• First Financial Northwest, Inc. Reports Net Income of $1.5 Million or $0.16 per Diluted Share for the Third Quarter Ended September 30, 2023  

    Source: Nasdaq GlobeNewswire / 26 Oct 2023 09:10:41   America/New_York

    RENTON, Wash., Oct. 26, 2023 (GLOBE NEWSWIRE) -- First Financial Northwest, Inc. (the “Company”) (NASDAQ GS: FFNW), the holding company for First Financial Northwest Bank (the “Bank”), today reported net income for the quarter ended September 30, 2023, of $1.5 million, or $0.16 per diluted share, compared to $1.5 million, or $0.16 per diluted share, for the quarter ended June 30, 2023, and $3.9 million, or $0.43 per diluted share, for the quarter ended September 30, 2022. For the nine months ended September 30, 2023, net income was $5.1 million, or $0.56 per diluted share, compared to net income of $10.0 million, or $1.10 per diluted share, for the comparable nine-month period in 2022.

    “The actions of the Federal Reserve’s Open Market Committee to continue increasing short-term interest rates is adversely impacting our profitability via reduced loan demand and a higher cost of funds, negatively impacting our net interest margin in recent quarters. Fortunately, however, the impact on profitability, albeit still challenging, was less severe this quarter than the previous two. I am pleased with the efforts of our employees as they continue to navigate a very competitive and challenging environment to attract and retain deposits and generate loans,” stated Joseph W. Kiley III, President and CEO.

    “Credit quality at September 30, 2023 remained strong, with nonperforming assets of $201,000 and additional loan delinquencies of $1.0 million on a total loan portfolio of $1.18 billion. We also recorded a $300,000 recapture of the provision for credit losses during the quarter as a result of a reduction in loans receivable which included the payoff of a $4.6 million commercial real estate loan that carried a higher credit risk rating and a credit upgrade of an $8.7 million commercial real estate loan,” continued Kiley.

    “While we are always striving to operate very efficiently, the focus is even greater in this environment. During the quarter, we reduced our staffing by approximately 6%. This reduction is anticipated to save the Company approximately $215,000 in noninterest expense per quarter going forward. We also initiated a search during the quarter for a senior C&I lending credit officer. This is being pursued in large part due to the lower-cost deposit opportunities associated with a C&I division, and we believe it prudent to start down this path by hiring a qualified individual to create appropriate credit expectations before taking the next step of building out the rest of the team,” concluded Kiley.

    Highlights for the quarter ended September 30, 2023:

    • The Company paid a regular quarterly cash dividend to shareholders of $0.13 per share.
    • The Bank’s Tier 1 leverage and total capital ratios were 10.3% and 16.0% at September 30, 2023, compared to 10.0% and 15.8% at June 30, 2023, and 10.4% and 15.5% at September 30, 2022, respectively.
    • Credit quality remained strong with nonperforming assets of $201,000, or 0.01% of total assets at September 30, 2023.
    • Based on management’s evaluation of the adequacy of the Allowance for Credit Losses (“ACL”) at September 30, 2023, the Company recognized a $300,000 recapture of provision for credit losses during the quarter.

    Deposits totaled $1.21 billion at September 30, 2023, compared to $1.22 billion at June 30, 2023, and $1.15 billion at September 30, 2022. Total deposits decreased $14.6 million in the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023, including a $7.6 million decrease in noninterest-bearing demand deposits. Interest-bearing demand deposits decreased $28.3 million as several large deposit relationships shifted funds into higher-earning money market accounts which contributed to a $33.8 million increase in that category. Retail certificate of deposit balances declined by $10.5 million during the quarter. At September 30, 2023, the Company held $49.6 million in interest-earning deposits that can be used to fund loan growth or reduce brokered deposits and/or other wholesale liabilities in future periods, compared to $43.0 million at June 30, 2023, and $15.2 million at September 30, 2022. Total deposits were up $61.0 million in the quarter ended September 30, 2023, compared to the same quarter a year ago.

