Exhibit 99.1
|
|
For more information, contact:
Joseph W. Kiley III, President and Chief Executive Officer
Rich Jacobson, Executive Vice President and Chief Financial Officer
(425) 255-4400
|
First Financial Northwest, Inc.
Reports Fourth Quarter Net Income of $2.6 Million or $0.26 per Diluted Share and
$10.4 Million or $1.03 per Diluted Share for the Year Ended December 31, 2019
Renton, Washington – January 23, 2020 - 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, 2019, of $2.6 million, or $0.26 per diluted share, compared to net income of $2.5 million, or $0.25 per diluted share, for the quarter ended September 30, 2019, and $2.2 million, or $0.21 per diluted share,
for the quarter ended December 31, 2018. For the year ended December 31, 2019, net income was $10.4 million, or $1.03 per diluted share, compared to net income of $14.9 million, or $1.43 per diluted share, for the year ended December 31, 2018.
“I am pleased with the growth in both deposit and loan balances during the quarter,” stated Joseph W. Kiley III, President and Chief Executive Officer. “I am also encouraged by the slight
improvement in our net interest margin this quarter, after experiencing declines in each of the preceding six quarters,” continued Kiley. “The modest increase in net interest margin was primarily the result of a 10 basis point reduction in our cost
of funds, an area receiving significant attention throughout the Bank. To this end, we continue to expand into new markets to attract lower cost deposits and enhance our growth prospects. During the fourth quarter, we entered the vibrant Kirkland,
Washington market and we intend to expand into the University Place market, opening our first office in Pierce County in the first quarter of 2020. Different from traditional branch models, our expansion strategy starts with identifying a team of
bankers with extensive experience and relationships in a particular market. Subsequently, we locate them in a small, efficient office space in that market, equipped with current technology to allow our bankers to demonstrate digital banking to their
customers,” continued Kiley. “Offices in each of our markets include a conference room equipped with leading edge technologies that is made available to the local community,” concluded Kiley.
Net loans receivable totaled $1.11 billion at December 31, 2019, compared to $1.08 billion at September 30, 2019, and $1.02 billion at December 31, 2018. The average balance of net loans receivable
totaled $1.09 billion for the quarter ended December 31, 2019, compared to $1.07 billion for the quarter ended September 30, 2019, and $1.01 billion for the quarter ended December 31, 2018. For the year ended December 31, 2019, the average balance of
net loans receivable was $1.06 billion, compared to $995.8 million for the year ended December 31, 2018.
The Company did not record a provision for loan losses in the quarter ended December 31, 2019, compared to a $100,000 provision for loan losses in the quarter ended September 30, 2019, and a
$200,000 provision for loan losses in the quarter ended December 31, 2018. There was no provision for loan losses in the most recent quarter despite our loan growth primarily due to credit upgrades for certain loan relationships reducing the amounts
required to be allocated for loan losses for those credits and the continued strength in our loan
portfolio quality metrics. In addition, the Bank realized recoveries of $57,000 on loans previously charged off and balances declined in loan categories typically associated with higher allowances
due to loan payoffs, further reducing the need for additions to the allowance for loan and lease losses. The provision in the quarter ended September 30, 2019, was primarily due to growth in loans receivable. The provision for loan losses in the
quarter ended December 31, 2018, was primarily due to a combination of growth in net loans receivable and a change in loan mix. For the year ended December 31, 2019, the recapture of provision for loan losses totaled $300,000, compared to a recapture
of provision for loan losses of $4.0 million, which included $4.5 million in recoveries, recorded for the year ended December 31, 2018.
The Bank continued to expand its geographic footprint during the year opening its twelfth new office in Kirkland, King County, Washington, in the fourth quarter of 2019. The Bank has received
regulatory approval to open its thirteenth office location in University Place, Pierce County, Washington, in the first quarter of 2020.
Highlights for the quarter and year ended December 31, 2019:
|
•
|
Net loans increased to $1.11 billion at December 31, 2019, from $1.08 billion at September 30, 2019, and $1.02 billion at December 31, 2018.
|
|
•
|
Total deposits increased to $1.03 billion at December 31, 2019, from $1.02 billion at September 30, 2019, and $939.0 million at December 31, 2018.
|
|
•
|
The Company increased the regular quarterly cash dividend to shareholders to $0.09 per share in the quarter ended June 30, 2019, from $0.08 per share previously.
|
|
•
|
The Company’s book value per share was $15.25 at December 31, 2019, compared to $15.06 at September 30, 2019, and $14.35 at December 31, 2018.
|
|
•
|
The Company repurchased 45,100 shares at an average price of $14.52 per share in the quarter ended December 31, 2019. For the year ended December 31, 2019, the Company repurchased a total
of 479,052 shares at an average price of $15.42 per share pursuant to two separate stock repurchase plans approved by its Board of Directors.
|
|
•
|
The Bank’s Tier 1 leverage and total capital ratios at December 31, 2019, were 10.3% and 14.4%, respectively, compared to 10.1% and 14.4% at September 30, 2019, and 10.4% and 14.7% at
December 31, 2018.
|
|
•
|
Based on management’s evaluation of the adequacy of the Allowance for Loan and Lease Losses (“ALLL”), there was no provision for loan losses required for the quarter ended December 31,
2019.
|
The ALLL represented 1.18% of total loans receivable, net of undisbursed funds, at December 31, 2019, compared to 1.20% at September 30, 2019, and 1.29% at December 31, 2018.
Nonperforming assets totaled $549,000 at December 31, 2019, compared to $591,000 at September 30, 2019, and $1.2 million at December 31, 2018.
The following table presents a breakdown of nonperforming assets (unaudited):
2
|
Dec 31,
|
Sep 30,
|
Dec 31,
|
Three
Month |
One
Year |
||||||||||||||||
|
2019
|
2019
|
2018
|
Change
|
Change
|
||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
|
Nonperforming loans:
|
||||||||||||||||||||
|
One-to-four family residential
|
$
|
95
|
$
|
98
|
$
|
382
|
$
|
(3
|
)
|
$
|
(287
|
)
|
||||||||
|
Commercial real estate
|
─
|
─
|
326
|
─
|
(326
|
)
|
||||||||||||||
|
Consumer
|
─
|
39
|
44
|
(39
|
)
|
(44
|
)
|
|||||||||||||
|
Total nonperforming loans
|
95
|
137
|
752
|
(42
|
)
|
(657
|
)
|
|||||||||||||
|
Other real estate owned (“OREO”)
|
454
|
454
|
483
|
─
|
(29
|
)
|
||||||||||||||
|
Total nonperforming assets (1)
|
$
|
549
|
$
|
591
|
$
|
1,235
|
$
|
(42
|
)
|
$
|
(686
|
)
|
||||||||
|
Nonperforming assets as a
|
||||||||||||||||||||
|
percent of total assets
|
0.04
|
%
|
0.05
|
%
|
0.10
|
%
|
||||||||||||||
(1) The difference between nonperforming assets reported above, and the totals reported by other industry sources, is due to their inclusion of all Troubled Debt
Restructured Loans ("TDRs") as nonperforming loans, although 100% of our TDRs were performing in accordance with their restructured terms at December 31, 2019.
OREO remained at $454,000 for both December 31, 2019, and September 30, 2019, but declined from $483,000 at December 31, 2018, as a result of a write down in value of the two remaining OREO
properties during the quarter ended March 31, 2019.
In circumstances where a customer is experiencing significant financial difficulties, the Company may elect to restructure the loan so the customer can continue to make payments while minimizing
the potential loss to the Company. Such restructures must be classified as TDRs. At December 31, 2019, TDRs totaled $5.2 million following $1.4 million in payoffs and payments in the quarter, compared to $6.6 million at September 30, 2019, and
$9.4 million at December 31, 2018.
