• First Northwest Bancorp Announces Record Earnings in the Fourth Quarter Of 2021

    Source: Nasdaq GlobeNewswire / 26 Jan 2022 06:30:01   America/Chicago

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

    Q4 2021 Net IncomeQ4 2021 Diluted
    Earnings Per Share
    YTD Loan GrowthQ4 2021
    Net Interest Margin
    Book Value per Share
    $5.1 million
    $0.5618%3.58%$19.10
    $18.891, 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. “We couldn’t 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 Ended December 31, 2021 to September 30, 2021Quarter Ended December 31, 2021 to December 31, 2020
    Financial Highlights
    Net income of $5.1 million and diluted earnings per share of $0.56, compared to $4.2 million and $0.45, respectivelyNet income of $5.1 million and diluted earnings per share of $0.56, compared to $3.8 million and $0.41, respectively
    Total revenue (net interest income before provision plus noninterest income) of $20.6 million, an increase of 4.8%, or $952,000, compared to an increase in non-interest expenses of 5.3%, or $744,000Total revenue of $20.6 million, an increase of 18.9%, or $3.3 million, compared to an increase in non-interest expenses of 25.2%, or $3.0 million
    Effective tax rate of 18.3%, compared to 18.9%Effective tax rate of 18.3%, compared to 18.2%
    Financial Position  
    Total assets of $1.92 billion, up $75.9 million, or 4.1%Increase in total assets of $266.7 million, or 16.1%
    Total gross loans, excluding loans held for sale, of $1.36 billion, up $4.3 million, or 0.3%Increase in total gross loans, excluding loans held for sale, of $203.1 million, or 17.6%
    Total deposits of $1.58 billion, up $57.7 million, or 3.8%Increase in total deposits of $247.1 million, or 18.5%
    Asset Quality and Capital 
    Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.07%, compared to 0.06%Nonperforming assets (nonaccrual loans and repossessed assets) to total assets of 0.07%, compared to 0.14%
    Tangible common equity ratio1 of 9.82%, compared to 10.07%Tangible common equity ratio1 of 9.82%, compared to 11.27%
    Key Performance Metrics 
    Net interest margin of 3.58% for both quartersNet interest margin of 3.58%, compared to 3.46%
    Efficiency ratio of 70.5%, compared to 70.3%Efficiency ratio of 70.5%, compared to 67.7%
    Return on average assets and return on tangible common equity1 of 1.09% and 10.82%, compared to 0.92% and 8.73%, respectivelyReturn on average assets and return on tangible common equity1 of 1.09% and 10.82%, compared to 0.97% and 8.28%, respectively
    Tangible book value per share1 of $18.89, an increase of 2.26% from $18.48Tangible book value per share1 of $18.89 an increase of 3.9% from $18.19
    2021 Year-End Highlights 
    Record net income of $15.4 million and diluted earnings per share of $1.66, up 49.1% and 50.9%, from $10.3 million and $1.10, respectively
    Record 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 million
    Effective tax rate of 17.6%, compared to 22.2%
    Net interest margin of 3.51%, compared to 3.27%
    Efficiency ratio of 73.0%, compared to 69.3%
    Return on average assets and return on tangible common equity1 of 0.87% and 8.22%, compared to 0.72% and 5.79%
    Repurchased 349,497 shares of common stock at an average price of $17.07 per share, for a total of $6.0 million in 2021

    ____________
    1 See 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 $113.4 million and comprised the largest portion of the investment portfolio at 32.9%. The estimated average life of the total investment securities portfolio was approximately 5.7 years, compared to 5.8 years in the prior quarter and 7.3 years in the fourth quarter of 2020.

