GlobeNewswire Inc | Oct 27, 2021 07:30AM EDT

October 27, 2021

PORT ANGELES, Wash., Oct. 27, 2021 (GLOBE NEWSWIRE) -- First Northwest Bancorp (Nasdaq: FNWB)

Net Diluted Earnings YTD Loan Net Interest Book Value per ShareIncome Per Share Growth Margin$4.2 $18.65Million $0.45 18% 3.58% $18.48^1, excluding goodwill and intangibles

CEO Commentary

First Fed achieved strong loan growth and record earnings in the third quarter as our strategic investment in technology, market expansion and personnel continues to deliver results, said Matthew P. Deines, President and CEO of First Northwest Bancorp. We believe our momentum will help us to continue to grow revenue, deliver results and create shareholder value in the years to come.

We continue to make progress on all aspects of our business with significant loan and revenue growth and enhancements to our deposit franchise, Deines added. Loan growth in the third quarter was broad-based due to solid commercial real estate and construction lending originations and partnerships with select specialty lenders who give us the ability to add consumer loans with attractive risk-adjusted returns. Growth in our balance sheet led to a healthy increase in interest income while improvements in our deposit franchise kept interest expense stable.

The Board of Directors of First Northwest Bancorp declared a quarterly cash dividend of $0.07 per common share. The dividend will be payable on November 26, 2021, to shareholders of record as of the close of business on November 12, 2021. On July 23, we closed on the previously announced Bellevue branch purchase from Sterling Savings and Trust. The branch had over $65 million in deposits at closing.

Quarter Ended September 30, 2021 to Quarter Ended September 30, 2021 toJune 30, 2021 September 30, 2020Financial HighlightsNet income of $4.2 million and diluted Net income of $4.2 million and dilutedearnings per share of $0.45, compared earnings per share of $0.45, comparedto $3.0 million and $0.32, respectively to $3.7 million and $0.40, respectivelyTotal revenue of $21.1 million, an Total revenue of $21.1 million, anincrease of 11.3%, or $2.1 million, increase of 16.0%, or $2.9 million,compared to an increase in non-interest compared to an increase in non-interestexpenses of 1.7%, or $227,000 expenses of 38.2%, or $3.9 millionEffective tax rate of 18.9% for both Effective tax rate of 17.2%, comparedquarters to 28.1%Financial Position Total assets of $1.85 billion, up $57.7 Increase in total assets of $280.5million, or 3.2% million, or 17.9%Total gross loans of $1.35 billion, up Increase in total gross loans of $280.0$96.7 million, or 7.7% million, or 26.1%Total deposits of $1.52 billion, up Increase in total deposits of $268.5$81.2 million, or 5.6% million, or 21.4%Asset Quality Nonperforming assets (nonaccrual loans Nonperforming assets (nonaccrual loansand repossessed assets) to total assets and repossessed assets) to total assetsof 0.06%, compared to 0.10% of 0.06%, compared to 0.21%Net loan charge-offs to average loans Net loan charge-offs to average loansoutstanding of approximately 0.00% for outstanding of approximately 0.01%,both quarters compared to 0.04%Key Performance Metrics Net interest margin of 3.58%, compared Net interest margin of 3.58%, comparedto 3.34% to 3.36%Efficiency ratio of 70.3%, compared to Efficiency ratio of 70.3%, compared to78.2% 60.9%Return on average assets and on Return on average assets and ontangible common equity1of 0.92% and tangible common equity1of 0.92% and8.93%, compared to 0.69% and 6.37%, 8.93%, compared to 0.99% and 8.09%,respectively respectivelyTangible book value per share1of Tangible book value per share1of$18.48, a decrease from $18.49 $18.48, an increase of 4.70% from $17.65Year-To-Date Highlights Net income of $10.3 million and diluted earnings per share of $1.11, up 57.8%and 60.9%, from $6.5 million and $0.69, respectivelyTotal revenue of $57.3 million, an increase of 17.2%, or $8.4 million, comparedto an increase in noninterest expenses of 33.6%, or $10.0 millionEffective tax rate of 17.2%, compared to 24.4%Net interest margin of 3.48%, compared to 3.20%Efficiency ratio of 73.5%, compared to 70.0%Return on average assets and on tangible common equity^1 of 0.79% and 7.41%,compared to 0.62% and 4.82%Repurchased 291,932 shares of common stock at an average price of $16.87 pershare for a total of $4.9 million year-to-date

Balance Sheet Review

Total assets increased $57.7 million, or 3.2%, to $1.85 billion at September 30, 2021, compared to $1.79 billion at June 30, 2021, and increased $280.5 million, or 17.9%, compared to $1.56 billion at September 30, 2020.