Net interest income totaled $9.7 million for both the quarters ended December 31 and September 30, 2019, compared to $10.0 million for the quarter ended December 31, 2018. The change in net
interest income compared to the prior year period was due primarily to a reduction in the Company’s net interest margin between periods. For the year ended December 31, 2019, net interest income totaled $38.9 million, compared to $41.2 million for
the year ended December 31, 2018. The reduction in 2019 was due to the net interest margin reduction noted above, as the cost of interest-bearing liabilities increased significantly in 2019.
Total interest income was $15.0 million during the quarter ended December 31, 2019, compared to $15.2 million during the quarter ended September 30, 2019, and $14.3 million in the quarter ended
December 31, 2018. The decline from the quarter ended September 30, 2019, was due primarily to a decline in the average yield on interest-earning assets, while the increase over the quarter ended December 31, 2018, was due to growth in the average
balance of total interest-earning assets outpacing the reduction in average yield on interest-earnings assets between the periods.
Total interest expense declined to $5.3 million for the quarter ended December 31, 2019, from $5.6 million in the quarter ended September 30, 2019, and increased from $4.3 million for the quarter
ended December 31, 2018. The decline from the quarter ended September 30, 2019, was due primarily to lower wholesale funding liabilities. Specifically, we redeemed higher rate brokered certificates of deposit and replaced them with lower cost
alternatives during the quarter, as discussed in detail below. In addition, interest on FHLB advances declined as we replaced higher cost advances using interest rate swaps to secure lower interest rate advances. An overall higher cost of
interest-bearing liabilities contributed to increased interest expense in the quarter ended December 31, 2019, compared to the quarter ended December 31, 2018. For the year ended December 31, 2019, the cost of interest-bearing liabilities increased
to 1.92%
3
compared to 1.46% for the year ended December 31, 2018. This higher interest rate environment, along with an increase in the average balance of total interest-bearing liabilities, resulted in the
significant increase in total interest expense for the year. The balance of brokered certificates of deposits were reduced to $94.5 million at December 31, 2019, from $138.6 million at September 30, 2019, and $97.8 million at December 31, 2018. For
the second quarter in a row, the Bank replaced a portion of its callable brokered certificates of deposit portfolio with lower rate alternatives. Specifically, in addition to replacing certain maturing brokered deposits with short term FHLB advances,
the Bank redeemed $10.2 million in callable brokered deposits with a weighted average rate of 3.33% and weighted average remaining term of 2.4 years. These funds were replaced with lower rate three-month FHLB advances and a concurrent 4-year,
$10.0 million notional pay fixed interest rate swap for which the Bank will pay 1.59% and in exchange will receive variable rate amounts from the interest rate swap counter party based on three-month LIBOR. This redemption accelerated approximately
$33,000 in unamortized fees relating to the original acquisition of the callable brokered deposits, increasing interest expense by this amount in the quarter ended December 31, 2019. Advances from the FHLB totaled $137.7 million at December 31, 2019,
compared to $121.0 million at September 30, 2019, and $146.5 million at December 31, 2018. The average cost of FHLB advances was 1.66% for the quarter ended December 31, 2019, compared to 2.02% for the quarter ended September 30, 2019, and 2.12% for
the quarter ended December 31, 2018. For the year ended December 31, 2019, the average cost of FHLB advances was 2.09%, compared to 1.92% for the prior year.
The following table presents a breakdown of our total deposits at the dates indicated (unaudited):
|
Dec 31,
2019 |
Sep 30,
2019 |
Dec 31,
2018 |
Three
Month Change |
One Year
Change
|
||||||||||||||||
|
Deposits:
|
(Dollars in thousands)
|
|||||||||||||||||||
|
Noninterest-bearing
|
$
|
52,849
|
$
|
49,398
|
$
|
46,108
|
$
|
3,451
|
$
|
6,741
|
||||||||||
|
Interest-bearing demand
|
65,897
|
53,197
|
40,079
|
12,700
|
25,818
|
|||||||||||||||
|
Statement savings
|
17,447
|
21,647
|
24,799
|
(4,200
|
)
|
(7,352
|
)
|
|||||||||||||
|
Money market
|
377,766
|
332,722
|
339,047
|
45,044
|
38,719
|
|||||||||||||||
|
Certificates of deposit, retail (1)
|
425,103
|
421,274
|
391,174
|
3,829
|
33,929
|
|||||||||||||||
|
Certificates of deposit, brokered
|
94,472
|
138,590
|
97,825
|
(44,118
|
)
|
(3,353
|
)
|
|||||||||||||
|
Total deposits
|
$
|
1,033,534
|
$
|
1,016,828
|
$
|
939,032
|
$
|
16,706
|
$
|
94,502
|
||||||||||
(1) Balance of retail certificates of deposit for acquired branches are net of an unamortized aggregate fair value adjustment of $28,000 at December 31, 2019, $34,000
at September 30, 2019, and $58,000 at December 31, 2018.
4
The following tables present an analysis of total deposits by office at the dates indicated (unaudited):
|
December 31, 2019
|
||||||||||||||||||||||||||||
|
Noninterest-bearing
demand
|
Interest-
bearing
demand
|
Statement savings
|
Money
market
|
Certificates
of deposit,
retail
|
Certificates
of deposit, brokered
|
Total
|
||||||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||
|
King County
|
||||||||||||||||||||||||||||
|
Renton
|
$
|
28,909
|
$
|
35,384
|
$
|
14,112
|
$
|
219,482
|
$
|
345,476
|
$
|
-
|
$
|
643,363
|
||||||||||||||
|
Landing
|
4,625
|
1,855
|
32
|
13,919
|
9,095
|
-
|
29,526
|
|||||||||||||||||||||
|
Woodinville (1)
|
1,772
|
3,228
|
699
|
13,076
|
7,110
|
-
|
25,885
|
|||||||||||||||||||||
|
Bothell
|
545
|
1,178
|
31
|
5,779
|
4,312
|
-
|
11,845
|
|||||||||||||||||||||
|
Crossroads
|
3,751
|
7,943
|
107
|
52,042
|
11,481
|
-
|
75,324
|
|||||||||||||||||||||
|
Kent (2)
|
370
|
2,753
|
-
|
4,036
|
1,055
|
-
|
8,214
|
|||||||||||||||||||||
|
Kirkland (3)
|
-
|
43
|
-
|
-
|
-
|
-
|
43
|
|||||||||||||||||||||
|
Total King County
|
39,972
|
52,384
|
14,981
|
308,334
|
378,529
|
-
|
794,200
|
|||||||||||||||||||||
|
Snohomish County
|
||||||||||||||||||||||||||||
|
Mill Creek
|
2,295
|
1,790
|
504
|
19,440
|
10,687
|
-
|
34,716
|
|||||||||||||||||||||
|
Edmonds
|
4,243
|
3,718
|
177
|
24,644
|
17,007
|
-
|
49,789
|
|||||||||||||||||||||
|
Clearview (1)
|
3,194
|
3,538
|
807
|
7,445
|
4,775
|
-
|
19,759
|
|||||||||||||||||||||
|
Lake Stevens (1)
|
2,036
|
2,033
|
415
|
7,015
|
3,940
|
-
|
15,439
|
|||||||||||||||||||||
|
Smokey Point (1)
|
1,109
|
2,434
|
563
|
10,888
|
10,165
|
-
|
25,159
|
|||||||||||||||||||||
|
Total Snohomish County
|
12,877
|
13,513
|
2,466
|
69,432
|
46,574
|
-
|
144,862
|
|||||||||||||||||||||
|
Total retail deposits
|
52,849
|
65,897
|
17,447
|
377,766
|
425,103
|
-
|
939,062
|
|||||||||||||||||||||
|
Brokered deposits
|
-
|
-
|
-
|
-
|
-
|
94,472
|
94,472
|
|||||||||||||||||||||
|
Total deposits
|
$
|
52,849
|
$
|
65,897
|
$
|
17,447
|
$
|
377,766
|
$
|
425,103
|
$
|
94,472
|
$
|
1,033,534
|
||||||||||||||
(1) Balance of retail certificates of deposit for acquired branches are net of an unamortized aggregate fair value adjustment of $28,000.
