GlobeNewswire Inc | Jul 28, 2021 04:00PM EDT

July 28, 2021

PORT ANGELES, Wash., July 28, 2021 (GLOBE NEWSWIRE) -- First Northwest Bancorp (Nasdaq: FNWB) (Company), the holding company for First Federal Savings and Loan Association of Port Angeles (Bank or "First Fed"), today reported net income of $3.0 million, or $0.32 per diluted share, for the second quarter of 2021, an increase of 51.6% compared to $2.0 million, or $0.21 per diluted share, for the second quarter a year ago, and a decrease of 4.0% compared to $3.1 million, or $0.34 per diluted share, for the first quarter of 2021. Second quarter results reflect strong year-over-year revenue generation, solid core deposit and loan growth, and excellent credit quality. The decrease from the prior period was primarily due to lower gains on sale of one- to four-family mortgages and increased compensation expense, partially offset by increased net interest income and a lower provision for loan losses. For the first six months of 2021, net income was $6.1 million, or $0.66 per diluted share, an increase of 114.7% compared to $2.8 million, or $0.30 per diluted share, for the first six months of 2020.

The Board of Directors of First Northwest Bancorp declared a quarterly cash dividend of $0.06 per common share. The dividend will be payable on August 27, 2021, to shareholders of record as of the close of business on August 13, 2021.

We again delivered solid financial results for the second quarter, demonstrating the sustained strength of our franchise, said Matthew P. Deines, President and CEO. Our second quarter profits were up over 50% year-over-year fueled by strong revenue growth and steady loan growth, particularly in the commercial banking area. Gross loans increased over 26%, while total deposits grew over 23%, year-over-year, as we continue to foster new customer relationships. We remain focused on improving our earning asset mix and lowering our cost of funds, which is driving our net interest margin expansion compared to a year ago.

We continue to look outside the box to generate organic commercial and consumer activity to benefit our customers, Deines continued. To meet the needs of our business customers, we initiated a Small Business Administration (SBA) program during the quarter and already are seeing good growth in this new portfolio. In April we started a joint venture and established Quin Ventures, Inc. (Quin or Quin Ventures) to develop a digital financial wellness platform offering personal financial services to the general public. In July we closed on the previously announced Bellevue branch purchase from Sterling Savings and Trust, and also relocated our Fairhaven branch to 1215 12th Street, Suite 105. Additionally, we are on schedule to open a new branch in Ferndale, Washington in August.

Second Quarter 2021 Highlights (at or for the quarter ended June30, 2021)

-- Second quarter net income was $3.0 million, compared to $3.1 million in the preceding quarter and $2.0 million in the same quarter one year ago. -- Diluted earnings per share was $0.32, compared to $0.34 per share in the preceding quarter and $0.21 per share in the second quarter a year ago. -- Provision for loan losses was $300,000 in the second quarter, compared to $500,000 in the first quarter of 2021, and $1.5 million in the second quarter of 2020, reflecting consistent strong credit quality. -- Loans receivable increased 7.8% to $1.25 billion at June 30, 2021, compared to $1.16 billion at March 31, 2021, and increased 26.4% compared to $986.4 million a year ago, primarily due to growth in commercial real estate, construction and consumer loan portfolios. -- Deposits increased nominally during the quarter and increased 23.2% from one year prior, to $1.44 billion at June 30, 2021, due to successful organic and wholesale deposit-gathering strategies, including significant growth in noninterest-bearing deposits, which increased 49.4% in the last twelve months. Brokered deposit balances decreased $12 million from March 31, 2021. -- The cost of total deposits for the second quarter decreased to 0.23% from 0.27% for first quarter 2021 and 0.72% in the second quarter of 2020. -- Gain on sale of mortgage loans was $921,000 for the second quarter compared to $1.3 million in the previous quarter and $2.0 million in the second quarter of 2020, reflecting a slowdown in refinance activity due to higher rates and lack of inventory available for sale. -- During the second quarter, the Company repurchased 18,142 shares of common stock at an average price of $17.06 per share for a total of $310,000, leaving 853,888 shares remaining under the 2020 Stock Repurchase Plan approved in October 2020.

Recent Developments

On July 23, 2021, First Fed completed the purchase of a Bellevue, Washington based bank branch from Sterling Bank and Trust of Southfield, Michigan. The agreement included the purchase of $65.4 million in deposits. We are excited for this opportunity to expand our presence in the vibrant King County market as we continue to grow our Northwest footprint. Bellevue is the fifth largest city in Washington, and the Eastside's high-tech hub. With diverse industries, increasing population and a vibrant economy, Bellevue is routinely ranked among the best mid-sized cities in the United States, said Deines.

