FNWB First Northwest Bancorp

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

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

The Board of Directors of First Northwest Bancorp declared a quarterly cash dividend of $0.07 per common share. The dividend will be payable on November 24, 2023, to shareholders of record as of the close of business on November 10, 2023.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Noninterest Expense
$ in thousands		3Q 23				2Q 23				1Q 23				4Q 22				3Q 22
Compensation and benefits		$	7,795			$	8,180			$	7,837			$	8,357			$	9,045
Data processing			1,945				2,080				2,038				2,119				1,778
Occupancy and equipment			1,173				1,214				1,209				1,300				1,499
Supplies, postage, and telephone			292				435				355				333				322
Regulatory assessments and state taxes			446				424				389				372				365
Advertising			501				929				1,041				486				645
Professional fees			929				884				806				762				695
FDIC insurance premium			369				313				257				235				219
Other expense			926				758				939				1,179				807
Total noninterest expense		$	14,376			$	15,217			$	14,871			$	15,143			$	15,375
Efficiency ratio			80.52	%			86.01	%			79.78	%			67.91	%			74.86	%

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

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

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

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

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

Loans by Collateral and Unfunded Commitments
$ in thousands		3Q 23				2Q 23				1Q 23				4Q 22				3Q 22
One-to-four family construction		$	72,991			$	74,787			$	65,770			$	63,021			$	58,038
All other construction and land			71,092				81,968				95,769				130,588				157,527
One-to-four family first mortgage			409,207				428,879				394,595				384,255				374,309
One-to-four family junior liens			12,859				11,956				9,140				8,219				7,244
One-to-four family revolving open-end			38,413				33,658				30,473				29,909				27,496
Commercial real estate, owner occupied:
Health care			22,677				23,157				23,311				23,463				23,909
Office			18,599				18,797				22,246				22,583				23,002
Warehouse			14,890				15,158				16,782				20,411				18,479
Other			57,414				60,054				52,212				47,778				38,282
Commercial real estate, non-owner occupied:
Office			53,879				54,926				58,711				59,216				60,655
Retail			51,466				51,824				52,175				54,800				53,186
Hospitality			61,339				53,416				45,978				46,349				44,359
Other			96,083				90,870				93,207				89,047				98,386
Multi-family residential			325,338				296,398				284,699				252,765				242,509
Commercial business loans			75,068				80,079				80,825				73,963				69,626
Commercial agriculture and fishing loans			4,437				7,844				1,829				1,847				938
State and political subdivision obligations			439				439				439				439				472
Consumer automobile loans			134,695				137,860				136,540				136,213				134,221
Consumer loans secured by other assets			113,685				115,646				114,343				102,333				104,272
Consumer loans unsecured			407				444				420				352				481
Total loans		$	1,634,978			$	1,638,160			$	1,579,464			$	1,547,551			$	1,537,391
Unfunded loan commitments		$	154,722			$	168,668			$	202,720			$	225,836			$	231,208

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

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

Deposits
$ in thousands		3Q 23				2Q 23				1Q 23				4Q 22				3Q 22
Noninterest-bearing demand deposits		$	269,800			$	280,475			$	292,119			$	315,083			$	342,808
Interest-bearing demand deposits			182,361				179,029				189,187				193,558				192,504
Money market accounts			372,706				374,269				402,760				473,009				519,018
Savings accounts			253,182				260,279				242,117				200,920				196,780
Certificates of deposit, retail			410,136				379,484				333,510				247,824				224,574
Certificates of deposit, brokered			169,577				179,586				134,515				133,861				129,551
Total deposits		$	1,657,762			$	1,653,122			$	1,594,208			$	1,564,255			$	1,605,235
Public fund and tribal deposits included in total deposits		$	128,627			$	130,974			$	119,969			$	103,662			$	113,690
Total loans to total deposits			99	%			99	%			99	%			99	%			96	%

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

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

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

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

$ in thousands		3Q 23				2Q 23				1Q 23				4Q 22				3Q 22
Allowance for credit losses on loans to total loans			1.04	%			1.06	%			1.10	%			1.04	%			1.06	%
Allowance for credit losses on loans to nonperforming loans			714				677				661				900				463
Nonperforming loans to total loans			0.15				0.16				0.17				0.12				0.22
Net charge-off ratio (annualized)			0.30				0.10				0.25				0.11				0.06
Total nonperforming loans		$	2,374			$	2,554			$	2,633			$	1,790			$	3,517
Reserve for unfunded commitments		$	828			$	1,336			$	1,336			$	325			$	331

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

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

Capital levels for both the Company and its operating bank, First Fed, remain in excess of applicable regulatory requirements and the Bank was categorized as "well-capitalized" at September 30, 2023. Common Equity Tier 1 and Total Risk-Based Capital Ratios at September 30, 2023, were 13.4% and 14.4%, respectively.

