UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 2023
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code: 303 .531.8100
Former name or former address, if changed since last report: Not Applicable
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | |||||
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Item 7.01 Regulation FD Disclosure.
First Western Financial, Inc. (the “Company”) is furnishing investor presentation materials as Exhibit 99.1 to this Form 8-K, which may be presented at meetings with investors, analysts, and others, in whole or in part and possibly with modifications, during the fiscal year ending December 31, 2023.
As provided in General Instruction B.2 to Form 8-K, the information furnished in Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| FIRST WESTERN FINANCIAL, INC. | ||||||||
| Date: February 27, 2023 | By: /s/ Scott C. Wylie | |||||||
| Scott C. Wylie | ||||||||
| Chairman, Chief Executive Officer and President | ||||||||
INVESTOR PRESENTATION March 2023
Safe Harbor 2 This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of First Western Financial, Inc.’s (“First Western”) management with respect to, among other things, future events and First Western’s financial performance. These statements are often, but not always, made through the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,” “future” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about First Western’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond First Western’s control. Accordingly, First Western cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are difficult to predict. Although First Western believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking statements. Those following risks and uncertainties, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: the COVID-19 pandemic and its effects; integration risks in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming, Montana, and California; the risk of changes in the economy affecting real estate values and liquidity; the risk in our ability to continue to originate residential real estate loans and sell such loans; risks specific to commercial loans and borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the risk of changes in interest rates; and the risk of the adequacy of our allowance for credit losses and the risk in our ability to maintain a strong core deposit base or other low-cost funding sources. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2022 and other documents we file with the SEC from time to time. All subsequent written and oral forward-looking statements attributable to First Western or persons acting on First Western’s behalf are expressly qualified in their entirety by this paragraph. Forward-looking statements speak only as of the date of this presentation. First Western undertakes no obligation to publicly update or otherwise revise any forward- looking statements, whether as a result of new information, future events or otherwise (except as required by law). Certain of the information contained herein may be derived from information provided by industry sources. The Company believes that such information is accurate and the sources from which it has been obtained are reliable; however, the Company cannot guaranty the accuracy of such information and has not independently verified such information. This presentation contains certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided at the end of this presentation. Numbers in the presentation may not sum due to rounding. Our common stock is not a deposit or savings account. Our common stock is not insured by the Federal Deposit Insurance Corporation or any governmental agency or instrumentality. This presentation is not an offer to sell any securities and it is not soliciting an offer to buy any securities in any state or jurisdiction where the offer or sale is not permitted. Neither the SEC nor any state securities commission has approved or disapproved of the securities of the Company or passed upon the accuracy or adequacy of this presentation. Any representation to the contrary is a criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof. The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company after the date hereof.
3 An Emerging High Performing Institution Overview ▪ Niche-focused regional wealth manager built on a private trust bank platform ▪ Headquartered in Denver, Colorado and positioned in desirable, affluent and high growth markets Target Market ▪ Households of $1+ million liquid net worth ▪ High net worth and high growth markets ▪ Colorado, Arizona, Wyoming, California and Montana Company Highlights Competitive Advantage (as of 12/31/22) ▪ Assets: $2.87 billion ▪ Total Loans: $2.47 billion ▪ Total Deposits: $2.41 billion ▪ AUM: $6.11 billion (for the year ending 12/31/22) ▪ Loan Growth: 26.7% ▪ Deposit Growth: 9.0% ▪ Asset Growth: 13.4% ▪ TBV/Share(1) Growth: 10.7% ▪ Operates as one integrated firm, not silos ▪ Team approach benefits both clients and First Western ▪ Local boutique private trust bank offices with central product experts (1) See Non-GAAP reconciliation CA MT AZ WY CO Office Locations
4 Investment Highlights Proven Execution on Growth Strategies Attractive Markets and Business Model Strong Earnings Momentum ▪ Significant revenue growth driving improved operating leverage and higher profitability ▪ TBV/share(1) increased 25% in 2020, 21% in 2021, and 11% in 2022 ▪ Continued scale expected to drive further leverage and generate returns consistent with a high performing institution over long term ▪ Highly aligned with shareholder interests as insiders own ~17% of total shares outstanding(2) ▪ Discounted valuation trading at just 1.17x TBV/share(3) High Insider Ownership and Discounted Valuation ▪ Track record of combining organic growth and market expansion with accretive acquisitions to enhance franchise value ▪ Total assets up 58% in 2020, 28% in 2021, and 13% in 2022 with substantial increases in revenue and EPS ▪ Strengthening commercial banking platform creating more diverse loan portfolio and lower-cost deposit base ▪ Rapidly growing institution operating in high growth markets ▪ Attractive, stable deposit base with noninterest-bearing and money market accounts comprising 80% of total deposits ▪ Conservative underwriting and affluent client base results in exceptional asset quality with minimal credit losses (1) See Non-GAAP reconciliation (2) Represents beneficial ownership as defined by the Proxy Statement (3) As of February 23, 2023
