0001327607FALSE00013276072024-07-292024-07-29

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): July 29, 2024
FIRST WESTERN FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
Colorado001-3859537-1442266
(State or other jurisdiction of
incorporation or organization)
(Commission
File Number)
(I.R.S. Employer
Identification No.)
1900 16th StreetSuite 1200
DenverColorado
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:
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
oPre-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).
oEmerging growth company
oIf 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 classTrading SymbolName of each exchange on which registered
Common Stock, no par valueMYFWNASDAQ Stock Market LLC



Item 7.01    Regulation FD Disclosure.
First Western Financial, Inc. (the “Company”) is furnishing investor presentation materials as Exhibit 99.1 to this Form 8-K, which may be presented at meetings with investors, analysts, and others, in whole or in part and possibly with modifications, during the fiscal year ending December 31, 2024.
As provided in General Instruction B.2 to Form 8-K, the information furnished in Exhibit 99.1 of this Current Report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and such information shall not be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01    Financial Statements and Exhibits.
(d)    Exhibits.
Exhibit
Number
Description
99.1
104Cover 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: July 29, 2024By: /s/ Scott C. Wylie
Scott C. Wylie
Chairman, Chief Executive Officer and President

INVESTOR PRESENTATION July 2024


 
Safe Harbor 2 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 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 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 as “may,” “should,” “could,” “predict,” “potential,” “believe,” “will likely result,” “expect,” “continue,” “will,” “anticipate,” “seek,” “estimate,” “intend,” “plan,” “position,” “project,” “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. These forward-looking statements are not historical facts, and are based on current expectations, estimates and projections about First Western’s industry, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond First Western’s control. Accordingly, First 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 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 may prove to be materially different from the results expressed or implied by the forward-looking statements. The following risks and uncertainties, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: integration risks in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming, California, and Montana; the risk of changes in the economy affecting real estate values and liquidity; the risk in our ability to continue to originate residential real estate loans and sell such loans; risks specific to commercial loans and borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the risk of changes in interest rates; and the risk of the adequacy of our allowance for credit losses and the risk in our ability to maintain a strong core deposit base or other low-cost funding sources. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2023 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 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. 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 otherwise (except as required by law). 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 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 information. This presentation contains certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-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. 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 or instrumentality. 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 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 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. 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 hereof.


 
3 An Emerging High Performing Institution Overview  Niche-focused regional wealth manager built on a private trust bank platform  Headquartered in Denver, Colorado and positioned in desirable, affluent and high growth markets Target Market  Households of $1+ million liquid net worth  High net worth and high growth markets  Colorado, Arizona, Wyoming, California and Montana Company Highlights Competitive Advantage (as of 06/30/24)  Assets: $2.94 billion  Total Loans: $2.46 billion  Total Deposits: $2.41 billion  AUM: $7.01 billion (for the year ending 12/31/23)  Loan Growth: 2.4%  Deposit Growth: 5.1%  Asset Growth: 3.8%  TBV/Share(1) Growth: 0.1%  Operates as one integrated firm, not silos  Team approach benefits both clients and First Western  Local boutique private trust bank offices with central product experts (1) See Non-GAAP reconciliation CA MT AZ WY CO Office Locations


 
4 Investment Highlights Successful Execution on Growth Strategies Attractive Markets and Business Model Strong Earnings Momentum  Significant revenue growth driving improved operating leverage and higher profitability since pre-IPO  TBV/share(1) increased ~140% since the IPO, 21% in 2021, 11% in 2022 and 0.1% in 2023  Continued scale expected to drive further leverage and generate returns consistent with a high performing institution over long term  Chairman and CEO has previously built and sold three banks for substantial gains for shareholders  COO has been instrumental in building the MYFW franchise over 18 years at the institution  Highly aligned with shareholder interests as insiders own ~18% of total shares outstanding(2)  Discounted valuation trading at just 0.83x TBV/share(3) Proven Management Team, High Insider Ownership, and Discounted Valuation  Track record of combining organic growth and market expansion with accretive acquisitions to enhance franchise value  Total assets up 184% since the IPO, 28% in 2021, 13% in 2022 and 4% in 2023 with substantial increases in revenue and EPS  Strengthening commercial banking platform creating more diverse loan portfolio and lower-cost deposit base  Rapidly growing institution operating in high growth markets  Attractive, stable deposit base with noninterest-bearing and money market accounts comprising 72% of total deposits as of 6/30/24  Conservative underwriting and affluent client base results in minimal credit losses (1) See Non-GAAP reconciliation (2) Represents beneficial ownership as defined by the Proxy Statement (3) As of July 25, 2024


 
$4,556 $5,795 $7,602 $10,854 $37,745 $28,510 $32,510 $17,416 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2021 2022 2023 2016-2020 Pre-Tax, Pre-Provision Income(1) ($000s) 5 Strong Operational and Financial Momentum  Robust organic balance sheet growth  Accretive acquisitions  Market expansion  Highly leverageable operating platform driving improved efficiencies  Minimal credit losses Drivers of Improved Performance (1) See Non-GAAP reconciliation Adjusted Pre-Tax, Pre-Provision Income(1) ($000s)


