10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended June 30, 2023

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from _____ to _____

Commission File Number: 001-36741

FIRST NORTHWEST BANCORP

(Exact name of registrant as specified in its charter)

Washington	46-1259100
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer I.D. Number)
105 West 8th Street, Port Angeles, Washington	98362
(Address of principal executive offices)	(Zip Code)
Registrant's telephone number, including area code:	(360) 457-0461

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:	Trading Symbol(s):	Name of each exchange on which registered:
Common Stock, par value $0.01 per share	FNWB	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐	Emerging growth company	☐
Non-accelerated filer	☒	Smaller reporting company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of August 4, 2023, there were 9,631,682 shares of common stock, $0.01 par value per share, outstanding.

1

FIRST NORTHWEST BANCORP

FORM 10-Q

TABLE OF CONTENTS

PART 1 - FINANCIAL INFORMATION
	Page
Item 1 - Financial Statements (Unaudited)	3
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations	42
Item 3 - Quantitative and Qualitative Disclosures About Market Risk	60
Item 4 - Controls and Procedures	60
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings	61
Item 1A - Risk Factors	61
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds	61
Item 3 - Defaults Upon Senior Securities	62
Item 4 - Mine Safety Disclosures	62
Item 5 - Other Information	62
Item 6 - Exhibits	62
SIGNATURES	63

As used in this report, the terms, "we," "our," and "us," and "Company" refer to First Northwest Bancorp ("First Northwest"), its consolidated subsidiary and its former joint venture controlling interest, unless the context indicates otherwise. When we refer to "First Fed" or the "Bank" in this report, we are referring to First Fed Bank, the wholly owned subsidiary of First Northwest Bancorp. When we refer to "Quin" or "Quin Ventures" in this report, we are referring to Quin Ventures, Inc., a former First Northwest joint venture. First Northwest and the Bank are collectively referred to as the "Company." For periods prior to June 30, 2023, Company references also include Quin Ventures.

2

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED BALANCE SHEETS

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

	June 30, 2023			December 31, 2022
ASSETS
Cash and due from banks	$	19,294		$	17,104
Interest-earning deposits in banks		59,008			28,492
Investment securities available for sale, at fair value		321,963			326,569
Loans held for sale		2,049			597
Loans receivable (net of allowance for credit losses on loans of $17,297 and $16,116)		1,620,863			1,531,435
Federal Home Loan Bank (FHLB) stock, at cost		12,621			11,681
Accrued interest receivable		7,480			6,743
Premises and equipment, net		18,140			18,089
Servicing rights on sold loans, at fair value		3,825			3,887
Bank-owned life insurance, net		40,066			39,665
Equity and partnership investments		14,569			14,289
Goodwill and other intangible assets, net		1,087			1,089
Deferred tax asset, net		15,031			14,091
Prepaid expenses and other assets		26,882			28,339
Total assets	$	2,162,878		$	2,042,070
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	$	1,653,122		$	1,564,255
Borrowings		303,397			285,358
Accrued interest payable		1,367			455
Accrued expenses and other liabilities		44,286			32,344
Advances from borrowers for taxes and insurance		1,149			1,376
Total liabilities		2,003,321			1,883,788
Shareholders' Equity
Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding		—			—
Common stock, $0.01 par value, authorized 75,000,000 shares; issued and outstanding 9,633,496 shares at June 30, 2023, and 9,703,581 shares at December 31, 2022		96			97
Additional paid-in capital		95,360			95,508
Retained earnings		111,750			114,424
Accumulated other comprehensive loss, net of tax		(40,066	)		(40,543	)
Unearned employee stock ownership plan (ESOP) shares		(7,583	)		(7,913	)
Total parent's shareholders' equity		159,557			161,573
Noncontrolling interest in Quin Ventures, Inc.		—			(3,291	)
Total shareholders' equity		159,557			158,282
Total liabilities and shareholders' equity	$	2,162,878		$	2,042,070

See selected notes to the consolidated financial statements.

3

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
INTEREST INCOME
Interest and fees on loans receivable	$	21,299		$	16,081		$	40,803		$	30,617
Interest on investment securities		3,336			2,715			6,518			4,990
Interest on deposits and other		617			46			1,021			84
FHLB dividends		222			119			414			171
Total interest income		25,474			18,961			48,756			35,862
INTEREST EXPENSE
Deposits		6,209			796			10,562			1,513
Borrowings		3,283			922			5,907			1,620
Total interest expense		9,492			1,718			16,469			3,133
Net interest income		15,982			17,243			32,287			32,729
Provision for (recapture of) credit losses		300			500			(200	)		500
Net interest income after provision for (recapture of) credit losses		15,682			16,743			32,487			32,229
NONINTEREST INCOME
Loan and deposit service fees		1,064			1,091			2,205			2,264
Sold loan servicing fees and servicing rights mark-to-market		(191	)		27			302			459
Net gain on sale of loans		58			231			234			484
Net (loss) gain on sale of investment securities		—			(8	)		—			118
Increase in cash surrender value of bank-owned life insurance		190			213			416			465
Other income		590			668			888			835
Total noninterest income		1,711			2,222			4,045			4,625
NONINTEREST EXPENSE
Compensation and benefits		8,180			9,735			16,017			18,538
Data processing		2,080			1,870			4,118			3,642
Occupancy and equipment		1,214			1,432			2,423			2,599
Supplies, postage, and telephone		435			408			790			721
Regulatory assessments and state taxes		424			441			813			802
Advertising		929			1,405			1,970			2,157
Professional fees		884			629			1,690			1,188
FDIC insurance premium		313			211			570			434
Other expense		758			832			1,697			1,713
Total noninterest expense		15,217			16,963			30,088			31,794
Income before provision for income taxes		2,176			2,002			6,444			5,060
Provision for income taxes		475			467			1,300			1,021
Net income		1,701			1,535			5,144			4,039
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.		75			953			160			1,255
Net income attributable to parent	$	1,776		$	2,488		$	5,304		$	5,294
Basic and diluted earnings per common share	$	0.20		$	0.27		$	0.59		$	0.58

See selected notes to the consolidated financial statements.

4

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands) (Unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net income	$	1,701		$	1,535		$	5,144		$	4,039
Other comprehensive (loss) income:
Unrealized holding (losses) gains on investments available for sale arising during the period		(4,152	)		(16,875	)		639			(36,329	)
Income tax benefit related to unrealized holding (losses) gains on investments		1,115			3,545			86			7,629
Amortization of unrecognized DB plan prior service cost		38			36			76			73
Income tax provision related to amortization of DB plan prior service cost		(8	)		(7	)		(16	)		(15	)
Unrealized holding gains (losses) on derivatives		1,336			—			(392	)		—
Income tax (provision) benefit related to unrealized holding gains (losses) on derivatives		(287	)		—			84			—
Reclassification adjustment for net (gains) losses on sales of securities realized in income		—			8			—			(118	)
Income tax (provision) benefit related to reclassification adjustment on sales of securities		—			(1	)		—			25
Other comprehensive (loss) income, net of tax		(1,958	)		(13,294	)		477			(28,735	)
Comprehensive (loss) income		(257	)		(11,759	)		5,621			(24,696	)
Comprehensive loss attributable to noncontrolling interest		(75	)		(953	)		(160	)		(1,255	)
Comprehensive (loss) income attributable to parent	$	(182	)	$	(10,806	)	$	5,781		$	(23,441	)

See selected notes to the consolidated financial statements.

5

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Three Months Ended June 30, 2023 and 2022

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

	Common Stock						Additional Paid-in			Retained			Unearned ESOP			Accumulated Other Comprehensive Loss,			Noncontrolling			Total Shareholders'
	Shares			Amount			Capital			Earnings			Shares			Net of Tax			Interest			Equity
Balance at March 31, 2022		10,003,622		$	100		$	96,473		$	105,546		$	(8,407	)	$	(15,153	)	$	(783	)	$	177,776
Net income											2,488									(953	)		1,535
Common stock repurchased		(52,618	)		(1	)		(525	)		(333	)											(859	)
Restricted stock award grants net of forfeitures		575			1			(1	)														—
Restricted stock awards canceled		(1,407	)		—			(27	)														(27	)
Other comprehensive loss, net of tax																	(13,294	)					(13,294	)
Share-based compensation expense								479															479
ESOP shares committed to be released								80						165									245
Cash dividends declared ($0.07 per share)											(701	)											(701	)
Balance at June 30, 2022		9,950,172		$	100		$	96,479		$	107,000		$	(8,242	)	$	(28,447	)	$	(1,736	)	$	165,154
Balance at March 31, 2023		9,674,055		$	97		$	95,333		$	114,139		$	(7,749	)	$	(38,108	)	$	(3,376	)	$	160,336
Net income											1,776									(75	)		1,701
Common stock repurchased		(30,176	)		(1	)		(301	)		(39	)											(341	)
Restricted stock award forfeitures net of grants		(8,911	)		—			—															—
Restricted stock awards canceled		(1,472	)		—			(17	)														(17	)
Other comprehensive loss, net of tax																	(1,958	)					(1,958	)
Close out investment in Quin Ventures											(3,451	)								3,451			—
Share-based compensation expense								358															358
ESOP shares committed to be released								(13	)					166									153
Cash dividends declared ($0.07 per share)											(675	)											(675	)
Balance at June 30, 2023		9,633,496		$	96		$	95,360		$	111,750		$	(7,583	)	$	(40,066	)	$	—		$	159,557

See selected notes to the consolidated financial statements.

6

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Six Months Ended June 30, 2023 and 2022

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

	Common Stock						Additional Paid-in			Retained			Unearned ESOP			Accumulated Other Comprehensive Loss,			Noncontrolling			Total Shareholders'
	Shares			Amount			Capital			Earnings			Shares			Net of Tax			Interest			Equity
Balance at December 31, 2021		9,972,698		$	100		$	96,131		$	103,014		$	(8,572	)	$	288		$	(481	)	$	190,480
Net income											5,294									(1,255	)		4,039
Common stock repurchased		(52,618	)		(1	)		(525	)		(333	)											(859	)
Restricted stock award grants net of forfeitures		40,418			1			(1	)														—
Restricted stock awards canceled		(10,326	)		—			(222	)														(222	)
Other comprehensive loss, net of tax																	(28,735	)					(28,735	)
Reclassification resulting from change in accounting method, net of tax											424												424
Share-based compensation expense								890															890
ESOP shares committed to be released								206						330									536
Cash dividends declared ($0.14 per share)											(1,399	)											(1,399	)
Balance at June 30, 2022		9,950,172		$	100		$	96,479		$	107,000		$	(8,242	)	$	(28,447	)	$	(1,736	)	$	165,154
Balance at December 31, 2022		9,703,581		$	97		$	95,508		$	114,424		$	(7,913	)	$	(40,543	)	$	(3,291	)	$	158,282
Net income											5,304									(160	)		5,144
Common stock repurchased		(74,617	)		(1	)		(745	)		(222	)											(968	)
Restricted stock award grants net of forfeitures		16,338			—			—															—
Restricted stock awards canceled		(11,806	)		—			(162	)														(162	)
Other comprehensive income, net of tax																	477						477
Reclassification resulting from adoption of Accounting Standards Codification 326, net of tax											(2,951	)											(2,951	)
Close out investment in Quin Ventures											(3,451	)								3,451			—
Share-based compensation expense								749															749
ESOP shares committed to be released								10						330									340
Cash dividends declared ($0.14 per share)											(1,354	)											(1,354	)
Balance at June 30, 2023		9,633,496		$	96		$	95,360		$	111,750		$	(7,583	)	$	(40,066	)	$	—		$	159,557

See selected notes to the consolidated financial statements.

7

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

	Six Months Ended June 30,
	2023			2022
Cash flows from operating activities:
Net income before noncontrolling interest	$	5,144		$	4,039
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		799			983
Amortization of core deposit intangible		2			7
Amortization and accretion of premiums and discounts on investments, net		711			898
(Accretion) amortization of deferred loan fees and purchased premiums, net		(160	)		571
Amortization of debt issuance costs		39			39
Change in fair value of sold loan servicing rights		137			53
Additions to servicing rights on sold loans, net		(75	)		(98	)
(Recapture of) provision for credit losses		(200	)		500
Allocation of ESOP shares		340			404
Share-based compensation expense		749			890
Gain on sale of loans, net		(234	)		(484	)
Gain on sale of securities available for sale, net		—			(118	)
Increase in cash surrender value of life insurance, net		(416	)		(465	)
Origination of loans held for sale		(13,294	)		(16,487	)
Proceeds from sale of loans held for sale		12,076			17,035
Change in assets and liabilities:
Increase in accrued interest receivable		(737	)		(513	)
Decrease (increase) in prepaid expenses and other assets		1,299			(3,854	)
Increase in accrued interest payable		912			68
Increase in accrued expenses and other liabilities		10,699			5,788
Net cash provided by operating activities		17,791			9,256
Cash flows from investing activities:
Purchase of securities available for sale		—			(78,409	)
Proceeds from maturities, calls, and principal repayments of securities available for sale		4,535			19,565
Proceeds from sales of securities available for sale		—			12,685
Purchase of FHLB stock		(940	)		(5,206	)
Early surrender of bank-owned life insurance policy		15			—
Net increase in loans receivable		(91,792	)		(112,363	)
Purchase of premises and equipment, net		(850	)		(2,442	)
Capital contributions to equity and partnership investments		(209	)		(6,979	)
Capital disbursements received from equity and partnership investments		347			—
Capital contributions to historic tax credit partnerships		—			(1,829	)
Net cash used by investing activities		(88,894	)		(174,978	)

See selected notes to the consolidated financial statements.

8

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

	Six Months Ended June 30,
	2023			2022
Cash flows from financing activities:
Net increase in deposits	$	88,867		$	144
Proceeds from long-term FHLB advances		15,000			10,000
Repayment of long-term FHLB advances		(10,000	)		—
Net increase in short-term FHLB advances		14,000			112,000
Net (decrease) increase in line of credit		(1,000	)		8,000
Net decrease in advances from borrowers for taxes and insurance		(227	)		(174	)
Payment of dividends		(1,354	)		(1,388	)
Restricted stock awards canceled		(162	)		(222	)
Repurchase of common stock		(968	)		(859	)
Net cash provided by financing activities		104,156			127,501
Net increase (decrease) in cash and cash equivalents		33,053			(38,221	)
Cash and cash equivalents at beginning of period		45,596			126,016
Cash and cash equivalents at end of period	$	78,649		$	87,795
Supplemental disclosures of cash flow information:
Cash paid for interest on deposits and borrowings	$	15,557		$	3,065
Cash paid for income taxes	$	1,811		$	1,110
Supplemental disclosures of noncash investing activities:
Change in unrealized gain (loss) on securities available for sale	$	639		$	(36,447	)
Change in unrealized (loss) gain on cash flow hedges	$	(392	)	$	—
Cumulative adjustment to servicing rights asset due to election of fair value option	$	—		$	538
Cumulative effect of adoption of ASU 2016-13 Financial Instruments - Credit Losses on January 1, 2023	$	(3,735	)	$	—

See selected notes to the consolidated financial statements.

9

FIRST NORTHWEST BANCORP AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - Basis of Presentation and Critical Accounting Policies

Organization and nature of business - First Northwest Bancorp, a Washington corporation ("First Northwest"), became the holding company of First Fed Bank ("First Fed" or the "Bank") on January 29, 2015, upon completion of the Bank's conversion from a mutual to stock form of organization (the "Conversion").

In connection with the Conversion, the Company issued an aggregate of 12,167,000 shares of common stock at an offering price of $10.00 per share for gross proceeds of $121.7 million. An additional 933,360 shares of Company common stock and $400,000 in cash were contributed to the First Federal Community Foundation ("Foundation"), a charitable foundation that was established in connection with the Conversion, resulting in the issuance of a total of 13,100,360 shares. The Company received $117.6 million in net proceeds from the stock offering of which $58.4 million was contributed to the Bank upon Conversion.

Pursuant to the Bank's Plan of Conversion (the "Plan") adopted by its Board of Directors, and as approved by its members, the Company established an employee stock ownership plan ("ESOP"). On December 18, 2015, the ESOP completed its open market purchases, with funds borrowed from the Company, of 8% of the common stock issued in the Conversion for a total of 1,048,029 shares.

In April 2021, First Northwest entered into an Amended and Restated Joint Venture Agreement (the "Joint Venture Agreement") with the Bank, POM Peace of Mind, Inc. ("POM"), and Quin Ventures, Inc. ("Quin Ventures"). First Northwest extended $8.0 million to Quin Ventures under a capital financing agreement and related promissory note and issued 29,719 shares of the Company's common stock to POM with a value of $500,000. Quin Ventures sold substantially all of its assets in December 2022 to Quil Ventures Inc., at which time POM returned the 29,719 shares previously issued and the Joint Venture Agreement was terminated. As part of the sale transaction, the Company received a 5% ownership stake in Quil Ventures Inc. valued at $225,000 and recorded a $1.5 million commitment receivable. In June 2023, First Northwest determined that Quin Ventures was no longer a going concern. The Company wrote off the remaining investment in Quin Ventures through retained earnings in accordance with applicable non-controlling interest accounting methods. The noncontrolling interest in Quin Ventures balance was moved to retained earnings, with no change to total shareholders' equity as a result of the transaction.

