Greetings, and welcome to First Foundation's First Quarter 2024 Earnings Conference 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 earnings release. 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. And now I would like to turn the call over to President and CEO, Scott Kavanaugh. Please go ahead.

Good morning, and welcome, everyone. Thank you for joining us for today's first quarter 2024 earnings call. As the banking industry continues to face headwinds and a continued inverted yield curve, I am proud of our team for the effort put forth to make the company stronger. I have never felt as comfortable with a management team in my entire career as I feel with the team that we currently have in place. Once again, we were able to improve our loans-to-deposit ratio, maintain overall loan yield and continued the process of improving the sensitivity of our balance sheet to changing interest rates. Most importantly, we took great strides to improve recurring revenue and reduced core expenses to increase future profitability. First Foundation Advisors closed the quarter at near record assets under management and the trust department posted another good quarter. For the first quarter, we reported net income attributable to common shareholders of $793,000 or $0.014 per share for the basic and diluted shares. Tangible book value, which is a non-GAAP measure, ended the quarter up $0.05 from the fourth quarter of 2023 and ended at $16.35. Pretax pre-provision revenue totaled $0.5 million, essentially unchanged from the fourth quarter. Interest income totaled $150.5 million for the quarter, compared to $146.6 million as of December 31, 2023, and $137 million for the first quarter of 2023. Noninterest income as a percentage of total revenue was 25% for the quarter, compared to 25% for the fourth quarter of 2023. Our net interest margin was 1.17% as compared to 1.36% for the fourth quarter of 2023. This was largely driven by the return of MSR deposits returning later in the quarter as opposed to earlier in the quarter. Noninterest expense decreased to $50.6 million in the quarter compared to $55.9 million in the prior quarter. Our efficiency ratio improved to 98.4%, compared to 98.5% for the fourth quarter of 2023. Adjusted return on assets, again, another non-GAAP measure, ended the quarter at 0.03% compared to 0.09% as of December 31, 2023. Our loan-to-deposit ratio improved to 94.8% in the quarter compared to 95.2% as of December 31, 2023. This was largely driven by an increase in core deposits late in the quarter. We remain committed to continuing to improve this ratio through a combination of strategically reducing lower-yielding loan balances and continuing to grow core relationship deposits. I just returned from Florida visiting our branches and I am extremely encouraged by the growth we are experiencing in many of those branches and throughout our entire branch network. Our deposit pipeline remains robust into the second quarter. Management made a strategic decision to exit the equipment finance operations late in the first quarter. As most of these loans were originated using third parties we felt that it did not fit our overall goals of getting back to our roots of relationship banking. We still will be able to accommodate our valued clients' needs as necessary for any of their equipment financing needs. We currently plan to continue servicing the remaining loan portfolio, but exiting the space will provide approximately $1.5 million in annualized cost savings. Total deposits were $10.64 billion in the quarter compared to $10.69 billion in the fourth quarter. Core non-brokered deposits increased to 64% during the quarter compared to 60% in the fourth quarter of 2023. Noninterest-bearing demand deposits increased to 17% for the quarter compared to 14% of the deposits in the fourth quarter of last year. As I indicated earlier, our deposit pipeline remains healthy, with most of the pipeline being in the noninterest-bearing category. Our insured and collateralized deposits were at 85% of total deposits at the end of the quarter compared to 87% of total deposits in the fourth quarter. We maintained a strong liquidity position of $4.4 billion. At these levels, our liquidity to uninsured and uncollateralized deposits ratio was 2.7x. Borrowings were $1.7 billion as of March 31, 2024, compared to $1.4 billion at the end of the fourth quarter. Average borrowings outstanding were $1.6 billion or 11.8% of total average assets for the quarter, compared to $1.1 billion or 8.7% of total average deposits for the prior quarter. The increased average borrowings from the prior quarter were used to enhance on-balance sheet liquidity, as cash and cash equivalents increased to 11.7% at the end of the first quarter from 10% at the end of the fourth quarter of last year. Credit quality continues to serve as a crucial differentiator for First Foundation. Our nonperforming assets to total assets was 0.18% at the end of the first quarter, compared to 0.15% as of December 31, 2023. Loan balances ended the quarter at $10.1 billion, a reduction of $100 million compared to December 31, 2023. It is important to note that loans would have grown for the quarter, but we had several C&I loans totaling approximately $200 million pushed into the second quarter. Many of these loans have already funded or will fund in the next several weeks. These additional C&I loans will have a net spread of over 3%. Multifamily remains a strong asset class for the bank. Our underwriting on these loans has never wavered since the company's inception. This sector of the CRE gained refocused attention in the first quarter with events on the East Coast. Chris will provide significant detail on this segment later in the call. First Foundation Advisors grew approximately $200 million to end the first quarter at $5.5 billion compared to $5.3 billion at December 31. Our pipeline of new relationships remains strong. Assets under advisement at FFB's Trust department was $1.2 billion for the quarter, compared to $1.3 billion in the fourth quarter. During the quarter, management worked diligently to build additional recurring revenue. Most of the revenue generation was added in the middle of the first quarter or as I mentioned funded at the beginning of the second quarter, so the full benefits were not reflected during the first quarter. This included adding investment securities to our AFS portfolio and swapping rates to fix a spread and adding additional C&I loans and core deposits. We will continue to strategically add hedges to both improve recurring revenues and reduce our interest rate sensitivity. Jamie will provide greater insight on this section. Once again, I will close by reiterating my appreciation for the incredible efforts and unwavering dedication of our entire team. I will now turn the call over to Jamie to cover the financials in greater detail.

