First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (July 2024)
51 slides from First Western Financial's investor presentation, Jul 29, 2024
Slide 1: Investor Presentation July 2024
INVESTOR PRESENTATION July 2024
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: 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 wo
Slide 4: Investment Highlights
4 Investment Highlights Successful Execution on Growth Strategies Attractive Markets and Business Model Strong Earnings Momentum Significant revenue growth driving improved operating leverage and higher profitability since pre-IPO TBV/share(1) increased ~140% since the IPO, 21% in 2021, 11% in 2
Slide 5: Strong Operational and Financial Momentum
$4,556 $5,795 $7,602 $10,854 $37,745 $28,510 $32,510 $17,416 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2021 2022 2023 2016-2020 Pre-Tax, Pre-Provision Income(1) ($000s) 5 Strong Operational and Financial Momentum Robust organic balance sheet growth
Slide 6: Franchise Overview
Franchise Overview W FIRSTWestern ERE
Slide 7: Great Markets, Scarce Investment Opportunity
7 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 ser
Slide 8: Success in Expansion and Acquisition Growth
8 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(4) Phoenix, AZ 2016 – 2020 (4) Broomfield, CO (2021) Greenwood Village, CO Lo
Slide 9: Revenue Growth Strategies
9 Revenue Growth Strategies Expand commercial loan production platform Building expertise in specific vertical markets Capitalize on growing reputation to attract additional experienced commercial banking talent Expand into new markets with attractive demographics Vail Valley office opened in
Slide 10: Recent M&A Transactions
10 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 11: Increasing Market Share
11 Increasing Market Share Successfully attracting new banking talent and growing awareness of superior value proposition are driving increases in market share Change 2022 Market Share 2023 Market Share(1) MSA 0.23%0.77%1.00%Denver-Aurora-Centennial, CO 2.42%2.20%4.62%Fort Collins-Loveland, CO 0.33%
Slide 12: Unique Business Model
Unique Business Model 12 W FIRSTWestern ERE
Slide 13: Unique Market Position
Unique Market Position High A v Level of Retail Sophistication Brokerage Firms A Life Insurance Companies v Low Sales <__________________» Basis of Relationship <——______________» Trust 13 W FIRST
Slide 14: 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 14 Cross-Selling a Diverse Set of Products and Services Commercial Banking Fiduciary wealth management with expert review of client
Slide 15: Private Bank Model Generates Strong Fee Income
15 Private Bank Model Generates Strong Fee Income 5-Year Average: More than 38% of Operating Revenue Generated by Fee Income 58.5% 38.8% 36.9% 34.5% 32.0% 28.1% 26.1% 27.5% 25.3% 26.0% 18.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW UMBF WASH PGC UVSP CATC SYBT CFR TMP FFWM Noninteres
Slide 16: Wealth Management Segment Earnings
16 Wealth Management Segment Earnings (1) See Non-GAAP reconciliation $0.78 $1.52 $2.60 $3.21 $1.11$1.29 $4.15 $3.31 $2.97 $0.85 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 FY19 FY20 FY21 FY22 FY23 Wealth Management Segment Consolidated Wealth Management segment earnings reflects c
Slide 17: Long Track Record of Superior Credit Quality
17 Long Track Record of Superior Credit Quality • Relationship-based approach, conservative underwriting criteria, and financial strength of clients have resulted in minimal credit losses over First Western’s history Underwriting criteria includes three sources of repayment including personal guar
Slide 18: Uninsured Deposits Represent 33.2% of Total Deposits
Uninsured Deposits Represent 33.2% of Total Deposits at 06/30/24 18 Strong Client Relationships Result in Sticky Deposit Base $2,375 $2,420 $2,529 $2,532 $2,411 $0 $500 $1,000 $1,500 $2,000 $2,500 $3,000 2Q23 3Q23 4Q23 1Q24 2Q24 Total Deposits Stable Deposit Base During Highly Volatile Period for th
Slide 19: Driving Profitable Growth
Driving Profitable Growth 19
Slide 20: Strong Execution on Revenue Growth Strategies
20 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 continued with acquisition of Teton Financial Ser
