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TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

Table of Contents

As filed with the Securities and Exchange Commission on July 9, 2018.

Registration No. 333-225719

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549



Amendment No. 2
to

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



FIRST WESTERN FINANCIAL, INC.
(Exact Name of Registrant as Specified in Its Charter)



Colorado
(State or Other Jurisdiction of
Incorporation or Organization)
  6022
(Primary Standard Industrial
Classification No.)
  37-1442266
(I.R.S. Employer
Identification No.)

1900 16th Street, Suite 1200
Denver, Colorado 80202
(303) 531-8100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

Scott C. Wylie
Chairman, Chief Executive Officer and President
1900 16th Street, Suite 1200
Denver, Colorado 80202
(303) 531-8100
(Name, address, including zip code, and telephone number, including area code, of agent for service)



Copies to:

Michael G. Keeley, Esq.
Paul Conneely, Esq.
Norton Rose Fulbright US LLP
2200 Ross Ave., Suite 3600
Dallas, TX 75201
(214) 855-3906
(214) 855-8200 (facsimile)

 

Brian H. Blaney, Esq.
Katherine A. Beck, Esq.
Greenberg Traurig, LLP
2375 East Camelback Road, Suite 700
Phoenix, AZ 85016
(602) 445-8322
(602) 445-8603 (facsimile)



Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.

           If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

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

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

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

           Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o   Accelerated filer o   Non-accelerated filer ý
(Do not check if a
smaller reporting company)
  Smaller reporting company o

Emerging growth company ý

           If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ý

CALCULATION OF REGISTRATION FEE

               
 
Title of Each Class of Securities
to be Registered

  Amount to Be
Registered(1)

  Proposed Maximum
Price Per Share(2)

  Proposed Maximum
Aggregate Offering
Price(2)

  Amount of
Registration Fee(3)

 

Common Stock, no par value

  2,127,500   $21.00   $44,677,500   $5,562

 

(1)
Includes the aggregate offering price of 277,500 additional shares of common stock that the underwriters have the option to purchase from the Registrant in this offering.

(2)
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933, as amended.

(3)
Of this amount, $3,113 has previously been paid by the Registrant.



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

   


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The information in this preliminary prospectus is not complete and may be changed. Neither we nor the selling shareholders may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to completion, dated July 9, 2018

PRELIMINARY PROSPECTUS

1,850,000 Shares

LOGO

Common Stock

        This prospectus relates to the initial public offering of First Western Financial, Inc.'s common stock. We are a financial holding company for First Western Trust Bank, with operations in Colorado, Arizona, Wyoming and California. We are offering 1,500,527 shares of our common stock and the selling shareholders identified in this prospectus are offering 349,473 shares of our common stock. We will not receive any proceeds from the sale of such shares by the selling shareholders.

        Prior to this offering there has been no established public market for our common stock. We currently estimate that the initial public offering price of our common stock will be between $19.00 and $21.00 per share. We have applied to list our common stock on the Nasdaq Global Select Market under the symbol "MYFW."

        Investing in our common stock involves a high degree of risk. See "Risk Factors" beginning on page 28 of this prospectus.

        We are an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012 and are eligible for reduced public company reporting requirements. See "Implications of Being an Emerging Growth Company."

 
  Per share   Total  

Initial public offering price

  $     $    

Underwriting discounts and commissions(1)

  $     $    

Proceeds, before expenses, to us

  $     $    

Proceeds, before expenses, to the selling shareholders

  $     $    

(1)
See "Underwriting" for additional information regarding the underwriting discounts and commissions and certain expenses payable to the underwriters by us.

        We have granted the underwriters an option for a period of 30 days following the date of this prospectus to purchase up to an additional 277,500 shares of our common stock from us on the same terms set forth above.

        Neither the Securities and Exchange Commission, nor any state securities commission nor any other regulatory authority has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

        Our common stock is not a deposit or savings account. Our common stock is not insured by the Federal Deposit Insurance Corporation or any other governmental agency or instrumentality.

        The underwriters expect to deliver the shares of our common stock to purchasers on or about                        , 2018, subject to customary closing conditions.

Keefe, Bruyette & Woods   Stephens Inc.
A Stifel Company    

Sandler O'Neill + Partners, L.P.



   

The date of this prospectus is                          , 2018


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TABLE OF CONTENTS

 
  Page  

About this Prospectus

    ii  

Market and Industry Data

    ii  

Implications of Being an Emerging Growth Company

    iii  

Prospectus Summary

    1  

The Offering

    17  

Selected Historical Consolidated Financial and Other Data

    20  

Unaudited Pro Forma Consolidated Financial Information

    25  

Risk Factors

    28  

Cautionary Note Regarding Forward-Looking Statements

    56  

Use of Proceeds

    59  

Dividend Policy

    60  

Capitalization

    61  

Dilution

    63  

Price Range of Our Common Stock

    65  

Business

    66  

Management's Discussion and Analysis of Financial Condition and Results of Operations

    85  

Management

    131  

Executive Compensation

    143  

Principal and Selling Shareholders

    153  

Certain Relationships and Related Persons Transactions

    156  

Description of Capital Stock

    161  

Description of Certain Indebtedness

    171  

Shares Eligible for Future Sale

    173  

Supervision and Regulation

    175  

Certain Material U.S. Federal Income Tax Consequences for Non-U.S. Holders of Common Stock

    187  

Underwriting

    191  

Legal Matters

    197  

Experts

    197  

Where You Can Find More Information

    197  

Index to Financial Statements

    F-1  

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ABOUT THIS PROSPECTUS

        In this prospectus, unless otherwise indicated or the context otherwise requires, all references to "we," "our," "us," "ourselves," "First Western," and "the Company" refer to First Western Financial, Inc., a Colorado corporation, and its consolidated subsidiaries. All references in this prospectus to "First Western Trust Bank," "the Bank," or "our Bank" refer to First Western Trust Bank, our wholly owned bank subsidiary, and all references in this prospectus to "FWCM" refer to "First Western Capital Management Company," our wholly owned, registered investment advisor subsidiary.

        You should rely only on the information contained in this prospectus and any free writing prospectus prepared by us or on our behalf that we have referred you to. We and the underwriters have not authorized anyone to provide you with additional or different information. If anyone provides you with additional, different or inconsistent information, you should not rely on it. We, the selling shareholders and the underwriters take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. This prospectus is an offer to sell only the shares offered hereby, and only under circumstances and in jurisdictions where it is lawful to do so. We, the selling shareholders and the underwriters are not making an offer of these securities in any state, country or other jurisdiction where the offer is not permitted. You should not assume that the information in this prospectus or any free writing prospectus is accurate as of any date other than the date of the applicable document regardless of its time of delivery or the time of any sales of our common stock. Our business, financial condition, results of operations and cash flows may have changed since the date of the applicable document.

        This prospectus describes the specific details regarding this offering and the terms and conditions of our common stock being offered hereby and the risks of investing in our common stock. For additional information, please see the section entitled "Where You Can Find More Information."

        You should not interpret the contents of this prospectus or any free writing prospectus to be legal, business, investment or tax advice. You should consult with your own advisors for that type of advice and consult with them about the legal, tax, business, financial and other issues that you should consider before investing in our common stock.

        Unless otherwise stated, all information in this prospectus assumes that the underwriters have not exercised their option to purchase additional shares of common stock.


MARKET AND INDUSTRY DATA

        This prospectus includes industry and trade association data, forecasts and information that we have prepared based, in part, upon data, forecasts and information obtained from independent trade associations, industry publications and surveys, government agencies and other independent information publicly available to us. Statements as to our market position are based on market data currently available to us. Industry publications and surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable. Although we believe these sources are reliable, we have not independently verified the information obtained from these sources. Some data is also based on our good faith estimates, which are derived from management's knowledge of the industry and independent sources. We believe our internal research is reliable, even though such research has not been verified by any independent sources. While we are not aware of any misstatements regarding our industry data presented herein, our estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading "Risk Factors" in this prospectus. In addition, forward-looking information obtained from these sources is subject to the same qualifications and the additional uncertainties regarding the other forward-looking statements in this prospectus. Trademarks used in this prospectus are the property of their respective owners, although for presentational convenience we may not use the ® or the ™ symbols to identify such trademarks.

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IMPLICATIONS OF BEING AN EMERGING GROWTH COMPANY

        We are an "emerging growth company" as defined in the Jumpstart our Business Startups Act of 2012 (the "JOBS Act"). For as long as we are an emerging growth company, unlike other public companies that are not emerging growth companies under the JOBS Act, we are not required to:

    Provide an auditor's attestation report on our system of internal control over financial reporting;

    Provide more than two years of audited financial statements and related management's discussion and analysis of financial condition and results of operations in this Form S-1;

    Comply with any new requirements adopted by the Public Company Accounting Oversight Board, or the PCAOB, requiring mandatory audit firm rotation or a supplement to the auditor's report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer;

    Provide certain disclosure regarding executive compensation required of larger public companies or hold shareholder advisory votes on executive compensation as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act"); or

    Obtain shareholder approval of any golden parachute payments not previously approved.

        We will cease to be an "emerging growth company" upon the earliest of:

    The last day of the fiscal year in which we have $1.07 billion or more in annual revenues;

    The date on which we become a "large accelerated filer" (the fiscal year end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30);

    The date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or

    The last day of the fiscal year following the fifth anniversary of our initial public offering.

        We have elected to adopt the reduced disclosure requirements above for purposes of the registration statement of which this prospectus is a part. In addition, we expect to take advantage of certain of the reduced reporting and other requirements of the JOBS Act with respect to the periodic reports we will file with the Securities and Exchange Commission (the "SEC") and proxy statements that we use to solicit proxies from our shareholders.

        In addition, Section 107 of the JOBS Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, or the Securities Act, for complying with new or revised accounting standards, but we have irrevocably opted out of the extended transition period, and as a result, we will adopt new or revised accounting standards on the relevant dates in which adoption of such standards is required for other public companies.

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PROSPECTUS SUMMARY

        This summary highlights selected information contained elsewhere in this prospectus. It does not contain all the information that you should consider before deciding to invest in our common stock. You should read the entire prospectus carefully, including the sections titled "Risk Factors," "Cautionary Note Regarding Forward-Looking Statements" and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and the historical consolidated financial statements and the accompanying notes included in this prospectus, before deciding to purchase our common stock in this offering.

Our Company

        First Western Financial, Inc. is a financial holding company headquartered in Denver, Colorado. We provide a fully integrated suite of wealth management services on our private trust bank platform, which includes a comprehensive selection of deposit, loan, trust, wealth planning and investment management products and services. We believe our integrated business model distinguishes us from other banks and non-bank financial services companies in the markets in which we operate. As of March 31, 2018, we provided fiduciary and advisory services on $5.4 billion of trust and investment management assets (referred to as "AUM"), and we had total assets of $991.6 million, total loans of $817.3 million, total deposits of $818.2 million and total shareholders' equity of $104.2 million.

        Our mission is to be the best private bank for the Western wealth management client. We believe that the "Western wealth management client" shares our entrepreneurial spirit and values our sophisticated, high-touch wealth management services that are tailored to meet their specific needs. Our target clients include successful entrepreneurs, professionals and other high net worth individuals or families, along with their businesses and philanthropic organizations. We offer our services through a branded network of boutique private trust bank offices, which we believe are strategically located in affluent and high-growth markets in thirteen locations across Colorado, Arizona, Wyoming and California.

        We generate a significant portion of our revenues from non-interest income, which we produce primarily from our trust, investment management and other advisory services as well as through the origination and sale of mortgage loans. The balance of our revenue we generate from net interest income, which we derive from our traditional banking products and services. For the year ended December 31, 2017, non-interest income was $27.7 million, or 50.1% of gross revenue (which is our total income before non-interest expense, less gains on securities sold, plus provision for credit losses), and net interest income was $27.6 million, or 49.9% of gross revenue. For the quarter ended March 31, 2018 non-interest income was $7.3 million, or 49.8% of gross revenue, and net interest income was $7.4 million, or 50.2% of gross revenue, as indicated in the diagram below:

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        We believe that we have developed a unique approach to private banking to best serve our Western wealth management clients primarily as a result of the combination of the following factors:

    Offering sophisticated wealth management products and services, including traditional banking as well as trust, wealth planning, investment management and other related services, often provided by larger financial institutions with the high-touch and personalized experience that is typically associated with community and trust banks;

    Delivering services through our strategically located private trust bank offices, which we refer to internally as "profit centers"; and

    Using our relationship-based team approach to become a "trusted advisor" to our clients by understanding their investment management, ultimate goals and banking needs and tailoring our products and services to meet those needs.

Our History and Growth

        We were founded in 2002 by our Chairman, Chief Executive Officer and President, Scott C. Wylie, and a group of local business leaders with the vision of building the best private bank for the Western wealth management client. Since opening our first profit center in Denver, Colorado in 2004, we have grown organically primarily by establishing thirteen offices, attracting new clients and expanding our relationships with existing clients, as well as through a series of ten strategic acquisitions of various trust, registered investment advisory and other financial services firms. The following timeline illustrates how we developed our current footprint through de novo office openings and acquisitions since opening our first profit center in 2004.

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Office Openings

        Historically, we have used two primary models to expand our footprint and open new offices. We have been successful starting de novo profit centers. In markets where we have identified well-respected

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registered investment advisors (referred to as a "RIA"), we seek to acquire the RIA and augment the RIA's existing services with our wealth management private trust bank platform. Examples of each expansion model are described below:

    De Novo Profit Centers—In our Aspen, Colorado profit center, we hired local banking professionals to lead our de novo expansion into that market. Since its inception in October 2015, our Aspen profit center has increased gross loans, total deposits and AUM to $50.5 million, $43.2 million and $38.9 million, respectively, at March 31, 2018. In our Jackson Hole, Wyoming profit center, we hired local investment management leaders and added our fully integrated suite of wealth management services on our private trust bank platform. Since we hired such team in January 2014, the Jackson Hole profit center has increased gross loans, total deposits and AUM to $26.2 million, $39.0 million and $260.4 million, respectively, at March 31, 2018. We believe the investments we have made in our two latest, less mature profit centers in Jackson Hole, Wyoming and Aspen, Colorado provide the foundation for future organic growth and high contribution margins consistent with our more mature profit centers.

    RIA Acquisition—We acquired an existing RIA and trust company to open our Fort Collins, Colorado profit center in 2004. Our Fort Collins profit center has increased gross loans from $22.5 million at December 31, 2005 to $71.2 million at March 31, 2018 and increased total deposits from $7.7 million at December 31, 2005 to $108.0 million at March 31, 2018.

Balance Sheet Growth

        Since opening our first profit center in 2004, we have also experienced growth in gross loans, total deposits and AUM throughout various economic cycles. From 2004 to 2008, which we refer to as our "Growth & Expansion" period in the chart below, we experienced significant growth in our gross loans, total deposits and assets under management primarily through the opening of six profit centers and organic growth, enhanced with seven acquisitions.

        From 2009 to 2013, which we refer to as our "Conservative Growth" period in the chart below due to difficult economic and industry conditions prevalent at such time, growth in gross loans, total deposits and assets under management was limited as we focused our efforts on integrating prior acquisitions, opening three new profit centers and improving our asset quality. During this time, we strengthened our regulatory capital position through a number of preferred stock and subordinated debt offerings, which limited dilution to our common shareholders.

        From 2013 to March 31, 2018, which we refer to as our "Capital Constrained Growth" period in the chart below, we have strategically focused our efforts on building our team, distribution channels and products for improved growth and earnings, while managing our balance sheet to stay below $1.0 billion in assets in order to retain the benefits available to us under the Small Bank Holding Company Policy Statement of the Board of Governors of the Federal Reserve System (referred to as the "Federal Reserve"), including not being subject to consolidated capital ratio requirements under Basel III.

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        Since December 31, 2013, we have increased gross loans from $484.7 million at December 31, 2013 to $817.3 million at March 31, 2018, and we have increased total deposits from $561.2 million at December 31, 2013 to $818.2 million at March 31, 2018.

Gross Loans ($ millions)   Total Deposits ($ millions)

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Revenue, Expense & Pre-Tax, Pre-Provision Income Growth

        Since December 31, 2013, we have increased gross revenues from $42.4 million for the year ended December 31, 2013 to $55.2 million for the year ended December 31, 2017, representing a CAGR of 6.8%, while total non-interest expense increased from $41.4 million for the year ended December 31, 2013 to $49.5 million for the year ended December 31, 2017, representing a CAGR of 4.6%. This 148% operating leverage (which we calculate as the ratio of gross revenue CAGR to total non-interest expense CAGR) has resulted in improved pre-tax, pre-provision income, which increased 6.5 times over the same time period. We believe that while the higher fixed costs of our product groups have limited our earnings, we have demonstrated significant operating leverage by growing pre-tax, pre-provision income at a faster rate than expenses. Pre-tax, pre-provision income is a non-GAAP measure. The nearest GAAP measure is income before income tax, which was $5.0 million for the year ended December 31, 2017. See "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures." Pre-tax, pre-provision income increased from $0.9 million for the year ended December 31, 2013 to $5.8 million for the year ended December 31, 2017, as indicated in the charts below. In addition, we have increased our quarterly

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pre-tax, pre-provision income from $1.0 million in the three months ended March 31, 2017 to $1.4 million in the three months ended March 31, 2018.

Pre-Tax, Pre-Provision Income ($ millions)   Pre-Tax, Pre-Provision Income ($ millions)

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Capitalization

        Our current capital structure is set forth in the chart below. We intend to use a portion of our proceeds from this offering and available cash on hand or borrowings under our existing credit facility to redeem all outstanding shares of our preferred stock and all of our subordinated notes due 2020. For the year ended December 31, 2017, we paid a total of $2.3 million in dividends to our preferred shareholders and $0.6 million in interest on our subordinated notes due 2020. Although we intend to use a portion of the net proceeds of this offering to redeem all outstanding shares of our preferred stock and all of our subordinated notes due 2020, the redemption of such securities is subject to regulatory approval, and accordingly, no assurance can be given as to when we will be able to redeem such securities, if at all. See "Use of Proceeds" and "Capitalization" for further information. The chart below sets forth our capitalization as of March 31, 2018.

Capital Structure (As of March 31, 2018)
  Amount
($ millions)
  Conversion
Price
($)
  Dividend /
Coupon
(%)
  Common
Shares if
Converted
  Maturity
Date/ Date
Redeemable
 

Subordinated Debt

                               

Subordinated Notes due 2020

  $ 6.9         8.00 %       7/31/2020  

Subordinated Notes due 2026

    6.6         7.25 %       12/31/2026  

Total

  $ 13.5                          

Preferred Equity

                               

Cumulative Perpetual Preferred Stock, Series A

  $ 8.6         9.00 %       2/15/2012  

Cumulative Perpetual Preferred Stock, Series B

    0.4         9.00 %       2/15/2012  

Cumulative Perpetual Preferred Stock, Series C

    11.9         9.00 %       2/15/2013  

Noncumulative Perpetual Convertible Preferred Stock, Series D

    4.1   $ 27.00     9.00 %   151,700     7/20/2017  

Total

  $ 25.0                          

Common Equity

                               

Common Equity

  $ 79.2                  

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Our Service Model and Products

        We deliver a broad array of wealth management products and services through our profit centers using our proprietary ConnectView® approach, which looks holistically across a client's current and projected financial situation. We believe providing financial solutions in one area (such as estate, retirement planning or lending) often impacts other areas of our clients' wealth planning (such as risk or balance sheet management), which provides us opportunities to evaluate proposed solutions across multiple business lines and offer additional services to our clients.

        We have designed our business around having each profit center staffed with seasoned management. Typically, each profit center team is led by a president, who is a senior investment advisor or banker with strong client relationships and sales and leadership skills. The local team includes deposit, loan, trust, wealth planning, and related professionals, creating a strong interdisciplinary sales and service team. In addition to this service team, we recently added wealth advisors as a commissioned sales force to several profit centers to enhance our acquisition of new clients. Beyond traditional banking, trust and investment management activities, at each profit center we provide:

    Consumer, mortgage and commercial lending;

    Treasury management;

    Risk management in the form of life insurance and annuities;

    Specialized philanthropic services;

    Retirement services, including 401(k) plan consulting; and

    Other complementary wealth management products and services.

        Our profit centers are supported by central specialized product expertise of our "product groups," which include experienced professionals in commercial banking, investment management, wealth planning, risk management/insurance, personal trust, retirement planning and mortgage lending. We believe that the sophistication of our product groups rivals the offerings and experts typically provided by larger financial institutions. Our product groups are led and staffed with highly accredited and well known professionals, each with significant experience in their fields.

        Our profit centers and product groups are also supported centrally by teams providing management services such as operations, risk management, credit administration, technology support, human capital and accounting/finance services, which we refer to as "support centers." Our employees, which we refer to as "associates," in our support centers have significant experience in wealth management, investment advisory, and commercial banking, including areas such as lending, underwriting, credit administration, risk management, accounting/finance, operations and information technology. We have structured our teams, services and product offerings to provide our clients with a high-touch, solution-oriented experience, that we believe is scalable and provides operating leverage for future growth.

