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DATE

Tuesday, April 28, 2026 at 11 a.m. ET

CALL PARTICIPANTS

  • Chief Executive Officer & President — Neal Arnold
  • Chief Financial Officer — Robert Cafera
  • Chief Credit Officer — Jennifer Norris
  • Moderator — Ed Jacques

TAKEAWAYS

  • Adjusted Net Income -- $23.7 million, reported with adjusted diluted earnings per share of $0.84 and adjusted return on assets of 1.14%.
  • Loan Growth -- Annualized growth rate surpassed 16%, with balances rising by $267 million, driven primarily by the commercial and industrial (C&I) portfolio.
  • Net Interest Margin (NIM) -- Achieved 4.25%, up 7 basis points sequentially from the prior quarter, marking 14 consecutive quarters above 4%.
  • Net Interest Income Growth -- Increased 11% on a year-over-year basis.
  • Noninterest Income -- Rose approximately 25% year over year and comprised 24.7% of total revenue, underpinned by strong mortgage and treasury service fee growth.
  • Deposit Trends -- Overall deposit balances declined slightly, primarily due to a $60 million reduction in brokered deposits within certificates of deposit, offset by growth in interest-bearing demand and money market accounts.
  • Provision Expense -- $8.3 million for the quarter, with allowance for credit losses at 1.2% of loans, down 7 basis points from Q4.
  • Net Charge-Offs -- $10.5 million (63 basis points annualized), with more than $10 million attributable to two previously reserved loans in the telecom and auto finance sectors.
  • Nonperforming Assets -- Averaged around 1% of loans over the last year, declining to 86 basis points at quarter-end.
  • Tangible Book Value (TBV) Per Share -- Increased by $0.74 to $38.57 as of quarter-end.
  • First Foundation Acquisition Update -- Integration progressing, with loan downsizing at First Foundation totaling approximately $1 billion, constituting 44% of the planned $2.3 billion reduction.
  • Balance Sheet Repositioning -- Remaining $1.3 billion in loan downsizing targeted for completion by end of Q2; completed all securities portfolio downsizing and exited $1.4 billion in acquired FHLB term advances in April.
  • Wholesale Funding Ratio -- Aiming to reduce to 10% by end of Q2, relative to 6% pre-acquisition, after acquiring a higher funding mix through First Foundation.
  • Cost Synergies -- On track to attain 65% of identified synergies by end of Q2; expect full realization in late 2026 as system conversions complete, with targeted cost saves at 35% of First Foundation's core expense base.
  • Capital Ratios -- Expected common equity tier 1 (CET1) ratio to reach approximately 11% post-repositioning, above the prior 10.5% guidance from October.
  • 2026 Outlook -- Full-year NIM projected in the mid-3.80s% range; Q2 and Q3 margins tracking in the 3.60%-3.70% range before rising to the 3.90% range in Q4.
  • Efficiency Ratio Guidance -- Forecast to operate in the mid- to lower-sixties percent for the next two quarters, decreasing toward approximately 60% in Q4.
  • Net Charge-Off Guidance -- Expected to end the year in the mid-twenties basis point range, based on higher average loan balances post-acquisition.
  • First Foundation Deposit Mix -- Noninterest-bearing deposits projected to remain in the low 20% range post-repositioning, declining a few percentage points from current levels.

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RISKS

  • Provision expense increased due to portfolio downgrades and "some deterioration in value realization in the event of loss," with Robert Cafera remarking, "two loans drove the bulk of the $10.5 million in net charge-offs," highlighting lumpy credit performance as a feature of the bank's C&I-heavy lending mix.
  • Management cited a "headwind from a growth perspective" in loan balances due to ongoing, multi-year multifamily loan repricing and intentional portfolio remixing, potentially muting net balance growth in the near term.

SUMMARY

The call highlighted significant progress on integration and risk reduction following the First Foundation acquisition, accompanied by disciplined execution of cost synergies and capital planning. Management outlined targeted reductions in loan and wholesale funding concentrations, as well as the timely completion of balance sheet repositioning, aimed at strengthening financial metrics and enabling near-term share repurchase capacity. Executives provided detailed guidance signaling stable loan and deposit balances for the remainder of the year, tempered near-term net interest margin, and efficiency expectations that improve as synergies phase in.

