Greetings and welcome to First Foundation's Strategic update call. Today's call is being recorded. Speaking today will be Scott Kavanaugh, First Foundation's President and Chief Executive Officer, Jamie Britton, First Foundation's Chief Financial Officer, and Chris Naghibi, Chief Operating Officer. Before I hand the call over to Scott, please note that management will make certain predictive statements during today's call that reflect their current views and expectations about the company's performance and financial results. These forward-looking statements are made subject to the Safe Harbor statement included in today's accompanying investor presentation. In addition, some of the discussion may include non-GAAP financial measures. For a more complete discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements and reconciliations of non-GAAP financial measures, please see the company's filings with the Securities and Exchange Commission. Now I would like to turn the call over to President and CEO Scott Kavanaugh. Good afternoon. Sorry for the delay. We had some technical issues associated with the link to this call, so sorry for those that are just now getting in or still delayed in getting in. But thank you and good afternoon, everyone, and thank you all for joining First Foundation's management for this afternoon's conference call. Today I'm joined by Jamie Britton, our CFO, and Chris Naghibi, our Chief Operating Officer. We are very much appreciative of you joining us for a discussion about today's important strategic capital raise and key changes at our organization. We are proud to announce that we have reached agreement with several experienced bank investors to raise $228 million of capital. This meaningful investment in our bank is anchored by Fortress Investment Group and Canyon Partners, who invest approximately $115 million and $46 million, respectively. The investors, along with their third-party advisors, performed months of in-depth due diligence on our institution and concluded that with a significant strengthening of our balance sheet and capital position, this company has been a foundation to return to being a high-performance regional bank. Between Texas, Florida, and California, we are in extremely desirable markets with boundless opportunities for growth. First Foundation is big enough to compete, yet small enough to be nimble. The fact that Fortress, Canyon, and many other investors came to this conclusion is an incredible vote of confidence, not only in our leadership team and reconstituted board, but also in our ability to transform the bank into a current challenging environment and take advantage of the many opportunities in our markets. In addition to Fortress and Canyon's financial commitments, we secured capital commitments from an impressive set of investors backed by some of the most respected and talented people in the industry for another $67 million of capital. With this additional capital, we are now confident that we will be able to refocus our balance sheet, reduce multifamily concentrations over time, continue to grow our C&I platform, increase our ACL, and materially strengthen earnings. This capital infusion will provide us the opportunity to return to a posture towards offense. We are also making key changes to our board of directors at the bank and hope, with regulatory approval, to have these changes take effect at the whole company as well. We plan to reduce the overall size of the board to nine and add four new bank-level board members at the close of this transaction. Our first new addition will be Simone Lagomarsino, who many of you already know and who I've had a very good long-standing relationship with. Simone, and she personally has over three decades of banking leadership experience in Southern California and is the former chair of the board of directors of the Federal Home Loan Bank of San Francisco. Simone will also be joining our executive leadership team as president of the bank. We are happy to also welcome three additional board members at the bank, including Hennessy Inden of Fortress, Sam Edelson, designated by Canyon, and Ben Kovach of Strategic Value Bank Partners. Each brings a high degree of financial expertise to our company and a significant understanding of its current challenges and opportunities. We look forward to their contributions. Finally, I also want to thank all of our valued employees across the company for being so focused on our client success. Your efforts are unbelievable, and we know the best is yet to come. With that, we are happy to answer questions. So, Operator, I'm happy to turn it back to you. Thank you. We will now begin the question and answer session. In order to ask a question, press star followed by the number one on your telephone keypad. Next question in David Feaster with Raymond James. Please go ahead. Hey, good afternoon, everybody. Hey, David. Maybe if we could just touch on you talk about the flexibility to rebalance the multifamily concentration, and it sounds like you're looking at some potential sales. Could you talk about what you're considering and how demand, what's the market like for some of those assets at this point? Sure. We have a business plan, and it's one that we intend on really rolling out more in our second quarter earnings. I think that's July 25th. But the intent, David, is we want to take some of our multi-family loans and shift them into available for sale, take a mark-to-market. But we want to be very thoughtful about the process of how we consider any type of sale that would ultimately lead to any potential loss from selling those loans. We believe we've got a pretty clear path set out that we're working on currently to do so. But by moving those into available for sale, that gives us the flexibility to evaluate and continue to review and consider the sale of some of those to further reduce our multi-family concentration. Okay. And you touched maybe you could touch on credit a bit more broadly and the need to increase the allowance. I mean, credit's been really strong. Has anything changed there? And where do you think the allowance needs to be? Where would you be more comfortable? Chris, you want to handle that? Hey, David. Yeah, to your point, credit has been very strong for us historically since the inception of the institution, and our credit loss profile has been exemplary. As a result, historically, we've had to rely on the outside metrics. So certainly, one of the things that's been difficult with CECL's rollout was to have some outward acquisition or origination of loans, a loss to be measured against. We understand where