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MYFW - First Western Financial Inc News Story

$25.88 -0.4  -1.6%

Last Trade - 09/04/21

Sector
Financials
Size
Small Cap
Market Cap £150.2m
Enterprise Value £166.2m
Revenue £71.0m
Position in Universe 4517th / 6827

First Western Reports Third Quarter 2020 Financial Results

Thu 22nd October, 2020 9:15pm
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Third Quarter 2020 Summary
* Net income available to common shareholders of $9.6 million in Q3 2020,
compared to $8.7 million in Q2 2020 and $2.4 million in Q3 2019


* Diluted EPS of $1.20 in Q3 2020, compared to $1.10 in Q2 2020 and $0.30 in
Q3 2019


* Gross revenue((1)) of $31.0 million in Q3 2020, compared to $26.2 million in
Q2 2020 and $16.6 million in Q3 2019


* Net interest margin, including the impact of Paycheck Protection Program
(“PPP”) loans, remained relatively flat at 3.07% in Q3 2020, compared with
3.10% in Q2 2020 and 2.95% Q3 2019


* Total assets of $1.97 billion, up 9.0% from Q2 2020 and 55.1% from Q3 2019


* Total deposits of $1.56 billion, up 11.1% from Q2 2020 and 41.0% from Q3
2019


* Gross loans of $1.51 billion, up 5.9% from Q2 2020 and 62.5% from Q3 2019


* Loans under active COVID-19 loan modification agreements declined 62.3% from
$176.9 million in Q2 2020, to $66.7 million in Q3 2020
((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.

DENVER, Oct. 22, 2020 (GLOBE NEWSWIRE) -- First Western Financial, Inc.,
(“First Western” or the “Company”) (NASDAQ: MYFW), today reported
financial results for the third quarter ended September 30, 2020.

Net income available to common shareholders was $9.6 million, or $1.20 per
diluted share, for the third quarter of 2020. This compares to $8.7 million,
or $1.10 per diluted share, for the second quarter of 2020, and $2.4 million,
or $0.30 per diluted share, for the third quarter of 2019.

Scott C. Wylie, CEO of First Western, commented, “We are very pleased to
deliver another record quarter of earnings driven by strong growth in both net
interest income and non-interest income, while our asset quality continues to
remain healthy despite the ongoing COVID-19 pandemic. The investments we have
made in banking talent and technology over the past few years are having the
impact that we expected, resulting in the consistent acquisition of new
clients, strong balance sheet growth, improving operating leverage, and
greater earnings power.

“With the addition of a number of experienced bankers through our branch
purchase consummated in May 2020, we have accelerated our commercial banking
initiative and are successfully attracting new commercial relationships.
During the third quarter, we generated loan growth of 5.9% and deposit growth
of 11.1%, largely due to growth in commercial banking relationships. As a
result, we continue to see a shift in our loan mix towards commercial loans,
while our deposit mix reflects the inflow of low-cost transaction deposits
with non-interest bearing deposits now accounting for approximately 30% of our
total deposits.

“We continue to have a strong business development pipeline in both our
commercial banking and residential mortgage areas. We expect our mortgage
activity to continue providing a significant earnings contribution in the
near-term, while the balance sheet growth, strong net interest margin and
improving operating leverage resulting from the expansion of our commercial
client roster we believe is creating a sustainable path to consistently
generating strong returns over the longer-term. As we continue to gain scale
through organic growth, expansion and additional strategic acquisitions, we
believe that our model will establish First Western as a high performing
financial institution and create significant value for our shareholders in the
future,” said Mr. Wylie.

