MYFW - Earnings call transcript Q2 2021 | First Western Financial, Inc.

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Operator

Good day and thank you for standing by. Welcome to the First Western Financial Q2 2021 Earnings Conference Call. At this time, all participant lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. now today, hand Profiles. Tony would to conference I speaker your Rossi Instructions] like the to over [Operator of Financial go ahead. Please

Tony Rossi

joining call. Thank thank Western morning Good second us for Financial's earnings you, First today XXXX everyone quarter for Dino. you and

First a team are from this part our slide Chief presentation Chairman Scott Financial Chief morning. management Julie discussion and as Officer; Courkamp, Western's Officer. us Wylie, and Joining Executive We'll use of

Presentations please If of First page you & not the have to the copy of already, Investor a visit website so Relations Western's Events done download presentation.

statements. including I'd materially remind First impact forward-looking of future different pandemic. COVID-XX Before be like we could of company's website. are are by during in implied factors disclaims made call discussed to results and and These conference performance that our or Western also contains earnings would Financial update I begin, actual on the with the call. the in read available The to the respect forward-looking you results factors to release any direct such the to expressed uncertainties Various from you any company presentation. that the to condition statements disclaimers which this cause filings, the forward-looking future involve financial any statements and investor SEC obligation risks company's

press GAAP financial The that, Scott. to intended but the the today and And GAAP not as supplement, non-GAAP the like other measures. well to available substitute reconciliation turn as website with the refer discussed to to Scott? are quantitative over most Additionally, which may to of measures. call be the information directly measures, management I'd comparable non-GAAP to on for contains release the

Scott Wylie

Good Tony. everybody. Thanks right. All morning

of the net $X.XX, up seen before XX.XX%, more quarter, million, quarter Financial On review over call we generated and As share yesterday, opening merger with the results with ROA are of and all then the signing of call agreement an improvement announced acquisition of In for an an detailed Teton discuss a X.XX%, we'll $X.X our quarter second of our results. today, Services. usual start per the income the we first I our the of to we'll which questions. of you've earnings imagine ROE

excluding While growth banking, in our generated banking private expectations, due we gross while our and XX%, our expense non-interest revenue returns operations. has expense realizing segment business, X%. mortgage our revenue delivering operating our largely is still year-over-year times, the share significant we the are by up With underperformed in earnings due level nearly to profitability. mortgage higher exceeding and inventory commercial markets, In we comparison, our expected that On we our a the scaled diluted leverage our housing we're is inflection as our up constraints to segment, of per seeing earnings business growth growth in the four XXX%. up impact reached we're an just positive non-mortgage point pretax growth the a

quarter including business, growth sale development the are prior are parts LA of the Income X% the up where the nearly the over business new despite successful driving Fixed we wealth trust, all in Our of efforts the through year. revenue management, Team lost in fees fourth year last

first loan a in call, small the relatively quarter. As with production we began year growth last pipeline, indicated in loan our the impacted loan we which

loan the pipeline of returned loan we the year, level the quarter, a more of during built production. normalized our has Over and course to steadily second

had in rate increased loan with in significant a total of at the forgiveness loan higher had which XX%. a portfolio, in in -- the loans, each an Notably, across first was production level for level the PPP quarter. of of area annualized well-balanced held loans than we the our second production first investment Excluding quarter,

We accounts. continue a where deposit also to inflows higher cost level our liquidity, low enabled of us intensely non-relationship of the we loan new and fund strong have deposits to high which growth, ran in cost off some

an in the will in good once continues interest the we during trends. second support We our low resulted we again to perspective, believe second see margin deposits history year excess continue and is expect losses. which net fund to very that a a a cost decrease charge we low half a net zero From this in us had long continue deposit have had strong quarter, our the liquidity decline And forward. non-performing our of interest our offs, total assets use growth While going loan income to the will net exceptionally and credit asset with deposits. of good pipeline quality in we enable of

our while Moving X.X%, our increases in the four, value book is value book share slide, per performance financial growth, per improved X.X%. strong to book driving our only earnings our quarter, but share our not tangible increased book value In also value. increased tangible second and

we important and want our overshadow reflects that an in slide our share five, performance the to pretax made trust our the areas. slide new we've a Obviously, businesses. Turning other excluding of was last these we've and private commercial banking, the per shows earnings business mortgage to investment banking, added deck extraordinary segment. This that year management the and progress for don't mortgage year to

