Exhibit 99.1
**For Immediate Release**
For more information, contact:
Victor Karpiak: (425) 255-4400
Scott Gaspard: (425) 254-2002
First Financial Northwest, Inc.
Reports Financial Results for the Year Ended December 31, 2009
Renton, Washington – January 25, 2010 - First Financial Northwest, Inc. (the “Company”) (Nasdaq GS: FFNW), the holding company for First Savings Bank Northwest (the “Bank”), today reported a net loss for the year ended December 31, 2009 of $40.7 million, or $2.18 per diluted share, as compared to net income of $4.7 million, or $0.22 per diluted share for the year ended December 31, 2008. For the quarter ended December 31, 2009, our net loss was $12.2 million, or $0.69 per diluted share as compared to a net loss of $3.0 million, or $0.14 per diluted share for the same period in 2008. For the year ended December 31, 2009, the following significant items, which total $67.0 million, contributed to our net loss:
| · | Provision for loan losses was $51.3 million; |
| · | Goodwill impairment totaling $14.2 million was written-off; |
| · | The remaining book value of $983,000 related to the building that housed our lending division was expensed as a new facility is being built; |
| · | A special assessment was levied on all financial institutions for deposit insurance by the Federal Deposit Insurance Corporation (“FDIC”), our portion totaled $559,000. |
“In a year which has proven to be the most challenging in the history of our Company, we still experienced strong deposit growth and increased liquidity, but our struggles in the construction and land development sector continued. We have seen more devaluation in the real estate market specific to construction lending than we could ever have anticipated. Over the past year, we continued to work with our builders to minimize the negative effects this turmoil has caused. With the stress of a prolonged economic downturn, it became evident in the fourth quarter that some of our builder relationships no longer had the energy or resources to market the projects as necessary. This resulted in us utilizing more aggressive measures such as foreclosures, short sales and accepting deeds in lieu of foreclosure as part of a determined resolution
process. These events have caused us to significantly increase our provision for loan losses bringing our reserves to a level that we believe at this time, is adequate to cover potential losses in our loan portfolio. We are committed to our goal of restoring earnings and improving our asset quality,” stated Mr. Victor Karpiak, Chairman of the Board, President and our Chief Executive Officer.
Capital levels at First Savings Bank Northwest continue to exceed the regulatory requirement for being “well capitalized.” Our Tier 1 leverage, Tier 1 risk-based and Total risk-based capital ratios for the Bank only at December 31, 2009, were 12.46%, 19.20% and 20.49%, respectively, compared to the regulatory capital requirements to be considered “well capitalized” which are 5%, 6%, and 10%, respectively. In addition, the parent company of the Bank at December 31, 2009 had an additional $52.7 million of capital.
Results of Operations
Our net loss for the fourth quarter of 2009 as compared to the same period in 2008 was primarily the result of increasing the provision for loan losses by $18.2 million to $23.7 million. This increase was offset by an increase in noninterest income of $2.9 million and a $5.9 million decrease in federal income tax expense. Similarly, for the year ended December 31, 2009, our results were primarily attributable to increasing the provision for loan losses by $41.9 million to $51.3 million and an increase in noninterest expense of $20.4 million (which included the $14.2 million impairment charge in goodwill). These increases were partially offset by a $16.5 million decrease in federal income tax expense as compared to 2008.
Net Interest Income/Loss
Net interest income for the quarter ended December 31, 2009 increased $243,000 to $8.3 million, as compared to $8.1 million for the same period in 2008. Interest income for the fourth quarter of 2009 decreased $600,000, or 3.5%, to $16.3 million from $16.9 million for the quarter ended December 31, 2008. This decline was partially offset by a reduction in interest expense of $843,000, or 9.5% for the three months ended December 31, 2009 from the comparable quarter in 2008.
The decline in interest income for the fourth quarter of 2009 was primarily the result of the decline in yield on average interest-earning assets for the quarter of 55 basis points which equates to a decrease of $1.1 million in interest income. The yield on average assets declined to 5.13% for the three months ended December 31, 2009 as compared to 5.68% for the same period in 2008 reflecting both the general decline in interest rates and the increase in our foregone interest (interest that has not been accrued on nonperforming loans). The yield on net loans receivable declined to 5.61% for the three months ended December 31, 2009 from 5.89% for the same period in 2008, a decrease of 28 basis points or $798,000 of the decline in interest income, of which $1.9 million related to foregone interest. The yield on investments available for sale decreased 55 basis points to 4.14% from 4.69%, or $195,000 for the same time periods. The yield on federal funds sold and interest-bearing deposits decreased 81 basis points to 0.29% during the quarter ended December 31, 2009, from 1.10% for the same period in 2008, or $137,000 reflecting the same general decline in interest rates. This decline in interest income related to rates was partially offset by an additional $513,000 of interest income generated by the growth in the average net loan portfolio balance of $32.3 million.
Total interest expense for the quarter ended December 31, 2009 decreased $843,000 or 9.5% to $8.0 million from $8.9 million for the same period in 2008. This decline was primarily a result of the general decline in interest rates which accounted for $1.9 million of the decrease. Our overall cost of funds decreased to 3.02% for the quarter ended December 31, 2009 from 3.83% as compared to the same quarter in 2008 primarily as a result of the decline in the cost of our certificates of deposit. The cost of our certificates of deposit decreased from 4.43% in the fourth quarter of 2008 to 3.42%, or $1.8 million compared to the same quarter in 2009. Conversely, the costs related to the increase in our interest-bearing liabilities, offset the benefit from the decline in interest rates by $1.0 million. Total average interest-bearing liabilities increased $135.7 million to $1.1 billion during the fourth quarter of 2009 as compared to $927.0 million for the same quarter in 2008. Average deposits increased $140.1 million and the average balance of advances from the Federal Home Loan Bank of Seattle (“FHLB”) decreased $4.3 million. Our interest rate spread for the quarter ended December 31, 2009 increased to 2.11% from 1.85% as compared to the same
quarter in 2008. Our net interest margin decreased to 2.61% for the fourth quarter of 2009 as compared to 2.71% for the quarter ended December 31, 2008 primarily as a result of foregone interest.
