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): April 18, 2024
(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 | |||||
| o | 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 2.02 Results of Operations and Financial Condition.
On April 18, 2024, First Western Financial, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2024. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference herein.
The information in this Item 2.02, including Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and 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 liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
Item 7.01 Regulation FD Disclosure.
The Company intends to hold an investor call and webcast to discuss its financial results for the first quarter ended March 31, 2024 on Friday, April 19, 2024, at 10:00 a.m. Mountain Time. The Company’s presentation to analysts and investors contains additional information about the Company’s financial results for the first quarter ended March 31, 2024 and is furnished as Exhibit 99.2 and is incorporated by reference herein.
The information in this Item 7.01, including Exhibit 99.2, is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit Number | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
| 104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document) | |||||||
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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: April 18, 2024 | By: /s/ Scott C. Wylie | |||||||
| Scott C. Wylie | ||||||||
| Chairman, Chief Executive Officer and President | ||||||||
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Exhibit 99.1
First Western Reports First Quarter 2024 Financial Results
First Quarter 2024 Summary
•Net income available to common shareholders of $2.5 million in Q1 2024, compared to a Net loss of $3.2 million in Q4 2023.
•Diluted earnings/(loss) per share of $0.26 in Q1 2024, compared to $(0.34) in Q4 2023
•Non-interest income increased 19.7% to $7.3 million compared to $6.1 million in Q4 2023 and 25.3% compared to $5.8 million in Q1 2023
•Loan to deposit ratio decreased to 98.4% in Q1 2024, compared to 100.6% in Q4 2023
•Book value per common share increased 0.8% from $25.33 in Q4 2023 to $25.52 in Q1 2024. Tangible book value per common share(1) increased 0.9% from $22.01 in Q4 2023, to $22.21 in Q1 2024.
•Total capital to risk-weighted assets ratio of 13.15% in Q1 2024, compared to 12.59% in Q4 2023
Denver, Colo., April 18, 2024 – First Western Financial, Inc. (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the first quarter ended March 31, 2024.
Net income available to common shareholders was $2.5 million, or $0.26 per diluted share, for the first quarter of 2024. This compares to Net loss of $3.2 million, or $(0.34) per diluted share, for the fourth quarter of 2023, and Net income of $3.8 million, or $0.39 per diluted share, for the first quarter of 2023.
Scott C. Wylie, CEO of First Western, commented, "While continuing to prioritize prudent risk management and a conservative approach to new loan production, we delivered a higher level of profitability during the first quarter compared to Q4 2023. As a result of strong execution on our strategic priorities, we saw positive trends in a number of key areas including further improvement in our loan-to-deposit ratio, a higher level of non-interest income driven by our wealth management and mortgage banking businesses, and improvement in our asset quality with a decline in non-performing loans and net charge-offs to average loans of 0.00% in the quarter. Given our higher level of profitability and prudent balance sheet management, we were able to continue increasing our tangible book value per share and our risk-based capital ratios.
“While economic conditions remain uncertain, we will continue to prioritize prudent risk management and be conservative in new loan production, while focusing on adding new full banking relationships with high quality clients that need the multiple products and services we can provide in banking, wealth management, and other areas. When economic conditions improve, given the strength of our balance sheet, including the higher level of liquidity that we now have, we believe we are well positioned to capitalize on increased loan demand to grow our balance sheet, increase revenue, and realize more operating leverage, which should result in further increases in our level of profitability and additional value being created for shareholders,” said Mr. Wylie.
For the Three Months Ended | |||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||
| (Dollars in thousands, except per share data) | 2024 | 2023 | 2023 | ||||||||||||||
| Earnings Summary | |||||||||||||||||
| Net interest income | $ | 16,070 | $ | 16,331 | $ | 19,573 | |||||||||||
| Provision/(release) for credit losses | 72 | 8,493 | (310) | ||||||||||||||
| Total non-interest income | 7,277 | 6,081 | 5,806 | ||||||||||||||
| Total non-interest expense | 19,696 | 18,276 | 20,528 | ||||||||||||||
| Income/(loss) before income taxes | 3,579 | (4,357) | 5,161 | ||||||||||||||
| Income tax expense/(benefit) | 1,064 | (1,138) | 1,341 | ||||||||||||||
| Net income/(loss) available to common shareholders | 2,515 | (3,219) | 3,820 | ||||||||||||||
| Basic earnings/(loss) per common share | 0.26 | (0.34) | 0.40 | ||||||||||||||
| Diluted earnings/(loss) per common share | 0.26 | (0.34) | 0.39 | ||||||||||||||
| Return on average assets (annualized) | 0.35 | % | (0.45) | % | 0.54 | % | |||||||||||
| Return on average shareholders' equity (annualized) | 4.10 | (5.17) | 6.40 | ||||||||||||||
Return on tangible common equity (annualized)(1) | 4.71 | (6.11) | 7.35 | ||||||||||||||
| Net interest margin | 2.34 | 2.37 | 2.93 | ||||||||||||||
Efficiency ratio(1) | 83.44 | 80.93 | 78.44 | ||||||||||||||
(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Operating Results for the First Quarter 2024
Revenue
Total income before non-interest expense was $23.3 million for the first quarter of 2024, an increase of 67.2%, compared to $13.9 million for the fourth quarter of 2023. Gross revenue(1) was $23.5 million for the first quarter of 2024, an increase of 4.6%, from $22.5 million for the fourth quarter of 2023. The increase in Total income before non-interest expense was primarily driven by a decrease in Provision for credit losses. Relative to the first quarter of 2023, Total income before non-interest expense decreased 9.4% from $25.7 million. Gross revenue decreased 9.8% from $26.1 million for the first quarter of 2023. The decrease was driven by a decrease in Net interest income as a result of higher Interest expense due to higher deposit costs, offset partially by higher Interest income.
(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Net Interest Income
Net interest income for the first quarter of 2024 was $16.1 million, a decrease of 1.6% from $16.3 million in the fourth quarter of 2023. Relative to the first quarter of 2023, Net interest income decreased 17.9% from $19.6 million. The decreases were due to higher Interest expense driven primarily by higher deposit costs, offset partially by higher Interest income.
2
Net Interest Margin
Net interest margin for the first quarter of 2024 decreased 3 basis points to 2.34% from 2.37% reported in the fourth quarter of 2024, primarily due to continued pricing pressure on interest-bearing deposits and an unfavorable mix shift in the deposit portfolio.