        To demonstrate how these three groups—profit centers, product groups and support centers—work together to deliver a highly competitive product offering through a team of local professionals, our investment management offering is an example:

    In each profit center, there are one or more portfolio managers that work as part of that local team's sales and service delivery. These portfolio managers are typically Certified Financial Planners with experience in wealth planning and portfolio construction. They meet with clients and develop an overall wealth management strategy, specific goals and objectives, an investment policy statement, and an implementation plan. They use our guided architecture, a diverse array of select

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      third party and proprietary investment products covering a broad range of asset classes, as their source for structure, asset allocation and products.

    Our investment platform is controlled by our central investment management product group, which has a strong research focus and many of whom have Chartered Financial Analyst designations, with oversight by our Chief Investment Officer and our Investment Policy Committee.

    Operational support for these profit center and product group teams is provided by our central trust and investment management support center team.

Our Management

        The members of our board of directors have demonstrated significant executive management and board leadership experience across a diverse range of industries, including financial services, private equity, manufacturing, family office, real estate, accounting, legal and insurance. Most of our board members have been invested in First Western since our inception, and as of June 30, 2018, our board members and associates beneficially owned, in the aggregate, approximately 30.4% of the outstanding shares of our common stock at such time.

        Our board of directors governs our experienced senior leadership team, who have held management-level positions at leading banking and professional services franchises within our markets, including throughout various economic cycles. Our senior leadership team, reflecting our entrepreneurial and ownership-based culture, has a long and successful history of starting and growing financial institutions, leading acquisition projects, managing organic growth and developing a disciplined credit, trust and wealth management culture.

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        The members of our senior leadership team, each of whom has a diverse and complementary background that is an integral part of our success, includes the following professionals:

Name
  Title   Experience
with First
Western /
Industry
  Prior Experience
Scott C. Wylie   Chairman, Chief Executive Officer and President   16 / 31 years  

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

             
Julie A. Courkamp   Treasurer and Chief Financial Officer   12 / 18 years  

Various audit positions with PricewaterhouseCoopers

             
Scott J. Lawley   Chief Credit Officer   — / 31 years  

Senior Credit Officer and Segment Risk Officer, Huntington National Bank

Various credit positions (credit advisor, chief underwriter, CRE credit officer) with PNC Bank and US Bank

Various lending positions with Fleet Bank

             
Gary B. Lutz   President, Product Groups   1 / 34 years  

Various executive positions with Wells Fargo, including:

Head of the Private Bank/Wealth Management Group in Colorado

Head of Commercial Banking for Colorado, Wyoming and Montana

Commercial Banking National Sales Manager

President, boutique wealth management firm

             
John E. Sawyer   Chief Investment Officer   1 / 25 years  

Chief Investment & Fiduciary Officer, BBVA Compass Bank

President & COO, Florida-based boutique wealth management firm

Various executive positions with Credit Suisse, Morgan Keegan & Co., and First Tennessee Capital Markets

             
Josh M. Wilson   Regional President, Colorado/Wyoming   6 / 19 years  

CFO, international oil and gas operating company

Various executive positions with Bank One, JP Morgan and Vectra Private Bank

             
Dan C. Thompson   Regional President, Arizona/California   14 / 25 years  

Team Leader within Private Wealth Advisors, Merrill Lynch

Various positions in the High Net Worth and Quality Assurance group, Charles Schwab & Co.

        For additional information about our directors, management team and other key associates, see "Management—Our Directors and Executive Officers" and "Management—The Business Background of our Directors and Executive Officers."

Our Market Opportunity

        Our strategic market area is defined by metropolitan areas in the Western United States having strong long-term economic growth prospects, a significant wealth demographic measured by growth in high net

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worth households, a dynamic commercial business landscape and the ability to sustain one or more of our profit centers. We target households with more than $1.0 million in liquid net worth and their related businesses and philanthropic interests. We believe that the complex and diverse financial needs of this market segment presents an opportunity to serve a broad array of client needs efficiently and cost effectively.

        Our current operating markets have a high concentration of our targeted client segment and are expected to experience high growth, providing opportunity for continued future organic growth through demographic and market share growth.

 
   
   
   
   
   
  Market Demographics  
 
   
  Deposit Market Share*   Total Population   $200,000+ Household
Income Population
 
MSA
  State   Number
of
Profit
Centers
  Deposits in
Market
($000)
  Market
Share
(%)
  Market
Rank
  2018
Population
(actual)
  Proj. '18 - '23
Population
Change
(%)
  2018
Population
(actual)
  Proj. '18 - '23
Population
Change
(%)
 

Denver-Aurora-Lakewood

  CO     3     354,633     0.4 %   21     2,933,089     7.7 %   10.2 %   41.9 %

Fort Collins

  CO     1     135,702     1.8 %   13     350,005     8.1 %   8.1 %   51.6 %

Phoenix-Mesa-Scottsdale

  AZ     2     131,806     0.1 %   36     4,789,980     7.2 %   6.5 %   36.8 %

Boulder

  CO     1     95,763     1.0 %   16     329,524     6.8 %   13.8 %   30.3 %

Jackson

  WY/ID     1     20,983     1.0 %   9     34,916     5.8 %   10.4 %   18.5 %

Glenwood Springs

  CO     1     31,248     1.2 %   10     77,708     4.7 %   7.6 %   24.9 %

United States of America

                                326,533,070     3.5 %   7.4 %   32.1 %

Source: S&P Global Market Intelligence; Population projections per Nielsen Holdings PLC

*
Data as of June 30, 2017 per the FDIC's Summary of Deposits

        We seek to expand our presence in our existing markets as well as other Western markets with similar demographic profiles. With improved access to capital as a result of our initial public offering, we expect to proactively evaluate opportunities to accelerate our organic growth and acquire banks, investment management firms and related businesses, while also seeking to hire talented personnel. We believe consolidation in the financial services industry along with the industry's movement towards automated and impersonal client service further presents a unique and significant opportunity for our Company. Our business model differentiates us from the industry, which we expect will enable us to increase our market share in existing markets and, on a strategic and opportunistic basis, expand our geographic footprint into new markets in the Western United States that share similar characteristics to our current markets.

Our Competitive Strengths

        We believe that the following strengths differentiate us and will help us to achieve our principal financial objectives of increased shareholder value and generation of earnings:

    Scalable Platform with Capacity to Support Our Growth.  Through significant investments in technology, staff, processes and procedures, we have built a scalable corporate infrastructure, which we believe will support our continued growth. In particular, our product group specialists, as well as other support and administrative functions, are provided to our profit centers from a central location, which provides operating leverage and allows us to deliver specialized expertise to our Western wealth management clients. By leveraging our central teams across a growing base of profit centers, we intend to continue to take advantage of our existing operating leverage, which we expect will continue to enhance our earnings growth.

    Diversified, Stable and Growing Revenue.  A significant portion of our revenue is fee-based, much of which is recurring from our trust and investment management services. Our revenue mix is diversified and balanced, which we believe differentiates us from our peers and provides us with a

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      platform for earnings growth and stability through various economic and interest rate cycles. Additionally, since 2015 we have significantly grown our residential mortgage loan origination business with the objective of adding another client service as well as a new client acquisition channel, which also provides another source of non-interest income sources.

    Experienced Management Team with a Proven Track Record.  Our management team has deep relationships in the communities that we serve and proven track records of successfully growing institutions. We have assembled a management team composed of individuals with significant banking and investment advisory experience as well as diverse backgrounds in other related industries. We believe that we have developed an entrepreneurial culture that is intensely focused on our clients and on executing our strategy.

    Strong Asset Quality.  Sound asset quality and robust credit underwriting are integral to our strategy and culture. We place a considerable emphasis on effective risk management and preserving sound credit underwriting standards as we grow our loan portfolio. Our high net worth clients are typically well diversified and we normally require collateral, three sources of repayment and a guarantor. As a result, we believe we are less susceptible to credit losses and have historically had excellent credit quality. Our nonperforming assets to total assets ratio was 0.4% as of March 31, 2018 and 0.7% as of December 31, 2017.

    Expansion Focus.  We have demonstrated the ability to enter new markets either by acquiring a local firm or by entering the market de novo. Having added several successful de novo profit centers and having also completed ten acquisitions since 2004, we believe we have the team and expertise to identify and successfully execute organic expansion opportunities as well as acquisitions that will enhance shareholder value.

    Strong and Trusted Fiduciary-Based Relationships.  We maintain a client centric, "trusted advisor" approach that allows us to develop strong, trusted team-based relationships with our clients. While individual relationship managers at our competitors often control the client relationship, at First Western, each client has a team of professionals who deliver our multi-disciplinary expertise to address such client's financial needs. Our client relationships frequently include in-depth proprietary ConnectView® financial plans and sophisticated, institutional quality investment management that is driven by comprehensive investment policy statements and access to industry-leading money managers. These characteristics provide a level of financial strength, product depth, integrated team delivery, corporate governance, and oversight not typically found in boutique wealth advisory firms.

    Distinctive Western-Based Approach.  As one of the first Western-based private banks, we are uniquely equipped to understand the needs and goals of the financially savvy, first- and second-generation wealth creators that have come to symbolize the dynamic economies of the Western United States. We understand the Western wealth management client is distinctive and the connection that first- and second-generation wealth creators have with their wealth is unique from that of generational wealth inheritors. We recognize the hands-on analytical approach that many Western wealth management clients appreciate and our entrepreneurial spirit that our teams share with our clients helps us better manage our client relationships.

        Income before income tax in our largest segment, wealth management, continues to improve with growth in net interest income due to increases in our net interest rate spread and growth in non-interest income. Our capital management segment recorded a loss before income tax for the years ended December 31, 2017 and 2016 of $0.9 million and $1.1 million, respectively. We seek to improve efficiencies in our capital management segment by reducing expenses to improve profitability. Our mortgage segment also recorded a loss before tax for the year ended December 31, 2017 and 2016 of $0.4 million and $0.7 million, respectively. We acquired the assets of a mortgage company in the third quarter of 2017.

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Subsequent to the asset acquisition, we have reduced costs and increased the volume of our mortgage loan production and origination into both the secondary market and the wealth management loan portfolio.

Our Business Strategy

        We believe we have built a premier private trust bank in the Western United States that is focused on providing the best financial solutions to our clients. We are service-driven, solution-oriented and relationship-based. We intend to accomplish this by continuing to execute on the following strategies:

    Building Out Existing Markets.  Once we have established a presence in a particular geographic market that contains attractive high net worth household demographics, we then look to establish additional locations that are closely situated to sub-concentrations of affluent households and/or commercial activity (a "hub and spoke" market build-out, as we have commenced in Denver and Phoenix). We also seek to employ highly capable associates with local market experience and relationships.

    Deepening Existing Client Relationships.  We deliver our services though our local boutique private trust bank offices. This allows us to use multi-discipline sales and client service teams, in market, to ensure we are meeting our client's comprehensive set of needs. These teams take the time to understand the complexities of our clients' financial world through wealth planning solutions and create the financial plan that helps them reach their goals. This profit center-based service model is a critical component of our future growth as we continue to develop our understanding of our clients' evolving needs we can deepen, broaden and grow our existing relationships.

    Generating Referrals for New Client Relationships.  We believe we have demonstrated a successful sales and marketing capability, built around the personal and professional networks and centers of influence of our local profit center leadership. Our existing client base also provides a significant amount of new clients through referrals. In surveys, our clients generally rate us very favorably overall in areas of professionalism, reliability, service-orientation, and trust. We also recently added wealth advisors to several of our profit centers as commissioned sales associates to enhance our acquisition of new clients.

    Developing Client Relationships through our Product Groups.  Each profit center is designed to feel like a boutique private trust bank office and is staffed with business development and client service personnel. The profit centers work closely with our central product groups to customize our services to each client's specific situation, without sacrificing the flexibility, expertise and authority to quickly meet complex client needs. Our central product groups are designed to support a significantly larger client and AUM base, providing an opportunity for significant operating leverage as we open additional profit centers. We have sales and service specialists in our product groups, such as Retirement Services and Mortgage Services, who are able to build relationships within their area of expertise and provide expertise and high quality service that creates an opportunity for a broader relationship across our suite of products and services.

    Expanding to New Markets.  We believe that our profit centers are profitable and stable businesses when mature. We also believe that our product group and support center teams have a high degree of operating leverage (i.e., we believe that increasing the number of profit centers would not require a proportionate increase in our product group or support center expenses). Therefore, a key strategy of ours is to add incremental profit centers and grow them to maturity. The trends in the financial services industry that make our business model successful in our existing geographic markets also exist in other locations in the Western United States. Our analysis indicates that there are hundreds of markets and submarkets in the Western United States that could support our profit centers and fit our target demographics. As such, we will continue to explore new Western United States markets with favorable high net worth demographics and competitive marketplaces.

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    Growing our Core Deposit Franchise.  The strength of our deposit franchise is derived from the long-standing relationships we have with our clients and the strong ties we have to the markets we serve. Our deposit footprint has provided, and we believe will continue to provide, primary support for our loan growth. A key part of our strategy is to continue to enhance our funding sources by continuing to build our private and commercial banking capabilities to keep building our base of attractively priced core deposits.

    Attracting Talent.  Our team of seasoned associates has been, and will continue to be, an important driver of our organic growth by further developing relationships with current and potential clients. We have a record of hiring experienced associates to enhance our organic growth, and sourcing and hiring talent will continue to be a core focus for us. We believe that this initial public offering will further enhance our ability to attract and retain this talent.

    Developing New Products.  We seek to be the primary source of financial products and services for our clients. By continuing to expand our product offerings—either by internal product development or establishing third-party relationships—we work to meet expanding client needs while further diversifying our revenue streams. Most recently, we have added a Health Savings Account consulting capability to our business services team, again providing additional client ties to increase revenues per client, improve "stickiness," and allow for building broader relationships.

Risks Related to Our Company

        An investment in our common stock involves substantial risks and uncertainties. Investors should carefully consider all of the information in this prospectus, including the detailed discussion of these risks under "Risk Factors" beginning on page 28, prior to investing in our common stock. Some of the more significant risks include the following:

    Our banking, trust and wealth advisory operations are geographically concentrated in Colorado, Arizona, Wyoming and California, leading to significant exposure to those markets.

    Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.

    The investment management contracts we have with our clients are terminable without cause and on relatively short notice by our clients, which makes us vulnerable to short term declines in the performance of the securities under our management.

    Our loan portfolio includes a significant number of commercial loans, which involve risks specific to commercial borrowers.

    We may be subject to claims and litigation pertaining to our fiduciary responsibilities.

    The market for investment managers and professionals is extremely competitive and the loss of a key investment manager to a competitor could adversely affect our investment advisory and wealth management business.

    If we are unable to continue to originate residential real estate loans and sell them into the secondary market for a profit, our earnings could decrease.

    The financial services industry is highly regulated, and legislative or regulatory actions taken now or in the future may have a significant adverse effect on our operations.

    There is currently no regular market for our common stock. An active, liquid market for our common stock may not develop or be sustained upon completion of this offering, which may impair your ability to sell your shares.

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    The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired.


Recent Developments

Preliminary Second Quarter Results

        Our consolidated financial statements for the three and six months ended June 30, 2018 are not yet available. The following selected preliminary unaudited consolidated financial information regarding our performance and financial condition as of and for the three and six months ended June 30, 2018 is based solely on management's estimates reflecting preliminary financial information, and remains subject to additional procedures and our consideration of subsequent events, particularly as it relates to material estimates and assumptions used in preparing management's estimates, which we expect to complete following this offering. These additional procedures could result in material changes to our preliminary estimates during the course of our preparation of condensed consolidated financial statements as of and for the three and six months ended June 30, 2018.

        The following estimates constitute forward-looking statements and are subject to risks and uncertainties, including those described under "Risk Factors—Risks Related to Our Business—There are material limitations with making preliminary estimates of our financial results as of and for the three and six month periods ended June 30, 2018 prior to the completion of our and our auditors' financial review procedures for such period" and "Cautionary Note Regarding Forward-Looking Statements." The following information should be read together with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and notes thereto included elsewhere in this prospectus. Our independent registered public accounting firm, Crowe LLP, has not audited or reviewed the preliminary financial information, and as such, does not express an opinion with respect to this preliminary financial information.

        The following tables contain selected preliminary unaudited financial information regarding our performance and financial position as of and for the periods indicated.

(Dollars in thousands, except per share amounts)
  As of
June 30, 2018
(Unaudited)
  As of
June 30, 2017
(Unaudited)
 

Selected Period End Balance Sheet Data:

             

Loans

  $ 842,644   $ 741,252  

Allowance for loan losses

    7,100     6,981  

Total assets

    1,045,073     953,017  

Noninterest-bearing deposits

    212,225     208,490  

Interest-bearing deposits

    631,517     564,459  

Total shareholders' equity

    104,722     97,039  

Preferred stock (liquidation preference)

    24,968     25,468  

Other Selected Data and Ratios:

             

Nonperforming assets to total assets

    0.35 %   0.85 %

Total assets under management

  $ 5,415,918   $ 5,109,887  

Non-GAAP-Ratios:

             

Tangible common equity(1)

  $ 54,170   $ 45,678  

Tangible book value per common share(2)

  $ 9.15   $ 8.24  

(1)
Tangible common equity is a non-GAAP financial measure. We calculate tangible common equity as total shareholders' equity less preferred stock (liquidation preference), goodwill and other intangible

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    assets, net, and tangible assets are total assets less goodwill and other intangible assets, net. See our reconciliation of "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

(2)
Tangible book value per common share is non-GAAP financial measure. We calculate tangible book value per common value share as tangible common equity divided by common shares outstanding.


(Dollars in thousands, except per share amounts)
  For the Three Months
Ended
June 30, 2018
(Unaudited)
  For the Three Months
Ended
June 30, 2017
(Unaudited)
  For the Six Months
Ended
June 30, 2018
(Unaudited)
  For the Six Months
Ended
June 30, 2017
(Unaudited)
 

Selected Income Statement Data:

                         

Interest income

  $ 9,505   $ 8,104   $ 18,511   $ 15,650  

Interest expense

    1,928     1,437     3,574     2,719  

Net interest income

    7,577     6,667     14,937     12,931  

Provision (release) for credit losses

        262     (187 )   486  

Net interest income after provision for credit losses

    7,577     6,405     15,124     12,445  

Non-interest income

    6,875     6,489     14,167     12,539  

Non-interest expense

    13,067     12,282     26,353     23,550  

Income before income tax

    1,385     612     2,938     1,434  

Income tax expense

    337     208     704     504  

Net income

    1,048     404     2,234     930  

Preferred dividends paid to preferred shareholders

    562     573     1,123     1,147  

Income (loss) allocable to common shareholders

    486     (169 )   1,111     (217 )

Per Share Data:

   
 
   
 
   
 
   
 
 

Earnings (loss) per share, basic

  $ 0.08   $ (0.03 ) $ 0.19   $ (0.04 )

Earnings (loss) per share, diluted

  $ 0.08   $ (0.03 ) $ 0.19   $ (0.04 )

Book value per share(1)

  $ 13.48   $ 12.91   $ 13.48   $ 12.91  

Weighted average outstanding shares, basic

    5,911,886     5,543,771     5,891,463     5,540,372  

Weighted average outstanding shares, diluted

    5,976,621     5,543,771     5,957,637     5,540,372  

Common shares outstanding, end of period

    5,917,667     5,544,078     5,917,667     5,544,078  

Convertible preferred shares outstanding, end of period

    41,000     46,000     41,000     46,000  

Preferred shares outstanding, end of period

    20,868     20,868     20,868     20,868  

Summary Performance Ratios:

   
 
   
 
   
 
   
 
 

Return on average assets(2)

    0.41 %   0.17 %   0.45 %   0.20 %

Return on average equity(2)

    4.00 %   1.64 %   4.29 %   1.91 %

Net interest margin(2)

    3.29 %   3.10 %   3.27 %   3.01 %

Net interest rate spread

    2.95 %   2.88 %   2.97 %   2.78 %

Loan yield

    4.34 %   4.09 %   4.27 %   3.95 %

Cost of funds

    0.84 %   0.68 %   0.79 %   0.65 %

Efficiency ratio(3)

    88.83 %   91.96 %   88.97 %   91.01 %

(1)
We calculate book value per share as total shareholders' equity less preferred stock (liquidation preference), at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.

(2)
Three and six month periods are annualized.

(3)
Efficiency ratio is non-interest expense, less intangible amortization, divided by net interest income plus non-interest income. See our reconciliation of non-GAAP financial measures to their most directly comparable

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    GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

        We expect to report net income for the three and six months ended June 30, 2018 of $1.0 million and $2.2 million, compared to $0.4 million and $0.9 million for the three and six months ended June 30, 2017, an increase of $0.6 million, or 159.4%, and an increase of $1.3 million, or 140.2%, respectively. We expect to report net income (loss) allocable to common shareholders for the three and six months ended June 30, 2018 of $0.5 million and $1.1 million, compared to $(0.2) million and $(0.2) million for the three and six months ended June 30, 2017, an increase of $0.7 million, or 387.6%, and an increase of $1.3 million, or 612.0%, respectively.

        The increase in estimated net income during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is primarily attributable to (i) an increase in net interest income resulting primarily from an increase in benchmark interest rates, along with growth in our interest earning assets, (ii) an increase in non-interest income resulting from an increase in trust and investment management fees due to growth in assets under management, (iii) an increase in net mortgage gain due to increased secondary sales activities and an increase in insurance fee income recorded, and (iv) a reduction in our effective tax rate due to lower federal tax rates.

