• First Financial Northwest, Inc. Reports Net Income of $1.6 Million or $0.17 Per Diluted Share for the Second Quarter Ended June 30, 2024

    Source: Nasdaq GlobeNewswire / 25 Jul 2024 08:10:02   America/Chicago

    RENTON, Wash., July 25, 2024 (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 of $1.6 million, or $0.17 per diluted share, for the quarter ended June 30, 2024, compared to a net loss of $1.1 million, or $(0.12) per diluted share, for the quarter ended March 31, 2024, and net income of $1.5 million, or $0.16 per diluted share, for the quarter ended June 30, 2023. For the six months ended June 30, 2024, net income was $480,000, or $0.05 per diluted share, compared to net income of $3.6 million, or $0.39 per diluted share, for the comparable period in 2023.

    “During the second quarter, our financial results were positively impacted by the successful completion of a project to modify a large number of loans relating to our previously announced sale of the Bank to Global Federal Credit Union. Specifically, our balance sheet contained over $250 million of loans that are ineligible for a federally chartered credit union like Global to hold due to various aspects, primarily an original term greater than 15 years for non-owner occupied residential and commercial loans. As part of our Purchase and Assumption Agreement with Global, the Bank agreed to use its good faith efforts to modify or refinance these loans. I am very pleased that the outstanding efforts of our employees resulted in the modification or refinance of over $130 million of this portfolio,” stated Joseph W. Kiley III, President and CEO.

    “As previously reported, our first quarter earnings were adversely impacted by the purchase of a single premium group annuity to satisfy the Company’s obligations to current and former employees covered by a legacy defined benefit plan. Extinguishing this liability at a pretax cost of $1.2 million was a strategic move considered to be an appropriate use of capital in light of the elevated rate environment. We also recognized $767,000 in pretax transaction related expenses in the first quarter of 2024, further adversely impacting our first quarter earnings. During the quarter ended June 30, 2024, we recognized $284,000 in pretax transaction expenses,” continued Kiley.

    “While nonaccrual loans increased $4.5 million during the quarter ended June 30, 2024, overall credit quality remained strong, with only $4.7 million of nonaccrual loans relative to our $1.15 billion total loan portfolio. The increase in nonaccrual loans was due primarily to a $4.1 million commercial real estate loan moving to nonaccrual in the quarter. The loan is secured by a well-collateralized mixed-use property, and as such, we do not expect to incur a loss related to this credit. The property is currently under contract to sell, and we are in the early stages of working with the purchaser to potentially allow an assumption of the existing loan. Finally, we performed an analysis of the allowance for credit losses, which considered various factors including declines in loan balances, shifts in the composition of the loan portfolio, and credit grade changes. After careful consideration, our analysis concluded that a $200,000 recapture of provision for credit losses was appropriate,” concluded Kiley.

    Highlights for the quarter ended June 30, 2024:

    • Net loans receivable totaled $1.14 billion at June 30, 2024, down $7.8 million from the prior quarter end.
    • Book value per share was $17.51 at June 30, 2024, compared to $17.46 at March 31, 2024, and $17.35 at June 30, 2023.
    • Paid a quarterly cash dividend to shareholders of $0.13 per share.
    • The Bank’s Tier 1 leverage and total capital ratios were 10.9% and 16.6% at June 30, 2024, compared to 10.4% and 16.2% at March 31, 2024, and 10.0% and 15.8% at June 30, 2023, respectively.
    • Credit quality remained strong with nonaccrual loans totaling $4.7 million, or 0.41% of total loans.
    • Recorded a $200,000 net recapture of provision for credit losses in the current quarter, compared to a $175,000 net recapture of provision for credit losses in the prior quarter and a $247,000 net recapture of provision for credit losses in the comparable quarter in 2023.

    Deposits totaled $1.09 billion at June 30, 2024, compared to $1.17 billion at March 31, 2024, and $1.22 billion at June 30, 2023. The $78.7 million decline in deposits at June 30, 2024, compared to March 31, 2024, was due predominantly to a $38.2 million decrease in money market balances, $10.2 million reduction in brokered certificates of deposit and a $25.1 million decline in brokered deposits through the IntraFi Network, which was consistent with management’s strategy to reduce these higher cost deposits.

