First Northwest Bancorp Reports Second Quarter 2025 Improved Profitability

PORT ANGELES, Wash., July 24, 2025 (GLOBE NEWSWIRE) -- First Northwest Bancorp (Nasdaq: FNWB) ("First Northwest" or the "Company"), the holding company for First Fed Bank ("First Fed" or the "Bank"), today reported net income of $3.7 million for the second quarter of 2025, compared to a net loss of $9.0 million for the first quarter of 2025 and a net loss of $2.2 million for the second quarter of 2024. Basic and diluted income per share were $0.42 for the second quarter of 2025, compared to basic and diluted loss per share of $1.03 for the first quarter of 2025 and basic and diluted loss per share of $0.25 for the second quarter of 2024. In the second quarter of 2025, the Company recorded Adjusted Pre-Tax, Pre-Provision Net Revenue ("PPNR")(1) of $2.1 million, compared to $1.5 million for the preceding quarter and $530,000 for the second quarter of 2024. The Board of Directors of First Northwest has elected not to declare a dividend for this quarter as part of a prudent approach to capital management. The Company remains committed to maintaining a strong balance sheet and will continue to evaluate future dividend decisions in light of the Company’s long-term strategic objectives. Quote from Cindy Finnie, First Northwest Board Chair:"As previously disclosed, the Board has begun a search process for the next full time Chief Executive Officer. We also continue to strongly dispute the allegations contained in the legal proceedings disclosed in our June 13, 2025, 8-K and intend to vigorously defend against them. Despite the volatility of the past few quarters, the Board remains focused on the strategic objectives of the Bank, building on the positive core trends from the past few quarters." Quote from Geraldine Bullard, First Northwest Interim CEO:"Our second quarter included continued modest improvement in several important performance measures, including seven basis points of net interest margin expansion and our fifth consecutive quarter of growing Adjusted PPNR. Commercial business loan recoveries totaling $1.1 million drove a modest provision release during the quarter. The Bank continues to show core customer growth, with loans growing 3% annualized compared to the preceding quarter and total deposits only down modestly despite a $31.0 million reduction in brokered time deposits during the quarter." Key Points for the Second Quarter Positive Trends: Return on average assets increased to 0.68% for the current quarter from -1.69% in the preceding quarter.Net interest margin increased to 2.83% for the current quarter compared to 2.76% in the first quarter of 2025, as a result of an increase in the yield on interest-earning assets and a decrease in the rate paid on interest-bearing liabilities.Efficiency ratio improved to 78.0% for the current quarter from 113.5% in the preceding quarter due to the recognition of a payroll tax credit in the current quarter while the preceding quarter included higher expenses related to the legal reserve recorded.Customer deposits increased $19.6 million to $1.55 billion at June 30, 2025 from $1.53 billion at March 31, 2025.Recorded a $296,000 recapture of provision for credit losses on loans in the second quarter of 2025, compared to provisions for credit losses on loans of $7.8 million for the preceding quarter and $8.7 million for the second quarter of 2024. Other significant events: In the second quarter of 2025, the statute of limitations expired on employee retention credit ("ERC") payments received for the first and second quarters of 2021. As a result, the Bank recorded $2.6 million as a reduction to compensation and benefits. A related contingent ERC consulting expense of $528,000 was recorded in professional fees, partially offsetting the credit. The Bank anticipates recording the remaining reserved ERC of $2.0 million in 2028.During the second quarter of 2025, the Bank consolidated the operations of its Bellevue and Fremont business centers into a new location, the Seattle business center. This consolidation resulted in a one-time increase to other expense of $599,000 for the early termination of the Bellevue business center lease and write-off of remaining leasehold improvements. No additional costs were incurred for closing the Fremont business center. The Bank estimates the consolidation will reduce annual rent expense by $130,000 going forward.The Company disclosed in its Current Report on Form 8-K filed on July 21, 2025, that a settlement agreement was