10-Q

F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from           to          

Commission File Number 001-36461

FIRST FOUNDATION INC.

(Exact name of Registrant as specified in its charter)

Delaware	20-8639702
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
200 Crescent Court, Suite 1400 Dallas, Texas	75201
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (469) 638-9636

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	FFWM	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.   Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes  ☐    No   ☒

As of November 1, 2024, the registrant had 82,345,084 shares of common stock, $0.001 par value per share, outstanding.

FIRST FOUNDATION INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2024

TABLE OF CONTENTS

		Page No.
Part I. Financial Information
Item 1.	Financial Statements	1
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	64
Item 4.	Controls and Procedures	64
Part II. Other Information
Item 1	Legal Proceedings	65
Item 1A	Risk Factors	65
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 5	Other Information	65
Item 6	Exhibits	66
SIGNATURES		S-1

(i)

PART I — FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

FIRST FOUNDATION INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

	September 30,		December 31,
	2024		2023
		(unaudited)
ASSETS
Cash and cash equivalents	$	1,106,422	$	1,326,629
Securities available-for-sale ("AFS"), at fair value (amortized cost of $1,313,589 and $731,489 at September 30, 2024 and December 31, 2023 respectively; net of allowance for credit losses of $7,299 and $8,220 at September 30, 2024 and December 31, 2023 respectively)		1,306,120		703,226
Securities held-to-maturity ("HTM") (fair value of $675,768 and $710,021 at September 30, 2024 and December 31, 2023, respectively)		734,863		789,578
Loans held for sale		1,788,395		—
Loans held for investment		8,088,863		10,177,802
Less: Allowance for credit losses		(29,300)		(29,205)
Total loans held for investment, net		8,059,563		10,148,597
Investment in FHLB stock		37,810		24,613
Accrued interest receivable		53,766		54,163
Deferred taxes		65,131		29,142
Premises and equipment, net		36,605		39,925
Real estate owned ("REO")		6,210		8,381
Bank owned life insurance		49,650		48,653
Core deposit intangibles		3,888		4,948
Other assets		128,138		149,393
Total Assets	$	13,376,561	$	13,327,248
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits	$	10,304,604	$	10,688,932
Borrowings		1,691,453		1,409,056
Subordinated debt		173,444		173,397
Derivative liabilities		5,124		—
Accounts payable and other liabilities		132,139		130,520
Total Liabilities		12,306,764		12,401,905
Shareholders’ Equity
Preferred stock, $0.001 par value, 44,301 shares issued and outstanding at September 30, 2024		130,252		—
Common stock, $0.001 par value; 200,000,000 shares authorized at September 30, 2024 and 100,000,000 shares authorized at December 31, 2023; 67,855,084 shares and 56,467,623 shares issued and outstanding, respectively		68		56
Additional paid-in-capital		805,819		720,899
Retained earnings		139,148		218,575
Accumulated other comprehensive loss		(5,490)		(14,187)
Total Shareholders’ Equity		1,069,797		925,343
Total Liabilities and Shareholders’ Equity	$	13,376,561	$	13,327,248

1

(See accompanying notes to the consolidated financial statements)

FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED

(In thousands, except share and per share amounts)

	Quarter Ended				Nine Months Ended
	September 30,				September 30,
	2024		2023		2024		2023
Interest income:
Loans	$	120,285	$	124,363	$	358,973	$	368,477
Securities		21,375		10,600		59,124		24,263
FHLB Stock, fed funds sold and interest-bearing deposits		15,496		9,802		40,426		34,353
Total interest income		157,156		144,765		458,523		427,093
Interest expense:
Deposits		89,135		84,814		275,015		219,886
Borrowings		17,182		6,158		47,044		42,280
Subordinated debt		1,720		1,720		5,130		5,115
Total interest expense		108,037		92,692		327,189		267,281
Net interest income		49,119		52,073		131,334		159,812
Provision (reversal) for credit losses		282		(2,015)		53		(711)
Net interest income after provision for credit losses		48,837		54,088		131,281		160,523
Noninterest income:
Asset management, consulting and other fees		9,162		8,812		26,959		26,624
(Loss) gain on sale of loans		(13)		—		665		—
Gain on sale of securities available-for-sale		—		—		1,204		—
Capital market activities		(117,517)		—		(115,844)		—
Gain on sale of REO		—		—		679		—
Other income		2,788		2,886		7,098		8,851
Total noninterest income		(105,580)		11,698		(79,239)		35,475
Noninterest expense:
Compensation and benefits		20,009		19,632		58,511		65,944
Occupancy and depreciation		9,013		9,253		27,126		27,331
Professional services and marketing costs		5,095		3,748		12,152		11,685
Customer service costs		18,954		24,683		45,796		60,402
Goodwill impairment		—		—		—		215,252
Other expenses		7,154		6,890		22,878		15,696
Total noninterest expense		60,225		64,206		166,463		396,310
(Loss) income before income taxes		(116,968)		1,580		(114,421)		(200,312)
Income tax (benefit) expense		(34,794)		(600)		(36,125)		1,300
Net (loss) income	$	(82,174)	$	2,180	$	(78,296)	$	(201,612)
Net (loss) income per share:
Basic	$	(1.23)	$	0.04	$	(1.30)	$	(3.57)
Diluted	$	(1.23)	$	0.04	$	(1.30)	$	(3.57)
Shares used in computation:
Basic		66,992,701		56,443,539		60,025,852		56,417,252
Diluted		66,992,701		56,449,720		60,025,852		56,417,252

2

(See accompanying notes to the consolidated financial statements)

FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF CHANGES

IN SHAREHOLDERS’ EQUITY - UNAUDITED

(In thousands, except share amounts)

	Common Stock			Preferred Stock			Convertible Warrants			Additional				Accumulated Other
	Number			Number			Number			Paid-in		Retained		Comprehensive
	of Shares	Amount		of Shares	Amount		of Warrants	Amount		Capital		Earnings		Income (Loss)		Total
Balance: December 31, 2023	56,467,623	$	56	—	$	—	—	$	—	$	720,899	$	218,575	$	(14,187)	$	925,343
Net loss	—		—	—		—	—		—		—		(78,296)		—		(78,296)
Other comprehensive gain	—		—	—		—	—		—		—		—		8,697		8,697
Stock based compensation	—		—	—		—	—		—		845		—		—		845
Cash dividend	—		—	—		—	—		—		—		(1,131)		—		(1,131)
Issuance of common stock:
Stock grants – vesting of restricted stock units	97,780		1	—		—	—		—		—		—		—		1
Issuance of common stock	11,308,676		11	—		—	—		—		35,307		—		—		35,318
Issuance of preferred shares	—		—	44,301		138,462	—		—		—		—		—		138,462
Issuance of warrants	—		—	—		—	6		54,219		—		—		—		54,219
Issuance costs	—		—	—		(8,210)	—		(3,215)		(2,094)		—		—		(13,519)
Repurchase of shares from restricted shares vesting	(18,995)		—	—		—	—		—		(142)		—		—		(142)
Balance: September 30, 2024	67,855,084	$	68	44,301	$	130,252	6	$	51,004	$	754,815	$	139,148	$	(5,490)	$	1,069,797
Balance: June 30, 2024	56,543,382	$	57	—	$	—	—	$	—	$	721,814	$	221,321	$	(9,948)	$	933,244
Net loss	—		—	—		—	—		—		—		(82,174)		—		(82,174)
Other comprehensive gain	—		—	—		—	—		—		—		—		4,458		4,458
Stock based compensation	—		—	—		—	—		—		(212)		—		—		(212)
Cash dividend	—		—	—		—	—		—		—		—		—		—
Issuance of common stock:
Stock grants – vesting of restricted stock units	3,026		—	—		—	—		—		—		1		—		1
Issuance of common stock	11,308,676		11	—		—	—		—		35,307		—		—		35,318
Issuance of preferred shares	—		—	44,301		138,462	—		—		—		—		—		138,462
Issuance of warrants	—		—	—		—	6		54,219		—		—		—		54,219
Issuance costs	—		—	—		(8,210)	—		(3,215)		(2,094)		—		—		(13,519)
Balance: September 30, 2024	67,855,084	$	68	44,301	$	130,252	6	$	51,004	$	754,815	$	139,148	$	(5,490)	$	1,069,797
Balance: December 31, 2022	56,325,242	$	56	—	$	—	—	$	—	$	719,606	$	426,659	$	(11,943)	$	1,134,378
Net loss	—		—	—		—	—		—		—		(201,612)		—		(201,612)
Other comprehensive loss	—		—	—		—	—		—		—		—		(5,853)		(5,853)
Stock based compensation	—		—	—		—	—		—		1,129		—		—		1,129
Cash dividend	—		—	—		—	—		—		—		(8,456)		—		(8,456)
Issuance of common stock:
Exercise of options	19,500		—	—		—	—		—		157		—		—		157
Stock grants – vesting of restricted stock units	134,386		—	—		—	—		—		—		—		—		—
Repurchase of shares from restricted shares vesting	(35,354)		—	—		—	—		—		(536)		—		—		(536)
Balance: September 30, 2023	56,443,774	$	56	—	$	—	—	$	—	$	720,356	$	216,591	$	(17,796)	$	919,207
Balance: June 30, 2023	56,443,070	$	56	—	$	—	—		—	$	719,779	$	215,540	$	(19,841)	$	915,534
Net income	—		—	—		—	—		—		—		2,180		—		2,180
Other comprehensive gain	—		—	—		—	—		—		—		—		2,045		2,045
Stock based compensation	—		—	—		—	—		—		577		—		—		577
Cash dividend	—		—	—		—	—		—		—		(1,129)		—		(1,129)
Issuance of common stock:
Stock grants – vesting of restricted stock units	1,000		—	—		—	—		—		—		—		—		—
Repurchase of shares from restricted shares vesting	(296)		—	—		—	—		—		—		—		—		—
Balance: September 30, 2023	56,443,774	$	56	—	$	—	—	$	—	$	720,356	$	216,591	$	(17,796)	$	919,207

(See accompanying notes to the consolidated financial statements)

3

FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF

COMPREHENSIVE INCOME (LOSS) - UNAUDITED

(In thousands)

	Quarter Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net (loss) income	$	(82,174)	$	2,180	$	(78,296)	$	(201,612)
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) on securities arising during the period		15,874		2,137		14,908		(4,848)
Reclassification adjustment for gain included in net income		—		—		(852)		—
Total change in unrealized gain (loss) on available-for-sale securities		15,874		2,137		14,056		(4,848)
Unrealized loss on cash flow hedge arising during this period		(11,391)		—		(5,124)		—
Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity		(25)		(92)		(235)		(1,005)
Total other comprehensive income (loss)		4,458		2,045		8,697		(5,853)
Total comprehensive (loss) income	$	(77,716)	$	4,225	$	(69,599)	$	(207,465)

(See accompanying notes to the consolidated financial statements)

4

FIRST FOUNDATION INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED

(In thousands)

	For the Nine Months Ended
	September 30,
	2024		2023
Cash Flows from Operating Activities:
Net loss	$	(78,296)	$	(201,612)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment		—		215,252
Provision for credit losses		1,358		2
Provision (reversal) for credit losses - securities AFS		(921)		1,022
Stock–based compensation expense		845		1,129
Depreciation and amortization		3,604		3,240
Deferred tax benefit		(41,801)		(5,756)
Amortization of discount on securities		(10,513)		(2,783)
Amortization of core deposit intangible		1,060		1,246
Amortization of mortgage servicing rights - net		1,497		1,667
Gain on sale of REO		(679)		—
Gain on sale of loans		(665)		—
Gain on sale of securities available-for-sale		(1,204)		—
Gain from hedging activities		(1,672)		—
LHFS LOCOM adjustment at time of transfer		136,683		—
Change in fair value of LHFS		(19,167)		—
Amortization of OCI - securities transfer to HTM		(235)		1,005
Valuation allowance on mortgage servicing rights - net		—		(1,441)
Decrease in accrued interest receivable and other assets		16,283		15,262
Increase in accounts payable and other liabilities		6,129		13,955
Net cash provided by operating activities		12,306		42,188
Cash Flows from Investing Activities:
Net decrease in loans		173,697		438,567
Proceeds from sale of loans		8,770		—
Proceeds from sale of REO		2,850		—
Purchase of premises and equipment		(2,362)		(6,303)
Disposals of premises and equipment		37		—
Proceeds from sale of land		1,650		—
Loss on sale of land		391		—
Purchases of securities AFS		(1,771,075)		(617,506)
Proceeds from sale of securities available-for-sale		749,020		—
Maturities of securities AFS		452,464		13,668
Maturities of securities HTM		53,919		62,164
Net (increase) decrease in FHLB stock		(13,197)		748
Net cash used in investing activities		(343,836)		(108,662)
Cash Flows from Financing Activities:
Increase (decrease) in deposits		(384,328)		449,582
Proceeds from FHLB & FRB advances		2,793,476		87,506,041
Repayments on FHLB & FRB advances		(2,471,846)		(87,411,041)
Net change in federal funds purchased		—		(200,000)
Net decrease in line of credit		—		(8,000)
Net increase in subordinated debt		47		47
Net decrease in repurchase agreements		(39,233)		(99,313)
Dividends paid		(1,131)		(8,456)
Proceeds from exercise of stock options		—		157
Proceeds from issuance of common stock		35,318		—
Proceeds from issuance of preferred stock		138,462		—
Proceeds from issuance of convertible warrants		54,219		—
Equity issuance costs		(13,519)		—
Repurchase of stock		(142)		(536)
Net cash provided by financing activities		111,323		228,481
Increase (decrease) in cash and cash equivalents		(220,207)		162,007
Cash and cash equivalents at beginning of year		1,326,629		656,494
Cash and cash equivalents at end of period	$	1,106,422	$	818,501
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes	$	197	$	—
Interest		280,746		223,654
Noncash transactions:
Transfer of loans to loans held for sale	$	136,684	$	—
Right of use lease assets and liabilities recognized		7,372		1,019
Chargeoffs against allowance for credit losses - loans		1,226		4,273
Chargeoffs against allowance for credit losses - securities		—		3,971

(See accompanying notes to the consolidated financial statements)

5

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation

First Foundation Inc. (“FFI”) is a financial services holding company whose operations are conducted through its wholly owned subsidiaries:  First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB” or the “Bank”) and the wholly owned subsidiaries of FFB, First Foundation Public Finance (“FFPF”), First Foundation Insurance Services (“FFIS”) and Blue Moon Management, LLC (collectively the “Company”).  FFI also has two inactive wholly owned subsidiaries, First Foundation Consulting and First Foundation Advisors, LLC.  FFI is incorporated in the state of Delaware.  The corporate headquarters for FFI is located in Dallas, Texas.  The Company provides a comprehensive platform of financial services to individuals, businesses and other organizations and has offices in California, Nevada, Florida, Texas, and Hawaii.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates.

The accompanying unaudited consolidated financial statements include the accounts of the Company as of September 30, 2024 and December 31, 2023, and for the nine months ended September 30, 2024 and 2023, and include all information and footnotes required for interim financial reporting presentation.  All intercompany accounts and transactions have been eliminated in consolidation. The results for the 2024 interim periods are not necessarily indicative of the results expected for the full year.  These financial statements assume that readers have read the most recent Annual Report on Form 10-K filed with the SEC which contains the latest available audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023.

Significant Accounting Policies

The accounting and reporting policies of the Company are based upon GAAP and conform to predominant practices within the banking industry.  We have not made any changes in our significant accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC, except for those described below.

Derivative Instruments (Cash Flow Hedge).  On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty used to manage our exposure to changes in interest rates as part of our overall interest rate risk management strategy.  This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  This agreement is a derivative instrument and qualifies for hedge accounting under ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”.  To qualify for hedge accounting, the cash flow hedge must be highly effective at reducing the risk associated with the hedged exposure.  The effectiveness of the hedging relationship is documented at inception and is monitored on at least a quarterly basis through the life of the transaction.  A cash flow hedge that is designated as highly effective is carried at fair value with the change in fair value recorded in other comprehensive income (loss) (“AOCI”).  If the cash flow hedge becomes ineffective, the change in fair value is reclassified from AOCI to earnings.

The cash flow hedge is classified as either derivative assets (if fair value is a net asset) or derivative liabilities (if fair value is a net liability) in the accompanying consolidated balance sheets.  The earnings and cash flow impact from this derivative asset are classified as an offset to interest expense which is consistent with the underlying hedged item.

6

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

New Accounting Pronouncements

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”.  ASU  2022-03 clarifies how the fair value of equity securities subject to contractual sale restrictions is determined.  Prior to its issuance, there was diversity in practice as to whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring the security's fair value.  ASU 2022-03 clarifies that a contractual sale restriction should not be considered in measuring fair value.  It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.  ASU 2022-03 is effective for fiscal years beginning after December 15, 2023.  The Company’s equity securities portfolio consists solely of investments in Small Business Administration (“SBA”) loan funds which can be redeemed at any time and are not subject to contractual sale restrictions.  The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”.  ASU 2023-07 requires public entities to disclose “significant segment expenses” by reportable segment if they are regularly provided to the Chief Operating Decision Maker (“CODM”) for review of profit and loss by segment and as a tool in resource-allocation decisions.  A significant segment expense category may be reported for one reportable segment but not for others.  Similarly, reportable segments may have different significant segment expense categories due to the nature of their operations.  The ASU also requires public entities to disclose the title and position of the individual or the name of the group identified as the CODM and how the CODM uses each reportable measure of segment profit or loss to assess performance and allocate resources to the segment.  ASU 2023-07 is effective for fiscal years beginning after December 15, 2023.  For financial reporting purposes, the Company has two segments:  Banking and Wealth Management.  These disclosures are presented in Note 15: Segment Reporting in the accompanying financial statements. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

NOTE 2: FAIR VALUE MEASUREMENTS

Assets Measured at Fair Value on a Recurring Basis

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

7

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The following tables show the recorded amounts of assets and liabilities measured at fair value on a recurring basis as of:

			Fair Value Measurement Level
(dollars in thousands)	Total		Level 1		Level 2		Level 3
September 30, 2024:
Investment securities available-for-sale:
Collateralized mortgage obligations	$	10,318	$	—	$	10,318	$	—
Agency mortgage-backed securities		1,108,337		—		1,108,337		—
Municipal bonds		46,799		—		46,799		—
SBA securities		9,627		—		9,627		—
Beneficial interests in FHLMC securitization		6,968		—		—		6,968
Corporate bonds		122,797		—		122,797		—
U.S. Treasury		1,274		1,274		—		—
Total assets at fair value on a recurring basis	$	1,306,120	$	1,274	$	1,297,878	$	6,968
Derivative liabilities:
Cash flow hedge	$	5,124	$	—	$	5,124	$	—
December 31, 2023:
Investment securities available-for-sale:
Collateralized mortgage obligations	$	7,605	$	—	$	7,605	$	—
Agency mortgage-backed securities		107,347		—		107,347		—
Municipal bonds		46,436		—		46,436		—
SBA securities		13,527		—		13,527		—
Beneficial interests in FHLMC securitization		7,241		—		—		7,241
Corporate bonds		122,280		—		122,280		—
U.S. Treasury		398,790		398,790		—		—
Total assets at fair value on a recurring basis	$	703,226	$	398,790	$	297,195	$	7,241

The decrease in Level 3 assets from December 31, 2023 was due to securitization paydowns in the FHLMC portfolio in the year-to-date period ended September 30, 2024.

Assets Measured at Fair Value on a Nonrecurring Basis

From time to time, we may be required to measure other assets at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

Loans. Loans measured at fair value on a nonrecurring basis include collateral dependent loans held for investment. The specific reserves for these loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Internal discounted cash flow analyses are also utilized to estimate the fair value of these loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity. When the fair value of the collateral is based on an observable market price or a current appraised value, we measure the impaired loan at nonrecurring Level 2.  When an appraised value is not available, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price or a discounted cash flow has been used to determine the fair value, we measure the collateral-dependent loan at nonrecurring Level 3.  Loans for which an appraised value is not available include commercial loans which are secured by non-real estate assets such as accounts receivable and inventory.  To establish fair value for these loans, we apply a recovery factor

8

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

against eligible receivables and inventory.  This recovery factor may be either increased or decreased subject to additional support and analysis of the quality of receivables and the companies owing the receivables.  The total collateral-dependent loans were $5.7 million and $3.8 million at September 30, 2024 and December 31, 2023, respectively. Specific reserves related to these loans totaled $964 thousand and $0 at September 30, 2024 and December 31, 2023, respectively.

Real Estate Owned (REO). The fair value of REO is based on external appraised values that include adjustments for estimated selling costs and assumptions of market conditions that are not directly observable, resulting in a Level 3 classification.  The decrease in REO from December 31, 2023 was due to the sale of one of the two REO properties held at December 31, 2023, resulting in a gain of $679 thousand which is included in the accompanying consolidated statements of operations.  At September 30, 2024, REO consisted of one property which is carried at amortized cost as the appraised value adjusted for estimated selling costs exceeded the amortized cost basis.

Mortgage Servicing Rights. When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount.  Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.  If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.  All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. At September 30, 2024, there was no valuation allowance on the mortgage servicing rights.  Significant assumptions in the valuation of these Level 3 mortgage servicing rights as of September 30, 2024, included prepayment rates ranging from 20% to 30% and a discount rate of 10%.

Loans Held for Sale. Loans held for sale are accounted for at the lower of amortized cost or fair value.  The fair value for loans held for sale is based upon a discounted cash flow model which involves estimating the future cash flows from the loans in the portfolio and discounting to a present value.  Contractual cash flows associated with the loans are adjusted to reflect certain assumptions, such as prepayment, default, and loss severity assumptions, to form expected prepayment and credit-adjusted expected cash flows.  The expected cash flows are then discounted to present value at a rate of return which considers other costs and risks, such as market risk and liquidity.  Significant assumptions in the valuation of these Level 3 loans held for sale as of September 30, 2024, included prepayment rates of 4% and 12% for fixed-rate and floating-rate loans, respectively; discount rates ranging from 2.35% to 5.55%; and annual expected loss assumption rate of 0.05%.

Fair Value of Financial Instruments

FASB ASC 825-10, “Disclosures about Fair Value of Financial Instruments” requires disclosure of the fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate such value. The methodologies for estimating the fair value of financial assets and financial liabilities measured at fair value on a recurring and non-recurring basis are discussed above. The estimated fair value amounts have been determined by management using available market information and appropriate valuation methodologies and are based on the exit price notion set forth by ASU 2016-01. In cases where quoted market prices are not available, fair values are based on estimates using present value or other market value techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. The aggregate fair value amounts presented below do not represent the underlying value of the Company.

9

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

Fair value estimates are made at a discrete point in time based on relevant market information and other information about the financial instruments. Because no active market exists for a significant portion of our financial instruments, fair value estimates are based in large part on judgments we make primarily regarding current economic conditions, risk characteristics of various financial instruments, prepayment rates, and future expected loss experience. These estimates are subjective in nature and invariably involve some inherent uncertainties. Additionally, unexpected changes in events or circumstances can occur that could require us to make changes to our assumptions and which, in turn, could significantly affect and require us to make changes to our previous estimates of fair value.

In addition, the fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of existing and anticipated future customer relationships and the value of assets and liabilities that are not considered financial instruments, such as premises and equipment and other real estate owned.

The following methods and assumptions were used to estimate the fair value of financial instruments:

Cash and Cash Equivalents. The fair value of cash and cash equivalents approximates its carrying value.

Interest-Bearing Deposits with Financial Institutions.  The fair value of interest-bearing deposits maturing within ninety days approximate their carrying values.  

Investment Securities Available-for-Sale.  Investment securities available for sale are measured at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. When a market is illiquid or there is a lack of transparency around the inputs to valuation, the securities are classified as Level 3 and reliance is placed upon external third-party models, and management judgment and evaluation for valuation. Level 1 investment securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 investment securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Investment securities classified as Level 3 include beneficial interests in FHLMC securitizations. Significant assumptions in the valuation of these Level 3 securities as of September 30, 2024 and December 31, 2023 included prepayment rates of 20% and 25%, respectively and discount rates ranging from 5.90% to 8.80% and 8.35% to 10.0%, respectively.

Investment Securities Held-to-Maturity.  Investment securities held-to-maturity are carried at amortized cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity.  Investment securities held-to-maturity consist of agency mortgage-backed securities issued by government sponsored entities.  Fair value is determined based upon the same independent pricing model utilized for valuation of Level 2 investment securities available-for-sale.

Investment in Equity Securities. The fair value on investment in equity securities is the carrying amount and is  evaluated for impairment on an annual basis.

Investment in Federal Home Loan Bank Stock. The Bank is a member of the Federal Home Loan Bank (the “FHLB”). As a member, we are required to own stock of the FHLB, the amount of which is based primarily on the level of our borrowings from this institution.  Because ownership is restricted, the fair value of the stock is not readily determinable and is therefore equal to the carrying amount, is classified as restricted securities and is periodically evaluated for impairment based on our assessment of the ultimate recoverability of our investments in that stock. Any cash or stock dividends paid to us on such stock are reported as income.

10

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

Loans Held for Investment. The fair value for loans with variable interest rates is the carrying amount. The fair value of fixed rate loans is derived by calculating the discounted value of future cash flows expected to be received by the various homogeneous categories of loans or by reference to secondary market pricing. All loans have been adjusted to reflect changes in credit risk.

Accrued Interest Receivable. The fair value of accrued interest receivable on loans and investment securities approximates its carrying value.

Derivative Instruments (Cash Flow Hedge).  The Bank entered into a pay-fixed, receive-variable interest rate swap agreement with a counterparty.  This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  We estimate the fair value of this agreement based on inputs from a third-party pricing model, which incorporates such factors as the Treasury curve, the secured overnight financial rate (“SOFR”), and the pay rate on the interest rate swaps.  The fair value of this derivative instrument is based on a discounted cash flow approach.  The observable nature of the inputs used in deriving its fair value results in a Level 2 classification.

Deposits. The fair value of demand deposits, savings deposits, and money market deposits is defined as the amounts payable on demand resulting in a Level 1 classification. The fair value of fixed maturity certificates of deposit is estimated based on the discounted value of the future cash flows expected to be paid on the deposits resulting in a Level 2 classification.

Borrowings. The fair value of borrowings is the carrying value of overnight FHLB advances and federal funds purchased that approximate fair value because of the short-term maturity of these instruments, resulting in a Level 1 classification. The fair value of borrowings in the form of FHLB putable advances also approximates carrying value and are classified as Level 1 instruments.  

Subordinated debt.  The fair value of term borrowings is derived by calculating the discounted value of future cash flows expected to be paid out by the Company resulting in a Level 3 classification.

Accrued Interest Payable.  The fair value of accrued interest payable on deposits, borrowings, and subordinated debt approximates its carrying value.

11

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The following table sets forth the estimated fair values and related carrying amounts of our financial instruments as of:

	Carrying		Fair Value Measurement Level
(dollars in thousands)	Value		1		2		3		Total
September 30, 2024:
Assets:
Cash and cash equivalents	$	1,106,422	$	1,106,422	$	—	$	—	$	1,106,422
Securities AFS, net		1,306,120		1,275		1,297,877		6,968		1,306,120
Securities HTM		734,863		—		675,768		—		675,768
Loans held for sale		1,788,395		—		—		1,788,395		1,788,395
Loans, net		8,059,563		—		4,922		7,746,825		7,751,747
Investment in FHLB stock		37,810		—		37,810		—		37,810
Investment in equity securities		11,780		—		—		11,780		11,780
Accrued interest receivable		53,766		53,766		—		—		53,766
Liabilities:
Deposits	$	10,304,604	$	8,131,079	$	2,601,375	$	—	$	10,732,454
Borrowings		1,691,453		1,729,848		—		—		1,729,848
Subordinated debt		173,444		—		—		138,978		138,978
Accrued interest payable		46,438		46,438		—		—		46,438
Derivative liabilities		5,124		—		5,124		—		5,124
December 31, 2023:
Assets:
Cash and cash equivalents	$	1,326,629	$	1,326,629	$	—	$	—	$	1,326,629
Securities AFS, net		703,226		398,790		297,194		7,242		703,226
Securities HTM		789,578		—		710,021		—		710,021
Loans, net		10,148,597		—		—		9,827,508		9,827,508
Investment in FHLB stock		24,613		—		24,613		—		24,613
Investment in equity securities		11,768		—		—		11,768		11,768
Accrued interest receivable		54,163		54,163		—		—		54,163
Liabilities:
Deposits	$	10,688,932	$	7,545,262	$	3,145,870	$	—	$	10,691,132
Borrowings		1,409,056		609,056		800,000		—		1,409,056
Subordinated debt		173,397		—		—		136,002		136,002
Accrued interest payable		42,177		42,177		—		—		42,177

12

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

NOTE 3: SECURITIES

The following table provides a summary of the Company’s securities AFS portfolio as of:

	Amortized		Gross Unrealized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Collateralized mortgage obligations	$	11,251	$	26	$	(959)	$	—	$	10,318
Agency mortgage-backed securities		1,094,633		13,966		(262)		—		1,108,337
Municipal bonds		49,174		—		(2,375)		—		46,799
SBA securities		9,688		5		(66)		—		9,627
Beneficial interests in FHLMC securitization		13,758		21		(333)		(6,478)		6,968
Corporate bonds		133,786		—		(10,168)		(821)		122,797
U.S. Treasury		1,299		—		(25)		—		1,274
Total	$	1,313,589	$	14,018	$	(14,188)	$	(7,299)	$	1,306,120
December 31, 2023:
Collateralized mortgage obligations	$	8,946	$	—	$	(1,341)	$	—	$	7,605
Agency mortgage-backed securities		106,733		1,028		(414)		—		107,347
Municipal bonds		49,473		—		(3,037)		—		46,436
SBA securities		13,631		2		(106)		—		13,527
Beneficial interests in FHLMC securitization		14,473		4		(418)		(6,818)		7,241
Corporate bonds		138,858		—		(15,176)		(1,402)		122,280
U.S. Treasury		399,375		—		(585)		—		398,790
Total	$	731,489	$	1,034	$	(21,077)	$	(8,220)	$	703,226

The following table provides a summary of the Company’s securities HTM portfolio as of:

	Amortized		Gross Unrecognized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Agency mortgage-backed securities	$	734,863	$	—	$	(59,095)	$	—	$	675,768
Total	$	734,863	$	—	$	(59,095)	$	—	$	675,768
December 31, 2023:
Agency mortgage-backed securities	$	789,578	$	1	$	(79,558)	$	—	$	710,021
Total	$	789,578	$	1	$	(79,558)	$	—	$	710,021

As of September 30, 2024, the tables above include $575.1 million in agency mortgage-backed securities pledged as collateral to the state of Florida to meet regulatory requirements; $1.3 million in U.S. Treasury securities pledged as collateral to various states to meet regulatory requirements related to the Bank’s trust operations; $259.5 million of agency mortgage-backed securities pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into from 2018 and 2021; and $82.6 million in securities consisting of SBA securities, collateralized mortgage obligations, and agency mortgage-backed securities pledged as collateral for repurchase agreements obtained from a prior bank acquisition.  A total of $904.9 million in SBA and agency mortgage-backed securities, collateralized mortgage obligations, corporate and municipal bonds are pledged as collateral to the Federal Reserve Bank’s discount window and bank term funding program from which the Bank may borrow.

We monitor the credit quality of these securities by evaluating various quantitative attributes. The credit quality indicators the Company monitors include, but are not limited to, credit ratings of individual securities and the credit rating

13

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

of United States government-sponsored enterprises that guarantee the securities. Credit ratings express opinions about the credit quality of a security. Securities rated investment grade, as defined by NRSROs, are generally considered by the rating agencies and market participants to be low credit risk.  As of September 30, 2024, all of the Company’s securities were either investment grade or were issued by a U.S. government agency or GSE with an investment grade rating, with the exception of two corporate bonds having a combined market value of $32.0 million which were below investment grade.

The tables below indicate the gross unrealized losses and fair values of our securities AFS portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Securities with Unrealized Loss at September 30, 2024
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Collateralized mortgage obligations	$	—	$	—	$	7,360	$	(959)	$	7,360	$	(959)
Agency mortgage-backed securities		1,803		(9)		4,668		(253)		6,471		(262)
Municipal bonds		1,698		(34)		44,600		(2,341)		46,298		(2,375)
SBA securities		151		—		8,170		(66)		8,321		(66)
Beneficial interests in FHLMC securitization		—		—		4,145		(333)		4,145		(333)
Corporate bonds		28,189		(1,811)		95,429		(8,357)		123,618		(10,168)
U.S. Treasury		—		—		1,275		(25)		1,275		(25)
Total	$	31,841	$	(1,854)	$	165,647	$	(12,334)	$	197,488	$	(14,188)

	Securities with Unrealized Loss at December 31, 2023
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Collateralized mortgage obligations	$	—	$	—	$	7,606	$	(1,341)	$	7,606	$	(1,341)
Agency mortgage-backed securities		—		—		5,710		(414)		5,710		(414)
Municipal bonds		1,779		(26)		42,847		(3,011)		44,626		(3,037)
SBA securities		353		—		12,025		(106)		12,378		(106)
Beneficial interests in FHLMC securitization		—		—		4,041		(418)		4,041		(418)
Corporate bonds		14,847		(153)		108,832		(15,023)		123,679		(15,176)
U.S. Treasury		397,942		(534)		848		(51)		398,790		(585)
Total	$	414,921	$	(713)	$	181,909	$	(20,364)	$	596,830	$	(21,077)

Unrealized losses in the securities AFS portfolio have not been recognized into income because the securities are either of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, or the decline in fair value is largely due to changes in discount rates and assumptions regarding future interest rates. The fair value is expected to recover as the bonds approach maturity.

14

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The tables below indicate the gross unrecognized losses and fair value of our securities HTM portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrecognized loss position.

	Securities with Unrecognized Loss at September 30, 2024
	Less than 12 months				12 months or more				Total
	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Agency mortgage-backed securities	$	18,146	$	(87)	$	657,622	$	(59,008)	$	675,768	$	(59,095)
Total	$	18,146	$	(87)	$	657,622	$	(59,008)	$	675,768	$	(59,095)

	Securities with Unrecognized Loss at December 31, 2023
	Less than 12 months				12 months or more				Total
	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Agency mortgage-backed securities	$	—	$	—	$	689,454	$	(79,558)	$	689,454	$	(79,558)
Total	$	—	$	—	$	689,454	$	(79,558)	$	689,454	$	(79,558)

During the nine-month period ending September 30, 2024, securities available-for-sale with an amortized cost of $741 million were sold, resulting in gross realized gains of $1.4 million and gross realized losses of $0.2 million.  There were no security sales during the nine-month period ending September 30, 2023.

The following is a rollforward of the Company’s allowance for credit losses related to investments for the following periods:

		Beginning		Provision (Reversal)						Ending
(dollars in thousands)		Balance		for Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2024:
Beneficial interests in FHLMC securitization	$	6,502	$	(24)	$	—	$	—	$	6,478
Corporate bonds		840		(19)		—		—		821
Total	$	7,342	$	(43)	$	—	$	—	$	7,299
Nine Months Ended September 30, 2024:
Beneficial interests in FHLMC securitization	$	6,818	$	(340)	$	—	$	—	$	6,478
Corporate bonds		1,402		(581)		—		—		821
Total	$	8,220	$	(921)	$	—	$	—	$	7,299
Three Months Ended September 30, 2023:
Municipal bonds	$	—	$	1	$	—	$	—	$	1
Beneficial interests in FHLMC securitization		7,058		40		—		—		7,098
Corporate bonds		1,477		(86)		—		—		1,391
Total	$	8,535	$	(45)	$	—	$	—	$	8,490
Nine Months Ended September 30, 2023:
Municipal bonds	$	—	$	1	$	—	$	—	$	1
Beneficial interests in FHLMC securitization		11,439		(370)		(3,971)		—		7,098
Corporate bonds		—		1,391		—		—		1,391
Total	$	11,439	$	1,022	$	(3,971)	$	—	$	8,490

15

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

During the nine-month periods ending September 30, 2024 and September 30, 2023, the Company recorded a provision (reversal) for credit losses of ($921) thousand and $1.0 million, respectively.  

The allowance for credit losses (“ACL”) on investment securities is determined for both held-to-maturity and available-for-sale classifications of the investment portfolio in accordance with ASC 326 and is evaluated on a quarterly basis. The ACL for held-to-maturity investment securities is determined on a collective basis, based on shared risk characteristics, and is determined at the individual security level when the Company deems a security to no longer possess shared risk characteristics. Under ASC 326-20, for investment securities where the Company has reason to believe the credit loss exposure is remote, such as those guaranteed by the U.S. government or government sponsored entities, a zero-loss expectation is applied and a company is not required to estimate and recognize an ACL.  The ACL related to held-to-maturity investment securities was zero at September 30, 2024.

For securities AFS in an unrealized loss position, the Company first evaluates whether it intends to sell, or whether it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. If neither criterion is met, the Company is required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. In determining whether a security’s decline in fair value is credit related, the Company considers a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security; and (v) the ability of the issuer of the security to make scheduled principal and interest payments. If, after considering these factors, the present value of expected cash flows to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, the Company records the decline in fair value through other comprehensive income (loss), net of related income tax effects. The Company has made the election to exclude accrued interest receivable on securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met.  

On a quarterly basis, the Company engages with an independent third party to perform an analysis of expected credit losses for its municipal and corporate bond securities in order to supplement our own internal review.  As of September 30, 2024, the analysis concluded and the Company concurred that fifteen corporate bonds were impacted by credit loss, for which ($581) thousand was recorded as reversal of provision to the ACL related to available-for-sale securities and that no municipal bond securities were impacted by credit loss.  The ACL reserve related to corporate bond securities within the available-for-sale portfolio totaled $821 thousand at September 30, 2024.  Charge-offs totaled $0 and $4.0 million for the nine-month periods ended September 30, 2024 and September 30, 2023, respectively.  For the year ended December 31, 2023, the Company recorded total charge-offs of $4.0 million related to several interest-only strip securities.  The ACL related to available-for-sale securities totaled $7.3 million and $8.2 million as of September 30, 2024 and December 31, 2023, respectively.

16

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The amortized cost and fair value of investment securities AFS by contractual maturity were as follows for the periods indicated:

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
September 30, 2024
Amortized Cost:
Collateralized mortgage obligations	$	—		$	277		$	171		$	10,803		$	11,251
Agency mortgage-backed securities		102			3,238			—			1,091,293			1,094,633
Municipal bonds		500			15,318			31,118			2,238			49,174
SBA securities		—			474			414			8,800			9,688
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,819			13,758
Corporate bonds		—			61,957			66,304			5,525			133,786
U.S. Treasury		799			500			—			—			1,299
Total	$	4,531		$	86,573		$	98,007		$	1,124,478		$	1,313,589
Weighted average yield		0.82	%		5.98	%		3.01	%		5.49	%		5.32	%
Estimated Fair Value:
Collateralized mortgage obligations	$	—		$	261		$	166		$	9,891		$	10,318
Agency mortgage-backed securities		101			3,137			—			1,105,098			1,108,336
Municipal bonds		500			14,900			29,520			1,879			46,799
SBA securities		—			472			414			8,741			9,627
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,507			13,446
Corporate bonds		—			59,121			60,165			4,332			123,618
U.S. Treasury		796			479			—			—			1,275
Total	$	4,527		$	83,179		$	90,265		$	1,135,448		$	1,313,419

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
December 31, 2023
Amortized Cost:
Collateralized mortgage obligations	$	—		$	—		$	513		$	8,433		$	8,946
Agency mortgage-backed securities		141			4,364			—			102,228			106,733
Municipal bonds		—			9,672			36,103			3,698			49,473
SBA securities		—			944			623			12,064			13,631
Beneficial interests in FHLMC securitization		3,315			5,380			—			5,778			14,473
Corporate bonds		5,012			60,444			67,872			5,530			138,858
U.S. Treasury		398,676			699			—			—			399,375
Total	$	407,144		$	81,503		$	105,111		$	137,731		$	731,489
Weighted average yield		5.47	%		6.46	%		2.90	%		5.94	%		5.30	%
Estimated Fair Value:
Collateralized mortgage obligations	$	—		$	—		$	466		$	7,139		$	7,605
Agency mortgage-backed securities		137			4,134			—			103,076			107,347
Municipal bonds		—			9,231			34,142			3,063			46,436
SBA securities		—			936			622			11,969			13,527
Beneficial interests in FHLMC securitization		3,315			5,380			—			5,364			14,059
Corporate bonds		4,973			58,337			56,395			3,977			123,682
U.S. Treasury		398,135			655			—			—			398,790
Total	$	406,560		$	78,673		$	91,625		$	134,588		$	711,446

17

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The amortized cost and fair value of investment securities HTM by contractual maturity were as follows for the periods indicated:

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
September 30, 2024
Amortized Cost:
Agency mortgage-backed securities	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Total	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Weighted average yield		—	%		0.95	%		1.54	%		2.32	%		2.30	%
Estimated Fair Value:
Agency mortgage-backed securities	$	—		$	4,705		$	8,744		$	662,319		$	675,768
Total	$	—		$	4,705		$	8,744		$	662,319		$	675,768

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
December 31, 2023
Amortized Cost:
Agency mortgage-backed securities	$	—		$	4,259		$	12,537		$	772,782		$	789,578
Total	$	—		$	4,259		$	12,537		$	772,782		$	789,578
Weighted average yield		—	%		0.86	%		1.44	%		2.26	%		2.24	%
Estimated Fair Value:
Agency mortgage-backed securities	$	—		$	3,972		$	11,457		$	694,592		$	710,021
Total	$	—		$	3,972		$	11,457		$	694,592		$	710,021

NOTE 4: LOANS

The following is a summary of our loans held for investment as of:

	September 30,		December 31,
(dollars in thousands)	2024		2023
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	3,322,471	$	5,227,885
Single family		889,616		950,712
Total real estate loans secured by residential properties		4,212,087		6,178,597
Commercial properties		952,700		987,596
Land and construction		80,307		137,298
Total real estate loans		5,245,094		7,303,491
Commercial and industrial loans		2,837,830		2,856,228
Consumer loans		832		1,328
Total loans		8,083,756		10,161,047
Premiums, discounts and deferred fees and expenses		5,107		16,755
Total	$	8,088,863	$	10,177,802

The Company’s loans held for investment portfolio is segmented according to loans that share similar attributes and risk characteristics.  In August 2024, a portion of the Company’s multifamily portfolio totaling $1.9 billion in principal

18

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

balance was reclassified from loans held for investment to loans held for sale.  As of September 30, 2024, none of the loans transferred have been sold.

Loans secured by real estate include those secured by either residential or commercial real estate properties, such as multifamily and single-family residential loans; owner occupied and non-owner occupied commercial real estate loans; and land and construction loans.

Commercial and industrial loans are loans to businesses where the operating cash flow of the business is the primary source of payment.  This segment includes commercial revolving lines of credit and term loans, municipal finance loans, equipment finance loans and SBA loans.

Consumer loans include personal installment loans and line of credit, and home equity lines of credit.  These loan products are offered as an accommodation to clients of our primary business lines.

Loans with a collateral value totaling $184.6 million and $283.7 million were pledged as collateral to secure borrowings with the Federal Reserve Bank at September 30, 2024 and December 31, 2023, respectively.  Loans with a market value of $4.3 billion and $4.2 billion were pledged as collateral to secure borrowings with the FHLB at September 30, 2024 and December 31, 2023, respectively.

During the nine-month period ended September 30, 2024, loans totaling $8.1 million in unpaid principal balance were sold, resulting in a net gain on sale of loans of $665 thousand.  There were no loan sales during the nine-month period ended September 30, 2023.  

The following table summarizes our delinquent and nonaccrual loans as of:

	Past Due and Still Accruing												Total Past
							90 Days						Due and
(dollars in thousands)	30–59 Days			60-89 Days			or More			Nonaccrual			Nonaccrual			Current		Total
September 30, 2024:
Real estate loans:
Residential properties	$	1,887		$	—		$	—		$	20,357		$	22,244		$	4,198,803	$	4,221,047
Commercial properties		9,046			—			—			9,145			18,191			933,976		952,167
Land and construction		—			—			—			—			—			80,153		80,153
Commercial and industrial loans		8,088			10,138			—			8,704			26,930			2,807,701		2,834,631
Consumer loans		—			—			—			—			—			865		865
Total	$	19,021		$	10,138		$	—		$	38,206		$	67,365		$	8,021,498	$	8,088,863
Percentage of total loans		0.24	%		0.13	%		—	%		0.47	%		0.83	%
December 31, 2023:
Real estate loans:
Residential properties	$	93		$	416		$	—		$	112		$	621		$	6,196,923	$	6,197,544
Commercial properties		27,403			403			1,730			2,915			32,451			954,321		986,772
Land and construction		—			—			—			—			—			136,827		136,827
Commercial and industrial loans		525			88			—			8,804			9,417			2,845,845		2,855,262
Consumer loans		—			—			—			—			—			1,397		1,397
Total	$	28,021		$	907		$	1,730		$	11,831		$	42,489		$	10,135,313	$	10,177,802
Percentage of total loans		0.28	%		0.01	%		0.02	%		0.12	%		0.42	%

19

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The following table summarizes our nonaccrual loans as of:

	Nonaccrual		Nonaccrual
	with Allowance		with no Allowance
(dollars in thousands)	for Credit Losses		for Credit Losses
September 30, 2024:
Real estate loans:
Residential properties	$	883	$	19,474
Commercial properties		9,145		—
Commercial and industrial loans		8,704		—
Total	$	18,732	$	19,474
December 31, 2023:
Real estate loans:
Residential properties	$	—	$	112
Commercial properties		—		2,915
Commercial and industrial loans		7,406		1,398
Total	$	7,406	$	4,425

The Company adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023.  The amendments in this ASU eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.  The amendments in this ASU were applied prospectively, and therefore, loan modification and charge off information is provided for only those items occurring after the January 1, 2023 adoption date.

