First Financial Northwest (FFNW) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $1.6 million ($0.17 per diluted share), up from $1.5 million in Q2 2023 and a net loss of $1.1 million in Q1 2024, driven by lower noninterest expense and successful loan modifications.

• For the six months ended June 30, 2024, net income was $480,000 ($0.05 per diluted share), down from $3.6 million ($0.39) in the prior year period, mainly due to lower net interest income and higher noninterest expense.

• The company is in the process of selling substantially all assets and liabilities to Global Federal Credit Union, with shareholder approval received but final regulatory approvals pending.

• Q2 results benefited from modification/refinance of over $130 million in loans related to the pending sale.

• Q1 earnings were negatively impacted by a $1.2 million annuity purchase and $767,000 in transaction expenses; Q2 included $284,000 in transaction expenses.

Financial highlights

• Total assets decreased 3.8% to $1.45 billion at June 30, 2024, from $1.51 billion at December 31, 2023, mainly due to declines in loans and investments.

• Net loans receivable fell 3.5% to $1.14 billion, with decreases across all loan categories except one-to-four family residential.

• Deposits declined 8.9% to $1.09 billion, primarily from a reduction in brokered and money market deposits.

• Net interest income for Q2 2024 was $9.0 million, down $1.3 million year-over-year; net interest margin improved to 2.66% from 2.55% in Q1 2024 but down from 2.84% in Q2 2023.

• Noninterest expense dropped to $7.9 million in Q2 2024, mainly due to lower salaries and transaction costs.

Outlook and guidance

• The company expects to complete the asset sale to Global Federal Credit Union, subject to final regulatory approvals, and then proceed with voluntary liquidation and distribution of net assets to shareholders.

• Management expects continued focus on completing the sale and managing related risks, with sufficient liquidity and capital to meet obligations for at least the next 12 months.

• Forward-looking statements highlight risks from transaction delays, regulatory approvals, and economic conditions.