First Western Financial, Inc. ($MYFW)

Good day, and thank you for standing by. Welcome to the First Western Financial First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. Now it's my pleasure to hand the conference to Tony Rossi. Please proceed.

Thank you, Carmen. Good morning, everyone, and thank you for joining us today for First Western Financial's First Quarter 2026 Earnings Call. Joining us from First Western's management team are: Scott Wylie, Chairman and Chief Executive Officer; Julie Courkamp, Chief Operating Officer; and David Weber, Chief Financial Officer. We'll use a slide presentation as part of our discussion this morning. If you have not done so already, please visit the Events and Presentations page of First Western's Investor Relations website to download a copy of the presentation. Before we begin, I'd like to remind you that this conference call contains forward-looking statements with respect to the future performance and financial condition of First Western Financial that involve risks and uncertainties. Various factors could cause actual results to be materially different from any future results expressed or implied by such forward-looking statements. These factors are discussed in the company's SEC filings, which are available on the company's website. I would also direct you to read the disclaimers in our earnings release and investor presentation. The company disclaims any obligation to update any forward-looking statements made during the call. Additionally, management may refer to non-GAAP measures, which are intended to supplement but not substitute for the most directly comparable GAAP measures. The press release available on the website contains the financial and other quantitative information to be discussed today as well as a reconciliation of the GAAP to non-GAAP measures. And with that, I'd like to turn the call over to Scott.

Thanks, Tony, and good morning, everybody. We executed well in the first quarter and saw positive trends in many areas, including loan and deposit growth, net interest margin expansion, well-managed expenses, higher mortgage banking revenues and improved asset quality. This resulted in another increase in our level of profitability with EPS up 85% quarter-over-quarter. We continued to maintain a conservative approach to our new loan production with our disciplined underwriting and pricing criteria. As a result of the additions we've made to our banking team over the past few years as well as the generally healthy economic conditions in our markets, we had a solid level of loan production which was diversified across our market, industries and loan types. As a result of our financial performance and the balance sheet management strategies, we had a further increase in both book value and tangible book value per share. Moving to Slide 4. We generated net income of $6.2 million or $0.63 per diluted share in the first quarter, which was higher than the prior quarter. This represented our third consecutive quarter where we generated an increase in net income and earnings per share. With our prudent balance sheet management, our tangible book value per share increased 3.3% for the quarter -- quarter-over-quarter. Now I'll turn the call over to Julie for some additional discussion of our balance sheet and trust investment management trends. Julie?

Thank you, Scott. Turning to Slide 5. We'll look at the trends in our loan portfolio. Our loans held for investment increased $41 million from the end of the prior quarter. We continue to be conservative and highly selective in our new loan production, but with the higher level of productivity we are seeing from the additions to our banking team that we have made over the last several quarters, we are seeing a solid level of new loan production. New loan production was $116 million in the first quarter. That production was diversified across our portfolios, and we are also getting deposit relationships with most of these new clients. We continue to be disciplined and are maintaining our pricing criteria. This resulted in the average rate on new production of 6.31% in the quarter. Moving to Slide 6, we'll take a closer look at our deposit trends. Our total deposits increased $95 million from the end of the prior quarter with growth in all types of deposits. The increase was driven by both new deposit relationships and inflows from existing deposit accounts. Notably, noninterest-bearing deposits increased 10% or $35 million in the quarter. The deposit growth in the quarter brought our loan-to-deposit ratio down from 96.5% in the prior quarter and 96.4% from a year ago to below 95%. Now turning to Trust and investment management Slide 7. We had a $43 million increase (sic) [ decrease ] in our assets under management in the first quarter, primarily attributed to lower market values, which were partially offset by the addition of new accounts. Net new accounts and contributions contributed a net increase of $42 million in the quarter. On a year-over-year basis, our assets under management increased (sic) [ decreased ] by approximately 1%. As David will cover shortly, our Trust and investment management fees have increased 5.3% from the second quarter of 2025 as we have restructured that team for growth. Now I'll turn the call over to David for further discussion of our financial results. David?

