SECOND QUARTER 2013 FINANCIAL HIGHLIGHTS
Net interest income (pre-provision) was flat compared to Q1 and has been impacted by three main factors:
- Loan pricing competition and low market rates;
- Declining loans outstanding, also due to increased market competition; and
- Lower investment portfolio yields in 2013.
Efforts of management to reduce deposit rates consistent with market, improve investment yields, and maintain loan pricing have improved net interest margin from 3Q12 up 45 bps to 3.88%. The provision for credit losses was a credit of $230 thousand, largely driven by the improvement in credit quality and declining loans outstanding.
Non-interest income was relatively flat compared to Q1, when 1Q13 and 2Q13 are adjusted for performance fees. Revenue in 1Q13 benefited from the recognition of annual performance fees at FWCM and changes in valuations of Bank-owned assets. Although decreasing slightly with markets in 2Q13, assets under management have increased $540 million, or 14%, compared to 4Q12, which was driven by higher market values and new business.
Expenses were up slightly over Q1 but remain below 2012 levels, reflecting earnings improvement initiatives management has undertaken. Year-to-date earnings are positive at the Bank.
With weaker loan trends, management worked to reduce excess liquidity in 4Q12 into 2Q13, reflected in the decline in deposits of $170 million from September 30. First Western’s revenue mix continues to be approximately 50/50, which is well above peers and indicates the diversity and strength of revenues at First Western. Bank capital ratios continued to improve and continue to exceed the regulatory “well-capitalized” standards.