 
Franchise Overview 6


 
7 Great Markets, Scarce Investment Opportunity  Ranked among states with highest GDP growth  Strong job and population growth  Experiencing significant in-migration  Attractive demographics with large amount of high net worth individuals that utilize private banking and investment management services  Favorable tax laws for trusts and estates that attract wealthy individuals Denver, CO 48% Phoenix, AZ 8% Fort Collins, CO 20% Boulder, CO 7% Other 8% Rock Springs, WY 3% Jackson, WY 6% Deposits by State 79%Colorado 13%Wyoming 8%Arizona Projected % Change in HHI (2021-2026) (2) Market ShareStateMSA 11.001.00CODenver-Aurora-Lakewood 13.454.62COFort Collins 13.180.12AZPhoenix-Mesa-Scottsdale 11.411.39COBoulder 8.504.47WY/IDJackson 8.827.16WYRock Springs 9.01National Average (1) Source: S&P Capital IQ as of 06/30/2023 (2) Percentage growth in household income (HHI) Characteristics of First Western Markets Deposits by MSA (1) Small Market Share Provides Large Growth Opportunity Total Assets ($bn)Current OwnershipAs of March 31, 2024 27.5PrivateFirstBank 9.9Public (NYSE: NBHC)NBH Bank 7.6Private (Sub. Of Pinnacle Bancorp-NE)Bank of Colorado 6.6PrivateAlpine Bank 3.2PrivateANB Bank 2.9Public (Nasdaq: MYFW)First Western Trust Bank MYFW is 2nd Largest Publicly Held CO Chartered Bank


 
8 Success in Expansion and Acquisition Growth 2006 – 2010 (3)  Boulder, CO  Century City, CA  Scottsdale, AZ 2011 – 2015 (6)  Aspen, CO  DTC/Cherry Hills, CO  Fort Collins, CO  Jackson Hole, WY  Laramie, WY(4)  Phoenix, AZ 2016 – 2020 (4)  Broomfield, CO (2021)  Greenwood Village, CO  Lone Tree, CO(2)  Vail Valley, CO 2002 – 2005 (3)  Cherry Creek, CO  Denver, CO  Northern Colorado, CO 2002 – 2005 (5)  Westcor Insurance Group, Inc.  Poudre River Valley Trust Co.  Sprout & Associates, Inc.  Sterling Partners  Silversmith Financial Corp 2006 – 2010 (4)  Reber/Russell Company  Ryder, Stilwell Inc.  Asset Purchase – Financial Management Advisors, LLC  Asset Purchase – GKM Advisors, LLC 2011 – 2015 (1)  Trust Department Assets – First National Bank of Wyoming 2016 – 2020 (2)  Asset Purchase – EMC Holdings, Inc.  Branch Purchase & Assumption from Simmons Bank O ff ic e O pe ni ng s A cq ui si tio ns 2002 2024 3 5 6 9 12 10 16 12 # #Total Acquisitions Total Offices 18 13 2021 - 2022 (1)  Teton Financial Services, Inc. 2021 - 2022 (5)  Jackson Hole, WY(1)  Pinedale, WY(1)  Rock Springs, WY(1)  Bozeman, MT(5)  Phoenix, AZ(3) (1) Added through the Teton Financial Services, Inc. acquisition. Jackson Hole offices were consolidated in May 2022 (2) Lone Tree office closed in 2Q2022 (3) Phoenix loan production office opened in 4Q2022 (4) Laramie trust office closed 1Q2023 (5) Bozeman office expanded from a loan production office to a full-service office in 3Q23


 
9 Revenue Growth Strategies Expand commercial loan production platform  Building expertise in specific vertical markets  Capitalize on growing reputation to attract additional experienced commercial banking talent Expand into new markets with attractive demographics  Vail Valley office opened in 2019  Built team and revenue base to open office in Broomfield, CO in 2021  Added teams to expand presence in Arizona in 2022  Full-service Bozeman, MT office opened in 2023 Execute on revenue initiatives in existing markets  Capitalize on higher legal lending limit to expand relationships with existing clients and pursue larger commercial clients  Cross-sell MYFW’s larger offering of trust and wealth management products  Continue adding banking talent to further accelerate market share gains Execute on low- risk strategic transactions that add value to the MYFW franchise  Execute on minimally dilutive acquisitions  Leverage infrastructure through branch acquisition transactions  Proactive expansion, acquisition team


 
10 Recent M&A Transactions Branch Purchase and Assumption Whole Bank Acquisition  Closed on May 18, 2020  Acquisition of all of the Denver locations of Simmons Bank (three branches and one loan production office)  Assumed $63 million in deposits and $120 million in loans related to the acquired locations  Added scale, an attractive client base, and commercial banking talent Transaction Overview Financial Impact  Mid-teens earnings accretion in 2021 Transaction Overview  Closed on December 31, 2021  Acquisition of Teton Financial Services Inc., the holding company for Rocky Mountain Bank  Expanded First Western’s footprint and market share in Wyoming where favorable trust, estate and tax laws align well with private banking and investment management business model  Added $379 million in deposits and $252 million in loans  Added scale and improves operating efficiencies Financial Impact  High single-digit earnings accretion in 2022  Immediately accretive to TBV/share upon closing  Added low-cost deposits and higher-yielding loans that positively impacted net interest margin


