First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (February 2024)
51 slides from First Western Financial's investor presentation, Feb 27, 2024
Slide 1: Investor Presentation
INVESTOR PRESENTATION February 2023
Slide 2: Safe Harbor
Safe Harbor 2 This presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements reflect the current views of First Western Financial
Slide 3: An Emerging High Performing Institution
3 An Emerging High Performing Institution Overview ▪ Niche-focused regional wealth manager built on a private trust bank platform ▪ Headquartered in Denver, Colorado and positioned in desirable, affluent and high growth markets Target Market ▪ Households of $1+ million liquid net worth ▪ High net wo
Slide 4: Investment Highlights
4 Investment Highlights Successful Execution on Growth Strategies Attractive Markets and Business Model Strong Earnings Momentum ▪ Significant revenue growth driving improved operating leverage and higher profitability since pre-IPO ▪ TBV/share(1) increased 143% since the IPO, 21% in 2021, 11% in 20
Slide 5: Consistent Value Creation
5 Consistent Value Creation TBV/Share(1) Up 143% Since July 2018 IPO Consistent increases in tangible book value per share driven by: • Organic growth that has increased operating leverage • Accretive acquisitions that have been well priced and smoothly integrated to realize all projected cost savin
Slide 6: Strong Operational and Financial Momentum
$4,556 $5,795 $7,602 $10,854 $38,429 $32,611 $33,733 $17,533 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2021 2022 2023 2016-2020 Pre-Tax, Pre-Provision Income(1) ($000s) 6 Strong Operational and Financial Momentum ▪ Robust organic balance sheet growth
Slide 7: Franchise Overview
Franchise Overview W FirSTwestern
Slide 8: Great Markets, Scarce Investment Opportunity
8 Great Markets, Scarce Investment Opportunity ▪ Ranked among states with highest GDP growth ▪ Strong job and population growth ▪ Experiencing significant in-migration ▪ Attractive demographics with large amount of high net worth individuals that utilize private banking and investment management ser
Slide 9: Success in Expansion and Acquisition Growth
9 Success in Expansion and Acquisition Growth 2006 – 2010 (3) ▪ Boulder, CO ▪ Century City, CA ▪ Scottsdale, AZ 2011 – 2015 (6) ▪ Aspen, CO ▪ DTC/Cherry Hills, CO ▪ Fort Collins, CO ▪ Jackson Hole, WY ▪ Laramie, WY(4) ▪ Phoenix, AZ 2016 – 2020 (4) ▪ Broomfield, CO (2021) ▪ Greenwood Village, CO ▪ Lo
Slide 10: Revenue Growth Strategies
10 Revenue Growth Strategies Expand commercial loan production platform ▪ Building expertise in specific vertical markets ▪ Capitalize on growing reputation to attract additional experienced commercial banking talent Expand into new markets with attractive demographics ▪ Vail Valley office opened in
Slide 11: Recent M&A Transactions
11 Recent M&A Transactions Branch Purchase and Assumption Whole Bank Acquisition ▪ Closed on May 18, 2020 ▪ Acquisition of all of the Denver locations of Simmons Bank (three branches and one loan production office) ▪ Assumed $63 million in deposits and $120 million in loans related to the acquired l
Slide 12: Increasing Market Share
12 Increasing Market Share Successfully attracting new banking talent and growing awareness of superior value proposition are driving increases in market share MSA 2023 Market Share(1) 2022 Market Share Change Denver-Aurora-Centennial, CO 1.00% 0.77% 0.23% Fort Collins-Loveland, CO 4.62% 2.20% 2.42%
Slide 13: Unique Business Model
Unique Business Model 13 W FirSTwestern
Slide 14: Unique Market Position
Unique Market Position High A v Level of Retail Sophistication Brokerage Firms A Life Insurance Companies v Low Sales < > Basis of Relationship < > Trust 14 W FIRST
Slide 15: Cross-Selling a Diverse Set of Products and Services
▪ Corporate loans to match specific needs ▪ Well-versed in working with complex cash flows and business models ▪ Customized treasury management products and services 15 Cross-Selling a Diverse Set of Products and Services Commercial Banking ▪ Fiduciary wealth management with expert review of client
Slide 16: Private Bank Model Generates Strong Fee Income
16 Private Bank Model Generates Strong Fee Income 5-Year Average: More than 38% of Operating Revenue Generated by Fee Income 58.5% 38.8% 36.9% 34.5% 32.0% 28.1% 26.1% 27.5% 25.3% 26.0% 18.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW UMBF WASH PGC UVSP CATC SYBT CFR TMP FFWM Noninteres
Slide 17: Wealth Management Segment Earnings
17 Wealth Management Segment Earnings (1) See Non-GAAP reconciliation $0.78 $1.60 $3.09 $3.33 $1.59 $1.29 $4.24 $3.81 $3.09 $1.33 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 FY19 FY20 FY21 FY22 FY23 Wealth Management Segment Consolidated ▪ Wealth Management segment earnings reflects