$4,556 $5,795 $7,602 $10,854 $38,429 $32,611 $33,733 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2021 2022 2016-2020 Pre-Tax, Pre-Provision Income(1) ($000s) 5 Strong Operational and Financial Momentum ▪ Robust organic balance sheet growth ▪ Accretive acquisitions ▪ Market expansion ▪ Highly leverageable operating platform driving improved efficiencies ▪ Outstanding asset quality and low credit costs Drivers of Improved Performance (1) See Non-GAAP reconciliation Adjusted Pre-Tax, Pre-Provision Income(1) ($000s)
$9.19 $11.14 $11.50 $11.88 $12.38 $12.83 $13.15 $13.39 $14.13 $15.38 $16.44 $17.24 $17.98 $18.85 $19.87 $20.25 $20.65 $21.35 $21.99 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 $24.00 MYFW TBV/Share 6 Improving Earnings Driving Outperformance and Creating Shareholder Value Discounted Valuation Provides Opportunity for Continued Outperformance as Multiple Expands(2) (1) See Non-GAAP reconciliation (2) Source: S&P Capital IQ (January 1, 2020 through February 23, 2023) TBV/Share(1) Up 139% Since July 2018 IPO
Franchise Overview 7
8 Great Markets, Scarce Investment Opportunity ▪ Ranked among states with highest GDP growth ▪ Strong job and population growth ▪ Experiencing significant in-migration ▪ Attractive demographics with large amount of high net worth individuals that utilize private banking and investment management services ▪ Favorable tax laws for trusts and estates that attract wealthy individuals As of December 31, 2022 Current Ownership Total Assets ($bn) FirstBank Private 27.8 NBH Bank Public (NYSE: NBHC) 9.6 Sunflower Bank Private 7.4 Bank of Colorado Private (Sub. Of Pinnacle Bancorp-NE) 6.6 Alpine Bank Private 6.3 ANB Bank Private 3.2 First Western Trust Bank Public (Nasdaq: MYFW) 2.9 Denver, CO 45% Phoenix, AZ 12% Fort Collins, CO 12% Boulder, CO 10% Other 4% Rock Springs, WY 4% Glenwood Springs, CO 3% Jackson, WY 10% Deposits by State Colorado 70% Wyoming 18% Arizona 12% MSA State Market Share Projected % Change in HHI (2021-2026) (2) Denver-Aurora-Lakewood CO 0.77 11.00 Fort Collins CO 2.20 13.45 Phoenix-Mesa-Scottsdale AZ 0.15 13.18 Boulder CO 1.45 11.41 Jackson WY/ID 4.80 8.50 Glenwood Springs CO 1.66 8.82 National Average 9.01 (1) Source: S&P Capital IQ as of 06/30/2022 (2) Percentage growth in household income (HHI). Characteristics of First Western Markets Deposits by MSA (1) MYFW is 2nd Largest Publicly Held CO Chartered Bank Small Market Share Provides Large Growth Opportunity
9 MYFW: Our Five Core Strengths Differentiated, Proven in the Marketplace Built-in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors ▪ Niche-focused franchise headquartered in Denver, Colorado ▪ Well-positioned in many attractive markets in Arizona, California, Colorado, Montana, and Wyoming ▪ Specialized central expertise to compete with siloed national, regional firms ▪ Delivered through local, boutique trust banking teams so clients “owned” by MYFW, not associates ▪ Strong profit center margins at maturity, growth opportunities in current and new markets ▪ Revenue growth over long-term in both fee income and net interest income, with neutral balance sheet ▪ Scalable, leverageable high fixed cost, low variable cost Product and Support Centers ▪ Operating expense investment already in place for growth and expansion ▪ Primarily recurring trust and investment management (“TIM”) fees ▪ Low risk, “sticky” wealth/trust business with comprehensive product offering ▪ Multiple entry points with ConnectView® – proprietary review process to service, cross-sell ▪ At critical mass but small market share, many current and new market opportunities ▪ Proven ability to expand: (1) Organically, (2) By expansion and (3) By acquisition ▪ Few large Colorado bank alternatives for investors and clients, creating lift-out opportunities ▪ Attractive revenue and earnings growth story trading at discounted valuation ▪ Executives are major bank/professional firm trained, with deep relationships in communities ▪ Achieved growth through business and economic cycles, capital constraints ▪ Healthy relationship with all regulators with strong risk management culture ▪ CEO with proven track record for creating value in previous bank ownership
▪ Corporate loans to match specific needs ▪ Well-versed in working with complex cash flows and business models ▪ Customized treasury management products and services 10 Cross-Selling a Diverse Set of Products and Services Commercial Banking ▪ Fiduciary wealth management with expert review of client objectives, creating solutions ▪ Irrevocable life insurance trust, conservatorship, successor trustee, directed custodial trusteeship ▪ WY tax-exempt asset protection, special needs trusts, escrow services, family office services ▪ Provide a broad range of asset and sub asset classes, with automated tax and basis management ▪ Create unique solutions through internal research, proprietary and third-party investment options ▪ Central team creates the platform for Portfolio Managers to service clients, manage accounts ▪ Wealth planning with specialized services (e.g. philanthropic) ▪ Proprietary ConnectView® approach, with access to CFPs, CPAs and estate planning attorneys ▪ Charitable giving tax strategies, deferred-compensation plans, life insurance, key person insurance ▪ Mortgage banking specializing in purchase money, high net worth lending ▪ Underwritten to Fannie Mae and Freddie Mac guidelines ▪ Targeted portfolio lending and secondary sales ▪ Retirement plan consultants partnering with businesses to sponsor retirement plans ▪ Creative corporate retirement plan design, analysis solutions, fiduciary liability management ▪ ERISA compliance and education Retirement / 401(k) Plan Consulting Residential Mortgage Lending Wealth Planning Investment Management Trust Our local profit centers team with specialized product experts through ConnectView®, with many points of entry
