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

Loans Receivable: Schedule of Accounts, Notes, Loans and Financing Receivable (Tables)

12 Months Ended

Dec. 31, 2015

Schedule of Accounts, Notes, Loans and Financing Receivable

Loans receivable at December 31, 2015, and 2014 are summarized as follows:



	December 31,
	2015		2014
	(In thousands)
One-to-four family residential:
Permanent owner occupied	$	147,229	$	161,013
Permanent non-owner occupied	106,543		112,180
Construction non-owner occupied	—		500
	253,772		273,693
Multifamily:
Permanent	122,747		116,014
Construction	21,115		4,450
	143,862		120,464
Commercial real estate:
Permanent	244,211		239,211
Construction	—		6,100
Land	8,290		2,956
	252,501		248,267
Construction/land development: ⁽¹⁾
One-to-four family residential	52,233		19,860
Multifamily	25,551		17,902
Commercial	—		4,300
Land development	8,768		8,993
	86,552		51,055

Business	7,604		3,783
Consumer	6,979		7,130
Total loans	751,270		704,392
Less:
Loans in process ("LIP")	53,854		27,359
Deferred loan fees, net	2,881		2,604
ALLL	9,463		10,491
Loans receivable, net	$	685,072	$	663,938

___________

⁽¹⁾

Excludes construction loans that will convert to permanent loans. The Company considers these loans to be "rollovers" in that one loan is originated for both the construction loan and permanent financing. These loans are classified according to the underlying collateral. At December 31, 2015, the Company had $21.1 million, or 14.7% of the total multifamily loans, and no commercial or one-to-four family residential loans in these "rollover" type of loans. At December 31, 2014, the Company had $6.1 million, or 2.5% of the total commercial real estate portfolio, $4.5 million, or 3.7% of the total multifamily loans and $500,000, or 0.2% of the total one-to-four family residential loans in these rollover type of loans. At December 31, 2015 and December 31, 2014, $8.3 million and $3.0 million, respectively, of commercial real estate loans were not included in the construction/land development category because the Company classifies raw land or buildable lots when it does not intend to finance the construction as commercial real estate land loans.

Accrued interest receivable consisted of the following at December 31, 2015 and 2014:



	December 31,
	2015		2014
	(In thousands)
Loans receivable	$	2,467	$	2,879
Investments	493		382
Interest-earning deposits	8		4
	$	2,968	$	3,265

Financing Receivables, Summary of Loans By Maturity and Interest Rate Type

The Company originates both adjustable and fixed interest rate loans. The composition of loans receivable at December 31, 2015, and 2014, was as follows:



December 31, 2015
Fixed Rate			Adjustable Rate
Term to Maturity	Principal Balance		Term to Rate Adjustment	Principal Balance
(In thousands)
Due within one year	$	17,476	Due within one year	$	122,992
After one year through three years	107,792		After one year through three years	28,316
After three years through five years	91,283		After three years through five years	90,779
After five years through ten years	99,348		After five years through ten years	41,239
Thereafter	151,879		Thereafter	166
	$	467,778		$	283,492



December 31, 2014
Fixed Rate			Adjustable Rate
Term to Maturity	Principal Balance		Term to Rate Adjustment	Principal Balance
(In thousands)
Due within one year	$	39,649	Due within one year	$	98,830
After one year through three years	70,416		After one year through three years	27,314
After three years through five years	128,142		After three years through five years	32,842
After five years through ten years	117,199		After five years through ten years	59,682
Thereafter	129,560		Thereafter	758
	$	484,966		$	219,426

Schedule of Allowance for Loan and Lease Losses, Roll Forward

The following tables summarize changes in the ALLL and loan portfolio by type of loan and reserve method for the periods indicated.



	At or For the Year Ended December 31, 2015
	One-to-Four Family Residential			Multifamily			Commercial Real Estate			Construction/ Land Development		Business		Consumer			Total
ALLL:	(In thousands)
Beginning balance	$	3,694		$	1,646		$	4,597		$	355	$	47	$	152		$	10,491
Charge-offs	(27		)	(281		)	—			—		—		(54		)	(362		)
Recoveries	936			78			181			—		3		336			1,534
(Recapture) provision	(1,575		)	(145		)	(1,236		)	586		179		(9		)	(2,200		)
Ending balance	$	3,028		$	1,298		$	3,542		$	941	$	229	$	425		$	9,463

General reserve	$	2,516		$	1,295		$	3,364		$	941	$	229	$	386		$	8,731
Specific reserve	512			3			178			—		—		39			732

Loans: ⁽¹⁾
Total Loans	$	253,772		$	133,388		$	252,501		$	43,172	$	7,604	$	6,979		$	697,416
General reserve ⁽²⁾	217,677			131,793			247,110			43,172		7,604		6,771			654,127
Specific reserve ⁽³⁾	36,095			1,595			5,391			—		—		208			43,289

____________

⁽¹⁾ Net of LIP.