Thank you, Scott. I'll start with the balance sheet and our net interest margin. As Scott mentioned, NIM contracted 19 basis points during the quarter from 1.36% in the fourth to 1.17% in the first. There's another slight improvement in our earning asset yield this quarter, which increased from 4.62% in Q4 to 4.64% in Q1. Earning asset yields begin with loan yields, which remained stable at 4.7%. The held-to-maturity portfolio yield improved slightly by 2 basis points, while the yield on the available-for-sale portfolio declined modestly by 7 basis points as we continue to reposition the investment portfolio to support our liquidity position, improve the balance sheet rate profile and more efficiently enhance recurring revenue. There were several factors contributing to the change in the AFS portfolio yield but the most noteworthy was taking advantage of the market's early quarter optimism for declining rates by adding securities in conjunction with new short-term funding, which we swapped to a more attractive longer-term fixed rate. This transaction provides additional rate insensitive recurring revenue and due to the execution timing several weeks into the first quarter, we expect it to provide additional benefit in the second and beyond. As I mentioned, we are open to acquiring safe, highly liquid securities at attractive yields and considering transactions that help us achieve our desired long-term interest rate risk profile and mitigate the earnings risk of future short-term rate increases. To the extent we can use some of our improving capital position to enhance recurring revenue in this type of safe and prudent way, all the better. Moving to the right-hand side of the balance sheet, the most important thing to highlight is the seasonal nature of our noninterest-bearing deposit portfolio and its MSR escrow balances which began their normal annual outflows later in the fourth quarter before beginning to rebuild late in the first. As we noted on last quarter's call, amidst the seasonal transition, we also had some balances leave the bank due to our customers' desire to diversify their exposure across additional banks. This, too, drove some of the quarter-over-quarter decline we saw in average balances. We appreciate our customers' proactive approach to their own risk management and welcome the improved diversification it provides in our own deposit portfolio as well. We believe the strong multiproduct relationships we foster in this business are contributing to its overall growth and we fully expect more deposit balances to continue building in the second quarter. Accompanying the decline in average noninterest-bearing deposits was another quarterly decline in customer service costs, which we have seen decline from $24.7 million in the third quarter of '23 to $16.4 million last quarter and only $10.7 million in the first. As we've discussed previously, the mix to interest-bearing liabilities, which we secure to replace declining noninterest-bearing balances, will begin to weigh on our net interest margin, and it was a factor again this quarter. But the quarter's balance sheet actions overall were net accretive to earnings when considering both net interest income and customer service costs. Given the holistic nature of these relationships, we are comfortable with the seasonal fluctuations they will cause in our margin. Interest-bearing liability costs increased modestly this quarter from 4.19% in the fourth to 4.24% in the first. Though borrowing costs remained relatively stable, interest-bearing deposit costs increased by 7 basis points to 4.28%. Factors included an increase in our mix of higher-cost deposits, which, as I mentioned a moment ago, we're used to absorb the seasonal declines in noninterest-bearing MSR balances. Additional client migration to higher-rate products such as CDs ahead of potential declines in short-term market rates and continued competition in the market for balances driving rate accommodations in the retail channel. We remain pleased with our retail business' performance and believe it is an important driver of our long-term success despite the modest increases it may continue to drive in the bank's deposit costs near term. Stepping back to consider overall deposit costs, monthly trends exited the quarter favorably. A majority of our products showed improvement throughout the quarter and March's total interest-bearing deposit costs were in line with the quarterly average of 4.28%. We have improved our monitoring and analytics in this area, and our teams are working as proactively as possible to hold the line while we wait for greater certainty in the rate market. As you will see, we continue to make progress on strengthening our balance sheet both our on-hand liquidity and our capital positions are much stronger than they were before we entered this phase of market uncertainty. And as Scott mentioned, our focus on full relationship banking is paying dividends in terms of recurring revenue and earnings stability. The new securities we added in conjunction with swapped fixed-rate funding over $150 million of outstanding loan balances fully self-funded by customer deposits at a 3% spread. And the savings gained by exiting the Equipment Finance business will generate almost $13 million of recurring annualized pre-provision net revenue. We will continue to monitor the rate environment for opportunities to take advantage of our liability sensitivity and pivot towards a more sustainable long-term interest rate risk profile, but our continued focus on relationship banking and day-to-day execution will continue to be the keys to drive long-term shareholder value. We're encouraged by our successes in the first quarter as well as here in the start of the second, and we remain optimistic on the year ahead. Moving to the income statement. Interest income continued to grow, ending the quarter at $150.5 million versus $146.6 million realized in the fourth. As discussed, interest expense was added to account for the quarterly declines in average noninterest-bearing MSR deposit balances. Though this drove a 19-basis-point reduction in our net interest margin and a $4.1 million decline in net interest income when considering the concurrent $5.7 million decline in customer service costs the balance sheet's overall contribution to pretax pre-provision net revenue improved for the quarter. We expect the net interest income to benefit from increasing noninterest-bearing deposit balances in the second quarter, but more importantly, we believe the actions we are taking to improve recurring revenue will continue to enhance balance sheet contribution. Moving to the rest of the income statement. Wealth and trust-related fees were flat for the quarter at $8.6 million, as Scott mentioned, however, AUM continued its strong performance, increasing point-to-point again this quarter and exceeding the $200 million of growth seen in the fourth. AUM ended the quarter at $5.5 billion, $300 million higher than at year-end 2023 and $500 million higher than at the end of the third quarter. We are encouraged by the FFA team's continued success and look forward to taking our history of exceptional proven customer service to the high-growth Texas and Florida markets. Outside of customer service costs, remaining noninterest expense categories totaled $39.9 million for the quarter, modestly higher than the fourth quarter's $39.5 million. As expected, compensation and benefits increased this quarter as a result of annual adjustments and tax resets, while all other categories saw modest quarter-over-quarter declines. Maintaining core expenses at responsible levels remains a focus. And as I mentioned, we expect the decisions made to exit equipment finance to mitigate growth here. As Scott and I have mentioned several times, the entire organization is laser-focused on improving operating efficiency and controlling these discretionary costs. First Foundation made some very difficult decisions in 2023 to reduce expenses during the market's volatility. As profitability returns, taking advantage of the opportunities available in North Texas and Southwest Florida will require measured investment but holding aside customer service costs, we intend to maintain our best-in-class expense to assets ratio. Moving finally to capital liquidity. We expect another significant improvement in First Foundation's total risk-based capital ratio, which we estimate will be 12.49% and or 22 basis points higher than that in Q4, and 105 basis points higher than its Q1 2023 level. We believe our strong capital base positions us well for growth, once uncertainty around the economic environment subsides. It also provides a relatively strong risk capital balance versus peers when considering our held-to-maturity portfolio's favorable after-tax unrealized loss position of $60.1 million or only 6.6% of tangible common equity, which is slightly higher than last quarter, but still well positioned relative to peers. And second, our strong liquidity position and low levels of uninsured and uncollateralized deposits, which, as a reminder, are those that prove to be the most vulnerable during times of significant stress. As noted, our uninsured and uncollateralized deposits stand at only 15% of total deposits, and this will continue to improve through the year as MSR-related deposit balances return. As I mentioned before, we are pleased with the stability we have achieved in our liquidity position and we are comfortable with the level of on-balance sheet liquidity we are holding today and confident our total available liquidity of 2.7x uninsured and uncollateralized deposits is more than sufficient to mitigate risk should market volatility return. I echo Scott's comments on the team's continued efforts and dedication to First Foundation, and I remain confident we are positioned for success moving forward. With that, I'll now turn it over to Chris to provide additional detail on our loan portfolio, asset quality and important distinctions and opportunities within our multifamily portfolio.

