DENVER, Oct. 06, 2025 (GLOBE NEWSWIRE) -- First Western Financial, Inc. (NASDAQ: MYFW), a financial services holding company headquartered in Denver, Colorado (“First Western”), announced today that it will release financial results for its third quarter ended September 30, 2025 after the markets close on Thursday, October 23, 2025. Management will hold a conference call at 10:00 a.m. Mountain Time/12:00 p.m. Eastern Time on Friday, October 24, 2025, to discuss First Western’s financial results. Analysts an ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________ FORM 10-Q _________________________________________ x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025 OR o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________ to ________ Commission File Number 001-38595 ______________ ...

Financial Data and Key Metrics Changes - The company generated net income of $2,500,000 or $0.26 diluted share in Q2 2025, which was lower than the prior quarter due to one-time gains in Q1 and a higher provision recorded due to strong loan growth [6][7] - Pre-provision net revenue increased during the quarter, amounting to approximately $5,100,000, down slightly from Q1 but up about 36% year over year [8] - Tangible book value per share increased by about 1% this quarter [8] Business Line Data and Key Metrics Changes - Loans held for investment increased by $114,000,000 from the end of the prior quarter, with new loan production of $167,000,000 in Q2 [9][10] - Average rate on new loan production was 6.35%, or 6.67% excluding loans secured by trust and investment management assets [10] - Total deposits were slightly up from the end of the prior quarter, with a decline in non-interest bearing deposits offset by an increase in interest-bearing deposits [10][11] - Assets under management increased by $320,000,000 in Q2, driven largely by favorable market performance, with a nearly 7% increase over the past year [11][12] Market Data and Key Metrics Changes - The market remains competitive in terms of pricing on loans and deposits, but the company successfully generated new loans and deposits by offering superior service rather than competing on rates [5] - The company expects deposit balances to build back up over the second half of the year following typical seasonal outflows related to tax payments [11] Company Strategy and Development Direction - The company maintains a conservative approach to new loan production with disciplined underwriting and pricing criteria, while also focusing on expense control despite inflationary pressures [5][6] - There is a focus on enhancing trust and investment management services, with new leadership brought in to drive growth in this area [34][36] Management's Comments on Operating Environment and Future Outlook - Management noted healthy economic conditions in their markets, with strong loan and deposit pipelines expected to result in solid balance sheet growth for the second half of the year [16] - Positive trends in net interest margin, net interest income, and fee income are anticipated, with no indications of meaningful deterioration in asset quality [16][17] Other Important Information - The company successfully lowered deposit costs and redeployed cash from the sale of two OREO properties into new loan production and securities purchases, contributing to the expansion in net interest margin [6][13] - Non-interest income decreased by approximately $1,000,000 from the prior quarter due to one-time gains recorded in Q1, partially offset by an increase in gains on the sale of mortgage loans [13][14] Q&A Session Summary Question: Borrowings at the end of the quarter - Management confirmed that borrowings were overnight with a mid-four percent rate, and they plan to pay them off as deposits come in during Q3 [21] Question: Cost of interest-bearing deposits - The spot rate at June was 3.07%, with expectations for continued repricing down on the CD portfolio and a relatively flat NIM in Q3, expanding in Q4 [23] Question: Expense run rate - Management expects the expense run rate to remain in the range of $19.5 million to $20 million for the back half of the year [25] Question: NIM outlook sensitivity to rate cuts - Management indicated that a 25 basis point reduction would impact net interest income by about $1 million, with some sensitivity taken off the balance sheet [29] Question: Trust fees and profitability - Management emphasized the importance of building trust fees and noted that new leadership is focused on growth in this area, with expectations for positive results going forward [34][36] Question: Customer mindset and loan growth - Management observed a shift from caution to increased demand and larger pipelines, indicating a more confident client base [55]

Financial Performance - Net income available to common shareholders was $2.5 million, resulting in diluted earnings per share of $0.26 in 2Q25[12, 13] - Net interest income increased by $0.4 million, a 2.3% increase, from $17.5 million in 1Q25 to $17.9 million in 2Q25[10, 43] - Total assets under management increased by $320 million, a 4.5% increase, during the quarter to $7.50 billion[34] Loan Portfolio - Total loans held for investment increased by $114.4 million from the prior quarter due to strong loan production[24] - New loan production in 2Q25 reached $166.9 million, with a focus on relationship-based lending[24] - Total loans reached $2.57 billion[18] Deposits - Total deposits increased by 0.4% from $2.52 billion in 1Q25 to $2.53 billion in 2Q25[29] - Noninterest-bearing deposits decreased by 11.7% from $410 million in 1Q25 to $362 million in 2Q25, primarily due to seasonal outflows[29] Expenses and Efficiency - Non-interest expense decreased to $19.1 million from $19.4 million in 1Q25, driven by a decrease in salaries and employee benefits expense[53] - The efficiency ratio improved from 79.16% in 1Q25 to 78.83% in 2Q25[53] Asset Quality - ACL/Total Loans increased from 0.74% in 1Q25 to 0.75% in 2Q25[57]

Group 1 - First Western (MYFW) reported quarterly earnings of $0.26 per share, missing the Zacks Consensus Estimate of $0.39 per share, compared to earnings of $0.11 per share a year ago, representing an earnings surprise of -33.33% [1] - The company posted revenues of $24.19 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.63%, and this is an increase from year-ago revenues of $22.75 million [2] - Over the last four quarters, First Western has surpassed consensus EPS estimates just once, indicating a mixed performance in earnings expectations [2][6] Group 2 - First Western shares have increased approximately 26.7% since the beginning of the year, outperforming the S&P 500's gain of 8.1% [3] - The current consensus EPS estimate for the coming quarter is $0.45 on revenues of $26.5 million, and for the current fiscal year, it is $1.82 on revenues of $104.3 million [7] - The Zacks Industry Rank for Banks - Midwest is currently in the top 29% of over 250 Zacks industries, suggesting a favorable outlook for the industry [8]

Financial Performance - Net income available to common shareholders for Q2 2025 was $2.5 million, or $0.26 per diluted share, a decrease from $4.2 million, or $0.43 per diluted share in Q1 2025, but an increase from $1.1 million, or $0.11 per diluted share in Q2 2024 [2][6]. - Total income before non-interest expense was $22.4 million for Q2 2025, a decrease of 9.3% from $24.7 million in Q1 2025, but an increase of 9.8% from $20.4 million in Q2 2024 [8]. - Net interest income increased to $17.9 million in Q2 2025, up 2.3% from $17.5 million in Q1 2025 and up 13.3% from $15.8 million in Q2 2024 [12][6]. Loan and Deposit Growth - Total loans increased by $115 million, or 4.7%, from $2.43 billion in Q1 2025 to $2.54 billion in Q2 2025 [6][20]. - Total deposits were $2.53 billion as of June 30, 2025, an increase of 0.4% from $2.52 billion in Q1 2025 and an increase from $2.41 billion in Q2 2024 [21]. Net Interest Margin and Efficiency - Net interest margin increased by 6 basis points to 2.67% in Q2 2025 from 2.61% in Q1 2025, and increased by 32 basis points from 2.35% in Q2 2024 [10][11]. - The efficiency ratio improved to 78.83% in Q2 2025 from 79.16% in Q1 2025 and 82.25% in Q2 2024 [17]. Credit Quality - Non-performing assets totaled $18.8 million, or 0.62% of total assets, as of June 30, 2025, compared to $17.1 million, or 0.59% of total assets in Q1 2025, and a decrease from $49.3 million, or 1.68% of total assets in Q2 2024 [26]. - Non-performing loans increased to $14.4 million as of June 30, 2025, from $12.8 million in Q1 2025, but decreased from $37.9 million in Q2 2024 [27]. Capital Position - As of June 30, 2025, the Company exceeded minimum capital levels required by regulators, with a Tier 1 capital to risk-weighted assets ratio of 9.96% [29]. - Book value per common share increased by 0.8% from $26.44 in Q1 2025 to $26.64 in Q2 2025, and increased by 4.3% from $25.55 in Q2 2024 [30].

[Second Quarter 2025 Performance Overview](index=1&type=section&id=Second%20Quarter%202025%20Summary) This section provides an overview of First Western Financial, Inc.'s financial performance for the second quarter of 2025 [Financial Highlights](index=1&type=section&id=2.1%20Financial%20Highlights) First Western Financial, Inc. reported $2.5 million net income and $0.26 diluted EPS in Q2 2025, with positive trends in loan/deposit growth, NIM expansion, and asset quality - CEO Scott C. Wylie noted strong Q2 execution with positive trends in **loan and deposit growth**, **net interest margin expansion**, **expense management**, and **stable asset quality**[4](index=4&type=chunk) - The company redeployed cash from the sale of its two largest OREO properties into loan production and securities purchases, positively impacting **net interest margin**[4](index=4&type=chunk) - Healthy loan and deposit pipelines are expected to drive **robust balance sheet growth** and **continued net interest margin expansion** in H2, alongside **strict expense control**[5](index=5&type=chunk) Key Financial Metrics for Q2 2025 | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | :------ | | Net Income (Million USD) | 2.5 | 4.2 | 1.1 | | Diluted EPS (USD) | 0.26 | 0.43 | 0.11 | | Total Loan Growth (Million USD) | 115 | - | - | | Total Loans (Billion USD) | 2.54 | 2.43 | - | | Net Interest Margin (bps) | 2.67% | 2.61% | - | | Net Interest Income (Million USD) | 17.9 | 17.5 | - | | Non-Interest Expense (Million USD) | 19.1 | 19.4 | - | [Operating Results for the Second Quarter 2025](index=2&type=section&id=Operating%20Results%20for%20the%20Second%20Quarter%202025) This section details the company's financial performance in Q2 2025, covering net interest income, non-interest income and expense, and tax impacts [Earnings Summary](index=2&type=section&id=2.1%20Earnings%20Summary) Q2 2025 saw sequential growth in net interest income, but increased credit loss provisions led to a quarter-over-quarter decline in pre-tax and net income, despite significant year-over-year net income growth Q2 2025 Earnings Summary (Thousand USD) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------- | :------ | :------ | :------ | | Net Interest Income | 17,884 | 17,453 | 15,778 | | Provision for Credit Losses | 1,773 | 80 | 2,334 | | Total Non-Interest Income | 6,305 | 7,345 | 6,972 | | Total Non-Interest Expense | 19,099 | 19,361 | 19,001 | | Income Before Income Taxes | 3,317 | 5,357 | 1,415 | | Income Tax Expense | 814 | 1,172 | 339 | | Net Income Attributable to Common Shareholders | 2,503 | 4,185 | 1,076 | | Diluted EPS | 0.26 | 0.43 | 0.11 | | Return on Average Assets (Annualized) | 0.36% | 0.59% | 0.15% | | Return on Average Equity (Annualized) | 3.90% | 6.63% | 1.73% | | Return on Average Tangible Common Equity (Annualized) | 4.40% | 7.44% | 2.00% | | Net Interest Margin | 2.67% | 2.61% | 2.35% | | Efficiency Ratio | 78.83% | 79.16% | 82.25% | [Revenue](index=2&type=section&id=2.2%20Revenue) Total revenue before non-interest expense in Q2 2025 was $22.4 million, a 9.3% sequential decrease, primarily due to increased credit loss provisions and reduced net gains from loan sales and OREO, while growing 9.8% year-over-year - Total revenue before non-interest expense in Q2 2025 was **$22.4 million**, a **9.3% decrease** from **$24.7 million** in Q1 2025[8](index=8&type=chunk) - The sequential decline was primarily