EX-99.1 2 myfw-20200430xex99d1.htm EX-99.1 fwfi_Ex99_1

Exhibit 99.1

Picture 1

First Western Reports First Quarter 2020 Financial Results

First Quarter 2020 Summary

Net income available to common shareholders of $1.3 million in Q1 2020, compared to $2.6 million in Q4 2019 and $1.6 million in Q1 2019

Diluted EPS of $0.17 in Q1 2020, compared to $0.32 in Q4 2019 and $0.21 in Q1 2019

·

Adjusted net income available to common shareholders, excluding loss on intangibles held for sale, of $1.8 million in Q1 2020

·

Adjusted diluted EPS, excluding loss on intangibles held for sale, of $0.22 for Q1 2020

·

Total assets grew to $1.35 billion, up 32.7% annualized from Q4 2019 and 18.3% from Q1 2019

·

Net interest margin improved to 3.14% in Q1 2020 from 2.91% in Q4 2019 and 3.03% Q1 2019

·

Total deposits of $1.2 billion, an 33.7% annualized increase from Q4 2019 and a 20.5% increase from Q1 2019

·

Gross loans of $1.04  billion, an annualized increase of 18.4% from Q4 2019 and an increase of 12.1% from Q1 2019

·

Branch purchase and assumption agreement signed with Simmons Bank that expands First Western’s presence in Denver market

·

$8.0 million subordinated debt offering during Q1 2020 completed

Denver, Colo., April 30, 2020 – First Western Financial, Inc., (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the first quarter ended March 31, 2020.

Net income available to common shareholders was $1.3 million, or $0.17 per diluted share, for the first quarter of 2020. This compares to $2.6 million, or $0.32 per diluted share, for the fourth quarter of 2019, and $1.6 million, or $0.21 per diluted share, for the first quarter of 2019.

Financial results for the first quarter of 2020 include a $0.6 million loss on intangibles held for sale related to the Company’s Capital Management segment, which negatively impacted earnings per diluted share by 5 cents. For the first quarter of 2020, adjusted net income, available to common shareholders, excluding the held for sale loss, was $1.8 million, or $0.22 per diluted share.

Scott C. Wylie, CEO of First Western, commented, “During January and February, we experienced positive trends throughout the business including strong growth in loans and deposits and an expansion in our net interest margin. We were also very pleased to sign a branch purchase and assumption agreement with

Simmons Bank in February that will increase our presence in Denver, add valuable scale and banking talent, and we believe will be highly accretive to earnings.”

“As the COVID-19 pandemic accelerated in March, our focus turned to protecting the health and safety of our associates and ensuring that we continued to support the financial needs of our clients and the communities we serve. We have implemented a number of programs to help our clients manage through this crisis, including participating in the Small Business Association’s Paycheck Protection Program (“PPP”). As of April 24th, we  processed 347 applications for a total of $162.1 million funded through the PPP. While our top priority has been serving our existing clients, we have also used the PPP to establish many new commercial client relationships with businesses that were frustrated by the lack of response from their prior banks.”

“We believe we are well positioned from a capital and liquidity standpoint to continue supporting our clients and communities throughout the duration of this crisis. Now more than ever, we have the opportunity to demonstrate the compelling value proposition of the First Western model, help our clients navigate through a time of unprecedented challenges, and attract new commercial and wealth management clients to our franchise,” said Mr. Wylie.

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

March 31, 

 

December 31, 

 

March 31, 

 

(Dollars in thousands, except per share data)

    

2020

    

2019

    

2019

 

Earnings Summary

 

 

  

 

 

  

 

 

  

 

Net interest income

 

$

8,931

 

$

8,190

 

$

7,971

 

Less: provision for loan losses

 

 

367

 

 

447

 

 

194

 

Total non-interest income

 

 

7,767

 

 

8,228

 

 

6,976

 

Total non-interest expense

 

 

14,647

 

 

13,082

 

 

12,602

 

Income before income taxes

 

 

1,684

 

 

2,889

 

 

2,151

 

Income tax expense

 

 

350

 

 

317

 

 

524

 

Net income available to common shareholders

 

 

1,334

 

 

2,572

 

 

1,627

 

Adjusted net income available to common shareholders(1)

 

 

1,772

 

 

2,572

 

 

1,627

 

Basic earnings per common share

 

 

