GlobeNewswire Inc | Jan 26, 2022 07:30AM EST

January 26, 2022

PORT ANGELES, Wash., Jan. 26, 2022 (GLOBE NEWSWIRE) -- First Northwest Bancorp (Nasdaq: FNWB)

Q4 2021 Q4 2021Q4 2021 Net Diluted YTD Loan Net Interest Book Value perIncome Earnings Per Growth Margin Share Share $19.10$5.1 million $0.56 18% 3.58% $18.89^1, excluding goodwill and intangibles

CEO Commentary

The fourth quarter concluded a record year of profitability and growth for First Fed, said Matthew P. Deines,President and CEO of First Northwest Bancorp. Wecouldnt be more pleased with the First Fed team, who worked together to deliver second-to-none financial solutions to the communities we serve.

The strategic investments and activities we began in 2020 continue to drive increased lending, improvements in our deposit franchise and expansion of our fintech initiatives that will continue to support growth, Deines added. Record revenues and net income and continued growth in our loan portfolio highlight the progress we have made in transforming First Fed into a high-performing, fintech-enabled community bank.

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 February 25, 2022, to shareholders of record as of the close of business on February 11, 2022.

Quarter EndedDecember 31, 2021 Quarter EndedDecember 31, 2021toSeptember 30, 2021 toDecember 31, 2020Financial HighlightsNet income of$5.1 million and diluted Net income of$5.1 million andearnings per share of$0.56, compared diluted earnings per shareto$4.2 million and $0.45, respectively of$0.56, compared to$3.8 million and $0.41, respectivelyTotal revenue (net interest income before Total revenue of $20.6 million, anprovision plus noninterest income) of increase of 18.9%, or $3.3 million,$20.6 million, an increase of4.8%, or compared to an increase in$952,000, compared to an increase in non-interest expenses of 25.2%,non-interest expenses of 5.3%, or $744,000 or$3.0 millionEffective tax rate of 18.3%,compared Effective tax rate of 18.3%,to18.9% compared to18.2%Financial Position Total assets of $1.92 billion, up $75.9 Increase in total assets of $266.7million, or4.1% million, or16.1%Total gross loans, excluding loans held Increase in total gross loans,for sale,of $1.36 billion, up $4.3 excluding loans held for sale,ofmillion, or0.3% $203.1 million, or17.6%Total deposits of $1.58 billion, up $57.7 Increase in total deposits of $247.1million, or3.8% million, or18.5%Asset Quality and Capital Nonperforming assets (nonaccrual loans and Nonperforming assets (nonaccrualrepossessed assets) to total assets loans and repossessed assets) toof0.07%, compared to0.06% total assets of0.07%, compared to0.14%Tangible common equity ratio^1of 9.82%, Tangible common equity ratio^1ofcompared to10.07% 9.82%, compared to11.27%Key Performance Metrics Net interest margin of3.58% for both Net interest margin of 3.58%,quarters compared to3.46%Efficiency ratio of 70.5%, compared Efficiency ratio of 70.5%, comparedto70.3% to67.7%Returnon average assets and return on Returnon average assets and returntangible common equity^1of1.09% and on tangible common equity^10.82%, compared to0.92% and 8.73%, 1of1.09%and 10.82%, comparedrespectively to0.97% and 8.28%, respectivelyTangible book value per share^1of Tangible book value per share^$18.89, an increase of2.26% from$18.48 1of$18.89 an increase of3.9% from$18.192021 Year-End Highlights Record net income of$15.4 million and diluted earnings per share of $1.66,up49.1% and 50.9%, from$10.3 million and $1.10, respectivelyRecord total revenue of $73.9 million, an increase of 23.6%,or $14.1 million,compared to an increase in noninterest expenses of 31.2%, or$13.0 millionEffective tax rate of 17.6%, compared to22.2%Net interest margin of 3.51%, compared to3.27%Efficiency ratio of 73.0%, compared to69.3%Return on average assets and return on tangible common equity^1of0.87% and8.22%, compared to0.72% and5.79%Repurchased349,497 shares of common stock at an average price of$17.07 pershare, for a total of$6.0 millionin 2021

____________1See reconciliation of Non-GAAP Financial Measures later in this release.

Balance Sheet Review

Total assets increased $75.9 million, or 4.1%, to$1.92 billion at December 31, 2021, compared to$1.85 billion at September 30, 2021, and increased $266.7 million, or 16.1%, compared to$1.65 billion at December 31, 2020.

Cash and cash equivalents increased by $49.9 million, or 65.5%, to$126.0 million as of December 31, 2021, compared to$76.1 million as of September 30, 2021. The Company continues to deploy excess cash and move it into higher yielding assets relative to cash as opportunities arise.

