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 June 14, 2019, the Company announced that its Board of Directors had authorized a share repurchase program under which the Company may repurchase up to 300,000 shares of its common stock and that the Board of Governors of the Federal Reserve System advised the Company that it had no objection to the Company’s stock repurchase program. The repurchase program authorized the Company to purchase its common stock from time to time in privately negotiated transactions, in the open market, including pursuant to any trading plan that may be adopted in accordance with Rule 10b5-1 plan promulgated by the Securities and Exchange Commissions, or otherwise in a manner that complies with applicable federal securities laws. During the year ended December 31, 2019, the Company repurchased 43,698 shares at an average price of $16.51. During the nine months ended September 30, 2020, the Company repurchased 22,679 shares at an average price of $16.50. The share repurchase program expired in June 2020 and therefore no shares were repurchased during the three months ended September 30, 2020.

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) vests ratably over five-years. The remaining $1.5 million, or 52,632 shares, may be earned based on performance of the mortgage division of the Company. During the nine months ended September 30, 2020, the Company recognized compensation expense of $0.1 million, representing the remaining 14,114 shares, related to the performance based awards. During the year ended December 31, 2019, the Company recognized compensation expense of $0.6 million, representing 38,518 shares, related to the performance-based awards. The performance based awards fully vested in the second quarter 2020, no expenses were recognized in the three months ended September 30, 2020.

As of September 30, 2020, the Restricted Stock Awards have a weighted-average grant date fair value of $28.50 per share. The Company recognized compensation expense of $0.1 million and $0.5 million for the three months ended September 30, 2020 and 2019, for the Restricted Stock Awards. During the nine months ended September 30, 2020 and 2019, the Company has recognized compensation expense of $0.3 million and $0.7 million for the Restricted Stock Awards, respectively. As of September 30, 2020, the Company has $0.6 million of unrecognized stock-based compensation expense related to the shares issued. As of September 30, 2020, the unrecognized stock-based compensation expense is expected to be recognized over a weighted average period of 1.5 years. Performance based Restricted Stock Awards representing 30,088 shares vested during the nine months ended September 30, 2020.

As of September 30, 2020, there were a total of 504,397 shares available for issuance under the First Western Financial, Inc. 2016 Omnibus Incentive Plan (“the 2016 Plan”). If the Awards outstanding under the First Western 2008 Stock Incentive Plan (“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.

The Company did not grant any stock options during the nine months ended September 30, 2020 and 2019.

During the three months ended September 30, 2020 and 2019, the Company recognized stock based compensation expense of $0.1 million and $0.1 million, respectively, associated with stock options. During the nine months ended September 30, 2020 and 2019, the Company recognized stock based compensation expense of $0.2 million and $0.2 million, respectively, associated with stock options. As of September 30, 2020, the Company has $0.1 million of unrecognized stock-based compensation expense related to stock options which are unvested. As of September 30, 2020, the unrecognized cost is expected to be recognized over a weighted-average period of less than one year.

The following summarizes activity for nonqualified stock options for the nine months ended September 30, 2020:

(a)	Nonqualified stock options outstanding at the end of the period and those fully vested / exercisable had immaterial aggregate intrinsic values.

As of September 30, 2020 and December 31, 2019, there were 396,916 and 394,020 options, respectively, that were exercisable. Exercise prices are between $20.00 and $40.00 per share, and the options are exercisable for a period of ten-years from the original grant date and expire on various dates between 2022 and 2026.

Restricted Stock Units

Pursuant to the 2016 Plan, the Company can grant associates and non-associate directors’ long-term cash and stock-based compensation. During the nine months ended September 30, 2020, the Company granted certain associates restricted stock units which are earned over time or based on various performance measures and convert to common stock upon vesting, which are summarized here and expanded further below.

The following summarizes the activity for the Time Vesting Units, the Financial Performance Units and the Market Performance Units for the nine months ended September 30, 2020:


	Time	Financial	Market
	Vesting	Performance	Performance
	Units	Units	Units
Outstanding at December 31, 2019	209,444	69,426	14,862
Granted	109,607	60,859	-
Vested	(54,112)	-	-
Forfeited	(1,888)	(854)	-
Outstanding at September 30, 2020	263,051	129,431	14,862

During the three months ended September 30, 2020, the Company issued 12,725 shares of common stock upon the settlement of Time Vesting Units. The remaining 6,196 shares that vested during the period were surrendered with a combined market value at the date of settlement of $0.1 million to cover employee withholding taxes. During the nine months ended September 30, 2020, the Company issued 34,260 shares of common stock upon the settlement of Time Vesting Units. The remaining 19,852 shares that vested during the period were surrendered with a combined market value at the dates of settlement of $0.3 million to cover employee withholding taxes. During the three and nine months ended September 30, 2019 the Company issued 15,446 shares of common stock upon the settlement of Time Vesting Units. The remaining 7,835 shares that vested during the period were surrendered with a combined market value at the dates of settlement of $0.1 million to cover employee withholding taxes.