    The following table presents a breakdown of our total deposits (unaudited):

     Sep 30,
    2023    		 Jun 30,
    2023    		 Sep 30,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
     (Dollars in thousands)
    Deposits:         
    Noninterest-bearing demand$104,164  $111,768  $118,842  $(7,604) $(14,678)
    Interest-bearing demand 60,816   89,080   95,767   (28,264)  (34,951)
    Savings 18,844   20,364   24,625   (1,520)  (5,781)
    Money market 501,168   467,411   572,137   33,757   (70,969)
    Certificates of deposit, retail 349,446   359,919   268,528   (10,473)  80,918 
    Brokered deposits 175,972   176,422   69,537   (450)  106,435 
    Total deposits$1,210,410  $1,224,964  $1,149,436  $(14,554) $60,974 


    The following tables present an analysis of total deposits by branch office (unaudited):

    September 30, 2023
     Noninterest-
    bearing
    demand     		Interest-
    bearing
    demand    		 Savings Money
    market     		Certificates
    of deposit,
    retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$32,025 $15,316 $12,140 $284,433 $239,940 $- $583,854 
    Landing 3,036  1,689  91  16,606  8,934  -  30,356 
    Woodinville 2,377  2,425  981  9,016  10,453  -  25,252 
    Bothell 3,798  751  35  4,363  2,365  -  11,312 
    Crossroads 10,589  4,067  77  28,773  14,460  -  57,966 
    Kent 6,665  7,397  4  13,310  7,839  -  35,215 
    Kirkland 10,385  1,765  148  12,277  1,174  -  25,749 
    Issaquah 1,476  1,966  30  3,719  6,170  -  13,361 
    Total King County 70,351  35,376  13,506  372,497  291,335  -  783,065 
    Snohomish County       
    Mill Creek 5,126  3,474  639  14,069  7,910  -  31,218 
    Edmonds 11,817  6,735  950  24,681  14,848  -  59,031 
    Clearview 5,497  5,468  1,495  18,896  9,132  -  40,488 
    Lake Stevens 3,740  4,567  964  23,657  12,126  -  45,054 
    Smokey Point 3,568  3,877  1,272  42,544  11,835  -  63,096 
    Total Snohomish County 29,748  24,121  5,320  123,847  55,851  -  238,887 
    Pierce County       
    University Place 3,176  99  3  3,279  996  -  7,553 
    Gig Harbor 889  1,220  15  1,545  1,264  -  4,933 
    Total Pierce County 4,065  1,319  18  4,824  2,260  -  12,486 
            
    Brokered deposits -  -  -  -  -  175,972  175,972 
            
    Total deposits$104,164 $60,816 $18,844 $501,168 $349,446 $175,972 $1,210,410 


    June 30, 2023
     Noninterest-
    bearing
    demand     		Interest-
    bearing
    demand    		 Savings Money
    market     		Certificates
    of deposit,
    retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$31,802 $41,857 $12,952 $237,814 $254,016 $- $578,441 
    Landing 2,773  1,831  137  15,120  8,657  -  28,518 
    Woodinville 2,440  2,653  1,032  10,077  14,647  -  30,849 
    Bothell 4,047  765  39  4,917  2,187  -  11,955 
    Crossroads 17,108  4,619  87  27,370  13,599  -  62,783 
    Kent 11,237  9,841  4  15,500  7,097  -  43,679 
    Kirkland 7,656  1,356  149  11,137  1,160  -  21,458 
    Issaquah 2,116  1,681  102  3,070  5,594  -  12,563 
    Total King County 79,179  64,603  14,502  325,005  306,957  -  790,246 
    Snohomish County       
    Mill Creek 5,797  2,638  591  15,209  7,140  -  31,375 
    Edmonds 12,384  7,659  895  28,177  12,871  -  61,986 
    Clearview 4,888  4,490  1,576  19,928  7,872  -  38,754 
    Lake Stevens 3,465  4,038  1,071  30,899  10,802  -  50,275 
    Smokey Point 2,953  4,619  1,715  42,192  11,846  -  63,325 
    Total Snohomish County 29,487  23,444  5,848  136,405  50,531  -  245,715 
    Pierce County       
    University Place 2,428  83  3  3,817  926  -  7,257 
    Gig Harbor 674  950  11  2,184  1,505  -  5,324 
    Total Pierce County 3,102  1,033  14  6,001  2,431  -  12,581 
            
