• First Financial Northwest, Inc. Reports Third Quarter 2024 Results

    来源: Nasdaq GlobeNewswire / 29 10月 2024 08:10:17   America/Chicago

    RENTON, Wash., Oct. 29, 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 $608,000, or $(0.07) per diluted share, for the quarter ended September 30, 2024, compared to net income of $1.6 million, or $0.17 per diluted share, for the quarter ended June 30, 2024, and net income of $1.5 million, or $0.16 per diluted share, for the quarter ended September 30, 2023. For the nine months ended September 30, 2024, the Company reported a net loss of $128,000, or $(0.01) per diluted share, compared to net income of $5.1 million, or $0.56 per diluted share, for the comparable period in 2023.

    The net loss for the quarter was primarily the result of a $1.6 million provision for credit losses. Our allowance for credit losses (“ACL”) analysis determined that a provision for credit losses of $1.6 million was appropriate as of September 30, 2024. This provision mainly relates to two participation loans totaling $6.0 million, for which we are not the lead lender. These loans, secured by short-term rehabilitation and assisted living facilities, have been individually evaluated and classified as “substandard” since March 2022 due to a decline in demand for the services provided at such facilities post-COVID. While payments on the loans were current as of September 30, 2024, updated appraisals received during the quarter resulted in an increase in our ACL. The loan guarantors are under contract to sell another property, with the sale expected to close in the fourth quarter of 2024. Proceeds from this sale are expected to be applied to the two loans, which would improve our position. Additionally, the guarantors reported interest from a national real estate developer in purchasing one of the facilities, though no purchase agreement was entered into as of September 30, 2024. The ACL was also impacted by higher forecasted unemployment rates and increased construction and land development loan balances. Additionally, reserves for unfunded commitments increased by $75,000 due to increased construction lending activity during the quarter.

    “While we recorded a provision for credit losses during the quarter ended September 30, 2024, our credit quality remained strong, with only $853,000 in nonaccrual loans relative to our $1.14 billion total loan portfolio. Our strong credit quality is directly related to our top-notch lending department employees who originate, document and underwrite these loans,” stated Joseph W. Kiley III, President and CEO.

    “We also continue to work closely with Global Federal Credit Union (“Global”) to prepare for the closing of the pending transaction and to ensure a smooth transition for our customers and employees. I truly appreciate the efforts and patience of our employees, customers, and shareholders as we await the final required approval from the National Credit Union Administration before we can close the transaction,” concluded Kiley.

    Highlights for the quarter ended September 30, 2024:

    • Net loans receivable totaled $1.13 billion at September 30, 2024, down $8.9 million from the prior quarter end.
    • Book value per share was $17.39 at September 30, 2024, compared to $17.51 at June 30, 2024, and $17.35 at September 30, 2023.
    • The Bank’s Tier 1 leverage and total capital ratios were 10.9% and 16.7% at September 30, 2024, compared to 10.9% and 16.6% at June 30, 2024, and 10.3% and 16.0% at September 30, 2023, respectively.
    • Credit quality remained strong with nonaccrual loans totaling only $853,000, or 0.07% of total loans.
    • A $1.6 million provision for credit losses was recorded in the current quarter, compared to a $200,000 recapture of provision for credit losses in the prior quarter and a $300,000 recapture of provision for credit losses in the comparable quarter in 2023.

    Deposits totaled $1.17 billion at September 30, 2024, compared to $1.09 billion at June 30, 2024, and $1.21 billion at September 30, 2023. The $79.2 million increase in deposits at September 30, 2024, compared to June 30, 2024, was due primarily to a $81.9 million increase in retail certificates of deposit and a $624,000 increase in noninterest-bearing demand deposits, partially offset by a $1.5 million, $1.4 million, $392,000, and $104,000 decline in interest-bearing demand deposits, money market deposits, savings and brokered deposits, respectively. The increased deposits were used to pay down our FHLB advances to $100.0 million at September 30, 2024, from $176.0 million at June 30, 2024.

