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First Northwest Bancorp Reports First Quarter 2024 Financial Results

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First Northwest Bancorp reported a return to profitability in Q1 2024, with a focus on balance sheet restructuring, increased market rate loans and securities, and a sale-leaseback transaction planned for six branches. The company emphasized expense management, small business lending, digital banking enhancements, and reducing reliance on term deposits. Share repurchase plans were executed, and a new dividend was declared. Financial results showed improvement in net income, operating expenses, and revenue, with positive growth in loans and deposits. Asset quality and key ratios remained stable.
First Northwest Bancorp ha segnalato un ritorno alla redditività nel primo trimestre del 2024, concentrandosi sulla ristrutturazione del bilancio, l'incremento dei prestiti a tasso di mercato e dei titoli, e la pianificazione di una operazione di sale-leaseback per sei filiali. La società ha messo l'accento sulla gestione delle spese, sui prestiti alle piccole imprese, sul miglioramento della banca digitale e sulla riduzione della dipendenza dai depositi a termine. Sono stati eseguiti piani di riacquisto di azioni e è stato dichiarato un nuovo dividendo. I risultati finanziari hanno mostrato miglioramenti nel reddito netto, nelle spese operative e nei ricavi, con una crescita positiva nei prestiti e nei depositi. La qualità degli asset e gli indicatori chiave sono rimasti stabili.
First Northwest Bancorp informó un retorno a la rentabilidad en el primer trimestre de 2024, centrándose en la reestructuración de balance, el aumento de préstamos a tasa de mercado y valores, y una transacción de venta con arrendamiento posterior planeada para seis sucursales. La compañía enfatizó la gestión de gastos, el préstamo a pequeñas empresas, mejoras en la banca digital y la reducción de dependencia en depósitos a plazo. Se ejecutaron planes de recompra de acciones y se declaró un nuevo dividendo. Los resultados financieros mostraron mejoras en el ingreso neto, los gastos operativos y los ingresos, con un crecimiento positivo en préstamos y depósitos. La calidad de los activos y las ratios clave se mantuvieron estables.
First Northwest Bancorp는 2024년 1분기에 수익성 회복을 보고했습니다. 이는 대차대조표 재구성, 시장 금리 대출 및 증권 확대, 그리고 여섯 지점에 대한 매각 후 임대 거래 계획에 중점을 두었습니다. 회사는 경비 관리, 소기업 대출, 디지털 뱅킹 개선 및 정기 예금 의존도 감소를 강조했습니다. 주식 매입 계획이 실행되었고 새로운 배당금이 선언되었습니다. 재무 결과는 순수익, 운영 비용 및 수익에서 개선을 보였으며, 대출과 예금에서 긍정적인 성장을 나타냈습니다. 자산의 질과 주요 비율은 안정적으로 유지되었습니다.
First Northwest Bancorp a rapporté un retour à la rentabilité au premier trimestre 2024, en se concentrant sur la restructuration du bilan, l'augmentation des prêts à taux de marché et des titres, et une transaction de vente avec location ultérieure prévue pour six succursales. La société a souligné la gestion des dépenses, le prêt aux petites entreprises, les améliorations de la banque numérique, et la réduction de la dépendance aux dépôts à terme. Des plans de rachat d'actions ont été exécutés et un nouveau dividende a été déclaré. Les résultats financiers ont montré une amélioration du revenu net, des dépenses d'exploitation et du chiffre d'affaires, avec une croissance positive des prêts et des dépôts. La qualité des actifs et les ratios clés sont restés stables.
First Northwest Bancorp meldete für das erste Quartal 2024 eine Rückkehr zur Rentabilität, mit einem Fokus auf der Umstrukturierung der Bilanz, erhöhten marktbasierten Krediten und Wertpapieren, und einer geplanten Sale-Leaseback-Transaktion für sechs Filialen. Das Unternehmen betonte das Kostenmanagement, die Kreditvergabe an kleine Unternehmen, die Verbesserungen im digitalen Bankwesen und die Reduzierung der Abhängigkeit von Termineinlagen. Aktienrückkaufpläne wurden durchgeführt und eine neue Dividende wurde erklärt. Die finanziellen Ergebnisse zeigten eine Verbesserung beim Nettoeinkommen, den Betriebskosten und den Einnahmen, mit positivem Wachstum bei Krediten und Einlagen. Die Qualität der Vermögenswerte und die Schlüsselkennzahlen blieben stabil.
Positive
  • The company returned to profitability in Q1 2024, driven by balance sheet restructuring efforts.
  • Over $90 million in market rate loans and securities were added in the first quarter.
  • A sale-leaseback transaction for six branches is planned for the second quarter to increase net interest margin and profitability.
  • Expense management was a focus, along with small business lending and digital banking enhancements.
  • Share repurchase plans were completed, and a new stock buyback plan for 10% of outstanding shares was approved.
  • A quarterly cash dividend of $0.07 per common share was declared, payable on May 24, 2024.
  • Financial results showed a significant improvement in net income, operating expenses, and revenue compared to the previous quarter.
  • Loans grew by $51.4 million, and customer deposits increased by 0.4% while reliance on brokered deposits decreased by 7.4%.
  • Asset quality metrics remained stable, with nonperforming assets and classified loans at consistent levels.
  • Key financial ratios, including return on average assets, return on equity, and net interest margin, showed positive trends.
Negative
  • None.

Insights

The announcement from First Northwest Bancorp outlines a strategic shift towards profitability, marking a pivot from the loss reported in the previous quarter. The financial results show the company's resilience and adaptability in managing its balance sheet. This is evidenced by a disciplined approach to expense management, resulting in a noticeable decrease in noninterest expense. The repurchase of significant amounts of its own stock indicates the management's confidence in the company's value, potentially leading to an increase in earnings per share.

From an investor's perspective, this could signal underlying strength in the company's operations and the potential for increased shareholder value. The decline in term deposits and an increase in non-maturity deposits may also reflect a strategic shift towards more stable funding sources. However, investors would need to watch the net interest margin closely, as it has experienced a decline, which could impact profitability if the trend continues.

The regional banking sector, where First Northwest Bancorp operates, is often influenced by local economic conditions. The bank's strategy to reduce reliance on term deposits and increase current market rate loans and securities could be construed as an agile response to the prevailing interest rate environment. This is complemented by their efforts to enhance digital banking platforms, which aligns with industry-wide trends towards digital transformation and could improve customer retention and attract new clients.

As an investor, observing the bank's progress in the small business lending program could shed light on its potential growth in a niche market that is typically underserved by larger institutions. The balance sheet restructuring and sale-leaseback transactions are also noteworthy as they could streamline the bank's operations and reduce overhead costs in the long term.

The financial report indicates that the bank has maintained stable asset quality with no significant increase in classified loans. It's imperative to understand this particular component, as a bank's health is often judged by its loan portfolio's quality. A zero total reserve for the identified impaired loans suggests that the collateral value is adequate, which is reassuring for risk-conscious investors. Nonetheless, vigilance is warranted given the current economic uncertainties.

Moreover, the approval of a new stock buyback plan could be perceived as a strategic move to enhance shareholder value, but it also reflects the bank's solid capital position, which is important for weathering potential downturns. This sort of proactive financial maneuvering is indicative of a robust governance structure that might bode well for long-term investors looking for stability in their investments.