                                                                                                                                          
                                                                       For the Three Months Ended                                         
                                                                       September 30,           June 30,              September 30,        
 (Dollars in thousands, except per share data)                         2020                    2020                  2019                 
 Earnings Summary                                                                                                                         
 Net interest income                                                   $        12,918         $      10,796         $        7,940       
 Less: provision for loan losses                                                1,496                 2,124                   100         
 Total non-interest income                                                      18,032                15,427                  8,788       
 Total non-interest expense                                                     16,632                12,644  ((1))           13,442      
 Income before income taxes                                                     12,822                11,455                  3,186       
 Income tax expense                                                             3,192                 2,759                   780         
 Net income available to common shareholders                                    9,630                 8,696                   2,406       
 Adjusted net income available to common shareholders ((2))                     9,630                 8,941                   2,855       
 Basic earnings per common share                                                1.22                  1.10                    0.30        
 Adjusted basic earnings per common share ((2))                                 1.22                  1.13                    0.35        
 Diluted earnings per common share                                              1.20                  1.10                    0.30        
 Adjusted diluted earnings per common share ((2))                      $        1.20           $      1.13           $        0.35        
                                                                                                                                          
 Return on average assets (annualized)                                          2.06     %            2.25    %               0.80     %  
 Adjusted return on average assets (annualized) ((2))                           2.06                  2.32                    0.95        
 Return on average shareholders' equity (annualized)                            26.43                 25.44                   7.74        
 Adjusted return on average shareholders' equity (annualized) ((2))             26.43                 26.16                   9.19        
 Return on tangible common equity (annualized) ((2))                            31.49                 31.02                   9.39        
 Adjusted return on tangible common equity (annualized) ((2))                   31.49                 31.89                   11.15       
 Net interest margin                                                            3.07                  3.10                    2.95        
 Efficiency ratio ((2))                                                         53.40    %            48.07   %               80.62    %  

((1)) Includes non-recurring acquisition related expenses of $0.3 million for
the three months ended June 30, 2020. 
((2) )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 Third Quarter 2020

Revenue

Gross revenue( (1)) was $31.0 million for the third quarter of 2020, compared
to $26.2 million for the second quarter of 2020. The increase in revenue was
driven by a $2.6 million increase in non-interest income, primarily due to
higher mortgage segment activity, as well as a $2.1 million increase in net
interest income.

((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.

Relative to the third quarter of 2019, gross revenue increased $14.3 million
from $16.6 million, or 86.3%. The increase in revenue was primarily due to
higher mortgage segment activity, as well as a $5.0 million increase in net
interest income.

Net Interest Income

Net interest income for the third quarter of 2020 was $12.9 million, an
increase of 19.7% from $10.8 million in the second quarter of 2020. The
increase in net interest income was driven primarily by a $194.1 million, or
15.3% increase in average loan balances attributed to organic growth as well
as a relatively stable net interest margin, which was partially impacted by an
increase of $0.4 million in accretion of the credit mark from acquired loans.

Relative to the third quarter of 2019, net interest income increased 62.7%
from $7.9 million. The year-over-year increase in net interest income was due
primarily to growth in average loans including the impact of PPP loans and the
branch acquisition.

Net Interest Margin

Net interest margin for the third quarter of 2020 decreased slightly to 3.07%
from 3.10% in the second quarter of 2020. The decrease was primarily driven by
a 15 basis point decline in the yield on earning assets. On a net basis, the
PPP program negatively impacted net interest margin by 31 basis points which
was offset by an increase of 15 basis points relating to the impact of
purchase accretion from the branch acquisition completed in the second quarter
2020.

Relative to the third quarter of 2019, the net interest margin increased from
2.95%, primarily due to a 100 basis point decline in cost of deposits
partially offset by an 83 basis point reduction in average yields on interest
earning assets.

Non-interest Income

Non-interest income for the third quarter of 2020 was $18.0 million, an
increase of 16.9% from $15.4 million in the second quarter of 2020. The
increase was attributable to higher net gain on mortgage loans as a result of
record volume of mortgages locked and originated in the quarter. The Company
originated $376.3 million of mortgage loans for sale during the quarter
compared to $344.3 million the previous quarter, an increase of $32.0 million.

Relative to the third quarter of 2019, non-interest income increased 105.2%
from $8.8 million. The increase was attributable to higher net gain on
mortgage loans.

Non-interest Expense

Non-interest expense for the third quarter of 2020 was $16.6 million, an
increase of 31.5% from $12.6 million for the second quarter of 2020. The
increase was primarily attributable to the second quarter deferral of $2.9
million in loan origination expenses related to PPP loans, resulting in higher
salaries and employee benefits expense in the current quarter, as well as the
full quarter impact of the personnel added through the branch purchase and an
increase in incentive compensation accruals correlating with the increase in
revenues and earnings.

