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First Western Financial Inc (MYFW)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered improving profitability with net income of $3.19M and diluted EPS $0.32, up sequentially from $0.26 and up year over year from $0.22, driven by higher net interest income and non-interest income alongside better operating efficiency .
  • Despite strong deposit inflows (+$320M, +12.6% q/q) and loan growth (+$50M, +2.0% q/q), EPS and “revenue” (total income before non-interest expense) came in below S&P Global consensus; EPS $0.32 vs $0.357*, and revenue $24.039M vs $25.606M*; management flagged near‑term NIM compression from mix shift but expects expansion in Q4 (misses) .
  • Net interest margin fell 13 bps q/q to 2.54% on higher cost of funds tied to money market growth, but efficiency ratio improved to 76.38% from 78.83%, showing positive operating leverage .
  • Credit quality was generally stable; NPAs rose to 0.70% of assets due to one downgraded C&I credit, but are materially better y/y (1.79% in Q3’24); ACL/Loans increased to 0.81% (mixed) .
  • Catalysts into Q4: expected NIM expansion (~+5 bps), continued loan/deposit growth, deposit cost moderation (MMDA beta ~63%), and stable asset quality; securities added ($~50M AFS floaters) provide earnings tailwind as liquidity redeploys .

What Went Well and What Went Wrong

What Went Well

  • Net interest income increased 8.9% q/q to $19.454M (fourth straight quarterly increase), driven by higher average earning assets; non-interest income rose 7.9% q/q to $6.842M .
  • Deposits grew 12.6% q/q to $2.85B (money market +$355M q/q), lowering borrowings by $112.5M as deposit growth outpaced loan growth; management emphasized deposit-gathering momentum .
  • “We executed well…positive trends in loan and deposit growth, an increase in net interest income, well managed expenses, and generally stable asset quality,” said CEO Scott Wylie, highlighting improving book and tangible book value per share .

What Went Wrong

  • Net interest margin declined 13 bps q/q to 2.54% due to unfavorable mix in interest-earning assets and deposit costs rising on money market growth (negative surprise); yield fell 2 bps and cost of interest-bearing liabilities rose 4 bps .
  • Provision for credit losses increased to $2.257M (vs $1.773M in Q2), tied to one downgraded credit; NPAs rose to $22.682M (0.70% of assets) from $18.779M (0.62%) q/q (headwind) .
  • EPS and revenue missed consensus (EPS $0.32 vs $0.357*; revenue $24.039M vs $25.606M*), reflecting NIM compression and higher provision; non-interest expense rose $0.975M q/q, largely salaries/benefits .

Financial Results

MetricQ3 2024Q2 2025Q3 2025
Total income before non-interest expense (“Revenue”) ($USD Millions)$22.039 $22.416 $24.039
Net interest income ($USD Millions)$15.568 $17.884 $19.454
Total non-interest income ($USD Millions)$6.972 $6.305 $6.842
Provision for credit losses ($USD Millions)$0.501 $1.773 $2.257
Non-interest expense ($USD Millions)$19.368 $19.099 $20.074
Income before income taxes ($USD Millions)$2.671 $3.317 $3.965
Net income to common ($USD Millions)$2.134 $2.503 $3.186
Diluted EPS ($USD)$0.22 $0.26 $0.32
Net interest margin (%)2.32 2.67 2.54
Efficiency ratio (%)84.98 78.83 76.38

Segment and category breakdowns

  • Non-interest income detail ($USD Millions)
CategoryQ3 2024Q2 2025Q3 2025
Trust & investment management fees$4.729 $4.512 $4.629
Net gain on mortgage loans$1.451 $1.187 $1.394
Bank fees$0.392 $0.293 $0.312
Risk management & insurance fees$0.367 $0.047 $0.193
Other and mark items (incl. FV option, equity gains, COLI, other)$1.033 $0.266 $0.314
Total non-interest income$6.972 $6.305 $6.842
  • Loan portfolio composition ($USD Millions)
CategoryQ3 2024Q2 2025Q3 2025
1-4 Family Residential$920.709 $1,012.662 $1,041.990
Non-owner occupied CRE$608.494 $655.954 $728.039
Owner occupied CRE$176.165 $196.692 $191.239
Construction & Development$301.542 $255.870 $230.600
Commercial & Industrial$239.660 $239.278 $225.919
Cash, Securities & Other$116.856 $161.725 $159.204
Consumer & Other$14.978 $15.778 $12.254
Total loans HFI (UPB)$2,378.404 $2,537.959 $2,589.245
  • Deposit portfolio composition ($USD Millions)
CategoryQ3 2024Q2 2025Q3 2025
Money market$1,350.619 $1,632.997 $1,988.336
Time deposits$533.452 $397.006 $349.533
Interest checking$130.255 $123.967 $121.901
Savings$15.152 $13.503 $13.433
Noninterest-bearing$473.576 $361.656 $375.708
Total deposits$2,503.054 $2,529.129 $2,848.911
  • KPIs and balance sheet items
KPIQ3 2024Q2 2025Q3 2025
Total assets ($USD Millions)$2,911.948 $3,026.797 $3,240.424
FHLB & FR borrowings ($USD Millions)$62.373 $163.416 $50.867
Subordinated notes ($USD Millions)$52.508 $44.673 $44.724
Non-performing loans ($USD Millions)$15.031 $14.394 $18.293
Non-performing assets ($USD Millions)$52.067 $18.779 $22.682
ACL to total loans (%)0.79 0.75 0.81
NPLs / total loans (%)0.63 0.57 0.71
NPAs / total assets (%)1.79 0.62 0.70
AUM ($USD Millions)$7,465.757 $7,497.361 $7,433.029
Book value per share ($)$25.75 $26.64 $26.92
Tangible book value per share ($)$22.47 $23.39 $23.68

