Liberty Northwest Bancorp, Inc. Announces 2023 Second Quarter Financial Results

2023 Second Quarter Financial Highlights:

• Total assets were $187.1 million at quarter end.
• Asset quality is excellent with zero nonperforming assets at quarter end.
• Total deposits increased to $ 140.5 million at quarter end.
• Net interest margin of 2.51% for the second quarter.
• Tangible book value per share increased to $7.68 at quarter end.
  

POULSBO, Wash., July 28, 2023 (GLOBE NEWSWIRE) -- Liberty Northwest Bancorp, Inc. (OTCQX: LBNW) (the “Company”) and its wholly-owned subsidiary Liberty Bank today announced earnings of $18 thousand for the second quarter ended June 30, 2023, compared to $165 thousand reported in the second quarter ended June 30, 2022. In the first six months of 2023, net income was $27 thousand, compared to $204 thousand the same period in 2022.

Total assets increased to $187.1 million as of June 30, 2023, compared to $186.0 million at June 30, 2022. Net loans totaled $138.6 million as of June 30, 2023, compared to $139.8 million at March 31, 2023 and $144.8 million a year ago. Loan demand has tapered off compared to a year ago and was impacted by loan payoffs.

Asset quality improved during the quarter, with no non-performing assets as of June 30, 2023. The allowance for credit losses totaled $1.25 million as of June 30, 2023, and was 0.90% of total loans outstanding. The Company recorded a loan loss recovery of $18 thousand during the quarter. The Company recorded a $50 thousand reversal to its provision for credit losses in the second quarter of 2023, compared to a $30 thousand provision in the first quarter of 2023 and a $75 thousand provision in the second quarter of 2022 as a result of improved credit metrics and performance.

Total deposits increased to $140.5 million at June 30, 2023 compared to $139.1 million at March 31, 2023 and decreased compared to $164.5 million a year earlier. Non-interest bearing demand accounts represented 30.9%, interest bearing demand represented 18.0%, money market and savings accounts comprised 26.6% and certificates of deposit made up 24.5% of the total deposit portfolio at June 30, 2023.

“Deposit growth and pricing remained an industrywide challenge during the second quarter, and we have not been immune to the effects of the Federal Reserve’s tightening monetary policy. Consistent with the rest of the banking industry, we experienced net interest margin contraction during the quarter due to pressure on funding costs,” said Rick Darrow, Liberty Northwest Bancorp, Inc. President and Chief Executive Officer. “We are taking actions to position our balance sheet to mitigate net interest margin compression and anticipate benefitting from rising interest rates in the near term. In addition, we continue to look for opportunities to grow our client base and take advantage of recent market disruptions.”

The Company’s net interest margin was 2.51% for the second quarter of 2023, compared to 2.62% for the preceding quarter, and 3.28% for the second quarter of 2022. For the first six months of 2023, the net interest margin was 2.56%, compared to 3.13% for the first six months of 2022.

Total non-interest income was $130 thousand for the second quarter of 2023, compared to $36 thousand in the second quarter a year ago. The year-over-year 258% increase was primarily due to an increase in referral income. For the first six months of 2023, non-interest income increased to $260 thousand, compared to $105 thousand for the first six months of 2022, an increase of $ 155 thousand or 147%.

Total noninterest expense was $1.27 million for the second quarter of 2023, an increase of $76 thousand, or 6.0%, from the second quarter a year ago. Compensation and benefits costs increased by $37 thousand, or 5.0%, over the prior year quarter. During the fourth quarter of 2022, the Company opened its new headquarters in Poulsbo. The banking center is in a desirable location in Poulsbo and is large enough to accommodate future growth for the bank well into the next decade. Occupancy costs increased by 12.0% from prior quarter of last year. Year-to-date, total noninterest expense decreased $20 thousand, or 1.0%, to $2.5 million, over the same period in 2022.

Capital ratios continue to exceed regulatory requirements, with a total risk-based capital ratio at 15.48% substantially above well-capitalized regulatory requirements. The tangible book value per share was $7.68 at quarter end, compared to $7.45 a year earlier.

The Company reported the level of uninsured deposits at quarter end was approximately 29% at June 30, 2023, compared to 27% three months earlier, excluding the collateralized portion of public deposits.

