Q1 2026 First Western Financial Inc Earnings Call

April 24, 2026

Operator 2: Good day, and thank you for standing by. Welcome to the First Western Financial Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to Tony Rossi. Please proceed.

Operator: Good day, and thank you for standing by. Welcome to the First Western Financial Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to Tony Rossi. Please proceed.

Speaker #2: Good day, and thank you for standing by. Welcome to the First Western Financial first quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #2: After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 11 on your telephone.

Speaker #2: You will then hear a message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded.

Speaker #2: Now it's my pleasure to hand the conference to Tony Rossi. Please proceed.

Speaker #3: Thank you, Carmen. Good morning, everyone, and thank you for joining us today for First Western Financial's first quarter 2026 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 Q1 2026 Earnings Call. Joining us from First Western's management team are Scott Wylie, Chairman and Chief Executive Officer, Julie Courkamp, Chief Operating Officer, and David Weber, Chief Financial Officer. We'll use a slide presentation as part of our discussion this morning. If you've not done so already, please visit the Events and Presentations page of First Western's Investor Relations website to download a copy of the presentation. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial 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 #3: We'll use a slide presentation as part of our discussion this morning. If you've 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 #3: 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.

Speaker #3: 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.

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

Speaker #3: 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.

Speaker #3: 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 a reconciliation of the GAAP to non-GAAP measures.

Speaker #3: And with that, I'd like to turn the call over to Scott.

Speaker #4: Thanks, Tony, and good morning, everybody. We executed well in the first quarter and saw positive trends in many areas, including loan and deposit growth, net interest margin expansion, well-managed expenses, higher mortgage banking revenues, and improved asset quality.

Scott Wylie: Thanks, Tony, and good morning, everybody. We executed well in Q1 and saw positive trends in many areas, including loan and deposit growth, net interest margin expansion, well-managed expenses, higher mortgage banking revenues, and improved asset quality. This resulted in another increase in our level of profitability, with EPS up 85% quarter over quarter. We continued to maintain a conservative approach to our new loan production with our disciplined underwriting and pricing criteria. As a result of the additions we've made to our banking team over the past few years, as well as the generally healthy economic conditions in our markets, we had a solid level of loan production, which was diversified across our market, industries, and loan types. As a result of our financial performance and the balance sheet management strategies, we had a further increase in both book value and tangible book value per share.

Scott Wylie: Thanks, Tony, and good morning, everybody. We executed well in Q1 and saw positive trends in many areas, including loan and deposit growth, net interest margin expansion, well-managed expenses, higher mortgage banking revenues, and improved asset quality. This resulted in another increase in our level of profitability, with EPS up 85% quarter-over-quarter. We continued to maintain a conservative approach to our new loan production with our disciplined underwriting and pricing criteria. As a result of the additions we've made to our banking team over the past few years, as well as the generally healthy economic conditions in our markets, we had a solid level of loan production, which was diversified across our market, industries, and loan types.

Speaker #4: This resulted in another increase in our level of profitability, with DPS up 85% quarter over quarter. We continued to maintain a conservative approach to our new loan production, with our disciplined underwriting and pricing criteria.

Speaker #4: As a result of the additions we've made to our banking team over the past few years, as well as generally healthy economic conditions in our markets, we had a solid level of loan production, which was diversified across our market, industries, and loan types.

Speaker #4: As a result of our financial performance and the balance sheet management strategies, we had a further increase in both book value and tangible book value per share.

Scott Wylie: As a result of our financial performance and the balance sheet management strategies, we had a further increase in both book value and tangible book value per share. Moving to slide four, we generated net income of $6.2 million, or $0.63 per diluted share in Q1, which was higher than the prior quarter. This represented our third consecutive quarter where we generated an increase in net income in earnings per share. With our prudent balance sheet management, our tangible book value per share increased 3.3% for the quarter-over-quarter. Now I'll turn the call over to Julie for some additional discussion of our balance sheet and trust investment management trends. Julie?

Speaker #4: Moving to slide four, we generated net income of $6.2 million, or $0.63 per diluted share in the first quarter, which was higher than the prior quarter.

Scott Wylie: Moving to slide four, we generated net income of $6.2 million, or $0.63 per diluted share in Q1, which was higher than the prior quarter. This represented our third consecutive quarter where we generated an increase in net income in earnings per share. With our prudent balance sheet management, our tangible book value per share increased 3.3% for the quarter-over-quarter. Now I'll turn the call over to Julie for some additional discussion of our balance sheet and trust investment management trends. Julie?

Speaker #4: This represented our third consecutive quarter where we generated an increase in net income and earnings per share. With our prudent balance sheet management, our tangible book value per share increased 3.3% for the quarter, quarter over quarter.

Speaker #4: Now I'll turn the call over to Julie for some additional discussion of our balance sheet and trust investment management trends. Julie?

Speaker #5: Thank you, Scott. Turning to slide five, we'll look at the trends in our loan portfolio. Our loans held for investment increased $41 million from the end of the prior quarter.

Julie Courkamp: Thank you, Scott. Turning to slide five, we'll look at the trends in our loan portfolio. Our loans held for investment increased $41 million from the end of the prior quarter. We continue to be conservative and highly selective in our new loan production, but with the higher level of productivity we are seeing from the additions to our banking team that we have made over the last several quarters, we are seeing a solid level of new loan production. New loan production was $116 million in Q1. That production was diversified across our portfolios, and we are also getting deposit relationships with most of these new clients. We continue to be disciplined and are maintaining our pricing criteria. This resulted in the average rate on new production of 6.31% in the quarter. Moving to slide six, we'll take a closer look at our deposit trends.

Speaker #5: We continue to be conservative and highly selective in our new loan production. But with the higher level of productivity we are seeing from the additions to our banking team that we have made over the last several quarters, we are seeing a solid level of new loan production.

Speaker #5: New loan production was $116 million in the first quarter. That production was diversified across our portfolios, and we are also getting deposit relationships with most of these new clients.

Julie Courkamp: That production was diversified across our portfolios, and we are also getting deposit relationships with most of these new clients. We continue to be disciplined and are maintaining our pricing criteria. This resulted in the average rate on new production of 6.31% in the quarter. Moving to slide six, we'll take a closer look at our deposit trends. Our total deposits increased $95 million from the end of the prior quarter, with growth in all types of deposits. The increase was driven by both new deposit relationships and inflows from existing deposit accounts. Notably, non-interest-bearing deposits increased 10%, or $35 million, in the quarter.

Speaker #5: We continue to be disciplined in maintaining our pricing criteria; this resulted in the average rate on new production of 6.31% in the quarter.

Speaker #5: Moving to slide six, we'll take a closer look at our deposit trends. Our total deposits increased $95 million from the end of the prior quarter, with growth in all types of deposits.

Julie Courkamp: Our total deposits increased $95 million from the end of the prior quarter, with growth in all types of deposits. The increase was driven by both new deposit relationships and inflows from existing deposit accounts. Notably, non-interest-bearing deposits increased 10%, or $35 million, in the quarter. The deposit growth in the quarter brought our loan-to-deposit ratio down from 96.5 in the prior quarter and 96.4 from a year ago to below 95. Now turning to trust and investment management, slide 7. We had a $43 million increase in our assets under management in Q1, primarily attributed to lower market values, which were partially offset by the addition of new accounts. Net new accounts and contributions contributed a net increase of $42 million in the quarter. On a year-over-year basis, our assets under management increased by approximately 1%.

Speaker #5: The increase was driven by both new deposit relationships and inflows from existing deposit accounts. Notably, non-interest-bearing deposits increased 10%, or $35 million, in the quarter.

Speaker #5: The deposit growth in the quarter brought our loan-to-deposit ratio down from 96.5 in the prior quarter and 96.4 from a year ago to below 95.

Julie Courkamp: The deposit growth in the quarter brought our loan-to-deposit ratio down from 96.5 in the prior quarter and 96.4 from a year ago to below 95. Now turning to trust and investment management, slide 7. We had a $43 million increase in our assets under management in Q1, primarily attributed to lower market values, which were partially offset by the addition of new accounts. Net new accounts and contributions contributed a net increase of $42 million in the quarter. On a year-over-year basis, our assets under management increased by approximately 1%.

Speaker #5: Now turning to Trust and Investment Management, slide seven. We had a $43 million increase in our assets under management in the first quarter, primarily attributed to lower market values, which were partially offset by the addition of new accounts.

Speaker #5: Net new accounts and contributions contributed a net increase of $42 million in the quarter. On a year-over-year basis, our assets under management increased by approximately 1%.

Speaker #5: As David will cover shortly, our trust and investment management fees have increased 5.3% from the second quarter of 2025, as we have restructured that team for growth.

Julie Courkamp: As David will cover shortly, our trust and investment management fees have increased 5.3% from Q2 of 2025, as we have restructured that team for growth.