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

     Jun 30,
    2024    		 Mar 31,
    2024    		 June 30,
    2023    		 Three
    Month
    Change    		 One
    Year
    Change
    Deposits:(Dollars in thousands)
    Noninterest-bearing demand$99,842 $100,846 $111,768 $(1,004) $(11,926)
    Interest-bearing demand 57,033  58,489  89,080  (1,456)  (32,047)
    Savings 17,423  19,314  20,364  (1,891)  (2,941)
    Money market 497,345  535,594  467,411  (38,249)  29,934 
    Certificates of deposit, retail 365,527  366,507  359,919  (980)  5,608 
    Brokered deposits 51,004  86,146  176,422  (35,142)  (125,418)
    Total deposits$1,088,174 $1,166,896 $1,224,964 $(78,722) $(136,790)
                     

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

    June 30, 2024
     Noninterest-bearing demand Interest-bearing
    demand    		 Savings Money
    market     		Certificates of
    deposit, retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County        
    Renton$        30,336$         14,380$        11,186$     306,176$      246,076$-$      608,154
    Landing 2,079 566 113 7,895 9,881 - 20,534
    Woodinville 1,953 2,949 987 10,931 10,845 - 27,665
    Bothell 3,336 847 398 1,595 6,055 - 12,231
    Crossroads 13,585 2,858 28 25,599 17,748 - 59,818
    Kent 7,729 8,142 42 14,525 7,448 - 37,886
    Kirkland 8,326 1,789 210 15,007 1,752 - 27,084
    Issaquah 1,287 232 22 3,971 6,202 - 11,714
    Total King County 68,631 31,763 12,986 385,699 306,007 - 805,086
    Snohomish County       
    Mill Creek 5,823 2,306 420 15,209 9,578 - 33,336
    Edmonds 10,418 9,470 402 20,255 12,753 - 53,298
    Clearview 4,810 4,888 1,444 18,695 9,504 - 39,341
    Lake Stevens 4,111 4,445 1,171 22,618 14,090 - 46,435
    Smokey Point 2,700 3,152 982 31,808 10,435 - 49,077
    Total Snohomish County 27,862 24,261 4,419 108,585 56,360 - 221,487
    Pierce County       
    University Place 2,385 41 2 1,819 1,503 - 5,750
    Gig Harbor 964 968 16 1,242 1,657 - 4,847
    Total Pierce County 3,349 1,009 18 3,061 3,160 - 10,597
            
    Brokered deposits - - - - - 51,004 51,004
            
    Total deposits$        99,842$         57,033$        17,423$     497,345$      365,527$        51,004$    1,088,174
                   


    March 31, 2024
     Noninterest-bearing
    demand     		Interest-bearing
    demand    		 Savings Money
    market     		Certificates of
    deposit, retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County        
    Renton$34,134$17,394$12,802$    328,526   $249,288$-$       642,144
    Landing 3,759 767 98 7,019 9,571 - 21,214
    Woodinville 2,137 2,207 1,011 10,707 10,866 - 26,928
    Bothell 3,025 947 32 1,835 5,158 - 10,997
    Crossroads 12,007 3,320 35 25,107 17,689 - 58,158
    Kent 5,875 5,579 6 15,046 7,207 - 33,713
    Kirkland 8,804 1,861 155 14,339
    		 2,055 - 27,214
    Issaquah 1,435 373 113 2,781 6,053 - 10,755
    Total King County 71,176 32,448 14,252 405,360 307,887 - 831,123
    Snohomish County       
    Mill Creek 5,241 2,327 685 12,600 8,426 - 29,279
    Edmonds 9,838 9,487 576 29,314 13,054 - 62,269
    Clearview 4,802 4,646 1,452 17,701 9,076 - 37,677
    Lake Stevens 3,841 4,134 1,165 22,557 14,043 - 45,740
    Smokey Point 2,661 4,415 1,167 45,123 10,800 - 64,166
    Total Snohomish County 26,383 25,009 5,045 127,295 55,399 - 239,131
    Pierce County       
    University Place 2,034 63 1 1,748 1,487 - 5,333
    Gig Harbor 1,253 969 16 1,191 1,734 - 5,163
    Total Pierce County 3,287 1,032 17 2,939 3,221 - 10,496
            
