Q2 2024 First Western Financial Inc Earnings Call

Good day everyone and thank you for standing by. Welcome to First Western Financial second quarter 2024 earnings conference call.

Operator: Quarter 2024 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.

Operator: 2024 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 participate, you will need to press star 11 on your telephone. You will then hear a message advising that your hand is raised. To withdraw your question, simply press star 11 again. Please be advised that today's conference is being recorded. I will hand the call over to Tony Rossi of Financial Profiles.

Speaker Change: 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 participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised.

Operator: To participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your questions, simply press star 1-1 again.

Operator: Please be advised that today's conference is being recorded.

To withdraw your questions, simply press star 11 again. Please be advised that today's conference is being recorded. I will hand the call over to Tony Rossi of Financial Profiles.

Tony Rossi: I will hand the call over to Tony Rossi of Financial Profiles.

Tony Rossi: Thank you, Carmen. Good morning, everyone, and thank you for joining us today for First Western Financial's second quarter 2024 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.

Tony Rossi: Thank you, Carmen. Good morning, everyone, and thank you for joining us today for First Western Financial's second quarter 2024 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 will use this 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.

Tony Rossi: Thank you, Carmen. Good morning, everyone, and thank you for joining us today for First Western Financial's second quarter 2024 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.

Tony Rossi: We will use the 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.

Speaker Change: We will use this slide presentation as part of our discussion this morning.

Speaker Change: 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.

Tony Rossi: Before I began, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition 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 disclaimer as in our earnings release and investor presentation. The company describes any obligation to update any forward-looking statements made during the call.

Tony Rossi: 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 condition 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.

Speaker Change: 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 condition 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.

Speaker Change: These factors are discussed in the company's SEC filings, which are available on the company's website.

Tony Rossi: 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 GAAP to non-GAAP measures. And with that, I'd like to turn the call over to Scott.

Speaker Change: 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.

Tony Rossi: 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 quantitative information to be discussed today, as well as the reconciliation of the gap to non-GAAP measures.

Speaker Change: 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. And with that, I'd like to turn the call over to Scott.

Tony Rossi: And with that, I'd like to turn the call over to Scott.

Scott Wylie: Thanks, Tony, and good morning, everybody. During the second quarter, we continue to prioritize proven risk management and a considerable approach to new loan production, which resulted in a balance sheet remaining relatively flat during the quarter. At the same time, we continued to execute well in our strategic priorities. It had a positive trend in a number of key areas. We continued to maintain discipline, expense control, which resulted in non-interest expense declining from the prior quarter. We continued to add new deposit relationships in our largest non-interest income generating businesses, wealth management and mortgage banking, continued to perform well. It makes strong contributions to our revenue.

Scott C. Wylie: Thanks, Tony. And good morning, everybody.

Scott C. Wylie: During the second quarter, we continued to prioritize prudent risk management and a conservative approach to new loan production, which resulted in our balance sheet remaining relatively flat during the quarter. At the same time, we continued to execute well on our strategic priorities and had positive trends in a number of key areas. We continue to maintain disciplined expense control, which resulted in non-interest expense declining from the prior quarter. We continue to add new deposit relationships.

Scott: Thanks, Tony, and good morning, everybody.

Scott: During the second quarter, we continued to prioritize prudent risk management and a conservative approach to new loan production, which resulted in our balance sheet remaining relatively flat during the quarter.

Scott: At the same time, we continued to execute well in our strategic priorities and had positive trends in a number of key areas.

Scott: We continued to maintain disciplined expense control, which resulted...

Scott: in non-interest expense declining from the prior quarter.

Scott C. Wylie: In our largest non-interest income generating businesses, wealth management and mortgage banking continue to perform well and make strong contributions to our revenue. Notably, our performance grew stronger as we moved through the quarter, and in June, we had increases in both loans and deposits, and we saw an increase in our net interest margin. In terms of asset quality, we continue to make progress on resolving our largest, non-performing assets, and we foreclosed on two of the properties we have as collateral during the quarter.

Scott: We continue to add new deposit relationships. In our largest non-interest income generating businesses, wealth management and mortgage banking continue to perform well and make strong contributions to our revenue.

Scott Wylie: Notably, our performance grew stronger as we moved through the quarter, and in June, we had increases in both loans and deposits, and we saw an increase in our net interest margin. In terms of asset quality, we continued to make progress on resolving our largest non-performing assets and foreclosed on two of the properties we have as collateral during the quarter. We experienced a decline in past two loans while having net recoveries in the quarter. As we indicated in the past, when we do see a loan move from non-performing status to specific due to specific issues with a particular buyer, it rarely results in a meaningful level of loss due to the strong collateral we require, typically also including multiple forms of repayment and personal guarantees.

Scott: Bye.

Scott: Notably, our performance grew stronger as we moved through the quarter, and in June we had increases in both loans and deposits, and we saw an increase in our net interest margin.

Scott: In terms of asset quality, we continue to make progress on resolving our largest non-performing assets and foreclosed on two of the properties we have as collateral during the quarter.

Scott C. Wylie: We experienced a decline in past due loans while having net recoveries in the quarter. As we have indicated in the past, when we do see a loan move from non-performing status due to specific issues with a particular borrower, it rarely results in a meaningful level of loss due to the strong collateral we require, typically also including multiple forms of repayment and personal guarantees.

Scott: We experienced a decline in past due loans while having net recoveries in the quarter.

Scott: As we indicated in the past, when we do see a loan move from non-performing status due to specific issues with a particular borrower, it rarely results in a meaningful level of loss due to the strong collateral we require, typically also including multiple forms of

Scott Wylie: Moving to slide four, we generated net income of 1.1 million, or about 11 cents per share, or diluted share in the first quarter, in pre-tax, pre-provision net income of 3.7 million. On a pre-tax, pre-provision net income basis, our financial performance was consistent with both the prior quarter and the same period last year. With our prudent balance sheet management, we had a further increase in tangible book value for share this quarter.

Scott C. Wylie: Moving to slide four, we generated net income of $1.1 million, or about $0.11 per diluted share, in the first quarter and pre-tax, pre-provision net income of $3.7 million, on a pre-tax, pre-provision basis. Our financial performance was consistent with both the prior quarter and the same period last year. With our prudent balance sheet management, we had a further increase in tangible book value per share this quarter. Now I'll turn the call over to Julie for some additional discussion of our balance sheet and trust, and Investment Management Trends. Julie? Thank you.

Scott: of repayment and personal guarantees.

Scott: Moving to slide four, we generated net income of $1.1 million, or about 11 cents.

Scott: for diluted share in the first quarter and pre-tax, pre-provision net income of $3.7 million.

Scott: On a pre-tax, pre-provision, net income basis, our financial performance was consistent with both the prior quarter and the same period last year.

Scott: With our prudent balance sheet management, we had a further increase in tangible book value per share this quarter.

Julie Courkamp: Now I'll turn the call over to Julie for some additional discussion on our balance sheet and trust in investment management trends.

Scott: Now I'll turn the call over to Julie for some additional discussion on our balance sheet.

Julie Courkamp: Julie? Thank you, Scott. Turning to slide five, we'll look at the trends in our loan portfolio. Our loan's helper investment decreased 20 million from the end of the prior quarter, but as Scott mentioned, our loan's helper investment increased during the month of June. We continue to be conservative and highly selective in our new loan production, but we did see a higher level of loan production in the second quarter. With total loan production increasing to 50 million, up from 31 million in the prior quarter. Most of our new loan production is coming in the areas of commercial loans and residential mortgages, where we are also getting deposit relationships.

Julie A. Courkamp: Turning to slide five, we'll look at the trends in our loan portfolio. Our loans held for investment decreased $20 million from the end of the prior quarter.

Scott: and Investment Managers of Trends. Julie? Thank you, Kev.

Julie: Turning to slide 5, we'll look at the trends in our loan portfolio. Our loans held for investment decreased $20 million from the end of the prior quarter, but as Scott mentioned, our loans held for investment increased during the month of June .

Julie A. Courkamp: But, as Scott mentioned, our loans held for investment increased during the month of June. We continue to be conservative and highly selective in our new loan production, but we did see a higher level of loan production in the second quarter, with total loan production increasing to $50 million, up from $31 million in the prior quarter. Most of our new loan production is coming in the areas of commercial loans and residential mortgages, where we are also building deposit relationships.

Speaker Change: We continue to be conservative and highly selective in our new loan production, but we did see a higher level of loan production in the second quarter, with total loan production increasing to $50 million, up from $31 million in the prior quarter.

Speaker Change: Most of our new loan production is coming in the areas of commercial loans and residential mortgages, where we are also getting deposit relationships.

Julie Courkamp: Our level of payoff were relatively consistent with the prior quarter and higher than our level of loan originations, which resulted in the decline in total loans. We continue to be disciplined, and we are maintaining our pricing criteria. This resulted in the average rate on new production being 8.35% in the quarter, which is higher than the average rate of our payoff, which resulted in the turnover in our loan portfolio being accreted to our average yield on loans.

Julie A. Courkamp: Our level of payoffs was relatively consistent with the prior quarter and higher than our level of loan originations, which resulted in the decline in total loans. We continue to be disciplined, and we are maintaining our pricing criteria.

Speaker Change: Our level of payoffs were relatively consistent with the prior quarter and higher than our level of loan originations, which resulted in the decline in total loans.

Julie A. Courkamp: This resulted in the average rate on new production being 8.35% in the quarter, which is higher than the average rate of our payoffs, which 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. Our total deposits declined during the quarter as we saw outflows primarily driven by seasonal tax payments, operating account fluctuations, and clients using liquidity for their strategic investments.

Speaker Change: We continue to be disciplined and we are maintaining our pricing criteria. This resulted in the average rate on new production being 8.35% in the quarter, which is higher than the average rate of our payoffs, which resulted in the turnover in our loan portfolio being accretive to our average yield on loans.

