As filed with the Securities and Exchange Commission on October 5, 2021

Registration No. 333-  ​

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

First Western Financial, Inc.

(Exact name of registrant as specified in its charter)

1900 16th Street, Suite 1200
Denver, Colorado 80202
(303) 531-8100

(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant’s Principal Executive Offices)

1900 16th Street, Suite 1200
Denver, Colorado 80202
(303) 531-8100

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service)

Copies to:

Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon completion of the Merger.

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box: ☐

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

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 7(a)(2)(B) of the Securities Act. ☐

If applicable, place an ☒ in the box to designate the appropriate rule provision relied upon in conducting this transaction:

Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

☐

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Exchange Act Rule 14d-1(d) (Cross-Border Third-Party Tender Offer)

☐

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CALCULATION OF REGISTRATION FEE

​

(1)

Represents the estimated maximum number of shares to be issued to holders of Teton Financial Services, Inc. (“Teton”) common stock pursuant to the Agreement and Plan of Merger dated July 22, 2021, between the registrant and Teton, which is attached to the proxy statement/prospectus as Appendix A.

​

(2)

Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(f)(2) and (f)(3) of Regulation C under the Securities Act of 1933, as amended.

​

(3)

Computed in accordance with Rule 457(f) under the Securities Act to be $2,623, which is equal to 0.0000927 multiplied by the proposed maximum aggregate offering price of $28,294,904.

​

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this proxy statement/prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus is not an offer to sell these securities, and it is not soliciting to buy these securities, in any state where the offer or sale is not permitted.

Preliminary Proxy Statement/Prospectus

Subject to completion, dated October 5, 2021

To the Shareholders of Teton Financial Services, Inc.:

The boards of directors of First Western Financial, Inc. (“First Western”), and Teton Financial Services, Inc. (“Teton”), have each unanimously approved the acquisition of Teton by First Western. The acquisition will be accomplished pursuant to the terms of an Agreement and Plan of Merger, dated as of July 22, 2021 (the “Merger Agreement”), by and between First Western and Teton, whereby Teton will be merged with and into First Western (the “Merger”). Immediately following the Merger, Rocky Mountain Bank, a wholly owned bank subsidiary of Teton, will merge with and into First Western’s wholly owned bank subsidiary, First Western Trust Bank, with First Western Trust Bank as the surviving bank.

The aggregate consideration to be paid for Teton is comprised of two components: the cash consideration and the stock consideration. The aggregate cash consideration is $11,500,000. The aggregate stock consideration is 1,373,661 shares of First Western common stock, which is subject to adjustment in two limited scenarios described below.

Accordingly, if the Merger is completed, each outstanding share of Teton common stock will be automatically converted into the right to receive $0.39 in cash and 0.0466 of a share of First Western common stock (as same may be adjusted).

As noted above, the stock portion of the consideration is subject to adjustment depending on the volume weighted average price for a share of First Western common stock for the 20 trading days immediately preceding the fifth business day prior to the date of closing (the “Average Closing Price”). If the Average Closing Price exceeds $29.08 or falls below $21.50 (i.e., a 15% or more deviation from $25.29), the number of shares of First Western common stock to be issued in the Merger will be adjusted as follows:

•

if the Average Closing Price is greater than $29.08 per share (i.e., 115% of $25.29), the aggregate number of shares of First Western common stock to be issued to Teton shareholders will be reduced by multiplying 1,373,661 by a fraction, the (i) the numerator of which is $29.08, and (ii) the denominator of which is the Average Closing Price; and

​

•

if the Average Closing Price is less than $21.50 per share (i.e., 85% of $25.29), the aggregate number of shares of First Western common stock to be issued to Teton shareholders will be increased by multiplying 1,373,661 by a fraction, the (i) the numerator of which is $21.50, and (ii) the denominator of which is the Average Closing Price.

​

Although the number of shares of First Western common stock that each Teton shareholder will receive is fixed (assuming no adjustments as described above), the market value of the Merger consideration will fluctuate with the market price of First Western common stock and will not be known at the time Teton shareholders vote on the Merger. Based on the closing price of First Western’s common stock on The Nasdaq Capital Market (“Nasdaq”), on March 23, 2021, of $25.29, the price at which the number of shares of First Western common stock comprising the stock consideration was determined, the Merger consideration represents approximately $1.57 in value for each share of Teton common stock. Based on the closing price of First Western’s common stock on the Nasdaq on July 21, 2021, the last trading day before public announcement of the Merger, of $26.46, the Merger consideration represents approximately $1.62 in value for each share of Teton common stock. Based on First Western’s closing price on September 29, 2021, the latest practicable trading day before the date of this proxy statement/prospectus, of  $28.41, the Merger consideration represented approximately $1.71 in value for each share of Teton common stock. We urge you to obtain current market quotations for First Western (trading symbol “MYFW”). There are no current market quotations for Teton common stock because Teton is a privately owned corporation and its common stock is not traded on any established public trading market.

Teton will hold a special meeting of its shareholders where Teton shareholders will be asked to consider and vote upon (i) a proposal to approve the Merger Agreement and the Merger, and (ii) a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the Merger Agreement and the Merger.

The special meeting will be held on [•], 2021, at [•] (Mountain Time), subject to any adjournment or postponement thereof. In light of the ongoing developments related to the COVID-19 pandemic and to

protect the health of Teton’s shareholders and the community, the special meeting will be held in a virtual-only online format conducted via live webcast. Instructions for how to attend are provided in the Notice of Special Meeting of Shareholders.

Each of First Western and Teton expects that the Merger will qualify as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, with the result that the Teton common stock exchanged for First Western common stock will generally be tax-free, except with respect to any cash received as consideration in the Merger, which will generally be subject to capital gains tax.

Your vote is important.   Completion of the Merger is subject to the approval of the Merger Agreement by the shareholders of Teton. Regardless of whether or not you plan to attend the special meeting, please take the time to authorize a proxy to vote your shares in accordance with the instructions contained in this proxy statement/prospectus. Submitting a proxy now will not prevent you from being able to vote at the special meeting.

The board of directors of Teton has determined that the Merger Agreement and the transactions contemplated thereby, including the Merger, are advisable and in the best interests of the shareholders of Teton, has unanimously approved the Merger Agreement and the Merger and unanimously recommends that the shareholders of Teton vote “FOR” the proposal to approve the Merger Agreement and the Merger and “FOR” the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies in favor of the proposal to approve the Merger Agreement and the Merger.

This proxy statement/prospectus describes the special meeting, the Merger, the Merger Agreement, other documents related to the Merger and other related matters. Please carefully read this entire proxy statement/prospectus, including “Risk Factors,” beginning on page 15, for a discussion of the risks relating to the proposed Merger. You also can obtain information about First Western from documents that it has filed with the Securities and Exchange Commission that are incorporated by reference into this proxy statement/​prospectus.