(2) Kent office opened January 31, 2019.
(3) Kirkland office opened November 12, 2019.
|
September 30, 2019
|
||||||||||||||||||||||||||||
|
Noninterest-bearing
demand
|
Interest-
bearing
demand
|
Statement savings
|
Money
market
|
Certificates
of deposit,
retail
|
Certificates
of deposit, brokered
|
Total
|
||||||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||
|
King County
|
||||||||||||||||||||||||||||
|
Renton
|
$
|
27,163
|
$
|
21,905
|
$
|
17,980
|
$
|
208,086
|
$
|
340,156
|
$
|
-
|
$
|
615,290
|
||||||||||||||
|
Landing
|
3,323
|
1,826
|
39
|
16,432
|
10,606
|
-
|
32,226
|
|||||||||||||||||||||
|
Woodinville (1)
|
2,287
|
2,130
|
672
|
13,303
|
6,996
|
-
|
25,388
|
|||||||||||||||||||||
|
Bothell
|
420
|
690
|
9
|
5,207
|
4,091
|
-
|
10,417
|
|||||||||||||||||||||
|
Crossroads
|
2,647
|
7,047
|
53
|
29,124
|
12,740
|
-
|
51,611
|
|||||||||||||||||||||
|
Kent (2)
|
134
|
2,657
|
6
|
4,524
|
849
|
-
|
8,170
|
|||||||||||||||||||||
|
Total King County
|
35,974
|
36,255
|
18,759
|
276,676
|
375,438
|
-
|
743,102
|
|||||||||||||||||||||
|
Snohomish County
|
||||||||||||||||||||||||||||
|
Mill Creek
|
2,456
|
3,088
|
622
|
16,196
|
11,077
|
-
|
33,439
|
|||||||||||||||||||||
|
Edmonds
|
4,166
|
5,474
|
286
|
17,421
|
17,222
|
-
|
44,569
|
|||||||||||||||||||||
|
Clearview (1)
|
3,504
|
3,839
|
874
|
6,696
|
3,527
|
-
|
18,440
|
|||||||||||||||||||||
|
Lake Stevens (1)
|
1,817
|
1,935
|
509
|
6,216
|
3,666
|
-
|
14,143
|
|||||||||||||||||||||
|
Smokey Point (1)
|
1,481
|
2,606
|
597
|
9,517
|
10,344
|
-
|
24,545
|
|||||||||||||||||||||
|
Total Snohomish County
|
13,424
|
16,942
|
2,888
|
56,046
|
45,836
|
-
|
135,136
|
|||||||||||||||||||||
|
Total retail deposits
|
49,398
|
53,197
|
21,647
|
332,722
|
421,274
|
-
|
878,238
|
|||||||||||||||||||||
|
Brokered deposits
|
-
|
-
|
-
|
-
|
-
|
138,590
|
138,590
|
|||||||||||||||||||||
|
Total deposits
|
$
|
49,398
|
$
|
53,197
|
$
|
21,647
|
$
|
332,722
|
$
|
421,274
|
$
|
138,590
|
$
|
1,016,828
|
||||||||||||||
(1) Balance of retail certificates of deposit for acquired branches are net of an unamortized aggregate fair value adjustment of $34,000.
(2) Kent office opened January 31, 2019.
5
The net interest margin was 3.09% for the quarter ended December 31, 2019, compared to 3.07% for the quarter ended September 30, 2019, and 3.41% for the quarter ended December 31, 2018. The modest
improvement in the quarter ended December 31, 2019, compared to the quarter ended September 30, 2019, relates primarily to the reduction in rates paid on brokered deposits and FHLB advances. The resulting improvement in the Company’s cost of funds
more than outpaced the reduction in yields on interest-earning assets. The decline in net interest margin for the quarter ended December 31, 2019, compared to the quarter ended December 31, 2018, was due to an increase in the average cost of funds to
1.82% from 1.61%, along with a reduction in yield on average interest-earning assets yields, which declined to 4.78% from 4.88%, between periods. Net interest margin for the year ended December 31, 2019, was 3.19%, compared to 3.56% for the year
ended December 31, 2018, primarily due to an increase in the average cost of funds to 1.84% from 1.39%, partially offset by a five basis point increase in the average yield on interest-earning assets between periods.
Noninterest income for the quarter ended December 31, 2019, totaled $1.5 million, compared to $1.0 million in the quarter ended September 30, 2019, and $728,000 in the quarter ended December 31,
2018. The increase in noninterest income for the quarter ended December 31, 2019, compared to the quarters ended September 30, 2019 and December 31, 2018, was due almost entirely to increases in loan related fees during a strong quarter for loan
activity, including an increase of $175,000 in swap related fees and an increase in prepayment penalties received of $218,000. For the year ended December 31, 2019, noninterest income increased to $4.1 million, from $2.9 million in 2018, due
primarily to increases in loan related fees, wealth management revenue, BOLI income recognition and net gain on sale of investments.
Noninterest expense totaled $8.0 million for the quarter ended December 31, 2019, compared to $7.5 million for the quarter ended September 30, 2019, and $7.7 million in the quarter ended
December 31, 2018. Salaries and employee benefits for the quarter ended December 31, 2019, increased from the quarter ended September 30, 2019, primarily due to $271,000 in severance related expenses due to the termination of the Bank’s Chief Credit
Officer during the quarter. In the quarter ended December 31, 2019, the Company significantly enhanced its online banking capabilities, resulting in higher data processing expense for the quarter. Regulatory assessments varied in the quarters ended
December 31, 2019, and September 30, 2019, due to regulatory assessment credits received during those two quarters, with no such credit during the quarter ended December 31, 2018. Noninterest expense totaled $30.4 million for the year ended
December 31, 2019, compared to $29.5 million in 2018. The increase in noninterest expense was due primarily to higher data processing, occupancy and equipment expenses and a modest increase in salaries and employee benefits.
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 12 full-service banking offices. We are a part of the ABA NASDAQ Community Bank Index and the Russell 2000 Index. 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. Factors that
6
could cause our actual results to differ materially from those described in the forward-looking statements, include, but are not limited to, the following: increased competitive
pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company’s latest Annual Report on Form
10-K and Quarterly Reports on Form 10-Q and other filings with 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. These risks could cause our actual results for 2020 and beyond to differ materially from those expressed in any forward-looking statements made by, or on behalf of, us and could negatively
affect our operating and stock performance.