The yield on interest-earning assets increased 7 basis points to 5.58% in the first quarter of 2024 from 5.51% in the fourth quarter of 2023 and the cost of interest-bearing deposits increased 19 basis points to 4.13% in the first quarter of 2024 from 3.94% in the fourth quarter of 2023.
Relative to the first quarter of 2023, net interest margin decreased from 2.93%, primarily due to pricing pressure on interest-bearing deposits and an unfavorable mix shift in the deposit portfolio.
Non-interest Income
Non-interest income for the first quarter of 2024 was $7.3 million compared to $6.1 million in the fourth quarter of 2023, primarily driven by an increase in Net gain on mortgage loans and higher Bank fees during the first quarter of 2024, partially offset by lower Risk management and insurance fees, which tend to be seasonally higher in the fourth quarter.
Relative to the first quarter of 2023, Non-interest income increased 25.3% from $5.8 million. Increases were driven by most components of Non-interest income, including Bank fees, Net gain on loans held for sale, Trust and investment management fees, Net gain on mortgage loans, and Net gain on loans accounted for under the fair value option.
Non-interest Expense
Non-interest expense for the first quarter of 2024 was $19.7 million compared to $18.3 million for the fourth quarter of 2023. The increase was driven by higher Salaries and employee benefits due to a higher bonus accrual commensurate with improved earnings in the first quarter of 2024 as compared to the fourth quarter of 2023 and higher payroll taxes, which tend to be seasonally higher in the first quarter.
Relative to the first quarter of 2023, Non-interest expense decreased 4.1% from $20.5 million, driven primarily by lower Salaries and employee benefits as a result of staffing reductions in 2023 to better align expenses with lower revenue. The decrease was partially offset by increased Professional services and Other operational costs related to higher legal, audit and other professional fees.
The Company’s efficiency ratio(1) was 83.4% in the first quarter of 2024, compared with 80.9% in the fourth quarter of 2023 and 78.4% in the first quarter of 2023.
(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Income Taxes
The Company recorded Income tax expense of $1.1 million for the first quarter of 2024, compared to Income tax benefit of $1.1 million for the fourth quarter of 2023 and Income tax expense of $1.3 million for the first quarter of 2023.
Loans
Total loans held for investment were $2.48 billion as of March 31, 2024, a decrease of 2.2% from $2.54 billion as of December 31, 2023, the decline was due to a net decrease in Commercial and Industrial and 1-4 Family Residential portfolios. Relative to the first quarter of 2023, Total loans held for investment were flat year over year at $2.48 billion as of March 31, 2023.
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Deposits
Total deposits were $2.53 billion as of March 31, 2024, which were flat compared to December 31, 2023. Relative to the first quarter of 2023, Total deposits increased 5.9% from $2.39 billion as of March 31, 2023, driven primarily by Interest-bearing deposits due to new and expanded deposit relationships.
Borrowings
Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $69.5 million as of March 31, 2024, a decrease of $56.2 million from $125.7 million as of December 31, 2023. Relative to the first quarter of 2023, borrowings decreased $191.9 million from $261.4 million as of March 31, 2023. The change in borrowings from December 31, 2023 and March 31, 2023 is driven by a $31.0 million repayment of a Bank Term Funding Program loan that matured in March 2024. The change when compared to March 31, 2023 was also driven by a decline in FHLB borrowing reliance as a result of increased deposits.
Subordinated notes were $52.4 million as of March 31, 2024, compared to $52.3 million as of December 31, 2023. Subordinated notes increased $0.2 million from $52.2 million as of March 31, 2023.
Assets Under Management
Assets Under Management ("AUM") increased by $388.5 million during the first quarter to $7.14 billion as of March 31, 2024, compared to $6.75 billion as of December 31, 2023. This increase was primarily attributable to an increase in market values throughout the first quarter of 2024, resulting in an increase in the value of AUM balances. Total AUM increased by $759.4 million compared to March 31, 2023 from $6.38 billion, which was primarily attributable to improving market conditions year-over-year resulting in an increase in the value of AUM.
Credit Quality
Non-performing assets totaled $46.0 million, or 1.57% of total assets, as of March 31, 2024, compared to $51.1 million, or 1.72% of total assets, as of December 31, 2023. The decrease is primarily due to the sale of a non-performing Construction and Development note at a gain, a large principal payment received on a Cash, securities and other note offset partially by one new Non-performing Commercial and Industrial loan. As of March 31, 2023, non-performing assets totaled $12.5 million, or 0.42% of total assets. Relative to the first quarter of 2023, the increase in non-performing assets was due to the net addition of $33.5 million in loans added throughout 2023.
During the first quarter of 2024 the Company recorded a provision expense of $0.1 million, compared to a provision expense of $8.5 million in the fourth quarter of 2023 and a $0.3 million release to its provision in the first quarter of 2023. The decrease in provision expense recorded in the first quarter of 2024 compared to fourth quarter of 2023 reflects a Commercial and Industrial loan where the borrower filed for bankruptcy resulting in a charge-off of the entire loan balance during the fourth quarter of 2023.
4
Capital
As of March 31, 2024, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of March 31, 2024, the Bank was classified as “well capitalized,” as summarized in the following table:
| March 31, | |||||
| 2024 | |||||
| Consolidated Capital | |||||
| Tier 1 capital to risk-weighted assets | 9.77 | % | |||
| Common Equity Tier 1 ("CET1") to risk-weighted assets | 9.77 | ||||
| Total capital to risk-weighted assets | 13.15 | ||||
| Tier 1 capital to average assets | 7.73 | ||||
| Bank Capital | |||||
| Tier 1 capital to risk-weighted assets | 11.00 | ||||
| CET1 to risk-weighted assets | 11.00 | ||||
| Total capital to risk-weighted assets | 12.02 | ||||
| Tier 1 capital to average assets | 8.70 | ||||
Book value per common share increased 0.8% from $25.33 as of December 31, 2023 to $25.52 as of March 31, 2024. Book value per common share increased 1.2% from $25.22 as of March 31, 2023.
Tangible book value per common share(1) increased 0.9% from $22.01 as of December 31, 2023, to $22.21 as of March 31, 2024. Tangible book value per common share increased 1.5% from $21.85 as of March 31, 2023.
(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call and webcast at 10:00 a.m. MT/ 12:00 p.m. ET on Friday, April 19, 2024. Telephone access: https://register.vevent.com/register/BId5870626426740ff9c585b6c315ea36c.
