First Northwest Bancorp Reports Third Quarter 2023 Earnings

المصدر: Nasdaq GlobeNewswire / 26 أكتوبر 2023 06:00:01 America/Chicago

PORT ANGELES, Wash., Oct. 26, 2023 (GLOBE NEWSWIRE) --

Matthew P. Deines, President and CEO, comments on financial results:

"The Company continues to manage through this historic interest rate environment by remaining focused on deepening existing relationships and acquiring new customers," said Matthew P. Deines, President and CEO. "We are also maintaining our commitment to reducing non-interest expense, which bore out in lower operating expenses and an improved efficiency ratio this quarter compared to the linked quarter. We celebrated our 100th anniversary in style during the quarter at an event in Port Angeles, which highlighted our history, strength and commitment to our communities. We also enjoyed great music, culture and food with friends and family."

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 24, 2023, to shareholders of record as of the close of business on November 10, 2023.

FINANCIAL HIGHLIGHTS	3Q 23			2Q 23			3Q 22			YTD Highlights
OPERATING RESULTS (in millions)										●	Deposit growth year-to-date of $93.5 million
Net income	$	2.5		$	1.8		$	4.3		▪	Retail growth $57.8 million, or 4.0%
Pre-provision net interest income		15.0			16.0			18.2		▪	Brokered growth $35.7 million, or 26.7%
Noninterest expense		14.4			15.2			15.4
Total revenue, net of interest expense*		17.9			17.7			20.5		●	Loan growth year-to-date of $87.4 million,
PER SHARE DATA											or 6%
Basic and diluted earnings	$	0.28		$	0.20		$	0.47
Book value		16.20			16.56			15.69		●	Deposit insurance coverage update:
Tangible book value *		16.03			16.39			15.50		▪	Estimated uninsured business and
BALANCE SHEET (in millions)											consumer deposits totaling $257.3 million,
Total assets	$	2,154		$	2,163		$	2,091			or approximately 16% of total deposits
Total loans		1,635			1,638			1,537			40% of uninsured in urban areas
Total deposits		1,658			1,653			1,605			60% of uninsured in rural areas
Total shareholders' equity		156			160			157		▪	Estimated uninsured public fund deposits
ASSET QUALITY											to total deposits of 7% (fully collateralized)
Net charge-off ratio		0.30	%		0.10	%		0.06	%	▪	Estimated insured deposits to total
Nonperforming assets to total assets		0.11			0.12			0.17			deposits of 77%
Allowance for credit losses on loans										▪	Available borrowing capacity to
to total loans		1.04			1.06			1.06			uninsured deposits of 115%
Nonperforming loan coverage ratio		714			677			463
SELECTED RATIOS										●	Liquidity is closely monitored with ample
Return on average assets		0.46	%		0.34	%		0.85	%		on and off balance sheet liquidity with
Return on average equity		6.17			4.41			10.12			coverage of uninsured deposits at 1.3x.
Return on average tangible equity *		6.23			4.47			10.23
Net interest margin		2.97			3.25			3.88		●	Asset quality:
Efficiency ratio		80.52			86.01			74.86			Credit metrics remain stable. Past due and
Bank common equity tier 1 (CETI) ratio		13.43			13.10			13.13			nonperforming balances remain low.
Bank total risk-based capital ratio		14.38			14.08			14.16

^* See reconciliation of Non-GAAP Financial Measures later in this release.

First Northwest Bancorp (Nasdaq: FNWB) ("First Northwest" or "Company") today reported quarterly net income of $2.5 million for the third quarter of 2023, compared to $1.8 million for the second quarter of 2023, and $4.3 million for the third quarter of 2022. Basic and diluted earnings per share were $0.28 for the third quarter of 2023, compared to $0.20 for the second quarter of 2023, and $0.47 for the third quarter of 2022. In the third quarter of 2023, the Company generated a return on average assets ("ROAA") of 0.46%, a return on average equity ("ROAE") of 6.17%, and a return on average tangible common equity* of 6.23%. Results in the third quarter of 2023 are reflective of higher noninterest income and lower noninterest expense, partially offset by higher funding costs. Income before provision for income taxes was $3.1 million for the current quarter, compared to $2.2 million for the preceding quarter, an increase of $931,000, or 42.8% and decreased $1.3 million compared to $4.4 million for the third quarter of 2022.

Net Interest Income
Total interest income increased $360,000 to $25.8 million for the third quarter of 2023, compared to $25.5 million in the previous quarter, and increased $5.0 million from $20.9 million in the third quarter of 2022. Interest income increased in the current quarter due to an increased volume of loans and higher yields on investments and interest-earning deposits in banks. Interest and fees on loans increased year-over-year, as the Company's banking subsidiary, First Fed Bank ("First Fed" or "Bank"), grew the loan portfolio through draws on new and existing lines of credit, originations of multi-family real estate loans and auto and manufactured home loan purchases. Northpointe Mortgage Purchase Program ("Northpointe MPP") participation also provided additional loan interest income. Loan yields increased over the prior year due to higher rates on new originations as well as the repricing of variable rate loans tied to the Prime Rate or other indices.

Total interest expense was $10.9 million for the third quarter of 2023, compared to $9.5 million in the second quarter of 2023 and $2.7 million in the third quarter a year ago. Current quarter interest expense was higher due to a 31 basis point increase in the cost of deposits to 1.85% at September 30, 2023, from 1.54% at the prior quarter end. The increase over the third quarter of 2022 was the result of a 153 basis point increase in the cost of deposits from 0.32% in the third quarter one year ago, along with higher volumes and rates paid on short-term FHLB advances and certificates of deposit ("CDs"). A shift in the deposit mix from transaction and money market accounts to a higher volume of savings accounts and CDs, primarily promotional, resulted in higher costs of deposits. Measured reliance on brokered CDs also contributed to additional deposit costs.

Net interest income before provision for credit losses for the third quarter of 2023 decreased 6.5% to $15.0 million, compared to $16.0 million for the preceding quarter, and decreased 17.9% from the third quarter one year ago.

