First Western Financial, Inc. Q1 FY2026 earnings call

• Executed well in first quarter with positive trends in loan and deposit growth, net interest margin expansion, well-managed expenses, higher mortgage banking revenues, and improved asset quality.
• EPS up 85% quarter over quarter, third consecutive quarter of net income and EPS increase.
• Conservative approach to new loan production with disciplined underwriting and pricing criteria.
• Added to banking team, seeing solid loan production diversified across markets, industries, and loan types.
• Tangible book value per share increased 3.3% for the quarter.
• Net interest income increased due to increase in net interest margin and average interest earning assets.
• Non-interest income increased due to gains on sale of mortgage loans, risk management and insurance fees, and trust and investment management fees.
• Non-interest expense decreased by $1.1 million from prior quarter, efficiency ratio improved for sixth consecutive quarter.
• Asset quality improved with decreases in non-accrual loans and NPAs, no loan charge-offs in the quarter, allowance coverage improved.

Loan portfolio: Loans held for investment increased $41 million from the end of the prior quarter. New loan production was $116 million in the first quarter, diversified across portfolios, with an average rate on new production of 6.31% in the quarter. Deposit trends: Total deposits increased $95 million from the end of the prior quarter, with growth in all types of deposits, including a 10% or $35 million increase in non-interest bearing deposits. Loan to deposit ratio dropped below 95. Trust and investment management: Assets under management increased $43 million in the first quarter, primarily attributed to lower market values partially offset by new accounts, with net new accounts and contributions contributing a net increase of $42 million. Trust and investment management fees increased 5.3% from the second quarter of 2025.

• Expectation for the year unchanged from start of year.
• Loan deposit pipelines remain strong, expecting solid balance sheet growth in 2026.
• Anticipate further expansion in net interest margin in 2026 but may not be at the same level as 2025.
• Will remain disciplined in expense control but invest in business for future shareholder value.
• Ongoing M&A activity in markets creates opportunities to add banking talent and new clients.
• No indication of meaningful deterioration in asset quality.

• Various factors could cause actual results to be materially different from forward-looking statements, including factors discussed in SEC filings.
• Economic conditions, interest rate fluctuations, M&A activity impact, market competition, etc., could affect performance.

Q: How many MLOs have been added and mortgage production totals?

A: Added 1 new MLO this quarter, added 7 front office banker type jobs. Mortgage production had gains from $800,000 in quarter four to $1.5 million in quarter one, secondary lock volume was just under $180 million in Q1.

Q: Any other markets keying in on growth?

A: Recruited new market president for Scottsdale, Arizona, excited about hires there, and seeing opportunities everywhere with quality talent available.

Q: Thoughts on net interest margin trajectory?

A: Expect to eventually get back to 3.15%-3.20% NIM, but pace hard to predict, focused on pricing discipline on loan and deposit sides.

Q: Trust business trajectory?

A: Brought in new head of wealth a year ago, overhauled planning, investment management, insurance, and retirement services, launched B2B offering WorkWealth, seeing green shoots.

Q: Deposit and loan growth dynamics?

A: Deposit growth focus for several quarters, loans come with primary banking relationship, loan to deposit ratio sub-95 now, long-term not heading to very low ratios.

Q: Impact of geopolitical events?

A: Not seen negative impact on loan, deposit, or pipeline activity so far.

Q: Loan growth expectation for 2026?

A: Guidance for balance sheet growth is high single digits, seeing loan growth across platform, being selective in owner-occupied CRE.

Q: Deposit rate pressure?

A: Not hearing much pressure to raise deposit rates, clients prefer local banks, have conversion concierge.

Q: New branch plans?

A: Very focused on organic growth, seeing opportunities to bring in well-established teams in adjacent footprints but no immediate announcements.