First Western Financial, Inc. · NASDAQ:MYFW
First Western Financial — Q3 2021 Earnings Presentation
24 slides from First Western Financial's earnings presentation, Oct 21, 2021
Slide 1: Third Quarter 2021 Conference Call
Third Quarter 2021 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 3Q21
3 Overview of 3Q21 Improvement in Key Metrics Earnings Growth and Higher Returns Continued Growth in Private and Commercial Banking Operations ▪ Total loans held for investment, excluding PPP loans, increased 19% annualized from prior quarter ▪ Total deposits increased 6.1% from end of prior quarter
Slide 4: Net Income Available to Common Shareholders and Earnings per Share
4 Net Income Available to Common Shareholders and Earnings per Share ▪ Net income of $6.4 million, or $0.78 diluted earnings per share, in 3Q21 ▪ Excluding acquisition-related expenses, adjusted diluted earnings per share(1) of $0.81 in 3Q21, up from $0.77 in 2Q21 ▪ Strong profitability results in 4
Slide 5: Non-Mortgage Segment Earnings
5 Non-Mortgage Segment Earnings (1) See Non-GAAP reconciliation $0.32 $0.67 $0.73 $0.85 $0.75 $1.61 $0.89 $0.99 $1.00 $1.03 $0.00 $0.50 $1.00 $1.50 $2.00 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Non-Mortgage Segment Consolidated ▪ Non-mortgage segment earnings reflects contribution of private banking
Slide 6: Loan Portfolio
6 Loan Portfolio ▪ Total loans HFI increased $30.4 million, or 1.9% from prior quarter ▪ Excluding PPP loans, total loans HFI increased $70.9 million, or 19% annualized from prior quarter ▪ Continued strong loan production across multiple areas offsetting payoffs and PPP forgiveness ▪ Cash, Securiti
Slide 7: Total Deposits
7 Total Deposits ▪ Total deposits increased $103.2 million from end of prior quarter ▪ Continued strong deposit inflows from new and existing clients ▪ Further improvement in deposit mix with noninterest-bearing deposits increasing to 33.5% of total deposits at 3Q21 from 30.2% at 3Q20 3Q 2020 2Q 202
Slide 8: 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 and
Slide 9: New Offices Ramping Up and Contributing to Organic Growth
9 New Offices Ramping Up and Contributing to Organic Growth ▪ New markets identified with large population of target clients ▪ Successfully recruiting experienced talent with deep relationships in new markets ▪ Effectively marketing First Western’s value proposition and cross-selling to expand relat
Slide 10: Trust and Investment Management
10 Trust and Investment Management ▪ Total assets under management increased $143.8 million from June 30, 2021 to $6.91 billion at September 30, 2021 ▪ The increase in asset balances were driven by both account additions and new account growth as well as the continued improvement in market valuation
Slide 11: 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 through net interest income (3) Includes $1.6 million in SBA fee income less $0.4 million of deferred loan origination
Slide 12: Gross Revenue
(1) See Non-GAAP reconciliation (2) Gross Revenue for 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. Financial results after that date for the unsold portion are presented in Wealth Management. 1
Slide 13: Net Interest Income and Net Interest Margin
13 Net Interest Income and Net Interest Margin ▪ Net interest income increased 4.4% from 2Q21, primarily due to an increase in average loan balances and a higher net interest margin, partially offset by lower PPP fees ▪ Net interest margin, including PPP and purchase accretion, increased 13 bps to 3
Slide 14: Non-Interest Income
14 Non-Interest Income ▪ Non-interest income increased 10.5% from 2Q21 ▪ Trust and investment management fees up 3.2% from 2Q21, and up 7% over 3Q20, despite loss of approximately $0.4 million in fees per quarter related to LA Fixed Income Team sold in 4Q20 ▪ Increase in net gain on mortgage loans p
Slide 15: Mortgage Operations
15 Mortgage Operations ▪ Mortgage locks up 4% from prior quarter primarily reflects increase in seasonal purchases ▪ Refi/Purchase mix of 39/61% in 3Q21 compared to 49/51% in 2Q21 and 67/33% in 4Q20 ▪ Profit margin improved due to increased volume and expense reductions in mortgage operations $376.3
Slide 16: Non-Interest Expense and Efficiency Ratio
16 Non-Interest Expense and Efficiency Ratio ▪ Non-interest expense increased 6.1% from 2Q21 ▪ 3Q21 included approximately $0.3 million of acquisition-related expense ▪ Higher salaries and employee benefits expense due to increased bonus accruals resulting from strong loan and deposit production and
Slide 17: Asset Quality
17 Asset Quality ▪ Stable asset quality across the portfolio ▪ Immaterial net charge-offs again in the quarter ▪ $0.4 million provision for loan losses related to growth in total loans ▪ Non-performing assets increased by $1.2 million due to one commercial loan placed on non-accrual during the quart
Slide 18: Near-Term Outlook
18 Near-Term Outlook ▪ Growth in commercial and private banking earnings will continue to replace outsized income generated by mortgage operations in 2020 ▪ Consistent pipeline and healthy demand should continue to drive organic loan growth across most areas of the portfolio ▪ Success in new busines
Slide 19: Appendix
Appendix a W Firstwestern
Slide 20: Capital and Liquidity Overview
20 Capital and Liquidity Overview 10.66% 10.66% 14.37% 7.86% 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 9/30/21)
Slide 21: Non-GAAP Reconciliation
21 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 Sept. 30, 2021 Total shareholders' equity $116,875 $127,678 $154,962 $175,129 Less: Preferred stock (liquidation preference) ---
Slide 22: Non-GAAP Reconciliation
22 Non-GAAP Reconciliation Wealth Management Gross Revenue For the Three Months Ended, (Dollars in thousands) September 30, 2020 December 31, 2020 March 31, 2021 June 30, 2021 September 30, 2021 Total income before non-interest expense $16,232 $17,973 $18,471 $19,782 $20,438 Plus: Provision for loan
Slide 23: Non-GAAP Reconciliation
23 Non-GAAP Reconciliation Adjusted net income available to common shareholders For the Three Months Ended, (Dollars in thousands, except per share data) September 30, 2020 December 31, 2020 March 31, 2021 June 30, 2021 September 30, 2021 Net income available to common shareholders $9,630 $4,874 $5,
Slide 24: Non-GAAP Reconciliation
24 Non-GAAP Reconciliation Adjusted net interest margin For the Three Months Ended December 31, 2020 For the Three Months Ended March 31, 2021 For the Three Months Ended June 30, 2021 For the Three Months Ended September 30, 2021 (Dollars in thousands) Average Balance Interest Earned/Paid Average Yi
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