A slide presentation relating to the fourth quarter 2024 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Events and Presentations page of the Company’s investor relations website at https://myfw.gcs-web.com.
About First Western
First Western is a financial services holding company headquartered in Denver, Colorado, with operations in Colorado, Arizona, Wyoming, California, and Montana. First Western and its subsidiaries provide a fully integrated suite of wealth management services on a private trust bank platform, which includes a comprehensive selection of deposit, loan, trust, wealth planning and investment management products and services. First Western’s common stock is traded on the Nasdaq Global Select Market under the symbol “MYFW.” For more information, please visit www.myfw.com.
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Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures include “Tangible Common Equity,” “Tangible Common Book Value per Share,” “Return on Tangible Common Equity,” “Efficiency Ratio,” “Gross Revenue,” and “Allowance for Credit Losses to Adjusted Loans". The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. Reconciliation of non-GAAP financial measures, to GAAP financial measures are provided at the end of this press release.
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Forward-Looking Statements
Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “position,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “opportunity,” “could,” or “may.” The forward-looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause us to make changes to our future plans. Those risks and uncertainties include, without limitation, the lack of soundness of other financial institutions or financial market utilities may adversely affect the Company; the Company’s ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions; financial institutions are interrelated because of trading, clearing, counterparty or other relationships; defaults by, or even rumors or questions about, one or more financial institutions or financial market utilities, or the financial services industry generally, may lead to market-wide liquidity problems and losses of client, creditor and counterparty confidence and could lead to losses or defaults by other financial institutions, or the Company; integration risks and projected cost savings in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming, California, and Montana; 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, 2024 (“Form 10-K”), and other documents we file with the SEC from time to time. We urge readers of this news release to review the “Risk Factors” section our Form 10-K and any updates to those risk factors set forth in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our other filings with the SEC. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today’s date, or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
Contacts:
Financial Profiles, Inc.
Tony Rossi
310-622-8221
MYFW@finprofiles.com
IR@myfw.com
7
First Western Financial, Inc.
Condensed Consolidated Statements of Income (unaudited)
| Three Months Ended | |||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||
| (Dollars in thousands, except per share amounts) | 2024 | 2023 | 2023 | ||||||||||||||
| Interest and dividend income: | |||||||||||||||||
| Loans, including fees | $ | 35,139 | $ | 35,625 | $ | 32,080 | |||||||||||
| Loans accounted for under the fair value option | 209 | 257 | 427 | ||||||||||||||
| Investment securities | 603 | 600 | 629 | ||||||||||||||
| Interest-bearing deposits in other financial institutions | 2,352 | 1,350 | 1,403 | ||||||||||||||
| Dividends, restricted stock | 95 | 161 | 173 | ||||||||||||||
| Total interest and dividend income | 38,398 | 37,993 | 34,712 | ||||||||||||||
| Interest expense: | |||||||||||||||||
| Deposits | 20,622 | 19,037 | 13,092 | ||||||||||||||
| Other borrowed funds | 1,706 | 2,625 | 2,047 | ||||||||||||||
| Total interest expense | 22,328 | 21,662 | 15,139 | ||||||||||||||
| Net interest income | 16,070 | 16,331 | 19,573 | ||||||||||||||
| Less: provision/(release) for credit losses | 72 | 8,493 | (310) | ||||||||||||||
| Net interest income, after provision/(release) for credit losses | 15,998 | 7,838 | 19,883 | ||||||||||||||
| Non-interest income: | |||||||||||||||||
| Trust and investment management fees | 4,930 | 4,705 | 4,635 | ||||||||||||||
| Net gain on mortgage loans | 1,264 | 379 | 1,019 | ||||||||||||||
| Net gain/(loss) on loans held for sale | 117 | — | (178) | ||||||||||||||
| Bank fees | 891 | 412 | 592 | ||||||||||||||
| Risk management and insurance fees | 49 | 544 | 127 | ||||||||||||||
| Income on company-owned life insurance | 105 | 101 | 90 | ||||||||||||||
| Net loss on loans accounted for under the fair value option | (302) | (91) | (543) | ||||||||||||||
| Unrealized (loss)/gain recognized on equity securities | (6) | (2) | 10 | ||||||||||||||
| Other | 229 | 33 | 54 | ||||||||||||||
| Total non-interest income | 7,277 | 6,081 | 5,806 | ||||||||||||||
| Total income before non-interest expense | 23,275 | 13,919 | 25,689 | ||||||||||||||
| Non-interest expense: | |||||||||||||||||
| Salaries and employee benefits | 11,267 | 9,988 | 13,098 | ||||||||||||||
| Occupancy and equipment | 1,976 | 1,937 | 1,914 | ||||||||||||||
| Professional services | 2,411 | 1,990 | 1,923 | ||||||||||||||
| Technology and information systems | 1,010 | 928 | 832 | ||||||||||||||
| Data processing | 948 | 1,189 | 1,139 | ||||||||||||||
| Marketing | 194 | 415 | 391 | ||||||||||||||
| Amortization of other intangible assets | 57 | 62 | 64 | ||||||||||||||
| Other | 1,833 | 1,767 | 1,167 | ||||||||||||||
| Total non-interest expense | 19,696 | 18,276 | 20,528 | ||||||||||||||
| Income/(loss) before income taxes | 3,579 | (4,357) | 5,161 | ||||||||||||||
| Income tax (benefit)/expense | 1,064 | (1,138) | 1,341 | ||||||||||||||
| Net income/(loss) available to common shareholders | $ | 2,515 | $ | (3,219) | $ | 3,820 | |||||||||||
| Earnings/(loss) per common share: | |||||||||||||||||
| Basic | $ | 0.26 | $ | (0.34) | $ | 0.40 | |||||||||||
| Diluted | 0.26 | (0.34) | 0.39 | ||||||||||||||
8
First Western Financial, Inc.