PORT ANGELES, Wash., April 25, 2024 (GLOBE NEWSWIRE) -- "The company returned to profitability in Q1 2024 following the first step of our balance sheet restructure in the fourth quarter of 2023," said Matthew P. Deines, President and CEO. "We continue to execute on this strategy as we added over $90 million in current market rate loans and securities over the course of the first quarter. We will continue this strategy in the second quarter as we prepare to execute on a sale-leaseback transaction for six of our branches located on the Olympic Peninsula. We anticipate this transaction will enable additional securities sales, furthering our goal of increasing our net interest margin and overall profitability. We were able to manage operating expenses well during the quarter and we maintain our disciplined approach to improving earnings per share and return on average equity.

"We are making good progress on our small business lending program, operating accounts for small to medium sized businesses and an enhancement to our digital business banking platform. We are also focused on reducing our reliance on term deposits, both brokered and retail. Term deposits decreased during the quarter by $39.9 million or 6.1%. Non-maturity deposits increased by $29.7 million or 2.9% over the past three months. Other than two previously identified criticized loans, we have not seen deterioration in our credit quality metrics during the quarter. Classified loans remain at 2.1% of total loans, consistent with levels at December 31, 2023. Both of these loan relationships have been evaluated for individual impairment as of March 31, 2024, and the total reserve for these relationships is zero, as the discounted collateral value on these loans appears to be sufficient to repay the principal balances in full.

"We completed our 2020 stock buyback plan during the quarter and to date have repurchased over 25% of the shares issued in our 2015 initial public offering. On April 23, 2024, the Board of Directors approved a new stock buyback plan for up to 10% of the shares currently outstanding. Our capital position remains strong with all bank level regulatory ratios above the well-capitalized criteria."

The Board of Directors of First Northwest Bancorp declared a quarterly cash dividend of $0.07 per common share. The dividend will be payable on May 24, 2024, to shareholders of record as of the close of business on May 10, 2024.

2024 FINANCIAL RESULTS 1Q 24  4Q 23  1Q 23 
OPERATING RESULTS (in millions)            
Net income (loss) $0.4  $(5.5) $3.5 
Pre-provision net interest income  13.9   14.2   16.3 
Noninterest expense  14.3   17.0   14.9 
Total revenue, net of interest expense *  16.1   11.3   18.6 
PER SHARE DATA            
Basic and diluted earnings (loss) $0.04  $(0.62) $0.39 
Book value  17.00   16.99   16.57 
Tangible book value *  16.83   16.83   16.38 
BALANCE SHEET (in millions)            
Total assets $2,240  $2,202  $2,172 
Total loans  1,711   1,660   1,579 
Total deposits  1,667   1,677   1,594 
Total shareholders' equity  161   163   160 
ASSET QUALITY            
Net charge-off ratio (1)  0.19%  0.14%  0.25%
Nonperforming assets to total assets  0.87   0.85   0.12 
Allowance for credit losses on loans            
to total loans  1.05   1.05   1.10 
Nonaccrual loan coverage ratio  92   94   661 
SELECTED RATIOS            
Return on average assets (1)  0.07%  -1.03%  0.70%
Return on average equity (1)  0.98   -14.05   8.98 
Return on average tangible equity (1) *  0.99   -14.20   9.08 
Net interest margin  2.76   2.84   3.46 
Efficiency ratio  88.75   150.81   79.78 
Bank common equity tier 1 (CETI) ratio  12.56   13.12   13.34 
Bank total risk-based capital ratio  13.57   14.11   14.35 

(1)  Performance ratios are annualized, where appropriate.
* See reconciliation of Non-GAAP Financial Measures later in this release.

 2024 Highlights
First Fed Bank ("First Fed" or "Bank") continues to restructure the balance sheet to improve the yield on earning assets.
 -  During the first quarter, First Fed purchased $45.3 million of higher-yielding security investments.
 -  Executed a new loan hedge that added 3 basis points to the net interest margin in the first quarter.
 -  Initiated conversion of lower-yielding bank-owned life insurance ("BOLI") policies expected to be finalized in the third quarter.
 -  Improved earning assets yield by 15 basis points over the prior quarter to 5.42%.
Loans grew during the first quarter by $51.4 million, or 3.1%, to $1.71 billion, with a weighted-average yield on new loans of 8.2%.
The Company added Sean Brennan, an experienced banker bringing additional industry insights, to the Board of Directors.
Hired seasoned professionals to lead digital innovation and commercial business lending.
Repurchased 214,132 shares of Company stock during the quarter, which closed out the October 2020 Stock Repurchase Plan.
New share repurchase plan approved in April 2024 authorizing the repurchase of 10%, or 944,279, of authorized and outstanding shares.
Customer deposits increased 0.4% to $1.47 billion while reliance on brokered deposits decreased 7.4% during the first quarter.
Estimated insured deposits totaled $1.3 billion, or 78% of total deposits. Available liquidity to uninsured deposit coverage remains strong at 1.5x.
Classified loans remained flat compared to December 31, 2023, at 2.1% of total loans.
Expense management resulted in operating expenses of $14.3 million, a reduction of $600,000, or 4%, from the first quarter of 2023.
  

First Northwest Bancorp (Nasdaq: FNWB) ("First Northwest" or "Company") today reported net income of $396,000 for the first quarter of 2024, compared to a net loss of $5.5 million for the fourth quarter of 2023 and net income of $3.5 million for the first quarter of 2023. Basic and diluted income per share were $0.04 for the first quarter of 2024, compared to basic and diluted loss per share of $0.62 for the fourth quarter of 2023 and basic and diluted income per share of $0.39 for the first quarter of 2023. In the first quarter of 2024, the Company generated a return on average assets of 0.07%, a return on average equity of 0.98% and a return on average tangible common equity* of 0.99%. Income before provision for income taxes was $843,000 for the current quarter, compared to a loss of $6.9 million for the preceding quarter, an increase of $7.7 million, or 112.3%, and decreased $3.4 million compared to income of $4.3 million for the first quarter of 2023.

The Bank continued efforts to restructure the balance sheet to improve the earning asset yield, which started in the fourth quarter of 2023. Investment security purchases during the first quarter of 2024 totaled $45.3 million, carrying an estimated weighted-average yield of 6.3% with a weighted-average life of 5.6 years. The annualized interest income on these securities is anticipated to provide an additional $2.9 million to revenue.

Also in the first quarter of 2024, we established a fair value hedge on loans to manage ongoing interest rate risk by reducing liability sensitivity while also increasing interest income. It is a four-year fixed-for-floating contract. We estimate that if rates remain flat, this hedge will add $1.7 million of annualized interest income in 2024. The estimated impact will be reduced if the Federal Reserve implements rate cuts during the year.

The balance sheet restructure plan also includes the surrender of $22.5 million and exchange of $3.5 million of existing BOLI contracts to reinvest in higher yielding products, which is anticipated to add about $1 million to revenue each year. The first-year revenue increase will be partially offset by taxes on surrender values and charges on exchanged contracts. The first $6.1 million was surrendered during the first quarter with the remaining surrender transactions expected to complete by the end of the third quarter of 2024.