If you have any questions concerning the special meeting, how to attend the meeting or how to vote your shares or the Merger, please contact Paul Cherry at paulcherry@rockymountainbank.com or (307) 732-7783 or Karla Tessler at karla@tesslerjh.com or (307) 734-2719. We look forward to seeing you at the meeting.

Allan Tessler
Chairman
Teton Financial Services, Inc.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Merger, the issuance of First Western common stock in connection with the Merger or the other transactions described in this document, or passed upon the adequacy or accuracy of the disclosure in this document. Any representation to the contrary is a criminal offense.

The securities to be issued in connection with the Merger are not savings accounts, deposits or other obligations of any bank, non-bank subsidiary or savings association and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. The securities are subject to investment risk, including possible loss of principal.

This document is dated [•], 2021 and is first being mailed to shareholders of Teton on or about [•], 2021.

 

TETON FINANCIAL SERVICES, INC.
2500 NORTH MOOSE WILSON ROAD
WILSON, WYOMING 83014
(307) 739-9000

NOTICE OF THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON [•], 2021

To the Shareholders of Teton Financial Services, Inc.:

A special meeting of the shareholders of Teton Financial Services, Inc., a Wyoming corporation (“Teton”), will be held on [•], 2021, at [•] (Mountain Time). In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of Teton’s shareholders and the community, the special meeting will be held in a virtual-only online format conducted via live webcast. You will be sent an invitation with a link to attend the special meeting through Microsoft Teams over the internet as well as a phone number to attend by phone, together with a password. These invitations will be sent to the current e-mail addresses Teton has on file for each shareholder. If you wish to confirm that Teton has your current e-mail address, please contact Paul Cherry at paulcherry@rockymountainbank.com or (307) 732-7783. You will be able to vote your shares and ask questions during the special meeting. The purpose of the special meeting is:

•

To consider and vote upon a proposal to approve the Agreement and Plan of Merger, dated as of July 22, 2021 (the “Merger Agreement”), by and between Teton and First Western Financial, Inc. (“First Western”), pursuant to which Teton will merge with and into First Western with First Western as the surviving entity (the “Merger”), all as described in the accompanying proxy statement/​prospectus and the Merger Agreement, a copy of which is included as Appendix A to the proxy statement/prospectus of which this notice is a part; and

​

•

to consider and vote upon a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to solicit additional proxies in the event there are not sufficient votes at the time of the special meeting to approve the foregoing proposal.

​

Teton will transact no other business at the special meeting except such business as may properly be brought before the special meeting or any adjournment or postponement thereof. Please refer to the proxy statement/prospectus of which this notice is a part for further information with respect to the business to be transacted at the special meeting.

The Teton board of directors has fixed the close of business on [•], 2021 as the record date for the special meeting. Only Teton shareholders of record at that time are entitled to receive notice of, and to vote at, the special meeting or any adjournment or postponement thereof.

Approval of the Merger Agreement requires the approval of a majority of the votes cast at the special meeting, assuming a quorum. Approval of the adjournment of the special meeting to a later date or dates, if necessary or appropriate, to permit further solicitation of proxies for approval of the Merger Agreement requires the approval of a majority of the votes cast at the special meeting.

The Teton board of directors has unanimously adopted the Merger Agreement and unanimously recommends that Teton shareholders vote “FOR” the proposal to approve the Merger Agreement and “FOR” the proposal to approve the adjournment of the special meeting, if necessary or appropriate, to permit further solicitation of proxies for the approval of the Merger Agreement.

Your vote is very important. Whether or not you expect to attend the special meeting, to ensure your representation at the special meeting, we urge you to submit a proxy to vote your shares as promptly as possible by signing, dating and returning your Teton proxy card (i) via DocuSign (which will be sent separately), (ii) by e-mail to Karla Tessler at karla@tesslerjh.com, or (iii) by facsimile to (307) 734-2719.

Submitting a proxy will not prevent you from voting at the special meeting, but it will help to secure a quorum and avoid added solicitation costs. Any eligible holder of Teton common stock who attends the special meeting may vote at the special meeting, thereby canceling any previous proxy. In any event, a proxy may be revoked in writing at any time before the special meeting in the manner described in the accompanying proxy/registration statement.

 

 

Holders of record of Teton common stock have the right to dissent from the Merger Agreement and the Merger and obtain payment in cash of the appraised fair value of their shares of Teton common stock under applicable provisions of the Wyoming Business Corporation Act (the “WBCA”). In order for a holder of Teton common stock to perfect his, her or its right to dissent, such holder must carefully follow the procedure set forth in the WBCA. A copy of the applicable statutory provisions of the WBCA is included Appendix B to the accompanying proxy statement/prospectus and a summary of these provisions can be found under the caption “The Merger — Teton Shareholder Appraisal Rights,” beginning on page 64 of the proxy statement/prospectus. The Merger may not be completed if the holders of more than 5% of the outstanding shares of Teton common stock exercise appraisal rights.

The enclosed proxy statement/prospectus provides a detailed description of the Merger and the Merger Agreement. We urge you to carefully read this proxy statement/prospectus, including any documents incorporated by reference, and the Appendices in their entirety. If you have any questions concerning the Merger Agreement, the Merger or this proxy statement/prospectus, would like additional copies or need help voting your shares of Teton common stock, please contact Paul Cherry at paulcherry@rockymountainbank.com or (307) 732-7783 or Karla Tessler at karla@tesslerjh.com or (307) 734-2719.

By Order of the Board of Directors

Jackson, Wyoming

[•], 2021

PLEASE VOTE YOUR SHARES OF TETON COMMON STOCK PROMPTLY. YOU CAN FIND INSTRUCTIONS FOR VOTING ON THE ENCLOSED PROXY CARD. IF YOU HAVE QUESTIONS ABOUT THE PROPOSALS OR ABOUT VOTING YOUR SHARES, PLEASE CONTACT PAUL CHERRY AT PAULCHERRY@ROCKYMOUNTAINBANK.COM OR (307)732-7783 OR KARLA TESSLER AT KARLA@TESSLERJH.COM OR (307) 734-2719.

 

 

TABLE OF CONTENTS

 

i

 

QUESTIONS AND ANSWERS ABOUT THE MERGER AND THE SPECIAL MEETING

The following are answers to certain questions that you may have regarding the special meeting. The parties urge you to carefully read the remainder of this document because the information in this section may not provide all the information that might be important to you in determining how to vote. Additional important information is also contained in the appendices to, and the documents incorporated by reference in, this document.

Q:

WHAT IS THE MERGER?

​

A.

