First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q2 2023 Earnings Presentation
20 slides from First Western Financial's earnings presentation, Jul 28, 2023
Slide 1: Second Quarter 2023 Conference Call
Second Quarter 2023 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 2Q23
Overview of 2Q23 • Net income available to common shareholders of $1.5 million, or $0.16 per diluted share • Second quarter 2023 included net of tax impacts of $1.5 million related to an allowance recorded on individually analyzed loans, $0.9 million of impairment to carrying value of contingent 2Q2
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 $1.5 million, or $0.16 diluted earnings per share, in 2Q23 • Including the impact of impairment to contingent consideration assets, adjusted net income(1) of $2.4 million in 2Q23 • Profitability and prudent balance sh
Slide 5: Loan Portfolio
Loan Portfolio Loan Portfolio Details Loan Production & Loan Payoffs • Total loans held for investment increased $26.8 million from prior quarter • Growth driven by CRE loans and draws on existing construction lines • Average rate on new loan production increased 23 bps to 7.41% compared to prior qu
Slide 6: Total Deposits
Total Deposits • Noninterest-bearing deposits increased during the month of June • Success in new business development, with $37.4 million in new deposit relationships added in 2Q23, lessened the typical seasonal impact of outflows from tax payments • Continued but slower migration of noninterest-be
Slide 7: Trust and Investment Management
Trust and Investment Management • Total assets under management increased $121.9 million from March 31, 2023 to $6.50 billion as of June 30, 2023 • Client accounts benefited from improved market conditions in the second quarter • Excluding custody, all product categories increased quarter-over-quart
Slide 8: Gross Revenue
Gross Revenue • Gross revenue(1) declined 5.0% from prior quarter • Decrease primarily driven by a decrease in net interest income as a result of higher interest expense driven by higher deposit costs, offset partially by higher interest income • Net interest income decline due to NIM pressure 2Q23
Slide 9: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin • Net interest income decreased to $18.4 million, or 5.8%, from $19.6 million in 1Q23 • Net interest income decreased from 1Q23 due to higher interest expense resulting from increase in average cost of deposits • Net interest margin decreased 20 bps to 2.7
Slide 10: Non-Interest Income
Non-Interest Income • Non-interest income decreased to $4.0 million, or 31.9%, from $5.8 million in 1Q23, primarily due to a $1.2 million impairment to carrying value of contingent consideration assets related to the sale of First Western Capital Management in 2020. The decrease to Non-interest inco
Slide 11: Non-Interest Expense and Efficiency Ratio
Non-Interest Expense and Efficiency Ratio • Non-interest expense decreased 9.8% from 1Q23 • Decrease in expense levels resulted from intentional delays in new initiatives and staffing reductions implemented in the first quarter and in April to better align with current revenue • Disciplined expense
Slide 12: Asset Quality
Asset Quality • NPAs declined 18% from prior quarter due to full payoffs on two non-performing loans • $1.8 million provision for credit losses driven primarily by an allowance recorded on individually analyzed loan previously identified as non-performing loan • ACL/Adjusted Total Loans(1) increased
Slide 13: Consistent Value Creation
Consistent Value Creation TBV/Share(1) Up 140% Since July 2018 IPO Consistent increases in tangible book value per share driven by: • Organic growth that has increased operating leverage • Accretive acquisitions that have been well priced and smoothly integrated to realize all projected cost savings
Slide 14: Near-Term Outlook
Near-Term Outlook • Prudent risk management will remain top priority while economic uncertainty remains, which will impact level of profitability in short term • Loan growth expected to remain at lower level in near future, although unfunded commitments provides potential catalyst for higher level o
Slide 15: Appendix
Appendix 15 W FIRSTWesternTRUST
Slide 16: Capital and Liquidity Overview
Capital and Liquidity Overview Tangible Common Equity / TBV per Share(1) Consolidated Capital Ratios (as of 6/30/23) Liquidity Funding Sources (as of 6/30/23) (in thousands) 15.00% 12.41% Liquidity Reserves: Total Available Cash $295,909 Unpledged Investment Securities 21,149 10.00% 9.26% 9.26% 7.80
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Consolidated Efficiency Ratio For the Three Months Ended, (Dollars in thousands) June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Non-interest expense $20,583 $19,260 $19,905 $20,528 $18,519 Less: amortization 77 77 77 64 62 Less: acquisition re
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Total income before non-interest expense $25,281 $26,555 $26,623 $24,543 $19,529 Less: unrealized gains/(losses)
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Net income available to common shareholders $4,482 $6,221 $5,471 $3,8
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted net interest For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended For the Three Months Ended margin June 30, 2022 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 Average Interest Average Average
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