First Western's Net Interest Margin Expansion Slows

The Tip Desk · October 22, 2026 · 3 min read

Net interest income rose 5.5% to $23.0 million as the margin widened 5 bps to 2.95% after a 9 bps gain in the second quarter.

First Western Financial (MYFW), a Denver-based wealth-management holding company, expanded its net interest margin 5 basis points in the third quarter to 2.95%, a slower pace than the 9 bps gain recorded in the second quarter.

Net interest income rose 5.5% to $23.0 million from $21.8 million in the second quarter, after a 4.3% increase in the prior period. The company attributed the lift to the margin expansion and an $81.1 million increase in average interest-earning assets.

Yield on interest-earning assets rose 7 bps to 5.65%, which the company said was driven primarily by higher loan yields. Cost of funds rose 2 bps to 2.88%, which it tied to higher money-market deposit rates.

Loan production accelerated. Total loans held for investment increased $95.0 million, or 3.5%, to $2.81 billion at September 30, with growth in 1-4 family residential and commercial and industrial portfolios. Chief executive Scott C. Wylie said healthy client demand drove the loan growth.

Deposits rose $70.0 million, or 2.5%, to $2.92 billion, primarily in noninterest-bearing accounts and money market deposit accounts. Noninterest-bearing deposits ended the quarter at $420.6 million, up from $381.8 million at June 30. Average noninterest-bearing deposits were $379.5 million.

Funding the asset growth, FHLB borrowings increased $114.5 million to $150.9 million from $36.4 million, which the company said was driven by interest-earning asset growth. Subordinated notes fell to $34.9 million after a $10.0 million redemption.

Non-interest income decreased 9.4% to $5.8 million from $6.4 million, on lower net gain on mortgage loans and bank fees, partially offset by higher trust and investment management fees. Trust and investment management fees were $4.9 million.

Non-interest expense decreased 1.9% to $20.8 million from $21.2 million, with lower salaries and a $0.4 million nonrecurring technology write-off in the second quarter, partially offset by higher occupancy. The efficiency ratio improved to 72.2% from 74.0%.

The company recorded a $0.6 million provision expense versus a $0.5 million provision release in the second quarter, which it said was primarily driven by loan growth. The allowance for credit losses was 74 bps of total loans at September 30, versus 75 bps at June 30.

Non-performing assets declined to $13.3 million, or 0.39% of total assets, from $16.3 million, or 0.50%, driven by paydowns and a charge-off. Non-accrual loans were $13.3 million.

Assets under management decreased 0.8% to $7.21 billion from $7.28 billion, primarily from lower market values in low-fee account types.

Consolidated CET1 declined to 9.76% from 9.93%, and total capital to risk-weighted assets declined to 11.80% from 12.47%. Book value per common share was $29.48.

Wylie said the company remains encouraged by the strength of its loan pipeline and the opportunities it sees across its markets.