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First Western Financial NASDAQ: MYFW reported improved profitability in the fourth quarter of 2025, supported by loan and deposit growth, net interest margin expansion, stable credit trends, and disciplined expense management, according to executives on the company’s quarterly earnings conference call.
Fourth-quarter profitability and one-time OREO impact
Chairman and CEO Scott Wylie said the company “executed well in the fourth quarter” and cited positive trends in loan growth, margin expansion, expense control, and asset quality. First Western posted net income of $3.3 million, or $0.34 per diluted share, in the fourth quarter, which was higher than the prior quarter.
Results included a $1.4 million write-down on the value of an other real estate owned (OREO) property, which management said reduced earnings per share by $0.10 after tax. Wylie provided additional context during Q&A, explaining the property was affected by “unpermitted construction” and challenges with local approvals. The company’s “last piece of OREO” was under contract and expected to close in the first quarter, management said.
Wylie also noted book value and tangible book value per share increased, with tangible book value per share rising 1.6% during the quarter.
Balance sheet growth: loans up $59 million and deposits up $102 million
Chief Operating Officer Julie Courkamp said loans held for investment increased $59 million from the end of the prior quarter, with new loan production totaling $146 million in the fourth quarter. She said the company remains “conservative and highly selective” on new loans, maintaining disciplined underwriting and pricing criteria, and reported an average rate of 6.36% on new production.
Courkamp said loan production was diversified, with the largest increases in commercial real estate portfolios, and noted the bank is “also getting deposit relationships with most of these new clients.” She added that some construction loans migrated into the CRE portfolio after project completion.
On deposits, Courkamp reported total deposits increased $102 million from the prior quarter. She attributed part of the change to new deposit relationships, partially offset by seasonal outflows tied largely to title company operating accounts, which typically decline in the fourth quarter with lower home purchase activity. She also said the bank ran off high-cost deposits after strong core deposit production in the third quarter. Average deposits increased 10% in the fourth quarter of 2025 compared with the fourth quarter of 2024.
Net interest margin expands as deposit costs decline
Chief Financial Officer David Weber said gross revenue increased 1.5% from the prior quarter, primarily due to higher net interest income, and was up 12.2% versus the fourth quarter of 2024.
Net interest income rose 5.6% sequentially and 21.7% year-over-year, driven by a higher net interest margin. Weber said net interest margin increased 17 basis points from the prior quarter to 2.71%, primarily due to a reduction in the cost of funds. He attributed the cost improvement to lower rates on money market deposit accounts as the company reduced deposit rates in line with short-term rate declines, as well as runoff of high-cost deposit accounts.
During Q&A, management said about $250 million in fixed-rate loans mature over the next year, with average yields “in the low fives,” providing an opportunity to reprice the loan book. Wylie also said the company has shifted its balance sheet interest rate risk closer to neutral over the last six months and that continued net interest margin improvement is “not dependent on continued rate cuts.”
In response to an analyst question regarding first-quarter pressure, management said net interest margin in December was 2.72% and did not expect meaningful incremental pressure from the end-of-period balance sheet mix. Management also disclosed an end-of-year spot rate on deposits of 2.86% and said it believed it could hold a mid-50% deposit beta.
Fee income decline and business line changes
Weber said non-interest income decreased by roughly $800,000 from the prior quarter, primarily due to lower gain-on-sale of mortgage loans—described as a typical seasonal decline in the fourth quarter—and a decrease in risk management and insurance fees. Management said it has transitioned to “new leadership and focus” in trust and investment management and insurance and expects those changes to drive improved results going forward.
On the wealth business, Courkamp said assets under management declined $155 million in the fourth quarter, driven primarily by net withdrawals in low-fee and fixed-fee product categories. She noted improved market conditions in investment agency accounts with higher variable fees, with those balances up $15 million, or about 1%, during the quarter.
Wylie said management reviewed the AUM declines and concluded the reductions were largely in lower-yielding categories, while higher-yielding categories for the company showed improvement. He described a strategic shift over the past year in the wealth business from being primarily investment management-led to being more “fiduciary and trust and especially planning-driven,” and referenced a new B2B offering that was “just now getting going.”
On mortgage, management emphasized seasonality and said the bank increased its mortgage loan officer (MLO) team by eight producers in 2025, a 45% year-over-year increase, noting the cost structure is commission-based. Executives said the mortgage operation remains profitable and contributes new client relationships to the bank, with expectations that the second and third quarters of 2026 will be seasonally stronger than the first and fourth.
Expenses, credit trends, and 2026 outlook
Weber said non-interest expense increased $1.2 million from the prior quarter, driven by the $1.4 million OREO write-down. Excluding that write-down, non-interest expense decreased $100,000, and management said it continues to control expenses while investing in areas expected to support long-term performance.
On asset quality, Weber said trends were generally stable, with decreases in non-accrual loans and non-performing assets and minimal net charge-offs. Allowance coverage remained unchanged at 81 basis points of total loans, and the company said the decrease in non-accrual loans and NPAs contributed to a more normal level of provision expense.
Looking ahead, Wylie said economic conditions in the company’s markets remain relatively healthy and pointed to opportunities to add clients and talent amid ongoing M&A disruption in the Colorado banking market. He also cited a newer market presence in Arizona and said loan and deposit pipelines remain strong, with 2026 balance sheet growth expected to be similar to 2025 levels. Management also expects continued positive trends in net interest margin, fee income, and operating leverage, though Wylie said 2026 margin expansion may not match 2025’s pace.
In response to questions on spending, Wylie said the company’s internal target is to keep quarterly expenses below $20 million, while remaining willing to invest when opportunities arise. On tax rate expectations, Weber said quarterly fluctuations were influenced by fintech investment K-1 losses and equity compensation dynamics, and he suggested a planning range of 23% to 24% going forward.
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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