First Western Financial - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 delivered a clean beat on both EPS and revenue: Diluted EPS was $0.43 vs S&P Global consensus $0.23; “total income before non-interest expense” was $24.7M vs $24.1M consensus, driven by 16 bps NIM expansion, lower deposit costs, and higher non-interest income (mortgage + OREO gains). EPS consensus and revenue consensus values marked with * are from S&P Global.
• Asset quality and balance sheet mix improved: NPAs fell to 0.59% of assets as OREO dropped by $31.5M following two sales (net gain $0.5M), and noninterest-bearing deposits rose 9% sequentially to $409.7M.
• Guidance and forward tone: management reiterated expense discipline (<$20M/quarter), guided Q2 NIM to be flattish with H2 expansion “back into the 2.70s,” and flagged redeployment of OREO cash plus an $8M 5.125% sub-debt redemption as incremental tailwinds.
• Stock reaction catalysts: visible earnings drivers (deposit cost downtrend, NIM path to high-2.7s, mortgage fee tailwind, OREO resolution) and improving credit metrics, balanced by expected Q2 deposit seasonality (tax payments) and macro/tariff uncertainty later in 2025.

What Went Well and What Went Wrong

• What Went Well

  • NIM expanded 16 bps to 2.61% (2.45% in Q4), as cost of interest-bearing deposits fell 19 bps to 3.59%, lifting NII 3.6% q/q to $17.5M.
  • Non-interest income rose $0.9M q/q to $7.3M on mortgage strength and $0.5M OREO gain; management: “significant improvement in our level of profitability” and “positive trends in many areas”.
  • Asset quality improved: NPAs declined to $17.1M (0.59% of assets) as two largest OREO properties were sold; ACL/loans modestly lower to 0.74% on better mix.
  • Quote: “We expect to see a continuation of the positive trends… while we also redeploy the cash from the sale of our two largest OREO properties into interest-earning assets” – CEO.

• What Went Wrong

  • Loan balances were flat; new production ($70.8M) was largely offset by payoffs ($71.6M), leaving total loans HFI ~unchanged.
  • AUM decreased 2.0% q/q to $7.18B on net withdrawals in fixed-fee accounts (still up slightly y/y).
  • Q2 caution flags: deposit runoff typical for tax season likely keeps Q2 NIM flattish; macro/tariff uncertainty could weigh on 2025 loan demand vs initial expectations.
  • Analyst Q&A revealed an approximate $200K above-normal amortized loan fee tailwind in loan yields this quarter, a benefit that may not repeat.

Transcript

Operator (participant)

Good day, and thank you for standing by. Welcome to the First Western Financial First Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one, one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one, one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Tony Rossi. Please go ahead.

Tony Rossi (Managing Director)

Thank you, Daniel. Good morning, everyone, and thank you for joining us today for First Western Financial's first quarter 2025 earnings call. Joining us from First Western's management team are Scott Wylie, Chairman and Chief Executive Officer; Julie Courkamp, Chief Operating Officer; and David Weber, Chief Financial Officer. We'll use a slide presentation as part of our discussion this morning. If you have not done so already, please visit the events and presentations page of First Western's Investor Relations website to download a copy of the presentation. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial conditions of First Western Financial that involve risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements.

These factors are discussed in the company's SEC filings, which are available on the company's website. I would also direct you to read the disclaimers in our earnings release and investor presentation. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today, as well as the reconciliation of the GAAP to non-GAAP measures. With that, I'd like to turn the call over to Scott. Scott.

Scott Wylie (Chairman and CEO)

Thanks, Tony, and good morning, everybody. As expected, during the first quarter, we generated a significant improvement in our level of profitability. This was driven by positive trends in many areas, including expansion in our net interest margin, a higher level of non-interest income, partially due to a higher level of mortgage banking income resulting from lower rates, and the positive impact of the MLOs that we've added in the past few quarters, an increase in non-interest-bearing deposits, solid loan production, and well-managed expenses. We continued to maintain a conservative approach to new loan production with our disciplined underwriting and pricing criteria. However, as a result of the additions we've made to our banking team over the past several quarters, we had a solid level of loan production, which was well-diversified across our markets, industries, and property types.