driven by increased **provision for credit losses**, reduced **net gains on loan sales**, and lower **OREO net gains**, partially offset by higher **net interest income**[8](index=8&type=chunk) - Compared to Q2 2024, total revenue before non-interest expense increased by **9.8%**, primarily due to higher **net interest income** and lower **provision for credit losses**[8](index=8&type=chunk) [Net Interest Margin](index=2&type=section&id=2.3%20Net%20Interest%20Margin) Net interest margin increased by 6 basis points quarter-over-quarter to 2.67% in Q2 2025, driven by lower deposit costs and higher earning asset yields, and grew 32 basis points year-over-year - Net interest margin increased by **6 basis points** quarter-over-quarter to **2.67%** in Q2 2025 (Q1 2025: 2.61%), primarily due to **lower deposit costs** and **higher earning asset yields**[9](index=9&type=chunk) - Earning asset yield increased by **4 basis points** quarter-over-quarter to **5.61%**, while the cost of interest-bearing liabilities decreased by **2 basis points** to **3.63%**[10](index=10&type=chunk) - Compared to Q2 2024, net interest margin increased by **32 basis points** (Q2 2024: 2.35%), primarily due to a **42 basis point decrease** in the total cost of funds in a lower interest rate environment[10](index=10&type=chunk) [Net Interest Income](index=3&type=section&id=2.4%20Net%20Interest%20Income) Net interest income in Q2 2025 was $17.9 million, a 2.3% sequential increase driven by higher net interest margin, partially offset by a decrease in average earning assets, and grew 13.3% year-over-year - Net interest income in Q2 2025 was **$17.9 million**, a **2.3% increase** from **$17.5 million** in Q1 2025[11](index=11&type=chunk) - The sequential increase was primarily driven by a **6 basis point increase** in net interest margin, partially offset by a decrease in **average earning assets**[11](index=11&type=chunk) - Compared to Q2 2024, net interest income increased by **13.3%** (Q2 2024: **$15.8 million**), primarily driven by a **32 basis point increase** in net interest margin[11](index=11&type=chunk) [Non-Interest Income](index=3&type=section&id=2.5%20Non-interest%20Income) Non-interest income in Q2 2025 was $6.3 million, a 13.7% sequential decrease due to reduced OREO net gains, loan sale net gains, and risk management/insurance fees, partially offset by increased mortgage net gains, and decreased by $0.7 million year-over-year - Non-interest income in Q2 2025 was **$6.3 million**, a **13.7% decrease** from **$7.3 million** in Q1 2025[12](index=12&type=chunk) - The decrease was primarily driven by reduced **OREO net gains**, **net gains on loan sales**, and **risk management and insurance fees**, partially offset by increased **mortgage net gains**[12](index=12&type=chunk) - Q1 2025 included **$0.5 million** in net gains from the sale of the two largest OREO properties and **$0.2 million** in net gains on loan sales from the reversal of non-performing loan charge-offs[12](index=12&type=chunk) - Compared to Q2 2024, non-interest income decreased by **$0.7 million**, primarily due to lower **mortgage net gains** resulting from reduced mortgage origination volume[13](index=13&type=chunk) [Non-Interest Expense](index=3&type=section&id=2.6%20Non-interest%20Expense) Non-interest expense in Q2 2025 was $19.1 million, a 1.5% sequential decrease due to seasonal payroll tax factors, partially offset by higher professional service fees, with improved efficiency ratios both sequentially and year-over-year - Non-interest expense in Q2 2025 was **$19.1 million**, a **1.5% decrease** from **$19.4 million** in Q1 2025[14](index=14&type=chunk) - The decrease was primarily driven by reduced **salaries and employee benefits** due to seasonal payroll tax factors, partially offset by increased **professional service fees**[14](index=14&type=chunk) - Compared to Q2 2024, non-interest expense increased by **0.5%**, primarily driven by higher **occupancy and equipment expenses**, partially offset by reduced **salaries and employee benefits**[15](index=15&type=chunk) - The company's efficiency ratio was **78.8%** in Q2 2025, down from **79.2%** in Q1 2025 and **82.3%** in Q2 2024[15](index=15&type=chunk) [Income Taxes](index=3&type=section&id=2.7%20Income%20Taxes) Income tax expense in Q2 2025 was $0.8 million, a sequential decrease but a significant year-over-year increase Income Tax Expense (Million USD) | Period | Q2 2025 | Q1 2025 | Q2 2024 | | :--- | :------ | :------ | :------ | | Income Tax Expense | 0.8 | 1.2 | 0.3 | [Balance Sheet and Credit Quality](index=3&type=section&id=Balance%20Sheet%20and%20Credit%20Quality) This section reviews the company's balance sheet composition, including loans, deposits, borrowings, and assets under management, alongside an assessment of credit quality and capital adequacy [Loans](index=3&type=section&id=3.1%20Loans) Total loans held for investment reached $2.54 billion as of June 30, 2025, a 4.7% sequential increase driven by net growth in cash, securities, and 1-4 family residential loans, and also increased year-over-year - Total loans held for investment were **$2.54 billion** as of June 30, 2025, an increase of **$115 million** or **4.7%** from March 31, 2025[17](index=17&type=chunk) - The quarter-over-quarter change included net growth in **cash, securities, and other** and **1-4 family residential loan portfolios**, partially offset by a net decrease in the **construction and development loan portfolio**[17](index=17&type=chunk) - Compared to Q2 2024, total loans held for investment increased from **$2.46 billion**, primarily driven by net growth in **1-4 family residential** and **non-owner-occupied commercial real estate loan portfolios**[17](index=17&type=chunk) [Deposits](index=4&type=section&id=3.2%20Deposits) Total deposits were $2.53 billion as of June 30, 2025, a 0.4% sequential increase, and also increased year-over-year, primarily driven by growth in interest-bearing deposits - Total deposits were **$2.53 billion** as of June 30, 2025, an increase of **0.4%** from **$2.52 billion** as of March 31, 2025[18](index=18&type=chunk) - Compared to Q2 2024, total deposits increased from **$2.41 billion**, primarily driven by an increase in **interest-bearing deposits**[18](index=18&type=chunk) [Borrowings](index=4&type=section&id=3.3%20Borrowings) FHLB and Federal Reserve borrowings totaled $163.4 million as of June 30, 2025, a significant sequential increase due to net FHLB credit line draws driven by earning asset growth, but decreased year-over-year due to BTFP repayment and FHLB credit line net paydowns - FHLB and Federal Reserve borrowings totaled **$163.4 million** as of June 30, 2025, an increase of **$111.8 million** from **$51.6 million** as of March 31, 2025[19](index=19&type=chunk) - The sequential change was primarily driven by **net FHLB credit line draws** resulting from earning asset growth during the quarter[19](index=19&type=chunk) - Compared to Q2 2024, borrowings decreased by **$28.1 million**, primarily due to **BTFP repayment** and **net FHLB credit line paydowns** resulting from deposit growth[19](index=19&type=chunk) [Subordinated Notes](index=4&type=section&id=3.4%20Subordinated%20Notes) Subordinated notes were $44.7 million as of June 30, 2025, relatively flat quarter-over-quarter, but decreased year-over-year due to the redemption of $8 million in Q1 2025 - Subordinated notes were **$44.7 million** as of June 30, 2025, compared to **$44.6 million** as of March 31, 2025[20](index=20&type=chunk) - Subordinated notes decreased by **$7.8 million** from **$52.5 million** as of June 30, 2024, primarily due to the **redemption of $8.0 million** in subordinated notes during Q1 2025[20](index=20&type=chunk) [Assets Under Management (AUM)](index=4&type=section&id=3.5%20Assets%20Under%20Management%20(AUM)) Assets Under Management (AUM) reached $7.50 billion as of June 30, 2025, a 4.5% sequential increase driven by improved market conditions, and grew 6.9% year-over-year - Assets Under Management (AUM) were **$7.50 billion** as of June 30, 2025, an increase of **$320 million** or **4.5%** from **$7.18 billion** as of March 31, 2025[21](index=21&type=chunk) - The increase in AUM during the quarter was primarily attributable to **improved market conditions**[21](index=21&type=chunk) - Compared to June 30, 2024, total AUM increased by **6.9%** (Q2 2024: **$7.01 billion**)[21](index=21&type=chunk) [Credit Quality](index=4&type=section&id=3.6%20Credit%20Quality) Non-performing assets and loans both increased sequentially in Q2 2025 due to higher non-performing loans, but significantly decreased year-over-year due to OREO property sales and non-performing loan migration - Total non-performing assets were **$18.8 million**, or **0.62%** of total assets, as of June 30, 2025, an increase from **$17.1 million** as of March 31, 2025[22](index=22&type=chunk) - The increase in non-performing assets during the quarter was due to an increase in **non-performing loans**[22](index=22&type=chunk) - Compared to Q2 2024, non-performing assets decreased, primarily driven by the **sale of two OREO properties**, partially offset by an increase in **non-performing loans**[22](index=22&type=chunk) - Total non-performing loans were **$14.4 million** as of June 30, 2025, an increase of **$1.6 million** from **$12.8 million** as of March 31, 2025, primarily due to the addition of one credit relationship that is actively being restructured[23](index=23&type=chunk) - The company recorded a **$1.8 million provision for credit losses** in Q2 2025, a significant increase from **$0.1 million** in Q1 2025, primarily driven by **loan growth and charge-offs**[24](index=24&type=chunk) [Capital](index=5&type=section&id=3.7%20Capital) First Western and its bank subsidiary exceeded minimum regulatory capital levels in Q2 2025, with the bank classified as 'well-capitalized,' while book value per common share and tangible book value per common share both increased, and the company repurchased 26,287 shares - As of June 30, 2025, First Western (consolidated) and First Western Trust Bank (the Bank) both exceeded their respective minimum regulatory capital levels, with the Bank classified as **'well-capitalized'**[25](index=25&type=chunk) Capital Ratios as of June 30, 2025 | Metric | Consolidated Capital | Bank Capital | | :--------------------------------- | :------- | :------- | | Tier 1 Capital to Risk-Weighted Assets Ratio | 9.96% | 11.36% | | Common Equity Tier 1 Capital to Risk-Weighted Assets Ratio | 9.96% | 11.36% | | Total Capital to Risk-Weighted Assets Ratio | 12.67% | 12.13% | | Tier 1 Capital to Average Assets Ratio | 8.31% | 9.49% | - Book value per common share increased by **0.8%** to **$26.64** as of June 30, 2025, from **$26.44** as of March 31, 2025[25](index=25&type=chunk) - Tangible book value per common share increased by **0.9%** to **$23.39** as of June 30, 2025, from **$23.18** as of March 31, 2025[26](index=26&type=chunk) - The company repurchased **26,287 shares** for **$0.5 million** during Q2 2025[26](index=26&type=chunk) [Company Information](index=5&type=section&id=Company%20Information) This section provides details on the upcoming conference call, an overview of First Western's business, and its market listing [Conference Call and Webcast](index=5&type=section&id=4.1%20Conference%20Call%20and%20Webcast) The company will host a conference call and webcast on July 25, 2025, to discuss Q2 2025 results, with presentation materials available beforehand - The company will host a conference call and webcast on **Friday, July 25, 2025, at 10:00 AM MT / 12:00 PM ET**[27](index=27&type=chunk) - A presentation related to the Q2 2025 results will be available prior to the scheduled conference call via the company's investor relations website[28](index=28&type=chunk) [About First Western](index=5&type=section&id=4.2%20About%20First%20Western) First Western is a Denver-based financial services holding company operating across multiple states, offering comprehensive wealth management services through its private trust bank platform - First Western is a financial services holding company headquartered in **Denver, Colorado**, with operations across **Colorado, Arizona, Wyoming, California, and Montana**[29](index=29&type=chunk) - The company and its subsidiaries provide fully integrated wealth management