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FFNW First Financial Northwest Inc

21.33
0.00 (0.00%)
Pre Market
Last Updated: 10:04:00
Delayed by 15 minutes
Share Name Share Symbol Market Type
First Financial Northwest Inc NASDAQ:FFNW NASDAQ Common Stock
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.00% 21.33 8.54 30.00 8 10:04:00

First Financial Northwest, Inc. Reports Net Income of $1.2 Million or $0.13 per Diluted Share for the Fourth Quarter and $6.3 Million or $0.69 per Diluted Share for the Year Ended December 31, 2023

25/01/2024 2:10pm

GlobeNewswire Inc.


First Financial Northwest (NASDAQ:FFNW)
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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 December 31, 2023, of $1.2 million, or $0.13 per diluted share, compared to $1.5 million, or $0.16 per diluted share, for the quarter ended September 30, 2023, and $3.2 million, or $0.35 per diluted share, for the quarter ended December 31, 2022. For the year ended December 31, 2023, net income was $6.3 million, or $0.69 per diluted share, compared to net income of $13.2 million, or $1.45 per diluted share, for the year ended December 31, 2022.

“Credit quality remained strong as of year-end with nonperforming assets of $220,000 on a $1.2 billion total loan portfolio. Our analysis of the allowance for credit losses was influenced by various factors during the quarter, including shifts in the balances and composition of the loan portfolio, a credit downgrade from “pass” to “watch” involving a $12.8 million lending relationship secured by mixed-use commercial real estate, and improvements in the unemployment rate forecast. After careful consideration, our analysis concluded that no provision for credit losses was necessary for the quarter,” stated Joseph W. Kiley III, President and CEO.

“Persistently elevated short term interest rates and intense competition have continued to place pressure on deposit rates, impacting our net interest income. Despite these challenges, we continue to actively manage these expenses to the extent possible, while prioritizing maintaining deposit balances and meeting our customers’ needs,” continued Kiley.

“Throughout the fourth quarter of 2023, our focus on cost reduction and operational efficiency yielded a decrease in noninterest expenses. We previously reported that we were in search of a senior C&I lending credit officer. However, in light of the announcement that we have entered into a Purchase and Assumption Agreement with Global Federal Credit Union pursuant to which Global will acquire substantially all of the assets and assume substantially all of the liabilities of the Bank, those hiring plans are currently on hold as we pursue regulatory approval for the sale,” concluded Kiley.

Highlights for the quarter and year ended December 31, 2023:

  • Net loans receivable increased by $7.8 million in the quarter to $1.18 billion at December 31, 2023, on continued strength in our construction/land and one-to-four family residential portfolios, along with modest growth observed in other business and consumer loans.
  • Book value per share was $17.61 at December 31, 2023, compared to $17.35 and $17.57 for September 30, 2023 and December 31, 2022, respectively.
  • Paid regular quarterly cash dividends to shareholders totaling $0.52 per share for the year, an 8.3% increase over the prior year.
  • The Bank’s Tier 1 leverage and total capital ratios were 10.2% and 16.2% at December 31, 2023, compared to 10.3% and 16.0% at September 30, 2023, and 10.3% and 15.6% at December 31, 2022, respectively.
  • Credit quality remained strong with nonperforming assets totaling $220,000, or 0.01% of total assets, and an additional $1.2 million in loans over 30 days past due at December 31, 2023.
  • Based on management’s evaluation of the adequacy of the allowance for credit losses (“ACL”) at December 31, 2023, the Company did not record a provision for credit losses during the quarter, resulting in a net recapture of provision for credit losses of $208,000 for the year. The Company recorded a $434,000 recapture of provision for credit losses for the year ended December 31, 2022.

Deposits totaled $1.19 billion at December 31, 2023, compared to $1.21 billion at September 30, 2023, and $1.17 billion at December 31, 2022. Total deposits decreased $16.3 million for the quarter ended December 31, 2023, compared to the quarter ended September 30, 2023, primarily due to a $45.2 million decrease in brokered deposits and a $7.1 million decrease in demand deposits, partially offset by a $28.2 million increase in money market balances and a $7.7 million increase in retail certificates of deposit. Management continues to consider various sources of funds, including wholesale markets, brokered deposits and the national deposit market to fund its growth. Total deposits were up $24.1 million at December 31, 2023, compared to $1.17 billion at December 31, 2022.