0.17

 

 

0.33

 

 

0.21

 

Adjusted basic earnings per common share(1)

 

 

0.23

 

 

0.33

 

 

0.21

 

Diluted earnings per common share

 

 

0.17

 

 

0.32

 

 

0.21

 

Adjusted diluted earnings per common share(1)

 

$

0.22

 

$

0.32

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

0.43

%  

 

0.82

%  

 

0.57

%

Adjusted return on average assets (annualized)(1)

 

 

0.57

 

 

0.82

 

 

0.57

 

Return on average shareholders' equity (annualized)

 

 

4.09

 

 

8.06

 

 

5.50

 

Adjusted return on average shareholders' equity (annualized)(1)

 

 

5.43

 

 

8.06

 

 

5.50

 

Return on tangible common equity (annualized)(1)

 

 

5.03

 

 

9.85

 

 

6.88

 

Adjusted return on tangible common equity (annualized)(1)

 

 

6.69

 

 

9.85

 

 

6.88

 

Net interest margin

 

 

3.14

 

 

2.91

 

 

3.03

 

Efficiency ratio(1)

 

 

84.39

%  

 

80.54

%  

 

83.15

%

 

(1)

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

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Operating Results for the First Quarter 2020

Revenue

Gross revenue (1) was $16.7 million for the first quarter of 2020, compared to $16.2 million for the fourth quarter of 2019.  The increase in revenue was primarily driven by a $0.7 million increase in net interest income.

Relative to the first quarter of 2019, gross revenue increased $1.8 million from $14.9 million. The increase was primarily due to growth in net interest income and net gain on mortgage loans resulting from increased mortgage activity. 

(1)

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

Net Interest Income

Net interest income for the first quarter of 2020 was $8.9 million, an increase of 9.0% from $8.2 million in the fourth quarter of 2019. The increase in net interest income was primarily attributable to a reduction in interest expense resulting from a 20 basis point decline in the cost of funds.

Relative to the first quarter of 2019, net interest income increased 12.0%  from $8.0 million. The year-over-year increase in net interest income was due primarily to growth in average loans and lower cost of funds.

Net Interest Margin

Net interest margin for the first quarter of 2020 increased to 3.14% from 2.91% in the fourth quarter of 2019. The increase was primarily driven by a 20 basis point decline in the cost of funds.

Relative to the first quarter of 2019, the net interest margin increased from 3.03%, primarily due to a 29 basis point decline in cost of funds.

Non-interest Income

Non-interest income for the first quarter of 2020 was $7.8 million, a decrease of 5.6% from $8.2 million in the fourth quarter of 2019. The decrease was primarily attributable to a decrease in insurance revenues. 

While our net gains on mortgage loans remained consistent with the fourth quarter, the uncertainty of COVID-19’s impact on the economy caused major disruptions in the mortgage market. Sharp Fed Funds and US Treasury rate reductions, as well as capacity, liquidity and delinquency concerns in the mortgage industry caused the market value of loans and loan servicing to decline rapidly and significantly relative to mortgage hedges, resulting in approximately $4 million of lost value during the month of March.

Relative to the first quarter of 2019, non-interest income increased 11.3% from $7.0 million. The increase was primarily attributable to higher net gains on mortgage loans as a result of a higher volume of mortgages.

Non-interest Expense

Non-interest expense for the first quarter of 2020 was $14.6 million, an increase of 12.0% from $13.1 million for the fourth quarter of 2019. Non-interest expense for the first quarter of 2020 included a $0.6 million loss

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on intangibles held for sale related to the Capital Management segment. Excluding the loss on intangibles held for sale, the increase was driven by higher professional costs primarily associated with the pending branch acquisition along with an increase in salaries and employee benefits expense resulting from higher head count and seasonality in payroll taxes.

Non-interest expense increased 16.2% from $12.6 million in the first quarter of 2019. The increase was primarily due to higher salaries and employee benefits expense reflecting the growth of the organization over the past year and improved performance.

The Company’s efficiency ratio was 84.4% in the first quarter of 2020, compared with 80.5% in the fourth quarter of 2019 and 83.2% in the first quarter of 2019. The efficiency ratio was negatively impacted during the first quarter 2020 by various acquisition and disposition related expenses. Management expects a return to the positive trend it had previously shown in the Company’s efficiency ratio.

