Rick Keller, who co-founded First Foundation Inc., is returning to his roots as a wealth manager.
Keller, along with his son Zane Keller, on July 28 officially opened their new wealth management firm, Ducere Wealth, in Newport Beach.
“Sometimes life is like a book, and you get to write the next chapter, and I wanted the next chapter to be positive and be impactful,” Rick told the Business Journal. “My clients are my friends. I wanted to make it work for all of us.”
Rick’s newest venture comes after a tumultuous departure from the company that he co-founded in 1990, turning it into Orange County’s third largest bank with a market cap that once topped $1.5 billion and where he served for 17 years as its executive chairman.
First Foundation has shed much of its top management that once built the company into a regional financial powerhouse, reaching $13.3 billion in assets on its banking side and more than $5.2 billion in its wealth management unit. While the company moved its headquarters in 2021 to Dallas, 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.
Since their shares topped $27 each in 2021, they have steadily declined and at press time, traded around $4.90 and a $404 million market cap (NYSE: FFWM).
Loan Troubles
Rick in 1990 began a fee-based investment advisory firm, Keller Coad & Collins, with Tom Coad, who became known for being the largest private investor in Qualcomm in the 1980s, Victoria Collins, a bestselling author on financial advice, and John Hakopian, who went on to head the company’s wealth management unit. Keller is well known in OC financial circles, having helped the University of California system avoid a meltdown during the 2008 financial crisis.
The four founders in 2007 started a bank, saying that financial crisis that was unfolding at that time gave them a golden opportunity to pick up assets that had fallen in value.
First Foundation hired Scott Kavanaugh, who became CEO in 2009, and the company went public in 2014.
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 portfolio of loans, the bank reported a loss of $199 million in 2023, a dramatic swing from 2022 when it reported $110.5 million 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 a price of $4.10 a share, a 62% discount to the stock that at that 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, Rick and Hakopian resigned, followed by Kavanaugh, who retired in November. Other well-known OC bankers who departed in 2022 included Chief Operating Officer Lindsay Lawrence and President David DePillo.
“It just became apparent that it was no longer a happy place for me,” Rick said. “I felt I needed to find a new opportunity to be able to grow and utilize my services.”
The board of directors has 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 Thomas Shafer, who has 40 years of banking experience, including co-president of commercial banking at Huntington Bancshares Inc.
First Foundation didn’t respond to the Business Journal’s requests for comments on Rick’s new venture. Rick Keller, who has sold most of his shares in First Foundation, said he wishes the company well going forward.
Heavy Regulation Burdens
After Rick left First Foundation, he decided to focus on wealth management rather than banking.
Having two heavily regulated industries under one roof was difficult, he said, noting that while the SEC oversaw investments, the FDIC regulated the banking side.
“The regulatory environment was oversight at a level that I just wasn’t used to as investment advisor,” he said. “I want to get back to working with clients and doing what’s best for my clients and not have to worry about what things I’m doing to satisfy governmental oversight regulations.”
He says his edge is competing against private equity firms that have been rolling up smaller firms in the wealth management industry.
“When you get investors as owners, things shift,” Rick said. “You get in the MBAs who are saying, ‘How do we extract more revenue and profit out of the clients?’
“It’s not necessarily what is absolutely best for the client, so conflicts of interest come in.”
Private Debt Edge
Son Zane, who had also worked at First Foundation in a variety of roles, is Ducere’s chief executive while Rick has taken on the role of chairman and chief economist.
“I’m focusing on what I do best,” the father said.
Besides building stock portfolios, the firm will also be investing in areas like real estate, private equity and venture capital.
His deep knowledge of banking also gives him an edge to invest in private debt deals, an asset that has exploded in popularity in recent years. Private debt lenders can approve a loan of tens of millions of dollars within a month while regular banks may need months, Rick said.
“We’ve seen the private debt world almost replace the banks in these private lendings,” he said. “Banks cannot act as quickly as a private debt firm.”
Ducere, which is Latin for “to guide, lead and educate,” already has seven full-time employees and has the office space to double employee count if needed; it’s also expanding into Las Vegas.
The firm, which is a registered investment advisory (RIA) that avoids conflicts of interest such as selling insurance products, is starting from scratch with a goal of reaching $2 billion in assets. By the end of its first week in business, it had $100 million in assets.
“I think we have the runway to support a multi-billion-dollar RIA,” Zane said.