We also continued to have success in our deposit gathering efforts, adding new clients and seeing inflows from existing clients that resulted in an increase in our non-interest-bearing deposits in the quarter. In addition, we were able to successfully lower our deposit costs, which contributed to the expansion we saw in our net interest margin. We saw generally positive trends in asset quality during the first quarter, resulting in a decline in our NPAs, the total assets. We also had a successful resolution of our two largest OREO properties, which we sold for a net gain. As a result of our stronger financial performance and balance sheet management strategies, we had a further increase in our tangible book value per share.

Moving to slide four, we generated net income of $4.2 million, or $0.43 per diluted share in the quarter, both substantial increases from the prior quarter and continuing the recent positive trend. With our prudent balance sheet management, our tangible book value per share increased by 1.6% this quarter. Now I'll turn the call over to Julie for some additional discussion of the balance sheet and trust investment management trends. Julie?

Julie Courkamp (COO)

Thank you, Scott. Turning to slide five, we'll look at the trends in our loan portfolio. Our loans held for investment were essentially unchanged from the end of the prior quarter. We continue to be conservative and highly selective in our new loan production, but with the higher level of productivity we are seeing from the additions to our banking team we have made over the last several quarters, we are seeing a solid level of new loan production. New loan production was $71 million in the first quarter. However, this was offset by $72 million in loan payoffs in the first quarter, resulting in the slight decrease we had in total loans. Most of our new loan production is coming in the areas of commercial loans and residential mortgages, where we are also getting deposit relationships.

We continue to see strong CRE loan demand as borrowers are looking to take advantage of lower property valuations. We continue to be disciplined, and we are maintaining our pricing criteria. This resulted in the average rate on new loan production being 6.89% in the quarter, which was higher than the average rate on our loan payoffs and resulted in the turnover in our loan portfolio being accretive to our average yield on loans. Moving to slide six, we'll take a closer look at our deposit trends. Total deposits were up slightly from the end of the prior quarter. We saw inflows of non-interest-bearing deposits from existing clients, as well as new relationships that were added in the quarter.

This was offset by a decline in time deposits, as we have reduced rates on maturing CDs, which resulted in some runoff, which we are replacing with lower-cost deposits and driving an improvement in our deposit mix. Given the nature of our client base, we typically see some outflows of deposits during the second quarter, largely related to tax payments, so it's possible that we see flat or lower deposit balances in the second quarter, which then tend to build back up over the second half of the year. Turning to trust investment management on slide seven, we had a $144 million decrease in our assets under management in the first quarter, which was driven by net withdrawals primarily in fixed fee accounts. Over the past year, our AUM has increased nearly one percent. Now I'll turn the call over to David for further discussion of our financial results. David?

David Weber (CFO)

Thanks, Julie. Turning to slide eight, we'll look at our gross revenue. Our gross revenue increased 3.4% from the prior quarter, as we had increases in both net interest income and non-interest income. Turning to slide nine, we'll look at our trends in net interest income and margin. Our net interest income increased 3.6% from the prior quarter due to an expansion in our net interest margin. Our NIM increased 16 basis points from the prior quarter to 2.6one percent. This was due to a reduction in our cost of deposits, along with an increase in our average yield on interest-earning assets. Our cost of deposits at the end of the quarter was lower than the average rate for the quarter, which will provide a benefit to margin in the second quarter.

With the continued reduction we expected to see, we expect to see in our cost of funds, along with the redeployment of cash we generated from the sale of the OREO properties into interest-earning assets, we expect to see continued growth in net interest income going forward. We will also benefit from $8 million of sub debt with a cost of 5.125% that we redeemed on March 31st, which eliminated a high cost of funds going into the second quarter. Now turning to slide 10, our non-interest income increased by approximately $900,000 from the prior quarter, in spite of seasonally higher insurance fees in the fourth quarter. This was due to an increase in gain on sale of mortgage loans, along with the net gain we recognized on the sale of our two largest OREO properties. Now turning to slide 11 in our expenses.

Our non-interest expense decreased $1 million from the prior quarter, which was primarily due to a $1.1 million write-down of an OREO property that we recorded in the fourth quarter. All other areas of non-interest expense were relatively consistent with the prior quarter, as we continue to tightly manage expenses while also making investments in the business that we believe will positively impact our long-term performance, although we did see the usual seasonal increase in first-quarter salaries and benefits expense due to the reset of accruals for payroll taxes. Now turning to slide 12, we'll look at our asset quality. As Scott indicated earlier, we saw generally stable trends in the loan portfolio in the first quarter, with a decline in non-performing assets.