Net interest income for the year ended December 31, 2009 decreased $1.5 million to $31.1 million as compared to $32.6 million for 2008. Interest income for the years ended December 31, 2009 and 2008 was $65.0 million and $68.6 million, respectively, a decrease of $3.6 million. This decrease in interest income over the past year was partially offset by a decrease in interest expense of $2.1 million, or 5.74% as compared to the year ended December 31, 2008.
Similar to the fourth quarter results, the decline in interest income for 2009 as compared to 2008 was a result of the decrease in yield on interest-earning assets of 70 basis points or an $8.8 million decline in interest income. The yield on average interest-earning assets declined to 5.21% for the year ended December 31, 2009 from 5.91% for 2008 reflecting both the general decline in interest rates and the increase in our foregone interest during the last year. The yield on net loans receivable declined to 5.60% for the year ended December 31, 2009 from 6.27% in 2008, a decrease of 67 basis points, or $7.0 million of which $7.2 million was a result of foregone interest. The yield on investments available for sale decreased 41 basis points from 4.68%, or $639,000 for the same time period. The yield on federal funds sold and interest-bearing deposits decreased 243 basis points to 0.23% during the year ended December 31, 2009, from 2.66% in 2008, or $1.1 million as a result of the general decline in interest rates. The decline in interest income for the year was partially offset by an additional $5.1 million in interest income generated by the growth in the average net loan portfolio balance of $79.9 million for the year ended December 31, 2009 as compared to 2008. The average net loan portfolio balance for the year ended December 31, 2009 was $1.0 billion as compared to $962.2 million for 2008.
Total interest expense for the year ended December 31, 2009 decreased $2.1 million or 5.74% to $33.9 million from $36.0 million in 2008. Similar to the results for the fourth quarter, the decline in interest expense for the year ended December 31, 2009 as compared to 2008 was primarily a result of the general decrease in interest rates which equated to a decrease in interest expense of $6.7 million. Our overall cost
of funds decreased to 3.35% for 2009 from 4.07% in 2008. The cost of our certificates of deposit, which accounted for the majority of the decline in interest expense, decreased from 4.70% in 2008 to 3.79% in 2009, resulting in a $6.2 million savings. The costs associated with the increase in the average balance of our interest-bearing liabilities offset the decline in interest expense by $4.7 million for the same time period. Total average interest-bearing liabilities increased $127.4 million to $1.0 billion in 2009 as compared to $884.6 million in 2008. The balance of average deposits increased $104.0 million and the average balance of advances from the FHLB increased $23.4 million during 2009 as compared to 2008. Our interest rate spread for 2009 was 1.86% for the twelve months ended December 31, 2009 as compared to 1.84% in 2008. Our net interest margin decreased to 2.49% in 2009 as compared to 2.81% in 2008.
Provision for Loan Losses
The provision for loan losses was $23.7 million and $5.5 million, for the quarters ended December 31, 2009 and 2008, respectively. Included in the fourth quarter provision for loan losses was an additional specific reserve of $5.9 million related to a large condominium project which we concluded that the long-term prospects for this project were not viable at this time. As a result, we subsequently charged-off this amount to reflect the “as is” value of the real estate. With real estate prices continuing to come under pressure, the anticipated increase in FDIC liquidations in our market and the excess capacity of real estate available in our market area, we expect that sales of real estate will be at prices below what we originally anticipated. As a result, we have increased our provision for loan losses for the fourth quarter of 2009 to reflect probable losses based on the current market values of the real estate underlying our problem loans. In addition, we anticipate foreclosing on additional properties in 2010. Based on our evaluation of the adequacy of the allowance for loan losses, after taking into account $21.8 million of loan charge-offs during the quarter, and the inherent risk in the loan portfolio, including the level of our nonperforming loans as well as specific reserves, we established the $23.7 million loan loss provision for the fourth quarter of 2009.
Nonperforming loans as of December 31, 2009 were $120.7 million, compared to $58.6 million at December 31, 2008. As a percentage of our total loan portfolio, the amount of nonperforming loans was
11.23% and 5.56% at December 31, 2009 and 2008, respectively. The increase in nonperforming loans was primarily related to our construction and land development portfolio. The provision for loan losses was $51.3 million and $9.4 million, respectively, for the years ended December 31, 2009 and 2008. As a result of this provision for loan losses, the allowance for loan loss account at December 31, 2009 increased to $33.0 million or 3.07% of our total loan portfolio, net of undisbursed funds. This compares to $31.1 million, or 2.86% of the total loan portfolio, net of undisbursed funds, at September 30, 2009 and $16.9 million, or 1.61% of the total loan portfolio, net of undisbursed funds, at December 31, 2008. The following table details the activity in the allowance for loan losses for the three months and years ended December 31, 2009 and 2008:
| | | | | | Three Months Ended | | | Years Ended |
| | | | | | December 31, | | | December 31, |
| | | | | | 2009 | | | 2008 | | | 2009 | | | 2008 |
| | | | | | (In thousands) |
| Balance at the beginning of the period | $ | 31,134 | | $ | 11,837 | | $ | 16,982 | | $ | 7,971 |
| Provision for loan losses | | 23,705 | | | 5,500 | | | 51,300 | | | 9,443 |
| Charge-offs | | (21,816) | | | (355) | | | (35,302) | | | (432) |
| Recoveries | | 16 | | | - | | | 59 | | | - |
| Balance at the end of the period | $ | 33,039 | | $ | 16,982 | | $ | 33,039 | | $ | 16,982 |
The breakdown of OREO at December 31, 2009 was as follows:
| | King County | | Pierce County | | Total OREO | | Percent of OREO |
| | (Dollars in thousands) |
| | | | | | | | | | | | |
| One-to four-family residential | $ | 1,903 | | $ | 2,973 | | $ | 4,876 | | 41.20 | % |
| Multifamily | | - | | | - | | | - | | 0.00 | |
| Commercial real estate | | 1,651 | | | - | | | 1,651 | | 13.95 | |
| Construction/land development | | 4,661 | | | 647 | | | 5,308 | | 44.85 | |
| Total Other Real Estate Owned | $ | 8,215 | | $ | 3,620 | | $ | 11,835 | | 100.00 | % |
Noninterest Income
Noninterest income was $1.9 million for the quarter ended December 31, 2009, as compared to a loss of $1.0 million for the same quarter in 2008. The $2.9 million increase in noninterest income for the fourth quarter of 2009 as compared to the same quarter in 2008 was predominately related to a net gain on the sale of investments in the fourth quarter of 2009 of $1.9 million. In addition, during the fourth quarter of 2008 we recorded an other-than-temporary impairment (“OTTI”) loss of $1.0 million related to a mutual fund investment whose market value had declined, with no comparable loss for the same quarter in 2009. For the year ended December 31, 2009, noninterest income increased $1.8 million, to $2.0 million compared to $200,000 for the same period in 2008. This increase was primarily related to the $1.6 million OTTI impairment loss on investments recorded in 2008. The OTTI loss for the same investment recorded in 2009 was $152,000. At December 31, 2009, the balance of the mutual fund investment was $4.6 million.