Balance Sheet Review

Total assets increased $51.1 million, or 2.9%, to $1.79 billion at June30, 2021, compared to $1.74 billion at March 31, 2021, and increased $308.5 million, or 20.9%, compared to $1.48 billion at June30, 2020.

Cash and cash equivalents decreased by $18.5 million, or 18.7%, to $80.7 million as of June 30, 2021, compared to $99.3 million as of March 31, 2021. The Company continues to deploy excess cash and move it into higher yielding ventures.

Investment securities decreased $23.0 million, or 5.8%, to $370.5 million at June 30, 2021, compared to $393.5 million three months earlier, and increased $6.2 million compared to $364.3 million at June 30, 2020. At June 30, 2021, municipal bonds totaled $130.5 million and comprised the largest portion of the investment portfolio at 35.2%. The estimated average life of the total investment securities portfolio was approximately 6.6 years.

We continue to utilize the investment portfolio as a means to generate additional interest income, said Geri Bullard, EVP/Chief Financial Officer. We began adding to the investment portfolio a year ago as credit spreads widened, to deploy excess cash.

Securities consisted of the following at the dates indicated:

June 30, March 31, June 30, Three One Year 2021 2021 2020 Month Change Change (In thousands) Available forSale at Fair ValueMunicipal bonds $ 130,458 $ 132,492 $ 107,610 $ (2,034 ) $ 22,848 U.S. governmentand agency 1,949 1,913 - 36 1,949 issued bonds(Agency bonds)U.S. governmentagency issuedasset-backed 36,564 65,910 60,819 (29,346 ) (24,255 )securities (ABSagency)Corporateissuedasset-backed 4,000 17,505 39,804 (13,505 ) (35,804 )securities (ABScorporate)Corporateissued debtsecurities 49,880 43,890 22,428 5,990 27,452 (Corporatedebt)U.S. SmallBusinessAdministration 16,753 17,566 23,547 (813 ) (6,794 )securities(SBA)Mortgage-backed securities:U.S. governmentagency issuedmortgage-backed 75,429 74,016 102,647 1,413 (27,218 )securities (MBSagency)Corporateissuedmortgage-backed 55,467 40,203 7,418 15,264 48,049 securities (MBScorporate)Totalsecurities $ 370,500 $ 393,495 $ 364,273 $ (22,995 ) $ 6,227 available forsale

Net loans, excluding loans held for sale, increased $89.9 million, or 7.8%, to $1.25 billion at June30, 2021, from $1.16 billion at March 31, 2021, and increased $260.0 million, or 26.4%, from $986.4 million a year ago. We produced solid loan growth in a very competitive operating environment, with total loans increasing 26.1% over the last twelve months, said Randy Riffle, EVP/Chief Lending Officer. We continue to pursue lending opportunities in commercial, construction, and SBA programs. We formed an SBA team to build out this program during the quarter and they are producing solid results, helping our business customers and generating fee income. Additionally, new PPP loan production from the SBAs latest round contributed to loan production, with $2.2 million in new PPP loans funded during the second quarter of 2021 and $32.4 million in PPP loans funded during the first quarter of 2021. Commercial business loans decreased $7.0 million during the quarter, mainly as the result of a $5.7 million decrease in Northpointe Mortgage Participation program loans, partially offset by a $2.8 million increase in other commercial business loans during the quarter.

The Company originated $51.9 million in residential mortgages during the second quarter and sold $28.7 million, with an average gross margin on sale of mortgage loans of approximately 2.54%. This production compares to residential mortgage originations of $66.3 million in the preceding quarter with sales of $37.0 million, with an average gross margin of 2.85%. The low interest rate environment continues to fuel mortgage banking activity, although we are starting to see a modest slowdown in activity compared to the record setting pace of the third and fourth quarters of 2020, said Kelly Liske, Chief Banking Officer.

