First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q4 2023 Earnings Presentation
20 slides from First Western Financial's earnings presentation, Jan 26, 2024
Slide 1: Fourth Quarter 2023 Conference Call
Fourth Quarter 2023 Conference Call
Slide 2: Safe Harbor
Safe Harbor 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: Overview of 4Q23
Overview of 4Q23 • Net income available to common shareholders of $0.3 million, or $0.03 per diluted share 4Q23 Earnings • Pre-tax, pre-provision net income(1) of $4.1 million • Decline in earnings from prior quarter primarily due to reserve on individually analyzed loans • Deposit growth exceeded l
Slide 4: Net Income Available to Common Shareholders and Earnings per Share
Net Income Available to Common Shareholders and Earnings per Share • Net income of $0.3 million, or $0.03 diluted earnings per share, in 4Q23 • Provision for individually analyzed loans in 4Q23 had diluted earnings per share impact of $0.29, net of tax • Tangible book value per share declined during
Slide 5: Loan Portfolio
Loan Portfolio Loan Portfolio Details Loan Production & Loan Payoffs • Total loans held for investment increased $12.0 million from prior quarter • Growth driven by increases in residential mortgage and CRE portfolios, partially offset by small declines in other portfolios • New loan production of m
Slide 6: Total Deposits
Total Deposits • Total deposits increased by $109 million in 4Q23 • Success in new business development, with $118 million in new deposit relationships added in 4Q23 • Noninterest-bearing deposits increased $6.3 million in 4Q23, primarily driven by new client accounts • Strategic decision made to ad
Slide 7: Trust and Investment Management
Trust and Investment Management • Total assets under management increased $357.2 million from September 30, 2023 to $6.75 billion as of December 31, 2023 • Increase in AUM driven by an increase in market values throughout 4Q23, resulting in a 5.6% increase compared to 3Q23, and a 10.6% increase year
Slide 8: Gross Revenue
Gross Revenue • Gross revenue(1) declined 2.7% from prior quarter • Slowest decline in the last five quarters as environmental headwinds appear to be shifting • Decline primarily due to an increase in deposit costs that reduced net interest income 4Q23 Gross Revenue(1) Gross Revenue(1) $35.0 $29.0 $
Slide 9: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin • Net interest income decreased to $16.3 million, or 2.6%, from $16.8 million in 3Q23, due primarily to higher deposit costs • Net interest margin decreased 9 bps to 2.37%, driven by the increase in interest bearing deposit costs • Strategic decision made
Slide 10: Non-Interest Income
Non-Interest Income • Non-interest income remained flat compared to prior quarter • Slight decline in Net gains on mortgage loans, which reflects impact of higher rates and seasonal decline in mortgage loan demand • Slight declines in Trust and Investment Management fees compared to prior quarter, h
Slide 11: Non-Interest Expense and Efficiency Ratio
Non-Interest Expense and Efficiency Ratio • Non-interest expense remained flat at $18.3 million compared to 3Q23 • Disciplined expense management resulted in non-interest expense coming in below targeted range Total Non-Interest Expense Operating Efficiency Ratio(1) (in thousands) $25,000 100.00% $1
Slide 12: Asset Quality
Asset Quality • NPLs increased $3.5 million due primarily to the downgrade of two loans • $3.9 million provision for credit losses driven primarily by reserve on individually analyzed loans previously downgraded to NPL, with small reserves established for two loans downgraded to NPL in 4Q23 • ACL/Ad
Slide 13: Consistent Value Creation
Consistent Value Creation TBV/Share(1) Up 143% Since July 2018 IPO Consistent increases in tangible book value per share driven by: • Organic growth that has increased operating leverage • Accretive acquisitions that have been well priced and smoothly integrated to realize all projected cost savings
Slide 14: 2024 Outlook and Priorities
2024 Outlook and Priorities • 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
Slide 15: Appendix
Appendix 15 W FIRSTWesternTRUST
Slide 16: Capital and Liquidity Overview
Capital and Liquidity Overview Tangible Common Equity / TBV per Share(1) Consolidated Capital Ratios (as of 12/31/23) Liquidity Funding Sources (as of 12/31/23) (in thousands) 15.00% 12.82% Liquidity Reserves: Total Available Cash $252,845 9.48% 9.48% Unpledged Investment Securities 21,526 10.00% 7.
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Consolidated Efficiency Ratio For the Three Months Ended, (Dollars in thousands) December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Non-interest expense $19,905 $20,528 $18,519 $18,314 $18,276 Less: amortization 77 64 62 62 62 Less: acquisitio
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Total income before non-interest expense $26,623 $24,543 $19,529 $21,647 $17,913 Less: unrealized gains/(loss
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 Net income available to common shareholders $5,471 $3,820 $1,506
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted net interest For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months margin December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Ended December 31, 2023 Average Interest Average Ave
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