Speaker #5: Now, I'll turn the call over to David for further discussion of our financial results. David?

Julie Courkamp: Now I'll turn the call over to David for further discussion of our financial results. David?

Speaker #4: Thank you, Julie. Turning to slide eight, we'll look at our gross revenue. Our gross revenue increased 3.4% from the prior quarter due to increases in both net interest income and non-interest income.

David Weber: Thank you, Julie. Turning to slide eight, we'll look at our gross revenue. Our gross revenue increased 3.4% from the prior quarter due to increases in both net interest income and non-interest income. Turning to slide nine, we'll look at our trends in net interest income and margin. Our net interest income increased 1.5% from the prior quarter due to an increase in our net interest margin. Our NIM increased 10 basis points from the prior quarter to 2.81%. This was due to a reduction in our cost of funds, which was primarily due to lower rates on money market deposit accounts as a result of the company reducing deposit rates commensurate with the short-term rate decreases in 2025, and runoff of higher cost deposit accounts.

Speaker #4: Turning to slide nine, we'll look at our trends in net interest income and margin. Our net interest income increased 1.5% from the prior quarter, due to an increase in our net interest margin.

Speaker #4: Our NIM increased 10 basis points from the prior quarter to 2.81%. This was due to a reduction in our cost of funds, which was primarily due to lower rates on money market deposit accounts, as a result of the company reducing deposit rates commensurate with the short-term rate decreases in 2025.

Speaker #4: And runoff of higher-cost deposit accounts. Our net interest income increased 9.7% from the first quarter of 2025, due to an increase in net interest margin and an increase in average interest-earning assets.

David Weber: Our net interest income increased 19.7% from Q1 2025 due to an increase in net interest margin and an increase in average interest-earning assets. Now turning to slide 10, our non-interest income increased by approximately $600,000 from the prior quarter. This was primarily due to increases in gain on sale of mortgage loans, risk management, and insurance fees, and trust and investment management fees, which increased for the third consecutive quarter. Now turning to slide 11 and our expenses. Our non-interest expense decreased by $1.1 million from the prior quarter.

Speaker #4: Now, turning to slide 10, our non-interest income increased by approximately $600,000 from the prior quarter. This was primarily due to increases in gain-on-sale of mortgage loans, risk management and insurance fees, and trust and investment management fees, which increased for the third consecutive quarter.

Speaker #4: Now turning to slide 11, and our expenses. Our non-interest expense decreased by $1.1 million from the prior quarter. The decrease was due to an OREO write-down in the fourth quarter of 2025, and a decrease in professional services, partially offset by an increase in salaries and employee benefits due to payroll tax seasonality and an increase in bonus accruals as a result of the improved earnings in the quarter.

David Weber: The decrease was due to an OREO write-down in Q4 2025 and a decrease in professional services, partially offset by an increase in salaries and employee benefits due to payroll tax seasonality and an increase in bonus accruals as a result of the improved earnings in the quarter. Our efficiency ratio improved for the sixth consecutive quarter as we continue to tightly manage expenses while also making investments in the business that we believe will positively impact our long-term performance. Now turning to slide 12, we'll look at our asset quality. As Scott indicated earlier, we saw improved trends in the loan portfolio in Q1, with decreases in non-accrual loans and NPAs. This was partially driven by the sale of the last OREO property we had on the balance sheet. Additionally, we had no loan charge-offs in the quarter.

Speaker #4: Our efficiency ratio improved for the sixth consecutive quarter, as we continue to tightly manage expenses while also making investments in the business that we believe will positively impact our long-term performance.

Speaker #4: Now turning to slide 12, we'll look at our asset quality. As Scott indicated earlier, we saw improved trends in the loan portfolio in the first quarter, with decreases in non-accrual loans and NPAs.

Speaker #4: This was partially driven by the sale of the last OREO property we had on the balance sheet. Additionally, we had no loan charge-offs in the quarter.

Speaker #4: Our allowance coverage was 77 basis points of total loans, as improved trends during the quarter drove a release of provision. Now I'll turn it back to Scott.

David Weber: Our allowance coverage was 77 basis points of total loans, as improved trends during the quarter drove a release of provision. Now I'll turn it back to Scott. Scott?

Speaker #4: Scott?

Speaker #6: Thanks, David. Turning to slide 13, I'll wrap up with some comments about our outlook. Based on our first quarter performance, and what we're seeing in our markets, our expectations for the year are unchanged from what we provided at the start of the year.

Scott Wylie: Thanks, David. Turning to slide 13, I'll wrap up with some comments about our outlook. Based on our Q1 performance and what we're seeing in our markets, our expectations for the year are unchanged from what we provided at the start of the year. Overall, we continue to see relatively healthy economic conditions in our markets. We're seeing good opportunities to add both new clients and banking talent due to the ongoing disruption from M&A activity, particularly in the Colorado banking market. We also recently added a new market presence for Scottsdale, Arizona, where we see good opportunities for growth. Our loan deposit pipelines remain strong and should continue to result in solid balance sheet growth in 2026, with loan deposit growth at similar levels to what we had in 2025.

Speaker #6: Overall, we continue to see relatively healthy economic conditions in our markets. We're seeing good opportunities to add both new clients and banking talent due to the ongoing disruption from M&A activity, particularly in the Colorado banking market.

Speaker #6: We're also seeing what we also recently added—a new market president for Scottsdale, Arizona—where we see good opportunities for growth. Our loan-to-deposit pipelines remain strong and should continue to result in solid balance sheet growth in 2026, with loan-to-deposit growth at similar levels to what we had in 2025.

Speaker #6: In addition to the balance sheet growth, we expect to see more positive trends in our net interest margin, our fee income, and more operating leverage resulting from our disciplined expense control.

Scott Wylie: In addition to the balance sheet growth, we expect to see more positive trends in our net interest margin, fee income, and more operating leverage resulting from our disciplined expense control. We had net interest margin expansion of 26 basis points in 2025, and while we expect further expansion in 2026, it may not be at the same level as last year. While we'll remain disciplined in our expense control, we believe that investing in the business will drive future shareholder value, and ongoing disruption from the M&A activity in our markets creates unique opportunities for us to add banking talent. We will take advantage of those opportunities if and when they materialize, as well as opportunities to add new clients.

Speaker #6: We had net interest in net interest margin expansion of 26 basis points in 2025, and we expect further expansion in 2026. It may not be at the same level as last year.

Speaker #6: We will remain disciplined in our expense control. We believe that investing in the business will drive future shareholder value, and ongoing disruption from the M&A activity in our markets creates unique opportunities for us to add banking talent.

Speaker #6: We will take advantage of those opportunities if and when they materialize, as well as opportunities to add new clients. Based on the trends we're seeing in the portfolio and the feedback we're getting from clients, we don't see anything to indicate that we'll experience any meaningful deterioration in asset quality.

Scott Wylie: Based on the trends we're seeing in the portfolio and the feedback we're getting from clients, we don't see anything to indicate that we'll experience any meaningful deterioration in asset quality. The positive trends we're seeing in a number of key areas are expected to continue, which we believe should result in steady improvement in our financial performance and further value being created for shareholders in 2026. With that, we're happy to take your questions. Carmen, please open up the call.

Speaker #6: The positive trends we're seeing in a number of key areas are expected to continue, and which we believe should result in steady improvement in our financial performance and further value being created for shareholders in 2026.

Speaker #6: So with that, we're happy to take your questions. So, Carmen, please open up the call.

Speaker #1: Thank you so much. And as a reminder, if you do have a question, press star 1-1 and wait for your name to be announced.

Operator 2: Thank you so much. As a reminder, if you do have a question, press star one one and wait for your name to be announced. To remove yourself, press star one one again. One moment for our first question. It comes from the line of Brett Rabatin with StoneX Group. Please proceed.

Operator: Thank you so much. As a reminder, if you do have a question, press star one one and wait for your name to be announced. To remove yourself, press star one one again. One moment for our first question. It comes from the line of Brett Rabatin with StoneX Group. Please proceed.

Speaker #1: To remove yourself, press star 11 again. One moment for our first question. It comes from the line of Brett Rabotin with Stonex Group. Please proceed.

Speaker #7: Hey, good morning, everyone—or good afternoon to some. Wanted to start off, obviously, great to see the trends this quarter in a number of categories.

Brett Rabatin: Hey, good morning, everyone, or good afternoon to some.

Scott Wylie: Good. How you doing, Brett?

Brett Rabatin: Wanted to start off, obviously great to see the trends this quarter in a number of categories. How many MLOs have you guys added? Then just obviously a stronger start than usual on mortgage. How much production did you guys have this quarter? I know it was better than usual for a Q1.

Speaker #7: How many MLOs have you guys added, and then just—obviously, a stronger start than usual on mortgage? How much production did you guys have this quarter?

Speaker #7: I know it was better than usual for a Q1.

