Form PRE 14A First Northwest Bancorp For: May 25

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE

SECURITIES EXCHANGE ACT OF 1934

(Amendment No.    )

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

FIRST NORTHWEST BANCORP

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

LETTER FROM OUR PRESIDENT AND CEO

April 15, 2021

DEAR SHAREHOLDER:

On behalf of the Board of Directors and management of First Northwest Bancorp, we are pleased to invite you to the 2021 Annual Meeting of Shareholders. This year’s meeting will be held virtually at 4:00 p.m. (Pacific Time) on Tuesday, May 25, 2021. While hoped to hold an in-person meeting this year, the ongoing pandemic forced us to limit this year’s meeting to virtual-only. We hope to return to an in-person, or hybrid, meeting format for the 2022 Annual Meeting of Shareholders.

The attached Proxy Statement discusses each matter expected to be voted on at the Annual Meeting of Shareholders in depth. The Board of Directors and management team encourage you to attend the meeting virtually. In addition to voting on the proposed items, you will have the opportunity to hear a brief report on current operations and have your questions and comments addressed afterward. Whether or not you participate in the Annual Meeting, it is important that your shares be represented and voted. We urge you to promptly vote and submit your proxy (1) via the Internet, (2) by phone, or (3) if you received your proxy materials by mail, by signing, dating, and returning the enclosed proxy card or voting instruction form in the envelope provided for your convenience.

As we are all keenly aware, the past year has presented unprecedented social and business challenges around the world. We are humbled and appreciative of the opportunities First Northwest Bancorp has had during these complex times to support our communities and help overcome the difficulties they face. During these challenging times, the Board and executive leadership worked to ensure that First Northwest Bancorp upheld its commitments to our employees, customers, the communities we serve, and of course our shareholders. With a focus on supporting these stakeholders, First Northwest Bancorp leveraged strong positions to produce another record year for financial performance and delivered strong results for our shareholders. In seeking to also support shareholder perspectives, our Board Chair and members of management engaged with a cross-section of shareholders, and the feedback from those conversations helped inform the Board’s decision to ask for shareholder approval to declassify the Board of Directors and provide for the annual election of all directors beginning in 2022.

As our communities begin to advance and recover this year, your Board of Directors and management team look forward to demonstrating our commitment to the long-term interests of our broad array of stakeholders, and the continued success of First Northwest Bancorp. We appreciate your confidence and support and look forward to the meeting.

Sincerely,

		Matthew P. Deines President and Chief Executive Officer

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The Board of Directors of First Northwest Bancorp (the “Board”) is using this Proxy Statement to solicit proxies from our shareholders for use at our 2021 Annual Meeting of Shareholders. We first provided electronic access to this Proxy Statement, a form of proxy card, and our Annual Report to our shareholders on or about April 15, 2021.

Due to concerns about containing the spread of the novel coronavirus, this year’s Annual Meeting will be a completely virtual meeting of shareholders, which will be conducted solely online via live webcast. You will be able to attend and participate in the Annual Meeting online, vote your shares, and submit your questions electronically prior to and during the meeting by visiting www.proxydocs.com/FNWB on the meeting date at the time described in the accompanying proxy statement.

Annual Meeting Business

PROPOSAL 1 - Election of one director to serve a one-year term and three directors to each serve a three-year term;

PROPOSAL 2 - Approval of the Amended and Restated Articles of Incorporation of First Northwest Bancorp, which includes declassification of the Board of Directors to provide for annual re-election of all directors;

PROPOSAL 3 - An advisory (non-binding) vote to approve the compensation of our named executive officers, as disclosed in this Proxy Statement;

PROPOSAL 4 - An advisory (non-binding) vote on whether an advisory vote on executive compensation should be held every one, two, or three years; and

PROPOSAL 5 - Ratification of the appointment of Moss Adams LLP as our independent registered public accounting firm for the year ending December 31, 2021.

YOUR VOTE IS IMPORTANT. We urge you to read this Proxy Statement carefully. Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote promptly through the Internet, by telephone, or by mail. This will ensure the presence of a quorum at the meeting. For instructions on voting, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail. You can request to receive proxy materials by mail or e-mail as well. Promptly voting your shares via the Internet, by telephone, or by signing, dating, and returning the proxy card or voting instruction form, will save us the expense and extra work of additional solicitation. If you are a shareholder of record and vote at the Annual Meeting, your proxy will not be used.

By Order of the Board of Directors

Allison R. Mahaney

Corporate Secretary and Assistant General Counsel

Port Angeles, Washington

April 15, 2021

The information provided in this Proxy Statement relates to First Northwest Bancorp and its wholly owned subsidiary, First Federal Savings and Loan Association of Port Angeles. First Northwest Bancorp may also be referred to as “First Northwest” and First Federal Savings and Loan Association of Port Angeles may also be referred to as “First Federal” or the “Bank.” References to “we,” “us,” and “our” refer to First Northwest and, as the context requires, First Federal.

2021 PROXY STATEMENT      

TABLE OF CONTENTS

PROXY SUMMARY

This summary highlights information contained elsewhere in this Proxy Statement and does not contain all of the information you should consider before casting your vote. Please read this entire Proxy Statement carefully before voting.

Information About the Annual Meeting

Matters to be Considered at the Annual Meeting

At the meeting, you will be asked to consider and vote upon the following proposals:

2021 PROXY STATEMENT    1

2020 Business Highlights

First Northwest Bancorp reported record annual profits in 2020 which contributed to increased earnings per share. We continue to focus on growing our services and footprint to better serve our customers and communities across Western Washington.

Board Directors and Nominees

Directors’ Core Competencies,

Out of 9 Directors

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ESG SUMMARY

2021 PROXY STATEMENT    3

Corporate Citizenship    

Our Board takes great pride in First Northwest’s commitment to supporting strong, sustainable communities in our service area. This commitment to good corporate citizenship is evident in many of First Northwest’s community programs. In 2020, our Board pushed corporate citizenship one step further by undertaking to share our ongoing, internal commitment with stakeholders. In doing so, the Board passed the Diversity, Equity, and Inclusion (“DEI”) Policy, providing structure for formalized, internal DEI programming and reporting. Additionally, the Board passed a standalone Environmental, Social, and Governance (“ESG”) Policy in early 2021, mandating Board level oversight and reporting of our ESG practices and planning. Please visit our Investor Relations webpage at https://investor.ourfirstfed.com for policy details as well as additional information and updates on our ESG commitment.

Our COVID-19 Response

The novel coronavirus pandemic of 2020 presented a unique opportunity for First Northwest through First Federal to demonstrate our commitment to our employees and communities. Our initial pandemic response efforts prioritized ensuring the safety of our employees and customers, as well as continuing to provide essential services to our customers. This effort resulted in shifting 88% of our workforce to remote work and limiting or transitioning branch operations to virtual services which provide remote access to live tellers and basic banking services. Additionally, we provided each employee (CEO, Executive Vice Presidents, and Senior Vice Presidents excluded) a pandemic bonus as recognition for their continued efforts to support our customers, our communities, and their coworkers. Bonuses were based on pay status and amounted to a $3.00 per hour increase for hourly employees from March 29, 2020, through April 24, 2020, or a one-time $500 bonus for qualifying salaried employees.

As a bank holding company, we also had an opportunity to support our larger community through thoughtful lending practices at the Bank, including deferred payments and issuing small business loans to provide financial security for customers. We processed over $177 million in commercial and mortgage loan deferrals in 2020. As of December 31, 2020, approximately 98% of these customers were able to resume payment of their loan obligations. Furthermore, we initiated new small business loans under the Paycheck Protection Program and, in doing so, provided over $32.2 million in financial support to 515 local small businesses in 2020.

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Principal Shareholders

Persons and groups beneficially owning more than five percent of First Northwest’s outstanding shares of common stock (“5% Beneficial Owners”) are required to file reports with the Securities and Exchange Commission (the “SEC”) disclosing their ownership. The following table lists all 5% Beneficial Owners known to management as of the record date for the Annual Meeting, March 26, 2021 (the “Record Date”):

Beneficial Ownership by Directors and Named Executive Officers

The following table sets forth information, as of the Record Date, regarding share ownership of our directors and director nominees, each current or former executive officer of First Northwest or any of its subsidiaries named in the Summary Compensation Table appearing under “Executive Compensation” below (referred to as “named executive officers”), and all current directors and executive officers of First Northwest and its subsidiaries as a group.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Securities Exchange Act of 1934 (the “Exchange Act”), a person is deemed to be the beneficial owner of any shares of common stock if he or she has voting or dispositive power with respect to those shares. Therefore, the table below includes shares held by spouses, by other immediate family members in trust, in retirement accounts or funds for the benefit of the named individuals, and in the ESOP and 401(k) Plan.

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As of the Record Date, there were * shares of First Northwest common stock outstanding.

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PROPOSAL 1:

Election of Directors

Our Board of Directors (the “Board”) consists of nine members and, in accordance with our current Articles of Incorporation, is divided into three classes. One-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified. If Proposal 2 is approved, our Articles of Incorporation will be amended to provide for annual election of all directors and therefore, beginning in 2022, all directors will be elected for one-year terms. The table below sets forth information regarding each director of First Northwest and each nominee for director. All nominees and continuing directors are also directors of First Federal.

In September 2020, David A. Flodstrom retired from our Board and Sherilyn G. Anderson was appointed to serve until the next annual meeting of shareholders. In accordance with the Board’s classified structure provided in our current Articles of Incorporation, Ms. Anderson has been nominated for a one-year term to complete the three-year term of her current position.

The Nominating and Corporate Governance Committee of the Board selects nominees for election as directors and presents its nominees to the Board for consideration. All nominees currently serve as First Northwest directors. Each nominee has consented to being named in this Proxy Statement and has agreed to serve if elected. It is intended that the proxies solicited on behalf of the Board (other than proxies in which the vote is withheld as to the nominee) will be voted at the Annual Meeting for the election of the nominees identified in the table below. If a nominee is unable to stand for election, the Board may either reduce the number of directors to be elected or select a substitute nominee. If a substitute nominee is selected, the proxy holders will vote your shares for the substitute nominee, unless you have withheld authority. At this time, we are not aware of any reason why a nominee might be unable to serve if elected.

