First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — 2021 KBW Community Bank Investors Conference
57 slides from First Western Financial's conference presentation, Jul 30, 2021
Slide 1: Filed by First Western Financial, Inc. Pursuant to Rule 425
FILED BY FIRST WESTERN FINANCIAL, INC. PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933 SUBJECT COMPANY: TETON FINANCIAL SERVICES, INC. FIRST WESTERN FINANCIAL, INC. COMMISSION FILE NO. 001-38595 The following is the First Western Financial, Inc. (the Company”) investor presentation prepared fo
Slide 2: 2021 KBW Community Bank Investors Conference August 2021
2021 KBW Community Bank Investors Conference August 2021
Slide 3: Safe Harbor
Safe Harbor 3 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 4: An Emerging High Performing Institution
Office Locations 4 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 wo
Slide 5: Investment Highlights
5 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 ▪ Continued scale expected to drive further leve
Slide 6: Strong Operational and Financial Momentum
$4,556 $5,795 $7,602 $10,854 $37,745 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2016-2020 Pre-Tax, Pre-Provision Income(1) ($000s) 6 Strong Operational and Financial Momentum ▪ Robust balance sheet growth ▪ Higher fee income driven by strengthened mort
Slide 7: 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 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 6/30/2018 9/30/2018 12/31/2018 3/31/2019 6/30/2019 9/30/2019 12/31/2019 3/31/2020 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 MYFW TBV/Share 7 Improving Ea
Slide 8: Franchise Overview
Franchise Overview : W Firstwestern
Slide 9: Great Markets, Scarce Investment Opportunity
9 Great Markets, Scarce Investment Opportunity ▪ Colorado (2020) ▪ #1 state for growth in personal income in 2019 ▪ #3 best state for business (24/7 Wall Street) ▪ #3 best state for entrepreneurs and start-ups (Motley Fool) ▪ Denver, Colorado (2020) ▪ #3 hottest job market (Wall Street Journal) ▪ #5
Slide 10: Our Five Core Strengths
10 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 mark
Slide 11: 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 11 Cross-Selling a Diverse Set of Products and Services Commercial Banking ▪ Fiduciary wealth management with expert review of client
Slide 12: High Quality Revenues with Predictable Sources of Recurring Income
$49.7 $54.3 $55.2 $57.8 $64.3 $97.3 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 Net Interest Income Non-Interest Income, excluding net gain/(loss) on sale of securities and assets 12 High Quality Revenues with Predictable Sources
Slide 13: Private Bank Model Generates Strong Fee Income
13 Private Bank Model Generates Strong Fee Income Half of Operating Revenue Generated by Fee Income 63.7% 52.6% 43.4% 43.1% 35.6% 32.5% 30.8% 28.5% 27.9% 27.6% 26.8% 24.7% 24.6% 21.8% 16.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW WASH UMBF BMTC PGC UVSP BPFH TSC SYBT CFR CATC TMP FF
Slide 14: Driving Profitable Growth
Driving Profitable Growth 14
Slide 15: Success in Expansion and Acquisition Growth
15 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 16: Revenue Growth Strategies
16 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 experience commercial banking talent Expand into new markets with attractive demograph
Slide 17: Accelerating Business Development Trends
17 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 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 2016 2017 2018 2019 2020 $44.0 $62.2 $121.6 $149.0 $467.9 $0.0 $100.0 $200.0
Slide 18: Increased Scale and Back-Office Streamlining Driving Improved Efficiencies
18 Increased Scale and Back-Office Streamlining Driving Improved Efficiencies 90.4% 88.2% 85.4% 80.6% 60.5% 50.0% 60.0% 70.0% 80.0% 90.0% 2016 2017 2018 2019 2020 (1) See Non-GAAP reconciliation Efficiency Ratio(1)
Slide 19: 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 complements private banking and
Slide 20: Non-Mortgage Segment Earnings
20 Non-Mortgage Segment Earnings (1) See Non-GAAP reconciliation $0.40 $0.32 $0.67 $0.73 $0.85 $1.44 $1.61 $0.89 $0.99 $1.00 $0.00 $0.50 $1.00 $1.50 $2.00 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Non-Mortgage Segment Consolidated ▪ Non-mortgage segment earnings reflects contribution of private bankin
Slide 21: Recent Financial Trends
Recent Financial Trends “ W Firstwestern
Slide 22: Overview of 2Q21
22 Overview of 2Q21 Increasing Loan Growth and Reduction in Excess Liquidity Earnings Growth and Higher Returns Growth in Private and Commercial Banking Driving Improved Profitability ▪ Excluding mortgage business, gross revenue increased 27% over prior year, while non-interest expense increased jus
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 $6.3 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 $245 $8,941
Slide 24: Loan Portfolio
24 Loan Portfolio ▪ Total loans HFI increased $26.2 million, or 1.7% from prior quarter ▪ Excluding PPP loans, total loans HFI increased $113.6 million, or 8.4% from prior quarter ▪ Forgiveness of PPP loans drove decline in Cash, Securities and Other portfolio ▪ Loan production returns to normalized
Slide 25: Total Deposits
25 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 de
Slide 26: Trust and Investment Management
26 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 $5
Slide 27: Paycheck Protection Program Overview
(1) All numbers represented do not include the impact of taxes (2) The deferred loan origination expenses are recorded in non-interest expenses (Salaries and Benefits) and amortized through net interest income (3) Includes $3.0 million in SBA fee income less $0.9 million of deferred loan origination
Slide 28: Gross Revenue
(1) See Non-GAAP reconciliation (2) Gross Revenue for Capital Management includes amounts for the fourth quarter of 2020 through the completion of the sale of the LA Fixed Income Team on November 16, 2020. Financial results after that date for the unsold portion are presented in Wealth Management. 2
Slide 29: Net Interest Income and Net Interest Margin
29 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
Slide 30: Non-Interest Income
30 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 $0.4 million in fees per quarter related
Slide 31: Mortgage Operations
31 Mortgage Operations ▪ Mortgage locks down 38% from prior quarter reflects decreased inventory and refi slow down ▪ 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 volume $344.3 $376.3 $414.5 $490.8 $319.7 $37.2 $41.9 $32.
