0001437749-23-020861.txt : 20230727 0001437749-23-020861.hdr.sgml : 20230727 20230727130704 ACCESSION NUMBER: 0001437749-23-020861 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 20230727 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20230727 DATE AS OF CHANGE: 20230727 FILER: COMPANY DATA: COMPANY CONFORMED NAME: First Northwest Bancorp CENTRAL INDEX KEY: 0001556727 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 461259100 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36741 FILM NUMBER: 231116836 BUSINESS ADDRESS: STREET 1: 105 WEST 8TH STREET CITY: PORT ANGELES STATE: WA ZIP: 98362 BUSINESS PHONE: (360) 457-0461 MAIL ADDRESS: STREET 1: 105 WEST 8TH STREET CITY: PORT ANGELES STATE: WA ZIP: 98362 8-K 1 fnwb20230525_8k.htm FORM 8-K fnwb20230525_8k.htm
false 0001556727 0001556727 2023-07-27 2023-07-27
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): July 27, 2023
 
FIRST NORTHWEST BANCORP
(Exact name of registrant as specified in its charter)
 
 
 
 
 
 
 
Washington
 
001-36741
 
46-1259100
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)
 
 
 
 
105 West 8th Street, Port Angeles, Washington
98362
(Address of principal executive offices)
(Zip Code)
 
Registrant's telephone number, including area code:  (360) 457-0461
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
 
 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))
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class:
 
Trading Symbol(s):
 
Name of each exchange on which registered:
Common Stock, par value $0.01 per share
 
FNWB
 
The Nasdaq Stock Market LLC
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
 
 
 

 
 
Item 2.02
Results of Operations and Financial Condition
 
On July 27, 2023, First Northwest Bancorp issued an earnings release for the quarter ended June 30, 2023. A copy of the earnings release is furnished herewith as Exhibit 99.1 and is incorporated herein by reference.
 
Item 8.01
Other Events
 
On July 27, 2023, First Northwest Bancorp announced in its earnings release that its Board of Directors has declared a quarterly cash dividend of $0.07 per share of common stock, payable on August 25, 2023, to shareholders of record as of the close of business on August 11, 2023.
 
 
 Item 9.01 Financial Statements and Exhibits 
(d) Exhibit.
The following exhibit is furnished with this Form 8-K.
 
 
Exhibit No.
Description
99.1
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
 
 
 

 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
FIRST NORTHWEST BANCORP
 
 
 
 
 
 
Date:
July 27, 2023
/s/Matthew P. Deines
 
 
Matthew P. Deines
 
 
President and Chief Executive Officer
 
 
 
EX-99.1 2 ex_526525.htm EXHIBIT 99.1 ex_526525.htm

Exhibit 99.1

a01.jpg

PORT ANGELES, Wash., Jul. 27, 2023 (GLOBE NEWSWIRE)

First Northwest Bancorp Reports Second Quarter 2023 Earnings

 

Matthew P. Deines, President and CEO, comments on financial results:

"We grew deposits this quarter and are cautiously optimistic that funding costs have begun to stabilize," said Matthew P. Deines, President and CEO of First Northwest Bancorp. "We continue to focus on the blocking and tackling of community banking and expect actions we took in the second quarter will result in lower expenses in future quarters. Loan growth continues to moderate as we focus on liquidity and pricing loans based on the marginal cost of deposits. Credit quality remains strong and continues to serve as a defining characteristic of our credit culture."

 

The Board of Directors of First Northwest Bancorp declared a quarterly cash dividend of $0.07 per common share. The dividend will be payable on August 25, 2023, to shareholders of record as of the close of business on August 11, 2023.

 

FINANCIAL HIGHLIGHTS

 

2Q 23

   

1Q 23

   

2Q 22

 

x

YTD Highlights

OPERATING RESULTS (in millions)

                         

Deposit growth year-to-date of $88.9 million

Operating revenue (1)

  $ 17.7     $ 18.6     $ 19.5    

Retail growth $43.1 million, or 3.0%

Noninterest expense

    15.2       14.9       17.0    

Brokered growth $45.7 million, or 34.2%

Pre-provision net interest income

    16.0       16.3       17.2        

Net income

    1.8       3.5       2.5    

Loan growth year-to-date of $90.6 million,

PER SHARE DATA

                           

or 6%

Basic and diluted earnings

  $ 0.20     $ 0.39     $ 0.27        

Book value

    16.56       16.57       16.60    

Deposit insurance coverage update:

Tangible book value *

    16.39       16.38       16.40    

Estimated uninsured business and

BALANCE SHEET (in millions)

                           

consumer deposits totaling $271.5 million,

Total loans

  $ 1,638     $ 1,579     $ 1,477      

or approximately 16% of total deposits

Total deposits

    1,653       1,594       1,581      

42% of uninsured in urban areas

Total shareholders' equity

    160       160       165      

58% of uninsured in rural areas

ASSET QUALITY

                         

Estimated uninsured public fund deposits

Net charge-off ratio

    0.10 %     0.25 %     -0.03 %    

to total deposits of 8% (fully collateralized)

Nonperforming assets to total assets

    0.12       0.12       0.06    

Estimated insured deposits to total

Allowance for credit losses on loans

                           

deposits of 76%

to total loans

    1.06       1.10       1.07    

Available borrowing capacity to

Nonperforming loan coverage ratio

    677       661       1,269      

uninsured deposits of 125%

SELECTED RATIOS

                             

Return on average assets

    0.34 %     0.70 %     0.51 %  

Liquidity:

Return on average equity

    4.41       8.98       5.75      

Closely monitored with ample on and off

Return on average tangible equity *

    4.47       9.08       5.82      

balance sheet liquidity for operations.

Net interest margin

    3.25       3.46       3.77        

Efficiency ratio

    86.01       79.78       87.15    

Asset quality:

Bank common equity tier 1 (CETI) ratio

    13.10       13.34       13.21      

Credit metrics remain stable. Past due and

Bank total risk-based capital ratio

    14.08       14.35       14.24      

nonperforming balances remain low.

(1)  Net interest income before provision plus noninterest income

* See reconciliation of Non-GAAP Financial Measures later in this release.

 

 

 

First Northwest Bancorp (Nasdaq: FNWB) ("First Northwest" or "Company") today reported quarterly net income of $1.8 million for the second quarter of 2023, compared to $3.5 million for the first quarter of 2023, and $2.5 million for the second quarter of 2022. Basic and diluted earnings per share were $0.20 for the second quarter of 2023, compared to $0.39 for the first quarter of 2023, and $0.27 for the second quarter of 2022. In the second quarter of 2023, the Company generated a return on average assets ("ROAA") of 0.34%, a return on average equity ("ROAE") of 4.41%, and a return on average tangible common equity* of 4.47%. Results in the second quarter of 2023 are reflective of the higher interest rate environment and the impact on the deposit mix as customers seek higher yielding alternatives for their balances.