Loans receivable consisted of the following at the dates indicated:

June 30, March 31, June 30, Three OneYear 2021 2021 2020 Month Change Change (In thousands) Real Estate: One to four $ 301,816 $ 295,831 $ 325,349 $ 5,985 $ (23,533 )familyMulti-family 166,502 162,487 103,279 4,015 63,223 Commercial 319,644 296,826 267,233 22,818 52,411 real estateConstruction 183,685 157,316 58,153 26,369 125,532 and landTotal real 971,647 912,460 754,014 59,187 217,633 estate loans Consumer: Home equity 36,886 33,713 33,696 3,173 3,190 Auto andother 171,617 139,134 109,214 32,483 62,403 consumerTotalconsumer 208,503 172,847 142,910 35,656 65,593 loans Commercial 75,995 83,033 99,477 (7,038 ) (23,482 )business Total loans 1,256,145 1,168,340 996,401 87,805 259,744 Less: Net deferred 5,610 4,983 1,842 627 3,768 loan feesPremium onpurchased (10,393 ) (7,347 ) (3,901 ) (3,046 ) (6,492 )loans, netAllowancefor loan 14,588 14,265 12,109 323 2,479 lossesTotal loansreceivable, $ 1,246,340 $ 1,156,439 $ 986,351 $ 89,901 $ 259,989 net

Total deposits increased $6.9 million, to $1.44 billion at June 30, 2021, compared to $1.43 billion at March31, 2021, and increased $271.4 million, or 23.2%, when compared to $1.17 billion a year ago. Demand deposits increased 42.4% compared to a year ago to $483.1 million at June30, 2021, and represented 33.5% of total deposits; money market accounts increased 54.7% compared to a year ago to $511.1 million, and represented 35.4% of total deposits; savings accounts increased 5.7% compared to a year ago to $185.8 million at June 30, 2021, and represented 12.9% of total deposits; and certificates of deposit decreased 19.5% compared to a year ago to $261.8 million at quarter-end, and represented 18.2% of total deposits.

Deposit balances remain at record levels as we continue to build relationships with both existing and new customers, said Bullard. We continue to lower our funding costs by focusing on noninterest-bearing and other core deposit growth, while strategically allowing higher-cost maturing deposits to run off. The total cost of funds was 0.37% for the second quarter of 2021 compared to 0.32% for the first quarter of 2021 and improved from 0.77% for the second quarter of 2020.

Deposits consisted of the following at the dates indicated:

June 30, March 31, June 30, Three OneYear 2021 2021 2020 Month Change Change (In thousands) Noninterest-bearing $ 307,119 $ 296,232 $ 205,597 $ 10,887 $ 101,522 demand depositsInterest-bearing 175,939 169,911 133,554 6,028 42,385 demand depositsMoney market 511,051 495,265 330,261 15,786 180,790 accountsSavings accounts 185,798 186,173 175,749 (375 ) 10,049 Certificates of 261,831 287,226 325,164 (25,395 ) (63,333 )depositTotal deposits $ 1,441,738 $ 1,434,807 $ 1,170,325 $ 6,931 $ 271,413

Total shareholders equity increased to $188.6 million at June 30, 2021, compared to $182.1 million three months earlier, and $176.3 million a year earlier. Book value per common share was $18.49 at June 30, 2021, compared to $17.86 at March31, 2021 and $17.07 at June 30, 2020.

Operating Results

In the second quarter of 2021, the Company generated a return on average assets ("ROAA") of 0.69%, and a return on average equity ("ROAE") of 6.46%, compared to 0.76% and 6.70%, respectively, in the first quarter of 2021, and 0.56% and 4.60%, respectively, in the second quarter of 2020. For the first six months of 2021, ROAA and ROAE was 0.73% and 6.63%, respectively, compared to 0.42% and 3.24% for the first six months of 2020.

Total interest income increased to $15.1 million for the second quarter of 2021, compared to $14.6 million in the previous quarter and $12.4 million in the second quarter of 2020. Interest and fees on loans increased due to loan growth during the current quarter. The current quarter yield on average loans receivable decreased by 10 basis points compared to the same period in the prior year. Total interest expense was $1.4 million for the second quarter of 2021, compared to $1.2 million in the first quarter of 2021, and $2.2 million in the second quarter a year ago. The increase during the quarter compared to the preceding quarter was due to interest on subordinated debt of $394,000, which was partially offset by a decrease of $116,000 in interest on deposits and other borrowings. For the first six months of 2021, total interest income increased 22% to $29.7 million, compared to $24.3 million for the first six months of 2020. The decrease in interest expense year-over-year was due to the decline in the cost of total deposits to 23 basis points compared to 72 basis points in the second quarter one year ago.