The Company recorded a $371,000 provision for credit losses in the third quarter of 2023, reflecting additional charge-offs from the Splash unsecured consumer loan program, partially offset by a provision recovery due to lower unfunded commitments at quarter end. This compares to a credit loss provision of $300,000 for the preceding quarter. A loan loss provision of $750,000 was recorded for the third quarter of 2022, which was estimated using the incurred loss method based on historical loss trends combined with qualitative adjustments.

The net interest margin decreased to 2.97% for the third quarter of 2023, from 3.25% for the prior quarter, and decreased 91 basis points compared to 3.88% for the third quarter of 2022. Decreases from both the prior quarter and the prior year are due to higher funding costs for both deposits and borrowed funds. While increases in the cost of funding are currently outpacing the growth of the yield on interest-earning assets, the Company has taken measures to combat interest rate compression. Organic loan production is augmented with higher yielding purchased loans through established relationships with loan originators. The Bank's fair value hedging agreement has boosted interest income and new loan originations are priced to account for the increasing cost of funds.

The yield on average earning assets of 5.14% for the third quarter of 2023 decreased 3 basis points compared to the second quarter of 2023 and increased 69 basis points from 4.45% for the third quarter of 2022. Higher loan rates at origination and increased yields on variable-rate loans were offset by a reclassification from interest income to noninterest income of funds recognized in the second quarter of 2023. The year-over-year increase was primarily due to higher average loan balances augmented by increases in yields, which were positively impacted by the rising rate environment and overall improvements in the mix of interest-earning assets.

The cost of average interest-bearing liabilities increased to 2.60% for the third quarter of 2023, compared to 2.33% for the second quarter of 2023, and increased from 0.73% for the third quarter of 2022. Total cost of funds increased to 2.23% for the third quarter of 2023 from 1.98% in the prior quarter and increased from 0.59% for the third quarter of 2022. Current quarter increases were due to higher costs on interest-bearing deposits and advances in addition to increases in average CD and savings balances.

The increase over the same quarter last year was driven by higher rates paid on deposits and borrowings. The Company attracted and retained funding through the use of promotional products and a focus on outbound sales efforts. The mix of retail deposit balances shifted from no or low-cost transaction accounts towards higher cost term certificate and savings products. Retail CDs represented 27.6%, 25.8% and 15.2% of retail deposits at September 30, 2023, June 30, 2023 and September 30, 2022, respectively. Average interest-bearing deposit balances increased $43.7 million, or 3.3%, to $1.38 billion for the third quarter of 2023 compared to $1.33 billion for the second quarter of 2023 and increased $153.1 million, or 12.5%, compared to $1.22 billion for the third quarter of 2022.

Selected Yields	3Q 23			2Q 23			1Q 23			4Q 22			3Q 22
Loan yield		5.31	%		5.38	%		5.16	%		5.22	%		4.75	%
Investment securities yield		4.18			4.09			3.93			3.71			3.21
Cost of interest-bearing deposits		2.22			1.87			1.37			0.78			0.41
Cost of total deposits		1.85			1.54			1.12			0.62			0.32
Cost of borrowed funds		4.45			4.36			3.92			3.30			2.50
Net interest spread		2.54			2.84			3.13			3.72			3.72
Net interest margin		2.97			3.25			3.46			3.96			3.88

Noninterest Income
Noninterest income increased 69.7% to $2.9 million for the third quarter of 2023 from $1.7 million for the second quarter of 2023, primarily due to a $750,000 reclassification of funds recouped on Splash charge-offs and an increase in the valuation of servicing rights on sold loans of $239,000. Noninterest income increased 24.4% from $2.3 million the same quarter one year ago, due to the Splash reclassification, offset by decreases in the servicing rights valuation, gain on sale of Small Business Administration ("SBA") loans and loan fee income. Saleable mortgage loan production continues to be hindered by reduced refinancing activity due to rising market rates on mortgage loans compared to the prior year.

Noninterest income declined $10,000 to $6.95 million for the nine months ended September 30, 2023, compared to $6.96 million for the nine months ended September 30, 2022.

Noninterest Income
$ in thousands	3Q 23		2Q 23			1Q 23		4Q 22		3Q 22
Loan and deposit service fees	$	1,068	$	1,064		$	1,141		1,163	$	1,302
Sold loan servicing fees and servicing rights mark-to-market		98		(191	)		493		202		206
Net gain on sale of loans		171		58			176		55		285
Increase in cash surrender value of bank-owned life insurance		252		190			226		230		221
Income from death benefit on bank-owned life insurance, net		—		—			—		1,489		—
Other income		1,315		590			298		229		320
Total noninterest income	$	2,904	$	1,711		$	2,334	$	3,368	$	2,334

Noninterest Expense
Noninterest expense totaled $14.4 million for the third quarter of 2023, compared to $15.2 million for the preceding quarter and $15.4 million for the third quarter a year ago. Decreases in marketing, payroll tax, medical insurance, software licensing and shareholder communications during the current quarter were partially offset by losses due to fraud. The decrease in expenses compared to the third quarter of 2022 reflects a $1.1 million reduction related to Quin Ventures, Inc. ("Quin Ventures") compensation, advertising and customer acquisition costs, and occupancy expenses, as well as decreases in Bank incentive compensation paid and non-recurring compensation expense, partially offset by higher Bank professional fees and FDIC insurance premiums. The Company continues to focus on managing expenses, with a focus on controlling compensation expense, and reducing advertising and other discretionary spending.

Noninterest expense decreased 5.7% to $44.5 million for the nine months ended September 30, 2023, compared to $47.2 million for the nine months ended September 30, 2022. Compensation expense decreased $3.8 million primarily due to lower commissions, payroll taxes, and medical insurance expenses. Quin Ventures expenses included for the nine months ended September 30, 2023, totaled $320,000 compared to $3.9 million in the nine months ended September 30, 2022.

