First Western Financial, Inc.

Thank you for standing by and welcome to the first Western Financial Q4 2021 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentations, there'll be a question and answer session. To ask a question at that time, please press star then one on your touchtone telephone. As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Mr. Tony Rossi of Financial Profile, so you may begin.

Thank you, Valerie. Good morning, everyone, and thank you for joining us today for First Western Financial's fourth quarter 2021 earnings call. Joining us from First Western's management team are Scott Wiley, chairman and chief executive officer, and Julie Korkamp, chief financial officer. We'll use a slide presentation as part of our discussion this morning. If you have not done so already, please visit the events and presentations page of First Western's investor relations website to download a copy of the presentation. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the financial performance and financial condition of First Western Financial that involves risks and uncertainties, including the impact of the COVID-19 pandemic. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. I would also direct you to read the disclaimers in our earnings release and investor presentations. 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. Scott?

Thanks, Tony, and good morning, everybody. Our fourth quarter performance capped another strong year of delivering on the vision we communicated at the time of our IPO in 2018. As we saw in Q3, there's quite a bit of noise in the reported numbers, which we will unpack for you today. We continue to realize more operating leverage and improve our level of profitability as we scale the company through a combination of organic growth, expansion, and accretive acquisitions. By successfully striking a balance between the new business development and risk management, we generated exceptional growth while maintaining pristine credit quality despite the impact of the pandemic. It's a testament to the value proposition that we offer that we've continually been able to generate strong growth by adding new clients that present us with very high-quality lending opportunities that meet our strict pricing and underwriting criteria while funding those loans with low-cost deposits. The success we've had in executing on our vision for First Western has created exceptional value for our shareholders. Since our IPO in mid-2018, our tangible book value per share has increased by 116%, with more than a 20% increase just in 2021. We ended 2021 with another quarter of exceptional balance sheet growth, driven by the strong commercial banking platform we've built over the last two years. and the growing contribution of new offices and bankers that we've added. A record quarter of loan production, excluding PPP loans, resulted in organic growth of 25% on an annualized basis in Q4, our highest level since coming public. Well, organic deposit growth was also strong at 10% annualized. Our asset quality remains exceptional with non-performing assets declining to 17 basis points of total assets in another quarter with an immaterial amount of net charge-offs. Complementing this strong organic growth was the completion of our acquisition of Teton Financial Services just over five months after announcing the transaction. At the time of the announcement, we estimated that the transaction would be slightly dilute of the tangible book value with an earn-back period of just under half a year. As a result of a higher stock price and slightly lower deal costs, the transaction is accretive to tangible book value, which further improves the attractive economics of this deal. The integration is proceeding smoothly and on schedule, including the trust and mortgage systems that have already been integrated. We've set the core banking system conversion and consolidation of the Jackson Hole locations for May. Moving to slide four, our earnings this quarter were impacted by acquisition-related expenses. Excluding those expenses, our earnings were down from the prior quarter, primarily due to a lower level of mortgage activity given the seasonal slowdown we see at the end of the year. We also saw higher provision due to loan growth in Q4, further impacting Q4's reported results. However, we continue to see strong increases in book value and tangible book value per share driven by our financial performance and the accretive impact of the Teton Financial Services transaction. Turning to slide five, we'll look at the performance of our private banking, commercial banking, and trust investment management businesses. This is represented by the pre-tax earnings of our wealth management segment. On a year-over-year basis, our pre-tax earnings increased 90% in this segment. After the outsized earnings we generated in the mortgage business in 2020, we're seeing our other businesses filling in that earnings gap, so to speak, with a more sustainable source of earnings growth, while our mortgage business returns to its intended role as a complementary source of fee income. Turning to slide six, we'll look at the trends in our loan portfolio. The Teton acquisition contributed $252 million to our period end balances. This amount includes our preliminary purchase accounting adjustments. There could be some small additional adjustments as they're finalized, but nothing particularly material is expected. As it stands now, the loan marks are lower than what we had initially expected when the deal was announced. On an organic basis, we had $225 million in loan production this quarter, which was a record level and 68% higher than the prior quarter. Loan payoffs were also higher than the prior quarter at $122 million, but the strong production more than offset the runoff and results in $98.5 million in net organic loan growth, which increases across most of our portfolio. The strongest growth came in our commercial real estate portfolio, where there's more demand in the current environment. Over the longer term, we remain focused on growing our C&I portfolio at a faster rate than our other portfolios, but we have the broad business development capabilities to enable us to be flexible and pursue whatever asset class provides the most attractive opportunities at any given point in time. For the second consecutive quarter, our cash securities and other portfolio also grew due to more demand among our private banking clients for investment management secured lines of credit, although the level of growth is masked by the continued runoff of PPP loans that are also held in this portfolio. Moving to slide seven, we'll take a closer look at our deposit trends. Our total deposits increased $423 million from the end of the prior quarter, with $379 million coming through the Teton acquisition and $44 million through organic growth. The $60 million temporary deposit that we mentioned on our last call did not run off in its entirety in the fourth quarter as expected. $50 million remained At the end of the year, it is expected to run off early this year as the proceeds from this liquidity event are distributed to partners of the real estate fund. When we saw some deposit outflows among our existing clients during the fourth quarter, this was more than offset by our successful new business development efforts that resulted in $110 million in new deposit accounts being opened in the fourth quarter. Moving to slide eight, we'll look at our progress in building our commercial banking platform which is providing more loan diversification and improving our deposit base by adding low-cost transaction deposits. Commercial loans increased 95 million from the prior quarter and 213 million from the prior year. Commercial deposits increased 216 million from the prior quarter and 424 million from the prior year. This represents 23% commercial loan growth and 43% commercial deposit growth over the prior year. It is reflective of the strong momentum we have in growing our commercial client base. Turning to trust and investment management on slide 9, our total assets under management increased $1.1 billion, or 17.5%, from the end of last year. This increase was due to a combination of closing on Teton financial acquisition, contributions to the existing accounts and new accounts, as well as improving market conditions, resulting in an increase in the value of assets under management. During the fourth quarter, new clients accounted for approximately $44 million of our growth in assets under management. With that, I'll turn the call over to Julie for a further discussion of our financial results. Julie?