Directors are elected by a plurality of the votes cast, individually or by proxy, at the Annual Meeting by holders of First Northwest common stock. Accordingly, the four nominees for election as directors who receive the highest number of votes cast will be elected. Our Articles of Incorporation do not permit shareholders to cumulate their votes for the election of directors. Votes may be cast for or withheld from each nominee. Votes that are withheld and broker non-votes will have no effect on the outcome of the election because the four nominees receiving the greatest number of votes will be elected.

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Director Qualifications and Experience. The following table identifies the experience, qualifications, attributes and skills the Nominating and Corporate Governance Committee considered in making its decision to nominate directors to our Board. The fact that a particular attribute was not considered does not mean that the director lacks such an attribute.

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Information Regarding Nominees for Election and Continuing Directors. Set forth below is the principal occupation and other business experience, during at least the last five years, of each nominee for director and each continuing director.

		SHERILYN G. ANDERSON Age: 61 Director since: 2020   Committees: Audit Compensation

 

Sherilyn G. Anderson is the CFO of Betacom Incorporated, which delivers dynamic, turnkey solutions to help mobile network operators plan, design, build, upgrade, and manage their networks. Prior to joining Betacom in February 2021, Ms. Anderson was the CFO of glassybaby, a Seattle-based producer and nationwide retailer of hand-blown glassware, and a pioneer in social venture enterprise, from October 2017 to June 2020. During her 20-year investment banking career, Ms. Anderson led over $6 billion of capital market transactions and over $1 billion of bank credit transactions on behalf of governmental entities.

Director Qualifications:

Ms. Anderson served as Director at Wells Fargo Securities from May 2012 to August 2017 and as Vice President and Director in public finance at UBS, successfully creating and growing both companies’ public finance investment banking practices in West Coast. She serves on the Executive Committee, and as Treasurer and Chair of the Finance Committee, of the Pacific Science Center, a nonprofit science museum in Seattle, and as Treasurer of the Ethical Apparel Africa Foundation. Ms. Anderson holds an MBA from Harvard Business School, and a B.S. in industrial engineering from Stanford University.

 

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		DANA D. BEHAR Age: 58 Director since: 2015   Committees: Audit

 

Dana D. Behar has been the owner of Discovery Bay Investments, LLC, a private equity investment firm based in Seattle, Washington, and focused on agricultural land and real estate, since 2015. Prior to that, Mr. Behar worked at HAL Real Estate Investments Inc., a private equity real estate investment entity based in Seattle, Washington, for 23 years, serving as President and Chief Executive Officer from 2005 until 2015.

Director Qualifications:

Mr. Behar previously worked in brand management at Procter & Gamble, served as Director of Marketing for the retail chain Egghead Software, and was a management consultant with the Wharton Small Business Development Center. He is active in his community, having served as a board member of Community Roots Housing and the Forterra Strong Communities Fund, and currently serving as a trustee of the Samis Foundation. Mr. Behar has a Bachelor of Arts degree in business with a concentration in finance from the University of Washington and a Master of Business Administration degree with a concentration in finance from the Wharton School of the University of Pennsylvania.

 

		DAVID A. BLAKE Age: 72 Director since: 2005   Committees: Audit Nominating and Corporate Governance (Chair)

 

David A. Blake is the Chief Operations Officer of Blake Sand and Gravel, a producer of washed sand and aggregate and crushed rock, and the Secretary and Treasurer of Blake Tile & Stone, a landscaping and tile supplier.

Director Qualifications:

Mr. Blake joined the family business in 1969 and served as President and Chief Executive Officer from 1980 until 2010. He is a board member of the Albert Haller Foundation and the Olympic Medical Foundation and served on the Sequim School Board of Directors for 31 years. Mr. Blake earned an Associate of Arts degree from Peninsula College.

 

 

 

 

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		CRAIG A. CURTIS Age: 60 Director since: 2014   Committees: Nominating and Corporate Governance

 

Craig A. Curtis is a Partner and Director of Emerging Building Technologies with Mithun, a multi-disciplinary design firm with offices in Seattle, San Francisco and Los Angeles. Mr. Curtis oversees the firm’s commitment to forward looking industry evolution including mass timber, pre-fabrication and offsite construction. Prior to joining Mithun in November 2020, Mr. Curtis served as Chief Architect with Katerra, Inc., a vertically integrated startup founded by Silicon Valley entrepreneurs to reinvent the way buildings are delivered by leveraging technology, supply chains, and off-site factory prefabrication.

Director Qualifications:

Mr. Curtis was responsible for the development of Katerra’s building platforms and led the launch of the company’s mass timber design division, including North America’s largest cross-laminated timber factory. Prior to joining Katerra, Mr. Curtis was employed by The Miller Hull Partnership for 30 years and served as a partner from 1994 until 2016. In 2004, Miller Hull was awarded the American Institute of Architects (AIA) National Firm Award, and in 2008, Mr. Curtis was elected to the AIA College of Fellows, a distinction awarded to approximately 3% of its members. Mr. Curtis serves as the Chairperson of the First Federal Loan and Asset Quality Committee. He has degrees in Architecture and Construction Management from Washington State University and has served on committees for the North Kitsap School District and Suquamish Community Advisory Council.

 

		MATTHEW P. DEINES Age: 47 Director since: 2019   Committees: None

 

Matthew P. Deines became President and Chief Executive Officer (“CEO”) of First Federal in August 2019, and was elected President, CEO, and Director of First Northwest on December 5, 2019. In over 18 years of banking he has experience in a variety of areas, including strategic planning and acquisitions, investor relations, financial reporting, and digital banking, as well as operations, payments, internal controls, and board governance.

Director Qualifications:

Mr. Deines served as Executive Vice President and Chief Financial Officer (“CFO”) of Liberty Bay Bank from November 2018 until May 2019. Prior to that, he began work at Sound Community Bank as its CFO in February 2002 and was promoted to Executive Vice President in January 2005. In 2008, Mr. Deines also became Executive Vice President, CFO, and Corporate Secretary of the newly incorporated Sound Financial, Inc., the predecessor to Sound Financial Bancorp, Inc. (“SFBC”). He held these roles at Sound Community Bank and SFBC until March 2018. In 2000, he received his Washington Certified Public Accountant certificate, currently inactive, while working for O’Rourke, Sacher & Moulton, LLP. Mr. Deines has been a conference speaker and instructor for the Washington Bankers Association and is actively involved with several non-profit organizations.

 

 

 

 

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		CINDY H. FINNIE Age: 70 Director since: 2012   Committees: Audit Compensation (Chair) Nominating and Corporate Governance Executive

 

Cindy H. Finnie is the co-owner and President of Rainshadow Properties, Inc., an award-winning boutique hotel and property management company that she co-founded in 1995.

Director Qualifications:

Ms. Finnie retired in 2011 from Allstate Insurance Company after 38 years of leadership experience. Her range of responsibilities included property and casualty underwriting, sales leadership, business development, and financial management. She was recognized in the company as an expert in developing insurance agencies and was the second person in company history to achieve the top sales leadership award. She currently serves as Past Chair of the Fort Worden PDA, Secretary of the Fort Worden Foundation, Director of the First Federal Community Foundation, and a member of the Port Townsend Lodging Tax Advisory Council. Past non-profit leadership positions include Board Chair of Centrum, an arts and education organization, and Director of the Jefferson County Community Foundation. Ms. Finnie was also appointed by the Governor to serve on the Washington State Arts Commission, which she chaired for three years. Ms. Finnie has a Bachelor of Arts degree from the University of Colorado.

 

 

		STEPHEN E. OLIVER Age: 72 Director since: 2001   Committees: Audit Compensation Nominating and Corporate Governance Executive

 

Stephen E. Oliver has served as Chairperson of the Board since January 2015. Mr. Oliver is a retired attorney with over 35 years of experience in the areas of banking, real estate development, environmental and municipal law.

Director Qualifications:

Mr. Oliver owned and operated the legal consulting firm S.E. Oliver, Inc. from 2010 until his retirement in 2014. Prior to starting his consulting firm, Mr. Oliver was a stockholder in the Platt Irwin Law Firm (which served as general counsel to First Federal through 2017), serving as President from 1991 through 2009. Mr. Oliver serves as President of the Board of Directors of the Northwest Maritime Center located in Port Townsend, Washington, and previously served as President of the Board of Directors of the Olympic Medical Center Foundation located in Port Angeles, Washington. Much of Mr. Oliver’s professional activity was devoted to assessing risk in banking and real estate development transactions, as well as general litigation risk. He has served on bank boards continuously since 2001 and, in that capacity, has chaired both Audit Committee and First Federal Loan and Asset Quality Committee for extended periods. Mr. Oliver earned a Bachelor of Arts, cum laude, with distinction in Economics and a Juris Doctorate, Order of the Coif, from the University of Washington.

 

 

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		NORMAN J. TONINA, JR. Age: 56 Director since: 2013   Committees: Compensation Nominating and Corporate Governance

 

Norman J. Tonina, Jr. has been a member of the Fort Worden Public Development Authority since 2011 and currently serves as its Co-Chair. Mr. Tonina also serves as President of the First Federal Community Foundation and as an adjunct faculty member in Seattle Pacific University’s graduate program in Industrial and Organizational Psychology since 2011. He most recently worked at Grameen Foundation, a non-governmental organization focused on enabling the poor to create a world without poverty, where he served as an advisor to the Chief Executive Officer and Board of Directors and as its Chief Human Resources Officer from 2010 to 2012.

Director Qualifications:

Mr. Tonina began his career at Digital Equipment Corporation in 1987 and joined Microsoft Corporation as a finance manager, rising to become Senior Director of Finance for Microsoft’s Platforms and Applications business. In 1999, he transitioned to Human Resources, where he directed strategic global Human Resources initiatives in the areas of culture, leadership, and talent. Mr. Tonina earned his Bachelor of Arts degree in Business Administration from Northeastern University, a certificate in Human Resources from the University of Michigan, and a Master’s degree in Organizational Psychology from Antioch University.