In addition to our new board member, Sean Brennan, First Fed added two new executive roles to foster a sharpened focus on digital and strategic initiatives and welcomes an additional Director of Commercial Banking. The Chief Innovation Officer, David Edelstein, will lead digital banking, technology, data, and fintech partnerships. Mr. Edelstein brings more than 25 years of leadership experience in financial services and technology. In addition, Chris Riffle was promoted to Chief Strategy Officer, and will focus on First Fed’s strategic initiatives with specific emphasis on planning and optimization of systems, teams, and processes. These new roles strengthen our commitment to deliver outstanding customer experiences by combining our trusted local presence with digital solutions. Charlie Guildner is expected to join the commercial banking team in the second quarter of 2024 to lead the North Cascades region and drive commercial business loan growth. Mr. Guildner has nearly 40 years of community banking experience, including having served President and CEO of North Cascades Bank.

Net Interest Income
Total interest income increased $1.0 million to $27.3 million for the first quarter of 2024, compared to $26.3 million in the previous quarter, and increased $4.0 million compared to $23.3 million in the first quarter of 2023. Interest income increased in the current quarter due to higher yields on loans, investments and interest-earning deposits in banks and an increased volume of loans. Interest and fees on loans increased year-over-year as First Fed's loan portfolio grew as a result of draws on new and existing lines of credit, originations of multi-family and home equity loans, and auto and manufactured home loan purchases. Loan yields increased over the prior year due to higher rates on new originations as well as the repricing of variable rate loans tied to the Prime Rate or other indices.

Total interest expense increased $1.3 million to $13.4 million for the first quarter of 2024, compared to $12.1 million in the fourth quarter of 2023, and increased $6.4 million compared to $7.0 million in the first quarter a year ago. Current quarter interest expense was higher due to a 31 basis point increase in the cost of deposits to 2.43% for the quarter ended March 31, 2024, from 2.12% for the prior quarter. During the first quarter, customers continued to shift their deposits into higher paying products, resulting in a higher cost of deposits for the Bank. The increase over the first quarter of 2023 was the result of a 131 basis point increase in the cost of deposits from 1.12% in the first quarter one year ago, along with higher volumes and rates paid on certificates of deposit ("CDs"). A shift in the deposit mix from transaction and savings accounts to money market accounts and CDs also added to the higher cost of deposits compared to the first quarter of 2023. Higher costs of brokered CDs also contributed to additional deposit costs with a 195 basis point increase to 4.94% for the current quarter compared to 2.99% for the first quarter one year ago.

Net interest income before provision for credit losses for the first quarter of 2024 decreased $267,000, or 1.9%, to $13.9 million, compared to $14.2 million for the preceding quarter, and decreased $2.4 million, or 14.6%, from the first quarter one year ago.

The Company recorded a $970,000 provision for credit losses in the first quarter of 2024, primarily due to additional charge-offs from the Splash unsecured consumer loan program and an increase in commercial business loan balances. Decreases attributable to the loss factors applied to Woodside auto loans as well as construction loans at quarter end were offset by increases to the loss factors applied to one-to-four family loans, home equity lines of credit and home equity loans. The provision for credit losses on loans was partially offset by a provision recovery on unfunded commitments due to a decrease in volume at quarter end. This compares to a credit loss provision of $1.2 million for the preceding quarter and a $500,000 recapture of provision for the first quarter of 2023.

The net interest margin decreased to 2.76% for the first quarter of 2024, from 2.84% for the prior quarter, and decreased 70 basis points from 3.46% for the first quarter of 2023. Decreases from both the prior quarter and the same quarter one year ago are due to higher funding costs for deposits and borrowed funds. The weighted-average yield on new loan originations was 8.2%, which partially offset the increase in the cost of funds. Organic loan production was augmented with higher-yielding purchased loans through established third-party relationships. Interest income on the Bank's fair value hedging agreements on securities increased quarter-over-quarter by $157,000. The fair value hedge on loans established mid-quarter added $173,000 in interest income for the first quarter of 2024.

The yield on average earning assets for the first quarter of 2024 increased 15 basis points to 5.42% compared to the fourth quarter of 2023 and increased 47 basis points from 4.95% for the first quarter of 2023. The first quarter increase is primarily attributable to higher loan rates at origination and increased yields on variable-rate loans. The year-over-year increase was primarily due to higher average loan balances augmented by increases in yields, which were positively impacted by the rising rate environment and overall improvements in the mix of interest-earning assets.

The cost of average interest-bearing liabilities increased 27 basis points to 3.14% for the first quarter of 2024, compared to 2.87% for the fourth quarter of 2023, and increased 133 basis points from 1.81% for the first quarter of 2023. Total cost of funds increased to 2.74% for the first quarter of 2024 from 2.48% in the prior quarter and increased from 1.53% for the first quarter of 2023.

Current quarter increases were due to higher costs on interest-bearing customer deposits due to competitive pressures related to continued higher market rates and migration from lower costing deposits to higher yield money market accounts. The volume of brokered CDs decreased to $192.2 million from the linked quarter. Brokered offerings were issued at nominally higher rates.

The increase over the same quarter last year was driven by higher rates paid on deposits and borrowings and higher average CD balances. The Company attracted and retained funding through the use of promotional products and a focus on digital account acquisition during 2023. The mix of retail deposit balances shifted from no or low-cost transaction accounts towards higher cost term certificate and higher yield money market and savings products. Retail CDs represented 28.4%, 30.2% and 22.8% of retail deposits at March 31, 2024, December 31, 2023 and March 31, 2023, respectively. Average interest-bearing deposit balances increased $43.0 million, or 3.1%, to $1.42 billion for the first quarter of 2024 compared to the fourth quarter of 2023 and increased $133.6 million, or 10.4%, compared to $1.29 billion for the first quarter of 2023.

Selected Yields 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Loan yield  5.51%  5.38%  5.31%  5.38%  5.16%
Investment securities yield  4.75   4.53   4.18   4.09   3.93 
Cost of interest-bearing deposits  2.86   2.52   2.22   1.87   1.37 
Cost of total deposits  2.43   2.12   1.85   1.54   1.12 
Cost of borrowed funds  4.52   4.50   4.45   4.36   3.92 
Net interest spread  2.28   2.40   2.54   2.84   3.14 
Net interest margin  2.76   2.84   2.97   3.25   3.46 
                     

Noninterest Income
Noninterest income increased to $2.2 million for the first quarter of 2024 compared to a loss of $2.9 million for the fourth quarter of 2023. During the fourth quarter of 2023, there was a $5.4 million loss on the sale of lower-yielding securities that have since been reinvested at higher yields. The decrease in some of the other income accounts is due to one-time entries recorded in the fourth quarter of 2023 for the gain on sale of Visa, Inc. Class B common stock of $470,000 and $200,000 of funds recouped on Splash loan charge-offs.

Noninterest income decreased 6.3% from $2.3 million in the same quarter one year ago, primarily due to lower servicing asset valuation and gain on sale of loans, partially offset by an unrealized gain on partnership investments. Saleable mortgage loan production and related gains continued to be impacted by higher market rates on mortgage loans compared to the prior year.

Noninterest Income                    
$ in thousands 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Loan and deposit service fees $1,102  $1,068  $1,068   1,064  $1,141 
Sold loan servicing fees and servicing rights mark-to-market  219   276   98   (191)  493 
Net gain on sale of loans  52   33   171   58   176 
Net (loss) gain on sale of investment securities     (5,397)         
Increase in cash surrender value of bank-owned life insurance  243   260   252   190   226 
Other income  572   831   1,315   590   298 
Total noninterest income $2,188  $(2,929) $2,904  $1,711  $2,334 
 

Noninterest Expense
Noninterest expense totaled $14.3 million for the first quarter of 2024, compared to $17.0 million for the preceding quarter and $14.9 million for the first quarter a year ago. Other expense decreased this quarter due to the one-time entries recorded in the fourth quarter of 2023 of $1.5 million for the Quil Ventures commitment receivable write-off, an accrual of $718,000 for a potential civil money penalty proposed by the FDIC and a write-off of investor accounting related items totaling $725,000. Current quarter decreases also included a reduction in consulting fees of $223,000, a reduction in software licensing fees of $158,000 and a $218,000 reduction in the accrual for a potential civil money penalty that were partially offset by increases in medical benefits of $142,000 and marketing expenses of $266,000.