Based on the guidance in ASU 2022-02, a loan modification or refinancing results in a new loan if the terms of the new loan are at least as favorable to the lender as the terms with customers with similar collection risks that are not refinancing or restructuring their loans and the modification to the terms of the loan are more than minor.  If a loan modification or refinancing does not result in a new loan, it is classified as a loan modification.

There are additional disclosures for modification of loans with borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows.  The disclosures are applicable to situations where there is interest rate reduction, term extensions, principal forgiveness, other-than-insignificant payment delays, or a combination of any of these items.  

20

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the nine-month periods ended September 30, 2024 and 2023, respectively with related amortized cost balances, respective percentage share of the total class of loans, and the related financial effect:

	September 30, 2024:
	Term Extension
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Residential loans	$	6	—	%	1 loan with term extension of 22 months.
Commercial real estate loans		12,900	1.40	%	1 loan with term extension of 10 months.
Commercial and industrial loans		2,294	—	%	6 loans with various extensions of loan maturity ranging from 3 to 60 months and payment deferral. 1 loan with 3-month extension and 3-month forbearance. 1 loan with $100 payments through 3 months.
Total	$	15,200
	Combination
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	9,568	0.40	%	5 loans with various extensions of loan maturity ranging from 6 to 7 months and payment deferral. 1 loan with 5 month forbearance and interest rate reduction. 2 loans with $100 payments through 3 months with payment deferral. 2 loans with term extension of 12 months and payment deferral.
Total	$	9,568
	Total
		Amortized Cost Basis	% of Total Class of Loans
Residential loans	$	6	—	%
Commercial real estate loans		12,900	1.40	%
Commercial and industrial loans		11,862	0.40	%
Total	$	24,768
	September 30, 2023:
	Term Extension
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	5,770	0.20	%	1 loan with 3-month extension
Total	$	5,770
	Payment Deferrals
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	400	—	%	4 loans each with partial payment deferrals for 3 months
Total	$	400
	Combination
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial real estate loans	$	645	0.10	%	1 loan with 10 year term extension and interest reduction
Total	$	645
	Total
		Amortized Cost Basis	% of Total Class of Loans
Commercial real estate loans	$	645	0.10	%
Commercial and industrial loans	$	6,170	0.20	%
Total	$	6,815

21

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The following table presents the amortized cost basis of loans that had a payment default since modification during the nine-months ended September 30, 2024 and 2023, respectively:

	September 30, 2024:
	Combination
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,229
Total		2	$	2,229
	Total
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,229
Total		2	$	2,229
	September 30, 2023:
	Payment Deferrals
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		1	$	1,339
Total		1	$	1,339
	Combination
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		1	$	950
Total		1	$	950
	Total
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,289
Total		2	$	2,289

The following table presents the payment status of our loan modifications made during the previous twelve-month period of October 1, 2023 to September 30, 2024:

			30-89 Days		90+ Days
(dollars in thousands)		Current	Past Due		Past Due			Nonaccrual	Total
September 30, 2024:
Residential loans	$	253	$	—	$	—	$	—	$	253
Commercial real estate loans		12,900		—		—		—		12,900
Commercial and industrial loans		6,104		7,060		—		8,252		21,416
Total	$	19,257	$	7,060	$	—	$	8,252	$	34,569

NOTE 5: ALLOWANCE FOR CREDIT LOSSES

The Company accounts for ACL related to loans in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to record an estimate of current expected credit losses (“CECL”) for loans at the time of origination.  The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated balance sheet.  

The measurement of the ACL is performed by collectively pooling and evaluating loans with similar risk characteristics.  The quantitative CECL model estimates credit losses by applying pool-specific probability of default (“PD”) and loss given default (“LGD”) rates to the expected exposure at default ("EAD") over the contractual life of the loans.  A significant portion of the ACL is calculated and measured on a collective pool basis, representing $7.9 billion or approximately 97.4% of the total blended loan portfolio as of September 30, 2024.  As of December 31, 2023, the ACL was calculated and measured based upon $9.9 billion or 97.2% of the total blended portfolio evaluated on a collective pool

22

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

basis and $268 million in small homogeneous loan portfolios or 2.6% of the total blended portfolio evaluated using historical loss factors.  Pooled loan segments consisted of multifamily, commercial, single-family, non-owner occupied commercial real estate, and construction loans.  The remaining portion of the loan portfolio, representing $200.6 million or approximately 2.5% of the total blended loan portfolio, consisted of small homogeneous loan portfolios which has its quantitative reserve calculated separately based on historical loss factors for the respective portfolios or, if no historical loss is available, based on peer group historical losses.  These loan portfolios include equipment finance, land, consumer and commercial small balance loans.  In addition, collateral dependent loans are separately valued based on the fair value of the underlying collateral.  

The measurement also incorporates qualitative components such as internal and external risk factors that may not be adequately assessed in the quantitative model.  Qualitative adjustments primarily relate to segments of the loan portfolio deemed by management to be of a higher-risk profile or other factors where management believes the quantitative component of the ACL model may not be fully reflective of levels deemed adequate in the judgment of management.  Qualitative adjustments may also relate to uncertainty as to future macroeconomic conditions and the related impact on certain loan segments.  Management reviews the need for an appropriate level of quantitative adjustments on a quarterly basis, and as such, the amount and allocation of qualitative adjustments may change in future periods.  Management applies a two-year time horizon in its ACL model at which there is a gradual reversion back to historical loss experience.

For purposes of calculating the ACL, the Company has elected to include deferred loan fees and expenses in the loan balance and exclude accrued interest from loan balances.

23

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The following is a rollforward of the allowance for credit losses related to loans for the following periods:

			Provision
	Beginning		(Reversal) for						Ending
(dollars in thousands)	Balance		Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2024:
Real estate loans:
Residential properties	$	9,013	$	(2,010)	$	—	$	—	$	7,003
Commercial properties		6,086		493		—		—		6,579
Land and construction		77		(17)		—		—		60
Commercial and industrial loans		14,104		1,809		(341)		80		15,652
Consumer loans		15		14		(23)		—		6
Total	$	29,295	$	289	$	(364)	$	80	$	29,300
Nine Months Ended September 30, 2024:
Real estate loans:
Residential properties	$	9,921	$	(2,918)	$	—	$	—	$	7,003
Commercial properties		4,148		2,431		—		—		6,579
Land and construction		332		(272)		—		—		60
Commercial and industrial loans		14,796		1,676		(1,203)		383		15,652
Consumer loans		8		20		(23)		1		6
Total	$	29,205	$	937	$	(1,226)	$	384	$	29,300
Three Months Ended September 30, 2023:
Real estate loans:
Residential properties	$	8,234		140		—		—	$	8,374
Commercial properties		5,253		(979)		—		—		4,274
Land and construction		287		(13)		—		—		274
Commercial and industrial loans		17,690		(1,070)		(1,183)		814		16,251
Consumer loans		21		—		—		1		22
Total	$	31,485	$	(1,922)	$	(1,183)	$	815	$	29,195
Nine Months Ended September 30, 2023:
Real estate loans:
Residential properties	$	8,306	$	68	$	—	$	—	$	8,374
Commercial properties		8,714		(4,191)		(249)		—		4,274
Land and construction		164		110		—		—		274
Commercial and industrial loans		16,521		2,019		(4,022)		1,733		16,251
Consumer loans		26		(4)		(2)		2		22
Total	$	33,731	$	(1,998)	$	(4,273)	$	1,735	$	29,195

24

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral.  Collateral dependent loans are evaluated individually to determine expected credit losses and any ACL allocation is determined based upon the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs (if applicable).  The following table presents the amortized cost basis of collateral dependent loans and the related ACL allocated to these loans as of the dates indicated:

					Equipment/					ACL
(dollars in thousands)	Real Estate		Cash		Receivables		Total			Allocation
September 30, 2024:
Loans secured by real estate:
Residential properties
Single family	$	244	$	—	$	—	$	244	$	—
Commercial real estate loans		5,462		—		—		5,462		964
Commercial loans		—		—		—		—		—
Total	$	5,706	$	—	$	—	$	5,706	$	964
December 31, 2023:
Loans secured by real estate:
Commercial real estate loans	$	2,523	$	—	$	—	$	2,523	$	—
Commercial loans		—		250		978		1,228		—
Total	$	2,523	$	250	$	978	$	3,751	$	—

Credit Risk Management

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as loans secured by multifamily or commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Pass: Loans classified as pass are strong credits with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions above and smaller, homogeneous loans not assessed on an individual basis.

25

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The following tables present risk categories of loans based on year of origination, and includes gross charge-offs in accordance with ASU 2022-02 as of the dates presented:

													Revolving
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Loans		Total
September 30, 2024:
Loans secured by real estate:
Residential
Multifamily
Pass	$	73,086	$	542	$	1,712,559	$	789,647	$	394,488	$	273,934	$	—	$	3,244,256
Special mention		—		—		—		6,489		11,628		51,471		—		69,588
Substandard		—		—		—		—		—		14,070		—		14,070
Total	$	73,086	$	542	$	1,712,559	$	796,136	$	406,116	$	339,475	$	—	$	3,327,914
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Single family
Pass	$	2,999	$	10,030	$	248,194	$	260,156	$	91,456	$	212,099	$	45,767	$	870,701
Special mention		—		—		—		—		—		1,403		—		1,403
Substandard		—		—		—		—		—		20,905		124		21,029
Total	$	2,999	$	10,030	$	248,194	$	260,156	$	91,456	$	234,407	$	45,891	$	893,133
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate
Pass	$	2,437	$	2,408	$	224,226	$	116,802	$	143,541	$	419,491	$	—	$	908,905
Special mention		—		—		—		1,198		2,225		843		—		4,266
Substandard		—		12,900		—		111		1,274		24,711		—		38,996
Total	$	2,437	$	15,308	$	224,226	$	118,111	$	147,040	$	445,045	$	—	$	952,167
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Land and construction
Pass	$	108	$	24,962	$	32,067	$	8,078	$	9,190	$	5,748	$	—	$	80,153
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	108	$	24,962	$	32,067	$	8,078	$	9,190	$	5,748	$	—	$	80,153
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Pass	$	58,523	$	148,702	$	1,012,681	$	251,189	$	92,598	$	35,695	$	1,171,997	$	2,771,385
Special mention		721		8,134		8,499		24,368		17		619		3,976		46,334
Substandard		116		34		68		804		3,686		2,490		9,714		16,912
Total	$	59,360	$	156,870	$	1,021,248	$	276,361	$	96,301	$	38,804	$	1,185,687	$	2,834,631
Gross charge-offs	$	—	$	179	$	678	$	303	$	43	$	—	$	—	$	1,203
Consumer
Pass	$	24	$	7	$	—	$	516	$	—	$	52	$	266	$	865
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	24	$	7	$	—	$	516	$	—	$	52	$	266	$	865
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	23	$	23
Total loans
Pass	$	137,177	$	186,651	$	3,229,727	$	1,426,388	$	731,273	$	947,019	$	1,218,030	$	7,876,265
Special mention		721		8,134		8,499		32,055		13,870		54,336		3,976		121,591
Substandard		116		12,934		68		915		4,960		62,176		9,838		91,007
Total	$	138,014	$	207,719	$	3,238,294	$	1,459,358	$	750,103	$	1,063,531	$	1,231,844	$	8,088,863
Gross charge-offs	$	—	$	179	$	678	$	303	$	43	$	—	$	23	$	1,226

26

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

													Revolving
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Loans		Total
December 31, 2023:
Loans secured by real estate:
Residential
Multifamily
Pass	$	37,343	$	2,355,381	$	1,537,636	$	763,736	$	289,675	$	243,146	$	—	$	5,226,917
Special mention		—		—		1,248		—		5,577		9,426		—		16,251
Substandard		—		—		—		—		—		—		—		—
Total	$	37,343	$	2,355,381	$	1,538,884	$	763,736	$	295,252	$	252,572	$	—	$	5,243,168
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Single family
Pass	$	13,631	$	259,043	$	267,373	$	92,567	$	38,132	$	208,035	$	54,444	$	933,225
Special mention		—		—		—		—		—		20,166		—		20,166
Substandard		—		—		—		—		—		846		139		985
Total	$	13,631	$	259,043	$	267,373	$	92,567	$	38,132	$	229,047	$	54,583	$	954,376
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Commercial real estate
Pass	$	2,469	$	221,525	$	130,579	$	119,684	$	81,243	$	383,729	$	—	$	939,229
Special mention		—		—		1,223		2,275		—		10,747		—		14,245
Substandard		12,900		—		116		1,445		11,424		7,413		—		33,298
Total	$	15,369	$	221,525	$	131,918	$	123,404	$	92,667	$	401,889	$	—	$	986,772
Gross charge-offs	$	—		—		—		—		—		249		—	$	249
Land and construction
Pass	$	19,151	$	43,923	$	29,445	$	36,498	$	807	$	7,003	$	—	$	136,827
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	19,151	$	43,923	$	29,445	$	36,498	$	807	$	7,003	$	—	$	136,827
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Commercial
Pass	$	182,391	$	1,082,510	$	291,663	$	119,035	$	21,314	$	25,030	$	1,087,075	$	2,809,018
Special mention		—		1,360		24,653		703		56		656		735		28,163
Substandard		55		12		842		3,881		1,325		458		11,508		18,081
Total	$	182,446	$	1,083,882	$	317,158	$	123,619	$	22,695	$	26,144	$	1,099,318	$	2,855,262
Gross charge-offs	$	257		1,420		1,205		587		117		48		1,364	$	4,998
Consumer
Pass	$	47	$	—	$	577	$	—	$	299	$	59	$	415	$	1,397
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	47	$	—	$	577	$	—	$	299	$	59	$	415	$	1,397
Gross charge-offs	$	—		—		—		—		—		—		2	$	2
Total loans
Pass	$	255,032	$	3,962,382	$	2,257,273	$	1,131,520	$	431,470	$	867,002	$	1,141,934	$	10,046,613
Special mention		—		1,360		27,124		2,978		5,633		40,995		735		78,825
Substandard		12,955		12		958		5,326		12,749		8,717		11,647		52,364
Total	$	267,987	$	3,963,754	$	2,285,355	$	1,139,824	$	449,852	$	916,714	$	1,154,316	$	10,177,802
Gross charge-offs	$	257		1,420		1,205		587		117		297		1,366	$	5,249

27

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

NOTE 6: CORE DEPOSIT INTANGIBLES

Core deposit intangibles are intangible assets having definite useful lives arising from whole bank acquisitions.  Core deposit intangibles are amortized on an accelerated method over their estimated useful lives, ranging from 7 to 10 years.  At September 30, 2024 and December 31, 2023, core deposit intangible assets totaled $3.9 million and $4.9 million, respectively, and we recognized $1.1 million and $1.2 million in core deposit intangible amortization expense for the nine-month periods ended September 30, 2024 and September 30, 2023, respectively.

NOTE 7: DERIVATIVE ASSETS/LIABILITIES

On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty to hedge against our exposure to changes in interest rates as part of our overall interest rate risk management strategy.  On the date the agreement was entered into, the derivative was designated as a cash flow hedge, as it was undertaken to manage the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  At inception and on a quarterly basis thereafter, an assessment is performed to determine the effectiveness of the derivative at reducing the risk associated with the hedged exposure.  A cash flow hedge designated as highly effective is carried at fair value on the balance sheet with the portion of change in fair value of the cash flow hedge considered highly effective recognized in AOCI.  If the cash flow hedge becomes ineffective, the portion of the change in fair value of the cash flow hedge considered ineffective is reclassified from AOCI to earnings.  

The hedging instrument is a pay-fixed, receive variable interest rate swap agreement having a beginning notional amount of $450 million.  The Bank pays quarterly interest at a fixed rate of 3.583% and receives quarterly interest payments calculated at the Daily Simple SOFR over the same period.  The original term of the agreement is five years, expiring on February 1, 2029.  On March 28, 2024, the original hedge position notional amount was reduced by $100 million, and a corresponding amount of the hedged item was simultaneously de-designated, resulting in the recording of a gain of $1.7 million, classified as capital markets activities on the accompanying statements of operations.

At September 30, 2024, the fair value of the cash flow hedge was ($5.1) million and is classified as derivative liabilities with a corresponding amount classified as a component of AOCI on the accompanying balance sheet.

NOTE 8: LOAN SALES AND MORTGAGE SERVICING RIGHTS

The Company retained servicing rights for the majority of the loans sold and recognized mortgage servicing rights in connection with multifamily loan sale transactions that occurred in 2021 and prior.  As of September 30, 2024, mortgage servicing rights totaled $4.0 million with no valuation allowance.  At December 31, 2023, mortgage servicing rights totaled $5.5 million, inclusive of a valuation allowance of $0.3 million.  Mortgage servicing rights are classified as a component of other assets in the accompanying consolidated balance sheets. The amount of loans serviced for others totaled $897 million and $1.0 billion at September 30, 2024 and December 31, 2023, respectively.  Servicing fees collected for the nine-month periods ended September 30, 2024 and 2023 totaled $1.8 million and $1.9 million, respectively.

There were no loan sale or purchase transactions that resulted in the recognition of mortgage servicing rights in 2024 and 2023.

28

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

NOTE 9: DEPOSITS

The following table summarizes the outstanding balance of deposits and average rates paid thereon as of:

	September 30, 2024				December 31, 2023
			Weighted				Weighted
(dollars in thousands)	Amount		Average Rate		Amount		Average Rate
Demand deposits:
Noninterest-bearing	$	2,136,442	—		$	1,467,806	—
Interest-bearing		1,999,229	3.66	%		2,881,786	2.94	%
Money market and savings		3,543,668	3.93	%		3,195,670	3.81	%
Certificates of deposit		2,625,265	4.77	%		3,143,670	4.87	%
Total	$	10,304,604	3.28	%	$	10,688,932	3.36	%

The following table provides the remaining maturities of certificate of deposit accounts of greater than $250,000 as of:

	September 30, 2024		December 31, 2023
Large Denomination Certificates of Deposit Maturity Distribution	(dollars in thousands)
3 months or less	$	60,095	$	343,078
Over 3 months through 6 months		75,036		24,126
Over 6 months through 12 months		63,479		56,415
Over 12 months		10,562		30,994
Total	$	209,172	$	454,613

Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 17.6% and 12.5% of our total deposits as of September 30, 2024 and December 31, 2023, respectively.  The composition of our large depositor relationships continues to include clients which have maintained long-term depository relationships with us.

Accrued interest payable on deposits, which is included in accounts payable and other liabilities, was $34.5 million and $36.7 million at September 30, 2024 and December 31, 2023, respectively.

NOTE 10: BORROWINGS

The Bank has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”), and other institutions.  At September 30, 2024, our borrowings consisted of $1 billion in FHLB putable advances at the Bank, $400 million of FHLB term advances at the Bank, $267 million in term advances from the Federal Reserve Bank, and $25 million in repurchase agreements at the Bank.  At December 31, 2023, our borrowings consisted of $800 million in FHLB putable advances at the Bank, $100 million of FHLB term advances at the Bank, $160 million in overnight advances and $285 million in term advances from the Federal Reserve Bank, and $64 million in repurchase agreements at the Bank.

FHLB Advances

The FHLB putable advances outstanding at September 30, 2024 had a weighted average remaining life of 6.50 years and a weighted average fixed interest rate of 3.74%.  The putable advances can be called quarterly until maturity at the option of the FHLB at various put dates, with $300 million eligible for exercising in December 2024 and the remaining $700 million eligible for exercising beginning in June 2025.  

29

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

The FHLB term advances outstanding at September 30, 2024 consist of the following:

$300 million in a three-year fixed-rate advance maturing on May 28, 2027 at an interest rate of 4.95%.

$100 million in a five-year fixed rate advance maturing on June 28, 2028 at an interest rate of 4.21%.  

FHLB advances are collateralized primarily by loans secured by single family, multifamily, and commercial real estate properties with a market value of $4.3 billion as of September 30, 2024. The Bank’s total unused borrowing capacity from the FHLB as of September 30, 2024 was $2.0 billion. The Bank had in place $10 million of letters of credit from the FHLB as of September 30, 2024, which are used to meet collateral requirements for deposits from local agencies.  

The FHLB putable advances outstanding at December 31, 2023 had a weighted average remaining life of 5.41 years and a weighted average fixed interest rate of 3.74%.  The FHLB term advances had a fixed interest rate of 4.21% and matures on June 28, 2028.  FHLB advances were collateralized primarily by loans secured by single family, multifamily, and commercial real estate properties with a market value of $4.3 billion as of December 31, 2023. The Bank’s total unused borrowing capacity from the FHLB as of December 31, 2023 was $2.0 billion. The Bank had in place $310 million of letters of credit from the FHLB as of December 31, 2023, which are used to meet collateral requirements for deposits from the State of California and local agencies.  

Federal Reserve Bank Borrowings

The Bank has a secured line of credit with the Federal Reserve Bank including the secured borrowing capacity through the Federal Reserve Bank’s Discount Window, Borrower-in-Custody (“BIC”), and Bank Term Funding (“BTFP”) programs.  Borrowings under the BIC program are overnight advances with interest chargeable at the primary credit borrowing rate.  At September 30, 2024, the Bank did not have any borrowings outstanding under the BIC program.  Borrowings under the BTFP, which was established in March 2023, are for periods up to one year in length, with interest rates based on the one-year overnight index swap (“OIS”) rate plus a spread of 10 basis points.  BTFP borrowings totaled $267 million at September 30, 2024, maturing on January 15, 2025, at an interest rate of 4.76%.  BTFP borrowings are collateralized by eligible investment securities valued at par and provide an additional source of liquidity.  At September 30, 2024, the Bank had secured unused borrowing capacity of $823 million under this agreement.  

At December 31, 2023, the Bank had outstanding BIC program borrowings totaling $160 million, bearing a fixed interest rate of 5.50% and were repaid in full in early January, 2024.  At December 31, 2023, the Bank had outstanding BTFP borrowings totaling $285 million.  At December 31, 2023, the Bank had secured unused borrowing capacity of $823 million under this agreement.

Uncommitted Credit Facilities:

The Bank has a total of $240 million in borrowing capacity through unsecured federal funds lines, ranging in size from $20 million to $100 million, with six correspondent financial institutions.  There were no balances outstanding under these arrangements as of September 30, 2024 and December 31, 2023.

Holding Company Line of Credit:

FFI has entered into a loan agreement with an unaffiliated lender that provides for a revolving line of credit for up to $20 million maturing in February 2025. The loan bears an interest rate of Prime rate, plus 50 basis points (0.50%). FFI’s obligations under the loan agreement are secured by, among other things, a pledge of all of its equity in the Bank. We are required to meet certain financial covenants during the term of the loan, including minimum capital levels and limits on classified assets. As of September 30, 2024 and December 31, 2023, FFI was in compliance with the covenants

30

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

contained in the loan agreement.  As of September 30, 2024 and December 31, 2023, there were no balances outstanding under this agreement.

Repurchase Agreements:

The repurchase agreements are treated as overnight borrowings with the obligations to repurchase securities sold reflected as a liability.  The investment securities underlying these agreements remain in the Company’s securities AFS portfolio.  As of September 30, 2024 and December 31, 2023, the repurchase agreements are collateralized by investment securities with a fair value of approximately $82.6 million and $76.3 million, respectively.

NOTE 11: SUBORDINATED DEBT

At September 30, 2024 and December 31, 2023, FFI had two issuances of subordinated notes outstanding with an aggregate carrying value of $173 million.  At September 30, 2024 and December 31, 2023, FFI was in compliance with all covenants under its subordinated debt agreements.  The following table summarizes the outstanding subordinated notes as of the dates indicated:  

		Current		Current			Carrying Value
	Stated	Interest		Principal			September 30,		December 31,
(dollars in thousands)	Maturity	Rate		Balance		2024		2023
Subordinated notes
Subordinated notes due 2032, 3.50% per annum until February 1, 2027, 3-month SOFR + 2.04% thereafter	February 1, 2032	3.50	%	$	150,000	$	148,238	$	148,058
Subordinated notes due 2030, 6.0% per annum until June 30, 2025, 3-month SOFR + 5.90% thereafter.	June 30, 2030	6.00	%		24,165		25,206		25,339
Total				$	174,165	$	173,444	$	173,397

NOTE 12: INCOME TAXES

For the nine-month period ended September 30, 2024, the Company recorded an income tax benefit of $36.1 million and had an effective tax rate of 31.6%.  For the nine-month period ended September 30, 2023, the Company recorded income tax expense of $1.3 million and had an effective tax rate of -0.65%.  The changes in the effective tax rate were predominately due to the changes in pretax income most notably in the current quarter there was a $117.5 million LOCOM loss related to the reclassification of $1.9 billion of loans from loans held for investment to loans held for sale.  The effective tax rates differ from the combined federal and state statutory rates for the Company of 28.2% due primarily to various permanent tax differences, including tax-exempt income and tax credits from low-income housing tax credit investments.

The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized.  Management has evaluated the realization of deferred tax assets and has determined that it is more likely than not that all of the deferred tax assets would be realized, therefore no valuation allowance was provided against the deferred tax assets.

Deferred tax assets totaled $65.1 million and $29.1 million at September 30, 2024 and December 31, 2023, respectively.

31

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

NOTE 13: SHAREHOLDERS’ EQUITY

FFI is a holding company and does not have any direct operating activities. Any future cash flow needs of FFI are expected to be met by its existing cash and cash equivalents and dividends from its subsidiaries. The Bank is subject to various laws and regulations that limit the amount of dividends that a bank can pay without obtaining prior approval from bank regulators. Additionally, under the terms of the holding company line of credit agreement, FFI may only declare and pay a dividend if the total amount of dividends and stock repurchases does not exceed 50% of FFI’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the current twelve-month period.  FFI’s cash and cash equivalents totaled $9.5 million and $15.3 million at September 30, 2024 and December 31, 2023, respectively.

On July 8, 2024, the Company raised approximately $228 million of gross proceeds in an equity capital raise (“July 2024 Capital Raise”) with certain investors.  In the July 2024 Capital Raise, the Company sold and issued to the investors:  (a) 11,308,676 shares of common stock at a purchase price per share of $4.10 (on July 1, 2024, the day before the announcement of the July 2024 Capital Raise, the closing price of the common stock was $6.47); (b) 29,811 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series A Noncumulative Convertible Preferred Stock (the “Series A Preferred Stock”), at a price per share of $4,100, and each share of which is convertible into 1,000 shares of common stock (or, in certain limited circumstances, one share of Series B Preferred Stock), and all of which shares of Series A Preferred Stock represent the right (on an as converted basis) to receive approximately 29,811,000 shares of common stock; (c) 14,490 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series B Noncumulative Preferred Stock (the “Series B Preferred Stock”), at a price per share of $4,100, each share of which is convertible into 1,000 shares of common stock, and all of which shares of Series B Preferred Stock represent the right (on an as converted basis) to receive approximately 14,490,000 shares of common stock; and (d) Issued Warrants, which are not exercisable for 180 days after closing of the July 2024 Capital Raise, affording the holder thereof the right, until the seven-year anniversary of the issuance of such Issued Warrant, to purchase for $5,125 per share, 22,239 shares of Series C non-voting, common-equivalent preferred stock (the “Series C NVCE Stock”).  Each share of Series C NVCE Stock is convertible into 1,000 shares of common stock, all of which shares of Series C NVCE Stock, upon issuance, will represent the right (on an as converted basis) to receive approximately 22,239,000 shares of common stock.  The investors are subject to a 180-day lock-up period with respect to the securities purchased.  Net proceeds from the July 2024 Capital Raise of $214.5 million, consisting of the $228 million gross proceeds less issuance costs of $13.5 million, were allocated amongst the newly issued equity instruments under the relative fair value method.  Under the relative fair value method, each equity instrument was allocated a portion of the net proceeds based on the proportion of its fair value to the sum of the fair values of all of the equity instruments covered in the allocation.  

The terms of the Series A Preferred Stock, Series B Preferred Stock, and Series C NVCE Stock are more fully described in the respective Certificates of Designation, which were included as Exhibit 3.1, Exhibit 3.2, and Exhibit 3.3, respectively to the Company’s Current Report on Form 8-K filed with the SEC on July 9, 2024, and incorporated by reference therein.  The terms of the Issued Warrants are more fully described in the Issued Warrant, a form of which was included as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 9, 2024, and incorporated by reference therein.

On September 30, 2024, stockholders approved and adopted an amendment to the Company’s certificate of incorporation, as amended, to increase the number of authorized shares of common stock from 100,000,000 shares to 200,000,000 shares, and also approved the issuance of shares of common stock in connection with the July 2024 Capital Raise pursuant to NYSE listing rules.  As a result of these approvals, all of the issued and outstanding shares of the Series B Preferred Stock automatically converted into shares of common stock as of the close of business on October 2, 2024, in accordance with the terms of the Certificate of Designation for the Series B Preferred Stock.  In addition, the quarterly non-cumulative cash dividend (annual rate of 13%) and liquidation preference rights of the Series A Preferred Stock cease to apply.  Shares of Series A Preferred Stock (a) are now entitled to receive dividends at the same time and on the same terms as shares of common stock in accordance with the Certificate of Designation for the Series A Preferred Stock, and

32

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

(b) rank as equal to shares of common stock in any liquidation of the Company.  Furthermore, the Company will not be required to issue any cash-settled warrants to the investors who participated in the July 2024 Capital Raise.  At September 30, 2024, there were no declared dividends outstanding with respect to the Series A and Series B Preferred Stock.  

NOTE 14: EARNINGS PER SHARE

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if contracts to issue common stock were exercised or converted into common stock that would then share in earnings. Contracts to issue common stock include warrants, convertible preferred stock, stock options, restricted stock, and other contingent shares.  As the average common share price was above the $5.125 per share exercise price (on an as-converted basis) of the warrants, the warrants would have been included in the dilutive share count and diluted earnings per share as of September 30, 2024, if the Company had positive earnings for the period. The following table sets forth the Company’s unaudited earnings per share calculations for the three and nine months ended September 30:

	Three Months Ended				Three Months Ended
	September 30, 2024				September 30, 2023
(dollars in thousands, except per share amounts)	Basic		Diluted		Basic		Diluted
Net (loss) income	$	(82,174)	$	(82,174)	$	2,180	$	2,180
Weighted average basic common shares outstanding		66,992,701		66,992,701		56,443,539		56,443,539
Dilutive effect of options, restricted stock and contingent shares issuable				—				6,181
Diluted common shares outstanding				66,992,701				56,449,720
Net (loss) income per share	$	(1.23)	$	(1.23)	$	0.04	$	0.04

	Nine Months Ended				Nine Months Ended
	September 30, 2024				September 30, 2023
(dollars in thousands, except share and per share amounts)	Basic		Diluted		Basic		Diluted
Net (loss) income	$	(78,296)	$	(78,296)	$	(201,612)	$	(201,612)
Weighted average basic common shares outstanding		60,025,852		60,025,852		56,417,252		56,417,252
Dilutive effect of options, restricted stock and contingent shares issuable				—				—
Diluted common shares outstanding				60,025,852				56,417,252
Net (loss) income per share	$	(1.30)	$	(1.30)	$	(3.57)	$	(3.57)

Stock options for 22,550 shares of common stock were not considered in computing diluted earnings per common share for the three-month period ended September 30, 2023, as the average common share price was below the exercise price of the options outstanding.  Stock options for the 22,550 shares of common stock were not considered in computing diluted earnings per share for the nine-month period ended September 30, 2023 because they are antidilutive.  There were no stock options outstanding for the three and nine-month periods ended September 30, 2024.

NOTE 15: SEGMENT REPORTING

For the three and nine months ended September 30, 2024 and 2023, the Company had two reportable business segments: Banking (FFB) and Wealth Management (FFA). The results of FFI and any elimination entries are included in the column labeled Other. The reportable segments are determined by products and services offered and the corporate structure.  Business segment earnings before taxes are the primary measure of the segment’s performance as evaluated by management.  Business segment earnings before taxes include direct revenue and expenses of the segment as well as corporate and inter-company cost allocations.  Allocations of corporate expenses, such as finance and accounting, data processing and human resources are calculated based on estimated activity or usage levels.  The management accounting

33

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

process measures the performance of the operating segments based on the Company’s management structure and is not necessarily comparable with similar information for other financial services companies.  If the management structures and/or the allocation process changes, allocations, transfers, and assignments may change.  

In accordance with ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”,  the significant expenses shown in the tables below are those that are regularly provided to the chief operating decision maker (“CODM”) who regularly uses them, along with other information in assessing the segments’ performance and in decisions regarding the allocation of resources.  With respect to ASU 2023-07, the CODM for the Company is the Chief Executive Officer.  The following tables show key operating results for each of our business segments used to arrive at our consolidated totals for the following periods:

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
Three Months Ended September 30, 2024:
Interest income	$	157,156	$	—	$	—	$	157,156
Interest expense		106,317		—		1,720		108,037
Net interest income		50,839		—		(1,720)		49,119
Provision for credit losses		282		—		—		282
Noninterest income		4,598		7,704		(365)		11,937
LHFS LOCOM adjustment		(117,517)		—		—		(117,517)
Noninterest expense
Compensation and benefits		15,688		4,154		167		20,009
Customer service costs		18,954		—		—		18,954
Professional services and marketing costs		3,298		994		803		5,095
Other		15,266		621		280		16,167
(Loss) income before income taxes		(115,568)		1,935		(3,335)		(116,968)
Income tax (benefit) expense		(34,399)		551		(946)		(34,794)
Net (loss) income	$	(81,169)	$	1,384	$	(2,389)	$	(82,174)
Three Months Ended September 30, 2023:
Interest income	$	144,765	$	—	$	—	$	144,765
Interest expense		90,960		—		1,732		92,692
Net interest income		53,805		—		(1,732)		52,073
Provision (reversal) for credit losses		(2,015)		—		—		(2,015)
Noninterest income		4,557		7,522		(381)		11,698
Noninterest expense
Compensation and benefits		15,571		3,835		226		19,632
Customer service costs		24,683		—		—		24,683
Professional services and marketing costs		2,430		853		465		3,748
Other		15,303		574		266		16,143
Income (loss) before income taxes		2,390		2,260		(3,070)		1,580
Income tax (benefit) expense		(409)		659		(850)		(600)
Net income (loss)	$	2,799	$	1,601	$	(2,220)	$	2,180

34

FIRST FOUNDATION INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the Nine Months Ended September 30, 2024 - UNAUDITED

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
Nine Months Ended September 30, 2024:
Interest income	$	458,523	$	—	$	—	$	458,523
Interest expense		322,059		—		5,130		327,189
Net interest income		136,464		—		(5,130)		131,334
Provision for credit losses		53		—		—		53
Noninterest income		16,522		22,843		(1,087)		38,278
LHFS LOCOM adjustment		(117,517)		—		—		(117,517)
Noninterest expense
Compensation and benefits		45,681		12,328		502		58,511
Customer service costs		45,796		—		—		45,796
Professional services and marketing costs		8,486		2,821		845		12,152
Other		47,084		1,980		940		50,004
(Loss) income before income taxes		(111,631)		5,714		(8,504)		(114,421)
Income tax expense (benefit)		(35,365)		1,632		(2,392)		(36,125)
Net (loss) income	$	(76,266)	$	4,082	$	(6,112)	$	(78,296)
Nine Months Ended September 30, 2023:
Interest income	$	427,093	$	—	$	—	$	427,093
Interest expense		261,948		—		5,333		267,281
Net interest income		165,145		—		(5,333)		159,812
Provision (reversal) for credit losses		(711)		—		—		(711)
Noninterest income		14,425		22,228		(1,178)		35,475
Noninterest expense
Goodwill impairment		215,252		—		—		215,252
Compensation and benefits		52,516		12,453		975		65,944
Customer service costs		60,402		—		—		60,402
Professional services and marketing costs		7,180		2,569		1,936		11,685
Other		40,234		1,922		871		43,027
(Loss) income before income taxes		(195,303)		5,284		(10,293)		(200,312)
Income tax expense (benefit)		2,672		1,552		(2,924)		1,300
Net (loss) income	$	(197,975)	$	3,732	$	(7,369)	$	(201,612)

35

ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis is intended to facilitate the understanding and assessment of significant changes and trends in our businesses that accounted for the changes in our results of operations in the three and nine months ended September 30, 2024 as compared to our results of operations in the three and nine months ended September 30, 2023; and our financial condition at September 30, 2024 as compared to our financial condition at December 31, 2023. This discussion and analysis is based on and should be read in conjunction with our consolidated financial statements and the accompanying notes thereto contained elsewhere in this report and our audited consolidated financial statements for the year ended December 31, 2023, and the notes thereto, which are set forth in Item 8 of our Annual Report on Form 10-K which we filed with the SEC on February 28, 2024.

Forward-Looking Statements

Statements contained in this report that are not historical facts or that discuss our expectations, beliefs or views regarding our future financial performance or future financial condition, or financial or other trends in our business or in the markets in which we operate, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. Often, they 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.” Such forward-looking statements are based on current information that is available to us, and on assumptions that we make, about future events or economic or financial conditions or trends over which we do not have control. In addition, our businesses and the markets in which we operate are subject to a number of risks and uncertainties. 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.

The principal risks and uncertainties to which our businesses are subject are discussed in this Item 2 and under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Therefore, you are urged to read not only the information contained in this Item 2, but also the risk factors and other cautionary information contained under the heading “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, which qualify the forward-looking statements contained in this report.

Also, our actual 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 risks and uncertainties, you are cautioned not to place undue reliance on the forward-looking statements contained in this report and not to make predictions about our future financial performance based solely on our historical financial performance.  We also disclaim any obligation to update forward-looking statements contained in this report or in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, except as may otherwise be required by applicable law or government regulations.

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP and accounting practices in the banking industry. Certain of those accounting policies are considered critical accounting policies because they require us to make estimates and assumptions regarding circumstances or trends that could materially affect the value of those assets, such as economic conditions or trends that could impact our ability to fully collect our loans or ultimately realize the carrying value of certain of our other assets. Those estimates and assumptions are made based on current information available to us regarding those economic conditions or trends or other circumstances. If changes were to occur in the events, trends or other circumstances on which our estimates or assumptions were based, or other unanticipated events were to occur that might affect our operations, we may be required under GAAP to adjust our earlier estimates and to reduce the carrying values of the affected assets on our balance sheet, generally by means of charges against income, which could also affect our results of operations in the fiscal periods when those charges are recognized. Management has identified

36

our most critical accounting policies and accounting estimates as:  allowance for credit losses – investment securities, allowance for credit losses – loans, and deferred income taxes.

Allowance for Credit Losses – Investment Securities – The ACL on investment securities is determined for both held-to-maturity and available-for-sale classifications of the investment portfolio in accordance with ASC 326 and is evaluated on a quarterly basis. The ACL for held-to-maturity investment securities is determined on a collective basis, based on shared risk characteristics, and is determined at the individual security level when we deem a security to no longer possess shared risk characteristics. Under ASC 326-20, for investment securities where we have reason to believe the credit loss exposure is remote, such as those guaranteed by the U.S. government or government sponsored entities, a zero-loss expectation is applied, and a company is not required to estimate and recognize an ACL.

For securities available-for-sale (“AFS”) in an unrealized loss position, we first evaluate whether we intend to sell, or whether it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the security amortized cost basis is written down to fair value through income. If neither criterion is met, we are required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. In determining whether a security’s decline in fair value is credit related, we consider a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security; and (v) the ability of the issuer of the security to make scheduled principal and interest payments. If, after considering these factors, the present value of expected cash flows to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, we record the decline in fair value through other comprehensive income, net of related income tax effects. We have elected to exclude accrued interest receivable on securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of a security is confirmed or when either of the criterion regarding intent or requirement to sell is met. See Note 3: Securities in the consolidated financial statements for additional information related to our allowance for credit losses on securities AFS.

Allowance for Credit Losses - Loans. Our ACL for loans is established through a provision for credit losses charged to expense and may be reduced by a recapture of previously established loss reserves, which are also reflected in the statement of income. Loans are charged against the ACL when management believes that collectability of the principal is unlikely. The ACL for loans is an amount that management believes will be adequate to absorb estimated losses on existing loans that may become uncollectible based on an evaluation of the collectability of loans and prior loan loss experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions and certain other subjective factors that may affect the borrower’s ability to pay. While we use the best information available to make this evaluation, future adjustments to our ACL may be necessary if there are significant changes in economic or other conditions that can affect the collectability in full of loans in our loan portfolios. See Note 5: Allowance for Credit Losses, in the consolidated financial statements for additional information related to the Company’s allowance for credit losses on loans.

Deferred Income Taxes. We record as a “deferred tax asset” on our balance sheet an amount equal to the tax credit and tax loss carryforwards and tax deductions (collectively “tax benefits”) that we believe will be available to us to offset or reduce income taxes in future periods. Under applicable federal and state income tax laws and regulations, tax benefits related to tax loss carryforwards may expire if they cannot be used within specified periods of time. Accordingly, the ability to fully use our deferred tax asset related to tax loss carryforwards to reduce income taxes in the future depends on the amount of taxable income that we generate during those time periods. At least once each year, or more frequently, if warranted, we make estimates of future taxable income that we believe we are likely to generate during those future periods. If we conclude, on the basis of those estimates and the amount of the tax benefits available to us, that it is more likely than not that we will be able to fully utilize those tax benefits prior to their expiration, we recognize the deferred tax asset in full on our balance sheet. On the other hand, if we were to conclude on the basis of those estimates and the amount of the tax benefits available to us that it has become more likely than not that we will be unable to utilize those tax benefits in full prior to their expiration, then we would establish a valuation allowance to reduce the deferred tax asset on our balance

37

sheet to the amount with respect to which we believe it is still more likely than not that we will be able to use to offset or reduce taxes in the future. The establishment of such a valuation allowance, or any change in an existing valuation allowance, would be effectuated through the provision for income taxes for the period in which such valuation allowance is established or changed.

For complete discussion and disclosure of other accounting policies, see Note 1: Summary of Significant Accounting Policies of the Company’s consolidated financial statements in both this quarterly filing as well as our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

We have two business segments, “Banking” and “Investment Management and Wealth Planning” (“Wealth Management”). Banking includes the operations of FFB, FFIS, FFPF, and Blue Moon Management LLC and Wealth Management includes the operations of FFA. The financial position and operating results of the stand-alone holding company, FFI, are included under the caption “Other” in certain of the tables that follow, along with any consolidation elimination entries.

Overview and Recent Developments

For the quarter ended September 30, 2024, the Company reported a net loss of $82.2 million, compared to net income of $3.1 million for the prior quarter and net income of $2.2 million for the quarter ended September 30, 2023.  In comparison to the prior quarter, current quarter results were impacted primarily by the recording of a $117.5 million Lower of Cost or Market (“LOCOM”) adjustment, resulting from the reclassification of a portion of the multifamily loan portfolio totaling $1.9 billion in principal balance from loans held for investment to loans held for sale.  Loans held for sale are accounted for at the lower of cost or fair value and as a result, the LOCOM adjustment, equating to 93.8% fair-value pricing, was recorded to earnings in the quarter.  The reclassification is intended to provide the Company with flexibility as it explores its options for securitizing or selling the loans and maximizing final execution pricing.  Offsetting the LOCOM adjustment, the Company reported an increase in net interest income after provision for credit losses of $4.2 million or 9.4% compared to the prior quarter, as increases in interest income earned on interest-earning assets offset relatively smaller increases in interest expense on interest-bearing liabilities.  Net interest income after provision for credit losses totaled $48.8 million for the quarter ended September 30, 2024, compared to $44.6 million for the prior quarter and $54.1 million for the quarter ended September 30, 2023.  Net interest margin (“NIM”) increased to 1.50%  for the quarter ended September 30, 2024, compared to 1.36% for the prior quarter.  For the quarter ended September 30, 2024 the Company recorded provision for credit losses of $282 thousand, compared to a reversal of provision of $806 thousand in the prior quarter.  The provision for credit losses recorded in the current quarter was a return to levels normally recorded following the prior quarter’s reversal.  The ACL related to loans held for investment totaled $29.3 million, relatively unchanged from the prior quarter.  The coverage ratio of ACL to total loans held for investment increased from 29 basis points in the prior quarter to 36 basis points in the current quarter.  The increase reflects certain adjustments made to the qualitative reserve which updated adjustments for the repricing and interest rate risks in the multifamily portfolio, the potential risk associated with substandard loans not impaired and potential impact of continued high interest rates on the business and retail loan portfolios.  Consideration for credit risk on the loans held for sale portfolio is considered in the fair value instead of the ACL.  Noninterest income, excluding the $117.5 million LOCOM adjustment, totaled $11.9 million for the quarter ended September 30, 2024, compared to $13.7 million for the prior quarter.  Noninterest expense totaled $60.2 million for the quarter ended September 30, 2024, compared to $55.6 million for the prior quarter. The Company recorded an income tax benefit of $34.8 million for the quarter ended September 30, 2024, compared to $421 thousand for the prior quarter.