    Advances from the FHLB totaled $100.0 million at September 30, 2024, down from $176.0 million at June 30, 2024, and $125.0 million at September 30, 2023, as the increase in deposits during the current quarter allowed us to reduce our reliance on FHLB advances. At September 30, 2024, the $100.0 million in 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 30.8 months and a weighted average fixed interest rate of 1.93% as of September 30, 2024. The average cost of borrowings was 3.19% for the quarter ended September 30, 2024, compared to 2.64% for the quarter ended June 30, 2024, and 2.42% for the quarter ended September 30, 2023.

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

     Sep 30,
    2024    		 Jun 30,
    2024    		 Sep 30,
    2023    		 Three
    Month
    Change    		 One
    Year
    Change
    Deposits:(Dollars in thousands)
    Noninterest-bearing demand$100,466 $99,842 $104,164 $624  $(3,698)
    Interest-bearing demand 55,506  57,033  60,816  (1,527)  (5,310)
    Savings 17,031  17,423  18,844  (392)  (1,813)
    Money market 495,978  497,345  501,168  (1,367)  (5,190)
    Certificates of deposit, retail 447,474  365,527  349,446  81,947   98,028 
    Brokered deposits 50,900  51,004  175,972  (104)  (125,072)
    Total deposits$1,167,355 $1,088,174 $1,210,410 $79,181  $(43,055)
     

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

    September 30, 2024
     Noninterest-bearing demand Interest-bearing demand Savings Money
    market     		Certificates of deposit, retailBrokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$29,388$14,153$10,654$305,836$315,721$-$675,752
    Landing 3,442 1,660 237 8,348 12,733 - 26,420
    Woodinville 1,968 2,234 959 8,852 11,522 - 25,535
    Bothell 2,965 1,151 401 1,536 5,918 - 11,971
    Crossroads 14,770 2,039 107 31,665 18,136 - 66,717
    Kent 5,417 10,502 44 16,053 8,562 - 40,578
    Kirkland 10,967 1,890 206 11,243 2,240 - 26,546
    Issaquah 1,186 294 18 2,547 6,580 - 10,625
    Total King County 70,103 33,923 12,626 386,080 381,412 - 884,144
    Snohomish County       
    Mill Creek 3,990 2,171 384 14,628 10,312 - 31,485
    Edmonds 9,254 6,831 330 18,549 13,281 - 48,245
    Clearview 5,587 5,242 1,462 21,206 12,251 - 45,748
    Lake Stevens 3,970 4,282 1,244 23,257 15,571 - 48,324
    Smokey Point 2,994 1,664 969 29,353 11,387 - 46,367
    Total Snohomish County 25,795 20,190 4,389 106,993 62,802 - 220,169
    Pierce County       
    University Place 2,940 53 4 1,848 1,458 - 6,303
    Gig Harbor 1,628 1,340 12 1,057 1,802 - 5,839
    Total Pierce County 4,568 1,393 16 2,905 3,260 - 12,142
            
