RENTON, Wash., April 26, 2018 (GLOBE NEWSWIRE) -- First Financial Northwest, Inc. (the “Company”) (NASDAQ:FFNW), the holding company for First Financial Northwest Bank (the “Bank”), today reported net income for the quarter ended March 31, 2018, of $6.8 million, or $0.66 per diluted share, compared to net income of $2.4 million, or $0.23 per diluted share, for the quarter ended December 31, 2017, and $2.3 million, or $0.22 per diluted share, for the quarter ended March 31, 2017.
Net loans receivable increased to $991.1 million at March 31, 2018, compared to $988.7 million at December 31, 2017, and $838.8 million at March 31, 2017. Internal loan growth in the first quarter was partially offset by a $20.0 million repayment received on a $22.0 million construction/land development loan. The average balance of net loans receivable totaled $985.8 million for the quarter ended March 31, 2018, compared to $963.1 million for the quarter ended December 31, 2017, and $825.3 million for the quarter ended March 31, 2017.
The Company had a $4.0 million recapture of provision for loan losses in the quarter ended March 31, 2018, compared to a recapture of provision for loan losses of $1.2 million in the quarter ended December 31, 2017, and a provision for loan losses of $200,000 in the quarter ended March 31, 2017. The recapture of provision in the quarter ended March 31, 2018, was due primarily to $4.3 million in recoveries received during that quarter of loans previously charged off, while the recapture of provision for loan losses in the quarter ended December 31, 2017, was due primarily to $2.0 million in recoveries during the quarter of loans previously charged off. The provision recaptures were partially offset by increases to the allowance for loan losses related to higher loan balances. The provision for loan losses in the quarter ended March 31, 2017, was primarily due to the increase in net loans receivable during the quarter.
“As a result of strategies we employed to encourage certain borrowers to repay us for amounts previously charged off, we are off to a great start to 2018. These amounts were charged off during the downturn in our economy as a result of the financial crisis, and I am pleased that we were able to negotiate repayment of these debts during this time of economic strength in the region,” stated Joseph W. Kiley III, President and Chief Executive Officer. “In addition, I am very pleased to report that our deposit base grew by $23.7 million during the current quarter, including a $5.3 million increase in checking account deposits. This is an area of extensive focus as we work to transform the Bank from a traditional savings bank to a full service community bank. If you have not visited one of our offices to see the technology we have deployed and meet our team of talented bankers, I encourage you to stop in to enjoy this new bank branch experience for yourself. I am also happy to report that we opened our tenth branch office in a development known as ‘The Junction’ in Bothell. This new branch office is a continuation of our strategy to expand our network, augmenting our efforts to grow our franchise and meet the deposit and lending needs of our communities.”
The following tables present an analysis of total deposits by branch office (unaudited):
| March 31, 2018 | |||||||||||||||||||||
| 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 | $ | 31,945 | $ | 19,620 | $ | 22,637 | $ | 228,134 | $ | 294,434 | $ | - | $ | 596,770 | |||||||
| The Landing | 3,176 | 980 | 59 | 11,571 | 8,096 | - | 23,822 | ||||||||||||||
| Woodinville (1) | 1,617 | 3,431 | 711 | 19,744 | 8,112 | - | 33,615 | ||||||||||||||
| Bothell | 31 | - | - | - | - | - | 31 | ||||||||||||||
| Crossroads | 1,074 | 6,388 | 82 | 25,104 | 7,006 | - | 39,654 | ||||||||||||||
| Total King County | 37,843 | 30,419 | 23,489 | 284,553 | 317,648 | - | 693,952 | ||||||||||||||
| Snohomish County: | |||||||||||||||||||||
| Mill Creek | 1,395 | 2,314 | 710 | 14,814 | 6,313 | - | 25,546 | ||||||||||||||
| Edmonds | 1,632 | 1,305 | 45 | 17,619 | 5,747 | - | 26,348 | ||||||||||||||
| Clearview (1) | 3,881 | 3,225 | 1,080 | 7,408 | 1,734 | - | 17,328 | ||||||||||||||
| Lake Stevens (1) | 1,517 | 1,359 | 517 | 3,131 | 2,645 | - | 9,169 | ||||||||||||||
| Smokey Point (1) | 1,867 | 2,182 | 547 | 6,983 | 3,819 | - | 15,398 | ||||||||||||||
| Total Snohomish County | 10,292 | 10,385 | 2,899 | 49,955 | 20,258 | - | 93,789 | ||||||||||||||
| Total retail deposits | 48,135 | 40,804 | 26,388 | 334,508 | 337,906 | - | 787,741 | ||||||||||||||
| Brokered deposits | - | - | - | - | - | 75,488 | 75,488 | ||||||||||||||
| Total deposits | $ | 48,135 | $ | 40,804 | $ | 26,388 | $ | 334,508 | $ | 337,906 | $ | 75,488 | $ | 863,229 | |||||||
(1) Balance of retail certificates of deposit for acquired branches are net of an aggregate fair value adjustment of $93,000.
