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First Financial Northwest, Inc. Announces First Quarter 2024 Results; Reports Withdrawal from Legacy Defined Benefit Plan and Purchase of Single Premium Group Annuity

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First Financial Northwest, Inc. reported a net loss of $1.1 million for the first quarter of 2024 due to a strategic move to extinguish a legacy defined benefit plan at a cost of $1.2 million. The company also recognized pretax expenses related to a sale to Global Federal Credit Union. Credit quality remained strong, with nonaccrual loans low at $201,000. Despite pressures on deposit rates, net interest margin saw a slight increase. Total deposits decreased due to a managed reduction in higher cost deposits.

First Financial Northwest, Inc. ha registrato una perdita netta di 1,1 milioni di dollari nel primo trimestre del 2024 a causa di una mossa strategica per estinguere un piano di benefici definito legacy, che ha comportato un costo di 1,2 milioni di dollari. La compagnia ha anche riconosciuto delle spese pre-tasse relative alla vendita alla Global Federal Credit Union. La qualità del credito è rimasta elevata, con prestiti inesigibili molto bassi, pari a 201.000 dollari. Nonostante le pressioni sui tassi dei depositi, il margine di interesse netto ha registrato un lieve aumento. I depositi totali sono diminuiti a causa di una riduzione gestita dei depositi a costo più elevato.
First Financial Northwest, Inc. reportó una pérdida neta de 1.1 millones de dólares para el primer trimestre de 2024 debido a una movida estratégica para extinguir un plan de beneficios definidos legado con un costo de 1.2 millones de dólares. La compañía también reconoció gastos antes de impuestos relacionados con una venta a Global Federal Credit Union. La calidad del crédito se mantuvo fuerte, con préstamos no acumulativos bajos a 201,000 dólares. A pesar de las presiones sobre las tasas de depósito, el margen de interés neto experimentó un ligero aumento. Los depósitos totales disminuyeron debido a una reducción gestionada de los depósitos de mayor costo.
First Financial Northwest, Inc.는 2024년 첫 분기에 1.2백만 달러의 비용으로 유산 정의 이득 계획을 소멸시키는 전략적 움직임으로 인해 1.1백만 달러의 순손실을 보고했습니다. 또한 회사는 Global Federal Credit Union에 대한 판매와 관련된 세전 비용을 인식했습니다. 대출 품질은 강세를 유지하며, 비정산 대출은 20만 1천 달러로 낮았습니다. 예금 금리의 압박에도 불구하고 순이자 마진은 소폭 상승했습니다. 총 예금은 고비용 예금의 관리 감소로 인해 감소했습니다.
First Financial Northwest, Inc. a enregistré une perte nette de 1,1 million de dollars pour le premier trimestre de 2024 suite à une décision stratégique d'éteindre un plan d'avantages définis hérité, qui a coûté 1,2 million de dollars. La société a également reconnu des dépenses avant impôts liées à une vente à la Global Federal Credit Union. La qualité du crédit est restée forte, avec des prêts non productifs très bas à 201 000 dollars. Malgré les pressions sur les taux des dépôts, la marge d'intérêt net a légèrement augmenté. Le total des dépôts a diminué en raison d'une réduction gérée des dépôts à coût plus élevé.
First Financial Northwest, Inc. verzeichnete im ersten Quartal 2024 einen Nettoverlust von 1,1 Millionen Dollar aufgrund einer strategischen Entscheidung, einen alten Pensionsplan zu einem Kostenpunkt von 1,2 Millionen Dollar auszulösen. Das Unternehmen erkannte zudem vorsteuerliche Aufwendungen im Zusammenhang mit einem Verkauf an die Global Federal Credit Union an. Die Kreditqualität blieb hoch, mit niedrigen nicht fälligen Krediten von 201.000 Dollar. Trotz Drucks auf die Einlagenzinsen stieg die Nettozinsmarge leicht an. Die Gesamteinlagen nahmen ab, bedingt durch eine gesteuerte Reduktion teurerer Einlagen.
Positive

  • Credit quality remained strong with nonaccrual loans low at $201,000.

