Greetings and welcome to First Foundation's Fourth Quarter 2024 Earnings Conference Call. Today's call is being recorded. Speaking today will be Thomas C. Shafer, First Foundation's Chief Executive Officer, and Jamie Britton, First Foundation's Chief Financial Officer. Before I hand the call over to Mr. Shafer, please note that management will make certain productive statements during today's call that reflect our 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 CEO, Thomas C. Shafer.

Thanks, Kate. Good morning and welcome. Thank you for joining us today for our fourth quarter 2024 earnings call. Before we begin, I'd like to provide a few remarks on the fires that have devastated so many communities in Southern California. We have been fortunate that we closed several branches for brief periods. None of our locations have been damaged and none of our team members have lost their homes. At this point, we have been in close contact with four customers whose properties have been impacted and all had replacement cost insurance. I want you to know our team is continuing to monitor the situation and we're all committed to supporting our communities and customers. I was appointed CEO of our company in late November of last year and have used the last two months to learn more about our current operations, our skills and the standards employed throughout our organization. In the fourth quarter, we also added another distinguished director, Allen Parker, who brings a wealth of corporate governance and regulatory knowledge to our company. I'm delighted to be working with Allen, the rest of our board, and our team to help build First Foundation's next chapter for the success of all constituents. We have previously articulated our goals to diversify our loan portfolio and reduce our commercial real estate concentration. During the quarter, we sold $489 million of the multifamily loans reclassified to loans held for sale in the third quarter. We continue to have approximately $1.4 billion of multifamily loans held for sale in our balance sheet and we are actively reviewing opportunities to continue selling the portfolio. Reducing our CRE concentration and lessening our dependence on high-cost and wholesale funding is among our highest priorities. It will not only improve our risk profile but also contribute to stronger financial performance going forward. Proceeds of our first sale went to paying down high-cost broker deposits. As sales continue, each of our high-cost deposit portfolios will be reviewed for reductions in 2025. As you know, another area of focus has been our ACL methodology. We exited the year with another quarterly increase in our reserves to 41 basis points, up from 36 basis points reported in the prior quarter. In addition to the reserve build, we also recorded $17.1 million in net charge-offs. $13.4 million was attributable to three longstanding commercial relationships and of the total, only $657,000 was associated with one multifamily loan. I'm still early in my tenure with First Foundation but I'm making meaningful strides in reviewing our historical practices and I'm already working with our team to establish standards appropriate for a $13 billion bank. As we transition our business mix and improve our risk profile, it will be important for us to also develop an operating framework that will support our sustainability in future periods, regardless of the interest rate environment. A couple of examples I'd like to share are in the areas of credit risk and interest rate risk. The team had already initiated a review of our seasonal methodology. We must also ensure we have standards in place to match our size and complexity. Strengthening our credit processes, controls and analytics will drive more consistent credit decisions and is fundamental to mitigating future risks as we reposition our credit portfolios. The same is true for how we manage interest rate risk. Over the past year, the company has invested in resources to meaningfully enhance our treasury capabilities and perform a bottom-up review of the assumptions and methodologies driving our modeling. Moving into 2025, we are more confident in our abilities to understand the risk we are taking, and we will be working to develop an operating model, processes and tools needed to leverage this information in all of our pricing and investment decisions. Migrating our model and establishing the standards necessary for success will take time. But as I continue to learn, I am pleased with the progress we have been able to make together in my first 60 days at First Foundation. This is such a critical area for our company, and I look forward to sharing with you our success as we move forward. I'll let Jamie go into more detail on the financials, but I'm happy to note another modest improvement in our net interest margin, which moved from 1.5% in the third quarter to 1.58% in the fourth. We've spoken previously of our optimism on the rate environment, but that unfortunately subsided at the end of the year. We do expect continued margin improvement in 2025. The first few rate reductions are a supportive tailwind, and continued actions to exit the relatively low-yielding loans moved to held-for-sale will continue to chip away at these headwinds. I'd also like to take a moment to note the continued success of our wealth and trust business. Both have been stable sources of fee income for our company, and their performance in the fourth quarter was no different. I'm excited about the opportunities we see for the future here. Not only are we investing in strengthening our platforms, but we are also recommitting to a culture of integrated support for our clients. Looking back on 2024, we have a lot to be proud of. It was an important year, but also a challenging one. And I would like to take a moment to thank our team for their commitment to First Foundation, welcome our new stakeholders, including our new audit partner, Crowe, and thank you again for your continued interest in our company. Now I'll hand it to Jamie to walk through the financials.

