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What changed in First Foundation Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of First Foundation Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+424 added−368 removedSource: 10-K (2025-03-17) vs 10-K (2024-02-28)

Top changes in First Foundation Inc.'s 2024 10-K

424 paragraphs added · 368 removed · 255 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

89 edited+48 added−14 removed153 unchanged
Biggest changeA bank holding company’s failure to meet these requirements will generally be considered by the Federal Reserve to be an unsafe and unsound banking practice or a violation of the Federal Reserve’s regulations or both, which could lead to the imposition of restrictions (including restrictions on growth) on, or a regulatory enforcement order against, the bank holding company. 9 Table of Contents Additionally, among its powers, the Federal Reserve may require any bank holding company to terminate an activity or terminate control of, or liquidate or divest itself of, any subsidiary or affiliated company that the Federal Reserve determines constitutes a significant risk to the financial safety, soundness or stability of the bank holding company or any of its banking subsidiaries.
Biggest changeA bank holding company’s failure to meet these requirements will generally be considered by the Federal Reserve to be an unsafe and unsound banking practice or a violation of the Federal Reserve’s regulations or both, which could lead to the imposition of restrictions (including restrictions on growth) on, or a regulatory enforcement order against, the bank holding company.
Our lending platform is focused on three primary channels: 1) Commercial Real Estate (“CRE”), defined as multifamily residential, owner and non-owner occupied commercial real estate, land and construction; 2) Commercial and Industrial (“C&I”), defined as term and revolving credit/lines of credit for small to moderate-sized businesses, professional firms, and municipal agencies; 3) Consumer defined as loan products to individuals, including single family residential real estate loans and home equity lines of credit and other consumer-related loans focused on the current and prospective clients of our platform.
Our lending platform is focused on three primary channels: 1) Commercial Real Estate (“CRE”), defined as multifamily residential, owner and non-owner occupied commercial real estate, land and construction; 2) Commercial and Industrial (“C&I”), defined as term and revolving credit/lines of credit for small to moderate-sized businesses, professional firms, and municipal agencies; and 3) Consumer defined as loan products to individuals, including single-family residential real estate loans and home equity lines of credit and other consumer-related loans focused on the current and prospective clients of our platform.
In addition, we perform stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as lease rates, values and absorption rates. We typically require full recourse from the owners of the entities to which we make such loans.
In addition, we perform stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as lease rates, values and absorption rates. We typically require full recourse from the owners of the entities to which we make such loans.
In addition, we perform stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as lease rates, values and absorption rates. We typically require full recourse from the owners of the entities to which we make such loans.
In addition, we perform stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as lease rates, values and absorption rates. We typically require full recourse from the owners of the entities to which we make such loans.
Small Business Lending and USDA Lending: The Bank is approved as a Small Business Administration (“SBA”) lender and as a United States Department of Agriculture (“USDA”) lender. We are committed to our small business commercial lending to serve our communities and small businesses that operate in our network of retail branch locations.
Small Business Lending and USDA Lending: The Bank is approved as a Small Business Administration (“SBA”) lender and as a United States Department of Agriculture (“USDA”) lender. We are committed to small business commercial lending to serve our communities and small businesses that operate in our network of retail branch locations.
Bank Secrecy Act and USA Patriot Act The Company and Bank are subject to the Bank Secrecy Act, as amended by the USA PATRIOT Act, which gives the federal government powers to address money laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers and mandatory transaction reporting obligations.
Bank Secrecy Act The Company and Bank are subject to the Bank Secrecy Act, as amended by the USA PATRIOT Act, which gives the federal government powers to address money laundering and terrorist threats through enhanced domestic security measures, expanded surveillance powers and mandatory transaction reporting obligations.
Those laws and regulations include: ● The Home Ownership and Equity Protection Act of 1994, which requires additional disclosures and consumer protections to borrowers designed to protect them against certain lending practices, such as practices deemed to constitute “predatory lending.” ● The Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, which requires banking institutions and financial services businesses to adopt practices and procedures designed to help deter identity theft, including developing appropriate fraud response programs, and provides consumers with greater control of their credit data. ● The Truth in Lending Act, which requires that credit terms be disclosed in a meaningful and consistent way so that consumers may compare credit terms more readily and knowledgeably. ● The Truth in Savings Act, which governs disclosure of account terms and costs to consumer depositors. ● The Equal Credit Opportunity Act, which generally prohibits, in connection with any consumer or business credit transactions, discrimination on the basis of race, color, religion, national origin, sex, marital status, age (except in limited circumstances), or the fact that a borrower is receiving income from public assistance programs. 17 Table of Contents ● The Fair Housing Act, which regulates many lending practices, including making it unlawful for any lender to discriminate in its housing-related lending activities against any person because of race, color, religion, national origin, sex, handicap or familial status. ● The Home Mortgage Disclosure Act, which includes a “fair lending” aspect that requires the collection and disclosure of data about applicant and borrower characteristics as a way of identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes. ● The Real Estate Settlement Procedures Act, which requires lenders to provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits certain abusive practices, such as kickbacks. ● The National Flood Insurance Act, which requires homes in flood-prone areas with mortgages from a federally regulated lender to have flood insurance. ● The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, which requires mortgage loan originator employees of federally insured institutions to register with the Nationwide Mortgage Licensing System and Registry, a database created by the states to support the licensing of mortgage loan originators, prior to originating residential mortgage loans.
Those laws and regulations include: ● The Home Ownership and Equity Protection Act of 1994, which requires additional disclosures and consumer protections to borrowers designed to protect them against certain lending practices, such as practices deemed to constitute “predatory lending.” ● The Fair Credit Reporting Act, as amended by the Fair and Accurate Credit Transactions Act, which requires banking institutions and financial services businesses to adopt practices and procedures designed to help deter identity theft, including developing appropriate fraud response programs, and provides consumers with greater control of their credit data. ● The Truth in Lending Act, which requires that credit terms be disclosed in a meaningful and consistent way so that consumers may compare credit terms more readily and knowledgeably. ● The Truth in Savings Act, which governs disclosure of account terms and costs to consumer depositors. ● The Equal Credit Opportunity Act, which generally prohibits, in connection with any consumer or business credit transactions, discrimination on the basis of race, color, religion, national origin, sex, marital status, age (except in limited circumstances), or the fact that a borrower is receiving income from public assistance programs. 18 Table of Contents ● The Fair Housing Act, which regulates many lending practices, including making it unlawful for any lender to discriminate in its housing-related lending activities against any person because of race, color, religion, national origin, sex, handicap or familial status. ● The Home Mortgage Disclosure Act, which includes a “fair lending” aspect that requires the collection and disclosure of data about applicant and borrower characteristics as a way of identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes. ● The Real Estate Settlement Procedures Act, which requires lenders to provide borrowers with disclosures regarding the nature and cost of real estate settlements and prohibits certain abusive practices, such as kickbacks. ● The National Flood Insurance Act, which requires homes in flood-prone areas with mortgages from a federally regulated lender to have flood insurance. ● The Secure and Fair Enforcement for Mortgage Licensing Act of 2008, which requires mortgage loan originator employees of federally insured institutions to register with the Nationwide Mortgage Licensing System and Registry, a database created by the states to support the licensing of mortgage loan originators, prior to originating residential mortgage loans.
Through our Supporting our Communities program, employees can invite local nonprofit organizations that they are involved with to apply for grants designed to impact the core mission of each nonprofit organization. We select community based non-profit organizations that not only align with our philanthropic mission, but also have established a long-term connection to our Company through our employees.
Through our Supporting our Communities program, employees can invite local nonprofit organizations with which they are involved with to apply for grants designed to impact the core mission of each nonprofit organization. We select community-based non-profit organizations that not only align with our philanthropic mission, but also have established a long-term connection to our Company through our employees.
Repayment of consumer loans are largely dependent on the borrower’s ongoing cash flows and financial stability and, as a result, generally pose higher credit risks than the other loans that we make. For all of our loan offerings, we utilize a comprehensive approach in our underwriting process.
Repayment of consumer loans are largely dependent on the borrower’s ongoing cash flows and financial stability and, as a result, generally pose higher credit risks than do the other loans that we make. For all of our loan offerings, we utilize a comprehensive approach in our underwriting process.
Those banks and investment advisory and wealth management firms generally have much greater financial and capital resources than we do and as a result of both their ability to conduct extensive advertising campaigns and their relatively long histories of operating in our markets, are generally better known than us.
Those banks and investment advisory and wealth management firms generally have much greater financial and capital resources than we do and as a result of both their ability to conduct extensive advertising campaigns and their relatively long histories of operating in our markets, are generally better known.
The risk-based capital ratios are determined by classifying assets and certain off-balance sheet financial instruments into weighted categories, with higher levels of capital being required for those categories perceived as representing greater risks, and with the applicable ratios calculated by dividing qualifying capital by total risk-adjusted assets and off-balance sheet items.
The risk-based capital ratios are determined by classifying assets and certain off-balance sheet financial instruments into risk-weighted categories, with higher levels of capital being required for those categories perceived as representing greater risks, and with the applicable ratios calculated by dividing qualifying capital by total risk-weighted assets and off-balance sheet items.
These actions include the power to enjoin any “unsafe or unsound” banking practices; to require that affirmative action be taken to correct any conditions resulting from any violation of law or unsafe or unsound practice; to issue an administrative order that can be judicially enforced; to require that it increase its capital; to restrict its growth; to assess civil monetary penalties against it or its officers or directors; to remove officers and directors of the bank; and if the federal agency concludes that such conditions at the bank cannot be corrected or there is an imminent risk of loss to depositors, to terminate a bank’s deposit insurance, which in the case of a California state-chartered bank would result in revocation of its charter and the mandatory cessation of its banking operations.
These actions include the power to enjoin any “unsafe or unsound” banking practices; to require that affirmative action be taken to correct any conditions resulting from any violation of law or unsafe or unsound practice; to issue an administrative order 13 Table of Contents that can be judicially enforced; to require that it increase its capital; to restrict its growth; to assess civil monetary penalties against it or its officers or directors; to remove officers and directors of the bank; and if the federal agency concludes that such conditions at the bank cannot be corrected or there is an imminent risk of loss to depositors, to terminate a bank’s deposit insurance, which in the case of a California state-chartered bank would result in revocation of its charter and the mandatory cessation of its banking operations.
These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in some cases these loans have fixed interest rates for periods ranging from 3 to 15 years and adjust thereafter based on an applicable indices and terms. These loans generally have interest rate floors, payment caps, and prepayment penalties.
These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in some cases these loans have fixed interest rates for periods ranging from 3 to 15 years and adjust thereafter based on an applicable index and terms. These loans generally have interest rate floors, payment caps, and prepayment penalties.
This includes the requirement that all factors considered in our underwriting be appropriately documented. In our underwriting, our primary focus is always on the primary, secondary and tertiary sources of repayment, which include the subject real estate collateral cash flow, the business/borrower’s ability to repay and value of the subject collateral securing the loan.
This includes the requirement that all factors considered in our underwriting be appropriately documented. In our underwriting, our primary focus is always on the primary, secondary and tertiary sources of repayment, which include the subject real estate collateral cash flow, the business’s/borrower’s ability to repay and the value of the subject collateral securing the loan.
The bank offers checking, savings, money market and CDs, as well as complementary products such as ATM/debit cards and eStatements through the system. Deposit Delivery Channe ls: Our deposit products and services are delivered through the following delivery channels: ● Retail Banking: The retail banking delivery channel is made up of 29 banking offices located throughout our market areas.
The Bank offers checking, savings, money market and CDs, as well as complementary products such as ATM/debit cards and eStatements through the system. Deposit Delivery Channels: Our deposit products and services are delivered through the following delivery channels: ● Retail Banking: The retail banking delivery channel is made up of 29 banking offices located throughout our market areas.
Each regional Federal Home Loan Bank is financed primarily from the sale of consolidated obligations of the overall Federal Home Loan Bank system. As an FHLB member, FFB is required to own a certain amount of capital stock in the FHLB. At December 31, 2023, FFB was in compliance with the FHLB’s stock ownership requirement.
Each regional Federal Home Loan Bank is financed primarily from the sale of consolidated obligations of the overall Federal Home Loan Bank system. As an FHLB member, FFB is required to own a certain amount of capital stock in the FHLB. At December 31, 2024, FFB was in compliance with the FHLB’s stock ownership requirement.
A bank holding company and its non-banking subsidiaries also are prohibited from implementing so-called tying arrangements whereby clients may be required to use or purchase services or products from the bank holding company or any of its non-bank subsidiaries in order to obtain a loan or other services from any of the holding company’s subsidiary banks.
A bank holding company and its non-banking subsidiaries also are prohibited from implementing so-called tying arrangements whereby clients may be required to use or purchase services or products from the bank holding company or any of its non-bank subsidiaries in order to obtain a loan or other services from any of the holding company’s subsidiary bank(s).
Land and Construction: Land and construction loans are provided to borrowers with extensive construction experience and/or as an accommodation to existing or potential clients of the platform; however, some such loans were obtained through acquisition of other banks. There is not a separate sales effort to generate land and construction loans.
Land and Construction: Land and construction loans are provided to borrowers with extensive construction experience and/or as an accommodation to existing or potential clients of the platform; however, some such loans were obtained through the acquisitions of other banks. There is not a separate sales effort to generate land and construction loans.
As of December 31, 2023, FFI and FFB did not have any trust preferred securities. In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (the standards are commonly referred to as “Basel IV”).
As of December 31, 2024, FFI and FFB did not have any trust preferred securities. In December 2017, the Basel Committee published standards that it described as the finalization of the Basel III post-crisis regulatory reforms (the standards are commonly referred to as “Basel IV”).
If a bank is classified as critically undercapitalized, FDICIA requires the bank to be placed 12 Table of Contents into conservatorship or receivership within 90 days, unless its federal banking regulatory agency determines that there are other measures that would enable the bank, within a relatively short period of time, to increase its capital in an amount sufficient to improve its capital classification under the prompt corrective action framework.
If a bank is classified as critically undercapitalized, FDICIA requires the bank to be placed into conservatorship or receivership within 90 days, unless its federal banking regulatory agency determines that there are other measures that would enable the bank, within a relatively short period of time, to increase its capital in an amount sufficient to improve its capital classification under the prompt corrective action framework.
We have not elected to be a financial holding company. Under Federal Reserve regulations, a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner.
We have not elected to be a financial holding company. Under Federal Reserve regulations, a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary bank(s) and may not conduct its operations in an unsafe or unsound manner.
The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the subject real estate collateral cash flow, the character and creditworthiness of the borrower and guarantors, loan-to-value and debt service coverage ratios, borrower liquidity and credit history.
The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the subject real estate collateral’s cash flow, the character and creditworthiness of the borrower and guarantors, loan-to-value and debt service coverage ratios, borrower liquidity and credit history.
Federal Home Loan Bank System FFB is a member of the FHLB. Among other benefits, each regional Federal Home Loan Bank serves as a reserve or central bank for its members within its assigned region and makes available loans or advances to its member banks.
Federal Home Loan Bank System FFB is a member of the Federal Home Loan Bank (“FHLB”). Among other benefits, each regional Federal Home Loan Bank serves as a reserve or central bank for its members within its assigned region and makes available loans or advances to its member banks.
We compete with these much larger banks and investment advisory and wealth management firms primarily on the basis of the personal and “one-on-one” service that we provide to our clients, which many of these competitors are unwilling or unable to provide, other than to their wealthiest clients, due to costs involved or their “one size fits all” 8 Table of Contents approaches to providing financial services to their clients.
We compete with these much larger banks and investment advisory and wealth management firms primarily on the basis of the personal and “one-on-one” service that we provide to our clients, which many of these competitors are unwilling or unable to provide, other than to their wealthiest clients, due to costs involved or their “one size fits all” approaches to providing financial services.
An insured depository institution’s capital category depends upon whether its capital levels meet these capital thresholds shown in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Well- ​ Adequately ​ ​ ​ ​ Significantly Capital Measure Capitalized Capitalized Undercapitalized Undercapitalized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage ratio ​ ​ 5% or greater ​ ​ 4% or greater ​ ​ Less than 4% ​ ​ Less than 3% CET1 risk-based capital ratio ​ 6.5% or greater ​ 4.5% or greater ​ Less than 4.5% ​ Less than 3% Tier 1 risk-based capital ratio ​ 8% or greater ​ 6% or greater ​ Less than 6% ​ Less than 4% Total risk-based capital ratio ​ 10% or greater ​ 8% or greater ​ Less than 8% ​ Less than 6% ​ A bank that is classified as “critically undercapitalized” if its tangible equity was equal to or less than 2% of average quarterly tangible assets.
An insured depository institution’s capital category depends upon whether its capital levels meet these capital thresholds shown in the table below. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Well- ​ Adequately ​ ​ ​ ​ Significantly Capital Measure Capitalized Capitalized Undercapitalized Undercapitalized ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Tier 1 leverage capital ratio ​ ​ 5% or greater ​ ​ 4% or greater ​ ​ Less than 4% ​ ​ Less than 3% Common equity tier 1 capital ratio ​ 6.5% or greater ​ 4.5% or greater ​ Less than 4.5% ​ Less than 3% Tier 1 risk-based capital ratio ​ 8% or greater ​ 6% or greater ​ Less than 6% ​ Less than 4% Total risk-based capital ratio ​ 10% or greater ​ 8% or greater ​ Less than 8% ​ Less than 6% A bank that is classified as “critically undercapitalized” if its tangible equity were equal to or less than 2% of its average quarterly tangible assets.
It is also a Federal 13 Table of Contents Reserve policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of financial strength for their banking subsidiaries. Under the Capital Rules discussed above, bank holding companies may not pay dividends on common stock unless they maintain minimum regulatory capital ratios.
It is also a Federal Reserve policy that bank holding companies should not maintain dividend levels that undermine their ability to be a source of financial strength for their banking subsidiaries. Under the Capital Rules discussed above, bank holding companies may not pay dividends on common stock unless they maintain minimum regulatory capital ratios.
GLBA also requires banking organizations to provide each of their customers with a notice of their privacy policies and practices and prohibits a banking organization from disclosing nonpublic personal information about a customer to nonaffiliated third parties unless the banking organization satisfies various notice and “opt-out” requirements and the customer has not chosen to opt out of the disclosure.
GLBA also requires banking organizations to provide each of 16 Table of Contents their customers with a notice of their privacy policies and practices and prohibits a banking organization from disclosing nonpublic personal information about a customer to nonaffiliated third parties unless the banking organization satisfies various notice and “opt-out” requirements and the customer has not chosen to opt out of the disclosure.
The table below summarizes the minimum capital ratios plus the applicable increment of the capital conservation buffer that are applicable to the Company and the Bank: ​ ​ ​ ​ CET1 risk-based capital ratio 7.00 % Tier 1 risk-based capital ratio 8.50 % Total risk-based capital ratio 10.50 % ​ The Capital Rules required that trust preferred securities be phased out from Tier 1 capital by January 1, 2016, except in the case of banking organizations with total consolidated assets of less than $15 billion, which will be permitted to include trust preferred securities issued prior to May 19, 2010 in Tier 1 capital, subject to a limit of 25% of tier 1 capital elements.
