MYFW - Earnings call transcript Q2 2022 | First Western Financial, Inc.

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Operator

Good day, and thank you for standing by. Welcome to First Western Financial Q2 2022 Earnings Conference Call. [Operator Instructions]. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tony Rossi of Financial Profiles. ahead. go Please

Tony Rossi

Good us Justin. XXXX and you thank Call. Thank for morning, First joining today Quarter Western for you, everyone, Financial's Earnings Second

Joining Financial and Scott Operating Officer. team Executive Western's and Chief us and Officer; Chief Chairman Chief are Courkamp, Julie from First Wylie, management

We a as slide part this our discussion will use morning. presentation of

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

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

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

Scott Wylie

Good Tony. Thanks, everybody. morning,

total a second $XX that results bank our level focused new for company. perspective, about We on $XXX we've put demonstrate was production we that our rate million which Financial platform, few To the XX%, the years, the which and quarter. a amount translated was second an building portfolio, XX% of $XX Over or was strong acquisition. million This quarter into progress exceptionally than end QX, we added increasing in loans an with stronger rate in Services our of production the Teton loan the annualized this had in more from prior million loan record coming in C&I the made. in loans significant with at the commercial quarter our highest growth the up of past loan

like markets in. continue that on machine I capitalizing conditions is it's the operate to economic the in the to say, that working to we way we supposed and work, strong growing attractive see As the we're

value the finding commercial compromise without the we that on to and opportunities or our expertise Given proposition offer, banking good structure. are pricing having teams lending

have general, Our base the of client user of on doesn't businesses of aren't end and constraints by much companies, and their chain inflation lot knowledge impact based an demand. consists a in supply impacted

So we good macro to to growth. they opportunities despite the headwinds, fund have continue perform well, continued and our

to Another family growth significant portfolio. X-X loan contributor our this our quarter was production residential

lending. At opportunity the percentage we attractive it total commercial new given to in yields add may current opportunities production in to Over done to a we longer choose environment. expect -- to the as high-quality portfolio assets production the of grow portfolio this we loans when as grow with decline point earning provides time, as continue this a new our term, risk-adjusted

the model. one mortgage don't conforming attract it's sellable the the over loans in a we deepen when relationships way get new then produce offensive our of bank have attracting more that overall operations From our standpoint, have it's mortgages to of type clients our importance is ensures our both defensive MLOs use even standpoint, needs with indicated can across we've to demand that ARMs we time. we're As a meeting limited retaining we mortgage. in business compelling that And they clients that it From the for the offer MLOs bank the so the go to tools of in differentiator jumbo we street an strategic and institutions. be to advantage may their to the in terms mortgages operate and declining. we of can portfolio, they at other for this attractive high-performing And which becomes past,

our second the liquidity With and were significant mix earning assets another our the earning well with a that exceptional able controlled, at able costs environment, higher remaining of the more to despite we're favorable and our of the more loan asset generate, And quarter growth total basis assets redeploy of and assets. see challenging nonperforming seeing remains immaterial in that charge-offs. in saw that deposit quality XX expansion we Along quarter. net more assets strong net to with interest an just points amount economic we remain of on a with margin rates we're excess

X. or net Slide of $X.X $X.XX generated Moving acquisition-related are per or per to expenses second excluded. share million the in share when We diluted $X.XX income quarter

that had in wealth While management increase in gain net revenue quarter interest in to a in the and our net than and balance both resulted growth a significant sold. income, strong mortgages due sheet earnings were prior our -- we interest decline a market on unfavorable lower significant conditions

book to to to in year continued liquidity and value investment than per our retain profitability portfolio. our into the value putting decision drive we from increases benefit strong tangible last rather cash in excess as book share strategic it our continue However,

are much through the we So that to invest liquidity plenty had and of providing higher yields. loans in now securities quarter

banking, We'll at Wealth and private our earnings This represented trust the Slide management businesses. segment. is of commercial to by the of performance pretax banking, look investment Management our Turning X.

segment doesn't this perform a well, you a this business see, although As drag on accurate mortgage picture. present core the earnings was can continues to while quarter, completely the completely very

income the the in generated expense by is Wealth segment, the operations all the mortgage to Management recorded segment. recognized add interest we mortgage While loans in in that our portfolio our the

even to that results pretax a we're in isn't segment value the there for reflected loss in the showing overall quarter, the mortgage our second So segment being reporting. is significant though provided