Noninterest Expense
Noninterest expense remained relatively stable at $4.3 million in the fourth quarter of 2009 compared to $4.2 million in the same quarter of 2008. For the year ended December 31, 2009, noninterest expense increased $20.4 million to $35.1 million from $14.7 million in 2008. The increase was primarily attributable to the goodwill impairment charge of $14.2 million recorded in the second quarter of 2009. During the second quarter of 2009, we conducted a review of the carrying value of our goodwill resulting from the acquisition of Executive House, a mortgage-banking business, which we acquired in December
2005. This review concluded that it was appropriate to record an impairment loss for this entire asset as a result of the continued decline in the economic environment. Salaries and employee benefits also increased during the year ended December 31, 2009 by $2.5 million as compared to the same period in 2008. Expenses associated with awards under the Equity Incentive Plan that was implemented in the third quarter of 2008 accounted for $1.3 million of the increase. The remaining increase related to the rise in staffing levels, medical insurance premiums and pension expense as compared to a year ago. In addition, regulatory assessments increased by $1.8 million in 2009 as compared to 2008, due to the increase in deposit insurance premiums as well as a special assessment levied by the FDIC during the second quarter of 2009.
Assets
At December 31, 2009, total assets increased $70.9 million to $1.3 billion from December 31, 2008. Cash, federal funds sold and interest-bearing deposits increased $99.2 million at December 31, 2009 as compared to the previous year. This increase was mainly attributable to $71.1 million in proceeds received from sales of investment securities completed during the year ended December 31, 2009. These sales resulted in a $51.9 million decrease in investments available for sale at December 31, 2009 as compared to December 31, 2008. Our loan portfolio, net of the allowance for loan losses, increased $4.1 million or 0.4% during the year ended December 31, 2009. Loan originations for the fourth quarter totaled $50.0 million and included: $12.4 million in one-to-four family mortgages; $15.4 million and $15.3 million in commercial real estate and multifamily loans, respectively; and $3.5 million in consumer loans. Included in the one-to-four family residential loan originations were $1.6 million of permanent loans where the builders have financed homes that are being rented by third parties. We also originated $3.2 million in construction related loans to our merchant builders so they could continue to complete their projects and utilize their existing land inventory. We have not expanded our customer base for this loan type during the past year.
Loan originations for the year ended December 31, 2009 totaled $206.5 million and included: $73.7 million in one-to-four family mortgages; $50.7 million each for commercial real estate and multifamily loans, respectively; and $13.2 million in consumer loans. Included in the one-to-four family residential loan originations were $30.0 million of permanent loans where the builders have financed homes that are being
rented by third parties. We also originated $17.7 million in construction related loans to our merchant builders so they could continue to complete their projects and utilize their existing land inventory and $500,000 in business loans.
Premises and equipment, net of depreciation, increased $6.6 million primarily as a result of the construction of a new building to house our lending staff. The new building is on budget and we anticipate moving our lending staff into the new facility in mid-February 2010. Federal income tax receivable increased $9.5 million, of which $8.3 million represents the money due to the Company from the application of net operating loss carrybacks to recover taxes paid in previous years as a result of a newly enacted tax law. During the second quarter of 2009, we conducted a review of the carrying value of our goodwill as a result of the continued decline in the economic environment. We concluded that it was appropriate to record an impairment loss on the entire asset. The fourth quarter of 2009 marked the first time in many years that we have had any OREO on our balance sheet. OREO increased $11.8 million as a result of foreclosure activity in the fourth quarter of 2009. Prepaid expenses and other assets increased $3.6 million primarily due to the three-year FDIC insurance premium assessment paid in December 2009 which will be amortized to expense over the next three years.
The following table presents a breakdown of our loan portfolio:
| | At December 31, | | At December 31, |
| | 2009 | | 2008 |
| | Amount | | Percent | | Amount | | Percent |
| | (Dollars in thousands) |
| Real Estate: | | | | | | | | | | | |
| One-to-four family residential | $ | 496,731 | | 44.54 | % | | $ | 512,446 | | 45.05 | % |
| Multifamily residential | | 146,508 | | 13.14 | | | | 100,940 | | 8.87 | |
| Commercial | | 288,996 | | 25.91 | | | | 260,727 | | 22.92 | |
| Construction/land development | | 163,953 | | 14.70 | | | | 250,512 | | 22.02 | |
| Total real estate | | 1,096,188 | | 98.29 | | | | 1,124,625 | | 98.86 | |
| | | | | | | | | | | | |
| Business | | 353 | | 0.03 | | | | - | | - | |
| | | | | | | | | | | | |
| Consumer | | 18,678 | | 1.68 | | | | 12,927 | | 1.14 | |
| Total loans | $ | 1,115,219 | | 100.00 | % | | $ | 1,137,552 | | 100.00 | % |
| | | | | | | | | | | | |
| Less: | | | | | | | | | | | |
| Loans in process | | 39,942 | | | | | | 82,541 | | | |
| Deferred loan fees | | 2,938 | | | | | | 2,848 | | | |
| Allowance for loan losses | | 33,039 | | | | | | 16,982 | | | |
| | | | | | | | | | | | |
| Loans receivable, net | $ | 1,039,300 | | | | | $ | 1,035,181 | | | |
Our loan policy limits the maximum amount of loans we can make to one borrower to 20% of the Bank’s risk-based capital. As of December 31, 2009, the maximum amount which we could lend to any one borrower was $34.9 million. Exceptions may be made to this policy with the prior approval of the Board of Directors if the borrower exhibits financial strength or compensating factors to sufficiently offset any weaknesses based on the loan-to-value ratio, borrower’s financial condition, net worth, credit history, earnings capacity, installment obligations and current payment history.