services through a private trust bank platform, including **deposit, loan, trust, wealth planning, and investment management products and services**[29](index=29&type=chunk) - First Western's common stock trades on the Nasdaq Global Select Market under the symbol **“MYFW”**[29](index=29&type=chunk) [Non-GAAP Financial Measures](index=6&type=section&id=Non-GAAP%20Financial%20Measures) This press release includes non-GAAP financial measures such as 'tangible common equity' and 'efficiency ratio,' which the company believes provide a more comprehensive understanding of its financial condition and performance, serving as supplementary information to GAAP metrics - Non-GAAP financial measures included in this press release are **'tangible common equity,' 'tangible book value per common share,' 'return on average tangible common equity,' 'efficiency ratio,' and 'total revenue'**[30](index=30&type=chunk) - The company believes these non-GAAP financial measures provide management and investors with a more comprehensive understanding of its **financial condition and performance**[30](index=30&type=chunk) - These non-GAAP financial measures are supplementary and not a substitute for any analysis based on GAAP financial measures, and may not be comparable to similarly titled measures used by other companies[30](index=30&type=chunk) [Legal and Investor Information](index=7&type=section&id=Legal%20and%20Investor%20Information) This section outlines forward-looking statements, their inherent risks and uncertainties, and provides contact information for investor inquiries [Forward-Looking Statements](index=7&type=section&id=6.1%20Forward-Looking%20Statements) This press release contains forward-looking statements regarding future financial performance, conditions, business, and market trends, which are subject to various unpredictable risks and uncertainties that could cause actual results to differ materially - Statements in the press release regarding expectations and beliefs about future financial performance and condition, as well as business and market trends, constitute **'forward-looking statements'** under the Private Securities Litigation Reform Act of 1995[31](index=31&type=chunk) - Forward-looking statements are based on current information and assumptions but are subject to various risks and uncertainties, and **actual financial results may differ materially** from those expressed or implied[31](index=31&type=chunk) - Risks and uncertainties include, but are not limited to, **geographic concentration risk, changes in real estate values and liquidity, risks in loan origination and sale capabilities, commercial loan risks, fiduciary liability litigation risk, interest rate changes, and increased credit risk**[31](index=31&type=chunk) [Contacts](index=7&type=section&id=6.2%20Contacts) Investors can contact Tony Rossi at Financial Profiles, Inc. or via IR@myfw.com for further information - Contact: **Tony Rossi** of Financial Profiles, Inc. at **310-622-8221** or **MYFW@finprofiles.com** or **IR@myfw.com**[32](index=32&type=chunk) [Financial Statements](index=8&type=section&id=Financial%20Statements) This section presents the company's unaudited condensed consolidated financial statements, including statements of income, balance sheets, and a comprehensive financial summary [Condensed Consolidated Statements of Income](index=8&type=section&id=7.1%20Condensed%20Consolidated%20Statements%20of%20Income) This section provides First Western Financial, Inc.'s unaudited condensed consolidated statements of income, detailing interest and dividend income, interest expense, net interest income, provision for credit losses, non-interest income, non-interest expense, and net income and EPS for Q2 2025, Q1 2025, and Q2 2024 Condensed Consolidated Statements of Income (Thousand USD, except per share data) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Total Interest and Dividend Income | 37,500 | 37,209 | 38,054 | | Total Interest Expense | 19,616 | 19,756 | 22,276 | | Net Interest Income | 17,884 | 17,453 | 15,778 | | Less: Provision for Credit Losses | 1,773 | 80 | 2,334 | | Net Interest Income after Provision for Credit Losses | 16,111 | 17,373 | 13,444 | | Total Non-Interest Income | 6,305 | 7,345 | 6,972 | | Total Revenue Before Non-Interest Expense | 22,416 | 24,718 | 20,416 | | Total Non-Interest Expense | 19,099 | 19,361 | 19,001 | | Income Before Income Taxes | 3,317 | 5,357 | 1,415 | | Income Tax Expense | 814 | 1,172 | 339 | | Net Income Attributable to Common Shareholders | 2,503 | 4,185 | 1,076 | | Basic Earnings Per Share | 0.26 | 0.43 | 0.11 | | Diluted Earnings Per Share | 0.26 | 0.43 | 0.11 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=7.2%20Condensed%20Consolidated%20Balance%20Sheets) This section presents First Western Financial, Inc.'s unaudited condensed consolidated balance sheets, detailing assets, liabilities, and shareholders' equity as of June 30, 2025, March 31, 2025, and June 30, 2024 Condensed Consolidated Balance Sheets (Thousand USD) | Metric | 2025年6月30日 | 2025年3月31日 | 2024年6月30日 | | :--------------------------------------- | :------------ | :------------ | :------------ | | **Assets** | | | | | Total Cash and Cash Equivalents | 232,314 | 271,582 | 245,799 | | Debt Securities Held to Maturity | 99,825 | 73,775 | 78,927 | | Loans, Net | 2,521,102 | 2,407,411 | 2,428,744 | | Other Real Estate Owned, Net | 4,385 | 4,385 | 11,421 | | Goodwill and Other Intangible Assets, Net | 31,524 | 31,576 | 31,741 | | Total Assets | 3,026,797 | 2,906,300 | 2,937,555 | | **Liabilities** | | | | | Total Deposits | 2,529,129 | 2,515,397 | 2,410,892 | | Federal Home Loan Bank and Federal Reserve Bank Borrowings | 163,416 | 51,612 | 191,505 | | Subordinated Notes | 44,673 | 44,621 | 52,451 | | Total Liabilities | 2,767,950 | 2,649,745 | 2,690,680 | | **Shareholders' Equity** | | | | | Total Shareholders' Equity | 258,847 | 256,555 | 246,875 | | Total Liabilities and Shareholders' Equity | 3,026,797 | 2,906,300 | 2,937,555 | [Consolidated Financial Summary](index=10&type=section&id=7.3%20Consolidated%20Financial%20Summary) This section provides First Western Financial, Inc.'s unaudited consolidated financial summary, including detailed information on loan and deposit portfolios, average balance sheets, yields/cost of funds, asset quality, market data, and capital ratios [Loan Portfolio](index=10&type=section&id=7.3.1%20Loan%20Portfolio) As of June 30, 2025, the company's total loan portfolio was $2.54 billion, with 1-4 family residential loans being the largest component and significant growth in cash, securities, and other loans Loan Portfolio (Thousand USD) | Loan Type | 2025年6月30日 | 2025年3月31日 | 2024年6月30日 | | :----------------------- | :------------ | :------------ | :------------ | | Cash, Securities, and Other | 161,725 | 101,078 | 143,720 | | Consumer and Other | 15,778 | 16,688 | 15,645 | | Construction and Development | 255,870 | 291,133 | 309,146 | | 1-4 Family Residential | 1,012,662 | 971,179 | 904,569 | | Non-Owner-Occupied Commercial Real Estate | 655,954 | 636,820 | 609,790 | | Owner-Occupied Commercial Real Estate | 196,692 | 182,417 | 189,353 | | Commercial and Industrial | 239,278 | 223,197 | 277,973 | | Total | 2,537,959 | 2,422,512 | 2,450,196 | | Total Loans Held for Investment | 2,543,194 | 2,428,792 | 2,460,690 | [Deposit Portfolio](index=10&type=section&id=7.3.2%20Deposit%20Portfolio) As of June 30, 2025, total deposits were $2.53 billion, with money market deposit accounts as the largest component and a decrease in non-interest-bearing deposits Deposit Portfolio (Thousand USD) | Deposit Type | 2025年6月30日 | 2025年3月31日 | 2024年6月30日 | | :----------------------- | :------------ | :------------ | :------------ | | Money Market Deposit Accounts | 1,632,997 | 1,566,737 | 1,342,753 | | Certificates of Deposit | 397,006 | 379,533 | 519,597 | | Interest-Bearing Checking Accounts | 123,967 | 144,980 | 135,759 | | Savings Accounts | 13,503 | 14,451 | 16,081 | | Total Interest-Bearing Deposits | 2,167,473 | 2,105,701 | 2,014,190 | | Non-Interest-Bearing Accounts | 361,656 | 409,696 | 396,702 | | Total Deposits | 2,529,129 | 2,515,397 | 2,410,892 | [Average Balance Sheets](index=11&type=section&id=7.3.3%20Average%20Balance%20Sheets) This section presents the average balance sheets for Q2 2025, Q1 2025, and Q2 2024, including the composition of average earning assets, non-earning assets, interest-bearing liabilities, and non-interest-bearing liabilities Average Balance Sheets (Thousand USD) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | **Assets** | | | | | Total Earning Assets | 2,683,139 | 2,707,613 | 2,697,367 | | Non-Earning Assets | 126,397 | 145,479 | 119,247 | | Total Assets | 2,809,536 | 2,853,092 | 2,816,614 | | **Liabilities and Shareholders' Equity** | | | | | Total Interest-Bearing Liabilities | 2,167,571 | 2,194,885 | 2,121,301 | | Total Non-Interest-Bearing Liabilities | 385,185 | 405,578 | 446,792 | | Total Shareholders' Equity | 256,780 | 252,629 | 248,521 | | Total Liabilities and Shareholders' Equity | 2,809,536 | 2,853,092 | 2,816,614 | [Yields/Cost of Funds](index=11&type=section&id=7.3.4%20Yields/Cost%20of%20Funds) This section details the annualized yields on earning assets and costs of funds for Q2 2025, Q1 2025, and Q2 2024, including net interest margin and net interest spread Yields/Cost of Funds (Annualized) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Yield on Interest-Bearing Deposits in Other Financial Institutions | 4.46% | 4.54% | 5.27% | | Debt Securities Yield | 3.83% | 3.65% | 3.47% | | Loan Yield | 5.71% | 5.71% | 5.75% | | Total Earning Assets Yield | 5.61% | 5.57% | 5.67% | | Cost of Interest-Bearing Deposits | 3.57% | 3.59% | 4.19% | | Total Deposit Cost | 3.04% | 3.06% | 3.47% | | FHLB and Federal Reserve Bank Borrowings Cost | 4.14% | 3.92% | 4.14% | | Subordinated Notes Cost | 5.66% | 5.70% | 5.66% | | Total Interest-Bearing Liabilities Cost | 3.63% | 3.65% | 4.22% | | Net Interest Margin | 2.67% | 2.61% | 2.35% | | Net Interest Spread | 1.98% | 1.92% | 1.45% | [Asset Quality](index=12&type=section&id=7.3.5%20Asset%20Quality) This section provides asset quality metrics for Q2 2025, Q1 2025, and Q2 2024, including non-performing loans, non-performing assets, net charge-offs, and related ratios Asset Quality Metrics | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Non-Performing Loans (Thousand USD) | 14,394 | 12,758 | 37,909 | | Non-Performing Assets (Thousand USD) | 18,779 | 17,143 | 49,330 | | Net Charge-offs (Recoveries) (Thousand USD) | 657 | 566 | (9) | | Non-Performing Loans to Total Loans Ratio | 0.57% | 0.53% | 1.54% | | Non-Performing Assets to Total Assets Ratio | 0.62% | 0.59% | 1.68% | | Allowance for Credit Losses to Non-Performing Loans Ratio | 131.96% | 140.74% | 72.06% | | Allowance for Credit Losses to Total Loans Ratio | 0.75% | 0.74% | 1.11% | | Net Charge-offs to Average Loans Ratio | 0.03% | 0.02% | * | [Market Data](index=12&type=section&id=7.3.6%20Market%20Data) This section provides market data for Q2 2025, Q1 2025, and Q2 2024, including assets under management, period-end book value per share, tangible book value per common share, and weighted average shares outstanding Market Data | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Assets Under Management (Thousand USD) | 7,497,361 | 7,176,624 | 7,011,796 | | Period-End Book Value Per Share (USD) | 26.64 | 26.44 | 25.55 | | Tangible Book Value Per Common Share (USD) | 23.39 | 23.18 | 22.27 | | Weighted Average Shares Outstanding, Basic | 9,707,924 | 9,704,419 | 9,647,345 | | Weighted Average Shares Outstanding, Diluted | 9,809,321 | 9,798,591 | 9,750,667 | | Period-End Shares Outstanding | 9,717,922 | 9,704,320 | 9,660,549 | [Capital Ratios](index=12&type=section&id=7.3.7%20Capital%20Ratios) This section provides consolidated and bank capital ratios for Q2 2025, Q1 2025, and Q2 2024, including Tier 1, Common Equity Tier 1, and Total Capital to Risk-Weighted Assets ratios, as well as Tier 1 Capital to Average Assets ratio Consolidated Capital Ratios | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Tier 1 Capital to Risk-Weighted Assets Ratio | 9.96% | 10.35% | 9.92% | | Common Equity Tier 1 Capital to Risk-Weighted Assets Ratio | 9.96% | 10.35% | 9.92% | | Total Capital to Risk-Weighted Assets Ratio | 12.67% | 13.15% | 13.44% | | Tier 1 Capital