 

 

		JENNIFER ZACCARDO Age: 68 Director since: 2011   Committees: Audit (Chair) Nominating and Corporate Governance Executive

 

Jennifer Zaccardo is President and Tax Partner of Baker, Overby & Moore Inc., P.S., a public accounting firm with which she has been affiliated since 1983. She is a Certified Public Accountant with particular expertise in the timber industry and small business financial reporting and taxation. Ms. Zaccardo is a member of the Washington Society of Certified Public Accountants and the American Institute of Certified Public Accountants.

Director Qualifications:

Ms. Zaccardo is a past president and treasurer of the Peninsula College Foundation Board of Governors and served on the Quillayute Valley School Board of Directors for 10 years. Ms. Zaccardo earned a Bachelor of Science degree in Forest Resources and a Bachelor of Arts degree in Business Administration from the University of Washington and is a Certified Public Accountant.

 

 

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PROPOSAL 2:

Approval of Amended and Restated Articles of Incorporation

Our Board recommends that shareholders approve the proposed Amended and Restated Articles of Incorporation (the “Articles”) attached to this Proxy Statement as Appendix A. If approved, the proposed amendments would declassify the Board of Directors and provide for annual election of all directors, as well as updating the Articles to include gender-neutral titles and references. The description in this Proxy Statement of the proposed changes to the Articles is qualified in its entirety by reference to, and should be read in conjunction with, the full text of Appendix A.

Under Article VII, Section B, of our current Articles of Incorporation, our directors are divided into three classes, as nearly equal in number as possible and serving staggered three-year terms, such that approximately one-third of our directors are elected at each annual meeting of shareholders. In approving and recommending that shareholders approve the declassification of our Board, the Board reviewed current leading corporate governance practices and the prevailing views of investors regarding board structure. The Board concluded that, as First Northwest matures as a public company, the shareholders will be better served by the adoption of a board structure that promotes accountability by electing all directors annually. While classified boards historically were viewed as promoting continuity and stability, encouraging a long-term perspective, and discouraging coercive takeover tactics, the Board believes that these potential benefits are outweighed by the importance of demonstrating to shareholders that the Board is responsive and accountable to shareholders and committed to strong corporate governance.

Therefore, our Board has unanimously adopted resolutions, subject to shareholder approval, approving the elimination of the classified board provision by amending Article VII, Section B, to read in full as follows:

“B. Election and Term. At each annual meeting of shareholders, the shareholders shall elect the directors to hold office until the next annual meeting of shareholders and until their respective successors are elected and qualified.”

The proposed amendments provide for the annual election of all directors commencing with the 2022 Annual Meeting of Shareholders and, as noted above, would also revise the language used in the Articles to be gender neutral. Approval of Proposal 2 would not affect the Board’s authority to fix the number of directors within a range of five to 15 directors and to fill any vacancies or newly created directorships. If Proposal 2 is approved by the shareholders, First Northwest, the Bank, and the Board of Directors will ensure any additional steps required to provide for the election of individuals to fill all director positions at the 2022 Annual Meeting of Shareholders will be taken including, but not limited to, necessary updates to any organizational documents and resignation of any director terms currently scheduled to extend beyond the date of the 2022 Annual Meeting of Shareholders.

If Proposal 2 is approved, the Amended and Restated Articles of Incorporation as set forth in Appendix A will be effective upon filing with the Washington Secretary of State, subject to any requisite regulatory approvals.

Approval of the Amended and Restated Articles of Incorporation will require the affirmative vote of 80% of the votes entitled to be cast at the Annual Meeting. Abstentions and broker non-votes will have the same effect as a vote against the proposal.

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Corporate Governance and Board Matters

Board of Directors. The Boards of Directors of First Northwest and First Federal conduct their business through board and committee meetings. In 2020, the Board held 13 meetings and the Board of Directors of the Bank also held 13 meetings. No director of First Northwest or the Bank attended fewer than 90 percent of the total meetings of the boards and committees on which that person served.

Committees and Committee Charters. The Board has standing Audit, Compensation, Nominating and Corporate Governance, and Executive Committees. The Board has adopted written charters for the Audit, Compensation, and Nominating and Corporate Governance Committees, copies of which are available under the “Investor Relations” tab on our website at www.ourfirstfed.com. All members of the Audit, Compensation, and Nominating and Corporate Governance Committees are independent, in accordance with the requirements for companies listed on NASDAQ.

The Audit Committee consists of Directors Zaccardo (Chair), Anderson, Behar, Blake, Finnie, and Oliver. The Board has determined that Ms. Zaccardo and two other members of the Committee meet the definition of “Audit Committee Financial Expert,” as defined by the SEC. This Committee is primarily responsible for overseeing the integrity of First Northwest’s financial reporting processes, financial statement audits, and systems of internal controls regarding finance, accounting, and legal compliance; overseeing the independence and performance of First Northwest’s independent auditors and internal audit function; and providing an avenue of communication among the independent auditor, management, and the Board. The Audit Committee meets quarterly and on an as-needed basis. The Audit Committee met eight times during 2020.

The Compensation Committee consists of Directors Finnie (Chair), Anderson, Oliver, and Tonina. This Committee meets semiannually and as needed, providing general oversight regarding the personnel, compensation, and benefits matters of First Northwest. In furtherance of this purpose, the Compensation Committee is responsible for setting the compensation of our Chief Executive Officer and reviewing his performance, approving the compensation arrangements and performance goals for other senior executives, and recommending board member compensation. The Compensation Committee met five times during 2020.

The Nominating and Corporate Governance Committee consists of Directors Blake (Chair), Curtis, Finnie, Oliver, Tonina, and Zaccardo. This Committee is responsible for assessing board and committee membership composition, succession planning, and implementing policies and processes regarding corporate governance matters — including oversight of First Northwest’s Environmental, Social, and Governance programming. The Committee also ensures that the requisite expertise, diversity of skills, experience, background, gender and ethnicity, and independence of the Board are considered in evaluating board composition and director nominations. The Nominating and Corporate Governance Committee meets semiannually, and on an as-needed basis. This Committee met seven times during 2020.

The Executive Committee consists of Directors Oliver, Finnie, and Zaccardo. This Committee acts for the Board of Directors when formal board action is required between regular meetings. The Executive Committee did not meet during 2020.

Leadership Structure. First Northwest has separated the positions of Chairperson and Chief Executive Officer. The Chairperson, an independent director, leads the Board and presides at all board meetings, while the President and Chief Executive Officer runs the day-to-day business of First Northwest. The Board supports having an independent director in a board leadership position. This enables non-management directors to raise issues and concerns for board consideration without immediately involving management. The Chairperson also serves as a liaison between the Board and senior management.

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Board Involvement in Risk Management Process. As part of its overall responsibility to oversee the management, business, and strategy of First Northwest and First Federal, one of the primary responsibilities of our Board is to oversee the amount and types of risks taken by management in executing our corporate strategy, and to monitor our risk experience against the policies and procedures set to control those risks. The Board’s risk oversight function is carried out through its approval of various policies and procedures, such as our lending and investment policies, and regular monitoring of risk, such as interest rate risk exposure, liquidity, cyber-security, and problem assets. Some oversight functions are delegated to committees of the Board, with such committees regularly reporting to the full Board the results of their oversight activities. For example, the Audit Committee is responsible for oversight of the independent auditor and meets directly with the auditors at various times during the course of the year, while also receiving quarterly reports on technology and information security, including cybersecurity.

Corporate Governance Policy. The Board has adopted a Corporate Governance Policy, a copy of which is available under the “Investor Relations” tab on our website at www.ourfirstfed.com. The Policy covers the following matters:

Director Independence. Our common stock is listed on the NASDAQ Global Market. In accordance with NASDAQ requirements, at least a majority of our directors must be independent directors. The Board has determined that eight of our nine directors are independent, as defined by NASDAQ rule. Only Matthew Deines, our President and Chief Executive Officer, is not independent.

Code of Ethics. The Code of Ethics applies to each of our directors, officers, and employees, and requires these individuals to maintain the highest standards of professional conduct. The Code is reviewed and updated periodically. The Board reviewed and reapproved the Code in November 2020. A copy of the Code of Ethics is available under the “Investor Relations” tab on our website at www.ourfirstfed.com.

Director Continuing Education. Continuing education programs assist directors in maintaining skills and knowledge necessary or appropriate for the performance of their responsibilities. These programs may include internally developed materials and presentations, programs presented by third parties, and financial and administrative support to attend qualifying academic or other independent programs. Our Board maintains a strong commitment to continuing education activities each year.

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Board Evaluation. The Nominating and Corporate Governance Committee conducts an annual evaluation of the performance of the Board, the Board Chairperson, and each of its members, including director self-assessment and one-on-one meetings between each director and the Board Chairperson. The results are reported to the Board. The report includes an assessment of the Board’s compliance with its Corporate Governance Policy, and identification of areas in which the Board could improve its performance.

Shareholder Communication with the Board of Directors. The Board welcomes communication from shareholders. Shareholders may send communications to the Board of Directors, First Northwest Bancorp, 105 W. Eighth Street, Port Angeles, Washington 98362. Shareholders should indicate clearly the director or directors for whom the communication is intended so that each communication may be forwarded appropriately.

Annual Meeting Attendance by Directors. We encourage, but do not require, our directors to attend the Annual Meeting of Shareholders. All directors then in office attended the 2020 Annual Meeting of Shareholders held on May 5, 2020.

Transactions with Related Persons. First Federal has followed a policy of granting loans to executive officers and directors which fully complies with all applicable federal regulations. Loans to directors and executive officers are made in the ordinary course of business and on the same terms and conditions, including interest rates and collateral, as those of comparable transactions with persons not related to First Federal prevailing at the time, in accordance with our underwriting guidelines, and do not involve more than the normal risk of collectability or present other unfavorable features. All loans to directors and executive officers and their related persons at December 31, 2020 were performing in accordance with their terms.