Slide Turning look our We'll loan portfolio. in X. at trends the to

loans payoffs the level our prior total of Our we production high as loan that of $XXX end offset quarter the level record the continue increased million from of to see.

during had attractive on quite our loan quarter. are than the We what production were production portfolio $XXX loan a quarter, of of loans the categories. loans of the period higher had Our the X-X of ARMs towards yields. end of end and million most was added diversified our bit family that come average and increases we Most to across well our residential major provide risk-adjusted jumbo we

So third we interest terms of quarter tailwind driving going have nice a net into higher income. the in

a take our at Moving closer to look deposit Slide We'll trends. X.

well offset some and deposits were commercial in with the we with for withdrawals related investment new deposit the end as during the million operating development deposit inflows some We total accounts accounts prior see new decreased to of of second relationships to tax opportunities. some Our of the seasonal providing quarter. fluctuations quarter. the that able was outflow $XX million outflows in $XXX payments The for decline typical as due

and on trust X. to investment management Turning Slide

trust to declines $XXX decreased due impact the million Our under in most significant quarter the assets in balances. with the management from investment coming end market total managed prior of the agency

that, a benchmarks our as would good portfolios moderating outperformed The severe accounts. financial increase of investment our With did the inflow job note of $XX their of on decline a I'll was Julie the turn over all discussion that I Julie? to our to very results. value million team market client assets due of in Although for market management partially new of call by pullback assets. the of impact offset a lower

Julie Courkamp

Scott. Thanks,

revenue. at our Turning to We'll Slide X. look gross

trends was we'll quarter increase as the interest net was On prior Our with Slide total income. and essentially at the by margin. in look offset in net XX, gross income flat our interest lower noninterest income the revenue

interest the net XX% prior margin. and our income net Our balances loan due interest higher quarter, to primarily increased increase in average an from

last increase quarter, interest in portfolio, higher contributed As given we net investment also to income. started interest to we rates, which the grow indicated our have

net interest XX in to increased margin Our second points the quarter basis X.XX%.

the points margin XX acquired Excluding and fees increased loans, our of X.XX%. basis on impact accretion PPP to net interest

benefited point margin increase held excess liquidity yields increase assets XX the average the as our point and basis yields balances in had loan we with offset we into loan well deposits. favorable our a our in in portfolio cash earning mix other institutions. and shift of redeployed in more assets as interest of basis financial as cost mix X XX a net more Our the than earning The higher favorable of our basis from point increase

our and we given continue had the in that forward, our we asset-sensitive of opportunities expect to interest to not we grow a increase sheet, the net going expect at loan While seeing quarter. in margin, the level portfolio second same cost see our continued although balance expansion our in to larger deposits

Slide to XX. Turning

Our noninterest have On prior equity offset management lower XX, unrealized we the details were fees our lower gain mortgage from to mortgage resulting by trust income and loans. $XXX,XXX approximately due These AUM XX% performance on investment quarter, on and some decreased by from provided declines primarily net Slide caused market gains securities. lower the in on partially additional operations.

increased quarter. the mortgage total prior operations Our XX% from

is traditionally locks declined mortgage volumes into our than as the Although, ARMs increase portion were originations in retained housing XX% of segment from refinancing as of the sale, volume market. decline by which we recognized mentioned, in volumes on jumbo when in the more offset we revenue as held for in is saw mortgage prior the significant quarter, the for the purchase entered season a loans we Scott strong that the The portfolio.

locks were second in lower levels and resulted in our the operations quarter. level While of prior mortgage for quarter, the with the revenue flat loss a expense

we our Scott interest account as does for in mentioned, we not the loans that income retain Although generate this from that portfolio.

XX Slide to and expenses. Turning our

but increased $XX.X Our the of to from noninterest in X% prior range million. anticipated our quarter remained million $XX.X expense

commission our Excluding in loan mortgage in our Jackson Teton begin expect acquisition-related production and talent invest result from the which acquisition, our Hole to and expense growth. a from in in higher as in lower and salaries banking our of increase cost in in the in the on support banking are production. the new We pipeline using a and which our to in to an we expenses, system continued combination level efficiency noninterest which savings bankers of of to resulting investment noninterest expense resulted their built higher ratio, and new direction payments talent of contributing due to employee talent. mid-May, banking income more The consolidation trend new portion completed investment strong increased branches had conversion will we the the positive new

to $XX.X million we remainder of year, expect to expense the range million. $XX.X the noninterest Over our from