Condensed Consolidated Balance Sheets (unaudited)
| March 31, | December 31, | March 31, | |||||||||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | ||||||||||||||
| Assets | |||||||||||||||||
| Cash and cash equivalents: | |||||||||||||||||
| Cash and due from banks | $ | 8,136 | $ | 7,284 | $ | 6,920 | |||||||||||
| Interest-bearing deposits in other financial institutions | 249,753 | 247,158 | 288,147 | ||||||||||||||
| Total cash and cash equivalents | 257,889 | 254,442 | 295,067 | ||||||||||||||
Held-to-maturity securities (fair value of $64,908, $66,617 and $73,570, respectively), net of allowance for credit losses of $71 | 72,303 | 74,102 | 79,565 | ||||||||||||||
| Correspondent bank stock, at cost | 4,461 | 7,155 | 13,222 | ||||||||||||||
| Mortgage loans held for sale, at fair value | 10,470 | 7,254 | 9,873 | ||||||||||||||
Loans (includes $11,922, $13,726, and $20,807 measured at fair value, respectively) | 2,475,524 | 2,530,915 | 2,469,038 | ||||||||||||||
| Allowance for credit losses | (24,630) | (23,931) | (19,843) | ||||||||||||||
| Loans, net | 2,450,894 | 2,506,984 | 2,449,195 | ||||||||||||||
| Premises and equipment, net | 24,869 | 25,256 | 25,383 | ||||||||||||||
| Accrued interest receivable | 11,919 | 11,428 | 10,976 | ||||||||||||||
| Accounts receivable | 4,980 | 5,095 | 4,713 | ||||||||||||||
| Other receivables | 5,254 | 4,467 | 2,396 | ||||||||||||||
| Goodwill and other intangible assets, net | 31,797 | 31,854 | 32,040 | ||||||||||||||
| Deferred tax assets, net | 5,695 | 6,407 | 6,792 | ||||||||||||||
| Company-owned life insurance | 16,635 | 16,530 | 16,242 | ||||||||||||||
| Other assets | 35,051 | 24,488 | 23,043 | ||||||||||||||
| Total assets | $ | 2,932,217 | $ | 2,975,462 | $ | 2,968,507 | |||||||||||
| Liabilities | |||||||||||||||||
| Deposits: | |||||||||||||||||
| Noninterest-bearing | $ | 434,236 | $ | 482,579 | $ | 545,064 | |||||||||||
| Interest-bearing | 2,097,734 | 2,046,460 | 1,846,863 | ||||||||||||||
| Total deposits | 2,531,970 | 2,529,039 | 2,391,927 | ||||||||||||||
| Borrowings: | |||||||||||||||||
| Federal Home Loan Bank and Federal Reserve borrowings | 69,484 | 125,711 | 261,385 | ||||||||||||||
| Subordinated notes | 52,397 | 52,340 | 52,167 | ||||||||||||||
| Accrued interest payable | 2,415 | 3,793 | 1,786 | ||||||||||||||
| Other liabilities | 30,423 | 21,841 | 21,420 | ||||||||||||||
| Total liabilities | 2,686,689 | 2,732,724 | 2,728,685 | ||||||||||||||
| Shareholders’ Equity | |||||||||||||||||
| Total shareholders’ equity | 245,528 | 242,738 | 239,822 | ||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,932,217 | $ | 2,975,462 | $ | 2,968,507 | |||||||||||
9
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| March 31, | December 31, | March 31, | |||||||||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | ||||||||||||||
| Loan Portfolio | |||||||||||||||||
Cash, Securities, and Other(1) | $ | 151,178 | $ | 140,053 | $ | 157,308 | |||||||||||
| Consumer and Other | 18,556 | 27,446 | 22,183 | ||||||||||||||
| Construction and Development | 333,284 | 347,515 | 283,999 | ||||||||||||||
| 1-4 Family Residential | 910,129 | 925,984 | 889,782 | ||||||||||||||
| Non-Owner Occupied CRE | 562,862 | 546,966 | 536,679 | ||||||||||||||
| Owner Occupied CRE | 194,338 | 197,205 | 223,449 | ||||||||||||||
| Commercial and Industrial | 297,573 | 336,842 | 340,632 | ||||||||||||||
| Total | 2,467,920 | 2,522,011 | 2,454,032 | ||||||||||||||
| Loans accounted for under the fair value option | 12,276 | 14,129 | 21,052 | ||||||||||||||
| Total loans held for investment | 2,480,196 | 2,536,140 | 2,475,084 | ||||||||||||||
Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net(2) | (4,672) | (5,225) | (6,046) | ||||||||||||||
Loans (includes $11,922, $13,726, and $20,807 measured at fair value, respectively) | $ | 2,475,524 | $ | 2,530,915 | $ | 2,469,038 | |||||||||||
| Mortgage loans held for sale | 10,470 | 7,254 | 9,873 | ||||||||||||||
| Deposit Portfolio | |||||||||||||||||
| Money market deposit accounts | $ | 1,503,598 | $ | 1,386,149 | $ | 1,277,988 | |||||||||||
| Time deposits | 442,834 | 496,452 | 354,545 | ||||||||||||||
| Negotiable order of withdrawal accounts | 132,415 | 147,488 | 192,011 | ||||||||||||||
| Savings accounts | 18,887 | 16,371 | 22,319 | ||||||||||||||
| Total interest-bearing deposits | 2,097,734 | 2,046,460 | 1,846,863 | ||||||||||||||
| Noninterest-bearing accounts | 434,236 | 482,579 | 545,064 | ||||||||||||||
| Total deposits | $ | 2,531,970 | $ | 2,529,039 | $ | 2,391,927 | |||||||||||
____________________
(1) Includes PPP loans of $3.8 million as of March 31, 2024, $4.3 million as of December 31, 2023, and $6.1 million as of March 31, 2023.
(2) Includes fair value adjustments on loans held for investment accounted for under the fair value option.
