8-K/A
First Western Financial Inc (MYFW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 25, 2024
FIRST WESTERN FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
| Colorado | 001-38595 | 37-1442266 |
|---|---|---|
| (State or other jurisdiction of<br>incorporation or organization) | (Commission<br>File Number) | (I.R.S. Employer<br>Identification No.) |
| 1900 16th Street, Suite 1200<br><br>Denver, Colorado | 80202 | |
| (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:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| o | 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).
| o | 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 |
|---|---|---|
| Common Stock, no par value | MYFW | The Nasdaq Stock Market LLC |
Explanatory Note
On January 25, 2024, First Western Financial, Inc. (the “Company”) filed a Current Report on Form 8-K furnishing under Items 2.02 and 9.01 the Company’s press release announcing its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2023 (the “Original Filing”). The full text of the press release was included as Exhibit 99.1 to the Original Filing.
This Amendment (this “Amendment”) to the Original Filing is being filed to reflect a subsequent event that occurred following the issuance of the Original Filing, more fully described herein. In accordance with ASC 855, Subsequent Events, the Company has determined that this event provided additional evidence about conditions that existed as of the date of the balance sheet. The adjustment was identified by the Company’s management after the date of the Original Filing and as part of the Company’s customary procedures to finalize its financial statements for inclusion in its Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Item 2.02 Results of Operations and Financial Condition.
An updated presentation of the Company’s “Consolidated Financial Summary” and “Reconciliations of Non-GAAP Financial Matters” is attached as Exhibit 99.1 to this Amendment and is incorporated herein by reference. The following is a summary of the adjustment.
In late 2022, management identified a Commercial and Industrial loan that had developed repayment issues. The loan was placed on non-accrual status in the first quarter of 2023. Throughout 2023, we increased our allowance on individually analyzed loans by $4.0 million specifically for this loan. On February 28, 2024, the Company was notified that the borrower filed a Chapter 7 Bankruptcy Petition for the guarantor. Per Company policy, a charge-off is taken upon the occurrence of the filing by a borrower of a petition for bankruptcy. We intend to pursue all available remedies to us in the bankruptcy proceeding. The charge-off resulted in a $3.5 million, net of tax, decrease to the fourth quarter and annual net income available to common stockholders. The Company also adjusted the Allowance for credit losses by $4.0 million and decreased Loans by $8.6 million.
Management has discussed the matters disclosed in this Amendment with Crowe, LLC, the Company’s independent registered public accounting firm, and with the Company’s Board of Directors and Audit Committee.
The information contained in this Item 2.02 is being furnished 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 the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing.
Cautionary Note Regarding Forward-Looking Statements.
The foregoing disclosures may include forward-looking statements by the Company 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, 2023 (“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.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit<br>Number | Description |
|---|---|