    Brokered deposits - - - - - 86,146 86,146
            
    Total deposits$      100,846$58,489$        19,314$     535,594$      366,507$86,146$    1,166,896
                   

    Net loans receivable totaled $1.14 billion at both June 30, 2024, and March 31, 2024, down from $1.17 billion at June 30, 2023. During the quarter ended June 30, 2024, loan repayments outpaced new originations across all loan categories except one-to-four family residential. The average balance of net loans receivable totaled $1.14 billion for the quarter ended June 30, 2024, compared to $1.16 billion for the quarter ended March 31, 2024, and $1.18 billion for the quarter ended June 30, 2023.

    The allowance for credit losses (“ACL”) represented 1.29% of total loans receivable at June 30, 2024, compared to 1.30% at March 31, 2024, and 1.31% at June 30, 2023.

    Nonaccrual loans totaled $4.7 million at June 30, 2024, compared to $201,000 at both March 31, 2024, and June 30, 2023. The increase in nonaccrual loans during the quarter was due primarily to the previously mentioned $4.1 million commercial real estate loan and an additional $400,000 in consumer loans moving to nonaccrual. The commercial real estate loan is well collateralized, and no losses are anticipated on this credit. There was no other real estate owned (“OREO”) at June 30, 2024, March 31, 2024, or June 30, 2023.

    Net interest income totaled $9.0 million for the quarter ended June 30, 2024, compared to $8.9 million for the quarter ended March 31, 2024, and $10.3 million for the quarter ended June 30, 2023.

    Total interest income was $19.3 million for the quarter ended June 30, 2024, compared to $19.6 million for the quarter ended March 31, 2024, and $19.7 million for the quarter ended June 30, 2023. The decline in total interest income during the current quarter was due to average interest-earning asset balances declining by $50.1 million and $99.8 million, respectively, compared to the prior periods. Yield on loans increased to 5.93% during the recent quarter, compared to 5.88% and 5.71% for the quarters ended March 31, 2024, and June 30, 2023, respectively. During the quarter ended June 30, 2024, the Bank modified over $130 million in loans in accordance with terms in its Purchase and Assumption Agreement (the “Agreement”) with Global Federal Credit Union (“Global”). Net deferred loan fees and costs recognition increased $214,000 compared to the quarter ended March 31, 2024, due in large part to this activity, which positively impacted the yield on loans in the current quarter. Yield on investment securities was 4.38% for the current quarter, up from 4.11% and 3.93% for the quarters ended March 31, 2024, and June 30, 2023, respectively, while the average balances of investment securities declined $29.0 million from the prior quarter, primarily due to the maturity of low yielding securities in recent months.

    Total interest expense was $10.3 million for the quarter ended June 30, 2024, compared to $10.7 million for the quarter ended March 31, 2024, and $9.4 million for the quarter ended June 30, 2023. The decline from the quarter ended March 31, 2024, was due primarily to lower levels of deposits, particularly the managed decrease in brokered deposits, offset slightly by an increase in the cost of interest-bearing liabilities. The average cost of interest-bearing deposits was 3.71% for the quarter ended June 30, 2024, up from 3.69% and 3.06% for the quarters ended March 31, 2024 and June 30, 2023, respectively. Advances from the FHLB totaled $176.0 million at June 30, 2024, compared to $115.0 million at March 31, 2024, and $120.0 million at June 30, 2023. The increase in FHLB advances during the current quarter was to replace the decrease in money market deposits and management’s intentional reduction in brokered deposits. At June 30, 2024, $115.0 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 29.6 months and a weighted average fixed interest rate of 1.87% as of June 30, 2024. The average cost of borrowings was 2.64% for the quarter ended June 30, 2024, compared to 2.65% for the quarter ended March 31, 2024, and 2.55% for the quarter ended June 30, 2023.

