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First Financial Northwest, Inc. Reports Net Income of $2.6 Million or $0.28 per Diluted Share for the Fourth Quarter and $8.6 Million or $0.88 per Diluted Share for the Year Ended December 31, 2020
ソース: Nasdaq GlobeNewswire / 28 1 2021 08:15:02 America/Chicago
RENTON, Wash., Jan. 28, 2021 (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 December 31, 2020, of $2.6 million, or $0.28 per diluted share, compared to net income of $2.1 million, or $0.21 per diluted share, for the quarter ended September 30, 2020, and $2.6 million, or $0.26 per diluted share, for the quarter ended December 31, 2019. For the year ended December 31, 2020, net income was $8.6 million, or $0.88 per diluted share, compared to net income of $10.4 million, or $1.03 per diluted share, for the year ended December 31, 2019.
“While 2020 certainly presented significant challenges, it also created many opportunities,” stated Joseph W. Kiley III, President and CEO. “We were able to keep all our offices open and available to our customers throughout the year. Thanks to the efforts of our fantastic team of employees, balances in checking accounts increased by $80.7 million in 2020, allowing us to decrease our balance of higher cost certificates of deposit. Due in large part to our improved deposit mix and the impact of the current low interest rate environment, our cost of funds declined to 1.07% in the quarter ended December 31, 2020, from 1.19% in the quarter ended September 30, 2020, and 1.82% in the quarter ended December 31, 2019. If interest rates remain low, we expect this trend to continue as we have approximately $266 million in certificates of deposit maturing in the next 12 months at a weighted average rate of 1.87%,” continued Kiley.
“In the third quarter of 2015, we embarked on a branch expansion strategy, focused on leasing small, efficient office spaces that provide a presence for our teams of community bankers in each market we serve, with many of these offices staffed with just two to three employees and equipped with cash recycling machines to assist with handling traditional teller work. We have now grown from a single office thrift institution in 2015 to a multi-branch, full-service community bank. We will open our 15th office in Issaquah, Washington, in the first quarter of 2021 and then pause our expansion with a focus on growing relationships and improving efficiency throughout our branch network. As an example of how the Bank has changed, checking account balances now total $199.5 million compared to $38.6 million at June 30, 2015, just prior to the beginning of our branch expansion efforts. Our strategy remains focused on improving the Bank’s deposit composition from a reliance on certificates of deposit to a more balanced deposit mix, and expanding our network for lending opportunities,” stated Kiley.
“Our lending teams are working closely with our customers and continue to assist borrowers that may require additional support or closer monitoring due to the COVID-19 pandemic. In the fourth quarter, borrowers that had requested an additional COVID-19 related loan deferral or concession were evaluated, ultimately resulting in downgrades in loan classifications on 16 loans totaling approximately $34.2 million. While these loans remain classified as ‘pass’ credits and the Bank still expects to receive full payment on the loans, including the deferred interest, these downgrades were the primary reason for our provision for loan losses of $600,000 in the quarter ended December 31, 2020, bringing the total provision for the year to $1.9 million, an increase of $2.2 million from the prior year. Nonetheless, our pre-tax, pre-provision income(1) was $12.4 million for the year ended December 31, 2020, a slight change from $12.6 million in 2019, despite the challenges presented in 2020,” concluded Kiley.
(1) Pre-tax, pre-provision income is a non-GAAP financial measure. Refer to Non-GAAP Financial Measures at the end of this press release for a reconciliation to the nearest GAAP equivalent.
Highlights for the quarter and year ended December 31, 2020:
- Demand deposits increased $80.7 million for the year ended December 31, 2020.
- The strong growth in retail deposits allowed the Bank to reduce its brokered certificates of deposit by $94.5 million in 2020 to none at December 31, 2020.
- The Company’s book value per share was $16.05 at December 31, 2020, compared to $15.62 at September 30, 2020, and $15.25 at December 31, 2019.
- The Company repurchased 544,626 shares during the year at an average price of $10.44 per share, an amount equal to approximately 5.3% of shares outstanding at the beginning of 2020.
- The Company paid regular quarterly cash dividends to shareholders totaling $0.40 per share for the year.
- The Bank’s Tier 1 leverage and total capital ratios at December 31, 2020, were 10.3% and 15.6%, respectively, compared to 10.0% and 15.3%, at September 30, 2020, and 10.3% and 14.4% at December 31, 2019.
- Based on management’s evaluation of the adequacy of the Allowance for Loan and Lease Losses (“ALLL”) and taking into account the estimated future impact of the COVID-19 pandemic, the Bank recorded a $600,000 provision for loan losses during the quarter, bringing the total provision for loan losses to $1.9 million for the year.
Total deposits increased $24.0 million to $1.09 billion at December 31, 2020, from $ 1.07 billion at September 30, 2020, and increased $60.1 million from $1.03 billion at December 31, 2019. Demand deposits increased $6.2 million and certificates of deposit decreased $19.1 million during the quarter, including a $10 million reduction in brokered deposits.
The following table presents a breakdown of our total deposits (unaudited):
Dec 31,
2020Sep 30,
2020Dec 31,
2019Three
Month
ChangeOne
Year
ChangeDeposits: (Dollars in thousands) Noninterest-bearing demand $ 91,285 $ 82,376 $ 52,849 $ 8,909 $ 38,436 Interest-bearing demand 108,182 110,856 65,897 (2,674 ) 42,285 Statement savings 19,221 19,292 17,447 (71 ) 1,774 Money market 465,369 428,512 377,766 36,857 87,603 Certificates of deposit, retail (1) 409,576 418,646 425,103 (9,070 ) (15,527 ) Certificates of deposit, brokered – 10,000 94,472 (10,000 ) (94,472 ) Total deposits $ 1,093,633 $ 1,069,682 $ 1,033,534 $ 23,951 $ 60,099 (1) Balance of retail certificates of deposit for acquired branches are net of an aggregate fair value adjustment of $12,000 at December 31, 2020, $14,000 at September 30, 2020, and $28,000 at December 31, 2019.
