It’s the end of an era for First Foundation Inc., which rose to the third-largest bank with headquarters in Orange County.
The company, which has several top executives based in its Irvine office, is being acquired by FirstSun Capital Bancorp, the parent of Dallas-based Sunflower Bank, in an all-stock deal valued at $785 million. The combined banks will have total assets of approximately $17 billion.
“This merger strengthens our ability to deliver exceptional financial services and expands our reach across key markets,” First Foundation Chief Executive Tom Shafer said in a statement.
The deal highlights the exodus of local banks with headquarters in Orange County. Earlier this year, Columbia Bank completed its purchase of Pacific Premier Bank, which was formerly the biggest bank here. While Banc of California still lists Santa Ana as its co-headquarters, it’s officially moved to Los Angeles following its purchase of PacWest Bank.
Sunwest Bank is based in Utah, although most of its top executives work in Irvine.
While First Foundation moved its headquarters to Dallas in 2021, it still employs 360 in Orange County.
And in May, it held its annual shareholder meeting at its prior headquarters in Irvine. The First Foundation signage still sits high on its building overlooking the San Diego (405) Freeway near John Wayne Airport.
After the announcement, shares of First Foundation rose 4.7% to $5.81. They had closed the day at $5.55 and a $457 million market cap (NYSE: FFWM). Shares of FirstSun fell 1.95% to $39.45; the company has a $939 million market cap.
The $228M Equity Raise
First Foundation traces its origins to 1990, when Rick Keller began a fee-based investment advisory firm with three other co-founders. In 2007, they started a bank, First Foundation, saying that the financial crisis that was unfolding at that time gave them a golden opportunity to acquire assets that had fallen in value.
First Foundation became a Southern California powerhouse, reaching $13.3 billion in assets on its banking side and more than $5.2 billion in its wealth management unit. The company went public with a market cap that topped $1.5 billion and Keller served for 17 years as its executive chairman (see story, this page).
In the past three years, the bank side of the business ran into trouble as interest rates soared, and its multifamily loan portfolio lost value. Because of problems in its multifamily loan portfolio, the bank reported a loss of $199 million in 2023, a dramatic swing from 2022, when it reported $110.5 million in net income.
Last year, shares of First Foundation fell 24% in the trading session after it announced it intended to raise $228 million from investors, including Fortress Investment Group and Canyon Partners. As part of the deal, the investors bought common and preferred shares at $4.10 a share, a 62% discount to the stock, which at the time was trading at $6.57. The new investors were given 49% of the bank after the deal closed, while existing shareholders saw their stake diluted to 51%.
After the capital raise, Keller and other prominent executives resigned.
The board of directors had a makeover, with six of its 10 members having served since 2024. First Foundation’s chairman is Max Briggs, who has been on the board since 2012.
In November, the company hired Shafer, who has 40 years of banking experience, including as co-president of commercial banking at Huntington Bancshares Inc.
The $785M Deal
The aggregate transaction value, inclusive of the cash consideration being paid to warrant holders, is estimated at $785 million based on FirstSun’s closing price as of Oct. 24.
FirstSun stockholders will own 59.5% and First Foundation stockholders will own 40.5% of the combined company following the merger. The combined holding company and bank will operate under the FirstSun and Sunflower Bank names and brands following the closing of the transaction.
Shafer will serve as vice chairman of the combined company following the closing of the proposed transaction. Five current First Foundation directors will be invited to join the combined company’s board of directors following the closing.
The acquisition will grant Sunflower Bank entry to markets in Southern California and Florida.
“Both organizations have a strong presence in large, vibrant markets, including the highly attractive Southern California region, which remains a key focus for our ongoing growth strategy,” said Mollie Hale Carter, executive chairman of FirstSun and Sunflower Bank.
Founder: First Foundation was a Good Name
Rick Keller, the former chairman and co-founder of First Foundation Inc., revealed that the bank, a couple of years ago, was discussing a possible deal with FirstSun Capital.
“We had negotiated a merger with them in 2022, but it never went forward because of the rapidly rising interest rates,” Keller revealed, adding that a purchase price wasn’t discussed.
The $785 million deal announced last week “was sooner than I thought it would be.”
“It’s a much lower price than I was hoping,” said Keller, who said First Foundation’s book value is about $920 million.
“There is still a lot of meat on the bones.”
He said the investors who invested last year probably made about a 50% return.
“If you’re a shareholder of First Foundation and want exposure to mid-size bank, it will work out well,” said Keller, who said he still owns some shares.
After the acquisition is completed, First Foundation will be known as Sunflower Bank.
“I thought we had a good name,” Keller said. “It will take some time to get used to a new name.
“I’m sorry to see it go, but I do believe in capitalism and the new buyer has the right to do whatever they want.
“That chapter of my life has moved on.”
Keller and his son Zane Keller have opened a Newport Beach wealth management firm, Ducere Wealth, which already has more than $400 million in assets under management.
Keller said he’ll have to find a new license plate, which has the company’s ticker: FFWM.