 

In June 2023, First Northwest determined that Quin Ventures, Inc. ("Quin Ventures") was no longer a going concern. The Company wrote off the remaining investment in Quin Ventures through retained earnings in accordance with applicable non-controlling interest accounting methods. The noncontrolling interest in Quin Ventures balance was moved to retained earnings, with no change to total shareholders' equity as a result of the transaction.

 

Net Interest Income

Total interest income increased $2.2 million to $25.5 million for the second quarter of 2023, compared to $23.3 million in the previous quarter, and increased $6.5 million from $19.0 million in the second quarter of 2022. Interest income increased in the current quarter due to higher yields on earning assets and increased volume of loans and interest-earning deposits in banks. Interest and fees on loans increased year-over-year, in part, as the Company's banking subsidiary, First Fed Bank ("First Fed" or "Bank"), grew the loan portfolio through our renewed short-term participation in the Northpointe Mortgage Purchase Program ("Northpointe MPP"), draws on new and existing business lines of credit, originations of multi-family real estate loans, and auto and manufactured home loan purchases. Loan yields have increased over the prior year due to higher rates on new originations as well as the repricing of variable rate loans tied to the Prime Rate or other indices.

 

Total interest expense was $9.5 million for the second quarter of 2023, compared to $7.0 million in the first quarter of 2023 and $1.7 million in the second quarter a year ago. Current quarter interest expense was higher due to a 42 basis point increase in the cost of deposits to 1.54% at June 30, 2023, from 1.12% at the prior quarter end. The increase over the second quarter of 2022 was the result of a 134 basis point increase in the cost of deposits from 0.20% one year prior along with higher volumes of short-term FHLB advances and certificates of deposit ("CDs"). A shift in the deposit mix from transaction and money market accounts to a higher volume of savings accounts and CDs, primarily promotional, resulted in higher costs of deposits. Reliance on brokered CDs to replace lost consumer balances also contributed to additional deposit costs.

 

Net interest income before provision for credit losses for the second quarter of 2023 decreased 2.0% to $16.0 million, compared to $16.3 million for the preceding quarter, and decreased 7.3% from the second quarter one year ago.

 

The Company recorded a $300,000 provision for credit losses in the second quarter of 2023, reflecting the growth in the loan portfolio and additional charge-offs from the Splash unsecured consumer loan program. This compares to a recapture of loan loss provision of $500,000 for the preceding quarter due to a decrease in unfunded commitments during the quarter as well as improvements in the U.S. gross domestic product assumption driving anticipated loss rates. A loan loss provision of $500,000 was recorded for the second quarter of 2022, which was estimated using the incurred loss method based on historical loss trends combined with qualitative adjustments.

 

The net interest margin decreased to 3.25% for the second quarter of 2023, from 3.46% the prior quarter, and decreased 52 basis points compared to the second quarter of 2022 of 3.77%. Decreases from both the prior quarter and the prior year are due to higher funding costs for both deposits and borrowed funds. While increases in the cost of funding are currently outpacing the growth of the yield on interest-earning assets, the Company has taken measures to combat interest rate compression. The Bank augments organic loan production with higher yielding purchased loans through relationships with loan originators. We have also increased our focus on variable-rate lending and the Bank has entered into a fair value hedging agreement.

 

The yield on average earning assets of 5.17% for the second quarter of 2023 increased 22 basis points compared to the first quarter of 2023, and increased 103 basis points from 4.14% for the second quarter of 2022. Higher loan rates at origination and increased yields on variable-rate loans were offset by a slight decline in the recognition of fees related to loan prepayments. The year-over-year increase was primarily due to higher average loan balances augmented by increases in yields, which were positively impacted by the rising rate environment and overall improvements in the mix of interest-earning assets.

 

The cost of average interest-bearing liabilities increased to 2.33% for the second quarter of 2023, compared to 1.81% for the first quarter of 2023, and increased from 0.49% for the second quarter of 2022. Total cost of funds increased to 1.98% for the second quarter of 2023 from 1.53% in the prior quarter and increased from 0.39% for the second quarter of 2022. Current quarter increases were due to higher costs on interest-bearing deposits and advances in addition to increases in average CD and advance balances.

 

2

The increase over the same quarter last year was driven by higher rates paid on deposits. The Company has attracted and retained funding through the use of promotional products. The mix of retail deposit balances has shifted away from non-maturity accounts towards higher cost term certificate and savings products. Retail CDs represented 25.8%, 22.8% and 12.3% of retail deposits at June 30, 2023, March 31, 2023 and June 30, 2022, respectively. Average interest-bearing deposit balances increased $45.5 million, or 3.5%, to $1.33 billion for the second quarter of 2023 compared to $1.29 billion for the first quarter of 2023 and increased $110.0 million, or 9.0%, compared to $1.22 billion for the second quarter of 2022.

 

Selected Yields

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Loan yield

    5.38 %     5.16 %     5.22 %     4.75 %     4.48 %

Investment securities yield

    4.09       3.93       3.71       3.21       2.96  

Cost of interest-bearing deposits

    1.87       1.37       0.78       0.41       0.26  

Cost of deposits

    1.54       1.12       0.62       0.32       0.20  

Cost of borrowed funds

    4.36       3.92       3.30       2.50       1.96  

Net interest spread

    2.84       3.13       3.72       3.72       3.65  

Net interest margin

    3.25       3.46       3.96       3.88       3.77  

 

Noninterest Income

Noninterest income declined 26.7% to $1.7 million for the second quarter of 2023 from $2.3 million for the first quarter of 2023 primarily due to a decline in the valuation of servicing rights on sold loans of $675,000 related to the impact of loan payoffs that increased the prepayment speed applied to the remaining servicing rights, as well as a current quarter reduction due to the paid-off loans, mainly attributable to one large commercial loan. Noninterest income declined 23.0% from $2.2 million the same quarter one year ago, due to decreases in the servicing rights valuation, gain on sale of mortgage loans and swap fee income. Saleable mortgage loan production continues to be hindered by reduced refinancing activity due to rising market rates on mortgage loans compared to the prior year.

 

Noninterest income declined $580,000 to $4.0 million for the six months ended June 30, 2023, compared to $4.6 million for the six months ended June 30, 2022.