Non-interest expense increased 23.7% from $13.4 million in the third quarter
of 2019. The increase was primarily due to higher salaries and employee
benefits expense resulting from the personnel added through the branch
purchase and an increase in incentive compensation accruals correlating with
the increase in revenues and earnings.

The Company’s efficiency ratio was 53.4% in the third quarter of 2020,
compared with 48.1% in the second quarter of 2020 and 80.6% in the third
quarter of 2019.

Income Taxes

The Company recorded income tax expense of $3.2 million for the third quarter
of 2020, representing an effective tax rate of 24.9%, compared to 24.1% for
the second quarter of 2020. The increase in effective tax rate in the third
quarter of 2020 was primarily attributable to adjustments related to the
vesting of restricted stock award.

Loan Portfolio

Total loans, including mortgage loans held for sale, were $1.60 billion at
September 30, 2020, an increase of $103.6 million from the end of the prior
quarter, and an increase of $603.8 million from September 30, 2019.

Total loans held for investment, were $1.51 billion at September 30, 2020, an
increase of 5.9% from $1.42 billion at June 30, 2020, and an increase of 63.1%
from $924.4 million at September 30, 2019. The increase in total loans held
for investment from June 30, 2020 was primarily due to growth in the 1-4
family residential, commercial real estate, and construction portfolios.

PPP loans were $206.1 million at September 30, 2020, an increase of 0.8% from
$204.6 million at June 30, 2020. As of October 16, 2020, the Company has
submitted loan forgiveness applications for $85.2 million and received $2.1
million from the Small Business Administration.

Deposits

Total deposits were $1.56 billion at September 30, 2020, compared to $1.41
billion at June 30, 2020, and $1.11 billion at September 30, 2019. The
increase in total deposits from June 30, 2020 was attributable to an increase
in money market, time, negotiable order of withdrawal and non-interest bearing
deposits.

Average total deposits for the third quarter of 2020 increased $420.6 million,
or 40.4%, from the third quarter of 2019 and $153.6 million, or 11.7%, from
the second quarter 2020.

Borrowings

Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $222.1
million at September 30, 2020, compared to $222.3 million at June 30, 2020, a
decrease of $0.2 million from the end of the prior quarter, and an increase of
$212.1 million from September 30, 2019. The increase from September 30, 2019
is attributable to participation in the Paycheck Protection Program Loan
Facility from the Federal Reserve in the amount of $204.1 million. Borrowing
from this facility is expected to match the balances of the PPP loans.

Assets Under Management

Total assets under management increased by $378.8 million during the third
quarter to $6.13 billion at September 30, 2020, compared to $5.75 billion at
June 30, 2020, and $6.12 billion at September 30, 2019. The increase was
primarily attributable to customer contributions to existing accounts and
improving market conditions.

Credit Quality

Non-performing assets totaled $10.4 million, or 0.53% of total assets, at
September 30, 2020, compared with $12.1 million, or 0.67% of total assets, at
June 30, 2020. The decline in non-performing assets is due to continued pay
downs on outstanding balances.

As a result of the COVID-19 pandemic, a loan modification program was designed
and implemented to assist our clients experiencing financial stress resulting
from the economic impacts caused by the global pandemic. The Company offered
loan extensions, temporary payment moratoriums, and financial covenant waivers
for commercial and consumer borrowers impacted by the pandemic who had a pass
risk rating and had not been delinquent over 30 days on payments in the last
two years.

At September 30, 2020, the Company has active loan modification agreements on
forty-four loans across multiple industries in the amount of $66.7 million,
representing a decline of 62.3% from $176.9 million, at June 30, 2020.
COVID-19 loan modification agreements represented 4.43% of total loans, at
September 30, 2020, compared with 12.42% of total loans, at June 30, 2020.
Most of the temporary payment moratoriums were for a period of 180 days or
less and the Company is recognizing interest income on these loans.

The Company continues to meet regularly with clients who could be more highly
impacted by the COVID-19 pandemic. The Company receives and reviews current
financial data and cash flow forecasts from borrowers with loan modification
agreements. As of September 30, 2020, loans which were granted modifications
and the modification term has ended have returned to performing status.