 
11 Increasing Market Share Successfully attracting new banking talent and growing awareness of superior value proposition are driving increases in market share Change 2022 Market Share 2023 Market Share(1) MSA 0.23%0.77%1.00%Denver-Aurora-Centennial, CO 2.42%2.20%4.62%Fort Collins-Loveland, CO 0.33%6.83%7.16%Rock Springs, WY 0.96%0.63%1.59%Edwards, CO (1) Source: S&P Capital IQ


 
Unique Business Model 12


 
13 Unique Market Position


 
 Corporate loans to match specific needs  Well-versed in working with complex cash flows and business models  Customized treasury management products and services 14 Cross-Selling a Diverse Set of Products and Services Commercial Banking  Fiduciary wealth management with expert review of client objectives, creating solutions  Irrevocable life insurance trust, conservatorship, successor trustee, directed custodial trusteeship  WY tax-exempt asset protection, special needs trusts, escrow services, family office services  Provide a broad range of asset and sub asset classes, with automated tax and basis management  Create unique solutions through internal research, proprietary and third-party investment options  Central team creates the platform for Portfolio Managers to service clients, manage accounts  Wealth planning with specialized services (e.g. philanthropic)  Proprietary ConnectView® approach, with access to CFPs, CPAs and estate planning attorneys  Charitable giving tax strategies, deferred-compensation plans, life insurance, key person insurance  Mortgage banking specializing in purchase money, high net worth lending  Underwritten to Fannie Mae and Freddie Mac guidelines  Targeted portfolio lending and secondary sales  Retirement plan consultants partnering with businesses to sponsor retirement plans  Creative corporate retirement plan design, analysis solutions, fiduciary liability management  ERISA compliance and education Retirement / 401(k) Plan Consulting Residential Mortgage Lending Wealth Planning Investment Management Trust Our local profit centers team with specialized product experts through ConnectView®, with many points of entry


 
15 Private Bank Model Generates Strong Fee Income 5-Year Average: More than 38% of Operating Revenue Generated by Fee Income 58.5% 38.8% 36.9% 34.5% 32.0% 28.1% 26.1% 27.5% 25.3% 26.0% 18.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW UMBF WASH PGC UVSP CATC SYBT CFR TMP FFWM Noninterest Income/Operating Revenue Peer Average Source: S&P Capital IQ (2019-2023)


 
16 Wealth Management Segment Earnings (1) See Non-GAAP reconciliation $0.78 $1.52 $2.60 $3.21 $1.11$1.29 $4.15 $3.31 $2.97 $0.85 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 FY19 FY20 FY21 FY22 FY23 Wealth Management Segment Consolidated  Wealth Management segment earnings reflects contribution of private banking, commercial banking, and trust and investment management business lines  Growth in private banking, commercial banking, and trust and investment management (TIM) businesses replacing earnings generated by mortgage segment in 2020 and creating sustainable path to higher profitability over long-term Wealth Management Segment Diluted Pre-Tax Earnings Per Share(1)


 
17 Long Track Record of Superior Credit Quality • Relationship-based approach, conservative underwriting criteria, and financial strength of clients have resulted in minimal credit losses over First Western’s history  Underwriting criteria includes three sources of repayment including personal guarantees  Low LTVs and high DSCRs  67% of borrowers have deposit accounts at First Western 0.0% 0.5% 1.0% 1.5% 2.0% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Net Charge-offs as a Percent to Average Loans


 
Uninsured Deposits Represent 33.2% of Total Deposits at 06/30/24 18 Strong Client Relationships Result in Sticky Deposit Base $2,375 $2,420 $2,529 $2,532 $2,411 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2Q23 3Q23 4Q23 1Q24 2Q24 Total Deposits Stable Deposit Base During Highly Volatile Period for the Banking Industry


 
Driving Profitable Growth 19


 
20 Strong Execution on Revenue Growth Strategies  Accelerating business development, office expansion and accretive acquisitions all contributing to the balance sheet growth driving improved operating leverage and higher profitability  M&A strategy continued with acquisition of Teton Financial Services  Office expansion continued with hiring of teams to focus on Bozeman, MT market and deepen presence in Colorado and Arizona (in millions) Incremental Balance Sheet Growth (1/1/20 through 12/31/23) $1,312.9 $1,009.0 $234.7(1) $433.3 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 $1,600.0 Loans HFI Deposits Organic Growth Acquisition 155% Increase in Loans HFI 133% Increase in Total Deposits (1) Acquired growth represents remaining balances as of December 31, 2023 following payoffs/paydowns since the loans were acquired.