We had a small amount of charge-offs in the quarter, which were entirely related to one loan we had from the Main Street Lending Program, which had unique issues and is not reflective of broader trends we are seeing in the portfolio. We also saw a positive shift in the mix in our loan portfolio towards loans with lower historical loss rates, which resulted in a small reduction in our allowance coverage. Now I'll turn it back to Scott. Scott?

Scott Wylie (Chairman and CEO)

Thanks, David. Turning to slide 13, I'll wrap up with some comments about our outlook. While we're generating improved profitability, we're still not satisfied with this level of performance. Over the past couple of years, we focused on improving a number of areas of the company.

As a result, we're starting to see some solid trends in asset quality, net interest margin, loan-to-deposit ratio, and overall efficiencies as we improve processes throughout the organization. We expect to see a continuation of the positive trends we're seeing, while we also redeploy the cash from the sale of our two largest OREO properties into interest-earning assets. Our loan pipeline continues to be healthy, and we've not yet seen any impact on loan demand from the tariffs, so we anticipate using most of this cash to fund new loan production. However, given the level of uncertainty regarding the macroeconomic outlook, it's possible that loan demand could be impacted later this year, and loan growth for the year could be lower than our initial expectations. We've also made a priority of growing our trust investment management business.

As part of this effort, we've added a new head of wealth planning who joined us from Goldman Sachs, which we expect will help this business make a greater contribution to our future growth and profitability. The positive trends we're seeing in a number of key areas are expected to continue, and we believe should result in steady improvement in our financial performance and further value being created for our shareholders as we move throughout the year. With that said, we're happy to take your questions.

Operator (participant)

As a reminder, to ask a question, please press star one, one on your telephone and wait for your name to be announced. To withdraw your question, please press star one, one again. Please stand by while we compile the Q&A roster. Our first question comes from Matthew Clark with Piper Sandler. Your line is now open.

Matthew Clark (Senior Research Analyst)

Hey, good morning. First question just around your loan yields. They were up late quarter. I know new production's accretive to loan yields, but I assume there were some interest recoveries in there. Can you isolate any interest recoveries on a dollar basis for us?

David Weber (CFO)

Yeah. We saw a little bit higher amortized loan fees through the quarter. That helped. They can be lumpy, right? We did see a little bit higher in terms of amortized loan fees through the quarter. That really helped kind of push that up a little bit, as you mentioned. I think it was somewhere in the $200,000 range.

Matthew Clark (Senior Research Analyst)

Okay. How does that compare to maybe a more normal quarter, just so we can normalize it going forward?

David Weber (CFO)

Sorry. That was $200,000 higher than we typically see in the quarter, is what I meant.

Matthew Clark (Senior Research Analyst)

Okay. Sounds good. Then just on the margin, if you could give us the spot rate on deposits at the end of March and the average margin in the month of March, normalizing for any kind of unusual that maybe the uptick in the.

David Weber (CFO)

Yeah. Yeah, March, we did have March was a little bit unusual, just given those dynamics. From a cost of deposit standpoint, the spot was $298. Cost of funds was roughly $305. From a NIM perspective, we think NIM will be relatively flat for the second quarter due to expected runoff in the deposit portfolio that we typically see in the second quarter, driven by tax payments. We are thinking NIM will be flattish in the second quarter, and then we will have opportunities for further expansion in the second half of the year, getting us back to that exit NIM that we talked about last quarter.

Matthew Clark (Senior Research Analyst)

Okay. That was $273-ish, I think.

David Weber (CFO)

Yeah. Yeah. Getting back into the $270s. Yep.

Matthew Clark (Senior Research Analyst)

Okay. Okay. Just on the non-performers that are left on the balance sheet, call it 70 basis points of loans in OREO, can you give us a sense for what might be resolved here shortly? Just kind of your updated thoughts on the resolution process of those non-performers this year.

Scott Wylie (Chairman and CEO)

I think there's one OREO left, and we expect to sell that over the course of this year sometime. I think that that's in what is typically the seasonal market in Aspen, notwithstanding the grand sale in Q1. I think selling that over the course of the summer would be a reasonable expectation at this point. Of the MPLs, there's really one substantial one in there that we've talked about before, which is a wealthy guy that's stopped paying us and is well-secured and working through the process with the courts and fully expect to collect on that with the sale of the collateral, if nothing else. It is hard to predict timing on that. I can tell you we are paying a lot of attention to it and focus, but we're a little bit at the mercy of the court on the timing.