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

 Dec 31,2023 Sep 30,2023 Dec 31,2022 ThreeMonthChange One Year Change
Deposits:(Dollars in thousands)
Noninterest-bearing demand$100,899  $104,164  $119,944  $(3,265) $(19,045)
Interest-bearing demand 56,968   60,816   96,632   (3,848)  (39,664)
Savings 18,886   18,844   23,636   42   (4,750)
Money market 529,411   501,168   542,388   28,243   (12,977)
Certificates of deposit, retail 357,153   349,446   262,554   7,707   94,599 
Brokered deposits 130,790   175,972   124,886   (45,182)  5,904 
Total deposits$1,194,107  $1,210,410  $1,170,040  $(16,303) $24,067 
 

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

December 31, 2023
 Noninterest-bearing demand Interest-bearing demand Savings Money market Certificates 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 
 

September 30, 2023
 Noninterest-bearing demand Interest-bearing demand Savings Money market Certificates of deposit, retailBrokered depositsTotal
 (Dollars in thousands)
King County       
Renton$32,025 $15,316 $12,140 $284,433 $239,940 $- $583,854 
Landing 3,036  1,689  91  16,606  8,934  -  30,356 
Woodinville 2,377  2,425  981  9,016  10,453  -  25,252 
Bothell 3,798  751  35  4,363  2,365  -  11,312 
Crossroads 10,589  4,067  77  28,773  14,460  -  57,966 
Kent 6,665  7,397  4  13,310  7,839  -  35,215 
Kirkland 10,385  1,765  148  12,277  1,174  -  25,749 
Issaquah 1,476  1,966  30  3,719  6,170  -  13,361 
Total King County 70,351  35,376  13,506  372,497  291,335  -  783,065 
Snohomish County       
Mill Creek 5,126  3,474  639  14,069  7,910  -  31,218 
Edmonds 11,817  6,735  950  24,681  14,848  -  59,031 
Clearview 5,497  5,468  1,495  18,896  9,132  -  40,488 
Lake Stevens 3,740  4,567  964  23,657  12,126  -  45,054 
Smokey Point 3,568  3,877  1,272  42,544  11,835  -  63,096 
Total Snohomish County 29,748  24,121  5,320  123,847  55,851  -  238,887 
Pierce County       
University Place 3,176  99  3  3,279  996  -  7,553 
Gig Harbor 889  1,220  15  1,545  1,264  -  4,933 
Total Pierce County 4,065  1,319  18  4,824  2,260  -  12,486 
        
Brokered deposits -  -  -  -  -  175,972  175,972 
        
Total deposits$104,164 $60,816 $18,844 $501,168 $349,446 $175,972 $1,210,410 
 

Net loans receivable totaled $1.18 billion at December 31, 2023, compared to $1.17 billion at both September 30, 2023 and December 31, 2022. During the quarter ended December 31, 2023, new originations of primarily construction/land and one-to-four family residential loans outpaced total loan repayments in the quarter. The average balance of net loans receivable totaled $1.17 billion for both the quarter ended December 31, 2023 and September 30, 2023, compared to $1.15 billion for the quarter ended December 31, 2022. For the year ended December 31, 2023, the average balance of net loans receivable was $1.17 billion, compared to $1.13 billion for the year ended December 31, 2022.

The allowance for credit losses (“ACL”) represented 1.28% of total loans receivable at December 31, 2023, compared to 1.29% at both September 30, 2023 and December 31, 2022.

Nonperforming loans totaled $220,000 at December 31, 2023, compared to $201,000 at September 30, 2023, and $193,000 at December 31, 2022. There was no other real estate owned (“OREO”) at December 31, 2023, September 30, 2023, or December 31, 2022.

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

 Dec 31, Sep 30, Dec 31, Three Month One Year
  2023   2023   2022  Change Change
 (Dollars in thousands)
Nonperforming loans:         
Consumer$220  $201  $193  $19  $27 
Total nonperforming loans 220   201   193   19   27 
          
OREO            
          
Total nonperforming assets$220  $201  $193  $19  $27 
          
Nonperforming assets as a percent         
of total assets 0.01%  0.01%  0.01%    
 

Net interest income totaled $9.3 million for the quarter ended December 31, 2023, down from $9.7 million and $12.4 million for the quarters ended September 30, 2023 and December 31, 2022, respectively. The decrease in the current quarter compared to the quarter ended September 30, 2023, was primarily due to higher interest expense on deposits, reflecting the sustained high levels of short-term interest rates and intense competition for deposits. Since March 2022, the Federal Open Market Committee of the Federal Reserve System has increased the target range for the federal funds rate by 525 basis points to a range of 5.25% to 5.50%. For the year ended December 31, 2023, net interest income totaled $40.5 million, compared to $48.4 million for the year ended December 31, 2022, as the increase in interest expense on liabilities outpaced the increase in interest income on loans and investments.