At September 30, 2024, the Company had total assets of $13.4 billion, including $8.1 billion of loans held for investment, net of deferred fees and allowance for credit losses, $1.8 billion in loans held for sale, net of deferred fees, $1.1 billion of cash and cash equivalents, $1.3 billion in investment securities available-for-sale, and $0.7 billion in investment securities held-to-maturity.  This compares to total assets of $13.3 billion, including $10.1 billion of total loans held for investment, net of deferred fees and allowance for credit losses, $1.3 billion of cash and cash equivalents, $0.8 billion in investment securities held-to-maturity, and $0.7 billion in investment securities available-for-sale at December 31, 2023.  Cash and cash equivalents represented approximately 8.3% of total assets at September 30, 2024, compared to 10% of total assets at December 31, 2023.  For the nine-month period ended September 30, 2024, total assets increased $49.3 million or 0.4%, largely due to an increase in securities available-for-sale which increased $0.6 billion, resulting

38

from $1.8 billion in new security purchases offset by $1.3 billion in sales and maturities, offset by decreases in total loans and other asset categories.

At September 30, 2024, the Company had total liabilities of $12.3 billion, including $10.3 billion in deposits, $1.7 billion in borrowings, and $173 million in subordinated debt.  This compares to total liabilities of $12.4 billion, including $10.7 billion in deposits, $1.4 billion in borrowings, and $173 million in subordinated debt at December 31, 2023.  For the nine-month period ended September 30, 2024, total liabilities decreased $95.1 million or 0.8%.  The decrease in total liabilities is due primarily to a $0.4 billion decrease in deposits, offset by a $0.3 billion increase in borrowings.  The decrease in deposits was the result of decreases in interest-bearing demand accounts and certificates of deposit, offset by increases in noninterest-bearing demand accounts and money market and savings accounts.  The increase in borrowings was primarily due to the addition of $500 million in FHLB advances offset by a $178 million paydown of Federal Reserve Bank advances.  Borrowings as a percentage of total assets equaled 12.6% at September 30, 2024, compared to 10.6% of total assets at December 31, 2023.  Our loan to deposit ratio was 95.9% as of September 30, 2024 compared to 95.2% as of December 31, 2023.

At September 30, 2024, the Company had total shareholders’ equity of $1.1 billion, compared to $925.3 million at December 31, 2023.  For the nine-month period ended September 30, 2024, total shareholders’ equity increased $144.5 million or 15.6%.  The increase in shareholders’ equity was largely due to the aforementioned July 2024 Capital Raise, which consisted of $228 million gross proceeds less $13.5 million in issuance costs, resulting in net proceeds of $214.5 million.  In addition, the Company reported an increase in accumulated other comprehensive income of $8.7 million for the nine-month period ended September 30, 2024, largely due to an increase in unrealized holding gains on available-for-sale investment securities, offset by an unrealized loss on the cash flow hedge during the period. The additional capital and increase in accumulated other comprehensive income were offset by the net loss of $78.3 million for the nine-months ended September 30, 2024, and by $1.1 million in fourth quarter 2023 and first quarter 2024 dividends paid to shareholders.  

Results of Operations

The primary sources of revenue for Banking are net interest income, fees from its deposits and trust services, gains on the sale of loans and investment securities available-for-sale, certain loan fees, and consulting fees. The primary sources of revenue for Wealth Management are asset management fees assessed on the balance of assets under management (“AUM”).

39

The following table shows key operating results for each of our business segments for the quarter ended September 30:

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
2024:
Interest income	$	157,156	$	—	$	—	$	157,156
Interest expense		106,317		—		1,720		108,037
Net interest income		50,839		—		(1,720)		49,119
Provision for credit losses		282		—		—		282
Noninterest income		4,598		7,704		(365)		11,937
LHFS LOCOM adjustment		(117,517)						(117,517)
Noninterest expense		53,206		5,769		1,250		60,225
(Loss) income before income taxes		(115,568)		1,935		(3,335)		(116,968)
Income tax (benefit) expense		(34,399)		551		(946)		(34,794)
Net (loss) income	$	(81,169)	$	1,384	$	(2,389)	$	(82,174)
2023:
Interest income	$	144,765	$	—	$	—	$	144,765
Interest expense		90,960		—		1,732		92,692
Net interest income		53,805		—		(1,732)		52,073
Provision (reversal) for credit losses		(2,015)		—		—		(2,015)
Noninterest income		4,557		7,522		(381)		11,698
Noninterest expense
Operating		57,987		5,262		957		64,206
Income (loss) before income taxes		2,390		2,260		(3,070)		1,580
Income tax (benefit) expense		(409)		659		(850)		(600)
Net income (loss)	$	2,799	$	1,601	$	(2,220)	$	2,180

Third Quarter of 2024 Compared to Third Quarter of 2023

Combined net loss for the third quarter of 2024 was $82.2 million, compared to net income of $2.2 million for the third quarter of 2023.  Combined net loss before income taxes for the third quarter of 2024 was $117.0 million, compared to combined net income before taxes of $1.6 million for the third quarter of 2023.  The $118.6 million decrease in combined net income before taxes from the year-ago quarter was primarily due to a decrease in net income before taxes in the Banking segment of $115.6 million, resulting primarily from the LHFS LOCOM adjustment of $117.5 million associated with the transfer of $1.9 billion in multifamily loans from loans held for investment to loans held for sale.  Net interest income decreased $3.0 million from the year-ago quarter.  Interest income increased $12.4 million or 8.6% from the year-ago quarter but was offset by an increase in interest expense of $15.3 million or 16.6% from the year-ago quarter.  Net interest income, noninterest income, and noninterest expense are discussed in more detail in the tables that follow.  The decrease in Wealth Management net income before taxes of $0.3 million was primarily due to a $0.5 million increase in noninterest expense, offset by an $0.2 million increase in noninterest income.

Provision for credit losses. The provision for credit losses represents our estimate of the amount necessary to be charged against the current period’s earnings to maintain the ACL for loans and investments at a level that we consider adequate in relation to the estimated losses inherent in the loan and investment portfolios. The provision for credit losses for loans is impacted by changes in loan balances as well as changes in estimated loss assumptions and charge-offs and recoveries. The amount of the provision for loans also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, current economic conditions and certain other subjective factors that may affect the ability of borrowers to meet their repayment obligations to us.  For the quarter ended September 30, 2024, we recorded a provision for credit losses of $0.3 million, compared to a reversal of provision expense of $2.0 million for the year-ago quarter.  The third quarter’s provision consisted primarily of additions to the ACL for the loans held for investment portfolio and unused commitments, offset slightly by a decrease in provision related to investment securities.  For the quarter ended September 30, 2024, we recorded net charge-offs of $0.3 million,

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or 0.01% of average loans on an annualized basis compared to $0.4 million, or 0.01% of average loans on an annualized basis in the year-ago quarter.

The following table shows key operating results for each of our business segments for the nine months ended September 30:

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
2024:
Interest income	$	458,523	$	—	$	—	$	458,523
Interest expense		322,059		—		5,130		327,189
Net interest income		136,464		—		(5,130)		131,334
Provision for credit losses		53		—		—		53
Noninterest income		16,522		22,843		(1,087)		38,278
LHFS LOCOM adjustment		(117,517)		—		—		(117,517)
Noninterest expense		147,047		17,129		2,287		166,463
(Loss) income before income taxes		(111,631)		5,714		(8,504)		(114,421)
Income tax (benefit) expense		(35,365)		1,632		(2,392)		(36,125)
Net (loss) income	$	(76,266)	$	4,082	$	(6,112)	$	(78,296)
2023:
Interest income	$	427,093	$	—	$	—	$	427,093
Interest expense		261,948		—		5,333		267,281
Net interest income		165,145		—		(5,333)		159,812
Provision (reversal) for credit losses		(711)		—		—		(711)
Noninterest income		14,425		22,228		(1,178)		35,475
Noninterest expense
Goodwill impairment		215,252		—		—		215,252
Operating		160,332		16,944		3,782		181,058
(Loss) income before income taxes		(195,303)		5,284		(10,293)		(200,312)
Income tax expense (benefit)		2,672		1,552		(2,924)		1,300
Net (loss) income	$	(197,975)	$	3,732	$	(7,369)	$	(201,612)

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

Combined net loss for the nine months ended September 30, 2024 was $78.3 million, compared to a net loss of $201.6 million for the year-ago period.  Combined net loss before income taxes for the nine months ended September 30, 2024 was $114.4 million, compared to combined net loss before taxes of $200.3 million for the year-ago period.  The combined net losses in both periods were largely due to nonrecurring items, in particular the $117.5 million LOCOM adjustment in 2024, and the $215.3 million goodwill impairment charge in 2023.  Excluding these items, combined net income before taxes would have been $3.1 million for the nine months ended September 30, 2024, compared to $14.9 million for the year-ago period.  The $11.8 million decrease in adjusted combined net income before taxes from the year-ago period was primarily due to a decrease in net interest income of $28.5 million, offset by a $2.8 million increase in noninterest income and a $14.6 million decrease in noninterest expense.  The decrease in net interest income from the year-ago period was due to an increase in interest expense primarily due to increases in interest expense associated with deposits, offset by an increase in interest income.  Interest income increased $31.4 million or 7.4% from the year-ago period but was offset by an increase in interest expense of $59.9 million or 22.4% from the year-ago period.  Net interest income, noninterest income, and noninterest expense are discussed in more detail in the tables that follow.  The increase in Wealth Management net income before taxes of $0.4 million was primarily due to an increase in noninterest income of $0.6 million, offset by a $0.2 million increase in noninterest expense.

Provision for credit losses.  For the nine months ended September 30, 2024, we recorded a provision for credit losses of $53 thousand, compared to a reversal of provision expense of $0.7 million in the year-ago period.  At September 30, 2024, the allowance for credit losses on the loans held for investment portfolio totaled $29.3 million, compared to

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$29.2 million at December 31, 2024.  The coverage ratio of ACL to total loans held for investment increased from 29 basis points in the prior quarter to 36 basis points in the current quarter.  The increase reflects certain adjustments made to the qualitative reserve which updated adjustments for the repricing and interest rate risks in the multifamily portfolio, the potential risk associated with substandard loans not impaired and potential impact of continued high interest rates on the business and retail loan portfolios.  For the nine-month period ended September 30, 2024, we recorded net charge-offs of $0.8 million, or 0.01% of average loans on an annualized basis compared to $2.5 million or 0.03% of average loans on an annualized basis in the year-ago period.    

Net Interest Income. The principal component of the Company’s earnings is net interest income, which is the difference between the interest and fees earned on loans and investments (interest-earning assets) and the interest paid on deposits and borrowed funds (interest-bearing liabilities). Net interest margin is net interest income as a percentage of average interest-earning assets for the period. The level of interest rates and the volume and mix of interest-earning assets and interest-bearing liabilities impact net interest income and net interest margin. The net interest rate spread is the yield on average interest-earning assets minus the cost of average interest-earning liabilities. Our net interest income, net interest rate spread, and net interest margin are sensitive to general business and economic conditions. We manage  net interest income through affecting changes in the mix of interest-earning assets as well as the mix of interest-bearing liabilities, changes in the level of interest-bearing liabilities in proportion to interest-earning assets, and the growth and maturity of earning assets. For further discussion on our interest rate risk management practices, see “Interest Rate Risk Management” within this Item 2.

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The following tables set forth information regarding (i) the total dollar amount of interest income from interest-earning assets and the resultant average yields on those assets; (ii) the total dollar amount of interest expense and the average rate of interest on our interest-bearing liabilities; (iii) net interest income; (iv) net interest rate spread; and (v) net interest margin for the three and nine months ended September 30:

	Three Months Ended September 30:
	2024						2023
	Average				Average		Average				Average
(dollars in thousands)	Balances		Interest		Yield /Rate		Balances		Interest		Yield /Rate
Interest-earning assets:
Loans, including LHFS	$	10,055,865	$	120,285	4.77	%	$	10,472,309	$	124,363	4.73	%
Securities AFS		1,278,765		17,199	5.38	%		501,625		6,068	4.84	%
Securities HTM		741,873		4,176	2.25	%		805,370		4,532	2.25	%
Cash, FHLB stock, and fed funds		1,127,688		15,496	5.47	%		866,707		9,802	4.49	%
Total interest-earning assets		13,204,191		157,156	4.75	%		12,646,011		144,765	4.56	%
Noninterest-earning assets:
Nonperforming assets		19,726						9,035
Other		251,248						249,021
Total assets	$	13,475,165					$	12,904,067
Interest-bearing liabilities:
Demand deposits	$	2,073,259	$	20,388	3.91	%	$	2,350,353	$	22,240	3.75	%
Money market and savings		3,527,161		35,850	4.04	%		3,136,053		28,275	3.58	%
Certificates of deposit		2,669,097		32,897	4.90	%		2,926,119		34,299	4.65	%
Total interest-bearing deposits		8,269,517		89,135	4.29	%		8,412,525		84,814	4.00	%
Borrowings		1,691,936		17,182	4.04	%		587,205		6,158	4.16	%
Subordinated debt		173,435		1,720	3.94	%		173,372		1,720	3.94	%
Total interest-bearing liabilities		10,134,888		108,037	4.24	%		9,173,102		92,692	4.01	%
Noninterest-bearing liabilities:
Demand deposits		2,124,562						2,676,340
Other liabilities		124,806						138,011
Total liabilities		12,384,256						11,987,453
Shareholders’ equity		1,090,909						916,614
Total liabilities and equity	$	13,475,165					$	12,904,067
Net Interest Income			$	49,119					$	52,073
Net Interest Rate Spread					0.51	%					0.55	%
Net Interest Margin					1.50	%					1.66	%

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	Nine Months Ended September 30:
	2024						2023
	Average				Average		Average				Average
(dollars in thousands)	Balances		Interest		Yield /Rate		Balances		Interest		Yield /Rate
Interest-earning assets:
Loans, including LHFS	$	10,084,178	$	358,973	4.75	%	$	10,568,012	$	368,477	4.65	%
Securities AFS		1,160,394		46,187	5.31	%		331,449		10,845	4.36	%
Securities HTM		762,126		12,937	2.26	%		828,952		13,418	2.16	%
FHLB stock, fed funds and deposits		1,012,308		40,426	5.33	%		1,038,722		34,353	4.42	%
Total interest-earning assets		13,019,006		458,523	4.70	%		12,767,135		427,093	4.47	%
Noninterest-earning assets:
Nonperforming assets		17,822						14,341
Other		261,671						402,266
Total assets	$	13,298,499					$	13,183,742
Interest-bearing liabilities:
Demand deposits	$	2,467,225	$	74,328	4.02	%	$	2,384,829	$	60,491	3.39	%
Money market and savings		3,354,460		100,005	3.98	%		3,131,660		75,323	3.22	%
Certificates of deposit		2,746,876		100,682	4.90	%		2,548,552		84,072	4.41	%
Total interest-bearing deposits		8,568,561		275,015	4.29	%		8,065,041		219,886	3.65	%
Borrowings		1,541,682		47,044	4.08	%		1,163,249		42,280	4.86	%
Subordinated debt		173,419		5,130	3.95	%		173,356		5,115	3.94	%
Total interest-bearing liabilities		10,283,662		327,189	4.25	%		9,401,646		267,281	3.80	%
Noninterest-bearing liabilities:
Demand deposits		1,903,046						2,588,053
Other liabilities		131,742						134,791
Total liabilities		12,318,450						12,124,490
Shareholders’ equity		980,049						1,059,252
Total liabilities and equity	$	13,298,499					$	13,183,742
Net Interest Income			$	131,334					$	159,812
Net Interest Rate Spread					0.45	%					0.67	%
Net Interest Margin					1.34	%					1.67	%

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Net interest income is impacted by the volume (changes in volume multiplied by prior rate), interest rate (changes in rate multiplied by prior volume) and mix of interest-earning assets and interest-bearing liabilities. The following table provides a breakdown of the changes in net interest income due to volume and rate changes for the three and nine months ended September 30, 2024, as compared to the three and nine months ended September 30, 2023:

	Quarter Ended							Nine Months Ended
	September 30, 2024 vs. 2023						September 30, 2024 vs. 2023
	Increase (Decrease) due to						Increase (Decrease) due to
(dollars in thousands)	Volume		Rate		Total		Volume		Rate		Total
Interest earned on:
Loans, including LHFS	$	(5,112)	$	1,034	$	(4,078)	$	(16,964)	$	7,460	$	(9,504)
Securities AFS		10,382		749		11,131		32,498		2,844		35,342
Securities HTM		(358)		2		(356)		(1,054)		573		(481)
Cash, FHLB stock, and fed funds		3,304		2,390		5,694		(863)		6,936		6,073
Total interest-earning assets		8,216		4,175		12,391		13,617		17,813		31,430
Interest paid on:
Demand deposits		(2,750)		898		(1,852)		2,211		11,626		13,837
Money market and savings		3,771		3,804		7,575		5,978		18,704		24,682
Certificates of deposit		(3,189)		1,787		(1,402)		6,925		9,685		16,610
Borrowings		11,206		(182)		11,024		12,321		(7,557)		4,764
Subordinated debt		—		—		—		7		8		15
Total interest-bearing liabilities		9,038		6,307		15,345		27,442		32,466		59,908
Net interest (expense) income	$	(822)	$	(2,132)	$	(2,954)	$	(13,825)	$	(14,653)	$	(28,478)

Net interest income was $49.1 million for the third quarter of 2024, compared to $54.1 million for the third quarter of 2023. The overall decrease in net interest income from the year-ago period was primarily driven by rates on interest-bearing liabilities increasing faster than rates on interest-earning assets, and average interest-bearing liability balances increasing more than those of average interest-earning assets.

Interest income increased to $157.2 million for the third quarter of 2024, compared to $144.8 million for the third quarter of 2023.  The increase in interest income was due to an increase in average yield earned on interest-earning assets, as well as an increase in average interest-earning asset balances.  Yields on interest-earning assets averaged 4.75% for the third quarter of 2024, compared to 4.56% for the third quarter of 2023, an increase of 19 basis points.  Average interest-earning asset balances increased 4.4% to $13.2 billion for the third quarter of 2024, compared to $12.6 billion for the third quarter of 2023.  Yields on the loan portfolio increased to 4.77% in the third quarter of 2024, compared to 4.73% for the third quarter of 2023, while average balances decreased to $10.1 billion for the third quarter of 2024, compared to average balances of $10.5 billion for the third quarter of 2023.  New loan fundings totaled $366 million at an average yield of 8.23% for the third quarter of 2024, compared to new loan fundings of $244.6 million at an average yield of 8.35% for the third quarter of 2023.  Yields on the combined AFS and HTM securities portfolio increased to 4.23% for the third quarter of 2024, compared to 3.24% for the third quarter of 2023, while combined average balances increased to $2.0 billion for the third quarter of 2024, compared to combined average balances of $1.3 billion for the third quarter of 2023.  The increase in combined average balances was due to the acquisition of higher-yielding and highly liquid AFS securities, primarily agency mortgage-backed securities.

Interest expense increased to $108.0 million for the third quarter of 2024, compared to $92.7 million for the third quarter of 2023.  The increase in interest expense was due to increases in both average interest-bearing liability balances as well as average rates paid on such balances.  Average interest-bearing liability balances, consisting of interest-bearing deposits, borrowings, and subordinated debt, increased 10.5% to $10.1 billion for the third quarter of 2024, compared to $9.2 billion for the third quarter of 2023. Rates on interest-bearing liability balances averaged 4.27% for the second quarter of 2024, compared to 3.97% for the second quarter of 2023.  Rates on interest-bearing liability balances increased primarily due to an increase in rates paid on interest-bearing deposits, which averaged 4.29% for the third quarter of 2024, compared to 4.00% for the third quarter of 2023, an increase of 29 basis points.  Rates on interest-bearing deposits increased from the year-ago period due to market competition for deposits which has driven rates paid to higher levels, as well as client migration from noninterest-bearing demand accounts to higher-rate money market, and higher-yielding savings accounts.  

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Average rates paid on borrowings decreased to 4.04% for the third quarter of 2024, compared to 4.16% for the third quarter of 2023, while average borrowings increased to $1.7 billion for the third quarter of 2024, compared to $0.6 billion for the third quarter of 2023.  Average borrowings increased as the Company locked-in lower-rate term borrowings and utilized the borrowings primarily to purchase higher-yielding, high-quality securities to improve the balance sheet’s rate profile and more efficiently enhance recurring revenue.  

Net interest income was $131.3 million for the nine-month period ended September 30 2024, compared to $159.8 million for the year-ago period. The overall decrease in net interest income from the year-ago period was primarily driven by rates on interest-bearing liabilities increasing faster than rates on interest-earning assets, and average interest-bearing liability balances increasing at a higher rate than those of average interest-earning assets.

Interest income increased to $458.5 million for the nine-month period ended September 30, 2024, compared to $427.1 million for the year-ago period.  The increase in interest income was due to increases in both average interest-earning asset balances as well as average yield earned on such balances.  Average interest-earning asset balances increased 2.0% to $13.0 billion for the nine-month period ended September 30, 2024, compared to $12.8 billion for the year-ago period.  Yields on interest-earning assets increased to 4.70% for the nine-month period ended September 30, 2024, compared to 4.47% for the year-ago period, an increase of 23 basis points.  Yields on the loan portfolio increased to 4.75% for the nine-month period ended September 30, 2024, compared to 4.65% for the year-ago period, while average balances decreased to $10.1 billion for the nine-month period ended September 30, 2024, compared to average balances of $10.6 billion in the year-ago period.  New loan fundings totaled $1.2 billion at an average yield of 8.25% for the nine-month period ended September 30, 2024, compared to new loan fundings of $1.2 billion at an average yield of 7.79% for the year-ago period.  Yields on the combined AFS and HTM securities portfolio increased to 4.10% for the nine-month period ended September 30, 2024, compared to 2.79% for the year-ago period, while combined average balances increased to $1.9 billion for the nine-month period ended September 30, 2024, compared to combined average balances of $1.2 billion for the year-ago period.  The increase in combined average balances was due to the acquisition of higher-yielding and highly liquid AFS securities, primarily agency mortgage-backed securities.

Interest expense increased to $327.2 million for the nine-month period ended September 30, 2024, compared to $267.3 million for the year-ago period.  The increase in interest expense was due to increases in both average interest-bearing liability balances as well as average rates paid on such balances.  Average interest-bearing liability balances, consisting of interest-bearing deposits, borrowings, and subordinated debt, increased 9.6% to $10.3 billion for the nine-month period ended September 30, 2024, compared to $9.4 billion for the year-ago period.  Rates on interest-bearing liability balances averaged 4.25% for the nine-month period ended September 30, 2024, compared to 3.80% for the year-ago period.  Rates on interest-bearing liability balances increased primarily due to an increase in rates paid on interest-bearing deposits, which averaged 4.29% for the nine-month period ended September 30, 2024, compared to 3.65% for the year-ago period, an increase of 64 basis points.  Rates on interest-bearing deposits increased due to market competition for deposits which has driven rates paid to higher levels, as well as client migration from noninterest-bearing demand accounts to higher-rate money market and higher-yielding savings accounts. Average rates paid on borrowings decreased to 4.08% for the nine-month period ended September 30, 2024, compared to 4.86% for the year-ago period, while average borrowings increased to $1.5 billion for the nine-month period ended September 30, 2024, compared to $1.2 billion for the year-ago period.  Average rates paid on borrowings for the nine-month period ended September 30, 2024 decreased as the composition of borrowings changed from primarily higher-rate short-term FHLB advances in the nine-month period ended September 30, 2023 to predominately lower-rate FHLB putable advances during the nine-month period ended September 30, 2024.

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Noninterest income. Noninterest income for Banking includes fees charged to clients for trust services and deposit services, consulting fees, prepayment and late fees charged on loans, gain on sale of loans, securities, and REO, and gains and losses from capital market activities, including those associated with changes in the valuation of the loans held for sale portfolio.  The following table provides a breakdown of noninterest income for Banking for the three and nine months ended September 30, 2024 and 2023:

(dollars in thousands)	2024		2023
Three Months Ended September 30:
Trust and consulting fees	$	1,746	$	1,577
Loan related fees		1,588		1,765
Deposit charges		425		502
Loss on sale of loans		(13)		—
LHFS LOCOM adjustment		(117,517)		—
Other		852		713
Total noninterest income	$	(112,919)	$	4,557
Nine Months Ended September 30:
Trust and consulting fees	$	4,946	$	5,305
Loan related fees		4,058		5,438
Deposit charges		1,355		1,530
Gain on sale of loans		665		—
Gain on sale of securities available-for-sale		1,204		—
Capital market activities		1,673		—
Loss on sale of assets		(391)		—
Gain on sale of REO		679		—
LHFS LOCOM adjustment		(117,517)		—
Other		2,333		2,152
Total noninterest income	$	(100,995)	$	14,425

Noninterest income in Banking was ($112.9) million for the third quarter of 2024, compared to $4.6 million for the third quarter of 2023. Noninterest income for the third quarter of 2024 includes a $117.5 million LHFS LOCOM adjustment associated with the transfer of $1.9 billion in multifamily loans from loans held for investment to loans held for sale during the quarter.  Excluding the LHFS LOCOM adjustment, noninterest income would have been $4.6 million for the third quarter of 2024, relatively unchanged from the year-ago period.  Noninterest income in Banking was ($101.0) million for the nine-month period ended September 30, 2024, compared to $14.4 million for the year-ago period.  Excluding the LHFS LOCOM adjustment, noninterest income would have been $16.5 million for the nine-month period ended September 30, 2024, an increase of $2.1 million from the year-ago period.  The $2.1 million increase in noninterest income was due primarily to gains on the sale of loans, securities available-for-sale, and REO totaling $2.5 million, $1.7 million in recognized gains associated with a cash-flow hedge which are classified as capital market activities, and $0.2 million increase in other noninterest income, offset by a $0.4 million decrease in trust and consulting fees, $1.4 million decrease in loan related fees, $0.4 million loss on sale of assets, and $0.2 million decrease in deposit charges.    

Noninterest income for Wealth Management includes fees charged to high net-worth clients for managing their assets and for providing financial planning consulting services. The following table provides the amounts of noninterest income for Wealth Management for the three and nine months ended September 30, 2024 and 2023:

(dollars in thousands)	2024		2023
Three Months Ended September 30:
Noninterest income	$	7,704	$	7,522
Nine Months Ended September 30:
Noninterest income	$	22,843	$	22,228

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Noninterest income for Wealth Management was $7.7 million for the third quarter of 2024, compared to $7.5 million for the third quarter of 2023. The $0.2 million increase in noninterest income was due primarily to a $0.4 million increase in fees earned on AUM balances as average AUM balances earning fees increased from $5.2 billion per month for the third quarter of 2023 to $5.5 billion per month for the third quarter of 2024.  Noninterest income for Wealth Management was $22.8 million for the nine-month period ended September 30, 2024, compared to $22.2 million for the year-ago period.  The $0.6 million increase in noninterest income was due primarily to a $0.6 million increase in fees earned on AUM balances as average AUM balances earning fees increased from $5.2 billion per month for the nine-month period ended September 30, 2024 to $5.4 billion per month for the nine-month period ended September 30, 2024.  

The following table summarizes the activity in our AUM for the periods indicated:

			Existing account
	Beginning		Additions/		New
(dollars in thousands)	Balance		Withdrawals		Accounts		Terminations		Performance		Ending balance
Three Months Ended September 30, 2024:
Fixed income	$	1,758,090	$	(16,651)	$	11,084	$	(47,521)	$	15,218	$	1,720,220
Equities		2,947,633		(111,577)		116,182		(106,825)		112,468		2,957,881
Cash and other		782,996		21,925		10,505		(33,459)		39,421		821,388
Total	$	5,488,719	$	(106,303)	$	137,771	$	(187,805)	$	167,107	$	5,499,489
Nine Months Ended September 30, 2024:
Fixed income	$	1,849,056	$	(73,125)	$	40,968	$	(67,388)	$	(29,291)	$	1,720,220
Equities		2,609,033		(67,931)		163,519		(136,085)		389,345		2,957,881
Cash and other		791,859		(38,810)		36,918		(45,732)		77,153		821,388
Total	$	5,249,948	$	(179,866)	$	241,405	$	(249,205)	$	437,207	$	5,499,489
Three Months Ended September 30, 2023:
Fixed income	$	1,892,454	$	(53,242)	$	48,733	$	(40,827)	$	(39,274)	$	1,807,844
Equities		2,673,182		(56,911)		26,205		(125,670)		(97,072)		2,419,734
Cash and other		753,327		54,790		1,981		(25,937)		11,150		795,311
Total	$	5,318,963	$	(55,363)	$	76,919	$	(192,434)	$	(125,196)	$	5,022,889
Nine Months Ended September 30, 2023:
Fixed income	$	1,699,554	$	87,816	$	113,148	$	(94,951)	$	2,277	$	1,807,844
Equities		2,383,268		(161,622)		69,937		(172,003)		300,154		2,419,734
Cash and other		902,455		(184,133)		57,283		(35,754)		55,460		795,311
Total	$	4,985,277	$	(257,939)	$	240,368	$	(302,708)	$	357,891	$	5,022,889

AUM balances were $5.5 billion at September 30, 2024, compared to $5.0 billion at September 30, 2023 and $5.2 billion at December 31, 2023.  The $250 million increase in AUM during the nine-month period ended September 30, 2024 was the net result of $241 million of new accounts, $437 million of performance gains, and terminations and net withdrawals of $429 million.

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Noninterest Expense. The following table provides a breakdown of noninterest expense for Banking and Wealth Management for the periods indicated:

	Banking				Wealth Management
(dollars in thousands)	2024		2023		2024		2023
Three Months Ended September 30:
Compensation and benefits	$	15,688	$	15,571	$	4,154	$	3,835
Occupancy and depreciation		8,550		8,798		463		455
Professional services and marketing		3,298		2,430		994		853
Customer service costs		18,954		24,683		—		—
Other		6,716		6,505		158		119
Total noninterest expense	$	53,206	$	57,987	$	5,769	$	5,262
Nine Months Ended September 30:
Compensation and benefits	$	45,681	$	52,515	$	12,328	$	12,453
Occupancy and depreciation		25,662		25,901		1,446		1,430
Professional services and marketing		8,486		7,180		2,821		2,569
Customer service costs		45,796		60,402		—		—
Other		21,422		14,334		534		492
Total operating expense		147,047		160,332		17,129		16,944
Goodwill impairment		—		215,252		—		—
Total noninterest expense	$	147,047	$	375,584	$	17,129	$	16,944

Noninterest expense in Banking was $53.2 million for the third quarter of 2024, compared to $58.0 million for the third quarter of 2023.  The $4.8 million decrease in noninterest expense was largely due to the $5.7 million decrease in customer service costs, offset by a $0.9 million increase in professional services and marketing expense.  The decrease in customer service costs was due to a decrease in the average balances of depository accounts receiving earnings credits as well as a decrease in the average rates paid on such accounts.  The increase in professional services and marketing expense was largely due to professional services associated with prior quarters’ activities as well as the shareholder meeting following the July 2024 Capital Raise.    

Noninterest expense in Wealth Management was $5.8 million for the third quarter of 2024, compared to $5.3 million for the third quarter of 2023.  The increase was due primarily to a $0.3 million increase in compensation and benefits expense, primarily due to higher commission expense.

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Noninterest expense in Banking was $147.0 million for the nine-month period ended September 30, 2024, compared to $375.6 million for the year-ago period. The $228.6 million decrease in noninterest expense was largely due to the $215.3 million goodwill impairment charge recorded in June 2023.  Excluding this one-time charge, operating noninterest expense totaled $160.3 million for the nine-month period ended September 30, 2023.  The $13.3 million decrease in operating noninterest expense was largely due to a $14.6 million decrease in customer service costs, and a $6.8 million decrease in compensation and benefit costs, offset by a $7.1 million increase in other expense and a $1.3 million increase in professional services and marketing expense. The decrease in customer service costs was due to a decrease in the average balances of depository accounts receiving earnings credits as well as a decrease in the rates paid on such balances in the nine-month period ended September 30, 2024, compared to the year-ago period.  The decrease in compensation and benefit costs was primarily due to decreased staffing levels during the nine-month period ended September 30, 2024, compared to levels during the year-ago period.  Average Banking FTEs were 492.3 for the nine-month period ended September 30, 2024, compared to 551.2 for the year-ago period.  Staffing levels were reduced in the first and second quarters of 2023 and have remained at reduced levels due to efforts to maximize efficiency and contain costs.  The increase in other expense was due largely to a $6.2 million increase in FDIC insurance costs in the nine-month period ended September 30, 2024, compared to the year-ago period. The increase in professional services and marketing was largely attributable to increases in external accounting and information technology and infrastructure expenses.

Noninterest expense in Wealth Management was $17.1 million for the nine-month period ended September 30, 2024, compared to $17.0 million for the year-ago period. The $0.1 million increase in noninterest expense in Wealth Management was largely due to slight increase in professional services and marketing expense, offset by a slight decrease in compensation and benefits expense.  Average Wealth Management FTEs were 63.2 for the nine-month period ended September 30, 2024, compared to 66.2 for the year-ago period.  

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Financial Condition

The following table shows the financial position for each of our business segments, and of FFI and elimination entries used to arrive at our consolidated totals which are included in the column labeled Other and Eliminations, as of:

			Wealth		Other and
(dollars in thousands)	Banking		Management		Eliminations		Total
September 30, 2024:
Cash and cash equivalents	$	1,106,166	$	19,262	$	(19,006)	$	1,106,422
Securities AFS, net		1,306,120		—		—		1,306,120
Securities HTM		734,863		—		—		734,863
Loans held for sale		1,788,395		—		—		1,788,395
Loans held for investment, net		8,059,563		—		—		8,059,563
Investment in FHLB stock		37,810		—		—		37,810
Accrued interest receivable		53,766		—		—		53,766
Deferred taxes		63,243		128		1,760		65,131
Premises and equipment		36,294		175		136		36,605
Real estate owned ("REO")		6,210		—		—		6,210
Bank owned life insurance		49,650		—		—		49,650
Core deposit intangibles		3,888		—		—		3,888
Other assets		100,509		529		27,100		128,138
Total assets	$	13,346,477	$	20,094	$	9,990	$	13,376,561
Deposits	$	10,333,098	$	—	$	(28,494)	$	10,304,604
Borrowings		1,691,453		—		—		1,691,453
Subordinated debt		—		—		173,444		173,444
Derivative liabilities		5,124		—		—		5,124
Intercompany balances		2,166		1,004		(3,170)		—
Accounts payable and other liabilities		111,717		2,441		17,981		132,139
Shareholders’ equity		1,202,919		16,649		(149,771)		1,069,797
Total liabilities and equity	$	13,346,477	$	20,094	$	9,990	$	13,376,561
December 31, 2023:
Cash and cash equivalents	$	1,326,237	$	4,746	$	(4,354)	$	1,326,629
Securities AFS, net		703,226		—		—		703,226
Securities HTM		789,578		—		—		789,578
Loans held for investment, net		10,148,597		—		—		10,148,597
Investment in FHLB stock		24,613		—		—		24,613
Accrued interest receivable		54,163		—		—		54,163
Deferred taxes		26,917		183		2,042		29,142
Premises and equipment		39,639		150		136		39,925
Real estate owned ("REO")		8,381		—		—		8,381
Bank owned life insurance		48,653						48,653
Core deposit intangibles		4,948		—		—		4,948
Other assets		123,652		533		25,208		149,393
Total assets	$	13,298,604	$	5,612	$	23,032	$	13,327,248
Deposits	$	10,708,549	$	—	$	(19,617)	$	10,688,932
Borrowings		1,409,056		—		—		1,409,056
Subordinated debt		—		—		173,397		173,397
Intercompany balances		2,604		(9,079)		6,475		—
Accounts payable and other liabilities		108,434		2,196		19,890		130,520
Shareholders’ equity		1,069,961		12,495		(157,113)		925,343
Total liabilities and equity	$	13,298,604	$	5,612	$	23,032	$	13,327,248

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Our consolidated balance sheet is primarily affected by changes occurring in our Banking operations as our Wealth Management operations do not maintain significant levels of assets.

During the nine-month period ended September 30, 2024, total assets increased by $49.3 million primarily due to increases in investment securities, offset by a decrease in cash and cash equivalents and total loans.  During the nine-month period ended September 30, 2024, total liabilities decreased by $95.1 million, primarily due to a decrease in deposits, offset by an increase in borrowings.  During the nine-month period ended September 30, 2024, total shareholders’ equity increased $144.5 million primarily due to net proceeds of $214.5 million received from the July 2024 Capital Raise and $8.7 million increase in accumulated other comprehensive income largely due to an increase in unrealized holding gains on available-for-sale securities, offset by net loss of $78.3 million and a $1.1 million fourth quarter 2023 and first quarter 2024 dividends paid to shareholders.

For additional information on the changes in total assets, liabilities, and shareholders’ equity, see “Overview and Recent Developments” within this Item 2.

Cash and cash equivalents. Cash and cash equivalents, which primarily consist of funds held at the Federal Reserve Bank or at correspondent banks, including fed funds, decreased by $220.2 million at September 30, 2024, compared to December 31, 2023.  Changes in cash and cash equivalents are primarily affected by the funding of loans, investments in securities, and changes in our sources of funding including deposits and borrowings.

Securities available for sale. The following table provides a summary of the Company’s AFS securities portfolio as of:

	Amortized		Gross Unrealized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Collateralized mortgage obligations	$	11,251	$	26	$	(959)	$	—	$	10,318
Agency mortgage-backed securities		1,094,633		13,966		(262)		—		1,108,337
Municipal bonds		49,174		—		(2,375)		—		46,799
SBA securities		9,688		5		(66)		—		9,627
Beneficial interests in FHLMC securitization		13,758		21		(333)		(6,478)		6,968
Corporate bonds		133,786		—		(10,168)		(821)		122,797
U.S. Treasury		1,299		—		(25)		—		1,274
Total	$	1,313,589	$	14,018	$	(14,188)	$	(7,299)	$	1,306,120
December 31, 2023:
Collateralized mortgage obligations	$	8,946	$	—	$	(1,341)	$	—	$	7,605
Agency mortgage-backed securities		106,733		1,028		(414)		—		107,347
Municipal bonds		49,473		—		(3,037)		—		46,436
SBA securities		13,631		2		(106)		—		13,527
Beneficial interest in FHLMC securitization		14,473		4		(418)		(6,818)		7,241
Corporate bonds		138,858		—		(15,176)		(1,402)		122,280
U.S. Treasury		399,375		—		(585)		—		398,790
Total	$	731,489	$	1,034	$	(21,077)	$	(8,220)	$	703,226

Excluding allowance for credit losses, the increase in AFS securities in the nine-month period ended September 30, 2024, was due primarily to the purchase of $1.8 billion in securities, offset by sales and maturities of $1.3 billion.  The $1.8 billion in securities purchased consisted of $1.2 billion in agency mortgage-backed securities and $0.5 billion in U.S. treasury securities.  The $1.3 billion in sales and maturities consisted of $0.9 billion in U.S. Treasury securities and $0.3 billion in agency mortgage-backed securities.  During the nine-month period ended September 30, 2024, the net unrealized loss position of the portfolio improved from $20.0 million in net unrealized losses as of December 31, 2023, to $170 thousand as of September 30, 2024.  The decrease in net unrealized loss position of the portfolio was largely driven by the

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fall in the 10-year Treasury yield which is the benchmark that agency mortgage-backed securities follow.  The 10-year Treasury yield fell 29 basis points to 3.73% as of September 30, 2024, from 4.02% as of December 31, 2023.  

Securities held to maturity. The following table provides a summary of the Company’s HTM securities portfolio as of:

	Amortized		Gross Unrecognized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Agency mortgage-backed securities	$	734,863	$	—	$	(59,095)	$	—	$	675,768
Total	$	734,863	$	—	$	(59,095)	$	—	$	675,768
December 31, 2023:
Agency mortgage-backed securities	$	789,578	$	1	$	(79,558)	$	—	$	710,021
Total	$	789,578	$	1	$	(79,558)	$	—	$	710,021

The decrease in HTM securities in the nine-month period ended September 30, 2024, was due to principal payments received.  There were no purchases of investment securities or other additions to the portfolio during the nine-month period ended September 30, 2024.  During the nine-month period ended September 30, 2024, the net unrealized loss position of the portfolio improved from $79.6 million in net unrealized losses as of December 31, 2023, to $59.1 million as of September 30, 2024.  The decrease in net unrealized loss position of the portfolio was largely driven by the fall in the 10-year Treasury yield which is the benchmark that agency mortgage-backed securities follow.  The 10-year Treasury yield fell 29 basis points to 3.73% as of September 30, 2024, from 4.02% as of December 31, 2023.  

The scheduled maturities of securities AFS, and the related weighted average yields, were as follows, as of September 30, 2024:

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
Amortized Cost:
Collateralized mortgage obligations	$	—		$	277		$	171		$	10,803		$	11,251
Agency mortgage-backed securities		102			3,238			—			1,091,293			1,094,633
Municipal bonds		500			15,318			31,118			2,238			49,174
SBA securities		—			474			414			8,800			9,688
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,819			13,758
Corporate bonds		—			61,957			66,304			5,525			133,786
U.S. Treasury		799			500			—			—			1,299
Total	$	4,531		$	86,573		$	98,007		$	1,124,478		$	1,313,589
Weighted average yield		0.82	%		5.98	%		3.01	%		5.49	%		5.32	%
Estimated Fair Value:
Collateralized mortgage obligations	$	—		$	261		$	166		$	9,891		$	10,318
Agency mortgage-backed securities		101			3,137			—			1,105,098			1,108,336
Municipal bonds		500			14,900			29,520			1,879			46,799
SBA securities		—			472			414			8,741			9,627
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,507			13,446
Corporate bonds		—			59,121			60,165			4,332			123,618
U.S. Treasury		796			479			—			—			1,275
Total	$	4,527		$	83,179		$	90,265		$	1,135,448		$	1,313,419

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The scheduled maturities of securities HTM, and the related weighted average yields were as follows, as of September 30, 2024:

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
September 30, 2024
Amortized Cost:
Agency mortgage-backed securities	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Total	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Weighted average yield		—	%		0.95	%		1.54	%		2.32	%		2.30	%
Estimated Fair Value:
Agency mortgage-backed securities	$	—		$	4,705		$	8,744		$	662,319		$	675,768
Total	$	—		$	4,705		$	8,744		$	662,319		$	675,768

See Note 3: Securities of the notes to the consolidated financial statements for additional information on our investment securities portfolio.

Loans. The following table sets forth our loans held for investment, by loan category, as of:

	September 30, 2024				December 31, 2023
			Percentage of				Percentage of
(dollars in thousands)	Amount		Total Loans		Amount		Total Loans
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	3,322,471	41.1	%	$	5,227,885	51.5	%
Single family		889,616	11.0	%		950,712	9.4	%
Total real estate loans secured by residential properties		4,212,087	52.1	%		6,178,597	60.8	%
Commercial properties		952,700	11.8	%		987,596	9.7	%
Land and construction		80,307	1.0	%		137,298	1.4	%
Total real estate loans		5,245,094	64.9	%		7,303,491	71.9	%
Commercial and industrial loans		2,837,830	35.1	%		2,856,228	28.1	%
Consumer loans		832	0.0	%		1,328	0.0	%
Total loans		8,083,756	100.0	%		10,161,047	100.0	%
Premiums, discounts and deferred fees and expenses		5,107				16,755
Total	$	8,088,863			$	10,177,802

In August 2024, a portion of the Company’s multifamily portfolio totaling $1.9 billion in principal balance was reclassified from loans held for investment to loans held for sale.  Loans held for sale, net of deferred fees, are accounted for at the lower of amortized cost or fair value and totaled $1.8 billion as of September 30, 2024, and consisted entirely of multifamily loans.  As of September 30, 2024, none of the loans transferred have been sold.  

Total loans (including loans held for sale) decreased by $300.5 million at September 30, 2024 compared to December 31, 2023, largely due to loan fundings totaling $1.2 billion, offset by loan payments and payoffs of $1.4 billion, and the $0.1 billion LHFS LOCOM adjustment resulting from the transfer of the multifamily loans from held for investment to held for sale during the nine-month period ended September 30, 2024.

At September 30, 2024, average current loan-to-value (“LTV”) ratios for all multifamily loans (including those included in loans held for sale) and single-family residential loans were 53.2% and 54.2%, respectively.  At December 31,

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2023, average current LTV ratios for the multifamily and single-family residential loans were 54.9% and 54.3%, respectively.  

At September 30, 2024, $953 million of the loan portfolio consisted of loans secured by commercial real estate properties, consisting of non-owner occupied and owner-occupied loans, respectively.  Non-owner-occupied CRE loans totaled approximately $594 million and consisted of a diversified mix of retail, office, hospitality, industrial, medical, and other real estate loans.  At September 30, 2024, the average current LTV ratio for the non-owner occupied CRE portfolio was 48.5%.  At December 31, 2023, the average current LTV ratio for the non-owner occupied CRE portfolio was 46.9%.  

At September 30, 2024, $2.8 billion of the loan portfolio consisted of commercial and industrial (“C&I”) loans consisting of commercial business lines of credit ($1.2 billion), municipal financing loans ($1.0 billion), commercial business term loans ($0.5 billion) and equipment finance loans ($0.1 billion).  

The loan portfolio is largely concentrated in the geographic markets in which we operate.  As of September 30, 2024, approximately 85.9% of the loans in our portfolio were made to borrowers who live and/or conduct business in California (72.8%), Florida (8.0%), Texas (4.0%), and Nevada (1.1%).

