First Western Financial, Inc. (MYFW): Boston Consulting Group Matrix [10-2024 Updated]

As we dive into the financial landscape of First Western Financial, Inc. (MYFW) in 2024, the Boston Consulting Group Matrix reveals crucial insights into its business segments. The analysis categorizes elements of the company into four distinct categories: Stars, Cash Cows, Dogs, and Question Marks. Each category highlights areas of strong growth, stability, decline, and uncertainty, respectively, providing a comprehensive overview of where the company stands and its potential for future development. Read on to uncover the detailed dynamics behind these classifications and what they mean for MYFW's strategic direction.

Background of First Western Financial, Inc. (MYFW)

First Western Financial, Inc. (MYFW) is a financial holding company founded in 2002 and headquartered in Denver, Colorado. The company provides a fully integrated suite of wealth management services, including banking, trust, and investment management products and services. Its mission is to be the premier private bank for the Western wealth management client, targeting entrepreneurs, professionals, and high-net-worth individuals, typically with liquid net worth exceeding $1 million.

As of September 30, 2024, First Western Financial had expanded its operations to include fourteen full-service profit centers, five loan production offices, and one trust office across five states: Colorado, Arizona, Wyoming, Montana, and California. The company reported total assets of $2.91 billion and total revenues of $65.7 million for the nine months ended September 30, 2024. Additionally, it provided fiduciary and advisory services on $7.5 billion of assets under management (AUM).

The company's clientele is characterized by a diverse base, with no single industry concentration, allowing it to mitigate risks associated with economic fluctuations. The recent banking industry disruptions in 2023, which included the failure of multiple banks, raised concerns over liquidity and consumer confidence. Despite these challenges, First Western Financial maintained strong fundamentals, reporting uninsured deposits of $929.4 million, which accounted for 37.1% of total deposits as of September 30, 2024. The company has a conservative credit appetite, with limited exposure to non-owner occupied office space commercial real estate, a sector affected by the shift to hybrid work arrangements.

First Western Financial operates through a branded network of boutique private trust bank offices, strategically located in affluent and high-growth markets. The company emphasizes a team approach to wealth management, integrating services provided by private bankers, lenders, wealth planners, and portfolio managers. This model is designed to meet the specific financial needs of its clients effectively.

First Western Financial, Inc. (MYFW) - BCG Matrix: Stars

Strong growth in Wealth Management segment

The Wealth Management segment reported total assets under management of $7.5 billion as of September 30, 2024, showcasing a robust growth trajectory driven by market conditions and client contributions. The segment's income before income tax for the three months ended September 30, 2024, was $2.2 million, down from $5.1 million in the same period of 2023.

Net interest income increased due to rising interest rates

Net interest income, before the provision for credit losses, was $15.6 million for the third quarter of 2024, reflecting a decrease of 7.1% compared to the third quarter of 2023. The net interest margin for this period decreased to 2.32% from 2.46% in 2023, indicating pricing pressures on interest-bearing deposits.

Significant market change contribution to trust balances

The Wealth Management segment's trust balances reached $1.995 billion by the end of September 2024, up from $1.840 billion a year earlier. This increase was largely attributed to a market change net of $335 million over the nine-month period.

Increased cash and cash equivalents by 8.6% to $276.2 million

As of September 30, 2024, cash and cash equivalents rose by $21.8 million, or 8.6%, to $276.2 million compared to December 31, 2023. This increase was primarily due to reduced loan production, which allowed for the accumulation of cash.

Non-interest income growth driven by investment management fees

Non-interest income totaled $21.2 million for the nine months ended September 30, 2024, a 33.7% increase from $15.9 million in the same period last year. This growth was fueled by an increase in trust and investment management fees, which contributed $14.5 million.

First Western Financial, Inc. (MYFW) - BCG Matrix: Cash Cows

Established customer base in core banking services.

First Western Financial, Inc. has developed a robust customer base within its core banking services. This established foundation supports its position in a mature market, allowing the company to maintain a significant market share.

Stable net income generation with $5.7 million reported for the year.

For the nine months ended September 30, 2024, First Western Financial reported a net income of $5.7 million, a decrease from $8.4 million reported for the same period in 2023, indicating a 32.2% decrease year-over-year.

Consistent performance in residential mortgage loans.