Our five largest borrowing relationships, as of December 31, 2009 were:
| | December 31, 2009 | |
| | Aggregate Amount | Number |
| Borrower (1) | of Loans (2) | of Loans |
| | | | | |
| Real estate builder | $ | 47.9 | million (3) | 150 |
| Real estate builder | | 39.5 | million | 144 |
| Real estate builder | | 28.7 | million | 120 |
| Real estate builder | | 19.0 | million (4) | 71 |
| Real estate investor | | 17.6 | million | 3 |
| Total | $ | 152.7 | million | 488 |
| | | | | |
| (1) The composition of borrowers represented in the table may change from one period to the next. |
| (2) Net of undisbursed funds. |
| (3) Of this amount, $9.2 million is considered impaired loans. |
| (4) Of this amount, $14.6 million is considered impaired loans. |
The following table details the breakdown of the types of loans to our five largest borrowing relationships at December 31, 2009:
| | One-to-Four Family | | Multifamily | | Commercial | | | | | | | |
| | Residential Loans | | Loans | | Loans | | Construction/ | | Aggregate Amount |
| Borrower | (Rental Properties) | | (Rental Properties) | | (Rental Properties) | | Land Development (1) | | of Loans (1) |
| | | | | | | | | | | | | | | | | | | | |
| Real estate builder | $ | 18.7 | million | | $ | - | | | $ | 0.3 | million | | $ | 28.9 | million | | $ | 47.9 | million |
| Real estate builder | | 26.6 | million | | | - | | | | 0.8 | million | | | 12.1 | million | | | 39.5 | million |
| Real estate builder | | 19.2 | million | | | 1.1 | million | | | 0.1 | million | | | 8.3 | million | | | 28.7 | million |
| Real estate builder | | 11.2 | million | | | - | | | | - | | | | 7.8 | million | | | 19.0 | million |
| Real estate investor | | - | | | | - | | | | 17.6 | million | | | - | | | | 17.6 | million |
| Total | $ | 75.7 | million | | $ | 1.1 | million | | $ | 18.8 | million | | $ | 57.1 | million | | $ | 152.7 | million |
| | | | | | | | | | | | | | | | | | | | |
| (1) Net of undisbursed funds. | | | | | | | | | | | | | | | | | |
During the fourth quarter of 2009, our largest borrower began experiencing the effects of the difficult economic environment. We have been working closely with this borrower to help work through these challenging times. We have agreed upon a plan of action that will improve the borrower’s liquidity position going forward and as a result have considered $9.2 million of this loan relationship impaired. As of December 31, 2009, all of the loans included in this relationship were current and complying with the terms of the loan agreements.
Some of the builders listed in the previous tables, as part of their business strategy, retain a certain percentage of their finished homes in their own inventory of permanent investment properties (i.e. one-to-four family rental properties). These properties are used to enhance the builders’ liquidity through rental income and improve their equity position, long-term, through the appreciation in market value of the property. As part of our underwriting process we review the borrowers’ business strategy to determine the feasibility of the project. In the past couple of years, these builders have taken more rental properties into their portfolio than originally planned as a result of the depressed housing market. For the four builders included in the previous table, the total one-to-four family rental properties increased $700,000, or 0.9% from $75.0 million at September 30, 2009 to $75.7 million at December 31, 2009.
At December 31, 2009, nonperforming assets, totaled $132.5 million, a decrease of $16.5 million, or 11.1%, as compared to September 30, 2009. Nonperforming loans represented 11.2% of total loans, net of undisbursed funds, and nonperforming assets as a percent of total assets was 10.1% at December 31, 2009. Nonperforming assets have increased $73.9 million as compared to December 31, 2008.
The following table presents a breakdown of our nonperforming assets:
| | December 31, | | | September 30, | | December 31, | | | One-Year | | One-Year | |
| | 2009 | | | 2009 | | 2008 | | | Change $ | | Change % | |
| | (In thousands) | |
| One-to-four family residential (1) | $ | 36,874 | | $ | 41,281 | | $ | 10,837 | | $ | 26,037 | | 240 | % |
| Commercial real estate | | 11,535 | | | 18,527 | | | 3,762 | | | 7,773 | | 207 | |
| Construction/land development | | 71,780 | | | 88,757 | | | 44,043 | | | 27,737 | | 63 | |
| Consumer | | 514 | | | 425 | | | - | | | 514 | | 100 | |
| Total nonperforming loans | $ | 120,703 | | $ | 148,990 | | $ | 58,642 | | $ | 62,061 | | 106 | % |
| | | | | | | | | | | | | | | |
| Other real estate owned | | 11,835 | | | - | | | - | | | 11,835 | | 100 | |
| | | | | | | | | | | | | | | |
| Total nonperfoming assets | $ | 132,538 | | $ | 148,990 | | $ | 58,642 | | $ | 73,896 | | 126 | % |
| ____________________ | | | | | | | | | | | | | | |
| (1) The majority of these loans are related to our merchant builders rental properties. | | | | | | | | |
Each of the major loan categories experienced a decrease in nonperforming loans during the fourth quarter of 2009 excluding the consumer loan category.
Our troubled debt restructured loans (TDRs) increased $10.2 million to $61.5 million at December 31, 2009 from $51.3 million at September 30, 2009. Of the $61.5 million of loans classified as TDRs, $35.5 million were considered performing, this compares to $24.2 million of performing TDRs at September 30, 2009. This increase was the result of a higher volume of requests for modification of loan terms from our customers to help them work through these challenging economic times. The majority of these modifications were adjustments to interest-only payments for a relatively short period of time. At December 31, 2009, our TDRs increased $38.5 million to $61.5 million as compared to $23.0 million at December 31, 2008.