Noninterest Expense
$ in thousands	3Q 23			2Q 23			1Q 23			4Q 22			3Q 22
Compensation and benefits	$	7,795		$	8,180		$	7,837		$	8,357		$	9,045
Data processing		1,945			2,080			2,038			2,119			1,778
Occupancy and equipment		1,173			1,214			1,209			1,300			1,499
Supplies, postage, and telephone		292			435			355			333			322
Regulatory assessments and state taxes		446			424			389			372			365
Advertising		501			929			1,041			486			645
Professional fees		929			884			806			762			695
FDIC insurance premium		369			313			257			235			219
Other expense		926			758			939			1,179			807
Total noninterest expense	$	14,376		$	15,217		$	14,871		$	15,143		$	15,375

Efficiency ratio		80.52	%		86.01	%		79.78	%		67.91	%		74.86	%

Investment Securities
Investment securities decreased $12.6 million, or 3.9%, to $309.3 million at September 30, 2023, compared to $322.0 million three months earlier, and decreased $20.1 million compared to $329.4 million at September 30, 2022. The market value of the portfolio decreased $8.3 million during the third quarter of 2023, primarily driven by an increase in long-term interest rates. At September 30, 2023, municipal bonds totaled $94.0 million and comprised the largest portion of the investment portfolio at 30.4%. Non-agency issued mortgage-backed securities ("MBS non-agency") were the second largest segment, totaling $90.0 million, or 29.1%, of the portfolio at quarter end. Included in MBS non-agency are $58.7 million of commercial mortgaged-backed securities ("CMBS"), of which 85.6% are in "A" tranches. The majority of the remaining 14.4% are in "B" tranches with one investment in a "C" tranche. Our largest exposure is to long-term care facilities, which makes up 53.9%, or $31.7 million, of our private label CMBS securities. All of the CMBS bonds have credit enhancements that further reduce risk of loss on these investments.

The estimated average life of the securities portfolio was approximately 7.7 years, compared to 7.8 years in the prior quarter and 8.4 years in the third quarter of 2022. The effective duration of the portfolio was approximately 4.9 years, compared to 5.2 years in the prior quarter and 5.1 years at the end of the third quarter of 2022.

Investment Securities Available for Sale, at Fair Value
$ in thousands	3Q 23		2Q 23		1Q 23		4Q 22		3Q 22
Municipal bonds	$	93,995	$	100,503	$	101,910	$	98,050	$	96,130
U.S. Treasury notes		2,377		2,364		2,390		2,364		2,355
International agency issued bonds (Agency bonds)		1,703		1,717		1,745		1,702		1,683
Corporate issued debt securities (Corporate debt):
Senior positions		16,975		16,934		17,025		16,828		16,571
Subordinated bank notes		37,360		36,740		38,092		38,671		39,594
Mortgage-backed securities:
U.S. government agency issued mortgage-backed securities (MBS agency)		66,946		71,565		74,946		75,648		78,231
Non-agency issued mortgage-backed securities (MBS non-agency)		89,968		92,140		92,978		93,306		94,872
Total securities available for sale, at fair value	$	309,324	$	321,963	$	329,086	$	326,569	$	329,436

Loans and Unfunded Loan Commitments
Net loans, excluding loans held for sale, decreased $2.8 million, or 0.2%, to $1.62 billion at September 30, 2023, from $1.62 billion at June 30, 2023, and increased $96.9 million, or 6.4%, from $1.52 billion one year ago. Multi-family loans increased $28.9 million during the current quarter. The increase was the result of new originations totaling $17.2 million and $13.0 million of construction loans converting into permanent amortizing loans, partially offset by scheduled payments. One-to-four family loans increased $4.4 million during the current quarter as a result of $14.9 million in residential construction loans that converted to permanent amortizing loans, partially offset by payments received. Commercial real estate increased $5.5 million during the current quarter compared to the previous quarter as originations exceeded payoffs and scheduled payments. Home equity loans also increased $5.5 million over the previous quarter due to draws on new and existing commitments. Commercial business loans decreased $28.8 million, mainly from a reduction in our Northpointe MPP participation from $23.9 million three months prior to $162,000 at the current quarter end along with repayment on existing lines of credit. Construction loans decreased $13.6 million during the quarter, with $25.4 million converting into fully amortizing loans, partially offset by draws on new and existing loans. Auto and other consumer loans decreased $5.2 million during the current quarter as payoffs and scheduled payments exceeded originations.

The Company originated $8.3 million in residential mortgages during the third quarter of 2023 and sold $9.7 million, with an average gross margin on sale of mortgage loans of approximately 2.02%. This production compares to residential mortgage originations of $10.7 million in the preceding quarter with sales of $6.4 million, with an average gross margin of 2.00%. While single-family home inventory increased in the third quarter of 2023, higher market rates on mortgage loans continued to hinder saleable mortgage loan production. We have expanded our secondary market outlets and changed our portfolio pricing in an effort to improve saleable loan production. New single-family residence construction loan commitments totaled $6.5 million in the third quarter, compared to $4.8 million in the preceding quarter.

Loans by Collateral and Unfunded Commitments
$ in thousands	3Q 23		2Q 23		1Q 23		4Q 22		3Q 22
One-to-four family construction	$	72,991	$	74,787	$	65,770	$	63,021	$	58,038
All other construction and land		71,092		81,968		95,769		130,588		157,527
One-to-four family first mortgage		409,207		428,879		394,595		384,255		374,309
One-to-four family junior liens		12,859		11,956		9,140		8,219		7,244
One-to-four family revolving open-end		38,413		33,658		30,473		29,909		27,496
Commercial real estate, owner occupied:
Health care		22,677		23,157		23,311		23,463		23,909
Office		18,599		18,797		22,246		22,583		23,002
Warehouse		14,890		15,158		16,782		20,411		18,479
Other		57,414		60,054		52,212		47,778		38,282
Commercial real estate, non-owner occupied:
Office		53,879		54,926		58,711		59,216		60,655
Retail		51,466		51,824		52,175		54,800		53,186
Hospitality		61,339		53,416		45,978		46,349		44,359
Other		96,083		90,870		93,207		89,047		98,386
Multi-family residential		325,338		296,398		284,699		252,765		242,509
Commercial business loans		75,068		80,079		80,825		73,963		69,626
Commercial agriculture and fishing loans		4,437		7,844		1,829		1,847		938
State and political subdivision obligations		439		439		439		439		472
Consumer automobile loans		134,695		137,860		136,540		136,213		134,221
Consumer loans secured by other assets		113,685		115,646		114,343		102,333		104,272
Consumer loans unsecured		407		444		420		352		481
Total loans	$	1,634,978	$	1,638,160	$	1,579,464	$	1,547,551	$	1,537,391