| December 31, 2017 | ||||||||||||||||||||||
| 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 | $ | 30,005 | $ | 18,099 | $ | 25,095 | $ | 225,714 | $ | 298,819 | $ | - | $ | 597,732 | ||||||||
| The Landing | 2,634 | 405 | 44 | 11,555 | 7,807 | - | 22,445 | |||||||||||||||
| Woodinville (1) | 1,904 | 3,124 | 685 | 20,527 | 7,072 | - | 33,312 | |||||||||||||||
| Crossroads | 606 | 5,413 | 81 | 13,831 | 945 | - | 20,876 | |||||||||||||||
| Total King County | 35,149 | 27,041 | 25,905 | 271,627 | 314,643 | - | 674,365 | |||||||||||||||
| Snohomish County: | ||||||||||||||||||||||
| Mill Creek | 1,721 | 2,931 | 355 | 14,325 | 5,652 | - | 24,984 | |||||||||||||||
| Edmonds | 1,300 | 1,119 | 30 | 17,576 | 4,932 | - | 24,957 | |||||||||||||||
| Clearview (1) | 3,960 | 3,631 | 1,247 | 7,009 | 1,724 | - | 17,571 | |||||||||||||||
| Lake Stevens (1) | 1,466 | 1,266 | 475 | 2,829 | 2,608 | - | 8,644 | |||||||||||||||
| Smokey Point (1) | 1,838 | 2,236 | 444 | 5,270 | 3,705 | - | 13,493 | |||||||||||||||
| Total Snohomish County | 10,285 | 11,183 | 2,551 | 47,009 | 18,621 | - | 89,649 | |||||||||||||||
| Total retail deposits | 45,434 | 38,224 | 28,456 | 318,636 | 333,264 | - | 764,014 | |||||||||||||||
| Brokered deposits | - | - | - | - | - | 75,488 | 75,488 | |||||||||||||||
| Total deposits | $ | 45,434 | $ | 38,224 | $ | 28,456 | $ | 318,636 | $ | 333,264 | $ | 75,488 | $ | 839,502 | ||||||||
(1) Balance of retail certificates of deposit for acquired branches are net of an aggregate fair value adjustment of $107,000.
Additional highlights for the quarter ended March 31, 2018:
- Net loans receivable increased to $991.1 million at March 31, 2018, compared to $988.7 million at December 31, 2017, and $838.8 million at March 31, 2017.
- Deposits increased to $863.2 million at March 31, 2018, compared to $839.5 million at December 31, 2017, and $734.7 million at March 31, 2017. Excluding certificates of deposits, deposit balances increased $19.1 million during the quarter.
- The Company’s book value per share was $13.80 at March 31, 2018, compared to $13.27 at December 31, 2017, and $12.84 at March 31, 2017.
- The Bank’s Tier 1 leverage and total capital ratios at March 31, 2018, were 10.4% and 14.4%, respectively, compared to 10.2% and 13.8% at December 31, 2017, and 11.6% and 15.7% at March 31, 2017.
Based on management’s evaluation of the adequacy of the Allowance for Loan and Lease Losses (“ALLL”), there was a $4.0 million recapture of provision for loan losses during the quarter ended March 31, 2018. The following items contributed to the recapture of provision during the quarter:
- The Bank received a $20.0 million payment on its largest loan that had a balance of $22.0 million at December 31, 2017.
- The Company received $4.3 million in recoveries during the quarter, primarily relating to balances from two customers, representing payment in full of loan balances previously charged off.
- The Company’s net loans receivable increased modestly during the quarter to $991.1 million at March 31, 2018, from $988.7 million at December 31, 2017, and was $838.8 million at March 31, 2017.
- Delinquent loans (loans over 30 days past due) remained low at $225,000 at March 31, 2018, compared to $101,000 at December 31, 2017, and no delinquent loans at March 31, 2017.
- Nonperforming loans totaled $175,000 at March 31, 2018, compared to $179,000 at December 31, 2017, and $602,000 at March 31, 2017.
- Nonperforming loans as a percentage of total loans remained low at 0.02% at both March 31, 2018, and December 31, 2017, compared to 0.07% at March 31, 2017.