Liabilities
Total liabilities increased $132.5 million, or 13.9%, to $1.1 billion at December 31, 2009 from $954.3 million at December 31, 2008. Deposits increased $147.9 million, or 18.7%, to $939.4 million from December 31, 2008, as customers are saving more as a result of the current economic conditions. We had no brokered deposits at December 31, 2009. Advances from the FHLB decreased $16.3 million to $139.9 million at December 31, 2009 compared to December 31, 2008.
Stockholders’ Equity
Our total stockholders’ equity decreased $61.6 million, or 21.2%, to $228.5 million at December 31, 2009 from $290.1 million at December 31, 2008. This decrease was primarily the result of the net loss of $40.7 million, the repurchase of 2.5 million shares for $17.8 million and the payment of cash dividends to shareholders of $6.4 million during the year ended December 31, 2009.
First Financial Northwest, Inc. is the parent company of First Savings Bank Northwest, a Washington chartered stock savings bank headquartered in Renton, Washington, serving the Puget Sound Region through its full-service banking office. We are a part of the ABA NASDAQ Community Bank Index as well as the Russell 3000 Index. For additional information about us, please visit our website at www.fsbnw.com and click on the “Investor Relations” section.
Forward-looking statements:
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and nonperforming assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; results of examinations of us by the Office of Thrift Supervision and our bank subsidiary by the Federal Deposit Insurance Corporation, the Washington State Department of Financial Institutions, Division of Banks or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; our ability to control operating costs and expenses; the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risk associated with the loans on our balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our work force and potential associated charges; computer systems on which we depend could fail or experience a security breach; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to implement our branch expansion strategy; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; our ability to manage loan delinquency rates; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; legislative or regulatory changes that adversely affect our business including changes in regulatory policies and principles, including the interpretation of regulatory capital or other rules; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; the economic impact of war or any terrorist activities; other economic, competitive, governmental, regulatory, and technological factors affecting our operations; pricing, products and services; and other risks detailed in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2008 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2009, June 30, 2009 and September 30, 2009. Any of the forward-looking statements that we make in this Press Release and in the other public statements we make 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. Because of these and other uncertainties, our actual future results may be materially different from those expressed in any forward-looking statements made by or on our behalf. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We undertake no responsibility to update or revise any forward-looking statements.
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES |
| Consolidated Balance Sheets |
| (Dollars in thousands, except share data) |
| (Unaudited) |
| | | | | | | | | | | | |
| | | | | | | | | December 31, |
| Assets | | 2009 | | | 2008 |
| | | | | | | | | | | | |
| Cash on hand and in banks | $ | 8,937 | | $ | 3,366 |
| Interest-bearing deposits | | 96,033 | | | 600 |
| Federal funds sold | | — | | | 1,790 |
| Investments available for sale | | 97,383 | | | 149,323 |
| Loans receivable, net of allowance of $33,039 and $16,982 | | 1,039,300 | | | 1,035,181 |
| Premises and equipment, net | | 19,585 | | | 13,026 |
| Federal Home Loan Bank stock, at cost | | 7,413 | | | 7,413 |
| Accrued interest receivable | | 4,880 | | | 5,532 |
| Federal income tax receivable | | 9,499 | | | — |
| Deferred tax assets, net | | 12,139 | | | 9,266 |
| Goodwill | | | | | — | | | 14,206 |
| Other real estate owned | | 11,835 | | | — |
| Prepaid expenses and other assets | | 8,330 | | | 4,737 |
| | | Total assets | $ | 1,315,334 | | $ | 1,244,440 |
| | | | | | | | | | | | |
| Liabilities and Stockholders' Equity | | | | | |
| | | | | | | | | | | | |
| Deposits | | | | $ | 939,423 | | $ | 791,483 |
| Advances from the Federal Home Loan Bank | | 139,900 | | | 156,150 |
| Advance payments from borrowers for taxes & | | | | | |
| | and insurance | | | 2,377 | | | 2,745 |
| Accrued interest payable | | 457 | | | 478 |
| Federal income tax payable | | — | | | 336 |
| Other liabilities | | | 4,660 | | | 3,140 |
| | | Total liabilities | | 1,086,817 | | | 954,332 |
| | | | | | | | | | | | |
| Commitments and contingencies | | | | | |
| | | | | | | | | | | | |
| Stockholders' Equity | | | | | |
| | Preferred stock, $0.01 par value; authorized 10,000,000 | | | | | |
| | | shares, no shares issued or outstanding | | — | | | — |
| | Common stock, $0.01 par value; authorized 90,000,000 | | | | | |
| | | shares; issued and outstanding 18,823,068 and | | | | | |
| | | 21,293,368 shares at December 31, 2009 and | | | | | |
