First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q3 2023 Earnings Presentation
20 slides from First Western Financial's earnings presentation, Oct 20, 2023
Slide 1: Third Quarter 2023 Conference Call
Third 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 3Q23
Overview of 3Q23 • Net revenue increased $2.0 million, or 9.6%, to $22.5 million in Q3 2023, compared to $20.6 million in Q2 2023 • Net income available to common shareholders of $3.1 million, or $0.32 per diluted share 3Q23 Earnings • Pre-tax, pre-provision net income of $4.6 million(1), an increas
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 $3.1 million, or $0.32 diluted earnings per share, in 3Q23 • Profitability and prudent balance sheet management resulted in book value and tangible book value per share(1) increasing by 4.1% and 5.0%, respectively, fr
Slide 5: Loan Portfolio
Loan Portfolio Loan Portfolio Details Loan Production & Loan Payoffs • Total loans held for investment increased $34.6 million from prior quarter • Growth driven by commercial and industrial loans, residential mortgage loans, and draws on existing construction lines, partially offset by a decrease i
Slide 6: Total Deposits
Total Deposits • Total deposits increased by $44.6 million in 3Q23 • Success in new business development, with $26 million in new deposit relationships added in 3Q23 • Continued migration of noninterest-bearing deposits into interest-bearing categories as clients seek higher rates for their excess l
Slide 7: Trust and Investment Management
Trust and Investment Management • Total assets under management decreased $108.2 million from June 30, 2023 to $6.40 billion as of September 30, 2023 • Primarily attributable to a decrease in market values throughout the quarter resulting in a decrease in the value of assets under management balance
Slide 8: Gross Revenue
Gross Revenue • Gross revenue(1) declined 6.6% from prior quarter • Decline in net interest income, partially offset by an increase in noninterest income • Non-interest income mix increased to 26.7% from 17.7% in prior quarter 3Q23 Gross Revenue(1) Gross Revenue(1) $35.0 $29.3 $29.0 $30.0 $26.1 $24.
Slide 9: Net Interest Income and Net Interest Margin
Net Interest Income and Net Interest Margin • Net interest income decreased to $16.8 million, or 9.1%, from $18.4 million in 2Q23 • Net interest income decreased from 2Q23 due to an increase in average cost of deposits • Net interest margin decreased 27 bps to 2.46%, driven by the increase in intere
Slide 10: Non-Interest Income
Non-Interest Income • Non-interest income increased 54% from prior quarter, primarily due to impacts in 2Q23: ◦ $1.2 million impairment to carrying value of contingent consideration assets in 2Q23 ◦ $1.1 million of losses on loans accounted for under fair value option in 2Q23 vs. $0.3 million of los
Slide 11: Non-Interest Expense and Efficiency Ratio
Non-Interest Expense and Efficiency Ratio • Non-interest expense decreased 1.1% from 2Q23 • Disciplined expense management resulted in non-interest expense coming in at low end of targeted range • Non-interest expense expected within the range of $18.5 million to $19.0 million for the remainder of 2
Slide 12: Asset Quality
Asset Quality • NPAs increased $45.9 million primarily due to four additional loans, under one relationship, moving to non-accrual during 3Q23 • New additions to NPAs are primarily collateralized with real estate assets in attractive markets and did not require an allowance on individually analyzed
Slide 13: Consistent Value Creation
Consistent Value Creation TBV/Share(1) Up 144% 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 • Continued focus on executing well on the areas that we can control • Balance sheet management • Attracting new clients with particular foc
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 9/30/23) Liquidity Funding Sources (as of 9/30/23) (in thousands) 15.00% 12.45% Liquidity Reserves: Total Available Cash $269,805 Unpledged Investment Securities 21,264 10.00% 9.32% 9.32% 7.96
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Consolidated Efficiency Ratio (Dollars in thousands) September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Non-interest expense $19,260 $19,905 $20,528 $18,519 $18,314 Less: amortization 77 77 64 62 62 Less: acquisition related expenses 154 195
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Total income before non-interest expense $26,482 $26,623 $24,543 $19,529 $21,647 Less: unrealized gains/(los
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) September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Net income available to common shareholders $6,221 $5,471 $3,820
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 September 30, 2022 December 31, 2022 March 31, 2023 June 30, 2023 September 30, 2023 Average Interest Average Av
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