• First Financial Northwest, Inc. Reports Net Income of $2.1 Million or $0.23 per Diluted Share for the First Quarter Ended March 31, 2023  

    Source: Nasdaq GlobeNewswire / 27 Apr 2023 08:15:51   America/Chicago

    RENTON, Wash., April 27, 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 March 31, 2023, of $2.1 million, or $0.23 per diluted share, compared to $3.2 million, or $0.35 per diluted share, for the quarter ended December 31, 2022, and $3.3 million, or $0.36 per diluted share, for the quarter ended March 31, 2022.

    President and CEO Joseph W. Kiley III stated, “While there was significant turmoil in the banking industry in the quarter, I am pleased to report that our liquidity, capital and credit quality metrics remain very strong. I sincerely appreciate our loyal customers who recognize how differently our community bank operates compared to the large banks that failed during the quarter. Our liquidity continues to be a strength, with total available liquidity from cash, investment securities and our line of credit at the Federal Home Loan Bank totaling over $600 million at quarter end.”

    “Credit quality remained strong, with nonperforming assets under $200,000 and additional loan delinquencies under $30,000 on total loans receivable of $1.2 billion,” noted Kiley. “During the quarter, we adopted the current expected credit loss accounting standard, which resulted in a one-time $500,000 increase to our allowance for credit losses and a corresponding net of tax adjustment of $395,000 to retained earnings. At quarter end, with an increase in loans receivable and an increase in the forecast for Washington State unemployment rates in future quarters, we also recognized a $300,000 provision for credit losses, increasing our allowance for credit losses on loans to $16.0 million compared to $15.2 million at year end,” continued Kiley.

    “With the volatility in the banking industry following the failures of two large regional banks, deposit customers looked for options to insure more of their deposits across the industry. Accordingly, we saw the level of uninsured deposits improve to 23.6% of deposits as of quarter-end from 27.4% at the end of 2022. I am proud of the efforts of our employees to help customers maximize their insured deposits and communicate to them how we are different from the larger banks in the news,” concluded Kiley.

    Highlights for the quarter ended March 31, 2023:

    • Net loans receivable increased by $17.7 million in the quarter to $1.18 billion at March 31, 2023.
    • The Company increased its regular quarterly cash dividend to shareholders by 8.3% to $0.13 per share from $0.12 per share.
    • The Bank’s Tier 1 leverage and total capital ratios were 10.2% and 15.6% at March 31, 2023, compared to 10.3% and 15.6% at December 31, 2022, and 10.5% and 15.3% at March 31, 2022, respectively.
    • Credit quality remained strong with nonperforming assets of $193,000, or 0.01% of total assets, and only $28,000 in additional loans over 30 days past due at March 31, 2023.
    • Based on management’s evaluation of the adequacy of the Allowance for Credit Losses (“ACL”) at March 31, 2023, the Bank recorded a $300,000 provision for credit losses during the quarter. This is in addition to the $500,000 that was added to the ACL upon the adoption of the Current Expected Credit Loss (“CECL”) accounting standard.

    Deposits totaled $1.23 billion at March 31, 2023, compared to $1.17 billion at December 31, 2022, and $1.14 billion at March 31, 2022. Total deposits increased $57.1 million for the quarter ended March 31, 2023, compared to the quarter ended December 31, 2022, primarily due to a $66.5 million increase in brokered deposits. Due in large part to certificate of deposit promotions during the quarter, money market balances declined by $58.4 million, while retail certificate of deposit balances increased by $70.4 million. During the quarter, management elected to obtain additional funding in the wholesale markets due to the considerable volatility in the banking industry. At March 31, 2023, the Company held $71.0 million in interest-earning deposits that can be used to reduce brokered deposits and/or other wholesale liabilities in future periods, compared to $16.6 million at December 31, 2022, and $19.6 million at March 31, 2022.

