-
First Financial Northwest, Inc. Announces First Quarter 2024 Results; Reports Withdrawal from Legacy Defined Benefit Plan and Purchase of Single Premium Group Annuity
المصدر: Nasdaq GlobeNewswire / 30 أبريل 2024 15:10:36 America/Chicago
RENTON, Wash., April 30, 2024 (GLOBE NEWSWIRE) -- First Financial Northwest, Inc. (the “Company”) (NASDAQ GS: FFNW), the holding company for First Financial Northwest Bank (the “Bank”), today reported a net loss of $1.1 million, or $0.12 per diluted share, for the quarter ended March 31, 2024, compared to net income of $1.2 million, or $0.13 per diluted share, for the quarter ended December 31, 2023, and net income of $2.1 million, or $0.23 per diluted share, for the quarter ended March 31, 2023.
“Our first quarter results were impacted by the purchase of a single premium group annuity to satisfy the Company’s obligations to current and former employees covered by a legacy defined benefit plan. The plan was frozen on March 31, 2013, however the liability continued for all vested participants. Extinguishing this liability at a cost of $1.2 million was a strategic move considered to be an appropriate use of capital in light of the elevated rate environment. We also recognized $767,000 in pretax expenses in the quarter relating to our previously announced sale to Global Federal Credit Union. We continue to work with the employees and management of Global on a variety of matters to facilitate the planned integration of our two institutions, while the regulatory agencies work through the processing of our applications,” stated Joseph W. Kiley III, President and CEO.
“Credit quality remained strong, with nonaccrual loans remaining low at $201,000 relative to our $1.2 billion total loan portfolio. Our analysis of the allowance for credit losses was influenced by various factors during the quarter, including declines in loan balances and shifts in the composition of the loan portfolio, credit grade changes, and improvements in the unemployment rate forecast. After careful consideration, our analysis concluded that a $175,000 recapture of provision for credit losses was appropriate inclusive of a $125,000 provision for credit losses on unfunded commitments, due to their increased balances,” stated Kiley.
“Persistently elevated short term interest rates and strong competition for deposits continued to place pressure on deposit rates. As a result, despite an uptick in loan yields during the quarter, our net interest margin was little changed, increasing to 2.55% for the current quarter from 2.54% in the quarter ended December 31, 2023,” concluded Kiley.
Highlights for the quarter ended March 31, 2024:
- Net loans receivable totaled $1.14 billion at March 31, 2024, down $33.0 million from the prior quarter end.
- Book value per share was $17.46 at March 31, 2024, compared to $17.61 at December 31, 2023, and $17.45 at March 31, 2023.
- Incurred a net loss of $1.1 million for the quarter ended March 31, 2024, compared to net income of $1.2 million and $2.1 million for the quarters ended December 31, 2023, and March 31, 2023, respectively.
- Paid a quarterly cash dividend to shareholders of $0.13 per share.
- The Bank’s Tier 1 leverage and total capital ratios were 10.4% and 16.2% at March 31, 2024, compared to 10.2% and 16.2% at December 31, 2023, and 10.2% and 15.6% at March 31, 2023, respectively.
- Credit quality remained strong with nonaccrual loans totaling $201,000, or 0.02% of total loans.
- Recorded a $175,000 recapture of provision for credit losses in the current quarter, compared to no provision for credit losses in the prior quarter and a $338,000 provision for credit losses in the comparable quarter in 2023.
Deposits totaled $1.17 billion at March 31, 2024, compared to $1.19 billion at December 31, 2023, and $1.23 billion at March 31, 2023. The $27.2 million decrease in deposits at March 31, 2024, compared to December 31, 2023, was due predominantly to a $44.6 million decrease in brokered deposits, which was consistent with management’s strategy to reduce these higher cost deposits, partially offset by a $9.4 million increase in retail certificates of deposit, a $6.2 million increase in money market balances, and a $1.5 million increase in interest-bearing demand deposits.
