First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q2 2021 Earnings Presentation
30 slides from First Western Financial's earnings presentation, Jul 22, 2021
Slide 1: Second Quarter 2021 Conference Call
Second Quarter 2021 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 2Q21 Earnings
Overview of 2Q21 Earnings Growth and Higher Returns $0.74 diluted EPS, in 1Q21 Return on average assets of 1.22%, up from 1.16% in 1Q21 Return on average shareholders’ equity of 15.17%, up from 14.95% in 1Q21 Growth in Private and Commercial Banking Driving Improved Profitability Balance sheet growt
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 $6.3 million, or $0.76 diluted earnings per share, in 2Q21 Strong profitability results in 3.6% and 4.3% increase in book value per share and tangible book value per share(1), respectively, from 1Q21 Net Income Availabl
Slide 5: Non-Mortgage Segment Earnings
Non-Mortgage Segment Earnings Non-mortgage segment earnings reflects contribution of private banking, commercial banking, and trust and investment management business lines Growth in private banking, commercial banking, and TIM businesses replacing earnings generated by mortgage segment in 2020 and
Slide 6: Loan Portfolio
Loan Portfolio Total loans HFI increased $26.2 million, or 1.7% from prior quarter Loan Portfolio Details Loan Production & Net Loan Payoffs $250 $191.7 $201.1 Excluding PPP loans, total loans HFI increased $113.6 million, or 8.4% from prior quarter Forgiveness of PPP loans drove decline in Cash, $2
Slide 7: Total Deposits
Total Deposits Total deposits decreased $128.8 million from end of prior quarter Decrease in deposits partially resulting from seasonal outflow related to tax payments and a decline in PPP-related deposits Excess liquidity funded the intentional reduction of higher-cost, non-relationship deposits (p
Slide 8: Commercial Banking Driving Growth
Commercial Banking Driving Growth During 2020, expanded commercial banking team and added construction lending expertise Increase in commercial banking clients contributing to growth in total loans and low-cost deposits while improving overall diversification Stronger commercial banking platform com
Slide 9: Trust and Investment Management
Trust and Investment Management Total assets under management increased $276.5 million from March 31, 2021 to $6.76 billion at June 30, 2021 The increase in asset balances were driven by both account additions and new account growth as well as the continued improvement in market valuations Total Ass
Slide 10: Paycheck Protection Program Overview
Paycheck Protection Program Overview Impact on 2Q21 Financials (1) ($ in Millions) Net Interest Income Amortization of SBA fee income and deferred loan origination expense (2) $1.2 Interest income from PPP loans, less PPPLF funding cost $0.3 Net Interest Income $1.5 Net Interest Margin Impact 7 bps
Slide 11: Gross Revenue
Gross Revenue Gross revenue(1) unchanged from 1Q21 Increase in net interest income and trust and investment management fees offset by lower net gain on mortgage loans 2Q21 Gross Revenue(1) Gross Revenue(1) (in millions) 60.0% Net Interest Income $14,223 40.0% Non-interest Income $9,498 $35.0 $30.0 $
Slide 12: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin Net interest income increased 9.0% from 1Q21, primarily due to higher PPP-related fees and higher average balances of non-PPP loans Net interest margin, including PPP and purchase accretion, increased 11 bps to 3.01% Net interest margin, excluding PPP and
Slide 13: Non-Interest Income
Non-Interest Income Non-interest income decreased 10.5% from 1Q21 Decreased net gain on mortgage loans partially offset by higher trust and investment management fees Trust and investment management fees up 9% over 2Q20, despite loss of approximately $0.8 million in fees per quarter related to LA Fi
Slide 14: Mortgage Operations
Mortgage Operations Mortgage Details Net Income, Revenue and Profit Margin Mortgage locks down 38% from prior quarter reflects decreased inventory and refi slow down 81%83% $12.3 Refi/Purchase mix of 49/51% in 2Q21 compared to 77/23% in 1Q21 and 67/33% in 4Q20 Profit margin down 10% due to decreased
Slide 15: Non-Interest Expense and Efficiency Ratio
Non-Interest Expense and Efficiency Ratio Non-interest expense declined 0.7% from 1Q21 Decline in non-interest expense drives improvement in operating efficiency ratio compared to 1Q21 Total Non-Interest Expense Operating Efficiency Ratio(1) (1) $18,000 $12,321 (1) $323 $14,000 $12,000 $10,000 $16,6
Slide 16: Asset Quality
Asset Quality Positive asset quality trends across the portfolio Non-performing assets decreased by $0.9 million, and declined as a percentage of total assets to 0.16% from 0.18% in 1Q21 Immaterial net charge-offs again in the quarter ALL/Adjusted Total Loans(1) decreased to 0.93% in 2Q21 from 1.01%
Slide 17: Acquisition of Teton Financial Services, Inc.
