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First Northwest Bancorp Earns $3.1 Million, or $0.34 Per Diluted Share, in First Quarter 2021; Highlighted by Net Interest Margin Expansion and Strong Asset Quality; Declares Quarterly Cash Dividend of $0.06 Per Share

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PORT ANGELES, Wash., April 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 that net income increased 257.6% to $3.1 million, or $0.34 per diluted share, for the first quarter of 2021, compared to $873,000, or $0.09 per diluted share, for the first quarter a year ago, and decreased compared to net income of $3.8 million, or $0.41 per diluted share, for the fourth quarter of 2020. First quarter results reflected strong year-over-year revenue growth, core deposit growth and net interest margin expansion. The decrease from the prior period was primarily due to lower gains on sale of one-to-four family mortgages and available for sale investments, partially offset by increased net interest income and a lower provision for loan losses. The Company also announced that its Board of Directors declared a regular quarterly cash dividend of $0.06 per common share outstanding, payable on May 28, 2021 to shareholders of record as of the close of business on May 14, 2021.

"First Northwest Bancorp's first quarter operating results were highlighted by strong revenue generation fueled by solid net interest income and core deposit growth," stated Matthew P. Deines, President and CEO. "Despite ongoing pressures on loan and investment yields, net interest income increased $4.1 million, or 43.3%, over the first quarter of 2020, boosted by growth in earning assets, $362,000 in Paycheck Protection Program ("PPP") income and a significant decline in cost of funds. We continue to generate organic commercial and consumer activity as we support our communities through an emerging recovery."

"We are actively participating in the SBA's current round of PPP funding that began in January 2021 and concludes at the end of May," said Deines. "This round of SBA funding offers PPP loans for companies that did not receive a PPP loan in 2020, and also "second draw" loans targeted at hard-hit businesses that have already used their initial PPP proceeds. We funded $32.4 million in second round PPP loans during the first quarter of 2021."

First Quarter 2021 Highlights (at or for the quarter ended March 31, 2021)

  • First quarter net income was $3.1 million, compared to $3.8 million in the preceding quarter and $873,000 in the year ago quarter.
  • Diluted earnings per share was $0.34, compared to $0.41 per share in the preceding quarter and $0.09 per share in the first quarter a year ago.
  • Provision for loan losses was $500,000 in the first quarter, compared to $930,000 in the fourth quarter of 2020 and $1.3 million in the first quarter of 2020.
  • Loans receivable increased 1.3% to $1.16 billion at March 31, 2021, compared to $1.14 billion at December 31, 2020, and increased 28.6% compared to $899.2 million a year ago, primarily due to growth in commercial real estate and commercial business loans, including PPP loans.
  • Deposits increased 7.6% during the quarter and increased 34.9% from one year prior, to $1.43 billion at March 31, 2021, due to successful organic and wholesale deposit-gathering strategies, including significant growth in noninterest-bearing deposits, which increased 76.8% in the last twelve months. Deposit balances benefitted from a second round of PPP and additional Federal stimulus payments during the quarter.
  • The cost of deposits for the first quarter decreased to 0.27% from 0.33% for fourth quarter 2020 and 0.85% in the first quarter of 2020.
  • Gain on sale of mortgage loans was $1.3 million for the first quarter compared to $2.3 million in the previous quarter and $383,000 in the first quarter of 2020, reflecting a modest slowdown in activity from the fourth quarter of 2020 and strong year-over-year quarterly mortgage originations, including refinance activity.
  • During the first quarter, the Company repurchased 135,837 shares of common stock at an average price of $15.89 per share for a total of $2.2 million, leaving 872,030 shares remaining under the 2020 Stock Repurchase Plan approved in October 2020.

Recent Developments

On March 22, 2021 the Company announced that First Fed has entered into an agreement with Sterling Bank and Trust of Southfield, Michigan to purchase its Bellevue, Washington branch, subject to applicable regulatory approvals and other customary closing conditions. The agreement includes the purchase of approximately $77.7 million in deposits as of the announcement date. First Fed expects to close the transaction by the end of the second quarter of 2021.