The following table presents a breakdown of our total deposits (unaudited):
Mar 31,
2024Dec 31,
2023Mar 31,
2023Three
Month
ChangeOne
Year
ChangeDeposits: (Dollars in thousands) Noninterest-bearing demand $ 100,846 $ 100,899 $ 110,780 $ (53 ) $ (9,934 ) Interest-bearing demand 58,489 56,968 86,183 1,521 (27,694 ) Savings 19,314 18,886 21,871 428 (2,557 ) Money market 535,594 529,411 483,945 6,183 51,649 Certificates of deposit, retail 366,507 357,153 332,935 9,354 33,572 Brokered deposits 86,146 130,790 191,414 (44,644 ) (105,268 ) Total deposits $ 1,166,896 $ 1,194,107 $ 1,227,128 $ (27,211 ) $ (60,232 )
The following tables present an analysis of total deposits by branch office (unaudited):March 31, 2024 Noninterest-
bearing
demandInterest-
bearing
demandSavings Money
marketCertificates
of deposit,
retailBrokered
depositsTotal (Dollars in thousands) King County Renton $ 34,134 $ 17,394 $ 12,802 $ 263,834 $ 249,288 $ - $ 577,452 Landing 3,759 767 98 7,019 9,571 - 21,214 Woodinville 2,137 2,207 1,011 10,707 10,866 - 26,928 Bothell 3,025 947 32 1,835 5,158 - 10,997 Crossroads 12,007 3,320 35 25,107 17,689 - 58,158 Kent 5,875 5,579 6 25,543 7,207 - 44,210 Kirkland 8,804 1,861 155 65,870 2,055 - 78,745 Issaquah 1,435 373 113 2,781 6,053 - 10,755 Total King County 71,176 32,448 14,252 402,696 307,887 - 828,459 Snohomish County Mill Creek 5,241 2,327 685 12,600 8,426 - 29,279 Edmonds 9,838 9,487 576 29,314 13,054 - 62,269 Clearview 4,802 4,646 1,452 39,865 9,076 - 59,841 Lake Stevens 3,841 4,134 1,165 18,769 14,043 - 41,952 Smokey Point 2,661 4,415 1,167 29,411 10,800 - 48,454 Total Snohomish County 26,383 25,009 5,045 129,959 55,399 - 241,795 Pierce County University Place 2,034 63 1 1,748 1,487 - 5,333 Gig Harbor 1,253 969 16 1,191 1,734 - 5,163 Total Pierce County 3,287 1,032 17 2,939 3,221 - 10,496 Brokered deposits - - - - - 86,146 86,146 Total deposits $ 100,846 $ 58,489 $ 19,314 $ 535,594 $ 366,507 $ 86,146 $ 1,166,896 December 31, 2023 Noninterest-
bearing
demandInterest-
bearing
demandSavings Money
marketCertificates
of deposit,
retailBrokered
depositsTotal (Dollars in thousands) King County Renton $ 32,707 $ 16,280 $ 12,637 $ 317,003 $ 241,983 $ - $ 620,610 Landing 2,789 1,658 104 12,447 9,842 - 26,840 Woodinville 1,909 2,292 1,000 9,491 10,671 - 25,363 Bothell 3,380 840 33 1,892 4,738 - 10,883 Crossroads 11,075 3,873 45 27,564 14,958 - 57,515 Kent 7,267 5,086 4 16,424 7,706 - 36,487 Kirkland 9,341 1,989 137 12,233 2,032 - 25,732 Issaquah 1,646 1,696 57 2,417 6,213 - 12,029 Total King County 70,114 33,714 14,017 399,471 298,143 - 815,459 Snohomish County Mill Creek 4,985 2,333 850 13,672 8,309 - 30,149 Edmonds 11,455 5,386 460 26,458 14,375 - 58,134 Clearview 4,614 4,964 1,541 17,597 9,243 - 37,959 Lake Stevens 3,849 4,919 940 24,009 12,633 - 46,350 Smokey Point 2,665 4,333 1,060 44,484 11,750 - 64,292 Total Snohomish County 27,568 21,935 4,851 126,220 56,310 - 236,884 Pierce County University Place 2,205 67 3 2,496 1,172 - 5,943 Gig Harbor 1,012 1,252 15 1,224 1,528 - 5,031 Total Pierce County 3,217 1,319 18 3,720 2,700 - 10,974 Brokered deposits - - - - - 130,790 130,790 Total deposits $ 100,899 $ 56,968 $ 18,886 $ 529,411 $ 357,153 $ 130,790 $ 1,194,107
Net loans receivable totaled $1.14 billion at March 31, 2024, compared to $1.18 billion at both December 31, 2023, and March 31, 2023. During the quarter ended March 31, 2024, loan repayments outpaced new originations. The average balance of net loans receivable totaled $1.16 billion for the quarter ended March 31, 2024, compared to $1.17 billion for both the quarter ended December 31, 2023, and March 31, 2023.The allowance for credit losses (“ACL”) represented 1.30% of total loans receivable at March 31, 2024, compared to 1.28% at December 31, 2023, and 1.33% at March 31, 2023.