So, path foundation this better and slide provides is earnings we sense profitability. built to producing higher sustainable a a the that for

or increased pace of are XX% EPS in the our the from share non-mortgage history. year up segment non-mortgage to and year, second XX% up XX% level the in this the was exceed quarter, totals. EPS to in prior -- earnings earnings Our XXXX per pretax we're quarter, in QX last from highest QX In meet XX% pretax our and on

balanced the quarter, highest million trends the the is had year declined securities year, the June of loans from significantly across period-end portfolio. of we slide as others, demand $XXX.X while rate two cash quarters. payoffs increase We was growth portfolios runoff down at loan throughout far, loan a We prior of the loans levels increased expect exception excluded. elevated growing commercial to with in normalized are resume increased total the PPP from loans. for of the Loan or all when more growth the our which of loans levels, line saw which had to PPP month our at of our prior to $XXX.X we'll production continues quarter Turning net the in with investment million, and faster the this with Loan portfolio. production in $XX.X recover production PPP. than loan excluding rest a our being due six, the basis, to increases, look held On economy million end so we

look deposit Moving trends. at to take seven, closer slide we'll our a

total Our the of decreased million the $XXX.X prior quarter. from deposits end

and million not I that accounted $XX As earlier, mentioned seasonal intensely Moving million in cost accounts. the are remainder intentional and runoff, prior deposit diversification is providing for rate payments, the Commercial deposits banking of base the increased from public our and $XXX of building we'll cost payments, to deposits. deposits the PPP $XXX at we the deposits. million approximately eight, prior to adding PPP-related year. tax runoff from tax were outflows, and our improving loan million runoff. relationship-oriented progress transaction which off in quarter attributable $XXX platform, due Commercial were The funds This our to down decrease ran some of look by loans higher largely slide low more commercial largely

end existing from of under contributions Turning management the new assets increased in total to and accounts our of improving the was management conditions increase and to value The under the accounts any assets balances. investment to $XXX.X as management primarily trust as on the market million nine, well prior quarter. in slide resulting increase attributable

agency investment accounts X.X% increased from XXXX. quarter first million the of or Our by $XXX.X

During management. clients for our approximately growth the second in under quarter, new $XX.X of million accounted assets

for of Julie? I'll the our call further results. Julie Now, over financial discussion to turn

Julie Courkamp

Thanks Scott.

Turning in of to update the We it program the how we an metrics million have slide in quarter. approximately XX, and various $XX.X in second PPP our the loans had second impacted PPP quarter. received forgiveness on participation provided

in net quarter, quarter we on million quarter second in we fees in recognized. be a amount saw million the positive of remaining end impact. balance of to our increased at and loans $X.X remaining the accelerated a the resulted SBA funded in With have This an the fee over seven submitted points SBA. million good additional applications net of the resulted loan in $XXX margin by the PPP in loans sheet PPP forgiveness interest basis which $XXX.X recognition forgiveness During and million $X.X now to

on treatment plenty can loans. so have deposit the of from PPP fund get we our PPP inflows, liquidity to origination facility strong continued utilize we our that have preferred we the resulting capital loan While to liquidity these

Now slide turning revenue. we'll XX, gross to at look

higher although from income a revenue Our the offset of was different. mix of had investment quarter, had net total unchanged revenue gross and we loans. a net the and on significantly level gains which management trust fees, was mortgage decline interest prior the We

the Turning income and net in we at look trends interest XX, to slide margin.

the margin X.XX%. unchanged to margin the net excluded, our accounting the of loans. income increased increase When higher our The PPP-related to quarter. reported interest non XX adjustments net purchase loans On PPP quarter of from are and average net prior interest basis, Our the basis interest from a quarter. increased prior higher due fee PPP X% points and from impact was prior was balances income

With quarter. deposit at of from deposit prior second the at up funds higher the fund a increased liquidity the three in of loan the point the from quarter, ratio basis With runoff to our end a the quarter. prior our to excess saw of XX% we cost deposits, at to utilized cost the XX% end our of the runoff, reduction portion

ratio flat on pricing the year, the a interest originations, slightly loan to continue over in pressure and margin loan loan the see even should lower than believe portfolio. expectation on higher the to existing half which though yields the we level remainder coming new for be Given of second sheet growth the deposit some the we are higher at to our our higher of balance year, net

XX.X% net management non-interest was declined income our quarter. to loans on due XX, fees. slide was to which offset mortgage lower higher and Turning prior a -- This trust gain the investment by from net partially interest

the to management Income an quarter our mentioned year. XX% XXXX. investment over were over and XX, our increased mortgage during by they Scott sale that the as fourth apples-to-apples fees the limited earlier, And LA originations due mentioned, some the loss, of despite our On due the the is additional investment of our excluding which and to markets. increased, and have Fixed prior we've basis, Team housing recognized, prior trust fees for purchase fees the Scott mortgage X% of while slide declined Total is refinancing. met revenue inventory prior management year, in operations. quarter from generated trust when detail As demand provided on up our when lower team, haven't the On expectations originations

mix the purchase decline we production seen, in moving refinances. have the our With of back which refinancing, is and level XX% is roughly XX% historically towards

