On January 29, 2025, First Northwest Bancorp (FNWB, Financial) released its 8-K filing detailing the financial results for the fourth quarter of 2024. The company reported a net loss of $2.8 million, translating to a basic and diluted loss per share of $0.32. This result is below the analyst estimate of $0.07 earnings per share, indicating a challenging quarter for the bank holding company.
Company Overview
First Northwest Bancorp is a bank holding company engaged in banking activities through its subsidiary, First Fed Bank. The company focuses on deposit and lending transactions, including first lien one- to four-family mortgage loans, commercial and multi-family real estate loans, construction and land loans, commercial business loans, and consumer loans.
Performance and Challenges
The fourth quarter of 2024 saw First Northwest Bancorp grappling with elevated credit costs, resulting in a net loss of $2.8 million. This was a deterioration from the $2.0 million net loss in the previous quarter but an improvement from the $5.5 million net loss in the same quarter of the previous year. The company's performance was significantly impacted by a $3.8 million provision for credit losses on loans, primarily due to charge-offs of six commercial business loans. This provision was higher than the $3.1 million recorded in the preceding quarter and $1.2 million in the fourth quarter of 2023.
Financial Achievements
Despite the challenges, First Northwest Bancorp achieved an adjusted pre-tax, pre-provision net revenue (PPNR) of $1.2 million, a significant improvement from a $49,000 adjusted PPNR loss in the previous quarter and $327,000 in the fourth quarter of 2023. This improvement is crucial for the bank as it indicates operational efficiency and potential for future profitability.
Income Statement and Key Metrics
Total revenue for the quarter was $15.4 million, slightly below the estimated $16.40 million. Net interest income remained relatively stable at $14.1 million compared to the previous quarter. The net interest margin was 2.73%, a slight increase from 2.70% in the prior quarter, reflecting modest margin improvement.
| Metric | Q4 2024 | Q3 2024 | Q4 2023 |
|---|---|---|---|
| Net Loss | $2.8 million | $2.0 million | $5.5 million |
| Loss per Share | $0.32 | $0.23 | $0.62 |
| Adjusted PPNR | $1.2 million | $(49,000) | $327,000 |
Balance Sheet and Cash Flow
First Northwest Bancorp's total deposits decreased by $23.6 million to $1.69 billion at the end of the fourth quarter. The company's investment securities increased by $29.5 million, or 9.5%, to $340.3 million. The allowance for credit losses on loans decreased by $1.5 million to $20.5 million, reflecting a decrease in multi-family, construction, and consumer loan balances.
Strategic Initiatives and Outlook
First Northwest Bancorp's strategic initiatives included restructuring its balance sheet, which positively impacted its interest income by $1.1 million for the year. The company also reinvested bank-owned life insurance policies into higher-yielding products, enhancing its earnings potential. The bank's focus on growing core commercial and retail customer relationships, resolving problem assets, and maintaining a strong capital position is expected to drive future profitability.
Although financial results in 2024 were adversely impacted by elevated credit costs, we are optimistic for continued improvement in asset quality in early 2025," said Matthew P. Deines, President and CEO of First Northwest Bancorp.
Conclusion
First Northwest Bancorp's fourth-quarter results highlight the challenges faced by the company, particularly in managing credit costs. However, the improvement in adjusted PPNR and strategic initiatives aimed at enhancing profitability and asset quality provide a positive outlook for the future. Investors and stakeholders will be keenly watching the company's progress in 2025 as it navigates these challenges.
Explore the complete 8-K earnings release (here) from First Northwest Bancorp for further details.
