First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (May 2024)
50 slides from First Western Financial's investor presentation, May 7, 2024
Slide 1: Investor Presentation May 2024
INVESTOR PRESENTATION May 2024
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 ~140% since the IPO, 21% in 2021, 11% in 2
Slide 5: Strong Operational and Financial Momentum
$4,556 $5,795 $7,602 $10,854 $37,745 $28,510 $32,510 $17,416 $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) 5 Strong Operational and Financial Momentum ▪ Robust organic balance sheet growth
Slide 6: Franchise Overview
Franchise Overview W FirSTwestern
Slide 7: Great Markets, Scarce Investment Opportunity
7 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 8: Success in Expansion and Acquisition Growth
8 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 9: Revenue Growth Strategies
9 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 10: Recent M&A Transactions
10 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 11: Increasing Market Share
11 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 12: Unique Business Model
Unique Business Model 12 W FirSTwestern
Slide 13: 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 13 W FIRST
Slide 14: 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 14 Cross-Selling a Diverse Set of Products and Services Commercial Banking ▪ Fiduciary wealth management with expert review of client
Slide 15: Private Bank Model Generates Strong Fee Income
15 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 16: Wealth Management Segment Earnings
16 Wealth Management Segment Earnings (1) See Non-GAAP reconciliation $0.78 $1.52 $2.60 $3.21 $1.11 $1.29 $4.15 $3.31 $2.97 $0.85 $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 17: Long Track Record of Superior Credit Quality
17 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 18: Strong Client Relationships Result in Sticky Deposit Base
Uninsured Deposits Represent 32.7% of Total Deposits at 03/31/24 18 Strong Client Relationships Result in Sticky Deposit Base $2,392 $2,375 $2,420 $2,529 $2,532 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 1Q23 2Q23 3Q23 4Q23 1Q24 Total Deposits Stable Deposit Base During Highly Volatile Period for th
Slide 19: Driving Profitable Growth
Driving Profitable Growth 19
Slide 20: Strong Execution on Revenue Growth Strategies
20 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 21: Recent Financial Trends
Recent Financial Trends 21 W FirSTwestern
Slide 22: Overview of 1Q24
Overview of 1Q24 1Q24 Earnings • Net income available to common shareholders of $2.5 million, or $0.26 per diluted share • Pre-tax, pre-provision net income(1) of $3.7 million Continued Execution on Balance Sheet Management Strategies • Continued improvement in loan-to-deposit ratio • Higher level o
Slide 23: Net Income Available to Common Shareholders and Earnings per Share
$0.39 $0.16 $0.32 ($0.34) $0.26 ($0.50) ($0.25) $0.00 $0.25 $0.50 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 3,820 1,506 3,118 (3,219) 2,515 ($5,000) ($4,000) ($3,000) ($2,000) ($1,000) $0 $1,000 $2,000 $3,000 $4,000 $5,000 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 23 Net Income Available to Common Share
Slide 24: Loan Portfolio
$2,480 $2,487 $2,515 $2,546 $2,501 $2,543 $2,491 $0 $400 $800 $1,200 $1,600 $2,000 $2,400 $2,800 $3,200 1Q23 2Q23 3Q23 4Q23 1Q24 4Q23 1Q24 24 Loan Portfolio • Total loans held for investment decreased $55.9 million from prior quarter • Decrease due to limited new production that was more than offset
Slide 25: Total Deposits
$2,352 $2,375 $2,359 $2,372 $2,455 $2,529 $2,532 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 1Q23 2Q23 3Q23 4Q23 1Q24 4Q23 1Q24 25 Total Deposits • Total deposits trending up again in 1Q24, with average balances up 3.5% or 14% annualized over 4Q23 • Success in new business development, with $17 milli
Slide 26: Trust and Investment Management
26 Trust and Investment Management • Total assets under management increased $388.5 million from December 31, 2023 to $7.1 billion as of March 31, 2024 • Increase in AUM driven by an increase in market values throughout 1Q24, resulting in a 6% increase compared to 4Q23, and a 12% increase year-over-
Slide 27: Gross Revenue