See Note 4: Loans of the notes to the consolidated financial statements for additional information on our loan portfolio.  

Deposits. The following table sets forth information with respect to our deposits and the average rates paid on deposits, as of:

	September 30, 2024				December 31, 2023
			Weighted				Weighted
(dollars in thousands)	Amount		Average Rate		Amount		Average Rate
Demand deposits:
Noninterest-bearing	$	2,136,442	—		$	1,467,806	—
Interest-bearing		1,999,229	3.66	%		2,881,786	2.94	%
Money market and savings		3,543,668	3.93	%		3,195,670	3.81	%
Certificates of deposit		2,625,265	4.77	%		3,143,670	4.87	%
Total	$	10,304,604	3.28	%	$	10,688,932	3.36	%

Total deposits decreased by approximately $384 million to $10.3 billion at September 30, 2024, compared to $10.7 billion at December 31, 2023.  During the nine-month period ended September 30, 2024, our deposit rates have moved in a manner consistent with overall deposit market rates.  The weighted average rate of our interest-bearing demand deposits increased from 2.94% at December 31, 2023, to 3.66% at September 30, 2024.  The weighted average rate of our money market and savings deposits increased from 3.81% at December 31, 2023, to 3.93% at September 30, 2024.  These increases were offset by a decrease in the weighted average rate of certificates of deposit from 4.87% at December 31, 2023 to 4.77% at September 30, 2024.  

The Bank may utilize brokered deposits as a source of funding and as a component of its overall liquidity management process. The Bank held brokered deposits totaling $3.7 billion and $4.2 billion at September 30, 2024 and December 31, 2023, respectively including insured cash sweep (“ICS”) accounts totaling $1.0 billion and $1.4 billion at September 30, 2024 and December 31, 2023, respectively which are classified as brokered deposit accounts for regulatory reporting purposes.  The weighted average rates paid on non-ICS and ICS brokered deposit balances were 4.10% and 2.19%, respectively for accounts held at September 30, 2024.  The weighted average rates paid on non-ICS and ICS brokered deposit balances were 4.35% and 3.53%, respectively for accounts held at December 31, 2023.

Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 17.6% and 12.5% of our total deposits as of September 30, 2024 and December 31, 2023, respectively.  The composition of our large depositor relationships continues to include clients which have maintained long-term depository relationships with us.

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The deposits held by the Bank are insured by the FDIC Deposit Insurance Fund up to applicable limits. The Dodd-Frank Act permanently increased the maximum deposit insurance amount for banks, savings institutions, and credit unions to $250,000 per depositor.  Insured and collateralized deposits comprised approximately 85% of total deposits at September 30, 2024.

The following table sets forth the estimated deposits exceeding the FDIC insurance limit:

	September 30, 2024		December 31, 2023
(dollars in thousands)	Amount		Amount
Uninsured deposits	$	2,247,579	$	2,662,405

The following table sets forth the maturity distribution of certificates of deposit as of September 30, 2024:

				Over Three		Over Six
		Three Months		Months Through		Months Through		Over
Large Denomination Certificates of Deposit Maturity Distribution		or Less		Six Months		Twelve Months		Twelve Months		Total
Certificates of deposit of $250,000 or less	$	332,166	$	416,137	$	531,035	$	1,136,755	$	2,416,093
Certificates of deposit of more than $250,000		60,095		75,036		63,479		10,562		209,172
Total	$	392,261	$	491,173	$	594,514	$	1,147,317	$	2,625,265

Borrowings.  At September 30, 2024, our borrowings consisted of $1 billion in FHLB putable advances at the Bank, $400 million of FHLB term advances at the Bank, $267 million in term advances from the Federal Reserve Bank, and $25 million in repurchase agreements at the Bank.  At December 31, 2023, our borrowings consisted of $800 million in FHLB putable advances at the Bank, $100 million of FHLB term advances at the Bank, $160 million in overnight advances and $285 million in term advances from the Federal Reserve Bank, and $64 million in repurchase agreements at the Bank.

The average balance of borrowings and the weighted average interest rate on such borrowings were $1.5 billion and 4.08%, respectively for the nine-month period ended September 30, 2024. The average balance of borrowings and the weighted average interest rate on such borrowings were $1.2 billion and 4.67%, respectively for the year ended December 31, 2023.   At September 30, 2024, total borrowings represented 12.6% of total assets, compared to 10.6% at December 31, 2023.

As of September 30, 2024, our unused borrowing capacity was $3.0 billion, which consisted of $2.0 billion in available lines of credit with the FHLB, $823 million in available borrowing capacity with the Federal Reserve Bank, $240 million in borrowing capacity through unsecured federal funds lines with six correspondent financial institutions, and $20 million in available borrowing capacity through a line of credit arrangement that our holding company maintains with an unaffiliated lender.  For additional information about borrowings, see Note 10: Borrowings to the consolidated financial statements.

Subordinated debt.  At September 30, 2024 and December 31, 2023, FFI had two issuances of subordinated notes with an aggregate carrying value of $173 million.  For additional information about subordinated debt, see Note 11: Subordinated Debt to the consolidated financial statements.

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Delinquent Loans, Nonperforming Assets and Provision for Credit Losses

Loans are considered past due following the date when either interest or principal is contractually due and unpaid. Loans on which the accrual of interest has been discontinued are designated as nonaccrual loans. Accrual of interest on loans is discontinued when reasonable doubt exists as to the full, timely collection of interest or principal and, generally, when a loan becomes contractually past due for 90 days or more with respect to principal or interest. However, the accrual of interest may be continued on a well-secured loan contractually past due 90 days or more with respect to principal or interest if the loan is in the process of collection or collection of the principal and interest is deemed probable. The following tables provide a summary of past due and nonaccrual loans as of:

							90 Days						Total Past Due
(dollars in thousands)	30–59 Days			60-89 Days			or More			Nonaccrual			and Nonaccrual			Current		Total
September 30, 2024:
Real estate loans:
Residential properties	$	1,887		$	—		$	—		$	20,357		$	22,244		$	4,198,803	$	4,221,047
Commercial properties		9,046			—			—			9,145			18,191			933,976		952,167
Land and construction		—			—			—			—			—			80,153		80,153
Commercial and industrial loans		8,088			10,138			—			8,704			26,930			2,807,701		2,834,631
Consumer loans		—			—			—			—			—			865		865
Total	$	19,021		$	10,138		$	—		$	38,206		$	67,365		$	8,021,498	$	8,088,863
Percentage of total loans		0.24	%		0.13	%		—	%		0.47	%		0.83	%
December 31, 2023:
Real estate loans:
Residential properties	$	93		$	416		$	—		$	112		$	621		$	6,196,923	$	6,197,544
Commercial properties		27,403			403			1,730			2,915			32,451			954,321		986,772
Land and construction		—			—			—			—			—			136,827		136,827
Commercial and industrial loans		525			88			—			8,804			9,417			2,845,845		2,855,262
Consumer loans		—			—			—			—			—			1,397		1,397
Total	$	28,021		$	907		$	1,730		$	11,831		$	42,489		$	10,135,313	$	10,177,802
Percentage of total loans		0.28	%		0.01	%		0.02	%		0.12	%		0.42	%

The following table summarizes our nonaccrual loans as of:

	Nonaccrual		Nonaccrual
	with Allowance		with no Allowance
(dollars in thousands)	for Credit Losses		for Credit Losses
September 30, 2024
Real estate loans:
Residential properties	$	883	$	19,474
Commercial properties		9,145		—
Commercial and industrial loans		8,704		—
Consumer loans		—		—
Total	$	18,732	$	19,474
December 31, 2023
Real estate loans:
Residential properties	$	—	$	112
Commercial properties		—		2,915
Commercial and industrial loans		7,406		1,398
Total	$	7,406	$	4,425

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The $24.9 million increase in total past due and nonaccrual loans from $42.5 million at December 31, 2023 to $67.4 million at September 30, 2024 was largely due to two residential loans totaling $19.2 million to the same high net worth individual, both of which are well secured by the borrower’s net worth and value of the collateral.  The loan delinquency on one of these loans was cured shortly after September 30, 2024, and the other loan’s delinquency is expected to be cured during the next quarter, therefore no specific provision was deemed necessary, however adjustments to the qualitative factors within the CECL model were made to reflect the increase in past due and nonaccrual loans.

Allowance for Credit Losses. The following table summarizes the activity in our ACL related to loans held for investment for the periods indicated:

			Provision
	Beginning		(Reversal) for						Ending
(dollars in thousands)	Balance		Credit Losses		Charge-offs		Recoveries		Balance
Three months ended September 30, 2024:
Real estate loans:
Residential properties	$	9,013	$	(2,010)	$	—	$	—	$	7,003
Commercial properties		6,086		493		—		—		6,579
Land and construction		77		(17)		—		—		60
Commercial and industrial loans		14,104		1,809		(341)		80		15,652
Consumer loans		15		14		(23)		—		6
Total	$	29,295	$	289	$	(364)	$	80	$	29,300
Nine months ended September 30, 2024:
Real estate loans:
Residential properties	$	9,921	$	(2,918)	$	—	$	—	$	7,003
Commercial properties		4,148		2,431		—		—		6,579
Land and construction		332		(272)		—		—		60
Commercial and industrial loans		14,796		1,676		(1,203)		383		15,652
Consumer loans		8		20		(23)		1		6
Total	$	29,205	$	937	$	(1,226)	$	384	$	29,300
Three months ended September 30, 2023:
Real estate loans:
Residential properties	$	8,234	$	140	$	—	$	—	$	8,374
Commercial properties		5,253		(979)		—		—		4,274
Land and construction		287		(13)		—		—		274
Commercial and industrial loans		17,690		(1,070)		(1,183)		814		16,251
Consumer loans		21		—		—		1		22
Total	$	31,485	$	(1,922)	$	(1,183)	$	815	$	29,195
Nine months ended September 30, 2023:
Real estate loans:
Residential properties	$	8,306	$	68	$	—	$	—	$	8,374
Commercial properties		8,714		(4,191)		(249)		—		4,274
Land and construction		164		110		—		—		274
Commercial and industrial loans		16,521		2,019		(4,022)		1,733		16,251
Consumer loans		26		(4)		(2)		2		22
Total	$	33,731	$	(1,998)	$	(4,273)	$	1,735	$	29,195

Our ACL for loans held for investment totaled $29.3 million as of September 30, 2024, compared to $29.2 million as of September 30, 2023, and $29.2 million as of December 31, 2023.  Our ACL for loans held for investment represented

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0.36% of total loans held for investment outstanding as of September 30, 2024, 0.28% of total loans held for investment outstanding as of September 30, 2023, and 0.29% of total loans held for investment outstanding at December 31, 2023.  Activity for the nine-month period ended September 30, 2024 included a provision for credit losses of $0.9 million, charge-offs of $1.2 million, and recoveries of $0.4 million.

Under the CECL methodology, for which our ACL for loans is based, estimates of expected credit losses over the life of a loan are determined and utilized considering the effect of various major factors.  The major factors considered in evaluating losses are historical charge-off experience, delinquency rates, local and national economic conditions, the borrower’s ability to repay the loan and timing of repayments, and the value of any related collateral.  Management’s estimate of fair value of the collateral considers current and anticipated future real estate market conditions, thereby causing these estimates to be particularly susceptible to changes that could result in a material adjustment to results of operations in the future.  Provisions for credit losses are charged to operations based on management’s evaluation of estimated losses in its loan portfolio.  

In addition, the FDIC and the California Department of Financial Protection and Innovation, as integral parts of their examination processes, periodically review the adequacy of our ACL. These agencies may require us to make additional provisions for credit losses, over and above the provisions that we have already made, the effect of which would be to reduce our income.

Liquidity

Liquidity management focuses on our ability to generate, on a timely and cost-effective basis, cash sufficient to meet the funding needs of current loan demand, deposit withdrawals, principal and interest payments with respect to outstanding borrowings and to pay operating expenses.  Liquidity management also includes the ability to manage unplanned decreases or changes in funding sources, as well as abnormal and unexpected needs.  To meet such abnormal and unexpected needs, lines of credit are maintained with the FHLB, the Federal Reserve Bank, and correspondent banks.  Liquidity management is both a daily and long-term function of funds management.  Liquidity management takes into consideration liquid assets, which includes: cash and cash equivalents; unencumbered eligible investment securities; and investment securities pledged under the Federal Reserve Bank’s discount window and BTFP programs which can be drawn at-will.  Liquidity management also takes into consideration available liquidity sources such as available unused funds from both the FHLB and Federal Reserve Bank credit lines.  The Bank’s Federal Reserve Bank credit line is secured by pledged collateral in the form of qualifying loans and investment securities.  As of September 30, 2024, the Bank had secured unused borrowing capacity of $823 million under this agreement.  The Bank’s unused borrowing capacity with the FHLB as of September 30, 2024 was $2.0 billion.  The Bank had a total of $240 million in unused borrowing capacity available through its correspondent bank lines of credit as of September 30, 2024.    

We monitor our liquidity in accordance with guidelines established by our Board of Directors and applicable regulatory requirements. Our need for liquidity is affected by our loan activity, net changes in deposit levels and the maturities of our borrowings. The principal sources of our liquidity consist of deposits, loan interest and principal payments and prepayments, investment management and consulting fees, proceeds from borrowings, and sales of FFI common stock. The remaining balances of the Bank’s lines of credit available to draw down totaled $3.0 billion at September 30, 2024.

We believe our liquid assets and available liquidity sources are sufficient to meet current funding needs and that we have the ability to manage unplanned decreases or changes in funding sources, as well as abnormal and unexpected needs.  We regularly monitor liquidity to ensure levels are in compliance with minimum requirements established by our Board of Directors.  As of September 30, 2024, our available liquidity ratio was 49.1%, which is above our minimum policy requirement of 25%.  We regularly model liquidity stress scenarios to ensure that adequate liquidity is available, and have contingency funding plans in place, which are reviewed and tested on a regular, recurring basis.

Cash Flows Provided by Operating Activities. During the nine-month period ended September 30, 2024, operating activities provided net cash of $12.3 million.  Changes in accrued interest receivable and other assets as well as changes in accounts payable and other liabilities accounted for most of the cash flows provided by operating activities.  

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Cash Flows Used in Investing Activities.  During the nine-month period ended September 30, 2024, investing activities used net cash of $343.8 million, primarily due to $515.7 million in purchases of securities, net of sales and maturities, offset by a $173.7 million net decrease in loans.  

Cash Flows Provided by Financing Activities. During the nine-month period ended September 30, 2024, financing activities provided net cash of $111.3 million, consisting primarily of a net increase of $321.6 million in FHLB and FRB advances, and $214.5 million in net proceeds received from the July 2024 Capital Raise, offset by a decrease of $384.3 million in deposits, and a decrease of $39.2 million in repurchase agreements.

Ratio of Loans to Deposits. The relationship between gross loans and total deposits can provide a useful measure of a bank’s liquidity. Since repayment of loans tends to be less predictable than the maturity of investments and other liquid resources, the higher the loan-to-deposit ratio the less liquid are our assets. On the other hand, since we realize greater yields on loans than we do on other interest-earning assets, a lower loan-to-deposit ratio can adversely affect interest income and earnings. As a result, our goal is to achieve a loan-to-deposit ratio that appropriately balances the requirements of liquidity and the need to generate a fair return on our assets. At September 30, 2024 and December 31, 2023, the loan-to-deposit ratios at FFB were 95.9%, and 95.2%, respectively.

Off-Balance Sheet Arrangements

The following table provides the off-balance sheet arrangements of the Company as of September 30, 2024:

(dollars in thousands)
Commitments to fund under existing loans, lines of credit	$	1,095,155
Commitments under standby letters of credit		38,471

Some of the commitments to fund existing loans, lines of credit and letters of credit are expected to expire without being drawn upon. Therefore, the total commitments do not necessarily represent future cash requirements. As of September 30, 2024, FFB was obligated on $10 million of letters of credit to the FHLB which were being used as collateral for public fund deposits.

Interest Rate Risk Management

Interest rate risk (“IRR”) refers to the vulnerability of an institution’s financial condition to movements in interest rates. Excessive IRR poses a significant threat to an institution’s earnings and capital. Changes in interest rates affect an institution’s earnings by altering interest-sensitive income and expenses. Changes in interest rates also affect the underlying value of an institutions’ assets, liabilities, and off-balance sheet instruments because the present value of future cash flows (and in some cases, the cash flows themselves) change when interest rates change. The Board of Directors of the Bank has adopted a policy to govern the management of the Bank’s exposure to IRR. This policy is an integral part of the Bank’s overall asset/liability management. The goals of this policy are to (1) optimize profits through the management of IRR; (2) limit the exposure of the Bank’s earnings and capital to fluctuations in interest rates; and (3) ensure that the Bank’s management of IRR meets applicable regulatory guidelines.

We assess our interest rate exposure within our major balance sheet categories individually, as well as in our balance sheet holistically, focusing on the interest rate sensitivity of our assets and liabilities.  Our processes identify potential areas of vulnerability, particularly those influenced by fluctuations in market interest rates.  Our IRR assessment process considers the repricing and liquidity characteristics of various financial instruments, including loans, investment securities, deposits, and borrowings.  We establish a desired risk profile that aligns with our strategic goals and the prevailing interest rate environment.  This profile considers factors such as the mix of fixed and floating rate assets and liabilities, taking into account our outlook on interest rates.  We set clear policy limits and guidelines that guide our IRR management strategies, consistent with regulatory guidance.  We employ various strategies to mitigate IRR by managing our asset and liability mix, including adjusting the duration of our assets to align with our liabilities.  Our IRR management process is dynamic and includes regular monitoring and review.  Our management team conducts ongoing assessments of asset and liability maturities and repricing characteristics, ensuring they remain consistent with our desired risk profile.  

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By proactively identifying, assessing, and managing IRR, we aim to maintain the stability of our financial performance, protect interests of our stakeholders, and ensure our continued ability to meet the financial needs of our customers.

The following table sets forth the interest-earning assets and interest-bearing liabilities on the basis of when they reprice or mature as of September 30, 2024:

	Less than		From 1 to		From 3 to
(dollars in thousands)	1 year		3 Years		5 Years		Over 5 Years		Total
Interest-earnings assets:
Cash equivalents	$	1,106,172	$	—	$	—	$	—	$	1,106,172
Securities, FHLB stock		647,327		387,967		253,333		751,353		2,039,980
Loans, including LHFS		4,489,482		3,327,389		1,111,806		747,402		9,676,079
Interest-bearing liabilities:
Deposits:
Interest-bearing checking		(2,204,141)		(708,265)		(125,856)		(27,650)		(3,065,912)
Money market and savings		(2,235,933)		(1,090,662)		(179,920)		(37,672)		(3,544,187)
Certificates of deposit		(1,516,783)		(909,126)		(371,584)		(4)		(2,797,497)
Borrowings		(291,452)		(300,000)		(1,100,000)		—		(1,691,452)
Net: Current Period	$	(5,328)	$	707,303	$	(412,221)	$	1,433,429	$	1,723,183
Net: Cumulative	$	(5,328)	$	701,975	$	289,754	$	1,723,183

The cumulative positive total of $1.7 billion reflects the funding provided by noninterest-bearing deposits and equity. Because we had a $5 million net negative position at September 30, 2024 for the repricing period of less than one year, the result of this analysis indicates that we would be adversely impacted by a short-term increase in interest rates and would be similarly positively impacted from a short-term decrease in interest rates.

However, the extent to which our net interest margin will be impacted by changes in prevailing interest rates will depend on a number of factors, including how quickly interest-earning assets and interest-bearing liabilities react to interest rate changes. It is not uncommon for rates on certain assets or liabilities to lag behind changes in the market rates of interest. Additionally, prepayments of loans and early withdrawals of certificates of deposit could cause interest sensitivities to vary. As a result, the relationship or “gap” between interest-earning assets and interest-bearing liabilities, as shown in the above table, is only a general indicator of interest rate sensitivity and the effect of changing rates of interest on our net interest income is likely to be different from that predicted solely on the basis of the interest rate sensitivity analysis set forth in the above table.

Our IRR position is regularly measured using two methods: (i) Net Interest Income (“NII”) and (ii) Economic Value of Equity (“EVE”).  Consistent with regulatory requirements, the Bank has established Board of Directors-approved IRR limits for NII simulations and EVE calculations.  These analyses are reviewed quarterly by the Asset/Liability Committee  and the Board of Directors.  If the analyses project changes which are outside our pre-established IRR limits, we may: (i) revise existing limits to address the changes in the Bank’s IRR, with the recommended limits being prudent and consistent with the Board’s risk tolerance; or (ii) retain the existing limits and implement a plan for an orderly return to compliance with these limits, where corrective actions may include, but are not limited to, restructuring the maturity profile of the Bank’s investment portfolio, changing deposit pricing, initiating off-balance sheet hedging actions, or adjusting the repricing characteristics of the loan portfolios.

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The NII simulation is used to measure and evaluate potential changes in our net interest income resulting from changes in interest rates.  The model measures the impact over a range of instantaneous shocks in 100 basis points increments to our net interest income over a 12-months forecast period.  The Board-approved limits on NII sensitivity and the actual computed changes to our NII based on the +/- 100 and +/- 200 basis points hypothetical interest rate scenarios as of September 30, 2024 are shown below:

	Estimated Increase
	(Decrease) in Net
Assumed Instantaneous Change in Interest Rates	Interest Income		Board Limits
+ 100 basis points	(5.92)	%	(20.00)	%
+ 200 basis points	(14.12)	%	(25.00)	%
- 100 basis points	0.98	%	(10.00)	%
- 200 basis points	1.92	%	(20.00)	%

The modeled one-year NII results indicate that the Bank is more earnings sensitive in the rising rate shock scenarios of 100 through 200 basis points.  The NII modeled results above are in compliance with the IRR limits.

The EVE measures the sensitivity of our market value equity to simultaneous changes in interest rates.  EVE is derived by subtracting the economic value of the Bank’s liabilities from the economic value of its assets, assuming current and hypothetical interest rate environments.  EVE is based on all of the future cash flows expected to be generated by the Bank’s current balance sheet, discounted to derive the economic value of the Bank’s assets and liabilities.  These cash flows may change depending on the assumed interest rate environment and the resulting changes in other assumptions, such as prepayment speeds.  The Bank has established IRR limits which specify the maximum EVE sensitivity allowed under current interest rates and for a range of hypothetical interest rate scenarios each in 100 basis point increments.  The hypothetical scenarios are represented by immediate, permanent, parallel movements in the term structure of interest rates.  The Board-approved limits on EVE sensitivity and the actual computed changes to our EVE based on the +/- 100 and +/- 200 basis points hypothetical interest rate scenarios as of September 30, 2024 are shown below:

	Estimated Increase
	(Decrease)
	in Economic
Assumed Instantaneous Change in Interest Rates	Value of Equity		Board Limits
+ 100 basis points	1.53	%	(15.00)	%
+ 200 basis points	0.14	%	(25.00)	%
- 100 basis points	(6.56)	%	(15.00)	%
- 200 basis points	(13.42)	%	(20.00)	%

The results of the EVE are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted. These could include, but are not limited to, non-parallel yield curve shifts, changes in market interest rate spreads and the actual reaction to changes in interest rate levels of interest-earning assets and interest-bearing liabilities. It is not uncommon for rates on certain assets or liabilities to lag behind changes in the market rates of interest. Additionally, prepayments of loans and early withdrawals of certificates of deposit could cause interest sensitivities to vary.

The EVE modeled results above are in compliance with the EVE limits.  The EVE is an interest rate risk management tool, and the results are not necessarily an indication of our actual future results.  Actual results may vary significantly from the results suggested by the table above.  Loan prepayments and deposit attrition, changes in our mix of earning assets or funding sources, and future asset/liability management decisions, among others, may vary significantly from our assumptions.

The results of these analyses and simulations do not contemplate all of the actions that we may undertake in response to changes in interest rates. In response to actual or anticipated changes in interest rates, we have various alternatives for managing and reducing the Bank’s exposure to interest rate risk, such as entering into hedges and obtaining long-term fixed-rate FHLB advances.

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We believe our IRR management policy limits are consistent with prevailing practice in the regional banking industry.

Capital Resources and Dividend Policy

The capital rules applicable to United States based bank holding companies and federally insured depository institutions (“Capital Rules”) require the Company (on a consolidated basis) and FFB (on a stand-alone basis) to meet specific capital adequacy requirements that, for the most part, involve quantitative measures, primarily in terms of the ratios of their capital to their assets, liabilities, and certain off-balance sheet items, calculated under regulatory accounting practices. For additional information regarding these Capital Rules, see Item 1 “Business Capital Requirements Applicable to Banks and Bank Holding Companies” included in our Annual Report on Form 10-K for the year ended December 31, 2023.

In addition, prompt corrective action regulations place a federally insured depository institution, such as FFB, into one of five capital categories on the basis of its capital ratios: (i) well-capitalized; (ii) adequately capitalized; (iii) undercapitalized; (iv) significantly undercapitalized; or (v) critically undercapitalized. A depository institution’s primary federal regulatory agency may determine that, based on certain qualitative assessments, the depository institution should be assigned to a lower capital category than the one indicated by its capital ratios. At each successive lower capital category, a depository institution is subject to greater operating restrictions and increased regulatory supervision by its federal bank regulatory agency.

The following table sets forth the capital and capital ratios of FFI (on a consolidated basis) and FFB as of the respective dates indicated below, as compared to the respective regulatory requirements applicable to them:

									To Be Well Capitalized
					For Capital				Under Prompt Corrective
	Actual				Adequacy Purposes				Action Provisions
(dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
FFI
September 30, 2024:
Common equity tier 1 ratio	$	896,254	10.31	%	$	391,055	4.50	%
Leverage ratio		1,026,506	7.64	%		537,589	4.00	%
Tier 1 risk-based capital ratio		8,690,105	11.81	%		521,406	6.00	%
Total risk-based capital ratio		8,690,105	14.21	%		695,208	8.00	%
December 31, 2023:
Common equity tier 1 ratio	$	931,272	10.02	%	$	418,142	4.50	%
Leverage ratio		931,272	7.20	%		517,033	4.00	%
Tier 1 risk-based capital ratio		931,272	10.02	%		557,523	6.00	%
Total risk-based capital ratio		1,140,312	12.27	%		743,363	8.00	%
FFB
September 30, 2024:
Common equity tier 1 ratio	$	1,160,564	13.41	%	$	389,497	4.50	%	$	562,606	6.50	%
Leverage ratio		1,160,564	8.65	%		536,475	4.00	%		670,594	5.00	%
Tier 1 risk-based capital ratio		1,160,564	13.41	%		519,329	6.00	%		692,438	8.00	%
Total risk-based capital ratio		1,195,624	13.81	%		692,438	8.00	%		865,548	10.00	%
December 31, 2023:
Common equity tier 1 ratio	$	1,076,337	11.62	%	$	416,684	4.50	%	$	601,877	6.50	%
Leverage ratio		1,076,337	8.35	%		515,753	4.00	%		644,691	5.00	%
Tier 1 risk-based capital ratio		1,076,337	11.62	%		555,579	6.00	%		740,772	8.00	%
Total risk-based capital ratio		1,111,979	12.01	%		740,772	8.00	%		925,965	10.00	%

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As of each of the dates set forth in the above table, the Company exceeded the minimum required capital ratios applicable to it and FFB’s capital ratios exceeded the minimums necessary to qualify as a well-capitalized depository institution under the prompt corrective action regulations. The required ratios for capital adequacy set forth in the above table do not include the Capital Rules’ additional capital conservation buffer, though each of the Company and FFB maintained capital ratios necessary to satisfy the capital conservation buffer requirements as of the dates indicated.

As of September 30, 2024, the amount of capital at FFB in excess of amounts required to be well capitalized for purposes of the prompt corrective action regulations was $598 million for the common equity tier 1 ratio, $490 million for the leverage ratio, $468 million for the tier 1 risk-based capital ratio and $330 million for the total risk-based capital ratio.

The amount and declaration of future cash dividends are subject to approval by our Board of Directors and certain regulatory restrictions which are discussed in Item 1 “Business—Supervision and Regulation—Dividends and Stock Repurchases” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2023. Additionally, under the terms of the holding company line of credit agreement, FFI may only declare and pay a dividend if the total amount of dividends and stock repurchases during the current twelve months does not exceed 50% of EBITDA for the same twelve-month period. The Board of Directors did not declare a cash dividend during the three months ended September 30, 2024, and June 30, 2024, respectively and declared a cash dividend of $0.01 per share during the three months ended March 31, 2024.  During 2023, the Board of Directors declared quarterly cash dividends totaling $0.06 per share.

We had no material commitments for capital expenditures as of September 30, 2024. However, we intend to take advantage of opportunities that may arise in the future to grow our businesses, which may include opening additional offices or acquiring complementary businesses that we believe will provide us with attractive risk-adjusted returns. As a result, we may seek to obtain additional borrowings and to sell additional shares of our common stock to raise funds which we might need for these or other purposes. There is no assurance, however, that, if required, we will succeed in obtaining additional borrowings or selling additional shares of our common stock or other securities on terms that are acceptable to us, if at all, as this will depend on market conditions and other factors outside of our control, as well as our future results of operations. See Item 1A, “Risk Factors” in Part I of our Annual Report on Form 10-K for the year ended December 31, 2023 for information regarding the impact that future sales of our common stock may have on the share ownership of our existing stockholders.

ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain financial risks, which are discussed in detail in Management’s Discussion and Analysis of Financial Condition and Results of Operations in the section titled Interest Rate Risk Management in this report as well as in our Annual Report on Form 10-K for the year ended December 31, 2023.  

ITEM 4.CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, our management recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

In accordance with SEC rules, an evaluation was performed under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer of the effectiveness, as of September 30, 2024, of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2024, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed in our reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods

64

specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting that occurred during the three months ended September 30, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II — OTHER INFORMATION

ITEM 1.LEGAL PROCEEDINGS

In the ordinary course of business, we are subject to claims, counter claims, suits and other litigation of the type that generally arise from the conduct of financial services businesses.  We are not aware of any threatened or pending litigation that we expect will have a material adverse effect on our business operations, financial condition or results of operations.

ITEM 1A.RISK FACTORS

We disclosed certain risks and uncertainties that we face under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2023, which we filed with the SEC on February 28, 2024.  There have been  no material changes in these risk factors from those disclosed in such Annual Report on Form 10-K.

ITEM 2.UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On April 26, 2022, the Company announced that its Board of Directors authorized a stock repurchase program, pursuant to which the Company may repurchase up to $75 million of its common stock. This plan has no stated expiration date. This stock repurchase program replaces and supersedes the stock repurchase program approved by the Board of Directors on October 30, 2018, which had authorized the Company to repurchase up to 2,200,000 shares of its common stock.  No shares were repurchased by the Company during the three months ended September 30, 2024.

ITEM 5.OTHER INFORMATION

None of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the third quarter of 2024.

65

ITEM 6.EXHIBITS

Exhibit No.	Description of Exhibit
3.1	Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 29, 2015).
3.2	Certificate of Amendment to Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on October 3, 2024).
3.3	Certificate of Designations for Series A Noncumulative Convertible Preferred Stock (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
3.4	Certificate of Designations for Series B Noncumulative Convertible Preferred Stock (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
3.5	Certificate of Designations for Series C NVCE Stock (incorporated by reference to Exhibit 3.3 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
3.6	Bylaws of the Company (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on February 27, 2024).
4.1	Form of Issued Warrant (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
10.1	Fortress Investment Agreement, dated July 2, 2024, by and between the Company and Fortress (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on July 2, 2024).*
10.2	Canyon Investment Agreement, dated July 2, 2024, by and between the Company and Canyon (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed on July 2, 2024).*
10.3	SVBP Investment Agreement, dated July 2, 2024, by and between the Company and SVBP (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed on July 2, 2024).*
10.4	Registration Rights Agreement, dated July 8, 2024, by and among the Company and the Purchasers (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on July 9, 2024).
10.5	Amendment to Investment Agreement, dated September 25, 2024, by and between the Company and CF1 Foundation Investors LP.
31.1(1)	Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
31.2(1)	Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
32.1(1)	Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002
32.2(1)	Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	Inline XBRL Taxonomy Extension Schema
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

(1) Filed herewith.

* Pursuant to Item 601(a)(5) of Regulation S-K, certain schedules and similar attachments have been omitted. The registrant hereby agrees to furnish a copy of any omitted schedule or similar attachment to the SEC upon request.

66

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST FOUNDATION INC. (Registrant)
Dated: November 8, 2024	By:	/s/    JAMES BRITTON
		James Britton
		Executive Vice President and Chief Financial Officer (Principal Financial Officer)

S-1

EX-10.5

Exhibit 10.5

AMENDMENT TO INVESTMENT AGREEMENT

This Amendment to Investment Agreement (this “Amendment”), effective as of September 25, 2024, is made by and between First Foundation Inc., a Delaware corporation (the “Company”) and CF 1Foundation Investors LP, a Delaware limited partnership (“Purchaser”), and amends that certain Investment Agreement, dated as of July 2, 2024 (the “Agreement”), by and between the Company and Purchaser.  All capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

WHEREAS, pursuant to the Agreement, Purchaser is entitled to designate up to two persons to the Board of Directors of the Company and the Board of Directors of First Foundation Bank, a wholly-owned bank subsidiary of the Company (the “Bank”, and such designated directors, the “Investor Directors”);

WHEREAS, the Agreement provides that the Investor Directors are entitled to the same compensation from the Company as the other independent directors serving on the Board of Directors of the Company or the Board of Director of the Bank, as applicable; and

WHEREAS, the parties desire to amend the Agreement to provide Purchaser with the option to elect to have the compensation of any such Investor Director be paid directly to Purchaser or its designee, as more specifically set forth herein.

NOW, THEREFORE, in consideration of these premises and the mutual covenants, terms and conditions set forth herein, all of the parties hereto mutually agree as follows:

1. Amendment.  The following sentence shall be added after the final sentence in Section 4.1(g) of the Agreement:

“Upon the election of the Purchaser, any compensation or expense reimbursement payable pursuant to clause (i) above to any individual Investor Director that was designated by the Purchaser shall instead be payable to the Purchaser or its designee (as such director was designated by the Purchaser to provide services to the Company, on behalf of the Purchaser, pursuant to this Agreement); provided that to the extent that the Purchaser is entitled to receive any voting securities or equity incentive awards for voting securities of the Company pursuant to this clause (g), the Company shall instead deliver to Purchaser cash or non-voting securities of the Company, as determined by the Company in its sole discretion, of substantially equivalent value in lieu of such voting securities or equity incentive awards for voting securities (which if cash is delivered at time of grant of such equity awards, it shall reflect the fair value of such equity awards and may be subject to recoupment or vesting on the same terms as the equity awards would be).”

2. No Other Amendments.  Except as specifically amended hereby, all of the terms and conditions of the Agreement are and shall remain in full force and effect and are hereby

-1-

ratified and confirmed. In the event of a conflict between the provisions of this Amendment and the provisions of the Agreement, the provisions of this Amendment shall control. No subsequent change or addition to this Amendment shall be binding unless in writing and duly executed by both the Company and the Purchaser.

3. Delivery by Electronic Transmission. This Amendment, to the extent signed and delivered by email delivery of a “.pdf” format data file or other electronic means, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. No party or to any such agreement or instrument shall raise the use of email delivery of a “.pdf” format data file or other electronic means to deliver a signature hereto or any amendment hereto or the fact that any signature or agreement or instrument was transmitted or communicated through the use of email delivery of a “.pdf” format data file or other electronic means as a defense to the formation of a contract and each party forever waives any such defense.

[Signature page follows]

-2-

IN WITNESS WHEREOF, this Amendment has been duly executed and delivered by the duly authorized officers of the parties as of the date first herein above written.

FIRST FOUNDATION INC.
By:	/s/ Erica Dorsett
Name:	Erica Dorsett
Title:	General Counsel/EVP
CF 1FOUNDATION INVESTORS LP
By: CF 1 FOUNDATION GP LLC, its general partner
By:	/s/ William A. Covino
Name:	William A. Covino
Title:	Chief Financial Officer

[Signature Page to Amendment to Investment Agreement]

EX-31.1

Exhibit 31.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, Scott Kavanaugh, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Foundation Inc. for the quarter ended September 30, 2024;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2024

/s/ SCOTT KAVANAUGH

Scott Kavanaugh

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATIONS OF CHIEF FINANCIAL OFFICER

UNDER

SECTION 302 OF THE SARBANES-OXLEY ACT

I, James Britton, certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Foundation Inc. for the quarter ended September 30, 2024;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 8, 2024

EVIN THOMPSON
	/s/ JAMES BRITTON
	James Britton
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER

UNDER

SECTION 906 OF THE SARBANES-OXLEY ACT

FIRST FOUNDATION INC.

Quarterly Report on Form 10-Q

for the Quarter ended September 30, 2024

The undersigned, who is the Chief Executive Officer of First Foundation Inc (the “Company”), hereby certifies that (i) the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, as filed by the Company with the Securities and Exchange Commission (the “Quarterly Report”), to which this Certification is an Exhibit, fully complies with the applicable requirements of Section 13(a) and 15(d) of the Exchange Act; and (ii) the information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 8, 2024

/s/ SCOTT KAVANAUGH

Scott Kavanaugh

Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATIONS OF CHIEF FINANCIAL OFFICER

UNDER

SECTION 906 OF THE SARBANES-OXLEY ACT

FIRST FOUNDATION INC.

Quarterly Report on Form 10-Q

for the Quarter ended September 30, 2024

The undersigned, who is the Chief Financial Officer of First Foundation Inc. (the “Company”), hereby certifies that (i) the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, as filed by the Company with the Securities and Exchange Commission (the “Quarterly Report”), to which this Certification is an Exhibit, fully complies with the applicable requirements of Section 13(a) and 15(d) of the Exchange Act; and (ii) the information contained in this Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: November 8, 2024

EVIN THOMPSON
	/s/ JAMES BRITTON
	James Britton
	Executive Vice President and Chief Financial Officer
	A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2024	Nov. 01, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2024
Document Transition Report	false
Entity File Number	001-36461
Entity Registrant Name	FIRST FOUNDATION INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-8639702
Entity Address, Address Line One	200 Crescent Court
Entity Address, Address Line Two	Suite 1400
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75201
City Area Code	469
Local Phone Number	638-9636
Title of 12(b) Security	Common Stock
Trading Symbol	FFWM
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		82,345,084
Amendment Flag	false
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001413837

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
ASSETS
Cash and cash equivalents	$ 1,106,422	$ 1,326,629
Securities available-for-sale ("AFS"), at fair value (amortized cost of $1,313,589 and $731,489 at September 30, 2024 and December 31, 2023 respectively; net of allowance for credit losses of $7,299 and $8,220 at September 30, 2024 and December 31, 2023 respectively)	1,306,120	703,226
Securities held-to-maturity ("HTM") (fair value of $675,768 and $710,021 at September 30, 2024 and December 31, 2023, respectively)	734,863	789,578
Loans held for sale	1,788,395
Loans held for investment	8,088,863	10,177,802
Less: Allowance for credit losses	(29,300)	(29,205)
Total loans held for investment, net	8,059,563	10,148,597
Investment in FHLB stock	37,810	24,613
Accrued interest receivable	53,766	54,163
Deferred taxes	65,131	29,142
Premises and equipment, net	36,605	39,925
Real estate owned ("REO")	6,210	8,381
Bank owned life insurance	49,650	48,653
Core deposit intangibles	3,888	4,948
Other assets	128,138	149,393
Total Assets	13,376,561	13,327,248
Liabilities:
Deposits	10,304,604	10,688,932
Borrowings	1,691,453	1,409,056
Subordinated debt	173,444	173,397
Derivative liabilities	5,124
Accounts payable and other liabilities	132,139	130,520
Total Liabilities	12,306,764	12,401,905
Shareholders' Equity
Preferred stock, $0.001 par value, 44,301 shares issued and outstanding at September 30, 2024	130,252
Common stock, $0.001 par value; 200,000,000 shares authorized at September 30, 2024 and 100,000,000 shares authorized at December 31, 2023; 67,855,084 shares and 56,467,623 shares issued and outstanding, respectively	68	56
Additional paid-in-capital	805,819	720,899
Retained earnings	139,148	218,575
Accumulated other comprehensive loss	(5,490)	(14,187)
Total Shareholders' Equity	1,069,797	925,343
Total Liabilities and Shareholders' Equity	$ 13,376,561	$ 13,327,248

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
CONSOLIDATED BALANCE SHEETS
Amortized Cost	$ 1,313,589	$ 731,489
Allowance for credit losses	7,299	8,220
Securities HTM	$ 675,768	$ 710,021
Preferred stock par or stated value per share	$ 0.001	$ 0.001
Preferred Stock, Shares Issued	44,301	44,301
Preferred Stock, Shares Outstanding	44,301	44,301
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	200,000,000	100,000,000
Common stock, shares issued	67,855,084	56,467,623
Common stock, shares outstanding	67,855,084	56,467,623

XML

CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Interest income:
Loans	$ 120,285	$ 124,363	$ 358,973	$ 368,477
Securities	21,375	10,600	59,124	24,263
FHLB Stock, fed funds sold and interest-bearing deposits	15,496	9,802	40,426	34,353
Total interest income	157,156	144,765	458,523	427,093
Interest expense:
Deposits	89,135	84,814	275,015	219,886
Borrowings	17,182	6,158	47,044	42,280
Subordinated debt	1,720	1,720	5,130	5,115
Total interest expense	108,037	92,692	327,189	267,281
Net interest income	49,119	52,073	131,334	159,812
Provision (reversal) for credit losses	282	(2,015)	53	(711)
Net interest income after provision for credit losses	48,837	54,088	131,281	160,523
Noninterest income:
Asset management, consulting and other fees	$ 9,162	$ 8,812	$ 26,959	$ 26,624
Type of Revenue [Extensible List]	us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember	us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember	us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember	us-gaap:InvestmentAdvisoryManagementAndAdministrativeServiceMember
(Loss) gain on sale of loans	$ (13)		$ 665	$ 0
Gain on sale of securities available-for-sale			1,204
Capital market activities	(117,517)		(115,844)
Gain on sale of REO			679
Other income	2,788	$ 2,886	7,098	8,851
Total noninterest income	(105,580)	11,698	(79,239)	35,475
Noninterest expense:
Compensation and benefits	20,009	19,632	58,511	65,944
Occupancy and depreciation	9,013	9,253	27,126	27,331
Professional services and marketing costs	5,095	3,748	12,152	11,685
Customer service costs	18,954	24,683	45,796	60,402
Goodwill impairment				215,252
Other expenses	7,154	6,890	22,878	15,696
Total noninterest expense	60,225	64,206	166,463	396,310
(Loss) income before income taxes	(116,968)	1,580	(114,421)	(200,312)
Income tax (benefit) expense	(34,794)	(600)	(36,125)	1,300
Net (loss) income	$ (82,174)	$ 2,180	$ (78,296)	$ (201,612)
Net (loss) income per share:
Basic (in dollars per share)	$ (1.23)	$ 0.04	$ (1.30)	$ (3.57)
Diluted (in dollars per share)	$ (1.23)	$ 0.04	$ (1.30)	$ (3.57)
Shares used in computation:
Basic (in shares)	66,992,701	56,443,539	60,025,852	56,417,252
Diluted (in shares)	66,992,701	56,449,720	60,025,852	56,417,252

XML

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - UNAUDITED - USD ($) $ in Thousands	Common Stock	Preferred Stock	Convertible Warrants	Additional Paid-in-Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total
Beginning balance at Dec. 31, 2022	$ 56			$ 719,606	$ 426,659	$ (11,943)	$ 1,134,378
Beginning balance (in shares) at Dec. 31, 2022	56,325,242
Net Income (Loss)					(201,612)		(201,612)
Other comprehensive gain (loss)						(5,853)	(5,853)
Stock based compensation				1,129			1,129
Cash dividend					(8,456)		(8,456)
Exercise of options				157			157
Exercise of options (in shares)	19,500
Stock grants - vesting of restricted stock units (in shares)	134,386
Repurchase of shares from restricted shares vesting				(536)			(536)
Repurchase of shares from restricted shares vesting (in shares)	(35,354)
Ending balance at Sep. 30, 2023	$ 56			720,356	216,591	(17,796)	919,207
Ending balance (in shares) at Sep. 30, 2023	56,443,774
Beginning balance at Jun. 30, 2023	$ 56			719,779	215,540	(19,841)	915,534
Beginning balance (in shares) at Jun. 30, 2023	56,443,070
Net Income (Loss)					2,180		2,180
Other comprehensive gain (loss)						2,045	2,045
Stock based compensation				577			577
Cash dividend					(1,129)		(1,129)
Stock grants - vesting of restricted stock units (in shares)	1,000
Repurchase of shares from restricted shares vesting (in shares)	(296)
Ending balance at Sep. 30, 2023	$ 56			720,356	216,591	(17,796)	919,207
Ending balance (in shares) at Sep. 30, 2023	56,443,774
Beginning balance at Dec. 31, 2023	$ 56			720,899	218,575	(14,187)	925,343
Beginning balance (in shares) at Dec. 31, 2023	56,467,623
Net Income (Loss)					(78,296)		(78,296)
Other comprehensive gain (loss)						8,697	8,697
Stock based compensation				845			845
Cash dividend					(1,131)		(1,131)
Stock grants - vesting of restricted stock units	$ 1						1
Stock grants - vesting of restricted stock units (in shares)	97,780
Stock issued, value	$ 11	$ 138,462		35,307			35,318
Stock issued (in shares)	11,308,676	44,301
Issuance of warrants			$ 54,219				54,219
Issuance of warrants (in shares)			6
Issuance costs		$ (8,210)	$ (3,215)	(2,094)			(13,519)
Repurchase of shares from restricted shares vesting				(142)			(142)
Repurchase of shares from restricted shares vesting (in shares)	(18,995)
Ending balance at Sep. 30, 2024	$ 68	$ 130,252	$ 51,004	754,815	139,148	(5,490)	1,069,797
Ending balance (in shares) at Sep. 30, 2024	67,855,084	44,301	6
Beginning balance at Jun. 30, 2024	$ 57			721,814	221,321	(9,948)	933,244
Beginning balance (in shares) at Jun. 30, 2024	56,543,382
Net Income (Loss)					(82,174)		(82,174)
Other comprehensive gain (loss)						4,458	4,458
Stock based compensation				(212)			(212)
Stock grants - vesting of restricted stock units					1		1
Stock grants - vesting of restricted stock units (in shares)	3,026
Stock issued, value	$ 11	$ 138,462		35,307			35,318
Stock issued (in shares)	11,308,676	44,301
Issuance of warrants			$ 54,219				54,219
Issuance of warrants (in shares)			6
Issuance costs		$ (8,210)	$ (3,215)	(2,094)			(13,519)
Ending balance at Sep. 30, 2024	$ 68	$ 130,252	$ 51,004	$ 754,815	$ 139,148	$ (5,490)	$ 1,069,797
Ending balance (in shares) at Sep. 30, 2024	67,855,084	44,301	6

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - UNAUDITED
Net (loss) income	$ (82,174)	$ 2,180	$ (78,296)	$ (201,612)
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) on securities arising during the period	15,874	2,137	14,908	(4,848)
Reclassification adjustment for gain included in net income			(852)
Total change in unrealized gain (loss) on available-for-sale securities	15,874	2,137	14,056	(4,848)
Unrealized loss on cash flow hedge arising during this period	(11,391)		(5,124)
Amortization of unrealized loss on securities transferred from available-for-sale to held-to-maturity	(25)	(92)	(235)	(1,005)
Total other comprehensive income (loss)	4,458	2,045	8,697	(5,853)
Total comprehensive (loss) income	$ (77,716)	$ 4,225	$ (69,599)	$ (207,465)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
Cash Flows from Operating Activities:
Net loss	$ (78,296)	$ (201,612)
Adjustments to reconcile net loss to net cash provided by operating activities:
Goodwill impairment		215,252
Provision for credit losses	1,358	2
Provision (reversal) for credit losses - securities AFS	(921)	1,022
Stock-based compensation expense	845	1,129
Depreciation and amortization	3,604	3,240
Deferred tax benefit	(41,801)	(5,756)
Amortization of discount on securities	(10,513)	(2,783)
Amortization of core deposit intangible	1,060	1,246
Amortization of mortgage servicing rights - net	1,497	1,667
Gain on sale of REO	(679)
Gain on sale of loans	(665)	0
Gain on sale of securities available-for-sale	(1,204)
Gain from hedging activities	(1,672)
LHFS LOCOM adjustment at time of transfer	136,683
Change in fair value of LHFS	(19,167)
Amortization of OCI - securities transfer to HTM	(235)	1,005
Valuation allowance on mortgage servicing rights - net		(1,441)
Decrease in accrued interest receivable and other assets	16,283	15,262
Increase in accounts payable and other liabilities	6,129	13,955
Net cash provided by operating activities	12,306	42,188
Cash Flows from Investing Activities:
Net decrease in loans	173,697	438,567
Proceeds from sale of loans	8,770
Proceeds from sale of REO	2,850
Purchase of premises and equipment	(2,362)	(6,303)
Disposals of premises and equipment	37
Proceeds from sale of land	1,650
Loss on sale of land	391
Purchases of securities AFS	(1,771,075)	(617,506)
Proceeds from sale of securities available-for-sale	749,020
Maturities of securities AFS	452,464	13,668
Maturities of securities HTM	53,919	62,164
Net (increase) decrease in FHLB stock	(13,197)	748
Net cash used in investing activities	(343,836)	(108,662)
Cash Flows from Financing Activities:
Increase (decrease) in deposits	(384,328)	449,582
Proceeds from FHLB & FRB advances	2,793,476	87,506,041
Repayments on FHLB & FRB advances	(2,471,846)	(87,411,041)
Net change in federal funds purchased		(200,000)
Net decrease in line of credit		(8,000)
Net increase in subordinated debt	47	47
Net decrease in repurchase agreements	(39,233)	(99,313)
Dividends paid	(1,131)	(8,456)
Proceeds from exercise of stock options		157
Proceeds from issuance of common stock	35,318
Proceeds from issuance of preferred stock	138,462
Proceeds from issuance of convertible warrants	54,219
Equity issuance costs	(13,519)
Repurchase of stock	(142)	(536)
Net cash provided by financing activities	111,323	228,481
Increase (decrease) in cash and cash equivalents	(220,207)	162,007
Cash and cash equivalents at beginning of year	1,326,629	656,494
Cash and cash equivalents at end of period	1,106,422	818,501
Supplemental disclosures of cash flow information:
Income taxes	197
Interest	280,746	223,654
Noncash transactions:
Transfer of loans to loans held for sale	136,684
Right of use lease assets and liabilities recognized	7,372	1,019
Chargeoffs against allowance for credit losses - loans	$ 1,226	4,273
Chargeoffs against allowance for credit losses - securities		$ 3,971

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation

First Foundation Inc. (“FFI”) is a financial services holding company whose operations are conducted through its wholly owned subsidiaries:  First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB” or the “Bank”) and the wholly owned subsidiaries of FFB, First Foundation Public Finance (“FFPF”), First Foundation Insurance Services (“FFIS”) and Blue Moon Management, LLC (collectively the “Company”).  FFI also has two inactive wholly owned subsidiaries, First Foundation Consulting and First Foundation Advisors, LLC.  FFI is incorporated in the state of Delaware.  The corporate headquarters for FFI is located in Dallas, Texas.  The Company provides a comprehensive platform of financial services to individuals, businesses and other organizations and has offices in California, Nevada, Florida, Texas, and Hawaii.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates.