        The increase in non-interest expense is primarily attributable to compensation costs resulting from the asset purchase of EMC and severance costs incurred in the six months ended June 30, 2018 related to headcount reduction.

        We expect estimated net income to result in an annualized return on average assets of approximately 0.41% and 0.45% for the three and six months ended June 30, 2018. We expect to report estimated diluted earnings per share of $0.08 and $0.19 for the three and six months ended June 30, 2018, as compared to a loss per share of $0.03 and $0.04 for the three and six months ended June 30, 2017.

        We expect to report total loans of $842.6 million as of June 30, 2018, representing a $101.4 million, or 13.7%, increase from June 30, 2017. We expect to report total assets of $1.0 billion as of June 30, 2018, representing a $75.4 million, or 7.8%, increase as compared to $969.7 million as of December 31, 2017 and a $92.1 million, or 9.7%, increase compared to $953.0 million as of June 30, 2017. We expect to report total deposits of $843.7 million as of June 30, 2018, representing a $70.8 million, or 9.2%, increase from June 30, 2017.

        Estimated increases in our net loans and total deposits were driven by organic growth. We expect to report net interest margin of 3.29% and 3.27% for the three and six months ended June 30, 2018 compared to 3.10% and 3.01% for the three and six months ended June 30, 2017. The expected increase in net interest margin was primarily driven by increasing loan yield, which we expect to report as 4.34% and 4.27% for the three and six months ended June 30, 2018 as compared to 4.09% and 3.95% for the three and six months ended June 30, 2017. The increase in our loan yield is primarily a result of an increase in the benchmark interest rates for the three and six months ended June 30, 2018 compared to the three and six months ended June 30, 2017.

        We expect to report total shareholders' equity of $104.7 million as of June 30, 2018 compared to $97.0 million as of June 30, 2017 and $101.8 million as of December 31, 2017. As a result, we expect to report book value per share of $13.48 as of June 30, 2018 compared to $12.91 as of June 30, 2017 and $13.18 as of December 31, 2017. Also, we expect to report tangible book value per common share of $9.15 as of June 30, 2018 compared to $8.24 as of June 30, 2017, and $8.71 as of December 31, 2017. Tangible book value per common share is a non-GAAP financial measure. The most directly comparable GAAP financial measure for tangible book value per common share is book value per share. See "Non-GAAP

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Reconciliation and Management Explanation of Non-GAAP Financial Measures" for a description and reconciliation of actual and estimated tangible book value per common share.

Recent Administrative and Operating Efficiencies

        During the six months ended June 30, 2018, we made several changes to streamline our operations and improve profitability, including consolidating administrative roles, reducing salaries and office space capacity. The consolidation of administrative roles resulted in a headcount reduction of 16 full-time equivalent employees, or 6.1% of our total headcount.

        We recorded pre-tax salary expense relating to these employees of $0.3 million and $0.7 million in the three and six months ended June 30, 2018. In addition, we recorded pre-tax severance costs of $0.1 million and $0.2 million in the three and six months ended June 30, 2018.

        Effective as of May 1, 2018, we sublet an office lease in our capital management segment at terms consistent with the current lease. We recorded pre-tax rent expense of an immaterial amount and $0.2 million for the three and six months ended June 30, 2018 relative to this lease.

Corporate Information

        Our principal executive offices are located at 1900 16th Street, Suite 1200, Denver, Colorado 80202, and our telephone number at that address is (303) 531-8100. Our website address is www.myfw.com. We expect to make our periodic reports and other information filed with, or furnished to, the SEC available free of charge through our website as soon as reasonably practicable after those reports and other information are electronically filed with, or furnished to, the SEC. The information contained on our website is not a part of, or incorporated by reference into, this prospectus.

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THE OFFERING

Common stock offered by us   1,500,527 shares of our common stock, no par value (or 1,778,027 shares if the underwriters exercise their option in full to purchase 277,500 additional shares).

Common stock offered by selling shareholders

 

349,473 shares of our common stock, no par value.

Common stock to be outstanding after this offering

 

7,418,194 shares (or 7,695,694 shares if the underwriters exercise their option in full to purchase additional shares).

Underwriter's option to purchase additional shares

 

We have granted the underwriters an option for a period of 30 days after the date of this prospectus to purchase up to an additional 277,500 shares of our common stock from us.

Use of proceeds

 

Assuming an initial public offering price of $20.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, we estimate that the net proceeds to us from this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $26.2 million (or approximately $31.4 million if the underwriters exercise their option in full to purchase additional shares from us). We intend to use approximately $25.0 million of the net proceeds from this offering to redeem all of the outstanding shares of our preferred stock and approximately $1.2 million of the net proceeds from this offering and available cash on hand or borrowings under our existing credit facility to redeem all of our subordinated notes due 2020. Although we intend to use a portion of the net proceeds of this offering to redeem all outstanding shares of our preferred stock and all of our subordinated notes due 2020, the redemption of such securities is subject to regulatory approval and, accordingly, no assurance can be given as to when we will be able to redeem such securities, if at all. To the extent there are any net proceeds from this offering remaining, we intend to use such net proceeds to support our organic growth and for general corporate purposes, including maintenance of our required regulatory capital. We will not receive any proceeds from the sale of shares of common stock by the selling shareholders. See "Use of Proceeds."

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Dividend policy   We have not declared or paid any cash dividends on our common stock and we do not currently anticipate paying any cash dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be retained to support our operations and finance the growth and development of our business. Any future determination to pay dividends on our common stock will be made by our board of directors and will depend upon our results of operations, our financial condition, capital requirements, general economic conditions, regulatory and contractual restrictions, our business strategy, our ability to service any equity or debt obligations senior to our common stock and other factors that our board of directors deems relevant. For additional information, see "Dividend Policy."

Directed share program

 

At our request, the underwriters have reserved for sale, at the initial public offering price, up to 10.0% of the shares of our common stock being offered by this prospectus for sale to certain of our associates, executive officers, directors, business associates and related persons who have expressed an interest in purchasing our common stock in this offering. We will offer these shares to the extent permitted under applicable regulations in the United States through a directed share program. Reserved shares purchased by our directors and executive officers will be subject to the lock-up provisions described in "Underwriting—Lock-Up Agreements." We do not know if these persons will choose to purchase all or any portion of the reserved shares, but any purchases they do make will reduce the number of shares available to the general public. Any reserved shares of our common stock that are not so purchased will be offered by the underwriters to the general public on the same terms as the other shares of our common stock offered by this prospectus. See "Underwriting."

Nasdaq Global Select Market listing

 

We have applied to list our common stock on the Nasdaq Global Select Market under the trading symbol "MYFW."

Risk factors

 

Investing in our common stock involves certain risks. See "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" along with all other information set forth in this prospectus before investing in our common stock.

        Except as otherwise indicated, all information in this prospectus:

    Assumes no exercise by the underwriters of their option to purchase 277,500 additional shares of our common stock from us;

    Does not attribute to any director, executive officer or principal shareholder any purchase of shares of our common stock in this offering, including through the directed share program described in "Underwriting—Directed Share Program";

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    Excludes 592,714 shares of our common stock issuable upon the exercise of stock options outstanding as of March 31, 2018 under our First Western Financial, Inc. 2008 Stock Incentive Plan (referred to as the "2008 Plan") with a weighted average exercise price of $29.24 per share;

    Excludes 199,263 shares subject to restricted stock units with time-based vesting outstanding as of March 31, 2018 under our First Western Financial, Inc. 2016 Omnibus Incentive Plan (referred to as the "2016 Plan");

    Excludes 20,840 shares (which could increase to 36,021 shares if targeted financial metrics are exceeded) subject to performance stock units with vesting conditions based on the financial performance of the Company and time-based vesting outstanding as of March 31, 2018 under our 2016 Plan;

    Excludes 21,467 shares subject to performance stock units with vesting conditions based on the performance of the Company's common stock following an initial public offering and time-based vesting outstanding as of March 31, 2018 under our 2016 Plan;

    Excludes up to 128,977 shares of our common stock issuable as of March 31, 2018 pursuant to the Make Whole Rights described in "Certain Relationships and Related Persons Transactions—Make Whole Rights"; and

    Assumes an initial offering price of $20.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER DATA

        You should read the following selected historical consolidated financial and other data in conjunction with our consolidated financial statements and related notes and the sections entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Capitalization" included elsewhere in this prospectus. The following tables set forth selected historical consolidated financial data (i) as of and for the three months ended March 31, 2018 and 2017, and (ii) as of and for the years ended December 31, 2017, 2016, 2015, 2014 and 2013. We have derived certain of the selected financial data as of and for the years ended December 31, 2017 and 2016 from our audited financial statements included elsewhere in this prospectus. We have derived certain of the selected financial data as of and for the years ended December 31, 2015, 2014 and 2013 from our audited financial statements not included in this prospectus. We have derived certain of the selected financial data as of and for the three months ended March 31, 2018 and 2017 from our unaudited interim financial statements included elsewhere in this prospectus. While unaudited, such selected financial data, in the opinion of our management, contains all adjustments (consisting of only normal or recurring adjustments) necessary to present fairly in all material respects our financial position and results of operations for the period in accordance with generally accepted accounting principles in the United States ("GAAP"). Our historical results are not necessarily indicative of any future period. The performance, asset quality and capital ratios are unaudited. Unless otherwise noted, ratios in this table are as of the period end presented.

 
  As of and for the
Three Months Ended
March 31,
  As of and for the Years Ended December 31,  
(Dollars in thousands, except share and per share data)
  2018   2017   2017   2016   2015   2014   2013  

Selected Period End Balance Sheet Data:

                                           

Cash and cash equivalents

  $ 37,076   $ 36,704   $ 9,502   $ 62,685   $ 79,636   $ 45,906   $ 62,812  

Available-for-sale securities                                

    49,859     114,016     53,650     97,655     66,064     84,127     75,483  

Mortgage loans held for sale                                

    22,146     5,756     22,940     8,053     19,903          

Loans(1)

    817,292     695,704     813,689     672,815     610,416     532,537     484,707  

Allowance for loan losses

    7,100     6,702     7,287     6,478     5,956     5,960     4,839  

Promissory notes from related parties

    5,795     10,465     5,792     10,384     19,254     25,457     24,977  

Goodwill

    24,811     24,811     24,811     24,811     24,811     24,811     24,811  

Other intangible assets, net

    1,003     1,267     1,233     1,452     2,198     2,988     3,790  

Company owned life insurance                                

    14,410     14,003     14,316     13,898     10,477     10,130      

Other real estate owned, net                                

    658     2,836     658     2,836     3,016     4,573     5,347  

Total assets

    991,621     925,536     969,659     915,998     857,001     752,581     696,977  

Noninterest-bearing deposits                                

    223,582     192,251     198,685     195,460     148,184     161,256     137,760  

Interest-bearing deposits

    594,645     584,910     617,432     558,440     561,753     427,587     423,443  

FHLB Topeka borrowings

    47,928     23,983     28,563     37,000     25,000     41,000     20,000  

Convertible subordinated debentures                        

        4,764         4,749     14,548     20,962     20,605  

Subordinated notes

    13,435     13,435     13,435     13,150     7,625     7,625     7,625  

Credit note payable

        2,436         2,736     3,936     5,036     5,952  

Preferred stock (liquidation preference)

    24,968     25,468     24,968     25,468     28,168     28,168     28,168  

Total shareholders' equity

    104,155     96,981     101,846     95,928     87,259     80,367     70,939  

Selected Income Statement Data:                

                                           

Interest income

  $ 9,006   $ 7,546   $ 33,337   $ 29,520   $ 26,370   $ 25,134   $ 25,160  

Interest expense

    1,646     1,282     5,761     5,063     3,904     4,422     5,250  

Net interest income

    7,360     6,264     27,576     24,457     22,466     20,712     19,910  

Provision (release) for credit losses

    (187 )   224     788     985     1,071     1,455     (1,676 )

Net interest income after provision for credit losses                                

    7,547     6,040     26,788     23,472     21,395     19,257     21,586  

Trust and investment management fees

    4,954     4,773     19,455     20,167     20,863     20,852     20,187  

Net mortgage gain

    1,251     552     3,469     6,702     3,549          

Net realized gain (loss) on sale of securities

            81     114     717     321     (101 )

Other

    1,087     725     4,708     2,939     2,815     2,103     2,267  

Non-interest income

    7,292     6,050     27,713     29,922     27,944     23,276     22,353  

Non-interest expense

    13,286     11,268     49,494     49,823     45,636     43,502     41,366  

Income (loss) before income tax                                

    1,553     822     5,007     3,571     3,703     (969 )   2,573  

Income tax expense (benefit)

    367     296     2,984     1,269     1,053     (11,959 )   358  

Net income

    1,186     526     2,023     2,302     2,650     10,990     2,215  

Preferred dividends paid to preferred shareholders                                

    561     574     2,291     2,840     2,419     2,003     1,718  

Per Share Data:

                                           

Earnings (loss) per share, basic                                

  $ 0.11   $ (0.01 ) $ (0.05 ) $ (0.11 ) $ 0.05   $ 1.92   $ 0.11  

Earnings (loss) per share, diluted                                

    0.11   $ (0.01 )   (0.05 )   (0.11 )   0.04     1.68     0.10  

Book value per share(2)

    13.42     12.90     13.18     12.74     11.74     11.65     9.78  

Preferred dividends per share

    9.07     8.58     37.03     42.47     25.77     21.34     18.30  

Weighted average outstanding shares, basic                                

    5,870,813     5,536,935     5,586,620     5,120,507     4,863,236     4,688,213     4,387,134  

Weighted average outstanding shares, diluted                                

    5,938,426     5,536,935     5,586,620     5,120,507     5,863,236     5,360,498     5,000,632  

Common shares outstanding, end of period                                

    5,900,698     5,543,121     5,833,456     5,529,542     5,033,565     4,482,059     4,373,874  

Convertible preferred shares outstanding, end of period                                                 

    41,000     46,000     41,000     46,000     73,000     73,000     73,000  

Preferred shares outstanding, end of period                                

    20,868     20,868     20,868     20,868     20,868     20,868     20,868  

Summary Performance Ratios:                

                                           

Return on average assets(3)

    0.48 %   0.23 %   0.21 %   0.26 %   0.35 %   1.60 %   0.34 %

Return on average equity(3)

    4.59 %   2.17 %   2.02 %   2.55 %   3.10 %   15.42 %   3.12 %

Net interest margin(3)

    3.25 %   2.98 %   3.15 %   3.06 %   3.28 %   3.32 %   3.42 %

Efficiency ratio(4)

    89.11 %   90.00 %   88.10 %   90.25 %   88.96 %   97.07 %   95.98 %

Loans to deposits ratio

    99.89 %   89.52 %   99.70 %   89.24 %   85.98 %   90.44 %   86.37 %

Interest rate spread

    2.99 %   2.76 %   2.91 %   2.89 %   3.15 %   3.10 %   3.19 %

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  As of and for the
Three Months Ended
March 31,
  As of and for the Years Ended December 31,  
(Dollars in thousands, except share and per share data)
  2018   2017   2017   2016   2015   2014   2013  

Non-interest income to average assets

    2.95 %   2.65 %   2.90 %   3.34 %   3.67 %   3.38 %   3.39 %

Non-interest expense to average assets

    5.37 %   4.94 %   5.18 %   5.57 %   6.00 %   6.31 %   6.28 %

Non-interest income to total income before non-interest expense

    49.14 %   50.04 %   50.85 %   56.04 %   56.64 %   54.72 %   50.87 %

Summary Credit Quality Ratios:                        

                                           

Nonperforming loans to total loans                        

    0.42 %   0.50 %   0.52 %   0.54 %   1.19 %   2.03 %   2.58 %

Nonperforming assets to total assets                        

    0.41 %   0.68 %   0.50 %   0.70 %   1.20 %   2.04 %   2.56 %

Allowance for loan losses to nonperforming loans

    209.19 %   191.32 %   172.55 %   179.60 %   81.69 %   55.20 %   38.76 %

Allowance for loan losses to total loans

    0.87 %   0.96 %   0.90 %   0.96 %   0.98 %   1.12 %   1.00 %

Net charge-offs to average loans outstanding                        

    0.00 %   0.00 %   0.00 %   0.07 %   0.19 %   0.07 %   0.62 %

Other Selected Ratios and Data:                

                                           

Total noninterest-bearing deposits to total deposits                                

    27.33 %   24.74 %   24.35 %   25.93 %   20.87 %   27.39 %   24.55 %

Interest bearing deposits to total deposits                

    72.67 %   75.26 %   75.65 %   74.07 %   79.13 %   72.61 %   75.45 %

Cost of funds

    0.74 %   0.63 %   0.67 %   0.63 %   0.58 %   0.72 %   0.89 %

Loan yield

    4.20 %   3.90 %   4.11 %   4.10 %   4.22 %   4.54 %   4.84 %

Total assets under management                                

  $ 5,358,316   $ 5,080,217   $ 5,374,471   $ 4,925,939   $ 4,743,668   $ 4,842,177   $ 4,522,682  

Total assets under management yield

    0.37 %   0.38 %   0.36 %   0.41 %   0.44 %   0.43 %   0.45 %

Summary Capital Ratios:

                                           

Average equity to average assets ratio

    10.45 %   10.61 %   10.47 %   10.10 %   11.23 %   10.34 %   10.77 %

Non-GAAP Ratios:

                                           

Tangible common equity(5)                         

  $ 53,373   $ 45,435   $ 50,834   $ 44,197   $ 32,082   $ 24,400   $ 14,120  

Tangible common equity ratio(6)                         

    5.53 %   5.05 %   5.39 %   4.97 %   3.87 %   3.37 %   2.12 %

Tangible book value per common share(7)                 

  $ 9.05   $ 8.20   $ 8.71   $ 7.99   $ 6.37   $ 5.44   $ 3.24  

Return on tangible common equity(8)

    1.17 %   (0.11 )%   (0.53 )%   (1.22 )%   0.72 %   36.83 %   3.51 %

Consolidated:

                                           

CET 1 capital ratio

    7.04 %   6.06 %   6.56 %   6.28 %   5.15 %        

Tier 1 capital ratio

    9.44 %   8.28 %   8.79 %   8.43 %   7.80 %   10.80 %   11.40 %

Total risk based capital ratio                                

    12.31 %   11.91 %   11.70 %   12.07 %   9.97 %   8.40 %   8.90 %

Leverage ratio

    7.72 %   6.72 %   7.41 %   7.00 %   6.47 %   7.30 %   7.20 %

Bank:

                                           

CET 1 capital ratio

    10.36 %   10.08 %   9.81 %   9.20 %   9.54 %        

Tier 1 capital ratio

    10.36 %   10.08 %   9.81 %   9.20 %   9.54 %   10.90 %   12.60 %

Total risk based capital ratio                                

    11.29 %   11.04 %   10.75 %   10.16 %   10.54 %   9.80 %   11.60 %

Leverage ratio

    8.43 %   8.24 %   8.27 %   7.63 %   7.97 %   8.30 %   8.80 %

(1)
Total loans net of loan fees and costs do not include loans held for sale of $22.1 million, $5.8 million, $22.9 million, $8.1 million and $19.9 million on March 31, 2018 and 2017, December 31, 2017, 2016 and 2015, respectively.

(2)
We calculate book value per share as total shareholders' equity less preferred stock (liquidation preference), at the end of the relevant period divided by the outstanding number of shares of our common stock at the end of the relevant period.

(3)
Three month periods are annualized.

(4)
Efficiency ratio is non-interest expense, less intangible amortization, divided by net interest income plus non-interest income. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

(5)
Tangible common equity is a non-GAAP financial measure. We calculate tangible common equity as total shareholders' equity less preferred stock (liquidation preference), goodwill and other intangible assets, net, and tangible assets are total assets less goodwill and other intangible assets, net. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

(6)
Tangible common equity ratio is a non-GAAP financial measure. We calculate the tangible common equity ratio as tangible common equity divided by total assets less goodwill and other intangible assets, net. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."

(7)
Tangible book value per common share is a non-GAAP financial measure. We calculate tangible book value per common share as tangible common equity divided by common shares outstanding.

(8)
Return on tangible common equity is a non-GAAP financial measure. We calculate return on tangible common equity as net income available to common shareholders (net income less dividends paid on preferred stock) divided by tangible common equity. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures under the caption "Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures."


Non-GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

        Our accounting and reporting policies conform to GAAP and the prevailing practices in the banking industry. However, we also evaluate our performance based on certain additional financial measures discussed in this prospectus as being non-GAAP financial measures. We classify a financial measure as being a non-GAAP financial measure if that financial measure excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, that are not included or excluded, as the case may be, in the most directly comparable measure calculated and presented in accordance with GAAP as in effect from time to time in the United States in our statements of income, balance sheets or statements of cash flows. Non-GAAP financial measures do not include operating and other statistical measures or ratios or statistical measures calculated using exclusively financial measures calculated in accordance with GAAP.

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        The non-GAAP financial measures that we discuss in this prospectus should not be considered in isolation or as a substitute for the most directly comparable or other financial measures calculated in accordance with GAAP. Moreover, the manner in which we calculate the non-GAAP financial measures that we discuss in this prospectus may differ from that of other companies, reporting measures with similar names. It is important to understand how other banking organizations calculate their financial measures with names similar to the non-GAAP financial measures we have discussed in this prospectus when comparing such non-GAAP financial measures.