Thank you, Julie. Turning to Slide 8, we'll look at our gross revenue. Our gross revenue increased 3.4% from the prior quarter due to increases in both net interest income and noninterest income. Turning to Slide 9. We'll look at our trends in net interest income and margin. Our net interest income increased 1.5% from the prior quarter due to an increase in our net interest margin. Our NIM increased 10 basis points from the prior quarter to 2.81%. This was due to a reduction in our cost of funds, which was primarily due to lower rates on money market deposit accounts as a result of the company reducing deposit rates commensurate with the short-term decrease -- short-term rate decreases in 2025 and runoff of higher cost deposit accounts. Our net interest income increased 19.7% from the first quarter of 2025 due to an increase in net interest margin and an increase in average interest earning assets. Now turning to Slide 10. Our noninterest income increased by approximately $600,000 from the prior quarter. This was primarily due to increases in gain on sale of mortgage loans, risk management and insurance fees and trust and investment management fees, which increased for the third consecutive quarter. Now turning to Slide 11 and our expenses. Our noninterest expense decreased by $1.1 million from the prior quarter. The decrease was due to an OREO write-down in the fourth quarter of 2025 and a decrease in professional services partially offset by an increase in salaries and employee benefits due to payroll tax seasonality and an increase in bonus accruals as a result of the improved earnings in the quarter. Our efficiency ratio improved for the sixth consecutive quarter as we continue to tightly manage expenses while also making investments in the business that we believe will positively impact our long-term performance. Now turning to Slide 12, we'll look at our asset quality. As Scott indicated earlier, we saw improved trends in the loan portfolio in the first quarter with decreases in nonaccrual loans and NPAs. This was partially driven by the sale of the last OREO property we had on the balance sheet. Additionally, we had no loan charge-offs in the quarter. Our allowance coverage was 77 basis points of total loans as improved trends during the quarter drove a release of provision. Now I'll turn it back to Scott. Scott?

Thanks, David. Turning to Slide 13. I'll wrap up with some comments about our outlook. Based on our first quarter performance and what we're seeing in our markets, our expectation for the year are unchanged from what we provided at the start of the year. Overall, we continue to see relatively healthy economic conditions in our markets. We're seeing good opportunities to add both new clients and banking talent due to the ongoing disruption from M&A activity, particularly in the Colorado banking market. We're also seeing -- well, we also recently added a new market President for Scottsdale, Arizona, where we see good opportunities for growth. Our loan and deposit pipelines remain strong and should continue to result in solid balance sheet growth in 2026 with loan deposit growth at similar levels to what we had in 2025. In addition to the balance sheet growth, we expect to see more positive trends in our net interest margin, our fee income and more operating leverage resulting from our disciplined expense control. We had net interest margin expansion of 26 basis points in 2025. And while we expect further expansion in 2026, it may not be at the same level as last year. While we'll remain disciplined in our expense control, we believe that investing in the business will drive future shareholder value and ongoing disruption from the M&A activity in our markets creates unique opportunities for us to add banking talent. We will take advantage of those opportunities if and when they materialize as well as opportunities to add new clients. Based on the trends we're seeing in the portfolio and the feedback we're getting from clients, we don't see anything to indicate that we'll experience any meaningful deterioration in asset quality. The positive trends we're seeing in a number of key areas are expected to continue, which we believe should result in a steady improvement in our financial performance and further value being created for shareholders in 2026. So with that, we're happy to take your questions. So Carmen, please open up the call.

[Operator Instructions] One moment for our first question. It comes from the line of Brett Rabatin with StoneX Group.

I wanted to start off, obviously, great to see the trends this quarter in a number of categories. How many MLOs have you guys added? And then just obviously, a stronger start than usual on mortgage, how much production that you guys have this quarter? I know it was better than usual for 1Q.

I think we added one new MLO this quarter, and we added another 7 folks in front office banker type jobs. The MLO additions are especially nice if they're a good fit for us and producers because they have very low fixed costs and their compensation largely comes from variable cost from production. Do you have the data for last year, handy? For last year, MLO adds.

Yes, let's see.

We'll look up that number, Brett. And...

And then just mortgage production totals?

Yes. Mortgage had a good, strong first quarter. We saw gains on mortgage loans go from $800,000 in quarter 4 to $1.5 million in quarter 1. So really strong production, good economic conditions, I think spurred that, but also the MLO adds we've been doing over the last several quarters have just given us a level of ability to produce mortgages.