The table below summarizes the minimum capital ratios plus the applicable increment of the capital conservation buffer that are applicable to the Company and the Bank: ​ ​ ​ ​ ​ ​ Tier 1 leverage capital ratio 4.00 % Common equity tier 1 capital ratio ​ 7.00 % Tier 1 risk-based capital ratio 8.50 % Total risk-based capital ratio 10.50 % ​ The Capital Rules required that trust preferred securities be phased out from Tier 1 capital by January 1, 2016, except in the case of banking organizations with total consolidated assets of less than $15 billion, which will be permitted to include trust preferred securities issued prior to May 19, 2010 in Tier 1 capital, subject to a limit of 25% of tier 1 capital elements.
Commercial lines of credit are adjustable-rate loans with interest rates usually tied to the Wall Street Journal prime rate, are made for terms ranging from one to two years, and contain various covenants, including possible requirements that the borrower reduce its credit line borrowings to zero for specified time periods during the term of the line of credit, maintains liquidity requirements with advances tied to periodic reviews and approved based upon a percentage of accounts receivable, and inventory or unmonitored lines for very small lines or credit or those with significant financial strength and liquidity.
Commercial lines of credit are adjustable-rate loans with interest rates usually tied to the Wall Street Journal prime rate, are made for terms ranging from one to two years, and contain various covenants, including possible requirements that the borrower reduces its credit line borrowings to zero for specified time periods during the term of the line of credit, maintains liquidity 4 Table of Contents requirements with advances tied to periodic reviews and approved based upon a percentage of accounts receivable, and inventory or unmonitored lines for very small lines of credit or those with significant financial strength and liquidity.
These products and services include bill pay, check/payee/ACH positive pay, wire origination, internal and external transfers, account reconciliation reporting, remote deposit capture, mobile banking, mobile deposit, lockbox, cash vault services and merchant processing. ● Online Banking: FFB offers Online Banking and Mobile Banking services to consumer, small business and commercial clients.
These products and services include bill pay, check/payee/ACH positive pay, ACH collections, ACH fraud monitoring, wire origination, internal and external transfers, account reconciliation reporting, remote deposit capture, mobile banking, mobile deposit, lockbox, cash vault services and merchant processing. ● Online Banking: FFB offers Online Banking and Mobile Banking services to consumer, small business and commercial clients.
In addition, FFB must obtain the prior approval of the FDIC and the DFPI before acquiring or merging with any other depository institution. 10 Table of Contents Capital Requirements Applicable to Banks and Bank Holding Companies Bank holding companies and banks are subject to similar regulatory capital requirements administered by federal and state regulatory agencies.
In addition, FFB must obtain the prior approval of the FDIC and the DFPI before acquiring or merging with any other depository institution. Capital Requirements Applicable to Banks and Bank Holding Companies Bank holding companies and banks are subject to similar regulatory capital requirements administered by federal and state regulatory agencies.
Those services, which consist primarily of the management of trust assets, complement the investment advisory and wealth management services that FFA offers to our clients and, as a result, provide us with cross-selling opportunities. As of December 31, 2023, trust AUA totaled $1.3 billion.
Those services, which consist primarily of the management of trust assets, complement the investment advisory and wealth management services that FFA offers to our clients and, as a result, provide us with cross-selling opportunities. As of December 31, 2024, trust AUA totaled $1.1 billion.
Acquisition of Control of a Bank Holding Company or a Bank As a bank holding company, we must obtain the prior approval of the Federal Reserve to acquire more than five percent of the outstanding shares of voting securities or substantially all of the assets, by merger or purchase, of (i) any bank or other bank holding company and (ii) any other entities engaged in banking-related businesses or that provide banking-related services.
Acquisition of Control of a Bank Holding Company or a Bank As a bank holding company, we must obtain the prior approval of the Federal Reserve to acquire more than five percent of the outstanding shares of voting securities or substantially all of the assets, by merger or purchase, of (i) any 10 Table of Contents bank or other bank holding company or (ii) any other entities engaged in banking-related businesses or that provide banking-related services.
To qualify for such loans, prospective borrowers generally must have operating cash flow sufficient to meet their obligations as they become due, 4 Table of Contents good payment histories, proper balance sheet oversight of key cash flow drivers, and experienced management.
To qualify for such loans, prospective borrowers generally must have operating cash flow sufficient to meet their obligations as they become due, good payment histories, proper balance sheet oversight of key cash flow drivers, and experienced management.
FFA is a California corporation that began operating 1 Table of Contents as a fee-based registered investment advisor under the Investment Advisers Act of 1940 (“Investment Advisers Act”) in 1990, and is subject to regulation by the Securities and Exchange Commission, (“SEC”), under that Act.
FFA is a California corporation that began operating as a fee-based registered investment advisor under the Investment Advisers Act of 1940 (“Investment Advisers Act”) in 1990 and is subject to regulation by the Securities and Exchange Commission, (“SEC”), under that Act.
These digital bank products are offered to consumers across all 50 states and enable FFB to target Millennial, Gen Z, and more digitally savvy prospects with increased efficiency and are supported by a dedicated digital bank operations team. 7 Table of Contents Trust Services: FFB is licensed to provide trust services to clients in California, Florida, Hawaii, Nevada, and Texas.
These digital bank products are offered to consumers across all 50 states and enable FFB to target Millennial, Gen Z, and more digitally savvy prospects with increased efficiency and are supported by a dedicated digital bank operations team. Trust Services FFB is licensed to provide trust services to clients in California, Florida, Hawaii, Nevada, and Texas.
If an undercapitalized bank is a subsidiary of a bank holding company, then, for its capital restoration plan to be approved, the bank’s parent holding company must guarantee that the bank will comply with, and provide assurances of the performance by the bank of, its capital restoration plan.
If an undercapitalized bank is a subsidiary of a bank holding company, then, for 12 Table of Contents its capital restoration plan to be approved, the bank’s parent holding company must guarantee that the bank will comply with, and provide assurances of the performance by the bank of, its capital restoration plan.
As of December 31, 2023, FFB exceeded the minimum regulatory capital requirements necessary to be considered “well-capitalized” under the prompt corrective action requirements.
As of December 31, 2024, FFB exceeded the minimum regulatory capital requirements necessary to be considered “well-capitalized” under the prompt corrective action requirements.
These are determined on the basis of a bank’s Tier 1 leverage ratio, Tier 1 capital ratio and total capital ratio. FDICIA regulations implementing the prompt corrective action framework establish minimum capital thresholds for five capital categories based on the Capital Rules.
These are determined on the basis of a bank’s Tier 1 leverage capital ratio, Common equity Tier 1 capital ratio, Tier 1 risk-based capital ratio and total risk-based capital ratio. FDICIA regulations implementing the prompt corrective action framework establish minimum capital thresholds for five capital categories based on the Capital Rules.
Our loan products are designed to meet the credit needs of our clients in a manner that, at the same time, enables us to effectively manage the credit and interest rate risks inherent in our lending activities. Our lending products are the primary drivers of revenues and earnings for the consolidated entity.
Our loan products are designed to meet the credit needs of our clients in a manner that, at the 2 Table of Contents same time, enables us to effectively manage the credit and interest rate risks inherent in our lending activities. Historically, our lending products are the primary drivers of revenues and earnings for the consolidated entity.
In addition, it is the Federal Reserve’s policy that a bank holding company, in serving as a source of strength to its subsidiary banks, should stand ready to use available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary banks.
In addition, it is the Federal Reserve’s policy that a bank holding company, in serving as a source of strength to its subsidiary bank(s), should stand ready to use available resources to provide adequate capital funds to its subsidiary bank(s) during 9 Table of Contents periods of financial stress or adversity and should maintain the financial flexibility and capital-raising capacity to obtain additional resources for assisting its subsidiary bank(s).
The typical C&I loan client utilizes more than one element of our platform, including almost all such clients using our deposit products and services. We typically focus on C&I clients that are manufacturers, distributors, wholesalers, importers and professional service companies.
The typical C&I loan client utilizes more than one element of our platform, for example, almost all such clients using our deposit products and services. We typically focus on C&I clients that are manufacturers, distributors, wholesalers, importers or professional service companies.
In addition, the exemption from Section 23A for transactions with financial subsidiaries has been eliminated. 15 Table of Contents California law also imposes restrictions with respect to transactions involving the Company and any other persons that may be deemed under that law to control FFB.
In addition, the exemption from Section 23A for transactions with financial subsidiaries has been eliminated. California law also imposes restrictions with respect to transactions involving the Company and any other persons that may be deemed under that law to control FFB.
We attempt to place our banking offices in strategic locations to establish a presence in our target markets, rather than saturating a market with numerous banking offices. The sales activities at our banking offices are led by the bankers and branch managers located at the offices.
We attempt to place our banking offices in strategic locations to establish a presence in our target markets, rather than saturating a market with numerous banking offices. The sales activities at our 6 Table of Contents banking offices are led by the bankers and branch managers located at the offices.
If a banking organization does not maintain a capital conservation buffer consisting of an additional 2.5% of CET1 on top of the minimum risk-weighted asset ratios, it faces constraints on dividends, equity repurchases and executive compensation, depending on the amount of the shortfall.
If a banking organization does not maintain a capital conservation buffer consisting of an additional 2.5% of common equity tier 1 (“CET1”) on top of the minimum risk-weighted asset ratios, it faces constraints on dividends, equity repurchases and executive compensation, depending on the amount of the shortfall.
Consumer loans are either fixed-rate loans or adjustable-rate loans with interest rates tied to a variety of independent indexes and are made for terms ranging from one to ten years.
Consumer loans are either fixed-rate loans or adjustable-rate loans with interest rates tied to a variety of independent indexes and are made for terms ranging from 1 to 10 years.
Restrictions on Transactions between FFB and the Company and its other Affiliates FFB is subject to Sections 23A and 23B of, and Federal Reserve Regulation W under, the Federal Reserve Act, which impose restrictions on (i) any extensions of credit to, or the issuance of a guarantee or letter of credit on behalf of, the Company or any of its other subsidiaries; (ii) the purchase of or investments in Company stock or other Company securities; (iii) the taking of Company securities as collateral for the loans that FFB makes; (iv) the purchase of assets from the Company or any of its other subsidiaries and (v) transactions between a bank and its financial subsidiaries, as well as other affiliates.
Historically, the FHLB has paid dividends on its capital stock to its members. 15 Table of Contents Restrictions on Transactions between FFB and the Company and its other Affiliates FFB is subject to Sections 23A and 23B of, and Federal Reserve Regulation W under, the Federal Reserve Act, which impose restrictions on (i) any extensions of credit to, or the issuance of a guarantee or letter of credit on behalf of, the Company or any of its other subsidiaries; (ii) the purchase of or investments in Company stock or other Company securities; (iii) the taking of Company securities as collateral for the loans that FFB makes; (iv) the purchase of assets from the Company or any of its other subsidiaries and (v) transactions between a bank and its financial subsidiaries, as well as other affiliates.
Each of our office locations are focused on serving the businesses and clients within their market area. Our lending activities serve the credit needs of individuals, owners of multifamily and commercial real estate properties, small to moderate size businesses and professional firms in our market areas.
Each of our office locations is focused on serving the businesses and clients within its market area. Our lending activities serve the credit needs of individuals, owners of multifamily and commercial real estate properties, small to moderate-sized businesses and professional firms in our market areas.
Residential Mortgage Loans – Multi-family: We make multi-family residential mortgage loans for terms up to 30 years for 5+ unit properties.
Residential Mortgage Loans – Multifamily: We make multifamily residential mortgage loans for terms up to 30 years for 5+ unit properties.
The Dodd-Frank Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal financial consumer protection laws and regulations.
The Dodd-Frank Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits state attorneys general to enforce compliance with both the state and federal financial consumer protection laws and regulations. Office of Foreign Assets Control Regulation The U.S.
The impact of Basel IV on us will depend on the manner in which it is implemented by the federal bank regulators. Prompt Corrective Action The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), established a framework for regulation of federally insured depository institutions, including banks, and their parent holding companies and other affiliates, by their federal banking regulators.
The impact of any changes to capital requirements and calculations and the implementation of Basel IV on us will depend on the manner in which it is implemented by the federal bank regulators with respect to smaller-sized institutions. ​ Prompt Corrective Action The Federal Deposit Insurance Corporation Improvement Act of 1991 (“FDICIA”), established a framework for regulation of federally insured depository institutions, including banks, and their parent holding companies and other affiliates, by their federal banking regulators.
Under these arrangements, the asset custodial firms provide referrals of prospective new clients whose wealth warrants the more personalized and expansive breadth of financial services that we are able to provide in exchange for a fee.
We have entered into referral agreements with certain of the asset custodial firms that provide custodial services to our clients. Under these arrangements, the asset custodial firms provide referrals of prospective new clients whose wealth warrants the more personalized and expansive breadth of financial services that we are able to provide in exchange for a fee.
Volcker Rule In December 2013, the federal bank regulatory agencies adopted final rules that implement a part of the Dodd-Frank Act commonly referred to as the “Volcker Rule.” Under these rules and subject to certain exceptions, banking entities are restricted from engaging in activities that are considered proprietary trading and from sponsoring or investing in certain entities, including hedge or private equity funds that are considered “covered funds.” These rules became effective on April 1, 2014, although certain provisions are subject to delayed effectiveness under rules promulgated by the FRB.
Regulatory authorities have imposed cease and desist orders and civil money penalties against institutions found to be violating these obligations. 19 Table of Contents ​ Volcker Rule In December 2013, the federal bank regulatory agencies adopted final rules that implement a part of the Dodd-Frank Act commonly referred to as the “Volcker Rule.” Under these rules and subject to certain exceptions, banking entities are restricted from engaging in activities that are considered proprietary trading and from sponsoring or investing in certain entities, including hedge or private equity funds that are considered “covered funds.” These rules became effective on April 1, 2014, although certain provisions are subject to delayed effectiveness under rules promulgated by the FRB.
The substance or impact of pending or future legislation or regulations, or the application thereof, cannot be predicted, although enactment of the proposed legislation could impact the regulatory structure under which we operate and may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital or modify our business strategy, limit our ability to pursue business opportunities or activities or alter the competitive balance between banks and non-bank financial service providers.
The substance or impact of pending or future legislation or regulations, or the application thereof, cannot be predicted, although enactment of the proposed legislation could impact the regulatory structure under which we operate and may significantly increase our costs, impede the efficiency of our internal business processes, require us to increase our regulatory capital or modify our business strategy, limit our ability to pursue business opportunities or activities or alter the competitive balance between banks and non-bank financial service providers. 20 Table of Contents Human Capital Resources As of December 31, 2024, the Company had approximately 551 full-time employees.
We do not have a separate marketing program for this channel; rather this channel is directed to a limited amount of fully-vetted broker relationships and as an accommodation for clients or prospective clients of our platform.
We do not have a separate marketing program for this channel; rather this channel is directed to a limited amount of fully-vetted broker relationships and as an accommodation for clients or prospective clients of our platform. Single-family loans comprise a substantial majority of the balances in this channel.
The Dodd-Frank Act permanently increased the maximum deposit insurance amount for banks, savings institutions and credit unions to $250,000 per depositor. The FDIC uses a risk-based assessment system that imposes insurance premiums based upon a risk matrix that takes into account a bank’s CAMELS supervisory rating. The risk matrix utilizes different risk categories distinguished by capital levels and supervisory ratings.
The Dodd-Frank Act permanently increased the maximum deposit insurance amount for banks, savings institutions and credit unions to $250,000 per depositor. 14 Table of Contents The FDIC uses a risk-based assessment system that imposes insurance premiums based upon a risk matrix that takes into account a bank’s CAMELS supervisory rating.
As a result of the Dodd-Frank Act, the base for insurance assessments is now consolidated average assets less average tangible equity. Assessment rates are calculated using formulas that take into account the risk of the institution being assessed.
The risk matrix utilizes different risk categories distinguished by capital levels and supervisory ratings. As a result of the Dodd-Frank Act, the base for insurance assessments is now consolidated average assets less average tangible equity. Assessment rates are calculated using formulas that take into account the risk of the institution being assessed.
The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the subject real estate collateral cash flow, the character and creditworthiness of the borrower and guarantors, loan-to-value and debt service coverage ratios, borrower liquidity and credit history.
These loans generally have interest rate floors, payment caps, and prepayment penalties. The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the subject real estate collateral’s cash flow, the character and creditworthiness of the borrower and guarantors, loan-to-value and debt service coverage ratios, borrower liquidity and credit history.
The Company held no investment positions at December 31, 2023, that were subject to the Volcker rule. 18 Table of Contents Regulation of First Foundation Advisors FFA is a registered investment advisor under the Investment Advisers Act and the SEC’s regulations promulgated thereunder.
The Company held no investment positions at December 31, 2023, that were subject to the Volcker rule. Regulation of First Foundation Advisors FFA is a registered investment advisor under the Investment Advisers Act and the SEC’s regulations promulgated thereunder. The Investment Advisers Act imposes numerous obligations on registered investment advisors, including fiduciary, recordkeeping, operational, and disclosure obligations.
To do so, we offer compensation, benefits, and training designed to attract, develop and retain quality employees. The Company seeks to build a culture of thoughtfulness, inclusion, and prosocial behavior. Our focus is to impact our communities through the wealth and well-being of our employees, families, and neighborhoods by sharing our unique skills, time, and talents.
The Company seeks to build a culture of thoughtfulness, inclusion, and prosocial behavior. Our focus is to impact our communities through the wealth and well-being of our employees, families, and neighborhoods by sharing our unique skills, time, and talents.
In 2023, the program resulted in approximately $359,000 of grants and donations distributed by the Company; 2,875 volunteer hours contributed by our employees, and a total of 212 organizations supported. ​ 19 Table of Contents Available Information The Company’s annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are accessible for free at the Investor Relations section of our website at www.firstfoundationinc.com as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.
Available Information The Company’s annual reports on Form 10-K, proxy statements, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are accessible for free at the Investor Relations section of our website at www.firstfoundationinc.com as soon as reasonably practicable after the Company electronically files such material with, or furnishes it to, the SEC.
To compete with other financial institutions, our business strategy emphasizes customer relationships and personalized service. To a large degree, our success therefore depends on the personal relationships of our employees and the quality of service they provide. We strive to attract, develop and retain employees who can further our business strategy and build long-term stockholder value.
To a large degree, our success therefore depends on the personal relationships of our employees and the quality of service they provide. We strive to attract, develop and retain employees who can further our business strategy and build long-term stockholder value. To do so, we offer compensation, benefits, and training designed to attract, develop and retain quality employees.
A lower CRA rating may be the 16 Table of Contents basis for requiring the applicant’s bank subsidiary to take corrective actions to improve its CRA performance as a condition to the approval of the acquisition or as a basis for denying the application altogether.
A lower CRA rating may be the basis for requiring the applicant’s bank subsidiary to take corrective actions to improve its CRA performance as a condition to the approval of the acquisition or as a basis for denying the application altogether. 17 Table of Contents In 2024, the federal banking regulators issued a final rule making comprehensive to the regulations implementing the CRA.
In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rates for insured depository institutions by 2 basis points, beginning with the first quarterly assessment period of 2023. The increased assessment rate schedules will remain in effect unless and until the reserve ratio of the DIF meets or exceeds 2%.
In October 2022, the FDIC adopted a final rule to increase initial base deposit insurance assessment rates for insured depository institutions by 2 basis points, beginning with the first quarterly assessment period of 2023.
As a result of the new rule, the FDIC insurance costs of insured depository institutions, including the Bank, will generally increase. 14 Table of Contents The FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
The FDIC may terminate deposit insurance upon a finding that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.
We also provide trust services to clients using our California, Hawaii, Nevada, Florida, and Texas trust powers. Those services, which consist primarily of the management of trust assets, complement the investment and wealth management services that FFA offers to our clients. Additionally, trust service fees provide additional sources of noninterest income for us.
