First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (November 2022)
48 slides from First Western Financial's investor presentation, Nov 1, 2022
Slide 1: Investor Presentation November 2022
INVESTOR PRESENTATION November 2022
Slide 2: Safe Harbor
Safe Harbor 2 This presentation contains “forward - looking statements” within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended .. These forward - looking statements reflect the current views of First Western
Slide 3: An Emerging High Performing Institution
3 An Emerging High Performing Institution 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
Slide 4: Investment Highlights
4 Investment Highlights Proven Execution on Growth Strategies Attractive Markets and Business Model Strong Earnings Momentum ▪ Significant revenue growth driving improved operating leverage and higher profitability ▪ TBV/share (1) increased 25% in 2020 and 21% in 2021 ▪ Continued scale expected to d
Slide 5: Strong Operational and Financial Momentum
$4,556 $5,795 $7,602 $10,854 $38,429 $32,611 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2021 2016 - 2020 Pre - Tax, Pre - Provision Income(1) ($000s) 5 Strong Operational and Financial Momentum ▪ Robust organic balance sheet growth ▪ Accretive acquisit
Slide 6: Improving Earnings Driving Outperformance and Creating Shareholder Value
$9.19 $11.14 $11.50 $11.88 $12.38 $12.83 $13.15 $13.39 $14.13 $15.38 $16.44 $17.24 $17.98 $18.85 $19.87 $20.25 $20.65 $21.35 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 MYFW TBV/Share 6 Improving Earnings Driving Outperformance and Creating Shareholder Value Discounted Valuation Provides
Slide 7: Franchise Overview
Franchise Overview W Frirstwestern
Slide 8: Great Markets, Scarce Investment Opportunity
8 Great Markets, Scarce Investment Opportunity ▪ Ranked among states with highest GDP growth ▪ Strong job and population growth ▪ Experiencing significant in - migration ▪ Attractive demographics with large amount of high net worth individuals that utilize private banking and investment management s
Slide 9: MYFW: Our Five Core Strengths
9 MYFW: Our Five Core Strengths Differentiated, Proven in the Marketplace Built - in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors ▪ Niche - focused franchise headquartered in Denver, Colorado ▪ Well - positioned in many attractive
Slide 10: Cross-Selling a Diverse Set of Products and Services
▪ Corporate loans to match specific needs ▪ Well - versed in working with complex cash flows and business models ▪ Customized treasury management products and services 10 Cross - Selling a Diverse Set of Products and Services Commercial Banking ▪ Fiduciary wealth management with expert review of cli
Slide 11: High Quality Revenues with Predictable Sources of Recurring Income
$54.3 $55.2 $57.8 $64.3 $97.3 $96.2 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Net Interest Income Non-Interest Income, excluding net gain/(loss) on sale of securities and assets 11 High Quality Revenues with Predictable Sources
Slide 12: Private Bank Model Generates Strong Fee Income
12 Private Bank Model Generates Strong Fee Income FY 2021: More than 40% of Operating Revenue Generated by Fee Income 62.8% 41.2% 37.9% 36.0% 34.6% 30.3% 27.8% 27.7% 26.0% 25.7% 24.6% 22.9% 18.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW WASH UMBF PGC UVSP SYBT CFR TMP CATC TSC FFWM F
Slide 13: Driving Profitable Growth
Driving Profitable Growth 13
Slide 14: Success in Expansion and Acquisition Growth
14 Success in Expansion and Acquisition Growth 2006 – 2010 (3) ▪ Boulder, CO ▪ Century City, CA ▪ Scottsdale, AZ 2011 – 2015 (6) ▪ Aspen, CO ▪ DTC/Cherry Hills, CO ▪ Fort Collins, CO ▪ Jackson Hole, WY ▪ Laramie, WY ▪ Phoenix, AZ 2016 – 2020 (4) ▪ Broomfield, CO (2021) ▪ Greenwood Village, CO ▪ Lone
Slide 15: Revenue Growth Strategies
15 Revenue Growth Strategies Expand commercial loan production platform ▪ Building expertise in specific vertical markets, e.g. medical and dental practices ▪ Capitalize on growing reputation to attract additional experienced commercial banking talent Expand into new markets with attractive demograp
Slide 16: Recent M&A Transactions
16 Recent M&A Transactions Branch Purchase and Assumption Whole Bank Acquisition ▪ Closed on May 18, 2020 ▪ Acquisition of all of the Denver locations of Simmons Bank (three branches and one loan production office) ▪ Assumed $63 million in deposits and $120 million in loans related to the acquired l
Slide 17: Strong Execution on Revenue Growth Strategies
