First Financial Northwest, Inc. - 10-K filing on 2016-03-10

Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2015

Regulatory Capital Requirements [Abstract]

Under Federal regulations, pre-conversion retained earnings are restricted for the protection of pre-conversion depositors.

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and, possibly, additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices.

The capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table that follows) of total and Tier 1 capital to risk-weighted assets (as defined in the regulations) and of Tier 1 capital to average assets.

As of December 31, 2015, according to the most recent notification from the FDIC, the Bank was categorized as well-capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since the notification that management believes have changed the Bank's category.

The Bank’s actual capital amounts and ratios at December 31, 2015, and 2014, are presented in the following table.



									To be Well Capitalized
					For Capital Adequacy				Under Prompt Corrective
	Actual				Purposes				Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in thousands)
December 31, 2015:
Total risk-based capital
Bank only	$	121,237	17.62	%	$	55,058	8.00	%	$	68,823	10.00	%
Parent company	179,551		25.94		55,369		8.00		69,211		10.00

Tier 1 risk-based capital
Bank only	112,613		16.36		41,294		6.00		55,058		8.00
Parent company	170,877		24.69		41,527		6.00		55,369		8.00

Common equity tier 1 capital
Bank only	112,613		16.36		30,970		4.50		44,735		6.50
Parent company	170,877		24.69		31,145		4.50		44,987		6.50

Tier 1 leverage capital
Bank only	112,613		11.61		38,787		4.00		48,484		5.00
Parent company	170,877		17.55		38,952		4.00		48,484		5.00

December 31, 2014: ⁽¹⁾
Total risk-based capital
Bank only	$	116,053	19.56	%	$	47,469	8.00	%	$	59,336	10.00	%

Tier 1 risk-based capital
Bank only	108,596		18.30		23,734		4.00		35,602		6.00

Tier 1 leverage capital
Bank only	108,596		11.79		36,849		4.00		46,061		5.00

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⁽¹⁾ As a small bank holding company, First Financial Northwest was not required to file regulatory ratios until the first quarter of 2016. Ratios were calculated voluntarily during 2015 in preparation of the filing requirement.