First Foundation Inc. reported a net loss for Q4 2025, impacted by merger-related and hedging costs. The company is actively repositioning its balance sheet and preparing for its merger with FirstSun Capital Bancorp, aiming for a more profitable business model and improved return metrics.
Total risk-based capital ratio increased to 15.51% at year end.
positiveCompleted $204.8 million multifamily loan securitization, substantially completing the planned $1.9 billion reduction in the multifamily loan portfolio.
positiveContinued strong credit performance with net charge-offs of only $0.2 million in the quarter.
positiveFirst Foundation Advisors recognized as a Top Registered Advisory Firm by Barron's and named to CNBC FA100 list.
positiveNet loss of $8.0 million for the quarter, or ($0.10) per share (basic and diluted).
negativeTotal revenue of $48.4 million for the quarter, compared to $63.6 million in the prior quarter and $64.7 million in the year-ago quarter.
negativeNet interest margin decreased to 1.36% for the quarter, down from 1.60% in the prior quarter.
negativeEfficiency ratio was 116.9% for the quarter, compared to 90.0% in the prior quarter, indicating higher expenses relative to revenue.
negativeNoninterest expense totaled $62.9 million for the quarter, compared to $57.5 million in the prior quarter, an increase driven by professional services and marketing costs related to merger activity.
attentionNoninterest income was $8.9 million for the quarter, compared to $17.5 million in the prior quarter, primarily due to a $4.7 million income on capital market activities in the prior quarter versus a $1.1 million loss in the current quarter.
attentionMargin expansion indicates improving profitability and operational efficiency. Measured in basis points (bps): 100 bps = 1.0%.
Special items are non-recurring events that may distort period-over-period comparisons. Analysts typically adjust for these when calculating normalized earnings.
The fourth quarter was shaped by our announcement in October of the pending merger with FirstSun Capital Bancorp. Our entire team has been focused on integration planning and preparing to make this next chapter an outstanding experience for our clients, team members, and shareholders.
The announcement gave us the ability to accelerate actions we have previously discussed for our balance sheet transformation. These actions have significantly reduced our reliance on high-cost funding and reduced our loan-to-deposit ratio to 75.3%.
2025 brought significant change to First Foundation’s balance sheet and risk profile. Meaningful progress towards selling $1.9 billion of our multifamily loan portfolio reduced our CRE concentration below 350%; continued focus on reducing our high-dollar, rate-sensitive deposit balances improved our funding profile and in conjunction with targeted hedging strategies brought our structural interest rate risk positioning in line with our peers; our ACL improved to 1.39% of loans; and total risk-based capital ended the year at 15.51%.
Commentary excerpts from earnings call transcripts provide management's perspective on performance, strategy, and outlook. Always review full transcripts for complete context.
Operational metrics provide insight into business drivers and customer engagement beyond traditional financial measures.