 
Recent Financial Trends 21


 
Overview of 2Q24 2Q24 Earnings • Net income available to common shareholders of $1.1 million or $0.11 per diluted share • Pre-tax, pre-provision net income(1) of $3.75 million compared to prior quarter of $3.65 million • Positive trends in a number of key areas Continued Execution on Strategic Priorities • Continued priority on prudent risk management and conservative approach to new loan production resulted in balance sheet remaining relatively flat in the quarter • Maintaining disciplined expense control with non-interest expense declining from prior quarter • Continued success in adding new deposit relationships • Strong contributions of non-interest income from wealth management and mortgage banking businesses Positive Trends in Key Metrics • Improving performance as the quarter progressed with loans, deposits, and net interest margin all increasing during the month of June • Continued progress on resolving problem loans • Non-performing loans declined from prior quarter • Net charge-offs/average loans were 0.00% • Further increase in tangible book value per share(1) 1. See Non-GAAP reconciliation 22


 
23 Net Income Available to Common Shareholders and Earnings per Share • Net income of $1.1 million, or $0.11 diluted earnings per share, in 2Q24 • Pre-tax, pre-provision(1) net income consistent with prior quarter and same period of prior year • Tangible book value per share(1) increased approximately 0.2% to $22.27 Net Income Available to Common Shareholders Diluted Earnings per Share 1. See Non-GAAP reconciliation


 
24 Loan Portfolio • Total loans held for investment decreased $19.5 million from prior quarter • Decrease due to limited new production that was more than offset by payoffs • New loan production improved in 2Q24 to $50 million with focus primarily on lending to clients that also bring deposits to the bank • Average rate on new loan production of 8.35% was higher than average rate of loans paying off and accretive to NIM 2Q241Q242Q23 $ 143,720$ 151,178$ 150,679Cash, Securities and Other 15,64518,55621,866Consumer and Other 309,146333,284313,227Construction and Development 904,569910,129878,6701-4 Family Residential 609,790562,862561,880Non-Owner Occupied CRE 189,353194,338218,651Owner Occupied CRE 277,973297,573338,679Commercial and Industrial $ 2,450,196$ 2,467,920$ 2,483,652Total 10,49412,27618,274Loans accounted for at fair value(2) $ 2,460,690$ 2,480,196$ 2,501,926Total Loans HFI 26,85610,47019,746Loans held-for-sale (HFS) $ 2,487,546$ 2,490,666$ 2,521,672Total Loans 1. Represents unpaid principal balance. Excludes deferred (fees) costs, and amortized premium/ (unaccreted discount). 2. Excludes fair value adjustments on loans accounted for under the fair value option. ($ in thousands, as of quarter end) Loan Portfolio Composition(1) Loan Portfolio Details Loan Production & Loan Payoffs Total Loans(1) Average Period End ($ in millions)


 
25 Total Deposits • Average deposits decreased $41 million and period end deposits decreased $121 million from the prior quarter. The deposit decline was primarily driven by seasonal tax payments, operating account fluctuations and clients using liquidity for strategic investments • Success in new business development, with $22 million from new deposit relationships added in 2Q24 • Growth in time deposits as clients moved funds from lower-yielding deposit accounts to lock in higher rates 2Q241Q242Q23 $ 1,342,753$ 1,503,598$ 1,297,732Money market deposit accounts 519,597442,834376,147Time deposits 135,759132,415168,537NOW 16,08118,88718,737Savings accounts 396,702434,236514,241Noninterest-bearing accounts $ 2,410,892$ 2,531,970$ 2,375,394Total Deposits Deposit Portfolio Composition Total Deposits Average Period End


 
26 Trust and Investment Management • Total assets under management decreased 1.8% during the quarter to $7 billion, however have increased 7.8% from 2Q23 • The decrease in AUM during the quarter was driven by asset withdrawals in custody accounts that have minimal impact on Trust and Investment Management fees • The increase from 2Q23 was primarily attributed to improving market conditions resulting in an increase in the value of AUM (in millions, as of quarter end) Total Assets Under Management


 
1. See Non-GAAP reconciliation Gross Revenue Gross Revenue(1) Gross Revenue(1) 27 • Gross revenue(1) decreased 2% from prior quarter • Net interest income decreased 2% from prior quarter, however net interest margin improved 1 basis point • Non-interest income decreased 4% from prior quarter, however mortgage revenues increased $0.8 million quarter over quarter and $1.1 million year over year


 
28 Net Interest Income and Net Interest Margin • Net interest income decreased $0.3 million, or 1.9%, from $16.1 million in 1Q24, driven primarily by a decline in interest earning cash • Net interest margin stabilized during the quarter, with a slight increase of 1 basis point from 2.34% in 1Q24 to 2.35% in 2Q24 • Yield on interest earning assets increased 9 bps from prior quarter due to impact of new loans coming on at higher rates than loans paying off • Overnight borrowings added to offset deposit outflows that will be paid off as deposit balances increase (in thousands) Net Interest Income Net Interest Margin


 
29 Non-Interest Income • Non-interest income decreased 4.2% from prior quarter • Stable Trust and Investment Management fees and increase in Net Gain on Mortgage Loans offset by decrease in Bank Fees, which included elevated loan prepayment penalty fees in 1Q24 • Mortgage production increased to $141 million from $91 million in prior quarter, primarily due to increased home buying activity in our markets and production from mortgage loan originators hired in 2024 (in thousands) Total Non-Interest Income Trust and Investment Management Fees (in thousands)


 
30 Non-Interest Expense and Efficiency Ratio • Non-interest expense decreased to $19.0 million, primarily due to to lower legal fees resulting from continued progress on resolution of NPLs, and lower fraud losses • Non-interest expense expected to be relatively consistent over next few quarters with primary variable being incentive compensation dependent upon financial performance 1. See Non-GAAP reconciliation Total Non-Interest Expense Operating Efficiency Ratio(1) (in thousands) (1) (1) (1) (1) (1) (1)(1) (1)