our Slide at to XX, Turning we'll look quality. asset

We the continue to across positive portfolio. trends see

assets assets, Our of losses minimal remain portfolio. in to see points continue at XX nonperforming basis total and we the

process largest now We workout are property received the our as the that And OREO. in of of loans. nonperforming part a resolving in is plan, residential successfully we held

which reserves we total quality required specific result growth recorded losses loan. lowering total portfolio. of of strong experienced of specific released release a credit portion have we also loan held receiving specific $XXX,XXX As of provision offset loans, had the level the low release loans. and against the provision of for the losses this a of to approximately the as the for reflects XX in ALLL this our basis our The property, reserve points in a reserve effect of a from We adjusted the

Now to I'll back it Scott. turn

Scott Wylie

Thanks, Julie.

Slide with some up comments XX. about our I'll outlook. wrap to Turning

further We of in growth. half second balance year, quarter we organic continue trends primarily the of experienced sheet to second the positive expect the by the many driven in

pipeline of loan very consistent the size the the the remains of first at and Our end strong quarter. with is pipeline

in built focus increase, present loans, we'll lending As and with most which commercial see point demand likely platform, classes production are to loan attractive flexible be experiencing for given and the to the estate we've lower at a strongest on well-diversified real whatever rates opportunities time. ability demand provides any loan us the it's start but asset

production high commitments which so potential million, another It's to would utilization change, than expect in production quarter the that payoffs catalyst loan increase, start as level a we if XX% experienced even our of new of might pricing So the loan unfunded strong maintain increase. the year. in underwriting rates we loan mix that while less moderate we experienced to of likely and increased loan first in we the our second a criteria. as will also by to discipline to originations, see headwind half also of growth rates growth The still for $XXX present represents

continued confident Given growth. to this feel with second net generating in half Combined margin, the interest all loan the increases result further should net these in strong significant we interest in year. trends, the in our our income ability expansion in continue of

in to we expect our move through into remainder We're As should of Montana of and improvement pipeline as of leverage portion operating the which acquisition, investments we year. going in translate and the slightly a we're from continuing better investment like expense the funding talent newer also over well as areas, a a seeing grow in Julie to add rest contribution revenue markets Teton Colorado. mentioned, as efficiencies. savings We're our presence with to so expand through Arizona cost levels increase phase larger growth new the in we the these in as steady and the these new year the

banking we're systems business investments growth. X of broader also new making of as upgrading to technology part support to management trust future and modernization addition our core initiative. in talent, our our infrastructure We're In investment and in technology

downturns, the better that user capabilities while historical And performance will systems, during the fintech and flexibility as enhance fee continue other to recession, more concerns the most throughout relatively greater conditions market, we I about Great With -- opportunities. during a features, tools income past crisis. see to about reporting strong finally, more talk well the notably a want take our minutes economic more a of we'll from efficiencies, Recession our in economic interface, as clients experience with to resulting value upgraded the our broader few a credit future financial create the to more serve have add create potential improved

well performed very was of Our the that Great reasons. loan couple Recession, for portfolio during and a

have strong And individuals of First, worth periods credit, economic and to protect contribution the balance loan happy newer stress This and with portfolio and will underwriting your from we're of conditions consistently that, through a we well quality some an particularly have duration. If if of one that which status. the very any our asset exceptionally we our we're credit questions. see expect demand and through And we has losses growth, our our in that cash of feel environment, and relatively base, served to manage low weaken, us we've X credit conservative to client value. we sheet be help very and as our have economic With balance sources repayment. could continue financial maintain profitable recession to level strong to this to loan strength high in remains conservative economic larger of that keeping markets. grown when to to approach well stress. strong, companies shallow liquidity loan continue effectively through flows low of we If very goes of deviated and strength us occurs take a into would start requires sheets generating consists manage shortened net believe to which in second, we losses positioned credit. approach franchise, nonperforming strong that even not Accordingly, from conditions economic terms criteria particularly and shareholder

Operator

Instructions]. question Hovde from [Operator Brett comes first And Group. from Rabatin our

Brett Rabatin

have average, versus mix the balance Scott the above margin? quite to and June the given Would been happen have the margin for in sheet quarter. ask June the Julie, bit it first to change wanted like seem quarter the you margin shift in the just a would would