With decline and a pretax business the saw going or in up XX% With XXth, in this our lower quarter, be $XXX,XXX forward. lower group margin volumes, fixed this to reduce and we annualized the expenses XX%. June lower expect our them about revenue profit mortgage on we

from XX was slide lower expense our and benefits to payroll the attributed expense taxes non-interest incentive $XXX,XXX and declined approximately from to and decline salaries prior The expenses, quarter. lower resulting compensation. by Turning our

XX% ratio efficiency in With the our decline expense, improved the from prior to quarter. in XX.X% non-interest

Given investments during levels of million we're to XXXX. business in more the small $XX.X personnel, expense increase second to our we $XX range a the development half million expect including making

prior We and portfolio by the to credit for loan saw XX PPP resulted points to growth at asset quality, total basis the we'll the a in assets. positive provision slide non-performing This the our excludes loans quarter, was trends of second decreased declined loans XX, provision asset improvement to quarter. basis our largely in and across just requirement points losses a look approximately total end of The $XXX,XXX offset ALLL, acquired quarter. assets brought which XX quality. for at Turning by the of in in which our $XX,XXX our adjusted

Now, turn the call over I'll to back Scott.

Scott Wylie

All right. Thanks Julie.

increase a business the Turning in in in We a offices Wyoming tangible to It's expect the of it throughout to accretive yesterday. less acquisition and savings and further Services to our currently cross-sell are operating relationships and compatible, larger to services, Rocky loan the approach a unique transaction a and bank as Bank to synergies in We've should commercial deposits, short XXXX portfolio, on we with to although model two a operating built that growth that grow half And is generates and core presence cost to our as make our further our for Teton, will the approach we private -- addition operate history believe that and strengthening of modeled commercial strong strengths accretive banking business and company very banking the Mountain earnings our going and increase the cost book with management holding banking announced wealth management team adding loans attractive that integration X.X% we year. collective key leverage, any small X.X% products we economics slide our attractive expand adjusted discuss with a fully larger acquisitions smooth presence investment to we makes Financial Teton strategy, interest synergies, franchise, Wyoming. three our Teton deposit capabilities. Western given demographics further operating Our a XX, two will of a with our of improve Teton, a while has revenue phased opportunities long-term branches which attractive be I'm of environment a the back C&I diversification in once core is trust haven't Wyoming. state our than lending net attractive our scale, expanding in favorable effectively real our more highly used businesses. diversify our very and and in in with for to value more built scale have further estate models, share margin. our and for client-centric bank we values, our the similar base, offering institutions enhance and yields with earned particularly business per with leverage very will part and low risk

be company Hole this Turning Jackson offices to acquisition since XX and although XXXX. XXth to us offices, slide consolidate the we'll our founding two will will XX, this bring XXXX during in total our

Turning to grown and in XXXX total assets. It information million to additional more than slide was in XX, we some has Teton. XXX about founded provided

banking support base it's very can business and the a generating double-digit market the just resources they're They coming non-performing and been also representing credit at and we a rate that steadily points Over XX.X%. growth years, And ROE in X.XX% share and the invest years, in can have particularly their an talent. of total additional further last and both loans seven as scale, of we generated continue an Wyoming to of assets Despite the client small our in in profitable OREO. company market we quality and exceptional believe compound provide, effective loans basis development with building its nicely ROA add deposits. three more and their annual increase with we accelerate relatively

they'll an and They interest this have with positive have a will impact X.XX%. our of margin, points. provide. our yield well-diversified loan net the But composition the that keep will higher cost the see portfolio deposits to how has First we deposit impact low our liquidity growth they and loan we of Turning average loan as yield, XX, loan same deploy loan about base balance costs combined of When that loan shall yield XX our portfolio, yield should a average average on excess level. down their increase Similar -- our that at increase we current with Western, they particularly some deposit break and average slide will basis by sheet.