    Investment securities consisted of the following at the dates indicated:

      December 31,
    2021
      September 30,
    2021
      December 31,
    2020
      Three
    Month
    Change
      One
    Year
    Change
     
        
      (In thousands) 
    Available for Sale at Fair Value                    
    Municipal bonds $113,364  $110,265  $127,862  $3,099  $(14,498)
    International agency issued bonds (Agency bonds)  1,920   1,940      (20)  1,920 
    U.S. government agency issued asset-backed securities (ABS agency)        63,820      (63,820)
    Corporate issued asset-backed securities (ABS corporate)  14,489   11,016   29,280   3,473   (14,791)
    Corporate issued debt securities (Corporate debt)  59,789   55,946   35,510   3,843   24,279 
    U.S. Small Business Administration securities (SBA)  14,680   15,842   18,564   (1,162)  (3,884)
    Mortgage-backed securities:                    
    U.S. government agency issued mortgage-backed securities (MBS agency)  79,962   75,091   62,683   4,871   17,279 
    Corporate issued mortgage-backed securities (MBS corporate)  60,008   55,790   26,577   4,218   33,431 
    Total securities available for sale $344,212  $325,890  $364,296  $18,322  $(20,084)
                         

    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 $39.3 million was offset by the sale of loans (servicing retained) with balances totaling $43.5 million. Commercial business loans decreased $12.1 million during the quarter, mainly as the result of decreases in Northpointe Mortgage Participation program loans of $1.2 million and Paycheck Protection Program (“PPP”) loans paid off during the quarter of $9.1 million.

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

    Loans receivable consisted of the following at the dates indicated:

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

    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 $540.1 million at December 31, 2021, and represented 34.2% of total deposits; money market accounts increased 39.3% compared to a year ago to $597.8 million, and represented 37.8% of total deposits; savings accounts increased 18.4% compared to a year ago to $194.6 million at December 31, 2021, and represented 12.3% of total deposits; and certificates of deposit decreased 19.9% compared to a year ago to $247.2 million at quarter-end, and represented 15.6% of total deposits.

    The total cost of deposits was 0.20% for the fourth quarter of 2021 compared to 0.23% for the third quarter of 2021 and improved from 0.34% for the fourth quarter of 2020.

    Deposits consisted of the following at the dates indicated:

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

    Total shareholders’ equity increased to $190.5 million at 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 $18.89 at December 31, 2021, compared to $18.48 at September 30, 2021 and $18.19 at December 31, 2020; while book value per common share was $19.10 at December 31, 2021, compared to $18.65 at September 30, 2021 and $18.20 at December 31, 2020. We repurchased 57,565 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.

    ____________
    1 See 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") of 10.72%, compared to 0.92% and 8.69%, respectively, in the third quarter of 2021, and 0.97% and 8.32%, respectively, in the fourth quarter of 2020.

    For the year ended December 31, 2021, ROAA and ROAE were 0.87% and 8.19%, respectively, compared to 0.72% and 5.79% 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 by 8 basis points compared to the same period in the prior year. Total interest expense was $1.4 million for the third and fourth quarters of 2021, compared to $1.3 million in the fourth quarter 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 to 23 basis 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 increased 3.0% to $15.8 million, compared to $15.4 million for the preceding quarter, and increased 24.7% from the fourth quarter a year ago.

    For the year ended December 31, 2021, net interest income before the provision for loan losses increased 32.6% 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 $51.0 million. 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 $150,000 negative loan loss provision during 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 was 3.58% for both the third and fourth quarters of 2021, and increased 12 basis points compared to 3.46% for the fourth quarter in 2020. For the year ended December 31, 2021, the net interest margin increased 24 basis points to 3.51%, compared to 3.27% 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 a substantial 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 1 basis point to 3.90% for the fourth quarter of 2021, compared to 3.91% for the third quarter of 2021, and increased 9 basis points from 3.81% 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 to 4.49% 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 increase from 4.41% for the fourth quarter of 2020 was mainly related to deferred fee income recognized on PPP loan payoffs.