The accompanying unaudited consolidated financial statements include the accounts of the Company as of September 30, 2024 and December 31, 2023, and for the nine months ended September 30, 2024 and 2023, and include all information and footnotes required for interim financial reporting presentation.  All intercompany accounts and transactions have been eliminated in consolidation. The results for the 2024 interim periods are not necessarily indicative of the results expected for the full year.  These financial statements assume that readers have read the most recent Annual Report on Form 10-K filed with the SEC which contains the latest available audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023.

Significant Accounting Policies

The accounting and reporting policies of the Company are based upon GAAP and conform to predominant practices within the banking industry.  We have not made any changes in our significant accounting policies from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC, except for those described below.

Derivative Instruments (Cash Flow Hedge).  On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty used to manage our exposure to changes in interest rates as part of our overall interest rate risk management strategy.  This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  This agreement is a derivative instrument and qualifies for hedge accounting under ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”.  To qualify for hedge accounting, the cash flow hedge must be highly effective at reducing the risk associated with the hedged exposure.  The effectiveness of the hedging relationship is documented at inception and is monitored on at least a quarterly basis through the life of the transaction.  A cash flow hedge that is designated as highly effective is carried at fair value with the change in fair value recorded in other comprehensive income (loss) (“AOCI”).  If the cash flow hedge becomes ineffective, the change in fair value is reclassified from AOCI to earnings.

The cash flow hedge is classified as either derivative assets (if fair value is a net asset) or derivative liabilities (if fair value is a net liability) in the accompanying consolidated balance sheets.  The earnings and cash flow impact from this derivative asset are classified as an offset to interest expense which is consistent with the underlying hedged item.

New Accounting Pronouncements

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”.  ASU  2022-03 clarifies how the fair value of equity securities subject to contractual sale restrictions is determined.  Prior to its issuance, there was diversity in practice as to whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring the security's fair value.  ASU 2022-03 clarifies that a contractual sale restriction should not be considered in measuring fair value.  It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.  ASU 2022-03 is effective for fiscal years beginning after December 15, 2023.  The Company’s equity securities portfolio consists solely of investments in Small Business Administration (“SBA”) loan funds which can be redeemed at any time and are not subject to contractual sale restrictions.  The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”.  ASU 2023-07 requires public entities to disclose “significant segment expenses” by reportable segment if they are regularly provided to the Chief Operating Decision Maker (“CODM”) for review of profit and loss by segment and as a tool in resource-allocation decisions.  A significant segment expense category may be reported for one reportable segment but not for others.  Similarly, reportable segments may have different significant segment expense categories due to the nature of their operations.  The ASU also requires public entities to disclose the title and position of the individual or the name of the group identified as the CODM and how the CODM uses each reportable measure of segment profit or loss to assess performance and allocate resources to the segment.  ASU 2023-07 is effective for fiscal years beginning after December 15, 2023.  For financial reporting purposes, the Company has two segments:  Banking and Wealth Management.  These disclosures are presented in Note 15: Segment Reporting in the accompanying financial statements. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2024

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

NOTE 2: FAIR VALUE MEASUREMENTS

Assets Measured at Fair Value on a Recurring Basis

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Current accounting guidance establishes a fair value hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following tables show the recorded amounts of assets and liabilities measured at fair value on a recurring basis as of:

			Fair Value Measurement Level
(dollars in thousands)	Total		Level 1		Level 2		Level 3
September 30, 2024:
Investment securities available-for-sale:
Collateralized mortgage obligations	$	10,318	$	—	$	10,318	$	—
Agency mortgage-backed securities		1,108,337		—		1,108,337		—
Municipal bonds		46,799		—		46,799		—
SBA securities		9,627		—		9,627		—
Beneficial interests in FHLMC securitization		6,968		—		—		6,968
Corporate bonds		122,797		—		122,797		—
U.S. Treasury		1,274		1,274		—		—
Total assets at fair value on a recurring basis	$	1,306,120	$	1,274	$	1,297,878	$	6,968
Derivative liabilities:
Cash flow hedge	$	5,124	$	—	$	5,124	$	—
December 31, 2023:
Investment securities available-for-sale:
Collateralized mortgage obligations	$	7,605	$	—	$	7,605	$	—
Agency mortgage-backed securities		107,347		—		107,347		—
Municipal bonds		46,436		—		46,436		—
SBA securities		13,527		—		13,527		—
Beneficial interests in FHLMC securitization		7,241		—		—		7,241
Corporate bonds		122,280		—		122,280		—
U.S. Treasury		398,790		398,790		—		—
Total assets at fair value on a recurring basis	$	703,226	$	398,790	$	297,195	$	7,241

The decrease in Level 3 assets from December 31, 2023 was due to securitization paydowns in the FHLMC portfolio in the year-to-date period ended September 30, 2024.

Assets Measured at Fair Value on a Nonrecurring Basis

From time to time, we may be required to measure other assets at fair value on a nonrecurring basis. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets.

Loans. Loans measured at fair value on a nonrecurring basis include collateral dependent loans held for investment. The specific reserves for these loans are based on collateral value, net of estimated disposition costs and other identified quantitative inputs. Collateral value is determined based on independent third-party appraisals or internally-developed discounted cash flow analyses. Internal discounted cash flow analyses are also utilized to estimate the fair value of these loans, which considers internally-developed, unobservable inputs such as discount rates, default rates, and loss severity. When the fair value of the collateral is based on an observable market price or a current appraised value, we measure the impaired loan at nonrecurring Level 2.  When an appraised value is not available, or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price or a discounted cash flow has been used to determine the fair value, we measure the collateral-dependent loan at nonrecurring Level 3.  Loans for which an appraised value is not available include commercial loans which are secured by non-real estate assets such as accounts receivable and inventory.  To establish fair value for these loans, we apply a recovery factor

against eligible receivables and inventory.  This recovery factor may be either increased or decreased subject to additional support and analysis of the quality of receivables and the companies owing the receivables.  The total collateral-dependent loans were $5.7 million and $3.8 million at September 30, 2024 and December 31, 2023, respectively. Specific reserves related to these loans totaled $964 thousand and $0 at September 30, 2024 and December 31, 2023, respectively.

Real Estate Owned (REO). The fair value of REO is based on external appraised values that include adjustments for estimated selling costs and assumptions of market conditions that are not directly observable, resulting in a Level 3 classification.  The decrease in REO from December 31, 2023 was due to the sale of one of the two REO properties held at December 31, 2023, resulting in a gain of $679 thousand which is included in the accompanying consolidated statements of operations.  At September 30, 2024, REO consisted of one property which is carried at amortized cost as the appraised value adjusted for estimated selling costs exceeded the amortized cost basis.

Mortgage Servicing Rights. When mortgage loans are sold with servicing retained, servicing rights are initially recorded at fair value with the income statement effect recorded in gains on sales of loans. Fair value is based on a valuation model that calculates the present value of estimated future net servicing income, resulting in a Level 3 classification. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount.  Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.  If the Company later determines that all or a portion of the impairment no longer exists for a particular grouping, a reduction of the allowance may be recorded as an increase to income.  All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans. At September 30, 2024, there was no valuation allowance on the mortgage servicing rights.  Significant assumptions in the valuation of these Level 3 mortgage servicing rights as of September 30, 2024, included prepayment rates ranging from 20% to 30% and a discount rate of 10%.

Loans Held for Sale. Loans held for sale are accounted for at the lower of amortized cost or fair value.  The fair value for loans held for sale is based upon a discounted cash flow model which involves estimating the future cash flows from the loans in the portfolio and discounting to a present value.  Contractual cash flows associated with the loans are adjusted to reflect certain assumptions, such as prepayment, default, and loss severity assumptions, to form expected prepayment and credit-adjusted expected cash flows.  The expected cash flows are then discounted to present value at a rate of return which considers other costs and risks, such as market risk and liquidity.  Significant assumptions in the valuation of these Level 3 loans held for sale as of September 30, 2024, included prepayment rates of 4% and 12% for fixed-rate and floating-rate loans, respectively; discount rates ranging from 2.35% to 5.55%; and annual expected loss assumption rate of 0.05%.

Fair Value of Financial Instruments

FASB ASC 825-10, “Disclosures about Fair Value of Financial Instruments” requires disclosure of the fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate such value. The methodologies for estimating the fair value of financial assets and financial liabilities measured at fair value on a recurring and non-recurring basis are discussed above. The estimated fair value amounts have been determined by management using available market information and appropriate valuation methodologies and are based on the exit price notion set forth by ASU 2016-01. In cases where quoted market prices are not available, fair values are based on estimates using present value or other market value techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument. The aggregate fair value amounts presented below do not represent the underlying value of the Company.

Fair value estimates are made at a discrete point in time based on relevant market information and other information about the financial instruments. Because no active market exists for a significant portion of our financial instruments, fair value estimates are based in large part on judgments we make primarily regarding current economic conditions, risk characteristics of various financial instruments, prepayment rates, and future expected loss experience. These estimates are subjective in nature and invariably involve some inherent uncertainties. Additionally, unexpected changes in events or circumstances can occur that could require us to make changes to our assumptions and which, in turn, could significantly affect and require us to make changes to our previous estimates of fair value.

In addition, the fair value estimates are based on existing on and off-balance sheet financial instruments without attempting to estimate the value of existing and anticipated future customer relationships and the value of assets and liabilities that are not considered financial instruments, such as premises and equipment and other real estate owned.

The following methods and assumptions were used to estimate the fair value of financial instruments:

Cash and Cash Equivalents. The fair value of cash and cash equivalents approximates its carrying value.

Interest-Bearing Deposits with Financial Institutions.  The fair value of interest-bearing deposits maturing within ninety days approximate their carrying values.  

Investment Securities Available-for-Sale.  Investment securities available for sale are measured at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. When a market is illiquid or there is a lack of transparency around the inputs to valuation, the securities are classified as Level 3 and reliance is placed upon external third-party models, and management judgment and evaluation for valuation. Level 1 investment securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 investment securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Investment securities classified as Level 3 include beneficial interests in FHLMC securitizations. Significant assumptions in the valuation of these Level 3 securities as of September 30, 2024 and December 31, 2023 included prepayment rates of 20% and 25%, respectively and discount rates ranging from 5.90% to 8.80% and 8.35% to 10.0%, respectively.

Investment Securities Held-to-Maturity.  Investment securities held-to-maturity are carried at amortized cost, adjusted for premiums and discounts that are recognized in interest income using the interest method over the period to maturity.  Investment securities held-to-maturity consist of agency mortgage-backed securities issued by government sponsored entities.  Fair value is determined based upon the same independent pricing model utilized for valuation of Level 2 investment securities available-for-sale.

Investment in Equity Securities. The fair value on investment in equity securities is the carrying amount and is  evaluated for impairment on an annual basis.

Investment in Federal Home Loan Bank Stock. The Bank is a member of the Federal Home Loan Bank (the “FHLB”). As a member, we are required to own stock of the FHLB, the amount of which is based primarily on the level of our borrowings from this institution.  Because ownership is restricted, the fair value of the stock is not readily determinable and is therefore equal to the carrying amount, is classified as restricted securities and is periodically evaluated for impairment based on our assessment of the ultimate recoverability of our investments in that stock. Any cash or stock dividends paid to us on such stock are reported as income.

Loans Held for Investment. The fair value for loans with variable interest rates is the carrying amount. The fair value of fixed rate loans is derived by calculating the discounted value of future cash flows expected to be received by the various homogeneous categories of loans or by reference to secondary market pricing. All loans have been adjusted to reflect changes in credit risk.

Accrued Interest Receivable. The fair value of accrued interest receivable on loans and investment securities approximates its carrying value.

Derivative Instruments (Cash Flow Hedge).  The Bank entered into a pay-fixed, receive-variable interest rate swap agreement with a counterparty.  This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  We estimate the fair value of this agreement based on inputs from a third-party pricing model, which incorporates such factors as the Treasury curve, the secured overnight financial rate (“SOFR”), and the pay rate on the interest rate swaps.  The fair value of this derivative instrument is based on a discounted cash flow approach.  The observable nature of the inputs used in deriving its fair value results in a Level 2 classification.

Deposits. The fair value of demand deposits, savings deposits, and money market deposits is defined as the amounts payable on demand resulting in a Level 1 classification. The fair value of fixed maturity certificates of deposit is estimated based on the discounted value of the future cash flows expected to be paid on the deposits resulting in a Level 2 classification.

Borrowings. The fair value of borrowings is the carrying value of overnight FHLB advances and federal funds purchased that approximate fair value because of the short-term maturity of these instruments, resulting in a Level 1 classification. The fair value of borrowings in the form of FHLB putable advances also approximates carrying value and are classified as Level 1 instruments.  

Subordinated debt.  The fair value of term borrowings is derived by calculating the discounted value of future cash flows expected to be paid out by the Company resulting in a Level 3 classification.

Accrued Interest Payable.  The fair value of accrued interest payable on deposits, borrowings, and subordinated debt approximates its carrying value.

The following table sets forth the estimated fair values and related carrying amounts of our financial instruments as of:

	Carrying		Fair Value Measurement Level
(dollars in thousands)	Value		1		2		3		Total
September 30, 2024:
Assets:
Cash and cash equivalents	$	1,106,422	$	1,106,422	$	—	$	—	$	1,106,422
Securities AFS, net		1,306,120		1,275		1,297,877		6,968		1,306,120
Securities HTM		734,863		—		675,768		—		675,768
Loans held for sale		1,788,395		—		—		1,788,395		1,788,395
Loans, net		8,059,563		—		4,922		7,746,825		7,751,747
Investment in FHLB stock		37,810		—		37,810		—		37,810
Investment in equity securities		11,780		—		—		11,780		11,780
Accrued interest receivable		53,766		53,766		—		—		53,766
Liabilities:
Deposits	$	10,304,604	$	8,131,079	$	2,601,375	$	—	$	10,732,454
Borrowings		1,691,453		1,729,848		—		—		1,729,848
Subordinated debt		173,444		—		—		138,978		138,978
Accrued interest payable		46,438		46,438		—		—		46,438
Derivative liabilities		5,124		—		5,124		—		5,124
December 31, 2023:
Assets:
Cash and cash equivalents	$	1,326,629	$	1,326,629	$	—	$	—	$	1,326,629
Securities AFS, net		703,226		398,790		297,194		7,242		703,226
Securities HTM		789,578		—		710,021		—		710,021
Loans, net		10,148,597		—		—		9,827,508		9,827,508
Investment in FHLB stock		24,613		—		24,613		—		24,613
Investment in equity securities		11,768		—		—		11,768		11,768
Accrued interest receivable		54,163		54,163		—		—		54,163
Liabilities:
Deposits	$	10,688,932	$	7,545,262	$	3,145,870	$	—	$	10,691,132
Borrowings		1,409,056		609,056		800,000		—		1,409,056
Subordinated debt		173,397		—		—		136,002		136,002
Accrued interest payable		42,177		42,177		—		—		42,177

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SECURITIES

9 Months Ended

Sep. 30, 2024

SECURITIES

SECURITIES

NOTE 3: SECURITIES

The following table provides a summary of the Company’s securities AFS portfolio as of:

	Amortized		Gross Unrealized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Collateralized mortgage obligations	$	11,251	$	26	$	(959)	$	—	$	10,318
Agency mortgage-backed securities		1,094,633		13,966		(262)		—		1,108,337
Municipal bonds		49,174		—		(2,375)		—		46,799
SBA securities		9,688		5		(66)		—		9,627
Beneficial interests in FHLMC securitization		13,758		21		(333)		(6,478)		6,968
Corporate bonds		133,786		—		(10,168)		(821)		122,797
U.S. Treasury		1,299		—		(25)		—		1,274
Total	$	1,313,589	$	14,018	$	(14,188)	$	(7,299)	$	1,306,120
December 31, 2023:
Collateralized mortgage obligations	$	8,946	$	—	$	(1,341)	$	—	$	7,605
Agency mortgage-backed securities		106,733		1,028		(414)		—		107,347
Municipal bonds		49,473		—		(3,037)		—		46,436
SBA securities		13,631		2		(106)		—		13,527
Beneficial interests in FHLMC securitization		14,473		4		(418)		(6,818)		7,241
Corporate bonds		138,858		—		(15,176)		(1,402)		122,280
U.S. Treasury		399,375		—		(585)		—		398,790
Total	$	731,489	$	1,034	$	(21,077)	$	(8,220)	$	703,226

The following table provides a summary of the Company’s securities HTM portfolio as of:

	Amortized		Gross Unrecognized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Agency mortgage-backed securities	$	734,863	$	—	$	(59,095)	$	—	$	675,768
Total	$	734,863	$	—	$	(59,095)	$	—	$	675,768
December 31, 2023:
Agency mortgage-backed securities	$	789,578	$	1	$	(79,558)	$	—	$	710,021
Total	$	789,578	$	1	$	(79,558)	$	—	$	710,021

As of September 30, 2024, the tables above include $575.1 million in agency mortgage-backed securities pledged as collateral to the state of Florida to meet regulatory requirements; $1.3 million in U.S. Treasury securities pledged as collateral to various states to meet regulatory requirements related to the Bank’s trust operations; $259.5 million of agency mortgage-backed securities pledged as collateral as support for the Bank’s obligations under loan sales and securitization agreements entered into from 2018 and 2021; and $82.6 million in securities consisting of SBA securities, collateralized mortgage obligations, and agency mortgage-backed securities pledged as collateral for repurchase agreements obtained from a prior bank acquisition.  A total of $904.9 million in SBA and agency mortgage-backed securities, collateralized mortgage obligations, corporate and municipal bonds are pledged as collateral to the Federal Reserve Bank’s discount window and bank term funding program from which the Bank may borrow.

We monitor the credit quality of these securities by evaluating various quantitative attributes. The credit quality indicators the Company monitors include, but are not limited to, credit ratings of individual securities and the credit rating

of United States government-sponsored enterprises that guarantee the securities. Credit ratings express opinions about the credit quality of a security. Securities rated investment grade, as defined by NRSROs, are generally considered by the rating agencies and market participants to be low credit risk.  As of September 30, 2024, all of the Company’s securities were either investment grade or were issued by a U.S. government agency or GSE with an investment grade rating, with the exception of two corporate bonds having a combined market value of $32.0 million which were below investment grade.

The tables below indicate the gross unrealized losses and fair values of our securities AFS portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Securities with Unrealized Loss at September 30, 2024
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Collateralized mortgage obligations	$	—	$	—	$	7,360	$	(959)	$	7,360	$	(959)
Agency mortgage-backed securities		1,803		(9)		4,668		(253)		6,471		(262)
Municipal bonds		1,698		(34)		44,600		(2,341)		46,298		(2,375)
SBA securities		151		—		8,170		(66)		8,321		(66)
Beneficial interests in FHLMC securitization		—		—		4,145		(333)		4,145		(333)
Corporate bonds		28,189		(1,811)		95,429		(8,357)		123,618		(10,168)
U.S. Treasury		—		—		1,275		(25)		1,275		(25)
Total	$	31,841	$	(1,854)	$	165,647	$	(12,334)	$	197,488	$	(14,188)

	Securities with Unrealized Loss at December 31, 2023
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Collateralized mortgage obligations	$	—	$	—	$	7,606	$	(1,341)	$	7,606	$	(1,341)
Agency mortgage-backed securities		—		—		5,710		(414)		5,710		(414)
Municipal bonds		1,779		(26)		42,847		(3,011)		44,626		(3,037)
SBA securities		353		—		12,025		(106)		12,378		(106)
Beneficial interests in FHLMC securitization		—		—		4,041		(418)		4,041		(418)
Corporate bonds		14,847		(153)		108,832		(15,023)		123,679		(15,176)
U.S. Treasury		397,942		(534)		848		(51)		398,790		(585)
Total	$	414,921	$	(713)	$	181,909	$	(20,364)	$	596,830	$	(21,077)

Unrealized losses in the securities AFS portfolio have not been recognized into income because the securities are either of high credit quality, management does not intend to sell, it is not more likely than not that management would be required to sell the securities prior to their anticipated recovery, or the decline in fair value is largely due to changes in discount rates and assumptions regarding future interest rates. The fair value is expected to recover as the bonds approach maturity.

The tables below indicate the gross unrecognized losses and fair value of our securities HTM portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrecognized loss position.

	Securities with Unrecognized Loss at September 30, 2024
	Less than 12 months				12 months or more				Total
	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Agency mortgage-backed securities	$	18,146	$	(87)	$	657,622	$	(59,008)	$	675,768	$	(59,095)
Total	$	18,146	$	(87)	$	657,622	$	(59,008)	$	675,768	$	(59,095)

	Securities with Unrecognized Loss at December 31, 2023
	Less than 12 months				12 months or more				Total
	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Agency mortgage-backed securities	$	—	$	—	$	689,454	$	(79,558)	$	689,454	$	(79,558)
Total	$	—	$	—	$	689,454	$	(79,558)	$	689,454	$	(79,558)

During the nine-month period ending September 30, 2024, securities available-for-sale with an amortized cost of $741 million were sold, resulting in gross realized gains of $1.4 million and gross realized losses of $0.2 million.  There were no security sales during the nine-month period ending September 30, 2023.

The following is a rollforward of the Company’s allowance for credit losses related to investments for the following periods:

		Beginning		Provision (Reversal)						Ending
(dollars in thousands)		Balance		for Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2024:
Beneficial interests in FHLMC securitization	$	6,502	$	(24)	$	—	$	—	$	6,478
Corporate bonds		840		(19)		—		—		821
Total	$	7,342	$	(43)	$	—	$	—	$	7,299
Nine Months Ended September 30, 2024:
Beneficial interests in FHLMC securitization	$	6,818	$	(340)	$	—	$	—	$	6,478
Corporate bonds		1,402		(581)		—		—		821
Total	$	8,220	$	(921)	$	—	$	—	$	7,299
Three Months Ended September 30, 2023:
Municipal bonds	$	—	$	1	$	—	$	—	$	1
Beneficial interests in FHLMC securitization		7,058		40		—		—		7,098
Corporate bonds		1,477		(86)		—		—		1,391
Total	$	8,535	$	(45)	$	—	$	—	$	8,490
Nine Months Ended September 30, 2023:
Municipal bonds	$	—	$	1	$	—	$	—	$	1
Beneficial interests in FHLMC securitization		11,439		(370)		(3,971)		—		7,098
Corporate bonds		—		1,391		—		—		1,391
Total	$	11,439	$	1,022	$	(3,971)	$	—	$	8,490

During the nine-month periods ending September 30, 2024 and September 30, 2023, the Company recorded a provision (reversal) for credit losses of ($921) thousand and $1.0 million, respectively.  

The allowance for credit losses (“ACL”) on investment securities is determined for both held-to-maturity and available-for-sale classifications of the investment portfolio in accordance with ASC 326 and is evaluated on a quarterly basis. The ACL for held-to-maturity investment securities is determined on a collective basis, based on shared risk characteristics, and is determined at the individual security level when the Company deems a security to no longer possess shared risk characteristics. Under ASC 326-20, for investment securities where the Company has reason to believe the credit loss exposure is remote, such as those guaranteed by the U.S. government or government sponsored entities, a zero-loss expectation is applied and a company is not required to estimate and recognize an ACL.  The ACL related to held-to-maturity investment securities was zero at September 30, 2024.

For securities AFS in an unrealized loss position, the Company first evaluates whether it intends to sell, or whether it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either of these criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. If neither criterion is met, the Company is required to assess whether the decline in fair value has resulted from credit losses or noncredit-related factors. In determining whether a security’s decline in fair value is credit related, the Company considers a number of factors including, but not limited to: (i) the extent to which the fair value of the investment is less than its amortized cost; (ii) the financial condition and near-term prospects of the issuer; (iii) downgrades in credit ratings; (iv) payment structure of the security; and (v) the ability of the issuer of the security to make scheduled principal and interest payments. If, after considering these factors, the present value of expected cash flows to be collected is less than the amortized cost basis, a credit loss exists, and an allowance for credit loss is recorded through income as a component of provision for credit loss expense. If the assessment indicates that a credit loss does not exist, the Company records the decline in fair value through other comprehensive income (loss), net of related income tax effects. The Company has made the election to exclude accrued interest receivable on securities from the estimate of credit losses and report accrued interest separately on the consolidated balance sheets. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met.  

On a quarterly basis, the Company engages with an independent third party to perform an analysis of expected credit losses for its municipal and corporate bond securities in order to supplement our own internal review.  As of September 30, 2024, the analysis concluded and the Company concurred that fifteen corporate bonds were impacted by credit loss, for which ($581) thousand was recorded as reversal of provision to the ACL related to available-for-sale securities and that no municipal bond securities were impacted by credit loss.  The ACL reserve related to corporate bond securities within the available-for-sale portfolio totaled $821 thousand at September 30, 2024.  Charge-offs totaled $0 and $4.0 million for the nine-month periods ended September 30, 2024 and September 30, 2023, respectively.  For the year ended December 31, 2023, the Company recorded total charge-offs of $4.0 million related to several interest-only strip securities.  The ACL related to available-for-sale securities totaled $7.3 million and $8.2 million as of September 30, 2024 and December 31, 2023, respectively.

The amortized cost and fair value of investment securities AFS by contractual maturity were as follows for the periods indicated:

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
September 30, 2024
Amortized Cost:
Collateralized mortgage obligations	$	—		$	277		$	171		$	10,803		$	11,251
Agency mortgage-backed securities		102			3,238			—			1,091,293			1,094,633
Municipal bonds		500			15,318			31,118			2,238			49,174
SBA securities		—			474			414			8,800			9,688
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,819			13,758
Corporate bonds		—			61,957			66,304			5,525			133,786
U.S. Treasury		799			500			—			—			1,299
Total	$	4,531		$	86,573		$	98,007		$	1,124,478		$	1,313,589
Weighted average yield		0.82	%		5.98	%		3.01	%		5.49	%		5.32	%
Estimated Fair Value:
Collateralized mortgage obligations	$	—		$	261		$	166		$	9,891		$	10,318
Agency mortgage-backed securities		101			3,137			—			1,105,098			1,108,336
Municipal bonds		500			14,900			29,520			1,879			46,799
SBA securities		—			472			414			8,741			9,627
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,507			13,446
Corporate bonds		—			59,121			60,165			4,332			123,618
U.S. Treasury		796			479			—			—			1,275
Total	$	4,527		$	83,179		$	90,265		$	1,135,448		$	1,313,419

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
December 31, 2023
Amortized Cost:
Collateralized mortgage obligations	$	—		$	—		$	513		$	8,433		$	8,946
Agency mortgage-backed securities		141			4,364			—			102,228			106,733
Municipal bonds		—			9,672			36,103			3,698			49,473
SBA securities		—			944			623			12,064			13,631
Beneficial interests in FHLMC securitization		3,315			5,380			—			5,778			14,473
Corporate bonds		5,012			60,444			67,872			5,530			138,858
U.S. Treasury		398,676			699			—			—			399,375
Total	$	407,144		$	81,503		$	105,111		$	137,731		$	731,489
Weighted average yield		5.47	%		6.46	%		2.90	%		5.94	%		5.30	%
Estimated Fair Value:
Collateralized mortgage obligations	$	—		$	—		$	466		$	7,139		$	7,605
Agency mortgage-backed securities		137			4,134			—			103,076			107,347
Municipal bonds		—			9,231			34,142			3,063			46,436
SBA securities		—			936			622			11,969			13,527
Beneficial interests in FHLMC securitization		3,315			5,380			—			5,364			14,059
Corporate bonds		4,973			58,337			56,395			3,977			123,682
U.S. Treasury		398,135			655			—			—			398,790
Total	$	406,560		$	78,673		$	91,625		$	134,588		$	711,446

The amortized cost and fair value of investment securities HTM by contractual maturity were as follows for the periods indicated:

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
September 30, 2024
Amortized Cost:
Agency mortgage-backed securities	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Total	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Weighted average yield		—	%		0.95	%		1.54	%		2.32	%		2.30	%
Estimated Fair Value:
Agency mortgage-backed securities	$	—		$	4,705		$	8,744		$	662,319		$	675,768
Total	$	—		$	4,705		$	8,744		$	662,319		$	675,768

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
December 31, 2023
Amortized Cost:
Agency mortgage-backed securities	$	—		$	4,259		$	12,537		$	772,782		$	789,578
Total	$	—		$	4,259		$	12,537		$	772,782		$	789,578
Weighted average yield		—	%		0.86	%		1.44	%		2.26	%		2.24	%
Estimated Fair Value:
Agency mortgage-backed securities	$	—		$	3,972		$	11,457		$	694,592		$	710,021
Total	$	—		$	3,972		$	11,457		$	694,592		$	710,021

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LOANS

9 Months Ended

Sep. 30, 2024

LOANS

LOANS

NOTE 4: LOANS

The following is a summary of our loans held for investment as of:

	September 30,		December 31,
(dollars in thousands)	2024		2023
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	3,322,471	$	5,227,885
Single family		889,616		950,712
Total real estate loans secured by residential properties		4,212,087		6,178,597
Commercial properties		952,700		987,596
Land and construction		80,307		137,298
Total real estate loans		5,245,094		7,303,491
Commercial and industrial loans		2,837,830		2,856,228
Consumer loans		832		1,328
Total loans		8,083,756		10,161,047
Premiums, discounts and deferred fees and expenses		5,107		16,755
Total	$	8,088,863	$	10,177,802

The Company’s loans held for investment portfolio is segmented according to loans that share similar attributes and risk characteristics.  In August 2024, a portion of the Company’s multifamily portfolio totaling $1.9 billion in principal

balance was reclassified from loans held for investment to loans held for sale.  As of September 30, 2024, none of the loans transferred have been sold.

Loans secured by real estate include those secured by either residential or commercial real estate properties, such as multifamily and single-family residential loans; owner occupied and non-owner occupied commercial real estate loans; and land and construction loans.

Commercial and industrial loans are loans to businesses where the operating cash flow of the business is the primary source of payment.  This segment includes commercial revolving lines of credit and term loans, municipal finance loans, equipment finance loans and SBA loans.

Consumer loans include personal installment loans and line of credit, and home equity lines of credit.  These loan products are offered as an accommodation to clients of our primary business lines.

Loans with a collateral value totaling $184.6 million and $283.7 million were pledged as collateral to secure borrowings with the Federal Reserve Bank at September 30, 2024 and December 31, 2023, respectively.  Loans with a market value of $4.3 billion and $4.2 billion were pledged as collateral to secure borrowings with the FHLB at September 30, 2024 and December 31, 2023, respectively.

During the nine-month period ended September 30, 2024, loans totaling $8.1 million in unpaid principal balance were sold, resulting in a net gain on sale of loans of $665 thousand.  There were no loan sales during the nine-month period ended September 30, 2023.  

The following table summarizes our delinquent and nonaccrual loans as of:

	Past Due and Still Accruing												Total Past
							90 Days						Due and
(dollars in thousands)	30–59 Days			60-89 Days			or More			Nonaccrual			Nonaccrual			Current		Total
September 30, 2024:
Real estate loans:
Residential properties	$	1,887		$	—		$	—		$	20,357		$	22,244		$	4,198,803	$	4,221,047
Commercial properties		9,046			—			—			9,145			18,191			933,976		952,167
Land and construction		—			—			—			—			—			80,153		80,153
Commercial and industrial loans		8,088			10,138			—			8,704			26,930			2,807,701		2,834,631
Consumer loans		—			—			—			—			—			865		865
Total	$	19,021		$	10,138		$	—		$	38,206		$	67,365		$	8,021,498	$	8,088,863
Percentage of total loans		0.24	%		0.13	%		—	%		0.47	%		0.83	%
December 31, 2023:
Real estate loans:
Residential properties	$	93		$	416		$	—		$	112		$	621		$	6,196,923	$	6,197,544
Commercial properties		27,403			403			1,730			2,915			32,451			954,321		986,772
Land and construction		—			—			—			—			—			136,827		136,827
Commercial and industrial loans		525			88			—			8,804			9,417			2,845,845		2,855,262
Consumer loans		—			—			—			—			—			1,397		1,397
Total	$	28,021		$	907		$	1,730		$	11,831		$	42,489		$	10,135,313	$	10,177,802
Percentage of total loans		0.28	%		0.01	%		0.02	%		0.12	%		0.42	%

The following table summarizes our nonaccrual loans as of:

	Nonaccrual		Nonaccrual
	with Allowance		with no Allowance
(dollars in thousands)	for Credit Losses		for Credit Losses
September 30, 2024:
Real estate loans:
Residential properties	$	883	$	19,474
Commercial properties		9,145		—
Commercial and industrial loans		8,704		—
Total	$	18,732	$	19,474
December 31, 2023:
Real estate loans:
Residential properties	$	—	$	112
Commercial properties		—		2,915
Commercial and industrial loans		7,406		1,398
Total	$	7,406	$	4,425

The Company adopted ASU 2022-02, Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023.  The amendments in this ASU eliminate the accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty.  The amendments in this ASU were applied prospectively, and therefore, loan modification and charge off information is provided for only those items occurring after the January 1, 2023 adoption date.

Based on the guidance in ASU 2022-02, a loan modification or refinancing results in a new loan if the terms of the new loan are at least as favorable to the lender as the terms with customers with similar collection risks that are not refinancing or restructuring their loans and the modification to the terms of the loan are more than minor.  If a loan modification or refinancing does not result in a new loan, it is classified as a loan modification.

There are additional disclosures for modification of loans with borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows.  The disclosures are applicable to situations where there is interest rate reduction, term extensions, principal forgiveness, other-than-insignificant payment delays, or a combination of any of these items.  

The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the nine-month periods ended September 30, 2024 and 2023, respectively with related amortized cost balances, respective percentage share of the total class of loans, and the related financial effect:

	September 30, 2024:
	Term Extension
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Residential loans	$	6	—	%	1 loan with term extension of 22 months.
Commercial real estate loans		12,900	1.40	%	1 loan with term extension of 10 months.
Commercial and industrial loans		2,294	—	%	6 loans with various extensions of loan maturity ranging from 3 to 60 months and payment deferral. 1 loan with 3-month extension and 3-month forbearance. 1 loan with $100 payments through 3 months.
Total	$	15,200
	Combination
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	9,568	0.40	%	5 loans with various extensions of loan maturity ranging from 6 to 7 months and payment deferral. 1 loan with 5 month forbearance and interest rate reduction. 2 loans with $100 payments through 3 months with payment deferral. 2 loans with term extension of 12 months and payment deferral.
Total	$	9,568
	Total
		Amortized Cost Basis	% of Total Class of Loans
Residential loans	$	6	—	%
Commercial real estate loans		12,900	1.40	%
Commercial and industrial loans		11,862	0.40	%
Total	$	24,768
	September 30, 2023:
	Term Extension
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	5,770	0.20	%	1 loan with 3-month extension
Total	$	5,770
	Payment Deferrals
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	400	—	%	4 loans each with partial payment deferrals for 3 months
Total	$	400
	Combination
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial real estate loans	$	645	0.10	%	1 loan with 10 year term extension and interest reduction
Total	$	645
	Total
		Amortized Cost Basis	% of Total Class of Loans
Commercial real estate loans	$	645	0.10	%
Commercial and industrial loans	$	6,170	0.20	%
Total	$	6,815

The following table presents the amortized cost basis of loans that had a payment default since modification during the nine-months ended September 30, 2024 and 2023, respectively:

	September 30, 2024:
	Combination
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,229
Total		2	$	2,229
	Total
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,229
Total		2	$	2,229
	September 30, 2023:
	Payment Deferrals
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		1	$	1,339
Total		1	$	1,339
	Combination
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		1	$	950
Total		1	$	950
	Total
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,289
Total		2	$	2,289

The following table presents the payment status of our loan modifications made during the previous twelve-month period of October 1, 2023 to September 30, 2024:

			30-89 Days		90+ Days
(dollars in thousands)		Current	Past Due		Past Due			Nonaccrual	Total
September 30, 2024:
Residential loans	$	253	$	—	$	—	$	—	$	253
Commercial real estate loans		12,900		—		—		—		12,900
Commercial and industrial loans		6,104		7,060		—		8,252		21,416
Total	$	19,257	$	7,060	$	—	$	8,252	$	34,569

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ALLOWANCE FOR CREDIT LOSSES

9 Months Ended

Sep. 30, 2024

ALLOWANCE FOR CREDIT LOSSES

ALLOWANCE FOR CREDIT LOSSES

NOTE 5: ALLOWANCE FOR CREDIT LOSSES

The Company accounts for ACL related to loans in accordance with ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the Company to record an estimate of current expected credit losses (“CECL”) for loans at the time of origination.  The ACL is maintained at a level deemed appropriate by management to provide for expected credit losses in the portfolio as of the date of the consolidated balance sheet.  

The measurement of the ACL is performed by collectively pooling and evaluating loans with similar risk characteristics.  The quantitative CECL model estimates credit losses by applying pool-specific probability of default (“PD”) and loss given default (“LGD”) rates to the expected exposure at default ("EAD") over the contractual life of the loans.  A significant portion of the ACL is calculated and measured on a collective pool basis, representing $7.9 billion or approximately 97.4% of the total blended loan portfolio as of September 30, 2024.  As of December 31, 2023, the ACL was calculated and measured based upon $9.9 billion or 97.2% of the total blended portfolio evaluated on a collective pool

basis and $268 million in small homogeneous loan portfolios or 2.6% of the total blended portfolio evaluated using historical loss factors.  Pooled loan segments consisted of multifamily, commercial, single-family, non-owner occupied commercial real estate, and construction loans.  The remaining portion of the loan portfolio, representing $200.6 million or approximately 2.5% of the total blended loan portfolio, consisted of small homogeneous loan portfolios which has its quantitative reserve calculated separately based on historical loss factors for the respective portfolios or, if no historical loss is available, based on peer group historical losses.  These loan portfolios include equipment finance, land, consumer and commercial small balance loans.  In addition, collateral dependent loans are separately valued based on the fair value of the underlying collateral.  

The measurement also incorporates qualitative components such as internal and external risk factors that may not be adequately assessed in the quantitative model.  Qualitative adjustments primarily relate to segments of the loan portfolio deemed by management to be of a higher-risk profile or other factors where management believes the quantitative component of the ACL model may not be fully reflective of levels deemed adequate in the judgment of management.  Qualitative adjustments may also relate to uncertainty as to future macroeconomic conditions and the related impact on certain loan segments.  Management reviews the need for an appropriate level of quantitative adjustments on a quarterly basis, and as such, the amount and allocation of qualitative adjustments may change in future periods.  Management applies a two-year time horizon in its ACL model at which there is a gradual reversion back to historical loss experience.

For purposes of calculating the ACL, the Company has elected to include deferred loan fees and expenses in the loan balance and exclude accrued interest from loan balances.