    Net interest margin was 2.66% for the quarter ended June 30, 2024, compared to 2.55% for the quarter ended March 31, 2024, and 2.84% for the quarter ended June 30, 2023. The increase in the quarter ended June 30, 2024, was due primarily to the increase in net deferred loan fee recognition compared to the quarter ended March 31, 2024. This activity contributed to an increase in the average yield on interest-earning assets of 11 basis points to 5.73% during the second quarter of 2024, from 5.62% during the first quarter of 2024, and increased 30 basis points from 5.43% during the quarter ended June 30, 2023. The average cost of interest-bearing liabilities increased one basis point to 3.59% during the quarter, from 3.58% during the quarter ended March 31, 2024, and increased 58 basis points from 3.01% during the quarter ended June 30, 2023. The net interest margin for the month of June 2024 was 2.66%.

    Noninterest income for the quarter ended June 30, 2024, totaled $673,000, down from $787,000 and $798,000 for the quarters ended March 31, 2024, and June 30, 2023, respectively. The decrease compared to the quarter ended March 31, 2024, was primarily due to fluctuations related to our fintech focused venture capital investment, a $41,000 decrease in wealth management revenue, and a $41,000 decrease in BOLI income due to timing differences, partially offset by a combined $58,000 increase in loan and deposit related fees.

    Noninterest expense totaled $7.9 million for the quarter ended June 30, 2024, compared to $11.3 million for the quarter ended March 31, 2024, and $9.5 million for the quarter ended June 30, 2023. The decrease compared to the quarter ended March 31, 2024, was primarily due to a $2.9 million decrease in salaries and employee benefits, of which $1.4 million was related to the purchase of a single premium group annuity and accelerated amortization of related prepaid expense to satisfy the defined benefit liability, with no such expense in the current quarter. In addition, the aforementioned loan modification activity in the current quarter resulted in a $939,000 increase in deferred loan costs, which further decreased salaries and employee benefits expenses in the current period, along with reductions in estimates for profitability relative to targets causing in a $151,000 reduction in profit sharing contributions between quarters. Payroll taxes declined by $94,000 in the current quarter compared to the quarter ended March 31, 2024, as seasonal annual limits were reached during the second quarter. Professional fees declined by $551,000 during the current quarter compared to the March 31, 2024 quarter, due mostly to a $489,000 decrease in professional services related to our pending transaction with Global, since the signing of the Agreement with Global and related filings occurred during the first quarter of 2024. Also contributing to the decline in professional fees was an $83,000 reduction in external audit and accounting fees in the current quarter compared to the quarter ended March 31, 2024. The decrease compared to the quarter ended June 30, 2023, was primarily due to a $1.2 million decrease in salaries and employee benefits, a $243,000 decrease in other general and administrative expense, a $138,000 decrease in professional fees, a $97,000 decline in regulatory assessments and a $51,000 decrease in marketing expense, partially offset by higher data processing and occupancy and equipment expense.

    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. Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about, among other things, our pending transaction with Global Federal Credit Union (“Global”) whereby Global, pursuant to the definitive purchase and assumption agreement (the “P&A Agreement”), will acquire substantially all of the assets and assume substantially all of the liabilities of the Bank, expectations of the business environment in which we operate, projections of future performance or financial items, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based on current management expectations and may, therefore, involve risks and uncertainties. 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: the occurrence of any event, change or other circumstances that could give rise to the right of one or all of the parties to terminate the P&A Agreement; delays in completing the P&A Agreement; the failure to obtain necessary regulatory approvals or to satisfy any of the other conditions to the Global transaction, including the P&A Agreement, on a timely basis or at all; delays or other circumstances arising from the dissolution of the Bank and the Company following completion of the P&A Agreement; diversion of management’s attention from ongoing business operations and opportunities during the pending Global transaction; potential adverse reactions or changes to business or employee relationships, including those resulting from the announcement of the Global transaction; 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 estimates in determining the 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.

