Item 1.01Entry into a Material Definitive Agreement.
On December 5, 2022, First Western Financial, Inc. (the “Company”) completed the issuance and sale (the “Offering”) of $20,000,000 in aggregate principal amount of 7.00% Fixed-to-Floating Rate Subordinated Notes due 2032 (the “Notes”) pursuant to Subordinated Note Purchase Agreement, dated December 5, 2022 (the “Note Purchase Agreement”), by and among the Company and the purchasers named therein (the “Purchasers”). The Notes were issued by the Company to the Purchasers at a price equal to 100% of their face amount. The Notes were offered and sold by the Company to the Purchasers in a private offering in reliance on the exemption from the registration requirements of Section 4(a)(2) of the Securities Act of 1933, as amended, and the provisions of Regulation D thereunder. The Company intends to use the proceeds from the Offering for general corporate purposes.
The Notes mature on December 15, 2032 (the “Maturity Date”), and bear interest at a fixed annual rate of 7.00%, payable semi-annually in arrears, to, but excluding, December 15, 2027. From and including December 15, 2027 to, but excluding, the Maturity Date or early redemption date, the interest rate will reset quarterly to an interest rate per annum equal to Three-Month Term SOFR (as defined in the Notes), or an alternative rate determined in accordance with the terms of the Notes if Three-Month Term SOFR cannot be determined or a Benchmark Transition Event (as defined in the Notes) has occurred, plus 328 basis points, payable quarterly in arrears. Notwithstanding the foregoing, in the event that Three-Month Term SOFR or the alternate rate if a Benchmark Transition Event has occurred is less than zero, then Three-Month Term SOFR or the alternate rate, as the case may be, shall be deemed to be zero. The Company is entitled to redeem the Notes, in whole or in part, on or after December 15, 2027, and to redeem the Notes at any time in whole upon certain other events, at a redemption price equal to 100% of the outstanding principal amount of the Notes to be redeemed plus any accrued and unpaid interest to, but excluding, the redemption date. Any redemption of the Notes will be subject to prior regulatory approval to the extent required.
The Note Purchase Agreement contains certain customary representations, warranties, and covenants made by each of the Company and the Purchasers. The Notes are not subject to any sinking fund and are not convertible into or exchangeable for any other securities or assets of the Company or any of its subsidiaries. The Notes are not subject to redemption at the option of the holders. Principal and interest on the Notes are subject to acceleration only in limited circumstances. The Notes are unsecured, subordinated obligations of the Company and generally rank junior in right to payment to the prior payment in full of all existing claims of creditors of the Company, whether now outstanding or subsequently created, assumed, or incurred. The Notes are the obligations of the Company only and are not obligations of, and are not guaranteed by, any of the Company’s subsidiaries including First Western Trust Bank. The Notes were designed to qualify as Tier 2 capital for the Company for regulatory capital purposes.
The foregoing descriptions of the Note Purchase Agreement and the Notes do not purport to be complete and are subject to, and qualified in their entirety by, the full text of the form of the Note Purchase Agreement and the form of Notes, each of which is attached hereto as an exhibit and is incorporated herein by reference.
Keefe, Bruyette & Woods, A Stifel Company, acted as the sole placement agent for the Offering. Norton Rose Fulbright US LLP served as legal counsel to the Company, and Squire Patton Boggs LLP served as legal counsel to the placement agent.
Item 2.03Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
The information set forth in Item 1.01 of this Current Report on Form 8-K is incorporated herein by reference.
