8-K - MYFW - Equibles

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 28, 2021

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 28, 2021, First Western Financial, Inc. (the “Company”) issued a press release announcing its financial results for the fourth quarter ended December 31, 2020. 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, 2020 on Friday, January 29, 2021, 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, 2020 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 28, 2021
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)

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 28, 2021		By: /s/ Scott C. Wylie
			Scott C. Wylie

			Chairman, Chief Executive Officer and President

Exhibit 99.1

First Western Reports Fourth Quarter 2020 Financial Results

Fourth Quarter 2020 Summary

●	Net income available to common shareholders of $4.9 million in Q4 2020, compared to $9.6 million in Q3 2020 and $2.6 million in Q4 2019
●	Diluted EPS of $0.61 in Q4 2020, compared to $1.21 in Q3 2020 and $0.32 in Q4 2019
---	---
●	Gross revenue^(1)^ of $23.4 million in Q4 2020, compared to $31.0 million in Q3 2020 and $16.2 million in Q4 2019
---	---
●	Net interest margin, including the impact of Paycheck Protection Program (“PPP”) loans, was consistent with Q3 2020 at 3.07% and an increase from 2.91% in Q4 2019
---	---
●	Total assets of $1.97 billion, remained relatively flat from Q3 2020 and up 57.7% from Q4 2019
---	---
●	Total deposits of $1.62 billion, up 3.6% from Q3 2020 and 49.1% from Q4 2019
---	---
●	Gross loans of $1.53 billion, up 1.8% from Q3 2020 and 53.6% from Q4 2019
---	---
●	Loans under active COVID-19 loan modification agreements declined 96.7% from $63.0 million in Q3 2020, to $2.1 million in Q4 2020
---	---
●	Non-performing assets to total assets declined to 0.22% from 0.53% in Q3 2020 and 1.03% in Q4 2019
---	---

^(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 28, 2021 – First Western Financial, Inc., (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the fourth quarter ended December 31, 2020.

Net income available to common shareholders was $4.9 million, or $0.61 per diluted share, for the fourth quarter of 2020. This compares to $9.6 million, or $1.21 per diluted share, for the third quarter of 2020, and $2.6 million, or $0.32 per diluted share, for the fourth quarter of 2019.

Scott C. Wylie, CEO of First Western, commented, “Although we saw a seasonal decline in mortgage activity during the fourth quarter, we were still able to nearly double our earnings from the prior year due primarily to the strong balance sheet growth we generated in 2020, which resulted in a 64% year-over-year increase in our net interest income. We had another strong quarter of loan production and core deposit gathering, largely due to continued growth in commercial relationships.

“We also continued to see positive trends in asset quality, which reflects the strength of our borrowers and our conservative underwriting. Our total non-performing assets declined by approximately 60% from the end

of the prior quarter, while only a small number of loans remain on deferral. We continue to closely monitor our borrowers and have not seen any meaningful deterioration in credit quality resulting from the recent surge in COVID-19 cases.

“We believe we are well positioned to generate another year of strong balance sheet growth in 2021, as our commercial banking initiative gains additional traction and we continue to have success competing against and taking business from larger banks. With the growth we have seen in our commercial client roster over the past year, we also believe that we have good opportunities to expand those relationships to include other products and services across the First Western banking and wealth management platform. As we continue to grow our balance sheet and expand client relationships, we expect to realize additional operating leverage, consistently deliver strong returns, and further enhance the value of the First Western franchise in the years to come,” said Mr. Wylie.


		For the Three Months Ended
		December 31,			September 30,			December 31,		****
(Dollars in thousands, except per share data)	****	2020		****	2020		****	2019		****
Earnings Summary
Net interest income		$	13,457		$	12,918		$	8,190
Less: provision for loan losses			695			1,496			447
Total non-interest income			9,954			18,032			8,228
Total non-interest expense			15,614			16,632			13,082
Income before income taxes			7,102			12,822			2,889
Income tax expense			2,228			3,192			317
Net income available to common shareholders			4,874			9,630			2,572
Basic earnings per common share			0.61			1.22			0.33
Diluted earnings per common share			0.61			1.21			0.32

Return on average assets (annualized)			0.99	%		2.06	%		0.82	%
Return on average shareholders' equity (annualized)			12.62			26.43			8.06
Return on tangible common equity (annualized)^(1)^			14.92			31.49			9.85
Net interest margin			3.07			3.07			2.91
Efficiency ratio^(1)^			66.62	%		53.40	%		80.54	%

^(1)^Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

Operating Results for the Fourth Quarter 2020

Revenue

Gross revenue^(1)^ was $23.4 million for the fourth quarter of 2020, compared to $31.0 million for the third quarter of 2020. The decrease in revenue was driven by an $8.1 million decrease in non-interest income, primarily due to a seasonal decline and processing constraints that impacted mortgage segment revenue.

Relative to the fourth quarter of 2019, gross revenue increased $7.2 million from $16.2 million, or 44.2%. The increase in revenue was primarily due to a $5.3 million increase in net interest income driven by improving net interest margin and growth in interest earning assets, as well as higher mortgage segment activity.

^(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 2

Net interest income for the fourth quarter of 2020 was $13.5 million, an increase of 4.2% from $12.9 million in the third quarter of 2020. The increase in net interest income was primarily driven by a $60.1 million, or 4.1%, increase in average loan balances attributed to organic growth and $1.0 million from PPP income.

Relative to the fourth quarter of 2019, net interest income increased 64.3% from $8.2 million. The year-over-year increase in net interest income was due primarily to growth in average loans including organic growth, the impact of PPP loans, and the branch acquisition.

Net Interest Margin

Net interest margin for the fourth quarter of 2020 remained flat from the third quarter of 2020, at 3.07%. On a net basis, the PPP program negatively impacted net interest margin by 12 basis points. This was primarily driven by amortization of SBA fee income and deferred loan origination expense of $0.7 million and interest income from PPP loans of $0.3 million. The negative impact was offset by an increase of 9 basis points relating to the impact of purchase accretion from the branch acquisition completed in the second quarter 2020. Net interest margin was also negatively impacted by excess liquidity during the period, although the excess liquidity was a contributor to growth in net interest income.

Relative to the fourth quarter of 2019, the net interest margin increased from 2.91%, primarily due to an 84 basis point decline in cost of deposits, partially offset by a 62 basis point reduction in average yields on interest earning assets.

Non-interest Income

Non-interest income for the fourth quarter of 2020 was $10.0 million, a decrease of 44.8% from $18.0 million in the third quarter of 2020. The decrease was attributable to a seasonal decline in demand for mortgage loans in the secondary market, operational constraints that limited the number of mortgage loans that could be processed in the quarter, and lower margins due to investor pricing pressure driven by high volume of originations in the MBS market. While mortgage loan lock volume declined 47.6% from the third quarter of 2020, the Company originated $414.5 million of mortgage loans for sale during the fourth quarter of 2020, compared to $376.3 million the previous quarter, an increase of $38.2 million.

