First Northwest Bancorp Reports Second Quarter 2026 Financial Results

PORT ANGELES, Wash., July 29, 2026 (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 its financial results for the second quarter and first six months of 2026. The Company reported net income of $308,000 for the second quarter of 2026, compared to net income of $6,000 for the first quarter of 2026 and $3.7 million for the second quarter of 2025. Basic and diluted income per share were $0.03 for the second quarter of 2026, compared to basic and diluted income per share of $0.00 for the first quarter of 2026 and basic and diluted income per share of $0.42 for the second quarter of 2025. 

Management Outlook; President and Chief Executive Officer, Curt Queyrouze:

"At the midpoint of 2026, we continue to execute a disciplined transformation to improve operating efficiency and reposition the balance sheet for long-term performance. We are pleased to report growth in customer deposits during the current quarter and are encouraged by the underlying momentum in our core banking franchise. Loan balances were down slightly for the quarter as we continue to rebalance our portfolio to lessen the dependence on commercial real estate lending. Consumer and commercial business lending were up, but offset by a decrease in commercial real estate balances. Our efforts to improve operating efficiency are on target at the midpoint of the year and we expect to begin realizing these benefits in late 2026 and over the course of 2027. We remain focused on disciplined balance sheet management, strengthening our funding and liquidity profile, and maintaining a strong capital position. Second quarter results reflect improved performance positioning the Company for accelerated growth in the second half of 2026 and beyond."

Second Quarter Insights:

• Core banking revenues remained steady.
• Cost of total deposits was flat at 2.04% for both the first and second quarters of 2026.
• A recapture of provision for credit losses on loans of $337,000 was recorded in the second quarter of 2026, compared to a recapture of $13,000 for the preceding quarter and a recapture of $296,000 for the second quarter of 2025.
• First Fed total risk-based capital ratio remained relatively stable at 13.4% for the current quarter compared to 13.5% in the first quarter of 2026, and 13.1% for the second quarter of 2025. 
• Total assets decreased $8.6 million, or 0.4%, to $2.12 billion at June 30, 2026 from $2.13 billion at March 31, 2026, and decreased $70.5 million, or 3.2%, from $2.20 billion at June 30, 2025.
• Net loans receivable, excluding loans held for sale, decreased $15.9 million, or 1.0%, to $1.60 billion at June 30, 2026 from $1.61 billion at March 31, 2026, and decreased $50.1 million, or 3.0%, from $1.65 billion at June 30, 2025.
• Customer deposits increased $11.3 million, or 0.7%, to $1.55 billion at June 30, 2026 from $1.54 billion at March 31, 2026, and increased $1.1 million, or 0.1%, from $1.55 billion at June 30, 2025.
• Brokered deposits decreased $5.5 million, or 8.6%, to $58.6 million at June 30, 2026 from $64.1 million at March 31, 2026, and decreased $48.3 million, or 45.2%, from $106.9 million at June 30, 2025.
• FHLB advances decreased $15.0 million, or 5.4%, to $265.0 million at June 30, 2026 from $280.0 million at March 31, 2026, and decreased $35.0 million, or 11.7%, from $300.0 million at June 30, 2025.

Selected Quarterly Financial Ratios:

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. Non-GAAP financial measure; see "Additional Information - Non-GAAP Financial Measures" later in this release for definitions and a reconciliation to the most comparable GAAP financial measure.
5. Current period capital ratios are preliminary and subject to finalization of the FDIC Call Report.

Net Interest Income and Margin

Total interest income increased $121,000 to $25.5 million for the second quarter of 2026, compared to $25.3 million for the preceding quarter, and decreased $1.7 million compared to $27.1 million in the second quarter of 2025. Interest income increased during the second quarter of 2026 primarily due to 2026 purchases of investment securities. Average investment securities balances and yields increased compared to the preceding quarter as a result of purchases. Average real estate loan balances decreased while average consumer and commercial business loan balances increased over the preceding quarter. The yield on interest-earning assets decreased by 2 basis points to 5.30% compared to the preceding quarter, primarily due to a reduction in average balances of loans receivable and interest-earning deposits in banks.

