First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q2 2019 Earnings Presentation
18 slides from First Western Financial's earnings presentation, Jul 25, 2019
Slide 1: Second Quarter 2019 Financial Results
First Western Financial, Inc. The First, Western-Based Private Trust Bank Second Quarter 2019 Financial Results
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: Overview of 2Q19 Key Operating Trends
Overview of 2Q19 Key Operating Trends Record Operating Earnings Continued Balance Sheet Growth ▪ Strong loan production partially offset by elevated payoffs ▪ Average loans up 16.0% annualized from 1Q19 ▪ Gross loans increased at 3.5% annualized rate in 2Q19 and 11.5% year-over-year ▪ Deposits incre
Slide 4: Net Income Available to Common Shareholders and Earnings per Share
$0.18 $0.15 $0.08 $0.19 $0.22 $0.21 $0.33 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 EPS Adjustment for Goodwill Impairment Net Income Available to Common Shareholders and Earnings per Share 4 Net Income Available to Common Shareholders ▪ Higher revenue, well controlled expenses driving earnings improv
Slide 5: Loan Portfolio
$862 $880 $893 $929 $966 $950 $974 2Q18 3Q18 4Q18 1Q19 2Q19 1Q19 2Q19 HFI HFS Average Period End Loan Portfolio 5 Loan Portfolio Composition(1) ▪ Average loans up 16.0% annualized from 1Q19, gross loans up 11.5% year-over-year ▪ Reduced substandard loans by $13.5 million in quarter ▪ Total new HFI l
Slide 6: Total Deposits
$838 $862 $880 $981 $967 $978 $1,005 2Q18 3Q18 4Q18 1Q19 2Q19 1Q19 2Q19 Average Period End Total Deposits 6 Deposit Portfolio Composition ▪ Total deposits increased $27.1 million from 1Q19, annualized growth of 11.1% and 19.1% year-over-year ▪ Strongest growth in negotiable order of withdrawal (NOW)
Slide 7: Trust and Investment Management
Trust and Investment Management ▪ Total assets under management increased $188 million from 1Q19 ▪ New accounts provided $161.5 million in new assets and contributions added $95.7 million in Q2 2019 $5,416 $5,626 $5,235 $5,781 $5,968 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Investment Agency Managed
Slide 8: Gross Revenue
Non-interest Income $8,586 Net Interest Income $7,960 48.1% 51.9% Gross Revenue 8 (1) See Non-GAAP reconciliation Q2 2019 Gross Revenue(1) ▪ Gross revenue increased 10.7% from prior quarter and 14.4% from 2Q18 ▪ Strong recovery in mortgage activity drove increase in non-interest income from prior qu
Slide 9: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin 9 Net Interest Income ▪ Net interest income consistent with prior quarter, up 5.1% from 2Q18 ▪ Net interest margin increased to 3.10% ▪ Liquidity resulting from strong inflows of deposits in past few quarters being redeployed into higher yielding assets Net
Slide 10: Non-Interest Income
Non-Interest Income 10 Total Non-Interest Income ▪ Total non-interest income increased by 23.1% due to higher gains on mortgage loans sold ▪ $138.3 million in mortgage loans sold in 2Q19 compared to $67.1 million sold in 1Q19 ▪ Trust and investment management fees consistent with prior quarter Trust
Slide 11: Non-Interest Expense and Efficiency Ratio
Non-Interest Expense and Efficiency Ratio 11 Total Non-Interest Expense ▪ Efficiency ratio(1) improved to 78.2% ▪ Total non-interest expense increased 16.3% from 1Q19, primarily due to a $1.6 million charge related to revaluation of the Capital Management segment goodwill triggered by pending asset
Slide 12: Asset Quality
Asset Quality 12 Non-Performing Assets/Total Assets ▪ Total NPAs declined from prior quarter due to paydowns ▪ Loss experience continues to be extremely low ▪ Small provision reversal for Q2 2019 primarily driven by improvement in credit quality Net Charge-Offs/Average Loans 0.0% 0.0% 0.0% 0.0% 0.0%
Slide 13: Agreement to sell LA-Based Fixed Income team
Agreement to sell LA-Based Fixed Income team 13 ▪ Announced agreement for sale of LA-based fixed income team, a component of the Capital Management segment ➢ Expected to close in 3Q19 ➢ Consistent with strategic refocus on Wealth Management segment ➢ Related goodwill impairment charge of $1.6M recor
Slide 14: Outlook
Outlook 14 ▪ Business development platform expected to continue to gain traction and drive further increases in gross revenue ▪ Operating improvements expected to be as strong as the first half of 2019 ▪ Mortgage activity expected to remain strong ▪ Continued improvement in operating efficiencies de
Slide 15: Appendix
Ww Firstwestern Appendix
Slide 16: Non-GAAP Reconciliation: Consolidated Efficiency Ratio
16 Non-GAAP Reconciliation Consolidated Efficiency Ratio For the Three Months Ended, (Dollars in thousands) June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 June 30, 2019 Non-interest expense $13,084 $12,176 $11,649 $12,602 $14,659 Less: Amortization Less: Goodwill impairment 230 -
Slide 17: Non-GAAP Reconciliation: Segment Gross Revenue
17 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) June 30, 2018 September 30, 2018 December 31, 2018 March 31, 2019 June 30, 2019 Total income before non-interest expense $12,257 $12,383 $12,289 $12,509 $12,550 Less: Net gain (loss) on sale
Slide 18: Non-GAAP Reconciliation: Impact of Goodwill Impairment
18 Non-GAAP Reconciliation Impact of Goodwill impairment – Net income available to common shareholder For the Three Months Ended, (Dollars in thousands, except per share data) June 30, 2019 Net income available to common shareholders $1,404 Plus: Goodwill impairment including tax Impact 1,182 Adjust
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