EX-99.1 2 myfw-20230630xexx991.htm EX-99.1 Document

Exhibit 99.1
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First Western Reports Second Quarter 2023 Financial Results
Second Quarter 2023 Summary
•Total assets of $3.0 billion and assets under management of $6.5 billion
•Net income available to common shareholders of $1.5 million in Q2 2023, compared to $3.8 million in Q1 2023 and $4.5 million in Q2 2022
•Diluted EPS of $0.16 in Q2 2023, compared to $0.39 in Q1 2023 and $0.46 in Q2 2022
•Second quarter 2023 included net of tax impacts of $1.5 million related to an allowance recorded on individually analyzed loans, $0.9 million of impairment to the carrying value of contingent consideration assets, and $0.8 million of losses on loans accounted for under the fair value option, with diluted EPS impacts, net of tax, of $0.15, $0.09, and $0.08, respectively
•Book value per common share increased to $25.38, or 0.6%, from $25.22 as of Q1 2023, and was up 5.5% from $24.06 as of Q2 2022
•Total deposits decreased slightly to $2.38 billion, or 0.7%, from $2.39 billion as of Q1 2023, and were up 9.5% from $2.17 billion as of Q2 2022
Denver, Colo., July 27, 2023 – First Western Financial, Inc. (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the second quarter ended June 30, 2023.
Net income available to common shareholders was $1.5 million, or $0.16 per diluted share, for the second quarter of 2023. This compares to $3.8 million, or $0.39 per diluted share, for the first quarter of 2023, and $4.5 million, or $0.46 per diluted share, for the second quarter of 2022. Net income for the second quarter of 2023 was negatively impacted by net of tax impacts of $1.5 million related to an allowance recorded on individually analyzed loans, $0.9 million of impairment to the carrying value of contingent consideration assets, and $0.8 million of losses on loans accounted for under the fair value option.

Scott C. Wylie, CEO of First Western, commented, “Our second quarter performance reflects the strength of the franchise we have built as we continued to see good stability in our deposit base and healthy asset quality despite the challenging operating environment. While remaining conservative and disciplined in our underwriting and pricing criteria, our total loans increased at an annualized rate of 4% despite a lower level of loan demand that we are seeing due to higher interest rates and concerns about a slowing economy. While we experienced some non-recurring expenses in the second quarter, our solid financial performance and prudent balance sheet management resulted in an increase in our capital ratios and further growth in tangible book value per share during the second quarter.

“While economic conditions remain uncertain, we will continue to prioritize prudent risk management and maintain high levels of liquidity, capital, and reserves. However, we remain committed to acting in the best long-term interests of our shareholders, and we will continue to evaluate opportunities for capital utilization that can create additional value for shareholders,” said Mr. Wylie.


For the Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands, except per share data)202320232022
Earnings Summary  
Net interest income$18,435 $19,560 $20,380 
Provision (release) for credit losses(1)
1,843 (310)519 
Total non-interest income3,962 5,819 6,698 
Total non-interest expense18,519 20,528 20,583 
Income before income taxes2,035 5,161 5,976 
Income tax expense529 1,341 1,494 
Net income available to common shareholders1,506 3,820 4,482 
Adjusted net income available to common shareholders(2)
2,440 3,847 4,742 
Basic earnings per common share0.16 0.40 0.47 
Adjusted basic earnings per common share(2)
0.25 0.40 0.50 
Diluted earnings per common share0.16 0.39 0.46 
Adjusted diluted earnings per common share(2)
0.25 0.39 0.49 
Return on average assets (annualized)0.21 %0.54 %0.71 %
Adjusted return on average assets (annualized)(2)
0.35 0.55 0.75 
Return on average shareholders' equity (annualized)2.49 6.40 7.89 
Adjusted return on average shareholders' equity (annualized)(2)
4.04 6.45 8.35 
Return on tangible common equity (annualized)(2)
2.86 7.35 9.16 
Adjusted return on tangible common equity (annualized)(2)
4.64 7.41 9.69 
Net interest margin2.73 2.93 3.38 
Efficiency ratio(2)
74.42 %78.29 %74.85 %
____________________
(1) Provision for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
(2) 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 Second Quarter 2023
Revenue
Gross revenue (1) was $24.8 million for the second quarter of 2023, a decrease of 5.0% from $26.1 million for the first quarter of 2023. The decrease was primarily driven by a decrease in net interest income as a result of higher interest expense driven by higher deposit costs, offset partially by higher interest income. Relative to the second quarter of 2022, gross revenue decreased 8.0% from $26.9 million. The decrease was driven by a decrease in net interest income as a result of higher interest expense driven by higher deposit costs, offset partially by higher interest income.