On October 31, 2021, the Bank converted from a State Savings Bank Charter to a State Commercial Bank Charter and was simultaneously renamed First Fed Bank from First Federal Savings and Loan Association of Port Angeles.

On August 5, 2022, First Northwest's election to be treated as a financial holding company became effective, allowing the Company to engage in activities that are financial in nature or incidental to financial activities.

First Northwest and the Bank are collectively referred to as the "Company." For periods prior to June 30, 2023, Company references also include Quin Ventures.

First Northwest's business activities generally are limited to passive investment activities and oversight of its investment in First Fed and former controlling interest in Quin Ventures. Accordingly, the information set forth in this report, including the consolidated unaudited financial statements and related data, relates primarily to the Bank for balance sheet related disclosures and the Bank and Quin Ventures for income statement related disclosures.

The Bank is a community-oriented financial institution providing commercial and consumer banking services to individuals and businesses in western Washington State with offices in Clallam, Jefferson, Kitsap, King, and Whatcom counties. These services include deposit and lending transactions that are supplemented with borrowing and investing activities.

Basis of presentation - The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial statements in accordance with GAAP have been included. Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for future periods.

10

 

In preparing the unaudited interim consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to a determination of the allowance for credit losses ("ACL"), fair value of financial instruments and derivatives, and deferred tax assets and liabilities.

Principles of consolidation - The accompanying consolidated financial statements include the accounts of First Northwest; its wholly owned subsidiary, First Fed, and its former controlling interest in Quin Ventures. All material intercompany accounts and transactions have been eliminated in consolidation. Through June 2023, First Northwest and POM shared equal ownership in Quin Ventures; however, it was previously determined that First Northwest had a controlling interest for financial reporting purposes under Accounting Standards Codification 810. The Quin Ventures net loss allocable to POM is shown on the financial statements where applicable through a noncontrolling interest adjustment.

Subsequent events - The Company has evaluated subsequent events for potential recognition and disclosure and has included additional information where appropriate.

Recently adopted accounting pronouncements

Credit Losses

On January 1, 2023, the Company adopted FASB ASU 2016- 13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with a current expected credit loss ("CECL") methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable and held-to-maturity securities. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, the CECL adoption made changes to the accounting for investment securities available for sale.

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and unfunded commitments. This method resulted in recording a cumulative-effect adjustment as of the beginning of 2023 with no change to prior periods. The Company elected not to measure an ACL on accrued interest receivable on loans receivable or accrued interest receivable on investment securities available for sale as Company policy is to reverse interest income for uncollectible accrued interest receivable balances in a timely manner.

Results for the reporting period beginning after January 1, 2023, are presented under ASU 2016-13, while prior period amounts were not restated and continue to be reported in accordance with previously applicable GAAP. The accounting policies for prior periods are included in the Company's Annual Report on Form 10-K for the year ended  December 31, 2022.

The accounting policies for all financial instruments impacted by the CECL adoption are as follows:

Investment Securities

A debt security is placed on nonaccrual status at the time any principal or payments become more than 90 days delinquent. Interest accrued, but not received for a security placed on nonaccrual, is reversed against interest income during the period that the debt security is placed on nonaccrual status.

Allowance for Credit Losses on Investment Securities

Management evaluates the need for an ACL on investment securities ("ACLI") on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For investment securities available for sale in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For investment securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and adverse conditions specifically related to the security, among other factors. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACLI is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any decline in fair value that has not been recorded through an ACLI is recognized in other comprehensive income (loss).

Changes in the ACLI are recorded as provision, or reversal of provision, for credit losses expense. Losses are charged against the allowance when management believes the uncollectibility of an investment security available for sale is confirmed or when either of the criteria regarding intent or requirement to sell is met.

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Accrued interest receivable on investment securities available for sale is excluded from the estimate of credit losses as interest accrued, but not received, is reversed timely in accordance with the policy for investment securities above.

Loans Receivable

Loans receivable include loans originated and indirect loans purchased by the Bank as well as loans acquired in business combinations.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the outstanding principal balance, net of purchased premiums and discounts, unearned discounts, and net deferred loan origination fees and costs. Accrued interest receivable for loans receivable is reported in prepaid expenses and other assets on the Consolidated Balance Sheets.

Allowance for Credit Losses on Loans

The ACL on loans ("ACLL") is a valuation account that is deducted from the amortized cost of loans receivable to present the net amount expected to be collected. Loans are charged against the allowance when management believes the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance. The Bank records the changes in the ACLL through earnings, as a provision for credit losses on the Consolidated Statements of Income.

Accrued interest receivable on loans receivable is excluded from the estimate of credit losses. Instead, interest accrued, but not received, is reversed timely in accordance with the policy for loans receivable above.

The Company has identified segments of loans with similar risk characteristics for which it then applies one of two loss methodologies. Management has adopted a discounted cash flow ("DCF") methodology for most of its segments to calculate the ACLL. For certain segments with smaller portfolios or where data is prohibitive to running a DCF calculation, management has elected to use a Remaining Life methodology. The Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. The allowance for individually evaluated loans is calculated using the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell, or another method such as the cash flow method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt. When the cash flow method is used, cash flows are discounted back by the effective interest rate and compared to the total recorded investment. If the present value of cash flows is less than the total recorded investment, a reserve is calculated.

For each loan segment collectively measured, the baseline loss rates are calculated using the Bank's own data and peer institution data from FFIEC Call Report filings. The Bank evaluates the historical period on a quarterly basis. The baseline loss rates are applied to each loan's estimated cash flows over the life of the loan to determine the baseline loss estimate for each loan. Estimated cash flows consider the principal and interest in accordance with the contractual term of the loan and estimated prepayments. Contractual cash flows are based on the amortized cost, as adjusted for balances guaranteed by governmental entities, such as the Small Business Administration ("SBA") or the United States Department of Agriculture ("USDA"), or the unguaranteed amortized cost. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: 1) management has a reasonable expectation at the reporting date that a modification agreement will be executed with an individual borrower or 2) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. Prepayments are established for each segment based on historical averages for the segments, which management believes is an accurate representation of future prepayment activity. Management reviews the adequacy of the prepayment period assumption on a quarterly basis.

The CECL methodology includes consideration of the forecasted direction of the economic and business environment and its likely impact to the estimated allowance as compared to the historical losses over the reasonable and supportable time frame. Economic forecast models for the current period are uploaded to the model, which targets two forecasted macroeconomic factors, which are national gross domestic product ("GDP") and unemployment figures. Each of the forecasted DCF segments is impacted by these macroeconomic factors. Further, each of the macroeconomic factors is utilized differently by segment, including the application of lagged factors and various transformations such as percent change year over year.

The Bank uses the Federal Open Market Committee ("FOMC") forecast via an application programming interface with our CECL software. FOMC provides various forecast scenarios used to determine the loan portfolio’s expected credit loss. Based on known/knowable information at the measurement date, management has determined that the FOMC scenarios and the underlying assumptions most closely align with current and expected conditions. The Bank has elected to forecast the first four quarters of the credit loss estimate and revert on a straight-line basis as permitted in ASC 326-20-30-9. The Bank also considers other qualitative risk factors to adjust the estimated ACL calculated by the above-mentioned model. While there are many factors available to incorporate into the quantitative model, the Bank has selected to use the most critical factors. Additional metrics will be included only if internal or external factors outside those considered in its historical losses or macroeconomic forecast indicate otherwise. The Bank has established metrics to estimate the qualitative risk factor by segment based on the identified risk.

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In general, management's estimate of the ACLL uses relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

The allowance for loan losses evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. While management utilizes its best judgment and information available to recognize losses on loans, future additions to the allowance may be necessary based on further declines in local and national economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s ACLL. Such agencies may require the Bank to make adjustments to the allowance based on their judgments about information available to them at the time of their examinations. The Company believes the ACLL is appropriate given the above considerations.

Allowance for Credit Losses on Unfunded Commitments

The Bank estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Bank is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The Bank has determined that no allowance is necessary for its home equity line of credit portfolio as it has the ability to unconditionally cancel the available lines of credit.

The allowance methodology is similar to the ACLL, but additionally includes an estimate of the future utilization of the commitment as determined by historical commitment utilization. The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class.

The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision (reversal of provision) for credit losses on the Consolidated Statements of Income.

Provision for Credit Losses

The provision for credit losses as presented in the Company's Consolidated Statements of Income includes the provision for credit losses on loans and the provision for credit losses on unfunded commitments.

Summary of CECL Impact:

Investment Securities - As of December 31, 2022, the Company had no historical charge-off or recovery history and did not have any investment securities available for sale outstanding at the adoption date for which an other-than-temporary impairment was previously recorded. At the adoption date of ASU 2016-13, the unrealized losses present in the portfolio of investment securities available for sale were primarily due to decreases in market interest rates on floating rate investment securities since the purchase of the securities and the fair value of these securities was expected to recover as the securities approach their maturity dates. The basis of management’s conclusion was that at January 1, 2023, 23.9% of the investment securities were issued by or guaranteed by the United States government or its agencies, 30.0% were issued and guaranteed by State and local governments and the remainder of the portfolio was invested in at least investment-grade securities. As a result of the analysis, no allowance for credit losses on investment securities available for sale was recorded upon adoption. See Note 2 Investment Securities for more information.

Loan Receivable - ASU 2016-13 was applied prospectively and replaced the allowance for loan losses with the ACLL on the Consolidated Balance Sheet and replaced the related provision for loan losses with the provision for credit losses on loans as presented on the Consolidated Statements of Income, net of provision for credit losses on unfunded commitments.

The Bank recorded a pretax increase to the ACLL of $2.2 million to increase the reserve to the estimated credit losses at January 1, 2023 based on its CECL methodology as part of the cumulative-effect adjustment to beginning retained earnings. Upon adoption, the adjusted beginning balance of the ACLL as a percentage of loans receivable was 1.18% as compared to 1.04% at December 31, 2022 under the prior incurred loss methodology. At June 30, 2023, the ACLL as a percentage of loans receivable was 1.06%.

See Note 4 - Allowance for Credit Loss on Loans for more information.

Unfunded Commitments - ASU 2016-13 was applied prospectively and replaced the reserve for unfunded commitments with the ACL on unfunded commitments ("ACLU") as included in accrued liabilities and other expenses on the Consolidated Balance Sheet and replaced the provision for unfunded commitments with the provision for credit losses on unfunded commitments as presented on the Consolidated Statements of Income, net of provision for credit losses on loans. Upon adoption, the Bank recorded a pretax increase in the beginning ACLU of $1.5 million.

Overall CECL Impact - The adoption of ASU 2016-13, included an increase to the ACLL of $2.2 million and an increase to the ACLU of $1.5 million, which resulted in a pretax cumulative-effect adjustment of $3.7 million. The impact of this adjustment to beginning retained earnings on January 1, 2023 was $3.0 million, net of tax.

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Troubled Debt Restructurings

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the accounting guidance for troubled debt restructured loans (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancing and restructuring activity by creditors when a borrower is experiencing financial difficulty. Additionally, the ASU requires public business entities to disclose current-period gross write offs by year of origination for financing receivables and net investments in leases. This ASU is effective upon adoption of ASU 2016-13. On January 1, 2023, the Company adopted this ASU at the same time ASU 2016-13 was adopted. The Company recorded gross charge-offs of $1.9 million in the first half of 2023 and recoveries for the same period were $594,000. See table in Note 3 for additional information.

Derivative Instruments and Hedging Activities

On March 28, 2022, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2022- 01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. The purpose of this updated guidance is to further align risk management objectives with hedge accounting results on the application of the last-of-layer method, which was first introduced in ASU 2017- 12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2022- 01 is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption in the interim period, permitted. For entities who have already adopted ASU 2017- 12, immediate adoption is allowed. ASU 2022- 01 requires a modified retrospective transition method for basis adjustments in which the entity will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company adopted this ASU on January 1, 2023 on a prospective basis; therefore, there was no impact to the consolidated financial statements.

Accounting Policy for Derivative Instruments and Hedging Activities - FASB ASC 815, Derivatives and Hedging ("ASC 815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting.

In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

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Recently issued accounting pronouncements not yet adopted

Other Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, which reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. This ASU is effective for all entities as of March 12, 2020 through December 31, 2022. On December 31, 2022, FASB issued ASU 2022-06, which deferred the sunset date for Topic 848 to December 31, 2024. The Company is implementing a transition plan to identify and modify its loans and other financial instruments that are either directly or indirectly influenced by LIBOR. The Company is in the process of evaluating ASU No. 2020-04 and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments, with no expected material impact on the Company's financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring fair value, nor should the contractual restriction be recognized and measured separately. Further, this ASU requires disclosure of the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, the nature and remaining duration of the restriction(s), and the circumstances that could cause a lapse in the restriction(s). ASU 2022-03 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect that ASU 2022-03 will have on its consolidated financial statements and related disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. ASU 2023-02 allows an entity the option to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits if certain conditions are met. Prior to this ASU, the application of the proportional amortization method of accounting was limited to investments in low-income housing tax credit structures. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the statements of income, income tax expense. Under this ASU, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis. In addition, the amendments in this ASU require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability to be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this ASU, low-income housing tax credit investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this ASU specifies that impairment of low-income housing tax credit investments not accounted for using the equity method must apply the impairment guidance in Subtopic 323-10: Investments - Equity Method and Joint Ventures - Overall. This ASU also clarifies that for low-income housing tax credit investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321: Investments - Equity Securities. The amendments in this ASU also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. ASU 2023-02 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect that ASU 2023-02 will have on its consolidated financial statements and related disclosures.

Reclassifications - Certain amounts in the unaudited interim consolidated financial statements for prior periods have been reclassified to conform to the current unaudited financial statement presentation with no effect on net income or shareholders' equity.

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Note 2 - Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at June 30, 2023 are summarized as follows:

			Gross		Gross			Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	119,514	$	—	$	(19,011	)	$	100,503
U.S. Treasury notes		2,475		—		(111	)		2,364
International agency issued bonds (Agency bonds)		1,960		—		(243	)		1,717
Corporate issued debt securities (Corporate debt)		60,595		—		(6,921	)		53,674
Mortgage-backed securities:
U.S. government agency issued mortgage-backed securities (MBS agency)		85,613		—		(14,048	)		71,565
Non-agency issued mortgage-backed securities (MBS non-agency)		99,781		—		(7,641	)		92,140
Total securities available for sale	$	369,938	$	—	$	(47,975	)	$	321,963

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at December 31, 2022, are summarized as follows:

			Gross		Gross			Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	119,990	$	—	$	(21,940	)	$	98,050
U.S. Treasury notes		2,469		—		(105	)		2,364
Agency bonds		1,955		—		(253	)		1,702
Corporate debt		60,700		—		(5,201	)		55,499
Mortgage-backed securities:
MBS agency		88,930		1		(13,283	)		75,648
MBS non-agency		101,139		—		(7,833	)		93,306
Total securities available for sale	$	375,183	$	1	$	(48,615	)	$	326,569

There were no securities classified as held-to-maturity at  June 30, 2023 and  December 31, 2022.

Accrued interest receivable on available-for-sale debt securities totaled $2.1 million and $2.0 million as of June 30, 2023 and  December 31, 2022, respectively. Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Balance Sheets and is excluded from the calculation of the allowance for credit losses on investment securities.

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The following shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of June 30, 2023:

	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	(10	)	$	435	$	(19,001	)	$	99,767	$	(19,011	)	$	100,202
U.S. Treasury notes		—			—		(111	)		2,364		(111	)		2,364
Agency bonds		—			—		(243	)		1,717		(243	)		1,717
Corporate debt		(723	)		7,777		(6,198	)		45,897		(6,921	)		53,674
Mortgage-backed securities:
MBS agency		(1	)		1,793		(14,047	)		69,772		(14,048	)		71,565
MBS non-agency		—			—		(7,641	)		92,140		(7,641	)		92,140
Total available for sale	$	(734	)	$	10,005	$	(47,241	)	$	311,657	$	(47,975	)	$	321,662

The following shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of December 31, 2022:

	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	(15,749	)	$	79,129	$	(6,191	)	$	18,621	$	(21,940	)	$	97,750
U.S. Treasury notes		(105	)		2,364		—			—		(105	)		2,364
Agency bonds		—			—		(253	)		1,702		(253	)		1,702
Corporate debt		(2,570	)		30,555		(2,631	)		24,944		(5,201	)		55,499
Mortgage-backed securities:
MBS agency		(5,079	)		40,099		(8,204	)		33,064		(13,283	)		73,163
MBS non-agency		(3,956	)		51,994		(3,877	)		41,311		(7,833	)		93,305
Total available for sale	$	(27,459	)	$	204,141	$	(21,156	)	$	119,642	$	(48,615	)	$	323,783

There were 8 available-for-sale securities with unrealized losses of less than one year, and 174 available-for-sale securities with an unrealized loss of more than one year at June 30, 2023. There were 113 available-for-sale securities with unrealized losses of less than one year, and 69 available-for-sale securities with an unrealized loss of more than one year at December 31, 2022. Management believes that the unrealized losses on our investment securities relate principally to the general change in interest rates, market liquidity and demand, and market volatility that has occurred since the initial purchase, and such unrecognized losses or gains will continue to vary with general interest rate level and market fluctuations in the future. We do not believe the unrealized losses on our securities are related to a deterioration in credit quality. Certain investments in a loss position are guaranteed by government entities or government sponsored entities. The Company does not intend to sell the securities in an unrealized loss position and believes that it is unlikely that we will be required to sell these investments prior to a market price recovery or maturity. Based on the Company’s evaluation of these securities, no credit impairment was recorded at June 30, 2023, or December 31, 2022.