The following tables present an analysis of total deposits by branch office (unaudited):
December 31, 2020 Noninterest-
bearing
demandInterest-
bearing
demandStatement
savingsMoney
marketCertificates
of deposit,
retailCertificates
of deposit,
brokeredTotal (Dollars in thousands) King County Renton $ 36,932 $ 47,964 $ 13,696 $ 243,940 $ 325,803 $ – $ 668,335 Landing 5,300 3,199 22 14,024 8,108 – 30,653 Woodinville 3,054 7,040 688 14,270 9,790 – 34,842 Bothell 2,153 1,760 53 5,502 3,233 – 12,701 Crossroads 6,719 5,249 58 56,836 10,994 – 79,856 Kent (1) 5,047 8,607 – 23,052 1,077 – 37,783 Kirkland (1) 5,205 113 30 3,757 – – 9,105 Total King County 64,410 73,932 14,547 361,381 359,005 – 873,275 Snohomish County Mill Creek 3,176 2,765 1,411 14,823 9,289 – 31,464 Edmonds 12,074 13,735 351 30,807 19,989 – 76,956 Clearview 5,367 6,690 1,012 17,902 5,346 – 36,317 Lake Stevens 3,057 7,419 835 14,593 4,669 – 30,573 Smokey Point 2,788 3,237 1,005 21,575 11,278 – 39,883 Total Snohomish County 26,462 33,846 4,614 99,700 50,571 – 215,193 Pierce County University Place 377 215 15 1,578 – – 2,185 Gig Harbor 36 189 45 2,710 – – 2,980 Total Pierce County 413 404 60 4,288 – – 5,165 Total retail deposits 91,285 108,182 19,221 465,369 409,576 – 1,093,633 Brokered deposits – – – – – – – Total deposits $ 91,285 $ 108,182 $ 19,221 $ 465,369 $ 409,576 $ – $ 1,093,633 (1) Kent opened January 31, 2019; Kirkland, November 12, 2019; University Place, March 2, 2020; and Gig Harbor, October 5, 2020.
September 30, 2020 Noninterest-
bearing
demandInterest-
bearing
demandStatement
savingsMoney
marketCertificates
of deposit,
retailCertificates
of deposit,
brokeredTotal (Dollars in thousands) King County Renton $ 35,066 $ 47,957 $ 14,677 $ 235,680 $ 335,675 $ – $ 669,055 Landing 3,209 3,193 37 16,398 8,251 – 31,088 Woodinville 3,086 6,608 703 12,589 8,514 – 31,500 Bothell 2,270 2,104 54 4,675 3,290 – 12,393 Crossroads 6,755 8,085 48 50,304 11,076 – 76,268 Kent (1) 5,452 8,277 – 13,802 1,070 – 28,601 Kirkland (1) 4,534 56 1 2,627 – – 7,218 Total King County 60,372 76,280 15,520 336,075 367,876 – 856,123 Snohomish County Mill Creek 3,713 3,236 856 14,695 10,675 – 33,175 Edmonds 5,853 13,865 485 28,229 19,300 – 67,732 Clearview 6,102 6,478 853 18,014 4,881 – 36,328 Lake Stevens 3,264 7,346 703 13,520 4,356 – 29,189 Smokey Point 2,733 3,137 875 16,173 11,558 – 34,476 Total Snohomish County 21,665 34,062 3,772 90,631 50,770 – 200,900 Pierce County University Place (1) 339 514 – 1,806 – – 2,659 Total Pierce County 339 514 – 1,806 – – 2,659 Total retail deposits 82,376 110,856 19,292 428,512 418,646 – 1,059,682 Brokered deposits – – – – – 10,000 10,000 Total deposits $ 82,376 $ 110,856 $ 19,292 $ 428,512 $ 418,646 $ 10,000 $ 1,069,682 (1) Kent opened January 31, 2019; Kirkland, November 12, 2019; and University Place, March 2, 2020.
Net loans receivable totaled $1.10 billion at December 31, 2020, compared to $1.13 billion at September 30, 2020, and $1.11 billion at December 31, 2019. New commercial loan activity remains muted as many borrowers are focused on maintaining their existing loans in lieu of seeking out new opportunities. The average balance of net loans receivable totaled $1.13 billion for the quarter ended December 31, 2020, compared to $1.14 billion for the quarter ended September 30, 2020, and $1.09 billion for the quarter ended December 31, 2019. For the year ended December 31, 2020, the average balance of net loans receivable was $1.12 billion, compared to $1.06 billion for the year ended December 31, 2019.
The Company recorded a $600,000 provision for loan losses in the quarter ended December 31, 2020, compared to a $700,000 provision for loan losses in the quarter ended September 30, 2020, and no provision for loan losses in the quarter ended December 31, 2019. The provision in the quarter ended December 31, 2020, was primarily due to risk rating downgrades on $34.2 million in commercial real estate loans, as any relationship that requested an additional loan payment deferral and demonstrated other weaknesses received additional scrutiny. Somewhat offsetting this impact, net loans receivable declined by $33.4 million during the quarter. The provision in the quarter ended September 30, 2020, was primarily attributed to loan downgrades during the quarter, including the downgrade of $26.8 million in commercial real estate loans. Strong loan portfolio quality metrics and credit upgrades for certain loan relationships resulted in no provision for loan losses in the quarter ended December 31, 2019. For the year ended December 31, 2020, the provision for loan losses totaled $1.9 million, compared to a recapture of provision for loan losses of $300,000 for the year ended December 31, 2019.
The ALLL represented 1.36% of total loans receivable at December 31, 2020, compared to 1.27% of total loans receivable at September 30, 2020, and 1.18% of total loans receivable at December 31, 2019. Excluding Paycheck Protection Program (“PPP”) loan balances, which are 100% guaranteed by the Small Business Administration (“SBA”), the ALLL represented 1.41% of total loans receivable at December 31, 2020, compared to 1.33% of total loans receivable at September 30, 2020. The ALLL as a percent of total loans excluding PPP loans is a non-GAAP financial measure. See Non-GAAP Financial Measures at the end of this press release for a reconciliation to its nearest GAAP equivalent. Nonperforming loans are comprised of a single $2.1 million multifamily loan in foreclosure at both December 31, 2020, and September 30, 2020, and were $95,000 at December 31, 2019. Based on an impairment analysis and ongoing monitoring, the Company does not expect to incur a loss on this multifamily loan. OREO also remained unchanged at $454,000 at December 31, 2020, September 30, 2020, and December 31, 2019.
The following table presents a breakdown of our nonperforming assets (unaudited):
Dec 31, Sep 30, Dec 31, Three
MonthOne
Year2020 2020 2019 Change Change (Dollars in thousands) Nonperforming loans: One-to-four family residential $ ─ $ ─ $ 95 $ ─ $ (95 ) Multifamily 2,104 2,104 ─ ─ 2,104 Total nonperforming loans 2,104 2,104 95 ─ 2,009 Other real estate owned (“OREO”) 454 454 454 ─ ─ Total nonperforming assets (1) $ 2,558 $ 2,558 $ 549 $ ─ $ 2,009 Nonperforming assets as a percent of total assets 0.18 % 0.19 % 0.04 % (1) The difference between nonperforming assets reported above, and the totals reported by other industry sources, is due to their inclusion of all Troubled Debt Restructured Loans ("TDRs") as nonperforming loans, although 100% of the Bank’s TDRs were performing in accordance with their restructured terms at December 31, 2020.
