First Northwest Bancorp Reports Fourth Quarter 2024 Financial Results

PORT ANGELES, Wash., Jan. 29, 2025 (GLOBE NEWSWIRE) -- First Northwest Bancorp (Nasdaq: FNWB) ("First Northwest" or the "Company") today reported a net loss of $2.8 million for the fourth quarter of 2024, compared to a net loss of $2.0 million for the third quarter of 2024 and a net loss of $5.5 million for the fourth quarter of 2023. Basic and diluted loss per share were $0.32 for the fourth quarter of 2024, compared to basic and diluted loss per share of $0.23 for the third quarter of 2024 and basic and diluted loss per share of $0.62 for the fourth quarter of 2023. In the fourth quarter of 2024, the Company recorded adjusted pre-tax, pre-provision net revenue ("PPNR")(1) of $1.2 million, compared to a $49,000 adjusted PPNR loss for the preceding quarter and adjusted PPNR of $327,000 for the fourth quarter of 2023. The Board of Directors of First Northwest declared a quarterly cash dividend of $0.07 per common share, payable on February 28, 2025, to shareholders of record as of the close of business on February 14, 2025. Quote from First Northwest President and CEO, Matthew P. Deines:"Although financial results in 2024 were adversely impacted by elevated credit costs, we are optimistic for continued improvement in asset quality in early 2025. During the fourth quarter, our pre-provision net revenue (1) grew to $1.2 million with modest margin improvement as we successfully reduced FHLB borrowings. As we look ahead to 2025, we are laser focused on growing core commercial and retail customer relationships while resolving problem assets, improving profitability and maintaining our strong capital position. Highlights for 2024 include the termination of our compliance Consent Order with the FDIC, reduction of core operating expenses and improvement in our liquidity position with the loan to deposit ratio below 100% at year-end. I’d like to thank all our employees for their efforts and contributions in 2024, and for making a positive impact in the communities we serve." Key Points for Fourth Quarter and Going Forward Provision for credit losses: The Company recorded a $3.8 million provision for credit losses on loans in the fourth quarter of 2024, primarily due to charge-offs of six commercial business loans. This compares to loan credit loss provisions of $3.1 million for the preceding quarter and $1.2 million for the fourth quarter of 2023. We believe the reserve on individually analyzed loans does not represent a universal decline in the collectability of all loans in the portfolio. We continue to work on resolution plans for all troubled borrowers. The provision for credit losses on loans had a significant negative impact on net income for the fourth quarter of 2024. First Fed Bank's ("First Fed" or the "Bank") balance sheet restructure continues to have a positive impact: The fair value hedge on loans, tied to the compounded overnight index swap using the secured overnight financing rate index, which was established in the first quarter of 2024, added $1.1 million to interest income for the year. The hedge successfully reduced the Bank's liability sensitivity, and lowered the overall interest rate risk profile. The hedge also enhanced earnings due to a favorable contract position during the 2024 interest rate environment. The Bank expects to maintain a positive carry on its derivative for up to an additional 25-basis points of rate cuts. During 2024, bank-owned life insurance policies ("BOLI") were reinvested into higher yielding products. In the fourth quarter of 2024, a $8.5 million policy was surrendered and reinvested into a policy earning 6.01% and a $922,000 policy earning 1.64% was exchanged and reinvested into a policy earning 3.99%. Total policy conversions during 2024 increased the annual pre-tax net yield earned on the total BOLI portfolio by 74-basis points. The remaining surrender transaction is expected to be completed during the first quarter of 2025. Investment security purchases during the fourth quarter of 2024 totaled $47.1 million, carrying a weighted-average yield of 6.7% at purchase and a weighted-average life of 3.1 years. The annualized interest income on these securities is anticipated to provide $2.6 million in revenue for 2025. (1) See reconciliation of Non-GAAP Financial Measures later in this release. Selected Quarterly Financial Ratios: As of or For the Quarter Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Performance