Julie Courkamp: Moving to slide six, we'll take a closer look at our deposit trends. Our total deposits declined during the quarter, as we saw outflows primarily driven by seasonal tax payments, operating account fluctuations, and clients using liquidity for their strategic investments. However, on an average basis, our deposits are up 39 million compared to the second period of 2023 due to our deposit gathering efforts over the past year. We continue to have success in new business development and added 22 million in new deposit relationships during the second quarter. We had the largest growth in time deposits during the quarter, which was primarily related to clients moving money into time deposits from lower yielding deposit count, due to their desire to take advantage of the higher-for-longer interest rate environment that we are in.

Speaker Change: Moving to slide six, we'll take a closer look at our deposit trends.

Speaker Change: Our total deposits declined during the quarter as we saw outflows primarily driven by seasonal tax payments, operating account fluctuations, and clients using liquidity for their strategic investments.

Julie A. Courkamp: However, on an average basis, our deposits are up $39 million compared to the second period of 2023 due to our deposit gathering efforts over the past year. We continue to have success in new business development and added $22 million in new deposit relationships during the second quarter. We had the largest growth in time deposits during the quarter, which was primarily related to clients moving money into time deposits from lower-yielding deposit accounts due to their desire to take advantage of the higher-for-longer interest rate environment that we are in.

Speaker Change: However, on an average basis, our deposits are up $39 million compared to the second period of 2023 due to our deposit gathering efforts over the past year.

Speaker Change: We continue to have success in new business development and added $22 million in new deposit relationships during the second quarter.

Speaker Change: We had the largest growth in time deposits during the quarter, which was primarily related to clients moving money into time deposits from lower-yielding deposit accounts due to their desire to take advantage of the higher-for-longer interest rate environment that we are in.

Julie Courkamp: Trying to trust an investment management, on slide seven, we had 129 million decreased in our asset center management in the second quarter, driven by asset withdrawals and custody accounts that have minimal impact on trust and investment management fees. However, we have seen an increase in AUM of 8% over the past year.

Julie A. Courkamp: Turning to Trust and Investment Management on Slide 7, we had a $129 million decrease in our assets under management in the second quarter, driven by asset withdrawals and custody accounts that have a minimal impact on trust and investment management fees.

Speaker Change: Turning to Trust and Investment Management on slide 7.

Speaker Change: We had a $129 million decrease in our assets under management in the second quarter, driven by asset withdrawals and custody accounts that have minimal impact on trust and investment management fees. However, we have seen an increase in AUM of 8% over the past year.

David Weber: However, we have seen an increase in AUM of 8% over the past year. Now, I'll turn the call over to David for further discussion of our financials. David. Thanks.

David Weber: Now I'll turn the call over to David for further discussion of our financials.

David Weber: David. Thanks, Julie. Turning to slide eight, we'll look at our gross revenue. Our gross revenue decreased 2% from the prior quarter, but was up from the average of our prior three quarters. We saw positive trends in NIM and mortgage fee income in the quarter. Now, turning to this slide 9, we'll look at the trends in net interest income and margin. Our net interest income decreased 1.9% from the prior quarter, primarily due to lower levels of intersparing cash. We continue to see more stability in our NIM, which increased one basis point from the prior quarter to 2.35%.

Speaker Change: Now, I'll turn the call over to David for further discussion of our financials. David?

David Weber: Turning to slide 8, we'll look at our gross revenue. Our gross revenue decreased 2% from the prior quarter, but it was up from the average of our prior three quarters.

David: Thanks, Julie.

David: Turning to slide 8, we'll look at our gross revenue. Our gross revenue decreased 2% from the prior quarter, but was up from the average of our prior three quarters. We saw positive trends in NIM and mortgage fee income in the quarter.

David Weber: We saw positive trends in NIM and mortgage fee income in the quarter. Now turning to slide nine, we'll look at the trends in net interest income and margins. Our net interest income decreased 1.9% from the prior quarter, primarily due to lower levels of interest-bearing cash.

Speaker Change: Now turning to slide nine, we'll look at the trends in net interest income and margin.

Speaker Change: Our net interest income decreased 1.9% from the prior quarter, primarily due to lower levels of interest bearing cash.

David Weber: We continue to see more stability in our NIM, which increased one basis point from the prior quarter to 2.35%. As Scott indicated earlier, we saw an increase in our NIM during June, and we expect to see continued expansion in our net interest margin over the second half of the year. We are seeing an increase in our average yield on interest-earning assets primarily due to new loans coming on the books at higher rates than the loans that are paying off. We added some overnight borrowings to offset the deposit outflows that occurred during the quarter. We plan to reduce these borrowings as deposit balances build back up again. Now, turning to slide 10.

Speaker Change: We continue to see more stability in our NIM, which increased one basis point from the prior quarter to 2.35%.

Speaker Change: As Scott indicated earlier, we saw an increase in our NIMS during June , and we expect to see continued expansion in our net interest margin over the second half of the year.

David Weber: We are seeing an increase in our average yield on intercerning assets, primarily due to new loans coming on the books at higher rates than the loans that are paying off. We added some overnight borrowings to offset the deposit outflows that occurred during the quarter. We plan to reduce these borrowings as deposit balances build back up again. Now, turning to this slide 10, our non-interest income decreased 4.2% from the prior quarter, but was up 29.6% from the average of the last three quarters of 2023. Our largest sources of non-interest income, trust in investment management fees, and net gains on mortgage loans continue to make strong contributions that were offset by a decrease in bank fees.

Scott: We are seeing an increase in our average yield on interest earning assets primarily due to new loans coming on the books at higher rates than the loans that are paying off.

Scott: We added some overnight borrowings to offset the deposit outflows that occurred during the quarter. We plan to reduce these borrowings as deposit balances build back up again.

David Weber: Our non-interest income decreased 4.2% from the prior quarter, but it was up 29.6% from the average of the last three quarters of 2023. Our largest sources of non-interest income—trust and investment management fees and net gains on mortgage loans—continue to make strong contributions, but they were offset by a decrease in bank fees. Our net gain on mortgage loans increased from the prior quarter due to a higher level of production resulting from the addition of MLOs earlier in the year, as well as an increase in home buying activity that we are seeing in our markets.

Scott: Now turning to slide 10.

Scott: Our non-interest income decreased 4.2% from the prior quarter, but was up 29.6% from the average of the last three quarters of 2023.

Scott: Our largest sources of non-interest income, trust and investment management fees, and net gains on mortgage loans continue to make strong contributions, but they were offset by a decrease in bank fees.

David Weber: Our net gain on mortgage loans increased from the prior quarter due to a higher level of production resulting from the addition of MLOs earlier in the year, as well as an increase in home buying activity that we are seeing in our markets. Now, turning to slide 11 in our expenses, our non-interest income decreased to 19 million, primarily due to a lower level of professional service fees as we continue to make progress on the resolution. Our efficiency ratio is back trending in the right direction. For the next few quarters, we expect non-interest expense to be relatively consistent, with the main variable being the level of incentive compensation, which will be dependent upon our financial performance.

Scott: Our net gain on mortgage loans increased from the prior quarter due to a higher level of production resulting from the addition of MLOs earlier in the year, as well as an increase in home buying activity that we are seeing in our markets.

David Weber: Now turning to slide 11 of our expenses, our non-interest expense decreased to $19 million primarily due to a lower level of professional service fees as we continue to make progress on the resolution of our non-performing loans. Our efficiency ratio is back trending in the right direction. For the next few quarters, we expect non-interest expense to be relatively consistent, with the main variable being the level of incentive compensation, which will be dependent upon our financial performance.

Scott: Now turning to slide 11, and our expenses.

Scott: Our non-interest expense decreased to $19 million, primarily due to a lower level of professional service fees as we continue to make progress on the resolution of our non-performing loans.

Scott: Our efficiency ratio is back trending in the right direction.

Scott: For the next few quarters, we expect non-interest expense to be relatively consistent with the main variable being the level of incentive compensation, which will be dependent upon our financial performance.

David Weber: Now, turning to slide 12, we'll look at our asset quality. Our non-performing assets increased slightly to 49.3 million. The increase was due to the foreclosure on two properties held as collateral, which are now held in Oreo, that more than offset the resulting decrease in non-performing loans due to a participated balance. We continue to make progress on our large workout relationship as we have previously discussed. In addition, we had a decline in past two loans and had a small amount of net recoveries in the quarter. With the decline we had in loans and the provision recorded in the quarter, our level of allowance to adjusted loans increased 12 basis points to 1.12% at June 30th.

David Weber: Now turning to slide 12, we'll look at our asset quality. Our non-performing assets increased slightly to $49.3 million. The increase was due to the foreclosure on two properties held as collateral, which are now held in OREO, that more than offset the resulting decrease in non-performing loans due to a participated balance. We continue to make progress on our large workout relationship, as we have previously discussed. In addition, we had a decline in past due loans and had a small amount of net recoveries in the quarter.

Scott: Now turning to slide 12, we'll look at our asset quality.

Scott: Our non-performing assets increased slightly to $49.3 million.

Scott: The increase was due to the foreclosure on two properties held as collateral, which are now held in OREO, that more than offset the resulting decrease in non-performing loans due to a participated balance.

Scott: We continue to make progress on our large workout relationship, as we have previously discussed.

Scott: In addition, we had a decline in past due loans and had a small amount of net recoveries in the quarter.

David Weber: With the decline we had in loans and the provision recorded in the quarter, our level of allowance to adjusted loans increased 12 basis points to one point one two percent on June 30th. Now, I'll turn it back to Scott. Scott?

Scott: With the decline we had in loans and the provision recorded in the quarter, our level of allowance to adjusted loans increased 12 basis points to 1.12% at June 30th. Now I'll turn it back to Scott.