    The cost of interest-bearing liabilities decreased 3 basis points to 0.42% for the fourth quarter of 2021, compared to 0.45% for the third quarter of 2021, and decreased 5 basis points from 0.47% for the fourth quarter of 2020. The total cost of funds decreased 2 basis points to 0.34% for the fourth quarter of 2021, compared to 0.36% for the third quarter of 2021, and decreased 4 basis points from 0.38% 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 increased 11.4% to $4.8 million for the fourth quarter of 2021 from $4.3 million for the third quarter of 2021 and increased 3.0% compared to $4.6 million for the fourth quarter a year ago. The fourth quarter of 2021 included $88,000 of sold loan servicing fee income compared to $815,000 in 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 included gain on sale of multifamily loans and related servicing right recognition totaling $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 decreased 1.3% to $15.6 million, compared to $15.9 million for the 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 2020 from a restructure of the BOLI policies in the third quarter of 2020. Decreases were partially 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 for the year ended December 31, 2020. The year-over-year increase 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, 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 2021 and $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 million compared to $3.0 million for the year ended December 31, 2020, reflecting higher net income before provision for income tax in the current year, while the prior year included a penalty recorded related to the surrender of a bank-owned life insurance policy in the third quarter of 2020 which resulted in a higher tax provision as well as a higher effective tax rate for the related period.

    Capital Ratios and Credit Quality

    Capital levels for both the Company and its operating bank, First Fed, remain in excess of applicable regulatory requirements and the Bank was categorized as "well-capitalized" at December 31, 2021. Common Equity Tier 1 and Total Risk-Based Capital Ratios at December 31, 2021 were 13.8% and 14.9%, respectively.

    Nonperforming loans were $1.4 million at December 31, 2021, an increase of $198,000 from September 30, 2021 related to brokered and purchased auto loans. The percentage of the allowance for loan losses to nonperforming loans decreased to 1095% at December 31, 2021, from 1289% at September 30, 2021, and increased from 609% at December 31, 2020. Classified loans decreased $93,000 during the fourth quarter to $12.6 million at December 31, 2021, reflecting improvements in almost all loan categories. The allowance for loan losses as a percentage of total loans was 1.11% at December 31, 2021, with no change from the prior quarter and a decrease from 1.20% 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 of Series B preferred stock in 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 Washington list. Nearly 25,000 Americans were surveyed for their opinions on their current and former banking relationships. Only 135 banks (2.7%) made the list of the nearly 5,000 FDIC-insured banks in the country. First Fed was one of three in Washington to be recognized as a Best Bank based on customer feedback.

    Additionally, on June 14 First Fed was named on the Puget Sound Business Journal’s Best Workplaces list. First Fed has been recognized as one the top 100 workplaces in Washington, as voted by each company’s 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 Fed’s 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 for 2022 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Companys operations and stock price performance.



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

                         
      December 31,
    2021
      September 30,
    2021
      December 31,
    2020
      Three
    Month
    Change
      One
    Year
    Change
     
    Assets                    
                         
    Cash and due from banks $13,868  $17,012  $13,508   -18.5%  2.7%
    Interest-bearing deposits in banks  112,148   59,108   51,647   89.7   117.1 
    Investment securities available for sale, at fair value  344,212   325,890   364,296   5.6   -5.5 
    Loans held for sale  760   2,231   3,753   -65.9   -79.7 
    Loans receivable (net of allowance for loan losses of $15,124, $15,243, and $13,847)  1,350,260   1,345,126   1,141,969   0.4   18.2 
    Federal Home Loan Bank (FHLB) stock, at cost  5,196   4,397   5,977   18.2   -13.1 
    Accrued interest receivable  5,289   5,775   6,966   -8.4   -24.1 
    Premises and equipment, net  19,830   18,188   14,785   9.0   34.1 
    Mortgage servicing rights, net  3,282   2,934   2,120   11.9   54.8 
    Bank-owned life insurance, net  39,318   39,080   38,353   0.6   2.5 
    Goodwill and other intangible assets, net  1,183   1,186      -0.3   100.0 
    Prepaid expenses and other assets  25,735   24,210   10,975   6.3   134.5 
                         
    Total assets $1,921,081  $1,845,137  $1,654,349   4.1%  16.1%
                         
    Liabilities and Shareholders' 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 debt, net  39,280   39,261      0.0   100.0 
    Accrued interest payable  393   29   53   1,255.2   641.5 
    Accrued expenses and other liabilities  29,240   33,369   23,303   -12.4   25.5 
    Advances from borrowers for taxes and insurance  1,108   2,118   1,116   -47.7   -0.7 
                         
