First Western Financial Inc
For the period ended Dec 31, 2024. Filed Mar 7, 2025.
View on SEC.govAbout this filing
A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2024 · Filed Mar 7, 2025
MYFW$30.71-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2023-12-31; filed 2024-03-15.
0001327607-24-000058
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2024-12-31; filed 2025-03-07.
0001327607-25-000020
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 243 previous paragraphs and 237 current paragraphs.
119 unchanged; 70 reworded; 46 added; 54 removed; 0 previous and 2 current paragraphs rearranged.
Tables are not compared: 34 previous and 34 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (46)
Current report
The year ended December 31, 2024 compared with the year ended December 31, 2023. We reported Net income available to common shareholders of $8.5 million for the year ended December 31, 2024, compared to $5.2 million of Net income available to common shareholders for the year ended December 31, 2023, a $3.2 million, or 63.5% increase. For the year ended December 31, 2024, our Income before income taxes was $11.6 million, a $4.5 million, or 63.4%, increase from the year ended December 31, 2023. The increase was primarily driven by a $1.6 million increase in Net interest income, after provision for credit losses and a $5.8 million increase in Non-interest income, partially offset by a $2.9 million increase in Non-interest expense.
Current report
•Theincrease in Net interest income, after provision for credit losses was primarily driven by an increase in Total interest and dividend income due to an increase in total average interest-earning assets and average yield and a decrease in the Provision for credit losses predominately due to decreases in individually analyzed and pooled loan reserves, offset partially by an increase in Total interest expense due to an increase in total average interest-bearing liabilities and average rate.
Current report
•The increase in Non-interest income was due to an increase in Net gain on mortgage loans driven by higher average gain on sale margins and origination volumes, increase in Risk management and insurance fees due to an increase in insurance client agreements, decrease in impairment to the carrying value of a contingent consideration asset, and decrease in Net loss on loans accounted for under the fair value option recorded.
Current report
•The increase in Non-interest expense was primarily driven by increases in Other operational costs attributed to higher costs on non-performing asset workouts, fraud losses, and an OREO write-down, Technology and information system costs related to enhancements of our information technology infrastructure, and Occupancy and equipment costs related to additional rent expense on the extension of a lease in 2024.
Current report
Interest expense on Deposits increased during the year ended December 31, 2024. Average interest-bearing deposit rates were 4.07% and 3.53% for the years ended December 31, 2024 and 2023. The increase in Interest-bearing deposit rates was primarily attributable to the continued elevated interest rate environment and highly competitive deposit market.
Current report
Trust and investment management fees—For the year ended December 31, 2024 compared to the same period in 2023, our Trust and investment management fees increased by $0.4 million, or 2.2%, to $19.2 million. The increase was primarily attributable to an increase in assets under management due to an increase in market values.
Current report
Net loss on loans held for sale—During the year ended December 31, 2024, the Company reclassified $5.8 million of loans held for investment to loans held for sale. The transfers occurred at the point in time the Company decided to sell the loans. During the year ended December 31, 2024, a total of $5.4 million reclassified loans held for investment were sold resulting in a gain of $0.1 million and a $0.2 million write-down on Loans held for sale still held by the Company at year-end was recognized, resulting in a Net loss on loans held for sale of $0.1 million.
Current report
Risk management and insurance fees—The increase in Risk management and insurance fees of $0.7 million, or 81.1%, to $1.7 million was primarily driven by an increase in insurance client agreements.
Current report
The year ended December 31, 2024 compared with the year ended December 31, 2023. The increase in Non-interest expense of 3.8% to $78.5 million was driven by Other operational costs attributed to an OREO write-down driven by updated appraisals, higher costs on non-performing asset workouts, and fraud losses. Technology and information system costs related to enhancements of our information technology infrastructure, and Occupancy and equipment costs related to additional rent expense on the extension of a lease in 2024.
Current report
Occupancy and equipment—The increase in Occupancy and equipment of $0.7 million, or 9.0%, was driven by additional rent expense related to the extension of a lease in 2024.
Current report
Professional services—The increase in Professional services of $0.3 million, or 4.1%, was driven by increased legal fees, audit fees, and FDIC insurance costs due to an increase in our assessment rate.
Current report
Technology and information systems—The increase in Technology and information systems of $0.7 million, or 19.2%, was primarily driven by increased costs related to enhancements of our information technology infrastructure.
Current report
Data processing—The decrease in Data processing of $0.4 million, or 7.9% was driven by lower system costs related to our trust and investment management system.
Current report
Other—The increase in Other of $2.1 million, or 38.4%, was primarily driven by a $1.1 million OREO write-down driven by updated appraisals, increased costs related to non-performing asset workouts, and fraud losses.
Current report
(1)All other non-interest income primarily includes Trust and investment management fees, Bank fees, Risk management and insurance fees, Net loss on loans accounted for under the fair value option, and Other.
Current report
(2)All other non-interest expense primarily includes Occupancy and equipment, Professional services, Technology and information systems, Data processing, Marketing, and Other.
Current report
(1)All other non-interest expense primarily includes Occupancy and equipment, Data processing, and Other.
Current report
Cash and cash equivalents decreased by $18.4 million, or 7.2%, to $236.0 million as of December 31, 2024 compared to December 31, 2023. The decrease was a result of decreases in Borrowings and Deposits, offset partially by the decrease in Loans.
Current report
Held-to-maturity debt securities increased by $1.6 million, or 2.2%, to $75.7 million as of December 31, 2024 compared to December 31, 2023. The increase was primarily due to Held-to-maturity debt security purchases throughout the year.
Current report
Loans, net of allowance decreased by $99.7 million, or 4.0%, to $2.41 billion as of December 31, 2024 compared to December 31, 2023. The decrease was due to payoffs outpacing new production as well as the migration of a large relationship out of loans and into OREO.
Current report
Mortgage loans held for sale increased by $18.2 million, or 250.9%, to $25.5 million as of December 31, 2024 compared to December 31, 2023. The increase was driven driven by higher funded loan volume and the timing of loan sale settlements.
Current report
Other real estate owned, net increased by $35.9 million as of December 31, 2024 compared to December 31, 2023. The increase was due to the migration of a large relationship out of loans and into OREO.
Current report
Other assets increased by $5.5 million, or 6.5%, to $89.8 million as of December 31, 2024 compared to December 31, 2023. The increase was driven by a $10.2 million increase in our lease assets primarily due to an extension of a lease, offset partially by a $3.3 million decrease in Deferred tax assets, net.
