• First Financial Northwest, Inc. Reports Net Income of $1.5 Million or $0.16 per Diluted Share for the Second Quarter Ended June 30, 2023  

    المصدر: Nasdaq GlobeNewswire / 27 يوليو 2023 09:10:27   America/New_York

    RENTON, Washington, July 27, 2023 (GLOBE NEWSWIRE) -- First Financial Northwest, Inc. (the “Company”) (NASDAQ GS: FFNW), the holding company for First Financial Northwest Bank (the “Bank”), today reported net income for the quarter ended June 30, 2023, of $1.5 million, or $0.16 per diluted share, compared to $2.1 million, or $0.23 per diluted share, for the quarter ended March 31, 2023, and $2.8 million, or $0.31 per diluted share, for the quarter ended June 30, 2022. For the six months ended June 30, 2023, net income was $3.6 million, or $0.39 per diluted share, compared to net income of $6.1 million, or $0.66 per diluted share, for the comparable six-month period in 2022.

    “The Bank first opened for business in July 1923, and we are honoring our 100 years of service to the community in several ways. We hosted events with customers, prospects and business associates and held community events at designated branches during the quarter. We expanded our social media outreach to highlight our exceptional history of delivering personalized financial services that provide unique, innovative solutions to our customers, including a video interview spotlighting H. A. “Harry” Blencoe, who served as Chairman of the Board and CEO from 1961 to 2005 and who celebrated his 99th birthday earlier this year. We also distributed tokens of our appreciation to our largest loan and deposit customers, as well as to each of our employees, as a special thank you for their continued support during the Bank’s 100-year anniversary,” stated Joseph W. Kiley III, President and CEO.

    “Our financial results were affected during the quarter as a result of recognizing $419,200 in legal, accounting and other fees related to the unsuccessful negotiation of a potential business combination with another financial institution. Despite our best efforts, the parties were unable to come to a mutual agreement on the terms of merger,” stated Kiley.

    “Credit quality at June 30, 2023, remained strong, with nonperforming assets totaling just $201,000 and additional loan delinquencies of only $175,000 on total loans receivable of $1.2 billion. A reduction in loans receivable during the quarter and a credit upgrade to a $2.1 million commercial real estate loan allowed the Company to recognize a $400,000 recapture of its provision for credit losses during the quarter,” continued Kiley.

    “Competition for deposits continues to adversely impact our cost of funds. We continue to work to grow deposits throughout our branch network and are thankful for our loyal customer base. Our level of uninsured deposits was reduced to 21.5% at quarter end, down from 23.6% of deposits at March 31, 2023 and 27.4% at the end of 2022. I am truly appreciative of the efforts of our employees in assisting customers to maximize the coverage on their deposits,” concluded Kiley.

    Highlights for the quarter ended June 30, 2023:

    • The Company paid a regular quarterly cash dividend to shareholders of $0.13 per share.
    • The Bank’s Tier 1 leverage and total capital ratios were 10.0% and 15.8% at June 30, 2023, compared to 10.2% and 15.6% at March 31, 2023, and 10.5% and 15.5% at June 30, 2022, respectively.
    • Credit quality remained strong with nonperforming assets of $201,000, or 0.01% of total assets.
    • Based on management’s evaluation of the adequacy of the Allowance for Credit Losses (“ACL”) at June 30, 2023, the Company recognized a $400,000 recapture of provision for credit losses during the quarter.

    Deposits totaled $1.22 billion at June 30, 2023, compared to $1.23 billion at March 31, 2023, and $1.18 billion at June 30, 2022. Total deposits decreased $2.2 million in the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023. We continued to see customers shift funds from money market accounts into retail certificates of deposit, with the $16.5 million decrease in money market balances more than offset by the $27.0 million increase in retail certificates of deposit. The primary reason for the slight reduction in deposits during the quarter was our decision to reduce our balances of brokered deposits by $15.0 million. At June 30, 2023, the Company held $43.0 million in interest-earning deposits that can be used to fund loan growth or further reduce brokered deposits and/or other wholesale liabilities in future periods, compared to $71.0 million at March 31, 2023, and $26.2 million at June 30, 2022.