Total interest income was $20.3 million for the quarter ended December 31, 2023, compared to $19.7 million and $17.3 million for the quarters ended September 30, 2023 and December 31, 2022, respectively. Yield on loans increased to 5.83% during the recent quarter, compared to 5.73% and 5.19% for the quarters ended September 30, 2023, and December 31, 2022, respectively. Yield on investments increased to 4.11% during the current quarter, compared to 3.98% and 3.60% for the quarters ended September 30, 2023, and December 31, 2022, respectively.

Total interest expense was $11.0 million for the quarter ended December 31, 2023, up from $10.0 million and $4.9 million for the quarters ended September 30, 2023 and December 31, 2022, respectively. The average cost of interest-bearing deposits was 3.62% for the quarter ended December 31, 2023, compared to 3.33% and 1.51% for the quarters ended September 30, 2023 and December 31, 2022, respectively. The increase from the quarter ended September 30, 2023, was due primarily to increased interest expense on money market and certificate of deposit balances along with the maturity of brokered deposits with lower rates that were entered into during a lower rate environment. Advances from the FHLB totaled $125.0 million at both December 31, 2023 and September 30, 2023, compared to $145.0 million at December 31, 2022. At December 31, 2023, $115.0 million of our $125.0 million of 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 36 months and a weighted average fixed interest rate of 1.87% as of December 31, 2023. The average cost of borrowings was 2.40% for the quarter ended December 31, 2023, compared to 2.42% and 2.46% for the quarters ended September 30, 2023 and December 31, 2022, respectively.

The net interest margin was 2.54% for the quarter ended December 31, 2023, down from 2.69% and 3.52% for the quarters ended September 30, 2023 and December 31, 2022, respectively. The decrease compared to the quarter ended September 30, 2023, was due primarily to the increase in the cost of interest-bearing liabilities outpacing the yields on interest-earnings assets. The average cost of interest-bearing liabilities increased 26 basis points to 3.50% during the quarter, from 3.24% during the quarter ended September 30, 2023, and increased 187 basis points from 1.63% during the quarter ended December 31, 2022, while the average yield on interest-earning assets increased 10 basis points to 5.56% during the fourth quarter of 2023, from 5.46% during the quarter ended September 30, 2023, and increased 66 basis points from 4.90% during the quarter ended December 31, 2022. The decline in the net interest margin in the current quarter was due in large part to the maturity of lower cost retail and brokered certificates of deposit, repricing in a higher interest rate environment. The net interest margin for the month of December 2023 was 2.52%.

Noninterest income for the quarter ended December 31, 2023, totaled $633,000, down from $677,000 and $720,000 for the quarters ended September 30, 2023 and December 31, 2022, respectively. The decrease compared to the quarter ended September 30, 2023, was primarily due to a $30,000 decrease in other noninterest income related to our fintech focused venture capital investment and lower loan and deposit related fees, partially offset by increases in wealth management revenue and BOLI income. The decrease in the quarter ended December 31, 2023, as compared to the quarter ended December 31, 2022, primarily reflects reduced loan related fees and the absence of a net gain on sale of investments, partially offset by higher BOLI income and wealth management revenue. Noninterest income declined $474,000 to $2.8 million for the year ended December 31, 2023, from $3.2 million for the year ended December 31, 2022, due primarily to a $644,000 decline in loan related fees due largely to a $495,000 decline in loan prepayment penalties, along with a $59,000 decline in wealth management revenue, partially offset by increases in other noninterest and BOLI income.

Noninterest expense totaled $8.4 million for the quarter ended December 31, 2023, down from $8.8 million and $8.7 million for the quarters ended September 30, 2023 and December 31, 2022, respectively. The decrease compared to the quarter ended September 30, 2023, was primarily due to decreases of $196,000 in salaries and employee benefits and $122,000 in professional fees. The decline in salaries and employee benefit expenses was due primarily to the reversal of $250,000 in incentive accruals following an analysis of the metrics impacting employee incentives for the year, compared to no incentive accrual activity in the quarter ended September 30, 2023. The decrease compared to the quarter ended December 31, 2022, was primarily due to decreases of $176,000 in professional fees, $155,000 in salaries and employee benefits and $153,000 in other general and administrative expenses, partially offset by increases of $88,000 in regulatory assessments, $84,000 in data processing and $76,000 in occupancy and equipment expenses. Noninterest expense totaled $35.7 million for the year ended December 31, 2023, compared to $35.6 million for the year ended December 31, 2022. The moderate increase year over was due primarily to an increase in regulatory assessments and other general and administrative expenses, partially offset by declines in salaries and employee benefits 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. 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: 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 estimate in determining 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.

