First Northwest Bancorp(FNWB) - 2024 Q3 - Quarterly Results

Financial Performance - First Northwest Bancorp reported a net loss of $2.2 million for Q2 2024, compared to a net income of $396,000 in Q1 2024 and $1.8 million in Q2 2023[6]. - Total revenue, net of interest expense, was $21.6 million in Q2 2024, up from $16.1 million in Q1 2024 and $17.7 million in Q2 2023[4]. - The company reported a net loss of $2,219 thousand for June 30, 2024, compared to a net income of $1,776 thousand for June 30, 2023[66]. - Net loss for the first half of 2024 was $(1,823), a decrease of 134.4% compared to the same period in 2023[59]. - Basic and diluted loss earnings per common share for Q2 2024 was $(0.25), a decline of 725.0% from Q1 2024[57]. Credit Losses and Provisions - The provision for credit losses increased to $8.7 million in Q2 2024, primarily due to loan charge-offs related to substandard lending relationships[5]. - The provision for credit losses was $8.7 million in Q2 2024, compared to $970,000 in Q1 2024 and $300,000 in Q2 2023, primarily due to charge-offs in commercial loans[14]. - Provision for credit losses on loans surged to $8,640 in Q2 2024, a dramatic increase of 597.3% from Q1 2024 and 2,780.0% year-over-year[57]. - The allowance for credit losses on loans increased to $19,300 thousand, representing 1.14% of total loans as of June 30, 2024, up from 1.05% in Q1 2024[39]. - Nonperforming loans rose to $23,631 thousand in Q2 2024, an increase of $4,150 thousand from Q1 2024, primarily due to credit concerns related to commercial construction loans[40]. Loans and Deposits - The company experienced a significant increase in non-real estate loans, which rose by 11%, approximately $41 million, year-to-date in 2024, while real estate loans remained flat[3]. - Total deposits grew by $41.7 million, or 2.5%, to $1.71 billion during the second quarter[5]. - Total net loans decreased by $15.0 million, or 0.9%, to $1.68 billion at June 30, 2024, compared to $1.69 billion at March 31, 2024, but increased by $56.9 million, or 3.5%, from $1.62 billion one year ago[29]. - Total deposits increased to $1,708,288 thousand in Q2 2024, up from $1,676,892 thousand in Q1 2024, representing a growth of 7.7% year-over-year[38]. - Consumer deposits accounted for 57% of total deposits, with an average balance of $23,000 per account[36]. Interest Income and Expenses - Total interest income for Q2 2024 was $28,611, an increase of 4.7% from Q1 2024 and 12.3% year-over-year[57]. - Total interest expense increased by $978,000 to $14.4 million in Q2 2024, up from $13.4 million in Q1 2024, and up $4.9 million from $9.5 million in Q2 2023[12]. - Total interest expense for Q2 2024 was $14,376, up 7.3% from Q1 2024 and 51.5% year-over-year[57]. - The cost of total deposits increased to 2.47% in Q2 2024, compared to 2.43% in Q1 2024, reflecting rising interest rates[38]. Noninterest Income and Expenses - Noninterest income surged to $7.4 million in Q2 2024, a 329.4% increase from $1.7 million in Q2 2023, driven by a sale-leaseback transaction[20]. - Noninterest income for Q2 2024 reached $7,347, a significant increase of 235.8% from Q1 2024 and 329.4% year-over-year[57]. - Noninterest expense totaled $15.6 million in Q2 2024, up from $14.3 million in Q1 2024 and $15.2 million in Q2 2023, mainly due to increased incentive compensation and a one-time tax assessment[22]. Shareholder Equity and Capital Ratios - Total shareholders' equity decreased to $158,900 thousand at June 30, 2024, compared to $160,500 thousand at March 31, 2024, due to a net loss of $2,200 thousand[43]. - Common Equity Tier 1 capital ratio was 12.4% as of June 30, 2024, remaining above regulatory requirements[43]. - Return on average equity for June 30, 2024, was -5.47%, compared to 4.41% for June 30, 2023[66]. - Book value per common share was $16.81, up from $16.56 a year earlier[62]. Operational Changes and Future Outlook - A reduction-in-force impacting 9% of the workforce was completed on July 24, 2024, expected to reduce compensation expenses by approximately $1.0 million per quarter starting in Q4 2024[5]. - The company anticipates potential risks including increased competitive pressures and changes in the interest rate environment affecting future performance[51]. - The Company authorized a new share repurchase plan for 944,279 shares in Q2 2024, alongside cash dividends totaling $670,000[44].