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The amortized cost and estimated fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated. Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties; therefore, these securities are shown separately.

	June 30, 2023
	Available-for-Sale
	Amortized Cost		Estimated Fair Value
	(In thousands)
Mortgage-backed securities:
Due within one year	$	27,322	$	26,940
Due after one through five years		17,148		16,315
Due after five through ten years		11,033		10,124
Due after ten years		129,891		110,326
Total mortgage-backed securities		185,394		163,705
All other investment securities:
Due within one year		—		—
Due after one through five years		20,711		19,151
Due after five through ten years		66,069		57,302
Due after ten years		97,764		81,805
Total all other investment securities		184,544		158,258
Total investment securities	$	369,938	$	321,963

	December 31, 2022
	Available-for-Sale
	Amortized Cost		Estimated Fair Value
	(In thousands)
Mortgage-backed securities:
Due within one year	$	13,762	$	13,490
Due after one through five years		28,890		27,808
Due after five through ten years		13,436		12,165
Due after ten years		133,981		115,491
Total mortgage-backed securities		190,069		168,954
All other investment securities:
Due within one year		—		—
Due after one through five years		20,700		18,957
Due after five through ten years		64,211		57,523
Due after ten years		100,203		81,135
Total all other investment securities		185,114		157,615
Total investment securities	$	375,183	$	326,569

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Sales of securities available-for-sale for the periods shown are summarized as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023		2022
	(In thousands)
Proceeds from sales	$	—	$	2,233		$	—	$	12,685
Gross realized gains		—		—			—		128
Gross realized losses		—		(8	)		—		(10	)

Note 3 - Loans Receivable

The Company has defined its loan portfolio into three segments that reflect the structure of the lending function, the Company's strategic plan and the manner in which management monitors performance and credit quality. The three loan portfolio segments are: Real Estate Loans, Consumer Loans and Commercial Business Loans. These segments are further disaggregated into classes based on similar attributes and risk characteristics.

Loan amounts are net of unearned loan fees in excess of unamortized costs and premiums of $14.2 million as of  June 30, 2023 and $13.2 million as of  December 31, 2022. Net loans do not include accrued interest receivable. Accrued interest receivable on loans was $5.4 million as of  June 30, 2023 and $4.7 million as of  December 31, 2022, and was reported in accrued interest receivable on the consolidated balance sheets.

The amortized cost of loans receivable, net of ACLL, consisted of the following at the dates indicated:

	June 30, 2023		December 31, 2022
	(In thousands)
Real Estate:
One-to-four family	$	365,600	$	343,559
Multi-family		296,561		252,745
Commercial real estate		375,961		388,884
Construction and land		157,060		193,646
Total real estate loans		1,195,182		1,178,834
Consumer:
Home equity		58,895		52,877
Auto and other consumer		253,950		238,913
Total consumer loans		312,845		291,790
Commercial business loans		130,133		76,927
Total loans receivable		1,638,160		1,547,551
Less:
Allowance for credit losses on loans (1)		17,297		16,116
Total loans receivable, net	$	1,620,863	$	1,531,435

(1) Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

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Nonaccrual Loans. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. For those loans placed on non-accrual status due to payment delinquency, return to accrual status will generally not occur until the borrower demonstrates repayment ability over a period of not less than six months.

The following table presents the amortized cost of nonaccrual loans by class of loan at the dates indicated:

	June 30, 2023						December 31, 2022
	Collateral Dependent Loans		Non-Collateral Dependent Loans		Total Nonaccrual Loans		Total Nonaccrual Loans (1)
	(In thousands)
One-to-four family	$	1,475	$	305	$	1,780	$	954
Commercial real estate		41		—		41		53
Construction and land		—		12		12		15
Home equity		31		214		245		196
Auto and other consumer		—		476		476		575
Total nonaccrual loans	$	1,547	$	1,007	$	2,554	$	1,793
(1) Presentation of December 31, 2022, balances is in accordance with pre-CECL disclosure requirements.

Interest income recognized on a cash basis on nonaccrual loans for the three and six months ended June 30, 2023, was $18,000 and $26,000, respectively.

Prior to the implementation of CECL, the Bank categorized loans as performing or nonperforming based on payment activity. Loans that were more than 90 days past due and nonaccrual loans were considered nonperforming.

The following table represents the credit risk profile based on payment activity by class of loans as of December 31, 2022, in accordance with pre-CECL disclosure requirements:

	Nonperforming		Performing		Total
	(In thousands)
Real Estate:
One-to-four family	$	954	$	342,605	$	343,559
Multi-family		—		252,745		252,745
Commercial real estate		53		388,831		388,884
Construction and land		15		193,631		193,646
Consumer:
Home equity		196		52,681		52,877
Auto and other consumer		575		238,338		238,913
Commercial business		—		76,927		76,927
Total loans	$	1,793	$	1,545,758	$	1,547,551

Past due loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. There were no loans past due 90 days or more and still accruing interest at  June 30, 2023 or  December 31, 2022.

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The following table presents the amortized cost of past due loans by segment and class as of June 30, 2023:

	30-59 Days		60-89 Days		90 Days or More		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
	(In thousands)
Real Estate:
One-to-four family	$	—	$	—	$	921	$	921	$	364,679	$	365,600
Multi-family		—		—		—		—		296,561		296,561
Commercial real estate		—		—		—		—		375,961		375,961
Construction and land		—		—		18		18		157,042		157,060
Total real estate loans		—		—		939		939		1,194,243		1,195,182
Consumer:
Home equity		—		14		91		105		58,790		58,895
Auto and other consumer		1,359		299		479		2,137		251,813		253,950
Total consumer loans		1,359		313		570		2,242		310,603		312,845
Commercial business loans		106		—		—		106		130,027		130,133
Total loans	$	1,465	$	313	$	1,509	$	3,287	$	1,634,873	$	1,638,160

The following table presents the amortized cost of past due loans by segment and class as of December 31, 2022, in accordance with pre-CECL disclosure requirements:

	30-59 Days		60-89 Days		90 Days or More		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
	(In thousands)
Real Estate:
One-to-four family	$	1,449	$	155	$	652	$	2,256	$	341,303	$	343,559
Multi-family		—		—		—		—		252,745		252,745
Commercial real estate		—		—		—		—		388,884		388,884
Construction and land		—		18		—		18		193,628		193,646
Total real estate loans		1,449		173		652		2,274		1,176,560		1,178,834
Consumer:
Home equity		153		—		11		164		52,713		52,877
Auto and other consumer		1,390		698		557		2,645		236,268		238,913
Total consumer loans		1,543		698		568		2,809		288,981		291,790
Commercial business loans		—		—		—		—		76,927		76,927
Total loans	$	2,992	$	871	$	1,220	$	5,083	$	1,542,468	$	1,547,551

Credit quality indicator. Federal regulations provide for the classification of lower quality loans and other assets, such as debt and equity securities, as substandard, doubtful, or loss; risk ratings 6, 7, and 8 in our 8-point risk rating system, respectively. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.

When the Bank classifies problem assets as either substandard or doubtful, it may establish a specific allowance to address the risk specifically or allow the loss to be addressed in the general allowance. General allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities but that, unlike specific allowances, have not been specifically allocated to certain problem assets. When an insured institution classifies problem assets as a loss, it is required to charge off such assets in the period in which they are deemed uncollectible. Assets that do not currently expose the Bank to enough risk to warrant classification as substandard or doubtful but do possess identified weaknesses are designated as either watch or special mention assets; risk ratings 4 and 5 in our risk rating system, respectively. Loans not otherwise classified are considered pass graded loans and are rated 1-3 in our risk rating system.

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The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of  June 30, 2023, as well as gross charge-off activity for the six months ended June 30, 2023. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

	Term Loans by Year of Origination (1)												Revolving		Total
	2023		2022		2021		2020		2019		Prior		Loans		Loans
	(In thousands)
One-to-four family
Pass	$	2,990	$	83,795	$	118,693	$	72,169	$	14,247	$	69,979	$	—	$	361,873
Watch		—		—		—		592		—		723		—		1,315
Special Mention		—		—		—		303		—		106		—		409
Substandard		—		—		—		329		487		1,187		—		2,003
Total one-to-four family		2,990		83,795		118,693		73,393		14,734		71,995		—		365,600
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Multi-family
Pass		22,960		103,162		81,072		59,041		8,637		5,422		—		280,294
Watch		—		—		15,268		—		—		999		—		16,267
Total multi-family		22,960		103,162		96,340		59,041		8,637		6,421		—		296,561
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass		21,721		89,951		105,753		83,355		13,604		24,688		—		339,072
Watch		3,908		—		12,434		6,901		3,607		1,026		—		27,876
Special Mention		—		—		6,591		—		—		—		—		6,591
Substandard		—		40		—		2,382		—		—		—		2,422
Total commercial real estate		25,629		89,991		124,778		92,638		17,211		25,714		—		375,961
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Construction and Land
Pass		24,924		62,714		49,563		772		570		2,740		—		141,283
Watch		889		—		—		—		—		17		—		906
Substandard		14,859		—		—		—		—		12		—		14,871
Total construction and land		40,672		62,714		49,563		772		570		2,769		—		157,060
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Home Equity
Pass		3,663		7,566		5,014		3,249		1,655		3,928		33,191		58,266
Watch		—		—		—		—		—		—		200		200
Special Mention		—		—		—		—		—		71		113		184
Substandard		—		—		32		61		—		—		152		245
Total home equity		3,663		7,566		5,046		3,310		1,655		3,999		33,656		58,895
Gross charge-offs during the period		—		—		—		—		—		11		—		11
Other Consumer
Pass		29,846		80,899		70,123		32,924		16,962		20,269		443		251,466
Watch		16		727		630		194		33		85		—		1,685
Special Mention		—		236		20		61		4		—		—		321
Substandard		13		308		—		—		150		7		—		478
Total other consumer		29,875		82,170		70,773		33,179		17,149		20,361		443		253,950
Gross charge-offs during the period		—		1,760		4		1		11		91		59		1,926
Commercial business
Pass		18,543		24,350		11,783		3,024		523		28,300		33,363		119,886
Watch		—		10		485		1,008		—		—		—		1,503
Special Mention		—		—		—		315		—		1,989		3,741		6,045
Substandard		—		—		—		29		—		185		2,485		2,699
Total commercial business		18,543		24,360		12,268		4,376		523		30,474		39,589		130,133
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Total loans
Pass		124,647		452,437		442,001		254,534		56,198		155,326		66,997		1,552,140
Watch		4,813		737		28,817		8,695		3,640		2,850		200		49,752
Special Mention		—		236		6,611		679		4		2,166		3,854		13,550
Substandard		14,872		348		32		2,801		637		1,391		2,637		22,718
Total loans	$	144,332	$	453,758	$	477,461	$	266,709	$	60,479	$	161,733	$	73,688	$	1,638,160
Total gross charge-offs during the period	$	—	$	1,760	$	4	$	1	$	11	$	102	$	59	$	1,937

(1) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

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The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of December 31, 2022, in accordance with pre-CECL disclosure requirements:

	Pass		Watch		Special Mention		Substandard		Total
	(In thousands)
Real Estate:
One-to-four family	$	339,812	$	2,234	$	27	$	1,486	$	343,559
Multi-family		237,077		15,668		—		—		252,745
Commercial real estate		350,001		25,586		12,161		1,136		388,884
Construction and land		179,116		529		—		14,001		193,646
Total real estate loans		1,106,006		44,017		12,188		16,623		1,178,834
Consumer:
Home equity		52,295		372		14		196		52,877
Auto and other consumer		238,522		222		75		94		238,913
Total consumer loans		290,817		594		89		290		291,790
Commercial business loans		66,276		2,234		8,417		—		76,927
Total loans	$	1,463,099	$	46,845	$	20,694	$	16,913	$	1,547,551

Individually Evaluated Loans. The Company evaluates loans collectively for purposes of determining the ACLL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral. Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio are evaluated individually for purposes of determining an appropriate lifetime ACLL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company may increase or decrease the ACLL for collateral dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. In cases where the loan is well-secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACLL is recorded. Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of June 30, 2023, $1.5 million of loans were individually evaluated with no ACLL attributed to such loans. At June 30, 2023, all individually evaluated loans were evaluated based on the underlying value of the collateral and none were evaluated using a discounted cash flow approach. All individually evaluated loans were on nonaccrual status at June 30, 2023.

Collateral Dependent Loans. Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral.

The following table summarizes individually evaluated collateral dependent loans by segment and collateral type as of June 30, 2023:

	Collateral Type
	Single Family Residence		Warehouse		Total
	(In thousands)
One-to-four family	$	1,475	$	—	$	1,475
Commercial real estate		—		41		41
Home equity		31		—		31
Total collateral dependent loans	$	1,506	$	41	$	1,547

Troubled debt restructuring. Prior to the implementation of CECL on January 1, 2023, a loan was identified as a TDR when a loan to a borrower who was experiencing financial difficulty was modified from its original terms and conditions in such a way that the Bank granted the borrower a concession of some kind. First Fed had granted a variety of concessions to borrowers in the form of loan modifications. The modifications were generally related to the loan's interest rate, term and payment amount or a combination thereof.

23

 

The following table is a summary of information pertaining to TDR loans included in impaired loans at the date indicated, in accordance with pre-CECL disclosure requirements:

	December 31, 2022
	(In thousands)
Total TDR loans	$	1,753
Allowance for credit losses on loans related to TDR loans		21
Total nonaccrual TDR loans		29

There were no newly restructured, renewals, or modifications of existing TDR loans that occurred during the three and six months ended June 30, 2022.

There were no TDR loans that incurred a payment default within 12 months of the restructure date during the three and six months ended June 30, 2022.

The following table presents TDR loans by class by accrual and nonaccrual status at the date indicated, in accordance with pre-CECL disclosure requirements:

	December 31, 2022
	Accrual		Nonaccrual		Total
	(In thousands)
One-to-four family	$	1,697	$	29	$	1,726
Home equity		27		—		27
Total TDR loans	$	1,724	$	29	$	1,753

Modified Loans to Troubled Borrowers. On January 1, 2023, the Company adopted ASU 2022-02, which introduces new reporting requirements for modifications of loans to borrowers experiencing financial difficulty. The Company refers to these loans as modified loans to troubled borrowers ("MLTB"). A MLTB arises from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or any combination of the foregoing. The ACLL for a MLTB is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACLL for a MLTB is determined through individual evaluation.

During the three and six months ended June 30, 2023, there were no MLTB.

Note 4 - Allowance for Credit Losses on Loans

The Company maintains an ACLL and an ACLU in accordance with ASC 326: Financial Instruments - Credit Losses. ASC 326 requires the Company to recognize estimates for lifetime credit losses on loans and unfunded loan commitments at the time of origination or acquisition. The recognition of credit losses at origination or acquisition represents the Company’s best estimate of lifetime expected credit losses, given the facts and circumstances associated with a particular loan or group of loans with similar risk characteristics. Determining the ACLL involves the use of significant management judgement and estimates, which are subject to change based on management’s ongoing assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the model. The reserve is an estimate based upon factors and trends at the time the financial statements are prepared. The Company adopted ASU 2016-13 effective January 1, 2023, which increased the beginning ACLL as discussed in Note 1. The incurred loss methodology presentation is used for periods prior to the adoption of ASU 2016-13.

The Company has identified segments of loans with similar risk characteristics for which it then applies one of two loss methodologies. The Company uses a DCF methodology for most of its segments to calculate the ACLL. For certain segments with smaller portfolios or where data is prohibitive to running a DCF calculation, management has elected to use a Remaining Life methodology. The Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. The allowance for individually evaluated loans is calculated using the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell, or another method such as the cash flow method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt. When the cash flow method is used, cash flows are discounted back by the effective interest rate and compared to the total recorded investment. If the present value of cash flows is less than the total recorded investment, a reserve is calculated.

24

 

The Company estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The Company has determined that no allowance is necessary for its home equity line of credit portfolio as it has the ability to unconditionally cancel the available lines of credit. The allowance methodology is similar to the ACLL, but additionally includes an estimate of the future utilization of the commitment as determined by historical commitment utilization. The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class. The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision (reversal of provision) for credit losses on the Consolidated Statements of Income.