Net interest income, before provision for loan losses, increased 1.2% during the quarter to $13.6 million, compared to $13.5 million for the preceding quarter, and increased 35.0% compared to $10.1 million in the second quarter a year ago. For the first six months of 2021, net interest income before the provision for loan losses increased 39.0% to $27.1 million, compared to $19.5 million for the first six months of 2020. As of June 30, 2021, we received SBA proceeds on forgiven loans totaling $21.8 million. Approximately $92,000 of the income recognized during the second quarter was related to deferred fees associated with PPP loan payoffs, compared to $177,000 of the income related to deferred fees associated with PPP loan payoffs in the first quarter of 2021, Riffle noted.

The Company recorded a $300,000 provision for loan losses during the second quarter of 2021. This compares to a provision for loan losses of $500,000 for the preceding quarter, and a provision for loan losses of $1.5 million for the second quarter of 2020. The lower quarterly provision reflects improvement in economic conditions and stable credit quality.

The net interest margin contracted 14 basis points to 3.34% for the second quarter of 2021, compared to 3.48% for the first quarter of 2021, and increased 24 basis points compared to 3.10% for the second quarter in 2020. The improvement in our earning asset mix and the substantial reduction in our cost of funds has fueled our net interest margin expansion over the last three quarters. The contraction during the current quarter was primarily due to the issuance of subordinated notes in March 2021, which reduced our net interest margin by 9 basis points, and, to a lesser degree, a decrease in our yield on earning assets, said Bullard. For the first six months of 2021, the net interest margin increased 32 basis points to 3.43%, compared to 3.11% in the first six months of 2020, primarily due to a substantial reduction in the cost of funds as well as an improvement in our earning asset mix. Average total loans increased to 74% of average interest-earning assets compared to 72% one year ago.

The yield on earning assets decreased 10 basis points to 3.68% for the second quarter of 2021, compared to 3.78% for the first quarter of 2021, and decreased 11 basis points from 3.79% for the second quarter of 2020. The decrease was due to lower yields on the investment portfolio and loans, which was offset by higher average loan balances. The yield on the loan portfolio decreased to 4.30% for the second quarter of 2021, from 4.43% for the first quarter of 2021, and decreased from 4.40% for the second quarter of 2020, primarily due to lower interest rates on refinanced and PPP loans. The cost of interest-bearing liabilities increased 6 basis points to 0.46% for the second quarter of 2021, compared to 0.40% for the first quarter of 2021, and decreased 43 basis points from 0.89% for the second quarter of 2020.

Noninterest income increased 43.2% to $3.9 million for the second quarter of 2021 from $2.7 million for the first quarter of 2021 and decreased 5.8% compared to $4.1 million for the second quarter a year ago. The second quarter of 2021 included a $921,000 gain on sale of loans compared to a $1.3 million gain on sale of loans in the preceding quarter and a $2.0 million gain on sale of loans in the second quarter a year ago. Noninterest income growth during the second quarter of 2021 also included a $1.1 million gain on sale of investment securities, $315,000 in swap program participation fees and $96,000 of SBA premiums recognized. Loan and deposit service fees increased to $1.0 million for the second quarter 2021, compared to $837,000 for the preceding quarter and $765,000 for the second quarter a year ago. In the year ago quarter, loan and deposit service fees were lower due to accommodations made to help customers affected by the halt on the economy due to the pandemic. For the first six months of 2021, noninterest income increased 2.3% to $6.6 million, compared to $6.4 million in the first six months of 2020, reflecting increases in loan and deposit fees that were partially offset by a lower gain on sale of loans.

Noninterest expense totaled $13.7 million for the second quarter of 2021, compared to $12.1 million for the preceding quarter and $10.3 million for the second quarter a year ago. For the first six months of 2021, noninterest expense increased to $25.8 million, from $19.7 million in the first six months of 2020. The increases for both the second quarter and for the year-to-date period reflects higher compensation expense, including salaries, commissions and benefits, as well as costs associated with technology enhancements for digital and mobile banking products.

Capital Ratios and Credit QualityCapital levels for both the Company and its operating bank, First Fed, remain in excess of applicable regulatory requirements and the Bank was categorized as "well-capitalized" at June30, 2021. Common Equity Tier 1 and Total Risk-Based Capital Ratios at June 30, 2021 were 14.5% and 15.6%, respectively.

Nonperforming loans were $1.8 million at June30, 2021, a decrease from $2.1 million at March31, 2021. The percentage of the allowance for loan losses to nonperforming loans increased to 817.7%, at June30, 2021, from 668.1% at March31, 2021, and 360.8% at June30, 2020. Classified loans decreased $803,000 during the second quarter to $13.3 million at June30, 2021, reflecting a one- to four-family loan that was brought current. The allowance for loan losses as a percentage of total loans was 1.2% at June 30, 2021, which was unchanged compared to three months and one year earlier.