Speaker #6: I think we had one new MLO this quarter, and we added another seven folks in front office, banker-type jobs. The MLO additions are especially nice if they're a good fit for us and producers because they have very low fixed costs, and their compensation largely comes from variable costs from production.

Scott Wylie: I think we added one new MLO this quarter, and we added another seven folks in front office banker-type jobs. The MLO additions are especially nice if they're a good fit for us and producers because they have very low fixed costs and their compensation largely comes from variable costs from production. Do either of you have the data for last year handy?

Speaker #6: Glad that you had the data for last year handy. Last year, MLO ads.

David Weber: For last year?

Scott Wylie: Last year MLO adds.

Speaker #8: Yeah. Give me a second.

David Weber: Yeah. Let me see.

Speaker #6: We'll look up that number, Brett, and.

Scott Wylie: We'll look up that number, Brett, and.

Brett Rabatin: Just mortgage production totals.

Speaker #7: And then just mortgage production totals?

Brett Rabatin: Just mortgage production totals.

Speaker #9: Yeah, mortgage had a good, strong first quarter. We saw gains on mortgage loans go from $800,000 in Q4 to $1.5 million in Q1.

Julie Courkamp: Yeah. Mortgage had a good, strong Q1. We saw gains on mortgage loans go from $800,000 in Q4 to $1.5 million in Q1. Seriously strong production. Good economic conditions, I think spurred that, but also the MLO adds we've been doing over the last several quarters have just given us a level of ability to produce mortgages.

Speaker #9: So, really strong production, good economic conditions—I think spurred that. But also, the MLO ads we've been doing over the last several quarters have just given us a level of ability to produce mortgages.

Speaker #7: Yeah. And lock volume increased a little under $40 million quarter over quarter. We were just under $180 million in secondary lock volume for Q1. And then we added—in 2025—we added eight MLOs.

David Weber: Yeah. Lock volume increased a little under $40 million quarter over quarter. We were just under $180 million in secondary lock volume for Q1. In 2025 we added eight MLOs.

Speaker #10: Okay. That's helpful caller. And.

Brett Rabatin: Okay. That's helpful, caller.

Scott Wylie: Brett, just on that point, I would love to tell you that we were expecting a strong Q1, but actually our experience is Q1 tends to be pretty quiet. We had been thinking that with the pent-up demand from slow mortgage markets in our geographic region that eventually we'd see some pent-up demand come out and play and drive some volume. I think that's what happened in Q1, a combination of pent-up demand, of course, that we had unseasonably warm weather in Q1. Then definitely the impact of the new MLOs we've added. Those were really nice results to see.

Speaker #6: Brett, just on that point—just on that point, I would love to tell you that we were expecting a strong first quarter, but actually our experience is the first quarter tends to be pretty quiet.

Speaker #6: And we had been thinking that, with the pent-up demand from slow mortgage markets in our geographic region, that eventually we'd see some pent-up demand come out and play in, and drive some volume.

Speaker #6: And I think that's what happened in Q1, is a combination of pent-up demand, of course, and we had seasonally warm weather in our markets.

Speaker #6: Unseasonably warm weather, and in Q1, and then definitely the impact of the new MLOs we've added. So those were really nice results to see.

Speaker #7: Yeah, Brett, I'll add one more data point. We did not see a material decrease in lock volume in March, when rates materially increased. So that's what gives us comfort as far as what was driving the mortgage origination volume—that it really wasn't solely dependent on improved rates.

David Weber: Yeah. Brett, I'll add one more data point. We did not see a material decrease in lock volume in March when rates materially increased. That's what gives us comfort as far as what was driving the mortgage origination volume, that it really wasn't solely dependent on improved rates because in March that obviously didn't happen from a rates perspective, and our volume still looked good in March.

Speaker #7: Because in March, that obviously didn't happen from a rates perspective, and our volume still looked good in March.

Speaker #10: Okay, that's helpful. And then you mentioned Scottsdale's new market president. Are there any other markets that you're keen on trying to grow stronger organically? And then I saw P&C had made quite a few layoffs—I'm sure mostly back office—but I just wanted to hear if you guys are able to capitalize on any disruption in Colorado, and maybe an update on what you're seeing from that perspective.

Brett Rabatin: Okay. That's helpful. Then you mentioned Scottsdale, new market, president. Any other markets that you're keying in on trying to grow stronger organically? Then I saw PNC had made quite a few layoffs, I'm sure mostly back office, but just wanted to hear if you guys were being able to capitalize on any disruption in Colorado and just maybe an update on what you're seeing from that perspective.

Speaker #6: So let's start with Arizona. In Arizona, we were feeling like we needed a leadership team that others would follow, and that could really help us build our teams out there.

Scott Wylie: Let's start with Arizona. In Arizona, we were feeling like we needed a leadership team that others would follow and that could really help us build our teams out there. We have two offices, one in Scottsdale and one in Phoenix, that have been open for years, and they've had good growth and they're profitable. We have tiny market share in Arizona, and we think we have a platform that would be attractive and unique and differentiate that market, but we didn't really have the leaders to put the teams together to make that happen. We recruited one of the top folks out of First Republic/JP Morgan and added him nine months ago, something like that. Does that sound about right, Julie?

Speaker #6: We have two offices, one in Scotts and one in Phoenix, that we've had open for years, and they've shown good growth in their profitability.

Speaker #6: But we have a tiny market share in Arizona. We think we have a platform that would be attractive and unique, and differentiate in that market, but we didn't really have the leaders to put the teams together to make that happen.

Speaker #6: And so we recruited one of the top folks out of First Republic/JPMorgan and added him nine months ago, something like that. That sound about right, Julie?

Julie Courkamp: Yeah, October maybe.

Speaker #9: Yeah, October, maybe.

Speaker #6: And then we hired one of the top folks out of First Bank/PNC that started maybe a month or two ago, and those two skill sets of those two executives have a very complementary set of skills.

Scott Wylie: Then we hired one of the top folks out of FirstBank/PNC that started maybe a month or two ago. Those two skill sets of those two executives have a very complementary set of skills, and they work really well together, so far. I mean, who knows? Seems like they work really well together, and we're excited about what they can accomplish. We're feeling really positive about these hires we've made for Arizona and where that team's going to go. In terms of your second part of your question about kind of the market opportunities in other markets, it's everywhere. It's amazing to see the quality of talent that we're seeing when we open up a position. I just think it's like a generational opportunity for us, and we've hired several people already.

Speaker #6: And they work really well together. So far, I mean, who knows? But it seems like they work really well together. And so we're excited about what they can accomplish.

Speaker #6: So, we're feeling really positive about these hires we've made for Arizona, and where that team's going to go. In terms of your second part of your question, about kind of the market opportunities in other markets, it's everywhere.

Speaker #6: I mean, it's amazing to see the quality of talent that we're seeing when we open up a position. And I just think it's a generational opportunity for us.

Speaker #6: And we've hired several people already. We've got several more in the works that are going to be real value drivers for us, I think, going forward.

Scott Wylie: We've got several more in the works that are going to be real value drivers for us, I think, going forward. We've done it all in a fairly well-contained cost environment. We've been spending between $19 and $20 million a quarter for something like 12 quarters now. It looked higher in Q4 last year, but remember, we wrote down $1.3 million of an OREO because we had that last OREO under contract, and we knew the price was going to be down $1.3 million from our book value. That actually shows up as an operating expense, even though it's non-recurring, obviously. Those expenses appeared more inflated in Q4 of last year than they really were on an operating basis. Your last question about PNC.

Speaker #6: And we've done it all in a fairly well-contained cost environment. We've been spending between $19 and $20 million a quarter for something like 12 quarters now.

Speaker #6: And it looked higher in the fourth quarter last year, but remember, we wrote down $1.3 million of an OREO because we had that last OREO under contract.

Speaker #6: And we knew the price was going to be down $1.3 million from our book value. So that actually shows up as an operating expense, even though it's non-recurring, obviously.

Speaker #6: So those expenses appeared inflated—more inflated in Q4 of last year than they really were, on an operating basis. And then your last question about PNC—I mean, I think that, and we've talked about this before on this call, there is a really unique kind of emotional connection between Coloradans and First.

Scott Wylie: I mean, I think that, and we've talked about this before on this call, that there is a really unique kind of emotional connection between Coloradans and FirstBank that had long, deep roots here that we could talk about if you want. I just think it's a real challenge for any acquirer from the outside to come in and navigate that. Certainly the news this week that they were laying off 800 people or whatever it was big news. I had phone calls this week from people just calling to say that they were sad, that this was a real tragedy for our economy here and stuff like that. I think that is just going to continue to create opportunities for us. We see that. Personally, I don't want to say I see it every day, but pretty much every day.

Speaker #1: This bank that had, you know, long, deep roots here that we could talk about, if you want. But I just think it's a real challenge for any acquirer from the outside to come in.

Speaker #1: And, and navigate that. And certainly the news this week that they were laying off 800 people, or whatever it was, was big news.

