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SHAREHOLDERS' EQUITY
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
SHAREHOLDERS' EQUITY SHAREHOLDERS’ EQUITY
Common Stock
The Company’s common stock has no par value and each holder of common stock is entitled to one vote for each share (though certain voting restrictions may exist on non-vested restricted stock) held.
On January 6, 2022, the Company filed a Form S-3 Registration Statement with the SEC providing that the Company may offer and sell from time to time, separately or together, in multiple series or in one or more offering, any combination of common stock, preferred stock, debt securities, warrants, depository shares and units, up to a maximum aggregate offer price of $100 million. During the three and nine months ended September 30, 2023, the Company did not issue any equity or debt securities under this registration statement.
Restricted Stock Awards
In 2017, the Company issued 105,264 shares of common stock ("Restricted Stock Awards") with a value of $3.0 million to the sole member of EMC Holdings, LLC ("EMC"), subject to forfeiture based on his continued employment with the Company. Half of the Restricted Stock Awards ($1.5 million or 52,632 shares) vested ratably over five years. These awards fully vested during the year ended December 31, 2022. The remaining $1.5 million, or 52,632 shares, were eligible to be earned based on performance of the mortgage division of the Company. The performance based awards fully vested during the year ended December 31, 2020.
As of September 30, 2023, all restricted stock awards were fully vested and no unrecognized compensation expense remained. During the three and nine months ended September 30, 2022, the Company recognized compensation expense of $0.1 million and $0.2 million, respectively. During the nine months ended September 30, 2022, 10,527 shares of the restricted stock awards vested. As of September 30, 2022, all restricted stock awards were fully vested and no unrecognized compensation expense remained.
Stock-Based Compensation Plans
The 2008 Stock Incentive Plan ("the 2008 Plan") was frozen in connection with the adoption of First Western Financial, Inc. 2016 Omnibus Incentive Plan (“the 2016 Plan”) and no new awards may be granted under the 2008 Plan. Remaining shares not issued under the 2008 Plan poured into the 2016 Plan. As of September 30, 2023, there were a total of 281,682 shares available for issuance under the 2016 Plan. If the Awards outstanding under the 2008 Plan or the 2016 Plan are forfeited, cancelled or terminated with no consideration paid to the Company, those amounts will increase the number of shares eligible to be granted under the 2016 Plan.
Stock Options
The Company did not grant any stock options during the nine months ended September 30, 2023 and 2022.
During the three and nine months ended September 30, 2023 and 2022, the Company recognized no stock based compensation expense associated with stock options. As of September 30, 2023, the Company has no unrecognized stock-based compensation expense related to stock options.
The following presents activity for nonqualified stock options during the nine months ended September 30, 2023:
Number
of
Options		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic
Value
Outstanding as of December 31, 2022184,165$22.76 
Exercised(12,260)20.00 
Forfeited or expired(22,180)20.11 
Outstanding as of September 30, 2023149,72523.38 1.6
(1)
Options fully vested / exercisable as of September 30, 2023149,72523.38 1.6
(1)
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(1)Nonqualified stock options outstanding at the end of the period and those fully vested/exercisable had immaterial aggregate intrinsic values.
As of September 30, 2023, there were 149,725 options that were exercisable. Exercise prices are between $20.00 and $27.00 per share, and the options are exercisable for a period of ten years from the original grant date and expire on various dates between 2023 and 2026.
Restricted Stock Units
Pursuant to the 2016 Plan, the Company may grant associates and non-associate directors long-term cash and stock-based compensation. Historically, the Company has granted certain associates restricted stock units which are earned over time or based on various performance measures and convert to common stock upon vesting. These restricted stock units include time vesting units, financial performance units, and market performance units, which are summarized here and expanded further below.
The following presents the activity for the Time Vesting Units, the Financial Performance Units, and the Market Performance Units during the nine months ended September 30, 2023:
Time
Vesting
Units		Financial
Performance
Units		Market
Performance
Units
Outstanding as of December 31, 2022285,995235,512—
Granted77,871102,167—
Vested(72,862)——
Forfeited (29,707)(24,937)—
Outstanding as of September 30, 2023261,297312,742—
During the three months ended September 30, 2023, the Company issued 8,610 net shares of common stock upon the settlement of Restricted Stock Units. The remaining 3,580 shares, with a combined market value at the dates of settlement of $0.1 million, were withheld to cover employee withholding taxes and were subsequently added back to the Company’s pool of shares available for issuance. During the nine months ended September 30, 2023, the Company issued 52,481 net shares of common stock upon the settlement of Restricted Stock Units. The remaining 20,381 shares, with a combined market value at the dates of settlement of $0.4 million, were withheld to cover employee withholding taxes and were subsequently added back to the Company’s pool of shares available for issuance. During the three months ended September 30, 2022, the Company issued 2,740 net shares of common stock upon the settlement of Restricted Stock Units. The remaining 1,111 shares were surrendered with an immaterial combined market value at the dates of settlement to cover employee withholding taxes and were subsequently added back to the Company’s pool of shares available for issuance. During the nine months ended September 30, 2022, the Company issued 64,426 shares net of common stock upon the settlement of Restricted Stock Units. The remaining 26,745 shares, with a combined market value at the dates of settlement of $0.8 million, were withheld to cover employee withholding taxes and were subsequently added back to the Company’s pool of shares available for issuance.