approximately And one increase meaningful has a add provide our in flow. -- small transaction we'll at The flow flow structure. a ago, The will of increase three with in public order consideration take liquidity creative cash. particularly this XX% to the first transaction the transaction transaction issuing of to our believe franchise multiples fourth relatively a the but be to are very we we're the XXXX stock a more it and in certainly early quality. be reasonable, and potential the is manner quick we'll investors, for stock in quarter XXXX. of our to of quarter of And a to to we'll Since expecting slide the our in XX, do interest shareholders stock using the close this for transaction does. been XX% or and objectives look coming a that's Turning to years to expand

accretion financial standalone raise of the earnings some accretion the including consensus of support we're review of of and forecasts we'll XX, projecting basing technology costs current of to slide do its our earnings that for prior We're off the plan assumptions. sub analyst current but from expenses, as the estimates, coming most performance. XX% saves the acquisition. contracts. as to approximately Jackson Turning transaction of to we $XX million closing impact estimates non-interest that well In estimates Teton's to locations and debt a the consolidation the Teton's We're Hole vendor

of XXXX XX% this efficiencies, scale increased to asset can of performing we profitability, support of resources, growing on further level making financial fee move commercial recurring of Western the sources summary, built our our We in very It high institution a First in of banking operations, our strengthen our believe transaction base, base exceptional team stable impact and with XXX% closer and foundation client and in private will attractive income. bankers deposit provide. place a we quality, savings of that is products a and also positively cost banking us a steadily revenue increase expand expect at positive can that that provide will In the end our we and believe our by Wyoming, presence talented Wyoming thereafter. and additional

outlook. half XX, second we're strong about wrap-up believe well-positioned I'd with to some our for like to slide deliver XXXX. comments We Turning

proposition We for migration our us to strong demographics continue clients characteristics team and into become to a markets, retirees. small for expand successful bank. in to new opportunities creating which our to has where banking built more entrepreneurs to talent already business us. attracting in which development Jackson value popular have destination a and We're see trends help Montana is the in been similar that similar We adding to also the more Hole recently areas has wealthy market, markets Bozeman, has

market coming growth the we another with Bozeman in us believe Wyoming, As nice be could for years.

loan Our second loan should the half the higher lead in increase to of pipeline year. continues to of growth level and

believe unfunded have create potential catalyst also We significant made in loan for amount of growth. We've could hit progress with expecting, year. that commitments QX, net it the our a growth liquidity loan trough higher be saw we -- first another in relative our we're loan to excess good we the margin in we will and of higher future in reducing interest half the and what

and attracting drive momentum We to management new also clients fees. trust management our growth in in business, have good which continue our should investment wealth and

We our quarter in declining likely in remain before third mortgage slower expect the constant quarter. fourth seasonally activity relatively to

stable With and levels, the in improvement should operating our profitability. additional levels expecting further see expense increases growth of we we're revenue in and leverage

take year we're road evaluate Teton happy to on Dino, Teton, growth a add the and particularly fee down acquisition side. well-positioned to we potential deliver please being questions. open our transaction With the another small value other your the that, strong believe And can to with we're we a integration, still franchise, the XXXX. have smooth of further that transactions up have ability call. income relatively with should of in Looking that to bit acquisition organic the

Operator

Hovde Rabatin Instructions] of from All Brett question line right. [Operator First comes from Group.

now live. are You

Ben Gerlinger

Ben on Hey, good is Gerlinger for morning Brett. guys. This

Scott Wylie

Ben. Morning

Ben Gerlinger

does would kind that start kind could strategy do a has that this one one said acquisitions know Teton wondering other more XXXX? boxes a then see need in-market, I whole? I the close to bring for you up can think loan it's structure. that great partnerships, you anything you we this checks from get going Scott, something for Hey. for would if level And perspective. -- that, of late further guys, complement closes higher the and look of First continue you is just off Or the to all Western to portfolio has was could as table similar actually Is that first? you of there XXXX, I teed they other early credit,

Scott Wylie

parts. Okay, question tackle well, let's that two-part two in

like. this We've strategic strong done Springs, reasons and in all, This as of First of market sense share a already you of market these and a in rationale couple -- is them. they we're really as Rock well and market well position Adding in where lot a entering highlighted a a are makes have markets Pinedale new additional attractive. nice, and Jackson, there. we

favorable the a in deposits. is landscape demographics model, yields, attractive, where trust it with state improves our tax laws. business this the they loan are cost our our well course, It Of improves state business aligns to and have

And I deposit think today, equity us think a It's I has that a accretive stable goes know know deposits this It's value to our tangible return stronger that of going cycles. building a having is expand part ROA for attractive base a on really quick common really is our don't and nice in is surplus it earn-back. and earnings. core attractive. I core core people this. base but deposit we part of that all

at deal. a Western, what we the are really with fit perfect similar. client-centric a kind First cultures people have it's think, of nice back. and similar which They a -- we loan So, really is a The very have do focus, our a I here part very a folks, of are big

we overall, those, heartbeat. could it we if one do of So, find in a another

franchise I high be we're partners a really folks. to quality thrilled and think these with it's

in commented too. prepared be we're of as think I remarks a to add to value lot my I going able

that double-digits future organic to parts, now growth Western for corporate these to doing activity, trying that. comes offices we're do every terms going in have We've we of each on before year have are development that we're where an active talked grow three XX in program. First the we growth, M&A office and In calls,

by grow also expansion. We

now. second about of XX a here, couple talked is we've that course, of in The kind dramatic power business particular, opportunity in half the then and acquisition, thing think year, this into three, And mortgages, acquisitions of last Simmons our of then layering offices examples model. the strategic I is Bozeman the are these deal one, launching particularly the the year. we of of we're the third with the adding So, last acquisitions done