Cash and cash equivalents decreased by $4.6 million, or 5.7%, to $76.1 million as of September 30, 2021, compared to $80.7 million as of June 30, 2021. The Company continues to deploy excess cash and move it into higher yielding assets relative to cash.

Investment securities decreased $44.6 million, or 12.0%, to $325.9 million at September 30, 2021, compared to $370.5 million three months earlier, and decreased $43.2 million compared to $369.1 million at September 30, 2020. At September 30, 2021, municipal bonds totaled $110.3 million and comprised the largest portion of the investment portfolio at 33.8%. The estimated average life of the total investment securities portfolio was approximately 5.84 years.

Securities consisted of the following at the dates indicated:

September June 30, September Three Month One Year 30, 2021 30, Change Change 2021 2020 (In thousands)Available forSale at Fair ValueMunicipal bonds $ $ $ $ ) $ 110,265 130,458 97,143 (20,193 13,122U.S. governmentand agency 1,940 1,949 ? (9 ) 1,940 issued bonds(Agency bonds)U.S. governmentagency issued asset-backed ? 36,564 73,618 (36,564 ) (73,618 )securities (ABSagency)Corporateissuedasset-backed 11,016 4,000 32,747 7,016 (21,731 )securities (ABScorporate)Corporateissued debtsecurities 55,946 49,880 33,230 6,066 22,716 (Corporatedebt)U.S. SmallBusinessAdministration 15,842 16,753 23,864 (911 ) (8,022 )securities(SBA)Mortgage-backed securities:U.S. governmentagency issuedmortgage-backed 75,091 75,429 92,402 (338 ) (17,311 )securities (MBSagency)Corporateissuedmortgage-backed 55,790 55,467 16,107 323 39,683 securities (MBScorporate)Totalsecurities $ $ $ $ ) $ )available for 325,890 370,500 369,111 (44,610 (43,221sale

Net loans, excluding loans held for sale, increased $98.8 million, or 7.9%, to $1.35 billion at September 30, 2021, from $1.25 billion at June 30, 2021, and increased $283.7 million, or 26.7%, from $1.06 billion a year ago. Commercial business loans increased $15.9 million during the quarter, mainly as the result of a $27.5 million increase in Northpointe Mortgage Participation program loans, partially offset by a $17.8 million decrease related to Paycheck Protection Program (PPP) loans paid off during the quarter.

The Company originated $52.7 million in residential mortgages during the third quarter and sold $22.3 million, with an average gross margin on sale of mortgage loans of approximately 2.67%. This production compares to residential mortgage originations of $51.9 million in the preceding quarter with sales of $28.7 million, with an average gross margin of 2.54%.

Loans receivable consisted of the following at the dates indicated:

September 30, June 30, September 30, Three Month One Year 2021 2021 2020 Change Change (In thousands)Real Estate: One to four family $ $ $ $ ) $ ) 294,432 301,816 317,755 (7,384 (23,323Multi-family 177,560 166,502 127,569 11,058 49,991 Commercial real 353,356 319,644 283,390 33,712 69,966 estateConstruction and 214,472 183,685 75,204 30,787 139,268 landTotal real estate 1,039,820 971,647 803,918 68,173 235,902 loans Consumer: Home equity 38,881 36,886 34,120 1,995 4,761 Auto and other 182,238 171,617 111,782 10,621 70,456 consumerTotal consumer 221,119 208,503 145,902 12,616 75,217 loans Commercial 91,939 75,995 123,036 15,944 (31,097 )business Total loans 1,352,878 1,256,145 1,072,856 96,733 280,022 Less: Net deferred loan 5,274 5,610 2,628 (336 ) 2,646 feesPremium onpurchased loans, (12,765 ) (10,393 ) (4,196 ) (2,372 ) (8,569 )netAllowance for loan 15,243 14,588 13,007 655 2,236 lossesTotal loans $ $ $ $ $ receivable, net 1,345,126 1,246,340 1,061,417 98,786 283,709

Total deposits increased $81.2 million, to $1.52 billion at September 30, 2021, compared to $1.44 billion at June 30, 2021, and increased $268.5 million, or 21.4%, when compared to $1.25 billion a year ago. Demand deposits increased 30.6% compared to a year ago to $510.6 million at September 30, 2021, and represented 33.5% of total deposits; money market accounts increased 44.1% compared to a year ago to $573.7 million, and represented 37.7% of total deposits; savings accounts increased 12.5% compared to a year ago to $193.5 million at September 30, 2021, and represented 12.7% of total deposits; and certificates of deposit decreased 16.5% compared to a year ago to $245.1 million at quarter-end, and represented 16.1% of total deposits.

