First Northwest Bancorp Earns Record $3.8 Million, or $0.41 Per Diluted Share, in Fourth Quarter 2020 and a Record $10.3 Million, or $1.10 Per Diluted Share, for the Year; Results Highlight Net Interest Margin Expansion and Substantial Loan and Core Deposit Growth; Declares Quarterly Cash Dividend of $0.06 Per Share
PORT ANGELES, Wash., Jan. 28, 2021 (GLOBE NEWSWIRE) — First Northwest Bancorp (Nasdaq: FNWB) (“Company”), the holding company for First Federal Savings and Loan Association of Port Angeles (“Bank” or “First Federal”), today reported net income increased 72.0% to $3.8 million, or $0.41 per diluted share, for the fourth quarter of 2020, compared to $2.2 million, or $0.23 per diluted share, for the fourth quarter a year ago, an increase of 3.8% compared to $3.7 million, or $0.40 per diluted share, for the third quarter of 2020. Fourth quarter results reflected strong loan and deposit growth, net interest margin expansion and improved efficiency. For the year 2020, net income increased 14.7% to a record $10.3 million, or $1.10 per diluted share, compared to $9.0 million, or $0.91 per diluted share, for 2019.
The Company also announced that its Board of Directors declared a regular quarterly cash dividend of $0.06 per common share outstanding, payable on February 26, 2021 to shareholders of record as of the close of business on February 12, 2021.
“First Northwest Bancorp produced record results for the fourth quarter and the year, with strong top line revenue growth, double digit loan and deposit growth and an improving net interest margin,” stated Matthew P. Deines, President and CEO. “Despite a difficult operating environment created by pandemic-related economic challenges, we made progress in several areas of the business, as we continued to support our customers, communities and employees.”
The sectors most heavily impacted by the pandemic include hospitality; restaurant and food services; and lessors of commercial real estate to these businesses. At December 31, 2020, the Company’s exposure as a percentage of the total loan portfolio to these industries was 4.44%, 0.17%, and 4.41%, respectively.
“We participated in the Small Business Administration’s (SBA) Paycheck Protection Program (PPP) beginning in April and ending in August, 2020, assisting approximately 515 customers who received $32.2 million in PPP funding, and we are participating in the SBA’s new round of PPP funding that began earlier this month,” said Deines. “This next round of SBA funding offers new PPP loans for companies that did not receive a PPP loan in 2020, and also “second draw” loans targeted at hard-hit businesses that have already used their initial PPP proceeds. Now more than ever, we are here for our customers and communities.”
“We were also successful participating in the Federal Reserve’s Main Street Lending Program,” said Deines. “As of year-end, we assisted approximately 20 customers receive $115.1 million in loans under the program. We were among the top banks in Washington State in terms Main Street Loans funded in both dollars and count.”
Under the Main Street Lending Program, the Federal Reserve purchased loans that the bank makes to small and mid-sized businesses, with the Federal Reserve purchasing 95% of each loan. The program, which became operational in early July, was designed to keep credit flowing to small and mid-sized businesses that were in good financial standing before the onset of the COVID-19 pandemic, but which came under extreme stress due to stay-at-home and business closure orders from state and local governments.
“In addition to the SBA’s PPP and the Federal Reserve’s Main Street Lending Program, we implemented additional programs to support our customers experiencing financial hardship as a result of the pandemic. These assistances included payment forbearance agreements with some customers for periods of up to six months. We deferred payment on 357 loans totaling $177.6 million through December 31, 2020. As of December 31, 2020, the deferral period had ended and payments voluntarily resumed for approximately 94.7% of these loans, of which 93.8% have resumed normal payments. Only 2.2% requested a second deferral period,” added Deines.
The table below presents selected information on loans that remained on COVID-19 deferrals at the periods indicated.
| % of Total Loan Portfolio |
Deferred Loan Balance |
Number of Loans |
|||||
| (In thousands) | |||||||
| June 30, 2020 | 12.9 | % | $ | 128,420 | 297 | ||
| September 30, 2020 | 13.9 | 149,542 | 183 | ||||
| December 31, 2020 | 0.2 | 2,349 | 19 | ||||
Fourth Quarter 2020 Highlights (at or for the quarter ended December 31, 2020)
- Fourth quarter net income increased to $3.8 million, compared to $3.7 million in the preceding quarter and $2.2 million in the year ago quarter.
- Diluted earnings per share was $0.41, up from $0.40 per share in the preceding quarter and $0.23 per share compared to the fourth quarter a year ago.
- Provision for loan losses was $930,000 in the fourth quarter, compared to $1.4 million in the third quarter of 2020 and $249,000 in the fourth quarter of 2019.
- Loans receivable increased 7.6% to $1.14 billion at December 31, 2020, compared to $1.06 billion at September 30, 2020, and increased 30.0% compared to $878.4 million a year ago, primarily due to growth in commercial real estate and commercial business loans, including PPP loans.
