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First Western Reports Second Quarter 2022 Financial Results

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First Western Financial, Inc.
First Western Financial, Inc.

Second Quarter 2022 Summary

  • Net income available to common shareholders of $4.5 million in Q2 2022, compared to $5.5 million in Q1 2022 and $6.3 million in Q2 2021

  • Diluted EPS of $0.46 in Q2 2022, compared to $0.57 in Q1 2022 and $0.76 in Q2 2021

  • Total income before non-interest expense of $26.6 million in Q2 2022, compared to $26.7 million in Q1 2022 and $23.7 million in Q2 2021

  • Total loans held for investment increased at annualized rate of 45.4%

  • Book value per common share increased to $24.06, or 1.6%, from $23.68 as of Q1 2022, and was up 14.5% from $21.01 as of Q2 2021

DENVER, July 28, 2022 (GLOBE NEWSWIRE) -- First Western Financial, Inc., (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the second quarter ended June 30, 2022.

Net income available to common shareholders was $4.5 million, or $0.46 per diluted share, for the second quarter of 2022. This compares to $5.5 million, or $0.57 per diluted share, for the first quarter of 2022, and $6.3 million, or $0.76 per diluted share, for the second quarter of 2021.

Scott C. Wylie, CEO of First Western, commented, “We had a record quarter of loan production and loan growth as we continue to benefit from the stronger commercial banking platform we have built, the addition of new banking talent, and our expansion into new, attractive markets. Our strong loan growth enabled us to redeploy our excess liquidity into higher yielding earning assets and drive significant expansion in our net interest margin. As a result of the loan growth and margin expansion, we were able to generate a 10% increase in net interest income compared to the prior quarter and offset some of the weakness we experienced in non-interest income due to the challenging operating environment for the wealth management and mortgage banking industries.

“We expect many of the positive trends we experienced in the second quarter to continue in the second half of the year. Our loan pipeline remains very strong and is consistent with the size of the pipeline at the end of the first quarter. While we expect higher rates to begin impacting loan demand, particularly for commercial real estate loans, we believe our well diversified loan production platform will continue generating strong loan growth, while our asset sensitivity drives further expansion in our net interest margin. Combined with relatively stable expense levels and continued strong asset quality, we believe we are well positioned to deliver a higher level of earnings and returns over the remainder of the year,” said Mr. Wylie.

 

 

 

 

 

 

 

 

 

 

 

 

 

For the Three Months Ended

 

 

 

June 30, 

 

March 31, 

 

June 30, 

 

(Dollars in thousands, except per share data)

    

2022

    

2022

    

2021

 

Earnings Summary

 

 

  

 

 

  

 

 

  

 

Net interest income

 

$

20,138

 

$

18,284

 

$

14,223

 

Provision for loan losses

 

 

519

 

 

210

 

 

12

 

Total non-interest income

 

 

6,940

 

 

8,600

 

 

9,500

 

Total non-interest expense

 

 

20,583

 

 

19,358

 

 

15,523

 

Income before income taxes

 

 

5,976

 

 

7,316

 

 

8,188

 

Income tax expense

 

 

1,494

 

 

1,792

 

 

1,911

 

Net income available to common shareholders

 

 

4,482

 

 

5,524

 

 

6,277

 

Adjusted net income available to common shareholders(1)

 

 

4,742

 

 

5,922

 

 

6,331

 

Basic earnings per common share

 

 

0.47

 

 

0.59

 

 

0.79

 

Adjusted basic earnings per common share(1)

 

 

0.50

 

 

0.63

 

 

0.80

 

Diluted earnings per common share

 

 

0.46

 

 

0.57

 

 

0.76

 

Adjusted diluted earnings per common share(1)

 

 

0.49

 

 

0.61

 

 

0.77

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets (annualized)

 

 

0.71

%

 

0.85

%

 

1.22

%

Adjusted return on average assets (annualized)(1)

 

 

0.75

 

 

0.92

 

 

1.23

 

Return on average shareholders' equity (annualized)

 

 

7.89

 

 

9.98

 

 

15.17

 

Adjusted return on average shareholders' equity (annualized)(1)

 

 

8.35

 

 

10.70

 

 

15.30

 

Return on tangible common equity (annualized)(1)

 

 

9.16

 

 

11.57

 

 

17.47

 

Adjusted return on tangible common equity (annualized)(1)

 

 

9.69

 

 

12.41

 

 

17.62

 

Net interest margin

 

 

3.35

 

 

2.98

 

 

3.01

 

Efficiency ratio(1)

 

 

74.85

 

 

69.68

 

 

65.13

 


(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

Operating Results for the Second Quarter 2022

Revenue

Gross revenue (1) remained flat for the second quarter of 2022, at $26.9 million compared to the first quarter of 2022. Relative to the second quarter of 2021, gross revenue increased 13.5% from $23.7 million for the second quarter of 2021, primarily driven by growth in interest-earning assets.

(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

Net Interest Income

Net interest income for the second quarter of 2022 was $20.1 million, an increase of 10.1% from $18.3 million in the first quarter of 2022. The increase was due to an increase in yield on interest-earning assets due to the higher rate environment and the increase in average interest-earning assets resulting from strong loan growth in the second quarter of 2022, which drove an increase in average loans of $87.3 million, as well as an increase in net interest margin. We saw growth across most major loan categories with the largest increases in C&I and 1-4 family residential, as second quarter mortgage production was more heavily weighted towards loans that the Company retains in its loans held for investment portfolio.