Slide 32: Non-Interest Expense and Efficiency Ratio
32 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 $323 $12,321 $16,632 $15,614 $15,629 $15,521 $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000
Slide 33: Asset Quality
33 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
Slide 34: Capital and Liquidity Overview
34 Capital and Liquidity Overview 10.68% 10.68% 13.45% 7.75% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 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 6/30/21)
Slide 35: Acquisition of Teton Financial Services, Inc.
Acquisition of Teton Financial Services, Inc. 35
Slide 36: Expansion Into a Growing Wyoming Region
36 Expansion Into a Growing Wyoming Region Strategic Rationale ▪ Acquisition of Teton Financial Services, Inc., holding company for Rocky Mountain Bank, creates a $2.4 billion financial institution with $1.9 billion in gross loans, $2.1 billion in deposits, and $7.2 billion in assets under managemen
Slide 37: Teton Financial Services, Inc. Overview
37 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 ▪ Primarily focused on real estate and C&I lending within the Wyoming region ▪ Offers
Slide 38: Pro Forma Loan and Deposit Composition
38 Pro Forma Loan and Deposit Composition Loan Composition Deposit Composition First Western Financial, Inc. Teton Financial Services, Inc. (1) Pro Forma + = + = Total Deposits: $1,807,825 Total Deposits: $384,600 Total Deposits: $2,192,425 Cost of Deposits: 0.23% Cost of Deposits: 0.22% Cost of Dep
Slide 39: Transaction Structure
39 Transaction Structure Consideration ▪ 0.0466 shares of First Western and $0.39 in cash for each share of Teton Financial Services, Inc. ▪ Results in ~76% stock | ~24% cash mix Transaction Value(1) ▪ $1.62 per share ▪ $47.8 million aggregate transaction value Pro Forma Ownership ▪ Fixed exchange r
Slide 40: Key Transaction Assumptions
40 Key Transaction Assumptions Earnings Cost Savings Fair Market Value Adjustments Core Deposit Intangibles Other Assumptions ▪ Consensus estimates for First Western ▪ Management estimates for Teton Financial Services, Inc. ▪ ~$3.0 million, or 30.0% of Teton Financial Services, Inc.’s 2022e standalo
Slide 41: Creating Additional Shareholder Value
Creating Additional Shareholder Value 41
Slide 42: Near-Term Outlook
42 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 devel
Slide 43: Long-Term Goals to Drive Shareholder Value
43 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&A ▪
Slide 44: Core strengths provide the foundation for driving shareholder value
MYFW’s core strengths provide the foundation for driving shareholder value 44 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 45: Appendix
Appendix 45
Slide 46: Organizational Overview
Organizational Overview * W Firstwestern
Slide 47: 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 48: 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 49: Integrated Team Approach in Boutique Offices
Working as a team to grow relationships 49 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 Holi
Slide 50: Organizational Structure Built for Scale
50 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 ▪ Scottsdale, AZ ▪ Broomfield, CO (2021) ▪ Lone Tree, CO ▪ Phoenix, AZ ▪ Vail Valley, Avon, CO Loan Production Offi
Slide 51: Non-GAAP Reconciliations
Non-GAAP Reconciliations 51
Slide 52: Consolidated Tangible Common Book Value Per Share
52 Non-GAAP Reconciliation Consolidated Tangible Common Book Value Per Share As of the Three Months Ended, (Dollars in thousands) June 30, 2018 Sep. 30, 2018 Dec. 31, 2018 March 31, 2019 June 30, 2019 Sep. 30, 2019 Dec. 31, 2019 March 31, 2020 June 30, 2020 Sep. 30, 2020 Dec. 31, 2020 March 31, 2021
Slide 53: Wealth Management Gross Revenue
53 Non-GAAP Reconciliation Wealth Management Gross Revenue0 For the Three Months Ended, (Dollars in thousands) June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021 June 30, 2021 Total income before non-interest expense $13,114 $16,232 $17,973 $18,471 $19,782 Plus: Provision for loan los
Slide 54: Adjusted net income available to common shareholders
54 Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021 June 30, 2021 Net income available to common shareholders $8,696 $9,630 $4,874 $
Slide 55: Adjusted net interest margin
55 Non-GAAP Reconciliation Adjusted net interest margin For the Three Months Ended September 30, 2020 For the Three Months Ended December 31, 2020 For the Three Months Ended March 31, 2021 For the Three Months Ended June 30, 2021 (Dollars in thousands) Average Balance Interest Earned/Paid Average Yi
Slide 56: Consolidated Gross Revenue
56 Non-GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2015 2016 2017 2018 2019 2020 Total income before non-interest expense $49,339 $53,394 $54,501 $57,617 $63,976 $92,600 Less: Net gain on sale of securities 717 114 81 - 119 - Less: Net gain on sale of a
Slide 57: Additional Information for Shareholders
merger of ‘Merger with enployens, and “SEC” “Risk Factors” and the (on March 12, 2021 No Offer or Solicitation {in any state or jariadiction where the offer or sale is not permited Additional Information for Shareholders mended (the “Secuntis Act’) relating tothe Company Stock (the “Registration Sta
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