Unfunded loan commitments	$	154,722	$	168,668	$	202,720	$	225,836	$	231,208

Deposits
Total deposits increased $4.6 million, to $1.66 billion at September 30, 2023, compared to $1.65 billion at June 30, 2023, and increased $52.5 million, or 3.3%, compared to $1.61 billion one year ago. Increases in consumer CDs of $27.7 million, business money market account balances of $12.1 million, business CD balances of $4.0 million, and consumer savings account balances of $2.1 million, were offset by decreases in consumer money market account balances of $13.7 million, brokered CDs of $10.0 million, business savings account balances of $9.2 million, business demand account balances of $7.3 million, public fund CDs of $1.0 million, and consumer demand account balances of $741,000 during the third quarter of 2023. Decreases in certain categories were driven by customers seeking higher rates and spending of excess savings accumulated in 2020 and 2021. The current rate environment has contributed to greater competition for deposits with additional deposit rate specials offered to attract new funds.

The Company estimates that 23% of total deposit balances were uninsured at September 30, 2023. Approximately 15% of total deposits were uninsured business and consumer deposits with the remaining 8% consisting of uninsured public fund balances totaling $123.9 million. Uninsured public fund balances are fully collateralized. The Bank holds an FHLB letter of credit as part of our participation in the Washington Public Deposit Protection Commission program which covers $104.7 million of related deposit balances. The remaining $19.2 million is fully covered through pledged securities. Consumer deposits make up 61% of total deposits with an average balance of approximately $24,000 per account.

Deposits
$ in thousands	3Q 23			2Q 23			1Q 23			4Q 22			3Q 22
Noninterest-bearing demand deposits	$	269,800		$	280,475		$	292,119		$	315,083		$	342,808
Interest-bearing demand deposits		182,361			179,029			189,187			193,558			192,504
Money market accounts		372,706			374,269			402,760			473,009			519,018
Savings accounts		253,182			260,279			242,117			200,920			196,780
Certificates of deposit, retail		410,136			379,484			333,510			247,824			224,574
Certificates of deposit, brokered		169,577			179,586			134,515			133,861			129,551
Total deposits	$	1,657,762		$	1,653,122		$	1,594,208		$	1,564,255		$	1,605,235

Public fund and tribal deposits included in total deposits	$	128,627		$	130,974		$	119,969		$	103,662		$	113,690
Total loans to total deposits		99	%		99	%		99	%		99	%		96	%

Deposit Mix	3Q 23			2Q 23			1Q 23			4Q 22			3Q 22
Noninterest-bearing demand deposits		16.3	%		17.0	%		18.3	%		20.1	%		21.4	%
Interest-bearing demand deposits		11.0			10.8			11.9			12.4			12.0
Money market accounts		22.5			22.6			25.3			30.3			32.2
Savings accounts		15.3			15.7			15.2			12.8			12.3
Certificates of deposit, retail		24.7			23.0			20.9			15.8			14.0
Certificates of deposit, brokered		10.2			10.9			8.4			8.6			8.1

Cost of Deposits for the Quarter Ended	3Q 23			2Q 23			1Q 23			4Q 22			3Q 22
Interest-bearing demand deposits		0.46	%		0.45	%		0.42	%		0.17	%		0.03	%
Money market accounts		1.22			0.99			0.73			0.49			0.33
Savings accounts		1.42			1.22			0.70			0.17			0.05
Certificates of deposit, retail		3.52			3.25			2.59			1.65			1.05
Certificates of deposit, brokered		4.31			3.44			2.99			2.15			1.08
Cost of total deposits		1.85			1.54			1.12			0.62			0.32

Asset Quality
Nonperforming loans were $2.4 million at September 30, 2023, a decrease of $180,000 from June 30, 2023, related to decreased delinquencies in Triad purchased manufactured home loans and home equity lines of credit, partially offset by a newly delinquent single-family residential loan and a Woodside auto loan. The percentage of the allowance for credit losses on loans to nonperforming loans increased to 714% at September 30, 2023, from 677% at June 30, 2023, and from 463% at September 30, 2022. Classified loans increased $245,000 to $23.0 million at September 30, 2023, due to the downgrades of a $119,000 commercial business loan, a $110,00 home equity loan and $196,000 in additional funds disbursed on a substandard commercial construction loan during the third quarter.

The allowance for credit losses on loans as a percentage of total loans was 1.04% at September 30, 2023, decreasing from 1.06% at the prior quarter end and from 1.06% reported one year earlier. The current quarter 2 basis point decrease can be attributed to changes in the loan mix with a shift in balances to amortizing loans, which carry lower reserve estimates, and a decrease in the qualitative factor adjustment applied to Woodside auto loans. The decrease in reserve calculation for the allowance for credit losses on loans was offset by net charge-offs.