- Deposits increased 6.3% during the quarter and increased 33.1% from one year prior, to $1.33 billion at December 31, 2020, due to successful organic and wholesale deposit-gathering strategies, including significant growth in noninterest-bearing deposits, which increased 71.4 % in 2020.
- The cost of deposits for the fourth quarter decreased to 0.33% from 0.45% for third quarter 2020 and 0.77% in the fourth quarter of 2019.
- Gain on sale of mortgage loans was $2.3 million for the fourth quarter compared to $1.7 million in the previous quarter and $247,000 in the fourth quarter of 2019 reflecting strong quarterly mortgage originations, including refinance activity.
- During the fourth quarter, the Company repurchased 15,553 shares of common stock at an average price of $15.67 per share for a total of $244,000, leaving 1,007,867 shares remaining under the 2020 Stock Repurchase Plan approved in October 2020.
Balance Sheet Review
Total assets increased $89.7 million, or 5.7%, to $1.65 billion, at December 31, 2020, compared to $1.56 billion at September 30, 2020, and increased $347.0 million, or 26.5%, compared to $1.31 billion, at December 31, 2019.
Investment securities decreased $4.8 million to $364.3 million, at December 31, 2020, compared to $369.1 million three months earlier and increased $48.7 million compared to $315.6 million, at December 31, 2019. At December 31, 2020, municipal bonds totaled $127.9 million and comprised the largest portion of the investment portfolio at 35.1%. The estimated average life of the total investment securities portfolio was 7.3 years, and the average repricing term was approximately 4.9 years.
“We continue to utilize the investment portfolio for liquidity and interest income generation,” said Geri Bullard, EVP/Chief Financial Officer. “We began adding to the investment portfolio in the second quarter as deposits increased in the early stages of the pandemic and credit spreads widened, creating more desirable opportunities.”
Securities consisted of the following at the dates indicated:
| December 31, 2020 |
September 30, 2020 |
December 31, 2019 |
Three Month Change |
One Year Change |
||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Available for Sale at Fair Value | ||||||||||||||||||||
| Municipal bonds | $ | 127,862 | $ | 97,143 | $ | 39,282 | $ | 30,719 | $ | 88,580 | ||||||||||
| U.S. government agency issued asset-backed securities (ABS agency) | 63,820 | 73,618 | 28,858 | (9,798 | ) | 34,962 | ||||||||||||||
| Corporate issued asset-backed securities (ABS corporate) | 29,280 | 32,747 | 40,855 | (3,467 | ) | (11,575 | ) | |||||||||||||
| Corporate issued debt securities (Corporate debt) | 35,510 | 33,230 | 9,643 | 2,280 | 25,867 | |||||||||||||||
| U.S. Small Business Administration securities (SBA) | 18,564 | 23,864 | 28,459 | (5,300 | ) | (9,895 | ) | |||||||||||||
| Mortgage-backed securities: | ||||||||||||||||||||
| U.S. government agency issued mortgage-backed securities (MBS agency) | 62,683 | 92,402 | 160,167 | (29,719 | ) | (97,484 | ) | |||||||||||||
| Corporate issued mortgage-backed securities (MBS corporate) | 26,577 | 16,107 | 8,316 | 10,470 | 18,261 | |||||||||||||||
| Total securities available for sale | $ | 364,296 | $ | 369,111 | $ | 315,580 | $ | (4,815 | ) | $ | 48,716 | |||||||||
Total loans, excluding loans held for sale, increased $81.2 million, or 7.6%, to $1.14 billion at December 31, 2020, from $1.06 billion at September 30, 2020, and increased $263.5 million, or 30.0%, from $878.4 million a year ago. “The collective efforts of our lending team during the year resulted in significant increases in balances, with total loans increasing 30.6% during the year, and total loans, excluding PPP loans increasing 28.0% during the year,” said Randy Riffle, EVP/Chief Lending Officer. “Additionally, PPP loans helped fuel loan production, with $32.2 million in total PPP loans funded in 2020. The first round of PPP expired on August 8, 2020 and as of year-end, we had submitted 171 forgiveness applications to the SBA totaling $13.5 million and received payment from the SBA for 114 borrowers. Approximately $182,000 of the income recognized during the fourth quarter was related to deferred fees associated with PPP loan payoffs.”
The Company originated $95.7 million in residential mortgages during the quarter and sold $59.3 million, with an average gross margin on sale of mortgage loans of approximately 3.01%. This production compares to residential mortgage originations of $41.1 million in the preceding quarter with sales of $48.0 million. “The activity in the mortgage market continued to exceed historical volumes again during the fourth quarter of 2020, especially for refinances of existing mortgages as interest rates remain at historically low levels,” said Kelly Liske, Chief Banking Officer.