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net interest margin (NIM)Q4 2025Continued expansion (Q2 commentary) Management expects NIM expansion; CFO cites ~+5 bps potential as liquidity redeploys Maintained; quantified
Non-interest expenseQ4 2025Tight expense control Expense run-rate “similar to third quarter” Maintained
Deposit costs/MMDA betaQ4 2025Deposit cost decline expected with rate cuts MMDA beta ~63%; spot deposit rate 3.04% at Q3 end; trend moderating intra‑quarter Maintained downward trajectory
Loan growthQ4 2025Solid H2 loan growth expected Loan pipelines “remain strong”; expect “solid loan growth” in Q4 Maintained
Asset qualityQ4 2025Stable asset quality Not seeing indicators of “meaningful deterioration” Maintained
Liquidity deployment/securitiesQ3 2025 actionN/AAdded ~$50M AFS floaters for spread over cash; focus remains on loan redeployment New action disclosed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
NIM trajectoryNIM rose 16 bps q/q in Q1 (2.61%); +6 bps in Q2 (2.67%) on lower deposit costs NIM fell to 2.54% on mix/cost; management expects Q4 expansion (~+5 bps) Near-term dip; improving outlook
Deposit strategyNoninterest-bearing up in Q1; interest-bearing up in Q2; focus on deposit growth Deposits +12.6% q/q; money market growth; expect stickier balances Strengthening
Asset qualityNPAs down sharply in Q1 post OREO sales; slight increase in Q2 NPAs/NPLs up on one C&I downgrade; minimal NCOs; ACL to loans rose to 0.81% Stable with isolated issue
Wealth mgmt (AUM/fees)AUM -2.0% q/q in Q1; +4.5% q/q in Q2; fee mix shifts AUM -0.9% q/q on net withdrawals; agency AUM +$43M; fees +$0.1M q/q Mixed; agency improving
Mortgage productionHigher volumes Q1; continued in Q2 Gain on mortgage loans +$0.2M; higher production supports fees Improving
Market disruption/talentLeveraging CO M&A disruption; deposit/loan pipelines Ongoing disruption driving client/talent additions; AZ leader added post-Q3 Opportunity expanding
Technology/platformCloud, middleware, digital rollout; investments made Emphasis on leveraging tech to compete on value, not price Execution phase
Capital & liquidityRobust liquidity sources in Q1/Q2 Liquidity redeployment into loans/securities; borrowings down Improving funding mix

Management Commentary

  • “We executed well in the third quarter and saw positive trends…loan and deposit growth, an increase in net interest income, well managed expenses, and generally stable asset quality…resulted in an increase in our level of profitability.” – Scott Wylie, CEO .
  • “Our loan pipeline remains healthy and we expect to see solid loan growth in the fourth quarter…positive trends…should result in solid financial performance.” – Scott Wylie .
  • “Our net interest income increased for the fourth consecutive quarter…NIM decreased…as our deposit growth was in higher-cost money market accounts…As liquidity is deployed…we expect NIM expansion.” – CFO .
  • “We said…we were going to shift back onto offense in 2025…we’ve replaced technology, reorganized product teams, standardized controls, rebuilt credit/risk/support…clear path to 1% ROAA.” – Scott Wylie .

Q&A Highlights

  • Deposit growth stickiness: management expects recent inflows to provide a higher base into Q4; pricing initially expensive but moderating intra‑quarter (avg deposit cost peaked 3.22% in Aug, 3.15% Sep, 3.04% spot at Q3 end) .
  • Credit specifics: NPA increase tied to one downgraded C&I credit with specific reserve; expected to work out over time .
  • NIM outlook: liquidity redeployment to loans could drive ~+5 bps in Q4; ability to improve earning asset yields and lower deposit costs .
  • Expense trajectory: non-interest expense run-rate “similar to Q3” for Q4; incentive comp varies with performance .
  • Balance sheet strategy: added ~$50M of AFS floaters to earn spread over cash; focus remains loan redeployment; deposit growth prepositions L/D remix in 2026 .

Estimates Context

MetricQ3 2024 ActualQ2 2025 ActualQ3 2025 ActualQ3 2025 Consensus# of Estimates
Diluted EPS ($)0.22 0.26 0.32 0.357*3*
Revenue (Total income before non-interest expense, $USD Millions)22.039 22.416 24.039 25.606*3*
  • Results vs consensus: EPS $0.32 vs $0.357* → bold miss; Revenue $24.039M vs $25.606M* → bold miss. Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Strong deposit inflows and money market growth reduced wholesale funding, positioning for NIM improvement as liquidity is deployed into loans in Q4 (management guides ~+5 bps) .
  • Operating leverage improving: efficiency ratio fell to 76.38% from 78.83% q/q and 84.98% y/y, while net interest income rose for the fourth straight quarter .
  • Asset quality is broadly stable; NPAs/NPLs up sequentially on one credit but materially better y/y, with ACL/loans rising to 0.81%—watch provision cadence near term .
  • Wealth management fees edged higher with agency AUM gains; overall AUM dipped on net withdrawals in low-fee categories—fee mix increasingly supportive .
  • Near-term trading setup: headline misses on EPS/revenue may weigh, but company narrative points to Q4 NIM expansion, deposit cost moderation, and continued balance sheet growth (potential sentiment shift on confirmation) .
  • Strategic hiring and technology investments underpin organic growth; securities deployment ($~50M) and lower borrowings provide earnings tailwinds as balance sheet remix continues .
  • Monitor deposit betas (MMDA ~63%) and deposit pricing trends; sequential moderation in deposit costs supports margin trajectory if rate cuts proceed .