First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q1 2021 Earnings Presentation
23 slides from First Western Financial's earnings presentation, Apr 22, 2021
Slide 1: First Quarter 2021 Conference Call
First Quarter 2021 Conference Call
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 1Q21
3 Overview of 1Q21 Continued High Level of Mortgage Activity Continuation of Improved Profitability New Business Development Driving Balance Sheet Growth ▪ Total assets of $2.21 billion, up 48.2% annualized in 1Q21 ▪ New wealth management and commercial client acquisitions driving strong inflows of
Slide 4: Net Income Available to Common Shareholders and Earnings per Share
4 Net Income Available to Common Shareholders and Earnings per Share ▪ Net income of $6.0 million, or $0.74 diluted earnings per share, in 1Q21 ▪ Strong profitability results in 4.1% and 4.9% increase in book value per share and tangible book value per share(1), respectively, from 4Q20 $438 $245 $1,
Slide 5: Non-Mortgage Segment Earnings
5 Non-Mortgage Segment Earnings (1) See Non-GAAP reconciliation $0.12 $0.40 $0.32 $0.67 $0.73 $0.00 $0.50 $1.00 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 ▪ Strong balance sheet growth and improving operating leverage creating sustainable path to higher earnings and profitability over long-term ▪ Non-m
Slide 6: Loan Portfolio
6 Loan Portfolio ▪ Total loans HFI increased $12.6 million, or 0.8% from prior quarter ▪ Average loans increased $87.4 million, or 5.3% from prior quarter ▪ Growth in non-owner occupied CRE offset by payoffs in construction portfolio due to project completions ▪ Payoffs included a low-yielding $50 m
Slide 7: Total Deposits
7 Total Deposits ▪ Total deposits increased $187.9 million, or 11.6%, from end of prior quarter ▪ Growth primarily attributable to new client relationships ▪ Noninterest-bearing deposits more than doubled over the past year and increased to 32.8% of total deposits at 1Q21 from 23.0% at 1Q20 1Q 2020
Slide 8: 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 9: Trust and Investment Management
9 Trust and Investment Management ▪ Total assets under management increased $230.3 million from December 31, 2020 to $6.49 billion at March 31, 2021 ▪ The increase was primarily attributable to contributions to existing accounts and new accounts, as well as improving market conditions $5,636 $5,752
Slide 10: 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 $4.4 million in SBA fee income less $1.3 million of deferred loan origination
Slide 11: 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. 1
Slide 12: Net Interest Income and Net Interest Margin
12 Net Interest Income and Net Interest Margin ▪ Net interest income decreased 3.0% from 4Q20, primarily due to lower PPP-related fees and two fewer days of interest accrual ▪ Net interest margin, including PPP and purchase accretion, declined to 2.90% due to excess liquidity and lower average loan
Slide 13: Non-Interest Income
13 Non-Interest Income ▪ Non-interest income increased 6.6% from 4Q20 and 36.7% from 1Q20 ▪ Increase from 4Q20 due to higher net gain on mortgage loans ▪ Excluding $0.1 million in fees generated by LA fixed income team (sold during 4Q20), Trust & Investment Management fees increased from prior quart
Slide 14: Mortgage Operations
14 Mortgage Operations ▪ Operational constraints resolved during 1Q21 ▪ Record mortgage originations in 1Q21 ▪ Mortgage locks down slightly from 4Q20 and 1Q20 ▪ Refi/Purchase mix of 77%/23% in 1Q21, compared to 67%/33% in 4Q20 $196.9 $344.3 $376.3 $414.5 $490.8 $31.2 $37.2 $41.9 $32.4 $33.9 $0 $100
Slide 15: Non-Interest Expense and Efficiency Ratio
15 Non-Interest Expense and Efficiency Ratio ▪ Non-interest expense unchanged from 4Q20 ▪ Salaries and employee benefits expense in 1Q21 reduced by $1.0 million in deferred loan origination expenses related to second round of PPP loans $553 $323 $14,094 $12,321 $16,632 $15,614 $15,629 $0 $2,000 $4,0
Slide 16: Asset Quality
16 Asset Quality ▪ Positive asset quality trends across the portfolio ▪ Non-performing assets decreased by $0.2 million, and declined as a percentage of total assets to 0.18% from 0.22% in 4Q20 and 0.82% in 1Q20 ▪ No remaining loan modifications ▪ Immaterial net charge-offs again in the quarter ▪ St
Slide 17: Near-Term Outlook
17 Near-Term Outlook ▪ Growing pipeline and increased confidence in economic recovery should lead to higher loan production and loan growth as the year progresses ▪ Excess liquidity will be redeployed into higher yielding earning assets or transferred into investment management accounts where it wil
Slide 18: Appendix
Appendix 18
Slide 19: Capital and Liquidity Overview
19 Capital and Liquidity Overview 10.31% 10.31% 13.11% 7.35% 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 3/31/21) Liquid
Slide 20: Non-GAAP Reconciliation
20 Non-GAAP Reconciliation Consolidated Tangible Common Book Value Per Share As of the Three Months Ended, (Dollars in thousands) Dec. 31, 2018 Dec. 31, 2019 Dec. 31, 2020 March 31, 2021 Total shareholders' equity $116,875 $127,678 $154,962 $161,439 Less: Preferred stock (liquidation preference) ---
Slide 21: Non-GAAP Reconciliation
21 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021 Total income before non-interest expense $13,023 $13,114 $16,232 $17,973 $18,471 Plus: Provision for loan los
Slide 22: Non-GAAP Reconciliation
22 Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 March 31, 2021 Net income available to common shareholders $1,334 $8,696 $9,630
Slide 23: Non-GAAP Reconciliation
23 Non-GAAP Reconciliation Adjusted net interest margin For the Three Months Ended June 30, 2020 For the Three Months Ended September 30, 2020 For the Three Months Ended December 31, 2020 For the Three Months Ended March 31, 2021 (Dollars in thousands) Average Balance Interest Earned/Paid Average Yi
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