First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (June 2020)
51 slides from First Western Financial's investor presentation, Jun 8, 2020
Slide 1: First Western Financial, Inc. Investor Presentation June 2020
First Western Financial, Inc. The First, Western-Based Private Trust Bank Investor Presentation June 2020
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: 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 ..
Slide 4: 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 4 (1) Source: 2019 Dow
Slide 5: Strong Operational and Financial Momentum
Strong Operational and Financial Momentum 5 (1) See Non-GAAP reconciliation $4,774 $4,556 $5,795 $7,602 $10,854 December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 2015-2019 Pre-Tax, Pre-Provision Income(1) ($000s) Earnings Per Share Drivers of Improved Performa
Slide 6: Strong Performance Creating Shareholder Value
Strong Performance Creating Shareholder Value 6 $11.50 $11.88 $12.38 $12.83 $13.15 $13.39 $11.00 $12.00 $13.00 $14.00 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 MYFW TBV/Share
Slide 7: Improving Earnings Driving Outperformance
Improving Earnings Driving Outperformance 7 Source: S&P Global Market Intelligence (as of June 5, 2020)
Slide 8: Franchise Overview
Ww Figstwestern Franchise Overview
Slide 9: MYFW: Our Five Core Strengths
First Western’s core strengths provide the foundation for driving shareholder value MYFW: Our Five Core Strengths Experienced and Tested Team .. Niche-focused franchise headquartered in Denver, Colorado .. Well-positioned in many attractive markets in Arizona, California, Colorado and Wyoming .. Spe
Slide 10: Cross-Selling a Diverse Set of Products and Services
Cross-Selling a Diverse Set of Products and Services 10 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
Slide 11: Private Bank Model Generates Strong Fee Income
60.6% 50.2% 37.8% 35.7% 35.3% 31.2% 30.5% 29.9% 28.5% 28.3% 27.8% 27.0% 25.9% 20.1% 17.7% ALRS MYFW UMBF BMTC WASH PGC CATC BPFH TSC SYBT UVSP CFR TMP FFWM FRC Noninterest Income/Operating Revenue Peer Average Private Bank Model Generates Strong Fee Income 11 Half of Operating Revenue Generated by F
Slide 12: Driving Profitable Growth
Ww Figstwestern Driving Profitable Growth
Slide 13: 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 14: Emerging From a Cycle of Capital Constraint
$110 $159 $327 $433 $478 $525 $509 $485 $533 $610 $673 $814 $894 $998 $1,044 $102 $147 $270 $407 $472 $530 $596 $561 $589 $710 $754 $816 $938 $1,087 $1,178 $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 $6,188 $5,636 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $
Slide 15: Accelerating Business Development Trends
Accelerating Business Development Trends 15 New Loan Production Net Deposit Growth Capital raised in July 2018 IPO has allowed for increased business development activities… $227.9 $268.2 $225.6 $317.9 2016 2017 2018 2019 $44.0 $62.2 $121.6 $149.0 2016 2017 2018 2019
Slide 16: Increased Scale and Back-Office Streamlining Driving Improved Efficiencies
Increased Scale and Back-Office Streamlining Driving Improved Efficiencies 16 90.4% 88.2% 85.4% 80.6% 2016 2017 2018 2019 Efficiency Ratio(1) 54.5% 55.2% 57.8% 56.6% 2016 2017 2018 2019 Percentage of Revenue Generating FTEs (1) See Non-GAAP reconciliation
Slide 17: Revenue Growth Strategies
17 Revenue Growth Strategies • Building expertise in specific vertical markets • Launched medical and dental practice group in 1Q20 • Replicate same model in additional vertical markets Expand commercial loan production platform • Vail Valley office opened in 2019 • Building team to focus on Broomfi
Slide 18: Highly Accretive Branch Purchase and Assumption Expands Denver Presence
Highly Accretive Branch Purchase and Assumption Expands Denver Presence 18 .. Acquisition of all of the Denver locations of Simmons Bank (three branches and one loan production office) Three of the locations will be consolidated into an existing First Western branch .. Assumed $63 million in depos
Slide 19: Paycheck Protection Program