Loans receivable consisted of the following at the dates indicated:
| December 31, 2020 |
September 30, 2020 |
December 31, 2019 |
Three Month Change |
One Year Change |
||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Real Estate: | ||||||||||||||||||||
| One to four family | $ | 309,828 | $ | 317,755 | $ | 306,014 | $ | (7,927 | ) | $ | 3,814 | |||||||||
| Multi-family | 162,467 | 127,569 | 96,098 | 34,898 | 66,369 | |||||||||||||||
| Commercial real estate | 296,574 | 283,390 | 255,722 | 13,184 | 40,852 | |||||||||||||||
| Construction and land | 123,627 | 75,204 | 37,187 | 48,423 | 86,440 | |||||||||||||||
| Total real estate loans | 892,496 | 803,918 | 695,021 | 88,578 | 197,475 | |||||||||||||||
| Consumer: | ||||||||||||||||||||
| Home equity | 33,103 | 34,120 | 35,046 | (1,017 | ) | (1,943 | ) | |||||||||||||
| Auto and other consumer | 128,233 | 111,782 | 112,119 | 16,451 | 16,114 | |||||||||||||||
| Total consumer loans | 161,336 | 145,902 | 147,165 | 15,434 | 14,171 | |||||||||||||||
| Commercial business | 100,201 | 123,036 | 41,571 | (22,835 | ) | 58,630 | ||||||||||||||
| Total loans | 1,154,033 | 1,072,856 | 883,757 | 81,177 | 270,276 | |||||||||||||||
| Less: | ||||||||||||||||||||
| Net deferred loan fees | 4,346 | 2,628 | 206 | 1,718 | 4,140 | |||||||||||||||
| Premium on purchased loans, net | (6,129 | ) | (4,196 | ) | (4,514 | ) | (1,933 | ) | (1,615 | ) | ||||||||||
| Allowance for loan losses | 13,847 | 13,007 | 9,628 | 840 | 4,219 | |||||||||||||||
| Total loans receivable, net | $ | 1,141,969 | $ | 1,061,417 | $ | 878,437 | $ | 80,552 | $ | 263,532 | ||||||||||
The Company continues to monitor the sectors that have been most heavily impacted by the COVID-19 pandemic. The table below presents selected information on loans to these industries as of December 31, 2020.
| Industry | % of Total Loan Portfolio |
Loan Balance | Number of Loans |
Average Loan- to-Value |
||||||
| (In thousands) | ||||||||||
| Hospitality | 4.4 | % | $ | 49,181 | 15 | 61.4 | % | |||
| Restaurant and food services | 0.2 | 1,915 | 6 | 64.9 | ||||||
| Lessors of commercial real estate to hospitality, restaurant, and retail establishments | 4.4 | 48,894 | 27 | 51.02 | ||||||
Total deposits increased $79.1 million, or 6.3%, to $1.33 billion at December 31, 2020, compared to $1.25 billion at September 30, 2020 and increased $331.9 million, or 33.1%, when compared to $1.00 billion a year ago. Savings accounts decreased 2.7% compared to a year ago, to $164.4 million at December 31, 2020, and represented 12.3% of total deposits; transaction accounts increased 55.9% compared to a year ago to $431.2 million at December 31, 2020, and account for 32.3% of total deposits; money market accounts increased 73.0% compared to a year ago to $429.1 million, and represented 32.2% of total deposits, and certificates of deposit remained unchanged compared to a year ago at $308.8 million at year-end, and represent 23.2% of total deposits.
“Deposit balances remain at record levels, as consumers continue to build cash reserves,” said Bullard. “We are strategically increasing non-interest bearing and other core deposits to manage overall funding costs and interest rate risk. We held $93.9 million, or 7.0% of total deposits, in brokered CDs included in our balance of certificates of deposit at December 31, 2020, and $92.6 million, or 7.4% of total deposits in brokered CDs at September 30, 2020. The weighted-average cost of brokered CDs improved to 0.36% for the fourth quarter of 2020, compared to 0.51% for the previous quarter. We were able to lower our total cost of funds over the quarter by shifting our deposit mix toward noninterest-bearing and other core deposits.” Total cost of funds improved to 0.38% for the fourth quarter of 2020 compared to 0.50% for the third quarter of 2020.
Deposits consisted of the following at the dates indicated:
| December 31, 2020 |
September 30, 2020 |
December 31, 2019 |
Three Month Change |
One Year Change |
||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Savings | $ | 164,434 | $ | 171,905 | $ | 168,983 | $ | (7,471 | ) | $ | (4,549 | ) | ||||||||
| Transaction accounts | 431,171 | 390,867 | 276,496 | 40,304 | 154,675 | |||||||||||||||
| Money market accounts | 429,143 | 398,144 | 248,086 | 30,999 | 181,057 | |||||||||||||||
| Certificates of deposit | 308,769 | 293,540 | 308,080 | 15,229 | 689 | |||||||||||||||
| Total deposits | $ | 1,333,517 | $ | 1,254,456 | $ | 1,001,645 | $ | 79,061 | $ | 331,872 | ||||||||||
Total shareholders’ equity increased to $186.4 million at December 31, 2020, compared to $180.7 million three months earlier, and $176.9 million a year earlier. The quarter-over-quarter increase in equity was due to earnings of $3.8 million and an increase to other comprehensive income based on the improvement in the market value of the investment portfolio of $2.3 million, partially offset by the cost of stock buybacks. Book value per common share increased to $18.20 at December 31, 2020, compared to $17.65 at September 30, 2020 and $16.48 at December 31, 2019.