Thank you, Jamie. I will be spending a fair amount of time addressing our multifamily portfolio, our reserves and the benefits of rent control in the marketplace that are being wildly misunderstood by the market. I will also speak to the stability and growth of our deposit franchise. As quarter-over-quarter comparison illustrates, we continue to reduce our multifamily concentration exposure by leveraging our existing robust C&I platform to diversify into index plus margin-based product. This renewed relationship prioritized focus has yielded quarter-over-quarter deposit growth and truly signals the strategic pivot and return to our core ethos of a franchise value driven by relationships and not transactions. We continue to be committed to a healthy gradual cadence of an increasing CECL reserve, which will be a natural byproduct of greater C&I growth in the portfolio. Characteristics of the C&I asset class as well as the historical data support greater reserves for C&I product than those for multifamily real estate. I will be discussing this specifically as it relates to multifamily in detail shortly. For now, let us quickly summarize the metrics of our diverse and strong loan portfolio, which as of March 31, 2024, remains composed of 51.9% multifamily loans down from its height of approximately 54% as of Q3 2022, 32% commercial business loans, including owner-occupied commercial real estate and legacy equipment finance compared to approximately 28% as of Q4 2022. 9% consumer and single-family residential loans, 6% non-owner-occupied commercial real estate and approximately 1% of land and construction loans. Loan fundings continue to be comprised of primarily high-quality adjustable rate C&I, SBA and mortgage lending totaling $302 million for the first quarter offset by loan paydowns and payoffs of $393 million in the quarter as lower yielding fixed rate loans continue to pay down, you can anticipate seeing the benefits in the net interest margin as well as the aforementioned reserve increasing. Driving down our commercial real estate exposure to yield a greater balance between fixed and variable rate lending will take a measured long-term approach. As a reminder, over the near term, we are taking a cautious protectionary lending approach with our existing multifamily portfolio. And as a result, the fixed-rate portion of the portfolio will comprise a smaller and smaller percentage of the whole. Given the relatively short duration of the multifamily asset class, which is less than 2 years, the cash flow focus of most investors, we anticipate a future benefit of anticipated repricing activity. As shown in a new slide within the investor presentation, we believe the repricing opportunity in a higher rate environment is meaningful, and we are proactively working with our clients to ensure they are prepared well in advance of considering their alternatives. On a long-term basis, we need to be, and we will be more diversified overall on all our underlying assets. Despite regional pressures in rhetoric around certain geographical challenges in multifamily housing, we remain confident in the asset class, particularly our unique workforce housing exposure within the broadly defined sector. On previous calls, you have heard our teams speak to the value of workforce housing in the face of record low housing affordability. I want to spend some time here and break down the nuances of the asset class with a focus on our California concentration, and specifically, Los Angeles County, where approximately 51% of our multifamily real estate portfolio is concentrated as a proxy for the widespread misunderstanding contributing to unfounded comparisons to different markets. Workforce housing refers to residential units that are affordably priced for middle-income workers such as teachers, firefighters and health care workers who are essential to the functioning of a local economy in our primary lending area. These housing units are typically priced to be affordable for individuals and families earning between 60% and 120% of the area median income. Looking at Los Angeles County, as an example, as of 2023, the area median income for a 4-person household was set to $100,900 by the Los Angeles County Planning Authority. The goal of workforce housing is to provide housing options that are within a reasonable cost range, allowing these workers to live near their places of employment. This is not only beneficial for the employees but also supports the overall economic health and sustainability of our communities. As a financial institution, our investment in workforce housing represents a strategic opportunity to foster community development while stabilizing our asset base with real estate that historically has evidenced steady demand through economic cycles. Going on the real estate offensive, Blackstone's $10 billion acquisition of private Apartment Income REIT, an owner of upscale apartment buildings is Blackstone's largest transaction in the multifamily market according to the Wall Street Journal. AIR Communities has the portfolio of underlying assets primarily in coastal communities like Boston, Miami and Los Angeles. As I mentioned a moment ago, approximately 51% of First Foundation Bank's portfolio of multifamily residential is located in Los Angeles County. These assets have a current weighted average loan-to-value of 54.8% with a conservative best-in-class underwritten weighted average current principal and interest debt service coverage ratio of 1.36x. If we can learn anything from the behaviors in the market right now, it is that CRE and multifamily pricing indices based on stock prices are not always the best proxies for real-world valuations. Blackstone's CEO, Jon Gray, has even gone so far in recent months to make the case that commercial real estate prices were bottoming and that now is a "good time to buy." A view that according to Rental Housing Economist, Jay Parsons is increasingly accepted in multifamily, where the consensus outlook now seems to be that multifamily is well positioned for growth by 2025 through 2026 after working through a multi-decade high supply wave. This is on the heels of U.S. apartments posting the strongest Q1 leasing demand in 20-plus years following a healthier than anticipated Q4 2023 according to real data. From a historical