to Average Assets Ratio | 8.31% | 8.12% | 7.91% | Bank Capital Ratios | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Tier 1 Capital to Risk-Weighted Assets Ratio | 11.36% | 11.76% | 11.22% | | Common Equity Tier 1 Capital to Risk-Weighted Assets Ratio | 11.36% | 11.76% | 11.22% | | Total Capital to Risk-Weighted Assets Ratio | 12.13% | 12.52% | 12.35% | | Tier 1 Capital to Average Assets Ratio | 9.49% | 9.24% | 8.95% | [Reconciliations of Non-GAAP Financial Measures](index=13&type=section&id=Reconciliations%20of%20Non-GAAP%20Financial%20Measures) This section provides reconciliations for non-GAAP financial measures, including tangible common equity and the efficiency ratio, to their most directly comparable GAAP measures [Tangible Common Equity Reconciliation](index=13&type=section&id=8.1%20Tangible%20Common%20Equity%20Reconciliation) This section provides a reconciliation of tangible common equity and its per-share value, deducting goodwill and other intangible assets from total shareholders' equity for a clearer view of capital structure Tangible Common Equity Reconciliation (Thousand USD, except per share data) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Total Shareholders' Equity | 258,847 | 256,555 | 246,875 | | Less: Goodwill and Other Intangible Assets, Net | 31,524 | 31,576 | 31,741 | | Tangible Common Equity | 227,323 | 224,979 | 215,134 | | Period-End Common Shares Outstanding | 9,717,922 | 9,704,320 | 9,660,549 | | Tangible Book Value Per Common Share (USD) | 23.39 | 23.18 | 22.27 | | Net Income Attributable to Common Shareholders | 2,503 | 4,185 | 1,076 | | Return on Average Tangible Common Equity (Annualized) | 4.40% | 7.44% | 2.00% | [Efficiency Ratio Reconciliation](index=13&type=section&id=8.2%20Efficiency%20Ratio%20Reconciliation) This section provides a reconciliation of the efficiency ratio, adjusting non-interest expense and total revenue to more accurately reflect the company's operational efficiency Efficiency Ratio Reconciliation (Thousand USD) | Metric | Q2 2025 | Q1 2025 | Q2 2024 | | :--------------------------------------- | :------ | :------ | :------ | | Non-Interest Expense | 19,099 | 19,361 | 19,001 | | Less: OREO Expense and Impairment | 53 | (80) | 29 | | Adjusted Non-Interest Expense | 19,046 | 19,441 | 18,972 | | Total Revenue Before Non-Interest Expense | 22,416 | 24,718 | 20,416 | | Less: Realized (Unrealized) Gains (Losses) on Equity Securities | 3 | 11 | (2) | | Less: Realized (Unrealized) Gains (Losses) on Loans Measured at Fair Value | 26 | 6 | (315) | | Less: Net Gains on Loans Held for Sale | — | 222 | — | | Add: Provision for Credit Losses | 1,773 | 80 | 2,334 | | Total Revenue | 24,160 | 24,559 | 23,067 | | Efficiency Ratio | 78.83% | 79.16% | 82.25% |

Company Overview - First Western Financial, Inc. is a financial services holding company headquartered in Denver, Colorado, with operations in Colorado, Arizona, Wyoming, California, and Montana [5] - The company provides a fully integrated suite of wealth management services on a private trust bank platform, including deposit, loan, trust, wealth planning, and investment management products and services [5] - First Western's common stock is traded on the NASDAQ Global Select Market under the symbol "MYFW" [5] Upcoming Financial Results - First Western will release its financial results for the second quarter ended June 30, 2025, after the markets close on Thursday, July 24, 2025 [1] - A conference call will be held on Friday, July 25, 2025, at 10:00 a.m. Mountain Time/12:00 p.m. Eastern Time to discuss the financial results [2] - The conference call will be webcast live on the News & Events page of First Western's investor relations website, with an archived version available shortly after the live call [4]

Group 1 - First Western Financial, Inc. (MYFW) has recently experienced a "golden cross" event, indicating a potential bullish breakout as its 50-day simple moving average has crossed above its 200-day simple moving average [1][2] - The stock has shown a significant upward movement of 23.9% over the past four weeks, suggesting strong momentum [4] - MYFW is currently rated as a 1 (Strong Buy) on the Zacks Rank, indicating positive sentiment among analysts [4] Group 2 - The golden cross pattern consists of three stages: a downtrend followed by a crossover of the shorter moving average over the longer one, and finally an upward price movement [3] - Recent earnings expectations for MYFW have improved, with one upward revision and no downward changes in the last 60 days, further supporting the bullish outlook [4][5] - The combination of positive earnings estimate revisions and the technical breakout suggests that MYFW may continue to see gains in the near future [5]

[Report Information](index=1&type=section&id=Report%20Information) [Form 10-Q Filing Details](index=1&type=section&id=Form%2010-Q%20Filing%20Details) This report is First Western Financial, Inc.'s quarterly report for the period ended March 31, 2025, confirming the company has filed all required reports and is classified as an accelerated filer - Reporting period ended **March 31, 2025**[2](index=2&type=chunk) - Company has filed all required reports and complies with filing requirements[4](index=4&type=chunk) - Company is classified as an "accelerated filer"[5](index=5&type=chunk) Company Basic Information | Indicator | Detail | | :--- | :--- | | Registrant Name | FIRST WESTERN FINANCIAL, INC. | | Jurisdiction of Incorporation | Colorado | | Telephone Number | 303.531.8100 | | Trading Symbol | MYFW | | Registered Exchange | The Nasdaq Stock Market LLC | | Common Stock Outstanding (as of May 5, 2025) | 9,715,432 shares | [TABLE OF CONTENTS](index=2&type=section&id=TABLE%20OF%20CONTENTS) [Important Notice about Information in this Quarterly Report](index=3&type=section&id=Important%20Notice%20about%20Information%20in%20this%20Quarterly%20Report) [Important Notice](index=3&type=section&id=Important%20Notice) Information in this quarterly report is current only as of the report date, with "we," "company," and "First Western" referring to First Western Financial, Inc. and its consolidated subsidiaries, including First Western Trust Bank - "We," "company," and "First Western" refer to First Western Financial, Inc. and its consolidated subsidiaries, including First Western Trust Bank[9](index=9&type=chunk) - Report information is current only as of the report date and specified dates within[9](index=9&type=chunk) [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](index=4&type=section&id=CAUTIONARY%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements regarding future events and financial performance, where actual results may differ materially due to various risks including geographic concentration, economic conditions, interest rate changes, credit risk, competition, regulatory changes, and technology risks, with no obligation to update - Forward-looking statements are based on current expectations, estimates, and projections, and actual results may differ materially[11](index=11&type=chunk) - Significant risk factors include geographic concentration (Colorado, Arizona, Wyoming, Montana, California), economic conditions, real estate values and liquidity, interest rate changes, adequacy of allowance for credit losses, liquidity risk, competition, acquisition risk, information security and cyberattacks, technological changes (including AI), regulatory changes, and legal proceedings[12](index=12&type=chunk)[14](index=14&type=chunk) - The company undertakes no obligation to publicly update or revise any forward-looking statements[13](index=13&type=chunk) [PART I. FINANCIAL INFORMATION](index=6&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=6&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the company's unaudited condensed consolidated financial statements, including balance sheets, income statements, comprehensive income statements, changes in shareholders' equity, and cash flow statements, along with detailed notes, providing financial position and operating results as of March 31, 2025 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets Key Data (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $271,582 | $236,041 | $35,541 | 15.1% | | Debt securities held-to-maturity, net | $73,775 | $75,724 | $(1,949) | (2.6)% | | Loans, net | $2,407,411 | $2,407,235 | $176 | 0.0% | | Mortgage loans held for sale, net | $10,557 | $25,455 | $(14,898) | (58.5)% | | Other real estate owned, net | $4,385 | $35,929 | $(31,544) | (87.8)% | | Goodwill and other intangible assets, net | $31,576 | $31,627 | $(51) | (0.2)% | | **Total assets** | **$2,906,300** | **$2,919,037** | **$(12,737)** | **(0.4)%** | | Total deposits | $2,515,397 | $2,514,209 | $1,188 | 0.0% | | Total borrowings | $96,233 | $109,603 | $(13,370) | (12.2)% | | **Total liabilities** | **$2,649,745** | **$2,666,715** | **$(16,970)** | **(0.6)%** | | **Total shareholders' equity** | **$256,555** | **$252,322** | **$4,233** | **1.7%** | [Condensed Consolidated Statements of Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Condensed Consolidated Statements of Income Key Data (Thousands of US Dollars, except per share amounts) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Total interest and dividend income | $37,209 | $38,398 | $(1,189) | (3.1)% | | Total interest expense | $19,756 | $22,328 | $(2,572) | (11.5)% | | Net interest income | $17,453 | $16,070 | $1,383 | 8.6% | | Less: Provision for credit losses | $80 | $72 | $8 | 11.1% | | Net interest income after provision for credit losses | $17,373 | $15,998 | $1,375 | 8.6% | | Total non-interest income | $7,345 | $7,277 | $68 | 0.9% | | Total non-interest expense | $19,361 | $19,696 | $(335) | (1.7)% | | Income before income taxes | $5,357 | $3,579 | $1,778 | 49.7% | | Income tax expense | $1,172 | $1,064 | $108 | 10.2% | | **Net income attributable to common shareholders** | **$4,185** | **$2,515** | **$1,670** | **66.4%** | | Basic earnings per common share | $0.43 | $0.26 | $0.17 | 65.4% | | Diluted earnings per common share | $0.43 | $0.26 | $0.17 | 65.4% | [Condensed Consolidated Statements of Comprehensive Income](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Comprehensive Income Key Data (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Net income | $4,185 | $2,515 | $1,670 | 66.4% | | Total other comprehensive (loss) income items | $(33) | $445 | $(478) | (107.4)% | | **Comprehensive income** | **$4,152** | **$2,960** | **$1,192** | **40.3%** | [Condensed Consolidated Statements of Changes in Shareholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity) Shareholders' Equity Changes Key Data (Thousands of US Dollars, except for share count) | Indicator | March 31, 2025 | January 1, 2025 | Change Amount | | :--- | :--- | :--- | :--- | | Common stock shares | 9,704,320 | 9,667,142 | 37,178 | | Additional paid-in capital | $193,666 | $193,585 | $81 | | Retained earnings | $63,700 | $59,515 | $4,185 | | Accumulated other comprehensive (loss) income | $(811) | $(778) | $(33) | | **Total shareholders' equity** | **$256,555** | **$252,322** | **$4,233** | - Shareholders' equity increased primarily due to net income of **$4,185 thousand** and equity compensation of **$422 thousand**, partially offset by share award settlements of **$339 thousand** and other comprehensive loss of **$33 thousand**[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=11&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Statement Key Data (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $8,012 | $(2,339) | $10,351 | | Net cash provided by investing activities | $32,608 | $59,461 | $(26,853) | | Net cash used in financing activities | $(5,079) | $(53,675) | $48,596 | | Net change in cash and cash equivalents | $35,541 | $3,447 | $32,094 | | Cash and cash equivalents at end of period | $271,582 | $257,889 | $13,693 | - Operating cash flow turned positive, primarily driven by increased net income and changes in operating assets and liabilities[24](index=24&type=chunk) - Investing cash flow primarily resulted from the sale of mortgage loans and disposition of real estate[24](index=24&type=chunk) - Financing cash outflow significantly decreased, mainly due to reduced payments on Federal Home Loan Bank