our peers are in the community it is. So one of the things we want to be thoughtful of is recognizing what potential could be out there. I think the mistake the market makes, frankly, is there is a disconnect from interest rate risk and actual credit risk. Our underwriting performance has been spectacular. There hasn't been any degradation. And I think that, frankly, this entire transaction with the due diligence we went through for months has been nothing but supportive of the fact that we believe the portfolio continues to be strong, will continue to perform strongly. And anecdotally, one thing I'll add as well as it relates to desirability on the secondary market is that we do predominantly multi-family workforce housing, as you've heard me say on previous calls. That product is much more desirable on the secondary market to sell. So I wouldn't anticipate it to perform like similarly situated asset classes in sectors of sold, so. Yeah. To be very clear, David, and thank you for asking the question, there has been no degradation in our credit whatsoever. We've been honest about the fact that some of these multi-family loans are on the lower yielding side, which has led to a decline in our earnings. And so to move these to a position that we can evaluate whether or not we should consider a sale, we believe that that's hugely important. But I think as we continue to focus to rebalance the balance sheet more into C&I lending and less into the lower yielding multi-family, it's going to get us back to earnings in a much quicker fashion. I guess to that point, I mean, you talk in the slide deck about this materially strengthening earnings and profitability. I guess could you talk about what your targets are from a profitability standpoint and maybe the timeline to where you think you can get back to more reasonable levels of profitability? Yeah. I think in discussions with some of the investors that have been had, our goal is to try to get back to a 1% ROAA by the end of 2026. We believe that what we plan on rolling out to everyone in a much more detailed fashion in our earnings call will demonstrate how we believe we can get there. Okay. All right. Thanks, everybody. The next question comes from the line of Gary Tenner with D.A. Davidson. Please go ahead. Thanks. So just a quick follow-up on something you just said and make sure I heard it correctly, Scott. Did you say the goal is 1% ROA by the end of 2026? Correct. Okay. All right. Just want to make sure I heard that correctly. Wondering if you could provide any thoughts on kind of where the trends have been. I know you're going to report earnings in a couple of weeks, but given that you've made this capital raise, kind of trends on the funding side in the second quarter? Trends. I'm sorry. In what fashion, Gary? Mix. The ability to improve the. Oh, you mean composition of the loan portfolio? The deposit mix. I'm talking about the funding side. Oh, the funding side. The funding side really hasn't changed much. I mean, I would tell you that we've had, and I'll let Jamie kind of step in here, but we had a fair number of core deposits come back this particular quarter. I think we alluded to that on the last earnings call. And I think you're going to find out our loans-to-deposits ratio is slightly improved. Our credit metrics are similar to what they were last quarter. So we're continuing to really focus on retaining and strengthening our core deposits. And we've been able to do that. Yeah. Great question, Gary. I mean, like Scott said, we have had core deposits continue to come in this quarter. Part of that is just the normal seasonal return of the MSR-related deposits in addition to the seasonal activity. We mentioned, I believe, on the Q4 call in January that we had one of our relationships pull out some deposits while they did a risk review. That was completed favorable to First Foundation, and they ended up bringing back a significant amount of those deposits in the second quarter. So we're really proud of that. Other customers have returned, and we've seen stability in the other channels of the core deposit base. We'll mention there's just one element of our brokered deposits. Because of the hedge that we have in place, we do at times look for opportunities to optimize costs between different forms of wholesale funding that serve as the underlying for the swap. And that'll go back and forth between short-term FHLB borrowings and short-term brokered deposits as opportunities present themselves. So you may see some adjustment there. But the return of core deposits has been as strong as we hoped and as we communicated in the first quarter call in April. Great. Appreciate that. If I could ask one more just quick question on the capital raise transaction itself. It reads pretty clearly that the Series B preferred convert when you get the stockholder approvals in terms of your number of shares to be issued. The Series A text doesn't read quite the same. So I just want to make sure I understand kind of the expectations on that piece converting. I would direct you to the 8-K, Gary, just to make sure that it's clarified. There is a significant amount of information provided there. But we did provide capital ratios and coverage ratios, concentration ratios in the presentation to show what ratios would be on a fully converted basis. The structure is similar to other precedent transactions that have recently occurred in the market. All right. Thank you. The next question comes from the line of Andrew Terrell with Stephens. Please go ahead. Hey, good afternoon. Hey. Hey, Andrew. Maybe just to circle back on, I mean, you kind of mentioned the presentation, building the allowance position, and we can obviously see where it's at as of the first quarter. I mean, near term, can you help us out with some goalposts to where you would, I guess, like to take the allowance to over the near term? I get it obviously shifts as the composition of the loan book shifts. But should we expect material reserve builds in the short term? That's an ongoing dialogue with our new auditors. We're going to continue to have that dialogue. To be crystal clear, as I think Chris was mentioning, we believe our reserves are adequate, bottom line. In this cycle that the banking sector seems to be in right now, I think most people would say that our reserves appear low. We don't believe so. We believe it is a prudent thing to try to increase the reserves to get higher. I think we'll probably be in a position, Andrew, to have a greater dialogue on that at the earnings call once we've finalized our discussions with our auditors. But I think the great