    Total liabilities  1,730,601   1,657,693   1,467,966   4.4   17.9 
                         
    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 9,972,698 at December 31, 2021; issued and outstanding 10,050,877 at September 30, 2021; and issued and outstanding 10,247,185 at December 31, 2020  100   102   102   -2.0   -2.0 
    Additional paid-in capital  96,132   96,396   97,412   -0.3   -1.3 
    Retained earnings  103,013   99,058   92,657   4.0   11.2 
    Accumulated other comprehensive income, net of tax  288   934   5,442   -69.2   -94.7 
    Unearned employee stock ownership plan (ESOP) shares  (8,572)  (8,736)  (9,230)  1.9   7.1 
                         
    Total parent's shareholders' equity  190,961   187,754   186,383   1.7   2.5 
    Noncontrolling interest in Quin Ventures, Inc.  (481)  (310)     -55.2   100.0 
                         
    Total shareholders' equity  190,480   187,444   186,383   1.6   2.2 
                         
    Total liabilities and shareholders' equity $1,921,081  $1,845,137  $1,654,349   4.1%  16.1%
                         


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

      Quarter Ended         
      December 31,
    2021
      September 30,
    2021
      December 31,
    2020
      Three
    Month
    Change
      One
    Year
    Change
     
    INTEREST INCOME                    
    Interest and fees on loans receivable $15,041  $14,581  $11,894   3.2%  26.5%
    Interest on mortgage-backed and related securities  727   715   437   1.7   66.4 
    Interest on investment securities  1,346   1,423   1,581   -5.4   -14.9 
    Interest on deposits in banks  37   18   9   105.6   311.1 
    FHLB dividends  58   41   56   41.5   3.6 
    Total interest income  17,209   16,778   13,977   2.6   23.1 
                         
    INTEREST EXPENSE                    
    Deposits  787   850   1,079   -7.4   -27.1 
    Borrowings  214   186   221   15.1   -3.2 
    Subordinated debt  394   390      1.0   100.0 
    Total interest expense  1,395   1,426   1,300   -2.2   7.3 
                         
    Net interest income  15,814   15,352   12,677   3.0   24.7 
                         
    (RECAPTURE OF) PROVISION FOR LOAN LOSSES  (150)  700   930   -121.4   -116.1 
                         
    Net interest income after provision for loan losses  15,964   14,652   11,747   9.0   35.9 
                         
    NONINTEREST INCOME                    
    Loan and deposit service fees  1,007   1,015   940   -0.8   7.1 
    Sold loan servicing fees, net of amortization  88   815   146   -89.2   -39.7 
    Net gain on sale of loans  2,264   663   2,324   241.5   -2.6 
    Net gain on sale of investment securities     1,286   912   -100.0   -100.0 
    Increase in cash surrender value of bank-owned life insurance  238   241   249   -1.2   -4.4 
    Other income  1,179   266   67   343.2   1,659.7 
    Total noninterest income  4,776   4,286   4,638   11.4   3.0 
                         
    NONINTEREST EXPENSE                    
    Compensation and benefits  8,948   8,713   7,193   2.7   24.4 
    Data processing  1,818   1,568   1,302   15.9   39.6 
    Occupancy and equipment  1,173   1,106   1,052   6.1   11.5 
    Supplies, postage, and telephone  313   279   236   12.2   32.6 
    Regulatory assessments and state taxes  316   335   271   -5.7   16.6 
    Advertising  556   547   572   1.6   -2.8 
    Professional fees  409   422   408   -3.1   0.2 
    FDIC insurance premium  302   134   89   125.4   239.3 
    Other  843   830   596   1.6   41.4 
    Total noninterest expense  14,678   13,934   11,719   5.3   25.2 
                         
    INCOME BEFORE PROVISION FOR INCOME TAXES  6,062   5,004   4,666   21.1   29.9 
                         
    PROVISION FOR INCOME TAXES  1,112   946   850   17.5   30.8 
                         
    NET INCOME  4,950   4,058   3,816   22.0   29.7 
    Net loss on noncontrolling interest in Quin Ventures, Inc.  174   120      45.0   100.0 
                         