    The following table presents a breakdown of our total deposits (unaudited):

     Jun 30,
    2023    		 Mar 31,
    2023    		 Jun 30,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
     (Dollars in thousands)
    Deposits:         
    Noninterest-bearing demand$111,768 $110,780 $127,808 $988  $(16,040)
    Interest-bearing demand 89,080  86,183  107,478  2,897   (18,398)
    Savings 20,364  21,871  23,525  (1,507)  (3,161)
    Money market 467,411  483,945  596,515  (16,534)  (129,104)
    Certificates of deposit, retail 359,919  332,935  270,866  26,984   89,053 
    Brokered deposits 176,422  191,414  53,277  (14,992)  123,145 
    Total deposits$1,224,964 $1,227,128 $1,179,469 $(2,164) $45,495 


    The following tables present an analysis of total deposits by branch office (unaudited):

    June 30, 2023
     Noninterest-
    bearing
    demand     		Interest-
    bearing
    demand    		 Savings Money
    market     		Certificates
    of deposit,
    retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$31,802$41,857$12,952$237,814$254,016$-$578,441
    Landing 2,773 1,831 137 15,120 8,657 - 28,518
    Woodinville 2,440 2,653 1,032 10,077 14,647 - 30,849
    Bothell 4,047 765 39 4,917 2,187 - 11,955
    Crossroads 17,108 4,619 87 27,370 13,599 - 62,783
    Kent 11,237 9,841 4 15,500 7,097 - 43,679
    Kirkland 7,656 1,356 149 11,137 1,160 - 21,458
    Issaquah 2,116 1,681 102 3,070 5,594 - 12,563
    Total King County 79,179 64,603 14,502 325,005 306,957 - 790,246
    Snohomish County       
    Mill Creek 5,797 2,638 591 15,209 7,140 - 31,375
    Edmonds 12,384 7,659 895 28,177 12,871 - 61,986
    Clearview 4,888 4,490 1,576 19,928 7,872 - 38,754
    Lake Stevens 3,465 4,038 1,071 30,899 10,802 - 50,275
    Smokey Point 2,953 4,619 1,715 42,192 11,846 - 63,325
    Total Snohomish County 29,487 23,444 5,848 136,405 50,531 - 245,715
    Pierce County       
    University Place 2,428 83 3 3,817 926 - 7,257
    Gig Harbor 674 950 11 2,184 1,505 - 5,324
    Total Pierce County 3,102 1,033 14 6,001 2,431 - 12,581
            
    Brokered deposits - - - - - 176,422 176,422
            
    Total deposits$111,768$89,080$20,364$467,411$359,919$176,422$1,224,964


    March 31, 2023
     Noninterest-
    bearing
    demand     		Interest-
    bearing
    demand    		 Savings Money
    market     		Certificates
    of deposit,
    retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$33,227$44,884$14,033$238,966$244,560$-$575,670
    Landing 2,721 1,407 184 15,056 6,411 - 25,779
    Woodinville 3,084 2,438 1,116 10,971 14,101 - 31,710
    Bothell 4,066 659 60 5,263 2,067 - 12,115
    Crossroads 11,766 2,956 95 35,242 11,956 - 62,015
    Kent 9,505 9,305 4 18,415 3,449 - 40,678
    Kirkland 7,318 1,282 99 10,643 627 - 19,969
    Issaquah 2,128 1,189 27 3,825 4,627 - 11,796
    Total King County 73,815 64,120 15,618 338,381 287,798 - 779,732
    Snohomish County       
    Mill Creek 7,001 3,089 617 12,487 6,190 - 29,384
    Edmonds 15,282 6,247 884 26,726 13,183 - 62,322
    Clearview 4,933 4,485 1,640 19,490 6,999 - 37,547
    Lake Stevens 4,177 3,577 1,355 33,824 9,197 - 52,130
    Smokey Point 2,836 4,287 1,745 46,825 7,782 - 63,475
    Total Snohomish County 34,229 21,685 6,241 139,352 43,351 - 244,858
    Pierce County       
    University Place 2,189 82 3 3,999 946 - 7,219
    Gig Harbor 547 296 9 2,213 840 - 3,905
    Total Pierce County 2,736 378 12 6,212 1,786 - 11,124
            
    Brokered deposits - - - - - 191,414 191,414
            
    Total deposits$110,780$86,183$21,871$483,945$332,935$191,414$1,227,128


    Net loans receivable totaled $1.17 billion at June 30, 2023, compared to $1.18 billion at March 31, 2023, and $1.12 billion at June 30, 2022. At June 30, 2023, loan totals were down across all categories except consumer loans which increased by $2.3 million. The average balance of net loans receivable totaled $1.18 billion for the quarter ended June 30, 2023, compared to $1.17 billion for the quarter ended March 31, 2023, and $1.12 billion for the quarter ended June 30, 2022.