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

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

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

Awards/Recognition

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

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

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

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

In May 2023, First Fed was recognized as a Top Corporate Citizen by the Puget Sound Business Journal. The Corporate Citizenship Awards honors local corporate philanthropists and companies making significant contributions in the region. The top 25 small, medium and large-sized companies were recognized in addition to nine other honorees last year. First Fed was ranked #1 in the medium-sized company category in 2023 and was ranked #3 in the same category in 2022.

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

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

About the Company

First Northwest Bancorp (Nasdaq: FNWB) is a financial holding company engaged in investment activities including the business of its subsidiary, First Fed Bank. First Fed is a Pacific Northwest-based financial institution which has served its customers and communities since 1923. Currently First Fed has 16 locations in Washington state including 12 full-service branches. First Fed’s business and operating strategy is focused on building sustainable earnings by delivering a full array of financial products and services for individuals, small businesses, non-profit organizations, and commercial customers. In 2022, First Northwest made an investment in The Meriwether Group, LLC, a boutique investment banking and accelerator firm. Additionally, First Northwest focuses on strategic partnerships to provide modern financial services such as digital payments and marketplace lending. First Northwest Bancorp was incorporated in 2012 and completed its initial public offering in 2015 under the ticker symbol FNWB. The Company is headquartered in Port Angeles, Washington.

Forward-Looking Statements

Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; pressures on liquidity, including as a result of withdrawals of deposits or declines in the value of our investment portfolio; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company’s latest Annual Report on Form 10-K and other filings with the Securities and Exchange Commission ("SEC"),which are available on our website at www.ourfirstfed.com and on the SEC’s website at www.sec.gov.

Any of the forward-looking statements that we make in this Press Release and in the other public statements we make may turn out to be incorrect because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company's operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for 2023 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Company’s operations and stock price performance.

For More Information Contact:Matthew P. Deines, President and Chief Executive 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)

		September 30, 2023				June 30, 2023				September 30, 2022				Three Month Change				One Year Change
ASSETS
Cash and due from banks		$	20,609			$	19,294			$	22,784				6.8	%			-9.5	%
Interest-earning deposits in banks			63,277				59,008				80,879				7.2				-21.8
Investment securities available for sale, at fair value			309,324				321,963				329,436				-3.9				-6.1
Loans held for sale			689				2,049				263				-66.4				162.0
Loans receivable (net of allowance for credit losses on    loans $16,945, $17,297, and $16,273)			1,618,033				1,620,863				1,521,118				-0.2				6.4
Federal Home Loan Bank (FHLB) stock, at cost			12,621				12,621				11,961				0.0				5.5
Accrued interest receivable			8,093				7,480				6,655				8.2				21.6
Premises and equipment, net			17,954				18,140				20,841				-1.0				-13.9
Servicing rights on sold loans, at fair value			3,729				3,825				3,872				-2.5				-3.7
Bank-owned life insurance, net			40,318				40,066				40,003				0.6				0.8
Equity and partnership investments			14,623				14,569				13,990				0.4				4.5
Goodwill and other intangible assets, net			1,087				1,087				1,173				0.0				-7.3
Deferred tax asset, net			16,611				15,031				12,689				10.5				30.9
Prepaid expenses and other assets			26,577				26,882				25,777				-1.1				3.1
Total assets		$	2,153,545			$	2,162,878			$	2,091,441				-0.4	%			3.0	%
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits		$	1,657,762			$	1,653,122			$	1,605,235				0.3	%			3.3	%
Borrowings			300,416				303,397				292,338				-1.0				2.8
Accrued interest payable			2,276				1,367				105				66.5				2,067.6
Accrued expenses and other liabilities			34,651				44,286				34,940				-21.8				-0.8
Advances from borrowers for taxes and insurance			2,375				1,149				2,224				106.7				6.8
Total liabilities			1,997,480				2,003,321				1,934,842				-0.3				3.2
Shareholders' Equity
Preferred stock, $0.01 par value, authorized    5,000,000 shares, no shares issued or    outstanding			—				—				—				n/a				n/a
Common stock, $0.01 par value, authorized    75,000,000 shares; issued and outstanding    9,630,735 at September 30, 2023; issued    and outstanding 9,633,496 at June 30, 2023;    and issued and outstanding 9,978,041 at    September 30, 2022			96				96				100				0.0				-4.0
Additional paid-in capital			95,658				95,360				97,924				0.3				-2.3
Retained earnings			113,579				111,750				110,107				1.6				3.2
Accumulated other comprehensive loss, net of tax			(45,850	)			(40,066	)			(41,023	)			-14.4				-11.8
Unearned employee stock ownership plan (ESOP) shares			(7,418	)			(7,583	)			(8,077	)			2.2				8.2
Total parent's shareholders' equity			156,065				159,557				159,031				-2.2				-1.9
Noncontrolling interest in Quin Ventures, Inc.			—				—				(2,432	)			n/a				100.0
Total shareholders' equity			156,065				159,557				156,599				-2.2				-0.3
Total liabilities and shareholders' equity		$	2,153,545			$	2,162,878			$	2,091,441				-0.4	%			3.0	%

