First Northwest Bancorp Reports $3.7 Million Net Income in Q2 2025, Significant Recovery from Prior Year Loss

First Northwest Bancorp reported a net income of $3.7 million for the second quarter of 2025, a significant recovery from a net loss of $2.2 million in the same period last year. This turnaround was primarily driven by a $9.1 million decrease in the provision for credit losses and a reduction of $2.8 million in noninterest expenses. However, the company experienced a decline in noninterest income, which fell by $5.2 million, or 70.5%, to $2.2 million, largely due to the absence of a prior year gain from a sale-leaseback transaction.

In terms of financial position, total assets decreased by 1.6% to $2.20 billion as of June 30, 2025, compared to $2.23 billion at the end of 2024. Cash and cash equivalents increased by 21.3% to $87.9 million, while investment securities decreased by 10.8% to $303.5 million, attributed to maturities and early redemptions. Net loans, excluding loans held for sale, also saw a decline of 1.7%, totaling $1.65 billion, with notable decreases in commercial business loans and one-to-four family loans.

Operationally, First Northwest Bancorp has focused on expanding its loan portfolio, particularly in commercial real estate and consumer loans. The company reported a 5.1% increase in consumer loans, driven by growth in auto and home equity loans. However, commercial business loans decreased by 22.2%, reflecting a strategic shift in lending practices. The allowance for credit losses (ACLL) decreased to $18.4 million, or 1.10% of total loans, down from 1.21% at the end of 2024, indicating improved credit quality.

Looking ahead, First Northwest Bancorp remains cautious about the economic environment, particularly regarding interest rates and market conditions. The company is actively managing its liquidity and capital resources, with total shareholders' equity at $149.7 million, representing 6.8% of total assets. The bank continues to monitor its loan portfolio closely, especially in light of recent charge-offs and nonperforming loans, which decreased significantly to $20.4 million, or 1.22% of total loans, from $30.5 million at the end of 2024. The management's outlook emphasizes a commitment to maintaining a diversified deposit base and exploring growth opportunities while managing risks effectively.