    Brokered deposits - - - - - 50,900 50,900
            
    Total deposits$100,466$55,506$17,031$495,978$447,474$50,900$1,167,355


    June 30, 2024
     Noninterest-bearing demand Interest-bearing demand Savings Money
    market     		Certificates of deposit, retailBrokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$30,336$14,380$11,186$306,176$246,076$-$608,154
    Landing 2,079 566 113 7,895 9,881 - 20,534
    Woodinville 1,953 2,949 987 10,931 10,845 - 27,665
    Bothell 3,336 847 398 1,595 6,055 - 12,231
    Crossroads 13,585 2,858 28 25,599 17,748 - 59,818
    Kent 7,729 8,142 42 14,525 7,448 - 37,886
    Kirkland 8,326 1,789 210 15,007 1,752 - 27,084
    Issaquah 1,287 232 22 3,971 6,202 - 11,714
    Total King County 68,631 31,763 12,986 385,699 306,007 - 805,086
    Snohomish County       
    Mill Creek 5,823 2,306 420 15,209 9,578 - 33,336
    Edmonds 10,418 9,470 402 20,255 12,753 - 53,298
    Clearview 4,810 4,888 1,444 18,695 9,504 - 39,341
    Lake Stevens 4,111 4,445 1,171 22,618 14,090 - 46,435
    Smokey Point 2,700 3,152 982 31,808 10,435 - 49,077
    Total Snohomish County 27,862 24,261 4,419 108,585 56,360 - 221,487
    Pierce County       
    University Place 2,385 41 2 1,819 1,503 - 5,750
    Gig Harbor 964 968 16 1,242 1,657 - 4,847
    Total Pierce County 3,349 1,009 18 3,061 3,160 - 10,597
            
    Brokered deposits - - - - - 51,004 51,004
            
    Total deposits$99,842$57,033$17,423$497,345$365,527$51,004$1,088,174
     

    Net loans receivable totaled $1.13 billion at September 30, 2024, compared to $1.14 billion at June 30, 2024, and $1.17 billion at September 30, 2023. During the quarter ended September 30, 2024, loan repayments outpaced new loan fundings across all loan categories except construction and land development. The average balance of net loans receivable totaled $1.13 billion for the quarter ended September 30, 2024, compared to $1.14 billion for the quarter ended June 30, 2024, and $1.17 billion for the quarter ended September 30, 2023.

    The ACL represented 1.42% of total loans receivable at September 30, 2024, compared to 1.29% at both June 30, 2024, and September 30, 2023.

    Nonaccrual loans totaled $853,000 at September 30, 2024, compared to $4.7 million at June 30, 2024, and $201,000 at September 30, 2023. The decrease compared to the prior quarter was due primarily to the payoff of a $4.1 million commercial real estate loan that had been reported as nonaccrual as of June 30, 2024. The Bank did not incur any loss related to this credit. Additionally, there was no other real estate owned at September 30, 2024, June 30, 2024, or September 30, 2023.

    Net interest income totaled $8.5 million for the quarter ended September 30, 2024, compared to $9.0 million for the quarter ended June 30, 2024, and $9.7 million for the quarter ended September 30, 2023.

    Total interest income was $19.4 million for the quarter ended September 30, 2024, compared to $19.3 million for the quarter ended June 30, 2024, and $19.7 million for the quarter ended September 30, 2023. The increase in total interest income during the current quarter was primarily due to interest income on interest-earning deposits held with banks which increased to $863,000 in the quarter ended September 30, 2024, up 79.0% from $482,000 in the quarter ended June 30, 2024, partially offset by decreases in interest income on loans and investments of $147,000 or 0.9% and $142,000 or 7.5%, respectively. The decrease in total interest income during the current quarter compared to the comparable quarter in 2023, was primarily due to decreases in interest income on loans of $260,000 or 1.5% and on investments of $374,000 or 17.7%, partially offset by increases in interest income on interest-earning deposits held with banks and dividends on FHLB stock of $338,000 or 64.4% and $37,000 or 32.7%, respectively.

    Yield on loans decreased to 5.86% during the recent quarter from 5.93% for the quarter ended June 30, 2024, and increased from 5.73% for the quarter ended September 30, 2023. During the June 30, 2024 quarter, the Bank modified over $130 million in loans under its agreement with Global, resulting in a $214,000 increase in net deferred loan fees and costs, which increased the loan yield. In the most recent quarter, these fees and costs decreased by $266,000. The yield on investment securities for the current quarter was 4.30%, down from 4.38% last quarter and up from 3.98% a year ago.