The total cost of funds was 0.36% for the third quarter of 2021 compared to 0.37% for the second quarter of 2021 and improved from 0.51% for the third quarter of 2020.

Deposits consisted of the following at the dates indicated:

September 30, June 30, September 30, Three Month One Year 2021 2021 2020 Change Change (In thousands) Noninterest-bearing $ $ $ $ $ demand deposits 328,463 307,119 154,861 21,344 173,602Interest-bearing 182,181 175,939 236,006 6,242 (53,825 )demand depositsMoney market 573,713 511,051 398,144 62,662 175,569 accountsSavings accounts 193,479 185,798 171,905 7,681 21,574 Certificates of 245,080 261,831 293,540 (16,751 ) (48,460 )depositTotal deposits $ $ $ $ $ 1,522,916 1,441,738 1,254,456 81,178 268,460

Total shareholders equity decreased to $187.4 million at September 30, 2021, compared to $188.6 million three months earlier, and increased from $180.7 million a year earlier. Tangible book value per common share1was $18.48 at September 30, 2021, compared to $18.49 at June 30, 2021 and $17.65 at September 30, 2020; while book value per common share was $18.65 at September 30, 2021, compared to $18.49 at June 30, 2021 and $17.65 at September 30, 2020. We repurchased 137,953 shares of common stock under the October 2020 Plan at an average price of $17.81 per share for a total of $2.5 million during the quarter ended September 30, 2021.

Income Statement Results

In the third quarter of 2021, the Company generated a return on average assets ("ROAA") of 0.92%, and a return on average equity ("ROAE") of 8.69%, compared to 0.69% and 6.46%, respectively, in the second quarter of 2021, and 0.99% and 8.22%, respectively, in the third quarter of 2020. For the first nine months of 2021, ROAA and ROAE was 0.79% and 7.33%, respectively, compared to 0.62% and 4.92% for the first nine months of 2020.

Total interest income increased to $16.8 million for the third quarter of 2021, compared to $15.1 million in the previous quarter and $13.4 million in the third quarter of 2020. Interest and fees on loans increased due to loan growth during the current quarter in addition to deferred fee income recognized on PPP and Main Street Lending Program (MSLP) loans. The current quarter yield on average loans receivable increased by 2 basis points compared to the same period in the prior year. Total interest expense was $1.4 million for the third quarter of 2021, compared to $1.4 million in the second quarter of 2021, and $1.6 million in the third quarter a year ago. A nominal increase during the quarter compared to the preceding quarter was due to interest on deposits of $25,000. For the first nine months of 2021, total interest income increased 23.2% to $46.5 million, compared to $37.7 million for the first nine months of 2020. A decrease of $2.4 million in interest expense year-over-year was due to the decline in the cost of total deposits to 24 basis points compared to 67 basis points in the third quarter one year ago.

Net interest income, before provision for loan losses, increased 12.5% during the quarter to $15.4 million, compared to $13.6 million for the preceding quarter, and increased 30.5% compared to $11.8 million in the third quarter a year ago. For the first nine months of 2021, net interest income before the provision for loan losses increased 35.8% to $42.5 million, compared to $31.3 million for the first nine months of 2020. As of September 30, 2021, we received SBA proceeds on forgiven loans totaling $39.7 million. Approximately $899,000 of the income recognized during the third quarter was related to deferred fees associated with PPP loan payoffs, compared to $93,000 of the income related to deferred fees associated with PPP loan payoffs in the second quarter of 2021. As of September 30, 2021, there is approximately $819,000 of PPP loan fee income remaining to be recognized in income.

The Company recorded a $700,000 provision for loan losses during the third quarter of 2021. This compares to a provision for loan losses of $300,000 for the preceding quarter, and a provision for loan losses of $1.4 million for the third quarter of 2020. The lower quarterly provision reflects improvement in economic conditions and stable credit quality compared to the prior year.