Thanks, Tom, and good morning. Starting with the balance sheet, as Tom noted, we continue to make progress on our strategic initiatives, successfully executing a $489 million multifamily loan securitization in early December. We remain confident in the economics of our multifamily portfolio, and we're pleased to execute at a price above 95, which was a premium to where the overall held-for-sale portfolio was marked at the end of both the third and fourth quarters, 93.8% and 93.4% respectively. I would also note that following the quarter, we entered into a swap that will help mitigate fair value related earnings volatility as we work to disposition the remaining held-for-sale loans. As expected, the reduction in loan balances was a factor contributing to lower loan interest income in the quarter, but our team moved quickly in deploying the proceeds and exited a similar level of high-cost broker deposits shortly after the close. The transaction overall provided a net benefit to net interest income, and we remain laser-focused on continuing to drive similar benefits through additional transactions in the first half of 2025. Broker deposits and other high cost deposits, such as those contributing to our monthly customer service costs are all candidates for reductions, and we will consider each as we work to balance the transition of our balance sheet and minimize impacts to our clients. Whether it's through increased net interest income alone or a combination of higher net interest income and lower customer service costs, we expect each loan disposition to contribute to improved financial performance going forward. Though improvements from the December securitization were minimal in the fourth quarter, our net interest margin benefited from the first three moves in the Fed's rate cutting cycle, improving to 1.58% in Q4. The eight basis point quarter-over-quarter increase left NIM 41 basis points above the 1.17% we reported in the first quarter of 2024, the year's low point, and 22 basis points above the year ago period of Q4 2023. While the margin expanded and we realized the 19 basis point improvement in our interest bearing liability costs, our earning asset yield declined in the quarter, decreasing to 4.68%, which is 7 basis points below the 4.75% reported in Q3, and in line with the 4.69% reported for the full year. Driven primarily by balance and yield declines in our commercial portfolio, overall total loan yields decreased in the fourth quarter, down 6 basis points to 4.71%. The anticipated decline in our cash positions yield following the Fed's initial rate reductions, 5.47% in the third to 4.82% in the fourth also contributed to the earning asset yields decline. The average balance in that portfolio remains elevated but is expected to be managed modestly lower over time as we work through our loan sale initiative, reduce our reliance on high-cost and wholesale funding and migrate our balance sheet to the desired long-term more sustainable business mix. Partially offsetting the lower yields and loans in cash, the quarter's newly purchased investment security yield of 5.36%, coupled with those on investments in the third quarter to support the nine basis point yield improvements seen in the available for sale portfolio. Unlike the prior couple of quarters, the available sale portfolio's balance ended the quarter lower than its average, as demonstrated, however, by the investment portfolio's year-over-year growth, we remain comfortable using safe, high-quality securities to support our liquidity position, improve the balance sheet's rate profile, grow recurring revenue and support investments in new relationship bankers for our markets and a more holistic product suite for our clients. Turning to the funding costs, our MSR escrow deposit portfolio's average balance unexpectedly grew this quarter. We have described in the past that annual seasonal inflows and outflows will drive changes in our net interest margin through the year. Whereas in most years, we would expect to see some pressure on the margin this time of year due to our needing to match non-interest bearing, MSR deposit outflows with higher cost interest bearing funding, that was not the case in the fourth quarter. Entering the first quarter with elevated MSR deposits, we expect the normal first quarter trough to be somewhat muted as well. As expected, the Fed's 50 basis point rate cut in September and the 225 basis point cuts that followed in the fourth quarter benefited the quarter's interest bearing liability costs, which declined to 4.05%, 19 basis points below the third quarter's 4.24% and 14 basis points below the year ago period's 4.19%. Since the cost on our $1.4 billion in FHLB advances remained effectively fixed at 4.08%, the benefit was driven by improvements in deposit costs. The full benefit of the reductions in our interest bearing deposit costs will be reflected in the first quarter of 2025, but for the fourth quarter of 2024, cost declined by 25 basis points to 4.04%. Importantly, monthly trends were such that rates exited the quarter below quarterly average rates in all categories except brokered CDs, which remained stable at approximately 5%. As mentioned, the proceeds of our December securitization were focused on high-cost broker deposits, which helped drive December's monthly interest bearing deposit costs to 3.92% or 43 basis points below the monthly cost of 4.35% in August before the Fed's first rate cut. Excluding traditional brokered CDs, monthly interest bearing deposit costs exited the year at 3.58% or 53 basis points below the monthly August rate of 4.11%. We are pleased with these trends and look forward to the full quarter benefits they will provide in Q1 2025. As we proceed through the year and make progress on exiting the loans held-for-sale portfolio, we expect to be able to allow the brokered CD portfolio to mature without replacement. Approximately 47% of the $1.9 billion year imbalance, which is being carried at a weighted average rate about 5% is maturing in 2025. Given the loans held-for-sale portfolio's sub 4% yield, exiting a portion of the loans held-for-sale balances alongside 2025's brokered CDs maturities will eliminate meaningful drags on both net interest margin and net interest income. We appreciate our team's proactive approach in serving our clients' needs. The initial rate cuts this cycle have offered some flexibility in how we do that on deposit costs. And we are encouraged by the balance growth we have been able to achieve with our core clients since the Fed's first move in September. Balances in the retail and digital channels have increased over $75 million from the end of August to the end of the year. Before moving to the income statement, I would note again that following the end of the quarter, we entered into our second swap focused on hedging