Total interest expense increased $388,000 to $11.3 million for the second quarter of 2026, compared to $10.9 million for the preceding quarter, and decreased $1.7 million compared to $12.9 million in the second quarter of 2025. Interest expense increased in the second quarter of 2026 primarily due to the transition of the Company's subordinated debt from a fixed rate to a floating rate at the end of March 2026. Higher volumes of customer deposits were partially offset by a reduced volume of brokered CDs. Interest paid on customer deposit accounts also increased compared to the preceding quarter due to an increase in CD and money market average balances combined with higher rates paid on non-maturity deposits. As a result of these second quarter changes, the total cost of funds increased 5 basis points to 2.42% compared to the preceding quarter.

The net interest margin decreased to 2.95% for the second quarter of 2026, from 3.03% for the preceding quarter but increased from 2.83% for the second quarter of 2025.

Noninterest Income and Expense

Noninterest income was flat at $2.0 million for the second and first quarters of 2026.

Noninterest expense decreased $291,000 to $16.4 million for the second quarter of 2026, compared to $16.7 million for the preceding quarter. The decline resulted from lower data processing and compensation costs, partially offset by increased legal and consulting fees recorded in professional fees. Legal fees remain elevated due to the Company's continued defense of ongoing legal matters. Consulting fees increased as several projects to improve operating efficiency were launched during the second quarter of 2026.

Allowance for Credit Losses on Loans ("ACLL") and Credit Quality

The ACLL decreased $514,000 to $16.3 million at June 30, 2026, from $16.8 million at March 31, 2026. The ACLL as a percentage of total loans was 1.01% at June 30, 2026, a decrease from 1.03% at March 31, 2026, and a decrease from 1.10% at June 30, 2025. A $337,000 recapture of loan provision expense for the quarter ended June 30, 2026, was the result of a $444,000 decrease in the overall pooled loan reserve and a $70,000 decrease in reserves on individually evaluated loans, partially offset by $177,000 in net charge-offs. The change in pooled loan reserve was driven by lower loss factors applied to commercial real estate and multi-family loans combined with decreased loan balances in multi-family and commercial business loans. Decreases to the pooled loan reserve balance were partially offset by higher loss factors applied to commercial business and home equity loan balances at the end of the current quarter. The pooled loan reserve loss rates were impacted by higher unemployment forecasts partially offset by a mild improvement in gross domestic product.

Nonperforming loans decreased $971,000 to $20.7 million at June 30, 2026, from $21.7 million at March 31, 2026. Current quarter activity included principal payments totaling $1.1 million and net charge-offs on nonperforming loans totaling $216,000. The decreases were partially offset by the transition into nonaccrual status of loans totaling $1.1 million across multiple loan categories. ACLL to nonperforming loans increased slightly to 79% at June 30, 2026, from 78% at March 31, 2026. This ratio increased compared to the preceding quarter despite a reduction in nonperforming loan balances.

Classified loans decreased $9.1 million to $25.5 million at June 30, 2026, from $34.6 million at March 31, 2026, primarily due to payoffs totaling $14.2 million, principal payments totaling $1.0 million, and net charge-offs totaling $216,000. The decreases were partially offset by $5.6 million of new downgrades across multiple loan categories. Four collateral-dependent loans totaling $18.3 million account for 72% of the classified loan balance at June 30, 2026.

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

Continued disciplined balance sheet management resulted in lower borrowings and reduced reliance on higher-cost brokered deposits while maintaining stable capital levels.

Investment securities increased $14.0 million, or 5.1%, to $287.0 million at June 30, 2026, compared to $273.0 million three months earlier, and decreased $16.5 million compared to $303.5 million at June 30, 2025. Purchases totaling $27.8 million and a $535,000 decrease in net unrealized losses were partially offset by maturities totaling $9.7 million and regular principal payments totaling $4.6 million during the second quarter of 2026. The estimated average life of the securities portfolio was approximately 6.4 years at June 30, 2026, 6.8 years at the preceding quarter end and 7.6 years at the end of the second quarter of 2025. The effective duration of the portfolio was approximately 4.6 years at June 30, 2026, compared to 4.7 years at the preceding quarter end and 4.9 years at the end of the second quarter of 2025.

