First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — IPO Roadshow (July 2018)
34 slides from First Western Financial's IPO roadshow presentation, Jul 9, 2018
Slide 1: Safe Harbor
Safe Harbor 2 First Western Financial, Inc. (“First Western,” “MYFW” the “Company,” “we,” “us” or “our”) has filed a registration statement (including a prospectus, which is preliminary and subject to completion) with the U.S. Securities and Exchange commission (the “SEC”) for the offering to which
Slide 2: Offering Summary
Offering Summary Issuer Name First Western Financial, Inc. Exchange / Ticker Nasdaq / MYFW Base Offering Size $37.0 million(1) Base Shares Offered 1,500,527 primary shares / 349,473 secondary shares Overallotment Option 15% of base offering or 277,500 primary shares Pro Forma Market Cap Approximatel
Slide 3: A Wealth Manager on Private Trust Bank Platform
A Wealth Manager on Private Trust Bank Platform 4 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: First Western's core strengths provide the foundation for driving shareholder value
First Western’s core strengths provide the foundation for driving shareholder value MYFW: Our Five Core Strengths Experienced, Tested Team Niche-focused franchise headquartered in Denver, Colorado Well-positioned in many attractive markets in Arizona, California, Colorado and Wyoming Specialized cen
Slide 5: Rationale for Starting First Western
6 Rationale for Starting First Western Competition is Everyone and No One
Slide 6: Team: Ready to Take MYFW to the Next Level
7 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 16 31 Chairman & CEO, Northern Trust Bank of Colorado Chairman & CEO, Trust Bank of Colorado CEO, Equitable Bancshares of Colorado and Women’s Bank, Chairma
Slide 7: Board of Directors and Beneficial Ownership
Name Title Primary Business Beneficial Ownership Scott C. Wylie Chairman, CEO & President First Western Financial, Inc. 14.2% 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
Slide 8: 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 9: Currently in a Cycle of Capital Constraint
10 Currently in a Cycle of Capital Constraint Growth & Expansion Conservative Growth Capital Constrained Growth $110 $159 $327 $433 $478 $525 $509 $485 $533 $610 $673 $814 $817 $102 $147 $270 $407 $472 $530 $596 $561 $589 $710 $754 $816 $818 $1,256 $1,378 $2,133 $3,057 $4,119 $4,042 $3,952 $4,523 $4
Slide 10: Market Favorability and Deposits by MSA
MSA State Market Share Projected % Change in HHI of $200M + (2018-2023)(3) Denver-Aurora-Lakewood CO 0.44 41.92 Fort Collins CO 1.78 51.60 Phoenix-Mesa-Scottsdale AZ 0.14 36.77 Boulder CO 0.95 30.26 Jackson WY/ID 0.96 18.50 Glenwood Springs CO 1.16 24.90 National Average 32.06 11 Source: 2017 Downto
Slide 11: The Roadmap to Shareholder Value Creation
12 The Roadmap to Shareholder Value Creation Short-Term Goals Long-Term Goals 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
Slide 12: 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 (PG) Support Centers (S
Slide 13: Integrated Team Approach in Boutique Offices
Integrated Team Approach in Boutique Offices President Private Bankers Wealth Advisor Trust Officer 14 Lenders Portfolio Managers Team Philosophy 1. 2. 3. 4. 5. by working as a team to grow relationships Team-based incentives Relationship-based wealth management Many relationship managers to one cli
Slide 14: Different Paths to Profit Center Success
Different Paths to Profit Center Success 15 We build new offices through acquisition or de novo, and start with either banking or investment professionals Jackson Hole January 2014 Northern Colorado January 2005 Aspen October 2015 RIA, trust company acquisition Added bigger platform Rapid growth in
Slide 15: Acquire, Cross Sell Clients Using Product Groups
Acquire, Cross Sell Clients Using Product Groups 16 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 to CFPs, C
Slide 16: Teamwork Drives Client Satisfaction, Retention
Investment Policy Committee (IPC), Investment Management (IM), Business Development Officers (BDO). Teamwork Drives Client Satisfaction, Retention 17 Example of investment management teamwork shows how MYFW, not relationship managers, owns our clients Profit Centers Product Groups Support Centers Te
Slide 17: Our High-Quality, Recurring Revenues
Our High-Quality, Recurring Revenues 18 Q1 2018 Net interest income, before provision, plus non-interest income. Note: As of or for the three months ended March 31, 2018 (unaudited). Q1 2018 Gross Revenue(1) Earnings Themes Diverse, stable, desirable revenue mix Attractive markets and business model
Slide 18: Predictable, Growing Sources of Fee Income
Predictable, Growing Sources of Fee Income 19 Note: As of or for the three months ended March 31, 2018 (unaudited). AUM Composition by Account Type ($billions) Q1 2018 Non-Interest Income ($millions) Trust and Investment Management Guided architecture Customized investment solutions Internally manag
Slide 19: Our Balanced, Private Banking Loan Portfolio