    Total interest expense was $11.0 million for the quarter ended September 30, 2024, compared to $10.3 million for the quarter ended June 30, 2024, and $10.0 million for the quarter ended September 30, 2023. The increase from the quarters ended June 30, 2024 and September 30, 2023, was due to increases in funding costs. Interest expense on deposits increased $250,000 or 2.6% to $9.7 million, while interest expense on other borrowings increased $364,000 or 42.9% to $1.2 million during the current quarter, compared to the prior quarter. The increase in interest expense on deposits was primarily due to a $32.5 million increase in the average balances of certificates of deposit, partially offset by declines of $28.9 million and $10.7 million in the average balances of brokered deposits and money market deposits, respectively. In addition, the average cost of interest-bearing deposits was 3.80% for the quarter ended September 30, 2024, up from 3.71% for the quarter ended June 30, 2024. The increase in interest expense on other borrowings was due to a $22.4 million increase in the average balance of borrowings, coupled with a 55-basis point increase in the average cost of other borrowings to 3.19% during the quarter ended September 30, 2024, compared to the prior quarter. The increase in interest expense during the current quarter compared to the same quarter in 2023, was also due to increases in both the average balance and cost of outstanding borrowings, which increased by $26.1 million and 77 basis points, respectively.

    Net interest margin was 2.46% for the quarter ended September 30, 2024, compared to 2.66% for the quarter ended June 30, 2024, and 2.69% for the quarter ended September 30, 2023. The decrease in the net interest margin for the quarter ended September 30, 2024, was due primarily to continued pressure on funding costs. The average yield on interest-earning assets decreased seven basis points to 5.66% during the quarter ended September 30, 2024, from 5.73% during the quarter ended June 30, 2024, and increased 20 basis points from 5.46% during the quarter ended September 30, 2023. The average cost of interest-bearing liabilities increased 13 basis points to 3.72% during the quarter, from 3.59% during the quarter ended June 30, 2024, and increased 48 basis points from 3.24% during the quarter ended September 30, 2023. The net interest margin for the month of September 2024 was 2.49%.

    Noninterest income for the quarter ended September 30, 2024, totaled $677,000, up slightly from $673,000 for the quarter ended June 30, 2024, and unchanged from $677,000 for the quarter ended September 30, 2023. The increase compared to the quarter ended June 30, 2024, was primarily due to fluctuations related to our fintech focused venture capital investment more than offsetting the decreases in BOLI income, wealth management revenue and deposit and loan related fees in the quarter.

    Noninterest expense totaled $8.5 million for the quarter ended September 30, 2024, compared to $7.9 million for the prior quarter, and $8.8 million for the same period in 2023. The increase from the June 30, 2024 quarter was primarily due to a $789,000 increase in salaries and employee benefits. This was because the June 2024 quarter included $939,000 in deferred loan costs related to loan modifications, which reduced salary and employee benefit expenses, compared to $117,000 in deferred loan costs in the quarter ended September 30, 2024. Partially offsetting this was a $411,000 refund from the defined benefit plan buyout following a final census review of remaining plan participants. Professional fees also declined by $164,000 in the current quarter, largely due to a $101,000 decline in transaction-related expenses and a $54,000 decline in legal fees. Compared to the September 30, 2023 quarter, the decline in noninterest expense was primarily due to a $412,000 decrease in salaries and employee benefits, a $51,000 decrease in marketing expenses, a $35,000 decline in regulatory assessments, and $10,000 in lower occupancy and equipment expense. These reductions were partially offset by higher data processing, other general and administrative expenses and professional fees.

    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 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; 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 recession or slowed economic growth; changes in the interest rate environment, including increases or decreases in the Federal Reserve benchmark rate and duration at which such 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 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, civil unrest 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.