The Company accounts for certain loan modifications or restructurings as TDRs. In general, the modification or restructuring of a debt is considered a TDR if, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession to the borrower that it would not otherwise consider. At December 31, 2020, TDRs totaled $3.9 million, compared to $4.1 million at September 30, 2020, and $5.2 million at December 31, 2019. All TDRs were performing according to their modified repayment terms for the periods presented. As discussed further below, The Coronavirus Aid, Relief, and Economic Security Act of 2020 (“CARES Act”), signed into law on March 27, 2020, provided guidance around the modification of loans as a result of the COVID19 pandemic, which outlined, among other criteria, that short-term modifications made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. The recently enacted Consolidated Appropriations Act, 2021 provides additional COVID relief, including, among other things, additional PPP funding of $284.5 billion and extends TDR relief to the earlier of 60 days after the national emergency termination date or January 1, 2022.
Net interest income totaled $10.7 million for the quarter ended December 31, 2020, compared to $10.1 million for the quarter ended September 30, 2020, and $9.7 million for the quarter ended December 31, 2019. The $562,000 increase in the quarter ended December 31, 2020, was due primarily to higher loan related fees including a $187,000 increase in net deferred fee recognition relating to the forgiveness of PPP loans. For the year ended December 31, 2020, net interest income totaled $40.5 million, compared to $38.9 million for the year ended December 31, 2019, due to changes in the average balances in net loans receivable to $1.12 million in 2020 compared to $1.06 million in 2019, and reductions in the cost of interestbearing liabilities that declined to 1.41% for the year ended December 31, 2020, from 1.92% for the year ended December 31, 2019.
Total interest income was $13.8 million for the quarter ended December 31, 2020, compared to $13.7 million for the quarter ended September 30, 2020, and $15.0 million for the quarter ended December 31, 2019. For the year ended December 31, 2020, interest income totaled $56.1 million, compared to $59.6 million for the prior year. The increase in the current quarter compared to the quarter ended September 30, 2020, was primarily due to the recognition of deferred fees on PPP loans, as noted above.
Total interest expense was $3.2 million for the quarter ended December 31, 2020, compared to $3.6 million for the quarter ended September 30, 2020, and $5.3 million for the quarter ended December 31, 2019. The average cost of interest-bearing deposits declined to 1.12% for the quarter ended December 31, 2020, compared to 1.27% for the quarter ended September 30, 2020, and 1.94% for the quarter ended December 31, 2019. The decline from the quarter ended September 30, 2020, was due primarily to a reduced level of brokered deposits and retail certificates of deposits, along with lower rates paid on the Bank’s other interestbearing deposit balances. During the quarter ended December 31, 2020, the Bank redeemed its remaining $10.0 million in callable brokered certificates of deposit with an average coupon of 1.475%, resulting in the recognition of $60,000 in unamortized fees in the quarter, compared to $20,000 in unamortized fees related to a $5.0 million redemption in the quarter ended September 30, 2020. Advances from the FHLB remained unchanged at $120.0 million at December 31, 2020 and September 30, 2020, compared to $137.7 million at December 31, 2019, and were comprised of short-term FHLB advances tied to cash flow hedge agreements utilized to assist in the Bank’s interest rate risk management efforts. The average cost of borrowings was 1.40% for the quarter ended December 31, 2020, compared to 1.28% for the quarter ended September 30, 2020, and 1.66% for the quarter ended December 31, 2019. For the year ended December 31, 2020, total interest expense declined to $15.6 million, compared to $20.7 million for the year ended December 31, 2019, due to the significant reduction in short term interest rates following decreases in the federal funds target rates in 2020 in response to COVID-19.
The net interest margin was 3.29% for the quarter ended December 31, 2020, compared to 3.07% for the quarter ended September 30, 2020, and 3.09% for the quarter ended December 31, 2019. The expansion in the net interest margin is due primarily to the 12 basis point reduction in the Company’s cost of interestbearing liabilities during the quarter to 1.15%, compared to 1.27% in the quarter ended September 30, 2020. The 10basis point increase in the yield on interest earning assets to 4.26% in the quarter ended December 31, 2020, from 4.16% in the quarter ended September 30, 2020, was impacted favorably by the quarter over quarter increase in net deferred fee recognition on PPP loans, with deferred fees totaling $420,000 recognized in the quarter ended December 31, 2020, compared to $232,000 in the quarter ended September 30, 2020. At December 31, 2020, the net balance of deferred fees relating to PPP loans totaled $1.0 million, which will be recognized in future periods.
Noninterest income for the quarter ended December 31, 2020, totaled $1.7 million, compared to $1.0 million for the quarter ended September 30, 2020, and $1.5 million for the quarter ended December 31, 2019. The increase in noninterest income for the quarter ended December 31, 2020, compared to the quarter ended September 30, 2020, was primarily due to a $706,000 increase in loan related fees, including an increase of $411,000 in swap related fees and an increase of $202,000 in prepayment penalty income. For the year ended December 31, 2020, noninterest income increased to $4.4 million, from $4.1 million for the year ended December 31, 2019, due primarily to an increase in loan related fees.
Noninterest expense totaled $8.4 million for the quarter ended December 31, 2020, compared to $7.9 million for the quarter ended September 30, 2020, and $8.0 million in the quarter ended December 31, 2019. Salaries and employee benefits for the quarter ended December 31, 2020, increased $266,000 compared to the quarter ended September 30, 2020, due primarily to accruals for employee incentives, based in large part on successful deposit growth, earned in 2020. Occupancy and equipment expenses increased $160,000 in the quarter ended December 31, 2020, compared to the quarter ended September 30, 2020, due primarily to expenses relating to our branch expansion efforts. Noninterest expense totaled $32.5 million for the year ended December 31, 2020, compared to $30.4 million in 2019. The increase in noninterest expense year over year was due primarily to increases in salaries and employee benefits, occupancy and equipment, and data processing expenses relating to the Company’s growth. As a result of ongoing efforts to identify operational efficiencies and to align with near-term growth expectations, the Bank eliminated eight full-time positions in mid-January 2021, representing approximately 6% of its employee base.
