First Western Financial (NASDAQ:MYFW) reported third-quarter 2026 net income of approximately $6 million, or $0.60 per diluted share, as loan growth, net interest margin expansion, improving deposit mix and expense controls supported profitability.
Chairman and Chief Executive Officer Scott Wylie said net income and diluted earnings per share were each 88% higher than in the third quarter of 2025. Pre-tax, pre-provision net income increased 15% from the prior quarter and 27% from the year-earlier period, according to management. Tangible book value per share rose 3% during the quarter to $26.28.
“We executed well in the third quarter and saw positive trends in many areas,” Wylie said, citing loan growth, deposit mix, net interest margin expansion, trust and investment-management fee growth, expenses and asset quality.
Loan Growth and Deposit Mix
Loans held for investment increased $95 million from the second quarter, representing the company’s sixth consecutive quarterly increase. Total loans were up 8% year over year. Chief Operating Officer Julie Courkamp said new loan production totaled $163 million and was diversified across markets and loan types, with an emphasis on relationship-based lending.
The average rate on new loan production was 6.79%, up 42 basis points sequentially and above the 6.26% average rate on loan payoffs. Quarter-end loans were nearly 3% above average loan balances for the quarter, which Courkamp said provided momentum entering the fourth quarter.
During the question-and-answer session, Wylie said the company’s loan pipeline and internal credit activity had strengthened in recent weeks. He said First Western expects to remain selective rather than pursue growth for its own sake, particularly where competitors are offering pricing that management views as unattractive.
Deposits increased 2.5% from the prior quarter and 2.4% year over year. Growth included non-interest-bearing and money-market accounts. Average non-interest-bearing deposits rose $14 million, or 3.9%, during the quarter; quarter-end non-interest-bearing balances increased 10%.
Wylie attributed deposit progress to a business-development focus, an upgraded treasury-management operation and a policy requiring borrowers to use First Western as their primary bank. He also pointed to opportunities created by merger-and-acquisition activity among competing financial institutions in the company’s markets.
Margin Expansion and Revenue Trends
Gross revenue rose 2.8% from the prior quarter, primarily reflecting higher net interest income. Net interest income increased 5.5% sequentially, supported by a $81 million increase in average interest-earning assets and a 5-basis-point expansion in net interest margin to 2.95%.
The yield on average interest-earning assets rose 7 basis points, driven by loan yields, while the cost of funds increased 2 basis points because of higher money-market account rates. Net interest income increased 18% from the third quarter of 2025, reflecting a 41-basis-point year-over-year increase in net interest margin and higher average interest-earning assets.
Chief Financial Officer David Weber said the total deposit spot rate at the end of September was 2.86%. He said the company saw a 28% beta on standard money-market accounts following the September rate increase, while $740 million of index money-market accounts have a 100% beta. The company also has $200 million notional of cash-flow hedges tied to the deposit portfolio.
Management said borrowings that increased at quarter-end were influenced by internal liquidity policies and are expected to normalize on an average basis.
Fees, Expenses and Asset Quality
Non-interest income declined by $600,000 from the second quarter, primarily because of lower gains on mortgage loan sales and lower bank fees. Mortgage origination volumes were affected by higher mortgage rates. However, trust and investment-management fees rose 2.6% sequentially, driven by higher investment agency, trust and retirement fees.
Wylie said the company views mortgage lending as strategically important for serving private-bank clients and attracting jumbo-mortgage relationships, although mortgages represent a relatively small share of revenue. He said the company has reduced fixed costs in the mortgage operation and added mortgage loan originators.
Non-interest expense declined $400,000 sequentially, led by lower technology and information-systems costs and lower salaries and employee benefits. Weber said technology expense benefited from the absence of a $400,000 non-recurring charge recorded in the second quarter. The efficiency ratio improved to 72%, from 74% in the prior quarter and 76% a year earlier.
Asset-quality measures improved, with non-accrual loans declining due to paydowns. The non-performing asset ratio fell to 39 basis points. The company recorded a $600,000 provision for credit losses due to increased loan volume, while the allowance coverage ratio was 74 basis points, compared with 75 basis points in the previous quarter.
Outlook and Capital Management
Wylie said First Western expects further improvement in financial performance during the fourth quarter, supported by loan and deposit growth, additional improvement in deposit mix, margin expansion, wealth-management activity and disciplined expense management.
Management said it has not seen indications of meaningful asset-quality deterioration through the rest of the year. Wylie also said the company expects to operate at a 1% return on assets during 2027, though he did not provide a more specific timing estimate.
Separately, Weber said First Western redeemed the full $10 million of subordinated debt notes issued in November 2020 after they became callable. The redemption is expected to benefit net interest margin, and management said it remains comfortable with the company’s capital ratios.
About First Western Financial (NASDAQ:MYFW)
First Western Financial, Inc is a Denver-based financial holding company that operates through First Western Trust Bank. The company provides private banking, wealth management and trust services to high-net-worth individuals, families, businesses, foundations and nonprofit organizations.
Its banking offerings include commercial and personal lending, deposit accounts, cash management and other customized financial solutions. Through its wealth management business, First Western provides investment management, financial planning, fiduciary administration and trust services designed to support clients’ long-term financial and estate-planning needs.
First Western serves clients primarily in Colorado and selected Western U.S.