ratios: (1) Return on average assets -0.51% -0.36% -0.40% 0.07% -1.03%Adjusted PPNR return on average assets (2) 0.22 -0.01 0.10 0.34 -0.06 Return on average equity -6.92 -4.91 -5.47 0.98 -14.05 Net interest margin (3) 2.73 2.70 2.76 2.76 2.84 Efficiency ratio (4) 92.2 100.3 72.3 88.8 150.8 Equity to total assets 6.89 7.13 7.17 7.17 7.42 Book value per common share$16.45 $17.17 $16.81 $17.00 $16.99 Tangible performance ratios: (1) Tangible common equity to tangible assets (2) 6.83% 7.06% 7.10% 7.10% 7.35%Return on average tangible common equity (2) -6.99 -4.96 -5.53 0.99 -14.20 Tangible book value per common share (2)$16.29 $17.00 $16.64 $16.83 $16.83 Capital ratios (First Fed): (5) Tier 1 leverage 9.4% 9.4% 9.4% 9.7% 9.9%Common equity Tier 1 capital 12.4 12.2 12.4 12.6 13.1 Total risk-based 13.6 13.4 13.5 13.6 14.1 (1)Performance ratios are annualized, where appropriate.(2)See reconciliation of Non-GAAP Financial Measures later in this release.(3)Net interest income divided by average interest-earning assets.(4)Total noninterest expense as a percentage of net interest income and total other noninterest income.(5)Current period capital ratios are preliminary and subject to finalization of the FDIC Call Report. Adjusted Pre-tax, Pre-Provision Net Revenue (1) Adjusted PPNR for the fourth quarter of 2024 increased $1.3 million to $1.2 million, compared to an adjusted PPNR loss of $49,000 for the preceding quarter, and increased $1.5 million from an adjusted PPNR $327,000 loss in the fourth quarter one year ago. For the Quarter Ended For the Year Ended (Dollars in thousands) December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Net interest income $14,137 $14,020 $14,235 $13,928 $14,195 $56,320 $61,432 Total noninterest income 1,300 1,779 7,347 2,188 (2,929) 12,614 4,020 Total revenue 15,437 15,799 21,582 16,116 11,266 68,934 65,452 Total noninterest expense 14,233 15,848 15,609 14,303 16,990 59,993 61,454 PPNR (1) 1,204 (49) 5,973 1,813 (5,724) 8,941 3,998 Selected nonrecurring adjustments to PPNR Less: Net gain on sale of premises and equipment — — 7,919 — — 7,919 — Sale leaseback taxes and assessments included in occupancy and equipment — — (359) — — (359) — Net loss on sale of investment securities — — (2,117) — (5,397) (2,117) (5,397)Adjusted PPNR (1) $1,204 $(49)$530 $1,813 $(327)$3,498 $9,395 (1) See reconciliation of Non-GAAP Financial Measures later in this release. Total interest income was relatively unchanged at $28.2 million for the fourth quarter of 2024, compared to the previous quarter, and increased $1.9 million compared to $26.3 million in the fourth quarter of 2023. Interest income decreased in the fourth quarter of 2024 primarily due to a decrease in the income earned on the securities derivative combined with lower FHLB dividends and reduced interest income received on Company deposit accounts. Higher yields on performing loans during the fourth quarter of 2024 were partially offset by nonaccrual interest adjustments totaling $46,000. Interest and fees on loans increased year-over-year as the loan portfolio grew. Loan yields increased over the prior year due to higher rates on new originations as well as the repricing of variable and adjustable-rate loans.The net interest margin increased to 2.73% for the fourth quarter of 2024, from 2.70% for the prior quarter, and decreased 11-basis points from 2.84% for the fourth quarter of 2023. The Company reported reduced rates and declining volume of borrowings during the quarter which lowered costs; however, these savings were partially offset by an increase in cost due to a higher volume of customer deposits. The decrease in net interest margin from the same quarter one year ago is due to higher funding costs for deposits and borrowed funds. Noninterest income included a $1.8 million write down on an equity investment in an organization that is involved in a lawsuit, partially offset by a $1.5 million BOLI death benefit payment received due to the passing of an employee. Noninterest expense for the fourth quarter of 2024 decreased mainly due to a $1.2 million reduction in compensation related to nonrecurring payouts in the previous quarter combined with a reduced incentive accrual and lower headcount in the fourth quarter of 2024. FDIC assessment, state taxes, advertising and other discretionary spending also decreased from the previous quarter. Allowance for Credit Losses on Loans ("ACLL") and Credit