8-K
First Western Financial Inc (MYFW)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 22, 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 April 22, 2021, First Western Financial, Inc. (the “Company”) issued a press release announcing its financial results for the first quarter ended March 31, 2021. A copy of the press release is furnished as Exhibit 99.1 and is incorporated by reference herein.
The information in this Item 2.02, including Exhibit 99.1, is being furnished pursuant to Item 2.02 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
Item 7.01 Regulation FD Disclosure.
The Company intends to hold an investor call and webcast to discuss its financial results for the first quarter ended March 31, 2021 on Friday, April 23, 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 first quarter ended March 31, 2021 and is furnished as Exhibit 99.2 and is incorporated by reference herein.
The information in this Item 7.01, including Exhibit 99.2, is being furnished pursuant to Item 7.01 of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to liabilities of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| <br><br> | | |
|---|---|---|
| Exhibit<br>Number | | Description |
| | ||
| 99.1 | Press Release issued by First Western Financial, Inc. dated April 22, 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) |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | |
|---|---|---|---|
| | | | FIRST WESTERN FINANCIAL, INC. |
| | | | |
| | | | |
| | Date: April 22, 2021 | | By: /s/ Scott C. Wylie |
| | | | Scott C. Wylie |
| | | | |
| | | | Chairman, Chief Executive Officer and President |
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Exhibit 99.1
First Western Reports First Quarter 2021 Financial Results
First Quarter 2021 Summary
| ● | Net income available to common shareholders of $6.0 million in Q1 2021, compared to $4.9 million in Q4 2020 and $1.3 million in Q1 2020 |
|---|---|
| ● | Diluted EPS of $0.74 in Q1 2021, compared to $0.61 in Q4 2020 and $0.17 in Q1 2020 |
| --- | --- |
| ● | Gross revenue^(1)^ of $23.7 million in Q1 2021, compared to $23.4 million in Q4 2020 and $16.7 million in Q1 2020 |
| --- | --- |
| ● | Total assets of $2.21 billion, up 48.2% annualized from Q4 2020 and 63.4% from Q1 2020 |
| --- | --- |
| ● | Return on average assets of 1.16%, compared to 0.99% for the fourth quarter of 2020 |
| --- | --- |
| ● | Return on average shareholders’ equity of 14.95%, compared to 12.62% for the fourth quarter of 2020 |
| --- | --- |
| ● | Return on tangible common equity^(1)^ of 17.49%, compared to 14.92% for the fourth quarter of 2020 |
| --- | --- |
^(1)^ Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Denver, Colo., April 22, 2021 – First Western Financial, Inc., (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the first quarter ended March 31, 2021.
Net income available to common shareholders was $6.0 million, or $0.74 per diluted share, for the first quarter of 2021. This compares to $4.9 million, or $0.61 per diluted share, for the fourth quarter of 2020, and $1.3 million, or $0.17 per diluted share, for the first quarter of 2020.
Scott C. Wylie, CEO of First Western, commented, “Our first quarter results reflect the continuation of our improved profitability, as our earnings per share increased more than 300% over the first quarter of last year and our return on tangible common equity exceeded 17%. Our new business development activity remains very strong and new client relationships helped drive a 12% increase in total deposits during the first quarter. While the strong deposit inflows are creating excess liquidity in the short-term that impacts our net interest margin, we believe we are well positioned to generate higher revenue in the future as these funds are redeployed into higher yielding earning assets or transferred into investment management accounts where they will generate fee income.
“During the first quarter, we resolved the processing constraints that limited our mortgage production late in 2020. We were able to capitalize on continued strong demand and more than double our net gain on mortgage loans compared to the first quarter of last year. Given the population growth and strong housing trends in our
markets, we expect the mortgage segment to continue making a significant contribution to our overall profitability.
“We spent the first quarter rebuilding our loan pipeline following the strong production we had to end 2020, as well as helping clients access the second round of funding through the Paycheck Protection Program. Despite the smaller pipeline to begin the year that impacted new loan production, our average loan balances, including mortgage loans held for sale, were still up more than 21% on an annualized basis in the first quarter. With our loan pipeline growing and commercial clients becoming more confident in a stronger economic recovery, we anticipate seeing a higher level of loan production and loan growth as we move through the year. This should lead to further increases in our level of profitability as we redeploy our excess liquidity and realize additional operating leverage,” said Mr. Wylie.
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | For the Three Months Ended | ||||||||
| | | March 31, | | December 31, | | March 31, | **** | |||
| (Dollars in thousands, except per share data) | **** | 2021 | **** | 2020 | **** | 2020 | **** | |||
| Earnings Summary | | | | | ||||||
| Net interest income | | $ | 13,053 | | $ | 13,457 | | $ | 8,931 | |
| Less: provision for loan losses | | — | | 695 | | 367 | | |||
| Total non-interest income | | 10,615 | | 9,954 | | 7,767 | | |||
| Total non-interest expense | | 15,629 | | 15,614 | | 14,647 | | |||
| Income before income taxes | | 8,039 | | 7,102 | | 1,684 | | |||
| Income tax expense | | 2,040 | | 2,228 | | 350 | | |||
| Net income available to common shareholders | | | 5,999 | | | 4,874 | | | 1,334 | |
| Adjusted net income available to common shareholders^(1)^ | | | 5,999 | | | 4,874 | | | 1,772 | |
| Basic earnings per common share | | | 0.76 | | | 0.61 | | | 0.17 | |
| Adjusted basic earnings per common share^(1)^ | | | 0.76 | | | 0.61 | | | 0.23 | |
| Diluted earnings per common share | | | 0.74 | | | 0.61 | | | 0.17 | |
| Adjusted diluted earnings per common share^(1)^ | | $ | 0.74 | | $ | 0.61 | | $ | 0.22 | |
| | | | | | | | | | | |
| Return on average assets (annualized) | | 1.16 | % | 0.99 | % | 0.43 | % | |||
| Adjusted return on average assets (annualized)^(1)^ | | | 1.16 | | | 0.99 | | | 0.57 | |
| Return on average shareholders' equity (annualized) | | 14.95 | | 12.62 | | 4.09 | | |||
| Adjusted return on average shareholders' equity (annualized)^(1)^ | | | 14.95 | | | 12.62 | | | 5.43 | |
| Return on tangible common equity (annualized)^(1)^ | | 17.49 | | 14.92 | | 5.03 | | |||
| Adjusted return on tangible common equity (annualized)^(1)^ | | | 17.49 | | | 14.92 | | | 6.69 | |
| Net interest margin | | 2.90 | | 3.07 | | 3.14 | | |||
| Efficiency ratio^(1)^ | | 66.02 | % | 66.62 | % | 84.39 | % |
^(1)^Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Operating Results for the First Quarter 2021
Revenue
Gross revenue^(1)^ was $23.7 million for the first quarter of 2021, compared to $23.4 million for the fourth quarter of 2020. The increase in revenue was driven by a $0.7 million increase in non-interest income, primarily due to a higher net gain on mortgage loans resulting from increased mortgage activity.
Relative to the first quarter of 2020, gross revenue increased $7.0 million from $16.7 million, or 41.7%. The increase in revenue was primarily due to a $4.1 million increase in net interest income driven by growth in interest earning assets, as well as higher mortgage segment activity. 2
^(1)^ Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Net Interest Income
Net interest income for the first quarter of 2021 was $13.1 million, a decrease of 3.0% from $13.5 million in the fourth quarter of 2020. The decrease in net interest income was primarily driven by a $0.2 million decrease in interest and loan fees recognized on Paycheck Protection Program (“PPP”), as well as the reduction in number of days of interest accruals in the first quarter of 2021 compared to the fourth quarter of 2020.
Relative to the first quarter of 2020, net interest income increased 46.2% from $8.9 million. The year-over-year increase in net interest income was due primarily to growth in average loans and the impact of PPP loan income.
Net Interest Margin
Net interest margin for the first quarter of 2021 decreased to 2.90% from 3.07% in the fourth quarter of 2020. Net interest margin was negatively impacted by a more liquid balance sheet mix resulting from continued strong deposit growth, which resulted in lower interest earning asset yields. On a net basis, the PPP program also negatively impacted net interest margin by 6 basis points. This was driven by amortization of SBA fee income and deferred loan origination expense of $0.5 million and interest income from PPP loans of $0.3 million. The impact from the PPP program was offset by an increase of 8 basis points relating to the impact of purchase accretion from the 2020 branch acquisition.
