First Northwest Bancorp reported a net loss of $1.98 million for the three months ended September 30, 2024, compared to a net income of $2.5 million for the same period in 2023. For the nine months ended September 30, 2024, the net loss totaled $3.8 million, a significant decline from the net income of $7.8 million recorded in the prior year. The basic and diluted loss per common share for the third quarter was $(0.23), down from earnings of $0.28 in the same quarter of 2023.

Total interest income for the third quarter increased by 9.2% to $28.2 million, driven by higher interest and fees on loans, which rose to $23.5 million from $21.7 million year-over-year. However, net interest income decreased to $14 million from $14.95 million, primarily due to a rise in interest expense, which surged by 30.3% to $14.2 million, reflecting increased costs of deposits and higher volumes of certificates of deposit (CDs) and money market accounts.

The provision for credit losses on loans significantly increased to $3.08 million for the third quarter, compared to $880,000 in the same period last year. The allowance for credit losses on loans rose to $21.97 million as of September 30, 2024, up from $16.95 million a year earlier. Nonaccrual loans also saw a substantial increase, rising to $30.38 million from $18.64 million, primarily due to issues in commercial construction and real estate loans.

Total assets increased to $2.26 billion, a 2.4% rise from $2.2 billion at the end of 2023. Loans receivable, net of allowance for credit losses, grew to $1.71 billion, up 4.4% from $1.64 billion. The company reported a notable increase in commercial business loans, which rose by 38.3% to $155.3 million, and consumer loans, which increased by 12.4% to $358.2 million.

Total deposits increased by 2.1% to $1.71 billion, with a weighted-average interest rate of 2.68%, up from 2.34% at the end of 2023. The company also repurchased shares, totaling 98,156 at an average price of $10.19 per share during the third quarter.

In terms of strategic developments, First Northwest Bancorp has been focusing on expanding its loan origination activities, particularly in commercial real estate and consumer loans. The company is also addressing internal control weaknesses identified in its financial reporting processes and is implementing a remediation plan to enhance its controls over loan evaluations.