The following is a rollforward of the allowance for credit losses related to loans for the following periods:

			Provision
	Beginning		(Reversal) for						Ending
(dollars in thousands)	Balance		Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2024:
Real estate loans:
Residential properties	$	9,013	$	(2,010)	$	—	$	—	$	7,003
Commercial properties		6,086		493		—		—		6,579
Land and construction		77		(17)		—		—		60
Commercial and industrial loans		14,104		1,809		(341)		80		15,652
Consumer loans		15		14		(23)		—		6
Total	$	29,295	$	289	$	(364)	$	80	$	29,300
Nine Months Ended September 30, 2024:
Real estate loans:
Residential properties	$	9,921	$	(2,918)	$	—	$	—	$	7,003
Commercial properties		4,148		2,431		—		—		6,579
Land and construction		332		(272)		—		—		60
Commercial and industrial loans		14,796		1,676		(1,203)		383		15,652
Consumer loans		8		20		(23)		1		6
Total	$	29,205	$	937	$	(1,226)	$	384	$	29,300
Three Months Ended September 30, 2023:
Real estate loans:
Residential properties	$	8,234		140		—		—	$	8,374
Commercial properties		5,253		(979)		—		—		4,274
Land and construction		287		(13)		—		—		274
Commercial and industrial loans		17,690		(1,070)		(1,183)		814		16,251
Consumer loans		21		—		—		1		22
Total	$	31,485	$	(1,922)	$	(1,183)	$	815	$	29,195
Nine Months Ended September 30, 2023:
Real estate loans:
Residential properties	$	8,306	$	68	$	—	$	—	$	8,374
Commercial properties		8,714		(4,191)		(249)		—		4,274
Land and construction		164		110		—		—		274
Commercial and industrial loans		16,521		2,019		(4,022)		1,733		16,251
Consumer loans		26		(4)		(2)		2		22
Total	$	33,731	$	(1,998)	$	(4,273)	$	1,735	$	29,195

A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral.  Collateral dependent loans are evaluated individually to determine expected credit losses and any ACL allocation is determined based upon the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs (if applicable).  The following table presents the amortized cost basis of collateral dependent loans and the related ACL allocated to these loans as of the dates indicated:

					Equipment/					ACL
(dollars in thousands)	Real Estate		Cash		Receivables		Total			Allocation
September 30, 2024:
Loans secured by real estate:
Residential properties
Single family	$	244	$	—	$	—	$	244	$	—
Commercial real estate loans		5,462		—		—		5,462		964
Commercial loans		—		—		—		—		—
Total	$	5,706	$	—	$	—	$	5,706	$	964
December 31, 2023:
Loans secured by real estate:
Commercial real estate loans	$	2,523	$	—	$	—	$	2,523	$	—
Commercial loans		—		250		978		1,228		—
Total	$	2,523	$	250	$	978	$	3,751	$	—

Credit Risk Management

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as current financial information, historical payment experience, collateral adequacy, credit documentation, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. This analysis typically includes larger, non-homogeneous loans such as loans secured by multifamily or commercial real estate and commercial and industrial loans. This analysis is performed on an ongoing basis as new information is obtained. The Company uses the following definitions for risk ratings:

Pass: Loans classified as pass are strong credits with no existing or known potential weaknesses deserving of management’s close attention.

Special Mention: Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

Substandard: Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Loans listed as pass include larger non-homogeneous loans not meeting the risk rating definitions above and smaller, homogeneous loans not assessed on an individual basis.

The following tables present risk categories of loans based on year of origination, and includes gross charge-offs in accordance with ASU 2022-02 as of the dates presented:

													Revolving
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Loans		Total
September 30, 2024:
Loans secured by real estate:
Residential
Multifamily
Pass	$	73,086	$	542	$	1,712,559	$	789,647	$	394,488	$	273,934	$	—	$	3,244,256
Special mention		—		—		—		6,489		11,628		51,471		—		69,588
Substandard		—		—		—		—		—		14,070		—		14,070
Total	$	73,086	$	542	$	1,712,559	$	796,136	$	406,116	$	339,475	$	—	$	3,327,914
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Single family
Pass	$	2,999	$	10,030	$	248,194	$	260,156	$	91,456	$	212,099	$	45,767	$	870,701
Special mention		—		—		—		—		—		1,403		—		1,403
Substandard		—		—		—		—		—		20,905		124		21,029
Total	$	2,999	$	10,030	$	248,194	$	260,156	$	91,456	$	234,407	$	45,891	$	893,133
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate
Pass	$	2,437	$	2,408	$	224,226	$	116,802	$	143,541	$	419,491	$	—	$	908,905
Special mention		—		—		—		1,198		2,225		843		—		4,266
Substandard		—		12,900		—		111		1,274		24,711		—		38,996
Total	$	2,437	$	15,308	$	224,226	$	118,111	$	147,040	$	445,045	$	—	$	952,167
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Land and construction
Pass	$	108	$	24,962	$	32,067	$	8,078	$	9,190	$	5,748	$	—	$	80,153
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	108	$	24,962	$	32,067	$	8,078	$	9,190	$	5,748	$	—	$	80,153
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Pass	$	58,523	$	148,702	$	1,012,681	$	251,189	$	92,598	$	35,695	$	1,171,997	$	2,771,385
Special mention		721		8,134		8,499		24,368		17		619		3,976		46,334
Substandard		116		34		68		804		3,686		2,490		9,714		16,912
Total	$	59,360	$	156,870	$	1,021,248	$	276,361	$	96,301	$	38,804	$	1,185,687	$	2,834,631
Gross charge-offs	$	—	$	179	$	678	$	303	$	43	$	—	$	—	$	1,203
Consumer
Pass	$	24	$	7	$	—	$	516	$	—	$	52	$	266	$	865
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	24	$	7	$	—	$	516	$	—	$	52	$	266	$	865
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	23	$	23
Total loans
Pass	$	137,177	$	186,651	$	3,229,727	$	1,426,388	$	731,273	$	947,019	$	1,218,030	$	7,876,265
Special mention		721		8,134		8,499		32,055		13,870		54,336		3,976		121,591
Substandard		116		12,934		68		915		4,960		62,176		9,838		91,007
Total	$	138,014	$	207,719	$	3,238,294	$	1,459,358	$	750,103	$	1,063,531	$	1,231,844	$	8,088,863
Gross charge-offs	$	—	$	179	$	678	$	303	$	43	$	—	$	23	$	1,226

													Revolving
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Loans		Total
December 31, 2023:
Loans secured by real estate:
Residential
Multifamily
Pass	$	37,343	$	2,355,381	$	1,537,636	$	763,736	$	289,675	$	243,146	$	—	$	5,226,917
Special mention		—		—		1,248		—		5,577		9,426		—		16,251
Substandard		—		—		—		—		—		—		—		—
Total	$	37,343	$	2,355,381	$	1,538,884	$	763,736	$	295,252	$	252,572	$	—	$	5,243,168
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Single family
Pass	$	13,631	$	259,043	$	267,373	$	92,567	$	38,132	$	208,035	$	54,444	$	933,225
Special mention		—		—		—		—		—		20,166		—		20,166
Substandard		—		—		—		—		—		846		139		985
Total	$	13,631	$	259,043	$	267,373	$	92,567	$	38,132	$	229,047	$	54,583	$	954,376
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Commercial real estate
Pass	$	2,469	$	221,525	$	130,579	$	119,684	$	81,243	$	383,729	$	—	$	939,229
Special mention		—		—		1,223		2,275		—		10,747		—		14,245
Substandard		12,900		—		116		1,445		11,424		7,413		—		33,298
Total	$	15,369	$	221,525	$	131,918	$	123,404	$	92,667	$	401,889	$	—	$	986,772
Gross charge-offs	$	—		—		—		—		—		249		—	$	249
Land and construction
Pass	$	19,151	$	43,923	$	29,445	$	36,498	$	807	$	7,003	$	—	$	136,827
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	19,151	$	43,923	$	29,445	$	36,498	$	807	$	7,003	$	—	$	136,827
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Commercial
Pass	$	182,391	$	1,082,510	$	291,663	$	119,035	$	21,314	$	25,030	$	1,087,075	$	2,809,018
Special mention		—		1,360		24,653		703		56		656		735		28,163
Substandard		55		12		842		3,881		1,325		458		11,508		18,081
Total	$	182,446	$	1,083,882	$	317,158	$	123,619	$	22,695	$	26,144	$	1,099,318	$	2,855,262
Gross charge-offs	$	257		1,420		1,205		587		117		48		1,364	$	4,998
Consumer
Pass	$	47	$	—	$	577	$	—	$	299	$	59	$	415	$	1,397
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	47	$	—	$	577	$	—	$	299	$	59	$	415	$	1,397
Gross charge-offs	$	—		—		—		—		—		—		2	$	2
Total loans
Pass	$	255,032	$	3,962,382	$	2,257,273	$	1,131,520	$	431,470	$	867,002	$	1,141,934	$	10,046,613
Special mention		—		1,360		27,124		2,978		5,633		40,995		735		78,825
Substandard		12,955		12		958		5,326		12,749		8,717		11,647		52,364
Total	$	267,987	$	3,963,754	$	2,285,355	$	1,139,824	$	449,852	$	916,714	$	1,154,316	$	10,177,802
Gross charge-offs	$	257		1,420		1,205		587		117		297		1,366	$	5,249

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CORE DEPOSIT INTANGIBLES

9 Months Ended

Sep. 30, 2024

CORE DEPOSIT INTANGIBLES

CORE DEPOSIT INTANGIBLES

NOTE 6: CORE DEPOSIT INTANGIBLES

Core deposit intangibles are intangible assets having definite useful lives arising from whole bank acquisitions.  Core deposit intangibles are amortized on an accelerated method over their estimated useful lives, ranging from 7 to 10 years.  At September 30, 2024 and December 31, 2023, core deposit intangible assets totaled $3.9 million and $4.9 million, respectively, and we recognized $1.1 million and $1.2 million in core deposit intangible amortization expense for the nine-month periods ended September 30, 2024 and September 30, 2023, respectively.

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DERIVATIVE ASSETS/LIABILITIES

9 Months Ended

Sep. 30, 2024

DERIVATIVE ASSETS/LIABILITIES

DERIVATIVE ASSETS/LIABILITIES

NOTE 7: DERIVATIVE ASSETS/LIABILITIES

On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty to hedge against our exposure to changes in interest rates as part of our overall interest rate risk management strategy.  On the date the agreement was entered into, the derivative was designated as a cash flow hedge, as it was undertaken to manage the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  At inception and on a quarterly basis thereafter, an assessment is performed to determine the effectiveness of the derivative at reducing the risk associated with the hedged exposure.  A cash flow hedge designated as highly effective is carried at fair value on the balance sheet with the portion of change in fair value of the cash flow hedge considered highly effective recognized in AOCI.  If the cash flow hedge becomes ineffective, the portion of the change in fair value of the cash flow hedge considered ineffective is reclassified from AOCI to earnings.  

The hedging instrument is a pay-fixed, receive variable interest rate swap agreement having a beginning notional amount of $450 million.  The Bank pays quarterly interest at a fixed rate of 3.583% and receives quarterly interest payments calculated at the Daily Simple SOFR over the same period.  The original term of the agreement is five years, expiring on February 1, 2029.  On March 28, 2024, the original hedge position notional amount was reduced by $100 million, and a corresponding amount of the hedged item was simultaneously de-designated, resulting in the recording of a gain of $1.7 million, classified as capital markets activities on the accompanying statements of operations.

At September 30, 2024, the fair value of the cash flow hedge was ($5.1) million and is classified as derivative liabilities with a corresponding amount classified as a component of AOCI on the accompanying balance sheet.

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LOAN SALES AND MORTGAGE SERVICING RIGHTS

9 Months Ended

Sep. 30, 2024

LOAN SALES AND MORTGAGE SERVICING RIGHTS

LOAN SALES AND MORTGAGE SERVICING RIGHTS

NOTE 8: LOAN SALES AND MORTGAGE SERVICING RIGHTS

The Company retained servicing rights for the majority of the loans sold and recognized mortgage servicing rights in connection with multifamily loan sale transactions that occurred in 2021 and prior.  As of September 30, 2024, mortgage servicing rights totaled $4.0 million with no valuation allowance.  At December 31, 2023, mortgage servicing rights totaled $5.5 million, inclusive of a valuation allowance of $0.3 million.  Mortgage servicing rights are classified as a component of other assets in the accompanying consolidated balance sheets. The amount of loans serviced for others totaled $897 million and $1.0 billion at September 30, 2024 and December 31, 2023, respectively.  Servicing fees collected for the nine-month periods ended September 30, 2024 and 2023 totaled $1.8 million and $1.9 million, respectively.

There were no loan sale or purchase transactions that resulted in the recognition of mortgage servicing rights in 2024 and 2023.

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DEPOSITS

9 Months Ended

Sep. 30, 2024

DEPOSITS

DEPOSITS

NOTE 9: DEPOSITS

The following table summarizes the outstanding balance of deposits and average rates paid thereon as of:

	September 30, 2024				December 31, 2023
			Weighted				Weighted
(dollars in thousands)	Amount		Average Rate		Amount		Average Rate
Demand deposits:
Noninterest-bearing	$	2,136,442	—		$	1,467,806	—
Interest-bearing		1,999,229	3.66	%		2,881,786	2.94	%
Money market and savings		3,543,668	3.93	%		3,195,670	3.81	%
Certificates of deposit		2,625,265	4.77	%		3,143,670	4.87	%
Total	$	10,304,604	3.28	%	$	10,688,932	3.36	%

The following table provides the remaining maturities of certificate of deposit accounts of greater than $250,000 as of:

	September 30, 2024		December 31, 2023
Large Denomination Certificates of Deposit Maturity Distribution	(dollars in thousands)
3 months or less	$	60,095	$	343,078
Over 3 months through 6 months		75,036		24,126
Over 6 months through 12 months		63,479		56,415
Over 12 months		10,562		30,994
Total	$	209,172	$	454,613

Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 17.6% and 12.5% of our total deposits as of September 30, 2024 and December 31, 2023, respectively.  The composition of our large depositor relationships continues to include clients which have maintained long-term depository relationships with us.

Accrued interest payable on deposits, which is included in accounts payable and other liabilities, was $34.5 million and $36.7 million at September 30, 2024 and December 31, 2023, respectively.

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BORROWINGS

9 Months Ended

Sep. 30, 2024

BORROWINGS

BORROWINGS

NOTE 10: BORROWINGS

The Bank has established secured and unsecured lines of credit under which it may borrow funds from time to time on a term or overnight basis from the FHLB, Federal Reserve Bank of San Francisco (the “Federal Reserve Bank”), and other institutions.  At September 30, 2024, our borrowings consisted of $1 billion in FHLB putable advances at the Bank, $400 million of FHLB term advances at the Bank, $267 million in term advances from the Federal Reserve Bank, and $25 million in repurchase agreements at the Bank.  At December 31, 2023, our borrowings consisted of $800 million in FHLB putable advances at the Bank, $100 million of FHLB term advances at the Bank, $160 million in overnight advances and $285 million in term advances from the Federal Reserve Bank, and $64 million in repurchase agreements at the Bank.

FHLB Advances

The FHLB putable advances outstanding at September 30, 2024 had a weighted average remaining life of 6.50 years and a weighted average fixed interest rate of 3.74%.  The putable advances can be called quarterly until maturity at the option of the FHLB at various put dates, with $300 million eligible for exercising in December 2024 and the remaining $700 million eligible for exercising beginning in June 2025.  

The FHLB term advances outstanding at September 30, 2024 consist of the following:

$300 million in a three-year fixed-rate advance maturing on May 28, 2027 at an interest rate of 4.95%.

$100 million in a five-year fixed rate advance maturing on June 28, 2028 at an interest rate of 4.21%.  

FHLB advances are collateralized primarily by loans secured by single family, multifamily, and commercial real estate properties with a market value of $4.3 billion as of September 30, 2024. The Bank’s total unused borrowing capacity from the FHLB as of September 30, 2024 was $2.0 billion. The Bank had in place $10 million of letters of credit from the FHLB as of September 30, 2024, which are used to meet collateral requirements for deposits from local agencies.  

The FHLB putable advances outstanding at December 31, 2023 had a weighted average remaining life of 5.41 years and a weighted average fixed interest rate of 3.74%.  The FHLB term advances had a fixed interest rate of 4.21% and matures on June 28, 2028.  FHLB advances were collateralized primarily by loans secured by single family, multifamily, and commercial real estate properties with a market value of $4.3 billion as of December 31, 2023. The Bank’s total unused borrowing capacity from the FHLB as of December 31, 2023 was $2.0 billion. The Bank had in place $310 million of letters of credit from the FHLB as of December 31, 2023, which are used to meet collateral requirements for deposits from the State of California and local agencies.  

Federal Reserve Bank Borrowings

The Bank has a secured line of credit with the Federal Reserve Bank including the secured borrowing capacity through the Federal Reserve Bank’s Discount Window, Borrower-in-Custody (“BIC”), and Bank Term Funding (“BTFP”) programs.  Borrowings under the BIC program are overnight advances with interest chargeable at the primary credit borrowing rate.  At September 30, 2024, the Bank did not have any borrowings outstanding under the BIC program.  Borrowings under the BTFP, which was established in March 2023, are for periods up to one year in length, with interest rates based on the one-year overnight index swap (“OIS”) rate plus a spread of 10 basis points.  BTFP borrowings totaled $267 million at September 30, 2024, maturing on January 15, 2025, at an interest rate of 4.76%.  BTFP borrowings are collateralized by eligible investment securities valued at par and provide an additional source of liquidity.  At September 30, 2024, the Bank had secured unused borrowing capacity of $823 million under this agreement.  

At December 31, 2023, the Bank had outstanding BIC program borrowings totaling $160 million, bearing a fixed interest rate of 5.50% and were repaid in full in early January, 2024.  At December 31, 2023, the Bank had outstanding BTFP borrowings totaling $285 million.  At December 31, 2023, the Bank had secured unused borrowing capacity of $823 million under this agreement.

Uncommitted Credit Facilities:

The Bank has a total of $240 million in borrowing capacity through unsecured federal funds lines, ranging in size from $20 million to $100 million, with six correspondent financial institutions.  There were no balances outstanding under these arrangements as of September 30, 2024 and December 31, 2023.

Holding Company Line of Credit:

FFI has entered into a loan agreement with an unaffiliated lender that provides for a revolving line of credit for up to $20 million maturing in February 2025. The loan bears an interest rate of Prime rate, plus 50 basis points (0.50%). FFI’s obligations under the loan agreement are secured by, among other things, a pledge of all of its equity in the Bank. We are required to meet certain financial covenants during the term of the loan, including minimum capital levels and limits on classified assets. As of September 30, 2024 and December 31, 2023, FFI was in compliance with the covenants

contained in the loan agreement.  As of September 30, 2024 and December 31, 2023, there were no balances outstanding under this agreement.

Repurchase Agreements:

The repurchase agreements are treated as overnight borrowings with the obligations to repurchase securities sold reflected as a liability.  The investment securities underlying these agreements remain in the Company’s securities AFS portfolio.  As of September 30, 2024 and December 31, 2023, the repurchase agreements are collateralized by investment securities with a fair value of approximately $82.6 million and $76.3 million, respectively.

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SUBORDINATED DEBT

9 Months Ended

Sep. 30, 2024

SUBORDINATED DEBT.

SUBORDINATED DEBT

NOTE 11: SUBORDINATED DEBT

At September 30, 2024 and December 31, 2023, FFI had two issuances of subordinated notes outstanding with an aggregate carrying value of $173 million.  At September 30, 2024 and December 31, 2023, FFI was in compliance with all covenants under its subordinated debt agreements.  The following table summarizes the outstanding subordinated notes as of the dates indicated:  

		Current		Current			Carrying Value
	Stated	Interest		Principal			September 30,		December 31,
(dollars in thousands)	Maturity	Rate		Balance		2024		2023
Subordinated notes
Subordinated notes due 2032, 3.50% per annum until February 1, 2027, 3-month SOFR + 2.04% thereafter	February 1, 2032	3.50	%	$	150,000	$	148,238	$	148,058
Subordinated notes due 2030, 6.0% per annum until June 30, 2025, 3-month SOFR + 5.90% thereafter.	June 30, 2030	6.00	%		24,165		25,206		25,339
Total				$	174,165	$	173,444	$	173,397

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INCOME TAXES

9 Months Ended

Sep. 30, 2024

INCOME TAXES

INCOME TAXES

NOTE 12: INCOME TAXES

For the nine-month period ended September 30, 2024, the Company recorded an income tax benefit of $36.1 million and had an effective tax rate of 31.6%.  For the nine-month period ended September 30, 2023, the Company recorded income tax expense of $1.3 million and had an effective tax rate of -0.65%.  The changes in the effective tax rate were predominately due to the changes in pretax income most notably in the current quarter there was a $117.5 million LOCOM loss related to the reclassification of $1.9 billion of loans from loans held for investment to loans held for sale.  The effective tax rates differ from the combined federal and state statutory rates for the Company of 28.2% due primarily to various permanent tax differences, including tax-exempt income and tax credits from low-income housing tax credit investments.

The Company accounts for income taxes by recognizing deferred tax assets and liabilities based upon future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is established if it is “more likely than not” that all or a portion of the deferred tax assets will not be realized.  Management has evaluated the realization of deferred tax assets and has determined that it is more likely than not that all of the deferred tax assets would be realized, therefore no valuation allowance was provided against the deferred tax assets.

Deferred tax assets totaled $65.1 million and $29.1 million at September 30, 2024 and December 31, 2023, respectively.

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SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2024

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY

NOTE 13: SHAREHOLDERS’ EQUITY

FFI is a holding company and does not have any direct operating activities. Any future cash flow needs of FFI are expected to be met by its existing cash and cash equivalents and dividends from its subsidiaries. The Bank is subject to various laws and regulations that limit the amount of dividends that a bank can pay without obtaining prior approval from bank regulators. Additionally, under the terms of the holding company line of credit agreement, FFI may only declare and pay a dividend if the total amount of dividends and stock repurchases does not exceed 50% of FFI’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”) for the current twelve-month period.  FFI’s cash and cash equivalents totaled $9.5 million and $15.3 million at September 30, 2024 and December 31, 2023, respectively.

On July 8, 2024, the Company raised approximately $228 million of gross proceeds in an equity capital raise (“July 2024 Capital Raise”) with certain investors.  In the July 2024 Capital Raise, the Company sold and issued to the investors:  (a) 11,308,676 shares of common stock at a purchase price per share of $4.10 (on July 1, 2024, the day before the announcement of the July 2024 Capital Raise, the closing price of the common stock was $6.47); (b) 29,811 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series A Noncumulative Convertible Preferred Stock (the “Series A Preferred Stock”), at a price per share of $4,100, and each share of which is convertible into 1,000 shares of common stock (or, in certain limited circumstances, one share of Series B Preferred Stock), and all of which shares of Series A Preferred Stock represent the right (on an as converted basis) to receive approximately 29,811,000 shares of common stock; (c) 14,490 shares of a new series of preferred stock, par value $0.001 per share, of the Company designated as Series B Noncumulative Preferred Stock (the “Series B Preferred Stock”), at a price per share of $4,100, each share of which is convertible into 1,000 shares of common stock, and all of which shares of Series B Preferred Stock represent the right (on an as converted basis) to receive approximately 14,490,000 shares of common stock; and (d) Issued Warrants, which are not exercisable for 180 days after closing of the July 2024 Capital Raise, affording the holder thereof the right, until the seven-year anniversary of the issuance of such Issued Warrant, to purchase for $5,125 per share, 22,239 shares of Series C non-voting, common-equivalent preferred stock (the “Series C NVCE Stock”).  Each share of Series C NVCE Stock is convertible into 1,000 shares of common stock, all of which shares of Series C NVCE Stock, upon issuance, will represent the right (on an as converted basis) to receive approximately 22,239,000 shares of common stock.  The investors are subject to a 180-day lock-up period with respect to the securities purchased.  Net proceeds from the July 2024 Capital Raise of $214.5 million, consisting of the $228 million gross proceeds less issuance costs of $13.5 million, were allocated amongst the newly issued equity instruments under the relative fair value method.  Under the relative fair value method, each equity instrument was allocated a portion of the net proceeds based on the proportion of its fair value to the sum of the fair values of all of the equity instruments covered in the allocation.  

The terms of the Series A Preferred Stock, Series B Preferred Stock, and Series C NVCE Stock are more fully described in the respective Certificates of Designation, which were included as Exhibit 3.1, Exhibit 3.2, and Exhibit 3.3, respectively to the Company’s Current Report on Form 8-K filed with the SEC on July 9, 2024, and incorporated by reference therein.  The terms of the Issued Warrants are more fully described in the Issued Warrant, a form of which was included as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on July 9, 2024, and incorporated by reference therein.

On September 30, 2024, stockholders approved and adopted an amendment to the Company’s certificate of incorporation, as amended, to increase the number of authorized shares of common stock from 100,000,000 shares to 200,000,000 shares, and also approved the issuance of shares of common stock in connection with the July 2024 Capital Raise pursuant to NYSE listing rules.  As a result of these approvals, all of the issued and outstanding shares of the Series B Preferred Stock automatically converted into shares of common stock as of the close of business on October 2, 2024, in accordance with the terms of the Certificate of Designation for the Series B Preferred Stock.  In addition, the quarterly non-cumulative cash dividend (annual rate of 13%) and liquidation preference rights of the Series A Preferred Stock cease to apply.  Shares of Series A Preferred Stock (a) are now entitled to receive dividends at the same time and on the same terms as shares of common stock in accordance with the Certificate of Designation for the Series A Preferred Stock, and

(b) rank as equal to shares of common stock in any liquidation of the Company.  Furthermore, the Company will not be required to issue any cash-settled warrants to the investors who participated in the July 2024 Capital Raise.  At September 30, 2024, there were no declared dividends outstanding with respect to the Series A and Series B Preferred Stock.  

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2024

EARNINGS PER SHARE

EARNINGS PER SHARE

NOTE 14: EARNINGS PER SHARE

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income or loss available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if contracts to issue common stock were exercised or converted into common stock that would then share in earnings. Contracts to issue common stock include warrants, convertible preferred stock, stock options, restricted stock, and other contingent shares.  As the average common share price was above the $5.125 per share exercise price (on an as-converted basis) of the warrants, the warrants would have been included in the dilutive share count and diluted earnings per share as of September 30, 2024, if the Company had positive earnings for the period. The following table sets forth the Company’s unaudited earnings per share calculations for the three and nine months ended September 30:

	Three Months Ended				Three Months Ended
	September 30, 2024				September 30, 2023
(dollars in thousands, except per share amounts)	Basic		Diluted		Basic		Diluted
Net (loss) income	$	(82,174)	$	(82,174)	$	2,180	$	2,180
Weighted average basic common shares outstanding		66,992,701		66,992,701		56,443,539		56,443,539
Dilutive effect of options, restricted stock and contingent shares issuable				—				6,181
Diluted common shares outstanding				66,992,701				56,449,720
Net (loss) income per share	$	(1.23)	$	(1.23)	$	0.04	$	0.04

	Nine Months Ended				Nine Months Ended
	September 30, 2024				September 30, 2023
(dollars in thousands, except share and per share amounts)	Basic		Diluted		Basic		Diluted
Net (loss) income	$	(78,296)	$	(78,296)	$	(201,612)	$	(201,612)
Weighted average basic common shares outstanding		60,025,852		60,025,852		56,417,252		56,417,252
Dilutive effect of options, restricted stock and contingent shares issuable				—				—
Diluted common shares outstanding				60,025,852				56,417,252
Net (loss) income per share	$	(1.30)	$	(1.30)	$	(3.57)	$	(3.57)

Stock options for 22,550 shares of common stock were not considered in computing diluted earnings per common share for the three-month period ended September 30, 2023, as the average common share price was below the exercise price of the options outstanding.  Stock options for the 22,550 shares of common stock were not considered in computing diluted earnings per share for the nine-month period ended September 30, 2023 because they are antidilutive.  There were no stock options outstanding for the three and nine-month periods ended September 30, 2024.

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SEGMENT REPORTING

9 Months Ended

Sep. 30, 2024

SEGMENT REPORTING

SEGMENT REPORTING

NOTE 15: SEGMENT REPORTING

For the three and nine months ended September 30, 2024 and 2023, the Company had two reportable business segments: Banking (FFB) and Wealth Management (FFA). The results of FFI and any elimination entries are included in the column labeled Other. The reportable segments are determined by products and services offered and the corporate structure.  Business segment earnings before taxes are the primary measure of the segment’s performance as evaluated by management.  Business segment earnings before taxes include direct revenue and expenses of the segment as well as corporate and inter-company cost allocations.  Allocations of corporate expenses, such as finance and accounting, data processing and human resources are calculated based on estimated activity or usage levels.  The management accounting

process measures the performance of the operating segments based on the Company’s management structure and is not necessarily comparable with similar information for other financial services companies.  If the management structures and/or the allocation process changes, allocations, transfers, and assignments may change.  

In accordance with ASU 2023-07 “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures”,  the significant expenses shown in the tables below are those that are regularly provided to the chief operating decision maker (“CODM”) who regularly uses them, along with other information in assessing the segments’ performance and in decisions regarding the allocation of resources.  With respect to ASU 2023-07, the CODM for the Company is the Chief Executive Officer.  The following tables show key operating results for each of our business segments used to arrive at our consolidated totals for the following periods:

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
Three Months Ended September 30, 2024:
Interest income	$	157,156	$	—	$	—	$	157,156
Interest expense		106,317		—		1,720		108,037
Net interest income		50,839		—		(1,720)		49,119
Provision for credit losses		282		—		—		282
Noninterest income		4,598		7,704		(365)		11,937
LHFS LOCOM adjustment		(117,517)		—		—		(117,517)
Noninterest expense
Compensation and benefits		15,688		4,154		167		20,009
Customer service costs		18,954		—		—		18,954
Professional services and marketing costs		3,298		994		803		5,095
Other		15,266		621		280		16,167
(Loss) income before income taxes		(115,568)		1,935		(3,335)		(116,968)
Income tax (benefit) expense		(34,399)		551		(946)		(34,794)
Net (loss) income	$	(81,169)	$	1,384	$	(2,389)	$	(82,174)
Three Months Ended September 30, 2023:
Interest income	$	144,765	$	—	$	—	$	144,765
Interest expense		90,960		—		1,732		92,692
Net interest income		53,805		—		(1,732)		52,073
Provision (reversal) for credit losses		(2,015)		—		—		(2,015)
Noninterest income		4,557		7,522		(381)		11,698
Noninterest expense
Compensation and benefits		15,571		3,835		226		19,632
Customer service costs		24,683		—		—		24,683
Professional services and marketing costs		2,430		853		465		3,748
Other		15,303		574		266		16,143
Income (loss) before income taxes		2,390		2,260		(3,070)		1,580
Income tax (benefit) expense		(409)		659		(850)		(600)
Net income (loss)	$	2,799	$	1,601	$	(2,220)	$	2,180

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
Nine Months Ended September 30, 2024:
Interest income	$	458,523	$	—	$	—	$	458,523
Interest expense		322,059		—		5,130		327,189
Net interest income		136,464		—		(5,130)		131,334
Provision for credit losses		53		—		—		53
Noninterest income		16,522		22,843		(1,087)		38,278
LHFS LOCOM adjustment		(117,517)		—		—		(117,517)
Noninterest expense
Compensation and benefits		45,681		12,328		502		58,511
Customer service costs		45,796		—		—		45,796
Professional services and marketing costs		8,486		2,821		845		12,152
Other		47,084		1,980		940		50,004
(Loss) income before income taxes		(111,631)		5,714		(8,504)		(114,421)
Income tax expense (benefit)		(35,365)		1,632		(2,392)		(36,125)
Net (loss) income	$	(76,266)	$	4,082	$	(6,112)	$	(78,296)
Nine Months Ended September 30, 2023:
Interest income	$	427,093	$	—	$	—	$	427,093
Interest expense		261,948		—		5,333		267,281
Net interest income		165,145		—		(5,333)		159,812
Provision (reversal) for credit losses		(711)		—		—		(711)
Noninterest income		14,425		22,228		(1,178)		35,475
Noninterest expense
Goodwill impairment		215,252		—		—		215,252
Compensation and benefits		52,516		12,453		975		65,944
Customer service costs		60,402		—		—		60,402
Professional services and marketing costs		7,180		2,569		1,936		11,685
Other		40,234		1,922		871		43,027
(Loss) income before income taxes		(195,303)		5,284		(10,293)		(200,312)
Income tax expense (benefit)		2,672		1,552		(2,924)		1,300
Net (loss) income	$	(197,975)	$	3,732	$	(7,369)	$	(201,612)

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2024

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (82,174)	$ 2,180	$ (78,296)	$ (201,612)

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Insider Trading Arrangements	3 Months Ended
	Sep. 30, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2024

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations and Principles of Consolidation

Nature of Operations and Principles of Consolidation

First Foundation Inc. (“FFI”) is a financial services holding company whose operations are conducted through its wholly owned subsidiaries:  First Foundation Advisors (“FFA”) and First Foundation Bank (“FFB” or the “Bank”) and the wholly owned subsidiaries of FFB, First Foundation Public Finance (“FFPF”), First Foundation Insurance Services (“FFIS”) and Blue Moon Management, LLC (collectively the “Company”).  FFI also has two inactive wholly owned subsidiaries, First Foundation Consulting and First Foundation Advisors, LLC.  FFI is incorporated in the state of Delaware.  The corporate headquarters for FFI is located in Dallas, Texas.  The Company provides a comprehensive platform of financial services to individuals, businesses and other organizations and has offices in California, Nevada, Florida, Texas, and Hawaii.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and prevailing practices within the banking industry. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates.

The accompanying unaudited consolidated financial statements include the accounts of the Company as of September 30, 2024 and December 31, 2023, and for the nine months ended September 30, 2024 and 2023, and include all information and footnotes required for interim financial reporting presentation.  All intercompany accounts and transactions have been eliminated in consolidation. The results for the 2024 interim periods are not necessarily indicative of the results expected for the full year.  These financial statements assume that readers have read the most recent Annual Report on Form 10-K filed with the SEC which contains the latest available audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2023.

Derivative Instruments (Cash Flow Hedge)

Derivative Instruments (Cash Flow Hedge).  On February 1, 2024, the Bank entered into an interest rate swap agreement with an institutional counterparty used to manage our exposure to changes in interest rates as part of our overall interest rate risk management strategy.  This agreement was solely undertaken as a cash flow hedge of interest rate risk, specifically of the risk of changes in cash flows on interest payments associated with a stream of variable-rate, short-term borrowings for a corresponding amount that are attributable to changes in the future financing rates of each rolling maturity.  This agreement is a derivative instrument and qualifies for hedge accounting under ASU 2017-12 “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”.  To qualify for hedge accounting, the cash flow hedge must be highly effective at reducing the risk associated with the hedged exposure.  The effectiveness of the hedging relationship is documented at inception and is monitored on at least a quarterly basis through the life of the transaction.  A cash flow hedge that is designated as highly effective is carried at fair value with the change in fair value recorded in other comprehensive income (loss) (“AOCI”).  If the cash flow hedge becomes ineffective, the change in fair value is reclassified from AOCI to earnings.

The cash flow hedge is classified as either derivative assets (if fair value is a net asset) or derivative liabilities (if fair value is a net liability) in the accompanying consolidated balance sheets.  The earnings and cash flow impact from this derivative asset are classified as an offset to interest expense which is consistent with the underlying hedged item.

New Accounting Pronouncements

New Accounting Pronouncements

In June 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2022-03, “Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions”.  ASU  2022-03 clarifies how the fair value of equity securities subject to contractual sale restrictions is determined.  Prior to its issuance, there was diversity in practice as to whether the effects of a contractual restriction that prohibits the sale of an equity security should be considered in measuring the security's fair value.  ASU 2022-03 clarifies that a contractual sale restriction should not be considered in measuring fair value.  It also requires entities with investments in equity securities subject to contractual sale restrictions to disclose certain qualitative and quantitative information about such securities.  ASU 2022-03 is effective for fiscal years beginning after December 15, 2023.  The Company’s equity securities portfolio consists solely of investments in Small Business Administration (“SBA”) loan funds which can be redeemed at any time and are not subject to contractual sale restrictions.  The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

In November 2023, FASB issued ASU 2023-07, “Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures”.  ASU 2023-07 requires public entities to disclose “significant segment expenses” by reportable segment if they are regularly provided to the Chief Operating Decision Maker (“CODM”) for review of profit and loss by segment and as a tool in resource-allocation decisions.  A significant segment expense category may be reported for one reportable segment but not for others.  Similarly, reportable segments may have different significant segment expense categories due to the nature of their operations.  The ASU also requires public entities to disclose the title and position of the individual or the name of the group identified as the CODM and how the CODM uses each reportable measure of segment profit or loss to assess performance and allocate resources to the segment.  ASU 2023-07 is effective for fiscal years beginning after December 15, 2023.  For financial reporting purposes, the Company has two segments:  Banking and Wealth Management.  These disclosures are presented in Note 15: Segment Reporting in the accompanying financial statements. The adoption of the ASU did not have a material impact on the Company’s consolidated financial statements.

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2024

FAIR VALUE MEASUREMENTS

Recorded Amounts of Assets and Liabilities Measured at Fair Value on Recurring Basis

The following tables show the recorded amounts of assets and liabilities measured at fair value on a recurring basis as of:

			Fair Value Measurement Level
(dollars in thousands)	Total		Level 1		Level 2		Level 3
September 30, 2024:
Investment securities available-for-sale:
Collateralized mortgage obligations	$	10,318	$	—	$	10,318	$	—
Agency mortgage-backed securities		1,108,337		—		1,108,337		—
Municipal bonds		46,799		—		46,799		—
SBA securities		9,627		—		9,627		—
Beneficial interests in FHLMC securitization		6,968		—		—		6,968
Corporate bonds		122,797		—		122,797		—
U.S. Treasury		1,274		1,274		—		—
Total assets at fair value on a recurring basis	$	1,306,120	$	1,274	$	1,297,878	$	6,968
Derivative liabilities:
Cash flow hedge	$	5,124	$	—	$	5,124	$	—
December 31, 2023:
Investment securities available-for-sale:
Collateralized mortgage obligations	$	7,605	$	—	$	7,605	$	—
Agency mortgage-backed securities		107,347		—		107,347		—
Municipal bonds		46,436		—		46,436		—
SBA securities		13,527		—		13,527		—
Beneficial interests in FHLMC securitization		7,241		—		—		7,241
Corporate bonds		122,280		—		122,280		—
U.S. Treasury		398,790		398,790		—		—
Total assets at fair value on a recurring basis	$	703,226	$	398,790	$	297,195	$	7,241

Carrying Amounts and Estimated Fair Value of Financial Instruments

The following table sets forth the estimated fair values and related carrying amounts of our financial instruments as of:

	Carrying		Fair Value Measurement Level
(dollars in thousands)	Value		1		2		3		Total
September 30, 2024:
Assets:
Cash and cash equivalents	$	1,106,422	$	1,106,422	$	—	$	—	$	1,106,422
Securities AFS, net		1,306,120		1,275		1,297,877		6,968		1,306,120
Securities HTM		734,863		—		675,768		—		675,768
Loans held for sale		1,788,395		—		—		1,788,395		1,788,395
Loans, net		8,059,563		—		4,922		7,746,825		7,751,747
Investment in FHLB stock		37,810		—		37,810		—		37,810
Investment in equity securities		11,780		—		—		11,780		11,780
Accrued interest receivable		53,766		53,766		—		—		53,766
Liabilities:
Deposits	$	10,304,604	$	8,131,079	$	2,601,375	$	—	$	10,732,454
Borrowings		1,691,453		1,729,848		—		—		1,729,848
Subordinated debt		173,444		—		—		138,978		138,978
Accrued interest payable		46,438		46,438		—		—		46,438
Derivative liabilities		5,124		—		5,124		—		5,124
December 31, 2023:
Assets:
Cash and cash equivalents	$	1,326,629	$	1,326,629	$	—	$	—	$	1,326,629
Securities AFS, net		703,226		398,790		297,194		7,242		703,226
Securities HTM		789,578		—		710,021		—		710,021
Loans, net		10,148,597		—		—		9,827,508		9,827,508
Investment in FHLB stock		24,613		—		24,613		—		24,613
Investment in equity securities		11,768		—		—		11,768		11,768
Accrued interest receivable		54,163		54,163		—		—		54,163
Liabilities:
Deposits	$	10,688,932	$	7,545,262	$	3,145,870	$	—	$	10,691,132
Borrowings		1,409,056		609,056		800,000		—		1,409,056
Subordinated debt		173,397		—		—		136,002		136,002
Accrued interest payable		42,177		42,177		—		—		42,177

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SECURITIES (Tables)

9 Months Ended

Sep. 30, 2024

SECURITIES

Summary of AFS Securities Portfolio

The following table provides a summary of the Company’s securities AFS portfolio as of:

	Amortized		Gross Unrealized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Collateralized mortgage obligations	$	11,251	$	26	$	(959)	$	—	$	10,318
Agency mortgage-backed securities		1,094,633		13,966		(262)		—		1,108,337
Municipal bonds		49,174		—		(2,375)		—		46,799
SBA securities		9,688		5		(66)		—		9,627
Beneficial interests in FHLMC securitization		13,758		21		(333)		(6,478)		6,968
Corporate bonds		133,786		—		(10,168)		(821)		122,797
U.S. Treasury		1,299		—		(25)		—		1,274
Total	$	1,313,589	$	14,018	$	(14,188)	$	(7,299)	$	1,306,120
December 31, 2023:
Collateralized mortgage obligations	$	8,946	$	—	$	(1,341)	$	—	$	7,605
Agency mortgage-backed securities		106,733		1,028		(414)		—		107,347
Municipal bonds		49,473		—		(3,037)		—		46,436
SBA securities		13,631		2		(106)		—		13,527
Beneficial interests in FHLMC securitization		14,473		4		(418)		(6,818)		7,241
Corporate bonds		138,858		—		(15,176)		(1,402)		122,280
U.S. Treasury		399,375		—		(585)		—		398,790
Total	$	731,489	$	1,034	$	(21,077)	$	(8,220)	$	703,226

Summary of HTM Securities Portfolio

	Amortized		Gross Unrecognized				Allowance for		Estimated
(dollars in thousands)	Cost		Gains		Losses		Credit Losses		Fair Value
September 30, 2024:
Agency mortgage-backed securities	$	734,863	$	—	$	(59,095)	$	—	$	675,768
Total	$	734,863	$	—	$	(59,095)	$	—	$	675,768
December 31, 2023:
Agency mortgage-backed securities	$	789,578	$	1	$	(79,558)	$	—	$	710,021
Total	$	789,578	$	1	$	(79,558)	$	—	$	710,021

Schedule of Securities in a Continuous Unrealized Loss Position Aggregated by Investment Category and Length of Time

The tables below indicate the gross unrealized losses and fair values of our securities AFS portfolio, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Securities with Unrealized Loss at September 30, 2024
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Collateralized mortgage obligations	$	—	$	—	$	7,360	$	(959)	$	7,360	$	(959)
Agency mortgage-backed securities		1,803		(9)		4,668		(253)		6,471		(262)
Municipal bonds		1,698		(34)		44,600		(2,341)		46,298		(2,375)
SBA securities		151		—		8,170		(66)		8,321		(66)
Beneficial interests in FHLMC securitization		—		—		4,145		(333)		4,145		(333)
Corporate bonds		28,189		(1,811)		95,429		(8,357)		123,618		(10,168)
U.S. Treasury		—		—		1,275		(25)		1,275		(25)
Total	$	31,841	$	(1,854)	$	165,647	$	(12,334)	$	197,488	$	(14,188)

	Securities with Unrealized Loss at December 31, 2023
	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Collateralized mortgage obligations	$	—	$	—	$	7,606	$	(1,341)	$	7,606	$	(1,341)
Agency mortgage-backed securities		—		—		5,710		(414)		5,710		(414)
Municipal bonds		1,779		(26)		42,847		(3,011)		44,626		(3,037)
SBA securities		353		—		12,025		(106)		12,378		(106)
Beneficial interests in FHLMC securitization		—		—		4,041		(418)		4,041		(418)
Corporate bonds		14,847		(153)		108,832		(15,023)		123,679		(15,176)
U.S. Treasury		397,942		(534)		848		(51)		398,790		(585)
Total	$	414,921	$	(713)	$	181,909	$	(20,364)	$	596,830	$	(21,077)

	Securities with Unrecognized Loss at September 30, 2024
	Less than 12 months				12 months or more				Total
	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Agency mortgage-backed securities	$	18,146	$	(87)	$	657,622	$	(59,008)	$	675,768	$	(59,095)
Total	$	18,146	$	(87)	$	657,622	$	(59,008)	$	675,768	$	(59,095)

	Securities with Unrecognized Loss at December 31, 2023
	Less than 12 months				12 months or more				Total
	Fair		Unrecognized		Fair		Unrecognized		Fair		Unrecognized
(dollars in thousands)	Value		Loss		Value		Loss		Value		Loss
Agency mortgage-backed securities	$	—	$	—	$	689,454	$	(79,558)	$	689,454	$	(79,558)
Total	$	—	$	—	$	689,454	$	(79,558)	$	689,454	$	(79,558)

Summary of Allowance For Credit Losses - Securities AFS

		Beginning		Provision (Reversal)						Ending
(dollars in thousands)		Balance		for Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2024:
Beneficial interests in FHLMC securitization	$	6,502	$	(24)	$	—	$	—	$	6,478
Corporate bonds		840		(19)		—		—		821
Total	$	7,342	$	(43)	$	—	$	—	$	7,299
Nine Months Ended September 30, 2024:
Beneficial interests in FHLMC securitization	$	6,818	$	(340)	$	—	$	—	$	6,478
Corporate bonds		1,402		(581)		—		—		821
Total	$	8,220	$	(921)	$	—	$	—	$	7,299
Three Months Ended September 30, 2023:
Municipal bonds	$	—	$	1	$	—	$	—	$	1
Beneficial interests in FHLMC securitization		7,058		40		—		—		7,098
Corporate bonds		1,477		(86)		—		—		1,391
Total	$	8,535	$	(45)	$	—	$	—	$	8,490
Nine Months Ended September 30, 2023:
Municipal bonds	$	—	$	1	$	—	$	—	$	1
Beneficial interests in FHLMC securitization		11,439		(370)		(3,971)		—		7,098
Corporate bonds		—		1,391		—		—		1,391
Total	$	11,439	$	1,022	$	(3,971)	$	—	$	8,490

