Earnings call transcript Q1 2023

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Operator

Good day and thank you for standing. Welcome to First Western Financial First Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be call recorded. is Please

turn over of to would Profiles. now speaker conference to like Rossi I your the today, go ahead. Please Financial Tony

Tony Rossi

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

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

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

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

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

made the the would and to in you statements direct any to disclaimers also obligation presentation. read any forward-looking The our investor earnings company I call. disclaims update release during

financial as non-GAAP as to non-GAAP other Additionally, today management to the intended of directly but to quantitative supplement, substitute discussed which may refer information reconciliation be well for GAAP The and measures, the the press contains on measures. website are measures. not to comparable most the the GAAP release available

Scott? the over Scott. like turn to with I'd call that, And to

Scott Wylie

at of and over more with same from was management, our to time, relationships never and clients the more a we everyone. stability have strong And Tony. been for we the have the of prudent never taken strength the our clients. source we has Western morning, approach months. couple built than Good Thanks, consistent First benefited past true risk Because of that always

regular to or ordinary their stay contact are the continue any business that meet we of with our that business, of course so in personalized we can ensure we needs. clients their appraised part As financial to of in changes

recent continue with didn't have than is in occurred, the to regular to which what when do clients. other remain usually we bank do, contact So, anything our we failures

are Our institution, manage clients the was built provide, service no and never know more we of value apparent. that to essentially deep our the conservatively relationships stickiness there on expressed face was and our we clients. we built financial we that by have a the so base, concern clients Due the expertise deposit the

January, Earlier that events deposit have meaningful, we had in quarter outflows. routine had we which the some liquidity base of net to speaks in deposit the inflows, the in deposit March, stability we February some among resulted both clients But and built. but our in

of the relationship In coming fact, clients as term recent new banking the a many institution. banking their loan they beneficiary been to Western, to we move in with wanted financial the have stronger to industry First

with deposit added of left bank. $X million relationships million we March, During deposit new relationships the $XX in only

base, on included deposit the prudent are believe on balance actions an a the of level had we that balance our management from in sheet stability good standpoint. risk impact we cash a we sheet. took the saw in we While but quarter, profitability This of higher some first level management holding

experienced given had extremely of this as We less they funding, banking but Our level in issues industry. already related our of source FHLB was in borrowings vested most have borrowings them funding’s new to the pricing of short-term than being into provided expensive increase decided the of chosen to borrowings, rather to environment increase are the deposit not as competitive a cash that to also loan a seeing. earlier, we purchases indicated in But deploy as we on hold I securities. increased, basis,

to no through had they added relationships where acquisitions. We These we were were and some loans, also loans were chose non-relationship deposit which of relatively most sell low yielding.

we this Because While we have in also of fundamentals while quarter, of felt of would strong. we company, profitability a the environment, impact these was the loan profile manner risk the improving to an capital in important get that sale the the our on in remain conservative franchise the extremely benefit our risk our of portfolio. terms prudent loans approach more of management and the did liquidity which current run in

We deposits. X.X just total XX% in have our represents uninsured $X.X which which liquidity, is available deposits, billion our of times level of

We base meaningful with have no diverse industry concentrations. a client

quality strong asset portfolio a of remains non-owner there well-diversified where with minimal have broader properties we office to and losses, exceptionally exposure a loan level Our with occupied immaterial is concern. an CRE

end some the so CRE just first quarter, have of represented in and provide X% don't about portfolio additional equity. At experienced. our of assets, held-to-maturity securities have also relatively less total I'll losses investment X.X% were portfolio, we our call. unrealized the information anywhere banks small the losses we shareholder some total later of our a near the level than that And of unrealized high have

some X. a net income in significant industry We generated of share diluted Slide $X.X first in the $X.XX quarter per to headwinds. spite million Moving or of

combination every loans share severance in per loss add the While payments, quarter, fair in there items sold, mark, on of X% loan about are small and small impact the non-operating value the QX.

