First Northwest Bancorp (FNWB): Business Model Canvas [10-2024 Updated]

First Northwest Bancorp (FNWB) stands out in the competitive banking landscape with a robust business model that emphasizes community engagement and personalized service. This blog post delves into FNWB's Business Model Canvas, exploring its key components such as value propositions, customer segments, and revenue streams. Discover how FNWB leverages local partnerships and technology to deliver tailored banking solutions that meet the diverse needs of its customers.

First Northwest Bancorp (FNWB) - Business Model: Key Partnerships

Collaborations with local businesses

First Northwest Bancorp (FNWB) actively collaborates with local businesses to enhance its service offerings and customer base. These partnerships include small to medium-sized enterprises (SMEs) across various sectors, which contribute significantly to the bank's loan portfolio. As of September 30, 2024, FNWB reported a total of $155.3 million in commercial business loans, reflecting a year-over-year increase driven by partnerships with local businesses.

Relationships with government agencies

FNWB maintains strong relationships with government agencies, particularly for programs that support lending to underserved communities. The bank's participation in Small Business Administration (SBA) loan programs is a key aspect of these relationships. For instance, in the third quarter of 2024, FNWB recorded $51,000 in income from SBA loans, which underscores the bank's commitment to facilitating access to capital for small businesses.

Partnerships with financial technology firms

FNWB has established partnerships with financial technology firms to enhance its digital banking capabilities. These collaborations aim to improve customer experience and streamline operations. The bank's focus on digital account acquisition has led to successful integration of fintech solutions, notably in mobile banking and payment processing. As of September 30, 2024, FNWB’s average interest-earning assets were approximately $2.05 billion, driven in part by technological advancements that attract new customers.

Affiliations with community organizations

FNWB is deeply engaged with community organizations, which play a vital role in its outreach and customer engagement strategies. These affiliations help FNWB to support local initiatives and provide financial literacy programs, thereby strengthening community ties. The bank's commitment is reflected in its community investment, which includes participation in various local events and sponsorships. Approximately 70% of FNWB's customer base is located in rural areas, highlighting its focus on community-centered banking.

Partnership Type	Description	Impact on FNWB
Local Businesses	Partnerships with SMEs to boost loan portfolio	$155.3 million in commercial loans as of Q3 2024
Government Agencies	Collaboration on SBA loan programs	$51,000 income from SBA loans in Q3 2024
Financial Technology Firms	Enhancing digital banking capabilities	Average interest-earning assets of $2.05 billion
Community Organizations	Support for local initiatives and financial literacy	70% customer base in rural areas

First Northwest Bancorp (FNWB) - Business Model: Key Activities

Offering retail and commercial banking services

First Northwest Bancorp (FNWB) provides a range of retail and commercial banking services, focusing on meeting the needs of individuals and businesses in its operating areas. As of September 30, 2024, the bank reported total assets of $2.26 billion and total deposits of $1.71 billion. The bank's loan portfolio stood at $1.73 billion, reflecting a year-to-date increase of 2.2%.

Managing loan and deposit portfolios

FNWB actively manages its loan and deposit portfolios to optimize profitability while ensuring risk management. The bank's classified loans increased to 2.71% of total loans as of September 30, 2024, compared to 2.12% at the previous year-end. The cost of total deposits rose to 2.56% for the quarter ended September 30, 2024, up from 1.85% in the same quarter of the previous year. The shift in deposit mix shows a transition from savings to higher-yielding money market accounts, with $401 million, or 23%, of deposits classified as uninsured.

Category	Amount (in billions)
Total Assets	$2.26
Total Deposits	$1.71
Total Loans	$1.73
Classified Loans (% of Total Loans)	2.71%
Cost of Total Deposits	2.56%
Uninsured Deposits (% of Total Deposits)	23%

Conducting risk assessments and credit analysis

FNWB emphasizes robust risk assessments and credit analysis to maintain asset quality. The bank recorded a provision for credit losses of $3.1 million in the third quarter of 2024, primarily due to reserves on individually analyzed loans. The nonperforming assets ratio reached 1.35% of total assets. The allowance for credit losses on loans to total loans stood at 1.27%.

Providing customer service and support

Customer service and support are vital components of FNWB's operations. The bank reported noninterest income of $1.78 million for the third quarter of 2024, which includes income from loan and deposit service fees. The efficiency ratio was reported at 100.31%, indicating the bank's focus on managing operating expenses. FNWB continues to enhance its service offerings to improve customer satisfaction and retention.

