First Western Financial (MYFW) Q4 2019 earnings summary

Executive summary

• FY2019 net income excluding the $1.6 million goodwill impairment increased 63% YoY; EPS excluding impairment rose over 83%; loans and deposits each grew more than 15%, and AUM increased 18% to $6.2 billion.

• GAAP net income was $8.0 million, up 41.8% YoY; income available to common shareholders rose 87.6% to $8.0 million, supported by mortgage gains and higher net interest income.

Financial highlights

• Total income before non-interest expense was $64.0 million, up 11.0% YoY; gross revenue was $64.3 million, up 11.3%.

• Net interest income rose 4.7% to $32.1 million; non-interest income increased 19.9% to $32.6 million, led by mortgage loan-sale gains.

• Net gain on mortgage loans sold increased 132.1% to $10.6 million as sold origination volume rose to $640.6 million from $388.3 million.

• Non-interest expense increased 7.2% to $53.8 million, including a $1.6 million goodwill impairment charge; excluding impairment, adjusted non-interest expense was $51.8 million.

• Period-end assets were $1.25 billion; loans totaled $998.0 million and deposits $1.09 billion, up 15.4%, 11.6% and 15.9%, respectively.

Outlook and guidance

• Expected growth catalysts included organic expansion, the Simmons Bank transaction, newer markets including Aspen, Jackson Hole, Vail Valley and Broomfield, and commercial banking verticals beginning with medical and dental practices.

• The February 2020 Simmons Bank agreement covered three Denver-area branches and one loan production office, with approximately $58 million of deposits and $105 million of loans; closing was expected in Q2 or Q3 2020, subject to approvals and other conditions.

• CECL adoption was expected January 1, 2023; implementation work was underway, but the financial impact remained undetermined.