First Financial Northwest: EPS Beats Expectations in 2024!

Ladies and gentlemen, buckle up! We've got a wild ride ahead as we dive into the full-year 2024 earnings report for First Financial Northwest, Inc. (FFNW). This bank has been through the wringer, but they've managed to pull off an EPS beat that's got investors cheering. Let's break it down!



First things first, the numbers. First Financial Northwest reported a net income of $1.1 million, or $0.12 per diluted share, for the year ended December 31, 2024. That's a far cry from the $6.3 million, or $0.69 per diluted share, they reported in 2023. But here's the kicker: despite the year-over-year decline, they managed to beat expectations in the fourth quarter with a net income of $1.2 million, or $0.13 per diluted share. That's a turnaround that's got the market taking notice!

So, what's the story behind this earnings beat? It all comes down to a $1.3 million recapture of provision for credit losses in the fourth quarter. You see, in the third quarter, they took a $1.6 million hit due to two participation loans totaling $6.0 million. These loans were secured by short-term rehabilitation and assisted living facilities, and they were classified as "substandard" due to a decline in demand post-COVID. But in the fourth quarter, one of those loans was paid in full, and the borrower paid down the balance on the other loan using proceeds from the sale of another property. That's a win-win!

But the story doesn't stop there. First Financial Northwest is also in the midst of a strategic acquisition by Global Federal Credit Union. This pending transaction is a game-changer, and it's got the market buzzing. The company is working closely with Global to prepare for the closing of the pending transaction and to ensure a smooth transition for its customers and employees. This acquisition is expected to provide a solution to the challenges of the current interest rate environment and competitive pressures, potentially benefiting shareholders through the transaction.

Now, let's talk about the challenges they faced. The provision for credit losses was a big one, but they also had to deal with higher forecasted unemployment rates and increased construction and land development loan balances. Additionally, they had to restate their quarterly report for the second quarter of 2024 due to a material weakness in the design of certain internal controls. But they tackled these challenges head-on, and they're coming out stronger for it.



So, what's the takeaway? First Financial Northwest has shown that they can weather the storm and come out on top. They've got a strong capital position, with Tier 1 leverage at 11.2% and total capital at 16.7%, well above regulatory requirements. They've got a strong credit quality, with only $842,000 in nonaccrual loans, representing 0.07% of their $1.16 billion total loan portfolio. And they've got a strategic acquisition in the works that could be a game-changer.

So, do you own this stock? If not, why not? This is a company that's shown resilience in the face of adversity, and they're poised for growth in the coming year. Don't miss out on this opportunity to get in on the ground floor of what could be a big winner. BOO-YAH!