The net interest margin expanded 24 basis points to 3.58% for the third quarter of 2021, compared to 3.34% for the second quarter of 2021, and increased 22 basis points compared to 3.36% for the third quarter in 2020. For the first nine months of 2021, the net interest margin increased 28 basis points to 3.48%, compared to 3.20% in the first nine 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 77% of average interest-earning assets compared to 72% one year ago.

The yield on earning assets increased 23 basis points to 3.91% for the third quarter of 2021, compared to 3.68% for the second quarter of 2021, and increased 9 basis points from 3.82% for the third quarter of 2020. The increase was due to higher yields on the investment portfolio and loans, coupled with higher average loan balances. The yield on the loan portfolio increased to 4.47% for the third quarter of 2021, from 4.30% for the second quarter of 2021, and increased from 4.45% for the third quarter of 2020, primarily due to deferred fee income recognized on PPP loan payoffs. The cost of interest-bearing liabilities decreased one basis point to 0.45% for the third quarter of 2021, compared to 0.46% for the second quarter of 2021, and decreased 15 basis points from 0.60% for the third quarter of 2020.

Noninterest income increased 10.7% to $4.3 million for the third quarter of 2021 from $3.9 million for the second quarter of 2021 and decreased 10.4% compared to $4.8 million for the third quarter a year ago. The third quarter of 2021 included $815,000 of servicing fee income on sold loans compared to $13,000 in the preceding quarter and $148,000 in the third quarter a year ago due in part to a catch-up entry for servicing fees on MSLP loans. Noninterest income growth during the third quarter of 2021 also included a $1.3 million gain on sale of investment securities and $134,000 in swap program participation fees. Loan and deposit service fees totaled $1.0 million for the third quarter 2021, compared to $1.0 million for the preceding quarter and $868,000 for the third 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 nine months of 2021, noninterest income decreased 3.1% to $10.9 million, compared to $11.2 million in the first nine months of 2020, reflecting a lower gain on sale of mortgage loans and a decrease in the cash surrender value of bank owned life insurance (BOLI) due to a one-time increase from a restructure of the BOLI policies in the third quarter of 2020, partially offset by an increase in servicing fee income on sold loans.

Noninterest expense totaled $13.9 million for the third quarter of 2021, compared to $13.7 million for the preceding quarter and $10.1 million for the third quarter a year ago. For the first nine months of 2021, noninterest expense increased to $39.7 million, from $29.7 million in the first nine months of 2020. The increases for both the third quarter and for the year-to-date period reflect higher compensation expense, including salaries, production-related commissions, incentives and benefits, as well as costs associated with expanding our footprint with two new locations, and technology enhancements for digital and mobile banking products.

The provision for income tax increased to $946,000 for the third quarter of 2021, compared to $663,000 for the second quarter of 2021, and decreased compared to $1.4 million for the third quarter of 2020. The decrease from the prior year is due to a penalty recorded related to the surrender of a bank-owned life insurance policy in the third quarter of 2020 which resulted in a higher tax provision as well as a higher effective tax rate for the related period.

Capital Ratios and Credit Quality

Capital 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 September 30, 2021. Common Equity Tier 1 and Total Risk-Based Capital Ratios at September 30, 2021 were 13.4% and 14.4 %, respectively.

Nonperforming loans were $1.2 million at September 30, 2021, a decrease from $1.8 million at June 30, 2021. The percentage of the allowance for loan losses to nonperforming loans increased to 1288.5%, at September 30, 2021, from 817.7% at June 30, 2021, and 419.9% at September 30, 2020. Classified loans decreased $647,000 during the third quarter to $12.7 million at September 30, 2021, reflecting improvements in almost all loan categories. The allowance for loan losses as a percentage of total loans was 1.1% at September 30, 2021, a decrease from 1.2% reported at both the 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 also 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 12 full-service branches and two business centers 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. On October 31, 2021, the Company will convert from a State Savings Bank Charter to a State Commercial Bank Charter and the Bank will simultaneously be renamed First Fed Bank from First Federal Savings and Loan Association.