Operating Results
In the fourth quarter of 2020, the Company generated a return on average assets (“ROAA”) of 0.97%, and a return on average equity (“ROAE”) of 8.32%, compared to 0.99% and 8.22%, respectively, in the third quarter of 2020, and 0.71% and 4.99%, respectively, in the fourth quarter a year ago.
Total interest income increased to $14.0 million for the fourth quarter of 2020, compared to $13.4 million in the previous quarter and $11.8 million in the fourth quarter of 2019. Interest and fees on loans increased due to loan growth which offset a small decrease in investment interest income. Quarter over quarter, the yield on total investment securities decreased 8 basis points while the yield on average loans receivable decreased by 4 basis points. Total interest expense was $1.3 million for the fourth quarter of 2020, compared to $1.6 million in the third quarter of 2020, and $2.6 million in the fourth quarter a year ago. The decrease in interest expense was due to the decline in the cost of deposits to 42 basis points from 45 basis points in the prior quarter and from 105 basis points the fourth quarter one year ago.
Net interest income, before provision for loan losses, increased 7.8% during the quarter to $12.7 million, compared to $11.8 million for the preceding quarter and increased 38.4% compared to $9.2 million in the fourth quarter a year ago. For the year 2020, net interest income, before the provision for loan losses, increased 16.1% to $44.0 million, compared to $37.9 million for the year 2019. Due to loan growth and the COVID-19 pandemic and the related impact to the business environment, the Company recorded a $930,000 provision for loan losses during the fourth quarter of 2020. This compares to a provision for loan losses of $1.4 million for the preceding quarter, and a provision for loan losses of $249,000 for the fourth quarter of 2019. For the full year 2020, the provision for loan losses was $5.0 million, compared to $669,000 for 2019.
The net interest margin expanded 10 basis point to 3.46% for the fourth quarter of 2020, compared to 3.36% for the third quarter of 2020, and increased 32 basis points compared to 3.14% for the fourth quarter in 2019. “Our improved earning asset mix as well as our lower cost of funds had a positive impact on our net interest margin again this quarter,” said Bullard. For the year 2020, the net interest margin was 3.27% compared to 3.20% in 2019.
The yield on earning assets decreased 1 basis point to 3.81% for the fourth quarter of 2020, compared to 3.82% for the third quarter of 2020, and decreased from 4.03% for the fourth quarter in 2019. The decrease was due to lower yields on the investment portfolio and loans, which was offset by higher average loan balances. The yield on the loan portfolio decreased to 4.41% for the fourth quarter 2020, from 4.45% for the third quarter 2020, and decreased from 4.50% for the fourth quarter of 2019. The cost of interest-bearing liabilities decreased 13 basis points to 0.47% for the fourth quarter of 2020 compared to 0.60% for the third quarter of 2020 and decreased 70 basis points from 1.17% for the fourth quarter in 2019. “Over the past year we have been actively working on changing the mix of our funding profile and lowering our cost of deposits. We anticipate moderate additional cost save improvements in our certificate of deposit portfolio,” said Bullard.
Noninterest income decreased 3.0% to $4.6 million for the fourth quarter 2020 from $4.8 million for the third quarter 2020 and increased 91.4% compared to $2.4 million for the fourth quarter in 2019. Fourth quarter of 2020 included a $2.3 million gain on sale of loans compared to a $1.7 million gain on sale of loans in the preceding quarter and a $247,000 gain on sale of loans in the fourth quarter a year ago. Noninterest income growth during the fourth quarter of 2020 was driven by increased mortgage refinance activity, which resulted in strong loan sale activity, as well as a gain on sale of investment securities of $912,000. Loan and deposit service fees totaled $940,000 for the fourth quarter 2020, compared to $868,000 for the preceding quarter and $994,000 for the fourth quarter a year ago. For the year 2020, noninterest income more than doubled to $15.8 million, compared to $7.0 million in 2019, reflecting substantial increases in gain on sale of investment securities and gain on sale of loans. Noninterest income also increased due to the higher cash surrender value of bank owned life insurance (BOLI) due to increased investment in BOLI, as well as a restructure of the existing BOLI policies into superior products.
Noninterest expense totaled $11.7 million for the fourth quarter of 2020, compared to $10.1 million for the preceding quarter and $8.6 million for the fourth quarter a year ago. The quarterly increase reflects higher compensation expense, including salaries, commissions and benefits. For the year 2020, noninterest expense increased to $41.5 million, compared to $33.1 million in 2019, due to higher salary and benefit expenses, including employee production-related commission payments, increased advertising spending and increases in operational expenses associated with overall asset growth.