$54.3 $55.2 $57.8 $64.3 $97.3 $96.2 $112.2 $0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Net Interest Income Non-Interest Income, excluding net gain/(loss) on sale of securities and assets 11 High Quality Revenues with Predictable Sources of Recurring Income Net Interest Income $83.2 74% Mortgage $5.3 5% Bank Fees $2.7 2% Insurance $1.2 1% Other $0.9 1% Trust & Advisory $18.9 17% ($ in millions) Note: As of or for the period ended December 31, 2022. Totals may not add up due to rounding. ($ in millions) FY 2022 Revenue Mix Gross Revenue(1) (1) See Non-GAAP reconciliation
12 Private Bank Model Generates Strong Fee Income 5-Year Average: More than 40% of Operating Revenue Generated by Fee Income 59.4% 43.3% 37.4% 35.1% 30.9% 28.5% 27.8% 27.7% 26.3% 25.7% 19.5% 17.5% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW UMBF WASH PGC UVSP CATC SYBT CFR TMP FFWM FRC Noninterest Income/Operating Revenue Peer Average Source: S&P Capital IQ (2018-2022)
Driving Profitable Growth 13
14 Success in Expansion and Acquisition Growth 2006 – 2010 (3) ▪ Boulder, CO ▪ Century City, CA ▪ Scottsdale, AZ 2011 – 2015 (6) ▪ Aspen, CO ▪ DTC/Cherry Hills, CO ▪ Fort Collins, CO ▪ Jackson Hole, WY ▪ Laramie, WY ▪ Phoenix, AZ 2016 – 2020 (4) ▪ Broomfield, CO (2021) ▪ Greenwood Village, CO ▪ Lone Tree, CO(2) ▪ Vail Valley, CO 2002 – 2005 (3) ▪ Cherry Creek, CO ▪ Denver, CO ▪ Northern Colorado, CO 2002 – 2005 (5) ▪ Westcor Insurance Group, Inc. ▪ Poudre River Valley Trust Co. ▪ Sprout & Associates, Inc. ▪ Sterling Partners ▪ Silversmith Financial Corp 2006 – 2010 (4) ▪ Reber/Russell Company ▪ Ryder, Stilwell Inc. ▪ Asset Purchase – Financial Management Advisors, LLC ▪ Asset Purchase – GKM Advisors, LLC 2011 – 2015 (1) ▪ Trust Department Assets – First National Bank of Wyoming 2016 – 2020 (2) ▪ Asset Purchase – EMC Holdings, Inc. ▪ Branch Purchase & Assumption from Simmons Bank O ff ic e O p e n in g s A cq u is it io n s 2002 2023 3 5 6 9 12 10 16 12 # #Total Acquisitions Total Offices 19 13 2021 - 2022 (1) ▪ Teton Financial Services, Inc. 2021 - 2022 (5) ▪ Jackson Hole, WY(1) ▪ Pinedale, WY(1) ▪ Rock Springs, WY(1) ▪ Bozeman, MT ▪ Phoenix, AZ(3) (1) Added through the Teton Financial Services, Inc. acquisition. Jackson Hole offices were consolidated in May 2022 (2) Lone Tree branch closed in 2Q2022 (3) Phoenix loan production office opened in 4Q2022
15 Revenue Growth Strategies Expand commercial loan production platform ▪ Building expertise in specific vertical markets, e.g. medical and dental practices ▪ Capitalize on growing reputation to attract additional experienced commercial banking talent Expand into new markets with attractive demographics ▪ Vail Valley office opened in 2019 ▪ Built team and revenue base to open office in Broomfield, CO in 3Q21 ▪ Added team to focus on Bozeman, MT market in 2Q21 ▪ Added teams to expand presence in Arizona in 2022 Execute on revenue synergies from Teton acquisition ▪ Capitalize on higher legal lending limit to expand relationships with existing clients and pursue larger commercial clients ▪ Cross-sell MYFW’s larger offering of trust and wealth management products to new client base ▪ Continue adding banking talent to further accelerate market share gains in Wyoming Execute on low- risk strategic transactions that add value to the MYFW franchise ▪ Execute on minimally dilutive acquisitions ▪ Leverage infrastructure through branch acquisition transactions ▪ Proactive expansion, acquisition team
16 Recent M&A Transactions Branch Purchase and Assumption Whole Bank Acquisition ▪ Closed on May 18, 2020 ▪ Acquisition of all of the Denver locations of Simmons Bank (three branches and one loan production office) ▪ Assumed $63 million in deposits and $120 million in loans related to the acquired locations ▪ Added scale, an attractive client base, and commercial banking talent Transaction Overview Financial Impact ▪ Mid-teens earnings accretion in 2021 Transaction Overview ▪ Closed on December 31, 2021 ▪ Acquisition of Teton Financial Services Inc., the holding company for Rocky Mountain Bank ▪ Expanded First Western’s footprint and market share in Wyoming where favorable trust, estate and tax laws align well with private banking and investment management business model ▪ Added $379 million in deposits and $252 million in loans ▪ Added scale and improves operating efficiencies Financial Impact ▪ High single-digit earnings accretion in 2022 ▪ Immediately accretive to TBV/share upon closing ▪ Added low-cost deposits and higher-yielding loans that will positively impact net interest margin
17 Strong Execution on Revenue Growth Strategies ▪ Accelerating business development, office expansion and accretive acquisitions all contributing to the balance sheet growth driving improved operating leverage and higher profitability ▪ M&A strategy continued with acquisition of Teton Financial Services ▪ Office expansion continued with hiring of teams to focus on Bozeman, MT market and deepen presence in Colorado and Arizona (in millions) Incremental Balance Sheet Growth (1/1/20 through 12/31/22) $1,238.5 $885.1 $234.7(1) $433.3 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 $1,600.0 Loans HFI Deposits Organic Growth Acquisition 148% Increase in Loans HFI 121% Increase in Total Deposits (1) Acquired growth represents remaining balances as of December 31, 2022 following payoffs/paydowns since the loans were acquired.