Stock Ownership Guidelines. In May 2017, the Board adopted a stock ownership policy because it believes that it is in First Northwest’s best interest to align the financial interests of our non-employee directors and Chief Executive Officer with those of our shareholders. The policy requires non-employee directors to own shares of First Northwest’s common stock equal in value to three times the respective director’s annual cash retainer. Directors must meet these ownership guidelines by May 2020 or within three years of joining the Board, whichever is later. Each of our non-employee directors who was in office at the beginning of 2020 was compliant with this policy requirement throughout 2020. In addition, our stock ownership guidelines require our Chief Executive Officer to hold First Northwest shares valued at three times his annual base salary within three years of his date of hire. Mr. Deines met his stock ownership guideline in 2020, approximately one year after his appointment as Chief Executive Officer of First Northwest, with 76,177 shares held, consisting of 40,078 shares held by direct ownership and 36,099 shares of restricted stock awards, as of the Record Date. See “Executive Compensation” below for a description of our anti-hedging policy applicable to directors, officers, and employees.

Anti-Hedging and Anti-Pledging Policy. Under our Anti-Hedging and Anti-Pledging Policy, we prohibit hedging the economic risk of ownership of our common stock through short sales or the purchase or sale of options, puts, calls, straddles, equity swaps, or other derivative securities that are directly linked to First Northwest stock, by our directors and officers. We also prohibit our directors and officers from holding our stock in a margin account or pledging our stock as collateral for a loan.

2021 PROXY STATEMENT    17

Director Compensation

The following table shows the compensation paid to our directors for the year ended December 31, 2020, except for Mr. Deines, our President and Chief Executive Officer, whose compensation is presented in the Summary Compensation Table in the section entitled “Executive Compensation” below.

Cash Retainers. The non-employee (outside) directors of First Northwest receive compensation for their service on the Board. In setting their compensation, the Board considers the significant amount of time and level of skill required for director service. In October 2019 the Board approved increases in cash director fees effective January 1, 2020, that set the annual retainer for service as a non-employee director of First Northwest at $32,000. The Board Chairperson is paid an additional annual retainer of $9,600. Under the policy, annual retainers for committee service are as follows:

All retainers are paid in equal monthly installments. No additional cash compensation is paid to directors for service on the First Federal Board of Directors.

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Equity Grants. In mid-2020, the Compensation Committee considered the status of First Northwest’s non-employee director compensation program. The Compensation Committee’s independent compensation consultant, McLagan Aon (“McLagan”) advised that First Northwest’s level of director compensation compared to its peers was low, largely because no equity awards had been granted to non-employee directors under First Northwest’s 2015 Equity Incentive Plan since 2016. McLagan recommended that the Compensation Committee consider granting equity awards to non-employee directors under First Northwest’s new 2020 Equity Incentive Plan. Following consideration, the Compensation Committee approved awards of shares of restricted stock to each non-employee director other than Mr. Flodstrom, who had announced his plan to retire later in 2020, with an economic value of $17,500 and vesting in full one year after the date of grant.

Deferred Compensation Plan. In order to encourage the retention of qualified directors, we offer a deferred compensation plan whereby directors may defer all or a portion of their regular fees until a permitted distribution event occurs under the plan. Each director may direct the investment of the deferred fees among investment options made available by First Federal. We have established a grantor trust to hold the plan investments. Grantor trust assets are considered part of our general assets, and the directors have the status of unsecured creditors of First Northwest with respect to the trust assets. The plan permits the payment of benefits upon a separation from service (on account of termination of service or pre-retirement death or disability), a change in control, an unforeseeable emergency, or upon a date specified by the director, in an amount equal to the value of the director’s account balance (or the amount necessary to satisfy the unforeseeable emergency, in that case). A director may elect, at the time he or she makes a deferral election, to receive the deferred amount and related earnings in a lump sum or in annual installments over a period not exceeding 15 years. A director may subsequently elect to change when or how he or she receives his or her plan benefit, if certain required conditions are met. At December 31, 2020, our estimated deferred compensation liability accrual with respect to non-employee directors under the deferred compensation plan totaled approximately $777,000.

Executive Compensation

Description of Executive Compensation Program. This section provides a brief overview of our executive compensation program and the process followed by our Compensation Committee in making decisions about executive compensation. Following this discussion are various tables and additional information about the compensation paid or payable to our “named executive officers.”

Compensation Philosophy and Objectives. In general, our executive compensation policies are designed to establish an appropriate relationship between executive pay and our performance. In particular, our executive compensation program is intended to:

Role of the Compensation Committee. The Compensation Committee is responsible for setting the policies and compensation levels for our directors and executive officers. The Committee is responsible for evaluating the performance of the Chief Executive Officer and setting his compensation, and for reviewing the Chief Executive Officer’s report regarding the performance of other senior executives. The Chief Executive Officer is not involved in decisions regarding his own compensation.

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Role of Compensation Consultants. Our Compensation Committee has the authority to engage its own advisors to assist in carrying out its responsibilities. In 2020, the Compensation Committee engaged McLagan, an independent compensation consultant, to assist with its duties, including providing advice relating to our compensation peer group selection, support, and specific analysis regarding compensation data, and recommendations for executive and non-employee director compensation. McLagan reports directly to our Compensation Committee and not to management, is independent from us, and has provided no services to us other than compensation-related services. The Compensation Committee relies in part on the information and advice from McLagan, as well as other industry information and surveys regarding executive and non-employee director compensation, as a market comparison of compensation levels and practices and to assess the competitiveness of our executive and director compensation program. Our Compensation Committee has assessed the independence of McLagan and concluded that there are no conflicts of interest regarding the work that McLagan performs for the Committee.

Compensation Program Elements. For several years, our executive compensation program has focused primarily on the following components:

Executive officers may also participate in a deferred compensation plan, the 401(k) Plan, and the ESOP as described in more detail under “Retirement Benefits” below. We have also entered into employment agreements with Matthew Deines, Kelly Liske, and Christopher Riffle that provide for, among other things, severance compensation upon involuntary termination in certain situations, as described under “Employment Agreements for Named Executive Officers” below. In addition, First Federal and First Northwest offer medical and dental insurance coverage, vision care coverage, group life insurance coverage, and long-term disability insurance coverage under welfare and benefit plans in which most employees, including executive officers, are eligible to participate.

Compensation Clawback Provision. In the event that First Northwest or First Federal is required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under securities laws, First Federal will recover incentive compensation awarded to current or former executive officers during the preceding three years, to the extent the original awards exceed the amounts that would have been paid under the restated results, or as otherwise required by applicable laws or regulations.

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Summary Compensation Table

The following table presents information regarding the compensation of our President and Chief Executive Officer and our next two most highly compensated executive officers who were serving as executive officers on December 31, 2020.

Cash Incentive Compensation. We believe that the opportunity for performance-based pay for officers is a significant factor in aligning the interests of the officers with those of shareholders. The Compensation Committee reviews and approves incentive compensation for the Board and Chief Executive Officer on an annual basis to ensure alignment with First Federal’s business objectives. The Chief Executive Officer is not permitted to be present during any committee deliberations or voting with respect to his compensation. After Compensation Committee approval, incentive compensation is authorized by the Board of Directors.

Each named executive officer has a set of predefined goals which consist of annual corporate performance goals and may also include personal goals outlined in the officer’s individual participation agreement. Each participant is assigned a target award level and range that defines their incentive opportunity. Each executive’s actual incentive compensation will be determined by whether the executive exceeds “threshold,” “target,” or “stretch” performance levels. Actual awards will be allocated based on specific performance goals defined for each participant and will range from 0% to 150% of their target incentive opportunity. Each participant’s payout is calculated on eligible earnings, as defined in the Cash Incentive Plan, and will be made in a cash lump sum.

2021 PROXY STATEMENT    21

On December 5, 2019, the Compensation Committee selected the participants under the Cash Incentive Plan, including all Executive and Senior Vice Presidents and selected Vice Presidents, and established performance goals for all participants. The annual incentive opportunities for the named executive officers, expressed as a percentage of annualized base salary at December 31, 2020, were as follows:

For 2020, the named executive officers’ goals consisted entirely of corporate goals. The Compensation Committee approved the following corporate performance measures for the named executive officers:

These corporate performance measures are based on the consolidated performance of First Northwest. For the year ended December 31, 2020, the corporate performance weightings applicable to the named executive officers were as follows:

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The following table summarizes First Northwest’s performance and resulting payouts associated with the corporate goals for the year ended December 31, 2020 (dollars in thousands):

Outstanding Equity Awards. The purpose of both the First Northwest Bancorp 2015 Equity Incentive Plan (the “2015 Plan”) and the First Northwest Bancorp 2020 Equity Incentive Plan (the “2020 Plan”) is to promote the long-term growth and profitability of First Northwest, to provide plan participants with an incentive to achieve corporate objectives, to attract and retain individuals of outstanding competence, and to provide plan participants with incentives that are closely linked to the interests of all shareholders of First Northwest.

The 2015 Plan was approved by shareholders in 2015. In July 2016, each of our then-current named executive officers received a restricted stock award vesting in five equal, annual installments beginning on the anniversary of the grant date. Named executive officers hired since 2016 received a restricted stock award with the same vesting schedule, and any unvested shares held by departing named executive officers prior to the completion of the vesting schedule are forfeited.

The 2020 Plan was approved by shareholders at the Annual Meeting in May 2020 and provides for the grant of a variety of equity-based awards to eligible participants including awards of restricted stock. Unvested shares held by departing named executive officers will be forfeited and returned to the 2020 Plan pool.

Following approval of the 2020 Plan, each of our named executive officers other than Mr. Deines received a restricted share award with a value equal to 25% of base salary, vesting in three equal, annual installments beginning on the first anniversary of the grant date. As shown in the table below, Mr. Deines received an equity award in January and July 2020 totaling 17,600 restricted shares. Beginning in 2021, the Compensation Committee plans to grant equity awards to the named executive officers through a combination of discretionary grants and awards tied to the achievement of specified performance goals.

2021 PROXY STATEMENT    23

The following information with respect to outstanding stock awards as of December 31, 2020, is presented for the named executive officers.