The cost of interest-bearing deposits decreased to 0.33% in the first quarter of 2021, from 0.37% in the fourth quarter of 2020, while the yield on interest-earning assets decreased to 3.22% in the first quarter of 2021, from 3.41% in the fourth quarter of 2020. The decline during the period was primarily due to a decrease in loan fees recognized on PPP loans, a more liquid balance sheet mix resulting from continued strong deposit growth, and two fewer days of interest accruals in the first quarter.
Relative to the first quarter of 2020, the net interest margin decreased from 3.14%, primarily due to an 82 basis point reduction in average yields on interest earning assets resulting from lower market rates and a more liquid mix of earning assets.
Non-interest Income
Non-interest income for the first quarter of 2021 was $10.6 million, an increase of 6.6% from $10.0 million in the fourth quarter of 2020. This was primarily due to an increase in realized net margins on sold loans from the fourth quarter 2020 to the first quarter 2021, offset by a decrease in the net margin on the unrealized portfolio. Mortgage origination volume increased $77.8 million in the first quarter 2021 compared to the fourth quarter 2020 contributing additional interest income and origination fee income of $0.5 million which was offset by $1.0 million in commission and other variable expenses associated with the increased volume. The Company originated $490.8 million of mortgage loans for sale during the quarter, compared to $414.5 million the previous quarter, an increase of $76.3 million. Excluding the fee revenue in the fourth quarter of 2020 generated by the LA Fixed Income team that was sold in November 2020, Trust and Investment Management fees increased $0.1 million, or 1.9% during the first quarter of 2021.
Relative to the first quarter of 2020, non-interest income increased 36.7% from $7.8 million. The increase was attributable to a $2.7 million increase in net gain on mortgage loans, primarily related to an increase in 3
the volume of mortgage originations quarter-over-quarter.
Non-interest Expense
Non-interest expense for the first quarter of 2021 was flat from the fourth quarter of 2020 at $15.6 million. First quarter non-interest expense reflects lower salaries and benefits expense resulting from $1.0 million in loan origination expenses related to PPP loans that were deferred in the period and will be amortized through net interest income over the expected 60-month life of the loans, if not earlier, as the borrowers are granted forgiveness. The resulting increase in compensation expense is primarily due to increased mortgage expenses resulting from higher mortgage originations and increased seasonal tax and benefits expenses.
Non-interest expense increased 6.7% from $14.6 million in the first quarter of 2020. The increase was primarily due to higher salaries and employee benefits expense and increased data processing costs resulting from the increase in total assets added through the branch purchase and through organic growth of the balance sheet.
The Company’s efficiency ratio^(1)^ was 66.0% in the first quarter of 2021, compared with 66.6% in the fourth quarter of 2020 and 84.4% in the first quarter of 2020.
^(1)^ Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Income Taxes
The Company recorded income tax expense of $2.0 million for the first quarter of 2021, representing an effective tax rate of 25.4%, compared to 31.4% for the fourth quarter of 2020. The decrease in effective tax rate in the first quarter of 2021 was primarily attributable to an increase in the fourth quarter 2020 effective tax rate as a result of additional expense related to recording a valuation allowance of $0.4 million on our net operating loss with the State of California following the sale of our LA fixed income team.
Loan Portfolio
Total loans, including mortgage loans held for sale, were $1.72 billion as of March 31, 2021, an increase of $27.4 million, or 1.6% from the end of the prior quarter and an increase of $616.8 million, or 55.7% from March 31, 2020.
Total loans held for investment, were $1.55 billion as of March 31, 2021, an increase of 0.8% from $1.53 billion as of December 31, 2020, and an increase of 48.4% from $1.04 billion as of March 31, 2020. The increase in total loans held for investment from December 31, 2020 was primarily due to growth in the non-owner occupied commercial real estate portfolio.
PPP loans were $190.5 million as of March 31, 2021, an increase of 33.3% from $142.9 million as of December 31, 2020. In the first quarter of 2021, the Company originated $78.9 million in PPP loans. As of March 31, 2021, the Company has submitted loan forgiveness applications to the Small Business Administration (“SBA”) on behalf of clients for $155.1 million and received forgiveness and funds remitted in the amount of $84.7 million from the SBA. As of March 31, 2021, there was $3.1 million remaining in net fees to be recognized upon forgiveness or repayment. 4
Deposits
Total deposits were $1.81 billion as of March 31, 2021, compared to $1.62 billion as of December 31, 2020, and $1.18 billion as of March 31, 2020. The increase in total deposits from December 31, 2020 was attributable to an increase in non-interest bearing deposits and money market deposits.
Average total deposits for the first quarter of 2021 increased $143.3 million, or 36.3% annualized, from the fourth quarter of 2020 and $636.2 million, or 58.7%, from the first quarter of 2020. The increase was primarily attributable to an increase in non-interest bearing and money market deposits resulting from inflows from large commercial depositors and higher deposit balances across the Company’s clientele due to the improving economic and business environment.
Borrowings
Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $198.0 million as of March 31, 2021, an increase of $48.5 million from $149.6 million as of December 31, 2020, and an increase of $188.0 million from $10.0 million as of March 31, 2020. The increase from March 31, 2020 and from December 31, 2020 is attributable to the participation in the Paycheck Protection Program Loan Facility (“PPPLF”) from the Federal Reserve. Borrowing from this facility is expected to match the balances of the PPP loans and the resulting net increase in PPP loans drove the increase to the PPPLF balance.
Assets Under Management
Total assets under management (“AUM”) increased by $230.3 million during the first quarter to $6.49 billion as of March 31, 2021, compared to $6.26 billion as of December 31, 2020, and $5.64 billion as of March 31, 2020. The increase was primarily attributable to contributions to existing accounts and new accounts, as well as improving market conditions resulting in an increase in the value of assets under management balances.
Credit Quality
Non-performing assets totaled $4.0 million, or 0.18% of total assets, as of March 31, 2021, compared with $4.3 million, or 0.22% of total assets, as of December 31, 2020 and $11.1 million, or 0.82% of total assets, as of March 31, 2020. The decline in non-performing assets from the prior quarter was due to continued pay downs on outstanding balances, as well as the sale of the remaining other real estate owned property in the quarter.
The Company did not record a provision for loan losses in the first quarter of 2021, compared to a provision of $0.4 million in the first quarter of 2020 and $0.7 million in the fourth quarter of 2020. The lower provision was the result of continued strong credit quality in the portfolio and continued pay downs on substandard loans. During 2020, the Company had implemented a loan modification program to assist its clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. As of January 25, 2021, all borrowers were out of their deferral period and all are performing.
5
Capital
As of March 31, 2021, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of March 31, 2021, the Bank was classified as “well capitalized,” as summarized in the following table:
| | | | |
|---|---|---|---|
| | **** | March 31, | **** |
| | | 2021 | **** |
| Consolidated Capital | | ||
| Tier 1 capital to risk-weighted assets | 10.31 | % | |
| Common Equity Tier 1 ("CET1") to risk-weighted assets | 10.31 | | |
| Total capital to risk-weighted assets | 13.11 | | |
| Tier 1 capital to average assets | 7.35 | | |
| | | | |
| Bank Capital | | | |
| Tier 1 capital to risk-weighted assets | 10.60 | | |
| CET1 to risk-weighted assets | 10.60 | | |
| Total capital to risk-weighted assets | 11.57 | | |
| Tier 1 capital to average assets | 7.53 | % |
Book value per common share^^increased 24.8% from $16.26 as of March 31, 2020 to $20.29 as of March 31, 2021, and was up 4.1% from $19.49 as of December 31, 2020.
Tangible book value per common share^(1)^ increased 28.8% from $13.39 as of March 31, 2020 to $17.24 as of March 31, 2021, and was up 4.9% from $16.44 as of December 31, 2020.
The Company did not repurchase any shares of its common stock during the first quarter of 2021 under its stock repurchase program, which authorized the repurchase of up to 400,000 shares of its common stock. As of March 31, 2021, the Company had up to 399,574 shares remaining under the current stock repurchase authorization.
^(1)^ Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
Conference Call, Webcast and Slide Presentation
The Company will host a conference call and webcast at 10:00 a.m. MT/ 12:00 p.m. ET on Friday, April 23, 2021. The call can be accessed via telephone at 877-405-1628. A recorded replay will be accessible through April 30, 2021 by dialing 855-859-2056; passcode 5491494.
