Good afternoon, ladies and gentlemen. Thank you for standing by and welcome to the First Western Financial Q3 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time. As a reminder, This conference call may be recorded.
I would now like to turn the conference over to your speaker today, Mr. Tony Roce of Financial Profiles. Go ahead, sir.
Thank you, Manny. Good morning, everyone, and thank you for joining us today for First Western Financial's Q3 2021 earnings call. Joining us from First Western's management team are Scott Wiley, Chairman and Chief Executive Officer and Julie Korkamp, Chief Financial Officer. We will 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, including the impact of the COVID-nineteen pandemic. 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 the reconciliation of the GAAP to non GAAP measures. And with that, I'd like to turn the call over to Scott. Scott?
Thanks, Tony. Good morning, everybody. Our Q3 results represent a continuation of the positive trends we've seen this year with growth in our Private Commercial Banking operations generating Higher levels of revenue, more operating leverage and increased profitability. In the 3rd quarter, we generated net income of 6,400,000 Earnings per share of $0.78 and an ROA of 1.27%, all of which are an improvement over our 2nd quarter results. On an adjusted basis, excluding acquisition related expenses, our earnings per share were up to $0.81 from $0.77 in the prior quarter.
We continue to have good momentum in business development, which is driving Higher levels of loans, deposits and assets under management. Excluding PPP loans excluding PPP loans, Our total loans held for investment increased at a 19% annualized rate in the 3rd quarter. We also continue to see strong deposit flows As total deposits were up 6.1% from the end of the prior quarter with all the growth coming in our lower cost categories. We're also seeing steady growth in our assets under management and higher trusted and vessel management fees. Our private and commercial banking model is working exceptionally well.
We're seeing high quality well diversified loan growth, Funding these loans with low cost deposits and effectively cross selling additional products and services to increase the overall profitability of these client relationships. As a result, we're seeing improvement across most of our key financial metrics. Compared to the prior quarter, our gross revenue was up nearly 7%. Our net interest margin increased 13 basis points and our efficiency ratio improved 44 basis points. More importantly, as we continue the profitable growth of the company, we're prudently managing our growth, which is reflected in our Continued strong asset quality and exceptionally low level of losses in the portfolio.
Moving to Slide 4, Our improved financial performance is not only driving earnings growth, but also strong increases in our book value and tangible book value. During the Q3, our book value increased 4.1%, while our tangible book value per share increased 4.8%. The profitable growth we're generating is a reflection of our strong execution across all of our growth strategies. Our more mature profit centers continue to add new clients and generate organic growth. The new offices we've opened up over the last couple of years continue to scale and are making large contributions.
And we're accelerating our growth through accretive acquisitions like the branch assumption transaction last year and the pending acquisition of Teton Financial Services in Jackson. Turning to Slide 5, We'll look at the performance of our Private Banking, Commercial Banking and Trust Investment Management businesses. This is represented by our pretax earnings of our non mortgage segment. On a year over year basis, our pretax earnings more than doubled in this segment. After the outsized earnings that we generated in the mortgage business last year, We're seeing other businesses fill in that earnings gap, so to speak, with a more sustainable source of earnings growth, While our mortgage business returns to its intended role as a complementary source of fee income.
Turning to Slide 6, we'll look at the trends in our loan portfolio. We had another good quarter of loan production with total production coming in at 133,400,000 relatively similar to the prior quarter, where loan payoffs were down a bit. On a period end basis, our total loans held for investment increased $30,400,000 from the end of the prior quarter or $70,900,000 when PPP loans are excluded. Most areas of the portfolio increased from the end of the prior quarter with the strongest growth coming from commercial real estate, Well, a high level of payoffs resulted in small decline in C and I portfolio. It's notable that cash, securities and other portfolio Was able to contribute to our total loan growth despite the continued runoff of PPP loans that are held in that category.
We saw more demand this quarter among our private banking clients for the type of investment management secured lines of credit that comprise the bulk of this portfolio. Moving to Slide 7, we'll take a closer look at our deposit trends. Our total deposits Increased $103,200,000 from the end of the prior quarter. All of the growth was in lower cost deposit categories. This continues to drive improvement in our deposit mix.