Income Taxes

The Company recorded income tax expense of $0.4 million for the first quarter of 2020, representing an effective tax rate of 20.8%, compared to 11.0% for the fourth quarter of 2019. The lower effective tax rate in the fourth quarter of 2019 was primarily attributable to tax-planning strategies driven by the impact of research and development tax credits.

Loan Portfolio

Total gross loans including mortgage loans held for sale were $1.11 billion at March 31, 2020, an increase of $61.8 million from the end of the prior quarter, and an increase of $157.1 million from March 31, 2019.

Gross loans, excluding mortgage loans held for sale, totaled $1.04 billion at March 31, 2020, an annualized increase of 18.4%  from $998.0 million at December  31, 2019, and an increase of 12.1% from $931.2 million at March 31, 2019. The increase in gross loans from December  31, 2019 was primarily due to growth in the 1-4 family residential, commercial and industrial, and commercial real estate portfolios.

Deposits

Total deposits were $1.18 billion at March 31, 2020, compared to $1.09 billion at December 31, 2019, and $978.1 million at March 31, 2019.  The increase in total deposits from December  31, 2019 was primarily due to an increase in money market, time and non-interest bearing deposits.

Average total deposits for the first quarter of 2020 increased  $103.6 million, or 10.6%, from the first quarter of 2019.

Assets Under Management

Total assets under management decreased by $551.2 million during the first quarter to $5.64 billion at March 31, 2020, compared to $6.19 billion at December 31, 2019, and $5.78 billion at March 31, 2019. The decrease was primarily attributable to market  losses resulting from the market volatility related to the global pandemic.

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Credit Quality

Non-performing assets totaled $11.1 million, or 0.82% of total assets, at March 31, 2020, a decline from $12.9 million, or 1.03% of total assets, at December  31, 2019 due primarily to pay downs on non-performing loans.

The Company recorded a provision for loan losses of $0.4 million in the first quarter of 2020, primarily reflecting the strong growth in the loan portfolio.  Changes within the provision during the first quarter 2020 also included a decrease in the specific reserve resulting from pay downs on an impaired loan and an increase in the unallocated reserve based on management’s assumptions related to the impact of the COVID-19 pandemic given data that was currently available, as of the date of analysis.

As a result of the COVID-19 pandemic, a loan modification program was designed and implemented to assist our clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. The program includes loan extensions, temporary payment moratoriums, and financial covenant waivers for commercial and consumer borrowers impacted by the pandemic who have a pass risk rating and have not been delinquent over 30 days on payments in the last two years. These programs were implemented towards the end of the first quarter of 2020. No clients participated in the loan modification program in the first quarter, however as April 24th, the Company entered into modification agreements with 32  clients across multiple industries in the amount of $55.8 million.

 

The Company will continue to closely monitor the loan portfolio, understanding the stress of our borrowers as well as the on-going impact of COVID-19, as it relates to the allowance for loan loss and credit quality metrics.

Capital

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

 

 

 

 

 

    

March 31, 

 

 

 

2020

 

Consolidated Capital

 

  

 

Tier 1 capital to risk-weighted assets

 

10.96

%

Common Equity Tier 1 (“CET 1”) to risk-weighted assets

 

10.96

 

Total capital to risk-weighted assets

 

13.31

 

Tier 1 capital to average assets

 

8.81

 

 

 

 

 

Bank Capital

 

  

 

Tier 1 capital to risk-weighted assets

 

10.35

 

CET 1 to risk-weighted assets

 

10.35

 

Total capital to risk-weighted assets

 

11.23

 

Tier 1 capital to average assets

 

8.33

%

 

Tangible book value per common share increased 12.7% from $11.88 at March 31, 2019 to $13.39 at March 31, 2020,  and was up 1.8% from $13.15 at December 31, 2019.

During the first quarter of 2020, the Company repurchased 22,679 shares of its common stock at an average price of $16.50 under its stock repurchase program, which authorized the repurchase of up to 300,000 shares

5

of its common stock. As of March 31, 2020, the Company had up to 233,623 shares remaining under the current stock repurchase authorization, although the Company does not currently anticipate continuing to repurchase shares while its capital can be better used supporting its clients and communities through the duration of the COVID-19 pandemic.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 10:00 a.m. MT/ 12:00 p.m. ET on Friday, May 1, 2020. The call can be accessed via telephone at 877-405-1628; passcode 3033844. A recorded replay will be accessible through May 8, 2020 by dialing 855-859-2056; passcode 3033844.