COVID-19 Related Information
The Bank is committed to assisting its customers and communities in response to the COVID-19 pandemic, including providing certain short-term loan modifications. In addition, the Bank is participating in the PPP as an SBA lender. The Bank continues to take the steps necessary while working with its loan customers to effectively manage the portfolio through the ongoing uncertainty surrounding the duration, impact and government response to the crisis.
Paycheck Protection Program
The SBA provides assistance to small businesses impacted by COVID-19 through the PPP, which was designed to provide near-term relief to help small businesses sustain operations. The deadline for PPP loan applications to the SBA under the original PPP was August 8, 2020. Under this program, as of December 31, 2020, there were 372 PPP loans outstanding totaling $41.3 million, down from 462 PPP loans totaling $52.0 million as of September 30, 2020, and $51.7 million representing 455 loans as of June 30, 2020. A total of 307, or more than 82%, of the remaining loans at December 31, 2020, are for loan amounts of $150,000 or less and represent $13.5 million of the total, of which 199 loans, representing $3.6 million, are for loan amounts of $50,000 or less. As of December 31, 2020, a total of 146 PPP loans totaling $11.2 million had been approved for forgiveness under the SBA program. Recent legislation reopened the PPP through March 31, 2021, by authorizing $284.5 billion in funding for eligible small businesses and nonprofits. In January, the Bank began accepting and processing loan applications under this second PPP program.Modifications
The primary method of relief is to allow the borrower to defer their loan payments for three to six months, while certain borrowers are allowed to pay interest only or have payment deferrals for periods longer than six months depending upon their specific circumstances. The CARES Act and regulatory guidelines suspend the determination of certain loan modifications related to the COVID19 pandemic from being treated as TDRs. Recent legislation extended this accounting treatment through the earlier of 60 days after the national emergency termination date or January 1, 2022. The following table provides detail on the balance of loans remaining on deferral status as of December 31, 2020:As of December 31, 2020 Balance of
loans with
modifications
of 4-6 monthsBalance of
loans with
modifications
of greater
than 6 monthsTotal balance
of loans with
modifications
grantedTotal loans Modifications
as % of total
loans in each
category(Dollars in thousands) One-to-four family residential $ 745 $ 1,027 $ 1,772 $ 381,960 0.5 % Multifamily - 2,347 2,347 136,694 1.7 Commercial real estate: Office - - - 84,311 - Retail - 3,972 3,972 114,117 3.5 Mobile home park - - - 28,094 - Hotel/motel - 30,501 30,501 69,304 44.0 Nursing home - 6,368 6,368 12,868 49.5 Warehouse - - - 17,484 - Storage - - - 33,671 - Other non-residential - - - 25,416 - Total commercial real estate - 40,841 40,841 385,265 10.6 Construction/land - - - 92,207 - Business: Aircraft - - - 10,811 - SBA - - - 928 - PPP - - - 41,251 - Other business - - - 27,673 - Total business - - - 80,663 - Consumer: Classic/collectible auto - 190 190 29,359 0.6 Other consumer - - - 11,262 - Total consumer - 190 190 40,621 0.5 Total loans with COVID19
pandemic modifications$ 745 $ 44,405 $ 45,150 $ 1,117,410 4.0 % Total loans with modifications granted were $45.2 million, or 4.0% of total loans outstanding, at December 31, 2020, down from $65.5 million, or 5.7% of total loans outstanding at September 30, 2020, and $132.1 million, or 11.4% of total loans outstanding, at June 30, 2020. As of December 31, 2020, $44.4 million in loans had been granted modifications of greater than six months, of which $30.5 million were for loans in the hotel/motel category.
Additional Loan Portfolio Details
The Bank is monitoring its loan portfolio for delinquent loans that have not requested modification qualifying under the CARES Act or regulatory guidance. The following table presents the loan to value (“LTV”) ratios of select segments of our loan portfolio at December 31, 2020, that may be more likely to be impacted by COVID-19 pandemic considerations. The LTV ratio is derived by dividing the current loan balance by the lower of the original appraised value or purchase price of the real estate or other collateral:As of December 31, 2020 LTV 0-60% LTV 61-75% LTV 76%+ Total Average LTV Category: (1) (Dollars in thousands) One-to-four family $ 236,286 $ 147,465 $ 31,605 $ 415,356 40.07 % Church 1,372 - - 1,372 46.39 Classic/collectible auto 5,006 11,776 12,577 29,359 67.56 Gas station 3,507 - 508 4,015 51.02 Hotel / motel 58,532 10,772 - 69,304 59.59 Marina 7,781 - - 7,781 37.88 Mobile home park 20,054 7,665 375 28,094 39.71 Nursing home 12,868 - - 12,868 20.87 Office 59,808 24,108 4,303 88,219 46.81 Other non-residential 9,971 2,277 - 12,248 42.85 Retail 77,733 36,384 - 114,117 49.89 Storage 24,378 11,169 - 35,547 44.05 Warehouse 15,577 1,907 - 17,484 43.63 (1) Represents select segments of loans that may include construction loans; classifications may differ from those used elsewhere in this release because they are based on type of collateral rather than loan category.
First Financial Northwest, Inc. is the parent company of First Financial Northwest Bank; an FDIC insured Washington State-chartered commercial bank headquartered in Renton, Washington, serving the Puget Sound Region through 14 full-service banking offices. For additional information about us, please visit our website at ffnwb.com and click on the “Investor Relations” link at the bottom of the page.