On April 16, 2021, the Company issued 29,719 shares of the Company's common stock under the terms of an Amended and Restated Joint Venture Agreement dated April 15, 2021 (the "Joint Venture Agreement") with the Bank, POM Peace of Mind, Inc. ("POM"), and Quin Ventures, Inc. ("Quin"). The shares were issued to POM and had a value of approximately $500,000. Under the Joint Venture Agreement, the Company and POM have established Quin to develop a digital financial wellness platform that will offer personal financial services to the general public. Under a related Marketing and Banking Services Agreement, Quin will promote the services offered through the digital financial wellness platform and the Bank will provide banking services to the customers who utilize the platform. The Marketing and Banking Services Agreement sets forth the terms governing the parties' commercial and economic commitments and responsibilities, including the fees to be paid by the Bank to fund the costs of acquiring customers and the distribution of interchange fees. The Company has also committed to extend $15.0 million to Quin under a capital financing agreement and related promissory note.

Balance Sheet Review

Total assets increased $81.9 million, or 5.0%, to $1.74 billion at March 31, 2021, compared to $1.65 billion at December 31, 2020, and increased $339.4 million, or 24.3%, compared to $1.40 billion at March 31, 2020.

Cash and cash equivalents increased by $34.1 million, or 52.4%, to $99.3 million as of March 31, 2021, compared to $65.2 million as of December 31, 2020, as the result of gross proceeds of $40.0 million from the issuance of subordinated debt as well an increase in deposits of $101.3 million offset by increases to investment securities and loans receivable.

Investment securities increased $29.2 million to $393.5 million at March 31, 2021, compared to $364.3 million three months earlier, and increased $76.0 million compared to $317.5 million at March 31, 2020. At March 31, 2021, municipal bonds totaled $132.5 million and comprised the largest portion of the investment portfolio at 33.7%. The estimated average life of the total investment securities portfolio was 7.5 years, and the average repricing term was approximately 5.3 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 and prudently manage the balance sheet."

Securities consisted of the following at the dates indicated:

    March 31,
2021
    December 31,
2020
    March 31,
2020
    Three
Month
Change
    One Year
Change
 
       
    (In thousands)  
Available for Sale at Fair Value                                        
Municipal bonds   $ 132,492     $ 127,862     $ 52,254     $ 4,630     $ 80,238  
U.S. government and agency issued bonds (Agency bonds)     1,913                   1,913       1,913  
U.S. government agency issued asset-backed securities (ABS agency)     65,910       63,820       42,125       2,090       23,785  
Corporate issued asset-backed securities (ABS corporate)     17,505       29,280       34,073       (11,775 )     (16,568 )
Corporate issued debt securities (Corporate debt)     43,890       35,510       9,439       8,380       34,451  
U.S. Small Business Administration securities (SBA)     17,566       18,564       25,363       (998 )     (7,797 )
Mortgage-backed securities:                                        
U.S. government agency issued mortgage-backed securities (MBS agency)     74,016       62,683       145,139       11,333       (71,123 )
Corporate issued mortgage-backed securities (MBS corporate)     40,203       26,577       9,127       13,626       31,076  
Total securities available for sale   $ 393,495     $ 364,296     $ 317,520     $ 29,199     $ 75,975  

Net loans, excluding loans held for sale, increased $14.5 million, or 1.3%, to $1.16 billion at March 31, 2021, from $1.14 billion at December 31, 2020, and increased $257.3 million, or 28.6%, from $899.2 million a year ago. "Our lending team did an excellent job growing the loan portfolio despite a competitive operating environment, with total loans increasing 28.6% over the last twelve months," said Randy Riffle, EVP/Chief Lending Officer. "Additionally, new PPP loan production from the SBA's latest round contributed meaningfully to loan production, with $32.4 million in new PPP loans funded during the first quarter." Commercial business loans decreased $17.2 million during the quarter as the result of a decrease of $41.6 million in the Northpointe Mortgage Participation program offset by an increase of $24.7 in PPP loans.