 

Noninterest Income

                                       

$ in thousands

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Loan and deposit service fees

  $ 1,064     $ 1,141     $ 1,163       1,302     $ 1,091  

Sold loan servicing fees and servicing right mark-to-market

    (191 )     493       202       206       27  

Net gain on sale of loans

    58       176       55       285       231  

Net gain on sale of investment securities

                            (8 )

Increase in cash surrender value of bank-owned life insurance

    190       226       230       221       213  

Income from death benefit on bank-owned life insurance, net

                1,489              

Other income

    590       298       229       320       668  

Total noninterest income

  $ 1,711     $ 2,334     $ 3,368     $ 2,334     $ 2,222  

 

Noninterest Expense

Noninterest expense totaled $15.2 million for the second quarter of 2023, compared to $14.9 million for the preceding quarter and $17.0 million for the second quarter a year ago. Increases in payroll tax, incentive payments, and stockholder communications during the current quarter were partially offset by decreases in advertising. The reduced expenses compared to the second quarter of 2022 reflects a $2.0 million decrease related to Quin Ventures compensation, advertising and customer acquisition costs, and occupancy expenses, as well as decreases in Bank commissions paid and non-recurring compensation expense, partially offset by higher Bank professional fees and FDIC insurance premiums. The Company continues to focus on managing expenses, with a focus on reducing advertising and discretionary spending.

 

Noninterest expense decreased 5.4% to $30.1 million for the six months ended June 30, 2023, compared to $31.8 million for the six months ended June 30, 2022. Compensation expense decreased $2.5 million primarily due to lower commissions, payroll taxes, and medical insurance expenses. Quin Ventures expenses included in the current six-month period totaled $320,000 compared to $2.7 million in the six months ended June 30, 2022.

 

3

 

Noninterest Expense

                                       

$ in thousands

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Compensation and benefits

  $ 8,180     $ 7,837     $ 8,357     $ 9,045     $ 9,735  

Data processing

    2,080       2,038       2,119       1,778       1,870  

Occupancy and equipment

    1,214       1,209       1,300       1,499       1,432  

Supplies, postage, and telephone

    435       355       333       322       408  

Regulatory assessments and state taxes

    424       389       372       365       441  

Advertising

    929       1,041       486       645       1,405  

Professional fees

    884       806       762       695       629  

FDIC insurance premium

    313       257       235       219       211  

Other expense

    758       939       1,179       807       832  

Total noninterest expense

  $ 15,217     $ 14,871     $ 15,143     $ 15,375     $ 16,963  
                                         

Efficiency ratio

    86.01 %     79.78 %     67.91 %     74.86 %     87.15 %

 

Investment Securities

Investment securities decreased $7.1 million, or 2.2%, to $322.0 million at June 30, 2023, compared to $329.1 million three months earlier, and decreased $31.2 million compared to $353.1 million at June 30, 2022. The market value of the portfolio decreased $4.2 million during the second quarter of 2023, primarily driven by an increase in long-term interest rates. At June 30, 2023, municipal bonds totaled $100.5 million and comprised the largest portion of the investment portfolio at 31.2%. Non-agency issued mortgage-backed securities were the second largest segment, totaling $92.1 million, or 28.6%, of the portfolio at quarter end. The estimated average life of the securities portfolio was approximately 7.8 years, compared to 8.1 years in the prior quarter and 8.2 years in the second quarter of 2022. The effective duration of the portfolio was approximately 5.2 years, compared to 5.1 years in the prior quarter and 5.2 years at the end of the second quarter of 2022.

 

Investment Securities

                                       

$ in thousands

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Municipal bonds

  $ 100,503     $ 101,910     $ 98,050     $ 96,130     $ 104,048  

U.S. Treasury notes

    2,364       2,390       2,364       2,355       2,420  

International agency issued bonds (Agency bonds)

    1,717       1,745       1,702       1,683       1,762  

Corporate issued debt securities (Corporate debt):

    53,674       55,117       55,499       56,165       57,977  

Senior positions

    16,934       17,025       16,828       16,571       16,864  

Subordinated bank notes

    36,740       38,092       38,671       39,594       41,113  

Mortgage-backed securities:

                                       

U.S. government agency issued mortgage-backed securities (MBS agency)

    71,565       74,946       75,648       78,231       85,796  

Non-agency issued mortgage-backed securities (MBS non-agency)

    92,140       92,978       93,306       94,872       101,141  

 

Loans and Unfunded Loan Commitments

Net loans, excluding loans held for sale, increased $58.8 million, or 3.8%, to $1.62 billion at June 30, 2023, from $1.56 billion at March 31, 2023, and increased $159.3 million, or 10.9%, from $1.46 billion one year ago. One-to-four family loans increased $11.1 million during the current quarter as a result of $3.3 million in new amortizing loan originations and $23.0 million of residential construction loans that converted to permanent amortizing loans, partially offset by sales and payments received. Multi-family loans increased $11.7 million during the current quarter. The increase was the result of new originations totaling $19.1 million and $493,000 of construction loans converting into permanent amortizing loans, partially offset by payoffs. Construction loans decreased $4.6 million during the quarter, with $27.5 million converting into fully amortizing loans, partially offset by draws on new and existing loans. Commercial real estate, automobile, and home equity loans increased $2.9 million, $2.6 million and $4.8 million, respectively, during the current quarter compared to the previous quarter as originations and draws on existing commitments exceeded payoffs and scheduled payments. Commercial business loans increased $30.1 million as a result of our participation in the Northpointe MPP of $23.9 million.

 

The Company originated $10.7 million in residential mortgages during the second quarter of 2023 and sold $6.4 million, with an average gross margin on sale of mortgage loans of approximately 2.00%. This production compares to residential mortgage originations of $5.8 million in the preceding quarter with sales of $5.4 million, with an average gross margin of 1.99%. The single-family home inventory increased in the second quarter of 2023 but higher market rates on mortgage loans continued to hinder saleable mortgage loan production. We have expanded our secondary market outlets and changed our portfolio pricing in an effort to improve our overall production mix. New single-family residence construction loan commitments totaled $4.8 million in the second quarter, compared to $4.9 million in the preceding quarter.

 

4

 

Loans by Collateral and Unfunded Commitments

                                       

$ in thousands

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

One-to-four family construction

  $ 74,787     $ 65,770     $ 63,021     $ 58,038     $ 60,848  

All other construction and land

    81,968       95,769       130,588       157,527       152,024  

One-to-four family first mortgage

    428,879       394,595       384,255       374,309       351,813  

One-to-four family junior liens

    11,956       9,140       8,219       7,244       2,701  

One-to-four family revolving open-end

    33,658       30,473       29,909       27,496       25,438  

Commercial real estate, owner occupied:

                                       

Health care

    23,157       23,311       23,463       23,909       24,058  

Office

    18,797       22,246       22,583       23,002       24,311  

Warehouse

    15,158       16,782       20,411       18,479       21,144  

Other

    60,054       52,212       47,778       38,282       31,375  

Commercial real estate, non-owner occupied:

                                       