Net loans receivable, excluding loans held for sale, decreased $15.9 million, or 1.0%, to $1.60 billion at June 30, 2026, from $1.61 billion at March 31, 2026, and decreased $50.1 million, or 3.0%, from $1.65 billion one year prior. Construction loans that converted into fully amortizing loans during the quarter totaled $8.9 million. Regular payments of $50.9 million, loan payoffs of $21.9 million and charge-offs totaling $359,000 outpaced new loan funding totaling $30.2 million and draws on existing loans totaling $20.4 million. Participation in the Northpointe MPP increased $2.7 million and purchased consumer loans increased $3.5 million during the current quarter.

Total deposits increased $5.8 million to $1.61 billion at June 30, 2026, compared to $1.60 billion at March 31, 2026, and decreased $47.2 million compared to $1.65 billion one year prior. During the second quarter of 2026, total customer deposit balances increased $11.3 million and brokered deposit balances decreased $5.5 million. The customer deposit mix reflects increased average money market and CD account balances while average balances of all other customer accounts decreased compared to the preceding quarter. The rates paid on customer interest-bearing deposits increased 3 basis points to 2.32% for the current quarter, compared to 2.29% for the first quarter of 2026. The deposit mix compared to June 30, 2025, reflects a continued shift in average balances of customer accounts to savings and money market accounts from demand deposit and CD accounts, with an overall $4.7 million decrease to average total customer balances. A $72.6 million decrease in the average balance of brokered CDs was the main driver for the year-over-year decrease in total deposits. Rates paid on total interest-bearing deposit accounts decreased 31 basis points compared to the same quarter one year ago.

FHLB advances decreased $15.0 million during the current quarter.

Total shareholders’ equity increased to $158.3 million at June 30, 2026, compared to $157.0 million three months earlier, due to increases in the after-tax fair market values of the available-for-sale investment securities portfolio of $418,000, the after-tax fair value of the investment portfolio hedge of $295,000 and net income of $308,000. 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, 2026. There are 846,123 shares that remain available for repurchase under the Repurchase Plan.

Capital levels for both the Company and the Bank remain in excess of applicable requirements and the Bank was categorized as "well-capitalized" at June 30, 2026. Preliminary calculations of Common Equity Tier 1 and Total Risk-Based Capital Ratios at June 30, 2026, for the Bank were 12.4% and 13.4%, respectively.

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 11 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. First Northwest has also strategically invested in partnerships focused on developing modern financial solutions and a boutique investment banking/accelerator firm. These investments underscore the Company’s commitment to innovation and growth in the financial services sector. 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

This press release contains 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, 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, declines in the value of our investment portfolio or changes in interest rates; risks related to overall economic conditions; geopolitical events; 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, except as required by law. These risks could cause our actual results for 2026 and beyond to differ materially from those expressed in or implied by 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:

Curt Queyrouze, President and Chief Executive Officer

Phyllis Nomura, Chief Financial Officer and EVP

IRGroup@ourfirstfed.com

360-457-0461

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data) (Unaudited)

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data) (Unaudited)

FIRST NORTHWEST BANCORP AND SUBSIDIARY

ADDITIONAL INFORMATION

(Dollars in thousands) (Unaudited)

FIRST NORTHWEST BANCORP AND SUBSIDIARY

NET INTEREST MARGIN ANALYSIS

(Unaudited)

(1) The average loans receivable, net balances include nonaccrual loans.

(2) Interest earned on loans receivable includes net deferred costs of $1.4 million and $486,000 for the three months ended June 30, 2026 and 2025, respectively.

(3) Includes interest-earning deposits (cash) at other financial institutions.

(4) Cost of all deposits, including noninterest-bearing demand deposits, was 2.04% and 2.31% for the three months ended June 30, 2026 and 2025, respectively.

(5) Net interest income divided by average interest-earning assets.

FIRST NORTHWEST BANCORP AND SUBSIDIARY

ADDITIONAL INFORMATION

(Unaudited)

Non-GAAP Financial Measures

This press release contains financial measures that are not in conformity with generally accepted accounting principles in the United States of America ("GAAP"). Non-GAAP financial 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 Tangible Common Equity:

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.