Time Vesting Units
Time Vesting Units are granted to full-time associates and board members at the date approved by the Company’s board of directors. The Company granted 77,871 Time Vesting Units with a five-year service period during the nine months ended September 30, 2023 that vest in equal installments of 20% on the anniversary of the grant date, assuming continuous employment through the scheduled vesting dates. During the three months ended September 30, 2023 and 2022, the Company recognized compensation expense of $0.4 million for the Time Vesting Units. During the nine months ended September 30, 2023 and 2022, the Company recognized compensation expense of $1.2 million and $1.3 million, respectively, for the Time Vesting Units. As of September 30, 2023, there was $5.2 million of unrecognized compensation expense related to the Time Vesting Units, which is expected to be recognized over a weighted-average period of 3.5 years.
Financial Performance Units
Financial Performance Units are granted to certain key associates and are earned based on the Company achieving various financial performance metrics. If the Company achieves the financial metrics, which include various thresholds from 0% up to 150%, then the Financial Performance Units will have a subsequent vesting period.
The following presents the Company’s existing Financial Performance Units as of September 30, 2023 (dollars in thousands, except share amounts):
Grant PeriodThreshold AccrualMaximum Issuable
Shares at Current
Threshold		Unrecognized Compensation
Expense
Weighted-Average (1)
Financial Metric End DateVesting Requirement End Date
May 1, 2019 through April 30, 2020150 %62,625$47 0.3 yearsDecember 31, 2021December 31, 2023
May 1, 2020 through December 31, 2020, excluding November 18, 2020150 70,536237 1.3 yearsDecember 31, 2022December 31, 2023
On November 18, 2020114 23,12990 2.1 yearsDecember 31, 2022
50% November 18, 2023 & 2025
May 3, 2021 through August 11, 202192 31,030384 2.3 yearsDecember 31, 2023December 31, 2025
May 2, 2022 through November 2, 2022, excluding August 4, 2022 (2)
0 — — 3.3 yearsDecember 31, 2024December 31, 2026
On August 4, 2022 (3)
33 9,090184 3.3 yearsDecember 31, 2024December 31, 2026
On May 1, 2023 (2)
0 — — 4.3 yearsDecember 31, 2025December 31, 2027
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(1)Represents the expected unrecognized stock-based compensation expense recognition period.
(2) As the performance threshold is not expected to be met in future performance periods, there is no related unrecognized compensation as of September 30, 2023.
(3) Performance threshold was not met for the year ended December 31, 2022. As of September 30, 2023, the threshold is not expected to be met for the year ended December 31, 2023. The 100% threshold is expected to be met for the year ended December 31, 2024.
The following presents the Company’s Financial Performance Units activity during the periods presented (dollars in thousands, except share amounts):
Units GrantedCompensation Expense Recognized
Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
Grant Period202320222023202220232022
May 1, 2019 through April 30, 2020 (3)
22,577—$(18)$4 $65 $94 
May 1, 2020 through December 31, 2020, excluding November 18, 2020 (3)
24,230—29 45 115 127 
On November 18, 2020 (3)
2,921—91 (1)131 27 
May 3, 2021 through August 11, 2021——10 72 (81)211 
May 2, 2022 through November 2022, excluding August 4, 2022 (1)
32264,629— 31 — 89 
August 4, 2022 (2)
—27,27214 28 19 28 
On May 1, 2023 (1)
52,117—— — — — 
(1) Performance threshold was not met as of the three and nine months ended September 30, 2023, therefore, no compensation expense was recognized for the three and nine months ended September 30, 2023.
(2) Performance threshold was not met for the year ended December 31, 2022. As of September 30, 2023, the threshold is not expected to be met for the year ended December 31, 2023. The 100% threshold is expected to be met for the year ended December 31, 2024.
(3) Granted shares represent the final performance period payout percentage above the 100% threshold initially granted.
Market Performance Units
Market Performance Units were granted to certain key associates and are earned based on growth in the value of the Company’s common stock, and were dependent on the Company completing an initial public offering of stock during a defined period of time. On July 23, 2018, the Company completed its initial public offering and the Market Performance Units performance condition was met. Subsequent to the performance condition, there was also a market condition as a vesting requirement for the Market Performance Units. If the Company’s common stock was trading at or above certain prices, over a performance period which ended on June 30, 2020, the Market Performance Units would have been determined to be earned and vest following the completion of a subsequent service period, which ended on June 30, 2022. The Company’s common stock did not trade at or above the required prices over the performance period and as a result, no Market Performance Units were eligible to be earned.
As of the end of the subsequent service period, or June 30, 2022, the Company had no remaining unrecognized compensation expense related to the Market Performance Units.