$ in thousands	3Q 23			2Q 23			1Q 23			4Q 22			3Q 22
Allowance for credit losses on loans to total loans		1.04	%		1.06	%		1.10	%		1.04	%		1.06	%
Allowance for credit losses on loans to nonperforming loans		714			677			661			900			463
Nonperforming loans to total loans		0.15			0.16			0.17			0.12			0.22
Net charge-off ratio (annualized)		0.30			0.10			0.25			0.11			0.06

Total nonperforming loans	$	2,374		$	2,554		$	2,633		$	1,790		$	3,517
Reserve for unfunded commitments	$	828		$	1,336		$	1,336		$	325		$	331

Capital
Total shareholders’ equity decreased to $156.1 million at September 30, 2023, compared to $159.6 million three months earlier, due to a decrease in the fair market value of the available-for-sale investment securities portfolio, net of taxes, of $6.5 million, dividends declared of $675,000 and share repurchases totaling $12,000, partially offset by net income of $2.5 million and a $727,000 increase in the fair market value of derivatives, net of taxes. Bond values continue to be impacted by the higher rate environment.

Tangible book value per common share* was $16.03 at September 30, 2023, compared to $16.39 at June 30, 2023, and $15.50 at September 30, 2022. Book value per common share was $16.20 at September 30, 2023, compared to $16.56 at June 30, 2023, and $15.69 at September 30, 2022.

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, 2023. Common Equity Tier 1 and Total Risk-Based Capital Ratios at September 30, 2023, were 13.4% and 14.4%, respectively.

	3Q 23			2Q 23			1Q 23			4Q 22			3Q 22
Equity to total assets		7.25	%		7.38	%		7.38	%		7.75	%		7.49	%
Tangible common equity ratio *		7.17			7.31			7.30			7.67			7.40
Capital ratios (First Fed Bank):
Tier 1 leverage		10.12			10.16			10.41			10.41			10.50
Common equity Tier 1 capital		13.43			13.10			13.34			13.40			13.13
Tier 1 risk-based		13.43			13.10			13.34			13.40			13.13
Total risk-based		14.38			14.08			14.35			14.42			14.16

Share Repurchase Program and Cash Dividend
First Northwest continued to return capital to our shareholders through cash dividends and share repurchases during the third quarter of 2023. We repurchased 1,073 shares of common stock under the Company's October 2020 stock repurchase plan at an average price of $11.10 per share for a total of $12,000 during the quarter ended September 30, 2023, leaving 226,337 shares remaining under the plan. In addition, the Company paid cash dividends totaling $671,000 in the third quarter of 2023.

^{__________________
*} See reconciliation of Non-GAAP Financial Measures later in this release.

Awards/Recognition

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

In October 2023, the First Fed team was honored to bring home the Gold for Best Bank in the Best of the Northwest survey hosted by Bellingham Alive for the second year in a row.

In September 2023, the First Fed team was recognized in the 2023 Best of Olympic Peninsula surveys, winning Best Bank and Best Financial Advisor in Clallam County. First Fed was also a finalist for Best Bank in Jefferson County, Best Employer in Kitsap County, and Best Bank and Best Financial Institution in Bainbridge.

In June 2023, First Fed was named on the Puget Sound Business Journal’s Best Workplaces list. First Fed has been recognized as one the top 100 workplaces in Washington, as voted for two years in row by each company’s own employees.

In May 2023, 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 last year. First Fed was ranked #1 in the medium-sized company category in 2023 and was ranked #3 in the same category in 2022.

In March 2023, First Fed won “Best Bank” in Cascadia Daily News 2023 Readers' Choice. It was the first year that First Fed had participated in this Whatcom County poll.

First Fed has been rated a 5-star bank by Bauer Financial, a leading independent bank and credit union rating and research firm. This top rating indicates that First Fed is one of the strongest banks in the nation based on capital, loan quality and other detailed performance criteria.

About the Company

First Northwest Bancorp (Nasdaq: FNWB) is a financial holding company engaged in investment activities including the business of its subsidiary, First Fed Bank. First Fed is a Pacific Northwest-based financial institution which has served its customers and communities since 1923. Currently First Fed has 16 locations in Washington state including 12 full-service branches. First Fed’s business and operating strategy is focused on building sustainable earnings by delivering a full array of financial products and services for individuals, small businesses, non-profit organizations, and commercial customers. In 2022, First Northwest made an investment in The Meriwether Group, LLC, a boutique investment banking and accelerator firm. Additionally, First Northwest focuses on strategic partnerships to provide modern financial services such as digital payments and marketplace lending. First Northwest Bancorp was incorporated in 2012 and completed its initial public offering in 2015 under the ticker symbol FNWB. The Company 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 of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; pressures on liquidity, including as a result of withdrawals of deposits or declines in the value of our investment portfolio; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company’s 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 SEC’s 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 2023 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Company’s operations and stock price performance.

For More Information Contact:
Matthew P. Deines, President and Chief Executive Officer
Geri Bullard, EVP, Chief Financial Officer and Chief Operating Officer
IRGroup@ourfirstfed.com
360-457-0461

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

	September 30, 2023			June 30, 2023			September 30, 2022			Three Month Change			One Year Change
ASSETS
Cash and due from banks	$	20,609		$	19,294		$	22,784			6.8	%		-9.5	%
Interest-earning deposits in banks		63,277			59,008			80,879			7.2			-21.8
Investment securities available for sale, at fair value		309,324			321,963			329,436			-3.9			-6.1
Loans held for sale		689			2,049			263			-66.4			162.0
Loans receivable (net of allowance for credit losses on loans $16,945, $17,297, and $16,273)		1,618,033			1,620,863			1,521,118			-0.2			6.4
Federal Home Loan Bank (FHLB) stock, at cost		12,621			12,621			11,961			0.0			5.5
Accrued interest receivable		8,093			7,480			6,655			8.2			21.6
Premises and equipment, net		17,954			18,140			20,841			-1.0			-13.9
Servicing rights on sold loans, at fair value		3,729			3,825			3,872			-2.5			-3.7
Bank-owned life insurance, net		40,318			40,066			40,003			0.6			0.8
Equity and partnership investments		14,623			14,569			13,990			0.4			4.5
Goodwill and other intangible assets, net		1,087			1,087			1,173			0.0			-7.3
Deferred tax asset, net		16,611			15,031			12,689			10.5			30.9
Prepaid expenses and other assets		26,577			26,882			25,777			-1.1			3.1
Total assets	$	2,153,545		$	2,162,878		$	2,091,441			-0.4	%		3.0	%