Scott Wylie: Now, I'll turn it back to Scott.

Scott Wylie: Scott? Thanks, David. Turning slide 13, I'll wrap up with some comments about our outlook. Well, economic conditions remain uncertain. We'll continue to prioritize prudent risk management and a conservative approach in the new loan product.

Scott C. Wylie: Attorney Slide 13, I'll wrap up with some comments about our outlook. Will economic conditions remain uncertain?

Scott: Thanks, David.

Scott: Turning to slide 13, I'll wrap up with some comments about our outlook.

Scott C. Wylie: We'll continue to prioritize prudent risk management and a conservative approach to new loan production. In addition, we continue to make progress on resolving the credits that were placed on non-performing status over the past few quarters. Furthermore, our past due loans have continued to decline over the past two consecutive quarters.

Speaker Change: Will economic conditions remain uncertain?

Scott Wylie: Inc. In addition, we continue to make progress on resolving the credits that were placed on non-performing status over the past few quarters. Notably, our past two loans have continued to decline over the past two consecutive quarters. We'll also continue to focus on maintaining discipline, expense control in developing new deposit relationships. We're benefiting from the strength of the franchise we've built, and as we have opened new positions in the organization, we're seeing good opportunities to upgrade our banking talent. These new additions, along with strong execution across our entire organization on our business development initiatives, are positively impacting our pipelines in all areas of the business, including loans, deposits, mortgage banking, and investment management.

Scott: We'll continue to prioritize prudent risk management and a conservative approach to new loan production.

Speaker Change: In addition, we continue to make progress on resolving the credits that were placed on non-performing status over the past few quarters. Notably,

Scott: Our past due loans have continued to decline over the past two consecutive quarters.

Scott C. Wylie: We'll also continue to focus on maintaining disciplined expense control and developing new deposit relationships. We're benefiting from the strength of the franchise we've built, and as we open new positions in the organization, we're seeing good opportunities to upgrade our banking talent. These new additions, along with strong execution across our entire organization of our business development initiatives, are positively impacting our pipelines in all areas of the business, including loans, deposits, mortgage banking, and investment management.

Scott: We'll also continue to focus on maintaining disciplined expense control and developing new deposit relationships.

Scott: We're benefiting from the strength of the franchise we've built, and as we open new positions in the organization, we're seeing good opportunities to upgrade our banking talent.

Scott: These new additions, along with strong execution across our entire organization,

Scott: on our business development initiatives are positively impacting our pipelines in all areas of the business including loans, deposits, mortgage banking, and investment management.

Scott Wylie: We're also in the process of reorganizing investment management business to improve its performance and business development capabilities. Based on the positive transparency, including the expansion in the medicine margin, we expect to generate a higher-level profitability in the second half of the year. We also continue to maintain a very strong balance sheet with the increases we're seeing in our capital ratios and improvement in our asset quality. We have the ability to consider additional options for capital use. This led to the authorization of the stock repurchase agreement that we announced in June. We did not repurchase any shares during the second quarter, but we do have a 10b51 plan in place now.

Scott C. Wylie: We're also in the process of reorganizing our investment management business to improve its performance and business development capability based on the positive trends we're seeing, including the expansion of the netted margin, to generate a higher level of profitability in the second half of the year. We also continue to maintain a very strong balance sheet. With the increases we're seeing in our capital ratios and improvement in our asset quality, we have the ability to consider additional options for capital use.

Scott: We're also in the process of reorganizing our investment management business to improve its performance and business development capabilities.

Scott: Based on the positive trends we're seeing, including the expansion of the netted margin,

Scott: Respect.

Scott: to generate a higher level of profitability in the second half of the year. We also continue to maintain very strong balance sheet with the increases we're seeing in our capital ratios and improvement in our asset quality. We have the ability to consider additional options for capital use.

Scott C. Wylie: This led to the authorization of a stock repurchase agreement that we announced in June. We did not repurchase any shares during the second quarter, but we do have a 10B51 plan in place now. We believe that repurchasing our shares will be in the best interest of shareholders. With that, we're happy to open the call to take your questions. Carmen, please open up the call.

Scott: This led to the authorization of the stock repurchase agreement that we announced in June .

Scott: We did not repurchase any shares during the second quarter, but we do have a 10B51 plan in place now. We believe that repurchasing our shares will be in the best interest of shareholders.

Scott Wylie: We believe in repurchasing our shares will be in the best interest of shareholders.

Operator: With that, we're happy to open the call to take your questions.

Operator: Thank you. And as a reminder, if you do have a question, simply press star 11 to get in the queue. And to remove yourself, press star 11 again. One moment for our first question.

Operator: Cramman, please open up the call. Thank you. In, as a reminder, if you do have a question, simply press star 11 to get in the queue. And to remove yourself, press star 11 again. One moment for our first question, please.

Scott: With that, we're happy to open the call to take your questions. Carmen, please open up the call.

Speaker Change: Thank you. And as a reminder, if you do have a question, simply press star 1-1 to get in the queue. And to remove yourself, press star 1-1 again. One moment for our first question, please.

Wood Lay: Any comments from the line of Woodie Lay with KBW, please proceed. Hey, thanks for taking my questions. I wanted to want to start with credit. As expected, there was an improvement from MPL to Oreo. Could you just remind us where MPA was your stance to that one larger relationship and any updated thoughts on timing around potential resolution? Yes. We have just under $30 million of MPL on that one credit, plus a specific reserve of $8.2, of which $2.4 million of that was put on in Q2. With respect to the timing of the other property sales, we had said that this was going to play out over the course of 2024, which it is.

Wood Neblett Lay: Please proceed. Hey. Thanks.

Wood Neblett Lay: Hey, thanks for taking my questions. I wanted to start with credit. As expected, there was some movement from NPL to Oreos, and then to Oreo. Could you just remind us where NPA exposure stands to that one larger relationship and any updated thoughts on timing around potential resolution?

Speaker Change: And it comes from the line of Woody Lay with KBW. Please proceed.

Wood Neblett Lay: Hey, thanks for taking my questions. I wanted to start with credit. As expected, there was some movement from NPL to Oreos.

Wood Neblett Lay: to Oreo. Could you just remind us where NPA exposure stands to that one larger relationship and any updated thoughts on timing around potential resolution?

Scott C. Wylie: We have just under $30 million of NPL on that one credit, plus a specific reserve of $8.2, of which $2.4 million of that was put on in Q2. With respect to the timing of the other property sales, you know, we had said that this was going to play out over the course of 2024, which it is. There's a whole sausage making process here that's well underway but is nevertheless, you know, full of.

Wood Neblett Lay: Yeah.

Speaker Change: We have just under $30 million of NPL on that one credit, plus a specific reserve of $8.2, of which $2.4 million of that was put on in Q2.

Speaker Change: With respect to the timing of the other property sales, you know, we had said that this was going to play out over the course of 2024, which it is. You know, there's a whole sausage-making process here that's well underway, but is nevertheless...

Scott Wylie: There's a whole software-making process here that's well underway, but it's nevertheless full of substance-making. We started out with seven properties that we've talked about. We don't have four remaining. Two of them are in Oreo and are being listed in sold during the second half of the year, I hope. There's another property that's scheduled to be auctioned off in the first half of August, and that's on track and something we've anticipated all along. And then the timing of the sale of the last property is uncertain right now. We're not sure how that's going to play out.

Scott C. Wylie: We started out with seven properties that we've talked about. We now have four remaining. Two of them are in Oreo and are being listed and sold during the second half of the year, I hope. There's another property that's scheduled to be auctioned off in the first half of August. And that's on track and something we've anticipated all along. But the timing of the sale of the last property is uncertain right now. We're not sure how that's going to play out.

Speaker Change: You know, full of...

Speaker Change: Sausage making.

Speaker Change: We started out with seven properties that we've talked about. We now have four remaining. Two of them are in OREO and are being listed and sold during the second half of the year, I hope.

Speaker Change: There's another property that's scheduled to be auctioned off in the first half of August , and that's on track, and something we've anticipated all along. And then the timing of the sale of the last property is uncertain right now. We're not sure how that's going to play out.

Scott Wylie: Got it. So it has yourself on the potential loss content, changed it all, given the increase per vision or was this just sort of a move out of, you know, out of abundance of caution? Well, one of the properties, one of the seven properties, had a new issue that popped up in Q2 with a clouded title and litigation. And that led us to book a zero value for that property and our expectations that we don't want to take further risk on that, and we will not have a recovery from that. So that was really what drove the specific reserve increase on that relationship.

Wood Neblett Lay: Got it. So have your thoughts on the potential loss content changed at all given the increased provision? Or was this just sort of a move out of, you know, an abundance of caution?

Speaker Change: Got it. So have your thoughts on the potential loss content changed at all given the the increased provision or was this just sort of a move out of you know out of abundance of caution?

Scott C. Wylie: Well, one of the properties, one of the seven properties, had a new issue that popped up in Q2 with a clouded title and litigation, and that led us to book a zero value for that property, in our expectations that we don't want to take further risk on that, and we will not have a recovery from that. So that was really what drove the specific reserve increase on that relationship.

Speaker Change: Well, one of the properties, one of the seven properties,

Speaker Change: had a new issue that popped up in Q2 with a clouded title and litigation and that led us to book a zero value for that property.

Speaker Change: And our expectation is that we don't want to take further risk on that and we will not have a recovery from that. So that was really what drove the specific reserve increase on that relationship.

Wood Lay: All right, thanks for the color there.

Wood Neblett Lay: All right. Thanks for the call right there. Maybe shifting over to the net interest margin, sounds like it saw a little bit of improvement throughout the quarter. Could you just talk through your expectations for the NIM for the back half of the year?

Scott Wylie: Maybe shifting over to the net interest margin. Sounds like it saw a little bit of improvement throughout the quarter.