The Company originated $66.3 million in residential mortgages during the quarter and sold $37.0 million, with an average gross margin on sale of mortgage loans of approximately 2.85%. This production compares to residential mortgage originations of $95.7 million in the preceding quarter with sales of $59.3 million, with an average gross margin of 3.01%. "Mortgage banking activity exceeded the first quarter of 2020, bucking seasonal trends, especially for refinances of existing mortgages as interest rates remain historically low," said Kelly Liske, Chief Banking Officer.

Loans receivable consisted of the following at the dates indicated:

    March 31,
2021
    December 31,
2020
    March 31,
2020
    Three
Month
Change
    One Year
Change
 
       
    (In thousands)  
Real Estate:                                        
One to four family   $ 295,831     $ 309,828     $ 302,688     $ (13,997 )   $ (6,857 )
Multi-family     162,487       162,467       88,794       20       73,693  
Commercial real estate     296,826       296,574       260,321       252       36,505  
Construction and land     157,316       123,627       48,565       33,689       108,751  
Total real estate loans     912,460       892,496       700,368       19,964       212,092  
                                         
Consumer:                                        
Home equity     33,713       33,103       35,260       610       (1,547 )
Auto and other consumer     139,134       128,233       114,194       10,901       24,940  
Total consumer loans     172,847       161,336       149,454       11,511       23,393  
                                         
Commercial business     83,033       100,201       55,853       (17,168 )     27,180  
                                         
Total loans     1,168,340       1,154,033       905,675       14,307       262,665  
Less:                                        
Net deferred loan fees     4,983       4,346       433       637       4,550  
Premium on purchased loans, net     (7,347 )     (6,129 )     (4,742 )     (1,218 )     (2,605 )
Allowance for loan losses     14,265       13,847       10,830       418       3,435  
Total loans receivable, net   $ 1,156,439     $ 1,141,969     $ 899,154     $ 14,470     $ 257,285  

The sectors most heavily impacted by the pandemic include hospitality; restaurant and food services; and lessors of commercial real estate to these businesses. The table below presents selected information on loans to these industries as of March 31, 2021.

Industry % of Total
Loan
Portfolio
  Loan Balance   Number
of Loans
  Average
Loan-to-Value
      (In thousands)
         
Hospitality 4.4 %   $50,332     14     60.6 %
Restaurant and food services 0.2     1,907     6     64.8  
Lessors of commercial real estate to hospitality, restaurant, and retail establishments 4.3     48,103     27     52.3  

The table below presents selected information on loans that remained on COVID-19 deferrals at the periods indicated.

  % of Total
Loan Portfolio
  Deferred Loan
Balance
  Number
of Loans
      (In thousands)
     
June 30, 2020 12.9 %   $128,420     297  
September 30, 2020 13.9     149,542     183  
December 31, 2020 0.2     2,349     19  
March 31, 2021 0.7     8,052     4  

Total deposits increased $101.3 million, or 7.6%, to $1.43 billion at March 31, 2021, compared to $1.33 billion at December 31, 2020, and increased $370.9 million, or 34.9%, when compared to $1.06 billion a year ago. Savings accounts increased 12.3% compared to a year ago to $186.2 million at March 31, 2021, and represented 13.0% of total deposits; transaction accounts increased 62.8% compared to a year ago to $466.1 million at March 31, 2021, and represented 32.5% of total deposits; money market accounts increased 95.6% compared to a year ago to $495.3 million, and represented 34.5% of total deposits; and certificates of deposit decreased 19.9% compared to a year ago to $287.2 million at quarter-end, and represented 20.0% of total deposits.