A slide presentation relating to the first quarter 2020 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Events and Presentations page of the Company’s investor relations website at https://myfw.gcs-web.com.

About First Western

First Western is a financial services holding company headquartered in Denver, Colorado, with operations in Colorado, Arizona, Wyoming and California. First Western and its subsidiaries provide a fully integrated suite of wealth management services on a private trust bank platform, which includes a comprehensive selection of deposit, loan, trust, wealth planning and investment management products and services. First Western’s common stock is traded on the Nasdaq Global Select Market under the symbol “MYFW.” For more information, please visit www.myfw.com.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”).   These non-GAAP financial measures include “Tangible Common Equity,” “Tangible Common Book Value per Share,” “Return on Tangible Common Equity,” “Efficiency Ratio,” and “Gross Revenue,” “Adjusted Net Income Available to Common Shareholders,” “Adjusted Earnings Per Share,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” and “Adjusted Return on Tangible Common Equity”. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. Reconciliation of non-GAAP financial measures, to GAAP financial measures are provided at the end of this press release.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “opportunity,” “could,” or “may.” The forward looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and

6

uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward looking statements contained in this news release and could cause us to make changes to our future plans. Those risks and uncertainties include, without limitation, the COVID-19 pandemic and related government actions; the risk of geographic concentration in Colorado, Arizona, Wyoming and California; the risk of changes in the economy affecting real estate values and liquidity; the risk in our ability to continue to originate residential real estate loans and sell such loans; risks specific to commercial loans and borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the risk of changes in interest rates; and the risk of the adequacy of our allowance for credit losses and the risk in our ability to maintain a strong core deposit base or other low-cost funding sources. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 12,  2020 (“Form 10-K”), and other documents we file with the SEC from time to time. We urge readers of this news release to review the “Risk Factors” section our Form 10-K and any updates to those risk factors set forth in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our other filings with the SEC. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today’s date, or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Contacts:

Financial Profiles, Inc.

Tony Rossi

310-622-8221

MYFW@finprofiles.com

IR@myfw.com

 

 

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First Western Financial, Inc.

Consolidated Financial Summary (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ending

 

 

March 31, 

 

December 31, 

 

March 31, 

(Dollars in thousands, except per share data)

    

2020

 

2019

 

2019

Interest and dividend income:

 

 

  

 

 

  

 

 

  

Loans, including fees

 

$

11,002

 

$

10,554

 

$

10,218

Investment securities

 

 

295

 

 

321

 

 

310

Federal funds sold and other

 

 

215

 

 

478

 

 

522

Total interest and dividend income

 

 

11,512

 

 

11,353

 

 

11,050

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

  

 

 

  

 

 

 

Deposits

 

 

2,393

 

 

2,995

 

 

2,909

Other borrowed funds

 

 

188

 

 

168

 

 

170

Total interest expense

 

 

2,581

 

 

3,163

 

 

3,079

Net interest income

 

 

8,931

 

 

8,190

 

 

7,971

Less: provision for loan losses

 

 

367

 

 

447

 

 

194

Net interest income, after provision for loan losses

 

 

8,564

 

 

7,743

 

 

7,777

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

  

 

 

  

 

 

 

Trust and investment management fees

 

 

4,731

 

 

4,748

 

 

4,670

Net gain on mortgage loans

 

 

2,481

 

 

2,577

 

 

1,456

Bank fees

 

 

368

 

 

261

 

 

289

Risk management and insurance fees

 

 

96

 

 

367

 

 

468

Income on company-owned life insurance

 

 

91

 

 

92

 

 

93

Net gain on sale of assets

 

 

 —

 

 

183

 

 

 —

Total non-interest income

 

 

7,767

 

 

8,228

 

 

6,976

Total income before non-interest expense

 

 

16,331

 

 

15,971

 

 

14,753

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

  

 

 

  

 

 

 

Salaries and employee benefits

 

 

8,482

 

 

7,990

 

 

7,618

Occupancy and equipment

 

 

1,440

 

 

1,369

 

 

1,407

Professional services

 

 

1,023

 

 

962

 

 

777

Technology and information systems

 

 

969

 

 

928

 