Over the past year, our non interest bearing accounts have increased to 33.5 percent of total deposits from 30.2%, while time deposits have declined to 7.7 percent of total deposits from 11.3%. We had one large deposit come in towards the end of the quarter as That client had a liquidity event. They temporarily placed about $60,000,000 in their money market account, which we expect to be withdrawn during the Q4 as proceeds from the liquidity event are distributed to partners of this real estate investment fund. Moving to Slide 8, We'll look at our progress in building our commercial banking portfolio, commercial banking platform, which is providing or loan diversification and improving our deposit base by adding low cost transaction deposits. Commercial loans increased $51,000,000 from the prior quarter and $196,000,000 from the prior year.
Commercial deposits increased $130,000,000 from the prior quarter and $227,000,000 from the prior year. In each case, this represents 24% growth over the prior year and is reflective of the strong momentum we have in growing the commercial bank. Moving to Slide 9. We've added a new slide to the presentation to show the increasing contribution we're getting from our new offices. This slide shows the aggregate contribution Of the offices we've opened since mid-twenty 19 to our total loans, deposits and assets under management.
As you can see, we're getting a larger contribution As the offices gain more traction and build new business pipelines that produce on a consistent basis. We've done a good job of identifying areas for the new offices that have a large amount of the type of clients that we target and then attracting proven banking talent with established relationships to build these offices. These new bankers have been successful in marketing First Western, the First Western value proposition, bringing in new clients and then expanding those relationships over time. Opening new offices has been a key part of our growth strategy throughout our history And we plan to continue opening 1 or 2 new offices each year with a primary focus on expanding in Colorado, Arizona, Wyoming and Montana. Turning to Trust and Investment Management on Slide 10.
Our total assets under management increased by $143,800,000 from the end of the quarter. The increase was due to a combination of contributions to existing accounts and new accounts as well as improving market conditions resulting in the increase in the value of assets under management. During the Q3, new clients accounted for approximately 30,000,000 of our growth in assets under management. Now I'll turn the call over to Julie for further discussion of our financial results. Julie?
Thank you, Seth. On Slide 11, we have provided an update on our participation in the PTT program and how it impacted various metrics in the Q3. As of September 30, we had $61,900,000 in PPP loans remaining on our balance sheet, which is a decline of $41,200,000 from the end of the prior quarter. We recognized approximately $900,000 in fees during the quarter and had $1,200,000 in fees remaining to be recognized at September 30th. PPP income had a 9 basis point positive impact on our net interest margin in the 3rd quarter.
As the PPP loans are forgiven, our borrowings from the PPP liquidity facility that were used to fund the loan originations also declined. At September 30, our borrowings from that facility were down to 43,600,000 Turning to slide 12, we look at our gross revenue. Our total gross revenue increased 6.8% from the prior quarter. The growth was well balanced across the bank with an increase in net interest income as well as all of our non interest income generating areas. Turning to Slide 13, we look at the trends in the net interest income and the margin.
Our net interest income increased 4.4% from the prior quarter despite a $400,000 decline in PPP fees recognized in the Q3. The increase is due to higher average balances of non PPP loans and an increase in our net interest margin. On a reported basis, our net interest margin increased 13 basis points from the prior quarter to 3.14%. When the impact of PPP loans and purchase accounting adjustments are excluded, our net interest margin increased 18 basis points from the prior quarter. The increase in our net interest margin was primarily due to a favorable shift in the mix of earning assets as we were able to reinvest more of our cash into the loan portfolio as well as increase in average loan yields.
