• First Western Reports First Quarter 2022 Financial Results

    المصدر: Nasdaq GlobeNewswire / 28 أبريل 2022 16:20:01   America/New_York

    First Quarter 2022 Summary

    • Net income available to common shareholders of $5.5 million in Q1 2022, compared to $1.9 million in Q4 2021 and $6.0 million in Q1 2021
    • Diluted EPS of $0.57 in Q1 2022, compared to $0.23 in Q4 2021 and $0.74 in Q1 2021
    • Total income before non-interest expense of $26.7 million in Q1 2022, compared to $23.1 million in Q4 2021 and $23.7 million in Q1 2021
    • Book value per common share increased to $23.68, or 1.8%, from $23.25 as of Q4 2021, and was up 16.7% from $20.29 as of Q1 2021
    • Total assets of $2.58 billion, up 1.9% from Q4 2021 and up 16.5% from Q1 2021

    DENVER, April 28, 2022 (GLOBE NEWSWIRE) -- First Western Financial, Inc., (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the first quarter ended March 31, 2022.

    Net income available to common shareholders was $5.5 million, or $0.57 per diluted share, for the first quarter of 2022. This compares to $1.9 million, or $0.23 per diluted share, for the fourth quarter of 2021, and $6.0 million, or $0.74 per diluted share, for the first quarter of 2021.

    Scott C. Wylie, CEO of First Western, commented, “Our first quarter results reflect the positive impact that the Teton Financial Services acquisition is having on our level of profitability even before we realize most of the cost savings projected for this transaction. On an adjusted basis excluding acquisition-related expenses, our return on average assets, return on average equity, and return on average tangible common equity all significantly increased compared to the fourth quarter of 2021.

    “We were able to deliver our strong financial performance despite a high level of payoffs that impacted our loan growth in the quarter. Many of the payoffs were the result of our high net worth and entrepreneurial clients selling businesses and properties to take advantage of significant appreciation in the value of these assets. The high level of payoffs resulted in excess liquidity during the first quarter, although it positions us well to redeploy these funds into higher yielding earning assets as interest rates increase.

    “Our loan pipeline continues to build and we expect to see further improvement in our profitability as we generate a higher level of loan growth, redeploy our excess liquidity, and fully realize the cost savings from the Teton acquisition. While macroeconomic and geopolitical issues have created a more challenging operating environment, we believe that we are well positioned to manage through these headwinds and continue to deliver strong results for our shareholders,” said Mr. Wylie.

     For the Three Months Ended 
     March 31,  December 31,  March 31,  
    (Dollars in thousands, except per share data)2022    2021    2021 
    Earnings Summary               
    Net interest income$18,284  $14,387  $13,053  
    Less: provision for loan losses 210   812     
    Total non-interest income 8,633   9,542   10,615  
    Total non-interest expense 19,391   20,530   15,629  
    Income before income taxes 7,316   2,587   8,039  
    Income tax expense 1,792   670   2,040  
    Net income available to common shareholders 5,524   1,917   5,999  
    Adjusted net income available to common shareholders(1) 5,922   4,776   5,999  
    Basic earnings per common share 0.59   0.24   0.76  
    Adjusted basic earnings per common share(1) 0.63   0.59   0.76  
    Diluted earnings per common share 0.57   0.23   0.74  
    Adjusted diluted earnings per common share(1) 0.61   0.57   0.74  
                 
    Return on average assets (annualized) 0.85 % 0.37 % 1.16 %
    Adjusted return on average assets (annualized)(1) 0.92   0.91   1.16  
    Return on average shareholders' equity (annualized) 9.98   4.28   14.95  
    Adjusted return on average shareholders' equity (annualized)(1) 10.70   10.66   14.95  
    Return on tangible common equity (annualized)(1) 11.57   4.10   17.49  
    Adjusted return on tangible common equity (annualized)(1) 12.41   10.21   17.49  
    Net interest margin 2.98   2.92   2.90  
    Efficiency ratio(1) 69.80   71.80   66.02  

    ______________________________
    (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 First Quarter 2022

    Revenue

    Gross revenue (1) was $26.9 million for the first quarter of 2022, an increase of 14.8% from $23.4 million for the fourth quarter of 2021, due primarily to an increase in net interest income driven by an increase in average interest-earning assets. Relative to the first quarter of 2021, gross revenue increased 13.7% from $23.7 million for the first quarter of 2021, primarily driven by growth in interest-earning assets.