    Brokered deposits -  -  -  -  -  176,422  176,422 
            
    Total deposits$111,768 $89,080 $20,364 $467,411 $359,919 $176,422 $1,224,964 


    Net loans receivable totaled $1.17 billion at both September 30, 2023 and June 30, 2023, compared to $1.14 billion at September 30, 2022. At September 30, 2023, loan totals were down across all categories except for an $11.6 million increase in one-to-four family residential and a $548,000 increase in business loans. The average balance of net loans receivable totaled $1.17 billion for the quarter ended September 30, 2023, compared to $1.18 billion for the quarter ended June 30, 2023, and $1.13 billion for the quarter ended September 30, 2022.

    The ACL to total loans was 1.29% and 1.31% at September 30, 2023 and June 30, 2023, respectively, compared to an allowance for loan and lease losses (“ALLL”) to total loans receivable of 1.27% at September 30, 2022.

    There were $201,000 in nonperforming loans at both September 30, 2023 and June 30, 2023, compared to $232,000 at September 30, 2022. There was no other real estate owned (“OREO”) at September 30, 2023, June 30, 2023, and September 30, 2022.

    The following table presents a breakdown of our nonperforming assets (unaudited):

     Sep 30, Jun 30, Sep 30, Three
    Month    		 One
    Year
      2023   2023   2022  Change Change
     (Dollars in thousands)
    Nonperforming loans:         
    One-to-four family residential$–  $–  $39  $‒  $(39)
    Consumer 201   201   193   ‒   8 
    Total nonperforming loans 201   201   232     (31)
              
    OREO –   –   –   –   – 
              
    Total nonperforming assets$201  $201  $232  $‒  $(31)
              
    Nonperforming assets as a percent         
    of total assets 0.01%   0.01%   0.02%     


    Net interest income totaled $9.7 million for the quarter ended September 30, 2023, compared to $10.3 million for the quarter ended June 30, 2023, and $12.7 million for the quarter ended September 30, 2022. The decrease in the current quarter compared to the quarter ended June 30, 2023, was primarily due to higher interest expense on deposits, reflecting the continued increase in market interest rates due to the ongoing increases to the targeted federal funds rate and continued intense competition for deposits. Since March 2022, the Federal Open Market Committee of the Federal Reserve System has increased the target range for the federal funds rate by 525 basis points, including 25 basis points during the third quarter of 2023, to a range of 5.25% to 5.50%.

    Total interest income was $19.7 million for both the quarters ended September 30, 2023 and June 30, 2023, compared to $15.4 million for the quarter ended September 30, 2022. Loan yield increased to 5.73% during the recent quarter, compared to 5.71% and 4.77% for the quarters ended June 30, 2023 and September 30, 2022, respectively. Yield on investments increased to 3.98% during the current quarter, compared to 3.93% and 2.90% for the quarters ended June 30, 2023 and September 30, 2022, respectively.

    Total interest expense was $10.0 million for the quarter ended September 30, 2023, compared to $9.4 million for the quarter ended June 30, 2023, and $2.7 million for the quarter ended September 30, 2022. The average cost of interest-bearing deposits was 3.33% for the quarter ended September 30, 2023, compared to 3.06% for the quarter ended June 30, 2023, and 0.87% for the quarter ended September 30, 2022. The increase from the quarter ended June 30, 2023, was due primarily to increased interest expense on money market and certificate of deposit balances in a highly competitive marketplace for deposits. Advances from the FHLB totaled $125.0 million at September 30, 2023, compared to $120.0 million at June 30, 2023, and $150.0 million at September 30, 2022. At September 30, 2023, all $125.0 million of our FHLB advances were tied to cash flow hedge agreements where the Bank pays a fixed rate and receives a variable rate in return to assist in the Bank’s interest rate risk management efforts. These cash flow hedge agreements had a weighted average remaining term of 36 months and a weighted average fixed interest rate of 1.84% as of September 30, 2023. The average cost of borrowings was 2.42% for the quarter ended September 30, 2023, compared to 2.55% for the quarter ended June 30, 2023, and 1.48% for the quarter ended September 30, 2022.