The following tables detail activity in the allowance for credit losses on loans by class for the periods shown:

	At or For the Three Months Ended June 30, 2023
	Adjusted Beginning Balance		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance
	(In thousands)
One-to-four family	$	2,903	$	—		$	4	$	105		$	3,012
Multi-family		1,045		—			—		(4	)		1,041
Commercial real estate		2,979		—			—		(55	)		2,924
Construction and land		2,782		—			—		(247	)		2,535
Home equity		1,084		—			5		36			1,125
Auto and other consumer		4,689		(972	)		564		514			4,795
Commercial business		1,914		—			—		(49	)		1,865
Total	$	17,396	$	(972	)	$	573	$	300		$	17,297

	At or For the Six Months Ended June 30, 2023
	Beginning Balance		Impact of Day 1 CECL Adoption			Adjusted Beginning Balance		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance
	(In thousands)
One-to-four family	$	3,343	$	(429	)	$	2,914	$	—		$	4	$	94		$	3,012
Multi-family		2,468		(1,449	)		1,019		—			—		22			1,041
Commercial real estate		4,217		(604	)		3,613		—			—		(689	)		2,924
Construction and land		2,344		1,555			3,899		—			—		(1,364	)		2,535
Home equity		549		346			895		(11	)		5		236			1,125
Auto and other consumer		2,024		2,381			4,405		(1,926	)		585		1,731			4,795
Commercial business		786		794			1,580		—			—		285			1,865
Unallocated		385		(385	)		—		—			—		—			—
Total	$	16,116	$	2,209		$	18,325	$	(1,937	)	$	594	$	315		$	17,297

The increase in the ACLL during the three months ended June 30, 2023, of $300,000 is reflective of $399,000 in net charge-offs. Charge-offs during the second quarter of 2023 were mainly concentrated in unsecured consumer loans purchased through the Splash program.

The $315,000 provision for ACLL for the six months ended June 30, 2023, is reflective of $1.3 million of year-to-date net charge-offs, partially offset by the provision for credit losses estimate. The recovery of provision for credit losses during the six months ended June 30, 2023, can be attributed to an improvement in the U.S. gross domestic product assumption since the implementation of CECL at the beginning of 2023.

25

 

The following table details activity in the ALLL by class for the period shown under the incurred loss methodology:

	At or For the Three Months Ended June 30, 2022
	One-to-four family			Multi-family		Commercial real estate		Construction and land		Home equity		Auto and other consumer			Commercial business		Unallocated			Total
	(In thousands)
ALLL:
Beginning balance	$	3,039		$	2,092	$	4,038	$	2,481	$	405	$	2,229		$	526	$	317		$	15,127
(Recapture of) provision for loan losses		(13	)		76		116		69		81		160			12		(1	)		500
Charge-offs		—			—		—		—		—		(73	)		—		—			(73	)
Recoveries		—			—		—		—		—		51			142		—			193
Ending balance	$	3,026		$	2,168	$	4,154	$	2,550	$	486	$	2,367		$	680	$	316		$	15,747

	At or For the Six Months Ended June 30, 2022
	One-to-four family			Multi-family		Commercial real estate		Construction and land			Home equity		Auto and other consumer			Commercial business		Unallocated			Total
	(In thousands)
ALLL:
Beginning balance	$	3,184		$	1,816	$	3,996	$	2,672		$	407	$	2,221		$	470	$	358		$	15,124
(Recapture of) provision for loan losses		(190	)		352		158		(124	)		62		216			68		(42	)		500
Charge-offs		—			—		—		—			—		(210	)		—		—			(210	)
Recoveries		32			—		—		2			17		140			142		—			333
Ending balance	$	3,026		$	2,168	$	4,154	$	2,550		$	486	$	2,367		$	680	$	316		$	15,747

The following table details the ALLL and loan portfolio by class and impairment method for the period shown under the incurred loss methodology:

	At December 31, 2022
	One-to-four family		Multi-family		Commercial real estate		Construction and land		Home equity		Auto and other consumer		Commercial business		Unallocated		Total
	(In thousands)
Total ALLL	$	3,343	$	2,468	$	4,217	$	2,344	$	549	$	2,024	$	786	$	385	$	16,116
General reserve		3,321		2,468		4,217		2,343		545		2,019		786		385		16,084
Specific reserve		22		—		—		1		4		5		—		—		32
Gross loans	$	343,825	$	253,551	$	390,246	$	194,646	$	52,322	$	222,794	$	76,996	$	—	$	1,534,380
Loans collectively evaluated (1)		341,171		253,551		390,196		194,630		52,100		222,702		76,996		—		1,531,346
Loans individually evaluated (2)		2,654		—		50		16		222		92		—		—		3,034

⁽¹⁾ Loans collectively evaluated for general reserves.

⁽²⁾ Loans individually evaluated for specific reserves.

26

Impaired loans incurred loss model. Prior to the implementation of CECL on January 1, 2023, a loan was considered impaired when the Bank has determined that it may be unable to collect payments of principal or interest when due under the contractual terms of the loan. Impairment was measured on a loan-by-loan basis for all loans in the portfolio except smaller balance homogeneous loans and certain qualifying TDR loans.

The following table provides additional information on loans individually evaluated for impairment by portfolio class at the date indicated under the incurred loss methodology. Recorded investment includes the unpaid principal balance or carrying amount of loans less charge-offs.

	December 31, 2022
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With no allowance recorded:
One-to-four family	$	666	$	705	$	—
Commercial real estate		50		149		—
Construction and land		—		14		—
Auto and other consumer		—		2		—
Total		716		870		—
With an allowance recorded:
One-to-four family		1,988		2,129		22
Construction and land		16		19		1
Home equity		222		224		4
Auto and other consumer		92		95		5
Total		2,318		2,467		32
Total impaired loans:
One-to-four family		2,654		2,834		22
Commercial real estate		50		149		—
Construction and land		16		33		1
Home equity		222		224		4
Auto and other consumer		92		97		5
Total	$	3,034	$	3,337	$	32

27

 

The following table presents the average recorded investment in loans individually evaluated for impairment and the related interest income recognized for the period shown under the incurred loss methodology:

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With no allowance recorded:
One-to-four family	$	356	$	6	$	283	$	8
Commercial real estate		63		—		65		—
Construction and land		—		1		—		1
Home equity		—		—		5		—
Auto and other consumer		247		5		249		9
Total		666		12		602		18
With an allowance recorded:
One-to-four family		2,128		39		2,079		72
Commercial real estate		21		—		11		—
Construction and land		22		1		22		1
Home equity		284		4		293		7
Auto and other consumer		61		1		139		2
Total		2,516		45		2,544		82
Total impaired loans:
One-to-four family		2,484		45		2,362		80
Commercial real estate		84		—		76		—
Construction and land		22		2		22		2
Home equity		284		4		298		7
Auto and other consumer		308		6		388		11
Total	$	3,182	$	57	$	3,146	$	100

Interest income recognized on a cash basis on impaired loans for the three and six months ended June 30, 2022, was $41,000 and $100,000, respectively, under the incurred loss methodology.

Allowance for Credit Losses on Unfunded Loan Commitments. The Company maintains an ACL for off-balance sheet commitments related to unfunded loans and lines of credit, which is included in other liabilities on the consolidated balance sheets. The allowance for off-balance sheet commitments was $1.3 million at June 30, 2023, a decrease compared to $1.9 million at the adoption of CECL on January 1, 2023. Included in the year-to-date provision for credit loss expense was a provision recapture for off-balance sheet commitments of $515,000 for both the three and six months ended June 30, 2023, attributable to lower unfunded commitments, primarily due to construction loan disbursements.

28

 

Note 5 - Deposits

Deposits and weighted-average interest rates at the dates indicated are as follows:

	June 30, 2023					December 31, 2022
	Amount		Weighted-Average Interest Rate			Amount		Weighted-Average Interest Rate
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	280,475		—	%	$	315,083		—	%
Interest-bearing demand deposits		179,029		0.50	%		193,558		0.01	%
Money market accounts		374,269		1.10	%		473,009		0.58	%
Savings accounts		260,279		1.41	%		200,920		0.26	%
Certificates of deposit		559,070		3.55	%		381,685		2.19	%
Total deposits	$	1,653,122		1.73	%	$	1,564,255		0.74	%

Brokered certificates of deposit of $179.6 million and $133.9 million are included in the June 30, 2023 and December 31, 2022 certificates of deposit totals above, respectively. The aggregate amount of time deposits in excess of the Federal Deposit Insurance Corporation ("FDIC") insured limit, currently $250,000, at June 30, 2023 and December 31, 2022, were $157.1 million and $96.6 million, respectively.

Maturities of certificates at the dates indicated are as follows:

	June 30, 2023		December 31, 2022
	(In thousands)
Within one year or less	$	422,485	$	262,189
After one year through two years		104,285		69,967
After two years through three years		16,339		37,032
After three years through four years		11,195		7,409
After four years through five years		4,766		5,088
Total certificates of deposit	$	559,070	$	381,685

At  June 30, 2023 and December 31, 2022, deposits included $112.1 million and $93.3 million, respectively, in public fund deposits. The Bank had an outstanding letter of credit from the Federal Home Loan Bank of Des Moines ("FHLB") with a notional amount of $60.0 million at  June 30, 2023, to secure public deposits and pledged investment securities with a carrying value of $57.1 million were pledged as collateral for these deposits at  December 31, 2022. This exceeds the minimum collateral requirements established by the Washington Public Deposit Protection Commission. Also included in deposits at  June 30, 2023 and December 31, 2022, were funds held by federally recognized tribes totaling $18.9 million and $10.3 million, respectively. Investment securities with a carrying value of $21.9 million and $23.6 million were pledged as collateral for these deposits at  June 30, 2023 and December 31, 2022, respectively. This exceeds the minimum collateral requirements established by the Bureau of Indian Affairs. 

Interest on deposits by type for the periods shown was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	(In thousands)
Demand deposits	$	201	$	25	$	395	$	42
Money market accounts		944		323		1,720		621
Savings accounts		762		26		1,138		52
Certificates of deposit		4,302		422		7,309		798
Total interest expense on deposits	$	6,209	$	796	$	10,562	$	1,513

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Note 6 - Borrowings

First Fed is a member of the FHLB. As a member, First Fed has a committed line of credit of up to 45% of total assets, subject to the amount of FHLB stock ownership and certain collateral requirements.

First Fed maintains borrowing arrangements with the FHLB to borrow funds primarily under long-term, fixed-rate advance agreements. First Fed also has overnight borrowings through FHLB which renew daily until paid. First Fed periodically uses fixed-rate advances maturing in less than one year as an alternative source of funds. All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $917.8 million and $753.7 million at  June 30, 2023 and December 31, 2022, respectively.

First Fed also has an established borrowing arrangement with the Federal Reserve Bank of San Francisco ("FRB") to utilize the discount window for short-term borrowing. Available borrowing capacity was $8.7 million and $8.6 million at  June 30, 2023 and December 31, 2022, respectively. No funds have been borrowed to date. Investment securities with a carrying value of $9.2 million and $9.0 million were pledged to the FRB at  June 30, 2023 and December 31, 2022, respectively.

On March 25, 2021, the Company completed a private placement of $40.0 million of 3.75% fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors. The net proceeds to the Company from the sale of the Notes were approximately $39.3 million after deducting placement agent fees and other offering expenses. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company used the net proceeds of the offering for general corporate purposes.

On May 20, 2022, First Northwest consummated a borrowing arrangement with NexBank for a $20.0 million revolving line of credit. Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The line of credit matures on May 18, 2024, with the option for one 364-day extension.

In June 2023, First Fed established a Bank Term Funding ("BTFP") borrowing arrangement with the FRB as an additional source of liquidity. Available borrowing capacity was $18.7 million at  June 30, 2023. No funds have been borrowed to date. Investment securities with a carrying value of $17.0 million were pledged to secure the BTFP at  June 30, 2023.

The following table sets forth information regarding our borrowings at the end of and during the six months ended June 30, 2023. The table includes both long- and short-term borrowings.

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FHLB Short-Term Fixed-Rate Advances			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	85,000		$	163,000		$	5,000		$	11,000		$	39,397
Maximum outstanding at any month-end		85,000			189,000			95,000			11,000			39,397
Average monthly outstanding during the period		82,500			133,500			45,833			10,718			39,374
Weighted-average daily interest rates
Annual		1.90	%		4.97	%		5.07	%		8.94	%		4.04	%
Period End		2.08	%		5.35	%		5.27	%		8.75	%		4.04	%

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The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at June 30, 2023 are as follows:

	Amount		Weighted- Average Interest Rate
	(Dollars in thousands)
Within one year or less	$	20,000		2.30	%
After one year through two years		30,000		2.48
After two years through three years		15,000		1.49
After three years through four years		10,000		1.63
After four years through five years		10,000		1.76
Total FHLB long-term advances	$	85,000		2.08	%

The following table sets forth information regarding our borrowings at the end of and during the year ended December 31, 2022. The table includes both long- and short-term borrowings.

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FHLB Short-Term Fixed-Rate Advances			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	80,000		$	144,000		$	10,000		$	12,000		$	39,358
Maximum outstanding at any month-end		80,000			206,000			42,500			12,000			39,358
Average monthly outstanding during the period		80,000			90,983			15,208			5,770			39,312
Weighted-average daily interest rates
Annual		1.52	%		2.83	%		1.82	%		6.76	%		4.01	%
Period End		1.52	%		4.30	%		2.12	%		8.00	%		4.01	%

Note 7 - Income Tax

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax assets and liabilities.

The effective tax rates were 20.2% and 20.2% for the six months ended June 30, 2023 and 2022, respectively. The effective tax rates differ from the statutory maximum federal tax rate for 2023 and 2022 of 21%, largely due to the nontaxable earnings on bank-owned life insurance and tax-exempt interest income earned on certain investment securities and loans. In the second quarter of 2022, the Company began accruing a provision for income tax for certain states in which we have employees and collateral for loans, thereby creating a nexus in those states for income tax purposes.

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Note 8 - Earnings per Common Share

The two-class method is used for computing basic and diluted earnings per share. Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participating rights in undistributed earnings. The Company has issued restricted shares under share-based compensation plans which qualify as participating securities.

The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
	(In thousands, except share data)
Net income:
Net income available to common shareholders	$	1,776		$	2,488		$	5,304		$	5,294
Earnings allocated to participating securities		(9	)		(25	)		(28	)		(55	)
Earnings allocated to common shareholders	$	1,767		$	2,463		$	5,276		$	5,239
Basic:
Weighted average common shares outstanding		9,667,380			9,849,265			9,684,673			9,846,086
Weighted average unvested restricted stock awards		(139,760	)		(92,626	)		(152,474	)		(95,390	)
Weighted average unallocated ESOP shares		(613,265	)		(661,745	)		(619,841	)		(668,323	)
Total basic weighted average common shares outstanding		8,914,355			9,094,894			8,912,358			9,082,373
Diluted:
Basic weighted average common shares outstanding		8,914,355			9,094,894			8,912,358			9,082,373
Dilutive restricted stock awards		17,031			71,237			19,759			84,942
Total diluted weighted average common shares outstanding		8,931,386			9,166,131			8,932,117			9,167,315
Basic earnings per common share	$	0.20		$	0.27		$	0.59		$	0.58
Diluted earnings per common share	$	0.20		$	0.27		$	0.59		$	0.58

Potentially dilutive shares are excluded from the computation of EPS if their effect is anti-dilutive. At  June 30, 2023 and 2022, antidilutive shares as calculated under the treasury stock method totaled 14,987 and 1,186, respectively.

Note 9 - Employee Benefits

Employee Stock Ownership Plan

In connection with the Conversion, the Company established an ESOP for eligible employees of the Company and the Bank. Employees of the Company and the Bank who have been credited with at least 1,000 hours of service during a 12-month period are eligible to participate in the ESOP.

Pursuant to the Plan, the ESOP purchased shares in the open market with funds borrowed from First Northwest. The Bank will make contributions to the ESOP in amounts necessary to amortize the ESOP loan payable to First Northwest over a period of 20 years, bearing estimated interest at 2.46%. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank's discretionary contributions to the ESOP and earnings on the ESOP assets. A $835,000 principal and interest payment was made by the ESOP during the six months ended June 30, 2023.

As shares are committed to be released from collateral, the Company reports compensation expense equal to the average daily market prices of the shares and the shares become outstanding for EPS computations. The compensation expense is accrued monthly throughout the year. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a reduction of debt and accrued interest.

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Compensation expense related to the ESOP for the three months ended June 30, 2023 and 2022, was $153,000 and $245,000, respectively. Compensation expense related to the ESOP for the six months ended June 30, 2023 and 2022, was $340,000 and $536,000, respectively.

Shares issued to the ESOP as of the dates indicated are as follows:

	June 30, 2023		December 31, 2022
	(Dollars in thousands)
Allocated shares		439,174		386,285
Committed to be released shares		—		26,442
Unallocated shares		608,855		635,302
Total ESOP shares issued		1,048,029		1,048,029
Fair value of unallocated shares	$	6,929	$	9,758

Note 10 - Stock-based Compensation

In May 2020, the Company's shareholders approved the First Northwest Bancorp 2020 Equity Incentive Plan ("2020 EIP"), which provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock shares or restricted stock units, and performance share awards to eligible participants through May 2030. The cost of awards under the 2020 EIP generally is based on the fair value of the awards on their grant date. The maximum number of shares that may be utilized for awards under the 2020 EIP is 520,000. As of  June 30, 2023, there were 290,029 total shares available for grant under the 2020 EIP, all of which are available to be granted as restricted shares.

As a result of the approval of the 2020 EIP, the First Northwest Bancorp 2015 Equity Incentive Plan (the "2015 EIP") was frozen and no additional awards will be made. As of  June 30, 2023, there were no shares available for grant under the 2015 EIP. At this date, there are 42,400 shares granted under the 2015 EIP that are expected to vest subject to the 2015 EIP plan provisions.

