First Western Financial Inc (MYFW)·Q1 2025 Earnings Summary

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 .

Financial Results

Headline vs. estimates and trend

• *Values retrieved from S&P Global.

Margins and efficiency

Segment gross revenue (Non-GAAP)

Key balance sheet and credit KPIs

Non-GAAP notes: Consolidated Gross Revenue and Efficiency Ratio are non-GAAP; reconciliations provided in company exhibits .

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We generated a significant improvement in our level of profitability… expansion in our net interest margin, a higher level of noninterest income… an increase in noninterest-bearing deposits, solid loan production, and well-managed expenses.” – CEO .
• “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… We will also benefit from $8 million of sub debt… redeemed on March 31.” – CFO .
• “We expect to see a continuation of the positive trends… while we also redeploy the cash from the sale of our 2 largest OREO properties into interest-earning assets.” – CEO .
• “We’re targeting keeping our expenses under $20 million a quarter… $19.5–$20 million guidance seems reasonable from what we know today.” – CEO .

Q&A Highlights

• Loan yields included ~$200K higher-than-normal amortized loan fees; helpful but lumpy, suggesting some non-repeatable benefit in Q1 .
• End-of-March spot metrics: cost of deposits ~2.98%, cost of funds ~3.05%; NIM flattish in Q2 due to typical tax-season deposit runoff, then expansion in H2 back into 2.70s .
• OREO/NPL resolution: one OREO left (likely sold over summer), and one substantial NPL expected to resolve during 2025, timing court-dependent .
• Expenses: reiteration of <$20M/quarter run-rate; upside risk only if performance outperforms (incentive accruals) .
• ROA ambition: medium-term target to get “back to 1%,” with operating leverage from NIM and fees; could go beyond 1% over time .
• Liquidity deployment: willing to lean into securities if loan growth underwhelms, but priority remains relationship-based banking .

Estimates Context

• S&P Global consensus (Q1 2025): EPS $0.23*, Revenue $24.10M* vs actual EPS $0.43 and total income before non-interest expense $24.72M; both beats. Drivers: NIM expansion (lower deposit costs), OREO gains, mortgage fee recovery; note ~$200K higher amortized loan fees aided loan yields .

• Estimate implications: upward revisions likely for FY EPS/NII given deposit cost trajectory, sub-debt redemption, and OREO redeployment; Q2 may be seasonally softer on deposits/NIM before H2 expansion .

• *Values retrieved from S&P Global.

Key Takeaways for Investors

• Near-term: Expect Q2 NIM to be flat given tax-season deposit runoff; key catalyst is H2 margin expansion back into the 2.70s and redeployment of OREO cash, plus lower interest expense from sub-debt redemption starting Q2 .
• Earnings power: Structural deposit cost improvement and efficiency gains (79.16%) underpin higher exit run-rate EPS vs recent quarters .
• Asset quality de-risking: NPAs dropped to 0.59% of assets; remaining OREO and single large NPL expected to resolve in 2025, reducing tail risk and freeing capital/liquidity .
• Balance sheet mix: NIB deposits up 9% q/q; time deposits rolling down; borrowings and sub-debt lower—supportive for funding costs and NIM .
• Fee levers: Mortgage banking momentum and strategic wealth hires provide incremental non-interest income upside if rates and markets cooperate .
• Risk checks: macro/tariff uncertainty could temper 2025 loan growth; Q1 loan payoffs offset production, though pipeline appears healthy .
• Medium-term thesis: management’s ROA target “back to 1%” relies on NIM expansion, fee growth, and expense discipline—credible path with multiple execution levers identified .

Source documents

• Q1 2025 8-K (Item 2.02) and exhibits: .
• Q1 2025 press release: .
• Q1 2025 earnings call transcripts: and –.
• Prior quarters for trend: Q4 2024 8-K and deck: ; Q3 2024 8-K and deck: .