 

1,069

Data processing

 

 

847

 

 

783

 

 

687

Marketing

 

 

415

 

 

300

 

 

278

Amortization of other intangible assets

 

 

 2

 

 

 7

 

 

173

Net loss on intangibles held for sale

 

 

553

 

 

 —

 

 

 —

Other

 

 

916

 

 

743

 

 

593

Total non-interest expense

 

 

14,647

 

 

13,082

 

 

12,602

Income before income taxes

 

 

1,684

 

 

2,889

 

 

2,151

Income tax expense

 

 

350

 

 

317

 

 

524

Net income available to common shareholders

 

$

1,334

 

$

2,572

 

$

1,627

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.17

 

$

0.33

 

$

0.21

Diluted

 

$

0.17

 

$

0.32

 

$

0.21

 

 

 

8

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ending

 

 

March 31, 

 

December 31, 

 

March 31, 

 

    

2020

 

2019

 

2019

 

 

 

 

 

 

 

 

 

 

(Dollars in thousands)

 

 

 

 

 

 

 

 

 

ASSETS

 

 

  

 

 

  

 

 

  

Cash and cash equivalents:

 

 

  

 

 

  

 

 

  

Cash and due from banks

 

$

4,076

 

$

4,180

 

$

2,164

Interest-bearing deposits in other financial institutions

 

 

114,438

 

 

74,458

 

 

67,602

Total cash and cash equivalents

 

 

118,514

 

 

78,638

 

 

69,766

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

 

52,500

 

 

58,903

 

 

53,610

Correspondent bank stock, at cost

 

 

1,158

 

 

585

 

 

993

Mortgage loans held for sale

 

 

64,120

 

 

48,312

 

 

19,778

Loans, net of allowance of $8,242, $7,875 and $7,645

 

 

1,035,709

 

 

990,132

 

 

923,545

Premises and equipment, net

 

 

5,148

 

 

5,218

 

 

5,815

Accrued interest receivable

 

 

3,107

 

 

3,048

 

 

3,053

Accounts receivable

 

 

4,669

 

 

5,238

 

 

4,561

Other receivables

 

 

1,058

 

 

1,006

 

 

881

Other real estate owned, net

 

 

658

 

 

658

 

 

658

Goodwill

 

 

19,686

 

 

19,686

 

 

24,811

Other intangible assets, net

 

 

26

 

 

28

 

 

229

Deferred tax assets, net

 

 

5,036

 

 

5,047

 

 

4,549

Company-owned life insurance

 

 

15,177

 

 

15,086

 

 

14,803

Other assets

 

 

24,297

 

 

16,544

 

 

17,636

Intangibles held for sale

 

 

3,000

 

 

3,553

 

 

 —

Total assets

 

$

1,353,863

 

$

1,251,682

 

$

1,144,688

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

  

 

 

  

 

 

 

Deposits:

 

 

  

 

 

  

 

 

 

Noninterest-bearing

 

$

270,604

 

$

240,068

 

$

226,484

Interest-bearing

 

 

907,846

 

 

846,716

 

 

751,617

Total deposits

 

 

1,178,450

 

 

1,086,784

 

 

978,101

Borrowings:

 

 

  

 

 

  

 

 

 

Federal Home Loan Bank Topeka borrowings

 

 

10,000

 

 

10,000

 

 

20,361

Subordinated notes

 

 

14,459

 

 

6,560

 

 

6,560

Accrued interest payable

 

 

417

 

 

299

 

 

329

Other liabilities

 

 

21,708

 

 

20,244

 

 

19,669

Liabilities held for sale

 

 

126

 

 

117

 

 

 —

Total liabilities

 

 

1,225,160

 

 

1,124,004

 

 

1,025,020

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

  

 

 

  

 

 

  

Total shareholders’ equity

 

 

128,703

 

 

127,678

 

 

119,668

Total liabilities and shareholders’ equity

 

$

1,353,863

 

$

1,251,682

 

$

1,144,688

9

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

As of

 

 

March 31, 

 

December 31, 

 

March 31, 

(Dollars in thousands)

    

2020

 

2019

 

2019

Loan Portfolio

 

 

  

 

 

  

 

 

  

Cash, Securities and Other

 

$

147,157

 

$

146,701

 

$

130,641

Construction and Development

 

 

25,461

 

 