Nonaccrual loans totaled $201,000 at March 31, 2024, compared to $220,000 at December 31, 2023, and $201,000 at March 31, 2023. There was no other real estate owned (“OREO”) at March 31, 2024, December 31, 2023, or March 31, 2023.
Net interest income totaled $8.9 million for the quarter ended March 31, 2024, compared to $9.3 million for the quarter ended December 31, 2023, and $11.3 million for the quarter ended March 31, 2023. The decrease in the current quarter was primarily due to lower levels of interest-earning assets and interest-bearing liabilities compared to the quarter ended December 31, 2023.
Total interest income was $19.6 million for the quarter ended March 31, 2024, compared to $20.3 million for the quarter ended December 31, 2023, and $18.5 million for the quarter ended March 31, 2023, with average interest-earning asset balances declining by $40.6 million and $11.6 million, respectively, compared to the prior periods. Yield on loans increased to 5.88% during the recent quarter, compared to 5.83% and 5.56% for the quarters ended December 31, 2023, and March 31, 2023, respectively. Yield on investments was unchanged at 4.11% for the current quarter, and the quarter ended December 31, 2023, an increase from 3.88% for the quarter ended March 31, 2023.
Total interest expense was $10.7 million for the quarter ended March 31, 2024, compared to $11.0 million for the quarter ended December 31, 2023, and $7.2 million for the quarter ended March 31, 2023. The decline from the quarter ended December 31, 2023, was due primarily to lower levels of deposits, particularly the managed decrease in brokered deposits, offset slightly by an increase in the cost of interest-bearing liabilities. The average cost of interest-bearing deposits was 3.69% for the quarter ended March 31, 2024, compared to 3.62% and 2.41% for the quarters ended December 31, 2023 and March 31, 2023, respectively. Advances from the FHLB totaled $115.0 million at March 31, 2024, down from $125.0 million at December 31, 2023 and $160.0 million at March 31, 2023. At March 31, 2024, all $115.0 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 32.6 months and a weighted average fixed interest rate of 1.87% as of March 31, 2024. The average cost of borrowings was 2.65% for the quarter ended March 31, 2024, compared to 2.40% and 2.69% for the quarters ended December 31, 2023, and March 31, 2023, respectively.
Net interest margin was 2.55% for the quarter ended March 31, 2024, up slightly from 2.54% for the quarter ended December 31, 2023, but down from 3.22% for the quarter ended March 31, 2023. The slight increase compared to the quarter ended December 31, 2023, was due primarily to the higher level of interest-earning assets. The average yield on interest-earning assets increased six basis points to 5.62% during the first quarter of 2024, from 5.56% during the quarter ended December 31, 2023, and increased 33 basis points from 5.29% during the quarter ended March 31, 2023. The average cost of interest-bearing liabilities increased eight basis points to 3.58% during the quarter, from 3.50% during the quarter ended December 31, 2023, and increased 114 basis points from 2.44% during the quarter ended March 31, 2023. The net interest margin for the month of March 2024 was 2.50%.
Noninterest income for the quarter ended March 31, 2024, totaled $787,000, up from $633,000 and $665,000 for the quarters ended December 31, 2023, and March 31, 2023, respectively. The increase compared to the quarter ended December 31, 2023, was primarily due to a $96,000 increase in BOLI income, a $38,000 increase in other noninterest income related to our fintech focused venture capital investment and a $35,000 increase in wealth management revenue, partially offset by a combined decrease of $15,000 in lower deposit and loan related fees. The increase in the quarter ended March 31, 2024, compared to the quarter ended March 31, 2023, primarily reflects an increase in other noninterest income, wealth management revenue and BOLI income, partially offset by lower loan and deposit related fees.