Current report
Deposits decreased $14.8 million, or 0.6%, to $2.51 billion as of December 31, 2024 compared to December 31, 2023. The decrease was driven primarily by operating account fluctuations and clients using liquidity for strategic investments. Noninterest-bearing deposit accounts decreased $107.0 million, or 22.2%, to $375.6 million as of December 31, 2024. Money market deposit accounts increased $127.5 million, or 9.2%, to $1.51 billion as of December 31, 2024 compared to December 31, 2023. Time deposit accounts decreased $25.0 million, or 5.0%, to $471.4 million as of December 31, 2024. Interest checking accounts decreased $8.1 million, or 5.5%, to $139.4 million compared to December 31, 2023. The decrease in noninterest-bearing deposit accounts and net increases in interest-bearing deposit accounts was primarily attributable to operating account fluctuations and a shift from noninterest-bearing deposit products into higher yielding products as clients seek higher rates for excess liquidity.
Current report
Borrowings decreased $68.4 million, or 38.4%, to $109.6 million as of December 31, 2024 compared to December 31, 2023. The decrease was primarily driven by a by a lower reliance on FHLB and FRB borrowings due to the decrease in loans.
Current report
Other liabilities increased $17.3 million, or 67.4%, to $42.9 million as of December 31, 2024 compared to December 31, 2023. The increase was primarily due to a $9.6 million increase in payables related to participated non-performing assets and a $10.1 million increase in our lease liability due to an extension of a lease, offset partially by a $1.5 million decrease in the unfunded commitment liability due to decreases in noncancellable commitments.
Current report
Debt securities
Current report
(*)Represents percentages that are insignificant
Current report
(1)Includes PPP loans of $2.0 million and $4.2 million as of December 31, 2024 and 2023, respectively.
Current report
(2)Includes$7.5 million and $14.1 million of unpaid principal balance of loans held for investment accounted for under the fair value option as of December 31, 2024 and 2023, respectively.
Current report
(4)Includes$0.6 million of principal balance of loans held for sale as of December 31, 2024.
Current report
The largest category of the Company’s loan portfolio is Commercial Real Estate (“CRE”). An additional breakdown of the Company’s CRE portfolio follows.
Current report
The following table summarizes the Company’s CRE portfolio by geographic location as of the dates indicated:
Current report
The CRE portfolio is comprised of loans made to purchase, construct and finance commercial real estate properties. On average, the balances are small and geographically disbursed across our footprint. Specifically, our CRE portfolio has an average loan balance of $2.47 million with a weighted average loan-to-value ratio (“LTV”) of 52.9% as of December 31, 2024.
Current report
Due to the recent trends in the banking industry, there has been increased risk associated with commercial real estate loans, including with respect to the higher vulnerability of these credits to pressure as interest rates remain elevated and market conditions in many large metropolitan areas continue to show signs of stress. The Company has limited exposure to the office building sector in central business districts as the office portfolio is generally diversified in suburban markets with strong occupancy levels. The Company maintains a practice of regular and ongoing loan reviews, stress tests, and sensitivity analyses to assess the level of risk in the loan portfolio. Loan reviews include monitoring past due rates, non-performing trends, concentrations, LTV’s, among other qualitative factors. Credit policies are robust and are updated as needed to meet the strategic and risk mitigation goals of the company.
Current report
(2)Loans accounted for under the fair value option are disclosed at fair value rather than amortized cost
Current report
The Company had $0.7 million and $1.7 million of interest reversed on non-accrual loans during the years ended December 31, 2024 and 2023, respectively. The amount of interest income that would have been recognized on loans accounted for on a non-accrual basis pursuant to contractual terms was $6.8 million and $4.0 million for the years ended December 31, 2024 and 2023, respectively.
Current report
We had amortized cost of $48.7 million and $50.8 million in non-performing assets as of December 31, 2024 and 2023, respectively. Although consistent balances of non-performing assets when comparing December 31, 2024 and December 31, 2023, there was significant activity during the ended December 31, 2024. Non-performing loans decreased $38.1 million and OREO increased $35.9 million. These changes were predominately due to the migration of one loan relationship out of non-performing loans and into OREO, as well as pay downs, charge-offs, and write-downs, offset by additions to non-performing loans.
Current report
(1)Held at the lower of cost or market as described in Note 16.
Current report
(1)Includes PPP loans of $2.0 million and $4.2 million as of December 31, 2024 and 2023, respectively.
Showing the first 40 of 46 passages. Open the source sections for the rest.
Removed paragraphs (54)
Previous report
The year ended December 31, 2023 compared with the year ended December 31, 2022. For the year ended December 31, 2023, we reported net income available to common shareholders of $5.2 million, compared to net income available to common shareholders for December 31, 2022 of $21.7 million, a $16.5 million, or 75.9% decrease. For the year ended December 31, 2023, our income before income tax was $7.1 million a $21.8 million, or 75.5%, decrease from December 31, 2022. The decrease was primarily driven by a $19.5 million decrease in net interest income, after provision for credit losses and a $5.7 million decrease in non-interest income, partially offset by a $3.5 million decrease in non-interest expense. The decrease in net interest income, after provision for credit losses, was primarily due to higher rates on deposits and borrowings resulting from increased market rates, an increase in the provision of credit losses due to $8.8 million of charge-offs, offset partially by an increase in interest and fees on loans resulting from loan growth and higher loan yields. The decrease in non-interest income was due to a $1.8 million decrease in net gain on mortgage loans driven by a slowdown in new lock volume associated with the rising interest rate environment, $1.2 million of impairment to the carrying value of a contingent consideration asset, and a $1.1 million increase in losses on loans accounted for under the fair value option recorded during the year ended December 31, 2023. The decrease in non-interest expense was primarily driven by lower salaries and benefits related to staffing reductions to better align with current revenue.
Previous report
Interest expense on deposits increased during the year ended December 31, 2023 compared to the same period in 2022. Average rates on interest bearing deposits increased 269 basis points, consistent with the higher interest rate environment, while the growth in interest-bearing deposits was primarily driven by new and expanded deposit relationships and a shift in clients moving out of non-interest bearing products into higher yielding products.
Previous report
Trust and investment management fees— For the year ended December 31, 2023 compared to the same period in 2022, our trust and investment management fees decreased by $0.2 million, or 0.8%, to $18.8 million. The decrease was primarily attributable to account attrition within one profit center, partially offset by an increase in our fee structure.
Previous report
Net loss on loans held for sale— During the year ended December 31, 2023, the Company transferred $39.2 million of non-relationship loans held for investment to loans held for sale. Upon transfer of the loans, the Company recorded a net loss on loans held for sale of $0.2 million, primarily attributable to the slight decline in fair value as a result of the rising interest rates on comparable loans in the market.
Previous report
Bank fees— For the year ended December 31, 2023 compared to the same period in 2022, our bank fees decreased by $0.6 million or 24.0%. The decrease was primarily driven by decreased treasury management fees as a result of rising interest rates driving higher earnings credit on commercial operating balances, partially offset by higher loan fees as a result of prepayment and swap derivative activity.
Previous report
Risk management and insurance fees— For the year ended December 31, 2023 compared to the same period in 2022, our risk management and insurance fees decreased by $0.3 million, or 25.3%, to $0.9 million.