Capital Ratios and Credit Quality
Capital levels for both the Company and its operating bank, First Federal, remain in excess of applicable regulatory requirements and the Bank was categorized as “well-capitalized” at December 31, 2020. Common Equity Tier 1 and Total Risk-Based Capital Ratios at December 31, 2020 were 13.4% and 14.6%, respectively.
Nonperforming loans decreased to $2.3 million at December 31, 2020, from $3.1 million at September 30, 2020. The percentage of the allowance for loan losses to nonperforming loans increased to 609.2%, at December 31, 2020, from 419.9% at September 30, 2020, and 536.1% at December 31, 2019. Classified loans increased $3.5 million during the current quarter to $7.5 million at December 31, 2020, reflecting a downgrade in a commercial real estate relationship. The allowance for loan losses as a percentage of total loans was 1.2% at December 31, 2020, compared to 1.2% at September 30, 2020, and 1.1% at December 31, 2019.
About the Company
First Northwest is a bank holding company which primarily engages in the business activity of its subsidiary, First Federal. First Federal is a community-oriented financial institution serving Clallam, Jefferson, Kitsap, Whatcom, and King counties in Washington, through its Seattle lending center and ten full-service branches. Our business and operating strategy is focused on building sustainable earnings through hiring experienced bankers, geographic expansion, and diversifying our loan product mix, expanding our deposit product offerings that deliver value-added solutions, enhancing existing services and digital service delivery channels, and enhancing our infrastructure to support the changing needs and expectations of our customers.
| FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share data) (Unaudited) |
||||||||||||||||||||
| December 31, 2020 |
September 30, 2020 |
December 31, 2019 |
Three Month Change |
One Year Change |
||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and due from banks | $ | 13,508 | $ | 16,776 | $ | 13,519 | -19.5 | % | -0.1 | % | ||||||||||
| Interest-bearing deposits in banks | 51,647 | 35,303 | 35,220 | 46.3 | 46.6 | |||||||||||||||
| Investment securities available for sale, at fair value | 364,296 | 369,111 | 315,580 | -1.3 | 15.4 | |||||||||||||||
| Loans held for sale | 3,753 | 4,754 | 503 | -21.1 | 646.1 | |||||||||||||||
| Loans receivable (net of allowance for loan losses of $13,847, $13,007, and $9,628) | 1,141,969 | 1,061,417 | 878,437 | 7.6 | 30.0 | |||||||||||||||
| Federal Home Loan Bank (FHLB) stock, at cost | 5,977 | 5,944 | 6,034 | 0.6 | -0.9 | |||||||||||||||
| Accrued interest receivable | 6,966 | 7,367 | 3,931 | -5.4 | 77.2 | |||||||||||||||
| Premises and equipment, net | 14,785 | 14,737 | 14,342 | 0.3 | 3.1 | |||||||||||||||
| Mortgage servicing rights, net | 2,120 | 1,545 | 871 | 37.2 | 143.4 | |||||||||||||||
| Bank-owned life insurance, net | 38,353 | 38,104 | 30,027 | 0.7 | 27.7 | |||||||||||||||
| Prepaid expenses and other assets | 10,975 | 9,612 | 8,872 | 14.2 | 23.7 | |||||||||||||||
| Total assets | $ | 1,654,349 | $ | 1,564,670 | $ | 1,307,336 | 5.7 | % | 26.5 | % | ||||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||||||||||
| Deposits | $ | 1,333,517 | $ | 1,254,456 | $ | 1,001,645 | 6.3 | % | 33.1 | % | ||||||||||
| Borrowings | 109,977 | 109,150 | 112,930 | 0.8 | -2.6 | |||||||||||||||
| Accrued interest payable | 53 | 51 | 373 | 3.9 | -85.8 | |||||||||||||||
| Accrued expenses and other liabilities | 23,303 | 18,359 | 14,392 | 26.9 | 61.9 | |||||||||||||||
| Advances from borrowers for taxes and insurance | 1,116 | 1,986 | 1,145 | -43.8 | -2.5 | |||||||||||||||
| Total liabilities | 1,467,966 | 1,384,002 | 1,130,485 | 6.1 | 29.9 | |||||||||||||||
| Shareholders’ Equity | ||||||||||||||||||||
| Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding | — | — | — | n/a | n/a | |||||||||||||||