    For more information, contact:
    Joseph W. Kiley III, President and Chief Executive Officer
    Rich Jacobson, Executive Vice President and Chief Financial Officer
    (425) 255-4400

    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Balance Sheets
    (Dollars in thousands)
    (Unaudited)

    AssetsJun 30,
    2024    		 Mar 31,
    2024    		  Jun 30,
    2023    		 Three
    Month
    Change    		 One
    Year
    Change
              
    Cash on hand and in banks$10,811  $8,789  $10,621  23.0% 1.8%
    Interest-earning deposits with banks 48,173   40,272   42,956  19.6  12.1 
    Investments available-for-sale, at fair value 160,693   180,376   208,927  (10.9) (23.1)
    Investments held-to-maturity, at amortized cost 2,456   2,451   2,444  0.2  0.5 
    Loans receivable, net of allowance of $14,796, $14,996, and $15,606 respectively 1,135,067   1,142,909   1,171,916  (0.7) (3.1)
    Federal Home Loan Bank ("FHLB") stock, at cost 8,823   6,078   6,603  45.2  33.6 
    Accrued interest receivable 6,632   7,176   6,690  (7.6) (0.9)
    Deferred tax assets, net 2,360   2,399   3,275  (1.6) (27.9)
    Premises and equipment, net 19,007   19,323   20,283  (1.6) (6.3)
    Bank owned life insurance ("BOLI"), net 38,368   38,058   36,922  0.8  3.9 
    Prepaid expenses and other assets 11,447   16,827   13,051  (32.0) (12.3)
    Right of use asset ("ROU"), net 2,670   2,415   3,018  10.6  (11.5)
    Goodwill 889   889   889  0.0  0.0 
    Core deposit intangible, net 357   388   484  (8.0) (26.2)
    Total assets$1,447,753  $1,468,350  $1,528,079  (1.4) (5.3)
              
    Liabilities and Stockholders' Equity             
              
    Deposits         
    Noninterest-bearing deposits$99,842  $100,846  $111,768  (1.0) (10.7)
    Interest-bearing deposits 988,332   1,066,050   1,113,196  (7.3) (11.2)
    Total deposits 1,088,174   1,166,896   1,224,964  (6.7) (11.2)
    Advances from the FHLB 176,000   115,000   120,000  53.0  46.7 
    Advance payments from borrowers for taxes and insurance 2,764   5,649   2,524  (51.1) 9.5 
    Lease liability, net 2,866   2,598   3,213  10.3  (10.8)
    Accrued interest payable 1,117   1,134   2,045  (1.5) (45.4)
    Other liabilities 16,139   16,890   16,618  (4.4) (2.9)
    Total liabilities 1,287,060   1,308,167   1,369,364  (1.6) (6.0)
              
    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 9,179,825 shares at June 30 2024, 9,174,425 shares at March 31 2024, and 9,148,086 shares at June 30 2023 92   92   92  0.0  0.0 
    Additional paid-in capital 72,953   72,871   72,544  0.1  0.6 
    Retained earnings 94,300   93,938   95,896  0.4  (1.7)
    Accumulated other comprehensive loss, net of tax (6,652)  (6,718)  (9,817) (1.0) (32.2)
    Total stockholders' equity 160,693   160,183   158,715  0.3  1.2 
    Total liabilities and stockholders' equity$1,447,753  $1,468,350  $1,528,079  (1.4) (5.3)
                      

    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Income Statements
    (Dollars in thousands, except per share data)
    (Unaudited)

