Key Highlights

  • EPS loss of USD 0.08 missed consensus estimate of USD 0.02 profit, against income of USD 0.09 a year earlier.
  • Revenue of USD 16.49 million sat below the consensus estimate of USD 16.55 million as net interest income held steady.
  • Net interest Margin improved to 2.96% from 2.95% in the second quarter, and customer deposits grew USD 27.0 million.
  • Nonperforming loans declined to USD 19.9 million, while a USD 1.3 million litigation settlement lifted noninterest expense.

First Northwest Bancorp (NASDAQ:FNWB), the Holding Company for First Fed Bank, reported a third quarter 2026 net loss of USD 743,000, or USD 0.08 per basic and diluted share, against a consensus estimate of USD 0.02 per share of income. The result compared with Net Income of USD 308,000, or USD 0.03 per share, in the second quarter and USD 802,000, or USD 0.09 per share, in the third quarter of 2025.

Revenue, measured as net interest income of USD 14.3 million plus noninterest income of USD 2.2 million, was USD 16.49 million, slightly below a consensus estimate of USD 16.55 million. Net interest income was USD 14.32 million versus USD 14.57 million a year earlier.

Expenses, Provision and Margin

Noninterest expense rose USD 922,000 from the second quarter to USD 17.3 million, mainly because of a nonrecurring USD 1.3 million expense for the settlement of litigation disclosed in a September 18, 2026 filing, partly offset by lower consulting fees. The provision for Credit losses was USD 739,000 compared with a recapture of USD 540,000 in the second quarter. The Loan provision of USD 532,000 reflected USD 453,000 of net charge-offs and a USD 264,000 increase in reserves on individually evaluated loans. The efficiency ratio was 105.0%.

Noninterest income rose USD 169,000 to USD 2.2 million, helped by a nonrecurring gain from exercising a historic tax credit Partnership Redemption option. Net interest margin was 2.96% versus 2.91% a year earlier, and the cost of funds slipped 1 basis point to 2.41%.

Credit Quality, Balance Sheet and Management View

Nonperforming loans decreased USD 842,000 to USD 19.9 million, and nonperforming Assets were 0.98% of total assets compared with 1.05% in the second quarter. The allowance for credit losses on loans was USD 16.4 million, or 1.03% of total loans, and coverage of nonaccrual loans rose to 82.41% from 78.68%. Classified loans increased USD 593,000 to USD 26.1 million, with four Collateral dependent loans totaling USD 17.4 million making up 67% of that balance.

Total assets were USD 2,143 million, loans were USD 1,594 million and customer deposits were USD 1,576 million, while brokered deposits stood at USD 59 million versus USD 104 million a year ago. Book Value per share fell to USD 15.65 from USD 16.66, and the First Fed total risk-based Capital ratio was 13.3%. President and Chief Executive Officer Curt Queyrouze said the Franchise showed momentum through stable net interest income, modest margin expansion and deposit growth, and that several strategic and operational initiatives are underway.

Credit and Funding Markers to Follow

Total past due loans rose to 1.44% of total loans from 1.09% in the second quarter, making delinquency a measurable item alongside the nonaccrual coverage ratio of 82.41%. Legal fees remain elevated because of the settlement timing and the defense of other ongoing legal matters. Funding mix, with brokered deposits at USD 59 million, the total risk-based capital ratio of 13.3% against 13.4% in the prior quarter, and an Investment portfolio of USD 310.2 million with 4.2 years of effective duration, are other figures to follow.