| Common stock, $0.01 par value, authorized 75,000,000 shares; issued and outstanding 10,247,185 at December 31, 2020; issued and outstanding 10,234,204 at September 30, 2020; and issued and outstanding 10,731,639 at December 31, 2019 | 102 | 102 | 107 | 0.0 | -4.7 | |||||||||||||||
| Additional paid-in capital | 97,412 | 97,229 | 102,017 | 0.2 | -4.5 | |||||||||||||||
| Retained earnings | 92,657 | 89,546 | 86,156 | 3.5 | 7.5 | |||||||||||||||
| Accumulated other comprehensive loss, net of tax | 5,442 | 3,186 | (1,539 | ) | 70.8 | 453.6 | ||||||||||||||
| Unearned employee stock ownership plan (ESOP) shares | (9,230 | ) | (9,395 | ) | (9,890 | ) | 1.8 | 6.7 | ||||||||||||
| Total shareholders’ equity | 186,383 | 180,668 | 176,851 | 3.2 | 5.4 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 1,654,349 | $ | 1,564,670 | $ | 1,307,336 | 5.7 | % | 26.5 | % | ||||||||||
| FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited) |
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| Quarter Ended | ||||||||||||||||||||
| December 31, 2020 |
September 30, 2020 |
December 31, 2019 |
Three Month Change |
One Year Change |
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| INTEREST INCOME | ||||||||||||||||||||
| Interest and fees on loans receivable | $ | 11,894 | $ | 11,097 | $ | 9,505 | 7.2 | % | 25.1 | % | ||||||||||
| Interest on mortgage-backed and related securities | 437 | 565 | 1,070 | -22.7 | -59.2 | |||||||||||||||
| Interest on investment securities | 1,581 | 1,603 | 1,065 | -1.4 | 48.5 | |||||||||||||||
| Interest on deposits in banks | 9 | 9 | 54 | 0.0 | -83.3 | |||||||||||||||
| FHLB dividends | 56 | 97 | 64 | -42.3 | -12.5 | |||||||||||||||
| Total interest income | 13,977 | 13,371 | 11,758 | 4.5 | 18.9 | |||||||||||||||
| INTEREST EXPENSE | ||||||||||||||||||||
| Deposits | 1,079 | 1,405 | 2,171 | -23.2 | -50.3 | |||||||||||||||
| Borrowings | 221 | 205 | 427 | 7.8 | -48.2 | |||||||||||||||
| Total interest expense | 1,300 | 1,610 | 2,598 | -19.3 | -50.0 | |||||||||||||||
| Net interest income | 12,677 | 11,761 | 9,160 | 7.8 | 38.4 | |||||||||||||||
| PROVISION FOR LOAN LOSSES | 930 | 1,350 | 249 | -31.1 | 273.5 | |||||||||||||||
| Net interest income after provision for loan losses | 11,747 | 10,411 | 8,911 | 12.8 | 31.8 | |||||||||||||||
| NONINTEREST INCOME | ||||||||||||||||||||
| Loan and deposit service fees | 940 | 868 | 994 | 8.3 | -5.4 | |||||||||||||||
| Mortgage servicing fees, net of amortization | 146 | 148 | 33 | -1.4 | 342.4 | |||||||||||||||
| Net gain on sale of loans | 2,324 | 1,725 | 247 | 34.7 | 840.9 | |||||||||||||||
| Net gain on sale of investment securities | 912 | 969 | 779 | -5.9 | 17.1 | |||||||||||||||
| Increase in cash surrender value of bank-owned life insurance | 249 | 622 | 273 | -60.0 | -8.8 | |||||||||||||||
| Other income | 67 | 449 | 97 | -85.1 | -30.9 | |||||||||||||||
| Total noninterest income | 4,638 | 4,781 | 2,423 | -3.0 | 91.4 | |||||||||||||||
| NONINTEREST EXPENSE | ||||||||||||||||||||
| Compensation and benefits | 7,193 | 6,070 | 4,902 | 18.5 | 46.7 | |||||||||||||||
| Data processing | 691 | 640 | 645 | 8.0 | 7.1 | |||||||||||||||
| Occupancy and equipment | 1,663 | 1,367 | 1,233 | 21.7 | 34.9 | |||||||||||||||
| Supplies, postage, and telephone | 236 | 254 | 205 | -7.1 | 15.1 | |||||||||||||||
| Regulatory assessments and state taxes | 271 | 262 | 210 | 3.4 | 29.0 | |||||||||||||||
| Advertising | 572 | 285 | 512 | 100.7 | 11.7 | |||||||||||||||
| Professional fees | 408 | 361 | 214 | 13.0 | 90.7 | |||||||||||||||
| FDIC insurance premium | 89 | 86 | — | 3.5 | 100.0 | |||||||||||||||
| FHLB prepayment penalty | — | — | — | n/a | n/a | |||||||||||||||
| Other | 596 | 756 | 700 | -21.2 | -14.9 | |||||||||||||||
| Total noninterest expense | 11,719 | 10,081 | 8,621 | 16.2 | 35.9 | |||||||||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 4,666 | 5,111 | 2,713 | -8.7 | 72.0 | |||||||||||||||