Slide 21: Recent Financial Trends
Recent Financial Trends 21 W FIRSTWestern ERE
Slide 22: Overview of 2Q24
Overview of 2Q24 2Q24 Earnings • Net income available to common shareholders of $1.1 million or $0.11 per diluted share • Pre-tax, pre-provision net income(1) of $3.75 million compared to prior quarter of $3.65 million • Positive trends in a number of key areas Continued Execution on Strategic Prior
Slide 23: Net Income Available to Common Shareholders and EPS
23 Net Income Available to Common Shareholders and Earnings per Share • Net income of $1.1 million, or $0.11 diluted earnings per share, in 2Q24 • Pre-tax, pre-provision(1) net income consistent with prior quarter and same period of prior year • Tangible book value per share(1) increased approximate
Slide 24: Loan Portfolio
24 Loan Portfolio • Total loans held for investment decreased $19.5 million from prior quarter • Decrease due to limited new production that was more than offset by payoffs • New loan production improved in 2Q24 to $50 million with focus primarily on lending to clients that also bring deposits to th
Slide 25: Total Deposits
25 Total Deposits • Average deposits decreased $41 million and period end deposits decreased $121 million from the prior quarter. The deposit decline was primarily driven by seasonal tax payments, operating account fluctuations and clients using liquidity for strategic investments • Success in new b
Slide 26: Trust and Investment Management
26 Trust and Investment Management • Total assets under management decreased 1.8% during the quarter to $7 billion, however have increased 7.8% from 2Q23 • The decrease in AUM during the quarter was driven by asset withdrawals in custody accounts that have minimal impact on Trust and Investment Mana
Slide 27: Gross Revenue
1. See Non-GAAP reconciliation Gross Revenue Gross Revenue(1) Gross Revenue(1) 27 • Gross revenue(1) decreased 2% from prior quarter • Net interest income decreased 2% from prior quarter, however net interest margin improved 1 basis point • Non-interest income decreased 4% from prior quarter, howeve
Slide 28: Net Interest Income and Net Interest Margin
28 Net Interest Income and Net Interest Margin • Net interest income decreased $0.3 million, or 1.9%, from $16.1 million in 1Q24, driven primarily by a decline in interest earning cash • Net interest margin stabilized during the quarter, with a slight increase of 1 basis point from 2.34% in 1Q24 to
Slide 29: Non-Interest Income
29 Non-Interest Income • Non-interest income decreased 4.2% from prior quarter • Stable Trust and Investment Management fees and increase in Net Gain on Mortgage Loans offset by decrease in Bank Fees, which included elevated loan prepayment penalty fees in 1Q24 • Mortgage production increased to $14
Slide 30: Non-Interest Expense and Efficiency Ratio
30 Non-Interest Expense and Efficiency Ratio • Non-interest expense decreased to $19.0 million, primarily due to to lower legal fees resulting from continued progress on resolution of NPLs, and lower fraud losses • Non-interest expense expected to be relatively consistent over next few quarters with
Slide 31: Asset Quality
31 Asset Quality • NPAs increased to $49.3 million due to the foreclosure on two properties held as collateral that were placed in OREO and more than offset the resulting decrease in NPLs • Past due loans declined for the second consecutive quarter • ACL/Adjusted Total Loans(1) increased to 1.12% in
Slide 32: Capital and Liquidity Overview
32 Capital and Liquidity Overview Liquidity Funding Sources (as of 06/30/24) 1. See Non-GAAP reconciliation 2. Based on internal policy guidelines Consolidated Capital Ratios (as of 06/30/24) Tangible Common Equity / TBV per Share(1) (in thousands) Liquidity Reserves: $ 244,179Total Available Cash 3
Slide 33: Creating Additional Shareholder Value
Creating Additional Shareholder Value 33
Slide 34: Near-Term Outlook
34 Near-Term Outlook • Prudent risk management and conservative underwriting criteria expected to result in modest asset growth in 2024 until economic conditions improve • Deposit gathering will remain a top priority throughout the organization with increased focus on targeting deposit rich industri
