First Northwest Bancorp reported a third-quarter loss as higher credit-loss provisions and the settlement of a previously disclosed legal matter weighed on results. The bank holding company said its underlying banking measures showed modest improvement in net interest margin and customer deposits, while loans declined from the prior quarter.
The company also issued a presentation reviewing results and trends through September 30. The release did not provide additional presentation details beyond that description.
Key details
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Third-quarter loss: First Northwest lost $743,000, or 8 cents per share, compared with net income of $308,000, or 3 cents per share, in the second quarter. A year earlier, it earned $802,000, or 9 cents per share.
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Nine-month results improved from a year ago: The company reported a loss of $400,000, or 5 cents per share, for the first nine months of 2026, versus a loss of $4.6 million, or 52 cents per share, in the same period of 2025.
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Credit costs reversed direction from recent quarters: The bank recorded a $700,000 provision for credit losses in the third quarter, compared with a $500,000 provision benefit in the second quarter and a $700,000 benefit a year earlier. Management also cited the settlement of a previously disclosed legal matter as a factor affecting quarterly results; it did not state the settlement amount in the release.
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Core interest income was broadly steady: Net interest income was $14.3 million, up from $14.2 million in the second quarter but below $14.6 million a year earlier. Net interest margin edged up to 2.96%, from 2.95% in the second quarter and 2.91% in the third quarter of 2025.
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Deposits grew as loans contracted: Customer deposits rose by $27 million during the quarter to $1.576 billion. Total loans fell $19 million from June 30 to $1.594 billion. Brokered deposits were $59 million, unchanged from the prior quarter and down from $104 million a year earlier.
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Assets increased partly because of securities purchases: Total assets reached $2.143 billion, up from $2.125 billion at the end of June. Securities available for sale increased to $310 million from $287 million, partly offsetting the decline in loans.
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Expenses rose from the prior quarter: Noninterest expense was $17.3 million, compared with $16.4 million in the second quarter and $17.4 million a year earlier. Noninterest income was $2.2 million, up from $2.0 million in each of those comparison quarters.
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Credit-quality measures were mixed: Nonperforming assets were 0.98% of total assets, down from 1.05% in the second quarter but above 0.70% a year earlier. The allowance for loan losses rose to 1.03% of total loans from 1.01% in the prior quarter. The nonaccrual-loan coverage ratio improved sequentially to 82.41% from 78.68%, but remained below 121.17% a year earlier. Annualized net charge-offs were 0.11% of average loans, compared with 0.04% in the second quarter and 0.37% a year ago.
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Capital and book value: First Fed’s total risk-based capital ratio was 13.3%, compared with 13.4% in the second quarter and 13.7% a year earlier. Shareholders’ equity was $149 million, down from $158 million at June 30. Book value per share was $15.65, and tangible book value per share was $15.52, both lower than at the end of the second quarter.
Plain-English implications
The quarter shows a contrast between improving deposit funding and margin measures and weaker reported earnings. Deposit growth and lower reliance on brokered deposits year over year were accompanied by a sequential decline in loans. Credit measures improved in some respects from the second quarter, but several remained weaker than a year earlier; the reported loss also reduced equity and per-share book value from the prior quarter.