8-K
First Western Financial Inc (MYFW)
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): January 27, 2022
FIRST WESTERN FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
| Colorado | 001-38595 | 37-1442266 |
|---|---|---|
| (State or other jurisdiction of | (Commission | (I.R.S. Employer |
| incorporation or organization) | File Number) | Identification No.) |
| | | |
| 1900 16th Street , Suite 1200 | | |
| 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:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ☒ | Emerging growth company |
|---|---|
| | |
| ☒ | If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | |
|---|---|---|---|---|
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||
| Common Stock, no par value | | MYFW | | The Nasdaq Stock Market LLC |
Item 2.02 Results of Operations and Financial Condition.
On January 27, 2022, First Western Financial, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter ended December 31, 2021. 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 fourth quarter ended December 31, 2021 on Friday, January 28, 2022, 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 fourth quarter ended December 31, 2021 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.
| <br><br> | | |
|---|---|---|
| Exhibit<br>Number | | Description |
| | ||
| 99.1 | Press Release issued by First Western Financial, Inc. dated January 27, 2022 | |
| 99.2 | | First Western Financial, Inc. Earnings Presentation |
| 104 | | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document) |
2
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: January 27, 2022 | | By: /s/ Scott C. Wylie |
| | | | Scott C. Wylie |
| | | | |
| | | | Chairman, Chief Executive Officer and President |
3
Exhibit 99.1
First Western Reports Fourth Quarter 2021 Financial Results
Fourth Quarter 2021 Summary
| ● | Completed acquisition of Teton Financial Services on December 31, 2021 |
|---|---|
| ● | Total assets of $2.53 billion in Q4 2021, up 21.7% from Q3 2021 and up 28.1% from Q4 2020 |
| --- | --- |
| ● | Quarter-over-quarter growth in total loans held for investment of $350.8 million, increase of $252.3 million contributed through acquisition, $98.5 remaining net loan growth |
| --- | --- |
| ● | Tangible book value per common share^(1)^ increased 5.4% from $18.85 as of Q3 2021 to $19.87 as of Q4 2021, and was up 20.9% from $16.44 as of Q4 2020 |
| --- | --- |
| ● | Net income available to common shareholders of $1.9 million in Q4 2021, compared to $6.4 million in Q3 2021 and $4.9 million in Q4 2020 |
| --- | --- |
| ● | Diluted EPS of $0.23 in Q4 2021, compared to $0.78 in Q3 2021 and $0.61 in Q4 2020 |
| --- | --- |
| ● | Excluding $3.7 million in acquisition-related expense, adjusted net income available to common shareholders^(1)^ of $4.8 million, or $0.57 per diluted share^(1)^, in Q4 2021 |
| --- | --- |
| ● | Gross revenue^(1)^ of $23.4 million in Q4 2021, compared to $25.3 million in Q3 2021 and $23.4 million in Q4 2020 |
| --- | --- |
^(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.
Denver, Colo., January 27, 2022 – First Western Financial, Inc., (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the fourth quarter ended December 31, 2021.
Net income available to common shareholders was $1.9 million, or $0.23 per diluted share, for the fourth quarter of 2021, which included $3.7 million in acquisition-related expenses with a $0.8 million tax impact that impacted diluted earnings per share by $0.34. This compares to $6.4 million, or $0.78 per diluted share, for the third quarter of 2021, and $4.9 million, or $0.61 per diluted share, for the fourth quarter of 2020.
Scott C. Wylie, CEO of First Western, commented, “We continued to generate exceptional organic balance sheet growth in the fourth quarter driven by the strong commercial banking platform that we have built over the past two years and the growing contribution of new offices and bankers we have added. We had a record quarter of loan production, which resulted in increases in most of our portfolios. Our strong loan growth enabled us to begin redeploying our excess liquidity into higher yielding earning assets.
“We are very pleased that we were able to complete our acquisition of Teton Financial Services in just over five months after announcing the transaction. At the time of the deal announcement, we expected a tangible book value dilution earn back period of approximately half a year. In fact, upon closing, the transaction was immediately accretive to tangible book value, further enhancing the attractive economics of this acquisition.
“We believe we are well positioned to deliver a strong year of balance sheet and earnings growth in 2022. Given the economic strength of our markets, improving loan demand, and the productivity of our commercial banking group, we expect to deliver another year of strong organic loan growth. We will also benefit from the accretive impact of the Teton acquisition as we fully realize the cost savings from the transaction over the course of the year. As we continue to scale the business, we believe that we will drive improved efficiencies and a higher level of earnings, while also investing to support future growth through the addition of new banking talent, opening new offices in attractive markets, and continuing to execute on accretive M&A transactions that can further enhance the value of our franchise,” said Mr. Wylie.
As previously announced, the Company acquired Teton Financial Services and its wholly owned subsidiary, Rocky Mountain Bank, effective December 31, 2021. The fair value of assets acquired was $431.9 million, which included $252.3 million in loans, $6.6 million in goodwill, and $1.3 million in core deposit intangibles. The fair value of total liabilities assumed was $380.5 million, which included $379.2 million in deposits. The reported results include provisional estimates of the accounting for the acquisition of Teton which are subject to revision in future periods when the application of purchase accounting is finalized.
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | ||||||||
| | | December 31, | | September 30, | | December 31, | **** | |||
| (Dollars in thousands, except per share data) | **** | 2021 | **** | 2021 | **** | 2020 | **** | |||
| Earnings Summary | | | | | ||||||
| Net interest income | | $ | 14,387 | | $ | 14,846 | | $ | 13,457 | |
| Less: provision for loan losses | | 812 | | 406 | | 695 | | |||
| Total non-interest income | | 9,542 | | 10,495 | | 9,954 | | |||
| Total non-interest expense | | 20,530 | | 16,469 | | 15,614 | | |||
| Income before income taxes | | 2,587 | | 8,466 | | 7,102 | | |||
| Income tax expense | | 670 | | 2,049 | | 2,228 | | |||
| Net income available to common shareholders | | | 1,917 | | | 6,417 | | | 4,874 | |
| Adjusted net income available to common shareholders^(1)^ | | | 4,776 | | | 6,669 | | | 4,979 | |
| Basic earnings per common share | | | 0.24 | | | 0.80 | | | 0.61 | |
| Adjusted basic earnings per common share^(1)^ | | | 0.59 | | | 0.84 | | | 0.63 | |
| Diluted earnings per common share | | | 0.23 | | | 0.78 | | | 0.61 | |
| Adjusted diluted earnings per common share^(1)^ | | | 0.57 | | | 0.81 | | | 0.62 | |
| | | | | | | | | | | |
| Return on average assets (annualized) | | 0.37 | % | 1.27 | % | 0.99 | % | |||
| Adjusted return on average assets (annualized)^(1)^ | | | 0.91 | | | 1.32 | | | 1.01 | |
| Return on average shareholders' equity (annualized) | | 4.28 | | 14.88 | | 12.62 | | |||
| Adjusted return on average shareholders' equity (annualized)^(1)^ | | | 10.66 | | | 15.46 | | | 12.90 | |
| Return on tangible common equity (annualized)^(1)^ | | 4.10 | | 17.01 | | 14.92 | | |||
| Adjusted return on tangible common equity (annualized)^(1)^ | | | 10.21 | | | 17.68 | | | 15.24 | |
| Net interest margin | | 2.92 | | 3.14 | | 3.07 | | |||
| Efficiency ratio^(1)^ | | 71.80 | | 63.66 | | 65.96 | |
^(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.
2
Operating Results for the Fourth Quarter 2021
Revenue
Gross revenue^(1)^ was $23.4 million for the fourth quarter of 2021, a decrease of 7.5% from $25.3 million for the third quarter of 2021, due primarily to a $2.0 million decrease in net gain on mortgage loans. Relative to the fourth quarter of 2020, gross revenue remained flat with a small increase of 0.1%.
^(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 fourth quarter of 2021 was $14.4 million, a decrease of 3.1% from $14.8 million in the third quarter of 2021. The decrease in net interest income was driven by a $0.4 million reduction in PPP fee income, a $0.4 million reduction in accretion income on acquired loans, off-set by an increase in net interest income due primarily to the increase in average interest-earning assets.
Relative to the fourth quarter of 2020, net interest income increased 6.9% from $13.5 million. The year-over-year increase in net interest income was due primarily to the increase in average interest-earning assets driven by a $131.0 million increase in loans and a $83.7 million increase in interest-bearing deposits in other financial institutions.
Net Interest Margin
Net interest margin for the fourth quarter of 2021 decreased to 2.92% from 3.14% in the third quarter of 2021, primarily due to three factors that positively impacted the third quarter margin. The third quarter of 2021 had higher PPP fee income by $0.4 million, higher accretion income on acquired loans by $0.4 million, and higher interest recovery of non-performing loans by $0.2 million. These items positively impacted net interest margin by 22 bps in the third quarter of 2021, compared to a positive impact of 3 bps in the fourth quarter of 2021.
The cost of interest-bearing deposits decreased slightly to 0.27% in the fourth quarter of 2021, from 0.29% in the third quarter of 2021 and the yield on interest-earning assets decreased to 3.20% in the fourth quarter of 2021, from 3.42% in the third quarter of 2021. The decrease during the period was primarily due to the reduction in interest income caused by lower yields and higher liquidity.
Relative to the fourth quarter of 2020, the net interest margin decreased from 3.07%, primarily due to higher accretion income on acquired loans of $0.7 million and PPP fee income of $0.3 million in the fourth quarter of 2020. These items positively impacted net interest margin by 25 bps in the fourth quarter of 2020.
Non-interest Income
Non-interest income for the fourth quarter of 2021 was $9.5 million, a decrease of 9.1% from $10.5 million in the third quarter of 2021. This was primarily due to a $2.0 million decrease in gain on mortgage loans, partially offset by a $0.5 million net gain on equity interests recognized in the fourth quarter and a $0.4 million increase in risk management and insurance fees. 3
Relative to the fourth quarter of 2020, non-interest income decreased 4.1% from $10.0 million. The decrease was primarily due to lower mortgage segment activity, partially offset by higher trust and investment management fees.
Non-interest Expense
Non-interest expense for the fourth quarter of 2021 was $20.5 million, an increase of 24.7% from the third quarter of 2021 at $16.5 million. This was primarily due to $3.7 million in acquisition-related costs incurred as a result of the Teton acquisition. The remaining increase is primarily due to increased salaries and employee benefits primarily relating to an increased bonus accrual commensurate with the increased production and revenues in the wealth management segment.