“Our brand of community banking is being well received in the markets that we serve, and we will continue to work to create value for our shareholders and our customers,” said Darrow. “Ultimately, we are proud to have created the ability to provide shareholders greater access to liquidity and increased market value transparency. With a strong capital position, a diversified balance sheet, ample liquidity and excellent credit quality, we believe we have a solid foundation upon which to continue to improve our financial performance.”

About Liberty Northwest Bancorp, Inc.
Liberty Northwest Bancorp, Inc. is the bank holding company for Liberty Bank, a commercial bank chartered in the State of Washington. The Bank began operations June 11, 2009, and operates a full-service branch in Poulsbo, WA in addition to a loan production office in Bellevue, WA. The Bank provides loan and deposit services to predominantly small and middle-sized businesses and individuals in and around Kitsap and King counties. The Bank is subject to regulation by the State of Washington Department of Financial Institutions and the Federal Deposit Insurance Corporation (FDIC). For more information, please visit www.libertybanknw.com. Liberty Northwest Bancorp, Inc. (OTCQX: LBNW), qualified to trade on the OTCQX® Best Market in June 2022. For information related to the trading of LBNW, please visit www.otcmarkets.com.

For further discussion, please contact the following:
Rick Darrow, Chief Executive Officer | 360-394-4750
Joel Keller, Chief Financial Officer | 360-394-4752

Forward-Looking Statement Safe Harbor: This news release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Forward-looking statements describe Liberty Northwest Bancorp, Inc.’s projections, estimates, plans and expectations of future results and can be identified by words such as “believe,” “intend,” “estimate,” “likely,” “anticipate,” “expect,” “looking forward,” and other similar expressions. They are not guarantees of future performance. Actual results may differ materially from the results expressed in these forward-looking statements, which because of their forward-looking nature, are difficult to predict. Investors should not place undue reliance on any forward-looking statement, and should consider factors that might cause differences including but not limited to the degree of competition by traditional and nontraditional competitors, declines in real estate markets, an increase in unemployment or sustained high levels of unemployment; changes in interest rates; greater than expected costs to integrate acquisitions, adverse changes in local, national and international economies; changes in the Federal Reserve’s actions that affect monetary and fiscal policies; changes in legislative or regulatory actions or reform, including without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act; demand for products and services; changes to the quality of the loan portfolio and our ability to succeed in our problem-asset resolution efforts; the impact of technological advances; changes in tax laws; and other risk factors. Liberty Northwest Bancorp, Inc. undertakes no obligation to publicly update or clarify any forward-looking statement to reflect the impact of events or circumstances that may arise after the date of this release.

STATEMENTS OF INCOME (Unaudited)
(Dollars in thousands)
			Quarter Ended June 30, 2023				Quarter Ended March 31, 2023				Three Month Change			Quarter Ended June 30, 2022				One Year Change			Year to Date June 30, 2023				Year to Date June 30, 2022				One Year Change
Interest Income
Loans			$	1,783			$	1,686			6	%		$	1,508			18	%		$	3,469			$	2,854			22	%
Interest bearing deposits in banks				82				41			100	%			16			402	%			123				27			362	%
Securities				114				110			4	%			90			26	%			224				180			24	%
Total interest income				1,979				1,856			7	%			1,614			23	%			3,835				3,061			25	%
Interest Expense
Deposits				515				425			21	%			74			596	%			940				134			600	%
Other Borrowings				352				308			15	%			100			253	%			660				201			229	%
Total interest expense				867				733			18	%			174			399	%			1,600				335			378	%
Net Interest Income				1,112				1,123			-1	%			1,441			-23	%			2,234				2,726			-18	%
Provision for Loan Losses				(50	)			30			-267	%			75			-167	%			(20	)			90			-122	%
Net interest income after provision for loan losses				1,162				1,093			6	%			1,366			-15	%			2,254				2,636			-14	%
Non-Interest Income
Service charges on deposit accounts				18				15			18	%			11			55	%			33				24			39	%
Other non-interest income				112				115			-3	%			25			353	%			227				81			179	%
Total non-interest income				130				130			-0	%			36			258	%			260				105			147	%
Non-Interest Expense
Salaries and employee benefits				720				693			4	%			683			5	%			1,412				1,444			-2	%
Occupancy and equipment expenses				158				141			12	%			141			12	%			299				291			3	%
Other operating expenses				391				359			9	%			368			6	%			752				748			1	%
Total non-interest expenses				1,269				1,193			6	%			1,193			6	%			2,463				2,483			-1	%
Net Income Before Income Tax				23				12			97	%			209			-89	%			35				258			-87	%
Provision for Income Tax				(5	)			(2	)		97	%			(44	)		-89	%			(7	)			(54	)		-87	%
Net Income			$	18			$	9			97	%		$	165			-89	%		$	27			$	204			-87	%