Yes. And lock volume increased a little under $40 million quarter-over-quarter. We were just under $180 million in secondary lock volume for Q1. And then we added in -- in 2025, we added 8 MLOs.

Okay. That's helpful color. And...

Just on that point, I would love to tell you that we were expecting a strong first quarter, but actually, our experience is first quarter tends to be pretty quiet. And we had been thinking that with the pent-up demand from slow mortgage markets in our geographic region that eventually, we'd see some pent-up demand come out and play and drive some volume. And I think that's what happened in Q1. It's a combination of pent-up demand. Of course, we had seasonally warm weather in our markets, unseasonally warm weather in Q1 and then definitely the impact of the new MLOs we've added. So those were -- those are really nice results to see.

Yes. Brett, I'll add one more data point. We did not see a material decrease in lock volume in March when rates materially increased. So that's what gives us comfort as far as what was driving the mortgage origination volume that it really wasn't solely dependent on improved rates because in March, that obviously didn't happen from a rates perspective and our volume still looked good in March.

Okay. That's helpful. And then you mentioned Scottsdale New market President. Any other markets that you're keen in on trying to grow stronger organically? And then I saw PNC had made quite a few layoffs. I'm sure mostly back office, but just wanted to hear if you guys are being able to capitalize on any disruption in Colorado and just maybe an update on what you're seeing from that perspective.

So let's start with Arizona. In Arizona, we were feeling like we needed a leadership team that others would follow, and that could really help us build our teams out there. We have two offices, one in Scottsdale, one in Phoenix that we've -- that have been open for years, and they've had good growth and they're profitable. But we have tiny market share in Arizona. And we think we have a platform that would be attractive and unique and differentiate that market, but we didn't really have the leaders to put the teams together to make that happen. And so we recruited one of the top folks out of First Republic/JPMorgan and added him 9 months ago, something like that, that sound about right, Julie?

Yes, October maybe.

And then we hired one of the top folks out of FirstBank/PNC that started maybe a month or two ago. And those two skill sets of the -- those two executives have a very complementary set of skills and they work really well together so far, I mean, who knows, but it seems like they work really well together. And so we're excited about what they can accomplish. So we're feeling really positive about these hires we've made for Arizona and where that team is going to go. In terms of your second part of your question about kind of the market opportunities in other markets, it's everywhere. I mean, it's amazing to see the quality of talent that we're seeing in -- when we open up a position. And I just think it's like a generational opportunity for us. And we've hired several people already. We've got several more in the works that are going to be real value drivers for us, I think, going forward. And we've done it all in a fairly well contained cost environment. We've been spending between $19 million and $20 million a quarter for something like 12 quarters now. And it looked higher in the fourth quarter last year. But remember, we wrote down $1.3 million of an OREO because we had that last OREO under contract, and we knew the price was going to be down $1.3 million from our book value. So that actually shows up as an operating expense even though it's nonrecurring, obviously. So those expenses appeared inflated -- more inflated in Q2 -- Q4 of last year than they really were on an operating basis. And then your last question about PNC. I mean, I think that -- and we've talked about this before on this call, that there is a really unique kind of emotional connection between Coloradans and FirstBank that had long deep roots here that we could talk about if you want. But I just think it's a real challenge for any acquirer from the outside to come in and navigate that. And certainly, the news this week that they were laying off 800 people or whatever it was, was big news. And I had phone calls this week from people just calling to say that they were sad, like that this was a real tragedy for our economy here and stuff like that. And so I think that, that is just going to continue to create opportunities for us, and we see that -- I mean, personally, I don't want to say I see it every day, but pretty much every day. It's going to continue to create opportunities, I think. And PNC, I think, is making a big effort to handle a smooth transition and all that. I mean, no knock on PNC. I think with the task they have is a real challenge.

Okay. And with all that said, Scott, you've started the year at a stronger pace than last year on loans, in particular, would it be too aggressive to say you guys could be a double-digit grower this year?