reached in the previously disclosed legal matter discussed in Part II, Item 1 of the Company's Form 10-Q for the quarter ended March 31, 2025. The Bank continues to vigorously defend itself in the separate legal proceedings disclosed in the Company's Current Report on Form 8-K filed on June 13, 2025. (1) See reconciliation of Non-GAAP Financial Measures later in this release. Selected Quarterly Financial Ratios: As of or For the Quarter Ended As of or For the Six Months Ended June 30, June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 2025 2024 Performance ratios: (1) Return on average assets 0.68% -1.69% -0.51% -0.36% -0.40% -0.50% -0.17%Adjusted PPNR return on average assets (2) 0.39 0.27 0.26 0.17 0.10 0.33 0.16 Return on average equity 10.00 -23.42 -6.92 -4.91 -5.47 -7.15 -2.26 Net interest margin (3) 2.83 2.76 2.73 2.70 2.76 2.80 2.76 Efficiency ratio (4) 78.0 113.5 92.2 100.3 72.3 96.40 79.35 Equity to total assets 6.82 6.75 6.89 7.13 7.17 6.82 7.17 Book value per common share $15.85 $15.52 $16.45 $17.17 $16.81 $15.85 $16.81 Tangible performance ratios: (1) Tangible common equity to tangible assets (2) 6.76% 6.68% 6.83% 7.06% 7.10% 6.76% 7.10%Return on average tangible common equity (2) 10.10 -23.65 -6.99 -4.96 -5.53 -7.22 -2.28 Tangible book value per common share (2) $15.70 $15.36 $16.29 $17.00 $16.64 $15.70 $16.64 Capital ratios (First Fed): (5) Tier 1 leverage 9.2% 9.0% 9.4% 9.4% 9.4% 9.2% 9.4%Common equity Tier 1 12.1 12.1 12.4 12.2 12.4 12.1 12.4 Total risk-based 13.1 13.4 13.6 13.4 13.5 13.1 13.5 (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 second quarter of 2025 increased $616,000 to $2.1 million, compared to $1.5 million for the preceding quarter, and increased $1.6 million from $530,000 in the second quarter one year ago. For the Quarter Ended For the Six Months Ended (Dollars in thousands) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 June 30, 2025 June 30, 2024 Net interest income (GAAP) $14,193 $13,847 $14,137 $14,020 $14,235 $28,040 $28,163 Total noninterest income (GAAP) 2,170 3,777 1,300 1,779 7,347 5,947 9,535 Total revenue (GAAP) 16,363 17,624 15,437 15,799 21,582 33,987 37,698 Total noninterest expense (GAAP) 12,765 20,000 14,233 15,848 15,609 32,765 29,912 PPNR (Non-GAAP) (1) 3,598 (2,376) 1,204 (49) 5,973 1,222 7,786 Less selected nonrecurring adjustments to PPNR (Non-GAAP): Employee retention credit ("ERC") included in compensation and benefits 2,640 — — — — 2,640 — ERC consulting expense included in professional fees (528) — — — — (528) — Costs associated with early termination of Bellevue Business Center lease included in other expense (599) — — — — (599) — Bank-owned life insurance ("BOLI") death benefit — 1,059 1,536 — — 1,059 — Gain on extinguishment of subordinated debt included in other income — 846 — — — 846 — Legal reserve — (5,750) — — — (5,750) — Equity investment repricing adjustment — — (1,762) — — — 651 One-time compensation payouts related to reduction in force — — — (996) — — — 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) — (2,117)Adjusted PPNR (Non-GAAP) (1) $2,085 $1,469 $1,430 $947 $530 $3,554 $1,692 (1) See reconciliation of Non-GAAP Financial Measures later in this release. Total interest income increased $308,000 to $27.1 million for the second quarter of 2025, compared to $26.8 million for the preceding quarter, and decreased $1.5 million compared to $28.6 million in the second quarter of 2024. Interest income increased in the second quarter of 2025 primarily due to an increase in the yields earned on loans receivable, partially offset by a decrease in both the yield earned and average volume of investment securities. Average real estate and commercial business loan balances decreased while average consumer loan balances increased over the preceding quarter.Total interest expense decreased $38,000 to $12.9 million for the second quarter of 2025, compared to $13.0 million for the preceding quarter, and decreased $1.4 million compared to $14.4 million in the second quarter of 2024. Interest expense decreased in the second quarter of 2025 primarily due to a reduced volume of brokered certificates of deposit ("CDs") and decreases in interest paid on customer CDs, brokered CDs and demand deposits. These decreases were partially offset by increases in the volume and interest paid on money market and savings accounts and an increase in the rate paid on advances during the current quarter.The net interest margin increased to 2.83% for the second quarter of 2025, from 2.76% for both the preceding quarter