  • Executives emphasized the strategic priority of converting acquired relationships into core deposit and service clients, particularly through targeted expansion in Southern California and Southwest Florida.
  • Robert Cafera stated, "We believe the combined earnings profile will quickly take the shape of what you have become accustomed to from legacy FirstSun Capital Bancorp," reflecting confidence in normalization of returns post-integration.
  • System conversion remains a pacing factor for full cost synergy realization, with management expecting roughly 65% of savings captured by Q2-end and the balance phased in after major conversions complete.
  • The updated outlook incorporates lower-than-initially forecast tangible book value dilution, with Robert Cafera noting this comes alongside reduced interest rate mark accretion in future earnings.
  • First Foundation's initial loan downsizing exceeded prior expectations due to short-term leverage deployed pre-acquisition, but management underscored that base balance sheet targets for 2026 are "largely unchanged" as this incremental activity is unwound.

INDUSTRY GLOSSARY

  • SNC (Shared National Credits): Federally supervised credit facilities shared by three or more financial institutions, typically to large corporate borrowers.
  • Net Charge-Offs: The dollar amount of loans written off as uncollectible, net of recoveries, during a specified period.
  • Wholesale Funding Ratio: The proportion of a bank’s funding base sourced from non-core, wholesale borrowings, such as brokered deposits and FHLB advances, relative to total funding.
  • Credit-Adjusted NIM: Net interest margin (NIM) figure adjusted for credit performance, reflecting loan loss provisioning or credit events.
  • TBV (Tangible Book Value) Per Share: A measure of a company’s net asset value per share, excluding intangible assets and goodwill.
  • CET1 (Common Equity Tier 1) Ratio: Key regulatory capital ratio comparing a bank’s core equity capital to its total risk-weighted assets.
  • Efficiency Ratio: Noninterest expense as a percentage of total revenue, used to assess cost management and operating leverage in banking.

Full Conference Call Transcript

Ed Jacques: Thank you, and good morning. I am joined today by Neal Arnold, our chief executive officer and president, Robert Cafera, our chief financial officer, and Jennifer Norris, our chief credit officer. We will start the call with some brief remarks to highlight commentary around our first quarter results and the recent First Foundation acquisition before moving into questions. Our comments will reference the earnings release and earnings presentation which you will find on our website under the Investor Relations section. During this call, we will comment on our financial performance using both GAAP metrics and non-GAAP financial measures.

Important information about these non-GAAP financial measures, including reconciliations to comparable GAAP measures, is included in the appendix to our earnings presentation and in our earnings release. During this call, we will also make remarks about future expectations, plans, and prospects for the company that constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors.

Please refer to our earnings presentation as well as our annual report on Form 10-Ks and our other SEC filings for a further discussion of the company's risk factors and other important information regarding our forward-looking statements. We undertake no obligation to publicly revise or update any forward-looking statement except as required by law. I will now turn the call over to Neal Arnold.

Neal Arnold: Thank you, Ed, and good morning. Thank you for joining us. It is a busy time right now at FirstSun Capital Bancorp as we have just recently closed the acquisition of First Foundation. All of our teams are hard at work on the integration of these businesses. We are seeing some great examples of teamwork throughout our business lines on the sales side as well as across our staff teams, so I am very encouraged by the progress we have made so far, and Robert will talk about that. I would like to start with some comments on our performance and some comments with regard to the First Foundation acquisition.

We are pleased with the momentum we saw in our business to start this year. We believe our relationship-focused diversified business model, and being in some of the largest fast-growing markets in the country, continues to be an important driver to our overall performance. For the quarter, we had adjusted net income of $23.7 million, representing adjusted diluted earnings per share of $0.84 and adjusted ROA of 1.14%. We saw very robust loan growth of over 16% annualized in the quarter, as well as continued expansion of our net interest margin to a strong 4.25%, and we also saw solid revenue mix on the noninterest income side representing 24.7% of total revenue.

On the asset quality side, we had higher provision, as I am sure you all saw, in the quarter due to a combination of factors: first of all, some portfolio downgrades as well as strong loan growth. Loan balances increased by approximately $267 million in the first quarter. We did see two loan charge-offs; we are seeing some deterioration in value realization in the event of loss. But the significant loan growth we saw in the first quarter materially impacted our higher provision expense. As we have noted before, in addition to traditional return measurements, part of our recurring performance monitoring focuses on what we call our credit-adjusted NIM, and we believe our performance there continues to remain strong.

