• First Western Reports Fourth Quarter 2022 Financial Results

    来源: Nasdaq GlobeNewswire / 26 1月 2023 16:10:01   America/New_York

    Fourth Quarter 2022 Summary

    • Total deposits increased $237.8 million, at an annualized rate of 43.9%, in Q4 2022

    • Total loans held for investment increased $121.2 million, at an annualized rate of 20.6%, in Q4 2022

    • Net income available to common shareholders of $5.5 million in Q4 2022, compared to $6.2 million in Q3 2022 and $1.9 million in Q4 2021

    • Diluted EPS of $0.56 in Q4 2022, compared to $0.64 in Q3 2022 and $0.23 in Q4 2021

    • Pre-tax, pre-provision net income(1) of $8.5 million in Q4 2022, compared to $10.0 million in Q3 2022 and $3.4 million in Q4 2021

    • Book value per common share increased to $25.37, or 2.5%, from $24.74 as of Q3 2022, and was up 9.1% from $23.25 as of Q4 2021

    DENVER, Jan. 26, 2023 (GLOBE NEWSWIRE) -- First Western Financial, Inc. (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the fourth quarter ended December 31, 2022.

    Net income available to common shareholders was $5.5 million, or $0.56 per diluted share, for the fourth quarter of 2022. This compares to $6.2 million, or $0.64 per diluted share, for the third quarter of 2022, and $1.9 million, or $0.23 per diluted share, for the fourth quarter of 2021.

    Scott C. Wylie, CEO of First Western, commented, “We had another strong quarter of business development resulting in double-digit annualized loan and deposit growth. While tightening our underwriting criteria and loan pricing, given the potential for weakening economic conditions, we still had 21% annualized loan growth, partially driven by increasing contributions from the teams we have added to expand our presence in Arizona, Wyoming and Montana. Importantly, our increased focus on deposit gathering resulted in deposit growth that was more than twice the rate of our loan growth, which significantly reduced our loan-to-deposit ratio. Our balance sheet growth enabled us to continue generating strong earnings and further growth in book value and tangible book value per share.

    “With our conservatively underwritten, well diversified loan portfolio and the financial strength of the clients we serve, we have consistently maintained strong asset quality during past economic downturns and we expect it to continue performing well this year. At the same time, given the strong business development capabilities we have built and the increasing traction we are getting in our newer markets, we expect to continue generating solid balance sheet growth, realizing more operating leverage, and delivering a higher level of earnings. While it appears that the macroeconomic environment will be challenging in 2023, we believe we are well positioned to continue profitably growing our franchise and creating shareholder value,” said Mr. Wylie.

    (1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

      
     For the Three Months Ended
     December 31, September 30, December 31,
    (Dollars in thousands, except per share data) 2022   2022   2021 
    Earnings Summary     
    Net interest income$21,842  $22,906  $14,407 
    Provision for loan losses 1,197   1,756   812 
    Total non-interest income 6,561   6,345   9,516 
    Total non-interest expense 19,905   19,260   20,524 
    Income before income taxes 7,301   8,235   2,587 
    Income tax expense 1,830   2,014   670 
    Net income available to common shareholders 5,471   6,221   1,917 
    Adjusted net income available to common shareholders(1) 5,617   6,337   4,776 
    Basic earnings per common share 0.58   0.66   0.24 
    Adjusted basic earnings per common share(1) 0.59   0.67   0.59 
    Diluted earnings per common share 0.56   0.64   0.23 
    Adjusted diluted earnings per common share(1) 0.58   0.66   0.57 
          
    Return on average assets (annualized) 0.79%  0.97%  0.37%
    Adjusted return on average assets (annualized)(1) 0.82   0.99   0.91 
    Return on average shareholders' equity (annualized) 9.17   10.70   4.28 
    Adjusted return on average shareholders' equity (annualized)(1) 9.41   10.90   10.66 
    Return on tangible common equity (annualized)(1) 10.48   12.28   4.10 
    Adjusted return on tangible common equity (annualized)(1) 10.76   12.51   10.21 
    Net interest margin 3.32   3.76   2.92 
    Efficiency ratio(1) 67.66   64.94   71.77 

    ____________________
    (1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

    Operating Results for the Fourth Quarter 2022

    Revenue

    Gross revenue (1) was $29.0 million for the fourth quarter of 2022, a slight decrease of 1.0% from $29.3 million for the third quarter of 2022. Relative to the fourth quarter of 2021, gross revenue increased 23.8% from $23.4 million for the fourth quarter of 2021, primarily driven by growth in interest-earning assets and an increase in net interest margin.