and the second quarter of 2024.Noninterest income decreased $1.6 million to $2.2 million for the second quarter of 2025, from $3.8 million for the preceding quarter. The first quarter of 2025 was higher due to nonrecurring income items including a $1.1 million BOLI death benefit payment received due to the passing of a former employee and a $846,000 gain on extinguishment of debt.Noninterest expense decreased $7.2 million to $12.8 million for the second quarter of 2025, compared to $20.0 million for the preceding quarter. Compensation and benefits was lower primarily due to the ERC recorded during the current quarter. Other expense for the preceding quarter included the previously disclosed $5.8 million legal reserve. Allowance for Credit Losses on Loans ("ACLL") and Credit Quality The allowance for credit losses on loans ("ACLL") decreased $2.2 million to $18.4 million at June 30, 2025, from $20.6 million at March 31, 2025. The ACLL as a percentage of total loans was 1.10% at June 30, 2025, a decrease from 1.24% at March 31, 2025, and from 1.14% one year earlier. A release of $2.6 million reserves on individually evaluated loans, partially offset by net loan charge-offs totaling $1.9 million and a small increase to the pooled loan reserve, resulted in a recapture of provision expense of $296,000 for the quarter ended June 30, 2025. Nonperforming loans totaled $20.4 million at both June 30, 2025 and March 31, 2025. Current quarter activity included an increase due to a $4.1 million commercial real estate loan transitioning into nonperforming status, large principal payments received totaling $3.6 million and charged-off balances totaling $1.3 million. ACLL to nonperforming loans decreased to 90% at June 30, 2025, from 101% at March 31, 2025, and increased from 82% at June 30, 2024. This ratio increased in the first quarter of 2025 with decreases in balances due to principal payments and charge-offs on loans with appropriate reserves. Classified loans decreased $663,000 to $30.9 million at June 30, 2025, from $31.6 million at March 31, 2025, primarily due to payments received of $3.2 million and commercial business loan net charge-offs totaling $1.5 million, partially offset by the downgrade of a $4.1 million commercial real estate loan that was adversely impacted by reduced cross-border traffic during the second quarter. Four collateral dependent loans totaling $23.8 million account for 77% of the classified loan balance at June 30, 2025. 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 the largest of these four collateral-dependent relationships. The Bank is also closely monitoring a group of commercial business loans that have similar collateral, with 11 loans totaling $562,000 included in classified loans at June 30, 2025, and four additional loans totaling $686,000 included in the special mention risk grading category. For the Quarter Ended ACLL ($ in thousands) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 Balance at beginning of period $20,569 $20,449 $21,970 $19,343 $17,958 Charge-offs: Commercial real estate (15) (5,571) — — — Construction and land — (374) (411) — (3,978)Auto and other consumer (273) (243) (364) (492) (832)Commercial business (2,823) (1,513) (4,596) (24) (2,643)Total charge-offs (3,111) (7,701) (5,371) (516) (7,453)Recoveries: One-to-four family — — — 42 — Commercial real estate 20 6 2 — — Construction and land 5 — — — — Auto and other consumer 74 43 52 24 198 Commercial business 1,084 2 36 — — Total recoveries 1,183 51 90 66 198 Net loan charge-offs (1,928) (7,650) (5,281) (450) (7,255)(Recapture of) provision for credit losses (296) 7,770 3,760 3,077 8,640 Balance at end of period $18,345 $20,569 $20,449 $21,970 $19,343 Average total loans $1,658,723 $1,662,164 $1,708,232 $1,718,402 $1,717,830 Annualized net charge-offs to average outstanding loans 0.47% 1.87% 1.23% 0.10% 1.70% Asset Quality ($ in thousands) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 Nonaccrual loans: One-to-four family $2,274 $1,404 $1,477 $1,631 $1,750 Multi-family — — — — 708 Commercial real estate 4,095 4 5,598 5,634 14 Construction and land 13,063 15,280 19,544 19,382 19,292 Home equity 10 54 55 116 118 Auto and other consumer 410 710 700 894 746 Commercial business 514 2,903 3,141 2,719 1,003 Total nonaccrual loans 20,366 20,355 30,515 30,376 23,631 Other real estate owned 1,297 — — — — Total nonperforming assets $21,663 $20,355 $30,515 $30,376 $23,631 Nonaccrual loans as a % of total loans (1) 1.22% 1.23% 1.80% 1.75% 1.39%Nonperforming assets as a % of