"Deposit balances remain at record levels as we experienced growth with existing customers and developed new deposit relationships," said Bullard. "We strategically increased noninterest-bearing and other core deposits to manage overall funding costs. We lowered our total cost of funds over the quarter by shifting our deposit mix more toward non-maturity deposits." Total cost of funds improved to 0.32% for the first quarter of 2021 compared to 0.38% for the fourth quarter of 2020.

Deposits consisted of the following at the dates indicated:

    March 31,
2021
  December 31,
2020
  March 31,
2020
  Three
Month
Change
  One Year
Change
     
    (In thousands)
Savings   $ 186,173   $ 164,434   $ 165,747   $ 21,739     $ 20,426  
Transaction accounts     466,143     431,171     286,283     34,972       179,860  
Money market accounts     495,265     429,143     253,198     66,122       242,067  
Certificates of deposit     287,226     308,769     358,677     (21,543 )     (71,451 )
Total deposits   $ 1,434,807   $ 1,333,517   $ 1,063,905   $ 101,290     $ 370,902  

On March 25, 2021, the Company completed its private placement of $40.0 million of 3.75% fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and accredited investors. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company intends to use the net proceeds of the offering for general corporate purposes and provided $20.0 million to the Bank as Tier 1 capital. "We believe this capital will serve us well as we continue to grow the Company and enhance our footprint and product offerings," said Deines.

Total shareholders' equity was $182.1 million at March 31, 2021, compared to $186.4 million three months earlier, and $167.2 million a year earlier. The decrease in equity was driven by reduced other comprehensive income of $5.2 million due to a decrease in the unrealized gain on investments of $3.5 million and a $1.7 million adjustment reflecting the recognition of prior service cost related to First Fed's transfer out of a multiemployer pension plan into a single employer plan. The decrease in equity compared to the prior quarter was also a result of stock buybacks during the first quarter of 2021. Book value per common share was $17.86 at March 31, 2021, compared to $18.20 at December 31, 2020 and $16.02 at March 31, 2020.

Operating Results

In the first quarter of 2021, the Company generated a return on average assets ("ROAA") of 0.76%, and a return on average equity ("ROAE") of 6.70%, compared to 0.97% and 8.32%, respectively, in the fourth quarter of 2020, and 0.27% and 1.94%, respectively, in the first quarter a year ago.

Total interest income increased to $14.6 million for the first quarter of 2021, compared to $14.0 million in the previous quarter and $12.0 million in the first quarter of 2020. Interest and fees on loans increased due to loan growth compared to the prior quarter. Quarter over quarter, the yield on average loans receivable increased by 2 basis points. Total interest expense was $1.2 million for the first quarter of 2021, compared to $1.3 million in the fourth quarter of 2020, and $2.6 million in the first quarter a year ago. The decrease in interest expense was due to the decline in the cost of total deposits to 27 basis points from 34 basis points in the prior quarter and 85 basis points the first quarter one year ago.

Net interest income, before provision for loan losses, increased 6.4% during the quarter to $13.5 million, compared to $12.7 million for the preceding quarter, and increased 43.3% compared to $9.4 million in the first quarter a year ago. "The first round of PPP expired on August 8, 2020, and as of March 31, 2021, we received from the SBA proceeds on forgiven loans totaling $16.6 million. Approximately $177,000 of the income recognized during the first quarter was related to deferred fees associated with PPP loan payoffs, compared to $182,000 of the income related to deferred fees associated with PPP loan payoffs in the prior quarter," added Riffle.

While asset quality improved during the last twelve months, additional loan growth and the anticipated impact of the COVID-19 pandemic on local businesses resulted in a $500,000 provision for loan losses during the first quarter of 2021. This compares to a provision for loan losses of $930,000 for the preceding quarter, and a provision for loan losses of $1.3 million for the first quarter of 2020.