Well, if you look at our loans -- if you look at our loans year-over-year, I think we grew 11%, and our deposits, we grew 13% year-over-year. So I think our guidance we've been giving is kind of high single digits, although if you take out kind of the quarter-over-quarter puts and takes, I feel like we seem to be around 10%-ish, which would be double digits, I guess, to your question, I think the fee income, we've really seen that flat for years, and we've made many changes now into that area, in particular. We talked about the mortgage one already, but also in the wealth side, we've got some changes that we feel very positive about. And we've talked a little bit about it, but we're seeing some green shoots there that are pretty exciting. And so yes, I do think that we'll see continued revenue growth this year with really nice operating leverage. If you look back, again, kind of take out some of the bumps here, we did $0.54 in EPS in '23, $0.87 in '24, $1.34 in 2025. And now our run rate is pretty clearly over $2. I think that, that bodes well for '26, '27 earnings.

One moment for our next question. It comes from the line of Wood Lay with KBW.

I wanted to start on the net interest margin. It's been two consecutive quarters of pretty meaningful expansion. I believe you noted you expect the expansion to moderate, but it still feels like the NIM is biased higher. So any thoughts on how we should think about the trajectory there?

Well, I've been saying for, I don't know, 6 quarters, 8 quarters, something like that. But I believe that we will ultimately get back to a 3.15%, 3.20% kind of a NIM because that's historically what we've seen in normal markets with normal yield curves and sort of normal economics, normal competitive environment over my 40 years of running my banks. And so I think we'll still get there. The pace is just hard to predict. And I think for the finance team, in particular, they're reluctant to say, well, not knowing anything about what's going to happen in the future, in the Fed and the war and whatever, we're going to see 10 basis points improvement a quarter. I mean I think David would feel comfortable saying we're not going to see that in 2026. But we have seen, as you said in your question, really good NIM improvements. And I think what's driving that, and David, I encourage you to speak to this point, but our people are doing a really good job of having pricing discipline, and that shows up on the loan side. We saw loan yields in Q1 down slightly when actual rates were down 50 basis points. And I'll tell you, we're seeing -- with all these acquisitions we're seeing, the acquirers wanting to prove that they make a decision. They're out doing really aggressive loan pricing. And we hear about this stuff, and we're like, well, we're not going to compete with that. And yet our people are still producing nice growth with high-quality credits that produce 0 loan losses like we've had now again. And then on the deposit side, again, we saw a 50 basis point decline in Q4, and we put all that into our deposit pricing, which a lot of banks here didn't and we didn't see any runoff. We actually saw a nice deposit growth. So I don't know, David, did I miss anything big there?

No, you covered it.

You're not guiding to 10 basis points a quarter.

Not quite.

I mean I guess as a follow-up to that normalized 3.15% to 3.20% margin, that's not going to happen this year, but what's a realistic time line to getting the net interest margin back to those levels?

I just think it's hard to predict. It's -- there's so many variables that go into it. And we just talked about 4 or 5 of them in that last answer. So I won't repeat that. But -- I'm hopeful that we're back with a 1% ROA in 2027. Whether we get there for the full year, whether we get there in January, whether we get there in December, I don't know yet. But I do think that we've come a long way since all that excitement of the rapid run-up in short-term rates, and the inverted yield curve, the failure of the big regional banks, all that stuff. We said we're going to play defense, we did. We said we're going to go back on offense, we have. We've got some really historic opportunities in the markets right now that I think we're doing a great job of taking advantage of and you're seeing that play out. And I think that's going to drive more operating leverage, more profitability and some nice outcomes for our shareholders.

Woody, our ability to materially improve NIM is -- there's a very large opportunity for us in DDAs. And just our organization is extremely focused on that. There's a lot of different things that we're working on. And hires that we're looking to make or have made in that area. So I think that -- to the point, we can't really predict it, but there's a lot of effort going into focusing on that. Noninterest-bearing deposit and then keeping, as we've mentioned, our discipline on loan pricing, which has been something that we're also quite focused on. So I think that those 2 points are really kind of an organizational focus of ours.

Yes. No, I really appreciate you all walking through the moving pieces there. Maybe just last for me on the Trust business. It's great to hear the commentary on new accounts opened and fees were up quarter-over-quarter. You've made some changes to that business to emphasize more of a growth on business model. So where do we sort of stand in the trajectory of that business?