| 99.1 | Presentation of Consolidated Statements ofFinancialCondition and Reconciliations of Certain GAAP andNon-GAAP Financial Measures, for the fourth quarter and fiscal year ended December 31, 2023 |
| 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: March 7, 2024 | By: /s/ Scott C. Wylie |
| Scott C. Wylie | |
| Chairman, Chief Executive Officer and President |
4
Document
Exhibit 99.1
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | ||||
| (Dollars in thousands, except per share amounts) | 2023(1) | 2023 | 2022 | |||
| Interest and dividend income: | ||||||
| Loans, including fees | $ | 35,625 | $ | 34,141 | $ | 30,349 |
| Loans accounted for under the fair value option | 257 | 300 | 488 | |||
| Investment securities | 600 | 607 | 645 | |||
| Interest-bearing deposits in other financial institutions | 1,350 | 1,292 | 931 | |||
| Dividends, restricted stock | 161 | 141 | 238 | |||
| Total interest and dividend income | 37,993 | 36,481 | 32,651 | |||
| Interest expense: | ||||||
| Deposits | 19,037 | 17,467 | 8,260 | |||
| Other borrowed funds | 2,625 | 2,248 | 2,403 | |||
| Total interest expense | 21,662 | 19,715 | 10,663 | |||
| Net interest income | 16,331 | 16,766 | 21,988 | |||
| Less: provision for credit losses(2) | 8,493 | 329 | 1,197 | |||
| Net interest income, after provision for credit losses(2) | 7,838 | 16,437 | 20,791 | |||
| Non-interest income: | ||||||
| Trust and investment management fees | 4,705 | 4,846 | 4,358 | |||
| Net gain on mortgage loans | 379 | 654 | 629 | |||
| Net loss on loans held for sale | — | — | (12) | |||
| Bank fees | 412 | 427 | 812 | |||
| Risk management and insurance fees | 544 | 145 | 924 | |||
| Income on company-owned life insurance | 101 | 96 | 88 | |||
| Net loss on loans accounted for under the fair value option | (91) | (252) | (602) | |||
| Unrealized loss recognized on equity securities | (2) | (19) | — | |||
| Other | 33 | 202 | 218 | |||
| Total non-interest income | 6,081 | 6,099 | 6,415 | |||
| Total income before non-interest expense | 13,919 | 22,536 | 27,206 | |||
| Non-interest expense: | ||||||
| Salaries and employee benefits | 9,988 | 10,968 | 11,679 | |||
| Occupancy and equipment | 1,937 | 1,807 | 1,910 | |||
| Professional services | 1,990 | 1,867 | 2,027 | |||
| Technology and information systems | 928 | 906 | 1,168 | |||
| Data processing | 1,189 | 1,159 | 1,223 | |||
| Marketing | 415 | 355 | 500 | |||
| Amortization of other intangible assets | 62 | 62 | 77 | |||
| Net gain on sale of other real estate owned | — | — | (3) | |||
| Other | 1,767 | 1,190 | 1,324 | |||
| Total non-interest expense | 18,276 | 18,314 | 19,905 | |||
| (Loss)/income before income taxes | (4,357) | 4,222 | 7,301 | |||
| Income tax (benefit)/expense | (1,138) | 1,104 | 1,830 | |||
| Net (loss)/income available to common shareholders | $ | (3,219) | $ | 3,118 | $ | 5,471 |
| (Loss)/earnings per common share: | ||||||
| Basic | $ | (0.34) | $ | 0.33 | $ | 0.58 |
| Diluted | (0.34) | 0.32 | 0.56 |
(1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
(2)Provision for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| December 31, | September 30, | December 31, | ||||
|---|---|---|---|---|---|---|
| (Dollars in thousands) | 2023(1) | 2023 | 2022 | |||
| Assets | ||||||
| Cash and cash equivalents: | ||||||
| Cash and due from banks | $ | 7,284 | $ | 6,439 | $ | 4,926 |
| Interest-bearing deposits in other financial institutions | 247,158 | 265,045 | 191,586 | |||
| Total cash and cash equivalents | 254,442 | 271,484 | 196,512 | |||
| Held-to-maturity securities, at amortized cost (fair value of $66,617, $66,487 and $74,718, respectively), net of allowance for credit losses | 74,102 | 75,539 | 81,056 | |||
| Correspondent bank stock, at cost | 7,155 | 11,305 | 7,110 | |||
| Mortgage loans held for sale, at fair value | 7,254 | 12,105 | 8,839 | |||