Turning to our recently completed First Foundation acquisition, as I mentioned, we are seeing some great energy across the teams since the deal closed on April 1, 2026. The sharing of information and knowledge across the combined branch teams, across the legacy First Foundation wealth advisory business, and our commercial and residential teams is already driving new business opportunity. I believe this teamwork will drive even greater long-term benefits to our future performance.

As I have said from the beginning of this transaction, our focus is on derisking the acquired balance sheet through a repositioning strategy that will allow us to unlock the core franchise and capitalize on the great market opportunities in the newly acquired footprint, particularly in Southern California and in the deposit-rich markets of Southwest Florida. Our second quarter emphasis is on completing the post-acquisition balance sheet repositioning, and we believe we are well underway in execution. I will let Robert cover some of the details there. Our third quarter emphasis is on completing our main application system conversions and unlocking the rest of the additional cost synergies that are included in that.

We believe the acquisition represents a significant step forward in the continued growth and evolution of this franchise. The combination enhances our presence in attractive high-growth markets and it further expands our regional footprint and gives us greater scale across our core businesses. Strategically, the expanded branch network will strengthen our ability to serve clients locally while enhancing our deposit-gathering capabilities and overall relationship density. In addition, the transaction significantly expands our wealth platform, which will allow us to deliver a more comprehensive suite of advisory and investment solutions to a broader client base.

Taken together, we believe these benefits enhance our long-term growth profile and improve the revenue diversification and strengthen the durability of this franchise so that we drive sustainable long-term value for shareholders. Our near-term focus remains on disciplined execution of our acquisition-related activities and completing the balance sheet repositioning we talked about, successfully executing our system conversion, and realizing the identified cost synergies. As we move through this year, we are confident our execution will drive improved profitability, a stronger funding portfolio, and great long-term shareholder value. Overall, I am really proud of the hard work all of the teams have been underway on and excited by the momentum across our extended footprint and the opportunities that lie ahead.

I will now pass the call over to Robert for some further color on our financial results as well as some of the integration activities underway.

Robert Cafera: Thank you, Neal. Starting with our first quarter performance, on the balance sheet side for the first quarter, and on a spot end balance basis, we achieved healthy loan growth of over 16% annualized, primarily in the C&I portfolio as we continued to see success across the high-growth markets in our footprint. We saw our line utilization increase by 4% from the end of last year. Just as a reminder, recall that our line utilization was down 3% at the end of last year, so that piece is really just a function of timing. New loan fundings totaled $528 million in the first quarter, up 47% from the fourth quarter and 32% from the first quarter of last year.

Loan growth was heavier on the back end of the quarter, so while average balances in Q1 saw a lesser growth rate, we see a nice tailwind here heading into Q2 from an NII perspective. I would also note that our pipelines remain pretty robust as we begin to move through the second quarter. On the deposit side, on both an average balance and period-end basis, our overall deposit balances were down slightly. Aside from general seasonality pressure that exists in the first quarter every year within a few segments in our deposit customer base, one specific component driving the decline in deposits was on the brokered deposit side, where balances declined by approximately $60 million.

From a product mix perspective, you will see the negative influence to balances from the decline in brokered within the CD category as balances were down there in total, mitigated somewhat by average balance growth in interest-bearing demand and money market accounts. Turning to the P&L side, we are quite pleased with the first quarter net interest margin, which ended at a strong 4.25%, up 7 bps from the fourth quarter. This is now 14 consecutive quarters we have enjoyed a net interest margin above 4%. The NIM expansion was largely driven by improved funding costs, with interest-bearing deposit costs down 14 basis points compared to the prior quarter.

All in all, we are very pleased with our margin performance and the corresponding 11% year-over-year net interest income growth. We believe this is a testament to our continued focus on relationship depth across our client base. On the service fee revenue side, we saw a really nice start to the year with noninterest income to total revenue of 24.7%. While noninterest income in total was up slightly compared to Q4, we saw approximately 25% growth over the first quarter of last year, with continued strong performance in our mortgage business. We also saw continued growth in our treasury service fee revenues in Q1, which continue to be a growth engine for us.

Our total adjusted noninterest expense in the first quarter, excluding merger-related expenses, was up from the fourth quarter by approximately $2.8 million, primarily related to increases in salary and employee benefits. Our employee base increased in the first quarter as we continue to invest in our sales force. We do continue to see great opportunity in Texas and Southern California from a growth opportunity perspective. We also saw a bump, sequentially speaking, in the annual payroll tax and retirement account contribution, which resets in the first quarter every year. We also saw an increase in overall medical insurance costs.