Those services, which consist primarily of the management of trust assets, complement the investment and wealth management services that FFA offers to our clients. Additionally, trust service fees provide additional sources of noninterest income for us. FFB’s operations comprise the banking and trust segments of our business.
Our pricing strategy is intended to complement our other products and services so that we can attract and retain clients without always paying the highest rates. 6 Table of Contents Deposit Services: Our deposit services include the following: ● Treasury Management: Our comprehensive suite of Treasury Management (“TM”) products and services provide our customers the tools to bank with us conveniently without having the need to visit one of our offices and are necessary to attract complex commercial and specialty deposit clients.
Deposit Services: Our deposit services include the following: ● Treasury Management: Our comprehensive suite of Treasury Management (“TM”) products and services provide our customers the tools to bank with us conveniently without having the need to visit one of our offices and are necessary to attract complex commercial and specialty deposit clients.
Additionally, the federal banking agencies are authorized to issue regulations as necessary to implement those notice requirements and non-disclosure restrictions. Community Reinvestment Act The Community Reinvestment Act (“CRA”) requires the federal banking regulatory agencies to evaluate the record of a bank in meeting the credit needs of its local communities, including those of low-and moderate-income neighborhoods in its service area.
The Company believes it and the Bank are currently in compliance with these requirements. ​ Community Reinvestment Act The Community Reinvestment Act (“CRA”) requires the federal banking regulatory agencies to evaluate the record of a bank in meeting the credit needs of its local communities, including those of low-and moderate-income neighborhoods in its service area.
These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in many cases these loans have initial fixed-rate periods ranging from 3 to 10 years and adjust thereafter based on an applicable index. These loans generally have interest rate floors, payment caps, and prepayment penalties.
We will consider special-purpose lending on a limited basis for our existing client base. These loans generally are adjustable-rate loans with interest rates tied to a variety of independent indexes; although in many cases these loans have initial fixed-rate periods ranging from 3 to 10 years and adjust thereafter based on an 3 Table of Contents applicable index.
Among other things, FDICIA requires the relevant federal banking regulator to take “prompt corrective action” with respect to a depository institution if that institution does not meet certain capital adequacy standards, including requiring the prompt submission by that bank of an acceptable capital restoration plan if its bank regulator has concluded that it needs additional capital. 11 Table of Contents Supervisory actions by a bank’s federal regulator under the prompt corrective action rules generally depend upon an institution’s classification within one of five capital categories: well-capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized.
Among other things, FDICIA requires the relevant federal banking regulator to take “prompt corrective action” with respect to a depository institution if that institution does not meet certain capital adequacy standards, including requiring the prompt submission by that bank of an acceptable capital restoration plan if its bank regulator has concluded that it needs additional capital.
Changes in our AUM reflect additions from new clients, the gains or losses recognized from investment results, additional funds received from existing clients, withdrawals of funds by clients, and terminations. We do not provide custodial services for our clients through FFA. Instead, client investment accounts are maintained under custodial arrangements with large, well-established brokerage firms, either directly or through FFB.
Changes in our AUM reflect additions from new clients, the gains or losses recognized from investment results, additional funds received from existing clients, withdrawals of funds by clients, and terminations. 7 Table of Contents We do not provide custodial services for our clients through FFA.
All website addresses given in this report are for information only and are not intended to be an active link or to incorporate any website information into this report. ​
All website addresses given in this report are for information only and are not intended to be an active link or to incorporate any website information into this report. Reports, proxy and information statements, and other information filed with the SEC is also available at www.sec.gov. ​
Human Capital Resources As of December 31, 2023, the Company had approximately 567 full-time employees. None of our employees are covered by a collective bargaining agreement. We believe relations with our employees are good and have not experienced interruptions of operations due to labor disagreements. We expect our human capital resources are adequate for our current needs.
None of our employees are covered by a collective bargaining agreement. We believe relations with our employees are good and have not experienced interruptions of operations due to labor disagreements. We expect our human capital resources are adequate for our current needs. To compete with other financial institutions, our business strategy emphasizes customer relationships and personalized service.
In addition, we perform stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as rental rates, values and vacancy rates.
In addition, we perform stress testing for changes in interest rates, capitalization rates and other factors and review general economic trends such as rental rates, values and vacancy rates. We typically require full or limited recourse from the owners of the entities to which we make such loans.
Single-family loans comprise a substantial majority of the balances in this channel. 5 Table of Contents Residential Mortgage Loans – Single-family: We offer single family residential mortgage loans that in most cases take the form of non-conforming jumbo and super-jumbo loans. We do not currently sell or securitize any of our single family residential mortgage loan originations.
Residential Mortgage Loans – Single-family: We offer single-family residential mortgage loans that in most cases take the form of non-conforming jumbo and super-jumbo loans. We do not currently sell or securitize any of our single-family residential mortgage loan originations. We do not originate loans defined as high-cost by state or federal banking regulators.
Under the Basel framework, these standards became effective on January 1, 2023, with an aggregate output floor phasing in through January 1, 2028. Under the current U.S. Capital Rules, operational risk capital requirements and a capital floor apply only to advanced approaches institutions, and not to the Company and the Bank.
Under the Basel framework, these standards became effective on January 1, 2023, with an aggregate output floor phasing in through January 1, 2028. Under the current U.S.
The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the character and creditworthiness of the borrower and guarantors, loan-to-value and debt to income ratios, borrower liquidity, income verification and credit history. In addition, we perform stress testing for changes in interest rates and other factors and review general economic trends such as market values.
The loans are underwritten based on a variety of underwriting criteria, including an evaluation of the character and creditworthiness of the borrower and guarantors, loan-to-value and debt to income ratios, borrower liquidity, income verification and credit history.
These loans are generally adjustable-rate loans with initial fixed-rate periods ranging from 3 to 10 year terms and terms of the loan not exceeding 30 years. These loans generally have interest rate floors and payment caps.
The majority of our single-family residential loan originations are collateralized by first mortgages on real properties located in Southern California and in southwest Florida. These loans are generally adjustable-rate loans with initial fixed-rate periods ranging from 3 to 10 years not exceeding 30 years. These loans generally have interest rate floors and payment caps.
Consumer Loans: We offer consumer loans and line of credit products as an accommodation to clients of our primary business lines, including personal installment loans and lines of credit, and home equity lines of credit designed to meet the needs of our clients.
In addition, we perform stress testing for changes in interest rates and other factors and review general economic trends such as market values. 5 Table of Contents Consumer Loans: We offer consumer loans and line of credit products as an accommodation to clients of our primary business lines, including personal installment loans and lines of credit, and home equity lines of credit designed to meet the needs of our clients.
However, we notify our clients that they are not obligated to use those services and that they are free to select securities brokerage firms and custodial service providers of their own choosing. We have entered into referral agreements with certain of the asset custodial firms that provide custodial services to our clients.
Instead, client investment accounts are maintained under custodial arrangements with large, well-established brokerage firms, either directly or through FFB. However, we notify our clients that they are not obligated to use those services and that they are free to select securities brokerage firms and custodial service providers of their own choosing.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLoan losses necessitate loan charge-offs and write-downs in the carrying values of our loans and, therefore, can reduce our net income and adversely affect our results of operations and financial condition. Accordingly, our results of operations will be directly affected by the volume and timing of loan losses, which for a number of reasons can vary from period to period.
Biggest changeLoan defaults and the incurrence of losses on loans are inherent risks in our business. Loan losses necessitate loan charge-offs and write-downs in the carrying values of our loans and, therefore, can reduce our net income and adversely affect our results of operations and financial condition.
We are subject to capital adequacy standards, and a failure to meet these standards could adversely affect our financial condition. The Company and the Bank are each subject to capital adequacy and liquidity rules and other regulatory requirements specifying minimum amounts and types of capital that must be maintained.
We are subject to capital adequacy standards and liquidity, and a failure to meet these standards could adversely affect our financial condition. The Company and the Bank are each subject to capital adequacy and liquidity rules and other regulatory requirements specifying minimum amounts and types of capital that must be maintained.
Our ability to attract and retain clients and key employees could be adversely affected if our reputation is harmed.
Our ability to attract and retain clients and key employees could be adversely affected if our reputation is harmed. Our ability to attract and retain clients and key employees could be adversely affected if our reputation is harmed.
Our allowance for credit losses may not be adequate to cover actual losses. In accordance with regulatory requirements and generally accepted accounting principles (“GAAP”) in the United States, we maintain an allowance for credit losses (“ACL”) to provide for loan defaults and non-performance, and an ACL on securities.
Our allowance for credit losses may not be adequate to cover actual losses. In accordance with regulatory requirements and generally accepted accounting principles (“GAAP”) in the United States, we maintain an allowance for credit losses to provide for loan defaults and non-performance, and an ACL on securities.
If we are unable to detect or prevent a security breach or cyber-attack from occurring, then we and our clients could incur losses or damages; and we could sustain damage to our reputation, lose clients and business, suffer disruptions to our business and incur increased operating costs, and be exposed to additional regulatory scrutiny or penalties and to civil litigation and 27 Table of Contents possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
If we are unable to detect or prevent a security breach or cyber-attack from occurring, then we and our clients could incur losses or damages; and we could sustain damage to our reputation, lose clients and business, suffer disruptions to our business and incur increased operating costs, and be exposed to additional regulatory scrutiny or penalties and to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.
A regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and prospects. 30 Table of Contents We are subject to increased regulation because we have more than $10 billion in total consolidated assets. ​ Federal law imposes heightened requirements on bank holding companies and depository institutions that exceed $10 billion in total consolidated assets.
A regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and prospects. We are subject to increased regulation because we have more than $10 billion in total consolidated assets. ​ Federal law imposes heightened requirements on bank holding companies and depository institutions that exceed $10 billion in total consolidated assets.
As a result, a material decrease in the volume of those deposits by a relatively small number of our depositors could reduce our liquidity, in which event it could become necessary for us to replace those deposits with higher-cost deposits, the sale of securities or borrowings, which would adversely affect our net interest income and, therefore, our results of operations.
As a result, a 25 Table of Contents material decrease in the volume of those deposits by a relatively small number of our depositors could reduce our liquidity, in which event it could become necessary for us to replace those deposits with higher-cost deposits, the sale of securities or borrowings, which would adversely affect our net interest income and, therefore, our results of operations.
Moreover, based on their assessment of the financial condition of the Bank or other factors, the FDIC or the DFPI could find that payment of cash dividends by the Bank to us 32 Table of Contents would constitute an unsafe or unsound banking practice, in which event they could restrict the Bank from paying cash dividends, even if the Bank meets the statutory requirements to do so.
Moreover, based on their assessment of the financial condition of the Bank or other factors, the FDIC or the DFPI could find that payment of cash dividends by the Bank to us would constitute an unsafe or unsound banking practice, in which event they could restrict the Bank from paying cash dividends, even if the Bank meets the statutory requirements to do so.
As a result of an examination, regulatory agencies may determine that the financial condition, capital resources, asset quality, asset concentrations, earnings prospects, management, liquidity, sensitivity to market risk, or other aspects of any of our operations are unsatisfactory, or that we or our management are in violation of any law, regulation or guideline in effect from time to time.
As a result of an examination, regulatory agencies may determine that the financial condition, capital resources, asset quality, asset concentrations, earnings prospects, management, 32 Table of Contents liquidity, sensitivity to market risk, or other aspects of any of our operations are unsatisfactory, or that we or our management are in violation of any law, regulation or guideline in effect from time to time.
Difficult economic conditions in any of the markets where we operate could, among other things, affect the volume of loan originations, increase the level of nonperforming assets, increase the rate of foreclosure losses on loans and reduce the value of our loans and loan servicing portfolio, adversely affecting our business, financial condition, results of operations and future prospects.
Difficult economic conditions in any of the markets where we operate could, among other things, affect the volume of loan originations, increase the level of nonperforming assets, increase the rate of foreclosure losses on loans and reduce the 23 Table of Contents value of our loans and loan servicing portfolio, adversely affecting our business, financial condition, results of operations and future prospects.
As a result, we face the risk that customers may choose to maintain deposits or trust assets with larger financial institutions or invest in short-term fixed-income securities instead of bank deposits, any of which could materially and adversely impact our liquidity, cost of funding, capital, and results of operations.
We face the risk that customers may choose to maintain deposits or trust assets with larger financial institutions or invest in short-term fixed-income securities instead of bank deposits, any of which could materially and adversely impact our liquidity, cost of funding, capital, and results of operations.
A natural disaster could harm our business. Historically, California, in which a substantial portion of our business is located, has been susceptible to natural disasters, such as earthquakes, drought, floods and wildfires. In addition to these risks, Florida and Hawaii experience tropical storms and hurricanes. Tornadoes also occasionally strike the area of Texas where our business is located.
Historically, California, in which a substantial portion of our business is located, has been susceptible to natural disasters, such as earthquakes, drought, floods and wildfires. In addition to these risks, Florida and Hawaii experience tropical storms and hurricanes. Tornadoes also occasionally strike the area of Texas where our business is located.
An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our financial condition, results of operations and liquidity. 24 Table of Contents The actions and commercial soundness of other financial institutions could affect our ability to engage in routine funding transactions.
An inability to raise additional capital on acceptable terms when needed could have a materially adverse effect on our financial condition, results of operations and liquidity. The actions and commercial soundness of other financial institutions could affect our ability to engage in routine funding transactions.
Any of these factors, as well as others, could cause other-than-temporary impairments 26 Table of Contents and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects.
Any of these factors, as well as others, could cause other-than-temporary impairments and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects.
Our 23 Table of Contents principal sources of liquidity include earnings, deposits, borrowings, sales of loans or investment securities held for sale, repayments by clients of loans we have made to them, and the proceeds from sales by us of our equity securities or from borrowings that we may obtain.
Our principal sources of liquidity include earnings, deposits, borrowings, sales of loans or investment securities held for sale, repayments by clients of loans we have made to them, and the proceeds from sales by us of our equity securities or from borrowings that we may obtain.
The risks identified below are not intended to be a comprehensive list of all risks we face, and additional risks that we may currently view as not material may also impair our financial condition and price performance of our common stock.
The risks identified below are not intended to be a comprehensive list of all risks we face, 21 Table of Contents and additional risks that we may currently view as not material may also impair our financial condition and price performance of our common stock.
The amount of the reimbursement and the impact of interest rate increases may vary by client. We may incur significant losses as a result of ineffective hedging of interest rate risk. From time to time, we may utilize financial derivative instruments to limit our exposure to interest rate risk.
The amount of the reimbursement and the impact of interest rate increases may vary by client. 24 Table of Contents We may incur significant losses as a result of ineffective hedging of interest rate risk. From time to time, we may utilize financial derivative instruments to limit our exposure to interest rate risk.
Income and cash flows from our banking operations depend to a great extent on the difference or “spread” between the interest we earn on interest-earning assets, such as loans and investment securities, and the rates at which we 22 Table of Contents pay interest on interest-bearing liabilities, such as deposits and borrowings.
Income and cash flows from our banking operations depend to a great extent on the difference or “spread” between the interest we earn on interest-earning assets, such as loans and investment securities, and the rates at which we pay interest on interest-bearing liabilities, such as deposits and borrowings.
Moreover, legislators and regulators in the United States and other countries are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities.
Moreover, legislators and regulators in the United States and states in which we operate are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities.
At this time, we cannot predict the scope or nature of these changes or assess what the overall effect of such potential changes could be on our results of operations. Risks Related to Ownership of Our Common Stock We may reduce or discontinue the payment of dividends on common stock.
At this time, we cannot predict the scope or nature of these changes or assess what the overall effect of such potential changes could be on our results of operations. Risks Related to Ownership of Our Common Stock We may not resume the payment of dividends on common stock.
In addition, the risk of volatility surrounding the global economic system and uncertainty surrounding regulatory reforms such as the Dodd-Frank Act continue to create uncertainty around access to the capital markets. As a result, there can be no assurance that we will continue to be successful in selling multifamily loans through the securitization market.
In addition, the risk of volatility surrounding the global economic system and uncertainty surrounding regulatory reforms may create uncertainty around access to the capital markets. As a result, there can be no assurance that we will continue to be successful in selling multifamily loans through the securitization market.
Generally, these laws increase our costs of compliance and business operations and could reduce income from certain business initiatives as well as the risk that we 31 Table of Contents could face enforcement actions from state or agencies agency or litigation brought by private parties.
Generally, these laws increase our costs of compliance and business operations and could reduce income from certain business initiatives as well as the risk that we could face enforcement actions from federal or state agencies or litigation brought by private parties.
If those systems and review processes prove to be ineffective in identifying and managing risks, we could be subjected to increased 28 Table of Contents regulatory scrutiny and regulatory restrictions could be imposed on our business, including on our potential future business lines, as a result of which our business and operating results could be adversely affected.
If those systems and review processes prove to be ineffective in identifying and managing risks, we could be subjected to increased regulatory scrutiny and regulatory restrictions could be imposed on our business, including on our potential future business lines, as a result of which our business and operating results could be adversely affected. A natural disaster could harm our business.
Loans secured by multifamily and commercial real estate represent a high percentage of the loans we make, making our results of operations vulnerable to downturns in the real estate market. At December 31, 2023, loans secured by multifamily and commercial real estate represented approximately 61% of our outstanding loans.
Loans secured by multifamily and commercial real estate represent a high percentage of the loans we make, making our results of operations vulnerable to downturns in the real estate market. At December 31, 2024, loans secured by multifamily and commercial real estate represented approximately 60.3% of our outstanding loans.
Market Risks Changes in interest rates could reduce our net interest margins and net interest income.
Market Risks Changes in interest rates could reduce our net interest margin and net interest income.
Factors beyond our control can significantly influence and cause adverse changes to occur in the fair values of securities in our investment securities portfolio.
The fair value of our investment securities can fluctuate due to factors outside of our control. Factors beyond our control can significantly influence and cause adverse changes to occur in the fair values of securities in our investment securities portfolio.
We may incur significant losses due to ineffective risk management processes and strategies. We seek to monitor and control our risk exposures through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational and compliance systems, and internal control and management review processes.
We seek to monitor and control our risk exposures through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational and compliance systems, and internal control and management review processes.
We may be adversely affected by the soundness of certain securities brokerage firms. FFA does not provide custodial services for its clients. Instead, client investment accounts are maintained under custodial arrangements with large, well-established securities brokerage firms, either directly or through arrangements made by FFA with those firms.
FFA does not provide custodial services for its clients. Instead, client investment accounts are maintained under custodial arrangements with large, well-established securities brokerage firms, either directly or through arrangements made by FFA with those firms.
Our hedging strategies and the derivatives that we use may not adequately offset the risks of interest rate volatility and could result in or magnify losses, which could have an adverse effect on our financial condition and result of operations. At December 31, 2023, there were no outstanding derivative instruments.
Our hedging strategies and the derivatives that we use may not adequately offset the risks of interest rate volatility and could result in or magnify losses, which could have an adverse effect on our financial condition and result of operations.
Our business activities and credit exposure, including real estate collateral for many of our loans, are concentrated in California, Florida, Nevada, Texas, and Hawaii. As of December 31, 2023, approximately 87% of the loans in our loan portfolio were made to borrowers who live and/or conduct business in California (73%), Florida (9%), Texas (4%), and Nevada (1%).