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

     Mar 31,
    2023    		 Dec 31,
    2022    		 Mar 31,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
     (Dollars in thousands)
    Deposits:         
    Noninterest-bearing demand$110,780  $119,944  $130,596  $(9,164) $(19,816)
    Interest-bearing demand 86,183   96,632   99,794   (10,449)  (13,611)
    Savings 21,871   23,636   23,441   (1,765)  (1,570)
    Money market 483,945   542,388   609,080   (58,443)  (125,135)
    Certificates of deposit, retail 332,935   262,554   277,190   70,381   55,745 
    Brokered deposits 191,414   124,886   -   66,528   191,414 
    Total deposits 1,227,128  $1,170,040  $1,140,101  $57,088  $87,027 



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

    March 31, 2023
     Noninterest-
    bearing
    demand     		Interest-
    bearing
    demand    		 Savings Money
    market     		Certificates
    of deposit,
    retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$33,227 $44,884 $14,033 $238,966 $244,560 $- $575,670 
    Landing 2,721  1,407  184  15,056  6,411  -  25,779 
    Woodinville 3,084  2,438  1,116  10,971  14,101  -  31,710 
    Bothell 4,066  659  60  5,263  2,067  -  12,115 
    Crossroads 11,766  2,956  95  35,242  11,956  -  62,015 
    Kent 9,505  9,305  4  18,415  3,449  -  40,678 
    Kirkland 7,318  1,282  99  10,643  627  -  19,969 
    Issaquah 2,128  1,189  27  3,825  4,627  -  11,796 
    Total King County 73,815  64,120  15,618  338,381  287,798  -  779,732 
    Snohomish County       
    Mill Creek 7,001  3,089  617  12,487  6,190  -  29,384 
    Edmonds 15,282  6,247  884  26,726  13,183  -  62,322 
    Clearview 4,933  4,485  1,640  19,490  6,999  -  37,547 
    Lake Stevens 4,177  3,577  1,355  33,824  9,197  -  52,130 
    Smokey Point 2,836  4,287  1,745  46,825  7,782  -  63,475 
    Total Snohomish County 34,229  21,685  6,241  139,352  43,351  -  244,858 
    Pierce County       
    University Place 2,189  82  3  3,999  946  -  7,219 
    Gig Harbor 547  296  9  2,213  840  -  3,905 
    Total Pierce County 2,736  378  12  6,212  1,786  -  11,124 
            
    Brokered deposits -  -  -  -  -  191,414  191,414 
            
    Total deposits$110,780 $86,183 $21,871 $483,945 $332,935 $191,414 $1,227,128 


    December 31, 2022
     Noninterest-
    bearing
    demand     		Interest-
    bearing
    demand    		 Savings Money
    market     		Certificates
    of deposit,
    retail    		Brokered
    deposits    		Total
     (Dollars in thousands)
    King County       
    Renton$35,123 $45,575 $15,515 $279,392 $203,463 $- $579,068 
    Landing 3,781  1,720  143  18,153  3,771  -  27,568 
    Woodinville 2,925  3,315  1,181  15,648  10,428  -  33,497 
    Bothell 3,363  1,041  49  6,485  942  -  11,880 
    Crossroads 14,455  3,082  226  30,969  11,667  -  60,399 
    Kent 8,162  11,660  2  19,549  1,023  -  40,396 
    Kirkland 10,618  506  62  8,310  25  -  19,521 
    Issaquah 3,342  1,171  134  2,474  3,408  -  10,529 
    Total King County 81,769  68,070  17,312  380,980  234,727  -  782,858 
    Snohomish County       
    Mill Creek 6,594  4,005  911  15,445  5,443  -  32,398 
    Edmonds 16,619  6,191  766  33,904  7,768  -  65,248 
    Clearview 5,456  6,317  1,653  23,322  2,906  -  39,654 
    Lake Stevens 3,936  5,213  1,390  36,842  4,674  -  52,055 
    Smokey Point 2,617  6,330  1,391  46,486  6,012  -  62,836 
    Total Snohomish County 35,222  28,056  6,111  155,999  26,803  -  252,191 
    Pierce County       
    University Place 2,192  96  1  3,953  672  -  6,914 
    Gig Harbor 761  410  212  1,456  352  -  3,191 
    Total Pierce County 2,953  506  213  5,409  1,024  -  10,105 
            
    Brokered deposits -  -  -  -  -  124,886  124,886 
            
    Total deposits$119,944 $96,632 $23,636 $542,388 $262,554 $124,886 $1,170,040 


    Net loans receivable totaled $1.18 billion at March 31, 2023, compared to $1.17 billion at December 31, 2022, and $1.12 billion at March 31, 2022. During the quarter ended March 31, 2023, multifamily loans increased $16.5 million, one-to-four family residential loans increased $8.4 million, and consumer loans increased $6.1 million, which included an increase of $4.0 million in classic, collectible and other auto loans, partially offset by a $14.1 million decline in construction and land development loans. The average balance of net loans receivable totaled $1.17 billion for the quarter ended March 31, 2023, compared to $1.15 billion for the quarter ended December 31, 2022, and $1.12 billion for the quarter ended March 31, 2022.