Speaker #1: And and I had phone calls this week from people , you know , just calling to say that they were sad like that , that this was a real tragedy for , you know , our economy here and stuff like that .

Speaker #1: And so , so , you know , I , I think that that is just going to continue to create opportunities for us .

Scott Wylie: I think that is just going to continue to create opportunities for us. We see that. Personally, I don't want to say I see it every day, but pretty much every day. It's going to continue to create opportunities, I think. PNC, I think, is making a big effort to handle a smooth transition and all that. No knock on PNC. I think the task they have is a real challenge.

Speaker #1: And we see that . I mean , I personally , I don't want to say I see it every day , but pretty much every day , it's , it's going to continue to create opportunities .

Scott Wylie: It's going to continue to create opportunities, I think. PNC, I think, is making a big effort to handle a smooth transition and all that. No knock on PNC. I think the task they have is a real challenge.

Speaker #1: I think . And Which would be double digits , I guess . And to your question , you know , I think the fee income , we've really seen that flat for years and we've made many changes .

Brett Rabatin: Okay. With all that said, Scott, you've started the year at a stronger pace than last year on loans. In particular, would it be too aggressive to say you guys could be a double-digit grower this year?

Scott Wylie: Well, if you look at our loans year-

Scott Wylie: Well, if you look at our loans year.

Brett Rabatin: Low teens?

Scott Wylie: If you look at our loans year over year, I think we grew 11%, and our deposits, we grew 13% year over year. I think our guidance we've been giving is kind of high single digits. Although, if you take out kind of the quarter over quarter puts and takes, I feel like we seem to be around 10%-ish, which would be double digits, I guess, into your question. I think the fee income, we've really seen that flat for years, and we've made many changes now into that area in particular. We talked about the mortgage one already, but also in the wealth side, we've got some changes that we feel very positive about. We've talked a little bit about it, but we're seeing some green shoots there that are pretty exciting.

Speaker #1: Now into that area . In particular , we talked about the mortgage one already , but also in the wealth side , we've got some changes that we feel very positive about .

Speaker #1: And we've talked a little bit about it , but we're seeing some green shoots there that are pretty exciting . And so , yeah , I do think that we'll see continued revenue growth this year with really nice operating leverage .

Scott Wylie: Yeah, I do think that we'll see continued revenue growth this year with really nice operating leverage. If you look back, again, kind of take out some of the bumps here. We did $0.54 in EPS in 2023, $0.87 in 2024, $1.34 in 2025, and now our run rate seems to be pretty clearly over $2. I think that bodes well for 2026, 2027 earnings.

Speaker #1: You know, if you look back again, kind of take out some of the bumps here. We did $0.54 in EPS and $23.87 and $24.34 in 2024 and 2025.

Speaker #1: And , you know , now our run rate seems to be pretty clearly over $2 . I , I think that that bodes well for , for 26 , 27 earnings .

Speaker #2: Okay. Great. Appreciate the color.

Brett Rabatin: Okay, great. Appreciate the color.

Speaker #3: Thank you. One moment for our next question. It comes from the line of Woody Lee with KBW. Please proceed.

Operator 2: Thank you. One moment for our next question. It comes from the line of Will Jones with KBW. Please proceed.

Operator: Thank you. One moment for our next question. It comes from the line of Will Jones with KBW. Please proceed.

Speaker #4: Hey , thanks for taking my questions . I wanted to start on the net interest margin . It's been two consecutive quarters of of pretty meaningful expansion .

Will Jones: Hey, thanks for taking my questions. Wanted to start on the net interest margin. It's been two consecutive quarters of pretty meaningful expansion. I believe you noted you expect the expansion to moderate, but it still feels like the NIM is biased higher. Any thoughts on how we should think about the trajectory there?

Woody Lay: Hey, thanks for taking my questions. Wanted to start on the net interest margin. It's been two consecutive quarters of pretty meaningful expansion. I believe you noted you expect the expansion to moderate, but it still feels like the NIM is biased higher. Any thoughts on how we should think about the trajectory there?

Speaker #4: I believe you noted you expect the expansion to moderate, but it still feels like the NIM is biased, tired. So any thoughts on how we should think about the trajectory there?

Speaker #1: Well , I I've been saying for I don't know , six quarters , eight quarters , something like that , that , that I , I believe that we will ultimately get back to a 315 , 320 kind of a .

Scott Wylie: Well, I've been saying for, I don't know, 6 quarters, 8 quarters, something like that I believe that we will ultimately get back to a 315, 320 kind of a NIM because that's historically what we've seen in normal markets, with normal yield curves, and sort of normal economics, normal competitive environment, over my 40 years of running my banks. I think we'll still get there. The pace is just hard to predict. I think, for the finance team in particular, they're reluctant to say, well, not knowing anything about what's going to happen in the future and the Fed and the war and whatever, we're going to see 10 basis points improve in a quarter. I think David would feel comfortable saying we're not going to see that in 2026. We have seen, as you said in your question, really good NIM improvements.

Speaker #1: Of a Nim because that's historically what we've seen in normal markets with normal yield curves and , you know , sort of normal economics , normal , competitive environment .

Speaker #1: Over my 40 years of running , my banks and , and so I , I , I think we'll still get there . The pace is just hard to predict .

Speaker #1: And I think , you know , for the finance team in particular , you know , there , their reluctant to say , well , not knowing anything about what's going to happen in the future .

Speaker #1: And the fed and the war and whatever , you know , we're going to see ten basis points improvement , a quarter . I mean , I think David would feel comfortable saying we're not going to see that in 2026 .

Speaker #1: But we have seen , as you said , in your question , you know , really good , really good improvements . And and I think what's driving that ?

Scott Wylie: I think what's driving that, and David, I'd encourage you to speak to this point, but our people are doing a really good job of having pricing discipline. That shows up on the loan side. We saw loan yields in Q1 down slightly when actual rates were down 50 basis points. I'll tell you, with all these acquisitions, we're seeing the acquirers wanting to prove that they make a good decision. They're out doing really aggressive loan pricing, and we hear about this stuff, and we're like, well, we're not going to compete with that. Yet our people are still producing nice growth with high-quality credits that produce zero loan losses like we've had now again.

Speaker #1: And David , you know , I encourage you to speak to this point , but , you know , our people are doing a really good job of having pricing discipline and that shows up on the loan side .

Speaker #1: You know , we saw loan yields in Q1 down slightly when actual rates were down 50 basis points . And I'll tell you , you know , we're seeing with all these acquisitions , we're seeing the choir's wanting to prove that they made good decision .

Speaker #1: They're out doing really aggressive loan pricing. And we hear about this stuff, and we're like, well, we're not going to compete with that.

Speaker #1: And yet our people are still producing nice growth with high-quality credits that, you know, produce zero loan losses like we've had now again.

Speaker #1: And , and then on the deposit side , again , we saw 50 , basis point decline in Q4 . And we put all that into our deposit pricing , which a lot of banks here didn't .

Scott Wylie: Then on the deposit side, again, we saw a 50 basis point decline in Q4, and we put all that into our deposit pricing, which a lot of banks here didn't. We didn't see any runoff. We actually saw a nice deposit growth. I don't know, David, did I miss anything big there?

Speaker #1: And , and we didn't see any runoff . We actually saw a nice deposit growth . So I don't know , David did , I , did I miss anything big there ?

Speaker #1: No .

David Weber: No, you covered it.

Speaker #5: You covered it .

Speaker #1: You you're .

Scott Wylie: You're guiding to 10 basis points a quarter?

Speaker #4: I

Speaker #1: Guiding the ten basis points a quarter.

Speaker #5: Not quite . But

David Weber: Not quite.

Speaker #4: I mean , I guess as a follow up to that normalized 315 to 320 margin , you know , it's not not going to happen this year , but what's a realistic timeline to , to getting the net interest margin back to those levels

Will Jones: I guess as a follow-up to that normalized 315 to 320 margin, it's not going to happen this year, but what's a realistic timeline to getting the net interest margin back to those levels?

Woody Lay: I guess as a follow-up to that normalized 315 to 320 margin, it's not going to happen this year, but what's a realistic timeline to getting the net interest margin back to those levels?

Scott Wylie: I just think it's hard to predict, Will Jones. There's so many variables that go into it, and we just talked about four or five of them in that last answer, so I won't repeat that. I'm hopeful that we're back with a 1% ROA in 2027. Whether we get there for the full year, whether we get there in January, whether we get there in December, I don't know yet. I do think that we've come a long way since all that excitement of the rapid run-up in short-term rates, the inverted yield curve, the failure of the big regional banks, all that stuff. We said we were going to play defense, we did. We said we're going to go back on offense, we have. We've got some really historic opportunities in the markets right now that I think we're doing a great job of taking advantage of.

Speaker #1: I , I just think it's hard to predict , you know , what ? It's , it's , there's so many variables that go into it and we just talked about 4 or 5 of them , you know , in that last answer .