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

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIESConsolidated Balance Sheets(Dollars in thousands, except share data)(Unaudited)
 
Assets Dec 31, 2023  Sep 30,2023  Dec 31,2022 ThreeMonthChange OneYearChange
          
Cash on hand and in banks$8,391  $8,074  $7,722  3.9% 8.7%
Interest-earning deposits with banks 22,138   49,618   16,598  (55.4) 33.4 
Investments available-for-sale, at fair value 207,915   204,975   217,778  1.4  (4.5)
Investments held-to-maturity, at amortized cost 2,456   2,450   2,444  0.2  0.5 
Loans receivable, net of allowance of $15,306, $15,306, and $15,227 respectively 1,175,925   1,168,079   1,167,083  0.7  0.8 
Federal Home Loan Bank ("FHLB") stock, at cost 6,527   6,803   7,512  (4.1) (13.1)
Accrued interest receivable 7,359   7,263   6,513  1.3  13.0 
Deferred tax assets, net 2,648   3,156   2,597  (16.1) 2.0 
Premises and equipment, net 19,667   19,921   21,192  (1.3) (7.2)
Bank owned life insurance ("BOLI"), net 37,653   37,398   36,286  0.7  3.8 
Prepaid expenses and other assets 10,478   13,673   12,479  (23.4) (16.0)
Right of use asset ("ROU"), net 2,617   2,818   3,275  (7.1) (20.1)
Goodwill 889   889   889  0.0  0.0 
Core deposit intangible, net 419   451   548  (7.1) (23.5)
Total assets$1,505,082  $1,525,568  $1,502,916  (1.3) 0.1 
          
Liabilities and Stockholders' Equity         
          
Deposits         
Noninterest-bearing deposits$100,899  $104,164  $119,944  (3.1) (15.9)
Interest-bearing deposits 1,093,208   1,106,246   1,050,096  (1.2) 4.1 
Total deposits 1,194,107   1,210,410   1,170,040  (1.3) 2.1 
Advances from the FHLB 125,000   125,000   145,000  0.0  (13.8)
Advance payments from borrowers for taxes and insurance 2,952   4,760   3,051  (38.0) (3.2)
Lease liability, net 2,806   3,011   3,454  (6.8) (18.8)
Accrued interest payable 2,739   2,646   328  3.5  735.1 
Other liabilities 15,818   20,506   20,683  (22.9) (23.5)
Total liabilities 1,343,422   1,366,333   1,342,556  (1.7) 0.1 
          
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 9,179,510 shares at December 31, 2023, 9,179,510 shares at September 30, 2023, and 9,127,595 shares at December 31, 2022 92   92   91  0.0  1.1 
Additional paid-in capital 73,035   72,926   72,424  0.1  0.8 
Retained earnings 96,206   96,206   95,059  0.0  1.2 
Accumulated other comprehensive loss, net of tax (7,673)  (9,989)  (7,214) (23.2) 6.4 
Total stockholders' equity 161,660   159,235   160,360  1.5  0.8 
Total liabilities and stockholders' equity$1,505,082  $1,525,568  $1,502,916  (1.3)% 0.1%
 

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIESConsolidated Income Statements(Dollars in thousands, except share data)(Unaudited)
 
 Quarter Ended    
 Dec 31,2023  Sep 30,2023  Dec 31,2022  ThreeMonthChange   OneYearChange
Interest income         
Loans, including fees$17,143  $16,918  $15,042  1.3% 14.0%
Investments 2,143   2,118   2,007  1.2  6.8 
Interest-earning deposits with banks 880   525   205  67.6  329.3 
Dividends on FHLB Stock 121   113   89  7.1  36.0 
Total interest income 20,287   19,674   17,343  3.1  17.0 
Interest expense         
Deposits 10,281   9,205   3,972  11.7  158.8 
FHLB advances and other borrowings 731   766   928  (4.6) (21.2)
Total interest expense 11,012   9,971   4,900  10.4  124.7 
Net interest income 9,275   9,703   12,443  (4.4) (25.5)
(Recapture of provision) provision for credit losses -   (300)  486  (100.0) (100.0)
Net interest income after (recapture of provision) provision for credit losses 9,275   10,003   11,957  (7.3) (22.4)
          
Noninterest income         
Net gain on sale of investments -   -   27  n/a  (100.0)
BOLI income 255   244   222  4.5  14.9 
Wealth management revenue 60   53   36  13.2  66.7 
Deposit related fees 234   247   231  (5.3) 1.3 
Loan related fees 60   79   172  (24.1) (65.1)
Other 24   54   32  (55.6) (25.0)
Total noninterest income 633   677   720  (6.5) (12.1)
          