Quality The allowance for credit losses on loans ("ACLL") decreased $1.5 million to $20.5 million at December 31, 2024, from $22.0 million at September 30, 2024. The ACLL as a percentage of total loans was 1.21% at December 31, 2024, a decrease from 1.27% at September 30, 2024, and an increase from 1.05% one year earlier. The pooled loan reserve decreased $1.5 million during the fourth quarter of 2024, primarily due to the decreases in multi-family, construction, and consumer loan balances combined with decreases resulting from lower loss factors applied to commercial business and commercial real estate loans, partially offset by higher loss factors applied to one-to-four family and other consumer loans. Nonperforming loans totaled $30.5 million at December 31, 2024, an increase of $139,000 from September 30, 2024. ACLL to nonperforming loans decreased to 67% at December 31, 2024, from 72% at September 30, 2024, and 94% at December 31, 2023. This ratio continued to decline as higher balances of real estate loans are included in nonperforming assets with no significant corresponding increase to the ACLL as these collateral dependent loans were considered adequately reserved for based on information available at each period end. Classified loans decreased $4.4 million to $42.5 million at December 31, 2024, from $46.9 million at September 30, 2024, primarily due to charge-offs totaling $3.9 million on six commercial business loans during the fourth quarter. An $11.4 million construction loan relationship, which became a classified loan in the fourth quarter of 2022; an $8.1 million commercial construction loan relationship, which became classified in the second quarter of 2024; and a $6.2 million commercial loan relationship, which became classified in the fourth quarter of 2023, account for 61% of the classified loan balance at December 31, 2024. The Bank has exercised legal remedies, including the appointment of a third-party receiver and foreclosure actions, to liquidate the underlying collateral to satisfy the real estate loans in two of these three collateral-dependent relationships. The Bank is also closely monitoring a group of commercial business loans that have similar collateral, with 15 loans totaling $2.2 million included in classified loans at December 31, 2024, and an additional eight loans totaling $2.8 million included in the special mention risk grading category. For the Quarter Ended ACLL ($ in thousands)December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Balance at beginning of period$21,970 $19,343 $17,958 $17,510 $16,945 Charge-offs: Construction and land (411) — (3,978) — — Home equity — — — — 1 Auto and other consumer (364) (492) (832) (806) (655)Commercial business (4,596) (24) (2,643) (33) — Total charge-offs (5,371) (516) (7,453) (839) (654)Recoveries: One-to-four family — 42 — 2 5 Commercial real estate 2 — — — — Home equity — — — — 10 Auto and other consumer 52 24 198 46 42 Commercial business 36 — — — — Total recoveries 90 66 198 48 57 Net loan charge-offs (5,281) (450) (7,255) (791) (597)Provision for credit losses 3,760 3,077 8,640 1,239 1,162 Balance at end of period$20,449 $21,970 $19,343 $17,958 $17,510 Average total loans 1,708,232 1,718,402 1,717,830 1,678,656 1,645,418 Annualized net charge-offs to average outstanding loans 1.23% 0.10% 1.70% 0.19% 0.14% Asset Quality ($ in thousands)December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Nonaccrual loans: One-to-four family$1,477 $1,631 $1,750 $1,237 $1,844 Multi-family — — 708 708 — Commercial real estate 5,598 5,634 14 22 28 Construction and land 19,544 19,382 19,292 14,440 14,986 Home equity 55 116 118 121 123 Auto and other consumer 700 894 746 1,012 786 Commercial business 3,141 2,719 1,003 1,941 877 Total nonaccrual loans 30,515 30,376 23,631 19,481 18,644 Other real estate owned — — — — — Total nonperforming assets$30,515 $30,376 $23,631 $19,481 $18,644 Nonaccrual loans as a % of total loans (1) 1.80% 1.75% 1.39% 1.14% 1.12%Nonperforming assets as a % of total assets (2) 1.37 1.35 1.07 0.87 0.85 ACLL as a % of total loans 1.21 1.27 1.14 1.05 1.05 ACLL as a % of nonaccrual loans 67.01 72.33 81.85 92.18 93.92 Total past due loans to total loans 1.98 1.92 1.45 1.91 0.94 (1)Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.