Schedule Maturities of Securities AFS by Contractual Maturity

The amortized cost and fair value of investment securities AFS by contractual maturity were as follows for the periods indicated:

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
September 30, 2024
Amortized Cost:
Collateralized mortgage obligations	$	—		$	277		$	171		$	10,803		$	11,251
Agency mortgage-backed securities		102			3,238			—			1,091,293			1,094,633
Municipal bonds		500			15,318			31,118			2,238			49,174
SBA securities		—			474			414			8,800			9,688
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,819			13,758
Corporate bonds		—			61,957			66,304			5,525			133,786
U.S. Treasury		799			500			—			—			1,299
Total	$	4,531		$	86,573		$	98,007		$	1,124,478		$	1,313,589
Weighted average yield		0.82	%		5.98	%		3.01	%		5.49	%		5.32	%
Estimated Fair Value:
Collateralized mortgage obligations	$	—		$	261		$	166		$	9,891		$	10,318
Agency mortgage-backed securities		101			3,137			—			1,105,098			1,108,336
Municipal bonds		500			14,900			29,520			1,879			46,799
SBA securities		—			472			414			8,741			9,627
Beneficial interests in FHLMC securitization		3,130			4,809			—			5,507			13,446
Corporate bonds		—			59,121			60,165			4,332			123,618
U.S. Treasury		796			479			—			—			1,275
Total	$	4,527		$	83,179		$	90,265		$	1,135,448		$	1,313,419

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
December 31, 2023
Amortized Cost:
Collateralized mortgage obligations	$	—		$	—		$	513		$	8,433		$	8,946
Agency mortgage-backed securities		141			4,364			—			102,228			106,733
Municipal bonds		—			9,672			36,103			3,698			49,473
SBA securities		—			944			623			12,064			13,631
Beneficial interests in FHLMC securitization		3,315			5,380			—			5,778			14,473
Corporate bonds		5,012			60,444			67,872			5,530			138,858
U.S. Treasury		398,676			699			—			—			399,375
Total	$	407,144		$	81,503		$	105,111		$	137,731		$	731,489
Weighted average yield		5.47	%		6.46	%		2.90	%		5.94	%		5.30	%
Estimated Fair Value:
Collateralized mortgage obligations	$	—		$	—		$	466		$	7,139		$	7,605
Agency mortgage-backed securities		137			4,134			—			103,076			107,347
Municipal bonds		—			9,231			34,142			3,063			46,436
SBA securities		—			936			622			11,969			13,527
Beneficial interests in FHLMC securitization		3,315			5,380			—			5,364			14,059
Corporate bonds		4,973			58,337			56,395			3,977			123,682
U.S. Treasury		398,135			655			—			—			398,790
Total	$	406,560		$	78,673		$	91,625		$	134,588		$	711,446

Schedule of Maturities of Securities HTM

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
September 30, 2024
Amortized Cost:
Agency mortgage-backed securities	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Total	$	—		$	4,949		$	9,364		$	720,550		$	734,863
Weighted average yield		—	%		0.95	%		1.54	%		2.32	%		2.30	%
Estimated Fair Value:
Agency mortgage-backed securities	$	—		$	4,705		$	8,744		$	662,319		$	675,768
Total	$	—		$	4,705		$	8,744		$	662,319		$	675,768

	1 Year or			More than 1 Year			More than 5 Years			More than
(dollars in thousands)	Less			through 5 Years			through 10 Years			10 Years			Total
December 31, 2023
Amortized Cost:
Agency mortgage-backed securities	$	—		$	4,259		$	12,537		$	772,782		$	789,578
Total	$	—		$	4,259		$	12,537		$	772,782		$	789,578
Weighted average yield		—	%		0.86	%		1.44	%		2.26	%		2.24	%
Estimated Fair Value:
Agency mortgage-backed securities	$	—		$	3,972		$	11,457		$	694,592		$	710,021
Total	$	—		$	3,972		$	11,457		$	694,592		$	710,021

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LOANS (Tables)

9 Months Ended

Sep. 30, 2024

LOANS

Schedule of summary of loans held for investment

	September 30,		December 31,
(dollars in thousands)	2024		2023
Outstanding principal balance:
Loans secured by real estate:
Residential properties:
Multifamily	$	3,322,471	$	5,227,885
Single family		889,616		950,712
Total real estate loans secured by residential properties		4,212,087		6,178,597
Commercial properties		952,700		987,596
Land and construction		80,307		137,298
Total real estate loans		5,245,094		7,303,491
Commercial and industrial loans		2,837,830		2,856,228
Consumer loans		832		1,328
Total loans		8,083,756		10,161,047
Premiums, discounts and deferred fees and expenses		5,107		16,755
Total	$	8,088,863	$	10,177,802

Summary of delinquent and nonaccrual loans

The following table summarizes our delinquent and nonaccrual loans as of:

	Past Due and Still Accruing												Total Past
							90 Days						Due and
(dollars in thousands)	30–59 Days			60-89 Days			or More			Nonaccrual			Nonaccrual			Current		Total
September 30, 2024:
Real estate loans:
Residential properties	$	1,887		$	—		$	—		$	20,357		$	22,244		$	4,198,803	$	4,221,047
Commercial properties		9,046			—			—			9,145			18,191			933,976		952,167
Land and construction		—			—			—			—			—			80,153		80,153
Commercial and industrial loans		8,088			10,138			—			8,704			26,930			2,807,701		2,834,631
Consumer loans		—			—			—			—			—			865		865
Total	$	19,021		$	10,138		$	—		$	38,206		$	67,365		$	8,021,498	$	8,088,863
Percentage of total loans		0.24	%		0.13	%		—	%		0.47	%		0.83	%
December 31, 2023:
Real estate loans:
Residential properties	$	93		$	416		$	—		$	112		$	621		$	6,196,923	$	6,197,544
Commercial properties		27,403			403			1,730			2,915			32,451			954,321		986,772
Land and construction		—			—			—			—			—			136,827		136,827
Commercial and industrial loans		525			88			—			8,804			9,417			2,845,845		2,855,262
Consumer loans		—			—			—			—			—			1,397		1,397
Total	$	28,021		$	907		$	1,730		$	11,831		$	42,489		$	10,135,313	$	10,177,802
Percentage of total loans		0.28	%		0.01	%		0.02	%		0.12	%		0.42	%

Summary of nonaccrual loans

	Nonaccrual		Nonaccrual
	with Allowance		with no Allowance
(dollars in thousands)	for Credit Losses		for Credit Losses
September 30, 2024:
Real estate loans:
Residential properties	$	883	$	19,474
Commercial properties		9,145		—
Commercial and industrial loans		8,704		—
Total	$	18,732	$	19,474
December 31, 2023:
Real estate loans:
Residential properties	$	—	$	112
Commercial properties		—		2,915
Commercial and industrial loans		7,406		1,398
Total	$	7,406	$	4,425

Schedule of composition of TDRs by accrual and nonaccrual status

The following table presents our loan modifications made to borrowers experiencing financial difficulty by type of modification for the nine-month periods ended September 30, 2024 and 2023, respectively with related amortized cost balances, respective percentage share of the total class of loans, and the related financial effect:

	September 30, 2024:
	Term Extension
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Residential loans	$	6	—	%	1 loan with term extension of 22 months.
Commercial real estate loans		12,900	1.40	%	1 loan with term extension of 10 months.
Commercial and industrial loans		2,294	—	%	6 loans with various extensions of loan maturity ranging from 3 to 60 months and payment deferral. 1 loan with 3-month extension and 3-month forbearance. 1 loan with $100 payments through 3 months.
Total	$	15,200
	Combination
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	9,568	0.40	%	5 loans with various extensions of loan maturity ranging from 6 to 7 months and payment deferral. 1 loan with 5 month forbearance and interest rate reduction. 2 loans with $100 payments through 3 months with payment deferral. 2 loans with term extension of 12 months and payment deferral.
Total	$	9,568
	Total
		Amortized Cost Basis	% of Total Class of Loans
Residential loans	$	6	—	%
Commercial real estate loans		12,900	1.40	%
Commercial and industrial loans		11,862	0.40	%
Total	$	24,768
	September 30, 2023:
	Term Extension
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	5,770	0.20	%	1 loan with 3-month extension
Total	$	5,770
	Payment Deferrals
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial and industrial loans	$	400	—	%	4 loans each with partial payment deferrals for 3 months
Total	$	400
	Combination
		Amortized Cost Basis	% of Total Class of Loans		Financial Effect
Commercial real estate loans	$	645	0.10	%	1 loan with 10 year term extension and interest reduction
Total	$	645
	Total
		Amortized Cost Basis	% of Total Class of Loans
Commercial real estate loans	$	645	0.10	%
Commercial and industrial loans	$	6,170	0.20	%
Total	$	6,815

The following table presents the amortized cost basis of loans that had a payment default since modification during the nine-months ended September 30, 2024 and 2023, respectively:

	September 30, 2024:
	Combination
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,229
Total		2	$	2,229
	Total
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,229
Total		2	$	2,229
	September 30, 2023:
	Payment Deferrals
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		1	$	1,339
Total		1	$	1,339
	Combination
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		1	$	950
Total		1	$	950
	Total
		# of Loans Defaulted		Amortized Cost Basis
Commercial and industrial loans		2	$	2,289
Total		2	$	2,289

The following table presents the payment status of our loan modifications made during the previous twelve-month period of October 1, 2023 to September 30, 2024:

			30-89 Days		90+ Days
(dollars in thousands)		Current	Past Due		Past Due			Nonaccrual	Total
September 30, 2024:
Residential loans	$	253	$	—	$	—	$	—	$	253
Commercial real estate loans		12,900		—		—		—		12,900
Commercial and industrial loans		6,104		7,060		—		8,252		21,416
Total	$	19,257	$	7,060	$	—	$	8,252	$	34,569

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ALLOWANCE FOR CREDIT LOSSES (Tables)

9 Months Ended

Sep. 30, 2024

ALLOWANCE FOR CREDIT LOSSES

Schedule of allowance for credit losses

The following is a rollforward of the allowance for credit losses related to loans for the following periods:

			Provision
	Beginning		(Reversal) for						Ending
(dollars in thousands)	Balance		Credit Losses		Charge-offs		Recoveries		Balance
Three Months Ended September 30, 2024:
Real estate loans:
Residential properties	$	9,013	$	(2,010)	$	—	$	—	$	7,003
Commercial properties		6,086		493		—		—		6,579
Land and construction		77		(17)		—		—		60
Commercial and industrial loans		14,104		1,809		(341)		80		15,652
Consumer loans		15		14		(23)		—		6
Total	$	29,295	$	289	$	(364)	$	80	$	29,300
Nine Months Ended September 30, 2024:
Real estate loans:
Residential properties	$	9,921	$	(2,918)	$	—	$	—	$	7,003
Commercial properties		4,148		2,431		—		—		6,579
Land and construction		332		(272)		—		—		60
Commercial and industrial loans		14,796		1,676		(1,203)		383		15,652
Consumer loans		8		20		(23)		1		6
Total	$	29,205	$	937	$	(1,226)	$	384	$	29,300
Three Months Ended September 30, 2023:
Real estate loans:
Residential properties	$	8,234		140		—		—	$	8,374
Commercial properties		5,253		(979)		—		—		4,274
Land and construction		287		(13)		—		—		274
Commercial and industrial loans		17,690		(1,070)		(1,183)		814		16,251
Consumer loans		21		—		—		1		22
Total	$	31,485	$	(1,922)	$	(1,183)	$	815	$	29,195
Nine Months Ended September 30, 2023:
Real estate loans:
Residential properties	$	8,306	$	68	$	—	$	—	$	8,374
Commercial properties		8,714		(4,191)		(249)		—		4,274
Land and construction		164		110		—		—		274
Commercial and industrial loans		16,521		2,019		(4,022)		1,733		16,251
Consumer loans		26		(4)		(2)		2		22
Total	$	33,731	$	(1,998)	$	(4,273)	$	1,735	$	29,195

Schedule of the amortized cost basis of collateral dependent loans and the related ACL allocated to these loans

A loan is considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to be provided substantially through the operation or sale of the collateral.  Collateral dependent loans are evaluated individually to determine expected credit losses and any ACL allocation is determined based upon the amount by which amortized costs exceed the estimated fair value of the collateral, adjusted for estimated selling costs (if applicable).  The following table presents the amortized cost basis of collateral dependent loans and the related ACL allocated to these loans as of the dates indicated:

					Equipment/					ACL
(dollars in thousands)	Real Estate		Cash		Receivables		Total			Allocation
September 30, 2024:
Loans secured by real estate:
Residential properties
Single family	$	244	$	—	$	—	$	244	$	—
Commercial real estate loans		5,462		—		—		5,462		964
Commercial loans		—		—		—		—		—
Total	$	5,706	$	—	$	—	$	5,706	$	964
December 31, 2023:
Loans secured by real estate:
Commercial real estate loans	$	2,523	$	—	$	—	$	2,523	$	—
Commercial loans		—		250		978		1,228		—
Total	$	2,523	$	250	$	978	$	3,751	$	—

Summary of risk categories of loans based on year of origination

The following tables present risk categories of loans based on year of origination, and includes gross charge-offs in accordance with ASU 2022-02 as of the dates presented:

													Revolving
(dollars in thousands)	2024		2023		2022		2021		2020		Prior		Loans		Total
September 30, 2024:
Loans secured by real estate:
Residential
Multifamily
Pass	$	73,086	$	542	$	1,712,559	$	789,647	$	394,488	$	273,934	$	—	$	3,244,256
Special mention		—		—		—		6,489		11,628		51,471		—		69,588
Substandard		—		—		—		—		—		14,070		—		14,070
Total	$	73,086	$	542	$	1,712,559	$	796,136	$	406,116	$	339,475	$	—	$	3,327,914
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Single family
Pass	$	2,999	$	10,030	$	248,194	$	260,156	$	91,456	$	212,099	$	45,767	$	870,701
Special mention		—		—		—		—		—		1,403		—		1,403
Substandard		—		—		—		—		—		20,905		124		21,029
Total	$	2,999	$	10,030	$	248,194	$	260,156	$	91,456	$	234,407	$	45,891	$	893,133
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate
Pass	$	2,437	$	2,408	$	224,226	$	116,802	$	143,541	$	419,491	$	—	$	908,905
Special mention		—		—		—		1,198		2,225		843		—		4,266
Substandard		—		12,900		—		111		1,274		24,711		—		38,996
Total	$	2,437	$	15,308	$	224,226	$	118,111	$	147,040	$	445,045	$	—	$	952,167
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Land and construction
Pass	$	108	$	24,962	$	32,067	$	8,078	$	9,190	$	5,748	$	—	$	80,153
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	108	$	24,962	$	32,067	$	8,078	$	9,190	$	5,748	$	—	$	80,153
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Pass	$	58,523	$	148,702	$	1,012,681	$	251,189	$	92,598	$	35,695	$	1,171,997	$	2,771,385
Special mention		721		8,134		8,499		24,368		17		619		3,976		46,334
Substandard		116		34		68		804		3,686		2,490		9,714		16,912
Total	$	59,360	$	156,870	$	1,021,248	$	276,361	$	96,301	$	38,804	$	1,185,687	$	2,834,631
Gross charge-offs	$	—	$	179	$	678	$	303	$	43	$	—	$	—	$	1,203
Consumer
Pass	$	24	$	7	$	—	$	516	$	—	$	52	$	266	$	865
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	24	$	7	$	—	$	516	$	—	$	52	$	266	$	865
Gross charge-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	23	$	23
Total loans
Pass	$	137,177	$	186,651	$	3,229,727	$	1,426,388	$	731,273	$	947,019	$	1,218,030	$	7,876,265
Special mention		721		8,134		8,499		32,055		13,870		54,336		3,976		121,591
Substandard		116		12,934		68		915		4,960		62,176		9,838		91,007
Total	$	138,014	$	207,719	$	3,238,294	$	1,459,358	$	750,103	$	1,063,531	$	1,231,844	$	8,088,863
Gross charge-offs	$	—	$	179	$	678	$	303	$	43	$	—	$	23	$	1,226

													Revolving
(dollars in thousands)	2023		2022		2021		2020		2019		Prior		Loans		Total
December 31, 2023:
Loans secured by real estate:
Residential
Multifamily
Pass	$	37,343	$	2,355,381	$	1,537,636	$	763,736	$	289,675	$	243,146	$	—	$	5,226,917
Special mention		—		—		1,248		—		5,577		9,426		—		16,251
Substandard		—		—		—		—		—		—		—		—
Total	$	37,343	$	2,355,381	$	1,538,884	$	763,736	$	295,252	$	252,572	$	—	$	5,243,168
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Single family
Pass	$	13,631	$	259,043	$	267,373	$	92,567	$	38,132	$	208,035	$	54,444	$	933,225
Special mention		—		—		—		—		—		20,166		—		20,166
Substandard		—		—		—		—		—		846		139		985
Total	$	13,631	$	259,043	$	267,373	$	92,567	$	38,132	$	229,047	$	54,583	$	954,376
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Commercial real estate
Pass	$	2,469	$	221,525	$	130,579	$	119,684	$	81,243	$	383,729	$	—	$	939,229
Special mention		—		—		1,223		2,275		—		10,747		—		14,245
Substandard		12,900		—		116		1,445		11,424		7,413		—		33,298
Total	$	15,369	$	221,525	$	131,918	$	123,404	$	92,667	$	401,889	$	—	$	986,772
Gross charge-offs	$	—		—		—		—		—		249		—	$	249
Land and construction
Pass	$	19,151	$	43,923	$	29,445	$	36,498	$	807	$	7,003	$	—	$	136,827
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	19,151	$	43,923	$	29,445	$	36,498	$	807	$	7,003	$	—	$	136,827
Gross charge-offs	$	—		—		—		—		—		—		—	$	—
Commercial
Pass	$	182,391	$	1,082,510	$	291,663	$	119,035	$	21,314	$	25,030	$	1,087,075	$	2,809,018
Special mention		—		1,360		24,653		703		56		656		735		28,163
Substandard		55		12		842		3,881		1,325		458		11,508		18,081
Total	$	182,446	$	1,083,882	$	317,158	$	123,619	$	22,695	$	26,144	$	1,099,318	$	2,855,262
Gross charge-offs	$	257		1,420		1,205		587		117		48		1,364	$	4,998
Consumer
Pass	$	47	$	—	$	577	$	—	$	299	$	59	$	415	$	1,397
Special mention		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—
Total	$	47	$	—	$	577	$	—	$	299	$	59	$	415	$	1,397
Gross charge-offs	$	—		—		—		—		—		—		2	$	2
Total loans
Pass	$	255,032	$	3,962,382	$	2,257,273	$	1,131,520	$	431,470	$	867,002	$	1,141,934	$	10,046,613
Special mention		—		1,360		27,124		2,978		5,633		40,995		735		78,825
Substandard		12,955		12		958		5,326		12,749		8,717		11,647		52,364
Total	$	267,987	$	3,963,754	$	2,285,355	$	1,139,824	$	449,852	$	916,714	$	1,154,316	$	10,177,802
Gross charge-offs	$	257		1,420		1,205		587		117		297		1,366	$	5,249

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DEPOSITS (Tables)

9 Months Ended

Sep. 30, 2024

DEPOSITS

Summary of Outstanding Balance of Deposits and Average Rates

	September 30, 2024				December 31, 2023
			Weighted				Weighted
(dollars in thousands)	Amount		Average Rate		Amount		Average Rate
Demand deposits:
Noninterest-bearing	$	2,136,442	—		$	1,467,806	—
Interest-bearing		1,999,229	3.66	%		2,881,786	2.94	%
Money market and savings		3,543,668	3.93	%		3,195,670	3.81	%
Certificates of deposit		2,625,265	4.77	%		3,143,670	4.87	%
Total	$	10,304,604	3.28	%	$	10,688,932	3.36	%

Summary of Large Denomination Certificates of Deposit Maturity Distribution

	September 30, 2024		December 31, 2023
Large Denomination Certificates of Deposit Maturity Distribution	(dollars in thousands)
3 months or less	$	60,095	$	343,078
Over 3 months through 6 months		75,036		24,126
Over 6 months through 12 months		63,479		56,415
Over 12 months		10,562		30,994
Total	$	209,172	$	454,613

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SUBORDINATED DEBT (Tables)

9 Months Ended

Sep. 30, 2024

SUBORDINATED DEBT.

Summary of outstanding subordinated notes

		Current		Current			Carrying Value
	Stated	Interest		Principal			September 30,		December 31,
(dollars in thousands)	Maturity	Rate		Balance		2024		2023
Subordinated notes
Subordinated notes due 2032, 3.50% per annum until February 1, 2027, 3-month SOFR + 2.04% thereafter	February 1, 2032	3.50	%	$	150,000	$	148,238	$	148,058
Subordinated notes due 2030, 6.0% per annum until June 30, 2025, 3-month SOFR + 5.90% thereafter.	June 30, 2030	6.00	%		24,165		25,206		25,339
Total				$	174,165	$	173,444	$	173,397

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2024

EARNINGS PER SHARE

Summary of computation of basic and diluted earnings per share

	Three Months Ended				Three Months Ended
	September 30, 2024				September 30, 2023
(dollars in thousands, except per share amounts)	Basic		Diluted		Basic		Diluted
Net (loss) income	$	(82,174)	$	(82,174)	$	2,180	$	2,180
Weighted average basic common shares outstanding		66,992,701		66,992,701		56,443,539		56,443,539
Dilutive effect of options, restricted stock and contingent shares issuable				—				6,181
Diluted common shares outstanding				66,992,701				56,449,720
Net (loss) income per share	$	(1.23)	$	(1.23)	$	0.04	$	0.04

	Nine Months Ended				Nine Months Ended
	September 30, 2024				September 30, 2023
(dollars in thousands, except share and per share amounts)	Basic		Diluted		Basic		Diluted
Net (loss) income	$	(78,296)	$	(78,296)	$	(201,612)	$	(201,612)
Weighted average basic common shares outstanding		60,025,852		60,025,852		56,417,252		56,417,252
Dilutive effect of options, restricted stock and contingent shares issuable				—				—
Diluted common shares outstanding				60,025,852				56,417,252
Net (loss) income per share	$	(1.30)	$	(1.30)	$	(3.57)	$	(3.57)

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SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2024

SEGMENT REPORTING

Summary of key operating results of business segments

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
Three Months Ended September 30, 2024:
Interest income	$	157,156	$	—	$	—	$	157,156
Interest expense		106,317		—		1,720		108,037
Net interest income		50,839		—		(1,720)		49,119
Provision for credit losses		282		—		—		282
Noninterest income		4,598		7,704		(365)		11,937
LHFS LOCOM adjustment		(117,517)		—		—		(117,517)
Noninterest expense
Compensation and benefits		15,688		4,154		167		20,009
Customer service costs		18,954		—		—		18,954
Professional services and marketing costs		3,298		994		803		5,095
Other		15,266		621		280		16,167
(Loss) income before income taxes		(115,568)		1,935		(3,335)		(116,968)
Income tax (benefit) expense		(34,399)		551		(946)		(34,794)
Net (loss) income	$	(81,169)	$	1,384	$	(2,389)	$	(82,174)
Three Months Ended September 30, 2023:
Interest income	$	144,765	$	—	$	—	$	144,765
Interest expense		90,960		—		1,732		92,692
Net interest income		53,805		—		(1,732)		52,073
Provision (reversal) for credit losses		(2,015)		—		—		(2,015)
Noninterest income		4,557		7,522		(381)		11,698
Noninterest expense
Compensation and benefits		15,571		3,835		226		19,632
Customer service costs		24,683		—		—		24,683
Professional services and marketing costs		2,430		853		465		3,748
Other		15,303		574		266		16,143
Income (loss) before income taxes		2,390		2,260		(3,070)		1,580
Income tax (benefit) expense		(409)		659		(850)		(600)
Net income (loss)	$	2,799	$	1,601	$	(2,220)	$	2,180

			Wealth
(dollars in thousands)	Banking		Management		Other		Total
Nine Months Ended September 30, 2024:
Interest income	$	458,523	$	—	$	—	$	458,523
Interest expense		322,059		—		5,130		327,189
Net interest income		136,464		—		(5,130)		131,334
Provision for credit losses		53		—		—		53
Noninterest income		16,522		22,843		(1,087)		38,278
LHFS LOCOM adjustment		(117,517)		—		—		(117,517)
Noninterest expense
Compensation and benefits		45,681		12,328		502		58,511
Customer service costs		45,796		—		—		45,796
Professional services and marketing costs		8,486		2,821		845		12,152
Other		47,084		1,980		940		50,004
(Loss) income before income taxes		(111,631)		5,714		(8,504)		(114,421)
Income tax expense (benefit)		(35,365)		1,632		(2,392)		(36,125)
Net (loss) income	$	(76,266)	$	4,082	$	(6,112)	$	(78,296)
Nine Months Ended September 30, 2023:
Interest income	$	427,093	$	—	$	—	$	427,093
Interest expense		261,948		—		5,333		267,281
Net interest income		165,145		—		(5,333)		159,812
Provision (reversal) for credit losses		(711)		—		—		(711)
Noninterest income		14,425		22,228		(1,178)		35,475
Noninterest expense
Goodwill impairment		215,252		—		—		215,252
Compensation and benefits		52,516		12,453		975		65,944
Customer service costs		60,402		—		—		60,402
Professional services and marketing costs		7,180		2,569		1,936		11,685
Other		40,234		1,922		871		43,027
(Loss) income before income taxes		(195,303)		5,284		(10,293)		(200,312)
Income tax expense (benefit)		2,672		1,552		(2,924)		1,300
Net (loss) income	$	(197,975)	$	3,732	$	(7,369)	$	(201,612)

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2024 segment	Sep. 30, 2023 segment	Sep. 30, 2024 subsidiary segment	Sep. 30, 2023 segment
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Number of inactive wholly owned subsidiaries | subsidiary			2
Reportable business segments | segment	2	2	2	2

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FAIR VALUE MEASUREMENTS - Recorded Amounts of Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	$ 1,306,120	$ 703,226
Derivative liabilities - Cash flow hedge	5,124
Agency mortgage-backed securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	1,108,337	107,347
Municipal bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	46,799	46,436
SBA securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	9,627	13,527
Beneficial interest - FHLMC securitizations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	6,968	7,241
Corporate bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	122,797	122,280
U.S. Treasury
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	1,274	398,790
Fair Value on Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Total assets at fair value on a recurring basis	1,306,120	703,226
Derivative liabilities - Cash flow hedge	5,124
Fair Value on Recurring Basis | Collateralized mortgage obligations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	10,318	7,605
Fair Value on Recurring Basis | Agency mortgage-backed securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	1,108,337	107,347
Fair Value on Recurring Basis | Municipal bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	46,799	46,436
Fair Value on Recurring Basis | SBA securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	9,627	13,527
Fair Value on Recurring Basis | Beneficial interest - FHLMC securitizations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	6,968	7,241
Fair Value on Recurring Basis | Corporate bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	122,797	122,280
Fair Value on Recurring Basis | U.S. Treasury
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	1,274	398,790
Fair Value Measurement Level 1 | Fair Value on Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Total assets at fair value on a recurring basis	1,274	398,790
Fair Value Measurement Level 1 | Fair Value on Recurring Basis | U.S. Treasury
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	1,274	398,790
Fair Value Measurement Level 2
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Derivative liabilities - Cash flow hedge	5,124
Fair Value Measurement Level 2 | Fair Value on Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Total assets at fair value on a recurring basis	1,297,878	297,195
Derivative liabilities - Cash flow hedge	5,124
Fair Value Measurement Level 2 | Fair Value on Recurring Basis | Collateralized mortgage obligations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	10,318	7,605
Fair Value Measurement Level 2 | Fair Value on Recurring Basis | Agency mortgage-backed securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	1,108,337	107,347
Fair Value Measurement Level 2 | Fair Value on Recurring Basis | Municipal bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	46,799	46,436
Fair Value Measurement Level 2 | Fair Value on Recurring Basis | SBA securities
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	9,627	13,527
Fair Value Measurement Level 2 | Fair Value on Recurring Basis | Corporate bonds
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	122,797	122,280
Fair Value Measurement Level 3 | Fair Value on Recurring Basis
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Total assets at fair value on a recurring basis	6,968	7,241
Fair Value Measurement Level 3 | Fair Value on Recurring Basis | Beneficial interest - FHLMC securitizations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Securities available-for-sale	$ 6,968	$ 7,241

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FAIR VALUE MEASUREMENTS - Valuation Assumptions (Details)	9 Months Ended
	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($) item
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Real estate owned ("REO")	$ 6,210,000	$ 8,381,000
Number Of Real Estate Properties Sold	1
Number of Real Estate Properties	1	2
Gain on sale of REO	$ 679,000
Specific reserves	964,000	$ 0
Fair Value Measurement Level 3
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Impaired loans	$ 5,700,000	$ 3,800,000
Fair Value Measurement Level 3 | Prepayment Rate | Beneficial interest - FHLMC securitizations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Alternative investment measurement input	0.20	0.25
Fair Value Measurement Level 3 | Prepayment Rate | Minimum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Loan, held-for-sale, measurement input	0.04
Fair Value Measurement Level 3 | Prepayment Rate | Minimum | Mortgage Servicing Rights.
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Alternative investment measurement input	0.20
Fair Value Measurement Level 3 | Prepayment Rate | Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Loan, held-for-sale, measurement input	0.12
Fair Value Measurement Level 3 | Prepayment Rate | Maximum | Mortgage Servicing Rights.
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Alternative investment measurement input	0.30
Fair Value Measurement Level 3 | Discount Rate | Mortgage Servicing Rights.
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Alternative investment measurement input	0.10
Fair Value Measurement Level 3 | Discount Rate | Minimum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Loan, held-for-sale, measurement input	0.0235
Fair Value Measurement Level 3 | Discount Rate | Minimum | Beneficial interest - FHLMC securitizations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Alternative investment measurement input	0.0590	0.0835
Fair Value Measurement Level 3 | Discount Rate | Maximum
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Loan, held-for-sale, measurement input	0.0555
Fair Value Measurement Level 3 | Discount Rate | Maximum | Beneficial interest - FHLMC securitizations
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Alternative investment measurement input	0.0880	0.100
Fair Value Measurement Level 3 | Expected loss assumption rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis
Loan, held-for-sale, measurement input	0.0005

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FAIR VALUE MEASUREMENTS - Carrying Amounts and Estimated Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Assets:
Cash and cash equivalents	$ 1,106,422	$ 1,326,629
Securities AFS, net	1,306,120	703,226
Securities HTM	734,863	789,578
Loans held for sale	1,788,395
Loans, net	8,059,563	10,148,597
Investment in FHLB stock	37,810	24,613
Investment in equity securities	11,780	11,768
Accrued interest receivable	53,766	54,163
Liabilities:
Deposits	10,304,604	10,688,932
Borrowings	1,691,453	1,409,056
Subordinated debt	173,444	173,397
Derivative liabilities	5,124
Accrued interest payable	46,438	42,177
Assets Fair Value:
Cash and cash equivalents	1,106,422	1,326,629
Securities AFS, net	1,306,120	703,226
Securities HTM	675,768	710,021
Loans held for sale	1,788,395
Loans, net	7,751,747	9,827,508
Investment in FHLB stock	37,810	24,613
Investment in equity securities	11,780	11,768
Accrued interest receivable	53,766	54,163
Liabilities Fair Value:
Deposits	10,732,454	10,691,132
Borrowings	1,729,848	1,409,056
Subordinated debt	138,978	136,002
Accrued interest payable	46,438	42,177
Derivative liabilities	5,124
Fair Value Measurement Level 1
Assets Fair Value:
Cash and cash equivalents	1,106,422	1,326,629
Securities AFS, net	1,275	398,790
Accrued interest receivable	53,766	54,163
Liabilities Fair Value:
Deposits	8,131,079	7,545,262
Borrowings	1,729,848	609,056
Accrued interest payable	46,438	42,177
Fair Value Measurement Level 2
Assets:
Investment in FHLB stock	37,810	24,613
Liabilities:
Derivative liabilities	5,124
Assets Fair Value:
Securities AFS, net	1,297,877	297,194
Securities HTM	675,768	710,021
Loans, net	4,922
Investment in FHLB stock	37,810	24,613
Liabilities Fair Value:
Deposits	2,601,375	3,145,870
Borrowings		800,000
Derivative liabilities	5,124
Fair Value Measurement Level 3
Assets:
Investment in equity securities	11,780	11,768
Assets Fair Value:
Securities AFS, net	6,968	7,242
Loans held for sale	1,788,395
Loans, net	7,746,825	9,827,508
Investment in equity securities	11,780	11,768
Liabilities Fair Value:
Subordinated debt	$ 138,978	$ 136,002

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SECURITIES - Summary of AFS Securities Portfolio (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Schedule Of Available For Sale Securities
Amortized Cost	$ 1,313,589		$ 731,489
Gross Unrealized Gains	14,018		1,034
Gross Unrealized Losses	(14,188)		(21,077)
Allowance for Credit Losses	(7,299)	$ (7,342)	(8,220)	$ (8,490)	$ (8,535)	$ (11,439)
Estimated Fair Value	1,306,120		703,226
Collateralized mortgage obligations
Schedule Of Available For Sale Securities
Amortized Cost	11,251		8,946
Gross Unrealized Gains	26
Gross Unrealized Losses	(959)		(1,341)
Estimated Fair Value	10,318		7,605
Agency mortgage-backed securities
Schedule Of Available For Sale Securities
Amortized Cost	1,094,633		106,733
Gross Unrealized Gains	13,966		1,028
Gross Unrealized Losses	(262)		(414)
Estimated Fair Value	1,108,337		107,347
Municipal bonds
Schedule Of Available For Sale Securities
Amortized Cost	49,174		49,473
Gross Unrealized Losses	(2,375)		(3,037)
Allowance for Credit Losses				(1)
Estimated Fair Value	46,799		46,436
SBA securities
Schedule Of Available For Sale Securities
Amortized Cost	9,688		13,631
Gross Unrealized Gains	5		2
Gross Unrealized Losses	(66)		(106)
Estimated Fair Value	9,627		13,527
Beneficial interests in FHLMC securitization
Schedule Of Available For Sale Securities
Amortized Cost	13,758		14,473
Gross Unrealized Gains	21		4
Gross Unrealized Losses	(333)		(418)
Allowance for Credit Losses	(6,478)	(6,502)	(6,818)	(7,098)	(7,058)	$ (11,439)
Estimated Fair Value	6,968		7,241
Corporate bonds
Schedule Of Available For Sale Securities
Amortized Cost	133,786		138,858
Gross Unrealized Losses	(10,168)		(15,176)
Allowance for Credit Losses	(821)	$ (840)	(1,402)	$ (1,391)	$ (1,477)
Estimated Fair Value	122,797		122,280
U.S. Treasury
Schedule Of Available For Sale Securities
Amortized Cost	1,299		399,375
Gross Unrealized Losses	(25)		(585)
Estimated Fair Value	$ 1,274		$ 398,790

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SECURITIES - Additional Information (Details) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2023 USD ($)	Sep. 30, 2024 USD ($) instrument	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)	Jun. 30, 2024 USD ($)	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Schedule Of Available For Sale Securities
Securities available-for-sale	$ 1,306,120		$ 1,306,120		$ 703,226
Charge-offs related to interest -only strip securities			0	$ 4,000	4,000
Allowance for credit losses	7,299	$ 8,490	7,299	8,490	8,220	$ 7,342	$ 8,535	$ 11,439
Proceeds from sale of securities available-for-sale			749,020
Debt securities, available-for-sale, realized loss			200
Debt securities, available-for-sale, realized gain			1,400
Provision (reversal) for credit losses - securities AFS	(43)	(45)	(921)	1,022
Securities available-for-sale			741,000
Repurchase agreements | Asset pledged as collateral
Schedule Of Available For Sale Securities
Securities available-for-sale	82,600		82,600
Federal funds purchased | Asset pledged as collateral
Schedule Of Available For Sale Securities
Securities available-for-sale	904,900		904,900
U.S. Treasury
Schedule Of Available For Sale Securities
Securities available-for-sale	1,274		1,274		398,790
U.S. Treasury | Asset pledged as collateral
Schedule Of Available For Sale Securities
Securities available-for-sale	1,300		1,300
Agency mortgage-backed securities
Schedule Of Available For Sale Securities
Securities available-for-sale	1,108,337		1,108,337		107,347
Agency mortgage-backed securities | Asset pledged as collateral
Schedule Of Available For Sale Securities
Securities available-for-sale	259,500		259,500
Agency mortgage-backed securities | Federal funds purchased | Asset pledged as collateral
Schedule Of Available For Sale Securities
Securities available-for-sale	575,100		575,100
SBA securities
Schedule Of Available For Sale Securities
Securities available-for-sale	9,627		9,627		13,527
Corporate bonds
Schedule Of Available For Sale Securities
Securities available-for-sale	122,797		122,797		122,280
Allowance for credit losses	821	1,391	$ 821	1,391	$ 1,402	$ 840	$ 1,477
Number of financial instruments impacted by credit loss | instrument			15
Provision (reversal) for credit losses - securities AFS	$ (19)	$ (86)	$ (581)	$ 1,391
Market value			$ 32,000

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SECURITIES - Summary of HTM Securities Portfolio (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Schedule of Held-to-maturity Securities
Amortized Cost	$ 734,863,000	$ 789,578,000
Gross Unrealized Gain		1,000
Gross Unrealized Loss	(59,095,000)	(79,558,000)
Allowance for Credit Losses	0
Estimated Fair Value	675,768,000	710,021,000
Agency mortgage-backed securities
Schedule of Held-to-maturity Securities
Amortized Cost	734,863,000	789,578,000
Gross Unrealized Gain		1,000
Gross Unrealized Loss	(59,095,000)	(79,558,000)
Estimated Fair Value	$ 675,768,000	$ 710,021,000

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SECURITIES - Schedule of AFS securities in a Continuous Unrealized Loss Position Aggregated by Investment Category and Length of Time (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Schedule Of Available For Sale Securities
Less than 12 months, Fair Value	$ 31,841	$ 414,921
Less than 12 months, Unrealized Loss	(1,854)	(713)
12 months or more, Fair Value	165,647	181,909
12 months or more, Unrealized Loss	(12,334)	(20,364)
Total, Fair Value	197,488	596,830
Total, Unrealized Loss	(14,188)	(21,077)
Collateralized mortgage obligations
Schedule Of Available For Sale Securities
12 months or more, Fair Value	7,360	7,606
12 months or more, Unrealized Loss	(959)	(1,341)
Total, Fair Value	7,360	7,606
Total, Unrealized Loss	(959)	(1,341)
Agency mortgage-backed securities
Schedule Of Available For Sale Securities
Less than 12 months, Fair Value	1,803
Less than 12 months, Unrealized Loss	(9)
12 months or more, Fair Value	4,668	5,710
12 months or more, Unrealized Loss	(253)	(414)
Total, Fair Value	6,471	5,710
Total, Unrealized Loss	(262)	(414)
Municipal bonds
Schedule Of Available For Sale Securities
Less than 12 months, Fair Value	1,698	1,779
Less than 12 months, Unrealized Loss	(34)	(26)
12 months or more, Fair Value	44,600	42,847
12 months or more, Unrealized Loss	(2,341)	(3,011)
Total, Fair Value	46,298	44,626
Total, Unrealized Loss	(2,375)	(3,037)
SBA securities
Schedule Of Available For Sale Securities
Less than 12 months, Fair Value	151	353
12 months or more, Fair Value	8,170	12,025
12 months or more, Unrealized Loss	(66)	(106)
Total, Fair Value	8,321	12,378
Total, Unrealized Loss	(66)	(106)
Beneficial interests in FHLMC securitization
Schedule Of Available For Sale Securities
12 months or more, Fair Value	4,145	4,041
12 months or more, Unrealized Loss	(333)	(418)
Total, Fair Value	4,145	4,041
Total, Unrealized Loss	(333)	(418)
Corporate bonds
Schedule Of Available For Sale Securities
Less than 12 months, Fair Value	28,189	14,847
Less than 12 months, Unrealized Loss	(1,811)	(153)
12 months or more, Fair Value	95,429	108,832
12 months or more, Unrealized Loss	(8,357)	(15,023)
Total, Fair Value	123,618	123,679
Total, Unrealized Loss	(10,168)	(15,176)
U.S. Treasury
Schedule Of Available For Sale Securities
Less than 12 months, Fair Value		397,942
Less than 12 months, Unrealized Loss		(534)
12 months or more, Fair Value	1,275	848
12 months or more, Unrealized Loss	(25)	(51)
Total, Fair Value	1,275	398,790
Total, Unrealized Loss	$ (25)	$ (585)

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SECURITIES - Schedule of HTM Securities in a Continuous Unrealized Loss Position Aggregated by Investment Category and Length of Time (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Schedule of Held-to-maturity Securities
Less than 12 months, Fair Value	$ 18,146
Less than 12 months, Unrecognized Loss	(87)
12 months or more, Fair Value	657,622	$ 689,454
12 months or more, Unrecognized Loss	(59,008)	(79,558)
Total, Fair Value	675,768	689,454
Total, Unrecognized Loss	(59,095)	(79,558)
Agency mortgage-backed securities
Schedule of Held-to-maturity Securities
Less than 12 months, Fair Value	18,146
Less than 12 months, Unrecognized Loss	(87)
12 months or more, Fair Value	657,622	689,454
12 months or more, Unrecognized Loss	(59,008)	(79,558)
Total, Fair Value	675,768	689,454
Total, Unrecognized Loss	$ (59,095)	$ (79,558)

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SECURITIES - Schedule of Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Schedule Of Available For Sale Securities
Beginning Balance for period	$ 7,342	$ 8,535	$ 8,220	$ 11,439
Provision (Reversal) for Credit Losses	(43)	(45)	(921)	1,022
Charge-offs				(3,971)
Ending Balance for period	7,299	8,490	7,299	8,490
Municipal bonds
Schedule Of Available For Sale Securities
Provision (Reversal) for Credit Losses		1		1
Ending Balance for period		1		1
Beneficial interests in FHLMC securitization
Schedule Of Available For Sale Securities
Beginning Balance for period	6,502	7,058	6,818	11,439
Provision (Reversal) for Credit Losses	(24)	40	(340)	(370)
Charge-offs				(3,971)
Ending Balance for period	6,478	7,098	6,478	7,098
Corporate bonds
Schedule Of Available For Sale Securities
Beginning Balance for period	840	1,477	1,402
Provision (Reversal) for Credit Losses	(19)	(86)	(581)	1,391
Ending Balance for period	$ 821	$ 1,391	$ 821	$ 1,391