17 Strong Execution on Revenue Growth Strategies ▪ Accelerating business development, office expansion and accretive acquisitions all contributing to the balance sheet growth driving improved operating leverage and higher profitability ▪ M&A strategy continuing with acquisition of Teton Financial Se
Slide 18: Accelerating Business Development Trends
18 Accelerating Business Development Trends Capital raised in July 2018 IPO has allowed for increased business development activities $227.9 $268.2 $225.6 $317.9 $691.7 $561.2 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 2016 2017 2018 2019 2020 2021 $44.0 $62.2 $121.6 $149.0 $467.9 $206.6
Slide 19: Increased Scale and Back-Office Streamlining Driving Improved Efficiencies
19 Increased Scale and Back - Office Streamlining Driving Improved Efficiencies 88.2% 85.4% 80.6% 59.8% 66.6% 50.0% 60.0% 70.0% 80.0% 90.0% 2017 2018 2019 2020 2021 (1) See Non - GAAP reconciliation Efficiency Ratio (1)
Slide 20: Wealth Management Segment Earnings
20 Wealth Management Segment Earnings (1) See Non - GAAP reconciliation $1.60 $3.09 $4.24 $3.81 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 FY20 FY21 Wealth Management Segment Consolidated ▪ Wealth Management segment earnings reflects contribution of private banking, commercial banki
Slide 21: Recent Financial Trends
Recent Financial Trends a W Frirstwestern
Slide 22: Overview of 3Q22
22 Overview of 3Q22 Strong, Well Balanced Loan Growth 3Q22 Earnings Increasing Profitability and Value Creation ▪ ROAA, ROAE, and ROATCE all significantly higher than prior quarter ▪ Strong financial performance and effective management of investment portfolio driving growth in both book value and t
Slide 23: Net Income Available to Common Shareholders and Earnings per Share
23 Net Income Available to Common Shareholders and Earnings per Share ▪ Net income of $6.2 million, or $0.64 diluted earnings per share, in 3Q22 ▪ Excluding acquisition - related expenses, adjusted diluted earnings per share (1) of $0.66 in 3Q22 ▪ Strong profitability resulted in 2.8% and 3.4% incre
Slide 24: Loan Portfolio
24 Loan Portfolio ▪ Total loans held for investment increased $204.8 million from prior quarter ▪ Continued strong loan production and a moderation in payoffs results in another quarter of significant loan growth ▪ Average rate on new loan production increased by more than 100 bps from prior quarter
Slide 25: Total Deposits
25 Total Deposits ▪ Total deposits essentially unchanged from end of prior quarter ▪ Minor fluctuations in each deposit category ▪ Interest bearing deposit costs increased 44 bps due to the higher interest rate environment and increased competition for deposits 3Q 2021 2Q 2022 3Q 2022 Money market d
Slide 26: Trust and Investment Management
26 Trust and Investment Management ▪ Total assets under management decreased $359.2 million from June 30, 2022 to $5.92 billion as of September 30, 2022 ▪ The decrease in asset balances was primarily attributable to unfavorable market conditions resulting in a decrease in the value of assets under m
Slide 27: Gross Revenue
(1) See Non - GAAP reconciliation Gross Revenue ▪ Gross revenue (1) increased 8.8% from 2Q22 ▪ Higher net interest income more than offset decline in non - interest income ▪ Accelerating growth, gross revenue excluding net gain on mortgage loans (1) up 41% annualized from 2Q22 and 36% from 3Q21 Non
Slide 28: Net Interest Income and Net Interest Margin
28 Net Interest Income and Net Interest Margin ▪ Net interest income increased to $22.8 million, or 13.2%, from $20.1 million in 2Q22 and 53.6% from $14.8 million in 3Q21 ▪ Net interest margin, excluding PPP and purchase accretion (1) , increased 47 bps to 3.77%, primarily due to favorable shift in
Slide 29: Non-Interest Income
29 Non - Interest Income ▪ Non - interest income decreased 7.0% from 2Q22, primarily due to lower net gain on mortgage sales and slight decline in Trust and Investment Management fees due to decline in AUM resulting from market performance ▪ Volume of locks on mortgage loans originated for sale decl
Slide 30: Non-Interest Expense and Efficiency Ratio
30 Non - Interest Expense and Efficiency Ratio ▪ Non - interest expense decreased 6.4% from 2Q22 ▪ Efficiency ratio trending down below 65% ▪ Cost savings from Teton acquisition have been fully realized and 3Q22 benefited from full quarter impact of system conversion and branch consolidation that oc
Slide 31: Asset Quality
31 Asset Quality ▪ Stable asset quality across the portfolio with NPAs down slightly from 2Q22 ▪ Immaterial net charge - offs again in the quarter ▪ $1.8 million provision for loan losses related to growth in total loans, excluding PPP loans, and changes in portfolio mix ▪ ALLL/Adjusted Total Loans