| | | December 31, 2008 | | 188 | | | 213 |
| | Additional paid-in capital | | 186,120 | | | 202,167 |
| | Retained earnings, substantially restricted | | 55,251 | | | 102,358 |
| | Accumulated other comprehensive income, net of tax | | 1,347 | | | 887 |
| | Unearned Employee Stock Ownership Plan (ESOP) shares | | (14,389) | | | (15,517) |
| | | Total stockholders' equity | | 228,517 | | | 290,108 |
| | | Total liabilities and stockholders' equity | $ | 1,315,334 | | $ | 1,244,440 |
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES |
| Consolidated Statements of Operations |
| (Dollars in thousands, except share data) |
| (Unaudited) |
| | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | Quarter Ended | | | | | | | |
| | | | | | | | | December 31, | | | September 30, | | | December 31, | | Three Month | | | One Year | | |
| | | | | | | | 2009 | | 2009 | | 2008 | | Change | | | Change | | |
| Interest income | | | | | | | | | | | | | | | | |
| | Loans, including fees | $ | 14,817 | | $ | 14,376 | | $ | 15,101 | | 3.07 | % | | (1.88) | % | |
| | Investments available for sale | | 1,422 | | | 1,765 | | | 1,793 | | (19.43) | | | (20.69) | | |
| | Tax exempt investments available for sale | | 48 | | | 48 | | | 47 | | 0.00 | | | 2.13 | | |
| | Federal funds sold and interest-bearing deposits with banks | | 48 | | | 32 | | | 11 | | 50.00 | | | 336.36 | | |
| | Dividends on Federal Home Loan Bank stock | | — | | | — | | | (17) | | 0.00 | | | (100.00) | | |
| | | Total interest income | $ | 16,335 | | $ | 16,221 | | $ | 16,935 | | 0.70 | % | | (3.54) | % | |
| Interest expense | | | | | | | | | | | | | | | |
| | Deposits | | | | 6,787 | | | 7,262 | | | 7,710 | | (6.54) | | | (11.97) | | |
| | Federal Home Loan Bank advances | | 1,239 | | | 1,310 | | | 1,159 | | (5.42) | | | 6.90 | | |
| | | Total interest expense | $ | 8,026 | | $ | 8,572 | | $ | 8,869 | | (6.37) | % | | (9.51) | % | |
| | | Net interest income | | 8,309 | | | 7,649 | | | 8,066 | | 8.63 | | | 3.01 | | |
| Provision for loan losses | | 23,705 | | | 7,795 | | | 5,500 | | 204.11 | | | 331.00 | | |
| | | Net interest income (loss) after provision for loan losses | $ | (15,396) | | $ | (146) | | $ | 2,566 | | 10445.21 | % | | (700.00) | % | |
| Noninterest income (loss) | | | | | | | | | | | | | | | |
| | Net gain (loss) on sale of investments | | 1,880 | | | (2) | | | (51) | | (94100.00) | | | (3786.27) | | |
| | Other-than-temporary impairment loss on investments | | — | | | — | | | (1,017) | | 0.00 | | | (100.00) | | |
| | Other | | | | | 47 | | | 74 | | | 55 | | (36.49) | | | (14.55) | | |
| | | Total noninterest income (loss) | $ | 1,927 | | $ | 72 | | $ | (1,013) | | 2576.39 | % | | (290.23) | % | |
| Noninterest expense | | | | | | | | | | | | | | | |
| | Salaries and employee benefits | | 2,577 | | | 3,077 | | | 2,796 | | (16.25) | | | (7.83) | | |
| | Occupancy and equipment | | 320 | | | 343 | | | 301 | | (6.71) | | | 6.31 | | |
| | Professional fees | | 384 | | | 332 | | | 366 | | 15.66 | | | 4.92 | | |
| | Data processing | | 162 | | | 178 | | | 135 | | (8.99) | | | 20.00 | | |
| | FDIC/OTS assessments | | 351 | | | 352 | | | 167 | | (0.28) | | | 110.18 | | |
| | Other general and administrative | | 533 | | | 607 | | | 472 | | (12.19) | | | 12.92 | | |
| | | Total noninterest expense | $ | 4,327 | | $ | 4,889 | | $ | 4,237 | | (11.50) | % | | 2.12 | % | |
| | | Loss before provision (benefit) for federal income taxes | | (17,796) | | | (4,963) | | | (2,684) | | 258.57 | | | 563.04 | | |
| Provision (benefit) for federal income taxes | | (5,548) | | | (3,304) | | | 305 | | 67.92 | | | (1919.02) | | |
| | | Net loss | $ | (12,248) | | $ | (1,659) | | $ | (2,989) | | 638.28 | % | | 309.77 | % | |
| | | Basic loss per share | $ | (0.69) | | $ | (0.09) | | $ | (0.14) | | (0.60) | % | | (0.55) | % | |
| | | Diluted loss per share | $ | (0.69) | | $ | (0.09) | | $ | (0.14) | | (0.60) | % | | (0.55) | % | |
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES |
| Consolidated Statements of Operations |
| (Dollars in thousands, except share data) |
| (Unaudited) |
| | | | | | | | | | | | | | | |
| | | | | | | | | |
| | | | | | | | Years Ended December 31, |
| | | | | | | | | 2009 | | | 2008 | | | 2007 |
| Interest income | | | | | | | | | |
| | Loans, including fees | $ | 58,332 | | $ | 60,318 | | $ | 56,123 |
| | Investments available for sale | | 6,409 | | | 6,799 | | | 5,950 |
| | Tax exempt investments available for sale | | 190 | | | 627 | | | — |
| | Investments held to maturity | | — | | | — | | | 334 |
| | Tax exempt investments held to maturity | | — | | | — | | | 3,474 |
| | Federal funds sold and interest-bearing deposits with banks | | 102 | | | 810 | | | 660 |
| | Dividends on Federal Home Loan Bank stock | | — | | | 47 | | | 28 |
| | | | Total interest income | $ | 65,033 | | $ | 68,601 | | $ | 66,569 |
| Interest expense | | | | | | | | |
| | Deposits | | | | 28,806 | | | 31,632 | | | 34,825 |
| | Federal Home Loan Bank advances | | 5,107 | | | 4,346 | | | 8,023 |
| | | | Total interest expense | $ | 33,913 | | $ | 35,978 | | $ | 42,848 |
| | | | Net interest income | | 31,120 | | | 32,623 | | | 23,721 |
| Provision for loan losses | | 51,300 | | | 9,443 | | | 6,000 |
| | | | Net interest income (loss) after provision for loan losses | $ | (20,180) | | $ | 23,180 | | $ | 17,721 |
| Noninterest income | | | | | | | | |
| | Net gain on sale of investments | | 1,954 | | | 1,606 | | | — |