So, These corporate have number development be over -- we're time. things an a we and I hope I the we Alan that -- time, and program. do for first of This things Mountain active have met that we here the will working come Chairman of on now. on lumpy, one think Rocky ago Alan can that bear Teton, years I called Bank five fruit

things So, you to know happen. these time going never take are when things and

I our gets is done are looking either be make and hopefully, always for do going right. be to working answers think active bet, I a to that to for next this will priority smooth that these But other this that we things [ph]. your is sure That this year find we on Brett opportunities opportunities. continue additional later year. questions, think or and

Ben Gerlinger

are helpful. Yes, actually, they very

Scott Wylie

Good.

Ben Gerlinger

my more a near-term -- other as you said margin that's basis you remarks. higher Teton, loan Julie, guys you your and know has going prepared geared then you in running of if similar slight that between offload which structure, and growth might which a to add improvement in deposit management, yield guys be loan I is deposit are on outlook question And be an organic have so if it and towards

lift doing the you first of anything for of also punch kind you guys margin in as had organically quarter those what out integration? of combined I bit curious a If what Teton add efforts, if and for full next one-two you're modeled be improvement, a of terms then two that might was

Julie Courkamp

of, above on I at just Mountain margin higher basis on lift expectation a average a ours, entity so already a expectations, notice bit you're our organically, but loan call little little the With an bit nicely Rocky we a in to continue that for the are bit combined and you'll grow and with absolutely talked things should improvement rate. right. regarding think little of in then Yes, kind to the of yields there, see our our fold all is to about being a

So, would than little overall. should the interest organically a and bit our see net a of have interest we margin more net combined entity lift in income

Ben Gerlinger

right. All

Scott Wylie

said portfolio to the the in remarks, Brett that combined loan [ph], lift XX be point basis in side. our We about prepared with

So, I you out. help model think that should

Ben Gerlinger

Got It you. pre-deal organic include the while basis did well. close you're doing as

Scott Wylie

Yes.

Julie Courkamp

Yes.

Ben Gerlinger

you. Got

Okay, sorry. in was I'll step my back Thanks. confusion. That queue. the

Operator

All right.

queue one Next Sandler. the on Clark from Matthew Piper is

You live. are now

Matthew Clark

Hi. Good morning.

Julie Courkamp

Morning.

Scott Wylie

Morning.

Matthew Clark

one but I follow-up pricing, maybe there? last the rate loan growth competitive a you little know question me talked on loan just what little start in -- think, on out weighted then and kind -- to loans side first Just and second, quarter, the of the wanting And average getting for on new were maybe price on quarter? this bit coming a guys a in on about giving more

Scott Wylie

the Sure. our did only prices Well, it's had In loan we to a on provide reality, front minor on pricings flexibility office more folks. realizing. we're impact

loan over we're to being aggressive we're get to not a following and based that that's not win information continue still pricing? offer, and just proposition. more have tried relative competitive, rates do premium value lowest We being we deals on down. the We but market on for not you he Do have asked never very seeing our the competitors Julie them have be the really and

Julie Courkamp

little on of a the rate production a loan bit decline. new of saw the average we quarter-over-quarter, So,

saw the bit family [ph] quarter quarter second to the X.XX based a one it Obviously, of about higher the we and going there's volatility little always X.XX of a the of loan mix quarter. with [ph] it to production. be was mix. was So, And last bit this on contributor a to then four little

C&I would I and And lending that expect So, rate. around produce average bounce down to loans, commercial more the we that brought little a of continue the as the bit. to

Matthew Clark

this then for rate the And growth mid annualized assume year, up kind double-digits Okay. growth you still quarter. teens? talking But thoughts not pipeline about it up, are basis about kind is I loan sounds are high ex-PPP building, on stepping on core overall growth stepping like the from of your what for the or of we you're spoke an looking

Scott Wylie

if year-to-date, that's much, I the we're good the yes, in we going step-up idea. be in of that's second I think half Yes, not I probably where we expect we're and to too think a trouble, to think, be year. But mid-teens and

Matthew Clark

pre-pandemic Great. the what reserve then down Okay. going reserve a growth CECL little I as back from coverage overall on migrate kind you're the just just it, thoughts the to your around And but bit levels, forward? of and are think on and came above maybe you just still