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)

September 30, June 30, September 30, Three One 2021 2021 2020 Month Year Change ChangeAssets Cash and due $ $ $ -3.3 % 1.4 %from banks 17,012 17,589 16,776Interest-bearingdeposits in 59,108 63,133 35,303 -6.4 67.4 banksInvestmentsecurities available for 325,890 370,500 369,111 -12.0 -11.7 sale, at fairvalueLoans held for 2,231 1,971 4,754 13.2 -53.1 saleLoans receivable(net ofallowance forloan losses of 1,345,126 1,246,340 1,061,417 7.9 26.7 $15,243,$14,588, and$13,007)Federal HomeLoan Bank (FHLB) 4,397 5,597 5,944 -21.4 -26.0 stock, at costAccrued interest 5,775 5,949 7,367 -2.9 -21.6 receivablePremises and 18,188 16,386 14,737 11.0 23.4 equipment, netMortgageservicing 2,934 2,381 1,545 23.2 89.9 rights, netBank-owned life 39,080 38,839 38,104 0.6 2.6 insurance, netGoodwill andother intangible 1,186 ? ? 100.0 100.0 assetsPrepaid expenses 24,210 18,706 9,612 29.4 151.9 and other assetsTotal assets $ 1,845,137 $ 1,787,391 $ 1,564,670 3.2 % 17.9 % Liabilities andShareholders' EquityDeposits $ 1,522,916 $ 1,441,738 $ 1,254,456 5.6 % 21.4 %Borrowings 60,000 90,000 -33.3 -45.0 109,150Subordinated 39,261 39,241 ? 0.1 100.0 debt, netAccrued interest 29 455 51 -93.6 -43.1 payableAccrued expensesand other 33,369 26,221 18,359 27.3 81.8 liabilitiesAdvances fromborrowers for 2,118 1,143 1,986 85.3 6.6 taxes andinsuranceTotal 1,657,693 1,598,798 1,384,002 3.7 19.8 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 outstanding10,050,877 atSeptember 30,2021; issued and 102 102 102 0.0 0.0 outstanding10,205,867 atJune 30, 2021;and issued andoutstanding10,234,204 atSeptember 30,2020Additional 96,396 97,463 97,229 -1.1 -0.9 paid-in capitalRetained 99,058 96,573 89,546 2.6 10.6 earningsAccumulatedothercomprehensive 934 3,546 3,186 -73.7 -70.7 income, net oftaxUnearnedemployee stock (8,736 ) (8,901 ) (9,395 ) 1.9 7.0 ownership plan(ESOP) sharesTotal parent's shareholders' 187,754 188,783 180,668 -0.5 3.9 equityNoncontrollinginterest in Quin (310 ) (190 ) ? -63.2 100.0 Ventures LLCTotal shareholders' 187,444 188,593 180,668 -0.6 3.8 equity Totalliabilities and $ 1,845,137 $ 1,787,391 $ 1,564,670 3.2 % 17.9 %shareholders'equity

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

Quarter Ended September 30, June 30, September 30, Three One 2021 2021 2020 Month Year Change ChangeINTEREST INCOME Interest and fees on loans $ 14,581 $ 12,866 $ 11,097 13.3 % 31.4 %receivableInterest onmortgage-backed 715 644 565 11.0 26.5 and relatedsecuritiesInterest oninvestment 1,423 1,480 1,603 -3.9 -11.2 securitiesInterest ondeposits in 18 15 9 20.0 100.0 banksFHLB dividends 41 46 97 -10.9 -57.7 Total interest 16,778 15,051 13,371 11.5 25.5 income INTEREST EXPENSEDeposits 850 825 1,405 3.0 -39.5 Borrowings 186 183 205 1.6 -9.3 Subordinated 390 394 ? -1.0 100.0 debtTotal interest 1,426 1,402 1,610 1.7 -11.4 expense Net interest 15,352 13,649 11,761 12.5 30.5 income PROVISION FOR 700 300 1,350 133.3 -48.1 LOAN LOSSES Net interestincome after 14,652 13,349 10,411 9.8 40.7 provision forloan losses NONINTEREST INCOMELoan anddeposit service 1,015 1,001 868 1.4 16.9 feesSold loanservicing fees, 815 13 148 6169.2 450.7 net ofamortizationNet gain on 663 921 1,725 -28.0 -61.6 sale of loansNet gain onsale of 1,286 1,124 969 14.4 32.7 investmentsecuritiesIncrease incash surrendervalue of 241 242 622 -0.4 -61.3 bank-owned lifeinsuranceOther income 265 571 449 -53.6 -41.0 Totalnoninterest 4,285 3,872 4,781 10.7 -10.4 income NONINTEREST EXPENSECompensation 8,713 8,559 6,070 1.8 43.5 and benefitsData processing 826 726 640 13.8 29.1 Occupancy and 1,848 1,803 1,367 2.5 35.2 equipmentSupplies,postage, and 279 355 254 -21.4 9.8 telephoneRegulatoryassessments and 335 301 262 11.3 27.9 state taxesAdvertising 547 492 285 11.2 91.9 Professional 422 644 361 -34.5 16.9 feesFDIC insurance 134 168 86 -20.2 55.8 premiumOther 830 659 756 25.9 9.8 Totalnoninterest 13,934 13,707 10,081 1.7 38.2 expense INCOME BEFOREPROVISION FOR 5,003 3,514 5,111 42.4 -2.1 INCOME TAXES PROVISION FOR 946 663 1,436 42.7 -34.1 INCOME TAXES NET INCOME 4,057 2,851 3,675 42.3 10.4 Net loss onnoncontrollinginterest in 121 145 ? -16.6 100.0 Quin VenturesLLC NET INCOME ATTRIBUTABLE TO $ 4,178 $ 2,996 $ 3,675 39.5 % 13.7 %PARENT Basic earnings per common $ 0.45 $ 0.33 $ 0.40 36.4 % 12.5 %shareDiluted earnings per $ 0.45 $ 0.32 $ 0.40 40.6 % 12.5 %common share