The ALLL represented 1.31% of total loans receivable, net of undisbursed funds, at March 31, 2018, compared to 1.28% at December 31, 2017, and 1.31% at March 31, 2017. Nonperforming assets totaled $658,000 at March 31, 2018, compared to $662,000 at December 31, 2017, and $2.9 million at March 31, 2017. The 77.2% reduction in the Company’s nonperforming assets from the prior year was primarily due to sales of other real estate owned (“OREO”) and, to a lesser extent, a reduction in nonperforming loan balances.
The following table presents a breakdown of our nonperforming assets (unaudited):
| Mar 31, | Dec 31, | Mar 31, | Three Month | One Year | |||||||||||||||
| 2018 | 2017 | 2017 | Change | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||
| Nonperforming loans: | |||||||||||||||||||
| One-to-four family residential | $ | 125 | $ | 128 | $ | 545 | $ | (3 | ) | $ | (420 | ) | |||||||
| Consumer | 50 | 51 | 57 | (1 | ) | (7 | ) | ||||||||||||
| Total nonperforming loans | 175 | 179 | 602 | (4 | ) | (427 | ) | ||||||||||||
| OREO | 483 | 483 | 2,281 | - | (1,798 | ) | |||||||||||||
| Total nonperforming assets (1) | $ | 658 | $ | 662 | $ | 2,883 | $ | (4 | ) | $ | (2,225 | ) | |||||||
| Nonperforming assets as a | |||||||||||||||||||
| percent of total assets | 0.05 | % | 0.05 | % | 0.27 | % | |||||||||||||
(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 March 31, 2018.
OREO totaled $483,000 at March 31, 2018, and December 31, 2017, down from $2.3 million at March 31, 2017, due to sales of properties. The Bank continues to actively market its two remaining OREO properties in an effort to minimize holding costs.
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.
The following table presents a breakdown of our TDRs (unaudited):
| Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | Three Month Change | One Year Change | ||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Nonperforming TDRs: | ||||||||||||||||
| One-to-four family residential | $ | – | $ | – | $ | 109 | $ | – | $ | (109 | ) | |||||
| Total nonperforming TDRs | – | – | 109 | – | (109 | ) | ||||||||||
| Performing TDRs: | ||||||||||||||||
| One-to-four family residential | 11,904 | 13,434 | 21,790 | (1,530 | ) | (9,886 | ) | |||||||||
| Multifamily | 1,128 | 1,134 | 1,152 | (6 | ) | (24 | ) | |||||||||
| Commercial real estate | 3,173 | 3,194 | 3,683 | (21 | ) | (510 | ) | |||||||||
| Consumer | 43 | 43 | 43 | (0 | ) | (0 | ) | |||||||||
| Total performing TDRs | 16,248 | 17,805 | 26,668 | (1,557 | ) | (10,420 | ) | |||||||||
| Total TDRs | $ | 16,248 | $ | 17,805 | $ | 26,777 | $ | (1,557 | ) | $ | (10,529 | ) | ||||
Net interest income for the quarter ended March 31, 2018, increased to $11.0 million, compared to $10.4 million for the quarter ended December 31, 2017, and $8.9 million for the quarter ended March 31, 2017, due in part to the growth in the average balance of net loans outstanding between periods, partially offset by increased interest expense due to higher deposit balances and increasing short term interest rates.
Total interest income increased to $14.1 million during the quarter ended March 31, 2018, compared to $13.3 million in the quarter ended December 31, 2017, and $11.0 million in the quarter ended March 31, 2017. These increases were due in part to the growth in the average balance of net loans receivable to $985.8 million for the quarter ended March 31, 2018, compared to $963.1 million for the quarter ended December 31, 2017, and $825.3 million for the quarter ended March 31, 2017. Interest income was also impacted by the recognition of $1.0 million in interest income during the quarter ended March 31, 2018, related to payments discussed above from two borrowers for the interest owed on the balances of previously charged off loans, compared to $436,000 in the quarter ended December 31, 2017. There was no such additional interest income recognized in the quarter ended March 31, 2017.
Total interest expense increased to $3.1 million for the quarter ended March 31, 2018, compared to $2.9 million for the quarter ended December 31, 2017, and $2.1 million for the quarter ended March 31, 2017. The higher level of interest expense in the quarter ended March 31, 2018, was due primarily to increases in the average balances of interest-bearing liabilities, in particular deposits, and increases in short term market interest rates. Advances from the Federal Home Loan Bank (“FHLB”) totaled $200.0 million at March 31, 2018, compared to $216.0 million at December 31, 2017, and $171.5 million at March 31, 2017. The Bank borrows from the FHLB to supplement its deposit gathering efforts when needed to support asset growth. The average cost of FHLB advances was 1.66% for the quarter ended March 31, 2018, compared to 1.46% for the quarter ended December 31, 2017, and 1.05% for the quarter ended March 31, 2017. The balance of brokered certificates of deposits was unchanged at $75.5 million at March 31, 2018, December 31, 2017, and March 31, 2017.