Speaker #1: So I won't repeat that . But but I , you know , I , I , I'm hopeful that we're back with a 1% ROE in 2027 .

Speaker #1: You know , whether we get there for the full year , whether we get there in January , where we get there in December , I don't know yet .

Speaker #1: But but I do think that , you know , we've come a long way since all that excitement of the rapid run up in short term rates , inverted yield curve , the failure of the big regional banks , all that stuff , you know , we said we were going to play defense .

Speaker #1: We did. We said we're going to go back on offense. We have—we've got some really historic opportunities in the markets right now that I think we're doing a great job of taking advantage of.

Speaker #1: You see that play out, and I think that's going to drive more operating leverage, more profitability, and some nice outcomes for our shareholders.

Scott Wylie: You're going to see that play out, and I think that's going to drive more operating leverage, more profitability, and some nice outcomes for our shareholders.

Speaker #6: You know, with our ability to materially improve NIM, there's a very large opportunity for us in days. And just, our organization is extremely focused on that.

Julie Courkamp: Woody, our ability to materially improve NIM is, there's a very large opportunity for us in DDAs, and just our organization is extremely focused on that. There's a lot of different things that we're working on, and hires that we're looking to make or have made in that area. I think that it's to the point we can't really predict it, but there's a lot of effort going into focusing on that non-interest-bearing deposits and then keeping, as we've mentioned, our discipline on loan pricing, which has been something that we're also quite focused on. I think that those two points are really kind of a organizational focus of ours.

Speaker #6: There's a lot of different things that we're working on and hires that we're looking to make or have made in that area . So I think that if to the point , we can't really predict it , but there's a lot of effort going into focusing on that noninterest bearing deposit and then keeping , as we've mentioned , our discipline on loan pricing , which has been something that we're also quite focused on .

Speaker #6: So I think that those two points are really kind of an organizational focus of ours.

Speaker #4: Yeah . No , I really appreciate y'all walking through the moving pieces there Maybe just last for me on the trust business . You know , it's great to hear the commentary on new accounts opened and fees were up quarter over quarter .

Will Jones: Yeah. No, I really appreciate y'all walking through the moving pieces there. Maybe just last for me on the trust business. It was great to hear the commentary on new accounts opened, and fees were up quarter-over-quarter. You've made some changes to that business to emphasize more of a growth-oriented business model. Where do we sort of stand in the trajectory of that business?

Woody Lay: Yeah. No, I really appreciate y'all walking through the moving pieces there. Maybe just last for me on the trust business. It was great to hear the commentary on new accounts opened, and fees were up quarter-over-quarter. You've made some changes to that business to emphasize more of a growth-oriented business model. Where do we sort of stand in the trajectory of that business?

Speaker #4: You've made some changes to that , to that business , to emphasize more more of a growth on business model . So so where do we sort of stand in the in the trajectory of that business

Speaker #1: We brought in a new head of Wealth a year ago. Now, he started on April 1st of last year from Goldman, and he was in a senior wealth role over there.

Scott Wylie: We brought in a new head of wealth a year ago now. He started on 1 April of last year from Goldman. He was in a senior wealth role over there. We, through him, he's leading it, have done a complete overhaul of our planning function here, of our trust function here, of our investment management. Which those three areas also include our insurance area and our retirement services. We've replaced the leadership in all those areas and built stronger teams. We've built out some new products and services, which we've been test marketing, and that's all gone better than we had expected. Then in addition to those things, this new hire, his name is Brandon Summers. He particularly had an expertise in selling B2B in wealth services.

Speaker #1: And he , he , we threw him . He's leading it . Have done a complete overhaul of our planning function here , of our trust function here , of our investment management , which those three areas also include our insurance area and our retirement services .

Speaker #1: We've replaced the leadership in all those areas and built stronger teams. We built out some new products and services, which we've been test marketing, and that's all gone better than we had expected.

Speaker #1: And then in addition to those things , this new hire , his name is Brandon Summers . He was particularly had an expertise in selling B2B and in wealth services .

Scott Wylie: That's not something we've done before and was a big part of why we wanted him and recruited him to join us. We've also launched a B2B offering, which is similar to what you see at the big Fortune 500 companies, where the company will hire a specialist firm like Goldman Sachs, for example, to provide wealth consulting services to their executives as a benefit to them. Obviously, we don't have a lot of Fortune 500 companies in our market here, and we don't really want to compete against that business. For our target clients, which are lots of entrepreneurial and some good-sized businesses, they don't have a product offering like that. We've created a trademarked offering called WorkWealth, and we're out selling that. We have a person dedicated to marketing that.

Speaker #1: And that's not something we've done before. And it was a big part of why we wanted him and recruited him to join us.

Speaker #1: And so we've also launched a , a B2B , B2B offering , which is similar to what you see at the big fortune 500 companies , where the company will hire specialist firm like Goldman Sachs , for example , to provide wealth consulting services to their executives as a benefit to them .

Speaker #1: Obviously, we don't have a lot of Fortune 500 companies in our market here, and we don't really want to compete against that business.

Speaker #1: But for our target clients , which are lots of entrepreneurial and some good sized businesses , you know , they don't have a product offering like that .

Speaker #1: And so we've created a trademarked offering called Work Wealth . And we're out selling that . And , and we have a , a person dedicated to , to , to marketing that .

Scott Wylie: We think that that's going to be really impactful in the future. Of course, there are really nice synergies between that and selling corporate banking services, and back to Julie's treasury management and the DDAs, right? This all has really nice synergies to what we're doing anyway. That I guess would be a little summary of what we're doing on the whole wealth management side that's I think really exciting. It's starting to show results, as you said, but really just green shoots at this point. We're going to see a lot more impact of that, I think, in the next couple of years.

Speaker #1: And we think that that's going to be really impactful in the future. Of course, there are really nice synergies between that and selling corporate banking services, and back to Julie's, you know, treasury management and the DDAs, right?

Speaker #1: This is all has really nice synergies to what we're doing anyway . And so , so I guess would be a little summary of what we're doing on the , on the wealth management side .

Speaker #1: That's , I think , I think really exciting is starting to show results , as you said , but really just greenshoots at this point , we're going to see a lot more impact to that .

Speaker #1: I think, in the next couple of years.

Will Jones: Yeah. Well, it's great to hear the momentum there. I appreciate y'all taking my questions.

Woody Lay: Yeah. Well, it's great to hear the momentum there. I appreciate y'all taking my questions.

Speaker #4: Yeah . Well , it's it's great to hear the momentum there . I appreciate you all taking my questions .

Scott Wylie: Yeah. Thank you, Will Jones.

Speaker #1: Thank you .

Speaker #5: Woody .

Operator 2: Thank you. Our next question comes from Matthew Clark with Piper Sandler. Please proceed.

Operator: Thank you. Our next question comes from Matthew Clark with Piper Sandler. Please proceed.

Speaker #3: Thank you. Our next question comes from Matthew Clark with Piper Sandler. Please proceed.

Matthew Clark: Hey, good morning. Thanks for the questions. I wanted to touch on interest-bearing deposit costs and maybe the spot rate at the end of March, if we could have it. How you're thinking about additional relief from here with the Fed on hold.

Speaker #7: Hey, good morning. Thanks for the questions. I wanted to touch on interest-bearing deposit costs and maybe the spot rate at the end of March.

Speaker #7: If we could have it. And then, how you're thinking about, you know, additional relief from here with the Fed on hold.

Scott Wylie: That sounds like a question for Dave and Julie Courkamp.

Speaker #1: That sounds like a question for David to me.

David Weber: Thank you. Matt, the spot rate on deposits was 279 for the end of the quarter.

David Weber: Thank you. Matt, the spot rate on deposits was 279 for the end of the quarter. With the Fed on pause, I go back to Julie's comments. We have a lot of opportunity from a funding cost perspective with growing our DDA balances. Even with the Fed on pause, we feel with the company's focus there and the things we've laid out and we're working on accomplishing, that we have opportunity to grow that portfolio. Which will then help obviously bring down our average cost of deposits and average cost of funds.

Speaker #5: Thank you . Matt . The the spot rate on deposits was 279 for the end of the quarter . And , you know , to with the fed on pause , I , I go back to Julie's comments .

David Weber: With the Fed on pause, I go back to Julie's comments. We have a lot of opportunity from a funding cost perspective with growing our DDA balances. Even with the Fed on pause, we feel with the company's focus there and the things we've laid out and we're working on accomplishing, that we have opportunity to grow that portfolio. Which will then help obviously bring down our average cost of deposits and average cost of funds.

Speaker #5: You know , we have a lot of opportunity from a funding cost perspective with growing our DDA balances and even with the fed on pause , you know , we feel with the company's focus there and things , you know , we've laid out and we're working on accomplishing that , we have opportunity to grow that portfolio , which will then help obviously bring down our average cost of deposits and average cost of funds

Matthew Clark: Okay. Along those lines, your non-interest-bearing deposits tend to decline in Q2. Should we still expect that to be the case, or is it different this time?