First Western and Teton have entered into a Merger Agreement pursuant to which, subject to the terms and conditions of the Merger Agreement, Teton will merge with and into First Western, with First Western continuing as the surviving corporation (the “Merger”). A copy of the Merger Agreement is attached as Appendix A to this document. Immediately following the Merger, Rocky Mountain Bank, a Wyoming-chartered bank and a wholly owned subsidiary of Teton (“RMB”), will merge (the “Bank Merger”) with and into First Western Trust Bank, a Colorado state-chartered bank and a wholly owned subsidiary of First Western (“First Western Trust”), with First Western Trust continuing as the surviving bank. In order to complete the transaction, Teton needs not only the approval of its shareholders but the approval of each of these mergers by the applicable banking regulators of First Western, First Western Trust, Teton, and RMB.

​

Q:

WHY AM I RECEIVING THIS PROXY STATEMENT/PROSPECTUS?

​

A.

Teton is sending these materials to its shareholders to help them decide how to vote their shares of Teton common stock with respect to the matters to be considered at the special meeting.

​

The Merger cannot be completed unless Teton shareholders approve and adopt the Merger Agreement. Teton is holding a special meeting of its shareholders to vote on the proposal necessary to complete the Merger. Information about this special meeting, the Merger and the business to be considered by shareholders at the special meeting is contained in this document.

This document constitutes both a proxy statement of Teton and a prospectus of First Western. It is a proxy statement because the board of directors of Teton is soliciting proxies from its shareholders using this document. Teton will bear the cost of the solicitation. It is a prospectus because First Western, in connection with the Merger, is offering shares of its common stock in exchange for outstanding shares of Teton common stock.

Q:

WHAT WILL TETON SHAREHOLDERS RECEIVE IN THE MERGER?

​

A:

Each share of Teton common stock issued and outstanding immediately prior to the effective time of the Merger (“Effective Time”), excluding any Cancelled Shares and any Dissenters’ Shares (each as defined in the Merger Agreement), shall represent the right to receive without interest (i) a number of shares of First Western common stock, rounded to the nearest whole share, obtained by dividing 1,373,661, as may be adjusted pursuant to the terms of the Merger Agreement, by the number of Teton shares of common stock issued and outstanding immediately prior to the Effective Time, but excluding Cancelled Shares (“Company Closing Shares”), plus (ii) an amount of cash equal to $11,500,000, divided by the number of Company Closing Shares.

​

For each fractional share that would otherwise be issued, First Western will pay cash in an amount equal to such fraction multiplied by the average volume weighted average of the daily closing sales prices of a share of First Western’s common stock for the 20 trading days immediately preceding the fifth business day prior to the Closing Date (the “Determination Date” and the “Average Closing Price,” respectively). The “Closing Date” will be a date no later than five business days after the satisfaction or waiver of First Western’s and Teton’s respective closing conditions, or at such other time and place as First Western and Teton may agree. No interest will be paid or accrue on cash payable to holders in lieu of fractional shares.

Based on First Western’s common stock’s closing price of $26.46 on July 21, 2021, the day before the announcement of the Merger, the transaction value is estimated at $47.8 million, or $1.62 per share of Teton common stock. Based on First Western’s common stock’s closing price of $28.41 on September 29,

 

1

 

2021, the latest practicable trading day before the date of this proxy statement/prospectus, the transaction value is estimated at $50.5 million, or $1.71 per share of Teton common stock. Based on an Average Closing Price of First Western’s common stock of $21.50 (the price beneath which Teton would have the right to terminate the Merger Agreement, as described below, subject to First Western’s right to increase the amount of consideration payable to Teton shareholders), the transaction value is estimated at $41.0 million, or $1.39 per share of Teton common stock. Based on an Average Closing Price of First Western’s common stock of $29.08 (the price above which First Western would have the right to terminate the Merger Agreement, as described below, subject to Teton’s right to decrease the amount of consideration payable to Teton shareholders), the transaction value is estimated at $51.4 million, or $1.75 per share of Teton common stock. The ultimate value of the consideration received by Teton shareholders will depend on the trading value of First Western’s common stock prior to the closing of the Merger.

Q:

WILL THE VALUE OF THE MERGER CONSIDERATION CHANGE BETWEEN THE DATE OF THIS DOCUMENT AND THE TIME THE MERGER IS COMPLETED?

​

A:

Yes. The trading price of First Western common stock may increase or decrease prior to the Closing Date, and the value of the shares of First Western common stock that you would receive in connection with the Merger would increase or decrease accordingly. In addition, the number of shares of First Western common stock that you may receive in the Merger may be increased or decreased in certain circumstances pursuant to the terms of the Merger Agreement. See “The Merger Agreement — Termination of the Merger Agreement.”

​

Q:

WILL TETON SHAREHOLDERS BE ABLE TO TRADE THE SHARES OF FIRST WESTERN COMMON STOCK RECEIVED IN THE MERGER?

​

A:

Yes. The First Western common stock issued in the Merger to Teton shareholders, except for holders of any Dissenters’ Shares, will be registered under the Securities Act of 1933, as amended (the “Securities Act”), and will be listed on Nasdaq under the symbol “MYFW.” All shares of First Western common stock issued in the Merger will be freely transferable and will not be subject to any restrictions on transfer arising under the Securities Act, except for (i) shares issued to any Teton shareholder who may be deemed to be an “affiliate” of First Western after completion of the Merger, or (ii) shares subject to the Lock-Up Agreements described below. An affiliate of a corporation, as defined by the rules promulgated under the Securities Act, is a person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, that corporation. Affiliates generally include directors, executive officers and beneficial owners of 10% or more of a corporation’s capital stock.

​

In connection with entering into the Merger Agreement, First Western entered into Lock-Up Agreements (the “Lock-Up Agreements”) with certain holders of Teton common stock. The shareholders that are party to the Lock-Up Agreements beneficially own 35.8% of the outstanding shares of Teton common stock. The Lock-Up Agreements require that the shareholders that are party thereto, during the period commencing as of the date on which the Effective Time occurs and expiring one year thereafter, not directly or indirectly, with certain exceptions, take any action to: (i) offer, sell, contract to sell, sell any option, warrant or contract to purchase, purchase any option, warrant or contract to sell, transfer, pledge or otherwise dispose of, or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition or otherwise) of any shares of First Western common stock whether owned as of the time of the Lock-Up Agreements or subsequently acquired, including shares of First Western common stock received by the shareholders pursuant to the Merger Agreement; (ii) enter into any swap or other derivative transaction that transfers to another, in whole or in part, any of the economic benefits or risks of ownership of First Western common stock, whether any such transaction is to be settled by delivery of First Western common stock or other securities, in cash or otherwise; or (iii) publicly disclose an intention to effect any transaction contemplated by clause (i) or (ii). If the Merger Agreement is terminated without the consummation of the Merger, the Lock-Up Agreements will automatically terminate.

