PORT ANGELES, Wash., April 24, 2025 (GLOBE NEWSWIRE) -- First Northwest Bancorp (Nasdaq: FNWB) ("First Northwest" or the "Company") today reported net income of $1.5 million for the first quarter of 2025, compared to a net loss of $2.8 million for the fourth quarter of 2024 and net income of $396,000 for the first quarter of 2024. Basic and diluted income per share were $0.17 for the first quarter of 2025, compared to basic and diluted loss per share of $0.32 for the fourth quarter of 2024 and basic and diluted income per share of $0.04 for the first quarter of 2024.
In the first quarter of 2025, the Company recorded adjusted pre-tax, pre-provision net revenue ("PPNR")(1) of $1.5 million, compared to $1.4 million for the preceding quarter and $1.2 million for the first quarter of 2024.
The Board of Directors of First Northwest declared a quarterly cash dividend of $0.07 per common share, payable on May 23, 2025, to shareholders of record as of the close of business on May 9, 2025.
Quote from First Northwest President and CEO, Matthew P. Deines:
"We were pleased to see improved profitability in the first quarter of 2025, which helped grow capital levels and tangible book value. We saw improvement on our asset quality metrics, with nonperforming loans 14% lower than the prior quarter, and remain focused on continued asset quality improvement over the balance of 2025. Core commercial and consumer customer growth was positive during the first quarter, with lower net loans and deposits largely the result of a decrease in funding to one large wholesale relationship and reduced brokered deposit balances. We expect better core growth and asset quality trends, combined with ongoing expense discipline and modest margin improvement, will continue to improve profitability and capital in future quarters. With improved profitability, we are evaluating the potential for future stock buybacks."
Key Points for First Quarter and Going Forward
Positive Balance Sheet Trends:
- A favorable deposit mix shift included a $45.0 million decrease in brokered deposits while core customer deposits grew $23.0 million. The loan-to-deposit ratio was stable at 99.9% compared to 99.3% in the fourth quarter of 2024.
- The Company reduced borrowings by $28.9 million. The total cost of funds decreased to 2.67% compared to 2.80% in the fourth quarter of 2024.
- The Company recorded a $1.6 million provision for credit losses on loans in the first quarter of 2025, primarily due to $1.4 million of charge-offs related to three commercial business loans, one commercial construction loan and a small number of consumer loans. This compares to loan credit loss provisions of $3.8 million for the preceding quarter and $1.2 million for the first quarter of 2024.
- We believe the reserve on individually analyzed loans does not represent a universal decline in the collectability of all loans in the portfolio. We continue to work on resolution plans for all troubled borrowers and expect further improvement in nonperforming loans over the course of 2025.
- First Fed Bank's ("First Fed" or the "Bank") balance sheet restructuring continued with the remaining bank-owned life insurance policy ("BOLI") surrender transaction recorded in the first quarter of 2025, with $266,000 of tax and penalties recorded in the provision for income tax. The surrendered policy value was reinvested in the second quarter of 2025. We expect to receive the return of the surrendered funds early in the third quarter of 2025.
- We sadly lost a former Bank employee in the first quarter of 2025, resulting in a $1.1 million BOLI death benefit gain.
- The Company recorded a $846,000 gain on extinguishment of debt related to repurchasing $5.0 million of subordinated debt at a discount during the first quarter of 2025. In addition to the current quarter gain, the future cost related to interest expense on the subordinated debt will be reduced.
- The Company also recognized a $315,000 gain on the conversion of a commercial business loan receivable into a Series A equity investment during the first quarter of 2025.
