April 2, 2010
With the arrival of spring, we see the changes from nature’s winter of colorless gloom, to blossoms slowly showing themselves; signaling the promise of warmer days ahead. This example from nature is relevant in our economic cycle as well.
As remnants of the economic challenges which consumed us throughout the past year linger on, there are the signals of recovery slowly appearing on the horizon. With the unemployment rate beginning to show signs that it has peaked, and the housing market stabilizing, we have become increasingly confident that the greatest of the challenges are behind us. Oh yes, there will be challenged earnings for the next few quarters, but looking beyond this season of difficulties, there is a tomorrow filled with opportunities for growth in product development, service delivery, and customer expectations. As you are aware, 2009 has been most difficult for our organization, as we addressed asset quality issues which resulted in a level of foreclosures I have never experienced in my 33 years with this great institution. Traditionally, and as was the case during this economic downturn, we have worked with our borrowers to resolve their inability to repay their obligations. Unfortunately, due to the depth of this housing crisis, where home values continued to depreciate by substantial margins, our builders have been unable to sell their product for what it cost to build. With some, we have been able to develop workout plans providing an opportunity to sell at reduced prices, but with others there was no option but to foreclose. All of these actions resulted in us setting up provisions for potential losses, or charging off principal amounts which impacted our earnings, causing a loss for the year. Although it is not uncommon for the national and local banking community to report a loss during these tough times, it nevertheless is a cause of concern for you our loyal customers, for our shareholders who have invested in us, and to our regulators who face an enormous task of issuing their report card on the strength of the banking community. I am certain they are not giving out many "A" grades.
As in nature’s transformation from the gloom of winter, to the colors of spring, so is our resurgence from the losses endured to the path of profitability. Yes, there will be a period of continued challenges before the blossoms appear, but the buds of strong capital, loyal depositors and good core earnings are in place. With some additional pruning, we are confident that we will once again stand tall among our peers, as that solid financial institution upon which you and your family have relied for generations.
Thank you for your confidence in us; together we have made First Savings Bank Northwest an institution of which we can all be proud. Our Directors, Management and Staff collectively, appreciate the opportunity we have to serve you, and without exception, remain committed to the principles which have guided us throughout history. It is this commitment, rooted in maintaining excess capital levels, solid core earnings, providing quality customer service and preserving the reputation of this great organization, which will make us a strong leader among community banks for generations to come.
On a lighter note, if you have had the opportunity to visit our office recently, you would have noticed that our Loan Center is now complete; the drive through has been restored, and the ATM again operational. Please stop by and take a look at the improvements done in our little corner of the world, here in downtown Renton.
Once again, I thank you for your loyalty.
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