we tangible the of year, CECL per seen year. impact in and resulting book past the our adoption book at from have share beginning the value the Over despite value increases capital of to both

loan the Turning trends our to portfolio. Slide will X, we at look in

about flat we total that the in were the loans Our sold non-relationship includes of first with $XX this million quarter. but quarter, the prior loans

sales, annualized our loans would rate have at of largest X%. increase loan an total about The our CRE those increased Excluding from portfolio. came

properties for very constraints in supply believe and demand markets high are Most of strong our we there they where those multifamily and housing are are credits.

had total quarters. recent uncertainty, adjusted what the Most and current attractive C&I volume that loans the are most of than bit loan our in was in environment. economic what selective present in our light of approach generating production a risk now we we quite the Given mortgage more believe generated we are yields residential of lower

our pricing, XXX to the points discipline loan on loan loan by continue new on rates production new we increasing rate with the prior average production, see from With basis higher on quarter.

that to of only and of Slide percentage loan portfolio loans information at Moving represent total property well-diversified CRE X. underwritten. provided the CRE type some about loans additional is Multi-family XX% total X% our We portfolio. largest This of loans. in and portfolio any conservatively

the just for a of as been portfolio never lender properties result, XX% and only X% loans. CRE and a of office have big total We loans office comprised

And majority portfolio, areas, exposure in office of practices. located including that have like properties areas are Denver, to over tenants in the the Within medical no properties we to with in industries no major buildings Downtown suburban seven stories. recession-resistant metropolitan exposure

million. the loan office just $X.X is loans average size Our among

the Over have XX years, that any minimal XXXX. are not have maturing through losses amount loans, of past a end office incurred -- the we in we our we a have been and

flows, warranted and annual portfolio at We're proactive review possible also concerning our approach, current point, to basis very cash rates on so, underwriting we've At rates, can portfolio and conservative productive continues and at perform frequently to in time. seen an in rental management, earliest the if any the approach trends. more our identify this we we vacancy that to least well. and approach any to deteriorating not proactive our portfolio Due trends very CRE management, our

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

higher of X% quarter, the than Our the on from but quarter we're total about basis. end deposits were the down an average just slightly prior

February, resulted clients As and declining in deposits by I April. in $XX January, our indicated we earlier, the net liquidity again our had during month in and inflows the events million experienced then of March, total

yield deposits a of to on accounts accounts to moving money get trend order The and continues a into of reflect their excess liquidity. mix clients in non-interest bearing interest-bearing of out higher

add deposits deposit in to order in rate going manage us time forward. costs our continue enable will also We effectively we to funding some that to believe more lock fixed

resources earnings trust business on We're investment allocated to in positive we to and management, resulted last in development trust X, Turning seeing our we've efforts these and from investment some call, Slide impact additional the new indicated had management. assets in first performance, our in of combination increases product inflows increase which million $XXX the management and categories. quarter, we of the five in notably, for during all in under clients, market

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

Julie Courkamp

Scott. you, Thank

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

in declined levels Our interest gross XX% and lower net to both income the prior income. non-interest revenue quarter due of

XXXX. average yields interest increased interest have higher first but quarter we our the X.X% balance asset and increased to basis, due our a on income growth the net of our year-over-year XX.X%, the sheet had to income compared However, in

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

of higher cash In impact to flexibility quarter the market average are prior the resulting from cost added XX% is as increase make conditions quickly as X.XX% the deposits decreased which interest term the the time change. liquidity decreased in well we funding higher to to and a we short points balances. of our borrowings adjustments deposits to income the interest margin cost funding of of expense callable, higher carried holding the Much and as and quarter. have from due in net interest XX Our basis due net an average March, of us in in excess gives form mix our or deposits

insurance following bank XX% our and bump while in the from to quarter, XX, decrease management management fees fees. due is the lower decline and the decreased we in risk Turning seasonal the lower risk see a The and quarter. were penalty to typical bank Slide prior non-interest prepayment fourth insurance to in income primarily attributed partially fees fees fees primarily

and in The on gain these on attributed gain increase net production. is decline loans. trust and offset mortgage primarily X% loans The to an management the investment loan increased increase higher areas fees mortgage in net in

originated of than for with We volume in first production we quarter see lock sum loans from from seasonality are the in being XX% The increased offset originations Colorado. in team loans. purchase expanded quarter the which the more for seeing of sale XX% prior mortgage Arizona, typically our