28,120

 

 

37,128

1-4 Family Residential

 

 

412,306

 

 

400,134

 

 

360,607

Non-Owner Occupied CRE

 

 

192,350

 

 

165,179

 

 

172,014

Owner Occupied CRE

 

 

121,138

 

 

127,968

 

 

108,873

Commercial and Industrial

 

 

144,066

 

 

128,457

 

 

120,602

Total loans held for investment

 

 

1,042,478

 

 

996,559

 

 

929,865

Deferred costs, net

 

 

1,473

 

 

1,448

 

 

1,325

Gross loans

 

$

1,043,951

 

$

998,007

 

$

931,190

Total mortgage loans held for sale

 

$

64,120

 

$

48,312

 

$

19,778

 

 

 

 

 

 

 

 

 

 

Deposit Portfolio

 

 

 

 

 

 

 

 

 

Money market deposit accounts

 

$

671,641

 

$

615,575

 

$

513,328

Time deposits

 

 

150,190

 

 

134,913

 

 

176,312

Negotiable order of withdrawal accounts

 

 

82,092

 

 

91,921

 

 

59,464

Savings accounts

 

 

3,923

 

 

4,307

 

 

2,513

Total interest-bearing deposits

 

 

907,846

 

 

846,716

 

 

751,617

Noninterest-bearing accounts

 

 

270,604

 

 

240,068

 

 

226,484

Total deposits

 

$

1,178,450

 

$

1,086,784

 

$

978,101

10

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31, 

 

December 31, 

 

March 31, 

 

(Dollars in thousands)

    

2020

 

2019

 

2019

 

Average Balance Sheets

 

 

  

 

 

  

 

 

  

 

Average Assets

 

 

  

 

 

  

 

 

  

 

Interest-earning assets:

 

 

  

 

 

  

 

 

  

 

Interest-bearing deposits in other financial institutions

 

$

68,035

 

$

108,245

 

$

85,826

 

Available-for-sale securities

 

 

55,208

 

 

58,745

 

 

50,474

 

Loans

 

 

1,016,148

 

 

958,497

 

 

915,921

 

Interest-earning assets

 

 

1,139,391

 

 

1,125,487

 

 

1,052,221

 

Mortgage loans held for sale

 

 

37,798

 

 

59,813

 

 

13,277

 

Total interest earning-assets, plus mortgage loans held for sale

 

 

1,177,189

 

 

1,185,300

 

 

1,065,498

 

Allowance for loan losses

 

 

(8,010)

 

 

(7,756)

 

 

(7,567)

 

Noninterest-earning assets

 

 

84,054

 

 

78,934

 

 

77,780

 

Total assets

 

$

1,253,233

 

$

1,256,478

 

$

1,135,711

 

 

 

 

 

 

 

 

 

 

 

 

Average Liabilities and Shareholders’ Equity

 

 

  

 

 

  

 

 

  

 

Interest-bearing liabilities:

 

 

  

 

 

  

 

 

  

 

Interest-bearing deposits

 

$

830,736

 

$

865,489

 

$

760,507

 

Federal Home Loan Bank Topeka borrowings

 

 

10,495

 

 

10,000

 

 

10,401

 

Subordinated notes

 

 

7,854

 

 

6,560

 

 

6,560

 

Total interest-bearing liabilities

 

 

849,085

 

 

882,049

 

 

777,468

 

Noninterest-bearing liabilities:

 

 

  

 

 

  

 

 

  

 

Noninterest-bearing deposits

 

 

253,813

 

 

226,948

 

 

220,408

 

Other liabilities

 

 

19,874

 

 

19,912

 

 

19,413

 

Total noninterest-bearing liabilities

 

 

273,687

 

 

246,860

 

 

239,821

 

Shareholders’ equity

 

 

130,461

 

 

127,569

 

 

118,422

 

Total liabilities and shareholders’ equity

 

$

1,253,233

 

$

1,256,478

 

$

1,135,711

 

 

 

 

 

 

 

 

 

 

 

 

Yields (annualized)

 

 

  

 

 

  

 

 

  

 

Interest-bearing deposits in other financial institutions

 

 

1.26

%  

 

1.77

%  

 

2.43

%

Available-for-sale securities

 

 

2.14

 

 

2.19

 

 

2.46

 

Loans

 

 

4.33

 

 