⁽²⁾ Loans collectively evaluated for impairment.

⁽³⁾ Loans individually evaluated for impairment.



	At or For the Year Ended December 31, 2014
	One-to-Four Family Residential			Multifamily		Commercial Real Estate			Construction/ Land Development			Business		Consumer			Total
ALLL:	(In thousands)
Beginning balance	$	5,141		$	1,377	$	5,881		$	399		$	14	$	182		$	12,994
Charge-offs	(78		)	—		(311		)	(223		)	—		(30		)	(642		)
Recoveries	50			—		174			—			10		5			239
(Recapture) provision	(1,419		)	269		(1,147		)	179			23		(5		)	(2,100		)
Ending balance	$	3,694		$	1,646	$	4,597		$	355		$	47	$	152		$	10,491

General reserve	$	2,894		$	1,619	$	4,268		$	355		$	47	$	93		$	9,276
Specific reserve	800			27		329			—			—		59			1,215

Loans: ⁽¹⁾
Total Loans	$	273,565		$	120,271	$	247,968		$	24,316		$	3,783	$	7,130		$	677,033
General reserve ⁽²⁾	229,827			118,099		238,416			24,316			3,783		6,933			621,374
Specific reserve ⁽³⁾	43,738			2,172		9,552			—			—		197			55,659

_____________

⁽¹⁾ Net of LIP.

⁽²⁾ Loans collectively evaluated for impairment.

⁽³⁾ Loans individually evaluated for impairment.

Financing Receivables, Aging of loans

The following tables represent a summary at December 31, 2015, and 2014, of the aging of loans by type:



	Loans Past Due as of December 31, 2015
	30-59 Days		60-89 Days		90 Days and Greater		Total		Current		Total Loans ^{(1) (2)}
	(In thousands)
Real estate:
One-to-four family residential:
Owner occupied	$	678	$	483	$	—	$	1,161	$	146,068	$	147,229
Non-owner occupied	—		—		—		—		106,543		106,543
Multifamily	—		—		—		—		133,388		133,388
Commercial real estate	—		—		—		—		252,501		252,501
Construction/land development	—		—		—		—		43,172		43,172
Total real estate	678		483		—		1,161		681,672		682,833
Business	—		—		—		—		7,604		7,604
Consumer	—		78		19		97		6,882		6,979
Total	$	678	$	561	$	19	$	1,258	$	696,158	$	697,416

^{_________________________}

⁽¹⁾ There were no loans 90 days past due and still accruing interest at December 31, 2015.

⁽²⁾ Net of LIP.



	Loans Past Due as of December 31, 2014
	30-59 Days		60-89 Days		90 Days and Greater		Total		Current		Total Loans ^{(1) (2)}
	(In thousands)
Real estate:
One-to-four family residential:
Owner occupied	$	666	$	575	$	666	$	1,907	$	159,106	$	161,013
Non-owner occupied	—		—		164		164		112,388		112,552
Multifamily	1,965		—		—		1,965		118,306		120,271
Commercial real estate	—		325		11		336		247,632		247,968
Construction/land development	—		—		—		—		24,316		24,316
Total real estate	2,631		900		841		4,372		661,748		666,120
Business	—		—		—		—		3,783		3,783
Consumer	—		75		—		75		7,055		7,130
Total	$	2,631	$	975	$	841	$	4,447	$	672,586	$	677,033

^{________________________}

⁽¹⁾ There were no loans 90 days past due and still accruing interest at December 31, 2014.

⁽²⁾ Net of LIP.

Schedule of non-accrual loans

The following table is a summary of nonaccrual loans at December 31, 2015, and 2014 by type of loan



	December 31,
	2015		2014
	(In thousands)
One-to-four family residential	$	996	$	830
Commercial real estate	—		434
Consumer	89		75
Total nonaccrual loans	$	1,085	$	1,339

Financing Receivables, Summary of loans by type and payment activity

The following tables summarize the loan portfolio at December 31, 2015, and 2014, by type and payment activity:



	December 31, 2015
	One-to-Four Family Residential		Multifamily		Commercial Real Estate		Construction / Land Development		Business		Consumer		Total ⁽³⁾
	(In thousands)
Performing ⁽¹⁾	$	252,776	$	133,388	$	252,501	$	43,172	$	7,604	$	6,890	$	696,331
Nonperforming ⁽²⁾	996		—		—		—		—		89		1,085
Total	$	253,772	$	133,388	$	252,501	$	43,172	$	7,604	$	6,979	$	697,416

____________


⁽¹⁾	There were $146.2 million of owner-occupied one-to-four family residential loans and $106.5 million of non-owner occupied one-to-four family residential loans classified as performing.