 

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Former Teton shareholders who are not affiliates of First Western after the completion of the Merger and are not subject to the terms of a Lock-Up Agreement may sell their shares of First Western common stock received in the Merger at any time. Former Teton shareholders who become affiliates of First Western after completion of the Merger and are not subject to the terms of a Lock-Up Agreement will be subject to the volume and sale limitations of Rule 144 under the Securities Act until they are no longer affiliates of First Western. This proxy statement/prospectus does not cover resales of First Western common stock received by any person upon completion of the Merger, and no person is authorized to make any use of or rely on this proxy statement/prospectus in connection with or to effect any resale of First Western common stock.

Q:

WHEN WILL THE MERGER BE COMPLETED?

​

A:

First Western and Teton are working to complete the Merger as soon as practicable. The Merger will occur no later than five business days after the satisfaction or waiver of First Western’s and Teton’s respective closing conditions, or at such other time and place as First Western and Teton may agree. Neither First Western nor Teton can predict the actual date on which the Merger will be completed because it is subject to factors beyond each company’s control. For further information, please see the section entitled “The Merger Agreement — Conditions to Consummation of the Merger” beginning on page 78.

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Q:

WHO IS ENTITLED TO VOTE?

​

A:

Holders of record of Teton common stock at the close of business on [•], 2021, which is the date that Teton’s board of directors has fixed as the record date for the special meeting, are entitled to vote at the special meeting.

​

Q:

WHAT CONSTITUTES A QUORUM?

​

A:

A majority of the outstanding shares of Teton common stock, represented in person or by proxy, will constitute a quorum for the transaction of business at the special meeting. Abstentions will be included in determining the number of shares present at the meeting for the purpose of determining the presence of a quorum.

​

Q:

WHAT AM I BEING ASKED TO VOTE ON AND WHY IS THIS APPROVAL NECESSARY?

​

A:

Teton shareholders are being asked to vote on the following proposals:

​

1.

To approve the Merger proposal.

​

2.

To approve the adjournment proposal (if necessary or appropriate).

​

Shareholder approval of the Merger proposal is required to complete the Merger. Teton will transact no business other than as listed above at the special meeting, except for business properly brought before the special meeting or any adjournment or postponement thereof.

Q:

WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL AT THE SPECIAL MEETING?

​

A:

The Merger proposal:   The affirmative vote of a majority of the shares of Teton common stock represented in person or by proxy at the special meeting and entitled to vote on the proposal is required to approve the Merger proposal.

​

The adjournment proposal:   The affirmative vote of a majority of the shares of Teton common stock represented in person or by proxy at the special meeting and entitled to vote on the proposal is required to approve the adjournment proposal.

Q:

WHAT DOES THE TETON BOARD OF DIRECTORS RECOMMEND?

​

A:

The Teton board of directors recommends that Teton shareholders vote “FOR” the Merger proposal and “FOR” the adjournment proposal (if necessary or appropriate).

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3

 

Q:

WHAT DO I NEED TO DO NOW?

​

A:

After carefully reading and considering the information contained in this document, please vote your shares as soon as possible so that your shares will be represented at the special meeting. Please follow the instructions set forth on the proxy card.

​

Q:

HOW DO I VOTE?

​

A:

If you are a shareholder of Teton as of the record date, you may submit your proxy before the special meeting by signing, dating and returning your Teton proxy card (i) via DocuSign (which will be sent separately), (ii) by e-mail to Karla Tessler at karla@tesslerjh.com, or (iii) by facsimile to (307) 734-2719.

​

You may also cast your vote at the special meeting.

Q:

HOW MANY VOTES DO I HAVE?

​

A:

You are entitled to one vote for each share of Teton common stock that you owned as of the record date. As of the close of business on the record date, there were 29,477,707 outstanding shares of Teton common stock entitled to vote. As of that date, approximately 38.34% of such outstanding shares of Teton common stock were beneficially owned by the directors and executive officers of Teton and their respective affiliates. In addition, shareholders owning 38.45% of the outstanding shares of Teton common stock are parties to a voting and support agreement with First Western (the “Voting Agreement”) requiring them to vote in favor of the Merger proposal.

​

Q:

WHEN AND WHERE IS THE SPECIAL MEETING?

​

A:

The special meeting of Teton shareholders will be held via live webcast at [•] (Mountain Time), on [•], 2021. All Teton shareholders as of the record date, or their duly appointed proxies, may attend the special meeting. In light of the ongoing developments related to the COVID-19 pandemic and to protect the health of Teton’s shareholders and the community, the special meeting will be held in a virtual-only online format conducted via live webcast.

​

Q:

WHAT IF I DO NOT VOTE OR I ABSTAIN?

​

A:

For purposes of the special meeting, an abstention occurs when a shareholder attends the applicable special meeting, either in person or represented by proxy, but abstains from voting.

​

For the Merger proposal, if a Teton shareholder present at the special meeting abstains from voting, or responds by proxy with an “abstain” vote, it will have no effect on the vote count for this proposal. If a Teton shareholder is not present at the special meeting at which there is a quorum and does not respond by proxy, it will have no effect on the vote count for this proposal.

For the adjournment proposal, if a Teton shareholder present at the special meeting abstains from voting, or responds by proxy with an “abstain” vote, it will have no effect on the vote count for this proposal. If a Teton shareholder is not present at the special meeting at which there is a quorum and does not respond by proxy, it will have no effect on the vote count for this proposal.

Q:

WHAT WILL HAPPEN IF I RETURN MY PROXY OR VOTING INSTRUCTION CARD WITHOUT INDICATING HOW TO VOTE?

​

A:

If you sign and return your proxy or voting instruction card without indicating how to vote on any particular proposal, the Teton common stock represented by your proxy will be voted as recommended by the Teton board of directors with respect to each proposal. Unless a Teton shareholder checks the box on its proxy card to withhold discretionary authority, the proxyholders may use their discretion to vote on other matters relating to the special meeting.

​

Q:

MAY I CHANGE MY VOTE AFTER I HAVE DELIVERED MY PROXY OR VOTING INSTRUCTION CARD?

​

A:

Yes. You may change your vote at any time before your proxy is voted at the special meeting. You may do this in one of three ways:

​

•

timely delivering a signed written notice of revocation;

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4

 

•

timely delivering a new, valid proxy bearing a later date; or

​

•

attending the special meeting and voting, which will automatically cancel any proxy previously given, or revoking your proxy at the meeting. Simply attending the special meeting without voting will not revoke any proxy that you have previously given or change your vote.

​

If you choose either of the first two methods, you must take the described action such that the notice or proxy card, as applicable, is received no later than the beginning of the special meeting.

Q:

DO I NEED IDENTIFICATION TO ATTEND THE SPECIAL MEETING WEBCAST?

​

A:

No; however, Teton reserves the right to use any reasonable measure it deems appropriate to verify the identity of any person who attends the special meeting over the internet or by phone.

​

Q:

ARE TETON SHAREHOLDERS ENTITLED TO APPRAISAL RIGHTS?

