First Northwest Bancorp · NASDAQ:FNWB

First Northwest Bancorp — Q2 2023 Earnings Presentation

27 slides from First Northwest Bancorp's earnings presentation, September 2023

  1. Slide 1: Investor Presentation Second Quarter 2023

    Investor Presentation Second Quarter 2023 September 2023 © 2023 FNWB 1

  2. Slide 2: About First Northwest Bancorp (FNWB)

     Bank holding company for First Fed, a growing About First Northwest community bank with $2.2 billion* in assets Bancorp (FNWB)  First Fed is a Washington state-chartered commercial bank, headquartered in Port Angeles where it was founded in 1923 FNWB  12 branches: 6 in Clallam and Jefferson Coun

  3. Slide 3: First Fed Executive Team

    First Fed Executive Team Matt Deines Terry Anderson Derek Brown President and CEO Chief Credit Officer Chief HR & Marketing Officer Geri Bullard Chris Neros Chris Riffle Chief Financial Officer Chief Lending Officer Chief Digital & Operating Officer | General Counsel © 2023 FNWB 3

  4. Slide 4: Strategic Initiatives

    Strategic Initiatives Focus on bringing back deposits that ▪ “Project Boomerang” calling and marketing campaign promoting new product offering left for higher rate alternatives Strategy to reduce reliance on ▪ Increase promotional offerings with rates below the cost of wholesale funding wholesale fu

  5. Slide 5: 2Q 2023 Key Take Aways

    2Q 2023 Key Take Aways ▪ Slowed organic loan growth given current rate and liquidity environment. Loans ▪ Utilized shorter-term, higher yielding wholesale options to augment interest income. ▪ Utilized promotional product and pricing exceptions to grow core customer deposits. Funding ▪ Utilized brok

  6. Slide 6: 2Q 2023 Key Take Aways

    2Q 2023 Key Take Aways ▪ Loan servicing rights value decreased due to large commercial loan (Main Street Lending Program) payoff. The prepayment assumptions were recalibrated given these payoffs and reduced the valuation as well. Non-Interest Income ▪ Gain on Other Investments decreased as there was

  7. Slide 7: Performance Metrics

    Performance Metrics Trailing Twelve Month Net Income ($ in Thousands) Trailing Twelve Month ROAA (%) Trailing Twelve Month Efficiency Ratio (%) Trailing Twelve Net Interest Margin (%) © 2023 FNWB Source: S&P Global Market Intelligence, Company documents; Financial data as of June 30, 2023 7

  8. Slide 8: Performance Metrics

    Performance Metrics Trailing Twelve Month Return on Avg. Equity Trailing Twelve Month Earnings per Share Historical Book Value per Share Historical TCE Ratio © 2023 FNWB Source: S&P Global Market Intelligence, Company documents; Financial data as of June 30, 2023 8

  9. Slide 9: Net Interest Income and Margin

    Net Interest Income and Margin ($ in Thousands) 4.50% $22,000 3.96% 3.88% 4.00% 3.77% $19,500 3.58% 3.58% 3.53% $18,931 3.46% 3.34% $18,205 3.50% 3.25% $17,242 $17,000 $16,305 $15,814 $15,982 3.00% $15,352 $15,486 $14,500 $13,648 2.50% $12,000 2.00% Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Q4

  10. Slide 10: Strategic Earnings Initiatives

    Strategic Earnings Initiatives  Continue to build core deposit base to paydown wholesale funding  Apply strict discipline to loan pricing profitability model  Continue to build Treasury and SBA lines of business  Reviewing staffing levels and taking advantage of attrition  Reducing advertising

  11. Slide 11: Selected Balance Sheet Detail

    Selected Balance Sheet Detail ($ in Millions) $2,163 $2,032 $1,786 $1,581 $1,621 $1,653 $1,479 $1,442 $1,462 $1,258 $1,246 $1,170 $986 $933 $874 Q2-FY19 Q2-FY20 Q2-FY21 Q2-FY22 Q2-FY23 Loans Receivable, Net Total Deposits Total Assets © 2023 FNWB Source: Company documents; Financial data as of June

  12. Slide 12: Growth While Enhancing Asset Mix

    Growth While Enhancing Asset Mix ($ in Thousands) Q2 2021 Q2 2022 Q2 2023 $1,786M $2,032M $2,163M © 2023 FNWB Source: Company documents; Financial data as of June 30, 2023 12

  13. Slide 13: Balance Sheet Growth

    Balance Sheet Growth Actual (Ex. PPP) PPP Loans ($ in Millions) Total Assets Total Loans and Leases Total Deposits Total Equity © 2023 FNWB 1CAGR calculated from first period to last period shown in chart Source: Company documents; Financial data as of June 30, 2023 13