    (1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

    Net Interest Income

    Net interest income for the fourth quarter of 2022 was $21.8 million, a decrease of 4.6% from $22.9 million in the third quarter of 2022. The decrease was due to higher interest expense resulting from the strong growth in total deposits in the fourth quarter, as well as an increase in the average cost of deposits due to the rising rate environment and a highly competitive deposit market.

    Relative to the fourth quarter of 2021, net interest income increased 51.6% from $14.4 million. The year-over-year increase in net interest income was due to an increase in net interest margin attributable to the higher rate environment and increased average interest-earning assets. The increase in average interest-earning assets was driven by growth in average loans of $782.4 million compared to December 31, 2021, resulting from organic loan growth and the Teton acquisition.

    Net Interest Margin

    Net interest margin for the fourth quarter of 2022 decreased 44 bps to 3.32% from 3.76% reported in the third quarter of 2022, primarily due to a 106 bps increase in average cost of funds, driven by a rising rate environment and a highly competitive deposit market.

    The yield on interest-earning assets increased to 4.93% in the fourth quarter of 2022 from 4.38% in the third quarter of 2022 and the cost of interest-bearing deposits increased to 2.09% in the fourth quarter of 2022 from 0.73% in the third quarter of 2022.

    Relative to the fourth quarter of 2021, net interest margin increased from 2.92%, primarily due to increased yields attributable to the rising rate environment and higher average loan balances as a result of strong organic loan growth and the Teton acquisition, more than offsetting the increase in cost of funds.

    Non-interest Income

    Non-interest income for the fourth quarter of 2022 was $6.6 million, an increase of 3.4%, from $6.3 million in the third quarter of 2022. This was primarily due to an $0.8 million increase in risk management and insurance fees due to seasonal increases, partially offset by losses on loans held for investment under the fair value option of $0.5 million due primarily to the rising rate environment.

    Relative to the fourth quarter of 2021, non-interest income decreased 31.1% from $9.5 million. The decrease was primarily due to lower mortgage segment activity as higher interest rates drove declines in both refinance and purchase volume, and lower Trust and investment management fees derived from reduced assets under management (“AUM”) balances, which were negatively impacted by lower equity and fixed income market valuations.

    Non-interest Expense

    Non-interest expense for the fourth quarter of 2022 was $19.9 million, an increase of 3.3%, from $19.3 million in the third quarter of 2022. The increase was primarily due to an increase in data processing fees and other operational costs attributable to nonrecurring implementation charges related to the trust and investment management system enhancements.

    Relative to the fourth quarter of 2021, non-interest expense decreased 3.0% from $20.5 million. The decrease was primarily due to the addition of Teton’s operations at the end of 2021 which increased data processing costs for one-time system conversion and termination fees.

    The impact of the merger and acquisition activity was as follows (in thousands):

      
     As of or for the Three Months Ended
     December 31, September 30, December 31,
      2022   2022   2021
    Adjusted Net Income Available to Common Shareholders(1)     
    Net income available to common shareholders$5,471  $6,221  $1,917
    Plus: acquisition related expenses     
    Salaries and employee benefits 112   98   547
    Professional services 87   90   713
    Data processing(2)    (96)  2,428
    Technology and information systems 1   1   
    Marketing    7   
    Other (5)  54   8
    Less: income tax impact 49   38   837
    Adjusted net income available to shareholders(1)$5,617  $6,337  $4,776
          
    Adjusted Diluted Earnings Per Share(1)     
    Diluted earnings per share$0.56  $0.64  $0.23
    Plus: acquisition related expenses net of income tax impact 0.02   0.02   0.34
    Adjusted diluted earnings per share(1)$0.58  $0.66  $0.57

    _____________________
    (1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
    (2) Represents reduced contract termination fees from the system conversion.