BALANCE SHEETS (Unaudited)
(Dollars in thousands)
			June 30, 2023				March 31, 2023				Three Month Change			June 30, 2022				One Year Change
Assets
	Cash and due from Banks		$	2,352			$	2,574			-9	%		$	4,381			-46	%
	Interest bearing deposits in banks			12,674				9,468			34	%			4,524			180	%
	Securities			23,069				23,793			-3	%			24,769			-7	%
	Loans			139,844				141,085			-1	%			146,375			-4	%
	Allowance for loan losses			(1,252	)			(1,284	)		-2	%			(1,615	)		-22	%
	Net Loans			138,592				139,801			-1	%			144,759			-4	%
	Premises and fixed assets			6,615				6,689			-1	%			5,580			19	%
	Accrued Interest receivable			642				644			-0	%			618			4	%
	Intangible assets			52				59			-11	%			78			-33	%
	Other assets			3,107				2,429			28	%			1,316			136	%
	Total Assets		$	187,104			$	185,457			1	%		$	186,026			1	%
Liabilities and Shareholders' Equity
	Deposits
	Demand, non-interest bearing		$	43,382			$	42,214			3	%		$	52,799			-18	%
	Interest Bearing Demand			25,288				23,733			7	%			38,042			-34	%
	Money Market and Savings			37,339				36,643			2	%			59,974			-38	%
	Certificates of Deposit			34,476				36,485			-6	%			13,700			152	%
	Total Deposits			140,486				139,074			1	%			164,516			-15	%
	Total Borrowing			33,415				33,407			0	%			8,884			276	%
	Accrued interest payable			238				108			120	%			72			232	%
	Other liabilities			365				413			-11	%			348			5	%
	Total Liabilities			174,504				173,002			1	%			173,820			0	%
	Shareholders' Equity
	Common Stock			1,638				1,633			0	%			1,627			1	%
	Additional paid in capital			13,081				13,038			0	%			13,004			1	%
	Retained Earnings			(1,501	)			(1,519	)		-1	%			(1,863	)		-19	%
	Other Comprehensive Income			(619	)			(697	)		-11	%			(562	)		10	%
	Total Shareholders' Equity			12,600				12,455			1	%			12,206			3	%
	Total Liabilities and Shareholders' Equity		$	187,104			$	185,457			1	%		$	186,026			1	%

				Quarter Ended June 30, 2023				Quarter Ended Mar 31, 20223				Quarter Ended June 30, 2022				YTD 2023			YTD 2022
Financial Ratios
	Return on Average Assets				0.04	%			0.02	%			0.35	%		0.03	%		0.22	%
	Return on Average Equity				0.58	%			0.29	%			5.39	%		0.44	%		3.31	%
	Efficiency Ratio				105.9	%			96.6	%			80.8	%		99.5	%		87.7	%
	Net Interest Margin				2.51	%			2.62	%			3.28	%		2.56	%		3.13	%
	Loan to Deposits				98.7	%			100.5	%			89.0	%
	Tangible Book Value per Share				7.68				7.59				7.45
	Book Value per Share				7.72				7.63				7.50
	Earnings per Share				0.01				0.01				0.10			0.02			0.13
	Asset Quality
	Net Loan Charge-offs (recoveries)				(18	)		$	-				-
	Nonperforming Loans				-			$	647			$	1,167
	Nonperforming Assets to Total Assets				0.00	%			0.35	%			0.63	%
	Allowance for Loan Losses to Total Loans				0.90	%			0.91	%			1.10	%
	Other Real Estate Owned			$	-			$	-				-
	CAPITAL (Bank only)
	Tier 1 leverage ratio				9.54	%			9.42	%			8.60	%
	Tier 1 risk-based capital ratio				14.43	%			14.21	%			13.00	%
	Total risk based capital ratio				15.48	%			15.28	%			14.25	%