EX-99.1 2 myfw-20221231xexx991.htm PRESS RELEASE ISSUED BY FIRST WESTERN FINANCIAL, INC. DATED JANUARY 26, 2023 Document

Exhibit 99.1
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First Western Reports Fourth Quarter 2022 Financial Results
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, Colo., January 26, 2023 – 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)202220222021
Earnings Summary  
Net interest income$21,842 $22,906 $14,407 
Provision for loan losses1,197 1,756 812 
Total non-interest income6,561 6,345 9,516 
Total non-interest expense19,905 19,260 20,524 
Income before income taxes7,301 8,235 2,587 
Income tax expense1,830 2,014 670 
Net income available to common shareholders5,471 6,221 1,917 
Adjusted net income available to common shareholders(1)
5,617 6,337 4,776 
Basic earnings per common share0.58 0.66 0.24 
Adjusted basic earnings per common share(1)
0.59 0.67 0.59 
Diluted earnings per common share0.56 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 margin3.32 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.
2

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.
3

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,
202220222021
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 benefits112 98 547 
Professional services87 90 713 
Data processing(2)
— (96)2,428 
Technology and information systems1 1 — 
Marketing— 7 — 
Other(5)54 8 
Less: income tax impact49 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 impact0.02 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.
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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.
5

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.
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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 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.
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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 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
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
Three Months Ended
December 31,September 30,December 31,
(Dollars in thousands, except per share amounts)202220222021
Interest and dividend income:
Loans, including fees$30,203 $24,831 $15,398 
Loans accounted for under the fair value option488 513 — 
Investment securities645 653 225 
Interest-bearing deposits in other financial institutions931 533 109 
Dividends, restricted stock238 109 20 
Total interest and dividend income32,505 26,639 15,752 
Interest expense:
Deposits8,260 2,706 813 
Other borrowed funds2,403 1,027 532 
Total interest expense10,663 3,733 1,345 
Net interest income21,842 22,906 14,407 
Less: provision for loan losses1,197 1,756 812 
Net interest income, after provision for loan losses20,645 21,150 13,595 
Non-interest income:
Trust and investment management fees4,358 4,639 5,184 
Net gain on mortgage loans775 885 2,470 
Bank fees812 586 615 
Risk management and insurance fees924 115 676 
Income on company-owned life insurance88 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 
Other206 85 — 
Total non-interest income6,561 6,345 9,516 
Total income before non-interest expense27,206 27,495 23,111 
Non-interest expense:
Salaries and employee benefits11,679 11,566 11,013 
Occupancy and equipment1,910 1,836 1,588 
Professional services2,027 2,316 2,164 
Technology and information systems1,168 1,172 916 
Data processing1,223 888 3,307 
Marketing500 403 497 
Amortization of other intangible assets77 77 4 
Net (gain)/loss on assets held for sale— (1)— 
Net (gain)/loss on sale of other real estate owned(3)(41)— 
Other1,324 1,044 1,035 
Total non-interest expense19,905 19,260 20,524 
Income before income taxes7,301 8,235 2,587 
Income tax expense1,830 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 
Diluted0.56 0.64 0.23 
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
December 31,September 30,December 31,
(Dollars in thousands)202220222021
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 institutions191,586 156,940 379,005 
Total cash and cash equivalents196,512 165,248 386,983 
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 cost7,110 12,783 2,584 
Mortgage loans held for sale, at fair value8,839 12,743 30,620 
Loans held for sale, at fair value1,965 — — 
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, net2,452,230 2,335,241 1,935,405 
Premises and equipment, net25,118 24,668 23,976 
Accrued interest receivable10,445 8,451 7,151 
Accounts receivable4,873 5,947 5,267 
Other receivables1,973 2,868 1,949 
Other real estate owned, net— 187 — 
Goodwill and other intangible assets, net32,104 32,181 31,902 
Deferred tax assets, net6,914 6,849 6,845 
Company-owned life insurance16,152 16,064 15,803 
Other assets21,457 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-bearing1,822,137 1,505,392 1,569,399 
Total deposits2,405,229 2,167,447 2,205,703 
Borrowings:   
Federal Home Loan Bank and Federal Reserve borrowings146,886 273,225 38,629 
Subordinated notes52,132 32,584 39,031 
Accrued interest payable1,125 664 355 
Other liabilities20,512 19,917 24,730 
Total liabilities2,625,884 2,493,837 2,308,448 
Shareholders’ Equity   
Total shareholders’ equity240,864 234,862 219,041 
Total liabilities and shareholders’ equity$2,866,748 $2,728,699 $2,527,489 
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First Western Financial, Inc.
Consolidated Financial Summary (unaudited)
December 31,September 30,December 31,
(Dollars in thousands)202220222021
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 Development288,497 228,060 178,716 
1-4 Family Residential898,154 822,796 580,872 
Non-Owner Occupied CRE496,776 527,836 482,622 
Owner Occupied CRE216,056 220,075 212,426 
Commercial and Industrial361,028 350,954 203,584 
Total loans held for investment2,476,135 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 sale1,965 — — 
Deposit Portfolio
Money market deposit accounts$1,336,092 $1,010,846 $1,056,669 
Time deposits224,090 186,680 170,491 
Negotiable order of withdrawal accounts234,778 277,225 309,940 
Savings accounts27,177 30,641 32,299 
Total interest-bearing deposits1,822,137 1,505,392 1,569,399 
Noninterest-bearing accounts583,092 662,055 636,304 
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.
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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)202220222021
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 securities84,017 87,340 36,001 
Correspondent bank stock11,880 4,924 1,744 
Loans2,436,273 2,241,343 1,653,919 
Interest-earning assets2,635,360 2,435,431 1,971,070 
Mortgage loans held for sale9,065 11,535 39,112 
Total interest-earning assets, plus mortgage loans held for sale2,644,425 2,446,966 2,010,182 
Allowance for loan losses(16,724)(14,981)(13,224)
Noninterest-earning assets125,355 126,457 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 borrowings212,693 119,025 49,115 
Subordinated notes38,335 32,564 39,017 
Total interest-bearing liabilities1,833,615 1,631,877 1,284,118 
Noninterest-bearing liabilities:    
Noninterest-bearing deposits659,076 673,949 608,693 
Other liabilities21,660 20,103 19,566 
Total noninterest-bearing liabilities680,736 694,052 628,259 
Total shareholders’ equity238,705 232,513 179,170 
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 institutions3.61 %2.08 %0.16 %
Investment securities3.07 2.99 2.50 
Correspondent bank stock8.01 8.85 4.59 
Loans5.04 4.52 3.72 
Interest-earning assets4.93 4.38 3.20 
Mortgage loans held for sale6.44 5.44 3.14 
Total interest-earning assets, plus mortgage loans held for sale4.94 4.38 3.20 
Interest-bearing deposits2.09 0.73 0.27 
FHLB and Federal Reserve borrowings3.61 2.23 0.45 
Subordinated notes5.07 4.45 4.89 
Total interest-bearing liabilities2.33 0.92 0.42 
Net interest margin3.32 3.76 2.92 
Net interest rate spread2.61 3.46 2.77 
12