Relative to the second quarter of 2021, net interest income increased 41.6% from $14.2 million. The year-over-year increase in net interest income was due to an increase in yield on interest-earning assets due to the higher rate environment and the increase in average interest-earning assets driven by an increase in average loans of $436.5 million compared to June 30, 2021, primarily a result of organic loan growth and the Teton Financial Services, Inc. (“Teton”) acquisition.

Net Interest Margin

Net interest margin for the second quarter of 2022 increased 37 bps to 3.35% from 2.98% in the first quarter of 2022, primarily due to higher yields on interest-earning assets and a more favorable earning asset mix.

The yield on interest-earning assets increased to 3.60% in the second quarter of 2022 from 3.20% in the first quarter of 2022 and the cost of interest-bearing deposits increased to 0.29% in the second quarter of 2022, from 0.23% in the first quarter of 2022.

Relative to the second quarter of 2021, net interest margin increased from 3.01%, primarily due to increased yields and volume on total loans as a result of strong loan growth, the Teton acquisition, and rising rate environment.

Non-interest Income

Non-interest income for the second quarter of 2022 was $6.9 million, a decrease of 19.3% from $8.6 million in the first quarter of 2022. This was primarily due to a $1.3 million decrease in net gain on mortgage loans due to a reduction in the amount of mortgage loans originated for sale and a $0.4 million decrease in trust and investment management fees, which were negatively impacted by lower equity and fixed income market valuations.

Relative to the second quarter of 2021, non-interest income decreased 26.9% from $9.5 million. The decrease was primarily due to lower mortgage segment activity driven by a 60.0% decline in refinance volume and a reduction in the amount of mortgage loans originated for sale, partially offset by higher bank fees and net gains on equity securities.

Non-interest Expense

Non-interest expense for the second quarter of 2022 was $20.6 million, an increase of 6.3% from $19.4 million in the first quarter of 2022. The increase was primarily due to an increase in salaries and employee benefits driven by increased mortgage commissions expense relating to the increase in portfolio mortgage production, additional sales headcount, and annual merit increases.

Relative to the second quarter of 2021, non-interest expense increased 32.6% from $15.5 million. The increase is primarily due to the addition of Teton’s operations at the end of 2021 which increased salary and benefits as well as occupancy expenses.

The impact of the mergers and acquisition activity is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

    

As of or for the Three Months Ended

 

 

June 30, 

 

March 31, 

 

June 30, 

 

 

2022

 

2022

 

2021

Adjusted Net Income Available to Common Shareholders(1)

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

4,482

 

 

$

5,524

 

$

6,277

Plus: acquisition related expenses

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

152

 

 

 

229

 

 

Professional services

 

 

274

 

 

 

112

 

 

70

Data processing(2)

 

 

(93

)

 

 

115

 

 

Technology and information systems

 

 

4

 

 

 

 

 

Marketing

 

 

5

 

 

 

70

 

 

Other

 

 

5

 

 

 

1

 

 

Less: income tax impact

 

 

87

 

 

 

129

 

 

16

Adjusted net income available to shareholders(1)

 

$

4,742

 

 

$

5,922

 

$

6,331

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share(1)

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.46

 

 

$

0.57

 

$

0.76

Plus: acquisition related expenses net of income tax impact

 

 

0.03

 

 

 

0.04

 

 

0.01

Adjusted diluted earnings per share(1)

 

$

0.49

 

 

$

0.61

 

$

0.77


(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
(2) Includes credit for avoided contract termination costs due to new contract terms.

The Company’s efficiency ratio(1) was 74.9% in the second quarter of 2022, compared with 69.7% in the first quarter of 2022 and 65.1% in the second quarter of 2021.

(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

Income Taxes

The Company recorded income tax expense of $1.5 million for the second quarter of 2022, representing an effective tax rate of 25.0%, compared to 24.5% for the first quarter of 2022.

Loans

Total loans held for investment were $2.15 billion as of June 30, 2022, an increase of 11.3% from $1.93 billion as of March 31, 2022, and an increase of 36.7% from $1.57 billion as of June 30, 2021. The increase in total loans held for investment from March 31, 2022 was attributable to loan growth in our residential mortgage, commercial and industrial, and commercial real estate portfolios. Excluding PPP loans, acquired loans, and loans accounted for under the fair value option, total loans held for investment were $1.83 billion as of June 30, 2022, an increase of $244.2 million, or 15.4%, from the end of the prior quarter and an increase of $477.7 million, or 35.3%, from June 30, 2021.

PPP loans were $10.7 million as of June 30, 2022, a net decrease of 35.9% from $16.7 million as of March 31, 2022, and 89.6% from $103.1 million as of June 30, 2021. As of June 30, 2022, there were $0.2 million remaining in net fees to be recognized upon forgiveness or repayment of PPP loans.

Deposits

Total deposits were $2.17 billion as of June 30, 2022, compared to $2.27 billion as of March 31, 2022, and $1.68 billion as of June 30, 2021. The decrease in total deposits from March 31, 2022 was related to seasonal outflow related to tax payments, real estate acquisitions, and client operating cash outflows. The increase in total deposits from June 30, 2021 was related to $379.2 million in deposits added through the Teton acquisition and $111.7 million in remaining net growth.