​

A:

Yes. Teton shareholders will have the right to assert appraisal of their shares of Teton common stock and obtain payment in cash for the fair value of their shares, but only if they perfect their dissenters’ rights and comply with the applicable provisions of Wyoming law. A copy of the Wyoming statutory provisions related to appraisal rights is attached as Appendix B to this document, and a summary of these provisions can be found under “The Merger — Teton Shareholder Appraisal Rights” beginning on page 64. Due to the complexity of the procedures for exercising the right to seek appraisal, Teton shareholders who are considering exercising such rights are encouraged to seek the advice of legal counsel. Failure to strictly comply with the applicable Wyoming law provisions will result in the loss of the right of appraisal.

​

Q:

WHAT ARE THE MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO TETON SHAREHOLDERS?

​

A:

The Merger is intended to qualify, and the obligation of each party to complete the Merger is conditioned upon the party’s receipt of an opinion to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”).

​

Accordingly, Teton shareholders are not expected to recognize any gain or loss upon receipt of First Western common stock in exchange for Teton common stock in the Merger, and will recognize gain (but not loss) in an amount not to exceed any cash received as part of the Merger consideration (except with respect to any cash received in lieu of a fractional share of First Western common stock, as discussed below under “Material U.S. Federal Income Tax Consequences of the Merger — Cash Received In Lieu of a Fractional Share of First Western Common Stock”). For a more detailed discussion of the material U.S. federal income tax consequences of the transaction, please see the section entitled “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 83.

The tax consequences of the Merger to any particular shareholder will depend on that shareholder’s particular facts and circumstances. Accordingly, you are urged to consult your tax advisor to determine your tax consequences from the Merger.

Q:

WHAT HAPPENS IF THE MERGER IS NOT COMPLETED?

​

A:

If the Merger Agreement is terminated and the Merger is not completed, Teton shareholders will not receive any consideration for their shares of Teton common stock that otherwise would have been received in connection with the Merger. Instead, Teton will remain an independent company. In addition, if the Merger Agreement is terminated under certain circumstances, Teton would be required to pay First Western a termination fee of $2.2 million.

​

 

5

 

Q:

SHOULD TETON SHAREHOLDERS SEND IN THEIR STOCK CERTIFICATES NOW?

​

A:

No. Shares of Teton common stock are not represented by stock certificates. They are all book entry shares maintained by Teton as its own transfer agent. If the Merger is approved, transmittal materials with instructions for their completion will be provided to Teton shareholders under separate cover, including instructions for how to exchange of shares of Teton common stock for the consideration to be paid in the Merger.

​

Q:

WHAT SHOULD I DO IF I RECEIVE MORE THAN ONE SET OF VOTING MATERIALS?

​

A:

Teton shareholders may receive more than one set of voting materials, including multiple copies of this document and multiple proxy cards or voting instruction cards. If you are a holder of record of Teton common stock and your shares are registered in more than one name, you will receive one or more separate proxy cards. Please complete, sign, date and return each proxy card that you receive or otherwise follow the voting instructions set forth in this document to ensure that you vote every share of Teton common stock that you own.

​

Q:

WHOM SHOULD I CONTACT IF I HAVE ANY QUESTIONS ABOUT THE PROXY MATERIALS OR VOTING?

​

A:

If you are a Teton shareholder and have any questions about the proxy materials or if you need assistance submitting your proxy or voting your shares or need additional copies of this document or the enclosed proxy card, you should contact Paul Cherry at paulcherry@rockymountainbank.com or (307) 732-7783 or Karla Tessler at karla@tesslerjh.com or (307) 734-2719.

​

 

6

 

7

 

First Western Closing Price	​	​	Total Merger Consideration	​	​	Consideration Per Share of Teton Common Stock(1)				​
$21.50	​	​	$41.0 million	​	​	​	$	1.39	​	​
$26.46	​	​	$47.8 million	​	​	​	$	1.62	​	​
$28.41	​	​	$50.5 million	​	​	​	$	1.71	​	​
$29.08	​	​	$51.4 million	​	​	​	$	1.75	​	​

8

 

9

 

​

10

 

​

11

 

12

 

13

 

14

 

RISK FACTORS

In addition to the other information contained in or incorporated by reference into this document, including the matters addressed under the caption entitled “Cautionary Statement Regarding Forward-Looking Statements,” Teton shareholders should carefully consider the following factors in deciding whether to vote for the proposals. Please see the sections entitled “Where You Can Find More Information” in the forepart of this document and “Incorporation of Certain Documents by Reference” beginning on page 125.

Risks Related to the Merger

Because the market price of First Western common stock will fluctuate, the value of the Merger consideration to be received by Teton shareholders may change.

Upon completion of the Merger, each outstanding share of Teton common stock, excluding Cancelled Shares and Dissenters’ Shares, will be converted into the per share stock consideration and per share cash consideration (each as defined in the Merger Agreement) pursuant to the terms of the Merger Agreement. The closing price of First Western common stock on the date that the Merger is completed may vary from the closing price of First Western common stock on the date First Western and Teton announced the Merger, on the date that this document is being mailed to Teton shareholders, and on the date of the special meeting of Teton shareholders. The stock component of the Merger consideration is determined by a fixed exchange ratio, subject to each party’s right to terminate the agreement above or below certain prices, as applicable, and the other party’s right to decrease or increase the stock consideration payable, as applicable. At the time of the special meeting Teton shareholders will not know or be able to calculate the value of the First Western common stock they will receive upon completion of the Merger. Any change in the market price of First Western common stock prior to completion of the Merger may affect the value of the stock component of the Merger consideration that Teton shareholders will receive upon completion of the Merger. Stock price changes may result from a variety of factors, including general market and economic conditions, changes in our respective businesses, operations and prospects, and regulatory considerations, among other things. Many of these factors are beyond the control of First Western and Teton. Teton shareholders should obtain current market quotations for shares of First Western common stock before voting their shares at the special meeting.

Teton shareholders will have a reduced ownership and voting interest after the Merger and will exercise less influence over management.

Teton shareholders currently have the right to vote in the election of the board of directors of Teton and on other matters affecting Teton. Upon the completion of the Merger, Teton’s shareholders will be shareholders of First Western with a percentage ownership of First Western that is smaller than their current percentage ownership of Teton. It is currently expected that the former shareholders of Teton as a group will receive shares in the Merger constituting approximately 14.7% of the outstanding shares of the combined company’s common stock immediately after the Merger. As a result, current shareholders of First Western as a group will own approximately 85.3% of the outstanding shares of the combined company’s common stock immediately after the Merger. Because of this, Teton shareholders will have less influence on the management and policies of the combined company than they now have on the management and policies of Teton.

Sales of substantial amounts of First Western’s common stock in the open market by former Teton shareholders could depress First Western’s stock price.