    The ACL represented 1.34% of total loans receivable at March 31, 2023, compared to the allowance for loan and lease losses (“ALLL”) to total loans receivable of 1.29% and 1.33% at December 31, 2022, and March 31, 2022, respectively.

    There were $193,000 in nonperforming loans at both March 31, 2023, and December 31, 2022, compared to $179,000 at March 31, 2022. There was no other real estate owned (“OREO”) at March 31, 2023, December 31, 2022, or March 31, 2022.


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

     Mar 31, Dec 31, Mar 31, Three
    Month    		 One
    Year
      2023   2022   2022  Change Change
     (Dollars in thousands)
    Nonperforming loans:         
    Consumer$193  $193  $179  $–  $14 
    Total nonperforming loans 193   193   179   –   14 
              
    OREO –   –   –   –   – 
              
    Total nonperforming assets$193  $193  $179  $–  $14 
              
    Nonperforming assets as a percent         
    of total assets 0.01%  0.01%  0.01%    


    Net interest income totaled $11.3 million for the quarter ended March 31, 2023, compared to $12.4 million for the quarter ended December 31, 2022, and $11.4 million for the quarter ended March 31, 2022. The decrease in the current quarter compared to the quarter ended December 31, 2022, was primarily due to higher interest expense on deposits and other borrowings, primarily 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, partially offset by higher interest income on loans, including fees, and investments. Since March 2022, the Federal Open Market Committee of the Federal Reserve System has increased the target range for the federal funds rate by 475 basis points, including 50 basis points during the first quarter of 2023, to a range of 4.75% to 5.00%.

    Total interest income was $18.5 million for the quarter ended March 31, 2023, compared to $17.3 million for the quarter ended December 31, 2022, and $12.9 million for the quarter ended March 31, 2022. The increase in the current quarter compared to the prior quarters was primarily due to an improvement in the average loan yield to 5.56% from 5.19% and 4.36% for the quarters ended December 31, 2022, and March 31, 2022, respectively, due in large part to recent increases in the targeted federal funds rate that increased our returns from LIBOR and Prime based variable rate loans and variable rate investment securities.

    Total interest expense was $7.2 million for the quarter ended March 31, 2023, compared to $4.9 million for the quarter ended December 31, 2022, and $1.6 million for the quarter ended March 31, 2022. The average cost of interest-bearing deposits was 2.41% for the quarter ended March 31, 2023, compared to 1.51% for the quarter ended December 31, 2022, and 0.50% for the quarter ended March 31, 2022. The increase from the quarter ended December 31, 2022, was due primarily to increased interest expense on money market and certificate of deposit balances and the continued use of higher cost brokered deposits and wholesale sources to meet our funding needs. Advances from the FHLB increased to $160.0 million at March 31, 2023, compared to $145.0 million at December 31, 2022, and $95.0 million at March 31, 2022. At March 31, 2023, $95.0 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 44 months and a weighted average fixed interest rate of 1.05% as of March 31, 2023. The average cost of borrowings was 2.69% for the quarter ended March 31, 2023, compared to 2.46% for the quarter ended December 31, 2022, and 1.28% for the quarter ended March 31, 2022.

    The net interest margin was 3.22% for the quarter ended March 31, 2023, compared to 3.52% for the quarter ended December 31, 2022, and 3.43% for the quarter ended March 31, 2022. The decrease in the net interest margin for the quarter ended March 31, 2023, compared to the quarter ended December 31, 2022, was due primarily to the cost of interest-bearing liabilities increasing more than the yields on interest-earnings assets, with an 81-basis point increase in the Company’s average cost of interest-bearing liabilities to 2.44% from 1.63%, partially offset by a 39-basis point increase in the average yield on interest-earning assets to 5.29% from 4.90%.