    (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 first quarter of 2022 was $18.3 million, an increase of 27.1% from $14.4 million in the fourth quarter of 2021. The increase was due primarily to the increase in average interest-earning assets resulting from the Teton acquisition and strong organic growth in the fourth quarter of 2021, which drove an increase in average loans of $268.9 million and an increase in average interest-bearing deposits in other financial institutions of $196.7 million compared to December 31, 2021.

    Relative to the first quarter of 2021, net interest income increased 40.1% from $13.1 million. The year-over-year increase in net interest income was due primarily to the increase in average interest-earning assets driven by an increase in average loans of $367.8 million and an increase in average interest-bearing deposits in other financial institutions of $261.0 million compared to March 31, 2021.

    Net Interest Margin

    Net interest margin for the first quarter of 2022 increased to 2.98% from 2.92% in the fourth quarter of 2021, primarily due to higher loan yields driven mainly by accretion income on acquired loans by $0.3 million as a result of the Teton acquisition last quarter, which positively impacted net interest margin by 5 bps in the first quarter of 2022, compared to a negative impact of 9 bps in the fourth quarter of 2021.

    The cost of interest-bearing deposits decreased slightly to 0.23% in the first quarter of 2022, from 0.27% in the fourth quarter of 2021 and the yield on interest-earning assets remained unchanged at 3.20% in the first quarter of 2022 from the fourth quarter of 2021.

    Relative to the first quarter of 2021, the net interest margin increased from 2.90%, primarily due to a positive PPP impact of 6 bps in the first quarter of 2022, compared to a negative impact of 6 bps in the first quarter of 2021.

    Non-interest Income

    Non-interest income for the first quarter of 2022 was $8.6 million, a decrease of 9.5% from $9.5 million in the fourth quarter of 2021. This was primarily due to a $0.6 million decrease in risk management and insurance fees and a $0.5 million net gain on equity interests recognized in the fourth quarter of 2021. Trust and investment management fees and net gain on mortgage loans remained flat quarter-over-quarter.

    Relative to the first quarter of 2021, non-interest income decreased 18.7% from $10.6 million. The decrease was primarily due to lower mortgage segment activity, partially offset by higher trust and investment management fees and bank fees.

    Non-interest Expense

    Non-interest expense for the first quarter of 2022 was $19.4 million, a decrease of 5.5% from $20.5 million in the fourth quarter of 2021. The decrease was primarily due to higher acquisition-related costs incurred in the fourth quarter of 2021, partially offset by the addition of Teton’s operations at the end of 2021.

    Relative to the first quarter of 2021, non-interest expense increased 24.1% from $15.6 million. The increase is primarily due to the addition of Teton’s operations at the end of 2021.

    The impact of the mergers and acquisition activity is as follows (in thousands):

     As of or for the Three Months Ended
     March 31,  December 31,  March 31, 
     2022 2021 2021
    Adjusted Net Income Available to Common Shareholders(1)           
    Net income available to common shareholders$5,524  $1,917  $5,999 
    Plus: acquisition related expenses           
    Salaries and employee benefits 229   547    
    Professional services 112   713    
    Data processing 115   2,428    
    Marketing 70       
    Other 1   8    
    Less: income tax impact 129   837    
    Adjusted net income available to shareholders(1)$5,922  $4,776  $5,999 
                