The following table presents a breakdown of our total deposits (unaudited):
| Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | Three Month Change | One Year Change | ||||||||||||
| Deposits: | (Dollars in thousands) | |||||||||||||||
| Noninterest-bearing | $ | 48,135 | $ | 45,434 | $ | 36,190 | $ | 2,701 | $ | 11,945 | ||||||
| Interest-bearing demand | 40,804 | 38,224 | 21,584 | 2,580 | 19,220 | |||||||||||
| Statement savings | 26,388 | 28,456 | 27,415 | (2,068 | ) | (1,027 | ) | |||||||||
| Money market | 334,508 | 318,636 | 218,578 | 15,872 | 115,930 | |||||||||||
| Certificates of deposit, retail (1) | 337,906 | 333,264 | 355,452 | 4,642 | (17,546 | ) | ||||||||||
| Certificates of deposit, brokered | 75,488 | 75,488 | 75,488 | - | - | |||||||||||
| Total deposits | $ | 863,229 | $ | 839,502 | $ | 734,707 | $ | 23,727 | $ | 128,522 | ||||||
(1) Balance of retail certificates of deposit for acquired branches are net of an aggregate fair value adjustment of $93,000 at March 31, 2018, and $107,000 at December 31, 2017.
Our net interest margin was 3.88% for the quarter ended March 31, 2018, compared to 3.65% for the quarter ended December 31, 2017, and 3.64% for the quarter ended March 31, 2017. The increase in the quarter ended March 31, 2018, from the prior quarter, was the result of payments received on amounts previously charged off. The Company recorded $1.0 million in additional interest related to these recoveries in the quarter ended March 31, 2018, compared to $436,000 in the quarter ended December 31, 2017.
Noninterest income for the quarter ended March 31, 2018, totaled $646,000, compared to $211,000 in the quarter ended December 31, 2017, and $535,000 in the quarter ended March 31, 2017. The amount recorded in the quarter ended December 31, 2017, was impacted by the $670,000 loss on sale of investments due to our investment portfolio restructuring at year end, undertaken primarily to reduce interest rate risk and to take advantage of the higher income tax rates for 2017 compared to 2018 following the passage of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”). Specifically, the Company sold approximately $37 million in fixed rate securities, with the proceeds reinvested primarily into adjustable rate securities.
Noninterest expense for the quarter ended March 31, 2018, declined slightly to $7.0 million, from $7.1 million in the quarter ended December 31, 2017, and increased from $6.1 million in the quarter ended March 31, 2017. The increase from the prior year period was due primarily to growth in the Bank’s number of locations in the past year, including the opening of a new office in the Crossroads neighborhood of Bellevue in June 2017, and the acquisition of four branch offices in August 2017.
The Company’s federal income tax provision was $1.8 million for the quarter ended March 31, 2018, compared to $2.3 million in the quarter ended December 31, 2017, and $785,000 in the quarter ended March 31, 2017. The quarter ended December 31, 2017, included a charge of $807,000 relating to changes in the Company’s deferred tax asset valuation following passage of the Tax Act.
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 10 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 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 2018 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.