(2)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. Financial Condition and Capital Investment securities increased $29.5 million, or 9.5%, to $340.3 million at December 31, 2024, compared to $310.9 million three months earlier, and increased $44.7 million compared to $295.6 million at December 31, 2023. The market value of the portfolio decreased $5.8 million during the fourth quarter of 2024. The estimated average life of the securities portfolio was approximately 6.9 years at December 31, 2024, 7.4 years at the prior quarter end and 7.7 years at the end of the fourth quarter of 2023. The effective duration of the portfolio was approximately 3.9 years at December 31, 2024, compared to 3.9 years at the prior quarter end and 4.8 years at the end of the fourth quarter of 2023. Investment purchases at the beginning of 2024 were primarily floating rate securities to take advantage of higher short-term rates above those offered on cash at that time and to reduce our liability sensitivity. Purchases in the fourth quarter were primarily fixed to rebalance our securities portfolio position for 2025. Investment Securities ($ in thousands) December 31, 2024 September 30, 2024 December 31, 2023 Three Month % Change One Year % Change Available for Sale at Fair Value Municipal bonds$77,876 $81,363 $87,761 -4.3%-11.3%U.S. government agency issued asset-backed securities (ABS agency) 12,876 13,296 11,782 -3.2 9.3 Corporate issued asset-backed securities (ABS corporate) 16,122 16,391 5,286 -1.6 205.0 Corporate issued debt securities (Corporate debt) 54,491 54,058 51,454 0.8 5.9 U.S. Small Business Administration securities (SBA) 8,666 9,317 — -7.0 100.0 Mortgage-backed securities: U.S. government agency issued mortgage-backed securities (MBS agency) 98,697 78,549 63,247 25.7 56.1 Non-agency issued mortgage-backed securities (MBS non-agency) 71,616 57,886 76,093 23.7 -5.9 Total securities available for sale$340,344 $310,860 $295,623 9.5 15.1 Net loans, excluding loans held for sale, decreased $39.2 million, or 2.3%, to $1.68 billion at December 31, 2024, from $1.71 billion at September 30, 2024, and increased $32.7 million, or 2.0%, from $1.64 billion one year prior. Construction loans that converted into fully amortizing loans during the quarter totaled $18.3 million. Loan payoffs of $73.9 million, regular payments of $35.3 million and charge-offs totaling $5.3 million outpaced new loan funding totaling $55.6 million and draws on existing loans totaling $19.7 million. Loans ($ in thousands) December 31, 2024 September 30, 2024 December 31, 2023 Three Month % Change One Year % Change Real Estate: One-to-four family$395,315 $395,792 $378,432 -0.1%4.5%Multi-family 332,596 353,813 333,094 -6.0 -0.1 Commercial real estate 390,379 376,008 387,983 3.8 0.6 Construction and land 78,110 95,709 129,691 -18.4 -39.8 Total real estate loans 1,196,400 1,221,322 1,229,200 -2.0 -2.7 Consumer: Home equity 79,054 76,960 69,403 2.7 13.9 Auto and other consumer 268,876 281,198 249,130 -4.4 7.9 Total consumer loans 347,930 358,158 318,533 -2.9 9.2 Commercial business 151,493 155,327 112,295 -2.5 34.9 Total loans receivable 1,695,823 1,734,807 1,660,028 -2.2 2.2 Less: Derivative basis adjustment 188 (1,579) — 111.9 100.0 Allowance for credit losses on loans 20,449 21,970 17,510 -6.9 16.8 Total loans receivable, net$1,675,186 $1,714,416 $1,642,518 -2.3 2.0 Total deposits decreased $23.6 million to $1.69 billion at December 31, 2024, compared to $1.71 billion at September 30, 2024, and increased $11.1 million, or 0.7%, compared to $1.68 billion one year ago. During the fourth quarter of 2024, total customer deposit balances decreased $2.8 million and brokered deposit balances decreased $20.8 million. Overall, the current rate environment continues to contribute to greater competition for deposits. As a result, the Bank continues offering deposit rate specials to attract new funds. Deposits ($ in thousands) December 31, 2024 September 30, 2024 December 31, 2023 Three Month % Change One Year % Change Noninterest-bearing demand deposits$256,416 $252,999 $252,083 1.4%1.7%Interest-bearing demand deposits 164,891 167,202 169,418 -1.4 -2.7 Money market accounts 413,822 433,307 362,205 -4.5 14.3 Savings accounts 205,055 212,763 242,148 -3.6 -15.3 Certificates of deposit, customer 464,928 441,665 443,412 5.3 4.9 Certificates of deposit, brokered 182,914 203,705 207,626 -10.2 -11.9 Total deposits$1,688,026 $1,711,641 $1,676,892 -1.4 0.7 Total shareholders’ equity decreased to $153.9 million at December 31, 2024, compared to $160.8 million three months earlier, due to a decrease in the after-tax fair market values of the available-for-sale investment securities portfolio of $4.5 million, a net loss of $2.8 million and dividends declared of $656,000, partially offset by an increase in the after-tax fair market values of derivatives of $952,000. 