total assets (2) 0.99 0.94 1.37 1.35 1.07 ACLL as a % of total loans 1.10 1.24 1.21 1.27 1.14 ACLL as a % of nonaccrual loans 90.08 101.05 67.01 72.33 81.85 Total past due loans to total loans 1.17 1.36 1.98 1.92 1.45 (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 decreased $11.9 million, or 3.8%, to $303.5 million at June 30, 2025, compared to $315.4 million three months earlier, and decreased $3.2 million compared to $306.7 million at June 30, 2024. Maturities totaling $11.8 million and regular principal payments totaling $5.7 million were partially offset by purchases totaling $5.5 million during the current quarter. Net unrealized losses were flat for the second quarter of 2025. The estimated average life of the securities portfolio was approximately 7.6 years at June 30, 2025, 6.9 years at the preceding quarter end and 7.8 years at the end of the second quarter of 2024. The effective duration of the portfolio was approximately 4.9 years at June 30, 2025, compared to 4.3 years at the preceding quarter end and 4.3 years at the end of the second quarter of 2024. Investment Securities ($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Three Month % Change One Year % Change Available for Sale at Fair Value Municipal bonds $77,324 $78,295 $78,825 -1.2% -1.9%U.S. government agency issued asset-backed securities (ABS agency) 12,298 12,643 13,982 -2.7 -12.0 Corporate issued asset-backed securities (ABS corporate) 13,105 15,671 16,483 -16.4 -20.5 Corporate issued debt securities (Corporate debt) 55,760 55,067 52,892 1.3 5.4 U.S. Small Business Administration securities (SBA) 7,504 8,061 9,772 -6.9 -23.2 Mortgage-backed securities: U.S. government agency issued mortgage-backed securities (MBS agency) 96,014 96,642 77,301 -0.6 24.2 Non-agency issued mortgage-backed securities (MBS non-agency) 41,510 49,054 57,459 -15.4 -27.8 Total securities available for sale $303,515 $315,433 $306,714 -3.8 -1.0 Net loans, excluding loans held for sale, increased $9.6 million, or 0.6%, to $1.65 billion at June 30, 2025, from $1.64 billion at March 31, 2025, and decreased $30.6 million, or 1.8%, from $1.68 billion one year prior. Construction loans that converted into fully amortizing loans during the quarter totaled $6.0 million. New loan funding totaling $47.2 million and draws on existing loans totaling $23.9 million outpaced loan payoffs of $34.1 million, regular payments of $28.4 million and charge-offs totaling $2.4 million. Loans ($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Three Month % Change One Year % Change Real Estate: One-to-four family $387,459 $394,428 $389,934 -1.8% -0.6%Multi-family 329,696 338,147 350,076 -2.5 -5.8 Commercial real estate 391,362 387,312 375,511 1.0 4.2 Construction and land 72,538 64,877 107,273 11.8 -32.4 Total real estate loans 1,181,055 1,184,764 1,222,794 -0.3 -3.4 Consumer: Home equity 84,927 79,151 72,613 7.3 17.0 Auto and other consumer 280,877 273,878 285,623 2.6 -1.7 Total consumer loans 365,804 353,029 358,236 3.6 2.1 Commercial business 117,843 119,783 117,094 -1.6 0.6 Total loans receivable 1,664,702 1,657,576 1,698,124 0.4 -2.0 Less: Derivative basis adjustment (860) (566) 1,017 -51.9 -184.6 Allowance for credit losses on loans 18,345 20,569 19,343 -10.8 -5.2 Total loans receivable, net $1,647,217 $1,637,573 $1,677,764 0.6 -1.8 The Bank invested $9.1 million into a new bank-owned life insurance policy in the second quarter of 2025 to replace a policy surrendered in the preceding quarter. The Bank received the return of the surrendered funds early in the third quarter of 2025. Total deposits decreased $11.4 million to $1.65 billion at June 30, 2025, compared to $1.67 billion at March 31, 2025, and decreased $53.7 million compared to $1.71 billion one year prior. During the second quarter of 2025, total customer deposit balances increased $19.6 million and brokered deposit balances decreased $31.0 million. Overall, the current rate environment continues to contribute to competition for deposits leading to increased volumes and higher rates paid on money market and savings accounts during the current quarter. The deposit mix compared to June 30, 2024, also reflects a shift in volume to money market and customer CD accounts while the volume and rate paid on brokered CDs decreased. Deposits ($ in thousands) June 30, 2025 March 31, 2025 June 30, 2024 Three Month % Change One Year % Change Noninterest-bearing demand deposits $240,051 $247,890 $276,543 -3.2% -13.2%Interest-bearing demand deposits 144,409 169,912 162,201 -15.0 -11.0 Money