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES | |||||||||||||||||
| Consolidated Balance Sheets | |||||||||||||||||
| (Dollars in thousands, except share data) | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| Assets | Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | Three Month Change | One Year Change | ||||||||||||
| Cash on hand and in banks | $ | 6,595 | $ | 9,189 | $ | 6,066 | (28.2 | )% | 8.7 | % | |||||||
| Interest-earning deposits | 13,954 | 6,942 | 20,007 | 101.0 | (30.3 | ) | |||||||||||
| Investments available-for-sale, at fair value | 142,872 | 132,242 | 129,662 | 8.0 | 10.2 | ||||||||||||
| Loans receivable, net of allowance of $13,136, $12,882 and $11,158 respectively | 991,138 | 988,662 | 838,768 | 0.3 | 18.2 | ||||||||||||
| Federal Home Loan Bank ("FHLB") stock, at cost | 9,450 | 9,882 | 8,102 | (4.4 | ) | 16.6 | |||||||||||
| Accrued interest receivable | 3,981 | 4,084 | 3,389 | (2.5 | ) | 17.5 | |||||||||||
| Deferred tax assets, net | 1,362 | 1,211 | 2,907 | 12.5 | (53.1 | ) | |||||||||||
| Other real estate owned ("OREO") | 483 | 483 | 2,281 | 0.0 | (78.8 | ) | |||||||||||
| Premises and equipment, net | 21,208 | 20,614 | 18,912 | 2.9 | 12.1 | ||||||||||||
| Bank owned life insurance ("BOLI"), net | 29,276 | 29,027 | 27,534 | 0.9 | 6.3 | ||||||||||||
| Prepaid expenses and other assets | 3,922 | 5,738 | 2,892 | (31.6 | ) | 35.6 | |||||||||||
| Goodwill | 889 | 889 | - | 0.0 | n/a | ||||||||||||
| Core deposit intangible | 1,228 | 1,266 | - | (3.0 | ) | n/a | |||||||||||
| Total assets | $ | 1,226,358 | $ | 1,210,229 | $ | 1,060,520 | 1.3 | % | 15.6 | % | |||||||
| Liabilities and Stockholders' Equity | |||||||||||||||||
| Deposits | |||||||||||||||||
| Noninterest-bearing deposits | $ | 48,135 | $ | 45,434 | $ | 36,190 | 5.9 | % | 33.0 | % | |||||||
| Interest-bearing deposits | 815,094 | 794,068 | 698,517 | 2.6 | 16.7 | ||||||||||||
| Total Deposits | 863,229 | 839,502 | 734,707 | 2.8 | 17.5 | ||||||||||||
| Advances from the FHLB | 200,000 | 216,000 | 171,500 | (7.4 | ) | 16.6 | |||||||||||
| Advance payments from borrowers for taxes and insurance | 4,478 | 2,515 | 4,092 | 78.1 | 9.4 | ||||||||||||
| Accrued interest payable | 270 | 326 | 237 | (17.2 | ) | 13.9 | |||||||||||
| Other liabilities | 9,626 | 9,252 | 8,235 | 4.0 | 16.9 | ||||||||||||
| Total liabilities | 1,077,603 | 1,067,595 | 918,771 | 0.9 | 17.3 | ||||||||||||
| 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 | |||||||||||||||||
| shares 10,779,424 at March 31, 2018, 10,748,437 at December 31, 2017, and | |||||||||||||||||
| 11,035,791 at March 31, 2017 | 108 | 107 | 110 | 0.9 | % | (1.8 | )% | ||||||||||
| Additional paid-in capital | 94,527 | 94,173 | 98,186 | 0.4 | (3.7 | ) | |||||||||||
| Retained earnings, substantially restricted | 60,767 | 54,642 | 50,702 | 11.2 | 19.9 | ||||||||||||
| Accumulated other comprehensive loss, net of tax | (1,568 | ) | (928 | ) | (1,042 | ) | 69.0 | 50.5 | |||||||||
| Unearned Employee Stock Ownership Plan ("ESOP") shares | (5,079 | ) | (5,360 | ) | (6,207 | ) | (5.2 | ) | (18.2 | ) | |||||||
| Total stockholders' equity | 148,755 | 142,634 | 141,749 | 4.3 | 4.9 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 1,226,358 | $ | 1,210,229 | $ | 1,060,520 | 1.3 | % | 15.6 | % | |||||||
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES | ||||||||||||||||
| Consolidated Income Statements | ||||||||||||||||
| (Dollars in thousands, except share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Quarter Ended | ||||||||||||||||
| Mar 31, 2018 | Dec 31, 2017 | Mar 31, 2017 | Three Month Change | One Year Change | ||||||||||||