Our business activities and credit exposure, including real estate collateral for many of our loans, are concentrated in California, Florida, Nevada, Texas, and Hawaii. As of December 31, 2024, approximately 86.3% of the loans in our loan portfolio were made to borrowers who live and/or conduct business in California (72%), Florida (8%), Texas (5.1%), and Nevada (1.2%).
As of December 31, 2023, large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, approximately 12.5% of our total deposits.
As of December 31, 2024, large depositor relationships, consisting of deposit relationships which individually exceed 2% of total deposits, accounted for, in the aggregate, approximately 19.7% of our total deposits.
Therefore, our operating results are heavily dependent on the financial performance of our investment portfolios and the investment strategies we employ in our investment advisory businesses and even short-term declines in the performance of the investment portfolios we manage for our clients, whatever the cause, could result in a decline in assets under management and a corresponding decline in investment management fees, which would adversely affect our results of operations.
Therefore, our operating results are heavily dependent on the financial performance of our investment portfolios and the investment strategies we employ in our investment advisory businesses and even short-term declines in the performance of the investment portfolios we manage for our clients, whatever the cause, could result in a decline in assets under management and a corresponding decline in investment management fees, which would adversely affect our results of operations. 31 Table of Contents The market for investment managers is extremely competitive and the loss of a key investment manager to a competitor could adversely affect our investment advisory and wealth management business.
New lines of business or new products and services may subject us to additional risks. From time to time, we may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts.
From time to time, we may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts. We may invest significant time and resources in developing and marketing new lines of business and/or new products and services.
Lapses in integrity could cause reputational harm to our businesses that could lead to the loss of existing clients and make it more difficult for us to attract new clients and, therefore, could have a material adverse effect on our business, financial condition, results of operations and prospects.
Lapses in integrity could cause reputational harm to our businesses that could lead to the loss of existing clients and make it more difficult for us to attract new clients and, therefore, could have a material adverse effect on our business, financial condition, results of operations and prospects. 30 Table of Contents We may incur significant losses due to ineffective risk management processes and strategies.
As a result, the loss of a key investment manager to a 29 Table of Contents competitor could jeopardize our relationships with some of our clients and lead to the loss of client accounts, which could have a material adverse effect on our business, financial condition, results of operations and prospects.
As a result, the loss of a key investment manager to a competitor could jeopardize our relationships with some of our clients and lead to the loss of client accounts, which could have a material adverse effect on our business, financial condition, results of operations and prospects. We may be adversely affected by the soundness of certain securities brokerage firms.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations, financial condition and prospects.
Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations, financial condition and prospects. We face intense competition from other banks and financial institutions and other wealth and investment management firms that could hurt our business.
The costs of implementing technological changes, new product development and marketing costs may increase our operating expenses without a commensurate increase in our business or revenues, in which event our business, financial condition, results of operations and prospects could be materially and adversely affected.
The costs of implementing technological changes, new product development and marketing costs may increase our operating expenses without a commensurate increase in our business or revenues, in which event our business, financial condition, results of operations and prospects could be materially and adversely affected. 29 Table of Contents Fraudulent activity, breaches of our information security systems, and cybersecurity attacks could have a material adverse effect on our business, financial condition, results of operations or future prospects.
CECL requires, among other things, that we determine periodic estimates of lifetime expected future credit losses on loans in the provision for credit losses in the period when the loans are booked, which considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions.
We determine the amount of our ACL in accordance with the Current Expected Credit Loss (“CECL”) model under the Financial Accounting Standards Board’s (“FASB”) ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires, among other things, that we determine periodic estimates of lifetime expected future credit losses on loans in the provision for credit losses in the period when the loans are booked, which considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions.
An investment in our common stock is not an insured deposit and is not guaranteed by the FDIC, so you could lose some or all of your investment.
A failure to resume the payment of dividends on our common stock could have a material adverse effect on our business, including the market price of our common stock. An investment in our common stock is not an insured deposit and is not guaranteed by the FDIC, so you could lose some or all of your investment.
Our failure to maintain and implement adequate anti-money laundering programs could also have serious reputational consequences for us. Any of these results could materially and adversely affect our business, financial condition, results of operations and prospects.
Our failure to maintain and implement adequate anti-money laundering programs could also have serious reputational consequences for us.
Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities. We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws.
An insured depository institution with $10 billion or more in total assets is subject to supervision, examination, and enforcement with respect to consumer protection laws by the CFPB.
An insured depository institution with $10 billion or more in total assets is subject to supervision, examination, and enforcement with respect to consumer protection laws by the CFPB. As an independent bureau within the Federal Reserve Board focused solely on consumer financial protection, the CFPB may impose requirements more strictly or severely than the FDIC.
Our ACL may not be adequate to absorb our actual or expected credit losses and future provisions for ACL could reduce our net income and materially and adversely affect our operating results. 21 Table of Contents The amount of future losses may also vary depending on changes in economic, operating and other conditions, including changes in interest rates that may be beyond our control, and these losses may exceed current estimates.
The amount of future losses may also vary depending on changes in economic, operating and other conditions, including changes in interest rates that may be beyond our control, and these losses may exceed current estimates.
The Company continues to monitor the inflation and overall economic environment and industry conditions and will make changes as appropriate. Credit Risks We could incur losses on the loans we make. Loan defaults and the incurrence of losses on loans are inherent risks in our business.
The Company continues to focus on serving its customers and communities, maintaining the well-being of its employees, and executing its strategic initiatives. The Company continues to monitor the inflation and overall economic environment and industry conditions and will make changes as appropriate. Credit Risks We could incur losses on the loans we make.
These developments have negatively impacted customer confidence in the safety and soundness of some regional and community banks.
The high-profile failures of several depository institutions during 2023 negatively impacted customer confidence in the safety and soundness of some regional and community banks.
The risks of loan losses are exacerbated by economic recessions and downturns, or by other events that can lead to local or regional business downturns.
Accordingly, our results of operations will be directly affected by the volume and timing of loan losses, which for a number of reasons can vary from period to period. The risks of loan losses are exacerbated by economic recessions and downturns, or by other events that can lead to local or regional business downturns.
If we are not successful in retaining existing and attracting new investment management clients, our business, financial condition, results of operations and prospects may be materially and adversely affected. Our loss of key personnel or inability to attract additional personnel could hurt our future financial performance.
If we are not successful in retaining existing and attracting new investment management clients, our business, financial condition, results of operations and prospects may be materially and adversely affected. 28 Table of Contents We are required to make significant estimates and assumptions in the preparation of our financial statements and our estimates and assumptions may not be accurate.
Critical estimates are made by management in determining, among other things, the allowance for credit losses, amounts of impairment of assets, and valuation of income taxes. Additionally, the adoption of CECL methodology for determining our allowance for credit losses in 2020 has increased the complexity, and associated risk, of the analysis and processes relying on management judgment.
Critical estimates are made by management in determining, among other things, the allowance for credit losses, amounts of impairment of assets, and valuation of income taxes. If our underlying estimates and assumptions prove to be incorrect, our financial condition and results of operations may be materially adversely affected.
A loss or material reduction of access to securitization markets for multifamily loans may adversely impact our business model, profitability and growth. We have sold multifamily loans through the securitization market from time to time and may seek to do so in the future.
We have sold multifamily loans through the securitization market from time to time and may seek to do so in the future. Historically, the securitization market, along with credit markets in general, has periodically experienced disruptions and volatility.
Our failure to maintain effective internal controls over financial reporting could have a material adverse effect on our business and stock prices. If we are unable to maintain the effectiveness of our internal controls over financial reporting, we may be unable to report our financial results accurately and on a timely basis.
As a result, if you acquire our common stock, you could lose some or all of your investment. ​ If we fail to maintain effective internal control over financial reporting, or if we fail to remediate material weaknesses previously identified, we may not be able to report our financial results accurately and timely.
At December 31, 2023, $711 million of our securities portfolio was classified as available-for-sale with an aggregate net unrealized loss of $14.2 million. Liquidity and Capital Risks Liquidity risk could adversely affect our ability to fund operations and hurt our financial condition.
At December 31, 2024, $1.3 billion of our securities portfolio was classified as available-for-sale with an aggregate net unrealized loss of $12.6 million. A loss or material reduction of access to securitization markets for multifamily loans may adversely impact our business model, profitability and growth.
We have agreed that the Bank will not pay any dividends to the Company without the FDIC and DFPI’s prior written approval. A reduction or discontinuance of dividends on our common stock could have a material adverse effect on our business, including the market price of our common stock.
We have agreed that the Bank will not pay any dividends to the Company without the FDIC and DFPI’s prior written approval. During the year ended December 31, 2024, we paid one quarterly dividend totaling $0.01 per common share for the first quarter with no subsequent quarterly dividends thereafter.
Removed
The strong demand for goods and services in recent years, supply chain constraints, and the impact of fiscal and monetary policy have contributed to higher levels of inflation throughout the U.S. economy, including within the Company’s market area. Inflation has resulted in higher prices for food, energy, housing, and various supply chain inputs, among others.
Added
The U.S. economy has experienced inflationary pressures over the last several years, resulting in higher costs for consumers and businesses.
Removed
These inflationary pressures have persisted throughout 2023, resulting in higher costs for consumers and businesses. To address the persistent levels of inflation, the Federal Reserve’s Federal Open Market Committee (“FOMC”) took steps to tighten monetary policy through increases to the federal funds rate beginning in March 2022 and continuing into 2023.
Added
To address the persistent levels of inflation, the Federal Reserve’s Federal Open Market Committee (“FOMC”) maintained the target range for the federal funds rate at elevated levels throughout most of 2024, with decisions to cut rates not occurring until late in the third quarter (50 basis point cut) and late in the fourth quarter (two 25 basis point cuts) of 2024.
Removed
The FOMC has stated that it remains committed to monetary policy measures that are designed to bring inflation down. The impact of these measures on the Company’s business, including future actions taken by the FOMC, are uncertain. Recent economic data indicates that the pace of inflation has moderated in recent months.
Added
Heading into 2025, it is expected that additional rate cuts may occur albeit at a much more moderate pace and that interest rates are expected to stay higher for a longer period. The impact of these measures on the Company’s business, including future actions taken by the FOMC, are uncertain.
Removed
However, the inflation rate remains above the FOMC’s 2% target.
Added
We may face the following risks in connection with any downward turn in the economy or sustained period of higher or lower rates or elevated inflation rates: ● Higher interest rates will not only impact the interest we receive on loans and investment securities and the amount of interest we pay our depositors, but also could impact our ability to grow loans and deposits; ● The fair value of our assets and overall asset quality can be impacted by an overall slowdown in economic growth and higher interest rates; ● The process we use to estimate losses inherent in our credit exposure requires difficult, subjective and complex judgments, including forecasts of economic conditions and how these economic conditions might impair the ability of our borrowers to repay their loans.
Removed
Should the impacts of inflation persist, we anticipate it could have an impact on some or all of the following: 20 Table of Contents Loan growth and interest income – If economic activity begins to wane, it may have an impact on our borrowers, the businesses they operate, and their financial condition.
Added
The level of uncertainty concerning economic conditions may adversely affect the accuracy of our estimates which may, in turn, impact the reliability of the process; and ● Our borrowers may be unable to make timely repayments of their loans, or the decrease in value of the collateral securing the payment of such loans could result in significant credit losses, increasing 22 Table of Contents delinquencies, foreclosures and customer bankruptcies, any of which could have a material adverse effect on our operating results.
Removed
Our borrowers may have less demand for credit needed to invest in and expand their businesses, as well as demand for real estate and consumer loans. Such factors would place pressure on the level of interest-earning assets, which may negatively impact our interest income.
Added
Our ACL may not be adequate to absorb our actual or expected credit losses and future provisions for ACL could reduce our net income and materially and adversely affect our operating results.
Removed
Credit quality – Should there be a decline in economic activity, the markets we serve could experience increases in unemployment, declines in consumer confidence, and a reluctance on the part of businesses to invest in and expand their operations, among other things.
Added
As of December 31, 2024, the Company had an interest rate swap agreement with a notional amount of $350 million outstanding which was designated as a cash flow hedge and carried at fair value on the balance sheet. We may incur significant losses from the balance sheet repositioning and future asset sales.
Removed
Such factors may result in weakened economic conditions, place strain on borrowers, and ultimately impact the credit quality of our loan portfolio. We expect this could result in increases in the level of past due, nonaccrual, and classified loans, as well as higher net charge-offs.
Added
In August 2024, we reclassified a portion of our multifamily loan portfolio totaling $1.9 billion principal balance from loans held for investment to loans held for sale as a step aimed at reducing exposure to low coupon fixed rate loans and concentration in multifamily commercial real estate.
Removed
While economic conditions have generally been favorable thus far, notwithstanding higher levels of inflation, there can be no assurance favorable economic conditions will continue. In addition, a higher interest rate environment impacts the ability of borrowers with adjustable-rate loans to meet their debt service obligations.
Added
Loans held for sale are accounted for at the lower of amortized cost or fair value and as a result a lower of cost or market (“LOCOM”) adjustment totaling $117.5 million was recorded to our quarterly earnings.
Removed
As such, should we experience future deterioration in the credit quality of our loan portfolio, it may contribute to the need for additional provisions for credit losses. Higher interest rates may also lower the rate of return on commercial real estate values that could result in higher charge-offs and provision for credit losses.
Added
In December 2024, we sold $489 million principal balance of the transferred loans at a price above the initial and year-end balance sheet fair-value pricing. We expect to complete additional loan sales in the first half of 2025.
Removed
Deposits and deposit costs – Given the expectation in the near-term for interest rates to remain elevated through restrictive monetary policy by the FOMC, it is likely that deposit costs will continue to increase.
Added
Depending on the existence of various buyers and competitive prices, we may sell assets at a significant loss, which could affect our financial condition and results of operations. Liquidity and Capital Risks Liquidity risk could adversely affect our ability to fund operations and hurt our financial condition.
Removed
In connection with high-profile bank failures in the first half of 2023, if adverse developments and significant market volatility continue in the banking sector, it may become more challenging for the Company to retain and attract deposit relationships.
Added
We may not have the ability to attract capital necessary to maintain regulatory ratios and fund growth. In July 2024, we raised approximately $228 million of gross proceeds from an equity capital raise.
Removed
Liquidity – Consistent with our prudent, proactive approach to liquidity management, we may take certain actions to further enhance our liquidity, including but not limited to, increasing our borrowings, increasing our brokered deposits, or liquidating loans and available-for-sale securities. In the event that we liquidate available-for-sale securities in an unrealized loss position, those losses would become realized.
Added
Strategic, Operational and External Risks We have recently experienced turnover in our Board of Directors and executive management team and are embarking upon a new strategic plan, all of which create uncertainties and could harm our business. We have experienced significant changes to our Board of Directors and executive leadership during the second half of 2024.
Removed
While the Company does not currently intend to sell held-to-maturity securities, if the Company were required to sell such securities to meet liquidity needs, it may realize the unrecognized losses on these securities. The Company continues to focus on serving its customers and communities, maintaining the well-being of its employees, and executing its strategic initiatives.
Added
These changes may result in the loss of institutional knowledge and changes to business strategy or objectives.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+1 added−0 removed10 unchanged
Biggest changeOur management team reports its findings using the FFIEC Cybersecurity Assessment Tool and our information security team’s determination as to whether our security controls, at a minimum, are in place and effective. 34 Table of Contents The Information Security Officer and Chief Technology Officer regularly report to the Director Risk Committee, Audit Committee and the Board regarding cybersecurity and related threats and trends, changes, control effectiveness and residual risk, the areas where our cybersecurity program may be improved and improvements made to address and remediate issues. ​
Biggest changeThe Information Security Officer and Chief Technology Officer regularly report to the Director Risk Committee , Audit Committee and the Board regarding cybersecurity and related threats and trends, changes, control effectiveness and residual risk, the areas where our cybersecurity program may be improved and improvements made to address and remediate issues . ​
Our Chief Technology Officer is responsible for managing our information security team, while our Information Security Officer is responsible for maintaining and continuing to develop and implement our cybersecurity program enterprise-wide and assessing and managing risks from cybersecurity threats.
Our Chief Technology Officer is responsible for managing our 36 Table of Contents information security team, while our Information Security Officer is responsible for maintaining and continuing to develop and implement our cybersecurity program enterprise-wide and assessing and managing risks from cybersecurity threats.
Added
Our management team reports its findings using the FFIEC Cybersecurity Assessment Tool and our information security team’s determination as to whether our security controls, at a minimum, are in place and effective.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed0 unchanged
Biggest changeItem 2. Properties. The Company’s corporate headquarters is located in Dallas, Texas, at 200 Crescent Court, Suite 1400, Dallas, Texas 75201. The Company has 29 banking offices and 2 loan production offices in California, Nevada, Florida, Texas, and Hawaii.
Biggest changeItem 2. Properties. The Company’s corporate headquarters is located in Dallas, Texas, at 200 Crescent Court, Suite 1400, Dallas, Texas 75201. The Company has 29 banking offices and 1 loan production office in the states of California, Nevada, Florida, Texas, and Hawaii.
Six of our office buildings are owned and the remaining are leased pursuant to non-cancelable operating leases that will expire between 2024 and 2035. The building for the office in Auburn, California is owned by us and is on land that is leased under a non-cancellable lease that expires in 2028. ​
Six of our office buildings are owned and the remaining are leased pursuant to non-cancelable operating leases that will expire between 2025 and 2035. The building for the office in Auburn, California is owned by us and is on land that is leased under a non-cancellable lease that expires in 2028. ​

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+3 added−3 removed14 unchanged
Biggest changeIn determining the amount of surplus of a Delaware corporation, the assets of the corporation, including stock of subsidiaries owned by the corporation, must be valued at their fair market value as determined by the board of directors, regardless of their historical book value. 35 Table of Contents In addition, since we are a bank holding company (“BHC”) subject to regulation by the FRB, it may become necessary for us to obtain the approval of the FRB before we can pay cash dividends to our stockholders.
Biggest changeIn addition, since we are a bank holding company (“BHC”) subject to regulation by the FRB, it may become necessary for us to obtain the approval of the FRB before we can pay cash dividends to our stockholders.
Our ability to pay dividends to our stockholders is subject to the restrictions set forth in the Delaware General Corporation Law (the “DGCL”) and the regulatory authority of the Federal Reserve.
Our ability to pay dividends to our stockholders is also subject to the restrictions set forth in the Delaware General Corporation Law (the “DGCL”) and the regulatory authority of the Federal Reserve.
The stock performance graph assumes that $100 was invested in Company common stock at the close of market on December 31, 2019, and, at that same date, in the Russell 2000 Index, the Russell 3000 Index and the KBW Nasdaq Regional Bank Index and that any dividends paid in the indicated periods were reinvested.
The stock performance graph assumes that $100 was invested in Company common stock at the close of market on December 31, 2020, and, at that same date, in the Russell 2000 Index, the Russell 3000 Index and the KBW Nasdaq Regional Bank Index and that any dividends paid in the indicated periods were reinvested.
Shareholder returns shown in the stock performance graph are not necessarily indicative of future stock price performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending ​ 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Foundation Inc.
Shareholder returns shown in the stock performance graph are not necessarily indicative of future stock price performance. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Period Ending ​ 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ First Foundation Inc.