On the asset quality side, provision expense for the first quarter was $8.3 million and our allowance for credit losses as a percentage of loans was 1.2%, a decrease of 7 bps from Q4. As Neal noted, our provision expense for this quarter was due to a combination of net portfolio downgrades and our strong loan growth. We took a charge-off on a telecom loan that we had partially reserved for last year and we took a charge-off on an auto finance lender loan that we had fully reserved for last year, both of which were part of our charge-off expectations for 2026.

These two loans drove the bulk of the $10.5 million in net charge-offs, or 63 basis points on an annualized basis. Overall, we are not seeing broad-based credit issues across any particular geography in our footprint or sector within our portfolio. However, we have seen a relatively consistent level of nonperformance in the portfolio as a whole, with an average level of nonperformers around 1% of the loan portfolio over the last year, although that level did come down slightly to 86 basis points at the end of the first quarter.

I will just underscore what Neal noted earlier, and that is the significant level of loan growth we saw did result in incremental loan loss provisioning for us in the first quarter. Our overall level of credit-adjusted NIM, which we referenced on page 15 in our earnings presentation deck, came down slightly as well, but is still above peer averages. On the capital side, we continue to strengthen our position as we ended the first quarter with our TBV per share improving by $0.74 to $38.57. Next, I will turn to a few comments on the First Foundation acquisition.

As Neal noted, there is a lot of momentum on the business side, and all of our integration activities are well underway. Our macro objective again is to derisk the acquired balance sheet and transform the business to look more like FirstSun Capital Bancorp. I will start with an overview on our balance sheet repositioning activities, and I will note that we have some details in the earnings presentation on this topic on page 20. At the end of the first quarter, before the transaction closed, First Foundation had already made significant progress on the loan downsizing, successfully reducing balances by approximately $1 billion, or 44% of the planned $2.3 billion in total loan downsizing.

We are now actively working on the remaining $1.3 billion in total loan downsizing, and based on our ongoing work with certain counterparties there, we expect to be completed by the end of the second quarter. Even after the remaining planned repositioning activities are complete in the second quarter, we expect to continue to remix the acquired loan portfolio and specifically expect to continue to bring down the multifamily balances as they naturally hit their scheduled repricing dates over the next several years. We have approximately $310 million in scheduled repricing in the acquired multifamily portfolio over the remainder of 2026 and another approximately $400 million in 2027.

Our focus here will be on keeping true relationships rather than where it is simply a credit-only situation. To us, credit-only is not a true relationship, and this is where we want to derisk the portfolio. Additionally, while our initial targeted balance reduction in the SNC portfolio is complete, we also expect to strategically continue to reduce the non-relationship balances in this portfolio on a go-forward basis, again with an emphasis on cultivating true relationships that have deposits and connections into our service revenue businesses like treasury management and wealth advisory services. Also, we expect to bring down the overall investor CRE concentration level to below 250% of capital by the end of the second quarter.

As a reminder, while the legacy FirstSun Capital Bancorp investor CRE concentration level was less than 120% at the end of the first quarter, the loans acquired from First Foundation did result in that level increasing significantly post acquisition. As to the other components of our repositioning work, in the month of April, we completed all of the downsizing in the securities portfolio and have already meaningfully exited some of the higher-cost funding, including all of the acquired FHLB term advances totaling $1.4 billion. Similarly, we expect we will utilize the proceeds from all the remaining second quarter repositioning on the asset side to exit funding targeted in Q2, including our initial targeted brokered deposit balance exits.

I will note that, similar to our continued remix plans on the loan side, we also plan to continue to bring down the brokered deposit balances as those remaining maturities occur in future quarters. We do expect we will be on target to bring down the overall wholesale funding ratio to approximately 10% by the end of the second quarter. As a reminder, while the legacy FirstSun Capital Bancorp wholesale funding ratio was only approximately 6% at the end of the first quarter, the acquired funding mix at First Foundation did result in the level of wholesale funding increasing significantly post acquisition.

We are very pleased with our progress to date on all of our repositioning work and we believe we will hit our targets by the end of the second quarter. Our most significant application system conversion is scheduled for late September 2026. So while we have already begun to realize cost synergies post closing, and I would say we will be at roughly 65% phased in for the cost synergies at the end of the second quarter, we will not reach a fully phased state until the end of this year. That is largely related to the timing for our largest system conversion in September and another separate system conversion on the wealth business side scheduled for Q4.