Average total deposits for the second quarter of 2022 decreased $46.6 million, or 8.2% annualized, from the first quarter of 2022 and increased $522.1 million, or 30.6%, from the second quarter of 2021. The quarter-over-quarter decrease in total deposits from March 31, 2022 was related to seasonal outflow related to tax payments, real estate acquisitions, and client operating cash outflows. The year-over-year increase in average deposits was primarily attributable to the Teton acquisition and organic growth in non-interest bearing and interest checking accounts.

Borrowings

Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $87.2 million as of June 30, 2022, an increase of $59.6 million from $27.6 million as of March 31, 2022, and a decrease of $33.5 million from $120.8 million as of June 30, 2021. The increase from March 31, 2022 is primarily driven by additional FHLB borrowings to support the strong loan growth in the quarter. The decrease from June 30, 2021 is primarily driven by paydowns on the Paycheck Protection Program Loan Facility (“PPPLF”) from the Federal Reserve, offset partially by additional FHLB borrowings to support the strong loan growth in the quarter. Borrowing from the PPPLF facility is expected to trend in the same direction as the balances of the PPP loans and the resulting net decrease in PPP loans drove the decrease to the PPPLF balance. As of June 30, 2022, the PPPLF had advances of $7.2 million compared to PPP loan balances of $10.7 million.

Assets Under Management

Total assets under management (“AUM”) decreased by $921.7 million during the second quarter to $6.28 billion as of June 30, 2022, compared to $7.20 billion as of March 31, 2022. This decrease was primarily attributable to unfavorable market conditions resulting in a decrease in the value of AUM balances. Total AUM decreased by $484.6 million compared to June 30, 2021 from $6.76 billion, which was primarily attributable to unfavorable market conditions throughout 2022 resulting in a decrease in the value of AUM balances.

Credit Quality

Non-performing assets totaled $4.3 million, or 0.17% of total assets, as of June 30, 2022, compared to $4.3 million, or 0.17% of total assets, as of March 31, 2022 and $3.1 million, or 0.16% of total assets, as of June 30, 2021.

The Company recorded a provision of $0.5 million in the second quarter of 2022, compared to an immaterial provision in the second quarter of 2021. The Company recorded a provision for loan losses of $0.2 million in the first quarter of 2022. The provision recorded in the second quarter of 2022 represented general provisioning consistent with growth of the bank originated loan portfolio, excluding PPP loans, and changes in the portfolio mix, partially offset by a release of specific reserve on an impaired loan. During the second quarter of 2022, the Company acquired a commercial property as partial reduction of the balance owed on an impaired loan and as a result, recorded other real estate owned in the amount of $0.4 million.

Capital

As of June 30, 2022, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of June 30, 2022, the Bank was classified as “well capitalized,” as summarized in the following table:

 

 

 

 

 

 

June 30, 

 

 

 

2022

 

Consolidated Capital

 

  

 

Tier 1 capital to risk-weighted assets

 

10.15

%

Common Equity Tier 1 ("CET1") to risk-weighted assets

 

10.15

 

Total capital to risk-weighted assets

 

12.58

 

Tier 1 capital to average assets

 

8.00

 

 

 

 

 

Bank Capital

 

 

 

Tier 1 capital to risk-weighted assets

 

10.99

 

CET1 to risk-weighted assets

 

10.99

 

Total capital to risk-weighted assets

 

11.75

 

Tier 1 capital to average assets

 

8.65

 

Book value per common share increased 1.6% from $23.68 as of March 31, 2022 to $24.06 as of June 30, 2022, and was up 14.5% from $21.01 as of June 30, 2021.

Tangible book value per common share (1) increased 2.0% from $20.25 as of March 31, 2022 to $20.65 as of June 30, 2022, and was up 14.8% from $17.98 as of June 30, 2021.

(1) Represents a Non-GAAP financial measure. See “Reconciliations of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.

Conference Call, Webcast and Slide Presentation

The Company will host a conference call and webcast at 10:00 a.m. MT/ 12:00 p.m. ET on Friday, July 29, 2022. Telephone access: https://register.vevent.com/register/BI5bd54cdfc671414f8033ccdf4692e21c

A slide presentation relating to the second quarter 2022 results will be accessible prior to the scheduled conference call. The slide presentation and webcast of the conference call can be accessed on the Events and Presentations page of the Company’s investor relations website at https://myfw.gcs-web.com.

About First Western

First Western is a financial services holding company headquartered in Denver, Colorado, with operations in Colorado, Arizona, Wyoming, California, and Montana. First Western and its subsidiaries provide a fully integrated suite of wealth management services on a private trust bank platform, which includes a comprehensive selection of deposit, loan, trust, wealth planning and investment management products and services. First Western’s common stock is traded on the Nasdaq Global Select Market under the symbol “MYFW.” For more information, please visit www.myfw.com.