    The ACL to total loans was 1.31% and 1.33% at June 30, 2023 and March 31, 2023, respectively, compared to allowance for loan and lease losses (“ALLL”) to total loans receivable of 1.33% at June 30, 2022.

    There was $201,000 in nonperforming loans at June 30, 2023, compared to $193,000 at March 31, 2023, and none at June 30, 2022. There was no other real estate owned (“OREO”) at June 30, 2023, March 31, 2023, and June 30, 2022.

    The following table presents a breakdown of our nonperforming assets (unaudited):

     Jun 30,
    2023         		 Mar 31,
    2023         		 Jun 30,
    2022         		 Three
    Month
    Change    		 One
    Year
    Change
     (Dollars in thousands)
    Nonperforming loans:         
    Consumer$201  $193   $–  $8 $201
    Total nonperforming loans 201   193   –     
              
    OREO –    –   –   –  –
              
    Total nonperforming assets$201  $193  $–  $8 $201
              
    Nonperforming assets as a percent 
    of total assets    		 0.01%  0.01%  0.00%    


    Net interest income totaled $10.3 million for the quarter ended June 30, 2023, compared to $11.3 million for the quarter ended March 31, 2023, and $11.8 million for the quarter ended June 30, 2022. The decrease in the current quarter compared to the quarter ended March 31, 2023, was primarily due to higher interest expense on deposits and other borrowings, primarily reflecting the continued increase in market interest rates due to the ongoing increases to the targeted federal funds rate, and continued intense competition for deposits, partially offset by higher interest income on loans and investment securities. Since March 2022, the Federal Open Market Committee of the Federal Reserve System has increased the target range for the federal funds rate by 500 basis points, including 25 basis points during the second quarter of 2023, to a range of 5.00% to 5.25%.

    Total interest income was $19.7 million for the quarter ended June 30, 2023, compared to $18.5 million for the quarter ended March 31, 2023, and $13.5 million for the quarter ended June 30, 2022. The increase in the current quarter compared to the prior quarters was primarily due to an improvement in the average yield on loans and investments due in large part to recent increases in the targeted federal funds rate. Loan yield increased to 5.71% during the recent quarter, compared to 5.56% and 4.41% for the quarters ended March 31, 2023 and June 30, 2022, respectively. Yield on investment securities increased to 3.93% during the current quarter, compared to 3.88% and 2.33% for the quarters ended March 31, 2023 and June 30, 2022, respectively.

    Total interest expense was $9.4 million for the quarter ended June 30, 2023, compared to $7.2 million for the quarter ended March 31, 2023, and $1.7 million for the quarter ended June 30, 2022. The average cost of interest-bearing deposits was 3.06% for the quarter ended June 30, 2023, compared to 2.41% for the quarter ended March 31, 2023, and 0.55% for the quarter ended June 30, 2022. The increase from the quarter ended March 31, 2023, was due primarily to increased interest expense on money market and certificate of deposit balances in a highly competitive marketplace for deposits and the costs from brokered deposits and other wholesale sources used to meet our funding needs. Advances from the FHLB totaled $120.0 million at June 30, 2023, compared to $160.0 million at March 31, 2023, and $95.0 million at June 30, 2022. At June 30, 2023, $95.0 million of our FHLB advances were tied to cash flow hedge agreements where the Bank pays a fixed rate and receives a variable rate in return to assist in the Bank’s interest rate risk management efforts. These cash flow hedge agreements had a weighted average remaining term of 41 months and a weighted average fixed interest rate of 1.05% as of June 30, 2023. Subsequent to quarter end, the Bank entered into two additional pay fixed cash flow hedges where the Bank pays a fixed rate and in return receives an amount based on the Secured Overnight Financing Rate (“SOFR”). The first is a $15.0 million notional, two-year swap where the Bank pays a fixed rate of 4.57% and the second is a $15.0 million notional, three-year swap where the Bank pays a fixed rate of 4.15%. These hedges are intended to provide protection to the Bank in the event that market rates rise further or stay at these elevated levels for longer than current market expectations. The average cost of borrowings was 2.55% for the quarter ended June 30, 2023, compared to 2.69% for the quarter ended March 31, 2023, and 1.21% for the quarter ended June 30, 2022.