There were 29,349 and 53,343 shares of restricted stock awarded, respectively, during the six months ended June 30, 2023 and 2022. Awarded shares of restricted stock vest ratably over periods ranging from one to five years from the date of grant provided the eligible participant remains in service to the Company. The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the grant date amortized over the vesting period.

For the three months ended June 30, 2023 and 2022, total compensation expense for the equity incentive plans was $358,000 and $479,000, respectively. Included in the compensation expense for the three months ended June 30, 2023 and 2022, was directors' equity compensation of $73,000 and $84,000, respectively.

For the six months ended June 30, 2023 and 2022, total compensation expense for the equity incentive plans was $749,000 and $890,000, respectively. Included in the compensation expense for the six months ended June 30, 2023 and 2022, was directors' equity compensation of $131,000 and $139,000, respectively.

The following tables provide a summary of changes in non-vested restricted stock awards for the period shown:

	For the Three Months Ended
	June 30, 2023
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at April 1, 2023		149,054		$	16.56
Granted		2,300			10.68
Vested		(5,753	)		14.81
Canceled (1)		(1,472	)		14.81
Forfeited		(11,211	)		17.14
Non-vested at June 30, 2023		132,918		$	16.50
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue.

33

 

	For the Six Months Ended
	June 30, 2023
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2023		166,839		$	17.78
Granted		29,349			14.09
Vested		(38,453	)		19.12
Canceled (1)		(11,806	)		19.12
Forfeited		(13,011	)		17.29
Non-vested at June 30, 2023		132,918		$	16.50
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue.

As of June 30, 2023, there was $1.5 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards. The cost is expected to be recognized over the remaining weighted-average vesting period of approximately 1.43 years.

Note 11 - Fair Value Accounting and Measurement

Fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants in the Company’s principal market. The Company has established and documented its process for determining the fair values of its assets and liabilities, where applicable. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, management determines the fair value of the Company’s assets and liabilities using valuation models or third-party pricing services, both of which rely on market-based parameters when available, such as interest rate yield curves, option volatilities and credit spreads, or unobservable inputs. Unobservable inputs may be based on management’s judgment, assumptions, and estimates related to credit quality, liquidity, interest rates, and other relevant inputs.

Any changes to valuation methodologies are reviewed by management to ensure they are relevant and justified. Valuation methodologies are refined as more market-based data becomes available.

A three-level valuation hierarchy is used in determining fair value that is based on the transparency of the inputs used in the valuation process. The inputs used in determining fair value in each of the three levels of the hierarchy are as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Either: (i) quoted prices for similar assets or liabilities; (ii) observable inputs, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data.

Level 3 - Unobservable inputs.

The hierarchy gives the highest ranking to Level 1 inputs and the lowest ranking to Level 3 inputs. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the overall fair value measurement.

The Company used the following methods to measure fair value on a recurring and nonrecurring basis.

Securities available for sale: Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 instruments include highly liquid government bonds, securities issued by the U.S. Treasury, and exchange-traded equity securities. If quoted prices are not available, management determines fair value using pricing models, quoted prices of similar securities, which are considered Level 2, or discounted cash flows. In certain cases, where there is limited activity in the market for an instrument, assumptions must be made to determine their fair value. Such instruments are classified as Level 3.

Partnership investments: Management determines fair value using quoted prices of similar investments or discounted cash flows, which are considered Level 2, when available. In certain cases, where there is limited activity in the market for an instrument, assumptions must be made to determine their fair value. Such instruments are classified as Level 3.

Sold loan servicing rights, at fair value: The fair value of sold loan servicing rights is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds, discount rates, and delinquency rate assumptions as inputs. Servicing rights are classified as Level 3 due to reliance on assumptions used in the valuation.

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Loans receivable, net: The fair value of loans is estimated by discounting the future cash flows using the current rate at which similar loans and leases would be made to borrowers with similar credit and for the same remaining maturities. Additionally, to be consistent with the requirements under FASB ASC Topic 820 for Fair Value Measurements and Disclosures, the loans were valued at a price that represents the Company’s exit price or the price at which these instruments would be sold or transferred.

Interest rate swap derivative: The fair values of interest rate swap agreements are based on valuation models using observable market data as of the measurement date (Level 2). The Company’s derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including market transactions and third-party pricing services. The fair values of all interest rate swaps are determined from third-party pricing services without adjustment.

Assets and liabilities measured at fair value on a recurring basis - Assets and liabilities are considered to be valued on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly, or quarterly). The following tables show the Company’s assets and liabilities measured at fair value on a recurring basis at the dates indicated:

	June 30, 2023
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial Assets		(In thousands)
Securities available-for-sale
Municipal bonds	$	5,014	$	95,489	$	—	$	100,503
U.S. Treasury notes		2,364		—		—		2,364
Agency bonds		—		1,717		—		1,717
Corporate debt		5,414		48,260		—		53,674
MBS agency		—		71,565		—		71,565
MBS non-agency		—		62,762		29,378		92,140
Sold loan servicing rights		—		—		3,825		3,825
Partnership investments		—		—		12,733		12,733
Total assets measured at fair value	$	12,792	$	279,793	$	45,936	$	338,521
Financial Liabilities
Interest rate swap derivative	$	—	$	392	$	—	$	392

	December 31, 2022
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial Assets		(In thousands)
Securities available-for-sale
Municipal bonds	$	4,913	$	93,137	$	—	$	98,050
U.S. Treasury notes		2,364		—		—		2,364
Agency bonds		—		1,702		—		1,702
Corporate debt		5,326		50,173		—		55,499
MBS agency		—		75,648		—		75,648
MBS non-agency		—		63,707		29,599		93,306
Sold loan servicing rights		—		—		3,887		3,887
Partnership investments		—		—		12,563		12,563
Total assets measured at fair value	$	12,603	$	284,367	$	46,049	$	343,019

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The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at the date indicated:

June 30, 2023	Fair Value (In thousands)	Valuation Technique	Unobservable Input (1)	Range (Weighted Average)
Sold loan servicing rights	$3,825	Discounted cash flow	Constant prepayment rate	4.84% - 40.04% (8.04%)
			Discount rate		11.63% - 14.35% (12.52%)
MBS non-agency	$29,378	Consensus pricing	Offered quotes	97.5 - 99.5
			Comparability adjustments (%)		-1.04% - 0.95%
(1) Unobservable inputs were weighted by the relative fair value of the instruments.

The following tables summarize the changes in Level 3 assets measured at fair value on a recurring basis at the dates indicated:

	As of or For the Three Months Ended June 30, 2023
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	4,224	$	7	$	(406	)	$	3,825
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2023
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	3,887	$	75	$	(137	)	$	3,825
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Three Months Ended June 30, 2022
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	4,046	$	42	$	(223	)	$	3,865
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2022
	Election of Fair Value Option for Servicing Rights at January 1, 2022		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	3,820	$	98	$	(53	)	$	3,865
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

36

 

	As of or For the Six Months Ended June 30, 2023
	Balance at beginning of period		Transfers Into Level 3		Purchases		Unrealized (Losses) Gains			Balance at end of period
	(In thousands)
Securities available for sale:
MBS non-agency	$	29,599	$	—	$	—	$	(221	)	$	29,378
Partnership investments		12,563		—		—		170			12,733

	As of or For the Year Ended December 31, 2022
	Balance at beginning of period		Transfers Into Level 3 (1)		Purchases		Unrealized Gains		Balance at end of period
	(In thousands)
Securities available for sale:
MBS non-agency	$	—	$	29,599	$	—	$	—	$	29,599
Sold loan servicing rights		—		12,490		—		73		12,563
(1) Transferred from Level 2 to Level 3 because of a lack of observable market data, resulting from little to no market activity for the investments.

Assets and liabilities measured at fair value on a nonrecurring basis - Assets are considered to be valued on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the consolidated balance sheets. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements that require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value.

The following tables present the Company’s assets measured at fair value on a nonrecurring basis at the date indicated:

	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Impaired loans	$	—	$	—	$	3,034	$	3,034

At  June 30, 2023 and December 31, 2022, there were no impaired loans with discounts to appraisal disposition value or other unobservable inputs.

37

 

The following tables present the carrying value and estimated fair value of financial instruments at the dates indicated:

	June 30, 2023
					Fair Value Measurements Using:
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Cash and cash equivalents	$	78,302	$	78,302	$	78,302	$	—	$	—
Investment securities available for sale		321,963		321,963		12,792		279,793		29,378
Loans held for sale		2,049		2,049		—		2,049		—
Loans receivable, net		1,620,863		1,509,311		—		—		1,509,311
FHLB stock		12,621		12,621		—		12,621		—
Accrued interest receivable		7,480		7,480		—		7,480		—
Sold loan servicing rights, at fair value		3,825		3,825		—		—		3,825
Partnership investments		12,733		12,733		—		—		12,733
Financial liabilities
Demand deposits	$	1,094,052	$	1,094,052	$	1,094,052	$	—	$	—
Time deposits		559,070		551,012		—		—		551,012
FHLB Borrowings		253,000		247,846		—		—		247,846
Line of Credit		11,000		11,047		—		—		11,047
Subordinated debt, net		39,397		40,164		—		—		40,164
Accrued interest payable		1,367		1,367		—		1,367		—
Interest rate swap derivative		392		392		—		392		—

	December 31, 2022
					Fair Value Measurements Using:
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Cash and cash equivalents	$	45,596	$	45,596	$	45,596	$	—	$	—
Investment securities available for sale		326,569		326,569		12,603		284,367		29,599
Loans held for sale		597		597		—		597		—
Loans receivable, net		1,531,435		1,461,470		—		—		1,461,470
FHLB stock		11,681		11,681		—		11,681		—
Accrued interest receivable		6,743		6,743		—		6,743		—
Sold loan servicing rights, at fair value		3,887		3,887		—		—		3,887
Partnership investments		12,563		12,563		—		—		12,563
Financial liabilities
Demand deposits		1,182,570	$	1,182,570	$	1,182,570	$	—	$	—
Time deposits		381,685		372,865		—		—		372,865
FHLB Borrowings		234,000		229,103		—		—		229,103
Line of Credit		12,000		12,034		—		—		12,034
Subordinated debt, net		39,358		38,841		—		—		38,841
Accrued interest payable		455		455		—		455		—

38

 

Note 12- Change in Accumulated Other Comprehensive Income ("AOCI")

Our AOCI includes unrealized gain (loss) on available-for-sale securities and an unrecognized defined benefit plan prior service cost. The following table presents changes to accumulated other comprehensive income after-tax for the periods shown:

	Unrealized Gains and Losses on Available-for-Sale Securities			Unrecognized Defined Benefit Plan Prior Service Cost, Net of Amortization			Unrealized Gains and Losses on Derivatives			Total
	(In thousands)
Balance at March 31, 2022	$	(13,330	)	$	(1,823	)	$	—		$	(15,153	)
Other comprehensive loss before reclassification		(13,330	)		—			—			(13,330	)
Amounts reclassified from accumulated other comprehensive income		7			29			—			36
Net other comprehensive (loss) income		(13,323	)		29			—			(13,294	)
Balance at June 30, 2022	$	(26,653	)	$	(1,794	)	$	—		$	(28,447	)
Balance at March 31, 2023	$	(34,642	)	$	(2,109	)	$	(1,357	)	$	(38,108	)
Other comprehensive loss before reclassification		(3,037	)		—			1,049			(1,988	)
Amounts reclassified from accumulated other comprehensive income		—			30			—			30
Net other comprehensive (loss) income		(3,037	)		30			1,049			(1,958	)
Balance at June 30, 2023	$	(37,679	)	$	(2,079	)	$	(308	)	$	(40,066	)
Balance at December 31, 2021	$	2,140		$	(1,852	)	$	—		$	288
Other comprehensive loss before reclassification		(28,700	)		—			—			(28,700	)
Amounts reclassified from accumulated other comprehensive income		(93	)		58			—			(35	)
Net other comprehensive (loss) income		(28,793	)		58			—			(28,735	)
Balance at June 30, 2022	$	(26,653	)	$	(1,794	)	$	—		$	(28,447	)
Balance at December 31, 2022	$	(38,404	)	$	(2,139	)	$	—		$	(40,543	)
Other comprehensive income before reclassification		725			—			(308	)		417
Amounts reclassified from accumulated other comprehensive income		—			60			—			60
Net other comprehensive income		725			60			(308	)		477
Balance at June 30, 2023	$	(37,679	)	$	(2,079	)	$	(308	)	$	(40,066	)

39

 

Note 13 - Derivatives and Hedging Activities

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

At June 30, 2023, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges. The Company had no fair value hedges at December 31, 2022.

Line item in the income statement in which the hedged item is included	Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)
	(In thousands)
June 30, 2023
Investment securities (1)	$	50,392	$	392
Total	$	50,392	$	392

(1) These amounts include the amortized cost basis of closed portfolios of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. At June 30, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $50.1 million, the cumulative basis adjustments associated with these hedging relationships was $392,000, and the amounts of the designated hedged items were $50.0 million.

The following table summarizes the Company’s derivative instruments at the date indicated. The Company has master netting agreements with derivative dealers with which it does business, but reflects gross assets and liabilities as “Other assets” and “Other liabilities,” respectively, on the Consolidated Balance Sheets, as follows:

			Fair Value
	Notional Amount		Other Assets		Other Liabilities
		(In thousands)
June 30, 2023
Fair value hedges:
Interest rate swaps - securities	$	50,000	$	—	$	351

The following table summarizes the effect of fair value and cash flow hedge accounting on the Consolidated Statements of Income for the periods shown:

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
	(In thousands)
Total amounts recognized in interest on investment securities	$	3,336		$	2,715	$	6,518		$	4,990
Net gains (losses) on fair value hedging relationships
Interest rate swaps - securities
Recognized on hedged items	$	(1,336	)	$	—	$	392		$	—
Recognized on derivatives designated as hedging instruments		1,443			—		(254	)		—
Net income recognized on fair value	$	107		$	—	$	138		$	—

40

 

Credit Risk-related Contingent Features

The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to all derivative transactions are major financial institutions with investment grade credit ratings. However, this does not eliminate the Company’s exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains in such contracts should any of these counterparties fail to perform as contracted.

The Company’s derivative contracts contain credit risk-related contingent features designed to protect against significant deterioration in counterparties’ creditworthiness and their ultimate ability to settle outstanding derivative contracts in the normal course of business. The Company’s bilateral credit related contingent features generally require the owing entity, either the Company or the derivative counterparty, to post collateral for the portion of the fair value in excess of $50.0 million should the fair value of outstanding derivatives per counterparty be greater than $50.0 million. Additionally, a certain level of decline in credit rating of either the Company or the counterparty could also trigger collateral requirements. As of June 30, 2023, the Company was in compliance with all credit risk-related contingent features and had derivative instruments with credit risk-related contingent features in a net liability position of $351,000. Accordingly, the Company posted collateral in the form of restricted cash of $2.2 million as a result of these contingent features. Given the considerations described above, the Company considers the impact of the risk of counterparty default to be immaterial.

41

 

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain matters discussed in this Quarterly Report on Form 10-Q constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Forward-looking statements include, but are not limited to:

• statements of our goals, intentions and expectations;

• statements regarding our business plans, prospects, growth and operating strategies;

• statements regarding the quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. Actual results may differ materially from those contemplated by the forward-looking statements due to, among others, the following factors:

• the risks associated with lending and potential adverse changes in the credit quality of loans in our portfolio;

• legislative or regulatory changes, including expanded consumer protection regulation, responses to recent events in the banking industry, inflation and climate change issues, which could adversely affect the Company's business;

• a continued decrease in the market demand for loans that we originate for sale;

• our ability to control operating costs and expenses;

• whether our management team can succeed in implementing our operational strategy, including but not limited to our efforts to achieve loan and revenue growth;

• our ability to successfully execute on merger and/or acquisition strategies, integrate any newly acquired assets, liabilities, customers, systems, and management personnel into our operations and realize related cost savings within expected time frames;

• our ability to successfully execute on growth strategies related to our entry into new markets and delivery channels, including banking as a service;

• our ability to develop user-friendly digital applications to serve existing customers and attract new customers;

• the use of estimates in determining fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation;

• changes in monetary policy and fiscal policies, including interest rate policies of the Federal Reserve, and the relative differences between short and long-term interest rates, deposit interest rates, our net interest margin and funding sources;

• pressures on liquidity, including as a result of withdrawals of deposits or declines in the value of our investment portfolio;

• increased competitive pressures among financial services companies, particularly from non-traditional banking entities such as challenger banks, fintech, and mega technology companies;

• our ability to attract and retain deposits at a reasonable cost;

• changes in consumer spending, borrowing and savings habits, resulting in reduced demand for banking products and services, particularly in the event of a recession that affects our market areas;

• results of examinations by the Washington State Department of Financial Institutions, Department of Banks, the Federal Deposit Insurance Corporation, Federal Reserve Bank of San Francisco, or other regulatory authorities, which could result in restrictions that may adversely affect our liquidity and earnings;

• disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions;

• risks related to overall economic conditions, including the impact on the economy of a rising interest rate environment, inflationary pressures, and geopolitical instability, including the war in Ukraine;

• any failure of key third-party vendors to perform their obligations to us;

• the effects of any reputational damage to the Company resulting from any of the foregoing; and

• other economic, competitive, governmental, regulatory and technical factors affecting our operations, pricing, products and services and other risks described elsewhere in our filings with the Securities and Exchange Commission, including this Form 10-Q and the Company's Annual Report on Form 10-K for the year ended December 31, 2022, ("2022 Form 10-K").