Turning impact primarily X% and lower loan compensation of higher interest prior deferred payroll to to the origination. the our expense Slide the quarter, well to net XX as seasonal due taxes, increased our expenses, decline as from in due

marketing by regular expense assessment and increase These the contributed non-interest to FDIC increases decline rate higher in expenses. place the of in addition, now offset review in as In our were part of technology partially a expense.

made the areas estate, and the and reflect areas software have longer such some as throughout our business of nature real which adjustments changing of focus organization in no spending, growing. staffing, recently on all We we

quarter per cost and being us of other in our result to the expense $XX $XX of of areas maintain from for savings the should non-interest of these be will control adjustments company. adjustments the million Overall, range to portion will million the these reinvested A remainder help XXXX. into expense in

Turning prior from were loan very end the quality. quarter XX, On a non-performing we'll at losses. basis, essentially look broad well our quarter, the to minimal of as unchanged the perform asset Slide continues assets the we of and had another portfolio our

beginning Following the adoption CECL of year. the of at the

This points due to volumes changes small allowance basis XX credit coverage, X losses CECL at had in one the our we at reserve March release points in the for during loan portfolio. Day Our and a from mix stood XXst. down quarter basis as is the

will I Scott. turn it Now to back

Scott Wylie

Julie. Thanks,

XX. shareholders. book XXXX. track shows record value in value review for trend our since Slide moment strong tangible a per want to Turning take our creation share our I IPO to slide and our in This of

share our increased the throughout seen cycles, inflation consistently we've book then rate tangible year. last see, per the a high variety higher and can estate including over of we've value environment the you pandemic, economic As

our strategies this our capital our of balance are diluted as that our and execution generating to believe well reflects value managing for growth We pricing. to prudently disciplined protecting not being in doing profitable shareholder as shareholders while our sheet, by commitment raises strong acquisition

acquisition our accretive tangible Services of value immediately per was recall, Financial book may share. Teton you As to

shown in Our in earnings core the also last come although pressure years, progress two management quarters. have recent have under wealth great too they

in degree to and stress provide I'll even banking going some continue comments about up a that the XX, high short-term. economic near-term our level to wrap Well, prioritize profitability uncertainty if impacts we're of prudent system Turning remains Slide our there's to under risk of the with management, outlook.

we reduce quarter. more also expense We of so or expense X.X% operating quarter will we adjustments completed recently and review to on realize non-interest continue to a sheet. expense continue leverage, the that had by million from can focus our We $X.X grow per the in as will disciplined made that expenses level first balance we of operating control approximately our

year challenging the in that since. being year, to demand and be were the was we is gotten particular, started knew forecast loan rates, we is we going selective we difficult to hard originate, forecast to we interest more to new higher in growth are and current investments the to more particularly a that only When environment, it they it's lower clients meet. overall very given reconsidering and planning credits due see In

will possible… we now that, loan level but this of there believe have We year, of is range a wider growth some

Difficulty] [Technical

Operator

right. All Please with proceed call. your

Scott Wylie

Wylie, not got sure off is understand Scott cut I'm we this I and we off. Well, exactly cut where there. got

So, of I -- prudent system We're and well, degree back of impacts economic management, was on under to the the slide, to short I'll in Slide go term. level remains risk high uncertainty. And the continue if banking even our outlook profitability with prioritize noting to there's that that going distress XX. a

control leverage completed we non-interest expense to sheet. our We quarter. or million operating of continue approximately level review of expense a per that discipline we had by adjustments grow the our on first that main will so we more focus to in expense quarter the as realize continue X.X% expenses and from recently operating reduce can balance We'll $X.X

then. being investments to due that the very started particularly and, to interest the forecast clients it credits we're is planning since that was to make. year you current in and be going given demand year, And the environment, we reconsidering higher In overall to were in we selective more and more new forecast gotten is rates it's When the see they challenging originate. growth a hard only particular, knew loan we to difficult lower

environment. have highly economic up it's dependent we'll outcomes, level end see of that there's possible that Well, what be, one but be believe loan this in year, a will we will will conditions. believe some on We a challenging we range wider where of growth terms of we a for now we favor be franchise. it Ultimately, and

levels losses in of liquidity, asset securities of exceptional we low sheet, balance deposit high a have strength Given extremely unrealized our an base, and the stable of capital and quality, our level portfolio.