 
31 Asset Quality • NPAs increased to $49.3 million due to the foreclosure on two properties held as collateral that were placed in OREO and more than offset the resulting decrease in NPLs • Past due loans declined for the second consecutive quarter • ACL/Adjusted Total Loans(1) increased to 1.12% in 2Q24 from 1.00% in 1Q24 • Continue to experience immaterial amount of credit losses Non-Performing Assets/Total Assets Net Charge-Offs/Average Loans 1. Adjusted Total Loans – Total Loans minus PPP loans and loans accounted for under fair value option; see non-GAAP reconciliation


 
32 Capital and Liquidity Overview Liquidity Funding Sources (as of 06/30/24) 1. See Non-GAAP reconciliation 2. Based on internal policy guidelines Consolidated Capital Ratios (as of 06/30/24) Tangible Common Equity / TBV per Share(1) (in thousands) Liquidity Reserves: $ 244,179Total Available Cash 33,628Unpledged Investment Securities Borrowed Funds: Secured: 551,642FHLB Available 21,048FRB Available Other: 176,380Brokered Remaining Capacity Unsecured: 29,000Credit Lines $ 1,055,877Total Liquidity Funding Sources 101.9 %Loan to Deposit Ratio (2)


 
Creating Additional Shareholder Value 33


 
34 Near-Term Outlook • Prudent risk management and conservative underwriting criteria expected to result in modest asset growth in 2024 until economic conditions improve • Deposit gathering will remain a top priority throughout the organization with increased focus on targeting deposit rich industries • Business development focus remains on full banking relationships with high quality clients who need multiple products and services First Western provides in banking, wealth management, and other areas • Upgrading of banking talent while filling open positions is having a positive impact on pipelines for loans, deposits, mortgage banking, and wealth management • Positive trends in business development, growing pipelines, and NIM expansion experienced in June expected to result in a higher level of profitability in second half of the year • Long-term approach to managing the Company will result in continued investment in talent and technology that will support continued profitable growth along with optimization of Wealth Management business to improve performance and business development • Continued progress on working through credits placed on non-performing status • Increase in TBV/share, capital ratios, and improvement in asset quality provides flexibility to consider additional options for capital utilization including stock repurchase following authorization • Strength of franchise and balance sheet enables First Western to continue capitalizing on our attractive markets to consistently add new clients, realize more operating leverage as we increase scale, generate profitable growth, and further enhance the long-term value of our franchise


 
35 Drivers of Improved Financial Performance Efficiency Ratio Asset Quality ROA and ROE  Net interest margin expanding due to increase in average yield on loans and improving deposit mix  Disciplined balance sheet management and effective business development efforts expected to result in growth in high quality loans, lower cost deposits, and fee income  Increased operating leverage through disciplined expense management  Realization of more operational efficiencies through streamlining of back office support and process improvements throughout the organization  Organization shifting more towards revenue producers without adding to headcount  Investments in technology resulting in improved efficiencies, enhanced client service, and additional revenue generation opportunities  Continued resolution of non-performing loans with minimal loss content  Disciplined underwriting criteria continues to result in strong overall asset quality with low level of losses


 
36 MYFW: Our Five Core Strengths Differentiated, Proven in the Marketplace Built-in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors  Niche-focused franchise headquartered in Denver, Colorado  Well-positioned in many attractive markets in Arizona, California, Colorado, Montana, and Wyoming  Specialized central expertise to compete with siloed national, regional firms  Delivered through local, boutique trust banking teams so clients “owned” by MYFW, not associates  Strong profit center margins at maturity, growth opportunities in current and new markets  Revenue growth over long-term in both fee income and net interest income, with neutral balance sheet  Scalable, leverageable high fixed cost, low variable cost Product and Support Centers  Operating expense investment already in place for growth and expansion  Primarily recurring trust and investment management (“TIM”) fees  Low risk, “sticky” wealth/trust business with comprehensive product offering  Multiple entry points with ConnectView® – proprietary review process to service, cross-sell  At critical mass but small market share, many current and new market opportunities  Proven ability to expand: (1) Organically, (2) By expansion and (3) By acquisition  Few large Colorado bank alternatives for investors and clients, creating lift-out opportunities  Attractive revenue and earnings growth story trading at discounted valuation  Executives are major bank/professional firm trained, with deep relationships in communities  Achieved growth through business and economic cycles, capital constraints  Healthy relationship with all regulators with strong risk management culture  CEO with proven track record for creating value in previous bank ownership


 
37 President Private Bankers Lenders Portfolio Managers Trust Officer Team-based incentives Relationship-based wealth management Many relationship managers to one client Product group specialists Holistic view of the client – ConnectView® Integrated Team Approach in Boutique Offices Working as a team to grow relationships


