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1. Company Snapshot

1.a. Company Description

First Foundation Inc., through its subsidiaries, provides personal banking, business banking, and private wealth management services in the United States.It operates through two segments, Banking and Wealth Management.The company offers a range of bank deposit products, including personal and business checking accounts, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificate of deposits; and loan products consisting of multifamily and single family residential real estate loans, commercial real estate loans, and commercial term loans and line of credits, as well as consumer loans, such as personal installment loans and line of credits, and home equity line of credits.


It also provides various specialized services comprising trust services, internet and mobile banking, remote deposit capture services, merchant credit card services, ATM cards, Visa debit cards, and business sweep accounts, as well as insurance brokerage services and equipment financing solutions.In addition, the company offers investment management and financial planning services; treasury management services; advisory and coordination services in the areas of estate planning, retirement planning, and charitable and business ownership issues; and financial, investment, and economic advisory and related services.Further, it provides support services, including the processing and transmission of financial and economic data for charitable organizations.


The company operates through a network of 28 branch offices and 3 loan production offices in California, Nevada, Texas, and Hawaii.First Foundation Inc.was founded in 1985 and is headquartered in Dallas, Texas.

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1.b. Last Insights on FFWM

First Foundation Inc.'s recent performance was negatively driven by its Q4 loss, missing revenue estimates, and lower earnings compared to the previous year. The company reported a quarterly loss of $0.17 per share, versus the estimated $0.03, and revenue fell short of expectations. This earnings miss, combined with a year-over-year decline in earnings, has likely weighed on the stock.

1.c. Company Highlights

2. First Foundation's Q2 2025 Earnings: A Step Towards Balance Sheet Stabilization

First Foundation reported a net loss of $7.7 million for Q2 2025, translating to an EPS of -$0.09, which missed analyst estimates of $0.018. The company's net interest margin (NIM) was 168 basis points, a 1 basis point increase from the previous quarter. Revenue growth is expected to be 9.5% next year, according to analyst estimates. The yield on total earning assets decreased by 2 basis points to 4.61%. Adjusted for one-time impacts, core after-tax net income was $1 million or $0.01 per share.

Publication Date: Aug -25

📋 Highlights
  • CRE Concentration Reduction:: Dropped to 365% of regulatory capital from over 600% via $858M in CRE loan sales/securitizations.
  • Core Profitability:: Adjusted core after-tax net income of $1M ($0.01/share) despite $7.7M net loss from one-time loan transaction impacts.
  • Deposit Strategy:: Paid down $975M in high-cost deposits, driving net interest margin up 1 bps to 168 bps in Q2.
  • Future Loan Repricing:: $455M (2026) and $895M (2027) of multifamily loans face repricing, offering strategic flexibility for margin improvement.
  • Balance Sheet Exit Goals:: Plans to fully exit CRE held-for-sale portfolio by 2025 end and reduce MSR portfolio by ~$300M by year-end.

Balance Sheet Restructuring

The company made significant progress in reducing its commercial real estate (CRE) concentration, with the ratio decreasing to 365% of regulatory capital from over 600% at its peak. This was achieved through the sale and securitization of $858 million of CRE loans held for sale. As Thomas Shafer noted, "we like the asset class, but we had too much of it on the balance sheet, and our goal is to reduce volatility and focus on EPS and funding costs." The company expects to complete an additional securitization in the second half of 2025 and be fully exited from the CRE held-for-sale portfolio by the end of the year.

Private Banking Initiative and Loan Portfolio

First Foundation is optimistic about its private banking initiative, citing the sophistication and tenure of its team. The company has already seen referrals and closed new wealth management clients. The loan portfolio is expected to reprice, with $455 million of multifamily loans repricing in 2026 and another $895 million in 2027. Loan yields exited the quarter at just under 4.70%, according to James Britton.

Valuation and Outlook

With a Price-to-Tangible Book Value (P/TBV) ratio of approximately 0.46, the stock appears to be undervalued. The company's guidance suggests net interest margin will expand to between 1.8% and 1.9% by the fourth quarter of 2025 and further to between 2.1% and 2.2% by the fourth quarter of 2026. As the company continues to execute on its balance sheet restructuring and private banking initiatives, investors may see a positive revaluation of the stock.

Deposit Mix and Funding Costs

The company is focused on reducing high-cost deposits, including ECR deposits, and replacing them with more granular, lower-cost deposits. This is expected to improve the company's funding costs and net interest margin. The company has already paid down $975 million of higher-cost deposits following the CRE loan transactions.