market accounts 484,787 424,469 423,047 14.2 14.6 Savings accounts 227,968 235,188 224,631 -3.1 1.5 Certificates of deposit, customer 450,494 450,663 398,161 0.0 13.1 Certificates of deposit, brokered 106,927 137,946 223,705 -22.5 -52.2 Total deposits $1,654,636 $1,666,068 $1,708,288 -0.7 -3.1 Total shareholders’ equity increased to $149.7 million at June 30, 2025, compared to $146.5 million three months earlier, due to net income of $3.7 million and an increase in the after-tax fair market values of the available-for-sale investment securities portfolio of $128,000, partially offset by dividends declared of $661,000 and a decrease in the after-tax fair market values of derivatives of $197,000. Capital levels for both the Company and the Bank remain in excess of applicable regulatory requirements and the Bank was categorized as "well-capitalized" at June 30, 2025. Preliminary calculations of Common Equity Tier 1 and Total Risk-Based Capital Ratios at June 30, 2025, were 12.1% and 13.1%, respectively. First Northwest continued to provide a return on capital to our shareholders through cash dividends during the second quarter of 2025. The Company paid cash dividends totaling $650,000 in the second quarter of 2025. No shares of common stock were repurchased under the Company's April 2024 Stock Repurchase Plan (the "Repurchase Plan") during the quarter ended June 30, 2025. There are 846,123 shares that remain available for repurchase under the Repurchase Plan. 2025 Awards/RecognitionForbes Best-in-State Banks 2024 Awards/Recognition Sound Publishing:Puget Sound Business Journal Top Corporate Philanthropists Best of the Olympic Peninsula AwardsBellingham Best of the Northwest - Silver Best Lender in Clallam and Jefferson County The Leader Readers Choice Award - Best Bank Best Bank in Clallam County and West End 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 17 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 and execution on certain strategies, 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, including potential recessionary and other unfavorable conditions and trends relating to housing markets, costs of living, unemployment levels, interest rates, supply chain difficulties and inflationary pressures, among other things; legislative, regulatory, and policy changes; legal proceedings regulatory investigations and their resolutions; and other factors described in the Company’s latest Annual Report on Form 10-K 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 2025 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:Geraldine Bullard, Interim Chief Executive Officer, Chief Operating Officer and EVPPhyllis Nomura, Chief Financial Officer and EVPIRGroup@ourfirstfed.com360-457-0461 FIRST NORTHWEST BANCORP AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS(Dollars in thousands, except share data) (Unaudited) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 ASSETS Cash and due from banks $18,487 $18,911 $16,811 $17,953 $19,184 Interest-earning deposits in banks 69,376 51,412 55,637 64,769 63,995 Investment securities available for sale, at fair value (amortized cost at each period end of $336,206, $348,249, $376,265, $341,011 and $344,941) 303,515 315,433 340,344 310,860 306,714 Loans held for sale 1,557 2,940 472 378 1,086 Loans receivable (net of allowance for credit losses on loans at each period end of $18,345, $20,569, $20,449, $21,970, and $19,343) 1,647,217 1,637,573 1,675,186 1,714,416 1,677,764 Federal Home Loan Bank (FHLB) stock, at cost 14,906 13,106 14,435 14,435 13,086 Accrued interest receivable 8,305 8,319 8,159 8,939 9,466 Premises and equipment, net 8,999 9,870 10,129 10,436 10,714 Servicing rights on sold loans, at fair value 3,220 3,301 3,281 3,584 3,740 Bank-owned life insurance ("BOLI"), net 41,380 31,786 41,150 41,429 41,113 Equity and partnership investments 14,811 15,026 13,229 14,912 15,085 Goodwill and other intangible assets, net 1,081 1,082 1,082 1,083 1,084 Deferred tax asset, net 14,266 14,304 13,738 10,802 12,216 Right-of-use ("ROU") asset, net 15,772 16,687 17,001 17,315 17,627 Prepaid expenses and other assets 32,471 31,680 21,352 24,175 23,088 Total assets $2,195,363 $2,171,430 $2,232,006 $2,255,486 $2,215,962 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $1,654,636 $1,666,068 $1,688,026 $1,711,641 $1,708,288 Borrowings 344,108 307,091 336,014 334,994 302,575 Accrued interest payable 1,514 2,163 3,295 2,153 3,143 Lease liability, net 16,257 17,266 17,535 17,799 18,054 Accrued expenses and other liabilities 27,790 