First Western(US:MYFW)2025-07-25 17:00Financial 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]