     Quarter Ended    
      Jun 30,
    2024    		 Mar 31,
    2024    		  Jun 30,
    2023     		  Three
    Month
    Change     		  One
    Year
    Change
    Interest income         
    Loans, including fees$16,805  $16,966  $16,849  (0.9)% (0.3)%
    Investments 1,886   2,064   2,108  (8.6) (10.5)
    Interest-earning deposits with banks 482   486   620  (0.8) (22.3)
    Dividends on FHLB Stock 144   127   120  13.4  20.0 
    Total interest income 19,317   19,643   19,697  (1.7) (1.9)
    Interest expense         
    Deposits 9,498   9,916   8,590  (4.2) 10.6 
    Other borrowings 849   827   798  2.7  6.4 
    Total interest expense 10,347   10,743   9,388  (3.7) 10.2 
    Net interest income 8,970   8,900   10,309  0.8  (13.0)
    Recapture of provision for credit losses (200)  (175)  (247) 14.3  (19.0)
    Net interest income after recapture of provision for credit losses 9,170   9,075   10,556  1.0  (13.1)
              
    Noninterest income         
    BOLI income 310   351   274  (11.7) 13.1 
    Wealth management revenue 54   95   95  (43.2) (43.2)
    Deposit related fees 240   221   252  8.6  (4.8)
    Loan related fees 97   58   44  67.2  120.5 
    Other (expense) income, net (28)  62   133  (145.2) (121.1)
    Total noninterest income 673   787   798  (14.5) (15.7)
              
    Noninterest expense         
    Salaries and employee benefits 3,817   6,763   5,064  (43.6) (24.6)
    Occupancy and equipment 1,225   1,226   1,160  (0.1) 5.6 
    Professional fees 749   1,300   887  (42.4) (15.6)
    Data processing 856   786   711  8.9  20.4 
    Regulatory assessments 170   166   267  2.4  (36.3)
    Insurance and bond premiums 118   132   115  (10.6) 2.6 
    Marketing 47   64   98  (26.6) (52.0)
    Other general and administrative 959   894   1,202  7.3  (20.2)
    Total noninterest expense 7,941   11,331   9,504  (29.9) (16.4)
    Income (loss) before federal income tax provision (benefit) 1,902   (1,469)  1,850  (229.5) 2.8 
    Federal income tax provision (benefit) 347   (393)  362  (188.3) (4.1)
    Net income (loss)$1,555  $(1,076) $1,488  (244.5) 4.5 
              
    Basic earnings (loss) per share$0.17  $(0.12) $0.16     
    Diluted earnings (loss) per share$0.17  $(0.12) $0.16     
    Weighted average number of common shares outstanding 9,168,414   9,159,339   9,120,468     
    Weighted average number of diluted shares outstanding 9,235,446   9,159,339   9,124,227     
                    

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

     June 30, 2024 March 31, 2024 June 30, 2023
     Amount Percent Amount Percent Amount Percent
     (Dollars in thousands)
    Commercial real estate:           
    Residential:           
    Multifamily$134,302  11.7% $134,386  11.6% $141,413  11.9%
    Total residential 134,302  11.7   134,386  11.6   141,413  11.9 
                
    Non-residential:           
    Retail 118,154  10.4   118,958  10.4            131,877  11.1 
    Office 74,032  6.4   72,303  6.2                 79,338  6.7 
    Hotel / motel 55,018  4.8   57,263  4.9               64,297  5.4 
    Storage 32,636  2.8   32,834  2.8               33,418  2.8 
    Mobile home park 23,159  2.0   23,351  2.0               22,798  1.9 
    Warehouse 18,868  1.6   19,086  1.6   19,557  1.6 
    Nursing Home 11,474  1.0   11,538  1.0               11,739  1.0 
    Other non-residential 32,139  2.8   32,041  2.8   43,332  3.7 
      Total non-residential 365,480  31.8   367,374  31.7   406,356  34.2 
                    
    Construction/land:           
    One-to-four family residential 39,908  3.5   43,411  3.7   47,168  4.0 
    Multifamily 6,078  0.5   5,266  0.5   547  0.0 
    Land development 9,800  0.8   8,330  0.7   10,113  0.9 
    Total construction/land 55,786  4.8   57,007  4.9   57,828  4.9 
                    
    One-to-four family residential:           
    Permanent owner occupied 283,516  24.7   283,398  24.5   246,585  20.8 
    Permanent non-owner occupied 225,423  19.6   223,302  19.3   235,008  19.8 
    Total one-to-four family residential 508,939  44.3   506,700  43.8   481,593  40.6 
                
