Executive Summary

Q4 2024 delivered positive adjusted PPNR ($1.2M) and a modest NIM uptick (2.73%), but higher credit costs drove a net loss of $2.8M ($0.32) as six commercial business loans were charged off; noninterest income was pressured by a $1.8M equity write-down partially offset by a $1.5M BOLI death benefit .
Balance-sheet actions continued to support earnings durability: the loan hedge added $1.1M to 2024 interest income and is expected to maintain positive carry for up to an additional 25 bps of rate cuts; Q4 securities purchases ($47.1M, 6.7% yield) are expected to contribute ~$2.6M annualized interest income in 2025 .
Asset quality mixed but trending to resolution: classified loans declined $4.4M QoQ to $42.5M; ACLL ticked down to 1.21% of loans as pooled reserves fell with portfolio mix, while nonaccruals were stable at ~$30.5M .
Deposits fell $23.6M QoQ (primarily brokered CDs -$20.8M) amid ongoing pricing competition; capital remained strong (CET1 12.4%, Total RBC 13.6%; well-capitalized) and the $0.07 dividend was maintained .
Catalysts: FDIC consent order termination (Oct 23, 2024), continued problem-loan resolution, NIM stabilization, and 2025 interest income tailwinds from hedge and higher-yield securities .

What Went Well and What Went Wrong

What Went Well
- Pre-provision performance improved: adjusted PPNR rose to $1.2M (from a $49K loss in Q3) as expenses fell and NIM edged up to 2.73% .
- Structural earnings levers in place: fair value loan hedge added $1.1M in 2024 and is expected to retain positive carry for up to an additional 25 bps of cuts; Q4 securities buys at 6.7% yield expected to add ~$2.6M annualized interest income in 2025 .
- Asset-quality progress: classified loans declined $4.4M QoQ to $42.5M, aided by charge-offs and remediation actions; bank exited FDIC compliance consent order in October .
What Went Wrong
- Credit costs remained elevated: Q4 provision was $3.8M (net charge-offs annualized 1.23%), largely from six commercial business loans, driving the quarterly loss .
- Noninterest income pressure: a $1.8M equity investment write-down outweighed underlying fees, partly offset by a $1.5M BOLI death benefit .
- Deposit competition persisted: total deposits down $23.6M QoQ (brokered CDs -$20.8M), reflecting continued rate pressure and mix shift to higher-cost funding .

Financial Results

Metric	Q2 2024	Q3 2024	Q4 2024
Total revenue, net of interest expense ($M)	21.598	15.799	15.437
Net interest income ($M)	14.251	14.020	14.137
Noninterest income ($M)	7.347	1.779	1.300
Provision for credit losses ($M)	4.237	3.134	3.655
Net income (loss) ($M)	1.418	(1.980)	(2.810)
Diluted EPS ($)	0.16	(0.23)	(0.32)
Net interest margin (%)	2.77	2.70	2.73
Efficiency ratio (%)	72.27	100.31	92.2
Return on avg assets (%)	0.26	-0.36	-0.51

KPIs and Balance Sheet

KPI	Q2 2024	Q3 2024	Q4 2024
Total loans receivable ($M)	1,704.761	1,734.807	1,695.823
Total deposits ($M)	1,708.288	1,711.641	1,688.026
ACLL / total loans (%)	1.26	1.27	1.21
Nonperforming assets / assets (%)	1.36	1.35	1.37
Nonaccrual loans / total loans (%)	1.78	1.75	1.80
Net charge-offs (annualized, %)	0.15	0.10	1.23
CET1 capital ratio (Bank, %)	12.6	12.2	12.4
Total risk-based ratio (Bank, %)	13.8	13.4	13.6
Equity / assets (%)	7.32	7.13	6.89
Tangible common equity / tangible assets (%)	7.25	7.06	6.83

Notes: Q2 revenue and noninterest line items benefited from a $7.9M gain on a sale-leaseback and a $2.1M securities loss; Q4 noninterest income included a $1.8M equity write-down and $1.5M BOLI death benefit .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly dividend per share	Q1 2025 payment (announced Jan 29, 2025)	$0.07 (Q4 2024/Q3 2024)	$0.07 (payable Feb 28, 2025)	Maintained
Securities purchases – annualized interest income	2025	N/A	~$2.6M from Q4’24 additions (6.7% yield, 3.1-yr WAL)	New detail
Loan hedge positive carry	2025	Positive carry up to 75 bps of cuts (Q3 view)	Positive carry up to 25 bps of cuts (Q4 view)	Lowered runway
BOLI restructuring	Q1 2025	Two policy restructures expected by end of Q1’25 (Q3)	Remaining surrender expected Q1’25	Maintained timing

No formal quantitative revenue/EPS/expense/tax guidance was provided. Management reiterated focus on resolving problem assets, improving profitability, and sustaining capital .