Noninterest expense totaled $11.3 million for the quarter ended March 31, 2024, compared to $8.4 million for the quarter ended December 31, 2023, and $9.0 million for the quarter ended March 31, 2023. The increase compared to the quarter ended December 31, 2023, was primarily due to a $1.9 million increase in salaries and employee benefits and a $869,000 increase in professional fees. The increase in salaries and employee benefits consisted primarily of a $1.2 million expense related to the defined benefit plan liability, an incentive accrual of $151,000 compared to a reversal of $250,000 in the previous quarter ended December 31, 2023, a $201,000 increase in salaries due to annual salary increases taking effect January 1, 2024, and $101,000 related to the seasonal increase in payroll taxes. The increase in professional fees consisted primarily of $767,000 in pretax expenses related to the pending sale of the Bank’s assets to Global Federal Credit Union. The increase compared to the quarter ended March 31, 2023, was primarily due to the purchase of a single premium group annuity to satisfy the defined benefit liability and transaction-related expenses mentioned previously, along with increases in data processing fees, occupancy and equipment expenses and regulatory assessments.
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. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about, among other things, our pending transaction with Global Federal Credit Union (“Global”) whereby Global, pursuant to the definitive purchase and assumption agreement (the “P&A Agreement”), will acquire substantially all of the assets and assume substantially all of the liabilities of the Bank, expectations of the business environment in which we operate, projections of future performance or financial items, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based on current management expectations and may, therefore, involve risks and uncertainties. Actual results may differ, possibly materially from those currently expected or projected in these forward-looking statements made by, or on behalf of, us and could negatively affect our operating and stock performance. 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: the occurrence of any event, change or other circumstances that could give rise to the right of one or all of the parties to terminate the P&A Agreement; delays in completing the P&A Agreement; the failure to obtain necessary regulatory approvals and shareholder approvals or to satisfy any of the other conditions to the Global transaction, including the P&A Agreement, on a timely basis or at all; delays or other circumstances arising from the dissolution of the Bank and the Company following completion of the P&A Agreement; diversion of management’s attention from ongoing business operations and opportunities during the pending Global transaction; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement of the Global transaction; 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; changes in the interest rate environment, including the recent increases in the Federal Reserve benchmark rate and duration at which such increased interest rate levels are maintained, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; the impact of continuing high inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown; increased competitive pressures; 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; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; effects of critical accounting policies and judgments, including the use of estimates in determining the fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; 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.
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)Assets Mar 31,
2024Dec 31,
2023Mar 31,
2023Three
Month
ChangeOne
Year