Speaker Change: Alright, thanks for the call right there. Maybe shifting over to the net interest margin. Sounds like it saw a little bit of improvement throughout the quarter. Could you just talk through your expectations on the NIM for the back half of the year?

Scott Wylie: Could you just talk through your expectations on the name for the back after the year? Sure, you know, I'll give it a try and Julie, David, if you guys want to add extra color, please go ahead, you know, on the two sides of the drive them on loan to deposits, you know, start with loans. I mean, we're seeing a fair amount of competition on loan pricing, and, you know, we still think that there's a possibility of a rate cut in the second half of the year. So we're thinking that our net interest margin will slowly improve, but, you know, currently appears that our return to a more normal name is going to take some time, which is, again, I think in line with what we've talked about before.

Scott C. Wylie: Sure. You know, I'll give it a try. And Julie, David, if you guys want to add extra color, please go ahead.

Speaker Change: Sure, you know, I'll give it a try and Julie and David, if you guys want to add extra color, please go ahead. You know, on the

Scott C. Wylie: You know, the two sides that drive them on loans and deposits start with loans. I mean, we're seeing a fair amount of competition on loan pricing. You know, we still think that there's a possibility of a rate cut in the second half of the year. So, we think that our net interest margin will slowly improve, but it currently appears that our return to a more normal NIM is going to take some time, which is, again, I think in line with what we've talked about before. You know, our loans that we did do in Q came on our books at an average rate of 8.3%. Is that the right number, David?

Speaker Change: The two sides that drive them on loans and deposits start with loans. I mean, we're seeing a fair amount of competition on loan pricing.

Speaker Change: You know, we still think that there's a possibility of a rate cut in the second half of the year. So we're thinking that

Scott Wylie: You know, our loans that we did do in Q2 came on our books at an average rate of 8.3%. Is that the right number, David? 8.35, 8.35%. So we are getting a nice yield on the new loans that we're booking. Although, you know, we're hearing stories from our front line about, you know, people out there doing five year fixed rate commercial real estate loans that start with a 6% start with a number of the 6% range.

Speaker Change: You know, our loans that we did do in Q-

Speaker Change: came on our books at an average rate of 8.3 percent. Is that the right number, David? 8.35. 8.35 percent. So we are getting a nice yield on the new loans that we're booking. Although, you know, we're hearing stories from our front line about, you know, people out there doing

Scott C. Wylie: 8.35. 8.35%. So we are getting a nice yield on the new loans that we're booking, although we're hearing stories from our front line about people out there doing five-year fixed-rate commercial real estate loans that start with a six percent, start with a number in the 6% So, I mean, you know, there's definitely things that we're certainly not going to be doing on the loan side. On the deposit side, you know, the cost of funds for the quarter was $347; the cost of deposits, technically, was $347; and the spot rate for June 30th was $346.

Speaker Change: five-year fixed rate commercial.

Speaker Change: real estate loans that start with a six percent.

Scott Wylie: So, I mean, you know, there's some definitely things that we're certainly not going to be doing on the loan side. On the deposit side, you know, the cost of funds for the quarter was 347. Across the deposits, technically, was 347. Spot rate for June 30th was 346. So, you know, it's not really a big improvement, obviously, but it is an improvement. And I think if you look back now several quarters, you see, you know, kind of a... a very nice trend line in terms of its slowing, nim improving and nim compressions slowing and then improving now in this quarter, which again is in line with what we had guided to in Q1.

Speaker Change: You start with a number in the 6% range.

Speaker Change: So, I mean, you know, there's definitely things that we're certainly not going to be doing.

Speaker Change: On the deposit side, the cost of funds for the quarter was $347, spot rate for June 30th was $346.

Scott C. Wylie: So, you know. It's not really a big improvement, obviously, but it is an improvement. And I think if you look back now, several quarters, you see, you know, kind of a very nice trend line in terms of it slowing, NIM compression slowing, and then improving now in this quarter, which again is in line with what we had guided to in Q1.

Speaker Change: It's not really a big improvement, obviously, but it is an improvement. And I think if you look back now several quarters, you see, you know, kind of a

Speaker Change: Very nice trend line in terms of it slowing, NIM improving, and

Speaker Change: MIM compression slowing and then improving now in this quarter, which again is in line with what we had

David Weber: I guess anything important there, David or Julie?

David Weber: Did I miss anything important there, David or Julie? No. No. Qualified.

Speaker Change: Guided to in Q1.

Operator: All right, thanks for taking my question. Thank you.

Speaker Change: Did I miss anything important there, David or Julie? No. All fair.

Wood Neblett Lay: All right, thanks for taking my question.

Operator: Thank you. One moment for our next question. And he's from the line of Matthew Clark with Piper Sandler. Please proceed.

Adam Kroll: One moment for our next question.

Speaker Change: All right, thanks for taking my question.

David Weber: And is from the line of Matthew Clark with Piper Sandler, please proceed. This is Adam Kroll on her Matthew Clark. I guess my first question, I was wondering if you happened to have the nim spot rate for June.

Speaker Change: Thank you. One moment for our next question.

Speaker Change: And he's from the line of Matthew Clark with Piper Sandler. Please proceed.

Adam Scott Butler: Hi, this is Adam Kroll on behalf of Matthew Clark. I guess my first question is, I was wondering if you happen to have the NIMS spot rate for June?

Adam Scott Butler: Hi, this is Adam Kroll on for Matthew Clark. I guess my first question I was wondering if you happen to have the NIMS spot rate for June ?

David Weber: David, do you want to go through that? Yeah, we saw slight improvement in NIM in June, 236 versus 235 to the quarter. And then switching to expenses, those came down this quarter. And I know you guys are focused on continued investments in talent and technology. So we're just wondering how we should think about the expense run rate going forward. You know, we have talked about our expenses being in the $19 million range each quarter this year. And I think that's about where we landed in Q2. We have had quite a bit of success bringing on production new hires.

David Weber: David, do you want to go through this?

David Weber: Yeah, we saw a slight improvement in NIM in June, $2.36 versus $2.35 for the quarter.

Adam Scott Butler: David, do you want to go through that?

David: Yeah, we saw a slight improvement in NIM in June , $2.36 versus $2.35 for the quarter.

Adam Scott Butler: And then switching to expenses, those came down this quarter, and I know you guys are focused on continued investments in talent and technology, so I was just wondering how we should think about the expense run rate going forward.

Speaker Change: And then switching to expenses, those...

Speaker Change: came down this quarter.

Speaker Change: And I know you guys are focused on continued investments in talent and technology, so was just wondering how we should think about the expense run rate going forward.

Scott C. Wylie: You know, we have talked about our expenses being in the $19 million range each quarter this year, and I think that's about where we landed in Q2. We have had quite a bit of success bringing on new hires, but that's largely by replacing open positions and the efficiencies that we've got on the back office, middle office side, and putting that into new production. We've hired 14 additional front office people that are producers here in the first half of the year, adding to our teams in Jackson, Boulder, and Fort Collins, in particular.

Speaker Change: You know, we have talked about our expenses being in the $19 million range.

Speaker Change: each quarter this year, and I think that's about where we landed in Q2. We have had quite a bit of success bringing on

David Weber: But that's largely by replacing over positions and the efficiencies that we've got on the back office, middle office side, and putting that into new production. We've hired 14 additional front office people that are producers here in the first half of the year, adding to our teams in Jackson, Boulder, and Fort Collins in particular. We've also added five new MLOs so far this year. So I feel like we've done a really nice job of, you know, on one hand, controlling expense. And on the other hand, adding production capability that's really going to pay out, I think, in the second half of the year.

Speaker Change: Production, new hires.

Speaker Change: But that's largely by replacing open positions and the efficiencies that we've got.

Speaker Change: on the back office, middle office side, and putting that into new production. We've hired 14 additional front office people that are producers.

Speaker Change: here in the first half of the year.

Speaker Change: adding to our teams in Jackson.

Scott C. Wylie: We've also added five new MLOs so far this year, so I feel like we've done a really nice job of, you know, on the one hand, controlling expenses and, on the other hand, adding production capability that's really going to pay out, I think, in the second half of the year.

Speaker Change: Boulder, and Fort Collins in particular. We've also added five new MLOs so far this year. So I feel like we've done a really nice job of, you know, on one hand, controlling

Speaker Change: expense, and on the other hand, adding production capability that's really going to pay out, I think, in the second half of the year.

Adam Kroll: Got it. That's super helpful.

Adam Scott Butler: Got it. That's super helpful. I guess my last question is, it looks like there were some ongoing deposit remakes this quarter, and I was just wondering if there was an update on flows you're seeing on the deposit side and any expectations going forward, particularly within non-interest bearing and if you're seeing sort of stabilization in your deposit base.

David Weber: I guess my last question is it looks like there was some ongoing deposit remakes this quarter and was just wondering if there was an update on flows. You're seeing on the deposit side in any expectations going forward, particularly within noninteresting, and if you're seeing sort of stabilization in your deposit base. Yeah, you know, as we had previewed, you know, we usually see deposit claims in Q2. And we did still see some outflows of noninteresting deposits in Q2, as you pointed out in your question. But, you know, with the new production leaders that we've added in several of these markets now, we expect to see an increase in operating company deposits.

Speaker Change: Got it. That's super helpful.

Speaker Change: I guess my last question is, it looks like there was some...

Speaker Change: ongoing deposit remakes this quarter and was just wondering if there was an update on flows you're seeing on the deposit side and any expectations going forward.

Speaker Change: Particularly within non-interest bearing and if you're seeing a sort of stabilization in your deposit base.

Scott C. Wylie: Yeah, you know, as we had predicted, we usually see positive findings in Q2, and we did still see some outflows of non-interest bearing deposits in Q2. As you pointed out in your question, but with the new production leaders that we've added to several of these markets now, we expect to see an increase in operating company deposits, which is [inaudible] you know, stable to improving deposit base over the course of the second half of the year.