First Northwest Bancorp (FNWB) - Business Model: Key Resources

Skilled workforce with banking expertise

First Northwest Bancorp employs a skilled workforce that is crucial for delivering banking services and maintaining customer relationships. As of September 30, 2024, the company had a headcount reduction of 9% due to a reduction-in-force, impacting operational efficiency and ongoing compensation expenses by approximately $820,000 per quarter starting in the fourth quarter of 2024.

Technology infrastructure for online banking

FNWB has invested in technology infrastructure to support online banking services. This investment is essential for enhancing customer experience and operational efficiency. The digital banking platform allows for seamless transactions and accessibility, catering to a growing demand for online services. The company aims to leverage technology to maintain competitiveness in the financial services sector.

Established branch network in local communities

First Northwest Bancorp maintains an established branch network that serves local communities. This network is vital for customer acquisition and retention, providing a physical presence where customers can access banking services. As of September 30, 2024, FNWB reported total assets of $2.255 billion, indicating a strong foundation to support its branch operations.

Branch Network Metrics	As of September 30, 2024
Total Assets	$2,255,486,000
Total Deposits	$1,710,000,000
Consumer Deposits (% of Total Deposits)	58%
Business Deposits (% of Total Deposits)	22%
Public Fund Deposits (% of Total Deposits)	8%
Brokered Deposits (% of Total Deposits)	12%

Capital reserves for lending activities

FNWB maintains significant capital reserves that are essential for its lending activities. As of September 30, 2024, the total shareholders' equity was reported at $160.789 million, with a Common Equity Tier 1 capital ratio of 12.2%. The bank's capacity to lend is supported by a total loan portfolio of approximately $1.735 billion, which includes various loan types such as commercial business, real estate, and consumer loans.

Capital and Lending Metrics	As of September 30, 2024
Total Shareholders' Equity	$160,789,000
Common Equity Tier 1 Capital Ratio	12.2%
Total Loans	$1,734,807,000
Provision for Credit Losses (YTD)	$12,843,000
Net Interest Income	$42,183,000

First Northwest Bancorp (FNWB) - Business Model: Value Propositions

Personalized banking solutions for local customers

First Northwest Bancorp (FNWB) focuses on providing personalized banking solutions tailored to meet the needs of its local customer base. This includes customized loan products, personal banking services, and financial advice that cater specifically to the demographics and economic conditions of the regions they serve. As of September 30, 2024, FNWB reported total loans of $1.73 billion, emphasizing its commitment to lending within its community.

Competitive interest rates on loans and deposits

The bank offers competitive interest rates on both loans and deposits, aimed at attracting and retaining customers. As of the third quarter of 2024, the loan yield was reported at 5.51%, while the cost of interest-bearing deposits was 3.00%, reflecting FNWB's strategy to maintain a favorable interest rate spread. The average interest rate spread for the same period was 2.21%, demonstrating the bank’s ability to balance competitive pricing with profitability.

Product/Service	Interest Rate	Notes
Loans	5.51%	As of Q3 2024, competitive yield on loans
Interest-bearing Deposits	3.00%	Reflects the bank's strategy to attract deposits
Average Interest Rate Spread	2.21%	Indicates profitability from lending vs. deposit rates

Commitment to community development and support

FNWB demonstrates a strong commitment to community development through various initiatives and support programs. This includes financial education, local sponsorships, and community investment projects. The bank’s strategy not only enhances its brand reputation but also solidifies customer loyalty, as approximately 70% of its customer base is located in rural areas. This community-centric approach is reflected in their total deposits, which increased to $1.71 billion as of September 30, 2024.

Access to a range of financial products

First Northwest Bancorp provides a comprehensive array of financial products, including personal and business loans, savings and investment accounts, and mortgage products. This diverse offering caters to different customer segments, ensuring that all financial needs are met. The bank reported total assets of $2.26 billion as of September 30, 2024, underscoring its capability to support a wide range of financial services.

Financial Product	Total Amount (in millions)	Notes
Total Assets	$2,255	As of Q3 2024
Total Loans	$1,735	Significant portion of assets dedicated to loans
Total Deposits	$1,710	Reflects the bank's customer base growth

First Northwest Bancorp (FNWB) - Business Model: Customer Relationships

Dedicated account managers for personalized service

First Northwest Bancorp (FNWB) employs dedicated account managers to foster personalized relationships with clients. This approach allows for tailored services, enhancing customer satisfaction and retention. The bank's emphasis on personal interaction is evident in its service model, which supports various customer segments, including individuals, businesses, and community organizations.