We also had a slight drop in our Cost of interest bearing deposits resulting from the full quarter impact of the higher cost non relationship deposits that we ran off during the Q2. Looking ahead, we expect our net interest margin to trend slightly down in the 4th quarter due primarily to the increased trend in excess liquidity from the temporary deposit that Scott mentioned earlier, which we are keeping in cash balances. Longer term, Looking at the potential for higher interest rates, we continue to run the bank to be neutral in terms of interest rates in Sidoti Any addition of Teton won't have a material impact on our sensitivity. However, due to the improvement we have made in our deposit mix over the past few years, The higher percentage of non interest bearing deposits, we have become more asset sensitive, which should enable us to benefit to a larger degree from higher interest rates than we did in the last rising interest rate cycle. Turning to slide 14, Our non interest income increased 10.5% from the prior quarter as we saw an increase in all income areas.
Trust and investment management fees were up 3.2% from the prior quarter and 7% higher than a year ago, the sale of our LA fixed income team during the Q4 of 2020. We also had a 14.5% increase in net gain on mortgage loans due to increases in volume for both purchase and refinancing as well as a reduction in variable costs. On slide 15, We have provided some additional detail on our mortgage operations. Total originations were down from the prior quarter, although mortgage locks, which is when revenues recognized were higher in the prior quarter than in the prior quarter. The mix of production continues to move towards our higher historical range with purchase accounting for 61% of production in the 3rd quarter.
As we indicated on our last call, we reduced our fixed expense in the mortgage group to reflect the lower level of volume that we are now seeing relative to 2020. As a result, the lower level of expense combined with the higher volume in the 3rd quarter increased our profit margin in this business to 50% from 31% in the prior quarter. Turning to Slide 16, our non interest expense increased by 6.1%
from the prior
quarter. This included approximately $300,000 of acquisition related expense. The remainder of the increase was primarily attributed to higher salaries and benefits expense resulting from bonus accruals relating to our strong loan and deposit production as well as higher insurance benefit costs. With our revenue growth exceeding our expense growth, our efficiency ratio improved to 65% from 65.4% in the prior quarter. Looking ahead to the Q4, we expect our non interest expense excluding any acquisition related expenses to increase slightly over the 3rd quarter level.
Turning to slide 17, we'll look at our asset quality. We continue to see generally positive trends across the portfolio. We had one commercial loan that was placed on non accrual during the quarter, which resulted in an increase on our non performing assets of $1,200,000 This loan is well secured and we do not expect to incur any loss at this time. We continue to see minimal losses in the portfolio and had a small amount of net recoveries in the quarter. We recorded a provision for loan loss of approximately $400,000 which was related to the growth in total loans.
This brought our adjusted ALLL, which excludes PPP and acquired loans, to 91 basis points of total loans at the end of the prior quarter. Now I'll turn this call back over to Scott. Jeff?
Thanks, Julie. Turning to Slide 18, I'll wrap up with some comments about our outlook. We expect a continuation of the positive trends we're seeing in the business and continued strong growth in our core commercial and private banking operations. We expect the growth in these areas of the business to continue replacing the earnings that were generated by our mortgage operations in 2020. Our loan pipeline is consistently strong and should continue to drive organic loan growth across most areas of the portfolio.
We continue to win business based on our expertise, responsiveness, quality of service and overall value proposition. This has enabled us to generate loan growth without compromising on structure or underwriting criteria as many competing banks have been forced to do. We expect continued growth in our trust and investment management fees as we're consistently adding new clients and increasing our assets under management. In the near term, this will help to offset lower mortgage activity as we enter the seasonally slower periods of the year. As I mentioned earlier, we're successfully adding new banking talent and expanding to new markets.
Most recently, we've made investments in the Montana and Arizona markets, And we believe both markets will be nice sources of additional organic growth for us. We continue to supplement our strong organic growth with accretive acquisitions. Our pending acquisition of Teton Financial Services is expected to close late this quarter or early in 2022. Since announcing the transaction, we've made good progress on our integration planning. We've made all the personnel decisions and informed everyone in the organization of our plans.
Our teams are collaborating well together to determine the best ways to leverage the collective strengths of each organization So that we're not only realizing the expense synergies that we projected, but also fully capitalizing on the revenue synergies. In closing, we believe we're executing at a very high level and should continue to deliver a strong finish to the year. With the combination of our continued strong organic growth and the accretive benefits of the Teton acquisition, we believe we're well positioned to deliver another strong year of profitable growth in 2022. With that, we're happy to take your questions. Annie, please open up the call.