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	$	1,657,762		$	1,653,122		$	1,605,235			0.3	%		3.3	%
Borrowings		300,416			303,397			292,338			-1.0			2.8
Accrued interest payable		2,276			1,367			105			66.5			2,067.6
Accrued expenses and other liabilities		34,651			44,286			34,940			-21.8			-0.8
Advances from borrowers for taxes and insurance		2,375			1,149			2,224			106.7			6.8
Total liabilities		1,997,480			2,003,321			1,934,842			-0.3			3.2

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 9,630,735 at September 30, 2023; issued and outstanding 9,633,496 at June 30, 2023; and issued and outstanding 9,978,041 at September 30, 2022		96			96			100			0.0			-4.0
Additional paid-in capital		95,658			95,360			97,924			0.3			-2.3
Retained earnings		113,579			111,750			110,107			1.6			3.2
Accumulated other comprehensive loss, net of tax		(45,850	)		(40,066	)		(41,023	)		-14.4			-11.8
Unearned employee stock ownership plan (ESOP) shares		(7,418	)		(7,583	)		(8,077	)		2.2			8.2
Total parent's shareholders' equity		156,065			159,557			159,031			-2.2			-1.9
Noncontrolling interest in Quin Ventures, Inc.		—			—			(2,432	)		n/a			100.0
Total shareholders' equity		156,065			159,557			156,599			-2.2			-0.3
Total liabilities and shareholders' equity	$	2,153,545		$	2,162,878		$	2,091,441			-0.4	%		3.0	%

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

	Quarter Ended
	September 30, 2023		June 30, 2023			September 30, 2022		Three Month Change			One Year Change
INTEREST INCOME
Interest and fees on loans receivable	$	21,728	$	21,299		$	17,778		2.0	%		22.2	%
Interest on investment securities		3,368		3,336			2,817		1.0			19.6
Interest on deposits in banks		524		617			118		-15.1			344.1
FHLB dividends		214		222			142		-3.6			50.7
Total interest income		25,834		25,474			20,855		1.4			23.9
INTEREST EXPENSE
Deposits		7,699		6,209			1,251		24.0			515.4
Borrowings		3,185		3,283			1,400		-3.0			127.5
Total interest expense		10,884		9,492			2,651		14.7			310.6
Net interest income		14,950		15,982			18,204		-6.5			-17.9
Provision for credit losses		371		300			750		23.7			-50.5
Net interest income after provision for credit losses		14,579		15,682			17,454		-7.0			-16.5
NONINTEREST INCOME
Loan and deposit service fees		1,068		1,064			1,302		0.4			-18.0
Sold loan servicing fees and servicing rights mark-to-market		98		(191	)		206		151.3			-52.4
Net gain on sale of loans		171		58			285		194.8			-40.0
Increase in cash surrender value of bank-owned life insurance		252		190			221		32.6			14.0
Other income		1,315		590			320		122.9			310.9
Total noninterest income		2,904		1,711			2,334		69.7			24.4
NONINTEREST EXPENSE
Compensation and benefits		7,795		8,180			9,045		-4.7			-13.8
Data processing		1,945		2,080			1,778		-6.5			9.4
Occupancy and equipment		1,173		1,214			1,499		-3.4			-21.7
Supplies, postage, and telephone		292		435			322		-32.9			-9.3
Regulatory assessments and state taxes		446		424			365		5.2			22.2
Advertising		501		929			645		-46.1			-22.3
Professional fees		929		884			695		5.1			33.7
FDIC insurance premium		369		313			219		17.9			68.5
Other expense		926		758			807		22.2			14.7
Total noninterest expense		14,376		15,217			15,375		-5.5			-6.5
Income before provision for income taxes		3,107		2,176			4,413		42.8			-29.6
Provision for income taxes		603		475			818		26.9			-26.3
Net income		2,504		1,701			3,595		47.2			-30.3
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.		—		75			696		-100.0			-100.0
Net income attributable to parent	$	2,504	$	1,776		$	4,291		41.0	%		-41.6	%

Basic and diluted earnings per common share	$	0.28	$	0.20		$	0.47		40.0	%		-40.4	%

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

	Nine Months Ended September 30,				Percent
	2023		2022		Change
INTEREST INCOME
Interest and fees on loans receivable	$	62,531	$	48,395		29.2	%
Interest on investment securities		9,886		7,807		26.6
Interest on deposits in banks		1,545		202		664.9
FHLB dividends		628		313		100.6
Total interest income		74,590		56,717		31.5
INTEREST EXPENSE
Deposits		18,261		2,764		560.7
Borrowings		9,092		3,020		201.1
Total interest expense		27,353		5,784		372.9
Net interest income		47,237		50,933		-7.3
Provision for credit losses		171		1,250		-86.3
Net interest income after provision for credit losses		47,066		49,683		-5.3
NONINTEREST INCOME
Loan and deposit service fees		3,273		3,566		-8.2
Sold loan servicing fees and servicing rights mark-to-market		400		665		-39.8
Net gain on sale of loans		405		769		-47.3
Net gain on sale of investment securities		—		118		-100.0
Increase in cash surrender value of bank-owned life insurance		668		686		-2.6
Other income		2,203		1,155		90.7
Total noninterest income		6,949		6,959		-0.1
NONINTEREST EXPENSE
Compensation and benefits		23,812		27,583		-13.7
Data processing		6,063		5,420		11.9
Occupancy and equipment		3,596		4,098		-12.2
Supplies, postage, and telephone		1,082		1,043		3.7
Regulatory assessments and state taxes		1,259		1,167		7.9
Advertising		2,471		2,802		-11.8
Professional fees		2,619		1,883		39.1
FDIC insurance premium		939		653		43.8
Other		2,623		2,520		4.1
Total noninterest expense		44,464		47,169		-5.7
Income before provision for income taxes		9,551		9,473		0.8
Provision for income taxes		1,903		1,839		3.5
Net income		7,648		7,634		0.2
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.		160		1,951		-91.8
Net income attributable to parent	$	7,808	$	9,585		-18.5	%

