First Western Financial NASDAQ: MYFW executives pointed to continued improvement in profitability and operating trends during the company’s first-quarter 2026 earnings call, citing loan and deposit growth, net interest margin expansion, higher mortgage banking revenue, and better asset quality.
Chairman and CEO Scott Wylie said the company “executed well in the Q1 and saw positive trends in many areas,” which helped drive a significant sequential increase in earnings per share. First Western reported net income of $6.2 million, or $0.63 per diluted share, in the quarter, and Wylie said EPS increased 85% from the prior quarter. He also said the company posted its “third consecutive quarter where we generated an increase in net income and earnings per share.”
Balance sheet growth and relationship-focused production
President and COO Julie Courkamp said loans held for investment increased $41 million from the prior quarter, supported by $116 million of new loan production. While First Western continued to take what management described as a conservative approach to underwriting and pricing, Courkamp said productivity gains from recent banker additions helped support production. She added that the quarter’s average rate on new loan production was 6.31%.
Deposits increased $95 million from the end of the prior quarter, with growth across all categories, according to Courkamp. Non-interest-bearing deposits rose 10%, or $35 million, during the quarter. Courkamp said the deposit growth brought the loan-to-deposit ratio down to below 95%, from 96.5% in the prior quarter.
In the question-and-answer session, Wylie emphasized the company’s focus on relationship banking, noting that First Western expects loans to come with deposit relationships and has incorporated that expectation into its processes. He added that the company has historically operated with loan-to-deposit ratios “in the 90s,” while indicating the bank becomes “more uncomfortable” when the ratio moves into the high 90s.
Margin expansion driven by funding costs and pricing discipline
CFO David Weber said gross revenue increased 3.4% from the prior quarter, reflecting increases in both net interest income and non-interest income. Net interest income rose 1.5% sequentially, which Weber attributed to an improvement in net interest margin (NIM). First Western’s NIM expanded 10 basis points from the prior quarter to 2.81%.
Weber said the NIM improvement was driven by a reduction in the company’s cost of funds, “primarily due to lower rates on money market deposit accounts” as the company lowered deposit rates in line with short-term rate decreases in 2025, as well as runoff of higher-cost deposit accounts. Net interest income increased 19.7% compared to the first quarter of 2025 due to higher NIM and growth in average interest-earning assets, he said.
Management said it expects continued NIM improvement, though at a more moderate pace than recent quarters. Wylie told analysts he believes the company will “ultimately get back to a 315-320 kind of a NIM” in a more normal market environment, but he and Weber cautioned that the path and timing are difficult to forecast. Wylie also pointed to pricing discipline amid what he characterized as aggressive loan pricing by some acquirers in the market, saying First Western has not been willing to match lower pricing and has continued to focus on credit quality.
In response to questions about deposit costs, Weber said the end-of-quarter spot rate on deposits was 2.79%. He also noted the company typically sees second-quarter deposit outflows related to tax payments and said there was nothing currently indicating that pattern would change.
Fee income lift from mortgage and wealth initiatives
Weber said non-interest income increased by about $600,000 from the prior quarter, driven largely by higher gain on sale of mortgage loans, risk management and insurance fees, and trust and investment management fees. He said trust and investment management fees increased for the third consecutive quarter.
Courkamp highlighted mortgage banking results during Q&A, saying gains on mortgage loans increased from $0.8 million to $1.5 million. Weber added that secondary lock volume was just under $180 million in the first quarter, up by “a little under 40 million” from the prior quarter. Wylie said mortgage activity in the first quarter was stronger than the company typically expects seasonally, attributing the results to pent-up demand, unseasonably warm weather in its markets, and the impact of recently added mortgage loan officers (MLOs).
On staffing, Wylie said the company added one new MLO during the quarter and “another seven folks in front office banker-type jobs.” Weber later noted the company added eight MLOs in 2025.
On wealth management, Wylie said the company has undertaken what he described as a “complete overhaul” of planning, trust, and investment management functions over the past year, including leadership changes, team strengthening, and new products and services. He also discussed a B2B initiative, including a trademarked offering called “WorkWealth,” which he said is being marketed to businesses as an executive benefit and is intended to create synergies with corporate banking and treasury management efforts.
Courkamp reported assets under management increased $43 million in the quarter, with net new accounts and contributions adding $42 million. She said assets under management increased by about 1% year over year.
Expenses and asset quality trends
Weber said non-interest expense decreased $1.1 million from the prior quarter, primarily due to an OREO write-down recorded in the fourth quarter of 2025 and lower professional services expense, partially offset by higher salaries and employee benefits tied to payroll tax seasonality and higher bonus accruals due to improved earnings. Weber said the efficiency ratio improved for the sixth consecutive quarter, reflecting ongoing expense management while continuing to invest in the business.
On asset quality, Weber said the company saw improvements in the first quarter, including decreases in non-accrual loans and non-performing assets. He said this was partially driven by the sale of the last OREO property on the balance sheet, and he added that the company had no loan charge-offs during the quarter. Weber said allowance coverage was 77 basis points of total loans and that improved trends led to a provision release.
Outlook: guidance unchanged, expansion opportunities from market disruption
Looking ahead, Wylie said First Western’s expectations for 2026 were unchanged from its initial outlook, and he described economic conditions in the company’s markets as relatively healthy. Management highlighted opportunities stemming from ongoing bank M&A disruption, particularly in Colorado, and said the company has been able to attract banking talent as a result.
Wylie also discussed investments to support growth in Arizona, including the recent hiring of a new market president for Scottsdale. He said the company believes it has a differentiated platform but previously lacked the leadership to build out the Arizona team, adding that recent hires include one executive from First Republic/JPMorgan and another from FirstBank/PNC.
On balance sheet growth, Wylie said the company’s guidance remains high single digits, while noting loans were up 11% year over year and deposits were up 13% year over year. He suggested the underlying run rate “seem[s] to be around 10%,” while saying the company was not prepared to forecast mid-teen growth. Wylie also said the company does not see indicators of “meaningful deterioration in asset quality” based on portfolio trends and client feedback.
In Q&A, Wylie said the company had not observed a negative impact from geopolitical developments on client behavior, stating that clients have not yet “stop[ped] doing things” due to uncertainty. He added that management’s attention has been more focused on market disruption from M&A activity than on global issues.
Weber also disclosed that the company’s Federal Home Loan Bank borrowing was an overnight borrowing that had been swapped, and the swap matured in early April. Weber said the balance was zero as of April, and the company will evaluate whether it makes sense to keep it at zero or replace it based on liquidity needs. Weber added that the company repurchased a small amount of stock during the quarter at an average price of $23.85.
About First Western Financial NASDAQ: MYFW
First Western Financial, Inc NASDAQ: MYFW is a Denver-based bank holding company that, through its principal subsidiary First Western Trust, delivers a suite of personalized financial services. The company's core activities center on wealth management and trust administration for high-net-worth individuals, families and institutions. In addition, First Western Financial offers a comprehensive range of deposit products—such as checking accounts, savings accounts, money market funds and certificates of deposit—designed to meet the liquidity and income needs of its clients.
Complementing its deposit offerings, First Western Financial provides fiduciary and investment management services, including estate planning, charitable giving strategies and multi-generational wealth transfer.
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