7
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share data)
(Unaudited)
|
Assets
|
Dec 31,
2019 |
Sep 30,
2019 |
Dec 31,
2018 |
Three
Month Change |
One
Year Change |
|||||||||||||||
|
Cash on hand and in banks
|
$
|
10,094
|
$
|
7,615
|
$
|
8,122
|
32.6
|
%
|
24.3
|
%
|
||||||||||
|
Interest-earning deposits
|
12,896
|
6,103
|
8,888
|
111.3
|
45.1
|
|||||||||||||||
|
Investments available-for-sale, at fair value
|
136,601
|
138,224
|
142,170
|
(1.2
|
)
|
(3.9
|
)
|
|||||||||||||
|
Loans receivable, net of allowance of $13,218,
$13,161, and $13,347, respectively
|
1,108,462
|
1,083,850
|
1,022,904
|
2.3
|
8.4
|
|||||||||||||||
|
Federal Home Loan Bank ("FHLB") stock, at cost
|
7,009
|
6,341
|
7,310
|
10.5
|
(4.1
|
)
|
||||||||||||||
|
Accrued interest receivable
|
4,138
|
4,407
|
4,068
|
(6.1
|
)
|
1.7
|
||||||||||||||
|
Deferred tax assets, net
|
1,501
|
1,202
|
1,844
|
24.9
|
(18.6
|
)
|
||||||||||||||
|
Other real estate owned ("OREO")
|
454
|
454
|
483
|
0.0
|
(6.0
|
)
|
||||||||||||||
|
Premises and equipment, net
|
22,466
|
22,346
|
21,331
|
0.5
|
5.3
|
|||||||||||||||
|
Bank owned life insurance ("BOLI")
|
31,982
|
31,681
|
29,841
|
1.0
|
7.2
|
|||||||||||||||
|
Prepaid expenses and other assets
|
4,425
|
4,242
|
3,458
|
4.3
|
28.0
|
|||||||||||||||
|
Goodwill
|
889
|
889
|
889
|
0.0
|
0.0
|
|||||||||||||||
|
Core deposit intangible
|
968
|
1,005
|
1,116
|
(3.7
|
)
|
(13.3
|
)
|
|||||||||||||
|
Total assets
|
$
|
1,341,885
|
$
|
1,308,359
|
$
|
1,252,424
|
2.6
|
%
|
7.1
|
%
|
||||||||||
|
Liabilities and Stockholders' Equity
|
||||||||||||||||||||
|
Deposits
|
||||||||||||||||||||
|
Noninterest-bearing deposits
|
$
|
52,849
|
$
|
49,398
|
$
|
46,108
|
7.0
|
%
|
14.6
|
%
|
||||||||||
|
Interest-bearing deposits
|
980,685
|
967,430
|
892,924
|
1.4
|
9.8
|
|||||||||||||||
|
Total Deposits
|
1,033,534
|
1,016,828
|
939,032
|
1.6
|
10.1
|
|||||||||||||||
|
Advances from the FHLB
|
137,700
|
121,000
|
146,500
|
13.8
|
(6.0
|
)
|
||||||||||||||
|
Advance payments from borrowers for taxes and
insurance
|
2,921
|
5,043
|
2,933
|
(42.1
|
)
|
(0.4
|
)
|
|||||||||||||
|
Accrued interest payable
|
285
|
382
|
478
|
(25.4
|
)
|
(40.4
|
)
|
|||||||||||||
|
Other liabilities
|
11,126
|
10,004
|
9,743
|
11.2
|
14.2
|
|||||||||||||||
|
Total liabilities
|
1,185,566
|
1,153,257
|
1,098,686
|
2.8
|
%
|
7.9
|
%
|
|||||||||||||
|
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
|
||||||||||||||||||||
|
10,252,953 shares at December 31, 2019,
10,296,053 shares at September 30, 2019, and |
||||||||||||||||||||
|
10,710,656 shares at December 31, 2018
|
103
|
103
|
107
|
0.0
|
%
|
(3.7
|
)%
|
|||||||||||||
|
Additional paid-in capital
|
87,370
|
87,835
|
93,773
|
(0.5
|
)
|
(6.8
|
)
|
|||||||||||||
|
Retained earnings, substantially restricted
|
73,321
|
71,592
|
66,343
|
2.4
|
10.5
|
|||||||||||||||
|
Accumulated other comprehensive loss, net of tax
|
(1,371
|
)
|
(1,042
|
)
|
(2,253
|
)
|
31.6
|
(39.1
|
)
|
|||||||||||
|
Unearned Employee Stock Ownership Plan
("ESOP") shares
|
(3,104
|
)
|
(3,386
|
)
|
(4,232
|
)
|
(8.3
|
)
|
(26.7
|
)
|
||||||||||
|
Total stockholders' equity
|
156,319
|
155,102
|
153,738
|
0.8
|
1.7
|
|||||||||||||||
|
Total liabilities and stockholders' equity
|
$
|
1,341,885
|
$
|
1,308,359
|
$
|
1,252,424
|
2.6
|
%
|
7.1
|
%
|
||||||||||
8
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except share data)
(Unaudited)
|
Quarter Ended
|
||||||||||||||||||||
|
Dec 31,
2019
|
Sep 30,
2019
|
Dec 31,
2018
|
Three
Month Change |
One
Year Change |
||||||||||||||||
|
Interest and dividend income
|
||||||||||||||||||||
|
Loans, including fees
|
$
|
13,852
|
$
|
13,897
|
$
|
13,024
|
(0.3
|
)%
|
6.4
|
%
|
||||||||||
|
Investments available-for-sale
|
995
|
1,066
|
1,124
|
(6.7
|
)
|
(11.5
|
)
|
|||||||||||||
|
Interest-earning deposits with banks
|
47
|
158
|
61
|
(70.3
|
)
|
(23.0
|
)
|
|||||||||||||
|
Dividends on FHLB Stock
|
72
|
97
|
115
|
(25.8
|
)
|
(37.4
|
)
|
|||||||||||||
|
Total interest and dividend income
|
14,966
|
15,218
|
14,324
|
(1.7
|
)
|
4.5
|
||||||||||||||
|
Interest expense
|
||||||||||||||||||||
|
Deposits
|
4,807
|
5,037
|
3,595
|
(4.6
|
)
|
33.7
|
||||||||||||||
|
FHLB advances and other borrowings
|
461
|
529
|
726
|
(12.9
|
)
|
(36.5
|
)
|
|||||||||||||
|
Total interest expense
|
5,268
|
5,566
|
4,321
|
(5.4
|
)
|
21.9
|
||||||||||||||
|
Net interest income
|
9,698
|
9,652
|
10,003
|
0.5
|
(3.0
|
)
|
||||||||||||||
|
Provision for loan losses
|
-
|
100
|
200
|
(100.0
|
)
|
(100.0
|
)
|
|||||||||||||
|
Net interest income after provision for loan
losses
|
9,698
|
9,552
|
9,803
|
1.5
|
(1.1
|
)
|
||||||||||||||
|
Noninterest income
|
||||||||||||||||||||
|
Net gain on sale of investments
|
71
|
88
|
-
|
(19.3
|
)
|
n/a
|
||||||||||||||
|
BOLI income
|
301
|
235
|
96
|
28.1
|
213.5
|
|||||||||||||||
|
Wealth management revenue
|
177
|
245
|
211
|
(27.8
|
)
|
(16.1
|
)
|
|||||||||||||
|
Deposit related fees
|
178
|
179
|
178
|
(0.6
|
)
|
0.0
|
||||||||||||||
|
Loan related fees
|
782
|
290
|
235
|
169.7
|
232.8
|
|||||||||||||||
|
Other
|
14
|
2
|
8
|
600.0
|
75.0
|
|||||||||||||||
|
Total noninterest income
|
1,523
|
1,039
|
728
|
46.6
|
109.2
|
|||||||||||||||
|
Noninterest expense
|
||||||||||||||||||||
|
Salaries and employee benefits
|
5,048
|
4,813
|
4,977
|
4.9
|
1.4
|
|||||||||||||||
|
Occupancy and equipment
|
1,024
|
924
|
871
|
10.8
|
17.6
|
|||||||||||||||
|
Professional fees
|
428
|
440
|
415
|
(2.7
|
)
|
3.1
|
||||||||||||||
|
Data processing
|
638
|
478
|
361
|
33.5
|
76.7
|
|||||||||||||||
|
OREO related expenses, net
|
1
|
1
|
3
|
0.0
|
(66.7
|
)
|
||||||||||||||