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, 2024. Preliminary calculations of Common Equity Tier 1 and Total Risk-Based Capital Ratios at December 31, 2024, were 12.4% and 13.6%, respectively. First Northwest continued to return capital to our shareholders through cash dividends during the fourth quarter of 2024. The Company paid cash dividends totaling $656,000 in the fourth quarter of 2024. No shares of common stock were repurchased under the Company's April 2024 Stock Repurchase Plan ("Repurchase Plan") during the quarter ended December 31, 2024. There are 846,123 shares that remain available for repurchase under the Repurchase Plan. Awards/RecognitionThe Company received several accolades as a leader in the community in the last year. In September 2024, the First Fed team was recognized in the 2024 Best of Olympic Peninsula surveys, winning Best Bank and Best Lender in Clallam County; Best Bank and Best Financial Advisor in the West End; and Best Lender in Jefferson County. First Fed was also a finalist for Best Bank, Best Customer Service, Best Employer and Best Financial Advisor in Jefferson County; Best Customer Service, Best Employer and Best Financial Advisor in Clallam County; and Best Customer Service and Best Employer in the West End.In May 2024, First Fed, along with the First Fed Community Foundation, were honored to be ranked second on the Puget Sound Business Journal Midsize Corporate Philanthropists list.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 as a finalist for Best Employer in Kitsap County and Best Bank and Best Financial Institution in Bainbridge. We recommend reading this earnings release in conjunction with the Fourth Quarter 2024 Investor Presentation, located at http://investor.ourfirstfed.com/quarterly-reports and included as an exhibit to our January 29, 2025, Current Report on Form 8-K. About the CompanyFirst 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 StatementsCertain 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, including our ability to collect, the outcome of litigation and statements regarding our mission and vision, and include, but are not limited to, statements about our plans, objectives, expectations and intentions that are not historical facts, and other statements often identified by words such as "believes," "expects," "anticipates," "estimates," or similar expressions. These forward-looking statements are based upon current management beliefs and expectations and may, therefore, involve risks and uncertainties, many of which are beyond our control. 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 Quarterly Reports on Form 10-Q under the section entitled "Risk Factors," 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 2024 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 OfficerGeri Bullard, EVP, Chief Financial Officer and Chief Operating OfficerIRGroup@ourfirstfed.com360-457-0461 FIRST NORTHWEST BANCORP AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share data) (Unaudited) December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 ASSETS Cash and due from banks $16,811 $17,953 $19,184 $15,562 $19,845 Interest-earning deposits in banks 55,637 64,769 63,995 61,784 103,324 Investment securities available for sale, at fair value 340,344 310,860 306,714 325,955 295,623 Loans held for sale 472 378 1,086 988 753 Loans receivable (net of allowance for credit losses on loans $20,449, $21,970, $19,343, $17,958, and $17,510) 1,675,186 1,714,416 1,677,764 1,692,774 1,642,518 Federal Home Loan Bank (FHLB) stock, at cost 14,435 14,435 13,086 15,876 13,664 Accrued interest receivable 8,159 8,939 9,466 8,909 7,894 Premises held for sale, net — — — 6,751 18,049 Premises and equipment, net 10,129 10,436 10,714 11,028 — Servicing rights on sold loans, at fair value 3,281 3,584 3,740 3,820 3,793 Bank-owned life insurance, net 41,150 41,429 41,113 34,681 40,578 Equity and partnership investments 13,229 14,912 15,085 15,121 14,794 Goodwill and other intangible assets, net 1,082 1,083 1,084 1,085 1,086 Deferred tax asset, net 13,738 10,802 12,216 12,704 13,001 Right-of-use ("ROU") asset, net 17,001 17,315 17,627 5,841 6,047 Prepaid expenses and other assets 21,352 