Scott Wylie

X.XX%, in interest and net was was in May I do. The was June in average margin X.XX%. April X.XX%,

right is on, guess Brett. your So

Brett Rabatin

ability quarter. sensitive mortgages, mortgages, but portfolio? movement decision to the that, to the balance understood talk It jumbo to the about tax make in just less open a I like took wanted the those that be seems the less Can changes on you partially market. would adding put might to then assume sure you And those sell to become to giving maybe linked with the maybe asset I sheet Okay. the

Scott Wylie

the talked portfolio. is up. seen jumbo those that Yes. secondary reasons, doing the their them the for We correct. are dried And of your some about question people ARM now market but We've are doing

don't want MLOs, in for through world. go and we So as be they a the mortgage competitive starve our we here difficult to make period sure

put of and having the all them, to XX-year so helpful on is And ARMs. frankly, portfolio ability to some those to us. They're X- and the helpful X-,

there's managed us that So going on assets adding they're those going not have rate, is certainly floating of variable attractive monthly forward. makes lending is, balance commercial but well less to And sheet. C&I most risk the asset risk-adjusted like sensitive our certainly

on increase the cash have into as impact. the I quarter, that the think We will so we end that the quarter. of reduction than coming in the but were certainly balance and asset-sensitive, still we're the with less sheet there, think of

Brett Rabatin

then And queue. look at million And you hop just have then the only cash of I'll on betas the liquidity How what points the lastly, do of helpful. of to and you the think do That's end you deposit the much deploy? the would during in be Okay. of back cost in funds quarter? left the at $XXX increase here given basis XQ? X How much from assumption

Scott Wylie

hard Yes. to want to to beta, a of add questions. depth if I'll say. then those it. Julie, stab at it's more you take And Deposit a both little

we different has seen, more markets the that, little bit like little expected into We see at our low Each year first further been. a a is increases would And with be that we've than there. as too. rate pressure then got it higher probably of

historically. areas And overall. higher we'll been So to beta predict. we've cash going be where see relatively I so a seen from to trust our But everything think it's it of as couple low like it's is difficult deposit has far,

I us, And over would the in since with seen growth. back in And interestingly, to are. numbers terms of we term, we years with loan deposits we're are to be continue XXs. we we've historical which think be have overall find terms where for our where in long opened, liquidity, In been kind in ratio. high our expect tended to loan-to-deposit XX liquidity. fund comfortable line the able consistently increase an about to now of Obviously, we've of to we we That's

Our these depositors. large clients be tend to

over. them want When them them, of at client need large Our elsewhere. them, and the take don't type to deposit they'll tends bring when have we they'll we balances margin. And

we're I I be in continue to on that to future the would going able manage those questions? I past. X have we to reason see Anything So think that there, the change. Julie, missed in in as any don't

Julie Courkamp

covered you it. think I Yes,

Operator

[Operator comes Gailey next And from Instructions]. KBW. Brady our question from

Brady Gailey

talked mid-teens I Western growth. know a we've loan of about level for First

still You one-off guys than the year? obviously Or you about think did growth a outpace you'll we half think that quarter. in back is just XQ lot of of that think really How should second mid-teens quarter? for the good loan kind better the do you level? Do a

Scott Wylie

think Well, quarter second enough about actually remarks in going talked to we we small our balance quarter the before my than see I variations had of the prepared quarter. just we've sheet going went -- that all -- we're number with But third we to loan is higher be that mean, going one, quarter-to-quarter. reasons into pipelines talked I growth. loan continued into what they're that the

volume rate. have and numbers a you So our to in terms would of I continued for tell that's strong, be trend. July both favorable

continued growth there. seeing So nice we're

and beginning X.X% Our ago X.X% went X.X% July, X.X% we from we down thinking were May, April, down June. percent of down X think, March, up in days come to that in beginning I might to And balances a in that, in as about were down balances. now as of payoff slow X.X% in actually balances, have they through, rates

NIM Colorado. we're originations. Arizona, about her seeing here We're slow demand strong good and in seeing So loan and in in Montana is We've these payoffs improving. comments down. added spoke for that Julie Wyoming new lenders in

higher strong slowdown are pretty and think. those offset I rates, help all that So tailwinds would economic

Brady Gailey

ratio points. All about you loan have come Do with Or level is things building more be downside? percentage, a right. down. you to It's think And ratio? it start there? that at and has XQ's should loss know now on improved is of XX reserve think the there uncertainty, that kind basis economic the flat Or that floor then I from as

Scott Wylie

at the basis We me mark look just stab correct own a when adjust around take loans points, PPP because if them. as purchase Julie. here. I have could I'll that, XX at then on purchase go and it And out don't Brady. you We their loans

loans, And was pre-pandemic. quality is this quarter, just so down brought ratio quite levels bit than you originated pre-pandemic better take and that bank if we to our it the asset a

reasonable. So we points, thought to XX was basis Did that that us get that, Julie?