(1) See Non-GAAP reconciliation Gross Revenue 1Q24 Gross Revenue(1) Gross Revenue(1) 27 • Gross revenue(1) increased 4.6% from prior quarter • Net interest income relatively consistent with prior quarter • Non-interest income increased 19.7% from prior quarter Non-interest Income $7,277 Net Interest
Slide 28: Net Interest Income and Net Interest Margin
28 Net Interest Income and Net Interest Margin • Net interest income decreased slightly to $16.1 million, or 1.6%, from $16.3 million in 4Q23, due primarily to higher deposit costs • Net interest margin decreased 3 bps to 2.34%. The rate of decline in net interest margin has decelerated over the pas
Slide 29: Non-Interest Income
29 Non-Interest Income • Non-interest income increased 19.7% from prior quarter • Increase driven by higher Trust and Investment Management fees, Net Gain on Mortgage Loans, and Bank Fees, partially offset by lower Risk Management and Insurance Fees, which are seasonally higher in the fourth quarter
Slide 30: Non-Interest Expense and Efficiency Ratio
$64 $62 $62 $62 $57 $20,528 $18,519 $18,314 $18,276 $19,696 $0 $5,000 $10,000 $15,000 $20,000 $25,000 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q1 2024 Non-Interest Expense Adjustments to Non-Interest Expense 30 Non-Interest Expense and Efficiency Ratio • Non-interest expense increased to $19.7 million, prima
Slide 31: Asset Quality
31 Asset Quality • NPAs decreased $5.1 million due to the sale of a non-performing construction loan at a gain and a paydown on the largest NPL following the sale of one of the properties held as collateral • Remainder of portfolio continues to perform well as indicated by a decline in past due loan
Slide 32: Capital and Liquidity Overview
32 Capital and Liquidity Overview Liquidity Funding Sources (as of 03/31/24) (1) See Non-GAAP reconciliation (2) Based on internal policy guidelines Consolidated Capital Ratios (as of 03/31/23) Tangible Common Equity / TBV per Share(1) (in thousands) Liquidity Reserves: Total Available Cash $256,492
Slide 33: Creating Additional Shareholder Value
Creating Additional Shareholder Value 33
Slide 34: Near-Term Outlook
34 Near-Term Outlook • Well positioned to manage through and perform well in any economic scenario that emerges in 2024 • Prudent risk management and conservative underwriting criteria expected to result in modest asset growth in 2024 until economic conditions improve • Deposit gathering will remain
Slide 35: MYFW: Our Five Core Strengths
35 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 36: Integrated Team Approach in Boutique Offices
Working as a team to grow relationships 36 Integrated Team Approach in Boutique Offices President Private Bankers Lenders Portfolio Managers Trust Officer Team-based incentives Relationship-based wealth management Many relationship managers to one client Product group specialists Holistic view of th
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: Core strengths provide the foundation for driving shareholder value
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 FirSTwestern
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 Consolidated Gross Revenue
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 $82,698 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: Goodwill impairment
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 $(3,695) Plus: Impairment of contingent consideration assets - -
Slide 48: Non-GAAP Reconciliation Tangible Common Book Value Per Share
48 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 Dec. 31, 2023 Mar. 31, 2024 Total shareholders' equity $116,875 $127,678 $154,962 $219,041 $240,864 $242,738 $245,528 Less:
Slide 49: Non-GAAP Reconciliation Wealth Management Gross Revenue
49 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 Total income before non-interest expense $24,543 $19,529 $21,647 $13,362 $21,890 Less: unrealized gains/(loss
Slide 50: Non-GAAP Reconciliation Pre-tax, pre-provision net income
50 Non-GAAP Reconciliation Pre-tax, pre-provision net income For the Three Months Ended, (Dollars in thousands) March 31, 2023 December 31, 2023 March 31, 2024 Income before income taxes $5,161 $(4,357) $3,579 Plus: provision for credit losses 310 8,493 72 Pre-tax, pre-provision net income $5,471 $4
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