Business Context and Reporting Period
Company: First Western Financial, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 18, 2019
Reporting Period: Event date March 18, 2019; Amendment signed March 22, 2019.
Context: The Company is an emerging growth company incorporated in Colorado. This filing reports the entry into a material definitive agreement regarding its business loan.
Key Financial Metrics
This filing does not provide specific revenue, profit, cash flow, margin, or total debt figures. The financial data disclosed is limited to covenant ratios regarding loan quality:
- Non-Performing Loans to Total Loans Ratio (New Covenant):
- 3.0% or less for fiscal quarters ending March 31, 2019, through September 30, 2019.
- 2.0% or less for the fiscal quarter ending December 31, 2019, and thereafter.
- Lender: BMO Harris Bank N.A.
Material Changes Versus Prior Period
The filing details a Ninth Amendment to the Company's Business Loan Agreement. Key changes include:
- Covenant Modification: The permitted ratio of non-performing loans to total loans was increased from the pre-amendment threshold to the new tiered structure (3.0% then 2.0%).
- Waiver of Violation: The Lender granted a limited waiver for a violation of the pre-amendment non-performing loans to total loans financial covenant as of December 31, 2018.
Guidance, Outlook, and Risks
Management Commentary: The filing confirms the Company successfully negotiated an amendment to address a covenant violation related to non-performing loans as of the end of 2018.
Risks and Contingencies: The necessity of the amendment indicates the Company previously breached its loan covenants regarding asset quality. Future compliance is now contingent on maintaining the non-performing loan ratio below the new thresholds (3.0% and 2.0%).
Unusual Items: The filing notes a specific waiver for a covenant violation that occurred as of December 31, 2018.
Investor Verification Checklist
- Verify the exact level of non-performing loans as of December 31, 2018, to understand the severity of the waived violation.
- Review the full text of the Ninth Amendment (Exhibit 10.1) for any additional terms, fees, or conditions not summarized in the 8-K.
- Monitor upcoming quarterly reports to ensure the Company remains within the new 3.0% and 2.0% non-performing loan covenants.
- Confirm if the covenant waiver or amendment impacts the Company's interest rates or other borrowing costs.