• First Western Reports Second Quarter 2022 Financial Results

    Source: Nasdaq GlobeNewswire / 28 Jul 2022 15:15:01   America/Chicago

    Second Quarter 2022 Summary

    • Net income available to common shareholders of $4.5 million in Q2 2022, compared to $5.5 million in Q1 2022 and $6.3 million in Q2 2021
    • Diluted EPS of $0.46 in Q2 2022, compared to $0.57 in Q1 2022 and $0.76 in Q2 2021
    • Total income before non-interest expense of $26.6 million in Q2 2022, compared to $26.7 million in Q1 2022 and $23.7 million in Q2 2021
    • Total loans held for investment increased at annualized rate of 45.4%
    • Book value per common share increased to $24.06, or 1.6%, from $23.68 as of Q1 2022, and was up 14.5% from $21.01 as of Q2 2021

    DENVER, July 28, 2022 (GLOBE NEWSWIRE) -- First Western Financial, Inc., (“First Western” or the “Company”) (NASDAQ: MYFW), today reported financial results for the second quarter ended June 30, 2022.

    Net income available to common shareholders was $4.5 million, or $0.46 per diluted share, for the second quarter of 2022. This compares to $5.5 million, or $0.57 per diluted share, for the first quarter of 2022, and $6.3 million, or $0.76 per diluted share, for the second quarter of 2021.

    Scott C. Wylie, CEO of First Western, commented, “We had a record quarter of loan production and loan growth as we continue to benefit from the stronger commercial banking platform we have built, the addition of new banking talent, and our expansion into new, attractive markets. Our strong loan growth enabled us to redeploy our excess liquidity into higher yielding earning assets and drive significant expansion in our net interest margin. As a result of the loan growth and margin expansion, we were able to generate a 10% increase in net interest income compared to the prior quarter and offset some of the weakness we experienced in non-interest income due to the challenging operating environment for the wealth management and mortgage banking industries.

    “We expect many of the positive trends we experienced in the second quarter to continue in the second half of the year. Our loan pipeline remains very strong and is consistent with the size of the pipeline at the end of the first quarter. While we expect higher rates to begin impacting loan demand, particularly for commercial real estate loans, we believe our well diversified loan production platform will continue generating strong loan growth, while our asset sensitivity drives further expansion in our net interest margin. Combined with relatively stable expense levels and continued strong asset quality, we believe we are well positioned to deliver a higher level of earnings and returns over the remainder of the year,” said Mr. Wylie.

               
      For the Three Months Ended 
      June 30,  March 31,  June 30,  
    (Dollars in thousands, except per share data)    2022    2022    2021 
    Earnings Summary             
    Net interest income $20,138 $18,284 $14,223 
    Provision for loan losses  519  210  12 
    Total non-interest income  6,940  8,600  9,500 
    Total non-interest expense  20,583  19,358  15,523 
    Income before income taxes  5,976  7,316  8,188 
    Income tax expense  1,494  1,792  1,911 
    Net income available to common shareholders  4,482  5,524  6,277 
    Adjusted net income available to common shareholders(1)  4,742  5,922  6,331 
    Basic earnings per common share  0.47  0.59  0.79 
    Adjusted basic earnings per common share(1)  0.50  0.63  0.80 
    Diluted earnings per common share  0.46  0.57  0.76 
    Adjusted diluted earnings per common share(1)  0.49  0.61  0.77 
               
    Return on average assets (annualized)  0.71% 0.85% 1.22%
    Adjusted return on average assets (annualized)(1)  0.75  0.92  1.23 
    Return on average shareholders' equity (annualized)  7.89  9.98  15.17 
    Adjusted return on average shareholders' equity (annualized)(1)  8.35  10.70  15.30 
    Return on tangible common equity (annualized)(1)  9.16  11.57  17.47 
    Adjusted return on tangible common equity (annualized)(1)  9.69  12.41  17.62 
    Net interest margin  3.35  2.98  3.01 
    Efficiency ratio(1)  74.85  69.68  65.13 



    (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.