The impact of the mergers and acquisition activity is as follows:
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | **** | As of or for the Three Months Ended | |||||||
| | | December 31, | | September 30, | | December 31, | |||
| (Dollars in thousands, except share and per share data) | | 2021 | | 2021 | | 2020^(2)^ | |||
| Adjusted Net Income Available to Common Shareholders^(1)^ | | | | | | | | | |
| Net income available to common shareholders | | $ | 1,917 | | $ | 6,417 | | $ | 4,874 |
| Plus: acquisition related expenses | | | | | | | | | |
| Salaries and employee benefits | | | 547 | | | — | | | 10 |
| Occupancy and equipment | | | — | | | — | | | 108 |
| Professional services | | | 713 | | | 332 | | | 26 |
| Data processing | | | 2,428 | | | — | | | 9 |
| Other | | | 8 | | | — | | | — |
| Less: income tax impact | | | 837 | | | 80 | | | 48 |
| Adjusted net income available to shareholders^(1)^ | | $ | 4,776 | | $ | 6,669 | | $ | 4,979 |
| | | | | | | | | | |
| Adjusted Diluted Earnings Per Share^(1)^ | | | | | | | | | |
| Diluted earnings per share | | $ | 0.23 | | $ | 0.78 | | $ | 0.61 |
| Plus: acquisition related expenses net of income tax impact | | | 0.34 | | | 0.03 | | | 0.01 |
| Adjusted diluted earnings per share^(1)^ | | $ | 0.57 | | $ | 0.81 | | $ | 0.62 |
^(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.
^(2)^Merger and acquisition expenses in Q4 2020 relate to the Simmons branch acquisition
Relative to the fourth quarter of 2020, non-interest expense increased by 31.5% from $15.6 million. Excluding the $3.7 million in acquisition costs recognized during the fourth quarter of 2021, non-interest expense increased by 7.8%. The increase is primarily due to increased salaries and employee benefits primarily relating to an increased commission and bonus accruals commensurate with the increased production and revenues in the wealth management segment.
The Company’s efficiency ratio^(1)^ was 71.8% in the fourth quarter of 2021, compared with 63.7% in the third quarter of 2021 and 66.0% in the fourth quarter of 2020.
^(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. 4
Income Taxes
The Company recorded income tax expense of $0.7 million for the fourth quarter of 2021, representing an effective tax rate of 25.9%, compared to 24.2% for the third quarter of 2021. The increase in effective tax rate in the fourth quarter of 2021 was primarily attributable to accrued acquisition costs as of December 31, 2021.
Loans
Total loans held for investment were $1.95 billion as of December 31, 2021, an increase of 21.9% from $1.60 billion as of September 30, 2021, and an increase of 27.4% from $1.53 billion as of December 31, 2020. The increase in total loans held for investment from September 30, 2021 was attributable to the Teton acquisition, which increased our total loan portfolio by $252.3 million, and remaining net loan growth of $98.5 million. The increase in total loans held for investment from December 31, 2020 was attributable to the Teton acquisition and remaining net loan growth of $167.7 million. Excluding PPP loans and acquired loans, total loans held for investment were $1.55 billion as of December 31, 2021, an increase of $129.4 million, or 9.1%, from the end of the prior quarter and an increase of $276.5 million, or 21.7%, from December 31, 2020.
PPP loans were $46.8 million as of December 31, 2021, a net decrease of 24.4% from $61.9 million as of September 30, 2021 and 67.2% from $142.9 million as of December 30, 2020, which includes the addition of $6.7 million in PPP loans acquired from Teton Financial Services. As of December 31, 2021, there were $0.7 million remaining in net fees to be recognized upon forgiveness or repayment of PPP loans.
Deposits
Total deposits were $2.21 billion as of December 31, 2021, compared to $1.78 billion as of September 30, 2021, and $1.62 billion as of December 31, 2020. The increase in total deposits from September 30, 2021 was related to $379.2 million in deposits added through the Teton acquisition and $44.2 million in remaining net growth. The increase in total deposits from December 31, 2020 was related to the deposits added through the Teton acquisition and $206.6 million in remaining net growth.
Average total deposits for the fourth quarter of 2021 increased $81.7 million, or 19.0% annualized, from the third quarter of 2021 and increased $227.2 million, or 14.4%, from the fourth quarter of 2020. The quarter-over-quarter increase in average deposits was primarily attributable to organic growth in non-interest bearing and interest checking accounts. The year-over-year increase in average deposits was primarily attributable to organic growth in non-interest bearing and money market accounts.
Borrowings
Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $38.6 million as of December 31, 2021, a decrease of $19.9 million from $58.6 million as of September 30, 2021, and a decrease of $110.9 million from $149.6 million as of December 31, 2020. The decrease from December 31, 2020 and from September 30, 2021 is attributable to the participation in the Paycheck Protection Program Loan Facility (“PPPLF”) from the Federal Reserve. Borrowing from this facility is expected to trend in the same direction as the balances of the PPP loans and the resulting net decrease in PPP loans drove the decrease to the PPPLF balance. As of December 31, 2021, the PPPLF had advances of $23.6 million compared to PPP loan balance of $46.8 million. 5
Assets Under Management
Total assets under management (“AUM”) increased by $445.9 million during the fourth quarter to $7.35 billion as of December 31, 2021, compared to $6.91 billion as of September 30, 2021, and $6.26 billion as of December 31, 2020. The increase was primarily attributable to the Teton Financial Services acquisition and improving market conditions resulting in an increase in the value of assets under management balances, as well as contributions to existing accounts and new accounts.
Credit Quality
Non-performing assets totaled $4.3 million, or 0.17% of total assets, as of December 31, 2021, compared to $4.4 million, or 0.21% of total assets, as of September 30, 2021 and $4.3 million, or 0.22% of total assets, as of December 31, 2020. The decrease in non-performing assets from the prior quarter was primarily due to continued pay downs of non-performing loan balances.
The Company recorded a provision of $0.8 million in the fourth quarter of 2021, compared to a provision of $0.7 million in the fourth quarter of 2020. The Company recorded a provision for loan losses of $0.4 million in the third quarter of 2021. The provision recorded in the fourth quarter represented general provisioning consistent with growth of the loan portfolio and the resulting allowance for loan loss is representative of continued strong credit quality in the portfolio.
Capital
As of December 31, 2021, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of December 31, 2021, the Bank was classified as “well capitalized,” as summarized in the following table:
| | | | |
|---|---|---|---|
| | **** | December 31, | **** |
| | | 2021 | **** |
| Consolidated Capital | | ||
| Tier 1 capital to risk-weighted assets | 10.54 | % | |
| Common Equity Tier 1 ("CET1") to risk-weighted assets | 10.54 | | |
| Total capital to risk-weighted assets | 13.54 | | |
| Tier 1 capital to average assets | 9.31 | | |
| | | | |
| Bank Capital | | | |
| Tier 1 capital to risk-weighted assets | 11.40 | | |
| CET1 to risk-weighted assets | 11.40 | | |
| Total capital to risk-weighted assets | 12.19 | | |
| Tier 1 capital to average assets | 10.05 | |
Book value per common share^^increased 6.3% from $21.88 as of September 30, 2021 to $23.25 as of December 31, 2021, and was up 19.3% from $19.49 as of December 31, 2020.
Tangible book value per common share^(1)^ increased 5.4% from $18.85 as of September 30, 2021 to $19.87 as of December 31, 2021, and was up 20.9% from $16.44 as of December 31, 2020.
The Company did not repurchase any shares of its common stock prior to the expiration of the stock repurchase program in the fourth quarter of 2021.
^(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. 6
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, January 28, 2022. The call can be accessed via telephone at 877-405-1628. A recorded replay will be accessible through February 4, 2022 by dialing 855-859-2056; passcode 3639994.
A slide presentation relating to the fourth quarter 2021 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 and California. 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.