Previous report
Unrealized (loss)/gain on Equity Securities— For the year ended December 31, 2023 compared to the same period in 2022, our unrealized gains on equity securities decreased by $0.4 million to an immaterial unrealized loss position as of December 31, 2023. The decrease was primarily driven by fair value adjustments on equity warrants.
Previous report
The year ended December 31, 2023 compared with the year ended December 31, 2022. The decrease in non-interest expense of 4.4% to $75.6 million for the year ended December 31, 2023, was primarily driven by lower Salaries and employee benefits related to staffing reductions to better align with current revenue and lower Technology and information system costs.
Previous report
Salaries and employee benefits—The decrease in salaries and employee benefits of $3.0 million, or 6.3%, was primarily related to lower wages and employee benefits related to staffing reductions to better align with current revenue, partially offset by lower deferred compensation due to fewer loan originations.
Previous report
Occupancy and equipment—The increase in occupancy and equipment of $0.1 million, or 1.0%, was primarily driven by an increase in leasehold improvement depreciation, partially offset by decreases in lease expense and variable lease costs.
Previous report
Professional Services—The decrease in professional services of $0.3 million, or 3.3%, was driven by lower consulting and other professional fees, as the same period a year ago had additional expenses related to the acquisition of Teton and corporate activity to support the growth of the Company. The decrease was partially offset by higher FDIC insurance costs due to the increase in the assessment rate and growth in the balance sheet.
Previous report
Technology and information systems—The decrease in technology and information systems of $1.0 million, or 21.6%, was primarily driven by reduced software costs related to the trust and investment management system enhancement completed in 2022 and lower infrastructure costs due to the Company bringing certain outsourced information technology support in-house.
Previous report
Other—The increase in other of $0.8 million, or 18.2%, was driven by increased subscription costs related to system and process improvements, and increased fees related to reciprocal deposit balance growth.
Previous report
(*)Represents percentages that are not meaningful due to being insignificant or exceeding 100%.
Previous report
Cash and cash equivalents increased by $57.9 million, or 29.5%, to $254.4 million as of December 31, 2023 compared to December 31, 2022. The increase in liquidity was driven primarily by deposit growth, offset partially by loan growth.
Previous report
Investments decreased by $7.0 million, or 8.6%, to $74.1 million as of December 31, 2023 compared to December 31, 2022. The decrease is due to held-to-maturity securities payments received throughout 2023.
Previous report
Loans, net of allowance increased by $54.8 million, or 2.2%, to $2.51 billion as of December 31, 2023 compared to December 31, 2022. The increase was driven by net portfolio growth, primarily in the construction and development, non-owner occupied commercial real estate, and residential mortgage portfolios. The growth in our construction and development portfolio was driven primarily by draws on existing commitments, partially offset by payoffs.
Previous report
Mortgage loans held for sale decreased $1.6 million, or 17.9%, to $7.3 million as of December 31, 2023 compared to December 31, 2022. The decrease was driven by a reduction in loan origination volume primarily driven by a slowdown in new lock volume associated with the rising interest rate environment.
Previous report
Other assets increased by $6.4 million, or 8.2%, to $84.3 million as of December 31, 2023 compared to December 31, 2022. The increase was primarily driven by an increase in tax receivable of $3.7 million related to estimated tax payments made during the year, the addition of hedge swap collateral of $0.8 million and swap derivative assets of $0.8 million, and contributions to the Company's low-income housing tax credit ("LIHTC) investments of $1.1 million and bank technology fund investments of $0.8 million, partially offset by a decrease of $1.5 million of a contingent consideration asset, primarily driven by the $1.2 million impairment to the carrying value of the contingent consideration asset recorded during the second quarter of 2023.
Previous report
Deposits increased $123.8 million, or 5.1%, to $2.53 billion as of December 31, 2023 compared to December 31, 2022. The increase was primarily attributable to new and expanded deposit relationships.
Previous report
Money market deposit accounts increased $50.1 million, or 3.7%, to $1.39 billion as of December 31, 2023 compared to December 31, 2022. Time deposit accounts increased $272.4 million, or 121.5%, to $496.5 million as of December 31, 2023. Negotiable order of withdrawal ("NOW") accounts decreased $87.3 million, or 37.2%, to $147.5 million compared to December 31, 2022. The decrease in NOW accounts was primarily attributable to a mix shift from lower yielding deposit products into higher yielding products as clients seek higher rates for excess liquidity.
Previous report
Borrowings decreased $21.0 million, or 10.5%, to $178.1 million as of December 31, 2023 compared to December 31, 2022. The decrease is primarily driven by a decline in FHLB borrowing reliance as a result of increased deposits.
Previous report
Investment securities
Previous report
Investments we intend to hold for an indefinite period of time, but not necessarily to maturity, are classified as available-for-sale and are recorded at fair value using current market information from a pricing service, with unrealized gains and losses excluded from earnings and reported in other comprehensive income, net of tax. The carrying values of our investment securities classified as available-for-sale are adjusted for unrealized gain or loss, and any gain or loss is reported on an after-tax basis as a component of other comprehensive income in shareholders’ equity.
Previous report
The Company reassessed classification of investment securities and, effective April 1, 2022, elected to transfer all securities, fair valued at $58.7 million, from available-for-sale to held-to-maturity. The related unrealized loss of $2.3 million included in other comprehensive income on April 1, 2022 remained in other comprehensive income and is being amortized out over the remaining term of the securities. No gain or loss was recorded at the time of transfer. As of December 31, 2023, all of our investment securities were classified as held-to-maturity.
Previous report
(1) Refer to Note 1 – Organization and Summary of Significant Accounting Policies for further information on our credit loss methodology.
Previous report
*Represents percentages that are not meaningful due to being insignificant or exceeding 100%
Previous report
(1)Management reviewed the collectability of corporate CMO and MBS securities taking into consideration such factors as the asset quality of the corporate bond issuers and credit support and delinquencies associated with the corporate CMO and MBS.
Previous report
(2)Refer to Note 1 – Organization and Summary of Significant Accounting Policies for further information on our credit loss methodology.
Previous report
(1)Includes PPP loans of $4.2 million and $6.9 million as of December 31, 2023 and 2022, respectively.
Previous report
(2)Includes$14.1 million and $23.4 million of unpaid principal balance of loans held for investment accounted for under the fair value option loansas of December 31, 2023 and 2022, respectively.
Previous report
(1)Includes PPP loans.
Previous report
As a result of the COVID-19 pandemic, a loan modification program was designed and implemented to assist our clients experiencing financial stress resulting from the economic impacts caused by the global pandemic. The Company offered loan extensions, temporary payment moratoriums, and financial covenant waivers for commercial and consumer borrowers impacted by the pandemic who had a pass risk rating and had not been delinquent over 30 days on payments in the last two years.
Previous report
In 2021, the deferral period ended for all non-acquired loans previously modified and payments resumed under the original terms. As of December 31, 2023, the Company's loan portfolio included 41 non-acquired loans which were previously modified under the loan modification program, totaling $71.3 million. Through the Teton acquisition, the Company acquired loans which were previously modified and are still in their deferral period. As of December 31, 2023, there were 14 of these loans, totaling $2.9 million.