the balance sheet. The hedge will help reduce any earnings volatility related to our remaining loans held-for-sale portfolio while also improving our overall interest rate risk position. We did not add any new swaps in the fourth quarter, but we fully expect this to be a valuable risk management tool for us. And we will continue monitoring for opportunities to further stabilize our rate profile and earnings going forward. Turning to income, with only the securities portfolio showing quarter-over-quarter interest income growth, total interest income declined from $157.2 million in the third quarter to $152.5 million in the fourth. A $6.9 million decrease in interest expense more than offset the decline, leading to a $2.2 million increase in net interest income. Deposit expense was the largest driver of the improvement, but interest expense on borrowings also contributed following the repayment of our $260 million bank term funding program borrowings, which were being carried at a rate of 4.76%. In addition to net interest income, overall balance sheet contribution remains a focus. Despite higher average MSR-related deposit balances in the quarter, customer service costs declined modestly by $1.2 million from $19 million in the third to $17.8 million in the second. Combined with the improvement in net interest income, balance sheet contribution increased by $3.4 million. All else being equal, we expect further benefits in the first quarter as we see the full quarter benefits of declining non-brokered CD deposit rates and the removal of $480 million of relatively low yielding multifamily loans. Provision for credit losses was significantly higher this quarter, with the largest factor being $17.1 million in net charge-offs. Comprising $13.4 million of the total was the full write-off of three commercial relationships with inadequate pay performance, sustained operating losses, and insufficient collateral protection. As Tom described, an important part of our pivot to a more sustainable business will be the implementation of important standards to guide our execution. We remain confident in the loan portfolios' credit quality, but we will continue to strengthen our risk management practices and assess the portfolio accordingly. Also contributing to the quarter's net charge-offs were additional delinquent equipment finance loans with little to no collateral and the first loss in the history of our multifamily portfolio for $657,000. While our delinquencies remain relatively low today, we will continue to enhance our stress testing and adjust loan grading across the portfolio as appropriate. As a result of the moves in credit, our ACL balance increased from $29.3 million or 0.36% of total loans in the third quarter to $32.3 million or 0.41% of total loans in the fourth quarter. As our balance sheet mixes towards commercial loans and as we continue ensuring our credit risk management practices are appropriate for an institution of our size and complexity, further increases in the ACL coverage ratio are expected going forward. As a reminder, credit risk on the loan held-for-sale portfolio is considered in its fair value adjustment instead of in the allowance for credit losses. Next, wealth and trust related fees were $9.3 million during the quarter, in line with last quarter's $9.2 million. Assets under management were modestly lower for the quarter ending at $5.4 billion. We remain pleased with the pipelines we see in businesses and as we mentioned investments in First Foundation advisors and our trust department remain a strategic priority going forward. New investments will occur alongside our continued efforts to better serve clients by strengthening the integration between our banking and wealth offerings. Following the increase in market rates since the end of the third quarter, we recorded a $3.3 million fair value charge on the remaining multifamily loans reclassified to held-for-sale. This was more than offset, however, by the $4.4 million gain on sale recorded following the securitization. Given the continued interest we see in these loans, we remain confident we will be able to secure final pricing execution at strong levels. We expect to complete additional sales in the first half of 2025, but we expect to also recover some of our fair value mark as our clients make regular principal payments and take advantage of opportunities to make prepayments or refinance their loans at par. Moving to non-interest expense outside of customer service costs, remaining non-interest expense categories totaled $49.7 million for the quarter, up from $41.3 million in the third. The largest contributor to the $7.9 million increase was compensation and benefits expense, which finished $5.4 million higher than in the third. Higher production-related incentives were a factor, but the primary driver was year-end awards for our internally focused non-executive officer team members. Accruals for year-end awards were concentrated in the fourth quarter, but we felt it important to recognize our teammates for their continued efforts and dedication to our company. Occupancy and depreciation expense was impacted by a write-off of software development costs, and the remaining quarter-over-quarter increase was related to year-end property taxes and charges related to a termination lease on a previously exited loan and production facility. Increases in professional services and marketing fees were primarily driven by normal year-end activity and the resolution of a one-off legal dispute. As we move forward, we will continue making strategic investments for future growth, but we are committed to controlling our discretionary costs. And as we mentioned on last quarter's call, we'll ensure any plans for measured investments across our markets are both in line with our strategic objectives and ultimately supported by commensurate growth in revenue and profitability. Closing with capital, though we expect to report modest declines in regulatory capital this quarter, First Foundation Inc's Common Equity Tier 1 Capital benefited as part of our preferred shares, the Series B preferred, converted to common equity following our recent shareholder vote. The shift, however, reduced tangible book value for common share, which ended the quarter at $11.68 per share or $2.11 per share lower than reported at the end of the third. As noted in our release, where all our remaining preferred shares, the Series A preferred to convert to common, our tangible book value per share for the fourth quarter would have been $9.36 per share. As Tom has noted, 2024 was a really challenging year for First Foundation, but an important one. And as always, I'd like to send a tremendous thank you to our team for the hard work you put in to make it a success. And with that, I'll turn it over to the operator to begin the Q&A session.