    Operating Results for the Second Quarter 2022

    Revenue

    Gross revenue (1) remained flat for the second quarter of 2022, at $26.9 million compared to the first quarter of 2022. Relative to the second quarter of 2021, gross revenue increased 13.5% from $23.7 million for the second quarter of 2021, primarily driven by growth in interest-earning assets.

    (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.

    Net Interest Income

    Net interest income for the second quarter of 2022 was $20.1 million, an increase of 10.1% from $18.3 million in the first quarter of 2022. The increase was due to an increase in yield on interest-earning assets due to the higher rate environment and the increase in average interest-earning assets resulting from strong loan growth in the second quarter of 2022, which drove an increase in average loans of $87.3 million, as well as an increase in net interest margin. We saw growth across most major loan categories with the largest increases in C&I and 1-4 family residential, as second quarter mortgage production was more heavily weighted towards loans that the Company retains in its loans held for investment portfolio.

    Relative to the second quarter of 2021, net interest income increased 41.6% from $14.2 million. The year-over-year increase in net interest income was due to an increase in yield on interest-earning assets due to the higher rate environment and the increase in average interest-earning assets driven by an increase in average loans of $436.5 million compared to June 30, 2021, primarily a result of organic loan growth and the Teton Financial Services, Inc. (“Teton”) acquisition.

    Net Interest Margin

    Net interest margin for the second quarter of 2022 increased 37 bps to 3.35% from 2.98% in the first quarter of 2022, primarily due to higher yields on interest-earning assets and a more favorable earning asset mix.

    The yield on interest-earning assets increased to 3.60% in the second quarter of 2022 from 3.20% in the first quarter of 2022 and the cost of interest-bearing deposits increased to 0.29% in the second quarter of 2022, from 0.23% in the first quarter of 2022.

    Relative to the second quarter of 2021, net interest margin increased from 3.01%, primarily due to increased yields and volume on total loans as a result of strong loan growth, the Teton acquisition, and rising rate environment.

    Non-interest Income

    Non-interest income for the second quarter of 2022 was $6.9 million, a decrease of 19.3% from $8.6 million in the first quarter of 2022. This was primarily due to a $1.3 million decrease in net gain on mortgage loans due to a reduction in the amount of mortgage loans originated for sale and a $0.4 million decrease in trust and investment management fees, which were negatively impacted by lower equity and fixed income market valuations.

    Relative to the second quarter of 2021, non-interest income decreased 26.9% from $9.5 million. The decrease was primarily due to lower mortgage segment activity driven by a 60.0% decline in refinance volume and a reduction in the amount of mortgage loans originated for sale, partially offset by higher bank fees and net gains on equity securities.

    Non-interest Expense

    Non-interest expense for the second quarter of 2022 was $20.6 million, an increase of 6.3% from $19.4 million in the first quarter of 2022. The increase was primarily due to an increase in salaries and employee benefits driven by increased mortgage commissions expense relating to the increase in portfolio mortgage production, additional sales headcount, and annual merit increases.

    Relative to the second quarter of 2021, non-interest expense increased 32.6% from $15.5 million. The increase is primarily due to the addition of Teton’s operations at the end of 2021 which increased salary and benefits as well as occupancy expenses.

    The impact of the mergers and acquisition activity is as follows (in thousands):

              
         As of or for the Three Months Ended
      June 30,  March 31,  June 30, 
      2022 2022 2021
    Adjusted Net Income Available to Common Shareholders(1)         
    Net income available to common shareholders $4,482  $5,524 $6,277
    Plus: acquisition related expenses         
    Salaries and employee benefits  152   229  
    Professional services  274   112  70
    Data processing(2)  (93)  115  
    Technology and information systems  4     
    Marketing  5   70  
    Other  5   1  
    Less: income tax impact  87   129  16
    Adjusted net income available to shareholders(1) $4,742  $5,922 $6,331
              
    Adjusted Diluted Earnings Per Share(1)         
    Diluted earnings per share $0.46  $0.57 $0.76
    Plus: acquisition related expenses net of income tax impact  0.03   0.04  0.01
    Adjusted diluted earnings per share(1) $0.49  $0.61 $0.77



    (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.
    (2) Includes credit for avoided contract termination costs due to new contract terms.