| PROVISION FOR INCOME TAXES | 850 | 1,436 | 495 | -40.8 | 71.7 | |||||||||||||||
| NET INCOME | $ | 3,816 | $ | 3,675 | $ | 2,218 | 3.8 | % | 72.0 | % | ||||||||||
| Basic and diluted earnings per common share | $ | 0.41 | $ | 0.40 | $ | 0.23 | 2.5 | % | 78.3 | % | ||||||||||
| FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited) |
||||||||||||
| Year Ended December 31, | Percent | |||||||||||
| 2020 | 2019 | Change | ||||||||||
| INTEREST INCOME | ||||||||||||
| Interest and fees on loans receivable | $ | 43,063 | $ | 40,166 | 7.2 | % | ||||||
| Interest on mortgage-backed and related securities | 2,701 | 4,606 | -41.4 | |||||||||
| Interest on investment securities | 5,569 | 3,965 | 40.5 | |||||||||
| Interest on deposits in banks | 94 | 244 | -61.5 | |||||||||
| FHLB dividends | 255 | 332 | -23.2 | |||||||||
| Total interest income | 51,682 | 49,313 | 4.8 | |||||||||
| INTEREST EXPENSE | ||||||||||||
| Deposits | 6,663 | 8,304 | -19.8 | |||||||||
| Borrowings | 1,061 | 3,144 | -66.3 | |||||||||
| Total interest expense | 7,724 | 11,448 | -32.5 | |||||||||
| Net interest income | 43,958 | 37,865 | 16.1 | |||||||||
| PROVISION FOR LOAN LOSSES | 5,046 | 669 | 654.3 | |||||||||
| Net interest income after provision for loan losses | 38,912 | 37,196 | 4.6 | |||||||||
| NONINTEREST INCOME | ||||||||||||
| Loan and deposit service fees | 3,454 | 3,893 | -11.3 | |||||||||
| Mortgage servicing fees, net of amortization | 137 | 176 | -22.2 | |||||||||
| Net gain on sale of loans | 6,433 | 1,077 | 497.3 | |||||||||
| Net gain on sale of investment securities | 3,147 | 836 | 276.4 | |||||||||
| Increase in cash surrender value of bank-owned life insurance | 1,826 | 708 | 157.9 | |||||||||
| Other income | 849 | 322 | 163.7 | |||||||||
| Total noninterest income | 15,846 | 7,012 | 126.0 | |||||||||
| NONINTEREST EXPENSE | ||||||||||||
| Compensation and benefits | 24,590 | 18,999 | 29.4 | |||||||||
| Data processing | 2,790 | 2,623 | 6.4 | |||||||||
| Occupancy and equipment | 5,726 | 4,642 | 23.4 | |||||||||
| Supplies, postage, and telephone | 985 | 883 | 11.6 | |||||||||
| Regulatory assessments and state taxes | 930 | 783 | 18.8 | |||||||||
| Advertising | 1,506 | 1,081 | 39.3 | |||||||||
| Professional fees | 1,523 | 1,121 | 35.9 | |||||||||
| FDIC insurance premium | 245 | 82 | 198.8 | |||||||||
| FHLB prepayment penalty | 210 | 344 | -39.0 | |||||||||
| Other | 2,959 | 2,559 | 15.6 | |||||||||
| Total noninterest expense | 41,464 | 33,117 | 25.2 | |||||||||
| INCOME BEFORE PROVISION FOR INCOME TAXES | 13,294 | 11,091 | 19.9 | |||||||||
| PROVISION FOR INCOME TAXES | 2,954 | 2,077 | 42.2 | |||||||||
| NET INCOME | $ | 10,340 | $ | 9,014 | 14.7 | % | ||||||
| Basic earnings per common share | $ | 1.11 | $ | 0.92 | 20.7 | % | ||||||
| Diluted earnings per common share | $ | 1.10 | $ | 0.91 | 20.9 | % | ||||||
| FIRST NORTHWEST BANCORP AND SUBSIDIARY Selected Financial Ratios and Other Data (Unaudited) |
||||||||||||||||||||
| As of or For the Quarter Ended | ||||||||||||||||||||
| December 31, 2020 |
September 30, 2020 |
June 30, 2020 |
March 31, 2020 |
December 31, 2019 |
||||||||||||||||
| Performance ratios: (1) | ||||||||||||||||||||
| Return on average assets | 0.97 | % | 0.99 | % | 0.56 | % | 0.27 | % | 0.71 | % | ||||||||||
| Return on average equity | 8.32 | 8.22 | 4.60 | 1.94 | 4.99 | |||||||||||||||
| Average interest rate spread | 3.35 | 3.22 | 2.90 | 2.86 | 2.86 | |||||||||||||||
| Net interest margin (2) | 3.46 | 3.36 | 3.10 | 3.11 | 3.14 | |||||||||||||||
| Efficiency ratio (3) | 67.7 | 60.9 | 72.3 | 80.0 | 74.4 | |||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 131.7 | 130.9 | 129.5 | 130.1 | 131.8 | |||||||||||||||
| Book value per common share | $ | 18.20 | $ | 17.65 | $ | 17.07 | $ | 16.02 | $ | 16.48 | ||||||||||
| Asset quality ratios: | ||||||||||||||||||||