    Net interest margin was 2.84% for the quarter ended June 30, 2023, compared to 3.22% for the quarter ended March 31, 2023, and 3.53% for the quarter ended June 30, 2022. The decrease in net interest margin for the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023, was due primarily to the cost of interest-bearing liabilities increasing more than the yields on interest-earnings assets, with a 57-basis point increase in the Company’s average cost of interest-bearing liabilities to 3.01% from 2.44%, partially offset by a 14-basis point increase in the average yield on interest-earning assets to 5.43% from 5.29%.

    Noninterest income for the quarter ended June 30, 2023, totaled $798,000, compared to $665,000 for the quarter ended March 31, 2023, and $961,000 for the quarter ended June 30, 2022. The increase for the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023, was primarily due to a $135,000 increase in other noninterest income and, to a lesser extent, an increase in wealth management revenue and deposit related fees, partially offset by decreases in loan related fees and income on bank-owned life insurance (“BOLI”). The decrease for the quarter ended June 30, 2023, compared to the prior year quarter, primarily reflects lower loan related fees.

    Noninterest expense totaled $9.7 million for the quarter ended June 30, 2023, compared to $9.0 million for the quarter ended March 31, 2023, and $9.3 million for the quarter ended June 30, 2022. The increase in noninterest expense for the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023, was primarily due to increases in professional fees, other general and administrative expenses and regulatory assessments. Professional fees increased $470,000, primarily due to $419,200 in expenses related to the exploration, negotiation and due diligence associated with a potential business combination which was abandoned during the second quarter of 2023. Other general and administrative fees increased $399,000 during the quarter ended June 30, 2023, compared to the quarter ended March 31, 2023, primarily due to the recognition of approximately $190,000 in one-time expenses relating to business relations and customer appreciation in conjunction with our 100-year celebration, and a $115,000 increase to our ACL on unfunded loan commitments. Regulatory assessments increased $166,000 during the second quarter of 2023 compared to the first quarter of 2023 due to a year-to-date true up of expenses relating to an increase in deposit insurance assessments instituted earlier in the year. These increases were partially offset by a $397,000 reduction in salaries and employee benefits as we refined and reduced our 2023 estimates for incentive compensation and profit-sharing accruals. The increase in noninterest expense for the quarter ended June 30, 2023, compared to the quarter ended June 30, 2022, primarily reflects $475,000 in higher other general and administrative expenses, $177,000 in regulatory assessments and $156,000 in professional fees, partially offset by a $414,000 decrease in salaries and employee benefits and a $45,000 decrease in occupancy and equipment expense, primarily for the reasons set forth above.

    First Financial Northwest, Inc. is the parent company of First Financial Northwest Bank; an FDIC insured Washington State-chartered commercial bank headquartered in Renton, Washington, serving the Puget Sound Region through 15 full-service banking offices. For additional information about us, please visit our website at ffnwb.com and click on the “Investor Relations” link at the bottom of the page.

    Forward-looking statements:

    When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management’s current expectations and forecasts regarding future events many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include, but are not limited to, the following: potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as supply chain disruptions; higher inflation and the impact of current and future monetary policies of the Federal Reserve in response thereto; increased competitive pressures; changes in the interest rate environment; legislative and regulatory changes; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other reports filed with or furnished to the Securities and Exchange Commission – that are available on our website at www.ffnwb.com and on the SEC’s website at www.sec.gov.

    Any of the forward-looking statements that we make in this Press Release and in the other public statements are based upon management’s beliefs and assumptions at the time they are made and may turn out to be wrong because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2023 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us and could negatively affect our operating and stock performance.