The decrease in total noninterest expenses compared to the first quarter of 2023 is mainly due to lower advertising costs. The Company continues to focus on controlling compensation expense and reducing advertising and other discretionary spending while the net interest margin compression due to higher market rates and an inverted yield curve persists. We do not anticipate a recurrence of any of the one-time charges referred to previously.

Noninterest Expense                    
$ in thousands 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Compensation and benefits $8,128  $7,397  $7,795  $8,180  $7,837 
Data processing  1,944   2,107   1,945   2,080   2,038 
Occupancy and equipment  1,240   1,262   1,173   1,214   1,209 
Supplies, postage, and telephone  293   351   292   435   355 
Regulatory assessments and state taxes  513   376   446   424   389 
Advertising  309   235   501   929   1,041 
Professional fees  910   1,119   929   884   806 
FDIC insurance premium  386   418   369   313   257 
Other expense  580   3,725   926   758   939 
Total noninterest expense $14,303  $16,990  $14,376  $15,217  $14,871 
                     
Efficiency ratio  88.75%  150.81%  80.52%  86.01%  79.78%
                     

Investment Securities
Investment securities increased $30.3 million, or 10.3%, to $326.0 million at March 31, 2024, compared to $295.6 million three months earlier, and decreased $3.1 million compared to $329.1 million at March 31, 2023. The market value of the portfolio decreased $749,000 during the first quarter of 2024 primarily due to widening spreads on the Bank's subordinate debt investments. At March 31, 2024, municipal bonds totaled $87.0 million and comprised the largest portion of the investment portfolio at 26.7%. Agency issued mortgage-backed securities ("MBS agency") were the second largest segment, totaling $83.3 million, or 25.5%, of the portfolio at quarter end. Included in MBS non-agency are $29.9 million of commercial mortgaged-backed securities ("CMBS"), of which 93.3% are in "A" tranches and the remaining 6.7% are in "B" tranches. Our largest exposure is to long-term care facilities, which comprises 65.3%, or $19.5 million, of our private label CMBS securities. All of the CMBS bonds have credit enhancements ranging from 29% to 99%, with a weighted-average credit enhancement of 56%, that further reduces the risk of loss on these investments.

The estimated average life of the securities portfolio was approximately 7.78 years, compared to 7.69 years in the prior quarter and 8.08 years in the first quarter of 2023. The effective duration of the portfolio was approximately 4.41 years at March 31, 2024, compared to 4.75 years in the prior quarter and 5.08 years at the end of the first quarter of 2023. Our recent investments have primarily been floating rate securities to take advantage of higher short-term rates above those offered on cash and to reduce our liability sensitivity.

Investment Securities Available for Sale, at Fair Value                    
$ in thousands 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Municipal bonds $87,004  $87,761  $93,995  $100,503  $101,910 
U.S. Treasury notes        2,377   2,364   2,390 
International agency issued bonds (Agency bonds)        1,703   1,717   1,745 
U.S. government agency issued asset-backed securities (ABS agency)  14,822   11,782          
Corporate issued asset-backed securities (ABS corporate)  13,929   5,286          
Corporate issued debt securities (Corporate debt):                    
Senior positions  13,617   9,270   16,975   16,934   17,025 
Subordinated bank notes  39,414   42,184   37,360   36,740   38,092 
U.S. Small Business Administration securities (SBA)  7,911             
Mortgage-backed securities:                    
U.S. government agency issued mortgage-backed securities (MBS agency)  83,271   63,247   66,946   71,565   74,946 
Non-agency issued mortgage-backed securities (MBS non-agency)  65,987   76,093   89,968   92,140   92,978 
Total securities available for sale, at fair value $325,955  $295,623  $309,324  $321,963  $329,086 
 

Loans and Unfunded Loan Commitments
Net loans, excluding loans held for sale, increased $50.3 million, or 3.1%, to $1.69 billion at March 31, 2024, from $1.64 billion at December 31, 2023, and increased $130.7 million, or 8.4%, from $1.56 billion one year ago.

Commercial business loans increased $24.0 million, primarily attributable to an increase in our Northpointe Bank Mortgage Purchase Program participation from $9.5 million last quarter to $15.0 million at the current quarter end, $8.7 million of new Bankers Healthcare group loans and organic originations partially offset by payments. Auto and other consumer loans increased $19.7 million during the current quarter with $13.4 million of new Woodside auto loan purchases and a pool purchase of Triad manufactured home loans totaling $5.1 million, partially offset by payments. Multi-family loans increased $6.4 million during the current quarter. The increase was primarily the result of $5.1 million of organic loan production and $3.7 million of construction loans converting into permanent amortizing loans, partially offset by scheduled payments. One-to-four family loans increased $5.5 million during the current quarter as a result of $10.4 million in residential construction loans that converted to permanent amortizing loans, partially offset by payments. Home equity loans increased $3.0 million over the previous quarter due to draws on new and existing commitments and $833,000 from organic home equity loan production.

Construction loans decreased $4.3 million during the quarter, with $14.5 million converting into fully amortizing loans, partially offset by draws on new and existing loans. New single-family residence construction loan commitments totaled $1.9 million in the first quarter, compared to $2.3 million in the preceding quarter. Commercial real estate loans decreased $2.9 million during the current quarter compared to the previous quarter due to a reclassification of $2.9 million to multi-family along with payoffs and scheduled payments exceeding originations.

The Company originated $5.0 million in residential mortgages during the first quarter of 2023 and sold $5.2 million, with an average gross margin on sale of mortgage loans of approximately 2.16%. This production compares to residential mortgage originations of $4.5 million in the preceding quarter with sales of $4.2 million, and an average gross margin of 2.01%. Single-family home inventory remains historically low and higher market rates on mortgage loans continue to limit saleable mortgage loan production.

