First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (August 2022)
49 slides from First Western Financial's investor presentation, Aug 1, 2022
Slide 1: Investor Presentation August 2022
INVESTOR PRESENTATION August 2022
Slide 2: Safe Harbor
Safe Harbor 2 This presentation contains “forward - looking statements” within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended .. These forward - looking statements reflect the current views of First Western
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
Slide 4: Investment Highlights
4 Investment Highlights Proven Execution on Growth Strategies Attractive Markets and Business Model Strong Earnings Momentum ▪ Significant revenue growth driving improved operating leverage and higher profitability ▪ TBV/share (1) increased 25% in 2020 and 21% in 2021 ▪ Continued scale expected to d
Slide 5: Strong Operational and Financial Momentum
$4,556 $5,795 $7,602 $10,854 $38,429 $32,611 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2021 2016 - 2020 Pre - Tax, Pre - Provision Income(1) ($000s) 5 Strong Operational and Financial Momentum ▪ Robust balance sheet growth ▪ Higher fee income driven b
Slide 6: Improving Earnings Driving Outperformance and Creating Shareholder Value
$9.19 $11.14 $11.50 $11.88 $12.38 $12.83 $13.15 $13.39 $14.13 $15.38 $16.44 $17.24 $17.98 $18.85 $19.87 $20.25 $20.65 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 MYFW TBV/Share 6 Improving Earnings Driving Outperformance and Creating Shareholder Value Discounted Valuation Provides Opportu
Slide 7: Franchise Overview
Franchise Overview W Frirstwestern
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 s
Slide 9: MYFW: Our Five Core Strengths
9 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
Slide 10: 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 10 Cross - Selling a Diverse Set of Products and Services Commercial Banking ▪ Fiduciary wealth management with expert review of cli
Slide 11: High Quality Revenues with Predictable Sources of Recurring Income
$54.3 $55.2 $57.8 $64.3 $97.3 $96.2 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Net Interest Income Non-Interest Income, excluding net gain/(loss) on sale of securities and assets 11 High Quality Revenues with Predictable Sources
Slide 12: Private Bank Model Generates Strong Fee Income
12 Private Bank Model Generates Strong Fee Income FY 2021: More than 40% of Operating Revenue Generated by Fee Income 62.8% 41.2% 37.9% 36.0% 34.6% 30.3% 27.8% 27.7% 26.0% 25.7% 24.6% 22.9% 18.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW WASH UMBF PGC UVSP SYBT CFR TMP CATC TSC FFWM F
Slide 13: Driving Profitable Growth
Driving Profitable Growth 13
Slide 14: Success in Expansion and Acquisition Growth
14 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 ▪ Phoenix, AZ 2016 – 2020 (4) ▪ Broomfield, CO (2021) ▪ Greenwood Village, CO ▪ Lone
Slide 15: Revenue Growth Strategies
15 Revenue Growth Strategies Expand commercial loan production platform ▪ Building expertise in specific vertical markets, e.g. medical and dental practices ▪ Capitalize on growing reputation to attract additional experienced commercial banking talent Expand into new markets with attractive demograp
Slide 16: Recent M&A Transactions
16 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 17: Strong Execution on Revenue Growth Strategies
17 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 continuing with acquisition of Teton Financial Se
Slide 18: Accelerating Business Development Trends
18 Accelerating Business Development Trends Capital raised in July 2018 IPO has allowed for increased business development activities $227.9 $268.2 $225.6 $317.9 $691.7 $561.2 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 2016 2017 2018 2019 2020 2021 $44.0 $62.2 $121.6 $149.0 $467.9 $206.6
Slide 19: Increased Scale and Back-Office Streamlining Driving Improved Efficiencies
19 Increased Scale and Back - Office Streamlining Driving Improved Efficiencies 88.2% 85.4% 80.6% 59.8% 66.6% 50.0% 60.0% 70.0% 80.0% 90.0% 2017 2018 2019 2020 2021 (1) See Non - GAAP reconciliation Efficiency Ratio (1)