borrowings[24](index=24&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=13&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=13&type=section&id=NOTE%201%20%E2%80%93%20ORGANIZATION%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) First Western Financial, Inc. is a bank holding company offering comprehensive wealth management services, including private banking, trust, investment management, and mortgage services, primarily to clients in Colorado, Arizona, California, Montana, and Wyoming, with financial statements prepared under GAAP and relying on estimates for credit loss allowance, goodwill impairment, and fair value of financial instruments, having adopted ASU 2023-09 and evaluating ASU 2024-03 - The company provides private banking, personal trust, investment management, mortgage, and institutional asset management services[29](index=29&type=chunk) - Primary revenue sources include net interest income, wealth advisory fees, investment management fees, asset management fees, personal trust service fees, and net gains on mortgage loans[29](index=29&type=chunk) - Loans secured by real estate constituted **79.5%** (March 31, 2025) and **78.9%** (December 31, 2024) of the loan portfolio[35](index=35&type=chunk) - ASU 2023-09 (Improvements to Income Tax Disclosures) was adopted effective January 1, 2025[56](index=56&type=chunk) - ASU 2024-03 (Disaggregation of Expenses) is being evaluated, with adoption expected January 1, 2027, and no significant impact anticipated[58](index=58&type=chunk) [NOTE 2 – DEBT SECURITIES](index=17&type=section&id=NOTE%202%20%E2%80%93%20DEBT%20SECURITIES) As of March 31, 2025, the amortized cost of the company's held-to-maturity debt securities was **$73.846 million**, a slight decrease from December 31, 2024, primarily due to principal payments, with this portfolio mainly consisting of securities issued by U.S. government entities and agencies, having a credit loss allowance of **$71 thousand** and no past due or nonaccrual securities Debt Securities Held-to-Maturity (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total amortized cost | $73,846 | $75,795 | | Total fair value | $67,479 | $68,161 | | Allowance for credit losses | $71 | $71 | - The held-to-maturity debt securities portfolio is predominantly composed of securities issued by U.S. government entities and agencies, with credit loss risk considered zero[42](index=42&type=chunk)[67](index=67&type=chunk) - As of March 31, 2025, and December 31, 2024, there were no past due or nonaccrual debt securities held-to-maturity[67](index=67&type=chunk) - As of March 31, 2025, the market value of pledged securities was **$29.8 million**, used to collateralize various public deposits and credit lines[64](index=64&type=chunk) [NOTE 3 – LOANS AND THE ALLOWANCE FOR CREDIT LOSSES](index=19&type=section&id=NOTE%203%20%E2%80%93%20LOANS%20AND%20THE%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) As of March 31, 2025, the company's total loans (amortized cost) were **$2.419 billion**, with an allowance for credit losses of **$17.956 million**, a slight decrease from the prior quarter due to loan portfolio mix adjustments and charge-offs, partially offset by a deteriorating macroeconomic forecast and increased individually analyzed reserves, with total nonaccrual loans at **$12.751 million** and no loans past due 90 days or more and still accruing interest Loan Portfolio Summary (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total loans (amortized cost) | $2,419,255 | $2,418,282 | | Allowance for credit losses | $(17,956) | $(18,330) | | Loans, net | $2,401,299 | $2,399,952 | | Loans accounted for under the fair value option | $6,112 | $7,283 | Nonaccrual Loans (Thousands of US Dollars) | Category | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash, securities, and other | $1,704 | $1,704 | | Commercial and industrial | $11,047 | $11,048 | | **Total nonaccrual loans** | **$12,751** | **$12,752** | - As of March 31, 2025, and December 31, 2024, the company had no loans past due 90 days or more and still accruing interest[70](index=70&type=chunk) - The allowance for credit losses decreased by **$0.4 million** in Q1 2025, primarily due to loan portfolio mix adjustments and charge-offs, partially offset by a deteriorating macroeconomic forecast and increased individually analyzed reserves[79](index=79&type=chunk) Allowance for Credit Losses Changes (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Beginning balance | $18,330 | $23,931 | | (Release) provision for credit losses | $192 | $699 | | Charge-offs | $(594) | $(11) | | Recoveries | $28 | $11 | | **Ending balance** | **$17,956** | **$24,630** | [NOTE 4 – GOODWILL](index=26&type=section&id=NOTE%204%20%E2%80%93%20GOODWILL) As of March 31, 2025, the company's total goodwill was **$30.4 million**, unchanged from December 31, 2024, with no impairment identified or recorded during the quarter Goodwill (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total goodwill | $30,400 | $30,400 | - No goodwill impairment was identified or recorded as of March 31, 2025[88](index=88&type=chunk) [NOTE 5 – LEASES](index=27&type=section&id=NOTE%205%20%E2%80%93%20LEASES) As of March 31, 2025, the company's operating lease right-of-use assets and liabilities slightly decreased, with net lease cost for Q1 2025 at **$1.452 million**, an increase from the prior year, mainly due to higher operating and variable lease costs Lease Assets and Liabilities (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets | $18,476 | $19,161 | | Operating lease liabilities | $20,183 | $20,959 | Net Lease Cost (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Operating lease cost | $876 | $754 | | Variable lease cost | $576 | $542 | | **Net lease cost** | **$1,452** | **$1,296** | - As of March 31, 2025, the weighted-average remaining lease term was **8.97 years**, and the weighted-average discount rate was **4.15%**[90](index=90&type=chunk) [NOTE 6 – DEPOSITS](index=28&type=section&id=NOTE%206%20%E2%80%93%20DEPOSITS) As of March 31, 2025, total deposits were **$2.515 billion**, a slight increase from December 31, 2024, with money market deposit accounts increasing and time deposits decreasing Deposit Composition (Thousands of US Dollars) | Deposit Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-interest-bearing deposits | $409,696 | $375,603 | | Interest-bearing deposits | $2,105,701 | $2,138,606 | | **Total deposits** | **$2,515,397** | **$2,514,209** | Interest-Bearing Deposit Details (Thousands of US Dollars) | Deposit Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Money market deposit accounts | $1,566,737 | $1,513,605 | | Time deposits | $379,533 | $471,415 | | Interest-bearing checking accounts | $144,980 | $139,374 | | Savings accounts | $14,451 | $14,212 | - As of March 31, 2025, total time deposits of **$250 million or more** amounted to **$86.091 million**[93](index=93&type=chunk) [NOTE 7 – BORROWINGS](index=29&type=section&id=NOTE%207%20%E2%80%93%20BORROWINGS) As of March 31, 2025, total borrowings were **$96.233 million**, a **12.2%** decrease from December 31, 2024, primarily due to the redemption of **$8 million** in subordinated notes and reduced reliance on Federal Home Loan Bank (FHLB) borrowings, with the company continuing to comply with all borrowing covenant requirements Borrowing Composition (Thousands of US Dollars) | Borrowing Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | FHLB and Federal Reserve Bank borrowings | $51,612 | $57,038 | | Subordinated notes | $44,621 | $52,565 | | **Total borrowings** | **$96,233** | **$109,603** | - On January 2, 2025, the company renewed a **$50 million** FHLB advance at SOFR plus **14.5 basis points**[96](index=96&type=chunk) - As of March 31, 2025, **$1.612 million** of Paycheck Protection Program Liquidity Facility (PPPLF) loans remained outstanding under FHLB and Federal Reserve Bank borrowings[97](index=97&type=chunk) - The company redeemed **$8 million** of subordinated notes, with **$0.5 million** paid before quarter-end and **$7.5 million** paid after quarter-end and reclassified to other liabilities[101](index=101&type=chunk)[219](index=219&type=chunk) - As of March 31, 2025, and December 31, 2024, the company was in compliance with all borrowing covenant requirements[102](index=102&type=chunk)[260](index=260&type=chunk) [NOTE 8 – COMMITMENTS AND CONTINGENCIES](index=30&type=section&id=NOTE%208%20%E2%80%93%20COMMITMENTS%20AND%20CONTINGENCIES) The company incurs off-balance sheet credit risk in its ordinary course of business, including unused lines of credit and standby letters of credit, with the allowance for credit losses on off-balance sheet credit risk at **$560 thousand** as of March 31, 2025, a decrease from the prior quarter, and legal proceedings not expected to have a material adverse effect on the financial statements Credit Risk Represented by Financial Instrument Contract Amounts (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Unused lines of credit | $552,612 | $521,947 | | Standby letters of credit | $23,312 | $21,864 | | Commitments to sell loans | $40,638 | $19,769 | | Commitments to originate loans | $96,154 | $19,592 | Changes in Allowance for Credit Losses on Off-Balance Sheet Credit Risk (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Beginning balance | $672 | $2,178 | | (Release) provision for credit losses | $(112) | $(627) | | **Ending balance** | **$560** | **$1,551** | - The company does not anticipate legal proceedings to have a material impact on the condensed consolidated financial statements[109](index=109&type=chunk) [NOTE 9 – SHAREHOLDERS' EQUITY](index=31&type=section&id=NOTE%209%20%E2%80%93%20SHAREHOLDERS'%20EQUITY) As of March 31, 2025, the company had **9,704,320** shares of common stock outstanding, having repurchased **100 shares** under its 2024 repurchase program with **194,399 shares** remaining available, and **493,349 shares** available for issuance under the 2016 Omnibus Incentive Plan, with equity compensation expense for time-vested units at **$0.4 million** in Q1 2025 - As of March 31, 2025, **9,704,320** common shares were outstanding[16](index=16&type=chunk) - In Q1 2025, the company repurchased **100 shares** of common stock under its 2024 repurchase program[111](index=111&type=chunk) - As of March 31, 2025, **194,399 shares** remained available for repurchase under the 2024 repurchase program[111](index=111&type=chunk) - As of March 31, 2025, **493,349 shares** were available for issuance under the 2016 Omnibus Incentive Plan[112](index=112&type=chunk) Equity Compensation Expense (Thousands of US Dollars) | Incentive Type | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Time-vested units | $400 | $300 | | Financial performance units | $63 | $(120) | - As of March 31, 2025, unrecognized equity compensation expense for time-vested units was **$3.2 million**, expected to be recognized over **2.8 years**[116](index=116&type=chunk) [NOTE 10 – EARNINGS PER COMMON SHARE](index=34&type=section&id=NOTE%2010%20%E2%80%93%20EARNINGS%20PER%20COMMON%20SHARE) In Q1 2025, basic and diluted earnings per common share were both **$0.43**, an increase from **$0.26** in Q1 2024, reflecting higher net income Earnings Per Common Share (US Dollars per share) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Basic earnings per common share | $0.43 | $0.26 | | Diluted earnings per common share | $0.43 | $0.26 | Weighted-Average Shares Outstanding (Shares) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Basic weighted-average shares outstanding | 9,704,419 | 9,621,309 | | Diluted weighted-average shares outstanding | 9,798,591 | 9,710,764 | [NOTE 11 – INCOME TAXES](index=34&type=section&id=NOTE%2011%20%E2%80%93%20INCOME%20TAXES) In Q1 2025, income tax expense was **$1.172 million** with an effective tax rate of **21.9%**, compared to **$1.064 million** and **29.7%** in Q1 2024 Income Tax Expense and Effective Tax Rate (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Income tax expense | $1,172 | $1,064 | | Effective tax rate | 21.9% | 29.7% | [NOTE 12 – FAIR VALUE](index=35&type=section&id=NOTE%2012%20%E2%80%93%20FAIR%20VALUE) The company regularly measures various financial instruments at fair value, categorized into three levels based on input observability, with mortgage loans held for sale and loans measured at fair value both decreasing as of March 31, 2025, and non-recurring fair value measurements primarily involving