  • Net interest margin saw a slight increase to 2.55%.

  • The Bank’s Tier 1 leverage and total capital ratios improved to 10.4% and 16.2%.

Negative

  • A net loss of $1.1 million was reported for the first quarter of 2024.

  • Total deposits decreased due to a reduction in higher cost deposits.

  • Pretax expenses related to the sale to Global Federal Credit Union impacted financials.

Insights

The recent financial release indicates a net loss of $1.1 million for First Financial Northwest, a sharp pivot from the previously reported net gains. This shift is primarily tied to the strategic decision to purchase a single premium group annuity, which has both short-term and long-term consequences for shareholders. Initially, the capital expenditure appears detrimental, especially when juxtaposed with the net gains from previous quarters. However, one must assess whether this liability extinguishment may streamline future expenses and reduce financial risk, potentially strengthening the company's financial position in the long run. Additionally, the recapture of provision for credit losses suggests a recalibration of financial risk assessment, hinting at a more conservative approach in face of shifting market dynamics.

The reported net loss coincides with ongoing preparations for First Financial's sale to Global Federal Credit Union, a move that indicates possible strategic realignment. Despite the loss, the bank's credit quality remains robust, with low nonaccrual loans. This could signal resilience in asset quality amid an uncertain economic climate. The mixed changes in deposit types—a reduction in brokered deposits and an increase in retail certificates—reflect a deliberate management strategy to shift towards more stable funding sources. An investor should note the potential for improved liquidity risk profile and possibly more favorable interest rate risk management due to these changes in the deposit composition.

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,
2024		 Dec 31,
2023		 Mar 31,
2023		 Three
Month
Change		 One
Year
Change
Deposits:(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
demand 		Interest-
bearing
demand		 Savings Money
market 		Certificates
of deposit,
retail		Brokered
deposits		Total
 (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
demand 		Interest-
bearing
demand		 Savings Money
market 		Certificates
of deposit,
retail		Brokered
deposits		Total
 (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)
 
AssetsMar 31,
2024		 Dec 31,
2023		  Mar 31,
2023		 Three
Month
Change		 One
Year
Change
          
Cash 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,
2024		  Dec 31,
2023 		 Mar 31,
2023		 Three
Month
Change		 One
Year
Change
Interest 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, 2024December 31, 2023March 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 capital		 307.2%    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 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
  Mar 31,
2024		   Dec 31,
2023		   Sep 30,
2023		   Jun 30,
2023		   Mar 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


FAQ

What was the net loss reported by First Financial Northwest, Inc. for the first quarter of 2024?

First Financial Northwest, Inc. reported a net loss of $1.1 million for the first quarter of 2024.

What was the reason behind the net loss for First Financial Northwest, Inc. in the first quarter of 2024?

The net loss was due to the strategic move to extinguish a legacy defined benefit plan at a cost of $1.2 million.

How did credit quality fare for First Financial Northwest, Inc. in the first quarter of 2024?

Credit quality remained strong with nonaccrual loans low at $201,000.

What impact did deposit rates have on First Financial Northwest, Inc.'s net interest margin?

Despite pressures on deposit rates, the net interest margin saw a slight increase to 2.55%.

What were the total deposits at First Financial Northwest, Inc. for the first quarter of 2024?

Total deposits decreased due to a managed reduction in higher cost deposits.

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First Financial Northwest, Inc

NASDAQ:FFNW

FFNW Rankings

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FFNW Latest News

Oct 29, 2024
First Financial Northwest, Inc. Reports Third Quarter 2024 Results
Aug 12, 2024
First Financial Northwest, Inc. Announces Receipt of Federal Deposit Insurance Corporation Approval for Transaction with Global Credit Union
Jul 25, 2024
First Financial Northwest, Inc. Reports Net Income of $1.6 Million or $0.17 Per Diluted Share for the Second Quarter Ended June 30, 2024
Jul 19, 2024
First Financial Northwest, Inc. Announces Receipt of Shareholder Approval for Transaction with Global Credit Union
May 28, 2024
First Financial Northwest, Inc. Declares Quarterly Cash Dividend of $0.13 per Share

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