    The Company’s efficiency ratio(1) was 74.9% in the second quarter of 2022, compared with 69.7% in the first quarter of 2022 and 65.1% in the second quarter of 2021.

    (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.

    Income Taxes

    The Company recorded income tax expense of $1.5 million for the second quarter of 2022, representing an effective tax rate of 25.0%, compared to 24.5% for the first quarter of 2022.

    Loans

    Total loans held for investment were $2.15 billion as of June 30, 2022, an increase of 11.3% from $1.93 billion as of March 31, 2022, and an increase of 36.7% from $1.57 billion as of June 30, 2021. The increase in total loans held for investment from March 31, 2022 was attributable to loan growth in our residential mortgage, commercial and industrial, and commercial real estate portfolios. Excluding PPP loans, acquired loans, and loans accounted for under the fair value option, total loans held for investment were $1.83 billion as of June 30, 2022, an increase of $244.2 million, or 15.4%, from the end of the prior quarter and an increase of $477.7 million, or 35.3%, from June 30, 2021.

    PPP loans were $10.7 million as of June 30, 2022, a net decrease of 35.9% from $16.7 million as of March 31, 2022, and 89.6% from $103.1 million as of June 30, 2021. As of June 30, 2022, there were $0.2 million remaining in net fees to be recognized upon forgiveness or repayment of PPP loans.

    Deposits

    Total deposits were $2.17 billion as of June 30, 2022, compared to $2.27 billion as of March 31, 2022, and $1.68 billion as of June 30, 2021. The decrease in total deposits from March 31, 2022 was related to seasonal outflow related to tax payments, real estate acquisitions, and client operating cash outflows. The increase in total deposits from June 30, 2021 was related to $379.2 million in deposits added through the Teton acquisition and $111.7 million in remaining net growth.

    Average total deposits for the second quarter of 2022 decreased $46.6 million, or 8.2% annualized, from the first quarter of 2022 and increased $522.1 million, or 30.6%, from the second quarter of 2021. The quarter-over-quarter decrease in total deposits from March 31, 2022 was related to seasonal outflow related to tax payments, real estate acquisitions, and client operating cash outflows. The year-over-year increase in average deposits was primarily attributable to the Teton acquisition and organic growth in non-interest bearing and interest checking accounts.

    Borrowings

    Federal Home Loan Bank (“FHLB”) and Federal Reserve borrowings were $87.2 million as of June 30, 2022, an increase of $59.6 million from $27.6 million as of March 31, 2022, and a decrease of $33.5 million from $120.8 million as of June 30, 2021. The increase from March 31, 2022 is primarily driven by additional FHLB borrowings to support the strong loan growth in the quarter. The decrease from June 30, 2021 is primarily driven by paydowns on the Paycheck Protection Program Loan Facility (“PPPLF”) from the Federal Reserve, offset partially by additional FHLB borrowings to support the strong loan growth in the quarter. Borrowing from the PPPLF facility is expected to trend in the same direction as the balances of the PPP loans and the resulting net decrease in PPP loans drove the decrease to the PPPLF balance. As of June 30, 2022, the PPPLF had advances of $7.2 million compared to PPP loan balances of $10.7 million.

    Assets Under Management

    Total assets under management (“AUM”) decreased by $921.7 million during the second quarter to $6.28 billion as of June 30, 2022, compared to $7.20 billion as of March 31, 2022. This decrease was primarily attributable to unfavorable market conditions resulting in a decrease in the value of AUM balances. Total AUM decreased by $484.6 million compared to June 30, 2021 from $6.76 billion, which was primarily attributable to unfavorable market conditions throughout 2022 resulting in a decrease in the value of AUM balances.

    Credit Quality

    Non-performing assets totaled $4.3 million, or 0.17% of total assets, as of June 30, 2022, compared to $4.3 million, or 0.17% of total assets, as of March 31, 2022 and $3.1 million, or 0.16% of total assets, as of June 30, 2021.

