First Western Financial Q2 Earnings Call Highlights

First Western Financial (NASDAQ:MYFW) reported second-quarter 2026 net income of $6.7 million, or $0.57 per diluted share, as deposit growth, net interest margin expansion and stable credit quality supported profitability. Net income was 129% higher than in the year-earlier quarter, while diluted earnings per share increased 119%, Chairman and Chief Executive Officer Scott Wylie said during the company’s earnings call. Tangible book value per share rose 2.6% during the quarter to $25.53. “We executed well in the second quarter and saw positive trends in many areas, including deposit growth, net interest margin expansion, well-managed expenses, and stable asset quality,” Wylie said. Loans and deposits increase Loans held for investment increased $23 million from the first quarter, marking the company’s fifth consecutive quarter of loan growth, according to Chief Operating Officer Julie Courkamp. Total loans increased 7% from a year earlier. Second-quarter new loan production totaled $115 million and was diversified across markets and loan types, with an emphasis on relationship-based lending. The average rate on new loan production was 6.37%, up six basis points from the prior quarter and above the 5.89% average rate on loan payoffs during the period. Wylie said the company experienced approximately $100 million in quarterly loan payoffs and paydowns. While production exceeded that amount, he said it was not sufficient to generate the degree of balance-sheet growth management had anticipated. Management cited competition in its markets, particularly on loan pricing, as a factor in its growth outlook. Wylie said First Western has chosen to remain disciplined on pricing and loan terms, though the company may become “a little more competitive” during the second half to support asset growth. Total deposits rose from the end of the first quarter and were up 12.6% year over year. Growth in money-market accounts was partly offset by lower time deposits. Average non-interest-bearing deposits increased $18 million, or 5.1%, during the quarter. Chief Financial Officer David Weber said the company’s spot deposit cost was 2.8% at June 30. He said First Western has not seen significant rate pressure from its existing depositors, but the cost of acquiring new deposits has increased as banks compete to retain deposits amid market disruption. The company’s time-deposit portfolio carried a 3.64% spot rate, Weber said, adding that management sees limited remaining opportunity for lower repricing rates in that portfolio. Courkamp said the principal opportunity for further funding-cost improvement is expanding the proportion of non-interest-bearing deposits. Margin expansion drives revenue growth Gross revenue increased 1.8% from the prior quarter and 16% from the second quarter of 2025. The sequential increase primarily reflected higher net interest income, partially offset by lower non-interest income. Net interest income rose 4.3% sequentially, aided by a higher net interest margin and the quarter’s higher day count. Net interest margin expanded nine basis points from the first quarter to 2.9%. Weber said the margin improvement reflected a four-basis-point increase in the yield on interest-earning assets, driven by a shift toward higher-yielding loans, as well as a four-basis-point decline in funding costs from improved funding mix and lower time-deposit rates. Net interest income increased 21.7% from a year earlier, supported by a 23-basis-point year-over-year expansion in net interest margin and higher average interest-earning assets. Management said margin expansion could continue, although it is weighing the trade-off between further margin gains and faster balance-sheet growth. Wylie said a more flexible approach to loan pricing could help the company genera...