    The Company’s efficiency ratio(1) was 67.7% in the fourth quarter of 2022, compared with 64.9% in the third quarter of 2022 and 71.8% in the fourth quarter of 2021.

    (1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

    Income Taxes

    The Company recorded income tax expense of $1.8 million for the fourth quarter of 2022, representing an effective tax rate of 25.1%, compared to 24.5% for the third quarter of 2022.

    Loans

    Total loans held for investment were $2.48 billion as of December 31, 2022, an increase of 5.1% from $2.35 billion as of September 30, 2022, and an increase of 26.7% from $1.95 billion as of December 31, 2021. The increase in total loans held for investment from September 30, 2022 was primarily attributable to growth in the residential mortgage, construction and development, and commercial and industrial portfolios. The increase in total loans held for investment from December 31, 2021 was attributable to loan growth distributed amongst our residential mortgage, construction and development, commercial and industrial, and commercial real estate portfolios.

    Deposits

    Total deposits were $2.41 billion as of December 31, 2022, an increase of 11.0% from $2.17 billion as of September 30, 2022. Relative to the fourth quarter of 2021, total deposits increased 9.0% from $2.21 billion as of December 31, 2021, driven primarily by organic growth through expanded client relationships.

    Borrowings

    Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $146.9 million as of December 31, 2022, a decrease of $126.3 million from $273.2 million as of September 30, 2022, and an increase of $108.3 million from $38.6 million as of December 31, 2021. The decrease in borrowings from September 30, 2022 was driven by our reduced reliance on FHLB borrowings due to deposit growth throughout the quarter. Relative to the fourth quarter of 2021, total borrowings increased to support the strong loan growth throughout 2022.

    Subordinated notes were $52.1 million as of December 31, 2022, an increase of $19.5 million from $32.6 million as of September 30, 2022 and an increase of $13.1 million from $39.0 million as of December 31, 2021. On December 5, 2022, the Company completed the issuance and sale of subordinated notes (the "December 2022 Sub Notes") totaling $20.0 million in aggregate principal amount. The December 2022 Sub Notes mature on December 15, 2032 (the "Maturity Date") and accrue interest at a rate of 7.00% per annum, payable semi-annually in arrears, to, but excluding, December 15, 2027. From and including December 15, 2027 to, but excluding the Maturity Date or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to Three-Month term SOFR, or an alternative rate determined in accordance with the terms of the Notes if Three-Month Term SOFR cannot be determined or a Benchmark Transition Event (as defined in the Notes) has occurred, plus 328 basis points, payable quarterly in arrears.

    Assets Under Management

    AUM increased by $188.6 million during the fourth quarter to $6.11 billion as of December 31, 2022, compared to $5.92 billion as of September 30, 2022. This increase was attributable to an increase in market values at the end of the fourth quarter 2022. Total AUM decreased by $1.24 billion compared to December 31, 2021 from $7.35 billion, which was primarily attributable to a decline in market values throughout 2022 resulting in a decrease in the value of AUM balances.

    Credit Quality

    Non-performing assets totaled $12.3 million, or 0.43% of total assets, as of December 31, 2022, compared to $3.9 million, or 0.14% of total assets, as of September 30, 2022 and $4.3 million, or 0.17% of total assets, as of December 31, 2021. The increase in non-performing assets is related to the addition of $8.9 million in problem loan credits at the end of the fourth quarter. The Company did not add a specific reserve to these new problem credits due to adequate collateral coverage as of December 31, 2022.

    The Company recorded a provision of $1.2 million in the fourth quarter of 2022, compared to a provision of $1.8 million in the third quarter of 2022 and $0.8 million in the fourth quarter of 2021. The provision recorded in the fourth quarter of 2022 represented general provisioning consistent with our net growth of the bank originated loan portfolio and changes in our portfolio mix.

