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 generate stronger asset growth in the third quarter.
Trust and investment management assets under management increased $41 million during the second quarter, primarily because of improved market conditions. Investment agency assets under management rose $91 million sequentially and $122 million year over year. Trust and investment management fees increased 5.1% from the second quarter of 2025, Courkamp said.
Expenses rise on technology charge; credit remains stable
Non-interest income declined $0.3 million from the first quarter. The decrease was primarily attributed to lower gains on sales of mortgage loans amid lower origination volume and higher mortgage rates, as well as lower risk management and insurance fees. Those declines were partly offset by higher bank fees.
Non-interest expense increased $1 million sequentially, reflecting higher technology and information systems, data processing and marketing expenses. Weber said the increase included a $400,000 nonrecurring charge for the write-off of certain previously capitalized technology assets, reducing diluted earnings per share by $0.03.
The efficiency ratio was 74.03%, compared with 73.11% in the first quarter and 78.83% a year earlier. Management expects quarterly non-interest expense of $20 million to $21 million going forward, compared with its prior $19 million to $20 million range, reflecting investments in newly hired production personnel.
On credit quality, the company reported no loan charge-offs for the second consecutive quarter. Non-accrual loans and nonperforming assets were relatively flat sequentially, while allowance coverage stood at 75 basis points of total loans. Improved portfolio trends led to a $500,000 provision release during the quarter.
Wylie said the company expects continued financial improvement in the second half, citing healthy economic conditions in its markets, strong loan and deposit pipelines, anticipated fee-income improvement and continued expense discipline. He also said ongoing merger-and-acquisition activity in the company’s markets is creating opportunities to add banking, trust and investment-management talent and attract new clients.
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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