ChangeCash on hand and in banks $ 8,789 $ 8,391 $ 9,618 4.7 % (8.6 )% Interest-earning deposits with banks 40,272 22,138 70,998 81.9 (43.3 ) Investments available-for-sale, at fair value 180,376 207,915 214,948 (13.2 ) (16.1 ) Investments held-to-maturity, at amortized cost 2,451 2,456 2,439 (0.2 ) 0.5 Loans receivable, net of allowance of $14,996, $15,306, and $16,028 respectively 1,142,909 1,175,925 1,184,750 (2.8 ) (3.5 ) Federal Home Loan Bank ("FHLB") stock, at cost 6,078 6,527 8,203 (6.9 ) (25.9 ) Accrued interest receivable 7,176 7,359 7,011 (2.5 ) 2.4 Deferred tax assets, net 2,399 2,648 2,990 (9.4 ) (19.8 ) Premises and equipment, net 19,323 19,667 20,732 (1.7 ) (6.8 ) Bank owned life insurance ("BOLI"), net 38,058 37,653 36,647 1.1 3.9 Prepaid expenses and other assets 16,827 10,478 11,336 60.6 48.4 Right of use asset ("ROU"), net 2,415 2,617 3,194 (7.7 ) (24.4 ) Goodwill 889 889 889 0.0 0.0 Core deposit intangible, net 388 419 516 (7.4 ) (24.8 ) Total assets $ 1,468,350 $ 1,505,082 $ 1,574,271 (2.4 ) (6.7 ) Liabilities and Stockholders' Equity Deposits Noninterest-bearing deposits $ 100,846 $ 100,899 $ 110,780 (0.1 ) (9.0 ) Interest-bearing deposits 1,066,050 1,093,208 1,116,348 (2.5 ) (4.5 ) Total deposits 1,166,896 1,194,107 1,227,128 (2.3 ) (4.9 ) Advances from the FHLB 115,000 125,000 160,000 (8.0 ) (28.1 ) Advance payments from borrowers for taxes and insurance 5,649 2,952 5,447 91.4 3.7 Lease liability, net 2,598 2,806 3,374 (7.4 ) (23.0 ) Accrued interest payable 1,134 2,739 749 (58.6 ) 51.4 Other liabilities 16,890 15,818 17,928 6.8 (5.8 ) Total liabilities 1,308,167 1,343,422 1,414,626 (2.6 ) (7.5 ) 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 9,174,425 shares at March 31 2024, 9,179,510 shares at December 31 2023, and 9,148,086 shares at March 31 2023 92 92 92 0.0 0.0 Additional paid-in capital 72,871 73,035 72,445 (0.2 ) 0.6 Retained earnings 93,938 96,206 95,597 (2.4 ) (1.7 ) Accumulated other comprehensive loss, net of tax (6,718 ) (7,673 ) (8,489 ) (12.4 ) (20.9 ) Total stockholders' equity 160,183 161,660 159,645 (0.9 ) 0.3 Total liabilities and stockholders' equity $ 1,468,350 $ 1,505,082 $ 1,574,271 (2.4 )% (6.7 )% FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except per share data)
(Unaudited)Quarter Ended Mar 31,
2024Dec 31,
2023Mar 31,
2023Three
Month
ChangeOne
Year
ChangeInterest income Loans, including fees $ 16,966 $ 17,143 $ 16,029 (1.0 )% 5.8 % Investments 2,064 2,143 2,105 (3.7 ) (1.9 ) Interest-earning deposits with banks 486 880 236 (44.8 ) 105.9 Dividends on FHLB Stock 127 121 130 5.0 (2.3 ) Total interest income 19,643 20,287 18,500 (3.2 ) 6.2 Interest expense Deposits 9,916 10,281 6,332 (3.6 ) 56.6 FHLB advances and other borrowings 827 731 912 13.1 (9.3 ) Total interest expense 10,743 11,012 7,244 (2.4 ) 48.3 Net interest income 8,900 9,275 11,256 (4.0 ) (20.9 ) (Recapture of provision) provision for credit losses (175 ) - 338 n/a (151.8 ) Net interest income after (recapture of provision) provision for credit losses 9,075 9,275 10,918 (2.2 ) (16.9 ) Noninterest income BOLI income 351 255 308 37.6 14.0 Wealth management revenue 95 60 45 58.3 111.1 Deposit related fees 221 234 223 (5.6 ) (0.9 ) Loan related fees 58 60 91 (3.3 ) (36.3 ) Other 62 24 (2 ) 158.3 NM Total noninterest income 787 633 665 24.3 18.3 Noninterest expense Salaries and employee benefits 6,763 4,822 5,461 40.3 23.8 Occupancy and equipment 1,226 1,231 1,165 (0.4 ) 5.2 Professional fees 1,300 431 417 201.6 211.8 Data processing 786 718 686 9.5 14.6 Regulatory assessments 166 196 101 (15.3 ) 64.4 Insurance and bond premiums 132 113 130 16.8 1.5 Marketing 64 70 77 (8.6 ) (16.9 ) Other general and administrative 894 858 918 4.2 (2.6 ) Total noninterest expense 11,331 8,439 8,955 34.3 26.5 (Loss) income before federal income tax (benefit) provision (1,469 ) 1,469 2,628 (200.0 ) (155.9 ) Federal income tax (benefit) provision (393 ) 275 506 (242.9 ) (177.7 ) Net (loss) income $ (1,076 ) $ 1,194 $ 2,122 (190.1 )% (150.7 )% Basic (loss) earnings per share $ (0.12 ) $ 0.13 $ 0.23 Diluted (loss) earnings per share $ (0.12 ) $ 0.13 $ 0.23 Weighted average number of common shares outstanding 9,159,339 9,151,892 9,104,371 Weighted average number of diluted shares outstanding 9,159,339 9,176,724 9,173,276 The following table presents a breakdown of the loan portfolio (unaudited):