Awards/Recognition

The Company has received several accolades as a leader in the community.

In April 2021, First Fed was recognized as a Top Corporate Citizen by the Puget Sound Business Journal. The Corporate Citizenship Awards honors local corporate philanthropists and companies making significant contributions in the region. The top 25 small, medium and large-sized companies were recognized in addition to nine other honorees this year. First Fed was ranked #4 in the medium-sized company category.

In May 2021, First Fed was named to the Middle Market Fast 50 List by the Puget Sound Business Journal. First Fed has made the Fast 50 list for 2020, which recognizes the region's fastest-growing middle market companies.

On June 24, First Fed was named to the Forbes Best Banks list for 2021, and included on the Forbes Best Bank in Washington list. Nearly 25,000 Americans were surveyed for their opinions on their current and former banking relationships. Only 135 banks (2.7%) made the list of the nearly 5,000 FDIC-insured banks in the country. First Fed was one of three in Washington to be recognized as a Best Bank based on customer feedback.

Additionally, on June 14 First Fed was named on the Puget Sound Business Journals Best Workplaces list. First Fed has been recognized as one the top 100 workplaces in Washington, as voted by each companys own employees.

About the Company

First Northwest is a bank holding company that primarily engages in the business activity of its subsidiary, First Fed. First Fed is a community-oriented financial institution which has served customers and communities since 1923. Currently First Fed has 11 full-service branches and one lending center serving Clallam, Jefferson, Kitsap, Whatcom, and King counties in Washington. First Feds business and operating strategy is focused on building sustainable earnings through hiring experienced bankers, geographic expansion, diversifying our loan product mix, expanding our deposit product offerings that deliver value-added solutions, enhancing existing services and digital service delivery channels, and enhancing our infrastructure to support the changing needs and expectations of our customers.

References

https://bellevuewa.gov/city-government/departments/community-development/data/demographic-data/city-demographic-profile

Forward-Looking Statements

Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Companys latest Annual Report on Form 10-K and other filings with the Securities and Exchange Commission ("SEC")-which are available on our website at www.ourfirstfed.com and on the SECs website at www.sec.gov.

Any of the forward-looking statements that we make in this Press Release and in the other public statements we make may turn out to be incorrect because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company's operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2021 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Companys operations and stock price performance.

FIRST NORTHWEST BANCORP AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share data) (Unaudited)

June 30, March 31, June 30, Three OneYear 2021 2021 2020 Month Change ChangeAssets Cash and due $ 17,589 $ 15,827 $ 16,346 11.1 % 7.6 %from banksInterest-bearingdeposits in 63,133 83,444 33,242 -24.3 89.9 banksInvestmentsecuritiesavailable for 370,500 393,495 364,273 -5.8 1.7 sale, at fairvalueLoans held for 1,971 4,037 3,111 -51.2 -36.6 saleLoans receivable(net ofallowance forloan losses of 1,246,340 1,156,439 986,351 7.8 26.4 $14,588,$14,265, and$12,109)Federal HomeLoan Bank (FHLB) 5,597 3,997 6,074 40.0 -7.9 stock, at costAccrued interest 5,949 6,251 5,360 -4.8 11.0 receivablePremises and 16,386 14,795 14,188 10.8 15.5 equipment, netMortgageservicing 2,381 2,309 1,098 3.1 116.8 rights, netBank-owned life 38,839 38,596 37,482 0.6 3.6 insurance, netPrepaid expenses 18,706 17,103 11,334 9.4 65.0 and other assets Total assets $ 1,787,391 $ 1,736,293 $ 1,478,859 2.9 % 20.9 % Liabilities andShareholders' Equity Deposits $ 1,441,738 $ 1,434,807 $ 1,170,325 0.5 % 23.2 %Borrowings 90,000 50,000 112,379 80.0 -19.9 Subordinated 39,241 39,310 ? -0.2 100.0 debt, netAccrued interest 455 84 253 441.7 79.8 payableAccrued expensesand other 26,221 27,994 18,184 -6.3 44.2 liabilitiesAdvances fromborrowers for 1,143 2,000 1,403 -42.9 -18.5 taxes andinsurance Total 1,598,798 1,554,195 1,302,544 2.9 22.7 liabilities Shareholders' EquityPreferred stock,$0.01 par value,authorized5,000,000 ? ? ? n/a n/a shares, noshares issued oroutstandingCommon stock,$0.01 par value,authorized75,000,000shares; issuedand outstanding10,205,867 atJune 30, 2021; 102 102 103 0.0 -1.0 issued andoutstanding10,195,644 atMarch 31, 2021;and issued andoutstanding10,326,226 atJune 30, 2020Additional 97,463 96,499 98,421 1.0 -1.0 paid-in capitalRetained 96,526 94,363 86,633 2.3 11.4 earningsAccumulatedothercomprehensive 3,546 199 717 1,681.9 394.6 income, net oftaxUnearnedemployee stock (8,901 ) (9,065 ) (9,559 ) 1.8 6.9 ownership plan(ESOP) shares Total parent'sshareholders' 188,736 182,098 176,315 3.6 7.0 equityNoncontrollinginterest in Quin (143 ) ? ? 100.0 100.0 Ventures Totalshareholders' 188,593 182,098 176,315 3.6 7.0 equity Totalliabilities and $ 1,787,391 $ 1,736,293 $ 1,478,859 2.9 % 20.9 %shareholders'equity

