FNWB - First Northwest Bancorp downgraded to Neutral at Piper

2023-06-09 11:10:38 ET

Piper Sandler downgraded First Northwest Bancorp ( NASDAQ: FNWB ), a regional bank operating in Washington state's Puget Sound area, to Neutral from Overweight on its below-average profitability outlook and its limited visibility on future benefits from its partnership investments.

Like many of its peers, First Northwest ( FNWB ) "experienced unfavorable funding mix shift changes as clients seek higher rates and as FNWB tapped wholesale funding sources for both defensive purposes and to support loan growth," Piper analyst Nathan Race wrote in a note to clients.

The deposit base is expected to stabilize as net interest margin pressure eases, he said. Specifically, the ongong unwind of borrowings and a resumption in loan yield expansion should help reduce future NIM pressure compared with Q1 2023.

After loans grew 13% Y/Y in 2022 and 12% in the last quiarter, annualized, management expects future loan growth in the low-single digit range, at most, Race said.

While the outlook for benefits from its partnerships remains cloudy for now, First Northwest's ( FNWB ) partnership investments could be future catalysts. "Core fees comprised 13% of 1Q23 total revenue and may become a more meaningful revenue source as FNWB realizes recurring benefits from current and future potential partnership investments," Race wrote.

Since May 6, the SA Quant system flagged First Northwest ( FNWB ) for a high risk of performing poorly on negative EPS revisions and inferior profitability.

Use the Peers tab to compare FNWB's key stats with those of its peers,

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