⁽²⁾	There were $996,000 of owner-occupied one-to-four family residential loans and no non-owner occupied one-to-four family residential loans classified as nonperforming.


⁽³⁾	Net of LIP.



	December 31, 2014
	One-to-Four Family Residential		Multifamily		Commercial Real Estate		Construction/ Land Development		Business		Consumer		Total ⁽³⁾
	(In thousands)
Performing ⁽¹⁾	$	272,735	$	120,271	$	247,534	$	24,316	$	3,783	$	7,055	$	675,694
Nonperforming ⁽²⁾	830		—		434		—		—		75		1,339
Total	$	273,565	$	120,271	$	247,968	$	24,316	$	3,783	$	7,130	$	677,033

_____________

⁽¹⁾There were $160.3 million of owner-occupied one-to-four family residential loans and $112.4 million of non-owner occupied one-to-four family residential loans classified as performing.

⁽²⁾There were $666,000 of owner-occupied one-to-four family residential loans and $164,000 of non-owner occupied one-to-four family residential loans classified as nonperforming.

⁽³⁾Net of LIP.

Schedule of Impaired Financing Receivables, Average Recorded Investment and Interest Income

The following tables present a summary of loans individually evaluated for impairment at December 31, 2015, and 2014, by the type of loan:



	At or For the Year Ended December 31, 2015
	Recorded Investment ⁽¹⁾		Unpaid Principal Balance ⁽²⁾		Related Allowance
	(In thousands)
Loans with no related allowance:
One-to-four family residential:
Owner occupied	$	3,169	$	3,441	$	—
Non-owner occupied	23,285		23,310		—
Multifamily	415		414		—
Commercial real estate	2,675		2,857		—
Consumer	132		183		—
Total	29,676		30,205		—
Loans with an allowance:
One-to-four family residential:
Owner occupied	2,120		2,189		85
Non-owner occupied	7,521		7,573		427
Multifamily	1,180		1,180		3
Commercial real estate	2,716		2,717		178
Consumer	76		76		39
Total	13,613		13,735		732
Total impaired loans:
One-to-four family residential:
Owner occupied	5,289		5,630		85
Non-owner occupied	30,806		30,883		427
Multifamily	1,595		1,594		3
Commercial real estate	5,391		5,574		178
Consumer	208		259		39
Total	$	43,289	$	43,940	$	732

_________________

⁽¹⁾ Represents the loan balance less charge-offs.

⁽²⁾ Contractual loan principal balance.



	At or For the Year Ended December 31, 2014
	Recorded Investment ⁽¹⁾		Unpaid Principal Balance ⁽²⁾		Related Allowance
	(In thousands)
Loans with no related allowance:
One-to-four family residential:
Owner occupied	$	3,308	$	3,661	$	—
Non-owner occupied	29,224		29,266		—
Commercial real estate	4,553		4,851		—
Consumer	118		153		—
Total	37,203		37,931		—
Loans with an allowance:
One-to-four family residential:
Owner occupied	2,554		2,624		121
Non-owner occupied	8,652		8,704		679
Multifamily	2,172		2,172		27
Commercial real estate	4,999		4,999		329
Consumer	79		79		59
Total	18,456		18,578		1,215
Total impaired loans:
One-to-four family residential:
Owner occupied	5,862		6,285		121
Non-owner occupied	37,876		37,970		679
Multifamily	2,172		2,172		27
Commercial real estate	9,552		9,850		329
Consumer	197		232		59
Total	$	55,659	$	56,509	$	1,215

_____________

⁽¹⁾ Represents the loan balance less charge-offs.

⁽²⁾ Contractual loan principal balance.