Community engagement through local events

FNWB actively engages with the community through local events, fostering strong ties with its customer base. In 2024, the bank sponsored over 15 community events, including financial literacy workshops and local charity fundraisers, which increased brand visibility and customer loyalty. This community-focused strategy is reflected in the bank's marketing efforts and customer outreach initiatives, contributing to a 5% increase in local customer acquisition compared to the previous year.

Feedback mechanisms to enhance service quality

The bank utilizes various feedback mechanisms, including customer satisfaction surveys and focus groups, to enhance service quality. In 2024, FNWB achieved a customer satisfaction score of 87%, up from 82% in 2023, reflecting improvements made based on customer feedback. The bank also implemented a new online platform for customer reviews and suggestions, which has seen a 30% increase in participation since its launch.

Loyalty programs for existing customers

FNWB has established loyalty programs aimed at rewarding existing customers. The bank's loyalty program, launched in early 2024, offers benefits such as fee waivers and higher interest rates on deposits for customers who maintain certain account balances. As of September 2024, approximately 25% of FNWB's customer base participated in the loyalty program, leading to a notable increase in retention rates and customer engagement.

Metric	2023	2024	Change (%)
Customer Satisfaction Score	82	87	6.1
Community Events Sponsored	10	15	50
Loyalty Program Participation	N/A	25%	N/A
Local Customer Acquisition Growth	N/A	5%	N/A

First Northwest Bancorp (FNWB) - Business Model: Channels

Physical branch locations for in-person banking

First Northwest Bancorp operates a network of physical branch locations to provide in-person banking services to its customers. As of September 30, 2024, the bank has a total of 14 branch locations across Washington state, enabling direct access to banking services.

Online banking platform for digital access

The bank offers a comprehensive online banking platform that allows customers to manage their accounts, pay bills, and transfer funds electronically. In the third quarter of 2024, approximately 70% of customer transactions were conducted through the online platform, reflecting a shift towards digital banking solutions.

Mobile app for convenient transactions

First Northwest Bancorp has developed a mobile banking app that provides customers with the ability to perform banking transactions on-the-go. As of September 30, 2024, the app had over 10,000 downloads, and user engagement metrics indicated a monthly active user rate of 65% among app users.

Customer support via phone and email

The bank provides customer support through various channels, including phone and email. In the third quarter of 2024, customer support received an average of 2,500 inquiries per month, with an average response time of under 5 minutes for phone inquiries and 24 hours for email support.

Channel Type	Details	Performance Metrics
Physical Branch Locations	14 branches in Washington	Direct access for in-person banking
Online Banking Platform	Full account management services	70% of transactions online
Mobile App	Banking on-the-go	10,000+ downloads, 65% active user rate
Customer Support	Phone and email support	2,500 inquiries/month, <5 min response time

First Northwest Bancorp (FNWB) - Business Model: Customer Segments

Individual consumers seeking personal banking

First Northwest Bancorp (FNWB) serves individual consumers through a variety of personal banking products. The bank offers checking and savings accounts, personal loans, and home equity lines of credit. As of September 30, 2024, consumer deposits comprised approximately 58% of total deposits, with an average balance of $24,000 per account .

Small to medium-sized enterprises (SMEs)

FNWB provides tailored banking solutions for small to medium-sized enterprises (SMEs), including business checking accounts, commercial loans, and lines of credit. As of September 30, 2024, business deposits accounted for 22% of total deposits, averaging $51,000 per account . The commercial business loan segment increased by $38.2 million in the third quarter of 2024, indicating strong demand from SMEs .

Real estate investors and developers

Real estate investors and developers are significant customer segments for FNWB, with the bank providing financing for multi-family and commercial real estate projects. As of September 30, 2024, the bank reported $1.22 billion in total real estate loans, which includes one-to-four family, multi-family, commercial, and construction loans . The loan mix has shifted towards commercial business and multi-family real estate, reflecting changing market dynamics .

Local government and non-profit organizations

FNWB also serves local government entities and non-profit organizations, offering specialized financial services such as public fund accounts and tailored lending solutions. As of September 30, 2024, public fund deposits accounted for 8% of total deposits, with an average balance of $1.6 million per account . The bank has maintained relationships with public funds for over a decade, highlighting its commitment to serve this segment effectively .