    The Company adopted the new current expected credit losses ("CECL") standard effective January 1, 2023. Based on preliminary results, the Company expects its allowance for credit losses ("ACL") coverage ratio to be within a range of approximately 75-90 bps of total loans and 30-45 bps coverage on off-balance sheet commitments.

    Capital

    As of December 31, 2022, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of December 31, 2022, the Bank was classified as “well capitalized,” as summarized in the following table:

      
     December 31,
     2022
    Consolidated Capital 
    Tier 1 capital to risk-weighted assets9.28%
    Common Equity Tier 1 ("CET1") to risk-weighted assets9.28 
    Total capital to risk-weighted assets12.37 
    Tier 1 capital to average assets7.81 
      
    Bank Capital 
    Tier 1 capital to risk-weighted assets10.29 
    CET1 to risk-weighted assets10.29 
    Total capital to risk-weighted assets11.06 
    Tier 1 capital to average assets8.65 
       

    Book value per common share increased 2.5% from $24.74 as of September 30, 2022 to $25.37 as of December 31, 2022, and was up 9.1% from $23.25 as of December 31, 2021.

    Tangible book value per common share (1) increased 3.0% from $21.35 as of September 30, 2022 to $21.99 as of December 31, 2022, and was up 10.7% from $19.87 as of December 31, 2021.

    (1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

    Conference Call, Webcast and Slide Presentation

    The Company will host a conference call and webcast at 10:00 a.m. MT/ 12:00 p.m. ET on Friday, January 27, 2023. Telephone access: https://register.vevent.com/register/BIef5fe496336a49e087313418c55050b5

    A slide presentation relating to the fourth quarter 2022 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Events and Presentations page of the Company’s investor relations website at https://myfw.gcs-web.com.

    About First Western

    First Western is a financial services holding company headquartered in Denver, Colorado, with operations in Colorado, Arizona, Wyoming, California, and Montana. First Western and its subsidiaries provide a fully integrated suite of wealth management services on a private trust bank platform, which includes a comprehensive selection of deposit, loan, trust, wealth planning and investment management products and services. First Western’s common stock is traded on the Nasdaq Global Select Market under the symbol “MYFW.” For more information, please visit www.myfw.com.

    Non-GAAP Financial Measures

    Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures include “Tangible Common Equity,” “Tangible Common Book Value per Share,” “Return on Tangible Common Equity,” “Efficiency Ratio,” “Gross Revenue,” “Allowance for Loan Losses to Bank Originated Loans Excluding PPP,” “Adjusted Net Income Available to Common Shareholders,” “Adjusted Basic Earnings Per Share,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” and “Adjusted Return on Tangible Common Equity”. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. Reconciliation of non-GAAP financial measures, to GAAP financial measures are provided at the end of this press release.

    Forward-Looking Statements

    Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “position,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “opportunity,” “could,” or “may.” The forward-looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause us to make changes to our future plans. Those risks and uncertainties include, without limitation, the COVID-19 pandemic and its effects; integration risks and projected cost savings in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming, California, and Montana; the risk of changes in the economy affecting real estate values and liquidity; the risk in our ability to continue to originate residential real estate loans and sell such loans; risks specific to commercial loans and borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the risk of changes in interest rates; and the risk of the adequacy of our allowance for loan losses and the risk in our ability to maintain a strong core deposit base or other low-cost funding sources. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2022 (“Form 10-K”), and other documents we file with the SEC from time to time. We urge readers of this news release to review the “Risk Factors” section our Form 10-K and any updates to those risk factors set forth in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our other filings with the SEC. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today’s date, or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

    Contacts:
    Financial Profiles, Inc.
    Tony Rossi
    310-622-8221
    MYFW@finprofiles.com
    IR@myfw.com


    First Western Financial, Inc.
    Consolidated Financial Summary (unaudited)