    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)
     
    AssetsSep 30,
    2024    		  Jun 30,
    2024    		  Sep 30,
    2023    		 Three
    Month
    Change    		 One
    Year
    Change
              
    Cash on hand and in banks$8,423  $10,811  $8,074  (22.1)% 4.3%
    Interest-earning deposits with banks 72,884   48,173   49,618  51.3  46.9 
    Investments available-for-sale, at fair value 156,609   160,693   204,975  (2.5) (23.6)
    Investments held-to-maturity, at amortized cost 2,462   2,456   2,450  0.2  0.5 
    Loans receivable, net of allowance of $16,265, $14,796, and $15,306 respectively 1,126,146   1,135,067   1,168,079  (0.8) (3.6)
    Federal Home Loan Bank ("FHLB") stock, at cost 5,403   8,823   6,803  (38.8) (20.6)
    Accrued interest receivable 6,638   6,632   7,263  0.1  (8.6)
    Deferred tax assets, net 2,690   2,360   3,156  14.0  (14.8)
    Premises and equipment, net 18,584   19,007   19,921  (2.2) (6.7)
    Bank owned life insurance ("BOLI"), net 38,661   38,368   37,398  0.8  3.4 
    Prepaid expenses and other assets 8,898   11,447   13,673  (22.3) (34.9)
    Right of use asset ("ROU"), net 2,473   2,670   2,818  (7.4) (12.2)
    Goodwill 889   889   889  0.0  0.0 
    Core deposit intangible, net 326   357   451  (8.7) (27.7)
    Total assets$1,451,086  $1,447,753  $1,525,568  0.2  (4.9)
              
    Liabilities and Stockholders' Equity         
              
    Deposits         
    Noninterest-bearing deposits$100,466  $99,842  $104,164  0.6  (3.6)
    Interest-bearing deposits 1,066,889   988,332   1,106,246  7.9  (3.6)
    Total deposits 1,167,355   1,088,174   1,210,410  7.3  (3.6)
    Advances from the FHLB 100,000   176,000   125,000  (43.2) (20.0)
    Advance payments from borrowers for taxes and insurance 5,211   2,764   4,760  88.5  9.5 
    Lease liability, net 2,673   2,866   3,011  (6.7) (11.2)
    Accrued interest payable 294   1,117   2,646  (73.7) (88.9)
    Other liabilities 15,340   16,139   20,506  (5.0) (25.2)
    Total liabilities 1,290,873   1,287,060   1,366,333  0.3  (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         
    9,213,969 shares at September 30, 2024; 9,179,825 shares at June 30, 2024; and 9,179,510 shares at September 30, 2023 92   92   92  0.0  0.0 
    Additional paid-in capital 72,916   72,953   72,926  (0.1) (0.0)
    Retained earnings 93,692   94,300   96,206  (0.6) (2.6)
    Accumulated other comprehensive loss, net of tax (6,487)  (6,652)  (9,989) (2.5) (35.1)
    Total stockholders' equity 160,213   160,693   159,235  (0.3) 0.6 
    Total liabilities and stockholders' equity$1,451,086  $1,447,753  $1,525,568  0.2% (4.9)%


    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Income Statements
    (Dollars in thousands, except per share data)
    (Unaudited)
     
     Quarter Ended    
      Sep 30,
    2024     		 Jun 30,
    2024    		  Sep 30,
    2023     		  Three
    Month
    Change     		  One
    Year
    Change
    Interest income         
    Loans, including fees$16,658  $16,805  $16,918  (0.9)% (1.5)%
    Investments 1,744   1,886   2,118  (7.5) (17.7)
    Interest-earning deposits with banks 863   482   525  79.0  64.4 
    Dividends on FHLB Stock 150   144   113  4.2  32.7 
    Total interest income 19,415   19,317   19,674  0.5  (1.3)
    Interest expense         
    Deposits 9,748   9,498   9,205  2.6  5.9 
    Other borrowings 1,213   849   766  42.9  58.4 
    Total interest expense 10,961   10,347   9,971  5.9  9.9 
    Net interest income 8,454   8,970   9,703  (5.8) (12.9)
    Provision (recapture of provision) for credit losses 1,575   (200)  (300) (887.5) (625.0)
    Net interest income after provision (recapture of provision) for credit losses 6,879   9,170   10,003  (25.0) (31.2)
              