A slide presentation relating to the first quarter 2021 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Events and Presentations page of the Company’s investor relations website at https://myfw.gcs-web.com.
About First Western
First Western is a financial services holding company headquartered in Denver, Colorado, with operations in Colorado, Arizona, Wyoming and California. First Western and its subsidiaries provide a fully integrated suite of wealth management services on a private trust bank platform, which includes a comprehensive selection of deposit, loan, trust, wealth planning and investment management products and services. First Western’s common stock is traded on the Nasdaq Global Select Market under the symbol “MYFW.” For more information, please visit www.myfw.com. 6
Non-GAAP Financial Measures
Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures include “Tangible Common Equity,” “Tangible Common Book Value per Share,” “Return on Tangible Common Equity,” “Efficiency Ratio,” “Gross Revenue,” “Allowance to Bank Originated Loans Excluding PPP,” “Adjusted Net Income Available to Common Shareholders,” “Adjusted Earnings Per Share,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” and “Adjusted Return on Tangible Common Equity”. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. Reconciliation of non-GAAP financial measures, to GAAP financial measures are provided at the end of this press release.
Forward-Looking Statements
Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “opportunity,” “could,” or “may.” The forward-looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause us to make changes to our future plans. Those risks and uncertainties include, without limitation, the COVID-19 pandemic and its effects; integration risks in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming and California; the risk of changes in the economy affecting real estate values and liquidity; the risk in our ability to continue to originate residential real estate loans and sell such loans; risks specific to commercial loans and borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the risk of changes in interest rates; and the risk of the adequacy of our allowance for loan losses and the risk in our ability to maintain a strong core deposit base or other low-cost funding sources. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 12, 2021 (“Form 10-K”), and other documents we file with the SEC from time to time. We urge readers of this news release to review the “Risk Factors” section our Form 10-K and any updates to those risk factors set forth in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our other filings with the SEC. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today’s date, or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not 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
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | Three Months Ended | |||||||
| | | March 31, | | December 31, | | March 31, | |||
| (Dollars in thousands, except per share amounts) | **** | 2021 | | 2020 | | 2020 | |||
| Interest and dividend income: | | | | ||||||
| Loans, including fees | | $ | 14,212 | | $ | 14,656 | | $ | 11,002 |
| Investment securities | | 196 | | 186 | | 295 | |||
| Federal funds sold and other | | 91 | | 100 | | 215 | |||
| Total interest and dividend income | | 14,499 | | 14,942 | | 11,512 | |||
| | | | | | | | | | |
| Interest expense: | | | | | | ||||
| Deposits | | 974 | | 1,015 | | 2,393 | |||
| Other borrowed funds | | 472 | | 470 | | 188 | |||
| Total interest expense | | 1,446 | | 1,485 | | 2,581 | |||
| Net interest income | | 13,053 | | 13,457 | | 8,931 | |||
| Less: provision for loan losses | | — | | 695 | | 367 | |||
| Net interest income, after provision for loan losses | | 13,053 | | 12,762 | | 8,564 | |||
| | | | | | | | | | |
| Non-interest income: | | | | | | ||||
| Trust and investment management fees | | 4,847 | | 4,868 | | 4,731 | |||
| Net gain on mortgage loans | | 5,196 | | 4,318 | | 2,481 | |||
| Bank fees | | 373 | | 391 | | 368 | |||
| Risk management and insurance fees | | 51 | | 287 | | 96 | |||
| Income on company-owned life insurance | | 88 | | 90 | | 91 | |||
| Other | | | 60 | | | — | | | — |
| Total non-interest income | | 10,615 | | 9,954 | | 7,767 | |||
| Total income before non-interest expense | | 23,668 | | 22,716 | | 16,331 | |||
| | | | | | | | | | |
| Non-interest expense: | | | | | | ||||
| Salaries and employee benefits | | 9,861 | | 9,401 | | 8,482 | |||
| Occupancy and equipment | | 1,409 | | 1,435 | | 1,440 | |||
| Professional services | | 1,279 | | 1,493 | | 1,023 | |||
| Technology and information systems | | 942 | | 1,041 | | 969 | |||
| Data processing | | 1,015 | | 1,078 | | 847 | |||
| Marketing | | 321 | | 415 | | 415 | |||
| Amortization of other intangible assets | | 4 | | 4 | | 2 | |||
| Net loss on assets held for sale | | — | | — | | 553 | |||
| Provision on other real estate owned | | | — | | | 76 | | | — |
| Other | | 798 | | 671 | ^(1)^ | 916 | |||
| Total non-interest expense | | 15,629 | | 15,614 | | 14,647 | |||
| Income before income taxes | | 8,039 | | 7,102 | | 1,684 | |||
| Income tax expense | | 2,040 | | 2,228 | | 350 | |||
| Net income available to common shareholders | | $ | 5,999 | | $ | 4,874 | | $ | 1,334 |
| Earnings per common share: | | | | | | | | ||
| Basic | | $ | 0.76 | | $ | 0.61 | | $ | 0.17 |
| Diluted | | $ | 0.74 | | $ | 0.61 | | $ | 0.17 |
^(1)^ Includes a $62 thousand gain on sale of the LA fixed income team. 9
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | March 31, | | December 31, | | March 31, | |||
| (Dollars in thousands) | | 2021 | | 2020 | | 2020 | |||
| ASSETS | | | | ||||||
| Cash and cash equivalents: | | | | ||||||
| Cash and due from banks | | $ | 2,295 | | $ | 2,405 | | $ | 4,076 |
| Interest-bearing deposits in other financial institutions | | 373,641 | | 153,584 | | 114,438 | |||
| Total cash and cash equivalents | | 375,936 | | 155,989 | | 118,514 | |||
| | | | | | | | | | |
| Available-for-sale securities, at fair value | | 30,843 | | 36,666 | | 52,500 | |||
| Correspondent bank stock, at cost | | 2,576 | | 2,552 | | 1,158 | |||
| Mortgage loans held for sale | | 176,644 | | 161,843 | | 64,120 | |||
| Loans, net of allowance of $12,539, $12,539 and $8,242 | | 1,531,387 | | 1,520,294 | | 1,035,709 | |||
| Premises and equipment, net | | 5,778 | | 5,320 | | 5,148 | |||
| Accrued interest receivable | | 6,852 | | 6,618 | | 3,107 | |||
| Accounts receivable | | 10,175 | | 4,865 | | 4,669 | |||
| Other receivables | | 3,254 | | 1,422 | | 1,058 | |||
| Other real estate owned, net | | — | | 194 | | 658 | |||
| Goodwill and other intangible assets, net | | 24,254 | | 24,258 | | 19,712 | |||
| Deferred tax assets, net | | 6,073 | | 6,056 | | 5,036 | |||
| Company-owned life insurance | | 15,537 | | 15,449 | | 15,177 | |||
| Other assets | | 22,269 | | 32,129 | | 24,297 | |||
| Assets held for sale | | — | | — | | 3,000 | |||
| Total assets | | $ | 2,211,578 | | $ | 1,973,655 | | $ | 1,353,863 |
| | | | | | | | | | |
| LIABILITIES | | | | | | | | ||
| Deposits: | | | | | |||||
| Noninterest-bearing | | $ | 593,388 | | $ | 481,457 | | $ | 270,604 |
| Interest-bearing | | 1,214,437 | | 1,138,453 | | 907,846 | |||
| Total deposits | | 1,807,825 | | 1,619,910 | | 1,178,450 | |||
| Borrowings: | | | | | |||||
| FHLB and Federal Reserve borrowings | | 198,041 | | 149,563 | | 10,000 | |||