Speaker Change: Yeah, you know, as we had previewed, you know, we usually see deposit declines in Q2, and we did still see some outflows of non-interest-bearing deposits in Q2, as you indicated.

Speaker Change: as you pointed out in your question. But you know, with the new production leaders that we've added in in several of these markets now, we expect to see an increase in operating company deposits, which is

David Weber: help offset some of the outflow, and we're expecting, you know, stable to improving deposit base over the course of the second half of the year.

Speaker Change: help offset some of the outflow, and we're expecting, you know, stable to improving deposit pace over the course of the second half of the year.

Adam Kroll: Got it, answer, take my question.

Adam Scott Butler: Got it. Thanks for taking my questions. Yeah, the Piper questions there were those, was that Adam that was asking?

Operator: Yeah, the piper questions there with those, was that Adam that was asking? Yeah, yeah, okay.

Speaker Change: Thanks for taking my questions. Yeah, the Piper questions there, was that Adam that was asking?

Operator: Yeah. Yeah. Okay. Yeah. Thanks.

Operator: Yeah, thanks, Adam. Thank you.

William J. Dezellem: Thank you. One moment for our next question. And he's in the line of Bill Dezellem with Titan Capital Management. Please proceed. Thank you.

Speaker Change: Yeah. Yeah. Okay. Yeah. Thanks.

Speaker Change: Thank you.

Bill Dezellem: Any from the line of Bill Dezellem with Titan Capital Management? Please proceed. Thank you. I'd like to circle back to your recent comment here that you hired 14 new producers this year. Would you please go into a bit more detail about those? What's the net new number, and are all of those 14 producers, or some of the support around producers? If you look at our number of production people that we had for producers last year, we're up 24% year to date versus our total last year. So these are net new producers. Now some of them, and this may be going too far down the Randall bill, but some of them are vacancies that we've had, frankly, for years.

Speaker Change: Thank you. One moment for our next question.

William J. Dezellem: Thank you. I'd like to circle back to your recent comment here that you hired 14 new producers this year. Would you please go into a bit more detail about those? What's the net new number, and are all of those 14 producers or some of the support around them?

Speaker Change: And he's from the line of Bill Dezellem with Titan Capital Management. Please proceed.

William J. Dezellem: Thank you. I'd like to circle back to your recent comment here that you hired 14 new producers this year. Would you please go into a bit more detail about those? What's the net new number and are all of those 14

Speaker Change: producers or some of the support around producers.

Scott C. Wylie: If you look at the number of production people that we had, producers, last year, you know, we're up 24% year-to-date versus our total last year. So these are net new producers.

Speaker Change: If you look at our

Speaker Change: number of production people that we had, producers, last year. You know, we're up 24% year-to-date versus our

Speaker Change: total last year. So these are net new producers.

Scott C. Wylie: Now, some of them, and this may be going too far down the rabbit hole, Bill, but some of them are vacancies that we've had, frankly, for years. You know, we promoted our Boulder market president to be a regional president, and he's been very effective in that job. That's been a great move for us and for him, but he's been doing double duty as the Boulder market president. We were able to attract a very strong Boulder market president, who's one of those 14, just as an example, who is a long-time leader in the market that was leading other banks' efforts there.

William J. Dezellem: Now, some of them, and this may be going too far down the rabbit hole, Bill, but some of them are vacancies that we've had, frankly, for years. You know, we promoted our Boulder...

Scott Wylie: You know, we promoted our bolder market president to be a regional president, who has been very effective in that job. That's been a great move for us and for him. But he's been doing double duty as the bolder market president. We were able to track a very strong bolder market president who's one of those 14, just as an example, who is a long time leader in the market that was leading another bank's efforts there. And so, as I said before, I mean, we just have really, we feel really good about these people that we're bringing in now, including our new market president, bolder, and some of these other places where we've added senior people.

William J. Dezellem: market president to be a regional president, and he's been very effective in that job. That's been a great move for us and for him.

William J. Dezellem: But he's been doing double duty as the boulder market president. We were able to track.

William J. Dezellem: A very strong, bolder market president, who's one of those 14, just as an example, who is a long-time leader in the market that was beating another bank's.

Scott C. Wylie: And so, as I said before, we just have really... We feel really good about these people that we're bringing in now, including our new market president, Boulder, and some of these other places where we've added senior people who can really help move it down for us.

William J. Dezellem: efforts there. And so, as I said before, I mean, we just have

William J. Dezellem: really

William J. Dezellem: We feel really good about these people that we're bringing in now, including

Scott Wylie: I think can really help move the dial for us. Scott, you'd mentioned that some of these positions have been open for a long time, and is it a coincidence that a number of these long time open positions are now being filled? Is it a culmination of just having worked on these, filling these positions for a long time? Or is there something loosening in the market with competitors that's leading to it being easier to hire, or those prospective candidates being more interested in making them move? Yeah, you know, that's a great question, and I'm not 100% sure of the answer.

William J. Dezellem: Our new market president, Boulder, and some of these other places where we've added senior people, I think, can really help move the dial for us.

William J. Dezellem: And, Scott, you mentioned that some of these positions have been open for a long time. And is it a coincidence that a number of these long-term open positions are now being filled? Is it a culmination of just having worked on these, filling these positions for a long time? Or is there something loosening in the market with competitors that's leading to it being easier to hire or those prospective candidates being more interested in making a move?

Scott: And Scott, you'd mentioned that some of these positions have been open for a long time.

Scott: And is it a coincidence that a number of these long-time open positions are now being filled?

Scott: Is it a culmination of just having worked on these, filling these positions for a long time?

Speaker Change: Or is there something loosening in the market with competitors that's leading to it being easier to hire or those prospective candidates being more interested in making a move?

Scott C. Wylie: Yeah, you know, that's a great question, and I'm not 100% sure of the answer. I do believe that there is turmoil in our markets today that we really haven't seen in the last couple of years, and that that's creating opportunity to bring new people in. And if you look kind of anecdotally at each of the 14 stories, that seems to bear out.

Julie Courkamp: I do believe that there is turmoil in our markets today that we really haven't seen over the last couple of years, and that's creating opportunity to bring new people in. And if you look kind of anecdotally at each of the 14 stories, that seems to bear out, I'm not sure. I can tell you, we had our semi-annual dawn summit with all of our managers in the company here over the last day and a half, and there's a very positive tone with those folks, the front office ones in particular. And I think when I would say, I think that there's a lot of turmoil in the market, and this is a good time to be upgrading our talent.

Speaker Change: Yeah, you know, that's a great question and I'm not 100% sure of the answer. I do believe that there is turmoil in our markets today that we really haven't seen over the last couple of years.

Speaker Change: and that that's creating opportunity to bring new people in. And if you look, kind of anecdotally, at each of the 14 stories,

William J. Dezellem: I'm not sure. I can tell you we had our semi-annual day-long summit with all of our managers in the company here over the last day and a half, and there's a very positive tone among those folks, the front office ones in particular. And I think, you know, when I say that there's a lot of turmoil in the market and this is a good time to be, you know, upgrading our talent, people seem to agree with that.

Speaker Change: that seems to bear out. I'm not sure. I can tell you we had our semi-annual

Speaker Change: day-long summit with all of our managers in the company.

Speaker Change: here over the last day and a half. And there's a very positive tone.

Speaker Change: with those folks, the front office ones in particular.

Speaker Change: And I think, you know, when I would say I think that there's a lot of turmoil in the market and this is a good time to be, you know, upgrading our talent, people seem to agree with that. I didn't get any pushback on that, so I do think it's more, in your question, the latter than the former.

Scott Wylie: People seem to agree with that. I didn't get any pushback on that, so I do think it's more in your question, the latter than the former. But, you know, we'll have to see how it goes with us a year. I mean, I'd love to be, you know, six months from now talking about additional talent that we've been able to track to build, you know, our organic growth story in 2025. Great. That's, that's really helpful. Julie's looking like she's got something to add there. I think for First Western has a differentiated story to tell too, and then more and more our name is getting out there with talent, but also clients, prospects.

William J. Dezellem: I didn't get any pushback on that. So I do think it's more the latter than the former in your question. You know, we'll have to see how it goes the rest of the year. I mean, I'd love to be, you know, six months from now talking about additional talent that we've been able to attract to build, you know, our organic growth story in 2020.

Speaker Change: But, you know, we'll have to see how it goes the rest of the year. I mean, I'd love to be, you know, six months from now talking about additional talent that we've been able to attract to build, you know, our organic growth story in 2025.

Julie A. Courkamp: Great, that's really helpful. Julie's looking like she's got something to add there. I was just going to add, Bill, that I think First Western has a differentiated story to tell, too, and more and more, our name is getting out there with talent, but also clients, and prospects, as a place that, you know, has high-quality relationships. And that's on both sides of the equation, on the client and the associate side. So as an add-on to that comment, I think that we're getting known a little bit more in the market as a great place to work as well. Great, thank you.

Julie: Great, that's really helpful. Julie's looking like she's got something to add there. I was going to add, Bill, that I think First Western has a differentiated story to tell, too, and more and more our name is getting out there with talent, but also clients, prospects.

Scott Wylie: It's a place that, you know, has high quality relationships, and that's on both sides of the equation on the client and the associate side. So, as an add-on to that comment, I think that we're getting known a little bit more in the market as a great place to work as well. Great. Thank you. And then, relative to mortgage, you've seen a nice uptick there. And the commentary in the market for the national market. And I recognize that you are not in, you know, across the entire country. But is that the mortgage business is pretty, pretty stagnant and a fair amount of disappointment in terms of the numbers.