The 2015 Plan and the 2020 Plan both provide for accelerated vesting of awards in the event of a recipient’s death or disability, or a change in control. Unvested awards will become exercisable or vest upon the date of the recipient’s death or disability. With respect to a change in control, unvested awards will become exercisable or vest only if the participant experiences an involuntary termination within 365 days following the change in control event, or the acquiring company does not either assume the outstanding award or replace the outstanding award with an equivalently-valued award.

Retirement Benefits. In order to encourage the retention of qualified officers, we offer a deferred compensation plan whereby certain officers may defer all or a portion of their annual salary until a permitted distribution event occurs under the plan. Each officer may direct the investment of the deferred salary among investment options made available by First Federal. We have established a grantor trust to hold the plan investments. Grantor trust assets are considered part of our general assets, and the officers have the status of unsecured creditors of First Federal with respect to the trust assets. The plan permits the payment of benefits upon a separation from service (whether on account of termination of employment or pre-retirement death or disability), a change in control, an unforeseeable emergency, or upon a date specified by the officer, in an amount equal to the value of the officer’s account balance (or the amount necessary to satisfy the unforeseeable emergency, in that case). An officer may elect, at the time of the deferral election, to receive the deferred amount and related earnings in a lump sum or in annual installments over a period not exceeding 15 years. An officer may subsequently elect to change when or how he or she receives his or her plan benefit, if certain required conditions are met. Currently, Mr. Deines is the only named executive officer who participates in this plan.

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We currently offer a qualified, tax-exempt savings plan to eligible employees with a cash or deferred feature qualifying under Section 401(k) of the Internal Revenue Code. Participants are permitted to make pre-tax contributions to the 401(k) Plan of up to a maximum of $19,500 in 2020. In addition, participants who have attained age 50 may defer an additional $6,500 annually as a 401(k) “catch-up” contribution. First Federal matches 50% of the first six percent of participants’ contributions to the 401(k) Plan, including catch-up contributions. All participant 401(k) contributions, rollovers, and earnings are fully and immediately vested. Matching contributions and related earnings vest at a rate of 25% after one year of employment, 50% after two years of employment, 75% after three years of employment, and 100% after four years of employment.

In connection with the conversion of First Federal from the mutual to the stock form of organization, we established an employee stock ownership plan (the “ESOP”). The ESOP provides eligible employees a beneficial interest in First Northwest and an additional retirement benefit in the form of First Northwest common stock. Participants will have a nonforfeitable interest in their individual account based on a vesting schedule of 25% after one year of employment, 50% after two years of employment, 75% after three years of employment, and 100% after four years of employment.

Employment Agreements for Named Executive Officers. On July 28, 2015, we entered into an amended three-year employment agreement with Ms. Liske, which was updated in 2018. Mr. Riffle entered into a three-year employment agreement in 2018, and Mr. Deines entered into a three-year employment agreement in 2019. Prior to the anniversary date of the employment agreements, unless notice is given by First Northwest or First Federal to the executive, or by the executive to First Northwest or First Federal, at least 90 days prior to the anniversary date, the term of the agreements will be extended for an additional year upon review and approval by the Board or the Compensation Committee. In February 2020, the Compensation Committee approved the extension of the term of the agreements for an additional year, to expire in 2023.

Under the employment agreements, the base salary level for each named executive officer is specified, which amounts will be paid by First Northwest and First Federal and may be increased at the discretion of the Compensation Committee. The agreements further provide that the executives may participate, to the same extent as executive officers of First Northwest and First Federal generally, in all plans of First Northwest and First Federal relating to pension, retirement, thrift, profit-sharing, savings, group, or other life insurance, hospitalization, medical and dental coverage, travel and accident insurance, education, cash bonuses, and other retirement or employee benefits or combinations thereof. In addition, the executives are entitled to participate in any other fringe benefit plans or perquisites which are generally available to executive officers of First Northwest or First Federal, including supplemental retirement, deferred compensation programs, supplemental medical or life insurance plans, company cars, club dues, physical examinations, and financial planning and tax preparation services. The executives also will receive annual paid vacation, and voluntary leaves of absence, with or without pay, from time to time at such times and upon such conditions as the Board or the Compensation Committee may determine.

The employment agreements with each of the named executive officers provide for potential payments upon the executive’s involuntary termination in certain situations, or upon death or disability. Any such payments are conditioned on receipt of the executive’s signed release of claims against First Northwest and First Federal. The agreements may be terminated by the Board at any time. If an executive’s employment is terminated other than for cause, without the executive’s consent, or by the executive for “Good Reason,” then for one year after the date of termination First Northwest and First Federal would be required to pay the executive’s salary at the rate in effect immediately prior to the date of termination and the pro rata portion of any incentive award or bonus, the amount of which will be determined by the Compensation Committee in its sole discretion, and continue the executive’s and the

2021 PROXY STATEMENT    25

executive’s dependents’ coverage under First Northwest’s and First Federal’s health, life, and disability programs. “Good Reason” means, in the absence of the Employee’s written consent, any of the following: (i) a material diminution in the executive’s base compensation; (ii) a material diminution in the executive’s authority, duties, or responsibilities; or (iii) a material change in the geographic location at which the executive must perform services of more than 35 miles.

The employment agreements also provide for severance payments and other benefits if an executive is involuntarily terminated not for cause (or terminates his or her employment for “Good Reason,” as defined above) within 24 months following a Change in Control event. The agreements define “Change in Control” as a change in the ownership or effective control of First Northwest or First Federal or a change in the ownership of a substantial portion of the assets of First Northwest or First Federal, as defined in Treasury Regulation § 1.409A-3(i)(5) or in subsequent regulations or other guidance issued by the Internal Revenue Service. For purposes of illustration, a Change in Control generally occurs on the date that: (i) any one person, or more than one person acting as a group, acquires ownership of First Northwest’s stock or First Federal’s stock that, together with stock already held by the person or group, constitutes more than 50 percent of the total fair market value or total voting power of First Northwest’s stock or First Federal’s stock; (ii) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition), ownership of First Northwest stock or First Federal stock that constitutes 35 percent or more of the total voting power of First Northwest’s stock or First Federal’s stock; (iii) a majority of members of the Board of Directors is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors before the appointment or election; or (iv) any one person, or more than one person acting as a group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition), assets from First Northwest or First Federal that have a total gross fair market value equal to or more than 40 percent of the total gross fair market value of all of First Northwest’s assets or First Federal’s assets immediately before the acquisition.

In the event of a termination in connection with a Change in Control, the employment agreements provide that First Northwest and First Federal jointly shall: (1) pay to the executive in a lump sum, as soon as practicable following receipt of the signed release described above, an amount equal to a multiple of the average of the executive’s five prior years’ annual salary (the multiple being 2.75 for Mr. Deines and 2.00 for Ms. Liske and Mr. Riffle); and (2) continue the executive’s and the executive’s dependents’ coverage under First Northwest’s and First Federal’s health, life and disability programs for one year after the executive’s termination of employment. Section 280G of the Internal Revenue Code provides that if payments made in connection with a Change in Control equal or exceed three times the individual’s base amount, then a portion of those payments are deemed to be “excess parachute payments.” An executive’s “base amount” is generally the average of the executive’s taxable compensation for the last five years preceding the year in which a Change in Control occurs. Individuals are subject to a 20% excise tax on the amount of such excess parachute payments, and First Northwest and First Federal would not be entitled to deduct the amount of such excess parachute payments. The employment agreements provide that severance and other payments payable upon a Change in Control, that constitute parachute payments and would be subject to the excise tax, must either be (i) paid in full or (ii) paid to a lesser extent only if no portion would then be subject to the excise tax, whichever amount results in the executive receiving, on an after-tax basis, the greatest amount of benefits without allowing for any additional payment to account for taxes owed by the executive.

Under the employment agreements, each executive also has agreed, while employed by First Federal and for one year following termination of employment, not to compete with First Federal or solicit any employees, customers, or potential customers actively solicited by First Federal during the preceding 12 months.

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If an executive becomes entitled to benefits under the terms of First Northwest’s or First Federal’s then-current disability plan, if any, or becomes otherwise unable to fulfill the duties required under the employment agreement, the executive shall be entitled to receive such group and other disability benefits as are then provided for executive employees. In the event of an executive’s disability, First Northwest and First Federal may provide the executive with written notice in accordance with the agreement of its intention to terminate the executive’s employment. In such event, the executive’s employment shall terminate effective on the 30th day after receipt of such notice by the executive (the “Disability Effective Date”); provided that, within the 30 days after such receipt, the executive shall not have returned to full-time performance of the executive’s duties.

In the event of an executive’s death while employed under an employment agreement and prior to any termination of employment, First Northwest and First Federal will pay to the executive’s estate, or such person as the executive may have previously designated, the salary which was not previously paid and which the executive would have earned if he or she had continued to be employed under the agreement through the last day of the month in which the executive died, together with the benefits provided under the employment agreement through that date.

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PROPOSAL 3:

Advisory Vote to Approve Executive Compensation

Under the Dodd-Frank Act, we are required to periodically include in our Annual Meeting Proxy Statement and present at the Annual Meeting of Shareholders a non-binding shareholder resolution to approve the compensation of our named executive officers, as disclosed in the Proxy Statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a “say-on-pay” proposal, gives shareholders the opportunity to endorse or not endorse the compensation of our executives as disclosed in the Proxy Statement. We currently hold our say-on-pay vote every year. Almost 90 percent of the votes cast on our say-on-pay proposal in 2020 were voted in favor of the proposal. The proposal will be presented at this year’s Annual Meeting in the form of the following resolution:

RESOLVED, that the shareholders approve the compensation of First Northwest Bancorp’s named executive officers, as disclosed in the Executive Compensation section, the compensation tables, and related material in First Northwest’s Proxy Statement for the 2021 Annual Meeting of Shareholders.

This vote will not be binding on our Board of Directors or Compensation Committee and may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty on the Board. It will also not affect any compensation paid or awarded to any executive. The Compensation Committee and the Board may, however, consider the outcome of the vote when assessing future executive compensation arrangements.