3. NewsRoom

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$HAREHOLDER ALERT: The M&A Class Action Firm Announces An Investigation of Kimberly-Clark Corporation (NASDAQ: KMB)

Nov -04

Source: globenewswire.com

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First Foundation (FFWM) Reports Q3 Earnings: What Key Metrics Have to Say

Oct -30

Source: zacks.com

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First Foundation (FFWM) Q3 Earnings and Revenues Top Estimates

Oct -30

Source: zacks.com

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First Foundation Inc. Reports Third Quarter 2025 Financial Results

Oct -30

Source: businesswire.com

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FFWM Stock Alert: Halper Sadeh LLC is Investigating Whether the Sale of First Foundation Inc. is Fair to Shareholders

Oct -28

Source: businesswire.com

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Shareholder Alert: The Ademi Firm investigates whether First Foundation Inc. is obtaining a Fair Price for its Public Shareholders

Oct -28

Source: prnewswire.com

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FirstSun to buy First Foundation in $785 million all-stock deal

Oct -27

Source: reuters.com

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FirstSun Capital Bancorp and First Foundation Inc. Combining in All-Stock Merger

Oct -27

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (12.18%)

6. Segments

Banking

Expected Growth: 12.0%

First Foundation Inc.'s 12.0% growth in banking is driven by strategic expansion into new markets, increased adoption of digital banking platforms, and a strong focus on customer relationships. Additionally, the company's diversified revenue streams, including mortgage banking and wealth management, have contributed to its growth momentum.

Wealth Management

Expected Growth: 14.0%

First Foundation Inc.'s 14.0% growth in Wealth Management is driven by increasing demand for investment management services, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on digital transformation, enhanced client experience, and diversified revenue streams have contributed to its growth momentum.

Other

Expected Growth: 11.0%

First Foundation Inc.'s 11.0% growth is driven by strategic expansion into new markets, increased adoption of digital banking services, and a strong focus on commercial lending. Additionally, the company's diversified revenue streams, including trust services and wealth management, contribute to its robust growth.

7. Detailed Products

Wealth Management

Comprehensive investment management and financial planning services tailored to individual and institutional clients

Trust Services

Expert trust administration, estate planning, and fiduciary services for individuals, families, and institutions

Bancorp Services

Specialized banking services, including deposit and cash management solutions, for businesses and institutions

Mortgage Services

Competitive mortgage lending solutions for residential and commercial properties

Insurance Services

Personalized insurance solutions, including life insurance, long-term care insurance, and disability insurance

8. First Foundation Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for First Foundation Inc. is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers is high due to the presence of a large number of customers and the availability of alternative products and services.

Bargaining Power Of Suppliers

The bargaining power of suppliers is low due to the presence of a large number of suppliers and the availability of alternative sources of supply.

Threat Of New Entrants

The threat of new entrants is medium due to the presence of barriers to entry and the availability of resources and capabilities required to enter the market.

Intensity Of Rivalry

The intensity of rivalry is high due to the presence of a large number of competitors and the availability of resources and capabilities required to compete in the market.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 63.10%
Debt Cost 10.45%
Equity Weight 36.90%
Equity Cost 10.45%
WACC 10.45%
Leverage 171.01%

11. Quality Control: First Foundation Inc. passed 0 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Tompkins Financial

A-Score: 6.2/10

Value: 6.1

Growth: 4.4

Quality: 6.3

Yield: 8.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

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Citizens Financial Services

A-Score: 6.0/10

Value: 7.0

Growth: 5.1

Quality: 5.5

Yield: 7.0

Momentum: 6.5

Volatility: 4.7

1-Year Total Return ->

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Mid-Southern Bancorp

A-Score: 5.9/10

Value: 8.9

Growth: 1.0

Quality: 6.1

Yield: 2.0

Momentum: 8.5

Volatility: 9.0

1-Year Total Return ->

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Carter Bankshares

A-Score: 4.9/10

Value: 5.7

Growth: 4.3

Quality: 5.9

Yield: 0.0

Momentum: 6.0

Volatility: 7.7

1-Year Total Return ->

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Greene County Bancorp

A-Score: 4.6/10

Value: 5.4

Growth: 6.6

Quality: 6.8

Yield: 3.0

Momentum: 1.0

Volatility: 5.0

1-Year Total Return ->

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First Foundation

A-Score: 3.6/10

Value: 9.2

Growth: 1.8

Quality: 3.9

Yield: 1.0

Momentum: 2.0

Volatility: 4.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

5.74$

Current Price

5.75$

Potential

-0.00%

Expected Cash-Flows