|
Regulatory assessments
|
21
|
13
|
111
|
61.5
|
(81.1
|
)
|
||||||||||||||
|
Insurance and bond premiums
|
87
|
95
|
88
|
(8.4
|
)
|
(1.1
|
)
|
|||||||||||||
|
Marketing
|
59
|
118
|
75
|
(50.0
|
)
|
(21.3
|
)
|
|||||||||||||
|
Other general and administrative
|
665
|
573
|
845
|
16.1
|
(21.3
|
)
|
||||||||||||||
|
Total noninterest expense
|
7,971
|
7,455
|
7,746
|
6.9
|
2.9
|
|||||||||||||||
|
Income before federal income tax provision
|
3,250
|
3,136
|
2,785
|
3.6
|
16.7
|
|||||||||||||||
|
Federal income tax provision
|
635
|
631
|
622
|
0.6
|
2.1
|
|||||||||||||||
|
Net income
|
$
|
2,615
|
$
|
2,505
|
$
|
2,163
|
4.4
|
%
|
20.9
|
%
|
||||||||||
|
Basic earnings per share
|
$
|
0.26
|
$
|
0.25
|
$
|
0.21
|
||||||||||||||
|
Diluted earnings per share
|
$
|
0.26
|
$
|
0.25
|
$
|
0.21
|
||||||||||||||
|
Weighted average number of common shares
outstanding
|
9,934,768
|
9,901,586
|
10,385,612
|
|||||||||||||||||
|
Weighted average number of diluted shares
outstanding
|
10,032,979
|
9,991,011
|
10,484,350
|
|||||||||||||||||
9
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except share data)
(Unaudited)
|
Year Ended December 31
|
||||||||||||||||||||
|
2019
|
2018
|
2017
|
One
Year
Change
|
Two
Year
Change
|
||||||||||||||||
|
Interest and dividend income
|
||||||||||||||||||||
|
Loans, including fees
|
$
|
54,636
|
$
|
51,127
|
$
|
43,607
|
6.9
|
%
|
25.3
|
%
|
||||||||||
|
Investments available-for-sale
|
4,329
|
4,126
|
3,504
|
4.9
|
23.5
|
|||||||||||||||
|
Interest-earning deposits with banks
|
293
|
202
|
237
|
45.0
|
23.6
|
|||||||||||||||
|
Dividends on FHLB Stock
|
362
|
458
|
296
|
(21.0
|
)
|
22.3
|
||||||||||||||
|
Total interest and dividend income
|
59,620
|
55,913
|
47,644
|
6.6
|
25.1
|
|||||||||||||||
|
Interest expense
|
||||||||||||||||||||
|
Deposits
|
17,996
|
11,218
|
7,517
|
60.4
|
139.4
|
|||||||||||||||
|
FHLB advances
|
2,716
|
3,520
|
2,505
|
(22.8
|
)
|
8.4
|
||||||||||||||
|
Total interest expense
|
20,712
|
14,738
|
10,022
|
40.5
|
106.7
|
|||||||||||||||
|
Net interest income
|
38,908
|
41,175
|
37,622
|
(5.5
|
)
|
3.4
|
||||||||||||||
|
Recapture of provision for loan losses
|
(300
|
)
|
(4,000
|
)
|
(400
|
)
|
(92.5
|
)
|
(25.0
|
)
|
||||||||||
|
Net interest income after recapture of provision
for loan losses
|
39,208
|
45,175
|
38,022
|
(13.2
|
)
|
3.1
|
||||||||||||||
|
Noninterest income
|
||||||||||||||||||||
|
Net gain (loss) on sale of investments
|
151
|
(20
|
)
|
(567
|
)
|
(855.0
|
)
|
(126.6
|
)
|
|||||||||||
|
BOLI income
|
994
|
814
|
623
|
22.1
|
59.6
|
|||||||||||||||
|
Wealth management revenue
|
879
|
611
|
919
|
43.9
|
(4.4
|
)
|
||||||||||||||
|
Deposit accounts related fees
|
733
|
681
|
446
|
7.6
|
64.3
|
|||||||||||||||
|
Loan related fees
|
1,344
|
768
|
776
|
75.0
|
73.2
|
|||||||||||||||
|
Other
|
40
|
24
|
11
|
66.7
|
263.6
|
|||||||||||||||
|
Total noninterest income
|
4,141
|
2,878
|
2,208
|
43.9
|
87.5
|
|||||||||||||||
|
Noninterest expense
|
||||||||||||||||||||
|
Salaries and employee benefits
|
19,595
|
19,302
|
17,773
|
1.5
|
10.3
|
|||||||||||||||
|
Occupancy and equipment
|
3,712
|
3,283
|
2,506
|
13.1
|
48.1
|
|||||||||||||||
|
Professional fees
|
1,690
|
1,538
|
1,809
|
9.9
|
(6.6
|
)
|
||||||||||||||
|
Data processing
|
2,031
|
1,392
|
1,457
|
45.9
|
39.4
|
|||||||||||||||
|
OREO related expenses (reimbursements),
net
|
34
|
7
|
(67
|
)
|
385.7
|
(150.7
|
)
|
|||||||||||||
|
Regulatory assessments
|
307
|
502
|
491
|
(38.8
|
)
|
(37.5
|
)
|
|||||||||||||
|
Insurance and bond premiums
|
375
|
443
|
399
|
(15.3
|
)
|
(6.0
|
)
|
|||||||||||||
|
Marketing
|
339
|
344
|
270
|
(1.5
|
)
|
25.6
|
||||||||||||||
|
Other general and administrative
|
2,335
|
2,650
|
2,171
|
(11.9
|
)
|
7.6
|
||||||||||||||
|
Total noninterest expense
|
30,418
|
29,461
|
26,809
|
3.2
|
13.5
|
|||||||||||||||
|
Income before federal income tax provision
|
12,931
|
18,592
|
13,421
|
(30.4
|
)
|
(3.7
|
)
|
|||||||||||||
|
Federal income tax provision
|
2,562
|
3,693
|
4,942
|
(30.6
|
)
|
(48.2
|
)
|
|||||||||||||
|
Net income
|
$
|
10,369
|
$
|
14,899
|
$
|
8,479
|
(30.4
|
)%
|
22.3
|
%
|
||||||||||
|
Basic earnings per share
|
$
|
1.04
|
$
|
1.44
|
$
|
0.82
|
||||||||||||||
|
Diluted earnings per share
|
$
|
1.03
|
$
|
1.43
|
$
|
0.81
|
||||||||||||||
|
Weighted average number of common shares
outstanding
|
9,976,056
|
10,306,835
|
10,289,049
|
|||||||||||||||||
|
Weighted average number of diluted shares
outstanding
|
10,075,906
|
10,424,187
|
10,437,449
|
|||||||||||||||||
10
The following table presents a breakdown of the loan portfolio, net of undisbursed funds (unaudited):
|
December 31, 2019
|
September 30, 2019
|
December 31, 2018
|
||||||||||||||||||||||
|
Amount
|
Percent
|
Amount
|
Percent
|
Amount
|
Percent
|
|||||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||
|
Commercial real estate:
|
||||||||||||||||||||||||
|
Residential:
|
||||||||||||||||||||||||
|
Micro-unit apartments
|
$
|
13,809
|
1.2
|
%
|
$
|
13,877
|
1.3
|
%
|
$
|
14,076
|
1.3
|
%
|
||||||||||||
|
Other multifamily
|
159,106
|
14.2
|
157,275
|
14.3
|
155,279
|
15.0
|
||||||||||||||||||
|
Total multifamily residential
|
172,915
|
15.4
|
171,152
|
15.6
|
169,355
|
16.3
|
||||||||||||||||||
|
Non-residential:
|
||||||||||||||||||||||||
|
Office
|
100,744
|
9.0
|
98,738
|
9.0
|
100,495
|
9.7
|
||||||||||||||||||
|
Retail
|
133,094
|
11.8
|
142,639
|
12.9
|
131,222
|
12.7
|
||||||||||||||||||
|
Mobile home park
|
26,099
|
2.3
|
23,070
|
2.1
|
16,003
|
1.5
|
||||||||||||||||||
|
Hotel
|
42,971
|
3.8
|
27,572
|
2.5
|
28,035
|
2.7
|
||||||||||||||||||
|
Nursing Home
|
11,831
|
1.1
|
16,104
|