Scott Wylie

strong performance you are justify We're so to getting it bigger from say, months it's and year, be from above for as XX just pre-pandemic we're just standpoint loans credit or significantly trying we PPP Simmons such seen acquisition continuing number. still above the actually over reserve that to -- where conservative a today and were numbers with up the and the the We've we're the last credit last hard better.

where right and a now for from reasonable in trying think know reserve to this into then we that allowance, have, QX. grow that I would expectation think we I we're and So, the what be QX assess we are would

Matthew Clark

I there of Okay. could a will it's assume the up the give $XX.X job quarters, sense new people, to for controlling you of what's expense, I to run of good did a bump just helpful? couple be us up? then just quarter, coal little a million, this driving next guided think, And more the million on but you expenses rate $XX for you

Scott Wylie

want Well, so me part you let its conservative, answer that. ahead? to of Julie's go Julie,

Julie Courkamp

just little It's right. exactly you're a bit added personnel. No,

our and production, add that of added -- that year. of compensation a the roles, to that should second looking as and the of open [indiscernible] We've office. we into been build finally about occurring talking out incentive space we're be up half With the in in increasing rent

a increasing that are there's So, that's of just re-rate. in that few quarter expenses those slightly very coming

Scott Wylie

you drivers, revenue all Future things those listed.

Matthew Clark

left be one on remaining last the just realized? then And Okay. fees net PPP to

Julie Courkamp

$X.X million.

Scott Wylie

$X.X million.

Matthew Clark

Okay. Thank you.

Scott Wylie

you, Thank Matt.

Operator

right. All

Next the Brady from is on queue one KBW. Gailey

now live. are You

Brady Gailey

you. Thank

does the it guys. the the at pull back change start know a growing How are to push either forward at wanted you all, for does acquisition, fit of into profile change, overall And it or the all? I does Teton I growth looks So, if with well like double-digits, company? that perfect that guys you it

Scott Wylie

well. know Well, nice they mid-teens think the the they Jackson the market have three I in markets with there. very and have seen in We're and been quite familiar these growing growth

really So, I don't see scenario where slows down. any that

here. done think cost our And we've cost their I the really or here. make a we've of this, then for saves plus of the synergies saves I I continued great our organic think organic revenue guess, incorporated with modeling in growth growth for lot there's numbers some minus that sort

there's have markets. capabilities. bunch be we three these lot Many completed, a to moved to have there's well. in There's in think be I us to get lot frankly, to to And a interests. hours apart, done management number sell Jackson be think to able once conversion transition Bozeman going completed, I and but this. the interesting or Wyoming but East more whole under that an products We and of of those hard We're the bigger connection markets a of and billion and they Bozeman Denver grow between transaction just the folks Wyoming have go are those the brings that and have a actually affinity five to assets our and services, $X.X culturally, it's to and Coast, believe, that's to on two toolkit shared of going Bozeman, as cultural in lived for opportunity Jackson of beyond people

Montana a both those think easier a in having and accelerate will in of I our presence Wyoming as Western jump So, fifth growth And profile think state, lower risk. the lot frankly, our markets. I in that stronger makes

Brady Gailey

profitability talk you continued is ROA kind of pretty improvement leverage about operating from and Scott, then And nicely here, improved. your already

I the get think you much possibly how think your higher did back points year half go? XXX XXX in it now about do ROA the can ROA? you basis XX much of XXXX, XXX basis basis Or is level? points. the higher running it's right is about -- the Or points, core that How first could was you

Scott Wylie

I need for groups is three to ton those And expertise with seen banks capital you expertise. we've for you And paid high businesses, we that we support that don't a produce don't really only product the we know with on frankly, that, have our XX there's reason Brady, need and historically, now of we And fee to went and high had have leverage there's continue which that. operating when public offices, just years build we that. a And ago, acquisition. XX ROAs. this

on actually ago for mean, growth. producing operating to that of continue IPO offices operating and that this Xx were continue leverage many in into panned non-mortgage any that us said a at generating it's last supported you time, reason over continue that. don't we or we've can't range was hard there's income the the Obviously, it that can at out I times built forever that. years two we've rates many just leverage it that at more going three three this for XX improvement at of you see said. of lot I the think call fee we and on of in supportive it And foreseeable continue. to exactly, you months. see it's As that to organic seen, seen but little I like think frankly, really leverage I And are expertise the that the across multiple of a more the time not But future. the

Brady Gailey

front? kind you're close a the on little we are now the in of step mortgage see we per mortgage a a to quarter. in rate? quarter, quarter second fees think more much Okay. million Or of the And could in second we normalize $X to run see do down new under you started How

