First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Investor Presentation (May 2022)
51 slides from First Western Financial's investor presentation, May 3, 2022
Slide 1: Investor Presentation May 2022
INVESTOR PRESENTATION May 2022
Slide 2: Safe Harbor
Safe Harbor 2 This presentation contains “forward - looking statements” within the meaning of Section 27 A of the Securities Act of 1933 , as amended, and Section 21 E of the Securities Exchange Act of 1934 , as amended .. These forward - looking statements reflect the current views of First Western
Slide 3: An Emerging High Performing Institution
Office Locations 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
Slide 4: Investment Highlights
4 Investment Highlights Proven Execution on Growth Strategies Attractive Markets and Business Model Strong Earnings Momentum ▪ Significant revenue growth driving improved operating leverage and higher profitability ▪ TBV/share (1) increased 25% in 2020 and 21% in 2021 ▪ Continued scale expected to d
Slide 5: Strong Operational and Financial Momentum
$4,556 $5,795 $7,602 $10,854 $38,429 $32,611 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 2016 2017 2018 2019 2020 2021 2016 - 2020 Pre - Tax, Pre - Provision Income(1) ($000s) 5 Strong Operational and Financial Momentum ▪ Robust balance sheet growth ▪ Higher fee income driven b
Slide 6: Improving Earnings Driving Outperformance and Creating Shareholder Value
$9.19 $11.14 $11.50 $11.88 $12.38 $12.83 $13.15 $13.39 $14.13 $15.38 $16.44 $17.24 $17.98 $18.85 $19.87 $20.25 $8.00 $10.00 $12.00 $14.00 $16.00 $18.00 $20.00 $22.00 MYFW TBV/Share 6 Improving Earnings Driving Outperformance and Creating Shareholder Value Discounted Valuation Provides Opportunity fo
Slide 7: Franchise Overview
Franchise Overview W Frirstwestern
Slide 8: Great Markets, Scarce Investment Opportunity
8 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 s
Slide 9: MYFW: Our Five Core Strengths
9 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
Slide 10: 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 10 Cross - Selling a Diverse Set of Products and Services Commercial Banking ▪ Fiduciary wealth management with expert review of cli
Slide 11: High Quality Revenues with Predictable Sources of Recurring Income
$54.3 $55.2 $57.8 $64.3 $97.3 $96.2 $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0 $100.0 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 Net Interest Income Non-Interest Income, excluding net gain/(loss) on sale of securities and assets 11 High Quality Revenues with Predictable Sources
Slide 12: Private Bank Model Generates Strong Fee Income
12 Private Bank Model Generates Strong Fee Income More than 40% of Operating Revenue Generated by Fee Income 62.8% 41.2% 37.9% 36.0% 34.6% 30.3% 27.8% 27.7% 26.0% 25.7% 24.6% 22.9% 18.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% ALRS MYFW WASH UMBF PGC UVSP SYBT CFR TMP CATC TSC FFWM FRC Nonint
Slide 13: Driving Profitable Growth
Driving Profitable Growth 13
Slide 14: Success in Expansion and Acquisition Growth
14 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 ▪ Phoenix, AZ 2016 – 2020 (4) ▪ Broomfield, CO (2021) ▪ Greenwood Village, CO ▪ Lone
Slide 15: Revenue Growth Strategies
15 Revenue Growth Strategies Expand commercial loan production platform ▪ Building expertise in specific vertical markets, e.g. medical and dental practices ▪ Capitalize on growing reputation to attract additional experienced commercial banking talent Expand into new markets with attractive demograp
Slide 16: Recent M&A Transactions
16 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 17: Strong Execution on Revenue Growth Strategies
17 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 continuing with acquisition of Teton Financial Se
Slide 18: Accelerating Business Development Trends
18 Accelerating Business Development Trends Capital raised in July 2018 IPO has allowed for increased business development activities $227.9 $268.2 $225.6 $317.9 $691.7 $561.2 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 $600.0 $700.0 2016 2017 2018 2019 2020 2021 $44.0 $62.2 $121.6 $149.0 $467.9 $206.6
Slide 19: Increased Scale and Back-Office Streamlining Driving Improved Efficiencies