Slide 32: Capital and Liquidity Overview
32 Capital and Liquidity Overview 9.54% 9.54% 11.84% 8.18% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% Tier 1 Capital to Risk-Weighted Assets CET1 to Risk- Weighted Assets Total Capital to Risk-Weighted Assets Tier 1 Capital to Average Assets Liquidity Funding Sources (as of 9/30/22) Liquidit
Slide 33: Creating Additional Shareholder Value
Creating Additional Shareholder Value 33
Slide 34: Near-Term Outlook
34 Near - Term Outlook ▪ Adjustments in underwriting and loan pricing to reflect more cautious approach in light of potential economic slowdown will likely lead to a moderation in loan growth ▪ Diverse loan production platform and increasing contributions from new banking talent added in Colorado, M
Slide 35: Long-Term Goals to Drive Shareholder Value
35 Long - Term Goals to Drive Shareholder Value ▪ Drive to $5 billion in total assets, $25 billion TIM assets through both organic growth and acquisitions ▪ ~50 offices ▪ $7 - 8 million in revenue per office ▪ 60% contribution margin per office ▪ Build footprint, scale and operating leverage with M&
Slide 36: MYFW's core strengths provide the foundation for driving shareholder value
MYFW’s core strengths provide the foundation for driving shareholder value 36 A Unique and Attractive Investment Differentiated, Proven in the Marketplace Built - in Operating Leverage Highly Desirable Recurring Fee Income Experienced, Tested Team Unique Opportunity for Investors
Slide 37: Appendix
Appendix 37 W Frirstwestern
Slide 38: Organizational Overview
Organizational Overview 38 W Frirstwestern
Slide 39: Management Team
Name Title Joined FW Years in Industry Prior Experience Scott C. Wylie Chairman, CEO & President 2002 34 ▪ Chairman & CEO, Northern Trust Bank of Colorado ▪ Chairman & CEO, Trust Bank of Colorado ▪ CEO, Equitable Bancshares of Colorado and Women’s Bank, Chairman, Equitable Bank ▪ Chairman, American
Slide 40: Board of Directors
Name Director Since Primary Business Scott C. Wylie 2002 ▪ First Western Financial, Inc. Julie A. Caponi, CPA 2017 ▪ Former Finance Executive at Arconic, Inc. (fka Alcoa Inc.) ▪ Former audit partner at Deloitte ▪ Board member & Audit Committee chair for FCF (NYSE) Julie A. Courkamp 2021 ▪ First West
Slide 41: Integrated Team Approach in Boutique Offices
Working as a team to grow relationships 41 Integrated Team Approach in Boutique Offices President Private Bankers Lenders Portfolio Managers Wealth Advisor Trust Officer Team - based incentives Relationship - based wealth management Many relationship managers to one client Product group specialists
Slide 42: Organizational Structure Built for Scale
42 Organizational Structure Built for Scale Full Bank and Trust: ▪ Aspen, CO ▪ Boulder, CO ▪ Cherry Creek, CO ▪ Denver, CO ▪ DTC/Cherry Hills, CO ▪ Northern Colorado ▪ Jackson Hole, WY ▪ Rock Springs, WY ▪ Pinedale, WY ▪ Scottsdale, AZ ▪ Broomfield, CO ▪ Phoenix, AZ ▪ Vail Valley, Avon, CO Loan Prod
Slide 43: Reconciliations
Non - GAAP Reconciliations 43
Slide 44: Reconciliation: Consolidated Gross Revenue and Efficiency Ratio
44 Non - GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 Total income before non - interest expense $53,394 $54,501 $57,602 $63,997 $92,615 $95,408 Less : Unrealized gains/(losses) recognized on equity securities - - (15) 21 15
Slide 45: Reconciliation: Tangible Common Book Value Per Share
45 Non - GAAP Reconciliation Consolidated Tangible Common Book Value Per Share As of , (Dollars in thousands) Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 Dec. 31 , 2021 June 30 , 2022 September 30 , 2022 Total shareholders' equity $116,875 $127,678 $154,962 $219,041 $228,024 $234,862 Less: Goodwill an
Slide 46: Reconciliation: Wealth Management and Mortgage Gross Revenue
46 Non - GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 Total income before non - interest expense $20,435 $20,612 $24,156 $25,282 $26,555 Less: unrealized gai
Slide 47: Reconciliation: Adjusted Net Income and Diluted EPS
47 Non - GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) September 30, 2021 December 31, 2021 March 31, 2022 June 30, 2022 September 30, 2022 Net income available to common shareholders $6,417 $1,917 $
Slide 48: Reconciliation: Adjusted Net Interest Margin
48 Non - GAAP Reconciliation Adjusted net interest margin For the Three Months Ended September 30, 2021 For the Three Months Ended December 31, 2021 For the Three Months Ended March 31, 2022 For the Three Months Ended June 30, 2022 For the Three Months Ended September 30, 2022 (Dollars in thousands)
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