First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (November 2024)
51 slides from First Western Financial's investor presentation, Nov 5, 2024
Slide 1: Investor Presentation November 2024
INVESTOR PRESENTATION November 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 ~145% 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 2024 Market Share(1) 2022 Market Share Change Denver-Aurora-Centennial, CO 1.13% 0.77% 0.36% Fort Collins-Loveland, CO 4.37% 2.20% 2.17%
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 Vv 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 37.1% of Total Deposits at 09/30/24 18 Strong Client Relationships Result in Sticky Deposit Base $2,392 $2,375 $2,420 $2,529 $2,532 $2,411 $2,503 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24 Total Deposits Stable Deposit Base During Highl
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 3Q24
Overview of 3Q24 3Q24 Earnings • Net income available to common shareholders of $2.1 million or $0.22 per diluted share • Net interest income after provision for credit losses improved to $15.1 million compared to prior quarter of $13.4 million • Positive trends in a number of key areas resulted in
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 $2.1 million, or $0.22 diluted earnings per share, in 3Q24 • Provision for credit losses decreased $1.8 million in 3Q24 • Tangible book value per share(1) increased approximately 0.9% to $22.47 Net Income Available
Slide 24: Loan Portfolio
24 Loan Portfolio • Total loans held for investment decreased $73.4 million from prior quarter • Decrease due to new production more than offset by payoffs and decline in NPLs • New loan production improved in 3Q24 to $82.8 million with focus primarily on lending to clients that also bring deposits
Slide 25: Total Deposits
25 Total Deposits • Total deposits increased 3.7% from $2.41 billion in 2Q24 to $2.50 billion in 3Q24 • Noninterest-bearing deposits increased 19% from $397 million in 2Q24 to $474 million in 3Q24 • Interest-bearing deposits increased 0.8% from $2.01 billion in 2Q24 to $2.03 billion in 3Q24 primaril
Slide 26: Trust and Investment Management
26 Trust and Investment Management • Total assets under management increased 6.5% during the quarter to $7.5 billion and increased 16.7% from 3Q23 • The increase in AUM during the quarter and from 3Q23 was primarily attributed to improving market conditions resulting in an increase in the value of A
Slide 27: Gross Revenue
(1) See Non-GAAP reconciliation within the appendix Gross Revenue Gross Revenue(1) Gross Revenue(1) 27 • Gross revenue(1) decreased 1.7% from prior quarter • Net interest income decreased 1.3% from prior quarter primarily driven by an increase in interest expense due to an increase in interest-beari
Slide 28: Net Interest Income and Net Interest Margin
28 Net Interest Income and Net Interest Margin • Net interest income of $15.6 million decreased $0.2 million, or 1.3%, from $15.8 million in 2Q24, primarily driven by an increase in interest expense due to an increase in interest-bearing deposits and partially due to having one additional day in the
Slide 29: Non-Interest Income
29 Non-Interest Income • Non-interest income remained flat at $7.0 million from prior quarter and increased 14% year over year • Activity throughout the quarter included an increase in Risk management and insurance fees, offset by decreased Net gain on mortgage loans • Held for sale mortgage margin
Slide 30: Non-Interest Expense and Efficiency Ratio
30 Non-Interest Expense and Efficiency Ratio • Non-interest expense increased to $19.4 million from $19.0 million in the second quarter, but was in line with the first half of the year • The increase was primarily driven by increases in Salaries and employee benefits due to increased front office he
Slide 31: Asset Quality
31 Asset Quality • NPAs increased to $52.1 million due to the addition of a non-performing loan and foreclosed property, partially offset by non-performing loan pay downs, charge-offs, and the sale of a non-performing loan • NPLs decreased $22.9 million driven by the migration of one loan relationsh
Slide 32: Capital and Liquidity Overview
32 Capital and Liquidity Overview Liquidity Funding Sources (as of 09/30/24) (1) See Non-GAAP reconciliation within the appendix (2) Based on internal policy guidelines Consolidated Capital Ratios (as of 09/30/24) Tangible Common Equity / TBV per Share(1) ($ in thousands) Liquidity Reserves: Total A
Slide 33: Creating Additional Shareholder Value
Creating Additional Shareholder Value 33
Slide 34: Near-Term Outlook
34 Near-Term Outlook • First Western's markets continue to perform well and the strength of our balance sheet and franchise provides opportunities to capitalize on market disruption and challenges being faced by competing banks to add new clients and banking talent • Prudent risk management and cons
Slide 35: Drivers of Long-Term Improved Financial Performance
35 Drivers of Long-Term Improved Financial Performance Efficiency Ratio Asset Quality ROA and ROE ▪ Net interest margin expanding due to increase in average yield on loans and improving deposit mix ▪ Disciplined balance sheet management and effective business development efforts expected to result i
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: Integrated Team Approach in Boutique Offices
37 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 the client – ConnectView® Integrated Team Approach in Boutique Offices Working as a tea
Slide 38: Organizational Structure Built for Scale
38 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 39: Long-Term Goals to Drive Shareholder Value
39 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 40: A Unique and Attractive Investment
MYFW’s core strengths provide the foundation for driving shareholder value 40 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 41: Appendix
Appendix 41 W FIRSTWestern
Slide 42: Organizational Overview
Organizational Overview 42 W FIRSTWestern
Slide 43: 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 44: 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 45: Non-GAAP Reconciliations
Non-GAAP Reconciliations 45
Slide 46: Non-GAAP Reconciliation: Consolidated Gross Revenue
46 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 47: Non-GAAP Reconciliation: Consolidated Efficiency Ratio
47 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 48: Non-GAAP Reconciliation: Diluted Pre-Tax Earnings Per Share
48 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 49: Non-GAAP Reconciliation: Tangible Common Book Value Per Share
49 Non-GAAP Reconciliation Consolidated Tangible Common Book Value Per Share As of, (Dollars in thousands) Dec. 31, 2019 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2022 Dec. 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 Total shareholders' equity $ 127,678 $ 154,962 $ 219,041 $ 240,864 $ 242,73
Slide 50: Non-GAAP Reconciliation: Wealth Management Gross Revenue
50 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 Total income before non-interest expense $ 21,647 $ 13,362 $ 21,890 $ 18,242 $ 20,296 Less: unrealized ga
Slide 51: Non-GAAP Reconciliation: Allowance for Credit Losses
51 Non-GAAP Reconciliation Allowance for Credit Losses to Bank Originated Loans Excluding PPP As of (Dollars in thousands) September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 Total loans held for investment $ 2,536,503 $ 2,536,140 $ 2,480,196 $ 2,460,690 $ 2,387,288
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