The Company recorded a provision for loan losses of $1.5 million in the third
quarter of 2020, primarily due to the growth in the loan portfolio and the
increased economic uncertainty resulting from the pandemic. The Company has
increased loan level reviews and portfolio monitoring to thoroughly assess how
its clients are being impacted by the current environment.

Capital

At September 30, 2020, First Western (“Consolidated”) and First Western
Trust Bank (“Bank”) exceeded the minimum capital levels required by their
respective regulators. At September 30, 2020, the Bank was classified as
“well capitalized,” as summarized in the following table:

                                                                          
                                                        September 30,     
                                                        2020              
 Consolidated Capital                                                     
 Tier 1 capital to risk-weighted assets                 9.88           %  
 Common Equity Tier 1 (CET1) to risk-weighted assets    9.88              
 Total capital to risk-weighted assets                  12.03             
 Tier 1 capital to average assets                       7.52              
                                                                          
 Bank Capital                                                             
 Tier 1 capital to risk-weighted assets                 10.28             
 Common Equity Tier 1 (CET1) to risk-weighted assets    10.28             
 Total capital to risk-weighted assets                  11.26             
 Tier 1 capital to average assets                       7.81           %  

Book value per common share increased 19.4% from $15.75 at September 30, 2019
to $18.81 at September 30, 2020, and was up 7.1% from $17.56 at June 30, 2020.

Tangible book value per common share( (1)) increased 19.9% from $12.83 at
September 30, 2019 to $15.38 at September 30, 2020, and was up 8.8% from
$14.13 at June 30, 2020.

((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, October 23, 2020. The call can be accessed via telephone at
877-405-1628. A recorded replay will be accessible through October 30, 2020 by
dialing 855-859-2056; passcode 6479834.

A slide presentation relating to the third quarter 2020 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 and California. 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 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 in
connection with acquisitions; the risk of geographic concentration in
Colorado, Arizona, Wyoming and California; 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 12, 2020 (“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                                           
                                                         September 30,          June 30,            September 30,     
 (Dollars in thousands, except per share amounts)        2020                   2020                2019              
 Interest and dividend income:                                                                                        
 Loans, including fees                                   $        14,138        $      12,202       $        10,672   
 Investment securities                                            173                  224                   312      
 Federal funds sold and other                                     99                   44                    489      
 Total interest and dividend income                               14,410               12,470                11,473   
                                                                                                                      
 Interest expense:                                                                                                    
 Deposits                                                         1,067                1,319                 3,363    
 Other borrowed funds                                             425                  355                   170      
 Total interest expense                                           1,492                1,674                 3,533    
 Net interest income                                              12,918               10,796                7,940    
 Less: provision for loan losses                                  1,496                2,124                 100      
 Net interest income, after provision for loan losses             11,422               8,672                 7,840    
                                                                                                                      
 Non-interest income:                                                                                                 
 Trust and investment management fees                             4,814                4,609                 4,824    
 Net gain on mortgage loans                                       12,304               10,173                3,291    
 Bank fees                                                        340                  221                   283      
 Risk management and insurance fees                               483                  333                   176      
 Net gain on sale of securities                                   —                    —                     119      
 Income on company-owned life insurance                           91                   91                    95       
 Total non-interest income                                        18,032               15,427                8,788    
 Total income before non-interest expense                         29,454               24,099                16,628   
                                                                                                                      
 Non-interest expense:                                                                                                
 Salaries and employee benefits                                   10,212               6,690                 8,504    
 Occupancy and equipment                                          1,619                1,515                 1,388    
 Professional services                                            1,288                1,231                 745      
 Technology and information systems                               1,032                993                   961      
 Data processing                                                  1,038                1,037                 854      
 Marketing                                                        395                  253                   272      
 Amortization of other intangible assets                          4                    38                    52       
 Provision on other real estate owned                             100                  —                     —        
 Other                                                            944                  887                   666      
 Total non-interest expense                                       16,632               12,644                13,442   
 Income before income taxes                                       12,822               11,455                3,186    
 Income tax expense                                               3,192                2,759                 780      
 Net income available to common shareholders             $        9,630         $      8,696        $        2,406    
 Earnings per common share:                                                                                           
 Basic                                                   $        1.22          $      1.10         $        0.30     
 Diluted                                                 $        1.20          $      1.10         $        0.30     