FIRST NORTHWEST BANCORP AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME(Dollars in thousands, except per share data) (Unaudited)

Quarter Ended June 30, March June 30, Three OneYear 2021 31, 2021 2020 Month Change ChangeINTEREST INCOME Interest andfees on loans $ 12,866 $ 12,541 $ 10,236 2.6 % 25.7 %receivableInterest onmortgage-backed 644 464 740 38.8 -13.0 and relatedsecuritiesInterest oninvestment 1,480 1,570 1,316 -5.7 12.5 securitiesInterest ondeposits in 15 13 8 15.4 87.5 banksFHLB dividends 46 45 55 2.2 -16.4 Total interest 15,051 14,633 12,355 2.9 21.8 income INTEREST EXPENSEDeposits 825 934 2,041 -11.7 -59.6 Borrowings 183 191 201 -4.2 -9.0 Subordinated 394 25 ? 1,476.0 100.0 debtTotal interest 1,402 1,150 2,242 21.9 -37.5 expense Net interest 13,649 13,483 10,113 1.2 35.0 income PROVISION FOR 300 500 1,500 -40.0 -80.0 LOAN LOSSES Net interestincome after 13,349 12,983 8,613 2.8 55.0 provision forloan losses NONINTEREST INCOMELoan anddeposit service 1,001 837 765 19.6 30.8 feesMortgageservicing fees, 13 30 (172 ) -56.7 107.6 net ofamortizationNet gain on 921 1,337 2,001 -31.1 -54.0 sale of loansNet gain onsale of 1,124 ? 661 100.0 70.0 investmentsecuritiesIncrease incash surrendervalue of 242 244 627 -0.8 -61.4 bank-owned lifeinsuranceOther income 571 256 227 123.0 151.5 Totalnoninterest 3,872 2,704 4,109 43.2 -5.8 income NONINTEREST EXPENSECompensation 8,559 7,295 5,966 17.3 43.5 and benefitsData processing 726 739 769 -1.8 -5.6 Occupancy and 1,803 1,623 1,345 11.1 34.1 equipmentSupplies,postage, and 355 242 284 46.7 25.0 telephoneRegulatoryassessments and 301 261 223 15.3 35.0 state taxesAdvertising 492 445 377 10.6 30.5 Professional 644 522 354 23.4 81.9 feesFDIC insurance 168 148 70 13.5 140.0 premiumOther 659 819 894 -19.5 -26.3 Totalnoninterest 13,707 12,094 10,282 13.3 33.3 expense INCOME BEFOREPROVISION FOR 3,514 3,593 2,440 -2.2 44.0 INCOME TAXES PROVISION FOR 663 473 464 40.2 42.9 INCOME TAXES NET INCOME 2,851 3,120 1,976 -8.6 44.2 Net loss onnoncontrolling 145 ? ? 100.0 100.0 interest inQuin Ventures NET INCOMEATTRIBUTABLE TO $ 2,996 $ 3,120 $ 1,976 -4.0 % 51.6 %PARENT Basic earningsper common $ 0.33 $ 0.34 $ 0.21 -2.9 % 57.1 %shareDilutedearnings per $ 0.32 $ 0.34 $ 0.21 -5.9 % 52.4 %common share

FIRST NORTHWEST BANCORP AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME(Dollars in thousands, except per share data) (Unaudited)