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SECURITIES - Scheduled Maturities of Securities AFS and the Related Weighted Average Yields (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Schedule Of Available For Sale Securities
Amortized cost, 1 Year or Less	$ 4,531	$ 407,144
Amortized cost, More than 1 Year through 5 Years	86,573	81,503
Amortized cost, More than 5 Years through 10 Years	98,007	105,111
Amortized cost, More than 10 Years	1,124,478	137,731
Amortized cost, total	$ 1,313,589	$ 731,489
Weighted average yield, 1 Year or Less	0.82%	5.47%
Weighted average yield, More than 1 Year through 5 Years	5.98%	6.46%
Weighted average yield, More than 5 Years through 10 Years	3.01%	2.90%
Weighted average yield, More than 10 Years	5.49%	5.94%
Weighted average yield, total	5.32%	5.30%
Estimated fair value, 1 Year or Less	$ 4,527	$ 406,560
Estimated fair value, More than 1 Year through 5 Years	83,179	78,673
Estimated fair value, More than 5 Years through 10 Years	90,265	91,625
Estimated fair value, More than 10 Years	1,135,448	134,588
Estimated fair value, total	1,313,419	711,446
Agency mortgage-backed securities
Schedule Of Available For Sale Securities
Amortized cost, 1 Year or Less	102	141
Amortized cost, More than 1 Year through 5 Years	3,238	4,364
Amortized cost, More than 10 Years	1,091,293	102,228
Amortized cost, total	1,094,633	106,733
Estimated fair value, 1 Year or Less	101	137
Estimated fair value, More than 1 Year through 5 Years	3,137	4,134
Estimated fair value, More than 10 Years	1,105,098	103,076
Estimated fair value, total	1,108,336	107,347
Municipal bonds
Schedule Of Available For Sale Securities
Amortized cost, 1 Year or Less	500
Amortized cost, More than 1 Year through 5 Years	15,318	9,672
Amortized cost, More than 5 Years through 10 Years	31,118	36,103
Amortized cost, More than 10 Years	2,238	3,698
Amortized cost, total	49,174	49,473
Estimated fair value, 1 Year or Less	500
Estimated fair value, More than 1 Year through 5 Years	14,900	9,231
Estimated fair value, More than 5 Years through 10 Years	29,520	34,142
Estimated fair value, More than 10 Years	1,879	3,063
Estimated fair value, total	46,799	46,436
SBA securities
Schedule Of Available For Sale Securities
Amortized cost, More than 1 Year through 5 Years	474	944
Amortized cost, More than 5 Years through 10 Years	414	623
Amortized cost, More than 10 Years	8,800	12,064
Amortized cost, total	9,688	13,631
Estimated fair value, More than 1 Year through 5 Years	472	936
Estimated fair value, More than 5 Years through 10 Years	414	622
Estimated fair value, More than 10 Years	8,741	11,969
Estimated fair value, total	9,627	13,527
Beneficial interest - FHLMC securitizations
Schedule Of Available For Sale Securities
Amortized cost, 1 Year or Less	3,130	3,315
Amortized cost, More than 1 Year through 5 Years	4,809	5,380
Amortized cost, More than 10 Years	5,819	5,778
Amortized cost, total	13,758	14,473
Estimated fair value, 1 Year or Less	3,130	3,315
Estimated fair value, More than 1 Year through 5 Years	4,809	5,380
Estimated fair value, More than 10 Years	5,507	5,364
Estimated fair value, total	13,446	14,059
Corporate bonds
Schedule Of Available For Sale Securities
Amortized cost, 1 Year or Less		5,012
Amortized cost, More than 1 Year through 5 Years	61,957	60,444
Amortized cost, More than 5 Years through 10 Years	66,304	67,872
Amortized cost, More than 10 Years	5,525	5,530
Amortized cost, total	133,786	138,858
Estimated fair value, 1 Year or Less		4,973
Estimated fair value, More than 1 Year through 5 Years	59,121	58,337
Estimated fair value, More than 5 Years through 10 Years	60,165	56,395
Estimated fair value, More than 10 Years	4,332	3,977
Estimated fair value, total	123,618	123,682
U.S. Treasury
Schedule Of Available For Sale Securities
Amortized cost, 1 Year or Less	799	398,676
Amortized cost, More than 1 Year through 5 Years	500	699
Amortized cost, total	1,299	399,375
Estimated fair value, 1 Year or Less	796	398,135
Estimated fair value, More than 1 Year through 5 Years	479	655
Estimated fair value, total	1,275	398,790
Collateralized mortgage obligations
Schedule Of Available For Sale Securities
Amortized cost, More than 1 Year through 5 Years	277
Amortized cost, More than 5 Years through 10 Years	171	513
Amortized cost, More than 10 Years	10,803	8,433
Amortized cost, total	11,251	8,946
Estimated fair value, More than 1 Year through 5 Years	261
Estimated fair value, More than 5 Years through 10 Years	166	466
Estimated fair value, More than 10 Years	9,891	7,139
Estimated fair value, total	$ 10,318	$ 7,605

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SECURITIES - Scheduled Maturities of Securities HTM and the Related Weighted Average Yields (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
HTM - Amortized Cost
Amortized cost, More than 1 Year through 5 Years	$ 4,949	$ 4,259
Amortized cost, More than 5 Years through 10 Years	9,364	12,537
Amortized cost, More than 10 Years	720,550	772,782
Amortized cost, total	$ 734,863	$ 789,578
HTM - Weighted average yield
Weighted average yield, More than 1 Year through 5 Years	0.95%	0.86%
Weighted average yield, More than 5 Years through 10 Years	1.54%	1.44%
Weighted average yield, More than 10 Years	2.32%	2.26%
Weighted average yield, total	2.30%	2.24%
HTM - Estimated Fair Value
Estimated fair value, More than 1 Year through 5 Years	$ 4,705	$ 3,972
Estimated fair value, More than 5 Years through 10 Years	8,744	11,457
Estimated fair value, More than 10 Years	662,319	694,592
Estimated fair value, total	675,768	710,021
Agency mortgage-backed securities
HTM - Amortized Cost
Amortized cost, More than 1 Year through 5 Years	4,949	4,259
Amortized cost, More than 5 Years through 10 Years	9,364	12,537
Amortized cost, More than 10 Years	720,550	772,782
Amortized cost, total	734,863	789,578
HTM - Estimated Fair Value
Estimated fair value, More than 1 Year through 5 Years	4,705	3,972
Estimated fair value, More than 5 Years through 10 Years	8,744	11,457
Estimated fair value, More than 10 Years	662,319	694,592
Estimated fair value, total	$ 675,768	$ 710,021

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LOANS - Summary of Loans (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2024 USD ($)	Sep. 30, 2024 USD ($) loan	Sep. 30, 2023 USD ($)	Dec. 31, 2023 USD ($)
Loans
Total loans	$ 8,083,756	$ 8,083,756		$ 10,161,047
Premiums, discounts and deferred fees and expenses	5,107	5,107		16,755
Total loans	8,088,863	8,088,863		10,177,802
Transfer of loans to loans held for sale		136,684
Securities pledged as collateral	82,600	82,600		76,300
Unpaid principal balance		8,100
(Loss) gain on sale of loans	(13)	665	$ 0
Asset pledged as collateral | Federal Reserve Bank advances | Loan Origination Commitments
Loans
Securities pledged as collateral	184,600	184,600		283,700
Asset pledged as collateral | Federal Home Loan Bank Advances | Loan Origination Commitments
Loans
Securities pledged as collateral	4,300,000	4,300,000		4,200,000
Multifamily
Loans
Total loans	3,327,914	3,327,914		5,243,168
Single family
Loans
Total loans	893,133	893,133		954,376
Commercial properties
Loans
Total loans	952,167	952,167		986,772
Land and construction
Loans
Total loans	80,153	80,153		136,827
Commercial and industrial loans
Loans
Total loans	2,837,830	2,837,830		2,856,228
Total loans	2,834,631	2,834,631		2,855,262
Consumer loans
Loans
Total loans	832	832		1,328
Total loans	865	865		1,397
Real estate loans
Loans
Total loans	5,245,094	5,245,094		7,303,491
Real estate loans | Residential properties
Loans
Total loans	4,212,087	4,212,087		6,178,597
Total loans	4,221,047	4,221,047		6,197,544
Real estate loans | Multifamily
Loans
Total loans	3,322,471	3,322,471		5,227,885
Transfer of loans to loans held for sale		$ 1,900,000
Number of transferred loans sold | loan		0
Real estate loans | Single family
Loans
Total loans	889,616	$ 889,616		950,712
Real estate loans | Commercial properties
Loans
Total loans	952,700	952,700		987,596
Total loans	952,167	952,167		986,772
Real estate loans | Land and construction
Loans
Total loans	80,307	80,307		137,298
Total loans	$ 80,153	$ 80,153		$ 136,827

XML

LOANS - Summary of Delinquent and Nonaccrual Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Loans
Nonaccrual	$ 38,206	$ 11,831
Total	$ 8,088,863	$ 10,177,802
Percentage of Total Loans Due Nonaccrual	0.47%	0.12%
Financial Asset, Past Due
Loans
Total	$ 67,365	$ 42,489
Percentage of Total Loans	0.83%	0.42%
30-59 Days
Loans
Total	$ 19,021	$ 28,021
Percentage of Total Loans Due 30-59 Days	0.24%	0.28%
60-89 Days
Loans
Total	$ 10,138	$ 907
Percentage of Total Loans Due 60-89 Days	0.13%	0.01%
90 Days or More
Loans
Total		$ 1,730
Percentage of Total Loans Due 90 Days or More		0.02%
Financial Asset, Not Past Due
Loans
Total	$ 8,021,498	$ 10,135,313
Commercial properties
Loans
Total	952,167	986,772
Land and construction
Loans
Total	80,153	136,827
Commercial and industrial loans
Loans
Nonaccrual	8,704	8,804
Total	2,834,631	2,855,262
Commercial and industrial loans | Financial Asset, Past Due
Loans
Total	26,930	9,417
Commercial and industrial loans | 30-59 Days
Loans
Total	8,088	525
Commercial and industrial loans | 60-89 Days
Loans
Total	10,138	88
Commercial and industrial loans | Financial Asset, Not Past Due
Loans
Total	2,807,701	2,845,845
Consumer loans
Loans
Total	865	1,397
Consumer loans | Financial Asset, Not Past Due
Loans
Total	865	1,397
Real estate loans | Residential loans
Loans
Nonaccrual	20,357	112
Total	4,221,047	6,197,544
Real estate loans | Residential loans | Financial Asset, Past Due
Loans
Total	22,244	621
Real estate loans | Residential loans | 30-59 Days
Loans
Total	1,887	93
Real estate loans | Residential loans | 60-89 Days
Loans
Total		416
Real estate loans | Residential loans | Financial Asset, Not Past Due
Loans
Total	4,198,803	6,196,923
Real estate loans | Commercial properties
Loans
Nonaccrual	9,145	2,915
Total	952,167	986,772
Real estate loans | Commercial properties | Financial Asset, Past Due
Loans
Total	18,191	32,451
Real estate loans | Commercial properties | 30-59 Days
Loans
Total	9,046	27,403
Real estate loans | Commercial properties | 60-89 Days
Loans
Total		403
Real estate loans | Commercial properties | 90 Days or More
Loans
Total		1,730
Real estate loans | Commercial properties | Financial Asset, Not Past Due
Loans
Total	933,976	954,321
Real estate loans | Land and construction
Loans
Total	80,153	136,827
Real estate loans | Land and construction | Financial Asset, Not Past Due
Loans
Total	$ 80,153	$ 136,827

XML

LOANS - Summary of Nonaccrual Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
Loans
Nonaccrual with Allowance for Credit Losses	$ 18,732	$ 7,406
Nonaccrual with no Allowance for Credit Losses	19,474	4,425
Commercial and industrial loans
Loans
Nonaccrual with Allowance for Credit Losses	8,704	7,406
Nonaccrual with no Allowance for Credit Losses		1,398
Real estate loans | Residential loans
Loans
Nonaccrual with Allowance for Credit Losses	883
Nonaccrual with no Allowance for Credit Losses	19,474	112
Real estate loans | Commercial properties
Loans
Nonaccrual with Allowance for Credit Losses	$ 9,145
Nonaccrual with no Allowance for Credit Losses		$ 2,915

XML

LOANS - Summary of Loan Modifications (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2024 USD ($) loan	Sep. 30, 2023 USD ($) loan
Financing Receivable Modifications
Amortized Cost Basis	$ 24,768	$ 6,815
Term Extension
Financing Receivable Modifications
Amortized Cost Basis	15,200	$ 5,770
Loans defaulted | loan		1
Payment Deferral Term		3 months
Payment Deferral
Financing Receivable Modifications
Amortized Cost Basis		$ 400
Loans defaulted | loan		4
Payment Deferral Term		3 months
Extended maturity and interest reduction
Financing Receivable Modifications
Loans defaulted | loan		1
Payment Deferral And Extended Maturity
Financing Receivable Modifications
Amortized Cost Basis	9,568	$ 645
Payment Deferral Term		10 years
Real estate loans
Financing Receivable Modifications
Nonaccrual	8,252
Amortized Cost Basis with Payment Default	34,569
Real estate loans | 30 to 89 Days Past Due
Financing Receivable Modifications
Amortized Cost Basis	7,060
Real estate loans | Financial Asset, Not Past Due
Financing Receivable Modifications
Amortized Cost Basis	19,257
Residential loans
Financing Receivable Modifications
Amortized Cost Basis	6
Residential loans | Term Extension
Financing Receivable Modifications
Amortized Cost Basis	$ 6
Loans defaulted | loan	1
Payment Deferral Term	22 months
Residential loans | Real estate loans
Financing Receivable Modifications
Amortized Cost Basis with Payment Default	$ 253
Residential loans | Real estate loans | Financial Asset, Not Past Due
Financing Receivable Modifications
Amortized Cost Basis	253
Commercial properties
Financing Receivable Modifications
Amortized Cost Basis	$ 12,900	$ 645
Total Class of Loans	1.40%	0.10%
Commercial properties | Term Extension
Financing Receivable Modifications
Amortized Cost Basis	$ 12,900
Total Class of Loans	1.40%
Loans defaulted | loan	1
Payment Deferral Term	10 months
Commercial properties | Payment Deferral And Extended Maturity
Financing Receivable Modifications
Amortized Cost Basis		$ 645
Total Class of Loans		0.10%
Commercial properties | Real estate loans
Financing Receivable Modifications
Amortized Cost Basis with Payment Default	$ 12,900
Commercial properties | Real estate loans | Financial Asset, Not Past Due
Financing Receivable Modifications
Amortized Cost Basis	12,900
Commercial and industrial loans
Financing Receivable Modifications
Amortized Cost Basis	11,862	$ 6,170
Nonaccrual	8,252
Amortized Cost Basis with Payment Default	$ 21,416
Total Class of Loans	0.40%	0.20%
Commercial and industrial loans | 30 to 89 Days Past Due
Financing Receivable Modifications
Amortized Cost Basis	$ 7,060
Commercial and industrial loans | Financial Asset, Not Past Due
Financing Receivable Modifications
Amortized Cost Basis	6,104
Commercial and industrial loans | Term Extension
Financing Receivable Modifications
Amortized Cost Basis	$ 2,294	$ 5,770
Total Class of Loans		0.20%
Payment Deferral Term	3 months
Commercial and industrial loans | Payment Deferral
Financing Receivable Modifications
Amortized Cost Basis		$ 400
Commercial and industrial loans | Extended Maturity for One Loan
Financing Receivable Modifications
Loans defaulted | loan	6
Period of payment forbearance	3 months
Commercial and industrial loans | Extended Maturity for One Loan | Minimum
Financing Receivable Modifications
Payment Deferral Term	3 months
Commercial and industrial loans | Extended Maturity for One Loan | Maximum
Financing Receivable Modifications
Payment Deferral Term	60 months
Commercial and industrial loans | Extended Maturity Loan Two
Financing Receivable Modifications
Loans defaulted | loan	1
Payment Deferral Term	3 months
Commercial and industrial loans | Extended Maturity Loan Three
Financing Receivable Modifications
Financing receivable, excluding accrued interest, modified, payments	$ 100
Loans defaulted | loan	1
Commercial and industrial loans | Payment Deferral And Extended Maturity
Financing Receivable Modifications
Amortized Cost Basis	$ 9,568
Total Class of Loans	0.40%
Loans defaulted | loan	5
Commercial and industrial loans | Payment Deferral And Extended Maturity | Minimum
Financing Receivable Modifications
Payment Deferral Term	6 months
Commercial and industrial loans | Payment Deferral And Extended Maturity | Maximum
Financing Receivable Modifications
Payment Deferral Term	7 months
Commercial and industrial loans | Payment Deferral And Extended Maturity Loan One
Financing Receivable Modifications
Loans defaulted | loan	1
Extended Term	5 months
Commercial and industrial loans | Payment Deferral And Extended Maturity Loan Two
Financing Receivable Modifications
Financing receivable, excluding accrued interest, modified, payments	$ 100
Loans defaulted | loan	2
Payment Deferral Term	3 months
Commercial and industrial loans | Payment Deferral And Extended Maturity Loan Three
Financing Receivable Modifications
Loans defaulted | loan	2
Payment Deferral Term	12 months
Commercial and industrial loans | Real estate loans | Payment Deferral
Financing Receivable Modifications
Amortized Cost Basis with Payment Default		$ 1,339
Loans defaulted | loan		1
Commercial and industrial loans | Real estate loans | Extended maturity and interest reduction
Financing Receivable Modifications
Amortized Cost Basis with Payment Default	$ 2,229	$ 950
Loans defaulted | loan	2	1
Commercial and industrial loans | Real estate loans | Payment Deferral And Extended Maturity
Financing Receivable Modifications
Amortized Cost Basis with Payment Default	$ 2,229	$ 2,289
Loans defaulted | loan	2	2

XML

ALLOWANCE FOR CREDIT LOSSES - Bank's Allowance for Credit Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Financing Receivable Allowance For Credit Losses
Financing receivables collectively evaluated for impairment	$ 7,900,000		$ 7,900,000		$ 9,900,000
Percentage of financing receivables collectively evaluated for impairment	97.40%		97.40%		97.20%
Financing receivables individually evaluated for impairment	$ 200,600		$ 200,600		$ 268,000
Percentage of financing receivables individually evaluated for impairment	2.50%		2.50%		2.60%
Financing Receivable, Allowance for Credit Loss, Beginning Balance	$ 29,295	$ 31,485	$ 29,205	$ 33,731
Provision (Reversal) for Credit Losses	289	(1,922)	937	(1,998)
Charge-offs	(364)	(1,183)	(1,226)	(4,273)
Recoveries	80	815	384	1,735
Financing Receivable, Allowance for Credit Loss, Ending Balance	29,300	29,195	29,300	29,195
Residential properties
Financing Receivable Allowance For Credit Losses
Financing Receivable, Allowance for Credit Loss, Beginning Balance	9,013	8,234	9,921	8,306
Provision (Reversal) for Credit Losses	(2,010)	140	(2,918)	68
Financing Receivable, Allowance for Credit Loss, Ending Balance	7,003	8,374	7,003	8,374
Commercial properties
Financing Receivable Allowance For Credit Losses
Financing Receivable, Allowance for Credit Loss, Beginning Balance	6,086	5,253	4,148	8,714
Provision (Reversal) for Credit Losses	493	(979)	2,431	(4,191)
Charge-offs				(249)
Financing Receivable, Allowance for Credit Loss, Ending Balance	6,579	4,274	6,579	4,274
Land and construction
Financing Receivable Allowance For Credit Losses
Financing Receivable, Allowance for Credit Loss, Beginning Balance	77	287	332	164
Provision (Reversal) for Credit Losses	(17)	(13)	(272)	110
Financing Receivable, Allowance for Credit Loss, Ending Balance	60	274	60	274
Commercial and industrial loans
Financing Receivable Allowance For Credit Losses
Financing Receivable, Allowance for Credit Loss, Beginning Balance	14,104	17,690	14,796	16,521
Provision (Reversal) for Credit Losses	1,809	(1,070)	1,676	2,019
Charge-offs	(341)	(1,183)	(1,203)	(4,022)
Recoveries	80	814	383	1,733
Financing Receivable, Allowance for Credit Loss, Ending Balance	15,652	16,251	15,652	16,251
Consumer loans
Financing Receivable Allowance For Credit Losses
Financing Receivable, Allowance for Credit Loss, Beginning Balance	15	21	8	26
Provision (Reversal) for Credit Losses	14		20	(4)
Charge-offs	(23)		(23)	(2)
Recoveries		1	1	2
Financing Receivable, Allowance for Credit Loss, Ending Balance	$ 6	$ 22	$ 6	$ 22

XML

ALLOWANCE FOR CREDIT LOSSES - Amortized Cost Basis of Collateral Dependent Loans Individually Evaluated to Determine Credit Losses and Related ACL Allocated to Loans (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Jun. 30, 2024	Dec. 31, 2023	Sep. 30, 2023	Jun. 30, 2023	Dec. 31, 2022
Financing Receivable Allowance For Credit Losses
Total Allowance for Credit Losses	$ 29,300	$ 29,295	$ 29,205	$ 29,195	$ 31,485	$ 33,731
Residential properties
Financing Receivable Allowance For Credit Losses
Total Allowance for Credit Losses	7,003	9,013	9,921	8,374	8,234	8,306
Commercial properties
Financing Receivable Allowance For Credit Losses
Total Allowance for Credit Losses	6,579	6,086	4,148	4,274	5,253	8,714
Land and construction
Financing Receivable Allowance For Credit Losses
Total Allowance for Credit Losses	60	77	332	274	287	164
Commercial and industrial loans
Financing Receivable Allowance For Credit Losses
Total Allowance for Credit Losses	15,652	14,104	14,796	16,251	17,690	16,521
Consumer loans
Financing Receivable Allowance For Credit Losses
Total Allowance for Credit Losses	6	$ 15	8	$ 22	$ 21	$ 26
Collateral Dependent Loans
Financing Receivable Allowance For Credit Losses
Amortized cost	5,706		3,751
Total Allowance for Credit Losses	964
Collateral Dependent Loans | Real Estate
Financing Receivable Allowance For Credit Losses
Amortized cost	5,706		2,523
Collateral Dependent Loans | Cash
Financing Receivable Allowance For Credit Losses
Amortized cost			250
Collateral Dependent Loans | Equipment/Receivables
Financing Receivable Allowance For Credit Losses
Amortized cost			978
Collateral Dependent Loans | Single family
Financing Receivable Allowance For Credit Losses
Amortized cost	244
Collateral Dependent Loans | Single family | Real Estate
Financing Receivable Allowance For Credit Losses
Amortized cost	244
Collateral Dependent Loans | Commercial properties
Financing Receivable Allowance For Credit Losses
Amortized cost	5,462		2,523
Total Allowance for Credit Losses	964
Collateral Dependent Loans | Commercial properties | Real Estate
Financing Receivable Allowance For Credit Losses
Amortized cost	$ 5,462		2,523
Collateral Dependent Loans | Commercial and industrial loans
Financing Receivable Allowance For Credit Losses
Amortized cost			1,228
Collateral Dependent Loans | Commercial and industrial loans | Cash
Financing Receivable Allowance For Credit Losses
Amortized cost			250
Collateral Dependent Loans | Commercial and industrial loans | Equipment/Receivables
Financing Receivable Allowance For Credit Losses
Amortized cost			$ 978

XML

ALLOWANCE FOR CREDIT LOSSES - Risk Category of Loans Based on Year of Origination (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	$ 138,014	$ 267,987
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	207,719	3,963,754
Financing Receivable Originated Two Years Before Latest Fiscal Year	3,238,294	2,285,355
Financing Receivable Originated Three Years Before Latest Fiscal Year	1,459,358	1,139,824
Financing Receivable Originated Four Years Before Latest Fiscal Year	750,103	449,852
Prior	1,063,531	916,714
Revolving Loans	1,231,844	1,154,316
Total	8,088,863	10,177,802
Financing Receivable Recorded Investment
Gross charge-offs Originated In Current Fiscal Year		257
Gross charge-offs Originated In Fiscal Year Before Latest Fiscal Year	179	1,420
Gross charge-offs Originated Two Years Before Latest Fiscal Year	678	1,205
Gross charge-offs Originated Three Years Before Latest Fiscal Year	303	587
Gross charge-offs Originated Four Years Before Latest Fiscal Year	43	117
Gross charge-offs Prior		297
Gross charge-offs Revolving Loans	23	1,366
Gross charge-offs Total loans	1,226	5,249
Pass
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	137,177	255,032
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	186,651	3,962,382
Financing Receivable Originated Two Years Before Latest Fiscal Year	3,229,727	2,257,273
Financing Receivable Originated Three Years Before Latest Fiscal Year	1,426,388	1,131,520
Financing Receivable Originated Four Years Before Latest Fiscal Year	731,273	431,470
Prior	947,019	867,002
Revolving Loans	1,218,030	1,141,934
Total	7,876,265	10,046,613
Special Mention
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	721
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	8,134	1,360
Financing Receivable Originated Two Years Before Latest Fiscal Year	8,499	27,124
Financing Receivable Originated Three Years Before Latest Fiscal Year	32,055	2,978
Financing Receivable Originated Four Years Before Latest Fiscal Year	13,870	5,633
Prior	54,336	40,995
Revolving Loans	3,976	735
Total	121,591	78,825
Substandard
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	116	12,955
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	12,934	12
Financing Receivable Originated Two Years Before Latest Fiscal Year	68	958
Financing Receivable Originated Three Years Before Latest Fiscal Year	915	5,326
Financing Receivable Originated Four Years Before Latest Fiscal Year	4,960	12,749
Prior	62,176	8,717
Revolving Loans	9,838	11,647
Total	91,007	52,364
Multifamily
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	73,086	37,343
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	542	2,355,381
Financing Receivable Originated Two Years Before Latest Fiscal Year	1,712,559	1,538,884
Financing Receivable Originated Three Years Before Latest Fiscal Year	796,136	763,736
Financing Receivable Originated Four Years Before Latest Fiscal Year	406,116	295,252
Prior	339,475	252,572
Total	3,327,914	5,243,168
Multifamily | Pass
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	73,086	37,343
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	542	2,355,381
Financing Receivable Originated Two Years Before Latest Fiscal Year	1,712,559	1,537,636
Financing Receivable Originated Three Years Before Latest Fiscal Year	789,647	763,736
Financing Receivable Originated Four Years Before Latest Fiscal Year	394,488	289,675
Prior	273,934	243,146
Total	3,244,256	5,226,917
Multifamily | Special Mention
Financing Receivable Recorded Investment
Financing Receivable Originated Two Years Before Latest Fiscal Year		1,248
Financing Receivable Originated Three Years Before Latest Fiscal Year	6,489
Financing Receivable Originated Four Years Before Latest Fiscal Year	11,628	5,577
Prior	51,471	9,426
Total	69,588	16,251
Multifamily | Substandard
Financing Receivable Recorded Investment
Prior	14,070
Total	14,070
Single family
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	2,999	13,631
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	10,030	259,043
Financing Receivable Originated Two Years Before Latest Fiscal Year	248,194	267,373
Financing Receivable Originated Three Years Before Latest Fiscal Year	260,156	92,567
Financing Receivable Originated Four Years Before Latest Fiscal Year	91,456	38,132
Prior	234,407	229,047
Revolving Loans	45,891	54,583
Total	893,133	954,376
Single family | Pass
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	2,999	13,631
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	10,030	259,043
Financing Receivable Originated Two Years Before Latest Fiscal Year	248,194	267,373
Financing Receivable Originated Three Years Before Latest Fiscal Year	260,156	92,567
Financing Receivable Originated Four Years Before Latest Fiscal Year	91,456	38,132
Prior	212,099	208,035
Revolving Loans	45,767	54,444
Total	870,701	933,225
Single family | Special Mention
Financing Receivable Recorded Investment
Prior	1,403	20,166
Total	1,403	20,166
Single family | Substandard
Financing Receivable Recorded Investment
Prior	20,905	846
Revolving Loans	124	139
Total	21,029	985
Commercial properties
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	2,437	15,369
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	15,308	221,525
Financing Receivable Originated Two Years Before Latest Fiscal Year	224,226	131,918
Financing Receivable Originated Three Years Before Latest Fiscal Year	118,111	123,404
Financing Receivable Originated Four Years Before Latest Fiscal Year	147,040	92,667
Prior	445,045	401,889
Total	952,167	986,772
Financing Receivable Recorded Investment
Gross charge-offs Prior		249
Gross charge-offs Total loans		249
Commercial properties | Pass
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	2,437	2,469
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	2,408	221,525
Financing Receivable Originated Two Years Before Latest Fiscal Year	224,226	130,579
Financing Receivable Originated Three Years Before Latest Fiscal Year	116,802	119,684
Financing Receivable Originated Four Years Before Latest Fiscal Year	143,541	81,243
Prior	419,491	383,729
Total	908,905	939,229
Commercial properties | Special Mention
Financing Receivable Recorded Investment
Financing Receivable Originated Two Years Before Latest Fiscal Year		1,223
Financing Receivable Originated Three Years Before Latest Fiscal Year	1,198	2,275
Financing Receivable Originated Four Years Before Latest Fiscal Year	2,225
Prior	843	10,747
Total	4,266	14,245
Commercial properties | Substandard
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year		12,900
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	12,900
Financing Receivable Originated Two Years Before Latest Fiscal Year		116
Financing Receivable Originated Three Years Before Latest Fiscal Year	111	1,445
Financing Receivable Originated Four Years Before Latest Fiscal Year	1,274	11,424
Prior	24,711	7,413
Total	38,996	33,298
Land and construction
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	108	19,151
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	24,962	43,923
Financing Receivable Originated Two Years Before Latest Fiscal Year	32,067	29,445
Financing Receivable Originated Three Years Before Latest Fiscal Year	8,078	36,498
Financing Receivable Originated Four Years Before Latest Fiscal Year	9,190	807
Prior	5,748	7,003
Total	80,153	136,827
Land and construction | Pass
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	108	19,151
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	24,962	43,923
Financing Receivable Originated Two Years Before Latest Fiscal Year	32,067	29,445
Financing Receivable Originated Three Years Before Latest Fiscal Year	8,078	36,498
Financing Receivable Originated Four Years Before Latest Fiscal Year	9,190	807
Prior	5,748	7,003
Total	80,153	136,827
Commercial and industrial loans
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	59,360	182,446
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	156,870	1,083,882
Financing Receivable Originated Two Years Before Latest Fiscal Year	1,021,248	317,158
Financing Receivable Originated Three Years Before Latest Fiscal Year	276,361	123,619
Financing Receivable Originated Four Years Before Latest Fiscal Year	96,301	22,695
Prior	38,804	26,144
Revolving Loans	1,185,687	1,099,318
Total	2,834,631	2,855,262
Financing Receivable Recorded Investment
Gross charge-offs Originated In Current Fiscal Year		257
Gross charge-offs Originated In Fiscal Year Before Latest Fiscal Year	179	1,420
Gross charge-offs Originated Two Years Before Latest Fiscal Year	678	1,205
Gross charge-offs Originated Three Years Before Latest Fiscal Year	303	587
Gross charge-offs Originated Four Years Before Latest Fiscal Year	43	117
Gross charge-offs Prior		48
Gross charge-offs Revolving Loans		1,364
Gross charge-offs Total loans	1,203	4,998
Commercial and industrial loans | Pass
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	58,523	182,391
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	148,702	1,082,510
Financing Receivable Originated Two Years Before Latest Fiscal Year	1,012,681	291,663
Financing Receivable Originated Three Years Before Latest Fiscal Year	251,189	119,035
Financing Receivable Originated Four Years Before Latest Fiscal Year	92,598	21,314
Prior	35,695	25,030
Revolving Loans	1,171,997	1,087,075
Total	2,771,385	2,809,018
Commercial and industrial loans | Special Mention
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	721
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	8,134	1,360
Financing Receivable Originated Two Years Before Latest Fiscal Year	8,499	24,653
Financing Receivable Originated Three Years Before Latest Fiscal Year	24,368	703
Financing Receivable Originated Four Years Before Latest Fiscal Year	17	56
Prior	619	656
Revolving Loans	3,976	735
Total	46,334	28,163
Commercial and industrial loans | Substandard
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	116	55
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	34	12
Financing Receivable Originated Two Years Before Latest Fiscal Year	68	842
Financing Receivable Originated Three Years Before Latest Fiscal Year	804	3,881
Financing Receivable Originated Four Years Before Latest Fiscal Year	3,686	1,325
Prior	2,490	458
Revolving Loans	9,714	11,508
Total	16,912	18,081
Consumer loans
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	24	47
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	7
Financing Receivable Originated Two Years Before Latest Fiscal Year		577
Financing Receivable Originated Three Years Before Latest Fiscal Year	516
Financing Receivable Originated Four Years Before Latest Fiscal Year		299
Prior	52	59
Revolving Loans	266	415
Total	865	1,397
Financing Receivable Recorded Investment
Gross charge-offs Revolving Loans	23	2
Gross charge-offs Total loans	23	2
Consumer loans | Pass
Financing Receivable Recorded Investment
Financing Receivable Originated In Current Fiscal Year	24	47
Financing Receivable Originated In Fiscal Year Before Latest Fiscal Year	7
Financing Receivable Originated Two Years Before Latest Fiscal Year		577
Financing Receivable Originated Three Years Before Latest Fiscal Year	516
Financing Receivable Originated Four Years Before Latest Fiscal Year		299
Prior	52	59
Revolving Loans	266	415
Total	$ 865	$ 1,397

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CORE DEPOSIT INTANGIBLES (Details) - Core Deposit - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
CORE DEPOSIT INTANGIBLES
Core deposit intangible assets	$ 3.9		$ 4.9
Core deposit intangible amortization expense	$ 1.1	$ 1.2
Minimum
CORE DEPOSIT INTANGIBLES
Estimated useful lives of other intangible assets	7 years
Maximum
CORE DEPOSIT INTANGIBLES
Estimated useful lives of other intangible assets	10 years

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DERIVATIVE ASSETS/LIABILITIES (Details) - USD ($) $ in Thousands			3 Months Ended	9 Months Ended
	Mar. 28, 2024	Feb. 01, 2024	Sep. 30, 2024	Sep. 30, 2024
Derivatives Fair Value [Line Items]
Gain from derivative activity			$ (117,517)	$ (115,844)
Interest Rate Swaps
Derivatives Fair Value [Line Items]
Notional amount		$ 450,000
Quarterly interest at a fixed rate		3.583%
Term of the agreement		5 years
Notional amount reduction	$ 100,000
Gain from derivative activity	$ 1,700
Cash flow hedge classified as derivative liabilities			$ (5,100)	$ (5,100)

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LOAN SALES AND MORTGAGE SERVICING RIGHTS (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
LOAN SALES AND MORTGAGE SERVICING RIGHTS
Mortgage servicing rights	$ 4,000		$ 5,500
Mortgage servicing rights, valuation allowance	0		300
Loans serviced for other financial institution	897,000		$ 1,000,000
Servicing fees earned on loans	1,800	$ 1,900
Sale of multifamily loans through securitization	$ 0	$ 0

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DEPOSITS - Summary of Outstanding Balance of Deposits and Average Rates (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
DEPOSITS
Demand deposits, Noninterest-bearing	$ 2,136,442	$ 1,467,806
Demand deposits, Interest-bearing	1,999,229	2,881,786
Money market and savings	3,543,668	3,195,670
Certificates of deposit	2,625,265	3,143,670
Total	$ 10,304,604	$ 10,688,932
Demand deposits, Interest-bearing, Weighted Average Rate	3.66%	2.94%
Money market and savings, Weighted Average Rate	3.93%	3.81%
Certificates of deposit, Weighted Average Rate	4.77%	4.87%
Total, Weighted Average Rate	3.28%	3.36%

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DEPOSITS - Remaining maturities of Certificate of Deposit Accounts (Details) - USD ($) $ in Thousands	Sep. 30, 2024	Dec. 31, 2023
DEPOSITS
3 months or less	$ 60,095	$ 343,078
Over 3 months through 6 months	75,036	24,126
Over 6 months through 12 months	63,479	56,415
Over 12 months	10,562	30,994
Total	$ 209,172	$ 454,613

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DEPOSITS - Additional Information (Details) - USD ($) $ in Millions	9 Months Ended	12 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
DEPOSITS
Large depositor relationships, percentage of total deposits	2.00%
Large depositor relationships, consisting of deposit relationships, total deposits	17.60%	12.50%
Accrued interest payable on deposits	$ 34.5	$ 36.7

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BORROWINGS (Details)	9 Months Ended
	Sep. 30, 2024 USD ($)	Dec. 31, 2023 USD ($)
Borrowings
Borrowing in term FHLB	$ 400,000,000	$ 100,000,000
Carrying Value	173,444,000	173,397,000
Loans held for investment	4,300,000,000	4,300,000,000
Federal Home Loan Bank, maximum borrowing capacity	2,000,000,000.0	2,000,000,000.0
Federal Home Loan Bank, additional credit available	10,000,000	$ 310,000,000
FHLB term advances interest rate		4.21%
Unsecured debt	$ 240,000,000
Number of financial institutions	6
Securities pledged as collateral	$ 82,600,000	$ 76,300,000
FHLB putable advances
Borrowings
FHLB advances	$ 1,000,000,000	$ 800,000,000
Weighted average interest rate	3.74%	3.74%
FHLB Putable Advances Exercisable In December 2024
Borrowings
FHLB putable advances eligible for exercising	$ 300,000,000
FHLB Putable Advances Exercisable In Beginning in June 2025
Borrowings
FHLB putable advances eligible for exercising	700,000,000
Minimum
Borrowings
Unsecured debt	20,000,000
Maximum
Borrowings
Unsecured debt	$ 100,000,000
Weighted Average | FHLB putable advances
Borrowings
Weighted average life	6 years 6 months	5 years 4 months 28 days
Revolving Credit Facility
Borrowings
Long-term line of credit	$ 0	$ 0
Debt instrument basis point rate	0.50%
Line of credit, borrowing capacity	$ 20,000,000
FHLB Advances Maturing on May 28, 2027
Borrowings
FHLB advances	$ 300,000,000
Weighted average life	3 years
Interest rate (as a percent)	4.95%
FHLB Advances Maturing on June 28, 2028
Borrowings
FHLB advances	$ 100,000,000
Weighted average life	5 years
Interest rate (as a percent)	4.21%
Overnight FHLB Advance
Borrowings
Secured debt		160,000,000
Repurchase agreements
Borrowings
Secured debt	$ 25,000,000	64,000,000
Federal Reserve Bank advances
Borrowings
Secured debt	267,000,000	285,000,000
Unsecured federal funds
Borrowings
Unsecured debt	0	0
Borrower In Custody
Borrowings
Long-term line of credit		$ 160,000,000
Interest rate (as a percent)		5.50%
Bank Term Funding Program
Borrowings
Long-term line of credit	$ 267,000,000	$ 285,000,000
Debt instrument basis point rate	0.10%
Remaining borrowing capacity	$ 823,000,000	$ 823,000,000
Interest rate (as a percent)	4.76%

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SUBORDINATED DEBT (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2024 USD ($) item	Dec. 31, 2023 USD ($) item
Subordinated Debt
Number of subordinated notes | item	2	2
Current Principal Balance	$ 174,165
Carrying Value	$ 173,444	$ 173,397
Subordinated notes due 2032
Subordinated Debt
Current Interest Rate	3.50%
Current Principal Balance	$ 150,000
Carrying Value	$ 148,238	148,058
Subordinated notes due 2032 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Subordinated Debt
Current Interest Rate	2.04%
Subordinated notes due 2030
Subordinated Debt
Current Interest Rate	6.00%
Current Principal Balance	$ 24,165
Carrying Value	$ 25,206	$ 25,339
Subordinated notes due 2030 | Secured Overnight Financing Rate (SOFR) Overnight Index Swap Rate
Subordinated Debt
Current Interest Rate	5.90%

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INCOME TAXES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
INCOME TAXES
Income tax (benefit) expense	$ (34,794)	$ (600)	$ (36,125)	$ 1,300
Effective income tax rate			31.60%	(0.65%)
LHFS LOCOM adjustment	117,517		$ 117,517
Reclassification of loans from loans held for investments to loans held for sale			$ 1,900,000
Combined federal and state statutory rates			28.20%
Valuation allowance	0		$ 0
Deferred tax assets	$ 65,100		$ 65,100		$ 29,100

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SHAREHOLDERS' EQUITY (Details)			1 Months Ended	3 Months Ended	9 Months Ended
	Sep. 30, 2024 USD ($) $ / shares shares	Jul. 08, 2024 USD ($)	Jul. 31, 2024 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Sep. 30, 2024 USD ($) $ / shares shares	Sep. 29, 2024 shares	Jul. 01, 2024 $ / shares	Dec. 31, 2023 USD ($) $ / shares shares
Subsidiary Sale Of Stock [Line Items]
Cash and cash equivalents | $	$ 1,106,422,000			$ 1,106,422,000	$ 1,106,422,000			$ 1,326,629,000
Preferred stock par or stated value per share | $ / shares	$ 0.001			$ 0.001	$ 0.001			$ 0.001
Warrants exercise price | $ / shares	$ 5.125			$ 5.125	$ 5.125
Issuance costs | $					$ 13,519,000
Common stock, shares authorized	200,000,000			200,000,000	200,000,000	100,000,000		100,000,000
Non-cumulative cash dividend rate	13.00%
Preferred stock dividends | $				$ 0
Common Stock
Subsidiary Sale Of Stock [Line Items]
New shares issued				11,308,676	11,308,676
Preferred Stock
Subsidiary Sale Of Stock [Line Items]
New shares issued				44,301	44,301
July 2024 Capital Raise
Subsidiary Sale Of Stock [Line Items]
Amount of capital raise | $		$ 228,000,000	$ 228,000,000
Lock in period | $			180
Net proceeds | $			$ 214,500,000
Issuance costs | $			$ 13,500,000
July 2024 Capital Raise | Common Stock
Subsidiary Sale Of Stock [Line Items]
New shares issued			11,308,676
Price per share (USD/Share) | $ / shares			$ 4.10
Closing price of common stock | $ / shares							$ 6.47
July 2024 Capital Raise | Warrants
Subsidiary Sale Of Stock [Line Items]
Number of days within which warrants not exercisable | $			180
Warrants term			7 years
Warrants exercise price | $ / shares			$ 5,125
July 2024 Capital Raise | Series A Preferred Stock
Subsidiary Sale Of Stock [Line Items]
New shares issued			29,811
Preferred stock par or stated value per share | $ / shares			$ 0.001
Price per share (USD/Share) | $ / shares			$ 4,100
Number of common stock issued for each of convertible preferred stock			1,000
Number of series B preferred stock issued per each series A preferred share			1
Total number of common shares issued for preferred shares			29,811,000
July 2024 Capital Raise | Series B Preferred Stock
Subsidiary Sale Of Stock [Line Items]
New shares issued			14,490
Preferred stock par or stated value per share | $ / shares			$ 0.001
Price per share (USD/Share) | $ / shares			$ 4,100
Number of common stock issued for each of convertible preferred stock			1,000
Total number of common shares issued for preferred shares			14,490,000
July 2024 Capital Raise | Series C Non-Voting Common Stock
Subsidiary Sale Of Stock [Line Items]
Number of common stock issued for each of convertible preferred stock			1,000
Total number of common shares issued for preferred shares			22,239,000
Numbers of shares issued for warrants			22,239
FFI
Subsidiary Sale Of Stock [Line Items]
Dividend payment restrictions (as a percent)					50.00%
Cash and cash equivalents | $	$ 9,500,000			$ 9,500,000	$ 9,500,000			$ 15,300,000

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EARNINGS PER SHARE - Summary of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
EARNINGS PER SHARE
Net (loss) income, Basic	$ (82,174)	$ 2,180	$ (78,296)	$ (201,612)
Net (loss) income, Diluted	$ (82,174)	$ 2,180	$ (78,296)	$ (201,612)
Weighted average basic common shares outstanding	66,992,701	56,443,539	60,025,852	56,417,252
Dilutive effect of options, restricted stock and contingent shares issuable		6,181
Diluted common shares outstanding	66,992,701	56,449,720	60,025,852	56,417,252
Net (loss) income per share, Basic	$ (1.23)	$ 0.04	$ (1.30)	$ (3.57)
Net (loss) income per share, Diluted	$ (1.23)	$ 0.04	$ (1.30)	$ (3.57)

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EARNINGS PER SHARE - Anti-dilutive (Details) - $ / shares	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
EARNINGS PER SHARE
Anti-dilutive securities excluded from computation of earnings per share	0	22,550	0	22,550
Average share price	$ 5.125		$ 5.125

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SEGMENT REPORTING (Details) - segment	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
SEGMENT REPORTING
Reportable business segments	2	2	2	2

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SEGMENT REPORTING - Summary of Key Operating Results of Business Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Segment Reporting Information
Interest income	$ 157,156	$ 144,765	$ 458,523	$ 427,093
Interest expense	108,037	92,692	327,189	267,281
Net interest income	49,119	52,073	131,334	159,812
Provision (reversal) for credit losses	282	(2,015)	53	(711)
Noninterest income	11,937	11,698	38,278	35,475
LHFS LOCOM adjustment	(117,517)		(117,517)
Goodwill impairment				215,252
Compensation and benefits	20,009	19,632	58,511	65,944
Customer service costs	18,954	24,683	45,796	60,402
Professional services and marketing costs	5,095	3,748	12,152	11,685
Other	16,167	16,143	50,004	43,027
(Loss) income before income taxes	(116,968)	1,580	(114,421)	(200,312)
Income tax expense (benefit)	(34,794)	(600)	(36,125)	1,300
Net (loss) income	(82,174)	2,180	(78,296)	(201,612)
Operating Segments | Banking
Segment Reporting Information
Interest income	157,156	144,765	458,523	427,093
Interest expense	106,317	90,960	322,059	261,948
Net interest income	50,839	53,805	136,464	165,145
Provision (reversal) for credit losses	282	(2,015)	53	(711)
Noninterest income	4,598	4,557	16,522	14,425
LHFS LOCOM adjustment	(117,517)		(117,517)
Goodwill impairment				215,252
Compensation and benefits	15,688	15,571	45,681	52,516
Customer service costs	18,954	24,683	45,796	60,402
Professional services and marketing costs	3,298	2,430	8,486	7,180
Other	15,266	15,303	47,084	40,234
(Loss) income before income taxes	(115,568)	2,390	(111,631)	(195,303)
Income tax expense (benefit)	(34,399)	(409)	(35,365)	2,672
Net (loss) income	(81,169)	2,799	(76,266)	(197,975)
Operating Segments | Wealth Management
Segment Reporting Information
Noninterest income	7,704	7,522	22,843	22,228
Compensation and benefits	4,154	3,835	12,328	12,453
Professional services and marketing costs	994	853	2,821	2,569
Other	621	574	1,980	1,922
(Loss) income before income taxes	1,935	2,260	5,714	5,284
Income tax expense (benefit)	551	659	1,632	1,552
Net (loss) income	1,384	1,601	4,082	3,732
Other
Segment Reporting Information
Interest expense	1,720	1,732	5,130	5,333
Net interest income	(1,720)	(1,732)	(5,130)	(5,333)
Noninterest income	(365)	(381)	(1,087)	(1,178)
Compensation and benefits	167	226	502	975
Professional services and marketing costs	803	465	845	1,936
Other	280	266	940	871
(Loss) income before income taxes	(3,335)	(3,070)	(8,504)	(10,293)
Income tax expense (benefit)	(946)	(850)	(2,392)	(2,924)
Net (loss) income	$ (2,389)	$ (2,220)	$ (6,112)	$ (7,369)