I think sometime in 2025, but hard to predict at this point.

Matthew Clark (Senior Research Analyst)

Okay. Great. Thank you.

Operator (participant)

Thank you. Our next question comes from Will Jones with KBW. Your line is now open.

Will Jones (Associate VP of Equity Research)

Yeah. Hey. Thanks, guys. Good afternoon. Stepping in here for Woody Lay. I wanted to circle back on the margin discussion. I appreciate all the kind of commentary and color of that. Feels like direction. We have a pretty good idea of where that's going to run and trend the rest of the year. Maybe just more of a thematic question. I know, especially following some of these OREO sales, that excess liquidity is in a higher position than it's really been in the past.

Scott, just to the extent that maybe loan growth doesn't quite play out how we all would hope for it this year, or to the extent maybe we do see any kind of demand reduction from tariffs, would you ever, in this statement, maybe lean in a little more into the bond book just as a way to deploy some of that cash in the near term?

Scott Wylie (Chairman and CEO)

Yeah. That's certainly an option. I'd say our primary focus remains on growing our banking relationships, existing and new. Yeah, that's certainly an option from a deploying liquidity standpoint.

Will Jones (Associate VP of Equity Research)

Yeah. Got it. I mean, that really continues to be a fairly nice story. I guess, hey, if you could just directionally help us guide to where you may see expenses kind of carry through the balance of the year. I will stop there and then follow up with that in just a minute.

Scott Wylie (Chairman and CEO)

We previously have said that we're targeting keeping our expenses under $20 million a quarter, and we did that effectively in the first quarter in spite of the seasonal increase that we see from the extra payroll tax hit that we take in Q1 that David mentioned in his comments. I think, as far as we know, that's still reasonable guidance. The scenario where it goes above that, I think, is really if we outperform our performance expectation. We have higher incentive comp accruals, but I think that would be a happy scenario for investors. I think the $19.5-$20 million guidance we've given before seems reasonable from what we know today.

Will Jones (Associate VP of Equity Research)

Okay. That's helpful. Thanks for that. Lastly for me, Scott, you kind of mentioned in your closing remarks there that this is still a pretty distasteful level of profitability for you guys, especially relative to where you've historically been. It does feel like there's a lot of tailwinds that are kind of moving in your favor right now, especially with the margin expansion that we could see over the rest of the year, as well as your ability to kind of maintain costs here. Do you have a reasonable guidepost or fence post where you'd like to see kind of ROA trend, maybe over the next year or two, just as you kind of get back to a more normalized level of operation?

Scott Wylie (Chairman and CEO)

Yeah. I think our target for now is to get back to one percent. I think if you go back three years ago, we were producing really good returns, which when we went public, we said we thought there was a lot of operating leverage in our business. If we could grow the balance sheet with the capital we raised, which we did, we tripled the balance sheet since then in 2018. I think as we get back on a growth path here, and as our NIM improves, and as our P/E income improves, I think all those things are going to add up to really nice operating leverage, which would drive higher ROA and ROE. I do not think it stops at one percent, but that is kind of where we are focused for now to get back there.

Will Jones (Associate VP of Equity Research)

Yeah. Okay. That's all really helpful. Congrats on getting this OREO lot behind you, and congrats on this quarter.

Scott Wylie (Chairman and CEO)

Yeah. Thanks, Will.

Operator (participant)

Thank you. Our next question comes from Bill Zone with Titan Capital Management. Your line is now open.

Bill Dezellem (Founder, President, Chief Investment Officer)

Thank you. You had referenced the loan payoffs essentially matched origination this quarter. Would you discuss your view of payoffs on a go-forward basis relative to what you are seeing that seems possible going forward, please?

Scott Wylie (Chairman and CEO)

Yeah. Our payoff history has been, to me, kind of amazingly consistent at about $100 million a quarter. In Q1, it was about $70 million, as Julie mentioned in her comments and in the presentation. I would expect, in a relatively stable world, if that's what we're in, that $100 million a quarter would be a reasonable expectation. Buried in the numbers, Bill, that you don't, I don't think you can't really see from the quarterly report. We actually saw downward pressure on the balance sheet. We shrank in January and February and then saw a nice recovery in March. Our feeling going into Q2 is that that momentum from March should continue. The pipelines look good. The growth looks good.