We have our first question from the line of Brett Rabatin. Your line is open. You may ask your question.
Hey, good morning.
Good morning, Brett. Good morning.
Maybe Julie, can you give if you David, I missed it. But the dollar amount of the loan recovery in the quarter, how much was that?
It was immaterial under $100,000 We've seen a little bit of recoveries, but not Anything material that shows up in even in the chart on the deck. Okay.
And then with the prepared commentary, you mentioned that you think the margin will be a little bit softer in the 4th quarter Following the improvement in 3Q, I think you've got $1,200,000 left of PPP related fees. Is the Linked quarter decline a function of expecting that $1,200,000 to drag out into Next year, maybe any color you could provide on how you're thinking about the margin in the Q4 in terms of particularly on the yield side?
I think generally we're expecting a favorable trend in our NIM. In Q3, we had a couple of one time things that increased the NIM PPP like you mentioned. And then there were additional payments on a non accrual loan that was All the principal is paid for, so the remaining payments from the client come in as interest. So those slightly inflated them in Q3 3 as well. So I think the concern that we won't see that increase in NIM in Q4 is really just smoothing out the trend that we're seeing.
I think generally we're seeing better rates on loans, better rates on deposits and overall improving NIM going into 2022. Yes. I
would agree, 2022, I think we're Looking to continue to see improvement in our earning asset mix as we're using up the liquidity. So NIM should follow that trend.
Okay. That's helpful. And then, was just curious, I know mortgage is tough to predict, but any thoughts on The Q4 and then maybe 2022, would expectations for total revenue to be lower than 21 or do you think you can gain share relative to the NBA forecast?
We Have the trends in there on Slide 15. It seems like we can produce Something like $4,000,000 or $5,000,000 in revenues and a couple of 1,000,000 in earnings out of Mortgage is, and I think that's going to continue. We've talked about our desire to hire more MLOs and the extent that we can find People that are a good fit for our strategy and that doing the business the way we want to do it, We're attracting them. We've added a couple this year and continuing to focus on building our MLO base. I think the really important trend here is the way that the business has picked up.
The core Wealth Management Business has picked up from the earnings benefit we had from mortgages last year. And I think if we can see 2022 in line with where we were in 2021, and that's a nice complement, but it's really not driving the story the way it did in 2020.
Okay. And then Scott, just lastly for me, Scott, if I heard you correctly, it sounds like you're anticipating some additional potential movement of Lenders, maybe some lift outs of some other folks. Did I hear that correctly? And any sense of the magnitude in terms of A number that might you might see in the first or in the next couple of quarters?
Well, we do We have started building a team in Bozeman. We've talked about that, and we're going to build that office out. We've got some, I think really great opportunities there. Actually the preliminary work that that team is doing, we're seeing a nice build of the pipeline And I hope to have some good news to report here in the next couple of quarters from the expansion into Montana here. Arizona, we've been looking at adding people there.
We brought in a new state president there. I think there's a ton of opportunity for us in Arizona. We've always thought that that market had as good or better Wealth demographics in Colorado, an attractive competitive environment and it's just a matter of getting the right team in place. We've seen that business Well, and we think we can accelerate the pace of growth there over time. So, I think these are things that are going to play out over Coming quarters, you're not going to see a big jump in expense in Q4 or anything like that.
We're building these teams in the way we have in the past and they're kind of A steady process that ensures that our revenue growth matches the expense growth or exceeds it.
Okay. That's helpful color. Congrats on the quarter.
Yes. Thanks, Brett.
Thank you, sir. We have our next question from Brady Gailey. Your line is open. You may ask your question.
Hey, thanks. Good morning, guys.
Good morning, Brady.
So over the last couple of years, we have seen some nice Operating leverage, and we've seen your ROA expand pretty nicely. I mean, it was 150% last year, 1.5%, which I know was propped up by a great mortgage year. This year, it's running around 125 basis points. I'm just wondering, given your business model and taking into account you're still growing the company, what do you expect your What would be an appropriate range for your ROA over the next couple of years? Do you think it's consistent with the $125,000,000 we've seen year to date or do you think you could do modestly better than that?