29,767 31,770 25,625 23,717 Advances from borrowers for taxes and insurance 1,325 2,583 1,484 2,485 1,304 Total liabilities 2,045,630 2,024,938 2,078,124 2,094,697 2,057,081 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: 9,444,963; 9,440,618; 9,353,348; 9,365,979; and 9,453,247 94 94 93 94 94 Additional paid-in capital 93,595 93,450 93,357 93,218 93,985 Retained earnings 90,506 87,506 97,198 100,660 103,322 Accumulated other comprehensive loss, net of tax (28,198) (28,129) (30,172) (26,424) (31,597)Unearned employee stock ownership plan (ESOP) shares (6,264) (6,429) (6,594) (6,759) (6,923)Total shareholders' equity 149,733 146,492 153,882 160,789 158,881 Total liabilities and shareholders' equity $2,195,363 $2,171,430 $2,232,006 $2,255,486 $2,215,962 FIRST NORTHWEST BANCORP AND SUBSIDIARYCONSOLIDATED STATEMENTS OF OPERATIONS(Dollars in thousands, except per share data) (Unaudited) For the Quarter Ended For the Six Months Ended June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 June 30, 2025 June 30, 2024 INTEREST INCOME Interest and fees on loans receivable $22,814 $22,231 $23,716 $23,536 $23,733 $45,045 $46,500 Interest on investment securities 3,466 3,803 3,658 3,786 3,949 7,269 7,581 Interest on deposits in banks 520 482 550 582 571 1,002 1,216 FHLB dividends 331 307 273 302 358 638 640 Total interest income 27,131 26,823 28,197 28,206 28,611 53,954 55,937 INTEREST EXPENSE Deposits 9,552 9,737 11,175 10,960 10,180 19,289 20,292 Borrowings 3,386 3,239 2,885 3,226 4,196 6,625 7,482 Total interest expense 12,938 12,976 14,060 14,186 14,376 25,914 27,774 Net interest income 14,193 13,847 14,137 14,020 14,235 28,040 28,163 PROVISION FOR CREDIT LOSSES (Recapture of) provision for credit losses on loans (296) 7,770 3,760 3,077 8,640 7,474 9,879 (Recapture of) provision for credit losses on unfunded commitments (64) 15 (105) 57 99 (49) (170)(Recapture of) provision for credit losses (360) 7,785 3,655 3,134 8,739 7,425 9,709 Net interest income after (recapture of) provision for credit losses 14,553 6,062 10,482 10,886 5,496 20,615 18,454 NONINTEREST INCOME Loan and deposit service fees 1,095 1,106 1,054 1,059 1,076 2,201 2,178 Sold loan servicing fees and servicing rights mark-to-market 92 195 (115) 10 74 287 293 Net gain on sale of loans 44 11 52 58 150 55 202 Net loss on sale of investment securities — — — — (2,117) — (2,117)Net gain on sale of premises and equipment — — — — 7,919 — 7,919 Increase in BOLI cash surrender value 485 372 328 315 293 857 536 Income from BOLI death benefit, net — 1,059 1,536 — — 1,059 — Other income (loss) 454 1,034 (1,555) 337 (48) 1,488 524 Total noninterest income 2,170 3,777 1,300 1,779 7,347 5,947 9,535 NONINTEREST EXPENSE Compensation and benefits 4,698 7,715 7,367 8,582 8,588 12,413 16,716 Data processing 1,926 2,011 2,065 2,085 2,008 3,937 3,952 Occupancy and equipment 1,507 1,592 1,559 1,553 1,799 3,099 3,039 Supplies, postage, and telephone 346 298 296 360 317 644 610 Regulatory assessments and state taxes 501 479 460 548 457 980 970 Advertising 299 265 362 409 377 564 686 Professional fees 1,449 777 813 698 684 2,226 1,594 FDIC insurance premium 463 434 491 533 473 897 859 Other expense 1,576 6,429 820 1,080 906 8,005 1,486 Total noninterest expense 12,765 20,000 14,233 15,848 15,609 32,765 29,912 Income (loss) before provision (benefit) for income taxes 3,958 (10,161) (2,451) (3,183) (2,766) (6,203) (1,923)Provision (benefit) for income taxes 297 (1,125) 359 (1,203) (547) (828) (100)Net income (loss) $3,661 $(9,036) $(2,810) $(1,980) $(2,219) $(5,375) $(1,823) Basic and diluted earnings (loss) per common share $0.42 $(1.03) $(0.32) $(0.23) $(0.25) $(0.61) $(0.21) FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited) Selected Loan Detail June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 Construction and land loans breakout 1-4 Family construction $39,040 $42,371 $39,319 $43,125 $56,514 Multifamily construction 14,728 9,223 15,407 29,109 43,341 Nonresidential construction 12,832 7,229 16,857 17,500 1,015 Land and development 5,938 6,054 6,527 5,975 6,403 Total construction and land loans $72,538 $64,877 $78,110 $95,709 $107,273 Auto and other consumer loans breakout Triad Manufactured Home loans $135,537 $134,740 $128,231 $129,600 $110,510 Woodside auto loans 127,828 118,972 117,968 126,129 131,151 First Help auto loans 11,221 13,012 14,283 15,971 17,427 Other auto loans 1,016 1,313 1,647 2,064 2,690 Other consumer loans 5,275 5,841 6,747 7,434 23,845 Total auto and other consumer loans $280,877 $273,878 $268,876 $281,198 $285,623 Commercial business loans breakout Northpointe Bank MPP $- $- $36,230 $38,155 $9,150 Secured lines of credit 41,043 39,986 35,701 37,686 28,862 Unsecured lines of credit 2,551 2,030 1,717 1,571 1,133 SBA loans 6,618 6,889 7,044 7,219 7,146 Other commercial business loans 67,631 70,878 70,801 70,696 70,803 Total commercial business loans $117,843 $119,783 $151,493 $155,327 $117,094 Loans by Collateral and Unfunded Commitments June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 One-to-four family construction $40,509 $38,221 $44,468 $51,607 $49,440 All other construction and land 36,129 30,947 34,290 45,166 58,346 One-to-four family first mortgage 420,847 428,081 466,046 469,053 434,840 One-to-four family junior liens 20,116 15,155 15,090 14,701 13,706 One-to-four family revolving open-end 57,502 51,832 51,481 48,459 44,803 Commercial real estate, owner occupied: Health care 29,091 29,386 29,129 29,407 29,678 Office 19,116 19,363 17,756 17,901 19,215 Warehouse 7,432 9,272 14,948 11,645 14,613 Other 74,364 74,915 78,170 64,535 56,292 Commercial real estate, non-owner occupied: Office 42,198 41,885 49,417 49,770 50,158 Retail 51,708 50,737 49,591 49,717 50,101 Hospitality 64,308 62,226 61,919 62,282 62,628 Other 93,505 93,549 81,640 82,573 84,428 Multi-family residential 330,784 339,217 333,419 354,118 350,382 Commercial business loans 73,403 75,628 77,381 86,904 79,055 Commercial agriculture and fishing loans 22,443 22,914 21,833 15,369 14,411 State and political subdivision obligations 369 369 369 404 405 Consumer automobile loans 139,992 133,209 133,789 144,036 151,121 Consumer loans secured by other assets 138,378 137,619 131,429 132,749 129,293 Consumer loans unsecured 2,508 3,051 3,658 4,411 5,209 Total loans $1,664,702 $1,657,576 $1,695,823 $1,734,807 $1,698,124 Unfunded commitments under lines of credit or existing loans $166,589 $175,100 $163,827 $166,446 $155,005 FIRST NORTHWEST BANCORP AND SUBSIDIARYNET INTEREST MARGIN ANALYSIS(Dollars in thousands) (Unaudited) Three Months Ended June 30, 2025 2024 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) $1,639,236 $22,814 5.58% $1,698,777 $23,733 5.62%Total investment securities 311,078 3,466 4.47 316,878 3,949 5.01 FHLB dividends 13,313 331 9.97 15,175 358 9.49 Interest-earning deposits in banks 46,807 520 4.46 41,450 571 5.54 Total interest-earning assets (3) 2,010,434 27,131 5.41 2,072,280 28,611 5.55 Noninterest-earning assets 154,145 147,090 Total average assets $2,164,579 $2,219,370 Interest-bearing liabilities: Interest-bearing demand deposits $164,475 $240 0.59 $165,212 $193 0.47 Money market accounts 444,135 2,660 2.40 405,393 2,420 2.40 Savings accounts 228,901 884 1.55 227,650 915 1.62 Certificates of deposit, customer 451,712 4,396 3.90 400,197 4,079 4.10 Certificates of deposit, brokered 124,383 1,372 4.42 209,566 2,573 4.94 Total interest-bearing deposits (4) 1,413,606 9,552 2.71 1,408,018 10,180 2.91 Advances 275,176 3,041 4.43 315,375 3,801 4.85 Subordinated debt 34,600 345 4.00 39,465 395 4.03 Total interest-bearing liabilities 1,723,382 12,938 3.01 1,762,858 14,376 3.28 Noninterest-bearing deposits (4) 243,655 251,442 Other noninterest-bearing liabilities 50,685 41,991 Total average liabilities 2,017,722 2,056,291 Average equity 146,857 163,079 Total average liabilities and equity $2,164,579 $2,219,370 Net interest income $14,193 $14,235 Net interest rate spread 2.40 2.27 Net earning assets $287,052 $309,422 Net interest margin (5) 2.83 2.76 Average interest-earning assets to average interest-bearing liabilities 116.7% 117.6% (1)The average loans receivable, net balances include nonaccrual loans.(2)Interest earned on loans receivable includes net deferred (costs) fees of ($148,000) and $34,000 for the three months ended June 30, 2025 and 2024, respectively.(3)Includes interest-earning deposits (cash) at other financial institutions.