Investment securities increased $18.3 million, or 5.6%, to$344.2 million at December 31, 2021, compared to$325.9 million three months earlier, and decreased$20.1 million compared to$364.3 million at December 31, 2020. At December 31, 2021, municipal bonds totaled $113.4million and comprised the largest portion of the investment portfolio at 32.9%. The estimated average life of the total investment securities portfolio was approximately5.7 years, compared to 5.8years in the prior quarter and7.3years in the fourth quarter of 2020.

Investment securities consisted of the following at the dates indicated:

December September December Three One 31, 30, 31, Month Year 2021 2021 2020 Change Change (In thousands) Available forSale at Fair ValueMunicipal bonds $ 113,364 $ 110,265 $ 127,862 $ 3,099 $ (14,498 )Internationalagency issued 1,920 1,940 ? (20 ) 1,920 bonds (Agencybonds)U.S. governmentagency issuedasset-backed ? ? 63,820 ? (63,820 )securities (ABSagency)Corporateissuedasset-backed 14,489 11,016 29,280 3,473 (14,791 )securities (ABScorporate)Corporateissued debtsecurities 59,789 55,946 35,510 3,843 24,279 (Corporatedebt)U.S. SmallBusinessAdministration 14,680 15,842 18,564 (1,162 ) (3,884 )securities(SBA)Mortgage-backed securities:U.S. governmentagency issuedmortgage-backed 79,962 75,091 62,683 4,871 17,279 securities (MBSagency)Corporateissuedmortgage-backed 60,008 55,790 26,577 4,218 33,431 securities (MBScorporate)Totalsecurities $ 344,212 $ 325,890 $ 364,296 $ 18,322 $ (20,084 )available forsale

Net loans, excluding loans held for sale, increased $5.1 million, or 0.4%, to $1,350 million at December 31, 2021, from$1,345 million at September 30, 2021, and increased $208.3 million, or 18.2%, from$1.14 billion a year ago. Multi-family loans decreased $5.2 million during the current quarter as the increase from loan originations totaling $39.3million was offset by the sale of loans (servicing retained)with balances totaling $43.5 million.Commercial business loans decreased $12.1million during the quarter, mainly as the result of decreases in Northpointe Mortgage Participation program loans of $1.2million and Paycheck Protection Program (PPP) loans paid off during the quarter of $9.1million.

The Company originated $46.2million in residential mortgages during the fourth quarter and sold $25.1million, with an average gross margin on sale of mortgage loans of approximately 2.64%. This production compares to residential mortgage originations of $52.7million in the preceding quarter with sales of $22.3million, with an average gross margin of 2.67%.

Loans receivable consisted of the following at the dates indicated:

December 31, September December 31, Three One 2021 30, 2020 Month Year 2021 Change Change (In thousands) Real Estate: One to four $ 294,965 $ 294,432 $ 309,828 $ 533 $ (14,863 )familyMulti-family 172,409 177,560 162,467 (5,151 ) 9,942 Commercial 363,299 353,356 296,574 9,943 66,725 real estateConstruction 224,709 214,472 123,627 10,237 101,082 and landTotal real 1,055,382 1,039,820 892,496 15,562 162,886 estate loans Consumer: Home equity 39,172 38,881 33,103 291 6,069 Auto andother 182,769 182,238 128,233 531 54,536 consumerTotalconsumer 221,941 221,119 161,336 822 60,605 loans Commercial 79,838 91,939 100,201 (12,101 ) (20,363 )business Total loans 1,357,161 1,352,878 1,154,033 4,283 203,128 Less: Net deferred 4,772 5,274 4,346 (502 ) 426 loan feesPremium onpurchased (12,995 ) (12,765 ) (6,129 ) (230 ) (6,866 )loans, netAllowancefor loan 15,124 15,243 13,847 (119 ) 1,277 lossesTotal loansreceivable, $ 1,350,260 $ 1,345,126 $ 1,141,969 $ 5,134 $ 208,291 net

Total deposits increased $57.7 million, to$1.58 billion at December 31, 2021, compared to$1.52 billion at September 30, 2021, and increased $247.1 million, or 18.5%, compared to$1.33 billion a year ago. Demand deposits increased 25.4% compared to a year ago to $540.1million at December 31, 2021, and represented 34.2% of total deposits; money market accounts increased 39.3% compared to a year ago to $597.8million, and represented 37.8% of total deposits; savings accounts increased 18.4% compared to a year ago to $194.6million at December 31, 2021, and represented 12.3% of total deposits; and certificates of deposit decreased 19.9% compared to a year ago to $247.2million at quarter-end, and represented 15.6% of total deposits.

The total cost of deposits was0.20%for the fourth quarter of 2021 compared to 0.23% for the third quarter of 2021 and improved from0.34%for the fourth quarter of 2020.