Slide 20: Wealth Management Segment Earnings
20 Wealth Management Segment Earnings (1) See Non - GAAP reconciliation $0.86 $0.79 $0.71 $0.77 $0.75 $1.60 $3.09 $1.01 $1.07 $0.75 $0.80 $0.65 $4.24 $3.81 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 FY20 FY21 Wealth Management Segment Consolid
Slide 21: Recent Financial Trends
Recent Financial Trends a W Frirstwestern
Slide 22: Overview of 2Q22
22 Overview of 2Q22 Significant NIM Expansion 2Q22 Earnings Record Loan Production and Growth ▪ Total loans held for investment increased at annualized rate of 45%, driven by record loan production ▪ Increases across most major loan categories ▪ Productivity of commercial banking platform continues
Slide 23: Net Income Available to Common Shareholders and Earnings per Share
23 Net Income Available to Common Shareholders and Earnings per Share ▪ Net income of $4.5 million, or $0.46 diluted earnings per share, in 2Q22 ▪ Excluding acquisition - related expenses, adjusted diluted earnings per share (1) of $0.49 in 2Q22 ▪ Strong profitability resulted in 1.6% and 2.0% incre
Slide 24: Loan Portfolio
24 Loan Portfolio ▪ Total loans HFI increased $219.0 million from prior quarter ▪ Record loan production more than offset continued high level of payoffs ▪ Growth in most major loan categories with largest increases in C&I and 1 - 4 family residential ▪ Mortgage loan officers generating more jumbo A
Slide 25: Total Deposits
25 Total Deposits ▪ Total deposits decreased $102.1 million from end of prior quarter ▪ Decrease primarily driven by fluctuations in commercial operating accounts, seasonal tax payments made by clients, and clients moving deposits into investment opportunities ▪ New client acquisition activity resul
Slide 26: Trust and Investment Management
26 Trust and Investment Management ▪ Total assets under management decreased $921.7 million from March 31, 2022 to $6.28 billion as of June 30, 2022 ▪ The decrease in asset balances was primarily attributable to unfavorable market conditions resulting in a decrease in the value of assets under manag
Slide 27: Gross Revenue
(1) See Non - GAAP reconciliation Gross Revenue ▪ Gross revenue (1) unchanged from 1Q22 ▪ Higher net interest income offset by decline in non - interest income ▪ Net interest income increased to $20.1 million, or 10.1%, from $18.3 million as of March 31, 2022 and 41.6% from $14.2 million as of June
Slide 28: Net Interest Income and Net Interest Margin
28 Net Interest Income and Net Interest Margin ▪ Net interest income increased 10.1% from 1Q22, primarily due to higher average loan balances and increase in net interest margin ▪ Growth in investment portfolio resulted in modest increase in interest income from securities ▪ Net interest margin, inc
Slide 29: Non-Interest Income
29 Non - Interest Income ▪ Non - interest income decreased 19.3% from 1Q22 ▪ Declines due primarily to ▪ Decrease in net gain on mortgage due to reduction in amount of mortgage loans originated for sale as production was more heavily weighted to portfolio loans held for investment ▪ Lower TIM fees p
Slide 30: Mortgage Operations
30 Mortgage Operations ▪ Total mortgage originations (HFS and portfolio) increased 48% from prior quarter ▪ Refi/Purchase mix of 25% / 75% in Q2 compared to 41% / 59% in 1Q22 and 41% / 59% in 4Q21 ▪ Profit margin declined in Q2 due to lower lock volume for HFS loans* ▪ Non - interest expense flat qu
Slide 31: Non-Interest Expense and Efficiency Ratio
31 Non - Interest Expense and Efficiency Ratio ▪ Non - interest expense increased 6.3% from 1Q22 ▪ Increase due primarily to higher salaries and benefits expense resulting from higher commission payments on portfolio mortgage production, investment in additional banking talent to support continued g
Slide 32: Asset Quality