Office

    54,926       58,711       59,216       60,655       62,971  

Retail

    51,824       52,175       54,800       53,186       50,818  

Hospitality

    53,416       45,978       46,349       44,359       44,845  

Other

    90,870       93,207       89,047       98,386       96,597  

Multi-family residential

    296,398       284,699       252,765       242,509       220,677  

Commercial business loans

    80,079       80,825       73,963       69,626       69,888  

Commercial agriculture and fishing loans

    7,844       1,829       1,847       938       525  

State and political subdivision obligations

    439       439       439       472       472  

Consumer automobile loans

    137,860       136,540       136,213       134,221       133,364  

Consumer loans secured by other assets

    115,646       114,343       102,333       104,272       102,685  

Consumer loans unsecured

    444       420       352       481       745  

Total loans

  $ 1,638,160     $ 1,579,464     $ 1,547,551     $ 1,537,391     $ 1,477,299  
                                         

Unfunded loan commitments

  $ 168,668     $ 202,720     $ 225,836     $ 231,208     $ 250,311  

 

Deposits

Total deposits increased $58.9 million, to $1.65 billion at June 30, 2023, compared to $1.59 billion at March 31, 2023, and increased $72.4 million, or 4.6%, compared to $1.58 billion one year ago. Increases in brokered CDs of $45.1 million, consumer CDs of $34.7 million, business savings account balances of $14.1 million, public fund CDs of $7.1 million, business CD balances of $4.2 million, consumer savings account balances of $4.1 million, and business money market account balances of $3.6 million, were offset by decreases in consumer money market account balances of $32.1 million, business demand account balances of $11.0 million, and consumer demand account balances of $10.7 million during the second quarter. We believe decreases in certain categories were driven by customers seeking higher rates and additional diversification over a variety of account types. The current rate environment has contributed to greater competition for deposits with additional rate specials offered to attract new funds.

 

On July 24, 2023, the FDIC issued guidance regarding estimated uninsured deposits reporting expectations to clarify that totals should not be reduced for balances collateralized by pledged assets. The Company estimates that 24% of total deposit balances were uninsured at June 30, 2023. Approximately 16% of total deposits were uninsured business and consumer deposits with the remaining 8% consisting of uninsured public fund balances totaling $126.4 million, of which $108.5 million is fully covered through a combination of an FHLB letter of credit and our participation in the Washington Public Deposit Protection Commission program and $17.9 million is fully covered through pledged securities. Consumer deposits make up 60% of total deposits with an average balance of approximately $24,000 per account.

 

Deposits

                                       

$ in thousands

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Noninterest-bearing demand deposits

  $ 280,475     $ 292,119     $ 315,083     $ 342,808     $ 336,311  

Interest-bearing demand deposits

    179,029       189,187       193,558       192,504       192,114  

Money market accounts

    374,269       402,760       473,009       519,018       587,747  

Savings accounts

    260,279       242,117       200,920       196,780       195,029  

Certificates of deposit, retail

    379,484       333,510       247,824       224,574       183,823  

Certificates of deposit, brokered

    179,586       134,515       133,861       129,551       85,700  

Total deposits

  $ 1,653,122     $ 1,594,208     $ 1,564,255     $ 1,605,235     $ 1,580,724  
                                         

Public fund and tribal deposits included in total deposits

  $ 130,974     $ 119,969     $ 103,662     $ 113,690     $ 131,855  

Total loans to total deposits

    99 %     99 %     99 %     96 %     93 %

 

5

 

Deposit Mix

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Noninterest-bearing demand deposits

    17.0 %     18.3 %     20.1 %     21.4 %     21.3 %

Interest-bearing demand deposits

    10.8       11.9       12.4       12.0       12.2  

Money market accounts

    22.6       25.3       30.3       32.2       37.2  

Savings accounts

    15.7       15.2       12.8       12.3       12.3  

Certificates of deposit, retail

    23.0       20.9       15.8       14.0       11.6  

Certificates of deposit, brokered

    10.9       8.4       8.6       8.1       5.4  

 

Cost of Deposits for the Quarter Ended

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Interest-bearing demand deposits

    0.45 %     0.42 %     0.17 %     0.03 %     0.05 %

Money market accounts

    0.99       0.73       0.49       0.33       0.22  

Savings accounts

    1.22       0.70       0.17       0.05       0.05  

Certificates of deposit, retail

    3.25       2.59       1.65       1.05       0.73  

Certificates of deposit, brokered

    3.44       2.99       2.15       1.08       0.57  

Cost of total deposits

    1.54       1.12       0.62       0.32       0.20  

 

Asset Quality

Nonperforming loans were $2.6 million at June 30, 2023, a decrease of $79,000 from March 31, 2023, related to decreased delinquencies in Splash unsecured consumer loans and Triad purchased manufactured home loans, partially offset by a newly delinquent single-family residential loan. The percentage of the allowance for credit losses on loans to nonperforming loans increased to 677% at June 30, 2023, from 661% at March 31, 2023, and decreased from 1269% at June 30, 2022. Classified loans increased $4.5 million to $22.7 million at June 30, 2023, due to the downgrades of a $2.5 million commercial business loan, a $1.3 million commercial real estate loan and $873,000 in additional funds disbursed on a substandard commercial construction loan during the second quarter. The allowance for credit losses on loans as a percentage of total loans was 1.06% at June 30, 2023, decreasing from 1.10% at the prior quarter end and from 1.07% reported one year earlier. The current quarter 4 basis point decrease can be attributed to construction loans converting into amortizing loans which carry lower reserve estimates along with the Northpoint MPP balance of $23.9 million which does not carry a reserve as it is a very low-risk program.

 

$ in thousands

 

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Allowance for credit losses on loans to total loans

    1.06 %     1.10 %     1.04 %     1.06 %     1.07 %

Allowance for credit losses on loans to nonperforming loans

    677       661       900       463       1269  

Nonperforming loans to total loans

    0.16       0.17       0.12       0.22       0.08  

Net charge-off ratio (annualized)

    0.10       0.25       0.11       0.06       (0.03 )
                                         

Total nonperforming loans

  $ 2,554     $ 2,633     $ 1,790     $ 3,517     $ 1,241  

Reserve for unfunded commitments

  $ 1,336     $ 1,336     $ 325     $ 331     $ 358  

 

Capital

Total shareholders’ equity decreased to $159.6 million at June 30, 2023, compared to $160.3 million three months earlier, due to a decrease in the fair market value of the investment securities portfolio, net of taxes, of $3.0 million, dividends declared of $675,000 and share repurchases totaling $341,000, partially offset by net income of $1.8 million and a $1.1 million increase in the fair market value of derivatives, net of taxes. Bond values continue to be impacted by the higher rate environment.

 

Tangible book value per common share* was $16.39 at June 30, 2023, compared to $16.38 at March 31, 2023, and $16.40 at June 30, 2022. Book value per common share was $16.56 at June 30, 2023, compared to $16.57 at March 31, 2023, and $16.60 at June 30, 2022.

 

Capital levels for both the Company and its operating bank, First Fed, remain in excess of applicable regulatory requirements and the Bank was categorized as "well-capitalized" at June 30, 2023. Common Equity Tier 1 and Total Risk-Based Capital Ratios at June 30, 2023, were 13.1% and 14.1%, respectively.

