 Fueled by Strong Loan and Deposit Growth; Declares Quarterly Cash Dividend of 0.05 per SharePORT ANGELES, Wash., July 30, 2020 GLOBE NEWSWIRE -- First Northwest Bancorp Nasdaq: FNWB Company, the holding company for First Federal Savings and Loan Association of Port Angeles Bank or First Federal, today reported net income of 2.0 million, or 0.21 per diluted share, for the second quarter of 2020, reflecting strong loan and deposit growth and an addition to loan loss reserves related to the economic disruption from the COVID-19 pandemic. These results compare to net income of 873,000, or 0.09 per diluted share, for the first quarter of 2020, and 2.1 million, or 0.21 per diluted share, for the second quarter of 2019. For the first six months of 2020, net income was 2.9 million, or 0.30 per diluted share, from 4.3 million, or 0.43 per diluted share, for the first six months of 2019. The Company also announced today that the Board of Directors declared a regular quarterly cash dividend of 0.05 per common share outstanding, payable on August 28, 2020, to shareholders of record as of the close of business on August 14, 2020. Our second quarter financial results demonstrate the strength of our franchise, with significant mortgage refinance activity and revenue generation from gains on loan sales. Additionally, Paycheck Protection Program PPP loans originated during the quarter had a meaningful impact on loan and deposit growth, which also bolstered second quarter results, stated Matthew P. Deines, President and CEO. The safety and well-being of our customers and employees remains our primary focus. As one of the first regions to experience COVID-19 infections, we were early adopters of COVID-19 pandemic safety protocols. We resumed lobby activities with modified hours at all branches on May 26, 2020, and we are encouraging the use of drive-up services, ITMATM machines, digital banking, and telephone banking, during extended hours. The State of Washington has slowly been reopening under a Four Phase approach following the lifting of the Stay Home, Stay Healthy order, which expired on May 31, 2020. From March 23 to May 31, 2020, stay at home mandates resulted in the closing of businesses or a substantial reduction in business activity, and at June 30, 2020, there were still some business types that werent allowed to fully open yet under current phase guidelines. The sectors most heavily impacted include hospitality; restaurant and food services; and lessors of commercial real estate to hospitality, restaurant, and retail establishments. At June 30, 2020, the Companys exposure as a percent of the total loan portfolio to these industries was 5.1, 0.2, and 4.9, respectively. Asset quality at quarter end remained strong, with very few delinquencies in the loan portfolio, as we continued to build our reserves in response to the pandemic and the economic impact of shutdowns on our customers and communities. We recorded a 1.5 million loan loss provision in response to the slowing economic activities which impacted businesses in our market and around the world, said Deines. We are actively assisting customers and supporting the businesses in our communities, added Deines. Our participation in the Paycheck Protection Program offered through the Small Business Administration SBA helped service the needs of our customers and the community. We were able to assist approximately 440 of our customers receive 30.6 million in loans from the program. We also began serving small business in accessing the Federal Reserves Main Street Lending Program near the end of the quarter. The Federal Reserves Main Street Lending Program was announced on April 9, 2020. Under the plan, the Federal Reserve agrees to purchase 95 of each qualified loan that banks provide to small and mid-sized businesses.Second Quarter 2020 Highlights at or for the quarter ended June 30, 2020 Second quarter net income totaled 2.0 million, compared to 873,000 in the preceding quarter and 2.1 million in the year ago quarter. Diluted earnings per share was 0.21, up from 0.09 per share in the preceding quarter and unchanged when compared to the second quarter a year ago. Provision for loan losses was 1.5 million in the second quarter, compared to 1.3 million in the first quarter of 2020 and 255,000 in the second quarter of 2019. Loans receivable increased 9.7 to 986.4 million at June 30, 2020, compared