First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q4 2020 Earnings Presentation
25 slides from First Western Financial's earnings presentation, Jan 28, 2021
Slide 1: Fourth Quarter 2020 Conference Call
First Western Financial, Inc. The First, Western-Based Private Trust Bank Fourth Quarter 2020 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 4Q20
Overview of 4Q20 Continued Strong Mortgage Activity Strong Year-Over-Year Revenue and Earnings Growth Balance Sheet Growth Driving Higher Spread Income ▪ Commercial banking initiative resulting in strong growth in commercial relationships, loans and deposits ▪ Total loans held-for-investment (HFI) i
Slide 4: Net Income Available to Common Shareholders and Earnings per Share
Net Income Available to Common Shareholders and Earnings per Share 4 Net Income Available to Common Shareholders ▪ Net income of $4.9 million, or $0.61 diluted earnings per share, in 4Q20 ▪ Balance sheet growth and increasing operating leverage continue to build sustainable path to improving profita
Slide 5: Loan Portfolio
$1,018 $1,054 $1,337 $1,463 $1,523 $1,597 $1,696 4Q19 1Q20 2Q20 3Q20 4Q20 3Q20 4Q20 HFI HFS Average Period End Loan Portfolio 5 Loan Portfolio Composition(2) ▪ Total loans HFI increased $26.7 million, or 1.8% from prior quarter ▪ Excluding PPP loans, total loans HFI increased $89.9 million, or 6.0%
Slide 6: Total Deposits
$1,092 $1,085 $1,309 $1,463 $1,577 $1,564 $1,620 4Q19 1Q20 2Q20 3Q20 4Q20 3Q20 4Q20 Average Period End Total Deposits 6 Deposit Portfolio Composition ▪ Total deposits increased $56.2 million, or 3.6%, from end of prior quarter ▪ Growth attributable to increases in commercial DDA relationships accoun
Slide 7: Commercial Banking Driving Growth
$626 $659 $837 $958 $977 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Commercial Banking Driving Growth 7 Total Commercial Loans(1) Total Commercial Deposits (in millions) (in millions) $569 $599 $785 $830 $908 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 ▪ During 2020, expanded commercial banking team and ad
Slide 8: Trust and Investment Management
Trust and Investment Management ▪ Total assets under management increased $124.2 million from September 30, 2020 to $6.26 billion at December 31, 2020 ▪ Excluding the impact of sale of LA fixed income team (which reduced agency holdings by $330.6 million), AUM increased $454.8 million, or 7.4% from
Slide 9: Paycheck Protection Program Overview
Paycheck Protection Program Overview 9 (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 $2.2 million in SBA fee income less $0
Slide 10: Gross Revenue
Non-interest Income $9,954 Net Interest Income $13,457 42.5% 57.5% Gross Revenue 10 (1) See Non-GAAP reconciliation (2) Gross Revenue for the 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. Financ
Slide 11: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin 11 Net Interest Income ▪ Net interest income increased 4.2% from 3Q20, primarily due to PPP income and higher average loan balances ▪ Net interest margin, including PPP and purchase accretion, remained stable at 3.07% ▪ Net interest margin, excluding PPP and
Slide 12: Non-Interest Income
$4,748 $4,731 $4,609 $4,814 $4,868 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Non-Interest Income 12 Total Non-Interest Income ▪ Non-interest income increased 21.0% from 4Q19 ▪ Increase primarily due to higher net gain on mortgage loans ▪ Trust & Investment Management fees increased from 3Q20 despite s
Slide 13: Mortgage Operations
Mortgage Operations 13 ▪ Continued strong origination production ▪ Mortgage locks down from record level in 3Q20, 225.8% Q419 lock volume ▪ Operational constraints and margin compression limited profitability during 4Q20 ▪ Refi/Purchase mix of 67%/33% in 4Q20, compared to 59%/41% in 3Q20 and 64%/36%
Slide 14: Non-Interest Expense and Efficiency Ratio
Non-Interest Expense and Efficiency Ratio 14 Total Non-Interest Expense ▪ Non-interest expense decreased 6.1% from 3Q20 ▪ Decrease primarily due to lower salaries and employee benefits expense resulting from decrease in incentive compensation consistent with lower mortgage activity ▪ Occupancy and e
Slide 15: Asset Quality
Asset Quality 15 Non-Performing Assets/Total Assets ▪ Positive asset quality trends across the portfolio ▪ Non-performing assets decreased by $6.2 million, and declined as a percentage of total assets to 0.22% from 0.53% in 3Q20 and 1.03% in 4Q20 ▪ Decline in NPAs primarily due to payoff of one larg
Slide 16: Asset Quality
Asset Quality 16 ▪ $0.7 million provision expense reflects the growth in the loan portfolio ▪ Increased loan level reviews and portfolio monitoring continue through the duration of the pandemic ▪ Past due loans as a percentage of total loans declined from Q3 2020 ALLL/ Adjusted Total Loans(1) 0.79%
Slide 17: Loan Modification Overview
Loan Modification Overview 17 ▪ Modified loan balances declined by 96.7% during 4Q20 ▪ Only loan modification granted in 4Q20 was requested prior to June 30 ▪ Most initial modifications were for 180 days or less ▪ Only one loan granted a second modification and has returned to performing status As r
Slide 18: 2021 Outlook and Priorities
2021 Outlook and Priorities 18 ▪ Strong capital generation in 2020 provides support for continued organic and acquisition-related growth ▪ Progress made in strengthening commercial banking capabilities in 2020 creates strong foundation for 2021 growth ▪ Continue expanding commercial banking platform
Slide 19: Appendix
FIRsTwestern Appendix
Slide 20: Loan Portfolio Composition
Loan Portfolio Composition 20 Cash, Securities and Other ⁽¹⁾ 23% 1 - 4 Family Residential 30% Non-Owner Occupied CRE 18% Construction and Development 9% Owner Occupied CRE 11% Commercial and Industrial 9% Commercial 68% Consumer 32% $1.5 Billion (as of 12/31/20) Commercial vs. Consumer (1) PPP loans
Slide 21: Capital and Liquidity Overview
Capital and Liquidity Overview 21 Liquidity Funding Sources (as of 12/31/20) Liquidity Reserves: Total Available Cash $155,220,931 Unpledged Investment Securities $ 26,975,468 Borrowed Funds: Unsecured: Credit Lines $ 54,000,000 Secured: FHLB Available $441,835,815 FRB Available $ 875,156 Brokered R
Slide 22: Non-GAAP Reconciliation
22 Non-GAAP Reconciliation Consolidated Efficiency Ratio For the Three Months Ended, (Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 Non-interest expense $13,082 $14,647 $12,644 $16,632 $15,614 Less: amortization 7 2 4 4 4 Less: provision on
Slide 23: Non-GAAP Reconciliation
23 Non-GAAP Reconciliation Wealth Management Gross Revenue(1) For the Three Months Ended, (Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 Total income before non-interest expense $12,534 $13,023 $13,114 $16,232 $17,973 Less: Net gain on sale
Slide 24: Non-GAAP Reconciliation
24 Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands) December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 December 31, 2020 Net income available to common shareholders $2,572 $1,334 $8,696 $9,630 $4,874 Plus:
Slide 25: Non-GAAP Reconciliation
25 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 (Dollars in thousands) Average Balance Interest Earned/Paid Average Yield/Rate Average Balance Interest Earned/P
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