| Subordinated notes | | 24,248 | | 24,291 | | 14,459 | |||
| Accrued interest payable | | 612 | | 453 | | 417 | |||
| Other liabilities | | | 19,413 | | | 24,476 | | | 21,708 |
| Liabilities held for sale | | — | | — | | 126 | |||
| Total liabilities | | 2,050,139 | | 1,818,693 | | 1,225,160 | |||
| | | | | | | | | | |
| SHAREHOLDERS’ EQUITY | | | | ||||||
| Total shareholders’ equity | | 161,439 | | 154,962 | | 128,703 | |||
| Total liabilities and shareholders’ equity | | $ | 2,211,578 | | $ | 1,973,655 | | $ | 1,353,863 |
10
First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | March 31, | | December 31, | | March 31, | |||
| (Dollars in thousands) | **** | 2021 | | 2020 | | 2020 | |||
| Loan Portfolio | | | | ||||||
| Cash, Securities and Other^(1)^ | | $ | 363,155 | | $ | 357,020 | | $ | 147,157 |
| Construction and Development | | 110,024 | | 131,111 | | 25,461 | |||
| 1-4 Family Residential | | 452,591 | | 455,038 | | 412,306 | |||
| Non-Owner Occupied CRE | | 317,457 | | 281,943 | | 192,350 | |||
| Owner Occupied CRE | | 161,787 | | 163,042 | | 121,138 | |||
| Commercial and Industrial | | 141,770 | | 146,031 | | 144,066 | |||
| Total loans held for investment | | | 1,546,784 | | | 1,534,185 | | | 1,042,478 |
| Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net | | (2,858) | | (1,352) | | 1,473 | |||
| Gross loans | | $ | 1,543,926 | | $ | 1,532,833 | | $ | 1,043,951 |
| Mortgage loans held for sale | | $ | 176,644 | | $ | 161,843 | | $ | 64,120 |
| | | | | | | | | | |
| Deposit Portfolio | | | | | | | | | |
| Money market deposit accounts | | $ | 918,940 | | $ | 847,430 | | $ | 671,641 |
| Time deposits | | 157,072 | | 172,682 | | 150,190 | |||
| Negotiable order of withdrawal accounts | | 130,540 | | 113,052 | | 82,092 | |||
| Savings accounts | | 7,885 | | 5,289 | | 3,923 | |||
| Total interest-bearing deposits | | | 1,214,437 | | | 1,138,453 | | | 907,846 |
| Noninterest-bearing accounts | | | 593,388 | | | 481,457 | | | 270,604 |
| Total deposits | | $ | 1,807,825 | | $ | 1,619,910 | | $ | 1,178,450 |
^(1)^ Includes PPP loans. 11
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | As of and for the Three Months Ended | ||||||||
| | | March 31, | | December 31, | | March 31, | **** | |||
| (Dollars in thousands) | **** | 2021 | | 2020 | | 2020 | **** | |||
| Average Balance Sheets | | | | | ||||||
| Assets | | | | | ||||||
| Interest-earning assets: | | | | | ||||||
| Interest-bearing deposits in other financial institutions | | $ | 213,577 | | $ | 194,179 | | $ | 68,035 | |
| Available-for-sale securities | | 31,935 | | 37,512 | | 55,208 | | |||
| Loans | | 1,554,990 | | 1,522,947 | | 1,016,148 | | |||
| Interest-earning assets | | 1,800,502 | | 1,754,638 | | 1,139,391 | | |||
| Mortgage loans held for sale | | 175,891 | | 120,554 | | 37,798 | | |||
| Total interest-earning assets, plus mortgage loans held for sale | | 1,976,393 | | 1,875,192 | | 1,177,189 | | |||
| Allowance for loan losses | | (12,541) | | (12,077) | | (8,010) | | |||
| Noninterest-earning assets | | 100,415 | | 103,961 | | 84,054 | | |||
| Total assets | | $ | 2,064,267 | | $ | 1,967,076 | | $ | 1,253,233 | |
| | | | | | | | | | | |
| Liabilities and Shareholders’ Equity | | | | | ||||||
| Interest-bearing liabilities: | | | | | ||||||
| Interest-bearing deposits | | $ | 1,163,010 | | $ | 1,094,317 | | $ | 830,736 | |
| FHLB and Federal Reserve borrowings | | 137,626 | | 192,448 | | 10,495 | | |||
| Subordinated notes | | 24,259 | | 18,443 | | 7,854 | | |||
| Total interest-bearing liabilities | | | 1,324,895 | | | 1,305,208 | | | 849,085 | |
| Noninterest-bearing liabilities: | | | | | ||||||
| Noninterest-bearing deposits | | 557,707 | | 483,115 | | 253,813 | | |||
| Other liabilities | | 21,151 | | 24,311 | | 19,874 | | |||
| Total noninterest-bearing liabilities | | | 578,858 | | | 507,426 | | | 273,687 | |
| Total shareholders’ equity | | | 160,514 | | | 154,442 | | | 130,461 | |
| Total liabilities and shareholders’ equity | | $ | 2,064,267 | | $ | 1,967,076 | | $ | 1,253,233 | |
| | | | | | | | | | | |
| Yields (annualized) | | | | | ||||||
| Interest-bearing deposits in other financial institutions | | 0.17 | % | 0.21 | % | 1.26 | % | |||
| Available-for-sale securities | | 2.45 | | 1.98 | | 2.14 | | |||
| Loans | | 3.66 | | 3.85 | | 4.33 | | |||
| Interest-earning assets | | 3.22 | | 3.41 | | 4.04 | | |||
| Mortgage loans held for sale | | 2.62 | | 2.88 | | 3.45 | | |||
| Total interest-earning assets, plus mortgage loans held for sale | | 3.17 | | 3.37 | | 4.02 | | |||
| Interest-bearing deposits | | 0.33 | | 0.37 | | 1.15 | | |||
| FHLB and Federal Reserve borrowings | | 0.38 | | 0.42 | | 1.95 | | |||
| Subordinated notes | | 5.61 | | 5.86 | | 6.97 | | |||
| Total interest-bearing liabilities | | 0.44 | | 0.46 | | 1.22 | | |||
| Net interest margin | | 2.90 | | 3.07 | | 3.14 | | |||
| Net interest rate spread | | 2.78 | % | 2.95 | % | 2.83 | % |
12
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | | As of and for the Three Months Ended | ||||||||
| | | March 31, | | December 31, | | March 31, | **** | |||
| (Dollars in thousands, except share and per share amounts) | **** | 2021 | | 2020 | | 2020 | **** | |||
| Asset Quality | | | | | ||||||
| Non-performing loans | | $ | 4,021 | | $ | 4,058 | | $ | 10,451 | |
| Non-performing assets | | 4,021 | | 4,252 | | 11,109 | | |||
| Net charge-offs | | $ | — | | $ | 1 | | $ | — | |
| Non-performing loans to total loans | | 0.26 | % | 0.26 | % | 1.00 | % | |||
| Non-performing assets to total assets | | 0.18 | | 0.22 | | 0.82 | | |||
| Allowance for loan losses to non-performing loans | | 311.84 | | 308.99 | | 78.86 | | |||
| Allowance for loan losses to total loans | | 0.81 | | 0.82 | | 0.79 | | |||
| Allowance for loan losses to bank originated loans excluding PPP^(1)^ | | | 1.01 | | | 0.98 | | | 0.79 | |
| Net charge-offs to average loans | | 0.00 | % ^(2)^ | 0.00 | % ^(2)^ | — | % | |||
| | | | | | | | | | | |
| Assets Under Management | | $ | 6,485,647 | | $ | 6,255,336 | | $ | 5,636,500 | |
| | | | | | | | | | | |
| Market Data | | | | | | | | | | |
| Book value per share at period end | | | 20.29 | | | 19.49 | | | 16.26 | |
| Tangible book value per common share^(1)^ | | $ | 17.24 | | $ | 16.44 | | $ | 13.39 | |
| Weighted average outstanding shares, basic | | | 7,935,664 | | | 7,930,854 | | | 7,863,564 | |
| Weighted average outstanding shares, diluted | | | 8,098,680 | | | 8,015,780 | | | 7,930,611 | |
| Shares outstanding at period end | | 7,957,900 | | 7,951,773 | | 7,917,489 | | |||
| | | | | | | | | | | |
| Consolidated Capital | | | | | | | | | | |
| Tier 1 capital to risk-weighted assets | | 10.31 | % | 9.96 | % | | 10.96 | % | ||
| CET1 to risk-weighted assets | | 10.31 | | 9.96 | | | 10.96 | | ||
| Total capital to risk-weighted assets | | 13.11 | | 12.80 | | | 13.31 | | ||
| Tier 1 capital to average assets | | 7.35 | | 7.45 | | | 8.81 | | ||
| | | | | | | | | | | |
| Bank Capital | | | | | | | | | | |
| Tier 1 capital to risk-weighted assets | | 10.60 | | 10.22 | | | 10.35 | | ||
| CET1 to risk-weighted assets | | 10.60 | | 10.22 | | | 10.35 | | ||
| Total capital to risk-weighted assets | | 11.57 | | 11.20 | | | 11.23 | | ||
| Tier 1 capital to average assets | | 7.53 | % | 7.62 | % | | 8.33 | % |
^(1)^ Represents a Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
^(2)^ Value results in an immaterial amount.