Earnings Call Themes & Trends

(Note: No Q4 2024 earnings call transcript was available in the document set searched; themes reflect disclosures across Q2–Q4 earnings materials and press releases.) [ListDocuments returned none for earnings-call-transcript; 0 documents]

Topic	Previous Mentions (Q2, Q3)	Current Period (Q4)	Trend
Credit quality and charge-offs	Q2: Provision $4.2M; nonaccruals up on commercial construction; classified loans up to $46.4M . Q3: Provision $3.1M; nonaccruals $30.4M; material weakness identified; lawsuits (Water Station borrowers) noted .	Q4: Provision $3.8M; NCOs annualized 1.23%; classified loans down $4.4M to $42.5M .	Mixed but improving on classifications; still elevated losses.
Balance-sheet hedging/derivatives	Q2: Hedge added $551K YTD; positive carry for up to five rate cuts .	Q4: Hedge added $1.1M in 2024; positive carry expected for up to 25 bps of cuts .	Benefit realized; runway shorter if cuts deepen.
Deposit mix/costs	Q2: Deposits +$41.7M; cost of total deposits 2.47% . Q3: Deposits +$3.4M; cost of total deposits 2.56% .	Q4: Deposits -$23.6M QoQ; competition remains; brokered -$20.8M .	Competitive; pressure persists.
Regulatory/compliance	Q3: FDIC Consent Order terminated Oct 23, 2024 (post-Q3) .	Post-Q3: Termination reinforced in press release .	Positive.
Nonrecurring items	Q2: $7.9M sale-leaseback gain; $2.1M securities loss . Q3: Severance $704K; no large gains .	Q4: $1.8M equity write-down; $1.5M BOLI death benefit .	Volatile but diminishing.
Capital/returns	Q2: Repurchase plan authorized; dividend $0.07 . Q3: Repurchased 98,156 shares; dividend $0.07 .	Q4: Dividend $0.07 declared; CET1 12.4% .	Stable dividend; strong capital.

Management Commentary

“Although financial results in 2024 were adversely impacted by elevated credit costs, we are optimistic for continued improvement in asset quality in early 2025… our pre-provision net revenue grew to $1.2 million with modest margin improvement as we successfully reduced FHLB borrowings… focused on growing core… while resolving problem assets, improving profitability and maintaining our strong capital position.” – Matthew P. Deines, President & CEO .
Balance sheet restructuring highlights: “Fair value hedge on loans… added $1.1 million to interest income for the year… expects to maintain a positive carry… up to an additional 25-basis points of rate cuts.” .
Investment strategy: “Q4 2024 investment security purchases totaled $47.1 million at a weighted-average yield of 6.7%… annualized interest income… anticipated to provide $2.6 million in revenue for 2025.” .

Q&A Highlights

No Q4 2024 earnings call transcript was available in the document set searched; therefore, Q&A highlights and any clarifications from live remarks could not be assessed. [ListDocuments showed 0 earnings-call-transcript]

Estimates Context

Wall Street consensus (S&P Global Capital IQ): Consensus EPS and revenue estimates for Q4 2024 were not available in the tool at the time of analysis; as a result, we cannot assess beats/misses versus Street. Coverage of smaller community banks can be limited; management did not provide quantitative guidance in the materials reviewed [GetEstimates returned no usable data].

Key Takeaways for Investors

Credit remains the swing factor: elevated Q4 provisioning and charge-offs drove the loss, but classified loans declined QoQ and management expects improvement in early 2025; monitor resolution timelines on the few large relationships and commercial business cohort .
Core earnings stabilizing: NIM firmed to 2.73% and adjusted PPNR turned positive as expenses declined; incremental 2025 interest income from Q4 securities and hedge should support baseline profitability if funding costs are contained .
Funding friction continues: deposits fell $23.6M QoQ (brokered -$20.8M) with ongoing price competition; track mix shifts, brokered usage, and promotional pricing as drivers of NIM trajectory .
Capital provides flexibility: CET1 at 12.4% and Total RBC at 13.6% underpin continued dividend ($0.07) and loss absorption while asset quality normalizes; repurchases were paused in Q4 with 846K shares remaining authorized .
Regulatory overhang removed: FDIC Consent Order termination is a positive reputational and operational catalyst; focus can shift to credit clean-up and growth in targeted small business/consumer verticals .
Watch list: progress on litigation mentioned in Q3 release, remediation of the disclosed internal controls material weakness, and any further equity investment marks that could affect noninterest income .

Supporting detail and data sources:

Q4 2024 press release and 8-K: financials, PPNR, NIM, provision, portfolio/credit updates, dividend .
Q3 2024 press/8-K: deposit costs, nonaccruals, internal control weakness, litigation update .
Q2 2024 press/8-K: sale-leaseback gain, securities loss, hedge/BOLI restructuring, deposit inflows .

First Northwest Bancorp (FNWB)·Q4 2024 Earnings Summary