Paycheck Protection Program 19 Key Data Points .. $208.3 million in PPP loans, 20% of March 31st gross loans .. 573 loans approved .. 51% of PPP loans provided to existing clients; 49% provided to new clients .. Median loan size of $92,500 .. PPP loans expected to generate $5.4 million of fee income
Slide 20: Financial Overview
Ww Figstwestern Financial Overview
Slide 21: High-Quality, Recurring Revenues
$49.7 $54.3 $55.2 $57.8 $64.3 $14.9 $16.7 December 31, 2015 December 31, 2016 December 31, 2017 December 31, 2018 December 31, 2019 YTD 2019 YTD 2020 Non-Interest Income, excluding net gain/(loss) on sale of securities and assets Net Interest Income High-Quality, Recurring Revenues 21 (1) See Non-GA
Slide 22: Predictable, Growing Sources of Fee Income
Mortgage $2.5 32.0% Bank Fees $0.4 5.1% Insurance $0.1 1.3% Other $0.1 1.3% Trust & Advisory $4.7 60.3% Managed Trust $1.5 26.8% Yield: 0.22% 401(k)/ Retirement $1.0 17.9% Yield: 0.17% Directed Trust $0.9 16.1% Yield: 0.08% Custody $0.4 7.1% Yield: 0.03% Investment Agency $1.8 32.1% Yield: 0.73% Pre
Slide 23: A Balanced, Private Banking Loan Portfolio
$610.4 $672.8 $813.7 $894.0 $988.0 $1,044.0 2015 2016 2017 2018 2019 1Q20 A Balanced, Private Banking Loan Portfolio 23 Historical Gross Loans ($millions) Q1 2020 Loan Portfolio by Collateral Type (1) Lending Trends and Strategy (1) As of March 31, 2020, excluding deferred costs, net .. Gross loans
Slide 24: Strong Asset Quality with Low Credit Losses
0.96 0.90 0.83 0.79 0.79 2016 2017 2018 2019 1Q20 0.07 0.00 0.00 0.03 0.00 2016 2017 2018 2019 1Q20 0.54 0.52 2.13 1.23 1.00 2016 2017 2018 2019 1Q20 0.70 0.50 1.82 1.03 0.82 2016 2017 2018 2019 1Q20 Strong Asset Quality with Low Credit Losses NPAs / Assets (%) NPLs / Loans (%) Net Charge-off (Recov
Slide 25: A Balanced, Growing Core Deposit Base
$709.9 $753.9 $816.1 $937.8 $1,086.8 $1,178.5 2015 2016 2017 2018 2019 1Q20 A Balanced, Growing Core Deposit Base 25 Historical Total Deposits ($millions) Q1 2020 Deposit Composition(1) Deposit Trends and Strategy (1) As of March 31, 2020. .. Total deposits increased 15.9% in 2019; annualized growth
Slide 26: COVID-19 Impact Overview
Ww Figstwestern COVID-19 Impact Overview
Slide 27: Operational Response
Operational Response 27 .. Business Continuity Plan activated in early February .. Daily meeting of Pandemic Response Team .. All offices open and functioning; client service by appointment only .. 90% of associates working from home routinely, 100% enabled .. All client and support operations fully
Slide 28: Client Engagement and Support Overview
Client Engagement and Support Overview Trust and Investment Management Banking .. Active client calling program to assess impact of COVID-19 .. All credits placed into risk categories based on data gathered .. Loan modification program, including payment deferrals, extensions and financial covenant
Slide 29: Notable Trends and Data Points
Notable Trends and Data Points 29 .. Positive business development trends in January and February Strong loan and deposit growth Steady expansion in net interest margin .. No meaningful change in credit line utilization rate since crisis started .. Loan pipeline slightly down from pre-crisis lev
Slide 30: Loan Portfolio Composition
Loan Portfolio Composition 30 Cash, Securities and Other 14% 1 - 4 Family Residential 40% Non-Owner Occupied CRE 18% Construction and Development 2% Owner Occupied CRE 12% Commercial and Industrial 14% Commercial 58% Consumer 42% $1.0 Billion (as of 3/31/20) Commercial vs. Consumer
Slide 31: Commercial Loans by Industry
Commercial Loans by Industry 31 44% 16% 10% 7% 4% 4% 3% 3% 3% 2% 2% 2% Real Estate / Rental and Leasing Finance and Insurance Health Care and Social Assistance Other Miscellaneous⁽¹⁾ Consumer Professional, Scientific and Technical Services Accommodation and Food Services Construction Arts, Entertain
Slide 32: CRE Loans By Property Type
CRE(1) Loans By Property Type 32 1-4 Family Construction 3% Other Construction & Land Development 6% 1st or 2nd DOT 5+ SFR Units 9% 1st & 2nd DOT- 1-4 Family Dwelling 1% Office/Office Condo 17% Commercial Office Building 12% Other Commercial 15% Hotel / Motel 3% Restaurant 1% Retail 14% Strip Center