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

		Quarter Ended
		September 30, 2023				June 30, 2023				September 30, 2022				Three Month Change				One Year Change
INTEREST INCOME
Interest and fees on loans receivable		$	21,728			$	21,299			$	17,778				2.0	%			22.2	%
Interest on investment securities			3,368				3,336				2,817				1.0				19.6
Interest on deposits in banks			524				617				118				-15.1				344.1
FHLB dividends			214				222				142				-3.6				50.7
Total interest income			25,834				25,474				20,855				1.4				23.9
INTEREST EXPENSE
Deposits			7,699				6,209				1,251				24.0				515.4
Borrowings			3,185				3,283				1,400				-3.0				127.5
Total interest expense			10,884				9,492				2,651				14.7				310.6
Net interest income			14,950				15,982				18,204				-6.5				-17.9
Provision for credit losses			371				300				750				23.7				-50.5
Net interest income after provision for credit losses			14,579				15,682				17,454				-7.0				-16.5
NONINTEREST INCOME
Loan and deposit service fees			1,068				1,064				1,302				0.4				-18.0
Sold loan servicing fees and servicing rights mark-to-market			98				(191	)			206				151.3				-52.4
Net gain on sale of loans			171				58				285				194.8				-40.0
Increase in cash surrender value of bank-owned life insurance			252				190				221				32.6				14.0
Other income			1,315				590				320				122.9				310.9
Total noninterest income			2,904				1,711				2,334				69.7				24.4
NONINTEREST EXPENSE
Compensation and benefits			7,795				8,180				9,045				-4.7				-13.8
Data processing			1,945				2,080				1,778				-6.5				9.4
Occupancy and equipment			1,173				1,214				1,499				-3.4				-21.7
Supplies, postage, and telephone			292				435				322				-32.9				-9.3
Regulatory assessments and state taxes			446				424				365				5.2				22.2
Advertising			501				929				645				-46.1				-22.3
Professional fees			929				884				695				5.1				33.7
FDIC insurance premium			369				313				219				17.9				68.5
Other expense			926				758				807				22.2				14.7
Total noninterest expense			14,376				15,217				15,375				-5.5				-6.5
Income before provision for income taxes			3,107				2,176				4,413				42.8				-29.6
Provision for income taxes			603				475				818				26.9				-26.3
Net income			2,504				1,701				3,595				47.2				-30.3
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.			—				75				696				-100.0				-100.0
Net income attributable to parent		$	2,504			$	1,776			$	4,291				41.0	%			-41.6	%
Basic and diluted earnings per common share		$	0.28			$	0.20			$	0.47				40.0	%			-40.4	%