    For more information, contact:
    Joseph W. Kiley III, President and Chief Executive Officer
    Rich Jacobson, Executive Vice President and Chief Financial Officer
    (425) 255-4400


    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
    (Dollars in thousands)
    (Unaudited)

    Assets Jun 30,
    2023    		  Mar 31,
    2023    		  Jun 30,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
              
    Cash on hand and in banks$10,621  $9,618  $9,458  10.4% 12.3%
    Interest-earning deposits with banks 42,956   70,998   26,194  (39.5) 64.0 
    Investments available-for-sale, at fair value 208,927   214,948   210,826  (2.8) (0.9)
    Investments held-to-maturity, at amortized cost 2,444   2,439   2,432  0.2  0.5 
    Loans receivable, net of allowance of $15,606, $16,028, and $15,125 respectively 1,171,916   1,184,750   1,119,795  (1.1) 4.7 
    Federal Home Loan Bank ("FHLB") stock, at cost 6,603   8,203   5,512  (19.5) 19.8 
    Accrued interest receivable 6,690   7,011   5,738  (4.6) 16.6 
    Deferred tax assets, net 3,275   2,990   1,840  9.5  78.0 
    Premises and equipment, net 20,283   20,732   21,855  (2.2) (7.2)
    Bank owned life insurance ("BOLI"), net 36,922   36,647   35,819  0.8  3.1 
    Prepaid expenses and other assets 13,051   11,336   10,493  15.1  24.4 
    Right of use asset ("ROU"), net 3,018   3,194   3,301  (5.5) (8.6)
    Goodwill 889   889   889  0.0  0.0 
    Core deposit intangible, net 484   516   616  (6.2) (21.4)
    Total assets$1,528,079  $1,574,271  $1,454,768  (2.9)% 5.0%
    Liabilities and Stockholders' Equity         
    Deposits         
    Noninterest-bearing deposits$111,768  $110,780  $127,808  0.9% (12.6)%
    Interest-bearing deposits 1,113,196   1,116,348   1,051,661  (0.3) 5.9 
    Total deposits 1,224,964   1,227,128   1,179,469  (0.2) 3.9 
    Advances from the FHLB 120,000   160,000   95,000  (25.0) 26.3 
    Advance payments from borrowers for taxes
    and insurance    		 2,524   5,447   2,670  (53.7) (5.5)
    Lease liability, net 3,213   3,374   3,482  (4.8) (7.7)
    Accrued interest payable 2,045   749   115  173.0  1678.3 
    Other liabilities 16,618   17,928   17,136  (7.3) (3.0)
    Total liabilities 1,369,364   1,414,626   1,297,872  (3.2)% 5.5%
    Commitments and contingencies         
    Stockholders' Equity         
    Preferred stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding -   -   -  n/a n/a
    Common stock, $0.01 par value; authorized 90,000,000 shares; issued and outstanding 9,148,086 shares at June 30, 2023,
    9,148,086 shares at March 31, 2023, and 9,091,533 shares at June 30, 2022    		 92   92   91  0.0% 1.1%
    Additional paid-in capital 72,544   72,445   71,835  0.1  1.0 
    Retained earnings 95,896   95,597   90,066  0.3  6.5 
    Accumulated other comprehensive loss,
    net of tax    		 (9,817)  (8,489)  (4,814) 15.6  103.9 
    Unearned Employee Stock Ownership Plan ("ESOP") shares -   -   (282) n/a (100.0)
    Total stockholders' equity 158,715   159,645   156,896  (0.6) 1.2 
    Total liabilities and stockholders' equity$1,528,079  $1,574,271  $1,454,768  (2.9)% 5.0%


    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Income Statements
    (Dollars in thousands, except per share data)
    (Unaudited)