 

6

 

   

2Q 23

   

1Q 23

   

4Q 22

   

3Q 22

   

2Q 22

 

Equity to total assets

    7.38 %     7.38 %     7.75 %     7.49 %     8.13 %

Tangible common equity ratio *

    7.31       7.30       7.67       7.40       8.04  

Capital ratios (First Fed Bank):

                                       

Tier 1 leverage

    10.16       10.41       10.41       10.50       10.41  

Common equity Tier 1 capital

    13.10       13.34       13.40       13.13       13.21  

Tier 1 risk-based

    13.10       13.34       13.40       13.13       13.21  

Total risk-based

    14.08       14.35       14.42       14.16       14.24  

 

Share Repurchase Program and Cash Dividend

First Northwest continued to return capital to our shareholders through cash dividends and share repurchases during the second quarter of 2023. We repurchased 30,176 shares of common stock under the Company's October 2020 stock repurchase plan at an average price of $11.27 per share for a total of $341,000 during the quarter ended June 30, 2023, leaving 227,410 shares remaining under the plan. In addition, the Company paid cash dividends totaling $683,000 in the second quarter of 2023

 


* See reconciliation of Non-GAAP Financial Measures later in this release.

 

 

Awards/Recognition

 

The Company has received several accolades as a leader in the community in the last year.

 

psbjbw_110pixels2023.jpg
 
In June 2023, First Fed was named on the Puget Sound Business Journal’s Best Workplaces list. First Fed has been recognized as one the top 100 workplaces in Washington, as voted for two years in row by each company’s own employees.
psbjcc_110pixels2023.jpg
 
In May 2023, First Fed was recognized as a Top Corporate Citizen by the Puget Sound Business Journal. The Corporate Citizenship Awards honors local corporate philanthropists and companies making significant contributions in the region. The top 25 small, medium and large-sized companies were recognized in addition to nine other honorees last year. First Fed was ranked #1 in the medium-sized company category in 2023 and was ranked #3 in the same category in 2022.
cascadia_110pixels2023.jpg
 
In March 2023, First Fed won “Best Bank” in Cascadia Daily News 2023 Readers' Choice. It was the first year that First Fed had participated in this Whatcom County poll.
bauer_110pixelslogo2023.jpg
 
First Fed has been rated a 5-star bank by Bauer Financial, a leading independent bank and credit union rating and research firm. This top rating indicates that First Fed is one of the strongest banks in the nation based on capital, loan quality and other detailed performance criteria.

 

 

7

 

best-ofpeninsulaw118.jpg
 
In October 2022, First Fed was also recognized in the Best of the Peninsula surveys, winning Best Bank for both Clallam and Jefferson counties. The Bank was a finalist for Best Bank on Bainbridge Island and Central Kitsap. Also, First Fed received Best Financial Advisor in Jefferson.
bongold.jpg
In September 2022, the First Fed team was honored to bring home the Gold for Best Bank in the Best of the Northwest survey hosted by Bellingham Alive.

 

 

About the Company

 

First Northwest Bancorp (Nasdaq: FNWB) is a financial holding company engaged in investment activities including the business of its subsidiary, First Fed Bank. First Fed is a Pacific Northwest-based financial institution which has served its customers and communities since 1923. Currently First Fed has 16 locations in Washington state including 12 full-service branches. First Fed’s business and operating strategy is focused on building sustainable earnings by delivering a full array of financial products and services for individuals, small businesses, non-profit organizations, and commercial customers. In 2022, First Northwest made an investment in The Meriwether Group, LLC, a boutique investment banking and accelerator firm. Additionally, First Northwest focuses on strategic partnerships to provide modern financial services such as digital payments and marketplace lending. First Northwest Bancorp was incorporated in 2012 and completed its initial public offering in 2015 under the ticker symbol FNWB. The Company is headquartered in Port Angeles, Washington.

 

 

Forward-Looking Statements

 

Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; pressures on liquidity, including as a result of withdrawals of deposits or declines in the value of our investment portfolio; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Companys latest Annual Report on Form 10-K and other filings with the Securities and Exchange Commission ("SEC"),which are available on our website at www.ourfirstfed.com and on the SECs website at www.sec.gov.

 

Any of the forward-looking statements that we make in this Press Release and in the other public statements we make may turn out to be incorrect because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company's operating and stock price performance may be negatively affected. 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 2023 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Companys operations and stock price performance.

 

 

For More Information Contact:

Matthew P. Deines, President and Chief Executive Officer

Geri Bullard, EVP and Chief Financial Officer

IRGroup@ourfirstfed.com

360-457-0461

 

8

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data) (Unaudited)

 

   

June 30, 2023

   

March 31, 2023

   

June 30, 2022

   

Three Month Change

   

One Year Change

 

ASSETS

                                       

Cash and due from banks

  $ 19,294     $ 17,844     $ 19,006       8.1 %     1.5 %

Interest-earning deposits in banks

    59,008       122,773       68,789       -51.9       -14.2  

Investment securities available for sale, at fair value

    321,963       329,086       353,144       -2.2       -8.8  

Loans held for sale

    2,049             696       100.0       194.4  

Loans receivable (net of allowance for credit losses on loans $17,297, $17,396, and $15,747)

    1,620,863       1,562,068       1,461,552       3.8       10.9  

Federal Home Loan Bank (FHLB) stock, at cost

    12,621       15,602       10,402       -19.1       21.3  

Accrued interest receivable

    7,480       7,205       5,802       3.8       28.9  

Premises and equipment, net

    18,140       18,252       21,291       -0.6       -14.8  

Servicing rights on sold loans, at fair value

    3,825       4,224       3,865       -9.4       -1.0  

Bank-owned life insurance, net

    40,066       39,878       39,783       0.5       0.7  

Equity and partnership investments

    14,569       14,392       11,452       1.2       27.2  

Goodwill and other intangible assets, net

    1,087       1,088       1,176       -0.1       -7.6  

Deferred tax asset, net

    15,031       14,211       9,310       5.8       61.5  

Prepaid expenses and other assets

    26,882       25,471       25,364       5.5       6.0  

Total assets

  $ 2,162,878     $ 2,172,094     $ 2,031,632       -0.4 %     6.5 %
                                         

LIABILITIES AND SHAREHOLDERS' EQUITY

                                       

Deposits

  $ 1,653,122     $ 1,594,208     $ 1,580,724       3.7 %     4.6 %

Borrowings

    303,397       379,377       249,319       -20.0       21.7  

Accrued interest payable

    1,367       508       461       169.1       196.5  

Accrued expenses and other liabilities

    44,286       35,255       35,040       25.6       26.4  

Advances from borrowers for taxes and insurance

    1,149       2,410       934       -52.3       23.0  

Total liabilities

    2,003,321       2,011,758       1,866,478       -0.4       7.3  
                                         

Shareholders' Equity

                                       

Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding

                      n/a       n/a  

Common stock, $0.01 par value, authorized 75,000,000 shares; issued and outstanding 9,633,496 at June 30, 2023; issued and outstanding 9,674,055 at March 31, 2023; and issued and outstanding 9,950,172 at June 30, 2022

    96       97       100       -1.0       -4.0  

Additional paid-in capital

    95,360       95,333       96,479       0.0       -1.2  

Retained earnings

    111,750       114,139       107,000       -2.1       4.4  

Accumulated other comprehensive loss, net of tax

    (40,066 )     (38,108 )     (28,447 )     -5.1       -40.8  

Unearned employee stock ownership plan (ESOP) shares

    (7,583 )     (7,749 )     (8,242 )     2.1       8.0  

Total parent's shareholders' equity

    159,557       163,712       166,890       -2.5       -4.4  

Noncontrolling interest in Quin Ventures, Inc.