13
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
Reconciliations of Non-GAAP Financial Measures
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | **** | As of and for the Three Months Ended | ||||||||
| | | March 31, | | December 31, | | March 31, | **** | |||
| (Dollars in thousands, except share and per share amounts) | | 2021 | | 2020 | | 2020 | **** | |||
| Tangible Common | | | | | ||||||
| Total shareholders' equity | | $ | 161,439 | | $ | 154,962 | | $ | 128,703 | |
| Less: goodwill and other intangibles, net | | 24,254 | | 24,258 | | 19,712 | | |||
| Less: intangibles held for sale^(1)^ | | — | | — | | 3,000 | | |||
| Tangible common equity | | $ | 137,185 | | $ | 130,704 | | $ | 105,991 | |
| | | | | | | | | | | |
| Common shares outstanding, end of period | | 7,957,900 | | 7,951,773 | | 7,917,489 | | |||
| Tangible common book value per share | | $ | 17.24 | | $ | 16.44 | | $ | 13.39 | |
| | | | | | | | | | | |
| Net income available to common shareholders | | $ | 5,999 | | $ | 4,874 | | $ | 1,334 | |
| Return on tangible common equity (annualized) | | 17.49 | % | 14.92 | % | 5.03 | % | |||
| | | | | | | | | | | |
| Efficiency | | | | | ||||||
| Non-interest expense | | $ | 15,629 | | $ | 15,614 | | $ | 14,647 | |
| Less: amortization | | 4 | | 4 | | 2 | | |||
| Less: provision on other real estate owned | | — | | 76 | | — | | |||
| Less: loss on assets held for sale | | | — | | | — | | | 553 | |
| Plus: gain on sale of LA fixed income team | | — | | (62) | | — | | |||
| Adjusted non-interest expense | | $ | 15,625 | | $ | 15,596 | | $ | 14,092 | |
| | | | | | | | | | | |
| Net interest income | | $ | 13,053 | | $ | 13,457 | | $ | 8,931 | |
| Non-interest income | | 10,615 | | 9,954 | | 7,767 | | |||
| Total income | | $ | 23,668 | | $ | 23,411 | | $ | 16,698 | |
| Efficiency ratio | | 66.02 | % | 66.62 | % | 84.39 | % | |||
| | | | | | | | | | | |
| Gross Revenue | | | | | | | | | | |
| Total income before non-interest expense | | $ | 23,668 | | $ | 22,716 | | $ | 16,331 | |
| Plus: provision for loan losses | | — | | 695 | | 367 | | |||
| Gross revenue | | $ | 23,668 | | $ | 23,411 | | $ | 16,698 | |
| | | | | | | | | | | |
| Allowance to Bank Originated Loans Excluding PPP | | | | | | | | | | |
| Total loans held for investment | | $ | 1,546,784 | | $ | 1,534,185 | | $ | 1,042,478 | |
| Less: loans acquired | | | 120,839 | | | 127,233 | | | — | |
| Less: bank originated PPP loans | | 183,005 | | 130,019 | | — | | |||
| Bank originated loans excluding PPP | | $ | 1,242,940 | | $ | 1,276,933 | | $ | 1,042,478 | |
| | | | | | | | | | | |
| Allowance for loan losses | | $ | 12,539 | | $ | 12,539 | | $ | 8,242 | |
| Allowance for loan losses to bank originated loans excluding PPP | | | 1.01 | % | | 0.98 | % | | 0.79 | % |
| (1) | Represents only the intangible portion of Assets held for sale. |
|---|
14
First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
| | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|
| | **** | As of and for the Three Months Ended | ||||||||
| | | March 31, | | December 31, | | March 31, | **** | |||
| (Dollars in thousands, except share and per share data) | | 2021 | | 2020 | | 2020 | **** | |||
| Adjusted Net Income Available to Common Shareholders | | | | | | | | | | |
| Net income available to common shareholders | | $ | 5,999 | | $ | 4,874 | | $ | 1,334 | |
| Plus: loss on intangibles held for sale, net of tax impact | | | — | | | — | | | 438 | |
| Adjusted net income available to shareholders | | $ | 5,999 | | $ | 4,874 | | $ | 1,772 | |
| | | | | | | | | | | |
| Adjusted Basic Earnings Per Share | | | | | | | | | | |
| Basic earnings per share | | $ | 0.76 | | $ | 0.61 | | $ | 0.17 | |
| Plus: loss on intangibles held for sale | | | — | | | — | | | 0.06 | |
| Adjusted basic earnings per share | | $ | 0.76 | | $ | 0.61 | | $ | 0.23 | |
| | | | | | | | | | | |
| Adjusted Diluted Earnings Per Share | | | | | | | | | | |
| Diluted earnings per share | | $ | 0.74 | | $ | 0.61 | | $ | 0.17 | |
| Plus: loss on intangibles held for sale | | | — | | | — | | | 0.05 | |
| Adjusted diluted earnings per share | | $ | 0.74 | | $ | 0.61 | | $ | 0.22 | |
| | | | | | | | | | | |
| Adjusted Return on Average Assets (annualized) | | | | | | | | | | |
| Return on average assets | | | 1.16 | % | | 0.99 | % | | 0.43 | % |
| Plus: loss on intangibles held for sale | | | — | | | — | | | 0.14 | |
| Adjusted return on average assets | | | 1.16 | % | | 0.99 | % | | 0.57 | % |
| | | | | | | | | | | |
| Adjusted Return on Average Shareholders' Equity (annualized) | | | | | | | | | | |
| Return on average shareholders' equity | | | 14.95 | % | | 12.62 | % | | 4.09 | % |
| Plus: loss on intangibles held for sale | | | — | | | — | | | 1.34 | |
| Adjusted return on average shareholders' equity | | | 14.95 | % | | 12.62 | % | | 5.43 | % |
| | | | | | | | | | | |
| Adjusted Return on Tangible Common Equity (annualized) | | | | | | | | | | |
| Return on tangible common equity | | | 17.49 | % | | 14.92 | % | | 5.03 | % |
| Plus: loss on intangibles held for sale | | | — | | | — | | | 1.66 | |
| Adjusted return on tangible common equity | | | 17.49 | % | | 14.92 | % | | 6.69 | % |
15
Exhibit 99.2
| First Quarter 2021<br>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<br>Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of First Western Financial, Inc.’s (“First Western”)<br>management with respect to, among other things, future events and First Western’s financial performance. These statements are often, but not always, made through<br>the use of words or phrases such as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,”<br>“estimate,” “intend,” “plan,” “project,” “future” “forecast,” “goal,” “target,” “would” and “outlook,” or the negative variations of those words or other comparable words<br>of a future or forward-looking nature. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections<br>about First Western’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and<br>beyond First Western’s control. Accordingly, First Western cautions you that any such forward-looking statements are not guarantees of future performance and are<br>subject to risks, assumptions and uncertainties that are difficult to predict. Although First Western believes that the expectations reflected in these forward-looking<br>statements are reasonable as of the date made, actual results may prove to be materially different from the results expressed or implied by the forward-looking<br>statements. Those following risks and uncertainties, among others, could cause actual results and future events to differ materially from those set forth or<br>contemplated in the forward-looking statements: the COVID-19 pandemic and its effects; integration risks in connection with acquisitions; the risk of geographic<br>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<br>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<br>our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the<br>risk of changes in interest rates; and the risk of the adequacy of our allowance for credit losses and the risk in our ability to maintain a strong core deposit base or<br>other low-cost funding sources. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are<br>subject is contained in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 12, 2021 and other documents we<br>file with the SEC from time to time. All subsequent written and oral forward-looking statements attributable to First Western or persons acting on First Western’s<br>behalf are expressly qualified in their entirety by this paragraph. Forward-looking statements speak only as of the date of this presentation. First Western undertakes<br>no obligation to publicly update or otherwise revise any forward-looking statements, whether as a result of new information, future events or otherwise (except as<br>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<br>and the sources from which it has been obtained are reliable; however, the Company cannot guaranty the accuracy of such information and has not independently<br>verified such information.