(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 second quarter of 2023 was $18.4 million, a decrease of 5.8% from $19.6 million in the first quarter of 2023. Relative to the second quarter of 2022, net interest income decreased 9.5% from $20.4 million. The decreases were due to higher interest expense driven primarily by higher deposit costs, offset partially by higher interest income.
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Net Interest Margin
Net interest margin for the second quarter of 2023 decreased 20 basis points to 2.73% from 2.93% reported in the first quarter of 2023, primarily due to a 42 basis point increase in average cost of deposits, driven by a rising rate environment and a highly competitive deposit market.
The yield on interest-earning assets increased 18 basis points to 5.38% in the second quarter of 2023 from 5.20% in the first quarter of 2023 and the cost of interest-bearing deposits increased 50 basis points to 3.44% in the second quarter of 2023 from 2.94% in the first quarter of 2023.
Relative to the second quarter of 2022, net interest margin decreased from 3.38%, primarily due to a 248 basis point increase in average cost of deposits, offset partially by a 135 basis point increase in loan yields.
Non-interest Income
Non-interest income for the second quarter of 2023 was $4.0 million, a decrease of 31.9%, from $5.8 million in the first quarter of 2023. This was primarily due to a $1.2 million impairment to the carrying value of contingent consideration assets related to the sale of First Western Capital Management in 2020. The value was established using asset growth assumptions provided by the buyer, which had not materialized. The decrease in Non-interest income was further driven by losses of $1.1 million recorded on loans accounted for under the fair value option during the second quarter of 2023.
Relative to the second quarter of 2022, non-interest income decreased 40.8% from $6.7 million. The decrease was primarily due to a $1.2 million impairment to the fair value of contingent consideration assets, and losses of $1.1 million recorded on loans accounted for under the fair value option.
Non-interest Expense
Non-interest expense for the second quarter of 2023 was $18.5 million, a decrease of 9.8%, from $20.5 million in the first quarter of 2023. Relative to the second quarter of 2022, non-interest expense decreased 10.0% from $20.6 million. The decreases were primarily driven by lower salaries and employee benefits related to staffing reductions to better align with lower revenue. Headcount decreased 10.5% as of June 30, 2023 compared to March 31, 2023 as a result of the staffing reductions.
The Company’s efficiency ratio(1) was 74.4% in the second quarter of 2023, compared with 78.3% in the first quarter of 2023 and 74.9% in the second quarter of 2022.
(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 $0.5 million for the second quarter of 2023, representing an effective tax rate of 26.0%, compared to 26.0% for the first quarter of 2023 and 25.0% for the second quarter of 2022.
Loans
Total loans held for investment were $2.50 billion as of June 30, 2023, an increase of 1.1% from $2.48 billion as of March 31, 2023. Relative to the second quarter of 2022, total loans held for investment increased 16.4% from $2.15 billion as of June 30, 2022. The increase in total loans held for investment from June 30, 2022 was attributable to loan growth primarily in our commercial real estate and residential mortgage portfolios.
