First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (November 2019)
31 slides from First Western Financial's investor presentation, Nov 1, 2019
Slide 1: First Western Financial, Inc. The First, Western-Based Private Trust Bank
First Western Financial, Inc. The First, Western-Based Private Trust Bank Investor Presentation September 2019
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’s managem
Slide 3: A Wealth Manager on Private Trust Bank Platform
A Wealth Manager on Private Trust Bank Platform 3 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 ▪ Hig
Slide 4: MYFW: Our Five Core Strengths
First Western’s core strengths provide the foundation for driving shareholder value MYFW: Our Five Core Strengths Experienced, Tested Team ▪ Niche-focused franchise headquartered in Denver, Colorado ▪ Well-positioned in many attractive markets in Arizona, California, Colorado and Wyoming ▪ Specializ
Slide 5: Rationale for Starting First Western
5 Rationale for Starting First Western Competition is Everyone and No One
Slide 6: Team: Ready to Take MYFW to the Next Level
6 Team: Ready to Take MYFW to the Next Level Name Title Years at FW Years in Industry Prior Experience Scott C. Wylie Chairman, CEO & President 17 32 ▪ Chairman & CEO, Northern Trust Bank of Colorado ▪ Chairman & CEO, Trust Bank of Colorado ▪ CEO, Equitable Bancshares of Colorado and Women’s Bank, C
Slide 7: Board of Directors
Name Title Primary Business Scott C. Wylie Chairman, CEO & President ▪ First Western Financial, Inc. Julie A. Caponi, CPA Board Director / Trustee ▪ Former Finance Executive at Arconic, Inc. (fka Alcoa Inc.) ▪ Former audit partner at Deloitte ▪ Board member & Audit Committee chair for FCF (NYSE) Dav
Slide 8: Success in Expansion and Acquisition Growth
Success in Expansion and Acquisition Growth January 2004 Acquired Westcor Insurance Group, Inc. January 2004 Acquired James Sprout & Associates, Inc. January 2004 Acquired Poudre River Valley Trust Company February 2005 Acquired Sterling Partners/ Silversmith Financial Corp September 2006 Acquired R
Slide 9: Emerging From a Cycle of Capital Constraint
$110 $159 $327 $433 $478 $525 $509 $485 $533 $610 $673 $814 $894 $927 $102 $147 $270 $407 $472 $530 $596 $561 $589 $710 $754 $816 $938 $1,109 $1,256 $1,378 $2,133 $3,057 $4,119 $4,042 $3,952 $4,523 $4,842 $4,744 $4,926 $5,374 $5,235 $6,117 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $0 $200
Slide 10: Great Markets, Scarce Investment Opportunity
MSA State Market Share Projected % Change in HHI of $200M + (2019-2024)(3) Denver-Aurora-Lakewood CO 0.64 35.49 Fort Collins CO 2.10 44.99 Phoenix-Mesa-Scottsdale AZ 0.12 41.62 Boulder CO 0.94 28.76 Jackson WY/ID 1.49 21.42 Glenwood Springs CO 0.93 24.61 National Average 31.93 10 (1) Source: 2019 Do
Slide 11: The Roadmap to Shareholder Value Creation
11 The Roadmap to Shareholder Value Creation Short-Term Goals Long-Term Goals Our mission is to be the BPBFWWMC – Best Private Bank for the Western Wealth Management Client We believe First Western can be a unique, niche focused regional powerhouse with high fee income and consistent strong earnings
Slide 12: Organizational Structure Built for Scale
▪ Finance & Accounting ▪ Risk & Compliance ▪ Enterprise Technology ▪ Human Capital ▪ Credit Analysis ▪ Bank & Trust/Investment Operations ▪ Marketing/Branding Our local, boutique private trust bank offices compete with the biggest wealth managers in the country… First Western Product Groups (PG) Sup
Slide 13: Integrated Team Approach in Boutique Offices
Integrated Team Approach in Boutique Offices President Private Bankers Wealth Advisor Trust Officer 13 Lenders Portfolio Managers Team-based incentives Relationship-based wealth management Many relationship managers to one client Product group specialists Holistic view of the client – ConnectView® T
Slide 14: Acquire, Cross Sell Clients Using Product Groups
Acquire, Cross Sell Clients Using Product Groups 14 Wealth Planning Commercial Banking Investment Management Residential Mortgage Lending Retirement / 401(k) Plan Consulting Trust ▪ Wealth planning with specialized services (e.g. philanthropic) ▪ Proprietary ConnectView® approach, with access to CFP
Slide 15: Teamwork Drives Client Satisfaction, Retention
(1) Investment Policy Committee (IPC), Investment Management (IM), Business Development Officers (BDO). Teamwork Drives Client Satisfaction, Retention 15 Example of investment management teamwork shows how MYFW, not relationship managers, owns our clients Profit Centers Product Groups Support Center
Slide 16: Our High-Quality, Recurring Revenues
$43.7 $49.7 $54.3 $55.2 $57.8 $43.5 $48.1 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 YTD 3Q18 YTD 3Q19 Non-Interest Income, excluding net gain/(loss) on sale of securities Net Interest Income Our High-Quality, Recurring Revenues 16 (1) See Non-GAAP reco