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)202220222021
Asset Quality
Non-performing loans$12,349 $3,744 $4,327 
Non-performing assets12,349 3,931 4,327 
Net charge-offs95 32 44 
Non-performing loans to total loans0.50 %0.16 %0.22 %
Non-performing assets to total assets0.43 0.14 0.17 
Allowance for loan losses to non-performing loans139.14 429.51 317.36 
Allowance for loan losses to total loans0.70 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 end25.37 24.74 23.25 
Tangible book value per common share(1)
21.99 21.35 19.87 
Weighted average outstanding shares, basic9,493,7329,481,3118,043,469
Weighted average outstanding shares, diluted9,702,9089,673,0788,370,998
Shares outstanding at period end9,495,4409,492,0069,419,271
Consolidated Capital
Tier 1 capital to risk-weighted assets9.28 %9.54 %10.54 %
CET1 to risk-weighted assets9.28 9.54 10.54 
Total capital to risk-weighted assets12.37 11.84 13.54 
Tier 1 capital to average assets7.81 8.18 9.31 
Bank Capital
Tier 1 capital to risk-weighted assets10.29 10.32 11.40 
CET1 to risk-weighted assets10.29 10.32 11.40 
Total capital to risk-weighted assets11.06 11.09 12.19 
Tier 1 capital to average assets8.65 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.
13

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)202220222021
Tangible Common
Total shareholders' equity$240,864 $234,862 $219,041 
Less: goodwill and other intangibles, net32,104 32,181 31,902 
Tangible common equity$208,760 $202,681 $187,139 
Common shares outstanding, end of period9,495,4409,492,0069,419,271
Tangible common book value per share$21.99 $21.35 $19.87 
Net income available to common shareholders5,4716,2211,917
Return on tangible common equity (annualized)10.48 %12.28 %4.10 %
Efficiency
Non-interest expense$19,905 $19,260 $20,524 
Less: amortization77 77 4 
Less: acquisition related expenses195 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 losses1,197 1,756 812 
Gross revenue$29,017 $29,304 $23,440 
Efficiency ratio67.66 %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 acquired234,717 248,573 360,661 
Less: bank originated PPP loans6,378 6,905 40,062 
Less: loans accounted for under fair value23,415 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 PPP0.78 %0.77 %0.88 %
___________________
(1) Presented in Other Non-interest income on the Consolidated Financial Summary statements

14

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)202220222021
Adjusted Net Income Available to Common Shareholders
Net income available to common shareholders$5,471 $6,221 $1,917 
Plus: acquisition related expenses195 154 3,696 
Less: income tax impact49 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 losses1,197 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 impact0.01 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 impact0.02 0.02 0.34 
Adjusted diluted earnings per share$0.58 $0.66 $0.57 
Adjusted Return on Average Assets (annualized)
Return on average assets0.79 %0.97 %0.37 %
Plus: acquisition related expenses net of income tax impact0.03 0.02 0.54 
Adjusted return on average assets0.82 %0.99 %0.91 %
Adjusted Return on Average Shareholders' Equity (annualized)
Return on average shareholders' equity9.17 %10.70 %4.28 %
Plus: acquisition related expenses net of income tax impact0.24 0.20 6.38 
Adjusted return on average shareholders' equity9.41 %10.90 %10.66 %
Adjusted Return on Tangible Common Equity (annualized)
Return on tangible common equity10.48 %12.28 %4.10 %
Plus: acquisition related expenses net of income tax impact0.28 0.23 6.11 
Adjusted return on tangible common equity10.76 %12.51 %10.21 %
15