4.40

 

 

4.46

 

Interest-earning assets

 

 

4.04

 

 

4.03

 

 

4.20

 

Mortgage loans held for sale

 

 

3.45

 

 

3.63

 

 

3.80

 

Total interest-earning assets, plus mortgage loans held for sale

 

 

4.02

 

 

4.01

 

 

4.20

 

Interest-bearing deposits

 

 

1.15

 

 

1.38

 

 

1.53

 

Federal Home Loan Bank Topeka borrowings

 

 

1.95

 

 

1.96

 

 

1.92

 

Subordinated notes

 

 

6.97

 

 

7.26

 

 

7.32

 

Total interest-bearing liabilities

 

 

1.22

 

 

1.43

 

 

1.58

 

Net interest margin

 

 

3.14

 

 

2.91

 

 

3.03

 

Interest rate spread

 

 

2.83

%  

 

2.60

%  

 

2.62

%

11

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of and for the Three Months Ended

 

 

 

March 31, 

 

December 31, 

 

March 31, 

 

(Dollars in thousands, except share and per share data)

    

2020

 

2019

 

2019

 

Asset Quality

 

 

  

 

 

  

 

 

  

 

Non-performing loans

 

$

10,451

 

$

12,270

 

$

18,713

 

Non-performing assets

 

 

11,109

 

 

12,928

 

 

19,371

 

Net charge-offs

 

 

 —

 

 

248

 

 

 —

 

Non-performing loans to total loans

 

 

1.00

%  

 

1.23

%  

 

2.01

%

Non-performing assets to total assets

 

 

0.82

 

 

1.03

 

 

1.69

 

Allowance for loan losses to non-performing loans

 

 

78.86

 

 

64.18

 

 

40.85

 

Allowance for loan losses to total loans

 

 

0.79

 

 

0.79

 

 

0.82

 

Net charge-offs to average loans

 

 

 —

%  

 

0.03

%  

 

 —

%

 

 

 

 

 

 

 

 

 

 

 

Assets under management

 

$

5,636,500

 

$

6,187,707

 

$

5,781,297

 

 

 

 

 

 

 

 

 

 

 

 

Market Data

 

 

 

 

 

 

 

 

 

 

Book value per share at period end

 

$

16.26

 

$

16.08

 

$

15.02

 

Tangible book value per common share(1) 

 

$

13.39

 

$

13.15

 

$

11.88

 

Weighted average outstanding shares, basic

 

 

7,863,564

 

 

7,906,516

 

 

7,873,718

 

Weighted average outstanding shares, diluted

 

 

7,930,611

 

 

7,950,279

 

 

7,889,644

 

Shares outstanding at period end

 

 

7,917,489

 

 

7,940,168

 

 

7,968,420

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Capital

 

 

 

 

 

 

 

 

 

 

Tier 1 capital to risk-weighted assets

 

 

10.96

%  

 

11.31

%  

 

11.13

%  

CET 1 to risk-weighted assets

 

 

10.96

 

 

11.31

 

 

11.13

 

Total capital to risk-weighted assets

 

 

13.31

 

 

12.87

 

 

12.78

 

Tier 1 capital to average assets

 

 

8.81

 

 

8.58

 

 

8.67

 

 

 

 

 

 

 

 

 

 

 

 

Bank Capital

 

 

 

 

 

 

 

 

 

 

Tier 1 capital to risk-weighted assets

 

 

10.35

 

 

10.67

 

 

10.36

 

CET 1 to risk-weighted assets

 

 

10.35

 

 

10.67

 

 

10.36

 

Total capital to risk-weighted assets

 

 

11.23

 

 

11.53

 

 

11.26

 

Tier 1 capital to average assets

 

 

8.33

%  

 

8.09

%  

 

8.07

%  

(1)

Represents a Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

 

12

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)

 

Reconciliations of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

 

    

As of and for the Three Months Ended

 

 

 

March 31, 

 

December 31, 

 

March 31, 

 

(Dollars in thousands, except share and per share data)

 

2020

 

2019

 

2019

 

Tangible common

 

 

  

 

 

  

 

 

  

 

Total shareholders' equity

 

$

128,703

 

$

127,678

 

$

119,668

 

Less:

 

 

  

 

 

  

 

 

  

 

Goodwill

 

 

19,686

 

 

19,686

 

 

