Company Quick10K Filing
Quick10K
First Financial Northwest
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$16.42 10 $172
10-Q 2019-03-31 Quarter: 2019-03-31
10-K 2018-12-31 Annual: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-K 2017-12-31 Annual: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-K 2016-12-31 Annual: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-K 2015-12-31 Annual: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-Q 2015-03-31 Quarter: 2015-03-31
10-K 2014-12-31 Annual: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-Q 2014-03-31 Quarter: 2014-03-31
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-06-22 Officers, Exhibits
8-K 2019-06-12 Officers, Shareholder Vote, Regulation FD, Exhibits
8-K 2019-05-21 Regulation FD, Exhibits
8-K 2019-05-06 Regulation FD, Exhibits
8-K 2019-04-25 Earnings, Exhibits
8-K 2019-04-01 Officers, Amend Bylaw, Exhibits
8-K 2019-01-29 Regulation FD, Exhibits
8-K 2019-01-24 Earnings, Exhibits
8-K 2019-01-24 Earnings, Exhibits
8-K 2018-12-31 Officers, Exhibits
8-K 2018-12-20 Officers, Exhibits
8-K 2018-11-07 Regulation FD, Exhibits
8-K 2018-10-25 Other Events, Exhibits
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-08-22 Regulation FD, Exhibits
8-K 2018-07-30 Regulation FD, Exhibits
8-K 2018-07-26 Earnings, Exhibits
8-K 2018-06-13 Shareholder Vote, Regulation FD, Exhibits
8-K 2018-05-14 Regulation FD, Exhibits
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-03-05 Regulation FD, Exhibits
8-K 2018-01-31 Regulation FD, Exhibits
8-K 2018-01-25 Earnings, Exhibits
AEIS Advanced Energy Industries 1,960
BANF Bancfirst 1,840
ALEX Alexander & Baldwin 1,720
NBR Nabors Industries 1,410
BEDU Bright Scholar Education Holdings 1,390
ETM Entercom Communications 930
TCPC Blackrock Tcp Capital 861
BBDC Barings Bdc 509
VIVE Viveve Medical 26
MATR Mattersight 0
FFNW 2019-03-31
Part 1. Financial Information
Item 1. Financial Statements
Note 1 - Description of Business
Note 2 - Basis of Presentation
Note 3 - Recently Issued Accounting Pronouncements
Note 4 - Investments
Note 5 - Loans Receivable
Note 6 - Other Real Estate Owned
Note 7 - Fair Value
Note 8 - Leases
Note 9 - Derivatives
Note 10 - Stock-Based Compensation
Note 11 - Earnings per Share
Note 12 - Branch Acquisition
Note 13 - Revenue Recognition
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits and Financial Statement Schedules
EX-31.1 ffnw-2019331x10qexx311.htm
EX-31.2 ffnw-2019331x10qexx312.htm
EX-32 ffnw-2019331x10qexx32.htm

First Financial Northwest Earnings 2019-03-31

FFNW 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

10-Q 1 ffnw-2019331x10q.htm 10-Q Exhibit

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended March 31, 2019
 
 
or
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
           For the transition period from ____________ to ____________
 
Commission File Number: 001-33652
 
 
FIRST FINANCIAL NORTHWEST, INC.
(Exact name of registrant as specified in its charter)
 
Washington
 
26-0610707
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification Number)
 
 
 
201 Wells Avenue South, Renton, Washington
 
98057
(Address of principal executive offices)
 
(Zip Code)
 
 
 
Registrant’s telephone number, including area code:
 
(425) 255-4400
 
 
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    

YES    X   NO      

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

YES    X   NO      

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer _____
Accelerated filer    X    
  Non-accelerated filer _____
Smaller reporting company _____
Emerging growth company _____
 



If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. _____

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES       NO   X   

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Common Stock, $0.01 par value per share
 
FFNW
 
The Nasdaq Stock Market, LLC

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: as of May 7, 2019, 10,375,325 shares of the issuer’s common stock, $0.01 par value per share, were outstanding.



FIRST FINANCIAL NORTHWEST, INC.
FORM 10-Q
TABLE OF CONTENTS
                                                                    
 
 
Page
PART I - FINANCIAL INFORMATION
 
 
Item 1.
Financial Statements
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
 
Item 4.
Controls and Procedures
   PART II - OTHER INFORMATION
 
 
Item 1.
Legal Proceedings
 
Item 1A.
Risk Factors
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
 
Item 3.
Defaults upon Senior Securities
 
Item 4.
Mine Safety Disclosures
 
Item 5.
Other Information
 
Item 6.
Exhibits
SIGNATURES
 
 


2

FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except share data)


Part 1. Financial Information

Item 1. Financial Statements
 
March 31, 2019
 
December 31, 2018
Assets
 
(Unaudited)
 
 
Cash on hand and in banks
$
9,366

 
$
8,122

Interest-earning deposits with banks
14,596

 
8,888

Investments available-for-sale, at fair value
138,658

 
142,170

Loans receivable, net of allowance of $13,808 and $13,347
1,051,711

 
1,022,904

Federal Home Loan Bank ("FHLB") stock, at cost
8,041

 
7,310

Accrued interest receivable
4,861

 
4,068

Deferred tax assets, net
1,728

 
1,844

Other real estate owned ("OREO")
454

 
483

Premises and equipment, net
21,370

 
21,331

Bank owned life insurance ("BOLI"), net
30,162

 
29,841

Prepaid expenses and other assets
4,947

 
3,458

Goodwill
889

 
889

Core deposit intangible
1,079

 
1,116

Total assets
$
1,287,862


$
1,252,424

 
 