On the cost save side, once we are fully phased in, based on all our preliminary work to date, we believe the overall level of fair value marks may come down a bit as compared to our expectations at the time we announced the transaction in October. While this means we could see a lesser level of TBV dilution, perhaps by a couple percentage points, we expect it will also translate into a lesser level of interest rate mark accretion in the go-forward P&L. We also believe we will see a slightly higher CET1 ratio compared to our expectations at the time we announced the transaction in October, and expect we will have capacity for some nearer-term share repurchases.

Specifically, as noted in our earnings presentation deck, we are expecting CET1 in the 11% range post repositioning, which compares favorably to the 10.5% we referenced when we announced the deal back in October. Finally, I thought I would make a couple references to our 2026 full year financial outlook, which we have updated to reflect the acquisition and includes preliminary estimates of purchase accounting adjustments and expectations related to the balance sheet repositioning. You will see our 2026 outlook in the earnings presentation on page 21.

On the balance sheet side for loans, given our continued focus on the remix of acquired balances, we expect balances to be relatively stable to post-reposition and post-mark balances through the end of the year and then expect to return to a balanced growth mode. While we expect healthy new loan origination levels this year, as I previously noted, we also expect to continue to remix the acquired First Foundation loan portfolio. This means we will have additional balance runoff and leads to our view of relatively stable balances in comparison to the post-reposition and post-mark starting point considering the acquisition.

For deposits, given our continued focus on the remix of acquired balances, we expect balances to be relatively stable to post-reposition and post-mark balances through the end of the year and then expect to return to a balanced growth mode. On the NIM side, in addition to our strong legacy FirstSun Capital Bancorp NIM run rate, our repositioning work and the impact from purchase accounting will have a significant favorable impact to the most recent First Foundation first quarter NIM of 1.07%.

We expect our full year 2026 net interest margin to be in the mid-3.80s range; however, for the next couple quarters, we expect to see a drop as we complete the downsizing in Q2 and as we work to further remix the acquired base in Q3, with the fourth quarter NIM expected to elevate into the 3.90s performance range. In terms of revenue mix, we expect our level of noninterest income to total revenue to decline into the lower twenties range. In terms of adjusted efficiency ratio, which excludes merger-related expenses, we expect to operate in the mid- to lower-sixties range for the next couple quarters and then drop to an approximate 60% level in the fourth quarter.

In terms of net charge-offs to average loans, we expect levels to end the year in the mid-twenties in basis points, albeit on a higher average balance base post acquisition. Overall, we are very pleased with the progress we have made with respect to the acquisition to date. We believe the combined earnings profile will quickly take the shape of what you have become accustomed to from legacy FirstSun Capital Bancorp. I will now turn the call back to the moderator to open the line for questions.

Operator: Thank you. We will now open the call for questions. Your line will remain open for follow-up questions. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Wood Lay with KBW. Wood Lay, your line is open. Please go ahead.

Wood Lay: Hey, good morning, guys. To start on the size of the balance sheet, and as you mentioned, tangible book value dilution with the deal is coming a little bit better than expected because the marks are lower, but that could have a slight impact on EPS as well. But it also looks like, you know, the repositioning is ahead of schedule, and it is about a billion more than what was initially laid out at the merger announcement. How do you expect the smaller balance sheet to impact that $5.24 EPS run rate that you initially laid out at deal announcement?

Robert Cafera: Morning, Wood Lay. Thank you. So, yes, we do see a little bit more in repositioning as we outlined on slide 20 in the earnings deck. That is largely related to, or entirely related to, I should say, a short-term leverage strategy that the First Foundation team deployed for the pendency period. So that is what is driving that. It was entirely wholesale deposit funded, and so that is, if you will, the reconciliation between the original $3.4 billion and what you see on slide 20 there of $4.4 billion. In terms of our expectations on an after-repositioning balance perspective, they are largely unchanged because that was an incremental leveraging on the balance sheet that was deployed post announcement.

So, if you will, the balance sheet base, our expectations are largely unchanged from announcement as we look at 2026. We do see a lot of healthy opportunity and expect healthy origination in the core C&I space, and we expect that will be met with some incremental remix and balance runoff as we continue to work through and get the overall concentration levels down from the acquired balance sheet. We do, as you referenced, see some slight improvement in the TBV dilution as a result of where marks are coming in as we are looking at those here preliminarily now in the second quarter.