| Loans held for sale, at fair value | — | — | 1,965 | |||
| Loans (includes $13,726, $15,464, and $23,321 measured at fair value, respectively) | 2,530,915 | 2,530,459 | 2,469,413 | |||
| Allowance for credit losses(2) | (23,931) | (23,175) | (17,183) | |||
| Loans, net | 2,506,984 | 2,507,284 | 2,452,230 | |||
| Premises and equipment, net | 25,256 | 25,410 | 25,118 | |||
| Accrued interest receivable | 11,428 | 11,633 | 10,445 | |||
| Accounts receivable | 5,095 | 5,292 | 4,873 | |||
| Other receivables | 4,467 | 3,052 | 1,973 | |||
| Goodwill and other intangible assets, net | 31,854 | 31,916 | 32,104 | |||
| Deferred tax assets, net | 6,407 | 6,624 | 6,914 | |||
| Company-owned life insurance | 16,530 | 16,429 | 16,152 | |||
| Other assets | 24,488 | 24,680 | 21,457 | |||
| Total assets | $ | 2,975,462 | $ | 3,002,753 | $ | 2,866,748 |
| Liabilities | ||||||
| Deposits: | ||||||
| Noninterest-bearing | $ | 482,579 | $ | 476,308 | $ | 583,092 |
| Interest-bearing | 2,046,460 | 1,943,688 | 1,822,137 | |||
| Total deposits | 2,529,039 | 2,419,996 | 2,405,229 | |||
| Borrowings: | ||||||
| Federal Home Loan Bank and Federal Reserve borrowings | 125,711 | 259,930 | 146,886 | |||
| Subordinated notes | 52,340 | 52,279 | 52,132 | |||
| Accrued interest payable | 3,793 | 3,203 | 1,125 | |||
| Other liabilities | 21,841 | 21,089 | 20,512 | |||
| Total liabilities | 2,732,724 | 2,756,497 | 2,625,884 | |||
| Shareholders’ Equity | ||||||
| Total shareholders’ equity | 242,738 | 246,256 | 240,864 | |||
| Total liabilities and shareholders’ equity | $ | 2,975,462 | $ | 3,002,753 | $ | 2,866,748 |
(1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
(2) Allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| December 31, | September 30, | December 31, | ||||
|---|---|---|---|---|---|---|
| (Dollars in thousands) | 2023(1) | 2023 | 2022 | |||
| Loan Portfolio | ||||||
| Cash, Securities, and Other(2) | $ | 140,053 | $ | 148,669 | $ | 165,670 |
| Consumer and Other | 31,296 | 23,975 | 26,539 | |||
| Construction and Development | 347,515 | 349,436 | 288,497 | |||
| 1-4 Family Residential | 925,984 | 913,085 | 898,154 | |||
| Non-Owner Occupied CRE | 546,966 | 527,377 | 496,776 | |||
| Owner Occupied CRE | 197,205 | 208,341 | 216,056 | |||
| Commercial and Industrial | 336,842 | 349,515 | 361,028 | |||
| Total | 2,525,861 | 2,520,398 | 2,452,720 | |||
| Loans accounted for under the fair value option | 14,129 | 16,105 | 23,415 | |||
| Total loans held for investment | 2,539,990 | 2,536,503 | 2,476,135 | |||
| Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net(3) | (9,075) | (6,044) | (6,722) | |||
| Loans (includes $13,726, $15,464, and $23,321 measured at fair value, respectively) | $ | 2,530,915 | $ | 2,530,459 | $ | 2,469,413 |
| Mortgage loans held for sale | 7,254 | 12,105 | 8,839 | |||
| Loans held for sale | — | — | 1,965 | |||
| Deposit Portfolio | ||||||
| Money market deposit accounts | $ | 1,386,149 | $ | 1,388,726 | $ | 1,336,092 |
| Time deposits | 496,452 | 373,459 | 224,090 | |||
| Negotiable order of withdrawal accounts | 147,488 | 164,000 | 234,778 | |||
| Savings accounts | 16,371 | 17,503 | 27,177 | |||
| Total interest-bearing deposits | 2,046,460 | 1,943,688 | 1,822,137 | |||
| Noninterest-bearing accounts | 482,579 | 476,308 | 583,092 | |||
| Total deposits | $ | 2,529,039 | $ | 2,419,996 | $ | 2,405,229 |
____________________
(1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
(2) Includes PPP loans of $4.3 million as of December 31, 2023, $4.9 million as of September 30, 2023, and $7.1 million as of December 31, 2022.
(3) Includes fair value adjustments on loans held for investment accounted for under the fair value option.