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 109,607 Time Vesting Units with a five-year service period during the nine months ended September 30, 2020, that vest in equal installments of 20% on the anniversary of the grant date, assuming continuous employment through the scheduled vesting dates. Time Vesting Units granted in 2020 have a weighted-average grant-date fair value of $12.84 per unit. During the three months ended September 30, 2020 and 2019, the Company recognized compensation expense of $0.4 million and $0.3 million, respectively. During the nine months ended September 30, 2020 and 2019, the company recognized compensation expense of $1.0 million and $0.7 million, respectively, for

Time Vesting Units. As of September 30, 2020, the Company has $3.8 million of unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of approximately 2.0 years.

Financial Performance Units Granted Prior to May 1, 2019

Financial Performance Units were granted to certain key associates and are earned based on the Company achieving various financial performance metrics beginning on the grant date and ending on December 31, 2019. 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 two-year service period vesting requirement ending on December 31, 2021. The end of the performance metrics period, December 31, 2019, resulted in accruing at 50% for half of the awards and at 100% for the remainder. The maximum shares that can be issued at the determined thresholds as of September 30, 2020 are approximately 10,000 shares. During the three and nine months ended September 30, 2020 and 2019, the Company recognized an immaterial amount of compensation expense for the Financial Performance Units. As of September 30, 2020, there was $0.1 million of unrecognized compensation expense related to the Financial Performance Units. As of September 30, 2020, the Company has unrecognized stock-based compensation expense that is expected to be recognized over a weighted-average period of 1.3 years.

Financial Performance Units Granted from May 1, 2019 through April 30, 2020

The Company granted 1,866 Financial Performance Units during the nine months ended September 30, 2020. In 2019, the Company granted 62,569 Financial Performance Units to officers and other key associates. All Financial Performance Units granted Between May 1, 2019 and May 1, 2020, have a five-year term and are earned based on the Company achieving various financial metrics beginning on the grant date and ending on December 31, 2021, which include various thresholds from 0% to 150%, then the Financial Performance Units will have a subsequent two-year service period vesting requirement ending on December 31, 2023. As of September 30, 2020, the Company is accruing at the maximum threshold for the awards. The maximum number of shares that can be issued at 150% as of September 30, 2020 was approximately 86,200 shares. During the three months ended September 30, 2020 and 2019, the Company recognized $0.1 million of compensation expense, for Financial Performance Units. For the nine months ended September 30, 2020 and 2019, the Company recognized $0.2 million and $0.1 million, respectively. As of September 30, 2020, there was $0.6 million of unrecognized compensation expense related to the Financial Performance Units. As of September 30, 2020, the unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of 3.3 years.

Financial Performance Units Granted from May 1, 2020 through September 30, 2020

The Company granted 699 and 58,993 Financial Performance Units during the three and nine months ended September 30, 2020. All Financial Performance Units granted on or after May 1, 2020, have a five-year term and are earned based on the Company achieving various financial metrics beginning on the grant date and ending on December 31, 2022, which include various thresholds from 0% to 150%, then the Financial Performance Units will have a subsequent two-year service period vesting requirement ending on December 31, 2023. As of September 30, 2020, the Company is accruing at maximum threshold for the awards. The maximum number of shares that can be issued at 150% as of September 30, 2020 was approximately 87,900 shares. During the three and nine months ended September 30, 2020, the Company recognized $0.1 million of compensation expense for the Financial Performance Units. As of September 30, 2020, there was $0.7 million of unrecognized compensation expense related to the Financial Performance Units. As of September 30, 2020, the unrecognized stock-based compensation expense is expected to be recognized over a weighted-average period of 4.3 years.

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. If the Company’s common stock is 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 ending on June 30, 2022. The Company’s common stock did not trade at or above the required prices over the performance period, as a result no Market Performance Units are eligible to be earned.

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 is also a market condition as a vesting requirement for the Market Performance Units which affects the determination of the grant date fair value. The Company estimated the grant date fair value using various valuation assumptions. During the three and nine months ended

September 30, 2020 and 2019, the Company recognized an immaterial amount of compensation expense for the Market Performance Units. As of September 30, 2020, there was $0.4 million of unrecognized compensation expense related to the Market Performance Units which is expected to be recognized over a weighted-average period of 1.8 years.