March 31, 2024 December 31, 2023 March 31, 2023 Amount Percent Amount Percent Amount Percent (Dollars in thousands) Commercial real estate: Residential: Multifamily $ 134,386 11.6 % $ 138,149 11.6 % $ 143,332 11.9 % Total multifamily residential 134,386 11.6 138,149 11.6 143,332 11.9 Non-residential: Retail 118,958 10.4 124,172 10.4 130,788 11.0 Office 72,303 6.2 72,778 6.1 79,793 6.6 Hotel / motel 57,263 4.9 63,597 5.3 67,165 5.6 Storage 32,834 2.8 33,033 2.8 33,604 2.8 Mobile home park 23,351 2.0 21,701 1.8 21,992 1.8 Warehouse 19,086 1.6 19,218 1.6 19,780 1.6 Nursing Home 11,538 1.0 11,610 1.0 12,260 1.0 Other non-residential 32,041 2.8 31,750 2.6 43,523 3.7 Total non-residential 367,374 31.7 377,859 31.6 408,905 34.1 Construction/land: One-to-four family residential 43,411 3.7 47,149 4.0 53,948 4.5 Multifamily 5,266 0.5 4,004 0.3 (131 ) 0.0 Commercial - 0.0 - 0.0 - 0.0 Land development 8,330 0.7 9,771 0.8 9,786 0.8 Total construction/land 57,007 4.9 60,924 5.1 63,603 5.3 One-to-four family residential: Permanent owner occupied 283,398 24.5 284,471 23.9 242,477 20.2 Permanent non-owner occupied 223,302 19.3 228,752 19.2 240,183 20.0 Total one-to-four family residential 506,700 43.8 513,223 43.1 482,660 40.2 Business: Aircraft 1,907 0.2 1,945 0.1 2,052 0.1 Small Business Administration ("SBA") 1,778 0.2 1,794 0.3 499 0.1 Paycheck Protection Plan ("PPP") 395 0.0 473 0.0 707 0.1 Other business 16,344 1.4 24,869 2.1 28,401 2.3 Total business 20,424 1.8 29,081 2.5 31,659 2.6 Consumer: Classic, collectible and other auto 58,003 5.0 58,618 5.0 59,962 5.0 Other consumer 14,011 1.2 13,377 1.1 10,657 0.9 Total consumer 72,014 6.2 71,995 6.1 70,619 5.9 Total loans 1,157,905 100.0 % 1,191,231 100.0 % 1,200,778 100.0 % Less: ACL 14,996 15,306 16,028 Loans receivable, net $ 1,142,909 $ 1,175,925 $ 1,184,750 Concentrations of credit: (1) Construction loans as % of total capital 36.3 % 38.3 % 44.9 % Total non-owner occupied commercial
real estate as % of total capital307.2 % 316.8 % 347.7 % (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 Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2024 2023 2023 2023 2023 (Dollars in thousands, except per share data) Performance Ratios: (1) Return on assets (0.29 )% 0.31 % 0.39 % 0.39 % 0.57 % Return on equity (2.67 ) 2.97 3.71 3.74 5.31 Dividend payout ratio (108.33 ) 100.00 79.26 79.90 56.52 Equity-to-assets ratio 10.91 10.74 10.44 10.39 10.14 Tangible equity ratio (2) 10.83 10.66 10.36 10.31 10.06 Net interest margin 2.55 2.54 2.69 2.84 3.22 Average interest-earning assets to average interest-bearing liabilities 116.40 115.84 116.94 116.27 117.78 Efficiency ratio 116.97 85.17 84.49 85.57 75.12 Noninterest expense as a percent of average total assets 3.05 2.18 2.29 2.50 2.42 Book value per common share $ 17.46 $ 17.61 $ 17.35 $ 17.35 $ 17.45 Tangible book value per share (2) 17.32 17.47 17.20 17.20 17.30 Capital Ratios: (3) Tier 1 leverage ratio 10.41 % 10.18 % 10.25 % 10.02 % 10.24 % Common equity tier 1 capital ratio 14.98 14.90 14.75 14.49 14.33 Tier 1 capital ratio 14.98 14.90 14.75 14.49 14.33 Total capital ratio 16.24 16.15 16.00 15.75 15.59 Asset Quality Ratios: (4) Nonaccrual loans as a percent of total loans 0.02 % 0.02 % 0.02 % 0.02 % 0.02 % ACL as a percent of total loans 1.30 1.28 1.29 1.31 1.33 Net 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 $ 15,306 $ 15,306 $ 15,606 $ 16,028 $ 15,227 Beginning balance adjustment from adoption of Topic 326 - - - - 500 (Recapture of provision) provision (300 ) - (300 ) (400 ) 300 Charge-offs (10 ) - - (22 ) - Recoveries - - - - 1 ACL, end of the quarter $ 14,996 $ 15,306 $ 15,306 $ 15,606 $ 16,028 Allowance for unfunded commitments Beginning balance $ 439 $ 439 $ 439 $ 286 $ 248 Provision for credit losses 125 - - 153 38 Ending balance $ 564 $ 439 $ 439 $ 439 $ 286 Provision for credit losses ACL - loans $ (300 ) $ - $ (300 ) $ (400 ) $ 300 Allowance for unfunded commitments 125 - - 153 38 Total $ (175 ) $ - $ (300 ) $ (247 ) $ 338 (1) Performance ratios are calculated on an annualized basis.