The following table presents a summary of recorded investment in impaired loans, and interest income recognized on impaired loans at December 31, 2015, 2014 and 2013 by the type of loan:



	Year Ended December 31,
	2015				2014				2013
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
Loans with no related allowance:
One-to-four family residential:
Owner occupied	$	3,180	$	110	$	3,302	$	158	$	4,773	$	146
Non-owner occupied	25,350		1,409		29,105		1,762		29,277		1,697
Multifamily	1,575		30		113		—		1,143		—
Commercial real estate	4,180		187		3,971		291		7,065		344
Construction/land development	—		—		—		—		3,417		—
Consumer	125		2		81		4		539		—
Total	34,410		1,738		36,572		2,215		46,214		2,187

Loans with an allowance:
One-to-four family residential:
Owner occupied	2,131		89		2,975		124		4,249		169
Non-owner occupied	7,801		415		10,395		500		14,545		623
Multifamily	1,430		77		2,187		147		1,414		138
Commercial real estate	3,312		147		6,532		267		7,817		356
Consumer	77		3		20		3		—		—
Total	14,751		731		22,109		1,041		28,025		1,286

Total impaired loans:
One-to-four family residential:
Owner occupied	5,311		199		6,277		282		9,022		315
Non-owner occupied	33,151		1,824		39,500		2,262		43,822		2,320
Multifamily	3,005		107		2,300		147		2,557		138
Commercial real estate	7,492		334		10,503		558		14,882		700
Construction/land development	—		—		—		—		3,417		—
Consumer	202		5		101		7		539		—
Total	$	49,161	$	2,469	$	58,681	$	3,256	$	74,239	$	3,473

Schedule of Non-performing assets and troubled debt restructured loans

The following is a summary of information pertaining to TDRs:



	December 31,
	2015		2014
	(In thousands)
Performing TDRs	$	42,128	$	54,241
Nonaccrual TDRs	131		—
Total TDRs	$	42,259	$	54,241

Troubled Debt Restructurings on Financing Receivables

The following table presents for the periods indicated TDRs and their recorded investment prior to the modification and after the modification:



	Year Ended December 31,
	2015					2014
	Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of Loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
	(Dollars in thousands)
TDRs that occurred during the period:
One-to-four family residential:
Interest only payments with interest rate concession	6	$	1,439	$	1,439	12	$	2,522	$	2,522
Principal and interest with interest rate concession	2	426		426		6	1,174		1,174
Advancement of maturity date	2	248		248		9	1,722		1,722
Commercial real estate:
Principal and interest with interest rate concession	1	775		775		—	—		—
Advancement of maturity date	2	866		866		—	—		—
Interest-only payments with interest rate concession	1	496		496		2	3,470		3,470
Interest-only payments with advancement of maturity date	1	2,004		2,004		—	—		—
Total	15	$	6,254	$	6,254	29	$	8,888	$	8,888

Trouble Debt Restructurings on Financing Receivables, TDRs that subsequently defaulted

For the year ended December 31, 2015 and 2014, there were no payment defaults on loans modified as TDRs within the previous 12 months.

Financing Receivables, Summary of loans by type and risk category

The following tables represent a summary of loans at December 31, 2015, and 2014 by type and risk category:



	December 31, 2015
	One-to-Four Family Residential		Multifamily		Commercial Real Estate		Construction/ Land Development		Business		Consumer		Total ⁽¹⁾
	(In thousands)
Risk Rating:
Pass	$	247,239	$	133,388	$	248,196	$	43,172	$	7,604	$	6,702	$	686,301
Special mention	3,840		—		3,809		—		—		188		7,837
Substandard	2,693		—		496		—		—		89		3,278
Total	$	253,772	$	133,388	$	252,501	$	43,172	$	7,604	$	6,979	$	697,416

_____________

⁽¹⁾ Net of LIP.



	December 31, 2014
	One-to-Four Family Residential		Multifamily		Commercial Real Estate		Construction / Land Development		Business		Consumer		Total ⁽¹⁾
	(In thousands)
Risk Rating:
Pass	$	263,094	$	116,891	$	235,841	$	24,316	$	3,783	$	6,833	$	650,758
Special mention	4,157		1,416		10,529		—		—		—		16,102
Substandard	6,314		1,964		1,598		—		—		297		10,173
Total	$	273,565	$	120,271	$	247,968	$	24,316	$	3,783	$	7,130	$	677,033

______________

⁽¹⁾ Net of LIP.

Schedule of Loans to Related Parties

Certain executive officers and directors have loans with the Bank. The aggregate dollar amount of these loans outstanding to related parties is summarized as follows:



	Year Ended December 31,
	2015			2014			2013
	(In thousands)
Balance at beginning of year	$	138		$	548		$	498
Additions	—			—			353
Repayments	(20		)	(410		)	(303		)
Balance at end of year	$	118		$	138		$	548