    Net interest margin was 2.69% for the quarter ended September 30, 2023, compared to 2.84% for the quarter ended June 30, 2023, and 3.65% for the quarter ended September 30, 2022. The decrease in net interest margin for the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023, was due primarily to the cost of interest-bearing liabilities increasing more than the yields on interest-earnings assets, with a 23-basis point increase in the Company’s average cost of interest-bearing liabilities to 3.24% from 3.01%, partially offset by a three basis point increase in the average yield on interest-earning assets to 5.46% from 5.43%. The 15-basis point decline in the net interest margin in the current quarter was less severe than the 38-basis point decline in the previous quarter and the 30-basis point decline in the quarter ended March 31, 2023, from the quarter ended December 31, 2022. The net interest margin for the month of September 2023 was 2.71%.

    Noninterest income for the quarter ended September 30, 2023, totaled $677,000, compared to $798,000 for the quarter ended June 30, 2023, and $778,000 for the quarter ended September 30, 2022. The $121,000 decrease in noninterest income for the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023, was primarily due to a $79,000 decrease in other noninterest income related to our fintech focused venture capital investment, a $42,000 decrease in wealth management revenue and a $30,000 decrease in BOLI income, partially offset by a $35,000 increase in loan related fee income. The decrease for the quarter ended September 30, 2023, compared to the prior year quarter, primarily reflects lower loan related fee income and wealth management revenue, partially offset by an increase in other noninterest income.

    Noninterest expense totaled $8.8 million for the quarter ended September 30, 2023, compared to $9.5 million for the quarter ended June 30, 2023, and $9.0 million for the quarter ended September 30, 2022. The decrease in noninterest expense for the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023, was primarily due to decreases in other general and administrative expenses and professional fees and, to a lesser extent, regulatory assessments and salaries and employee benefits. Professional fees in the prior quarter included $419,000 in expenses related to a potential business combination which was abandoned during the quarter, while other general and administrative fees included the recognition of approximately $190,000 in one-time expenses related to the Bank’s 100-year celebration. Regulatory assessments decreased $67,000 for the third quarter of 2023, compared to the second quarter of 2023, the latter which included a year-to-date true up of expenses relating to an increase in deposit insurance assessments instituted earlier in the year. Salaries and employee benefits decreased $46,000 for the quarter ended September 30, 2023, compared to the quarter ended June 30, 2023, as the Company took steps to rein in costs by reducing staffing amid tough market conditions. Late in the quarter ended September 30, 2023, the Company eliminated approximately 6% of its full-time positions, with salaries and benefits for those positions totaling approximately $215,000 per quarter. The decrease in noninterest expense for the quarter ended September 30, 2023, compared to the year-ago quarter, was primarily due to a reduction in salaries and employee benefits, reflecting lower estimated incentive compensation and profit-sharing accruals for 2023, partially offset by higher regulatory assessments and data processing fees.

    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 15 full-service banking offices. 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 made by, or on behalf of, us and could negatively affect our operating and stock performance. 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: potential adverse impacts to economic conditions in our local market areas, other markets where the Company has lending relationships, or other aspects of the Company’s business operations or financial markets, including, without limitation, as a result of employment levels, labor shortages and the effects of inflation, a potential recession or slowed economic growth; changes in the interest rate environment, including the recent increases in the Federal Reserve benchmark rate and duration at which such increased interest rate levels are maintained, which could adversely affect our revenues and expenses, the value of assets and obligations, and the availability and cost of capital and liquidity; the impact of continuing high inflation and the current and future monetary policies of the Federal Reserve in response thereto; the effects of any federal government shutdown; increased competitive pressures; legislative and regulatory changes; the impact of bank failures or adverse developments at other banks and related negative press about the banking industry in general on investor and depositor sentiment; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; effects of critical accounting policies and judgments, including the use of estimate in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; the effects of climate change, severe weather events, natural disasters, pandemics, epidemics and other public health crises, acts of war or terrorism, and other external events on our business; and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other reports filed with or furnished to 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.


