Washington
|
001-3365
|
26-0610707
|
||
State or other jurisdiction of
incorporation
|
Commission
File Number
|
(I.R.S. Employer
Identification No.)
|
||
201 Wells Avenue South, Renton, Washington
|
98057
|
|||
(Address of principal executive offices)
|
(Zip Code)
|
[ ]
|
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
|
[ ]
|
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
|
[ ]
|
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
|
|
(17 CFR 240.14d-2(b))
|
[ ]
|
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
|
|
(17 CFR 240.13e-4 (c))
|
FIRST FINANCIAL NORTHWEST, INC. | |
DATE: April 25, 2011 | By: Kari Stenslie |
Kari Stenslie | |
Chief Financial Officer |
3 |
·
|
Nonperforming assets decreased $10.7 million or 11.5% primarily due to a reduction in nonperforming loans. Nonperforming loans decreased $11.8 million to $51.1 million from $62.9 million at December 31, 2010 and represented 6.24% of loans compared to 7.14% at December 31, 2010 and 13.81% at March 31, 2010;
|
·
|
Our delinquent loans less than 90 days past due decreased $1.2 million to $8.0 million from $9.2 million at December 31, 2010 as a result of our continued emphasis to aggressively manage our delinquent loan portfolio;
|
·
|
We continued to manage the overall risk level of our loan portfolio by reducing our construction/land development loans which declined $13.4 million to $43.1 million, a 23.7% decrease from December 31, 2010. This segment of our loan portfolio now represents 5.23% of total loans compared to 6.33% at December 31, 2010;
|
·
|
Net gain on sales of investments totaled $511,000;
|
·
|
Sales of other real estate owned (“OREO”) totaled $8.6 million with net gains on sales of $626,000;
|
·
|
Net interest margin increased to 3.09% from 2.95% for the quarter ended December 31, 2010 and
|
·
|
The Company’s ratio of tangible equity to tangible assets at March 31, 2011 was 14.91% (1).
|
(1)
|
The tangible equity to tangible assets ratio is the same as the equity to assets ratio under Generally Accepted Accounting Principles (“GAAP”) as the Company has an immaterial amount of intangible assets at March 31, 2011.
|
Three Month
|
One Year
|
||||||||||||||
March 31,
|
December 31,
|
March 31,
|
Increase
|
Increase
|
|||||||||||
2011
|
2010
|
2010
|
(Decrease)
|
(Decrease)
|
|||||||||||
(In thousands)
|
|||||||||||||||
One-to-four family
residential (1) |
$
|
15,652
|
$
|
22,688
|
|
$
|
48,035
|
$
|
(7,036)
|
$
|
(32,383)
|
||||
Multifamily
|
700
|
-
|
-
|
700
|
700
|
||||||||||
Commercial real estate
|
11,104
|
7,306
|
14,108
|
3,798
|
(3,004)
|
||||||||||
Construction/land
|
|||||||||||||||
development
|
23,485
|
32,885
|
83,016
|
(9,400)
|
(59,531)
|
||||||||||
Consumer
|
145
|
57
|
759
|
88
|
(614)
|
||||||||||
Total nonperforming loans
|
$
|
51,086
|
$
|
62,936
|
|
$ |
145,918
|
$
|
(11,850)
|
$
|
(94,832)
|
||||
OREO
|
31,266
|
30,102
|
20,500
|
1,164
|
10,766
|
||||||||||
Total nonperforming assets
|
$
|
82,352
|
$
|
93,038
|
$
|
166,418
|
$
|
(10,686)
|
$
|
(84,066)
|
|||||
(1) The majority of these loans are related to our merchant builders rental properties.
