First Financial Northwest, Inc. reported a net loss of $608,000 for the three months ended September 30, 2024, compared to a net income of $1.5 million for the same period in 2023. This decline in profitability is attributed to a $1.2 million decrease in net interest income and a $1.9 million increase in the provision for credit losses. For the nine months ended September 30, 2024, the company recorded a net loss of $128,000, a significant drop from a net income of $5.1 million in the prior year.
Total interest income for the three months ended September 30, 2024, was $19.4 million, down from $19.7 million in 2023. Net interest income decreased to $8.5 million from $9.7 million year-over-year, reflecting a net interest margin decline to 2.46% from 2.69%. The average yield on loans increased to 5.86%, but the average balance of loans receivable fell by $40 million to $1.13 billion, impacting overall interest income.
The provision for credit losses for the three months ended September 30, 2024, was $1.6 million, primarily related to two participation loans classified as “substandard.” The allowance for credit losses increased to $16.3 million, representing 1.42% of total loans, up from 1.29% at the end of 2023.
Total assets decreased by $54 million to $1.45 billion as of September 30, 2024. Cash on hand and in banks increased slightly to $8.4 million, while interest-earning deposits surged to $72.9 million, a 229.2% increase from the previous period. Investments available-for-sale decreased by 24.7% to $156.6 million.
Total loans receivable, net, fell by $49.8 million to $1.13 billion, with notable decreases in commercial real estate and business loans. Total deposits also decreased by $26.8 million to $1.17 billion, with a significant increase in retail certificates of deposit, which rose by 25.3% to $447.5 million.
The company declared and paid a cash dividend of $0.26 per share, totaling $2.4 million, down from $0.39 per share in the previous year. Stockholders' equity decreased to $160.2 million from $161.7 million at the end of 2023.
Strategically, First Financial Northwest is managing interest rate risk through interest rate swaps, with a total notional amount of $100 million. The company continues to monitor its interest rate sensitivity and has implemented strategies to mitigate risks associated with fluctuating interest rates.
About First Financial Northwest, Inc.
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