Any of the forward-looking statements that we make in this report and in other statements we make may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot anticipate or predict. Any forward-looking statements are based upon management’s beliefs and assumptions at the time they are made. We undertake no obligation to publicly update or revise any forward-looking statements included or incorporated by reference in this document or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. Due to these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur, and you should not put undue reliance on any forward-looking statements.

42

General

First Northwest is a bank holding company and a financial holding company and is engaged in banking activities through its wholly owned subsidiary, First Fed Bank, as well as certain non-banking financial activities. Non-financial investments include several limited partnership investments, including a 33% interest in The Meriwether Group, LLC ("MWG"). The Company's business activities are generally focused on passive investment activities and oversight of the activities of First Fed. The Company has also entered into partnerships to strategically invest in fintech-related businesses, which may result in the development of additional investment opportunities.

First Fed Bank is a community-oriented financial institution founded in 1923 in Port Angeles, Washington. We have 16 locations including 12 full-service branches and four business centers in Clallam, Jefferson, King, Kitsap, and Whatcom counties. First Fed’s business and operating strategy is focused on building sustainable earnings by delivering a fully array of financial products and services for individuals, small business, and commercial customers. Lending activities include the origination of first lien one-to-four family mortgage loans, commercial and multi-family real estate loans, residential and commercial construction and land loans, commercial business loans, SBA loans, and consumer loans, consisting primarily of home equity loans and lines of credit. Over the last five years, we have significantly increased the origination of commercial real estate, multi-family real estate, construction, and commercial business loans, and have increased our consumer loan portfolio through our manufactured home and auto loan purchase programs. We offer traditional consumer and business deposit products, including transaction accounts, savings and money market accounts and certificates of deposit ("CDs") for individuals and businesses. Deposits are our primary source of funding for our lending and investing activities.

First Northwest's limited partnership investments include Canapi Ventures Fund, LP; BankTech Ventures, LP; and JAM FINTOP Blockchain, LP. These limited partnerships invest in fintech-related businesses with a focus on developing digital solutions applicable to the banking industry. In 2022, First Northwest acquired a 33% interest in MWG, a boutique investment bank and consulting firm focused on providing entrepreneurs with resources to help them succeed. Also in 2022, the Company acquired a 25% equity interest as a general partner in Meriwether Group Capital, LLC ("MWGC"), which provides financial advice for borrowers and capital for the Meriwether Group Capital Hero Fund LP ("Hero Fund"). The Hero Fund is a private commercial lender focused on lower-middle market businesses, primarily in the Pacific Northwest. MWG also holds a 20% interest in MWGC. In addition, First Northwest has a limited partnership investment in the Hero Fund.

First Northwest is impacted by prevailing economic conditions as well as government policies and regulations concerning, among other things, monetary and fiscal affairs, housing and financial institutions. Deposit flows are influenced by several factors, including interest rates paid on competing deposits, alternative investment options available to our customers, account maturities, the number and quality of our deposit originators, digital delivery systems, branding and customer acquisition, and the overall level of personal income and savings in the markets where we do business. Lending activities are influenced by the demand and pricing for loan funds, our credit policies, the number and quality of our lenders and credit underwriters, digital delivery systems, branding and customer acquisition, and regional economic cycles.

Our primary source of pre-tax income is net interest income. Net interest income is the difference between interest income earned on our loans and investments and interest expense paid on our deposits and borrowings. Changes in our asset and liability mix, market and portfolio interest rates and cash flows from existing assets and liabilities affect our net interest income. A secondary source of income for the Company is noninterest income, which includes revenue earned from providing products and services, including service charges on deposit accounts, late and other charges on loans, mortgage banking income, loan sales and servicing income, interest rate swap fee income, earnings from bank-owned life insurance, investment services income, gains and losses from sales of securities, and changes in the market value of our equity and partnership investments.

An offset to net interest income is the provision for credit losses, which represents the periodic charge to operations that is required to adequately provide for losses inherent in our loan portfolio through the ACL. A recapture of previously recognized provision for credit losses may be added to net income as the underlying assumptions driving anticipated loss rates within the CECL model improve, such as the United States unemployment and gross domestic product metrics, or receipt of recoveries for amounts previously charged off.

Noninterest expenses we incur in operating our business consist of salaries and employee benefit costs, occupancy and equipment expenses, federal deposit insurance premiums and regulatory assessments, data processing expenses, marketing and other customer acquisition expenses, legal and other professional fees, expenses related to real estate and personal property owned, and other expenses.

43

Critical Accounting Policies

On January 1, 2023, the Company adopted ASU 2016-13, Measurement of Credit Losses on Financial Instruments, referred to as the Current Expected Credit Loss or CECL model. In conjunction with the adoption of CECL, the Company also adopted ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. For additional information on these ASUs, see "Note 1 - Basis of Presentation and Critical Accounting Policies - Recently adopted accounting pronouncements" of the Notes to the Consolidated Financial Statements included in Part I. Item 1 of this report.

Effective with the execution of a hedging agreement in the first quarter of 2023, the Company implemented an accounting policy on derivatives and hedging. For additional information on the hedging policy, see "Note 1 - Basis of Presentation and Critical Accounting Policies - Recently adopted accounting pronouncements" of the Notes to the Consolidated Financial Statements included in Part I. Item 1 of this report.

There were no other material changes to the critical accounting policies from those disclosed in the Company's 2022 Form 10-K.

Comparison of Financial Condition at June 30, 2023 and December 31, 2022

Assets. Total assets increased to $2.16 billion, or 5.9%, at June 30, 2023, from $2.04 billion at December 31, 2022.

Cash and cash equivalents increased by $32.7 million, or 71.7%, to $78.3 million as of June 30, 2023, compared to $45.6 million as of December 31, 2022. Cash increased during the current year as the Bank increased balance sheet liquidity in response to stresses within the banking industry and related concerns with respect to liquidity and uncertainty around deposit retention.

Investment securities decreased $4.6 million, or 1.4%, to $322.0 million at June 30, 2023, from $326.6 million at December 31, 2022. Normal payments and prepayment activity were partially offset by a mark-to-market valuation increase of $639,000 primarily related to an improved outlook on the municipal bond portfolio. The investment portfolio, including mortgage-backed securities, had an estimated projected average life of 7.8 years as of June 30, 2023, compared to 8.2 years as of December 31, 2022, and had an estimated average repricing term of 7.0 years as of June 30, 2023, compared to 7.1 years as of December 31, 2022, based on the interest rate environment at those times. The effective duration of the investment portfolio was 5.2 years at June 30, 2023, compared to 5.1 years at December 31, 2022. We believe prepayment activity may continue to slow if interest rates continue to rise, extending the projected duration and causing additional deterioration to the market value of our securities portfolio.

The investment portfolio was composed of 49.9% in amortizing securities at June 30, 2023, compared to 50.8% at December 31, 2022. The projected average life of our securities may vary due to prepayment activity, which, particularly in the mortgage-backed securities portfolio, is impacted by prevailing mortgage interest rates. The Company maintains a focus on enhancing the mix of earning assets by increasing loans as a percentage of earning assets; however, we may continue to purchase investment securities as a source of additional interest income. Securities are sold to provide liquidity, improve long-term portfolio yields and manage interest rate risk in the portfolio. For additional information, see Note 2 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Net loans, excluding loans held for sale, increased $89.4 million to $1.62 billion at June 30, 2023, from $1.53 billion at December 31, 2022. During the six months ended June 30, 2023, commercial business loans increased $53.2 million, as a result of a $23.9 million funding to the Northpointe Mortgage Purchase Program ("Northpointe MPP"), $15.2 million of Bankers Healthcare Group loan purchases and $14.1 million of organic originations and draws on existing commitments in excess of payoffs and scheduled payments. Multi-family loans increased $43.8 million through new originations totaling $19.1 million, and $32.7 million of construction loans converting into permanent amortizing loans, including $12.4 million of acquisition-renovation loans. One-to-four family residential loans increased $22.0 million during the first six months of 2023 as a result of $3.3 million in new amortizing loan originations and $38.9 million of residential construction loans that converted to permanent amortizing loans, partially offset by loan payoffs totaling $13.7 million and $7.7 million of scheduled payments received. Auto and other consumer loans increased $15.0 million, due to a $14.3 million purchase of a pool of manufactured home loans, $1.6 million in individual manufactured home loan purchases and a net increase in auto loans of $1.5 million, offset by payment activity. Home equity loans increased $6.0 million as a result of $3.7 million in new fixed-rate originations and $3.8 million in new home equity lines of credit, offset by payment activity. Commercial real estate loans decreased $12.9 million, with early payoffs and scheduled payments in excess of the $4.3 million from construction loans that converted into permanent amortizing loans.

44

Construction and land loans decreased $36.6 million, or 18.9%, to $157.1 million at June 30, 2023, from $193.7 million at December 31, 2022, with $76.0 million converting into fully amortizing loans and additional decreases from loans being paid in full, partially offset by draws on new and existing loans. Construction loans in the portfolio are geographically dispersed throughout western Washington with two loans in Oregon and two loans in Idaho. We manage construction lending by utilizing a licensed third-party vendor to assist us in monitoring the progress toward completion of our construction projects. We continue to monitor the impact of supply chain challenges, inflation and consumer demand in a rising interest rate environment on completion of the projects currently in the portfolio. As of the date of this report, we have no reason to believe that any of the projects in process will not be completed. At June 30, 2023, acquisition-renovation loans of $7.3 million were included in the construction loan total compared to $19.3 million at December 31, 2022. These commercial acquisition-renovation loans represent financing primarily for the acquisition of multi-family properties with a construction component used for the renovation of common areas and specific units of the building. Given the construction component of these loans, we are required to report them as construction under regulatory guidelines; however, we consider these loans to be lower risk than typical ground-up construction projects. At June 30, 2023, 40% of construction commitments were for one-to-four family residential properties, which are anticipated to convert into amortizing loans upon completion.

We monitor real estate values and general economic conditions in our market areas, in addition to assessing the strength of our borrowers, including their equity contributions to a project, to prudently underwrite construction loans. We continually assess our lending strategies across all product lines and markets where we do business to improve earnings while also prudently managing credit risk.

45

The following tables show our construction commitments by type and geographic concentrations at the dates indicated:

June 30, 2023	North Olympic Peninsula (1)		Puget Sound Region (2)		Other Washington		Oregon		Idaho		Total
	(In thousands)
Construction Commitment
One-to-four family residential	$	21,899	$	60,701	$	7,774	$	540	$	—	$	90,914
Multi-family residential		—		85,563		9,130		415		3,592		98,700
Commercial acquisition-renovation		—		7,861		—		—		—		7,861
Commercial real estate		503		31,341		—		—		—		31,844
Total commitment	$	22,402	$	185,466	$	16,904	$	955	$	3,592	$	229,319
Construction Funds Disbursed
One-to-four family residential	$	11,788	$	31,639	$	3,480	$	170	$	—	$	47,077
Multi-family residential		—		64,795		5,436		85		3,071		73,387
Commercial acquisition-renovation		—		7,285		—		—		—		7,285
Commercial real estate		454		21,707		—		—		—		22,161
Total disbursed	$	12,242	$	125,426	$	8,916	$	255	$	3,071	$	149,910
Undisbursed Commitment
One-to-four family residential	$	10,111	$	29,062	$	4,294	$	370	$	—	$	43,837
Multi-family residential		—		20,768		3,694		330		521		25,313
Commercial acquisition-renovation		—		576		—		—		—		576
Commercial real estate		49		9,634		—		—		—		9,683
Total undisbursed	$	10,160	$	60,040	$	7,988	$	700	$	521	$	79,409
Land Funds Disbursed
One-to-four family residential	$	3,650	$	3,201	$	412	$	—	$	—	$	7,263
Commercial real estate		—		355		—		—		—		355
Total disbursed for land	$	3,650	$	3,556	$	412	$	—	$	—	$	7,618

(1) Includes Clallam and Jefferson counties.

(2) Includes Kitsap, Mason, Thurston, Pierce, King, Snohomish, Skagit, Whatcom, and Island counties.

December 31, 2022	North Olympic Peninsula (1)		Puget Sound Region (2)		Other Washington		Oregon		Idaho		Total
	(In thousands)
Construction Commitment
One-to-four family residential	$	39,031	$	75,745	$	12,015	$	—	$	—	$	126,791
Multi-family residential		—		102,429		9,296		415		3,592		115,732
Commercial acquisition-renovation		1,636		18,625		—		—		—		20,261
Commercial real estate		349		39,845		—		540		—		40,734
Total commitment	$	41,016	$	236,644	$	21,311	$	955	$	3,592	$	303,518
Construction Funds Disbursed
One-to-four family residential	$	17,557	$	36,902	$	4,280	$	—	$	—	$	58,739
Multi-family residential		—		68,936		5,296		42		2,752		77,026
Commercial acquisition-renovation		1,636		17,687		—		—		—		19,323
Commercial real estate		212		27,492		—		12		—		27,716
Total disbursed	$	19,405	$	151,017	$	9,576	$	54	$	2,752	$	182,804
Undisbursed Commitment
One-to-four family residential	$	21,474	$	38,843	$	7,735	$	—	$	—	$	68,052
Multi-family residential		—		33,493		4,000		373		840		38,706
Commercial acquisition-renovation		—		938		—		—		—		938
Commercial real estate		137		12,353		—		528		—		13,018
Total undisbursed	$	21,611	$	85,627	$	11,735	$	901	$	840	$	120,714
Land Funds Disbursed
One-to-four family residential	$	3,552	$	3,370	$	419	$	—	$	—	$	7,341
Commercial real estate		372		4,129		—		—		—		4,501
Total disbursed for land	$	3,924	$	7,499	$	419	$	—	$	—	$	11,842

(1) Includes Clallam and Jefferson counties.

(2) Includes Kitsap, Mason, Thurston, Pierce, King, Snohomish, Skagit, Whatcom, and Island counties.

46

During the six months ended June 30, 2023, the Company originated $106.0 million of organic loans, of which $74.4 million, or 70.2%, were originated in the Puget Sound region, $26.4 million, or 24.9%, in the North Olympic Peninsula, $1.8 million, or 1.7%, in other areas throughout Washington State, and $3.4 million, or 3.2%, in other states. The Company purchased an additional $22.7 million in auto loans, $15.9 million in manufactured home loans, and $15.2 million in commercial business loans with collateral located throughout the United States during the six months ended June 30, 2023. We will continue to strategically evaluate opportunities to acquire assets through wholesale channels in order to supplement organic originations and increase net interest income. Northpointe MPP also provides a temporary source of additional interest income but is dependent on demand for funding, with repayment of advances to this program typically occurring within 30 days or less. The total loan portfolio was composed of 79.1% organic originations and 20.9% purchased loans at June 30, 2023.

The ACLL increased to $17.3 million at June 30, 2023, as the Company adopted CECL on January 1, 2023, recording a day-one adjusting entry of $2.2 million that was increased by a $315,000 provision for credit loss on loans for the six-month period. Net charge-offs were $1.3 million for the six-month period. The ACLL as a percentage of total loans was 1.1% at both June 30, 2023 and December 31, 2022.

Nonperforming loans increased $761,000, or 42.4%, to $2.6 million at June 30, 2023, from $1.8 million at December 31, 2022, reflecting the deterioration of three mortgage loans totaling $826,000, partially offset by payments received on other nonperforming loans. Nonperforming loans to total loans was 0.2% at June 30, 2023, up from 0.1% at December 31, 2022. The ACLL as a percentage of nonperforming loans decreased to 677% at June 30, 2023, down from 900% at December 31, 2022.

Classified loans increased $5.8 million to $22.7 million at June 30, 2023, from $16.9 million at December 31, 2022, due to downgrades of a $2.5 million commercial business loan, a $1.3 million commercial real estate loan, $873,000 of additional funds disbursed on a substandard commercial construction loan, $816,000 for two single-family residential loans, along with delinquent unsecured consumer loans totaling $321,000 and purchased manufactured home loans totaling $149,000.

Loan charge-offs are concentrated mainly in purchased unsecured consumer and indirect auto loans. Efforts to minimize future losses include adjusting the underwriting criteria for future loans purchased from the Splash unsecured consumer loan program, which had loan balances of $10.0 million and $9.2 million at June 30, 2023 and December 31, 2022, respectively. The indirect auto loan program was discontinued in 2020, and the remaining loan balances under that program decreased to $3.2 million at June 30, 2023 from $4.8 million at December 31, 2022. We believe the ACLL is adequate to absorb the known and inherent risks of loss in the overall loan portfolio as of June 30, 2023.