Forward-looking statements:
When used in this press release and in other documents filed with or furnished to the Securities and Exchange Commission (the “SEC”), in press releases or other public stockholder communications, or in oral statements made with the approval of an authorized executive officer, the words or phrases “believe,” “will,” “will likely result,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” “plans,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events many of which are inherently uncertain and outside of our control. 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: the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; 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 filings with 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 2021 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, except share data)
(Unaudited)Assets Dec 31,
2020Sep 30,
2020Dec 31,
2019Three
Month
ChangeOne
Year
ChangeCash on hand and in banks $ 7,995 $ 7,440 $ 10,094 7.5 % (20.8 )% Interest-earning deposits with banks 72,494 18,674 12,896 288.2 462.1 Investments available-for-sale, at fair value 127,551 126,020 136,601 1.2 (6.6 ) Annuity held-to-maturity 2,418 2,406 - 0.5 n/a Loans receivable, net of allowance of $15,174,
$14,568, and $13,218 respectively1,100,582 1,133,984 1,108,462 (2.9 ) (0.7 ) Federal Home Loan Bank ("FHLB") stock, at cost 6,410 6,410 7,009 0.0 (8.5 ) Accrued interest receivable 5,508 5,676 4,138 (3.0 ) 33.1 Deferred tax assets, net 1,641 1,879 1,501 (12.7 ) 9.3 Other real estate owned ("OREO") 454 454 454 0.0 0.0 Premises and equipment, net 22,579 22,409 22,466 0.8 0.5 Bank owned life insurance ("BOLI") 33,034 32,830 31,982 0.6 3.3 Prepaid expenses and other assets 1,643 1,704 2,216 (3.6 ) (25.9 ) Right of use asset ("ROU") 3,647 3,834 2,209 (4.9 ) 65.1 Goodwill 889 889 889 0.0 0.0 Core deposit intangible 824 860 968 (4.2 ) (14.9 ) Total assets $ 1,387,669 $ 1,365,469 $ 1,341,885 1.6 3.4 Liabilities and Stockholders' Equity Deposits Noninterest-bearing deposits 91,285 82,376 52,849 10.8 72.7 Interest-bearing deposits 1,002,348 987,306 980,685 1.5 2.2 Total deposits 1,093,633 1,069,682 1,033,534 2.2 5.8 Advances from the FHLB 120,000 120,000 137,700 0.0 (12.9 ) Advance payments from borrowers for taxes
and insurance2,498 4,742 2,921 (47.3 ) (14.5 ) Lease liability 3,783 3,942 2,279 (4.0 ) 66.0 Accrued interest payable 211 197 285 7.1 (26.0 ) Other liabilities 11,242 12,128 8,847 (7.3 ) 27.1 Total liabilities 1,231,367 1,210,691 1,185,566 1.7 3.9 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 outstanding9,736,875 shares at December 31, 2020,
9,911,607 shares at September 30, 2020,
and 10,252,953 shares at December 31, 201997 99 103 (2.0 ) (5.8 ) Additional paid-in capital 82,095 83,839 87,370 (2.1 ) (6.0 ) Retained earnings 78,003 76,300 73,321 2.2 6.4 Accumulated other comprehensive loss, net of tax (1,918 ) (3,203 ) (1,371 ) (40.1 ) 39.9 Unearned Employee Stock Ownership Plan
("ESOP") shares(1,975 ) (2,257 ) (3,104 ) (12.5 ) (36.4 ) Total stockholders' equity 156,302 154,778 156,319 1.0 (0.0 ) Total liabilities and stockholders' equity $ 1,387,669 $ 1,365,469 $ 1,341,885 1.6 % 3.4 % FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except share data)
(Unaudited)Quarter Ended Dec 31,
2020Sep 30,
2020Dec 31,
2019Three
Month
ChangeOne
Year
ChangeInterest income Loans, including fees $ 13,042 $ 12,847 $ 13,852 1.5 % (5.8 )% Investments available-for-sale 707 751 995 (5.9 ) (28.9 ) Investments held-to-maturity 6 6 - 0.0 n/a Interest-earning deposits with banks 7 8 47 (12.5 ) (85.1 ) Dividends on FHLB Stock 81 82 72 (1.2 ) 12.5 Total interest income 13,843 13,694 14,966 1.1 (7.5 ) Interest expense Deposits 2,767 3,206 4,807 (13.7 ) (42.4 ) FHLB advances and other borrowings 426 400 461 6.5 (7.6 ) Total interest expense 3,193 3,606 5,268 (11.5 ) (39.4 ) Net interest income 10,650 10,088 9,698 5.6 9.8 Provision for loan losses 600 700 - (14.3 ) n/a Net interest income after provision for loan losses 10,050 9,388 9,698 7.1 3.6 Noninterest income Net gain on sale of investments - 18 71 (100.0 ) (100.0 ) BOLI income 204 269 301 (24.2 ) (32.2 ) Wealth management revenue 170 145 177 17.2 (4.0 ) Deposit related fees 195 201 178 (3.0 ) 9.6 Loan related fees 1,082 376 782 187.8 38.4 Other 3 2 14 50.0 (78.6 ) Total noninterest income 1,654 1,011 1,523 63.6 8.6 Noninterest expense Salaries and employee benefits 5,146 4,880 5,048 5.5 1.9 Occupancy and equipment 1,147 987 1,024 16.2 12.0 Professional fees 450 371 428 21.3 5.1 Data processing 711 731 638 (2.7 ) 11.4 OREO related expenses, net 1 1 1 0.0 0.0 Regulatory assessments 142 134 21 6.0 576.2 Insurance and bond premiums 106 116 87 (8.6 ) 21.8 Marketing 64 41 59 56.1 8.5 Other general and administrative 668 606 665 10.2 0.5 Total noninterest expense 8,435 7,867 7,971 7.2 5.8 Income before federal income tax provision 3,269 2,532 3,250 29.1 0.6 Federal income tax provision 622 450 635 38.2 (2.0 ) Net income $ 2,647 $ 2,082 $ 2,615 27.1 % 1.2 % Basic earnings per share $ 0.28 $ 0.22 $ 0.26 Diluted earnings per share $ 0.28 $ 0.21 $ 0.26 Weighted average number of common shares
outstanding9,573,950 9,661,498 9,934,768 Weighted average number of diluted shares
outstanding9,603,493 9,675,567 10,032,979 FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except share data)
(Unaudited)Year Ended December 31 2020 2019 2018 One
Year
ChangeTwo
Year