Julie Courkamp

points XX adjusted, us, basis for yes.

Scott Wylie

Yes.

from of going we bps, So XX that, lower want of course. mind, Brady, adjusted of back be don't the CECL it's and we and too, that anticipate know in our to what today. we mindful

Operator

[Operator And Instructions]. from our Matthew Clark from next question Sandler. Piper comes

Matthew Clark

the How trend willing let with ratio. of here that Scott to fund quarter It ratio and that you to July. comparable deposits match, to able you go? be there's level. probably with side kind momentum growth in on and at of won't loan above that loan-to-deposit are on high Assuming like the sounds some being last momentum fair still pipeline Julie, loan-to-deposit the just amount a

Scott Wylie

when years. was certainly the We've deposit small balances have Well, obviously, seen, do causing it such the what a quarter comes wondering this liquidity the a percent people bank in been And that out, does a of rewonder deposit over overall in ours what's the like question for the that -- our got all last deposits this what markets. added to to with us, was couple the as historical into of Fed we by economy declines. into

in the I declines. And the her at we And it's declines. all in mentioned as into deck. our And slide second what dive in quarter what deep a Julie did causing significant is deposit and know one? the so looked was comments, the think we I To deposit

Julie Courkamp

this where is you gives And kind the identified kind payments, purposes. tax go that We see deep which of for is did we then bank out their movement. we've normal with their moves seen cash, dive seasonal we investment of of And some their accounts headed still is time. just commercial the X are we the when clients fluctuations. investing what and think just of about some that operating were Scott making having own I Slide typically saw

So from perspective, I we where at good feel that on deposit we're pretty side. think about the

course, Of mentioned, our pretty a loan-to-deposit heavily and ratio historical feel that to. ability different we're liquidity feel we need in as monitoring of to have lot like those about pretty Scott deposits places. And we they raise as good

a of have we balances lot We high in we if need bring clients typically to. with that can

deposit ability planning flexible to to going mindful to the and as our cost we remaining as of well loan we're pipelines future of continue the those with look the be bring gathering So that our the we're of gathering on strong. But be well. work in on deposits kind development as pricing those very as just and here pretty additional to into business in

Scott Wylie

the I feel we're little pressures today. like and what unprecedented is Fed bit we're financial doing seeing between times the inflationary a

have been I you quarter the to we and But a very to -- That's been XXs. consistently. lot and been had at deposits it's XX in worked So the us say hate times, well grow ratio next for loan-to-deposit mean, able to consistently years. going is we high at least last look have for like us, manageable the again,

be So to Matt. my I your answer question, direct guess, will

Matthew Clark

happen do the to of on June, the And Great. end have at point? give you spot then interest-bearing to starting just us a Okay. rate deposits

Scott Wylie

the month bps. deposits total I XX for was the June, of for rate XX spot but The end think, was at bps,

Matthew Clark

quarter rate XQ? average relative the new then And Great. in the Okay. the on to weighted loans

Scott Wylie

an is as try actually -- looking interesting Well, well. was that number to at some time spent see this what we and ahead

those in some mix certainly QX. quarter, look with QX. getting And second closed in then being a the affects higher that locked rate also actually you we So that and are of at production the loans had in that of in mortgage mortgage loans, the amount

was new So far, if today so loan average And we you in June, July X.XX. kind of at rate for it's in look where the production. are X.XX

in So positive strong trends seeing very loan price.

course, point XX yesterday. all basis increase before that the comes Of

Julie Courkamp

also we're little payoffs, are of We what rates of hit point longer the which that in helps at the bit. getting margin. so kind seeing No a the higher than stop treadmill headwind where booked against loans much a

Matthew Clark

then one for And last me. Right. Great.

else Just do on there do do can you anything front? done Or segment. that cut mortgage expenses? can like there you to Is feel on you the you've all

Scott Wylie

our story. So I about, and important as the whole answer and part but the small song we've talked a strategically that's short the go through is version, won't of overall

