% increase in interest expense on deposits and a 169.1% increase in interest expense on borrowings. Interest expense on deposits and borrowings increased due to increases in deposit rates, and interest rates on borrowings, as the average rate on FHLB advances and other borrowings increased to 3.79% in the fourth quarter of 2022, from 2.61% in the third quarter of 2022.

Net Interest Margin

Net interest margin (“NIM”) was 2.45% in the fourth quarter of 2022, compared to 3.10% in the third quarter of 2022, and 3.15% in the fourth quarter of 2021. The NIM decrease in the fourth quarter was primarily driven by an increase in the yield on interest bearing liabilities, which increased to 2.52% in the fourth quarter of 2022, from 1.23% in the third quarter of 2022, offset partially by an increase in the yield on interest earning assets, which increased to 4.12% in the fourth quarter of 2022, from 3.84% in the third quarter of 2022.  The average balance in interest-bearing liabilities also increased by 19.0% compared to the third quarter, offset partially by an 8.0% increase in the average balance in interest earning assets in the same period.  

Noninterest Income

Noninterest income was $7.2 million in the fourth quarter of 2022, compared to $12.2 million in the third quarter of 2022 and $13.8 million in the fourth quarter of 2021.  The decrease in the fourth quarter was largely attributable to a $6.25 million loss due to a valuation adjustment for an equity investment in NYDIG.  

Noninterest income during the fourth quarter of 2022, excluding the $6.25 million loss, totaled $13.5 million and was comprised of $6.5 million of investment advisory fees from Wealth Management, $3.2 million of trust administrative and consulting fees, $2.5 million of loan and servicing fees, $0.6 million of deposit account fees and other income of $0.7 million.  

Noninterest Expense

Noninterest expense decreased to $59.8 million for the fourth quarter of 2022, compared to $60.3 million for the third quarter of 2022, and increased 51.2%, compared to $39.6 million for the fourth quarter of 2021. Compensation and benefits were $23.2 million in the fourth quarter of 2022, compared to $29.5 million in the third quarter of 2022, and $22.9 million in the fourth quarter of 2021.  The decrease in compensation and benefits in the fourth quarter of 2022 was primarily due to the reversal of accruals for incentive compensation for several

Page 4 of 19

​

executive management personnel who separated from the company during the quarter.  Additionally, headcount decreased slightly to 713 FTEs in the fourth quarter of 2022 compared to 718 FTEs in the third quarter of 2022.  Customer service costs increased to $18.2 million in the fourth quarter of 2022, from $13.6 million in the third quarter of 2022 and $2.1 million in the fourth quarter of 2021.  The increase in customer service costs were due to increases in the earnings credit rates paid on the related deposit balances.  Deferred loan costs decreased in the fourth quarter of 2022, compared to the third quarter of 2022, as these costs are a direct offset to compensation expense. The decrease in deferred loan costs were due to the fourth quarter decrease in loan originations.

Our efficiency ratio for the fourth quarter of 2022 was 70.9%, compared to 60.0% for the third quarter of 2022 and 51.0% in the fourth quarter of 2021. The fourth quarter increase in the efficiency ratio was impacted by an increase in customer service expense. The efficiency ratio for the fourth quarter of 2022 excludes the negative $6.25 million valuation adjustment on the NYDIG equity investment included in other income.

Income Tax Expense

We recorded income tax expense of $3.6 million in the fourth quarter of 2022, compared to income tax expense of $10.5 million in the third quarter of 2022, and income tax expense of $8.5 million in the fourth quarter of 2021. Our effective tax rate for the fourth quarter of 2022 was 17.1%, compared to 26.6% for the third quarter of 2022, and 26.2% for the fourth quarter of 2021.  Our annual effective tax rates for 2022 and 2021 were 26.2%, and 27.9% respectively.  The decrease was predominantly due to a decrease in pretax income, a decrease in our statutory state tax rate, an increase in public finance lending and an increase in low-income housing tax credit investments.  The decrease reflects our ongoing efforts to lower the effective tax rate.

Asset Quality

Total nonperforming assets were $16.5 million as of December 31, 2022, compared to $17.5 million as of September 31, 2022, and $14.5 million as of December 31, 2021. Our ratio of nonperforming assets to total assets was 0.13% as of December 31, 2022, compared to 0.14% as of September 30, 2022, and December 31, 2021.. Total delinquent loans were $20.8 million as of December 31, 2022, compared to $5.8 million as of September 30, 2022, and $5.3 million as of December 31, 2021.

Our allowance for credit losses for loans was $33.7 million, or 0.31% of total loans held for investment, as of December 31, 2022, compared to $32.9 million, or 0.32%, as of September 30, 2022, and $33.8 million, or 0.49%, as of December 31, 2021.  The fourth quarter increase in the allowance for credit losses for loans of $831 thousand was primarily the result of increased loan balances, offset by the release of specific reserves related to purchase credit deteriorated loans from prior acquisitions. Net charge-offs during the fourth quarter of 2022 were $268 thousand, compared to net charge-offs of $169 thousand for the third quarter of 2022, and $1.1 million of net charge-offs for the fourth quarter of 2021.  

The ratio of the allowance for credit losses for loans to total past due and nonaccrual loans was 108.5% as of December 31, 2022, compared to 192.6% as of September 30, 2022, and 247.3% as of December 31, 2021.

Page 5 of 19

​

Capital

As of December 31, 2022, FFB exceeded all Basel III minimum regulatory capital requirements necessary to be considered a well-capitalized depository institution, as summarized in the table below:

​

Shareholders' equity totaled $1.13 billion as of December 31, 2022, an increase of $12.4 million and $70.4 million from September 30, 2022, and December 30, 2021, respectively. Our tangible book value per common share was $16.20 as of December 31, 2022, compared to $15.96 as of September 30, 2022, and $14.92 as of December 31, 2021. The fourth quarter increase in tangible book value per common share was attributable to positive EPS of $0.31 during the quarter, offset by $0.11 dividends per share.

​

​

Page 6 of 19

​

The Company will host a conference call at 8:00 a.m. PT / 11:00 a.m. ET on January 26, 2023, 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 (800) 267-6316 using conference ID FFWMQ422.  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.  

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, 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 changes in 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 at historic levels or at all; risks associated with changes in income tax laws and regulations; and risks associated with seeking new client relationships and maintaining existing client relationships.

Page 7 of 19

​

Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021, that we filed with the SEC on February 28, 2022, 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.

​

Page 8 of 19

​

CONSOLIDATED BALANCE SHEETS

(unaudited)

​

​

Page 9 of 19

​

CONSOLIDATED INCOME STATEMENTS

(unaudited)

​

Page 10 of 19

​

SELECTED CONSOLIDATED FINANCIAL DATA AND ASSET QUALITY

(unaudited)

​

Page 11 of 19

​

SEGMENT REPORTING

(unaudited)

​

​

Page 12 of 19

​

LOAN AND DEPOSIT BALANCES

(unaudited)