The net interest margin expanded 2 basis point to 3.48% for the first quarter of 2021, compared to 3.46% for the fourth quarter of 2020, and increased 37 basis points compared to 3.11% for the first quarter in 2020. "Despite a challenging interest rate environment, our earning asset mix enhancements as well as substantially reducing our cost of funds helped increase our net interest margin over the past twelve months," said Bullard.

The yield on earning assets decreased 3 basis points to 3.78% for the first quarter of 2021, compared to 3.81% for the fourth quarter of 2020, and decreased 19 basis points from 3.97% for the first 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 increased to 4.43% for the first quarter of 2021, from 4.41% for the fourth quarter of 2020, and decreased from 4.52% for the first quarter of 2020 due to a decline in the overall rate environment. The cost of interest-bearing liabilities decreased 7 basis points to 0.40% for the first quarter of 2021, compared to 0.47% for the fourth quarter of 2020, and decreased 71 basis points from 1.11% for the first quarter in 2020.

Noninterest income decreased 41.7% to $2.7 million for the first quarter of 2021 from $4.6 million for the fourth quarter of 2020 and increased 16.7% compared to $2.3 million for the first quarter a year ago. The first quarter of 2021 included a $1.3 million gain on sale of loans compared to a $2.3 million gain on sale of loans in the preceding quarter and a $383,000 gain on sale of loans in the first quarter a year ago. Noninterest income growth during the fourth quarter of 2020 also included a $912,000 gain on sale of investment securities. Loan and deposit service fees, the second largest component of noninterest income, totaled $837,000 for the first quarter 2021, compared to $940,000 for the preceding quarter and $881,000 for the first quarter a year ago.

Noninterest expense totaled $12.1 million for the first quarter of 2021, compared to $11.7 million for the preceding quarter and $9.4 million for the first quarter a year ago. The quarterly increase reflects higher compensation expense, including salaries, commissions and benefits. Also impacting operating expenses for the first quarter was the implementation of new technology enhancements for loan and deposit account applications through the use of digital and mobile banking products.

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 March 31, 2021. Common Equity Tier 1 and Total Risk-Based Capital Ratios at March 31, 2021, were 15.1 % and 16.3%, respectively. The Company distributed $20.0 million to the Bank as Tier 1 capital.

Nonperforming loans decreased to $2.1 million at March 31, 2021, from $2.3 million at December 31, 2020. The percentage of the allowance for loan losses to nonperforming loans increased to 668.1%, at March 31, 2021, from 609.2% at December 31, 2020, and 622.4% at March 31, 2020. Classified loans increased $6.6 million during the current quarter to $14.1 million at March 31, 2021, due to one substandard commercial real estate loan. The allowance for loan losses as a percentage of total loans was 1.2% at March 31, 2021, which was unchanged compared to three months and one year earlier.

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 serving Clallam, Jefferson, Kitsap, Whatcom, and King counties in Washington, through its Seattle lending center and ten full-service branches. Our 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.



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

    March 31,
2021
    December 31,
2020
    March 31,
2020
    Three
Month
Change
    One Year
Change
 
Assets                                        
                                         
Cash and due from banks   $ 15,827     $ 13,508     $ 15,531       17.2 %     1.9 %
Interest-bearing deposits in banks     83,444       51,647       91,633       61.6       -8.9  
Investment securities available for sale, at fair value     393,495       364,296       317,520       8.0       23.9  
Loans held for sale     4,037       3,753       4,531       7.6       -10.9  
Loans receivable (net of allowance for loan losses of $14,265, $13,847, and $10,830)     1,156,439       1,141,969       899,154       1.3       28.6  
Federal Home Loan Bank (FHLB) stock, at cost     3,997       5,977       7,581       -33.1       -47.3  
Accrued interest receivable     6,251       6,966       4,124       -10.3       51.6  
Premises and equipment, net     14,795       14,785       14,231       0.1       4.0  
Mortgage servicing rights, net     2,309       2,120       843       8.9       173.9  
Bank-owned life insurance, net     38,596       38,353       30,355       0.6       27.1  
Prepaid expenses and other assets     17,103       10,975       11,436       55.8       49.6  
                                         