We brought in a new Head of Wealth a year ago now. He started on April 1 of last year from Goldman, and he was in a senior wealth role over there. And he -- we, through him, he's leading it, have done a complete overhaul of our planning function here, of our trust function here, of our investment management which those 3 areas also include our insurance area and our retirement services. We've replaced the leadership in all those areas and built stronger teams. We've built out some new products and services, which we've been test marketing and that's all gone better than we had expected. And then in addition to those things, this new hire, and his name is Brandon Summers, he was -- particularly had an expertise in selling B2B in wealth services. And we -- that's not something we've done before and was a big part of why we wanted him and recruited him to join us. And so we've also launched a B2B offering, which is similar to what you see at the big Fortune 500 companies where the company will hire a specialist firm like Goldman Sachs, for example, to provide wealth consulting services to their executives as a benefit to them. Obviously, we don't have a lot of Fortune 500 companies in our market here and we don't really want to compete against that business. But for our target clients, which are lots of entrepreneurial and some good-sized businesses, they don't have a product offering like that. And so we've created a trademark offering called WorkWealth, and we're out selling that and we have a person dedicated to marketing that. And we think that, that's going to be really impactful in the future. Of course, there are really nice synergies between that and selling corporate banking services. And back to Julie's treasury management and the DDAs, right? This is all -- has really nice synergies to what we're doing anyway. And so I guess, would be a little summary of what we're doing on the whole wealth management side. That's, I think, really exciting starting to show results, as you said, but really just green shoots at this point. We're going to see a lot more impact of that, I think, in the next couple of years.

Our next question comes from Matthew Clark with Piper Sandler.

I want to touch on interest-bearing deposit costs and maybe the spot rate at the end of March, if we could have it. And then how you're thinking about additional relief from here with the Fed on hold?

That's another question for David to me.

Thank you. Matt, the spot rate on deposits was 2.79% for the end of the quarter. And with the Fed on pause, I go back to Julie's comments, we have a lot of opportunity from a funding cost perspective with growing our DDA balances. And even with the Fed on pause, we feel with the company's focus there and the things we've laid out and we're working on accomplishing that we have opportunity to grow that portfolio, which will then help obviously bring down our average cost of deposits and average cost of funds.

Okay. And along those lines, your noninterest-bearing deposits tend to decline in the second quarter. Is that -- should we still expect that to be the case? Or is it different this time?

I wouldn't say anything different at the moment. We typically see deposit outflows as you mentioned, related to tax payments in the second quarter. So I don't know that there's anything that we know today that would make that difference. So I think that's what we're thinking about as far as Q2.

Okay. And then your -- the FHLB borrowings that you have, can you just remind us that those are overnight or if there's some term to them? And is there a plan to use excess cash to pay those off?

Yes. The FHLB borrowing, it was an overnight that was swapped, and that actually -- that swap matured in early April. So we -- depending on how our liquidity evolves going forward, we'll see if it makes sense to pay that off and keep it at 0 or if we need to replace that. We'll just have to see how things evolve.

Okay. So it's 0 as of -- in April here, is that what you're saying?

I'm sorry, say that again.

It's a 0 balance in April as of now?

Correct.

Okay. Sounds good. And then in terms of the near-term NIM, I know there's a little bit of relief on the deposit side, but assuming you lose some noninterest-bearing seasonally, you got the benefit of the FHLB going away. It does seem like maybe the margin is flattish in the near term to flat to down slightly. I haven't have to recast the numbers, but that's kind of where I am.

I think we still have opportunities to continue to see NIM expansion in the remaining quarters in 2026. To Scott's point earlier, I don't think it's going to be 10 basis points a quarter, but I do feel that we will continue to have opportunities to expand NIM.

Okay. Great. And then just last minor one. You bought back a little bit of stock. It's not a big amount, but just curious what price you paid.

Yes. It was $23.85 on an average basis.

Our next question comes from the line of Bill Dezellem with Tieton Capital Management.

A couple of questions. First of all, the deposits grew at roughly 2x the rate of loan growth in the first quarter. Would you step back and just walk us through the general dynamic behind that, if that is a normal seasonal phenomenon? Or if there is something -- that was something specific to your activities that led to that ratio?