    NET INCOME ATTRIBUTABLE TO PARENT $5,124  $4,178  $3,816   22.6%  34.3%
                         
                         
    Basic and diluted earnings per common share $0.56  $0.45  $0.41   24.4%  36.6%
                         


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

      Year Ended December 31,  Percent 
      2021  2020  Change 
    INTEREST INCOME            
    Interest and fees on loans receivable $55,029  $43,063   27.8%
    Interest on mortgage-backed and related securities  2,550   2,701   -5.6 
    Interest 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 loan losses  56,948   38,912   46.4 
                 
    NONINTEREST INCOME            
    Loan and deposit service fees  3,860   3,454   11.8 
    Sold loan servicing fees, net of amortization  946   137   590.5 
    Net 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 bank-owned life insurance  965   1,826   -47.2 
    Other 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 Quin Ventures, Inc.  439      100.0 
                 
    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 SUBSIDIARY
    Selected Financial Ratios and Other Data
    (Dollars in thousands, except per share data) (Unaudited)

      As of or For the Quarter Ended 
      December 31,
    2021
      September 30,
    2021
      June 30,
    2021
      March 31,
    2021
      December 31,
    2020
     
    Performance ratios: (1)                    
    Return on average assets  1.09%  0.92%  0.69%  0.76%  0.97%
    Return on average equity  10.72   8.69   6.46   6.70   8.32 
    Average interest rate spread  3.48   3.46   3.22   3.38   3.35 
    Net interest margin (2)  3.58   3.58   3.34   3.48   3.46 
    Efficiency ratio (3)  70.5   70.3   78.2   74.7   67.7 
    Equity to total assets  9.92   10.16   10.55   10.49   11.27 
    Average interest-earning assets to average interest-bearing liabilities  133.8   134.1   133.9   134.6   131.7 
    Book value per common share $19.10  $18.65  $18.49  $17.86  $18.20 
                         
    Tangible performance ratios:                    
    Tangible assets (4) $1,919,028  $1,843,395  $1,787,389  $1,736,292  $1,654,348 
    Tangible common equity (4)  188,427   185,702   188,591   182,097   186,382 
    Tangible common equity ratio (4)  9.82%  10.07%  10.55%  10.49%  11.27%
    Return on tangible common equity (4)  10.82   8.73   6.46   6.80   8.28 
    Tangible book value per common share (4) $18.89  $18.48  $18.49  $17.86  $18.19 
                         
    Asset quality ratios:                    
    Nonperforming assets to total assets at end of period (5)  0.07%  0.06%  0.10%  0.12%  0.14%
    Nonperforming loans to total loans (6)  0.10   0.09   0.14   0.18   0.20 
    Allowance for loan losses to nonperforming loans (6)  1095.15   1288.50   817.71   668.15   609.20 
    Allowance for loan losses to total loans  1.11   1.13   1.16   1.22   1.20 
    Annualized net (recoveries) charge-offs to average outstanding loans  (0.01)  0.01   0.00   0.00   0.00 
                         
    Capital ratios (First Fed Bank):                    
    Tier 1 leverage  10.6%  10.6%  10.9%  11.2%  10.3%
    Common equity Tier 1 capital  13.8   13.4   14.5   15.1   13.4 
    Tier 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 assets $1,864,309  $1,810,543  $1,737,363  $1,645,806  $1,567,521 
    Average total loans  1,336,937   1,303,199   1,211,348   1,144,230   1,089,505 
    Average interest-earning assets  1,750,355   1,702,762   1,639,782   1,549,316   1,466,103 
    Average noninterest-bearing deposits  330,913   314,677   304,483   283,204   245,024 
    Average interest-bearing deposits  1,211,453   1,179,096   1,133,472   1,092,114   1,032,608 
    Average interest-bearing liabilities  1,307,895   1,269,958   1,224,665   1,150,743   1,113,339 
    Average equity  189,706   190,764   186,153   186,171   183,424 
    Average shares -- basic  9,103,640   9,184,568   9,130,113   9,094,354   9,214,965 
    Average shares -- diluted  9,189,252   9,268,076   9,248,667   9,185,725   9,258,109 