18 Accelerating Business Development Trends Capital raised in July 2018 IPO has allowed for increased business development activities $227.9 $268.2 $225.6 $317.9 $691.7 $561.2 $918.7 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 $800.0 $900.0 $1,000.0 2016 2017 2018 2019 2020 2021 2022 $44.0 $62.2 $121.6 $149.0 $467.9 $206.6 $199.5 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 2016 2017 2018 2019 2020 2021 2022 (1) Excluding PPP loans (2) Excluding acquired deposits (in millions)(in millions) New Loan Production(1) Net Deposit Growth(2)
19 Increased Scale and Back-Office Streamlining Driving Improved Efficiencies 88.2% 85.4% 80.6% 59.8% 66.6% 69.2% 50.0% 60.0% 70.0% 80.0% 90.0% 2017 2018 2019 2020 2021 2022 (1) See Non-GAAP reconciliation Efficiency Ratio(1)
20 Wealth Management Segment Earnings (1) See Non-GAAP reconciliation $1.55 $0.78 $1.60 $3.09 $3.33 $1.33 $1.29 $4.24 $3.81 $3.09 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 FY18 FY19 FY20 FY21 FY22 Wealth Management Segment Consolidated ▪ Wealth Management segment earnings reflects contribution of private banking, commercial banking, and trust and investment management business lines ▪ Growth in private banking, commercial banking, and TIM businesses replacing earnings generated by mortgage segment in 2020 and creating sustainable path to higher profitability over long-term Wealth Management Segment Diluted Pre-Tax Earnings Per Share(1)
Recent Financial Trends 21
22 Overview of 4Q22 Strong Deposit Growth 4Q22 Earnings Well Balanced Loan Growth ▪ Despite tighter underwriting and pricing criteria, total loans held for investment increased at 21% annualized rate ▪ Increasing contributions from newer markets in Arizona, Wyoming and Montana ▪ Growth in most major loan categories ▪ Strong deposit growth significantly reduced loan-to-deposit ratio ▪ Total Capital Ratio increased 53 bps from end of prior quarter to 12.37% Increase in Liquidity and Capital ▪ Increased focus on deposit gathering resulted in 44% annualized growth in total deposits ▪ Newer markets making larger contributions to deposit growth ▪ Net income available to common shareholders of $5.5 million, or $0.56 per diluted share ▪ Excluding acquisition-related expenses, adjusted net income of $5.6 million, or $0.58 per diluted share(1) (1) See Non-GAAP reconciliation
23 Net Income Available to Common Shareholders and Earnings per Share ▪ Net income of $5.5 million, or $0.56 diluted earnings per share, in 4Q22 ▪ Excluding acquisition-related expenses, adjusted diluted earnings per share(1) of $0.58 in 4Q22 ▪ Strong profitability resulted in 2.5% and 3.0% increase in book value per share and tangible book value per share(1), respectively, from 3Q22 ▪ Consistent value creation resulted in both book value and tangible book value per share(1) increasing by more than 9% during 2022 $1,917 $5,524 $4,482 $6,221 $5,471 $4,776 $5,922 $4,742 $6,337 $5,617 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Net Income Adjustments to Net Income $0.23 $0.57 $0.46 $0.64 $0.56 $0.57 $0.61 $0.49 $0.66 $0.58 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 $0.60 $0.70 $0.80 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Net Income Adjustments to Net Income Net Income Available to Common Shareholders Diluted Earnings per Share (1) See Non-GAAP reconciliation (1) (1) (1) (1)(1) (1) (1) (1) (1) (1)
24 Loan Portfolio ▪ Total loans held for investment increased $121.2 million from prior quarter ▪ Continued strong loan production and a moderation in payoffs results in another quarter of significant loan growth ▪ Average rate on new loan production increased by more than 100 bps from prior quarter ▪ Growth primarily driven by commercial, residential mortgage, and construction lending 4Q 2021 3Q 2022 4Q 2022 Cash, Securities and Other $261,190 $154,748 $165,670 Consumer and Other(2) 34,758 50,429 49,954 Construction and Development 178,716 228,060 288,497 1-4 Family Residential 580,872 822,796 898,154 Non-Owner Occupied CRE 482,622 527,836 496,776 Owner Occupied CRE 212,426 220,075 216,056 Commercial and Industrial 203,584 350,954 361,028 Total Loans HFI $1,954,168 2,354,898 2,476,135 Loans held-for-sale (HFS) (3) 30,620 12,743 10,804 Total Loans $1,984,788 $2,367,641 $2,486,939 $252.3 $224.6 $101.8 $341.9 $292.7 $182.3 $122.3 $154.2 $157.7 $123.4 $115.4 $21.5 $25.6 $5.7 $2.6 $0.1 $0 $50 $100 $150 $200 $250 $300 $350 4Q21 1Q22 2Q22 3Q22 4Q22 Teton Acquired Production Loan Payoffs PPP Forgiveness (in millions) $1,693 $1,945 $2,029 $2,253 $2,445 $2,368 $2,487 $0 $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 4Q21 1Q22 2Q22 3Q22 4Q22 3Q22 4Q22 (1) Represents unpaid principal balance. Excludes deferred (fees) costs, and amortized premium/ (unaccreted discount) and fair value adjustments on loans accounted for under the fair value option. (2) Includes loans held for investment accounted for under fair value option of $23.4 million and $22.6 million as of December 31, 2022 and September 30, 2022, respectively. (3) Includes $2.0 million loans held for sale that are not Mortgage loans held for sale as of December 31, 2022. ($ in thousands, as of quarter end) Loan Portfolio Composition(1) Loan Portfolio Details Loan Production & Loan Payoffs Total Loans(1) Average Period End