Julie: is a place that has high quality relationships and that's on both sides of the equation on the client and the associate side. So as an add-on to that comment, I think that we're getting known a little bit more in the market as a great place to work as well.

William J. Dezellem: And then relative to mortgages, you've seen a nice uptick there. And the commentary in the market for the national market, and I recognize that you are not in, you know, across the entire country, but is that the mortgage business is pretty, pretty stagnant, and there is a fair amount of disappointment in terms of the numbers. Is what I am seeing with the national numbers just being skewed by, you know, the normal seasonality, or are you seeing something different in your marketplace, or maybe with specifically your MLOs, that's leading to this uptick that you've seen, which kind of on the surface looks like a bit of a rebound for you?

Speaker Change: Great, thank you. And then relative to mortgage, you've seen a nice uptick there.

Speaker Change: and the commentary in the market for the national market, and I recognize that you are not in, you know, across the entire country.

Speaker Change: but is that the mortgage business is pretty stagnant and a fair amount of disappointment in terms of the numbers.

Scott Wylie: What is what I am seeing with the national numbers just being skewed by, you know, the normal seasonality, or you've seen something different in your marketplace or maybe with specifically your, your MLOs that's leading to this uptick that you've, that you've seen, which kind of on the surface looks like a bit of a rebound for you. Yeah, I would say it's a lot more than a read, a little bit of a rebound. It's really a really nice rebound, and it's flipped us from, I think we had six months last year where we lost $250,000 or more in contribution.

Speaker Change: [inaudible]

Speaker Change: Is what I am seeing with the national numbers just being skewed by, you know, the normal seasonality? Or are you seeing something different in your marketplace?

Speaker Change: or maybe with specifically your MLOs that's leading to this uptick that you've seen, which kind of on the surface looks like a bit of a rebound for you.

Scott C. Wylie: Yeah, I would say it's a lot more than a little bit of a rebound. It's been a really nice rebound, and it's flipped us from...

Speaker Change: Yeah, I would say it's a lot more than a little bit of a rebound, it's been a really nice rebound and it's flipped us from...

Scott C. Wylie: I think we had six months last year where we lost $250,000 or more in contributions. Again, we've had really nice earnings, I think $150,000 or more coming out of mortgages over the last four months now. So definitely, I mean, again, I'm not sure how much of that is national trends or trends in our market or whatever, but it's certainly happening in our market. But if you look at the reasons why, though, it's not just, you know, manna from heaven here.

Scott Wylie: Again, we've had really nice earnings; I think $150,000 or more coming out of mortgages over the last four months now. So definitely, I mean, again, I'm not sure how much of that is national trends or trends in our market or whatever, but it's certainly happening in our market. If you look at the reasons why, though, it's not just, you know, mana from heaven here. This is, you know, part of a concerted effort by us to support our mortgages team and then build our mortgages team. And we've added five more MLOs, mortgage loan officers, in the first half of the year, which are bringing additional production.

Speaker Change: Really nice.

Speaker Change: Earnings, I think $250,000 or more.

Speaker Change: coming out of mortgages over the last four months now.

Speaker Change: So definitely, I mean, again, I'm not sure how much of that is national trends or trends in our market or whatever, but it's certainly happening in our market. If you look at the reasons why, though, it's not just, you know, manna from heaven here. This is...

Scott C. Wylie: This is, you know, part of a concerted effort by us to support our mortgage team and then build our mortgage team. And we've added five more MLOs, mortgage loan officers, in the first half of the year, which are bringing additional production. And that's going to accelerate in the second half of the year. But when they're new, it takes them a little time.

Speaker Change: you know, part of a concerted effort by us to support our mortgage team in

Speaker Change: and then build our mortgage team, and we've added five more MLOs, mortgage loan officers.

Scott Wylie: And that's going to accelerate the second half of the year, right? When they're new, it takes them a little time. And we also have just opened two new MLO loan production offices in the last week or two, I think now, one in Northern Colorado, one in Southeast Wyoming. That I think are going to be very helpful to those new folks in building their production. So I think it is a combination bill of a little bit lower rates, a little bit better activity and mortgages. I think some nice work by the Morton team here under Julie's leadership and then also hiring these new MLOs.

Speaker Change: in the first half of the year.

Speaker Change: which are bringing additional production, and that's going to accelerate in the second half of the year, right? When they're new, it takes them a little time, and we also have just opened two new MLO loan production offices.

Scott C. Wylie: And we also have just opened two new MLO loan production offices in the last, or two I think now, one in northern Colorado and one in southeast Wyoming, that I think are going to be very helpful to those new folks in building their production. So I think it is a combination, Bill, of a little bit lower interest rates and a little bit better activity in mortgages. I think some nice work by the mortgage team here under Julie's leadership and then also, you know, hiring these new MLOs.

Speaker Change: in the last week or two, I think, now. One in northern Colorado, one in southeast Wyoming.

Speaker Change: that I think are going to be very helpful to those new folks in building their production.

Speaker Change: So I think it is a combination, Bill, of a little bit lower rates, a little bit better activity in mortgages.

Speaker Change: I think some nice work by the mortgage team here under Julie's leadership and then also

Scott C. Wylie: Which we're continuing to do. That was one of the reasons for the office opening, attracting more MLOs.

Scott Wylie: Which were continuing to do that was one of the reasons for the office opening and attracting more MLOs. And relative to your pipeline of new MLOs, do you anticipate being able to hire an equal number or more in the second half? So five or more? You know, it's hard to forecast until, but we have plans; our goals are that to do the same amount of new hires in the second half of the year. We'll see how that plays out. Great.

Speaker Change: for hiring these new MLOs.

Speaker Change: Which we're continuing to do. That was one of the reasons for the office opening is attracting more MLOs.

William J. Dezellem: And relative to your pipeline of new MLOs, do you anticipate being able to hire an equal number or more in the second half, so five or more?

Speaker Change: And relative to your pipeline of new MLOs, do you anticipate being able to hire an equal number or more in the second half, so five or more?

Scott C. Wylie: You know, it's hard to forecast and tell, but we have plans, our goals are to make the same number of new hires in the second half of the year, so we'll see how that plays out. Great.

Speaker Change: You know, it's hard to forecast and tell, but we have plans, our goals are that, to do the same amount of new hires in the second half of the year, so we'll see how that plays out.

William J. Dezellem: Since we're talking about a pipeline of humans, let's jump to the 14 new producers on the non-mortgage side of the business. Do you think you can repeat that in the second half?

Scott Wylie: Since we're talking about the pipeline of humans, let's jump to the 14 new producers on the non-mortgage site of the business. Do you think you can repeat that in the second half? I don't know the answer to that. I think that, you know, as I said, we've had this meeting here last day and a half of all senior people, and I have definitely tasked our senior leaders to look for the top town in the market and let them know we're open for business. You know, I think a lot of banks are being cautious right now, and I think there's a lot of turmoil in our markets.

Speaker Change: Since we're talking about a pipeline of humans, let's jump to the 14 new producers on the non-mortgage side of the business. Do you think you can repeat that in the second half?

Scott C. Wylie: I don't know the answer to that. I think that, you know... As I said, we've had this meeting here the last day and a half with all the senior people, and I have definitely tasked our senior leaders to look for the top talent in the market and let them know we're open for business. You know, I think a lot of banks are being cautious right now, and I think there's a lot of turmoil in our markets.

Speaker Change: I don't know the answer to that. I think that...

Speaker Change: you know...

Speaker Change: and the rest of us.

Speaker Change: As I said, we've had this meeting here the last day and a half of all the senior people, and I have definitely tasked our senior leaders...

Speaker Change: to look for the top talent in the market.

Speaker Change: and let them know we're open for business. You know, I think a lot of banks...

Bill Dezellem: We have some new acquires that have come to town that are going to have their deals approved. I think over the next six months or something like that, and that just creates a lot of opportunity with clients and top talent to be unsettled. And I want our people to be focused on that, and that brings some more new people here; that would be terrific. Great. Thank you both for the time. Thank you, Bill.

Scott C. Wylie: We have some new acquirers that have come to town that are going to have their deals approved, I think, over the next six months or something like that, and that just creates clients and top talent to be unsettled. And I want our people to be focused on that. And if that brings some more new people here, that would be terrific. Great. Thank you both for your time.

Speaker Change: are being cautious right now. And I think there's a lot of turmoil in our markets. We have some new acquirers that have come to town that are going to have their deals approved, I think, over the next six months or something like that. And that just creates a lot of opportunity with.

Speaker Change: Clients and top talent to be unsettled and I want our people to be focused on that and that brings some more New people here, that would be terrific

Ross Haberman: Thank you. Our next question comes from the line of Ross Haberman with our L.A.C. investment. Please proceed. Good morning all. Just a couple of questions. I got on a bit late. I'm sorry if you mentioned this. The additions to your non-performers: these two pieces of collateral that you took back. Did you say you think you're pretty well secured against those? That two pieces of collateral, yes. This is a short answer. The two pieces of collateral are the same stuff we've been talking about for a year or however long it's been. And having them as collateral is a plus because now you can control it, and we can sell it.

Speaker Change: Great. Thank you both for the time.

Operator: Our next question comes from the line of Ross Haberman with RLH Investments. Please proceed.

William J. Dezellem: Thank you, Bill.

William J. Dezellem: Thank you.

Speaker Change: Our next question comes from the line of Ross Haberman with RLH Investments. Please proceed.

Ross Haberman: Good morning, all. Just a couple of quick questions. I got on a bit late. I'm sorry if you mentioned this. The additions to your non-performers, these two pieces of collateral that you took back, Did you say you think you're pretty well secured against those? The two pieces of collateral, yes, is the short answer. The two pieces of collateral are the same stuff we've been talking about for a year or whatever long it's been. And, you know, having them as collateral is a plus because now we can control it, and we can sell it. And so we control it, and we're going to sell it. I got it.