Scott Wylie

think just priority we're last forever, it's move. And Arizona's it get has results that structure. now put our particular more We as focused in or people with been expand going and We've seeing to other into platform of been I one for, mortgage to our purchase-oriented And probably six actually a into some I as to Denver new so, for we hard been on. desire talking a boom it's year our quarters five or there. like Metro MLOs on about feel this markets some outside year our attract successfully to

in saw a into here us I got we hire that we're one possibly number working in of new is that got leads another QX, I joining expanding one We've we think Arizona in way. other on think QX. a bigger

feel those Brady, So, I a to like you purchase last been fees know, lot I hate it, a lot. about because fees. that money it replace about promise we year saw like thinking that that that's we'd to But refi of as how we're we've talking with

to that's opportunity over continue consistent this strong getting months business And real operations banks move mortgage revenues, that money, think private We we challenges really important The produce us continue the is opportunities. banking. think to last create of that we cross-selling and work or private a strategically have for a people the good for so. good to on purchase XX notwithstanding

Brady Gailey

Okay, Thanks on and got it. the congrats color for the deal.

Scott Wylie

you. thank Yes,

Operator

on one queue from our Dezellem Next is Capital. Bill Tieton

are live. now You

Bill Dezellem

through to you've mortgage talk ultimately what would being or you. the business, anticipate from grow ability will And shortages that the shortage resolution? to benefit is housing you with the how not resolved? the to degree Scott, Thank able referenced be causing you troubles you

Scott Wylie

years the other attractive the step a the other I of price that markets Well, Denver standpoint from markets situation, XX that current a in relatively lot if country. and back think from were you to ago, we're around

isn't of we're a in Denver that the and lot resort and of living all Phoenix, had gotten benefit life as relatively have folks right? quality desirable you more and and so here Fort expensive anymore, Scottsdale markets desirable cost that like And Collins here. just being realized

going the right, in and that's Jackson Bozeman, that's not slow is I in we're kind it's what wealth, are and handful that. that So, I Jackson to some interesting about Economics Certainly, seeing off. personally connection know to XXX, doing think going right people migration the wealth -- take Bozeman. pressure ultra-high middle of, I of a of, the moving lots the and And selling that now talked

the in and of in Bozeman Mountain another congratulate last with great One -- called to she big similar I just I Jackson. my a this another building one views me And Rocky night with sold style views deal. buy house Bank And in great said, one them on us house.

how really economics out mean, play I it's do that. So, people just interesting and

I what's here. So, happen that's to think, Bill, going ultimately

the expensive. I think because takes a it to for we immigration, builders fill and obviously, it's time then slow be where little to And going demand. the developers more whatnot,

So, we'll time. over that all see normalized here

and control we game I mentioned, MLOs high-producing, for they're as what to purchase-oriented control will but I build team And the important business, really I think that continue that And the seeing on. well-connected, Our only mortgage in to focus -- and can happen that. will I happen time can't but not to is a is it provide and of lot that, is what bringing us us going overnight, allow us. over ain't and benefit to our we're focusing think strategic

Bill Dezellem

or characterized which Bozeman-equivalent, Bozeman as level of and a cost shift be a haven't who Scott markets become even primary have the comment low see of step markets Bozeman with the live but multiple disagree Do burgeoning it the would statement. radar, that And in though on taking market further, people using the your historically is to that next expensive your example, probably see will for one more you that would all some years been as be throughout you markets? West the new previously XX

Scott Wylie

to Yes. -- Wyoming, asked makes of a a I low our think there our Utah nice risk continue Like profitability. we scale we Montana, to into some continue of opportunity these I build you in to current area, further question, one and of think going for to that us then Idaho that's and like us. south the markets lot think into can other incrementally for I a And doing, don't really markets I think build of, and us for I isn't. in that sense grow, can't the franchise really ton kind think and need there's [indiscernible] and way of actually -- when reach Boise I over from we're

Bill Dezellem

Great, thank you.

Scott Wylie

Thank Yes. Bill. you,

Operator

from All the on right. RLH queue Ross one Next [Operator Instructions] Investments. is Haberman

live. now You are

Ross Haberman

allowance on Scott, for acquisition. numbers earlier. questions. The was quick a of the question touched nice I couple have which quarter, upon nice just

you're in Thanks. to of points Give or total. loans adequate XXX at a that's of sense north basis opposed something mix of points you XXX basis today? your I XX-somewhat why think think given as me

