First Financial Northwest reports Q3 EPS 16c, consensus 15c

The Bank’s Tier 1 leverage and total capital ratios were 10.3% and 16.0% at September 30, 2023, compared to 10.0% and 15.8% at June 30, 2023, and 10.4% and 15.5% at September 30, 2022, respectively. Credit quality remained strong with nonperforming assets of $201,000, or 0.01% of total assets at September 30, 2023. “The actions of the Federal Reserve’s Open Market Committee to continue increasing short-term interest rates is adversely impacting our profitability via reduced loan demand and a higher cost of funds, negatively impacting our net interest margin in recent quarters. Fortunately, however, the impact on profitability, albeit still challenging, was less severe this quarter than the previous two. I am pleased with the efforts of our employees as they continue to navigate a very competitive and challenging environment to attract and retain deposits and generate loans,” stated Joseph W. Kiley III, President and CEO. “Credit quality at September 30, 2023 remained strong, with nonperforming assets of $201,000 and additional loan delinquencies of $1.0 million on a total loan portfolio of $1.18 billion. We also recorded a $300,000 recapture of the provision for credit losses during the quarter as a result of a reduction in loans receivable which included the payoff of a $4.6 million commercial real estate loan that carried a higher credit risk rating and a credit upgrade of an $8.7 million commercial real estate loan,” continued Kiley. “While we are always striving to operate very efficiently, the focus is even greater in this environment. During the quarter, we reduced our staffing by approximately 6%. This reduction is anticipated to save the Company approximately $215,000 in noninterest expense per quarter going forward. We also initiated a search during the quarter for a senior C&I lending credit officer. This is being pursued in large part due to the lower-cost deposit opportunities associated with a C&I division, and we believe it prudent to start down this path by hiring a qualified individual to create appropriate credit expectations before taking the next step of building out the rest of the team,” concluded Kiley.