Shares of First Western common stock that are issued to shareholders of Teton in the Merger will, except for those shares subject to the Lock-Up Agreement and for persons deemed to be affiliates of First Western, be freely tradable without restrictions or further registration under the Securities Act. As of the record date, First Western had approximately [•] shares of common stock entitled to vote outstanding and [•] shares of First Western common stock were reserved for issuance under the First Western Financial, Inc. 2008 Stock Incentive Plan and the First Western Financial, Inc. 2016 Omnibus Incentive Plan. First Western currently expects to issue approximately 1,373,661 shares of its common stock in connection with the Merger, of which approximately 35.8% will be subject to the Lock-Up Agreement.

 

15

 

If the Merger is completed and if Teton’s former shareholders sell substantial amounts of First Western common stock in the public market following completion of the Merger, the market price of First Western common stock may decrease.

The combined company may fail to realize the anticipated benefits of the Merger.

The success of the Merger will depend on, among other things, the combined company’s ability to combine the businesses of First Western and Teton. If the combined company is not able to successfully achieve this objective, the anticipated benefits of the Merger may not be fully realized, may not be realized at all or may take longer to realize than expected.

It is possible that the integration of First Western’s and Teton’s businesses or other factors could result in the loss or departure of key employees, the disruption of the ongoing business of First Western or Teton or inconsistencies in standards, controls, procedures and policies. It is also possible that customers, depositors and counterparties of First Western or Teton could choose to discontinue their relationships with the combined company post-Merger because they prefer doing business with an independent company or for any other reason, which would adversely affect the future performance of the combined company. These transition matters could have an adverse effect on each of First Western and Teton during the pre-Merger period and for an undetermined amount of time after the consummation of the Merger.

Failure of the Merger to be completed, the termination of the Merger Agreement or a significant delay in the consummation of the Merger could negatively impact Teton.

The Merger Agreement is subject to a number of conditions which must be fulfilled in order to complete the Merger. First Western and Teton have agreed to use their respective reasonable best efforts to obtain all necessary regulatory approvals for the Merger. Notwithstanding this agreement, it is a condition to First Western’s obligation to consummate the Merger that no such requisite regulatory approval shall require First Western to take any action, or commit to take any action, or agree to any condition or restriction, in connection with obtaining any regulatory approval that would: (i) reasonably be expected to be materially burdensome on, or impair in any material respect the benefits of the transactions contemplated by the Merger Agreement to First Western; (ii) require a material modification of, or impose any material limitation or restriction on, the activities, governance, legal structure, compensation or fee arrangements of First Western or any of its subsidiaries; (iii) require any person other than First Western to guaranty, support or maintain the capital of First Western Trust or the surviving corporation, as applicable, after the Closing Date; (iv) cause any person other than the surviving corporation to be deemed to control First Western Trust or RMB after the Closing Date; or (v) require any contribution of capital to Teton, RMB or First Western Trust at the closing (each, a “Burdensome Condition”).

These conditions to the consummation of the Merger may not be fulfilled and, accordingly, the Merger may not be completed. In addition, if the Merger is not completed by the End Time, either First Western or Teton may choose not to proceed with the Merger, and the parties can mutually decide to terminate the Merger Agreement at any time, before or after shareholder approval.

If the Merger is delayed or not consummated, the ongoing business, financial condition and results of operations of Teton may be materially adversely affected and the value of Teton’s common stock may decline significantly.

In addition, Teton has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement. If the Merger is not completed, Teton would have to recognize these expenses without realizing the expected benefits of the Merger. Any of the foregoing, or other risks arising in connection with the failure of or delay in consummating the Merger, including the diversion of management attention from pursuing other opportunities and the constraints in the Merger Agreement on the ability to make significant changes to Teton’s ongoing business during the pendency of the Merger, could have a material adverse effect on Teton’s business, financial condition and results of operations.

Additionally, Teton’s business may have been adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the

 

16

 

anticipated benefits of completing the Merger. If the Merger Agreement is terminated and Teton’s board of directors seeks another merger or business combination, Teton’s shareholders cannot be certain that such party will be able to find a party willing to engage in a transaction on more attractive terms than the Merger.

If First Western fails to successfully integrate Teton into its internal control over financial reporting or if the internal control of Teton over financial reporting were found to be ineffective, the integrity of First Western’s financial reporting could be compromised which could result in a material adverse effect on First Western’s reported financial results or in the determination of the effectiveness of First Western’s internal controls over financial reporting.

As a private company, Teton has not been subject to the requirements of the Exchange Act with respect to internal control over financial reporting. The integration of Teton into First Western’s internal control over financial reporting will require significant time and resources from management and other personnel and will increase compliance costs. If First Western fails to successfully integrate the operations of Teton into its internal control over financial reporting, First Western’s internal control over financial reporting may not be effective. Failure to achieve and maintain an effective internal control environment could have a material adverse effect on First Western’s ability to accurately report its financial results and the market’s perception of its business and its stock price.

Teton will be subject to business uncertainties and contractual restrictions while the Merger is pending.

Uncertainty about the effect of the Merger on employees, customers and vendors may have an adverse effect on the business, financial condition and results of operations of Teton. These uncertainties may impair Teton’s ability to attract, retain and motivate key personnel, depositors and borrowers pending the consummation of the Merger, as such personnel, depositors and borrowers may experience uncertainty about their future roles following the consummation of the Merger. Additionally, these uncertainties could cause customers (including depositors and borrowers), suppliers, vendors and others who deal with Teton to seek to change existing business relationships with them or fail to extend an existing relationship with Teton. In addition, competitors may target Teton’s existing customers by highlighting potential uncertainties and integration difficulties that may result from the Merger.

Teton has a small number of key personnel. The pursuit of the Merger and the preparation for the integration may place a burden on Teton’s management and internal resources. Any significant diversion of management attention away from ongoing business concerns and any difficulties encountered in the transition and integration process could have a material adverse effect on Teton’s business, financial condition and results of operations.

In addition, the Merger Agreement restricts Teton from taking certain actions without First Western’s consent while the Merger is pending. These restrictions may, among other matters, prevent Teton from pursuing otherwise attractive business opportunities, selling assets (except those described in the Merger Agreement), incurring indebtedness, engaging in significant capital expenditures in excess of certain limits set forth in the Merger Agreement, entering into other transactions or making other changes to its business prior to consummation of the Merger or termination of the Merger Agreement. These restrictions could have a material adverse effect on Teton’s business, financial condition and results of operations. Please see the section entitled “The Merger Agreement — Conduct of Business Prior to the Completion of the Merger” beginning on page 72 for a description of the restrictive covenants applicable to Teton.

Teton’s directors and officers have interests in the Merger different from the interests of other Teton shareholders.