| Nonperforming assets to total assets at end of period (4) | 0.1 | % | 0.2 | % | 0.2 | % | 0.2 | % | 0.2 | % | ||||||||||
| Nonperforming loans to total loans (5) | 0.2 | 0.3 | 0.3 | 0.2 | 0.2 | |||||||||||||||
| Allowance for loan losses to nonperforming loans (5) | 609.2 | 419.9 | 360.8 | 622.4 | 536.1 | |||||||||||||||
| Allowance for loan losses to total loans | 1.2 | 1.2 | 1.2 | 1.2 | 1.1 | |||||||||||||||
| Net charge-offs to average outstanding loans | — | — | — | — | — | |||||||||||||||
| Capital ratios (First Federal): | ||||||||||||||||||||
| Tier 1 leverage | 10.3 | % | 10.5 | % | 10.9 | % | 11.8 | % | 12.2 | % | ||||||||||
| Common equity Tier 1 capital | 13.4 | 14.7 | 15.1 | 16.8 | 17.5 | |||||||||||||||
| Tier 1 risk-based | 13.4 | 14.7 | 15.1 | 16.8 | 17.5 | |||||||||||||||
| Total risk-based | 14.6 | 16.0 | 16.4 | 18.1 | 18.7 | |||||||||||||||
| Other Information: | ||||||||||||||||||||
| Average total assets | $ | 1,567,521 | $ | 1,488,723 | $ | 1,401,500 | $ | 1,287,529 | $ | 1,242,780 | ||||||||||
| Average interest-earning assets | 1,466,103 | 1,401,090 | 1,305,437 | 1,208,314 | 1,167,805 | |||||||||||||||
| Average total loans | 1,089,505 | 1,009,210 | 938,646 | 876,135 | 849,741 | |||||||||||||||
| Average equity | 183,424 | 178,887 | 172,009 | 179,614 | 177,759 | |||||||||||||||
| Average deposits | 1,277,632 | 1,227,656 | 1,133,665 | 1,008,410 | 985,788 | |||||||||||||||
| (1 | ) | Performance ratios are annualized, where appropriate. |
| (2 | ) | Net interest income divided by average interest-earning assets. |
| (3 | ) | Total noninterest expense as a percentage of net interest income and total other noninterest income. |
| (4 | ) | Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets. |
| (5 | ) | Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due. |
| FIRST NORTHWEST BANCORP AND SUBSIDIARY Selected Financial Ratios and Other Data (Unaudited) (continued) |
||||||||
| As of or For the Year Ended December 31, | ||||||||
| 2020 | 2019 | |||||||
| Performance ratios: (1) | ||||||||
| Return on average assets | 0.72 | % | 0.72 | % | ||||
| Return on average equity | 5.79 | 5.13 | ||||||
| Average interest rate spread | 3.09 | 2.91 | ||||||
| Net interest margin (2) | 3.27 | 3.20 | ||||||
| Efficiency ratio (3) | 69.3 | 73.8 | ||||||
| Average interest-earning assets to average interest-bearing liabilities | 130.6 | 129.8 | ||||||
| Book value per common share | $ | 18.20 | $ | 16.48 | ||||
| Asset quality ratios: | ||||||||
| Nonperforming assets to total assets at end of period (4) | 0.1 | % | 0.2 | % | ||||
| Nonperforming loans to total loans (5) | 0.2 | 0.2 | ||||||
| Allowance for loan losses to nonperforming loans (5) | 609.2 | 536.1 | ||||||
| Allowance for loan losses to total loans | 1.2 | 1.1 | ||||||
| Net charge-offs to average outstanding loans | 0.1 | 0.1 | ||||||
| Capital ratios (First Federal): | ||||||||
| Tier 1 leverage | 10.3 | % | 12.2 | % | ||||
| Common equity Tier 1 capital | 13.4 | 17.5 | ||||||
| Tier 1 risk-based | 13.4 | 17.5 | ||||||
| Total risk-based | 14.6 | 18.7 | ||||||
| Other Information: | ||||||||
| Average total assets | $ | 1,436,895 | $ | 1,255,581 | ||||
| Average interest-earning assets | 1,345,770 | 1,181,923 | ||||||
| Average total loans | 978,799 | 870,696 | ||||||
| Average equity | 178,498 | 175,578 | ||||||
| Average deposits | 1,162,323 | 957,557 | ||||||
| (1 | ) | Performance ratios are annualized, where appropriate. |
| (2 | ) | Net interest income divided by average interest-earning assets. |
| (3 | ) | Total noninterest expense as a percentage of net interest income and total other noninterest income. |
| (4 | ) | Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets. |
| (5 | ) | Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due. |
Contact:
Matthew P. Deines, President and Chief Executive Officer
Geri Bullard, EVP and Chief Financial Officer
First Northwest Bancorp
360-457-0461