Non-GAAP Financial Measures

Some of the financial measures included in this press release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States (“GAAP”). These non-GAAP financial measures include “Tangible Common Equity,” “Tangible Common Book Value per Share,” “Return on Tangible Common Equity,” “Efficiency Ratio,” “Gross Revenue,” “Allowance for Loan Losses to Bank Originated Loans Excluding PPP,” “Adjusted Net Income Available to Common Shareholders,” “Adjusted Basic Earnings Per Share,” “Adjusted Diluted Earnings Per Share,” “Adjusted Return on Average Assets,” “Adjusted Return on Average Shareholders’ Equity,” and “Adjusted Return on Tangible Common Equity”. The Company believes these non-GAAP financial measures provide both management and investors a more complete understanding of the Company’s financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. Reconciliation of non-GAAP financial measures, to GAAP financial measures are provided at the end of this press release.

Forward-Looking Statements

Statements in this news release regarding our expectations and beliefs about our future financial performance and financial condition, as well as trends in our business and markets are “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements often include words such as “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “project,” “outlook,” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “opportunity,” “could,” or “may.” The forward-looking statements in this news release are based on current information and on assumptions that we make about future events and circumstances that are subject to a number of risks and uncertainties that are often difficult to predict and beyond our control. As a result of those risks and uncertainties, our actual financial results in the future could differ, possibly materially, from those expressed in or implied by the forward-looking statements contained in this news release and could cause us to make changes to our future plans. Those risks and uncertainties include, without limitation, the COVID-19 pandemic and its effects; integration risks and projected cost savings in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming, California, and Montana; the risk of changes in the economy affecting real estate values and liquidity; the risk in our ability to continue to originate residential real estate loans and sell such loans; risks specific to commercial loans and borrowers; the risk of claims and litigation pertaining to our fiduciary responsibilities; the risk of competition for investment managers and professionals; the risk of fluctuation in the value of our investment securities; the risk of changes in interest rates; and the risk of the adequacy of our allowance for loan losses and the risk in our ability to maintain a strong core deposit base or other low-cost funding sources. Additional information regarding these and other risks and uncertainties to which our business and future financial performance are subject is contained in our Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (“SEC”) on March 15, 2022 (“Form 10-K”), and other documents we file with the SEC from time to time. We urge readers of this news release to review the “Risk Factors” section our Form 10-K and any updates to those risk factors set forth in our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and our other filings with the SEC. Also, our actual financial results in the future may differ from those currently expected due to additional risks and uncertainties of which we are not currently aware or which we do not currently view as, but in the future may become, material to our business or operating results. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this news release, which speak only as of today’s date, or to make predictions based solely on historical financial performance. Any forward-looking statement speaks only as of the date on which it is made, and we do not undertake any obligation to update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Contacts:
Financial Profiles, Inc.
Tony Rossi
310-622-8221
MYFW@finprofiles.com 
IR@myfw.com

First Western Financial, Inc.
Consolidated Financial Summary (unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

June 30, 

 

March 31, 

 

June 30, 

(Dollars in thousands, except per share amounts)

    

2022

 

2022

 

2021

Interest and dividend income:

 

 

  

 

 

  

 

 

  

Loans, including fees

 

$

20,318

 

 

$

19,096

 

 

$

15,287

Loans accounted for under the fair value option

 

 

346

 

 

 

 

 

 

Investment securities

 

 

418

 

 

 

337

 

 

 

169

Interest-bearing deposits in other financial institutions

 

 

549

 

 

 

232

 

 

 

92

Total interest and dividend income

 

 

21,631

 

 

 

19,665

 

 

 

15,548

 

 

 

 

 

 

 

 

 

 

Interest expense:

 

 

  

 

 

  

 

 

 

Deposits

 

 

1,103

 

 

 

943

 

 

 

866

Other borrowed funds

 

 

390

 

 

 

438

 

 

 

459

Total interest expense

 

 

1,493

 

 

 

1,381

 

 

 

1,325

Net interest income

 

 

20,138

 

 

 

18,284

 

 

 

14,223

Less: provision for loan losses

 

 

519

 

 

 

210

 

 

 

12

Net interest income, after provision for loan losses

 

 

19,619

 

 

 

18,074

 

 

 

14,211

 

 

 

 

 

 

 

 

 

 

Non-interest income:

 

 

  

 

 

  

 

 

 

Trust and investment management fees

 

 

4,784

 

 

 

5,168

 

 

 

5,009

Net gain on mortgage loans

 

 

1,152

 

 

 

2,494

 

 

 

3,914

Bank fees

 

 

601

 

 

 

689

 

 

 

394

Risk management and insurance fees

 

 

83

 

 

 

109

 

 

 

92

Income on company-owned life insurance

 

 

87

 

 

 

86

 

 

 

89

Net (loss)/gain on loans accounted for under the fair value option

 

 

(155

)

 

 

 

 

 

Unrealized gains/(losses) recognized on equity securities

 

 

299

 

 

 

(32

)

 

 

2

Net gain on equity interests

 

 

 

 

 

1

 

 

 

Other

 

 

89

 

 

 

85

 

 

 

Total non-interest income

 

 

6,940

 

 

 

8,600

 

 

 

9,500

Total income before non-interest expense

 

 

26,559

 

 

 

26,674

 

 

 

23,711

 

 

 

 

 

 

 

 

 

 

Non-interest expense:

 

 

  

 

 

  

 

 

 

Salaries and employee benefits

 

 

12,945

 

 

 