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

		Nine Months Ended September 30,								Percent
		2023				2022				Change
INTEREST INCOME
Interest and fees on loans receivable		$	62,531			$	48,395				29.2	%
Interest on investment securities			9,886				7,807				26.6
Interest on deposits in banks			1,545				202				664.9
FHLB dividends			628				313				100.6
Total interest income			74,590				56,717				31.5
INTEREST EXPENSE
Deposits			18,261				2,764				560.7
Borrowings			9,092				3,020				201.1
Total interest expense			27,353				5,784				372.9
Net interest income			47,237				50,933				-7.3
Provision for credit losses			171				1,250				-86.3
Net interest income after provision for credit losses			47,066				49,683				-5.3
NONINTEREST INCOME
Loan and deposit service fees			3,273				3,566				-8.2
Sold loan servicing fees and servicing rights mark-to-market			400				665				-39.8
Net gain on sale of loans			405				769				-47.3
Net gain on sale of investment securities			—				118				-100.0
Increase in cash surrender value of bank-owned life insurance			668				686				-2.6
Other income			2,203				1,155				90.7
Total noninterest income			6,949				6,959				-0.1
NONINTEREST EXPENSE
Compensation and benefits			23,812				27,583				-13.7
Data processing			6,063				5,420				11.9
Occupancy and equipment			3,596				4,098				-12.2
Supplies, postage, and telephone			1,082				1,043				3.7
Regulatory assessments and state taxes			1,259				1,167				7.9
Advertising			2,471				2,802				-11.8
Professional fees			2,619				1,883				39.1
FDIC insurance premium			939				653				43.8
Other			2,623				2,520				4.1
Total noninterest expense			44,464				47,169				-5.7
Income before provision for income taxes			9,551				9,473				0.8
Provision for income taxes			1,903				1,839				3.5
Net income			7,648				7,634				0.2
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.			160				1,951				-91.8
Net income attributable to parent		$	7,808			$	9,585				-18.5	%
Basic and diluted earnings per common share		$	0.87			$	1.04				-16.3	%

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

		As of or For the Quarter Ended
		September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022
Performance ratios: (1)
Return on average assets			0.46	%			0.34	%			0.70	%			1.18	%			0.85	%
Return on average equity			6.17				4.41				8.98				15.26				10.12
Average interest rate spread			2.54				2.84				3.14				3.72				3.72
Net interest margin (2)			2.97				3.25				3.46				3.96				3.88
Efficiency ratio (3)			80.5				86.0				79.8				67.9				74.9
Equity to total assets			7.25				7.38				7.38				7.75				7.49
Average interest-earning assets to average interest-bearing liabilities			120.0				120.7				122.4				124.8				128.6
Book value per common share		$	16.20			$	16.56			$	16.57			$	16.31			$	15.69
Tangible performance ratios:
Tangible assets (4)		$	2,151,849			$	2,161,235			$	2,170,202			$	2,040,267			$	2,089,454
Tangible common equity (4)			154,369				157,914				158,444				156,479				154,612
Tangible common equity ratio (4)			7.17	%			7.31	%			7.30	%			7.67	%			7.40	%
Return on tangible common equity (4)			6.23				4.47				9.08				15.45				10.23
Tangible book value per common share (4)		$	16.03			$	16.39			$	16.38			$	16.13			$	15.50
Asset quality ratios:
Nonperforming assets to total assets at end of period (5)			0.11	%			0.12	%			0.12	%			0.09	%			0.17	%
Nonperforming loans to total loans (6)			0.15				0.16				0.17				0.12				0.22
Allowance for credit losses on loans to nonperforming loans (6)			713.77				677.25				660.69				900.34				462.70
Allowance for credit losses on loans to total loans			1.04				1.06				1.10				1.04				1.06
Annualized net charge-offs to average outstanding loans			0.30				0.10				0.25				0.11				0.06
Capital ratios (First Fed Bank):
Tier 1 leverage			10.1	%			10.2	%			10.4	%			10.4	%			10.5	%
Common equity Tier 1 capital			13.4				13.1				13.3				13.4				13.1
Tier 1 risk-based			13.4				13.1				13.3				13.4				13.1
Total risk-based			14.4				14.1				14.4				14.4				14.2
Other Information:
Average total assets		$	2,139,734			$	2,118,014			$	2,050,210			$	2,039,016			$	1,996,765
Average total loans			1,641,206				1,605,133				1,552,299				1,554,276				1,500,508
Average interest-earning assets			1,994,251				1,975,384				1,909,271				1,895,799				1,859,396
Average noninterest-bearing deposits			276,294				282,514				294,235				326,450				342,944
Average interest-bearing deposits			1,377,734				1,333,943				1,288,429				1,243,185				1,224,548
Average interest-bearing liabilities			1,661,996				1,636,188				1,559,983				1,519,106				1,446,428
Average equity			160,994				161,387				159,319				157,590				168,264
Average common shares -- basic			8,906,526				8,914,355				8,911,294				9,069,493				9,093,821
Average common shares -- diluted			8,934,882				8,931,386				8,939,601				9,106,453				9,138,123