Well, I don't want to over inflate expectations, But we do think that we are doing a nice job of proving the operating leverage that we have said all along, we think exists in our business model. We continue to see that, especially in the organic part of our business, right? I mean, I think that What we're doing with the expansion provides future earnings power and then what we're doing with acquisitions has certainly been additive. But just in the organic business, We know that the next dollar of revenues doesn't take much in cost. And so I think it continued to show that, Especially over the last 6 or 8 quarters.
Yes. And then yes, I know you guys like to open 1 to 2 new offices a year, recently Bozeman and Broomfield. But with Teton in the mix, do you take a pause on that organic growth or does that continue even in the midst of the Teton acquisition?
We've kind of changed our business model for new offices. We used to open a new office And basically spend $1,000,000 in expense the 1st year. And then by the end of the 1st year into the 2nd year, maybe they've got $1,000,000 in revenue. So maybe a breakeven the 2nd year and then hopefully you get our earn back in the 3rd year. We've been incubating these last few offices in existing offices.
So we're doing that for Bozeman in Jackson right now. We did that for Broomfield in the Boulder office and we've got another Denver office that we're incubating in the downtown Denver location. And so it really changes the numbers there. So you can profitably open these new locations. I mean, I hope we get to the point where we're doing it right out of the gate.
So Broomfield just actually opened in their physical location. We told them they had to get to a certain level of revenues And then we move into their own office and they just moved in. We had the grand opening here, 45 days or so ago in Q3. In Bozeman, we've got some very modest temporary space that we'll be starting in here shortly and Building that leveraging through our Jackson office with the folks that we have there and the connections between Jackson and Bozeman, which are many. And then like I said in Denver, we've seen really good growth in that new office that we're incubating.
And so we'll move them into a New location, I hope, in 2022. So yes, we're going to continue to open new offices. All right.
And then one question specific to the Teton transaction. I know they're coming over with a nice wealth management trust business as well. And the question is, does Teton have anything on the wealth management side, any products or services or offering that First Western doesn't Or vice versa, First Western has something that Teton doesn't where there's an opportunity to basically cross sell into each other. And The question is basically, is there an opportunity on the wealth management side to see some nice revenue synergies?
Yes. The Teton Wealth Management business is largely outsourced. And so of the $400,000,000 or so that they have, they've outsourced it. And so we're looking at what Complementary services DAP provider might add to what we have, but we have a much broader and deeper range of services that we can sell into the Teton client base. So we're certainly working on How we can do that in 2022?
The numbers that we announced for accretion and tangible book value earn back Didn't include any revenue synergies, that was only cost synergies. But what we've seen already is our team in Jackson He's working closely with our team the Teton team in their Plans for 2022 for new business, and I think we're going to see lots of synergies, not only from the products and services, but from the people complementing each other with Different skill sets and ability to cross sell into our respective planning bases. Okay, got it. Thanks, Scott.
Thank you, sir. We have another question from the line of Ross Haberman. Your line is open. You may ask your question.
Good morning, Scott. How are you?
Good. Good morning, Ross.
Could you I just want to sort of take a step back and ask you more. What are you seeing in terms of your markets in the in market migration? Are you still seeing The growth, maybe not as much as we saw during COVID or pre COVID, but What's sort of the end market migration into your markets and into the Jackson I guess the space, so that to drive the mortgage business or maybe keep it at What you're on, I think it said on Slide 15, you're in about $2,300,000 I guess that's after tax. I'm just trying to get sort of the underlying migration trends that might that's going to keep that mortgage business at, I don't know, $1,500,000 to $2,500,000 a quarter ish, if that's as good a guess as any. Thank you.