Even if we have higher payoffs in March or in Q2, I mean, which I would expect, I think that we can still produce some net growth in Q2. It is just hard to predict today. I think the economic uncertainty out there and the impact of the tariff noise is hard to predict what clients are going to do.

Bill Dezellem (Founder, President, Chief Investment Officer)

Does this origination pipeline that you're referencing circle back to the significant increase in bankers that you had last year that I think we talked about on previous calls?

Scott Wylie (Chairman and CEO)

That's certainly a factor. I don't know that I can tell you that it's 50% of the results or whatever. I don't really have a clear picture of how much of that's related to new folks becoming productive. But I would tell you we did have some really strong new hires last year that are contributing. We've got some more that we've done this year or that we have in the pipeline for this year, people that have accepted jobs that will be starting the second quarter. I think attracting the kind of talent that we're attracting these days should really be beneficial in terms of supporting the balance sheet growth we'd like to see this year.

Bill Dezellem (Founder, President, Chief Investment Officer)

One additional question following up on your last comment. If you take those new hires in Q1 and those who have accepted in Q2, what percentage increase would that create based off of your 12/31 base?

Scott Wylie (Chairman and CEO)

12.3%? I'm not sure. Are you getting at the percent of people, Bill, that we're so?

Bill Dezellem (Founder, President, Chief Investment Officer)

Yes. Yes. As an example, if you had 20 bankers and you added one in the first quarter, one in the second quarter, that's a total of 2 on 20 is 10%.

Scott Wylie (Chairman and CEO)

Yeah. We do not really look at it that way. If we have somebody that is underperforming that we replace with somebody strong, I am not sure how you would count that exactly. Also, these new hires are not all created equal. I think two of the best hires we made last year were market presidents in two of our larger markets. Both of those people have really had a positive impact on the overall balance sheet and on that team that they are leading in their respective markets. When I have been up in those markets visiting with clients and prospects, it is clearly a new energy and a new kind of prospects that they are bringing in, partially from their prior experience in leadership roles in the markets, but partially because of just the new energy that they bring and the expertise they bring.

I think looking forward, we've recruited a very high-profile person in one market that's been pretty flat for us that's starting, I think, May 1, I believe. I think that that's going to have a big impact in that market. That'll be a positive thing when we can announce that here shortly. We've got another one that we're very close to in another really kind of flat market for us where we think that that person will have a big impact. One of the things we really haven't talked about on the call today, I mentioned in my closing comments on that last slide, is we've really decided that our P10 function, Planning, Trust, and Investment Management, that really hasn't shown any growth since the IPO in terms of fees, needed a fresh look. We've been working on that for the past few months.

We have brought in a couple of new leaders for that, one with a deep background and expertise from Schwab. He actually joined us six or nine months ago, something like that. A new one just joined us on March 31 from Goldman Sachs. He was a Senior VP at Goldman in the wealth planning area and a senior executive on, I think his title was Wellness Investment Management and Financial Planning. He has brought a lot of good ideas. Typically, we see these folks taking some time for a ramp-up. This latest hire has lots of good ideas. I think he is going to have an impact here in the short term that is very positive. We also hired a new head of retirement services last fall to lead up that business.

All these folks, I think, are going to have a really positive impact, Bill, on driving fundamental growth across the platform.

Bill Dezellem (Founder, President, Chief Investment Officer)

Great. Thank you. Congratulations on those hires.

Scott Wylie (Chairman and CEO)

Yeah. Thanks.

Operator (participant)

Thank you. Our next question comes from Ross Haberman with RLH Investments. Your line is now open.

Ross Haberman (Money Manager)

Good afternoon, guys. How are you? I just want to follow up with what you were saying. You hire all these people. Could you go sort of market by market? Is there one market that's sort of much softer in terms of loan origination or business that you sort of need to augment, you might say, because you're in pretty good markets? I know with all the uncertainty in D.C., it's holding everyone back from making significant moves. Could you just go market by market? Is there one market that's really much softer that you're focusing on more today? Thanks.

