On July 23, 2024, First Western Financial Inc (MYFW, Financial) released its 8-K filing for the second quarter of 2024. First Western Financial Inc is a financial holding company that provides a fully integrated suite of wealth management services on its private trust bank platform, which includes a comprehensive selection of deposit, loan, trust, wealth planning, and investment management products and services. The company operates through two segments: Wealth Management and Mortgage, with the majority of its revenue derived from the Wealth Management segment.
Performance Overview
First Western Financial Inc (MYFW, Financial) reported net income available to common shareholders of $1.1 million, or $0.11 per diluted share, for Q2 2024. This represents a significant decline from the $2.5 million, or $0.26 per diluted share, reported in Q1 2024, and a decrease from the $1.5 million, or $0.16 per diluted share, reported in Q2 2023. The reported earnings per share (EPS) of $0.11 fell short of the analyst estimate of $0.32.
Key Financial Metrics
| Metric | Q2 2024 | Q1 2024 | Q2 2023 |
|---|---|---|---|
| Net Interest Income | $15.8 million | $16.1 million | $18.4 million |
| Provision for Credit Losses | $2.3 million | $0.1 million | $1.8 million |
| Total Non-Interest Income | $7.0 million | $7.3 million | $4.0 million |
| Total Non-Interest Expense | $19.0 million | $19.7 million | $18.5 million |
| Net Income Available to Common Shareholders | $1.1 million | $2.5 million | $1.5 million |
| Diluted EPS | $0.11 | $0.26 | $0.16 |
| Net Interest Margin | 2.35% | 2.34% | 2.73% |
Income Statement Highlights
Net interest income for Q2 2024 was $15.8 million, a decrease of 1.9% from $16.1 million in Q1 2024, and a 14.1% decrease from $18.4 million in Q2 2023. The decline was primarily driven by higher interest expenses due to increased deposit costs. Provision for credit losses surged to $2.3 million in Q2 2024, up from $0.1 million in Q1 2024, reflecting increased provisions on individually analyzed loans.
Balance Sheet and Cash Flow
Total loans held for investment were $2.46 billion as of June 30, 2024, a slight decrease from $2.48 billion as of March 31, 2024. Total deposits also declined to $2.41 billion from $2.53 billion in the previous quarter, driven by seasonal tax payments and strategic investments by clients. Federal Home Loan Bank and Federal Reserve borrowings increased significantly to $191.5 million from $69.5 million in Q1 2024.
Capital and Asset Quality
First Western Financial Inc (MYFW, Financial) maintained strong capital ratios, with a total capital to risk-weighted assets ratio of 13.44% in Q2 2024, up from 13.15% in Q1 2024. Non-performing assets increased to $49.3 million, or 1.68% of total assets, compared to $46.0 million, or 1.57% of total assets, in Q1 2024. The increase was primarily due to the foreclosure on two properties used as collateral for one participated loan balance.
Management Commentary
"During the second quarter, we continued to prioritize prudent risk management and a conservative approach to new loan production, which resulted in our balance sheet remaining relatively flat in the quarter. We also continued to execute well on our strategic priorities including maintaining disciplined expense control, adding new deposit relationships, and generating strong contributions of non-interest income from our wealth management and mortgage banking businesses," said Scott C. Wylie, CEO of First Western.
Conclusion
First Western Financial Inc (MYFW, Financial) faced challenges in Q2 2024, including higher provision for credit losses and increased interest expenses, which impacted its net income. However, the company maintained strong capital ratios and continued to focus on strategic priorities. Investors will be keen to see how the company navigates these challenges in the coming quarters.
Explore the complete 8-K earnings release (here) from First Western Financial Inc for further details.