19 Increased Scale and Back - Office Streamlining Driving Improved Efficiencies 88.2% 85.4% 80.6% 59.8% 66.6% 50.0% 60.0% 70.0% 80.0% 90.0% 2017 2018 2019 2020 2021 (1) See Non - GAAP reconciliation Efficiency Ratio (1)
Slide 20: 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 a
Slide 21: Wealth Management Segment Earnings
21 Wealth Management Segment Earnings (1) See Non - GAAP reconciliation $0.73 $0.86 $0.79 $0.71 $0.77 $1.60 $3.09 $0.99 $1.01 $1.07 $0.75 $0.80 $4.24 $3.81 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 FY20 FY21 Wealth Management Segment Consolid
Slide 22: Recent Financial Trends
Recent Financial Trends 2 W Frirstwestern
Slide 23: Overview of 1Q22 Earnings
23 Overview of 1Q22 Payoffs Impact Loan Growth 1Q22 Earnings Increasing Profitability ▪ Teton acquisition having positive impact on profitability prior to realization of most of the cost savings ▪ Larger balance sheet resulted in 27% increase in net interest income from 4Q21 ▪ Significant increases
Slide 24: Net Income Available to Common Shareholders and Earnings per Share
24 Net Income Available to Common Shareholders and Earnings per Share ▪ Net income of $5.5 million, or $0.57 diluted earnings per share, in 1Q22 ▪ Excluding acquisition - related expenses, adjusted diluted earnings per share (1) of $0.61 in 1Q22 ▪ Strong profitability resulted in 1.8% and 1.9% incre
Slide 25: Loan Portfolio
25 Loan Portfolio ▪ Total loans HFI decreased $23.0 million from prior quarter due to high level of payoffs and a decrease in PPP loans of $30.1 million ▪ Seasonally lighter loan production in first quarter ▪ Growth in C&I loans partially offset payoffs of construction loans following project comple
Slide 26: Total Deposits
26 Total Deposits ▪ Total deposits increased $66.4 million from end of prior quarter ▪ Continued improvement in deposit mix as growth in noninterest - bearing and low - cost interest - bearing deposits offset decline in time deposits ▪ Strong new client acquisition activity resulted in $92.3 million
Slide 27: Trust and Investment Management
27 Trust and Investment Management ▪ Total assets under management decreased $152.5 million from December 31, 2021 to $7.20 billion at March 31, 2022 ▪ The decrease in asset balances was attributable to unfavorable market conditions resulting in a decrease in the value of assets under management bal
Slide 28: 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 throug h net interest income (3 ) Includes $0.4 million in SBA fee income less $0.1 million of deferred loan origina
Slide 29: Gross Revenue
(1) See Non - GAAP reconciliation Gross Revenue ▪ Gross revenue (1) increased 14.8% from 4Q21 due to higher net interest income ▪ Most areas of non - interest income were consistent with prior quarter with exception of decline in risk management and insurance fees and net gain on equity interests ▪
Slide 30: Net Interest Income and Net Interest Margin
30 Net Interest Income and Net Interest Margin ▪ Net interest income increased 27.1% from 4Q21, primarily due to higher average loan balances ▪ Excluding PPP fees and purchase accretion income, net interest income increased $3.3 million from 4Q21 ▪ Net interest margin, including PPP and purchase acc
Slide 31: Non-Interest Income
31 Non - Interest Income ▪ Non - interest income decreased 9.5% from 4Q21 ▪ Excluding net gain on equity interests in 4Q21, adjusted non - interest income (1) decreased 4.6%, primarily due to lower risk management and insurance fees, which are seasonally higher in Q4 compared to the rest of the fisc
Slide 32: Mortgage Operations
32 Mortgage Operations ▪ Mortgage locks up 4.5% from prior quarter ▪ Refi/Purchase mix of 41% / 59% in 1Q22 compared to 41% / 59% in 4Q21 and 39% / 61% in 3Q21 ▪ Profit margin remained consistent quarter - over - quarter ▪ Non - interest expense down 28.0% in Mortgage segment from 1Q21 $490.8 $319.7
Slide 33: Non-Interest Expense and Efficiency Ratio
33 Non - Interest Expense and Efficiency Ratio ▪ Non - interest expense decreased 5.5% from 4Q21 ▪ 1Q22 included $0.5 million of acquisition - related expense, compared with $3.7 million in 4Q21 ▪ Excluding acquisition - related expense, adjusted non - interest expense (1) increased from 4Q21 primar