    Adjusted Diluted Earnings Per Share(1)           
    Diluted earnings per share$0.57  $0.23  $0.74 
    Plus: acquisition related expenses net of income tax impact 0.04   0.34    
    Adjusted diluted earnings per share(1)$0.61  $0.57  $0.74 

    ______________________________
    (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.

    The Company’s efficiency ratio(1) was 69.8% in the first quarter of 2022, compared with 71.8% in the fourth quarter of 2021 and 66.0% in the first 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 first quarter of 2022, representing an effective tax rate of 24.5%, compared to 25.9% for the fourth quarter of 2021. The decrease in effective tax rate in the first quarter of 2022 was primarily attributable to temporary and permanent tax differences on acquisition costs as of December 31, 2021.

    Loans

    Total loans held for investment were $1.93 billion as of March 31, 2022, a decrease of 1.2% from $1.95 billion as of December 31, 2021, and an increase of 24.8% from $1.55 billion as of March 31, 2021. The decrease in total loans held for investment from December 31, 2021 was attributable to a decrease in PPP loans of $30.1 million as well as a high level of loan payoffs influenced by our high net worth and entrepreneurial clients selling businesses and properties to take advantage of significant appreciation in the value of those assets. Including the $252.3 million in loans acquired in the Teton acquisition and the decrease of $173.8 million in PPP loans, the net increase in total loans held for investment from March 31, 2021 was attributed to increases in each loan category. Excluding PPP loans, acquired loans, and loans accounted for under the fair value option, total loans held for investment were $1.59 billion as of March 31, 2022, an increase of $34.6 million, or 2.2%, from the end of the prior quarter and an increase of $345.2 million, or 27.8%, from March 31, 2021.

    PPP loans were $16.7 million as of March 31, 2022, a net decrease of 64.4% from $46.8 million as of December 31, 2021, and 91.2% from $190.5 million as of March 31, 2021. As of March 31, 2022, there were $0.3 million remaining in net fees to be recognized upon forgiveness or repayment of PPP loans.

    Deposits

    Total deposits were $2.27 billion as of March 31, 2022, compared to $2.21 billion as of December 31, 2021, and $1.81 billion as of March 31, 2021. The increase in total deposits from December 31, 2021 was related to continued inflows of both noninterest-bearing and interest-bearing deposits from new business development efforts. The increase in total deposits from March 31, 2021 was related to $379.2 million in deposits added through the Teton acquisition and $85.1 million in remaining net growth.

    Average total deposits for the first quarter of 2022 increased $469.3 million, or 104.0% annualized, from the fourth quarter of 2021 and increased $553.3 million, or 32.2%, from the first quarter of 2021. The quarter-over-quarter and year-over-year increase in average deposits was primarily attributable to the Teton acquisition and organic growth in non-interest bearing and interest checking accounts.

    Borrowings

    Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $27.6 million as of March 31, 2022, a decrease of $11.1 million from $38.6 million as of December 31, 2021, and a decrease of $170.5 million from $198.0 million as of March 31, 2021. The decrease from December 31, 2021 and from March 31, 2021 is attributable to the participation in the Paycheck Protection Program Loan Facility (“PPPLF”) from the Federal Reserve. Borrowing from this facility is expected to trend in the same direction as the balances of the PPP loans and the resulting net decrease in PPP loans drove the decrease to the PPPLF balance. As of March 31, 2022, the PPPLF had advances of $12.6 million compared to PPP loan balance of $16.7 million.

    Assets Under Management

    Total assets under management (“AUM”) decreased by $152.5 million during the first quarter to $7.20 billion as of March 31, 2022, compared to $7.35 billion as of December 31, 2021. This decrease was primarily attributable to unfavorable market conditions resulting in a decrease in the value of AUM balances. Total AUM increased by $713.7 million compared to March 31, 2021 from $6.49 billion, which was primarily attributable to improved market conditions throughout 2021 and the Teton acquisition.