takeaway should be from investors is that we are willing to throw more reserves into the qualitative side just in order to bring up with what we believe will be unnecessary builds in ACL, but one that we believe the street has looked at and said it should be higher. Yep. Okay. And then on the, I see the CET1 pro forma for the raise of 12.6 up from 10.2 in the first quarter. And thanks for providing that. How should we think about minimum level of CET1 or whatever the most kind of binding or the kind of binding metric in your mind? Just where should we think about the minimum level you guys are willing to manage capital at as we kind of play around with exploring potential asset sales? We can provide more detail on that when we roll out the business plan and maybe some information in the 2Q earnings call at the end of the month. I think similar to peers, 9.5%-10% CET1 should be a reasonable minimum to guide to medium to longer term. Okay. Understood. If I could just sneak one more in, kind of bigger picture about the quarter, do you feel like earnings troughed in the first quarter, or is it fair to think we could see a step lower here in 2Q? No, it's earnings troughed in the first quarter, consistent with what we said in the last earnings call. We truly believe that earnings have troughed in that first quarter. The second quarter will be a little bit more favorable. But obviously, with the capital raise, we believe we're going to put ourselves into a position of returning to a much higher profitability profile over a fairly short period of time. Yep. Okay. Thanks for taking the questions. The next question comes from the line of Matthew Clark with Piper Sandler. Please go ahead. Hey, good afternoon, everyone. Hey. Hey, Matthew. The $10.15 pro forma tangible book, does that include the impact of the warrants? It does not. Okay. And it's $22.2 million warrants that would be up there. And the exercise price, I think, is what, $5.125. Any mandatory exercise price there? I'm not sure I follow the question. A mandatory exercise price? Well, I'm just trying to get a sense for the strike versus the mandatory, just to figure out what the net amount of warrants would become outstanding. Because it wouldn't be the, I assume it wouldn't be the full $22.2 million. Correct. They'll be net settled. They have a lockup period. They're 7-year warrants. On a fully diluted basis, if you converted all of them, tangible book would be around $8.70. Okay. Thank you. And then just if you could provide some commentary around the background of how this came together. I mean, a bit of a disconnect between the $10.15 and the $4.10 at which you're raising capital at. Obviously, there's some marks you're going to take with moving loans and selling loans. But just want to get a sense for was this more regulatory driven? I mean, credit clearly is not an issue, but concentrations are just trying to get more color around the background of how this all came together and whether or not it was somewhat regulatory driven. No. Absolutely not. It was definitely not regulatory driven. That's the first thing. The second thing is that when you look at FFWM stock price, it's been battered for some time as the earnings decrease. I was presented with the opportunity to engage with some high-profile and extremely experienced bank investors. And as I surveyed it and talked to some of the investors out there, we started having a dialogue at the board level and felt that it was a prudent thing to do to shore up and make sure that we believe we had adequate capital ratios at a point. We've always had very low AOCI. So our capital ratios have always been pretty significant. You mentioned or touched on credit. And so we've always had strong credit, which is absolutely the truth. And you'll see that in the earnings coming up. But an opportunity to put ourselves back to a point where we can get ourselves back to a strong profitability over a shorter period of time, the board felt like that that was a prudent thing to do. As we said, taking some of the lower-yielding multifamily, considering selling those, or possibly doing some type of structured product, we think has some merit behind it. But it would also be one that we would like to make sure that we feel we're strongly capitalized. And this definitely ensures that. Matthew, while Scott was answering that question, I was able to confirm there's no mandatory exercise to answer that question. Okay. Yeah. I'm just trying to get at kind of a fully loaded pro forma share account to the extent if and when those warrants get net settled. But I guess we can back into it. Okay. And then last one for me, just on the commercial real estate concentration. It comes down with the raise. But what's the plan? I mean, is there an appetite or desire to get to 300% or lower? And And over what kind of time period? I think over a period of time. First of all, I'm glad you kind of brought that up. We've had great success in the few loans that actually are rolling. We've had tremendous success rolling a lot of our multifamily into 2.80 to 3.25 to 3.50 increases in margin on the loans that we've had. And we believe that that's going to continue. We've given you what the roll dates are. And obviously, a lot of these tend to roll in 2026 and 2027. But the experience that we've had so far in rolling these has been tremendous. Yesterday, we just lost a multifamily loan that was on our own balance sheet that was priced out at another institution lower than 5.5%, which astounds me. And we were more than happy to let that roll off the balance sheet. So this is why I think it's important that you don't just go and try to sell the product. I think you have to be thoughtful about how you do this. But the answer is that there's still a tremendous amount of equity in our multifamily product. And we're going to continue to work that. But our goal is to bring and I think we'll talk about it further at the end of the or at the earnings call. But I believe we demonstrate to ourselves, at least, that we can get sub-400 sometime next year. Okay. Great. Thank you. I will now turn the call back over to Scott Kavanaugh for closing remarks. Please go ahead. Thank you so much. We're very proud of the team that has worked on this. We're very thankful to our investors. I think what I would tell you is there has been a tremendous amount of due diligence done. It's a real testament that these folks were willing to put their capital in and stand behind us. We know that we can get our earnings back up in a fairly short period of time. With that, thank you. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.