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,” “Allowance for Loan Losses to Bank Originated Loans Excluding PPP,” “Adjusted Net Income Available to Common Shareholders,” “Adjusted Basic Earnings Per Share,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” and “Adjusted Return on Tangible Common Equity”. 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. 7
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,” “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 COVID-19 pandemic and its effects; integration risks in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming and California; the risk of changes in the economy affecting real estate values and liquidity; the risk in our ability to continue to originate residential real estate loans and sell such loans; risks specific to commercial loans and borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the risk of changes in interest rates; and the risk of the adequacy of our allowance for loan 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 12, 2021 (“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
8
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | |||||||
| | | December 31, | | September 30, | | December 31, | |||
| (Dollars in thousands, except per share amounts) | **** | 2021 | | 2021 | | 2020 | |||
| Interest and dividend income: | | | | ||||||
| Loans, including fees | | $ | 15,398 | | $ | 15,861 | | $ | 14,656 |
| Investment securities | | 225 | | 180 | | 186 | |||
| Interest-bearing deposits in other financial institutions | | 109 | | 105 | | 100 | |||
| Total interest and dividend income | | 15,732 | | 16,146 | | 14,942 | |||
| | | | | | | | | | |
| Interest expense: | | | | | | ||||
| Deposits | | 813 | | 829 | | 1,015 | |||
| Other borrowed funds | | 532 | | 471 | | 470 | |||
| Total interest expense | | 1,345 | | 1,300 | | 1,485 | |||
| Net interest income | | 14,387 | | 14,846 | | 13,457 | |||
| Less: provision for loan losses | | 812 | | 406 | | 695 | |||
| Net interest income, after provision for loan losses | | 13,575 | | 14,440 | | 12,762 | |||
| | | | | | | | | | |
| Non-interest income: | | | | | | ||||
| Trust and investment management fees | | 5,197 | | 5,167 | | 4,868 | |||
| Net gain on mortgage loans | | 2,470 | | 4,480 | | 4,318 | |||
| Bank fees | | 622 | | 458 | | 391 | |||
| Risk management and insurance fees | | 676 | | 300 | | 287 | |||
| Income on company-owned life insurance | | 88 | | 90 | | 90 | |||
| Net gain on equity interests | | | 489 | | | — | | | — |
| Total non-interest income | | 9,542 | | 10,495 | | 9,954 | |||
| Total income before non-interest expense | | 23,117 | | 24,935 | | 22,716 | |||
| | | | | | | | | | |
| Non-interest expense: | | | | | | ||||
| Salaries and employee benefits | | 11,013 | | 10,229 | | 9,401 | |||
| Occupancy and equipment | | 1,588 | | 1,550 | | 1,435 | |||
| Professional services | | 2,164 | | 1,660 | | 1,493 | |||
| Technology and information systems | | 916 | | 945 | | 1,041 | |||
| Data processing | | 3,307 | | 912 | | 1,078 | |||
| Marketing | | 497 | | 397 | | 415 | |||
| Amortization of other intangible assets | | 4 | | 5 | | 4 | |||
| Provision on other real estate owned | | | — | | | — | | | 76 |
| Other | | 1,041 | | 771 | | 671 | |||
| Total non-interest expense | | 20,530 | | 16,469 | | 15,614 | |||
| Income before income taxes | | 2,587 | | 8,466 | | 7,102 | |||
| Income tax expense | | 670 | | 2,049 | | 2,228 | |||
| Net income available to common shareholders | | $ | 1,917 | | $ | 6,417 | | $ | 4,874 |
| Earnings per common share: | | | | | | | | ||
| Basic | | $ | 0.24 | | $ | 0.80 | | $ | 0.61 |
| Diluted | | | 0.23 | | | 0.78 | | | 0.61 |
9
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | December 31, | | September 30, | | December 31, | |||
| (Dollars in thousands) | | 2021 | | 2021 | | 2020 | |||
| ASSETS | | | | ||||||
| Cash and cash equivalents: | | | | ||||||
| Cash and due from banks | | $ | 6,487 | | $ | 2,829 | | $ | 2,405 |
| Federal funds sold | | | 1,491 | | | — | | | — |
| Interest-bearing deposits in other financial institutions | | 379,005 | | 307,406 | | 153,584 | |||
| Total cash and cash equivalents | | 386,983 | | 310,235 | | 155,989 | |||
| | | | | | | | | | |
| Available-for-sale securities, at fair value | | 56,211 | | 32,233 | | 36,666 | |||
| Correspondent bank stock, at cost | | 2,584 | | 1,772 | | 2,552 | |||
| Mortgage loans held for sale | | 30,620 | | 51,309 | | 161,843 | |||
| Loans, net of allowance of $13,732, $12,964 and $12,539 | | 1,935,405 | | 1,590,086 | | 1,520,294 | |||
| Premises and equipment, net | | 23,976 | | 6,344 | | 5,320 | |||
| Accrued interest receivable | | 7,151 | | 6,306 | | 6,618 | |||
| Accounts receivable | | 5,267 | | 5,500 | | 4,865 | |||
| Other receivables | | 1,949 | | 1,553 | | 1,422 | |||
| Other real estate owned, net | | — | | — | | 194 | |||
| Goodwill and other intangible assets, net | | 31,902 | | 24,246 | | 24,258 | |||
| Deferred tax assets, net | | 6,845 | | 5,926 | | 6,056 | |||
| Company-owned life insurance | | 15,803 | | 15,715 | | 15,449 | |||
| Other assets | | 22,678 | | 25,047 | | 32,129 | |||
| Assets held for sale | | 115 | | — | | — | |||
| Total assets | | $ | 2,527,489 | | $ | 2,076,272 | | $ | 1,973,655 |
| | | | | | | | | | |
| LIABILITIES | | | | | | | | ||
| Deposits: | | | | | |||||
| Noninterest-bearing | | $ | 636,304 | | $ | 596,635 | | $ | 481,457 |
| Interest-bearing | | 1,569,399 | | 1,185,664 | | 1,138,453 | |||
| Total deposits | | 2,205,703 | | 1,782,299 | | 1,619,910 | |||
| Borrowings: | | | | | |||||
| FHLB and Federal Reserve borrowings | | 38,629 | | 58,564 | | 149,563 | |||
| Subordinated notes | | 39,031 | | 39,010 | | 24,291 | |||
| Accrued interest payable | | 355 | | 357 | | 453 | |||
| Other liabilities | | | 24,730 | | | 20,913 | | | 24,476 |
| Total liabilities | | 2,308,448 | | 1,901,143 | | 1,818,693 | |||
| | | | | | | | | | |
| SHAREHOLDERS’ EQUITY | | | | ||||||
| Total shareholders’ equity | | 219,041 | | 175,129 | | 154,962 | |||
| Total liabilities and shareholders’ equity | | $ | 2,527,489 | | $ | 2,076,272 | | $ | 1,973,655 |
10
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | December 31, | | September 30, | | December 31, | |||
| (Dollars in thousands) | **** | 2021 | | 2021 | | 2020 | |||
| Loan Portfolio | | | | ||||||
| Cash, Securities and Other^(1)^ | | $ | 295,948 | | $ | 293,837 | | $ | 357,020 |
| Construction and Development | | 178,716 | | 132,141 | | 131,111 | |||
| 1-4 Family Residential | | 580,872 | | 502,439 | | 455,038 | |||
| Non-Owner Occupied CRE | | 482,622 | | 358,369 | | 281,943 | |||
| Owner Occupied CRE | | 212,426 | | 167,638 | | 163,042 | |||
| Commercial and Industrial | | 203,584 | | 148,959 | | 146,031 | |||
| Total loans held for investment | | | 1,954,168 | | | 1,603,383 | | | 1,534,185 |
| Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net | | (5,031) | | (333) | | (1,352) | |||
| Gross loans | | $ | 1,949,137 | | $ | 1,603,050 | | $ | 1,532,833 |
| Mortgage loans held for sale | | $ | 30,620 | | $ | 51,309 | | $ | 161,843 |
| | | | | | | | | | |
| Deposit Portfolio | | | | | | | | | |
| Money market deposit accounts | | $ | 1,056,669 | | $ | 905,196 | | $ | 847,430 |
| Time deposits | | 170,491 | | 137,015 | | 172,682 | |||
| Negotiable order of withdrawal accounts | | 309,940 | | 137,833 | | 113,052 | |||
| Savings accounts | | 32,299 | | 5,620 | | 5,289 | |||
| Total interest-bearing deposits | | | 1,569,399 | | | 1,185,664 | | | 1,138,453 |
| Noninterest-bearing accounts | | | 636,304 | | | 596,635 | | | 481,457 |
| Total deposits | | $ | 2,205,703 | | $ | 1,782,299 | | $ | 1,619,910 |
^(1)^ Includes PPP loans of $46.8 million as of December 31, 2021, $61.9 million as of September 30, 2021, and $142.9 million as of December 31, 2020. 11
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) | **** | 2021 | | 2021 | | 2020 | **** | |||
| Average Balance Sheets | | | | | ||||||
| Assets | | | | | ||||||
| Interest-earning assets: | | | | | ||||||
| Interest-bearing deposits in other financial institutions | | $ | 277,915 | | $ | 266,614 | | $ | 194,179 | |
| Federal funds sold | | | 1,491 | | | — | | | — | |
| Available-for-sale securities | | 36,001 | | 29,130 | | 37,512 | | |||
| Loans | | 1,653,919 | | 1,592,800 | | 1,522,947 | | |||
| Interest-earning assets | | 1,969,326 | | 1,888,544 | | 1,754,638 | | |||
| Mortgage loans held for sale | | 39,112 | | 54,717 | | 120,554 | | |||
| Total interest-earning assets, plus mortgage loans held for sale | | 2,008,438 | | 1,943,261 | | 1,875,192 | | |||
| Allowance for loan losses | | (13,224) | | (12,740) | | (12,077) | | |||
| Noninterest-earning assets | | 96,333 | | 92,901 | | 103,961 | | |||
| Total assets | | $ | 2,091,547 | | $ | 2,023,422 | | $ | 1,967,076 | |
| | | | | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | ||||||
| Interest-bearing liabilities: | | | | | ||||||
| Interest-bearing deposits | | $ | 1,195,986 | | $ | 1,160,433 | | $ | 1,094,317 | |
| FHLB and Federal Reserve borrowings | | 49,115 | | 81,307 | | 192,448 | | |||
| Subordinated notes | | 39,017 | | 29,236 | | 18,443 | | |||
| Total interest-bearing liabilities | | | 1,284,118 | | | 1,270,976 | | | 1,305,208 | |
| Noninterest-bearing liabilities: | | | | | ||||||
| Noninterest-bearing deposits | | 608,693 | | 562,569 | | 483,115 | | |||
| Other liabilities | | 19,566 | | 17,359 | | 24,311 | | |||
| Total noninterest-bearing liabilities | | | 628,259 | | | 579,928 | | | 507,426 | |
| Total shareholders’ equity | | | 179,170 | | | 172,518 | | | 154,442 | |
| Total liabilities and shareholders’ equity | | $ | 2,091,547 | | $ | 2,023,422 | | $ | 1,967,076 | |
| | | | | | | | | | | |
| Yields/Cost of funds (annualized) | | | | | ||||||
| Interest-bearing deposits in other financial institutions | | 0.16 | % | 0.16 | % | 0.21 | % | |||
| Available-for-sale securities | | 2.50 | | 2.47 | | 1.98 | | |||
| Loans | | 3.72 | | 3.98 | | 3.85 | | |||
| Interest-earning assets | | 3.20 | | 3.42 | | 3.41 | | |||
| Mortgage loans held for sale | | 3.14 | | 2.97 | | 2.88 | | |||
| Total interest-earning assets, plus mortgage loans held for sale | | 3.19 | | 3.41 | | 3.37 | | |||
| Interest-bearing deposits | | 0.27 | | 0.29 | | 0.37 | | |||
| FHLB and Federal Reserve borrowings | | 0.45 | | 0.40 | | 0.42 | | |||
| Subordinated notes | | 4.89 | | 5.32 | | 5.86 | | |||
| Total interest-bearing liabilities | | 0.42 | | 0.41 | | 0.46 | | |||
| Net interest margin | | 2.92 | | 3.14 | | 3.07 | | |||
| Net interest rate spread | | 2.78 | | 3.01 | | 2.95 | |
12
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) | **** | 2021 | | 2021 | | 2020 | **** | |||
| Asset Quality | | | | | | |||||
| Non-performing loans | | $ | 4,327 | | $ | 4,358 | | $ | 4,058 | |
| Non-performing assets | | 4,327 | | 4,358 | | 4,252 | | |||
| Net charge-offs/(recoveries) | | | 44 | | | (6) | | | 1 | |
| Non-performing loans to total loans | | 0.22 | % | 0.27 | % | 0.26 | % | |||
| Non-performing assets to total assets | | 0.17 | | 0.21 | | 0.22 | | |||
| Allowance for loan losses to non-performing loans | | 317.36 | | 297.48 | | 308.99 | | |||
| Allowance for loan losses to total loans | | 0.70 | | 0.81 | | 0.82 | | |||
| Allowance for loan losses to bank originated loans excluding PPP^(1)^ | | | 0.88 | | | 0.91 | | | 0.98 | |
| Net charge-offs to average loans^(2)^ | | 0.00 | | 0.00 | | 0.00 | | |||
| | | | | | | | | | | |
| Assets Under Management | | $ | 7,351,840 | | $ | 6,905,935 | | $ | 6,255,336 | |
| | | | | | | | | | | |
| Market Data | | | | | | | | | | |
| Book value per share at period end | | $ | 23.25 | | $ | 21.88 | | $ | 19.49 | |
| Tangible book value per common share^(1)^ | | | 19.87 | | | 18.85 | | | 16.44 | |
| Weighted average outstanding shares, basic | | | 8,043,469 | | | 7,979,869 | | | 7,930,854 | |
| Weighted average outstanding shares, diluted | | | 8,370,998 | | | 8,246,353 | | | 8,015,780 | |
| Shares outstanding at period end | | 9,419,271 | | 8,002,874 | | 7,951,773 | | |||
| | | | | | | | | | | |
| Consolidated Capital | | | | | | | | | | |
| Tier 1 capital to risk-weighted assets | | 10.54 | % | 10.66 | % | | 9.96 | % | ||
| CET1 to risk-weighted assets | | 10.54 | | 10.66 | | | 9.96 | | ||
| Total capital to risk-weighted assets | | 13.54 | | 14.37 | | | 12.80 | | ||
| Tier 1 capital to average assets | | 9.31 | | 7.86 | | | 7.45 | | ||
| | | | | | | | | | | |
| Bank Capital | | | | | | | | | | |
| Tier 1 capital to risk-weighted assets | | 11.40 | % | 11.02 | % | | 10.22 | % | ||
| CET1 to risk-weighted assets | | 11.40 | | 11.02 | | | 10.22 | | ||
| Total capital to risk-weighted assets | | 12.19 | | 11.96 | | | 11.20 | | ||
| Tier 1 capital to average assets | | 10.05 | | 8.11 | | | 7.62 | |
^(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.