our did a the Given and as reevaluating we financial relationships their sheet, more to pandemic, who on responsible adding new capitalize we are to believe can institution. during just clients we banking stronger, balance opportunities looking move

provide trust being continued beneficiary have and improve it both while to more time on in environment. the possible to long-term best how focusing the designed year, of to leaders and on to current senior economic Essentially, leaders clients we completed near-term banking, that we our those Earlier level reorganization see senior new the we'll continue a shareholders. development. on as contribute offices for believe impact our our our additional opportunities due spend we profitability be net was will our our for in focus clients to profitable Ultimately, growth likely business value add we'll a operate, of created made salespeople our for offices more to which and we've to to time selling new

With your happy take questions. to we're that,

to ask please. call, So, open the Amy, up you I if could

Operator

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

Your line is open.

Brett Rabatin

Scott outlook? margin the the hold then is thinking Julie. of bit? new the good where of thinking of deposit to little rates start NII, and sheet Hi, on increase you and could too off given come year, can on just maybe you and about maybe us or that balance NII grows Wanted dollars kind about this seeing aggressive for Or just you're give balance down deposit a just dollars the sheet if little is think flavor bit morning, margin, and balance a NII sheet but the in

Scott Wylie

you with the I more if a of high-level ask Julie I'll and then to numbers can. Well, give answer start

a really which our had our continue. pressure because QX, actually nature We've most there, seems QX. and income I on business, than that more our we we think We tightening into side progress which certainly that, would to probably side. continue earlier to we in saw, in expense we've NIM interest seen projected of and expect seen that interest of likely banks the our think do nice

is that is our year. like from XXx. our in of income Julie prepared up interest quarter XX% remarks up to But quarter this last the expense year-over-year first mentioned first year of her interest

I that interest been pressure So, strong in really kind dollars year-over-year headwind, the grow able that think of income and pretty fact just to pretty impressive. net we've is

be So, that I progress would some want Julie, to behind our and numbers NIM of kind of think. general the my if outlook. answer, you highlight

Julie Courkamp

just of was the X.XX% March, at if March. or March so month deposits the of look X.XX%, you our at was cost rate end for spot deposits NIM on of So

a new loan competition. our the I what as depends of at in more We say in to were in expect mentioned growth deposits level. then quite rate think, and our compression would higher XXX really we on it and see that, quarter, the coming would the but bit the Scott I second environment than some happens rest

not the NIM. haven't we're really guidance secondary March. end in we raised So, April And point, at of race as or a giving on

sheet it exception win We are our to client deposits. pricing continuing to where retain and then needed hold rate making as or is

Brett Rabatin

Okay. which That's what what helpful. March, the number was -- for Julie, was XXX sorry, I'm that?

Julie Courkamp

March. for NIM That's

Brett Rabatin

NIM Okay. March. for

sensible in from that color rate, fit or to the around exited lower the Great. bucket that was to made on any non-relationship I $XX perspective other move that any that obviously of anything else relationship and loans thinking other ask you then but boxes million going Okay. would from? just a And of wanted additional that forward about thing just didn't color any those

Scott Wylie

some loans our our With really weren't -- acquired do. what we we've acquisitions, that Nope.

that it's to if sell if a we taken us don't not and they at attractive balance are but loss. them up so, are and able space small sheet need, And distracting we fine, were they

like took $XXX,XXX something we quarter. that the I in loss, think

Julie Courkamp

quarter. but the of the credits accretive purchased kind perspective, actually earnings it, balance it to on principal you a look when the allowance In overall was at for and

So, of factors make the of well loans and from as makes a we look sense perspective. on each going it sheet that, the forward management balance at a P&L all sure as

Brett Rabatin

the That's color. Okay. Thanks for helpful. all

Operator

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

Your line open. is

Matthew Clark

morning. Good

clarify or say March. the month X.XX%? Just of want margin X.XX% to you Did the in

Julie Courkamp

X.XX%.