12,058

 

 

 

9,643

Occupancy and equipment

 

 

1,892

 

 

 

1,882

 

 

 

1,443

Professional services

 

 

2,027

 

 

 

1,526

 

 

 

1,370

Technology and information systems

 

 

1,076

 

 

 

1,046

 

 

 

904

Data processing

 

 

987

 

 

 

1,187

 

 

 

1,093

Marketing

 

 

428

 

 

 

557

 

 

 

398

Amortization of other intangible assets

 

 

77

 

 

 

77

 

 

 

4

Net (gain)/loss on assets held for sale

 

 

(2

)

 

 

(1

)

 

 

Other

 

 

1,153

 

 

 

1,026

 

 

 

668

Total non-interest expense

 

 

20,583

 

 

 

19,358

 

 

 

15,523

Income before income taxes

 

 

5,976

 

 

 

7,316

 

 

 

8,188

Income tax expense

 

 

1,494

 

 

 

1,792

 

 

 

1,911

Net income available to common shareholders

 

$

4,482

 

 

$

5,524

 

 

$

6,277

Earnings per common share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.47

 

 

$

0.59

 

 

$

0.79

Diluted

 

 

0.46

 

 

 

0.57

 

 

 

0.76


 

 

 

 

 

 

 

 

 

 

 

 

June 30, 

 

March 31, 

 

June 30, 

(Dollars in thousands)

 

2022

 

2022

 

2021

Assets

 

 

  

 

 

  

 

 

  

Cash and cash equivalents:

 

 

  

 

 

  

 

 

  

Cash and due from banks

 

$

11,790

 

 

$

5,961

 

 

$

2,921

 

Federal funds sold

 

 

385

 

 

 

1,273

 

 

 

 

Interest-bearing deposits in other financial institutions

 

 

159,431

 

 

 

446,865

 

 

 

286,168

 

Total cash and cash equivalents

 

 

171,606

 

 

 

454,099

 

 

 

289,089

 

 

 

 

 

 

 

 

 

 

 

Available-for-sale securities, at fair value

 

 

 

 

 

58,727

 

 

 

25,532

 

Held-to-maturity securities, at amortized cost (fair value of $84,742 as of June 30, 2022)

 

 

87,029

 

 

 

 

 

 

 

Correspondent bank stock, at cost

 

 

4,352

 

 

 

1,617

 

 

 

2,053

 

Mortgage loans held for sale

 

 

26,202

 

 

 

33,663

 

 

 

48,563

 

Loans (includes $21,477, $6,380, and $0 measured at fair value, respectively)

 

 

2,146,394

 

 

 

1,923,825

 

 

 

1,571,060

 

Allowance for loan losses

 

 

(14,357

)

 

 

(13,885

)

 

 

(12,552

)

Premises and equipment, net

 

 

24,236

 

 

 

23,539

 

 

 

5,885

 

Accrued interest receivable

 

 

7,884

 

 

 

6,969

 

 

 

5,986

 

Accounts receivable

 

 

5,192

 

 

 

6,445

 

 

 

4,923

 

Other receivables

 

 

4,575

 

 

 

2,841

 

 

 

1,056

 

Other real estate owned, net

 

 

378

 

 

 

 

 

 

 

Goodwill and other intangible assets, net

 

 

32,258

 

 

 

32,335

 

 

 

24,250

 

Deferred tax assets, net

 

 

7,662

 

 

 

7,540

 

 

 

5,742

 

Company-owned life insurance

 

 

15,976

 

 

 

15,889

 

 

 

15,626

 

Other assets

 

 

21,960

 

 

 

22,940

 

 

 

22,091

 

Assets held for sale

 

 

146

 

 

 

117

 

 

 

 

Total assets

 

$

2,541,493

 

 

$

2,576,661

 

 

$

2,009,304

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

Deposits:

 

 

  

 

 

  

 

 

 

Noninterest-bearing

 

$

668,342

 

 

$

654,401

 

 

$

555,106

 

Interest-bearing

 

 

1,501,656

 

 

 

1,617,711

 

 

 

1,123,947

 

Total deposits

 

 

2,169,998

 

 

 

2,272,112

 

 

 

1,679,053

 

Borrowings:

 

 

  

 

 

  

 

 

 

FHLB and Federal Reserve borrowings

 

 

87,223

 

 

 

27,576

 

 

 

120,762

 

Subordinated notes

 

 

32,553

 

 

 

32,523

 

 

 

24,261

 

Accrued interest payable

 

 

304

 

 

 

312

 

 

 

312

 

Other liabilities

 

 

23,391

 

 

 

20,872

 

 

 

16,930

 

Total liabilities

 

 

2,313,469

 

 

 

2,353,395

 

 

 

1,841,318

 

 

 

 

 

 

 

 

 

 

 

Shareholders' Equity

 

 

  

 

 

  

 

 

  

Total shareholders’ equity

 

 

228,024

 

 

 

223,266

 

 

 

167,986

 

Total liabilities and shareholders’ equity

 

$

2,541,493

 

 

$

2,576,661

 

 

$

2,009,304

 


 

 

 

 

 

 

 

 

 

 

 

 

June 30, 

 

March 31, 

 

June 30, 

(Dollars in thousands)

    

2022

 

2022

 

2021

Loan Portfolio

 