The that. at $X Difficulty] that the We and from book with have that attendant which [Technical said and normal a course, revenues you that look reported business offsets going lose if we're higher points interest QX, Number money jumbo loans, the into factor the portfolio than just that did in the money of not if business. And much we was income mortgage to we net on segment then, one, that those lose get for hedging are we in that you in that from million in us a reporting. But the loans couple in QX the as segment goes losses. just more go whatnot that all percentage that. segment of

measures that right on that it basis MLOs have can some business. costs the a today, going that I no and overall kind and Again, producing cut this And attract environment reduced do look to we've I lot of we control in you when We of done directly, More reaffirm, cost. saw help the significant forward. not that of we kind the the think we're to have an us that's and a think new away, second we additional is we place. end in at money at cost we better the going losing slowdown to made the remember look last help your point. would if offset intention already again you reporting So just second get June, in segment quarter, of we question, the first some quarter. -- have

Operator

Investments. [Operator from comes question Instructions]. our Ross from next Haberman RLH And

Ross Haberman

Yes, or was geography or loan could from down it Wyoming if growth. Montana great break by you loan I Arizona. growth or wondering see sort better of

Sort of where are you that? growth seeing the best like

Scott Wylie

Yes.

capability could there. hired So question doing feel a a is in really a a much platform, If Colorado, little biggest for I we're good going Arizona, that is. bit But just production strongest but across that it's minute. could base take our to. the us about detour, in didn't of because that's question. if we've new where I Wyoming produce really on good address QX, I what the significant

moved that tell to we perfectly, challenge May Julie said, I the the in when about from Bank clients are all is a backwards, bring in it in you the right? you quarter and QX. and not were you here that first And things over. them to you mitigate. love was would weekend and through then of them But put everything making you, conversion. retaining First want Rocky comfortable. but XX, big team make as than they conversions, being there Mountain this And at we're about go did Western all be sure sure So conducted on could to we conversion to certainly painful, an true a think, great was you Jackson, One acquisition we don't that job. worry because I'd great went conversion did The based everybody

that the flat -- get us. in there. I good. So thought And legacy out the it's for could that's boy, to PC showing great opportunity Rocky you have history we I a Wyoming tells to banking the X accomplishment. that already toolbox they you're highest turns that, that yes, net it apply do mean up we our to And Mountain Bank nice QX. our It something obviously special sent we because community it the that could when for that I of growth see and and Well, producing Wyoming all quarter, nice in for Jackson saw big if quarter. quarter, end you at I platform actually take it's that's if really high a really thinking, third loan actually, was our was the the

Ross Haberman

one last just question. And

I environment XX points to think them that's in rising that another maybe September. we saying continue on you're see the You them, rate on -- if basis

continue to and the is correct? that, the margin will that help So help that spread,

Scott Wylie

continue the earlier in NIM asset that see have and that then a half the rates, right? you NIM we've came on we're second and earning quarter earnings that lot we a without assets put of see improvements stronger the increased going about mean, think strong that, to momentum going the and I to in significant top the on that's growth tell second the Well, year impact question of NIM growth for the improvement even you I in seen, to The loan the the year. of half

see think where disappointing least In fact, headline saw, see we that the want I we numbers it. see you the at when it. I be and to now mean if to was efficiency are And look to where significantly want ratio better. wondering should we numbers me, when you those at I it, EPS can you see not when

you take QX data leverage operating XXX% had of And company leverage an I operating if operating you the that and appendices. operating growth in was QX. in and We at operating income interest and growth looking net it divide a the basis, XXX% just on in expense is So whole actually in leverage. by the the in

continue that being those but hidden to short be at hopefully, -- that From rate. is what's than turn term. that, So going the to offsetting to in fee we'll that's income around there fee offsetting income, the declines. here that, more decline it's able not And

seen QX, think we're just many rest the really of quarters. Ross. and the hidden I It's that's to the that in going in I operating seeing the now so we'd come in still QX think leverage a past kind in nice year, positive focus and And of back

Ross Haberman

one just final question. And

it you're you out as You the the further buy organic to added the or of purchase. looking business or expansion? for operations for buying either opposed branches Are still moment to around

Scott Wylie

before, do development active we Well, corporate as have, program. said we've an

a team. in, terms to for has credit that right would love focus more we know. a they have I it that something they both There's more never come couple fits when to for with It us and that a to have slows. on really do historically. team lot actively. We opportunities sense time times, work on to strong urgency for that we'd great shown story us get going and we're be opportunities into to You we've -- be the pretty to it targets working and Are it and and right makes we the on we're I we that have think those. of be They the these that of but get strong a has do, number happen? has economy be for right sheet, the us, and interested identified -- think that record that the discipline a good interesting balance on continue of

ahead And First so on going capitalize it Western to time interesting may for those. is be an

Ross Haberman

one that to detail taking at you impediment this out AOCI turn possible be the is account your major buy, deal? you did an -- into between acquisitions? when -- How ask you're just bid I to to a Can how things And looking going ask a is about and are that adjustment?