Basic and diluted earnings per common share	$	0.87	$	1.04		-16.3	%

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

	As of or For the Quarter Ended
	September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
Performance ratios: (1)
Return on average assets		0.46	%		0.34	%		0.70	%		1.18	%		0.85	%
Return on average equity		6.17			4.41			8.98			15.26			10.12
Average interest rate spread		2.54			2.84			3.14			3.72			3.72
Net interest margin (2)		2.97			3.25			3.46			3.96			3.88
Efficiency ratio (3)		80.5			86.0			79.8			67.9			74.9
Equity to total assets		7.25			7.38			7.38			7.75			7.49
Average interest-earning assets to average interest-bearing liabilities		120.0			120.7			122.4			124.8			128.6
Book value per common share	$	16.20		$	16.56		$	16.57		$	16.31		$	15.69

Tangible performance ratios:
Tangible assets (4)	$	2,151,849		$	2,161,235		$	2,170,202		$	2,040,267		$	2,089,454
Tangible common equity (4)		154,369			157,914			158,444			156,479			154,612
Tangible common equity ratio (4)		7.17	%		7.31	%		7.30	%		7.67	%		7.40	%
Return on tangible common equity (4)		6.23			4.47			9.08			15.45			10.23
Tangible book value per common share (4)	$	16.03		$	16.39		$	16.38		$	16.13		$	15.50

Asset quality ratios:
Nonperforming assets to total assets at end of period (5)		0.11	%		0.12	%		0.12	%		0.09	%		0.17	%
Nonperforming loans to total loans (6)		0.15			0.16			0.17			0.12			0.22
Allowance for credit losses on loans to nonperforming loans (6)		713.77			677.25			660.69			900.34			462.70
Allowance for credit losses on loans to total loans		1.04			1.06			1.10			1.04			1.06
Annualized net charge-offs to average outstanding loans		0.30			0.10			0.25			0.11			0.06

Capital ratios (First Fed Bank):
Tier 1 leverage		10.1	%		10.2	%		10.4	%		10.4	%		10.5	%
Common equity Tier 1 capital		13.4			13.1			13.3			13.4			13.1
Tier 1 risk-based		13.4			13.1			13.3			13.4			13.1
Total risk-based		14.4			14.1			14.4			14.4			14.2

Other Information:
Average total assets	$	2,139,734		$	2,118,014		$	2,050,210		$	2,039,016		$	1,996,765
Average total loans		1,641,206			1,605,133			1,552,299			1,554,276			1,500,508
Average interest-earning assets		1,994,251			1,975,384			1,909,271			1,895,799			1,859,396
Average noninterest-bearing deposits		276,294			282,514			294,235			326,450			342,944
Average interest-bearing deposits		1,377,734			1,333,943			1,288,429			1,243,185			1,224,548
Average interest-bearing liabilities		1,661,996			1,636,188			1,559,983			1,519,106			1,446,428
Average equity		160,994			161,387			159,319			157,590			168,264
Average common shares -- basic		8,906,526			8,914,355			8,911,294			9,069,493			9,093,821
Average common shares -- diluted		8,934,882			8,931,386			8,939,601			9,106,453			9,138,123

(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 later in this release.
(5	)	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.
(6	)	Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

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

	As of or For the Nine Months Ended September 30,
	2023			2022
Performance ratios: (1)
Return on average assets		0.50	%		0.66	%
Return on average equity		6.50			7.24
Average interest rate spread		2.83			3.61
Net interest margin (2)		3.22			3.73
Efficiency ratio (3)		82.1			81.5
Equity to total assets		7.25			7.49
Average interest-earning assets to average interest-bearing liabilities		121.0			130.2
Book value per common share	$	16.20		$	15.69

Tangible performance ratios:
Tangible assets (4)	$	2,151,849		$	2,089,454
Tangible common equity (4)		154,369			154,612
Tangible common equity ratio (4)		7.17	%		7.40	%
Return on tangible common equity (4)		6.57			7.33
Tangible book value per common share (4)	$	16.03		$	15.50

Asset quality ratios:
Nonperforming assets to total assets at end of period (5)		0.11	%		0.17	%
Nonperforming loans to total loans (6)		0.15			0.22
Allowance for credit losses on loans to nonperforming loans (6)		713.77			462.70
Allowance for credit losses on loans to total loans		1.04			1.06
Annualized net charge-offs to average outstanding loans		0.22			0.02

Capital ratios (First Fed Bank):
Tier 1 leverage		10.1	%		10.5	%
Common equity Tier 1 capital		13.4			13.1
Tier 1 risk-based		13.4			13.1
Total risk-based		14.4			14.2

Other Information:
Average total assets	$	2,102,980		$	1,953,738
Average total loans		1,599,872			1,434,178
Average interest-earning assets		1,959,946			1,824,734
Average noninterest-bearing deposits		284,282			338,745
Average interest-bearing deposits		1,333,696			1,223,265
Average interest-bearing liabilities		1,619,763			1,401,036
Average equity		160,573			177,023
Average common shares -- basic		8,910,391			9,086,229
Average common shares -- diluted		8,930,404			9,155,813

(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 later in this release.
(5	)	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.
(6	)	Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

Selected loan detail:

	September 30, 2023		June 30, 2023		September 30, 2022		Three Month Change			One Year Change
	(In thousands)
Commercial business loans breakout
PPP loans	$	45	$	54	$	130	$	(9	)	$	(85	)
Northpointe Bank MPP		162		23,904		—		(23,742	)		162
Secured lines of credit		35,833		38,355		14,982		(2,522	)		20,851
Unsecured lines of credit		919		1,231		1,479		(312	)		(560	)
SBA loans		9,149		9,038		6,975		111			2,174
Other commercial business loans		55,272		57,551		47,599		(2,279	)		7,673
Total commercial business loans	$	101,380	$	130,133	$	71,165	$	(28,753	)	$	30,215