Total assets   $ 1,736,293     $ 1,654,349     $ 1,396,939       5.0 %     24.3 %
                                         
Liabilities and Shareholders' Equity                                        
                                         
Deposits   $ 1,434,807     $ 1,333,517     $ 1,063,905       7.6 %     34.9 %
FHLB advances     50,000       109,977       150,021       -54.5       -66.7  
Subordinated debt     39,310                   100.0       100.0  
Accrued interest payable     84       53       194       58.5       -56.7  
Accrued expenses and other liabilities     27,994       23,303       15,225       20.1       83.9  
Advances from borrowers for taxes and insurance     2,000       1,116       443       79.2       351.5  
                                         
Total liabilities     1,554,195       1,467,966       1,229,788       5.9       26.4  
                                         
Shareholders' Equity                                        
Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding                       n/a       n/a  
Common stock, $0.01 par value, authorized 75,000,000 shares; issued and outstanding 10,195,644 at March 31, 2021; issued and outstanding 10,247,185 at December 31, 2020; and issued and outstanding 10,432,963 at March 31, 2020     102       102       104       0.0       -1.9  
Additional paid-in capital     96,499       97,412       99,479       -0.9       -3.0  
Retained earnings     94,363       92,657       85,549       1.8       10.3  
Accumulated other comprehensive income (loss), net of tax     199       5,442       (8,256 )     -96.3       102.4  
Unearned employee stock ownership plan (ESOP) shares     (9,065 )     (9,230 )     (9,725 )     1.8       6.8  
                                         
Total shareholders' equity     182,098       186,383       167,151       -2.3       8.9  
                                         
Total liabilities and shareholders' equity   $ 1,736,293     $ 1,654,349     $ 1,396,939       5.0 %     24.3 %



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

    Quarter Ended                  
    March 31,
2021
    December 31,
2020
    March 31,
2020
    Three
Month
Change
    One Year
Change
 
INTEREST INCOME                                        
Interest and fees on loans receivable   $ 12,541     $ 11,894     $ 9,836       5.4 %     27.5 %
Interest on mortgage-backed and related securities     464       437       959       6.2       -51.6  
Interest on investment securities     1,570       1,581       1,069       -0.7       46.9  
Interest on deposits in banks     13       9       68       44.4       -80.9  
FHLB dividends     45       56       47       -19.6       -4.3  
Total interest income     14,633       13,977       11,979       4.7       22.2  
                                         
INTEREST EXPENSE                                        
Deposits     934       1,079       2,138       -13.4       -56.3  
FHLB advances     191       221       434       -13.6       -56.0  
Subordinated debt     25                   100.0       100.0  
Total interest expense     1,150       1,300       2,572       -11.5       -55.3  
                                         
Net interest income     13,483       12,677       9,407       6.4       43.3  
                                         
PROVISION FOR LOAN LOSSES     500       930       1,266       -46.2       -60.5  
                                         
Net interest income after provision for loan losses     12,983       11,747       8,141       10.5       59.5  
                                         
NONINTEREST INCOME                                        
Loan and deposit service fees     837       940       881       -11.0       -5.0  
Mortgage servicing fees, net of amortization     30       146       15       -79.5       100.0  
Net gain on sale of loans     1,337       2,324       383       -42.5       249.1  
Net gain on sale of investment securities           912       605       -100.0       -100.0  
Increase in cash surrender value of bank-owned life insurance     244       249       328       -2.0       -25.6  
Other income     256       67       106       282.1       141.5  
Total noninterest income     2,704       4,638       2,318       -41.7       16.7  
                                         