Teton’s executive officers and directors have interests in the Merger that are different from, or in addition to, the interests of Teton’s shareholders generally. Such interests include the purchase of a promissory note from Teton at a discount and the cancellation of such note in exchange for shares of Teton common stock securing such note, an employment agreement and the right to indemnification and insurance coverage following the consummation of the Merger. The members of the Teton board of directors were aware of and considered these interests, among other matters, when they approved the Merger Agreement and recommended that Teton shareholders approve the Merger proposal. These interests are described in more detail under the section entitled “The Merger — Interests of Teton’s Directors and Executive Officers in the Merger” beginning on page 61.

 

17

 

Shares of First Western common stock to be received by Teton shareholders as a result of the Merger will have rights different from the shares of Teton common stock.

Upon completion of the Merger, the rights of former Teton shareholders will be governed by the articles of incorporation and bylaws of First Western. The rights associated with Teton common stock are different from the rights associated with First Western common stock. Please see the section entitled “Comparison of Shareholders’ Rights” beginning on page 87 for a summary of the different rights associated with First Western common stock.

The Merger Agreement contains provisions that may discourage other companies from trying to acquire Teton.

The Merger Agreement contains provisions that may discourage a third party from submitting a business combination proposal to Teton that might result in greater value to Teton’s shareholders than that provided pursuant to the Merger. These provisions include a general prohibition on Teton from soliciting or providing information to any third party regarding any acquisition proposal or offers for competing transactions. Further, the Voting Agreement requires that the shareholders party thereto vote all of their shares of Teton common stock in favor of the Merger and against alternative acquisition proposals. The shareholders that are parties to the Voting Agreement beneficially own in the aggregate 38.45% of the outstanding shares of Teton common stock as of the Teton record date. For further information, please see “The Merger Agreement — Voting Agreement” beginning on page 81.

Combining the two companies may be more difficult, costly or time consuming than expected and the anticipated benefits and cost savings of the Merger may not be realized.

First Western and Teton have operated and, until the completion of the Merger, will continue to operate, independently. The success of the Merger, including anticipated benefits and cost savings, will depend, in part, on the successful combination of the businesses of First Western and Teton. To realize these anticipated benefits and cost savings, after the completion of the Merger, First Western expects to integrate Teton’s business into its own. It is possible that the integration process could result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the combined company’s ability to maintain relationships with clients, customers, depositors and employees or to achieve the anticipated benefits and cost savings of the Merger. The loss of key employees could have an adverse effect on the companies’ financial results and the value of their common stock. If First Western experiences difficulties with the integration process, the anticipated benefits of the Merger may not be realized fully or at all, or may take longer to realize than expected.

The combined company expects to incur substantial expenses related to the Merger.

The combined company expects to incur substantial expenses in connection with consummation of the Merger and combining the business, operations, networks, systems, technologies, policies and procedures of the two companies. Although First Western and Teton have assumed that each party would incur a certain level of transaction and combination expenses, there are a number of factors beyond their control that could affect the total amount or the timing of their combination expenses. Many of the expenses that will be incurred, by their nature, are difficult to estimate accurately at the present time. Due to these factors, the transaction and combination expenses associated with the Merger could, particularly in the near term, exceed the savings that the combined company expects to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings related to the combination of the businesses following the consummation of the Merger. As a result of these expenses, both First Western and Teton could take charges against their earnings before and after the completion of the Merger. Such charges taken in connection with the Merger could be significant, although the aggregate amount and timing of any such charges are uncertain at present.

The unaudited pro forma combined condensed consolidated financial information included in this document is illustrative only and the actual financial condition and results of operations after the Merger may differ materially.

The unaudited pro forma combined condensed consolidated financial information in this document is presented for illustrative purposes only and is not necessarily indicative of what First Western’s actual

 

18

 

financial condition or results of operations would have been had the Merger been completed on the dates indicated. The pro forma combined condensed consolidated financial information reflects adjustments, which are based upon preliminary estimates, to record the Teton identifiable tangible and intangible assets acquired and liabilities assumed at fair value and the resulting goodwill recognized. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this document. For more information, please see the section entitled “Certain Financial Information Regarding First Western and Teton — Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 25.

The opinion of Teton’s financial advisor delivered to Teton’s board of directors prior to execution of the Merger Agreement will not reflect any changes in circumstances that may have occurred since the date of the opinion.

The fairness opinion of Teton’s financial advisor was delivered to Teton’s board of directors on July 20, 2021. Changes in the operations and prospects of Teton or First Western, general market and economic conditions and other factors which may be beyond the control of Teton and First Western may have altered the value of Teton or First Western or the prices of shares of Teton common stock or First Western common stock as of the date of this proxy statement/prospectus, or may alter such values and prices by the time the Merger is completed. The opinion from Teton’s financial advisor does not and will not speak as of the date of this proxy statement/prospectus or the time the Merger is completed or any other date other than the date of the opinion. For a description of the opinion of Teton’s financial advisor, please refer to the section entitled “The Merger — Opinion of Teton’s Financial Advisor” beginning on page 48.

Teton shareholders will pay U.S. federal income tax on the Cash Consideration.

The cash consideration that Teton shareholders receive in connection with the Merger will be taxable for U.S. federal income tax purposes. Each Teton shareholder should consult its own tax advisor as to the tax consequences of the Merger in its particular circumstances, including the applicability and effect of the alternative minimum tax and any state, local, foreign or other tax laws and of changes in those laws. This proxy statement/prospectus does not address any tax consequences arising under the laws of any state, local or foreign jurisdiction, or under any U.S. federal laws other than those pertaining to the income tax nor does it address any tax consequences arising under the unearned income Medicare contribution tax pursuant to the Health Care and Education Reconciliation Act of 2010. See “Material U.S. Federal Income Tax Consequences of the Merger” beginning on page 83.

The amount of consideration to be received by shareholders exercising their appraisal rights is uncertain.

Teton shareholders will have the right to demand appraisal of their shares of Teton common stock and obtain payment in cash for the fair value of their shares, but only if they perfect their appraisal rights and comply with the applicable provisions of Wyoming law. Teton shareholders may or may not be entitled to receive more than the amount provided for in the Merger Agreement for their shares of Teton common stock if they elect to exercise their appraisal rights with respect to the proposed Merger, depending on the appraisal of the fair value of the Teton common stock. For this reason, the amount of cash that a Teton shareholder might be entitled to receive should it elect to exercise its appraisal rights may be more or less than the value of the Merger consideration to be paid pursuant to the Merger Agreement. In addition, it is a condition in the Merger Agreement that the holders of not more than 5% of the outstanding shares of Teton common stock shall have exercised their statutory appraisal rights under Wyoming law. The number of shares of Teton shareholders that will exercise appraisal rights is not known and therefore there is no assurance of this closing condition being satisfied.

Risks Related to the Ownership of First Western Common Stock

An investment in First Western common stock is not an insured deposit.

