First Northwest Bancorp in Port Angeles, Wash., reported a quarterly loss that reflected credit issues and a legal reserve tied to litigation with a borrower group.
The $2.2 billion-asset company said in a press release that it lost $9 million in the first quarter, an increase from its $2.8 million loss a quarter earlier. The company earned $396,000 a year earlier.
First Northwest said the results included a $5.8 million legal reserve after a group of borrowers alleged “financial misconduct” by the bank. The allegations were made on April 27, three days before the parties were set to meet in hopes of reaching a settlement as part of involuntary bankruptcy proceedings.
The company also set aside $7.8 million in the first quarter to address potential loan losses, largely reflecting $7.7 million of chargeoffs. The chargeoffs were tied to two commercial real estate loans and a related commercial business loan totaling $6.2 million.
First Northwest said the remaining chargeoffs were mostly tied to three commercial business loans, a commercial construction loan and “a small number of consumers loans.”