Deposits consisted of the following at the dates indicated:

December 31, September December 31, Three One 2021 30, 2020 Month Year 2021 Change Change (In thousands) Noninterest-bearing $ 343,932 $ 328,463 $ 274,930 $ 15,469 $ 69,002 demand depositsInterest-bearing 196,970 182,181 156,241 14,789 40,729 demand depositsMoney market 597,815 573,713 429,143 24,102 168,672 accountsSavings accounts 194,620 193,479 164,434 1,141 30,186 Certificates of 247,243 245,080 308,769 2,163 (61,526 )depositTotal deposits $ 1,580,580 $ 1,522,916 $ 1,333,517 $ 57,664 $ 247,063

Total shareholders equity increased to $190.5 millionat December 31, 2021, compared to$187.4 million three months earlier, and increased from$186.4 million a year earlier. Tangible book value per common share1 was$18.89at December 31, 2021, compared to$18.48at September 30, 2021 and$18.19at December 31, 2020; while book value per common sharewas$19.10at December 31, 2021, compared to$18.65at September 30, 2021 and$18.20at December 31, 2020. We repurchased57,565 shares of common stock under the October 2020 Plan at an average price of$18.06 per share for a total of$1.0 million during the quarter ended December 31, 2021.

____________1See reconciliation of Non-GAAP Financial Measures later in this release.

Income Statement Results

In the fourth quarter of 2021, the Company generated a return on average assets ("ROAA") of 1.09%, and a return on average equity ("ROAE") of10.72%, compared to0.92% and8.69%, respectively, in the third quarter of 2021, and0.97% and8.32%, respectively, in the fourth quarter of 2020.

For the year ended December 31, 2021, ROAA and ROAE were0.87% and8.19%, respectively, compared to0.72% and5.79%for the year ended December 31, 2020.

Total interest income increased to$17.2 million for the fourth quarter of 2021, compared to$16.8 million in the previous quarter and$14.0 million in the fourth 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 loans. The current quarter yield on average loans receivable also increased by8 basis points compared to the same period in the prior year. Total interest expense was$1.4 millionfor the third and fourth quarters of 2021, compared to$1.3 millionin the fourthquarter a year ago, as a result of the subordinated debt issued in March 2021 offset by a decrease in interest paid on certificates of deposit.

For the year ended December 31, 2021, total interest income increased 23.2%to $63.7 million, compared to$51.7 million for the year ended December 31, 2020, due to loan growth. A decrease of$2.4 million in interest expense year-over-year was due to the decline in the cost of total deposits to23basis points compared to 57 basis points in the fourth quarter one year ago, offset by interest on the subordinated debt issued in March 2021.

Net interest income, before provision for loan losses, for the fourth quarter increased3.0%to $15.8 million, compared to$15.4 million for the preceding quarter, and increased24.7%from the fourth quarter a year ago.

For the year ended December 31, 2021, net interest income before the provision for loan losses increased32.6% to $58.3 million, compared to$44.0 million for the year ended December 31, 2020.

Interest income from loans was positively impacted by PPP loans in 2021.As of December 31, 2021, we received SBA proceeds on forgiven loans totaling $51.0million. Approximately $385,000 of the income recognized during the fourth quarter was related to deferred fees associated with PPP loan payoffs, compared to $630,000 in the third quarter of 2021. Total deferred fee income recognized in 2021 related to PPP loan payoffs was $1.3 million.At December 31, 2021, there was approximately $390,000 of PPP loan fee income remaining to be recognized in income.

The Company recorded a $150,000negative loan loss provisionduring the fourth quarter of 2021. This compares to a provision for loan losses of$700,000 for the preceding quarter, and a provision for loan losses of$930,000 for the fourth quarter of 2020. For the year ended December 31, 2021, the provision for loan losses was$1.4 million, compared to$5.1 million for the year ended December 31, 2020. The lower provision reflects improvement in economic conditions, less uncertainty regarding the impact of COVID-19,and stable credit quality compared to the prior year.

The net interest margin was3.58% for both the third and fourth quarters of 2021, and increased12 basis points compared to3.46% for the fourth quarter in 2020.For the year ended December 31, 2021, the net interest margin increased24 basis points to 3.51%, compared to3.27% in the year ended December 31, 2020. Increases over the prior year are primarily due to an improvement in our earning asset mix, loan fee income recognized during 2021 from PPP loan payoffs,and asubstantial reduction in the cost of funds. Average total loans increased to 75% of average interest-earning assets compared to 73% one year ago.

The yield on earning assets decreased 1basis pointto3.90% for the fourth quarter of 2021, compared to 3.91% for the third quarter of 2021, and increased 9 basis points from3.81% for the fourth quarter of 2020. The year-over-year 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 to4.49% for the fourth quarter of 2021, from 4.47% for the third quarter of 2021, primarily due to interest income on commercial construction loans during the current quarter. The increasefrom4.41% for the fourthquarter of 2020was mainly related to deferred fee income recognized on PPP loan payoffs.