The following table provides information relating to the Company’s purchases of shares of its common stock during the fourth quarter of 2023: ​ ​ 36 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ Total Number ​ ​ ​ Shares Purchased ​ Value of Shares That ​ ​ of Shares ​ Price Paid Per ​ as Part of Publicly ​ May Yet Be Purchased Purchase Dates Purchased Share Announced Program Under the Program October 1 to October 31, 2023 ​ ​ - $ - ​ - ​ $ 71,518,400 November 1 to November 30, 2023 ​ ​ - ​ - ​ - ​ ​ 71,518,400 December 1 to December 31, 2023 ​ ​ - ​ - ​ - ​ ​ 71,518,400 Total ​ ​ - ​ ​ ​ ​ ​ - ​ ​ ​ ​ 37 Table of Contents Stock Performance Graph The following graph shows a comparison from December 31, 2019 through December 31, 2023 of the cumulative total return for our common stock, compared against (i) the Russell 2000 Index, which measures the performance of the smallest 2,000 members, by market cap, (ii) the Russell 3000 Index, which measures the performance of the smallest 3,000 members, by market cap, of the Russell Index, and (iii) an index published by SNL Securities L.C.
The following table provides information relating to the Company’s purchases of shares of its common stock during the fourth quarter of 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total Number of ​ Approximate Dollar ​ ​ Total Number ​ ​ ​ Shares Purchased ​ Value of Shares That ​ ​ of Shares ​ Price Paid Per ​ as Part of Publicly ​ May Yet Be Purchased Purchase Dates Purchased Share Announced Program Under the Program October 1 to October 31, 2024 ​ ​ - $ - ​ - ​ $ 71,518,400 November 1 to November 30, 2024 ​ ​ - ​ - ​ - ​ ​ 71,518,400 December 1 to December 31, 2024 ​ ​ - ​ - ​ - ​ ​ 71,518,400 Total ​ ​ - ​ ​ ​ ​ ​ - ​ ​ ​ ​ 39 Table of Contents Stock Performance Graph The following graph shows a comparison from December 31, 2020 through December 31, 2024 of the cumulative total return for our common stock, compared against (i) the Russell 2000 Index, which measures the performance of the smallest 2,000 members, by market cap, (ii) the Russell 3000 Index, which measures the performance of the smallest 3,000 members, by market cap, of the Russell Index, and (iii) an index published by SNL Securities L.C.
This stock repurchase program, which has no stated expiration date, replaced and superseded 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. During 2023, the Company did not repurchase any shares of common stock.
This stock repurchase program, which has no stated expiration date, 38 Table of Contents replaced and superseded 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. During 2024, the Company did not repurchase any shares of common stock.
(FFWM) 100.00 114.43 142.87 82.36 55.63 Russell 2000 Index 100.00 118.36 134.57 105.56 121.49 Russell 3000 Index 100.00 118.26 147.35 117.17 145.24 KBW Regional Bank Index 100.00 87.90 117.08 106.02 101.77 ​ The above performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act. 38 Table of Contents
(FFWM) 100.00 124.86 71.97 48.62 31.19 Russell 2000 Index 100.00 113.69 89.18 102.64 112.93 Russell 3000 Index 100.00 124.60 99.08 122.81 150.01 KBW Regional Bank Index 100.00 133.20 120.61 115.78 126.88 ​ The above performance graph shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the NYSE under the trading symbol “FFWM”. Previously, since 2014, our common stock traded on the NASDAQ Global Stock Market under the same symbol until we transferred the listing to the NYSE on August 22, 2023.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information Our common stock trades on the NYSE under the trading symbol “FFWM”. As of February 21, 2025, a total of 82,365,388 shares of our common stock were issued and outstanding which were held of record by approximately 8,719 shareholders.
Removed
As of February 21, 2024, a total of 56,467,623 shares of our common stock were issued and outstanding which were held of record by approximately 8,927 shareholders. There were no sales of unregistered securities during the fiscal year ended December 31, 2023.
Added
There were no sales of unregistered securities during the fiscal year ended December 31, 2024. Dividend Policy and Restrictions on the Payment of Dividends The timing and amount of cash dividends paid to our common stockholders depends on our earnings, capital requirements, financial condition, regulatory approval, and other relevant factors, as determined by our Board of Directors.
Removed
Dividend Policy and Restrictions on the Payment of Dividends Since the first quarter of 2019, we have paid quarterly dividends and it is the current intention of the Company to continue to pay dividends on an ongoing basis.
Added
During the year ended December 31, 37 Table of Contents 2024, the Company paid a quarterly dividend totaling $0.01 per common share for the first quarter, but elected to suspend its dividends thereafter.
Removed
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 FFI’s net income for the same twelve-month period.
Added
In determining the amount of surplus of a Delaware corporation, the assets of the corporation, including stock of subsidiaries owned by the corporation, must be valued at their fair market value as determined by the board of directors, regardless of their historical book value.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table summarizes the activity in our ACL related to loans for the year ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision ​ Allowance ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning ​ Adoption of ​ (Reversal) for ​ on Acquired ​ ​ ​ ​ ​ ​ ​ Ending (dollars in thousands) Balance ​ ASC 326 Credit Losses ​ PCD Loans Charge-offs Recoveries Balance 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 8,306 ​ $ — ​ $ 1,615 ​ $ — ​ $ — ​ $ — ​ $ 9,921 Commercial properties ​ 8,714 ​ — ​ (4,317) ​ — ​ (249) ​ — ​ 4,148 Land and construction ​ 164 ​ — ​ 168 ​ — ​ — ​ — ​ 332 Commercial and industrial loans ​ 16,521 ​ — ​ 1,171 ​ — ​ (4,998) ​ 2,102 ​ 14,796 Consumer loans ​ 26 ​ — ​ (18) ​ — ​ (2) ​ 2 ​ 8 Total ​ $ 33,731 ​ $ — ​ $ (1,381) ​ $ — ​ $ (5,249) ​ $ 2,104 ​ $ 29,205 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 2,637 ​ $ — ​ $ 5,674 ​ $ — ​ $ (5) ​ $ — ​ $ 8,306 Commercial properties ​ 17,049 ​ — ​ (8,335) ​ — ​ — ​ — ​ 8,714 Land and construction ​ 1,995 ​ — ​ (1,831) ​ — ​ — ​ — ​ 164 Commercial and industrial loans ​ 11,992 ​ — ​ 4,804 ​ — ​ (711) ​ 436 ​ 16,521 Consumer loans ​ 103 ​ — ​ (73) ​ — ​ (4) ​ — ​ 26 Total ​ $ 33,776 ​ $ — ​ $ 239 ​ $ — ​ $ (720) ​ $ 436 ​ $ 33,731 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 5,115 ​ $ — ​ $ (1,453) ​ $ 93 ​ $ (1,118) ​ $ — ​ $ 2,637 Commercial properties ​ 8,711 ​ — ​ 774 ​ 7,564 ​ — ​ — ​ 17,049 Land and construction ​ 892 ​ — ​ 1,051 ​ 52 ​ — ​ — ​ 1,995 Commercial and industrial loans ​ 9,249 ​ — ​ 614 ​ 1,836 ​ (706) ​ 999 ​ 11,992 Consumer loans ​ 233 ​ — ​ (130) ​ — ​ — ​ — ​ 103 Total ​ $ 24,200 ​ $ — ​ $ 856 ​ $ 9,545 ​ $ (1,824) ​ $ 999 ​ $ 33,776 2020: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 8,423 ​ $ 363 ​ $ (3,671) ​ $ — ​ $ — ​ $ — ​ $ 5,115 Commercial properties ​ 4,166 ​ 3,760 ​ 785 ​ — ​ — ​ — ​ 8,711 Land and construction ​ 573 ​ 92 ​ 227 ​ — ​ — ​ — ​ 892 Commercial and industrial loans ​ 7,448 ​ — ​ 2,642 ​ — ​ (1,844) ​ 1,003 ​ 9,249 Consumer loans ​ 190 ​ — ​ 43 ​ — ​ — ​ — ​ 233 Total ​ $ 20,800 ​ $ 4,215 ​ $ 26 ​ $ — ​ $ (1,844) ​ $ 1,003 ​ $ 24,200 2019: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 9,216 ​ $ — ​ $ (793) ​ $ — ​ $ — ​ $ — ​ $ 8,423 Commercial properties ​ 4,547 ​ — ​ (381) ​ — ​ — ​ — ​ 4,166 Land and construction ​ 391 ​ — ​ 182 ​ — ​ — ​ — ​ 573 Commercial and industrial loans ​ 4,628 ​ — ​ 3,653 ​ — ​ (2,687) ​ 1,854 ​ 7,448 Consumer loans ​ 218 ​ — ​ (24) ​ — ​ (5) ​ 1 ​ 190 Total ​ $ 19,000 ​ $ — ​ $ 2,637 ​ $ — ​ $ (2,692) ​ $ 1,855 ​ $ 20,800 ​ On January 1, 2020, we adopted a new accounting standard, commonly referred to as “CECL”, which replaces the “incurred loss” approach with an “expected loss” model over the life of the loan, as further described in Note 1: Summary of Significant Accounting Policies of the notes to the consolidated financial statements.
Biggest changeThe following table summarizes the activity in our ACL related to loans held for investment for the year ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning ​ (Reversal) for ​ ​ ​ ​ ​ ​ ​ Ending (dollars in thousands) Balance Credit Losses ​ Charge-offs Recoveries Balance 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ Residential properties ​ $ 9,921 ​ $ (2,048) ​ $ (657) ​ $ — ​ $ 7,216 Commercial properties ​ 4,148 ​ 3,499 ​ (964) ​ — ​ 6,683 Land and construction ​ 332 ​ (271) ​ — ​ — ​ 61 Commercial and industrial loans ​ 14,796 ​ 19,815 ​ (16,770) ​ 492 ​ 18,333 Consumer loans ​ 8 ​ 23 ​ (23) ​ 1 ​ 9 Total ​ $ 29,205 ​ $ 21,018 ​ $ (18,414) ​ $ 493 ​ $ 32,302 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (charge-offs) recoveries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ (17,921) Net (charge-offs) recoveries to average loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 0.18% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023: ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ Residential properties ​ $ 8,306 ​ $ 1,615 ​ $ — ​ $ — ​ $ 9,921 Commercial properties ​ 8,714 ​ (4,317) ​ (249) ​ — ​ 4,148 Land and construction ​ 164 ​ 168 ​ — ​ — ​ 332 Commercial and industrial loans ​ 16,521 ​ 1,171 ​ (4,998) ​ 2,102 ​ 14,796 Consumer loans ​ 26 ​ (18) ​ (2) ​ 2 ​ 8 Total ​ $ 33,731 ​ $ (1,381) ​ $ (5,249) ​ $ 2,104 ​ $ 29,205 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (charge-offs) recoveries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ (3,145) Net (charge-offs) recoveries to average loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 0.03% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022: ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ Residential properties ​ $ 2,637 ​ $ 5,674 ​ $ (5) ​ $ — ​ $ 8,306 Commercial properties ​ 17,049 ​ (8,335) ​ — ​ — ​ 8,714 Land and construction ​ 1,995 ​ (1,831) ​ — ​ — ​ 164 Commercial and industrial loans ​ 11,992 ​ 4,804 ​ (711) ​ 436 ​ 16,521 Consumer loans ​ 103 ​ (73) ​ (4) ​ — ​ 26 Total ​ $ 33,776 ​ $ 239 ​ $ (720) ​ $ 436 ​ $ 33,731 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net (charge-offs) recoveries ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ (284) Net (charge-offs) recoveries to average loans ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 0.00% ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The allowance for credit losses for loans held for investment totaled $32.3 million as of December 31, 2024, compared to $29.2 million as of December 31, 2023.
The following table provides a breakdown of noninterest expense for Banking and Wealth Management for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Banking ​ Wealth Management (dollars in thousands) ​ 2023 ​ 2022 ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Compensation and benefits $ 67,114 $ 90,186 $ 16,049 $ 18,705 Occupancy and depreciation ​ 34,886 ​ 34,471 ​ 1,913 ​ 1,753 Professional services and marketing ​ 9,626 ​ 9,193 ​ 3,487 ​ 3,211 Customer service costs ​ 76,806 ​ 38,178 ​ — ​ — Other ​ 22,082 ​ 16,591 ​ 651 ​ 702 Total operating expense ​ ​ 210,514 ​ ​ 188,619 ​ ​ 22,100 ​ ​ 24,371 Goodwill impairment ​ ​ 215,252 ​ ​ — ​ ​ — ​ ​ — Total noninterest expense ​ $ 425,766 ​ $ 188,619 ​ $ 22,100 ​ $ 24,371 ​ Noninterest expense in Banking was $425.8 million for the year ended December 31, 2023, compared to $188.6 million for 2022.
The following table provides a breakdown of noninterest expense for Banking and Wealth Management for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Banking ​ Wealth Management (dollars in thousands) ​ 2023 ​ 2022 ​ 2023 ​ 2022 Compensation and benefits $ 67,114 $ 90,186 $ 16,049 $ 18,705 Occupancy and depreciation ​ 34,886 ​ 34,471 ​ 1,913 ​ 1,753 Professional services and marketing ​ 9,626 ​ 9,193 ​ 3,487 ​ 3,211 Customer service costs ​ 76,806 ​ 38,178 ​ — ​ — Other ​ 22,082 ​ 16,591 ​ 651 ​ 702 Total operating expense ​ ​ 210,514 ​ ​ 188,619 ​ ​ 22,100 ​ ​ 24,371 Goodwill impairment ​ ​ 215,252 ​ ​ — ​ ​ — ​ ​ ​ Total noninterest expense ​ $ 425,766 ​ $ 188,619 ​ $ 22,100 ​ $ 24,371 ​ Noninterest expense in Banking was $425.8 million for the year ended December 31, 2023, compared to $188.6 million for 2022.
Our net interest income, net interest rate spread, and net interest margin are sensitive to general business and economic conditions.
Our net interest income, net interest rate spread, and net interest margin are sensitive to general business and economic conditions.
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 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.
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.
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.
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.
The following table provides a breakdown of the changes in net interest income due to volume and rate changes between 2023 as compared to 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (Decrease) due to Net Increase (dollars in thousands) ​ Volume Rate (Decrease) Interest earned on: ​ ​ ​ ​ Loans ​ $ 58,226 ​ $ 60,414 ​ $ 118,640 Securities AFS ​ 1,368 ​ 9,472 ​ 10,840 Securities HTM ​ ​ 1,240 ​ ​ 1,421 ​ ​ 2,661 Cash, FHLB stock, and fed funds ​ 6,210 ​ 31,462 ​ 37,672 Total interest-earning assets ​ 67,044 ​ 102,769 ​ 169,813 Interest paid on: ​ ​ ​ Demand deposits ​ 118 ​ 60,349 ​ 60,467 Money market and savings ​ 3,612 ​ 77,345 ​ 80,957 Certificates of deposit ​ 59,368 ​ 48,124 ​ 107,492 Borrowings ​ 22,234 ​ 14,580 ​ 36,814 Subordinated debt ​ ​ 367 ​ ​ 101 ​ ​ 468 Total interest-bearing liabilities ​ 85,699 ​ 200,499 ​ 286,198 Net interest (expense) income ​ $ (18,655) ​ $ (97,730) ​ $ (116,385) ​ Net interest income was $202.3 million for the year ended December 31, 2023, compared to $318.7 million for 2022.
The following table 51 Table of Contents provides a breakdown of the changes in net interest income due to volume and rate changes between 2023 as compared to 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase (Decrease) due to Net Increase (dollars in thousands) Volume Rate (Decrease) Interest earned on: ​ ​ ​ Loans ​ $ 58,226 ​ $ 60,414 ​ $ 118,640 Securities AFS ​ 1,368 ​ 9,472 ​ 10,840 Securities HTM ​ ​ 1,240 ​ ​ 1,421 ​ ​ 2,661 Cash, FHLB stock, and fed funds ​ 6,210 ​ 31,462 ​ 37,672 Total interest-earning assets ​ 67,044 ​ 102,769 ​ 169,813 Interest paid on: ​ ​ ​ Demand deposits ​ 118 ​ 60,349 ​ 60,467 Money market and savings ​ 3,612 ​ 77,345 ​ 80,957 Certificates of deposit ​ 59,368 ​ 48,124 ​ 107,492 Borrowings ​ 22,234 ​ 14,580 ​ 36,814 Subordinated debt ​ ​ 367 ​ ​ 101 ​ ​ 468 Total interest-bearing liabilities ​ 85,699 ​ 200,499 ​ 286,198 Net interest income ​ $ (18,655) ​ $ (97,730) ​ $ (116,385) ​ Net interest income was $202.3 million for the year ended December 31, 2023, compared to $318.7 million for 2022.
For further discussion on our interest rate risk management practices, see “Interest Rate Risk Management” within Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations . ​ 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 years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31: ​ ​ 2023 2022 ​ ​ Average ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ Average ​ (dollars in thousands) ​ Balances Interest Yield /Rate Balances Interest Yield /Rate Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 10,477,485 ​ $ 488,718 4.66 % $ 9,139,349 ​ $ 370,078 4.05 % Securities AFS ​ 459,279 ​ 22,023 4.80 % 413,220 ​ 11,183 2.71 % Securities HTM ​ ​ 819,945 ​ ​ 17,889 ​ 2.18 % ​ 760,489 ​ ​ 15,228 ​ 2.00 % Cash, FHLB stock, and fed funds ​ 981,593 ​ 45,061 4.59 % 625,351 ​ 7,389 1.18 % Total interest-earning assets ​ 12,738,302 ​ 573,691 4.50 % 10,938,409 ​ 403,878 3.69 % Noninterest-earning assets: ​ ​ ​ ​ ​ Nonperforming assets ​ 12,659 ​ ​ ​ ​ 10,609 ​ ​ ​ ​ Other ​ 367,036 ​ ​ ​ ​ 459,072 ​ ​ ​ ​ Total assets ​ $ 13,117,997 ​ ​ ​ ​ $ 11,408,090 ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ Demand deposits ​ $ 2,380,373 ​ 84,740 3.56 % $ 2,370,323 ​ 24,273 1.02 % Money market and savings ​ 3,147,427 ​ 105,522 3.35 % 2,783,825 ​ 24,565 0.88 % Certificates of deposit ​ 2,661,375 ​ 120,499 4.53 % 814,906 ​ 13,007 1.60 % Total interest-bearing deposits ​ 8,189,175 ​ 310,761 3.79 % 5,969,054 ​ 61,845 1.04 % Borrowings ​ 1,153,068 ​ 53,791 4.67 % 590,934 ​ 16,977 2.87 % Subordinated debt ​ ​ 173,364 ​ ​ 6,834 ​ 3.94 % ​ 164,004 ​ ​ 6,366 ​ 3.88 % Total interest-bearing liabilities ​ 9,515,607 ​ 371,386 3.90 % 6,723,992 ​ 85,188 1.27 % Noninterest-bearing liabilities: ​ ​ ​ ​ ​ Demand deposits ​ 2,440,561 ​ ​ ​ ​ 3,474,657 ​ ​ ​ ​ Other liabilities ​ 138,161 ​ ​ ​ ​ 112,590 ​ ​ ​ ​ Total liabilities ​ 12,094,329 ​ ​ ​ ​ 10,311,239 ​ ​ ​ ​ Shareholders’ equity ​ 1,023,668 ​ ​ ​ ​ 1,096,851 ​ ​ ​ ​ Total liabilities and equity ​ $ 13,117,997 ​ ​ ​ ​ $ 11,408,090 ​ ​ ​ ​ Net Interest Income ​ ​ ​ ​ $ 202,305 ​ ​ ​ ​ $ 318,690 ​ ​ Net Interest Rate Spread ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ 2.42 % Net Interest Margin ​ ​ ​ ​ ​ 1.59 % ​ ​ ​ ​ 2.91 % ​ 44 Table of Contents 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.