Our executive compensation policies are designed to establish an appropriate relationship between executive pay and the annual and long-term performance of First Northwest and First Federal, to reflect the attainment of short- and long-term financial performance goals, to enhance our ability to attract and retain qualified executive officers, and to align to the greatest extent possible the interests of management and shareholders. Our Board of Directors believes that our compensation policies and procedures achieve these objectives.

Approval, on a non-binding advisory basis, of the compensation of our named executive officers requires the affirmative vote of a majority of the votes cast, individually or by proxy, at the Annual Meeting. Abstentions and broker non-votes do not constitute votes cast and therefore will have no effect on the outcome of the proposal.

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PROPOSAL 4:

Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation

Under the Dodd-Frank Act, we were required to include in the Proxy Statement for the 2015 Annual Meeting of Shareholders a non-binding shareholder vote to consider the timing of future shareholder votes on executive compensation. Shareholders voted in favor of holding an annual vote on executive compensation and the Board of Directors determined to adopt an annual frequency. The Dodd-Frank Act requires that shareholders be permitted to vote on the frequency of future votes on executive compensation at least once every six years. Accordingly, we are including in this Proxy Statement and presenting at this year’s Annual Meeting a non-binding shareholder vote to consider the timing of future shareholder votes on executive compensation. This proposal gives shareholders the opportunity to vote on whether a resolution to approve the compensation of our named executive officers should be presented to shareholders every one, two, or three years, or to abstain from voting.

The Board of Directors believes that a resolution to approve the compensation of our named executive officers should be presented to shareholders every year because the Board is committed to strong corporate governance and an annual cycle provides for the greatest accountability to our shareholders.

This vote will not be binding on our Board of Directors or Compensation Committee and may not be construed as overruling a decision by the Board or create or imply any additional fiduciary duty on the Board. It also will not affect when the shareholders will be asked to vote on executive compensation in future years. The Compensation Committee and the Board may, however, consider the outcome of the vote when determining the timing of any proposed shareholder resolution to approve executive compensation.

The non-binding advisory vote regarding the frequency of future shareholder votes on executive compensation has three alternatives. Shareholders may vote that shareholder votes on executive compensation be held every year, every two years or every three years, or shareholders may abstain from voting. The alternative receiving the greatest number of votes – every year, every two years or every three years – will be the frequency that shareholders approve. Abstentions and broker non-votes will have no effect on the outcome of the advisory vote because the alternative receiving the greatest number of votes will be the frequency that shareholders approve.

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Audit Committee Report

The Audit Committee of the First Northwest Board of Directors reports as follows with respect to First Northwest’s audited financial statements for the year ended December 31, 2020:

The foregoing report is provided by the following directors, who constitute the Audit Committee:

Jennifer Zaccardo (Chair)

Sherilyn G. Anderson

Dana D. Behar

David A. Blake

Cindy H. Finnie

Stephen E. Oliver

This report shall not be deemed to be incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934 and shall not otherwise be deemed filed under such acts.    

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PROPOSAL 5:

Ratification of Appointment of Independent Auditor

The Audit Committee of the Board of Directors has appointed Moss Adams LLP as our independent auditor for the year ending December 31, 2021. You are asked to ratify the appointment of Moss Adams LLP at the Annual Meeting. Although shareholder ratification of the appointment of Moss Adams LLP is not required by our Bylaws or otherwise, our Board of Directors is submitting this appointment to shareholders for their ratification at the Annual Meeting as a matter of good corporate practice. If the appointment of Moss Adams LLP is not ratified by our shareholders, the Audit Committee may appoint another independent auditor or it may decide to maintain its appointment of Moss Adams LLP. Even if the appointment of Moss Adams LLP is ratified by the shareholders at the Annual Meeting, the Audit Committee, in its discretion, may select a different independent auditor at any time during the year. Moss Adams LLP served as our independent auditor for the year ended December 31, 2020, and a representative of the firm is expected to attend the Annual Meeting virtually to respond to appropriate questions and will have an opportunity to make a statement if he or she so desires.    

Ratification of the appointment of Moss Adams LLP as our independent auditor requires the affirmative vote of a majority of the votes cast, individually or by proxy, at the Annual Meeting. Abstentions do not constitute votes cast and therefore will have no effect on the outcome of the proposal.

The below table sets forth the aggregate fees billed to First Northwest and First Federal for professional services rendered by Moss Adams LLP for the years ended December 31, 2019 and December 31, 2020.

The Audit Committee pre-approves all audit and permissible non-audit services to be provided by the independent auditor and the estimated fees for these services in connection with its annual review of its charter. In considering non-audit services, the Audit Committee will consider various factors, including but not limited to, whether it would be beneficial to have the service provided by the independent auditor and whether the service could compromise the independence of the independent auditor. All of the services provided by Moss Adams LLP during the year ended December 31, 2020, were approved by the Audit Committee.

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Delinquent Section 16(A) Reports

Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10 percent of First Northwest’s common stock (with certain exceptions), to report their initial ownership of the common stock and any subsequent changes in that ownership to the SEC. The SEC has established filing deadlines for these reports, and we are required to disclose in this Proxy Statement any late filings or failures to file. Based solely on our review of reports filed electronically with the SEC and written representations provided to us by the above referenced persons, we believe that, during the year ended December 31, 2020, all filing requirements applicable to our executive officers, directors, and greater than 10 percent shareholders were properly and timely complied with, except with regard to Directors Tonina and Behar, each of whom was a director of First Northwest during 2020. Mr. Tonina filed one Form 4 report listing two acquisitions of shares through dividend reinvestment late, while Mr. Behar filed one Form 4 report listing five acquisitions of shares through dividend reinvestment late.

Shareholder Proposals

Proposals of shareholders intended to be presented at the 2022 Annual Meeting of Shareholders must be received at the executive office at 105 W. Eighth Street, Port Angeles, Washington 98362, no later than December 16, 2021 in order to be eligible for inclusion in our printed proxy materials. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Exchange Act, and as with any shareholder proposal (regardless of whether included in our proxy materials), our Articles of Incorporation and Bylaws.

Our Articles of Incorporation provide that, in order for a shareholder to make nominations for the election of directors or proposals for business to be brought before a meeting, a shareholder must deliver notice of such nominations and/or proposals to the Corporate Secretary not less than 90 nor more than 120 days prior to the date of the meeting; provided that if less than 100 days’ notice of the meeting is given to shareholders, such written notice must be delivered no later than the close of business on the tenth day following the day on which notice of the meeting was provided to shareholders. As specified in the Articles of Incorporation, the notice with respect to nominations for election of directors must set forth certain information regarding each nominee for election as a director, including the person’s name, age, business address, and number of shares of common stock held, a written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected, and certain other information regarding the shareholder giving such notice. The notice with respect to business proposals to be brought before the annual meeting must state the shareholder’s name, address, and number of shares of common stock held, a brief discussion of the business to be brought before the annual meeting, the reasons for conducting such business at the meeting, and any interest of the shareholder in the proposal.

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Questions and Answers about the Proxy Materials and the Annual Meeting

Who is Entitled to Vote?

We have fixed the close of business on March 26, 2021, as the record date for shareholders entitled to receive notice of and to vote at our Annual Meeting. Only holders of record of First Northwest’s common stock on that date are entitled to receive notice of and to vote at the Annual Meeting. You are entitled to one vote for each share of First Northwest common stock you own, unless you own more than ten percent of First Northwest’s outstanding shares. On March 26, 2021, the voting record date, there were * shares of First Northwest common stock outstanding and entitled to vote at the Annual Meeting.

How Can I Attend the Annual Meeting?

The Annual Meeting will be a completely virtual meeting of stockholders, conducted exclusively by webcast. You are entitled to participate in the Annual Meeting only if you were a stockholder of the First Northwest as of the close of business on the Record Date, or if you hold a valid proxy for the Annual Meeting. No physical meeting will be held.

You will be able to attend the Annual Meeting online and submit your questions during the meeting by visiting www.proxydocs.com/FNWB. You also will be able to vote your shares online by attending the Annual Meeting by webcast.

To participate in the Annual Meeting, you will need to review the information included on your Notice, on your proxy card, or on the instructions that accompanied your proxy materials.

If you hold your shares through an intermediary, such as a bank or broker, you must register in advance using the instructions below.

The online meeting will begin promptly at 4:00 p.m. (Pacific Time). We encourage you to access the meeting prior to the start time, leaving ample time for the check in. Please follow the registration instructions as outlined in this Proxy Statement.

How Do I Register to Attend the Annual Meeting Virtually?

If you are a registered shareholder (i.e., you hold your shares through our transfer agent, Computershare), you do not need to register to attend the Annual Meeting virtually. Please follow the instructions on the notice or proxy card that you received. If you hold your shares through an intermediary, such as a bank or broker, you must register in advance to attend the Annual Meeting virtually on the Internet.

Please visit www.proxydocs.com/FNWB to register to attend the Annual Meeting online by webcast.

Why are you Holding a Virtual Meeting Instead of a Physical Meeting?

Due to concerns regarding the novel coronavirus pandemic and to protect the safety and well-being of our shareholders, Board of Directors, and employees, we made the difficult decision to hold this year’s Annual Meeting online. This decision was not made without significant consideration regarding how this meeting format will impact shareholders and their access to the information and communication from the meeting. The decision to hold our 2021 Annual Meeting online is not an indication that First Northwest intends to hold future annual meetings using an online-only format. We remain committed to the in-person format we have traditionally used for our annual meetings, with the possibility of enhancing access to and participation in those meetings by adding an online attendance option.

2021 PROXY STATEMENT    33

How Do I Vote at the Annual Meeting?

Proxies are solicited to provide all shareholders of record as of the voting Record Date an opportunity to vote on matters scheduled for the Annual Meeting as described in these materials. You are a shareholder of record if your shares of First Northwest common stock are held in your name. If you are a beneficial owner of First Northwest common stock held by a broker, bank, or other nominee (i.e., in “street name”), please see the instructions below under “What If My Shares Are Held in Street Name?”