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| As of or for the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||
| (Dollars in thousands) | 2023(1) | 2023 | 2022 | ||||||
| Average Balance Sheets | |||||||||
| Assets | |||||||||
| Interest-earning assets: | |||||||||
| Interest-bearing deposits in other financial institutions | $ | 104,789 | $ | 102,510 | $ | 103,190 | |||
| Federal funds sold | — | — | — | ||||||
| Investment securities | 76,331 | 78,057 | 84,017 | ||||||
| Correspondent bank stock | 7,576 | 7,162 | 11,880 | ||||||
| Loans | 2,536,287 | 2,502,419 | 2,436,273 | ||||||
| Interest-earning assets | 2,724,983 | 2,690,148 | 2,635,360 | ||||||
| Mortgage loans held for sale | 9,915 | 12,680 | 9,065 | ||||||
| Total interest-earning assets, plus mortgage loans held for sale | 2,734,898 | 2,702,828 | 2,644,425 | ||||||
| Allowance for credit losses(2) | (23,308) | (22,122) | (16,724) | ||||||
| Noninterest-earning assets | 126,132 | 125,774 | 125,355 | ||||||
| Total assets | $ | 2,837,722 | $ | 2,806,480 | $ | 2,753,056 | |||
| Liabilities and Shareholders’ Equity | |||||||||
| Interest-bearing liabilities: | |||||||||
| Interest-bearing deposits | $ | 1,914,856 | $ | 1,846,318 | $ | 1,582,587 | |||
| FHLB and Federal Reserve borrowings | 139,316 | 125,250 | 212,693 | ||||||
| Subordinated notes | 52,299 | 52,242 | 38,335 | ||||||
| Total interest-bearing liabilities | 2,106,471 | 2,023,810 | 1,833,615 | ||||||
| Noninterest-bearing liabilities: | |||||||||
| Noninterest-bearing deposits | 456,787 | 512,956 | 659,076 | ||||||
| Other liabilities | 25,387 | 24,228 | 21,660 | ||||||
| Total noninterest-bearing liabilities | 482,174 | 537,184 | 680,736 | ||||||
| Total shareholders’ equity | 249,077 | 245,486 | 238,705 | ||||||
| Total liabilities and shareholders’ equity | $ | 2,837,722 | $ | 2,806,480 | $ | 2,753,056 | |||
| Yields/Cost of funds (annualized) | |||||||||
| Interest-bearing deposits in other financial institutions | 5.11 | % | 5.00 | % | 3.57 | % | |||
| Investment securities | 3.12 | 3.09 | 3.05 | ||||||
| Correspondent bank stock | 8.43 | 7.81 | 7.95 | ||||||
| Loans | 5.59 | 5.43 | 5.00 | ||||||
| Mortgage loans held for sale | 6.60 | 6.70 | 6.39 | ||||||
| Total interest-earning assets | 5.51 | 5.35 | 4.90 | ||||||
| Interest-bearing deposits | 3.94 | 3.75 | 2.07 | ||||||
| Cost of deposits | 3.18 | 2.94 | 1.46 | ||||||
| FHLB and Federal Reserve borrowings | 5.36 | 4.58 | 3.58 | ||||||
| Subordinated notes | 5.63 | 6.08 | 5.03 | ||||||
| Total interest-bearing liabilities | 4.08 | 3.86 | 2.31 | ||||||
| Net interest margin | 2.37 | 2.46 | 3.30 | ||||||
| Net interest rate spread | 1.43 | 1.49 | 2.59 |
(1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
(2) Allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| As of or for the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||
| (Dollars in thousands, except share and per share amounts) | 2023(1) | 2023 | 2022 | ||||||
| Asset Quality | |||||||||
| Non-performing loans | $ | 51,125 | $ | 56,146 | $ | 12,349 | |||
| Non-performing assets | 51,125 | 56,146 | 12,349 | ||||||
| Net charge-offs | 8,595 | 190 | 95 | ||||||
| Non-performing loans to total loans | 2.01 | % | 2.21 | % | 0.50 | % | |||
| Non-performing assets to total assets | 1.72 | 1.87 | 0.43 | ||||||
| Allowance for credit losses to non-performing loans(4) | 46.81 | 41.28 | 139.14 | ||||||
| Allowance for credit losses to total loans(4) | 0.95 | 0.92 | 0.70 | ||||||
| Allowance for credit losses to adjusted loans(2)(4) | 0.95 | 0.92 | 0.78 | ||||||
| Net charge-offs to average loans(3) | 0.34 | 0.01 | * | ||||||
| Assets Under Management | $ | 6,752,981 | $ | 6,395,786 | $ | 6,106,973 | |||
| Market Data | |||||||||
| Book value per share at period end | 25.33 | 25.76 | 25.37 | ||||||
| Tangible book value per common share(2) | 22.01 | 22.42 | 21.99 | ||||||