For further discussion on our interest rate risk management practices, see “Interest Rate Risk Management” within Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations . ​ 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 years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 ​ ​ Average ​ ​ ​ ​ Average ​ Average ​ ​ ​ ​ Average ​ (dollars in thousands) Balances Interest Yield /Rate Balances Interest Yield /Rate Interest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Loans ​ $ 10,477,485 ​ $ 488,718 4.66 % $ 9,139,349 ​ $ 370,078 4.05 % Securities AFS ​ 459,279 ​ 22,023 4.80 % 413,220 ​ 11,183 2.71 % Securities HTM ​ ​ 819,945 ​ ​ 17,889 ​ 2.18 ​ ​ 760,489 ​ ​ 15,228 ​ 2.00 % Cash, FHLB stock, and fed funds ​ 981,593 ​ 45,061 4.59 % 625,351 ​ 7,389 1.18 % Total interest-earning assets ​ 12,738,302 ​ 573,691 4.50 % 10,938,409 ​ 403,878 3.69 % Noninterest-earning assets: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Nonperforming assets ​ 12,659 ​ ​ ​ ​ ​ 10,609 ​ ​ ​ ​ ​ Other ​ 367,036 ​ ​ ​ ​ ​ 459,072 ​ ​ ​ ​ ​ Total assets ​ $ 13,117,997 ​ ​ ​ ​ ​ ​ $ 11,408,090 ​ ​ ​ ​ ​ ​ Interest-bearing liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Demand deposits ​ $ 2,380,373 ​ 84,740 3.56 % $ 2,370,323 ​ 24,273 1.02 % Money market and savings ​ 3,147,427 ​ 105,522 3.35 % 2,783,825 ​ 24,565 0.88 % Certificates of deposit ​ 2,661,375 ​ 120,499 4.53 % 814,906 ​ 13,007 1.60 % Total interest-bearing deposits ​ 8,189,175 ​ 310,761 3.79 % 5,969,054 ​ 61,845 1.04 % Borrowings ​ 1,153,068 ​ 53,791 4.67 % 590,934 ​ 16,977 2.87 % Subordinated debt ​ ​ 173,364 ​ ​ 6,834 ​ 3.94 % ​ 164,004 ​ ​ 6,366 ​ 3.88 % Total interest-bearing liabilities ​ 9,515,607 ​ 371,386 3.90 % 6,723,992 ​ 85,188 1.27 % Noninterest-bearing liabilities: ​ ​ ​ ​ ​ Demand deposits ​ 2,440,561 ​ ​ ​ 3,474,657 ​ ​ ​ Other liabilities ​ 138,161 ​ ​ ​ 112,590 ​ ​ ​ Total liabilities ​ 12,094,329 ​ ​ ​ 10,311,239 ​ ​ ​ Stockholders’ equity ​ 1,023,668 ​ ​ ​ 1,096,851 ​ ​ ​ Total liabilities and equity ​ $ 13,117,997 ​ ​ ​ ​ $ 11,408,090 ​ ​ ​ ​ Net Interest Income ​ ​ ​ ​ $ 202,305 ​ ​ ​ $ 318,690 ​ Net Interest Rate Spread ​ ​ ​ ​ ​ 0.60 % ​ ​ ​ ​ 2.42 % Net Interest Margin ​ ​ ​ ​ ​ 1.59 % ​ ​ ​ ​ 2.91 % ​ 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 tables show key operating results for each of our business segments for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wealth ​ ​ ​ ​ (dollars in thousands) Banking Management Other Total 2023: ​ ​ ​ ​ Interest income ​ $ 573,691 ​ $ — ​ $ — ​ $ 573,691 Interest expense ​ 364,310 ​ — ​ 7,076 ​ 371,386 Net interest income ​ 209,381 ​ — ​ (7,076) ​ 202,305 Provision (reversal) for credit losses ​ (482) ​ — ​ — ​ (482) Noninterest income ​ 21,540 ​ 29,358 ​ (1,547) ​ 49,351 Noninterest expense ​ ​ ​ ​ ​ ​ ​ ​ Goodwill impairment ​ ​ 215,252 ​ ​ — ​ ​ — ​ ​ 215,252 Operating ​ ​ 210,514 ​ ​ 22,100 ​ ​ 4,336 ​ ​ 236,950 (Loss) income before income taxes ​ ​ (194,363) ​ ​ 7,258 ​ ​ (12,959) ​ ​ (200,064) Income tax (benefit) expense ​ ​ 560 ​ ​ 2,072 ​ ​ (3,632) ​ ​ (1,000) Net (loss) income ​ $ (194,923) ​ $ 5,186 ​ $ (9,327) ​ $ (199,064) 2022: ​ ​ ​ ​ Interest income ​ $ 403,878 ​ $ — ​ $ — ​ $ 403,878 Interest expense ​ 78,766 ​ — ​ 6,422 ​ 85,188 Net interest income ​ 325,112 ​ — ​ (6,422) ​ 318,690 Provision for credit losses ​ 532 ​ — ​ — ​ 532 Noninterest income ​ 26,148 ​ 30,027 ​ (7,941) ​ 48,234 Noninterest expense ​ 188,619 ​ 24,371 ​ 3,599 ​ 216,589 Income (loss) before income taxes ​ ​ 162,109 ​ ​ 5,656 ​ ​ (17,962) ​ ​ 149,803 Income tax expense (benefit) ​ ​ 42,698 ​ ​ 1,660 ​ ​ (5,067) ​ ​ 39,291 Net income (loss) ​ $ 119,411 ​ $ 3,996 ​ $ (12,895) ​ $ 110,512 ​ Years Ended December 31, 2023 and 2022.
The following tables show key operating results for each of our business segments for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wealth ​ ​ ​ ​ (dollars in thousands) Banking Management Other Total 2023: ​ ​ ​ ​ Interest income ​ $ 573,691 ​ $ — ​ $ — ​ $ 573,691 Interest expense ​ 364,310 ​ — ​ 7,076 ​ 371,386 Net interest income ​ 209,381 ​ — ​ (7,076) ​ 202,305 Provision (reversal) for credit losses ​ (482) ​ — ​ — ​ (482) Noninterest income ​ 21,540 ​ 29,358 ​ (1,547) ​ 49,351 Noninterest expense ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Goodwill impairment ​ ​ 215,252 ​ ​ — ​ ​ — ​ ​ 215,252 Operating ​ ​ 210,514 ​ ​ 22,100 ​ ​ 4,336 ​ ​ 236,950 (Loss) income before income taxes ​ ​ (194,363) ​ ​ 7,258 ​ ​ (12,959) ​ ​ (200,064) Income tax expense (benefit) ​ ​ 560 ​ ​ 2,072 ​ ​ (3,632) ​ ​ (1,000) Net (loss) income ​ $ (194,923) ​ $ 5,186 ​ $ (9,327) ​ $ (199,064) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022: ​ ​ ​ ​ Interest income ​ $ 403,878 ​ $ — ​ $ — ​ $ 403,878 Interest expense ​ 78,766 ​ — ​ 6,422 ​ 85,188 Net interest income ​ 325,112 ​ — ​ (6,422) ​ 318,690 Provision for credit losses ​ 532 ​ — ​ — ​ 532 Noninterest income ​ 26,148 ​ 30,027 ​ (7,941) ​ 48,234 Noninterest expense ​ 188,619 ​ 24,371 ​ 3,599 ​ 216,589 Income (loss) before income taxes ​ ​ 162,109 ​ ​ 5,656 ​ ​ (17,962) ​ ​ 149,803 Income tax expense (benefit) ​ ​ 42,698 ​ ​ 1,660 ​ ​ (5,067) ​ ​ 39,291 Net income (loss) ​ $ 119,411 ​ $ 3,996 ​ $ (12,895) ​ $ 110,512 ​ Combined net loss for 2023 was $199.1 million, compared to net income of $110.5 million for 2022.
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.
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 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.
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.
Our ACL for loans held for investment 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.
During the year ended December 31, 2023, investing activities provided net cash of $135 million, primarily due to a $541 million net decrease in loans, $176 million in proceeds from the sale of securities AFS, $90 million cash received in principal collection and maturities of securities AFS and HTM, offset by $667 million (net of discount) in purchases of securities AFS.
During the year ended December 31, 2023, investing activities provided net cash of $133 million, primarily due to a $541 million net decrease in loans, $176 million in proceeds from the sale of securities AFS, $90 million cash received in principal collection and maturities of securities AFS and HTM, offset by $667 million (net of discount) in purchases of securities AFS.
Management’s 61 Table of Contents 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.
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 63 Table of Contents result in a material adjustment to results of operations in the future.
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 year ended December 31, 2023, as compared to our results of operations in the year ended December 31, 2022; in our results of operations in the year ended December 31, 2022, as compared to our results of operations in the year ended December 31, 2021, and our financial condition at December 31, 2023 as compared to our financial condition at December 31, 2022.
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 year ended December 31, 2024, as compared to our results of operations in the year ended December 31, 2023; in our results of operations in the year ended December 31, 2023, as compared to our results of operations in the year ended December 31, 2022; and our financial condition at December 31, 2024 as compared to our financial condition at December 31, 2023.
The decrease in the effective tax rate was predominately due to the decrease in pretax income, largely due to the goodwill impairment charge which is not deductible for tax purposes, as well as an increase in tax-exempt interest income and a decrease in the state tax rate. ​ 43 Table of Contents Net Interest Income.
The decrease in the effective tax rate was predominately due to the decrease in pretax income, largely due to the goodwill impairment charge which is not deductible for tax purposes, as well as an increase in tax-exempt interest income and a decrease in the state tax rate. 50 Table of Contents Net Interest Income.
During the year ended December 31, 2023, operating activities provided net cash of $6 million, comprised primarily of net income of $16 million and an $11 million decrease in accrued interest receivable and other assets, offset partially by an $18 million decrease in accounts payable and other liabilities.
During the year ended December 31, 2023, operating activities provided net cash of $8 million, comprised primarily of net income of $16 million and an $11 million decrease in accrued interest receivable and other assets, offset partially by an $18 million decrease in accounts payable and other liabilities.
The following table provides the amounts of noninterest income for Wealth Management for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) 2023 2022 Noninterest income ​ $ 29,358 ​ $ 30,027 ​ Noninterest income for Wealth Management was $29.4 million for the year ended December 31, 2023, compared to $30.0 million for 2022.
The following table provides the amounts of noninterest income for Wealth Management for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) 2023 2022 Noninterest income ​ $ 29,358 ​ $ 30,027 ​ 53 Table of Contents Noninterest income for Wealth Management was $29.4 million for the year ended December 31, 2023, compared to $30.0 million for 2022.
Under the CECL methodology, on 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.
Under the CECL methodology, on which our ACL for loans held for investment 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 $0.6 million decrease was due to a decrease in average fees earned on AUM balances as the portfolio composition changed from equities which earn higher fees to fixed income funds which earn lower fees.
The $0.6 million decrease was due to a decrease in average fees earned on AUM balances as the portfolio composition changed from equities which earn higher fees to fixed income funds which earn lower fees. Noninterest Expense.
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. We believe our IRR management policy limits are consistent with prevailing practice in the regional banking industry.
In response to actual or anticipated changes in interest rates, we have various 67 Table of Contents 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. We believe our IRR management policy limits are consistent with prevailing practice in the regional banking industry.
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 59 Table of Contents interest if the loan is in the process of collection or collection of the principal and interest is deemed probable.
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.
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.
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 from Operating Activities.
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.
The major factors considered in evaluating losses are historical charge-off experience, delinquency rates, local and national economic conditions including macroeconomic forecasts, the borrower’s ability to repay the loan and timing of repayments, and the value of any related collateral.
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.
We employ various strategies to mitigate IRR by managing 65 Table of Contents 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.
Results were impacted by a $215.3 million goodwill impairment charge which was recorded in the second quarter of 2023. See Note 8: Goodwill and Core Deposit Intangibles in the consolidated financial statements for additional information related to goodwill.
See Note 4: Loans in the consolidated financial statements for additional information related to loans. Prior year results were impacted by a $215.3 million goodwill impairment charge which was recorded in the second quarter of 2023. See Note 8: Goodwill and Core Deposit Intangibles in the consolidated financial statements for additional information related to goodwill.
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 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 expected lifetime credit losses in the loan and investment portfolios.
The Bank had a total of $170 million in unused borrowing capacity available through its correspondent bank lines of credit as of December 31, 2023. We monitor our liquidity in accordance with guidelines established by our Board of Directors and applicable regulatory requirements.
The Bank had a total of $240 million in unused borrowing capacity available through its correspondent bank lines of credit as of December 31, 2024. We monitor our liquidity in accordance with guidelines established by our Board of Directors and applicable regulatory requirements.
The net income of $16 million provided by operating activities consisted of the net loss of $199 million, excluding the goodwill impairment charge of $215 million, which does not impact cash flow.
The net income of $16 million provided by operating activities consisted of the net loss of $199 million, excluding the goodwill impairment charge of $215 million, which does not impact cash flow. Cash Flows from Investing Activities.
The following table provides a breakdown of noninterest income for Banking for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) 2023 2022 ​ ​ ​ ​ ​ ​ ​ Year Ended December 31: ​ ​ ​ ​ ​ ​ Trust fees ​ $ 6,753 ​ $ 9,394 Loan related fees ​ 7,213 ​ 9,228 Deposit charges ​ 2,020 ​ 2,508 Gain on sale leaseback ​ ​ — ​ ​ 1,061 Gain on sale of securities available-for-sale ​ ​ 2,304 ​ ​ — Consulting fees ​ ​ 354 ​ ​ 396 Other ​ 2,896 ​ 3,561 Total noninterest income ​ $ 21,540 ​ $ 26,148 ​ Noninterest income in Banking was $21.5 million for the year ended December 31 2023, compared to $26.1 million for 2022.
The following table provides a breakdown of noninterest income for Banking for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) 2023 2022 Trust and consulting fees ​ $ 7,107 ​ $ 9,790 Loan related fees ​ 7,213 ​ 9,228 Deposit charges ​ 2,020 ​ 2,508 Gain on sale leaseback ​ — ​ 1,061 Gain on sale of securities available-for-sale ​ ​ 2,304 ​ ​ — Other ​ 2,896 ​ 3,561 Total noninterest income ​ $ 21,540 ​ $ 26,148 ​ Noninterest income in Banking was $21.5 million for the year ended December 31 2023, compared to $26.1 million for 2022.
See Note 3: Securities in the consolidated financial statements for additional information related to our allowance for credit losses on securities AFS. 40 Table of Contents Allowance for Credit Losses - Loans .
See Note 3: Securities in the consolidated financial statements for additional information related to our allowance for credit losses on securities AFS. 41 Table of Contents Allowance for Credit Losses – Loans Held for Investment .
Combined net loss for 2023 was $199.1 million, compared to net income of $110.5 million for 2022. Combined net loss before taxes for 2023 was $200.1 million, compared to net income before taxes of $149.8 million for 2022.
Combined net loss before taxes for 2023 was $200.1 million, compared to net income before taxes of $149.8 million for 2022.
For additional information about borrowings, see Note 11: Borrowings to the consolidated financial statements. Subordinated debt. At December 31, 2023 and December 31, 2022, FFI had two issuances of subordinated notes with an aggregate carrying value of $173 million. For additional information about subordinated debt, see Note 12: Subordinated Debt to the consolidated financial statements.
Subordinated debt. At December 31, 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 13: Subordinated Debt to the consolidated financial statements.
We regularly monitor liquidity to ensure levels are in compliance with minimum requirements established by our Board of Directors. As of December 31, 2023, our available liquidity ratio was 33.6%, which is above our minimum policy requirement of 25%.
We regularly monitor liquidity to ensure levels are in compliance with minimum requirements established by our Board of Directors. As of December 31, 2024, our available liquidity ratio was 51.0%, which is above our minimum policy requirement of 25%.
Additionally, prepayments of loans and early withdrawals of certificates of deposit could cause interest 65 Table of Contents sensitivities to vary.
Additionally, prepayments of loans and early withdrawals of certificates of deposit could cause interest sensitivities to vary.
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.
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-bearing liabilities.
The remaining balances of the Bank’s lines of credit available to draw down totaled $2.6 billion at December 31, 2023. 63 Table of Contents 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.
The remaining balances of the Bank’s lines of credit available to draw down totaled $3.0 billion at December 31, 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.
NIM was 1.59% for the year ended December 31, 2023 compared to 2.91% for 2022. ​ 45 Table of Contents Provision for credit losses.
NIM was 1.59% for the year ended December 31, 2023 compared to 2.91% for 2022. ​ Provision for credit losses.
The Bank’s Federal Reserve Bank credit line is secured by pledged collateral in the form of qualifying loans and investment securities. As of December 31, 2023, the Bank had secured unused borrowing capacity of $402 million under this agreement. The Bank’s unused borrowing capacity with the FHLB as of December 31, 2023 was $2.0 billion.
The Bank’s Federal Reserve Bank credit line is secured by pledged collateral in the form of qualifying loans and investment securities. As of December 31, 2024, the Bank had secured unused borrowing capacity of $1.1 billion under this agreement. The Bank’s unused borrowing capacity with the FHLB as of December 31, 2024 was $1.7 billion.
At December 31, 2023 and 2022, the loan-to-deposit ratios at FFB were 95.2%, and 103.5%, respectively.
At December 31, 2024 and 2023, the loan-to-deposit ratios at FFB were 93.5%, and 95.2%, respectively.
As of December 31, 2023, FFI had $13.5 million of available capital and, therefore, has the ability and financial resources to contribute additional capital to FFB, if needed.
As of December 31, 2024, FFI had $25.3 million of available capital and, therefore, has the ability and financial resources to contribute additional capital to FFB, if needed.
The 0.81% increase in average yield earned on interest-earning assets was offset by a 2.63% increase in average rate paid on interest-bearing liability balances and a mix shift to interest-bearing liabilities, resulting in a contraction of NIM for the year ended December 31, 2023.
Average balances of borrowings increased in line with our increase in balance sheet liquidity. ​ The 0.81% increase in average yield earned on interest-earning assets was offset by a 2.63% increase in average rate paid on interest-bearing liability balances and a mix shift to interest-bearing liabilities, resulting in a contraction of 52 Table of Contents NIM for the year ended December 31, 2023.
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. The average balance of borrowings and the weighted average interest rate on such borrowings were $591 million and 2.87%, respectively for the year ended December 31, 2022.
The average balance of borrowings and the weighted average interest rate on such borrowings were $1.5 billion and 4.09%, respectively for the year ended December 31, 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.
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 December 31, 2023 are shown below: ​ ​ ​ ​ ​ ​ ​ ​ Estimated Increase ​ ​ ​ (Decrease) ​ ​ ​ ​ ​ ​ in Economic ​ ​ ​ ​ Assumed Instantaneous Change in Interest Rates ​ Value of Equity ​ ​ Board Limits ​ + 100 basis points 0.11 % ​ (15.00) % + 200 basis points (2.83) % ​ (25.00) % - 100 basis points (6.33) % ​ (15.00) % - 200 basis points (14.06) % ​ (20.00) % ​ 66 Table of Contents The results of the EVE are hypothetical, and a variety of factors might cause actual results to differ substantially from what is depicted.