First Western’s common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund or by any other public or private entity. Investment in First Western common stock is inherently risky for the reasons described in this “Risk Factors” section and elsewhere in

 

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this report and is subject to the same market forces that affect the price of common stock in any company. As a result, a Teton shareholder who acquires First Western common stock in the Merger could lose some or all of the shareholder’s investment.

The trading volume in First Western common stock is less than that of other larger financial services companies.

Although First Western’s common stock is listed for trading on the Nasdaq Global Select Market, its trading volume is generally less than that of other, larger financial services companies, and investors are not assured that a liquid market will exist at any given time for First Western common stock. A public trading market having the desired characteristics of depth, liquidity and orderliness depends on the presence in the marketplace at any given time of willing buyers and sellers of First Western common stock. This presence depends on the individual decisions of investors and general economic and market conditions over which First Western has no control. Given the lower trading volume of First Western’s common stock, significant sales of First Western common stock, or the expectation of these sales, could cause First Western’s stock price to fall.

The holders of First Western’s subordinated notes have rights that are senior to those of First Western’s shareholders.

As of August 31, 2021, First Western had outstanding an aggregate of $39.6 million of subordinated notes. The subordinated notes are senior to First Western’s shares of common stock. As a result, First Western must make payments on the subordinated notes before any dividends can be paid on First Western common stock and, in the event of First Western’s bankruptcy, dissolution or liquidation, the holders of the subordinated notes must be satisfied before any distributions can be made to the holders of First Western common stock. First Western’s ability to pay the future distributions depends upon the earnings of First Western Trust and the dividends from First Western Trust to First Western, which may be inadequate to service the obligations.

 

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CERTAIN FINANCIAL INFORMATION REGARDING FIRST WESTERN AND TETON

Selected Financial Information of First Western

The following tables summarize consolidated financial results achieved by First Western for the periods and at the dates indicated and should be read in conjunction with First Western’s consolidated financial statements and the notes to the consolidated financial statements contained in reports that First Western has previously filed with the SEC. Historical financial information for First Western can be found in its Annual Report on Form 10-K for the year ended December 31, 2020 and its Quarterly Report on Form 10-Q for the six-month period ended June 30, 2021. Please see the section entitled “Where You Can Find More Information” for instructions on how to obtain the information that has been incorporated by reference. You should not assume the results of operations for past years indicate results for any future period.

 

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(a)

Total loans net of loan fees, costs, premiums, and discounts do not include mortgage loans held for sale of $161.8 million, $48.3 million, $14.8 million, $22.9 million, and $8.1 million as of December 31, 2020, 2019, 2018, 2017 and 2016, respectively.

​

(b)

Return on average assets is determined by dividing net income by average assets.

​

(c)

Return on average equity is determined by dividing net income by average shareholders’ equity.

​

(d)

Net interest margin is determined by dividing net interest income by average earning assets.

​

(e)

As presented, the efficiency ratio is a non-GAAP financial measure. First Western believes that the presentation of the efficiency ratio provides useful information to investors regarding its results of operations because it provides additional insights as to First Western’s current performance. A reconciliation is presented below.

​

The following table provides a reconciliation of the non-GAAP measures to the most comparable GAAP equivalent, in each case as of the dates presented.

 

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(a)

Total loans net of loan fees, costs, premiums, and discounts do not include mortgage loans held for sale of $48.6 million and $69.6 million as of June 30, 2021 and 2020, respectively.

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(b)

Return on average assets is determined by dividing net income by average assets.

​

(c)

Return on average equity is determined by dividing net income by average shareholders’ equity.

​

(d)

Net interest margin is determined by dividing net interest income by average earning assets.

​

(e)

As presented, the efficiency ratio is a non-GAAP financial measure. First Western believes that the presentation of the efficiency ratio provides useful information to investors regarding its results of operations because it provides additional insights as to First Western’s current performance. A reconciliation is presented below.

​

The following tables provide a reconciliation of the non-GAAP measures to the most comparable GAAP equivalent, in each case as of the dates presented.

Unaudited Pro Forma Condensed Combined Financial Information

The following pro forma condensed combined financial statements reflect information about the financial condition and results of operations of First Western giving effect to:

•

First Western’s pending acquisition of Teton; and

​

•

the issuance of an estimated 1,373,661 shares of First Western common stock and approximately $11.5 million in cash to shareholders of Teton in connection with the Merger, as if, in the case of the unaudited pro forma combined condensed consolidating balance sheet, the Merger was completed as of June 30, 2021 and, in the case of the unaudited pro forma combined condensed consolidating statements of income the Merger was completed January 1, 2020; and

​

•

Certain transactions occurring prior to the closing of the Merger including the issuance of subordinated debt by First Western, the repayment of subordinated debt by Teton and the settlement of an employee stock loan by Teton. These adjustments are described in more detail in Note 5 of the pro forma financial information.

​

The unaudited pro forma condensed combined statements of income for the fiscal year ended December 31, 2020 combine the consolidated statements of income of First Western with the consolidated statements of income of Teton for the respective period giving effect to the Merger as if it had been completed as of January 1, 2020. The unaudited pro forma combined condensed consolidating balance sheet as of June 30, 2021 combines the consolidated balance sheet of First Western as of that date with the consolidated balance sheet of Teton as of that date and gives effect to the Merger as if it had been completed on that date.

The historical consolidated financial information contained in the unaudited pro forma combined condensed consolidating financial information has been adjusted to give effect to the combined results of First Western and Teton. Assumptions underlying the pro forma transaction accounting adjustments are

 

25

 

estimated by First Western and are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma combined condensed consolidating financial information.

The unaudited pro forma combined condensed consolidating financial statements are prepared in accordance with generally accepted accounting principles in the United States of America during the periods presented. As such, the unaudited pro forma combined condensed consolidating financial statements do not contemplate any impact as a result of changes to accounting standards or legislation that occurred after the historical periods presented.

Most notably, the unaudited pro forma combined condensed consolidating financial information does not reflect the adoption or ongoing potential impact of the following:

•

First Western or Teton’s adoption of Accounting Standards Update (“ASU”) 2016-13, “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (commonly referred to as “Cumulative Expected Credit Losses” or “CECL”)

​

•

Legislation going into effect after the historical periods presented

​

•

The impact on our companies and clients and the economy generally from the various public health and safety measures implemented in connection with the COVID-19 pandemic

​

The unaudited pro forma combined condensed consolidating financial information appearing below does not reflect any potential effects that changes in market conditions may have on the financial condition and/or the results of operations of First Western and Teton.

 

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Unaudited Pro Forma Condensed Combined Balance Sheet as of June 30, 2021

See accompanying Notes to Unaudited Pro Forma Condensed Combined Financial Information.

 

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Unaudited Pro Forma Condensed Combined Statement of Income for the Year Ended December 31, 2020