Well, I think over the last many quarters now, again, I'm not really sure whether it's 8 or 12 or whatever, but we have put a much more significant focus on deposit growth. And our feeling is to get to be the bank that we want to be at $5 billion or $10 billion, we need to have as strong of a deposit story as we do on the loan and the [indiscernible] side. So it's definitely been a focus for us now for several quarters. Bill, we don't really do loans here that don't come with a primary banking relationship. We literally write that into our loan documents here now. And so it's part of the expectation that we have with any conversation we have with any prospective client. It's part of the conversation we have with existing clients. We report on it internally, what loans we have that don't have deposits associated or have smaller ones. It's a very routine part of the conversation here just being good bankers, and driving relationship-oriented clients. So I think the fact that in one quarter, we saw a little bit more deposit growth than loan growth, I wouldn't read too much into that. We saw something like that in the third quarter last year, you'll recall. And I think some of the feedback, we got was you should try and manage that, so it's more consistent. And there's no way of doing that. It just kind of happens when it happens. I think the more relevant number for me is the fact that we grew deposits 2% more than we grew loans over the last 12 months. I think that's probably a really relevant and helpful data point. And if we see some decline in deposits in Q2, which is likely, I wouldn't read anything into that either. That's just part of who our clients are and the fact that they pay taxes in Q2 that pulled down money market accounts and whatnot here. So I think -- I wouldn't read too much into that.

That's helpful, Scott. Let me take it one step further though. Over time, where would you anticipate that the loan-to-deposit ratio would end up? You said sub-95% now. And if you keep up the trend that's been in place for several quarters, you'll be at sub-85% and then sub-75%, and next thing, we're sub-50%. And I suspect that's not where you're headed. I'm being a bit facetious, of course. But what's your long-term thought?

That is true. That is not where we're headed. What we have found, and again, I've been doing this a long time, Bill. And so I never really know where the next $1 billion of deposits are going to come from. But our clients do have a lot of liquidity, and we find that we're always able to produce deposits when we want them. And it doesn't mean you don't have to focus on it. It doesn't mean you don't have to do the things that Julie was just talking about in terms of focusing on deposit strategies and strengthening our treasury management team, improving our technology, stuff like that. But at the end of the day, we've historically operated First Western and my prior banks with loan to deposit ratios in the 90s. And I think when it gets into the high 90s, we get more uncomfortable. When it's in the low 90s, we think that's fine, but we're not going to pay up for higher cost deposits. And I think that, that all has fueled nice growth for us over the years and continue to do that and provide the operating leverage we need to drive earnings that can support the growth that we want to do.

Great. That's really a nice perspective. And lastly, with the geopolitical events, specifically the Iran War, What, if any, impact have you seen from your customers' behavior on either the loan or deposit side or the pipeline of activity?

Yes. I actually was thinking about that before this call, Bill. And over time, what I have found is when our clients get nervous, they kind of stop doing things, and they just say, "I can wait." And we haven't seen that yet in this case. And I'm not sure why that is. I think maybe Middle East seems like a long way away from the Rocky Mountain region. I'm not sure why we're not seeing it. And knock on wood, it hasn't had any negative impact on us so far, but we really haven't seen any impact. And I'm not hearing about it in my conversations with clients or prospects or with our folks in the field at this point. That could change, I don't know. But right now, I would say our days are much more consumed by all this market disruption that we're seeing from the M&A activity than it is kind of that global economic stuff, political stuff.

Our next question comes from the line of Ross Haberman with RLH Investments.

I'm sorry, Scott. I got on a bit late. So if you addressed these questions, I do apologize. Could you talk about loan growth and what your expectation is for '26 in terms of net loan growth? And what offices do you think it's going to originate? Or what are you seeing better demand from? Is it Arizona, Colorado or elsewhere?

Yes. So great question. We didn't really talk specifically about that. I did mention that we're seeing loan growth across the platform in terms of geography and industry type. And so I think that we're not seeing weakness in one place or another. We're also not stretching anywhere. I would tell you that our owner-occupied CRE number was getting a little higher than we felt comfortable, and we have pulled that down. I don't have that number handy. Is it from 2.60% something -- 3.60% to down to like 3.25% now?

Yes, in that range, yes.

