First Western Q1 2026 slides: earnings surge 85%, efficiency improves

First Western Financial Inc (NYSE:MYFW) presented its first quarter 2026 results on April 24, 2026, showcasing substantial improvement across key financial metrics and reinforcing its position as a diversified regional bank serving Colorado, Arizona, Wyoming, California, and Montana. The company’s presentation highlighted a sixth consecutive quarter of improvement in critical performance indicators, with particular strength in profitability and operational efficiency.

The earnings significantly exceeded market expectations, with diluted earnings per share of $0.63 beating the consensus estimate of $0.44 by 43.18%. Despite this strong performance, the stock declined modestly by 2.07% to close at $26.04, reflecting broader market conditions rather than company-specific concerns.

First Western reported net income of $6.2 million, or $0.63 per diluted share for the first quarter of 2026, representing an 85% increase from the prior quarter and a 47% increase compared to the same period last year. Pre-tax, pre-provision net income grew by $2.0 million (38%) from the fourth quarter of 2025, demonstrating improved underlying profitability.

As shown in the following chart, the company’s earnings momentum has accelerated significantly over the past year, with net income available to common shareholders climbing from $4.2 million in the first quarter of 2025 to $6.2 million in the most recent quarter.

Tangible book value per share increased 3.3% from $24.07 in the fourth quarter of 2025 to $24.87 in the first quarter of 2026, reflecting solid capital accumulation and value creation for shareholders.

The company demonstrated strong momentum in both loan and deposit gathering during the quarter. Total loans held for investment increased by $40.7 million (1.5%) to reach $2.69 billion, marking the fourth consecutive quarter of loan growth and a 12% year-over-year increase.

The following chart illustrates the loan portfolio composition and production trends, with new loan originations of $115.8 million at an average rate of 6.31%, consistent with the prior quarter.

Growth was diversified across markets and loan types, with particular strength in 1-4 family residential and commercial and industrial portfolios. The company emphasized prudent risk management and conservative underwriting standards supported by new banking talent acquisitions.

Deposit gathering efforts proved equally successful, with total deposits increasing by $95 million (3.5%) from $2.75 billion in the fourth quarter of 2025 to $2.84 billion in the first quarter of 2026. Notably, noninterest-bearing deposits rose 10.2% from $345 million to $380 million, primarily due to operating account fluctuations.

The deposit portfolio composition shown below demonstrates the company’s funding diversity, with money market deposit accounts representing the largest component at $1.95 billion.

Net interest income increased by $0.3 million (1.5%) from $20.6 million in the fourth quarter of 2025 to $20.9 million in the first quarter of 2026, marking the sixth consecutive quarter of growth. The net interest margin expanded by 10 basis points from 2.71% to 2.81%, primarily driven by a 13 basis point decrease in the cost of funds as the company reduced deposit rates in line with short-term rate decreases during 2025.

The following charts demonstrate the consistent upward trajectory in both net interest income and net interest margin, with year-over-year net interest income growth of 19.7%.

Gross revenue increased 3.4% from $26.7 million in the fourth quarter to $27.6 million in the first quarter, with net interest income representing 75.8% of total revenue and non-interest income contributing 24.2%. This diversified revenue model provides stability and multiple growth avenues.

Non-interest income increased by $0.6 million (9.5%) to $6.7 million from the prior quarter, driven primarily by higher net gains on mortgage loans due to increased origination volume and growth in risk management and insurance fees from higher new case activity. Trust and investment management fees also increased for the third consecutive quarter.

The breakdown of non-interest income sources is illustrated below, showing the company’s wealth management and mortgage banking capabilities.

Trust and investment management assets under management totaled $7.23 billion as of quarter end, a slight decrease of 0.6% from the prior quarter due primarily to lower market values, partially offset by new account additions. Year-over-year, AUM increased 0.8% from $7.18 billion.

First Western achieved significant improvement in operational efficiency during the quarter. Non-interest expense decreased to $20.2 million in the first quarter of 2026 from $21.3 million in the fourth quarter of 2025, primarily due to a $1.4 million other real estate owned write-down in the prior quarter and a decrease in professional services expenses.

The efficiency ratio improved to 73.11% from 74.88% in the fourth quarter and 79.16% in the year-ago quarter, marking the sixth consecutive quarter of improvement. This demonstrates the company’s success in generating operating leverage through revenue growth combined with disciplined expense control.

Asset quality metrics showed positive trends across the board. Non-performing assets decreased by $3.3 million to $16.3 million in the first quarter, driven by the sale of the company’s last OREO property and ongoing loan paydowns. Non-accrual loans also decreased by $0.3 million to $16.3 million.

Most notably, the company recorded zero charge-offs during the quarter, and a credit event resolution on an individually analyzed loan led to a provision release of $0.7 million. The allowance for credit losses as a percentage of total loans stood at 0.77%, down from 0.81% in the prior quarter.

The following charts illustrate the improving asset quality trends, with non-performing assets declining to 0.50% of total assets and net charge-offs at zero.

Management outlined an optimistic near-term outlook based on several positive momentum indicators. The company expects its markets to perform well and plans to leverage its strong balance sheet and franchise to attract new clients and banking talent amid market disruption. New leadership in Arizona is anticipated to drive growth opportunities.

Key expectations include solid loan and deposit growth continuing throughout 2026, further expansion in net interest margin (though at a slower pace than 2025), more robust business development in wealth management, higher mortgage production from new mortgage loan originators, and increased operating leverage from revenue growth combined with disciplined expense control.

Management projects loan and deposit growth at high single-digit rates and targets a normalized net interest margin of 315-320 basis points over time. The company expects no significant deterioration in asset quality given current portfolio trends and client performance.

The company’s capital position remains strong, with consolidated Tier 1 capital to risk-weighted assets at 9.90% and total liquidity funding sources of $1.35 billion as of March 31, 2026. The loan-to-deposit ratio of 94.7% provides room for continued balance sheet growth while maintaining appropriate liquidity buffers.

CEO Mark Smith stated during the earnings call, "Our strong first quarter results reflect our disciplined approach to growth and efficiency. We are committed to maintaining our momentum through strategic initiatives in wealth management and mortgage banking."

The company acknowledged potential risks including competitive loan pricing pressures, anticipated seasonal deposit outflows in the second quarter, and macroeconomic uncertainties such as geopolitical events. However, management expressed confidence in the company’s ability to navigate these challenges while continuing to deliver improved financial performance and shareholder value creation.

Full presentation:

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