On April 18, 2024, First Western Financial Inc (MYFW, Financial) released its 8-K filing, detailing a significant recovery in its financial performance for the first quarter of 2024. The company reported a net income of $2.5 million, a sharp turnaround from a net loss of $3.2 million in the previous quarter, and a slight decline from $3.8 million in the same quarter last year. This performance notably exceeds the analyst's estimated net income of $2.14 million for the quarter.
First Western Financial Inc, a notable entity in the financial sector, operates primarily through its Wealth Management and Mortgage segments, deriving the majority of its revenue from wealth management services. The company's strategic focus on these areas has evidently paid off, as indicated by the increased non-interest income and improved loan-to-deposit ratios reported in this quarter.
Comprehensive Financial Performance Analysis
The reported earnings per share (EPS) of $0.26 also surpassed the estimated EPS of $0.22. Total revenue for the quarter stood at $23.3 million, which not only exceeds the analyst's expectation of $22.97 million but also shows a significant improvement from the $13.9 million reported in the previous quarter. This increase was primarily due to a decrease in the provision for credit losses and a boost in non-interest income, which climbed by 19.7% to $7.3 million.
Despite these gains, the company faced a decrease in net interest income, which dropped by 17.9% compared to the same period last year, settling at $16.1 million. This decline was attributed to higher interest expenses driven by rising deposit costs, although it was partially offset by increased interest income.
The net interest margin slightly decreased to 2.34% from 2.37% in the previous quarter, reflecting ongoing pricing pressures on interest-bearing deposits and an unfavorable mix shift in the deposit portfolio. However, the company managed to improve its efficiency ratio to 83.44%, although it shows a decrease in operational efficiency compared to the previous year.
Strategic Initiatives and Future Outlook
Scott C. Wylie, CEO of First Western, emphasized the company's conservative approach to loan production and risk management. He highlighted the strategic priorities that have led to improved profitability, such as enhancing the loan-to-deposit ratio and boosting non-interest income through the wealth management and mortgage banking sectors.
"While economic conditions remain uncertain, we will continue to prioritize prudent risk management and be conservative in new loan production, while focusing on adding new full banking relationships with high quality clients that need the multiple products and services we can provide in banking, wealth management, and other areas," said Mr. Wylie.
Assets under management also saw a significant increase, rising by $388.5 million to $7.14 billion, driven largely by improved market conditions and an increase in market values during the quarter.
Capital and Credit Quality
First Western maintained a strong capital position, with total capital to risk-weighted assets ratio improving to 13.15%. The bank's capital levels are well above the regulatory requirements, affirming its status as "well capitalized."
Credit quality also showed signs of improvement with non-performing assets decreasing to $46.0 million from $51.1 million in the previous quarter. This was primarily due to the sale of a non-performing note and significant principal payments received during the quarter.
In summary, First Western Financial Inc's first quarter results for 2024 demonstrate a robust recovery, with significant improvements in revenue and profitability, driven by strategic adjustments in its wealth management and mortgage banking operations. The company's focus on maintaining a strong capital base and improving asset quality positions it well for sustainable growth amid ongoing economic uncertainties.
Explore the complete 8-K earnings release (here) from First Western Financial Inc for further details.