other real estate owned (OREO) and collateral-dependent loans Assets and Liabilities Measured at Fair Value (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Mortgage loans held for sale | $10,557 | $25,455 | | Loans measured at fair value | $6,112 | $7,283 | | Forward commitments and FSC | $5 | $225 | | Equity securities | $761 | $752 | | Collateralized assets | $261 | $235 | | Interest rate lock commitments (IRLCs), net | $801 | $358 | | Equity warrants | $765 | $765 | | Swap derivative assets | $1,013 | $1,060 | | Forward commitments and FSC liabilities | $128 | $13 | | Swap derivative liabilities | $1,013 | $956 | - Net gains on loans measured at fair value were **$0.186 million** in Q1 2025, compared to **$0.129 million** in Q1 2024[135](index=135&type=chunk) - Fair value measurements for other real estate owned (OREO) and collateral-dependent loans are typically based on appraisals and classified as Level 3 inputs[138](index=138&type=chunk)[139](index=139&type=chunk) Non-Recurring Fair Value Measurements (Thousands of US Dollars) | Category | March 31, 2025 Fair Value | | :--- | :--- | | OREO: 1-4 family residential | $4,385 | | Collateral-dependent loans, net: Commercial and industrial | $794 | | Collateral-dependent loans, net: Commercial and industrial | $132 | | Collateral-dependent loans, net: Owner-occupied commercial real estate | $845 | [NOTE 13 – DERIVATIVES](index=44&type=section&id=NOTE%2013%20%E2%80%93%20DERIVATIVES) The company utilizes interest rate swaps as part of its asset/liability management strategy to manage interest rate risk, including FHLB borrowing swaps designated as cash flow hedges (notional amount **$50 million**) and client variable-rate loan swaps not designated as hedging instruments (notional amount **$71.369 million**), with cash flow hedges determined to be effective Derivative Fair Values (Thousands of US Dollars) | Derivative Type | March 31, 2025 Notional Amount | March 31, 2025 Fair Value | December 31, 2024 Notional Amount | December 31, 2024 Fair Value | | :--- | :--- | :--- | :--- | :--- | | Interest rate swaps – cash flow hedges | $50,000 | $30 | $50,000 | $129 | | Interest rate swaps – client loan related (not designated as hedges) | $71,369 | $983 | $70,353 | $931 | | Client loan related interest rate swap liabilities (not designated as hedges) | $71,369 | $1,013 | $70,353 | $956 | - Cash flow hedges were determined to be effective as of March 31, 2025, and December 31, 2024[152](index=152&type=chunk) [NOTE 14 – SEGMENT REPORTING](index=45&type=section&id=NOTE%2014%20%E2%80%93%20SEGMENT%20REPORTING) The company has two reportable operating segments: Wealth Management and Mortgage, with the Wealth Management segment (including parent company activities) experiencing a significant **57.2%** increase in income before income taxes to **$5.351 million** in Q1 2025, while the Mortgage segment's income before income taxes sharply decreased by **96.6%** to **$6 thousand** Segment Income Before Income Taxes (Thousands of US Dollars) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Wealth Management | $5,351 | $3,404 | $1,947 | 57.2% | | Mortgage | $6 | $175 | $(169) | (96.6)% | | **Consolidated Total** | **$5,357** | **$3,579** | **$1,778** | **49.7%** | - Wealth Management segment revenue growth was primarily driven by increased net interest income, higher non-interest income, and reduced non-interest expense[211](index=211&type=chunk) - Mortgage segment revenue declined mainly due to reduced net gains on mortgage loans, particularly a decrease in interest rate lock pull-through rates[212](index=212&type=chunk) [NOTE 15 – LOW-INCOME HOUSING TAX CREDIT INVESTMENTS](index=47&type=section&id=NOTE%2015%20%E2%80%93%20LOW-INCOME%20HOUSING%20TAX%20CREDIT%20INVESTMENTS) As of March 31, 2025, total Low-Income Housing Tax Credit (LIHTC) investments were **$3.6 million**, with unused commitments of **$3.4 million**, and both amortization expense and tax credits were **$0.2 million** in Q1 2025, with no impairment losses incurred LIHTC Investments (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total LIHTC investments | $3,600 | $3,100 | | Total unused commitments | $3,400 | $4,100 | LIHTC Related Expenses and Benefits (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Amortization expense | $200 | $200 | | Tax credits and other benefits | $200 | $200 | - No impairment losses were incurred in Q1 2025[163](index=163&type=chunk) [NOTE 16 – REGULATORY CAPITAL MATTERS](index=47&type=section&id=NOTE%2016%20%E2%80%93%20REGULATORY%20CAPITAL%20MATTERS) As of March 31, 2025, First Western and its bank met all applicable regulatory capital requirements and were classified as "well capitalized" institutions, with all capital ratios significantly exceeding Basel III minimums and "well capitalized" standards Bank Regulatory Capital Ratios (Thousands of US Dollars) | Indicator | March 31, 2025 Actual Ratio | Capital Adequacy Requirement Ratio | Well Capitalized (Corrective Action) Requirement Ratio | | :--- | :--- | :--- | :--- | | Bank Tier 1 Capital to Risk-Weighted Assets | 11.76% | 6.0% | 8.0% | | Bank CET1 to Risk-Weighted Assets | 11.76% | 4.5% | 6.5% | | Bank Total Capital to Risk-Weighted Assets | 12.52% | 8.0% | 10.0% | | Bank Tier 1 Capital to Average Assets | 9.24% | 4.0% | 5.0% | Consolidated Regulatory Capital Ratios (Thousands of US Dollars) | Indicator | March 31, 2025 Actual Ratio | | :--- | :--- | | Consolidated Tier 1 Capital to Risk-Weighted Assets | 10.35% | | Consolidated CET1 to Risk-Weighted Assets | 10.35% | | Consolidated Total Capital to Risk-Weighted Assets | 13.15% | | Consolidated Tier 1 Capital to Average Assets | 8.12% | - As of March 31, 2025, the bank had **$118.6 million** in retained earnings available for dividend payments[170](index=170&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=49&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's detailed discussion and analysis of the company's financial condition and results of operations for the three months ended March 31, 2025, covering company overview, industry developments, operating results, financial condition, liquidity and capital resources, and critical accounting policies [Company Overview](index=49&type=section&id=Company%20Overview) First Western Financial, Inc., founded in 2002 and headquartered in Denver, is a financial holding company dedicated to providing comprehensive wealth management services, including banking, trust, and investment management, to high-net-worth clients in the Western U.S. As of March 31, 2025, total assets were **$2.91 billion**, and assets under management (AUM) were **$7.18 billion** - The company was founded in **2002** and is headquartered in Denver, Colorado[173](index=173&type=chunk) - It offers comprehensive wealth management services, including banking, trust, and investment management products and services[173](index=173&type=chunk) - Target clients are entrepreneurs, professionals, and high-net-worth individuals, typically with **over $1 million** in liquid net worth[173](index=173&type=chunk) Company Size (Thousands of US Dollars) | Indicator | March 31, 2025 | | :--- | :--- | | Total Assets | $2,910,000 | | Total Income Before Income Taxes | $24,700 | | Assets Under Management (AUM) | $7,180,000 | [Recent Industry Developments](index=49&type=section&id=Recent%20Industry%20Developments) Despite economic and regulatory uncertainties, the banking industry is projected to perform strongly in 2025, with the company maintaining stability, holding-to-maturity securities at **2.5%** of total assets, limited exposure to non-owner-occupied office commercial real estate (CRE), and a diversified client base - The banking industry is projected to have a stronger performance in **2025**[176](index=176&type=chunk) - The company's held-to-maturity securities represent **2.5%** of total assets, with unrealized losses representing **2.5%** of total shareholders' equity as of March 31, 2025[176](index=176&type=chunk) - The company has limited exposure to non-owner-occupied office commercial real estate (CRE)[176](index=176&type=chunk) - The company's client base is diversified, with no single industry concentration risk[176](index=176&type=chunk) [Primary Factors Used to Evaluate the Results of Operations](index=49&type=section&id=Primary%20Factors%20Used%20to%20Evaluate%20the%20Results%20of%20Operations) The company primarily evaluates operating results through net interest income, non-interest income, and non-interest expense, with net interest income influenced by loan growth, interest rates, and funding costs; non-interest income mainly from trust and investment management fees and mortgage net gains; and non-interest expense primarily comprising salaries, benefits, occupancy, and professional services - Primary factors for evaluating operating results include net interest income, non-interest income, and non-interest expense[177](index=177&type=chunk) - Net interest income is affected by loan and investment securities yields, deposit costs, borrowing rates, and changes in market interest rates[178](index=178&type=chunk) - Non-interest income primarily includes trust and investment management fees, net gains on mortgage loans, net gains on loans held for sale, bank service charges, risk management and insurance fees, and bank-owned life insurance income[179](index=179&type=chunk) - Non-interest expense primarily includes salaries and employee benefits, occupancy and equipment, professional services, technology and information systems, data processing, marketing, amortization of other intangible assets, and other operating expenses[179](index=179&type=chunk)[186](index=186&type=chunk) [Results of Operations](index=52&type=section&id=Results%20of%20Operations) For the three months ended March 31, 2025, net income attributable to common shareholders was **$4.2 million**, a **68.0%** increase year-over-year, with income before income taxes at **$5.4 million**, up **50.0%**, primarily driven by a **$1.4 million** increase in net interest income, a **$0.1 million** increase in non-interest income, and a **$0.3 million** decrease in non-interest expense Operating Results Overview (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to common shareholders | $4,185 | $2,515 | $1,670 | 66.4% | | Income before income taxes | $5,357 | $3,579 | $1,778 | 49.7% | | Net interest income (before provision for credit losses) | $17,453 | $16,070 | $1,383 | 8.6% | | Total non-interest income | $7,345 | $7,277 | $68 | 0.9% | | Total non-interest expense | $19,361 | $19,696 | $(335) | (1.7)% | [Net Interest Income](index=52&type=section&id=Net%20Interest%20Income) Net interest income (before provision for credit losses) for Q1 2025 was **$17.5 million**, an **8.7%** increase year-over-year, with net interest margin expanding by **27 basis points** to **2.61%**, mainly due to a **54 basis point** decrease in the average rate on interest-bearing deposits, partially offsetting a decrease in average loan balances Net Interest Income and Net Interest Margin (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Net interest income | $17,453 | $16,070 | | Net interest spread | 1.92% | 1.41% | | Net interest margin | 2.61% | 2.34% | - The average rate on interest-bearing deposits decreased by **54 basis points** from **4.13%** in Q1 2024 to **3.59%** in Q1 2025[189](index=189&type=chunk)[192](index=192&type=chunk) - Average loan balances decreased by **$82.8 million**[188](index=188&type=chunk) - Average loan yield increased from **5.66%** in Q1 2024 to **5.71%** in Q1 2025[190](index=190&type=chunk)[192](index=192&type=chunk) [Provision for Credit Losses](index=54&type=section&id=Provision%20for%20Credit%20Losses) In Q1 2025, the company recorded an **$80 thousand** provision for credit losses, largely consistent with the prior year, primarily due to a charge-off on a previously classified loan held for sale and a slight deterioration in macroeconomic forecasts, partially offset by loan portfolio mix adjustments and a release of the allowance for unfunded loan commitments Provision for Credit Losses (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Provision for credit losses | $80 | $72 | - The provision for credit losses was primarily impacted by a charge-off on a loan held for sale and deteriorating macroeconomic forecasts, partially offset by portfolio mix