Relative to the fourth quarter of 2019, non-interest income increased 21.0% from $8.2 million. The increase was attributable to higher net gain on mortgage loans of 67.6%, primarily related to an increase in mortgage lock volume of 125.8% year-over-year.

Non-interest Expense

Non-interest expense for the fourth quarter of 2020 was $15.6 million, a decrease of 6.1% from $16.6 million for the third quarter of 2020. The decrease was attributable to lower incentive compensation accruals and lower occupancy costs related to the consolidation of other locations acquired as part of the branch acquisition in the second quarter of 2020. This was partially offset by higher professional fees related to the disposition of the Los Angeles fixed income portfolio management team (“LA fixed income team”) and higher FDIC insurance related to deposit growth.

Non-interest expense increased 19.4% from $13.1 million in the fourth quarter of 2019. The increase was primarily due to higher salaries and employee benefits expense, additional FDIC insurance, and additional data processing costs resulting from the personnel and assets added through the branch purchase and organic growth.

The Company’s efficiency ratio^(1)^ was 66.6% in the fourth quarter of 2020, compared with 53.4% in the third quarter of 2020 and 80.5% in the fourth quarter of 2019.

^(1)^ Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

Income Taxes

The Company recorded income tax expense of $2.2 million for the fourth quarter of 2020, representing an effective tax rate of 31.4%, compared to 24.9% for the third quarter of 2020. The increase in effective tax rate in the fourth quarter of 2020 was primarily attributable to recording a valuation allowance of $0.4 million related to our net operating loss with the State of California following the sale of our LA fixed income team in the fourth quarter.

Loan Portfolio

Total loans, including mortgage loans held for sale, were $1.70 billion at December 31, 2020, an increase of $98.7 million from the end of the prior quarter and an increase of $648.4 million from December 31, 2019.

Total loans held for investment, were $1.53 billion at December 31, 2020, an increase of 1.8% from $1.51 billion at September 30, 2020, and an increase of 53.9% from $996.6 million at December 31, 2019. The increase in total loans held for investment from September 30, 2020 was primarily due to growth in the commercial real estate, construction portfolio, and 1-4 family residential portfolios.

PPP loans were $142.9 million as of December 31, 2020, a decrease of 30.7% from $206.1 million as of September 30, 2020. As of December 31, 2020, the Company has submitted loan forgiveness applications to the Small Business Administration (“SBA”) on behalf of clients for $123.8 million and received forgiveness and funds remitted in the amount of $54.8 million from the SBA. As of December 31, 2020, there was $1.3 million remaining in net fees to be recognized upon forgiveness.

Deposits

Total deposits were $1.62 billion at December 31, 2020, compared to $1.56 billion at September 30, 2020, and $1.09 billion at December 31, 2019. The increase in total deposits from September 30, 2020 was primarily attributable to an increase in money market deposits.

Average total deposits for the fourth quarter of 2020 increased $114.6 million, or 31.3% annualized, from the third quarter of 2020 and $485.0 million, or 44.4%, from the fourth quarter of 2019. The increase was primarily attributable to an increase in money market deposits.

Borrowings

Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $149.6 million as of December 31, 2020, compared to $222.1 million as of September 30, 2020, a decrease of $72.5 million from the end of the prior quarter, and an increase of $139.6 million from December 31, 2019. The decrease from September 30, 2020 is attributable to the payback of funds received from the Paycheck Protection Program Loan Facility (“PPPLF”) from the Federal Reserve as PPP loans are forgiven. The balances in PPPLF reduced by $69.5 million in the fourth quarter 2020 when compared to the third quarter 2020 due to the corresponding forgiveness of PPP loans. Borrowing from this facility is expected to match the balances of the PPP loans. The increase from December 30, 2019 is attributable to participation in the PPPLF. 4

Assets Under Management

Total assets under management (“AUM”) increased by $124.2 million during the fourth quarter to $6.26 billion as of December 31, 2020, compared to $6.13 billion as of September 30, 2020, and $6.19 billion as of December 31, 2019. The increase was primarily attributable to new accounts and contributions to existing accounts, as well as improving market conditions causing an increase in assets under management balances. The increase in the fourth quarter AUM was partially offset by the sale of the LA fixed income team, resulting in a decline in investment agency balances of $330.6 million.

Credit Quality

Non-performing assets totaled $4.3 million, or 0.22% of total assets, as of December 31, 2020, compared with $10.4 million, or 0.53% of total assets, as of September 30, 2020 and $12.9 million, or 1.03% of total assets, as of December 31, 2019. The decline in non-performing assets from prior quarter was primarily due to the payoff of one large non-performing loan.

As a result of the COVID-19 pandemic, a loan modification program was designed and implemented to assist our clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. The Company offered loan extensions, temporary payment moratoriums, and financial covenant waivers for commercial and consumer borrowers impacted by the pandemic who had a pass risk rating and had not been delinquent over 30 days on payments in the last two years. As of January 25, 2021, all borrowers were out of their deferral period and all are performing.

As of December 31, 2020, the Company has active loan modification agreements on two loans across multiple industries in the amount of $2.1 million, representing a decline of 96.7% from $63.0 million, as of September 30, 2020. COVID-19 loan modification agreements represented 0.1% of total loans, as of December 31, 2020, compared with 4.2% of total loans, as of September 30, 2020. Most of the temporary payment moratoriums were for a period of 180 days or less and the Company is recognizing interest income on these loans.

The Company continues to meet regularly with clients who could be more highly impacted by the COVID-19 pandemic. The Company receives and reviews current financial data and cash flow forecasts from borrowers with loan modification agreements. As of December 31, 2020, loans which were granted modifications and the modification term has ended have returned to performing status.

The Company recorded a provision for loan losses of $0.7 million in the fourth quarter of 2020, compared with $0.4 million in the fourth quarter of 2019. The higher provision was primarily due to the growth in the loan portfolio. The Company has increased loan level reviews and portfolio monitoring to thoroughly assess how its clients are being impacted by the current environment.

Capital

As of December 31, 2020, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of December 31, 2020, the Bank was classified as “well capitalized,” as summarized in the following table:


	****	December 31,	****
		2020	****
Consolidated Capital
Tier 1 capital to risk-weighted assets		9.96	%
Common Equity Tier 1 (CET1) to risk-weighted assets		9.96
Total capital to risk-weighted assets		12.80
Tier 1 capital to average assets		7.45

Bank Capital
Tier 1 capital to risk-weighted assets		10.22
Common Equity Tier 1 (CET1) to risk-weighted assets		10.22
Total capital to risk-weighted assets		11.20
Tier 1 capital to average assets		7.62	%

Book value per common share^^increased 21.2% from $16.08 as of December 31, 2019 to $19.49 as of December 31, 2020, and was up 3.6% from $18.81 as of September 30, 2020.