Six Months Ended June Percent 30, 2021 2020 Change INTEREST INCOME Interest and fees on loans receivable $ 25,407 $ 20,072 26.6 %Interest on mortgage-backed and related 1,108 1,699 -34.8 securitiesInterest on investment securities 3,050 2,385 27.9 Interest on deposits in banks 28 76 -64.2 FHLB dividends 91 102 -10.8 Total interest income 29,684 24,334 22.0 INTEREST EXPENSE Deposits 1,759 4,179 -57.9 Borrowings 374 635 -41.1 Subordinated debt 419 ? 100.0 Total interest expense 2,552 4,814 -47.0 Net interest income 27,132 19,520 39.0 PROVISION FOR LOAN LOSSES 800 2,766 -71.1 Net interest income after provision for 26,332 16,754 57.2 loan losses NONINTEREST INCOME Loan and deposit service fees 1,838 1,646 11.7 Mortgage servicing fees, net of 43 (157 ) 127.4 amortizationNet gain on sale of loans 2,258 2,384 -5.3 Net gain on sale of investment securities 1,124 1,266 -11.2 Increase in cash surrender value of 486 955 -49.1 bank-owned life insuranceOther income 827 333 148.3 Total noninterest income 6,576 6,427 2.3 NONINTEREST EXPENSE Compensation and benefits 15,854 11,327 40.0 Data processing 1,465 1,459 0.4 Occupancy and equipment 3,426 2,696 27.1 Supplies, postage, and telephone 597 495 20.6 Regulatory assessments and state taxes 562 397 41.6 Advertising 937 649 44.4 Professional fees 1,166 754 54.6 FDIC insurance premium 316 70 351.4 FHLB prepayment penalty ? 210 -100.0 Other 1,478 1,607 -8.0 Total noninterest expense 25,801 19,664 31.2 INCOME BEFORE PROVISION FOR INCOME TAXES 7,107 3,517 102.1 PROVISION FOR INCOME TAXES 1,136 668 70.1 NET INCOME 5,971 2,849 109.6 Net loss on noncontrolling interest in Quin 145 ? 100.0 Ventures NET INCOME ATTRIBUTABLE TO PARENT $ 6,116 $ 2,849 114.7 % Basic earnings per common share $ 0.67 $ 0.30 123.3 %Diluted earnings per common share $ 0.66 $ 0.30 120.0 %

FIRST NORTHWEST BANCORP AND SUBSIDIARYSelected Financial Ratios and Other Data(Dollars in thousands, except per share data) (Unaudited)

As of or For the Quarter Ended June 30, March 31, December September June 30, 2021 2021 31, 2020 30, 2020 2020Performance ratios: (1)Return on average 0.69 % 0.76 % 0.97 % 0.99 % 0.56 %assetsReturn on average 6.46 6.70 8.32 8.22 4.60 equityAverage interest rate 3.22 3.38 3.35 3.22 2.90 spreadNet interest margin 3.34 3.48 3.46 3.36 3.10 (2)Efficiency ratio (3) 78.2 74.7 67.7 60.9 72.3 Averageinterest-earningassets to average 133.9 134.6 131.7 130.9 129.5 interest-bearingliabilitiesBook value per common $ 18.49 $ 17.86 $ 18.20 $ 17.65 $ 17.07 share Asset quality ratios: Nonperforming assetsto total assets at 0.1 % 0.1 % 0.1 % 0.2 % 0.2 %end of period (4)Nonperforming loans 0.1 0.2 0.2 0.3 0.3 to total loans (5)Allowance for loanlosses to 817.7 668.1 609.2 419.9 360.8 nonperforming loans(5)Allowance for loan 1.2 1.2 1.2 1.2 1.2 losses to total loansNet charge-offs toaverage outstanding ? ? ? ? ? loans Capital ratios (First Federal):Tier 1 leverage 10.9 % 11.2 % 10.3 % 10.5 % 10.9 %Common equity Tier 1 14.5 15.1 13.4 14.7 15.1 capitalTier 1 risk-based 14.5 15.1 13.4 14.7 15.1 Total risk-based 15.6 16.3 14.6 16.0 16.4 Other Information: Average total assets $ 1,737,363 $ 1,645,806 $ 1,567,521 $ 1,488,723 $ 1,401,500 Average total loans 1,211,348 1,144,230 1,089,505 1,009,210 938,646 Averageinterest-earning 1,639,782 1,549,316 1,466,103 1,401,090 1,305,437 assetsAveragenoninterest-bearing 304,483 283,204 245,024 218,615 196,698 depositsAverageinterest-bearing 1,133,472 1,092,114 1,032,608 1,009,041 936,968 depositsAverageinterest-bearing 51,917 55,437 80,731 61,244 71,170 liabilitiesAverage equity 186,153 186,171 183,424 178,887 172,009 Average shares - 9,130,113 9,094,354 9,214,965 9,257,252 9,373,253 basicAverage shares - 9,248,667 9,185,725 9,258,109 9,263,975 9,408,123 diluted