adjustments and a release of the allowance for unfunded loan commitments[194](index=194&type=chunk) [Non-Interest Income](index=54&type=section&id=Non-Interest%20Income) Non-interest income for Q1 2025 slightly increased by **0.9%** to **$7.3 million**, primarily driven by significant growth in net gains on other real estate owned (OREO) sales and net gains on loans measured at fair value, partially offset by decreases in trust and investment management fees and bank service charges Non-Interest Income Details (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Trust and investment management fees | $4,677 | $4,930 | $(253) | (5.1)% | | Net gains on mortgage loans | $1,067 | $1,264 | $(197) | (15.6)% | | Net gains on loans held for sale | $222 | $117 | $105 | 89.7% | | Bank service charges | $422 | $891 | $(469) | (52.6)% | | Risk management and insurance fees | $259 | $49 | $210 | 428.6% | | Bank-owned life insurance income | $110 | $105 | $5 | 4.8% | | Net gains (losses) on loans measured at fair value | $6 | $(302) | $308 | 102.0% | | Net gains on other real estate owned | $459 | $0 | $459 | * | | Unrealized gains (losses) on equity securities | $11 | $(6) | $17 | 283.3% | | Other | $112 | $229 | $(117) | (51.1)% | | **Total non-interest income** | **$7,345** | **$7,277** | **$68** | **0.9%** | - Net gains on other real estate owned increased by **$0.459 million**, primarily due to the sale of two largest OREO properties[202](index=202&type=chunk) - Bank service charges decreased by **$0.469 million**, mainly due to a large loan prepayment penalty collected in Q1 2024[200](index=200&type=chunk) - Risk management and insurance fees increased by **$0.21 million**, primarily due to an increase in insurance client agreements[200](index=200&type=chunk) [Non-Interest Expense](index=55&type=section&id=Non-Interest%20Expense) Non-interest expense for Q1 2025 decreased by **1.7%** to **$19.4 million**, primarily due to reductions in professional services fees and other operating costs, although salaries and benefits, occupancy and equipment, and data processing expenses increased Non-Interest Expense Details (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Salaries and employee benefits | $11,480 | $11,267 | $213 | 1.9% | | Occupancy and equipment | $2,210 | $1,976 | $234 | 11.8% | | Professional services | $1,704 | $2,411 | $(707) | (29.3)% | | Technology and information systems | $1,078 | $1,010 | $68 | 6.7% | | Data processing | $1,122 | $948 | $174 | 18.4% | | Marketing | $216 | $194 | $22 | 11.3% | | Amortization of other intangible assets | $51 | $57 | $(6) | (10.5)% | | Other | $1,500 | $1,833 | $(333) | (18.2)% | | **Total non-interest expense** | **$19,361** | **$19,696** | **$(335)** | **(1.7)%** | - Professional services fees decreased by **$0.707 million**, primarily due to lower legal, audit, and FDIC insurance expenses[205](index=205&type=chunk) - Other expenses decreased by **$0.333 million**, mainly due to lower costs associated with the disposition of problem assets[206](index=206&type=chunk) - Occupancy and equipment expenses increased by **$0.234 million**, primarily due to additional rent expense from a lease extension in Q1 2024[205](index=205&type=chunk) [Income Tax](index=56&type=section&id=Income%20Tax) Income tax expense for Q1 2025 was **$1.172 million** with an effective tax rate of **21.9%**, compared to **$1.064 million** and **29.7%** in Q1 2024 Income Tax Expense and Effective Tax Rate (Thousands of US Dollars) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Income tax expense | $1,172 | $1,064 | | Effective tax rate | 21.9% | 29.7% | [Segment Reporting](index=57&type=section&id=Segment%20Reporting) The Wealth Management segment's income before income taxes significantly increased by **57.2%** to **$5.351 million** in Q1 2025, driven by higher net interest income and non-interest income, and reduced non-interest expense, while the Mortgage segment's income before income taxes sharply declined by **96.6%** to **$6 thousand** due to decreased net gains on mortgage loans Segment Income Before Income Taxes (Thousands of US Dollars) | Segment | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Wealth Management | $5,351 | $3,404 | $1,947 | 57.2% | | Mortgage | $6 | $175 | $(169) | (96.6)% | - Wealth Management segment total revenue increased by **7.2%** to **$23.468 million**[210](index=210&type=chunk) - Mortgage segment total revenue (before non-interest expense) decreased by **9.3%** to **$1.25 million**[212](index=212&type=chunk) [Financial Condition](index=59&type=section&id=Financial%20Condition) As of March 31, 2025, total assets slightly decreased by **0.4%** to **$2.906 billion**, with cash and cash equivalents significantly increasing, while other real estate owned and mortgage loans held for sale substantially decreased, total deposits remained largely flat, total borrowings decreased, and shareholders' equity increased due to net income Balance Sheet Key Data (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $271,582 | $236,041 | $35,541 | 15.1% | | Mortgage loans held for sale | $10,557 | $25,455 | $(14,898) | (58.5)% | | Other real estate owned, net | $4,385 | $35,929 | $(31,544) | (87.8)% | | **Total assets** | **$2,906,300** | **$2,919,037** | **$(12,737)** | **(0.4)%** | | Total deposits | $2,515,397 | $2,514,209 | $1,188 | 0.0% | | Total borrowings | $96,233 | $109,603 | $(13,370) | (12.2)% | | Shareholders' equity | $256,555 | $252,322 | $4,233 | 1.7% | - Cash and cash equivalents increased primarily due to proceeds from the sale of two OREO properties during the quarter[215](index=215&type=chunk) - Net other real estate owned decreased by **$31.544 million**, primarily due to the sale of two OREO properties in Q1[217](index=217&type=chunk) - Borrowings decreased by **$13.37 million**, mainly due to the redemption of **$8 million** in subordinated notes and reduced reliance on FHLB borrowings[219](index=219&type=chunk) [Assets Under Management](index=61&type=section&id=Assets%20Under%20Management) As of March 31, 2025, assets under management (AUM) were **$7.177 billion**, a slight increase from March 31, 2024, but a **2.0%** decrease from the beginning of the period, primarily due to net withdrawals Assets Under Management (AUM) Overview (Millions of US Dollars) | Indicator | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Managed trust balances, end of period | $1,945 | $2,051 | | Directed trust balances, end of period | $1,930 | $1,665 | | Investment agency balances, end of period | $1,532 | $1,624 | | Custody balances, end of period | $653 | $726 | | **Total AUM excluding 401(k)/retirement** | **$6,060** | **$6,066** | | 401(k)/retirement balances | $1,117 | $1,075 | | **Total Assets Under Management** | **$7,177** | **$7,141** | - Assets under management (AUM) decreased by **$144 million (2.0%)** in Q1 2025, primarily attributable to net withdrawals[224](index=224&type=chunk) [Debt Securities](index=63&type=section&id=Debt%20Securities) All company debt securities are classified as held-to-maturity and recorded at amortized cost, with the book value of held-to-maturity debt securities at **$73.846 million** as of March 31, 2025, a slight decrease from December 31, 2024, and an allowance for credit losses of **$100 thousand**, with no past due or nonaccrual securities - All debt securities are classified as held-to-maturity[227](index=227&type=chunk) Held-to-Maturity Debt Securities Book Value (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total amortized cost | $73,846 | $75,795 | | Allowance for credit losses | $100 | $100 | - As of March 31, 2025, and December 31, 2024, there were no past due or nonaccrual debt securities held-to-maturity[67](index=67&type=chunk) [Loan Portfolio](index=65&type=section&id=Loan%20Portfolio) As of March 31, 2025, the company's total loan portfolio (amortized cost) was **$2.419 billion**, remaining largely flat, with Commercial Real Estate (CRE) as the largest loan category, accounting for **33.6%** of total loans, an average loan balance of **$2.55 million**, and a weighted-average loan-to-value (LTV) of **53.6%**, while the company has limited exposure to the office sector and continuously reviews and stress tests loans to manage credit risk Loan Portfolio Type (Amortized Cost, Thousands of US Dollars) | Loan Type | March 31, 2025 | Percentage | December 31, 2024 | Percentage | | :--- | :--- | :--- | :--- | :--- | | Cash, securities, and other | $100,994 | 4.2% | $119,834 | 5.0% | | Consumer and other | $16,829 | 0.7% | $17,482 | 0.7% | | Construction and development | $290,110 | 12.0% | $314,481 | 13.0% | | 1-4 family residential | $973,718 | 40.2% | $962,901 | 39.8% | | Non-owner-occupied commercial real estate (CRE) | $633,641 | 26.2% | $611,239 | 25.3% | | Owner-occupied commercial real estate (CRE) | $181,207 | 7.5% | $172,019 | 7.1% | | Commercial and industrial | $222,756 | 9.2% | $220,326 | 9.1% | | **Total loans held for investment, at amortized cost** | **$2,419,255** | **100.0%** | **$2,418,282** | **100.0%** | - Commercial Real Estate (CRE) is the company's largest loan category, totaling **$814.8 million**, representing **33.6%** of total loans as of March 31, 2025[236](index=236&type=chunk) - The weighted-average loan-to-value (LTV) for the CRE portfolio was **53.6%** as of March 31, 2025[237](index=237&type=chunk) - The company has limited exposure to central business district office properties, with its office portfolio generally diversified across high-occupancy suburban markets[237](index=237&type=chunk) Loan Interest Rate Type (Amortized Cost, Thousands of US Dollars) | Interest Rate Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Fixed-rate loans | $988,613 | $1,003,445 | | Variable-rate loans | $1,436,754 | $1,422,120 | | **Total loans** | **$2,425,367** | **$2,425,565** | [Non-Performing Assets](index=69&type=section&id=Non-Performing%20Assets) As of March 31, 2025, total non-performing assets were **$17.136 million**, a significant **64.8%** decrease from December 31, 2024, primarily due to the sale of two other real estate owned (OREO) properties, with nonaccrual loans remaining largely flat, and the ratio of non-performing assets to total assets decreasing to **0.59%** Non-Performing Assets Overview (Amortized Cost, Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total nonaccrual loans | $12,751 | $12,752 | | Other real estate owned (OREO) | $4,385 | $35,929 | | **Total non-performing assets** | **$17,136** | **$48,681** | - Total non-performing assets decreased by **64.8%**, primarily due to the sale of two OREO properties[245](index=245&type=chunk) Non-Performing Asset Ratios | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Nonaccrual loans to total loans | 0.53% | 0.53% | | Non-performing assets to total assets | 0.59% | 1.67% | | Allowance for credit losses to nonaccrual loans | 140.82% | 143.74% | [Credit Quality Indicators](index=70&type=section&id=Credit%20Quality%20Indicators) As of March 31, 2025, the vast majority of the company's loan portfolio (**$2.372 billion**) was rated as "Pass," while total substandard loans increased to **$44.546 million**, including **$12.8 million** in nonaccrual loans Loan Credit Quality Indicators (Amortized Cost, Thousands of US Dollars) | Credit Rating | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Pass | $2,372,355 | $2,382,005 | | Special Mention | $2,354 | $9,120 | | Substandard | $44,546 | $27,157 | | Doubtful | $0 | $0 | | Not Rated | $6,112 | $7,283 | | **Total** | **$2,425,367** | **$2,425,565** | - As of March 31, 2025, and December 31, 2024, the substandard category included **$12.8 million** in nonaccrual loans[246](index=246&type=chunk) [Allowance for Credit Losses on Loans](index=70&type=section&id=Allowance%20for%20Credit%20Losses%20on%20Loans) As of March 31, 2025, the allowance for credit losses on loans was **$17.956 million**, representing **0.74%** of total loans, a decrease from **1.00%** as of March 31, 2024, with the quarter's change in allowance primarily influenced by loan portfolio mix adjustments and charge-offs, partially offset by a deteriorating macroeconomic forecast and increased individually analyzed reserves Allowance for Credit Losses on Loans Overview (Thousands of US Dollars) | Indicator | March 31, 2025 | March 31, 2024 | | :--- | :--- | :--- | | Ending allowance for