 
38 Organizational Structure Built for Scale Full Bank and Trust:  Aspen, CO  Boulder, CO  Cherry Creek, CO  Denver, CO  DTC/Cherry Hills, CO  Northern Colorado  Jackson Hole, WY  Rock Springs, WY  Pinedale, WY  Scottsdale, AZ  Broomfield, CO  Phoenix, AZ  Vail Valley, Avon, CO  Bozeman, MT Loan Production Offices:  Ft. Collins, CO  Greenwood Village, CO  Phoenix, AZ Trust Offices:  Century City, CA  Investment Management  Fiduciary/ Trust  Wealth Planning  Retirement Services  Insurance  Mortgage Services  Treasury Management First Western Profit Centers Product Groups Support Centers  Finance & Accounting  Risk & Compliance  Enterprise Technology  Human Capital  Credit Analysis  Bank & Trust/Investment Operations  Marketing/Branding Big operating leverage from expert, high fixed cost teams Very profitable when mature


 
39 Long-Term Goals to Drive Shareholder Value  Since our pre-2018 IPO status as of year end 2017, we have tripled total loans and total deposits, more than doubled TBV per share, had substantial increases in annual revenue, and demonstrated significant operating leverage. Looking forward we can drive shareholder value by:  Continuing to execute well, creating more operating leverage to drive high performing ROAA and ROAE results  Emphasizing our differentiation in marketplace  Growing through $5 billion in total assets, $25 billion TIM assets through both organic growth and acquisitions, ideally:  ~50 offices – infill and adjacent  Maturing at $8 million in revenue per office through growing 20%  75% contribution margin per office at maturity, then growing  Building footprint, scale and operating leverage with M&A  Disciplined approach to be significantly earnings accretive with minimal TBV dilution  Enhancing wealth management platform  Upgrade omnichannel client experience  Create new digital distribution channel Our mission is to be the BPBFWWMC – Best Private Bank for the Western Wealth Management Client We believe First Western can be a unique, niche focused regional powerhouse with high fee income and consistent strong earnings from our scalable wealth management platform


 
MYFW’s core strengths provide the foundation for driving shareholder value 40 A Unique and Attractive Investment Differentiated, Proven in the Marketplace Built-in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors


 
Appendix 41


 
Organizational Overview 42


 
Prior ExperienceYears in Industry Joined FWTitleName  Chairman & CEO, Northern Trust Bank of Colorado  Chairman & CEO, Trust Bank of Colorado  CEO, Equitable Bancshares of Colorado and Women’s Bank, Chairman, Equitable Bank  Chairman, American Fundware  President & CEO, Bank and Trust of Puerto Rico  Associate, First Boston Corporation 352002Chairman, CEO & PresidentScott C. Wylie  Executive roles within First Western with responsibility for Accounting & Finance, Risk, Technology, Operations and Human Resources  Assurance services with PricewaterhouseCoopers 222006President, Chief Operating Officer Julie A. Courkamp  Various finance roles at First Western including Finance & Treasury Manager and Director of Finance & Treasury & Cashier of the Bank  Various finance roles at Fifth Third Bank 152018Chief Financial Officer & Treasurer David R. Weber  Colorado Market President, Simmons Bank  President-Colorado, Bank SNB  Market President, Community Banks of Colorado 252020Chief Banking OfficerMatt C. Cassell  Executive roles with BBVA USA, including CRO, Dir. Risk Internal Control/ERM, Chief Credit Policy Officer, Dir. Risk & Portfolio Management  Wells Fargo & Bank of America: Various roles in client facing and underwriting/portfolio management positions 302024Chief Risk OfficerEric E. Ensmann 43 Team: Ready to Take MYFW to the Next Level


 
Primary BusinessDirector SinceName  First Western Financial, Inc.2002Scott C. Wylie  Former Finance Executive at Arconic, Inc. (fka Alcoa Inc.)  Former audit partner at Deloitte  Board member & Audit Committee chair for FCF (NYSE) 2017Julie A. Caponi, CPA(1)  First Western Financial, Inc.2021Julie A. Courkamp  Energy  Winery Executive, Silver Oak Cellars  Entrepreneur, board member, business leader 2011David R. Duncan  Real Estate Developer  Specialty Retail Executive  Family business, PE investing across broad range of industries 2013Thomas A. Gart  Real Estate Developer  Home Builder Executive  Entrepreneur, business/community leader, real estate expertise 2004Patrick H. Hamill  Utility Maintenance  Construction Executive  Family business, public bank board 2015Luke A. Latimer  President, U.S. Engineering, Metalworks  President of several successful manufacturing companies  Six Sigma Master Black Belt 2021Scott C. Mitchell  Principal and Founder of the Robinson Coaching Group, Inc  Leadership development and coaching  Professional Coach Certification 2024Ellen S. Robinson  Real Estate Developer  Entrepreneur, community leadership, real estate expertise 2002Mark L. Smith  Family Office Executive  Corporate leadership, board, and investment management 2004Joseph C. Zimlich, CPA 44 MYFW’s Sophisticated Board of Directors (1) CPA license inactive.