     Quarter Ended     
      Jun 30,
    2023     		 Mar 31,
    2023    		  Jun 30,
    2022     		  Three
    Month
    Change     		  One
    Year
    Change     		 
    Interest income          
    Loans, including fees$16,849  $16,029  $12,273 5.1% 37.3%
    Investments 2,108   2,105   1,156 0.1  82.4 
    Interest-earning deposits with banks 620   236   37 162.7  1575.7 
    Dividends on FHLB Stock 120   130   71 (7.7) 69.0 
    Total interest income 19,697   18,500   13,537 6.5  45.5 
    Interest expense         
    Deposits 8,590   6,332   1,398 35.7  514.4 
    Other borrowings 798   912   315 (12.5) 153.3 
    Total interest expense 9,388   7,244   1,713 29.6  448.0 
    Net interest income 10,309   11,256   11,824 (8.4) (12.8)
    (Recapture of provision) provision for credit losses (400)  300   - (233.3) n/a
    Net interest income after (recapture of provision) provision for credit losses 10,709   10,956   11,824 (2.3) (9.4)
              
    Noninterest income         
              
    BOLI income 274   308   251 (11.0) 9.2 
    Wealth management revenue 95   45   104 111.1  (8.7)
    Deposit related fees 252   223   246 13.0  2.4 
    Loan related fees 44   91   354 (51.6) (87.6)
    Other 133   (2)  6 (6750.0) 2116.7 
    Total noninterest income 798   665   961 20.0  (17.0)
              
    Noninterest expense         
    Salaries and employee benefits 5,064   5,461   5,478 (7.3) (7.6)
    Occupancy and equipment 1,160   1,165   1,205 (0.4) (3.7)
    Professional fees 887   417   731 112.7  21.3 
    Data processing 711   686   692 3.6  2.7 
    Regulatory assessments 267   101   90 164.4  196.7 
    Insurance and bond premiums 115   130   113 (11.5) 1.8 
    Marketing 98   77   96 27.3  2.1 
    Other general and administrative 1,355   956   880 41.7  54.0 
    Total noninterest expense 9,657   8,993   9,285 7.4  4.0 
    Income before federal income tax provision 1,850   2,628   3,500 (29.6) (47.1)
    Federal income tax provision 362   506   692 (28.5) (47.7)
    Net income$1,488  $2,122  $2,808 (29.9)% (47.0)%
               
    Basic earnings per share$0.16  $0.23  $0.31     
    Diluted earnings per share$0.16  $0.23  $0.31     
    Weighted average number of common shares outstanding 9,120,468   9,104,371   8,982,969     
    Weighted average number of diluted shares outstanding 9,124,227   9,173,276   9,085,913     


    The following table presents a breakdown of the loan portfolio (unaudited):

     June 30, 2023 March 31, 2023 June 30, 2022
     Amount Percent Amount Percent Amount Percent
    Commercial real estate:           
    Residential:           
    Other multifamily$141,413  11.9% $143,332  11.9% $135,879  12.0%
    Total multifamily residential 141,413  11.9   143,332  11.9   135,879  12.0 
                
    Non-residential:           
    Office 79,338  6.7   79,793  6.6   84,884  7.5 
    Retail 131,877  11.1   130,788  11.0   139,425  12.2 
    Mobile home park 22,798  1.9   21,992  1.8   22,264  2.0 
    Hotel / motel 64,297  5.4   67,165  5.6   57,224  5.0 
    Nursing home 11,739  1.0   12,260  1.0   12,527  1.1 
    Warehouse 19,557  1.6   19,780  1.6   19,056  1.7 
    Storage 33,418  2.8   33,604  2.8   34,167  3.0 
    Other non-residential 43,332  3.7   43,523  3.7   43,350  3.8 
    Total non-residential 406,356  34.2   408,905  34.1   412,897  36.3 
                
    Construction/land:           
    One-to-four family residential 47,168  4.0   53,948  4.5   34,578  3.1 
    Multifamily 547  0.0   (131) 0.0   4,805  1.4 
    Land development 10,113  0.9   9,786  0.8   24,483  1.2 
    Total construction/land 57,828  4.9   63,603  5.3   63,866  5.7 
                
    One-to-four family residential:           
    Permanent owner occupied 246,585  20.8   242,477  20.2   211,491  18.7 
    Permanent non-owner occupied 235,008  19.8   240,183  20.0   223,670  19.8 
    Total one-to-four family residential 481,593  40.6   482,660  40.2   435,161  38.5 
                
    Business:           
    Aircraft 2,017  0.2   2,052  0.1   3,130  0.3 
    Small Business Administration ("SBA") 1,824  0.2   499  0.1   538  0.1 
    Paycheck Protection Plan ("PPP") 629  0.1   707  0.1   1,511  0.1 
    Other business 22,957  1.8   28,401  2.3   28,489  2.5 
    Total business 27,427  2.3   31,659  2.6   33,668  3.0 
                