    Business:           
    Aircraft -  0.0   1,907  0.2   2,017  0.2 
    Small Business Administration ("SBA") 1,763  0.2   1,778  0.2   1,824  0.2 
    Paycheck Protection Plan ("PPP") 316  0.0   395  0.0   629  0.1 
    Other business 12,984  1.1   16,344  1.4   22,957  1.8 
    Total business 15,063  1.3   20,424  1.8   27,427  2.3 
                    
    Consumer:           
    Classic, collectible and other auto 56,758  4.9   58,003  5.0   61,611  5.1 
    Other consumer 13,535  1.2   14,011  1.2   11,294  1.0 
    Total consumer 70,293  6.1   72,014  6.2   72,905  6.1 
                
    Total loans 1,149,863  100.0%  1,157,905  100.0%  1,187,522  100.0%
    Less:           
    ACL 14,796     14,996     15,606   
    Loans receivable, net$1,135,067    $1,142,909    $1,171,916   
                
    Concentrations of credit: (1)           
    Construction loans as % of total capital 34.8%    36.3%    40.0%  
    Total non-owner occupied commercial real estate as % of total capital 298.8%    307.2%    336.8%  
                      

    (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
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
      2024   2024   2023   2023   2023 
     (Dollars in thousands, except per share data)
    Performance Ratios: (1)         
    Return on assets 0.43%  (0.29)%  0.31%  0.39%  0.39%
    Return on equity 3.88   (2.67)  2.97   3.71   3.74 
    Dividend payout ratio 76.47   (108.33)  100.00   79.26   79.90 
    Equity-to-assets ratio 11.10   10.91   10.74   10.44   10.39 
    Tangible equity ratio (2) 11.02   10.83   10.66   10.36   10.31 
    Net interest margin 2.66   2.55   2.54   2.69   2.84 
    Average interest-earning assets to average interest-bearing liabilities 117.01   116.40   115.84   116.94   116.27 
    Efficiency ratio 82.35   116.97   85.17   84.49   85.57 
    Noninterest expense as a percent of average total assets 2.21   3.05   2.18   2.29   2.50 
    Book value per common share$         17.51  $         17.46  $         17.61  $         17.35  $        17.35 
    Tangible book value per share (2) 17.37   17.32   17.47   17.20   17.20 
              
    Capital Ratios: (3)         
    Tier 1 leverage ratio 10.91%  10.41%  10.18%  10.25%  10.02%
    Common equity tier 1 capital ratio 15.39   14.98   14.90   14.75   14.49 
    Tier 1 capital ratio 15.39   14.98   14.90   14.75   14.49 
    Total capital ratio 16.64   16.24   16.15   16.00   15.75 
              
    Asset Quality Ratios: (4)         
    Nonaccrual loans as a percent of total loans 0.41%  0.02%  0.02%  0.02%  0.02%
    Nonaccrual as a percent of total assets 0.32   0.01   0.01   0.01   0.01 
    ACL as a percent of total loans 1.29   1.30   1.28   1.29   1.31 
    Net charge-offs to average loans receivable, net 0.00   0.00   0.00   0.00   0.00 
              
    Allowance for Credit Losses:         
    ACL - loans         
    Beginning balance$14,996  $15,306  $15,306  $15,606  $16,028 
    Recapture of provision (200)  (300)  -   (300)  (400)
    Charge-offs -   (10)  -   -   (22)
    Recoveries -   -   -   -   - 
    Ending balance$14,796  $14,996  $15,306  $15,306  $15,606 
              
    Allowance for unfunded commitments             
    Beginning balance$564  $439  $439  $439  $286 
    Provision for credit losses -   125   -   -   153 
    Ending balance$564  $564  $439  $439  $439 
              
    Provision for credit losses         
    ACL - loans$(200) $(300) $-  $(300) $(400)
    Allowance for unfunded commitments -   125   -   -   153 
    Total$(200) $(175) $-  $(300) $(247)
                        