     Three Months Ended
     December 31, September 30, December 31,
    (Dollars in thousands, except per share amounts) 2022   2022   2021
    Interest and dividend income:     
    Loans, including fees$30,203  $24,831  $15,398
    Loans accounted for under the fair value option 488   513   
    Investment securities 645   653   225
    Interest-bearing deposits in other financial institutions 931   533   109
    Dividends, restricted stock 238   109   20
    Total interest and dividend income 32,505   26,639   15,752
          
    Interest expense:     
    Deposits 8,260   2,706   813
    Other borrowed funds 2,403   1,027   532
    Total interest expense 10,663   3,733   1,345
    Net interest income 21,842   22,906   14,407
    Less: provision for loan losses 1,197   1,756   812
    Net interest income, after provision for loan losses 20,645   21,150   13,595
          
    Non-interest income:     
    Trust and investment management fees 4,358   4,639   5,184
    Net gain on mortgage loans 775   885   2,470
    Bank fees 812   586   615
    Risk management and insurance fees 924   115   676
    Income on company-owned life insurance 88   88   88
    Net (loss)/gain on loans accounted for under the fair value option (602)  (134)  
    Unrealized gain/(loss) recognized on equity securities    75   
    Net gain/(loss) on equity interests    6   483
    Other 206   85   
    Total non-interest income 6,561   6,345   9,516
    Total income before non-interest expense 27,206   27,495   23,111
          
    Non-interest expense:     
    Salaries and employee benefits 11,679   11,566   11,013
    Occupancy and equipment 1,910   1,836   1,588
    Professional services 2,027   2,316   2,164
    Technology and information systems 1,168   1,172   916
    Data processing 1,223   888   3,307
    Marketing 500   403   497
    Amortization of other intangible assets 77   77   4
    Net (gain)/loss on assets held for sale    (1)  
    Net (gain)/loss on sale of other real estate owned (3)  (41)  
    Other 1,324   1,044   1,035
    Total non-interest expense 19,905   19,260   20,524
    Income before income taxes 7,301   8,235   2,587
    Income tax expense 1,830   2,014   670
    Net income available to common shareholders$5,471  $6,221  $1,917
    Earnings per common share:     
    Basic$0.58  $0.66  $0.24
    Diluted 0.56   0.64   0.23
               
               

    First Western Financial, Inc.
    Consolidated Financial Summary (unaudited)

     December 31, September 30, December 31,
    (Dollars in thousands) 2022   2022   2021 
    Assets     
    Cash and cash equivalents:     
    Cash and due from banks$4,926  $8,308  $6,487 
    Federal funds sold       1,491 
    Interest-bearing deposits in other financial institutions 191,586   156,940   379,005 
    Total cash and cash equivalents 196,512   165,248   386,983 
          
    Available-for-sale securities, at fair value       56,211 
    Held-to-maturity securities, at amortized cost (fair value of $74,718 and $78,624 as of December 31, 2022 and September 30, 2022, respectively) 81,056   84,257    
    Correspondent bank stock, at cost 7,110   12,783   2,584 
    Mortgage loans held for sale, at fair value 8,839   12,743   30,620 
    Loans held for sale, at fair value 1,965       
    Loans (includes $23,321, $22,871, and $0 measured at fair value, respectively) 2,469,413   2,351,322   1,949,137 
    Allowance for loan losses (17,183)  (16,081)  (13,732)
    Loans, net 2,452,230   2,335,241   1,935,405 
    Premises and equipment, net 25,118   24,668   23,976 
    Accrued interest receivable 10,445   8,451   7,151 
    Accounts receivable 4,873   5,947   5,267 
    Other receivables 1,973   2,868   1,949 
    Other real estate owned, net    187    
    Goodwill and other intangible assets, net 32,104   32,181   31,902 
    Deferred tax assets, net 6,914   6,849   6,845 
    Company-owned life insurance 16,152   16,064   15,803 
    Other assets 21,457   21,212   22,678 
    Assets held for sale       115 
    Total assets$2,866,748  $2,728,699  $2,527,489 
          