25 Total Deposits ▪ Total deposits increased at 44% annualized rate in 4Q22 ▪ Some migration of noninterest-bearing deposits into interest-bearing categories as clients seek higher rates for their excess liquidity ▪ Time deposits added to lock-in longer-term fixed rate funding and help improve ability to manage funding costs going forward 4Q 2021 3Q 2022 4Q 2022 Money market deposit accounts $1,056,669 $1,010,846 $1,336,092 Time deposits 170,491 186,680 224,090 NOW 309,940 277,225 234,778 Savings accounts 32,299 30,641 27,177 Noninterest-bearing accounts 636,304 662,055 583,092 Total Deposits $2,205,703 $2,167,447 $2,405,229 $1,805 $2,274 $2,227 $2,154 $2,242 $2,167 $2,405 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 4Q21 1Q22 2Q22 3Q22 4Q22 3Q22 4Q22 Average Period End ($ in millions) Deposit Portfolio Composition Total Deposits
26 Trust and Investment Management ▪ Total assets under management increased $188.6 million from September 30, 2022 to $6.11 billion as of December 31, 2022 ▪ All model portfolios continue to outperform their respective benchmark helping moderate the impact of this year’s market pullback $7,352 $7,199 $6,278 $5,918 $6,107 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Investment Agency Managed Trust 401(k)/Retirement Directed Trust Custody (in millions, as of quarter end) Total Assets Under Management
(1) See Non-GAAP reconciliation Gross Revenue ▪ Gross revenue(1) relatively consistent with prior quarter ▪ Higher non-interest income partially offset decline in net interest income ▪ Consistent growth in balance sheet and client base resulted in 4Q22 gross revenue(1) increasing 23.8% from same quarter in 2021, despite mortgage revenues declining Non-interest Income $6,561 Net Interest Income $21,842 23.9% 76.1% $23.4 $26.9 $26.9 $29.3 $29.0 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Wealth Management Mortgage (in millions) 4Q22 Gross Revenue(1) Gross Revenue(1) 27
28 Net Interest Income and Net Interest Margin ▪ Net interest income decreased to $21.8 million, or 4.6%, from $22.9 million in 3Q22, but increased 51.6% from $14.4 million in 4Q21 ▪ Net interest income decreased from 3Q22 due to higher interest expense resulting from strong deposit growth and increase in average cost of deposits ▪ Net interest margin, excluding PPP and purchase accretion (1), decreased 47 bps to 3.31%, due to increase in average cost of funds ▪ Net interest margin expected to decrease in 1Q23 $14,407 $18,305 $20,152 $22,906 $21,842 $0 $5,000 $10,000 $15,000 $20,000 $25,000 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 2.95% 2.98% 3.35% 3.76% 3.32% 2.92% 2.87%(1) 3.30% 3.78% 3.31% -0.50% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Net Interest Margin Adjusted Net Interest Margin (1) (1) (1) (1) (in thousands) (1) See Non-GAAP reconciliation Net Interest Income Net Interest Margin
29 Non-Interest Income ▪ Non-interest income increased 3.4% from 3Q22, primarily due to increases in bank fees and risk management and insurance fees ▪ Increase in risk management and insurance fees reflect typical seasonal increase in fourth quarter, while increase in bank fees partially driven by higher loan prepayment penalty fees ▪ Trust and Investment Management fees and net gain on mortgage loans beginning to stabilize ▪ Volume of locks on mortgage loans originated for sale declined 32% from the prior quarter, with 95% of the originations being purchase loans $9,516 $8,579 $6,926 $6,345 $6,561 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Trust and Investment Management Fees Net Gain on Mortgage Loans Bank Fees Risk Management and Insurance Fees Income on Company-Owned Life Insurance Other $5,197 $5,168 $4,784 $4,664 $4,358 $4,000 $4,200 $4,400 $4,600 $4,800 $5,000 $5,200 $5,400 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 (in thousands)(in thousands) Total Non-Interest Income Trust and Investment Management Fees
30 Non-Interest Expense and Efficiency Ratio ▪ Non-interest expense increased 3.3% from 3Q22 ▪ Increase primarily attributable to higher data processing fees and other operational costs related to enhancements to Trust and Investment Management platform ▪ Following investments in talent and technology in 2022, growth in non-interest expense expected to moderate in 2023 ▪ Non-interest expense for 1Q23 expected to range from $20-$21 million $3,700 $604 $424 $231 $272 $20,524 $19,358 $20,583 $19,260 $19,905 $0 $5,000 $10,000 $15,000 $20,000 $25,000 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Non-Interest Expense Adjustments to Non-Interest Expense (1) 71.77% 69.68% 74.85% 64.94% 67.66% 0% 20% 40% 60% 80% 100% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 (1) See Non-GAAP reconciliation Total Non-Interest Expense Operating Efficiency Ratio(1) (in thousands) (1) (1) (1) (1) (1)
31 Asset Quality ▪ Increase in NPAs primarily attributable to one commercial loan with multiple sources of repayment ▪ $1.2 million provision for loan losses related to growth in total loans and changes in portfolio mix ▪ ALLL/Adjusted Total Loans(1) increased to 0.78% in 4Q22 from 0.77% in 3Q22 ▪ CECL adopted on January 1, 2023 with preliminary estimate of ACL/Total Loans of 75-90 bps and 30-45 bps coverage on off-balance sheet commitments 0.17% 0.17% 0.17% 0.14% 0.43% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.20% 0.40% 0.60% 0.80% 1.00% Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Non-Performing Assets/Total Assets Net Charge-Offs/Average Loans (1) Adjusted Total Loans – Total Loans minus PPP loans, acquired loans, and loans accounted for under fair value option; see non-GAAP reconciliation
