Sign in

You're signed outSign in or to get full access.

FW

First Western Financial Inc (MYFW)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 EPS of $0.26 and gross revenue of $24.16m fell below S&P Global consensus, driven by a sharp sequential increase in provision expense and normalization of one-time gains from Q1; NIM expanded to 2.67% and efficiency improved modestly, while net income declined QoQ to $2.5m . EPS est: $0.3567* vs $0.26 actual; revenue est: $25.28m* vs $24.16m actual.
  • Positive operating momentum: loans +4.7% QoQ to $2.54B on diversified production ($167m) and deposit costs eased (spot 3.07% at June-end), lifting NIM +6 bps QoQ; AUM rose 4.5% QoQ on markets .
  • Funding and liquidity: interest-bearing deposits grew 2.8% QoQ; noninterest-bearing deposits fell seasonally; FHLB/FRB borrowings increased to $163m (over-night, mid-4%); management plans to pay these down as deposits rebuild in Q3 .
  • Outlook/guidance: management expects NIM flat in Q3 then to expand in Q4 toward low–mid 2.70s (consistent with prior “exit NIM” commentary), OpEx run-rate unchanged at $19.5–$20.0m, and continued balance sheet growth; NII sensitivity to 25 bps cut ~-$1.0m, slightly reduced vs prior due to lower rate sensitivity .

What Went Well and What Went Wrong

What Went Well

  • NIM expansion and deposit cost relief: NIM rose to 2.67% (+6 bps QoQ) on lower deposit costs and higher earning-asset yields after redeploying OREO sale proceeds; CEO: “We executed well…expansion in our net interest margin…redeploy[ed] cash from the sale of our two largest OREO properties into loan production and securities purchases” .
  • Strong loan growth and pipelines: Loans +4.7% QoQ to $2.54B on $167m diversified production; management cites “solid level of loan production” and healthy pipelines expected to sustain balance sheet growth in 2H .
  • Operating discipline: Efficiency ratio improved to 78.83% (from 79.16% in Q1 and 82.25% YoY); OpEx decreased $0.3m QoQ; TBVPS increased to $23.39 (+0.9% QoQ) .

What Went Wrong

  • EPS/revenue miss vs consensus: EPS $0.26 vs $0.3567*; revenue $24.16m vs $25.28m*; drivers were higher provision ($1.77m vs $0.08m in Q1) and loss of prior quarter one-time gains (OREO gain $0.5m; LHFS gain $0.2m in Q1) . EPS/revenue estimates from S&P Global*.
  • Funding mix pressured: Noninterest-bearing deposits fell 11.7% QoQ on seasonality, offset by interest-bearing growth; borrowings rose to $163m to fund asset growth; plan is to reduce in Q3 as deposits rebuild .
  • Noninterest income down 13.7% QoQ to $6.3m as one-time gains rolled off; trust/investment management fees slipped with mix shift to lower-fee categories; management highlighted reversing PTIM fee pressure as a priority .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Total income before non-interest expense ($m)$20.416 $24.341 $24.718 $22.416
Gross revenue (Non-GAAP) ($m)$23.067 $23.787 $24.559 $24.160
Net interest income ($m)$15.778 $16.908 $17.453 $17.884
Provision for credit losses ($m)$2.334 $(0.974) $0.080 $1.773
Total non-interest income ($m)$6.972 $6.459 $7.345 $6.305
Total non-interest expense ($m)$19.001 $20.427 $19.361 $19.099
Net income to common ($m)$1.076 $2.748 $4.185 $2.503
Diluted EPS ($)$0.11 $0.28 $0.43 $0.26
Net interest margin (%)2.35% 2.45% 2.61% 2.67%
Efficiency ratio (%)82.25% 80.74% 79.16% 78.83%

Segment/non-GAAP revenue breakdown

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Wealth Mgmt Gross Revenue ($m)$20.893 $22.986 $23.309 $22.663
Mortgage Gross Revenue ($m)$2.174 $0.801 $1.250 $1.497
Consolidated Gross Revenue ($m)$23.067 $23.787 $24.559 $24.160

KPIs and balance sheet

KPIQ2 2024Q4 2024Q1 2025Q2 2025
Loans HFI (period-end, $B)$2.461 $2.429 $2.429 $2.543
Deposits (period-end, $B)$2.411 $2.514 $2.515 $2.529
Noninterest-bearing dep. ($m)$396.7 $375.6 $409.7 $361.7
FHLB/FRB borrowings ($m)$191.5 $57.0 $51.6 $163.4
Subordinated notes ($m)$52.5 $52.6 $44.6 $44.7
AUM (period-end, $B)$7.012 $7.321 $7.177 $7.497
NPAs / Total assets (%)1.68% 1.68% 0.59% 0.62%
NPLs / Total loans (%)1.54% 0.54% 0.53% 0.57%
ACL / Total loans (%)1.11% 0.76% 0.74% 0.75%
ROA (annualized, %)0.15% 0.38% 0.59% 0.36%
ROE (annualized, %)1.73% 4.39% 6.63% 3.90%
BVPS ($)$25.55 $26.10 $26.44 $26.64
TBVPS ($)$22.27 $22.83 $23.18 $23.39

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net interest margin2H25Exit NIM “low–mid 2.70s” (referenced as prior guide) Q3 roughly flat; Q4 expands toward low–mid 2.70s Maintained trajectory
OpEx (non-interest expense)2H25$19.5–$20.0m/quarter (prior guide) $19.5–$20.0m/quarter Maintained
NII sensitivity to 25 bps rate cut2H25~-$1.0m (prior) -$1.0m, slightly less sensitive ($0.9m) post Q2 mix changes Slightly reduced sensitivity
BorrowingsQ3 2025n/aOvernight FHLB borrowings (mid-4% rate) to be paid down as deposits rebuild New color
Deposits2H25n/aDeposit pipelines strong; ability to reprice CDs lower; spot total deposit rate 3.07% at June-end New color
Asset quality2H25n/aExpect no meaningful deterioration; stable overall Maintained constructive tone
Mortgage banking2H25n/aHigher production expected with added MLOs despite industry softness Positive directional