perspective, Moody's Analytics data highlights that the lowest occupancy rate in Los Angeles since 2007 has been 95.20% which occurred in 2009 and as of 2023, the occupancy rate was approximately 96.80%. During this time, asking rents have increased in all but 3 years, 2009, 2020 and 2023 which saw decreases of negative 4%, negative 4% and negative 2.3%, respectively. Asking rents in aggregate from 2007 to 2023, including these decreases totaled approximately 59.3% or an average increase of 3.49% per year. Strong occupancy and steady rent increases are obviously very positive for multifamily and a couple of the reasons First Foundation Bank has never experienced a loss in its multifamily portfolio. Across the same 17-year Moody's analysis period for all California commercial banks average net losses in multifamily were reported in only 5 years, 2008, 2009, 2010, 2011 and 2012 with losses of 0.03%, 0.2%, 0.29%, 0.13% and 0.03% respectively. These losses came at a time when the Great Recession had exposed some liberal underwriting standards, including underwriting to pro forma rents, underwriting to low or even breakeven debt service coverage ratios and/or underwriting to the subject property without considering sponsorship. At no point in First Foundation's history has the bank ever underwritten with anything other than its stable, conservative time-tested methodology. This includes a lower of in-place or market rents, averaging historical repairs and maintenance of a period no less than 2 years, the greater of actual vacancy or market vacancy and grossed up expense costs. The bank underwrites to full principal and interest payments even for interest-only loans, and the bank underwrites a sponsorship on all nonrecourse loans. As a reminder, California is a single action state under California's One-Action Rule, a lender can only take one action against you, whether it is to conduct a trustee sale, sue on the promissory note for the balance of the debt or judicially foreclose. This saves a tremendous amount of time in the worst-case event scenario of a default when compared to many other states. Another question we received is whether we stressed expenses enough during the underwriting, as there has been a lot of conjecture about expense increases in the state of California, particularly insurance and taxes, which many falsely believe will guarantee degraded cash flow over time. I wish I could say California has ever been a cheap state to insure in, it has not. Wildfires, flooding and earthquakes have long impacted the state and insurance costs have reflected this for decades. Regions like Florida and Texas have seen significant increases with average insurance cost per unit growing approximately 37% and 43%, respectively, from 2020 to 2022. California's insurance market is tightly regulated with Proposition 103 passed by voters on November 8, 1988, requiring insurers to obtain state approval for rate changes. This regulation can and does influence the overall insurance cost landscape, but it didn't stop the average insurance cost per unit for multifamily apartments from jumping approximately 33% over the 3-year period from 2020 to 2022. While impactful to bank's underwriting pro forma insurance coverage in California assumes no less than a 20% or more increase per year for a new loan. When it comes to taxes, Proposition 13 passed by California voters in 1978 significantly impacts all real estate properties in California, including multifamily apartments. Its primary effects are on the property tax rate assessment procedures and reassessment timelines, which have broad implications for property owners, including First Foundation's customers owning and managing multifamily apartment buildings. Proposition 13 capped the annual real estate property tax at 1% of the assessed value plus any voter-approved local taxes and assessments. This cap applies to multifamily apartments providing a predictable tax expense for property owners by limiting how much property taxes can increase each year, Proposition 13 has made it somewhat more feasible for investors to hold on to multifamily properties over the long term, without facing significant tax hikes providing for predictable future expense figures and is an incentive to hold assets long term. The proposition also restricts the assessment of property values to when the property is bought, newly constructed or undergoes a change in ownership. For multifamily apartments, this means that the property tax basis is essentially set at the time of purchase and only increases at a maximum of 2% per year until the property is sold or significantly renovated. This also means that the repairs and maintenance figures for capital expenditures averaged over 2 years or more generally captures units being renovated as units turn over. To answer directly those asking whether we sufficiently stress expenses during our underwriting, yes. We assume enough stress in our underwriting. With stabilized predictable expenses and conservatively underwritten gross potential income clarified, the elephant in the room as it relates to multifamily in California is the unwarranted stigma around rent control laws. I will say it here clearly, when underwritten appropriately, rent control insulates lenders from risk and potential downside. It also makes for stable, predictable returns for multifamily investors. Rent control laws in the United States exhibit significant variance influenced by state-specific legislations and the autonomy granted to local governments. Notably, 31 states restrict local authorities from enacting rent control measures, underscoring a complex national landscape of housing regulations. Unfortunately, to understand how this impacts multifamily loans and those making them requires a deep regional and nuanced-based understanding of each submarket. Take, for example, California and New York, which offer two distinct approaches to rent control. In California, the statewide rent control law signed by Governor Newsom in 2019 caps rent increases at 5% and plus inflation, subject to certain conditions and exceptions. This legislation empowers local jurisdictions to adopt stricter controls, highlighting California's layered response to rent control deeply rooted in its housing history. Los Angeles, for instance, has been grappling with rent