Scott Wylie

here enough we my these due that sample done done XX XX pretty in I've done of and abilities. diligence feel First these we've our of career, acquisitions with at Western. comfortable We've

record, things be our for to at look potential. sheet. track we look at earnings going beneficial from to know when we're that look So for do We shareholders, value our are that obviously, shareholders. And we the risk-adjusted the balance at our the going you

in have comments. tangible was mentioned impact, at going book to Our value Bank to last actually very accretion their and closing nice accretive as earnings parent with earlier certainly merger my I've and a Teton Rocky Mountain

count for Ross, So opportunities be on you in term. I disciplined think that value continue look short shareholder can and going to to the in drive to us, are that

Operator

And our comes Instructions]. Capital question Management. Tieton Bill Dezellem next from from [Operator

William Dezellem

questions. have a of I couple

start more ago? that are year all, sensing a at you environment, people to this are with how people they the today Or I'd First and new Western In you of about bringing on. teams First than this thinking like that likely point? are to were towards move

Scott Wylie

you this or -- boy, get to we're to don't going whatever. acquisition I filled it I or attracting don't when now, they of that thought, we bid just hard times then to people them predict find whatever have like if I we up get Well, attract But really be should right know from closed. are able for people. reason, And having a lot success the

build to we're place career. think a as people scale that a a really us size and that see good to I getting

of long newer are some our and that for the the think competitors legacy time mix right finding trouble I having growth.

helping right to that reason, I think relationship think our I whatever don't strong the really but frankly, a slow. And bank. now quite attract in to market people, I that's For and the of success having bankers reputation is us bit strong, attracting that's we're think going

continue. that's I see to been think here. this going very to that It's encouraging

William Dezellem

Congratulations.

to So into if be scenes happening C&I the in dive as let $XX loans incremental number. me if million quarter, really I behind a to hoping what's and I of cause specifically strong? big shift, the With and was lending. could may, to the you C&I that's

Scott Wylie

focusing quarter business and much banking a about wanting on our Well, pretty these think every calls private on away -- I mortgage talked just part. And traditional I We've think seeing capability. I to their us diversify it's lending we're building from feel on and persistence C&I and like that.

Bank some good acquisition. We certainly Bank the Rocky with C&I recruited. We and have we Simmons acquisition now got with that Mountain lenders some the

takes think community reputation I off. but developing a pays the in think building that we're And now. seeing those I So teams time and

William Dezellem

a And a state? your that now are is that that sense it are at they operating still mature call in we'll mode? fully teams those Or -- ramp-up

Scott Wylie

scratching thinks a bullish the there. here and there, he on opportunity is I'll leader that. there's He our group Well, tell believes that banking of of surface lot the very building you that we're just

William Dezellem

on people. Excellent. And bringing congratulations the on all

Operator

And follow-up Brett Instructions]. Group. we question have [Operator from Rabatin a from Hovde

Brett Rabatin

strong were Scott, outlook at ready the of loan March, year, I kind the same When one we recession think for follow-up. you the talking being talking a in about time. getting growth earlier were and

to in like, of loan you're don't next your year know we consider go or What riskier the you eye you're have into going categories there I wanted doing? hey, to or You good at in be going to some with is could anything on loan would Any markets into consumer in more to you we're that this that that be growth terms year any the here X? want whatever are out possibly. past pretty and seeing tourism economic operate some segments of there that any point or slow