| Weighted average outstanding shares, basic | 9,572,582 | 9,553,331 | 9,493,732 | ||||||
| Weighted average outstanding shares, diluted | 9,572,582 | 9,743,270 | 9,702,908 | ||||||
| Shares outstanding at period end | 9,581,183 | 9,560,209 | 9,495,440 | ||||||
| Consolidated Capital | |||||||||
| Tier 1 capital to risk-weighted assets | 9.40 | % | 9.32 | % | 9.28 | % | |||
| CET1 to risk-weighted assets | 9.40 | 9.32 | 9.28 | ||||||
| Total capital to risk-weighted assets | 12.59 | 12.45 | 12.37 | ||||||
| Tier 1 capital to average assets | 7.77 | 7.96 | 7.81 | ||||||
| Bank Capital | |||||||||
| Tier 1 capital to risk-weighted assets | 10.54 | 10.42 | 10.29 | ||||||
| CET1 to risk-weighted assets | 10.54 | 10.42 | 10.29 | ||||||
| Total capital to risk-weighted assets | 11.45 | 11.31 | 11.06 | ||||||
| Tier 1 capital to average assets | 8.71 | 8.88 | 8.65 |
____________________
(1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
(2) 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.
(3) Value results in an immaterial amount.
(4) Allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP. Total loans does not include loans accounted for under the fair value option.
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
Reconciliations of Non-GAAP Financial Measures
| As of or for the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||
| (Dollars in thousands, except share and per share amounts) | 2023(1) | 2023 | 2022 | ||||||
| Tangible Common | |||||||||
| Total shareholders' equity | $ | 242,738 | $ | 246,256 | $ | 240,864 | |||
| Less: goodwill and other intangibles, net | 31,854 | 31,916 | 32,104 | ||||||
| Tangible common equity | $ | 210,884 | $ | 214,340 | $ | 208,760 | |||
| Common shares outstanding, end of period | 9,581,183 | 9,560,209 | 9,495,440 | ||||||
| Tangible common book value per share | $ | 22.01 | $ | 22.42 | $ | 21.99 | |||
| Net (loss)/income available to common shareholders | (3,219) | 3,118 | 5,471 | ||||||
| Return on tangible common equity (annualized) | (6.11) | % | 5.82 | % | 10.48 | % | |||
| Efficiency | |||||||||
| Non-interest expense | $ | 18,276 | $ | 18,314 | $ | 19,905 | |||
| Less: amortization | 62 | 62 | 77 | ||||||
| Less: acquisition related expenses | 36 | 30 | 195 | ||||||
| Adjusted non-interest expense | $ | 18,178 | $ | 18,222 | $ | 19,633 | |||
| Total income before non-interest expense | $ | 13,919 | $ | 22,536 | $ | 27,206 | |||
| Less: unrealized loss recognized on equity securities | (2) | (19) | — | ||||||
| Less: net loss on loans accounted for under the fair value option | (91) | (252) | (602) | ||||||
| Less: net loss on loans held for sale at fair value | — | — | (12) | ||||||
| Plus: provision for credit losses(2) | 8,493 | 329 | 1,197 | ||||||
| Gross revenue | $ | 22,505 | $ | 23,136 | $ | 29,017 | |||
| Efficiency ratio | 80.77 | % | 78.76 | % | 67.66 | % | |||
| Allowance for Credit Loss to Adjusted Loans | |||||||||
| Total loans held for investment | 2,539,990 | 2,536,503 | 2,476,135 | ||||||
| Less: loans acquired(3) | — | — | 234,717 | ||||||
| Less: PPP loans(4) | 4,343 | 4,876 | 6,378 | ||||||
| Less: loans accounted for under fair value | 14,129 | 16,105 | 23,415 | ||||||
| Adjusted loans | $ | 2,521,518 | $ | 2,515,522 | $ | 2,211,625 | |||
| Allowance for credit losses(2) | $ | 23,931 | $ | 23,175 | $ | 17,183 | |||
| Allowance for credit losses to adjusted loans(2) | 0.95 | % | 0.92 | % | 0.78 | % |
___________________
(1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
(2) Provision and allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
(3)As of December 31, 2023 and September 30, 2023, acquired loans totaling $212.3 million and $216.1 million, respectively, are included in the allowance for credit loss calculation and are therefore not removed in calculating adjusted total loans.