Your first question comes from Gary Tenner with D.A. Davidson. Please go ahead.

Thanks, good morning. I wanted to start off with a question about the commercial charge-offs. Maybe some background here. Were they previously on non-accrual? Was this part of a bit of a portfolio scrub, Tom, since you came on board? Any background color you could give us on those charge-offs?

Sure. There were a number of credits that had been monitored closely for quite some time. And one of the first areas I began looking at was some of our high-risk assets. There was, I would say, a change in performance in these or enough change in performance where it was time to take a step forward and charge them off. The team had monitored them for a period of time. It wasn't something that just happened in the fourth quarter, but it was an appropriate time period for us to address them.

Okay, thank you. And then Jamie, in terms of expenses, I guess in terms of the customer service-related deposit balances, it sounds like those were probably a little bit over $15 billion, just kind of given an assumed fed funds effective rate for the quarter. As you talked about selling more of the multifamily, you made a comment that you'll kind of determine which deposit segment you should reduce. And the obvious is the brokered piece with the maturities coming. But how do you think about that customer service-related deposit business? Would you de-emphasize it? How would you go about kind of moderating that line item over time?

Well, thanks for the question, Gary, and good morning. That's been an important business for us. We value those clients. We're comfortable with the seasonality. But over the years we have grown probably more concentrated in certain relationships than we would be comfortable with. We may start to reduce those balances, but we recognize also that they're important client considerations. We, again, value those relationships and we want to make sure that we're supporting them as best we can. We'll have conversations with them as we move forward. Our overall risk profile, for instance, including the loan-to-deposit ratio is an important factor for us. And it will balance maturities in the broker CD portfolio with what we can do on other high-cost deposits, including the customer service costs. But there are other relationships that have higher costs as well. And so, we'll monitor progress as we move through dispositioning the loans held-for-sale portfolio, work with our clients, and really try to maximize or optimize the benefits that we can drive in our risk profile and earnings while maintaining support for clients going forward. I know it's not a great answer, but it's something that we'll be focused on month by month as the left-hand side of the balance shifts, either through normal changes and fluctuations in non-held-for-sale portfolios or dispositions in the held-for-sale portfolio.

No, that's good, Jamie. I appreciate just hearing the thought process. And then, if I could ask just one less related expense question. Given the spike in the compensation line this quarter, can you talk about kind of the net result of the elevated fourth quarter level and first quarter resets, just in terms of kind of where maybe that line would shake out to start the year?