Slide 35: Drivers of Improved Financial Performance
35 Drivers of Improved Financial Performance Efficiency Ratio Asset Quality ROA and ROE Net interest margin expanding due to increase in average yield on loans and improving deposit mix Disciplined balance sheet management and effective business development efforts expected to result in growth i
Slide 36: MYFW: Our Five Core Strengths
36 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 37: Integrated Team Approach in Boutique Offices
37 President Private Bankers Lenders Portfolio Managers Trust Officer Team-based incentives Relationship-based wealth management Many relationship managers to one client Product group specialists Holistic view of the client – ConnectView® Integrated Team Approach in Boutique Offices Working as a tea
Slide 38: Organizational Structure Built for Scale
38 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 Bozeman
Slide 39: Long-Term Goals to Drive Shareholder Value
39 Long-Term Goals to Drive Shareholder Value Since our pre-2018 IPO status as of year end 2017, we have tripled total loans and total deposits, more than doubled TBV per share, had substantial increases in annual revenue, and demonstrated significant operating leverage. Looking forward we can dri
Slide 40: Core strengths provide the foundation for driving shareholder value
MYFW’s core strengths provide the foundation for driving shareholder value 40 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 41: Appendix
Appendix 41 W FIRSTWestern ERE
Slide 42: Organizational Overview
Organizational Overview 42 W FIRSTWestern ERE
Slide 43: Executive Management Team
Prior ExperienceYears in Industry Joined FWTitleName 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 Fundware President & CEO, Bank and Trust of Puerto
Slide 44: Board of Directors
Primary BusinessDirector SinceName First Western Financial, Inc.2002Scott C. Wylie Former Finance Executive at Arconic, Inc. (fka Alcoa Inc.) Former audit partner at Deloitte Board member & Audit Committee chair for FCF (NYSE) 2017Julie A. Caponi, CPA(1) First Western Financial, Inc.2021Ju
Slide 45: Non-GAAP Reconciliations
Non-GAAP Reconciliations 45
Slide 46: Non-GAAP Reconciliation
46 Non-GAAP Reconciliation For the Years Ended,Consolidated Gross Revenue 20232022202120202019201820172016(Dollars in thousands) $82,698$107,934$95,408$92,615$63,997$57,602$54,501$53,394 Total income before non-interest expense (22)342(21)1521(15)-- Less: Unrealized gains/(losses) recognized on equi
Slide 47: Non-GAAP Reconciliation
47 Non-GAAP Reconciliation For the Years Ended,Consolidated Efficiency Ratio 20232022202120202019201820172016(Dollars in thousands) $75,637$79,106$68,128$59,552$53,806$50,182$49,494$49,823Non-interest expense 2503081714374831784747Less: Amortization ----1,572---Less: Goodwill impairment ---176----Le
Slide 48: Non-GAAP Reconciliation
48 Non-GAAP Reconciliation Diluted Pre-Tax Earnings Per Share December 31, 2023September 30, 2023June 30, 2023March 31, 2023December 31, 2022(Dollars in thousands) $(3,695)$5,102$2,429$5,971$8,168Non-Mortgage income before income tax --1,249--Plus: Impairment of contingent consideration assets (662)
Slide 49: Non-GAAP Reconciliation
49 Non-GAAP Reconciliation As of,Consolidated Tangible Common Book Value Per Share June 30, 2024March 31, 2024Dec. 31, 2023Dec. 31, 2022Dec. 31, 2021Dec. 31, 2020Dec. 31, 2019(Dollars in thousands) $ 246,875$ 245,528$ 242,738$ 240,864$ 219,041$ 154,962$ 127,678Total shareholders' equity Less: 31,741
Slide 50: Non-GAAP Reconciliation
50 Non-GAAP Reconciliation For the Three Months Ended,Wealth Management Gross Revenue June 30, 2024March 31, 2024December 31, 2023September 30, 2023June 30, 2023(Dollars in thousands) $ 18,242$ 21,890$ 13,362$ 21,647$ 19,529Total income before non-interest expense (2)(6)(2)(19)(11) Less: unrealized
Slide 51: Non-GAAP Reconciliation
51 Non-GAAP Reconciliation As ofAllowance for credit losses to Bank originated loans excluding PPP June 30, 2024March 31, 2024December 31, 2023September 30, 2023June 30, 2023(Dollars in thousands) $ 2,460,690$ 2,480,196$ 2,536,140$ 2,536,503$ 2,501,926Total loans held for investment 3,1293,7794,3434
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