Slide 18: Long Track Record of Superior Credit Quality
18 Long Track Record of Superior Credit Quality • Relationship-based approach, conservative underwriting criteria, and financial strength of clients have resulted in minimal credit losses over First Western’s history ➢ Underwriting criteria includes three sources of repayment including personal guar
Slide 19: Strong Client Relationships Result in Sticky Deposit Base
Uninsured Deposits Represent 33.7% of Total Deposits at 12/31/23 19 Strong Client Relationships Result in Sticky Deposit Base $2,405 $2,392 $2,375 $2,420 $2,529 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 4Q22 1Q23 2Q23 3Q23 4Q23 Total Deposits Stable Deposit Base During Highly Volatile Period for th
Slide 20: Driving Profitable Growth
Driving Profitable Growth 20
Slide 21: Strong Execution on Revenue Growth Strategies
21 Strong Execution on Revenue Growth Strategies ▪ Accelerating business development, office expansion and accretive acquisitions all contributing to the balance sheet growth driving improved operating leverage and higher profitability ▪ M&A strategy continued with acquisition of Teton Financial Ser
Slide 22: Recent Financial Trends
Recent Financial Trends 22 W FirSTwestern
Slide 23: Overview of 4Q23
Overview of 4Q23 4Q23 Earnings • Net income available to common shareholders of $0.3 million, or $0.03 per diluted share • Pre-tax, pre-provision net income(1) of $4.1 million • Decline in earnings from prior quarter primarily due to reserve on individually analyzed loans Prudent Balance Sheet Growt
Slide 24: Net Income Available to Common Shareholders and Earnings per Share
24 Net Income Available to Common Shareholders and Earnings per Share • Net income of $0.3 million, or $0.03 diluted earnings per share, in 4Q23 • Provision for individually analyzed loans in 4Q23 had diluted earnings per share impact of $0.29, net of tax • Tangible book value per share declined dur
Slide 25: Loan Portfolio
25 Loan Portfolio • Total loans held for investment increased $12.0 million from prior quarter • Growth driven by increases in residential mortgage and CRE portfolios, partially offset by small declines in other portfolios • New loan production of more than $50 million, with focus primarily on clien
Slide 26: Total Deposits
26 Total Deposits • Total deposits increased by $109 million in 4Q23 • Success in new business development, with $118 million in new deposit relationships added in 4Q23 • Noninterest-bearing deposits increased $6.3 million in 4Q23, primarily driven by new client accounts • Strategic decision made to
Slide 27: Trust and Investment Management
27 Trust and Investment Management • Total assets under management increased $357.2 million from September 30, 2023 to $6.75 billion as of December 31, 2023 • Increase in AUM driven by an increase in market values throughout 4Q23, resulting in a 5.6% increase compared to 3Q23, and a 10.6% increase y
Slide 28: Gross Revenue
1. See Non-GAAP reconciliation Gross Revenue 4Q23 Gross Revenue(1) Gross Revenue(1) 8 • Gross revenue(1) declined 2.7% from prior quarter • Slowest decline in the last five quarters as environmental headwinds appear to be shifting • Decline primarily due to an increase in deposit costs that reduced
Slide 29: Net Interest Income and Net Interest Margin
29 Net Interest Income and Net Interest Margin • Net interest income decreased to $16.3 million, or 2.6%, from $16.8 million in 3Q23, due primarily to higher deposit costs • Net interest margin decreased 9 bps to 2.37%, driven by the increase in interest bearing deposit costs • Strategic decision ma
Slide 30: Non-Interest Income
30 Non-Interest Income • Non-interest income remained flat compared to prior quarter • Slight decline in Net gains on mortgage loans, which reflects impact of higher rates and seasonal decline in mortgage loan demand • Slight declines in Trust and Investment Management fees compared to prior quarter
Slide 31: Non-Interest Expense and Efficiency Ratio
31 Non-Interest Expense and Efficiency Ratio • Non-interest expense remained flat at $18.3 million compared to 3Q23 • Disciplined expense management resulted in non-interest expense coming in below targeted range 1. See Non-GAAP reconciliation Total Non-Interest Expense Operating Efficiency Ratio(1)
Slide 32: Asset Quality
32 Asset Quality • NPLs increased $3.5 million due primarily to the downgrade of two loans • $3.9 million provision for credit losses driven primarily by reserve on individually analyzed loans previously downgraded to NPL, with small reserves established for two loans downgraded to NPL in 4Q23 • ACL
Slide 33: Capital and Liquidity Overview
