First Foundation (FFWM) Strategic Update summary

Strategic Capital Raise and Equity Investment

• Announced a $228 million capital raise led by Fortress Investment Group ($115 million), Canyon Partners ($46 million), Strategic Value Bank Partners ($22 million), and North Reef Capital ($22 million), with additional commitments totaling $67 million from other investors.

• Investors will receive common stock at $4.10 per share, Series A and B noncumulative convertible preferred stock, and seven-year warrants for Series C non-voting common equivalent stock at a 25% premium, with full conversion potentially issuing about 66.5 million shares.

• The capital infusion aims to strengthen the balance sheet, reduce multifamily loan concentration, grow the C&I platform, increase allowance for credit losses, and materially improve earnings.

• Pro-forma CET1 ratio expected to rise to 12.6%, Tier 1 capital to 12.6%, total risk-based capital to 14.9%, and leverage ratio to 8.5%.

• Closing is expected around July 8, 2024, subject to regulatory and shareholder approvals, including NYSE listing and an increase in authorized common shares.

Board and Leadership Changes

• Board to be reduced to nine members, with four new directors: Simone Lagomarsino (also joining as President), Henchy Enden, Sam Edelson, and Ben Mackovak, pending regulatory approval.

• Board will include representatives from Fortress, Canyon, and Strategic Value Bank Partners, bringing significant financial expertise.

• Fortress retains the right to add another board member.

Strategic Plan and Operational Focus

• Five-point plan: strengthen allowance for credit losses, reduce multifamily concentration, evaluate multifamily loan sales, support First Foundation Advisors, and invest in core businesses with a focus on C&I growth in CA, TX, and FL.

• Plan to shift some multifamily loans to available-for-sale to allow for potential sales and reduce concentration.

• Focus on rebalancing towards higher-yielding C&I lending to accelerate earnings recovery.

• Targeting a return to 1% ROAA by end of 2026, with more details to be shared in the next earnings call.

• Emphasis on long-term shareholder value and profitability.