| | Other-than-temporary impairment loss on investments | | (152) | | | (1,640) | | | — |
| | Other | | | | | 230 | | | 234 | | | 589 |
| | | | Total noninterest income | $ | 2,032 | | $ | 200 | | $ | 589 |
| Noninterest expense | | | | | | | | |
| | Salaries and employee benefits | | 11,730 | | | 9,208 | | | 5,383 |
| | Occupancy and equipment | | 2,306 | | | 1,188 | | | 1,060 |
| | Professional fees | | 1,412 | | | 1,477 | | | 619 |
| | Data processing | | 634 | | | 486 | | | 468 |
| | FDIC/OTS Assessments | | 2,281 | | | 484 | | | 92 |
| | Goodwill Impairment | | 14,206 | | | — | | | — |
| | Contribution to First Financial Northwest Foundation | | — | | | — | | | 16,928 |
| | Other general and administrative | | 2,498 | | | 1,844 | | | 1,419 |
| | | | Total noninterest expense | $ | 35,067 | | $ | 14,687 | | $ | 25,969 |
| | | | Income (loss) before provision (benefit) for federal income taxes | (53,215) | | | 8,693 | | | (7,659) |
| Provision (benefit) for federal income taxes | | (12,507) | | | 4,033 | | | (3,675) |
| | | | Net income (loss) | $ | (40,708) | | $ | 4,660 | | $ | (3,984) |
| | | | Basic earnings (loss) per share (1) | $ | (2.18) | | $ | 0.22 | | $ | (0.51) |
| | | | Diluted earnings (loss) per share (1) | $ | (2.18) | | $ | 0.22 | | $ | (0.51) |
| __________________ | | | | | | | | | | | |
| (1) The Company completed its mutual to stock conversion on October 9, 2007. |
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES |
| Key Financial Ratios |
| (Unaudited) |
| | | | | | | | | | | | | | | | | |
| | | At or For the Quarter Ended | |
| | | December 31, 2009 | | September 30, 2009 | | June 30, 2009 | | March 31, 2009 | | December 31, 2008 | |
| | | | | | (Dollars in thousands, except share data) | | | | | | |
| Performance Ratios: | | | | | | | | | | | | | | | |
| Return (loss) on assets (1) | | (3.70) | % | | (0.50) | % | | (8.64) | % | | 0.39 | % | | (0.96) | % |
| Return (loss) on equity (2) | | (19.74) | | | (2.61) | | | (39.54) | | | 1.66 | | | (3.97) | |
| Equity-to-assets ratio (3) | | 18.74 | | | 19.37 | | | 21.86 | | | 23.15 | | | 24.26 | |
| Interest rate spread (4) | | 2.11 | | | 1.80 | | | 1.54 | | | 1.96 | | | 1.85 | |
| Net interest margin (5) | | 2.61 | | | 2.40 | | | 2.24 | | | 2.74 | | | 2.71 | |
| Average interest-earning assets to | | | | | | | | | | | | | | | |
| average interest-bearing liabilities | | 119.87 | | | 122.15 | | | 124.86 | | | 126.95 | | | 128.63 | |
| Efficiency ratio (6) | | 42.27 | | | 63.32 | | | 300.54 | | | 59.70 | | | 60.07 | |
| Noninterest expense as a percent of | | | | | | | | | | | | | | | |
| average total assets | | 1.31 | | | 1.49 | | | 6.39 | | | 1.60 | | | 1.37 | |
| Book value per common share (7) | $ | 12.14 | | $ | 12.52 | | $ | 12.48 | | $ | 13.92 | | $ | 13.62 | |
| | | | | | | | | | | | | | | | | |
| Capital Ratios (8): | | | | | | | | | | | | | | | |
| Tier 1 leverage | | 12.46 | % | | 13.47 | % | | 13.82 | % | | 15.65 | % | | 15.61 | % |
| Tier 1 risk-based | | 19.20 | | | 20.43 | | | 21.42 | | | 23.14 | | | 23.04 | |
| Total risk-based | | 20.49 | | | 21.72 | | | 22.70 | | | 24.40 | | | 24.30 | |
| | | | | | | | | | | | | | | | | |
| Asset Quality Ratios (9): | | | | | | | | | | | | | | | |
| Nonaccrual and 90 days or more past due loans | | | | | | | | | | | | | | | |
| as a percent of total loans | | 11.23 | % | | 13.67 | % | | 12.20 | % | | 7.65 | % | | 5.56 | % |
| Nonperforming assets as a percent | | | | | | | | | | | | | | | |
| of total assets | | 10.08 | | | 11.29 | | | 9.97 | | | 6.36 | | | 4.71 | |
| Allowance for loan losses as a percent of | | | | | | | | | | | | | | | |
| total loans | | 3.07 | | | 2.86 | | | 3.06 | | | 1.36 | | | 1.61 | |
| Allowance for loan losses as a percent of | | | | | | | | | | | | | | | |
| nonperforming loans | | 27.37 | | | 20.90 | | | 25.07 | | | 17.82 | | | 28.96 | |
| Net charge-offs to average loans | | | | | | | | | | | | | | | |
| receivable, net | | 2.06 | | | 0.88 | | | 0.01 | | | 0.41 | | | 0.03 | |
| | | | | | | | | | | | | | | | | |
| Allowance for Loan Losses: | | | | | | | | | | | | | | | |
| Allowance for loan losses, beginning of the quarter | $ | 31,134 | | $ | 32,450 | | $ | 14,294 | | $ | 16,982 | | $ | 11,837 | |
| | Provision | | 23,705 | | | 7,795 | | | 18,256 | | | 1,544 | | | 5,500 | |
| | Charge-offs | | (21,816) | | | (9,154) | | | (100) | | | (4,232) | | | (355) | |
| | Recoveries | | 16 | | | 43 | | | - | | | - | | | - | |
| Allowance for loan losses, end of the quarter | $ | 33,039 | | $ | 31,134 | | $ | 32,450 | | $ | 14,294 | | $ | 16,982 | |
| | | | | | | | | | | | | | | | | |
| Reserve for unfunded commitments, | | | | | | | | | | | | | | | |
| beginning of the quarter | $ | 450 | | $ | 330 | | $ | 186 | | $ | - | | $ | - | |
| | Adjustments | | (114) | | | 120 | | | 144 | | | 186 | | | - | |
| Reserve for unfunded commitments, | | | | | | | | | | | | | | | |
| end of the quarter | $ | 336 | | $ | 450 | | $ | 330 | | $ | 186 | | $ | - | |
| | | | | | | | | | | | | | | | | |
| Nonperforming Assets (9): | | | | | | | | | | | | | | | |
| Nonperforming loans | | | | | | | | | | | | | | | |
| | 90 days or more past due and still accruing | $ | - | | $ | 907 | | $ | 7,130 | | $ | 12,657 | | $ | 2,104 | |
| | Nonaccrual loans | | 94,682 | | | 120,956 | | | 98,054 | | | 51,041 | | | 35,720 | |
| | Nonaccrual troubled debt restructured loans | | 26,021 | | | 27,127 | | | 24,244 | | | 16,514 | | | 20,818 | |
