First Western(MYFW) - 2024 Q3 - Quarterly Report

Financial Performance - For the three months ended September 30, 2024, net income available to common shareholders was $2.1 million, a decrease of$1.0 million, or 31.6%, compared to the same period in 2023[172]. - For the nine months ended September 30, 2024, net income available to common shareholders was $5.7 million, a decrease of$2.7 million, or 32.2%, compared to the same period in 2023[173]. - Non-interest income increased by $5.4 million for the nine months ended September 30, 2024, partially offsetting the decrease in net interest income[173]. - Non-interest income increased by$0.9 million, or 14.3%, to $7.0 million for the three months ended September 30, 2024, driven by higher net gains on mortgage loans and risk management fees[184]. - Total non-interest income for the nine months ended September 30, 2024, increased by$5.4 million, or 33.7%, to $21.2 million, primarily due to higher net gains on mortgage loans[186]. - The effective tax rate decreased to 20.1$15.6 million, a decrease of $1.2 million, or 7.1$8.4 million decrease in net interest income for the nine months ended September 30, 2024, primarily due to higher rates on deposits and borrowings[173]. - For the nine months ended September 30, 2024, net interest income was $47.4 million, a decrease of$7.4 million or 13.4% compared to the same period in 2023[175]. - Average interest-bearing deposit rates increased to 4.19% and 4.17% for the three and nine months ended September 30, 2024, compared to 3.75% and 3.39% for the same periods in 2023[177]. - Total interest-bearing liabilities increased to $2.132 billion, with interest expense rising to$67.1 million for the three months ended September 30, 2024[180]. - Interest income decreased by $1.6 million, or 1.9$2.91 billion, with total revenues of $65.7 million and$7.5 billion in assets under management (AUM)[163]. - Assets Under Management (AUM) increased by $454 million, or 6.5$713 million, or 10.6%, attributed to contributions and improving market conditions year-over-year[212]. - Total Assets Under Management as of September 30, 2024, reached $7,466 million, compared to$6,396 million in the previous year[212]. - Contributions for the three months ended September 30, 2024, totaled $93 million, while withdrawals amounted to$262 million[212]. Loans and Credit Quality - Average loans outstanding decreased due to a net decline in several portfolios, with non-performing loans decreasing by $30.0 million[175]. - Non-performing assets totaled$51,450,000, with non-accrual loans accounting for 14,414,000, representing 0.61% of total loans[243]. - The company recorded $25.6 million of OREO in Q3 2024, increasing the carrying amount of OREO properties to$37.0 million[242]. - The allowance for credit losses to non-accrual loans was 130.40%, significantly higher than the previous year's 47.09%[243]. - The total amount of loans classified as substandard was $25.675 million as of September 30, 2024[246]. Deposits and Borrowings - Total deposits decreased by$26.0 million, or 1.0%, to $2.50 billion as of September 30, 2024, from December 31, 2023[258]. - Total average deposits for the three months ended September 30, 2024, increased by$43.7 million, or 1.9%, compared to $2.36 billion as of September 30, 2023[258]. - As of September 30, 2024, total borrowings decreased to$114.9 million from $178.1 million as of December 31, 2023, reflecting a lower reliance on FHLB and FRB borrowings due to decreased loans[262]. - The Company has pledged$1.30 billion in collateral for borrowings under the FHLB agreement as of September 30, 2024, with eligibility to borrow an additional $612.1 million[265]. Capital and Regulatory Compliance - The bank's capital ratios exceeded the current well-capitalized regulatory requirements established under Basel III as of September 30, 2024[171]. - Tier 1 capital to risk-weighted assets for the Bank improved to 11.39$6,093,000, or 2.5%, to $248,831,000 as of September 30, 2024, compared to$242,738,000 as of December 31, 2023[206]. Risk Management - The company actively monitors interest rate risk exposure, with quarterly reviews by the board of directors[280]. - Interest rate sensitivity analysis indicates potential changes in net interest income and economic value of equity under various interest rate scenarios[280]. - The company’s credit culture emphasizes conservative approaches to credit requests, ensuring strong credit underwriting practices across all loan types[228].