 

  

 

 

  

 

 

  

Cash, Securities and Other(1)

 

$

180,738

 

 

$

235,221

 

 

$

268,904

 

Consumer and Other(2)

 

 

47,855

 

 

 

36,578

 

 

 

22,003

 

Construction and Development

 

 

162,426

 

 

 

151,651

 

 

 

127,141

 

1-4 Family Residential

 

 

732,725

 

 

 

602,412

 

 

 

496,101

 

Non-Owner Occupied CRE

 

 

489,111

 

 

 

455,715

 

 

 

324,493

 

Owner Occupied CRE

 

 

224,597

 

 

 

212,401

 

 

 

178,847

 

Commercial and Industrial

 

 

312,696

 

 

 

237,144

 

 

 

155,526

 

Total loans held for investment

 

 

2,150,148

 

 

 

1,931,122

 

 

 

1,573,015

 

Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net(3)

 

 

(3,754

)

 

 

(7,297

)

 

 

(1,955

)

Gross loans

 

$

2,146,394

 

 

$

1,923,825

 

 

$

1,571,060

 

Mortgage loans held for sale

 

$

26,202

 

 

$

33,663

 

 

$

48,563

 

 

 

 

 

 

 

 

 

 

 

Deposit Portfolio

 

 

 

 

 

 

 

 

 

Money market deposit accounts

 

$

1,033,739

 

 

$

1,108,315

 

 

$

840,073

 

Time deposits

 

 

147,623

 

 

 

156,678

 

 

 

137,499

 

Negotiable order of withdrawal accounts

 

 

287,195

 

 

 

319,648

 

 

 

141,076

 

Savings accounts

 

 

33,099

 

 

 

33,070

 

 

 

5,299

 

Total interest-bearing deposits

 

 

1,501,656

 

 

 

1,617,711

 

 

 

1,123,947

 

Noninterest-bearing accounts

 

 

668,342

 

 

 

654,401

 

 

 

555,106

 

Total deposits

 

$

2,169,998

 

 

$

2,272,112

 

 

$

1,679,053

 


(1) Includes PPP loans of $10.7 million as of June 30, 2022, $16.7 million as of March 31, 2022, and $103.1 million as of June 30, 2021.
(2) Includes loans held for investment accounted for under fair value option of $21.1 million and $6.4 million as of June 30, 2022 and March 31, 2022, respectively.
(3) Includes fair value adjustments on loans held for investment accounted for under the fair value option.

 

 

 

 

 

 

 

 

 

 

 

 

As of or for the Three Months Ended

 

 

June 30, 

 

March 31, 

 

June 30, 

(Dollars in thousands)

    

2022

 

2022

 

2021

Average Balance Sheets

 

 

  

 

 

  

 

 

  

Assets

 

 

  

 

 

  

 

 

  

Interest-earning assets:

 

 

  

 

 

  

 

 

  

Interest-bearing deposits in other financial institutions

 

$

320,656

 

 

$

474,593

 

 

$

292,615

 

Federal funds sold

 

 

1,017

 

 

 

1,349

 

 

 

 

Investment securities

 

 

69,320

 

 

 

55,739

 

 

 

26,474

 

Loans

 

 

2,010,024

 

 

 

1,922,770

 

 

 

1,573,553

 

Interest-earning assets

 

 

2,401,017

 

 

 

2,454,451

 

 

 

1,892,642

 

Mortgage loans held for sale

 

 

19,452

 

 

 

22,699

 

 

 

86,760

 

Total interest-earning assets, plus mortgage loans held for sale

 

 

2,420,469

 

 

 

2,477,150

 

 

 

1,979,402

 

Allowance for loan losses

 

 

(13,257

)

 

 

(13,715

)

 

 

(12,540

)

Noninterest-earning assets

 

 

119,857

 

 

 

121,650

 

 

 

93,629

 

Total assets

 

$

2,527,069

 

 

$

2,585,085

 

 

$

2,060,491

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

  

 

 

  

 

 

  

Interest-bearing liabilities:

 

 

  

 

 

  

 

 

  

Interest-bearing deposits

 

$

1,547,901

 

 

$

1,605,314

 

 

$

1,165,734

 

FHLB and Federal Reserve borrowings

 

 

20,815

 

 

 

33,104

 

 

 

148,869

 

Subordinated notes

 

 

32,533

 

 

 

32,939

 

 

 

24,252

 

Total interest-bearing liabilities

 

 

1,601,249

 

 

 

1,671,357

 

 

 

1,338,855

 

Noninterest-bearing liabilities:

 

 

  

 

 

  

 

 

  

Noninterest-bearing deposits

 

 

679,531

 

 

 

668,705

 

 

 

539,613

 

Other liabilities

 

 

19,194

 

 

 

23,555

 

 

 

16,558

 

Total noninterest-bearing liabilities

 

 

698,725

 

 

 

692,260

 

 

 

556,171

 

Total shareholders’ equity

 

 

227,095

 

 

 

221,468

 

 

 

165,465

 

Total liabilities and shareholders’ equity

 

$

2,527,069

 

 

$

2,585,085

 

 

$

2,060,491

 

 

 

 

 

 

 

 

 

 

 

Yields/Cost of funds (annualized)

 

 

  

 

 

  

 