Previous report
All loans modified in response to COVID-19 are classified as performing and pass rated as of December 31, 2023. Non-acquired COVID modified loans are included in the allowance for credit losses. Management has increased our loan level reviews and portfolio monitoring to address the changing environment. Management believes the diversity of the loan portfolio is prudent and remains consistent with the credit culture and goals of the Bank.
Previous report
Interest accrued during the modification term on modified loans is deferred to the end of the loan term. Interest receivable is excluded from the estimate of credit losses.
Previous report
The following table presents the amortized cost basis as of December 31, 2023 of the loans modified to borrowers experiencing financial difficulty during the year ended December 31, 2023, disaggregated by class of financing receivable and type of concession granted during the period. The percentage of the amortized cost basis of loans that were modified to borrowers in financial distress as compared to the amortized cost basis of each class of financing receivable is also presented below.
Previous report
The following table presents the financial effect by type of modification made to borrowers experiencing financial difficulty for the period ended December 31, 2023:
Previous report
The amount of lost interest for non-accrual loans was $6.4 million and $0.2 million for each of the years ended December 31, 2023 and 2022, respectively. The Company recorded $8.8 million and $0.2 million of charge-offs, net of recoveries, during the year ended December 31, 2023 and December 31, 2022, respectively.
Previous report
We had amortized cost of $50.8 million and $12.1 million in non-performing assets as of December 31, 2023 and December 31, 2022, respectively. The increase in non-performing assets is primarily related to the addition of $42.2 million in loans, under one relationship, during the third quarter of 2023.
Showing the first 40 of 54 passages. Open the source sections for the rest.
Reworded paragraphs (70)
Previous wording
We offer our services through a branded network of boutique private trust bank offices, which we believe are strategically located in affluent and high-growth markets in locations across Colorado, Arizona, Wyoming, Montana, and California. Our profit centers, which are comprised of private bankers, lenders, wealth planners and portfolio managers, under the leadership of and/or president, are also supported centrally by teams providing management services such as operations, risk management, credit administration, marketing, technology support, human capital, and accounting/finance services, which we refer to as support centers.
Current wording
We offer our services through a branded network of boutique private trust bank offices, which we believe are strategically located in affluent and high-growth markets in locations across Colorado, Arizona, Wyoming, Montana, and California. Our profit centers, which are comprised of private bankers, lenders, wealth planners and portfolio managers, under the leadership of a local chairman and/or president, are also supported centrally by teams providing management services such as operations, risk management, credit administration, marketing, technology support, human capital, and accounting/finance services, which we refer to as support centers.
Previous wording
From 2004, when we opened our first profit center, until December 31, 2023, wehave expanded our footprint into fourteen full service profit centers, three loan production offices, and one trust office located across five states. Asof and for the year ended December 31, 2023, we had $2.98 billion in total assets, $82.7 million in total revenues and provided fiduciary and advisory services on $6.75 billion of assets under management ("AUM").
Current wording
From 2004, when we opened our first profit center, until December 31, 2024, wehave expanded our footprint into fourteen full service profit centers, five loan production offices, and one trust office located across five states. Asof and for the year ended December 31, 2024, we had $2.92 billion in total assets, $90.1 million in total revenues, and provided fiduciary and advisory services on $7.32 billion of assets under management ("AUM").
Previous wording
During March and April of 2023, the banking industry experienced significant disruption and volatility with the failure of multiple banks creating industry wide concerns related to liquidity, deposit outflows, unrealized securities losses, and eroding consumer confidence in the banking industry. Despite the market wide impact to bank stock prices, we believe the Bank remains stable with strong fundamentals including uninsured deposits lower than our peer average, at $852.8 million, or 33.7% of total deposits as of December 31, 2023. The Company has a low amount of held-to-maturity securities, which represent 2.5% of Total assets, and carries unrecognized losses amounting to 3.1% of Total shareholders’ equity as of December 31, 2023. We have limited exposure to commercial real estate (“CRE”) non-owner occupied office space which has been impacted by the shift to hybrid work environments. Our client base is well diversified with no single industry concentration.
Current wording
During 2024, the banking industry largely rebounded from the disruption and volatility seen in 2023 stemming from the failure of multiple banks, which created industry wide concerns related to liquidity, deposit outflows, and unrealized securities losses. Valuations for bank stocks improved during the year, although there are still headwinds across the industry. The Bank remains stable with strong fundamentals including uninsured deposits at $902.6 million, or 35.9% of total deposits as of December 31, 2024. The Company has a low amount of held-to-maturity debt securities, which represent 2.6% of Total assets and carries unrecognized losses amounting to 3.0% of Total shareholders’ equity as of December 31, 2024. We have a conservative credit appetite as evidenced by our limited exposure to non-owner occupied office space commercial real estate (“CRE”), which has been negatively impacted by the shift to hybrid work environments. Our client base is well diversified with no single industry concentration.
Previous wording
Net interest income represents interest income less interest expense. We generate interest income on interest-earning assets, primarily loans and investment securities. We incur interest expense on interest-bearing liabilities, primarily interest-bearing deposits and borrowings. To evaluate net interest income, we measure and monitor: (i) yields on loans, investment securities, and other interest-earning assets; (ii) the costs of deposits and other funding sources; (iii) the rates incurred on borrowings and other interest-bearing liabilities; and (iv) the regulatory risk weighting associated with the assets. Interest income is primarily impacted by loan growth and loan repayments, along with changes in interest rates on the loans. Interest expense is primarily impacted by changes in deposit balances, changes in interest rates on deposits, along with the volume and type of interest-bearing liabilities. Net interest income is primarily impacted by changes in market interest rates, the slope of the yield curve, and interest we earn on interest-earning assets or pay on interest-bearing liabilities.
Current wording
Net interest income represents interest income less interest expense. We generate interest income on interest-earning assets, primarily loans and investment securities. We incur interest expense on interest-bearing liabilities, primarily interest-bearing deposits and borrowings. To evaluate Net interest income, we measure and monitor: (i) yields on loans, investment securities, and other interest-earning assets; (ii) the costs of deposits and other funding sources; (iii) the rates incurred on borrowings and other interest-bearing liabilities; and (iv) the regulatory risk weighting associated with the assets. Interest income is primarily impacted by loan growth and loan repayments, along with changes in interest rates on the loans. Interest expense is primarily impacted by changes in deposit balances, changes in interest rates on deposits, and the volume and type of interest-bearing liabilities. Net interest income is primarily impacted by changes in market interest rates, the slope of the yield curve, and interest we earn on interest-earning assets or pay on interest-bearing liabilities.
Previous wording
•Other—includes costs related to operational expenses associated with office supplies, postage, travel expenses, meals and entertainment, dues and memberships, costs to maintain or prepare other real estate owned ("OREO") for sale, director compensation and travel, and other general corporate expenses that do not fit within one of the specific non-interest expense lines described above. Other operational expenses are generally impacted by our business activities and needs.