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Deposits
Total deposits were $2.38 billion as of June 30, 2023, a decrease of 0.7% from $2.39 billion as of March 31, 2023, as a result of seasonal factors and a highly competitive deposit market. Relative to the second quarter of 2022, total deposits increased 9.5% from $2.17 billion as of June 30, 2022, driven primarily by organic growth through new and expanded client relationships.
Borrowings
Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $312.6 million as of June 30, 2023, an increase of $51.2 million from $261.4 million as of March 31, 2023, and an increase of $225.4 million from $87.2 million as of June 30, 2022. Relative to the first quarter of 2023 and second quarter of 2022, total borrowings increased to support balance sheet growth and liquidity.
Subordinated notes remained consistent at $52.2 million as of June 30, 2023, compared to March 31, 2023. Subordinated notes increased $19.7 million from $32.6 million as of June 30, 2022.
Assets Under Management

AUM increased by $121.9 million during the second quarter to $6.50 billion as of June 30, 2023, compared to $6.38 billion as of March 31, 2023. This increase was attributable to an increase in market values at the end of the second quarter 2023. Total AUM increased by $226.4 million compared to June 30, 2022 from $6.28 billion, which was primarily attributable to improving market conditions year-over-year resulting in an increase in the value of assets under management balances.
Credit Quality
Non-performing assets totaled $10.3 million, or 0.36% of total assets, as of June 30, 2023, compared to $12.5 million, or 0.42% of total assets, as of March 31, 2023. The decrease was attributable to the two non-accrual loans being paid off during the quarter. Total classified loans decreased 46.8%, to $10.1 million as of June 30, 2023, compared to $19.0 million as of March 31, 2023, driven primarily by four classified loans being paid off during the second quarter of 2023. As of June 30, 2022, non-performing assets totaled $4.3 million, or 0.17% of total assets. Relative to the second quarter of 2022, the increase in non-performing assets was driven by the addition of $8.9 million in loans at the end of the fourth quarter of 2022, partially offset by two non-accrual loans being paid off during the quarter.
During the second quarter of 2023, the Company recorded a provision expense of $1.8 million, compared to a provision release of $0.3 million in the first quarter of 2023 and a $0.5 million provision expense in the second quarter of 2022. The provision recorded in the second quarter of 2023 reflects a $2.0 million allowance on individually analyzed loans, partially offset by the impact of improved economic forecasts which decreased probability of default rates and loss given default rates, which in turn reduced our quantitative model loss rates.
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Capital
As of June 30, 2023, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of June 30, 2023, the Bank was classified as “well capitalized,” as summarized in the following table:
June 30,
2023
Consolidated Capital
Tier 1 capital to risk-weighted assets9.26 %
Common Equity Tier 1 ("CET1") to risk-weighted assets9.26 
Total capital to risk-weighted assets12.41 
Tier 1 capital to average assets7.80 
Bank Capital
Tier 1 capital to risk-weighted assets10.34 
CET1 to risk-weighted assets10.34 
Total capital to risk-weighted assets11.23 
Tier 1 capital to average assets8.70 
Book value per common share increased 0.6% from $25.22 as of March 31, 2023 to $25.38 as of June 30, 2023. Book value per common share was up 5.5% from $24.06 as of June 30, 2022. The adoption of CECL on January 1, 2023 resulted in a $0.56 reduction of book value per common share.
Tangible book value per common share (1) increased 0.8% from $21.85 as of March 31, 2023, to $22.03 as of June 30, 2023. Tangible book value per common share was up 6.7% from $20.65 as of June 30, 2022. The adoption of CECL on January 1, 2023 resulted in a $0.56 reduction of tangible book value per common share.
(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, July 28, 2023. Telephone access: https://register.vevent.com/register/BI8ae2876802dc4a1d986948ac4226140e
A slide presentation relating to the second quarter 2023 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.
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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 Credit Losses to Adjusted Loans,” “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.
