First Western Financial's Net Income Jumps 72% on Strong Interest Growth

TL;DR

**MYFW is crushing it with net interest income, but keep an eye on those non-interest fees – they're lagging.**

AI Summary

First Western Financial Inc. (MYFW) reported a significant increase in net income for the three months ended September 30, 2025, reaching $3.186 million, up 49.3% from $2.134 million in the same period of 2024. For the nine months ended September 30, 2025, net income surged to $9.874 million, a 72.5% increase from $5.725 million in 2024. This growth was primarily driven by a robust 24.9% increase in net interest income to $19.454 million for the quarter, and a 15.5% increase to $54.791 million for the nine-month period, despite a higher provision for credit losses of $2.257 million for the quarter. Total assets expanded to $3.240 billion as of September 30, 2025, from $2.919 billion at December 31, 2024, largely due to a $165.281 million increase in loans, net, and a $117.698 million increase in cash and cash equivalents. Deposits also grew by $334.702 million to $2.848 billion. However, non-interest income saw a slight decrease of 1.9% to $6.842 million for the quarter, mainly due to lower trust and investment management fees and net gain on mortgage loans. The company's shareholders' equity increased to $261.495 million from $252.322 million at year-end 2024, reflecting improved profitability. The allowance for credit losses increased to $20.967 million from $18.330 million, indicating a more conservative stance on potential loan defaults.

Why It Matters

MYFW's substantial net income growth, fueled by rising net interest income, signals strong operational performance in a challenging rate environment, which is a positive for investors. The increase in the allowance for credit losses suggests prudent risk management, potentially reassuring employees and customers about the bank's stability. However, the slight dip in non-interest income, particularly in trust and investment management fees, highlights competitive pressures in wealth management. This mixed performance could impact MYFW's ability to attract and retain top talent and clients in a competitive financial services landscape.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in the provision for credit losses, which rose from $501 thousand in Q3 2024 to $2.257 million in Q3 2025, indicating potential concerns about loan quality. Additionally, the accumulated other comprehensive loss worsened from $(778) thousand at December 31, 2024, to $(1.609) million at September 30, 2025, primarily due to unrealized losses on available-for-sale debt securities and cash flow hedges, reflecting interest rate sensitivity.

Analyst Insight

Investors should consider MYFW's strong net interest income growth and expanding loan portfolio as positive indicators. However, they should monitor future trends in non-interest income and the allowance for credit losses to assess sustained profitability and risk management effectiveness. A deeper dive into the composition of the loan portfolio and interest rate sensitivity is warranted.

Financial Highlights

debt To Equity

11.39

revenue

$26.296M

operating Margin

N/A

total Assets

$3.240B

total Debt

$333.731M

net Income

$3.186M

eps

$0.33

gross Margin

N/A

cash Position

$355.639M

revenue Growth

+19.6%

Revenue Breakdown

Key Numbers

• $3.186M — Net Income (Q3 2025) (Increased 49.3% from $2.134M in Q3 2024)
• $9.874M — Net Income (9M 2025) (Increased 72.5% from $5.725M in 9M 2024)
• $19.454M — Net Interest Income (Q3 2025) (Increased 24.9% from $15.568M in Q3 2024)
• $54.791M — Net Interest Income (9M 2025) (Increased 15.5% from $47.416M in 9M 2024)
• $2.257M — Provision for Credit Losses (Q3 2025) (Increased from $501K in Q3 2024)
• $3.240B — Total Assets (Sep 30, 2025) (Increased from $2.919B at Dec 31, 2024)
• $2.848B — Total Deposits (Sep 30, 2025) (Increased from $2.514B at Dec 31, 2024)
• $20.967M — Allowance for Credit Losses (Sep 30, 2025) (Increased from $18.330M at Dec 31, 2024)
• $0.33 — Basic EPS (Q3 2025) (Increased from $0.22 in Q3 2024)
• $1.02 — Basic EPS (9M 2025) (Increased from $0.59 in 9M 2024)

Key Players & Entities

• First Western Financial, Inc. (company) — Registrant as specified in its charter
• First Western Trust Bank (company) — Consolidated subsidiary of First Western Financial, Inc.
• Nasdaq Stock Market LLC (regulator) — Exchange where Common Stock is registered
• SEC (regulator) — Securities and Exchange Commission
• $3.186 million (dollar_amount) — Net income for Q3 2025
• $9.874 million (dollar_amount) — Net income for nine months ended September 30, 2025
• $19.454 million (dollar_amount) — Net interest income for Q3 2025
• $2.257 million (dollar_amount) — Provision for credit losses for Q3 2025
• $3.240 billion (dollar_amount) — Total assets as of September 30, 2025
• $2.848 billion (dollar_amount) — Total deposits as of September 30, 2025