control and affordable housing since the 1940s, marking a significant legislative milestone in the early 1940s and in the late 1970s, which are far more restrictive in the recent statewide legislature. Conversely, New York's rent control paradigm is notably more localized and intricate with a focus on New York City. The state's legislative framework distinguishes between rent-controlled and rent-stabilized units, reflecting a tailored approach to address the city's unique housing market dynamics. The Housing Stability and Tenant Protection Act of 2019 further expanded tenant protections indicating New York's progressive stance on housing regulation. All of this to say that the changes made to New York City's rent control appear to have been the catalyst for the challenges in their multifamily market. The loose landlord-friendly regulation in place for more than 20 years before 2019 gave way to what appears to have been some degradation of lending and underwriting standards by market area banks, which is contributing to hypothetical unrealized potential losses today. Weaker underwriting requirements closely tracked what was allowable under the law instead of the more conservative and more formalized practices for similarly situated properties in other states. As money poured into the market to take advantage of the pre-2019 regulations, it is impossible to say whether underwriting to rents in place alone would have contained the asset price bubble that developed over time, but it certainly would have helped those holding the loans today. Differences between the two states rent-control measures can be characterized by the scope and application of their respective laws. The presence or absence of vacancy bonuses and vacancy decontrol and their historical context. California statewide policy broadly applies to most rental properties with local jurisdictions capable of enforcing stricter laws and has done so for decades. New York's rent regulation is deeply ingrained within New York City's housing market, highlighting a long-standing commitment to tenant protections and housing affordability, which after a period of flexibility got significantly more restrictive in 2019. The historical evolution of rent control in both states reflects their unique responses to housing crises, with California adopting a more uniform approach in recent years, while New York maintains a complex city-focused regulatory environment. When underwriting in California for workforce housing, it is clear to see that in one respect, California has a more predictable consistent approach to rent control on buildings that are also generally not as old as those in New York, which require a much greater investment in repairs and maintenance and capital expenditures to stay competitive. All of this explains why when you look at our portfolio, its strength is evident in both the continued credit quality metrics and the low NPAs to total assets ratio for the first quarter of 18 basis points, compared to 15 basis points from the prior quarter. The bank's return to profoundly deeper relationships with our clients has been fruitful, and we continue to believe that when combined with our value proposition of service, we'll both distinguish us in the marketplace while making the clients stickier. Maintaining a close eye on our near-term liquidity and funding, we have begun to see a return on our investments in culture and growth quarter-over-quarter within our core funding, up from $9.4 billion as of fiscal year-end 2023 to over $9.7 billion as of Q1 2024. This growth can be attributed to both the return of our seasonal MSR deposit, tax and insurance impound account outflows in Q4 of 2023 as well as both growth of existing relationships and new relationships to the organization. Our strategy to drive down any long-term overdependence on broker deposits and home loan bank advances is taking shape. The breakdown of our current deposits is as follows: money market and savings, 29%, certificates of deposits, 28%. Interest-bearing demand deposits 23%, noninterest-bearing demand deposits at 20%. Our core deposits are diversified geographically with California accounting for 28% of total core deposits, Florida at 24% and Texas at 6%. Outside of this majority in Nevada, Hawaii and other states make up the remaining total. We believe both the Texas and Florida markets have tremendous untapped upside potential for additional deposit growth in the near future. We continue to be pleased with the growth of our digital branches online account opening infrastructure and technology. The seamless account opening and funding with real-time risk mitigation and fraud detection is already prepared for deployment in our physical branches. It will initially be utilized for consumer accounts so that we can free up more time to focus on the high-touch needs of our business clients and the complexities of their banking needs. As we noted last quarter, we have begun to change the culture of our physical branches to empower and incentivize employees to aggressively grow our granular core retail deposit franchise. We want to foster and enable an outbound network of active participants in the communities we serve. We also want to ensure that parts of First Foundation are properly compensated and incentivized to grow the franchise. From a timing perspective, we have begun preparing for a challenging landscape ahead of potential rate cuts during the 2024 calendar year. However, we are prepared for a worst-case scenario in which there may be none. We continue to strategically deprioritize marketing based on rate and instead highlighting relationships, community and service, a trend we have seen in the marketplace as several large banks have already begun cutting their deposit rates. In the ever-evolving landscape of banking regardless of size, we are proud of how our teams have been able to pivot and adjust during challenging times. In 2023, we learned how resilient we were. However, in 2024, we strive to highlight our team's ability to grow and pivot to an offensive growth strategy. While there are certainly volatile and challenging economic times ahead, the management team and I are incredibly grateful for the support and confidence of our clients and our employees. I will now hand the call back to the operator for questions.

