First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q3 2020 Earnings Presentation
29 slides from First Western Financial's earnings presentation, Oct 22, 2020
Slide 1: The First, Western-Based Private Trust Bank Third Quarter 2020 Conference Call
First Western Financial, Inc. The First, Western-Based Private Trust Bank Third 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 3Q20
Overview of 3Q20 Record Quarter of Mortgage Production Record Financial Performance Investments in Talent and Platform Driving Expected Growth .. Strong organic balance sheet growth as established offices continue to achieve scale and new offices increase their contributions .. Gross loans increased
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 .. Record financial performance despite ongoing impact of COVID-19 pandemic .. Net income of $9.6 million, or $1.20 diluted earnings per share, in 3Q20 .. Mortgage activity providing sign
Slide 5: Loan Portfolio
$990 $1,018 $1,054 $1,337 $1,463 $1,494 $1,597 3Q19 4Q19 1Q20 2Q20 3Q20 2Q20 3Q20 HFI HFS Average Period End Loan Portfolio 5 Loan Portfolio Composition(2) .. Total loans held-for-investment (HFI) increased $83.3 million, or 23.6% from prior quarter .. Balanced growth across most areas of the portfo
Slide 6: Total Deposits
$1,042 $1,092 $1,085 $1,309 $1,463 $1,407 $1,564 3Q19 4Q19 1Q20 2Q20 3Q20 2Q20 3Q20 Average Period End Total Deposits 6 Deposit Portfolio Composition .. Total deposits increased $156.7 million, or 11.1%, from end of prior quarter .. PPP-related deposits accounted for $29.0 million of quarter end tot
Slide 7: Trust and Investment Management
Trust and Investment Management .. Total assets under management increased $378.8 million from June 30, 2020 to $6.13 billion at September 30, 2020 .. Increase was primarily attributable to client contributions to existing accounts and improving market conditions $6,116 $6,188 $5,636 $5,752 $6,131 Q
Slide 8: Paycheck Protection Program Overview
Paycheck Protection Program Overview 8 ($ in Millions) At or for the three months ended 9/30/20 Total Loans $206.1 Average Loan Size $0.3 Total Deposits $29.0 PPPLF Advances $204.1 Net Interest Margin Impact -31 bps Remaining Fees to be Recognized Pre-Tax(3) $2.1 (1) All numbers represented do not i
Slide 9: 3Q20 Gross Revenue
Non-interest Income $18,032 Net Interest Income $12,918 41.7% 58.3% Gross Revenue 9 (1) See Non-GAAP reconciliation 3Q20 Gross Revenue(1) .. Gross revenue(1) increased 18.0% from 2Q20 .. Strong year-over-year growth in both net interest income and non-interest income .. Relative to 2Q20, net interes
Slide 10: Net Interest Income & Net Interest Margin
Net Interest Income & Net Interest Margin 10 Net Interest Income .. Net interest income increased 19.7% from 2Q20, primarily due to an increase in average loan balances .. Net interest margin, including impact of PPP loans, remained relatively stable at 3.07% .. Net interest margin, excluding impact
Slide 11: Non-Interest Income
$4,824 $4,748 $4,731 $4,609 $4,814 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Non-Interest Income 11 Total Non-Interest Income .. Non-interest income increased 16.9% from 2Q20 .. Increase primarily due to record quarter of net gain on mortgage loans .. Increasing economic activity and clients added thr
Slide 12: Mortgage Operations
Mortgage Operations 12 .. Record mortgage originations in 3Q20 .. Refi/Purchase mix of 59%/41% in 3Q20, compared to 73%/27% in 2Q20 and 54%/46% in 3Q19 .. Mortgage profit margins have increased from 39% in 3Q19 to 83% in 3Q20 (in millions) $215.4 $197.0 $196.9 $344.3 $376.3 $16.9 $66.3 $31.2 $37.2 $
Slide 13: Non-Interest Expense and Efficiency Ratio
Non-Interest Expense and Efficiency Ratio 13 Total Non-Interest Expense .. Non-interest expense increased 31.5% from 2Q20 .. Increase in non-interest expense primarily due to deferred loan origination expense related to PPP loans that reduced expense levels in 2Q20 .. Full quarter impact of personne
Slide 14: Asset Quality
Asset Quality 14 Non-Performing Assets/Total Assets .. Generally stable to improving trends across the portfolio .. Non-performing assets decreased by $1.7 million, and declined as a percentage of total assets to 0.53% from 0.67% in 2Q20 .. Minimal charge-offs again in the quarter Net Charge-Offs/Av
Slide 15: Asset Quality