Loans by Collateral and Unfunded Commitments                    
$ in thousands 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
One-to-four family construction $70,100  $60,211  $72,991  $74,787  $65,770 
All other construction and land  55,286   69,484   71,092   81,968   95,769 
One-to-four family first mortgage  436,543   426,159   409,207   428,879   394,595 
One-to-four family junior liens  12,608   12,250   12,859   11,956   9,140 
One-to-four family revolving open-end  45,536   42,479   38,413   33,658   30,473 
Commercial real estate, owner occupied:                    
Health care  29,946   22,523   22,677   23,157   23,311 
Office  17,951   18,468   18,599   18,797   22,246 
Warehouse  14,683   14,758   14,890   15,158   16,782 
Other  55,063   61,304   57,414   60,054   52,212 
Commercial real estate, non-owner occupied:                    
Office  53,099   53,548   53,879   54,926   58,711 
Retail  50,478   51,384   51,466   51,824   52,175 
Hospitality  66,982   67,332   61,339   53,416   45,978 
Other  93,040   94,822   96,083   90,870   93,207 
Multi-family residential  339,907   333,428   325,338   296,398   284,699 
Commercial business loans  90,781   76,920   75,068   80,079   80,825 
Commercial agriculture and fishing loans  10,200   5,422   4,437   7,844   1,829 
State and political subdivision obligations  405   405   439   439   439 
Consumer automobile loans  139,524   132,877   134,695   137,860   136,540 
Consumer loans secured by other assets  122,895   108,542   104,999   105,653   106,360 
Consumer loans unsecured  6,415   7,712   9,093   10,437   8,403 
Total loans $1,711,442  $1,660,028  $1,634,978  $1,638,160  $1,579,464 
                     
Unfunded loan commitments $51,038  $149,631  $154,722  $168,668  $202,720 
                     

Deposits
Total deposits decreased $10.3 million to $1.67 billion at March 31, 2024, compared to $1.68 billion at December 31, 2023, and increased $72.4 million, or 4.5%, compared to $1.59 billion one year ago. During first quarter of 2024, total retail deposit balances increased $5.2 million while brokered deposit balances decreased $15.4 million. Compared to the preceding quarter, there were balance increases in business money market accounts of $19.6 million, consumer money market accounts of $13.5 million, consumer demand accounts of $2.0 million, and business savings accounts of $379,000. These increases were offset by decreases in consumer CDs of $20.9 million, brokered CDs of $15.4 million, consumer savings accounts of $6.0 million, public fund CDs of $2.5 million, business CDs of $1.1 million and business demand accounts of $163,000, during the first quarter of 2024. Increases in demand and money market accounts were driven by customer behavior as they sought out higher rates offered as CD specials matured. Deposits originated through digital channels, which are included in the deposits described above, increased $15.3 million, or 23.3%, during the current quarter to $81.1 million at March 31, 2024. Overall, the current rate environment continues to contribute to greater competition for deposits with additional deposit rate specials offered to attract new funds.

The Company estimates that $372.4 million, or 22%, of total deposit balances were uninsured at March 31, 2024. Approximately $242.7 million, or 14%, of total deposits were uninsured business and consumer deposits with the remaining $129.7 million, or 8%, consisting of uninsured public funds at March 31, 2024. Uninsured public fund balances were fully collateralized. The Bank holds an FHLB letter of credit as part of our participation in the Washington Public Deposit Protection Commission program which covered $112.2 million of related deposit balances while the remaining $17.5 million was fully covered through pledged securities at March 31, 2024.

As of March 31, 2024, consumer deposits made up 59% of total deposits with an average balance of $24,000 per account, business deposits made up 21% of total deposits with an average balance of $49,000 per account, public fund deposits made up 8% of total deposits with an average balance of $1.5 million per account and the remaining 12% of account balances are brokered CDs. We have maintained the majority of our public fund relationships for over 10 years. Approximately 69% of our customer base is located in rural areas, with 19% in urban areas and the remaining 12% are brokered deposits as of March 31, 2024.

Deposits                    
$ in thousands 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Noninterest-bearing demand deposits $252,761  $252,083  $269,800  $280,475  $292,119 
Interest-bearing demand deposits  170,729   169,418   182,361   179,029   189,187 
Money market accounts  395,480   362,205   372,706   374,269   402,760 
Savings accounts  236,550   242,148   253,182   260,279   242,117 
Certificates of deposit, retail  418,904   443,412   410,136   379,484   333,510 
Total retail deposits  1,474,424   1,469,266   1,488,185   1,473,536   1,459,693 
Certificates of deposit, brokered  192,200   207,626   169,577   179,586   134,515 
Total deposits $1,666,624  $1,676,892  $1,657,762  $1,653,122  $1,594,208 
                     
Public fund and tribal deposits included in total deposits $134,120  $132,652  $128,627  $130,974  $119,969 
Total loans to total deposits  103%  99%  99%  99%  99%


Deposit Mix 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Noninterest-bearing demand deposits  15.2%  15.0%  16.3%  17.0%  18.3%
Interest-bearing demand deposits  10.2   10.1   11.0   10.8   11.9 
Money market accounts  23.7   21.6   22.5   22.6   25.3 
Savings accounts  14.2   14.4   15.3   15.7   15.2 
Certificates of deposit, retail  25.2   26.5   24.7   23.0   20.9 
Certificates of deposit, brokered  11.5   12.4   10.2   10.9   8.4 


Cost of Deposits for the Quarter Ended 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Interest-bearing demand deposits  0.45%  0.45%  0.46%  0.45%  0.42%
Money market accounts  2.08   1.48   1.22   0.99   0.73 
Savings accounts  1.63   1.54   1.42   1.22   0.70 
Certificates of deposit, retail  4.13   3.92   3.52   3.25   2.59 
Certificates of deposit, brokered  4.94   4.72   4.31   3.44   2.99 
Cost of total deposits  2.43   2.12   1.85   1.54   1.12 
                     

Asset Quality
Nonperforming loans were $19.5 million at March 31, 2024, an increase of $837,000 from December 31, 2023, primarily attributable to two delinquent commercial business loans with an aggregate total of $1.1 million and a $708,000 multi-family loan placed on nonaccrual due to credit concerns, partially offset by a $544,000 payment received on the commercial construction loan previously placed on nonaccrual and a $591,000 single family residence loan that was paid off during the current quarter. The percentage of the allowance for credit losses on loans to nonperforming loans decreased to 92% at March 31, 2024, from 94% at December 31, 2023, and from 661% at March 31, 2023. Classified loans increased $1.1 million to $36.2 million at March 31, 2024, due to the downgrade of the three loans noted above during the first quarter. A $14.4 million construction loan relationship, which became a classified loan in the fourth quarter of 2022, and a $9.3 million commercial loan relationship which became classified in the fourth quarter of 2023, account for 66% of the classified loan balance at March 31, 2024. The Bank has exercised legal remedies, including the appointment of a third-party receivership and foreclosure actions, to liquidate the underlying collateral to satisfy the real estate loans in the two relationships.

The allowance for credit losses on loans as a percentage of total loans was 1.05% at March 31, 2024, and December 31, 2023, decreasing from 1.10% one year earlier. The current quarter decrease can be attributed to changes in the loan mix and an update to the loss factors applied.

$ in thousands 1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Allowance for credit losses on loans to total loans  1.05%  1.05%  1.04%  1.06%  1.10%
Allowance for credit losses on loans to nonaccrual loans  92   94   714   677   661 
Nonaccrual loans to total loans  1.14   1.12   0.15   0.16   0.17 
Net charge-off ratio (annualized)  0.19   0.14   0.30   0.10   0.25 
                     
Total nonaccrual loans $19,481  $18,644  $2,374  $2,554  $2,633 
Reserve for unfunded commitments $548  $817  $828  $1,336  $1,336 
                     

Capital
Total shareholders’ equity decreased to $160.5 million at March 31, 2024, compared to $163.3 million three months earlier, due to a decrease in the fair market value of the available-for-sale investment securities portfolio, net of taxes, of $588,000, dividends declared of $671,000 and share repurchases totaling $3.0 million, partially offset by net income of $396,000 and a $730,000 increase in the after-tax fair market value of derivatives.

Book value per common share was $17.00 at March 31, 2024, compared to $16.99 at December 31, 2023, and $16.57 at March 31, 2023. Tangible book value per common share* was $16.83 at March 31, 2024, compared to $16.83 at December 31, 2023, and $16.38 at March 31, 2023.