Selected Quarterly Financial Ratios:
| As of or For the Quarter Ended | ||||||||||||||||||||
| March 31, 2025 | December 31, 2024 | September 30,
2024 | June 30, 2024 | March 31, 2024 | ||||||||||||||||
| Performance ratios: (1) | ||||||||||||||||||||
| Return on average assets | 0.28 | % | -0.51 | % | -0.36 | % | -0.40 | % | 0.07 | % | ||||||||||
| Adjusted PPNR return on average assets (2) | 0.27 | 0.26 | 0.17 | 0.10 | 0.22 | |||||||||||||||
| Return on average equity | 3.92 | -6.92 | -4.91 | -5.47 | 0.98 | |||||||||||||||
| Net interest margin (3) | 2.76 | 2.73 | 2.70 | 2.76 | 2.76 | |||||||||||||||
| Efficiency ratio (4) | 79.4 | 92.2 | 100.3 | 72.3 | 88.8 | |||||||||||||||
| Equity to total assets | 7.22 | 6.89 | 7.13 | 7.17 | 7.17 | |||||||||||||||
| Book value per common share | $ | 16.63 | $ | 16.45 | $ | 17.17 | $ | 16.81 | $ | 17.00 | ||||||||||
| Tangible performance ratios: (1) | ||||||||||||||||||||
| Tangible common equity to tangible assets (2) | 7.15 | % | 6.83 | % | 7.06 | % | 7.10 | % | 7.10 | % | ||||||||||
| Return on average tangible common equity (2) | 3.96 | -6.99 | -4.96 | -5.53 | 0.99 | |||||||||||||||
| Tangible book value per common share (2) | $ | 16.48 | $ | 16.29 | $ | 17.00 | $ | 16.64 | $ | 16.83 | ||||||||||
| Capital ratios (First Fed): (5) | ||||||||||||||||||||
| Tier 1 leverage | 9.5 | % | 9.4 | % | 9.4 | % | 9.4 | % | 9.7 | % | ||||||||||
| Common equity Tier 1 capital | 12.7 | 12.4 | 12.2 | 12.4 | 12.6 | |||||||||||||||
| Total risk-based | 13.9 | 13.6 | 13.4 | 13.5 | 13.6 | |||||||||||||||
| (1 | ) | Performance ratios are annualized, where appropriate. |
| (2 | ) | See reconciliation of Non-GAAP Financial Measures later in this release. |
| (3 | ) | Net interest income divided by average interest-earning assets. |
| (4 | ) | Total noninterest expense as a percentage of net interest income and total other noninterest income. |
| (5 | ) | Current period capital ratios are preliminary and subject to finalization of the FDIC Call Report. |
Adjusted Pre-tax, Pre-Provision Net Revenue (1)
Adjusted PPNR for the first quarter of 2025 increased $40,000 to $1.5 million, compared to $1.4 million for the preceding quarter, and increased $308,000 from $1.2 million in the first quarter one year ago.
| For the Quarter Ended | ||||||||||||||||||||
| (Dollars in thousands) | March 31,
2025 | December 31, 2024 | September 30, 2024 | June 30, 2024 | March 31, 2024 | |||||||||||||||
| Net interest income | $ | 13,847 | $ | 14,137 | $ | 14,020 | $ | 14,235 | $ | 13,928 | ||||||||||
| Total noninterest income | 4,092 | 1,300 | 1,779 | 7,347 | 2,188 | |||||||||||||||
| Total revenue | 17,939 | 15,437 | 15,799 | 21,582 | 16,116 | |||||||||||||||
| Total noninterest expense | 14,249 | 14,233 | 15,848 | 15,609 | 14,303 | |||||||||||||||
| PPNR (1) | 3,690 | 1,204 | (49 | ) | 5,973 | 1,813 | ||||||||||||||
| Less selected nonrecurring adjustments to PPNR: | ||||||||||||||||||||
| BOLI death benefit | 1,059 | 1,536 | - | - | - | |||||||||||||||
| Gain on extinguishment of subordinated debt included in other income | 846 | - | - | - | - | |||||||||||||||
| Gain on conversion of loan receivable into Series A equity investment | 315 | - | - | - | - | |||||||||||||||
| Equity investment repricing adjustment | - | (1,762 | ) | - | - | 651 | ||||||||||||||
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