Ross Haberman: Good morning all. Just a couple of quick questions. I got on a bit late, I'm sorry if you mentioned this.

Speaker Change: The additions to your non-performers, these two pieces of collateral that you took back,

Speaker Change: Did you say you think you're pretty well secured against those?

Speaker Change: The two-piece of collateral, yes, is the short answer.

Speaker Change: The two pieces of collateral, it's the same stuff we've been talking about for a year or however long it's been. And, you know, having them as collateral is a plus because now we can control it and we can sell it. And so by controlling it, we're going to sell them.

Scott Wylie: I got it. Anything else in the criticised or delinquent that you're concerned about today that you'll lose the sleep about or basically what we did. These are the main items which you laid out here. Yeah, so you know that's a great question. And we talked a little bit about it in our prepared remarks and in the deck. But I think you know the headlines to me on that are you know that the top line number of our whichever one you want to use NPL or NPA is not a number we're happy about. But it really is driven by the one credit that we've been talking about.

Scott C. Wylie: Anything else in the criticalized or delinquent that you're concerned about today that you're losing sleep about or or basically what we've got? Yeah, so you know, that's a great question. We talked a little bit about it in our prepared remarks and in the deck. But I think, you know, the headlines to me on that are, you know, that the top line number of our, whichever one you want to use, NPL or NPA, is not a number we're happy about, but it really is driven by the one credit that we've been talking about.

Speaker Change: I got it. Anything else in the in the criticalized or delinquent that you're concerned about today that you're losing sleep about or or basically what we

Speaker Change: These are the main items which you laid out here.

Speaker Change: Yeah, so, you know, that's...

Speaker Change: That's a great question. We talked a little bit about it in our prepared remarks and in the deck, but I think, you know, the headlines to me on that are, you know, that the

Speaker Change: The top line number of our...

Speaker Change: whichever one you want to use, NPL or NPA.

Scott C. Wylie: We've been talking about these two credits now for the last six quarters, and one of them is written off. So any further news on that one is going to be positive because it's going to be a recovery if there is any news. And so now we're down to one, and that one we said was going to be a workout project, and it is a workout project, and it's proceeding more or less like we thought.

Speaker Change: is not a number we're happy about, but it really is driven by the one credit that we've been talking about. We've been talking about these two credits.

Scott Wylie: We were talking about these two credits now for the last six quarters, and one was written off. So any further news on that one is going to be positive because it's going to be a recovery if there's news. And so now we're down to one, and that one we said was going to be a workout project, and it is a workout project, and it's proceeding more or less like we thought. And I would say that with a little luck we'll be out of that by the end of the year. And if not me, maybe it's filled a little bit into next year.

Speaker Change: now for the last six quarters.

Speaker Change: And one of them's written off.

Speaker Change: so

Speaker Change: Any further news on that one is going to be positive because it's going to be a recovery if there's news. And so, you know, now we're down to one, and that one we said was going to be, you know, a workout project. And it is a workout project, and it's proceeding more or less like we thought.

Scott C. Wylie: I would say that with a little luck, we'll be out of that by the end of the year, and if not, you know, maybe it spills a little bit into next year. But generally, I think that that is showing up in the numbers with a declining NPA trend. Now, you know, that went backwards in Q2 for the reason we talked about where the value of the OREO that we brought on was higher than the loan balance, so that had the effect of increasing NPAs, but that's sort of a good problem in a way, and we'll sell that, and the NPAs will come down, and the NPLs will continue to come down as we work out that loan.

Speaker Change: And, you know, I would say that with a little luck, we'll be out of that by the end of the year, and if not, you know, maybe it spills a little bit into next year. But generally, I think that that...

Scott Wylie: But generally, I think that that is showing up in the numbers with a declining NPA trend. And now you know that that that went backwards in Q2 for the reason we talked about where the value of the Oreo that we brought on was higher than the loan balance. So that had the effect of increasing NPAs. But that's sort of a good problem in a way, and you know, we'll sell that. And the NPAs just come down, and the NPLs will continue to come down as we work out that. Could you give Russ one more point? All the other credit metrics that we follow are showing positive trends.

Speaker Change: that is showing up in the numbers with a declining NPA trend. Now, you know, that went backwards in

Speaker Change: Q2, for the reason we talked about, where the...

Speaker Change: The value of the OREO that we brought on was higher than the loan balance, so that had the effect of increasing NPAs, but that's sort of a good problem in a way, and we'll sell that, and the NPAs will come down, and the NPLs will continue to come down as we work out that loan.

Ross Haberman: Excuse me, Ross, one more point: all the other credit metrics that we follow are showing positive trends. So I think that was the other half of your question. Sorry. Go ahead.

Speaker Change: Um, could, uh, um...

Speaker Change: Excuse me, Russ, one more point.

Russ: all the other credit metrics that we follow.

Scott Wylie: So I think that was the other half of your question. Sorry, go ahead.

David Weber: Could you tell me how much expense was incurred in terms of dealing with all these non-performing assets as part of the non-interest expense number for the quarter? I don't know the total of that, but maybe Julia David does. It's a non-zero number of time and effort that it takes. Right, Ben. And frankly, as we went through the second quarter, I think that did come down. And as we go through the year, I think that will continue to come down. You know, it's interesting. If you look at criticized and clad-level looking, I'll give you more data on the positive trends.

Ross Haberman: Could you tell me how much expense was incurred in terms of dealing with all these non-performing assets as part of the non-interest expense number for the quarter? I don't know the total of that, but maybe Julia or David do.

Russ: are showing positive trends.

Russ: So I think that was the other half of your question. Sorry, go ahead. Could you tell me how much expense was incurred in terms of dealing with all these non-performing assets as part of the non interest expense number for the quarter?

Russ: I don't know the total of that, but...

Scott C. Wylie: You know, it's not a zero number. It's a nonzero number of time and effort that it takes, and expense. You know, Frankly, As we went through the second quarter, I think that did come down. As we go through the year, I think that will continue to come down. You know, it's interesting. If you look at criticized and classified, while we're looking, I'll give you more data on the positive trends. If you look at criticized and classified during the second quarter, they were below the prior three quarter ends and trending down with about 80 million total in 331 and about 60 million total in 630. So, you know, I think that, as I said, the underlying. Transcripts provided by Transcription Outsourcing, LLC. Materials. That's sort of what I think...

Speaker Change: Maybe Julie or David do?

Speaker Change: You know, it's a not...

Speaker Change: And, you know, frankly,

Speaker Change: Uh-oh.

Speaker Change: As we went through the second quarter, I think that did come down, and as we go through the year, I think that will continue to come down. You know, it's interesting, if you look at criticized and classified— while we're looking, I'll give you more data on the positive trends.

David Weber: If you look at criticized and classified during the second quarter, they were below the prior three quarter ends and trending down. It was about 80 million total in 331 and about 60 million total in 630. So, you know, I think that, as I said, the underlying trends are strong. And we talked in prepared comments about our past dues being down significantly over the last couple of years. I would just wondering if that ongoing sort of expenses material, that's sort of what I'm getting at. Yeah, between our legal fees and, you know, other workout costs that come with those efforts.

Speaker Change: If you look at Criticized and Classified during the second quarter, they were...

Speaker Change: below the prior three quarter ends and the trending down, there's about 80 million total in 331 and about 60 million total in 630. So, you know, I think that, as I said, the underlying.

Speaker Change: Trends are strong. We talked in a prepared comments about our past dues being down significantly over the last couple of years. I was just wondering if that ongoing sort of

David Weber: Yeah, between our legal fees and other workout costs that come with those efforts, it was about $300,000 for the quarter.

Speaker Change: expenses material. That's sort of what I'm getting at.

Speaker Change: Yeah, between, um...

Speaker Change: Between our legal fees and other workout costs that come with those efforts, it was about $300,000 for the quarter. Okay, got it. It's down from Q1, David. Absolutely. Okay.

David Weber: It was about 300,000 for the quarter. Okay, got it. Okay, we're down from Q1. Yeah, but absolutely. Okay. Yeah. Okay. That doesn't include the opportunity costs when you get off those non-earning, interest-earning assets off the books and can deploy those into interest earnings. So that's a, that's not in material number either. These are things that we're working heavily to get off the books because of the, you know, inherent cost of them. So that was actually a surprising number when Julie first pointed that out six months ago or something. If you would give, you don't get all those NPAs turned into interest-earning assets.

Ross Haberman: Okay, got it. Okay, we're down from Q1, David. Absolutely. Okay.

Scott C. Wylie: That doesn't include the opportunity cost, since you get those non-earning, interest-earning assets off the books and can deploy those into interest earnings, so that's not an immaterial number either. These are things that we're working heavily to get off the books because of those, you know, inherent costs of them.

Speaker Change: Yeah. Okay.

Speaker Change: That doesn't include the opportunity costs once you get off those non-earning, interest-earning assets off the books and can deploy those into interest earnings. So, that's a not immaterial number either. These are things that we're working heavily to get off the books because of those, you know, inherent costs of them.

Ross Haberman: That was actually a surprising number when Julie first pointed that out six months ago or something. If you had, all those NPAs would turn into interest-bearing assets.

Speaker Change: So that was actually a surprising number when...

Speaker Change: Julie first pointed that out six months ago or something if you would you know get

Scott Wylie: It's a meaningful EPS update. You had some, I think it was some new office or lending offices in Bozeman and in Arizona. How are they faring? So they're full-service offices. Bozeman office is making really nice progress. I mean, that market continues to be full of opportunity. Our market president up there was here yesterday for those meetings that I mentioned and has a very positive outlook on the opportunity there. So that's going well. Arizona, you know, we've really re-tooled the staff there over the last, what's really, 12, 18 months, something like that. And they're fully staffed in both of our locations there now with really strong people.

