First Western Financial, Inc.
Second Quarter 2016 Financial Highlights
We are very pleased with our second quarter earnings results and continued asset growth. First Western reported pre-tax net income of $1.9 million for the quarter ended June 30, 2016 compared to pre-tax net income of $1.1 million for the same period in 2015. First Western substantially increased revenues by $2.4 million (or 20%) compared to the same period in 2015, which drove an increase in net income of $0.5 million (up 58%). Total assets have increased 25% over the last twelve months, and our assets under management are at historic highs, $5 billion as of June 30, 2016. Non-interest income is largely made up of recurring fee revenues and now represents almost 60% of total revenues.
Net Interest Income (pre-provision) is up 4% and non-interest income is up 23% year-over-year. Operating earnings are up year-over-year by 35% to $3.2mm. The primary drivers of this growth are as follows:
- Total net loans outstanding are up $113.0 million or 19% compared to June 30, 2015, but as we continue to experience pressure from competition, change the mix of loans funded, and remain in a low rate environment, our loan yields continue to decline. The yield on our loan portfolio has decreased 23 bps to 4.22% compared to June 30, 2015.
- Total deposits are up $236 million or 45% compared to June 30, 2015. With this successful growth in deposits, we have only modestly increased our cost of interest-bearing deposits, up 4 bps compared to June 30, 2015 to 0.39%.
- The year-over-year decrease in net interest margin is due primarily to the increase in average liquidity assets as well as the decrease in loan yields.
- First Western has funded a total of $174.1 million in mortgages year to date, $33.0 million are held for sale as of June 30, 2016, $17.0 million are retained as loans in our portfolio, and the remaining $124.1 million have been profitably sold in the secondary markets.
- Expenses have increased due to general business growth, primarily in the areas of salaries and employee benefits and occupancy related to the mortgage services group and expansion into the Aspen market.
We continue to manage credit and margins as we look to continually improve our earnings outlook, through expense management and organic growth.
Chief Financial Officer
August 1, 2016