| Interest income | ||||||||||||||||
| Loans, including fees | $ | 13,042 | $ | 12,269 | $ | 10,027 | 6.3 | % | 30.1 | % | ||||||
| Investments available-for-sale | 929 | 903 | 845 | 2.9 | 9.9 | |||||||||||
| Interest-earning deposits with banks | 38 | 43 | 44 | (11.6 | ) | (13.6 | ) | |||||||||
| Dividends on FHLB Stock | 104 | 85 | 82 | 22.4 | 26.8 | |||||||||||
| Total interest income | 14,113 | 13,300 | 10,998 | 6.1 | 28.3 | |||||||||||
| Interest expense | ||||||||||||||||
| Deposits | 2,276 | 2,117 | 1,691 | 7.5 | 34.6 | |||||||||||
| FHLB advances | 853 | 795 | 445 | 7.3 | 91.7 | |||||||||||
| Total interest expense | 3,129 | 2,912 | 2,136 | 7.5 | 46.5 | |||||||||||
| Net interest income | 10,984 | 10,388 | 8,862 | 5.7 | 23.9 | |||||||||||
| (Recapture of provision) provision for loan losses | (4,000 | ) | (1,200 | ) | 200 | 233.3 | (2,100.0 | ) | ||||||||
| Net interest income after (recapture of provision) provision for loan losses | 14,984 | 11,588 | 8,662 | 29.3 | 73.0 | |||||||||||
| Noninterest income | ||||||||||||||||
| Net loss on sale of investments | - | (670 | ) | - | (100.0 | ) | n/a | |||||||||
| BOLI | 249 | 133 | 201 | 87.2 | 23.9 | |||||||||||
| Wealth management revenue | 99 | 220 | 140 | (55.0 | ) | (29.3 | ) | |||||||||
| Deposit related fees | 161 | 169 | 71 | (4.7 | ) | 126.8 | ||||||||||
| Loan related fees | 134 | 356 | 120 | (62.4 | ) | 11.7 | ||||||||||
| Other | 3 | 3 | 3 | 0.0 | 0.0 | |||||||||||
| Total noninterest income | 646 | 211 | 535 | 206.2 | 20.7 | |||||||||||
| Noninterest expense | ||||||||||||||||
| Salaries and employee benefits | 4,662 | 4,673 | 4,285 | (0.2 | ) | 8.8 | ||||||||||
| Occupancy and equipment | 769 | 721 | 480 | 6.7 | 60.2 | |||||||||||
| Professional fees | 328 | 430 | 439 | (23.7 | ) | (25.3 | ) | |||||||||
| Data processing | 324 | 326 | 240 | (0.6 | ) | 35.0 | ||||||||||
| OREO related expenses (reimbursements), net | 1 | (81 | ) | 40 | (101.2 | ) | (97.5 | ) | ||||||||
| Regulatory assessments | 155 | 161 | 96 | (3.7 | ) | 61.5 | ||||||||||
| Insurance and bond premiums | 106 | 97 | 99 | 9.3 | 7.1 | |||||||||||
| Marketing | 107 | 68 | 48 | 57.4 | 122.9 | |||||||||||
| Other general and administrative | 575 | 674 | 341 | (14.7 | ) | 68.6 | ||||||||||
| Total noninterest expense | 7,027 | 7,069 | 6,068 | (0.6 | ) | 15.8 | ||||||||||
| Income before federal income tax provision | 8,603 | 4,730 | 3,129 | 81.9 | 174.9 | |||||||||||
| Federal income tax provision | 1,761 | 2,324 | 785 | (24.2 | ) | 124.3 | ||||||||||
| Net income | $ | 6,842 | $ | 2,406 | $ | 2,344 | 184.4 | % | 191.9 | % | ||||||
| Basic earnings per share | $ | 0.67 | $ | 0.24 | $ | 0.23 | ||||||||||
| Diluted earnings per share | $ | 0.66 | $ | 0.23 | $ | 0.22 | ||||||||||
| Weighted average number of common shares outstanding | 10,210,828 | 10,184,804 | 10,319,722 | |||||||||||||
| Weighted average number of diluted shares outstanding | 10,336,566 | 10,313,114 | 10,504,046 | |||||||||||||
The following table presents a breakdown of our loan portfolio (unaudited):
| March 31, 2018 | December 31, 2017 | March 31, 2017 | ||||||||||||||||||
| Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||
| Residential: | ||||||||||||||||||||
| Micro-unit apartments | $ | 14,266 | 1.3 | % | $ | 14,331 | 1.3 | % | $ | 7,841 | 0.8 | % | ||||||||
| Other multifamily | 176,126 | 16.2 | 170,571 | 15.6 | 113,877 | 12.5 | ||||||||||||||
| Total Multifamily | 190,392 | 17.5 | 184,902 | 16.9 | 121,718 | 13.3 | ||||||||||||||
| Non-residential: | ||||||||||||||||||||
| Office | 107,966 | 9.9 | 112,327 | 10.2 | 101,369 | 11.1 | ||||||||||||||
| Retail | 131,978 | 12.1 | 129,875 | 11.9 | 105,233 | 11.5 | ||||||||||||||