 
Non-GAAP Reconciliations 45


 
46 Non-GAAP Reconciliation For the Years Ended,Consolidated Gross Revenue 20232022202120202019201820172016(Dollars in thousands) $82,698$107,934$95,408$92,615$63,997$57,602$54,501$53,394 Total income before non-interest expense (22)342(21)1521(15)-- Less: Unrealized gains/(losses) recognized on equity securities (2,010)(891)------ Less: net gain/(loss) on loans accounted for under the fair value option -7489-119-81114Less: Net gain on equity interests ----183---Less: Net gain on sale of assets (178)(12)------ Less: Net gain on loans held for sale 10,3553,6821,2304,682662180788985Plus: Provision for credit losses $95,263$112,170$96,170$97,282$64,336$57,797$55,208$54,265Gross revenue For the Twelve Months Ended December 31,Consolidated Adjusted Pre-tax, Pre- provision Income 20232022202120202019201820172016(Dollars in thousands) $7,061$28,828$27,280$33,063$10,192$7,422$5,007$3,571 Net Income before income tax, as reported 10,3553,6821,2304,682662180788 985 Plus: Provision for credit losses $17,416$32,510$28,510$37,745$10,854$7,602$5,795 $4,556 Pre-tax, Pre-provision Income For the Twelve Months ended December 31,Diluted Pre-Tax Earnings Per Share 202320222021202020192018(Dollars in thousands) $9,591$31,139$21,378$12,086$6,152$8,664Non-Mortgage income before income tax 1,249-----Plus: Impairment of contingent consideration assets (2,530)(2,311)5,90220,9784,040(1,242)Mortgage income before income tax 1,8367,1306,6708,5292,1831,775Less: Income tax expense including acquisition tax effect $6,474$21,698$20,610$24,535$8,009$5,647Net income available to common shareholders 9,725,9109,713,6238,235,1787,961,9047,914,9615,586,620Diluted weighted average shares $1.11$3.21$2.60$1.52$0.78$1.55 Non-Mortgage Segment Diluted Pre-Tax Earnings Per Share $0.85$2.97$3.31$4.15$1.29$1.33Consolidated Diluted Pre-Tax Earnings Per Share


 
47 Non-GAAP Reconciliation For the Years Ended,Consolidated Efficiency Ratio 20232022202120202019201820172016(Dollars in thousands) $75,637$79,106$68,128$59,552$53,806$50,182$49,494$49,823Non-interest expense 2503081714374831784747Less: Amortization ----1,572---Less: Goodwill impairment ---176----Less: Provision on other real estate owned ---553----Less: Loss on assets held for sale ---62---- Plus: Gain on sale of LA fixed income team $75,387$78,798$68,111$58,871$51,860$49,351$48,710$49,076Adjusted non-interest expense 71,105$83,204$56,509$46,102$32,061$30,624$27,576$24,457Net interest income 21,94828,41240,12951,19532,59827,15827,71329,922Non-interest income (22)342(21)1521(15)-- Less: Unrealized gains/(losses) recognized on equity securities (2,010)(891)------ Less: net gain/(loss) on loans accounted for under the fair value option -7489-119-81114Less: Net gain on equity interests ----183---Less: Net gain on sale of assets (178)(12)------Less: Net gain on loans held for sale $95,263$112,170$96,170$97,282$64,336$57,797$55,208$54,265Total income 79.1%70.2%70.8%60.5%80.6%85.4%88.2%90.4%Efficiency ratio


 
48 Non-GAAP Reconciliation Diluted Pre-Tax Earnings Per Share December 31, 2023September 30, 2023June 30, 2023March 31, 2023December 31, 2022(Dollars in thousands) $(3,695)$5,102$2,429$5,971$8,168Non-Mortgage income before income tax --1,249--Plus: Impairment of contingent consideration assets (662)(880)(394)(810)(867)Mortgage income before income tax (1,138)1,1048541,3411,830Less: Income tax expense $(3,219)$3,118$2,430$3,820$5,417Net income available to common shareholders 9,572,5829,743,2709,686,4019,732,6749,702,908Diluted weighted average shares $(0.39)$0.52$0.38$0.61$0.84 Non-Mortgage Segment Diluted Pre-Tax Earnings Per Share $(0.46)$0.43$0.34$0.53$0.75Consolidated Diluted Pre-Tax Earnings Per Share


 
49 Non-GAAP Reconciliation As of,Consolidated Tangible Common Book Value Per Share June 30, 2024March 31, 2024Dec. 31, 2023Dec. 31, 2022Dec. 31, 2021Dec. 31, 2020Dec. 31, 2019(Dollars in thousands) $ 246,875$ 245,528$ 242,738$ 240,864$ 219,041$ 154,962$ 127,678Total shareholders' equity Less: 31,74131,79731,85432,10431,90224,25819,714Goodwill and other intangibles, net ——————3,553Intangibles held for sale(1) $ 215,134$ 213,731$ 210,884$ 208,760$ 187,139$ 130,704$ 104,411Tangible common equity 9,660,5499,621,3099,581,1839,495,4409,419,2717,951,7737,940,168Common shares outstanding, end of period $ 22.27$ 22.21$ 22.01$ 21.99$ 19.87$ 16.44$ 13.15Tangible common book value per share $ 1,076Net income available to common shareholders 2.00 %Return on tangible common equity (annualized) 1. Represents the intangible portion of assets held for sale For the Three Months Ended,Consolidated Efficiency Ratio June 30, 2024March 31, 2024December 31, 2023September 30, 2023June 30, 2023(Dollars in thousands) $ 19,001$ 19,696$ 18,276$ 18,314$ 18,519Non-interest expense 5657626262Less: amortization $ 18,945$ 19,639$ 18,214$ 18,252$ 18,457Adjusted non-interest expense $ 15,778$ 16,070$ 16,331$ 16,766$ 18,435Net interest income 6,9727,2776,0816,0993,962Non-interest income (2)(6)(2)(19)(11)Less: unrealized gains/(losses) recognized on equity securities ————(1,249)Less: impairment of contingent consideration assets (315)(302)(91)(252)(1,124) Less: net gain/(loss) on loans accounted for under the fair value option —————Less: net gain on equity interests —117———Less: net (loss)/gain on loans held for sale at fair value $ 7,289$ 7,468$ 6,174$ 6,370$ 6,346Adjusted non-interest income $ 23,067$ 23,538$ 22,505$ 23,136$ 24,781Total income 82.13 %83.44 %80.93 %78.89 %74.48 %Efficiency ratio