Tangible book value per common share^(1)^ increased 25.0% from $13.15 as of December 31, 2019 to $16.44 as of December 31, 2020, and was up 6.9% from $15.38 as of September 30, 2020.

During the fourth quarter of 2020, the Company repurchased 426 shares of its common stock at an average price of $17.30 under its stock repurchase program, which authorized the repurchase of up to 400,000 shares of its common stock. As of December 31, 2020, the Company had up to 399,574 shares remaining under the current stock repurchase authorization.

During the fourth quarter of 2020, the Company completed a subordinated debt offering, raising $10.0 million from five investors with an initial interest rate of 4.25%.

^(1)^ Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 10:00 a.m. MT/ 12:00 p.m. ET on Friday, January 29, 2021. The call can be accessed via telephone at 877-405-1628. A recorded replay will be accessible through February 5, 2021 by dialing 855-859-2056; passcode 3477399.

A slide presentation relating to the fourth quarter 2020 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 6

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,” and “Allowance to Bank Originated Loans Excluding PPP”. 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.

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, 2020 (“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 7

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

First Western Financial, Inc.

Consolidated Financial Summary (unaudited)


		Three Months Ended
		December 31,		September 30,		December 31,
(Dollars in thousands, except per share amounts)	****	2020		2020		2019
Interest and dividend income:
Loans, including fees		$	14,656	$	14,138	$	10,554
Investment securities			186		173		321
Federal funds sold and other			100		99		478
Total interest and dividend income			14,942		14,410		11,353

Interest expense:
Deposits			1,015		1,067		2,995
Other borrowed funds			470		425		168
Total interest expense			1,485		1,492		3,163
Net interest income			13,457		12,918		8,190
Less: provision for loan losses			695		1,496		447
Net interest income, after provision for loan losses			12,762		11,422		7,743

Non-interest income:
Trust and investment management fees			4,868		4,814		4,748
Net gain on mortgage loans			4,318		12,304		2,577
Bank fees			391		340		261
Risk management and insurance fees			287		483		367
Net gain on sale of assets			—		—		183
Income on company-owned life insurance			90		91		92
Total non-interest income			9,954		18,032		8,228
Total income before non-interest expense			22,716		29,454		15,971

Non-interest expense:
Salaries and employee benefits			9,401		10,212		7,990
Occupancy and equipment			1,435		1,619		1,369
Professional services			1,493		1,288		962
Technology and information systems			1,041		1,032		928
Data processing			1,078		1,038		783
Marketing			415		395		300
Amortization of other intangible assets			4		4		7
Provision on other real estate owned			76		100		—
Other^(1)^			671		944		743
Total non-interest expense			15,614		16,632		13,082
Income before income taxes			7,102		12,822		2,889
Income tax expense			2,228		3,192		317
Net income available to common shareholders		$	4,874	$	9,630	$	2,572
Earnings per common share:
Basic		$	0.61	$	1.22	$	0.33
Diluted		$	0.61	$	1.21	$	0.32

^(1)^ Includes a $62 thousand gain on sale of the LA fixed income team. 9

First Western Financial, Inc.

Consolidated Financial Summary (unaudited)


	December 31,		September 30,		December 31,
(Dollars in thousands)	2020		2020		2019
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	2,405	$	2,867	$	4,180
Interest-bearing deposits in other financial institutions		153,584		247,491		74,458
Total cash and cash equivalents		155,989		250,358		78,638

Available-for-sale securities, at fair value		36,666		40,654		58,903
Correspondent bank stock, at cost		2,552		1,295		585
Mortgage loans held for sale		161,843		89,872		48,312
Loans, net of allowance of $12,539, $11,845 and $7,875		1,520,294		1,494,231		990,132
Premises and equipment, net		5,320		5,116		5,218
Accrued interest receivable		6,618		6,730		3,048
Accounts receivable		4,865		4,821		5,238
Other receivables		1,422		1,497		1,006
Other real estate owned, net		194		558		658
Goodwill		24,191		24,191		19,686
Other intangible assets, net		67		72		28
Deferred tax assets, net		6,056		6,405		5,047
Company-owned life insurance		15,449		15,359		15,086
Other assets		32,129		28,738		16,544
Assets held for sale		—		3,000		3,553
Total assets	$	1,973,655	$	1,972,897	$	1,251,682

LIABILITIES
Deposits:
Noninterest-bearing	$	481,457	$	472,963	$	240,068
Interest-bearing		1,138,453		1,090,709		846,716
Total deposits		1,619,910		1,563,672		1,086,784
Borrowings:
Federal Home Loan Bank Topeka and Federal Reserve borrowings		149,563		222,075		10,000
Subordinated notes		24,291		14,447		6,560
Accrued interest payable		453		347		299
Other liabilities		24,476		22,639		20,244
Liabilities held for sale		—		141		117
Total liabilities		1,818,693		1,823,321		1,124,004

SHAREHOLDERS’ EQUITY
Total shareholders’ equity		154,962		149,576		127,678
Total liabilities and shareholders’ equity	$	1,973,655	$	1,972,897	$	1,251,682

First Western Financial, Inc.

Consolidated Financial Summary (unaudited)


		December 31,		September 30,		December 31,
(Dollars in thousands)	****	2020		2020		2019
Loan Portfolio
Cash, Securities and Other^(1)^		$	357,020	$	371,481	$	146,701
Construction and Development			131,111		105,717		28,120
1-4 Family Residential			455,038		446,959		400,134
Non-Owner Occupied CRE			281,943		243,564		165,179
Owner Occupied CRE			163,042		154,138		127,968
Commercial and Industrial			146,031		185,625		128,457
Total loans held for investment			1,534,185		1,507,484		996,559
Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net			(1,352)		(1,408)		1,448
Gross loans		$	1,532,833	$	1,506,076	$	998,007
Total mortgage loans held for sale		$	161,843	$	89,872	$	48,312

Deposit Portfolio
Money market deposit accounts		$	847,430	$	805,634	$	615,575
Time deposits			172,682		177,391		134,913
Negotiable order of withdrawal accounts			113,052		101,708		91,921
Savings accounts			5,289		5,976		4,307
Total interest-bearing deposits			1,138,453		1,090,709		846,716
Noninterest-bearing accounts			481,457		472,963		240,068
Total deposits		$	1,619,910	$	1,563,672	$	1,086,784

^(1)^ Includes PPP loans. 11

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)


