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RENTON, Wash., Sept. 27, 2010 (GLOBE NEWSWIRE) -- First Financial Northwest, Inc. (the "Company") (Nasdaq:FFNW), today announced that its subsidiary, First Savings Bank Northwest (the "Bank"), entered into a formal agreement with the Federal Deposit Insurance Corporation and the Washington Department of Financial Institutions requiring the Bank to take corrective measures in a number of areas to strengthen and improve the Bank's financial condition and operations.
Victor Karpiak, Chairman, President and Chief Executive Officer of First Financial Northwest, Inc. stated, "Like many real estate lenders, First Savings Bank Northwest continues to face unprecedented challenges with the prolonged downturn in the economy and the steep decline in the values of the underlying residential real estate collateral of our loan portfolio."
The agreement, formally known as a Stipulation to the Issuance of a Consent Order ("Order"), is based on items identified in our on-site regulatory exam completed earlier this year and commits the Bank to continue taking actions relating to its asset quality, earnings, and capital levels, along with appropriate board and management oversight.
Among other directives, the Order requires the Bank to maintain or exceed regulatory capital levels at 10% Tier 1 Leverage Ratio and 12% Total Risk-Based Ratio, which the Bank currently exceeds as a result of the capital contribution discussed below. At its meeting held September 15, 2010, the Board of Directors of First Financial Northwest, Inc. authorized a portion of the Company's capital to be contributed to the Bank, which will provide the Bank with the capital to exceed these measures prior to the issuance of the Order. Further, the Bank is directed to take certain measures in a number of areas including loan loss allowance determination; problem loan charge-off and reduction; lending and collection policies; reducing loan concentrations; incorporating the terms of the Order into an updated three year strategic plan; liquidity management; increasing Board oversight, and an independent study of management resources. The Order also provides that the Bank will obtain prior regulatory approval before the payment of cash dividends or the appointment of any senior executive officers or directors.