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 December 31, 2024 are shown below: ​ ​ ​ ​ ​ ​ ​ ​ Estimated Increase ​ ​ ​ (Decrease) ​ ​ ​ ​ ​ ​ in Economic ​ ​ ​ ​ Assumed Instantaneous Change in Interest Rates ​ Value of Equity ​ ​ Board Limits ​ + 100 basis points (3.82) % ​ (15.00) % + 200 basis points (13.88) % ​ (25.00) % - 100 basis points (4.52) % ​ (15.00) % - 200 basis points (11.83) % ​ (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.
Average balances of interest-bearing deposits increased due to a shift in the mix of deposit account balances from noninterest bearing to higher-yield savings, money market, and certificate of deposit accounts. Average balances of borrowings increased in line with our increase in balance sheet liquidity.
Average balances of interest-bearing deposits increased due to a shift in the mix of deposit account balances from noninterest bearing to higher-yield savings, money market, and certificate of deposit accounts.
These agencies may require us to make additional provisions for credit losses, over and above the provisions that we have already made, the effects of which would be to reduce our income.
These agencies may require us to make additional provisions for credit losses, over and above the provisions that we have already made, the effects of which would be to reduce our income. For additional information about allowance for credit losses, see Note 5: Allowance for Credit Losses to the consolidated financial statements.
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 December 31, 2023 are shown below: ​ ​ ​ ​ ​ ​ ​ ​ Estimated Increase ​ ​ ​ (Decrease) in Net ​ ​ ​ ​ Assumed Instantaneous Change in Interest Rates Interest Income ​ ​ Board Limits ​ + 100 basis points (10.65) % ​ (20.00) % + 200 basis points (19.75) % ​ (25.00) % - 100 basis points (1.27) % ​ (10.00) % - 200 basis points (3.58) % ​ (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 Board-approved limits on NII sensitivity and 66 Table of Contents the actual computed changes to our NII based on the +/- 100 and +/- 200 basis points hypothetical interest rate scenarios as of December 31, 2024 are shown below: ​ ​ ​ ​ ​ ​ ​ ​ Estimated Increase ​ ​ ​ (Decrease) in Net ​ ​ ​ ​ Assumed Instantaneous Change in Interest Rates Interest Income ​ ​ Board Limits ​ + 100 basis points (15.43) % ​ (20.00) % + 200 basis points (30.10) % ​ (25.00) % - 100 basis points 6.60 % ​ (10.00) % - 200 basis points 12.02 % ​ (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.
Off-Balance Sheet Arrangements The following table provides the off-balance sheet arrangements of the Company as of December 31, 2023: ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ Commitments to fund new loans ​ $ 4,900 Commitments to fund under existing loans, lines of credit ​ ​ 1,143,175 Commitments under standby letters of credit ​ 19,487 ​ Some of the commitments to fund existing loans, lines of credit and letters of credit are expected to expire without being drawn upon.
Off-Balance Sheet Arrangements The following table provides the off-balance sheet arrangements of the Company as of December 31, 2024: ​ ​ ​ ​ ​ (dollars in thousands) ​ ​ Commitments to fund under existing loans, lines of credit ​ $ 1,032,887 Commitments under standby letters of credit ​ 34,901 ​ Some of the commitments to fund existing loans, lines of credit and letters of credit are expected to expire without being drawn upon.
As of December 31, 2023, approximately 87% of the loans in our portfolio were made to borrowers who live and/or conduct business in California (73%), Florida (9%), Texas (4%), and Nevada (1%).
As of December 31, 2023, approximately 86.3% of the loans in our portfolio were made to borrowers who live and/or conduct business in California (72%), Florida (8%), Texas (5.1%), and Nevada (1.2%).
As of December 31, 2023, the amount of capital at FFB in excess of amounts required to be well-capitalized for purposes of the prompt corrective action regulations was $474 million for the CET1 risk-based capital ratio, $432 million for the Tier 1 Leverage Ratio, $336 million for the Tier 1 risk-based capital ratio and $186 million for the Total risk-based capital ratio.
As of December 31, 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 $580 million for the common equity tier 1 ratio, $480 million for the leverage ratio, $451 million for the tier 1 risk-based capital ratio and $314 million for the total risk-based capital ratio.
Net interest income before provision (reversal) of credit losses totaled $202.3 million for the year ended December 31, 2023, compared to $318.7 million for 2022. Net interest margin (“NIM”) was 1.59% for the year ended December 31, 2023, compared to 2.91% for 2022.
Net interest income before provision (reversal) of credit losses totaled $161.9 million for the year ended December 31, 2024, compared to $202.8 million for 2023. Net interest margin (“NIM”) was 1.40% for the year ended December 31, 2024, compared to 1.59% for 2023.
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. 67 Table of Contents The following table sets forth the capital and capital ratios of FFI (on a consolidated basis) and FFB (on a stand-alone basis) as of the respective dates and 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ CET1 risk-based capital ratio ​ $ 931,272 10.02 % $ 418,142 4.50 % ​ ​ Tier 1 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 % ​ ​ December 31, 2022 ​ ​ ​ ​ CET1 risk-based capital ratio ​ $ 931,125 9.18 % $ 456,603 4.50 % ​ ​ Tier 1 leverage ratio ​ 931,125 7.44 % 500,327 4.00 % ​ ​ Tier 1 risk-based capital ratio ​ 931,125 9.18 % 608,804 6.00 % ​ ​ Total risk-based capital ratio ​ 1,145,765 11.29 % 811,739 8.00 % ​ ​ December 31, 2021 ​ ​ ​ ​ CET1 risk-based capital ratio ​ $ 846,515 11.34 % $ 335,801 4.50 % ​ ​ Tier 1 leverage ratio ​ 846,515 8.43 % 401,645 4.00 % ​ ​ Tier 1 risk-based capital ratio ​ 846,515 11.34 % 447,735 6.00 % ​ ​ Total risk-based capital ratio ​ 887,821 11.90 % 596,980 8.00 % ​ ​ FFB ​ ​ ​ ​ December 31, 2023 ​ ​ ​ ​ CET1 risk-based capital ratio ​ $ 1,076,337 11.62 % $ 416,684 4.50 % $ 601,877 6.50 % Tier 1 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 % December 31, 2022 ​ ​ ​ ​ CET1 risk-based capital ratio ​ $ 1,070,648 10.60 % $ 454,655 4.50 % $ 656,724 6.50 % Tier 1 leverage ratio ​ 1,070,648 8.59 % 498,725 4.00 % 623,400 5.00 % Tier 1 risk-based capital ratio ​ 1,070,648 10.60 % 606,207 6.00 % 808,276 8.00 % Total risk-based capital ratio ​ 1,111,952 11.01 % 808,276 8.00 % 1,010,345 10.00 % December 31, 2021 ​ ​ ​ ​ CET1 risk-based capital ratio ​ $ 854,075 11.49 % $ 334,608 4.50 % $ 483,323 6.50 % Tier 1 leverage ratio ​ 854,075 8.53 % 400,616 4.00 % 500,770 5.00 % Tier 1 risk-based capital ratio ​ 854,075 11.49 % 446,144 6.00 % 594,859 8.00 % Total risk-based capital ratio ​ 895,381 12.04 % 594,859 8.00 % 743,574 10.00 % ​ 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.
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. 68 Table of Contents The following table sets forth the capital and capital ratios of FFI (on a consolidated basis) and FFB (on a stand-alone basis) 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 ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2024 ​ ​ ​ ​ Common equity tier 1 ratio ​ $ 912,919 10.54 % $ 389,938 4.50 % ​ ​ Leverage ratio ​ 1,000,568 7.55 % 530,093 4.00 % ​ ​ Tier 1 risk-based capital ratio ​ 1,000,568 11.55 % 519,917 6.00 % ​ ​ Total risk-based capital ratio ​ 1,209,565 13.96 % 693,223 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 % ​ ​ December 31, 2022 ​ ​ ​ ​ Common equity tier 1 ratio ​ $ 931,125 9.18 % $ 456,603 4.50 % ​ ​ Leverage ratio ​ 931,125 7.44 % 500,327 4.00 % ​ ​ Tier 1 risk-based capital ratio ​ 931,125 9.18 % 608,804 6.00 % ​ ​ Total risk-based capital ratio ​ 1,145,765 11.29 % 811,739 8.00 % ​ ​ FFB ​ ​ ​ ​ December 31, 2024 ​ ​ ​ ​ Common equity tier 1 ratio ​ $ 1,141,374 13.22 % $ 388,449 4.50 % $ 561,092 6.50 % Leverage ratio ​ 1,141,374 8.63 % 529,129 4.00 % 661,412 5.00 % Tier 1 risk-based capital ratio ​ 1,141,374 13.22 % 517,931 6.00 % 690,575 8.00 % Total risk-based capital ratio ​ 1,176,913 13.63 % 690,575 8.00 % 863,219 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 % December 31, 2022 ​ ​ ​ ​ Common equity tier 1 ratio ​ $ 1,070,648 10.60 % $ 454,655 4.50 % $ 656,724 6.50 % Leverage ratio ​ 1,070,648 8.59 % 498,725 4.00 % 623,400 5.00 % Tier 1 risk-based capital ratio ​ 1,070,648 10.60 % 606,207 6.00 % 808,276 8.00 % Total risk-based capital ratio ​ 1,111,952 11.01 % 808,276 8.00 % 1,010,345 10.00 % ​ 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.
At December 31, 2023, total borrowings represented 10.6% of total assets, compared to 9.2% at December 31, 2022.
At December 31, 2024, total borrowings represented 11.3% of total assets, compared to 10.6% at December 31, 2023.
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.
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.
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 December 31, 2023.
During 2024, the Board of Directors declared a quarterly cash dividend of $0.01 per share for the quarter ended March 31, 2024, with no subsequent declarations made. During 2023, the Board of Directors declared quarterly cash dividends totaling $0.06 per share. 69 Table of Contents We had no material commitments for capital expenditures as of December 31, 2024.
The Dodd-Frank Act permanently increased the maximum deposit insurance amount for banks, savings institutions and credit unions to $250,000 per depositor.
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 84% of total deposits at December 31, 2024.
Noninterest income totaled $49.4 million for the year ended December 31, 2023, compared to $48.2 million for 2022. Noninterest expense, excluding the aforementioned goodwill impairment charge, totaled $237.0 million for the year ended December 31, 2023, compared to $216.6 million for 2022.
Noninterest income, excluding the aforementioned LOCOM adjustment totaled $51.6 million for the year ended December 42 Table of Contents 31, 2023, compared to $49.4 million for 2023. Noninterest expense totaled $233.5 million for the year ended December 31, 2024, compared to $237.0 million, excluding the aforementioned goodwill impairment charge for the year ended December 31, 2023.
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 Item 7.
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.
As of December 31, 2023, our unused borrowing capacity was $2.6 billion, which consisted of $2.0 billion in available lines of credit with the FHLB, $402 million in available borrowing capacity with the Federal Reserve Bank, $170 million in borrowing capacity through unsecured federal funds lines with four correspondent financial institutions, and $20 million in available borrowing capacity through line of credit arrangement that our holding company maintains with an unaffiliated lender.
As of December 31, 2024, our unused borrowing capacity was $3.0 billion, which consisted of $1.7 billion in available lines of credit with the FHLB, $1.1 billion 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 line of credit arrangement that our holding company maintains with an unaffiliated lender. 60 Table of Contents For additional information about borrowings, see Note 12: Borrowings to the consolidated financial statements.
The increase in investment securities included $501.0 million in net purchases of securities available-for-sale, offset by $90.3 million in maturities of securities available-for-sale and securities held-for-investment during the year. The purchases of securities available-for-sale included U.S. Treasury and GNMA mortgage-backed securities.
The increase in investment securities included $1.1 billion in net purchases of securities available-for-sale, offset by $608 million in maturities of securities available-for-sale and securities held-for-investment during the year. The net purchases of securities available-for-sale largely consisted of agency mortgage-backed securities.
The following table provides the amounts of noninterest income for Wealth Management for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) 2022 2021 Noninterest income ​ $ 30,027 ​ $ 29,917 ​ Noninterest income for Wealth Management was in line for 2022 when compared to 2021. ​ Noninterest Expense.
The following table provides the amounts of noninterest income for Wealth Management for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) 2024 2023 Noninterest income ​ $ 30,583 ​ $ 29,358 ​ Noninterest income for Wealth Management was $30.6 million for the year ended December 31, 2024, compared to $29.4 million for 2023.
Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 12.5% and 19.8% of our total deposits as of December 31, 2023 and 2022, respectively.
Large depositor relationships, consisting of deposit relationships which exceed 2% of total deposits, accounted for, in the aggregate, 19.7% and 12.5% of our total deposits as of December 31, 2024, and 2023, respectively. The composition of our large depositor relationships includes mortgage servicing clients who have maintained long-term depository relationships with us.
The following table provides a summary of past due and nonaccrual loans as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Past Due and Still Accruing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ Total Past Due ​ ​ ​ ​ ​ ​ (dollars in thousands) 30–59 Days 60-89 Days or More Nonaccrual and Nonaccrual Current Total 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 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022: ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 511 ​ $ 57 ​ $ — ​ $ 2,556 ​ $ 3,124 ​ $ 6,374,100 ​ $ 6,377,224 Commercial properties ​ 15,000 ​ 946 ​ 1,213 ​ 4,547 ​ 21,706 ​ 1,180,357 ​ 1,202,063 Land and construction ​ — ​ — ​ — ​ — ​ — ​ 157,630 ​ 157,630 Commercial and industrial loans ​ 385 ​ 1,495 ​ 982 ​ 3,228 ​ 6,090 ​ 2,978,668 ​ 2,984,758 Consumer loans ​ — ​ 167 ​ — ​ — ​ 167 ​ 4,351 ​ 4,518 Total ​ $ 15,896 ​ $ 2,665 ​ $ 2,195 ​ $ 10,331 ​ $ 31,087 ​ $ 10,695,106 ​ $ 10,726,193 Percentage of total loans ​ 0.15 % 0.02 % 0.02 % 0.10 % 0.29 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021: ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 1,519 ​ $ 310 ​ $ — ​ $ 3,281 ​ $ 5,110 ​ $ 3,827,385 ​ $ 3,832,495 Commercial properties ​ 2,934 ​ — ​ — ​ 1,529 ​ 4,463 ​ 1,305,112 ​ 1,309,575 Land and construction ​ — ​ — ​ — ​ — ​ — ​ 155,926 ​ 155,926 Commercial and industrial loans ​ 303 ​ 260 ​ — ​ 3,520 ​ 4,083 ​ 1,593,782 ​ 1,597,865 Consumer loans ​ — ​ — ​ — ​ — ​ — ​ 10,867 ​ 10,867 Total ​ $ 4,756 ​ $ 570 ​ $ — ​ $ 8,330 ​ $ 13,656 ​ $ 6,893,072 ​ $ 6,906,728 Percentage of total loans ​ 0.07 % 0.01 % — % 0.12 % 0.20 % ​ ​ 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 December 31, 2023 ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ Residential properties ​ $ — ​ $ 112 Commercial properties ​ ​ — ​ ​ 2,915 Commercial and industrial loans ​ 7,406 ​ 1,398 Consumer loans ​ — ​ — Total ​ $ 7,406 ​ $ 4,425 ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ Residential properties ​ $ — ​ $ 2,556 Commercial properties ​ ​ — ​ ​ 4,547 Commercial and industrial loans ​ 2,016 ​ 1,212 Total ​ $ 2,016 ​ $ 8,315 60 Table of Contents Allowance for Credit Losses.
The following table provides a summary of past due and nonaccrual loans in our loans held for investment portfolio as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Past Due and Still Accruing ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 90 Days ​ ​ ​ ​ Total Past Due ​ ​ ​ ​ ​ ​ (dollars in thousands) 30–59 Days 60-89 Days or More Nonaccrual and Nonaccrual Current Total 2024: ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 7,083 ​ $ — ​ $ — ​ $ 23,324 ​ $ 30,407 ​ $ 4,193,994 ​ $ 4,224,401 Commercial properties ​ 7,944 ​ 428 ​ 12,900 ​ 7,946 ​ 29,218 ​ 874,463 ​ 903,681 Land and construction ​ — ​ — ​ — ​ — ​ — ​ 69,134 ​ 69,134 Commercial and industrial loans ​ 997 ​ 617 ​ — ​ 9,174 ​ 10,788 ​ 2,732,226 ​ 2,743,014 Consumer loans ​ — ​ — ​ — ​ — ​ — ​ 1,163 ​ 1,163 Total ​ $ 16,024 ​ $ 1,045 ​ $ 12,900 ​ $ 40,444 ​ $ 70,413 ​ $ 7,870,980 ​ $ 7,941,393 Percentage of total loans ​ 0.20 % 0.01 % 0.16 % 0.51 % 0.89 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022: ​ ​ ​ ​ ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ ​ Residential properties ​ $ 511 ​ $ 57 ​ $ — ​ $ 2,556 ​ $ 3,124 ​ $ 6,374,100 ​ $ 6,377,224 Commercial properties ​ 15,000 ​ 946 ​ 1,213 ​ 4,547 ​ 21,706 ​ 1,180,357 ​ 1,202,063 Land and construction ​ — ​ — ​ — ​ — ​ — ​ 157,630 ​ 157,630 Commercial and industrial loans ​ 385 ​ 1,495 ​ 982 ​ 3,228 ​ 6,090 ​ 2,978,668 ​ 2,984,758 Consumer loans ​ — ​ 167 ​ — ​ — ​ 167 ​ 4,351 ​ 4,518 Total ​ $ 15,896 ​ $ 2,665 ​ $ 2,195 ​ $ 10,331 ​ $ 31,087 ​ $ 10,695,106 ​ $ 10,726,193 Percentage of total loans ​ 0.15 % 0.02 % 0.02 % 0.10 % 0.29 % ​ ​ 61 Table of Contents 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 December 31, 2024 ​ ​ ​ Real estate loans: ​ ​ ​ ​ ​ ​ Residential properties ​ $ 1,420 ​ $ 21,904 Commercial properties ​ ​ 3,449 ​ ​ 4,497 Commercial and industrial loans ​ 9,174 ​ — Total ​ $ 14,043 ​ $ 26,401 ​ ​ ​ ​ ​ ​ ​ 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 $27.9 million increase in total past due and nonaccrual loans from $42.5 million at December 31, 2023 to $70.4 million at December 31, 2024 was largely due to two residential property loans totaling $19.1 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. ​ 62 Table of Contents Allowance for Credit Losses.
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.
Our statutory tax rates were 27.8% and 28.2% for 2024 and 2023, respectively. 44 Table of Contents 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).
During 2023, our deposit rates have moved in a manner consistent with overall deposit market rates and market rates continued to rise as a result of the actions taken by the Federal Reserve Board. The weighted average interest rates of total deposits increased from 2.13% at December 31, 2022 to 3.36% at December 31, 2023.
During 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 3.29% at December 31, 2024.
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 year ended December 31, 2023, the Company reported a net loss of $199.1 million, compared to net income of $110.5 million for 2022.
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.
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.
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.
Securities available-for-sale:: The following table provides a summary of the Company’s AFS securities portfolio at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Gross Unrealized Allowance for Estimated (dollars in thousands) Cost Gains Losses Credit Losses Fair Value 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 ​ 700 ​ — ​ (22) ​ — ​ 678 Total ​ $ 1,335,225 ​ $ 2,310 ​ $ (19,516) ​ $ (4,134) ​ $ 1,313,885 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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.