Speaker #7: Okay . And along those lines , you're noninterest bearing deposits tend to decline in the second quarter . that should we still expect that to be the case or is it different this time ?

David Weber: I wouldn't say anything different at the moment. We typically see deposit outflows, as you mentioned, related to tax payments in Q2. I don't know that there's anything that we know today that would make that different. I think that's what we're thinking about as far as Kesa.

Speaker #5: I wouldn't say anything different at the moment . We we typically see deposit outflows , as you mentioned , related to tax payments in the second quarter .

Speaker #5: So, I don't know that there's anything that we know today that would make that difference. So, I think that's what we're thinking about as far as Q2.

Matthew Clark: Okay, the FHLB borrowings that you have, can you just remind us if those are overnight or if there's some term to them? Is there a plan to use excess cash to pay those off?

Speaker #7: Okay . And then you're the Fhlb borrowings that you have . Can you just remind us if those are overnight or if there's some term to them and is there , is there a plan to use excess cash to pay those off ?

David Weber: Yeah, the FHLB borrowing, it was an overnight that was swapped, and that swap matured in early April. Depending on how our liquidity evolves going forward, we'll see if it makes sense to pay that off and keep it at zero or if we need to replace that. We'll just have to see how things evolve.

Speaker #5: Yeah . The , the Fhlb borrowing , it was an overnight that was swapped and that actually that swap matured in early April .

Speaker #5: So we , you know , depending on how our , our liquidity evolves going forward , we'll see if it if it makes sense to pay that off and keep it at zero or if we need to replace that , we'll just have to see how things evolve .

Speaker #5: So

Matthew Clark: Okay. It's zero as of in April here, is that what you're saying?

Speaker #7: Okay. So it’s zero as of in April here. Is that what you’re saying?

David Weber: I'm sorry, say that again.

Speaker #5: I'm sorry. Say that again.

Matthew Clark: It's a 0 balance in April as of now?

Speaker #7: It's a zero balance in April, as of now.

David Weber: Correct.

Speaker #5: Correct .

Matthew Clark: Okay. Sounds good. In terms of the near-term NIM, I know there's a little bit of relief on the deposit side, but assuming you lose some non-interest-bearing seasonally, you got the benefit of the FHLB going away. It does seem like maybe the margin is flattish in the near term to flat to down slightly. I'd have to retest the numbers, but that's kind of where I am.

Speaker #7: Okay Sounds good . And then in terms of the near Nim , you know , I know there's a little bit of relief on the deposit side , but assuming you lose some noninterest bearing seasonally , you got the benefit of the fhlb going away .

Speaker #7: It does seem like maybe the margin is, you know, flattish in the near term to, you know, flat to down slightly.

Speaker #7: I haven't—I have to retest the numbers, but that's kind of where I am.

David Weber: I think we still have opportunities to continue to see NIM expansion in the remaining quarters in 2026. To Scott's point earlier, I don't think it's going to be 10 basis points a quarter, but I do feel that we will continue to have opportunities to expand NIM.

Speaker #8: I .

Speaker #5: I think we still have , we still have opportunities to continue to see Nim expansion in , in the remaining quarters in , in 2026 .

Speaker #5: So, to Scott's point earlier, I don't think it's going to be ten basis points a quarter, but I do feel that we will continue to have opportunities to expand them.

Matthew Clark: Okay, great. Just last minor one, you bought back a little bit of stock. It's not a big amount, but just curious what price you paid?

Speaker #7: Okay , great . And then just last minor one , you bought back a little bit of stock . It's not a big amount , but just curious what price you paid .

David Weber: Yeah. It was $23.85 on an average basis.

Speaker #5: Yeah, it was 23.85 on an average basis.

Matthew Clark: Perfect. Thank you.

Speaker #7: Perfect . Thank you .

David Weber: Thank you.

Speaker #5: Thank you .

Operator 2: Thank you. Our next question comes from the line of Bill Dezellem with Tieton Capital Management.

Operator: Thank you. Our next question comes from the line of Bill Dezellem with Tieton Capital Management.

Speaker #3: Thank you. Our next question comes from the line of Bill De with Tieton Capital Management.

Bill Dezellem: Thank you. A couple of questions. First of all, the deposits grew at roughly two times the rate of loan growth in Q1. Would you step back and just walk us through the general dynamic behind that, if that is a normal seasonal phenomenon or if there was something specific to your activities that led to that ratio?

Speaker #9: Thank you. A couple of questions. First of all, the deposits grew at roughly two times the rate of loan growth in the first quarter.

Speaker #9: Would you step back and and just walk us through the general dynamic behind that ? If that is a normal seasonal phenomenon or if there is something there was something specific to your activities that that led to that ratio

David Weber: Well, I think over the last many quarters now, again, I'm not really sure whether it's 8 or 12 or whatever, but we have put a much more significant focus on deposit growth. Our feeling is to get to be the bank that we want to be at $5 billion or $10 billion, we need to have as strong of a deposit story as we do on the loan and the P&L side. It's definitely been a focus for us now for several quarters. Bill, we don't really do loans here that don't come with a primary banking relationship. We literally write that into our loan documents here now. It's part of the expectation that we have with any conversation we have with any prospective client. It's a part of the conversation we have with existing clients.

Scott Wylie: Well, I think over the last many quarters now, again, I'm not really sure whether it's 8 or 12 or whatever, but we have put a much more significant focus on deposit growth. Our feeling is to get to be the bank that we want to be at $5 billion or $10 billion, we need to have as strong of a deposit story as we do on the loan and the P&L side. It's definitely been a focus for us now for several quarters. Bill, we don't really do loans here that don't come with a primary banking relationship. We literally write that into our loan documents here now. It's part of the expectation that we have with any conversation we have with any prospective client. It's a part of the conversation we have with existing clients.

Speaker #1: Well , I think over the last many quarters now , again , I'm not really sure whether it's 8 or 12 or whatever , but , you know , we have put a much more significant focus on deposit growth .

Speaker #1: And, you know, our feeling is to get to be the bank that we want to be at $5 billion or $10 billion.

Speaker #1: We need to have as strong of a deposit story as we do on the loan and the PTM side. So, it's definitely been a focus for us now for several quarters.

Speaker #1: Bill, you know, we don't really do loans here that don't come with a primary banking relationship. We literally write that into our loan documents here.

Speaker #1: Now, and, and so it's part of the expectation that we have with any conversation we have with any prospective client. It's part of the conversation we have with existing clients.

David Weber: We report on it internally, what loans we have that don't have deposits associated or have smaller ones. It's a very routine part of the conversation here, just being good bankers and driving relationship-oriented clients. I think the fact that in one quarter we saw a little bit more deposit growth than loan growth. I wouldn't read too much into that. We saw something like that in Q3 last year, you'll recall. I think some of the feedback we got was you should try and manage that so it's more consistent. There's no way of doing that. It just kind of happens when it happens. I think the more relevant number for me is the fact that we grew deposits 2% more than we grew loans over the last 12 months. I think that's.

Scott Wylie: We report on it internally, what loans we have that don't have deposits associated or have smaller ones. It's a very routine part of the conversation here, just being good bankers and driving relationship-oriented clients. I think the fact that in one quarter we saw a little bit more deposit growth than loan growth. I wouldn't read too much into that. We saw something like that in Q3 last year, you'll recall. I think some of the feedback we got was you should try and manage that so it's more consistent. There's no way of doing that. It just kind of happens when it happens. I think the more relevant number for me is the fact that we grew deposits 2% more than we grew loans over the last 12 months. I think that's.

Speaker #1: We report on it internally , you know , what loans we have that don't have deposits associated or have smaller ones that that it's a very routine part of the conversation here .

Speaker #1: Just being good bankers and driving relationship oriented clients . So I think the fact that in one quarter , we saw a little bit more deposit growth and loan growth , I wouldn't read too much into that .

Speaker #1: You know , we saw something like that in third quarter last year . You'll recall , and I think , you know , some of the feedback we got was , you know , you should try and manage that .

Speaker #1: So it's more consistent and there's no way of doing that . It just kind of happens when it happens . I , I , I think the more relevant number for me is the fact that we grew deposits , you know , two , 2% more than we grew loans over the last 12 months .

Scott Wylie: Probably a really relevant and helpful data point. If we see some decline in deposits in Q2, which is likely, I wouldn't read anything into that either. That's just part of who our clients are and the fact that they pay taxes in Q2 that pull down the money market accounts and whatnot here. I wouldn't read too much into that.

Speaker #1: I think that's probably a really relevant and helpful data point. And if we see some decline in deposits in Q2, which is likely, I wouldn't read anything into that either.