Acquisition of Teton Financial Services, Inc. 17
Slide 18: Expansion Into a Growing Wyoming Region
Expansion Into a Growing Wyoming Region Strategic Rationale Expands First Western’s footprint / market share in Wyoming Wyoming demographics and business landscape aligns with First Western’s business model with favorable trust, estate and tax laws Ability to consolidate two Jackson Hole offices, an
Slide 19: Acquisitions
Acquisitions 2002 2002 – 2005 (5) Westcor Insurance Group, Inc. Poudre River Valley Trust Co. Sprout & Associates, Inc. Sterling Partners Silversmith Financial Corp 5 3 2002 – 2005 (3) Cherry Creek, CO Denver, CO Northern Colorado, CO 2006 – 2010 (4) Reber/Russell Company Ryder, Stilwell Inc. Asset
Slide 20: Teton Financial Services, Inc. Overview
Teton Financial Services, Inc. Overview Company Overview Key Bank Level Financial Highlights Holding company for Rocky Mountain Bank Operates out of three branches in Jackson Hole, Pinedale and Rock Springs For the quarter ended March, 31 2021 Balance Sheet ($mm) Total Assets $429.2 Primarily focuse
Slide 21: Pro Forma Loan and Deposit Composition
Pro Forma Loan and Deposit Composition First Western Financial, Inc. Teton Financial Services, Inc. (1) Pro Forma OO CRE 10% OO CRE 10% OO CRE 10% Loan Composition 32% C&I 24% NOO CRE 15% C&D 6% Multifamily + Consumer & Other 9% Res. RE 25% C&I 26% NOO CRE 15% Multifamily 2% Consumer = 12% C&D 10% R
Slide 22: Transaction Structure
Transaction Structure Consideration Results in ~[75]% stock | ~[25]% cash mix Transaction Value(1) $[45.6] million aggregate transaction value Collars(2) Transaction Multiples Pay-to-Trade Ratio: [0.88]x Price / LTM Earnings(3): [16.8]x Price / 2022 Earnings: [10.5]x Core Deposit Premium(4): [2.3]%
Slide 23: Key Transaction Assumptions
Key Transaction Assumptions Earnings Management estimates for Teton Financial Services, Inc. Cost Savings base Loan Credit Mark $5.8 million gross loan credit mark, or 2.16% of Teton Financial Services, Inc.’s loan portfolio Core Deposit Intangibles Amortized sum-of-the-year digits over 10 years Oth
Slide 24: Near-Term Outlook
Near-Term Outlook Loan pipeline continues to increase and should lead to a higher level of loan growth in the second half of the year Reduction in excess liquidity and higher loan growth should lead to improved net interest margin relative to first half of 2021 Success in new business development sh
Slide 25: Appendix
Appendix 25
Slide 26: Capital and Liquidity Overview
Capital and Liquidity Overview Tangible Common Equity / TBV per Share(1) (in thousands) $160,000 $140,000 $120,000 $100,000 $80,000 $91,662 $11.50 $101,411 $13.15 $130,701 $16.44 $143,736 $17.98 $20.00 $18.00 $16.00 $14.00 $12.00 $60,000 4Q184Q194Q202Q21 TCETBV/Share $10.00 Consolidated Capital Rati
Slide 27: Non-GAAP Reconciliation
Non-GAAP Reconciliation (1) Represents the intangible portion of assets held for sale27
Slide 28: Non-GAAP Reconciliation
Non-GAAP Reconciliation Wealth Management Gross Revenue0For the Three Months Ended, (Dollars in thousands)June 30, 2020 September 30, 2020 December 31, 2020March 31, 2021June 30, 2021 Total income before non-interest expense$13,114$16,232$17,973$18,471$19,782 Plus: Provision for loan loss2,1241,4966
Slide 29: Non-GAAP Reconciliation
Non-GAAP Reconciliation Total Non-Interest Expense adjusted for Non-Operating itemsFor the Three Months Ended, Allowance for loan losses to Bank originated loans excluding PPPAs of (Dollars in thousands)March 31, 2021June 30, 2021 29
Slide 30: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted net interest margin For the Three Months Ended September 30, 2020 (Dollars in thousands) Average Balance Interest Earned/Paid Average Yield/Rate AverageInterestAverageAverage Balance Earned/Paid Yield/Rate Balance InterestAverage Earned/Paid Yield/Rate Average Balanc
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