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First Northwest Bancorp (NASDAQ:FNWB), a regional bank with a market capitalization of approximately $70 million, announced Monday that its banking subsidiary, First Fed Bank, has entered into a settlement agreement to resolve legal disputes connected to bankruptcy proceedings involving several of its borrowers. The stock, which has declined over 26% in the past six months according to InvestingPro data, faces this legal development amid challenging market conditions. The information was disclosed in a press release statement and detailed in a recent SEC filing.
According to the company, on July 17, First Fed Bank, the OpCo Debtors (Creative Technologies, LLC, Water Station Management, LLC, and Refreshing USA, LLC), Ideal Property Investments LLC, and the Joint Official Committee of Unsecured Creditors of the Debtors entered into a Settlement Agreement, Plan Support Agreement, and Release. The agreement aims to resolve an adversary proceeding and other related claims that arose from bankruptcy filings in 2024. InvestingPro data shows the bank’s financial health score as weak, with particularly concerning metrics in profitability and growth.
Under the terms of the settlement, First Fed Bank agreed to release certain liens against the property of the debtors and make cash payments totaling not less than $2.87 million and up to $5.74 million. The final payment amount will depend on the percentage of certain unsecured creditors of the OpCo Debtors who enter into a mutual release of all claims related to the debtors under the Chapter 11 liquidation plan.
First Northwest Bancorp stated that the bank reserved $5.8 million for this matter as a noninterest expense in the first quarter of 2025. The company also indicated its intention to seek reimbursement from its insurance carriers.
The settlement is intended to eliminate risks, costs, and ongoing distractions associated with the adversary proceeding and related claims. The company’s common stock is listed on the Nasdaq Stock Market under the symbol FNWB.
All information in this article is based on a press release statement and the company’s filing with the Securities and Exchange Commission.
In other recent news, First Northwest Bancorp has announced several key developments. The company is undergoing a leadership transition as President and CEO Matthew P. Deines is set to resign effective July 12, 2025, with Executive Vice President and Chief Operating Officer Geri Bullard stepping in as interim CEO. Piper Sandler has maintained a Neutral rating on First Northwest Bancorp, citing a relatively smooth transition without immediate strategic impacts. In legal matters, First Northwest Bancorp is facing a $106 million lawsuit filed by 3|5|2 Capital GP LLC, alleging the bank’s involvement in a fraudulent scheme related to Water Station Management, LLC. The bank has denied the allegations and plans to defend itself vigorously. Additionally, the company has changed its independent registered public accounting firm following a merger involving its previous auditor, Moss Adams LLP, which has now merged with Baker Tilly US, LLP. The transition to Baker Tilly was approved by the company’s Audit Committee and is effective as of June 3, 2025. Throughout this period, there were no disagreements with Moss Adams regarding financial statements or audit procedures. These developments have been disclosed in recent filings with the Securities and Exchange Commission.
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