Asset Quality 15 .. $1.5 million provision expense reflects the growth in the loan portfolio, as well as continued economic uncertainty .. Increased loan level reviews and portfolio monitoring continue through the duration of the pandemic .. Past due loans as a percentage of total loans declined fro
Slide 16: Loan Modification Overview
Loan Modification Overview 16 .. Modified loan balances declined by 62.3% during 3Q20 .. New loan modification requests have slowed considerably, offering on exception basis only as of June 30 One new loan modification made in July and one in September .. Most initial modifications were for 180 da
Slide 17: Loan Modification Overview
Loan Modification Overview 17 Portfolio Loan Level Reviews • Borrowers providing current financials and cash flow forecasts • Increased monitoring and oversight • Identify emerging issues early $0.5 $2.1 $2.4 Food Services and Drinking Establishments Health Care and Social Assistance Management of C
Slide 18: Near-Term Outlook and Expectations
Near-Term Outlook and Expectations 18 .. Significant growth in tangible book value expected to continue Core earnings and operating leverage improvement expected to continue PPP fee recognition and pending sale of LA Fixed Income Team .. Asset quality showing strength despite continuation of pan
Slide 19: Appendix
Ww Firstwestern Appendix
Slide 20: Loan Portfolio Composition
Loan Portfolio Composition 20 Cash, Securities and Other ⁽¹⁾ 25% 1 - 4 Family Residential 30% Non-Owner Occupied CRE 16% Construction and Development 7% Owner Occupied CRE 10% Commercial and Industrial 12% Commercial 69% Consumer 31% $1.5 Billion (as of 9/30/20) Commercial vs. Consumer (1) PPP loans
Slide 21: Commercial Loans by Industry
Commercial Loans by Industry(1) 21 42.84% 11.69% 11.36% 6.76% 4.41% 4.37% 3.90% 3.85% 3.38% 3.00% 2.22% 1.14% 0.80% 0.28% Real Estate / Rental and Leasing Construction Retail Trade Educational Services Arts, Entertainment and Recreation Other Miscellaneous⁽²⁾ Accommodation and Food Services Health C
Slide 22: CRE Loans By Property Type
CRE(1) Loans By Property Type 22 Office/Office Condo 15.2% Warehouse 13.5% Other Commercial 12.9% 1st or 2nd DOT 5+ SFR Units 11.7% 1-4 Family Construction 11.4% Other Construction & Land Development 10.6% Retail 8.9% Commercial Office Building 8.0% Strip Center 3.2% Hotel / Motel 2.5% 1st & 2nd DOT
Slide 23: CRE Portfolio Characteristics and Underwriting
. We require our CRE loans to be secured by seasoned and well-managed properties with adequate margins .. We generally obtain a guaranty from experienced owners and managers with outside cash flows and/or other assets .. Loan amounts generally do not exceed 80% or 75% of the property’s appraised val
Slide 24: Exposure to Stressed Industries
Exposure to Stressed Industries (as of 9/30/20) 24 Industry Exposure Outstanding Balances ($ in millions) % of Total Loans Unused Commitments ($ in Millions) Portfolio Characteristics Energy Related $6.7 0.4% $16.8 .. Indirect business or personal exposure to energy industry .. Collateral type: 47%
Slide 25: Capital and Liquidity Overview
Capital and Liquidity Overview 25 Liquidity Funding Sources (as of 9/30/20) Liquidity Reserves: Total Available Cash $249,542,451 Unpledged Investment Securities $ 34,412,685 Borrowed Funds: Unsecured: Credit Lines $ 54,000,000 Secured: FHLB Available $401,870,448 FRB Available $ 1,035,353 Brokered
Slide 26: Non-GAAP Reconciliation
26 Non-GAAP Reconciliation Consolidated Efficiency Ratio For the Three Months Ended, (Dollars in thousands) September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Non-interest expense $13,442 $13,082 $14,647 $12,644 $16,632 Less: amortization 52 7 2 38 4 Less: provision
Slide 27: Non-GAAP Reconciliation
27 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Total income before non-interest expense $12,554 $12,534 $13,023 $13,114 $16,232 Less: Net gain on sale o
Slide 28: Non-GAAP Reconciliation
28 Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) September 30, 2019 December 31, 2019 March 31, 2020 June 30, 2020 September 30, 2020 Net income available to common shareholders $2,406 $2,572 $1,
Slide 29: Non-GAAP Reconciliation
29 Non-GAAP Reconciliation Adjusted net interest margin For the Three Months Ended June 30, (Dollars in thousands) Average Balance Interest Earned/Paid Average Yield/Rate Interest-bearing deposits in other financial institutions 76,463 44 PPP adjustment 20,587 25 Available-for-sale securities 48,614
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