Slide 34: Asset Quality
34 Asset Quality ▪ Stable asset quality across the portfolio ▪ Immaterial net charge - offs again in the quarter ▪ $0.2 million provision for loan losses related to growth in total loans, excluding PPP loans, and changes in portfolio mix ▪ Non - performing assets remained consistent at 0.17% of tota
Slide 35: Capital and Liquidity Overview
35 Capital and Liquidity Overview 11.11% 11.11% 13.81% 7.67% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 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 3/31/22)
Slide 36: Creating Additional Shareholder Value
Creating Additional Shareholder Value 36
Slide 37: Near-Term Outlook
37 Near - Term Outlook ▪ Growing reputation and larger balance sheet positively impacting ability to attract experienced banking talent and expand business development capabilities across all markets ▪ Loan pipeline continues to build and should lead to higher loan growth over remainder of 2022 ▪ Hi
Slide 38: Long-Term Goals to Drive Shareholder Value
38 Long - Term Goals to Drive Shareholder Value ▪ Drive to $5 billion in total assets, $25 billion TIM assets through both organic growth and acquisitions ▪ ~50 offices ▪ $7 - 8 million in revenue per office ▪ 60% contribution margin per office ▪ Build footprint, scale and operating leverage with M&
Slide 39: MYFW's core strengths provide the foundation for driving shareholder value
MYFW’s core strengths provide the foundation for driving shareholder value 39 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 40: Appendix
Appendix 40 W Frirstwestern
Slide 41: Organizational Overview
Organizational Overview a W Frirstwestern
Slide 42: Management Team
Name Title Joined FW Years in Industry Prior Experience Scott C. Wylie Chairman, CEO & President 2002 34 ▪ 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
Slide 43: Board of Directors
Name Director Since Primary Business Scott C. Wylie 2002 ▪ First Western Financial, Inc. Julie A. Caponi, CPA 2017 ▪ Former Finance Executive at Arconic, Inc. (fka Alcoa Inc.) ▪ Former audit partner at Deloitte ▪ Board member & Audit Committee chair for FCF (NYSE) Julie A. Courkamp 2021 ▪ First West
Slide 44: Integrated Team Approach in Boutique Offices
Working as a team to grow relationships 44 Integrated Team Approach in Boutique Offices President Private Bankers Lenders Portfolio Managers Wealth Advisor Trust Officer Team - based incentives Relationship - based wealth management Many relationship managers to one client Product group specialists
Slide 45: Organizational Structure Built for Scale
45 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 ▪ Lone Tree, CO ▪ Phoenix, AZ ▪ Vail Valley, A
Slide 46: Reconciliations
Non - GAAP Reconciliations 46
Slide 47: Reconciliation: Consolidated Gross Revenue
47 Non - GAAP Reconciliation Consolidated Gross Revenue For the Years Ended, (Dollars in thousands) 2016 2017 2018 2019 2020 2021 Total income before non - interest expense $53,394 $54,501 $57,617 $63,976 $92,600 $95,429 Less: Net gain on securities 114 81 - 119 - 489 Less: Net gain on sale of asset
Slide 48: Reconciliation: Adjusted Net Income
48 Non - GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 Net income available to common shareholders $5,999 $6,277 $6,41
Slide 49: Reconciliation: Tangible Common Book Value Per Share
49 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 Dec. 31 , 2021 Mar. 31 , 2022 Total shareholders' equity $116,875 $127,678 $154,962 $219,041 $223,266 Less: Goodwill and other
Slide 50: Reconciliation: Wealth Management Gross Revenue
50 Non - GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) March 31, 2021 June 30, 2021 September 30, 2021 December 31, 2021 March 31, 2022 Total income before non - interest expense $18,471 $19,782 $20,438 $20,619 $24,189 Less: Net gain on equity
Slide 51: Reconciliation: Adjusted Net Interest Margin
51 Non - GAAP Reconciliation Adjusted net interest margin For the Three Months Ended March 31, 2021 For the Three Months Ended June 30, 2021 For the Three Months Ended September 30, 2021 For the Three Months Ended December 31, 2021 For the Three Months Ended March 31, 2022 (Dollars in thousands) Ave
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