investor presentation 19q3 data 19 11 05 · 2019. 11. 8. · for the first nine months of 2019,...

PRIVATE WEALTH MANAGEMENT ● PERSONAL BANKING ● BUSINESS BANKING

November 2019

INVESTOR PRESENTATION

Copyright © 2019 First Foundation Inc. All Rights Reserved

This presentation and the accompanying oral commentary contain forward-looking statements within the meaning of the federalsecurities laws. Forward-looking statements express our current assumptions, beliefs, plans and expectations about our future financialperformance and achievements and are necessarily based on current information available to us. Forward-looking statements include allstatements that are not statements of historical facts and can be identified by words such as “anticipates,” “believes,” “seeks,” “estimates,”“expects,” “intends,” “may,” “plans,” “potential,” “predicts, “projects,” “should,” “could,” “will,” “would” or similar expressions and thenegatives of those expressions. In particular, forward-looking statements contained in this presentation and the accompanying oralcommentary relate to, among other things, our future or assumed financial condition, results of operations, strategic plans andobjectives, competitive position and potential growth opportunities.

The realization of our future financial performance and the achievement of our plans and objectives, including the achievement of ourstrategic plans and the realization of our potential growth opportunities, as set forth in the forward-looking statements contained in thispresentation and the accompanying oral commentary, are subject to substantial known and unknown risks and uncertainties and otherfactors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by theforward-looking statements contained in this presentation or expressed in the accompanying oral commentary. For a discussion of someof these risks, please see the section entitled "Risk Factors" in our 2018 Annual Report on Form 10-K filed with the SEC on March 1, 2019,and in the other documents we file with the SEC from time to time. Except as required by law, we assume no obligation to update anyforward-looking statements publicly, or to update the reasons our actual results could differ materially from those anticipated in theseforward-looking statements, even if new information becomes available to us in the future.

Safe Harbor Statement

1


Selected Financial Information

Financial Highlights: As of or for the Nine Months Ended September 30, 2019

Loans $4.9 Billion Revenue: $158 Million

Deposits $5.2 Billion Net Income: $41.0 Million

Total Assets $6.4 Billion ROAA 0.90%

AUM $4.2 Billion ROE (tangible equity)2 11.4%

TBV per share $11.352 Efficiency Ratio 63.1% 1

Growth / Footprint

Loan production: $1.72 billion – 2017; $1.84 billion – 2018; $1.38 billion – 2019, 9 months

Deposit growth: $1.2 billion – 2017; $1.1 billion – 2018; $638 million – 2019, 9 months

Revenue growth: 23% - 2017; 26% - 2018; 12% - 2019, 9 months (over 2018 corresponding period)

Bank Offices: Southern California (14); Northern California (4); Hawaii and Nevada

1) The efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income. For the first nine months of 2019, $0.4 million of one-time income items and $1.2 million of expense refunds was excluded from non-interest income for purposes of this computation.

2) Tangible common equity (also referred to as tangible book value or tangible equity) and tangible assets, are equal to common equity and assets, respectively, less $97.7 million of goodwill and intangible assets as of September 30, 2019. Average tangible equity is equal to average common equity less $98.6 million of average goodwill and intangible assets for the nine months September 30, 2019. We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of capital ratios.

2


Attractive Revenue Growth / Diverse Revenue Composition

$66.9 $103.1

$129.4 $166.9

$122.9 $140.5 $20.1

$20.9

$22.9

$24.5

$18.4 $17.1

$87.0

$124.0

$152.3

$191.4

$141.3 $157.6

2015 2016 2017 2018 2018 9M 2019 9M

Total Revenue

Banking Wealth Management

($ in millions)

80%

11%

2% 3%4% Net Interest Income

Investment Management Fees

Trust and Consulting Fees

Gain on Sale of Loans

Deposit Fees, Loan Fees and Other

Substantial fee-based, recurring revenue

Revenue Composition Q3 2019 YTD

3


§ Net interest income growthdirectly related to robustgrowth in loans and deposits31% CAGR in loans: 12/31/2015 to 9/30/2019

§ Conservative, liquidity-focusedinvestment portfolioPredominantly MBS with monthly cash flows

Strong Net Interest Income

$58.2

$89.4 $113.6 $155.6 $114.2

$126.1

3.39%

3.13%

2.93%

2.99%

2.97% 2.87%

2015 2016 2017 2018 2018 9M

2019 9M

Net Interest Income and Net Yield on Interest-Earning Assets ($ in millions)