credit losses | $17,956 | $24,630 | | Allowance for credit losses to total loans | 0.74% | 1.00% | | Net charge-offs to average loans | 0.02% | 0.00% | - In Q1 2025, a **$0.5 million** release was recorded for collectively evaluated loans, and a **$0.1 million** provision was recorded for individually analyzed loans[247](index=247&type=chunk) Allowance for Credit Losses Allocation (Thousands of US Dollars) | Loan Category | March 31, 2025 Amount | March 31, 2025 Percentage | December 31, 2024 Amount | December 31, 2024 Percentage | | :--- | :--- | :--- | :--- | :--- | | Cash, securities, and other | $391 | 4.2% | $410 | 5.0% | | Consumer and other | $151 | 0.7% | $185 | 0.7% | | Construction and development | $4,299 | 12.0% | $5,184 | 13.0% | | 1-4 family residential | $5,321 | 40.2% | $5,200 | 39.8% | | Non-owner-occupied commercial real estate | $4,310 | 26.2% | $4,340 | 25.3% | | Owner-occupied commercial real estate | $915 | 7.5% | $654 | 7.1% | | Commercial and industrial | $2,569 | 9.2% | $2,357 | 9.1% | | **Total allowance for credit losses** | **$17,956** | **100.0%** | **$18,330** | **100.0%** | [Deferred Tax Assets, Net](index=72&type=section&id=Deferred%20Tax%20Assets,%20Net) As of March 31, 2025, net deferred tax assets were **$2.9 million**, a **7.2%** decrease from December 31, 2024 Deferred Tax Assets, Net (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Net deferred tax assets | $2,856 | $3,079 | $(223) | (7.2)% | [Deposits](index=72&type=section&id=Deposits) As of March 31, 2025, total deposits were **$2.515 billion**, largely unchanged from December 31, 2024, with money market deposit accounts increasing and time deposits decreasing, and the average cost of funds for Q1 2025 at **3.13%**, a decrease from the prior year Total Deposits (Thousands of US Dollars) | Indicator | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total deposits | $2,515,397 | $2,514,209 | Average Deposit Balances and Rates (Thousands of US Dollars) | Deposit Type | March 31, 2025 Average Balance | March 31, 2025 Average Rate | March 31, 2024 Average Balance | March 31, 2024 Average Rate | | :--- | :--- | :--- | :--- | :--- | | Money market deposit accounts | $1,523,891 | 3.67% | $1,376,621 | 4.30% | | Total time deposits | $415,749 | 4.55% | $471,676 | 4.90% | | Non-interest-bearing accounts | $363,922 | - | $446,457 | - | | **Total deposits** | **$2,454,427** | **3.06%** | **$2,454,703** | **3.38%** | - The average cost of funds for Q1 2025 was **3.13%**, compared to **3.45%** for Q1 2024[255](index=255&type=chunk) - Non-interest-bearing deposits represented **14.8%** of average total deposits in Q1 2025, down from **18.2%** in Q1 2024[254](index=254&type=chunk) [Borrowings](index=73&type=section&id=Borrowings) As of March 31, 2025, total borrowings were **$96.233 million**, a **12.2%** decrease from December 31, 2024, primarily due to the redemption of subordinated notes and reduced reliance on FHLB borrowings, with the company continuing to comply with all borrowing covenant requirements Borrowing Balances (Thousands of US Dollars) | Borrowing Type | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | FHLB borrowings | $50,000 | $55,000 | | Federal Reserve Bank borrowings | $1,612 | $2,038 | | Subordinated notes | $44,621 | $52,565 | | **Total** | **$96,233** | **$109,603** | - Borrowings decreased primarily due to the redemption of subordinated notes and reduced reliance on FHLB borrowings during the quarter[259](index=259&type=chunk) - The company complies with all borrowing covenant requirements[260](index=260&type=chunk) [Derivatives](index=73&type=section&id=Derivatives) The company utilizes interest rate swaps to manage interest rate risk, including FHLB borrowing swaps designated as cash flow hedges (notional amount **$50 million**) and client variable-rate loan swaps not designated as hedging instruments (notional amount **$71.4 million**) - Cash flow hedge interest rate swaps had a notional amount of **$50 million** as of March 31, 2025[261](index=261&type=chunk) - Client loan-related interest rate swaps not designated as hedging instruments had a notional amount of **$71.4 million** as of March 31, 2025[262](index=262&type=chunk) [Liquidity and Capital Resources](index=74&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity primarily stems from interest-bearing and non-interest-bearing deposits, supplemented by FHLB and correspondent bank borrowings, with total shareholders' equity increasing by **1.7%** to **$256.6 million** as of March 31, 2025, due to net income, and both the company and its bank meeting all applicable regulatory capital requirements and classified as "well capitalized" institutions - Primary sources of funds are interest-bearing and non-interest-bearing deposits, with the primary use of funds being loans[263](index=263&type=chunk)[264](index=264&type=chunk) Funding Sources and Uses Composition (Percentage of Average Total Assets) | Indicator | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :--- | :--- | :--- | | Non-interest-bearing deposits | 12.76% | 15.57% | | Interest-bearing deposits | 73.27% | 70.04% | | FHLB and Federal Reserve Bank borrowings | 1.82% | 3.22% | | Subordinated notes | 1.84% | 1.83% | | Total loans | 83.92% | 86.48% | | Investment securities | 2.65% | 2.60% | - As of March 31, 2025, total shareholders' equity was **$256.6 million**, a **1.7%** increase from December 31, 2024, primarily due to year-to-date net income[265](index=265&type=chunk) - The company and its bank meet all applicable regulatory capital requirements, and the bank is classified as a "well capitalized" institution[267](index=267&type=chunk) [Contractual Obligations and Off-Balance Sheet Arrangements](index=75&type=section&id=Contractual%20Obligations%20and%20Off-Balance%20Sheet%20Arrangements) As of March 31, 2025, total future contractual obligations were **$501.7 million**, primarily comprising time deposits, FHLB and Federal Reserve Bank borrowings, subordinated notes, and minimum lease payments, with the company also having off-balance sheet arrangements like committed credit lines, but these are not expected to materially impact financial condition Future Contractual Obligations (Thousands of US Dollars) | Obligation Type | 1 Year or Less | 1 to 3 Years | 3 to 5 Years | 5 Years or More | Total | | :--- | :--- | :--- | :--- | :--- | :--- | | FHLB and Federal Reserve Bank borrowings | $50,000 | $0 | $1,612 | $0 | $51,612 | | Subordinated notes | $0 | $0 | $0 | $44,621 | $44,621 | | Time deposits | $336,286 | $42,729 | $518 | $0 | $379,533 | | Minimum lease payments | $2,066 | $3,003 | $4,200 | $16,633 | $25,902 | | **Total** | **$388,352** | **$45,732** | **$6,330** | **$61,254** | **$501,668** | - The company does not believe off-balance sheet arrangements will have a material effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources[269](index=269&type=chunk) [Critical Accounting Policies](index=75&type=section&id=Critical%20Accounting%20Policies) The company's critical accounting policies and procedures are detailed in Note 1 to the condensed consolidated financial statements and in the 2024 Annual Report on Form 10-K - Critical accounting policies are described in Note 1 and the 2024 Annual Report on Form 10-K[270](index=270&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) The company primarily faces interest rate risk, actively managed through asset/liability strategies and board oversight, with a sensitivity analysis as of March 31, 2025, indicating a **2.23%** change in net interest income and a **-7.78%** change in equity fair value with a **200 basis point** increase in interest rates - The company's market risk primarily arises from interest rate risk inherent in its lending, investing, and deposit-taking activities[271](index=271&type=chunk) - The company does not hold market risk sensitive instruments for trading purposes[271](index=271&type=chunk) Interest Rate Sensitivity Analysis (Percentage) | Interest Rate Change (Basis Points) | Net Interest Income Change (March 31, 2025) | Equity Fair Value Change (March 31, 2025) | | :--- | :--- | :--- | | +200 | 2.23% | (7.78)% | | +100 | 2.60% | (2.26)% | | Base | 0% | 0% | | -100 | 2.61% | 5.53% | | -200 | 12.44% | (0.54)% | - Model simulations indicate the company's balance sheet maintained a similar interest rate risk profile as of March 31, 2025, compared to December 31, 2024[276](index=276&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) As of March 31, 2025, the company's management, including the Chief Executive Officer and Chief Financial Officer, assessed and concluded that disclosure controls and procedures were effective, with no significant changes in internal control over financial reporting during the quarter - As of March 31, 2025, the company's disclosure controls and procedures were determined to be effective[280](index=280&type=chunk) - No significant changes in internal control over financial reporting occurred during the three months ended March 31, 2025[281](index=281&type=chunk) [PART II. OTHER INFORMATION](index=77&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, but management, after consulting legal counsel, believes these actions, individually or in aggregate, will not materially affect the condensed consolidated financial statements if adversely determined - The company does not anticipate legal proceedings to have a material impact on the condensed consolidated financial statements[282](index=282&type=chunk) [Item 1A. Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) The risk factors disclosed in the company's 2024 Annual Report on Form 10-K have not materially changed during this reporting period - Risk factors are consistent with those disclosed in the company's 2024 Annual Report on Form 10-K, with no material changes[283](index=283&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In March 2025, the company repurchased **100 shares** of common stock under its 2024 repurchase program, with **194,399 shares** remaining available, and additionally, **17,339 shares** were used for tax payments related to equity awards through employee net settlement Issuer Purchases of Equity Securities | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans | Maximum Number of Shares that May Yet Be Purchased Under the Plans | | :--- | :--- | :--- | :--- | :--- | | January 1 to January 31, 2025 | 17,339 | $19.57 | — | 194,499 | | February 1 to February 28, 2025 | — | — | — | 194,499 | | March 1 to March 31, 2025 | 100 | $18.50 | 100 | 194,399 | - **17,339 shares** were net settled by employees to cover income taxes related to vested restricted stock awards[284](index=284&type=chunk) [Item 3. Defaults upon Senior Securities](index=77&type=section&id=Item%203.%20Defaults%20upon%20Senior%20Securities) Not applicable - Not applicable[285](index=285&type=chunk) [Item 4. Mine Safety Disclosures](index=77&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable - Not applicable[286](index=286&type=chunk) [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) Not applicable - Not applicable[287](index=287&type=chunk) [Item 6. Exhibits](index=78&type=section&id=Item%206.%20Exhibits) This section lists the exhibits accompanying the Form 10-Q, including certifications from the Chief Executive Officer and Chief Financial Officer, and interactive data files in Inline XBRL format - Exhibits include certifications from the Chief Executive Officer and Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a) and 18 U.S.C. Section 1350[288](index=288&type=chunk) - Exhibits also include Inline XBRL Instance Document, Taxonomy Extension Schema Document, Calculation Linkbase Document, Definition Linkbase Document, Label Linkbase Document, and Presentation Linkbase Document[288](index=288&type=chunk) [SIGNATURES](index=79&type=section&id=SIGNATURES) [Signatures](index=79&type=section&id=Signatures) This report was signed by Scott C. Wylie, Chairman, Chief Executive Officer, and President, and David R. Weber, Chief Financial Officer and Treasurer, of First Western Financial, Inc. on May 7, 2025 - The report was signed by Scott C. Wylie (Chairman, Chief Executive Officer, and President) and David R. Weber (Chief Financial Officer and Treasurer)[293](index=293&type=chunk)[294](index=294&type=chunk) - The signing date was May 7, 2025[293](index=293&type=chunk)[294](index=294&type=chunk)