^(2)^ Value results in an immaterial amount.
13
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) | | 2021 | | 2021 | | 2020 | **** | |||
| Tangible Common | | | | | ||||||
| Total shareholders' equity | | $ | 219,041 | | $ | 175,129 | | $ | 154,962 | |
| Less: goodwill and other intangibles, net | | 31,902 | | 24,246 | | 24,258 | | |||
| Tangible common equity | | $ | 187,139 | | $ | 150,883 | | $ | 130,704 | |
| | | | | | | | | | | |
| Common shares outstanding, end of period | | 9,419,271 | | 8,002,874 | | 7,951,773 | | |||
| Tangible common book value per share | | $ | 19.87 | | $ | 18.85 | | $ | 16.44 | |
| | | | | | | | | | | |
| Net income available to common shareholders | | $ | 1,917 | | $ | 6,417 | | $ | 4,874 | |
| Return on tangible common equity (annualized) | | 4.10 | % | 17.01 | % | 14.92 | % | |||
| | | | | | | | | | | |
| Efficiency | | | | | ||||||
| Non-interest expense | | $ | 20,530 | | $ | 16,469 | | $ | 15,614 | |
| Less: amortization | | 4 | | 5 | | 4 | | |||
| Less: acquisition related expenses | | 3,696 | | 332 | | 153 | | |||
| Less: provision on other real estate owned | | | — | | | — | | | 76 | |
| Plus: gain on sale of LA fixed income team | | — | | — | | (62) | | |||
| Adjusted non-interest expense | | $ | 16,830 | | $ | 16,132 | | $ | 15,443 | |
| | | | | | | | | | | |
| Net interest income | | $ | 14,387 | | $ | 14,846 | | $ | 13,457 | |
| Non-interest income | | 9,542 | | 10,495 | | 9,954 | | |||
| Less: net gain on equity interests | | | 489 | | | — | | | — | |
| Total income | | $ | 23,440 | | $ | 25,341 | | $ | 23,411 | |
| Efficiency ratio | | 71.80 | % | 63.66 | % | 65.96 | % | |||
| | | | | | | | | | | |
| Gross Revenue | | | | | | | | | | |
| Total income before non-interest expense | | $ | 23,117 | | $ | 24,935 | | $ | 22,716 | |
| Less: net gain on equity interests | | 489 | | — | | — | | |||
| Plus: provision for loan losses | | 812 | | 406 | | 695 | | |||
| Gross revenue | | $ | 23,440 | | $ | 25,341 | | $ | 23,411 | |
| | | | | | | | | | | |
| Allowance to Bank Originated Loans Excluding PPP | | | | | | | | | | |
| Total loans held for investment | | $ | 1,954,168 | | $ | 1,603,383 | | $ | 1,534,185 | |
| Less: loans acquired | | | 360,661 | | | 117,465 | | | 127,233 | |
| Less: bank originated PPP loans | | 40,062 | | 61,838 | | 130,019 | | |||
| Bank originated loans excluding PPP | | $ | 1,553,445 | | $ | 1,424,080 | | $ | 1,276,933 | |
| | | | | | | | | | | |
| Allowance for loan losses | | $ | 13,732 | | $ | 12,964 | | $ | 12,539 | |
| Allowance for loan losses to bank originated loans excluding PPP | | | 0.88 | % | | 0.91 | % | | 0.98 | % |
| (1) | Represents only the intangible portion of Assets held for sale. |
|---|
14
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) | | 2021 | | 2021 | | 2020 | **** | |||
| Adjusted Net Income Available to Common Shareholders | | | | | | | | | | |
| Net income available to common shareholders | | $ | 1,917 | | $ | 6,417 | | $ | 4,874 | |
| Plus: acquisition related expenses | | | 3,696 | | | 332 | | | 153 | |
| Less: income tax impact | | | 837 | | | 80 | | | 48 | |
| Adjusted net income available to shareholders | | $ | 4,776 | | $ | 6,669 | | $ | 4,979 | |
| | | | | | | | | | | |
| Adjusted Basic Earnings Per Share | | | | | | | | | | |
| Basic earnings per share | | $ | 0.24 | | $ | 0.80 | | $ | 0.61 | |
| Plus: acquisition related expenses net of income tax impact | | | 0.35 | | | 0.04 | | | 0.02 | |
| Adjusted basic earnings per share | | $ | 0.59 | | $ | 0.84 | | $ | 0.63 | |
| | | | | | | | | | | |
| Adjusted Diluted Earnings Per Share | | | | | | | | | | |
| Diluted earnings per share | | $ | 0.23 | | $ | 0.78 | | $ | 0.61 | |
| Plus: acquisition related expenses net of income tax impact | | | 0.34 | | | 0.03 | | | 0.01 | |
| Adjusted diluted earnings per share | | $ | 0.57 | | $ | 0.81 | | $ | 0.62 | |
| | | | | | | | | | | |
| Adjusted Return on Average Assets (annualized) | | | | | | | | | | |
| Return on average assets | | | 0.37 | % | | 1.27 | % | | 0.99 | % |
| Plus: acquisition related expenses net of income tax impact | | | 0.54 | | | 0.05 | | | 0.02 | |
| Adjusted return on average assets | | | 0.91 | % | | 1.32 | % | | 1.01 | % |
| | | | | | | | | | | |
| Adjusted Return on Average Shareholders' Equity (annualized) | | | | | | | | | | |
| Return on average shareholders' equity | | | 4.28 | % | | 14.88 | % | | 12.62 | % |
| Plus: acquisition related expenses net of income tax impact | | | 6.38 | | | 0.58 | | | 0.28 | |
| Adjusted return on average shareholders' equity | | | 10.66 | % | | 15.46 | % | | 12.90 | % |
| | | | | | | | | | | |
| Adjusted Return on Tangible Common Equity (annualized) | | | | | | | | | | |
| Return on tangible common equity | | | 4.10 | % | | 17.01 | % | | 14.92 | % |
| Plus: acquisition related expenses net of income tax impact | | | 6.11 | | | 0.67 | | | 0.32 | |
| Adjusted return on tangible common equity | | | 10.21 | % | | 17.68 | % | | 15.24 | % |
15
Exhibit 99.2
| Fourth Quarter 2021<br>Conference Call |
|---|
| Safe Harbor<br>2<br>This<br>presentation<br>contains<br>“forward<br>-<br>looking<br>statements”<br>within<br>the<br>meaning<br>of<br>Section<br>27<br>A<br>of<br>the<br>Securities<br>Act<br>of<br>1933<br>,<br>as<br>amended,<br>and<br>Section<br>21<br>E<br>of<br>the<br>Securities<br>Exchange<br>Act<br>of<br>1934<br>,<br>as<br>amended<br>..<br>These<br>forward<br>-<br>looking<br>statements<br>reflect<br>the<br>current<br>views<br>of<br>First<br>Western<br>Financial,<br>Inc<br>..<br>’s<br>(“First<br>Western”)<br>management<br>with<br>respect<br>to,<br>among<br>other<br>things,<br>future<br>events<br>and<br>First<br>Western’s<br>financial<br>performance<br>..<br>These<br>statements<br>are<br>often,<br>but<br>not<br>always,<br>made<br>through<br>the<br>use<br>of<br>words<br>or<br>phrases<br>such<br>as<br>“may,”<br>“should,”<br>“could,”<br>“predict,”<br>“potential,”<br>“believe,”<br>“will<br>likely<br>result,”<br>“expect,”<br>“continue,”<br>“will,”<br>“anticipate,”<br>“seek,”<br>“estimate,”<br>“intend,”<br>“plan,”<br>“project,”<br>“future”<br>“forecast,”<br>“goal,”<br>“target,”<br>“would”<br>and<br>“outlook,”<br>or<br>the<br>negative<br>variations<br>of<br>those<br>words<br>or<br>other<br>comparable<br>words<br>of<br>a<br>future<br>or<br>forward<br>-<br>looking<br>nature<br>..<br>These<br>forward<br>-<br>looking<br>statements<br>are<br>not<br>historical<br>facts,<br>and<br>are<br>based<br>on<br>current<br>expectations,<br>estimates<br>and<br>projections<br>about<br>First<br>Western’s<br>industry,<br>management’s<br>beliefs<br>and<br>certain<br>assumptions<br>made<br>by<br>management,<br>many<br>of<br>which,<br>by<br>their<br>nature,<br>are<br>inherently<br>uncertain<br>and<br>beyond<br>First<br>Western’s<br>control<br>..<br>Accordingly,<br>First<br>Western<br>cautions<br>you<br>that<br>any<br>such<br>forward<br>-<br>looking<br>statements<br>are<br>not<br>guarantees<br>of<br>future<br>performance<br>and<br>are<br>subject<br>to<br>risks,<br>assumptions<br>and<br>uncertainties<br>that<br>are<br>difficult<br>to<br>predict<br>..<br>Although<br>First<br>Western<br>believes<br>that<br>the<br>expectations<br>reflected<br>in<br>these<br>forward<br>-<br>looking<br>statements<br>are<br>reasonable<br>as<br>of<br>the<br>date<br>made,<br>actual<br>results<br>may<br>prove<br>to<br>be<br>materially<br>different<br>from<br>the<br>results<br>expressed<br>or<br>implied<br>by<br>the<br>forward<br>-<br>looking<br>statements<br>..<br>Those<br>following<br>risks<br>and<br>uncertainties,<br>among<br>others,<br>could<br>cause<br>actual<br>results<br>and<br>future<br>events<br>to<br>differ<br>materially<br>from<br>those<br>set<br>forth<br>or<br>contemplated<br>in<br>the<br>forward<br>-<br>looking<br>statements<br>:<br>the<br>COVID<br>-<br>19<br>pandemic<br>and<br>its<br>effects<br>;<br>integration<br>risks<br>in<br>connection<br>with<br>acquisitions<br>;<br>the<br>risk<br>of<br>geographic<br>concentration<br>in<br>Colorado,<br>Arizona,<br>Wyoming<br>and<br>California<br>;<br>the<br>risk<br>of<br>changes<br>in<br>the<br>economy<br>affecting<br>real<br>estate<br>values<br>and<br>liquidity<br>;<br>the<br>risk<br>in<br>our<br>ability<br>to<br>continue<br>to<br>originate<br>residential<br>real<br>estate<br>loans<br>and<br>sell<br>such<br>loans<br>;<br>risks<br>specific<br>to<br>commercial<br>loans<br>and<br>borrowers<br>;<br>the<br>risk<br>of<br>claims<br>and<br>litigation<br>pertaining<br>to<br>our<br>fiduciary<br>responsibilities<br>;<br>the<br>risk<br>of<br>competition<br>for<br>investment<br>managers<br>and<br>professionals<br>;<br>the<br>risk<br>of<br>fluctuation<br>in<br>the<br>value<br>of<br>our<br>investment<br>securities<br>;<br>the<br>risk<br>of<br>changes<br>in<br>interest<br>rates<br>;<br>and<br>the<br>risk<br>of<br>the<br>adequacy<br>of<br>our<br>allowance<br>for<br>credit<br>losses<br>and<br>the<br>risk<br>in<br>our<br>ability<br>to<br>maintain<br>a<br>strong<br>core<br>deposit<br>base<br>or<br>other<br>low<br>-<br>cost<br>funding<br>sources<br>..