                                                                                                                               
                                                                 September 30,         June 30,            September 30,       
                                                                 2020                  2020                2019                
                                                                                                                               
 (Dollars in thousands)                                                                                                        
 ASSETS                                                                                                                        
 Cash and cash equivalents:                                                                                                    
 Cash and due from banks                                         $        2,867        $      4,404        $        3,828      
 Interest-bearing deposits in other financial institutions                247,491             187,272               142,348    
 Total cash and cash equivalents                                          250,358             191,676               146,176    
                                                                                                                               
 Available-for-sale securities, at fair value                             40,654              47,018                61,491     
 Correspondent bank stock, at cost                                        1,295               1,295                 582        
 Mortgage loans held for sale                                             89,872              69,604                69,231     
 Loans, net of allowance of $11,845, $10,354 and $7,675                   1,494,231           1,412,086             918,911    
 Premises and equipment, net                                              5,116               5,201                 5,483      
 Accrued interest receivable                                              6,730               5,108                 2,968      
 Accounts receivable                                                      4,821               4,616                 4,978      
 Other receivables                                                        1,497               1,543                 865        
 Other real estate owned, net                                             558                 658                   658        
 Goodwill                                                                 24,191              24,191                19,686     
 Other intangible assets, net                                             72                  76                    36         
 Deferred tax assets, net                                                 6,405               6,035                 4,765      
 Company-owned life insurance                                             15,359              15,268                14,993     
 Other assets                                                             28,738              23,141                17,549     
 Assets held for sale                                                     3,000               3,010                 3,553      
 Total assets                                                    $        1,972,897    $      1,810,526    $        1,271,925  
                                                                                                                               
 LIABILITIES                                                                                                                   
 Deposits:                                                                                                                     
 Noninterest-bearing                                             $        472,963      $      398,063      $        231,535    
 Interest-bearing                                                         1,090,709           1,008,869             877,369    
 Total deposits                                                           1,563,672           1,406,932             1,108,904  
 Borrowings:                                                                                                                   
 Federal Home Loan Bank Topeka and Federal Reserve borrowings             222,075             222,313               10,000     
 Subordinated notes                                                       14,447              14,444                6,560      
 Accrued interest payable                                                 347                 205                   356        
 Other liabilities                                                        22,639              27,080                20,262     
 Liabilities held for sale                                                141                 135                   111        
 Total liabilities                                                        1,823,321           1,671,109             1,146,193  
                                                                                                                               
 SHAREHOLDERS’ EQUITY                                                                                                          
 Total shareholders’ equity                                               149,576             139,417               125,732    
 Total liabilities and shareholders’ equity                      $        1,972,897    $      1,810,526    $        1,271,925  
                                                                                                                               



                                                                                                                                                     
                                                                               September 30,              June 30,               September 30,       
 (Dollars in thousands)                                                        2020                       2020                   2019                
 Loan Portfolio                                                                                                                                      
 Cash, Securities and Other                                                    $      371,481             $    371,111           $        146,622    
 Construction and Development                                                         105,717                  74,793                     42,059     
 1-4 Family Residential                                                               446,959                  418,409                    366,238    
 Non-Owner Occupied CRE                                                               243,564                  229,150                    138,753    
 Owner Occupied CRE                                                                   154,138                  117,426                    119,497    
 Commercial and Industrial                                                            185,625                  213,271                    111,187    
 Total loans held for investment                                                      1,507,484                1,424,160                  924,356    
 Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net           (1,408     )             (1,720     )               2,230      
 Gross loans                                                                   $      1,506,076           $    1,422,440         $        926,586    
 Total mortgage loans held for sale                                            $      89,872              $    69,604            $        69,231     
                                                                                                                                                     