We put some guidance on slide 21 in terms of the level of loan interest rate accretion for 2026. It is relatively comparable to what you saw in the investor deck back in October, or the announcement deck back in October. And that relative comparability extends into 2027 as well. So we feel pretty good about that $5-plus level as you look forward to 2027 that was referenced in the October announcement deck.

Wood Lay: That is extremely helpful. I appreciate you walking through the moving pieces there. Maybe just thinking about the net interest margin, I appreciate the glide path you provided for 2026. But as we think about longer term, there are still some remix initiatives going on behind the scenes. Do you think the NIM is higher in 2027 as that remix occurs, improving off that 4Q expected base in the 3.90s range?

Robert Cafera: Yes, as I had mentioned for the fourth quarter of 2026 and as we referenced in the deck on slide 21, we expect 4Q to be in the 3.90s range. As you look forward into 2027, I would expect a little bit of an uptick from that level, but it is going to be in that same neighborhood. We feel pretty good about that as a run rate as we extend out looking over the near-term horizon here, end of fourth quarter 2026 and for 2027.

Wood Lay: Got it. Maybe just the last for me. You sounded a little more incrementally positive on buybacks and being active there. CET1 is coming slightly above where you laid out. Just thoughts on where you would like to keep CET1 for the pro forma company. Any target you are thinking of?

Robert Cafera: Fair question. We have looked at an 11% level for CET1. I think we have referenced that in the past, and that is a level that internally, in our conversations with our board, we have said is a targeted level for CET1. And as you referenced, we do see the capacity for some near-term share repurchase activity. Those are always active conversations within our boardroom and will continue to be. But we feel really good about our capital positioning.

Wood Lay: Alright. I appreciate you taking my questions.

Operator: Thank you, Wood. Your next question comes from the line of Michael Rose with Raymond James. Michael, your line is open. Please go ahead.

Michael Rose: Hey, good morning, guys. Thanks for taking my questions. Maybe just following up on some of the loan growth commentary that you provided. It sounds like there is going to be some ongoing remixing as we get beyond the second quarter into the third and fourth, but is that largely complete by the time you get to the end of the year? And then with, you know, some of the personnel shifts and changes that I think will happen on the First Foundation side, and ongoing hiring efforts, how should we think about the pro forma intermediate- to longer-term growth rate for the company beyond this year as some of those remixing activities run their course?

Neal Arnold: Morning. I guess what I would say, Michael, is that the loan growth we had in the first quarter was surprising to us. Both Southern California and Texas are leading the way and we are seeing that across some of those markets. The remix that we are going to have going on is a multiyear one as we see maturities on the multifamily portfolio. Some of those we will keep as they become deposit clients; some of those will run off. The more loan growth we have on the C&I side, I would say the asset yield step-up will happen. The other thing I am pretty bullish on is the focus on core deposits across our franchise.

The deposit teams have already kicked off their campaign, and we could see a material impact as we continue to improve the mix on the funding side. Obviously, getting rid of wholesale was the immediate priority, but I would say just remixing the core deposit work—Robert and the teams have been hard at it. Robert, I will let you add to that color.

Robert Cafera: Just to underscore what Neal was referencing there, Michael, and back to one of the remarks I made in the prepared section, there is scheduled repricing in that multifamily portfolio here not only in 2026 but also in 2027 at somewhat elevated levels. So that is, if you will, a bit of a headwind from a growth perspective, but again it is all part of our overall strategy on bringing concentration levels down as we have talked about, and it will mute the overall growth in 2026 to that relatively stable level that we have referenced.

There is roughly another $400 million in repricing scheduled, and as Neal referenced, our objective is to get deposit penetration within that base and convert to core relationships. That is what the team will be hard at work at. As we cast forward into 2027, I referenced returning to a growth mode. We certainly see more of a growth mode as we look out into 2027 and beyond.

Michael Rose: Okay, that is helpful. I will not try and pin you down for a percentage in 2027. Maybe if we can switch to credit. I appreciate the reminder and the color on those two credits that were kind of the bulk of the charge-offs this quarter. Obviously, the guidance implies a pretty big step down in the combined charge-off rate as we move forward. You have been pretty clear that given the C&I mix and how it is higher than peers and the average size of your loans being a little bit higher, credit is going to be, on a ratio basis, somewhat lumpy.

What gives you confidence that you can operate in that ~20 bps range not only this year but as we move forward as growth reaccelerates?