Yes. So I think there are a couple of questions in there, Ross, maybe I should I mean, I think the first part of the question about the immigration that we're seeing into our markets has been very strong and continues to be very strong. We're seeing that not only in the resort markets, Yes, but in Vail, Jackson, but we're also seeing that in our urban markets here in the Front Range and in Arizona. I mean, it's happening in Montana big time. I mean, we're continuing to see a big influx of folks from Especially the coasts, somewhat from the Midwest, but that is definitely a continuing trend.
I think the second part of your question is what's the impact on mortgages. I mean, I think that that's going to continue to provide fuel for growth in our mortgage business. But I think it's actually a lot more significant for the other parts of our business. When people move to town, they're looking to connect with the community And a great way to do that is with the leading private bank in the community. And so we position ourselves in that way.
We look for those people. And I look at the mortgage, as an important strategic element in that where we can play offense by attracting some of these folks that are moving to town, But we can also play defense with that in protecting our client base from going elsewhere. So I think the Implications for credit, the implications of the economy, implications for our private bank and our commercial banking business. I mean, those are all really nice side benefits of all these Good companies and people that are moving into our markets that that trend is going to continue, I think, for a long time I think that that's something that COVID may have accelerated, but it was going on before and it's Continuing to be a big factor in the economic outlook here.
Would you
be so bold? Yes. Would you be so bold? And again, I'm looking at this chart on 15, looking at the income, net income after Facts of the mortgage business. Would it be I mean, would an $8,000,000 average run rate I'll be as good a guess as any as an ongoing number or again it all depends on how quickly they raise rates going forward Or even if they do, given your in migration, dollars 7,000,000 or $8,000,000 or $8,000,000 a year is not a is as good a guess as any.
Yes. I mean, there are a number of factors that go into this, right? It's volume, it's margins, it's a mix of business. We have seen already the mix from refis back to more purchase money. I mean, that happened in Q3.
That's going to continue in Q4. But I think Our expectations are 2022 probably looks a lot like 2021 in terms of mortgage revenues and mortgage earnings. We cut mortgage expenses on June 30, and so we've seen good profitability in Q3 as a result of that. And we'll continue to manage those expenses and support that business. As I mentioned before, I mean, we would like to grow that as we grow our footprint.
And so we're looking to bring on good MLOs and we got conversations going on and whether it works out or not, you never know. But I think as a baseline thinking that 'twenty two looks a lot like 'twenty one wouldn't be a bad starting point.
Last question. Are you looking for other banks To buy in the Montana or the Arizona locale, you have a currency. If you found the right thing, which is highly accretive and not too dilutive in a 2 or 3 year breakeven, Is that an interesting enough a way to further grow within those markets As opposed to organic, branch by branch lift outs Yes, as the other way growing. Thanks. Thanks again.
Yes. So great question. We Look at our growth as having 3 elements to it. Organic growth, which we've talked about Being in the mid teens, new offices that create future growth opportunities and then Acquisitions, and I think we've had quite a bit of success with our recent acquisitions. Specifically, your question about Are we looking?
Yes, we are. And we have an active program. We actually have made 2 offers on small bank deals here over the last 3 months or so. And in both cases, we were outbid. I think there are banks out there being very aggressive And they're bidding because they can't grow organically and that's not our situation.
We can remain disciplined in our pricing, in our criteria and anything we're going to do to make economic and strategic sense. And I think there's plenty of opportunities out there for us to continue to maintain our discipline and Still have the ability to get things done, get deals done with organizations that understand how they're going to benefit from a merger with us, Yes, Teton, Ted.
Okay. Thanks again. Get your booster shot and have a wonderful weekend. Thank you.
All right. Thank you, Russ.
Thank you, sir. Call. We have another question from the line of Bill Dezellem. Your line is open. You may ask your question.
Thank you. I'd like to start with mortgage Satchel, we're spending time with the last question and then a couple of others, please. What are you seeing with mortgage activity here in October and your thoughts relative to the Q4 versus the normal level of seasonality. I'm just trying to gauge that relative to of the supposedly pent up demand that we have in housing.
Hi, Bill. It's good to hear from you. I would tell you that we're expecting Q4 to be seasonably slower. And I think that the preliminary results so far this quarter are bearing that out. I think, I mean, we didn't really talk about this with Ross' question, but just because there's a lot of demand Doesn't mean there's any more supply.