    Liabilities     
    Deposits:     
    Noninterest-bearing$583,092  $662,055  $636,304 
    Interest-bearing 1,822,137   1,505,392   1,569,399 
    Total deposits 2,405,229   2,167,447   2,205,703 
    Borrowings:     
    Federal Home Loan Bank and Federal Reserve borrowings 146,886   273,225   38,629 
    Subordinated notes 52,132   32,584   39,031 
    Accrued interest payable 1,125   664   355 
    Other liabilities 20,512   19,917   24,730 
    Total liabilities 2,625,884   2,493,837   2,308,448 
          
    Shareholders’ Equity     
    Total shareholders’ equity 240,864   234,862   219,041 
    Total liabilities and shareholders’ equity$2,866,748  $2,728,699  $2,527,489 
                
                

    First Western Financial, Inc.
    Consolidated Financial Summary (unaudited)

     December 31, September 30, December 31,
    (Dollars in thousands) 2022   2022   2021 
    Loan Portfolio     
    Cash, Securities, and Other(1)$165,670  $154,748  $261,190 
    Consumer and Other(2) 49,954   50,429   34,758 
    Construction and Development 288,497   228,060   178,716 
    1-4 Family Residential 898,154   822,796   580,872 
    Non-Owner Occupied CRE 496,776   527,836   482,622 
    Owner Occupied CRE 216,056   220,075   212,426 
    Commercial and Industrial 361,028   350,954   203,584 
    Total loans held for investment 2,476,135   2,354,898   1,954,168 
    Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net(3) (6,722)  (3,576)  (5,031)
    Gross loans$2,469,413  $2,351,322  $1,949,137 
    Mortgage loans held for sale$8,839  $12,743  $30,620 
    Loans held for sale 1,965       
          
    Deposit Portfolio     
    Money market deposit accounts$1,336,092  $1,010,846  $1,056,669 
    Time deposits 224,090   186,680   170,491 
    Negotiable order of withdrawal accounts 234,778   277,225   309,940 
    Savings accounts 27,177   30,641   32,299 
    Total interest-bearing deposits 1,822,137   1,505,392   1,569,399 
    Noninterest-bearing accounts 583,092   662,055   636,304 
    Total deposits$2,405,229  $2,167,447  $2,205,703 

    ___________________
    (1) Includes PPP loans of $7.1 million as of December 31, 2022, $7.7 million as of September 30, 2022, and $46.8 million as of December 31, 2021.
    (2) Includes loans held for investment accounted for under fair value option of $23.4 million and $22.6 million as of December 31, 2022 and September 30, 2022, respectively.
    (3) Includes fair value adjustments on loans held for investment accounted for under the fair value option.


    First Western Financial, Inc.
    Consolidated Financial Summary (unaudited) (continued)

     As of or for the Three Months Ended
     December 31, September 30, December 31,
    (Dollars in thousands) 2022   2022   2021 
    Average Balance Sheets     
    Assets     
    Interest-earning assets:     
    Interest-bearing deposits in other financial institutions$103,190  $101,564  $277,915 
    Federal funds sold    260   1,491 
    Investment securities 84,017   87,340   36,001 
    Correspondent bank stock 11,880   4,924   1,744 
    Loans 2,436,273   2,241,343   1,653,919 
    Interest-earning assets 2,635,360   2,435,431   1,971,070 
    Mortgage loans held for sale 9,065   11,535   39,112 
    Total interest-earning assets, plus mortgage loans held for sale 2,644,425   2,446,966   2,010,182 
    Allowance for loan losses (16,724)  (14,981)  (13,224)
    Noninterest-earning assets 125,355   126,457   94,589 
    Total assets$2,753,056  $2,558,442  $2,091,547 
          
