First Northwest Bancorp (FNWB) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $1.4 million, up from $396,000 in Q1 2024 but down from $1.8 million in Q2 2023; six-month net income was $1.8 million versus $5.3 million year-over-year.

• Total assets increased to $2.22 billion as of June 30, 2024, up 0.8% from year-end 2023.

• A sale-leaseback of six branch properties generated a $7.9 million pre-tax gain in Q2 2024.

• Provision for credit losses rose to $4.2 million, mainly due to two problem loan relationships and increased loss factors.

• Announced a reduction in force impacting 9% of workforce, expected to reduce compensation expense by $1 million per quarter starting Q4 2024.

Financial highlights

• Net interest income for Q2 2024 was $14.3 million, down from $16.0 million in Q2 2023; for the six months, it was $28.2 million, down from $32.3 million year-over-year.

• 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.

• Noninterest income surged to $7.4 million in Q2 2024 from $1.7 million in Q2 2023, mainly due to the branch sale-leaseback; offset by a $2.1 million securities loss.

• Noninterest expense was $15.6 million, up from $14.3 million in Q1 2024 and $15.2 million in Q2 2023, with increases from incentive compensation and sale-leaseback related costs.

• Basic and diluted EPS was $0.16, up from $0.04 in Q1 2024 but down from $0.20 in Q2 2023.

Outlook and guidance

• Expense reductions from workforce actions are expected to positively impact earnings starting in Q4 2024 and into 2025.

• Management continues to focus on margin improvement through higher-yielding loan and security purchases and ongoing balance sheet restructuring.

• The company expects continued competition for deposits and ongoing margin pressure due to the rate environment.

• Focus remains on shifting loan mix toward small- and medium-sized business lending and away from real estate to reduce interest rate risk.