          (3,376 )     (1,736 )     100.0       100.0  

Total shareholders' equity

    159,557       160,336       165,154       -0.5       -3.4  

Total liabilities and shareholders' equity

  $ 2,162,878     $ 2,172,094     $ 2,031,632       -0.4 %     6.5 %

 

9

 

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data) (Unaudited)

 

   

Quarter Ended

                 
   

June 30, 2023

   

March 31, 2023

   

June 30, 2022

   

Three Month Change

   

One Year Change

 

INTEREST INCOME

                                       

Interest and fees on loans receivable

  $ 21,299     $ 19,504     $ 16,081       9.2 %     32.4 %

Interest on investment securities

    3,336       3,182       2,715       4.8       22.9  

Interest on deposits in banks

    617       404       46       52.7       1,241.3  

FHLB dividends

    222       192       119       15.6       86.6  

Total interest income

    25,474       23,282       18,961       9.4       34.3  

INTEREST EXPENSE

                                       

Deposits

    6,209       4,353       796       42.6       680.0  

Borrowings

    3,283       2,624       922       25.1       256.1  

Total interest expense

    9,492       6,977       1,718       36.0       452.5  

Net interest income

    15,982       16,305       17,243       -2.0       -7.3  

Provision for (recapture of) credit losses

    300       (500 )     500       160.0       -40.0  

Net interest income after provision for (recapture of) credit losses

    15,682       16,805       16,743       -6.7       -6.3  

NONINTEREST INCOME

                                       

Loan and deposit service fees

    1,064       1,141       1,091       -6.7       -2.5  

Sold loan servicing fees and servicing right mark-to-market

    (191 )     493       27       -138.7       -807.4  

Net gain on sale of loans

    58       176       231       -67.0       -74.9  

Net (loss) gain on sale of investment securities

                (8 )     n/a       100.0  

Increase in cash surrender value of bank-owned life insurance

    190       226       213       -15.9       -10.8  

Other income

    590       298       668       98.0       -11.7  

Total noninterest income

    1,711       2,334       2,222       -26.7       -23.0  

NONINTEREST EXPENSE

                                       

Compensation and benefits

    8,180       7,837       9,735       4.4       -16.0  

Data processing

    2,080       2,038       1,870       2.1       11.2  

Occupancy and equipment

    1,214       1,209       1,432       0.4       -15.2  

Supplies, postage, and telephone

    435       355       408       22.5       6.6  

Regulatory assessments and state taxes

    424       389       441       9.0       -3.9  

Advertising

    929       1,041       1,405       -10.8       -33.9  

Professional fees

    884       806       629       9.7       40.5  

FDIC insurance premium

    313       257       211       21.8       48.3  

Other expense

    758       939       832       -19.3       -8.9  

Total noninterest expense

    15,217       14,871       16,963       2.3       -10.3  

Income before provision for income taxes

    2,176       4,268       2,002       -49.0       8.7  

Provision for income taxes

    475       825       467       -42.4       1.7  

Net income

    1,701       3,443       1,535       -50.6       10.8  

Net loss attributable to noncontrolling interest in Quin Ventures, Inc.

    75       85       953       -11.8       -92.1  

Net income attributable to parent

  $ 1,776     $ 3,528     $ 2,488       -49.7 %     -28.6 %
                                         

Basic and diluted earnings per common share

  $ 0.20     $ 0.39     $ 0.27       -48.7 %     -25.9 %
                                         

 

10

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data) (Unaudited)

 

   

Six Months Ended June 30

   

Percent

 
   

2023

   

2022

   

Change

 

INTEREST INCOME

                       

Interest and fees on loans receivable

  $ 40,803     $ 30,617       33.3 %

Interest on investment securities

    6,518       4,990       30.6  

Interest on deposits in banks

    1,021       84       1,115.5  

FHLB dividends

    414       171       142.1  

Total interest income

    48,756       35,862       36.0  

INTEREST EXPENSE

                       

Deposits

    10,562       1,513       598.1  

Borrowings

    5,907       1,620       264.6  

Total interest expense

    16,469       3,133       425.7  

Net interest income

    32,287       32,729       -1.4  

(Recapture of) provision for credit losses

    (200 )     500       -140.0  

Net interest income after (recapture of) provision for credit losses

    32,487       32,229       0.8  

NONINTEREST INCOME

                       

Loan and deposit service fees

    2,205       2,264       -2.6  

Sold loan servicing fees and servicing right mark-to-market

    302       459       -34.2  

Net gain on sale of loans

    234       484       -51.7  

Net gain on sale of investment securities

          118       -100.0  

Increase in cash surrender value of bank-owned life insurance

    416       465       -10.5  

Other income

    888       835       6.3  

Total noninterest income

    4,045       4,625       -12.5  

NONINTEREST EXPENSE

                       

Compensation and benefits

    16,017       18,538       -13.6  

Data processing

    4,118       3,642       13.1  

Occupancy and equipment

    2,423       2,599       -6.8  

Supplies, postage, and telephone

    790       721       9.6  

Regulatory assessments and state taxes

    813       802       1.4  

Advertising

    1,970       2,157       -8.7  

Professional fees

    1,690       1,188       42.3  

FDIC insurance premium

    570       434       31.3  

Other

    1,697       1,713       -0.9  

Total noninterest expense

    30,088       31,794       -5.4  

Income before provision for income taxes

    6,444       5,060       27.4  

Provision for income taxes

    1,300       1,021       27.3  

Net income

    5,144       4,039       27.4  

Net loss attributable to noncontrolling interest in Quin Ventures, Inc.