ChangeInterest income Loans, including fees $ 52,546 $ 54,636 $ 51,127 (3.8 )% 2.8 % Investments available-for-sale 3,173 4,329 4,126 (26.7 ) (23.1 ) Investments held-to-maturity 23 - - n/a n/a Interest-earning deposits with banks 52 293 202 (82.3 ) (74.3 ) Dividends on FHLB Stock 320 362 458 (11.6 ) (30.1 ) Total interest income 56,114 59,620 55,913 (5.9 ) 0.4 Interest expense Deposits 14,005 17,996 11,218 (22.2 ) 24.8 FHLB advances 1,640 2,716 3,520 (39.6 ) (53.4 ) Total interest expense 15,645 20,712 14,738 (24.5 ) 6.2 Net interest income 40,469 38,908 41,175 4.0 (1.7 ) Provision (recapture of provision) for loan losses 1,900 (300 ) (4,000 ) (733.3 ) (147.5 ) Net interest income after provision
(recapture of provision) for loan losses38,569 39,208 45,175 (1.6 ) (14.6 ) Noninterest income Net gain (loss) on sale of investments 86 151 (20 ) (43.0 ) (530.0 ) BOLI 982 994 814 (1.2 ) 20.6 Wealth management revenue 663 879 611 (24.6 ) 8.5 Deposit accounts related fees 755 733 681 3.0 10.9 Loan related fees 1,947 1,344 768 44.9 153.5 Other 9 40 24 (77.5 ) (62.5 ) Total noninterest income 4,442 4,141 2,878 7.3 54.3 Noninterest expense Salaries and employee benefits 20,039 19,595 19,302 2.3 3.8 Occupancy and equipment 4,237 3,712 3,283 14.1 29.1 Professional fees 1,707 1,690 1,538 1.0 11.0 Data processing 2,822 2,031 1,392 38.9 102.7 OREO related expenses, net 9 34 7 (73.5 ) 28.6 Regulatory assessments 547 307 502 78.2 9.0 Insurance and bond premiums 445 375 443 18.7 0.5 Marketing 197 339 344 (41.9 ) (42.7 ) Other general and administrative 2,510 2,335 2,650 7.5 (5.3 ) Total noninterest expense 32,513 30,418 29,461 6.9 10.4 Income before federal income tax provision 10,498 12,931 18,592 (18.8 ) (43.5 ) Federal income tax provision 1,942 2,562 3,693 (24.2 ) (47.4 ) Net income $ 8,556 $ 10,369 $ 14,899 (17.5 )% (42.6 )% Basic earnings per share $ 0.88 $ 1.04 $ 1.44 Diluted earnings per share $ 0.88 $ 1.03 $ 1.43 Weighted average number of common
shares outstanding9,734,493 9,976,056 10,306,835 Weighted average number of diluted
shares outstanding9,758,644 10,075,906 10,424,187 The following table presents a breakdown of the loan portfolio (unaudited):
December 31, 2020 September 30, 2020 December 31, 2019 Amount Percent Amount Percent Amount Percent (Dollars in thousands) Commercial real estate: Residential: Micro-unit apartments $ 11,366 1.0 % $ 11,422 1.0 % $ 13,809 1.2 % Other multifamily 125,328 11.2 131,197 11.4 159,106 14.2 Total multifamily residential 136,694 12.2 142,619 12.4 172,915 15.4 Non-residential: Office 84,311 7.5 81,566 7.1 100,744 9.0 Retail 114,117 10.2 121,338 10.6 133,094 11.8 Mobile home park 28,094 2.5 25,510 2.2 26,099 2.3 Hotel / motel 69,304 6.2 69,157 6.0 42,971 3.8 Nursing Home 12,868 1.2 12,868 1.1 11,831 1.1 Warehouse 17,484 1.6 17,512 1.5 17,595 1.6 Storage 33,671 3.0 36,093 3.1 37,190 3.3 Other non-residential 25,416 2.3 25,724 2.3 25,628 2.3 Total non-residential 385,265 34.5 389,768 33.9 395,152 35.2 Construction/land: One-to-four family residential 33,396 3.0 45,231 4.0 44,491 4.0 Multifamily 51,215 4.6 47,547 4.1 40,954 3.6 Commercial 5,783 0.5 5,475 0.5 19,550 1.7 Land development 1,813 0.2 1,345 0.1 8,670 0.8 Total construction/land 92,207 8.3 99,598 8.7 113,665 10.1 One-to-four family residential: Permanent owner occupied 206,323 18.5 214,250 18.6 210,898 18.8 Permanent non-owner occupied 175,637 15.7 177,621 15.4 161,630 14.4 Total one-to-four family residential 381,960 34.2 391,871 34.0 372,528 33.2 Business Aircraft 10,811 0.9 11,735 1.0 14,012 1.3 Small Business Administration ("SBA") 928 0.1 819 0.1 362 0.0 Paycheck Protection Plan ("PPP") 41,251 3.7 52,045 4.5 - 0.0 Other business 27,673 2.5 21,181 1.8 23,405 2.1 Total business 80,663 7.2 85,780 7.4 37,779 3.4 Consumer Classic/collectible auto 29,359 2.6 27,784 2.4 18,454 1.7 Other consumer 11,262 1.0 13,061 1.2 11,745 1.0 Total consumer 40,621 3.6 40,845 3.6 30,199 2.7 Total loans 1,117,410 100.0 % 1,150,481 100.0 % 1,122,238 100.0 % Less: Deferred loan fees, net 1,654 1,929 558 ALLL 15,174 14,568 13,218 Loans receivable, net $ 1,100,582 $ 1,133,984 $ 1,108,462 Concentrations of credit: (1) Construction loans as % of total capital 61.6 % 68.4 % 81.9 % Total non-owner occupied commercial
real estate as % of total capital390.1 % 407.1 % 449.7 % (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 Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, 2020 2020 2020 2020 2019 (Dollars in thousands, except per share data) Performance Ratios: (1) Return on assets 0.77 % 0.60 % 0.63 % 0.51 % 0.79 % Return on equity 6.76 5.34 5.59 4.30 6.64 Dividend payout ratio 35.71 45.45 45.45 58.82 34.62 Equity-to-assets ratio 11.26 11.34 10.86 11.50 11.65 Tangible equity ratio (2) 11.15 11.22 10.74 11.38 11.53 Net interest margin 3.29 3.07 3.12 3.11 3.09 Average interest-earning assets to average
interest-bearing liabilities116.42 116.08 115.96 113.78 113.50 Efficiency ratio 68.55 70.88 73.18 77.60 71.04 Noninterest expense as a percent of average
total assets2.46 2.26 2.33 2.51 2.40 Book value per common share $ 16.05 $ 15.62 $ 15.32 $ 15.03 $ 15.25 Tangible book value per share 15.88 15.44 15.14 14.85 15.07 Capital Ratios: (3) Tier 1 leverage ratio 10.29 % 10.03 % 10.02 % 10.25 % 10.27 % Common equity tier 1 capital ratio 14.32 14.01 13.70 13.42 13.13 Tier 1 capital ratio 14.32 14.01 13.70 13.42 13.13 Total capital ratio 15.57 15.26 14.95 14.67 14.38 Asset Quality Ratios: Nonperforming loans as a percent of total loans 0.19 % 0.18 % 0.19 % 0.20 % 0.01 % Nonperforming assets as a percent of total assets 0.18 0.19 0.19 0.20 0.04 ALLL as a percent of total loans 1.36 1.27 1.20 1.22 1.18 Net (recoveries) charge-offs to average loans
receivable, net(0.00 ) (0.00 ) (0.00 ) (0.00 ) (0.01 ) Allowance for Loan Losses: ALLL, beginning of the quarter $ 14,568 $ 13,836 $ 13,530 $ 13,218 $ 13,161 Provision (Recapture of provision) 600 700 300 300 - Charge-offs (2 ) - - - - Recoveries 8 32 6 12 57 ALLL, end of the quarter $ 15,174 $ 14,568 $ 13,836 $ 13,530 $ 13,218 (1) Performance ratios are calculated on an annualized basis.