    The Company recorded a provision of $0.5 million in the second quarter of 2022, compared to an immaterial provision in the second quarter of 2021. The Company recorded a provision for loan losses of $0.2 million in the first quarter of 2022. The provision recorded in the second quarter of 2022 represented general provisioning consistent with growth of the bank originated loan portfolio, excluding PPP loans, and changes in the portfolio mix, partially offset by a release of specific reserve on an impaired loan. During the second quarter of 2022, the Company acquired a commercial property as partial reduction of the balance owed on an impaired loan and as a result, recorded other real estate owned in the amount of $0.4 million.

    Capital

    As of June 30, 2022, First Western (“Consolidated”) and First Western Trust Bank (“Bank”) exceeded the minimum capital levels required by their respective regulators. As of June 30, 2022, the Bank was classified as “well capitalized,” as summarized in the following table:

        
      June 30,  
      2022 
    Consolidated Capital    
    Tier 1 capital to risk-weighted assets 10.15%
    Common Equity Tier 1 ("CET1") to risk-weighted assets 10.15 
    Total capital to risk-weighted assets 12.58 
    Tier 1 capital to average assets 8.00 
        
    Bank Capital   
    Tier 1 capital to risk-weighted assets 10.99 
    CET1 to risk-weighted assets 10.99 
    Total capital to risk-weighted assets 11.75 
    Tier 1 capital to average assets 8.65 

    Book value per common share increased 1.6% from $23.68 as of March 31, 2022 to $24.06 as of June 30, 2022, and was up 14.5% from $21.01 as of June 30, 2021.

    Tangible book value per common share (1) increased 2.0% from $20.25 as of March 31, 2022 to $20.65 as of June 30, 2022, and was up 14.8% from $17.98 as of June 30, 2021.

    (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, July 29, 2022. Telephone access: https://register.vevent.com/register/BI5bd54cdfc671414f8033ccdf4692e21c

    A slide presentation relating to the second quarter 2022 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, California, and Montana. 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 for Loan Losses 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 and projected cost savings in connection with acquisitions; the risk of geographic concentration in Colorado, Arizona, Wyoming, California, and Montana; 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 15, 2022 (“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
      June 30,  March 31,  June 30, 
    (Dollars in thousands, except per share amounts)    2022 2022 2021
    Interest and dividend income:            
    Loans, including fees $20,318  $19,096  $15,287
    Loans accounted for under the fair value option  346      
    Investment securities  418   337   169
    Interest-bearing deposits in other financial institutions  549   232   92
    Total interest and dividend income  21,631   19,665   15,548
              
    Interest expense:           
    Deposits  1,103   943   866
    Other borrowed funds  390   438   459
    Total interest expense  1,493   1,381   1,325
    Net interest income  20,138   18,284   14,223
    Less: provision for loan losses  519   210   12
    Net interest income, after provision for loan losses  19,619   18,074   14,211
              
    Non-interest income:           
    Trust and investment management fees  4,784   5,168   5,009
    Net gain on mortgage loans  1,152   2,494   3,914
    Bank fees  601   689   394
    Risk management and insurance fees  83   109   92
    Income on company-owned life insurance  87   86   89
    Net (loss)/gain on loans accounted for under the fair value option  (155)     
    Unrealized gains/(losses) recognized on equity securities  299   (32)  2
    Net gain on equity interests     1   
    Other  89   85   
    Total non-interest income  6,940   8,600   9,500
    Total income before non-interest expense  26,559   26,674   23,711
              
    Non-interest expense:           
    Salaries and employee benefits  12,945   12,058   9,643
    Occupancy and equipment  1,892   1,882   1,443
    Professional services  2,027   1,526   1,370
    Technology and information systems  1,076   1,046   904
    Data processing  987   1,187   1,093
    Marketing  428   557   398
    Amortization of other intangible assets  77   77   4
    Net (gain)/loss on assets held for sale  (2)  (1)  
    Other  1,153   1,026   668
    Total non-interest expense  20,583   19,358   15,523
    Income before income taxes  5,976   7,316   8,188
    Income tax expense  1,494   1,792   1,911
    Net income available to common shareholders $4,482  $5,524  $6,277
    Earnings per common share:         
    Basic $0.47  $0.59  $0.79
    Diluted  0.46   0.57   0.76