Matthew Clark

And you. Okay. Thank clarify... to then also

Scott Wylie

of Matthew, gave March end the the of cost cost number of spot and the at was X.XX. she me, other excuse that deposits that

Matthew Clark

on down Great. the commentary we expectations And ask. How here amount'' I what change? mix and growing probably of you. we mid-teens think [indiscernible] your prior from loan right should was that's and Thank that's understandable anyway. Yes, ''some your now to slow going growth you then should want growth and wouldn't to from deposit kind not about mid-teens

Tony Rossi

that said operated XXX%. to I in kind have traditionally below the want we it our that, would we be get deposit range. to XX% We below a by down We longer year-end, get us. to for deposit And could XXX% loans down good if think ratio of

I the we in will pretty pace in a considering that's deposits the anticipate core the in higher we're loans. that's base are rate a industry. But are growing the a grow probably deposit And going QX. of capability than us. to be at flat a that future And We for core probably to those drama quarter deposits to continue for hopefully accomplishment of think lot look the good

Matthew Clark

there can you then end the to reduce to great. coverage of uninsured the Is Okay, quarter, plans further? anything at And amount do the on that else any there? deposits, the increase

Scott Wylie

feedback have with actions indicated and with have their they clients the their that deposits our with are think comfortable here. they I Well,

insurance, FDIC’s We to have products seen move that those. that's or people of looking XXX% one to deposit whether have

and overhaul, prepared been existing mentioned a deck we depositors I deposit seen But then our more have actually new we growth little deposits very as in stable. bit in and base that seen the so, And slide in have has margin. comments, the the March I of February, think and nice And at in April.

little XX you QX years payments. whatever all see I significant here tell this my that XX or been for is private tax all true years we and has for career and in outflows of in historically, would in my banks, XX

various liquidity April. taxes their tends in events base and in when pay client deposits to put then have Our they their

So, I that'll don't quarter. out this know play how

month million I new increases think and As I deposits. we've $XX here said, seen April million to date in in net $XX deposit in

how So, we're in plays it continued we see We'll saw seeing quarter. out and March. see February the the over trend

Matthew Clark

for then you sense CECIL, some reserve one and And us CECIL? forward can macro assumed great. how just sense underlying you a the might Okay, factors. be assume that of the last and assumptions me, deterioration or should higher of it whether to trying and give reserve we they continues with conservative the for to Just for with not the migrate in on get a flexibility adopting going

Julie Courkamp

of complicated a year in that pretty I level us might most, have down bit but the more categories obviously, was then, lack finding book And with our that But and and our of and pretty have can that model. a would loans our modeling now consistent different lot dive So, peers is went loan work on it of been types of we've that, area a give core loan like very handle the good the in details in we the on challenging. Did little I into you I the low we that go parallel because somewhat a about a pretty metrics to good all of think we deep and we and feel don't of be know do modeling, a that's economic for DCF loan to say is running hardest portfolio. our factors on loss modeling, handle used that. peer I sets

part of commitments was the like feel on the the that amount on our we can environment, amount decent put a things things lot sure properly then as we're an reserve eye loans and to on for. of reserved the of of as levers implementing modeling put within I changing CECIL. are in model unfunded think we've was pull And the that close different I $X keeping there a the we're different make impact purchase on information, a and that, of that additional million pretty And given

So, loan, overall, excuse does will I funding think your, our does me, move around or around. it as loan move

figure So, to where is out I at manage now. trying we're each stay to of how consistently just factors but to we're different those right through applying trying the changes, think,

Matthew Clark

what Would know stable a $X to don't we and from a that assuming January a you our direct put future today, say, relatively economic quality be think we Julie, would be right? in reflective extra asset little [ph]. million the more environment, is of we trend, That that

Julie Courkamp

Correct. here CECIL just a as on That one mix modeling based of just modifications economic time, and portfolio transition and and cost the be any going growth into changes really the will from it or the volume

Matthew Clark

it. Thank Got you.