Speaker #1: That's just part of , you know , who our clients are . And the fact that they pay taxes in Q2 , that pull down the money market accounts and , and whatnot here .

Speaker #1: So, I think I wouldn't read too much into that.

Bill Dezellem: That's helpful, Scott. Let me take it one step further, though. Over time, where would you anticipate that the loan-to-deposit ratio would end up? You said sub-95 now, and if you keep up the trend that's been in place for several quarters, you'll be at sub-85 and then sub-75. Next thing you know, we're sub-50, and I suspect that's not where you're headed. I'm being a bit facetious, of course, but what's your long-term thought?

Speaker #9: That's helpful . Scott . Let me take it one step further , though . Over time , where would you where would you anticipate that that the loan to deposit ratio would end up , you said sub 90 , 95 .

Speaker #9: Now . And if you keep up the trend that's been in place for for , you know , several quarters , you'll be at sub 85 and then sub 75 .

Speaker #9: And next thing you know we're sub 50 . And I suspect that's not where you're headed . I'm being a bit facetious of course , but what's your long term thought

Scott Wylie: That is true. That is not where we're headed. What we have found, and again, I've been doing this a long time, Bill, and so I never really know where the next $1 billion of deposits are going to come from. Our clients do have a lot of liquidity, and we find that we're always able to produce deposits when we want them. It doesn't mean you don't have to focus on it, doesn't mean you don't have to do the things that Julie was just talking about in terms of focusing on deposit strategies, strengthening our treasury management team, improving our technology, stuff like that. At the end of the day, we've historically operated First Western and my prior banks with loan-to-deposit ratios in the 90s, and I think when it gets into the high 90s, we get more uncomfortable.

Speaker #1: That that that is true . That is not where we're headed . You know what we have found . And again , I've been doing this a long time , Bill .

Speaker #1: And and so I , I , I , I never really know where the next billion dollars of deposits are going to come from , but our clients do have a lot of liquidity , and we find that we're always able to produce deposits when we want them .

Speaker #1: And , you know , that doesn't mean you don't have to focus on it . It doesn't mean you don't have to do the things that Julie was just talking about in terms of , you know , focusing on deposit strategies and strengthening our treasury management team , improving our technology , stuff like that .

Speaker #1: But , but at the end of the day , you know , we've historically operated first Western and my prior banks with loan to deposit ratios in the 90s .

Speaker #1: And I think when it gets into the high 90s , we get more uncomfortable . Yeah . When it's in the low 90s , we think that's fine , but we're not going to pay up for higher cost deposits .

Scott Wylie: When it's in the low 90s, we think that's fine, but we're not going to pay up for higher cost deposits. I think that all has fueled nice growth for us over the years and continue to do that and provide the operating leverage we need to drive earnings that can support the growth that we want to do.

Speaker #1: And I think that all has fueled nice growth for us over the years, and continues to do that and provide the operating leverage we need to drive earnings that can support the growth that we want to do.

Bill Dezellem: Great. That's really nice perspective. Thank you for that. Lastly, with the geopolitical events, specifically the Iran war, what, if any, impact have you seen from your customers' behavior on either the loan or deposit side or the pipeline of activity?

Speaker #9: Great . Now that is that's really nice perspective . Thank you for that . And lastly , with the geopolitical events , specifically the Iran war What , if any , impact have you seen from from your customers behavior on either the loan or deposit side or the pipeline of , of activity

Scott Wylie: Yeah, I actually was thinking about that before this call, Bill. Over time, what I have found is when our clients get nervous, they kind of stop doing things, and they just say, "I can wait." We haven't seen that yet in this case, and I'm not sure why that is. I think, maybe Middle East seems like a long way away from the Rocky Mountain region. I'm not sure why we're not seeing it, and knock on wood, it hasn't had any negative impact on us so far. We really haven't seen any impact, and I'm not hearing about it in my conversations with clients, prospects, or our folks in the field at this point. That could change, I don't know.

Speaker #1: Yeah . You know , I actually was thinking about that before this call . Bill . And , and over time , what I have found is when our clients get nervous , they kind of stop doing things and they just say , you know , I can wait .

Speaker #1: And we haven't seen that yet . In this case . And I'm not sure why that is . I think , you know , maybe Middle East seems like a long way away from the Rocky Mountain region .

Speaker #1: I'm not sure why we're not seeing it. And, you'll knock on wood, it hasn't had any negative impact on us so far.

Speaker #1: But we really haven't seen any any impact . And I'm not hearing about it in my conversations with clients or prospects or , or with our folks in the field at this point , that could change .

Scott Wylie: Right now, I would say our days are much more consumed by all this market disruption that we're seeing from the M&A activity than it is kind of that global economic stuff, political stuff.

Speaker #1: I don't know , but but right now , I would say our days are much more consumed by all this market disruption that we're seeing from the M&A activity than it is , you know , kind of that global economic stuff , political stuff

Bill Dezellem: Again, that's very helpful. Thanks for taking the question.

Speaker #9: Again, that's very helpful. Thanks for taking the question.

Scott Wylie: Yep. Thank you, Bill.

Speaker #1: Yeah. Thank you, Bill.

Operator 2: Thank you. Our next question comes from the line of Ross Haberman with RLH Investments.

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

Speaker #3: Thank you. Our next question comes from the line of Ross Haberman with RLH Investments.

Ross Haberman: Morning. I'm sorry, Scott. I got on a bit late, so if you address these questions, I do apologize. Could you talk about loan growth and what your expectation is for 2026 in terms of net loan growth? What offices do you think it's going to originate or what are you seeing better demand from? Is it Arizona, Colorado, or elsewhere? Thank you.

Speaker #10: Good morning . Good morning . I'm sorry Scott . Scott . I got on a bit late . So if you if you address these questions , I , I do apologize .

Speaker #10: Could you talk about loan growth and what and what your expectation is for 26 in terms of net loan growth and what , what offices do you think it's going to it's going to originate or what are you seeing better demand from ?

Speaker #10: Is it Arizona, Colorado, or elsewhere? Thank you.

Scott Wylie: Yeah. Great question. We didn't really talk specifically about that. I did mention that we're seeing loan growth across the platform in terms of geography and industry type. I think that we're not seeing weakness one place or another. We're also not stretching anywhere. I would tell you that our owner-occupied CRE number was getting a little higher than we felt comfortable, and we have pulled that down. I don't have that number handy. Is it from $260-something, $360 to down to like $325 now?

Speaker #1: Yeah . So great question . We didn't really talk specifically about that . I did mention that we're seeing Loan growth across the platform in terms of geography and industry type and , and so I think that that we're not seeing weakness in one place or another .

Speaker #1: We're also not stretching anywhere. I would tell you that our owner-occupied CRE number was getting a little higher than we felt comfortable.

Speaker #1: And we have pulled that down . I don't have that number handy . Is it from 263 , 62 down to like 325 now ?

Ross Haberman: Yeah. In that range, yeah.

Julie Courkamp: Yeah. In that range, yeah.

Speaker #6: Yeah, in that range. Yes.

Scott Wylie: That's a change that we're driving. We're actually seeing probably more owner-occupied CRE demand than ever, but we're being very selective there. The guidance we've given for balance sheet growth is high single digits, but I did say early in the call that we're up 11% year-over-year in loans. We're up 13% year-over-year in deposits. I don't think we're ready to jump out and say we're going to see mid-teen growth this year, but it does seem like 10% would be a reasonable guesstimate from where we are today.

Speaker #1: And and so I mean , that's a change that we're driving . We're actually seeing probably more owner occupied CRE demand than ever , but we're being very selective there .

Speaker #1: You know , the guidance we've given for balance sheet growth is high single digits . But I did say early in the call that , you know , we're up 11% year over year in loans .

Speaker #1: We're up 13% year over year in deposits. So, I don't think we're ready to jump out and say, you know, we're going to see mid-teen growth this year.

Speaker #1: But it does seem like, you know, 10% would be a reasonable guesstimate from where we are today.

Ross Haberman: Is a lot of that coming from the Arizona branch or Montana?

Speaker #10: Is, is a lot of that comes from the Arizona branch, or, or Montana?

Scott Wylie: What was the beginning of the question? Our loans?

Speaker #8: What was the beginning .

Speaker #1: Of the question ? Our

Ross Haberman: I said, is a good amount of the growth of the loans coming from Arizona and/or Montana?

Speaker #10: I said it is a good amount of the growth of the loans coming from a Arizona and or and or Montana .

Scott Wylie: I would say in the backward-looking data, no. Neither one. I would also tell you that we're seeing some nice opportunities in both markets, and I think that you're going to see nice growth out of both those markets in the next 12 to 24 months. We've got really good people there, and they're working hard. We do live the market disruption in Colorado more than elsewhere, but it's everywhere. We're seeing it in Wyoming. We're seeing it in Arizona. We think there are lots of opportunities for us in Montana, too. The numbers are just bigger in Colorado and more immediate for us because we're in Denver, but

Speaker #1: I would say in the in the backward looking data , no , neither one . But I would also tell you that we're seeing some nice opportunities in both markets .

