First Savings Bank Northwest in Renton, Wash., has been released from a formal enforcement order with its regulators after substantially reducing its problem loans and demonstrating that it can earn money on a consistent basis.
The thrift's parent company, First Financial Northwest (FFNW), said Monday that the consent order put in place in September 2010 was lifted last week and has been replaced by a less-formal memorandum of understanding. The order required the thrift to lower its level of classified assets and improve its overall condition after it had been hammered by losses on real estate loans.
The company reported a profit of $4.2 million last year, compared to a loss of $54.1 million in 2010 and has turned a profit in five consecutive quarters. Its percentage of nonperforming assets to total assets declined by more than 300 basis points year over year, to 4.69%.
"We are pleased to have attained this important milestone," said Victor Karpiak, the chairman, president and chief executive of the bank and the holding company. "The lifting of the formal consent order and its replacement with an informal MOU reflect our hard work to reduce the bank's level of classified assets, increase earnings, augment management and improve the overall condition of the bank."
First Financial's shares were trading at $7.90 midday Monday, up 2.3% from Friday's closing price.