NONINTEREST EXPENSE                                        
Compensation and benefits     7,295       7,193       5,361       1.4       36.1  
Data processing     739       691       690       6.9       7.1  
Occupancy and equipment     1,623       1,663       1,351       -2.4       20.1  
Supplies, postage, and telephone     242       236       211       2.5       14.7  
Regulatory assessments and state taxes     261       271       174       -3.7       50.0  
Advertising     445       572       272       -22.2       63.6  
Professional fees     522       408       400       27.9       30.5  
FDIC insurance premium     148       89             66.3       100.0  
FHLB prepayment penalty                 210       n/a       -100.0  
Other     819       596       713       37.4       14.9  
Total noninterest expense     12,094       11,719       9,382       3.2       28.9  
                                         
INCOME BEFORE PROVISION FOR INCOME TAXES     3,593       4,666       1,077       -23.0       233.6  
                                         
PROVISION FOR INCOME TAXES     473       850       204       -44.4       131.9  
                                         
NET INCOME   $ 3,120     $ 3,816     $ 873       -18.2 %     257.4 %
                                         
Basic and diluted earnings per common share   $ 0.34     $ 0.41     $ 0.09       -17.1 %     277.8 %



FIRST NORTHWEST BANCORP AND SUBSIDIARY
Selected Financial Ratios and Other Data
(Unaudited)

    As of or For the Quarter Ended
    March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
Performance ratios: (1)                                        
Return on average assets     0.76 %     0.97 %     0.99 %     0.56 %     0.27 %
Return on average equity     6.70       8.32       8.22       4.60       1.94  
Average interest rate spread     3.38       3.35       3.22       2.90       2.86  
Net interest margin (2)     3.48       3.46       3.36       3.10       3.11  
Efficiency ratio (3)     74.7       67.7       60.9       72.3       80.0  
Average interest-earning assets to average interest-bearing liabilities     134.6       131.7       130.9       129.5       130.1  
Book value per common share   $ 17.86     $ 18.20     $ 17.65     $ 17.07     $ 16.02  
                                         
Asset quality ratios:                                        
Nonperforming assets to total assets at end of period (4)     0.1 %     0.1 %     0.2 %     0.2 %     0.2 %
Nonperforming loans to total loans (5)     0.2       0.2       0.3       0.3       0.2  
Allowance for loan losses to nonperforming loans (5)     668.1       609.2       419.9       360.8       622.4  
Allowance for loan losses to total loans     1.2       1.2       1.2       1.2       1.2  
Net charge-offs to average outstanding loans                              
                                         
Capital ratios (First Fed):                                        
Tier 1 leverage   11.2     10.3 %     10.5 %     10.9 %     11.8 %
Common equity Tier 1 capital   15.1       13.4       14.7       15.1       16.8  
Tier 1 risk-based   15.1       13.4       14.7       15.1       16.8  
Total risk-based   16.3       14.6       16.0       16.4       18.1  
                                         
Other Information:                                        
Average total assets   $ 1,645,806     $ 1,567,521     $ 1,488,723     $ 1,401,500     $ 1,287,529  
Average total loans     1,144,230       1,089,505       1,009,210       938,646       876,135  
Average interest-earning assets     1,549,316       1,466,103       1,401,090       1,305,437       1,208,314  
Average noninterest-bearing deposits     283,204       245,024       218,615       196,698       159,214  
Average interest-bearing deposits     1,092,114       1,032,608       1,009,041       936,968       849,196  
Average interest-bearing liabilities     58,629       80,731       61,244       71,170       79,659  
Average equity     186,171       183,424       178,887       172,009       179,614  
Average shares - basic     9,094,354       9,214,965       9,257,252       9,373,253       9,624,727  
Average shares - diluted     9,185,725       9,258,109       9,263,975       9,408,123       9,676,377  


(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)   Nonperforming assets consists of nonperforming loans (which include 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.


Contact:
Matthew P. Deines, President and Chief Executive Officer
Geri Bullard, EVP and Chief Financial Officer
First Northwest Bancorp
360-457-0461


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