| Total nonperforming loans | $ | 120,703 | | $ | 148,990 | | $ | 129,428 | | $ | 80,212 | | $ | 58,642 | |
| | OREO | | 11,835 | | | - | | | - | | | - | | | - | |
| Total nonperforming assets (NPA) | $ | 132,538 | | $ | 148,990 | | $ | 129,428 | | $ | 80,212 | | $ | 58,642 | |
| | | | | | | | | | | | | | | | | |
| Performing troubled debt restructured loans | $ | 35,458 | | $ | 24,192 | | $ | 13,965 | | $ | 5,776 | | $ | 2,226 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| (1) | Net income divided by average total assets. |
| (2) | Net income divided by average equity. |
| (3) | Average equity divided by average total assets. |
| (4) | Difference between weighted-average yield on interest-earning |
| | assets and weighted-average cost of interest-bearing liabilities. |
| (5) | Net interest income divided by average interest-earning assets |
| (6) | Noninterest expense divided by net interest income plus noninterest income |
| (7) | Outstanding shares divided by stockholders' equity. |
| (8) | Capital ratios are for First Savings Bank Northwest only. |
| (9) | Nonaccrual and nonperforming loans/assets and total loans are calculated net of undisbursed funds. |
| FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES |
| Key Financial Ratios |
| (Unaudited) |
| |
| | | | Year Ended December 31, |
| | | | 2009 | | 2008 | | 2007 |
| | | | | | | | | | | |
| Performance Ratios: | | | | | | | | | |
| Return (loss) on assets (1) | | (3.14) | % | | 0.39 | % | | (0.37) | % |
| Return (loss) on equity (2) | | (15.18) | | | 1.50 | | | (2.59) | |
| Equity-to-assets ratio (3) | | 20.72 | | | 25.70 | | | 14.37 | |
| Interest rate spread (4) | | 1.86 | | | 1.84 | | | 1.75 | |
| Net interest margin (5) | | 2.49 | | | 2.81 | | | 2.30 | |
| Average interest-earning assets to | | | | | | | | | |
| average interest-bearing liabilities | | 123.31 | | | 131.20 | | | 113.48 | |
| Efficiency ratio (6)(10) | | 105.78 | | | 44.75 | | | 106.82 | |
| Noninterest expense as a percent of | | | | | | | | | |
| average total assets (10) | | 2.71 | | | 1.22 | | | 2.42 | |
| Book value per common share (7) | $ | 12.14 | | $ | 13.62 | | $ | 13.53 | |
| | | | | | | | | | | |
| Capital Ratios (8): | | | | | | | | | |
| Tier 1 leverage | | 12.46 | % | | 15.61 | % | | 16.62 | % |
| Tier 1 risk-based | | 19.20 | | | 23.04 | | | 24.84 | |
| Total risk-based | | 20.49 | | | 24.30 | | | 25.91 | |
| | | | | | | | | | | |
| Asset Quality Ratios (9): | | | | | | | | | |
| Nonaccrual and 90 days or more past due loans | | | | | | | | | |
| as a percent of total loans | | 11.23 | | | 5.56 | | | 2.81 | |
| Nonperforming assets as a percent | | | | | | | | | |
| of total assets | | 10.08 | | | 4.71 | | | 2.19 | |
| Allowance for losses as a percent of | | | | | | | | | |
| total loans | | 3.07 | | | 1.61 | | | 0.89 | |
| Allowance for losses as a percent of | | | | | | | | | |
| nonperforming loans | | 27.37 | | | 28.96 | | | 31.83 | |
| Net charge-offs to average loans | | | | | | | | | |
| receivable, net | | 3.38 | | | 0.04 | | | - | |
| | | | | | | | | | | |
| Allowance for Loan Losses: | | | | | | | | | |
| Allowance for loan losses, beginning of the period | $ | 16,982 | | $ | 7,971 | | $ | 1,971 | |
| | Provision | | 51,300 | | | 9,443 | | | 6,000 | |
| | Charge-offs | | (35,302) | | | (432) | | | - | |
| | Recoveries | | 59 | | | - | | | - | |
| Allowance for loan losses, end of the period | $ | 33,039 | | $ | 16,982 | | $ | 7,971 | |
| | | | | | | | | | | |
| Reserve for unfunded commitments, | | | | | | | | | |
| beginning of the period | $ | - | | $ | - | | $ | - | |
| | Adjustments | | 336 | | | - | | | - | |
| Reserve for unfunded commitments, | | | | | | | | | |
| end of the period | $ | 336 | | $ | - | | $ | - | |
| | | | | | | | | | | |
| Nonperforming Assets (9): | | | | | | | | | |
| Nonperforming loans | | | | | | | | | |
| | 90 days or more past due and still accruing | $ | - | | $ | 2,104 | | $ | - | |
| | Nonaccrual loans | | 94,682 | | | 35,720 | | | 25,042 | |
| | Nonaccrual troubled debt restructured loans | | 26,021 | | | 20,818 | | | - | |
| Total nonperforming loans | $ | 120,703 | | $ | 58,642 | | $ | 25,042 | |
| | OREO | | 11,835 | | | - | | | - | |
| Total nonperforming assets (NPA) | $ | 132,538 | | $ | 58,642 | | $ | 25,042 | |
| | | | | | | | | | | |
| Performing troubled debt restructured loans | $ | 35,458 | | $ | 2,226 | | $ | - | |
| | | | | | | | | | | |
| ___________________________ | | | | | | | | | |
| | | | | | | | | | | |
| (1) | Net income divided by average total assets. |
| (2) | Net income divided by average equity. |
| (3) | Average equity divided by average total assets. |
| (4) | Difference between weighted-average yield on interest-earning |
| | assets and weighted-average cost of interest-bearing liabilities. |
| (5) | Net interest income divided by average interest-earning assets |
| (6) | Noninterest expense divided by net interest income plus noninterest income |
| (7) | Outstanding shares divided by stockholders' equity. |
| (8) | Capital ratios are for First Savings Bank Northwest only. |
| (9) | Nonaccrual and nonperforming loans/assets and total loans are calculated net of undisbursed funds. |
| (10) | Noninterest expense in 2007 included a one-time expense for the establishment of the First Financial Northwest Foundation of $16.9 million. Without this one-time expense, the efficiency ratio for the year ended December 31, 2007 would have been 37.19%. |
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