    (1)Performance ratios are calculated on an annualized basis.
    (2)Tangible equity, tangible assets, tangible equity ratio and tangible book value per share are non-GAAP financial measures. 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
     Jun 30, Mar 31, Dec 31, Sep 30, Jun 30,
      2024   2024   2023   2023   2023 
     (Dollars in thousands)
    Yields and Costs: (1)         
    Yield on loans 5.93%  5.88%  5.83%  5.73%  5.71%
    Yield on investments 4.38   4.11   4.11   3.98   3.93 
    Yield on interest-earning deposits 5.25   5.28   5.32   5.18   4.91 
    Yield on FHLB stock 8.63   7.79   7.29   6.57   7.06 
    Yield on interest-earning assets 5.73%  5.62%  5.56%  5.46%  5.43%
              
    Cost of interest-bearing deposits 3.71%  3.69%  3.62%  3.33%  3.06%
    Cost of borrowings 2.64   2.65   2.40   2.42   2.55 
    Cost of interest-bearing liabilities 3.59%  3.58%  3.50%  3.24%  3.01%
              
    Cost of total deposits (2) 3.38%  3.38%  3.31%  3.03%  2.78%
    Cost of funds (3) 3.30   3.31   3.23   2.97   2.76 
              
    Average Balances:         
    Loans$1,139,017  $1,160,156  $1,167,339  $1,171,483  $1,182,939 
    Investments 173,102   202,106   206,837   211,291   215,113 
    Interest-earning deposits 36,959   37,032   65,680   40,202   50,691 
    FHLB stock 6,714   6,554   6,584   6,820   6,814 
    Total interest-earning assets$1,355,792  $1,405,848  $1,446,440  $1,429,796  $1,455,557 
              
    Interest-bearing deposits$1,029,608  $1,082,168  $1,127,690  $1,097,324  $1,126,598 
    Borrowings 129,126   125,604   120,978   125,402   125,275 
    Total interest-bearing liabilities$1,158,734  $1,207,772  $1,248,668  $1,222,726  $1,251,873 
    Noninterest-bearing deposits 101,196   99,173   102,869   109,384   111,365 
    Total deposits and borrowings$1,259,930  $1,306,945  $1,351,537  $1,332,110  $1,363,238 
              
    Average assets$1,446,207  $1,495,753  $1,538,955  $1,522,224  $1,547,321 
    Average stockholders' equity 161,057   161,823   159,659   160,299   159,764 
                        

    (1) Yields and costs are annualized.
    (2) Includes noninterest-bearing deposits.
    (3) Includes total borrowings and deposits (including noninterest-bearing deposits).

    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 tables provide a reconciliation between the GAAP and non-GAAP measures:

     Quarter Ended
      Jun 30,
    2024    		   Mar 31,
    2024    		   Dec 31,
    2023    		   Sep 30,
    2023    		   Jun 30,
    2023    		 
     (Dollars in thousands, except per share data)
    Tangible equity to tangible assets and tangible book value per share:
                        
    Total stockholders' equity (GAAP)$160,693  $     160,183  $     161,660  $     159,235  $     158,715 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 357   388   419   451   484 
    Tangible equity (Non-GAAP)$159,447  $     158,906  $     160,352  $     157,895  $     157,342 
              
    Total assets (GAAP)$1,447,753  $1,468,350  $1,505,082  $1,525,568  $1,528,079 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 357   388   419   451   484 
    Tangible assets (Non-GAAP)$1,446,507  $1,467,073  $1,503,774  $1,524,228  $1,526,706 
              
    Common shares outstanding at period end 9,179,825   9,174,425   9,179,510   9,179,510   9,148,086 
              
    Equity-to-assets ratio (GAAP) 11.10%  10.91%  10.74%  10.44%  10.39%
    Tangible equity-to-tangible assets ratio (Non-GAAP) 11.02   10.83   10.66   10.36   10.31 
    Book value per common share (GAAP)$   17.51  $    17.46  $    17.61  $    17.35  $    17.35 
    Tangible book value per share (Non-GAAP)    17.37   17.32   17.47   17.20   17.20 

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