    Liabilities and Shareholders’ Equity     
    Interest-bearing liabilities:     
    Interest-bearing deposits$1,582,587  $1,480,288  $1,195,986 
    FHLB and Federal Reserve borrowings 212,693   119,025   49,115 
    Subordinated notes 38,335   32,564   39,017 
    Total interest-bearing liabilities 1,833,615   1,631,877   1,284,118 
    Noninterest-bearing liabilities:     
    Noninterest-bearing deposits 659,076   673,949   608,693 
    Other liabilities 21,660   20,103   19,566 
    Total noninterest-bearing liabilities 680,736   694,052   628,259 
    Total shareholders’ equity 238,705   232,513   179,170 
    Total liabilities and shareholders’ equity$2,753,056  $2,558,442  $2,091,547 
          
    Yields/Cost of funds (annualized)     
    Interest-bearing deposits in other financial institutions 3.61%  2.08%  0.16%
    Investment securities 3.07   2.99   2.50 
    Correspondent bank stock 8.01   8.85   4.59 
    Loans 5.04   4.52   3.72 
    Interest-earning assets 4.93   4.38   3.20 
    Mortgage loans held for sale 6.44   5.44   3.14 
    Total interest-earning assets, plus mortgage loans held for sale 4.94   4.38   3.20 
    Interest-bearing deposits 2.09   0.73   0.27 
    FHLB and Federal Reserve borrowings 3.61   2.23   0.45 
    Subordinated notes 5.07   4.45   4.89 
    Total interest-bearing liabilities 2.33   0.92   0.42 
    Net interest margin 3.32   3.76   2.92 
    Net interest rate spread 2.61   3.46   2.77 
                
                

    First Western Financial, Inc.
    Consolidated Financial Summary (unaudited) (continued)

     As of or for the Three Months Ended
     December 31, September 30, December 31,
    (Dollars in thousands, except share and per share amounts) 2022   2022   2021 
    Asset Quality     
    Non-performing loans$12,349  $3,744  $4,327 
    Non-performing assets 12,349   3,931   4,327 
    Net charge-offs 95   32   44 
    Non-performing loans to total loans 0.50%  0.16%  0.22%
    Non-performing assets to total assets 0.43   0.14   0.17 
    Allowance for loan losses to non-performing loans 139.14   429.51   317.36 
    Allowance for loan losses to total loans 0.70   0.68   0.70 
    Allowance for loan losses to bank originated loans excluding PPP(1) 0.78   0.77   0.88 
    Net charge-offs to average loans(2) 0.00   0.00   0.00 
          
    Assets Under Management$6,106,973  $5,918,403  $7,351,840 
          
    Market Data     
    Book value per share at period end 25.37   24.74   23.25 
    Tangible book value per common share(1)  21.99   21.35   19.87 
    Weighted average outstanding shares, basic 9,493,732   9,481,311   8,043,469 
    Weighted average outstanding shares, diluted 9,702,908   9,673,078   8,370,998 
    Shares outstanding at period end 9,495,440   9,492,006   9,419,271 
          
    Consolidated Capital     
    Tier 1 capital to risk-weighted assets 9.28%  9.54%  10.54%
    CET1 to risk-weighted assets 9.28   9.54   10.54 
    Total capital to risk-weighted assets 12.37   11.84   13.54 
    Tier 1 capital to average assets 7.81   8.18   9.31 
          
    Bank Capital     
    Tier 1 capital to risk-weighted assets 10.29   10.32   11.40 
    CET1 to risk-weighted assets 10.29   10.32   11.40 
    Total capital to risk-weighted assets 11.06   11.09   12.19 
    Tier 1 capital to average assets 8.65   8.84   10.05 

    ____________________
    (1) Represents a Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
    (2) Value results in an immaterial amount.