33 Capital and Liquidity Overview Liquidity Funding Sources (as of 12/31/23) 1. See Non-GAAP reconciliation 2. Based on internal policy guidelines Consolidated Capital Ratios (as of 12/31/23) Tangible Common Equity / TBV per Share(1) (in thousands) Liquidity Reserves: Total Available Cash $252,845 U
Slide 34: Creating Additional Shareholder Value
Creating Additional Shareholder Value 34
Slide 35: Near-Term Outlook
35 Near-Term Outlook • Prudent risk management will remain top priority while economic uncertainty remains, which will impact level of profitability in short term • Continued focus on executing well on the areas that we can control • Balance sheet management • Attracting new clients with particular
Slide 36: MYFW: Our Five Core Strengths
36 MYFW: Our Five Core Strengths Differentiated, Proven in the Marketplace Built-in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors ▪ Niche-focused franchise headquartered in Denver, Colorado ▪ Well-positioned in many attractive mark
Slide 37: Organizational Structure Built for Scale
37 Organizational Structure Built for Scale Full Bank and Trust: ▪ Aspen, CO ▪ Boulder, CO ▪ Cherry Creek, CO ▪ Denver, CO ▪ DTC/Cherry Hills, CO ▪ Northern Colorado ▪ Jackson Hole, WY ▪ Rock Springs, WY ▪ Pinedale, WY ▪ Scottsdale, AZ ▪ Broomfield, CO ▪ Phoenix, AZ ▪ Vail Valley, Avon, CO ▪ Bozeman
Slide 38: Long-Term Goals to Drive Shareholder Value
38 Long-Term Goals to Drive Shareholder Value ▪ Since our pre-2018 IPO status as of year end 2017, we have tripled total loans and total deposits, more than doubled TBV per share, had substantial increases in annual revenue, and demonstrated significant operating leverage. Looking forward we can dri
Slide 39: A Unique and Attractive Investment
MYFW’s core strengths provide the foundation for driving shareholder value 39 A Unique and Attractive Investment Differentiated, Proven in the Marketplace Built-in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors
Slide 40: Appendix
Appendix 40 W FirSTwestern
Slide 41: Organizational Overview
Organizational Overview 41 W FiRSTWwestern
Slide 42: Management Team
Name Title Joined FW Years in Industry Prior Experience Scott C. Wylie Chairman, CEO & President 2002 35 ▪ 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
Slide 43: Board of Directors
Name Director Since Primary Business Scott C. Wylie 2002 ▪ First Western Financial, Inc. Julie A. Caponi, CPA(1) 2017 ▪ Former Finance Executive at Arconic, Inc. (fka Alcoa Inc.) ▪ Former audit partner at Deloitte ▪ Board member & Audit Committee chair for FCF (NYSE) Julie A. Courkamp 2021 ▪ First W
Slide 44: Non-GAAP Reconciliations
Non-GAAP Reconciliations 44
Slide 45: Non-GAAP Reconciliation: Gross Revenue and Pre-Tax, Pre-Provision Income
45 Non-GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 2022 2023 Total income before non-interest expense $53,394 $54,501 $57,602 $63,997 $92,615 $95,408 $107,934 $87,249 Less: Unrealized gains/(losses) recognized on equity sec
Slide 46: Non-GAAP Reconciliation: Consolidated Efficiency Ratio
46 Non-GAAP Reconciliation Consolidated Efficiency Ratio For the Years Ended, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 2022 2023 Non-interest expense $49,823 $49,494 $50,182 $53,806 $59,552 $68,128 $79,106 $75,637 Less: Amortization 747 784 831 374 14 17 308 250 Less: Acquisition related
Slide 47: Non-GAAP Reconciliation: Diluted Pre-Tax Earnings Per Share
47 Non-GAAP Reconciliation Diluted Pre-Tax Earnings Per Share (Dollars in thousands) December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Non-Mortgage income before income tax $8,168 $5,971 $2,429 $5,102 $856 Plus: Acquisition-related expenses 195 37 14 30 36 Plus: Imp
Slide 48: Non-GAAP Reconciliation: Tangible Common Book Value Per Share
47 Non-GAAP Reconciliation Consolidated Tangible Common Book Value Per Share As of, (Dollars in thousands) Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Sept. 30, 2023 Dec. 31, 2023 Total shareholders' equity $116,875 $127,678 $154,962 $219,041 $240,864 $246,256 $246,212 Less
Slide 49: Non-GAAP Reconciliation: Wealth Management Gross Revenue
48 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Total income before non-interest expense $26,623 $24,543 $19,529 $21,647 $17,913 Less: unrealized gains/(l
Slide 50: Non-GAAP Reconciliation: Adjusted Net Income Available to Common Shareholders
50 Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Net income available to common shareholders $5,471 $3,820 $1,5
Slide 51: Non-GAAP Reconciliation: Adjusted Net Interest Margin
50 Non-GAAP Reconciliation Adjusted net interest margin For the Three Months Ended December 31, 2022 For the Three Months Ended March 31, 2023 For the Three Months Ended June 30, 2023 For the Three Months Ended September 30, 2023 For the Three Months Ended December 31, 2023 (Dollars in thousands) Av
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