        Efficiency Ratio.    We calculate our efficiency ratio as non-interest expense, less intangible amortization divided by net interest income (which is pre-provision), plus non-interest income. The following table reconciles, as of the dates set forth below, non-interest expense, less intangible amortization which is a non-GAAP measure, to non-interest expense, and presents the calculation of our efficiency ratios:

 
  For the
Three Months
Ended June 30,
  For the Six Months
Ended June 30,
 
(Dollars in thousands)
  2018(1)   2017   2018(1)   2017  

Non-interest expense

  $ 13,067   $ 12,282   $ 26,353   $ 23,550  

Less amortization

    230     184     460     369  

Adjusted non-interest expense

  $ 12,837   $ 12,098   $ 25,893   $ 23,181  

Net interest income

  $ 7,577   $ 6,667   $ 14,937   $ 12,931  

Non-interest income

    6,875     6,489     14,167     12,539  

  $ 14,452   $ 13,156   $ 29,104   $ 25,470  

Efficiency ratio

    88.83 %   91.96 %   88.97 %   91.01 %

(1)
Figures included in this reconciliation are preliminary estimates and subject to additional procedures, which we expect to complete after the completion of this offering. These additional procedures could result in material changes to our preliminary estimates. See "Risk Factors—Risks Related to Our Business—There are material limitations with making preliminary estimates of our financial results as of and for the three and six month periods ended June 30, 2018 prior to the completion of our and our auditors' financial review procedures for such period."


 
  For the
Three Months Ended
March 31,
  For the Year Ended December 31,  
(Dollars in thousands)
  2018   2017   2017   2016   2015   2014   2013  

Non-interest expense

  $ 13,286   $ 11,268   $ 49,494   $ 49,823   $ 45,636   $ 43,502   $ 41,366  

Less amortization

    230     185     784     747     790     802     803  

Adjusted non-interest expense

  $ 13,056   $ 11,083   $ 48,710   $ 49,076   $ 44,846   $ 42,700   $ 40,563  

Net interest income

  $ 7,360   $ 6,264   $ 27,576   $ 24,457   $ 22,466   $ 20,712   $ 19,910  

Non-interest income

    7,292     6,050     27,713     29,922     27,944     23,276     22,353  

  $ 14,652   $ 12,314   $ 55,289   $ 54,379   $ 50,410   $ 43,988   $ 42,263  

Efficiency ratio

    89.11 %   90.00 %   88.10 %   90.25 %   88.96 %   97.07 %   95.98 %

        Tangible Common Equity and Tangible Common Equity Ratio.    We calculate tangible common equity as total shareholders' equity, less preferred stock (liquidation preference), goodwill and other intangible assets, net of accumulated amortization. We calculate tangible assets as total assets less goodwill and other intangible assets, net of accumulated amortization. We calculate the tangible common equity ratio as

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tangible common equity divided by tangible assets. The most directly comparable GAAP financial measure for tangible common equity is total shareholders' equity and the most directly comparable GAAP financial measure for tangible assets is total assets.

        We believe the use of tangible common book value has less relevance for high fee banks and investment management firms than for most banks, as our goodwill is all associated with highly desirable fee business. We recognize that the tangible common book value per common share measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. Goodwill and other intangible assets have the effect of increasing total book value while not increasing our tangible book value.

        The following table reconciles and presents, as of the dates set forth below, total shareholders' equity to tangible common equity, total assets to tangible assets and presents the calculation of the tangible common equity ratio:

 
  As of March 31,   As of December 31,  
(Dollars in thousands)
  2018   2017   2017   2016   2015   2014   2013  

Total shareholders' equity

  $ 104,155   $ 96,981   $ 101,846   $ 95,928   $ 87,259   $ 80,367   $ 70,939  

Less

                                           

Preferred stock

    24,968     25,468     24,968     25,468     28,168     28,168     28,168  

Goodwill

    24,811     24,811     24,811     24,811     24,811     24,811     24,811  

Intangibles, net

    1,003     1,267     1,233     1,452     2,198     2,988     3,790  

Tangible common equity

  $ 53,373   $ 45,435   $ 50,834   $ 44,197   $ 32,082   $ 24,400   $ 14,170  

Total assets

  $ 991,621   $ 925,536   $ 969,659   $ 915,998   $ 857,001   $ 752,581   $ 696,977  

Less

                                           

Goodwill

    24,811     24,811     24,811     24,811     24,811     24,811     24,811  

Intangibles, net

    1,003     1,267     1,233     1,452     2,198     2,988     3,790  

Tangible assets

  $ 965,807   $ 899,458   $ 943,615   $ 889,735   $ 829,992   $ 724,782   $ 668,376  

Tangible common equity ratio

    5.53 %   5.05 %   5.39 %   4.97 %   3.87 %   3.37 %   2.12 %

        Tangible Book Value per Common Share.    We calculate tangible book value per common share as tangible common equity divided by common shares outstanding as detailed in the table below:

 
  As of June 30,  
(Dollars in thousands, except share and per share data)
  2018(1)   2017  

Total shareholders' equity

  $ 104,722   $ 97,039  

Less

             

Preferred stock

    24,968     25,468  

Goodwill

    24,811     24,811  

Intangibles, net

    773     1,082  

Tangible common equity

  $ 54,170   $ 45,678  

Common shares outstanding, end of period

    5,917,667     5,544,078  

Tangible common book value per share

  $ 9.15   $ 8.24  

(1)
Figures included in this reconciliation are preliminary estimates and subject to additional procedures, which we expect to complete after the completion of this offering. These additional procedures could result in material changes to our preliminary estimates. See "Risk Factors—Risks Related to Our Business—There are material limitations with making preliminary estimates of our financial results as

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    of and for the three and six month periods ended June 30, 2018 prior to the completion of our and our auditors' financial review procedures for such period."

 
  As of March 31,   As of December 31,  
(Dollars in thousands, except share and per share data)
 
  2018   2017   2017   2016   2015   2014   2013  

Total shareholders' equity

  $ 104,155   $ 96,981   $ 101,846   $ 95,928   $ 87,259   $ 80,367   $ 70,939  

Less

                                           

Preferred stock

    24,968     25,468     24,968     25,468     28,168     28,168     28,168  

Goodwill

    24,811     24,811     24,811     24,811     24,811     24,811     24,811  

Intangibles, net

    1,003     1,267     1,233     1,452     2,198     2,988     3,790  

Tangible common equity

  $ 53,373   $ 45,435   $ 50,834   $ 44,197   $ 32,082   $ 24,400   $ 14,170  

Common shares outstanding, end of period

    5,900,698     5,543,121     5,833,456     5,529,542     5,033,565     4,482,059     4,373,874  

Tangible common book value per share

  $ 9.05   $ 8.20   $ 8.71   $ 7.99   $ 6.37   $ 5.44   $ 3.24  

        Return on Tangible Common Equity.    We calculate return on tangible common equity as net income available to common shareholders (net income less dividends paid on preferred stock) divided by tangible common equity. The most directly comparable GAAP financial measure for tangible common equity is total shareholders' equity.

        The following table reconciles net income to income (loss) available to common shareholders and presents the calculation of return on tangible common equity:

 
  As of and for the
Three Months Ended
March 31,
  As of and for the Year Ended December 31,  
(Dollars in thousands)
  2018   2017   2017   2016   2015   2014   2013  

Net income, as reported

  $ 1,186   $ 526   $ 2,023   $ 2,302   $ 2,650   $ 10,990   $ 2,215  

Less preferred stock dividends

    561     574     2,291     2,840     2,419     2,003     1,718  

Income (loss) available to common shareholders

    625     (48 ) $ (268 ) $ (538 ) $ 231   $ 8,987   $ 497  

Tangible common equity

  $ 53,373   $ 45,435   $ 50,834   $ 44,197   $ 32,082   $ 24,400   $ 14,170  

Return on tangible common equity

    1.17 %   (0.11 )%   (0.53 )%   (1.22 )%   0.72 %   36.83 %   3.51 %

        Pre-tax, Pre-Provision Income.    Pre-tax, pre-provision income is income (loss) before income tax with provision for credit loss added back. The most directly comparable GAAP financial measure is net income (loss). We believe pre-tax, pre-provision income provides the readers of the financial statements information on our performance trends absent fluctuations in credit trends and loan balance changes which both drive provision, and elimination of taxes which provides readers more insight into our performance without consideration of changes in statutory tax rates.

        The following table reconciles, as of the dates set forth below, pre-tax, pre-provision income to net income:

 
  For the Three
Months Ended
March 31,
  For the Year Ended December 31,  
(Dollars in thousands)
  2018   2017   2017   2016   2015   2014   2013  

Income (loss) before income tax, as reported

  $ 1,553   $ 822   $ 5,007   $ 3,571   $ 3,703   $ (969 ) $ 2,573  

Provision (release) for loan losses

    (187 )   224     788     985     1,071     1,455     (1,676 )

Pre-tax, pre-provision income

  $ 1,366   $ 1,046   $ 5,795   $ 4,556   $ 4,774   $ 486   $ 897  

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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

        In 2017, we entered into an asset purchase agreement with EMC Holdings, LLC (referred to as "EMC"), WHMC, LLC and Mr. Alan Schrum (collectively, "Seller Group"). As consideration in full for the acquisition of the assets, we paid, or could pay up to a total of $5.0 million ($2.0 million in cash due at closing and approximately $3.0 million in earn-out common stock based on a per share price of $28.50, which was the price in the Company's private placement at the time of the acquisition) to Seller Group. Of this, $1.0 million is deemed purchase consideration, and the remaining $4.0 million will be recognized as compensation expense as discussed below. The Company used cash on hand to pay the $2.0 million in closing consideration.

        The following unaudited pro forma condensed combined statement of income for the year ended December 31, 2017, has been prepared to reflect the acquisition of the assets of EMC after giving effect to the adjustments reflected in the notes following the table. The unaudited pro forma condensed combined statement of income includes the historical results of EMC for the six months ended June 30, 2017, with the pro forma adjustments reflecting the results of EMC from January 1, 2017 through August 31, 2017. The acquisition date of EMC was September 15, 2017, however, pursuant to the asset purchase agreement, we began recognizing EMC's revenue and expenses in our financials effective September 1, 2017. Beginning September 1, 2017, the financial results of EMC are recorded in the Company's historical financial statements. As a result, the pro forma information presented here reflects EMC's estimated results through August 31, 2017. The unaudited pro forma condensed combined statement of income for the year ended December 31, 2017 is presented as if the transaction occurred on January 1, 2017.

        The unaudited pro forma condensed combined statement of income has been prepared assuming the acquisition method of accounting in accordance with Accounting Standards Codification Topic 805, Business Combinations ("ASC 805"). Under ASC 805, all the assets acquired and liabilities assumed in a business combination are recognized at their acquisition date fair value, while transaction costs associated with the business combination are expensed as incurred.

        The unaudited pro forma condensed combined statement of income is presented for illustrative purposes only and is not intended to present future results of operations. The unaudited pro forma condensed combined statement of income is based upon assumptions and adjustments that we believe are reasonable. These adjustments, which are described above and in the accompanying footnotes, have been applied in a manner to give effect to the transaction. The assumptions and adjustments are subject to change as future events materialize and fair value estimates are refined.

        The unaudited pro forma condensed combined statement of income should be read together with the following:

    The accompanying notes to the unaudited pro forma condensed combined statement of income;

    Our audited consolidated financial statements and accompanying notes as of and for the years ended December 31, 2017 and 2016, included elsewhere this prospectus;

    EMC's audited financial statements and accompanying notes as of and for the years ended December 31, 2016 and 2015, included elsewhere this prospectus; and

    EMC's unaudited financial statements and accompanying notes as of and for the six-month period ended June 30, 2017, included elsewhere this prospectus.

        The following unaudited pro forma condensed combined statement of income for the year ended December 31, 2017 combines our consolidated historical income statement and EMC's assuming the companies had been combined as of January 1, 2017 on a purchase accounting basis.

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Unaudited Pro Forma Condensed Combined Statement of Income
For the Year Ended December 31, 2017

(Dollars in thousands, except share and per share data)
  First Western
Historical
  EMC
Historical
  Pro Forma
Adjustments(1)
   
  Pro Forma
Combined
 

Interest and dividend income:

                             

Loans, including fees

  $ 30,908   $   $       $ 30,908  

Investment securities

    2,115                 2,115  

Federal funds sold and other

    314                 314  

Total interest and dividend income

    33,337                 33,337  

Interest expense:

                             

Deposits

    3,778                 3,778  

Other borrowed funds

    1,983                 1,983  

Total interest expense

    5,761                 5,761  

Net interest income

    27,576                 27,576  

Less: Provision for credit losses                  

    788                 788  

Net interest income, after provision for credit losses

    26,788                 26,788  

Non-interest income:

                             

Trust and investment management fees                  

    19,455                 19,455  

Net gain on mortgage loans sold

    3,469     1,782     999   a     6,250  

Bank fees

    2,176                 2,176  

Risk management and insurance fees

    1,289                 1,289  

Income on company-owned life insurance

    418                 418  

Net gain on sale of securities            

    81                 81  

Gain on legal settlement

    825                 825  

Total non-interest income

    27,713     1,782     999         30,494  

Total income before non-interest expense                              

    54,501     1,782     999         57,282  

Non-interest expense:

                             

Salaries and employee benefits            

    28,663     1,068     664   b     30,395  

Occupancy and equipment

    5,884     146     71   c     6,101  

Professional services

    3,490     15             3,505  

Technology, software licenses, and maintenance

    3,911                 3,911  

Data processing

    2,436                 2,436  

Marketing

    1,492                 1,492  

Amortization of other intangible assets

    784     24     289   d     1,097  

Total loss on sales/provision of other real estate owned

    311                 311  

Other

    2,523     167     55   e     2,745  

Total non-interest expense

    49,494     1,420     1,079         51,993  

Income (loss) before income taxes

    5,007     362     (80 )       5,289  

Income tax expense

    2,984         109   f     3,093  

Net income

  $ 2,023   $ 362   $ (189 )     $ 2,196  

Preferred stock dividends

    (2,291 )               (2,291 )

Net (loss) available to common shareholders

  $ (268 ) $ 362   $ (189 )     $ (95 )

Earnings (loss) per common share:

                             

Basic and diluted

  $ (0.05 )                 $  

Weighted average shares outstanding, basic and diluted

    5,586,620                      

(1)
The pro forma adjustments column includes the following items:

a.
Net gains recognized by EMC on originating and selling mortgage loans from July 1, 2017 through August 31, 2017. Also includes gains estimated on loans sold and fair value of interest rate lock derivatives related to EMC from July 1, 2017 through August 31, 2017. Due to a difference in accounting policy between the Company and EMC, the net gain on sale related to the acquired mortgage loans that EMC locked prior to

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      September 1, 2017, but did not fund prior to closing, was not recorded in EMC's historical financial statement of operations and was recognized by the Company through purchase price accounting adjustments.

    b.
    Salary and employee benefits recorded by EMC from July 1, 2017 through August 31, 2017, and the following expenses related to the sole selling shareholder of EMC as a result of the acquisition accounting:

    i.
    Stock-based compensation expense for the period January 1, 2017 through August 31, 2017, which represents the vesting of restricted stock awards granted to the selling shareholder of EMC. These shares have a time vesting feature, which is being recognized ratably over a five-year period which we began expensing after the acquisition. This pro forma adjustment results in a full year of pro forma reported expenses and is an adjustment of $0.2 million; and

    ii.
    Cash compensation expense for the period January 1, 2017 through August 31, 2017, which is being recognized over the eight year estimated service period of the sole selling shareholder of EMC after the acquisition date. This adjustment, which is $0.1 million, results in a full year of pro forma reported expense.

    c.
    Adjustments to remove EMC's historical depreciation and record estimated depreciation expense related to the acquired fixed assets over their remaining estimated useful lives. The acquired fixed assets were not material to the Company's consolidated financial statements.

    d.
    Removal of EMC's historical amortization related to goodwill that was not acquired from January 1, 2017 through August 31, 2017, and recording amortization for this same period for the acquired non-competition agreement.

    e.
    Other estimated expenses recorded by EMC for the period July 1, 2017 through August 31, 2017.

    f.
    EMC is a limited liability company, therefore, EMC does not pay taxes. This adjustment is to record the tax effect of the results of EMC operations for the six months ended June 30, 2017, as well as the reclassification and pro forma adjustments, assuming a current year tax rate of 38.5% and a future tax rate of 21.0%.

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RISK FACTORS

        Investing in our common stock involves a significant degree of risk. You should carefully consider the following risk factors, in addition to the other information contained in this prospectus, including our consolidated financial statements and related notes, before deciding to invest in our common stock. Any of the following risks could have a material adverse effect on our business, financial condition, results of operations and future prospects. As a result, the trading price of our common stock could decline, and you could lose all or part of your investment. Some statements in this prospectus, including statements in the following risk factors section, constitute forward-looking statements. Please refer to "Cautionary Note Regarding Forward-Looking Statements."

Risks Related to Our Business

    Our banking, trust and wealth advisory operations are geographically concentrated in Colorado, Arizona, Wyoming and California, leading to significant exposure to those markets.

        Our business activities and credit exposure, including real estate collateral for many of our loans, are concentrated in Colorado, Arizona, Wyoming and California. As of March 31, 2018, 93.5% of the loans in our loan portfolio were made to borrowers who live in or conduct business in those states. This geographic concentration imposes risks from lack of geographic diversification. Difficult economic conditions, including state and local government deficits, in Colorado, Arizona, Wyoming and California may affect our business, financial condition, results of operations and future prospects, where adverse economic developments, among other things, could affect the volume of loan originations, increase the level of nonperforming assets, increase the rate of foreclosure losses on loans and reduce the value of our loans and loan servicing portfolio. Any regional or local economic downturn that affects Colorado, Arizona, Wyoming and California or existing or prospective borrowers or property values in such areas may affect us and our profitability more significantly and more adversely than our competitors whose operations are less geographically concentrated. This includes a sustained downturn in the oil and gas market, which is important for the general economic health of Colorado in particular. We are unable to predict when or if oil prices will rise, and a prolonged period of low oil prices could have a material adverse effect on our results of operations and financial condition.

    Because a significant portion of our loan portfolio is comprised of real estate loans, negative changes in the economy affecting real estate values and liquidity could impair the value of collateral securing our real estate loans and result in loan and other losses.

        As of March 31, 2018, approximately $586.9 million, or 71.8%, of our gross loans were loans with real estate as a primary or secondary component of collateral. The repayment of such loans is highly dependent on the ability of the borrowers to meet their loan repayment obligations to us, which can be adversely affected by economic downturns that can lead to (i) declines in the rents and, therefore, in the cash flows generated by those real properties on which the borrowers depend to fund their loan payments to us, (ii) decreases in the values of those real properties, which make it more difficult for the borrowers to sell those real properties for amounts sufficient to repay their loans in full, and (iii) job losses of residential home buyers, which makes it more difficult for these borrowers to fund their loan payments. As a result, our operating results are more vulnerable to adverse changes in the real estate market than other financial institutions with more diversified loan portfolios, and we could incur losses in the event of changes in economic conditions that disproportionately affect the real estate markets.

        Real estate values in many of our markets have generally experienced periods of fluctuation over the last five years. The market value of real estate can fluctuate significantly in a short period of time. As a result, adverse developments affecting real estate values and the liquidity of real estate in our primary markets could increase the credit risk associated with our loan portfolio, and could result in losses that

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adversely affect credit quality, financial condition and results of operations. Negative changes in the economy affecting real estate values and liquidity in our market areas could significantly impair the value of property pledged as collateral on loans and affect our ability to sell the collateral upon foreclosure without a loss or additional losses or our ability to sell these loans on the secondary securitization market. Collateral may have to be sold for less than the outstanding balance of the loan, which could result in losses on such loans. Such declines and losses would have a material adverse effect on our business, financial condition and results of operations. If real estate values decline, it is also more likely that we would be required to increase our allowance for loan and lease losses ("ALLL"), which would adversely affect our business, financial condition and results of operations. In addition, adverse weather events, including wildfires, flooding, and mudslides, can cause damages to the property pledged as collateral on loans, which could result in additional losses upon a foreclosure.

    If we are unable to continue to originate residential real estate loans and sell them into the secondary market for a profit, our earnings could decrease.

        We derive a portion of our non-interest income from the origination of residential real estate loans and the subsequent sale of such loans into the secondary market. If we are unable to continue to originate and sell residential real estate loans at historical or greater levels, our residential real estate loan volume would decrease, which could decrease our earnings. A rising interest rate environment, general economic conditions, market volatility, or other factors beyond our control could adversely affect our ability to originate residential real estate loans. The financial services industry is experiencing an increase in regulations and compliance requirements related to mortgage loan originations necessitating technology upgrades and other changes. If new regulations continue to increase and we are unable to make technology upgrades, our ability to originate mortgage loans will be reduced or eliminated. Additionally, we sell a large portion of our residential real estate loans to third party investors, and rising interest rates could negatively affect our ability to generate suitable profits on the sale of such loans. If interest rates increase after we originate the loans, our ability to market those loans is impaired as the profitability on the loans decreases. These fluctuations can have an adverse effect on the revenue we generate from residential real estate loans and in certain instances, could result in a loss on the sale of the loans.

