Note 8 - Borrowings

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

Note 8 - Borrowings

First Fed is a member of the FHLB. As a member, First Fed has a committed line of credit of up to 35% of total assets, subject to the amount of FHLB stock ownership and certain collateral requirements.

First Fed maintains borrowing arrangements with the FHLB to borrow funds primarily under long-term, fixed-rate advance agreements. First Fed also has overnight borrowings through FHLB which renew daily until paid. First Fed periodically uses fixed-rate advances maturing in less than one year as an alternative source of funds. Available borrowing capacity was $226.1 million and $253.8 million at  September 30, 2024 and December 31, 2023, respectively. All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $907.3 million and $896.2 million at  September 30, 2024 and December 31, 2023, respectively. The Bank had outstanding letters of credit from the FHLB with notional amounts of $60.0 million to secure public deposits and $772,000 to secure the Bellevue, Washington branch lease at September 30, 2024.

First Fed also has an established borrowing arrangement with the Federal Reserve Bank of San Francisco ("FRB") to utilize the discount window for short-term borrowing. Available borrowing capacity was $18.7 million and $6.6 million at  September 30, 2024 and December 31, 2023, respectively. An overnight test of the line of credit was performed at the end of June 2024. Investment securities with a carrying value of $19.3 million and $6.9 million were pledged to the FRB at  September 30, 2024 and December 31, 2023, respectively.

On March 25, 2021, the Company completed a private placement of $40.0 million of 3.75% fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors. The net proceeds to the Company from the sale of the Notes were approximately $39.3 million after deducting placement agent fees and other offering expenses. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company used the net proceeds of the offering for general corporate purposes.

On May 20, 2022, First Northwest consummated a borrowing arrangement with NexBank for a $20.0 million revolving line of credit. Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The line of credit matures on May 17, 2025.

In June 2023, First Fed established a Bank Term Funding Program ("BTFP") borrowing arrangement with the FRB as an additional source of liquidity. Available borrowing capacity was $15.2 million at December 31, 2023. No funds were borrowed between June 2023 and March 2024, when the BTFP stopped funding new loans, effectively ending the Bank's participation in the program. Investment securities with a carrying value of $12.9 million were pledged to secure the BTFP at December 31, 2023.

The following table sets forth information regarding our borrowings at the end of and during the nine months ended September 30, 2024. The table includes both long- and short-term borrowings.

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FRB Discount Window			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	160,000		$	130,000		$	—		$	5,500		$	39,494
Maximum outstanding at any month-end		170,000			270,000			100			10,000			39,494
Average monthly outstanding during the period		128,333			154,778			11			6,856			39,465
Weighted-average daily interest rates
Annual		3.24	%		5.51	%		5.27	%		9.60	%		4.01	%
Period End		3.63	%		5.35	%		—	%		8.50	%		4.00	%

The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at  September 30, 2024 are as follows:

	Amount		Weighted- Average Interest Rate
	(Dollars in thousands)
Within one year or less	$	20,000		2.12	%
After one year through two years		55,000		3.85
After two years through three years		50,000		3.93
After three years through four years		35,000		3.72
Total FHLB long-term advances	$	160,000		3.63

The following table sets forth information regarding our borrowings at the end of and during the year ended December 31, 2023. The table includes both long- and short-term borrowings.

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FHLB Short-Term Fixed-Rate Advances			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	80,000		$	195,000		$	—		$	6,500		$	39,436
Maximum outstanding at any month-end		85,000			195,000			95,000			11,000			39,436
Average monthly outstanding during the period		81,667			149,500			25,000			9,327			39,395
Weighted-average daily interest rates
Annual		2.00	%		5.26	%		5.08	%		9.15	%		4.01	%
Period End		2.09	%		5.52	%		5.27	%		9.00	%		4.00	%