Scott Wylie

and that long answer and that short to at have kind I the we zero that. answer answer. think mean, which years scale credit credit of allowance to losses, our last I to look over Well, quality the there's the the then are and we the short a is several

every And really statistic think actually level. is up. answer statistics those good I look improving -- so you already credit short the here credit is from And allowances at

that this a time is answer, But all we Julie that at the conservatively and factors portfolio to crack analytics of allowance I at level that's detail more performance me look like. be it needs want for you and with number consistent look The approach to a be. at team, the a with we the you credit for this whole stuff if explain that we detailed and do as at take factors show and for we I'll can And economic we're to the through provided high suggests and in the that calculating the think team, so what allowance accounting of we're the said, generates the honest Board. And to go I and it methodology kind allowance over to you very that and today. finance So, other more team keep mean, we struggling answer. that have I end where complex

So, of is in calculate? -- Julie how you'd add other terms the we color

Julie Courkamp

be portfolio. operating on the specifically, that as within hard fit at. are two. environmental those economic and based having conditions markets see look know own going we we and we But adjust at that from look another and still impact you or Yes, the just those what's in factors Obviously, we various we in won't perspective, a than factors our on we're the pre-CECL the take and that year have for factors

come at. those all our where and we So, we're things play level of for is like appropriate the allowance of into feel

Ross Haberman

Okay.

or the quick XX, I for that you're forgiveness slide quarter fees slide quarter, XX this $X.X other think Julie, I from two understand PPP was that PPP on did correct? is Just right, the questions. the it fees, billion in

Julie Courkamp

costs, in and LF a PPP of million we fees the in interest the of loan, net Forgiveness quarter. net interest funding income impact $X.X had the

Ross Haberman

Okay. next on apples-to-apples the of million couple go And over the to just more quarters. there's $X.X basis,

Julie Courkamp

had $X.X to the million We That's in net apples-to-apples fee of don't number that's that costs try predict million. on slide, funding the the The from amortization deferred is $XXX,XXX we income to right. the that income in interest that and quarter. expense that of $X.X PPP the

So, apples-to-apples, remaining. we million $X.X had $X.X have then two, million quarter and in we

Ross Haberman

expansion? Scott, more. opportunity Scott to because one And loans? for terms sort up just two office their in additional offices just office the quicker; the open there? bigger the ramp loan growth is Bozeman acquisition, service or can Or in loan one, full really And have Jackson you're stop could going going to to they make be or there of up you what there is you and next just keep of

Scott Wylie

needs higher dealing right, in they're we Rocky you're are in today, limit with Bank Mountain of deal end that the have with our that Bank. office Rocky legal that and borrowers borrowing certainly Mountain than the there Well,

we just bring as by a Mountain and there for the existing combined create Rocky new I've to they're acquisition itself. Again, that the we not can Bank and let about purpose, as their going compete our the I into go opportunity you entity. clients factored in So, additional alone that's clients, modeling to out lenders senior but talked tell excited capacity for

and Rocky In Mountain a the corner has great right the Bank in at the offices one, Jackson at we building really of terms closing; First expansion, Main. two have

we'll over few closing there moving be just after office, the which blocks our a to our the is moment. plan So, is street down at

markets add actually, So, would a but Wyoming, also has other in be we think Wyoming think offices I one. Jackson interest only Montana. in there there And do in we'll of extensive and go to experience, Jackson. I will two team our in to that from not in don't want office second are

nice expansion to that into Wyoming Montana. and this a So, going bridge I our is be really in into think further growth

Ross Haberman

And just final Julie. one for question

accretion maybe starting that X% or basically, what to back X.X%, XXXX share that you're your number? in as much from dollar per with with Going as

Scott Wylie

growth. analyst we So, for why didn't QX after you analysts we're using XXXX core give number our estimates XXXX, for the XXXX that's revise in case strong a

X% got saves. cost So, yes. is And in XXXX, cost XX% think if X.X%, X.X% stays I the it XXX% total we the or be assuming would

Ross Haberman

around And about what that's based a base or starting on something share $X.XX a of from?

Scott Wylie

for are XXXX. $X.XX analysts the think I -- Analyst

Ross Haberman

the XXXX? build of So, off saying? you that base, in X% you're

Scott Wylie

yes. is referring X% to, the what That's

Ross Haberman

it. got I

Okay. Thanks guys. Best of luck.

Scott Wylie

you, Ross. Thank Yes.

Ross Haberman

you. Thank

Operator

further remarks. to no show I any and questions for management like back would turn to right. it All closing

Scott Wylie

I with we'll in Hopefully, that in it's us like business thank new I an First the and you have joining this really Wyoming, core time think to progress All that really see right. everybody at Well, also exciting would Western. we're today. our for West merger partners making and acquisition great

thanks for you. in. quarter. next again So, speaking everybody again look dialing We Thank forward to

Operator

This concludes today's conference call. for participating. Thank you

You may now disconnect.

First Western Financial (MYFW) 23 Jul 212021 Q2 Earnings call transcript