First Western Financial Sees Optimism in Q4 Earnings Call

First Western Financial ((MYFW)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for First Western Financial painted a picture of cautious optimism among the company’s leadership. While there were positive trends in profitability, loan production, and net interest margin expansion, challenges such as a decrease in assets under management and noninterest income were also highlighted. Despite these hurdles, the overall sentiment was one of measured confidence, with expectations of continued improvement into 2025.

Increased Profitability in Q4 2024

First Western Financial reported a notable increase in profitability for the fourth quarter of 2024, with net income reaching $2.7 million, translating to $0.28 per diluted share. This marked an improvement from the previous quarter, accompanied by a 1.6% rise in tangible book value per share.

Record Loan Production

The company achieved its highest level of loan production in any quarter for 2024, with new loans totaling $94 million, a significant rise from the $83 million recorded in the third quarter. This milestone reflects First Western’s strategic focus on loan growth.

Net Interest Margin Expansion

First Western saw its net interest income rise by 8.3% from the prior quarter, with the net interest margin increasing by 13 basis points to 2.45%. This expansion highlights the company’s effective management of its interest-earning assets and liabilities.

Decrease in Nonperforming Assets

There was a positive trend in asset quality, as evidenced by a decline in nonperforming assets relative to total assets and another quarter with minimal charge-offs, underscoring the company’s strong risk management practices.

Strong Performance in Risk Management and Insurance Fees

The company recorded a remarkable quarter in risk management and insurance fees, generating $1.1 million, which is double the amount from the same quarter in the previous year. This growth emphasizes First Western’s successful expansion in fee-based income.

Decrease in Assets Under Management

Assets under management fell by $145 million in the fourth quarter, driven by net withdrawals and lower market values, which presented a challenge for the company in managing its clients’ portfolios.

Noninterest Income Decline

There was a decrease in noninterest income by approximately $500,000 from the prior quarter, primarily due to a reduced gain on the sale of mortgage loans, indicating a need for diversification in income sources.

OREO Write-Down

A $1.1 million write-down in Other Real Estate Owned (OREO) due to new appraisals negatively impacted earnings per share by $0.08 in the fourth quarter, highlighting an area of concern for financial adjustments.

Forward-Looking Guidance for 2025

Looking ahead to 2025, First Western Financial’s management team expressed optimism about further financial improvements. The company aims to maintain a loan-to-deposit ratio in the mid-90% range, reduce deposit costs, and continue expanding its net interest margin. Additionally, anticipated growth in loan production and enhanced fee income, particularly from risk management and insurance, are expected to bolster financial performance. Maintaining disciplined expense control with noninterest expenses projected around $20 million per quarter is also a priority.

In summary, the earnings call for First Western Financial reflected a cautiously optimistic outlook, with discussions centered on increased profitability and record loan production, alongside challenges like decreased assets under management and noninterest income. The forward-looking guidance suggests a strategic focus on growth and efficiency, aiming to enhance shareholder value in the coming year.