Note 9 - Borrowings

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

Note 9 - Borrowings

First Fed is a member of the FHLB. As a member, First Fed has a committed line of credit of up to 45% of total assets, subject to the amount of FHLB stock ownership and certain collateral requirements.

First Fed maintains borrowing arrangements with the FHLB to borrow funds under long-term, fixed-rate advance agreements. First Fed also has overnight borrowings through FHLB which renew daily until paid. First Fed periodically uses fixed-rate advances maturing in less than one year as an alternative source of funds. All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $896.1 million and $753.6 million at  December 31, 2023 and 2022, respectively. The Bank had outstanding letters of credit from the FHLB with notional amounts of $60.0 million to secure public deposits and $772,000 to secure the Bellevue, Washington branch lease at December 31, 2023.

First Fed also has an established borrowing arrangement with the Federal Reserve Board of San Francisco ("FRB") to utilize the discount window for short-term borrowing. Available borrowing capacity was $6.6 million and $8.6 million at December 31, 2023 and 2022, respectively. No funds have been borrowed to date. Investment securities with a carrying value of $6.9 million and $8.9 million were pledged to the FRB at  December 31, 2023 and 2022, respectively.

On March 25, 2021, the Company completed a private placement of $40.0 million of 3.75% fixed-to-floating rate subordinated notes due 2031 (the “Notes”) to certain qualified institutional buyers and institutional accredited investors. The net proceeds to the Company from the sale of the Notes were approximately $39.3 million after deducting placement agent fees and other offering expenses. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company used the net proceeds of the offering for general corporate purposes.

On May 20, 2022, First Northwest consummated a borrowing arrangement with NexBank for a $20.0 million revolving line of credit. Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The Company was in compliance with all covenants at December 31, 2023, including fixed coverage, Tier 1 leverage, and risk-based capital ratio minimum requirements and classified assets to Tier 1 capital and Texas ratio maximum requirements. The line of credit matures on May 18, 2024, with the option for one 364-day extension.

In June 2023, First Fed established a Bank Term Funding Program ("BTFP") borrowing arrangement with the FRB as an additional source of liquidity. Available borrowing capacity was $15.2 million at December 31, 2023. No funds have been borrowed to date. Investment securities with a carrying value of $12.9 million were pledged to secure the BTFP at December 31, 2023.

FHLB advances, line of credit, and subordinated debt outstanding by type of advance were as follows:

	December 31, 2023		December 31, 2022
	(In thousands)
Long-term advances	$	80,000	$	80,000
Short-term fixed-rate advances		—		10,000
Overnight variable-rate advances		195,000		144,000
Line of credit		6,500		12,000
Subordinated debt, net		39,436		39,358

The maximum and average outstanding balances and average interest rates on FHLB overnight variable-rate advances were as follows:

	For the Year Ended December 31,
	2023			2022
	(Dollars in thousands)
Maximum outstanding at any month-end	$	195,000		$	206,000
Monthly average outstanding		149,500			90,983
Weighted-average daily interest rates
Annual		5.26	%		2.83	%
Period End		5.52	%		4.30	%
Interest expense during the period		6,674			1,845

The maximum and average outstanding balances and average interest rates on FHLB short-term, fixed-rate advances were as follows:

	For the Year Ended December 31,
	2023			2022
	(Dollars in thousands)
Maximum outstanding at any month-end	$	95,000		$	42,500
Monthly average outstanding		25,000			15,208
Weighted-average daily interest rates
Annual		5.08	%		1.82	%
Period End		5.27	%		2.12	%
Interest expense during the period		1,692			246

The maximum and average outstanding balances and average interest rates on FHLB long-term, fixed-rate advances were as follows:

	For the Year Ended December 31,
	2023			2022
	(Dollars in thousands)
Maximum outstanding at any month-end	$	85,000		$	80,000
Monthly average outstanding		81,667			80,000
Weighted-average interest rates
Annual		2.00	%		1.52	%
Period End		2.09	%		1.52	%
Interest expense during the period		1,650			1,260

The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances are as follows:

	December 31, 2023					December 31, 2022
	Amount		Weighted- Average Interest Rate			Amount		Weighted- Average Interest Rate
	(Dollars in thousands)
Within one year or less	$	25,000		2.76	%	$	15,000		1.54	%
After one year through two years		30,000		1.93			15,000		1.47
After two years through three years		15,000		1.55			25,000		1.42
After three years through four years		10,000		1.76			15,000		1.55
After four years through five years		—		—			10,000		1.76
	$	80,000		2.09	%	$	80,000		1.52	%

The maximum and average outstanding balances and average interest rates on the line of credit were as follows:

	For the Year Ended December 31,
	2023			2022
	(Dollars in thousands)
Maximum outstanding at any month-end	$	11,000		$	12,000
Monthly average outstanding		9,327			5,770
Weighted-average interest rates
Annual		9.15	%		6.76	%
Period End		9.00	%		8.00	%
Interest expense during the period		854			389

The maximum and average outstanding balances and average interest rates on subordinated debt were as follows:

	For the Year Ended December 31,
	2023			2022
	(Dollars in thousands)
Maximum outstanding at any month-end	$	39,436		$	39,358
Monthly average outstanding		39,395			39,312
Weighted-average interest rates
Annual		4.01	%		4.01	%
Period End		4.00	%		4.01	%
Interest expense during the period		1,578			1,577