 Deposit Portfolio                                                                                                                                   
 Money market deposit accounts                                                 $      805,634             $    759,997           $        620,434    
 Time deposits                                                                        177,391                  152,897                    170,457    
 Negotiable order of withdrawal accounts                                              101,708                  88,560                     83,022     
 Savings accounts                                                                     5,976                    7,415                      3,456      
 Total interest-bearing deposits                                                      1,090,709                1,008,869                  877,369    
 Noninterest-bearing accounts                                                         472,963                  398,063                    231,535    
 Total deposits                                                                $      1,563,672           $    1,406,932         $        1,108,904  
                                                                                                                                                     



                                                                                                                                                             
                                                                     As of and for the Three Months Ended                                                    
                                                                     September 30,                  June 30,                     September 30,               
 (Dollars in thousands)                                              2020                           2020                         2019                        
 Average Balance Sheets                                                                                                                                      
 Assets                                                                                                                                                      
 Interest-earning assets:                                                                                                                                    
 Interest-bearing deposits in other financial institutions           $      178,756                 $     76,463                 $      88,782               
 Available-for-sale securities                                              40,528                        48,614                        51,368               
 Loans                                                                      1,462,872                     1,268,797                     937,260              
 Interest-earning assets                                                    1,682,156                     1,393,874                     1,077,410            
 Mortgage loans held for sale                                               94,714                        68,212                        52,546               
 Total interest-earning assets, plus mortgage loans held for sale           1,776,870                     1,462,086                     1,129,956            
 Allowance for loan losses                                                  (10,965    )                  (8,694     )                  (7,584     )         
 Noninterest-earning assets                                                 101,874                       89,817                        81,171               
 Total assets                                                        $      1,867,779               $     1,543,209              $      1,203,543            
                                                                                                                                                             
 Liabilities and Shareholders’ Equity                                                                                                                        
 Interest-bearing liabilities:                                                                                                                               
 Interest-bearing deposits                                           $      1,045,321               $     929,805                $      826,490              
 Federal Home Loan Bank Topeka and Federal Reserve borrowings               222,225                       64,067                        10,567               
 Subordinated notes                                                         14,445                        14,445                        6,560                
 Total interest-bearing liabilities                                         1,281,991                     1,008,317                     843,617              
 Noninterest-bearing liabilities:                                                                                                                            
 Noninterest-bearing deposits                                               417,502                       379,374                       215,721              
 Other liabilities                                                          22,564                        18,815                        19,881               
 Total noninterest-bearing liabilities                                      440,066                       398,189                       235,602              
 Total shareholders’ equity                                                 145,722                       136,703                       124,324              
 Total liabilities and shareholders’ equity                          $      1,867,779               $     1,543,209              $      1,203,543            
                                                                                                                                                             
 Yields (annualized)                                                                                                                                         
 Interest-bearing deposits in other financial institutions                  0.22              %           0.23             %            2.20              %  
 Available-for-sale securities                                              1.71                          1.84                          2.43                 
 Loans                                                                      3.87                          3.85                          4.55                 
 Interest-earning assets                                                    3.43                          3.58                          4.26                 
 Mortgage loans held for sale                                               2.72                          3.23                          3.46                 
 Total interest-earning assets, plus mortgage loans held for sale           3.39                          3.56                          4.22                 
 Interest-bearing deposits                                                  0.41                          0.57                          1.63                 
 Federal Home Loan Bank Topeka and Federal Reserve borrowings               0.37                          0.81                          1.93                 
 Subordinated notes                                                         6.12                          6.26                          7.26                 
 Total interest-bearing liabilities                                         0.47                          0.66                          1.68                 
 Net interest margin                                                        3.07                          3.10                          2.95                 
 Net interest rate spread                                                   2.96              %           2.92             %            2.58              %  