24,175 23,088 27,141 20,828 Total assets $2,232,006 $2,255,486 $2,215,962 $2,240,020 $2,201,797 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $1,688,026 $1,711,641 $1,708,288 $1,666,624 $1,676,892 Borrowings 336,014 334,994 302,575 371,455 320,936 Accrued interest payable 3,295 2,153 3,143 2,830 3,396 Lease liability, net 17,535 17,799 18,054 6,227 6,428 Accrued expenses and other liabilities 31,770 25,625 23,717 29,980 29,545 Advances from borrowers for taxes and insurance 1,484 2,485 1,304 2,398 1,260 Total liabilities 2,078,124 2,094,697 2,057,081 2,079,514 2,038,457 Shareholders' Equity Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding — — — — — Common stock, $0.01 par value, 75,000,000 shares authorized; issued and outstanding at each period end: 9,353,348; 9,365,979; 9,453,247; 9,442,796; and 9,611,876 93 94 94 94 96 Additional paid-in capital 93,357 93,218 93,985 93,763 95,784 Retained earnings 97,198 100,660 103,322 106,202 107,349 Accumulated other comprehensive loss, net of tax (30,172) (26,424) (31,597) (32,465) (32,636)Unearned employee stock ownership plan (ESOP) shares (6,594) (6,759) (6,923) (7,088) (7,253)Total shareholders' equity 153,882 160,789 158,881 160,506 163,340 Total liabilities and shareholders' equity $2,232,006 $2,255,486 $2,215,962 $2,240,020 $2,201,797 FIRST NORTHWEST BANCORP AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share data) (Unaudited) For the Quarter Ended For the Year Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 INTEREST INCOME Interest and fees on loans receivable $23,716 $23,536 $23,733 $22,767 $22,083 $93,752 $84,614 Interest on investment securities 3,658 3,786 3,949 3,632 3,393 15,025 13,279 Interest on deposits in banks 550 582 571 645 581 2,348 2,126 FHLB dividends 273 302 358 282 252 1,215 880 Total interest income 28,197 28,206 28,611 27,326 26,309 112,340 100,899 INTEREST EXPENSE Deposits 11,175 10,960 10,180 10,112 8,758 42,427 27,019 Borrowings 2,885 3,226 4,196 3,286 3,356 13,593 12,448 Total interest expense 14,060 14,186 14,376 13,398 12,114 56,020 39,467 Net interest income 14,137 14,020 14,235 13,928 14,195 56,320 61,432 PROVISION FOR CREDIT LOSSES Provision for credit losses on loans 3,760 3,077 8,640 1,239 1,162 16,716 2,357 (Recapture of) provision for credit losses on unfunded commitments (105) 57 99 (269) (10) (218) (1,034)Provision for credit losses 3,655 3,134 8,739 970 1,152 16,498 1,323 Net interest income after provision for credit losses 10,482 10,886 5,496 12,958 13,043 39,822 60,109 NONINTEREST INCOME Loan and deposit service fees 1,054 1,059 1,076 1,102 1,068 4,291 4,341 Sold loan servicing fees and servicing rights mark-to-market (115) 10 74 219 276 188 676 Net gain on sale of loans 52 58 150 52 33 312 438 Net loss on sale of investment securities — — (2,117) — (5,397) (2,117) (5,397)Net gain on sale of premises and equipment — — 7,919 — — 7,919 — Increase in cash surrender value of bank-owned life insurance 328 315 293 243 260 1,179 928 Income from death benefit on bank-owned life insurance, net 1,536 — — — — 1,536 — Other (loss) income (1,555) 337 (48) 572 831 (694) 3,034 Total noninterest income 1,300 1,779 7,347 2,188 (2,929) 12,614 4,020 NONINTEREST EXPENSE Compensation and benefits 7,367 8,582 8,588 8,128 7,397 32,665 31,209 Data processing 2,065 2,085 2,008 1,944 2,107 8,102 8,170 Occupancy and equipment 1,559 1,553 1,799 1,240 1,262 6,151 4,858 Supplies, postage, and telephone 296 360 317 293 351 1,266 1,433 Regulatory assessments and state taxes 460 548 457 513 376 1,978 1,635 Advertising 362 409 377 309 235 1,457 2,706 Professional fees 813 698 684 910 1,119 3,105 3,738 FDIC insurance premium 491 533 473 386 418 1,883 1,357 Other expense 820 1,080 906 580 3,725 3,386 6,348 Total noninterest expense 14,233 15,848 15,609 14,303 16,990 59,993 61,454 Loss before provision (benefit) for income taxes (2,451) (3,183) (2,766) 843 (6,876) (7,557) 2,675 Provision (benefit) for income taxes 359 (1,203) (547) 447 (1,354) (944) 549 Net (loss) income $(2,810)$(1,980)$(2,219)$396 $(5,522)$(6,613)$2,286 Basic and diluted (loss) earnings per common share $(0.32)$(0.23)$(0.25)$0.04 $(0.62)$(0.75)$0.26 FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited) Selected Loan Detail December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 Construction and land loans breakout 1-4 Family construction $39,319 $43,125 $56,514 $69,075 $68,029 Multifamily construction 15,407 29,109 43,341 45,776 50,431 