(1	)	Performance ratios are annualized, where appropriate.
(2	)	Net interest income divided by average interest-earning assets.
(3	)	Total noninterest expense as a percentage of net interest income and total other noninterest income.
(4	)	See reconciliation of Non-GAAP Financial Measures later in this release.
(5	)	Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.
(6	)	Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

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

		As of or For the Nine Months Ended September 30,
		2023				2022
Performance ratios: (1)
Return on average assets			0.50	%			0.66	%
Return on average equity			6.50				7.24
Average interest rate spread			2.83				3.61
Net interest margin (2)			3.22				3.73
Efficiency ratio (3)			82.1				81.5
Equity to total assets			7.25				7.49
Average interest-earning assets to average interest-bearing liabilities			121.0				130.2
Book value per common share		$	16.20			$	15.69
Tangible performance ratios:
Tangible assets (4)		$	2,151,849			$	2,089,454
Tangible common equity (4)			154,369				154,612
Tangible common equity ratio (4)			7.17	%			7.40	%
Return on tangible common equity (4)			6.57				7.33
Tangible book value per common share (4)		$	16.03			$	15.50
Asset quality ratios:
Nonperforming assets to total assets at end of period (5)			0.11	%			0.17	%
Nonperforming loans to total loans (6)			0.15				0.22
Allowance for credit losses on loans to nonperforming loans (6)			713.77				462.70
Allowance for credit losses on loans to total loans			1.04				1.06
Annualized net charge-offs to average outstanding loans			0.22				0.02
Capital ratios (First Fed Bank):
Tier 1 leverage			10.1	%			10.5	%
Common equity Tier 1 capital			13.4				13.1
Tier 1 risk-based			13.4				13.1
Total risk-based			14.4				14.2
Other Information:
Average total assets		$	2,102,980			$	1,953,738
Average total loans			1,599,872				1,434,178
Average interest-earning assets			1,959,946				1,824,734
Average noninterest-bearing deposits			284,282				338,745
Average interest-bearing deposits			1,333,696				1,223,265
Average interest-bearing liabilities			1,619,763				1,401,036
Average equity			160,573				177,023
Average common shares -- basic			8,910,391				9,086,229
Average common shares -- diluted			8,930,404				9,155,813

(1	)	Performance ratios are annualized, where appropriate.
(2	)	Net interest income divided by average interest-earning assets.
(3	)	Total noninterest expense as a percentage of net interest income and total other noninterest income.
(4	)	See reconciliation of Non-GAAP Financial Measures later in this release.
(5	)	Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), real estate owned and repossessed assets.
(6	)	Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.

FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited)

Selected loan detail:

		September 30, 2023				June 30, 2023				September 30, 2022				Three Month Change				One Year Change
		(In thousands)
Commercial business loans breakout
PPP loans		$	45			$	54			$	130			$	(9	)		$	(85	)
Northpointe Bank MPP			162				23,904				—				(23,742	)			162
Secured lines of credit			35,833				38,355				14,982				(2,522	)			20,851
Unsecured lines of credit			919				1,231				1,479				(312	)			(560	)
SBA loans			9,149				9,038				6,975				111				2,174
Other commercial business loans			55,272				57,551				47,599				(2,279	)			7,673
Total commercial business loans		$	101,380			$	130,133			$	71,165			$	(28,753	)		$	30,215
Auto and other consumer loans breakout
Triad Manufactured Home loans		$	90,230			$	90,792			$	79,353			$	(562	)		$	10,877
Woodside auto loans			124,833				125,948				112,944				(1,115	)			11,889
First Help auto loans			5,079				5,602				5,912				(523	)			(833	)
Other auto loans			5,022				6,188				10,229				(1,166	)			(5,207	)
Other consumer loans			23,622				25,420				30,541				(1,798	)			(6,919	)
Total auto and other consumer loans		$	248,786			$	253,950			$	238,979			$	(5,164	)		$	9,807
Construction and land loans breakout
1-4 Family construction		$	63,371			$	65,025			$	71,758			$	(1,654	)		$	(8,387	)
Multifamily construction			54,318				58,070				99,153				(3,752	)			(44,835	)
Acquisition-renovation			—				7,266				18,761				(7,266	)			(18,761	)
Nonresidential construction			18,746				19,033				16,034				(287	)			2,712
Land and development			6,999				7,666				10,172				(667	)			(3,173	)
Total construction and land loans		$	143,434			$	157,060			$	215,878			$	(13,626	)		$	(72,444	)

