0001437749-26-008021
SEC filingFirst Northwest Bancorp reported a net loss of $4.2 million for fiscal year 2025, an improvement from a $6.6 million loss in 2024. The company generated total interest income of $107.0 million, primarily from loans receivable ($90.3 million), and total noninterest income of $11.6 million. However, this was offset by total interest expense of $49.7 million and total noninterest expense of $67.1 million, which included a $5.7 million legal settlement. The net interest margin improved to 2.88% from 2.74% in the prior year. Total assets decreased 5.6% to $2.11 billion, driven by a reduction in loans and investment securities, while total shareholders' equity increased 2.2% to $157.3 million. The company's capital ratios remained above regulatory well-capitalized requirements.
First Northwest Bancorp reported a net loss of $4.2 million for the fiscal year ended December 31, 2025, representing an improvement from a net loss of $6.6 million in 2024. The company generated total interest income of $107.0 million, a decrease of $5.3 million (4.8%) from the prior year, primarily due to lower average loan balances and yields. Interest expense decreased by $6.3 million (11.3%) to $49.7 million, driven by lower rates paid on deposits and borrowings. This resulted in net interest income of $57.3 million, a slight increase of $979,000 (1.7%) from 2024. The net interest margin improved to 2.88% from 2.74% in the prior year. Noninterest income totaled $11.6 million, a decrease of $975,000 (7.7%) from 2024, while noninterest expense increased by $7.1 million (11.8%) to $67.1 million, largely due to a $5.7 million legal settlement paid.
The company's revenue is primarily derived from interest income, which totaled $107.0 million for FY 2025. The largest component was interest and fees on loans receivable at $90.3 million, followed by interest on investment securities at $13.5 million, interest-bearing deposits and other at $2.0 million, and FHLB dividends at $1.2 million. Noninterest income of $11.6 million included loan and deposit fees ($4.4 million), increase in BOLI cash surrender value net ($1.9 million), income from BOLI death benefit net ($1.1 million), and other income ($3.8 million). The company's loan portfolio is geographically concentrated in Washington State, with $117.0 million (54.9%) of 2025 originations in the Puget Sound region, $50.5 million (23.7%) in the Olympic Peninsula region, $27.3 million (12.8%) in other Washington areas, and $18.3 million (8.6%) in other states.
The company's net interest margin improved to 2.88% in FY 2025 from 2.74% in FY 2024, representing a 14 basis point increase. This improvement was driven by a decrease in the cost of interest-bearing liabilities to 2.94% from 3.22% in the prior year, which outpaced the decrease in yield on interest-earning assets to 5.37% from 5.47%. The provision for credit losses decreased significantly to $7.3 million from $16.5 million in 2024, contributing to the improved loss position. However, profitability was negatively impacted by increased noninterest expense, particularly the $5.7 million legal settlement paid, $599,000 for early lease termination costs, and $621,000 for branch closure costs. The effective tax rate decreased compared to the prior year as 2024 included an estimate for penalties on early surrender of BOLI contracts.
Net cash used in operating activities was $2.8 million for FY 2025, compared to net cash provided by operating activities in the prior year. Net cash provided by investing activities was $132.9 million, primarily from proceeds from maturities, calls, and principal repayments of securities available for sale ($86.0 million) and early surrender of bank-owned life insurance policy ($9.4 million). Net cash used in financing activities was $117.5 million, mainly due to a net decrease in deposits of $88.9 million. Total assets decreased by $124.1 million (5.6%) to $2.11 billion, with loans receivable (net) decreasing by $67.7 million (4.0%) to $1.61 billion and investment securities decreasing by $70.0 million (20.6%) to $270.3 million. Total liabilities decreased by $127.5 million (6.1%) to $1.95 billion, while total shareholders' equity increased by $3.4 million (2.2%) to $157.3 million. The company maintained strong liquidity with cash and cash equivalents of $85.1 million and available borrowing capacity of $204.4 million from the FHLB.
The company has identified three strategic pillars for the upcoming years: process and data improvement to drive efficiencies, building a resilient core deposit base, and growing the organic loan portfolio. Management intends to focus on enhancing customer experience through digital investments, creating operating leverage through process improvements, strengthening core funding with relationship-based deposits, expanding offerings to small-to-medium sized businesses, and focusing on high-quality loan growth through relationship-based lending. Key risk factors include concentration in Washington State economy, interest rate risk, credit risk in commercial real estate lending (which represented 42.5% of the loan portfolio at December 31, 2025), competition for deposits, and cybersecurity threats. The company has not paid dividends since May 2025 as part of a prudent approach to capital management and there is no assurance dividends will resume in the future.