Noninterest expense         
Salaries and employee benefits 4,822   5,018   4,977  (3.9) (3.1)
Occupancy and equipment 1,231   1,193   1,155  3.2  6.6 
Professional fees 431   553   607  (22.1) (29.0)
Data processing 718   742   634  (3.2) 13.2 
Regulatory assessments 196   200   108  (2.0) 81.5 
Insurance and bond premiums 113   111   111  1.8  1.8 
Marketing 70   97   77  (27.8) (9.1)
Other general and administrative 858   856   1,011  0.2  (15.1)
Total noninterest expense 8,439   8,770   8,680  (3.8) (2.8)
Income before federal income tax provision 1,469   1,910   3,997  (23.1) (63.2)
Federal income tax provision 275   409   771  (32.8) (64.3)
Net income$1,194  $1,501  $3,226  (20.5)% (63.0)%
          
Basic earnings per share$0.13  $0.16  $0.35     
Diluted earnings per share$0.13  $0.16  $0.35     
Weighted average number of common shares outstanding 9,151,892   9,127,568   9,073,323     
Weighted average number of diluted shares outstanding 9,176,724   9,150,059   9,149,044     
                

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIESConsolidated Income Statements(Dollars in thousands, except share data)(Unaudited)
 
 Year Ended December 31,  
  2023   2022   OneYearChange
Interest income     
Loans, including fees$66,938  $52,935  26.5%
Investments 8,474   5,603  51.2 
Interest-earning deposits with banks 2,261   386  485.8 
Dividends on FHLB Stock 485   318  52.5 
Total interest income 78,158   59,242  31.9 
Interest expense     
Deposits 34,407   8,955  284.2 
FHLB advances 3,208   1,934  65.9 
Total interest expense 37,615   10,889  245.4 
Net interest income 40,543   48,353  (16.2)
Recapture of provision for credit losses (208)  (434) (52.1)
Net interest income after recapture of provision for credit losses 40,751   48,787  (16.5)
      
Noninterest income     
Net gain on sale of investments -   27  (100.0)
BOLI 1,081   1,004  7.7 
Wealth management revenue 253   312  (18.9)
Deposit accounts related fees 956   936  2.1 
Loan related fees 275   919  (70.1)
Other 208   49  324.5 
Total noninterest income 2,773   3,247  (14.6)
      
Noninterest expense     
Salaries and employee benefits 20,366   21,133  (3.6)
Occupancy and equipment 4,748   4,776  (0.6)
Professional fees 2,288   2,339  (2.2)
Data processing 2,857   2,678  6.7 
Regulatory assessments 763   403  89.3 
Insurance and bond premiums 468   464  0.9 
Marketing 343   303  13.2 
Other general and administrative 3,833   3,529  8.6 
Total noninterest expense 35,666   35,625  0.1 
Income before federal income tax provision 7,858   16,409  (52.1)
Federal income tax provision 1,553   3,169  (51.0)
Net income$6,305  $13,240  (52.4)%
      
Basic earnings per share$0.69  $1.47   
Diluted earnings per share$0.69  $1.45   
Weighted average number of common shares outstanding 9,126,209   9,006,369   
Weighted average number of diluted shares outstanding 9,152,617   9,102,283   
          

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

 December 31, 2023September 30, 2023December 31, 2022
 Amount Percent Amount Percent Amount Percent
 (Dollars in thousands)
Commercial real estate:           
Residential:           
Multifamily$138,149  11.6% $140,022  11.7% $126,866  10.7%
Total multifamily residential 138,149  11.6   140,022  11.7   126,866  10.7 
            
Non-residential:           
Office 72,778  6.1   72,773  6.1   84,301  7.1 
Retail 124,172  10.4   130,101  11.0   132,917  11.3 
Mobile home park 21,701  1.8   21,285  1.8   25,283  2.1 
Hotel / motel 63,597  5.3   63,954  5.4   55,408  4.7 
Nursing Home 11,610  1.0   11,676  1.0   12,348  1.0 
Warehouse 19,218  1.6   19,446  1.6   19,917  1.7 
Storage 33,033  2.8   33,229  2.8   33,797  2.9 
Other non-residential 31,750  2.6   42,227  3.7   43,933  3.7 
Total non-residential 377,859  31.6   394,691  33.4   407,904  34.5 
            
Construction/land:           
One-to-four family residential 47,149  4.0   43,532  3.7   52,492  4.5 
Multifamily 4,004  0.3   2,043  0.2   15,393  1.3 
Land development 9,771  0.8   9,766  0.8   9,759  0.8 
Total construction/land 60,924  5.1   55,341  4.7   77,644  6.6 
            