Well, there are, I mean, a few factors to consider. I mean, you always have the resets in the first quarter due to taxes and whatnot. The concentration of the year-end bonus accrual for our non-executive teammates we felt was really important. I would expect that to be lower in the first quarter, no question. And as we've tried to imply from our remarks and different conversations over time, we do want to make sure that we're laser-focused on expense management and increasing that as revenue returns. We do have some tailwinds from the rate cuts that were in the fourth, the disposition of the $489 million that were being carried at a net loss. And so we do expect for more revenue to return in the first, but how much returns and where we see progress on some of our strategic initiatives will continue to guide the expense line and for instance, accruals as we move forward. I don't have a specific level for you. I do think it'll be lower, but the trajectory going forward through the year will depend on our successes in other areas.

Thank you.

You bet.

Hi, good morning, everybody.

Morning.

Hey, David.

Maybe just starting high level. Tom, I know you've only been there a couple of months at this point. You touched on a couple of things that you focused on initially. It's extremely encouraging to see some methodology. Just curious, how do you think about the balance sheet strategy and maybe opportunities to accelerate that or is the plan still kind of like a slow and steady pace to minimize losses on the runoff? And just kind of any other commentary you can provide on where you're focusing your attention initially?

Sure, David, thank you. As I indicated in my comments, I've spent my time over the last couple of months just learning about our methodologies. I'm still steep in the learning curve and how do we approach the business, what standards we're using throughout the organization, making sure that they're appropriate, not only for the scale of the company today as a larger than $10 billion organization with the obligations that go along with that, but making sure that we're really setting ourselves up for success as we think about repositioning the balance sheet, remixing the credit portfolios so that we've got the interest rate risk skills, the credit monitoring skills, and underwriting policies that support new lines of business as we move into 2025. So that review continues. We're going to hold ourselves to high standards and make sure that we have a very sustainable organization, as I mentioned, regardless of interest rate environment, but also even as the economy might turn, we want to ensure that we're building a very sustainable, organic, profitable company.

Okay, that's helpful. And then Jamie, you touched on, you mentioned allowing the brokerage CDs to mature and not replace them this year. I think that's about $900 million maturing this year. I guess I'm just curious, how do you think about funding that, would you expect a commensurate amount of decline in the HFS book or are there other deposit initiatives that you think could bridge that gap?

Thank you for the question, David. It's a significant topic that we are addressing through several of our strategic initiatives. The straightforward answer is that we expect to make significant progress on the held-for-sale portfolio in the first half of 2025 and for the entire year. We're also focused on growing our deposits. We've noticed a shift in the trend of some of our core deposits following the initial rate cut this quarter, or more accurately, in the fourth quarter. The initiatives we're implementing should help maintain that growth. We are investing in new commercial bankers who will concentrate on relationship banking, which is likely to attract more deposits. Additionally, we are empowering our branch staff to build networks and foster relationships within our communities, which we believe will continue to enhance our deposit growth. We've also seen positive growth in our digital bank after the initial rate cuts, as we have positioned ourselves more competitively among our peers in the digital market. Moving forward, we anticipate reductions in the loans held-for-sale portfolio in the first half of the year, while we've already started to see growth in our core deposit portfolios. However, there will likely be some decline in legacy multifamily balances over time. We are beginning to enter a period where more of our rate resets will occur. We didn't have many rate resets in 2024, but we have significantly more scheduled for 2025 and even more in 2026 and 2027. As our clients start to evaluate the interest rate environment and their opportunities, we expect to see increased activity in this area in the upcoming year, which might result in lower balances in the remaining $3.2 billion of multifamily on the balance sheet.

Okay, that's really good color. Thank you. And then, maybe just touching on the multifamily segment broadly. I mean, the securitization, the pricing was extremely encouraging like you alluded to previously, it's better than what we've marked the book at and better than what we've seen other larger transactions do at. I'm curious, how's the demand for that product today? What are you hearing from other folks? If you could just touch on that, and then we have the multifamily loss this quarter, it's obviously small. Just curious if you could touch on that, just given it's the first one we've seen?

I'll start with the held-for-sale portfolio. We were very pleased with where we executed and the securitization, obviously 95.1 was better than both where we marked in the third and at the end of the year for the remaining loans. I think there's a difference in private transactions that we'd likely see if we were to execute on something other than a securitization. But demand's been very strong. We've had many productive conversations. I think we have over 30 different parties under NDAs and actively working to review the portfolio and do their diligence. And I think we're still a little early to start providing any sort of color on where we think pricing will come in. But based on the interest, I think we're optimistic that we'll be able to continue securing a strong final execution pricing. Where it is relative to the 95.1, I don't want to offer a guess on that. A lot of it depends too on the rate environment, which continues to bounce around a bit. But we're confident we'll get strong execution pricing going forward and really optimistic about what we're seeing in terms of interest.