The cost of interest-bearing liabilities decreased 3 basis points to0.42% for the fourth quarter of 2021, compared to 0.45% for the third quarter of 2021, and decreased5 basis points from0.47% for the fourth quarter of 2020.The total cost of funds decreased 2 basis points to0.34%for the fourth quarter of 2021, compared to 0.36% for the third quarter of 2021, and decreased4basis points from0.38%for the fourth quarter of 2020. While the average balance and cost of funds on borrowings increased from the prior year, the lower-cost average deposit account balances continued to grow and the related cost of deposits decreased.

Noninterest income increased11.4% to$4.8 million for the fourth quarter of 2021 from$4.3 million for the third quarter of 2021 and increased3.0% compared to $4.6 millionfor the fourth quarter a year ago. The fourth quarter of 2021 included$88,000 of sold loan servicing fee income compared to $815,000in the preceding quarter, which was positively impacted by a catch-up for servicing fees on Main Street Lending Program loans sold,and$146,000 in the fourth quarter a year ago.Increases for the quarter includedgainon sale of multifamily loans and related servicing right recognitiontotaling$1.2 million, SBA participation fee income of $360,000 and swap program participation fees of $236,000. The third quarter of 2021 included a $1.3 million gain on sale of investment securities and $134,000 in swap program participation fees.

For the year ended December 31, 2021, noninterest income decreased1.3% to $15.6 million, compared to$15.9 million forthe year ended December 31, 2020, reflecting a lower gain on sale of mortgage loans, lower gain on sale of securities,and a decrease in the cash surrender value of bank owned life insurance (BOLI) due to a one-time increase recorded in the third quarter of 2020from a restructure of the BOLI policies in the third quarter of 2020. Decreases werepartially offset by increases in gain on sale of commercial loans, SBA and swap program participation fees, and a gain on our investment in Canapi Ventures Fund LP.

Noninterest expense totaled$14.7 million for the fourth quarter of 2021, compared to$13.9 million for the preceding quarter and$11.7 million for the fourth quarter a year ago. The current quarter increase is due to additional compensation expense, technology enhancements, and FDIC insurance premiums.The increase over the fourth quarter of 2020 reflects higher compensation expense, including salaries, production-related commissions, incentives and benefits, as well as costs associated with expanding our footprint with two new locations;technology enhancements for digital and mobile banking products; and higher FDIC insurance premiums.

For the year ended December 31, 2021, noninterest expense increased to $54.4 million, from$41.5 million forthe year ended December 31, 2020. The year-over-year increasereflects 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$1.1 million for the fourth quarter of 2021, compared to$946,000 for the third quarter of 2021and $850,000 for the fourth quarter of 2020, due to the increase in income.The provision for income tax for the year ended December 31, 2021, was$3.2 millioncompared to $3.0 millionfor the year ended December 31, 2020, reflecting higher net income before provision for income tax in the current year, while the prior year includeda 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 December 31, 2021. Common Equity Tier 1 and Total Risk-Based Capital Ratios at December 31, 2021 were13.8% and 14.9%, respectively.

Nonperforming loans were$1.4 million at December 31, 2021, an increase of$198,000 fromSeptember 30, 2021related to brokered and purchased auto loans.The percentage of the allowance for loan losses to nonperforming loans decreased to1095%at December 31, 2021, from1289%at September 30, 2021, and increased from609%at December 31, 2020. Classified loans decreased $93,000 during the fourth quarter to $12.6million at December 31, 2021, reflecting improvements in almost all loan categories. The allowance for loan losses as a percentage of total loans was1.11% at December 31, 2021, with no change from the prior quarter anda decrease from1.20% reported one year earlier.

Recent Developments

On January 12, 2022, the Company announced a new fintech partnership with Splash Financial, a leading digital lending platform that helps borrowers easily shop and compare financial products. Through its First Fed subsidiary, FNWB will work collaboratively with Splash to develop and deploy consumer loan products and solutions throughout the country.

Splash Financial is a national leader in refinancing student loans, helping consumers save money on educational financing and personal loans. Splash raised $44 million from sales ofSeries B preferred stockin June 2021, bringing its total funding to $60.9 million.

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 Washingtonlist. 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 Bancorp (Nasdaq: FNWB) is a bank holding company engaged in investment activities including the business activity of its subsidiary, First Fed Bank. First Fed is a community-oriented financial institution which has served customers and communities since 1923. Currently First Fed has 16 locations in Washington state including 12 full-service branches. First Feds business and operating strategy is focused on building sustainable earnings by delivering a fully array of financial products and services for individuals, small business, and commercial customers. Additionally, First Fed focuses on strategic partnerships with financial technology (fintech) companies to develop and deploy digitally focused financial solutions to meet customers needs on a broader scale. FNWB also invests in fintech companies directly as well as through select venture capital partners. In 2021, the Company entered a joint venture to found Quin, a fintech focused on financial wellness and lifestyle protection for consumers nationwide. Other fintech partnership initiatives include banking-as-a-service, digital payments and marketplace lending. FNWB was incorporated in 2012 and is headquartered in Port Angeles, Washington.