    160       1,255       -87.3  

Net income attributable to parent

  $ 5,304     $ 5,294       0.2 %
                         

Basic and diluted earnings per common share

  $ 0.59     $ 0.58       1.7 %

 

11

 

FIRST NORTHWEST BANCORP AND SUBSIDIARY

Selected Financial Ratios and Other Data

(Dollars in thousands, except per share data) (Unaudited)

 

   

As of or For the Quarter Ended

 
   

June 30, 2023

   

March 31, 2023

   

December 31, 2022

   

September 30, 2022

   

June 30, 2022

 

Performance ratios: (1)

                                       

Return on average assets

    0.34 %     0.70 %     1.18 %     0.85 %     0.51 %

Return on average equity

    4.41       8.98       15.26       10.12       5.75  

Average interest rate spread

    2.84       3.14       3.72       3.72       3.65  

Net interest margin (2)

    3.25       3.46       3.96       3.88       3.77  

Efficiency ratio (3)

    86.0       79.8       67.9       74.9       87.2  

Equity to total assets

    7.38       7.38       7.75       7.49       8.13  

Average interest-earning assets to average interest-bearing liabilities

    120.7       122.4       124.8       128.6       130.0  

Book value per common share

  $ 16.56     $ 16.57     $ 16.31     $ 15.69     $ 16.60  
                                         

Tangible performance ratios:

                                       

Tangible assets (4)

  $ 2,161,235     $ 2,170,202     $ 2,040,267     $ 2,089,454     $ 2,029,702  

Tangible common equity (4)

    157,914       158,444       156,479       154,612       163,224  

Tangible common equity ratio (4)

    7.31 %     7.30 %     7.67 %     7.40 %     8.04 %

Return on tangible common equity (4)

    4.47       9.08       15.45       10.23       5.82  

Tangible book value per common share (4)

  $ 16.39     $ 16.38     $ 16.13     $ 15.50     $ 16.40  
                                         

Asset quality ratios:

                                       

Nonperforming assets to total assets at end of period (5)

    0.12 %     0.12 %     0.09 %     0.17 %     0.06 %

Nonperforming loans to total loans (6)

    0.16       0.17       0.12       0.22       0.08  

Allowance for credit losses on loans to nonperforming loans (6)

    677.25       660.69       900.34       462.70       1268.90  

Allowance for credit losses on loans to total loans

    1.06       1.10       1.04       1.06       1.07  

Annualized net charge-offs (recoveries) to average outstanding loans

    0.10       0.25       0.11       0.06       (0.03 )
                                         

Capital ratios (First Fed Bank):

                                       

Tier 1 leverage

    10.2 %     10.4 %     10.4 %     10.5 %     10.4 %

Common equity Tier 1 capital

    13.1       13.3       13.4       13.1       13.2  

Tier 1 risk-based

    13.1       13.3       13.4       13.1       13.2  

Total risk-based

    14.1       14.4       14.4       14.2       14.2  
                                         

Other Information:

                                       

Average total assets

  $ 2,118,014     $ 2,050,210     $ 2,039,016     $ 1,996,765     $ 1,963,665  

Average total loans

    1,605,133       1,552,299       1,554,276       1,500,508       1,455,038  

Average interest-earning assets

    1,975,384       1,909,271       1,895,799       1,859,396       1,836,202  

Average noninterest-bearing deposits

    282,514       294,235       326,450       342,944       344,827  

Average interest-bearing deposits

    1,333,943       1,288,429       1,243,185       1,224,548       1,223,888  

Average interest-bearing liabilities

    1,636,188       1,559,983       1,519,106       1,446,428       1,412,327  

Average equity

    161,387       159,319       157,590       168,264       173,584  

Average shares -- basic

    8,914,355       8,911,294       9,069,493       9,093,821       9,094,894  

Average shares -- diluted

    8,931,386       8,939,601       9,106,453       9,138,123       9,166,131  

 

(1)

Performance ratios are annualized, where appropriate.

(2) Net interest income divided by average interest-earning assets.
(3) Total noninterest expense as a percentage of net interest income and total other noninterest income.
(4) See reconciliation of Non-GAAP Financial Measures later in this release.
(5) Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.
(6) Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

 

 

 

12

 

 

   

As of or For the Six Months Ended June 30,

 
   

2023

   

2022

 

Performance ratios: (1)

               

Return on average assets

    0.51 %     0.55 %

Return on average equity

    6.67       5.88  

Average interest rate spread

    2.98       3.54  

Net interest margin (2)

    3.35       3.65  

Efficiency ratio (3)

    82.8       85.1  

Equity to total assets

    7.38       8.13  

Average interest-earning assets to average interest-bearing liabilities

    121.5       131.1  

Book value per common share

  $ 16.56     $ 16.60  
                 

Tangible performance ratios:

               

Tangible assets (4)

  $ 2,161,235     $ 2,029,702  

Tangible common equity (4)

    157,914       163,224  

Tangible common equity ratio (4)

    7.31 %     8.04 %

Return on tangible common equity (4)

    6.75       5.96  

Tangible book value per common share (4)

  $ 16.39     $ 16.40  
                 

Asset quality ratios:

               

Nonperforming assets to total assets at end of period (5)

    0.12 %     0.06 %

Nonperforming loans to total loans (6)

    0.16       0.08  

Allowance for credit losses on loans to nonperforming loans (6)

    677.25       1268.90  

Allowance for credit losses on loans to total loans

    1.06       1.07  

Annualized net charge-offs (recoveries) to average outstanding loans

    0.17       (0.02 )
                 

Capital ratios (First Fed Bank):

               

Tier 1 leverage

    10.2 %     10.4 %

Common equity Tier 1 capital

    13.1       13.2  

Tier 1 risk-based

    13.1       13.2  

Total risk-based

    14.1       14.2  
                 

Other Information:

               

Average total assets

  $ 2,084,299     $ 1,931,868  

Average total loans

    1,605,133       1,400,461  

Average interest-earning assets

    1,942,510       1,807,115  

Average noninterest-bearing deposits

    288,343       336,611  

Average interest-bearing deposits

    1,311,311       1,222,612  

Average interest-bearing liabilities

    1,598,295       1,377,962  

Average equity

    160,359       181,475  

Average shares -- basic

    8,912,358       9,082,373  

Average shares -- diluted

    8,932,117       9,167,315  

 

(1)

Performance ratios are annualized, where appropriate.