        Further, for the mortgage loans we sell in the secondary market, the mortgage loan sales contracts contain indemnification clauses should the loans default, generally within the first 90 – 120 days, or if documentation is determined not to be in compliance with regulations. While the Company has had no historic losses as a result of these indemnities, we could be required to repurchase the mortgage loans or reimburse the purchaser of our loans for losses incurred. Both of these situations could have an adverse effect on the profitability of our mortgage loan activities and negatively impact our net income.

    Our loan portfolio includes a significant number of commercial loans, which involve risks specific to commercial borrowers.

        Our loan portfolio includes a significant amount of commercial real estate loans and commercial lines of credit. Our typical commercial borrower is a small or medium-sized privately owned Colorado business entity. Our commercial loans typically have greater credit risks than standard residential mortgage or consumer loans because commercial loans often have larger balances, and repayment usually depends on the borrowers' successful business operations. Commercial loans also involve some additional risk because they generally are not fully repaid over the loan period and thus may require refinancing or a large payoff at maturity. If the general economy turns substantially downward, commercial borrowers may not be able to repay their loans, and the value of their assets, which are usually pledged as collateral, may decrease rapidly and significantly. Also, when credit markets tighten due to adverse developments in specific markets or the general economy, opportunities for refinancing may become more expensive or unavailable, resulting in loan defaults.

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    We may be subject to claims and litigation pertaining to our fiduciary responsibilities.

        Some of the services we provide, such as trust and investment services, require us to act as fiduciaries for our clients and others. From time to time, third parties make claims and take legal action against us pertaining to the performance of our fiduciary responsibilities. If these claims and legal actions are not resolved in a manner favorable to us, we may be exposed to significant financial liability or our reputation could be damaged. Either of these results may adversely impact demand for our products and services or otherwise have a material adverse effect on our business, financial condition or results of operations.

    The market for investment managers and professionals is extremely competitive and the loss of a key investment manager to a competitor could adversely affect our investment advisory and wealth management business.

        We believe that investment performance is one of the most important factors that affect the amount of assets under our management and, for that reason, the success of our business is heavily dependent on the quality and experience of our senior wealth management professionals and their track records in terms of making investment decisions that result in attractive investment returns for our clients. We consider the "chairman" and "president" roles in each of our profit center teams to be instrumental to executing our business strategy. However, the market for such investment professionals is extremely competitive and is increasingly characterized by frequent movement of these individuals among different firms. In addition, our individual investment professionals often have direct contact with particular clients, which can lead to a strong client relationship based on the client's trust in that individual manager. As a result, the loss of a key investment manager to a competitor could jeopardize our relationships with some of our clients and lead to the loss of client accounts, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

    The fair value of our investment securities can fluctuate due to factors outside of our control.

        As of March 31, 2018, the fair value of our investment securities portfolio was $49.9 million. Factors beyond our control can significantly influence and cause adverse changes to occur in the fair values of securities in that portfolio. These factors include, but are not limited to, rating agency actions in respect of the investment securities in our portfolio, defaults by the issuers of such securities, concerns with respect to the enforceability of the payment or other key terms of such securities, changes in market interest rates and continued instability in the capital markets. Any of these factors, as well as others, could cause other-than-temporary impairments and realized or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects. In addition, the process for determining whether an impairment of a security is other-than-temporary usually requires complex, subjective judgments, which could subsequently prove to have been wrong, regarding the future financial performance and liquidity of the issuer of the security, the fair value of any collateral underlying the security and whether and the extent to which the principal of and interest on the security will ultimately be paid in accordance with its payment terms.

    We may be adversely affected by the soundness of certain securities brokerage firms.

        We do not provide custodial services for our clients. Instead, client investment accounts are maintained under custodial arrangements with large, well established securities brokerage firms or bank institutions that provide custodial services (collectively, "brokerage firms"), either directly or through arrangements made by us with those firms. As a result, the performance of, or even rumors or questions about the integrity or performance of, any of those brokerage firms could adversely affect the confidence of our clients in the services provided by those firms or otherwise adversely impact their custodial holdings. Such an occurrence could negatively impact our ability to retain existing or attract new clients and, as a

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result, could have a material adverse effect on our business, financial condition, results of operations and prospects.

    The investment management contracts we have with our clients are terminable without cause and on relatively short notice by our clients, which makes us vulnerable to short-term declines in the performance of the securities under our management.

        Like most investment advisory and wealth management businesses, the investment advisory contracts we have with our clients are typically terminable by the client without cause upon less than 30 days' notice. As a result, even short-term declines in the performance of the securities we manage, which can result from factors outside our control, such as adverse changes in market or economic condition or the poor performance of some of the investments we have recommended to our clients, could lead some of our clients to move assets under our management to other asset classes such as broad index funds or treasury securities, or to investment advisors which have investment product offerings or investment strategies different than ours. Therefore, our operating results are heavily dependent on the financial performance of our investment portfolios and the investment strategies we employ in our investment advisory businesses and even short-term declines in the performance of the investment portfolios we manage for our clients, whatever the cause, could result in a decline in assets under management and a corresponding decline in investment management fees, which would adversely affect our results of operations.

    Fee revenue represents a significant portion of our consolidated revenue and is subject to decline, among other things, in the event of a reduction in, or changes to, the level or type of investment activity by our clients.

        A significant portion of our revenue results from fee-based services related to wealth advisory, private banking, personal trust, investment management, mortgage lending and institutional asset management services to derive revenue. This contrasts with many commercial banks that may rely more heavily on interest-based sources of revenue, such as loans. For the three months ended March 31, 2018 and the year ended December 31, 2017, non-interest income represented approximately 49.8% and 50.1%, respectively, of our consolidated gross revenue. The level of these fees is influenced by several factors, including the mix and volume of our assets under custody and administration and our assets under management, the value and type of securities positions held (with respect to assets under custody) and the volume of portfolio transactions, and the types of products and services used by our clients.

        In addition, our clients include institutional investors, such as mutual funds, collective investment funds, hedge funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments and investment managers. Economic, market or other factors that reduce the level or rates of savings in or with those institutions, either through reductions in financial asset valuations or through changes in investor preferences, could materially reduce our fee revenue or have a material adverse effect on our consolidated results of operations. These clients also, by their nature, are often able to exert considerable market influence, and this, combined with strong competitive forces in the markets for our services, has resulted in, and may continue to result in, significant pressure to reduce the fees we charge for our services in both our asset servicing and asset management business lines.

    The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings.

        We derive a significant amount of our revenues primarily from investment management fees based on assets under management. Our ability to maintain or increase assets under management is subject to a number of factors, including investors' perception of our past performance, in either relative or absolute terms, market and economic conditions, including changes in oil and gas prices, and competition from investment management companies. Financial markets are affected by many factors, all of which are

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beyond our control, including general economic conditions, including changes in oil and gas prices; securities market conditions; the level and volatility of interest rates and equity prices; competitive conditions; liquidity of global markets; international and regional political conditions; regulatory and legislative developments; monetary and fiscal policy; investor sentiment; availability and cost of capital; technological changes and events; outcome of legal proceedings; changes in currency values; inflation; credit ratings; and the size, volume and timing of transactions. A decline in the fair value of the assets under management, caused by a decline in general economic conditions, would decrease our wealth management fee income.

        Investment performance is one of the most important factors in retaining existing clients and competing for new wealth management clients. Poor investment performance could reduce our revenues and impair our growth in the following ways:

    Existing clients may withdraw funds from our wealth management business in favor of better performing products;

    Asset-based management fees could decline from a decrease in assets under management;

    Our ability to attract funds from existing and new clients might diminish; and

    Our portfolio managers may depart, to join a competitor or otherwise.

        Even when market conditions are generally favorable, our investment performance may be adversely affected by the investment style of our asset managers and the particular investments that they make. To the extent our future investment performance is perceived to be poor in either relative or absolute terms, the revenues and profitability of our wealth management business will likely be reduced and our ability to attract new clients will likely be impaired. As such, fluctuations in the equity and debt markets can have a direct impact upon our net earnings.

    Changes in interest rates could reduce our net interest margins and net interest income.

        Interest rates are key drivers of our net interest margin and subject to many factors beyond our control. Income and cash flows from our banking operations depend to a great extent on the difference or "spread" between the interest we earn on interest-earning assets, such as loans and investment securities, and the rates at which we pay interest on interest-bearing liabilities, such as deposits and borrowings. As interest rates change, net interest income is affected. Rapidly increasing interest rates in the future could result in interest expense increasing faster than interest income because of a divergence in financial instrument maturities or competitive pressures. Further, substantially higher interest rates generally reduce loan demand and may result in slower loan growth. Decreases or increases in interest rates could have a negative effect on the spreads between the interest rates earned on assets and the rates of interest paid on liabilities, and therefore decrease net interest income. Also, changes in interest rates might also impact the values of equity and debt securities under management and administration, which may have a negative impact on fee income.

        Interest rates are highly sensitive to many factors that are beyond our control, including (among others) general and regional and local economic conditions, the monetary policies of the Federal Reserve, bank regulatory requirements, competition from other banks and financial institutions and a change over time in the mix of our loans and investment securities, on the one hand, and on our deposits and other liabilities, on the other hand. Changes in monetary policy will, in particular, influence the origination and market value of and the yields we can realize on loans and investment securities, and the interest we pay on deposits. Additionally, sustained low levels of market interest rates, as we have experienced during the past nine years, could continue to place downward pressure on our net interest margins and, therefore, on our earnings.

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        Our net interest margins and earnings also could be adversely affected if we are unable to adjust our interest rates on loans and deposits on a timely basis in response to changes in economic conditions or monetary policies. For example, if the rates of interest we pay on deposits, borrowings and other interest-bearing liabilities increase faster than we are able to increase the rates of interest we charge on loans or the yields we realize on investments and other interest-earning assets, our net interest income and, therefore, our earnings will decrease. In particular, the rates of interest we charge on loans may be subject to longer fixed interest periods compared to the interest we must pay on deposits. On the other hand, increasing interest rates generally lead to increases in net interest income; however, such increases also may result in a reduction in loan originations, declines in loan prepayment rates and reductions in the ability of borrowers to repay their current loan obligations, which could result in increased loan defaults and charge-offs and could require increases to our ALLL, thereby offsetting either partially or totally the increases in net interest income resulting from the increase in interest rates. Additionally, we could be prevented from increasing the interest rates we charge on loans or from reducing the interest rates we offer on deposits due to "price" competition from other banks and financial institutions with which we compete. Conversely, in a declining interest rate environment, our earnings could be adversely affected if the interest rates we are able to charge on loans or other investments decline more quickly than those we pay on deposits and borrowings.

    Our allowance for credit losses may not be adequate to cover actual losses.

        In accordance with regulatory requirements and GAAP, we maintain an ALLL to provide for incurred loan and lease losses and a reserve for unfunded loan commitments. Our allowance for credit losses may not be adequate to absorb actual credit losses, and future provisions for credit losses could materially and adversely affect our operating results. Our allowance for credit losses is based on prior experience and an evaluation of the risks inherent in our then-current portfolio. The amount of future losses may also vary depending on changes in economic, operating and other conditions, including changes in interest rates that may be beyond our control, and these losses may exceed current estimates. Federal and state regulators, as an integral part of their examination process, review our loans and leases and allowance for credit losses. While we believe our allowance for credit losses is appropriate for the risk identified in our loan and lease portfolio, we may need to increase the allowance for credit losses, such increases may not be sufficient to address losses, and regulators may require us to increase this allowance even further. Any of these occurrences could have a material adverse effect on our business, financial condition, results of operations and prospects.

    Our business and operations may be adversely affected in numerous and complex ways by weak economic conditions and global trade.

        Our businesses and operations, including our private bank and trust services, which primarily consist of lending money to clients in the form of loans, borrowing money from clients in the form of deposits, investing in securities and investment management, are sensitive to general business and economic conditions in the United States. If the United States economy weakens, our growth and profitability from our lending, deposit and investment operations could be constrained. Uncertainty about the federal fiscal policymaking process, the medium- and long-term fiscal outlook of the federal government, and future tax rates is a concern for businesses, consumers and investors in the United States. In addition, economic conditions in foreign countries and weakening global trade due to increased anti-globalization sentiment could affect the stability of global financial markets, which could hinder the economic growth of the United States. Weak economic conditions are characterized by deflation, fluctuations in debt and equity capital markets, a lack of liquidity or depressed prices in the secondary market for loans, increased delinquencies on mortgage, consumer and commercial loans, residential and commercial real estate price declines and lower home sales and commercial activity. The current economic environment is also characterized by interest rates remaining at historically low levels, which impacts our ability to attract deposits and to

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generate attractive earnings through our investment portfolio. Further, a general economic slowdown could decrease the value of assets under management and administration by our trust services resulting in lower fee income, and clients potentially seeking alternative investment opportunities with other providers, which could result in lower fee income to us. All of these factors are detrimental to our business, and the interplay between these factors can be complex and unpredictable. Adverse economic conditions and government policy responses to such conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. Broad market performance may not be favorable in the future.

    Our results of operations and financial condition could be materially affected by the enactment of legislation implementing changes in the U.S. or the adoption of other tax reform policies.

        On December 22, 2017, the legislation commonly referred to as the Tax Cuts and Jobs Act ("Tax Reform Act") was enacted, which contains significant changes to U.S. tax law, including, but not limited to, a reduction in the corporate tax rate and a transition to a new territorial system of taxation. The primary impact of the new legislation on our provision for income taxes was a reduction of the future tax benefits of our deferred tax assets by approximately $1.2 million as a result of the reduction in the corporate tax rate. The impact of the Tax Reform Act will likely be subject to ongoing technical guidance and accounting interpretation, which we will continue to monitor and assess. Provisional accounting impacts may change in future reporting periods until the accounting analysis is finalized, which will occur no later than one year from the date the Tax Reform Act was enacted.

    Our business and operations may be adversely affected in numerous and complex ways by external business disruptors in the financial services industry.

        The financial services industry is undergoing rapid change, as technology enables non-traditional new entrants to compete in certain segments of the banking market, in some cases with reduced regulation. New entrants may use new technologies, advanced data and analytic tools, lower cost to serve, reduced regulatory burden or faster processes to challenge traditional banks. For example, new business models have been observed in retail payments, consumer and commercial lending, foreign exchange and low-cost investment advisory services. While we closely monitor business disruptors and seek to adapt to changing technologies, matching the pace of innovation exhibited by new and differently situated competitors may require us and policy-makers to adapt at a greater pace.

    We have pledged all of the stock of the Bank as collateral for a loan and if the lender forecloses, you could lose your investment.

        We have pledged all of the stock of the Bank as collateral for a third-party loan. The loan had no balance as of June 30, 2018. If we were to incur indebtedness under this loan and default, the lender of such loan could foreclose on the Bank's stock and we would lose our principal asset. In that event, if the value of the Bank's stock is less than the amount of the indebtedness, you could lose the entire amount of your investment.

    Liquidity risk could adversely affect our ability to fund operations and hurt our financial condition.

        Liquidity is essential to our banking business, as we use cash to make loans and purchase investment securities and other interest-earning assets and to fund deposit withdrawals that occur in the ordinary course of our business. Our principal sources of liquidity include earnings, deposits, repayment by clients of loans we have made to them, and the proceeds from sales by us of our equity securities or from borrowings that we may obtain. Potential alternative sources of liquidity include the sale of loans, the acquisition of national market non-core deposits, the issuance of additional collateralized borrowings such

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as Federal Home Loan Bank advances, access to the Federal Reserve discount window and the issuance of additional equity securities. If our ability to obtain funds from these sources becomes limited or the costs of those funds increase, whether due to factors that affect us specifically, including our financial performance, or due to factors that affect the financial services industry in general, including weakening economic conditions or negative views and expectations about the prospects for the financial services industry as a whole, then our ability to grow our banking and investment advisory and trust businesses would be harmed, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

    We may not be able to maintain a strong core deposit base or other low-cost funding sources.

        We depend on checking and savings deposit account balances and other forms of client deposits as our primary source of funding for our lending activities. Our future growth will largely depend on our ability to maintain and grow a strong deposit base and our ability to retain our largest trust clients, many of whom are also depositors. We may not be able to grow and maintain our deposit base. The account and deposit balances can decrease when clients perceive alternative investments, such as the stock market or real estate, as providing a better risk/return tradeoff. If clients, including our trust clients, move money out of bank deposits and into investments (or similar deposit products at other institutions that may provide a higher rate of return), we could lose a relatively low cost source of funds, increasing our funding costs and reducing our net interest income and net income. We also have increased risks from losses of bank deposit clients due to the large deposits we hold from certain clients. For example, as of December 31, 2017, our 10 largest depositors make up 29.1% of our total deposits. Losses of any one of these deposit clients would have an outsized impact on our results of operations. Additionally, any such loss of funds could result in lower loan originations, which could materially negatively impact our growth strategy.

    We receive substantial deposits and assets under management as a result of referrals by professionals, such as attorneys, accountants, and doctors, and such referrals are dependent upon the continued positive interaction with and financial health of those referral sources.

        Many of our deposit clients and clients of our private trust bank offices are individuals involved in professional vocations, such as lawyers, accountants, and doctors. These clients are a significant source of referrals for new clients in both the deposit and wealth management areas. If we fail to adequately serve these professional clients with our deposit services, lending, and wealth management products, this source of referrals may diminish, which could have a negative impact on our results. Further, if the economy in the geographic areas that we serve is negatively impacted, the amount of deposits and services that these professional individuals will utilize and the amount of referrals that they will make may decrease, which may have a material and adverse impact on our business, financial condition or results of operations.

    Our largest trust client accounts for 35.9% of our total assets under management.

        As of March 31, 2018, our largest trust client accounted for, in the aggregate, 35.9% of our total assets under management and 2.3% of our non-interest income. As a result, a material decrease in the volume of those trust assets by that client could materially reduce our assets under management, which would adversely affect our non-interest income and, therefore, our results of operations.

    The success of our business depends on achieving our strategic objectives, including through acquisitions which may not increase our profitability and may adversely affect our future operating results.

        Since we commenced our banking business in 2004, we have grown our banking franchise and now have thirteen locations in Colorado, Arizona, Wyoming and California, including a centralized operations center in downtown Denver. We plan to continue to grow our banking business both organically and

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through acquisitions of other banks and financial service providers, which may include entry into new markets. However, the implementation of our growth strategy poses a number of risks for us, including that:

    Any newly established offices will not generate revenues in amounts sufficient to cover the start-up costs of those offices, which would reduce our earnings;

    Acquisitions we might consummate in the future will prove not to be accretive to or may reduce our earnings if we do not realize anticipated cost savings, or if we incur unanticipated costs in integrating the acquired businesses into our operations or if a substantial number of the clients of any of the acquired businesses move their business to our competitors;

    Such expansion efforts will divert management time and effort from our existing banking operations, which could adversely affect our future financial performance; and

    Additional capital which we may need to support our growth or the issuance of shares in any acquisitions will be dilutive of the investments that our existing shareholders have in the shares of our common stock that they own and in their respective percentage ownership interests they have in the Company.

    We face intense competition from other banks and financial institutions and other wealth and investment management firms that could hurt our business.

        We conduct our business operations in markets where the banking business is highly competitive and is dominated by large multi-state and in-state banks with operations and offices covering wide geographic areas. We also compete with other financial service businesses, including investment advisory and wealth management firms, mutual fund companies, financial technology companies, and securities brokerage and investment banking firms that offer competitive banking and financial products and services as well as products and services that we do not offer. Larger banks and many of those other financial service organizations have greater financial and marketing resources than we do that enable them to conduct extensive advertising campaigns and to shift resources to regions or activities of greater potential profitability. They also have substantially more capital and higher lending limits than we do, which enable them to attract larger clients and offer financial products and services that we are unable to offer, putting us at a disadvantage in competing with them for loans and deposits and investment management clients. If we are unable to compete effectively with those banking or other financial services businesses, we could find it more difficult to attract new and retain existing clients and our net interest margins, net interest income and investment management fees could decline, which would materially adversely affect our business, results of operations and prospects, and could cause us to incur losses in the future.

        In addition, our ability to successfully attract and retain investment advisory and wealth management clients is dependent on our ability to compete with competitors' investment products, level of investment performance, client services and marketing and distribution capabilities. If we are not successful in retaining existing and attracting new investment management clients, our business, financial condition, results of operations and prospects may be materially and adversely affected.

    We may not be successful in implementing our internal growth strategy or be able to manage the risks associated with our anticipated growth through opening new boutique private trust bank offices, which could have a material adverse effect on our business, financial condition and results of operations.

        Our business strategy includes pursuing organic and internal growth and evaluating strategic opportunities to grow through opening new boutique private trust bank offices. We believe that banking location expansion has been meaningful to our growth since inception. We intend to pursue an organic growth strategy in addition to our acquisition strategy, the success of which is dependent on our ability to

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generate an increasing level of loans, deposits and assets under management at acceptable risk levels without incurring corresponding increases in noninterest expense. Opening new offices carries with it certain potential risks, including significant startup costs and anticipated initial operating losses; an inability to gain regulatory approval; an inability to secure the services of qualified senior management to operate the new offices and successfully integrate and promote our corporate culture; poor market reception for our new offices established in markets where we do not have a preexisting reputation; challenges posed by local economic conditions; challenges associated with securing attractive locations at a reasonable cost; and the additional strain on management resources and internal systems and controls. Further, we may not be successful in our organic growth strategies generally due to, among other factors, delays in introducing and implementing new products and services and other impediments resulting from regulatory oversight, lack of qualified personnel at existing locations. In addition, the success of our internal growth strategy will depend on maintaining sufficient regulatory capital levels and on favorable economic conditions in our primary market areas. Failure to adequately manage the risks associated with our anticipated growth, including growth through creating new boutique private trust bank offices, could have a material adverse effect on our business, financial condition and results of operations.