		As of and for the Three Months Ended
		December 31,			September 30,			December 31,		****
(Dollars in thousands)	****	2020			2020			2019		****
Average Balance Sheets
Assets
Interest-earning assets:
Interest-bearing deposits in other financial institutions		$	194,179		$	178,756		$	108,245
Available-for-sale securities			37,512			40,528			58,745
Loans			1,522,947			1,462,872			958,497
Interest-earning assets			1,754,638			1,682,156			1,125,487
Mortgage loans held for sale			120,554			94,714			59,813
Total interest-earning assets, plus mortgage loans held for sale			1,875,192			1,776,870			1,185,300
Allowance for loan losses			(12,077)			(10,965)			(7,756)
Noninterest-earning assets			103,961			101,874			78,934
Total assets		$	1,967,076		$	1,867,779		$	1,256,478

Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Interest-bearing deposits		$	1,094,317		$	1,045,321		$	865,489
Federal Home Loan Bank Topeka and Federal Reserve borrowings			192,448			222,225			10,000
Subordinated notes			18,443			14,445			6,560
Total interest-bearing liabilities			1,305,208			1,281,991			882,049
Noninterest-bearing liabilities:
Noninterest-bearing deposits			483,115			417,502			226,948
Other liabilities			24,311			22,564			19,912
Total noninterest-bearing liabilities			507,426			440,066			246,860
Total shareholders’ equity			154,442			145,722			127,569
Total liabilities and shareholders’ equity		$	1,967,076		$	1,867,779		$	1,256,478

Yields (annualized)
Interest-bearing deposits in other financial institutions			0.21	%		0.22	%		1.77	%
Available-for-sale securities			1.98			1.71			2.19
Loans			3.85			3.87			4.40
Interest-earning assets			3.41			3.43			4.03
Mortgage loans held for sale			2.88			2.72			3.63
Total interest-earning assets, plus mortgage loans held for sale			3.37			3.39			4.01
Interest-bearing deposits			0.37			0.41			1.38
Federal Home Loan Bank Topeka and Federal Reserve borrowings			0.42			0.37			1.96
Subordinated notes			5.86			6.12			7.26
Total interest-bearing liabilities			0.46			0.47			1.43
Net interest margin			3.07			3.07			2.91
Net interest rate spread			2.95	%		2.96	%		2.60	%

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)


		As of and for the Three Months Ended
		December 31,			September 30,			December 31,		****
(Dollars in thousands, except share and per share amounts)	****	2020			2020			2019		****
Asset Quality
Non-performing loans		$	4,058		$	9,881		$	12,270
Non-performing assets			4,252			10,439			12,928
Net charge-offs		$	1		$	5		$	248
Non-performing loans to total loans			0.26	%		0.66	%		1.23	%
Non-performing assets to total assets			0.22			0.53			1.03
Allowance for loan losses to non-performing loans			308.99			119.88			64.18
Allowance for loan losses to total loans			0.82			0.79			0.79
Allowance for loan losses to bank originated loans excluding PPP^(1)^			0.98			1.00			0.79
Net charge-offs to average loans			0.00	% ^(2)^		0.00	% ^(2)^		0.03	%

Assets Under Management		$	6,255,336		$	6,131,179		$	6,187,707

Market Data
Book value per share at period end		$	19.49		$	18.81		$	16.08
Tangible book value per common share^(1)^		$	16.44		$	15.38		$	13.15
Weighted average outstanding shares, basic			7,930,854			7,911,871			7,906,516
Weighted average outstanding shares, diluted			8,015,780			7,963,736			7,950,279
Shares outstanding at period end			7,951,773			7,951,749			7,940,168

Consolidated Capital
Tier 1 capital to risk-weighted assets			9.96	%		9.88	%		11.31	%
Common Equity Tier 1 (CET1) to risk-weighted assets			9.96			9.88			11.31
Total capital to risk-weighted assets			12.80			12.03			12.87
Tier 1 capital to average assets			7.45			7.52			8.58

Bank Capital
Tier 1 capital to risk-weighted assets			10.22			10.28			10.67
Common Equity Tier 1 (CET1) to risk-weighted assets			10.22			10.28			10.67
Total capital to risk-weighted assets			11.20			11.26			11.53
Tier 1 capital to average assets			7.62	%		7.81	%		8.09	%

^(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.

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)

Reconciliations of Non-GAAP Financial Measures


	****	As of and for the Three Months Ended
		December 31,			September 30,			December 31,		****
(Dollars in thousands, except share and per share amounts)		2020			2020			2019		****
Tangible Common
Total shareholders' equity		$	154,962		$	149,576		$	127,678
Less: goodwill			24,191			24,191			19,686
Less: intangibles held for sale^(1)^			—			3,000			3,553
Less: other intangibles, net			67			72			28
Tangible common equity		$	130,704		$	122,313		$	104,411

Common shares outstanding, end of period			7,951,773			7,951,749			7,940,168
Tangible common book value per share		$	16.44		$	15.38		$	13.15

Net income available to common shareholders		$	4,874		$	9,630		$	2,572
Return on tangible common equity (annualized)			14.92	%		31.49	%		9.85	%

Efficiency
Non-interest expense		$	15,614		$	16,632		$	13,082
Less: amortization			4			4			7
Less: provision on other real estate owned			76			100			—
Plus: Gain on sale of LA fixed income team			(62)			—			—
Adjusted non-interest expense		$	15,596		$	16,528		$	13,075

Net interest income		$	13,457		$	12,918		$	8,190
Non-interest income			9,954			18,032			8,228
Less: net gain on sale of securities			—			—			—
Less: net gain on sale of assets			—			—			183
Total income		$	23,411		$	30,950		$	16,235
Efficiency ratio			66.62	%		53.40	%		80.54	%

Gross Revenue
Total income before non-interest expense		$	22,716		$	29,454		$	15,971
Less: net gain on sale of assets			—			—			183
Plus: provision for loan losses			695			1,496			447
Gross revenue		$	23,411		$	30,950		$	16,235

Allowance to Bank Originated Loans Excluding PPP
Total loans		$	1,534,185		$	1,507,484		$	996,559
Less: loans acquired			127,233			124,689			—
Less: bank originated PPP loans			130,019			193,213			—
Bank originated loans excluding PPP		$	1,276,933		$	1,189,582		$	996,559

Allowance for loan losses		$	12,539		$	11,845		$	7,875
Allowance for loan losses to bank originated loans excluding PPP			0.98	%		1.00	%		0.79	%

