First Northwest Bancorp Restates Financials Due to Material Weakness in Internal Controls

On October 21, 2024, First Northwest Bancorp (NASDAQ: FNWB) announced in an 8-K filing shared with the Securities and Exchange Commission that the Audit Committee of the Board of Directors, based on recommendations from the management and independent registered public accounting firm, concluded that previously issued unaudited consolidated financial statements as of and for the three and six month periods ended June 30, 2024, should no longer be relied upon.

The Audit Committee’s decision was based on the need for adjustments totaling $6.6 million in charge-offs across commercial construction loans, commercial business loans, and the Splash unsecured consumer loan program. Additionally, an increased provision on Splash consumer loans was required, resulting in a restated provision for credit losses on loans totaling $8.7 million. These changes led to corrections in various financial areas, including loan amortized cost balances, the allowance for credit losses on loans, interest and fees on loans receivable, the provision for credit losses on loans, and tax adjustments related to loan charge-offs and allowance for credit losses on loans.

The restatement of financials was deemed necessary to reflect the credit quality of certain commercial loans and underlying collateral values, following management’s ongoing credit evaluation. The Audit Committee agreed with the management’s conclusions, and the Company has restated the affected financial records, filing them as part of an amendment to the Quarterly Report on Form 10-Q.

In light of these developments, a material weakness in the Company’s internal control over financial reporting as of June 30, 2024, was identified. First Northwest Bancorp revised its internal control framework and outlined a remediation plan in the Amended Quarterly Report.

First Northwest Bancorp discussed these matters with Moss Adams LLP, the independent registered public accounting firm. The corrected and restated earnings release, dated October 25, 2024, along with detailed financial adjustments, has been furnished as Exhibit 99.1 with the filing.

These updates reflect the Company’s commitment to ensuring the accuracy and reliability of its financial reporting processes. Investors and stakeholders are encouraged to review the complete filing for a comprehensive understanding of the recent developments within First Northwest Bancorp.

The Company’s management, led by President and Chief Executive Officer Matthew P. Deines, remains focused on addressing these challenges and working towards strengthening internal controls to maintain transparency and accountability.

This information is being shared under Item 2.02 and Item 4.02 of the Securities Exchange Act of 1934 and is not intended to be filed for the purposes of Section 18 of the Exchange Act, nor incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except where explicitly referenced.

The announcement signifies First Northwest Bancorp’s commitment to upholding the highest standards of financial reporting and governance practices.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read First Northwest Bancorp’s 8K filing here.

First Northwest Bancorp Company Profile

First Northwest Bancorp operates as a bank holding company for First Fed Bank that provides commercial and consumer banking services to individuals, businesses, and nonprofit organizations in western Washington, the United States. The company accepts various deposit instruments, including checking, money market deposit, savings, and transaction accounts, as well as certificates of deposit.