First Western Financial (MYFW) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $1.1 million ($0.11 per diluted share), down 28.6% year-over-year and sequentially, with pre-tax, pre-provision net income of $3.75 million.

• Tangible book value per share increased 0.2% to $22.27, and book value per share rose to $25.55, reflecting strong balance sheet management.

• Prudent risk management, conservative loan production, and disciplined expense control were maintained, with non-interest expense declining sequentially.

• The company operates in wealth management and mortgage segments, with $7.0 billion in assets under management as of June 30, 2024.

• Total assets as of June 30, 2024 were $2.94 billion, a 1.3% decrease from December 31, 2023.

Financial highlights

• Net interest income for Q2 2024 was $15.8 million, down 1.9% sequentially and 14.4% year-over-year; net interest margin was 2.35%, up 1 basis point from Q1 but down from 2.73% a year ago.

• Non-interest income was $7.0 million, down 4% sequentially but up 76% year-over-year, driven by higher mortgage gains and lower losses.

• Non-interest expense decreased to $19.0 million from $19.7 million in Q1 2024, but up 2.6% year-over-year due to technology and occupancy costs.

• Total loans held for investment were $2.46 billion, down $20 million sequentially and 1.6% year-over-year, with new loan production of $50 million at an average rate of 8.35%.

• Total deposits were $2.41 billion, down $118.1 million sequentially due to seasonal and client-driven outflows, but up from $2.38 billion a year ago.

Outlook and guidance

• Management expects improved profitability in the second half of 2024, supported by positive trends in loans, deposits, and business development.

• Non-interest expense projected to remain stable, with incentive compensation as the main variable.

• Deposit base expected to stabilize or improve, supported by new hires and business development.

• Continued investment in talent and technology, and optimization of the Wealth Management business, are planned for long-term growth.

• Management expects continued pressure on net interest margin due to competitive deposit markets and higher funding costs.