Operator

question And with next KBW. from Gailey is our Brady

open. line Your is

Brady Gailey

Thanks, good morning.

non-relationship were similar loans So, the future quarter there are in of that million could other something happen quarters? where $XX the non-relationship sold loans in that

Scott Wylie

I say would not material.

do said having promises. that, keep of we list broken a here Although

clients the them than you it. bring do when probably and up if don't were say to it, So, that looking you lot time bug if call in they're over promises about to we'll grow a more pay list going were might broken And and to attention you you'd them they otherwise. a deposits, relationships

is definitely attention that. So to we're organization, an paying

but ones here, I clients with And that's what do promises think were I their really that sold and our And not great. more transaction, Those doing I as I that we want that not don't business them. we our the be to said, to to honor to have relationship-based had Brady, really acquisition. do. want expect we that think people a we that clients through that, anticipate when part of make came we core loans And of modeling really

Brady Gailey

XX% here. some share growth building a going with be All tangible you're potentially think price. forward? right. discount value, then so book How book And going you slowing, decent is at stock The buybacks tangible is to capital forward of do about

Scott Wylie

I'd from at preserve think here. the expenses, are us. to improve. sure our be love do, we'll very work it's the make have think, let's And conservative to and our obviously, on leaves we fees, price, let's that manage think, I capital that attractive. But this are work earnings let's perspective see I margin, to our on where And actions continuing then, I

where been historically opportunistic, feel we think, point we will. comfortable we've a I to we and doing get that if

we've But and investment great in our We unrealized history current have right now got experience. don't losses portfolio. credit

want You need our for capital we in don't again, either. to put a where capital We other have issue banks at put issues at that might a here. are on stress to position us an wouldn't do to ourselves But we time. raise that not want

Operator

our Ross Haberman question with is next And Investment. from RLH

Your is open. line

Ross Haberman

small comment value. on announced the nine or there about, markets You growth months the were book you saw the them think fairly ago? Could optimistic Montana. also I of And a market the Arizona you and about Wyoming talk guess market, six could them, vis-a-vis a I where actually those view roughly I you you say see today was where deal, on, in a Phoenix area, last night,

If something Bye. shares? like you came your opposed do up that, And to at back -- would your you like if as that, to you? own a money attractive something would that look rather be was Thanks. that buying to use you

Tony Rossi

Good Yes, thanks questions. Ross.

view, issue optimistic rebuttal, a want to go if ahead. first. go the I'll Julie you for So,

mortgages, long Arizona a between for it. and in attractive in that is that's desire the their have add We is there the and a talked of counter Colorado mean, a part business in also a which of cyclical cyclical to piece you I our expand time that presting way. mortgage about counter us could [ph] team think help connections Arizona culture there's certainly an Arizona of from lot standpoint, and with people but franchise and

a And while. latter year. I'm up. in not in of so, getting ramped QX. sure month half first we making mortgage Arizona we that last they our in add a exactly of are a was benefit And nice money March team of did actually quite when mortgages saw

to some great progress was see it So, there.

up, actually originators loan have mortgage mortgage in our communities. folks added resort We

surprise We Wyoming. all coverage expand great really Montana three in core We'd broader, those think been that Montana. us. pleasant of have in The markets for have I business, has some we opportunities to like and into a

are We small there. very

permanent now. just LPO have we Our office, right an

think Our permanent Julie still third will you quarter, be the office in opening, it?

Julie Courkamp

ish. September

Tony Rossi

step ongoing, I legacy doing Bank surprise it's an a folks Wyoming think team continued will that the pleasant And so, the are next Rocky important The former, to with been great be with and for Mountain partnership there. our upside actually us. the

for that us. But to core think important all valuable all are us. is here all long-term our opportunity Ross, relatively to really those compared think footprint I and creating Colorado. shareholder components it's value, small in So, I

you get starting. And there can't without

are we those making of each so, And progress.