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 for2022and 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)

December September December Three One 31, 30, 31, Month Year 2021 2021 2020 Change ChangeAssets Cash and due $ 13,868 $ 17,012 $ 13,508 -18.5 % 2.7 %from banksInterest-bearingdeposits in 112,148 59,108 51,647 89.7 117.1 banksInvestmentsecuritiesavailable for 344,212 325,890 364,296 5.6 -5.5 sale, at fairvalueLoans held for 760 2,231 3,753 -65.9 -79.7 saleLoans receivable(net ofallowance forloan losses of 1,350,260 1,345,126 1,141,969 0.4 18.2 $15,124,$15,243, and$13,847)Federal HomeLoan Bank (FHLB) 5,196 4,397 5,977 18.2 -13.1 stock, at costAccrued interest 5,289 5,775 6,966 -8.4 -24.1 receivablePremises and 19,830 18,188 14,785 9.0 34.1 equipment, netMortgageservicing 3,282 2,934 2,120 11.9 54.8 rights, netBank-owned life 39,318 39,080 38,353 0.6 2.5 insurance, netGoodwill andother intangible 1,183 1,186 ? -0.3 100.0 assets, netPrepaid expenses 25,735 24,210 10,975 6.3 134.5 and other assets Total assets $ 1,921,081 $ 1,845,137 $ 1,654,349 4.1 % 16.1 % Liabilities andShareholders' Equity Deposits $ 1,580,580 $ 1,522,916 $ 1,333,517 3.8 % 18.5 %Borrowings 80,000 60,000 109,977 33.3 -27.3 Subordinated 39,280 39,261 ? 0.0 100.0 debt, netAccrued interest 393 29 53 1,255.2 641.5 payableAccrued expensesand other 29,240 33,369 23,303 -12.4 25.5 liabilitiesAdvances fromborrowers for 1,108 2,118 1,116 -47.7 -0.7 taxes andinsurance Total 1,730,601 1,657,693 1,467,966 4.4 17.9 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 outstanding9,972,698 atDecember 31,2021; issued and 100 102 102 -2.0 -2.0 outstanding10,050,877 atSeptember 30,2021; and issuedand outstanding10,247,185 atDecember 31,2020Additional 96,132 96,396 97,412 -0.3 -1.3 paid-in capitalRetained 103,013 99,058 92,657 4.0 11.2 earningsAccumulatedothercomprehensive 288 934 5,442 -69.2 -94.7 income, net oftaxUnearnedemployee stock (8,572 ) (8,736 ) (9,230 ) 1.9 7.1 ownership plan(ESOP) shares Total parent'sshareholders' 190,961 187,754 186,383 1.7 2.5 equityNoncontrollinginterest in Quin (481 ) (310 ) ? -55.2 100.0 Ventures, Inc. Totalshareholders' 190,480 187,444 186,383 1.6 2.2 equity Totalliabilities and $ 1,921,081 $ 1,845,137 $ 1,654,349 4.1 % 16.1 %shareholders'equity