<br>Additional<br>information<br>regarding<br>these<br>and<br>other<br>risks<br>and<br>uncertainties<br>to<br>which<br>our<br>business<br>and<br>future<br>financial<br>performance<br>are<br>subject<br>is<br>contained<br>in<br>our<br>Annual<br>Report<br>on<br>Form<br>10<br>-<br>K<br>filed<br>with<br>the<br>U<br>..<br>S<br>..<br>Securities<br>and<br>Exchange<br>Commission<br>(“SEC”)<br>on<br>March<br>12<br>,<br>2021<br>and<br>other<br>documents<br>we<br>file<br>with<br>the<br>SEC<br>from<br>time<br>to<br>time<br>..<br>All<br>subsequent<br>written<br>and<br>oral<br>forward<br>-<br>looking<br>statements<br>attributable<br>to<br>First<br>Western<br>or<br>persons<br>acting<br>on<br>First<br>Western’s<br>behalf<br>are<br>expressly<br>qualified<br>in<br>their<br>entirety<br>by<br>this<br>paragraph<br>..<br>Forward<br>-<br>looking<br>statements<br>speak<br>only<br>as<br>of<br>the<br>date<br>of<br>this<br>presentation<br>..<br>First<br>Western<br>undertakes<br>no<br>obligation<br>to<br>publicly<br>update<br>or<br>otherwise<br>revise<br>any<br>forward<br>-<br>looking<br>statements,<br>whether<br>as<br>a<br>result<br>of<br>new<br>information,<br>future<br>events<br>or<br>otherwise<br>(except<br>as<br>required<br>by<br>law)<br>..<br>Certain<br>of<br>the<br>information<br>contained<br>herein<br>may<br>be<br>derived<br>from<br>information<br>provided<br>by<br>industry<br>sources<br>..<br>The<br>Company<br>believes<br>that<br>such<br>information<br>is<br>accurate<br>and<br>the<br>sources<br>from<br>which<br>it<br>has<br>been<br>obtained<br>are<br>reliable<br>;<br>however,<br>the<br>Company<br>cannot<br>guaranty<br>the<br>accuracy<br>of<br>such<br>information<br>and<br>has<br>not<br>independently<br>verified<br>such<br>information<br>..<br>This<br>presentation<br>contains<br>certain<br>non<br>-<br>GAAP<br>financial<br>measures<br>intended<br>to<br>supplement,<br>not<br>substitute<br>for,<br>comparable<br>GAAP<br>measures<br>..<br>Reconciliations<br>of<br>non<br>-<br>GAAP<br>financial<br>measures<br>to<br>GAAP<br>financial<br>measures<br>are<br>provided<br>at<br>the<br>end<br>of<br>this<br>presentation<br>..<br>Numbers<br>in<br>the<br>presentation<br>may<br>not<br>sum<br>due<br>to<br>rounding<br>..<br>Our<br>common<br>stock<br>is<br>not<br>a<br>deposit<br>or<br>savings<br>account<br>..<br>Our<br>common<br>stock<br>is<br>not<br>insured<br>by<br>the<br>Federal<br>Deposit<br>Insurance<br>Corporation<br>or<br>any<br>governmental<br>agency<br>or<br>instrumentality<br>..<br>This<br>presentation<br>is<br>not<br>an<br>offer<br>to<br>sell<br>any<br>securities<br>and<br>it<br>is<br>not<br>soliciting<br>an<br>offer<br>to<br>buy<br>any<br>securities<br>in<br>any<br>state<br>or<br>jurisdiction<br>where<br>the<br>offer<br>or<br>sale<br>is<br>not<br>permitted<br>..<br>Neither<br>the<br>SEC<br>nor<br>any<br>state<br>securities<br>commission<br>has<br>approved<br>or<br>disapproved<br>of<br>the<br>securities<br>of<br>the<br>Company<br>or<br>passed<br>upon<br>the<br>accuracy<br>or<br>adequacy<br>of<br>this<br>presentation<br>..<br>Any<br>representation<br>to<br>the<br>contrary<br>is<br>a<br>criminal<br>offense<br>..<br>Except<br>as<br>otherwise<br>indicated,<br>this<br>presentation<br>speaks<br>as<br>of<br>the<br>date<br>hereof<br>..<br>The<br>delivery<br>of<br>this<br>presentation<br>shall<br>not,<br>under<br>any<br>circumstances,<br>create<br>any<br>implication<br>that<br>there<br>has<br>been<br>no<br>change<br>in<br>the<br>affairs<br>of<br>the<br>Company<br>after<br>the<br>date<br>hereof<br>.. |
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| 3<br>Overview of 4Q21<br>Strong Organic<br>Balance Sheet<br>Growth<br>4Q21 Earnings<br>Teton<br>Financial Services<br>Acquisition<br>▪<br>Acquisition closed on December 31, 2021<br>▪<br>Upon closing, acquisition was immediately accretive to tangible book value<br>▪<br>Integration proceeding on schedule with core banking system integration and consolidation of branches<br>set for May 2022<br>▪<br>Non<br>-<br>performing assets declined to 0.17% of total assets from 0.21%<br>at 3Q21<br>▪<br>History of exceptionally low charge<br>-<br>offs continues<br>Asset Quality<br>Remains<br>Exceptional<br>▪<br>Record quarter of loan production resulted in net loan growth of $350.8 million, $252.3 million from<br>acquisition and $98.5 organic loan growth<br>(1)<br>, or 25% annualized, with increases across nearly all portfolios<br>▪<br>Organic deposit growth<br>(1)<br>of 10% annualized<br>▪<br>Tangible book value per common share<br>(1)<br>increased 22% annualized from 3Q21 and 21% from 4Q20<br>▪<br>Net income available to common shareholders of $1.9 million<br>▪<br>Diluted EPS of $0.23<br>▪<br>Excluding acquisition<br>-<br>related expenses, adjusted net income of $4.8 million, or $0.57 per diluted share<br>(1)<br>(1)<br>See Non<br>-<br>GAAP reconciliation |
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| 4<br>Net Income Available to Common Shareholders<br>and Earnings per Share<br>▪<br>Net income of $1.9 million, or $0.23 diluted earnings per share, in 4Q21<br>▪<br>Excluding acquisition<br>-<br>related expenses, adjusted diluted earnings per share<br>(1)<br>of $0.57 in 4Q21<br>▪<br>Strong profitability and Teton Financial Services acquisition resulted in 6.3% and 5.4% increase in book<br>value per share and tangible book value per share<br>(1)<br>, respectively, from 3Q21<br>▪<br>Earnings growth coming from combination of continued organic growth of more mature profit centers,<br>contribution of newer profit centers ramping up, and accretive acquisitions<br>$6,277<br>$6,417<br>$1,917<br>$4,979<br>$5,999<br>$6,331<br>$6,669<br>$4,776<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>$5,000<br>$6,000<br>$7,000<br>$8,000<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Net Income<br>Adjustments to Net Income<br>(1)<br>$0.76<br>$0.78<br>$0.23<br>$0.62<br>$0.74<br>$0.77<br>$0.81<br>$0.57<br>$0.00<br>$0.10<br>$0.20<br>$0.30<br>$0.40<br>$0.50<br>$0.60<br>$0.70<br>$0.80<br>$0.90<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Net Income<br>Adjustments to Net Income<br>Net Income Available to Common Shareholders<br>Diluted Earnings per Share<br>(1)<br>See Non<br>-<br>GAAP reconciliation<br>(1)<br>(1)<br>(1)<br>(1)<br>(1)<br>(1)<br>(1)<br>$<br>4,874<br>$<br>0.61 |
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| 5<br>Wealth Management Segment Earnings<br>(1)<br>See Non<br>-<br>GAAP reconciliation<br>$0.69<br>$0.73<br>$0.86<br>$0.79<br>$0.71<br>$1.63<br>$3.09<br>$0.91<br>$0.99<br>$1.01<br>$1.07<br>$0.75<br>$4.26<br>$3.81<br>$0.00<br>$0.50<br>$1.00<br>$1.50<br>$2.00<br>$2.50<br>$3.00<br>$3.50<br>$4.00<br>$4.50<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>FY20<br>FY21<br>Wealth Management Segment<br>Consolidated<br>▪<br>Wealth Management segment earnings reflects contribution of private banking, commercial<br>banking, and trust and investment management business lines<br>▪<br>Growth in private banking, commercial banking, and TIM businesses replacing earnings generated<br>by mortgage segment in 2020 and creating sustainable path to higher profitability over long<br>-<br>term<br>▪<br>Decline in wealth management segment earnings from 3Q21 primarily due to the provision<br>expense, reduction in PPP fee income, and accretion income on acquired loans<br>Wealth Management Segment Diluted Pre<br>-<br>Tax Earnings Per Share<br>(1) |