<br>This presentation contains certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-<br>GAAP financial measures to GAAP financial measures are provided at the end of this presentation. Numbers in the presentation may not sum due to rounding.<br>Our common stock is not a deposit or savings account. Our common stock is not insured by the Federal Deposit Insurance Corporation or any governmental agency<br>or instrumentality.<br>This presentation is not an offer to sell any securities and it is not soliciting an offer to buy any securities in any state or jurisdiction where the offer or sale is not<br>permitted. Neither the SEC nor any state securities commission has approved or disapproved of the securities of the Company or passed upon the accuracy or<br>adequacy of this presentation. Any representation to the contrary is a criminal offense. Except as otherwise indicated, this presentation speaks as of the date hereof.<br>The delivery of this presentation shall not, under any circumstances, create any implication that there has been no change in the affairs of the Company after the date<br>hereof. |
| --- |
| 3<br>Overview of 1Q21<br>Continued<br>High Level of<br>Mortgage<br>Activity<br>Continuation of<br>Improved<br>Profitability<br>New Business<br>Development<br>Driving Balance<br>Sheet Growth<br>▪ Total assets of $2.21 billion, up 48.2% annualized in 1Q21<br>▪ New wealth management and commercial client acquisitions driving strong inflows of low-cost deposits<br>and further improvement in deposit mix<br>▪ 1Q21 loan growth impacted by smaller pipeline to start 2021 and focus on PPP loan production<br>▪ Non-performing assets declined to 0.18% of total assets from 0.22% at end of prior quarter<br>▪ No remaining COVID-19 loan modifications<br>▪ History of exceptionally low charge-offs continues<br>Asset Quality<br>Remains<br>Exceptional<br>▪ Net gain on mortgage loans of $5.2 million, up 20.3% from 4Q20 and 109.4% from 1Q20<br>▪ Operational constraints in mortgage segment resolved during 1Q21<br>▪ Net income available to common shareholders of $6.0 million, or $0.74 diluted EPS, up over 300% from<br>1Q20<br>▪ Return on average shareholders’ equity of 14.95%<br>▪ Return on tangible common equity(1) of 17.49%<br>(1) See Non-GAAP reconciliation |
| --- |
| 4<br>Net Income Available to Common Shareholders<br>and Earnings per Share<br>▪ Net income of $6.0 million, or $0.74 diluted earnings per share, in 1Q21<br>▪ Strong profitability results in 4.1% and 4.9% increase in book value per share and tangible book value per<br>share(1), respectively, from 4Q20<br>$438<br>$245<br>$1,772<br>$8,941<br>$9,630<br>$4,874<br>$5,999<br>$0<br>$2,000<br>$4,000<br>$6,000<br>$8,000<br>$10,000<br>$12,000<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Net Income Adjustments to Net Income<br>(1)<br>(1)<br>$0.05<br>$0.03<br>$0.22<br>$1.13<br>$1.21<br>$0.61<br>$0.74<br>$0.00<br>$0.20<br>$0.40<br>$0.60<br>$0.80<br>$1.00<br>$1.20<br>$1.40<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Net Income Adjustments to Net Income<br>(1)<br>(1)<br>(1) See Non-GAAP reconciliation<br>Net Income Available to Common Shareholders Diluted Earnings per Share |
| --- |
| 5<br>Non-Mortgage Segment Earnings<br>(1) See Non-GAAP reconciliation<br>$0.12<br>$0.40<br>$0.32<br>$0.67<br>$0.73<br>$0.00<br>$0.50<br>$1.00<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>▪ Strong balance sheet growth and improving operating leverage creating sustainable path to<br>higher earnings and profitability over long-term<br>▪ Non-mortgage segment earnings reflects contribution of private banking, commercial banking,<br>and trust and investment management business lines<br>Non-Mortgage Segment Diluted Pre-Tax Earnings Per Share(1) |
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| 6<br>Loan Portfolio<br>▪ Total loans HFI increased $12.6 million, or 0.8% from<br>prior quarter<br>▪ Average loans increased $87.4 million, or 5.3% from<br>prior quarter<br>▪ Growth in non-owner occupied CRE offset by payoffs in<br>construction portfolio due to project completions<br>▪ Payoffs included a low-yielding $50 million cash-<br>secured loan that impacted EOP balances<br>1Q 2020 4Q 2020 1Q 2021<br>Cash, Securities and Other $147,157 $357,020 $363,155<br>Construction and Development 25,461 131,111 110,024<br>1-4 Family Residential 412,306 455,038 452,591<br>Non-Owner Occupied CRE 192,350 281,943 317,457<br>Owner Occupied CRE 121,138 163,042 161,787<br>Commercial and Industrial 144,066 146,031 141,770<br>Total Loans HFI $1,042,478 $1,534,185 $1,546,784<br>Mortgage loans held-for-sale (HFS) 64,120 161,843 176,644<br>Total Loans $1,106,598 $1,696,028 $1,723,428<br>$191.7<br>$1.8<br>$78.9<br>$122.5 $119.0<br>$142.1<br>$201.1<br>$65.7<br>$87.7<br>$71.8 $83.2<br>$128.1 $122.6<br>$48.7 $30.5<br>$0<br>$50<br>$100<br>$150<br>$200<br>$250<br>1Q20 2Q20 3Q20 4Q20 1Q21<br>PPP Production⁽¹⁾ Production Net Loan Payoffs PPP Forgiveness<br>(in millions)<br>$1,054<br>$1,337<br>$1,558 $1,644<br>$1,731 $1,696 $1,723<br>$0<br>$200<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>$1,400<br>$1,600<br>$1,800<br>$2,000<br>1Q20 2Q20 3Q20 4Q20 1Q21 4Q20 1Q21<br>HFI HFS (1) Bank originated<br>(2) Excludes deferred (fees) costs, and amortized premium/(unaccreted discount), net<br>($ in thousands, as of quarter end)<br>Loan Portfolio Composition(2)<br>Loan Portfolio Details Loan Production & Net Loan Payoffs<br>Total Loans(2)<br>Average Period End |
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| 7<br>Total Deposits<br>▪ Total deposits increased $187.9 million, or 11.6%, from end of prior quarter<br>▪ Growth primarily attributable to new client relationships<br>▪ Noninterest-bearing deposits more than doubled over the past year and increased to 32.8% of<br>total deposits at 1Q21 from 23.0% at 1Q20<br>1Q 2020 4Q 2020 1Q 2021<br>Money market deposit accounts $671,641 $847,430 $918,940<br>Time deposits 150,190 172,682 157,072<br>NOW 82,092 113,052 130,540<br>Savings accounts 3,923 5,289 7,885<br>Noninterest-bearing accounts 270,604 481,457 593,388<br>Total Deposits $1,178,450 $1,619,910 $1,807,825<br>$1,085<br>$1,309<br>$1,463<br>$1,577<br>$1,721<br>$1,620<br>$1,808<br>$0<br>$200<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>$1,400<br>$1,600<br>$1,800<br>$2,000<br>1Q20 2Q20 3Q20 4Q20 1Q21 4Q20 1Q21<br>Average Period End<br>($ in millions)<br>Deposit Portfolio Composition Total Deposits |
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| ▪ During 2020, expanded commercial banking team and added construction lending expertise<br>▪ Increase in commercial banking clients contributing to growth in total loans and low-cost deposits 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>8<br>Commercial Banking Driving Growth<br>$659<br>$837<br>$958 $977<br>$1,213<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>$1,400<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>$599<br>$785<br>$830<br>$908<br>$871<br>$400<br>$600<br>$800<br>$1,000<br>$1,200<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>(1) Reflects loans to commercial borrowers across all loan categories excludes SBA PPP loan balances due<br>to their short-term nature.<br>(in millions) (in millions)<br>Up 45% Year-Over-Year Up 84% Year-Over-Year<br>Total Commercial Loans(1) Total Commercial Deposits |
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| 9<br>Trust and Investment Management<br>▪ Total assets under management increased $230.3 million from December 31, 2020 to $6.49 billion at<br>March 31, 2021<br>▪ The increase was primarily attributable to contributions to existing accounts and new accounts, as well<br>as improving market conditions<br>$5,636 $5,752<br>$6,131 $6,255<br>$6,486<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>$5,000<br>$6,000<br>$7,000<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Investment Agency Managed Trust 401(k)/Retirement Directed Trust Custody<br>(in millions, as of quarter end)<br>Total Assets Under Management |