Slide 33: CRE Portfolio Characteristics and Underwriting
. We require our CRE loans to be secured by seasoned and well-managed properties with adequate margins .. We generally obtain a guaranty from experienced owners and managers with outside cash flows and/or other assets .. Loan amounts generally do not exceed 80% or 75% of the property’s appraised val
Slide 34: Exposure to Stressed Industries
Exposure to Stressed Industries (as of 3/31/20) 34 Industry Outstanding Balances ($ in millions) % of Total Loans Unused Commitments ($ in Millions) Portfolio Characteristics Energy Related $18.3 1.8% $17.2 .. Indirect business or personal exposure to energy industry .. Collateral type: 49% business
Slide 35: Capital and Liquidity Overview
Capital and Liquidity Overview 35 Liquidity Funding Sources (as of 3/31/20) Liquidity Reserves: Total Available Cash $117,811,270 Unpledged Investment Securities $ 47,365,999 Borrowed Funds: Unsecured: Credit Lines $ 54,000,000 Secured: FHLB Available $378,745,864 FRB Available $ 1,203,604 Brokered
Slide 36: Creating Additional Shareholder Value
Creating Additional Shareholder Value
Slide 37: Near-Term Outlook and Expectations
Near-Term Outlook and Expectations 37 .. Excluding impact of PPP loans, NIM should continue to expand, while fee income should normalize .. Decrease in non-recurring expenses for Q2 - expect core NIE of $14-14.5M .. Share repurchase activity on hold during duration of crisis as capital can be better
Slide 38: Long-Term Goals to Drive Shareholder Value
38 Long-Term Goals to Drive Shareholder Value 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 from our scalable wealth manage
Slide 39: 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 39
Slide 40: Appendix
Ww Figstwestern Appendix
Slide 41: Organizational Overview
Ww Figstwestern Organizational Overview
Slide 42: Team: Ready to Take MYFW to the Next Level
42 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 18 33 . Chairman & CEO, Northern Trust Bank of Colorado .. Chairman & CEO, Trust Bank of Colorado .. CEO, Equitable Bancshares of Colorado and Women’s Bank
Slide 43: 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) D
Slide 44: Integrated Team Approach in Boutique Offices
Integrated Team Approach in Boutique Offices President Private Bankers Wealth Advisor Trust Officer 44 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 45: Teamwork Drives Client Satisfaction, Retention
(1) Investment Policy Committee (IPC), Investment Management (IM), Business Development Officers (BDO). Teamwork Drives Client Satisfaction, Retention 45 Example of investment management teamwork shows how MYFW, not relationship managers, owns our clients Profit Centers Product Groups Support Center
Slide 46: 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 (P
Slide 47: Holistic, Integrated Risk Management
Holistic, Integrated Risk Management 47 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 a
Slide 48: Key Themes of ERM
Key Themes of ERM– In the Business 48 Ensure Compliance .. Meet regulatory requirements .. Comply with good industry practices including placing a priority on cybersecurity .. Effective, efficient, and smart compliance – a change agent for better business decisions Limit Potential Losses Improve Pro
Slide 49: Non-GAAP Reconciliations
Ww Figstwestern Non-GAAP Reconciliations
Slide 50: Non-GAAP Reconciliation: Pre-tax, Pre-provision Income
50 Non-GAAP Reconciliation Consolidated Pre-tax, Pre-provision Income For the Twelve Months Ended December 31, (Dollars in thousands) 2015 2016 2017 2018 2019 Net Income, as reported $2,650 $2,302 $2,023 $5,647 $8,009 Provision for loan losses 1,071 985 788 180 662 Income tax (benefit) expense 1,053
Slide 51: Non-GAAP Reconciliation: Gross Revenue and Efficiency Ratio
51 Non-GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2015 2016 2017 2018 2019 Total income before non-interest expense $49,339 $53,394 $54,501 $57,617 $63,976 Less: Net gain on sale of securities 717 114 81 - 119 Less: Net gain on sale of assets ---- 183
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