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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 lack of soundness of other financial institutions or financial market utilities may adversely affect the Company; the Company’s ability to engage in routine funding and other transactions could be adversely affected by the actions and commercial soundness of other financial institutions; financial institutions are interrelated because of trading, clearing, counterparty or other relationships; defaults by, or even rumors or questions about, one or more financial institutions or financial market utilities, or the financial services industry generally, may lead to market-wide liquidity problems and losses of client, creditor and counterparty confidence and could lead to losses or defaults by other financial institutions, or the Company; 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 credit 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, 2023 (“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
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands, except per share amounts)202320232022
Interest and dividend income:
Loans, including fees$33,583 $32,080 $20,546 
Loans accounted for under the fair value option351 427 346 
Investment securities627 629 418 
Interest-bearing deposits in other financial institutions1,666 1,403 549 
Dividends, restricted stock145 173 14 
Total interest and dividend income36,372 34,712 21,873 
Interest expense:
Deposits15,864 13,092 1,103 
Other borrowed funds2,073 2,060 390 
Total interest expense17,937 15,152 1,493 
Net interest income18,435 19,560 20,380 
Less: provision (release) for credit losses(1)
1,843 (310)519 
Net interest income, after provision (release) for credit losses(1)
16,592 19,870 19,861 
Non-interest income:
Trust and investment management fees4,602 4,635 4,781 
Net gain on mortgage loans774 1,019 924 
Net loss on loans held for sale— (178)— 
Bank fees591 592 590 
Risk management and insurance fees103 127 83 
Income on company-owned life insurance91 90 87 
Net loss on loans accounted for under the fair value option(1,124)(543)(155)
Unrealized (loss)/gain recognized on equity securities(11)10 299 
Other(1,064)67 89 
Total non-interest income3,962 5,819 6,698 
Total income before non-interest expense20,554 25,689 26,559 
Non-interest expense:
Salaries and employee benefits11,148 13,098 12,945 
Occupancy and equipment1,939 1,914 1,892 
Professional services1,858 1,923 2,027 
Technology and information systems831 832 1,076 
Data processing1,052 1,139 987 
Marketing379 391 428 
Amortization of other intangible assets62 64 77 
Net (gain)/loss on assets held for sale— — (2)
Other1,250 1,167 1,153 
Total non-interest expense18,519 20,528 20,583 
Income before income taxes2,035 5,161 5,976 
Income tax expense529 1,341 1,494 
Net income available to common shareholders$1,506 $3,820 $4,482 
Earnings per common share:
Basic$0.16 $0.40 $0.47 
Diluted0.16 0.39 0.46 
(1) Provision for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
June 30,March 31,June 30,
(Dollars in thousands)202320232022
Assets
Cash and cash equivalents:
Cash and due from banks$6,285 $6,920 $11,790 
Federal funds sold— — 385 
Interest-bearing deposits in other financial institutions291,283 288,147 159,431 
Total cash and cash equivalents297,568 295,067 171,606 
Held-to-maturity securities, at amortized cost (fair value of $69,551, $73,570 and $84,742, respectively), net of allowance for credit losses77,469 79,565 87,029 
Correspondent bank stock, at cost13,518 13,222 4,352 
Mortgage loans held for sale, at fair value19,746 9,873 26,202 
Loans (includes $17,523, $20,807, and $21,477 measured at fair value, respectively)2,495,582 2,469,038 2,146,394 
Allowance for credit losses(1)
(22,044)(19,843)(14,357)
Loans, net2,473,538 2,449,195 2,132,037 
Premises and equipment, net25,473 25,383 24,236 
Accrued interest receivable11,135 10,976 7,884 
Accounts receivable5,116 4,713 5,192 
Other receivables3,331 2,396 4,575 
Other real estate owned, net— — 378 