^(1)^ Represents only the intangible portion of assets held for sale 14

Exhibit 99.2

First Western Financial, Inc.<br>The First, Western-Based Private Trust Bank<br>Fourth Quarter 2020 Conference Call
Safe Harbor<br>2<br>This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities<br>Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of First Western Financial, Inc.’s (“First Western”) management with respect<br>to, among other things, future events and First Western’s financial performance. These statements are often, but not always, made through the use of words or phrases such<br>as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “project,”<br>“future” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words of a future or forward-looking nature.<br>These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about First Western’s industry, management’s<br>beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond First Western’s control. Accordingly, First<br>Western cautions you that any such forward-looking statements are not guarantees of future performance and are subject to risks, assumptions and uncertainties that are<br>difficult to predict. Although First Western believes that the expectations reflected in these forward-looking statements are reasonable as of the date made, actual results<br>may prove to be materially different from the results expressed or implied by the forward-looking statements. Those following risks and uncertainties, among others, could<br>cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: the COVID-19 pandemic and its effects;<br>integration risks in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming and California; the risk of changes in the economy<br>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<br>borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of<br>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<br>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<br>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<br>March 12, 2020 and other documents we file with the SEC from time to time. All subsequent written and oral forward-looking statements attributable to First Western or<br>persons acting on First Western’s behalf are expressly qualified in their entirety by this paragraph. Forward-looking statements speak only as of the date of this presentation.<br>First Western undertakes no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or<br>otherwise (except as required by law).<br>Certain of the information contained herein may be derived from information provided by industry sources. The Company believes that such information is accurate and the<br>sources from which it has been obtained are reliable; however, the Company cannot guaranty the accuracy of such information and has not independently verified such<br>information.<br>This presentation contains certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-GAAP<br>financial measures to GAAP financial measures are provided at the end of this presentation. Numbers in the presentation may not sum due to rounding.
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Overview of 4Q20<br>Continued Strong<br>Mortgage Activity<br>Strong<br>Year-Over-Year<br>Revenue and<br>Earnings Growth<br>Balance Sheet<br>Growth Driving<br>Higher Spread<br>Income<br>▪ Commercial banking initiative resulting in strong growth in commercial<br>relationships, loans and deposits<br>▪ Total loans held-for-investment (HFI) increased 6.0% from 3Q20 (excluding<br>Paycheck Protection Program (PPP) loan runoff)<br>▪ Total deposits increased 3.6% from 3Q20<br>▪ Net interest income up 4.2% from 3Q20 and 64.3% from 4Q19<br>▪ Non-performing assets declined by 59.3% from end of prior quarter to just<br>0.22% of total assets<br>▪ COVID-19 loan modifications represented just 0.1% of total loans at<br>December 31, 2020<br>▪ History of exceptionally low charge-offs continues<br>Positive Trends in<br>Asset Quality<br>▪ Net gain on mortgage loans of $4.3 million, up 67.6% from 4Q19<br>▪ Seasonal slowdown and operational constraints reduced contribution of mortgage<br>business relative to earlier in 2020<br>3<br>▪ Net income available to common shareholders of $4.9 million, or $0.61 diluted<br>EPS, up 88.6% from 4Q19<br>▪ Gross revenue(1) of $23.4 million, up 44.2% from 4Q19<br>▪ Strong performance and completed sale of LA fixed income team resulted in<br>25.0% increase in TBV/share from 4Q19<br>(1) See Non-GAAP reconciliation
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Net Income Available to Common Shareholders and<br>Earnings per Share<br>4<br>Net Income Available to Common Shareholders<br>▪ Net income of $4.9 million, or $0.61 diluted earnings per share, in 4Q20<br>▪ Balance sheet growth and increasing operating leverage continue to build sustainable path to improving<br>profitability and returns<br>▪ Sale of LA fixed income team resulted in a valuation allowance that increased 4Q20 effective tax rate,<br>negatively impacting EPS by $0.05<br>Diluted Earnings per Share<br>(in thousands)<br>$438<br>$245<br>$2,572<br>$1,772<br>$8,941<br>$9,630<br>$4,874<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Net Income Adjustments to Net Income<br>(1)<br>(1) See Non-GAAP reconciliation<br>(1)<br>$0.05<br>$0.03<br>$0.32<br>$0.22<br>$1.13<br>$1.21<br>$0.61<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Net Income Adjustments to Net Income<br>(1)<br>(1)
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$1,018 $1,054<br>$1,337<br>$1,463 $1,523 $1,597 $1,696<br>4Q19 1Q20 2Q20 3Q20 4Q20 3Q20 4Q20<br>HFI HFS<br>Average Period End<br>Loan Portfolio<br>5<br>Loan Portfolio Composition(2)<br>▪ Total loans HFI increased $26.7 million, or 1.8% from<br>prior quarter<br>▪ Excluding PPP loans, total loans HFI increased $89.9<br>million, or 6.0% from prior quarter<br>▪ Construction lending expertise added in 2020 providing<br>another catalyst for loan growth<br>▪ Gross loan production of $201.1 million in 4Q20, a record<br>high<br>(in thousands, as of quarter-end)<br>Total Loans(2)<br>(in millions)<br>(1) Bank originated<br>(2) Excludes deferred (fees) costs, and amortized premium/(unaccreted discount), net<br>4Q 2019 3Q 2020 4Q 2020<br>Cash, Securities and Other $146,701 $371,481 $357,020<br>Construction and Development 28,120 105,717 131,111<br>1 - 4 Family Residential 400,134 446,959 455,038<br>Non-Owner Occupied CRE 165,179 243,564 281,943<br>Owner Occupied CRE 127,968 154,138 163,042<br>Commercial and Industrial 128,457 185,625 146,031<br>Total Loans HFI $996,559 $1,507,484 $1,534,185<br>Mortgage loans held-for-sale<br>(HFS) 48,312 89,872 161,843<br>Total Loans $1,044,871 $1,597,356 $1,696,028<br>Loan Production & Net Loan Payoffs/Paydowns<br>$191.7<br>$1.8 $0.0<br>$146.1<br>$122.5 $119.0<br>$142.1<br>$201.1<br>$82.7 $87.7<br>$71.8 $83.2<br>$128.1<br>$48.7<br>4Q19 1Q20 2Q20 3Q20 4Q20<br>PPP Production⁽¹⁾ Production<br>Net Loan Payoffs/Paydowns PPP Forgiveness/Paydowns<br>(in millions)