 
 
Liabilities and Stockholders' Equity
 

 
 
Deposits:
 
 
 
Noninterest-bearing deposits
$
46,026

 
$
46,108

Interest-bearing deposits
909,246

 
892,924

Total deposits
955,272

 
939,032

FHLB advances
163,500

 
146,500

Advance payments from borrowers for taxes and insurance
5,374

 
2,933

Accrued interest payable
478

 
478

Other liabilities
11,554

 
9,743

Total liabilities
1,136,178

 
1,098,686

 
 

 
 
Commitments and contingencies


 


Stockholders' Equity
 

 
 
Preferred stock, $0.01 par value; authorized 10,000,000 shares; no shares
issued or outstanding

 

Common stock, $0.01 par value; authorized 90,000,000 shares; issued and
outstanding 10,457,625 shares at March 31, 2019, and 10,710,656
shares at December 31, 2018
104

 
107

Additional paid-in capital
89,800

 
93,773

Retained earnings
67,568

 
66,343

Accumulated other comprehensive loss, net of tax
(1,838
)
 
(2,253
)
Unearned Employee Stock Ownership Plan ("ESOP") shares
(3,950
)
 
(4,232
)
Total stockholders' equity
151,684

 
153,738

Total liabilities and stockholders' equity
$
1,287,862

 
$
1,252,424


See accompanying selected notes to consolidated financial statements.

3


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Income Statements
(Dollars in thousands, except per share data)
(Unaudited)

 
Three Months Ended March 31,
 
2019
 
2018
Interest income
 
 
 
Loans, including fees
$
13,281

 
$
13,042

Investments available-for-sale
1,159

 
929

Interest-earning deposits with banks
40

 
38

Dividends on FHLB stock
91

 
104

Total interest income
14,571

 
14,113

Interest expense
 

 
 

Deposits
3,822

 
2,276

FHLB advances and other borrowings
897

 
853

Total interest expense
4,719

 
3,129

Net interest income
9,852

 
10,984

Provision (recapture of provision) for loan losses
400

 
(4,000
)
Net interest income after provision (recapture of provision) for loan losses
9,452

 
14,984

Noninterest income
 

 
 

Net loss on sale of investments
(8
)
 

BOLI income
269

 
249

Wealth management revenue
196

 
99

Deposit related fees
171

 
161

Loan related fees
63

 
134

Other
9

 
3

Total noninterest income
700

 
646

Noninterest expense
 

 
 

Salaries and employee benefits
5,000

 
4,662

Occupancy and equipment
866

 
769

Professional fees
496

 
328

Data processing
518

 
324

OREO related expenses, net
31

 
1

Regulatory assessments
137

 
155

Insurance and bond premiums
105

 
106

Marketing
86

 
107

Other general and administrative
470

 
575

Total noninterest expense
7,709

 
7,027

Income before federal income tax provision
2,443

 
8,603

Federal income tax provision
498

 
1,761

Net income
$
1,945

 
$
6,842

Basic earnings per common share
$
0.19

 
$
0.67

Diluted earnings per common share
$
0.19

 
$
0.66

Basic weighted average number of common shares outstanding
10,118,286

 
10,210,828

Diluted weighted average number of common shares outstanding
10,220,900

 
10,336,566

See accompanying selected notes to consolidated financial statements.

4


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(In thousands)
(Unaudited)


 
Three Months Ended March 31,
 
2019
 
2018
Net income
$
1,945

 
$
6,842

Other comprehensive income, before tax:
 
 
 
Unrealized holding gain (loss) on investments available-for-sale
976

 
(1,473
)
Tax (provision) benefit
(205
)
 
309

Reclassification adjustment for net losses realized in income
8

 

Tax provision
(1
)
 

(Loss) gain on cash flow hedge
(460
)
 
663

Tax benefit (provision)
97

 
(139
)
Other comprehensive income (loss), net of tax
415

 
(640
)
Total comprehensive income
$
2,360

 
$
6,202


See accompanying selected notes to consolidated financial statements.



5


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity
(Dollars in thousands except share data)
(Unaudited)

 
Three Months Ended March 31, 2018
 
Shares
 
Common Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Accumulated Other Comprehensive Loss,
 net of tax
 
Unearned
ESOP
Shares
 
Total Stockholders’ Equity
Balances at December 31, 2017
10,748,437

 
$
107

 
$
94,173

 
$
54,642

 
$
(928
)
 
$
(5,360
)
 
$
142,634

Net income

 

 

 
6,842

 

 

 
6,842

Other comprehensive (loss) income

 

 

 

 
(640
)
 

 
(640
)
Exercise of stock options
10,000

 

 
98

 

 

 

 
98

Issuance of common stock - restricted stock awards, net
20,987

 
1

 

 

 

 

 
1

Compensation related to stock options and restricted stock awards

 

 
83

 

 

 

 
83

Allocation of 28,213 ESOP shares

 

 
173

 

 

 
281

 
454

Cash dividend declared and paid ($0.07 per share)

 

 

 
(717
)
 

 

 
(717
)
Balances at March 31, 2018
10,779,424

 
$
108

 
$
94,527

 
$
60,767

 
$
(1,568
)
 
$
(5,079
)
 