Current wording
•Other—includes costs related to operational expenses associated with office supplies, postage, travel expenses, meals and entertainment, dues and memberships, costs to maintain or prepare other real estate owned ("OREO") for sale, changes in OREO valuations subsequent to the initial acquisition when updated fair values are lower than the cost basis, director compensation and travel, and other general corporate expenses that do not fit within one of the specific non-interest expense lines described above. Other operational expenses are generally impacted by our business activities and needs.
Previous wording
We manage the diversification and quality of our assets based upon factors that include the level, distribution, severity and trend of problem assets such as those determined to be classified, delinquent, non-accrual, non-performing or restructured; the adequacy of our allowance for credit losses; the diversification and quality of loan and investment portfolios; the extent of counterparty risks, credit risk concentrations, and other factors.
Current wording
We manage the diversification and quality of our assets based upon factors that include the level, distribution, severity, and trend of problem assets such as those determined to be classified, delinquent, non-accrual, non-performing or restructured; the adequacy of our allowance for credit losses; the diversification and quality of loan and investment portfolios; and the extent of counterparty risks, credit risk concentrations, and other factors.
Previous wording
The year ended December 31, 2023 compared with the year ended December 31, 2022. For the year ended December 31, 2023, compared to the year ended December 31, 2022, net interest income, before the provision for credit losses, decreased $12.8 million, or 15.3%, to $71.1 million. This decrease was driven by a $300.3 million increase in average interest bearing deposit balances and a 269 bps increase in average rates paid on interest bearing deposits partially offset by a $340.5 million increase in average loans outstanding and a 102 bps increase in the average yield on loans. For the year ended December 31, 2023, our net interest margin was 2.62% and our net interest spread was 1.71%. For the year ended December 31, 2022, our net interest margin was 3.36% and our net interest spread was 3.02%.
Current wording
The year ended December 31, 2024 compared with the year ended December 31, 2023. For the year ended December 31, 2024, Net interest income, before Provision for credit losses, was $64.3 million, a decrease of $6.8 million, or 9.6%, compared to the year ended December 31, 2023. This decrease was driven by a $174.2 million increase in average interest-bearing deposit balances and a 54 basis point increase in average rates paid on Interest-bearing deposits, offset partially by a 27 basis point increase in the average yield on loans and a $53.7 million increase in Interest-bearing deposits in other financial institutions. For the year ended December 31, 2024, our net interest margin was 2.37% and our net interest spread was 1.50%. For the year ended December 31, 2023, our net interest margin was 2.62% and our net interest spread was 1.71%.
Previous wording
The increase in average loans outstanding for the year ended December 31, 2023 compared to the same periods in 2022 was due to an increase in construction and development, non-owner occupied CRE, and residential mortgage offset by a decrease in cash, securities, and other, consumer and other, commercial and industrial, and owner occupied CRE. The growth in our construction and development portfolio was driven primarily by draws on existing commitments, partially offset by payoffs. Average loan yield was 5.43% for the year ended December 31, 2023, compared to 4.42% for the year ended December 31, 2022. The increase in loan yield during the period was primarily driven by an increase in yields on the variable rate portfolio and an increase in yields on new loan production due to the rising interest rate environment.
Current wording
The decrease in average loans outstanding for the year ended December 31, 2024 compared to the same periods in 2023 was primarily due to net declines in the Cash, Securities and Other, Construction and Development, and Commercial and Industrial portfolios, offset by net growth in the 1-4 Family Residential and Non-Owner Occupied Commercial Real Estate portfolios. Contributing factors to the decline in the Commercial and Industrial portfolio was the resolution of a problem credit relationship, which decreased non-performing loans by $42.2 million and increased Other real estate owned ("OREO") by $35.9 million, as well as net pay downs. Average loan yield was 5.70% for the year ended December 31, 2024, compared to 5.43% for the year ended December 31, 2023. The increase in loan yield during the period was primarily driven by an increase in yields on new loan production due to the continued elevated interest rate environment.
Previous wording
Interest income on our investment securities portfolio increased as a result of higher average investment balances and higher average yield for the year ended December 31, 2023 compared to the same period in 2022. Our average investment securities balance during the year ended December 31, 2023 was $79.2 million, an increase of $5.0 million from the year ended December 31, 2022.
Current wording
Interest income on our Debt securities portfolio increased as a result of an increase in average yield of 3.47% for the year ended December 31, 2024, compared to 3.11% for the year ended December 31, 2023. Our average Debt securities balance during the year ended December 31, 2024 was $76.7 million, a decrease of $2.5 million from the year ended December 31, 2023.
Previous wording
(3)Non-performing loans are included in the respective average loan balances. Income, if any, on such loans is recognized on a cash basis.
Current wording
(3)Non-accrual loans are included in the respective average loan balances. Income, if any, is not recognized until all principal has been repaid.
Previous wording
We have a dedicated problem loan resolution team comprised of associates from our credit, senior leadership, risk, and accounting teams that meets frequently to ensure that watch list and problem credits are identified early and actively managed. We work to identify potential losses in a timely manner and proactively manage the problem credits to minimize losses. For the years ended December 31, 2023 and 2022, we recorded $10.4 million and $3.7 million, respectively, of provision for credit losses. The provision recorded for the year ended December 31, 2023 includes $8.8 million of charge-offs, a $3.8 million allowance recorded on non-performing loans, as well as general provisioning consistent with our net growth of the originated loan portfolio, partially offset by a $1.7 million provision release related to off-balance sheet commitments, as well as changes in our portfolio mix and reduced model loss rates used in our quantitative model, largely driven by the economic outlook scenario assuming a soft landing as compared to a more severe and deep recession previously forecasted.
Current wording
We have a dedicated problem loan resolution team comprised of associates from our credit, senior leadership, risk, and accounting teams that meets frequently to ensure that watch list and problem credits are identified early and actively managed. We work to identify potential losses in a timely manner and proactively manage the problem credits to minimize losses. For the years ended December 31, 2024 and 2023, we recorded $1.9 million and $10.4 million Provision for credit losses, respectively. The provision recorded for the year ended December 31, 2024 was due to related provisioning on $9.0 million of net charge-offs, $3.5 million decrease in provisions on individually analyzed loans, $2.1 million release of provisions on pooled loans, and $1.5 million provision releases related to off-balance sheet commitments. The release of provision related to individually analyzed loans was predominately due to the migration of one loan relationship out of non-performing loans and into OREO, pay downs on non-performing loans, and charge-offs. The release of provision related to pooled loans was predominately due to net pay downs, changes in our portfolio mix, as well as modest macroeconomic forecast improvements. The release of provision related to off-balance sheet commitments for the year ended December 31, 2024 was predominately due to decreases in non-cancellable commitments..