Loans receivable, excluding loans held for sale, consisted of the following at the dates indicated:

					Increase (Decrease)
	June 30, 2023		December 31, 2022		Amount			Percent
	(In thousands)
Real Estate:
One-to-four family	$	365,600	$	343,559	$	22,041			6.4	%
Multi-family		296,561		252,745		43,816			17.3
Commercial real estate		375,961		388,884		(12,923	)		(3.3	)
Construction and land		157,060		193,646		(36,586	)		(18.9	)
Total real estate loans		1,195,182		1,178,834		16,348			1.4
Consumer:
Home equity		58,895		52,877		6,018			11.4
Auto and other consumer		253,950		238,913		15,037			6.3
Total consumer loans		312,845		291,790		21,055			7.2
Commercial business loans		130,133		76,927		53,206			69.2
Total loans		1,638,160		1,547,551		90,609			5.9
Less:
Allowance for credit losses on loans		17,297		16,116		1,181			7.3
Loans receivable, net	$	1,620,863	$	1,531,435	$	89,428			5.8

47

The following table represents nonperforming assets at the dates indicated.

							Increase (Decrease)
	June 30, 2023			December 31, 2022			Amount			Percent
	(In thousands)
Nonperforming loans:
Real estate loans:
One-to-four family	$	1,780		$	954		$	826			86.6	%
Commercial real estate		41			53			(12	)		(22.6	)
Construction and land		12			15			(3	)		(20.0	)
Total real estate loans		1,833			1,022			811			79.4
Consumer loans:
Home equity		245			196			49			25.0
Auto and other consumer		476			575			(99	)		(17.2	)
Total consumer loans		721			771			(50	)		(6.5	)
Total nonperforming assets	$	2,554		$	1,793		$	761			42.4
Nonaccrual and 90 days or more past due loans as a percentage of total loans		0.2	%		0.1	%		0.1	%		100.0

Liabilities. Total liabilities increased to $2.0 billion at June 30, 2023, from $1.88 billion at December 31, 2022, due to an increase in deposits of $88.9 million and borrowings of $18.0 million.

Deposit balances increased $88.9 million to $1.65 billion at June 30, 2023 from $1.56 billion at December 31, 2022. During the six-month period ended June 30, 2023, CDs increased $177.4 million and savings accounts increased $59.4 million, offset by money market account decreases of $98.7 million and demand deposit account decreases of $49.1 million. We believe the shift between categories was driven by customers seeking higher rates and diversification of their deposit balances. We utilize brokered CDs as an additional funding source to provide liquidity, manage cost of funds, reduce reliance on FHLB advances, and manage interest rate risk. Brokered CDs totaling $179.6 million were included in the $559.0 million balance of CDs at June 30, 2023. Brokered CD balances increased $45.7 million, business and public fund account balances increased $35.1 million, and consumer account balances increased $8.0 million during the six-month period ended June 30, 2023.

FHLB advances increased $29.0 million, or 12.9% to $253.0 million at June 30, 2023, from $224.0 million at December 31, 2022. We increased short-term advances to provide additional balance sheet liquidity and to keep the duration of liabilities shorter relative to taking on longer term advances.

Equity. Total shareholders' equity increased $1.3 million to $159.6 million for the six months ended June 30, 2023. The Company recorded year-to-date net income of $5.3 million and a decrease in the after-tax unrealized loss on available-for-sale investments of $725,000. Increases were partially offset by a $3.0 million decrease for the cumulative CECL adjustment, $1.4 million of dividends paid, a $308,000 decrease in the fair market value of derivatives, net of taxes and the cost of repurchased shares. Year-to-date, we repurchased 74,617 shares of common stock under the October 2020 stock repurchase plan at an average price of $12.94 per share for a total of $968,000, leaving 227,410 shares remaining in the current share repurchase program. Bond values increased modestly from the end of 2022 as the economic outlook for rising long-term rates subsided.

48

Comparison of Results of Operations for the Three Months Ended June 30, 2023 and 2022

General. Net income attributable to the Company was $1.8 million for the three months ended June 30, 2023, compared to $2.5 million for the three months ended June 30, 2022. A $1.1 million decrease in net interest income after provision for credit losses and a $511,000 decrease in noninterest income was offset by a $1.8 million decrease in noninterest expense.

Net Interest Income. Net interest income decreased $1.3 million to $16.0 million for the three months ended June 30, 2023, from $17.2 million for the three months ended June 30, 2022. This decrease was mainly the result of higher rates paid on interest-bearing liabilities, which increased 184 basis points to 2.33% for the three months ended June 30, 2023, compared to 0.49% for the same period in the prior year. The decrease in net interest income was also due to an increase in the average balances of CDs and advances and higher rates paid on all deposits and advances. The average yield on interest-earning assets increased 103 basis points to 5.17% for the three months ended June 30, 2023, compared to 4.14% for the same period last year, due primarily to higher yields on variable-rate assets and new loan fundings and an increase of net loans as a percentage of earning assets.

Total cost of funds increased 159 basis points to 1.98% for the three months ended June 30, 2023, from 0.39% for the same period in 2022. The net interest margin decreased 52 basis points to 3.25% for the three months ended June 30, 2023, from 3.77% for the same period in 2022. While increases in the cost of funding are currently outpacing the growth of the yield on interest-earning assets, the Company has taken measures to combat interest rate compression. The Bank augments organic loan production with higher yielding purchased loans through relationships with loan originators. We have also increased our focus on variable-rate lending and the Bank has entered into a fair value hedging agreement.

Interest Income. Total interest income increased $6.5 million, or 34.3%, to $25.5 million for the three months ended June 30, 2023, from $19.0 million for the comparable period in 2022, primarily due to an increase in the average balances on interest-earning assets. Interest and fees on loans receivable increased $5.2 million, to $21.3 million for the three months ended June 30, 2023, from $16.1 million for the three months ended June 30, 2022, primarily due to an increase in the average balance of net loans receivable of $148.2 million compared to the second quarter of 2022, coupled with an increase in average loan yields to 5.38% for the three months ended June 30, 2023, from 4.48% for the same period in 2022. The loan portfolio has grown through our renewed short-term participation in the Northpointe MPP, draws on new and existing business lines of credit, originations of multi-family real estate loans, and purchases of auto, manufactured home, and purchased Bankers Healthcare Group commercial loans. Loan yields have increased over the prior year due to higher rates on new originations as well as the repricing of variable rate loans tied to the Prime Rate or other indices. The yield earned on investment securities also increased 124 basis points to 4.09% compared to the same period in 2022, as increases in floating bond rates and a slowdown in prepayment speeds, which reduces amortization of premium costs, have positively impacted investment securities income. The yield on interest-earning deposits in banks also increased to 5.18% from 0.89% for the comparable period in 2022, given the FRB rate increases.

49

The following table compares average earning asset balances, associated yields, and resulting changes in interest income for the periods shown:

	Three Months Ended June 30,
	2023					2022
	Average Balance Outstanding		Yield			Average Balance Outstanding		Yield			Increase (Decrease) in Interest Income
	(Dollars in thousands)
Loans receivable, net	$	1,587,948		5.38	%	$	1,439,714		4.48	%	$	5,218
Investment securities		327,129		4.09			367,662		2.96			621
FHLB stock		12,515		7.11			8,190		5.83			103
Interest-earning deposits in banks		47,792		5.18			20,636		0.89			571
Total interest-earning assets	$	1,975,384		5.17	%	$	1,836,202		4.14	%	$	6,513

Interest Expense. Total interest expense increased $7.8 million, or 452.5%, to $9.5 million for the three months ended June 30, 2023, compared to $1.7 million for the three months ended June 30, 2022. The increase over the second quarter of 2022 was the result of an increase in the cost of deposits to 1.54% from 0.20% in same period one year ago along with higher volumes of CDs. A shift in the deposit mix from low-cost transaction and money market accounts to a higher volume of CDs and savings accounts resulted in higher costs of deposits. Borrowing expense increased due to an average balance increase of $113.7 million and an increase in the cost of advances, primarily FHLB advances, compared to the same period in 2022.

Average deposit account balances were composed of 83% in interest-bearing deposits and 17% in noninterest-bearing deposits at June 30, 2023, compared to 78% and 22%, respectively, at June 30, 2022. During the three months ended June 30, 2023, interest expense increased on CDs due to an increase in the average balances of $274.0 million, along with an increase in the average rates paid of 77 basis points, compared to the three months ended June 30, 2022. During the same period, the average balances of money market accounts decreased $199.9 million, offset by a 64 basis point average rate increase, resulting in an increase to interest expense. The average cost of interest-bearing deposit accounts increased to 1.87% for the three months ended June 30, 2023, from 0.26% for the three months ended June 30, 2022, due to changes to the deposit mix, driven by customer preferences and the use of higher rate promotional products designed to retain existing deposits and generate new deposits. The mix of customer deposit balances shifted from non-maturity accounts towards higher cost term certificate and savings products. Customer CDs represented 25.8% and 12.3% of customer deposits at June 30, 2023 and 2022, respectively.

The following table details average balances, cost of funds and the change in interest expense for the periods shown:

	Three Months Ended June 30,
	2023					2022
	Average Balance Outstanding		Rate			Average Balance Outstanding		Rate			Increase (Decrease) in Interest Expense
	(Dollars in thousands)
Transaction accounts	$	178,696		0.45	%	$	197,071		0.05	%	$	176
Money market accounts		384,269		0.99			584,162		0.22			621
Savings accounts		249,681		1.22			195,345		0.05			736
Certificates of deposit		521,297		3.31			247,310		0.68			3,880
Advances		262,861		4.41			149,145		1.42			2,362
Subordinated debt		39,384		4.01			39,294		4.03			(1	)
Total interest-bearing liabilities	$	1,636,188		2.33	%	$	1,412,327		0.49	%	$	7,774

Provision for Credit Losses. The Company recorded a $300,000 provision for credit losses in the three months ended June 30, 2023, reflecting growth in the loan portfolio and additional charge-offs from the Splash unsecured consumer loan program. This compares to a $500,000 loan loss provision for the three months ended June 30, 2022, which was estimated using the incurred loss method based on historical loss trends combined with qualitative adjustments.

50

The following table details activity and information related to the ACLL for the periods shown:

	Three Months Ended June 30,
	2023			2022
	(Dollars in thousands)
Provision for credit losses on loans	$	300		$	500
Net (charge-offs) recoveries		(399	)		120
Allowance for credit losses on loans		17,297			15,747
Allowance for losses as a percentage of gross loans receivable at period end		1.1	%		1.1	%
Total nonaccrual loans		2,554			1,241
Allowance for credit losses on loans as a percentage of nonaccrual loans at period end		677.3	%		1268.9	%
Nonaccrual and 90 days or more past due loans as a percentage of total loans		0.2	%		0.1	%
Total loans	$	1,638,160		$	1,477,299

Noninterest Income. Noninterest income decreased $511,000, or 23.0%, to $1.7 million for the three months ended June 30, 2023, from $2.2 million for the three months ended June 30, 2022. The decrease was primarily due to a decline in the valuation of servicing rights of $183,000 related to the impact of paid-off loans. Saleable mortgage loan production continues to be hindered by the rise in market rates on mortgage loans and a lack of single-family home inventory compared to the same period in the prior year, resulting in a quarter-over-quarter decrease in the net gain on sale of loans of $173,000. An increase of $260,000 in the recorded value of our equity and partnership fintech investments recorded in other income was offset by a $334,000 reduction in swap fee income.

The following table provides a detailed analysis of the changes in the components of noninterest income for the periods shown:

	Three Months Ended June 30,						Increase (Decrease)
	2023			2022			Amount			Percent
	(Dollars in thousands)
Loan and deposit service fees	$	1,064		$	1,091		$	(27	)		(2.5	)%
Sold loan servicing fees and servicing rights mark-to-market		(191	)		27			(218	)		(807.4	)
Net gain on sale of loans		58			231			(173	)		(74.9	)
Net (loss) gain on sale of investment securities		—			(8	)		8			(100.0	)
Increase in cash surrender value of bank-owned life insurance		190			213			(23	)		(10.8	)
Other income		590			668			(78	)		(11.7	)
Total noninterest income	$	1,711		$	2,222		$	(511	)		(23.0	)%

Noninterest Expense. Noninterest expense decreased $1.8 million, or 10.3%, to $15.2 million for the three months ended June 30, 2023, compared to $17.0 million for the three months ended June 30, 2022. The reduced expenses compared to the second quarter of 2022 reflects a $2.0 million decrease related to Quin Ventures compensation, advertising and customer acquisition costs, and occupancy expenses. Additional decreases in Bank commissions paid and compensation expense were partially offset by higher Bank professional fees and FDIC insurance premiums. The Company continues to manage expenses, with a focus on further reducing compensation, occupancy, advertising, travel and other discretionary spending.

The following table provides an analysis of the changes in the components of noninterest expense for the periods shown:

	Three Months Ended June 30,				Increase (Decrease)
	2023		2022		Amount			Percent
	(Dollars in thousands)
Compensation and benefits	$	8,180	$	9,735	$	(1,555	)		(16.0	)%
Data processing		2,080		1,870		210			11.2
Occupancy and equipment		1,214		1,432		(218	)		(15.2	)
Supplies, postage, and telephone		435		408		27			6.6
Regulatory assessments and state taxes		424		441		(17	)		(3.9	)
Advertising		929		1,405		(476	)		(33.9	)
Professional fees		884		629		255			40.5
FDIC insurance premium		313		211		102			48.3
Other expense		758		832		(74	)		(8.9	)
Total noninterest expense	$	15,217	$	16,963	$	(1,746	)		(10.3	)%

51

Provision for Income Tax. An income tax expense of $475,000 was recorded for the three months ended June 30, 2023, compared to $467,000 for the three months ended June 30, 2022, due to a year-over-year increase in income before taxes of $174,000. The provision includes accruals for both federal and state income taxes. The provision for state income tax began in the second quarter of 2022 with respect to certain states in which we have employees and collateral for loans, thereby creating nexus in those states for income tax purposes. For additional information, see Note 7 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Comparison of Results of Operations for the Six Months Ended June 30, 2023 and 2022

General. Net income attributable to the Company was $5.3 million for the six months ended June 30, 2023, compared to $5.29 million for the six months ended June 30, 2022. A $258,000 increase in net interest income after provision for credit losses and a $1.7 million decrease in noninterest expense were offset by a $580,000 decrease in noninterest income and a $1.1 million decrease in the net loss attributable to the noncontrolling interest in Quin Ventures.

Net Interest Income. Net interest income decreased $442,000 to $32.3 million for the six months ended June 30, 2023, from $32.7 million for the six months ended June 30, 2022, as higher weighted-average funding costs outpaced increased loan and investment income.

Average earning assets increased $135.4 million year-over-year. The yield on average interest-earning assets increased 106 basis points to 5.06% for the six months ended June 30, 2023, compared to 4.00% for the same period in the prior year, due to an increase in the average net loans receivable balance, higher loan yields, and an increase in yields earned on investment securities.

The average cost of interest-bearing liabilities increased to 2.08% for the six months ended June 30, 2023, compared to 0.46% for the same period last year, due primarily to higher rates paid on all interest-bearing deposits and advances along with increases in the average balances of CDs and FHLB advances. Total cost of funds increased 139 basis points to 1.76% for the six months ended June 30, 2023, from 0.37% for the same period in 2022. The net interest margin decreased 30 basis points to 3.35% for the six months ended June 30, 2023, from 3.65% for the same period in 2022.

Interest Income. Total interest income increased $12.9 million, or 36.0%, to $48.8 million for the six months ended June 30, 2023, from $35.9 million for the comparable period in 2022, primarily due to an increase in yields on interest-earning assets and an increase in average net loans receivable balances. Interest and fees on loans receivable increased $10.2 million, to $40.8 million for the six months ended June 30, 2023, from $30.6 million for the six months ended June 30, 2022, primarily due to an increase in the average balance of net loans receivable of $176.0 million compared to the prior year, coupled with an increase in average loan yields to 5.27% for the six months ended June 30, 2023, from 4.46% for the same period in 2022. The loan portfolio saw increases in multi-family and commercial real estate lending, renewed short-term participation in Northpointe MPP, as well as additional purchased auto, manufactured home, and Bankers Healthcare Group commercial loans. Loan yields increased over the prior year due to higher rates on new originations as well as the repricing of variable rate loans tied to the Prime Rate or other variable-rate indices. The yield earned on investment securities also increased to 4.01% compared to the same period in 2022, as the purchase of higher-yielding investments occurred late in the first quarter of 2022 with the related increase only impacting income for the second quarter of 2022. An increase in rates on floating bonds and a slowdown in prepayment speeds, which reduces amortization of premium costs, also positively impacted investment securities income.

52

The following table compares average earning asset balances, associated yields, and resulting changes in interest income for the periods shown:

	Six Months Ended June 30,
	2023					2022
	Average Balance Outstanding		Yield			Average Balance Outstanding		Yield			Increase (Decrease) in Interest Income
	(Dollars in thousands)
Loans receivable, net	$	1,561,278		5.27	%	$	1,385,248		4.46	%	$	10,186
Investment securities		327,743		4.01			363,572		2.77			1,528
FHLB stock		11,849		7.05			6,758		5.10			243
Interest-earning deposits in banks		41,640		4.94			51,537		0.33			937
Total interest-earning assets	$	1,942,510		5.06	%	$	1,807,115		4.00	%	$	12,894

Interest Expense. Total interest expense increased $13.3 million, or 425.7%, to $16.5 million for the six months ended June 30, 2023, compared to $3.1 million for the six months ended June 30, 2022. The increase over the first six months of 2022 was the result of a 113 basis point increase in the cost of deposits from 0.20% one year prior along with a higher volume of CD balances. A shift in the deposit mix from low-cost transaction and money market accounts to a higher volume of CDs and savings accounts resulted in higher costs of funds on deposits. Interest expense on borrowings increased due to a $113.7 million increase in the average balance and a 299 basis point increase in the cost of advances, primarily FHLB advances, compared to the same period in 2022.