    Credit Quality

    Non-performing assets totaled $4.3 million, or 0.17% of total assets, as of March 31, 2022, compared to $4.3 million, or 0.17% of total assets, as of December 31, 2021 and $4.0 million, or 0.18% of total assets, as of March 31, 2021.

    The Company recorded a provision of $0.2 million in the first quarter of 2022, compared to no provision recorded in the first quarter of 2021. The Company recorded a provision for loan losses of $0.8 million in the fourth quarter of 2021. The provision recorded in the first quarter of 2022 represented general provisioning consistent with growth of the bank originated loan portfolio, excluding PPP loans, and changes in the portfolio mix, we believe the resulting allowance for loan loss is representative of continued strong credit quality in the portfolio.

    Capital

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

     March 31,
     
     2022
     
    Consolidated Capital    
    Tier 1 capital to risk-weighted assets11.11 %
    Common Equity Tier 1 ("CET1") to risk-weighted assets11.11  
    Total capital to risk-weighted assets13.81  
    Tier 1 capital to average assets7.67  
        
    Bank Capital   
    Tier 1 capital to risk-weighted assets12.01  
    CET1 to risk-weighted assets12.01  
    Total capital to risk-weighted assets12.82  
    Tier 1 capital to average assets8.27  

    Book value per common share increased 1.8% from $23.25 as of December 31, 2021 to $23.68 as of March 31, 2022, and was up 16.7% from $20.29 as of March 31, 2021.

    Tangible book value per common share (1) increased 1.9% from $19.87 as of December 31, 2021 to $20.25 as of March 31, 2022, and was up 17.5% from $17.24 as of March 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, April 29, 2022. The call can be accessed via telephone at 877-405-1628. A recorded replay will be accessible through May 6, 2022 by dialing 855-859-2056; passcode 3759275.

    A slide presentation relating to the first 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 and California. 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,” “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 and California; 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
     March 31,  December 31,  March 31, 
    (Dollars in thousands, except per share amounts)2022 2021 2021
    Interest and dividend income:             
    Loans, including fees$19,096  $15,398  $14,212 
    Investment securities 337   225   196 
    Interest-bearing deposits in other financial institutions 232   109   91 
    Total interest and dividend income 19,665   15,732   14,499 
               
    Interest expense:            
    Deposits 943   813   974 
    Other borrowed funds 438   532   472 
    Total interest expense 1,381   1,345   1,446 
    Net interest income 18,284   14,387   13,053 
    Less: provision for loan losses 210   812    
    Net interest income, after provision for loan losses 18,074   13,575   13,053 
               
    Non-interest income:            
    Trust and investment management fees 5,168   5,197   4,847 
    Net gain on mortgage loans 2,494   2,470   5,196 
    Bank fees 690   622   373 
    Risk management and insurance fees 109   676   51 
    Income on company-owned life insurance 86   88   88 
    Net gain on equity interests 1   489    
    Other 85      60 
    Total non-interest income 8,633   9,542   10,615 
    Total income before non-interest expense 26,707   23,117   23,668 
               
    Non-interest expense:            
    Salaries and employee benefits 12,058   11,013   9,861 
    Occupancy and equipment 1,882   1,588   1,409 
    Professional services 1,526   2,164   1,279 
    Technology and information systems 1,046   916   942 
    Data processing 1,187   3,307   1,015 
    Marketing 557   497   321 
    Amortization of other intangible assets 77   4   4 
    Net (Gain)/loss on assets held for sale (1)      
    Other 1,059   1,041   798 
    Total non-interest expense 19,391   20,530   15,629 
    Income before income taxes 7,316   2,587   8,039 
    Income tax expense 1,792   670   2,040 
    Net income available to common shareholders$5,524  $1,917  $5,999 
    Earnings per common share:          
    Basic$0.59  $0.24  $0.76 
    Diluted 0.57   0.23   0.74 