Shares of First Northwest common stock can only be voted by the shareholder or by proxy at the Annual Meeting. To ensure your representation at the Annual Meeting, we recommend you vote by proxy even if you plan to attend the Annual Meeting virtually. You can vote by telephone or the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail. You may also vote by signing, dating, and returning the proxy card or voting instruction form if you requested a copy of the proxy materials by mail. You can always change your vote at the virtual meeting if you are a shareholder of record.

Shares of First Northwest common stock represented by properly executed proxies will be voted the Board of Directors in accordance with the shareholder’s instructions. Where properly executed proxies are returned to us with no specific instruction as to how to vote at the Annual Meeting, the Board will vote the shares as reflected in the following table:

If any other matters are properly presented at the Annual Meeting for action, the Board of Directors will have the discretion to vote on these matters in accordance with its best judgment. We do not currently expect that any other matters will be properly presented for action at the Annual Meeting.

You may receive more than one Notice of Internet Availability of Proxy Materials depending on how your shares are held. For example, you may hold some of your shares individually, some jointly with your spouse, and some in trust for your children. In this case, you will receive three separate (but similar) notices explaining how to access the proxy materials and vote.

34    FIRST NORTHWEST BANCORP

Important Notice Regarding the Availability of Proxy Materials

Our proxy materials are available at www.proxydocs.com/FNWB. The following materials are available for review:

We provided electronic access to our proxy materials beginning on or about April 15, 2021. On or about April 15, 2021, we mailed to our shareholders the Notice of Availability of Proxy Materials, which contains instructions on how to access the Proxy Statement and our Annual Report via the Internet and how to vote online. The SEC allows the delivery of proxy materials to shareholders over the Internet. We believe that this offers a convenient way for shareholders to review the Annual Meeting materials, while also reducing printing and mailing expenses and lessening the environmental impact of paper copies.

What if My Shares are held in Street Name?

If you are the beneficial owner of shares held in “street name” by a broker, your broker or other custodian is required to vote the shares in accordance with your instructions. If you do not give instructions to your broker, stock exchange rules permit your broker to vote the shares only with respect to discretionary items. In the case of non-discretionary items, the shares not voted will be treated as “broker non-votes.” The proposal to elect directors, approval of the Amended and Restated Articles of Incorporation, the advisory vote on executive compensation, and the advisory vote on the frequency of the advisory vote on executive compensation are considered non-discretionary items; therefore, you must provide instructions to your broker in order to have your shares voted on these proposals.

If your shares are held in street name, you will need proof of ownership to be admitted to the Annual Meeting. A legal proxy issued by your broker, a recent brokerage statement, or a letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares of common stock held in street name at the Annual Meeting, you will need to obtain a legal proxy in your name from the broker, bank, or other nominee who holds your shares.

How will My Shares of Common Stock held in the Employee Stock Ownership Plan Be Voted?

We maintain the First Northwest Bancorp Employee Stock Ownership Plan (“ESOP”) for the benefit of our employees. Each participant may instruct the ESOP trustees how to vote the shares of First Northwest common stock allocated to his or her account under the ESOP by completing the proxy card distributed by the administrator. If a participant properly executes the proxy card, the administrator will instruct the trustees to vote the participant’s shares in accordance with the participant’s instructions. Unallocated shares of First Northwest common stock held in the ESOP and allocated shares for which proper voting instructions are not received will be voted by the trustees in the same proportion as shares for which the trustees have received voting instructions. In order to give the trustees sufficient time to vote, all vote authorization forms must be received by the ESOP third party administrator, Principal Trust Service, on or before May 21, 2021 at 4:00 p.m. (Pacific Time).

2021 PROXY STATEMENT    35

How will my Shares of Common Stock Held in the First Federal 401(K) Plan be Voted?

We also maintain the First Federal Savings and Loan Association of Port Angeles 401(k) Plan (“401(k) Plan”) for the benefit of our employees. First Northwest’s common stock is an investment choice for participants in the 401(k) Plan. Each participant may instruct the trustees how to vote the shares of First Northwest common stock allocated to his or her account under the 401(k) Plan by completing the proxy card distributed by the administrator, Principal Trust Service. If a participant properly executes the proxy card, the administrator will instruct the trustee to vote the participant’s shares in accordance with the participant’s instructions. Shares for which proper voting instructions are not received will be voted by the trustee as directed by the administrator. In order to give the trustee sufficient time to vote, all vote authorization forms must be received by the administrator on or before May 21, 2021 at 4:00 p.m. (Pacific Time).

How Many Shares must be Present to hold the Annual Meeting?

A quorum must be present at the meeting for any business to be conducted. The presence, at the meeting or by proxy, of at least a majority of the shares of First Northwest common stock entitled to vote at the Annual Meeting as of the Record Date will constitute a quorum. Abstentions and broker non-votes will be included in the number of shares considered to be present at the meeting for purposes of determining whether a quorum exists at the Annual Meeting.

What if a Quorum is not Present at the Annual Meeting?

If a quorum is not present at the scheduled time of the meeting, a majority of the shareholders present or represented by proxy may adjourn the meeting until a quorum is present. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given unless the adjourned meeting is set to be held 120 days or more after the original meeting. An adjournment will have no effect on the business that may be conducted at the meeting.    

May I Revoke My Proxy?

You may revoke your proxy before it is voted by:

If your shares are held in street name, you must obtain a validly executed legal proxy from your broker or other custodian indicating that you have the right to vote your shares.

Miscellaneous

The Board of Directors is not aware of any business to come before the Annual Meeting other than those matters described in this Proxy Statement. However, if any other matters should properly come before the meeting, it is intended that proxies in the accompanying form will be voted in respect thereof in accordance with the judgment of the Board of Directors.

36    FIRST NORTHWEST BANCORP

We will bear the cost of solicitation of proxies and will reimburse brokerage firms and other custodians, nominees, and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of First Northwest’s common stock. In addition to solicitations via the Internet and by mail, our directors, officers, and regular employees may solicit proxies personally or electronically or by telephone without additional compensation.

Our Annual Report to Shareholders, including the Annual Report on Form 10-K, has been made available to all shareholders of record as of the close of business on the Record Date for the Annual Meeting, and is available on our website at www.ourfirstfed.com under the “Investor Relations” tab.

By order of the Board of Directors

Allison R. Mahaney

Corporate Secretary / Assistant General Counsel

Port Angeles, Washington

April 15, 2021

2021 PROXY STATEMENT    37

APPENDIX A

AMENDED AND RESTATED ARTICLES OF INCORPORATION OF FIRST NORTHWEST BANCORP

ARTICLE I

Name

The name of the corporation is First Northwest Bancorp (the “Corporation”).

ARTICLE II

Duration

The duration of the Corporation is perpetual.

ARTICLE III

Purpose and Powers

The purpose for which the Corporation is organized is to act as a bank holding company and to transact all other lawful business for which corporations may be incorporated under the WBCA. The Corporation shall have all and may exercise all the express, implied and incidental powers of a corporation organized under the WBCA.

ARTICLE IV

Capital Stock

The total number of shares of all classes of capital stock which the Corporation has authority to issue is 80,000,000, of which 75,000,000 shall be common stock of par value of $0.01 per share, and of which 5,000,000 shall be serial preferred stock of par value of $0.01 per share. The shares may be issued from time to time as authorized by the Board of Directors without further approval of the shareholders, except to the extent that such approval is required by governing law, rule or regulation. The consideration for the issuance of the shares shall be paid in full before their issuance and shall not be less than the stated par value per share. Upon payment of such consideration, such shares shall be deemed to be fully paid and nonassessable. Upon authorization by its Board of Directors, the Corporation may issue its own shares in exchange for or in conversion of its outstanding shares or distribute its own shares, pro rata to its shareholders or the shareholders of one or more classes or series, to effectuate stock dividends or splits, and any such transaction shall not require consideration.

Except as expressly provided by applicable law, these Articles of Incorporation or by any resolution of the Board of Directors designating and establishing the terms of any series of preferred stock, no holders of any class or series of capital stock shall have any right to vote as a separate class or series or to vote more than one vote per share. The shareholders of the Corporation shall not be entitled to cumulative voting in any election of directors.

A description of the different classes and series (if any) of the Corporation’s capital stock and a statement of the designations, and the relative rights, preferences, limitations and voting powers of the shares of each class and series (if any) of capital stock are as follows:

A. Common Stock. On matters on which holders of common stock are entitled to vote, each holder of shares of common stock shall be entitled to one vote for each share held by such holder.

2021 PROXY STATEMENT    A-1

APPENDIX A

Whenever there shall have been paid, or declared and set aside for payment, to the holders of the outstanding shares of any class of stock having preference over the common stock as to the payment of dividends, the full amount of dividends and of sinking fund, retirement fund or other retirement payments, if any, to which such holders are respectively entitled in preference to the common stock, then dividends may be paid on the common stock and on any class or series of stock entitled to participate therewith as to dividends, out of any assets legally available for the payment of dividends, but only when and as declared by the Board of Directors.

In the event of any liquidation, dissolution or winding up of the Corporation, the holders of the common stock (and the holders of any class or series of stock entitled to participate with the common stock in the distribution of assets) shall be entitled to receive, in cash or in kind, the assets of the Corporation available for distribution remaining after: (i) payment or provision for payment of the Corporation’s debts and liabilities; (ii) distributions or provision for distributions in settlement of the liquidation account established for certain depositors of First Federal Savings and Loan Association of Port Angeles (the “Association”) in connection with the Association’s mutual-to-stock conversion; and (iii) distributions or provision for distributions to holders of any class or series of stock having preference over the common stock in the liquidation, dissolution or winding up of the Corporation. Each share of common stock shall have the same relative rights as and be identical in all respects with all the other shares of common stock.

