First Western Financial, Inc (NASDAQ:MYFW) Q4 2019 Earnings Conference Call - Final Transcript
Jan 24, 2020 • 12:00 pm ET
new business development officers we've added over the last couple of years are becoming more seasoned in generating more consistent pipelines.
The combination of all these factors resulted in the strong loan production we saw in the fourth quarter. We continue to experience a high level of pay-offs and pay-downs. However, strong new production helped us more than offset the run-off in the portfolio and grow our gross loans at an annualized rate of 30.8%. We're still relatively small institution and our loan production can still be subject to some lumpiness. So we don't expect to maintain this 30% plus level of growth each quarter.
But we are encouraged that our increased focus on loan production is gaining traction and should help us grow revenues and improve earnings with the liquidity that we're adding through our deposit gathering efforts. One negative in the quarter was that most of our loan production occurred late in the quarter. So we didn't see much benefit yet in our net interest income, but we did have to take a higher level of provision to account for the growth. But this should set us up to see a nice increase in net interest income heading into the first quarter.
Aside from the loan production, our other business development efforts were very successful as we delivered another good quarter of core deposit growth and AUM growth. Our average deposits increased $50.2 million or 19.3 annualized -- 19.3% annualized. Our AUM increased another $71 million in the fourth quarter, putting us at 18% growth for 2019.
Looking at our performance for all of 2019, we believe we had a very strong year of growth and value creation. For the full year, our average gross loans -- average total gross loans increased 14%. Our average deposits in the fourth quarter were 24.2% higher than the previous year and our tangible book value per share increased 14.3%. More importantly, we achieved this growth while maintaining our strong credit profile as our non-performing loans were 36% lower at the end of 2019 than they were at the end of the prior year.
Moving on to slide 4, we provide additional details on our fourth quarter earnings. Relative to last year, we continue to see strong improvement in earnings driven by higher revenue and well controlled expenses. Turning to slide 5, we look at trends in our loan portfolio. Our gross loans held-for-investment increased at an annual growth rate -- annualized growth rate of 30.8%. While we had a record quarter of loan production, we also had a record level of pay-offs and pay-downs. We had $82.7 million in pay-offs and pay-downs, an increase of more than $11 million from the prior quarter. Q4 year-over-year, we grew 14% in average gross outstandings in line with our previously stated mid-teen outlook.
In terms of growth in the portfolio, we had nice contributions from most of our major lending areas. We also had a particularly strong quarter of growth in our residential mortgage