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

     March 31,  December 31,  March 31, 
    (Dollars in thousands)2022 2021 2021
    Assets           
    Cash and cash equivalents:           
    Cash and due from banks$5,961  $6,487  $2,295 
    Federal funds sold 1,273   1,491    
    Interest-bearing deposits in other financial institutions 446,865   379,005   373,641 
    Total cash and cash equivalents 454,099   386,983   375,936 
             
    Available-for-sale securities, at fair value 58,727   55,562   30,843 
    Correspondent bank stock, at cost 1,617   2,584   2,576 
    Mortgage loans held for sale, at fair value 33,663   30,620   176,644 
    Loans (includes $6,380, $0, and $0 measured at fair value, respectively) 1,923,825   1,949,137   1,543,926 
    Allowance for loan losses (13,885)  (13,732)  (12,539)
    Premises and equipment, net 23,539   23,976   5,778 
    Accrued interest receivable 6,969   7,151   6,852 
    Accounts receivable 6,445   5,267   10,175 
    Other receivables 2,841   1,949   3,254 
    Goodwill and other intangible assets, net 32,335   31,902   24,254 
    Deferred tax assets, net 7,540   6,845   6,073 
    Company-owned life insurance 15,889   15,803   15,537 
    Other assets 22,940   23,327   22,269 
    Assets held for sale 117   115    
    Total assets$2,576,661  $2,527,489  $2,211,578 
             
    Liabilities        
    Deposits:          
    Noninterest-bearing$654,401  $636,304  $593,388 
    Interest-bearing 1,617,711   1,569,399   1,214,437 
    Total deposits 2,272,112   2,205,703   1,807,825 
    Borrowings:          
    FHLB and Federal Reserve borrowings 27,576   38,629   198,041 
    Subordinated notes 32,523   39,031   24,248 
    Accrued interest payable 312   355   612 
    Other liabilities 20,872   24,730   19,413 
    Total liabilities 2,353,395   2,308,448   2,050,139 
             
    Shareholders' Equity           
    Total shareholders’ equity 223,266   219,041   161,439 
    Total liabilities and shareholders’ equity$2,576,661  $2,527,489  $2,211,578 


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

     March 31,  December 31,  March 31, 
    (Dollars in thousands)2022 2021 2021
    Loan Portfolio           
    Cash, Securities and Other(1)$271,811  $295,948  $363,155 
    Construction and Development 151,651   178,716   110,024 
    1-4 Family Residential 602,412   580,872   452,591 
    Non-Owner Occupied CRE 455,715   482,622   317,457 
    Owner Occupied CRE 212,401   212,426   161,787 
    Commercial and Industrial 237,144   203,584   141,770 
    Total loans held for investment 1,931,134   1,954,168   1,546,784 
    Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net (7,309)  (5,031)  (2,858)
    Gross loans$1,923,825  $1,949,137  $1,543,926 
    Mortgage loans held for sale, at fair value$33,663  $30,620  $176,644 
             
    Deposit Portfolio        
    Money market deposit accounts$1,108,315  $1,056,669  $918,940 
    Time deposits 156,678   170,491   157,072 
    Negotiable order of withdrawal accounts 319,648   309,940   130,540 
    Savings accounts 33,070   32,299   7,885 
    Total interest-bearing deposits 1,617,711   1,569,399   1,214,437 
    Noninterest-bearing accounts 654,401   636,304   593,388 
    Total deposits$2,272,112  $2,205,703  $1,807,825 

    ______________________________
    (1) Includes PPP loans of $16.7 million as of March 31, 2022, $46.8 million as of December 31, 2021, and $190.5 million as of March 31, 2021. Also includes loans held for investment accounted for under fair value option of $6.4 million as of March 31, 2022.