  14. Slide 14: Liquidity Overview

    Liquidity Overview Sequential Total Off-Balance Sheet Liquidity Available at June 30, 2023 Quarter Gross Net Three Months Ended Change ($ in thousands) Availability Utilization Availability ($ in thousands) 6/30/2023 3/31/2023 Q2 2023 FHLB Lines $625,027 $313,772 $311,256 Brokered deposits $179,586

  15. Slide 15: Securities Portfolio

    Securities Portfolio Other Investment Portfolio Characteristics as of 1% June 30, 2023  Book Value: $370.0 Million Corporate  Market Value: $322.0 Million Debt 17%  Effective Duration: 4.80 years Municipal 31%  Average Life: 7.55 years Q2 2023  Municipal Securities – Portfolio Ratings:  Aaa/AA

  16. Slide 16: Loan Portfolio Composition

    Loan Portfolio Composition Loans by Type 6/30/2023 Change from ($ in Thousands) Balance % of Total 6/30/2022 6/30/2022 Commercial Real Estate $377,139 23.0% $4,086 $373,052 1-4 Family 365,897 22.3% 57,125 308,772 Construction and Land Development 157,694 9.6% (55,157) 212,851 Multi-Family 297,512 18

  17. Slide 17: Strong Core Deposit Composition

    Strong Core Deposit Composition Brokered CDs 11% Deposits by Type 6/30/2023 Change from ($ in Thousands) Balance % of Total one year ago Noninterest Noninterest Checking $280,475 17.0% ($55,836) Checking Interest Checking 179,028 10.8% (13,084) 17% Savings 260,279 15.7% 65,251 Money Market 374,269 2

  18. Slide 18: Diversified Deposit Base

    Diversified Deposit Base June 30, 2023 Average consumer account balance $24 thousand Average business account balance $51 thousand Average customer account balance 1 $28 thousand Insured Cash Sweep ("ICS") deposits $29.6 million Deposits in Certificate of Deposit Account Registry Service ("CDARS") d

  19. Slide 19: Returning Capital to Shareholders

    Returning Capital to Shareholders Status of Share Repurchase Program  On October 28, 2020, the Company announced that its Board of Directors had authorized the repurchase and retirement of up to an additional ≈1 million shares of its common stock, or 10% of the outstanding shares at that time  As

  20. Slide 20: Bank Level Capital Ratios

    Bank Level Capital Ratios TCE / TA Leverage Ratio Tier 1 Capital Ratio Total RBC Ratio © 2023 FNWB Source: Company documents; Financial data as of June 30, 2023 20

  21. Slide 21: Historically Strong Asset Quality

    Historically Strong Asset Quality NPA / Assets (%) Allowance for Credit Losses on Loans / Total Loans (%) NCOs / Avg. Loans (%)  Growth focused on appropriate risk adjusted return loan types  Continued use of enhanced underwriting  Portfolio Stress Tests indicate minimal losses  Loans Past Due/T

  22. Slide 22: Consolidated Historical Balance Sheet

    For the Quarter Ending 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 Assets ($000) Consolidated Cash and Cash Equivalents Investments 87,794 353,144 103,663 329,436 45,596 326,569 140,617 329,086 78,302 321,962 Federal Home Loan Bank (FHLB) Stock, at Cost 10,402 11,961 11,681 15,602 12,621 Historical Total Cas

  23. Slide 23: Consolidated Historical Income Statement

    For the Quarter Ending 2022Q2 2022Q3 2022Q4 2023Q1 2023Q2 Consolidated Income ($000) Interest and Fees on Loans Receivable Interest on Investment Securities 16,081 2,715 17,778 2,817 20,240 3,059 19,504 3,182 21,299 3,336 Historical Other Interest Income Interest Income Interest Expense 165 18,961 1

  24. Slide 24: Market Footprint

    Market Footprint 16 locations in 5 counties:  7 in Clallam: Headquarters with ITM, 5 branches, 1 business center with ITM  1 in Jefferson  2 in Kitsap  2 in King: 1 branch, 1 business center  4 in Whatcom: 3 branches, 1 business center © 2023 FNWB 24

  25. Slide 25: Leading Deposit Market Share

    Leading Deposit Market Share Clallam County, WA Whatcom County, WA Rank Institution (ST) # Branches Deposits ($M) Market Share (%) Rank Institution (ST) # Branches Deposits ($M) Market Share (%) 1 First Northwest Bancorp (WA) 7 1,096 40.1 1 Peoples Bancorp (WA) 9 1,447 24.7 2 Sound Financial Bancorp

  26. Slide 26: Mission Statement

    We design and deliver delightful, accessible, and effortless financial solutions by empowering our team members to improve the lives of those we serve. Mission Statement © 2023 FNWB 26

  27. Slide 27: Thank You!

    Thank You! Contact Matt Deines Geri Bullard President and CEO EVP | CFO matt.deines@ourfirstfed.com geri.bullard@ourfirstfed.com © 2023 FNWB 27

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