to 899.2 million at March 31, 2020, and increased 12.9 compared to 874.0 million a year ago, primarily due to growth in real estate and commercial business, including PPP loans. Deposits increased 10.0 during the quarter and increased 25.4 from one year prior, to 1.17 billion at June 30, 2020, due to successful organic and wholesale deposit-gathering strategies. The cost of total deposits for the second quarter decreased 13 and 12 basis points, respectively, to 72 basis points from 85 basis points for first quarter 2020 and 84 basis points in the second quarter of 2019. Gain on sale of mortgage loans total 2.0 million for the second quarter compared to 384,000 in the previous quarter and 88,000 in the second quarter of 2019 reflecting strong quarterly mortgage originations. During the second quarter, the Company repurchased 130,237 shares of common stock at an average price of 12.81 per share for a total of 1.7 million under the 2019 Stock Repurchase Plan approved in December 2019.Balance Sheet ReviewTotal assets increased 81.9 million, or 5.9, during the quarter to 1.48 billion at June 30, 2020, compared to 1.40 billion at March 31, 2020, and increased 221.1 million, or 17.6, compared to 1.26 billion at June 30, 2019. The quarterly increase in total assets is primarily the result of additions to the available-for-sale investment portfolio and new net loan receivables. Investment securities increased 46.8 million during the quarter to 364.3 million at June 30, 2020, and increased 114.2 million compared to 250.1 million at June 30, 2019. At June 30, 2020, municipal bonds totaled 107.6 million and comprised the largest portion of the investment portfolio at 29.5. The estimated average life of the total investment securities portfolio was 6.7 years, and the average repricing term was approximately 4.8 years.Securities consisted of the following at the dates indicated: June 30, 2020 March 31, 2020 June 30, 2019 Three Month Change One Year Change In thousands Available for Sale at Fair Value Municipal bonds 107,610 52,254 932 55,356 106,678 U.S. government agency issued asset-backed securities ABS agency 60,819 42,125 25,436 18,694 35,383 Corporate issued asset-backed securities ABS corporate 39,804 34,073 37,210 5,731 2,594 Corporate issued debt securities Corporate debt 22,428 9,439 9,482 12,989 12,946 U.S. Small Business Administration securities SBA 23,547 25,363 31,975 1,816 8,428 Mortgage-backed securities: U.S. government agency issued mortgage-backed securities MBS agency 102,647 145,139 135,239 42,492 32,592 Corporate issued mortgage-backed securities MBS corporate 7,418 9,127 9,777 1,709 2,359 Total securities available for sale 364,273 317,520 250,051 46,753 114,222 Held to Maturity at Amortized Cost Municipal bonds 7,080 7,080 SBA 144 144 Mortgage-backed securities: MBS Agency 30,766 30,766 Total securities held to maturity 37,990 37,990 We continue to focus our strategic efforts on growing the loan portfolio, while maintaining investment securities for liquidity and generating interest income, said Geri Bullard, EVPChief Financial Officer. At June 30, 2020, the market values for our bond portfolio increased significantly compared to March 31, 2020, as the bond market started to stabilize. Total loans, excluding loans held for sale, increased 87.2 million to 986.4 million at June 30, 2020, from 899.2 million at March 31, 2020, and increased 112.4 million from 874.0 million a year ago. Our participation in the SBAs Paycheck Protection helped fuel loan production during the quarter, with 30.6 million in new PPP loans as of June 30, 2020, said Terry Anderson, EVPChief Credit Officer. Additionally, we enhanced credit underwriting procedures during the quarter, as we anticipate a more difficult operating environment for the majority of businesses this year. The Company originated 56.6 million in new residential mortgages during the quarter, and sold 61.1 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 2.46. This production compares to residential mortgage originations of 30.7 million in the preceding quarter with sales of 16.0 million. The continued high volume of mortgage activity will be dependent on the low rate environment. In the event mortgage rates begin to rise, this activity could slow down. In addition to new originations, the Company also purchased a 28.0 million pool of mortgage loans during the quarter. 