10
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| As of or for the Three Months Ended | |||||||||||||||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||||||||||||||
| (Dollars in thousands) | 2024 | 2023 | 2023 | ||||||||||||||||||||||||||
| Average Balance Sheets | |||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||
| Interest-bearing deposits in other financial institutions | $ | 177,523 | $ | 104,789 | $ | 127,608 | |||||||||||||||||||||||
| Investment securities | 74,666 | 76,331 | 82,106 | ||||||||||||||||||||||||||
| Correspondent bank stock | 4,451 | 7,576 | 9,592 | ||||||||||||||||||||||||||
| Loans | 2,490,300 | 2,521,532 | 2,456,922 | ||||||||||||||||||||||||||
| Mortgage loans held for sale | 6,752 | 9,915 | 7,521 | ||||||||||||||||||||||||||
| Loans held at fair value | 13,134 | 14,755 | 22,722 | ||||||||||||||||||||||||||
| Total interest-earning assets | 2,766,826 | 2,734,898 | 2,706,471 | ||||||||||||||||||||||||||
| Allowance for credit losses | (23,974) | (23,308) | (20,325) | ||||||||||||||||||||||||||
| Noninterest-earning assets | 124,144 | 126,132 | 125,201 | ||||||||||||||||||||||||||
| Total assets | $ | 2,866,996 | $ | 2,837,722 | $ | 2,811,347 | |||||||||||||||||||||||
| Liabilities and Shareholders’ Equity | |||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||
| Interest-bearing deposits | $ | 2,008,246 | $ | 1,914,856 | $ | 1,805,994 | |||||||||||||||||||||||
| FHLB and Federal Reserve borrowings | 92,195 | 139,316 | 142,642 | ||||||||||||||||||||||||||
| Subordinated notes | 52,360 | 52,299 | 52,135 | ||||||||||||||||||||||||||
| Total interest-bearing liabilities | 2,152,801 | 2,106,471 | 2,000,771 | ||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 446,457 | 456,787 | 545,670 | ||||||||||||||||||||||||||
| Other liabilities | 22,250 | 25,387 | 26,206 | ||||||||||||||||||||||||||
| Total noninterest-bearing liabilities | 468,707 | 482,174 | 571,876 | ||||||||||||||||||||||||||
| Total shareholders’ equity | 245,488 | 249,077 | 238,700 | ||||||||||||||||||||||||||
| Total liabilities and shareholders’ equity | $ | 2,866,996 | $ | 2,837,722 | $ | 2,811,347 | |||||||||||||||||||||||
| Yields/Cost of funds (annualized) | |||||||||||||||||||||||||||||
| Interest-bearing deposits in other financial institutions | 5.33 | % | 5.11 | % | 4.46 | % | |||||||||||||||||||||||
| Investment securities | 3.25 | 3.12 | 3.11 | ||||||||||||||||||||||||||
| Correspondent bank stock | 8.58 | 8.43 | 7.31 | ||||||||||||||||||||||||||
| Loans | 5.66 | 5.58 | 5.28 | ||||||||||||||||||||||||||
| Loan held at fair value | 6.40 | 6.91 | 7.62 | ||||||||||||||||||||||||||
| Mortgage loans held for sale | 6.79 | 6.60 | 6.04 | ||||||||||||||||||||||||||
| Total interest-earning assets | 5.58 | 5.51 | 5.20 | ||||||||||||||||||||||||||
| Interest-bearing deposits | 4.13 | 3.94 | 2.94 | ||||||||||||||||||||||||||
| Total deposits | 3.38 | 3.18 | 2.26 | ||||||||||||||||||||||||||
| FHLB and Federal Reserve borrowings | 4.23 | 5.36 | 3.89 | ||||||||||||||||||||||||||
| Subordinated notes | 5.66 | 5.63 | 5.38 | ||||||||||||||||||||||||||
| Total interest-bearing liabilities | 4.17 | 4.08 | 3.07 | ||||||||||||||||||||||||||
| Net interest margin | 2.34 | 2.37 | 2.93 | ||||||||||||||||||||||||||
| Net interest rate spread | 1.41 | 1.43 | 2.13 | ||||||||||||||||||||||||||
11
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| As of or for the Three Months Ended | |||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||
| (Dollars in thousands, except share and per share amounts) | 2024 | 2023 | 2023 | ||||||||||||||
| Asset Quality | |||||||||||||||||
| Non-performing loans | $ | 46,044 | $ | 51,125 | $ | 12,460 | |||||||||||
| Non-performing assets | 46,044 | 51,125 | 12,460 | ||||||||||||||
| Net charge-offs | — | 8,595 | 5 | ||||||||||||||
| Non-performing loans to total loans | 1.86 | % | 2.02 | % | 0.50 | % | |||||||||||
| Non-performing assets to total assets | 1.57 | 1.72 | 0.42 | ||||||||||||||
| Allowance for credit losses to non-performing loans | 53.49 | 46.81 | 159.25 | ||||||||||||||
| Allowance for credit losses to total loans | 1.00 | 0.95 | 0.81 | ||||||||||||||
Allowance for credit losses to adjusted loans(1) | 1.00 | 0.95 | 0.81 | ||||||||||||||
| Net charge-offs to average loans | — | 0.34 | * | ||||||||||||||
| Assets Under Management | $ | 7,141,453 | $ | 6,752,981 | $ | 6,382,036 | |||||||||||
| Market Data | |||||||||||||||||
| Book value per share at period end | 25.52 | 25.33 | 25.22 | ||||||||||||||
Tangible book value per common share(1) | 22.21 | 22.01 | 21.85 | ||||||||||||||
| Weighted average outstanding shares, basic | 9,621,309 | 9,572,582 | 9,503,715 | ||||||||||||||
| Weighted average outstanding shares, diluted | 9,710,764 | 9,572,582 | 9,732,674 | ||||||||||||||
| Shares outstanding at period end | 9,621,309 | 9,581,183 | 9,507,564 | ||||||||||||||
| Consolidated Capital | |||||||||||||||||
| Tier 1 capital to risk-weighted assets | 9.77 | % | 9.40 | % | 9.28 | % | |||||||||||
| CET1 to risk-weighted assets | 9.77 | 9.40 | 9.28 | ||||||||||||||
| Total capital to risk-weighted assets | 13.15 | 12.59 | 12.39 | ||||||||||||||
| Tier 1 capital to average assets | 7.73 | 7.77 | 7.75 | ||||||||||||||
| Bank Capital | |||||||||||||||||
| Tier 1 capital to risk-weighted assets | 11.00 | 10.54 | 10.29 | ||||||||||||||
| CET1 to risk-weighted assets | 11.00 | 10.54 | 10.29 | ||||||||||||||
| Total capital to risk-weighted assets | 12.02 | 11.45 | 11.12 | ||||||||||||||
| Tier 1 capital to average assets | 8.70 | 8.71 | 8.59 | ||||||||||||||
____________________
(1) Represents a Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
* Value results in an immaterial amount.