|
King
County
|
Pierce County
|
Kitsap
County
|
Snohomish
County
|
All other
counties
|
Total OREO
|
Percent of Total OREO
|
||||||||||||||
(Dollars in thousands)
|
||||||||||||||||||||
One-to-four family residential
|
$
|
3,771
|
$
|
6,544
|
$
|
1,904
|
$
|
1,674
|
$
|
475
|
$
|
14,368
|
45.95
|
%
|
||||||
Commercial real estate
|
563
|
2,600
|
1,292
|
-
|
450
|
4,905
|
15.69
|
|||||||||||||
Construction/land development
|
5,906
|
-
|
3,522
|
-
|
2,565
|
11,993
|
38.36
|
|||||||||||||
Total OREO
|
$
|
10,240
|
$
|
9,144
|
$
|
6,718
|
$
|
1,674
|
$
|
3,490
|
$
|
31,266
|
100.00
|
%
|
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
|
|||||||||||||||||
Consolidated Balance Sheets
|
|||||||||||||||||
(Dollars in thousands, except share data)
|
|||||||||||||||||
(Unaudited)
|
|||||||||||||||||
March 31,
|
December 31,
|
March 31,
|
Three Month
|
One Year
|
|||||||||||||
Assets
|
2011
|
2010
|
2010
|
Change
|
Change
|
||||||||||||
Cash on hand and in banks
|
$
|
4,869
|
$
|
7,466
|
$
|
8,373
|
(34.8)
|
%
|
(41.9)
|
%
|
|||||||
Interest-bearing deposits
|
159,126
|
90,961
|
107,326
|
74.9
|
48.3
|
||||||||||||
Investments available for sale
|
148,230
|
164,603
|
109,593
|
(10.0)
|
35.3
|
||||||||||||
Loans receivable, net of allowance of $20,250, $22,534
|
796,354
|
856,456
|
1,016,896
|
(7.0)
|
(21.7)
|
||||||||||||
and $36,479
|
|||||||||||||||||
Premises and equipment, net
|
19,585
|
19,829
|
20,453
|
(1.2)
|
(4.2)
|
||||||||||||
Federal Home Loan Bank stock, at cost
|
7,413
|
7,413
|
7,413
|
-
|
-
|
||||||||||||
Accrued interest receivable
|
4,339
|
4,686
|
4,716
|
(7.4)
|
(8.0)
|
||||||||||||
Federal income tax receivable
|
6,346
|
5,916
|
12,160
|
7.3
|
(47.8)
|
||||||||||||
Deferred tax assets, net
|
-
|
-
|
5,415
|
-
|
(100.0)
|
||||||||||||
Other real estate owned
|
31,266
|
30,102
|
20,500
|
3.9
|
52.5
|
||||||||||||
Prepaid expenses and other assets
|
6,210
|
6,226
|
8,384
|
(0.3)
|
(25.9)
|
||||||||||||
Total assets
|
$
|
1,183,738
|
$
|
1,193,658
|
$
|
1,321,229
|
(0.8)
|
%
|
(10.4)
|
%
|
|||||||
Liabilities and Stockholders' Equity
|
|||||||||||||||||
Interest-bearing deposits
|
$
|
901,408
|
$
|
911,526
|
$
|
957,389
|
(1.1)
|
%
|
(5.9)
|
%
|
|||||||
Non-interest bearing deposits
|
4,818
|
8,700
|
5,201
|
(44.6)
|
(7.4)
|
||||||||||||
Advances from the Federal Home Loan Bank
|
93,066
|
93,066
|
139,900
|
-
|
(33.5)
|
||||||||||||
Advance payments from borrowers for taxes and insurance
|
4,293
|
2,256
|
4,509
|
90.3
|
(4.8)
|
||||||||||||
Accrued interest payable
|
230
|
214
|
402
|
7.5
|
(42.8)
|
||||||||||||
Other liabilities
|
3,408
|
3,418
|
3,789
|
(0.3)
|
(10.1)
|
||||||||||||
Total liabilities
|
1,007,223
|
1,019,180
|
1,111,190
|
(1.2)
|
(9.4)
|
||||||||||||
Commitments and contingencies
