First Northwest Bancorp (FNWB) Reports Fourth Quarter 2023 Results Amidst Market Challenges
Net Loss: FNWB reported a net loss of $5.5 million in Q4 2023, a significant shift from the net income of $2.5 million in Q3 2023 and $6.1 million in Q4 2022.
Dividend Declared: Despite the loss, FNWB declared a quarterly cash dividend of $0.07 per common share, payable on February 23, 2024.
Asset Repositioning: The bank restructured its bond portfolio, resulting in a $5.4 million loss from the sale of investment securities.
Loan and Deposit Growth: Year-over-year loan growth was reported at 7.3%, with deposits also growing by 7.2%.
Asset Quality: Nonperforming assets to total assets ratio increased to 0.85%, with a net charge-off ratio of 0.14%.
Capital Ratios: The Bank's CET1 and total risk-based capital ratios remained well above the "well-capitalized" threshold at 13.12% and 14.11%, respectively.
Tangible Book Value Increase: Tangible book value per share increased by 5.0% in Q4, signaling a positive change in Other Comprehensive Income.
On January 25, 2024, First Northwest Bancorp (NASDAQ:FNWB) released its 8-K filing, detailing the financial results for the fourth quarter of 2023. FNWB, a bank holding company operating through its subsidiary, First Fed Bank, faced a challenging year, as noted by President and CEO Matthew P. Deines. Despite an operating loss in Q4, largely due to a restructured bond portfolio, the company saw an increase in tangible book value per share and remains focused on customer financial needs.
Financial Performance and Challenges
FNWB's performance in Q4 2023 was marked by a net loss of $5.5 million, a stark contrast to the net income achieved in the same quarter of the previous year. The loss was primarily due to a strategic decision to sell lower-yielding investments, which resulted in a $5.4 million loss. Additionally, one-time charges related to investments in Quin Ventures, Inc. and Quil Ventures, Inc. amounted to $1.7 million. Despite these challenges, FNWB's tangible book value grew by 5.0% during the quarter, and the bank declared a quarterly cash dividend of $0.07 per common share.
Asset Quality and Loan Portfolio
Asset quality was closely monitored, with past due and nonperforming loan balances remaining under 1.2% of the loan portfolio. However, classified loans increased to 2.1% of total loans. The bank's loan portfolio grew by $112.5 million year-over-year, and deposits also saw a significant increase, including a $50.8 million rise in deposits originated through digital channels.
Income Statement Highlights
FNWB's total revenue, net of interest expense, was $11.3 million for Q4 2023, down from $17.9 million in Q3 2023 and $22.3 million in Q4 2022. The net interest margin decreased to 2.84% for Q4 2023, from 2.97% for the prior quarter, and decreased 112 basis points compared to 3.96% for the fourth quarter of 2022. Noninterest income saw a significant decrease, primarily due to the loss on the sale of investment securities.
Balance Sheet and Capital Strength
FNWB's total assets stood at $2.202 billion, with total loans at $1.660 billion and total deposits at $1.677 billion. The bank's total shareholders' equity increased to $163 million. The Bank's CET1 and total risk-based capital ratios were 13.12% and 14.11%, respectively, indicating a strong capital position.
Looking Forward
Despite the operating loss in Q4, FNWB's strategic moves, such as the repositioning of its securities portfolio and the growth in loans and deposits, position the bank for a potentially challenging yet prosperous 2024. The bank remains committed to serving its customers and communities as it enters its second century of operations.
For more detailed information and financial tables, readers are encouraged to view the full 8-K filing.
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Explore the complete 8-K earnings release (here) from First Northwest Bancorp for further details.
This article first appeared on GuruFocus.