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

Quarter Ended December September December Three One 31, 30, 31, Month Year 2021 2021 2020 Change ChangeINTEREST INCOME Interest andfees on loans $ 15,041 $ 14,581 $ 11,894 3.2 % 26.5 %receivableInterest onmortgage-backed 727 715 437 1.7 66.4 and relatedsecuritiesInterest oninvestment 1,346 1,423 1,581 -5.4 -14.9 securitiesInterest ondeposits in 37 18 9 105.6 311.1 banksFHLB dividends 58 41 56 41.5 3.6 Total interest 17,209 16,778 13,977 2.6 23.1 income INTEREST EXPENSEDeposits 787 850 1,079 -7.4 -27.1 Borrowings 214 186 221 15.1 -3.2 Subordinated 394 390 ? 1.0 100.0 debtTotal interest 1,395 1,426 1,300 -2.2 7.3 expense Net interest 15,814 15,352 12,677 3.0 24.7 income (RECAPTURE OF)PROVISION FOR (150 ) 700 930 -121.4 -116.1 LOAN LOSSES Net interestincome after 15,964 14,652 11,747 9.0 35.9 provision forloan losses NONINTEREST INCOMELoan anddeposit service 1,007 1,015 940 -0.8 7.1 feesSold loanservicing fees, 88 815 146 -89.2 -39.7 net ofamortizationNet gain on 2,264 663 2,324 241.5 -2.6 sale of loansNet gain onsale of ? 1,286 912 -100.0 -100.0 investmentsecuritiesIncrease incash surrendervalue of 238 241 249 -1.2 -4.4 bank-owned lifeinsuranceOther income 1,179 266 67 343.2 1,659.7 Totalnoninterest 4,776 4,286 4,638 11.4 3.0 income NONINTEREST EXPENSECompensation 8,948 8,713 7,193 2.7 24.4 and benefitsData processing 1,818 1,568 1,302 15.9 39.6 Occupancy and 1,173 1,106 1,052 6.1 11.5 equipmentSupplies,postage, and 313 279 236 12.2 32.6 telephoneRegulatoryassessments and 316 335 271 -5.7 16.6 state taxesAdvertising 556 547 572 1.6 -2.8 Professional 409 422 408 -3.1 0.2 feesFDIC insurance 302 134 89 125.4 239.3 premiumOther 843 830 596 1.6 41.4 Totalnoninterest 14,678 13,934 11,719 5.3 25.2 expense INCOME BEFOREPROVISION FOR 6,062 5,004 4,666 21.1 29.9 INCOME TAXES PROVISION FOR 1,112 946 850 17.5 30.8 INCOME TAXES NET INCOME 4,950 4,058 3,816 22.0 29.7 Net loss onnoncontrollinginterest in 174 120 ? 45.0 100.0 Quin Ventures,Inc. NET INCOMEATTRIBUTABLE TO $ 5,124 $ 4,178 $ 3,816 22.6 % 34.3 %PARENT Basic anddiluted $ 0.56 $ 0.45 $ 0.41 24.4 % 36.6 %earnings percommon share

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

Year Ended December Percent 31, 2021 2020 Change INTEREST INCOME Interest and fees on loans receivable $ 55,029 $ 43,063 27.8 %Interest on mortgage-backed and related 2,550 2,701 -5.6 securitiesInterest on investment securities 5,819 5,569 4.5 Interest on deposits in banks 83 94 -11.7 FHLB dividends 190 255 -25.5 Total interest income 63,671 51,682 23.2 INTEREST EXPENSE Deposits 3,396 6,663 -49.0 Borrowings 774 1,061 -27.0 Subordinated debt 1,203 ? 100.0 Total interest expense 5,373 7,724 -30.4 Net interest income 58,298 43,958 32.6 PROVISION FOR LOAN LOSSES 1,350 5,046 -73.2 Net interest income after provision for 56,948 38,912 46.4 loan losses NONINTEREST INCOME Loan and deposit service fees 3,860 3,454 11.8 Sold loan servicing fees, net of 946 137 590.5 amortizationNet gain on sale of loans 5,278 6,433 -18.0 Net gain on sale of investment securities 2,410 3,147 -23.4 Increase in cash surrender value of 965 1,826 -47.2 bank-owned life insuranceOther income 2,179 849 156.7 Total noninterest income 15,638 15,846 -1.3 NONINTEREST EXPENSE Compensation and benefits 33,515 24,590 36.3 Data processing 6,244 4,637 34.7 Occupancy and equipment 4,312 3,879 11.2 Supplies, postage, and telephone 1,189 985 20.7 Regulatory assessments and state taxes 1,213 930 30.4 Advertising 2,040 1,506 35.5 Professional fees 1,997 1,523 31.1 FDIC insurance premium 752 245 206.9 FHLB prepayment penalty ? 210 -100.0 Other 3,151 2,959 6.5 Total noninterest expense 54,413 41,464 31.2 INCOME BEFORE PROVISION FOR INCOME TAXES 18,173 13,294 36.7 PROVISION FOR INCOME TAXES 3,194 2,954 8.1 NET INCOME 14,979 10,340 44.9 Net loss on noncontrolling interest in 439 ? 100.0 Quin Ventures, Inc. NET INCOME ATTRIBUTABLE TO PARENT $ 15,418 $ 10,340 49.1 % Basic earnings per common share $ 1.67 $ 1.11 50.5 %Diluted earnings per common share $ 1.66 $ 1.10 50.9 %