    (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.
    (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) (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 average interest-bearing liabilities  134.1   130.6 
    Book 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 end of period (5)  0.07%  0.14%
    Nonperforming loans to total loans (6)  0.10   0.20 
    Allowance for loan losses to nonperforming loans (6)  1095.15   609.19 
    Allowance for loan losses to total loans  1.11   1.20 
    Net charge-offs to average outstanding loans  0.01   0.10 
             
    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.
    (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:

      December 31,
    2021
      September 30,
    2021
      December 31,
    2020
      Three
    Month
    Change
      One
    Year
    Change
     
        
      (In thousands) 
    Commercial business loans breakout                    
    PPP 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 credit  10,376   8,279   7,467   2,097   2,909 
    Unsecured lines of credit  3,082   2,708   1,474   374   1,608 
    Other commercial business loans  25,556   26,590   20,789   (1,034)  4,767 
    Total commercial business loans $79,838  $91,939  $100,201  $(12,101) $(20,363)
                         
    Auto and other consumer loans breakout                    
    Triad Manufactured Home loans $58,296  $58,823  $19,632  $(527) $38,664 
    Woodside 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 consumer loans $182,769  $182,238  $128,233  $531  $54,536 
                         
    Construction and land loans breakout                    
    1-4 Family construction $68,079  $66,287  $37,489  $1,792  $30,590 
    Multifamily construction  88,919   80,146   34,513   8,773   54,406 
    Acquisition-renovation  51,099   53,670   39,346   (2,571)  11,753 
    Nonresidential construction  6,308   4,520   1,949   1,788   4,359 
    Land and development  10,304   9,849   10,330   455   (26)
    Total construction and land loans $224,709  $214,472  $123,627  $10,237  $101,082 
                         


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

    Non-GAAP Financial Measures
    This press release contains both financial measures based on GAAP and non-GAAP based financial measures, which are used where management believes them to be helpful in understanding the Company’s 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 31,
    2021
      September 30,
    2021
      June 30,
    2021
      March 31,
    2021
      December 31,
    2020
     
        
      (Dollars in thousands, except per share data) 
    Total shareholders' equity $190,480  $187,444  $188,593  $182,098  $186,383 
    Less: Goodwill and other intangible assets  1,183   1,186          
    Disallowed servicing right  870   556   2   1   1 
    Total tangible common equity $188,427  $185,702  $188,591  $182,097  $186,382 
                         
    Total assets $1,921,081  $1,845,137  $1,787,391  $1,736,293  $1,654,349 
    Less: Goodwill and other intangible assets  1,183   1,186          
    Disallowed servicing right  870   556   2   1   1 
    Total tangible assets $1,919,028  $1,843,395  $1,787,389  $1,736,292  $1,654,348 
                         
    Average shareholders' equity $189,706  $190,764  $186,153  $186,171  $183,424 
    Less: Average goodwill and other intangible assets  1,185   880          
    Average disallowed servicing right  560   8   1   1   1 
    Total average tangible common equity $187,961  $189,876  $186,152  $186,170  $183,423 
                         
    Tangible common equity ratio  9.82%  10.07%  10.55%  10.49%  11.27%
    Net income $5,124  $4,178  $2,996  $3,120  $3,816 
    Return on tangible common equity  10.82%  8.73%  6.46%  6.80%  8.28%
    Common shares outstanding  9,972,698   10,050,877   10,205,867   10,195,644   10,247,185 
    Tangible book value per common share $18.89  $18.48  $18.49  $17.86  $18.19 
    GAAP Ratios:                    
    Equity to total assets  9.92%  10.16%  10.55%  10.49%  11.27%
    Return on average equity  10.72%  8.69%  6.46%  6.70%  8.32%
    Book value per common share $19.10  $18.65  $18.49  $17.86  $18.20 


      December 31, 2021  December 31, 2020 
        
      (Dollars in thousands, except per share data) 
    Total shareholders' equity $190,480  $186,383 
    Less: Goodwill and other intangible assets  1,183   1,186 
    Disallowed 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 assets  1,183   1,186 
    Disallowed 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 intangible assets  520    
    Average 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

    (1)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.


    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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