                                                                                                                                                          
                                                                           As of and for the Three Months Ended                                           
                                                                           September 30,                June 30,                   September 30,          
 (Dollars in thousands, except share and per share amounts)                2020                         2020                       2019                   
 Asset Quality                                                                                                                                            
 Non-performing loans                                                      $        9,881               $      11,454              $        13,980        
 Non-performing assets                                                              10,439                     12,112                       14,638        
 Net charge-offs                                                           $        5                   $      12                  $        —             
 Non-performing loans to total loans                                                0.66       %               0.81       %                 1.51       %  
 Non-performing assets to total assets                                              0.53                       0.67                         1.15          
 Allowance for loan losses to non-performing loans                                  119.88                     90.40                        54.90         
 Allowance for loan losses to total loans                                           0.79                       0.73                         0.83          
 Allowance for loan losses to bank originated loans excluding PPP ((1))             1.00                       0.93                         0.83          
 Net charge-offs to average loans                                                   —          % ((2))         —          % ((2))           —          %  
                                                                                                                                                          
 Assets Under Management                                                   $        6,131,179           $      5,752,353           $        6,116,510     
                                                                                                                                                          
 Market Data                                                                                                                                              
 Book value per share at period end                                        $        18.81               $      17.56               $        15.75         
 Tangible book value per common share ((1))                                $        15.38               $      14.13               $        12.83         
 Weighted average outstanding shares, basic                                         7,911,871                  7,890,337                    7,890,959     
 Weighted average outstanding shares, diluted                                       8,019,007                  7,928,518                    7,914,959     
 Shares outstanding at period end                                                   7,951,749                  7,939,024                    7,983,866     
                                                                                                                                                          
 Consolidated Capital                                                                                                                                     
 Tier 1 capital to risk-weighted assets                                             9.88       %               9.67       %                 11.73      %  
 Common Equity Tier 1 (CET1) to risk-weighted assets                                9.88                       9.67                         11.73         
 Total capital to risk-weighted assets                                              12.03                      11.84                        13.36         
 Tier 1 capital to average assets                                                   7.52                       8.30                         8.76          
                                                                                                                                                          
 Bank Capital                                                                                                                                             
 Tier 1 capital to risk-weighted assets                                             10.28                      10.12                        10.98         
 Common Equity Tier 1 (CET1) to risk-weighted assets                                10.28                      10.12                        10.98         
 Total capital to risk-weighted assets                                              11.26                      11.05                        11.87         
 Tier 1 capital to average assets                                                   7.81       %               8.63       %                 8.19       %  

((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)) Calculation results in an immaterial amount.

Reconciliations of Non-GAAP Financial Measures

                                                                     As of and for the Three Months Ended                                       
                                                                     September 30,              June 30,                 September 30,          
 (Dollars in thousands, except share and per share amounts)          2020                       2020                     2019                   
 Tangible Common                                                                                                                                
 Total shareholders' equity                                          $        149,576           $      139,417           $        125,732       
 Less: goodwill                                                               24,191                   24,191                     19,686        
 Less: intangibles held for sale                                              3,000                    3,000      ((1))           3,553         
 Less: other intangibles, net                                                 72                       76                         36            
 Tangible common equity                                              $        122,313           $      112,150           $        102,457       
                                                                                                                                                
 Common shares outstanding, end of period                                     7,951,749                7,939,024                  7,983,866     
 Tangible common book value per share                                $        15.38             $      14.13             $        12.83         
                                                                                                                                                
 Net income available to common shareholders                         $        9,630             $      8,696             $        2,406         
 Return on tangible common equity (annualized)                                31.49      %             31.02      %               9.39       %  
                                                                                                                                                
 Efficiency                                                                                                                                     
 Non-interest expense                                                $        16,632            $      12,644            $        13,442        
 Less: amortization                                                           4                        38                         52            
 Less: provision on other real estate owned                                   100                      —                          —             
 Adjusted non-interest expense                                       $        16,528            $      12,606            $        13,390        
                                                                                                                                                
 Net interest income                                                 $        12,918            $      10,796            $        7,940         
 Non-interest income                                                          18,032                   15,427                     8,788         
 Less: net gain on sale of securities                                         —                        —                          119           
 Total income                                                        $        30,950            $      26,223            $        16,609        
 Efficiency ratio                                                             53.40      %             48.07      %               80.62      %  
                                                                                                                                                
 Gross Revenue                                                                                                                                  
 Total income before non-interest expense                            $        29,454            $      24,099            $        16,628        
 Less: net gain on sale of securities                                         —                        —                          119           
 Plus: provision for loan losses                                              1,496                    2,124                      100           
 Gross revenue                                                       $        30,950            $      26,223            $        16,609        
                                                                                                                                                