Speaker #1: And I think that you're going to see nice growth out of both those markets in the next 12 to 24 months. We've got really good people there, and they're working hard.

Speaker #1: And and I , you know , we do live the market disruption in Colorado more than elsewhere . But it's everywhere . You know , we're seeing it in Wyoming .

Speaker #1: We're seeing it in Arizona . We think there are lots of opportunities for us in Montana , too . So , you know , the the numbers are just bigger in Colorado and more immediate for us because we're in Denver .

Scott Wylie: The numbers are just bigger in Colorado and more immediate for us because we're in Denver, but we're seeing opportunities everywhere. You know, Ross, very well about our theory about market share. We just have tiny market share, and I think by just showing up and doing a good job of what we do differently than everybody else, which is, we're local, we're trusted, and we're expert. Those three things play really well in the market today.

Ross Haberman: Right

Speaker #1: But but we're seeing opportunities everywhere . And , you know , Ross very well about , you know , our theory about market share .

Scott Wylie: We're seeing opportunities everywhere. You know, Ross, very well about our theory about market share. We just have tiny market share, and I think by just showing up and doing a good job of what we do differently than everybody else, which is, we're local, we're trusted, and we're expert. Those three things play really well in the market today.

Speaker #1: I mean , we just have tiny market share . And I think by just showing up and doing a good job of what we do differently than everybody else , which is , you know , we're local , we're trusted , and we're expert .

Speaker #1: Those three things play really well in the market today.

Ross Haberman: A number of other banks I'm talking to are really beginning to see some pressure on the deposit side, particularly from some of the bigger banks in different markets. Are you seeing pressure to raise deposit rates on the deposit side, and is it coming from the bigger banks in your markets today?

Speaker #10: Are you seeing I'm a number of other banks . I'm talking to are seeing are really beginning to see some pressure on the deposit side , particularly from some of the bigger banks in different markets .

Speaker #10: Are you seeing pressure to raise deposit rates on the deposit side? And is it coming from the bigger banks in your markets today?

Scott Wylie: I would take a stab at that question, David, and then maybe I'd be really interested in your answer, too, because it seems like less to me, but you answer from what you're seeing. My answer, Ross, would be, of the conversations I'm having, people are calling in, or I'm calling them, and they're saying, "I don't want to be with a national bank. I want to be with a local bank." They don't even say the word rate. They say, "When can I move?" We've actually created here a conversion concierge, the internal people call it. I call it the SWAT team, the switch SWAT team, actually. When we tell people that we have a switch SWAT team that will come out and help them transfer their accounts here and simplify the whole conversion process, they love it.

Speaker #1: You know , I , I would take a stab at that question , David . And then maybe and be really interested in your answer too , because it seems like less to me , but , but , but do you answer from what you're seeing ?

Speaker #1: My answer , Ross , would be the conversations I'm having people are calling and or I'm calling them and they're saying , I don't want to be with a big national bank .

Speaker #1: I want to be with a local bank. And they don't even say the word 'rate.' They say, 'When can I move?'

Speaker #1: And we've actually created here a conversion concierge , the internal people call it , I call it the Swat team . The Swat team actually .

Speaker #1: And, and, and what we tell people is that we have a SWAT team that will come out and help them transfer their accounts here.

Speaker #1: And simplify the whole conversion process . They love it . And again , they're just , I mean , I , I literally don't hear the question , well , what rate are you going to give me ?

Scott Wylie: Again, I literally don't hear the question, "Well, what rate are you going to give me?" Again, I think we have a really extraordinary window of opportunity here, and we're doing everything we can to jump through it. That'd be my answer. David, what are you seeing in terms of the day-to-day stuff?

Speaker #1: And so, again, I think we have a really extraordinary window of opportunity here. And we're doing everything we can to jump through it.

Speaker #1: But that'd be my answer . David , what are you seeing in terms of the day to day stuff ?

David Weber: Yeah, my simple answer would be, is the pricing market for deposits still highly competitive? Yes. Am I fielding a bunch of calls from our bankers saying we need to raise deposit rates? No. I think those are the dynamics that we're seeing in our markets at the moment.

Speaker #5: Yeah, my simple answer would be: is the pricing market for deposits still highly competitive? Yes. Am I fielding a bunch of calls from our bankers saying we need to raise deposit rates? Yes.

Speaker #5: No. So, I think that those are the dynamics that we're seeing in our markets at the moment.

Ross Haberman: Just one final question, if I may. Have you announced any new plans for new branches in any of your markets, or if you found something small to buy as a fit in, or would you consider buying that today, or any growth you really want it to be organic?

Speaker #10: And just one final question , if I may . Have have you announced any new plans for new for new branches in in any of your in , in any of your markets ?

Speaker #10: Or if you found something small to buy as a , as a fit in or would you consider buying that , that today or any growth you really want it to be organic ?

Scott Wylie: Well, we're very focused on organic growth, without a doubt. We haven't talked about it because we don't have anything to talk about yet, but as part of the whole market disruption thing, we're seeing really good people that are available that we're trying to bring here. Some of those are, well, most of them, and so far, all of them have been in our existing footprint. There are some that are in adjacent footprints that would be very attractive to us. Hopefully, we'll have something to talk about later this year there. That would be a big plus as far as I'm concerned. If we could bring a couple of well-established teams that want our toolbox to be able to go out and sell with, that would be fantastic in New Bank.

Speaker #1: Well , we're very focused on organic growth , without a doubt . I , we , we haven't talked about it because we don't have anything to talk about yet , but , but as part of the whole market disruption thing , we're seeing really good people that are available , that we're trying to bring here .

Speaker #1: And some of those are , well , most of them so far , all of them have been in our existing footprint . But there are some that are in adjacent footprints that would be very attractive to us .

Speaker #1: And, you know, hopefully we'll have something to talk about later this year there. That would be a big plus for us.

Speaker #1: I'm concerned if we could bring a couple of well-established teams that want our toolbox to be able to go out and sell with.

Speaker #1: That would be fantastic. In new markets.

Ross Haberman: Okay. Thanks again for all your help. The best of luck. Have a good weekend, guys. Thank you.

Speaker #10: Thanks again for all your help . The best of luck . Have a good weekend , guys . Thank you .

David Weber: Thanks, Ross.

Speaker #1: Thanks , Ross .

Operator 2: Thank you. As I see no further questions in the queue, I will conclude the session and turn it back to management for closing remarks.

Operator: Thank you. As I see no further questions in the queue, I will conclude the session and turn it back to management for closing remarks.

Speaker #3: Thank you. And as I see no further questions in the queue, I will conclude the session and turn it back to management for closing remarks.

Scott Wylie: Well, thank you, and appreciate everybody dialing in on the call today. We talked about some of the noise in Q1 that was built off of the noise in Q2, but clearly, we're seeing really nice trends in operating leverage that's translating into great EPS results. Again, if you kind of back up and look at that year-over-year, we've seen a nice multi-year trend. Our NIM's continuing to improve. Organic growth is continuing across the platform. Our asset quality continues to be very strong, and we don't see anything today that would change that. I think that's a very encouraging referendum on the credit quality that we pursue here. Our efficiency ratio has really trended down nicely from 79% a year ago to 73%, and that's not going to stop, I don't think.

Speaker #1: Well, thank you, and appreciate everybody dialing in on the call today. You know, we talked about some of the noise in Q1.

Speaker #1: That was built off of the noise in Q2, but clearly, you were seeing really nice trends in operating leverage. That's translating into great EPS results.

Speaker #1: And again, if you kind of back up and look at that year over year, we've seen a nice multiyear trend. Our NIMs continue to improve, and organic growth is continuing across the platform.

Speaker #1: Our asset quality continues to be very strong. And we don't see anything today that would change that. And I think that that's a very encouraging referendum on the credit quality that we pursue here.

Speaker #1: Our efficiency ratio has really trended down nicely from 79% a year ago to 73% . And that's not going to stop . I don't think , you know , our goal here is to get our ROA back over 1% with our capital efficiency is going to drive a nice ROE in the low teens in .

Scott Wylie: Our goal here is to get our ROA back over 1% with our capital efficiency is going to drive a nice ROE in the low teens and really, I think, get First Western back towards a financial performance where we should be. With that, thanks everybody for dialing in. We really appreciate the support and your interest in First Western. Have a great weekend.

Speaker #1: And really , I think , get first Western back towards a financial performance where we should be . So with that , thanks everybody for dialing in .

Speaker #1: We really appreciate the support and your interest in First Western. Have a great weekend.

Operator 2: This concludes our conference. Thank you for participating, and you may now disconnect.

Operator: This concludes our conference. Thank you for participating, and you may now disconnect.

Q1 2026 First Western Financial Inc Earnings Call

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