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 December 31, September June 30, March 31, December 31, 2021 30, 2021 2021 2020 2021Performance ratios: (1)Return on average 1.09 % 0.92 % 0.69 % 0.76 % 0.97 %assetsReturn on average 10.72 8.69 6.46 6.70 8.32 equityAverage interest 3.48 3.46 3.22 3.38 3.35 rate spreadNet interest margin 3.58 3.58 3.34 3.48 3.46 (2)Efficiency ratio 70.5 70.3 78.2 74.7 67.7 (3)Equity to total 9.92 10.16 10.55 10.49 11.27 assetsAverageinterest-earningassets to average 133.8 134.1 133.9 134.6 131.7 interest-bearingliabilitiesBook value per $ 19.10 $ 18.65 $ 18.49 $ 17.86 $ 18.20 common share Tangible performance ratios:Tangible assets (4) $ 1,919,028 $ 1,843,395 $ 1,787,389 $ 1,736,292 $ 1,654,348 Tangible common 188,427 185,702 188,591 182,097 186,382 equity (4)Tangible common 9.82 % 10.07 % 10.55 % 10.49 % 11.27 %equity ratio (4)Return on tangible 10.82 8.73 6.46 6.80 8.28 common equity (4)Tangible book valueper common share $ 18.89 $ 18.48 $ 18.49 $ 17.86 $ 18.19 (4) Asset quality ratios:Nonperformingassets to total 0.07 % 0.06 % 0.10 % 0.12 % 0.14 %assets at end ofperiod (5)Nonperforming loans 0.10 0.09 0.14 0.18 0.20 to total loans (6)Allowance for loanlosses to 1095.15 1288.50 817.71 668.15 609.20 nonperforming loans(6)Allowance for loanlosses to total 1.11 1.13 1.16 1.22 1.20 loansAnnualized net(recoveries)charge-offs to (0.01 ) 0.01 0.00 0.00 0.00 average outstandingloans Capital ratios (First Fed Bank):Tier 1 leverage 10.6 % 10.6 % 10.9 % 11.2 % 10.3 %Common equity Tier 13.8 13.4 14.5 15.1 13.4 1 capitalTier 1 risk-based 13.8 13.4 14.5 15.1 13.4 Total risk-based 14.9 14.4 15.6 16.3 14.6 Other Information: Average total $ 1,864,309 $ 1,810,543 $ 1,737,363 $ 1,645,806 $ 1,567,521 assetsAverage total loans 1,336,937 1,303,199 1,211,348 1,144,230 1,089,505 Averageinterest-earning 1,750,355 1,702,762 1,639,782 1,549,316 1,466,103 assetsAveragenoninterest-bearing 330,913 314,677 304,483 283,204 245,024 depositsAverageinterest-bearing 1,211,453 1,179,096 1,133,472 1,092,114 1,032,608 depositsAverageinterest-bearing 1,307,895 1,269,958 1,224,665 1,150,743 1,113,339 liabilitiesAverage equity 189,706 190,764 186,153 186,171 183,424 Average shares -- 9,103,640 9,184,568 9,130,113 9,094,354 9,214,965 basicAverage shares -- 9,189,252 9,268,076 9,248,667 9,185,725 9,258,109 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.(4 ) See reconciliation of Non-GAAP Financial Measures on page 14. Nonperforming assets consists of nonperforming loans (which include(5 ) nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.(6 ) 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 Year Ended December 31, 2021 2020 Performance ratios: (1) Return on average assets 0.87 % 0.72 %Return on average equity 8.19 5.79 Average interest rate spread 3.40 3.09 Net interest margin (2) 3.51 3.27 Efficiency ratio (3) 73.0 69.3 Equity to total assets 9.92 11.27 Average interest-earning assets to 134.1 130.6 average interest-bearing liabilitiesBook value per common share $ 19.10 $ 18.19 Tangible performance ratios: Tangible assets (4) $ 1,919,028 $ 1,654,348 Tangible common equity (4) 188,427 186,382 Tangible common equity ratio (4) 9.82 % 11.27 %Return on tangible common equity (4) 8.22 5.79 Tangible book value per common share (4) $ 18.89 $ 18.19 Asset quality ratios: Nonperforming assets to total assets at 0.07 % 0.14 %end of period (5)Nonperforming loans to total loans (6) 0.10 0.20 Allowance for loan losses to 1095.15 609.19 nonperforming loans (6)Allowance for loan losses to total loans 1.11 1.20 Net charge-offs to average outstanding 0.01 0.10 loans Capital ratios (First Fed Bank): Tier 1 leverage 10.6 % 10.3 %Common equity Tier 1 capital 13.8 13.4 Tier 1 risk-based 13.8 13.4 Total risk-based 14.9 14.6 Other Information: Average total assets $ 1,765,230 $ 1,436,895 Average total loans 1,249,605 978,799 Average interest-earning assets 1,661,219 1,345,770 Average noninterest-bearing deposits 308,467 205,043 Average interest-bearing deposits 1,154,430 957,281 Average interest-bearing liabilities 1,238,833 1,030,549 Average equity 188,215 178,498 Average shares -- basic 9,207,609 9,348,874 Average shares -- diluted 9,302,396 9,380,294

(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.(4 ) See reconciliation of Non-GAAP Financial Measures on page 14. Nonperforming assets consists of nonperforming loans (which include(5 ) nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.(6 ) 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:

December September December Three One 31, 30, 31, Month Year 2021 2021 2020 Change Change (In thousands) Commercial business loans breakoutPPP loans $ 14,552 $ 26,858 $ 23,211 $ (12,306 ) $ (8,659 )Northpointe Bank MPP 26,272 27,504 47,260 (1,232 ) (20,988 )Secured lines of 10,376 8,279 7,467 2,097 2,909 creditUnsecured lines of 3,082 2,708 1,474 374 1,608 creditOther commercial 25,556 26,590 20,789 (1,034 ) 4,767 business loansTotal commercial $ 79,838 $ 91,939 $ 100,201 $ (12,101 ) $ (20,363 )business loans Auto and otherconsumer loans breakoutTriad Manufactured $ 58,296 $ 58,823 $ 19,632 $ (527 ) $ 38,664 Home loansWoodside auto loans 100,965 99,335 81,087 1,630 19,878 First Help auto loans 5,752 4,164 1,758 1,588 3,994 Other auto loans 13,861 15,715 23,554 (1,854 ) (9,693 )Other consumer loans 3,895 4,201 2,202 (306 ) 1,693 Total auto and other $ 182,769 $ 182,238 $ 128,233 $ 531 $ 54,536 consumer loans Construction and land loans breakout1-4 Family $ 68,079 $ 66,287 $ 37,489 $ 1,792 $ 30,590 constructionMultifamily 88,919 80,146 34,513 8,773 54,406 constructionAcquisition-renovation 51,099 53,670 39,346 (2,571 ) 11,753 Nonresidential 6,308 4,520 1,949 1,788 4,359 constructionLand and development 10,304 9,849 10,330 455 (26 )Total construction and $ 224,709 $ 214,472 $ 123,627 $ 10,237 $ 101,082 land loans

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

Non-GAAP Financial MeasuresThis 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:

December September June 30, March 31, December 31, 31, 30, 2021 2021 2020 2021 2021 (Dollars in thousands, except per share data) Totalshareholders' $ 190,480 $ 187,444 $ 188,593 $ 182,098 $ 186,383 equityLess:Goodwill andother 1,183 1,186 ? ? ? intangibleassetsDisallowedservicing 870 556 2 1 1 rightTotaltangible $ 188,427 $ 185,702 $ 188,591 $ 182,097 $ 186,382 common equity Total assets $ 1,921,081 $ 1,845,137 $ 1,787,391 $ 1,736,293 $ 1,654,349 Less:Goodwill andother 1,183 1,186 ? ? ? intangibleassetsDisallowedservicing 870 556 2 1 1 rightTotaltangible $ 1,919,028 $ 1,843,395 $ 1,787,389 $ 1,736,292 $ 1,654,348 assets Averageshareholders' $ 189,706 $ 190,764 $ 186,153 $ 186,171 $ 183,424 equityLess: Averagegoodwill andother 1,185 880 ? ? ? intangibleassetsAveragedisallowed 560 8 1 1 1 servicingrightTotal averagetangible $ 187,961 $ 189,876 $ 186,152 $ 186,170 $ 183,423 common equity Tangiblecommon equity 9.82 % 10.07 % 10.55 % 10.49 % 11.27 %ratioNet income $ 5,124 $ 4,178 $ 2,996 $ 3,120 $ 3,816 Return ontangible 10.82 % 8.73 % 6.46 % 6.80 % 8.28 %common equityCommon shares 9,972,698 10,050,877 10,205,867 10,195,644 10,247,185 outstandingTangible bookvalue per $ 18.89 $ 18.48 $ 18.49 $ 17.86 $ 18.19 common shareGAAP Ratios: Equity to 9.92 % 10.16 % 10.55 % 10.49 % 11.27 %total assetsReturn onaverage 10.72 % 8.69 % 6.46 % 6.70 % 8.32 %equityBook valueper common $ 19.10 $ 18.65 $ 18.49 $ 17.86 $ 18.20 share

December 31, December 31, 2021 2020 (Dollars in thousands, except per share data)Total shareholders' equity $ 190,480 $ 186,383 Less: Goodwill and other intangible 1,183 1,186 assetsDisallowed servicing right 870 556 Total tangible common equity $ 188,427 $ 184,641 Total assets $ 1,921,081 $ 1,654,349 Less: Goodwill and other intangible 1,183 1,186 assetsDisallowed servicing right 870 556 Total tangible assets $ 1,919,028 $ 1,652,607 Average shareholders' equity $ 188,215 $ 178,498 Less: Average goodwill and other 520 ? intangible assetsAverage disallowed servicing right 144 9 Total average tangible common equity $ 187,551 $ 178,489 Tangible common equity ratio 9.82 % 11.17 %Net income $ 15,418 $ 10,340 Return on tangible common equity 8.22 % 5.79 %Common shares outstanding 9,972,698 10,247,185 Tangible book value per common share $ 18.89 $ 18.02 GAAP Ratios: Equity to total assets 9.92 % 11.27 %Return on average equity 8.19 % 5.79 %Book value per common share $ 19.10 $ 18.19

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.

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