| Mobile home park | 20,783 | 1.9 | 19,970 | 1.8 | 20,519 | 2.2 | ||||||||||||||
| Warehouse | 22,611 | 2.1 | 22,701 | 2.1 | 21,575 | 2.4 | ||||||||||||||
| Storage | 32,031 | 2.9 | 32,201 | 2.9 | 35,290 | 3.9 | ||||||||||||||
| Other non-residential | 51,405 | 4.7 | 44,768 | 4.1 | 33,733 | 3.7 | ||||||||||||||
| Total non-residential | 366,774 | 33.6 | 361,842 | 33.0 | 317,719 | 34.8 | ||||||||||||||
| Construction/land development: | ||||||||||||||||||||
| One-to-four family residential | 97,779 | 9.0 | 87,404 | 8.0 | 58,447 | 6.4 | ||||||||||||||
| Multifamily | 85,773 | 7.9 | 108,439 | 9.9 | 108,801 | 11.9 | ||||||||||||||
| Commercial | 5,735 | 0.5 | 5,325 | 0.5 | - | 0.0 | ||||||||||||||
| Land development | 13,299 | 1.2 | 36,405 | 3.3 | 39,687 | 4.3 | ||||||||||||||
| Total construction/land development | 202,586 | 18.6 | 237,573 | 21.7 | 206,935 | 22.6 | ||||||||||||||
| One-to-four family residential: | ||||||||||||||||||||
| Permanent owner occupied | 162,544 | 14.9 | 148,304 | 13.6 | 135,743 | 14.9 | ||||||||||||||
| Permanent non-owner occupied | 133,351 | 12.2 | 130,351 | 11.9 | 113,476 | 12.4 | ||||||||||||||
| Total one-to-four family residential | 295,895 | 27.1 | 278,655 | 25.5 | 249,219 | 27.3 | ||||||||||||||
| Business: | ||||||||||||||||||||
| Aircraft | 10,514 | 1.0 | 12,491 | 1.1 | 2,760 | 0.3 | ||||||||||||||
| Other business | 13,723 | 1.2 | 10,596 | 1.0 | 7,610 | 0.8 | ||||||||||||||
| Total business | 24,237 | 2.2 | 23,087 | 2.1 | 10,370 | 1.1 | ||||||||||||||
| Consumer | 11,131 | 1.0 | 9,133 | 0.8 | 7,878 | 0.9 | ||||||||||||||
| Total loans | 1,091,015 | 100.0 | % | 1,095,192 | 100.0 | % | 913,839 | 100.0 | % | |||||||||||
| Less: | ||||||||||||||||||||
| Loans in Process ("LIP") | 85,576 | 92,498 | 61,735 | |||||||||||||||||
| Deferred loan fees, net | 1,165 | 1,150 | 2,178 | |||||||||||||||||
| ALLL | 13,136 | 12,882 | 11,158 | |||||||||||||||||
| Loans receivable, net | $ | 991,138 | $ | 988,662 | $ | 838,768 | ||||||||||||||
| Concentrations of credit: (1) | ||||||||||||||||||||
| Construction loans as % of total capital | 84.9 | % | 108.6 | % | 111.7 | % | ||||||||||||||
| Total non-owner occupied commercial real estate as % of total capital | 484.8 | % | 514.0 | % | 441.2 | % | ||||||||||||||
(1) Concentrations of credit percentages are for First Financial Northwest Bank only using classifications in accordance with FDIC regulatory guidelines.
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES | |||||||||||||||||||
| Key Financial Measures | |||||||||||||||||||
| At or For the Quarter Ended | |||||||||||||||||||
| Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Performance Ratios: | |||||||||||||||||||
| Return on assets | 2.28 | % | 0.80 | % | 0.66 | % | 0.70 | % | 0.91 | % | |||||||||
| Return on equity | 19.16 | 6.70 | 5.13 | 5.22 | 6.76 | ||||||||||||||
| Dividend payout ratio | 10.47 | 29.17 | 38.89 | 38.89 | 26.09 | ||||||||||||||
| Equity-to-assets ratio | 12.13 | 11.79 | 12.10 | 13.27 | 13.37 | ||||||||||||||
| Interest rate spread | 3.73 | 3.51 | 3.38 | 3.47 | 3.51 | ||||||||||||||
| Net interest margin | 3.88 | 3.65 | 3.53 | 3.60 | 3.64 | ||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 113.46 | 113.32 | 114.08 | 114.29 | 114.74 | ||||||||||||||
| Efficiency ratio | 60.42 | 66.69 | 67.64 | 70.27 | 64.57 | ||||||||||||||
| Noninterest expense as a percent of average total assets | 2.34 | 2.34 | 2.42 | 2.57 | 2.35 | ||||||||||||||
| Book value per common share | $ | 13.80 | $ | 13.27 | $ | 13.08 | $ | 13.00 | $ | 12.84 | |||||||||
| Capital Ratios: (1) | |||||||||||||||||||