(4)As of December 31, 2023 and September 30, 2023, the adjustment for PPP loans includes acquired PPP loans as acquired loans are included in total loans held for investment as a result of the adoption of ASC 326. As of December 31, 2022, the adjustment for PPP loans did not include acquired PPP loans, as those were already included in the loans acquired adjustment.
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| As of or for the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| December 31, | September 30, | December 31, | |||||||
| (Dollars in thousands, except share and per share data) | 2023(1) | 2023 | 2022 | ||||||
| Adjusted Net (Loss)/Income Available to Common Shareholders | |||||||||
| Net (loss)/income available to common shareholders | $ | (3,219) | $ | 3,118 | $ | 5,471 | |||
| Plus: acquisition related expenses | 36 | 30 | 195 | ||||||
| Less: income tax impact from acquisition related expenses | 9 | 8 | 49 | ||||||
| Adjusted net (loss)/income available to shareholders | $ | (3,192) | $ | 3,140 | $ | 5,617 | |||
| Pre-Tax, Pre-Provision Net Income | |||||||||
| (Loss)/income before income taxes | $ | (4,357) | $ | 4,222 | $ | 7,301 | |||
| Plus: provision for credit losses | 8,493 | 329 | 1,197 | ||||||
| Pre-tax, pre-provision net income | $ | 4,136 | $ | 4,551 | $ | 8,498 | |||
| Adjusted Basic (Loss)/Earnings Per Share | |||||||||
| Basic (loss)/earnings per share | $ | (0.34) | $ | 0.33 | $ | 0.58 | |||
| Plus: acquisition related expenses net of income tax impact | * | * | 0.01 | ||||||
| Adjusted basic (loss)/earnings per share | $ | (0.34) | $ | 0.33 | $ | 0.59 | |||
| Adjusted Diluted (Loss)/Earnings Per Share | |||||||||
| Diluted (loss)/earnings per share | $ | (0.34) | $ | 0.32 | $ | 0.56 | |||
| Plus: acquisition related expenses net of income tax impact | * | * | 0.02 | ||||||
| Adjusted diluted (loss)/earnings per share | $ | (0.34) | $ | 0.32 | $ | 0.58 | |||
| Adjusted Return on Average Assets (annualized) | |||||||||
| Return on average assets | (0.45) | % | 0.44 | % | 0.79 | % | |||
| Plus: acquisition related expenses net of income tax impact | * | 0.01 | 0.03 | ||||||
| Adjusted return on average assets | (0.46) | % | 0.45 | % | 0.82 | % | |||
| Adjusted Return on Average Shareholders' Equity (annualized) | |||||||||
| Return on average shareholders' equity | (5.17) | % | 5.08 | % | 9.17 | % | |||
| Plus: acquisition related expenses net of income tax impact | 0.04 | 0.04 | 0.24 | ||||||
| Adjusted return on average shareholders' equity | (5.12) | % | 5.12 | % | 9.41 | % | |||
| Adjusted Return on Tangible Common Equity (annualized) | |||||||||
| Return on tangible common equity | (6.11) | % | 5.82 | % | 10.48 | % | |||
| Plus: acquisition related expenses net of income tax impact | 0.06 | 0.04 | 0.28 | ||||||
| Adjusted return on tangible common equity | (6.05) | % | 5.86 | % | 10.76 | % |
(1) December 31, 2023 amounts include the impact of the revision previously mentioned in this earnings release.
* Represents an immaterial impact to adjusted earnings per share.