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| (1) All numbers represented do not include the impact of taxes<br>(2) The deferred loan origination expenses are recorded in non-interest expenses (Salaries and Benefits) and amortized through net interest income<br>(3) Includes $4.4 million in SBA fee income less $1.3 million of deferred loan origination expense 10<br>Paycheck Protection Program Overview<br>Impact on 1Q21 Financials (1)<br>($ in Millions)<br>Net Interest Income<br>Amortization of SBA fee income and deferred loan origination<br>expense (2) $0.5<br>Interest income from PPP loans, less PPPLF funding cost $0.3<br>Net Interest Income $0.8<br>Net Interest Margin Impact -6 bps<br>($ in Millions) At or for the three<br>months ended 3/31/21<br>Total Loans (existing PPP) $190.5<br>Average Loan size $0.3<br>PPPLF advances $183.0<br>Remaining Fees to be Recognized<br>Pre-Tax(3) $3.1<br>PPP Loan Forgiveness<br>($ in Millions) As of 3/31/21<br>Total Loans submitted to SBA $155.1<br>Number of Loans forgiven by SBA 499<br>Amount of Loans forgiven by SBA $84.7<br>Loans under $50K not<br>yet forgiven $6.4<br>PPP Round 2<br>($ in Millions) As of 4/11/21<br>Number of loan applications received<br>from borrowers 743<br>Loan applications received<br>from borrowers $99.8<br>Loan applications approved by<br>the SBA $82.5<br>Average loan size $0.1 |
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| (1) See Non-GAAP reconciliation<br>(2) Gross Revenue for Capital Management includes amounts for the fourth quarter of 2020 through the completion of the sale of the LA Fixed<br>Income Team on November 16, 2020. Financial results after that date for the unsold portion are presented in Wealth Management. 11<br>Gross Revenue<br>▪ Gross revenue(1) increased 41.7% from 1Q20 driven by increase in assets, net interest income and fees<br>▪ Strong year-over-year growth in both net interest income and non-interest income<br>▪ Realizing more operating leverage as stable expense base continues to generate higher level of revenue<br>Non-interest<br>Income<br>$10,615<br>Net Interest<br>Income<br>$13,053<br>44.8% 55.2%<br>$16.7<br>$26.2<br>$31.0<br>$23.4 $23.7<br>$0.0<br>$5.0<br>$10.0<br>$15.0<br>$20.0<br>$25.0<br>$30.0<br>$35.0<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020⁽²⁾ Q1 2021<br>Wealth Management Capital Management Mortgage<br>(in millions)<br>1Q21 Gross Revenue(1) Gross Revenue(1) |
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| 12<br>Net Interest Income and Net Interest Margin<br>▪ Net interest income decreased 3.0% from 4Q20, primarily due to lower PPP-related fees and two<br>fewer days of interest accrual<br>▪ Net interest margin, including PPP and purchase accretion, declined to 2.90% due to excess<br>liquidity and lower average loan yields<br>▪ Net interest margin, excluding PPP and purchase accretion(1), decreased to 2.88% in 1Q21<br>▪ Cost of funds decreased 2 bps to 0.31% in 1Q21 from 0.33% in 4Q20<br>▪ Redeployment of excess liquidity throughout 2021 should positively impact net interest margin<br>$8,931<br>$10,796<br>$12,918 $13,457 $13,053<br>$0<br>$2,000<br>$4,000<br>$6,000<br>$8,000<br>$10,000<br>$12,000<br>$14,000<br>$16,000<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>3.10% 3.07% 3.07%<br>3.14% 3.22% 3.23% 3.10%<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>2.00%<br>2.50%<br>3.00%<br>3.50%<br>4.00%<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Net Interest Margin Adjusted Net Interest Margin<br>(1) (1) (1)<br>(in thousands)<br>(1) See Non-GAAP reconciliation<br>Net Interest Income Net Interest Margin<br>(1)<br>2.88%<br>2.90% |
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| 13<br>Non-Interest Income<br>▪ Non-interest income increased 6.6% from 4Q20 and 36.7% from 1Q20<br>▪ Increase from 4Q20 due to higher net gain on mortgage loans<br>▪ Excluding $0.1 million in fees generated by LA fixed income team (sold during 4Q20), Trust &<br>Investment Management fees increased from prior quarter<br>$7,767<br>$15,427<br>$18,032<br>$9,954 $10,615<br>$0<br>$5,000<br>$10,000<br>$15,000<br>$20,000<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<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 Other<br>$4,731<br>$4,609<br>$4,814<br>$4,868 $4,847<br>$4,000<br>$4,200<br>$4,400<br>$4,600<br>$4,800<br>$5,000<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>(in thousands) (in thousands)<br>Total Non-Interest Income Trust and Investment Management Fees |
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| 14<br>Mortgage Operations<br>▪ Operational constraints resolved during 1Q21<br>▪ Record mortgage originations in 1Q21<br>▪ Mortgage locks down slightly from 4Q20 and 1Q20<br>▪ Refi/Purchase mix of 77%/23% in 1Q21, compared to<br>67%/33% in 4Q20<br>$196.9<br>$344.3<br>$376.3<br>$414.5<br>$490.8<br>$31.2 $37.2 $41.9 $32.4 $33.9<br>$0<br>$100<br>$200<br>$300<br>$400<br>$500<br>$600<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Originations for Sale Originations for Porfolio<br>$394.3 $417.1<br>$718.8<br>$376.6 $359.4<br>$0<br>$100<br>$200<br>$300<br>$400<br>$500<br>$600<br>$700<br>$800<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>(in millions)<br>$0.7<br>$8.3<br>$10.2<br>$1.7 $2.1 $2.5<br>$10.2<br>$12.3<br>$4.3<br>$5.2 29%<br>81% 83%<br>40% 41%<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Net Income Revenue Profit Margin<br>(in millions)<br>Mortgage Originations<br>Mortgage Details Net Income, Revenue and Profit Margin<br>Mortgage Loan Locks |
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| 15<br>Non-Interest Expense and Efficiency Ratio<br>▪ Non-interest expense unchanged from 4Q20<br>▪ Salaries and employee benefits expense in 1Q21 reduced by $1.0 million in deferred loan origination<br>expenses related to second round of PPP loans<br>$553<br>$323<br>$14,094<br>$12,321<br>$16,632 $15,614 $15,629<br>$0<br>$2,000<br>$4,000<br>$6,000<br>$8,000<br>$10,000<br>$12,000<br>$14,000<br>$16,000<br>$18,000<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Non-Interest Expense Adjustments to Non-Interest Expense<br>(1)<br>(1)<br>84.4%<br>48.2%<br>53.4%<br>66.6% 66.0%<br>0%<br>20%<br>40%<br>60%<br>80%<br>100%<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>(1) See Non-GAAP reconciliation<br>Total Non-Interest Expense Operating Efficiency Ratio(1)<br>(in thousands)<br>(1) |
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| 16<br>Asset Quality<br>▪ Positive asset quality trends across the portfolio<br>▪ Non-performing assets decreased by $0.2 million, and declined as a percentage of total assets to<br>0.18% from 0.22% in 4Q20 and 0.82% in 1Q20<br>▪ No remaining loan modifications<br>▪ Immaterial net charge-offs again in the quarter<br>▪ Stable asset quality and immaterial charge-offs resulted in no provision expense in 1Q21<br>▪ ALL/Adjusted Total Loans(1) increased to 1.01% in 1Q21 from 0.98% in 4Q20<br>0.82%<br>0.67%<br>0.53%<br>0.22% 0.18%<br>0.00%<br>0.50%<br>1.00%<br>1.50%<br>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>0.00% 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>Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021<br>Non-Performing Assets/Total Assets Net Charge-Offs/Average Loans<br>(1) Adjusted Total Loans – Total Loans minus PPP loans and acquired Loans; see non-GAAP reconciliation |
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| 17<br>Near-Term Outlook<br>▪ Growing pipeline and increased confidence in economic recovery should lead to<br>higher loan production and loan growth as the year progresses<br>▪ Excess liquidity will be redeployed into higher yielding earning assets or<br>transferred into investment management accounts where it will generate fee<br>income<br>▪ Addition of new MLOs should increase ability to capitalize on demand for<br>purchase mortgages in seasonally stronger quarters for housing market<br>▪ Higher revenue generated from redeployment of excess liquidity and growth in<br>non-interest income should lead to additional operating leverage and further<br>increases in profitability<br>▪ Well positioned to execute on additional acquisitions that can enhance franchise<br>value and accelerate growth |