    Consumer:           
    Classic, collectible and other auto 61,611  5.1   59,962  5.0   43,695  3.7 
    Other consumer 11,294  1.0   10,657  0.9   9,754  0.8 
    Total consumer 72,905  6.1   70,619  5.9   53,449  4.5 
    Total loans 1,187,522  100.0%  1,200,778  100.0%  1,134,920  100.0%
    Less:           
    ACL 15,606     16,028     15,125   
    Loans receivable, net$1,171,916    $1,184,750    $1,119,795   
    Concentrations of credit: (1)           
    Construction loans as % of total capital 40.0%    44.9%    45.2%  
    Total non-owner occupied commercial real estate as % of total capital 336.8%    347.7%    360.0%  

    (1) Concentrations of credit percentages are for First Financial Northwest Bank only using classifications in accordance with FDIC regulatory guidelines.


    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Key Financial Measures
    (Unaudited)

     At or For the Quarter Ended
     Jun 30,
    2023         		 Mar 31,
    2023         		 Dec 31,
    2022         		 Sep 30,
    2022         		 Jun 30,
    2022     
     (Dollars in thousands, except per share data)
    Performance Ratios: (1)         
    Return on assets 0.39%  0.57%  0.86%  1.06%  0.79%
    Return on equity 3.74   5.31   8.04   9.88   7.11 
    Dividend payout ratio 79.90   56.52   34.29   27.40   38.51 
    Equity-to-assets ratio 10.39   10.14   10.67   10.64   10.78 
    Tangible equity-to-assets ratio (2) 10.31   10.06   10.58   10.55   10.69 
    Net interest margin 2.84   3.22   3.52   3.65   3.53 
    Average interest-earning assets to average interest-bearing liabilities 116.27   117.78   117.93   119.08   120.21 
    Efficiency ratio 86.95   75.44   65.84   66.80   72.62 
    Noninterest expense as a percent of average total assets 2.50   2.42   2.30   2.43   2.60 
    Book value per common share$17.35  $17.45  $17.57  $17.30  $17.26 
    Tangible book value per common share (2) 17.20   17.30   17.41   17.14   17.09 
              
    Capital Ratios: (3)         
    Tier 1 leverage ratio 10.02%  10.24%  10.31%  10.43%  10.53%
    Common equity tier 1 capital ratio 14.49   14.33   14.37   14.24   14.22 
    Tier 1 capital ratio 14.49   14.33   14.37   14.24   14.22 
    Total capital ratio 15.75   15.59   15.62   15.49   15.47 
              
    Asset Quality Ratios: (4)         
    Nonperforming loans as a percent of total loans 0.02%  0.02%  0.02%  0.02%  0.00%
    Nonperforming assets as a percent of total assets 0.01   0.01   0.01   0.02   0.00 
    ACL as a percent of total loans 1.31   1.33   1.29   1.27   1.33 
    Net (recoveries) charge-offs to average loans receivable, net 0.00   (0.00)  (0.00)  (0.00)  0.00 
              
    Allowance for Credit Losses:         
    ACL, beginning of the quarter$16,028  $15,227  $14,726  $15,125  $15,159 
    Beginning balance adjustment from adoption of Topic 326 -   500   -   -   - 
    (Recapture of provision) provision for credit losses (400)  300   500   (400)  - 
    Charge-offs (22)  -   -   -   (37)
    Recoveries -   1   1   1   3 
    ACL, end of the quarter$15,606  $16,028  $15,227  $14,726  $15,125 

    (1) Performance ratios are calculated on an annualized basis.
    (2) Represent non-GAAP financial measures. Tangible equity-to-tangible assets ratio is calculated by dividing tangible equity by tangible assets. Tangible book value per common share is calculated by dividing tangible equity by common shares outstanding at period end. Tangible equity and tangible assets exclude goodwill and core deposit intangible assets. Refer to Non-GAAP Financial Measures at the end of this press release for a reconciliation to the nearest GAAP equivalents.
    (3) Capital ratios are for First Financial Northwest Bank only.
    (4) Loans are reported net of undisbursed funds.