1.5
|
16,315
|
1.6
|
||||||||||||||||||
|
Warehouse
|
17,595
|
1.6
|
18,200
|
1.7
|
25,398
|
2.4
|
||||||||||||||||||
|
Storage
|
37,190
|
3.3
|
35,908
|
3.3
|
32,462
|
3.1
|
||||||||||||||||||
|
Other non-residential
|
25,628
|
2.3
|
19,659
|
1.8
|
23,868
|
2.3
|
||||||||||||||||||
|
Total non-residential
|
395,152
|
35.2
|
381,890
|
34.8
|
373,798
|
36.0
|
||||||||||||||||||
|
Construction/land:
|
||||||||||||||||||||||||
|
One-to-four family residential
|
44,491
|
4.0
|
47,524
|
4.3
|
51,747
|
5.0
|
||||||||||||||||||
|
Multifamily
|
40,954
|
3.6
|
40,078
|
3.7
|
40,502
|
3.9
|
||||||||||||||||||
|
Commercial
|
19,550
|
1.7
|
15,913
|
1.5
|
9,976
|
1.0
|
||||||||||||||||||
|
Land development
|
8,670
|
0.8
|
6,400
|
0.6
|
6,629
|
0.6
|
||||||||||||||||||
|
Total construction/land
|
113,665
|
10.1
|
109,915
|
10.1
|
108,854
|
10.5
|
||||||||||||||||||
|
One-to-four family residential:
|
||||||||||||||||||||||||
|
Permanent owner occupied
|
210,898
|
18.8
|
205,679
|
18.7
|
194,141
|
18.7
|
||||||||||||||||||
|
Permanent non-owner occupied
|
161,630
|
14.4
|
164,707
|
15.0
|
147,825
|
14.3
|
||||||||||||||||||
|
Total one-to-four family residential
|
372,528
|
33.2
|
370,386
|
33.7
|
341,966
|
33.0
|
||||||||||||||||||
|
Business
|
||||||||||||||||||||||||
|
Aircraft
|
14,012
|
1.3
|
14,186
|
1.3
|
11,058
|
1.1
|
||||||||||||||||||
|
Small Business Administration (“SBA”)
|
362
|
0.0
|
-
|
0.0
|
-
|
0.0
|
||||||||||||||||||
|
Other business
|
23,405
|
2.1
|
23,321
|
2.1
|
19,428
|
1.9
|
||||||||||||||||||
|
Total business
|
37,779
|
3.4
|
37,507
|
3.4
|
30,486
|
3.0
|
||||||||||||||||||
|
Consumer
|
||||||||||||||||||||||||
|
Classic Auto
|
18,454
|
1.7
|
14,636
|
1.3
|
-
|
0.0
|
||||||||||||||||||
|
Other consumer
|
11,745
|
1.0
|
11,815
|
1.1
|
12,970
|
1.2
|
||||||||||||||||||
|
Total consumer
|
30,199
|
2.7
|
26,451
|
2.4
|
12,970
|
1.2
|
||||||||||||||||||
|
Total loans
|
1,122,238
|
100.0
|
%
|
1,097,301
|
100.0
|
%
|
1,037,429
|
100.0
|
%
|
|||||||||||||||
|
Less:
|
||||||||||||||||||||||||
|
Deferred loan fees, net
|
558
|
290
|
1,178
|
|||||||||||||||||||||
|
ALLL
|
13,218
|
13,161
|
13,347
|
|||||||||||||||||||||
|
Loans receivable, net
|
$
|
1,108,462
|
$
|
1,083,850
|
$
|
1,022,904
|
||||||||||||||||||
|
Concentrations of credit: (1)
|
||||||||||||||||||||||||
|
Construction loans as % of total capital
|
81.9
|
%
|
82.6
|
%
|
81.9
|
%
|
||||||||||||||||||
|
Total non-owner occupied commercial real estate as % of total capital
|
449.7
|
%
|
444.9
|
%
|
451.8
|
%
|
||||||||||||||||||
|
(1)
|
Concentrations of credit percentages are for First Financial Northwest Bank only using classifications in accordance with FDIC regulatory guidelines.
|
11
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures
(Dollars in thousands, except per share data)
(Unaudited)
|
At or For the Quarter Ended
|
||||||||||||||||||||
|
Dec 31
|
Sep 30
|
Jun 30
|
Mar 31,
|
Dec 31,
|
||||||||||||||||
|
2019
|
2019
|
2019
|
2019
|
2018
|
||||||||||||||||
|
Performance Ratios:
|
||||||||||||||||||||
|
Return on assets
|
0.79
|
%
|
0.75
|
%
|
1.04
|
%
|
0.63
|
%
|
0.69
|
%
|
||||||||||
|
Return on equity
|
6.64
|
6.41
|
8.70
|
5.16
|
5.54
|
|||||||||||||||
|
Dividend payout ratio
|
34.62
|
36.00
|
27.27
|
42.11
|
38.10
|
|||||||||||||||
|
Equity-to-assets ratio
|
11.65
|
11.85
|
11.86
|
11.78
|
12.28
|
|||||||||||||||
|
Tangible equity ratio (1)
|
11.53
|
11.73
|
11.72
|
11.64
|
12.13
|
|||||||||||||||
|
Net interest margin
|
3.09
|
3.07
|
3.23
|
3.37
|
3.41
|
|||||||||||||||
|
Average interest-earning assets to average
interest-bearing liabilities
|
113.50
|
113.17
|
113.23
|
113.87
|
114.27
|
|||||||||||||||
|
Efficiency ratio
|
71.04
|
69.73
|
68.80
|
73.06
|
72.18
|
|||||||||||||||
|
Noninterest expense as a percent of average
total assets
|
2.40
|
2.24
|
2.28
|
2.48
|
2.49
|
|||||||||||||||
|
Book value per share
|
$
|
15.25
|
$
|
15.06
|
$
|
14.83
|
$
|
14.50
|
$
|
14.35
|
||||||||||
|
Tangible book value per share (1)
|
15.07
|
14.88
|
14.64
|
14.32
|
14.17
|
|||||||||||||||
|
Capital Ratios: (2)
|
||||||||||||||||||||
|
Tier 1 leverage ratio
|
10.27
|
%
|
10.13
|
%
|
10.34
|
%
|
10.28
|
%
|
10.37
|
%
|
||||||||||
|
Common equity tier 1 capital ratio
|
13.13
|
13.14
|
13.46
|
13.13
|
13.43
|
|||||||||||||||
|
Tier 1 capital ratio
|
13.13
|
13.14
|
13.46
|
13.13
|
13.43
|
|||||||||||||||
|
Total capital ratio
|
14.38
|
14.39
|
14.71
|
14.38
|
14.68
|
|||||||||||||||
|
Asset Quality Ratios:
|
||||||||||||||||||||
|
Nonperforming loans as a percent of total
loans, net of undisbursed funds
|
0.01
|
%
|
0.01
|
%
|
0.01
|
%
|
0.01
|
%
|
0.07
|
%
|
||||||||||
|
Nonperforming assets as a percent of total
assets
|
0.04
|
0.05
|
0.05
|
0.05
|
0.10
|
|||||||||||||||
|
ALLL as a percent of total loans, net of
undisbursed funds
|
1.18
|
1.20
|
1.22
|
1.30
|
1.29
|
|||||||||||||||
|
Net recoveries to average loans receivable, net
|
(0.01
|
)
|
(0.00
|
)
|
(0.00
|
)
|
(0.01
|
)
|
(0.00
|
)
|
||||||||||
|
Allowance for Loan Losses:
|
||||||||||||||||||||
|
ALLL, beginning of the quarter
|
$
|
13,161
|
$
|
13,057
|
$
|
13,808
|
$
|
13,347
|
$
|
13,116
|
||||||||||
|
Provision (Recapture of provision)
|
-
|
100
|
(800
|
)
|
400
|
200
|
||||||||||||||
|
Charge-offs
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
|
Recoveries
|
57
|
4
|
49
|
61
|
31
|
|||||||||||||||
|
ALLL, end of the quarter
|
$
|
13,218
|
$
|
13,161
|
$
|
13,057
|
$
|
13,808
|
$
|
13,347
|
||||||||||
(1) Tangible equity ratio and tangible book value per share are non-GAAP financial measures. Refer to page 16 for
reconciliation between the GAAP and non‑GAAP financial measures.