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| 6<br>Loan Portfolio<br>▪<br>Total loans HFI increased $350.8 million from prior<br>quarter<br>▪<br>Teton Financial Services acquisition contributed $252.3<br>million in loans HFI<br>▪<br>Organic loan growth<br>(1)<br>of $98.5 million in 4Q21<br>▪<br>Strong organic growth across most portfolios<br>▪<br>New production in Cash, Securities and Other portfolio<br>partially offset by PPP forgiveness<br>4Q 2020<br>3Q 2021<br>4Q 2021<br>Cash, Securities and Other<br>$357,020<br>$293,837<br>$295,948<br>Construction and Development<br>131,111<br>132,141<br>178,716<br>1<br>-<br>4 Family Residential<br>455,038<br>502,439<br>580,872<br>Non<br>-<br>Owner Occupied CRE<br>281,943<br>358,369<br>482,622<br>Owner Occupied CRE<br>163,042<br>167,638<br>212,426<br>Commercial and Industrial<br>146,031<br>148,959<br>203,584<br>Total Loans HFI<br>$1,534,185<br>$1,603,383<br>$1,954,168<br>Mortgage loans held<br>-<br>for<br>-<br>sale (HFS)<br>161,843<br>51,309<br>30,620<br>Total Loans<br>$1,696,028<br>$1,654,692<br>$1,984,788<br>$252.3<br>$201.1<br>$144.6<br>$142.5<br>$133.4<br>$224.6<br>$128.1<br>$122.6<br>$91.5<br>$84.4<br>$122.3<br>$48.7<br>$30.5<br>$91.4<br>$40.6<br>$21.5<br>$0<br>$50<br>$100<br>$150<br>$200<br>$250<br>$300<br>4Q20<br>1Q21<br>2Q21<br>3Q21<br>4Q21<br>Teton Acquired<br>Production<br>Loan Payoffs<br>PPP Forgiveness<br>(in millions)<br>$1,644<br>$1,731<br>$1,660<br>$1,648<br>$1,693<br>$1,655<br>$1,985<br>$0<br>$200<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>$1,400<br>$1,600<br>$1,800<br>$2,000<br>$2,200<br>4Q20<br>1Q21<br>2Q21<br>3Q21<br>4Q21<br>3Q21<br>4Q21<br>HFI<br>HFS<br>(1)<br>Excludes deferred (fees) costs, and amortized premium/(<br>unaccreted<br>discount), net<br>($ in thousands, as of quarter end)<br>Loan Portfolio Composition<br>(1)<br>Loan Portfolio Details<br>Loan Production & Loan Payoffs<br>Average<br>Total Loans<br>(1)<br>Average<br>Period End |
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| 7<br>Total Deposits<br>▪<br>Total deposits increased $423.4 million from end of prior quarter<br>▪<br>Teton Financial Services acquisition contributed $379.2 million in deposits<br>▪<br>Organic deposit growth<br>(1)<br>of $44.2 million<br>▪<br>Strong new client acquisition activity resulted in $110 million in new deposit accounts in 4Q21<br>4Q 2020<br>3Q 2021<br>4Q 2021<br>Money market deposit accounts<br>$847,430<br>$905,196<br>$1,056,669<br>Time deposits<br>172,682<br>137,015<br>170,491<br>NOW<br>113,052<br>137,833<br>309,940<br>Savings accounts<br>5,289<br>5,620<br>32,299<br>Noninterest<br>-<br>bearing accounts<br>481,457<br>596,635<br>636,304<br>Total Deposits<br>$1,619,910<br>$1,782,299<br>$2,205,703<br>$1,577<br>$1,721<br>$1,705<br>$1,723<br>$1,805<br>$1,782<br>$2,206<br>$0<br>$500<br>$1,000<br>$1,500<br>$2,000<br>$2,500<br>4Q20<br>1Q21<br>2Q21<br>3Q21<br>4Q21<br>3Q21<br>4Q21<br>Average<br>Period End<br>($ in millions)<br>Deposit Portfolio Composition<br>Total Deposits |
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| ▪<br>During 2020, expanded commercial banking team and added construction lending expertise<br>▪<br>Increase in commercial banking clients contributing to growth in total loans and low<br>-<br>cost deposits while<br>improving overall diversification<br>▪<br>Stronger commercial banking platform complements private banking and expanded mortgage capabilities<br>to create a more valuable franchise with additional catalysts for future growth<br>8<br>Commercial Banking Driving Growth<br>$977<br>$1,213<br>$1,055<br>$1,185<br>$1,401<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>$1,400<br>$1,600<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>$908<br>$871<br>$975<br>$1,026<br>$1,121<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>(1)<br>Reflects loans to commercial borrowers across all loan categories excludes SBA PPP loan balances due<br>to their short<br>-<br>term nature.<br>(in millions)<br>(in millions)<br>Up 23% Year<br>-<br>Over<br>-<br>Year<br>Up 43% Year<br>-<br>Over<br>-<br>Year<br>Total Commercial Loans<br>(1)<br>Total Commercial Deposits |
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| 9<br>Trust and Investment Management<br>▪<br>Total assets under management increased $445.9 million from September 30,<br>2021<br>to $7.35 billion<br>at<br>December 31, 2021<br>▪<br>The increase in asset balances was attributable to the Teton acquisition and improving market conditions<br>as well as account additions and new account growth<br>$6,255<br>$6,486<br>$6,762<br>$6,906<br>$7,352<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>$5,000<br>$6,000<br>$7,000<br>$8,000<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Investment Agency<br>Managed Trust<br>401(k)/Retirement<br>Directed Trust<br>Custody<br>(in millions, as of quarter end)<br>Total Assets Under Management |
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| (1) All numbers represented do not include the impact of taxes<br>(2) The deferred loan origination expenses are recorded in non<br>-<br>interest expenses (Salaries and Benefits) and amortized throug<br>h net interest income<br>(3<br>) Includes $0.8 million in SBA fee income less $0.1 million of deferred loan origination expense<br>Paycheck Protection Program Overview<br>Impact on 4Q21 Financials<br>(1)<br>($ in Millions)<br>Net Interest Income<br>Amortization of SBA fee income and deferred loan origination<br>expense<br>(2)<br>$0.5<br>Interest income from PPP loans, less PPPLF funding cost<br>$0.1<br>Net Interest<br>Income<br>$0.6<br>Net Interest Margin Impact<br>6 bps<br>($ in Millions)<br>As<br>of 12/31<br>/21<br>Total Loans (existing PPP)<br>$46.8<br>PPP Loans Acquired (included in total)<br>$6.7<br>Total Loans Forgiven<br>$239.3<br>PPPLF advances<br>$23.6<br>Remaining Fees to be Recognized<br>Pre<br>-<br>Tax<br>(3)<br>$0.7<br>10 |
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| (1)<br>See Non<br>-<br>GAAP reconciliation<br>(2)<br>Gross Revenue for Capital Management includes amounts for the fourth quarter of 2020 through the completion of the sale of th<br>e L<br>A Fixed<br>Income Team on November 16, 2020. Financial results after that date for the unsold portion are presented in Wealth Management<br>..<br>11<br>Gross Revenue<br>▪<br>Gross revenue<br>(1)<br>decreased 7.5% from 3Q21, primarily due to lower net gain on mortgage loans<br>▪<br>Increases in most non<br>-<br>interest income generating areas compared to 3Q21<br>➢<br>Trust and investment management fees up 0.6%<br>➢<br>Bank fees up 35.8%<br>➢<br>Risk management and insurance fees up 125.3%<br>Adjusted<br>Non<br>-<br>interest<br>Income<br>$9,053<br>Net Interest<br>Income<br>$14,387<br>38.6%<br>61.4%<br>(1)<br>$23.4<br>$23.7<br>$23.7<br>$25.3<br>$23.4<br>$0.0<br>$5.0<br>$10.0<br>$15.0<br>$20.0<br>$25.0<br>$30.0<br>$35.0<br>Q4 2020⁽²⁾<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Wealth Management<br>Capital Management<br>Mortgage<br>(in millions)<br>4Q21 Gross Revenue<br>(1)<br>Gross Revenue<br>(1) |
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| 12<br>Net Interest Income and Net Interest Margin<br>▪<br>Net interest income decreased 3.1% from 3Q21, primarily due to lower PPP fees and purchase<br>accretion income<br>▪<br>Excluding PPP fees and purchase accretion income, net interest income increased $0.3 million from<br>3Q21<br>▪<br>Net interest margin, including PPP and purchase accretion, decreased 22 bps to 2.92%<br>▪<br>Net interest margin, excluding PPP and purchase accretion<br>(1)<br>, decreased 11 bps to 2.95%, primarily<br>due to lower loan yields<br>▪<br>Net interest margin should expand as excess liquidity is used to fund continued loan growth<br>$13,457<br>$13,053<br>$14,223<br>$14,846<br>$14,387<br>$0<br>$2,000<br>$4,000<br>$6,000<br>$8,000<br>$10,000<br>$12,000<br>$14,000<br>$16,000<br>$18,000<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>3.07%<br>(1)<br>2.88%<br>(1)<br>2.88%<br>(1)<br>3.06%<br>(1)<br>2.95%<br>3.10%<br>2.90%<br>3.01%<br>3.14%<br>2.92%<br>-0.50%<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>2.00%<br>2.50%<br>3.00%<br>3.50%<br>4.00%<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Net Interest Margin<br>Adjusted Net Interest Margin<br>(1)<br>(in thousands)<br>(1)<br>See Non<br>-<br>GAAP reconciliation<br>Net Interest Income<br>Net Interest Margin |