    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Key Financial Measures
    (Unaudited)

     For the Quarter Ended
     Jun 30,
    2023    		 Mar 31,
    2023    		 Dec 31,
    2022    		 Sep 30,
    2022    		 Jun 30,
    2022
     (Dollars in thousands)
    Yields and Costs: (1)         
    Yield on loans 5.71%  5.56%  5.19%  4.77%  4.41%
    Yield on investments 3.93   3.88   3.60   2.90   2.33 
    Yield on interest-earning deposits 4.91   4.40   3.31   2.02   0.67 
    Yield on FHLB stock 7.06   7.30   4.58   5.56   4.82 
    Yield on interest-earning assets 5.43%  5.29%  4.90%  4.43%  4.04%
              
    Cost of interest-bearing deposits 3.06%  2.41%  1.51%  0.87%  0.55%
    Cost of borrowings 2.55   2.69   2.46   1.48   1.21 
    Cost of interest-bearing liabilities 3.01%  2.44%  1.63%  0.93%  0.61%
              
    Cost of total deposits 2.78%  2.17%  1.36%  0.78%  0.49%
    Cost of funds 2.76   2.23   1.48   0.84   0.55 
              
    Average Balances:         
    Loans$1,182,939  $1,168,539  $1,150,181  $1,132,233  $1,117,079 
    Investments 215,113   219,969   221,113   220,244   198,819 
    Interest-earning deposits 50,691   21,729   24,608   24,565   22,010 
    FHLB stock 6,814   7,219   7,710   5,923   5,905 
    Total interest-earning assets$1,455,557  $1,417,456  $1,403,612  $1,382,965  $1,343,813 
              
    Interest-bearing deposits$1,126,598  $1,065,827  $1,040,357  $1,056,079  $1,013,080 
    Borrowings 125,275   137,600   149,946   105,272   104,835 
    Total interest-bearing liabilities$1,251,873  $1,203,427  $1,190,303  $1,161,351  $1,117,915 
    Noninterest-bearing deposits$111,365  $115,708  $121,518  $125,561  $131,415 
    Total deposits and borrowings$1,363,238  $1,319,135  $1,311,821  $1,286,912  $1,249,330 
              
    Average assets$1,547,321  $1,509,297  $1,496,125  $1,470,816  $1,431,003 
    Average stockholders' equity 159,764   162,016   159,120   158,515   158,349 

    (1) Yields and costs are annualized.


    Non-GAAP Financial Measures

    In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains non-GAAP financial measures that include tangible equity, tangible assets, tangible book value per share, and the tangible equity-to-assets ratio. The Company believes that these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of goodwill and core deposit intangible, net and provides an alternative view of the Company’s performance over time and in comparison to the Company’s competitors. Non-GAAP financial measures have limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation and are not a substitute for other measures in this earnings release that are presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

    The following table provides a reconciliation between the GAAP and non-GAAP measures:

     Quarter Ended
     Jun 30,
    2023    		 Mar 31,
    2023    		 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022
     (Dollars in thousands, except per share data)

    Tangible equity to tangible assets and tangible book value per share:

    Total stockholders' equity (GAAP)$158,715  $159,645  $160,360  $157,890  $156,896 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 484   516   548   582   616 
    Tangible equity (Non-GAAP)$157,342  $158,240  $158,923  $156,419  $155,391 
              
    Total assets (GAAP)$1,528,079  $1,574,271  $1,502,916  $1,484,311  $1,454,768 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 484   516   548   582   616 
    Tangible assets (Non-GAAP)$1,526,706  $1,572,866  $1,501,479  $1,482,840  $1,453,263 
              
    Common shares outstanding at period end 9,148,086   9,148,086   9,127,595   9,127,595   9,091,533 
              
    Equity-to-assets ratio (GAAP) 10.39%  10.14%  10.67%  10.64%  10.78%
    Tangible equity-to-tangible assets ratio (Non-GAAP) 10.31%  10.06   10.58   10.55   10.69 
    Book value per common share (GAAP)$17.35  $17.45  $17.57  $17.30  $17.26 
    Tangible book value per share (Non-GAAP) 17.20   17.30   17.41   17.14   17.09 


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