(4)Cost of all deposits, including noninterest-bearing demand deposits, was 2.31% and 2.47% for the three months ended June 30, 2025 and 2024, 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 Six Months Ended (Dollars in thousands) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 June 30, 2025 June 30, 2024 Net income (loss) (GAAP) $3,661 $(9,036) $(2,810) $(1,980) $(2,219) $(5,375) $(1,823)Plus: (recapture of) provision for credit losses (GAAP) (360) 7,785 3,655 3,134 8,739 7,425 9,709 Provision (benefit) for income taxes (GAAP) 297 (1,125) 359 (1,203) (547) (828) (100)PPNR (Non-GAAP) (1) 3,598 (2,376) 1,204 (49) 5,973 1,222 7,786 Less selected nonrecurring adjustments to PPNR (Non-GAAP): Employee retention credit ("ERC") included in compensation and benefits 2,640 — — — — 2,640 — ERC consulting expense included in professional fees (528) — — — — (528) — Costs associated with early termination of Bellevue Business Center lease included in other expense (599) — — — — (599) — Bank-owned life insurance ("BOLI") death benefit — 1,059 1,536 — — 1,059 — Gain on extinguishment of subordinated debt included in other income — 846 — — — 846 — Legal reserve — (5,750) — — — (5,750) — Equity investment repricing adjustment — — (1,762) — — — 651 One-time compensation payouts related to reduction in force — — — (996) — — — 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) — (2,117)Adjusted PPNR (Non-GAAP) (1) $2,085 $1,469 $1,430 $947 $530 $3,554 $1,692 Average total assets (GAAP) $2,164,579 $2,174,748 $2,205,502 $2,209,333 $2,219,370 $2,169,621 $2,192,779 GAAP Ratio: Return on average assets (GAAP) 0.68% -1.69% -0.51% -0.36% -0.40% -0.50% -0.17%Non-GAAP Ratios: PPNR return on average assets (Non-GAAP) (1) 0.67% -0.44% 0.22% -0.01% 1.08% 0.11% 0.71%Adjusted PPNR return on average assets (Non-GAAP) (1) 0.39% 0.27% 0.26% 0.17% 0.10% 0.33% 0.16% (1)PPNR removes the provisions for credit loss and income tax from net income. This removes potentially volatile estimates, providing a comparative amount limited to income and expense recorded during the period. Adjusted PPNR further removes large nonrecurring transactions recorded during the period. We believe these metrics provide comparative amounts for a better review of recurring net revenue. FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited) Calculations Based on Tangible Common Equity: For the Quarter Ended For the Six Months Ended (Dollars in thousands, except per share data) June 30, 2025 March 31, 2025 December 31, 2024 September 30, 2024 June 30, 2024 June 30, 2025 June 30, 2024 Total shareholders' equity $149,733 $146,492 $153,882 $160,789 $158,881 $149,733 $158,881 Less: Goodwill and other intangible assets 1,081 1,082 1,082 1,083 1,084 1,081 1,084 Disallowed non-mortgage loan servicing rights 372 415 423 489 517 372 517 Total tangible common equity $148,280 $144,995 $152,377 $159,217 $157,280 $148,280 $157,280 Total assets $2,195,363 $2,171,430 $2,232,006 $2,255,486 $2,215,962 $2,195,363 $2,215,962 Less: Goodwill and other intangible assets 1,081 1,082 1,082 1,083 1,084 1,081 1,084 Disallowed non-mortgage loan servicing rights 372 415 423 489 517 372 517 Total tangible assets $2,193,910 $2,169,933 $2,230,501 $2,253,914 $2,214,361 $2,193,910 $2,214,361 Average shareholders' equity $146,857 $156,470 $161,560 $160,479 $163,079 $151,620 $162,473 Less: Average goodwill and other intangible assets 1,081 1,082 1,083 1,084 1,085 1,082 1,085 Average disallowed non-mortgage loan servicing rights 415 423 489 517 489 419 485 Total average tangible common equity $145,361 $154,965 $159,988 $158,878 $161,505 $150,119 $160,903 Net income (loss) $3,661 $(9,036) $(2,810) $(1,980) $(2,219) $(5,375) $(1,823)Common shares outstanding 9,444,963 9,440,618 9,353,348 9,365,979 9,453,247 9,444,963 9,453,247 GAAP Ratios: Equity to total assets 6.82% 6.75% 6.89% 7.13% 7.17% 6.82% 7.17%Return on average equity 10.00% -23.42% -6.92% -4.91% -5.47% -7.15% -2.26%Book value per common share $15.85 $15.52 $16.45 $17.17 $16.81 $15.85 $16.81 Non-GAAP Ratios: Tangible common equity to tangible assets (1) 6.76% 6.68% 6.83% 7.06% 7.10% 6.76% 7.10%Return on average tangible common equity (1) 10.10% -23.65% -6.99% -4.96% -5.53% -7.22% -2.28%Tangible book value per common share (1) $15.70 $15.36 $16.29 $17.00 $16.64 $15.70 $16.64 (1)We believe that the 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. Photos accompanying this announcement are available at https://www.globenewswire.com/NewsRoom/AttachmentNg/c85e4dc5-66aa-4a20-9353-c1b9da5ac869 https://www.globenewswire.com/NewsRoom/AttachmentNg/e8d326aa-0fde-4c3c-954f-bb809e7c276c https://www.globenewswire.com/NewsRoom/AttachmentNg/f24035e8-5a6e-4f39-a0db-93ca11dc39d5 https://www.globenewswire.com/NewsRoom/AttachmentNg/c29167d1-36df-44c1-9e51-889b5be4fb96 https://www.globenewswire.com/NewsRoom/AttachmentNg/ae6ceb7f-9f7a-4a77-b835-146a0638be30 https://www.globenewswire.com/NewsRoom/AttachmentNg/5ba4f507-769e-4e54-acdb-4aed9253c967 https://www.globenewswire.com/NewsRoom/AttachmentNg/66e51144-1d2d-4c3f-ae91-2192cc90a887

First Northwest Bancorp Reports Second Quarter 2025 Improved Profitability

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