First Western Financial (MYFW) Q4 2022 earnings summary

Executive summary

• 2022 adjusted pre-tax, pre-provision income rose 3.4% YoY; tangible book value per share increased 11% in a year many banks saw declines.

• Organic loan growth was 27%; record production offset elevated payoffs, while Q4 deposit growth exceeded loan growth by more than 2x.

• Teton integration finished on schedule with projected cost savings achieved; Wyoming teams began contributing more to loans and deposits.

Financial highlights

• Net income available to common shareholders was $21.7M, up 5.3% YoY; income before tax was $28.8M, up 5.7%.

• Net interest income before provision rose 47.0% to $83.2M; loan growth and a 64 bps increase in average loan yield were partly offset by higher deposit costs.

• Total income before non-interest expense was $107.9M; non-interest income fell 29.0% to $28.4M, mainly on lower mortgage gains.

• Non-interest expense increased 16.1% to $79.1M, driven by Teton operations and added headcount; it included non-recurring system conversion and process-improvement costs.

• Diluted EPS was $2.23 vs. $2.50 YoY; income tax expense was $7.1M at a 24.7% effective rate.

Outlook and guidance

• 2023 outlook called for another strong year, with solid loan growth expected as Arizona, Wyoming and Montana teams gain traction.

• New loan production is expected to remain conservative and highly selective until economic conditions improve.

• Deposit gathering and full banking relationships remain priorities to improve alignment between loan and deposit growth.

• CECL implementation was scheduled for Jan. 1, 2023; preliminary ACL coverage expectations were 75–90 bps of total loans and 30–45 bps on off-balance-sheet commitments.