Previous wording
The Company has increased loan level reviews and portfolio monitoring to address the changing environment. Management believes the financial strength of the Bank’s clientele and the diversity of the portfolio continues to mitigate the credit risk within the portfolio.
Current wording
The Company maintains a credit management program which includes internal and external loan review along with recurring portfolio monitoring activities to address the changing environment. Management believes the financial strength of the Bank’s clientele and the diversity of the portfolio continues to mitigate the credit risk within the portfolio.
Previous wording
The year ended December 31, 2023 compared with the year ended December 31, 2022. For the year ended December 31, 2023 compared to the year ended December 31, 2022, non-interest income decreased $5.7 million, or 20.7%, to $21.9 million. The decrease in non-interest income was primarily due as a result of a $1.8 million decrease in Net gain on mortgage loans driven by a slowdown in new lock volume on held for sale loans associated with the rising interest rate environment, $1.2 million of impairment to the carrying value of a contingent consideration asset recorded during the second quarter of 2023, and a $1.1 million increase in net losses on loans accounted for under the fair value option.
Current wording
The year ended December 31, 2024 compared with the year ended December 31, 2023. For the year ended December 31, 2024 compared to the year ended December 31, 2023, Non-interest income increased $5.7 million, or 26.1%, to $27.7 million. The increase in non-interest income was primarily due to a $2.1 million increase in Net gain on mortgage loans driven by higher average gain on sale margins and origination volumes, $0.7 million increase in Risk management and insurance fees due to an increase in insurance client agreements, $0.9 million decrease in impairment to the carrying value of a contingent consideration asset, and $1.0 million decrease in Net losses on loans accounted for under the fair value option.
Previous wording
Net gain on mortgage loans— For the year ended December 31, 2023 compared to the same period in 2022, our net gain on mortgage loans decreased by $1.8 million, or 38.4%, to $2.8 million. The decrease in net gain on mortgage loans was primarily driven by a slowdown in new lock volume on held for sale loans associated with the rising interest rate environment.
Current wording
Net gain on mortgage loans—For the year ended December 31, 2024 compared to the same period in 2023, our Net gain on mortgage loans increased by $2.1 million, or 73.8%, to $4.9 million. The increase in Net gain on mortgage loans was driven by higher average gain on sale margins and origination volumes.
Previous wording
Net loss on loans accounted for under the fair value option— The Company elected the fair value option on certain loans purchased in 2022. For the year ended December 31, 2023 compared to the same period in 2022, loans accounted for under the fair value option had an additional $1.1 million in net losses recorded. The increase was primarily attributable to net charge-offs during the period and, partially offset by improvement in fair value.
Current wording
Net loss on loans accounted for under the fair value option—The Company elected the fair value option on certain loans purchased in 2022. The decrease in Net loss on loans accounted for under the fair value option of $1.0 million, or 50.3% was primarily attributable to overall improved performance of the portfolio.
Previous wording
Other— For the year ended December 31, 2023 compared to the same period in 2022, our other income decreased by $1.3 million. The decrease was primarily attributable to $1.2 million of impairment to the carrying value of a contingent consideration asset recorded during the second quarter of 2023, related to the sale of First Western Capital Management in 2020. The value was established using asset growth assumptions provided by the buyer, which had not materialized.
Current wording
Other—The increase in Other income of $1.4 million, or 175.0% was primarily attributable to a $0.9 million year-over-year decrease in impairment recorded to the carrying value of a contingent consideration asset recorded related to the sale of First Western Capital Management in 2020. The initial contingent asset value was established using asset growth assumptions provided by the buyer, which have not materialized.
Previous wording
Marketing—The decrease in marketing of $0.3 million, or 18.4%, was primarily driven by lower advertising costs as well as reduced client onboarding costs related to the Teton acquisition compared to the same period last year.
Current wording
Marketing—The decrease in Marketing of $0.3 million, or 21.6%, was driven by lower advertising costs and decreased events and sponsorships.
Previous wording
During the year ended December 31, 2023, the Company recorded an income tax provision of $1.8 million, reflecting an effective tax rate 26.0% During the year ended December 31, 2022, the Company recorded an income tax provision of $7.1 million, reflecting an effective tax rate of 24.7%.
Current wording
The Company recorded an income tax provision of $3.1 million and $1.8 million for the years ended December 31, 2024 and 2023, respectively, reflecting an effective tax rate 26.8% and 26.0%, respectively.
Previous wording
We have two reportable operating segments: Wealth Management and Mortgage. Our Wealth Management segment consists of operations relating to the Company’s fully integrated wealth management products and services. Services provided include deposit, loan, insurance, and trust and investment management advisory products and services for which fee revenue is recognized. Our Mortgage segment consists of operations relating to the Company’s residential mortgage service offerings. Services provided by our mortgage segment include soliciting, originating, and selling mortgage loans into the secondary market. Mortgage products are financial in nature for which origination fees are recognized net of origination expenses, upon the funding of the mortgage loans. Mortgage loans held for sale are accounted for under the fair value option with changes in fair value reported through earnings at inception when loans are locked to the borrower and until the loan is sold to third parties, at which time additional gains or losses on the sale are recorded. Mortgage loans originated and held for investment purposes are recorded in the Wealth Management segment, as this segment provides ongoing services to our clients.
Current wording
Our Mortgage segment consists of operations relating to the Company’s residential mortgage service offerings. Services provided by our mortgage segment include soliciting, originating, and selling mortgage loans into the secondary market. Mortgage products are financial in nature for which origination fees are recognized net of origination expenses, upon the funding of the mortgage loans. Mortgage loans held for sale are accounted for under the fair value option with changes in fair value reported through earnings at inception when loans are locked to the borrower and until the loan is sold to third parties, at which time additional gains or losses on the sale are recorded. Mortgage loans originated and held for investment purposes are recorded in the Wealth Management segment, as this segment provides ongoing services to our clients.
Previous wording
(1)Net interest income after provision plus non-interest income.
Current wording
(1)Net interest income after provision for credit losses plus non-interest income.
Previous wording
The Wealth Management segment reported income before income tax of $9.6 million for the year ended December 31, 2023, compared to $31.3 million, for the same period in 2022. The majority of our assets and liabilities are on the Wealth Management segment balance sheet and the decrease in income before taxes is primarily attributable to a decrease in net interest income, after provision for credit losses. The decrease in net interest income, after provision for credit loss was primarily driven by an increase in average interest-bearing deposits and rates, partially offset by an increase in interest income. The provision for credit losses for the year ended December 31, 2023 increased $6.7 million to $10.4 million compared to $3.7 million for the same period in 2022, primarily due an increase in an allowance on individually analyzed loans. As of December 31, 2023, the Company had an allowance of $3.8 million on non-performing loans.