Robert Cafera: You are right, Michael. Given our heavier C&I mix, we do see credit coming in some lumpy fashion at times. We have had the onesie-twosie as we look back over the course of the first quarter in 2026 and back into 2025. One of the things that we intently focus on, of course, is the overall return level within the business and the underlying economics that we are delivering. One of those metrics that we do point to is that credit-adjusted NIM level. Given we are in a heavy C&I business, credit spreads that we are operating with are obviously different than a CRE-heavy bank mix—i.e., we are 300-plus spreads, as opposed to 200–225 kind of spreads.

We realize that the credit profile on the C&I side will lead to some lumpiness at times. As the teams work hard constantly on our portfolio, we are not seeing broad-based structural issues in a sector or in a geography within the portfolio. It is just one-off isolated instances—this past quarter a telecom company, an auto finance lender. Both of those we had spoken about and referenced in the prior year, and we are seeing some elevated loss realization levels there on those exits. But it is the overall performance in the business—being able to continue to operate strongly from an overall return perspective, that credit-adjusted return perspective—and the absence of any deep broad-based issues across the portfolio.

We have been operating around the 1% NPA level, actually down in Q1 to 86 bps. The first quarter on an annualized basis looks a little elevated because we did take those couple charges in the first quarter. They were all part of what we saw coming at us for fiscal 2026. The point of realization became Q1 for both of those. Hopefully that gives you a sense for how we are looking at the business and what we are seeing that leads us to our guidance around that mid-twenties level on charge-off performance.

Neal Arnold: Michael, I would just add we have never liked losing money, but the hard part with C&I is we do not have an industry concentration, and we are not seeing it out of any one sector or one geography. So it makes it hard to forecast. If I could plan for events, I would certainly rather not have charge-offs in our biggest loan quarter. It is what it is, and we do not take it lightly. We are provisioning on the front end for some extraordinary loan growth, and we will still continue to say we want more C&I opportunity because on a risk-adjusted NIM, it is the best thing we can do.

Michael Rose: Totally get it. I appreciate all the color. Maybe just last one for me. If I go back to the slide deck from when you announced the deal, you talked about a 1.45% pro forma ROA and about a 13.5% ROTCE. Understanding some of the marks and the rate landscape have certainly changed, any updates to those targets? I know you talked about the tangible book value being a little bit less; I would expect there would be some change there. Any updates there? And if we were to exclude the impacts of expected accretion in 2027, what could those levels look like?

Robert Cafera: As you look at returns in the business and in comparison to what we referenced in the announcement deck, given the lesser level of TBV dilution and the linkage on the mark side, there is some lesser level of accretion—not materially, as I mentioned a little bit ago—relative to our expectations on a bottom-line EPS perspective in 2027. We do think we are still in that $5 neighborhood for 2027. Returns as you look at next year will certainly be increasing over 2026 levels.

I would say coming down a little bit in relation to what was in the announcement deck, but certainly above the most recent return levels that we delivered in fiscal 2025 in the low 1.20s on the ROA side. On the capital side, we will continue to look at the right mix of capital given our overall target levels, coming out a little favorably on that side and having a more near-term capacity for some possible repurchase activity, which can certainly impact favorably the return on tangible capital levels as well.

Neal Arnold: The only thing I might add is I like the flexibility of the new combined balance sheet—that we have both the floating-rate growth in C&I and the term nature of the multifamily. On prepay and otherwise, I would not trade our balance sheet for anyone out there.

Operator: Your next call comes from the line of Matt Olney with Stephens. Matt, your line is open. Please go ahead.

Matt Olney: Thanks, and good morning, everybody. Going back to the repositioning efforts in recent weeks, it sounds like you are getting some pretty good pricing versus original expectations on the loan dispositions. Anything you can disclose or any color you can give us as far as the Shared National Credits or the multifamily efforts as far as pricing versus original expectations?

Robert Cafera: I would say on the SNC side—very successful performance there. The initial targets on the SNC side First Foundation completed all of the strategic exits actually prior to 03/31, so real strong performance on the SNC side. On the multifamily side, we are very favorably pleased with our discussions so far, and we continue to work with counterparties on all the remaining loan sales that we believe will conclude and complete here in the second quarter. We are very pleased with what we have been talking about and what we think we will ultimately realize there, maybe slightly better than our original targets, but very, very pleased.