Auto and other consumer loans breakout
Triad Manufactured Home loans	$	90,230	$	90,792	$	79,353	$	(562	)	$	10,877
Woodside auto loans		124,833		125,948		112,944		(1,115	)		11,889
First Help auto loans		5,079		5,602		5,912		(523	)		(833	)
Other auto loans		5,022		6,188		10,229		(1,166	)		(5,207	)
Other consumer loans		23,622		25,420		30,541		(1,798	)		(6,919	)
Total auto and other consumer loans	$	248,786	$	253,950	$	238,979	$	(5,164	)	$	9,807

Construction and land loans breakout
1-4 Family construction	$	63,371	$	65,025	$	71,758	$	(1,654	)	$	(8,387	)
Multifamily construction		54,318		58,070		99,153		(3,752	)		(44,835	)
Acquisition-renovation		—		7,266		18,761		(7,266	)		(18,761	)
Nonresidential construction		18,746		19,033		16,034		(287	)		2,712
Land and development		6,999		7,666		10,172		(667	)		(3,173	)
Total construction and land loans	$	143,434	$	157,060	$	215,878	$	(13,626	)	$	(72,444	)

FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

Non-GAAP Financial Measures
This press release contains financial measures that are not defined in generally accepted accounting principles ("GAAP"). Non-GAAP measures are presented where management believes the information will help investors understand the Company’s results of operations or financial position and assess trends. Where non-GAAP financial measures are used, the comparable GAAP financial measure is also provided. 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.

Calculation of Total Revenue:

	September 30, 2023		June 30, 2023		March 31, 2023		December 31, 2022		September 30, 2022
	(Dollars in thousands)
Net interest income	$	14,950	$	15,982	$	16,305	$	18,930	$	18,204
Noninterest income		2,904		1,711		2,334		3,368		2,334
Total revenue, net of interest expense ⁽¹⁾	$	17,854	$	17,693	$	18,639	$	22,298	$	20,538

(1) We believe this non-GAAP metric provides an important measure with which to analyze and evaluate income available for noninterest expenses.

Calculations Based on Tangible Common Equity:

	September 30, 2023			June 30, 2023			March 31, 2023			December 31, 2022			September 30, 2022
	(Dollars in thousands, except per share data)
Total shareholders' equity	$	156,065		$	159,557		$	160,336		$	158,282		$	156,599
Less: Goodwill and other intangible assets		1,087			1,087			1,088			1,089			1,173
Disallowed non-mortgage loan servicing rights		609			556			804			714			814
Total tangible common equity	$	154,369		$	157,914		$	158,444		$	156,479		$	154,612

Total assets	$	2,153,545		$	2,162,878		$	2,172,094		$	2,042,070		$	2,091,441
Less: Goodwill and other intangible assets		1,087			1,087			1,088			1,089			1,173
Disallowed non-mortgage loan servicing rights		609			556			804			714			814
Total tangible assets	$	2,151,849		$	2,161,235		$	2,170,202		$	2,040,267		$	2,089,454

Average shareholders' equity	$	160,994		$	161,387		$	159,319		$	157,590		$	168,264
Less: Average goodwill and other intangible assets		1,087			1,088			1,089			1,171			1,175
Average disallowed non-mortgage loan servicing rights		557			801			715			813			755
Total average tangible common equity	$	159,350		$	159,498		$	157,515		$	155,606		$	166,334

Tangible common equity ratio ⁽¹⁾		7.17	%		7.31	%		7.30	%		7.67	%		7.40	%
Net income	$	2,504		$	1,776		$	3,528		$	6,060		$	4,291
Return on tangible common equity ⁽¹⁾		6.23	%		4.47	%		9.08	%		15.45	%		10.23	%
Common shares outstanding		9,630,735			9,633,496			9,674,055			9,703,581			9,978,041
Tangible book value per common share ⁽¹⁾	$	16.03		$	16.39		$	16.38		$	16.13		$	15.50
GAAP Ratios:
Equity to total assets		7.25	%		7.38	%		7.38	%		7.75	%		7.49	%
Return on average equity		6.17	%		4.41	%		8.98	%		15.26	%		10.12	%
Book value per common share	$	16.20		$	16.56		$	16.57		$	16.31		$	15.69

)

We believe these non-GAAP metrics provide an important measure with which to analyze and evaluate financial condition and capital strength. In 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.

FIRST NORTHWEST BANCORP AND SUBSIDIARY
ADDITIONAL INFORMATION
(Dollars in thousands) (Unaudited)

	September 30, 2023			September 30, 2022
	(Dollars in thousands, except per share data)
Total shareholders' equity	$	156,065		$	156,599
Less: Goodwill and other intangible assets		1,087			1,173
Disallowed non-mortgage loan servicing rights		609			814
Total tangible common equity	$	154,369		$	154,612

Total assets	$	2,153,545		$	2,091,441
Less: Goodwill and other intangible assets		1,087			1,173
Disallowed non-mortgage loan servicing rights		609			814
Total tangible assets	$	2,151,849		$	2,089,454

Average shareholders' equity	$	160,573		$	177,023
Less: Average goodwill and other intangible assets		1,088			1,179
Average disallowed non-mortgage loan servicing rights		690			1,026
Total average tangible common equity	$	158,795		$	174,818

Tangible common equity ratio ⁽¹⁾		7.17	%		7.40	%
Net income	$	7,808		$	9,585
Return on tangible common equity ⁽¹⁾		6.57	%		7.33	%
Common shares outstanding		9,630,735			9,978,041
Tangible book value per common share ⁽¹⁾	$	16.03		$	15.50
GAAP Ratios:
Equity to total assets		7.25	%		7.49	%
Return on average equity		6.50	%		7.24	%
Book value per common share	$	16.20		$	15.69

)

First Northwest Bancorp Reports Third Quarter 2023 Earnings

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