Net Interest Income Net Yield on Interest - Earning Assets

4


§ Loan growth has been achieved while maintaining credit discipline§ $306 million of multifamily loans were sold in 2016§ $453 million of multifamily loans were sold in 2017§ $674 million of multifamily loans were sold in 2018§ $551 million of multifamily loans were sold in 2019

Loan Growth Driven by Experienced Lending TeamGross Loans ($ in millions)

$1,765

$2,807

$3,818

$4,801 $4,876

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

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§ Track record of outstanding credit quality across the loan portfolio− NPAs/Assets (9/30/19): 0.33%− Avg. NCO/Average Loans (2015-2018):

0.05%− Avg. NCO/Average loans (2019 9M)

0.01%− ALLL/Gross Loans (9/30/19): 0.52%

§ Growth in commercial lending− 30% of 2019 YTD originations

§ Multifamily and commercial real estate lending platform− $6.3 billion of originations since 2009− No charge-offs in 11 year lending history

§ Business banking products for small to medium-sized business and professional firms in our market area

Loan Composition and Credit Quality

$1,952 40%

$897 18%

$871 18%

$566 12%

$17 0%

$71 2%

$502 10%

Loans by Type – September 30, 2019($ in millions)

Multifamily

Single Family

CRE

Business (Term & LOC)

Consumer

Land / Construction

Loans Held for Sale

Q3 2019 Yield on Loans: 4.27%

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$470 $630 $901

$1,950 $1,971 $752 $1,135

$1,446

$1,508 $1,668

$300

$662

$1,097

$1,075

$1,532

$1,522

$2,427

$3,444

$4,533

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

Deposits($ in millions)

CDs

Other Interest Bearing

Non Interest Bearing

$5,171

Deposit Growth and Composition

$1,532 30%

$351 7%$1,317

25%

$1,971 38%

Noninterest-Bearing Demand

Interest-Bearing Demand

Money Market & Savings

Certificates of Deposits

Deposits by Type – September 30, 2019($ in millions)

Q3 2019 Cost of Deposits: 1.31%

7


Consistent Earnings Growth While Investing in the Future

8.1% 8.5% 8.6%

10.6%9.8%

11.4%

2015 2016 2017 2018 2018 9M

2019 9M

Return on Average Tangible Equity 1

§ Performance driven by growth in loans, deposits, and assets under management§ Scalable business model with significant expense leverage

1 Effective tax rate: 41.4% (2015), 39.2% (2016) , 45.5% (2017), 28.5% (2018 ) and 29.0% (2019 YTD). Average tangible equity is equal to average common equity less average goodwill and intangible assets of: $1.2 million (2015), 2.3 million (2016) , $4.5 million (2017), $69.2 million (2018), $60.1 million (2018 9 months), and $98.6 million (2019 9 months). We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of capital ratios.

$-

$10

$20

$30

$40

$50

$60

$70

2015 2016 2017 2018 2018 9M

2019 9M

Income Before Taxes($ in millions)

l

8


Efficient Operating Platform

1.25%

1.50%

1.75%

2.00%

2.25%

2.50%

2.75%

Mar-17 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19

Noninterest Expense / Assets

Total Excluding customer service Peer group

>100 bps r

Levering our investments in personnel and technology, we have consistently lowered its non-interest expense to assets and is currently operating at a significant advantage to peers1) Source FDIC: Institutions between $3 and $10 billion. Does not include one-time expenses such as merger expenses and FDIC Refund.

9


Our Competitive Advantage

§ Personalized services

§ Strong organic growth

§ Significant referrals from existing clients and strategic partners

Private Wealth Management

§ Robust investment management platform

§ Solutions for business, individuals, and families

§ Strong financial planning capabilities

§ Trust services (CA, NV, and HI)

§ Life insurance services

§ Philanthropy consulting

Banking

§ Multifamily / CRE lending platform

§ Single family residential lending

§ Commercial Lending / Cash Management

§ Business and personal banking

CORE OFFERING

COMPLEMENTARY SERVICES

SERVICE & GROWTH

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§ First Foundation Bank⁻ Established in 2007⁻ Acquisition of Desert Commercial bank in 2012⁻ Acquisition of Pacific Rim Bank in 2015⁻ Two branch acquisitions in 2016⁻ Acquisition of Community 1st Bank in 2017⁻ Acquisition of Premier Business Bank in 2018

§ Bank, including Trust Department, collaborate with Wealth Management on services provided to clients

§ Offerings include a broad range of banking services⁻ Personal and business banking⁻ Multifamily and commercial real estate lending

platform⁻ Single-family residential mortgages (primarily

as a service to our high net-worth clients)⁻ Relationship-based deposit acquisition strategy⁻ California, Nevada, and Hawaii trust powers