     
    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
    (Dollars in thousands)
    (Unaudited)
     
    Assets Sep 30,
    2023    		  Jun 30,
    2023    		  Sep 30,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
    Cash on hand and in banks$8,074  $10,621  $9,684  (24.0)% (16.6)%
    Interest-earning deposits with banks 49,618   42,956   15,227  15.5  225.9 
    Investments available-for-sale, at fair value 204,975   208,927   221,278  (1.9) (7.4)
    Investments held-to-maturity, at amortized cost 2,450   2,444   2,438  0.2  0.5 
    Loans receivable, net of allowance of $15,306, $15,606, and $14,726, respectively 1,168,079   1,171,916   1,143,348  (0.3) 2.2 
    Federal Home Loan Bank ("FHLB") stock, at cost 6,803   6,603   7,712  3.0  (11.8)
    Accrued interest receivable 7,263   6,690   6,261  8.6  16.0 
    Deferred tax assets, net 3,156   3,275   2,355  (3.6) 34.0 
    Premises and equipment, net 19,921   20,283   21,608  (1.8) (7.8)
    Bank owned life insurance ("BOLI"), net 37,398   36,922   36,064  1.3  3.7 
    Prepaid expenses and other assets 13,673   13,051   13,605  4.8  0.5 
    Right of use asset ("ROU"), net 2,818   3,018   3,260  (6.6) (13.6)
    Goodwill 889   889   889  0.0  0.0 
    Core deposit intangible, net 451   484   582  (6.8) (22.5)
    Total assets$1,525,568  $1,528,079  $1,484,311  (0.2) 2.8 
              
    Liabilities and Stockholders' Equity         
              
    Deposits         
    Noninterest-bearing deposits$104,164  $111,768  $118,842  (6.8) (12.4)
    Interest-bearing deposits 1,106,246   1,113,196   1,030,594  (0.6) 7.3 
    Total deposits 1,210,410   1,224,964   1,149,436  (1.2) 5.3 
    Advances from the FHLB 125,000   120,000   150,000  4.2  (16.7)
    Advance payments from borrowers for taxes and insurance 4,760   2,524   5,033  88.6  (5.4)
    Lease liability, net 3,011   3,213   3,441  (6.3) (12.5)
    Accrued interest payable 2,646   2,045   185  29.4  1330.3 
    Other liabilities 20,506   16,618   18,326  23.4  11.9 
    Total liabilities 1,366,333   1,369,364   1,326,421  (0.2) 3.0 
              
    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 9,179,510 shares at September 30 2023, 9,148,086 shares at June 30 2023, and 9,127,595 shares at September 30, 2022 92   92   91  0.0  1.1 
    Additional paid-in capital 72,926   72,544   72,295  0.5  0.9 
    Retained earnings 96,206   95,896   92,928  0.3  3.5 
    Accumulated other comprehensive loss, net of tax (9,989)  (9,817)  (7,424) 1.8  34.6 
    Total stockholders' equity 159,235   158,715   157,890  0.3  0.9 
    Total liabilities and stockholders' equity$1,525,568  $1,528,079  $1,484,311  (0.2)% 2.8%


     
    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Income Statements
    (Dollars in thousands, except per share data)
    (Unaudited)
     
     Quarter Ended    
     Sep 30,
    2023    		 Jun 30,
    2023    		 Sep 30,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
    Interest income         
    Loans, including fees$16,918  $16,849  $13,618  0.4% 24.2%
    Investments 2,118   2,108   1,609  0.5  31.6 
    Interest-earning deposits with banks 525   620   125  (15.3) 320.0 
    Dividends on FHLB Stock 113   120   83  (5.8) 36.1 
    Total interest income 19,674   19,697   15,435  (0.1) 27.5 
    Interest expense         
    Deposits 9,205   8,590   2,326  7.2  295.7 
    Other borrowings 766   798   392  (4.0) 95.4 
    Total interest expense 9,971   9,388   2,718  6.2  266.9 
    Net interest income 9,703   10,309   12,717  (5.9) (23.7)
    Recapture of provision for credit losses (300)  (247)  (400) 21.5  (25.0)
    Net interest income after recapture of provision for credit losses 10,003   10,556   13,117  (5.2) (23.7)
              