|
|||||||||||||||||
Stockholders' Equity
|
|||||||||||||||||
Preferred stock, $0.01 par value; authorized 10,000,000
|
|||||||||||||||||
shares, no shares issued or outstanding
|
$
|
-
|
$
|
-
|
$
|
-
|
-
|
%
|
-
|
%
|
|||||||
Common stock, $0.01 par value; authorized 90,000,000
|
|||||||||||||||||
shares; issued and outstanding 18,805,168 shares at
|
|||||||||||||||||
March 31, 2011, December 31, 2010 and March 31, 2010
|
188
|
188
|
188
|
-
|
-
|
||||||||||||
Additional paid-in capital
|
187,707
|
187,371
|
186,415
|
0.2
|
0.7
|
||||||||||||
Retained earnings (accumulated deficit), substantially restricted
|
1,129
|
(305)
|
36,078
|
(470.2)
|
(96.9)
|
||||||||||||
Accumulated other comprehensive income, net of tax
|
469
|
484
|
1,465
|
(3.1)
|
(68.0)
|
||||||||||||
Unearned Employee Stock Ownership Plan (ESOP) shares
|
(12,978)
|
(13,260)
|
(14,107)
|
(2.1)
|
(8.0)
|
||||||||||||
Total stockholders' equity
|
176,515
|
174,478
|
210,039
|
1.2
|
(16.0)
|
||||||||||||
Total liabilities and stockholders' equity
|
$
|
1,183,738
|
$
|
1,193,658
|
$
|
1,321,229
|
(0.8)
|
%
|
(10.4)
|
%
|
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
|
||||||||||||||||
Consolidated Income Statements
|
||||||||||||||||
(Dollars in thousands, except share data)
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
Quarter Ended
|
Three Month
|
|||||||||||||||
March 31, 2011
|
December 31, 2010
|
March 31, 2010
|
% Change
|
|||||||||||||
Interest income
|
||||||||||||||||
Loans, including fees
|
$ | 12,428 | $ | 13,267 | $ | 14,594 | (6.3 | ) % | ||||||||
Investments available for sale
|
1,205 | 1,118 | 1,007 | 7.8 | ||||||||||||
Cash on hand and in banks
|
76 | 62 | 61 | 22.6 | ||||||||||||
Total interest income
|
$ | 13,709 | $ | 14,447 | $ | 15,662 | (5.1 | ) % | ||||||||
Interest expense
|
||||||||||||||||
Deposits | 4,513 | 4,914 | 6,571 | (8.2 | ) | |||||||||||
Federal Home Loan Bank advances
|
576 | 1,074 | 1,023 | (46.4 | ) | |||||||||||
Total interest expense
|
$ | 5,089 | $ | 5,988 | $ | 7,594 | (15.0 | ) % | ||||||||
Net interest income
|
8,620 | 8,459 | 8,068 | 1.9 | ||||||||||||
Provision for loan losses
|
1,200 | 2,100 | 13,000 | (42.9 | ) | |||||||||||
Net interest income (loss) after provision for loan losses
|
$ | 7,420 | $ | 6,359 | $ | (4,932 | ) | 16.7 | % | |||||||
Noninterest income
|
||||||||||||||||
Net gain on sale of investments
|
511 | 843 | - | (39.4 | ) | |||||||||||
Other | 85 | 52 | 46 | 63.5 | ||||||||||||
Total noninterest income
|
$ | 596 | $ | 895 | $ | 46 | (33.4 | ) % | ||||||||
Noninterest expense
|
||||||||||||||||
Salaries and employee benefits
|
3,289 | 3,008 | 3,189 | 9.3 | ||||||||||||
Occupancy and equipment
|
402 | 397 | 425 | 1.3 | ||||||||||||
Professional fees
|