32 Asset Quality ▪ Stable asset quality across the portfolio with NPAs remaining consistent at 0.17% of total assets ▪ Immaterial net charge - offs again in the quarter ▪ Improved collateral valuation of largest problem loan resulted in partial release of specific reserve ▪ $0.5 million provision fo
Slide 33: Capital and Liquidity Overview
33 Capital and Liquidity Overview 10.15% 10.15% 12.58% 8.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Tier 1 Capital to Risk-Weighted Assets CET1 to Risk- Weighted Assets Total Capital to Risk-Weighted Assets Tier 1 Capital to Average Assets Liquidity Funding Sources (as of 6/30/22) Liquid
Slide 34: Creating Additional Shareholder Value
Creating Additional Shareholder Value 34
Slide 35: Near-Term Outlook
35 Near - Term Outlook ▪ Expect continuation of positive trends in second half of 2022 driven by further organic balance sheet growth ▪ Loan pipeline continues to build since end of first quarter and should result in continued strong loan growth ➢ Well diversified loan production platform should off
Slide 36: Long-Term Goals to Drive Shareholder Value
36 Long - Term Goals to Drive Shareholder Value ▪ Drive to $5 billion in total assets, $25 billion TIM assets through both organic growth and acquisitions ▪ ~50 offices ▪ $7 - 8 million in revenue per office ▪ 60% contribution margin per office ▪ Build footprint, scale and operating leverage with M&
Slide 37: MYFW's core strengths provide the foundation for driving shareholder value
MYFW’s core strengths provide the foundation for driving shareholder value 37 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 38: Appendix
Appendix 38 W Frirstwestern
Slide 39: Organizational Overview
Organizational Overview 9 W Frirstwestern
Slide 40: Management Team
Name Title Joined FW Years in Industry Prior Experience Scott C. Wylie Chairman, CEO & President 2002 34 ▪ 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 41: Board of Directors
Name Director Since Primary Business Scott C. Wylie 2002 ▪ First Western Financial, Inc. Julie A. Caponi, CPA 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 West
Slide 42: Integrated Team Approach in Boutique Offices
Working as a team to grow relationships 42 Integrated Team Approach in Boutique Offices President Private Bankers Lenders Portfolio Managers Wealth Advisor Trust Officer Team - based incentives Relationship - based wealth management Many relationship managers to one client Product group specialists
Slide 43: Organizational Structure Built for Scale
43 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 Loan Prod
Slide 44: Reconciliations
Non - GAAP Reconciliations 44
Slide 45: Reconciliation: Consolidated Gross Revenue and Efficiency Ratio
45 Non - GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 Total income before non - interest expense $53,394 $54,501 $57,602 $63,997 $92,615 $95,408 Less : Unrealized gains/(losses) recognized on equity securities - - (15) 21 15
Slide 46: Reconciliation: Tangible Common Book Value Per Share
46 Non - GAAP Reconciliation Consolidated Tangible Common Book Value Per Share As of the Three Months Ended, (Dollars in thousands) Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Dec. 31 , 2021 Mar. 31, 2022 June 30 , 2022 Total shareholders' equity $116,875 $127,678 $154,962 $219,041 223,266 $228,024 Le
Slide 47: Reconciliation: Wealth Management and Mortgage Gross Revenue
47 Non - GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 Total income before non - interest expense $19,784 $20,435 $20,612 $24,156 $25,282 Less: unrealized gains/(l
Slide 48: Reconciliation: Adjusted Net Income and Diluted EPS
48 Non - GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 Net income available to common shareholders $6,277 $6,417 $1,917
Slide 49: Reconciliation: Adjusted Net Interest Margin
49 Non - GAAP Reconciliation Adjusted net interest margin For the Three Months Ended June 30, 2021 For the Three Months Ended September 30, 2021 For the Three Months Ended December 31, 2021 For the Three Months Ended March 31, 2022 For the Three Months Ended June 30, 2022 (Dollars in thousands) Aver
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