    Although we plan to grow our business internally, we may expand our business by acquiring other banks and financial services companies, and we may not be successful in doing so.

        While a key element of our business plan is to grow our banking franchise and increase our market share through internal and organic growth, we intend to take advantage of opportunities to acquire other banks, investment advisors, and other financial services companies as such opportunities present themselves. However, we may not succeed in seizing such opportunities when they arise. Our ability to execute on acquisition opportunities may require us to raise additional capital and to increase our capital position to support the growth of our franchise. It will also depend on market conditions; over which we have no control. Moreover, any acquisitions may require the approval of our bank regulators and we may not be able to obtain such approvals on acceptable terms, if at all.

    Acquisitions may subject us to integration risks and other unknown risks.

        Although we plan to continue to grow our business organically and through opening new boutique private trust bank offices, we also intend to pursue acquisition opportunities that we believe complement our activities and have the ability to enhance our profitability and provide attractive risk-adjusted returns. Our acquisition activities could be material to our business and involve a number of risks, including the failure to: adequately centralize and standardize policies, procedures, products, and processes; combine employee benefit plans and compensation cultures; implement a unified investment policy and make related adjustments to combined investment portfolios; implement a unified loan policy and conform lending authority; implement a standard loan management system; avoid delays in implementing new policies or procedures; and apply new policies or procedures.

        Certain events may arise after the date of an acquisition, or we may learn of certain facts, events or circumstances after the closing of an acquisition, that may affect our financial condition or performance or subject us to risk of loss. It is possible that we could undertake an acquisition that subsequently does not perform in line with our financial or strategic objectives or expectations. These events include, but are not limited to: retaining key associates and clients, achieving anticipated synergies, meeting expectations and otherwise realizing the undertaking's anticipated benefits; litigation resulting from circumstances occurring at the acquired entity prior to the date of acquisition; loan downgrades and credit loss provisions resulting from underwriting of certain acquired loans determined not to meet our credit standards; personnel changes that cause instability within a department; and other events relating to the performance of our business. In addition, if we determined that the value of an acquired business had decreased and that the related goodwill was impaired, an impairment of goodwill charge to earnings would be recognized.

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Acquisitions involve inherent uncertainty and we cannot determine all potential events, facts and circumstances that could result in loss or increased costs. Our due diligence or mitigation efforts may not be sufficient to protect against any such loss or increased costs.

    We are required to make significant estimates and assumptions in the preparation of our financial statements and our estimates and assumptions may not be accurate.

        The preparation of our consolidated financial statements in conformity with GAAP requires our management to make significant estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of income and expense during the reporting periods. Critical estimates are made by management in determining, among other things, the ALLL, amounts of impairment of assets, and valuation of income taxes. If our underlying estimates and assumptions prove to be incorrect, our financial condition and results of operations may be materially adversely affected.

    There are material limitations with making preliminary estimates of our financial results as of and for the three and six month periods ended June 30, 2018 prior to the completion of our and our auditors' financial review procedures for such period.

        The preliminary financial estimates contained in "Prospectus Summary—Recent Developments" are not a comprehensive statement of our financial results as of and for the three and six month periods ended June 30, 2018, and our auditors have not yet completed their review of such financial results. Our financial statements for the three and six month periods ended June 30, 2018 will not be available until after this offering is completed and, consequently, will not be available to you prior to investing in this offering. Our actual financial results for the three and six month periods ended June 30, 2018 may differ materially from the preliminary financial estimates we have provided as a result of the completion of our financial closing procedures, final adjustments and other developments arising between now and the time that our financial results for such periods are finalized. The preliminary financial data included herein have been prepared by, and are the responsibility of, management. Crowe LLP, our independent registered public accounting firm, has not audited, reviewed, compiled or performed any procedures with respect to such preliminary estimates. Accordingly, Crowe LLP does not express an opinion or any other form of assurance with respect thereto.

    The occurrence of fraudulent activity, breaches of our information security, and cybersecurity attacks could adversely affect our ability to conduct our business, manage our exposure to risk or expand our businesses, result in the disclosure or misuse of confidential or proprietary information, increase our costs to maintain and update our operational and security systems and infrastructure, and adversely impact our results of operations, liquidity and financial condition, as well as cause legal or reputational harm.

        As a financial institution, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed against us, our clients, or third parties with whom we interact and that may result in financial losses or increased costs to us or our clients, disclosure or misuse of confidential information belonging to us or personal or confidential information belonging to our clients, misappropriation of assets, litigation, or damage to our reputation. Our industry has seen increases in electronic fraudulent activity, hacking, security breaches, sophisticated social engineering and cyber-attacks within the financial services industry, including in the commercial banking sector, as cyber-criminals have been targeting commercial bank and brokerage accounts on an increasing basis.

        Our business is highly dependent on the security and efficacy of our infrastructure, computer and data management systems, as well as those of third parties with whom we interact or on whom we rely. Our business relies on the secure processing, transmission, storage and retrieval of confidential, proprietary and

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other information in our computer and data management systems and networks, and in the computer and data management systems and networks of third parties. In addition, to access our network, products and services, our customers and other third parties may use personal mobile devices or computing devices that are outside of our network environment and are subject to their own cybersecurity risks. All of these factors increase our risks related to cyber-threats and electronic disruptions.

        In addition to well-known risks related to fraudulent activity, which take many forms, such as check "kiting" or fraud, wire fraud, and other dishonest acts, information security breaches and cybersecurity-related incidents have become a material risk in the financial services industry. These threats may include fraudulent or unauthorized access to data processing or data storage systems used by us or by our clients, electronic identity theft, "phishing," account takeover, denial or degradation of service attacks, and malware or other cyber-attacks. These electronic viruses or malicious code are typically designed to, among other things:

    Obtain unauthorized access to confidential information belonging to us or our clients and customers;

    Manipulate or destroy data;

    Disrupt, sabotage or degrade service on a financial institution's systems; or

    Steal money.

        In recent periods, several governmental agencies and large corporations, including financial service organizations and retail companies, have suffered major data breaches, in some cases exposing not only their confidential and proprietary corporate information, but also sensitive financial and other personal information of their clients or clients and their employees or other third parties, and subjecting those agencies and corporations to potential fraudulent activity and their clients, clients and other third parties to identity theft and fraudulent activity in their credit card and banking accounts. Therefore, security breaches and cyber-attacks can cause significant increases in operating costs, including the costs of compensating clients and customers for any resulting losses they may incur and the costs and capital expenditures required to correct the deficiencies in and strengthen the security of data processing and storage systems.

        Unfortunately, it is not always possible to anticipate, detect, or recognize these threats to our systems, or to implement effective preventative measures against all breaches, whether those breaches are malicious or accidental. Cybersecurity risks for banking organizations have significantly increased in recent years and have been difficult to detect before they occur because, among other reasons:

    The proliferation of new technologies, and the use of the Internet and telecommunications technologies to conduct financial transactions;

    These threats arise from numerous sources, not all of which are in our control, including among others human error, fraud or malice on the part of employees or third parties, accidental technological failure, electrical or telecommunication outages, failures of computer servers or other damage to our property or assets, natural disasters or severe weather conditions, health emergencies or pandemics, or outbreaks of hostilities or terrorist acts;

    The techniques used in cyberattacks change frequently and may not be recognized until launched or until well after the breach has occurred;

    The increased sophistication and activities of organized crime groups, hackers, terrorist organizations, hostile foreign governments, disgruntled employees or vendors, activists and other external parties, including those involved in corporate espionage;

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    The vulnerability of systems to third parties seeking to gain access to such systems either directly or using equipment or security passwords belonging to employees, customers, third-party service providers or other users of our systems; and

    Our frequent transmission of sensitive information to, and storage of such information by, third parties, including our vendors and regulators, and possible weaknesses that go undetected in our data systems notwithstanding the testing we conduct of those systems.

        Although to date we have not experienced any losses or other material consequences relating to technology failure, cyber-attacks or other information, we may suffer such losses or other consequences in the future. While we invest in systems and processes that are designed to detect and prevent security breaches and cyber-attacks and we conduct periodic tests of our security systems and processes, we may not succeed in anticipating or adequately protecting against or preventing all security breaches and cyber-attacks from occurring. Even the most advanced internal control environment may be vulnerable to compromise. Targeted social engineering attacks are becoming more sophisticated and are extremely difficult to prevent. Additionally, the existence of cyber-attacks or security breaches at third parties with access to our data, such as vendors, may not be disclosed to us in a timely manner. While we had insurance against losses related to cyber insurance as of the date of this prospectus, we may not be able to insure against losses related to cyber-threats in the future and our insurance may not insure against all possible losses. As cyber-threats continue to evolve, we may be required to expend significant additional resources to continue to modify or enhance our protective measures or to investigate and remediate any information security vulnerabilities or incidents.

        As is the case with non-electronic fraudulent activity, cyber-attacks or other information or security breaches, whether directed at us or third parties, may result in a material loss or have material consequences. Furthermore, the public perception that a cyber-attack on our systems has been successful, whether or not this perception is correct, may damage our reputation with customers and third parties with whom we do business. A successful penetration or circumvention of system security could cause us negative consequences, including loss of customers and business opportunities, disruption to our operations and business, misappropriation or destruction of our confidential information and/or that of our customers, or damage to our customers' and/or third parties' computers or systems, and could expose us to additional regulatory scrutiny and result in a violation of applicable privacy laws and other laws, litigation exposure, regulatory fines, penalties or intervention, loss of confidence in our security measures, reputational damage, reimbursement or other compensatory costs, additional compliance costs, and could adversely impact our results of operations, liquidity and financial condition.

    We rely on communications, information, operating and financial control systems technology and related services from third-party service providers and we may suffer an interruption in those systems.

        We also face indirect technology, cybersecurity and operational risks relating to the third parties with whom we do business or upon whom we rely to facilitate or enable our business activities. In addition to customers and clients, the third parties with whom we interact and upon whom we rely include financial counterparties; financial intermediaries such as clearing agents, exchanges and clearing houses; vendors; regulators; providers of critical infrastructure such as internet access and electrical power; and other parties for whom we process transactions. Each of these third parties faces the risk of cyber-attack, information breach or loss, or technology failure. Any such cyber-attack, information breach or loss, or technology failure of a third party could, among other things, adversely affect our ability to effect transactions, service our clients, manage our exposure to risk or expand our businesses. Additionally, interruptions in service and security breaches could damage our reputation, lead existing clients to terminate their business relationships with us, make it more difficult for us to attract new clients and subject us to additional regulatory scrutiny and possibly financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

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    We continually encounter technological change, and we may have fewer resources than many of our competitors to invest in technological improvements.

        The financial services industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve clients and to reduce costs. Our future success will depend, in part, upon our ability to address the needs of our clients by using technology to provide products and services that will satisfy client demands for convenience, as well as to create additional efficiencies in our operations. Many national vendors provide turn-key services that allow smaller banks to compete with institutions that have substantially greater resources to invest in technological improvements. We may not be able, however, to effectively implement new technology-driven products and services or be successful in marketing these products and services to our clients.

    Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed.

        Our ability to attract and retain clients and key associates could be adversely affected if our reputation is harmed. Any actual or perceived failure to address various issues could cause reputational harm, including a failure to address any of the following types of issues: legal and regulatory requirements; the proper maintenance or protection of the privacy of client and employee financial or other personal information; record keeping deficiencies or errors; money-laundering; and potential conflicts of interest or ethical issues. Moreover, any failure to appropriately address any issues of this nature could give rise to additional regulatory restrictions, and legal risks, which could lead to costly litigation or subject us to enforcement actions, fines, or penalties and cause us to incur related costs and expenses. In addition, our banking, investment advisory and wealth management businesses are dependent on the integrity of our banking personnel and our investment advisory and wealth managers. Lapses in integrity could cause reputational harm to our businesses that could lead to the loss of existing clients and make it more difficult for us to attract new clients and, therefore, could have a material adverse effect on our business, financial condition, results of operations and prospects.

    We may incur significant losses due to ineffective risk management processes and strategies.

        We seek to monitor and control our risk exposures through a risk and control framework encompassing a variety of separate but complementary financial, credit, operational and compliance systems, and internal control and management review processes. However, those systems and review processes and the judgments that accompany their application may not be effective and, as a result, we may not anticipate every economic and financial outcome in all market environments or the specifics and timing of such outcomes, particularly in the event of the kinds of dislocations in market conditions experienced in recent years, which highlight the limitations inherent in using historical data to manage risk. If those systems and review processes prove to be ineffective in identifying and managing risks, we could be subjected to increased regulatory scrutiny and regulatory restrictions could be imposed on our business, including on our potential future business lines, as a result of which our business and operating results could be adversely affected.

    A natural disaster could harm our business.

        Historically, Colorado, Wyoming, Arizona, and especially California, in which a substantial portion of our business is located, have been susceptible to natural disasters, such as earthquakes, floods, mudslides, and wild fires. The nature and level of natural disasters cannot be predicted. These natural disasters could harm our operations through interference with communications, including the interruption or loss of our computer systems, which could prevent or impede us from gathering deposits, originating loans and processing and controlling our flow of business, as well as through the destruction of facilities and our

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operational, financial and management information systems. Additionally, natural disasters could negatively impact the values of collateral securing our borrowers' loans and interrupt our borrowers' abilities to conduct their business in a manner to support their debt obligations, either of which could result in losses and increased provisions for loan losses for us.

    We are exposed to risk of environmental liabilities with respect to real properties that we may acquire.

        From time to time, in the ordinary course of our business, we acquire, by or in lieu of foreclosure, real properties which collateralize nonperforming loans. As an owner of such properties, we could become subject to environmental liabilities and incur substantial costs for any property damage, personal injury, investigation and clean-up that may be required due to any environmental contamination that may be found to exist at any of those properties, even if we did not engage in the activities that led to such contamination and those activities took place prior to our ownership of the properties. In addition, if we are the owner or former owner of a contaminated site, we may be subject to common law claims by third parties seeking damages for environmental contamination emanating from the site. If we were to become subject to significant environmental liabilities or costs, our business, financial condition, results of operations and prospects could be materially and adversely affected.

    New lines of business or new products and services may subject us to additional risks.

        From time to time, we may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts. We may invest significant time and resources in developing and marketing new lines of business or new products and services. Initial timetables for the introduction and development of new lines of business or new products or services may not be achieved and price and profitability targets may not prove feasible or may be dependent on identifying and hiring a qualified person to lead the division. In addition, existing management personnel may not have the experience or capacity to provide effective oversight of new lines of business or new products and services.

        External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. Furthermore, any new line of business or new product or service could have a significant impact on the effectiveness of our system of internal controls. Failure to successfully manage these risks in the development and implementation of new lines of business or new products or services could have a material adverse effect on our business, results of operations, financial condition and prospects.

    We rely on customer and counterparty information, which subjects us to risks if that information is not accurate or is incomplete.

        When deciding whether to extend credit or enter into other transactions with customers or counterparties, we may rely on information provided by or on behalf of those customers and counterparties, including audited financial statements and other financial information. We may also rely on representations made by customers and counterparties that the information they provide is accurate and complete. We conduct appropriate due diligence on such customer information and, where practical and economical, we engage valuation and other experts or sources of information to assist with assessing collateral and other customer risks. Our financial results could be adversely affected if the financial statements, collateral value or other financial information provided by customers or counterparties are incorrect.

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Risks Related to Our Regulatory Environment

    The financial services industry is highly regulated, and legislative or regulatory actions taken now or in the future may have a significant adverse effect on our operations.

        The financial services industry is extensively regulated and supervised under both federal and state laws and regulations that are intended primarily to protect clients, depositors, the Federal Deposit Insurance Corporation ("FDIC") deposit insurance fund, and the banking system as a whole, not our shareholders. We are subject to the regulation and supervision of the Federal Reserve, the FDIC and the Colorado Division of Banking ("CDB"). The banking laws, regulations and policies applicable to us govern matters ranging from the maintenance of adequate capital, safety and soundness, mergers and changes in control to the general business operations conducted by us, including permissible types, amounts and terms of loans and investments, the amount of reserves held against deposits, restrictions on dividends, imposition of specific accounting requirements, establishment of new offices and the maximum interest rate that may be charged on loans.

        We are subject to changes in federal and state banking statutes, regulations and governmental policies, or the interpretation or implementation of them, and are subject to changes and increased complexity in regulatory requirements as governments and regulators continue reforms intended to strengthen the stability of the financial system and protect key markets and participants. Any changes in any federal or state banking statute, regulation or governmental policy, including changes which occurred in 2017 and may occur in 2018 and beyond during the current and future administration, could affect us in substantial and unpredictable ways, including ways that may adversely affect our business, results of operations, financial condition or prospects. Compliance with laws and regulations can be difficult and costly, and changes to laws and regulations often impose additional compliance costs. In addition, federal and state banking regulators have broad authority to supervise our banking business and that of our subsidiaries, including the authority to prohibit activities that represent unsafe or unsound banking practices or constitute violations of statute, rule, regulation, or administrative order. Failure to comply with any such laws, regulations or regulatory policies could result in sanctions by regulatory agencies, restrictions on our business activities, civil money penalties or damage to our reputation, all of which could adversely affect our business, results of operations, financial condition or prospects.

    Federal and state banking agencies periodically conduct examinations of our business, including compliance with laws and regulations, and our failure to comply with any supervisory actions which we are, or may become, subject to as a result of such examinations may adversely affect us.

        The Federal Reserve, the FDIC, and the CDB may conduct examinations of our business, including for compliance with applicable laws and regulations. As a result of an examination, regulatory agencies may determine that the financial condition, capital resources, asset quality, asset concentrations, earnings prospects, management, liquidity, sensitivity to market risk, or other aspects of any of our operations are unsatisfactory, or that we or our management are in violation of any law, regulation or guideline in effect from time to time. Regulatory agencies may take a number of different remedial actions, including the power to enjoin "unsafe or unsound" practices, to require affirmative actions to correct any conditions resulting from any violation or practice, to issue an administrative order that can be judicially enforced, to direct an increase in our capital, to restrict our growth, to change the composition of our concentrations in portfolio or balance sheet assets, to assess civil monetary penalties against officers or directors, to remove officers and directors and, if such conditions cannot be corrected or there is an imminent risk of loss to depositors, the FDIC may terminate our deposit insurance. A regulatory action against us could have a material adverse effect on our business, results of operations, financial condition and prospects.

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    The Dodd-Frank Act may have a material effect on our operations.

        The Dodd-Frank Act imposes significant regulatory and compliance changes on financial institutions and non-bank providers of financial products. The Dodd-Frank Act has had and will continue to have an impact on our business in the following ways:

    Changes to regulatory capital requirements;

    Creation of government regulatory agencies (particularly the Consumer Financial Protection Bureau (the "CFPB"), which develops and enforces rules for bank and non-bank providers of consumer financial products);

    Changes to deposit insurance assessments;

    Regulation of debit interchange fees we earn;

    Changes in retail banking regulations, including potential limitations on certain fees we may charge; and

    Changes in the regulation of consumer mortgage loan origination and risk retention.

        In addition, the Dodd-Frank Act restricts the ability of banks to engage in certain proprietary trading or to sponsor or invest in private equity or hedge funds. The Dodd-Frank Act also contains provisions designed to limit the ability of insured depository institutions, their holding companies, and their affiliates to conduct certain swaps and derivatives activities and to take certain principal positions in financial instruments. Some provisions of the Dodd-Frank Act have not been completely implemented and future implementation is uncertain in light of the transition of power in the United States federal government to the new administration following the 2016 election. The changes resulting from the Dodd-Frank Act may impact the profitability of our business activities or otherwise adversely affect our business. Failure to comply with the requirements may negatively impact our results of operations and financial condition. While we cannot predict what effect any presently contemplated or future changes in the laws or regulations or their interpretations would have on us, these changes could be materially adverse to investors in our equity securities.

    As a result of the Dodd-Frank Act and associated rulemaking, we have become subject to more stringent capital requirements.

        On July 2, 2013, the Federal Reserve, and on July 9, 2013, the FDIC and the Office of the Comptroller of the Currency (the "OCC"), adopted a final rule that implements the Basel III changes to the international regulatory capital framework and revises the U.S. risk-based and leverage capital requirements for U.S. banking organizations to strengthen identified areas of weakness in capital rules and to address relevant provisions of the Dodd-Frank Act.

        The final rule established a stricter regulatory capital framework that requires banking organizations to hold more and higher-quality capital to act as a financial cushion to absorb losses and help banking organizations better withstand periods of financial stress. The final rule increased capital ratios for all banking organizations and introduced a "capital conservation buffer" which is in addition to each capital ratio. If a banking organization dips into its capital conservation buffer, it may be restricted in its ability to pay dividends and discretionary bonus payments to its executive officers. The final rule assigned a higher risk weight (150%) to exposures that are more than 90 days past due or are on nonaccrual status and to certain commercial real estate facilities that finance the acquisition, development or construction of real property. The final rule also required unrealized gains and losses on certain "available-for-sale" securities holdings to be included for purposes of calculating regulatory capital requirements unless a one-time opt-out is exercised. We exercised this opt-out right in our March 31, 2015 quarterly financial filing. The

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final rule also included changes in what constitutes regulatory capital, some of which are subject to a two-year transition period. These changes included the phasing-out of certain instruments as qualifying capital. In addition, Tier 2 capital is no longer limited to the amount of Tier 1 capital included in total capital. Mortgage servicing rights, certain deferred tax assets and investments in unconsolidated subsidiaries over designated percentages of common stock are required to be deducted from capital, subject to a two-year transition period.