    Noninterest income         
    BOLI income 295   310   244  (4.8) 20.9 
    Wealth management revenue 42   54   53  (22.2) (20.8)
    Deposit related fees 236   240   247  (1.7) (4.5)
    Loan related fees 96   97   79  (1.0) 21.5 
    Other income (expense), net 8   (28)  54  (128.6) (85.2)
    Total noninterest income 677   673   677  0.6  0.0 
              
    Noninterest expense         
    Salaries and employee benefits 4,606   3,817   5,018  20.7  (8.2)
    Occupancy and equipment 1,183   1,225   1,193  (3.4) (0.8)
    Professional fees 585   749   553  (21.9) 5.8 
    Data processing 838   856   742  (2.1) 12.9 
    Regulatory assessments 165   170   200  (2.9) (17.5)
    Insurance and bond premiums 113   118   111  (4.2) 1.8 
    Marketing 46   47   97  (2.1) (52.6)
    Other general and administrative 952   959   856  (0.7) 11.2 
    Total noninterest expense 8,488   7,941   8,770  6.9  (3.2)
    (Loss) income before federal income tax (benefit) provision (932)  1,902   1,910  (149.0) (148.8)
    Federal income tax (benefit) provision (324)  347   409  (193.4) (179.2)
    Net (loss) income$(608) $1,555  $1,501  (139.1)% (140.5)%
              
    Basic (loss) earnings per share$(0.07) $0.17  $0.16     
    Diluted (loss) earnings per share$(0.07) $0.17  $0.16     
    Weighted average number of common shares outstanding 9,190,146   9,168,414   9,127,568     
    Weighted average number of diluted shares outstanding 9,190,146   9,235,446   9,150,059     
     

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

     September 30, 2024June 30, 2024September 30, 2023
     Amount Percent Amount Percent Amount Percent
     (Dollars in thousands)
    Commercial real estate:           
    Residential:           
    Multifamily$132,811  11.6% $134,302  11.7% $140,022  11.7%
    Total multifamily residential 132,811  11.6   134,302  11.7   140,022  11.7 
                
    Non-residential:           
    Retail 118,840  10.4   118,154  10.4   130,101  11.0 
    Office 73,778  6.5   74,032  6.4   72,773  6.1 
    Hotel / motel 54,716  4.8   55,018  4.8   63,954  5.4 
    Storage 32,443  2.8   32,636  2.8   33,229  2.8 
    Mobile home park 22,443  2.0   23,159  2.0   21,285  1.8 
    Warehouse 18,743  1.6   18,868  1.6   19,446  1.6 
    Nursing Home 11,407  1.0   11,474  1.0   11,676  1.0 
    Other non-residential 30,719  2.7   32,139  2.8   42,227  3.7 
    Total non-residential 363,089  31.8   365,480  31.8   394,691  33.4 
                
    Construction/land:           
    One-to-four family residential 42,846  3.8   39,908  3.5   43,532  3.7 
    Multifamily 7,227  0.6   6,078  0.5   2,043  0.2 
    Land development 10,148  0.8   9,800  0.8   9,766  0.8 
    Total construction/land 60,221  5.2   55,786  4.8   55,341  4.7 
                
    One-to-four family residential:           
    Permanent owner occupied 279,744  24.5   283,516  24.7   260,970  22.1 
    Permanent non-owner occupied 221,127  19.4   225,423  19.6   232,238  19.6 
    Total one-to-four family residential 500,871  43.9   508,939  44.3   493,208  41.7 
                