    Noninterest income for the quarter ended March 31, 2023, totaled $665,000, compared to $720,000 for the quarter ended December 31, 2022, and $789,000 for the quarter ended March 31, 2022. The decrease in noninterest income for the quarter ended March 31, 2023, compared to the quarter ended December 31, 2022, was primarily due to lower loan related fees and other noninterest income, partially offset by higher income on bank-owned life insurance. In addition, the prior quarter benefited from a net gain on sale of investments not duplicated in the current period. The decrease for the quarter ended March 31, 2023, compared to the prior year quarter, primarily reflects lower loan related fees and wealth management revenue.

    Noninterest expense totaled $9.0 million for the quarter ended March 31, 2023, compared to $8.7 million for the quarter ended December 31, 2022, and $8.6 million for the quarter ended March 31, 2022. The increase in noninterest expense for the quarter ended March 31, 2023, compared to the quarter ended December 31, 2022, was primarily due to a $484,000 increase in salaries and employee benefits due to annual merit-based salary increases and expenses associated with enhancements to the Bank’s 401(k) plan for all eligible employees, whereas the prior quarter benefited from the absence of compensation expense related to the Bank’s Employee Stock Ownership Plan (“ESOP”) which matured and was fully allocated during the third quarter of 2022 and averaged approximately $458,000 in expense per quarter in the first three quarters of 2022. The increase was partially offset by a $190,000 reduction in professional fees in the quarter. The increase in noninterest expense for the quarter ended March 31, 2023, compared to the quarter ended March 31, 2022, primarily reflects a $215,000 increase in other general and administrative expenses, including a $60,000 increase in reserve for unfunded commitments and a $54,000 increase in state and local taxes, a $200,000 increase in salaries and employee benefits and higher marketing expense, partially offset by lower occupancy and equipment expenses and professional fees.

    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: 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 caused by increasing political instability from acts of war including Russia’s invasion of Ukraine, as well as increasing prices and supply chain disruptions, and any governmental or societal responses to new COVID-19 variants; the uncertain impacts of quantitative tightening and current and future monetary policies of the Federal Reserve; increased competitive pressures; changes in the interest rate environment; 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 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. These risks could cause our actual results for 2023 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)
    (Unaudited)
     
    AssetsMar 31,
    2023    		 Dec 31,
    2022    		  Mar 31,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
    Cash on hand and in banks$9,618  $7,722  $7,979  24.6% 20.5%
    Interest-earning deposits with banks 70,998   16,598   19,633  327.8  261.6 
    Investments available-for-sale, at fair value 214,948   217,778   180,212  (1.3) 19.3 
    Investments held-to-maturity, at amortized cost 2,439   2,444   2,426  (0.2) 0.5 
    Loans receivable, net of allowance of $16,028, $15,227, and $15,159 respectively 1,184,750   1,167,083   1,121,382  1.5  5.7 
    Federal Home Loan Bank ("FHLB") stock, at cost 8,203   7,512   5,512  9.2  48.8 
    Accrued interest receivable 7,011   6,513   5,590  7.6  25.4 
    Deferred tax assets, net 2,990   2,597   1,069  15.1  179.7 
    Premises and equipment, net 20,732   21,192   22,254  (2.2) (6.8)
    Bank owned life insurance ("BOLI"), net 36,647   36,286   35,552  1.0  3.1 
    Prepaid expenses and other assets 11,336   12,479   8,451  (9.2) 34.1 
    Right of use asset ("ROU"), net 3,194   3,275   3,455  (2.5) (7.6)
    Goodwill 889   889   889  0.0  0.0 
    Core deposit intangible, net 516   548   650  (5.8) (20.6)
    Total assets$1,574,271  $1,502,916  $1,415,054  4.7  11.3 
    Liabilities and Stockholders' Equity         
    Deposits         
    Noninterest-bearing deposits$110,780  $119,944  $130,596  (7.6) (15.2)
    Interest-bearing deposits 1,116,348   1,050,096   1,009,505  6.3  10.6 
    Total deposits 1,227,128   1,170,040   1,140,101  4.9  7.6 
    Advances from the FHLB 160,000   145,000   95,000  10.3  68.4 
    Advance payments from borrowers for taxes and insurance 5,447   3,051   5,299  78.5  2.8 
    Lease liability, net 3,374   3,454   3,617  (2.3) (6.7)
    Accrued interest payable 749   328   112  128.4  568.8 
    Other liabilities 17,928   20,683   13,168  (12.8) 36.9 
    Total liabilities 1,414,626   1,342,556   1,257,297  5.4  12.5 
    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 9,148,086 shares at March 31, 2023, 9,127,595 shares at December 31, 2022, and 9,107,977 shares at March 31, 2022 92   91   91  1.1  1.1 
    Additional paid-in capital 72,445   72,424   71,780  0.0  0.9 
    Retained earnings 95,597   95,059   88,339  0.5  8.1 
    Accumulated other comprehensive loss, net of tax (8,489)  (7,214)  (1,889) 17.7  349.4 
    Unearned Employee Stock Ownership Plan ("ESOP") shares -   -   (564) n/a  (100.0)
    Total stockholders' equity 159,645   160,360   157,757  (0.5) 1.1 
    Total liabilities and stockholders' equity$1,574,271  $1,502,916  $1,415,054  4.7% 11.3%



    FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
    Consolidated Income Statements
    (Dollars in thousands, except per share data)
    (Unaudited)
     
     Quarter Ended    
     Mar 31,
    2023    		  Dec 31,
    2022     		 Mar 31,
    2022    		 Three
    Month
    Change    		 One
    Year
    Change
    Interest income         
    Loans, including fees$16,029  $15,042  $12,001  6.6% 33.6%
    Investments 2,105   2,007   831  4.9  153.3 
    Interest-earning deposits with banks 236   205   19  15.1  1142.1 
    Dividends on FHLB Stock 130   89   74  46.1  75.7 
    Total interest income 18,500   17,343   12,925  6.7  43.1 
    Interest expense         
    Deposits 6,332   3,972   1,257  59.4  403.7 
    FHLB advances and other borrowings 912   928   300  (1.7) 204.0 
    Total interest expense 7,244   4,900   1,557  47.8  365.3 
    Net interest income 11,256   12,443   11,368  (9.5) (1.0)
    Provision (recapture of provision) for credit losses 300   500   (500) (40.0) (160.0)
    Net interest income after provision (recapture of provision) for credit losses 10,956   11,943   11,868  (8.3) (7.7)
              
    Noninterest income         
    Net gain on sale of investments -   27   -  (100.0) n/a 
    BOLI income 308   222   288  38.7  6.9 
    Wealth management revenue 45   36   82  25.0  (45.1)
    Deposit related fees 223   231   215  (3.5) 3.7 
    Loan related fees 91   172   199  (47.1) (54.3)
    Other (2)  32   5  (106.3) (140.0)
    Total noninterest income 665   720   789  (7.6) (15.7)
              
    Noninterest expense         
    Salaries and employee benefits 5,461   4,977   5,261  9.7  3.8 
    Occupancy and equipment 1,165   1,155   1,228  0.9  (5.1)
    Professional fees 417   607   452  (31.3) (7.7)
    Data processing 686   634   677  8.2  1.3 
    Regulatory assessments 101   108   101  (6.5) 0.0 
    Insurance and bond premiums 130   111   129  17.1  0.8 
    Marketing 77   77   37  0.0  108.1 
    Other general and administrative 956   997   741  (4.1) 29.0 
    Total noninterest expense 8,993   8,666   8,626  3.8  4.3 
    Income before federal income tax provision 2,628   3,997   4,031  (34.3) (34.8)
    Federal income tax provision 506   771   771  (34.4) (34.4)
    Net income$2,122  $3,226  $3,260  (34.2)% (34.9)%
              
    Basic earnings per share$0.23  $0.35  $0.36     
    Diluted earnings per share$0.23  $0.35  $0.36     
    Weighted average number of common shares outstanding 9,104,371   9,073,323   8,987,482     
    Weighted average number of diluted shares outstanding 9,173,276   9,149,044   9,117,432     



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

     March 31, 2023 December 31, 2022 March 31, 2022
     Amount Percent Amount  Percent Amount Percent
     (Dollars in thousands)
    Commercial real estate:           
    Residential:           
    Multifamily$143,430  11.9% $126,895  10.7% $152,855  13.4%
    Total multifamily residential 143,430  11.9   126,895  10.7   152,855  13.4 
                