One-to-four family residential:           
Permanent owner occupied 228,752  19.2   260,970  22.1   232,869  19.7 
Permanent non-owner occupied 284,471  23.9   232,238  19.6   241,311  20.4 
Total one-to-four family residential 513,223  43.1   493,208  41.7   474,180  40.1 
            
Business           
Aircraft 1,945  0.1   1,981  0.2   2,087  0.2 
Small Business Administration ("SBA") 1,794  0.3   1,810  0.3   514  0.1 
Paycheck Protection Plan ("PPP") 473  0.0   551  0.0   783  0.1 
Other business 24,869  2.1   23,633  1.9   27,979  2.3 
Total business 29,081  2.5   27,975  2.4   31,363  2.7 
            
Consumer           
Classic, collectible and other auto 58,618  5.0   59,955  5.1   55,838  4.7 
Other consumer 13,377  1.1   12,193  1.0   8,515  0.7 
Total consumer 71,995  6.1   72,148  6.1   64,353  5.4 
            
Total loans 1,191,231  100.0%  1,183,385  100.0%  1,182,310  100.0%
Less:           
ACL 15,306     15,306     15,227   
Loans receivable, net$1,175,925    $1,168,079    $1,167,083   
            
Concentrations of credit: (1)           
Construction loans as % of total capital 38.3%    37.8%    53.1%  
Total non-owner occupied commercial real estate as % of total capital 316.8%    328.1%    346.9%  
                  
(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 SUBSIDIARIESKey Financial Measures(Unaudited)
 
 At or For the Quarter Ended
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
  2023   2023   2023   2023   2022 
 (Dollars in thousands, except per share data)
Performance Ratios: (1)         
Return on assets 0.31%  0.39%  0.39%  0.57%  0.86%
Return on equity 2.97   3.71   3.74   5.31   8.04 
Dividend payout ratio 100.00   79.26   79.90   56.52   34.29 
Equity-to-assets ratio 10.74   10.44   10.39   10.14   10.67 
Tangible equity ratio (2) 10.66   10.36   10.31   10.06   10.58 
Net interest margin 2.54   2.69   2.84   3.22   3.52 
Average interest-earning assets to average interest-bearing liabilities 115.84   116.94   116.27   117.78   117.93 
Efficiency ratio 85.17   84.49   85.57   75.12   65.94 
Noninterest expense as a percent of average total assets 2.18   2.29   2.50   2.42   2.30 
Book value per common share$17.61  $17.35  $17.35  $17.45  $17.57 
Tangible book value per share (2) 17.47   17.20   17.20   17.30   17.41 
          
Capital Ratios: (3)         
Tier 1 leverage ratio 10.18%  10.25%  10.02%  10.24%  10.31%
Common equity tier 1 capital ratio 14.90   14.75   14.49   14.33   14.37 
Tier 1 capital ratio 14.90   14.75   14.49   14.33   14.37 
Total capital ratio 16.15   16.00   15.75   15.59   15.62 
          
Asset Quality Ratios: (4)         
Nonperforming loans as a percent of total loans 0.02%  0.02%  0.02%  0.02%  0.02%
Nonperforming assets as a percent of total assets 0.01   0.01   0.01   0.01   0.01 
ACL as a percent of total loans 1.28   1.29   1.31   1.33   1.29 
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$15,306  $15,606  $16,028  $15,227  $14,726 
Beginning balance adjustment from adoption of Topic 326 -   -   -   500   - 
(Recapture of provision) provision -   (300)  (400)  300   500 
Charge-offs -   -   (22)  -   - 
Recoveries -   -   -   1   1 
ACL, end of the quarter$15,306  $15,306  $15,606  $16,028  $15,227 
 
(1) Performance ratios are calculated on an annualized basis.
(2) Tangible equity and tangible assets exclude goodwill and core deposit intangible assets. 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 SUBSIDIARIESKey Financial Measures(Unaudited)
 
 At or For the Quarter Ended
 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
  2023   2023   2023   2023   2022 
 (Dollars in thousands)
Yields and Costs: (1)         
Yield on loans 5.83%  5.73%  5.71%  5.56%  5.19%
Yield on investments 4.11   3.98   3.93   3.88   3.60 
Yield on interest-earning deposits 5.32   5.18   4.91   4.40   3.31 
Yield on FHLB stock 7.29   6.57   7.06   7.30   4.58 
Yield on interest-earning assets 5.56%  5.46%  5.43%  5.29%  4.90%
          