    Business:           
    Aircraft -  0.0   -  0.0   1,981  0.2 
    Small Business Administration ("SBA") 1,745  0.2   1,763  0.2   1,810  0.3 
    Paycheck Protection Plan ("PPP") 238  0.0   316  0.0   551  0.0 
    Other business 12,416  1.1   12,984  1.1   23,633  1.9 
    Total business 14,399  1.3   15,063  1.3   27,975  2.4 
                
    Consumer:           
    Classic, collectible and other auto 58,085  5.1   56,758  4.9   59,955  5.1 
    Other consumer 12,935  1.1   13,535  1.2   12,193  1.0 
    Total consumer 71,020  6.2   70,293  6.1   72,148  6.1 
                
    Total loans 1,142,411  100.0%  1,149,863  100.0%  1,183,385  100.0%
    Less:           
    ACL 16,265     14,796     15,306   
    Loans receivable, net$1,126,146    $1,135,067    $1,168,079   
                
    Concentrations of credit: (1)           
    Construction loans as % of total capital 36.8%    34.8%    37.8%  
    Total non-owner occupied commercial
    real estate as % of total capital    		 296.2%    298.8%    328.1%  
     

    (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
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
      2024   2024   2024   2023   2023 
     (Dollars in thousands, except per share data)
    Performance Ratios: (1)         
    Return on assets (0.17)%  0.43%  (0.29)%  0.31%  0.39%
    Return on equity (1.50)  3.88   (2.67)  2.97   3.71 
    Dividend payout ratio 0.00   76.47   (108.33)  100.00   79.26 
    Equity-to-assets ratio 11.04   11.10   10.91   10.74   10.44 
    Tangible equity ratio (2) 10.97   11.02   10.83   10.66   10.36 
    Net interest margin 2.46   2.66   2.55   2.54   2.69 
    Average interest-earning assets to average interest-bearing liabilities 116.46   117.01   116.40   115.84   116.94 
    Efficiency ratio 92.96   82.35   116.97   85.17   84.49 
    Noninterest expense as a percent of average total assets 2.32   2.21   3.05   2.18   2.29 
    Book value per common share$17.39  $17.51  $17.46  $17.61  $17.35 
    Tangible book value per share (2) 17.26   17.37   17.32   17.47   17.20 
              
    Capital Ratios: (3)         
    Tier 1 leverage ratio 10.86%  10.91%  10.41%  10.18%  10.25%
    Common equity tier 1 capital ratio 15.43   15.39   14.98   14.90   14.75 
    Tier 1 capital ratio 15.43   15.39   14.98   14.90   14.75 
    Total capital ratio 16.68   16.64   16.24   16.15   16.00 
              
    Asset Quality Ratios: (4)         
    Nonaccrual loans as a percent of total loans 0.07%  0.41%  0.02%  0.02%  0.02%
    Nonaccrual loans as a percent of total assets 0.06   0.32   0.01   0.01   0.01 
    ACL as a percent of total loans 1.42   1.29   1.30   1.28   1.29 
    Net charge-offs to average loans receivable, net 0.00   0.00   0.00   0.00   0.00 
              
    Allowance for Credit Losses:         
    ACL ‒ loans         
    Beginning balance$14,796  $14,996  $15,306  $15,306  $15,606 
    Provision (recapture of provision) for credit losses 1,500   (200)  (300)  -   (300)
    Charge-offs (31)  -   (10)  -   - 
    Recoveries -   -   -   -   - 
    Ending balance$16,265  $14,796  $14,996  $15,306  $15,306 
              
    Allowance for unfunded commitments         
    Beginning balance$564  $564  $439  $439  $439 
    Provision for credit losses 75   -   125   -   - 
    Ending balance$639  $564  $564  $439  $439 
              
    Provision (recapture of provision) for credit losses         
    ACL - loans$1,500  $(200) $(300) $-  $(300)
    Allowance for unfunded commitments 75   -   125   -   - 
    Total$1,575  $(200) $(175) $-  $(300)
     