32 Capital and Liquidity Overview 9.28% 9.28% 12.37% 7.81% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Tier 1 Capital to Risk-Weighted Assets CET1 to Risk- Weighted Assets Total Capital to Risk-Weighted Assets Tier 1 Capital to Average Assets Liquidity Funding Sources (as of 12/31/22) Liquidity Reserves: Total Available Cash $ 194,871 Unpledged Investment Securities 58,498 Borrowed Funds: Unsecured: Credit Lines 29,000 Secured: FHLB Available 751,224 Brokered Remaining Capacity 445,175 Total Liquidity Funding Sources $ 1,479,112 Loan to Deposit Ratio 102.7% $91,662 $104,411 $130,704 $187,139 $208,760 $11.50 $13.15 $16.44 $19.87 $21.99 $10.00 $15.00 $20.00 $25.00 $30.00 $40,000 $60,000 $80,000 $100,000 $120,000 $140,000 $160,000 $180,000 $200,000 $220,000 $240,000 4Q18 4Q19 4Q20 4Q21 4Q22 TCE TBV/Share (in thousands) (1) See Non-GAAP reconciliation Consolidated Capital Ratios (as of 12/31/22) Tangible Common Equity / TBV per Share(1) (in thousands)
Creating Additional Shareholder Value 33
34 2023 Outlook and Priorities ▪ Well positioned to protect shareholder value during economic downturn and generate profitable growth as economic conditions improve ▪ Increased focus on core deposit gathering to fund loan production ▪ Strong business development capabilities and increasing contributions from newer markets in Arizona, Wyoming and Montana expected to continue resulting in solid loan growth ▪ Additional resources allocated to business development in Trust and Investment Management business ▪ Disciplined expense control should result in revenue growth rate exceeding expense growth rate ▪ Increased operating leverage focus should result in further earnings growth
35 Long-Term Goals to Drive Shareholder Value ▪ Since our pre-2018 IPO status as of year end 2017, we have tripled total loans and total deposits, more than doubled TBV per share, had substantial increases in annual revenue, and demonstrated significant operating leverage. Looking forward we can drive shareholder value by: ▪ Continuing to execute well, creating more operating leverage to drive high performing ROAA and ROAE results ▪ Emphasizing our differentiation in marketplace ▪ Growing through $5 billion in total assets, $25 billion TIM assets through both organic growth and acquisitions, ideally: ▪ ~50 offices – infill and adjacent ▪ Maturing at $8 million in revenue per office through growing 20% ▪ 75% contribution margin per office at maturity, then growing ▪ Building footprint, scale and operating leverage with M&A ▪ Disciplined approach to be significantly earnings accretive with minimal TBV dilution ▪ Enhancing wealth management platform ▪ Upgrade omnichannel client experience ▪ Create new digital distribution channel Our mission is to be the BPBFWWMC – Best Private Bank for the Western Wealth Management Client We believe First Western can be a unique, niche focused regional powerhouse with high fee income and consistent strong earnings from our scalable wealth management platform
MYFW’s core strengths provide the foundation for driving shareholder value 36 A Unique and Attractive Investment Differentiated, Proven in the Marketplace Built-in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors
Appendix 37
Organizational Overview 38
Name Title Joined FW Years in Industry Prior Experience Scott C. Wylie Chairman, CEO & President 2002 35 ▪ Chairman & CEO, Northern Trust Bank of Colorado ▪ Chairman & CEO, Trust Bank of Colorado ▪ CEO, Equitable Bancshares of Colorado and Women’s Bank, Chairman, Equitable Bank ▪ Chairman, American Fundware ▪ President & CEO, Bank and Trust of Puerto Rico ▪ Associate, First Boston Corporation Julie A. Courkamp Chief Financial Officer and Chief Operating Officer, Director & Treasurer 2006 22 ▪ Assurance services with PricewaterhouseCoopers ▪ Executive roles within First Western with responsibility for Accounting & Finance, Risk, Technology, Operations and Human Resources John E. Sawyer Chief Investment Officer 2017 29 ▪ Chief Investment & Fiduciary Officer, BBVA Compass Bank ▪ President & COO, Florida-based boutique wealth management firm ▪ Executive with Credit Suisse, Morgan Keegan & Co., and First Tennessee Capital Markets Matt Cassell Chief Banking Officer 2020 25 ▪ Colorado Market President, Simmons Bank ▪ President-Colorado, Bank SNB ▪ Market President, Community Banks of Colorado Scott J. Lawley Chief Credit Officer 2018 35 ▪ Sr. Credit Officer & Segment Risk Officer, Huntington National Bank ▪ Credit advisor, chief underwriter, CRE credit officer PNC Bank, US Bank ▪ Lending positions with Fleet Bank 39 Team: Ready to Take MYFW to the Next Level
Name Director Since Primary Business Scott C. Wylie 2002 ▪ First Western Financial, Inc. Julie A. Caponi, CPA 2017 ▪ Former Finance Executive at Arconic, Inc. (fka Alcoa Inc.) ▪ Former audit partner at Deloitte ▪ Board member & Audit Committee chair for FCF (NYSE) Julie A. Courkamp 2021 ▪ First Western Financial, Inc. David R. Duncan 2011 ▪ Energy ▪ Winery Executive, Silver Oak Cellars ▪ Entrepreneur, board member, business leader Thomas A. Gart 2013 ▪ Real Estate Developer ▪ Specialty Retail Executive ▪ Family business, PE investing across broad range of industries Patrick H. Hamill 2004 ▪ Real Estate Developer ▪ Home Builder Executive ▪ Entrepreneur, business/community leader, real estate expertise Luke A. Latimer 2015 ▪ Utility Maintenance ▪ Construction Executive ▪ Family business, public bank board Scott C. Mitchell 2021 ▪ President, U.S. Engineering, Metalworks ▪ President of several successful manufacturing companies ▪ Six Sigma Master Black Belt Eric D. Sipf, CPA(1) 2003 ▪ Former Healthcare Executive ▪ US Army ▪ Asset management, finance, bank board, M&A Mark L. Smith 2002 ▪ Real Estate Developer ▪ Entrepreneur, community leadership, real estate expertise Joseph C. Zimlich, CPA 2004 ▪ Family Office Executive ▪ Corporate leadership, board, and investment management 40 MYFW’s Sophisticated Board of Directors (1) CPA license inactive.