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| Appendix<br>18 |
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| 19<br>Capital and Liquidity Overview<br>10.31% 10.31%<br>13.11%<br>7.35%<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>Liquidity Funding Sources (as of 3/31/21)<br>Liquidity Reserves:<br>Total Available Cash $ 375,078<br>Unpledged Investment Securities 21,604<br>Borrowed Funds:<br>Unsecured:<br>Credit Lines 54,000<br>Secured:<br>FHLB Available 459,125<br>FRB Available 767<br>Brokered Remaining Capacity 358,112<br>Total Liquidity Funding Sources $ 1,268,686<br>Loan to Deposit Ratio 85.4%<br>$91,662<br>$104,411<br>$130,704<br>$137,185<br>$11.50<br>$13.15<br>$16.44<br>$17.24<br>$10.00<br>$12.00<br>$14.00<br>$16.00<br>$18.00<br>$20.00<br>$50,000<br>$70,000<br>$90,000<br>$110,000<br>$130,000<br>$150,000<br>4Q18 4Q19 4Q20 1Q21<br>TCE TBV/Share<br>(in thousands)<br>(1) See Non-GAAP reconciliation<br>Consolidated Capital Ratios (as of 3/31/21)<br>Tangible Common Equity / TBV per Share(1)<br>(in thousands) |
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| 20<br>Non-GAAP Reconciliation<br>Consolidated Tangible Common Book<br>Value Per Share<br>As of the Three Months Ended,<br>(Dollars in thousands) Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 March 31, 2021<br>Total shareholders' equity $116,875 $127,678 $154,962 $161,439<br>Less:<br>Preferred stock (liquidation preference) ----<br>Goodwill and other intangibles, net 25,213 19,714 24,258 24,254<br>Intangibles held for sale(1) - 3,553 --<br>Tangible common equity 91,662 104,411 $130,704 137,185<br>Common shares outstanding, end of period 7,968,420 7,940,168 7,951,773 7,957,900<br>Tangible common book value per share $11.50 $13.15 $16.44 $17.24<br>Net income available to common shareholders $5,999<br>Return on tangible common equity (annualized) 17.49%<br>(1) Represents the intangible portion of assets held for sale<br>Consolidated Efficiency Ratio For the Three Months Ended,<br>(Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Non-interest expense $14,647 $12,644 $16,632 $15,614 $15,629<br>Less: amortization 2 4 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 $14,092 $12,640 $16,528 $15,596 $15,625<br>Net interest income $8,931 $10,796 $12,918 $13,457 $13,053<br>Non-interest income 7,767 15,427 18,032 9,954 10,615<br>Less: Net gain on sale of securities -----<br>Less: Net gain on sale of assets -----<br>Total income $16,698 $26,223 $30,950 $23,411 $23,668<br>Efficiency ratio 84.4% 48.2% 53.4% 66.6% 66.0% |
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| 21<br>Non-GAAP Reconciliation<br>Wealth Management Gross Revenue For the Three Months Ended,<br>(Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Total income before non-interest expense $13,023 $13,114 $16,232 $17,973 $18,471<br>Plus: Provision for loan loss 367 2,124 1,496 695 -<br>Gross revenue $13,390 $15,238 $17,728 $18,668 $18,471<br>Capital Management Gross Revenue For the Three Months Ended,<br>(Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Total income before non-interest expense $804 $788 $899 $423 $-<br>Plus: Provision for loan loss -----<br>Gross revenue $804 $788 $899 $423 $-<br>Mortgage Gross Revenue For the Three Months Ended,<br>(Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Total income before non-interest expense $2,504 $10,197 $12,323 $4,320 $5,197<br>Plus: Provision for loan loss -----<br>Gross revenue $2,504 $10,197 $12,323 $4,320 $5,197<br>Consolidated Gross Revenue For the Three Months Ended,<br>(Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Total income before non-interest expense $16,331 $24,099 $29,454 $22,716 $23,668<br>Plus: Provision for loan loss 367 2,124 1,496 695 -<br>Gross revenue $16,698 $26,223 $30,950 $23,411 $23,668<br>Non-Mortgage Segment Diluted Pre-Tax Earnings<br>Per Share For The Three Months Ended<br>(Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Non-Mortgage income before income tax $970 $3,148 $2,581 $5,386 $5,917<br>Mortgage income before income tax 714 8,307 10,241 1,716 2,122<br>Less: Income tax expense 350 2,759 3,192 2,228 2,040<br>Net income available to common shareholders $1,334 $8,696 $9,630 $4,874 $5,999<br>Diluted weighted average shares 7,930,611 7,928,518 7,963,736 8,015,780 8,098,680<br>Non-Mortgage Segment Diluted Pre-Tax Earnings Per<br>Share $0.12 $0.40 $0.32 $0.67 $0.73 |
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| 22<br>Non-GAAP Reconciliation<br>Adjusted net income available to common shareholders For the Three Months Ended,<br>(Dollars in thousands, except per share data) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Net income available to common shareholders $1,334 $8,696 $9,630 $4,874 $5,999<br>Plus: acquisition related expense including tax impact - 245 ---<br>Plus: loss on intangibles held for sale including tax impact 438 ----<br>Adjusted net income to common shareholders $1,772 $8,941 $9,630 $,4,874 $,5,999<br>Adjusted earnings per share For the Three Months Ended,<br>(Dollars in thousands, except per share data) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Earnings per share $0.17 $1.10 $1.21 $0.61 $0.74<br>Plus: acquisition related expenses including tax impact - 0.03 ---<br>Plus: loss on intangibles held for sale including tax impact 0.05 ----<br>Adjusted earnings per share $0.22 $1.13 $1.21 $0..61 $0.74<br>Allowance for loan losses to Bank originated loans<br>excluding PPP As of<br>(Dollars in thousands) December 31, 2020 March 31, 2021<br>Gross loans 1,534,185 1,546,784<br>Less: Branch acquisition 127,233 120,839<br>Less: PPP loans 130,019 183,005<br>Loans excluding acquired and PPP 1,276,933 1,242,940<br>Allowance for loan losses 12,539 12,539<br>Allowance for loan losses to Bank originated loans excluding PPP 0.98% 1.01%<br>Total Non-Interest Expense adjusted for Non-Operating<br>items For the Three Months Ended,<br>(Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021<br>Total non-interest expense $14,647 $12,644 $16,632 $15,614 $15,629<br>Less: acquisition related expense - 323 ---<br>Less: loss on intangibles held for sale 553 ----<br>Total Non-Interest Expense adjusted for Non-Operating items $14,094 $12,321 $16,632 $15,614 $15,629 |
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| 23<br>Non-GAAP Reconciliation<br>Adjusted net interest<br>margin<br>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>For the Three Months Ended<br>March 31, 2021<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>Average<br>Balance<br>Interest<br>Earned/Paid<br>Average<br>Yield/Rate<br>Interest-bearing deposits in<br>other financial institutions 76,463 44 178,756 99 194,179 100 213,577 91<br>PPP adjustment 20,587 25 (38,618) (45) (20,871) (5) 21,173 5<br>Available-for-sale securities 48,614 224 40,528 173 37,512 186 31,936 196<br>PPP adjustment --------<br>Loans 1,268,797 12,202 1,462,872 14,138 1,522,947 14,656 1,554,990 14,212<br>PPP adjustment (152,893) (718) (201,208) (870) (174,046) (1,209) (171,263) (945)<br>Purchase Accretion<br>adjustment -(534) -(333) -(344)<br>Adjusted total Interest-<br>earning assets 1,261,568 11,777 1,442,330 12,961 1,559,721 13,395 1,650,413 13,215<br>Interest-bearing deposits 1,319 1,067 1,015 974<br>PPP adjustment ----<br>Federal Home Loan Bank<br>Topeka and Federal Reserve<br>borrowings 129 204 200 132<br>PPP adjustment (39) (180) (175) (109)<br>Subordinated notes 226 221 270 340<br>Adjusted total interest-<br>bearing liabilities 1,635 1,312 1,310 1,337<br>Net interest income 10,142 11,649 12,085 11,878<br>Adjusted net interest margin 3.22% 3.23% 3.10% 2.88% |
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