(2) Tangible equity, tangible assets, tangible equity ratio and tangible book value per share are non-GAAP financial measures. 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)At or For the Quarter Ended Mar 31, Dec 31, Sep 30, Jun 30, Mar 31, 2024 2023 2023 2023 2023 (Dollars in thousands) Yields and Costs: (1) Yield on loans 5.88 % 5.83 % 5.73 % 5.71 % 5.56 % Yield on investments 4.11 4.11 3.98 3.93 3.88 Yield on interest-earning deposits 5.28 5.32 5.18 4.91 4.40 Yield on FHLB stock 7.79 7.29 6.57 7.06 7.30 Yield on interest-earning assets 5.62 % 5.56 % 5.46 % 5.43 % 5.29 % Cost of interest-bearing deposits 3.69 % 3.62 % 3.33 % 3.06 % 2.41 % Cost of borrowings 2.65 2.40 2.42 2.55 2.69 Cost of interest-bearing liabilities 3.58 % 3.50 % 3.24 % 3.01 % 2.44 % Cost of total deposits (2) 3.38 % 3.31 % 3.03 % 2.78 % 2.17 % Cost of funds (3) 3.31 3.23 2.97 2.76 2.23 Average Balances: Loans $ 1,160,156 $ 1,167,339 $ 1,171,483 $ 1,182,939 $ 1,168,539 Investments 202,106 206,837 211,291 215,113 219,969 Interest-earning deposits 37,032 65,680 40,202 50,691 21,729 FHLB stock 6,554 6,584 6,820 6,814 7,219 Total interest-earning assets $ 1,405,848 $ 1,446,440 $ 1,429,796 $ 1,455,557 $ 1,417,456 Interest-bearing deposits $ 1,082,168 $ 1,127,690 $ 1,097,324 $ 1,126,598 $ 1,065,827 Borrowings 125,604 120,978 125,402 125,275 137,600 Total interest-bearing liabilities $ 1,207,772 $ 1,248,668 $ 1,222,726 $ 1,251,873 $ 1,203,427 Noninterest-bearing deposits 99,173 102,869 109,384 111,365 115,708 Total deposits and borrowings $ 1,306,945 $ 1,351,537 $ 1,332,110 $ 1,363,238 $ 1,319,135 Average assets $ 1,495,753 $ 1,538,955 $ 1,522,224 $ 1,547,321 $ 1,509,297 Average stockholders' equity 161,823 159,659 160,299 159,764 162,016 (1) Yields and costs are annualized.
(2) Includes noninterest-bearing deposits.
(3) Includes total borrowings and deposits (including noninterest-bearing deposits).
Non-GAAP Financial MeasuresIn 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 tables provide a reconciliation between the GAAP and non-GAAP measures:
Quarter Ended Mar 31,
2024Dec 31,
2023Sep 30,
2023Jun 30,
2023Mar 31,
2023(Dollars in thousands, except per share data) Tangible equity to tangible assets and tangible book value per share: Total stockholders' equity (GAAP) $ 160,183 $ 161,660 $ 159,235 $ 158,715 $ 159,645 Less: Goodwill 889 889 889 889 889 Core deposit intangible, net 388 419 451 484 516 Tangible equity (Non-GAAP) $ 158,906 $ 160,352 $ 157,895 $ 157,342 $ 158,240 Total assets (GAAP) $ 1,468,350 $ 1,505,082 $ 1,525,568 $ 1,528,079 $ 1,574,271 Less: Goodwill 889 889 889 889 889 Core deposit intangible, net 388 419 451 484 516 Tangible assets (Non-GAAP) $ 1,467,073 $ 1,503,774 $ 1,524,228 $ 1,526,706 $ 1,572,866 Common shares outstanding at period end 9,174,425 9,179,510 9,179,510 9,148,086 9,148,086 Equity-to-assets ratio (GAAP) 10.91 % 10.74 % 10.44 % 10.39 % 10.14 % Tangible equity-to-tangible assets ratio (Non-GAAP) 10.83 10.66 10.36 10.31 10.06 Book value per common share (GAAP) $ 17.46 $ 17.61 $ 17.35 $ 17.35 $ 17.45 Tangible book value per share (Non-GAAP) 17.32 17.47 17.20 17.20 17.30 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