480 | 538 | 459 | (10.8 | ) | |||||||||||
Data processing
|
209 | 189 | 170 | 10.6 | ||||||||||||
Loss (gain) on sale of OREO property, net
|
(626 | ) | (403 | ) | 437 | 55.3 | ||||||||||
OREO market value adjustments
|
628 | 440 | 2,271 | 42.7 | ||||||||||||
OREO related expenses, net
|
850 | 1,047 | 702 | (18.8 | ) | |||||||||||
FDIC/OTS assessments
|
710 | 832 | 580 | (14.7 | ) | |||||||||||
Insurance and bond premiums
|
247 | 148 | 149 | 66.9 | ||||||||||||
Marketing
|
61 | 64 | 43 | (4.7 | ) | |||||||||||
Other general and administrative
|
332 | 426 | 442 | (22.1 | ) | |||||||||||
Total noninterest expense
|
$ | 6,582 | $ | 6,686 | $ | 8,867 | (1.6 | ) % | ||||||||
Income (loss) before provision for federal income taxes
|
1,434 | 568 | (13,753 | ) | 152.5 | |||||||||||
Provision for federal income taxes
|
- | - | 3,999 | - | ||||||||||||
Net income (loss)
|
$ | 1,434 | $ | 568 | $ | (17,752 | ) | 152.5 | % | |||||||
Basic earnings (loss) per share
|
$ | 0.08 | $ | 0.03 | $ | (1.02 | ) | 166.7 | % | |||||||
Diluted earnings (loss) per share
|
$ | 0.08 | $ | 0.03 | $ | (1.02 | ) | 166.7 | % |
March 31, 2011
|
December 31, 2010
|
||||||||||||
Amount
|
Percent
|
Amount
|
Percent
|
||||||||||
(Dollars in thousands)
|
|||||||||||||
One-to-four family residential (1)
|
|||||||||||||
Permanent
|
$
|
375,894
|
45.6
|
%
|
$
|
393,334
|
44.1
|
%
|
|||||
Construction
|
-
|
-
|
5,356
|
0.6
|
|||||||||
375,894
|
45.6
|
398,690
|
44.7
|
||||||||||
Multifamily:
|
|||||||||||||
Permanent
|
126,120
|
15.3
|
140,762
|
15.8
|
|||||||||
Construction
|
3,024
|
0.4
|
4,114
|
0.4
|
|||||||||
129,144
|
15.7
|
144,876
|
16.2
|
||||||||||
Commercial real estate:
|
|||||||||||||
|
Permanent
|
227,202
|
27.6
|
237,708
|
26.6
|
||||||||
Construction
|
26,861
|
3.3
|
28,362
|
3.2
|
|||||||||
Land
|
4,419
|
0.5
|
6,643
|
0.8
|
|||||||||
258,482
|
31.4
|
272,713
|
30.6
|
||||||||||
Construction/land development:
|
|||||||||||||
One-to-four family residential
|
17,643
|
2.1
|
26,848
|
3.0
|
|||||||||
Multifamily
|
882
|
0.1
|
1,283
|
0.1
|
|||||||||
Commercial
|
1,104
|
0.1
|
1,108
|
0.1
|
|||||||||
Land development
|
23,490
|
2.9
|
27,262
|
3.1
|
|||||||||
43,119
|
5.2
|
56,501
|
6.3
|
||||||||||
Business
|
1,026
|
0.1
|
479
|
0.1
|
|||||||||
Consumer
|
16,767
|
2.0
|
19,127
|
2.1
|
|||||||||
Total loans
|
$
|
824,432
|
100.0
|
%
|
$
|
892,386
|
100.0
|
%
|
|||||
Less:
|
|||||||||||||
Loans in process (LIP)
|
5,633
|
10,975
|
|||||||||||
Deferred loan fees, net
|
2,195
|
2,421
|
|||||||||||
Allowance for loan losses
|
20,250
|
22,534
|
|||||||||||
Loans receivable, net
|
$
|
796,354
|
$
|
856,456
|
_________________ |
(1) Includes $166.2 million and $173.4 million of non-owner occupied loans at March 31, 2011 and December 31, 2010, respectively.