Cost of interest-bearing deposits 3.62%  3.33%  3.06%  2.41%  1.51%
Cost of borrowings 2.40   2.42   2.55   2.69   2.46 
Cost of interest-bearing liabilities 3.50%  3.24%  3.01%  2.44%  1.63%
          
Cost of total deposits 3.31%  3.03%  2.78%  2.17%  1.36%
Cost of funds 3.23   2.97   2.76   2.23   1.48 
          
Average Balances:         
Loans$1,167,339  $1,171,483  $1,182,939  $1,168,539  $1,150,181 
Investments 206,837   211,291   215,113   219,969   221,113 
Interest-earning deposits 65,680   40,202   50,691   21,729   24,608 
FHLB stock 6,584   6,820   6,814   7,219   7,710 
Total interest-earning assets$1,446,440  $1,429,796  $1,455,557  $1,417,456  $1,403,612 
          
Interest-bearing deposits$1,127,690  $1,097,324  $1,126,598  $1,065,827  $1,040,357 
Borrowings 120,978   125,402   125,275   137,600   149,946 
Total interest-bearing liabilities$1,248,668  $1,222,726  $1,251,873  $1,203,427  $1,190,303 
Noninterest-bearing deposits 102,869   109,384   111,365   115,708   121,518 
Total deposits and borrowings$1,351,537  $1,332,110  $1,363,238  $1,319,135  $1,311,821 
          
Average assets$1,538,955  $1,522,224  $1,547,321  $1,509,297  $1,496,125 
Average stockholders' equity 159,659   160,299   159,764   162,016   159,120 
                    
(1) Yields and costs are annualized.
                    

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIESKey Financial Measures(Unaudited)
 
 At or For the Year Ended December 31,
  2023   2022   2021   2020   2019 
   (Dollars in thousands, except per share data) 
Performance Ratios:         
Return on assets 0.41%  0.91%  0.86%  0.63%  0.80%
Return on equity 3.93   8.34   7.65   5.50   6.73 
Dividend payout ratio 75.36   32.65   33.59   45.45   33.65 
Equity-to-assets ratio 10.74   10.67   11.07   11.26   11.65 
Tangible equity ratio (1) 10.66   10.58   10.97   11.15   11.53 
Net interest margin 2.82   3.54   3.35   3.15   3.19 
Average interest-earning assets to average interest-bearing liabilities 116.69   119.18   118.59   115.62   113.44 
Efficiency ratio 82.34   69.04   68.32   72.39   70.66 
Noninterest expense as a percent of average total assets 2.33   2.44   2.35   2.39   2.35 
Book value per common share$17.61  $17.57  $17.30  $16.05  $15.25 
Tangible book value per share (1) 17.47   17.41   17.13   15.88   15.07 
          
Capital Ratios: (2)         
Tier 1 leverage ratio 10.18%  10.31%  10.34%  10.29%  10.27%
Common equity tier 1 capital ratio 14.90   14.37   14.23   14.32   13.13 
Tier 1 capital ratio 14.90   14.37   14.23   14.32   13.13 
Total capital ratio 16.15   15.62   15.48   15.57   14.38 
          
Asset Quality Ratios: (3)         
Nonperforming loans as a percent of total loans 0.02%  0.02%  0.00%  0.19%  0.01%
Nonperforming assets as a percent of total assets 0.01   0.01   0.00   0.18   0.04 
ACL as a percent of total loans 1.28   1.29   1.40   1.36   1.18 
Net charge-offs (recoveries) to average loans receivable, net 0.00   0.00   (0.02)  (0.00)  (0.02)
          
Allowance for Credit Losses:         
ACL, beginning of the year$15,227  $15,657  $15,174  $13,218  $13,347 
Beginning balance adjustment from adoption of Topic 326 500   -   -   -   - 
(Recapture of provision) provision (400)  (400)  300   1,900   (300)
Charge-offs (22)  (37)  -   (2)  - 
Recoveries 1   7   183   58   171 
ACL, end of the year$15,306  $15,227  $15,657  $15,174  $13,218 
 
(1) Tangible equity and tangible assets exclude goodwill and core deposit intangible assets. Tangible equity, tangible, 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.
(2) Capital ratios are for First Financial Northwest Bank only.
(3) Loans are reported net of undisbursed funds.
 