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$1,092 $1,085<br>$1,309<br>$1,463<br>$1,577 $1,564 $1,620<br>4Q19 1Q20 2Q20 3Q20 4Q20 3Q20 4Q20<br>Average Period End<br>Total Deposits<br>6<br>Deposit Portfolio Composition<br>▪ Total deposits increased $56.2 million, or 3.6%, from end of prior quarter<br>▪ Growth attributable to increases in commercial DDA relationships accounts for 65.7% of all<br>growth from 4Q19<br>▪ Noninterest-bearing deposits more than doubled over the past year and increased to 29.7% of<br>total deposits at 4Q20 from 22.1% at 4Q19<br>4Q 2019 3Q 2020 4Q 2020<br>Money market deposit accounts $615,575 $805,634 $847,430<br>Time deposits 134,913 177,391 172,682<br>NOW 91,921 101,708 113,052<br>Savings accounts 4,307 5,976 5,289<br>Noninterest-bearing accounts 240,068 472,963 481,457<br>Total Deposits $1,086,784 $1,563,672 $1,619,910<br>(in thousands, as of quarter-end)<br>Total Deposits<br>(in millions)
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$626 $659<br>$837<br>$958 $977<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Commercial Banking Driving Growth<br>7<br>Total Commercial Loans(1) Total Commercial Deposits<br>(in millions) (in millions)<br>$569 $599<br>$785 $830<br>$908<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>▪ During 2020, expanded commercial banking team and added construction lending expertise<br>▪ Increase in commercial banking clients contributing to loan and low-cost deposit growth while<br>improving overall diversification<br>▪ Stronger commercial banking platform complements private banking and expanded mortgage<br>capabilities to create a more valuable franchise with additional catalysts for future growth<br>(1) Reflects loans to commercial borrowers across all loan categories excludes SBA PPP loan balances due to their short-term nature.
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Trust and Investment Management<br>▪ Total assets under management increased $124.2 million from September 30, 2020 to $6.26<br>billion at December 31, 2020<br>▪ Excluding the impact of sale of LA fixed income team (which reduced agency holdings by<br>$330.6 million), AUM increased $454.8 million, or 7.4% from end of prior quarter<br>▪ The increase was primarily attributable to new accounts and contributions to existing<br>accounts, as well as improving market conditions<br>$6,188<br>$5,636 $5,752<br>$6,131 $6,255<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Investment Agency Managed Trust 401(k)/Retirement Directed Trust Custody<br>(in millions, as of quarter-end)<br>8
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Paycheck Protection Program Overview<br>9<br>(1) All numbers represented do not include the impact of taxes<br>(2) The deferred loan origination expenses are recorded in non-interest expenses (Salaries and Benefits) and amortized through net interest income<br>(3) Includes $2.2 million in SBA fee income less $0.9 million of deferred loan origination expense<br>Impact on 4Q20 Financials (1)<br>($ in Millions)<br>Net Interest Income<br>Amortization of SBA fee income and deferred loan origination<br>expense (2) $0.7<br>Interest income from PPP loans, less PPPLF funding cost $0.3<br>Net Interest Income $1.0<br>Net Interest Margin Impact -12 bps<br>PPP Round 1 Loan Forgiveness<br>($ in Millions)<br>As of<br>12/31/20<br>As of<br>1/25/21<br>Total Loans submitted to SBA $123.8 $129.0<br>Number of Loans forgiven by SBA 324 390<br>Amount of Loans forgiven by SBA $54.8 $64.5<br>Loans under $50K not yet forgiven $3.0 $2.2<br>($ in Millions)<br>At or for the three<br>months ended<br>12/31/20<br>Total Loans (existing PPP) $142.9<br>Average Loan size $0.3<br>PPPLF advances $134.6<br>Remaining Fees to be<br>Recognized Pre-Tax(3) $1.3<br>PPP Round 2<br>($ in Millions) As of 1/25/21<br>Number of loan<br>applications received<br>from borrowers<br>380<br>Loan applications<br>received from borrowers $73.7<br>Loan applications<br>approved by the SBA $34.9<br>Average Loan size $0.2
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Non-interest<br>Income<br>$9,954<br>Net Interest<br>Income<br>$13,457<br>42.5% 57.5%<br>Gross Revenue<br>10<br>(1) See Non-GAAP reconciliation<br>(2) Gross Revenue for the Capital Management includes amounts for the fourth quarter of 2020 through the completion of the sale of the LA Fixed Income Team on November 16, 2020. Financial results after that date for the<br>unsold portion are presented in Wealth Management.<br>4Q20 Gross Revenue(1)<br>▪ Gross revenue(1) increased 44.2% from 4Q19 driven by increase in assets, net interest<br>income and fees<br>▪ Strong year-over-year growth in both net interest income and non-interest income<br>▪ Proven operating leverage as stable expense base continues to generate higher level of<br>revenue<br>Gross Revenue(1)<br>$16.2 $16.7<br>$26.2<br>$31.0<br>$23.4<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020⁽²⁾<br>Wealth Management Capital Management Mortgage<br>(in millions)
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Net Interest Income & Net Interest Margin<br>11<br>Net Interest Income<br>▪ Net interest income increased 4.2% from 3Q20, primarily due to PPP income and higher<br>average loan balances<br>▪ Net interest margin, including PPP and purchase accretion, remained stable at 3.07%<br>▪ Net interest margin, excluding PPP and purchase accretion(1), decreased to 3.10% in 4Q20<br>▪ Cost of funds decreased 2 bps to 0.33% in 4Q20 from 0.35% in 3Q20<br>▪ Full quarter impact of recent sub debt issuance, continued excess liquidity, and declining loan<br>yields expected to limit further NIM gains going forward<br>Net Interest Margin<br>3.10% 3.07% 3.07%<br>2.91%<br>3.14% 3.22% 3.23% 3.10%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Net Interest Margin Adjusted Net Interest Margin<br>(1)<br>$8,190 $8,931<br>$10,796<br>$12,918 $13,457<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>(in thousands)<br>(1) See Non-GAAP reconciliation<br>(1) (1)
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$4,748 $4,731 $4,609 $4,814 $4,868<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Non-Interest Income<br>12<br>Total Non-Interest Income<br>▪ Non-interest income increased 21.0% from 4Q19<br>▪ Increase primarily due to higher net gain on mortgage loans<br>▪ Trust & Investment Management fees increased from 3Q20 despite sale of LA fixed<br>income team during 4Q20<br>▪ Participated and funded six Main Street Lending Program loans generating $0.1<br>million in servicing fee income in 2020<br>Trust & Investment Management Fees<br>$8,228<br>$7,767<br>$15,427<br>$18,032<br>$9,954<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Trust and Investment Management Fees Net Gain on Mortgage Loans<br>Bank Fees Risk Management and Insurance Fees<br>Income on Company-Owned Life Insurance Net Gain on Sale of Securities/Assets<br>(in thousands) (in thousands)