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

Nine Months Ended September 30, Percent 2021 2020 ChangeINTEREST INCOME Interest and fees on loans $ $ 28.3 %receivable 39,988 31,169Interest onmortgage-backed and 1,823 2,264 -19.5 related securitiesInterest on investment 4,473 3,988 12.2 securitiesInterest on deposits in 46 85 -45.9 banksFHLB dividends 132 199 -33.7 Total interest income 46,462 37,705 23.2 INTEREST EXPENSE Deposits 2,609 5,584 -53.3 Borrowings 560 840 -33.3 Subordinated debt 809 ? 100.0 Total interest expense 3,978 6,424 -38.1 Net interest income 42,484 31,281 35.8 PROVISION FOR LOAN LOSSES 1,500 4,116 -63.6 Net interest income after 40,984 27,165 50.9 provision for loan losses NONINTEREST INCOME Loan and deposit service 2,853 2,514 13.5 feesSold loan servicing fees, 858 (9 ) 9633.3 net of amortizationNet gain on sale of loans 2,921 4,109 -28.9 Net gain on sale of 2,410 2,235 7.8 investment securitiesIncrease in cash surrendervalue of bank-owned life 727 1,577 -53.9 insuranceOther income 1,092 782 39.6 Total noninterest income 10,861 11,208 -3.1 NONINTEREST EXPENSE Compensation and benefits 24,567 17,397 41.2 Data processing 2,921 2,099 9.1 Occupancy and equipment 5,274 4,063 29.8 Supplies, postage, and 876 749 17.0 telephoneRegulatory assessments and 897 659 36.1 state taxesAdvertising 1,484 934 58.9 Professional fees 1,588 1,115 42.4 FDIC insurance premium 450 156 188.5 FHLB prepayment penalty ? 210 -100.0 Other 2,308 2,363 -2.3 Total noninterest expense 39,735 29,745 33.6 INCOME BEFORE PROVISION 12,110 8,628 40.4 FOR INCOME TAXES PROVISION FOR INCOME TAXES 2,082 2,104 -1.0 NET INCOME 10,028 6,524 53.7 Net loss on noncontrollinginterest in Quin Ventures 266 ? 100.0 LLC NET INCOME ATTRIBUTABLE TO $ $ 57.8 %PARENT 10,294 6,524 Basic earnings per common $ $ 62.3 %share 1.12 0.69Diluted earnings per $ $ 60.9 %common share 1.11 0.69