Scott Wylie (Chairman and CEO)

Yeah. Thanks for that question, Ross. I think we have 19 offices now. If I actually went through each of the 19, I think that might be a little much for this call.

Ross Haberman (Money Manager)

You can go general geography. General type of geography. The top three or four or five geographies.

Scott Wylie (Chairman and CEO)

Yeah. It's still a really good question, Ross. The front range of Colorado where we have the preponderance of our business is still healthy and growing. I think that the economic uncertainty from the tariff situation and the kind of economic turmoil that that's causing seems to be impacting our clients one of three ways. I have been out talking to clients quite a bit over the last couple of weeks to try and assess what they're thinking. The folks that are directly affected by this, like manufacturers or agriculture, are obviously very concerned. Fortunately, that's a very small number for us. We have minimal exposure in manufacturing and even less in agriculture. I do not think that that's going to be a big impact on us, at least from a credit standpoint, our current portfolio.

The three things that I've been hearing is, number one, some folks seem to think that this is noise for now, and they're just kind of going on with what they were doing anyway. There's a second group, which I would say is probably the largest of the three, that's just kind of pausing and taking a wait and see. We don't really need to jump into this until the dust settles a little bit. The third group would be folks that are already working on something or have something underway, and they're actually trying to accelerate to get ahead of any cost increases. I think for the short term, some of that third effect may offset any slowdown from the second effect. Overall, I think most people are assuming this is noise and business as usual.

If you look in the front range, I think that's kind of the dynamic that's driving it. In the resort communities, which would be Vail, Aspen, Jackson, we're seeing continued interest in those markets. We're seeing good activity. I think that those will continue to be nice growth markets for us. We have relatively small offices there and high-performing folks. I think that that should do well here. Bozeman is a newer market for us. As you know, Bozeman market continues to be very hot. We think that that's going to be a really good market for us. In Arizona, I think that we've got a nice, profitable, stable business there that we'd like to see growing much faster. We're working on some initiatives there to drive some growth. I think there's opportunity across our platform.

We do not have any concerns today in any of these different regions. I think we have good people in place. To the extent that we can add talent, we are doing it.

Ross Haberman (Money Manager)

Just one follow-up regarding the new personnel you brought on. Will we see a significant increase in expense the next quarter or two? How quickly do you think these new people should be accretive to the bottom line in general, two or three quarters out? How quickly do you expect them to? Thanks. That is my last question.

Scott Wylie (Chairman and CEO)

One of them was explaining to me earlier this week how he thinks he can have an impact this quarter. My experience is it takes a while. I love the enthusiasm. I do think that it takes a little while for them to kind of get settled and figure out what they're going to be able to get done here and how quickly that can close and those sorts of things. I think over the next two or three quarters, you're going to see continued impact from these folks. We've said that we think expenses are going to be pretty flat this year. We think that we're going to be able to grow the balance sheet and produce some really nice operating leverage.

If you look at that one page in the deck that shows the net income, I think it's page four or five, over the last four quarters, you see that happening. I think that that's going to continue here. I'm optimistic that that's what we'll see going forward in 2025.

Ross Haberman (Money Manager)

Thank you very much. The best of luck.

Scott Wylie (Chairman and CEO)

Thank you, Ross.

Operator (participant)

Thank you. I'm showing no further questions at this time. Now I'd like to turn it back to management for closing remarks.

Scott Wylie (Chairman and CEO)

Great. Thank you, Daniel. For several quarters, we've talked about disappointing headline numbers but solid underlying trends. I think this quarter was more evident than prior ones that this is happening. It's going to continue through 2025, as I just said. Some of these trends are becoming more obvious today: asset quality, NIM, our loan-to-deposit ratio, our operating efficiency, with more to come. I think with the sales and marketing changes we've talked about, our tech rebuild that we've done, the data management initiative, our process work, and our P10 initiatives, these all are going to play out significantly as we head into the back half of 2025 and into 2026. First Western Financial has a strong post-IPO history of good organic growth with really nice operating leverage driving strong profitability.

We expect that to continue to recover as the economic and financial conditions normalize here. In the meantime, we really appreciate everybody's interest and support. Thank you so much for taking the time to dial in today and for the questions. We really appreciate your interest. Thanks, everybody. Have a great Friday.

Operator (participant)

This concludes today's conference call. Thank you for participating. You may now disconnect.