our is where doing When really uncertainty we question are that now, Your out with think about the is right? in M&A, right we think it I deals. and stocks lots of interested tricky there, M&A don't

so, And great financially relatively limited and that sense. or small at I be see a there But really that we meaningful think see to opportunities or like if aren't are can will things look opportunities I them do way. makes that to think realistically, we when or either both And us. those fit, out we are it in now a strategically

cycle. operating really capital remember financial among base coming recession I what and real some of of last the banks and winners out in M&A the strength difference losers kind from that's think created your in great great the opportunities were earnings we all and there your your performance recession, and the your and was

So, did I know of Arizona. chance. in something you do folks bank name think something to on we the think like Bank Commerce see we more a if that's like was didn't but that at them, Commerce, those or the We impactful I Bank small know blank we'd had that the announced

Ross Haberman

real one Thank one of just much. loan is it bigger in of And would Alpine some competition, Who for who Banks of you question the Is -- banks? local or toughest you, competition, Colorado commercial on side? your very competition? say local follow-up estate the the terms

Scott Wylie

competitive from interesting landscape the a and you one Yeah, really the now. on on strong open players. And it’s We're is side, side. most six the trust heard account ladder? Obviously, seeing the clients the we've so, of deposit months challenge over questions of just bank right a deposit tough. me that's a build guys will for last bond from the all very non-bank kinds competition and Frankly, really

and have to still of that not we're what in now. past rates. your side, other sort of we're loan CRE competitive lending in banks being living going CRE to there's a interest seeing terms right saying the that and seeing banks are we're the And do stock few particularly and point, On they're is

market tell So, year, that there the down I otherwise may it have I we see they this and ago. slow we're us less clients may why some acquisition things people here at if they aggressive think to because would rates done, or growth are of see year pulling to the being that's of you client out opportunities but might is a that terms of kind were so and because going than our appealing interesting be

Ross Haberman

kind those those thing today new loans? are co CREs, final what what just of types on one sorry, And on of getting you rates

Scott Wylie

are Do if you know, what average -- dramatically, Julie, it up mean, just rates? let gets I me

Julie Courkamp

is mid averaging seven. new production Our about

eight. going be the to was the then more that C&I six like is -- On is CRE like and question. maybe

bit rough we've a average, a pretty what but it's of So, that's and seeing. been difference a that's

Operator

And a Hovde. have follow up Brett question from Rabatin with we

open. line Your is

Brett Rabatin

I in improvement sounded I that, Just in current it environment so comments, the continue that some long-term term. you intimating maybe your got the bank. have drag a the a the or were assessment maybe of prepared directionally you But Is near in I first, on you're sense was the Hey two Scott, to your message fair mean, about talk for the maybe to profitability? comment and me can that things in that growth implementing quick things. profitability profitability might like

Scott Wylie

have I is It's probably well, today and environment growing how do mid-teen you confident stuff, about before well revenue a you success the because revenues. growth this look very feel uncertain growth? not other now on said to our calls you it's cost-cutting. And path yeah, to say, think these that environment. Yeah, and And hard right at I say, it's

for this the I we've act on plan and okay, and best. kind looked let's So, that, then hope of the think worst at said, and for

the doesn't the costs cautiously scenario we on we grow that that about the on to to can how how that If us? at was we make sheet do improve net our expenses And sense fact growth, earnings? quarter, can? is loans us make produce so terms sense of our plan then that we we're do think whole How manage liability talked down purpose. a lot we so, so, we [ph] I first best do as that rates And FTs in balance that XX manage

We ranges. also in mid-XX talked our done expenses the about X.X% the we've a cost in drive that are to that fact cost in versus reduction QX more April

a quarter, headed. of think, where we've to to $XX million is from I been $XX which kind guided million XX down Julie,

tweaks do those you those on just So, numbers. those things,

drama going We to revenues, see And investment and fees, nice more industry, in mortgages, the see growth. better Then management on bit well-controlled of which I expense we see, going hope is the all to absent then You're improved you me, expense, out. that a income. up little stuff see excuse and trust a all earnings. you're We plays see earnings scenario that a adds really then saw further in think QX. just And base. improved growth

a and strong you And in come you here. recovery of with all capital that opportunities the downturn what the do base, see out then

that's picture was kind to think, I I paint the of indirectly. trying

I being about that's don't little it. we're direct about thinking more a it, So, how