Working as a team to grow relationships 41 Integrated Team Approach in Boutique Offices President Private Bankers Lenders Portfolio Managers Wealth Advisor Trust Officer Team-based incentives Relationship-based wealth management Many relationship managers to one client Product group specialists Holistic view of the client – ConnectView®
42 Organizational Structure Built for Scale Full Bank and Trust: ▪ Aspen, CO ▪ Boulder, CO ▪ Cherry Creek, CO ▪ Denver, CO ▪ DTC/Cherry Hills, CO ▪ Northern Colorado ▪ Jackson Hole, WY ▪ Rock Springs, WY ▪ Pinedale, WY ▪ Scottsdale, AZ ▪ Broomfield, CO ▪ Phoenix, AZ ▪ Vail Valley, Avon, CO Loan Production Offices: ▪ Bozeman, MT ▪ Ft. Collins, CO ▪ Greenwood Village, CO ▪ Phoenix, AZ Trust Offices: ▪ Century City, CA ▪ Laramie, WY ▪ Investment Management ▪ Fiduciary/ Trust ▪ Wealth Planning ▪ Retirement Services ▪ Insurance ▪ Mortgage Services ▪ Treasury Management First Western Profit Centers Product Groups Support Centers ▪ Finance & Accounting ▪ Risk & Compliance ▪ Enterprise Technology ▪ Human Capital ▪ Credit Analysis ▪ Bank & Trust/Investment Operations ▪ Marketing/Branding Big operating leverage from expert, high fixed cost teams Very profitable when mature
Non-GAAP Reconciliations 43
44 Non-GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 2022 Total income before non-interest expense $53,394 $54,501 $57,602 $63,997 $92,615 $95,408 $107,934 Less: Unrealized gains/(losses) recognized on equity securities - - (15) 21 15 (21) 342 Less: net gain/(loss) on loans accounted for under the fair value option - - - - - - (891) Less: Net gain on equity interests 114 81 - 119 - 489 7 Less: Net gain on sale of assets - - - 183 - - - Less: Net gain on loans held for sale - - - - - - (12) Plus: Provision for credit loss 985 788 180 662 4,682 1,230 3,682 Gross revenue $54,265 $55,208 $57,797 $64,336 $97,282 $96,170 $112,170 Consolidated Adjusted Pre-tax, Pre- provision Income For the Twelve Months Ended December 31, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 2022 Net Income before income tax, as reported $3,571 $5,007 $7,422 $10,192 $33,063 $27,280 $28,828 Plus: Provision for loan losses 985 788 180 662 4,682 1,230 3,682 Pre-tax, Pre-provision Income $4,556 $5,795 $7,602 $10,854 $37,745 $28,510 $32,510 Plus: Acquisition related expenses - - - - 684 4,101 1,223 Adjusted Pre-tax, Pre-provision Income $4,556 $5,795 $7,602 $10,854 $38,429 $32,611 $33,733 Diluted Pre-Tax Earnings Per Share For the Twelve Months ended December 31, (Dollars in thousands) 2018 2019 2020 2021 2022 Non-Mortgage income before income tax $8,664 $6,152 $12,086 $21,378 $31,139 Plus: Acquisition-related expenses - - 684 4,101 1,223 Mortgage income before income tax (1,242) 4,040 20,978 5,902 (2,311) Less: Income tax expense including acquisition tax effect 1,775 2,183 8,705 7,673 7,432 Net income available to common shareholders $5,647 $8,009 $25,043 $23,708 $22,619 Diluted weighted average shares 5,586,620 7,914,961 7,961,904 8,235,178 9,713,623 Non-Mortgage Segment Diluted Pre-Tax Earnings Per Share $1.55 $0.78 $1.60 $3.09 $3.33 Consolidated Diluted Pre-Tax Earnings Per Share $1.33 $1.29 $4.24 $3.81 $3.09
45 Non-GAAP Reconciliation Consolidated Efficiency Ratio For the Years Ended, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 2022 Non-interest expense $49,823 $49,494 $50,182 $53,806 $59,552 $68,128 $79,106 Less: Amortization 747 784 831 374 14 17 308 Less: Acquisition related expenses - - - - 684 4,101 1,223 Less: Goodwill impairment - - - 1,572 - - - Less: Provision on other real estate owned - - - - 176 - - Less: Loss on assets held for sale - - - - 553 - - Plus: Gain on sale of LA fixed income team - - - - 62 - - Adjusted non-interest expense $49,076 $48,710 $49,351 $51,860 $58,187 $64,010 $77,575 Net interest income $24,457 $27,576 $30,624 $32,061 $46,102 $56,509 $83,204 Non-interest income 29,922 27,713 27,158 32,598 51,195 40,129 28,412 Less: Unrealized gains/(losses) recognized on equity securities - - (15) 21 15 (21) 342 Less: net gain/(loss) on loans accounted for under the fair value option - - - - - - (891) Less: Net gain on equity interests 114 81 - 119 - 489 7 Less: Net gain on sale of assets - - - 183 - - - Less: Net gain on loans held for sale - - - - - - (12) Total income $54,265 $55,208 $57,797 $64,336 $97,282 $96,170 $112,170 Efficiency ratio 90.4% 88.2% 85.4% 80.6% 59.8% 66.6% 69.2%
46 Non-GAAP Reconciliation Consolidated Tangible Common Book Value Per Share As of, (Dollars in thousands) Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2021 Sep. 30, 2022 Dec. 31, 2022 Total shareholders' equity $116,875 $127,678 $154,962 $219,041 $234,862 $240,864 Less: Goodwill and other intangibles, net 25,213 19,714 24,258 31,902 32,181 32,104 Intangibles held for sale(1) - 3,553 - - - - Tangible common equity 91,662 104,411 $130,704 187,139 202,681 208,760 Common shares outstanding, end of period 7,968,420 7,940,168 7,951,773 9,419,271 9,492,006 9,495,440 Tangible common book value per share $11.50 $13.15 $16.44 $19.87 $21.35 $21.99 Net income available to common shareholders $5,471 Return on tangible common equity (annualized) 10.48% (1) Represents the intangible portion of assets held for sale Consolidated Efficiency Ratio For the Three Months Ended, (Dollars in thousands) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Non-interest expense $20,524 $19,358 $20,583 $19,260 $19,905 Less: amortization 4 77 77 77 77 Less: acquisition related expenses 3,696 527 347 154 195 Adjusted non-interest expense $16,824 $18,754 $20,159 $19,029 $19,633 Net interest income $14,407 $18,305 $20,152 $22,906 $21,842 Non-interest income 9,516 8,579 6,926 6,345 6,561 Less: unrealized gains/(losses) recognized on equity securities (7) (32) 299 75 - Less: net gain/(loss) on loans accounted for under the fair value option - - (155) (134) (602) Less: Net gain on equity interests 489 1 - 6 - Less: Net (loss)/gain on loans held for sale at fair value - - - - (12) Adjusted non-interest income 9,034 8,610 6,782 6,398 7,175 Total income $23,440 $26,915 $26,934 $29,304 $29,017 Efficiency ratio 71.77% 69.68% 74.85% 64.94% 67.66%