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Mortgage Operations<br>13<br>▪ Continued strong origination production<br>▪ Mortgage locks down from record level in<br>3Q20, 225.8% Q419 lock volume<br>▪ Operational constraints and margin<br>compression limited profitability during<br>4Q20<br>▪ Refi/Purchase mix of 67%/33% in 4Q20,<br>compared to 59%/41% in 3Q20 and<br>64%/36% in 4Q19<br>(in millions)<br>$197.0 $196.9<br>$344.3<br>$376.3<br>$414.5<br>$66.3<br>$31.2 $37.2 $41.9 $32.4<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Originations for Sale Originations for Porfolio<br>Mortgage Originations<br>$166.8<br>$394.3 $417.1<br>$718.8<br>$376.6<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Mortgage Loan Locks<br>(in millions)<br>$0.9 $0.7<br>$8.3<br>$10.2<br>$1.7<br>$2.6 $2.5<br>$10.2<br>$12.3<br>$4.3<br>34%<br>29%<br>81% 83%<br>40%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Net Income Revenue Profit Margin<br>Profit Margin
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Non-Interest Expense and Efficiency Ratio<br>14<br>Total Non-Interest Expense<br>▪ Non-interest expense decreased 6.1% from 3Q20<br>▪ Decrease primarily due to lower salaries and employee benefits expense resulting from decrease in<br>incentive compensation consistent with lower mortgage activity<br>▪ Occupancy and equipment cost decreased following consolidation of other locations acquired as part of<br>the branch acquisition in 2Q20<br>▪ Balance sheet growth and higher fee income continue to drive significant year-over-year improvement in<br>efficiency ratio<br>Operating Efficiency Ratio(1)<br>80.5% 84.4%<br>48.2%<br>53.4%<br>66.6%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>$553<br>$323<br>$13,082<br>$14,094<br>$12,321<br>$16,632<br>$15,614<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>Non-Interest Expense Adjustments to Non-Interest Expense<br>(in thousands)<br>(1) See Non-GAAP reconciliation<br>(1)<br>(1)
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Asset Quality<br>15<br>Non-Performing Assets/Total Assets<br>▪ Positive asset quality trends across the portfolio<br>▪ Non-performing assets decreased by $6.2 million, and declined as a percentage of total assets to 0.22% from<br>0.53% in 3Q20 and 1.03% in 4Q20<br>▪ Decline in NPAs primarily due to payoff of one large TDR that was refinanced by another bank<br>▪ Immaterial net charge-offs again in the quarter<br>Net Charge-Offs/Average Loans<br>0.03% 0.00% 0.00% 0.00% 0.00%<br>0.00%<br>0.20%<br>0.40%<br>0.60%<br>0.80%<br>1.00%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>1.03%<br>0.82%<br>0.67%<br>0.53%<br>0.22%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020
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Asset Quality<br>16<br>▪ $0.7 million provision expense reflects the growth in the loan portfolio<br>▪ Increased loan level reviews and portfolio monitoring continue through the duration of the pandemic<br>▪ Past due loans as a percentage of total loans declined from Q3 2020<br>ALLL/ Adjusted Total Loans(1)<br>0.79% 0.79%<br>0.93%<br>1.00% 0.98%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>0.6%<br>0.4%<br>0.5%<br>0.4%<br>0.2%<br>0.3%<br>0.0%<br>0.1% 0.1%<br>0.0%<br>0.1%<br>0.5%<br>0.4%<br>0.2% 0.2%<br>Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020<br>30-59 60-89 90 +<br>Total Past Due as a % of Total Loans<br>(1) Adjusted Total Loans – Total Loans minus PPP loans and acquired Loans; see non-GAAP reconciliation
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Loan Modification Overview<br>17<br>▪ Modified loan balances declined by 96.7% during 4Q20<br>▪ Only loan modification granted in 4Q20 was requested prior to June 30<br>▪ Most initial modifications were for 180 days or less<br>▪ Only one loan granted a second modification and has returned to performing status<br>As reported June 30, 2020 As of September 30, 2020 As of January 25, 2021<br>Modified Loan<br>Balances<br>Loan<br>Count<br>% of<br>Loans<br>(ex. PPP)<br>Modified Loan<br>Balances<br>Loan<br>Count<br>% of<br>Loans<br>(ex. PPP)<br>Modified Loan<br>Balances<br>Loan<br>Count<br>% of<br>Loans<br>(ex. PPP)<br>CRE $83.0 million 40 6.8% $52.1 million 30 4.0% $0.0 million 0 0.0%<br>C&I $42.5 million 18 3.5% $5.0 million 5 0.4% $0.0 million 0 0.0%<br>1-4 Family $41.7 million 31 3.4% $4.4 million 6 0.3% $0.0 million 0 0.0%<br>All Other $9.7 million 9 0.8% $1.5 million 1 0.1% $0.0 million 0 0.0%<br>Total $176.9 million 98 14.5% $63.0 million 42 4.8% $0.0 million 0 0.0%
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2021 Outlook and Priorities<br>18<br>▪ Strong capital generation in 2020 provides support for continued organic and acquisition-related<br>growth<br>▪ Progress made in strengthening commercial banking capabilities in 2020 creates strong foundation<br>for 2021 growth<br>▪ Continue expanding commercial banking platform<br>➢ Capitalize on growing reputation as well as a differentiated commercial bank to attract<br>additional talent<br>➢ Use 2nd PPP program to develop new commercial relationships<br>▪ Add MLOs and operations staff to mortgage business to support continued higher production levels<br>▪ Continue growing newer offices to move them closer to target profitability<br>▪ Manage expenses while investing in technology to improve efficiencies, productivity, and client<br>experience<br>▪ Evaluating additional acquisition opportunities that can add value and accelerate growth<br>▪ Continue making progress in building First Western into a high performing institution
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Appendix
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Loan Portfolio Composition<br>20<br>Cash, Securities and<br>Other ⁽¹⁾<br>23%<br>1 - 4 Family<br>Residential<br>30%<br>Non-Owner<br>Occupied CRE<br>18%<br>Construction and<br>Development<br>9%<br>Owner Occupied CRE<br>11% Commercial and<br>Industrial<br>9%<br>Commercial<br>68%<br>Consumer<br>32%<br>$1.5 Billion<br>(as of 12/31/20)<br>Commercial vs. Consumer<br>(1) PPP loans accounted for $142.9 million of total loans at 12/31/20
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Capital and Liquidity Overview<br>21<br>Liquidity Funding Sources<br>(as of 12/31/20)<br>Liquidity Reserves:<br>Total Available Cash $155,220,931<br>Unpledged Investment Securities $ 26,975,468<br>Borrowed Funds:<br>Unsecured:<br>Credit Lines $ 54,000,000<br>Secured:<br>FHLB Available $441,835,815<br>FRB Available $ 875,156<br>Brokered Remaining Capacity $228,275,419<br>Total Liquidity Funding Sources $907,182,789<br>Loan to Deposit Ratio 94.6%<br>Consolidated Capital Ratios<br>(as of 12/31/20)<br>9.96% 9.96%<br>12.80%<br>7.45%<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>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>Tangible Common Equity / TBV Per Share(1)<br>(in thousands)<br>$91,662<br>$104,411<br>$130,704<br>$11.50<br>$13.15<br>$16.44<br>$10.00<br>$12.00<br>$14.00<br>$16.00<br>$18.00<br>$20.00<br>$80,000<br>$90,000<br>$100,000<br>$110,000<br>$120,000<br>$130,000<br>$140,000<br>4Q18 4Q19 4Q20<br>TCE TBV/Share (1) See Non-GAAP reconciliation