24,811

 

Intangibles held for sale

 

 

3,000

 

 

3,553

 

 

 —

 

Other intangibles, net

 

 

26

 

 

28

 

 

229

 

Tangible common equity

 

$

105,991

 

$

104,411

 

$

94,628

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding, end of period

 

 

7,917,489

 

 

7,940,168

 

 

7,968,420

 

Tangible common book value per share

 

$

13.39

 

$

13.15

 

$

11.88

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

1,334

 

$

2,572

 

$

1,627

 

Return on tangible common equity (annualized)

 

 

5.03

%  

 

9.85

%  

 

6.88

%

 

 

 

 

 

 

 

 

 

 

 

Efficiency

 

 

  

 

 

  

 

 

  

 

Non-interest expense

 

$

14,647

 

$

13,082

 

$

12,602

 

Less: amortization

 

 

 2

 

 

 7

 

 

173

 

Less: loss on intangibles held for sale

 

 

553

 

 

 —

 

 

 —

 

Adjusted non-interest expense

 

$

14,092

 

$

13,075

 

$

12,429

 

 

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

8,931

 

$

8,190

 

$

7,971

 

Non-interest income

 

 

7,767

 

 

8,228

 

 

6,976

 

Less:

 

 

 

 

 

 

 

 

 

 

Net gain on sale of assets

 

 

 —

 

 

183

 

 

 —

 

Total income

 

$

16,698

 

$

16,235

 

$

14,947

 

Efficiency ratio

 

 

84.39

%  

 

80.54

%  

 

83.15

%

 

 

 

 

 

 

 

 

 

 

 

Total income before non-interest expense

 

$

16,331

 

$

15,971

 

$

14,753

 

Less:

 

 

 

 

 

 

 

 

 

 

Net gain on sale of assets

 

 

 —

 

 

183

 

 

 —

 

Plus: provision for loan losses

 

 

367

 

 

447

 

 

194

 

Gross revenue

 

$

16,698

 

$

16,235

 

$

14,947

 

 

13

First Western Financial, Inc.

Consolidated Financial Summary (unaudited) (continued)

 

 

 

 

 

 

 

 

 

 

 

 

    

As of and for the Three Months Ended

 

 

 

March 31, 

 

December 31, 

 

March 31, 

 

(Dollars in thousands, except share and per share data)

 

2020

 

2019

 

2019

 

Adjusted Net Income Available To Common Shareholders

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

1,334

 

$

2,572

 

$

1,627

 

Plus: loss on intangibles held for sale including income tax impact

 

 

438

 

 

 —

 

 

 —

 

Adjusted net income available to shareholders

 

$

1,772

 

$

2,572

 

$

1,627

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

Earnings per share

 

$

0.17

 

$

0.33

 

$

0.21

 

Plus: loss on intangibles held for sale including income tax impact

 

 

0.06

 

 

 —

 

 

 —

 

Adjusted earnings per share

 

$

0.23

 

$

0.33

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.17

 

$

0.32

 

$

0.21

 

Plus: loss on intangibles held for sale including income tax impact

 

 

0.05

 

 

 —

 

 

 —

 

Adjusted diluted earnings per share

 

$

0.22

 

$

0.32

 

$

0.21

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Assets (annualized)

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.43

%

 

0.82

%

 

0.57

%

Plus: loss on intangibles held for sale including income tax impact

 

 

0.14

 

 

 —

 

 

 —

 

Adjusted return on average assets

 

 

0.57

%

 

0.82

%

 

0.57

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Shareholders' Equity (annualized)

 

 

 

 

 

 

 

 

 

 

Return on average shareholders' equity

 

 

4.09

%

 

8.06

%

 

5.50

%

Plus: loss on intangibles held for sale including income tax impact

 

 

1.34

 

 

 —

 

 

 —

 

Adjusted return on average shareholders' equity

 

 

5.43

%

 

8.06

%

 

5.50

%

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Tangible Common Equity (annualized)

 

 

 

 

 

 

 

 

 

 

Return on tangible common equity

 

 

5.03

%

 

9.85

%

 

 6.88

%

Plus: loss on intangibles held for sale including income tax impact

 

 

1.66

 

 

 —

 

 

 —

 

Adjusted return on tangible common equity

 

 

6.69

%

 

9.85

%

 

 6.88

%

 

14