Matt Olney: Thanks for that, Robert. And then on the expense side, any more color on expenses at the combined company that we will see in the near term? I think we can see the disclosure for First Foundation expenses and, obviously, FirstSun Capital Bancorp. Should we just add these two together initially before we recognize some of these cost savings? Or is there anything more nuanced in the run rate of either side that you want to disclose as we think about our estimates?

Robert Cafera: Thank you for the question, Matt. You are right. As you look at First Foundation in the first quarter, it was, call it, a $56 million kind of run-rate level. If, to your point, you just add that with FirstSun Capital Bancorp and apply some cost saves—as I mentioned, we think we will be at about a 65% level on cost saves in the second quarter—we are well on our way in total on cost saves and actually expect to be slightly above our original targets there.

The original target was 35% of the First Foundation core expense base, so if you just apply that math, that should give you a pretty close approximation for where we would see Q2–Q3, consistent with our expectations on efficiency being in the mid-60s for the next couple quarters and then dropping into the lower 60s in the fourth quarter.

Matt Olney: Okay, appreciate that, Robert. And just to follow up on your last point there, I think we talked about that efficiency ratio getting to the 58% range when full cost saves are recognized, and I understand we do not quite see that in the fourth quarter given the timing of conversion. Do you still see that efficiency ratio moving to the 58% range in 2027?

Robert Cafera: We do. If we are in the low 60s in Q4, as you look forward and go back to the October announcement looking at 2027 run rates, we do see improvement over that low 60s in the fourth quarter to get to around that neighborhood. So, yes, we feel real good about our overall projections from an efficiency ratio standpoint.

Operator: Thank you. Your next call comes from the line of Matthew Clark with Piper Sandler. Matthew, your line is open. Please go ahead.

Matthew Clark: Thanks. Good morning, everyone. I want to start on slide 20—the First Foundation deposits. On the right side, they are running off another $2 billion, so call it $6.75 billion after that. How much of that $6.75 billion do you anticipate to be noninterest bearing, just knowing that some of that might be ECR related?

Robert Cafera: Fair question. In terms of the total mix of the portfolio on a go-forward basis, I would probably see, what would that be, low 20s. If you look at where our mix is on a noninterest-bearing to total base standpoint, we are between 20–25%, probably closer to maybe 23%. If you look go-forward, post acquisition, post repositioning, we will still be in the 20s, but that is going to drop a couple percentage points.

Matthew Clark: Okay. And then on the margin here in the near term, I think your guide includes the 4.25% you just put up in the first quarter. That would suggest a decent step down in the margin here in 2Q. Any thoughts around the cadence of the margin to get to that 3.90% in the fourth quarter? Do we step down to like a 3.70% here in 2Q and build back?

Robert Cafera: Fair question. As you look at the overall guidance for a mid-3.80s on the year and a Q4 in the 3.90s, how do you get there in the math for Q2 and Q3? You are going to see 3.60s–3.70s stepping from Q2 into Q3 before you get to the 3.90 neighborhood in Q4.

Matthew Clark: Okay. And then if you were to strip out the Fed rate cut, what would that do to your margin guidance?

Robert Cafera: It would have a nominal impact on the margin guidance—a basis point or two.

Matthew Clark: And then just on the net charge-off guidance of the mid-20s, again, it assumes that pretty big step down, maybe to 20 basis points going forward. I am assuming that is partly because you are marking First Foundation’s balance sheet—so a lot of the portfolio will not have the losses there just because it has been marked up front. Is that fair and consistent with what you are thinking?

Robert Cafera: We are marking the First Foundation balance sheet. Under the new guidance, the credit mark is now in ACL. So if ultimately we do see a loan that we have fully reserved for in purchase accounting, it is fully reserved for in that ACL line. If we see something on the First Foundation side, it will still roll through charge-off even though it will have no P&L impact, just to be precise on mechanics. So it could end up in a charge-off percentage base in 2026. But yes, relative to the 63 basis points in Q1, we see a step down. Those two credits in Q1 were part of our expectations for full 2026.

The point of realization became Q1 for both of those. We see a step down in activity over the course of the next three quarters to get to that overall mid-20s for the full year.

Matthew Clark: How much did those two credits contribute to the $10.6 million net charge-offs this quarter?

Robert Cafera: More than $10 million. When I say bulk, it truly is bulk.

Operator: There are no further questions at this time. I will now turn the call over to Neal Arnold for closing remarks.

Neal Arnold: Thank you. We appreciate you all joining the call this morning and your continued interest in FirstSun Capital Bancorp. Thanks for the day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.