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 September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020Performance ratios: (1)Return on average 0.92 % 0.69 % 0.76 % 0.97 % 0.99 %assetsReturn on average 8.69 6.46 6.70 8.32 8.22 equityAverage interest 3.46 3.22 3.38 3.35 3.22 rate spreadNet interest margin 3.58 3.34 3.48 3.46 3.36 (2)Efficiency ratio 70.3 78.2 74.7 67.7 60.9 (3)Equity to total 10.16 10.55 10.49 11.27 11.55 assetsAverageinterest-earningassets to average 134.1 133.9 134.6 131.7 130.9 interest-bearingliabilitiesBook value per $ 18.65 $ $ $ $ common share 18.49 17.86 18.20 17.65 Tangibleperformance ratios: ^1Tangible assets $ 1,843,395 $ 1,787,389 $ 1,736,292 $ 1,654,348 $ 1,564,669 Tangible common 185,702 188,591 182,097 186,382 180,667 equityTangible common 10.07 % 10.55 % 10.49 % 11.27 % 11.55 %equity ratioReturn on tangible 8.93 6.37 6.95 8.15 8.09 common equityTangible book value $ $ $ $ $ per common share 18.48 18.49 17.86 18.19 17.65 Asset quality ratios:Nonperformingassets to total 0.06 % 0.10 % 0.12 % 0.10 % 0.21 %assets at end ofperiod (4)Nonperforming loans 0.09 0.14 0.18 0.20 0.30 to total loans (5)Allowance for loanlosses to 1,288.50 817.71 668.15 609.20 419.85 nonperforming loans(5)Allowance for loanlosses to total 1.13 1.16 1.22 1.20 1.21 loansNet charge-offs toaverage outstanding 0.01 0.00 0.00 0.00 0.04 loans Capital ratios (First Federal):Tier 1 leverage 10.6 % 10.9 % 11.2 % 10.3 % 10.5 %Common equity Tier 13.4 14.5 15.1 13.4 14.7 1 capitalTier 1 risk-based 13.4 14.5 15.1 13.4 14.7 Total risk-based 14.4 15.6 16.3 14.6 16.0 Other Information: Average total $ 1,810,543 $ $ $ $ 1,488,723 assets 1,737,363 1,645,806 1,567,521Average total loans 1,303,199 1,211,348 1,144,230 1,089,505 1,009,210 Averageinterest-earning 1,702,762 1,639,782 1,549,316 1,466,103 1,401,090 assetsAveragenoninterest-bearing 314,677 304,483 283,204 245,024 218,615 depositsAverageinterest-bearing 1,179,096 1,133,472 1,092,114 1,032,608 1,009,041 depositsAverageinterest-bearing 1,269,958 1,224,665 1,150,743 1,113,339 1,070,285 liabilitiesAverage equity 190,764 186,153 186,171 183,424 178,887 Average shares - 9,184,568 9,130,113 9,094,354 9,214,965 9,257,252 basicAverage shares - 9,268,076 9,248,667 9,185,725 9,258,109 9,263,975 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 Nine Months Ended September 30, 2021 2020Performance ratios: (1)Return on average 0.79 % 0.62 %assetsReturn on average 7.33 4.92 equityAverage interest 3.37 3.00 rate spreadNet interest margin 3.48 3.20 (2)Efficiency ratio (3) 73.5 70.0 Equity to total 10.16 11.55 assetsAverageinterest-earningassets to average 134.2 130.2 interest-bearingliabilitiesBook value per $ $ common share 18.65 17.65 Tangible performance ratios:^1Tangible assets $ $ 1,843,395 1,564,669Tangible common 185,702 180,667 equityTangible common 10.07 % 11.55 %equity ratioReturn on tangible 7.41 4.82 common equityTangible book value $ $ per common share 18.48 17.65 Asset quality ratios:Nonperforming assetsto total assets at 0.06 % 0.21 %end of period (4)Nonperforming loans 0.09 0.30 to total loans (5)Allowance for loanlosses to 1288.50 419.85 nonperforming loans(5)Allowance for loanlosses to total 1.13 1.21 loansNet charge-offs toaverage outstanding 0.01 0.08 loans Capital ratios (First Federal):Tier 1 leverage 10.6 % 10.5 %Common equity Tier 1 13.4 14.7 capitalTier 1 risk-based 13.4 14.7 Total risk-based 14.4 16.0 Other Information: Average total assets $ $ 1,731,841 1,393,036Average total loans 1,220,175 941,627 Averageinterest-earning 1,631,179 1,305,366 assetsAveragenoninterest-bearing 300,903 177,971 depositsAverageinterest-bearing 1,135,213 931,988 depositsAverageinterest-bearing 1,215,559 1,002,751 liabilitiesAverage equity 187,713 176,844 Average shares -? 9,196,729 9,409,754 basicAverage shares -? 9,294,256 9,439,238 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 SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited)

Selected loan detail:

As of the Quarter Ended September June 30, September Three Month One Year 30, 2021 30, Change Change 2021 2020 (In thousands)Commercial business loans breakoutPPP loans $ $ $ $ ) $ ) 26,858 45,211 32,089 (18,353 (5,231Northpointe Bank MPP 27,504 ? 71,416 27,504 (43,912 )Secured lines of 8,279 13,685 1,240 (5,406 ) 7,039 creditUnsecured lines of 2,708 2,270 1,928 438 780 creditOther commercial 26,590 14,829 16,363 11,761 10,227 business loansTotal commercial $ $ $ $ $ )business loans 91,939 75,995 123,036 15,944 (31,097 Auto and other consumer loans breakoutTriad Manufactured $ $ $ $ $ Home loans 58,823 49,735 2,134 9,088 56,689Woodside auto loans 99,335 94,934 79,178 4,401 20,157 First Help auto loans 4,164 4,608 ? (444 ) 4,164 Other auto loans 15,715 18,223 26,573 (2,508 ) (10,858 )Other consumer loans 4,201 4,117 3,897 84 304 Total auto and other $ $ $ $ $ consumer loans 182,238 171,617 111,782 10,621 70,456 Construction and land loans breakout1-4 Family $ $ $ $ $ construction 66,287 53,630 32,667 12,657 33,620Multifamily 80,146 58,097 17,555 22,049 62,591 constructionAcquisition-renovation 53,670 59,141 8,079 (5,471 ) 45,591 Nonresidential 4,520 3,156 6,970 1,364 (2,450 )constructionLand and development 9,849 9,661 9,933 188 (84 )Total construction and $ $ $ $ $ land loans 214,472 183,685 75,204 30,787 139,268

FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited)

Non-GAAP Financial Measures

This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Companys results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, are included in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Reconciliations of the GAAP and non-GAAP measures are presented below:

Tangible Common Equity:

As of or For the Quarter Ended September 30, June 30, March 31, December 31, September 30, 2021 2021 2021 2020 2020 (Dollars in thousands, except per share data)Total shareholders' $ 187,444 $ 188,593 $ 182,098 $ 186,383 $ 180,668 equityLess: goodwilland intangible 1,186 ? ? ? ? assetsLess:disallowed 556 2 1 1 1 servicingrightsTotal tangible $ 185,702 $ $ $ 186,382 $ common equity 188,591 182,097 180,667 Total assets $ 1,845,137 $ $ $ 1,654,349 $ 1,787,391 1,736,293 1,564,670Less: goodwilland intangible 1,186 ? ? ? ? assetsLess:disallowed 556 2 1 1 1 servicingrightsTotal tangible $ 1,843,395 $ $ $ 1,654,348 $ assets 1,787,389 1,736,292 1,564,669 Tangiblecommon equity 10.07 % 10.55 % 10.49 % 11.27 % 11.55 %ratio (1)Net income $ 4,178 $ $ $ 3,816 $ 2,996 3,120 3,675Return ontangible 8.93 % 6.37 % 6.95 % 8.15 % 8.09 %common equity(1)Common shares 10,050,877 10,247,185 outstanding 10,205,867 10,195,644 10,234,204Tangible bookvalue per $ 18.48 $ 18.49 $ 17.86 $ 18.19 $ 17.65 common share(1)

As of or For the Nine Months Ended September 30, 2021 2020 (Dollars in thousands, except per share data)Total shareholders' equity $ $ 187,444 180,668Less: goodwill and intangible 1,186 ? assetsLess: disallowed servicing rights 556 1 Total tangible common equity $ $ 185,702 180,667 Total assets $ 1,845,137 $ 1,564,670 Less: goodwill and intangible 1,186 ? assetsLess: disallowed servicing rights 556 1 Total tangible assets $ 1,843,395 $ 1,564,669 Tangible common equity ratio (1) 10.07 % 11.55 %Net income $ 10,294 $ 6,524 Return on tangible common equity 7.41 % 4.82 %(1)Common shares outstanding 10,050,877 10,234,204 Tangible book value per common $ 18.48 $ 17.65 share (1)

Non-GAAP Financial Measures Footnote

We believe these non-GAAP metrics provide an important measure with which to analyze and evaluate financial condition and capital strength. In(1) addition, we believe that use of tangible equity and tangible assets improves the comparability to other institutions that have not engaged in acquisitions that resulted in recorded goodwill and other intangibles.

1 See reconciliation of Non-GAAP Financial Measures on page 14.

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