Customer Segment	Percentage of Total Deposits	Average Balance per Account	Total Loans Outstanding (as of Sept 30, 2024)
Individual Consumers	58%	$24,000	N/A
Small to Medium-Sized Enterprises (SMEs)	22%	$51,000	$155.3 million (Commercial Business Loans)
Real Estate Investors and Developers	N/A	N/A	$1.22 billion (Total Real Estate Loans)
Local Government and Non-Profit Organizations	8%	$1.6 million	N/A

First Northwest Bancorp (FNWB) - Business Model: Cost Structure

Employee salaries and benefits

Total noninterest expense for First Northwest Bancorp for the third quarter of 2024 was $15.9 million, which includes significant components related to employee salaries and benefits. This expense reflects a one-time severance payout of $704,000 due to workforce reductions impacting 9% of the staff. Overall compensation costs are expected to decrease by approximately $820,000 per quarter starting in the fourth quarter of 2024.

Cost Component	Amount (in thousands)
Compensation Expense (Q3 2024)	$15,900
Severance Payout (Q3 2024)	$704
Estimated Future Savings	$820

Operational costs for branches and technology

Operational costs encompass expenses related to maintaining branches and technology infrastructure. In Q3 2024, these costs were influenced by occupancy expenses and additional rent from a sale-leaseback transaction, which accounted for $416,000. Other operational expenses increased due to $161,000 in additional credit-related expenses.

Operational Cost Component	Amount (in thousands)
Occupancy Expense (Q3 2024)	$416
Additional Credit-Related Expenses	$161
Total Operational Costs	$15,900

Marketing and advertising expenses

Marketing and advertising expenses for First Northwest Bancorp reflected a strategic focus on controlling discretionary spending. In Q3 2024, advertising costs decreased by $91,000 compared to the previous quarter, indicating a conscious effort to manage marketing expenditures amid broader cost control measures.

Marketing Expense Component	Amount (in thousands)
Advertising Costs (Q3 2024)	Decreased by $91
Total Marketing Expenses	Part of $15,900 noninterest expense

Regulatory compliance and insurance costs

Regulatory compliance and insurance costs are essential for First Northwest Bancorp's operations. The FDIC insurance premium expense was $533,000 in Q3 2024, reflecting the bank's ongoing commitment to meeting regulatory requirements.

Compliance Cost Component	Amount (in thousands)
FDIC Insurance Premium (Q3 2024)	$533
Total Compliance Costs	Included in $15,900 noninterest expense

First Northwest Bancorp (FNWB) - Business Model: Revenue Streams

Net interest income from loans

For the third quarter of 2024, First Northwest Bancorp reported a net interest income of $14.0 million, slightly down from $14.2 million in the previous quarter and $14.9 million in the same quarter of 2023. The net interest margin was 2.70%, down from 2.76% in the preceding quarter and 2.97% in Q3 2023.

Non-interest income from fees and services

Non-interest income for FNWB decreased to $1.8 million in Q3 2024 from $7.4 million in Q2 2024, primarily due to nonrecurring transactions in the previous quarter. The breakdown of non-interest income sources for Q3 2024 is as follows:

Source	Q3 2024	Q2 2024	Q1 2024	Q4 2023	Q3 2023
Loan and deposit service fees	$1,059,000	$1,076,000	$1,102,000	$1,068,000	$1,068,000
Sold loan servicing fees and servicing rights mark-to-market	$10,000	$74,000	$219,000	$276,000	$98,000
Net gain on sale of loans	$58,000	$150,000	$52,000	$33,000	$171,000
Net loss on sale of investment securities	$0	($2,117,000)	$0	($5,397,000)	$0
Net gain on sale of premises and equipment	$0	$7,919,000	$0	$0	$0
Increase in cash surrender value of bank-owned life insurance	$315,000	$293,000	$243,000	$260,000	$252,000
Other income	$337,000	($48,000)	$572,000	$831,000	$1,315,000
Total noninterest income	$1,779,000	$7,347,000	$2,188,000	($2,929,000)	$2,904,000

Gains from investment securities

First Northwest experienced a net loss on the sale of investment securities totaling $2.1 million for the year, while the third quarter of 2024 did not report any gains from investment securities. The total securities available for sale, at fair value, amounted to $310.9 million as of September 30, 2024.

Income from wealth management services

Income from wealth management services is integrated into the non-interest income category, contributing to the overall fee structure. However, specific figures for wealth management services were not detailed in the latest financial statements. The overall non-interest income, which reflects various services, was $1.8 million for Q3 2024.

Article updated on 8 Nov 2024

Resources:

1. First Northwest Bancorp (FNWB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of First Northwest Bancorp (FNWB)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View First Northwest Bancorp (FNWB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.