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22<br>Non-GAAP Reconciliation<br>Consolidated Efficiency Ratio For the Three Months Ended,<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Non-interest expense $13,082 $14,647 $12,644 $16,632 $15,614<br>Less: amortization 7 2 4 4 4<br>Less: provision on other real estate owned --- 100 76<br>Less: loss on assets held for sale - 553 ---<br>Plus: gain on sale of LA fixed income team ---- 62<br>Adjusted non-interest expense $13,075 $14,092 $12,640 $16,528 $15,596<br>Net interest income $8,190 $8,931 $10,796 $12,918 $13,457<br>Non-interest income 8,228 7,767 15,427 18,032 9,954<br>Less: Net gain on sale of securities -----<br>Less: Net gain on sale of assets 183 ----<br>Total income $16,235 $16,698 $26,223 $30,950 $23,411<br>Efficiency ratio 80.5% 84.4% 48.2% 53.4% 66.6%<br>Consolidated Tangible Common Book Value Per<br>Share<br>As of the Three Months Ended,<br>(Dollars in thousands) December 31, 2018 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Total shareholders' equity $116,875 $127,678 $128,703 $139,417 $149,576 $154,962<br>Less:<br>Goodwill $24,811 $19,686 $19,686 $24,191 $24,191 $24,191<br>Intangibles held for sale(1) - 3,553 3,000 3,000 3,000 -<br>Other intangibles, net 402 28 26 76 72 67<br>Tangible common equity 91,662 104,411 105,991 112,150 122,313 130,704<br>Common shares outstanding, end of period 7,968,420 7,940,168 7,917,489 7,939,024 7,951,749 7,951,773<br>Tangible common book value per share $11.50 $13.15 $13.39 $14.13 $15.38 $16.44<br>(1) Represents the intangible portion of assets held for sale
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23<br>Non-GAAP Reconciliation<br>Wealth Management Gross Revenue(1) For the Three Months Ended,<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Total income before non-interest expense $12,534 $13,023 $13,114 $16,232 $17,973<br>Less: Net gain on sale of assets 183 ----<br>Plus: Provision for loan loss 447 367 2,124 1,496 695<br>Gross revenue $12,798 $13,390 $15,238 $17,728 $18,668<br>Capital Management Gross Revenue(1) For the Three Months Ended,<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Total income before non-interest expense $815 $804 $788 $899 $423<br>Less: Net gain on sale of assets -----<br>Plus: Provision for loan loss -----<br>Gross revenue $815 $804 $788 $899 $423<br>Mortgage Gross Revenue For the Three Months Ended,<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Total income before non-interest expense $2,622 $2,504 $10,197 $12,323 $4,320<br>Less: Net gain on sale of assets -----<br>Plus: Provision for loan loss -----<br>Gross revenue $2,622 $2,504 $10,197 $12,323 $4,320<br>Consolidated Gross Revenue For the Three Months Ended,<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Total income before non-interest expense $15,971 $16,331 $24,099 $29,454 $22,716<br>Less: Net gain on sale of assets 183 ----<br>Plus: Provision for loan loss 447 367 2,124 1,496 695<br>Gross revenue $16,235 $16,698 $26,223 $30,950 $23,411<br>(1) Gross Revenue for the Capital Management includes amounts for the fourth quarter of 2020 through the completion of the sale of the LA Fixed Income Team on November 16, 2020. Financial results after that date for the<br>unsold portion are presented in Wealth Management.
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24<br>Non-GAAP Reconciliation<br>Adjusted net income available to common shareholders For the Three Months Ended,<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Net income available to common shareholders $2,572 $1,334 $8,696 $9,630 $4,874<br>Plus: acquisition related expense including tax impact -- 245 --<br>Plus: goodwill impairment including tax impact -----<br>Plus: loss on intangibles held for sale including tax impact - 438 ---<br>Adjusted net income to common shareholders $2,572 $1,772 $8,941 $9,630 $4,874<br>Adjusted earnings per share For the Three Months Ended,<br>(Dollars in thousands, except per share data) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Earnings per share $0.32 $0.17 $1.10 $1.21 $0.61<br>Plus: acquisition related expenses including tax impact -- 0.03 --<br>Plus: goodwill impairment including tax impact -----<br>Plus: loss on intangibles held for sale including tax impact - 0.05 ---<br>Adjusted earnings per share $0.32 $0.22 $1.13 $1.21 $0.61<br>Allowance for loan losses to Bank originated loans excluding PPP As of<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Total loans HFI 996,559 1,042,478 1,424,160 1,507,484 1,534,185<br>Less: Branch acquisition -- 123,786 124,689 127,233<br>Less: PPP loans -- 191,676 193,213 130,019<br>Loans excluding acquired and PPP 996,559 1,042,478 1,108,698 1,189,582 1,276,933<br>Allowance for loan losses 7,875 8,242 10,354 11,845 12,539<br>Allowance for loan losses to Bank originated loans excluding<br>PPP 0.79% 0.79% 0.93% 1.00% 0.98%<br>Total Non-Interest Expense adjusted for non-operating items For the Three Months Ended,<br>(Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020<br>Total non-interest expense $13,082 $14,647 $12,644 $16,632 $15,614<br>Less: acquisition related expense -- 323 --<br>Less: goodwill impairment -----<br>Less: loss on intangibles held for sale - 553 ---<br>Total Non-Interest Expense adjusted for non-operating items $13,082 $14,094 $12,321 $16,632 $15,614
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25<br>Non-GAAP Reconciliation<br>Adjusted net interest margin For the Three Months Ended<br>June 30, 2020<br>For the Three Months Ended<br>September 30, 2020<br>For the Three Months Ended<br>December 31, 2020<br>(Dollars in thousands) 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-bearing deposits in other financial<br>institutions 76,463 44 178,756 99 194,179 100<br>PPP adjustment 20,587 25 (38,618) (45) (20,871) (5)<br>Available-for-sale securities 48,614 224 September 40,528 173 37,512 186<br>PPP adjustment ------<br>Loans 1,268,797 12,202 1,462,872 14,138 1,522,947 14,656<br>PPP adjustment (152,893) (718) (201,208) (870) (174,046) (1,209)<br>Purchase Accretion adjustment -(534) -(333)<br>Adjusted total Interest-earning assets 1,261,568 11,777 1,442,330 12,961 1,559,721 13,395<br>Interest-bearing deposits 1,319 1,067 1,015<br>PPP adjustment ---<br>Federal Home Loan Bank Topeka and<br>Federal Reserve borrowings 129 204 200<br>PPP adjustment (39) (180) (175)<br>Subordinated notes 226 221 270<br>Adjusted total interest-bearing liabilities 1,635 1,312 1,310<br>Net interest income 10,142 11,649 12,085<br>Adjusted net interest margin 3.22% 3.23% 3.10%
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