That was a lot of great color, Chris. I really appreciate that. And the slide that you gave on the contractual repricing is extremely helpful. We've talked in the past though about how oftentimes borrowers are interested in refinancing ahead of the contractual terms, when loans shift to full P&I. Just given the significant amount of growth that was originated in 2021 and 2022, we're going to be coming up on some of that, right? First, I guess, my question is, am I thinking about that correctly? And secondarily, are you hearing this, you're starting to see this from borrowers? And maybe how do you think of a realistic pace of repricing that may be coming in the next 12 to 18 months, so rather than relative to that $700 million or so that is scheduled.

Yes, I believe you are considering it from the right perspective. I understand there is considerable concern in the market regarding the current trends, and we have indeed experienced a slight pause. These real estate investors have decades, and in some cases generations, of experience, and they are observing the market volatility and deciding to take a wait-and-see approach. If the 10-year yield begins to rise as I anticipate, and we start to see prices in this sector increasing, they will begin to secure their positions intentionally and proactively. At this moment, they are not sufficiently worried about the changes in the repricing market to act aggressively. Additionally, they are transitioning from interest-only to principal and interest payments, and they will be keen on reverting back to interest-only options. I believe you are on the right track in your thinking. We can expect a fairly typical pattern of refinancing activity. While they may not achieve the same cash flow levels as before due to changing rates, they will still manage their cash flow well and be satisfied with their outcomes.