| Tier 1 leverage ratio | 10.44 | % | 10.20 | % | 10.80 | % | 11.46 | % | 11.57 | % | |||||||||
| Common equity tier 1 capital ratio | 13.10 | 12.52 | 12.95 | 13.94 | 14.40 | ||||||||||||||
| Tier 1 capital ratio | 13.10 | 12.52 | 12.95 | 13.94 | 14.40 | ||||||||||||||
| Total capital ratio | 14.35 | 13.77 | 14.20 | 15.19 | 15.65 | ||||||||||||||
| Asset Quality Ratios: (2) | |||||||||||||||||||
| Nonperforming loans as a percent of total loans | 0.02 | % | 0.02 | % | 0.02 | % | 0.07 | % | 0.07 | % | |||||||||
| Nonperforming assets as a percent of total assets | 0.05 | 0.05 | 0.17 | 0.22 | 0.27 | ||||||||||||||
| ALLL as a percent of total loans | 1.31 | 1.28 | 1.28 | 1.29 | 1.31 | ||||||||||||||
| ALLL as a percent of nonperforming loans | 7,508.90 | 7,196.65 | 6,545.95 | 1,935.68 | 1,853.49 | ||||||||||||||
| Net charge-offs (recoveries) to average loans receivable, net | (0.43 | ) | (0.20 | ) | (0.04 | ) | (0.00 | ) | (0.00 | ) | |||||||||
| Allowance for Loan Losses: | |||||||||||||||||||
| ALLL, beginning of the quarter | $ | 12,882 | $ | 12,110 | $ | 11,285 | $ | 11,158 | $ | 10,951 | |||||||||
| Provision (Recapture of provision) | (4,000 | ) | (1,200 | ) | 500 | 100 | 200 | ||||||||||||
| Charge-offs | - | - | - | - | - | ||||||||||||||
| Recoveries | 4,254 | 1,972 | 325 | 27 | 7 | ||||||||||||||
| ALLL, end of the quarter | $ | 13,136 | $ | 12,882 | $ | 12,110 | $ | 11,285 | $ | 11,158 | |||||||||
(1) Capital ratios are for First Financial Northwest Bank only.
(2) Loans are reported net of undisbursed funds.
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES | |||||||||||||||||||
| Key Financial Measures (continued) | |||||||||||||||||||
| At or For the Quarter Ended | |||||||||||||||||||
| Mar 31, | Dec 31, | Sep 30, | Jun 30, | Mar 31, | |||||||||||||||
| 2018 | 2017 | 2017 | 2017 | 2017 | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||
| Yields and Costs: | |||||||||||||||||||
| Yield on loans | 5.37 | % | 5.05 | % | 4.95 | % | 4.91 | % | 4.93 | % | |||||||||
| Yield on investments available-for-sale | 2.65 | 2.52 | 2.59 | 2.69 | 2.66 | ||||||||||||||
| Yield on interest-earning deposits | 1.32 | 1.23 | 1.27 | 1.00 | 0.74 | ||||||||||||||
| Yield on FHLB stock | 4.40 | 3.42 | 2.91 | 2.89 | 4.14 | ||||||||||||||
| Yield on interest-earning assets | 4.98 | 4.67 | 4.51 | 4.54 | 4.52 | ||||||||||||||
| Cost of deposits | 1.15 | 1.08 | 1.05 | 1.03 | 1.00 | ||||||||||||||
| Cost of borrowings | 1.66 | 1.46 | 1.40 | 1.24 | 1.05 | ||||||||||||||
| Cost of interest-bearing liabilities | 1.25 | 1.16 | 1.13 | 1.07 | 1.01 | ||||||||||||||
| Average Balances: | |||||||||||||||||||
| Loans | $ | 985,799 | $ | 963,097 | $ | 879,075 | $ | 844,853 | $ | 825,251 | |||||||||
| Investments available-for-sale | 142,236 | 141,962 | 132,959 | 132,375 | 128,993 | ||||||||||||||
| Interest-earning deposits | 11,717 | 13,843 | 33,854 | 16,831 | 24,233 | ||||||||||||||
| FHLB stock | 9,593 | 9,859 | 9,126 | 8,616 | 8,034 | ||||||||||||||
| Total interest-earning assets | $ | 1,149,345 | $ | 1,128,761 | $ | 1,055,014 | $ | 1,002,675 | $ | 986,511 | |||||||||
| Deposits | $ | 804,451 | $ | 780,671 | $ | 727,702 | $ | 692,922 | $ | 688,298 | |||||||||
| Borrowings | 208,544 | 215,418 | 197,098 | 184,357 | 171,500 | ||||||||||||||
| Total interest-bearing liabilities | $ | 1,012,995 | $ | 996,089 | $ | 924,800 | $ | 877,279 | $ | 859,798 | |||||||||
| Average assets | $ | 1,218,418 | $ | 1,199,774 | $ | 1,120,176 | $ | 1,066,477 | $ | 1,046,473 | |||||||||
| Average stockholders' equity | $ | 144,786 | $ | 142,390 | $ | 143,975 | $ | 143,643 | $ | 140,546 | |||||||||
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