• Net Income: $2.7 million or $0.28 per diluted share in Q4 2024.
• Loan Production: $94 million in Q4, up from $83 million in Q3.
• Average Rate on New Loan Production: 7.44% in Q4.
• Total Deposits: Increased by $11 million from the prior quarter.
• Gross Revenue: Increased 4.8% from the prior quarter.
• Net Interest Income: Increased 8.3% from the prior quarter.
• Net Interest Margin (NIM): Increased 13 basis points to 2.45%.
• Noninterest Income: Decreased by approximately $500,000 from the prior quarter.
• Noninterest Expense: Increased by $1 million due to a $1.1 million write-down of OREO.
• Assets Under Management: Decreased by $145 million in Q4.
• Tangible Book Value Per Share: Increased by 1.6% in the quarter.

• Warning! GuruFocus has detected 4 Warning Signs with MYFW.

Release Date: January 24, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• First Western Financial Inc (NASDAQ:MYFW) achieved its highest level of loan production in any quarter of 2024, driven by additions to its banking team.
• The company successfully lowered deposit costs, contributing to an expansion in net interest margin.
• There was a decline in non-performing assets, with immaterial charge-offs reported for the quarter.
• The tangible book value per share increased by 1.6% during the quarter.
• Net interest income increased by 8.3% from the prior quarter, contributing to a 4.8% rise in gross revenue.

Negative Points

• A $1.1 million write-down in OREO negatively impacted earnings per share by $0.08 in the fourth quarter.
• Non-interest income decreased by approximately $500,000 due to a decline in gain on sale of mortgage loans.
• Assets under management decreased by $145 million in the fourth quarter, primarily due to net withdrawals and lower market values.
• Non-interest expenses increased by $1 million from the prior quarter, attributed to the OREO write-down.
• The trust and investment management fees only increased by 2.2% year over year, indicating slower growth in this segment.

Q & A Highlights

Q: Can you provide more details about the sale of the large OREO property and its impact on financials? A: Scott Wylie, CEO, explained that the Three Meadows Ranch, a significant property, is under contract with a strong price that will not require a write-down. The sale is expected to close in early February. The other two properties are smaller and have seen interest but are less likely to sell during the winter season.

Q: What is the outlook for the net interest margin (NIM) in 2025, with or without rate cuts? A: David Weber, CFO, stated that they expect to expand the NIM in 2025 without relying on rate cuts. Rate cuts would further benefit the NIM, with an estimated $1 million annualized increase per 25 basis point reduction. The focus will be on loan turnover and deposit growth to improve the average cost of funds.

Q: What drove the strong performance in risk management and insurance fees this quarter? A: Scott Wylie, CEO, noted that efforts to strengthen their planning, trust, and investment management offerings, including insurance, paid off in the fourth quarter. This was a record quarter for insurance fees, and they aim to continue growing this segment to improve fee income.

Q: How is the loan pipeline looking, and what trends are you seeing in loan demand? A: Scott Wylie, CEO, mentioned a significant increase in the loan pipeline, particularly in C&I loans and owner-occupied commercial real estate. The focus on building C&I demand is yielding results, and they are seeing more demand for investor commercial real estate, although their appetite for it is full.

Q: What are your expectations for operating expenses in 2025? A: Scott Wylie, CEO, indicated that they aim to keep expenses flat despite inflationary pressures. The target for quarterly operating expenses is around $20 million, with efforts to drive productivity and efficiency to manage costs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.