    Noninterest income         
    BOLI income 244   274   243  (10.9) 0.4 
    Wealth management revenue 53   95   89  (44.2) (40.4)
    Deposit related fees 247   252   245  (2.0) 0.8 
    Loan related fees 79   44   195  79.5  (59.5)
    Other 54   133   6  (59.4) 800.0 
    Total noninterest income 677   798   778  (15.2) (13.0)
              
    Noninterest expense         
    Salaries and employee benefits 5,018   5,064   5,417  (0.9) (7.4)
    Occupancy and equipment 1,193   1,160   1,188  2.8  0.4 
    Professional fees 553   887   549  (37.7) 0.7 
    Data processing 742   711   675  4.4  9.9 
    Regulatory assessments 200   267   105  (25.1) 90.5 
    Insurance and bond premiums 111   115   112  (3.5) (0.9)
    Marketing 97   98   92  (1.0) 5.4 
    Other general and administrative 856   1,202   876  (28.8) (2.3)
    Total noninterest expense 8,770   9,504   9,014  (7.7) (2.7)
    Income before federal income tax provision 1,910   1,850   4,881  3.2  (60.9)
    Federal income tax provision 409   362   935  13.0  (56.3)
    Net income$1,501  $1,488  $3,946  0.9% (62.0)%
              
    Basic earnings per share$0.16  $0.16  $0.44     
    Diluted earnings per share$0.16  $0.16  $0.43     
    Weighted average number of common shares outstanding 9,127,568   9,120,468   8,981,037     
    Weighted average number of diluted shares outstanding 9,150,059   9,124,227   9,068,541     


    The following table presents a breakdown of the loan portfolio (unaudited):

     September 30, 2023June 30, 2023September 30, 2022
     Amount Percent Amount Percent Amount Percent
     (Dollars in thousands)
    Commercial real estate:           
    Residential:           
    Multifamily$140,022  11.7% $141,413  11.9% $132,703  11.5%
    Total multifamily residential 140,022  11.7   141,413  11.9   132,703  11.5 
                
    Non-residential:           
    Office 72,773  6.1   79,338  6.7   84,739  7.3 
    Retail 130,101  11.0   131,877  11.1   137,908  11.9 
    Mobile home park 21,285  1.8   22,798  1.9   23,411  2.1 
    Hotel / motel 63,954  5.4   64,297  5.4   56,655  4.9 
    Nursing Home 11,676  1.0   11,739  1.0   12,445  1.1 
    Warehouse 19,446  1.6   19,557  1.6   20,180  1.7 
    Storage 33,229  2.8   33,418  2.8   33,982  2.9 
    Other non-residential 42,227  3.7   43,332  3.7   44,368  3.9 
    Total non-residential 394,691  33.4   406,356  34.2   413,688  35.8 
                
    Construction/land:           
    One-to-four family residential 43,532  3.7   47,168  4.0   41,208  3.6 
    Multifamily 2,043  0.2   547  0.0   15,405  1.3 
    Land development 9,766  0.8   10,113  0.9   15,496  1.4 
    Total construction/land 55,341  4.7   57,828  4.9   72,109  6.3 
                
    One-to-four family residential:           
    Permanent owner occupied 260,970  22.1   246,585  20.8   220,342  19.0 
    Permanent non-owner occupied 232,238  19.6   235,008  19.8   227,498  19.6 
    Total one-to-four family residential 493,208  41.7   481,593  40.6   447,840  38.6 
                
    Business:           
    Aircraft 1,981  0.2   2,017  0.2   2,335  0.2 
    Small Business Administration ("SBA") 1,810  0.3   1,824  0.2   525  0.0 
    Paycheck Protection Plan ("PPP") 551  0.0   629  0.1   1,201  0.1 
    Other business 23,633  1.9   22,957  1.8   27,978  2.4 
    Total business 27,975  2.4   27,427  2.3   32,039  2.7 
                