        The final rule became effective for us on January 1, 2015. As of December 31, 2017, we met all of these new requirements, including the full capital conservation buffer.

        Although we currently cannot predict the specific impact and long-term effects that Basel III will have on our Company and the banking industry more generally, the Company will be required to maintain higher regulatory capital levels which could impact our operations, net income and ability to grow. Furthermore, the Company's failure to comply with the minimum capital requirements could result in our regulators taking formal or informal actions against us which could restrict our future growth or operations.

    New and future rulemaking by the CFPB and other regulators, as well as enforcement of existing consumer protection laws, may have a material and adverse effect on our operations and operating costs.

        The CFPB has the authority to implement and enforce a variety of existing federal consumer protection statutes and to issue new regulations but, with respect to institutions of our size, does not have primary examination and enforcement authority with respect to such laws and regulations. The authority to examine depository institutions with $10.0 billion or less in assets, like us, for compliance with federal consumer laws remains largely with our primary federal regulator, the FDIC. However, the CFPB may participate in examinations of smaller institutions on a "sampling basis" and may refer potential enforcement actions against such institutions to their primary regulators. In some cases, regulators such as the Federal Trade Commission and the Department of Justice also retain certain rulemaking or enforcement authority, and we also remain subject to certain state consumer protection laws. As an independent bureau within the Federal Reserve, the CFPB may impose requirements more severe than the previous bank regulatory agencies. The CFPB has placed significant emphasis on consumer complaint management and has established a public consumer complaint database to encourage consumers to file complaints they may have against financial institutions. We are expected to monitor and respond to these complaints, including those that we deem frivolous, and doing so may require management to reallocate resources away from more profitable endeavors.

    The level of our commercial real estate loan portfolio may subject us to heightened regulatory scrutiny.

        The FDIC and the Federal Reserve have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under the guidance, a financial institution that is actively involved in commercial real estate lending should perform a risk assessment to identify potential concentrations in commercial real estate lending. A financial institution may have such a concentration if, among other factors: (i) total outstanding loans for construction, land development, and other land represent 100% or more of total risk-based capital ("CRE 1 Concentration"); or (ii) total outstanding loans for construction, land development and other land and loans secured by multifamily and non-owner occupied non-farm, non-residential properties (excluding loans secured by owner-occupied properties) represent 300% or more of total risk-based capital ("CRE 2 Concentration") and the institution's commercial real estate loan portfolio has increased by 50% or more during the prior 36-month period. In such an instance, management should employ heightened risk management practices, including board and management oversight and strategic planning, development of underwriting standards, risk assessment and monitoring through market analysis and stress testing. As of

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March 31, 2018, our CRE 1 Concentration level was 56.1% and our CRE 2 Concentration level was 195.5%. We may, at some point, be considered to have a concentration in the future, or our risk management practices may be found to be deficient, which could result in increased reserves and capital costs as well as potential regulatory enforcement action.

    We are subject to numerous laws designed to protect consumers, including the Community Reinvestment Act and fair lending laws, and failure to comply with these laws could lead to a wide variety of sanctions.

        The Community Reinvestment Act, the Equal Credit Opportunity Act, the Fair Housing Act and other fair lending laws and regulations impose nondiscriminatory lending requirements on financial institutions. The Department of Justice, the CFPB and other federal agencies are responsible for enforcing these laws and regulations. A successful regulatory challenge to an institution's performance under the Community Reinvestment Act or fair lending laws and regulations could result in a wide variety of sanctions, including damages and civil money penalties, injunctive relief, restrictions on mergers and acquisitions activity, restrictions on expansion, and restrictions on entering new business lines. Private parties may also have the ability to challenge an institution's performance under fair lending laws in private class action litigation. Any such actions could have a material adverse effect on our business, financial condition, results of operations and prospects.

    We face a risk of noncompliance and enforcement action with the Bank Secrecy Act and other anti-money laundering statutes and regulations.

        The federal Bank Secrecy Act, Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the "USA PATRIOT Act") and other laws and regulations require financial institutions, among other duties, to institute and maintain effective anti-money laundering programs and file suspicious activity and currency transaction reports as appropriate. The federal Financial Crimes Enforcement Network, established by the Treasury to administer the Bank Secrecy Act, is authorized to impose significant civil money penalties for violations of those requirements and has recently engaged in coordinated enforcement efforts with the individual federal banking regulators, as well as the U.S. Department of Justice, Drug Enforcement Administration and Internal Revenue Service. There is also increased scrutiny of compliance with the sanctions rules enforced by the Office of Foreign Assets Control. If our policies, procedures and systems are deemed deficient or the policies, procedures and systems of any financial institutions that we may acquire in the future are deemed deficient, we would be subject to liability, including fines and regulatory actions such as restrictions on our ability to pay dividends and the necessity to obtain regulatory approvals to proceed with certain aspects of our business plan, which would negatively impact our business, financial condition and results of operations. Failure to maintain and implement adequate programs to combat money laundering and terrorist financing could also have serious reputational consequences for us. Any of these results could materially and adversely affect our business, financial condition, results of operations and prospects.

    Regulations relating to privacy, information security and data protection could increase our costs, affect or limit how we collect and use personal information and adversely affect our business opportunities.

        We are subject to various privacy, information security and data protection laws, including requirements concerning security breach notification, and we could be negatively impacted by these laws. For example, our business is subject to the Gramm-Leach-Bliley Act which, among other things: (i) imposes certain limitations on our ability to share non-public personal information about our clients with non-affiliated third parties; (ii) requires that we provide certain disclosures to clients about our information collection, sharing and security practices and afford clients the right to "opt out" of any information sharing by us with non-affiliated third parties (with certain exceptions); and (iii) requires we develop, implement and maintain a written comprehensive information security program containing

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safeguards appropriate based on our size and complexity, the nature and scope of our activities, and the sensitivity of client information we process, as well as plans for responding to data security breaches. Various state and federal banking regulators and states and foreign countries have also enacted data security breach notification requirements with varying levels of individual, consumer, regulatory or law enforcement notification in certain circumstances in the event of a security breach. Moreover, legislators and regulators in the United States and other countries are increasingly adopting or revising privacy, information security and data protection laws that potentially could have a significant impact on our current and planned privacy, data protection and information security-related practices, our collection, use, sharing, retention and safeguarding of consumer or employee information, and some of our current or planned business activities. This could also increase our costs of compliance and business operations and could reduce income from certain business initiatives. This includes increased privacy-related enforcement activity at the federal level, by the Federal Trade Commission, as well as at the state level, such as with regard to mobile applications.

        Compliance with current or future privacy, data protection and information security laws (including those regarding security breach notification) affecting client or employee data to which we are subject could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could have a material adverse effect on our business, financial conditions or results of operations. Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory or governmental investigations or actions, litigation, fines, sanctions and damage to our reputation, which could have a material adverse effect on our business, financial condition or results of operations.

    We can be subject to legal and regulatory proceedings, investigations and inquiries related to conduct risk.

        Such legal and regulatory activities could result in significant penalties and other negative impacts on our businesses and results of operations. At any given time, we can be involved in defending legal and regulatory proceedings and are subject to numerous governmental and regulatory examinations, investigations and other inquiries. The frequency with which such proceedings, investigations and inquiries are initiated have increased over the last few years, and the global judicial, regulatory and political environment generally remains hostile to financial institutions. For example, the U.S. Department of Justice, or the DOJ, conditions the granting of cooperation credit in civil and criminal investigations of corporate wrongdoing on the company involved having provided to investigators all relevant facts relating to the individuals responsible for the alleged misconduct. The complexity of the federal and state regulatory and enforcement regimes in the U.S., means that a single event or issue may give rise to a large number of overlapping investigations and regulatory proceedings, either by multiple federal and state agencies in the U.S. or by multiple regulators and other governmental entities in different jurisdictions. Moreover, U.S. authorities have been increasingly focused on "conduct risk," a term that is used to describe the risks associated with behavior by employees and agents, including third-party vendors, that could harm clients, consumers, investors or the markets, such as failures to safeguard consumers' and investors' personal information, failures to identify and manage conflicts of interest and improperly creating, selling and marketing products and services. In addition to increasing compliance risks, this focus on conduct risk could lead to more regulatory or other enforcement proceedings and litigation, including for practices which historically were acceptable but are now receiving greater scrutiny. Further, while we take numerous steps to prevent and detect conduct by employees and agents that could potentially harm customers, investors or the markets, such behavior may not always be deterred or prevented. Banking regulators have also focused on the overall culture of financial services firms. In addition to regulatory restrictions or structural changes that could result from perceived deficiencies in our culture, such focus could also lead to additional regulatory proceedings.

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    FWCM's business is highly regulated, and the regulators have the ability to limit or restrict, and impose fines or other sanctions on, FWCM's business.

        FWCM is registered as an investment adviser with the SEC under the Investment Advisers Act of 1940, as amended (the "Investment Advisers Act"), and its business is highly regulated. The Investment Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary, record keeping, operational and disclosure obligations. Moreover, the Investment Advisers Act grants broad administrative powers to regulatory agencies such as the SEC to regulate investment advisory businesses. If the SEC or other government agencies believe that FWCM has failed to comply with applicable laws or regulations, these agencies have the power to impose fines, suspensions of individual employees or other sanctions, which could include revocation of FWCM's registration under the Investment Advisers Act. We are also subject to the provisions and regulations of ERISA to the extent that we act as a "fiduciary" under ERISA with respect to certain of our clients. ERISA and the applicable provisions of the federal tax laws, impose a number of duties on persons who are fiduciaries under ERISA and prohibit certain transactions involving the assets of each ERISA plan which is a client, as well as certain transactions by the fiduciaries (and certain other related parties) to such plans. Additionally, like other investment advisory and wealth management companies, FWCM also faces the risks of lawsuits by clients. The outcome of regulatory proceedings and lawsuits is uncertain and difficult to predict. An adverse resolution of any regulatory proceeding or lawsuit against FWCM could result in substantial costs or reputational harm to FWCM and, therefore, could have an adverse effect on the ability of FWCM to retain key relationship and wealth managers, and to retain existing clients or attract new clients, any of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Risks Related to an Investment in our Common Stock

    There is currently no regular market for our common stock. An active, liquid market for our common stock may not develop or be sustained upon completion of this offering, which may impair your ability to sell your shares.

        Our common stock is not currently traded on an established public trading market. As a result, there is no regular market for our common stock. We contemplate that we will list our common stock on the Nasdaq Global Select Market, but an active, liquid trading market for our common stock may not develop or be sustained following this offering. A public trading market having the desired characteristics of depth, liquidity and orderliness depends upon the presence in the marketplace and independent decisions of willing buyers and sellers of our common stock, over which we have no control. Without an active, liquid trading market for our common stock, shareholders may not be able to sell their shares at the volume, prices and times desired. Moreover, the lack of an established market could materially and adversely affect the value of our common stock. The market price of our common stock could decline significantly due to actual or anticipated issuances or sales of our common stock in the future.

    The market price of our common stock may be subject to substantial fluctuations, which may make it difficult for you to sell your shares at the volume, prices and times desired.

        The market price of our common stock may be highly volatile, which may make it difficult for you to resell your shares at the volume, prices and times desired. There are many factors that may affect the market price and trading volume of our common stock, including, without limitation:

    Actual or anticipated fluctuations in our operating results, financial condition or asset quality;

    Changes in economic or business conditions;

    The effects of, and changes in, trade, monetary and fiscal policies, including the interest rate policies of the Federal Reserve;

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    Publication of research reports about us, our competitors, or the financial services industry generally, or changes in, or failure to meet, securities analysts' estimates of our financial and operating performance, or lack of research reports by industry analysts or ceasing of coverage;

    Operating and stock price performance of companies that investors deemed comparable to us;

    Additional or anticipated sales of our common stock or other securities by us or our existing shareholders;

    Additions or departures of key personnel;

    Perceptions in the marketplace regarding our competitors or us;

    Significant acquisitions or business combinations, strategic partnerships, joint ventures or capital commitments by or involving our competitors or us;

    Other economic, competitive, governmental, regulatory and technological factors affecting our operations, pricing, products and services; and

    Other news, announcements or disclosures (whether by us or others) related to us, our competitors, our primary markets or the financial services industry.

        The stock market and, in particular, the market for financial institution stocks have experienced substantial fluctuations in recent years, which in many cases have been unrelated to the operating performance and prospects of particular companies. In addition, significant fluctuations in the trading volume in our common stock may cause significant price variations to occur. Increased market volatility may materially and adversely affect the market price of our common stock, which could make it difficult to sell your shares at the volume, prices and times desired.

    The market price of our common stock could decline significantly due to actual or anticipated issuances or sales of our common stock in the future.

        Actual or anticipated issuances or sales of substantial amounts of our common stock following this offering could cause the market price of our common stock to decline significantly and make it more difficult for us to sell equity or equity-related securities in the future at a time and on terms that we deem appropriate. The issuance of any shares of our common stock in the future also would, and equity-related securities could, dilute the percentage ownership interest held by shareholders prior to such issuance. Our articles of incorporation authorize us to issue up to 90 million shares of our common stock, 7,418,194 of which will be outstanding following the completion of this offering (or 7,695,694 shares if the underwriters exercise in full their option to purchase additional shares). All of the shares of common stock sold in this offering will be freely tradable, except that any shares purchased by our "affiliates" (as that term is defined in Rule 144 under the Securities Act of 1933, as amended, or the Securities Act) may be resold only in compliance with the limitations described under "Shares Eligible for Future Sale." The remaining 5,568,194 outstanding shares of our common stock will be deemed to be "restricted securities" as that term is defined in Rule 144, and may be resold in the United States only if they are registered for resale under the Securities Act or an exemption, such as Rule 144, is available. We also intend to file a registration statement on Form S-8 under the Securities Act to register shares of common stock issued or reserved for issuance under our equity incentive plans. We may issue all of these shares without any additional action or approval by our shareholders, and these shares, once issued (including upon exercise of outstanding options), will be available for sale into the public market, subject to the restrictions described above, if applicable, for affiliate holders.

        Further, in connection with this offering, we, our directors and our executive officers have agreed to enter into lock-up agreements that restrict the sale of their holdings of our common stock for a period of

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180 days from the date of this prospectus. The underwriters, in their discretion, may release any of the shares of our common stock subject to these lock-up agreements at any time without notice. The resale of such shares could cause the market price of our stock to drop significantly, and concerns that those sales may occur could cause the trading price of our common stock to decrease or to be lower than it should be.

        In addition, we may issue shares of our common stock or other securities from time to time as consideration for future acquisitions and investments and pursuant to compensation and incentive plans. If any such acquisition or investment is significant, the number of shares of our common stock, or the number or aggregate principal amount, as the case may be, of other securities that we may issue may in turn be substantial. We may also grant registration rights covering those shares of our common stock or other securities in connection with any such acquisitions and investments.

        We cannot predict the size of future issuances of our common stock or the effect, if any, that future issuances and sales of our common stock will have on the market price of our common stock. Sales of substantial amounts of our common stock (including shares of our common stock issued in connection with an acquisition or under a compensation or incentive plan), or the perception that such sales could occur, may adversely affect prevailing market prices for our common stock and could impair our ability to raise capital through future sales of our securities.

    The obligations associated with being a public company will require significant resources and management attention, which will increase our costs of operations and may divert focus from our business operations.

        As a public company, we will face increased legal, accounting, administrative and other costs and expenses that we have not incurred as a private company, particularly after we no longer qualify as an emerging growth company. We expect to incur substantial costs related to operating as a public company, and these costs may be higher when we no longer qualify as an emerging growth company. After the completion of this offering, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, which requires that we file annual, quarterly and current reports with respect to our business and financial condition and proxy and other information statements, and the rules and regulations implemented by the SEC, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act, the PCAOB and the Nasdaq Global Select Market, each of which imposes additional reporting and other obligations on public companies. As a public company, compliance with these reporting requirements and other SEC and the Nasdaq Global Select Market rules will make certain operating activities more time-consuming, and we will also incur significant new legal, accounting, insurance and other expenses. Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management's attention from implementing our operating strategy, which could prevent us from successfully implementing our strategic initiatives and improving our results of operations. We have made, and will continue to make, changes to our internal controls and procedures for financial reporting and accounting systems to meet our reporting obligations as a public company. However, we cannot predict or estimate the amount of additional costs we may incur in order to comply with these requirements. We anticipate that these costs will materially increase our general and administrative expenses and such increases will reduce our profitability.

    We had a material weakness in internal control over financial reporting relating to the accounting treatment of a non-recurring asset acquisition treated as a business combination in 2017. Failure to implement and maintain effective internal control over financial reporting could result in material misstatements in our financial statements, which could require us to restate financial statements, impair investor confidence in our reported financial information and have a negative effect on the trading price of our common stock.

        Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. For the year ended December 31, 2017, in

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connection with the preparation of year-end financial statements, a material weakness was identified in our internal control design over financial reporting for a business combination transaction related to our asset acquisition with EMC. The control designed to evaluate the accounting for the business combination during 2017 did not operate at a precise level to timely prevent and detect a misstatement prior to submission to the independent auditor.

        To address this material weakness, we designed and implemented controls to review the data inputs, expanded research inclusive of the relevant GAAP as well as industry technical guidance and documentation, models, valuations and other processes related to significant and unusual transactions, including business combinations. We will continue to periodically test and update, as necessary, our internal control systems, including our financial reporting controls. We have also hired additional accounting personnel in anticipation of our transition from a private company to a public company. Our actions, however, may not be sufficient to result in an effective internal control environment, and any future failure to maintain effective internal control over financial reporting could impair the reliability of our financial statements, which in turn could harm our business, impair investor confidence in the accuracy and completeness of our financial reports, impair our access to the capital markets, cause the price of our common stock to decline and subject us to regulatory penalties.

    Investors in this offering will experience immediate and substantial dilution.

        The initial public offering price is substantially higher than the tangible book value per share of our common stock immediately following this offering. Therefore, if you purchase shares in this offering, you will experience immediate and substantial dilution in tangible book value per share in relation to the price that you paid for your shares. We expect the dilution to new investors as a result of this offering to be $9.24 per share, based on an assumed initial public offering price of $20.00 per share, which is the midpoint of the price range set forth on the cover page of this prospectus, and our pro forma tangible book value of $10.76 per share as of March 31, 2018. Further, this initial public offering may trigger certain rights held by shareholders who have Make Whole Rights, as discussed in "Certain Relationships and Related Persons Transactions—Make Whole Rights." These Make Whole Rights will result in the issuance of up to 128,977 additional shares of common stock, which will have an immediately dilutive effect on the shares issued in this offering. Accordingly, if we were liquidated at our pro forma tangible book value, you would not receive the full amount of your investment. See "Dilution."

    Securities analysts may not initiate or continue coverage on us.

        The trading market for our common stock will depend, in part, on the research and reports that securities analysts publish about us and our business. We do not have any control over these securities analysts, and they may not cover us. If one or more of these analysts cease to cover us or fail to publish regular reports on us, we could lose visibility in the financial markets, which could cause the price or trading volume of our common stock to decline. If we are covered by securities analysts and are the subject of an unfavorable report, the price of our common stock may decline.

    Our management and board of directors have significant control over our business.

        As of June 30, 2018, our directors and executive officers beneficially owned an aggregate of 1,862,133 shares, or approximately 30.4% of our shares of common stock. Following the completion of this offering, our directors and executive officers will beneficially own approximately 24.4% of our outstanding common stock as a group (or 23.6% if the underwriters exercise in full their option to purchase additional shares), excluding any shares that may be purchased in this offering by our directors and executive officers through the directed share program described in "Underwriting—Directed Share Program." Consequently, our management and board of directors may be able to significantly affect our affairs and policies, including

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the outcome of the election of directors and the potential outcome of other matters submitted to a vote of our shareholders, such as mergers, the sale of substantially all of our assets and other extraordinary corporate matters. This influence may also have the effect of delaying or preventing changes of control or changes in management, or limiting the ability of our other shareholders to approve transactions that they may deem to be in the best interests of our Company. The interests of these insiders could conflict with the interests of our other shareholders, including you.

    We have broad discretion in the use of the net proceeds to us from this offering, and our use of these proceeds may not yield a favorable return on your investment.