Current wording
The Wealth Management segment reported Income before income taxes of $10.6 million for the year ended December 31, 2024, compared to $9.7 million for the same period in 2023. The majority of our assets and liabilities are on the Wealth Management segment balance sheet and the increase in Income before taxes is primarily attributable to an increases in Net interest income, after provision for credit losses and Non-interest income, partially offset by increases in Non-interest expense. The increase in Net interest income, after provision for credit losses was driven by a decrease in Provision for credit losses primarily due to a decrease in provisions related to individually analyzed loans and an increase in Total interest and dividend income due to an increase in total average interest-earning assets and average yield, offset partially by an increase in Total interest expense due to an increase in total average interest-bearing liabilities and average rate. The increase in Non-interest income was primarily driven by increases in Risk management and insurance fees and a decrease in Net loss on loans accounted for under the fair value option recorded. The increase in Non-interest expense was driven by increases in Technology and information systems expenses, Occupancy and equipment costs, and Other expenses.
Previous wording
The Mortgage segment reported a loss before income tax of $2.5 million for the year ended December 31, 2023, compared to a loss before income tax of $2.4 million for the same period in 2022. The overall decrease in non-interest income was primarily driven by a slowdown in new lock volume on held for sale loans associated with rising interest rates, which continue to impact loan demand. The decrease in non-interest expense was driven by a reduction in headcount to better align the operations functions with the slowdown in volume.
Current wording
The Mortgage segment reported Income before income tax of $1.0 million for the year ended December 31, 2024, compared to a loss before income tax of $2.6 million for the same period in 2023. The increase in Income before taxes was primarily driven by an increase in Non-interest income and a decrease in Non-interest expense. The increase in Non-interest income was primarily driven by higher average gain on sale margins and origination volume. The decrease in Non-interest expense was primarily due to lower Salaries and employee benefits.
Previous wording
*Represents percentages that are not meaningful due to being insignificant or exceeding 100%
Current wording
(*)Represents percentages that are not meaningful..
Previous wording
Goodwill and other intangible assets, net decreased by $0.3 million, or 0.8%, to $31.9 million as of December 31, 2023 compared to December 31, 2022. The decrease was driven by amortization on intangible assets.
Current wording
Goodwill and other intangible assets, net decreased by $0.2 million, or 0.7%, to $31.6 million as of December 31, 2024 compared to December 31, 2023. The decrease was driven by amortization on intangible assets.
Previous wording
Total shareholders’ equity increased $1.9 million, or 0.8%, to $242.7 million as of December 31, 2023. The increase is primarily due to Net income for the year and a $2.4 million increase in Additional paid-in capital driven by stock-based compensation expense, partially offset by a $5.3 million net reduction to Retained earnings as a result of the adoption of ASU 2016-13 for Current Expected Credit Losses ("CECL").
Current wording
Total shareholders’ equity increased $9.6 million, or 3.9%, to $252.3 million as of December 31, 2024. The increase was primarily due to Net income for the year and a $0.7 million increase in Additional paid-in capital driven by stock-based compensation expense.
Previous wording
(1)AUM reported for the current period are one quarter in arrears.
Current wording
(1)AUM reported for the current period is one quarter in arrears.
Previous wording
Assets under management increased $646.0 million, or 10.6%, to $6.75 billion for the year ended December 31, 2023. The increase was primarily attributable to improving market conditions year-over-year resulting in an increase in the value of assets under management balances.
Current wording
AUM increased $568.0 million, or 8.4%, to $7.32 billion for the year ended December 31, 2024. The increase was attributable to contributions and improving market conditions year-over-year resulting in an increase in the value of assets under management balances, offset partially by net withdrawals.
Previous wording
Investments for which we have the intent and ability to hold to their maturity are classified as held-to-maturity securities and are recorded at amortized cost. Securities held-to-maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity.
Current wording
Debt securities for which we have the intent and ability to hold to their maturity are classified as Held-to-maturity debt securities and are recorded at amortized cost. Debt securities held-to-maturity are carried at cost, adjusted for the amortization of premiums and the accretion of discounts using the level-yield method over the remaining period until maturity. As of December 31, 2024 and 2023, all our investments in debt securities were classified as held-to-maturity.
Previous wording
The following tables present the amortized cost and estimated fair value of our investment securities as of the dates noted:
Current wording
The following tables present the amortized cost and estimated fair value of our debt securities as of the dates noted:
Previous wording
The following presents the book value of our contractual maturities and weighted average yield for our investment securities as of the dates presented. Contractual maturities may differ from expected maturities because issuers can have the right to call or prepay obligations without penalties. Our investments are taxable securities. The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security as of December 31, 2023. Weighted average yields are not presented on a taxable equivalent basis.
Current wording
The following presents the book value of our contractual maturities and weighted average yield for our debt securities as of the dates presented. Contractual maturities may differ from expected maturities because issuers can have the right to call or prepay obligations without penalties. Our debt securities are taxable securities. The weighted average yield for each range of maturities was calculated using the yield on each security within that range weighted by the amortized cost of each security as of December 31, 2024. Weighted average yields are not presented on a taxable equivalent basis.
Previous wording
As of December 31, 2023 and December 31, 2022, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of shareholders’ equity.
Current wording
As of December 31, 2024 and 2023, there were no holdings of debt securities of any one issuer, other than the U.S. Government sponsored entities and its agencies, in an amount greater than 10% of shareholders’ equity.
Previous wording
Allowance for Credit Losses for HTM Securities
Current wording
Allowance for Credit Losses for HTM Debt Securities
Previous wording
On January 1, 2023, the Company adopted the new CECL standard, ASU 2016-13, using the modified retrospective method for all financial assets measured at amortized cost. Management measures expected credit losses on held-to-maturity debt securities on a collective basis by major security type. The majority of our held-to-maturity investment portfolio consists of securities issues by U.S. government entities and agencies and we consider the risk of credit loss to be zero and, therefore, we do not record an ACL. The Company's non-government backed securities include private label CMO and MBS as well as bank subordinated debt. Accrued interest receivable on held-to-maturity debt securities totaled $0.4 million at December 31, 2023 and is excluded from the estimate of credit losses. The following table presents the activity in the allowance for credit losses for debt securities held-to-maturity by major security type for the year ended December 31, 2023:
Current wording
Management measures expected credit losses on Held-to-maturity debt securities on a collective basis by major security type. The majority of our held-to-maturity investment portfolio consists of debt securities issued by U.S. government entities and agencies and we consider the risk of credit loss to be zero and, therefore, we do not record an ACL. The Company's non-government backed debt securities include private label CMO and MBS as well as corporate bonds. Accrued interest receivable on Held-to-maturity debt securities totaled $0.3 million and $0.4 million as of December 31, 2024 and 2023, respectively, and was excluded from the estimate of credit losses. The following table presents the activity in the allowance for credit losses for Held-to-maturity debt securities by major security type for the years noted:
Previous wording
Our primary source of interest income is derived through interest earned on loans to high net worth individuals and their related commercial interests. Our senior lending and credit team consists of seasoned, experienced personnel and we believe that our officers are well versed in the types of lending in which we are engaged. Underwriting policies and decisions are managed centrally and the approval process is tiered based on loan size, making the process consistent, efficient, and effective. The management team and credit culture demands prudent, practical, and conservative approaches to all credit requests in compliance with the loan policy guidelines to ensure strong credit underwriting practices.