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

     As of or for the Three Months Ended 
     March 31,  December 31,  March 31,  
    (Dollars in thousands)2022 2021 2021 
    Average Balance Sheets            
    Assets            
    Interest-earning assets:            
    Interest-bearing deposits in other financial institutions$474,593  $277,915  $213,577  
    Federal funds sold 1,349   1,491     
    Available-for-sale securities 55,739   36,001   31,935  
    Loans 1,922,770   1,653,919   1,554,990  
    Interest-earning assets 2,454,451   1,969,326   1,800,502  
    Mortgage loans held for sale 22,699   39,112   175,891  
    Total interest-earning assets, plus mortgage loans held for sale 2,477,150   2,008,438   1,976,393  
    Allowance for loan losses (13,715)  (13,224)  (12,541) 
    Noninterest-earning assets 121,650   96,333   100,415  
    Total assets$2,585,085  $2,091,547  $2,064,267  
              
    Liabilities and Shareholders’ Equity            
    Interest-bearing liabilities:            
    Interest-bearing deposits$1,605,314  $1,195,986  $1,163,010  
    FHLB and Federal Reserve borrowings 33,104   49,115   137,626  
    Subordinated notes 32,939   39,017   24,259  
    Total interest-bearing liabilities 1,671,357   1,284,118   1,324,895  
    Noninterest-bearing liabilities:            
    Noninterest-bearing deposits 668,705   608,693   557,707  
    Other liabilities 23,555   19,566   21,151  
    Total noninterest-bearing liabilities 692,260   628,259   578,858  
    Total shareholders’ equity 221,468   179,170   160,514  
    Total liabilities and shareholders’ equity$2,585,085  $2,091,547  $2,064,267  
              
    Yields/Cost of funds (annualized)            
    Interest-bearing deposits in other financial institutions 0.20 %   0.16 %   0.17 %
    Available-for-sale securities 2.42   2.50   2.45  
    Loans 3.97   3.72   3.66  
    Interest-earning assets 3.20   3.20   3.22  
    Mortgage loans held for sale 3.37   3.14   2.62  
    Total interest-earning assets, plus mortgage loans held for sale 3.21   3.19   3.17  
    Interest-bearing deposits 0.23   0.27   0.33  
    FHLB and Federal Reserve borrowings 0.47   0.45   0.38  
    Subordinated notes 4.85   4.89   5.61  
    Total interest-bearing liabilities 0.33   0.42   0.44  
    Net interest margin 2.98   2.92   2.90  
    Net interest rate spread 2.87   2.78   2.78  


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

     As of or for the Three Months Ended 
     March 31,  December 31,  March 31,  
    (Dollars in thousands, except share and per share amounts)2022 2021 2021 
    Asset Quality              
    Non-performing loans$4,309  $4,327  $4,021  
    Non-performing assets 4,309   4,327   4,021  
    Net charge-offs/(recoveries) 57   44     
    Non-performing loans to total loans 0.22 %   0.22 %   0.26 %
    Non-performing assets to total assets 0.17   0.17   0.18  
    Allowance for loan losses to non-performing loans 322.23   317.36   311.84  
    Allowance for loan losses to total loans 0.72   0.70   0.81  
    Allowance for loan losses to bank originated loans excluding PPP(1) 0.87   0.88   1.01  
    Net charge-offs to average loans(2) 0.00   0.00   0.00  
                 
    Assets Under Management$7,199,328  $7,351,840  $6,485,647  
                 
    Market Data            
    Book value per share at period end$23.68  $23.25  $20.29  
    Tangible book value per common share(1) 20.25   19.87   17.24  
    Weighted average outstanding shares, basic 9,418,318   8,043,469   7,935,664  
    Weighted average outstanding shares, diluted 9,762,602   8,370,998   8,103,603  
    Shares outstanding at period end 9,430,007   9,419,271   7,957,900  
                 
    Consolidated Capital            
    Tier 1 capital to risk-weighted assets 11.11 %   10.54 %   10.31 %  
    CET1 to risk-weighted assets 11.11   10.54   10.31  
    Total capital to risk-weighted assets 13.81   13.54   13.11  
    Tier 1 capital to average assets 7.67   9.31   7.35  
                 