12
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
Reconciliations of Non-GAAP Financial Measures
| As of or for the Three Months Ended | |||||||||||||||||
| March 31, | December 31, | March 31, | |||||||||||||||
| (Dollars in thousands, except share and per share amounts) | 2024 | 2023 | 2023 | ||||||||||||||
| Tangible Common | |||||||||||||||||
| Total shareholders' equity | $ | 245,528 | $ | 242,738 | $ | 239,822 | |||||||||||
| Less: goodwill and other intangibles, net | 31,797 | 31,854 | 32,040 | ||||||||||||||
| Tangible common equity | $ | 213,731 | $ | 210,884 | $ | 207,782 | |||||||||||
| Common shares outstanding, end of period | 9,621,309 | 9,581,183 | 9,507,564 | ||||||||||||||
| Tangible common book value per share | $ | 22.21 | $ | 22.01 | $ | 21.85 | |||||||||||
| Net income/(loss) available to common shareholders | 2,515 | (3,219) | 3,820 | ||||||||||||||
| Return on tangible common equity (annualized) | 4.71 | % | (6.11) | % | 7.35 | % | |||||||||||
| Efficiency | |||||||||||||||||
| Non-interest expense | $ | 19,696 | $ | 18,276 | $ | 20,528 | |||||||||||
| Less: amortization | 57 | 62 | 64 | ||||||||||||||
| Adjusted non-interest expense | $ | 19,639 | $ | 18,214 | $ | 20,464 | |||||||||||
| Total income before non-interest expense | $ | 23,275 | $ | 13,919 | $ | 25,689 | |||||||||||
| Less: unrealized (loss)/gain recognized on equity securities | (6) | (2) | 10 | ||||||||||||||
| Less: net loss on loans accounted for under the fair value option | (302) | (91) | (543) | ||||||||||||||
| Less: net gain/(loss) on loans held for sale at fair value | 117 | — | (178) | ||||||||||||||
| Plus: provision/(release) for credit losses | 72 | 8,493 | (310) | ||||||||||||||
| Gross revenue | $ | 23,538 | $ | 22,505 | $ | 26,090 | |||||||||||
| Efficiency ratio | 83.44 | % | 80.93 | % | 78.44 | % | |||||||||||
| Allowance for Credit Loss to Adjusted Loans | |||||||||||||||||
| Total loans held for investment | 2,480,196 | 2,536,140 | 2,475,084 | ||||||||||||||
| Less: PPP loans | 3,779 | 4,343 | 6,100 | ||||||||||||||
| Less: loans accounted for under fair value | 12,276 | 14,129 | 21,052 | ||||||||||||||
| Adjusted loans | $ | 2,464,141 | $ | 2,517,668 | $ | 2,447,932 | |||||||||||
| Allowance for credit losses | $ | 24,630 | $ | 23,931 | $ | 19,843 | |||||||||||
| Allowance for credit losses to adjusted loans | 1.00 | % | 0.95 | % | 0.81 | % | |||||||||||
13
First Quarter 2024 Conference Call
Safe Harbor 2 Statements in this presentation regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward- looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “position,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “opportunity,” “could,” or “may.” The forward-looking statements in this presentation are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this presentation and could cause us to make changes to our future plans. Those risks and uncertainties include, without limitation, the lack of soundness of other financial institutions or financial market utilities may adversely affect the Company; the Company’s ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions; financial institutions are interrelated because of trading, clearing, counterparty or other relationships; defaults by, or even rumors or questions about, one or more financial institutions or financial market utilities, or the financial services industry generally, may lead to market-wide liquidity problems and losses of client, creditor and counterparty confidence and could lead to losses or defaults by other financial institutions, or the Company; integration risks and projected cost savings in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming, California, and Montana; 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, 2024 (“Form 10-K”), and other documents we file with the SEC from time to time. We urge readers of this presentation to review the “Risk Factors” section our Form 10-K and any updates to those risk factors set forth in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our other filings with the SEC. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this presentation, which speak only as of today’s date, or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato(regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions Overview of 1Q24 1Q24 Earnings • Net income available to common shareholders of $2.5 million, or $0.26 per diluted share • Pre-tax, pre-provision net income(1) of $3.7 million Continued Execution on Balance Sheet Management Strategies • Continued improvement in loan-to-deposit ratio • Higher level of liquidity enabled repayment of higher cost borrowings • Total loans declined due to conservative approach to new loan production, continued high levels of payoffs, and lower level of draws on credit lines than previous quarters Positive Trends in Key Metrics • Increase in non-interest income from prior quarter resulting from higher Net Gain on Mortgage Loans, Bank fees and Trust and Investment Management fees • Non-performing loans declined from prior quarter • Net charge-offs/average loans were 0.00% • Further increase in tangible book value per share(1) (1) See Non-GAAP reconciliation 3
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato(regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 4 Net Income Available to Common Shareholders and Earnings per Share • Net income of $2.5 million, or $0.26 diluted earnings per share, in 1Q24 • Tangible book value per share(1) increased approximately 1% to $22.21 Net Income Available to Common Shareholders Diluted Earnings per Share $3,820 $1,506 $3,118 $(3,219) $2,515 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $(5,000) $(4,000) $(3,000) $(2,000) $(1,000) $— $1,000 $2,000 $3,000 $4,000 $5,000 $0.39 $0.16 $0.32 $(0.34) $0.26 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $(0.50) $(0.25) $— $0.25 $0.50 (1) See Non-GAAP reconciliation
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 5 Loan Portfolio • Total loans held for investment decreased $55.9 million from prior quarter • Decrease due to limited new production that was more than offset by payoffs and a lower level of draws on existing credit lines than previous quarters • New loan production of $31 million, with focus primarily on non-CRE lending to clients that also bring deposits to the bank • Average rate on new loan production of 6.95% negatively impacted by a large cash secured origination 1Q 2023 4Q 2023 1Q 2024 Cash, Securities and Other $ 157,308 $ 140,053 $ 151,178 Consumer and Other 22,183 27,446 18,556 Construction and Development 283,999 347,515 333,284 1-4 Family Residential 889,782 925,984 910,129 Non-Owner Occupied CRE 536,679 546,966 562,862 Owner Occupied CRE 223,449 197,205 194,338 Commercial and Industrial 340,632 336,842 297,573 Total $ 2,454,032 $ 2,522,011 $ 2,467,920 Loans accounted for at fair value(2) 21,052 14,129 12,276 Total Loans HFI $ 2,475,084 $ 2,536,140 $ 2,480,196 Loans held-for-sale (HFS) 9,873 7,254 10,470 Total Loans $ 2,484,957 $ 2,543,394 $ 2,490,666 (1) Represents unpaid principal balance. Excludes deferred (fees) costs, and amortized premium/ (unaccreted discount). (2) Excludes fair value adjustments on loans accounted for under the fair value option. ($ in thousands, as of quarter end) Loan Portfolio Composition(1) Loan Portfolio Details Loan Production & Loan Payoffs Total Loans(1) $2,487 $2,487 2,515 2,546 2,510 $2,543 $2,491 1Q23 2Q23 3Q23 4Q23 1Q24 4Q23 1Q24 $— $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 $3,200 Average Period End