              
      June 30,  March 31,  June 30, 
    (Dollars in thousands) 2022 2022 2021
    Assets            
    Cash and cash equivalents:            
    Cash and due from banks $11,790  $5,961  $2,921 
    Federal funds sold  385   1,273    
    Interest-bearing deposits in other financial institutions  159,431   446,865   286,168 
    Total cash and cash equivalents  171,606   454,099   289,089 
              
    Available-for-sale securities, at fair value     58,727   25,532 
    Held-to-maturity securities, at amortized cost (fair value of $84,742 as of June 30, 2022)  87,029       
    Correspondent bank stock, at cost  4,352   1,617   2,053 
    Mortgage loans held for sale  26,202   33,663   48,563 
    Loans (includes $21,477, $6,380, and $0 measured at fair value, respectively)  2,146,394   1,923,825   1,571,060 
    Allowance for loan losses  (14,357)  (13,885)  (12,552)
    Premises and equipment, net  24,236   23,539   5,885 
    Accrued interest receivable  7,884   6,969   5,986 
    Accounts receivable  5,192   6,445   4,923 
    Other receivables  4,575   2,841   1,056 
    Other real estate owned, net  378       
    Goodwill and other intangible assets, net  32,258   32,335   24,250 
    Deferred tax assets, net  7,662   7,540   5,742 
    Company-owned life insurance  15,976   15,889   15,626 
    Other assets  21,960   22,940   22,091 
    Assets held for sale  146   117    
    Total assets $2,541,493  $2,576,661  $2,009,304 
              
    Liabilities         
    Deposits:           
    Noninterest-bearing $668,342  $654,401  $555,106 
    Interest-bearing  1,501,656   1,617,711   1,123,947 
    Total deposits  2,169,998   2,272,112   1,679,053 
    Borrowings:           
    FHLB and Federal Reserve borrowings  87,223   27,576   120,762 
    Subordinated notes  32,553   32,523   24,261 
    Accrued interest payable  304   312   312 
    Other liabilities  23,391   20,872   16,930 
    Total liabilities  2,313,469   2,353,395   1,841,318 
              
    Shareholders' Equity            
    Total shareholders’ equity  228,024   223,266   167,986 
    Total liabilities and shareholders’ equity $2,541,493  $2,576,661  $2,009,304 


              
      June 30,  March 31,  June 30, 
    (Dollars in thousands)    2022 2022 2021
    Loan Portfolio            
    Cash, Securities and Other(1) $180,738  $235,221  $268,904 
    Consumer and Other(2)  47,855   36,578   22,003 
    Construction and Development  162,426   151,651   127,141 
    1-4 Family Residential  732,725   602,412   496,101 
    Non-Owner Occupied CRE  489,111   455,715   324,493 
    Owner Occupied CRE  224,597   212,401   178,847 
    Commercial and Industrial  312,696   237,144   155,526 
    Total loans held for investment  2,150,148   1,931,122   1,573,015 
    Deferred (fees) costs and unamortized premiums/(unaccreted discounts), net(3)  (3,754)  (7,297)  (1,955)
    Gross loans $2,146,394  $1,923,825  $1,571,060 
    Mortgage loans held for sale $26,202  $33,663  $48,563 
              
    Deposit Portfolio         
    Money market deposit accounts $1,033,739  $1,108,315  $840,073 
    Time deposits  147,623   156,678   137,499 
    Negotiable order of withdrawal accounts  287,195   319,648   141,076 
    Savings accounts  33,099   33,070   5,299 
    Total interest-bearing deposits  1,501,656   1,617,711   1,123,947 
    Noninterest-bearing accounts  668,342   654,401   555,106 
    Total deposits $2,169,998  $2,272,112  $1,679,053 



    (1) Includes PPP loans of $10.7 million as of June 30, 2022, $16.7 million as of March 31, 2022, and $103.1 million as of June 30, 2021.
    (2) Includes loans held for investment accounted for under fair value option of $21.1 million and $6.4 million as of June 30, 2022 and March 31, 2022, respectively.
    (3) Includes fair value adjustments on loans held for investment accounted for under the fair value option.