We're still seeing tight supply and that's limiting the amount of mortgage activity That we're seeing in our markets, but that will catch up at some point and I think we'll see better volumes. And as I say, I mean, I think 2022 could probably look a lot like 2021 in terms of mortgage revenues and earnings.
So with that pent up demand, are you expecting the seasonality to be any to be muted Here in the Q4 and not as severe as normal or are you really seeing a normal level of seasonality?
It's hard to answer that, Bill, because last year was such an unusual year. And then in 2019, we were really just ramping up our mortgage business. I mean, I think Over the last 3 or 4 quarters now, we've seen pretty steady revenue levels in the kind of $4,500,000 to $5,000,000 range. And hopefully, we can produce something like that in Q4. I think generally, we're expecting it to be a little slower in Q4 and Q1.
We've talked before about our desire to expand our mortgage operation in Arizona so that we can offset some of that seasonality. We'd like to do that. We just haven't found the right team. And like I was saying with respect to the new acquisitions, I mean, we're in a position where we don't need to do things that don't work Don't fit and aren't priced right. So we continue to work on that.
Hopefully, we can find a way It smooth out some of the seasonality over time, but I think Q4 is going to be a little softer than Q2 and Q3 and hopefully will come back strongly in 2022. Sounds fair.
Let me shift to C and I loans. You'd mentioned that the Q3 saw pay downs And C and I, what's it going to take to rejuvenate that C and I loan growth?
We're just small enough. We talked about this on these calls before. We're small enough that If you cut things off once a quarter and you look at what happened in the quarter, there's noise in the numbers. And I would tell you, there's no reason to think that our C and I progress that we've made over the last couple of years won't continue. I think that what you just saw in Q3 is the normal kind of noise Of quarter to quarter variances, I actually think we're seeing good progress there.
You look at our pipelines today, Going into Q4, they were right in line with where we were in prior quarters and we're going to continue to see, I think, Strong loan demand across all of our different categories, including C and I.
Thank you. And then one additional question please. The non interest bearing deposits were up I think $42,000,000 or something Like that in Q3 versus Q2. What led To that growth in non interest bearing, I do recall the $60,000,000 that came in, but that went into money market, which I presume It does have a rate associated with it.
Sure does. The growth in DDAs is just part of this growth in the commercial focus that we've had. And I think if you go back A couple of years and look at the trends, they're very positive, right? We've shifted from I think I shared some numbers in the prepared remarks. But since the end of 2018, we've I I think more than tripled our DDAs at the same time that we about doubled our deposits.
So We're seeing really nice growth in that area. We expect that to continue. I mean, I think that Teton is going to be helpful with that. They've got a nice deposit mix. And I think the engine that's produced these results here over the last couple of years It's continuing and accelerating.
So I think we'll be fine there. The $60,000,000 deposit is an interesting Story because it's such a one off thing with a client liquidity event, but these one off things happen to us all the time because that's the business we're in. And so those deposits in that particular case, those deposits will be largely paid out to the partners. But a lot of times we've had really good success, soliciting those partners to become clients When there's a liquidity event, so these things are actually just very much integral to our business. And again, part of that sort of circumstance I was talking about before where you see quarter to quarter things that are Changes, but not really underlying trends.
It's just part of the volatility of us still being relatively small.
Great. Thank you.
Good. Thank you.
Thank you, sir. There are no additional questions at this time. I will now turn the call back to the management for closing remarks.
Okay. Thank you, Andy. Well, I just would sum up here. We've It's really nice continued progress here growing our business, improving our margins, demonstrating the operating leverage in our business model and creating shareholder value here in Q3. With our continued organic growth And the ongoing expansion and the addition of the Teton team, I think we've got lots of momentum going into 2022.
I really thank everybody for their time and interest today dialing in and for your support for First Western. We really appreciate it and look forward Speak again next quarter.
Ladies and gentlemen, this concludes today's conference call. You may now disconnect. Thank you for participating.