$
148,755

 
Three Months Ended March 31, 2019
 
Shares
 
Common 
Stock
 
Additional 
Paid-in
Capital
 
Retained
Earnings
 
Accumulated Other Comprehensive Loss,  net of tax
 
Unearned
ESOP
Shares
 
Total
Stockholders' Equity
Balances at December 31, 2018
10,710,656

 
$
107

 
$
93,773

 
$
66,343

 
$
(2,253
)
 
$
(4,232
)
 
$
153,738

Net income

 

 

 
1,945

 

 

 
1,945

Other comprehensive income

 

 

 

 
415

 

 
415

Issuance of common stock - restricted stock awards, net
16,698

 

 
(93
)
 

 

 

 
(93
)
Compensation related to stock options and restricted stock awards

 

 
124

 

 

 

 
124

Allocation of 28,213 ESOP shares

 

 
163

 

 

 
282

 
445

Repurchase and retirement of common stock
(263,800
)
 
(3
)
 
(4,167
)
 

 

 

 
(4,170
)
Canceled common stock - restricted stock awards
(5,929
)
 

 

 

 

 

 

Cash dividend declared and paid ($0.08 per share)

 

 

 
(807
)
 

 

 
(807
)
Beginning balance adjustment from adoption of Topic 842

 

 

 
87

 

 

 
87

Balances at March 31, 2019
10,457,625

 
$
104

 
$
89,800

 
$
67,568

 
$
(1,838
)
 
$
(3,950
)
 
$
151,684


See accompanying selected notes to consolidated financial statements.

6


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
Three Months Ended March 31,
 
2019
 
2018
Cash flows from operating activities:
 
 
 
Net income
$
1,945

 
$
6,842

Adjustments to reconcile net income to net cash provided by
operating activities:
 
 
 
Provision (recapture of provision) for loan losses
400

 
(4,000
)
OREO market value adjustments
29

 

Net amortization of premiums and discounts on investments
193

 
274

Loss on sale of investments available-for-sale
8

 

Depreciation of premises and equipment
427

 
401

Deferred federal income taxes
7

 
19

Allocation of ESOP shares
445

 
454

Stock compensation expense
124

 
84

Increase in cash surrender value of BOLI
(269
)
 
(249
)
Changes in operating assets and liabilities:
 
 
 

(Increase) decrease in prepaid expenses and other assets
(1,912
)
 
2,517

Net increase in advance payments from borrowers for taxes and insurance
2,441

 
1,963

(Increase) decrease in accrued interest receivable
(793
)
 
103

Increase (decrease) in accrued interest payable

 
(56
)
Increase in other liabilities
1,898

 
374

Net cash provided by operating activities
4,943

 
8,726

Cash flows from investing activities:
 

 
 

Proceeds from sales, calls and maturities of investments available-for-sale
2,995

 
2,000

Principal repayments on investments available-for-sale
1,300

 
1,601

Purchases of investments available-for-sale

 
(15,978
)
Net (increase) decrease in loans receivable
(29,207
)
 
1,524

(Purchase) redemption of FHLB stock
(731
)
 
432

Purchase of premises and equipment
(466
)
 
(995
)
Purchase of BOLI
(52
)
 

Net cash used by investing activities
(26,161
)
 
(11,416
)
 
 
 
 
Continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

7


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)

 
 
 
 
 
Three Months Ended March 31,
 
2019
 
2018
Cash flows from financing activities:
 

 
 

Net increase in deposits
$
16,240

 
$
23,727

Advances from the FHLB
71,500

 
140,000

Repayments of advances from the FHLB
(54,500
)
 
(156,000
)
Proceeds from stock options exercises

 
98

Net share settlement of stock awards
(93
)
 

Repurchase and retirement of common stock
(4,170
)
 

Dividends paid
(807
)
 
(717
)
Net cash provided by financing activities
28,170

 
7,108

Net increase in cash and cash equivalents
6,952

 
4,418

Cash and cash equivalents at beginning of period
17,010

 
16,131

Cash and cash equivalents at end of period
$
23,962

 
$
20,549

 
 
 
 
Supplemental disclosures of cash flow information:
 

 
 

Cash paid during the period for:
 

 
 

Interest paid
$
4,719

 
$
3,185

 
 
 
 
Noncash items:
 
 
 

Change in unrealized loss on investments available-for-sale
$
984

 
$
(1,473
)
Change in gain on cash flow hedge
(460
)
 
663


See accompanying selected notes to consolidated financial statements.


8



FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 - Description of Business

First Financial Northwest, Inc. (“First Financial Northwest”), a Washington corporation, was formed on June 1, 2007 for the purpose of becoming the holding company for First Financial Northwest Bank (the “Bank”) in connection with the conversion from a mutual holding company structure to a stock holding company structure completed on October 9, 2007. First Financial Northwest’s business activities generally are limited to passive investment activities and oversight of its investment in First Financial Northwest Bank. Accordingly, the information presented in the consolidated financial statements and accompanying data, relates primarily to First Financial Northwest Bank. First Financial Northwest is a bank holding company, having converted from a savings and loan holding company on March 31, 2015, and as a bank holding company is subject to regulation by the Federal Reserve Bank of San Francisco. First Financial Northwest Bank is regulated by the Federal Deposit Insurance Corporation (“FDIC”) and the Washington State Department of Financial Institutions (“DFI”).

At March 31, 2019, First Financial Northwest Bank operated in eleven locations in Washington with the headquarters and six branch locations in King County and five branch locations in Snohomish County. The Bank’s primary market area consists of King, Snohomish, Pierce and Kitsap counties, Washington. The Bank has received FDIC approval to open an additional branch in Kirkland, Washington, which is expected to open later in 2019.

The Bank is a portfolio lender, originating and purchasing one-to-four family residential, multifamily, commercial real estate, construction/land development, business, and consumer loans. Loans are primarily funded by deposits from the general public, supplemented by borrowings from the Federal Home Loan Bank of Des Moines (“FHLB”) and deposits raised in the national brokered deposit market.

As used throughout this report, the terms “we,” “our,” “us,” or the “Company” refer to First Financial Northwest, Inc. and its consolidated subsidiary First Financial Northwest Bank, unless the context otherwise requires.

Note 2 - Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all of the information and footnotes required by U.S. Generally Accepted Accounting Principles (“GAAP”) for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the SEC (“2018 Form 10-K”). In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the unaudited interim consolidated financial statements in accordance with GAAP have been included. All significant intercompany balances and transactions between the Company and its subsidiaries have been eliminated in consolidation. Operating results for the three months ended March 31, 2019, are not necessarily indicative of the results that may be expected for the year ending December 31, 2019. In preparing the unaudited consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the allowance for loan and lease losses (“ALLL”), the valuation of other real estate owned (“OREO”) and the underlying collateral of impaired loans, deferred tax assets, the right-of-use asset and lease liability on our operating leases, and the fair value of financial instruments.

The Company’s activities are considered to be a single industry segment for financial reporting purposes. The Company is engaged in the business of attracting deposits from the general public and originating and purchasing loans for its portfolio. Substantially all income is derived from a diverse base of commercial, multifamily, and residential real estate loans, consumer lending activities, and investments.

Certain amounts in the unaudited interim consolidated financial statements for prior periods have been reclassified to conform to the current unaudited financial statement presentation with no effect on consolidated net income or stockholders’ equity.



9


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 3 - Recently Issued Accounting Pronouncements

Recent Accounting Pronouncements Adopted in 2019

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842). ASU No. 2016-02 requires lessees to recognize on the balance sheet the assets and liabilities arising from operating leases. In July 2018, FASB issued ASU No. 2018-11, Leases (Topic 842) to address the comparative reporting requirements when this ASU is adopted. In March 2019, FASB issued ASU 2019-01, Leases (Topic 842), Codification Improvements. Under these ASUs, a lessee should recognize a liability to make lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term. A lessee should include payments to be made in an optional period only if the lessee is reasonably certain to exercise an option to extend the lease or not to exercise an option to terminate the lease. For a finance lease, interest payments should be recognized separately from amortization of the right-of-use asset in the statement of comprehensive income. For operating leases, the lease cost should be allocated over the lease term on a generally straight-line basis. The Company adopted this ASU on January 1, 2019 and according to ASU 2018-11, elected to recognize the related cumulative-effect adjustment as an adjustment to the opening balance of retained earnings. Adoption of ASU 2016-02 resulted in the addition of a right-of-use asset and lease related to certain banking offices under noncancelable operating lease agreements. The resulting increase did not to have a material impact on the Company’s consolidated financial statements or regulatory capital ratios. For more information see Note 8 ‑ Leases in this report.

In March 2017, FASB issued ASU No. 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. The ASU shortens the amortization period for certain callable debt securities held at a premium. The Company adopted this ASU during the quarter ended March 31, 2019 with no material impact on the Company's consolidated financial statements.

Recent Accounting Pronouncements

In June 2016, FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326). This ASU replaces the existing incurred loss impairment methodology that recognizes credit losses when a probable loss has been incurred with new methodology where loss estimates are based upon lifetime expected credit losses. The amendments in this ASU require a financial asset that is measured at amortized cost to be presented at the net amount expected to be collected. The income statement would then reflect the measurement of credit losses for newly recognized financial assets as well as changes to the expected credit losses that have taken place during the reporting period. The measurement of expected credit losses will be based on historical information, current conditions, and reasonable and supportable forecasts that impact the collectability of the reported amount. Available‑for‑sale securities will bifurcate the fair value mark and establish an allowance for credit losses through the income statement for the credit portion of that mark. The interest portion will continue to be recognized through accumulated other comprehensive income or loss. The change in allowance recognized as a result of adoption will occur through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the ASU is adopted. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for fiscal years beginning after December 15, 2018. The Company is evaluating our current expected loss methodology of our loan and investment portfolios to identify the necessary modifications in accordance with this standard and expects a change in the processes and procedures to calculate the ALLL, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. A valuation adjustment to our ALLL or investment portfolio that is identified in this process will be reflected as a one-time adjustment in equity rather than earnings. We are in the process of compiling historical and industry data that will be used to calculate expected credit losses on our loan portfolio to ensure we are fully compliant with the ASU at the adoption date and are evaluating the potential impact adoption of this ASU will have on our consolidated financial statements. The Company intends to adopt ASU 2016-13 in the first quarter of 2020, and as a result, we expect our allowance for loan losses to increase. Until our evaluation is complete, however, the magnitude of the increase will not be known.
    
In August 2018, FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820) - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement. The amendments in this ASU remove certain disclosure requirements regarding transfers between Level 1 and Level 2 of the fair value hierarchy and changes in unrealized gains and losses for recurring Level 3 fair value measurements. In addition, the amendments modified and added certain disclosure requirements for Level 3 fair value measurements. This ASU is effective for fiscal years beginning after December 15, 2019, and early adoption is permitted. Entities are permitted to early adopt any removed or modified disclosures and adopt the additional disclosures at the effective date. Adoption of ASU 2018-13 is not expected to have a material impact on the Company’s consolidated financial statements.


10


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 4 - Investments

Investments available-for-sale are summarized as follows at the dates indicated:
 
March 31, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
(In thousands)
Mortgage-backed investments:
 
 
 
 
 
 
 
   Fannie Mae
$
23,967

 
$
89

 
$
(370
)
 
$
23,686

   Freddie Mac
6,310

 
27

 
(18
)
 
6,319

   Ginnie Mae
23,053

 
10

 
(1,050
)
 
22,013

   Other
8,925

 
47

 
(19
)
 
8,953

Municipal bonds
7,619

 
169

 
(21
)
 
7,767

U.S. Government agencies
47,355

 
72

 
(820
)
 
46,607

Corporate bonds
23,491

 
323

 
(501
)
 
23,313

Total
$
140,720

 
$
737

 
$
(2,799
)
 
$
138,658

 
December 31, 2018
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Fair Value
 
(In thousands)
Mortgage-backed investments:
 
 
 
 
 
 
 
   Fannie Mae
$
24,276

 
$
24

 
$
(657
)
 
$
23,643

   Freddie Mac
6,351

 
10

 
(74
)
 
6,287

   Ginnie Mae
23,311

 

 
(1,250
)
 
22,061

   Other
8,983

 
17

 
(21
)
 
8,979

Municipal bonds
10,615

 
49

 
(120
)
 
10,544

U.S. Government agencies
48,190

 
73

 
(825
)
 
47,438

Corporate bonds
23,490

 
399

 
(671
)
 
23,218

Total
$
145,216

 
$
572

 
$
(3,618
)
 
$
142,170

     
The tables below summarize the aggregate fair value and gross unrealized loss by length of time those investment securities have been continuously in an unrealized loss position at the dates indicated:
 
March 31, 2019
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
Fair Value
 
Gross Unrealized
Loss
 
Fair Value
 
Gross Unrealized
Loss
 
Fair Value
 
Gross Unrealized
Loss
 
(In thousands)
Mortgage-backed investments:
 
 
 
 
 
 
 
 
 
 
 
   Fannie Mae
$

 
$

 
$
15,338

 
$
(370
)
 
$
15,338

 
$
(370
)
   Freddie Mac

 

 
3,203

 
(18
)
 
3,203

 
(18
)
   Ginnie Mae

 

 
19,135

 
(1,050
)
 
19,135

 
(1,050
)
   Other
6,008

 
(19
)
 

 

 
6,008

 
(19
)
Municipal bonds

 

 
987

 
(21
)
 
987

 
(21
)
U.S. Government agencies
9,661

 
(114
)
 
30,381

 
(706
)
 
40,042

 
(820
)
Corporate bonds

 

 
6,999

 
(501
)
 
6,999

 
(501
)
Total
$
15,669

 
$
(133
)
 
$
76,043

 
$
(2,666
)
 
$
91,712

 
$
(2,799
)

11


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


 
December 31, 2018
 
Less Than 12 Months
 
12 Months or Longer
 
Total
 
Fair Value
 
Gross Unrealized
Loss
 
Fair Value
 
Gross Unrealized
Loss
 
Fair Value
 
Gross Unrealized
Loss
 
(In thousands)
Mortgage-backed investments:
 
 
 
 
 
 
 
 
 
 
 
   Fannie Mae
$
5,480

 
$
(32
)
 
$
16,721

 
$
(625
)
 
$
22,201

 
$
(657
)
   Freddie Mac
1,994

 
(23
)
 
3,185

 
(51
)
 
5,179

 
(74
)
   Ginnie Mae
2,867

 
(8
)
 
19,194

 
(1,242
)
 
22,061

 
(1,250
)
   Other
6,008

 
(21
)
 

 

 
6,008

 
(21
)
Municipal bonds
4,161

 
(46
)
 
934

 
(74
)
 
5,095

 
(120
)
U.S. Government agencies
5,985

 
(13
)
 
30,779

 
(812
)
 
36,764

 
(825
)
Corporate bonds

 

 
6,828

 
(671
)
 
6,828

 
(671
)
Total
$
26,495

 
$
(143
)
 
$
77,641

 
$
(3,475
)
 
$
104,136

 
$
(3,618
)

On a quarterly basis, management makes an assessment to determine whether there have been any events or economic circumstances to indicate that a security on which there is an unrealized loss is impaired on an other-than-temporary basis. The Company considers many factors including the severity and duration of the impairment, recent events specific to the issuer or industry, and for debt securities, external credit ratings and recent downgrades. Securities on which there is an unrealized loss that is deemed to be an other-than-temporary impairment (“OTTI”) are written down to fair value. If the Company intends to sell a debt security, or it is likely that the Company will be required to sell the debt security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If the Company does not intend to sell the debt security and it is not likely that it will be required to sell the debt security but does not expect to recover the entire amortized cost basis of the debt security, only the portion of the impairment loss representing credit losses would be recognized in earnings. The credit loss on a debt security is measured as the difference between the amortized cost basis and the present value of the cash flows expected to be collected. Projected cash flows are discounted by the original or current effective interest rate depending on the nature of the debt security being measured for potential OTTI. The remaining impairment related to all other factors, the difference between the present value of the cash flows expected to be collected and fair value, is recognized as a charge to other comprehensive income (“OCI”). Impairment losses related to all other factors are presented as separate categories within OCI. At March 31, 2019, and December 31, 2018, the Company had 37 securities and 51 securities in an unrealized loss position, respectively, with 31 of these securities in an unrealized loss position for 12 months or more at both dates. Management does not believe that any individual unrealized loss as of March 31, 2019, or December 31, 2018, represented OTTI. The decline in fair market value of these securities was generally due to changes in interest rates and changes in market-desired spreads subsequent to their purchase. Management also reviewed the financial condition of the entities issuing municipal or corporate bonds at March 31, 2019, and December 31, 2018, and determined that an OTTI charge was not warranted.

The amortized cost and estimated fair value of investments available-for-sale at March 31, 2019, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Investments not due at a single maturity date, primarily mortgage-backed investments, are shown separately.
 
March 31, 2019
 
Amortized Cost
 
Fair Value
 
(In thousands)
Due within one year
$
251

 
$
250

Due after one year through five years
7,328

 
7,481

Due after five years through ten years
19,291

 
19,000

Due after ten years
51,595

 
50,956

 
78,465

 
77,687

Mortgage-backed investments
62,255

 
60,971

Total
$
140,720

 
$
138,658



12


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Under Washington state law, in order to participate in the public funds program the Company is required to pledge eligible securities as collateral in an amount equal to 50% of the public deposits held less the FDIC insured amount. Investment securities with market values of $15.7 million and $15.6 million were pledged as collateral for public deposits at March 31, 2019, and December 31, 2018, respectively, both of which exceeded the collateral requirements established by the Washington Public Deposit Protection Commission.

For the three months ended March 31, 2019, we had calls and sales on investment securities of $3.0 million, generating a net loss of $8,000. For the three months ended March 31, 2018, we had a maturity on one investment security of $2.0 million generating no gain or loss.


Note 5 - Loans Receivable

Loans receivable are summarized as follows at the dates indicated: 
 
March 31, 2019
 
December 31, 2018
 
(In thousands)
One-to-four family residential:
 
 
 
Permanent owner occupied
$
194,648

 
$
194,141

Permanent non-owner occupied
156,684

 
147,825

 
351,332

 
341,966

 
 
 
 
Multifamily
167,843

 
169,355

 
 
 
 
Commercial real estate
384,686

 
373,819

 
 
 
 
Construction/land:
 
 
 

One-to-four family residential
84,191

 
86,604

Multifamily
87,748

 
83,642

Commercial
22,400

 
18,300

Land
6,965

 
6,740

 
201,304

 
195,286

 
 
 
 
Business
33,513

 
30,486

Consumer
14,336

 
12,970

Total loans
1,153,014

 
1,123,882

 
 
 
 
Less:
 
 
 

Loans in process ("LIP") (1)
86,794

 
86,453

Deferred loan fees, net
701

 
1,178

Allowance for loan and lease losses ("ALLL")
13,808

 
13,347

Loans receivable, net
$
1,051,711

 
$
1,022,904

_______________ 
(1) LIP is the amount of committed but undisbursed funds on construction loans.

At March 31, 2019, loans totaling $480.7 million were pledged to secure borrowings from the FHLB of Des Moines compared to $471.4 million at December 31, 2018.
    
Credit Quality Indicators. The Company assigns a risk rating to all credit exposures based on a risk rating system designed to define the basic characteristics and identified risk elements of each credit extension. The Company utilizes a nine‑point risk rating system. A description of the general characteristics of the risk grades is as follows:

13


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



Grades 1 through 5: These grades are considered to be “pass” credits. These include assets where there is virtually no credit risk, such as cash secured loans with funds on deposit with the Bank. Pass credits also include credits that are on the Company’s watch list, where the borrower exhibits potential weaknesses, which may, if not checked or corrected, negatively affect the borrower’s financial capacity and threaten their ability to fulfill debt obligations in the future.

Grade 6: These credits, classified as “special mention”, possess weaknesses that deserve management’s close attention. Special mention assets do not expose the Company to sufficient risk to warrant adverse classification in the substandard, doubtful or loss categories. If left uncorrected, these potential weaknesses may result in deterioration in the Company’s credit position at a future date.

Grade 7: These credits, classified as “substandard”, present a distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. These credits have well defined weaknesses which jeopardize the orderly liquidation of the debt and are inadequately protected by the current net worth and payment capacity of the borrower or of any collateral pledged.

Grade 8: These credits are classified as “doubtful” and possess well defined weaknesses which make the full collection or liquidation of the loan highly questionable and improbable. This classification is used where significant risk exposures are perceived but the exact amount of the loss cannot yet be determined due to pending events.

Grade 9: Assets classified as “loss” are considered uncollectible and cannot be justified as a viable asset for the Company. There is little or no prospect of near term recovery and no realistic strengthening action of significance is pending.

As of March 31, 2019, and December 31, 2018, the Company had no loans rated as doubtful or loss. The following tables represent a summary of loans at March 31, 2019, and December 31, 2018 by type and risk category:

 
March 31, 2019
 
One-to-Four
Family
Residential
 
Multifamily
 
Commercial
Real Estate
 
Construction/ 
Land
 
Business
 
Consumer
 
Total (1)
 
(In thousands)
Risk Rating:
 
 
 
 
 
 
 
 
 
 
 
 
 
   Pass
$
349,894

 
$
167,843

 
$
384,149

 
$
112,380

 
$
33,513

 
$
14,292

 
$
1,062,071

   Special mention
795

 

 
537

 
2,130

 

 

 
3,462

   Substandard
643

 

 

 

 

 
44

 
687

Total loans
$
351,332

 
$
167,843

 
$
384,686

 
$
114,510

 
$
33,513

 
$
14,336

 
$
1,066,220

_______________

(1) Net of LIP.
 
December 31, 2018
 
One-to-Four
Family
Residential
 
Multifamily
 
Commercial
Real Estate
 
Construction/
Land
 
Business
 
Consumer
 
Total (1)
 
(In thousands)
Risk Rating:
 
 
 
 
 
 
 
 
 
 
 
 
 
   Pass
$
339,310

 
$
169,355

 
$
372,690

 
$
108,854

 
$
30,486

 
$
12,926

 
$
1,033,621

   Special mention
1,737

 

 
782

 

 

 

 
2,519

   Substandard
919

 

 
326

 

 

 
44

 
1,289

Total loans
$
341,966

 
$
169,355

 
$
373,798

 
$
108,854

 
$
30,486

 
$
12,970

 
$
1,037,429

_______________

(1) Net of LIP.

14


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



ALLL. When the Company classifies problem assets as either substandard or doubtful, pursuant to Federal regulations, it may establish a specific reserve in an amount deemed prudent to address the risk specifically or may allow the loss to be addressed in the general allowance. General allowances represent loss allowances which have been established to recognize the inherent risk associated with lending activities, but which, unlike specific allowances, have not been specifically allocated to the particular problem assets. When an insured institution classifies problem assets as a loss, pursuant to Federal regulations, it is required to charge-off such assets in the period in which they are deemed uncollectible. The determination as to the classification of the Company’s assets and the amount of valuation allowances is subject to review by bank regulators, who can require the establishment of additional loss allowances.

Loan grades are used by the Company to identify and track potential problem loans which do not rise to the levels described for substandard, doubtful, or loss. The grades for watch and special mention are assigned to loans which have been criticized based upon known characteristics such as periodic payment delinquency or stale financial information from the borrower and/or guarantors. Loans identified as criticized (watch and special mention) or classified (substandard, doubtful or loss) are subject to problem loan reporting every three months.

The following tables summarize changes in the ALLL and loan portfolio by loan type and impairment method at the dates and for the periods shown: 
 
At or For the Three Months Ended March 31, 2019
 
One-to-Four
Family
Residential
 
Multifamily
 
Commercial 
Real Estate
 
Construction/
Land
 
Business
 
Consumer
 
Total
 
(In thousands)
ALLL:
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
3,387

 
$
1,680

 
$
4,777

 
$
2,331

 
$
936

 
$
236

 
$
13,347

   Charge-offs

 

 

 

 

 

 

   Recoveries
24

 

 

 

 

 
37

 
61

(Recapture) provision
(379
)
 
(101
)
 
32

 
801

 
94

 
(47
)
 
400

Ending balance
$
3,032

 
$
1,579

 
$
4,809

 
$
3,132

 
$
1,030

 
$
226

 
$
13,808

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ALLL by category:
 
 
 
 
 
 
 
 
 
 
 
 
 
General reserve
$
2,982

 
$
1,579

 
$
4,809

 
$
3,132

 
$
1,030

 
$
226

 
$
13,758

Specific reserve
50

 

 

 

 

 

 
50

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
$
351,332

 
$
167,843

 
$
384,686

 
$
114,510

 
$
33,513

 
$
14,336

 
$
1,066,220

Loans collectively evaluated for impairment (2)
345,569

 
167,843

 
382,530

 
114,510

 
33,513

 
14,292

 
1,058,257

Loans individually evaluated for impairment (3)
5,763

 

 
2,156

 

 

 
44

 
7,963

____________ 

(1) Net of LIP.
(2) Loans collectively evaluated for general reserves.
(3) Loans individually evaluated for specific reserves.




15


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


 
At or For the Three Months Ended March 31, 2018
 
One-to-Four
Family
Residential
 
Multifamily
 
Commercial 
Real Estate
 
Construction/
Land
 
Business
 
Consumer
 
Total
 
(In thousands)
ALLL:
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
2,837

 
$
1,820

 
$
4,418

 
$
2,816

 
$
694

 
$
297

 
$
12,882

   Charge-offs

 

 

 

 

 

 

   Recoveries
4,240

 

 
14

 

 

 

 
4,254

   (Recapture) provision
(3,840
)
 
64

 
58

 
(362
)
 
46

 
34

 
(4,000
)
Ending balance
$
3,237

 
$
1,884

 
$
4,490

 
$
2,454

 
$
740

 
$
331

 
$
13,136

 
 
 
 
 
 
 
 
 
 
 
 
 
 
ALLL by category:
 
 
 
 
 
 
 
 
 
 
 
 
 
General reserve
$
3,168

 
$
1,884

 
$
4,464

 
$
2,454

 
$
740

 
$
331

 
$
13,041

Specific reserve
69

 

 
26

 

 

 

 
95

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans: (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
$
295,895

 
$
190,392

 
$
366,231

 
$
117,554

 
$
24,237

 
$
11,131

 
$
1,005,440

Loans collectively evaluated for impairment (2)
283,866

 
189,264

 
363,059

 
117,554

 
24,237

 
11,038

 
989,018

Loans individually evaluated for impairment (3)
12,029

 
1,128

 
3,172

 

 

 
93

 
16,422

_____________ 

(1) Net of LIP.
(2) Loans collectively evaluated for general reserves.
(3) Loans individually evaluated for specific reserves.


16


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)



Past Due Loans. Loans are considered past due if a scheduled principal or interest payment is due and unpaid for 30 days or more. At March 31, 2019, past due loans were 0.03% of total loans receivable, net of LIP. In comparison, past due loans were 0.08% of total loans receivable, net of LIP at December 31, 2018. The following tables represent a summary of the aging of loans by type at the dates indicated:

 
Loans Past Due as of March 31, 2019
 
 
 
 
 
30-59 Days
 
60-89 Days
 
90 Days and
Greater
 
Total Past
Due
 
Current
 
Total (1) (2)
 
(In thousands)
Real estate:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family residential:
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
$
107

 
$

 
$

 
$
107

 
$
194,541

 
$
194,648

Non-owner occupied
166

 

 

 
166

 
156,518

 
156,684

Multifamily

 

 

 

 
167,843

 
167,843

Commercial real estate

 

 

 

 
384,686

 
384,686

Construction/land

 

 

 

 
114,510

 
114,510

Total real estate
273

 

 

 
273

 
1,018,098

 
1,018,371

Business

 

 

 

 
33,513

 
33,513

Consumer
44

 

 

 
44

 
14,292

 
14,336

Total loans
$
317

 
$

 
$

 
$
317

 
$
1,065,903

 
$
1,066,220

 ________________ 

(1) There were no loans 90 days and greater past due and still accruing interest at March 31, 2019.
(2) Net of LIP.

 
Loans Past Due as of December 31, 2018
 
 
 
 
 
30-59 Days
 
60-89 Days
 
90 Days and
Greater
 
Total Past
Due
 
Current
 
Total (1) (2)
 
(In thousands)
Real estate:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family residential:
 
 
 
 
 
 
 
 
 
 
 
Owner occupied
$
223

 
$

 
$
272

 
$
495

 
$
193,646

 
$
194,141

Non-owner occupied

 

 

 

 
147,825

 
147,825

Multifamily

 

 

 

 
169,355

 
169,355

Commercial real estate

 

 
326

 
326

 
373,472

 
373,798

Construction/land

 

 

 

 
108,854

 
108,854

Total real estate
223

 

 
598

 
821

 
993,152

 
993,973

Business

 

 

 

 
30,486

 
30,486

Consumer

 

 

 

 
12,970

 
12,970

Total loans
$
223

 
$

 
$
598

 
$
821

 
$
1,036,608

 
$
1,037,429

_________________ 

(1) There were no loans 90 days and greater past due and still accruing interest at December 31, 2018.
(2) Net of LIP.





17


FIRST FINANCIAL NORTHWEST, INC. AND SUBSIDIARIES
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Nonaccrual Loans. The following table is a summary of nonaccrual loans by loan type at the dates indicated:

 
March 31, 2019
 
December 31, 2018
 
(In thousands)
One-to-four family residential
$
107

 
$
382

Commercial real estate

 
326

Consumer
44

 
44

Total nonaccrual loans
$
151

 
$
752


During the three months ended March 31, 2019, interest income that would have been recognized had these nonaccrual loans been performing in accordance with their original terms was $6,000. For the three months ended March 31, 2018, foregone interest on nonaccrual loans was $6,000.

The following tables summarize the loan portfolio by type and payment status at the dates indicated:

 
March 31, 2019
 
One-to-Four
Family
Residential
 
Multifamily
 
Commercial
Real Estate
 
Construction/
Land
 
Business
 
Consumer
 
Total (1)
 
(In thousands)
Performing (2)
$
351,225

 
$
167,843

 
$
384,686

 
$
114,510

 
$
33,513

 
$
14,292

 
$
1,066,069

Nonperforming (3)
107

 

 

 

 

 
44

 
151

Total loans
$
351,332

 
$
167,843

 
$
384,686

 
$
114,510

 
$
33,513

 
$
14,336

 
$
1,066,220

_____________

(1) 
Net of LIP.
(2) 
There were $194.5 million of owner-occupied one-to-four family residential loans and $156.7 million of non-owner occupied one-to-four family residential loans classified as performing.
(3) 
The $107,000 one-to-four family residential loan classified as nonperforming is owner-occupied.
 
December 31, 2018
 
One-to-Four
Family
Residential
 
Multifamily
 
Commercial
Real Estate
 
Construction/
Land
 
Business
 
Consumer
 
Total (1)
 
(In thousands)
Performing (2)
$
341,584

 
$
169,355

 
$
373,472

 
$
108,854

 
$
30,486

 
$
12,926

 
$
1,036,677

Nonperforming (3)
382

 

 
326

 

 

 
44

 
752

Total loans
$
341,966

 
$
169,355

 
$
373,798

 
$
108,854

 
$
30,486

 
$
12,970

 
$
1,037,429

_____________

(1) Net of LIP.    
(2) There were $193.8 million of owner-occupied one-to-four family residential loans and $147.8 million of non-owner occupied one-to-four family residential loans classified as performing.
(3) The $382,000 of one-to-four family residential loans classified as nonperforming are all owner-occupied.

Impaired Loans. A loan is considered impaired when we have determined that we may be unable to collect payments of principal or interest when due under the terms of the original loan document. There were no funds committed to be advanced in connection with impaired loans at either March 31, 2019, or December 31, 2018.

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