Capital levels for both the Company and its operating bank, First Fed, remain in excess of applicable regulatory requirements and the Bank was categorized as "well-capitalized" at March 31, 2024. Common Equity Tier 1 and Total Risk-Based Capital Ratios at March 31, 2024, were 12.6% and 13.6%, respectively.

  1Q 24  4Q 23  3Q 23  2Q 23  1Q 23 
Equity to total assets  7.17%  7.42%  7.25%  7.38%  7.38%
Tangible common equity to tangible assets *  7.10   7.35   7.17   7.31   7.30 
Capital ratios (First Fed Bank):                    
Tier 1 leverage  9.74   9.90   10.12   10.16   10.41 
Common equity Tier 1 capital  12.56   13.12   13.43   13.10   13.34 
Tier 1 risk-based  12.56   13.12   13.43   13.10   13.34 
Total risk-based  13.57   14.11   14.38   14.08   14.35 
                     

Share Repurchase Program and Cash Dividend
First Northwest continued to return capital to our shareholders through cash dividends and share repurchases during the first quarter of 2024. We repurchased 214,132 shares of common stock under the Company's October 2020 Stock Repurchase Plan ("Repurchase Plan") at an average price of $14.03 per share for a total of $3.0 million during the quarter ended March 31, 2024. All authorized shares under the Repurchase Plan have been repurchased. In addition, the Company paid cash dividends totaling $667,000 in the first quarter of 2024. 


* See reconciliation of Non-GAAP Financial Measures later in this release.

Awards/Recognition
The Company received several accolades as a leader in the community in the last year.

Best of the Northwest

 
In October 2023, the First Fed team was honored to bring home the Gold for Best Bank in the Best of the Northwest survey hosted by Bellingham Alive for the second year in a row.
2023 Best of Olympic Peninsula

 
In September 2023, the First Fed team was recognized in the 2023 Best of Olympic Peninsula surveys, winning Best Bank and Best Financial Advisor in Clallam County. First Fed was also a finalist for Best Bank in Jefferson County, Best Employer in Kitsap County and Best Bank and Best Financial Institution in Bainbridge.
Puget Sound Business Journal’s Best Workplaces

 
In June 2023, First Fed was named on the Puget Sound Business Journal’s Best Workplaces list. First Fed has been recognized as one the top 100 workplaces in Washington, as voted for two years in row by each company’s own employees.
Puget Sound Business Journal Top Corporate Citizen

 
In May 2023, First Fed was recognized as a Top Corporate Citizen by the Puget Sound Business Journal. The Corporate Citizenship Awards honors local corporate philanthropists and companies making significant contributions in the region. The top 25 small, medium and large-sized companies were recognized in addition to nine other honorees last year. First Fed was ranked #1 in the medium-sized company category in 2023 and was ranked #3 in the same category in 2022.
Bauer Financial 5-star bank
First Fed has been rated a 5-star bank by Bauer Financial, a leading independent bank and credit union rating and research firm. This top rating indicates that First Fed is one of the strongest banks in the nation based on capital, loan quality and other detailed performance criteria.
  

About the Company
First Northwest Bancorp (Nasdaq: FNWB) is a financial holding company engaged in investment activities including the business of its subsidiary, First Fed Bank. First Fed is a Pacific Northwest-based financial institution which has served its customers and communities since 1923. Currently First Fed has 16 locations in Washington state including 12 full-service branches. First Fed’s business and operating strategy is focused on building sustainable earnings by delivering a full array of financial products and services for individuals, small businesses, non-profit organizations and commercial customers. In 2022, First Northwest made an investment in The Meriwether Group, LLC, a boutique investment banking and accelerator firm. Additionally, First Northwest focuses on strategic partnerships to provide modern financial services such as digital payments and marketplace lending. First Northwest Bancorp was incorporated in 2012 and completed its initial public offering in 2015 under the ticker symbol FNWB. The Company is headquartered in Port Angeles, Washington.

Forward-Looking Statements
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision, and include, but are not limited to, statements about our plans, objectives, expectations and intentions that are not historical facts, and other statements often identified by words such as "believes," "expects," "anticipates," "estimates," or similar expressions. These forward-looking statements are based upon current management beliefs and expectations and may, therefore, involve risks and uncertainties, many of which are beyond our control. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; pressures on liquidity, including as a result of withdrawals of deposits or declines in the value of our investment portfolio; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Companys latest Annual Report on Form 10-K under the section entitled "Risk Factors," and other filings with the Securities and Exchange Commission ("SEC"),which are available on our website at www.ourfirstfed.com and on the SECs website at www.sec.gov.

Any of the forward-looking statements that we make in this press release and in the other public statements we make may turn out to be incorrect because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company's operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2024 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Companys operations and stock price performance.

For More Information Contact:
Matthew P. Deines, President and Chief Executive Officer
Geri Bullard, EVP, Chief Financial Officer and Chief Operating Officer
IRGroup@ourfirstfed.com
360-457-0461


FIRST NORTHWEST BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data) (Unaudited)
 
  March 31, 2024  December 31, 2023  March 31, 2023  Three Month Change  One Year Change 
ASSETS                    
Cash and due from banks $15,562  $19,845  $17,844   -21.6%  -12.8%
Interest-earning deposits in banks  61,784   103,324   122,773   -40.2   -49.7 
Investment securities available for sale, at fair value  325,955   295,623   329,086   10.3   -1.0 
Loans held for sale  988   753      31.2   100.0 
Loans receivable (net of allowance for credit losses on loans $17,958, $17,510, and $17,396)  1,692,774   1,642,518   1,562,068   3.1   8.4 
Federal Home Loan Bank (FHLB) stock, at cost  15,876   13,664   15,602   16.2   1.8 
Accrued interest receivable  8,909   7,894   7,205   12.9   23.7 
Premises and equipment, net  11,028   18,049   18,252   -38.9   -39.6 
Premises held for sale, net  6,751         100.0   100.0 
Servicing rights on sold loans, at fair value  3,820   3,793   4,224   0.7   -9.6 
Bank-owned life insurance, net  34,681   40,578   39,878   -14.5   -13.0 
Equity and partnership investments  15,121   14,794   14,392   2.2   5.1 
Goodwill and other intangible assets, net  1,085   1,086   1,088   -0.1   -0.3 
Deferred tax asset, net  12,704   13,001   14,211   -2.3   -10.6 
Prepaid expenses and other assets  32,982   26,875   25,471   22.7   29.5 
Total assets $2,240,020  $2,201,797  $2,172,094   1.7%  3.1%
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
Deposits $1,666,624  $1,676,892  $1,594,208   -0.6%  4.5%
Borrowings  371,455   320,936   379,377   15.7   -2.1 
Accrued interest payable  2,830   3,396   508   -16.7   457.1 
Accrued expenses and other liabilities  36,207   35,973   35,255   0.7   2.7 
Advances from borrowers for taxes and insurance  2,398   1,260   2,410   90.3   -0.5 
Total liabilities  2,079,514   2,038,457   2,011,758   2.0   3.4 
                     