    Consumer:           
    Classic, collectible and other auto 59,955  5.1   61,611  5.1   49,047  4.2 
    Other consumer 12,193  1.0   11,294  1.0   10,648  0.9 
    Total consumer 72,148  6.1   72,905  6.1   59,695  5.1 
                
    Total loans 1,183,385  100.0%  1,187,522  100.0%  1,158,074  100.0%
    Less:           
    ACL 15,306     15,606     14,726   
    Loans receivable, net$1,168,079    $1,171,916    $1,143,348   
                
    Concentrations of credit: (1)           
    Construction loans as % of total capital 37.8%    40.0%    49.1%  
    Total non-owner occupied commercial
    real estate as % of total capital    		 328.1%    336.8%    354.6%  

    (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
    (Unaudited)
     
     At or For the Quarter Ended
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
      2023   2023   2023   2022   2022 
     (Dollars in thousands, except per share data)
    Performance Ratios: (1)         
    Return on assets 0.39%  0.39%  0.57%  0.86%  1.06%
    Return on equity 3.71   3.74   5.31   8.04   9.88 
    Dividend payout ratio 79.26   79.90   56.52   34.29   27.40 
    Equity-to-assets ratio 10.44   10.39   10.14   10.67   10.64 
    Tangible equity-to-assets ratio (2) 10.36   10.31   10.06   10.58   10.55 
    Net interest margin 2.69   2.84   3.22   3.52   3.65 
    Average interest-earning assets to average interest-bearing liabilities 116.94   116.27   117.78   117.93   119.08 
    Efficiency ratio 84.49   86.95   75.44   65.84   66.80 
    Noninterest expense as a percent of average total assets 2.29   2.50   2.42   2.30   2.43 
    Book value per common share$17.35  $17.35  $17.45  $17.57  $17.30 
    Tangible book value per common share (2) 17.20   17.20   17.30   17.41   17.14 
              
    Capital Ratios: (3)         
    Tier 1 leverage ratio 10.25%  10.02%  10.24%  10.31%  10.43%
    Common equity tier 1 capital ratio 14.75   14.49   14.33   14.37   14.24 
    Tier 1 capital ratio 14.75   14.49   14.33   14.37   14.24 
    Total capital ratio 16.00   15.75   15.59   15.62   15.49 
              
    Asset Quality Ratios: (4)         
    Nonperforming loans as a percent of total loans 0.02%  0.02%  0.02%  0.02%  0.02%
    Nonperforming assets as a percent of total assets 0.01   0.01   0.01   0.01   0.02 
    ACL as a percent of total loans 1.29   1.31   1.33   1.29   1.27 
    Net (recoveries) charge-offs to average loans receivable, net 0.00   0.00   (0.00)  (0.00)  (0.00)
              
    Allowance for Credit Losses:         
    ACL, beginning of the quarter$15,606  $16,028  $15,227  $14,726  $15,125 
    Beginning balance adjustment from adoption of Topic 326 -   -   500   -   - 
    (Recapture of provision) provision (300)  (400)  300   500   (400)
    Charge-offs -   (22)  -   -   - 
    Recoveries -   -   1   1   1 
    ACL, end of the quarter$15,306  $15,606  $16,028  $15,227  $14,726 

    (1) Performance ratios are calculated on an annualized basis.
    (2) Represent non-GAAP financial measures. Tangible equity-to-tangible assets ratio is calculated by dividing tangible equity by tangible assets. Tangible book value per common share is calculated by dividing tangible equity by common shares outstanding at period end. Tangible equity and tangible assets exclude goodwill and core deposit intangible assets. Refer to Non-GAAP Financial Measures at the end of this press release for a reconciliation to the nearest GAAP equivalents.
    (3) Capital ratios are for First Financial Northwest Bank only.
    (4) Loans are reported net of undisbursed funds.