And so I mean that's a change that we're driving. We're actually seeing probably more owner-occupied CRE demand than ever, but we're being very selective there. The guidance we've given for balance sheet growth is high single digits, but I did say early in the call that we're up 11% year-over-year in loans. We're up 13% year-over-year in deposits. So I don't think we're ready to jump out and say, we're going to see mid-teen growth this year, but it does seem like 10% would be a reasonable guesstimate from where we are today.

Is a lot of that coming from the Arizona branch or Montana?

What was the beginning of the question, our loans?

I said, it is a good amount of the growth of the loans coming from Arizona and/or Montana?

I would say in the backward-looking data, no, neither one. But I would also tell you that we're seeing some nice opportunities in both markets. And I think that you're going to see nice growth out of both those markets in the next 12 to 24 months. We've got really good people there, and they're working hard. And we do live the market disruption in Colorado more than elsewhere, but it's everywhere. We're seeing it in Wyoming. We're seeing it in Arizona. We think there are lots of opportunities for us in Montana, too. So the numbers are just bigger in Colorado and more immediate for us because we're in Denver. But we're seeing opportunities everywhere. And you know Ross, very well about our theory about market share. I mean we just have tiny market share. And I think by just showing up and doing a good job of what we do differently than everybody else, which is we're local, we're trusted and we're expert, those three things play really well in the market today.

Are you seeing -- a number of other banks I'm talking to are seeing -- are really beginning to see some pressure on the deposit side, particularly from some of the bigger banks in different markets. Are you seeing pressure to raise deposits rates on the deposit side? And is it coming from the bigger banks in your markets today?

I would take a stab at that question, David, and then maybe I'll be really interested in your answer, too, because it seems like less to me, but you answered from what you're seeing. My answer, Ross, would be of the conversations I'm having. People are calling -- or I'm calling them and they're saying, "I don't want to be with a big national bank, I want to be with a local bank." And they don't even say the word rate. They say, "When can I move?" And we've actually created here a conversion concierge, the internal people call it, I call it the SWAT team, the switch SWAT team actually. And what we tell people that we have a switch SWAT team that will come out and help them transfer their accounts here and simplify the whole conversion process. They love it. And again, they're just -- I mean, I literally don't hear the question, well, what rate are you going to give me? And so again, I think we have a really extraordinary window of opportunity here, and we're doing everything we can to jump through it. But that would be my answer. David, what are you seeing in terms of the day-to-day stuff?

Yes. My simple answer would be is the pricing market for deposits still highly competitive? Yes. Am I fielding a bunch of calls from our bankers saying we need to raise deposit rates? No. So I think that -- those are the dynamics that we're seeing in our markets at the moment.

And just one final question, if I may. Have you announced any new plans for new branches in any of your markets? Or if you found something small to buy as a fit in or would you consider buying that today? Or any growth you really want it to be organic?

Well, we're very focused on organic growth without a doubt. We haven't talked about it because we don't have anything to talk about yet, but as part of the whole market disruption thing, we're seeing really good people that are available that we're trying to bring here. And some of those are -- well, most of them so far, all of them have been in our existing footprint, but there are some that are in adjacent footprints that would be very attractive to us. And hopefully, we'll have something to talk about later this year there. That would be a big plus as far as I'm concerned. If we could bring a couple of well-established teams that want our toolbox to be able to go out and sell with, that would be fantastic in new market.

And as I see no further questions in the queue, I will conclude the session and turn it back to management for closing remarks.

Well, thank you, and I appreciate everybody dialing in on the call today. We talked about some of the noise in Q1 that was built off of the noise in [ Q2 ]. But clearly, we're seeing really nice trends in operating leverage that's translating into great EPS results. And again, if you kind of back up and look at that year-over-year, we've seen a nice multiyear trend. Our NIM is continuing to improve. Organic growth is continuing across the platform. Our asset quality continues to be very strong, and we don't see anything today that would change that. And I think that, that's a very encouraging referendum on the credit quality that we pursue here. Our efficiency ratio has really trended down nicely from 79% a year ago to 73%, and that's not going to stop, I don't think. Our goal here is to get our ROA back over 1% with -- our capital efficiency is going to drive a nice ROE in the low teens and really, I think, get First Western back towards a financial performance where we should be. So with that, thanks, everybody, for dialing in. We really appreciate the support and your interest in First Western. Have a great weekend.

And this concludes our conference. Thank you for participating, and you may now disconnect.