FAQ

Risk Factors

• Credit Risk and Loan Portfolio Quality [high — financial]: The company's allowance for credit losses increased to $20.967 million from $18.330 million. This reflects a more conservative stance on potential loan defaults, with loans net of allowance at $2.569 billion. The provision for credit losses for Q3 2025 was $2.257 million, a significant increase from $501K in Q3 2024.
• Interest Rate Sensitivity [medium — market]: Fluctuations in interest rates can impact net interest income and the fair value of investment securities. The company holds $98.205 million in held-to-maturity debt securities and $49.177 million in available-for-sale debt securities.
• Dependence on Non-interest Income Sources [medium — operational]: A slight decrease in non-interest income, particularly from trust and investment management fees and mortgage loan gains, highlights a potential vulnerability. This segment contributed $6.842 million in Q3 2025.
• Regulatory Compliance and Capital Requirements [medium — regulatory]: As a financial institution, MYFW is subject to stringent regulatory oversight and capital adequacy requirements. Changes in regulations could impact operations and profitability.
• Liquidity Management [medium — financial]: While total deposits grew to $2.848 billion, the company must manage its liquidity effectively to meet obligations and fund loan growth, which increased by $165.281 million.

Industry Context

First Western Financial Inc. operates in the highly competitive banking and financial services sector. The industry is characterized by evolving interest rate environments, increasing digital adoption, and a focus on credit quality. Banks are navigating a landscape where net interest margins are crucial, alongside diversified fee income streams.

Regulatory Implications

As a financial institution, MYFW is subject to rigorous regulatory oversight from bodies like the Federal Reserve and FDIC. Compliance with capital adequacy ratios, lending standards, and consumer protection laws is paramount. Any shifts in regulatory policy could impact lending activities, operational costs, and overall profitability.

What Investors Should Do

1. Monitor loan growth and credit quality trends.
2. Analyze the sustainability of net interest income growth.
3. Evaluate the impact of non-interest income fluctuations.
4. Assess capital adequacy and liquidity ratios.

Key Dates

• 2025-09-30: End of Q3 2025 — Reported significant net income growth of 49.3% and robust net interest income increase of 24.9%.
• 2024-09-30: End of Q3 2024 — Provided comparative figures for Q3 2025 performance analysis.
• 2025-12-31: End of Fiscal Year 2024 — Provided comparative figures for year-end balance sheet items.

Glossary

Allowance for credit losses

An estimate of the amount of uncollectible loans in a company's loan portfolio. (An increase in this allowance, as seen with MYFW, indicates a more conservative approach to potential loan defaults and impacts reported net income.)

Net interest income

The difference between the interest income generated by a financial institution and the interest paid out to its depositors and lenders. (This is a primary driver of profitability for banks, and MYFW's significant increase of 24.9% in Q3 2025 is a key positive indicator.)

Provision for credit losses

An expense recognized by a financial institution for estimated loan losses. (An increase in this provision, as seen in Q3 2025, directly reduces net income and signals potential concerns about loan quality.)

Available-for-sale debt securities

Debt securities that are not classified as held-to-maturity or trading securities. Their unrealized gains and losses are reported in other comprehensive income. (MYFW has $49.177 million in these securities as of September 30, 2025, impacting its balance sheet and equity.)

Held-to-maturity debt securities

Debt securities that a company has the intent and ability to hold until maturity. They are recorded at amortized cost. (MYFW holds $98.205 million in these securities, which are less sensitive to short-term market fluctuations than available-for-sale securities.)

Year-Over-Year Comparison

Compared to the prior year, First Western Financial Inc. has demonstrated substantial growth in profitability, with net income up 49.3% for the quarter and 72.5% year-to-date. This is largely fueled by a strong 24.9% increase in net interest income, indicating improved lending margins or volume. However, the company has also increased its provision for credit losses significantly, suggesting a more cautious outlook on loan portfolio health. While total assets and deposits have grown, non-interest income has seen a slight contraction, indicating a potential area for focus.

Filing Documents

• myfw-20250930.htm (10-Q) — 4694KB
• myfw-20250930x10qxexx311.htm (EX-31.1) — 9KB
• myfw-20250930x10qxexx312.htm (EX-31.2) — 9KB
• myfw-20250930x10qxexx321.htm (EX-32.1) — 4KB
• myfw-20250930x10qxexx322.htm (EX-32.2) — 4KB
• 0001628280-25-047822.txt ( ) — 21647KB
• myfw-20250930.xsd (EX-101.SCH) — 91KB
• myfw-20250930_cal.xml (EX-101.CAL) — 122KB
• myfw-20250930_def.xml (EX-101.DEF) — 570KB
• myfw-20250930_lab.xml (EX-101.LAB) — 1098KB
• myfw-20250930_pre.xml (EX-101.PRE) — 875KB
• myfw-20250930_htm.xml (XML) — 5314KB

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements (Unaudited)

Financial Statements (Unaudited): 7 Condensed Consolidated Balance Sheets 7 Condensed Consolidated Statements of Income 8 Condensed Consolidated Statements of Comprehensive Income 9 Condensed Consolidated Statements of Changes in Shareholders' Equity 10 Condensed Consolidated Statements of Cash Flows 11 Notes to Condensed Consolidated Financial Statements 13 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 51 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 78 Item 4.

