First Western Financial, Inc.

And good day. Thank you for standing by. Welcome to the first Western Financial Q1 2022 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. Please be advised that today's conference is being recorded. To ask a question during this session, you will need to press star 1 on your telephone. If you require any assistance, please press star 0. I would now like to hand the conference over to the speaker of today's call, Mr. Tony Rossi of Financial Profile. You may begin.

Thank you, Latonya. Good morning, everyone, and thank you for joining us today for First Western Financial's first quarter 2022 earnings call. Joining us from First Western's management team are Scott Wiley, Chairman and Chief Executive Officer, and Julie Korkamp, Chief Financial and Chief Operating Officer. We will use the 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 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. 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 gap to non-gap measures. And with that, I'd like to turn the call over to Scott. Scott?

Thanks, Tony, and good morning, everybody. There were a number of macroeconomic and geopolitical headwinds that emerged during the first quarter of 2022 to create a more challenging operating environment than we expected. However, we were still able to deliver strong financial performance, primarily due to our ongoing strong operating performance and the positive impact of the Teton Financial Services acquisition, the positive impact that it is having on our level profitability, even before we realized most of the cost savings anticipated from this transaction. In the first quarter, we had $5.5 million in net income, or $0.57 per share, and $0.61 per share, excluding the M&A expense, while generating increases in all of our returns compared to the prior quarter. On an adjusted basis, excluding acquisition-related expenses, our return on average assets increased one basis point to 92 BIPs. Our return on average equity increased four basis points to 10.70. And our return on tangible common equity increased 220 basis points to 12.41%. We were able to deliver this improvement despite a challenging environment that impacted our level of organic loan growth this quarter. We typically see some level of seasonality in the first quarter that impacts our level of loan production, which definitely occurred again this year, particularly in January and February. We've also seen an increase in the competitive environment in our markets, somewhat driven by new entrants and acquisition activity. We operate in very attractive markets, particularly in Colorado, and more banks are making efforts to build a presence here. In order to do that, many of them are essentially trying to buy market share by offering very low, long-term fixed-rate loans. As always, we're maintaining our underwriting and pricing discipline, and our unwillingness to compete on price is having some level of impact on our loan production. Particularly ahead of the coming interest rate increases, we believe that we're best served by not putting low, long-term loans fixed-rate loans on our balance sheet, even if that costs us a bit in terms of loan growth and net interest income in the short term. In addition, we saw a significant increase in the level of payoffs during the first quarter. Some of this is related to completion of construction projects that we expected to occur late last year but got pushed into the first quarter. We also had quite a bit of payoffs related to liquidity events and the sale of businesses and properties. As we talked about in the past, we have a very sophisticated client base consisting of high net worth individuals and entrepreneurs, and they make intelligent decisions and are opportunistic when it comes time to manage their assets. They've seen substantial appreciation of value in their businesses and investment properties, and it seems like some of our clients have decided to capitalize on what they think are near peak values for these assets. This high level of payoffs resulted in excess liquidity this quarter and that impacted both net interest income and net interest margin. However, we saw improving trends in March with $44 million in loan growth, excluding PPP loans, in the month. This momentum has continued, and based on the current trends, we're seeing loan production, the trends we're seeing in loan production to start the second quarter. We believe that we'll have good opportunities to redeploy our assets excess liquidity into higher yielding assets in the coming months. Despite the more challenging operating environment, our asset quality remains exceptional with non-performing assets remaining at just 17 bps of total assets, another quarter with an immaterial amount of net charge-offs. Moving to slide four, our strong profitability this quarter led to increases in book value and tangible book value per share of just under 2%, which goes against the broader industry trend this quarter with many banks reporting declines in book value per share due to the volatility in AOCI. Our success in protecting and continuing to grow our book value is directly attributable to the strategic decision we made last year to retain our excess liquidity rather than putting it into investment portfolio. With the prospect of higher rates on the horizon, we felt we were better served by retaining the excess liquidity and passing up the small amount of incremental interest income that we would have received from growing the investment portfolio. Because of that decision, we've been able to protect our book value while now having significant liquidity that we can deploy at higher rates than what we would have gotten last year. As with our decision not to put on low long-term fixed rate loans in the current environment, This reflects our commitment to operating the company with a long-term perspective and not making short-term decisions to support near-term earnings growth that will ultimately come back to hurt the company in the future. On slide five, we'll look at the performance of our private banking, commercial banking, and trusted investment management businesses. This is represented by the pre-tax earnings of our wealth management segment. Compared to the fourth quarter of 2021, Our pre-tax earnings increased 8.5% in this segment quarter over quarter, again reflecting the positive impact of the Teton acquisition. In the first quarter of 2022, our wealth management segment accounted for 96% of consolidated pre-tax earnings as our mortgage business continues to return 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. Excluding PPP, our total loans increased $11 million from the quarter end, in spite of the high level of payoffs I talked about earlier. Over the long term, we continue to see very strong loan growth, both organically and through our acquisitions. Our non-PPP loans are up 41% year over year, and bank-originated loans are up 28%, excluding PPP. We grew our CNI portfolio by 16% during the first quarter, but this was offset by the payoffs that occurred in the construction and CRE portfolios. We had $102 million in loan production this quarter, with almost half of that coming in the month of March, but we had $154 million in payoffs, which was significantly higher than the levels we've been seeing over the past several quarters. With interest rates rising and our commitment to maintaining our pricing discipline, our average yield on new loan production increased 55 basis points from the prior quarter to 4.07%. Moving to slide seven, we'll take a closer look at our deposit trends. Our total deposits increased 66 million from the end of the prior quarter. Our new deposit development efforts are consistently resulting in new deposit relationships, with new accounts accounting for $42 million of the deposit inflows during the first quarter. Turning to trust and investment management on slide 8, our total assets under management increased $153 million from the end of the prior quarter due to market declines, with the most significant impact coming in the investment agency balances. The lower value of assets due to market decline, was partially offset by $48 million of inflow into new accounts. Year over year, AUM was up 11%, reflecting the steady growth we're generating in this area. Now I'll turn the call over to Julie for further discussion of our financial results. Julie?