First Foundation Announces Record Results for 2014

First Foundation Inc. (NASDAQ: FFWM), a financial services company with two wholly-owned operating subsidiaries, First Foundation Advisors and First Foundation Bank, provides investment management, wealth planning, consulting, trust and banking services primarily to high net-worth individuals and businesses, today reported its financial results for the quarter and year ended December 31, 2014.

“We are very pleased with our record results across the entire company for both the fourth quarter and the full year,” said CEO Scott F. Kavanaugh. “The growth in revenue and earnings continues to validate the strength of our comprehensive wealth management model as we build on our existing client relationships and attract new clients. In addition, we are thrilled about our planned expansion into Hawaii and the potential to further bolster our performance. As we enter into 2015, we expect to continue to grow, and I am confident that we are well-positioned to deliver on our value proposition to clients as well as enhance shareholder value.”

Financial Highlights

• Income before taxes for First Foundation increased by 111% to $5.2 million and by 56% to $14.8 million for the quarter and year ended December 31, 2014, respectively, when compared to the corresponding periods in 2013.
• Net income for the quarter ended December 31, 2014 was $3.0 million, or $0.37 per fully diluted share, as compared to $3.5 million, or $0.44 per fully diluted share for the quarter ended December 31, 2013. Net income for 2014 was $8.4 million, or $1.03 per fully diluted share, as compared to $7.9 million, or $1.01 per fully diluted share for 2013. Primarily as a result of the elimination of a deferred tax valuation allowance in the fourth quarter of 2013, the provision for taxes in the fourth quarter of 2013 was a negative amount of $1.0 million and the effective tax rate for 2013 was 17.2% as compared to 43.4% in 2014.
• Total revenues, which consist of net interest income and noninterest income, increased by 26% and by 22%, for the quarter and year ended December 31, 2014, respectively, as compared to the corresponding periods in 2013.
• Assets under management at First Foundation Advisors increased by 24% during 2014 to $3.2 billion as of December 31, 2014, primarily due to organic growth of net new assets from both existing and new clients.
• Strong demand for banking products and services occurred in 2014 as indicated by the growth of consolidated loans and deposits by 29% and 20%, respectively.
• Tangible book value increased from $11.18 per share at December 31, 2013 to $12.66 per share at December 31, 2014.

Update on Status of Merger Agreement with Pacific Rim Bank

First Foundation and Pacific Rim Bank have filed an interagency merger application with their regulators and are in the process of preparing the proxy related materials. Consummation of the transaction is subject to various conditions, including the approval of the merger by federal and state banking agencies and by Pacific Rim’s shareholders. “We continue to witness the opportunities being presented by our planned merger with Pacific Rim Bank and we look forward to completing the merger during the second quarter of 2014,” Mr. Kavanaugh stated. “We expect that the merger to be immediately accretive to tangible capital and to be accretive to earnings by the end of the first full year following completion of the transaction,” added Mr. Kavanaugh.

About First Foundation

First Foundation, a financial institution founded in 1990, provides integrated investment management, wealth planning, consulting, trust and banking services. The company is headquartered in Irvine with offices in Newport Beach, Pasadena, West Los Angeles, San Diego, Palm Desert and the Imperial Valley in California, and Las Vegas, Nevada. For more information, please visit our website at www.ff-inc.com.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” The forward looking statements in this news release 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 news release 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 loan losses, which is an inherent risk of the banking business; the risk that the economic recovery in the United States will stall or will be adversely affected by domestic or international economic conditions and the risk that the Federal Reserve Board will continue to keep interest rates low, any of which could adversely affect our interest income and interest rate margins and, therefore, our future operating results; and 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; and the risk that the approvals required for the Pacific Rim merger cannot be obtained, in which event the merger would have to be abandoned. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in Item 1A, entitled “Risk Factors” in our 2013 Annual Report on Form 10-K for the fiscal year ended December 31, 2013 that we filed with the SEC on March 25, 2014, and additional information about our planned acquisition, by merger, of Pacific Rim is contained in our Current Report on Form 8-K which we filed with the SEC on December 1, 2014. We urge readers of this news release to review that additional information contained in that Annual Report and in that Current Report. 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 news release, 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 news release or in the above-referenced 2013 Annual Report or Current Report, whether as a result of new information, future events or otherwise, except as may be required by law or NASDAQ rules.

(1) Reflects effective tax rates of 43.4% and 17.2% for the year ended December 31, 2014 and 2013, respectively.

(2) Tangible common equity, (also referred to as tangible book value) and tangible assets, are equal to common equity and assets, respectively, less $0.2 million of intangible assets as of December 31, 2014, and less $0.3 million of intangible assets as of December 31, 2013.

(3) The efficiency ratio is the ratio of noninterest expense to the sum of net interest income and noninterest income. The efficiency ratio for 2014 excludes $1.0 million in costs related to a cancelled initial public offering, a $1.0 million gain on sale of REO and a $1.0 million expense representing a payout to the prior shareholders of an acquired company under a holdback agreement.

(4) 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.