Piper Sandler maintains neutral on First Western stock, target at $22.50

On Monday, Piper Sandler reaffirmed a Neutral rating with a $22.50 price target for First Western Financial (NASDAQ:MYFW), which currently trades at $19.20 with a market capitalization of $186 million. According to InvestingPro data, analysts’ targets range from $22.50 to $24.00, suggesting potential upside. In a recent analysis following the filing of MYFW’s latest 10-K report, the company revealed the successful sale of its largest OREO property, Three Meadows Ranch in Colorado, for a $1 million profit on February 19. The transaction is expected to reduce MYFW’s non-performing assets (NPAs) by 102 basis points to 0.95%.

The 10-K filing also included a Subsequent Events note, which highlighted the conclusion of the pending sale. This favorable outcome is anticipated to have a positive impact on the bank’s financial health. However, the report also indicated a slight uptick in earlier stage credit migration, with criticized loans increasing by 19 basis points to 1.48%. This rise is attributed to a growth in special mention categories, primarily in commercial and industrial (C&I) loans, which went up by 15 basis points to 0.37%, and substandard loans, which saw a 4 basis point increase to 1.11%.

Despite the minor negative trend in criticized loans, the overall low loss experience of MYFW is expected to help the company’s performance. The analyst predicts that the positive resolution of MYFW’s largest OREO property will likely overshadow the modest negative migration in criticized loans, especially with the stock trading at 0.84 times its tangible book value (TBV).

Investors are looking forward to seeing how this development will influence First Western Financial’s market performance, particularly considering the recent sale and its implications for the company’s asset quality. The successful disposal of the OREO property at a gain and the subsequent reduction in NPAs are key factors that could play a role in the bank’s stock movement as the trading week begins.

In other recent news, First Western Financial Inc. reported its fourth-quarter 2024 earnings, aligning with analysts’ expectations with an earnings per share (EPS) of $0.28. However, the company generated $23.37 million in revenue, which did not meet the anticipated $24.55 million, representing a shortfall of approximately 4.8%. Despite this revenue miss, First Western Financial managed to double its net income from the previous quarter, reaching $2.1 million or $0.22 per diluted share. The company’s mortgage business showed strong performance in September, and it continues to expand its presence in key markets such as Colorado and Arizona.

In terms of analyst activity, no specific upgrades or downgrades were mentioned, but firms like Hovde Group and Piper Sandler participated in the earnings call, indicating ongoing interest and analysis of the company. Looking ahead, First Western Financial anticipates continued loan growth in 2025, supported by solid operating leverage and a focus on managing expenses. The company is also optimistic about potential improvements in net interest margin, driven by strategic shifts and market conditions. These recent developments reflect First Western Financial’s ongoing efforts to navigate a competitive landscape and strengthen its market position.

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