First Western Financial (MYFW) Q3 2024 earnings summary

Executive summary

• Net income available to common shareholders was $2.1 million, or $0.22 per diluted share, doubling EPS from the prior quarter but down from $3.1 million in Q3 2023.

• Strong deposit inflows, especially non-interest-bearing deposits, which grew 19% sequentially, contributed to improved loan-to-deposit ratio.

• Asset quality improved with significant reduction in non-performing and classified loans, though OREO increased due to foreclosure.

• AUM grew 6.5% in Q3 and 16.7% year-over-year, reaching $7.47 billion, driven by market gains.

• The company maintained strong capital ratios and was classified as "well capitalized" by regulators.

Financial highlights

• Net interest income was $15.6 million, down 1.3% sequentially and 7.1% year-over-year; non-interest income was flat sequentially at $7.0 million, up 14% year-over-year.

• Non-interest expense increased to $19.4 million, up 2% sequentially and 6% year-over-year, mainly due to higher salaries and marketing.

• Gross revenue decreased 1.7% from the prior quarter, mainly due to a problem credit and higher interest expense.

• Net interest margin decreased to 2.32% from 2.35% in Q2 2024 and 2.46% in Q3 2023; spot NIM at quarter end was 2.40%.

• Efficiency ratio rose to 84.9% from 82.1% in Q2 2024 and 78.9% in Q3 2023.

Outlook and guidance

• Positioned for higher loan growth in 2025 as loan demand increases and balance sheet liquidity improves.

• Anticipates net interest margin expansion and increased non-interest income from mortgage business as rates decline.

• Expense target for 2025 is $19.5–$20.5 million, assuming revenue growth.

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

• Sale of OREO collateral and declining rates expected to provide cash for redeployment and lower funding costs.