47 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Total income before non-interest expense $20,612 $24,156 $25,282 $26,555 $26,623 Less: unrealized gains/(losses) recognized on equity securities (7) (32) 299 75 - Less: net gain/(loss) on loans accounted for under the fair value option - - (155) (134) (602) Less: net gain on equity interests 489 1 - 6 - Less: net (loss)/gain on loans held for sale at fair value - - - - (12) Plus: provision for loan loss 812 210 519 1,756 1,197 Gross revenue $20,942 $24,397 $25,657 $28,364 $28,434 Mortgage Gross Revenue For the Three Months Ended, (Dollars in thousands) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Total income before non-interest expense $2,498 $2,518 $1,277 $940 $583 Plus: provision for loan loss - - - - - Gross revenue $2,498 $2,518 $1,277 $940 $583 Consolidated Gross Revenue For the Three Months Ended, (Dollars in thousands) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Total income before non-interest expense $23,110 $26,674 $26,559 $27,495 $27,206 Less: unrealized gains/(losses) recognized on equity securities (7) (32) 299 75 - Less: net gain/(loss) on loans accounted for under the fair value option - - (155) (134) (602) Less: net gain on equity interests 489 1 - 6 - Less: net (loss)/gain on loans held for sale at fair value - - - - (12) Plus: provision for loan loss 812 210 519 1,756 1,197 Gross revenue $23,440 $26,915 $26,934 $29,304 $29,017 Gross Revenue excluding net gain on mortgage loans For the Three Months Ended, (Dollars in thousands) December 31, 2021 September 30, 2022 December 31, 2022 Gross revenue $23,440 $29,304 $29,017 Less: net gain on mortgage loans 2,470 885 775 Gross revenue excluding net gain on mortgage loans $20,970 $28,419 $28,242
48 Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Net income available to common shareholders $1,917 $5,524 $4,482 $6,221 $5,471 Plus: acquisition related expense including tax impact 2,859 398 260 116 146 Adjusted net income to common shareholders $4,776 $5,922 $4,742 $6,337 $5,617 Adjusted diluted earnings per share For the Three Months Ended, (Dollars in thousands, except per share data) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Diluted earnings per share $0.23 $0.57 $0.46 $0.64 $0.56 Plus: acquisition related expenses including tax impact 0.34 0.04 0.03 0.02 0.02 Adjusted diluted earnings per share $0.57 $0.61 $0.49 $0.66 $0.58 Allowance for loan losses to Bank originated loans excluding PPP As of (Dollars in thousands) December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 December 31, 2022 Total loans held for investment $1,954,168 $1,931,122 $2,150,148 $2,354,898 $2,476,135 Less: Acquired loans 360,661 323,563 287,623 248,573 234,717 Less: PPP loans 40,062 13,109 9,053 6,905 6,378 Less: Purchased loans accounted for under fair value - 6,368 21,149 22,648 23,415 Loans excluding acquired and PPP 1,553,445 1,588,082 1,832,323 2,076,772 2,211,625 Allowance for loan losses 13,732 13,885 14,357 16,081 17,183 Allowance for loan losses to Bank originated loans excluding PPP 0.88% 0.87% 0.78% 0.77% 0.78% Pre-tax, pre-provision net income For the Three Months Ended, (Dollars in thousands) December 31, 2021 September 30, 2022 December 31, 2022 Income before income taxes $2,587 $8,235 $7,301 Plus: provision for loan losses 812 1,756 1,197 Pre-tax, pre-provision net income $3,399 $9,991 $8,498
49 Non-GAAP Reconciliation Adjusted net interest margin For the Three Months Ended December 31, 2021 For the Three Months Ended March 31, 2022 For the Three Months Ended June 30, 2022 For the Three Months Ended September 30, 2022 For the Three Months Ended December 31, 2022 (Dollars in thousands) Average Balance Interest Earned/Paid Average Yield/Rate Average Balance Interest Earned/Paid Average Yield/Rate Average Balance Interest Earned/Paid Average Yield/Rate Average Balance Interest Earned/Paid Average Yield/Rate Average Balance Interest Earned/Paid Average Yield/Rate Interest-bearing deposits in other financial institutions 279,406 109 475,942 232 321,673 549 101,824 533 103,190 931 PPP adjustment 9,556 3 12,378 6 4,493 9 2,798 16 1,736 16 Investment securities 36,001 226 55,739 337 69,320 418 87,340 653 84,017 645 Correspondent bank stock 1,744 20 1,663 21 1,555 13 4,924 109 11,880 237 PPP adjustment - - - - - - - - - - Loans 1,653,920 15,398 1,922,770 19,096 2,010,024 20,663 2,241,343 25,345 2,436,273 30,691 PPP adjustment (51,825) (622) (30,481) (491) (13,385) (148) (9,026) (73) (7,350) (32) Purchase Accretion adjustment - 398 - (328) - (288) - 114 - (87) Adjusted total Interest- earning assets 1,928,802 15,532 2,438,011 18,873 2,393,680 21,216 2,429,203 26,697 2,629,746 32,401 Interest-bearing deposits 813 943 1,103 2,706 8,260 PPP adjustment - - - - - Federal Home Loan Bank Topeka and Federal Reserve borrowings 55 39 28 666 1,916 PPP adjustment (31) (16) (8) (3) (6) Subordinated notes 477 400 361 362 486 Adjusted total interest- bearing liabilities 1,314 1,366 1,484 3,731 10,656 Net interest income 14,218 17,507 19,732 22,966 21,745 Adjusted net interest margin 2.95% 2.87% 3.30% 3.78% 3.31%