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIESKey Financial Measures (continued)(Unaudited)
 
 At or For the Year Ended December 31,
  2023   2022   2021   2020    2019 
 (Dollars in thousands)
Yields and Costs:         
Yield on loans 5.71%  4.69%  4.57%  4.69%  5.15%
Yield on investments 3.97   2.77   1.83   2.39   3.11 
Yield on interest-earning deposits 5.06   1.28   0.12   0.21   2.15 
Yield on FHLB stock 7.07   5.08   5.29   4.85   5.42 
Yield on interest-earning assets 5.44%  4.33%  4.01%  4.36%  4.88%
          
Cost of deposits 3.12%  0.87%  0.71%  1.42%  1.90%
Cost of borrowings 2.52   1.70   1.39   1.31   2.09 
Cost of interest-bearing liabilities 3.05%  0.95%  0.78%  1.41%  1.92%
          
Cost of interest-bearing deposits 2.83%  0.77%  0.64%  1.32%  1.81%
Cost of funds 2.80   0.86   0.71   1.32   1.84 
          
Average Balances:         
Loans$1,172,569  $1,128,835  $1,098,772  $1,120,889  $1,061,367 
Investments 213,261   203,165   176,110   133,584   139,354 
Interest-earning deposits 44,684   30,176   60,482   25,108   13,634 
FHLB stock 6,857   6,256   6,271   6,600   6,684 
Total interest-earning assets$1,437,371  $1,368,432  $1,341,635  $1,286,181  $1,221,039 
          
Interest-bearing deposits$1,104,510  $1,034,351  $1,015,852  $987,069  $946,484 
Borrowings 127,263   113,890   115,466   125,392   129,899 
Total interest-bearing liabilities$1,231,773  $1,148,241  $1,131,318  $1,112,461  $1,076,383 
Noninterest-bearing deposits 109,795   125,166   112,484   75,388   48,434 
Total deposits and borrowings$1,341,568  $1,273,407  $1,243,802  $1,187,849  $1,124,817 
          
Average assets$1,529,511  $1,455,739  $1,421,476  $1,361,604  $1,294,164 
Average stockholders' equity 160,428   158,685   160,041   155,587   154,092 
                    

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 tables provide a reconciliation between the GAAP and non-GAAP measures:

                    
 Quarter Ended
  Dec 31,2023   Sep 30,2023   Jun 30,2023   Mar 31,2023   Dec 31, 2022 
 (Dollars in thousands, except per share data)
Tangible equity to tangible assets and tangible book value per share:
                    
Total stockholders' equity (GAAP)$161,660  $159,235  $158,715  $159,645  $160,360 
Less:         
Goodwill 889   889   889   889   889 
Core deposit intangible, net 419   451   484   516   548 
Tangible equity (Non-GAAP)$160,352  $157,895  $157,342  $158,240  $158,923 
          
Total assets (GAAP)$1,505,082  $1,525,568  $1,528,079  $1,574,271  $1,502,916 
Less:         
Goodwill 889   889   889   889   889 
Core deposit intangible, net 419   451   484   516   548 
Tangible assets (Non-GAAP)$1,503,774  $1,524,228  $1,526,706  $1,572,866  $1,501,479 
          
Common shares outstanding at period end 9,179,510   9,179,510   9,148,086   9,148,086   9,127,595 
          
Equity-to-assets ratio (GAAP) 10.74%  10.44%  10.39%  10.14%  10.67%
Tangible equity-to-tangible assets ratio (Non-GAAP) 10.66   10.36   10.31   10.06   10.58 
Book value per common share (GAAP)$17.61  $17.35  $17.35  $17.45  $17.57 
Tangible book value per share (Non-GAAP) 17.47   17.20   17.20   17.30   17.41 
                    

 Year Ended December 31,
  2023   2022   2021   2020   2019 
 (Dollars in thousands, except per share data)
Tangible equity to tangible assets and tangible book value per share:
                    
Total stockholders' equity (GAAP)$161,660  $160,360  $157,879  $156,302  $156,319 
Less:         
Goodwill 889   889   889   889   889 
Core deposit intangible 419   548   684   824   968 
Tangible equity (Non-GAAP)$160,352  $158,923  $156,306  $154,589  $154,462 
          
Total assets (GAAP) 1,505,082   1,502,916   1,426,329   1,387,669   1,341,885 
Less:         
Goodwill 889   889   889   889   889 
Core deposit intangible 419   548   684   824   968 
Tangible assets (Non-GAAP)$1,503,774  $1,501,479  $1,424,756  $1,385,956  $1,340,028 
          
Common shares outstanding at period end 9,179,510   9,127,595   9,125,759   9,736,875   10,252,953 
          
Equity-to-assets ratio (GAAP) 10.74%  10.67%  11.07%  11.26%  11.65%
Tangible equity ratio (Non-GAAP) 10.66   10.58   10.97   11.15   11.53 
Book value per common share (GAAP)$17.61  $17.57  $17.30  $16.05  $15.25 
Tangible book value per share (Non-GAAP) 17.47   17.41   17.13   15.88   15.07 
                    

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