 Allowance to Bank Originated Loans Excluding PPP                                                                                               
 Total loans                                                         $        1,507,484         $      1,424,160         $        924,356       
 Less: loans acquired                                                         124,689                  123,786                    —             
 Less: bank originated PPP loans                                              193,213                  191,676                    —             
 Bank originated loans excluding PPP                                 $        1,189,582         $      1,108,698         $        924,356       
                                                                                                                                                
 Allowance for loan losses                                           $        11,845            $      10,354            $        7,675         
 Allowance for loan losses to bank originated loans excluding PPP             1.00       %             0.93       %               0.83       %  

((1)) Represents only the intangible portion of assets held for sale

                                                                                                                                          
                                                                       As of and for the Three Months Ended                               
                                                                       September 30,            June 30,             September 30,        
 (Dollars in thousands, except share and per share data)               2020                     2020                 2019                 
 Adjusted Net Income Available to Common Shareholders                                                                                     
 Net income available to common shareholders                           $        9,630           $      8,696         $        2,406       
 Plus: expenses related to branch purchase and assumption agreement             —                      323                    —           
 Plus: EMC performance related earn-out payouts                                 —                      —                      466         
 Plus: expenses related to sale of L.A. fixed income team                       —                      —                      140         
 Less: income tax impact                                                        —                      78                     157         
 Adjusted net income available to shareholders                         $        9,630           $      8,941         $        2,855       
                                                                                                                                          
 Adjusted Basic Earnings Per Share                                                                                                        
 Basic earnings per share                                              $        1.22            $      1.10          $        0.30        
 Plus: expenses related to branch purchase and assumption agreement             —                      0.03                   —           
 Plus: EMC performance related earn-out payouts                                 —                      —                      0.04        
 Plus: expenses related to sale of L.A. fixed income team                       —                      —                      0.01        
 Adjusted basic earnings per share                                     $        1.22            $      1.13          $        0.35        
                                                                                                                                          
 Adjusted Diluted Earnings Per Share                                                                                                      
 Diluted earnings per share                                            $        1.20            $      1.10          $        0.30        
 Plus: expenses related to branch purchase and assumption agreement             —                      0.03                   —           
 Plus: EMC performance related earn-out payouts                                 —                      —                      0.04        
 Plus: expenses related to sale of L.A. fixed income team                       —                      —                      0.01        
 Adjusted diluted earnings per share                                   $        1.20            $      1.13          $        0.35        
                                                                                                                                          
 Adjusted Return on Average Assets (annualized)                                                                                           
 Return on average assets                                                       2.06     %             2.25   %               0.80     %  
 Plus: expenses related to branch purchase and assumption agreement             —                      0.07                   —           
 Plus: EMC performance related earn-out payouts                                 —                      —                      0.12        
 Plus: expenses related to sale of L.A. fixed income team                       —                      —                      0.03        
 Adjusted return on average assets                                              2.06     %             2.32   %               0.95     %  
                                                                                                                                          
 Adjusted Return on Average Shareholders' Equity (annualized)                                                                             
 Return on average shareholders' equity                                         26.43    %             25.44  %               7.74     %  
 Plus: expenses related to branch purchase and assumption agreement             —                      0.72                   —           
 Plus: EMC performance related earn-out payouts                                 —                      —                      1.13        
 Plus: expenses related to sale of L.A. fixed income team                       —                      —                      0.32        
 Adjusted return on average shareholders' equity                                26.43    %             26.16  %               9.19     %  
                                                                                                                                          
 Adjusted Return on Tangible Common Equity (annualized)                                                                                   
 Return on tangible common equity                                               31.49    %             31.02  %               9.39     %  
 Plus: expenses related to branch purchase and assumption agreement             —                      0.87                   —           
 Plus: EMC performance related earn-out payouts                                 —                      —                      1.37        
 Plus: expenses related to sale of L.A. fixed income team                       —                      —                      0.39        
 Adjusted return on tangible common equity                                      31.49    %             31.89  %               11.15    %  
                                                                                                                                          

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