        We intend to use the net proceeds to us from this offering to further implement our expansion strategy, fund organic growth in our banking markets, to redeem our preferred stock, repay our subordinated notes due 2020 and for general corporate purposes, which may include paying off other debt. We have not specifically allocated the amount of net proceeds to us that will be used for these purposes and our management will have broad discretion over how these proceeds are used and could spend these proceeds in ways with which you may not agree. In addition, we may not use the net proceeds to us from this offering effectively or in a manner that increases our market value or enhances our profitability. We have not established a timetable for the effective deployment of the net proceeds to us, and we cannot predict how long it will take to deploy these proceeds. Investing the net proceeds to us in securities until we are able to deploy these proceeds will provide lower yields than we generally earn on loans, which may have an adverse effect on our profitability. Although we may, from time to time in the ordinary course of business, evaluate potential acquisition opportunities that we believe provide attractive risk-adjusted returns, we do not have any immediate plans, arrangements or understandings relating to any acquisitions, nor are we engaged in negotiations with any potential acquisition targets. Likewise, although we regularly consider establishing private trust bank office locations and organic growth initiatives within our current and potential new markets, we do not have any immediate plans, arrangements or understandings relating to the establishment of any office locations or any other organic growth initiatives outside of the ordinary course of business.

    We may not be able to redeem our preferred stock or subordinated notes due 2020.

        Subject to consultation with, and approval from, our banking regulators, we currently intend to repurchase the Fixed Rate Cumulative Perpetual Preferred Stock, Series A (referred to as "Series A preferred stock"), Fixed Rate Cumulative Perpetual Preferred Stock, Series B (referred to as "Series B preferred stock"), Fixed Rate Cumulative Perpetual Preferred Stock, Series C (referred to as "Series C preferred stock") and Noncumulative Perpetual Convertible Preferred Stock, Series D (referred to as "Series D preferred stock") following this offering. However, we may not be able to, or may not decide to, consummate the redemption of the preferred stock or subordinated notes due 2020 for any number of reasons, including, but not limited to failure to obtain approval, change in business circumstances or lack of sufficient funds. Until such time as the preferred stock is repurchased and the subordinated notes due 2020 are redeemed, the Company will remain subject to the terms and conditions of the respective certificates of designations governing those series and the notes governing the subordinated notes due 2020, which, among other things, limit the Company's ability to pay dividends on common stock, repurchase or redeem common stock, and the preferred have priority in liquidation before our common stock.

    The holders of our preferred stock will have priority over our common stock with respect to payment in the event of liquidation, dissolution or winding up and with respect to the payment of interest and preferred dividends.

        As of June 30, 2018, we had outstanding: (i) 8,559 shares of Series A preferred stock that were issued February 6, 2009; (ii) 428 shares of Series B preferred stock that were issued February 6, 2009; (iii) 11,881

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shares of Series C preferred stock were issued December 11, 2009; and (iv) 41,000 shares of Series D preferred stock that were issued in July and August 2012. These shares have rights that are senior to our common stock. As a result, we must make dividend payments on these series of preferred stock before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the series of preferred stock must be satisfied in full before any distributions can be made to the holders of our common stock. Furthermore, our board of directors, in its sole discretion, has the authority to designate and issue one or more series of preferred stock from our authorized and unissued preferred stock, which may have preferences with respect to common stock in dissolution, dividends, liquidation or otherwise. Future issuances of equity securities may negatively affect the market price of our common stock.

    We may issue new debt securities, which would be senior to our common stock and may cause the market price of our common stock to decline.

        We have issued $6.6 million aggregate principal amount of subordinated notes due 2026 and $6.9 million aggregate principal amount of subordinated notes due 2020. In the future, we may increase our capital resources by making additional offerings of debt or equity securities, which may include senior or additional subordinated notes, classes of preferred shares or common shares. Holders of our common stock are not entitled to preemptive rights or other protections against dilution. Preferred shares and debt, if issued, have a preference on liquidating distributions or a preference on dividend or interest payments that could limit our ability to make a distribution to the holders of our common stock. Future issuances and sales of parity preferred stock, or the perception that such issuances and sales could occur, may also cause prevailing market prices for the series of preferred stock and our common stock to decline and may adversely affect our ability to raise additional capital in the financial markets at times and prices favorable to us. Further issuances of our common stock could be dilutive to holders of our common stock.

    Our common stock constitutes equity and is subordinate to our existing and future indebtedness and our series of preferred stock, and is effectively subordinated to all the indebtedness and other non-common equity claims against our subsidiaries.

        Shares of our common stock represent equity interests in the Company and do not constitute indebtedness. Accordingly, the shares of our common stock rank junior to all of our indebtedness and to other non-equity claims on the Company with respect to assets available to satisfy such claims. Additionally, dividends to holders of the Company's common stock are subject to the prior dividend and liquidation rights of the holders of the Company's series of preferred stock and any additional preferred stock we may issue. The Series A, B, and C preferred stock, collectively have an aggregate liquidation preference of $20.9 million, plus any accrued and unpaid dividends, and the Series D preferred stock has an aggregate liquidation preference of $4.1 million.

        The Company's right to participate in any distribution of assets of any of its subsidiaries upon the subsidiary's liquidation or otherwise, and thus the ability of the Company's common shareholders to benefit indirectly from such distribution, will be subject to the prior claims of creditors of that subsidiary. As a result, holders of the Company's common stock will be effectively subordinated to all existing and future liabilities and obligations of its subsidiaries, including claims of depositors.

    We may issue shares of preferred stock in the future, which could make it difficult for another company to acquire us or could otherwise adversely affect holders of our common stock, which could depress the price of our common stock.

        Our articles of incorporation authorize us to issue up to 10 million shares of one or more series of preferred stock. Our board of directors has the authority to determine the preferences, limitations and

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relative rights of shares of preferred stock and to fix the number of shares constituting any series and the designation of such series, without any further vote or action by our shareholders. Our preferred stock could be issued with voting, liquidation, dividend and other rights superior to the rights of our common stock. The potential issuance of preferred stock may delay or prevent a change in control of us, discourage bids for our common stock at a premium over the market price and materially adversely affect the market price and the voting and other rights of the holders of our common stock.

    The preferred stock that we have issued impacts net income available to our common shareholders and our earnings per share.

        As long as the series of preferred stock are outstanding, no dividends may be paid on our common stock unless all dividends on the preferred stock have been paid in full. The dividends declared on the preferred stock, whether we are able to pay such dividends or not, along with the accretion of the discount upon issuance, will reduce the net income available to common shareholders and our earnings per share of common stock. Holders of the preferred stock have rights that are senior to those of the holders of our common stock.

    We are dependent upon the Bank for cash flow, and the Bank's ability to make cash distributions is restricted.

        Our primary tangible asset is the stock of the Bank. As such, we depend upon the Bank for cash distributions (through dividends on the Bank's common stock) that we use to pay our operating expenses, satisfy our obligations (including our preferred dividends, subordinated debentures, notes, and our other debt obligations) and to pay dividends on our common stock. Federal statutes, regulations and policies restrict the Bank's ability to make cash distributions to us. These statutes and regulations require, among other things, that the Bank maintain certain levels of capital in order to pay a dividend. In addition, there are certain restrictions imposed by federal banking laws, regulations and authorities on the payment of dividends by us and by the Bank. If the Bank is unable to pay dividends to us, we will not be able to satisfy our obligations or pay dividends on our common stock. Our dividend policy may change without notice, and our future ability to pay dividends is subject to restrictions.

        We are a separate and distinct legal entity from the Bank. We receive substantially all of our revenue from dividends paid to us by the Bank, which we use as the principal source of funds to pay our expenses and to pay dividends to our shareholders, if any. Various federal and state laws and regulations limit the amount of dividends that the Bank may pay us. If the Bank does not receive regulatory approval or does not maintain a level of capital sufficient to permit it to make dividend payments to us while maintaining adequate capital levels, our ability to pay our expenses and our business, financial condition or results of operations could be materially and adversely impacted.

        As a bank holding company, we are subject to regulation by the Federal Reserve. The Federal Reserve has indicated that bank holding companies should carefully review their dividend policy in relation to the organization's overall asset quality, current and prospective earnings and level, composition and quality of capital. The guidance provides that we inform and consult with the Federal Reserve prior to declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid or that could result in an adverse change to our capital structure, including interest on the subordinated debentures underlying our trust preferred securities and our other debt obligations. If required payments on our outstanding junior subordinated debentures, held by our unconsolidated subsidiary trusts, or our other debt obligations, are not made or are deferred, or dividends on any preferred stock we may issue are not paid, we will be prohibited from paying dividends on our common stock.

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    Our corporate organizational documents and provisions of federal and state law to which we are subject contain certain provisions that could have an anti-takeover effect and may delay, make more difficult or prevent an attempted acquisition that you may favor or an attempted replacement of our board of directors or management.

        Our articles of incorporation and our bylaws (each as amended and restated and in effect prior to the completion of this offering) may have an anti-takeover effect and may delay, discourage or prevent an attempted acquisition or change of control or a replacement of our incumbent board of directors or management. Our governing documents include provisions that:

    Empower our board of directors, without shareholder approval, to issue our preferred stock, the terms of which, including voting power, are to be set by our board of directors;

    Provide that directors may only be removed from office for cause;

    Eliminate cumulative voting in elections of directors;

    Permit our board of directors to alter, amend or repeal our amended and restated bylaws or to adopt new bylaws;

    Prohibit shareholder action by less than unanimous written consent, thereby requiring virtually all actions to be taken at a meeting of the shareholders;

    Require shareholders that wish to bring business before annual or special meetings of shareholders, or to nominate candidates for election as directors at our annual meeting of shareholders, to provide timely notice of their intent in writing; and

    Enable our board of directors to increase, between annual meetings, the number of persons serving as directors and to fill the vacancies created as a result of the increase by a majority vote of the directors present at a meeting of directors.

        Banking laws also impose notice, approval, and ongoing regulatory requirements on any shareholder or other party that seeks to acquire direct or indirect "control" of an FDIC-insured depository institution or its holding company. These laws include the Bank Holding Company Act of 1956, as amended, or the BHC Act, and the Change in Bank Control Act, or the CBCA. These laws could delay or prevent an acquisition.

        Furthermore, our bylaws provide that the state or federal courts located in Denver County, Colorado, the county in which the city of Denver is located, will be the exclusive forum for: (i) any actual or purported derivative action or proceeding brought on our behalf; (ii) any action asserting a claim of breach of fiduciary duty by any of our directors or officers; (iii) any action asserting a claim against us or our directors or officers arising pursuant to the Colorado Business Corporations Act, our articles of incorporation, or our bylaws; or (iv) any action asserting a claim against us or our officers or directors that is governed by the internal affairs doctrine. By becoming a shareholder of our Company, you will be deemed to have notice of and have consented to the provisions of our bylaws related to choice of forum. The choice of forum provision in our bylaws may limit our shareholders' ability to obtain a favorable judicial forum for disputes with us. Alternatively, if a court were to find the choice of forum provision contained in our bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could adversely affect our business, operating results and financial condition.

    An investment in our common stock is not an insured deposit and is subject to risk of loss.

        Any shares of our common stock you purchase in this offering will not be savings accounts, deposits or other obligations of any of our bank or nonbank subsidiaries and will not be insured or guaranteed by the FDIC or any other government agency. Your investment will be subject to investment risk, and you must be capable of affording the loss of your entire investment.

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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. These forward-looking statements reflect our current views with respect to, among other things, future events and our 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," "projection," "would" and "outlook," or the negative version of those words or other comparable words or phrases 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 our industry, management's beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, we caution 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 we believe 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.

        There are or will be important factors that could cause our actual results to differ materially from those indicated in these forward-looking statements, including, but not limited to, the following:

    Our expected financial results as of and for the three and six months ended June 30, 2018;

    Geographic concentration in Colorado, Arizona, Wyoming and California;

    Changes in the economy affecting real estate values and liquidity;

    Our ability to continue to originate residential real estate loans and sell such loans;

    Risks specific to commercial loans and borrowers;

    Claims and litigation pertaining to our fiduciary responsibilities;

    Competition for investment managers and professionals;

    Fluctuation in the value of our investment securities;

    The soundness of certain securities brokerage firms;

    The terminable nature of our investment management contracts;

    Changes to the level or type of investment activity by our clients;

    Investment performance, in either relative or absolute terms;

    Changes in interest rates;

    The adequacy of our allowance for credit losses;

    Weak economic conditions and global trade;

    Legislative changes or the adoption of tax reform policies;

    External business disruptors in the financial services industry;

    Liquidity risks;

    Our ability to maintain a strong core deposit base or other low-cost funding sources;

    Continued positive interaction with and financial health of our referral sources;

    Retaining our largest trust clients;

    Our ability to achieve our strategic objectives;

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    Competition from other banks, financial institutions and wealth and investment management firms;

    Our ability to implement our internal growth strategy;

    Our ability to manage the risks associated with our anticipated growth;

    The acquisition of other banks and financial services companies;

    Integration risks and other unknown risks;

    The accuracy of estimates and assumptions;

    Our ability to protect against and manage fraudulent activity, breaches of our information security, and cybersecurity attacks;

    Our reliance on communications, information, operating and financial control systems technology and related services from third-party service providers;

    Technological change;

    Our ability to attract and retain clients and key associates;

    Natural disasters;

    Environmental liabilities;

    New lines of business or new products and services;

    The accuracy of information from customers and counterparties;

    Regulation of the financial services industry;

    Compliance with laws and regulations, supervisory actions, the Dodd-Frank Act, capital requirements; the Bank Secrecy Act, anti-money laundering laws, and other statutes and regulations;

    Regulatory scrutiny related to our commercial real estate loan portfolio;

    Compliance with future and existing laws designed to protect consumers;

    The enactment of regulations relating to privacy, information security and data protection;

    Legal and regulatory proceedings, investigations and inquiries, fines and sanctions;

    The development of an active, liquid market for our common stock;

    Fluctuations in the market price of our common stock;

    Actual or anticipated issuances or sales of our common stock in the future;

    Our ability to manage the obligations and costs associated with being a public company;

    Material weaknesses in our internal control over financial reporting;

    The initiation and continuation of securities analysts coverage of the Company;

    Our management and board of directors have significant control over our business;

    The use of the net proceeds to us from this offering;

    Our ability to redeem our preferred stock;

    The priority of our preferred stock relative to our common stock;

    Future issuances of debt securities;

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    Our ability to manage our existing and future indebtedness;

    Future issuances of preferred stock and its impact on our common stock;

    Available cash flows from the Bank; and

    Other factors that are discussed in the section entitled "Risk Factors," beginning on page 28.

        The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this prospectus. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. Accordingly, you should not place undue reliance on any such forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise. New factors emerge from time to time, and it is not possible for us to predict which will arise. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

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USE OF PROCEEDS

        Assuming an initial public offering price of $20.00 per share, the midpoint of the price range set forth on the cover page of this prospectus, we estimate that the net proceeds to us from the sale of our common stock in this offering, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, will be approximately $26.2 million, or approximately $31.4 million if the underwriters exercise their option in full to purchase additional shares from us.

        Each $1.00 increase (decrease) in the assumed initial public offering price would increase (decrease) the net proceeds to us from this offering by approximately $1.4 million, or approximately $1.7 million if the underwriters exercise their option in full to purchase additional shares from us in each case, assuming the number of shares set forth on the cover page of this prospectus remains the same and after deducting underwriting discounts and commissions but before payment of estimated offering expenses payable by us.

        We intend to use approximately $25.0 million of the net proceeds from this offering to redeem all of the outstanding shares of our preferred stock, which consists of 8,559 shares of Series A preferred stock, 428 shares of Series B preferred stock, 11,881 shares of Series C preferred stock, and 41,000 shares of Series D preferred stock, and approximately $1.2 million of the net proceeds from this offering and available cash on hand or borrowings under our existing credit facility to redeem all of our subordinated notes due 2020. Although we intend to use a portion of the net proceeds of this offering to redeem all outstanding shares of our preferred stock and all of our subordinated notes due 2020 as promptly as practicable following the completion of this offering, the redemption of such securities is subject to regulatory approval, and accordingly, no assurance can be given as to when we will be able to redeem such securities, if at all.

        We currently pay cumulative cash dividends at a rate per annum of 9.0% per share on our Series A preferred stock, Series B preferred stock and Series C preferred stock. Similarly, we pay non-cumulative cash dividends at a rate per annum of 9.0% on our Series D preferred stock. For a further description of our preferred stock, see "Description of Capital Stock—Preferred Stock—Capital Purchase Program Preferred Stock" and "Description of Capital Stock—Preferred Stock—Series D Preferred Stock."

        The subordinated notes due 2020 bear interest at a fixed rate of 8.0% per annum and mature in July 2020. For a further description of our subordinated notes due 2020, see "Description of Certain Indebtedness—Subordinated Notes due 2020."

        To the extent there are any remaining net proceeds from this offering, we intend to use such net proceeds to support our organic growth and for general corporate purposes, including maintenance of our required regulatory capital. Our management will retain broad discretion to allocate the net proceeds of this offering and we may elect to contribute a portion of the net proceeds to the Bank as regulatory capital. The precise amounts and timing of our use of the proceeds will depend upon market conditions and other factors.

        We will not receive any proceeds from the sale of common stock by the selling shareholders.

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DIVIDEND POLICY

        We have not declared or paid any dividends on our common stock and we do not currently anticipate paying any cash dividends on our common stock in the foreseeable future. Instead, we anticipate that all of our earnings in the foreseeable future will be retained to support our operations and finance the growth and development of our business. Any future determination to pay dividends on our common stock will be made by our board of directors and will depend upon our results of operations, financial condition, capital requirements, general economic conditions, regulatory and contractual restrictions, our business strategy, our ability to service any equity or debt obligations senior to our common stock and other factors that our board of directors deems relevant. We are not obligated to pay dividends on our common stock and are subject to restrictions on paying dividends on our common stock.

        As a bank holding company, our ability to pay dividends is affected by the policies and enforcement powers of the Federal Reserve. See "Supervision and Regulation—Regulation of the Company—Dividends." In addition, because we are a holding company, we are dependent upon the payment of dividends by the Bank to us as our principal source of funds to pay dividends in the future, if any, and to make other payments. The Bank is also subject to various legal, regulatory and other restrictions on its ability to pay dividends and make other distributions and payments to us. See "Supervision and Regulation—Regulation of the Bank—Dividends." The present and future dividend policy of the Bank is subject to the discretion of the board of directors. The Bank is not obligated to pay us dividends.

        As a Colorado corporation, we are subject to certain restrictions on distributions under the Colorado Business Corporation Act. Generally, a Colorado corporation may not make a distribution to its shareholders if, after giving the distribution effect: (i) the corporation would not be able to pay its debts as they become due in the usual course of business; or (ii) the corporation's total assets would be less than the sum of its total liabilities plus the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution.

        In addition, so long as any share of Series A preferred stock, Series B preferred stock, Series C preferred stock or Series D preferred stock remains outstanding, we generally may not declare or pay any dividend or distribution on our common stock, and we generally may not directly or indirectly, purchase, redeem or otherwise acquire for consideration any shares of common stock unless all accrued and unpaid dividends for all past dividend periods on all outstanding shares of Series A preferred stock, Series B preferred stock, Series C preferred stock and Series D preferred stock have been or are contemporaneously declared and paid in full.

        We are also subject to certain restrictions on our right to pay dividends to our shareholders under the terms of our credit agreement with BMO Harris Bank, N.A.

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CAPITALIZATION

        The following table sets forth our capitalization, including regulatory capital ratios, on a consolidated basis, as of March 31, 2018 on:

    An actual basis; and

    A pro forma as adjusted basis after giving effect to the issuance and sale by us of 1,500,527 shares of our common stock in this offering (assuming the underwriters do not exercise their option to purchase any additional shares of common stock) and the receipt of the net proceeds from the sale of these shares at the initial public offering price of $20.00 per share, which is the midpoint of the price range on the cover page of this prospectus, and the receipt and application, including redemption of all of the outstanding shares of our preferred stock and all of our subordinated notes due 2020, after deducting underwriting discounts and commissions but before payment of estimated offering expenses payable by us.

        This table should be read in conjunction with, and is qualified in its entirety by reference to, "Use of Proceeds," "Selected Historical Consolidated Financial and Other Data," "Description of Capital Stock," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the related notes included elsewhere in this prospectus.

 
  As of March 31, 2018  
(Dollars in thousands, except share and per share information)
  Actual   As Adjusted(1)  

Long-term Indebtedness:

             

Federal Home Loan Bank Topeka borrowings

  $ 47,928   $ 47,928  

Subordinated Notes due 2020(2)

    6,875      

Subordinated Notes due 2026

    6,560     6,560  

Shareholders' Equity:

             

Preferred stock—no par value; 1,000,000 shares authorized; 20,868 issued and outstanding (actual) and no shares issued and outstanding (as adjusted); liquidation preference: $20,868

  $   $  

Convertible preferred stock—no par value; 150,000 shares authorized; 41,000 shares issued and outstanding (actual) and no shares issued and outstanding (as adjusted); liquidation preference: $4,100

         

Common Stock—no par value; 10,000,000 shares authorized; 5,900,698 shares issued and outstanding (actual); and 7,401,225 shares issued and outstanding (as adjusted)(1)

         

Additional paid-in capital

    132,520     133,779  

Accumulated deficit

    (26,712 )   (26,712 )

Accumulated other comprehensive loss

    (1,653 )   (1,653 )

Total shareholders' equity

  $ 104,155   $ 105,414  

Total capitalization

  $ 165,518   $ 159,902  

Capital Ratios:

             

Total shareholders' equity to total assets

    10.50 %   10.69 %

Tangible common equity ratio(3)

    5.53 %   8.29 %

CET 1

    7.04 %   10.42 %

Tier 1 leverage ratio

    7.72 %   8.51 %

Tier 1 risk based capital ratio

    9.44 %   10.42 %