Shareholders' Equity                    
Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding           n/a   n/a 
Common stock, $0.01 par value, authorized 75,000,000 shares; issued and outstanding 9,442,796 at March 31, 2024; issued and outstanding 9,611,876 at December 31, 2023; and issued and outstanding 9,674,055 at March 31, 2023  94   96   97   -2.1   -3.1 
Additional paid-in capital  93,763   95,784   95,333   -2.1   -1.6 
Retained earnings  106,202   107,349   114,139   -1.1   -7.0 
Accumulated other comprehensive loss, net of tax  (32,465)  (32,636)  (38,108)  0.5   14.8 
Unearned employee stock ownership plan (ESOP) shares  (7,088)  (7,253)  (7,749)  2.3   8.5 
Total parent's shareholders' equity  160,506   163,340   163,712   -1.7   -2.0 
Noncontrolling interest in Quin Ventures, Inc.        (3,376)  n/a   100.0 
Total shareholders' equity  160,506   163,340   160,336   -1.7   0.1 
Total liabilities and shareholders' equity $2,240,020  $2,201,797  $2,172,094   1.7%  3.1%


FIRST NORTHWEST BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data) (Unaudited)
 
  Quarter Ended         
  March 31, 2024  December 31, 2023  March 31, 2023  Three Month Change  One Year Change 
INTEREST INCOME                    
Interest and fees on loans receivable $22,767  $22,083  $19,504   3.1%  16.7%
Interest on investment securities  3,632   3,393   3,182   7.0   14.1 
Interest on deposits in banks  645   581   404   11.0   59.7 
FHLB dividends  282   252   192   11.9   46.9 
Total interest income  27,326   26,309   23,282   3.9   17.4 
INTEREST EXPENSE                    
Deposits  10,112   8,758   4,353   15.5   132.3 
Borrowings  3,286   3,356   2,624   -2.1   25.2 
Total interest expense  13,398   12,114   6,977   10.6   92.0 
Net interest income  13,928   14,195   16,305   -1.9   -14.6 
PROVISION FOR CREDIT LOSSES                    
Provision for (recapture of) credit losses on loans  1,239   1,162   (515)  6.6   340.6 
(Recapture of) provision for credit losses on unfunded commitments  (269)  (10)  15   -2,590.0   -1,893.3 
Provision for (recapture of) credit losses  970   1,152   (500)  -15.8   294.0 
Net interest income after provision for (recapture of) credit losses  12,958   13,043   16,805   -0.7   -22.9 
NONINTEREST INCOME                    
Loan and deposit service fees  1,102   1,068   1,141   3.2   -3.4 
Sold loan servicing fees and servicing rights mark-to-market  219   276   493   -20.7   -55.6 
Net gain on sale of loans  52   33   176   57.6   -70.5 
Net (loss) gain on sale of investment securities     (5,397)     100.0   n/a 
Increase in cash surrender value of bank-owned life insurance  243   260   226   -6.5   7.5 
Other income  572   831   298   -31.2   91.9 
Total noninterest income  2,188   (2,929)  2,334   174.7   -6.3 
NONINTEREST EXPENSE                    
Compensation and benefits  8,128   7,397   7,837   9.9   3.7 
Data processing  1,944   2,107   2,038   -7.7   -4.6 
Occupancy and equipment  1,240   1,262   1,209   -1.7   2.6 
Supplies, postage, and telephone  293   351   355   -16.5   -17.5 
Regulatory assessments and state taxes  513   376   389   36.4   31.9 
Advertising  309   235   1,041   31.5   -70.3 
Professional fees  910   1,119   806   -18.7   12.9 
FDIC insurance premium  386   418   257   -7.7   50.2 
Other expense  580   3,725   939   -84.4   -38.2 
Total noninterest expense  14,303   16,990   14,871   -15.8   -3.8 
Income before provision (benefit) for income taxes  843   (6,876)  4,268   112.3   -80.2 
Provision (benefit) for income taxes  447   (1,354)  825   133.0   -45.8 
Net income (loss)  396   (5,522)  3,443   107.2   -88.5 
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.        85   n/a   -100.0 
Net income (loss) attributable to parent $396  $(5,522) $3,528   107.2%  -88.8%
                     
Basic and diluted earnings (loss) per common share $0.04  $(0.62) $0.39   106.5%  -89.7%
                     


FIRST NORTHWEST BANCORP AND SUBSIDIARY
Selected Financial Ratios and Other Data
(Dollars in thousands, except per share data) (Unaudited)
 
  As of or For the Quarter Ended 
  March 31, 2024  December 31, 2023  September 30, 2023  June 30, 2023  March 31, 2023 
Performance ratios: (1)                    
Return on average assets  0.07%  -1.03%  0.46%  0.34%  0.70%
Return on average equity  0.98   (14.05)  6.17   4.41   8.98 
Average interest rate spread  2.28   2.40   2.54   2.84   3.14 
Net interest margin (2)  2.76   2.84   2.97   3.25   3.46 
Efficiency ratio (3)  88.8   150.8   80.5   86.0   79.8 
Equity to total assets  7.17   7.42   7.25   7.38   7.38 
Average interest-earning assets to average interest-bearing liabilities  118.3   118.2   120.0   120.7   122.4 
Book value per common share $17.00  $16.99  $16.20  $16.56  $16.57 
                     
Tangible performance ratios: (1)                    
Tangible common equity to tangible assets (4)  7.10%  7.35%  7.17%  7.31%  7.30%
Return on average tangible common equity (4)  0.99   (14.20)  6.23   4.47   9.08 
Tangible book value per common share (4) $16.83  $16.83  $16.03  $16.39  $16.38 
                     
Asset quality ratios:                    
Nonperforming assets to total assets at end of period (5)  0.87%  0.85%  0.11%  0.12%  0.12%
Nonaccrual loans to total loans (6)  1.14   1.12   0.15   0.16   0.17 
Allowance for credit losses on loans to nonaccrual loans (6)  92.18   93.92   713.77   677.25   660.69 
Allowance for credit losses on loans to total loans  1.05   1.05   1.04   1.06   1.10 
Annualized net charge-offs to average outstanding loans  0.19   0.14   0.30   0.10   0.25 
                     
Capital ratios (First Fed Bank):                    
Tier 1 leverage  9.7%  9.9%  10.1%  10.2%  10.4%
Common equity Tier 1 capital  12.6   13.1   13.4   13.1   13.3 
Tier 1 risk-based  12.6   13.1   13.4   13.1   13.3 
Total risk-based  13.6   14.1   14.4   14.1   14.4 
                     
Other Information:                    
Average total assets $2,166,187  $2,127,655  $2,139,734  $2,118,014  $2,050,210 
Average total loans  1,678,656   1,645,418   1,641,206   1,605,133   1,552,299 
Average interest-earning assets  2,027,821   1,980,226   1,994,251   1,975,384   1,909,271 
Average noninterest-bearing deposits  249,283   259,845   276,294   282,514   294,235 
Average interest-bearing deposits  1,422,116   1,379,059   1,377,734   1,333,943   1,288,429 
Average interest-bearing liabilities  1,714,474   1,675,044   1,661,996   1,636,188   1,559,983 
Average equity  161,867   155,971   160,994   161,387   159,319 
Average common shares -- basic  8,876,236   8,928,620   8,906,526   8,914,355   8,911,294 
Average common shares -- diluted  8,907,184   8,968,828   8,934,882   8,931,386   8,939,601 
Tangible assets (4)  2,238,446   2,200,230   2,151,849   2,161,235   2,170,202 
Tangible common equity (4)  158,932   161,773   154,369   157,914   158,444 


(1)Performance ratios are annualized, where appropriate.
(2)Net interest income divided by average interest-earning assets.
(3)Total noninterest expense as a percentage of net interest income and total other noninterest income.
(4)See reconciliation of Non-GAAP Financial Measures later in this release.
(5)Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.
(6)Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.


FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)
 
  March 31, 2024  December 31, 2023  March 31, 2023  Three Month Change  One Year Change 
  (In thousands) 
Real Estate:                    
One-to-four family $383,905  $378,432  $354,522  $5,473  $29,383 
Multi-family  339,538   333,094   284,863   6,444   54,675 
Commercial real estate  385,130   387,983   373,013   (2,853)  12,117 
Construction and land  125,347   129,691   161,662   (4,344)  (36,315)
Total real estate loans  1,233,920   1,229,200   1,174,060   4,720   59,860 
Consumer:                    
Home equity  72,391   69,403   54,116   2,988   18,275 
Auto and other consumer  268,834   249,130   251,302   19,704   17,532 
Total consumer loans  341,225   318,533   305,418   22,692   35,807 
Commercial business  136,297   112,295   99,986   24,002   36,311 
Total loans receivable  1,711,442   1,660,028   1,579,464   51,414   131,978 
Less:                    
Derivative basis adjustment  710   0   0   710   710 
Allowance for credit losses on loans  17,958   17,510   17,396   448   562 
Total loans receivable, net $1,692,774  $1,642,518  $1,562,068  $50,256  $130,706 
 

Selected loan detail:

  March 31, 2024  December 31, 2023  March 31, 2023  Three Month Change  One Year Change 
  (In thousands) 
Construction and land loans breakout                    
1-4 Family construction $69,075  $68,029  $87,269  $1,046  $(18,194)
Multifamily construction  45,776   50,431   51,788   (4,655)  (6,012)
Acquisition-renovation        7,096      (7,096)
Nonresidential construction  3,374   3,756   6,909   (382)  (3,535)
Land and development  7,122   7,475   8,600   (353)  (1,478)
Total construction and land loans $125,347  $129,691  $161,662  $(4,344) $(36,315)
                     
Auto and other consumer loans breakout                    
Triad Manufactured Home loans $105,525  $93,591  $102,424  $11,934  $3,101 
Woodside auto loans  128,072   124,401   123,337   3,671   4,735 
First Help auto loans  8,326   4,516   6,281   3,810   2,045 
Other auto loans  3,313   4,158   7,350   (845)  (4,037)
Other consumer loans  23,598   22,464   11,910   1,134   11,688 
Total auto and other consumer loans $268,834  $249,130  $251,302  $19,704  $17,532 
                     
Commercial business loans breakout                    
PPP loans $18  $32  $72  $(14) $(54)
Northpointe Bank MPP  15,047   9,502      5,545   15,047 
Secured lines of credit  41,014   35,815   30,723   5,199   10,291 
Unsecured lines of credit  1,001   456   588   545   413 
SBA loans  8,944   9,115   8,805   (171)  139 
Other commercial business loans  70,273   57,375   59,798   12,898   10,475 
Total commercial business loans $136,297  $112,295  $99,986  $24,002  $36,311 


FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

Non-GAAP Financial Measures
This press release contains financial measures that are not in conformity with generally accepted accounting principles in the United States of America ("GAAP"). Non-GAAP measures are presented where management believes the information will help investors understand the Company’s results of operations or financial position and assess trends. Where non-GAAP financial measures are used, the comparable GAAP financial measure is also provided. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that may be presented by other companies. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons. Reconciliations of the GAAP and non-GAAP measures are presented below.

Calculation of Total Revenue:

  March 31, 2024  December 31, 2023  September 30, 2023  June 30, 2023  March 31, 2023 
  (Dollars in thousands) 
Net interest income $13,928  $14,195  $14,950  $15,982  $16,305 
Noninterest income  2,188   (2,929)  2,904   1,711   2,334 
Total revenue, net of interest expense (1) $16,116  $11,266  $17,854  $17,693  $18,639 


(1)We believe this non-GAAP metric provides an important measure with which to analyze and evaluate income available for noninterest expenses.
   

Calculations Based on Tangible Common Equity:

  March 31, 2024  December 31, 2023  September 30, 2023  June 30, 2023  March 31, 2023 
  (Dollars in thousands, except per share data) 
Total shareholders' equity $160,506  $163,340  $156,065  $159,557  $160,336 
Less: Goodwill and other intangible assets  1,085   1,086   1,087   1,087   1,088 
Disallowed non-mortgage loan servicing rights  489   481   609   556   804 
Total tangible common equity $158,932  $161,773  $154,369  $157,914  $158,444 
                     
Total assets $2,240,020  $2,201,797  $2,153,545  $2,162,878  $2,172,094 
Less: Goodwill and other intangible assets  1,085   1,086   1,087   1,087   1,088 
Disallowed non-mortgage loan servicing rights  489   481   609   556   804 
Total tangible assets $2,238,446  $2,200,230  $2,151,849  $2,161,235  $2,170,202 
                     
Average shareholders' equity $161,867  $155,971  $160,994  $161,387  $159,319 
Less: Average goodwill and other intangible assets  1,085   1,086   1,087   1,088   1,089 
Average disallowed non-mortgage loan servicing rights  481   608   557   801   715 
Total average tangible common equity $160,301  $154,277  $159,350  $159,498  $157,515 
                     
Tangible common equity to tangible assets (1)  7.10%  7.35%  7.17%  7.31%  7.30%
Net income (loss) $396  $(5,522) $2,504  $1,776  $3,528 
Return on average tangible common equity (1)  0.99%  -14.20%  6.23%  4.47%  9.08%
Common shares outstanding  9,442,796   9,611,876   9,630,735   9,633,496   9,674,055 
Tangible book value per common share (1) $16.83  $16.83  $16.03  $16.39  $16.38 
GAAP Ratios:                    
Equity to total assets  7.17%  7.42%  7.25%  7.38%  7.38%
Return on average equity  0.98%  -14.05%  6.17%  4.41%  8.98%
Book value per common share $17.00  $16.99  $16.20  $16.56  $16.57 


(1)We believe these non-GAAP metrics provide an important measure with which to analyze and evaluate financial condition and capital strength. In addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.

 

Photos accompanying this announcement are available at:
https://www.globenewswire.com/NewsRoom/AttachmentNg/e5886160-9c61-4260-b858-a2d740483439
https://www.globenewswire.com/NewsRoom/AttachmentNg/985787b8-4cb5-4faa-9c91-aab1791cc9d6
https://www.globenewswire.com/NewsRoom/AttachmentNg/c637a5e6-7d3b-4de3-b3e8-45c6e76598a5
https://www.globenewswire.com/NewsRoom/AttachmentNg/43eedfeb-4788-49eb-8faa-a76672f17e9e
https://www.globenewswire.com/NewsRoom/AttachmentNg/1a00e1b2-ef76-4150-8ba7-9111866b3799


FAQ

What was First Northwest Bancorp's net income for Q1 2024?

First Northwest Bancorp reported a net income of $396,000 for the first quarter of 2024.

What was the basic and diluted earnings per share for Q1 2024?

Basic and diluted earnings per share for the first quarter of 2024 were $0.04.

What was the total assets of First Northwest Bancorp in Q1 2024?

First Northwest Bancorp had total assets of $2,240 million in the first quarter of 2024.

What was the return on average assets in Q1 2024?

The return on average assets for First Northwest Bancorp in the first quarter of 2024 was 0.07%.

First Northwest Bancorp

NASDAQ:FNWB

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