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24, Q1’25)Current Period (Q2’25)Trend
NIM trajectoryQ4: NIM +13 bps to 2.45% on lower deposit costs ; Q1: NIM +16 bps to 2.61% NIM 2.67%; Q3 flat, Q4 expansion to low–mid 2.70s Improving; clear path to higher NIM
Deposit costs/fundingQ4: cost of deposits fell; avg deposits up ; Q1: total/NIB deposits up Spot deposit rate 3.07%; ability to reprice CDs lower; IB deposits +2.8% QoQ; NIB deposits seasonally down Gradual cost relief; seasonal mix shift
Asset qualityQ4: NPAs 1.68%; OREO large, under resolution ; Q1: NPAs fell to 0.59% after OREO sales NPAs 0.62%; slight NPL increase from one relationship; classified loans down $10m Stable to improving overall
Loan growth/pipelinesQ4: strong production; loans +2.1% QoQ ; Q1: “solid loan production” Loans +4.7% QoQ; $167m production; pipelines healthy Accelerating growth
PTIM/trust feesQ1: PTIM fees 4.677m; some pressure Fees declined; management replacing PTIM leadership; launching B2B distribution; priority to grow Repositioning for growth
Mortgage bankingQ4: mortgage gains down ; Q1: gains improved Gains up QoQ; market demand still soft; MLO adds drive production; contribution positive Improving internally despite soft market
Competitive environmentn/aCompetitive pricing persists; bank wins on service/relationship model Ongoing headwind; manageable

Management Commentary

  • CEO: “We executed well in the second quarter and saw positive trends in many areas including loan and deposit growth, an expansion in our net interest margin, well managed expenses, and stable asset quality…redeploy[ed] the cash…from the sale of our two largest OREO properties into loan production and securities purchases” .
  • COO: “New loan production was $167 million in the second quarter…well-diversified…we are also getting deposit relationships with most of these new clients…average rate on new loan production [was] 6.35% (6.67% ex. trust-secured)” .
  • CFO: “We expect NIM to be relatively flat in the short term, but it should expand later in the year…strong NII growth in the third and fourth quarters…OpEx run-rate $19.5–$20.0 million” .
  • CFO: “Spot [total deposit] rate at the end of June was 3.07%…opportunity to continue to reprice down on the CD portfolio” .

Q&A Highlights

  • Funding and borrowings: End-of-quarter FHLB borrowings were overnight in the mid-4% range; plan to pay down as deposits rebuild in Q3 .
  • NIM outlook and rate sensitivity: NIM expected flat in Q3 and to expand in Q4 toward low–mid 2.70s; a 25 bps rate cut impacts NII by about $1.0m, slightly less sensitive than before .
  • Expense discipline: OpEx run-rate reiterated at $19.5–$20.0m; focus is on operating leverage over cost-cutting .
  • PTIM growth plan: New leadership and B2B initiative to reaccelerate PTIM fee growth; priority area with expected future results .
  • Mortgage dynamics: Volumes are market-constrained, but contribution remains positive; MLO hiring broadens production footprint .

Estimates Context

Results vs S&P Global consensus:

  • Q2 2025: EPS $0.26 vs $0.3567*; Revenue $24.16m vs $25.28m* — both misses (driven by higher provision, lower one-time gains) .
  • Q1 2025: EPS $0.43 vs $0.2333*; Revenue $24.72m vs $24.10m* — beats .
  • Q4 2024: EPS $0.28 vs $0.2633*; Revenue $24.34m vs $24.41m* — inline/slight miss on revenue .
    Note: Asterisks denote values retrieved from S&P Global.

Estimates table

MetricQ4 2024Q1 2025Q2 2025
EPS (Actual vs Cons.)$0.28 vs $0.2633* $0.43 vs $0.2333* $0.26 vs $0.3567*
Revenue (Actual vs Cons., $m)$24.34 vs $24.41* $24.72 vs $24.10* $24.16 vs $25.28*

Key Takeaways for Investors

  • NIM momentum intact; Q3 pause followed by Q4 expansion toward low–mid 2.70s offers a credible path to earnings recovery as funding costs ease and earning-asset yields improve .
  • Sequential EPS step-down reflects cyclical credit costs and the absence of Q1 one-time gains, not a deterioration in core spread income (NII +2.3% QoQ) .
  • Loan growth accelerated (loans +4.7% QoQ) on diversified production and relationship banking, supporting NII growth into 2H despite seasonal NIB deposit headwinds .
  • Near-term funding mix is transitory: management plans to reduce overnight FHLB balances in Q3 as deposits rebuild; deposit cost relief (spot 3.07%) and CD repricing should aid NIM .
  • Credit trends remain stable with low NPAs (0.62% of assets) and adequate reserves (ACL/loans 0.75%); NPL uptick tied to one relationship under workout .
  • Fee outlook mixed: PTIM fees under pressure from mix, but leadership changes and B2B expansion are intended to drive medium-term growth; mortgage contribution positive despite weak industry .
  • Tactical implications: Expect estimate revisions lower for Q2 but constructive revisions path into Q4 as NIM expands and funding normalizes; watch deposit mix rebuild, CD repricing cadence, and provision normalization.

Additional references and source documents: Q2 2025 8-K and Exhibit 99.1 press release , earnings call transcript , investor presentation excerpts embedded in 8-K –, Q1 2025 press release for trend compares –, and Q4 2024 press release for trend compares –.