B. Serial Preferred Stock. The Board of Directors of the Corporation is authorized by resolution or resolutions from time to time adopted to provide for the issuance of preferred stock in series and to fix and state the voting powers, designations, preferences and relative, participating, optional or other special rights of the shares of each such series and the qualifications, limitations and restrictions thereof, including, but not limited to, determination of any of the following:

(a) The distinctive serial designation and the number of shares constituting such series;

(b) The dividend rate or the amount of dividends to be paid on the shares of such series, whether dividends shall be cumulative and, if so, from which date or dates, the payment date or dates for dividends, and the participating or other special rights, if any, with respect to dividends;

(c) The voting powers, full or limited, if any, of shares of such series;

(d) Whether the shares of such series shall be redeemable and, if so, the price(s) at which, and the terms and conditions on which, such shares may be redeemed;

(e) The amount(s) payable upon the shares of such series in the event of voluntary or involuntary liquidation, dissolution or winding up of the Corporation;

(f) Whether the shares or such series shall be entitled to the benefit of a sinking or retirement fund to be applied to the purchase or redemption of such shares, and if so entitled, the amount of such fund and the manner of its application, including the price(s) at which such shares may be redeemed or purchased through the application of such fund;

(g) Whether the shares of such series shall be convertible into, or exchangeable for, shares of any other class or classes or of any other series of the same or any other class or classes of stock of the Corporation, and, if so convertible or exchangeable, the conversion price(s), or the rate or rates of exchange, and the adjustments thereof, if any, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(h) The price or other consideration for which the shares of such series shall be issued; and

A-2    FIRST NORTHWEST BANCORP

APPENDIX A

(i) Whether the shares of such series which are redeemed or converted shall have the status of authorized but unissued shares of serial preferred stock and whether such shares may be reissued as shares of the same or any other series of serial preferred stock.

Each share of each series of preferred stock shall have the same relative rights as and be identical in all respects with all other shares of the same series.

C. 1. Notwithstanding any other provision of these Articles of Incorporation, in no event shall any record owner of any outstanding common stock which is beneficially owned, directly or indirectly, by a person who, as of any record date for the determination of shareholders entitled to vote on any matter, beneficially owns in excess of 10% of the then-outstanding shares of common stock (“Limit”), be entitled, or permitted to any vote in respect of the shares held in excess of the Limit, unless a majority of the Whole Board (as hereinafter defined) shall have by resolution granted in advance such entitlement or permission. The number of votes which may be cast by any record owner by virtue of the provisions hereof in respect of common stock beneficially owned by such person owning shares in excess of the Limit shall be a number equal to the total number of votes which a single record owner of all common stock owned by such person would be entitled to cast after giving effect to the provisions hereof, multiplied by a fraction, the numerator of which is the number of shares of such class or series which are both beneficially owned by such person and owned of record by such record owner and the denominator of which is the total number of shares of common stock beneficially owned by such person owning shares in excess of the Limit.

2. The following definitions shall apply to this Section C of this Article VII.

(a) “Affiliate” shall have the meaning ascribed to it in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange Act of 1934, as in effect on the date of filing of these Articles of Incorporation.

(b) “Beneficial ownership” shall be determined pursuant to Rule 13d-3 of the General Rules and Regulations under the Securities Exchange Act of 1934 (or any successor rule or statutory provision), or, if said Rule 13d-3 shall be rescinded and there shall be no successor rule or provision thereto, pursuant to said Rule 13d-3 as in effect on the date of filing of these Articles of Incorporation; provided, however, that a person shall, in any event, also be deemed the “beneficial owner” of any common stock:

(i) which such person or any of its Affiliates beneficially owns, directly or indirectly; or

(ii) which such person or any of its Affiliates has (A) the right to acquire (whether such right is exercisable immediately or only after the passage of time), pursuant to any agreement, arrangement or understanding (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of an agreement, contract, or other arrangement with the Corporation to effect any transaction which is described in any one or more of subparagraphs A(1)(a) through (h) of Article XI hereof or upon the exercise of conversion rights, exchange rights, warrants or options or otherwise), or (B) sole or shared voting or investment power with respect thereto pursuant to any agreement, arrangement, understanding, relationship or otherwise (but shall not be deemed to be the beneficial owner of any voting shares solely by reason of a revocable proxy granted for a particular meeting of shareholders, pursuant to a public solicitation of proxies for such meeting, with respect to shares of which neither such person nor any such Affiliate is otherwise deemed the beneficial owner); or

(iii) which are beneficially owned, directly or indirectly, by any other person with which such first mentioned person or any of its Affiliates acts as a partnership, limited partnership, syndicate or other group pursuant to any agreement, arrangement or understanding for the purpose of acquiring, holding,

2021 PROXY STATEMENT    A-3

APPENDIX A

voting or disposing of any shares of capital stock of the Corporation; and provided further, however, that (i) no director or officer of the Corporation (or any Affiliate of any such director or officer) shall, solely by reason of any or all of such directors or officers acting in their capacities as such, be deemed, for any purposes hereof, to beneficially own any common stock beneficially owned by any other such director or officer (or any Affiliate thereof), and (ii) neither any employee stock ownership or similar plan of the Corporation or any subsidiary of the Corporation, nor any trustee with respect thereto or any Affiliate of such trustee (solely by reason of such capacity of such trustee), shall be deemed, for any purposes hereof, to beneficially own any common stock held under any such plan. For purposes of computing the percentage beneficial ownership of common stock of a person, the outstanding common stock shall include shares deemed owned by such person through application of this subsection but shall not include any other common stock which may be issuable by the Corporation pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise. For all other purposes, the outstanding common stock shall include only common stock then outstanding and shall not include any common stock which may be issuable by the Corporation pursuant to any agreement, or upon the exercise of conversion rights, warrants or options, or otherwise.

(c) A “person” shall mean any individual, firm, corporation or other entity.

(d) “Whole Board” shall mean the total number of directors which the Corporation would have if there were no vacancies on the Board of Directors.

3. The Board of Directors shall have the power to construe and apply the provisions of this Section C and to make all determinations necessary or desirable to implement such provisions, including but not limited to matters with respect to (i) the number of shares of common stock beneficially owned by any person, (ii) whether a person is an Affiliate of another, (iii) whether a person has an agreement, arrangement or understanding with another as to the matters referred to in the definition of beneficial ownership, (iv) the application of any other definition or operative provision of this Section C to the given facts or (v) any other matter relating to the applicability or effect of this Section C.

4. The Board of Directors shall have the right to demand that any person who is reasonably believed to beneficially own common stock in excess of the Limit (or holds of record common stock beneficially owned by any person in excess of the Limit) supply the Corporation with complete information as to (i) the record owner(s) of all shares beneficially owned by such person who is reasonably believed to own shares in excess of the Limit and (ii) any other factual matter relating to the applicability or effect of this section as may reasonably be required of such person.

5. Except as otherwise provided by law or expressly provided in this Section C, the presence, in person or by proxy, of the holders of record of shares of capital stock of the Corporation entitling the holders thereof to cast a majority of the votes (after giving effect, if required, to the provisions of this Section C) entitled to be cast by the holders of shares of capital stock of the Corporation shall constitute a quorum at all meetings of the shareholders, and every reference in these Articles of Incorporation to a majority or other proportion of capital stock (or the holders thereof) for purposes of determining any quorum requirement or any requirement for shareholder consent or approval shall be deemed to refer to such majority or other proportion of the votes (or the holders thereof) then entitled to be cast in respect of such capital stock.

6. Any constructions, applications or determinations made by the Board of Directors pursuant to this Section C in good faith and on the basis of such information and assistance as was then reasonably available for such purpose shall be conclusive and binding upon the Corporation and its shareholders.

A-4    FIRST NORTHWEST BANCORP

APPENDIX A

7. In the event any provision (or portion thereof) of this Section C shall be found to be invalid, prohibited or unenforceable for any reason, the remaining provisions (or portions thereof) of this Section C shall remain in full force and effect, and shall be construed as if such invalid, prohibited or unenforceable provision had been stricken herefrom or otherwise rendered inapplicable, it being the intent of the Corporation and its shareholders that each such remaining provision (or portion thereof) of this Section C remain, to the fullest extent permitted by law, applicable and enforceable as to all shareholders, including shareholders owning an amount of stock over the Limit, notwithstanding any such finding.

ARTICLE V

Preemptive Rights

Holders of the capital stock of the Corporation shall not be entitled to preemptive rights with respect to any shares of the Corporation which may be issued.

ARTICLE VI

Initial Directors

The persons who shall serve as the initial directors of the Corporation are: Richard G. Kott, Stephen E. Oliver, David A. Blake, Lloyd J. Eisenman, Cindy H. Finnie, David T. Flodstrom, Laurence J. Hueth, Jennifer Zaccardo, Norman J. Tonina, Jr. and Craig Curtis. The address of each initial director is 105 West 8th Street, Port Angeles, Washington 98362. The initial directors (or their successors) shall serve until the first annual meeting of shareholders, at which time they may stand for reelection, if so nominated, for terms based on the respective groups described in Part B of Article VII to which they have been nominated.

ARTICLE VII

Directors

A. Number. The Corporation shall be under the direction of a Board of Directors. The number of directors shall be as provided in the Corporation’s Bylaws, but in no event shall be fewer than five nor more than 15.

B. Classified BoardElection and Term. Effective beginning with the election of directors at the first annual meeting of shareholders, the Board of Directors, other than those directors who may be elected by the holders of any class or series of preferred stock, shall be divided into three groups, with each group containing one-third of the total number of directors, or as near as may be. The terms of the directors elected to serve in the first group shall expire at the second annual shareholders’ meeting, the terms of the directors elected to serve in the second group shall expire at the third annual shareholders’ meeting, and the terms of the directors elected to serve in the third group shall expire at the fourth annual shareholders’ meeting. At the second annual shareholders’ meeting and each annual shareholders’ meeting held thereafter, directors shall be elected for a term of three years to succeed those whose terms expire. At each annual meeting of shareholders, the shareholders shall elect the directors to hold office until the next annual meeting of shareholders and until their respective successors are elected and qualified.

C. Vacancies. Any vacancy occurring in the Board of Directors may be filled only by the affirmative vote of a majority of the remaining directors, whether or not there remains a quorum of the Board of Directors. A director elected to fill a vacancy shall be elected for a term which expires at the next shareholders’ meeting at which directors are elected. A

2021 PROXY STATEMENT    A-5

APPENDIX A