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| 13<br>Non<br>-<br>Interest Income<br>▪<br>Non<br>-<br>interest income decreased 9.1% from 3Q21<br>▪<br>Lower net gain on mortgage loans offset increases in most other areas<br>▪<br>Trust and Investment Management fees increased 6.8% from fourth quarter of 2020<br>▪<br>$0.5 million net gain on equity interests in 4Q21<br>$9,954<br>$10,615<br>$9,498<br>$10,495<br>$9,542<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Trust and Investment Management Fees<br>Net Gain on Mortgage Loans<br>Bank Fees<br>Risk Management and Insurance Fees<br>Income on Company-Owned Life Insurance<br>Other<br>$4,868<br>$4,847<br>$5,009<br>$5,167<br>$5,197<br>$4,000<br>$4,200<br>$4,400<br>$4,600<br>$4,800<br>$5,000<br>$5,200<br>$5,400<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>(in thousands)<br>(in thousands)<br>Total Non<br>-<br>Interest Income<br>Trust and Investment Management Fees |
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| 14<br>Mortgage Operations<br>▪<br>Mortgage locks down 39% from prior quarter<br>▪<br>Refi/Purchase mix of 41% / 59% in 4Q21 compared to 39%<br>/ 61% in 3Q21 and 49% / 51% in 2Q21<br>▪<br>Profit margin down 38% due to decreased revenue as a<br>result of the decrease in locks<br>▪<br>Non<br>-<br>interest expense down 29% in Mortgage segment from<br>1Q21<br>$414.5<br>$490.8<br>$319.7<br>$256.1<br>$196.7<br>$32.4<br>$33.9<br>$41.2<br>$36.5<br>$34.3<br>$0<br>$100<br>$200<br>$300<br>$400<br>$500<br>$600<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Originations for Sale<br>Originations for Porfolio<br>$376.6<br>$359.4<br>$268.2<br>$279.0<br>$170.3<br>$0<br>$50<br>$100<br>$150<br>$200<br>$250<br>$300<br>$350<br>$400<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>(in millions)<br>$1.7<br>$2.1<br>$1.2<br>$2.3<br>$0.3<br>$4.3<br>$5.2<br>$3.9<br>$4.5<br>$2.5<br>40%<br>41%<br>31%<br>50%<br>12%<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Net Income<br>Revenue<br>Profit Margin<br>(in millions)<br>Mortgage Originations<br>Mortgage Details<br>Net Income, Revenue and Profit Margin<br>Mortgage Loan Locks |
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| 15<br>Non<br>-<br>Interest Expense and Efficiency Ratio<br>▪<br>Non<br>-<br>interest expense increased 24.7% from 3Q21<br>▪<br>4Q21 included $3.7 million of acquisition<br>-<br>related expense, compared with $0.3 million in 3Q21<br>▪<br>Excluding acquisition<br>-<br>related expense, non<br>-<br>interest expense increased from 3Q21 primarily due to higher<br>bonus accruals resulting from strong loan and deposit production<br>$171<br>(1)<br>$4<br>(1)<br>$74<br>(1)<br>$337<br>(1)<br>$3,700<br>(1)<br>$15,614<br>$15,629<br>$15,521<br>$16,469<br>$20,530<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>$25,000<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Non-Interest Expense<br>Adjustments to Non-Interest Expense<br>(1)<br>66.0%<br>66.0%<br>65.1%<br>63.7%<br>71.8%<br>0%<br>20%<br>40%<br>60%<br>80%<br>100%<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>(1)<br>See Non<br>-<br>GAAP reconciliation<br>Total Non<br>-<br>Interest Expense<br>Operating Efficiency Ratio<br>(1)<br>(in thousands) |
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| 16<br>Asset Quality<br>▪<br>Stable asset quality across the portfolio<br>▪<br>Immaterial net charge<br>-<br>offs again in the quarter<br>▪<br>$0.8 million provision for loan losses related to growth in total loans<br>▪<br>Non<br>-<br>performing assets decreased to 0.17% of total assets from 0.21% in 3Q21<br>▪<br>ALL/Adjusted Total Loans<br>(1)<br>decreased to 0.88%<br>in 4Q21 from 0.91% in 3Q21, consistent with strong<br>asset quality and immaterial losses<br>0.22%<br>0.18%<br>0.16%<br>0.21%<br>0.17%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>0.00%<br>0.00%<br>0.00%<br>0.00%<br>0.00%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>Q4 2020<br>Q1 2021<br>Q2 2021<br>Q3 2021<br>Q4 2021<br>Non<br>-<br>Performing Assets/Total Assets<br>Net Charge<br>-<br>Offs/Average Loans<br>(1)<br>Adjusted Total Loans<br>–<br>Total Loans minus PPP loans and acquired Loans; see non<br>-<br>GAAP reconciliation |
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| 17<br>2022 Outlook and Priorities<br>▪<br>First Western is well positioned to deliver another strong year of organic and acquisitive<br>growth in 2022<br>▪<br>Increasing production from commercial banking platform expected to result in strong<br>organic loan growth<br>▪<br>Focused on fully realizing the synergies from Teton Financial Services acquisition<br>▪<br>Continued investment in new banking talent and market expansion should continue to<br>create additional sources of organic growth<br>▪<br>Capitalize on the benefits of increased scale to continue investing in technology and talent<br>while still realizing improved operating leverage<br>▪<br>Balance sheet is well positioned to benefit from rising interest rates<br>▪<br>Evaluate additional accretive acquisition opportunities<br>▪<br>Continue executing well and further enhancing the value of the First Western franchise |
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| Appendix<br>18 |
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| 19<br>Capital and Liquidity Overview<br>10.54%<br>10.54%<br>13.54%<br>9.31%<br>0.00%<br>2.00%<br>4.00%<br>6.00%<br>8.00%<br>10.00%<br>12.00%<br>14.00%<br>16.00%<br>Tier 1 Capital to<br>Risk-Weighted<br>Assets<br>CET1 to Risk-<br>Weighted Assets<br>Total Capital to<br>Risk-Weighted<br>Assets<br>Tier 1 Capital to<br>Average Assets<br>Liquidity Funding Sources<br>(as of 12/31/21)<br>Liquidity Reserves:<br>Total Available Cash<br>$ 383,279<br>Unpledged Investment Securities<br>37,315<br>Borrowed Funds:<br>Unsecured<br>:<br>Credit Lines<br>54,000<br>Secured<br>:<br>FHLB Available<br>509,659<br>Brokered<br>Remaining Capacity<br>507,004<br>Total Liquidity Funding Sources<br>$ 1,491,752<br>Loan to Deposit Ratio<br>88.4%<br>$91,662<br>$104,411<br>$130,704<br>$187,139<br>$11.50<br>$13.15<br>$16.44<br>$19.87<br>$10.00<br>$15.00<br>$20.00<br>$25.00<br>$30.00<br>$60,000<br>$80,000<br>$100,000<br>$120,000<br>$140,000<br>$160,000<br>$180,000<br>$200,000<br>4Q18<br>4Q19<br>4Q20<br>4Q21<br>TCE<br>TBV/Share<br>(in thousands)<br>(1)<br>See Non<br>-<br>GAAP reconciliation<br>Consolidated Capital Ratios<br>(as of 12/31/21)<br>Tangible Common Equity / TBV per Share<br>(1)<br>(in thousands) |
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| 20<br>Non<br>-<br>GAAP Reconciliation<br>Consolidated Tangible Common<br>Book Value Per Share<br>As<br>of<br>the Three Months Ended,<br>(Dollars in thousands)<br>Dec. 31, 2018<br>Dec. 31, 2019<br>Dec. 31, 2020<br>September 30, 2021<br>Dec. 31<br>, 2021<br>Total shareholders' equity<br>$116,875<br>$127,678<br>$154,962<br>$175,129<br>$219,041<br>Less:<br>Preferred stock (liquidation preference)<br>-<br>-<br>-<br>-<br>-<br>Goodwill and other intangibles, net<br>25,213<br>19,714<br>24,258<br>24,246<br>31,902<br>Intangibles held for sale<br>(1)<br>-<br>3,553<br>-<br>-<br>Tangible common equity<br>91,662<br>104,411<br>$130,704<br>150,883<br>187,139<br>Common shares outstanding, end of period<br>7,968,420<br>7,940,168<br>7,951,773<br>8,002,874<br>9,419,271<br>Tangible common book value per share<br>$11.50<br>$13.15<br>$16.44<br>$18.85<br>$19.87<br>Net income available to common shareholders<br>$1,917<br>Return on tangible common equity (annualized)<br>4.10%<br>(1)<br>Represents the intangible portion of assets held for sale<br>Consolidated Efficiency Ratio<br>For the Three Months Ended,<br>(Dollars in thousands)<br>December 31, 2020<br>March 31, 2021<br>June 30, 2021<br>September 30, 2021<br>December 31, 2021<br>Non<br>-<br>interest expense<br>$15,614<br>$15,629<br>$15,521<br>$16,469<br>$20,530<br>Less: amortization<br>4<br>4<br>4<br>5<br>4<br>Less: acquisition related expenses<br>153<br>-<br>70<br>332<br>3,696<br>Less:<br>provision on other real estate owned<br>76<br>-<br>-<br>-<br>-<br>Less: loss on assets<br>held for sale<br>-<br>-<br>-<br>-<br>-<br>Plus: gain on sale of LA fixed income team<br>62<br>-<br>-<br>-<br>-<br>Adjusted non<br>-<br>interest expense<br>$15,443<br>$15,625<br>$15,447<br>$16,132<br>$16,830<br>Net interest income<br>$13,457<br>$13,053<br>$14,223<br>$14,846<br>$14,387<br>Non<br>-<br>interest income<br>9,954<br>10,615<br>9,498<br>10,495<br>9,542<br>Less: Net gain on equity interests<br>-<br>-<br>-<br>-<br>489<br>Less: Net gain<br>on sale of assets<br>-<br>-<br>-<br>-<br>-<br>Adjusted non<br>-<br>interest income<br>9,954<br>10,615<br>9,498<br>10,495<br>9,053<br>Total income<br>$23,411<br>$23,668<br>$23,721<br>$25,341<br>$23,440<br>Efficiency ratio<br>66.0%<br>66.0%<br>65.1%<br>63.7%<br>71.8% |