Brett Rabatin

maybe a about talked have it more, affecting other the Okay. you're if effort by to an and credit a and with And it they're reduction, out calling seeing more $X.X of do if a banks people available million efficiency business production some your going like maybe to you be talking feel is streamlining little a you That's with in higher the little quite does to improved the have a just like then bit see concerted production? there effort people helpful. to you become there sounds of pullback how kind

Scott Wylie

right. of investment, and bankers you're In the people direct the we've made investment those question have folks. market banking to We've to reports and on trust presidents Well, private assumption market support And president -- now a is senior XXX% bank bank side that -- your our as trust XX side report got these locations. that then other the time that active and influence, clients prospects is in business being that frees time does top markets, markets getting that managers and in out and our clients. spend less care people most of and those their more we're and visible experienced to their in administrators, of that are being letting all taking know COIs what and our centers bankers up

reorganization is was did So we in QX, good we QX? know. new about offices. course going completed did. that I today started the of absolutely it. we our last the don't I part really think which that was drive feel business more in the comment to that that actually that that over And We fall, those and of in year, But

asked to the going be us you change allow it's us nice think really it and exactly to for I thing does do a about.

Brett Rabatin

for Okay. Great. additional color. Thanks

Operator

Thank Instructions]. Sandler. from follow-up you. we have a And Clark question [Operator Piper Matthew with

Your open. line is

Matthew Clark

the Hi. Thanks follow-up. for

mid-XXXs? suggests square falls the when And recap thoughts. borrowings? to clarify and little, of margin want yield the which make X.XX% month that to I March of is a to I kind And want into securities margin those X.XX%. yields deposits Just the that loan quarter, seem to commentary, above it the me is a two just first you doesn't in sense of then mean,

Julie Courkamp

of like, March were bit a the So, balance through sheet, which part early more. would I and our us April, into down more, we carrying little putting have think cost latter

noise I quarters. fees, in second first or in had quarter well think and and fourth we loan our as some the first

that, from we are early a as April to that at part seeing you of it's least of kind So, that the perspective. gives NIM lumpy for here. a the where bit I little direction But think

Scott Wylie

expect going expect in NIM in there, But from don't know I quarter second today, from I -- what would the we come I... It's to of Matt. X.XX. not

Julie Courkamp

quarter compression We and then second will the in see for sure.

Scott Wylie

Yeah.

we said what So, this before. is

Matthew Clark

the you that average, sub you debt you do debt. separate the it's in subject if if see million $XXX of million just add average million sub $XXX want. include And I and what they mean, around But going maybe they $XXX period out again was in borrowings. the quarter you total? if trending? the where also then the borrowings And you see do Yeah. Maybe the were end

Julie Courkamp

part we Well, were the March. the pulled in sheet million seen in of first the balance nearly end were the since the in with growth we the And in March. on sheet that I We the off have liquidity all borrowings April, that well-trimmed down. balance holding deposits of $XXX borrowings think excess

was for going borrowings to spot we that NIM up $XX are were lower which in about So, I than have million a think deposits, net that cost had March. in our have

Matthew Clark

Okay.

Great. in the Okay. that year So $XXX out comes Thank in you. April? million

Operator

Scott like And the time. back further Wylie to now showing to I'm questions remarks. at I no call would closing over turn for this

Scott Wylie

you, Thank Great. Emmy.

Just that efforts industry, and thanks give our to at challenging the like the associates the the in time. this to this of through significant time from have associates of clients I'd special disruption had a the we support for clients and

demonstrated First in significant steady in spite value creating solid, progress headwinds. Western has fundamental shareholder of

and We for have our sheet structure continued balance headwinds. expense positioned

believe support We our you stabilize of pressure and with and earnings in improve for income interest today. controlled, fee yields are everybody well appreciate cost fund that, thank if their your Western. and really nicely. asset expenses we picks However, outlook interest First and our And up, could improve

Operator

for this you today's concludes And conference call. participating. Thank

now may disconnect. You

First Western Financial (MYFW) 28 Apr 232023 Q1 Earnings call transcript