 
50 Non-GAAP Reconciliation For the Three Months Ended,Wealth Management Gross Revenue June 30, 2024March 31, 2024December 31, 2023September 30, 2023June 30, 2023(Dollars in thousands) $ 18,242$ 21,890$ 13,362$ 21,647$ 19,529Total income before non-interest expense (2)(6)(2)(19)(11) Less: unrealized gains/(losses) recognized on equity securities ————(1,249)Less: impairment of contingent consideration assets (315)(302)(91)(252)(1,124) Less: net gain/(loss) on loans accounted for under the fair value option —————Less: net gain on equity interests —117———Less: net (loss)/gain on loans held for sale at fair value 2,334728,4933291,843Plus: (release) provision for credit loss $ 20,893$ 22,153$ 21,948$ 22,247$ 23,756Gross revenue For the Three Months Ended,Mortgage Gross Revenue June 30, 2024March 31, 2024December 31, 2023September 30, 2023June 30, 2023(Dollars in thousands) $ 2,174$ 1,385$ 557$ 889$ 1,025Total income before non-interest expense —————Plus: provision for credit loss $ 2,174$ 1,385$ 557$ 889$ 1,025Gross revenue For the Three Months Ended,Consolidated Gross Revenue June 30, 2024March 31, 2024December 31, 2023September 30, 2023June 30, 2023(Dollars in thousands) $ 20,416$ 23,275$ 13,919$ 22,536$ 20,554Total income before non-interest expense (2)(6)(2)(19)(11) Less: unrealized gains/(losses) recognized on equity securities ————(1,249)Less: impairment of contingent consideration assets (315)(302)(91)(252)(1,124) Less: net gain/(loss) on loans accounted for under the fair value option —————Less: net gain on equity interests —117———Less: net (loss)/gain on loans held for sale at fair value 2,334728,4933291,843Plus: (release) provision for credit loss $ 23,067$ 23,538$ 22,505$ 23,136$ 24,781Gross revenue Gross Revenue excluding net gain on mortgage loans June 30, 2024March 31, 2024June 30, 2023(Dollars in thousands) $ 23,067$ 23,538$ 24,781Gross revenue 1,8201,264774Less: net gain on mortgage loans $ 21,247$ 22,274$ 24,007Gross revenue excluding net gain on mortgage loans


 
51 Non-GAAP Reconciliation As ofAllowance for credit losses to Bank originated loans excluding PPP June 30, 2024March 31, 2024December 31, 2023September 30, 2023June 30, 2023(Dollars in thousands) $ 2,460,690$ 2,480,196$ 2,536,140$ 2,536,503$ 2,501,926Total loans held for investment 3,1293,7794,3434,8765,558Less: PPP loans 10,49412,27614,12916,10518,274 Less: Purchased loans accounted for under fair value ("FVO") $ 2,447,067$ 2,464,141$ 2,517,668$ 2,515,522$ 2,478,094Adjusted Loans excluding acquired, PPP and FVO 27,31924,63023,93123,17522,044Allowance for credit losses 1.12 %1.00 %0.95 %0.92 %0.89 %Allowance for credit losses to adjusted loans For the Three Months Ended, Pre-tax, pre-provision net income June 30, 2024March 31, 2024June 30, 2023(Dollars in thousands) $ 1,415$ 3,579$ 2,035Income before income taxes 2,334721,843Plus: provision (release) for credit losses $ 3,749$ 3,651$ 3,878Pre-tax, pre-provision (release) net income


 
v3.24.2
Cover Page
Jul. 29, 2024
Cover [Abstract]  
Document Type 8-K
Document Period End Date Jul. 29, 2024
Entity Registrant Name FIRST WESTERN FINANCIAL, INC.
Entity Incorporation, State or Country Code CO
Entity File Number 001-38595
Entity Tax Identification Number 37-1442266
Entity Address, Address Line One 1900 16th Street
Entity Address, Address Line Two Suite 1200
Entity Address, City or Town Denver
Entity Address, State or Province CO
Entity Address, Postal Zip Code 80202
City Area Code 303
Local Phone Number 531.8100
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity Emerging Growth Company false
Title of 12(b) Security Common Stock, no par value
Trading Symbol MYFW
Security Exchange Name NASDAQ
Entity Central Index Key 0001327607
Amendment Flag false

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