First Foundation Inc. Reports $7.7 Million Net Loss in Q2 2025

First Foundation Inc. reported a net loss of $7.7 million for the second quarter of 2025, a significant decline from the net income of $3.1 million recorded in the same quarter of the previous year. This loss translates to a net loss per share of $0.09, compared to earnings of $0.05 per share in the prior year. The company's total interest income decreased to $137.1 million, down from $150.9 million a year earlier, primarily due to a reduction in loan balances and yields. Interest expense also fell to $87.0 million from $107.1 million, contributing to a net interest income of $50.1 million, an increase from $43.8 million in the year-ago quarter.

In terms of overall financial performance, First Foundation's total assets decreased by 8.4% to $11.6 billion as of June 30, 2025, down from $12.6 billion at the end of 2024. This decline was largely attributed to a $1.2 billion drop in total loans, which fell to $7.5 billion, reflecting the company's strategy to reduce exposure to low-coupon fixed-rate loans. The company sold $858 million in multifamily loans held for sale during the quarter, which was part of a broader effort to manage its loan portfolio more effectively. Total liabilities also decreased by 9.1% to $10.5 billion, driven by a $1.3 billion reduction in deposits.

Operationally, First Foundation's customer base and engagement metrics showed mixed results. The company reported a decrease in total loans held for sale, which fell to $476.7 million from $1.3 billion at the end of 2024. The decrease in loans was offset by new loan fundings of $436 million during the first half of 2025. The company’s loan-to-deposit ratio remained stable at 93.4%, indicating a consistent balance between loans and deposits. However, the overall number of employees increased slightly, reflecting the company's investment in staffing to support its strategic initiatives.

Looking ahead, First Foundation's management expressed a cautious outlook, emphasizing the need to navigate the current economic environment and interest rate fluctuations. The company is actively working to enhance its internal controls and financial oversight processes, particularly in relation to its allowance for credit losses. The management is also focused on improving profitability by reducing high-cost deposits and reallocating resources to higher-yielding assets. The company’s capital ratios remain strong, with a common equity tier 1 ratio of 11.08% as of June 30, 2025, well above the regulatory minimum requirements.