Goodwill and other intangible assets, net31,977 32,040 32,258 
Deferred tax assets, net7,202 6,792 7,662 
Company-owned life insurance16,333 16,242 15,976 
Other assets23,240 23,043 21,960 
Assets held for sale— — 146 
Total assets$3,005,646 $2,968,507 $2,541,493 
Liabilities  
Deposits:   
Noninterest-bearing$514,241 $545,064 $668,342 
Interest-bearing1,861,153 1,846,863 1,501,656 
Total deposits2,375,394 2,391,927 2,169,998 
Borrowings:   
Federal Home Loan Bank and Federal Reserve borrowings312,600 261,385 87,223 
Subordinated notes52,223 52,167 32,553 
Accrued interest payable1,788 1,786 304 
Other liabilities21,399 21,420 23,391 
Total liabilities2,763,404 2,728,685 2,313,469 
Shareholders’ Equity   
Total shareholders’ equity242,242 239,822 228,024 
Total liabilities and shareholders’ equity$3,005,646 $2,968,507 $2,541,493 
(1) Allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
June 30,March 31,June 30,
(Dollars in thousands)202320232022
Loan Portfolio
Cash, Securities, and Other(1)
$150,679 $157,308 $180,738 
Consumer and Other21,866 22,183 26,706 
Construction and Development313,227 283,999 162,426 
1-4 Family Residential878,670 889,782 732,725 
Non-Owner Occupied CRE561,880 536,679 489,111 
Owner Occupied CRE218,651 223,449 224,597 
Commercial and Industrial338,679 340,632 312,696 
Total 2,483,652 2,454,032 2,128,999 
Loans accounted for under the fair value option18,274 21,052 21,149 
Total loans held for investment2,501,926 2,475,084 2,150,148 
Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net(2)
(6,344)(6,046)(3,754)
Loans (includes $17,523, $20,807, and $21,477 measured at fair value, respectively)$2,495,582 $2,469,038 $2,146,394 
Mortgage loans held for sale19,746 9,873 26,202 
Deposit Portfolio
Money market deposit accounts$1,297,732 $1,277,988 $1,033,739 
Time deposits376,147 354,545 147,623 
Negotiable order of withdrawal accounts168,537 192,011 287,195 
Savings accounts18,737 22,319 33,099 
Total interest-bearing deposits1,861,153 1,846,863 1,501,656 
Noninterest-bearing accounts514,241 545,064 668,342 
Total deposits$2,375,394 $2,391,927 $2,169,998 
____________________
(1) Includes PPP loans of $5.6 million as of June 30, 2023, $6.1 million as of March 31, 2023, and $10.7 million as of June 30, 2022.
(2) Includes fair value adjustments on loans held for investment accounted for under the fair value option.

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First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
As of or for the Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands)202320232022
Average Balance Sheets
Assets
Interest-earning assets:
Interest-bearing deposits in other financial institutions$135,757 $127,608 $320,656 
Federal funds sold— — 1,017 
Investment securities80,106 82,106 69,320 
Correspondent bank stock8,844 9,592 1,555 
Loans2,471,587 2,479,644 2,010,024 
Interest-earning assets2,696,294 2,698,950 2,402,572 
Mortgage loans held for sale15,841 7,521 19,452 
Total interest-earning assets, plus mortgage loans held for sale2,712,135 2,706,471 2,422,024 
Allowance for credit losses(1)
(20,077)(20,325)(13,257)
Noninterest-earning assets124,561 125,201 118,302 
Total assets$2,816,619 $2,811,347 $2,527,069 
Liabilities and Shareholders’ Equity  
Interest-bearing liabilities:  
Interest-bearing deposits$1,847,788 $1,805,994 $1,547,901 
FHLB and Federal Reserve borrowings123,578 142,642 20,815 
Subordinated notes52,186 52,135 32,533 
Total interest-bearing liabilities2,023,552 2,000,771 1,601,249 
Noninterest-bearing liabilities:  
Noninterest-bearing deposits527,562 545,670 679,531 
Other liabilities23,850 26,206 19,194 
Total noninterest-bearing liabilities551,412 571,876 698,725 
Total shareholders’ equity241,655 238,700 227,095 
Total liabilities and shareholders’ equity$2,816,619 $2,811,347 $2,527,069 
Yields/Cost of funds (annualized)
Interest-bearing deposits in other financial institutions4.92 %4.46 %0.68 %
Investment securities3.14 3.11 2.42 
Correspondent bank stock6.58 7.31 3.61 
Loans5.47 5.30 4.12 
Mortgage loans held for sale5.82 6.04 4.72 