 

  

Interest-bearing deposits in other financial institutions

 

 

0.68

%

 

 

0.20

%

  

 

0.13

%

Investment securities

 

 

2.41

 

 

 

2.42

 

 

 

2.55

 

Loans

 

 

4.11

 

 

 

3.97

 

 

 

3.89

 

Interest-earning assets

 

 

3.60

 

 

 

3.20

 

 

 

3.29

 

Mortgage loans held for sale

 

 

4.71

 

 

 

3.37

 

 

 

2.88

 

Total interest-earning assets, plus mortgage loans held for sale

 

 

3.61

 

 

 

3.21

 

 

 

3.27

 

Interest-bearing deposits

 

 

0.29

 

 

 

0.23

 

 

 

0.30

 

FHLB and Federal Reserve borrowings

 

 

0.54

 

 

 

0.47

 

 

 

0.31

 

Subordinated notes

 

 

4.45

 

 

 

4.85

 

 

 

5.64

 

Total interest-bearing liabilities

 

 

0.37

 

 

 

0.33

 

 

 

0.40

 

Net interest margin

 

 

3.35

 

 

 

2.98

 

 

 

3.01

 

Net interest rate spread

 

 

3.23

 

 

 

2.87

 

 

 

2.89

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 

As of or for the Three Months Ended

 

 

June 30, 

 

 

March 31, 

 

 

June 30, 

(Dollars in thousands, except share and per share amounts)

    

2022

 

 

2022

 

 

2021

Asset Quality

 

 

  

 

 

 

  

 

 

 

 

Non-performing loans

 

$

3,931

 

 

$

4,309

 

 

$

3,120

 

Non-performing assets

 

 

4,309

 

 

 

4,309

 

 

 

3,120

 

Net charge-offs/(recoveries)

 

 

47

 

 

 

57

 

 

 

(1

)

Non-performing loans to total loans

 

 

0.18

%

 

 

0.22

%

 

 

0.20

%

Non-performing assets to total assets

 

 

0.17

 

 

 

0.17

 

 

 

0.16

 

Allowance for loan losses to non-performing loans

 

 

365.23

 

 

 

322.23

 

 

 

402.31

 

Allowance for loan losses to total loans

 

 

0.67

 

 

 

0.72

 

 

 

0.80

 

Allowance for loan losses to bank originated loans excluding PPP(1)

 

 

0.78

 

 

 

0.87

 

 

 

0.93

 

Net charge-offs to average loans(2)

 

 

0.00

 

 

 

0.00

 

 

 

0.00

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets Under Management

 

$

6,277,588

 

 

$

7,199,328

 

 

$

6,762,179

 

 

 

 

 

 

 

 

 

 

 

 

 

Market Data

 

 

 

 

 

 

 

 

 

 

 

Book value per share at period end

 

$

24.06

 

 

$

23.68

 

 

$

21.01

 

Tangible book value per common share(1)

 

 

20.65

 

 

 

20.25

 

 

 

17.98

 

Weighted average outstanding shares, basic

 

 

9,450,987

 

 

 

9,418,318

 

 

 

7,961,785

 

Weighted average outstanding shares, diluted

 

 

9,717,667

 

 

 

9,762,602

 

 

 

8,213,900

 

Shares outstanding at period end

 

 

9,478,710

 

 

 

9,430,007

 

 

 

7,994,832

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Capital

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital to risk-weighted assets

 

 

10.15

%

 

 

11.11

%

 

 

10.68

%

CET1 to risk-weighted assets

 

 

10.15

 

 

 

11.11

 

 

 

10.68

 

Total capital to risk-weighted assets

 

 

12.58

 

 

 

13.81

 

 

 

13.45

 

Tier 1 capital to average assets

 

 

8.00

 

 

 

7.67

 

 

 

7.75

 

 

 

 

 

 

 

 

 

 

 

 

 

Bank Capital

 

 

 

 

 

 

 

 

 

 

 

Tier 1 capital to risk-weighted assets

 

 

10.99

%

 

 

12.01

%

 

 

11.03

%

CET1 to risk-weighted assets

 

 

10.99

 

 

 

12.01

 

 

 

11.03

 

Total capital to risk-weighted assets

 

 

11.75

 

 

 

12.82

 

 

 

11.99

 

Tier 1 capital to average assets

 

 

8.65

 

 

 

8.27

 

 

 

7.98

 


(1) Represents a Non-GAAP financial measure. See “Reconciliation of Non-GAAP Measures” for a reconciliation of our Non-GAAP measures to the most directly comparable GAAP financial measure.
(2) Value results in an immaterial amount.