The net gain on mortgage loans increased to $4.5 million for the nine months ended September 30, 2024, compared to $2.4 million for the same period in 2023, reflecting an 85.3% increase driven by higher origination volumes.

Solid capital ratios, maintaining well-capitalized status.

First Western Financial maintains solid capital ratios, with total shareholders' equity of $248.8 million as of September 30, 2024. This reflects a 2.5% increase from $242.7 million at the end of 2023.

Lower reliance on borrowings, reflected in decreased liabilities.

As of September 30, 2024, total liabilities decreased by 2.5% to $2.66 billion, compared to $2.73 billion at the end of 2023. Borrowings also decreased significantly by 35.5% to $114.9 million.

First Western Financial, Inc. (MYFW) - BCG Matrix: Dogs

Declining performance in commercial and industrial loans

As of September 30, 2024, the total non-performing loans for First Western Financial, Inc. stood at $14.4 million, a significant decline from $50.8 million at the end of 2023. This decline included $11.2 million in commercial and industrial loans that previously accounted for $31.9 million.

Non-performing loans increased to $14.4 million, raising concerns

The non-performing loans increased to $14.4 million as of September 30, 2024, raising concerns about asset quality. The increase was primarily attributed to loans categorized as substandard, which totaled $25.7 million across various categories.

Decreased deposits by $26 million, indicating potential liquidity issues

Deposits decreased by $26 million or 1.0% to $2.50 billion as of September 30, 2024. This decrease was driven by seasonal tax payments and clients utilizing liquidity for strategic investments.

Limited new production in loan origination

Loan origination activities have faced significant limitations, resulting in a net decrease in loans of $142.6 million, or 5.7%, to $2.4 billion as of September 30, 2024.

Higher competition affecting customer retention and margin pressures

Increased competition in the lending market has exerted pressure on margins, with average interest-bearing deposit rates rising to 4.19% for the three months ended September 30, 2024, compared to 3.75% for the same period in 2023.

First Western Financial, Inc. (MYFW) - BCG Matrix: Question Marks

Mortgage segment showing mixed results, with fluctuating sales.

The Mortgage segment reported a net interest income of $729,000 for the nine months ended September 30, 2024, an increase of 31.1% from $556,000 in the same period in 2023. Non-interest income for this segment also saw significant growth, increasing by 82.7% to $4.57 million from $2.50 million year-over-year.

New relationships in trust management are declining.

As of September 30, 2024, new relationships in the Managed Trust segment saw a decrease, with closed relationships totaling three for the three months ended September 30, 2024, compared to two in the same period of 2023. Withdrawals in this segment were significant, amounting to $97 million.

Potential growth in investment management yet to be fully realized.

Investment management fees increased by 3.2% for the nine months ended September 30, 2024, totaling $14.53 million, up from $14.08 million in 2023, indicating some growth potential in this area. The overall assets under management (AUM) stood at $7.5 billion as of September 30, 2024.

Need for strategic initiatives to enhance loan growth.

Loans, net of allowance, decreased by $142.6 million, or 5.7%, to $2.36 billion as of September 30, 2024, compared to $2.51 billion at the end of 2023. This decline emphasizes the need for strategic initiatives to stimulate loan growth in a competitive market environment.

Uncertainty in economic conditions impacting loan performance and collections.

The economic landscape has shown uncertainty, impacting loan performance significantly. The net interest margin decreased to 2.32% for the three months ended September 30, 2024, compared to 2.46% in the same period in 2023. Additionally, the company reported a provision for credit losses of $2.91 million for the nine months ended September 30, 2024, up from $1.86 million in 2023, indicating increasing concerns regarding loan collections.

In summary, First Western Financial, Inc. (MYFW) showcases a mixed yet strategically significant portfolio as highlighted by the BCG Matrix. The Wealth Management segment stands out as a Star, benefiting from robust growth and increased net interest income. Meanwhile, the established banking services act as Cash Cows, providing stable income. However, challenges persist with Dogs like declining commercial loans and rising non-performing loans, while the Question Marks in the mortgage and investment segments indicate potential but uncertain growth. Addressing these dynamics will be crucial for navigating the evolving financial landscape.

Article updated on 8 Nov 2024

Resources:

1. First Western Financial, Inc. (MYFW) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Western Financial, Inc. (MYFW)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View First Western Financial, Inc. (MYFW)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.