First Western(MYFW) - 2025 Q1 - Quarterly Report

Report Information Form 10-Q Filing Details 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] - Company has filed all required reports and complies with filing requirements[4] - Company is classified as an "accelerated filer"[5] 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 Important Notice about Information in this Quarterly Report Important Notice 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] - Report information is current only as of the report date and specified dates within[9] CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS 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] - 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][14] - The company undertakes no obligation to publicly update or revise any forward-looking statements[13] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (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 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 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 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 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] Condensed Consolidated Statements of Cash Flows 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] - Investing cash flow primarily resulted from the sale of mortgage loans and disposition of real estate[24] - Financing cash outflow significantly decreased, mainly due to reduced payments on Federal Home Loan Bank borrowings[24] Notes to Condensed Consolidated Financial Statements NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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] - 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] - Loans secured by real estate constituted 79.5% (March 31, 2025) and 78.9% (December 31, 2024) of the loan portfolio[35] - ASU 2023-09 (Improvements to Income Tax Disclosures) was adopted effective January 1, 2025[56] - ASU 2024-03 (Disaggregation of Expenses) is being evaluated, with adoption expected January 1, 2027, and no significant impact anticipated[58] NOTE 2 – DEBT SECURITIES 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][67] - As of March 31, 2025, and December 31, 2024, there were no past due or nonaccrual debt securities held-to-maturity[67] - 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] NOTE 3 – LOANS AND THE ALLOWANCE FOR CREDIT LOSSES 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] - 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] 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 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] NOTE 5 – LEASES 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] NOTE 6 – DEPOSITS 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] NOTE 7 – 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 $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] - 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] - 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][219] - As of March 31, 2025, and December 31, 2024, the company was in compliance with all borrowing covenant requirements[102][260] NOTE 8 – COMMITMENTS AND CONTINGENCIES 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] NOTE 9 – SHAREHOLDERS' EQUITY 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] - In Q1 2025, the company repurchased 100 shares of common stock under its 2024 repurchase program[111] - As of March 31, 2025, 194,399 shares remained available for repurchase under the 2024 repurchase program[111] - As of March 31, 2025, 493,349 shares were available for issuance under the 2016 Omnibus Incentive Plan[112] 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] NOTE 10 – EARNINGS PER COMMON SHARE 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 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 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] - 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][139] 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 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] NOTE 14 – SEGMENT REPORTING 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] - Mortgage segment revenue declined mainly due to reduced net gains on mortgage loans, particularly a decrease in interest rate lock pull-through rates[212] NOTE 15 – LOW-INCOME HOUSING TAX CREDIT INVESTMENTS 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] NOTE 16 – REGULATORY CAPITAL MATTERS 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] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 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 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] - It offers comprehensive wealth management services, including banking, trust, and investment management products and services[173] - Target clients are entrepreneurs, professionals, and high-net-worth individuals, typically with over $1 million in liquid net worth[173] 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 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] - 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] - The company has limited exposure to non-owner-occupied office commercial real estate (CRE)[176] - The company's client base is diversified, with no single industry concentration risk[176] Primary Factors Used to Evaluate the Results of Operations 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] - Net interest income is affected by loan and investment securities yields, deposit costs, borrowing rates, and changes in market interest rates[178] - 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] - 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][186] Results of Operations 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 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][192] - Average loan balances decreased by $82.8 million[188] - Average loan yield increased from 5.66% in Q1 2024 to 5.71% in Q1 2025[190][192] Provision for Credit Losses 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] Non-Interest Income 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] - Bank service charges decreased by $0.469 million, mainly due to a large loan prepayment penalty collected in Q1 2024[200] - Risk management and insurance fees increased by $0.21 million, primarily due to an increase in insurance client agreements[200] Non-Interest Expense 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] - Other expenses decreased by $0.333 million, mainly due to lower costs associated with the disposition of problem assets[206] - Occupancy and equipment expenses increased by $0.234 million, primarily due to additional rent expense from a lease extension in Q1 2024[205] Income Tax 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 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] - Mortgage segment total revenue (before non-interest expense) decreased by 9.3% to $1.25 million[212] Financial Condition 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] - Net other real estate owned decreased by $31.544 million, primarily due to the sale of two OREO properties in Q1[217] - Borrowings decreased by $13.37 million, mainly due to the redemption of $8 million in subordinated notes and reduced reliance on FHLB borrowings[219] Assets Under Management 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] Debt Securities 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] 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] Loan Portfolio 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] - The weighted-average loan-to-value (LTV) for the CRE portfolio was 53.6% as of March 31, 2025[237] - The company has limited exposure to central business district office properties, with its office portfolio generally diversified across high-occupancy suburban markets[237] 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 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] 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 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] Allowance for Credit Losses on Loans 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] 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 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 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] - Non-interest-bearing deposits represented 14.8% of average total deposits in Q1 2025, down from 18.2% in Q1 2024[254] 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] - The company complies with all borrowing covenant requirements[260] 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] - 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] Liquidity and Capital Resources 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][264] 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] - The company and its bank meet all applicable regulatory capital requirements, and the bank is classified as a "well capitalized" institution[267] Contractual Obligations and Off-Balance Sheet Arrangements 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] Critical Accounting Policies 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] Item 3. Quantitative and Qualitative Disclosures about Market Risk 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] - The company does not hold market risk sensitive instruments for trading purposes[271] 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] Item 4. Controls and Procedures 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] - No significant changes in internal control over financial reporting occurred during the three months ended March 31, 2025[281] PART II. OTHER INFORMATION Item 1. Legal Proceedings 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] Item 1A. Risk Factors 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] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 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] Item 3. Defaults upon Senior Securities Not applicable - Not applicable[285] Item 4. Mine Safety Disclosures Not applicable - Not applicable[286] Item 5. Other Information Not applicable - Not applicable[287] Item 6. Exhibits 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] - 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] SIGNATURES 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][294] - The signing date was May 7, 2025[293][294]