Controls and Procedures

Controls and Procedures 79

OTHER INFORMATION

PART II. OTHER INFORMATION 80 Item 1.

Legal Proceedings

Legal Proceedings 80 Item 1A.

Risk Factors

Risk Factors 80 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 80 Item 3. Defaults upon Senior Securities 80 Item 4. Mine Safety Disclosures 80 Item 5. Other Information 80 Item 6. Exhibits 81

SIGNATURES

SIGNATURES 82 2 Table of Contents ABBREVIATIONS/ACRONYMS The abbreviations and acronyms identified in alphabetical order below are used throughout this Quarterly Report on Form 10-Q: ACL Allowance for Credit Losses FDIA Federal Deposit Insurance Act AFS Available-for-Sale FDIC Federal Deposit Insurance Corporation AI Artificial Intelligence FHLB Federal Home Loan Bank ALCO Asset and Liability Committee FNMA Federal National Mortgage Association AML Act Anti-Money Laundering Act of 2020 FRB Federal Reserve Bank ASC Accounting Standards Codification FSC Forward Sale Commitments ASU Accounting Standards Update GAAP Accounting Principles Generally Accepted in the United States of America AUM Assets Under Management GDP Gross Domestic Product Bank First Western Trust Bank GNMA Government National Mortgage Association bp or bps Basis Point(s) HPI Housing Price Index BSA Bank Secrecy Act HTM Held-to-Maturity BTFP Bank Term Funding Program IRLC Interest Rate Lock Commitments CDB Colorado Division of Banking ITC Investment Tax Credit CECL Current Expected Credit Losses LIHTC Low-Income Housing Tax Credit CET1 Equity Tier 1 Capital MBS Mortgage-Backed Securities CFPB Consumer Financial Protection Bureau MSLP Main Street Lending Program CMO Collateralized-Mortgage Obligations OCC Office of the Comptroller of the Currency CODM Chief Operating Decision Maker OCI Other Comprehensive Income Company, FWFI First Western Financial, Inc. OREO Other Real Estate Owned COSO Committee of Sponsoring Organizations of the Treadway Commission PCAOB Public Company Accounting Oversight Board (United States) CRA Community Reinvestment Act of 1977 PPP Paycheck Protection Program CRE Commercial Real Estate SBA Small Business Administration CRO Chief Risk Officer SEC Securities and Exchange Commission DCF Discounted Cash Flow SOFR Secured Overnight Financial Rate FASB Financial Accounting Standards Board 3 Table of Contents Important Notice about Information

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION

FINANCIAL STATEMENTS

ITEM 1. FINANCIAL STATEMENTS FIRST WESTERN FINANCIAL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (in thousands, except share amounts) September 30, 2025 December 31, 2024 Assets Cash and cash equivalents: Cash and due from banks $ 13,889 $ 9,770 Interest-bearing deposits in other financial institutions 341,750 228,171 Total cash and cash equivalents 355,639 237,941 Available-for-sale debt securities, at fair value (amortized cost of $ 49,407 and $ 0 , respectively) 49,177 — Held-to-maturity debt securities, net of allowance for credit losses of $ 71 and $ 71 (fair value of $ 93,589 and $ 68,161 ), respectively 98,205 75,724 Correspondent bank stock, at cost 6,481 5,864 Mortgage loans held for sale, at fair value 21,806 25,455 Loans held for sale, at fair value — 251 Loans (includes $ 4,208 and $ 7,283 measured at fair value, respectively) 2,590,846 2,425,565 Allowance for credit losses ( 20,967 ) ( 18,330 ) Loans, net 2,569,879 2,407,235 Premises and equipment, net 24,963 24,129 Accrued interest receivable 11,907 10,364 Accounts receivable 4,687 4,763 Other receivables 3,736 5,710 Other real estate owned, net 4,389 35,929 Goodwill and other intangible assets, net 31,473 31,627 Deferred tax assets, net 3,500 3,079 Company-owned life insurance 17,299 16,961 Other assets 37,283 34,005 Total assets $ 3,240,424 $ 2,919,037 Liabilities Deposits: Noninterest-bearing $ 375,708 $ 375,603 Interest-bearing 2,473,203 2,138,606 Total deposits 2,848,911 2,514,209 Borrowings: Federal Home Loan Bank and Federal Reserve borrowings 50,867 57,038 Subordinated notes 44,724 52,565 Accrued interest payable 1,689 1,995 Other liabilities 32,738 40,908 Total liabilities 2,978,929 2,666,715 Shareholders' Equity Preferred stock - no par value; 10,000,000 shares authorized; 0 issued and outstanding — — Common stock - no par value; 90,000,000 shares authorized; 9,714,711 and 9,667,142 shares issued and outstanding as of September 30

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