Reconciliations of Non-GAAP Financial Measures

 

 

 

 

 

 

 

 

 

 

 

 

    

As of or for the Three Months Ended

 

 

 

June 30, 

 

March 31, 

 

June 30,  

(Dollars in thousands, except share and per share amounts)

 

2022

 

2022

 

2021 

Tangible Common

 

 

  

 

 

  

 

 

  

 

Total shareholders' equity

 

$

228,024

 

 

$

223,266

 

 

$

167,986

 

Less: goodwill and other intangibles, net

 

 

32,258

 

 

 

32,335

 

 

 

24,250

 

Tangible common equity

 

$

195,766

 

 

$

190,931

 

 

$

143,736

 

 

 

 

 

 

 

 

 

 

 

 

Common shares outstanding, end of period

 

 

9,478,710

 

 

 

9,430,007

 

 

 

7,994,832

 

Tangible common book value per share

 

$

20.65

 

 

$

20.25

 

 

$

17.98

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

4,482

 

 

$

5,524

 

 

$

6,277

 

Return on tangible common equity (annualized)

 

 

9.16

%

  

 

11.57

%

 

 

17.47

%

 

 

 

 

 

 

 

 

 

 

 

Efficiency

 

 

  

 

 

  

 

 

  

 

Non-interest expense

 

$

20,583

 

 

$

19,358

 

 

$

15,523

 

Less: amortization

 

 

77

 

 

 

77

 

 

 

4

 

Less: acquisition related expenses

 

 

347

 

 

 

527

 

 

 

70

 

Adjusted non-interest expense

 

$

20,159

 

 

$

18,754

 

 

$

15,449

 

 

 

 

 

 

 

 

 

 

 

 

Total income before non-interest expense

 

$

26,559

 

 

$

26,674

 

 

$

23,711

 

Less: unrealized gains/(losses) recognized on equity securities

 

 

299

 

 

 

(32

)

 

 

2

 

Less: net gain/(loss) on loans accounted for under the fair value option

 

 

(155

)

 

 

 

 

 

 

Less: net gain on equity interests

 

 

 

 

 

1

 

 

 

 

Plus: provision for loan losses

 

 

519

 

 

 

210

 

 

 

12

 

Gross revenue

 

$

26,934

 

 

$

26,915

 

 

$

23,721

 

Efficiency ratio

 

 

74.85

%

 

 

69.68

%

 

 

65.13

%

 

 

 

 

 

 

 

 

 

 

 

Allowance to Bank Originated Loans Excluding PPP

 

 

 

 

 

 

 

 

 

 

Total loans held for investment

 

$

2,150,148

 

 

$

1,931,122

 

 

$

1,573,015

 

Less: loans acquired

 

 

287,623

 

 

 

323,563

 

 

 

116,052

 

Less: bank originated PPP loans

 

 

9,053

 

 

 

13,109

 

 

 

102,359

 

Less: loans accounted for under fair value

 

 

21,149

 

 

 

6,368

 

 

 

 

Bank originated loans excluding PPP

 

$

1,832,323

 

 

$

1,588,082

 

 

$

1,354,604

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for loan losses

 

$

14,357

 

 

$

13,885

 

 

$

12,552

 

Allowance for loan losses to bank originated loans excluding PPP

 

 

0.78

%

 

 

0.87

%

 

 

0.93

%


 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

As of or for the Three Months Ended

 

 

 

June 30, 

 

 

March 31, 

 

 

June 30, 

 

(Dollars in thousands, except share and per share data)

 

2022

 

 

2022

 

 

2021

 

Adjusted Net Income Available to Common Shareholders

 

 

 

 

 

 

 

 

 

 

 

 

Net income available to common shareholders

 

$

4,482

 

 

$

5,524

 

 

$

6,277

 

Plus: acquisition related expenses

 

 

347

 

 

 

527

 

 

 

70

 

Less: income tax impact

 

 

87

 

 

 

129

 

 

 

16

 

Adjusted net income available to shareholders

 

$

4,742

 

 

$

5,922

 

 

$

6,331

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Basic Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.47

 

 

$

0.59

 

 

$

0.79

 

Plus: acquisition related expenses net of income tax impact

 

 

0.03

 

 

 

0.04

 

 

 

0.01

 

Adjusted basic earnings per share

 

$

0.50

 

 

$

0.63

 

 

$

0.80

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

$

0.46

 

 

$

0.57

 

 

$

0.76

 

Plus: acquisition related expenses net of income tax impact

 

 

0.03

 

 

 

0.04

 

 

 

0.01

 

Adjusted diluted earnings per share

 

$

0.49

 

 

$

0.61

 

 

$

0.77

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Assets (annualized)

 

 

 

 

 

 

 

 

 

 

 

 

Return on average assets

 

 

0.71

%

 

 

0.85

%

 

 

1.22

%

Plus: acquisition related expenses net of income tax impact

 

 

0.04

 

 

 

0.07

 

 

 

0.01

 

Adjusted return on average assets

 

 

0.75

%

 

 

0.92

%

 

 

1.23

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Average Shareholders' Equity (annualized)

 

 

 

 

 

 

 

 

 

 

 

 

Return on average shareholders' equity

 

 

7.89

%

 

 

9.98

%

 

 

15.17

%

Plus: acquisition related expenses net of income tax impact

 

 

0.46

 

 

 

0.72

 

 

 

0.13

 

Adjusted return on average shareholders' equity

 

 

8.35

%

 

 

10.70

%

 

 

15.30

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Return on Tangible Common Equity (annualized)

 

 

 

 

 

 

 

 

 

 

 

 

Return on tangible common equity

 

 

9.16

%

 

 

11.57

%

 

 

17.47

%

Plus: acquisition related expenses net of income tax impact

 

 

0.53

 

 

 

0.84

 

 

 

0.15

 

Adjusted return on tangible common equity

 

 

9.69

%

 

 

12.41

%

 

 

17.62

%