(2) Capital ratios are for First Financial Northwest Bank only.
12
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures (continued)
(Dollars in thousands, except per share data)
(Unaudited)
|
At or For the Quarter Ended
|
||||||||||||||||||||
|
Dec 31,
|
Sep 30,
|
Jun 30,
|
Mar 31,
|
Dec 31,
|
||||||||||||||||
|
2019
|
2019
|
2019
|
2019
|
2018
|
||||||||||||||||
|
Yields and Costs:
|
||||||||||||||||||||
|
Yield on loans
|
5.05
|
%
|
5.14
|
%
|
5.19
|
%
|
5.22
|
%
|
5.13
|
%
|
||||||||||
|
Yield on investments available-for-sale
|
2.85
|
3.02
|
3.21
|
3.35
|
3.17
|
|||||||||||||||
|
Yield on interest-earning deposits
|
1.61
|
2.24
|
2.33
|
2.50
|
2.27
|
|||||||||||||||
|
Yield on FHLB stock
|
4.84
|
6.81
|
5.58
|
4.68
|
6.63
|
|||||||||||||||
|
Yield on interest-earning assets
|
4.78
|
%
|
4.84
|
%
|
4.94
|
%
|
4.98
|
%
|
4.88
|
%
|
||||||||||
|
Cost of interest-bearing deposits
|
1.94
|
%
|
2.00
|
%
|
1.89
|
%
|
1.76
|
%
|
1.61
|
%
|
||||||||||
|
Cost of FHLB advances
|
1.66
|
2.02
|
2.28
|
2.26
|
2.12
|
|||||||||||||||
|
Cost of interest-bearing liabilities
|
1.91
|
%
|
2.00
|
%
|
1.94
|
%
|
1.84
|
%
|
1.68
|
%
|
||||||||||
|
Cost of total deposits
|
1.84
|
%
|
1.91
|
%
|
1.80
|
%
|
1.67
|
%
|
1.53
|
%
|
||||||||||
|
Cost of funds
|
1.82
|
1.92
|
1.86
|
1.76
|
1.61
|
|||||||||||||||
|
Average Balances:
|
||||||||||||||||||||
|
Loans
|
$
|
1,087,558
|
$
|
1,073,283
|
$
|
1,051,894
|
$
|
1,031,994
|
$
|
1,006,905
|
||||||||||
|
Investments available-for-sale
|
138,331
|
140,031
|
138,634
|
140,433
|
140,568
|
|||||||||||||||
|
Interest-earning deposits
|
11,572
|
27,992
|
8,275
|
6,484
|
10,653
|
|||||||||||||||
|
FHLB stock
|
5,897
|
5,649
|
7,337
|
7,888
|
6,886
|
|||||||||||||||
|
Total interest-earning assets
|
$
|
1,243,358
|
$
|
1,246,955
|
$
|
1,206,140
|
$
|
1,186,799
|
$
|
1,165,012
|
||||||||||
|
Interest-bearing deposits
|
$
|
985,532
|
$
|
998,123
|
$
|
919,306
|
$
|
881,260
|
$
|
883,672
|
||||||||||
|
Borrowings
|
109,895
|
103,707
|
145,895
|
160,950
|
135,886
|
|||||||||||||||
|
Total interest-bearing liabilities
|
$
|
1,095,427
|
$
|
1,101,830
|
$
|
1,065,201
|
$
|
1,042,210
|
$
|
1,019,558
|
||||||||||
|
Noninterest-bearing deposits
|
50,951
|
47,613
|
48,137
|
47,002
|
47,580
|
|||||||||||||||
|
Total deposits and borrowings
|
$
|
1,146,378
|
$
|
1,149,443
|
$
|
1,113,338
|
$
|
1,089,212
|
$
|
1,067,138
|
||||||||||
|
Average assets
|
$
|
1,317,586
|
$
|
1,319,777
|
$
|
1,279,880
|
$
|
1,258,902
|
$
|
1,236,460
|
||||||||||
|
Average stockholders' equity
|
156,147
|
155,057
|
152,267
|
152,850
|
154,958
|
|||||||||||||||
13
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures
(Dollars in thousands, except per share data)
(Unaudited)
|
At or For the Year Ended December 31,
|
||||||||||||||||||||
|
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
|
Performance Ratios:
|
||||||||||||||||||||
|
Return on assets
|
0.80
|
%
|
1.21
|
%
|
0.76
|
%
|
0.88
|
%
|
0.96
|
%
|
||||||||||
|
Return on equity
|
6.73
|
9.86
|
5.94
|
5.55
|
5.15
|
|||||||||||||||
|
Dividend payout ratio
|
33.65
|
21.53
|
32.93
|
32.02
|
35.57
|
|||||||||||||||
|
Equity-to-assets
|
11.65
|
12.28
|
11.79
|
13.31
|
17.42
|
|||||||||||||||
|
Tangible equity ratio (1)
|
11.53
|
12.13
|
11.63
|
13.31
|
17.42
|
|||||||||||||||
|
Net interest margin
|
3.19
|
3.56
|
3.60
|
3.60
|
3.38
|
|||||||||||||||
|
Average interest-earning assets to average interest-
bearing liabilities
|
113.44
|
114.28
|
114.07
|
117.11
|
120.45
|
|||||||||||||||
|
Efficiency ratio
|
70.66
|
66.88
|
67.31
|
62.27
|
62.66
|
|||||||||||||||
|
Noninterest expense as a percent of average total assets
|
2.35
|
2.40
|
2.42
|
2.27
|
2.07
|
|||||||||||||||
|
Book value per common share
|
$
|
15.25
|
$
|
14.35
|
$
|
13.27
|
$
|
12.63
|
$
|
12.40
|
||||||||||
|
Tangible book value per share (1)
|
$
|
15.07
|
$
|
14.17
|
$
|
13.07
|
$
|
12.63
|
$
|
12.40
|
||||||||||
|
Capital Ratios: (2)
|
||||||||||||||||||||
|
Tier 1 leverage ratio
|
10.27
|
%
|
10.37
|
%
|
10.20
|
%
|
11.17
|
%
|
11.61
|
%
|
||||||||||
|
Common equity tier 1 capital ratio
|
13.13
|
13.43
|
12.52
|
14.38
|
16.36
|
|||||||||||||||
|
Tier 1 capital ratio
|
13.13
|
13.43
|
12.52
|
14.38
|
16.36
|
|||||||||||||||
|
Total capital ratio
|
14.38
|
14.68
|
13.77
|
15.63
|
17.62
|
|||||||||||||||
|
Asset Quality Ratios:
|
||||||||||||||||||||
|
Nonperforming loans as a percent of total loans, net of
undisbursed funds
|
0.01
|
%
|
0.07
|
%
|
0.02
|
%
|
0.10
|
%
|
0.16
|
%
|
||||||||||
|
Nonperforming assets as a percent of total assets
|
0.04
|
0.10
|
0.05
|
0.31
|
0.48
|
|||||||||||||||
|
ALLL as a percent of total loans, net of undisbursed funds
|
1.18
|
1.29
|
1.28
|
1.32
|
1.36
|
|||||||||||||||
|
Net recoveries to average loans receivable, net
|
(0.02
|
)
|
(0.45
|
)
|
(0.27
|
)
|
(0.02
|
)
|
(0.18
|
)
|
||||||||||
|
Allowance for Loan Losses:
|
||||||||||||||||||||
|
ALLL, beginning of the year
|
$
|
13,347
|
$
|
12,882
|
$
|
10,951
|
$
|
9,463
|
$
|
10,491
|
||||||||||
|
Provision (Recapture of provision)
|
$
|
(300
|
)
|
(4,000
|
)
|
(400
|
)
|
1,300
|
(2,200
|
)
|
||||||||||
|
Charge-offs
|
-
|
-
|
-
|
(83
|
)
|
(362
|
)
|
|||||||||||||
|
Recoveries
|
$
|
171
|
4,465
|
2,331
|
271
|
1,534
|
||||||||||||||
|
ALLL, end of the year
|
$
|
13,218
|
$
|
13,347
|
$
|
12,882
|
$
|
10,951
|
$
|
9,463
|
||||||||||
(1) Tangible equity ratio and tangible book value per share are non-GAAP financial measures. Refer to page 16 for
reconciliation between the GAAP and non‑GAAP financial measures.