That's great. And then if you could just touch on the loss that we saw. Again, obviously it's the first one and it's small, but just curious what was going on there and just whether that's indicative of anything else or kind of just one-off?

David, I think it's a one-off. It's the first loss I think we've taken in that portfolio in our company's history. About $650,000, and it was a property in the San Francisco market that had an owner that passed away and it had been handled by a trustee that hired a property manager that probably could have done better, but it was also a small property. And I don't think it's indicative of other things that we're seeing in the portfolio.

Okay. Great, thanks everybody.

Thanks, Dave.

Your next question comes from the line of Adam Butler with Piper Sandler. Please go ahead.

Hey, good morning, everyone. This is Adam on from Matthew Clark.

Hey, good morning, Adam.

Good morning. Just first, just to help put some pieces together on the NIM expansion outlook. I was wondering if you had the timing of the loan sale this quarter and then also the timing of the payoff of brokerage CDs. Just want to understand if we had a full quarter impact in Q4 or if that's going to bleed over into the first quarter as well?

No, no, good question. The execution was in early December. The treasury team moved as quickly as possible to exit the brokerage CDs and our broker deposits. And I think they were fully out a week and a half or so after. And so I would put the securitization, if I recall was around, I think the proceeds were around December 10th or 11th. And then, we were out of the brokered deposits, call it just before the year-end holidays.

Okay, that's very helpful. And then just on the remaining loan held-for-sale portfolio, do you happen to have a current loan yield, average loan yield on that?

I don't have the exact one, Adam. I want to say, it's similar to the remaining multifamily portfolio though. And I mean, the loan yield offered there. I would say the loan yield there is around 3.75%.

Okay, the overall portfolio remains consistent compared to last quarter. Thank you. I want to revisit the customer-related deposit costs. While I recognize that the average balance was seasonally higher in Q4, the cost was lower. I would like to gain some clarity moving forward, particularly in Q1 as these deposits are expected to reach their lowest point. What kind of decrease can we anticipate in the run rate as we head into Q1 from the $17.8 million level in Q4?

Well, a couple of factors I would offer for that. The benefit in customer service costs that we saw in the quarter was driven primarily by the reductions in market rates with the higher average balance. Otherwise, we would have seen an increase. So the reduction in rates was able to drive a benefit and overall net benefit there. And we would expect the first quarter to be advantaged by a full quarter benefit of that. And so those deposits, as a reminder, moved pretty much in lockstep with the Fed. I mean, they're essentially indexed. And so you'll get a full, you'll see the full 100 basis point reduction going into the first. I'd also say that there will continue to be some seasonality where we're a little elevated from where we thought we would be, as I mentioned, but going into the first, I think you'll still see if we have $1.1 billion on the balance sheet at the end of the year, I think you would see maybe a 20 or so percent reduction in the first quarter. A majority of that is related to the seasonality. There may be a little more reduction as we work to reduce some balances on outside clients coming back to David's question about the reduction in those portfolios going forward. So I think if you think about the pace of rate cuts in September and the fourth, and then recognizing that we'll get the full benefit of those in the first, combine that with some seasonal runoff of call it 20% to 25%, that should give you an idea of where we'll come in for the first quarter.

Okay, that's super helpful commentary. Helps me get to an outlook to comp. And then lastly, for me, on the reserve, outside of some elevated seemingly one-off charge-offs, the reserve still went up this quarter. I was just hoping to maybe get some updated commentary from you guys on where you may, on your comfortability with the reserve at where it's at today, or if you have any targets for where you'd like to see that ratio trend over a longer period of time?

Adam, we were able to, even with the outsized charge-off in the quarter, increase it. Part of the commentary on CECL analysis is we're continuing to go through that. I think that as we kind of look at a higher rate environment for an extended period of time, that there will be a bias for it moving up from where it's at right now.

Okay, very helpful. And I'll step back. Thanks for taking my questions.

Thank you.

Thank you, Adam.

I will now turn the call back over to Thomas Shafer for closing remarks.

Thank you. Thanks for joining today. It was a little bit of an unusual quarter for us, but I think we're making significant progress. We're spending a lot of time, not only on the underpinnings of the standards of the organization, but culture and engagement, engagement for clients, and looking forward to continuing to go through redeveloping the revenue for the organization as we march forward. So I appreciate your time today and thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.