              
      As of or for the Three Months Ended
      June 30,  March 31,  June 30, 
    (Dollars in thousands)    2022 2022 2021
    Average Balance Sheets            
    Assets            
    Interest-earning assets:            
    Interest-bearing deposits in other financial institutions $320,656  $474,593  $292,615 
    Federal funds sold  1,017   1,349    
    Investment securities  69,320   55,739   26,474 
    Loans  2,010,024   1,922,770   1,573,553 
    Interest-earning assets  2,401,017   2,454,451   1,892,642 
    Mortgage loans held for sale  19,452   22,699   86,760 
    Total interest-earning assets, plus mortgage loans held for sale  2,420,469   2,477,150   1,979,402 
    Allowance for loan losses  (13,257)  (13,715)  (12,540)
    Noninterest-earning assets  119,857   121,650   93,629 
    Total assets $2,527,069  $2,585,085  $2,060,491 
              
    Liabilities and Shareholders’ Equity            
    Interest-bearing liabilities:            
    Interest-bearing deposits $1,547,901  $1,605,314  $1,165,734 
    FHLB and Federal Reserve borrowings  20,815   33,104   148,869 
    Subordinated notes  32,533   32,939   24,252 
    Total interest-bearing liabilities  1,601,249   1,671,357   1,338,855 
    Noninterest-bearing liabilities:            
    Noninterest-bearing deposits  679,531   668,705   539,613 
    Other liabilities  19,194   23,555   16,558 
    Total noninterest-bearing liabilities  698,725   692,260   556,171 
    Total shareholders’ equity  227,095   221,468   165,465 
    Total liabilities and shareholders’ equity $2,527,069  $2,585,085  $2,060,491 
              
    Yields/Cost of funds (annualized)            
    Interest-bearing deposits in other financial institutions  0.68  0.20   0.13
    Investment securities  2.41   2.42   2.55 
    Loans  4.11   3.97   3.89 
    Interest-earning assets  3.60   3.20   3.29 
    Mortgage loans held for sale  4.71   3.37   2.88 
    Total interest-earning assets, plus mortgage loans held for sale  3.61   3.21   3.27 
    Interest-bearing deposits  0.29   0.23   0.30 
    FHLB and Federal Reserve borrowings  0.54   0.47   0.31 
    Subordinated notes  4.45   4.85   5.64 
    Total interest-bearing liabilities  0.37   0.33   0.40 
    Net interest margin  3.35   2.98   3.01 
    Net interest rate spread  3.23   2.87   2.89 


                
      As of or for the Three Months Ended
      June 30,   March 31,   June 30, 
    (Dollars in thousands, except share and per share amounts)    2022  2022  2021
    Asset Quality             
    Non-performing loans $3,931  $4,309  $3,120 
    Non-performing assets  4,309   4,309   3,120 
    Net charge-offs/(recoveries)  47   57   (1)
    Non-performing loans to total loans  0.18%    0.22%    0.20
    Non-performing assets to total assets  0.17   0.17   0.16 
    Allowance for loan losses to non-performing loans  365.23   322.23   402.31 
    Allowance for loan losses to total loans  0.67   0.72   0.80 
    Allowance for loan losses to bank originated loans excluding PPP(1)  0.78   0.87   0.93 
    Net charge-offs to average loans(2)  0.00   0.00   0.00 
                
    Assets Under Management $6,277,588  $7,199,328  $6,762,179 
                
    Market Data           
    Book value per share at period end $24.06  $23.68  $21.01 
    Tangible book value per common share(1)  20.65   20.25   17.98 
    Weighted average outstanding shares, basic  9,450,987   9,418,318   7,961,785 
    Weighted average outstanding shares, diluted  9,717,667   9,762,602   8,213,900 
    Shares outstanding at period end  9,478,710   9,430,007   7,994,832 
                
    Consolidated Capital           
    Tier 1 capital to risk-weighted assets  10.15%    11.11%    10.68
    CET1 to risk-weighted assets  10.15   11.11   10.68 
    Total capital to risk-weighted assets  12.58   13.81   13.45 
    Tier 1 capital to average assets  8.00   7.67   7.75 
                
    Bank Capital           
    Tier 1 capital to risk-weighted assets  10.99%    12.01%    11.03
    CET1 to risk-weighted assets  10.99   12.01   11.03 
    Total capital to risk-weighted assets  11.75   12.82   11.99 
    Tier 1 capital to average assets  8.65   8.27   7.98 



    (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) Value results in an immaterial amount.