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 6 Total Deposits • Total deposits trending up again in 1Q24, with average balances up 3.5% or 14% annualized over 4Q23 • Success in new business development, with $17 million in new deposit relationships added in 1Q24 • Strongest growth in money market accounts resulting from expanded relationships with existing clients and funds moved from CDs 1Q 2023 4Q 2023 1Q 2024 Money market deposit accounts $ 1,277,988 $ 1,386,149 $ 1,503,598 Time deposits 354,545 496,452 442,834 NOW 192,011 147,488 132,415 Savings accounts 22,319 16,371 18,887 Noninterest-bearing accounts 545,064 482,579 434,236 Total Deposits $ 2,391,927 $ 2,529,039 $ 2,531,970 Deposit Portfolio Composition Total Deposits $2,352 $2,375 $2,359 $2,372 $2,455 $2,529 $2,532 1Q23 2Q23 3Q23 4Q23 1Q24 4Q23 1Q24 $— $500 $1,000 $1,500 $2,000 $2,500 $3,000 Average Period End
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 7 Trust and Investment Management • Total assets under management increased $388.5 million from December 31, 2023 to $7.1 billion as of March 31, 2024 • Increase in AUM driven by an increase in market values throughout 1Q24, resulting in a 6% increase compared to 4Q23, and a 12% increase year-over-year (in millions, as of quarter end) Total Assets Under Management $6,382 $6,504 $6,396 $6,753 $7,141 Investment Agency Managed Trust 401(k)/Retirement Directed Trust Custody Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $— $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions (1) See Non-GAAP reconciliation Gross Revenue 1Q24 Gross Revenue(1) Gross Revenue(1) 8 $26.1 $24.8 $23.1 $22.5 $23.5 Wealth Management Mortgage Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $— $5.0 $10.0 $15.0 $20.0 $25.0 $30.0 $35.0 • Gross revenue(1) increased 4.6% from prior quarter • Net interest income relatively consistent with prior quarter • Non-interest income increased 19.7% from prior quarter
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 9 Net Interest Income and Net Interest Margin • Net interest income decreased slightly to $16.1 million, or 1.6%, from $16.3 million in 4Q23, due primarily to higher deposit costs • Net interest margin decreased 3 bps to 2.34%. The rate of decline in net interest margin has decelerated over the past four quarters, nearing a point of stabilization • Yield on interest earning assets increased 7 bps from prior quarter • Repayment of $31 million of borrowings from Bank Term Funding Program in March will reduce level of borrowings in the second quarter of 2024 (in thousands) Net Interest Income Net Interest Margin $19,573 $18,435 $16,766 $16,331 $16,070 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $— $5,000 $10,000 $15,000 $20,000 $25,000
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 10 Non-Interest Income • Non-interest income increased 19.7% from prior quarter • Increase driven by higher Trust and Investment Management fees, Net Gain on Mortgage Loans, and Bank Fees, partially offset by lower Risk Management and Insurance Fees, which are seasonally higher in the fourth quarter each year • Mortgage production increased to $91 million from $67 million in prior quarter, primarily due to increased home buying activity in our markets and production from mortgage loan originators hired in 2024 • Increase in Net Gain on Mortgage Loans also resulted from higher average gain on sale margins (in thousands) Total Non-Interest Income Trust and Investment Management Fees $5,806 $3,962 $6,099 $6,081 $7,277 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $(2,000) $— $2,000 $4,000 $6,000 $8,000 $4,635 $4,602 $4,846 $4,705 $4,930 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $— $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 (in thousands)
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 11 Non-Interest Expense and Efficiency Ratio • Non-interest expense increased to $19.7 million, primarily due to seasonal impact of higher payroll taxes, higher incentive compensation resulting from improved financial performance, and higher legal costs • Non-interest expense expected to be relatively consistent over next few quarters with primary variable being incentive compensation dependent upon financial performance (1) See Non-GAAP reconciliation Total Non-Interest Expense Operating Efficiency Ratio(1) (in thousands) (1) (1) (1) $20,528 $18,519 $18,314 $18,276 $19,696 $64 $62 $62 $62 $57 Non-Interest Expense Adjustments to Non-Interest Expense Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 $— $5,000 $10,000 $15,000 $20,000 $25,000 78.44% 74.48% 78.89% 80.93% 83.44% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 —% 20.00% 40.00% 60.00% 80.00% 100.00% (1) (1)(1)(1) (1)
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 12 Asset Quality • NPAs decreased $5.1 million due to the sale of a non-performing construction loan at a gain and a paydown on the largest NPL following the sale of one of the properties held as collateral • Remainder of portfolio continues to perform well as indicated by a decline in past due loans during the quarter • ACL/Adjusted Total Loans(1) increased to 1.00% in 1Q24 from 0.95% in 4Q23 • Continue to experience immaterial amount of credit losses • Multifamily represent just 7% of total loans Non-Performing Assets/Total Assets Net Charge-Offs/Average Loans (1) Adjusted Total Loans – Total Loans minus PPP loans and loans accounted for under fair value option; see non-GAAP reconciliation 0.42% 0.36% 1.87% 1.72% 1.57% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 —% 0.20% 0.40% 0.60% 0.80% 1.00% 1.20% 1.40% 1.60% 1.80% 2.00% 2.20% Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 —% 0.20% 0.40% 0.60% 0.80% 1.00%