David, to address your question, I want to clarify that at the beginning of this year, it appeared that interest rates were going to drop significantly. Many were interpreting recent data as an indication that the Fed might pause rather than lower rates. In a conversation with our Chief Lending Officer yesterday, we noted that our pipeline currently includes about $20 million that will transition from very low 3s to mid- to low 6s.

That's terrific. So I guess the way I'm thinking about it is like this is almost the baseline of what's going to be repricing. It's probably actually higher than what we've laid out in this slide.

I truly believe so, yes.

I believe the slide we included shows the specific timeframes during which actions need to be taken, or things will roll over. As Chris mentioned earlier, we will start to see some individuals stepping up and looking to secure their positions. I want to emphasize that multifamily borrowers are focused on cash flow and are assessing their financial situation. Therefore, securing their rates now is a sensible move for them. For us, we're observing margins improve by more than 3% on those being refinanced.

And David, I'd also like to point out that one of the things we started doing well over a year ago was we started looking at asset quality review financials that come in, re-underwriting this stuff and calling people proactively to say, hey, look, let's talk about refinancing your loan well in advance and letting them know what their scenarios were. So we know what their financial positions are. We know what their refinance would look like, and we're very confident in those numbers.

I would just add to you, David, not to pile on, but all of these outcomes are beneficial for First Foundation. They either move to floating, which is illustrated on the slide, they refinance at a higher fixed rate again, like Scott described, and we hate to lose a customer. But even if those relationships decide to refinance a loan or 2 elsewhere, that's a benefit to us as well because we're able to extinguish higher cost funding from the balance sheet. So we see these as all these attractive options and benefits to the bank.

Absolutely. That was kind of my point as it seems like the opportunity could be even larger than what is laid out on that slide. Okay, that's great. Now, regarding the deposit side, it was encouraging to see the non-interest bearing growth in the quarter. I appreciate the insights on the seasonal dynamics and customer diversification. I'm curious about how things are looking as we head into the second quarter. You mentioned a healthy deposit pipeline, but I would like to know what strategies you are most focused on and where you are experiencing the most success at this moment, as well as your thoughts on deposit trends moving forward.

Chris?

Yes, everything we're discussing right now is centered around building relationships, which has been a recurring theme for all of us. We're particularly emphasizing growth in the commercial and industrial sector, covering middle markets, small balances, and larger corporate credits. This is important because these segments often include compensating balances and foster holistic relationships. We also have a significant wealth advisory business with many high net worth clients who see the current economic climate as a chance to grow. Our aim is to enhance these relationships and attract deposits. Strategically, I mentioned shifting towards a more proactive, client-focused approach to deposit gathering. I prefer branch managers to be out engaging with clients rather than staying in the branches. The key differentiator among banks today is the service value proposition. We want to be visible and proactive in seeking their business and providing what they need.

Our current pipeline is approximately $300 million, and we are confident that those deposits will return. As mentioned by all three of us, we are shifting our focus towards building relationships with people. Recently, I attended a presentation for one of our loan clients, and when I spoke with the Treasurer, I inquired if we had a deposit relationship with them. He responded that we hadn't asked before. I made it clear that I was asking now. We established those accounts just two days ago, and they are in the process of transferring their funds, contributing to that $300 million. We have another client in a similar situation where we've provided loans, but we hadn't actively pursued those clients before. We're taking responsibility for that oversight and are now reconnecting with many of our valued relationships. I'm also making outbound calls just as much as anyone, and we are seeing great success from these efforts.

That's terrific. Glad to hear it. And then last one for me. Scott, you talked about an increase in C&I fundings in the second quarter so far, which is encouraging. Curious maybe where are you seeing opportunity? How is demand trending? And then I'm just curious, maybe broadly what you're seeing in Texas and Florida and whether this timing issue, originations were down in those markets. I'm just curious whether this timing issue was a part of that. So just kind of curious about the C&I pipeline where you're seeing opportunities in Texas and Florida specifically?