Current wording
Our primary source of interest income is derived through interest earned on loans to high net worth individuals and their related commercial interests. Our senior lending and credit team consists of seasoned, experienced personnel, and we believe that our officers are well versed in the types of lending in which we are engaged. Underwriting policies and decisions are managed centrally and the approval process is tiered based on loan size, making the process consistent, efficient, and effective. The management team and credit culture demands prudent, practical, and conservative approaches to all credit requests in compliance with the credit policy guidelines to ensure strong credit underwriting practices.
Previous wording
In addition to originating loans for our own portfolio, we conduct mortgage banking activities in which we originate and sell, servicing-released, whole loans in the secondary market. Our mortgage banking loan sales activities are primarily directed at originating single family mortgages that are priced and underwritten to conform to previously agreed-upon criteria before loan funding and are delivered to the investor shortly after funding. The level of future loan originations, loan sales and loan repayments depends on overall credit availability, the interest rate environment, the strength of the general economy, local real estate markets and the housing industry, and conditions in the secondary loan sale market. The amount of gain or loss on the sale of loans is primarily driven by market conditions and changes in interest rates, as well as our pricing and asset liability management strategies. As of December 31, 2023 and December 31, 2022, we had mortgage loans held for sale of $7.3 million and $8.8 million, respectively, in residential mortgage loans we originated.
Current wording
In addition to originating loans for our own portfolio, we conduct mortgage banking activities in which we originate and sell, servicing-released, whole loans in the secondary market. Our mortgage banking loan sales activities are primarily directed at originating single family mortgages that are priced and underwritten to conform to previously agreed-upon criteria before loan funding, and are delivered to the investor shortly after funding. The level of future loan originations, loan sales and loan repayments depends on overall credit availability, the interest rate environment, the strength of the general economy, local real estate markets and the housing industry, and conditions in the secondary loan sale market. The amount of gain or loss on the sale of loans is primarily driven by market conditions and changes in interest rates, as well as our pricing and asset liability management strategies. As of December 31, 2024 and 2023, we had Mortgage loans held for sale of$25.5 million and$7.3 million, respectively, in residential mortgage loans we originated. As of December 31, 2024 and 2023, we had Loans held for sale of$0.3 million and$0.0 million, respectively.
Previous wording
Beginning in the first quarter of 2022, the Company entered into whole loan purchase agreements to acquire third party originated and serviced unsecured consumer loans to hold for investment and elected the fair value option to account for these loans. As of December 31, 2023, the Company has $13.7 million in loans accounted for under the fair value option with an unpaid principal balance of $14.1 million. As of December 31, 2022, the Company had$23.3 million in loans accounted for under the fair value option with an unpaid principal balance $23.4 million. See Note 16 – Fair Value in the Notes to Consolidated Financial Statements.
Current wording
Beginning in the first quarter of 2022, the Company entered into whole loan purchase agreements to acquire third party originated and serviced unsecured consumer loans to hold for investment and elected the fair value option to account for these loans. As of December 31, 2024, the Company has $7.3 million in loans accounted for under the fair value option with an unpaid principal balance of $7.5 million. As of December 31, 2023, the Company had$13.7 million in loans accounted for under the fair value option with an unpaid principal balance $14.1 million. See Note 16 – Fair Value in the Notes to the Consolidated Financial Statements.
Previous wording
As of December 31, 2023, the Company has $4.2 million in PPP loans outstanding with$0.1 million in remaining fees to be recognized. The remaining fees represent the net amount of the fees from the SBA for participation in the PPP less the loan origination costs on these loans. The current amortization of this income is being recognized over a five-year period from the time of origination, however, if a loan receives full forgiveness from the SBA or if the borrower repays the loan, the remaining income will be recognized upon payoff.
Current wording
As of December 31, 2024, the Company has $2.0 million in PPP loans outstanding with$40 thousand in remaining fees to be recognized. As of December 31, 2023, the Company had$4.2 million in PPP loans outstanding with$0.1 million in remaining fees to be recognized. The remaining fees represent the net amount of the fees from the SBA for participation in the PPP less the loan origination costs on these loans. The current amortization of this income is being recognized over a five-year period from the time of origination, however, if a loan receives full forgiveness from the SBA or if the borrower repays the loan, the remaining income will be recognized upon payoff.
Previous wording
(3)Includes $7.1 million and $8.8 million of unpaid principal balance of mortgage loans held for sale as of December 31, 2023 and 2022, respectively.
Current wording
(3)Includes $25.2 million and $7.1 million of unpaid principal balance of mortgage loans held for sale as of December 31, 2024 and 2023, respectively.
Previous wording
•Cash, Securities and Other—consists of consumer and commercial purpose loans that are primarily secured by securities managed and under custody with us, cash on deposit with us or life insurance policies. In addition, loans in this portfolio are collateralized with other sources of collateral. This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment. PPP loans that are fully guaranteed by the SBA are classified within this line item and had balances of $4.2 million and $6.9 millionasof December 31, 2023 and 2022, respectively.
Current wording
•Cash, Securities, and Other—consists of consumer and commercial purpose loans that are primarily secured by securities managed and under custody with us, cash on deposit with us or life insurance policies. In addition, loans in this portfolio are collateralized with other sources of collateral. This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment. PPP loans that are fully guaranteed by the SBA are classified within this line item and had balances of $2.0 million and $4.2 millionasof December 31, 2024 and 2023, respectively.
Previous wording
•Consumer and Other—consists of unsecured consumer loans. This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment. Loans held for investment accounted for under the fair value option are also classified within this line item and had an unpaid principal balance of $14.1 million and $23.4 million as of December 31, 2023 and December 31, 2022, respectively.
Current wording
•Consumer and Other—consists of unsecured consumer loans. This segment of our portfolio is affected by a variety of local and national economic factors affecting borrowers’ employment prospects, income levels, and overall economic sentiment. Loans held for investment accounted for under the fair value option are also classified within this line item and had an unpaid principal balance of $7.5 million and $14.1 million as of December 31, 2024 and 2023, respectively.
Showing the first 40 of 70 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
We have two reportable operating segments: Wealth Management and Mortgage. Our Wealth Management segment consists of operations relating to the Company’s fully integrated wealth management products and services. Services provided include deposit, loan, insurance, and trust and investment management advisory products and services for which fee revenue is recognized. Parent company activity primarily consists of subordinated debt interest expense and is included within Wealth Management as management evaluates and makes business decisions for Wealth Management, including the parent company, collectively as one segment.
Current report — wording carried from elsewhere
Total shareholders’ equity increased$9.6 million, or 3.9%, to$252.3 million as of December 31, 2024 compared to December 31, 2023. The increase was primarily due to Net income and a$0.7 million increase in Additional paid-in capital driven by stock-based compensation expense.