(2) Tangible equity ratio and tangible book value per share are non-GAAP financial measures. Refer to Non-GAAP Financial Measures at the end of this press release for a reconciliation to the nearest GAAP equivalents.
(3) Capital ratios are for First Financial Northwest Bank only.FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures (continued)
(Unaudited)At or For the Quarter Ended Dec 31, Sep 30, Jun 30, Mar 31, Dec 31, 2020 2020 2020 2020 2019 (Dollars in thousands) Yields and Costs: (1) Yield on loans 4.61 % 4.49 % 4.72 % 4.94 % 5.05 % Yield on investments available-for-sale 2.21 2.32 2.41 2.72 2.85 Yield on investments held-to-maturity 0.99 0.99 1.52 0.00 0.00 Yield on interest-earning deposits 0.11 0.10 0.10 1.18 1.61 Yield on FHLB stock 4.99 4.95 4.84 4.62 4.84 Yield on interest-earning assets 4.26 % 4.16 % 4.37 % 4.67 % 4.78 % Cost of interest-bearing deposits 1.12 % 1.27 % 1.49 % 1.81 % 1.94 % Cost of borrowings 1.40 1.28 1.08 1.48 1.66 Cost of interest-bearing liabilities 1.15 % 1.27 % 1.44 % 1.77 % 1.91 % Cost of total deposits 1.03 % 1.18 % 1.38 % 1.72 % 1.84 % Cost of funds 1.07 1.19 1.34 1.69 1.82 Average Balances: Loans $ 1,126,554 $ 1,137,742 $ 1,122,913 $ 1,096,091 $ 1,087,558 Investments available-for-sale 127,456 128,885 133,038 135,765 138,331 Investments held-to-maturity 2,410 2,399 2,378 2,061 - Interest-earning deposits 26,092 32,701 30,989 10,555 11,572 FHLB stock 6,459 6,592 6,736 6,615 5,897 Total interest-earning assets $ 1,288,971 $ 1,308,319 $ 1,296,054 $ 1,251,087 $ 1,243,358 Interest-bearing deposits $ 985,945 $ 1,002,518 $ 989,549 $ 970,062 $ 985,532 Borrowings 121,218 124,543 128,154 127,707 109,895 Total interest-bearing liabilities 1,107,163 1,127,061 1,117,703 1,097,769 1,095,427 Noninterest-bearing deposits 83,719 81,694 82,750 53,199 50,951 Total deposits and borrowings $ 1,190,882 $ 1,208,755 $ 1,200,453 $ 1,150,968 $ 1,146,378 Average assets $ 1,366,061 $ 1,383,736 $ 1,371,269 $ 1,324,845 $ 1,317,586 Average stockholders' equity 155,765 154,988 154,115 157,492 156,147 (1) Yields and costs are annualized.
FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures (continued)
(Unaudited)At or For the Year Ended December 31, 2020 2019 2018 2017 2016 (Dollars in thousands, except per share data) Performance Ratios: Return on assets 0.63 % 0.80 % 1.21 % 0.76 % 0.88 % Return on equity 5.50 6.73 9.86 5.94 5.55 Dividend payout ratio 45.45 33.65 21.53 32.93 32.02 Equity-to-assets 11.26 11.65 12.28 11.79 13.31 Tangible equity ratio (1) 11.15 11.53 12.13 11.63 13.31 Net interest margin 3.15 3.19 3.56 3.60 3.60 Average interest-earning assets to average
interest-bearing liabilities115.62 113.44 114.28 114.07 117.11 Efficiency ratio 72.39 70.66 66.88 67.31 62.27 Noninterest expense as a percent of average
total assets2.39 2.35 2.40 2.42 2.27 Book value per common share $ 16.05 $ 15.25 $ 14.35 $ 13.27 $ 12.63 Tangible book value per share (1) 15.88 15.07 14.17 13.07 12.63 Capital Ratios: (2) Tier 1 leverage ratio 10.29 % 10.27 % 10.37 % 10.20 % 11.17 % Common equity tier 1 capital ratio 14.32 13.13 13.43 12.52 14.38 Tier 1 capital ratio 14.32 13.13 13.43 12.52 14.38 Total capital ratio 15.57 14.38 14.68 13.77 15.63 Asset Quality Ratios: Nonperforming loans as a percent of total loans,
net of undisbursed funds0.19 % 0.01 % 0.07 % 0.02 % 0.10 % Nonperforming assets as a percent of total assets 0.18 0.04 0.10 0.05 0.31 ALLL as a percent of total loans, net of
undisbursed funds1.36 1.18 1.29 1.28 1.32 Net charge-offs (recoveries) to average loans
receivable, net(0.00 ) (0.02 ) (0.45 ) (0.27 ) (0.02 ) Allowance for Loan Losses: ALLL, beginning of the year $ 13,218 $ 13,347 $ 12,882 $ 10,951 $ 9,463 Provision (recapture of provision) 1,900 (300 ) (4,000 ) (400 ) 1,300 Charge-offs (2 ) - - - (83 ) Recoveries 58 171 4,465 2,331 271 ALLL, end of the year $ 15,174 $ 13,218 $ 13,347 $ 12,882 $ 10,951 (1) Tangible equity ratio and tangible book value per share are non-GAAP financial measures. Refer to Non-GAAP Financial Measures at the end of this press release for a reconciliation to the nearest GAAP equivalents.