(2) Net interest income divided by average interest-earning assets.
(3) Total noninterest expense as a percentage of net interest income and total other noninterest income.
(4) See reconciliation of Non-GAAP Financial Measures later in this release.
(5) Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.
(6) Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

 

 

13

 

FIRST NORTHWEST BANCORP AND SUBSIDIARY

ADDITIONAL INFORMATION

(Dollars in thousands) (Unaudited)

 

Selected loan detail:

   

June 30, 2023

   

March 31, 2023

   

June 30, 2022

   

Three Month Change

   

One Year Change

 
   

(In thousands)

 

Commercial business loans breakout

                                       

PPP loans

  $ 54     $ 72     $ 1,751     $ (18 )   $ (1,697 )

Northpointe Bank MPP

    23,904                   23,904       23,904  

Secured lines of credit

    38,355       30,723       12,989       7,632       25,366  

Unsecured lines of credit

    1,231       588       981       643       250  

SBA loans

    9,038       8,805       10,432       233       (1,394 )

Other commercial business loans

    57,551       59,798       44,909       (2,247 )     12,642  

Total commercial business loans

  $ 130,133     $ 99,986     $ 71,062     $ 30,147     $ 59,071  
                                         

Auto and other consumer loans breakout

                                       

Triad Manufactured Home loans

  $ 90,792     $ 102,424     $ 79,659     $ (11,632 )   $ 11,133  

Woodside auto loans

    125,948       123,337       110,499       2,611       15,449  

First Help auto loans

    5,602       6,281       6,724       (679 )     (1,122 )

Other auto loans

    6,188       7,350       11,097       (1,162 )     (4,909 )

Other consumer loans

    25,420       11,910       28,764       13,510       (3,344 )

Total auto and other consumer loans

  $ 253,950     $ 251,302     $ 236,743     $ 2,648     $ 17,207  
                                         

Construction and land loans breakout

                                       

1-4 Family construction

  $ 65,025     $ 87,269     $ 74,520     $ (22,244 )   $ (9,495 )

Multifamily construction

    58,070       51,788       88,922       6,282       (30,852 )

Acquisition-renovation

    7,266       7,096       27,103       170       (19,837 )

Nonresidential construction

    19,033       6,909       12,651       12,124       6,382  

Land and development

    7,666       8,600       9,866       (934 )     (2,200 )

Total construction and land loans

  $ 157,060     $ 161,662     $ 213,062     $ (4,602 )   $ (56,002 )

 

14

FIRST NORTHWEST BANCORP AND SUBSIDIARY

ADDITIONAL INFORMATION

(Dollars in thousands) (Unaudited)

 

Non-GAAP Financial Measures

This press release contains financial measures that are not defined in generally accepted accounting principles ("GAAP"). Non-GAAP measures are presented where management believes the information will help investors understand the Company’s results of operations or financial position and assess trends. Where non-GAAP financial measures are used, the comparable GAAP financial measure is also provided. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of the GAAP and non-GAAP measures are presented below.

 

Calculations Based on Tangible Common Equity:

   

June 30, 2023

   

March 31, 2023

   

December 31, 2022

   

September 30, 2022

   

June 30, 2022

 
   

(Dollars in thousands, except per share data)

 

Total shareholders' equity

  $ 159,557     $ 160,336     $ 158,282     $ 156,599     $ 165,154  

Less: Goodwill and other intangible assets

    1,087       1,088       1,089       1,173       1,176  

Disallowed non-mortgage loan servicing rights

    556       804       714       814       754  

Total tangible common equity

  $ 157,914     $ 158,444     $ 156,479     $ 154,612     $ 163,224  
                                         

Total assets

  $ 2,162,878     $ 2,172,094     $ 2,042,070     $ 2,091,441     $ 2,031,632  

Less: Goodwill and other intangible assets

    1,087       1,088       1,089       1,173       1,176  

Disallowed non-mortgage loan servicing rights

    556       804       714       814       754  

Total tangible assets

  $ 2,161,235     $ 2,170,202     $ 2,040,267     $ 2,089,454     $ 2,029,702  
                                         

Average shareholders' equity

  $ 161,387     $ 159,319     $ 157,590     $ 168,264     $ 173,584  

Less: Average goodwill and other intangible assets

    1,088       1,089       1,171       1,175       1,179  

Average disallowed non-mortgage loan servicing rights

    801       715       813       755       949  

Total average tangible common equity

  $ 159,498     $ 157,515     $ 155,606     $ 166,334     $ 171,456  
                                         

Tangible common equity ratio (1)

    7.31 %     7.30 %     7.67 %     7.40 %     8.04 %

Net income

  $ 1,776     $ 3,528     $ 6,060     $ 4,291     $ 2,488  

Return on tangible common equity (1)

    4.47 %     9.08 %     15.45 %     10.23 %     5.82 %

Common shares outstanding

    9,633,496       9,674,055       9,703,581       9,978,041       9,950,172  

Tangible book value per common share (1)

  $ 16.39     $ 16.38     $ 16.13     $ 15.50     $ 16.40  

GAAP Ratios:

                                       

Equity to total assets

    7.38 %     7.38 %     7.75 %     7.49 %     8.13 %

Return on average equity

    4.41 %     8.98 %     15.26 %     10.12 %     5.75 %

Book value per common share

  $ 16.56     $ 16.57     $ 16.31     $ 15.69     $ 16.60  

 

   

June 30, 2023

   

June 30, 2022

 
   

(Dollars in thousands, except per share data)

 

Total shareholders' equity

  $ 159,557     $ 165,154  

Less: Goodwill and other intangible assets

    1,087       1,176  

Disallowed non-mortgage loan servicing rights

    556       754  

Total tangible common equity

  $ 157,914     $ 163,224  
                 

Total assets

  $ 2,162,878     $ 2,031,632  

Less: Goodwill and other intangible assets

    1,087       1,176  

Disallowed non-mortgage loan servicing rights

    556       754  

Total tangible assets

  $ 2,161,235     $ 2,029,702  
                 

Average shareholders' equity

  $ 160,359     $ 181,475  

Less: Average goodwill and other intangible assets

    1,088       1,180  

Average disallowed non-mortgage loan servicing rights

    758       1,164  

Total average tangible common equity

  $ 158,513     $ 179,131  
                 

Tangible common equity ratio (1)

    7.31 %     8.04 %

Net income

  $ 5,304     $ 5,294  

Return on tangible common equity (1)

    6.75 %     5.96 %

Common shares outstanding

    9,633,496       9,950,172  

Tangible book value per common share (1)

  $ 16.39     $ 16.40  

GAAP Ratios:

               

Equity to total assets

    7.38 %     8.13 %

Return on average equity

    6.67 %     5.88 %

Book value per common share

  $ 16.56     $ 16.60  

 

Non-GAAP Financial Measures Footnote

(1)

We believe these non-GAAP metrics provide an important measure with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.

 

15
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Document And Entity Information
Jul. 27, 2023
Document Information [Line Items]  
Entity, Registrant Name FIRST NORTHWEST BANCORP
Document, Type 8-K
Document, Period End Date Jul. 27, 2023
Entity, Incorporation, State or Country Code WA
Entity, File Number 001-36741
Entity, Tax Identification Number 46-1259100
Entity, Address, Address Line One 105 West 8th Street
Entity, Address, City or Town Port Angeles
Entity, Address, State or Province WA
Entity, Address, Postal Zip Code 98362
City Area Code 360
Local Phone Number 457-0461
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock
Trading Symbol FNWB
Security Exchange Name NASDAQ
Entity, Emerging Growth Company false
Amendment Flag false
Entity, Central Index Key 0001556727
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