Banking Services

$2,593

$3,975 $4,541

$5,840 $6,358

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

Total Assets ($ in millions)

$1,035

$512 $571

$742 $840

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

Trust AUM ($ in millions)

11


Established Successful Asset Management

$3,471 $3,587

$4,296

$3,935

$4,244

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

AUM ($ in millions)

§ Investment management solutions for high net worth clients- SEC-registered investment advisor- Serving individuals, multi-generational

families and business owners

§ Ability to promote across business lines to deepen relationship with client− Use of banking, trust and philanthropy

services to strengthen relationship

§ Investment Strategies− Focus on high-quality investments across

equities, fixed income and alternatives− Value focused with growth component− Flexible open architecture− Use of proprietary and third-party solutions

§ Emphasis on sophisticated financial planning− Key component to client relationship− Ability to solve for complex client situations

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§ Grow and diversify our funding sources

§ Grow our commercial lending activities

§ Maintain our top of class multifamily lending platform

§ Making opportunistic acquisitions

§ Leveraging existing infrastructure to maximize economies of scale

§ Cross-promoting our services among our banking and wealth management clients

Strategic Activities

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Why Invest in First Foundation

Experienced Management Team with Demonstrated Ability to Provide Returns

Well-Positioned in Strategic Markets with Attractive Demographics

Strong Credit Culture

Broad Range of Financial Products in Banking and Wealth Management

Diverse Revenue Base

Significant Insider Ownership – Incentives Aligned with Shareholders

14


Appendix

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1) Effective tax rate of 41.4% (2015) 39.2% (2016), 45.5% (2017), 28.5% (2018) and 29.0% (2019) respectively. 2) Average tangible equity is equal to average common equity less average goodwill and intangible assets of: $1.2 million (2015), 2.3 million (2016) , $4.5 million (2017), $69.2

million (2018), $60.0 million (2018 9 months) and $98.6 million (2019 9 months) respectively . We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of capital ratios.

3) The efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income and excludes one-time items of income or expense. For the years ended September 30, 2018, and 2017 $3.8 million and $2.6 million of acquisition costs, respectively, were excluded from noninterest expenses for purposes of this computation. For the first nine months of 2019, one-time income items and $1.2 million of expense refunds was excluded from non-interest income for purposes of this computation.

Profitability

0.76% 0.80%0.70%

0.81% 0.74%0.90%

2015 2016 2017 2018 2018 9M

2019 9M

Return on Average Assets1

8.1% 8.5% 8.6%10.6% 9.8%

11.4%

2015 2016 2017 2018 2018 9M

2019 9M

Return on Average Tangible Equity1,2

70.7%65.3% 63.3% 64.4% 65.9% 63.1%

2015 2016 2017 2018 2018 9M

2019 9M

Efficiency Ratio3

13,378

23,303 27,582

42,958

28,829

41,025

2015 2016 2017 2018 2018 9M

2019 9M

Net Income ($000s)1

16


1 This ratio excludes loans acquired in an acquisition as GAAP requires estimated credit losses for acquired loans to be recorded as discounts to those loans.

Credit Quality

0.32% 0.25% 0.31%0.21%

0.33%

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

NPAs/Assets

0.61% 0.60% 0.54% 0.51% 0.52%

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

ALLL/Loans1

0.23% 0.29% 0.30% 0.24%

0.43%

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

NPLs/Loans

0.00%

0.15%

0.00% -0.01%

0.08%0.01%

2014 2015 2016 2017 2018 2019 9M

NCOs/Average Loans

17


Balance Sheet and Capital

18.20%

13.50% 12.60%11.00% 10.91%

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

Total Risk Based Capital Ratio

11.80%

8.80% 8.40% 8.40% 8.15%

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

Tier I Leverage Ratio

$8.05 $8.62 $9.46 $10.33 $11.35

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

TBV Per Share 1

9.90%

7.10%8.00% 8.00% 8.09%

12.31.15 12.31.16 12.31.17 12.31.18 9.30.19

TCE/TA1

1 Tangible common equity (also referred to as tangible book value) and tangible assets, are equal to common equity and assets, respectively, less $97.7 million, $99.5 million, $33.6 million, $2.2 million and $2.4 million of goodwill and intangible assets as of September 30, 2019 and December 31, 2018, 2017, 2016 and 2015, respectively. We believe that this information is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of capital ratios.

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investor presentation 19q3 data 19 11 05 · 2019. 11. 8. · for the first nine months of 2019,...

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