FIRST NORTHWEST BANCORP AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited)

Non-GAAP Financial MeasuresThis press release contains financial measures that are not defined in generally accepted accounting principles ("GAAP"). Non-GAAP measures are presented where management believes the information will help investors understand the Company’s results of operations or financial position and assess trends. Where non-GAAP financial measures are used, the comparable GAAP financial measure is also provided. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, and are not necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of the GAAP and non-GAAP measures are presented below.

Calculation of Total Revenue:

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

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

Calculations Based on Tangible Common Equity:

		September 30, 2023				June 30, 2023				March 31, 2023				December 31, 2022				September 30, 2022
		(Dollars in thousands, except per share data)
Total shareholders' equity		$	156,065			$	159,557			$	160,336			$	158,282			$	156,599
Less: Goodwill and other intangible assets			1,087				1,087				1,088				1,089				1,173
Disallowed non-mortgage loan servicing rights			609				556				804				714				814
Total tangible common equity		$	154,369			$	157,914			$	158,444			$	156,479			$	154,612
Total assets		$	2,153,545			$	2,162,878			$	2,172,094			$	2,042,070			$	2,091,441
Less: Goodwill and other intangible assets			1,087				1,087				1,088				1,089				1,173
Disallowed non-mortgage loan servicing rights			609				556				804				714				814
Total tangible assets		$	2,151,849			$	2,161,235			$	2,170,202			$	2,040,267			$	2,089,454
Average shareholders' equity		$	160,994			$	161,387			$	159,319			$	157,590			$	168,264
Less: Average goodwill and other intangible assets			1,087				1,088				1,089				1,171				1,175
Average disallowed non-mortgage loan servicing rights			557				801				715				813				755
Total average tangible common equity		$	159,350			$	159,498			$	157,515			$	155,606			$	166,334
Tangible common equity ratio (1)			7.17	%			7.31	%			7.30	%			7.67	%			7.40	%
Net income		$	2,504			$	1,776			$	3,528			$	6,060			$	4,291
Return on tangible common equity (1)			6.23	%			4.47	%			9.08	%			15.45	%			10.23	%
Common shares outstanding			9,630,735				9,633,496				9,674,055				9,703,581				9,978,041
Tangible book value per common share (1)		$	16.03			$	16.39			$	16.38			$	16.13			$	15.50
GAAP Ratios:
Equity to total assets			7.25	%			7.38	%			7.38	%			7.75	%			7.49	%
Return on average equity			6.17	%			4.41	%			8.98	%			15.26	%			10.12	%
Book value per common share		$	16.20			$	16.56			$	16.57			$	16.31			$	15.69

(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 AND SUBSIDIARYADDITIONAL INFORMATION(Dollars in thousands) (Unaudited)

		September 30, 2023				September 30, 2022
		(Dollars in thousands, except per share data)
Total shareholders' equity		$	156,065			$	156,599
Less: Goodwill and other intangible assets			1,087				1,173
Disallowed non-mortgage loan servicing rights			609				814
Total tangible common equity		$	154,369			$	154,612
Total assets		$	2,153,545			$	2,091,441
Less: Goodwill and other intangible assets			1,087				1,173
Disallowed non-mortgage loan servicing rights			609				814
Total tangible assets		$	2,151,849			$	2,089,454
Average shareholders' equity		$	160,573			$	177,023
Less: Average goodwill and other intangible assets			1,088				1,179
Average disallowed non-mortgage loan servicing rights			690				1,026
Total average tangible common equity		$	158,795			$	174,818
Tangible common equity ratio (1)			7.17	%			7.40	%
Net income		$	7,808			$	9,585
Return on tangible common equity (1)			6.57	%			7.33	%
Common shares outstanding			9,630,735				9,978,041
Tangible book value per common share (1)		$	16.03			$	15.50
GAAP Ratios:
Equity to total assets			7.25	%			7.49	%
Return on average equity			6.50	%			7.24	%
Book value per common share		$	16.20			$	15.69

(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.