    Non-residential:           
    Office 79,795  6.6   84,315  7.1   87,394  7.7 
    Retail 130,502  10.9   132,595  11.2   142,725  12.6 
    Mobile home park 22,125  1.9   25,420  2.2   20,409  1.8 
    Hotel / motel 67,339  5.6   55,471  4.7   58,406  5.1 
    Nursing home 12,275  1.0   12,365  1.0   12,622  1.1 
    Warehouse 19,655  1.7   19,783  1.7   21,103  1.9 
    Storage 33,677  2.8   33,876  2.9   34,442  3.0 
    Other non-residential 43,619  3.6   44,057  3.6   39,887  3.5 
    Total non-residential 408,987  34.1   407,882  34.4   416,988  36.7 
                
    Construction/land:           
    One-to-four family residential 54,191  4.5   52,836  4.5   35,953  3.2 
    Multifamily -  0.0   15,501  1.3   17,196  1.5 
    Commercial -  0.0   -  0.0   6,189  0.5 
    Land development 9,801  0.8   9,783  0.8   15,359  1.4 
    Total construction/land 63,992  5.3   78,120  6.6   74,697  6.6 
                
    One-to-four family residential:           
    Permanent owner occupied 243,366  20.3   233,785  19.8   197,447  17.4 
    Permanent non-owner occupied 240,894  20.1   242,051  20.5   214,784  18.9 
    Total one-to-four family residential 484,260  40.4   475,836  40.3   412,231  36.3 
                
    Business:           
    Aircraft 2,051  0.1   2,086  0.1   4,647  0.4 
    Small Business Administration (“SBA”) 494  0.1   509  0.1   816  0.1 
    Paycheck Protection Plan (“PPP”) 708  0.1   785  0.1   5,181  0.5 
    Other business 28,415  2.3   27,991  2.4   19,902  1.7 
    Total business 31,668  2.6   31,371  2.7   30,546  2.7 
                
    Consumer:           
    Classic, collectible and other auto 57,703  4.8   53,705  4.6   38,781  3.4 
    Other consumer 10,469  0.9   8,350  0.7   10,650  0.9 
    Total consumer 68,172  5.7   62,055  5.3   49,431  4.3 
                
    Total loans 1,200,509  100.0%  1,182,159  100.0%  1,136,748  100.0%
    Less:           
    Deferred loan (costs) fees, net (269)    (151)    207   
    ACL 16,028     15,227     15,159   
    Loans receivable, net$1,184,750    $1,167,083    $1,121,382   
                
    Concentrations of credit: (1)           
    Construction loans as % of total capital 44.9%    53.1%    51.9%  
    Total non-owner occupied commercial real estate as % of total capital 347.7%    346.9%    379.6%  
     
    (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
     Mar 31, Dec 31, Sep 30, Jun 30, Mar 31,
      2023   2022   2022   2022   2022 
     (Dollars in thousands, except per share data)
    Performance Ratios: (1)         
    Return on assets 0.57%  0.86%  1.06%  0.79%  0.93%
    Return on equity 5.31   8.04   9.88   7.11   8.33 
    Dividend payout ratio 56.52   34.29   27.40   38.51   33.20 
    Equity-to-assets ratio 10.14   10.67   10.64   10.78   11.15 
    Tangible equity-to-tangible assets ratio (2) 10.06   10.58   10.55   10.69   11.05 
    Net interest margin 3.22   3.52   3.65   3.53   3.43 
    Average interest-earning assets to average interest-bearing liabilities 117.78   117.93   119.08   120.21   119.59 
    Efficiency ratio 75.44   65.84   66.80   72.62   70.96 
    Noninterest expense as a percent of average total assets 2.42   2.30   2.43   2.60   2.46 
    Book value per common share$17.45  $17.57  $17.30  $17.26  $17.32 
    Tangible book value per common share (2) 17.30   17.41   17.14   17.09   17.15 
              
    Capital Ratios: (3)         
    Tier 1 leverage ratio 10.24%  10.31%  10.43%  10.53%  10.51%
    Common equity tier 1 capital ratio 14.33   14.37   14.24   14.22   14.08 
    Tier 1 capital ratio 14.33   14.37   14.24   14.22   14.08 
    Total capital ratio 15.59   15.62   15.49   15.47   15.33 
              
    Asset Quality Ratios: (4)         
    Nonperforming loans as a percent of total loans 0.02%  0.02%  0.02%  0.00%  0.02%
    Nonperforming assets as a percent of total assets 0.01   0.01   0.02   0.00   0.01 
    ACL as a percent of total loans 1.34   1.29   1.27   1.33   1.33 
    Net (recoveries) charge-offs to average loans receivable, net (0.00)  (0.00)  (0.00)  0.00   (0.00)
              
