First Western's Green Shoots Finally Show Up in the Arithmetic
A 14% annualized loan quarter, a fifth straight quarter of NIM expansion, and the first trust-fee growth 'in years' — yet the stock sits 12% below its July high and the fee base is still stuck where it was in 2017.
MYFW · Earnings Call · 2026-10-23
From narrative to numbers
First Western Financial is a $2.8 billion-asset private bank in Denver with a $293 million market cap, and for roughly two years its calls have run on the same patient script: market disruption, a disruption task force, green shoots, operating leverage just around the corner. The third quarter is the first where the script and the tape of the P&L agree. Net income was about $6 million, or $0.60 per diluted share, up 88% year over year; pre-tax pre-provision income rose 15% sequentially and 27% year over year. Net interest margin reached 2.95%, up 5bp on the quarter and 41bp on the year, while net interest income rose 18% year over year.
We talked last quarter about green shoots and we said we're seeing some green shoots on the banking side, we're seeing some on the PTIM side, and now those green shoots seem to be sprouting a little bit more and showing up more in the numbers.
The loan growth is what gives that line teeth. Loans held for investment rose $95 million sequentially, the sixth consecutive quarterly increase, on $163 million of new production at an average rate of 6.79% — 42bp better than the prior quarter and 53bp above the 6.26% average rate of what paid off. That spread between what walks in and what walks out is the entire margin mechanism, and Julie Courkamp was explicit that the portfolio is "providing strong momentum going into the fourth quarter." Scott Wylie put the full-year growth at roughly 10%, with a mid-teens run rate the reasonable read into 2027.
The hinge is funding, not lending
What makes this quarter more than a rate-cycle bounce is the funding side. Total deposits rose 2.5% sequentially with growth in non-interest-bearing and money market balances; average non-interest-bearing deposits were up 3.9%, and 10% on period-end balances. Deposits are the scarce input in this business, and management finally has an explanation that isn't just "our clients have liquidity": a deposit-focused business development hire, a rebuilt treasury management team, and a contractual requirement that every borrower bank with them.
The uncomfortable detail sits in the money market account book. The spot rate on total deposits was 2.86% at September 30, versus 2.80% at June 30 — funding costs went up, not down, and David Weber was transparent about why:
“We have $740 million in index money market accounts, which would translate to 100% beta. And then we have $760 million in standard money market accounts... and we saw a 28% beta on that September hike.” — David Weber, Chief Financial Officer · 2026-10-23
That is a company paying full freight on more than a quarter of its deposit base to keep relationships that fund the loan book. The offset is a $200 million notional pay-fixed swap layered on the index money market book, plus roughly $1 billion of floating rate loans and bonds that only begin earning the September hike in the fourth quarter:
“We have about $1 billion in floating rate loans and bonds. And that didn't really even show up in Q3 because that Fed Funds increase was actually on September 15th. So you'll see that benefit really for the first time in Q4.” — Scott Wylie, Chairman and Chief Executive Officer · 2026-10-23
Add $370 million of loans maturing or repricing through 2027 and $400 million of fair value cash flow swaps, and the case for continued margin expansion is mechanical rather than hopeful. This is the sector's dominant editorial theme right now — Fed rate hike is the market's second-ranked keyword this quarter, and reporters as varied as EBC and PNFP are leaning on fixed rate asset repricing and deposit cost commentary. First Western is riding the same wave, just from a much smaller boat.
The fee story nobody is paying for
The persistent weakness is non-interest income. Non-interest income sits at roughly $6 million a quarter, unchanged for nearly a decade and still 52% below the 2021Q1 peak, and the quarterly series shows no breakout. On a $48 million revenue base, fees are about an eighth of the whole.
What's new is direction. Investment management fees rose 2.6% sequentially and 5.1% year over year — trivial in dollars, meaningful as a change in slope after years of stasis:
“Our trust and investment management fees were up over $100,000 in Q3, which if you look at that on a growth rate basis, that's 2.6% increase, or annualized, that's, what, 10.4%, and up 5.1% from a year ago. So those are trends that we haven't seen in years here.” — Scott Wylie, Chairman and Chief Executive Officer · 2026-10-23
Wylie was also explicitly dismissive of mortgage, a business he has spent the last two calls defending: “It's a little bit of a sideshow.” — Scott Wylie, Chairman and Chief Executive Officer · 2026-10-23 That is a notable de-emphasis — the prior calls featured MLO headcount and lock volume; this one relegates a business whose production has "fallen off the cliff" nationally to a footnote. Management spent quarters building that team; it now barely merits a sentence.
What's priced, and what isn't
The 1% ROA target is not new — in April, Wylie said “I am hopeful that we are back with a 1% ROA in 2027” — Scott C. Wylie, Chairman and Chief Executive Officer · 2026-04-24 — but the medium-term ambition is: a line of sight to 1.5% in the internal three-year forecast. He also declined the obvious extrapolation, saying mid-teens loan growth is "a great place to be" and that 20-25% growth means chasing 90bp-over-Treasury pricing against no-credit-risk floating Ginnies. That is a disciplined answer, and it caps the upside narrative rather than inflating it.
Valuation has partly caught up: at 1.1x tangible book, the stock is no longer the 0.7x distressed asset of 2024. But the tape says the market stopped voting in mid-July: MYFW peaked at $34.19 on July 16 and is 12.3% below that, essentially flat over the last 90 days despite this print. Asset quality supports the bull case — non-performing assets fell to 39bp on paydowns, provisions were $600k on volume rather than stress, and coverage is 74bp — but that is a thin cushion, and management's claim of no deterioration through year-end is a promise, not a fact, in a loan book that has grown 27% year over year net.
The setup, then, is a bank whose operating leverage is finally visible, whose funding cost is the swing factor, and whose stock is waiting for one more quarter to prove the September rate hike flows through rather than being eaten by 100%-beta index deposits. The 2027 ROA conversation stops being a slogan the moment fees move, and right now fees remain the missing comma in an otherwise improving sentence.