Nonresidential construction 16,857 17,500 1,015 3,374 3,756 Land and development 6,527 5,975 6,403 7,122 7,475 Total construction and land loans $78,110 $95,709 $107,273 $125,347 $129,691 Auto and other consumer loans breakout Triad Manufactured Home loans $128,231 $129,600 $110,510 $105,525 $105,057 Woodside auto loans 117,968 126,129 131,151 128,072 124,401 First Help auto loans 14,283 15,971 17,427 8,326 4,516 Other auto loans 1,647 2,064 2,690 3,313 4,158 Other consumer loans 6,747 7,434 23,845 23,598 10,998 Total auto and other consumer loans $268,876 $281,198 $285,623 $268,834 $249,130 Commercial business loans breakout Northpointe Bank MPP $36,230 $38,155 $9,150 $15,047 $9,502 Secured lines of credit 35,701 37,686 28,862 41,014 35,815 Unsecured lines of credit 1,717 1,571 1,133 1,001 456 SBA loans 7,044 7,219 7,146 8,944 9,115 Other commercial business loans 70,801 70,696 70,803 70,291 57,407 Total commercial business loans $151,493 $155,327 $117,094 $136,297 $112,295 Loans by Collateral and Unfunded Commitments December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 One-to-four family construction $44,468 $51,607 $49,440 $70,100 $60,211 All other construction and land 34,290 45,166 58,346 55,286 69,484 One-to-four family first mortgage 466,046 469,053 434,840 436,543 426,159 One-to-four family junior liens 15,090 14,701 13,706 12,608 12,250 One-to-four family revolving open-end 51,481 48,459 44,803 45,536 42,479 Commercial real estate, owner occupied: Health care 29,129 29,407 29,678 29,946 22,523 Office 17,756 17,901 19,215 17,951 18,468 Warehouse 14,948 11,645 14,613 14,683 14,758 Other 78,170 64,535 56,292 55,063 61,304 Commercial real estate, non-owner occupied: Office 49,417 49,770 50,158 53,099 53,548 Retail 49,591 49,717 50,101 50,478 51,384 Hospitality 61,919 62,282 62,628 66,982 67,332 Other 81,640 82,573 84,428 93,040 94,822 Multi-family residential 333,419 354,118 350,382 339,907 333,428 Commercial business loans 77,381 86,904 79,055 90,781 76,920 Commercial agriculture and fishing loans 21,833 15,369 14,411 10,200 5,422 State and political subdivision obligations 369 404 405 405 405 Consumer automobile loans 133,789 144,036 151,121 139,524 132,877 Consumer loans secured by other assets 131,429 132,749 129,293 122,895 108,542 Consumer loans unsecured 3,658 4,411 5,209 6,415 7,712 Total loans $1,695,823 $1,734,807 $1,698,124 $1,711,442 $1,660,028 Unfunded commitments under lines of credit or existing loans $163,827 $166,446 $155,005 $148,736 $149,631 FIRST NORTHWEST BANCORP AND SUBSIDIARYNET INTEREST MARGIN ANALYSIS(Dollars in thousands) (Unaudited) Three Months Ended December 31, 2024 2023 Average Interest Average Interest Balance Earned/ Yield/ Balance Earned/ Yield/ Outstanding Paid Rate Outstanding Paid Rate (Dollars in thousands) Interest-earning assets: Loans receivable, net (1) (2) $1,688,239 $23,716 5.59%$1,628,718 $22,083 5.38%Investment securities 313,759 3,658 4.64 297,020 3,393 4.53 FHLB dividends 11,762 273 9.23 12,514 252 7.99 Interest-earning deposits in banks 45,358 550 4.82 41,974 581 5.49 Total interest-earning assets (3) 2,059,118 28,197 5.45 1,980,226 26,309 5.27 Noninterest-earning assets 146,384 147,429 Total average assets $2,205,502 $2,127,655 Interest-bearing liabilities: Interest-bearing demand deposits $162,954 $210 0.51 $172,013 $197 0.45 Money market accounts 442,481 2,773 2.49 362,366 1,351 1.48 Savings accounts 206,605 721 1.39 247,744 963 1.54 Certificates of deposit, customer 461,136 4,925 4.25 424,722 4,197 3.92 Certificates of deposit, brokered 192,018 2,546 5.27 172,214 2,050 4.72 Total interest-bearing deposits (4) 1,465,194 11,175 3.03 1,379,059 8,758 2.52 Advances 236,576 2,491 4.19 256,560 2,962 4.58 Subordinated debt 39,504 394 3.97 39,425 394 3.96 Total interest-bearing liabilities 1,741,274 14,060 3.21 1,675,044 12,114 2.87 Noninterest-bearing deposits (4) 256,715 259,845 Other noninterest-bearing liabilities 45,953 36,795 Total average liabilities 2,043,942 1,971,684 Average equity 161,560 155,971 Total average liabilities and equity $2,205,502 $2,127,655 Net interest income $14,137 $14,195 Net interest rate spread 2.24 2.40 Net earning assets $317,844 $305,182 Net interest margin (5) 2.73 2.84 Average interest-earning assets to average interest-bearing liabilities 118.3% 118.2% (1) The average loans receivable, net balances include nonaccrual loans.