Total interest-earning assets5.38 5.20 3.62 
Interest-bearing deposits3.44 2.94 0.29 
Cost of deposits2.68 2.26 0.20 
FHLB and Federal Reserve borrowings4.42 3.89 0.54 
Subordinated notes5.47 5.38 4.46 
Total interest-bearing liabilities3.56 3.07 0.37 
Net interest margin2.73 2.93 3.38 
Net interest rate spread1.82 2.13 3.25 
(1) Allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
As of or for the Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands, except share and per share amounts)202320232022
Asset Quality
Non-performing loans$10,273 $12,460 $3,931 
Non-performing assets10,273 12,460 4,309 
Net charge-offs8 5 47 
Non-performing loans to total loans0.41 %0.50 %0.18 %
Non-performing assets to total assets0.36 0.42 0.17 
Allowance for credit losses to non-performing loans(3)
214.58 159.25 365.23 
Allowance for credit losses to total loans(3)
0.89 0.80 0.67 
Allowance for credit losses to adjusted loans(1)(3)
0.89 0.81 0.78 
Net charge-offs to average loans(2)
***
Assets Under Management$6,503,964 $6,382,036 $6,277,588 
Market Data
Book value per share at period end25.38 25.22 24.06 
Tangible book value per common share(1)
22.03 21.85 20.65 
Weighted average outstanding shares, basic9,532,3979,503,7159,450,987
Weighted average outstanding shares, diluted9,686,4019,732,6749,717,667
Shares outstanding at period end9,545,0719,507,5649,478,710
Consolidated Capital
Tier 1 capital to risk-weighted assets9.26 %9.28 %10.15 %
CET1 to risk-weighted assets9.26 9.28 10.15 
Total capital to risk-weighted assets12.41 12.39 12.58 
Tier 1 capital to average assets7.80 7.75 8.00 
Bank Capital
Tier 1 capital to risk-weighted assets10.34 10.29 10.99 
CET1 to risk-weighted assets10.34 10.29 10.99 
Total capital to risk-weighted assets11.23 11.12 11.75 
Tier 1 capital to average assets8.70 8.59 8.65 
____________________
(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.
(3) Allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP. Total loans does not include loans accounted for under the fair value option.

12

First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
Reconciliations of Non-GAAP Financial Measures
As of or for the Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands, except share and per share amounts)202320232022
Tangible Common
Total shareholders' equity$242,242 $239,822 $228,024 
Less: goodwill and other intangibles, net31,977 32,040 32,258 
Tangible common equity$210,265 $207,782 $195,766 
Common shares outstanding, end of period9,545,0719,507,5649,478,710
Tangible common book value per share$22.03 $21.85 $20.65 
Net income available to common shareholders1,5063,8204,482
Return on tangible common equity (annualized)2.86 %7.35 %9.16 %
Efficiency
Non-interest expense$18,519 $20,528 $20,583 
Less: amortization62 64 77 
Less: acquisition related expenses14 37 347 
Adjusted non-interest expense$18,443 $20,427 $20,159 
Total income before non-interest expense$20,554 $25,689 $26,559 
Less: unrealized (loss)/gain recognized on equity securities(11)10 299 
Less: net (loss)/gain on loans accounted for under the fair value option(1,124)(543)(155)
Less: impairment of contingent consideration assets(1,249)— — 
Less: net (loss)/gain on loans held for sale at fair value(1)
— (178)— 
Plus: provision (release) for credit losses(2)
1,843 (310)519 
Gross revenue$24,781 $26,090 $26,934 
Efficiency ratio74.42 %78.29 %74.85 %
Allowance for Credit Loss to Adjusted Loans
Total loans held for investment2,501,926 2,475,084 2,150,148 
Less: loans acquired(3)
— — 287,623 
Less: PPP loans(4)
5,558 6,100 9,053 
Less: loans accounted for under fair value18,274 21,052 21,149 
Adjusted loans$2,478,094 $2,447,932 $1,832,323 
Allowance for credit losses(2)
$22,044 $19,843 $14,357 
Allowance for credit losses to adjusted loans(2)
0.89 %0.81 %0.78 %
___________________
(1) Presented in Other Non-interest income on the Consolidated Financial Summary statements
(2) Provision and allowance for credit loss amounts for periods prior to the ASC 326 adoption date of January 1, 2023 are reported in accordance with previously applicable GAAP.