(2) Capital ratios are for First Financial Northwest Bank only.FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Key Financial Measures (continued)
(Unaudited)At or For the Year Ended December 31, 2020 2019 2018 2017 2016 (Dollars in thousands) Yields and Costs: Yield on loans 4.69 % 5.15 % 5.13 % 4.96 % 4.99 % Yield on investments available-for-sale 2.42 3.11 2.92 2.61 2.31 Yield on investments held-to-maturity 0.99 0.00 0.00 0.00 0.00 Yield on interest-earning deposits 0.21 2.15 1.74 1.07 0.52 Yield on FHLB stock 4.85 5.42 5.24 3.32 2.62 Yield on interest-earning assets 4.36 % 4.88 % 4.83 % 4.57 % 4.39 % Cost of deposits 1.42 % 1.90 % 1.35 % 1.04 % 0.94 % Cost of borrowings 1.31 2.09 1.92 1.30 0.86 Cost of interest-bearing liabilities 1.41 % 1.92 % 1.46 % 1.10 % 0.92 % Cost of total deposits 1.32 % 1.81 % 1.28 % 0.99 % 0.90 % Cost of funds 1.32 1.84 1.39 1.05 0.89 Average Balances: Loans $ 1,120,889 $ 1,061,367 $ 995,810 $ 878,449 $ 765,948 Investments available-for-sale 131,272 139,354 141,100 134,105 132,372 Investments held-to-maturity 2,312 - - - - Interest-earning deposits 25,108 13,634 11,628 22,194 45,125 FHLB stock 6,600 6,684 8,748 8,914 7,714 Total interest-earning assets $ 1,286,181 $ 1,221,039 $ 1,157,286 $ 1,043,662 $ 951,159 Deposits $ 987,069 $ 946,484 $ 828,965 $ 722,666 $ 648,324 Borrowings 125,392 129,899 183,667 192,227 163,893 Total interest-bearing liabilities 1,112,461 1,076,383 1,012,632 914,893 812,217 Noninterest-bearing deposits 75,388 48,434 49,461 39,127 27,596 Total deposits and borrowings $ 1,187,849 $ 1,124,817 $ 1,062,093 $ 954,020 $ 839,813 Average assets $ 1,361,604 $ 1,294,164 $ 1,227,396 $ 1,108,656 $ 1,010,243 Average stockholders' equity 155,587 154,092 151,145 142,647 160,192 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: pre-tax, pre-provision income; tangible assets; tangible book value per share; tangible equity to tangible assets ratio; and ALLL as a percent of total loans excluding PPP loans. 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 certain items 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 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 (Dollars in thousands, except per share data) Tangible equity to tangible assets and tangible book value per share:
Total stockholders' equity (GAAP) $ 156,302 $ 154,778 $ 153,976 $ 153,092 $ 156,319 Less: Goodwill 889 889 889 889 889 Core deposit intangible 824 860 896 932 968 Tangible equity (Non-GAAP) $ 154,589 $ 153,029 $ 152,191 $ 151,271 $ 154,462 Total assets (GAAP) 1,387,669 1,365,469 1,418,355 1,331,213 1,341,885 Less: Goodwill 889 889 889 889 889 Core deposit intangible 824 860 896 932 968 Tangible assets (Non-GAAP) $ 1,385,956 $ 1,363,720 $ 1,416,570 $ 1,329,392 $ 1,340,028 Common shares outstanding
at period end9,736,875 9,911,607 10,048,961 10,184,411 10,252,953 Equity to assets ratio 11.26 % 11.34 % 10.86 % 11.50 % 11.65 % Tangible equity ratio 11.15 11.22 10.74 11.38 11.53 Book value per share $ 16.05 $ 15.62 $ 15.32 $ 15.03 $ 15.25 Tangible book value per share 15.88 15.44 15.14 14.85 15.07 ALLL on loans to total loans receivable, excluding PPP loans:
Allowance for loan losses $ 15,174 $ 14,568 $ 13,836 $ 13,530 $ 13,218 Total loans (GAAP) $ 1,117,410 $ 1,150,481 $ 1,154,132 $ 1,105,959 $ 1,122,238 Less: PPP loans 41,251 52,045 51,661 - - Total loans excluding PPP loans
(Non-GAAP)$ 1,076,159 $ 1,098,436 $ 1,102,471 1,105,959 1,122,238 ALLL as a percent of total loans 1.36 % 1.27 % 1.20 % 1.22 % 1.18 % ALLL as a percent of total loans
excluding PPP loans1.41 % 1.33 % 1.25 1.22 1.18 Year Ended December 31, 2020 2019 2018 2017 2016 (Dollars in thousands, except per share data) Pre-tax, pre-provision income:
Net income (GAAP) $ 8,556 $ 10,369 $ 14,899 $ 8,479 $ 8,892 Plus: Federal income tax provision 1,942 2,562 3,693 4,942 3,712 Provision (recapture of provision)
for loan losses1,900 (300 ) (4,000 ) (400 ) 1,300 Pre-tax, pre-provision income
(Non-GAAP)$ 12,398 $ 12,631 $ 14,592 $ 13,021 $ 13,904 Tangible equity to tangible assets and tangible book value per share:
Total stockholders' equity (GAAP) $ 156,302 $ 156,319 $ 153,738 $ 142,634 $ 138,125 Less: Goodwill 889 889 889 889 - Core deposit intangible 824 968 1,116 1,266 - Tangible equity (Non-GAAP) $ 154,589 $ 154,462 $ 151,733 $ 140,479 $ 138,125 Total assets (GAAP) 1,387,669 1,341,885 1,252,424 1,210,229 1,037,584 Less: Goodwill 889 889 889 889 - Core deposit intangible 824 968 1,116 1,266 - Tangible assets (Non-GAAP) $ 1,385,956 $ 1,340,028 $ 1,250,419 $ 1,208,074 $ 1,037,584 Common shares outstanding
at period end9,736,875 10,252,953 10,710,656 10,748,437 10,938,251 Equity to assets ratio 11.26 % 11.65 % 12.28 % 11.79 % 13.31 % Tangible equity ratio 11.15 11.53 12.13 11.63 13.31 Book value per share $ 16.05 $ 15.25 $ 14.35 $ 13.27 $ 12.63 Tangible book value per share 15.88 15.07 14.17 13.07 12.63 ALLL on loans to total loans receivable, excluding PPP loans:
Allowance for loan losses $ 15,174 $ 13,218 $ 13,347 $ 12,882 $ 10,951 Total loans (GAAP) $ 1,117,410 $ 1,122,238 $ 1,037,429 $ 1,002,694 $ 828,161 Less: PPP loans 41,251 - - - - Total loans excluding PPP loans
(Non-GAAP)$ 1,076,159 $ 1,122,238 $ 1,037,429 $ 1,002,694 $ 828,161 ALLL as a percent of total loans 1.36 % 1.18 % 1.29 % 1.28 % 1.32 % ALLL as a percent of total loans
excluding PPP loans1.41 % 1.18 % 1.29 1.28 1.32 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