Scott Wylie

one. Well, there. I'll stories told before a then I new Sure. two and One tell

be have team XX about, months, our don't the last we the credit is this Over to we XX to stretching. hey, to that want talked time

not And terms, stay in that. terms we so well hold of credit let's sure firm to rate make and quality on and as chase

we talked we've about you before, that So to I and that. can tell do continue

summit into then some a our or to company we lending thing -- presentation credit company. the guy. I our managers our our credit experienced a last of topic talked assembled about what I joined XX quarter, Lawley, And was -- each about Scott a do together. this Huntington this we #X a is really credit Huntington haven't And the at get recession. we Officer, The group so to summer, call our work other members was of all on leadership of a at credit to and have I is team present did very where top once in which urgency have at asked Credit out leaders He he week us. guy and before Chief He importance

there's like the And scare to lenders. workout nothing guy so a good

credits not holding don't reminder, a and to standards and industries really on. we we the presentation in and we the the do I not he on firm did do late and think, credit do a it everybody focus good want things about don't and cycle. on And to on to credits we're stretching focus to kind our willing so And of was kind the want whole of

on So whole centralized. very active that we're sure to is training enforces very course, is our here, here that of approval is topic on that And focused people make actually Scott, through that. credit process which the a everybody

Brett Rabatin

away stray want you specific going categories that to forward? here things from Any or Okay.

Scott Wylie

of would I don't know call I particularly. out, any that

credit in have and industries. not industries We policy desired desired

have Scott talked front and late the that list we of be about think I we're we presentation, company, thinking as that how So And as And we're the but and in we the here, about cycle, anyway. in -- that in they're that think cycle say, do on don't I we to know focused in me, I his want I a late know it. cautious.

Brett Rabatin

But I And yes, understood one make weren't then lose to is enough. either to I want going that around the and the mortgage Fair don't you assume for it net conversation one, volumes until the near Okay. you could. profitability but lose And margins if last loss banking money, be operation sure at from continues to to a just up until the fair to want expand? did, money. pick or I gain you banking here. mortgage term

Scott Wylie

also I business report second said the is I the in what reasons Well, shows loss, did to but the mortgage obviously, either, segment a quarter. for which here talked was want a mortgage in segment negative about, the profitable earnings we a we the business. don't

to I the number in at revenues continue another in to mortgages grow think we QX, just the to million $X.X that reporting for positive are you annually continue ways for they at expense to there there going segment. income look the a company. look But manage produces the we're if produced that so So the and

for for Brett? I'm question, that be and term. a your contributor be we long overall, us positive a So And to was business expect in, we think been to 'XX? giant it, be a for address been it since Julie, benefit It's great not I in. we evasive. fall that business trying Does us want still it's to the bought the that's of what

Brett Rabatin

is No, due sheet. equation I the production balance the that helps. on profitability to the part going of realize

if from production slows, doing expenses here, So terms talent? I If to understand that. you Does new that offset be higher correctly. you're that talked a in heard adding would that what -- I about little of being an

Scott Wylie

-- fee if I interest QX. look if total you our out our operating and and just net just income growth operating Yes. QX you in the -- strong business really leverage you about seen expenses, again mean -- over operating I in at talked take altogether we've

to about the line overall manage growth continue with revenue kind profitability earlier. the going and that in showing of talked I we're improved we're sure make So our expenses that to

Operator

showing no to questions. like closing now the further I am turn I to call back would for remarks. management And

Scott Wylie

I Western, talked second and space Okay, about the organic And the First I growth think quarter. have machine saw Justin, past the thanks. in in is in X that working. engines here at we that

that machine to So we'll continue, we continue expect we're to -- and the building machine.

portion we that engine. are We've time from Expansion. don't if for get So XX add I our think those talked organic the trends offices growth of offices positive can't about to very -- to time. new we

now Bozeman put opportunities got as We've hired in already, ready for we've they're we and progress got Bozeman. incubating. that go The the in Actually the very so to our And showing the open we're LPO. team Valley Longmont, Valley have at excited a an very Phoenix, team team significant. team the for a in we've the together about here market, Phoenix. opportunity West is East

and growth, our expansion all growth and attractive acquisitions, a going about, the organic think of mean the be I work I to and we out earnings here going then a part if in big forward. together. the opportunities team terms So it's timing And see effort of continues, number talked we the

talked operating are headwinds. fee about. positive this seeing We're healthy. challenges, that income The and strong we've very obviously business, had core Our leverage headwinds short-term we've

over we think there show will progress that time. I

don't we really feel QX. the of good outlook from so from headlines about some so positive look these of here that spite And in

in thanks, for much. everybody's here at produce have work with dialing to the these really results, done call. today. time First Western attention that the the you Thank We appreciate everybody, the teams so and that, and on today associates So

Operator

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

may You now disconnect.

First Western Financial (MYFW) 30 Jul 222022 Q2 Earnings call transcript