    First Western Financial, Inc.
    Consolidated Financial Summary (unaudited) (continued)

    Reconciliations of Non-GAAP Financial Measures

     As of or for the Three Months Ended
     December 31, September 30, December 31,
    (Dollars in thousands, except share and per share amounts) 2022   2022   2021 
    Tangible Common     
    Total shareholders' equity$240,864  $234,862  $219,041 
    Less: goodwill and other intangibles, net 32,104   32,181   31,902 
    Tangible common equity$208,760  $202,681  $187,139 
          
    Common shares outstanding, end of period 9,495,440   9,492,006   9,419,271 
    Tangible common book value per share$21.99  $21.35  $19.87 
    Net income available to common shareholders 5,471   6,221   1,917 
    Return on tangible common equity (annualized) 10.48%  12.28%  4.10%
          
    Efficiency     
    Non-interest expense$19,905  $19,260  $20,524 
    Less: amortization 77   77   4 
    Less: acquisition related expenses 195   154   3,696 
    Adjusted non-interest expense$19,633  $19,029  $16,824 
          
    Total income before non-interest expense$27,206  $27,495  $23,111 
    Less: unrealized gain/(loss) recognized on equity securities    75    
    Less: net (loss)/gain on loans accounted for under the fair value option (602)  (134)   
    Less: net gain/(loss) on equity interests    6   483 
    Less: net (loss)/gain on loans held for sale at fair value(1) (12)      
    Plus: provision for loan losses 1,197   1,756   812 
    Gross revenue$29,017  $29,304  $23,440 
    Efficiency ratio 67.66%  64.94%  71.77%
          
    Allowance to Bank Originated Loans Excluding PPP     
    Total loans held for investment$2,476,135  $2,354,898  $1,954,168 
    Less: loans acquired 234,717   248,573   360,661 
    Less: bank originated PPP loans 6,378   6,905   40,062 
    Less: loans accounted for under fair value 23,415   22,648    
    Bank originated loans excluding PPP$2,211,625  $2,076,772  $1,553,445 
          
    Allowance for loan losses$17,183  $16,081  $13,732 
    Allowance for loan losses to bank originated loans excluding PPP 0.78%  0.77%  0.88%

    ____________________
    (1) Presented in Other Non-interest income on the Consolidated Financial Summary statements


    First Western Financial, Inc.
    Consolidated Financial Summary (unaudited) (continued)

     As of or for the Three Months Ended
     December 31, September 30, December 31,
    (Dollars in thousands, except share and per share data) 2022   2022   2021 
    Adjusted Net Income Available to Common Shareholders     
    Net income available to common shareholders$5,471  $6,221  $1,917 
    Plus: acquisition related expenses 195   154   3,696 
    Less: income tax impact 49   38   837 
    Adjusted net income available to shareholders$5,617  $6,337  $4,776 
          
    Pre-Tax, Pre-Provision Net Income     
    Income before income taxes$7,301  $8,235  $2,587 
    Plus: provision for loan losses 1,197   1,756   812 
    Pre-tax, pre-provision net income$8,498  $9,991  $3,399 
          
    Adjusted Basic Earnings Per Share     
    Basic earnings per share$0.58  $0.66  $0.24 
    Plus: acquisition related expenses net of income tax impact 0.01   0.01   0.35 
    Adjusted basic earnings per share$0.59  $0.67  $0.59 
          
    Adjusted Diluted Earnings Per Share     
    Diluted earnings per share$0.56  $0.64  $0.23 
    Plus: acquisition related expenses net of income tax impact 0.02   0.02   0.34 
    Adjusted diluted earnings per share$0.58  $0.66  $0.57 
          
    Adjusted Return on Average Assets (annualized)     
    Return on average assets 0.79%  0.97%  0.37%
    Plus: acquisition related expenses net of income tax impact 0.03   0.02   0.54 
    Adjusted return on average assets 0.82%  0.99%  0.91%
          
    Adjusted Return on Average Shareholders' Equity (annualized)     
    Return on average shareholders' equity 9.17%  10.70%  4.28%
    Plus: acquisition related expenses net of income tax impact 0.24   0.20   6.38 
    Adjusted return on average shareholders' equity 9.41%  10.90%  10.66%
          
    Adjusted Return on Tangible Common Equity (annualized)     
    Return on tangible common equity 10.48%  12.28%  4.10%
    Plus: acquisition related expenses net of income tax impact 0.28   0.23   6.11 
    Adjusted return on tangible common equity 10.76%  12.51%  10.21%

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