(2) Capital ratios are for First Financial Northwest Bank only.
14
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures (continued)
(Dollars in thousands, except per share data)
(Unaudited)
|
At or For the Year Ended December 31,
|
||||||||||||||||||||
|
2019
|
2018
|
2017
|
2016
|
2015
|
||||||||||||||||
|
Yields and Costs:
|
||||||||||||||||||||
|
Yield on loans
|
5.15
|
%
|
5.13
|
%
|
4.96
|
%
|
4.99
|
%
|
5.18
|
%
|
||||||||||
|
Yield on investments available-for-sale
|
3.11
|
2.92
|
2.61
|
2.31
|
1.84
|
|||||||||||||||
|
Yield on interest-earning deposits
|
2.15
|
1.74
|
1.07
|
0.52
|
0.26
|
|||||||||||||||
|
Yield on FHLB stock
|
5.42
|
5.24
|
3.32
|
2.62
|
1.06
|
|||||||||||||||
|
Yield on interest-earning assets
|
4.88
|
%
|
4.83
|
%
|
4.57
|
%
|
4.39
|
%
|
4.13
|
%
|
||||||||||
|
Cost of interest-bearing deposits
|
1.90
|
%
|
1.35
|
%
|
1.04
|
%
|
0.94
|
%
|
0.89
|
%
|
||||||||||
|
Cost of FHLB advances
|
2.09
|
1.92
|
1.30
|
0.86
|
0.95
|
|||||||||||||||
|
Cost of interest-bearing liabilities
|
1.92
|
%
|
1.46
|
%
|
1.10
|
%
|
0.92
|
%
|
0.90
|
%
|
||||||||||
|
Cost of total deposits
|
1.81
|
%
|
1.28
|
%
|
0.99
|
%
|
0.90
|
%
|
0.86
|
%
|
||||||||||
|
Cost of funds
|
1.84
|
1.39
|
1.05
|
0.89
|
0.88
|
|||||||||||||||
|
Average Balances:
|
||||||||||||||||||||
|
Loans
|
$
|
1,061,367
|
$
|
995,810
|
$
|
878,449
|
$
|
765,948
|
$
|
667,739
|
||||||||||
|
Investments available-for-sale
|
139,354
|
141,100
|
134,105
|
132,372
|
121,893
|
|||||||||||||||
|
Interest-earning deposits
|
13,634
|
11,628
|
22,194
|
45,125
|
104,476
|
|||||||||||||||
|
FHLB stock
|
6,684
|
8,748
|
8,914
|
7,714
|
6,527
|
|||||||||||||||
|
Total interest-earning assets
|
$
|
1,221,039
|
$
|
1,157,286
|
$
|
1,043,662
|
$
|
951,159
|
$
|
900,635
|
||||||||||
|
Interest-bearing deposits
|
$
|
946,484
|
$
|
828,965
|
$
|
722,666
|
$
|
648,324
|
$
|
614,185
|
||||||||||
|
Borrowings
|
129,899
|
183,667
|
192,227
|
163,893
|
133,527
|
|||||||||||||||
|
Total interest-bearing liabilities
|
$
|
1,076,383
|
$
|
1,012,632
|
$
|
914,893
|
$
|
812,217
|
$
|
747,712
|
||||||||||
|
Noninterest-bearing deposits
|
48,434
|
49,461
|
39,127
|
27,596
|
23,509
|
|||||||||||||||
|
Total deposits and borrowings
|
$
|
1,124,817
|
$
|
1,062,093
|
$
|
954,020
|
$
|
839,813
|
$
|
771,221
|
||||||||||
|
Average assets
|
$
|
1,294,164
|
$
|
1,227,396
|
$
|
1,108,656
|
$
|
1,010,243
|
$
|
958,154
|
||||||||||
|
Average stockholders' equity
|
154,092
|
151,145
|
142,647
|
160,192
|
177,904
|
|||||||||||||||
15
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 of the tangible equity ratio and tangible book value per share. The Company's intangible assets consist of goodwill and core deposit intangible. Tangible equity is calculated by subtracting intangible assets from total stockholders’ equity.
Tangible assets are calculated by subtracting intangible assets from total assets. The tangible equity ratio is tangible equity divided by tangible assets. Tangible book value per share is calculated by dividing tangible equity by the number of
common shares outstanding. The Company believes that these non-GAAP measures provide a more consistent presentation of its capital and facilitate peer comparison that is desired by investors.
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 table provides a reconciliation between the GAAP and non-GAAP measures:
|
|
Dec 31,
2019
|
Sep 30,
2019
|
Jun 30,
2019
|
Mar 31,
2019
|
Dec 31,
2018
|
Dec 31,
2017
|
||||||||||||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||||||||||||||
|
Total stockholders' equity (GAAP)
|
$
|
156,319
|
$
|
155,102
|
$
|
153,828
|
$
|
151,684
|
$
|
153,738
|
$
|
142,634
|
||||||||||||
|
Less:
|
||||||||||||||||||||||||
|
Goodwill
|
889
|
889
|
889
|
889
|
889
|
889
|
||||||||||||||||||
|
Core deposit intangible
|
968
|
1,005
|
1,042
|
1,079
|
1,116
|
1,266
|
||||||||||||||||||
|
Tangible equity (Non-GAAP)
|
$
|
154,462
|
$
|
153,208
|
$
|
151,897
|
$
|
149,716
|
$
|
151,733
|
$
|
140,479
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Total assets (GAAP)
|
1,341,885
|
1,308,359
|
1,297,561
|
1,287,862
|
1,252,424
|
1,210,229
|
||||||||||||||||||
|
Less:
|
||||||||||||||||||||||||
|
Goodwill
|
889
|
889
|
889
|
889
|
889
|
889
|
||||||||||||||||||
|
Core deposit intangible
|
968
|
1,005
|
1,042
|
1,079
|
1,116
|
1,266
|
||||||||||||||||||
|
Tangible assets (Non-GAAP)
|
$
|
1,340,028
|
$
|
1,306,465
|
$
|
1,295,630
|
$
|
1,285,894
|
$
|
1,250,419
|
$
|
1,208,074
|
||||||||||||
|
|
||||||||||||||||||||||||
|
Common shares outstanding
at period end
|
10,252,953
|
10,296,053
|
10,375,325
|
10,457,625
|
10,710,656
|
10,748,437
|
||||||||||||||||||
|
|
||||||||||||||||||||||||
|
Equity to assets ratio
|
11.65
|
%
|
11.85
|
%
|
11.86
|
%
|
11.78
|
%
|
12.28
|
%
|
11.79
|
%
|
||||||||||||
|
Tangible equity ratio
|
11.53
|
11.73
|
11.72
|
11.64
|
12.13
|
11.63
|
||||||||||||||||||
|
Book value per share
|
$
|
15.25
|
$
|
15.06
|
$
|
14.83
|
$
|
14.50
|
$
|
14.35
|
$
|
13.27
|
||||||||||||
|
Tangible book value per share
|
15.07
|
14.88
|
14.64
|
14.32
|
14.17
|
13.07
|
||||||||||||||||||
16