Our commercial and industrial sectors have been quite diversified. We've built strong teams in California and Nevada, and I also think we have solid teams in Florida. Recently, during my visit to Florida, I met with our C&I teams. As Chris mentioned, there was a time when we were playing more defensively, possibly being overly restrictive. We've engaged in discussions among credit and lending teams, and I see numerous opportunities ahead. We have around 8 or 9 C&I bankers in Florida, and we are revitalizing our approach by acknowledging that we may have been too cautious previously. Not long ago, I indicated that we would downsize our balance sheet, but we've since shifted gears and are now aiming for expansion. To do this effectively, we need to empower our teams. I firmly believe that Florida and California have significant potential, but we're currently short on C&I teams in Dallas. As we work on enhancing our recurring revenue, this will be a key area of focus for us. It's known that the Dallas-Fort Worth area is projected to become the largest metro region in the U.S. in the next decade. We have specific goals for growth in this market, and I feel we're on the brink of making that happen.

I wanted to ask about the expenses related to non-customer service costs. Jamie, you mentioned this briefly in your comments. There's been significant emphasis on managing expenses over the past year, especially with your push into commercial and industrial lending. How do you view the growth opportunities in C&I lending with your current team and business development staff? I'm curious about your thoughts on growing this area over time and what that growth might entail from an expense standpoint.

Gary, I think we're going to remain very careful and measured about this. As Scott mentioned, as recurring revenue comes back and we're able to afford investing in those teams, we will start to do so. Therefore, I expect expenses to grow modestly, hopefully throughout this year. As we see recurring revenue improve, and if we benefit from the rate environment, we'll ensure that our investments align with recurring revenue and profitability so that we maintain operating leverage moving forward.

The one thing I would tell you, Gary, is that just of the few relationships that I have happened to reach out to they are coming in at substantially lower pricing than wholesale funding. So we're hopeful that we can continue that trend and get better, more granular deposits at lower deposit costs.

And Jamie, I apologize if I missed this in your prepared remarks. But did you mention the average deposits that were customer service cost-oriented deposits in the quarter?

I'm sorry, Gary, I'm not sure I understand. Can you just...

What was the average deposit balance for the customer service cost-oriented deposits in the quarter?

No, you didn't miss it. I didn't mention that. I'd say it was probably in the $500 million or $600 million range on average for the quarter. Sorry, that's for MSR deposits. There's probably another $300 million or $400 million on average for the remaining customer service.

Okay. Compared to the previous quarter, the overall expense decreased. I'm interested in how your negotiations with depositors have progressed and whether you've been able to reduce those costs. How much more can you lower customer service expenses before implementing rate cuts?

Well, unfortunately, there's not a ton of opportunity there, and we're investing in that business. I mean, some of the best relationships we have are from MSR clients who we provide loans to at attractive spreads even to the deposit that they bring in and at the cost where they are. And so the customer service costs will increase as deposits return, deposits were on average, lower in the first quarter than they were in the fourth because they didn't start returning until later in the first. And we do have some of those already in the pipeline returning here in the second. So the rate on those deposits isn't likely to come down, but we are still pleased with the benefits, their core deposits, they're insured. And oftentimes, they bring more products like loans at attractive spreads.

Maybe just a quick question. You guys provide a lot of color around some of the moving pieces around deposits and kind of the loan repricing and margin. But maybe just simply put, would you expect that the first quarter is the trough on net interest income? And then as it relates to margins, specifically, how much margin expansion would you expect over the next 12 months?

Well, the first question is a little easier. I think as the customer service deposits return that will provide some relief to interest expense and improved net interest income, the recurring revenue that we mentioned a few times will also continue to help. We'll also look to opportunistically pull some more of our liability sensitivity forward here and there. So I would be comfortable saying that net interest income, barring a rate increase from here is troughing here in the first. On the NIM expansion, that's a much tougher question to answer. I think it depends on the rate environment and just how much success we have on the customer service deposits and continuing to build relationships there. So I don't know that we're prepared to provide any guidance on NIM at this point.

Okay. Understood. I appreciate it. And then maybe just a similar question on the customer service cost kind of line items specifically just given kind of the seasonality there, can you help us understand maybe in terms of dollars or magnitude, just how much this line item kind of builds going from 1Q into 2Q and beyond?

Yes. I'd say it's anecdotally given some of the wins that are back on into the second quarter here, coupled with just the normal seasonal flows. I would expect us to have a good build in the second. I don't know that we get back to 4Q levels of expense here in the second quarter. But I'd say they'd be several million off the Q1 number. Is that helpful?

Yes. Okay. So maybe fair to just think about split in the middle of 1Q and 4Q, somewhere in that neighborhood?

Yes, probably. I'd probably err on the side of higher, but I think that's a good starting point.

As there are no further questions at this time. I would like to turn the call over back to Scott for closing remarks.

Thank you, everyone, for participating in today's call. We look forward to speaking again at the end of the second quarter. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect.