First Federal reports quarterly profit increase, creation of new foundation

Larry Hueth (Peninsula Daily News)

Larry Hueth (Peninsula Daily News)

PORT ANGELES — First Federal has reported big gains in profit in the first quarter since its conversion from a mutual, or depositor-owned, savings and loan to a shareholder-owned bank.

Excluding a post-tax $8.3 million expense associated with setting up the new First Federal Community Foundation, First Northwest Bancorp, First Fed’s holding company, reported that net income for the quarter that ended March 31 was $731,000, a 59.3 percent increase over the $459,000 earned in the same quarter last year, according to a quarterly operating report released this week.

Net income was $2.5 million for the nine months through March 31, a 23.3 percent increase over net income of $2.0 million for the same period last year.

”Earnings increased due in part to the larger balance sheet created from the capital raise and the continued improvements in the quality of our loans,” Larry Hueth, First Federal’s president and CEO, told the Peninsula Daily News.

The bank’s total assets from its investments and loans increased $12.6 million, or 1.4 percent, from $924.2 million between December 31, 2014, and March 31, and over nine months it increased $141.5 million, or 17.8 percent, climbing from $795.3 million at June 30, 2014, to $936.8 million on March 31.

Loans “remained virtually unchanged, decreasing $358,000 during the quarter from $493.5 million at December 31, 2014, or 0.1 percent, and decreased $3.0 million, or 0.6 percent, from $496.2 million at June 30, 2014, to $493.2 million at March 31,” the holding company’s quarterly report said.

The full quarterly report is online at http://tinyurl.com/pdnfirstfed.

Stock price up

First Fed stock has gone up.

The conversion was approved by depositors Jan. 28. First Federal stock was so popular that all 12,167,000 shares of stock, the maximum the bank could offer, quickly sold out at the initial price of $10 a share.

Since then, the stock, with the ticker symbol FNWB, has been trading between $11.75 and $12.65 a share on the Nasdaq exchange.

It closed Tuesday at $12.18.

Known officially as First Federal Savings and Loan Association of Port Angeles, First Federal’s conversion followed a national trend in which mutuals have switched to stock ownership to raise millions in new capital.

Depositors in January also approved the creation of the First Federal Community Foundation, a 501(c)(3) that will give money to various groups within the communities the bank serves.

The foundation continues the bank’s long tradition of financial support for nonprofits and community projects.

The three-member board of the foundation is made up of Stephen E. Oliver and David T. Flodstrom, both directors of First Federal, as well as Karen McCormick, a former president and CEO of First Federal.

McCormick is the foundation’s executive director. She plans to begin operations in a few weeks.

The new charitable foundation was funded with $400,000 in cash and $9.3 million in stock for a pre-tax total of $9.7 million.

“As a result of this contribution,” the bank’s operating report said, “the company reported a net loss of $7.6 million, or $(0.58) per share, for the quarter ended March 31, 2015, and a net loss of $5.8 million, or $(0.45) per share, for the nine months ended March 31, 2015.

“The contribution to the foundation, on a net tax basis of $8.3 million, contributed $(0.64) to the net loss per share for the quarter and nine months ended March 31, 2015.”

Said Hueth in the quarterly report:

“We are pleased to report our first quarterly results as a public company.

“We are delighted with the success of our oversubscribed stock offering which raised $121.7 million of gross proceeds from our depositors.

“I am also pleased we had the opportunity to create the foundation.

“We are pleased with the improvement in earnings, before the contribution to the foundation, for the quarter and nine months ended March 31, 2015, as compared to the comparable periods in the prior year.

“With the completion of the offering, management will focus on maintaining exemplary customer service, growing our portfolio of loans, improving asset and credit quality, and investing in our future, consistent with our business plan, while seeking to improve our net interest margin and return on equity.”

First Federal, which began in 1923, has branches in Port Angeles, Sequim, Port Townsend, Forks and Silverdale, plus a lending center in Bellingham.

It has almost 180 employees.

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