The following table sets forth our loans, by loan category, as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2023 December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage of ​ ​ ​ ​ Percentage of ​ (dollars in thousands) Amount ​ Total Loans ​ Amount ​ Total Loans ​ Outstanding principal balance: ​ ​ ​ ​ ​ ​ ​ Loans secured by real estate: ​ ​ ​ ​ ​ ​ ​ Residential properties: ​ ​ ​ ​ ​ ​ ​ Multifamily ​ $ 5,227,885 ​ 51.5 % $ 5,341,596 ​ 49.9 % Single family ​ 950,712 ​ 9.4 % 1,016,498 ​ 9.5 % Total real estate loans secured by residential properties ​ 6,178,597 ​ 60.8 % 6,358,094 ​ 59.4 % Commercial properties ​ 987,596 ​ 9.7 % 1,203,292 ​ 11.2 % Land and construction ​ 137,298 ​ 1.4 % 158,565 ​ 1.5 % Total real estate loans ​ 7,303,491 ​ 71.9 % 7,719,951 ​ 72.1 % Commercial and industrial loans ​ 2,856,228 ​ 28.1 % 2,984,748 ​ 27.9 % Consumer loans ​ 1,328 ​ 0.0 % 4,481 ​ 0.0 % Total loans ​ 10,161,047 ​ 100.0 % 10,709,180 ​ 100.0 % Premiums, discounts and deferred fees and expenses ​ 16,755 ​ ​ ​ 17,013 ​ ​ ​ Total ​ $ 10,177,802 ​ ​ ​ $ 10,726,193 ​ ​ ​ ​ Total loans decreased by $548.4 million, as a result of $1.5 billion in loan fundings, offset by loan payoffs and paydowns of $2.1 billion for the year ended December 31, 2023.
The following table sets forth our loans held for investment, by loan category, as of December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 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 ​ $ 3,341,823 ​ 42.1 % $ 5,227,885 ​ 51.5 % Single family ​ 873,491 ​ 11.0 % 950,712 ​ 9.4 % Total real estate loans secured by residential properties ​ 4,215,314 ​ 53.1 % 6,178,597 ​ 60.8 % Commercial properties ​ 904,167 ​ 11.4 % 987,596 ​ 9.7 % Land and construction ​ 69,246 ​ 0.9 % 137,298 ​ 1.4 % Total real estate loans ​ 5,188,727 ​ 65.4 % 7,303,491 ​ 71.9 % Commercial and industrial loans ​ 2,746,351 ​ 34.6 % 2,856,228 ​ 28.1 % Consumer loans ​ 1,137 ​ 0.0 % 1,328 ​ 0.0 % Total loans ​ 7,936,215 ​ 100.0 % 10,161,047 ​ 100.0 % Premiums, discounts and deferred fees and expenses ​ 5,178 ​ ​ ​ 16,755 ​ ​ ​ Total ​ $ 7,941,393 ​ ​ ​ $ 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.
The following table summarizes the activity in our AUM for the periods indicated: 46 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Existing account ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Beginning ​ Additions/ ​ New ​ ​ ​ ​ ​ ​ ​ ​ ​ (dollars in thousands) Balance Withdrawals Accounts Terminations Performance Ending balance Year Ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ Fixed income ​ $ 1,699,554 ​ $ 34,536 ​ $ 137,732 ​ $ (128,917) ​ $ 106,151 ​ $ 1,849,056 Equities ​ ​ 2,383,268 ​ ​ (164,461) ​ ​ 82,540 ​ ​ (231,240) ​ ​ 538,926 ​ ​ 2,609,033 Cash and other ​ 902,455 ​ (205,819) ​ 71,226 ​ (58,055) ​ 82,052 ​ 791,859 Total ​ $ 4,985,277 ​ $ (335,744) ​ $ 291,498 ​ $ (418,212) ​ $ 727,129 ​ $ 5,249,948 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022: ​ ​ ​ ​ ​ ​ ​ Fixed income ​ $ 1,303,760 ​ $ 451,841 ​ $ 154,827 ​ $ (30,428) ​ $ (180,446) ​ $ 1,699,554 Equities ​ ​ 3,330,639 ​ ​ (87,881) ​ ​ 108,003 ​ ​ (78,785) ​ ​ (888,708) ​ ​ 2,383,268 Cash and other ​ 1,046,206 ​ (422,405) ​ ​ 305,747 ​ ​ (58,248) ​ ​ 31,155 ​ 902,455 Total ​ $ 5,680,605 ​ $ (58,445) ​ $ 568,577 ​ $ (167,461) ​ $ (1,037,999) ​ $ 4,985,277 ​ AUM balances were $5.2 billion at December 31, 2023, compared to $5.0 billion at December 31, 2022.
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 Year Ended December 31, 2024: ​ ​ ​ ​ ​ ​ ​ Fixed income ​ $ 1,849,056 ​ $ (131,210) ​ $ 48,038 ​ $ (44,645) ​ $ (70,516) ​ $ 1,650,723 Equities ​ ​ 2,609,033 ​ ​ (28,621) ​ ​ 185,487 ​ ​ (144,211) ​ ​ 310,838 ​ ​ 2,932,526 Cash and other ​ 791,859 ​ (62,887) ​ 99,012 ​ (55,238) ​ 89,885 ​ 862,631 Total ​ $ 5,249,948 ​ $ (222,718) ​ $ 332,537 ​ $ (244,094) ​ $ 330,207 ​ $ 5,445,880 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023: ​ ​ ​ ​ ​ ​ ​ Fixed income ​ $ 1,699,554 ​ $ 34,536 ​ $ 137,732 ​ $ (128,917) ​ $ 106,151 ​ $ 1,849,056 Equities ​ ​ 2,383,268 ​ ​ (164,461) ​ ​ 82,540 ​ ​ (231,240) ​ ​ 538,926 ​ ​ 2,609,033 Cash and other ​ 902,455 ​ (205,819) ​ ​ 71,226 ​ ​ (58,055) ​ ​ 82,052 ​ 791,859 Total ​ $ 4,985,277 ​ $ (335,744) ​ $ 291,498 ​ $ (418,212) ​ $ 727,129 ​ $ 5,249,948 ​ AUM balances were $5.4 billion at December 31, 2024, compared to $5.2 billion at December 31, 2023.
The allowance for credit losses for loans totaled $29.2 million as of December 31, 2023, compared to $33.7 million as of December 31, 2022. Our ACL for loans represented 0.29% of total loans outstanding as of December 31, 2023 compared to 0.31% of total loans outstanding as of December 31, 2022.
Our ACL for loans held for investment represented 0.41% of total loans held for investment outstanding as of December 31, 2024, compared to 0.29% of total loans held for investment outstanding as of December 31, 2023. The ACL for loans increased $3.1 million as of December 31, 2024, compared to December 31, 2023.
Treasury ​ 398,135 ​ 655 ​ — ​ — ​ 398,790 ​ Total ​ $ 406,560 ​ $ 78,673 ​ $ 91,625 ​ $ 134,588 ​ $ 711,446 ​ ​ Securities held-to-maturity: The following table provides a summary of the Company’s HTM securities portfolio at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Gross Unrealized Allowance for Estimated (dollars in thousands) Cost Gains Losses Credit Losses Fair Value 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency mortgage-backed securities ​ $ 789,578 ​ $ 1 ​ $ (79,558) ​ $ — ​ $ 710,021 Total ​ $ 789,578 ​ $ 1 ​ $ (79,558) ​ $ — ​ $ 710,021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022: ​ ​ ​ ​ ​ ​ Agency mortgage-backed securities ​ $ 862,544 ​ $ — ​ $ (89,483) ​ $ — ​ $ 773,061 Total ​ $ 862,544 ​ $ — ​ $ (89,483) ​ $ — ​ $ 773,061 ​ There were no securities held-to-maturity as of December 31, 2021. ​ ​ ​ ​ ​ ​ 56 Table of Contents The scheduled maturities of securities HTM, and the related weighted average yields were as follows, as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ ​ See Note 3: Securities of the notes to the consolidated financial statements for additional information on our investment securities portfolio. ​ Loans.
Treasury ​ 200 ​ 478 ​ — ​ — ​ 678 ​ Total ​ $ 2,820 ​ $ 83,089 ​ $ 89,492 ​ $ 1,142,618 ​ $ 1,318,019 ​ ​ Securities held-to-maturity: The following table provides a summary of the Company’s HTM securities portfolio at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Gross Unrecognized Allowance for Estimated (dollars in thousands) Cost Gains Losses Credit Losses Fair Value 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Agency mortgage-backed securities ​ $ 712,105 ​ $ — ​ $ (75,265) ​ $ — ​ $ 636,840 Total ​ $ 712,105 ​ $ — ​ $ (75,265) ​ $ — ​ $ 636,840 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023: ​ ​ ​ ​ ​ ​ Agency mortgage-backed securities ​ $ 789,578 ​ $ 1 ​ $ (79,558) ​ $ — ​ $ 710,021 Total ​ $ 789,578 ​ $ 1 ​ $ (79,558) ​ $ — ​ $ 710,021 ​ The scheduled maturities of securities HTM, and the related weighted average yields were as follows, as of December 31, 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 December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Amortized Cost: ​ ​ ​ ​ ​ ​ Agency mortgage-backed securities ​ $ — ​ $ 4,542 ​ $ 8,900 ​ $ 698,663 ​ $ 712,105 ​ Total ​ $ — ​ $ 4,542 ​ $ 8,900 ​ $ 698,663 ​ $ 712,105 ​ Weighted average yield ​ — % 0.99 % ​ 1.58 % 2.24 % ​ 2.22 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Estimated Fair Value: ​ ​ ​ ​ ​ ​ Agency mortgage-backed securities ​ $ — ​ $ 4,287 ​ $ 8,128 ​ $ 624,425 ​ $ 636,840 ​ Total ​ $ — ​ $ 4,287 ​ $ 8,128 ​ $ 624,425 ​ $ 636,840 ​ 57 Table of Contents See Note 3: Securities of the notes to the consolidated financial statements for additional information on our investment securities portfolio. ​ Loans.
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 decrease in loan-related fees was due to a decrease in prepayment fees, as early payoffs of loans decreased from year-ago levels. ​ 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 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.
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 decrease in compensation and benefit costs was primarily due to 47 Table of Contents a reduction in annual bonus expense compared to the year-ago period. Average Wealth Management FTEs were 65.7 for the year ended December 31, 2023, compared to 66.8 for 2022. Years Ended December 31, 2022 and 2021.
The increase in compensation and benefit costs was primarily due to an increase in commission expense compared to the year-ago period as average AUM balances increased for the year ended December 31, 2024, compared to 2023. Average Wealth Management FTEs were 62.6 for the year ended December 31, 2024, compared to 65.7 for 2023.
During 2023, total assets increased by $313 million primarily due to increases in cash and cash equivalents, and investment securities, offset by decreases in loans held for investment and the write-off of goodwill balances. During 2023, total liabilities increased $522 million primarily due to increases in deposits and borrowings, offset by a decrease in accounts payable and other liabilities.
During 2024, total assets decreased by $682 million primarily due to decreases in total loans and cash and cash equivalents, offset by increases in investment securities and deferred taxes. During 2024, total liabilities decreased $810 million primarily due to decreases in deposits, and accounts payable and other liabilities, offset by an increase in borrowings.
Noninterest expenses for Wealth Management increased by $1.0 million for 2022, when compared to the comparable period in 2021, primarily due to increased compensation costs related to higher commission expense, resulting from the increase in the number of new accounts. 52 Table of Contents Financial Condition The following table shows the financial position for each of our business segments, and of Other and Elimination entries used to arrive at our consolidated totals which are included in the column labeled Other, at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wealth Other and ​ ​ (dollars in thousands) ​ Banking ​ Management ​ Eliminations ​ Total 2023: ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 1,326,237 ​ $ 4,746 ​ $ (4,354) ​ $ 1,326,629 Securities AFS, net ​ 703,226 ​ — ​ — ​ 703,226 Securities HTM, net ​ ​ 789,578 ​ ​ — ​ ​ — ​ ​ 789,578 Loans, net ​ 10,148,597 ​ — ​ — ​ 10,148,597 Accrued interest receivable ​ ​ 54,163 ​ ​ — ​ ​ — ​ ​ 54,163 Premises and equipment ​ 39,639 ​ 150 ​ 136 ​ 39,925 Investment in FHLB stock ​ 24,613 ​ — ​ — ​ 24,613 Deferred taxes ​ 26,917 ​ 183 ​ 2,042 ​ 29,142 Real estate owned ("REO") ​ 8,381 ​ ​ — ​ ​ — ​ 8,381 Core deposit intangibles ​ 4,948 ​ — ​ — ​ 4,948 Other assets ​ 172,305 ​ 533 ​ 25,208 ​ 198,046 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 2022: ​ ​ ​ ​ Cash and cash equivalents ​ $ 656,247 ​ $ 16,757 ​ $ (16,510) ​ $ 656,494 Securities AFS, net ​ 226,158 ​ — ​ — ​ 226,158 Securities HTM, net ​ 862,544 ​ — ​ — ​ 862,544 Loans, net ​ 10,692,462 ​ — ​ — ​ 10,692,462 Accrued interest receivable ​ ​ 51,359 ​ ​ — ​ ​ — ​ ​ 51,359 Premises and equipment ​ 35,788 ​ 216 ​ 136 ​ 36,140 Investment in FHLB stock ​ 25,358 ​ — ​ — ​ 25,358 Deferred taxes ​ 19,671 ​ 78 ​ 4,449 ​ 24,198 Real estate owned ("REO") ​ ​ 6,210 ​ ​ — ​ ​ — ​ ​ 6,210 Goodwill ​ 215,252 ​ — ​ — ​ 215,252 Core deposit intangibles ​ ​ 6,583 ​ ​ — ​ ​ — ​ ​ 6,583 Other assets ​ 182,262 ​ 428 ​ 28,731 ​ 211,421 Total assets ​ $ 12,979,894 ​ $ 17,479 ​ $ 16,806 ​ $ 13,014,179 Deposits ​ $ 10,403,205 ​ $ — ​ $ (40,593) ​ $ 10,362,612 Borrowings ​ 1,176,601 ​ — ​ 20,000 ​ 1,196,601 Subordinated debt ​ ​ — ​ ​ — ​ ​ 173,335 ​ ​ 173,335 Intercompany balances ​ 1,001 ​ 971 ​ (1,972) ​ — Accounts payable and other liabilities ​ 125,254 ​ 4,392 ​ 17,607 ​ 147,253 Shareholders’ equity ​ 1,273,833 ​ 12,116 ​ (151,571) ​ 1,134,378 Total liabilities and equity ​ $ 12,979,894 ​ $ 17,479 ​ $ 16,806 ​ $ 13,014,179 ​ 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 or liabilities.
Average Wealth Management FTEs were 65.7 for the year ended December 31, 2023, compared to 66.8 for 2022. 54 Table of Contents 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, at December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Wealth Other and ​ ​ (dollars in thousands) ​ Banking ​ Management ​ Eliminations ​ Total 2024: ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 1,015,832 ​ $ 20,668 ​ $ (20,368) ​ $ 1,016,132 Securities AFS, net ​ 1,313,885 ​ — ​ — ​ 1,313,885 Securities HTM, net ​ ​ 712,105 ​ ​ — ​ ​ — ​ ​ 712,105 Loans held for sale ​ 1,285,819 ​ — ​ — ​ 1,285,819 Loans held for investment, net ​ 7,909,091 ​ — ​ — ​ 7,909,091 Investment in FHLB stock ​ 37,869 ​ — ​ — ​ 37,869 Accrued interest receivable ​ ​ 54,804 ​ ​ — ​ ​ — ​ ​ 54,804 Deferred taxes ​ 69,669 ​ (3,004) ​ 9,985 ​ 76,650 Premises and equipment, net ​ 35,492 ​ 178 ​ 136 ​ 35,806 Real estate owned ("REO") ​ 6,210 ​ ​ — ​ ​ — ​ 6,210 Bank owned life insurance ​ ​ 49,993 ​ ​ — ​ ​ — ​ ​ 49,993 Core deposit intangibles ​ 3,558 ​ — ​ — ​ 3,558 Derivative assets ​ ​ 5,086 ​ ​ — ​ ​ — ​ ​ 5,086 Other assets ​ 112,485 ​ 524 ​ 25,248 ​ 138,257 Total assets ​ $ 12,611,898 ​ $ 18,366 ​ $ 15,001 ​ $ 12,645,265 Deposits ​ $ 9,898,339 ​ $ — ​ $ (28,060) ​ $ 9,870,279 Borrowings ​ 1,425,369 ​ — ​ — ​ 1,425,369 Subordinated debt ​ ​ — ​ ​ — ​ ​ 173,459 ​ ​ 173,459 Intercompany balances ​ (1,031) ​ (2,046) ​ 3,077 ​ — Accounts payable and other liabilities ​ 100,549 ​ 2,406 ​ 19,840 ​ 122,795 Shareholders’ equity ​ 1,188,672 ​ 18,006 ​ (153,315) ​ 1,053,363 Total liabilities and equity ​ $ 12,611,898 ​ $ 18,366 ​ $ 15,001 ​ $ 12,645,265 2023: ​ ​ ​ ​ Cash and cash equivalents ​ $ 1,326,237 ​ $ 4,746 ​ $ (4,354) ​ $ 1,326,629 Securities AFS, net ​ 703,226 ​ — ​ — ​ 703,226 Securities HTM, net ​ 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, net ​ 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 ​ 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 or liabilities.
Trust asset balances under advisement remained constant at $1.3 billion as of both December 31, 2023 and 2022. The decrease in loan related fees was due to a decrease in prepayment fees, as early payoffs of loans decreased from year-ago levels.
Trust asset balances under advisement remained constant at $1.3 billion as of both December 31, 2023 and 2022.
The increase in trust fees was due primarily to higher levels of billable assets under advisement. The increase in other income was primarily due to a $1.5 million increase in bank owned life insurance (“BOLI”) income. ​ 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 decrease in loan related fees was largely due to a decrease in prepayment fees, as early payoffs of loans decreased from year-ago levels. Noninterest income for Wealth Management includes fees charged to high net-worth clients for managing their assets and for providing financial planning consulting services.
Treasury and GNMA agency mortgage-backed securities, offset by $174 million in sales of AFS securities, $17.2 million in principal payments and maturities, and $4.0 million in impairment charges during 2023.
Treasury securities, offset by $0.9 billion in sales and maturities of U.S. Treasury securities, $0.2 billion in sales and maturities of agency mortgage-backed securities, and $0.1 billion in principal payments received.
Non owner-occupied CRE loans totaled approximately $586 million and consisted of a diversified mix of retail, office, hospitality, industrial, medical, and other real estate loans. At December 31, 2023, the average LTV ratio for the non-owner occupied CRE portfolio was 46.9%. 57 Table of Contents The loan portfolio is largely concentrated in the geographic markets in which we operate.
At December 31, 2024, $904 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 $565 million and consisted of a diversified mix of retail, office, hospitality, industrial, medical, and other real estate loans.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk For quantitative and qualitative disclosures regarding market risk in the Company’s portfolio, please see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Risk Management in Part II above. ​ 69 Table of Contents
Biggest changeItem 7A. Quantitative and Qualitative Disclosures About Market Risk For quantitative and qualitative disclosures regarding market risk in the Company’s portfolio, please see Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations - Interest Rate Risk Management in Part II above. ​ 70 Table of Contents

Other FFWM 10-K year-over-year comparisons