Ross Haberman: It's a meaningful EPS update. You had some, I think it was some new offices or lending offices in Bozeman and in Arizona. How are they faring? So they're full service offices.

Julie: All those NPAs turn into interest-bearing assets. It's a meaningful EPS uptick.

Speaker Change: You had some, I think it was some new office or lending offices in Bozeman and in Arizona. How are they faring?

Scott C. Wylie: Bozeman Office is making really nice progress. I mean, that market continues to be full of opportunity. Our market president up there was here yesterday for those meetings that I mentioned and has a very positive outlook on the opportunity there. So that's going well. Arizona, you know, we've really retooled the staff there over the last, what's really 12 to 18 months, something like that. And they're fully staffed at both of our locations. They're now with really strong people.

Speaker Change: So they're full service offices.

Speaker Change: Bozeman Office.

Speaker Change: is making really nice progress. I mean, that market continues to be full of opportunity.

Speaker Change: Our market president up there was here yesterday for those meetings that I mentioned and has a very positive outlook.

Speaker Change: on the opportunity there, so that's going well. Arizona, you know, we've really retooled the staff there over the last...

Speaker Change: What, Julie, 12 to 18 months, something like that?

Julie: And they're fully staffed in both of our locations there now with really strong...

Scott C. Wylie: Part of this new production hiring that we've talked about is in Arizona, and I think. You know, the folks that are working on that here internally, the regional presidents, the market presidents, the local producers, seem very positive about that outlook. So, Arizona's making money, and it has for a long time, so I mean, that's fine. We'd like to see it do a lot better. I always like to remind our leaders there that if we had the same market share in Arizona, in the Phoenix MSA, that we have in our largest market share market, which is Fort Collins MSA, we'd be $4 billion bigger.

Scott Wylie: Part of this new production hiring that we've talked about is in Arizona. And I think, I think, you know, the folks that are working on that. Here internally, the regional president, the market president, and the local producers seem very positive on that outlook. So Arizona is making money in the hands for a long time. So, I mean, that's fine. We'd like to see it do a lot better. I always like to remind our leaders there that if we had the same market share in Arizona, actually in the... Phoenix, MSA, that we have in our largest market share market, which is four columns, MSA.

Julie: People, part of this new production hiring that we've talked about is in Arizona, and I think the folks that are working on that here internally, the regional presidents, the market presidents.

Julie: The local producers seem very...

Julie: positive on the outlook. So, Arizona is making money and it has for a long time. So, I mean, that's fine. We'd like to see it do a lot better. I always like to remind our leaders there that if we had the same market share in Arizona, it actually in the,

Julie: Phoenix MSA that we have in our largest market share market, which is Fort Collins MSA, we'd be $4 billion bigger. So I do think that there's a lot of opportunity in Arizona for us, and I feel like we're building a team there that can realize that.

Scott Wylie: We'd be four billion dollars bigger, so I do think that there's a lot of opportunity in Arizona for us and feel like we're building a team there that can realize that.

Scott C. Wylie: So I do think that there's a lot of opportunity in Arizona for us, and I feel like we're building a team there that can realize that. And just one last question, any large expenditures expected in the next quarter or two, I guess besides the workout? expenses for the non-performing assets. I think the answer to that is no, but I can't resist the slow pitch here, and Julie, I'll start, and if you want to jump in and explain it better, please feel free.

Scott Wylie: And just one last question: any large expenditures expected in the next quarter or two, I guess besides the workout expenses for the non-performing assets? I think the answer to that is no, but I can't resist this little pitch here, and Julie Ulstert, and if you want to jump in and explain it better, please feel free. We have decided that our tech platform is due for a pretty big free build, and that we can probably save money in the process, and after the process of doing that, so that involves changing where tech platform is hosted, and changing our use of the core, and modernizing the whole thing into the cloud, and using Vintech solutions.

Speaker Change: And just one last question, any large expenditures expected in the next quarter or two, I guess besides the workout expenses for the non-performing assets?

Speaker Change: [inaudible]

Speaker Change: I think the answer to that is no, but I can't resist.

Speaker Change: This low pitch here and Julie I'll start and if you want to jump in and Explain it better. Please feel free We have decided that our tech platform

Ross Haberman: We have decided that our tech platform is due for a pretty big rebuild and that we can probably save money in the process and after the process of doing that. So, you know, that involves changing the way our tech platform is hosted and changing our use of the core and modernizing the whole thing into the cloud and using fintech solutions. And to do that, we had to rebuild the foundation, and that's 80% done, something like that, Julie?

Speaker Change: is due for a pretty big

Speaker Change: Freebill, and that we can probably save money in the process and after the process.

Speaker Change: of doing that, so, you know, that involves changing our...

Julie: The way our tech platform is hosted, and changing our use of the core, and modernizing the whole thing into the cloud, and using FinTech.

Julie Courkamp: And to do that, we had to rebuild the foundation, and that's 80% from something like that, Julie. Is it a foundational build? Yes. The foundational build. And I think we're beginning to implement the middleware piece of it now, and we'll implement the bells and whistles part of it after that, which will be Q4 early next year, something like that. Well, that will start, so I think in future calls, we'll be talking about some of the efficiency gains there, and those will actually be definitely gains in terms of the efficiency and effectiveness that we're delivering to associates internally and to clients. But also, I think some nice overall cost saves as well.

Julie: Solutions, and to do that we had to rebuild the foundation, and that's 80% done, something like that, Julie?

Scott C. Wylie: The foundational build, yes. The foundational build. And I think we're beginning to implement the middleware piece of it now, and we'll implement the bells and whistles part of it after that, which will be Q4 early next year, something like that. That'll start. So I think in future calls, we'll be talking about some of the efficiency gains there. And those will definitely be gains in terms of the efficiency and effectiveness that we're delivering to associates internally and to clients, but also, I think, some nice overall cost savings as well. Shaking her head, she had nothing to add.

Julie: The foundational bill, and I think we're beginning to implement the middleware piece of it now, and we'll implement the bells and whistles part of it.

Julie: After that, which will be Q4, early next year, something like that, that'll start. So I think, you know, in future calls, we'll be talking about some of the efficiency gains there, and those will actually be definitely...

Julie: gains in terms of

Julie: In terms of the efficiency and effectiveness that we're delivering to associates internally and to clients But also I think some nice overall cost saves as well

Julie Courkamp: Thank you. Shaking her head, nothing add. Thank you.

Operator: Thank you. And, as I don't see any further questions in the queue, I will conclude the Q&A session and pass the call back to Scott for final comments.

Scott Wylie: And as I don't see any further questions in the queue, I will conclude the Q&A session and pass the call back to Scott for final comments. All right, Carmen. Well, thank you. And thanks very, very for joining today. It just, you know, turns out concluded comments, I would say, you know, some of the headline numbers are challenging here, you know, we're not happy with the EPS and the efficiency ratio, the EPS quality numbers, but the year is progressing largely as we expected and indicated earlier and in line with our prior guidance. You know, in addition to the things we talked about, and there's just a number of very positive underlying trends that we are seeing for the second half of the year. Certainly saw it in Q2, we saw it in June, and we're seeing it so far in July as well, which we think are going to help us in Q3, Q4 and ultimately in 2025.

Speaker Change: Thank you. Shaking her head, nothing to add.

Speaker Change #102: Thank you. And as I don't see any further questions in the queue, I will conclude the Q&A session and pass the call back to Scott for final comments.

Scott C. Wylie: All right, Carmen. Well, thank you. And thanks to everybody for joining today. Just, you know, in terms of concluding comments, I would say, you know, some of the headline numbers are challenging here. You know, we're not happy with the EPS and efficiency ratio, and the asset quality numbers, but the year is progressing largely as we had expected and indicated earlier and in line with our prior guidance. In addition to the things we talked about, there are just a number of very positive underlying trends that we are seeing for the second half of the year.

Scott: All right, Carmen. Well, thank you. And thanks for everybody for joining today. Just, you know, in terms of concluding comments, I would say, you know, some of the headline numbers are challenging here, you know, we're not happy with.

Scott: to the things we talked about, and there's just a number of very positive underlying trends.

Scott C. Wylie: Certainly, we saw it in Q2. We saw it in June, and we're seeing it so far in July as well, which we think is going to help us in Q3, Q4, and ultimately in 2025. And these include some of the things we've talked about, such as a better NIM Outlook, new producers on board, a favorable efficiency ratio trend, and bigger pipelines throughout the organization. So I think there is a positive story going forward. And we really thank everybody for dialing in today for their interest and for your support for First Western. Thanks again. Have a great rest of your day.

Scott: that we are seeing.

Scott: for the second half of the year. Certainly saw it in Q2, we saw it in June , and we're seeing it so far in July as well.

Scott Wylie: And these include, you know, some of the things we've talked about: expense control, this includes new deposit relationships, improving fee income, asset quality improvement. is a better name outlook, new producers on board, favorable efficiency ratio trend and bigger pipelines throughout the organization. So I think there is a positive story going forward, and we really thank everybody for downing in the day for your interest and for your support for First Western. Thanks again. Have a great rest of your day.

Scott: which we think are going to help us in Q3.

Scott: Q4 and ultimately in 2025, and these include some of the things we've talked about, expense control, this includes new deposit relationships, improving fee income, asset quality improvements.

Scott: Better NAM Outlook

Scott: new producers on board.

Scott: favorable efficiency ratio trend and bigger pipelines throughout the organization. So I think there is a positive.

Scott: story

Scott: going forward and we really

Speaker Change #100: Thank you everybody for dialing in today for your interest and for your support for First Western.

Operator: And thank you all for participating in today's conference, and you may now disconnect.

Operator: And thank you all for participating in today's conference. You may now disconnect.

Speaker Change #101: Thanks again. Have a great rest of your day. And thank you all for participating in today's conference. You may now disconnect.