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 13 Near-Term Outlook • Well positioned to manage through and perform well in any economic scenario that emerges in 2024 • Prudent risk management and conservative underwriting criteria expected to result in modest asset growth in 2024 until economic conditions improve • Deposit gathering will remain a top priority throughout the organization with increased focus on targeting deposit rich industries • Business development focus remains on full banking relationships with high quality clients who need multiple products and services First Western provides in banking, wealth management, and other areas • Positive trends in non-interest income expected to continue largely driven by wealth management and mortgage banking businesses • Progress on working through credits placed on non-performing status • Increase in TBV/share, capital ratios, and improvement in asset quality provides flexibility to consider additional options for capital utilization • Strength of franchise and balance sheet enables First Western to continue capitalizing on our attractive markets to consistently add new clients, realize more operating leverage as we increase scale, generate profitable growth, and further enhance the long-term value of our franchise
Appendix 14
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 15 Capital and Liquidity Overview Liquidity Funding Sources (as of 03/31/24) (1) See Non-GAAP reconciliation (2) Based on internal policy guidelines Consolidated Capital Ratios (as of 03/31/24) Tangible Common Equity / TBV per Share(1) (in thousands) Liquidity Reserves: Total Available Cash $256,492 Unpledged Investment Securities 25,840 Borrowed Funds: Secured: FHLB Available 722,747 FRB Available 23,430 Other: Brokered Remaining Capacity 128,993(2) Unsecured: Credit Lines 29,000 Total Liquidity Funding Sources $1,186,502 Loan to Deposit Ratio 98.4 % 9.77% 9.77% 13.15% 7.73% Tier 1 Capital to Risk- Weighted Assets CET1 to Risk- Weighted Assets Total Capital to Risk- Weighted Assets Tier 1 Capital to Average Assets —% 5.00% 10.00% 15.00%
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 16 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 Dec. 31, 2022 Dec. 31, 2023 Mar. 31, 2024 Total shareholders' equity $116,875 $127,678 $154,962 $219,041 $240,864 $242,738 $245,528 Less: Goodwill and other intangibles, net 25,213 19,714 24,258 31,902 32,104 31,854 31,797 Intangibles held for sale(1) - 3,553 - - - - - Tangible common equity 91,662 104,411 $130,704 187,139 208,760 210,884 213,731 Common shares outstanding, end of period 7,968,420 7,940,168 7,951,773 9,419,271 9,495,440 9,581,183 9,621,309 Tangible common book value per share $11.50 $13.15 $16.44 $19.87 $21.99 $22.01 $22.21 Net income available to common shareholders $2,515 Return on tangible common equity (annualized) 4.71% (1) Represents the intangible portion of assets held for sale Consolidated Efficiency Ratio For the Three Months Ended, (Dollars in thousands) March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Non-interest expense $20,528 $18,519 $18,314 $18,276 $16,696 Less: amortization 64 62 62 62 57 Adjusted non-interest expense $20,464 $18,457 $18,252 $18,214 $19,639 Net interest income $19,573 $18,435 $16,766 $16,331 $16,070 Non-interest income 5,806 3,962 6,099 6,081 7,277 Less: unrealized gains/(losses) recognized on equity securities 10 (11) (19) (2) (6) Less: impairment of contingent consideration assets - (1,249) - - - Less: net gain/(loss) on loans accounted for under the fair value option (543) (1,124) (252) (91) (302) Less: net gain on equity interests - - - - - Less: net (loss)/gain on loans held for sale at fair value (178) - - - 117 Adjusted non-interest income 6,517 6,346 6,370 6,174 7,468 Total income $26,090 $24,781 $23,136 $22,505 $23,538 Efficiency ratio 78.44% 74.48% 78.89% 80.93% 83.44%
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 17 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Total income before non-interest expense $24,543 $19,529 $21,647 $13,362 $21,890 Less: unrealized gains/(losses) recognized on equity securities 10 (11) (19) (2) (6) Less: impairment of contingent consideration assets - (1,249) - - - Less: net gain/(loss) on loans accounted for under the fair value option (543) (1,124) (252) (91) (302) Less: net gain on equity interests - - - - - Less: net (loss)/gain on loans held for sale at fair value (178) - - - 117 Plus: (release) provision for credit loss (310) 1,843 329 $8,493 72 Gross revenue $24,944 $23,756 $22,247 $21,948 $22,153 Mortgage Gross Revenue For the Three Months Ended, (Dollars in thousands) March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Total income before non-interest expense $1,146 $1,025 $889 $557 $1,385 Plus: provision for credit loss - - - - - Gross revenue $1,146 $1,025 $889 $557 $1,385 Consolidated Gross Revenue For the Three Months Ended, (Dollars in thousands) March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Total income before non-interest expense $25,689 $20,554 $22,536 $13,919 $23,275 Less: unrealized gains/(losses) recognized on equity securities 10 (11) (19) (2) (6) Less: impairment of contingent consideration assets - (1,249) - - - Less: net gain/(loss) on loans accounted for under the fair value option (543) (1,124) (252) (91) (302) Less: net gain on equity interests - - - - - Less: net (loss)/gain on loans held for sale at fair value (178) - - - 117 Plus: (release) provision for credit loss (310) 1,843 329 8,493 72 Gross revenue $26,090 $24,781 $23,136 $22,505 $23,538 Gross Revenue excluding net gain on mortgage loans (Dollars in thousands) March 31, 2023 December 31, 2023 March 31, 2024 Gross revenue $26,090 $22,505 $23,538 Less: net gain on mortgage loans 1,019 379 1,264 Gross revenue excluding net gain on mortgage loans $25,071 $22,126 $22,274
157 180 196 164 166 168 62 94 111 154 161 132 122 125 129 76 78 86 255 255 255 Chart color Table color Special Headlines Slide Headlines / Text on light background Primary Colors Secondary Colors Primary Background / Call Out Boxes / Text on dark background Chart color Table Color Tertiary Colors Chart color Table Color Chart Color Chart Color Approved Fonts AaBbCc 123 Lora (bold) Slide Headlines / Special Headlines AaBbCc 123 Lato (regular, bold, italics) Body Copy / Subheadings / Small Text Descriptions 18 Non-GAAP Reconciliation Allowance for credit losses to Bank originated loans excluding PPP As of (Dollars in thousands) March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Total loans held for investment $2,475,084 $2,501,926 $2,536,503 $2,536,140 $2,480,196 Less: PPP loans 6,100 5,558 4,876 4,343 3,779 Less: Purchased loans accounted for under fair value ("FVO") 21,052 18,274 16,105 14,129 12,276 Adjusted Loans excluding acquired, PPP and FVO $2,447,932 $2,478,094 $2,515,522 $2,517,668 $2,464,141 Allowance for credit losses 19,843 22,044 23,175 23,931 24,630 Allowance for credit losses to adjusted loans 0.81% 0.89% 0.92% 0.95% 1.00% Pre-tax, pre-provision net income For the Three Months Ended, (Dollars in thousands) March 31, 2023 December 31, 2023 March 31, 2024 Income before income taxes $5,161 $(4,357) $3,579 Plus: provision (release) for credit losses (310) 8,493 72 Pre-tax, pre-provision (release) net income $4,851 $4,136 $3,651