    (1) Performance ratios are calculated on an annualized basis.
    (2) 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
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
      2024   2024   2024   2023   2023 
     (Dollars in thousands)
    Yields and Costs: (1)         
    Yield on loans 5.86%  5.93%  5.88%  5.83%  5.73%
    Yield on investments 4.30   4.38   4.11   4.11   3.98 
    Yield on interest-earning deposits 5.27   5.25   5.28   5.32   5.18 
    Yield on FHLB stock 7.73   8.63   7.79   7.29   6.57 
    Yield on interest-earning assets 5.66%  5.73%  5.62%  5.56%  5.46%
              
    Cost of interest-bearing deposits 3.80%  3.71%  3.69%  3.62%  3.33%
    Cost of borrowings 3.19   2.64   2.65   2.40   2.42 
    Cost of interest-bearing liabilities 3.72%  3.59%  3.58%  3.50%  3.24%
              
    Cost of total deposits (2) 3.47%  3.38%  3.38%  3.31%  3.03%
    Cost of funds (3) 3.44%  3.30%  3.31%  3.23%  2.97%
              
    Average Balances:         
    Loans$1,131,473  $1,139,017  $1,160,156  $1,167,339  $1,171,483 
    Investments 161,232   173,102   202,106   206,837   211,291 
    Interest-earning deposits 65,149   36,959   37,032   65,680   40,202 
    FHLB stock 7,719   6,714   6,554   6,584   6,820 
    Total interest-earning assets$1,365,573  $1,355,792  $1,405,848  $1,446,440  $1,429,796 
              
    Interest-bearing deposits$1,021,041  $1,029,608  $1,082,168  $1,127,690  $1,097,324 
    Borrowings 151,478   129,126   125,604   120,978   125,402 
    Total interest-bearing liabilities 1,172,519   1,158,734   1,207,772   1,248,668   1,222,726 
    Noninterest-bearing deposits 96,003   101,196   99,173   102,869   109,384 
    Total deposits and borrowings$1,268,522  $1,259,930  $1,306,945  $1,351,537  $1,332,110 
              
    Average assets$1,453,431  $1,446,207  $1,495,753  $1,538,955  $1,522,224 
    Average stockholders' equity 161,569   161,057   161,823   159,659   160,299 
     

    (1) Yields and costs are annualized.
    (2) Includes noninterest-bearing deposits.
    (3) Includes total borrowings and deposits (including noninterest-bearing deposits).

    Non-GAAP Financial Measures

    In addition to financial results presented in accordance with generally accepted accounting principles (“GAAP”) utilized in the United States, 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
      Sep 30,
    2024    		   Jun 30,
    2024    		   Mar 31,
    2024    		   Dec 31,
    2023    		   Sep 30,
    2023    		 
     (Dollars in thousands, except per share data)
    Tangible equity to tangible assets and tangible book value per share:
                        
    Total stockholders' equity (GAAP)$160,213  $160,693  $160,183  $161,660  $159,235 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 326   357   388   419   451 
    Tangible equity (Non-GAAP)$158,998  $159,447  $158,906  $160,352  $157,895 
              
    Total assets (GAAP)$1,451,086  $1,447,753  $1,468,350  $1,505,082  $1,525,568 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 326   357   388   419   451 
    Tangible assets (Non-GAAP)$1,449,871  $1,446,507  $1,467,073  $1,503,774  $1,524,228 
              
    Common shares outstanding at period end 9,213,969   9,179,825   9,174,425   9,179,510   9,179,510 
              
    Equity-to-assets ratio (GAAP) 11.04%  11.10%  10.91%  10.74%  10.44%
    Tangible equity-to-tangible assets ratio (Non-GAAP) 10.97   11.02   10.83   10.66   10.36 
    Book value per common share (GAAP)$17.39  $17.51  $17.46  $17.61  $17.35 
    Tangible book value per share (Non-GAAP) 17.26   17.37   17.32   17.47   17.20 

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