Slide 17: Predictable, Growing Sources of Fee Income
Mortgage $8.0 32.9% Bank Fees $0.9 3.7% Insurance $0.8 3.4% Other $0.4 1.7% Trust & Advisory $14.2 58.3% Managed Trust $1.8 29.5% Yield: 0.16% 401(k)/ Retirement $1.0 16.4% Yield: 0.22% Directed Trust $0.9 14.8% Yield: 0.07% Custody $0.5 8.2% Yield: 0.03% Investment Agency $1.9 31.1% Yield: 0.68% Pr
Slide 18: Private Bank Model Generates Strong Fee Income
58.6% 47.5% 38.9% 33.7% 32.6% 31.9% 31.5% 29.4% 28.0% 27.5% 27.2% 26.6% 26.3% 18.1% 17.4% ALRS MYFW UMBF BMTC CATC BPFH WASH TSC SYBT PGC UVSP TMP CFR FFWM FRC Noninterest Income/Operating Revenue Peer Average Private Bank Model Generates Strong Fee Income 18 Nearly Half of Operating Revenue Generat
Slide 19: Our Balanced, Private Banking Loan Portfolio
$532.5 $610.4 $672.8 $813.7 $894.0 $926.6 2014 2015 2016 2017 2018 Q3'19 Our Balanced, Private Banking Loan Portfolio 19 Historical Gross Loans ($millions) Q3 2019 Loan Portfolio by Collateral Type (1) Lending Strategy (1) As of September 30, 2019, excluding deferred costs, net ▪ Total loans increas
Slide 20: 12 Quarters of No Net Charge-offs
1.12 0.98 0.96 0.90 0.83 0.83 2014 2015 2016 2017 2018 Q3'19 0.07 0.19 0.07 0.00 0.00 (0.00) 2014 2015 2016 2017 2018 Q3'19 2.03 1.19 0.54 0.52 2.13 1.51 2014 2015 2016 2017 2018 Q3'19 2.04 1.20 0.70 0.50 1.82 1.15 2014 2015 2016 2017 2018 Q3'19 12 Quarters of No Net Charge-offs NPAs / Assets (%) NP
Slide 21: A Balanced, Growing Core Deposit Base
$588.8 $709.9 $753.9 $816.1 $937.8 $1,108.9 2014 2015 2016 2017 2018 Q3'19 A Balanced, Growing Core Deposit Base 21 Historical Total Deposits ($millions) Q3 2019 Deposit Composition(1) Deposit Strategy (1) As of September 30, 2019. ▪ Total deposits increased 26.2% from September 30, 2018 ▪ Cross-sel
Slide 22: Revenue Growth Exceeding Expense Growth
$43.5 $45.6 $49.8 $49.5 $50.2 $40.7 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 YTD 3Q19 $43.7 $49.7 $54.3 $55.2 $57.8 $48.1 December 31, 2014 December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 YTD 3Q19 Revenue Growth Exceeding Expen
Slide 23: MYFW's Embedded Earnings Growth Drivers
23 MYFW’s Embedded Earnings Growth Drivers Removed Capital Constraints Reduce Expenses and Improve Operating Efficiency Added Revenue Generators Drive Client Acquisition and Increase Share of Wallet ▪ Lowered capital costs by ~$2.7 million (after-tax) per year ▪ Historical balance sheet growth was B
Slide 24: Progress Report on Earnings Drivers
Progress Report on Earnings Drivers 24 (1) See Non-GAAP reconciliation Earnings Driver Progress Report Lower capital costs • 2019 is first full year with no preferred stock dividend payment Increased loan growth • 13.6% total loan growth from 3Q18 to 3Q19 • Growth coming in all portfolios except non
Slide 25: Outlook
Outlook 25 ▪ Business development platform has been effectively generating deposit and AUM growth; we now intend to increase our focus on asset generation ▪ Loan production expected to be strong in 4Q19, although we expect payoffs will continue to present a near-term headwind for loan growth ▪ Mortg
Slide 26: A Unique and Attractive Investment
Experienced, Tested Team Built-in Operating Leverage Highly Desirable Recurring Fee Income Differentiated, Proven in the Marketplace Unique Opportunity for Investors MYFW’s core strengths provide the foundation for driving shareholder value A Unique and Attractive Investment 26
Slide 27: Appendix
Ww Firstwestern Appendix
Slide 28: Holistic, Integrated Risk Management
Holistic, Integrated Risk Management 28 Purpose ▪ Holistic approach for the oversight, control, and discipline to drive continuous improvement ▪ Everyone’s responsibility and non-compliance is not an option ▪ Governance framework for the process of anticipating, identifying, assessing, managing and
Slide 29: Key Themes of ERM
Key Themes of ERM– In the Business 29 Ensure Compliance ▪ Meet regulatory requirements ▪ Comply with good industry practices ▪ Effective, efficient, and smart compliance – a change agent for better business decisions Limit Potential Losses Improve Profitability Support Growth Risk Overlay for Decisi
Slide 30: Non-GAAP Reconciliation: Pre-tax, Pre-provision Income
30 Non-GAAP Reconciliation Consolidated Pre-tax, Pre-provision Income For the Twelve Months Ended December 31, (Dollars in thousands) 2014 2015 2016 2017 2018 Net Income, as reported $10,990 $2,650 $2,302 $2,023 $5,647 Provision for loan losses 1,455 1,071 985 788 180 Income tax (benefit) expense (1
Slide 31: Non-GAAP Reconciliation: Consolidated Gross Revenue
31 Non-GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2014 2015 2016 2017 2018 Total income before non-interest expense $42,533 $49,339 $53,394 $54,501 $57,617 Less: Net gain on sale of securities 321 717 114 81 - Plus: Provision for credit loss 1,455 1,07
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