|
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES | ||||||||||||
Key Financial Information
|
||||||||||||
(Unaudited)
|
||||||||||||
At or For the Quarter Ended
|
||||||||||||
March 31, 2011
|
December 31, 2010
|
March 31, 2010
|
||||||||||
(Dollars in thousands, except share data)
|
||||||||||||
Performance Ratios:
|
||||||||||||
Return on assets
|
0.48 | % | 0.19 | % | (5.36 | ) % | ||||||
Return on equity
|
3.25 | 1.28 | (30.29 | ) | ||||||||
Equity-to-assets ratio
|
14.91 | 14.62 | 15.90 | |||||||||
Interest rate spread
|
2.88 | 2.70 | 2.23 | |||||||||
Net interest margin
|
3.09 | 2.95 | 2.59 | |||||||||
Average interest-earning assets to
|
||||||||||||
average interest-bearing liabilities
|
111.55 | 111.77 | 115.09 | |||||||||
Efficiency ratio
|
71.42 | 71.48 | 109.28 | |||||||||
Noninterest expense as a percent of
|
||||||||||||
average total assets
|
2.21 | 2.19 | 2.68 | |||||||||
Book value per common share
|
$ | 9.39 | $ | 9.28 | $ | 11.17 | ||||||
Capital Ratios (1):
|
||||||||||||
Tier 1 leverage
|
12.13 | % | 11.73 | % | 11.33 | % | ||||||
Tier 1 risk-based
|
20.03 | 18.38 | 16.43 | |||||||||
Total risk-based
|
21.30 | 19.65 | 17.73 | |||||||||
Asset Quality Ratios (2):
|
||||||||||||
Nonaccrual and 90 days or more past due loans
|
||||||||||||
as a percent of total loans
|
6.24 | % | 7.14 | % | 13.81 | % | ||||||
Nonperforming assets as a percent
|
||||||||||||
of total assets
|
6.96 | 7.79 | 12.60 | |||||||||
Allowance for loan losses as a percent of
|
||||||||||||
total loans
|
2.47 | 2.56 | 3.45 | |||||||||
Allowance for loan losses as a percent of
|
||||||||||||
nonperforming loans
|
39.64 | 35.80 | 25.00 | |||||||||
Net charge-offs to average loans
|
||||||||||||
receivable, net
|
0.42 | 0.90 | 0.92 | |||||||||
Allowance for Loan Losses:
|
||||||||||||
Allowance for loan losses, beginning of the quarter
|
$ | 22,534 | $ | 28,400 | $ | 33,039 | ||||||
Provision
|
1,200 | 2,100 | 13,000 | |||||||||
Charge-offs
|
(3,675 | ) | (8,970 | ) | (9,682 | ) | ||||||
Recoveries
|
191 | 1,004 | 122 | |||||||||
Allowance for loan losses, end of the quarter
|
$ | 20,250 | $ | 22,534 | $ | 36,479 | ||||||
Nonperforming Assets:
|
||||||||||||
Nonperforming loans (3)
|
||||||||||||
Nonaccrual loans
|
$ | 39,737 | $ | 46,637 | $ | 108,135 | ||||||
Nonaccrual troubled debt restructured loans
|
11,349 | 16,299 | 37,783 | |||||||||
Total nonperforming loans
|
$ | 51,086 | $ | 62,936 | $ | 145,918 | ||||||
OREO
|
31,266 | 30,102 | 20,500 | |||||||||
Total nonperforming assets
|
$ | 82,352 | $ | 93,038 | $ | 166,418 | ||||||
Performing troubled debt restructured loans
|
$ | 65,805 | $ | 58,375 | $ | 22,948 | ||||||
____________ | ||||||||||||
(1) Capital ratios are for First Savings Bank Northwest only.
|
||||||||||||
(2) Loans are reported net of undisbursed funds. | ||||||||||||
(3) There were no loans 90 days or more past due and still accruing interest for the periods presented.
|
10 |