Our Balanced, Private Banking Loan Portfolio 20 Historical Gross Loans ($millions) Q1 2018 Loan Portfolio by Collateral Type (2) MYFW vs. Peers(1) – Yield on Loans Q1’18 (%) Lending Strategy MYFW uses the following Peers throughout this presentation: ALRS, BMTC, BPFH, CATC, CFR, FFWM, FRC, PGC, SYBT
Slide 20: A Balanced, Growing Core Deposit Base
A Balanced, Growing Core Deposit Base 21 Historical Total Deposits ($millions) Deposit Composition (March 31, 2018) MYFW vs. Peers(1) – Cost of Deposits Q1’18 (%) Deposit Strategy Peers include ALRS, BMTC, BPFH, CATC, CFR, FFWM, FRC, PGC, SYBT, TMP, TSC, UMBF, UVSP, and WASH. Source: S&P Global Mark
Slide 21: MYFW's Embedded Earnings Growth Drivers
22 MYFW’s Embedded Earnings Growth Drivers Remove Capital Constraints Reduce Expenses and Improve Operating Efficiency Added Revenue Generators in 2017 - 2018 Drive Client Acquisition and Increase Share of Wallet Lowering capital costs by ~$2.7 million (after-tax) per year(1) Historical balance shee
Slide 22: Common Equity Opportunity: Optimize MYFW's Capital Structure
Common Equity Opportunity: Optimize MYFW’s Capital Structure Total intangibles of approximately $26 million. Based on the midpoint of the range and excludes the exercise of the overallotment option (net of fees and expenses). Note: Preferred Equity reflected at par value, which excludes the impact o
Slide 23: Our Revenues have Outgrown Expenses by ~50%
Year Ended December 31, Three Months Ended March 31, 2018 Dollars in thousands 2013 2014 2015 2016 2017 Net interest income before provision $ 19,910 $ 20,712 $ 22,466 $ 24,457 $ 27,576 $ 7,360 (Release of) provision for credit losses (1,676) 1,455 1,071 985 788 (187) Net interest income after provi
Slide 24: Summary Income Statement
25 Year Ended December 31, Three Months Ended March 31, 2018 (Dollars in thousands) 2013 2014 2015 2016 2017 Net interest income before provision $ 19,910 $ 20,712 $ 22,466 $ 24,457 $ 27,576 $ 7,360 (Release of) provision for credit losses (1,676) 1,455 1,071 985 788 (187) Net interest income after
Slide 25: Six Months Ended June 30, 2018 Preliminary Results
26 Six Months Ended June 30, 2018 (Dollars in thousands) Preliminary Results Staffing and Other Operating Efficiencies (1) Use of Proceeds (2) Adjusted Preliminary Results Additional Growth Drivers Net interest income before provision $ 14,937 - $ 276 $ 15,213 + Gross loans up 21% 2016 to 2017, 14%
Slide 26: 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 27
Slide 27: A Unique and Attractive Investment
W A Unique and Attractive Investment FIRST MYFW’s core strengths provide the foundation for driving shareholder value Differentiated, Proven in the Marketplace Built-in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors
Slide 28: Preliminary and Estimated Income Statement
Preliminary and Estimated Income Statement Six Months Ended June 30, (Dollars in thousands, except per share) 2018 2017 $ Change % Change Net interest income after provision $15,124 $12,445 $2,679 22% Non-interest income 14,167 12,539 1,628 13% Non-interest expense 26,353 23,550 2,803 12% Estimated
Slide 29: Selected Historical Consolidated Financials
Selected Historical Consolidated Financials 30 Total loans net of loan fees and costs do not include loans held for sale of $22.1 million, $5.8 million, $22.9 million, $8.1 million and $19.9 million on March 31, 2018 and 2017, December 31, 2017, 2016 and 2015, respectively. Year Ended December 31, T
Slide 30: Key Themes of ERM
Key Themes of ERM– In the Business 32 Ensure Compliance Meet regulatory requirements Comply with good industry practices Effective, efficient, and smart compliance – a change agent for better business decisions Limit Potential Losses Improve Profitability Support Growth Risk Overlay for Decision Mak
Slide 31: Favorable Asset Quality Trends
Favorable Asset Quality Trends NPAs / Assets (%) NPLs / Loans (%) Net Charge-offs / Average Loans (%) Loan Loss Reserves / Gross Loans (%) 33 1.00 1.12 0.98 0.96 0.90 0.87 2013 2014 2015 2016 2017 Q1'18 2.56 2.04 1.20 0.70 0.50 0.41 2013 2014 2015 2016 2017 Q1'18 2.58 2.03 1.19 0.54 0.52 0.42 2013 2
Slide 32: First Western Capital Management and Mortgage Services
34 First Western Capital Management First Western Mortgage Services In late 2016, we closed our loan production office in Scottsdale, Arizona due to a lack of cultural fit and for not aligning with our long term mortgage strategy That location funded $149.8 million of mortgages during the first thre
Slide 33: Non-GAAP Reconciliation
35 Non-GAAP Reconciliation Consolidated Pre-tax Pre-provision Income For the Three Months Ended, (Dollars in thousands) March 31, 2017(1) June 30, 2017(1) September 30, 2017(1) December 31, 2017(1) March 31, 2018(1) Net Income, as reported $526 $400 $2,746 $(1,650) $1,186 Provision for loan losses 2
Slide 34: Non-GAAP Reconciliation
W Non-GAAP Reconciliation FIRSTWestern Consolidated Pre-tax Pre-provision Income For the Three Months Ended, June 30, September 30, December 31, (Dollars in thousands) 20174 2017) 2017!) Net Income, as reported $(1,650) Provision for loan losses (3) Income tax expense (benefit) 3,545 Pre-tax, Pre-pr