     
    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Key Financial Measures
    (Unaudited)
     
     At or For the Quarter Ended
     Sep 30, Jun 30, Mar 31, Dec 31, Sep 30,
     2023 2023 2023 2022 2022
     (Dollars in thousands)
    Yields and Costs: (1)         
    Yield on loans 5.73%  5.71%  5.56%  5.19%  4.77%
    Yield on investments 3.98   3.93   3.88   3.60   2.90 
    Yield on interest-earning deposits 5.18   4.91   4.40   3.31   2.02 
    Yield on FHLB stock 6.57   7.06   7.30   4.58   5.56 
    Yield on interest-earning assets 5.46%  5.43%  5.29%  4.90%  4.43%
              
    Cost of interest-bearing deposits 3.33%  3.06%  2.41%  1.51%  0.87%
    Cost of borrowings 2.42   2.55   2.69   2.46   1.48 
    Cost of interest-bearing liabilities 3.24%  3.01%  2.44%  1.63%  0.93%
              
    Cost of total deposits 3.03%  2.78%  2.17%  1.36%  0.78%
    Cost of funds 2.97   2.76   2.23   1.48   0.84 
              
    Average Balances:         
    Loans$1,171,483  $1,182,939  $1,168,539  $1,150,181  $1,132,233 
    Investments 211,291   215,113   219,969   221,113   220,244 
    Interest-earning deposits 40,202   50,691   21,729   24,608   24,565 
    FHLB stock 6,820   6,814   7,219   7,710   5,923 
    Total interest-earning assets$1,429,796  $1,455,557  $1,417,456  $1,403,612  $1,382,965 
              
    Interest-bearing deposits$1,097,324  $1,126,598  $1,065,827  $1,040,357  $1,056,079 
    Borrowings 125,402   125,275   137,600   149,946   105,272 
    Total interest-bearing liabilities$1,222,726  $1,251,873  $1,203,427  $1,190,303  $1,161,351 
    Noninterest-bearing deposits 109,384   111,365   115,708   121,518   125,561 
    Total deposits and borrowings$1,332,110  $1,363,238  $1,319,135  $1,311,821  $1,286,912 
              
    Average assets$1,522,224  $1,547,321  $1,509,297  $1,496,125  $1,470,816 
    Average stockholders' equity 160,299   159,764   162,016   159,120   158,515 

    (1) Yields and costs are annualized.


    Non-GAAP Financial Measures

    In addition to financial results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains non-GAAP financial measures that include tangible equity, tangible assets, tangible book value per share, and the tangible equity-to-assets ratio. The Company believes that these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of goodwill and core deposit intangible, net and provides an alternative view of the Company’s performance over time and in comparison to the Company’s competitors. Non-GAAP financial measures have limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation and are not a substitute for other measures in this earnings release that are presented in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

    The following table provides a reconciliation between the GAAP and non-GAAP measures:

     Quarter Ended
     Sep 30,
    2023
    		 Jun 30,
    2023
    		 Mar 31,
    2023
    		 Dec 31,
    2022
    		 Sep 30,
    2022
     (Dollars in thousands, except per share data)
    Tangible equity to tangible assets and tangible book value per share:
    Total stockholders' equity (GAAP)$159,235  $158,715  $159,645  $160,360  $157,890 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 451   484   516   548   582 
    Tangible equity (Non-GAAP)$157,895  $157,342  $158,240  $158,923  $156,419 
              
    Total assets (GAAP)$1,525,568  $1,528,079  $1,574,271  $1,502,916  $1,484,311 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 451   484   516   548   582 
    Tangible assets (Non-GAAP)$1,524,228  $1,526,706  $1,572,866  $1,501,479  $1,482,840 
              
    Common shares outstanding at period end 9,179,510   9,148,086   9,148,086   9,127,595   9,127,595 
              
    Equity-to-assets ratio (GAAP) 10.44%  10.39%  10.14%  10.67%  10.64%
    Tangible equity-to-tangible assets ratio (Non-GAAP) 10.36   10.31   10.06   10.58   10.55 
    Book value per common share (GAAP)$17.35  $17.35  $17.45  $17.57  $17.30 
    Tangible book value per share (Non-GAAP) 17.20   17.20   17.30   17.41   17.14 


    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


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