    Allowance for Credit Losses:         
    ALLL, beginning of the quarter$15,227  $14,726  $15,125  $15,159  $15,657 
    Beginning balance adjustment from adoption
    of Topic 326    		 500   -   -   -   - 
    Provision (recapture of provision) 300   500   (400)  -   (500)
    Charge-offs -   -   -   (37)  - 
    Recoveries 1   1   1   3   2 
    ACL, end of the quarter$16,028  $15,227  $14,726  $15,125  $15,159 
     
    (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)
     
     For the Quarter Ended
     Mar 31,
    2023    		 Dec 31,
    2022    		 Sep 30,
    2022    		 Jun 30,
    2022    		 Mar 31,
    2022
     (Dollars in thousands)
    Yields and Costs: (1)         
    Yield on loans 5.56%  5.19%  4.77%  4.41%  4.36%
    Yield on investments 3.88   3.60   2.90   2.33   1.96 
    Yield on interest-earning deposits 4.40   3.31   2.02   0.67   0.15 
    Yield on FHLB stock 7.30   4.58   5.56   4.82   5.49 
    Yield on interest-earning assets 5.29%  4.90%  4.43%  4.04%  3.90%
              
    Cost of interest-bearing deposits 2.41%  1.51%  0.87%  0.55%  0.50%
    Cost of borrowings 2.69   2.46   1.48   1.21   1.28 
    Cost of interest-bearing liabilities 2.44%  1.63%  0.93%  0.61%  0.56%
              
    Cost of total deposits 2.17%  1.36%  0.78%  0.49%  0.44%
    Cost of funds 2.23   1.48   0.84   0.55   0.51 
              
    Average Balances:         
    Loans$1,168,539  $1,150,181  $1,132,233  $1,117,079  $1,115,428 
    Investments 219,969   221,113   220,244   198,819   171,685 
    Interest-earning deposits 21,729   24,608   24,565   22,010   49,857 
    FHLB stock 7,219   7,710   5,923   5,905   5,467 
    Total interest-earning assets$1,417,456  $1,403,612  $1,382,965  $1,343,813  $1,342,437 
              
    Interest-bearing deposits$1,065,827  $1,040,357  $1,056,079  $1,013,080  $1,027,507 
    Borrowings 137,600   149,946   105,272   104,835   95,000 
    Total interest-bearing liabilities 1,203,427   1,190,303   1,161,351   1,117,915   1,122,507 
    Noninterest-bearing deposits 115,708   121,518   125,561   131,415   122,175 
    Total deposits and borrowings$1,319,135  $1,311,821  $1,286,912  $1,249,330  $1,244,682 
              
    Average assets$1,509,297  $1,496,125  $1,470,816  $1,431,003  $1,424,054 
    Average stockholders' equity 162,016   159,120   158,515   158,349   158,756 
     
    (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 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
      Mar 31,
    2023    		   Dec 31,
    2022    		   Sep 30,
    2022    		   Jun 30,
    2022    		   Mar 31,
    2022    		 
     (Dollars in thousands, except per share data)
    Tangible equity to tangible assets and tangible book value per share:                   
                        
    Total stockholders' equity (GAAP)$159,645  $160,360  $157,890  $156,896  $157,757 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 516   548   582   616   650 
    Tangible equity (Non-GAAP)$158,240  $158,923  $156,419  $155,391  $156,218 
              
    Total assets (GAAP)$1,574,271  $1,502,916  $1,484,311  $1,454,768  $1,415,054 
    Less:         
    Goodwill 889   889   889   889   889 
    Core deposit intangible, net 516   548   582   616   650 
    Tangible assets (Non-GAAP)$1,572,866  $1,501,479  $1,482,840  $1,453,263  $1,413,515 
              
    Common shares outstanding at period end 9,148,086   9,127,595   9,127,595   9,091,533   9,107,977 
              
    Equity-to-assets ratio (GAAP) 10.14%  10.67%  10.64%  10.78%  11.15%
    Tangible equity-to-tangible assets ratio (Non-GAAP) 10.06   10.58   10.55   10.69   11.05 
    Book value per common share (GAAP)$17.45  $17.57  $17.30  $17.26  $17.32 
    Tangible book value per share (Non-GAAP) 17.30   17.41   17.14   17.09   17.15 


    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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