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| 21<br>Non<br>-<br>GAAP Reconciliation<br>Wealth Management Gross Revenue<br>For the Three Months Ended,<br>(Dollars in thousands)<br>December 31, 2020<br>March 31, 2021<br>June 30, 2021<br>September 30, 2021<br>December 31, 2021<br>Total income before non<br>-<br>interest expense<br>$17,973<br>$18,471<br>$19,782<br>$20,438<br>$20,619<br>Less: Net gain on equity interests<br>-<br>-<br>-<br>-<br>489<br>Plus: Provision for loan loss<br>695<br>-<br>12<br>406<br>812<br>Gross revenue<br>$18,668<br>$18,471<br>$19,794<br>$20,844<br>$20,942<br>Capital Management Gross Revenue<br>For the Three Months Ended,<br>(Dollars in thousands)<br>December 31, 2020<br>March 31, 2021<br>June 30, 2021<br>September 30, 2021<br>December 31, 2021<br>Total income before non<br>-<br>interest expense<br>$423<br>$<br>-<br>$<br>$<br>$<br>Plus: Provision for loan loss<br>-<br>-<br>-<br>-<br>-<br>Gross revenue<br>$423<br>$<br>-<br>$<br>$<br>$<br>Mortgage Gross Revenue<br>For the Three Months Ended,<br>(Dollars in thousands)<br>December 31, 2020<br>March 31, 2021<br>June 30, 2021<br>September 30, 2021<br>December 31, 2021<br>Total income before non<br>-<br>interest expense<br>$4,320<br>$5,197<br>$3,927<br>$4,497<br>$2,498<br>Plus: Provision for loan loss<br>-<br>-<br>-<br>-<br>-<br>Gross revenue<br>$4,320<br>$5,197<br>$3,927<br>$4,497<br>$2,498<br>Consolidated Gross Revenue<br>For the Three Months Ended,<br>(Dollars in thousands)<br>December 31, 2020<br>March 31, 2021<br>June 30, 2021<br>September 30, 2021<br>December 31, 2021<br>Total income before non<br>-<br>interest expense<br>$22,716<br>$23,668<br>$23,709<br>$24,935<br>$23,117<br>Less: Net gain on equity interests<br>-<br>-<br>-<br>-<br>489<br>Plus: Provision for loan loss<br>695<br>-<br>12<br>406<br>812<br>Gross revenue<br>$23,411<br>$23,668<br>$23,721<br>$25,341<br>$23,440<br>Diluted Pre<br>-<br>Tax Earnings Per Share<br>For The Three<br>Months<br>Ended<br>For The<br>Years Ended<br>(Dollars in thousands)<br>December 31,<br>2020<br>March 31, 2021<br>June 30, 2021<br>September 30,<br>2021<br>December 31,<br>2021<br>December 31,<br>2020<br>December 31,<br>2021<br>Non<br>-<br>Mortgage income before income tax<br>$5,386<br>$5,917<br>$6,983<br>$6,199<br>$2,279<br>$12,085<br>21,378<br>Plus: Acquisition<br>-<br>related<br>expenses<br>153<br>-<br>70<br>332<br>3,696<br>879<br>4,098<br>Mortgage income before income tax<br>1,716<br>2,122<br>1,205<br>2,267<br>308<br>20,978<br>5,902<br>Less: Income tax expense including acquisition tax effect<br>2,276<br>2,040<br>1,927<br>2,129<br>1,507<br>8,756<br>7,603<br>Net income available to common shareholders<br>$4,979<br>$5,999<br>$6,331<br>$6,669<br>$4,776<br>$25,186<br>$23,775<br>Diluted weighted average shares<br>8,015,780<br>8,098,680<br>8,213,900<br>8,246,353<br>8,370,998<br>7,961,904<br>8,235,178<br>Non<br>-<br>Mortgage Segment<br>Diluted Pre<br>-<br>Tax Earnings Per Share<br>$0.69<br>$0.73<br>$0.86<br>$0.79<br>$0.71<br>$1.63<br>$3.09<br>Consolidated Diluted Pre<br>-<br>Tax Earnings Per Share<br>$0.91<br>$0.99<br>$1.01<br>$1.07<br>$0.75<br>$4.26<br>$3.81 |
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| 22<br>Non<br>-<br>GAAP Reconciliation<br>Adjusted net<br>income available to common shareholders<br>For the Three Months Ended,<br>(Dollars in thousands, except per share data)<br>December 31, 2020<br>March 31, 2021<br>June 30, 2021<br>September 30, 2021<br>December 31, 2021<br>Net income available to common shareholders<br>$4,874<br>$5,999<br>$6,277<br>$6,417<br>$1,917<br>Plus: acquisition<br>related expense including tax impact<br>105<br>-<br>54<br>252<br>2,859<br>Plus: loss on intangibles held for sale<br>including t<br>ax<br>impact<br>-<br>-<br>-<br>-<br>-<br>Adjusted<br>net income to common shareholders<br>$4,979<br>$5,999<br>$6,331<br>$6,669<br>$4,776<br>Adjusted diluted earnings per share<br>For the Three Months Ended,<br>(Dollars in thousands, except per share data)<br>December 31, 2020<br>March 31, 2021<br>June 30, 2021<br>September 30, 2021<br>December 31, 2021<br>Earnings per share<br>$0.61<br>$0.74<br>$0.76<br>$0.78<br>$0.23<br>Plus: acquisition related expenses including tax impact<br>0.01<br>-<br>0.01<br>0.03<br>0.34<br>Plus:<br>loss on intangibles held for sale including tax impact<br>-<br>-<br>-<br>-<br>-<br>Adjusted earnings<br>per share<br>$0.62<br>$0.74<br>$0.77<br>$0.81<br>$0.57<br>Allowance<br>for loan losses to Bank originated loans excluding PPP<br>As of<br>(Dollars in thousands)<br>September 30, 2021<br>December 31, 2021<br>Gross loans<br>$1,603,383<br>$1,954,168<br>Less: Branch acquisition<br>117,465<br>360,661<br>Less: PPP loans<br>61,838<br>40,062<br>Loans excluding acquired and PPP<br>1,424,080<br>1,553,445<br>Allowance for loan losses<br>12,964<br>13,732<br>Allowance for loan losses to Bank originated loans excluding<br>PPP<br>0.91%<br>0.88%<br>Organic loan growth (annualized)<br>As of<br>(Dollars in thousands)<br>September 30, 2021<br>December 31, 2021<br>Total loans held for investment<br>$1,603,383<br>$1,954,168<br>Quarter<br>-<br>over<br>-<br>quarter growth in total loans held for investment<br>69,198<br>350,785<br>Less: loans acquired through Teton acquisition<br>-<br>252,275<br>Organic quarter<br>-<br>over<br>-<br>quarter growth in total loans held for investment<br>69,198<br>98,510<br>Organic<br>loan growth<br>24.58%<br>Organic deposit growth (annualized)<br>As of<br>(Dollars in thousands)<br>September 30, 2021<br>December 31, 2021<br>Total deposits<br>$1,782,299<br>$2,205,703<br>Quarter<br>-<br>over<br>-<br>quarter growth in total deposits<br>103,246<br>423,404<br>Less: deposits acquired through Teton acquisition<br>-<br>379,227<br>Organic quarter<br>-<br>over<br>-<br>quarter growth in total deposits<br>103,246<br>44,177<br>Organic<br>deposit growth<br>9.91% |
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| 23<br>Non<br>-<br>GAAP Reconciliation<br>Adjusted net<br>interest<br>margin<br>For the Three Months Ended<br>March 31, 2021<br>For the Three Months Ended<br>June 30, 2021<br>For the Three Months Ended<br>September 30, 2021<br>For the Three Months Ended<br>December 31, 2021<br>(Dollars in thousands)<br>Average<br>Balance<br>Interest<br>Earned/Paid<br>Average<br>Yield/Rate<br>Average<br>Balance<br>Interest<br>Earned/Paid<br>Average<br>Yield/Rate<br>Average<br>Balance<br>Interest<br>Earned/Paid<br>Average<br>Yield/Rate<br>Average<br>Balance<br>Interest<br>Earned/Paid<br>Average<br>Yield/Rate<br>Interest<br>-<br>bearing deposits in<br>other financial institutions<br>213,577<br>91<br>292,615<br>92<br>266,614<br>105<br>279,406<br>109<br>PPP adjustment<br>21,173<br>5<br>17,115<br>4<br>1,636<br>-<br>9,556<br>3<br>Available<br>-<br>for<br>-<br>sale securities<br>31,936<br>196<br>26,474<br>169<br>29,130<br>180<br>36,001<br>226<br>PPP adjustment<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>Loans<br>1,554,990<br>14,212<br>1,573,553<br>15,287<br>1,592,800<br>15,861<br>1,653,920<br>15,398<br>PPP adjustment<br>(171,263)<br>(945)<br>(176,396)<br>(1,583)<br>(81,476)<br>(1,081)<br>(51,825)<br>(622)<br>Purchase Accretion<br>adjustment<br>-<br>(344)<br>-<br>(260)<br>-<br>35<br>-<br>398<br>Adjusted total Interest<br>-<br>earning assets<br>1,650,413<br>13,215<br>1,773,360<br>13,709<br>1,808,704<br>15,100<br>1,927,058<br>15,512<br>Interest<br>-<br>bearing deposits<br>974<br>866<br>829<br>813<br>PPP adjustment<br>-<br>-<br>-<br>-<br>Federal Home Loan Bank<br>Topeka and Federal Reserve<br>borrowings<br>132<br>117<br>82<br>55<br>PPP adjustment<br>(109)<br>(93)<br>(59)<br>(31)<br>Subordinated notes<br>340<br>342<br>389<br>477<br>Adjusted total interest<br>-<br>bearing liabilities<br>1,337<br>1,232<br>1,241<br>1,314<br>Net interest income<br>11,878<br>12,477<br>13,859<br>14,198<br>Adjusted<br>net interest margin<br>2.88%<br>2.88%<br>3.06%<br>2.95% |
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