    Reconciliations of Non-GAAP Financial Measures

               
         As of or for the Three Months Ended 
      June 30,  March 31,  June 30,  
    (Dollars in thousands, except share and per share amounts) 2022 2022 2021 
    Tangible Common             
    Total shareholders' equity $228,024  $223,266  $167,986 
    Less: goodwill and other intangibles, net  32,258   32,335   24,250 
    Tangible common equity $195,766  $190,931  $143,736 
               
    Common shares outstanding, end of period  9,478,710   9,430,007   7,994,832 
    Tangible common book value per share $20.65  $20.25  $17.98 
               
    Net income available to common shareholders $4,482  $5,524  $6,277 
    Return on tangible common equity (annualized)  9.16   11.57  17.47%
               
    Efficiency             
    Non-interest expense $20,583  $19,358  $15,523 
    Less: amortization  77   77   4 
    Less: acquisition related expenses  347   527   70 
    Adjusted non-interest expense $20,159  $18,754  $15,449 
               
    Total income before non-interest expense $26,559  $26,674  $23,711 
    Less: unrealized gains/(losses) recognized on equity securities  299   (32)  2 
    Less: net gain/(loss) on loans accounted for under the fair value option  (155)      
    Less: net gain on equity interests     1    
    Plus: provision for loan losses  519   210   12 
    Gross revenue $26,934  $26,915  $23,721 
    Efficiency ratio  74.85  69.68  65.13%  
               
    Allowance to Bank Originated Loans Excluding PPP          
    Total loans held for investment $2,150,148  $1,931,122  $1,573,015 
    Less: loans acquired  287,623   323,563   116,052 
    Less: bank originated PPP loans  9,053   13,109   102,359 
    Less: loans accounted for under fair value  21,149   6,368    
    Bank originated loans excluding PPP $1,832,323  $1,588,082  $1,354,604 
               
    Allowance for loan losses $14,357  $13,885  $12,552 
    Allowance for loan losses to bank originated loans excluding PPP  0.78  0.87  0.93%  


                 
         As of or for the Three Months Ended 
      June 30,   March 31,   June 30,  
    (Dollars in thousands, except share and per share data) 2022  2022  2021 
    Adjusted Net Income Available to Common Shareholders            
    Net income available to common shareholders $4,482  $5,524  $6,277 
    Plus: acquisition related expenses  347   527   70 
    Less: income tax impact  87   129   16 
    Adjusted net income available to shareholders $4,742  $5,922  $6,331 
                 
    Adjusted Basic Earnings Per Share            
    Basic earnings per share $0.47  $0.59  $0.79 
    Plus: acquisition related expenses net of income tax impact  0.03   0.04   0.01 
    Adjusted basic earnings per share $0.50  $0.63  $0.80 
                 
    Adjusted Diluted Earnings Per Share            
    Diluted earnings per share $0.46  $0.57  $0.76 
    Plus: acquisition related expenses net of income tax impact  0.03   0.04   0.01 
    Adjusted diluted earnings per share $0.49  $0.61  $0.77 
                 
    Adjusted Return on Average Assets (annualized)            
    Return on average assets  0.71%  0.85%  1.22%
    Plus: acquisition related expenses net of income tax impact  0.04   0.07   0.01 
    Adjusted return on average assets  0.75%  0.92%  1.23%
                 
    Adjusted Return on Average Shareholders' Equity (annualized)            
    Return on average shareholders' equity  7.89%  9.98%  15.17%
    Plus: acquisition related expenses net of income tax impact  0.46   0.72   0.13 
    Adjusted return on average shareholders' equity  8.35%  10.70%  15.30%
                 
    Adjusted Return on Tangible Common Equity (annualized)            
    Return on tangible common equity  9.16%  11.57%  17.47%
    Plus: acquisition related expenses net of income tax impact  0.53   0.84   0.15 
    Adjusted return on tangible common equity  9.69%  12.41%  17.62%


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