(3)As of June 30, 2023 and March 31, 2023, acquired loans totaling $225.4 million and $233.3 million, respectively, are included in the allowance for credit loss calculation and are therefore not removed in calculating adjusted total loans.
(4)As of June 30, 2023 and March 31, 2023, the adjustment for PPP loans includes acquired PPP loans as acquired loans are included in total loans held for investment as a result of the adoption of ASC 326. As of June 30, 2022, the adjustment for PPP loans did not include acquired PPP loans, as those were already included in the loans acquired adjustment.


13

First Western Financial, Inc.
Consolidated Financial Summary (unaudited) (continued)
As of or for the Three Months Ended
June 30,March 31,June 30,
(Dollars in thousands, except share and per share data)202320232022
Adjusted Net Income Available to Common Shareholders
Net income available to common shareholders$1,506 $3,820 $4,482 
Plus: impairment of contingent consideration assets1,249 — — 
Plus: acquisition related expenses14 37 347 
Less: income tax impact from impairment of contingent consideration assets325 — — 
Less: income tax impact from acquisition related expenses4 10 87 
Adjusted net income available to shareholders$2,440 $3,847 $4,742 
Pre-Tax, Pre-Provision Net Income
Income before income taxes$2,035 $5,161 $5,976 
Plus: provision (release) for credit losses1,843 (310)519 
Pre-tax, pre-provision net income$3,878 $4,851 $6,495 
Adjusted Basic Earnings Per Share
Basic earnings per share $0.16 $0.40 $0.47 
Plus: impairment of contingent consideration assets net of income tax impact0.09 — — 
Plus: acquisition related expenses net of income tax impact**0.03 
Adjusted basic earnings per share$0.25 $0.40 $0.50 
Adjusted Diluted Earnings Per Share
Diluted earnings per share $0.16 $0.39 $0.46 
Plus: impairment of contingent consideration assets net of income tax impact0.09 — — 
Plus: acquisition related expenses net of income tax impact**0.03 
Adjusted diluted earnings per share$0.25 $0.39 $0.49 
Adjusted Return on Average Assets (annualized)
Return on average assets0.21 %0.54 %0.71 %
Plus: impairment of contingent consideration assets net of income tax impact0.13 — — 
Plus: acquisition related expenses net of income tax impact0.01 0.01 0.04 
Adjusted return on average assets0.35 %0.55 %0.75 %
Adjusted Return on Average Shareholders' Equity (annualized)
Return on average shareholders' equity2.49 %6.40 %7.89 %
Plus: impairment of contingent consideration assets net of income tax impact1.53 — — 
Plus: acquisition related expenses net of income tax impact0.02 0.05 0.46 
Adjusted return on average shareholders' equity4.04 %6.45 %8.35 %
Adjusted Return on Tangible Common Equity (annualized)
Return on tangible common equity2.86 %7.35 %9.16 %
Plus: impairment of contingent consideration assets net of income tax impact1.76 — — 
Plus: acquisition related expenses net of income tax impact0.02 0.06 0.53 
Adjusted return on tangible common equity4.64 %7.41 %9.69 %
* Represents an immaterial impact to adjusted earnings per share.
14