(2) Interest earned on loans receivable includes net deferred fees (costs) of $103,000 and ($151,000) for the three months ended December 31, 2024 and 2023, respectively.(3) Includes interest-earning deposits (cash) at other financial institutions.(4) Cost of all deposits, including noninterest-bearing demand deposits, was 2.58% and 2.12% for the three months ended December 31, 2024 and 2023, respectively.(5) Net interest income divided by average interest-earning assets. FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited) Non-GAAP Financial MeasuresThis press release contains financial measures that are not in conformity with generally accepted accounting principles in the United States of America ("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. Other banking companies may use names similar to those the Company uses for the non-GAAP financial measures the Company discloses, but may calculate them differently. Investors should understand how the Company and other companies each calculate their non-GAAP financial measures when making comparisons. Reconciliations of the GAAP and non-GAAP measures are presented below. Calculations Based on PPNR and Adjusted PPNR: For the Quarter Ended For the Year Ended (Dollars in thousands) December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 Net (loss) income $(2,810)$(1,980)$(2,219)$396 $(5,522)$(6,613)$2,286 Plus: provision for credit losses 3,655 3,134 8,739 970 1,152 16,498 1,323 Provision (benefit) for income taxes 359 (1,203) (547) 447 (1,354) (944) 549 PPNR (1) 1,204 (49) 5,973 1,813 (5,724) 8,941 4,158 Selected nonrecurring adjustments to PPNR Less: Net gain on sale of premises and equipment — — 7,919 — — 7,919 — Sale leaseback taxes and assessments included in occupancy and equipment — — (359) — — (359) — Net loss on sale of investment securities — — (2,117) — (5,397) (2,117) (5,397)Adjusted PPNR (1) $1,204 $(49)$530 $1,813 $(327)$3,498 $9,555 Average total assets $2,205,502 $2,209,333 $2,219,370 $2,166,187 $2,127,655 $2,200,138 $2,109,200 Return on average assets (GAAP) -0.51% -0.36% -0.40% 0.07% -1.03% -0.30% 0.11%Adjusted PPNR return on average assets (Non-GAAP) (1) 0.22% -0.01% 0.10% 0.34% -0.06% 0.16% 0.45% (1) We believe these non-GAAP metrics are useful to evaluate the relative strength of the Company's performance. FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited) Calculations Based on Tangible Common Equity: For the Quarter Ended For the Year Ended December 31, 2024 September 30, 2024 June 30, 2024 March 31, 2024 December 31, 2023 December 31, 2024 December 31, 2023 (Dollars in thousands, except per share data) Total shareholders' equity $153,882 $160,789 $158,881 $160,506 $163,340 $153,882 $163,340 Less: Goodwill and other intangible assets 1,082 1,083 1,084 1,085 1,086 1,082 1,086 Disallowed non-mortgage loan servicing rights 423 489 517 489 481 423 481 Total tangible common equity $152,377 $159,217 $157,280 $158,932 $161,773 $152,377 $161,773 Total assets $2,232,006 $2,255,486 $2,215,962 $2,240,020 $2,201,797 $2,232,006 $2,201,797 Less: Goodwill and other intangible assets 1,082 1,083 1,084 1,085 1,086 1,082 1,086 Disallowed non-mortgage loan servicing rights 423 489 517 489 481 423 481 Total tangible assets $2,230,501 $2,253,914 $2,214,361 $2,238,446 $2,200,230 $2,230,501 $2,200,230 Average shareholders' equity $161,560 $160,479 $163,079 $161,867 $155,971 $161,742 $159,413 Less: Average goodwill and other intangible assets 1,083 1,084 1,085 1,085 1,086 1,084 1,087 Average disallowed non-mortgage loan servicing rights 489 517 489 481 608 494 670 Total average tangible common equity $159,988 $158,878 $161,505 $160,301 $154,277 $160,164 $157,656 Net (loss) income $(2,810)$(1,980)$(2,219)$396 $(5,522)$(6,613)$2,286 Common shares outstanding 9,353,348 9,365,979 9,453,247 9,442,796 9,611,876 9,353,348 9,611,876 GAAP Ratios: Equity to total assets 6.89% 7.13% 7.17% 7.17% 7.42% 6.89% 7.42%Return on average equity -6.92% -4.91% -5.47% 0.98% -14.05% -4.09% 1.43%Book value per common share $16.45 $17.17 $16.81 $17.00 $16.99 $16.45 $16.99 Non-GAAP Ratios: Tangible common equity to tangible assets (1) 6.83% 7.06% 7.10% 7.10% 7.35% 6.83% 7.35%Return on average tangible common equity (1) -6.99% -4.96% -5.53% 0.99% -14.20% -4.13% 1.45%Tangible book value per common share (1) $16.29 $17.00 $16.64 $16.83 $16.83 $16.29 $16.83 (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.

First Northwest Bancorp Reports Fourth Quarter 2024 Financial Results

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