(1) Performance ratios are annualized, where appropriate.(2) Net interest income divided by average interest-earning assets.(3) Total noninterest expense as a percentage of net interest income and total other noninterest income. Nonperforming assets consists of nonperforming loans (which include(4) nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.(5) Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

FIRST NORTHWEST BANCORP AND SUBSIDIARYSelected Financial Ratios and Other Data(Dollars in thousands, except per share data) (Unaudited) (continued)

As of or For the Six Months Ended June 30, 2021 2020 Performance ratios: (1) Return on average assets 0.73 % 0.42 %Return on average equity 6.63 3.24 Average interest rate spread 3.32 2.88 Net interest margin (2) 3.43 3.11 Efficiency ratio (3) 76.5 75.8 Average interest-earning assets to 134.3 129.8 average interest-bearing liabilitiesBook value per common share $ 18.49 $ 17.07 Asset quality ratios: Nonperforming assets to total assets at 0.1 % 0.2 %end of period (4)Nonperforming loans to total loans (5) 0.1 0.3 Allowance for loan losses to 817.7 674.2 nonperforming loans (5)Allowance for loan losses to total loans 1.2 1.2 Net charge-offs to average outstanding 0.0 0.0 loans Capital ratios (First Federal): Tier 1 leverage 10.9 % 10.9 %Common equity Tier 1 capital 14.5 15.1 Tier 1 risk-based 14.5 15.1 Total risk-based 15.6 16.4 Other Information: Average total assets $ 1,691,837 $ 1,344,666 Average total loans 1,177,974 907,465 Average interest-earning assets 1,594,797 1,256,978 Average noninterest-bearing deposits 293,902 177,971 Average interest-bearing deposits 1,112,907 893,038 Average interest-bearing liabilities 53,667 75,574 Average equity 186,162 175,811 Average shares - basic 9,114,841 9,488,197 Average shares - diluted 9,221,041 9,528,208

(1) Performance ratios are annualized, where appropriate.(2) Net interest income divided by average interest-earning assets.(3) Total noninterest expense as a percentage of net interest income and total other noninterest income. Nonperforming assets consists of nonperforming loans (which include(4) nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.(5) Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL LOAN DETAILS(Dollars in thousands) (Unaudited)

Selected loan detail:

June 30, March 31, June 30, Three One Year 2021 2021 2020 Month Change Change (In thousands)Commercial business loans PPP loans $ 45,211 $ 47,928 $ 30,491 $ (2,717 ) $ 14,720 Northpointe Bank MPP ? 5,697 45,862 (5,697 ) (45,862 )Secured lines of credit 13,685 16,245 5,486 (2,560 ) 8,199 Unsecured lines of 2,270 1,130 1,580 1,140 690 creditOther commercial 14,829 12,033 16,058 2,796 (1,229 )business loansTotal commercial $ 75,995 $ 83,033 $ 99,477 $ (7,038 ) $ (23,482 )business loans Auto and other consumer loans Triad Manufactured Home $ 49,735 $ 26,264 $ ? $ 23,471 $ 49,735 loansWoodside auto loans 94,934 85,616 76,339 9,318 18,595 First Help auto loans 4,608 3,269 ? 1,339 4,608 Other auto loans 18,223 20,726 29,750 (2,503 ) (11,527 )Other consumer loans 4,117 3,259 3,125 858 992 Total auto and other $ 171,617 $ 139,134 $ 109,214 $ 32,483 $ 62,403 consumer loans Construction and land loans1-4 Family construction $ 53,630 $ 44,568 $ 23,418 $ 9,062 $ 30,212 Multifamily 58,097 42,533 12,480 15,564 45,617 constructionAcquisition-renovation 59,141 56,876 8,012 2,265 51,129 Nonresidential 3,156 2,779 5,434 377 (2,278 )constructionLand and development 9,661 10,560 8,809 (899 ) 852 Total construction and $ 183,685 $ 157,316 $ 58,153 $ 26,369 $ 125,532 land loans

Contact:Matthew P. Deines, President and Chief Executive OfficerGeri Bullard, EVP and Chief Financial OfficerFirst Northwest Bancorp360-457-0461