    Bank Capital            
    Tier 1 capital to risk-weighted assets 12.01 %   11.40 %   10.60 
    CET1 to risk-weighted assets 12.01   11.40   10.60  
    Total capital to risk-weighted assets 12.82   12.19   11.57  
    Tier 1 capital to average assets 8.27   10.05   7.53  

    ______________________________
    (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 
     March 31,  December 31,  March 31,  
    (Dollars in thousands, except share and per share amounts)2022 2021 2021 
    Tangible Common               
    Total shareholders' equity$223,266  $219,041  $161,439  
    Less: goodwill and other intangibles, net 32,335   31,902   24,254  
    Tangible common equity$190,931  $187,139  $137,185  
                 
    Common shares outstanding, end of period 9,430,007   9,419,271   7,957,900  
    Tangible common book value per share$20.25  $19.87  $17.24  
                 
    Net income available to common shareholders$5,524  $1,917  $5,999  
    Return on tangible common equity (annualized) 11.57 %   4.10 %   17.49 %
                 
    Efficiency               
    Non-interest expense$19,391  $20,530  $15,629  
    Less: amortization 77   4   4  
    Less: acquisition related expenses 527   3,696     
    Adjusted non-interest expense$18,787  $16,830  $15,625  
                 
    Total income before non-interest expense$26,707  $23,117  $23,668  
    Less: net gain on equity interests 1   489     
    Plus: provision for loan losses 210   812     
    Gross revenue$26,916  $23,440  $23,668  
    Efficiency ratio 69.80 %   71.80 %   66.02 %  
                 
    Allowance to Bank Originated Loans Excluding PPP            
    Total loans held for investment$1,931,134  $1,954,168  $1,546,784  
    Less: loans acquired 323,563   360,661   120,839  
    Less: bank originated PPP loans 13,109   40,062   183,005  
    Less: purchased loans accounted for under fair value 6,368        
    Bank originated loans excluding PPP$1,588,094  $1,553,445  $1,242,940  
                 
    Allowance for loan losses$13,885  $13,732  $12,539  
    Allowance for loan losses to bank originated loans excluding PPP 0.87 %   0.88 %   1.01 %  


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

     As of or for the Three Months Ended 
     March 31,  December 31,  March 31,  
    (Dollars in thousands, except share and per share data)2022 2021 2021 
    Adjusted Net Income Available to Common Shareholders            
    Net income available to common shareholders$5,524  $1,917  $5,999  
    Plus: acquisition related expenses 527   3,696     
    Less: income tax impact 129   837     
    Adjusted net income available to shareholders$5,922  $4,776  $5,999  
                 
    Adjusted Basic Earnings Per Share            
    Basic earnings per share$0.59  $0.24  $0.76  
    Plus: acquisition related expenses net of income tax impact 0.04   0.35     
    Adjusted basic earnings per share$0.63  $0.59  $0.76  
                 
    Adjusted Diluted Earnings Per Share            
    Diluted earnings per share$0.57  $0.23  $0.74  
    Plus: acquisition related expenses net of income tax impact 0.04   0.34     
    Adjusted diluted earnings per share$0.61  $0.57  $0.74  
                 
    Adjusted Return on Average Assets (annualized)            
    Return on average assets 0.85 % 0.37 % 1.16 %
    Plus: acquisition related expenses net of income tax impact 0.07   0.54     
    Adjusted return on average assets 0.92 % 0.91 % 1.16 %
                 
    Adjusted Return on Average Shareholders' Equity (annualized)            
    Return on average shareholders' equity 9.98 % 4.28 % 14.95 %
    Plus: acquisition related expenses net of income tax impact 0.72   6.38     
    Adjusted return on average shareholders' equity 10.70 % 10.66 % 14.95 %
                 
    Adjusted Return on Tangible Common Equity (annualized)            
    Return on tangible common equity 11.57 % 4.10 % 17.49 %
    Plus: acquisition related expenses net of income tax impact 0.84   6.11     
    Adjusted return on tangible common equity 12.41 % 10.21 % 17.49 %



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