During the six months ended June 30, 2023, interest expense on CDs increased due to higher average balances of $239.7 million, along with a 238 basis point increase in the average rates paid, compared to the six months ended June 30, 2022. During the same period, the average balances of money market accounts decreased $176.9 million, with a 64 basis point average rate increase, resulting in an overall increase to interest expense. The average cost of interest-bearing deposit accounts increased to 1.62% for the six months ended June 30, 2023, from 0.25% for the six months ended June 30, 2022, due to the use of promotional products designed to retain existing deposits and generate new deposits. The mix of customer deposit balances shifted from non-maturity accounts towards higher cost CD and savings products. Brokered CDs represented 10.9% and 5.4% of total deposits at June 30, 2023 and 2022, respectively.

The following table details average balances, cost of funds and the change in interest expense for the periods shown:

	Six Months Ended June 30,
	2023					2022
	Average Balance Outstanding		Rate			Average Balance Outstanding		Rate			Increase (Decrease) in Interest Expense
	(Dollars in thousands)
Transaction accounts	$	182,968		0.44	%	$	196,615		0.04	%	$	353
Money market accounts		409,025		0.85			585,974		0.21			1,099
Savings accounts		234,607		0.98			195,034		0.05			1,086
Certificates of deposit		484,711		3.04			244,989		0.66			6,511
Advances		247,610		4.17			116,062		1.44			4,287
Subordinated debt		39,374		4.04			39,288		4.05			—
Total interest-bearing liabilities	$	1,598,295		2.08	%	$	1,377,962		0.46	%	$	13,336

Provision for Credit Losses. The Company recorded a $200,000 recapture of provision for credit losses for the six months ended June 30, 2023, reflecting a year-to-date decrease in unfunded commitments primarily due to construction loan disbursements, as well as improvements in the underlying assumptions driving anticipated loss rates within the CECL model adopted January 1, 2023. Specifically, the gross domestic product assumption metric improved since implementation at the beginning of 2023. The recapture attributable to the decrease in unfunded commitments was partially offset by a provision expense related to higher outstanding loan balances from new funding and disbursements on prior commitments. Charged-off loan balances also contributed to the loan-related provision. This compares to a $500,000 loan loss provision for the six months ended June 30, 2022, which was estimated using the incurred loss method based on historical loss trends combined with qualitative adjustments.

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The following table details activity and information related to the ACLL for the periods shown:

	Six Months Ended June 30,
	2023			2022
	(Dollars in thousands)
Provision for credit losses on loans	$	315		$	500
Net (charge-offs) recoveries		(1,343	)		123
Allowance for credit losses on loans		17,297			15,747
Allowance for losses as a percentage of total gross loans receivable at period end		1.1	%		1.1	%
Total nonaccrual loans		2,554			1,241
Allowance for credit losses on loans as a percentage of nonaccrual loans at period end		677.3	%		1268.9	%
Nonaccrual and 90 days or more past due loans as a percentage of total loans		0.2	%		0.1	%
Total loans	$	1,638,160		$	1,477,299

Noninterest Income. Noninterest income decreased $580,000, or 12.5%, to $4.1 million for the six months ended June 30, 2023, from $4.6 million for the six months ended June 30, 2022. Other income increased due to a year-over-year increase of $366,000 in the recorded value of our equity and partnership fintech investments. Saleable mortgage loan production continues to be hindered by the rise in market rates on mortgage loans and a lack of single-family home inventory compared to the prior year, resulting in a $250,000 year-over-year decrease in net gain on sale of loans. No investment securities sales were recorded during the current year compared to the same period in 2022.

The following table provides a detailed analysis of the changes in the components of noninterest income for the periods shown:

	Six Months Ended June 30,				Increase (Decrease)
	2023		2022		Amount			Percent
	(Dollars in thousands)
Loan and deposit service fees	$	2,205	$	2,264	$	(59	)		(2.6	)%
Sold loan servicing fees and servicing rights mark-to-market		302		459		(157	)		(34.2	)
Net gain on sale of loans		234		484		(250	)		(51.7	)
Net (loss) gain on sale of investment securities		—		118		(118	)		(100.0	)
Increase in cash surrender value of bank-owned life insurance		416		465		(49	)		(10.5	)
Other income		888		835		53			6.3
Total noninterest income	$	4,045	$	4,625	$	(580	)		(12.5	)%

Noninterest Expense. Noninterest expense decreased $1.7 million, or 5.4%, to $30.1 million for the six months ended June 30, 2023, compared to $31.8 million for the six months ended June 30, 2022. Compensation and benefits was lower due to lower commissions and incentives paid as well as a decrease in medical insurance and payroll tax expense and a reduction in workforce in the fourth quarter of 2022. The Bank received a medical insurance premium refund of $436,000 in the first quarter of 2023 and transitioned to a self-insured medical plan in 2023. Payroll tax expense was reduced in 2023 by the recognition of a portion of the Employee Retention Credit received in March 2023. These decreases were partially offset by an increase in legal and consulting fees and FDIC insurance premiums. The increase over the six months ended June 30, 2022, also reflects increases in data processing expenses associated with building enhanced technological infrastructure. Quin Ventures expenses decreased $2.4 million compared to the same period in 2022, as a result of no Quin Ventures expense recorded for compensation, marketing, or professional fees during the first six months of 2023.

The following table provides an analysis of the changes in the components of noninterest expense for the periods shown:

	Six Months Ended June 30,				Increase (Decrease)
	2023		2022		Amount			Percent
	(Dollars in thousands)
Compensation and benefits	$	16,017	$	18,538	$	(2,521	)		(13.6	)%
Data processing		4,118		3,642		476			13.1
Occupancy and equipment		2,423		2,599		(176	)		(6.8	)
Supplies, postage, and telephone		790		721		69			9.6
Regulatory assessments and state taxes		813		802		11			1.4
Advertising		1,970		2,157		(187	)		(8.7	)
Professional fees		1,690		1,188		502			42.3
FDIC insurance premium		570		434		136			31.3
Other expense		1,697		1,713		(16	)		(0.9	)
Total noninterest expense	$	30,088	$	31,794	$	(1,706	)		(5.4	)%

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Provision for Income Tax. An income tax expense of $1.3 million was recorded for the six months ended June 30, 2023, compared to $1.0 million for the six months ended June 30, 2022, due to a year-over-year increase in income before taxes of $1.4 million. The provision includes accruals for both federal and state income taxes. The provision for state income tax began in the second quarter of 2022 with respect to certain states in which we have employees and collateral for loans, thereby creating nexus in those states for income tax purposes. For additional information, see Note 7 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q.

Average Balances, Interest and Average Yields/Cost

The following tables set forth, for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Also presented is the weighted average yield on interest-earning assets, rates paid on interest-bearing liabilities and the net spread as of June 30, 2023 and 2022. Income and all average balances are monthly average balances, which management deems to be not materially different than daily averages. Nonaccrual loans have been included in the table as loans carrying a zero yield.

	Three Months Ended June 30,
	2023								2022
	Average			Interest					Average			Interest
	Balance			Earned/		Yield/			Balance			Earned/		Yield/
	Outstanding			Paid		Rate			Outstanding			Paid		Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net (1)	$	1,587,948		$	21,299		5.38	%	$	1,439,714		$	16,081		4.48	%
Investment securities		327,129			3,336		4.09			367,662			2,715		2.96
FHLB dividends		12,515			222		7.11			8,190			119		5.83
Interest-earning deposits in banks		47,792			617		5.18			20,636			46		0.89
Total interest-earning assets (2)		1,975,384			25,474		5.17			1,836,202			18,961		4.14
Noninterest-earning assets		142,630								127,463
Total average assets	$	2,118,014							$	1,963,665
Interest-bearing liabilities:
Interest-bearing demand deposits	$	178,696		$	201		0.45		$	197,071		$	25		0.05
Money market accounts		384,269			944		0.99			584,162			323		0.22
Savings accounts		249,681			762		1.22			195,345			26		0.05
Certificates of deposit		521,297			4,302		3.31			247,310			422		0.68
Total interest-bearing deposits (3)		1,333,943			6,209		1.87			1,223,888			796		0.26
Advances		262,861			2,889		4.41			149,145			527		1.42
Subordinated debt		39,384			394		4.01			39,294			395		4.03
Total interest-bearing liabilities		1,636,188			9,492		2.33			1,412,327			1,718		0.49
Noninterest-bearing deposits (3)		282,514								344,827
Other noninterest-bearing liabilities		37,925								32,927
Total average liabilities		1,956,627								1,790,081
Average equity		161,387								173,584
Total average liabilities and equity	$	2,118,014							$	1,963,665
Net interest income				$	15,982							$	17,243
Net interest rate spread							2.84								3.65
Net earning assets	$	339,196							$	423,875
Net interest margin (4)							3.25								3.77
Average interest-earning assets to average interest-bearing liabilities		120.7	%							130.0	%

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

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

(3) Cost of all deposits, including noninterest-bearing demand deposits, was 1.54% and 0.20% for the three months ended June 30, 2023 and 2022, respectively.

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

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	Six Months Ended June 30,
	2023								2022
	Average			Interest					Average			Interest
	Balance			Earned/		Yield/			Balance			Earned/		Yield/
	Outstanding			Paid		Rate			Outstanding			Paid		Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable, net (1)	$	1,561,278		$	40,803		5.27	%	$	1,385,248		$	30,617		4.46	%
Total investment securities		327,743			6,518		4.01			363,572			4,990		2.77
FHLB dividends		11,849			414		7.05			6,758			171		5.10
Interest-earning deposits in banks		41,640			1,021		4.94			51,537			84		0.33
Total interest-earning assets (2)		1,942,510			48,756		5.06			1,807,115			35,862		4.00
Noninterest-earning assets		141,789								124,753
Total average assets	$	2,084,299							$	1,931,868
Interest-bearing liabilities:
Interest-bearing demand deposits (3)	$	182,968		$	395		0.44		$	196,615		$	42		0.04
Money market accounts		409,025			1,720		0.85			585,974			621		0.21
Savings accounts		234,607			1,138		0.98			195,034			52		0.05
Certificates of deposit		484,711			7,309		3.04			244,989			798		0.66
Total interest-bearing deposits		1,311,311			10,562		1.62			1,222,612			1,513		0.25
Advances		247,610			5,118		4.17			116,062			831		1.44
Subordinated debt		39,374			789		4.04			39,288			789		4.05
Total interest-bearing liabilities		1,598,295			16,469		2.08			1,377,962			3,133		0.46
Noninterest-bearing deposits (3)		288,343								336,611
Other noninterest-bearing liabilities		37,302								35,820
Total average liabilities		1,923,940								1,750,393
Average equity		160,359								181,475
Total average liabilities and equity	$	2,084,299							$	1,931,868
Net interest income				$	32,287							$	32,729
Net interest rate spread							2.98								3.54
Net earning assets	$	344,215							$	429,153
Net interest margin (4)							3.35								3.65
Average interest-earning assets to average interest-bearing liabilities		121.5	%							131.1	%

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

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

(3) Cost of all deposits, including noninterest-bearing demand deposits, was 1.33% and 0.20% for the six months ended June 30, 2023 and 2022, respectively.

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

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Rate/Volume Analysis

The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.

	Three Months Ended									Six Months Ended
	June 30, 2023 vs. 2022									June 30, 2023 vs. 2022
	Increase (Decrease) Due to									Increase (Decrease) Due to
	Volume			Rate			Total Increase (Decrease)			Volume			Rate			Total Increase (Decrease)
	(In thousands)									(In thousands)
Interest-earning assets:
Loans receivable, net	$	1,656		$	3,562		$	5,218		$	3,904		$	6,282		$	10,186
Investments		(300	)		921			621			(490	)		2,018			1,528
FHLB stock		63			40			103			129			114			243
Other (1)		60			511			571			(16	)		953			937
Total interest-earning assets	$	1,479		$	5,034		$	6,513		$	3,527		$	9,367		$	12,894
Interest-bearing liabilities:
Interest-bearing demand deposits	$	(2	)	$	178		$	176		$	(6	)	$	359		$	353
Money market accounts		(113	)		734			621			(191	)		1,290			1,099
Savings accounts		7			729			736			7			1,079			1,086
Certificates of deposit		464			3,416			3,880			787			5,724			6,511
Advances		403			1,959			2,362			937			3,350			4,287
Subordinated debt		1			(2	)		(1	)		2			(2	)		—
Total interest-bearing liabilities	$	760		$	7,014		$	7,774		$	1,536		$	11,800		$	13,336
Net change in interest income	$	719		$	(1,980	)	$	(1,261	)	$	1,991		$	(2,433	)	$	(442	)

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

Off-Balance Sheet Activities

In the normal course of operations, First Fed engages in a variety of financial transactions that are not recorded in the financial statements. These transactions involve varying degrees of off-balance sheet credit, interest rate and liquidity risks. These transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For the six months ended June 30, 2023 and the year ended December 31, 2022, we engaged in no off-balance sheet transactions likely to have a material effect on our financial condition, results of operations or cash flows.

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Contractual Obligations

At June 30, 2023, our scheduled maturities of contractual obligations were as follows:

	Within		After 1 Year Through		After 3 Years Through		Beyond		Total
	1 Year		3 Years		5 Years		5 Years		Balance
	(In thousands)
Certificates of deposit	$	422,485	$	120,624	$	15,961	$	—	$	559,070
FHLB advances		188,000		45,000		20,000		—		253,000
Line of credit		11,000		—		—		—		11,000
Subordinated debt obligation		—		—		—		39,397		39,397
Operating leases		834		1,761		1,708		3,561		7,864
Borrower taxes and insurance		1,149		—		—		—		1,149
Deferred compensation		119		264		194		677		1,254
Total contractual obligations	$	623,587	$	167,649	$	37,863	$	43,635	$	872,734

Commitments and Off-Balance Sheet Arrangements

The following table summarizes our commitments and contingent liabilities with off-balance sheet risks as of June 30, 2023:

	Amount of Commitment by Expiration
	Within		After 1 Year Through		After 3 Years Through		Beyond		Total Amounts
	1 Year		3 Years		5 Years		5 Years		Committed
	(In thousands)
Commitments to originate loans:
Variable-rate		16,450		—		—		—		16,450
Unfunded commitments under lines of credit or existing loans		67,663		8,442		3,719		88,844		168,668
Standby letters of credit		558		—		—		200		758
Total commitments	$	84,671	$	8,442	$	3,719	$	89,044	$	185,876

Liquidity Management

Liquidity is the ability to meet current and future financial obligations of a short-term and long-term nature. Our primary sources of funds consist of deposit inflows, loan repayments, maturities and sales of securities, and borrowings from the FHLB. While maturities and scheduled amortization of loans and securities are usually predictable sources of funds, deposit flows, calls of investment securities and borrowed funds, and prepayments on loans and investment securities are greatly influenced by general interest rates, economic conditions and competition, which can cause those sources of funds to fluctuate.

Management regularly adjusts our investments in liquid assets based upon an assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, and the objectives of our interest-rate risk and investment policies. In the first quarter, we increased liquid assets in response to the recent stresses within the banking industry and related concerns regarding liquidity.

Our most liquid assets are cash and cash equivalents followed by available-for-sale securities. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At June 30, 2023, cash and cash equivalents totaled $78.3 million and unpledged securities classified as available-for-sale had a market value of $290.9 million. The Bank pledged collateral of $625.0 million to support borrowings from the FHLB, with a remaining borrowing capacity of $311.3 million at June 30, 2023. The Bank also has an established discount window borrowing arrangement with the FRB, for which available-for-sale securities with a market value of $9.1 million were pledged as of June 30, 2023, with a remaining borrowing capacity of $8.7 million. The Bank has established an additional arrangement with the FRB through the BTFP, for which available-for-sale securities with a market value of $17.1 million were pledged as of June 30, 2023, with a remaining borrowing capacity of $18.7 million. First Northwest has a $20.0 million borrowing arrangement with NexBank which is secured by First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The remaining borrowing capacity of the NexBank line of credit was $9.0 million at June 30, 2023.

At June 30, 2023, we had $16.5 million in loan commitments outstanding and $169.4 million in undisbursed loans and standby letters of credit, including $79.4 million in undisbursed construction loan commitments.

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CDs due within one year as of June 30, 2023, totaled $422.5 million, or 75.6% of CDs with a weighted-average rate of 3.75%. If these maturing deposits are not renewed, we will seek other sources of funds, including other CDs, non-maturity deposits, and borrowings. We have the ability to attract and retain deposits by adjusting the interest rates offered as well as through sales and marketing efforts in the markets we serve. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on CDs. In addition, we believe that our branch network, and the general cash flows from our existing lending and investment activities, will provide adequate long-term liquidity. For additional information, see the Consolidated Statements of Cash Flows in Item 1 of this Form 10-Q.

First Fed has a diversified deposit base with approximately 60% of deposit account balances held by consumers, 29% held by business and public fund depositors, and 11% in brokered deposits. The average deposit account balance, excluding brokered and public fund accounts, was $28,000 at June 30, 2023. We estimate that 80-85% of our customer deposit balances are below the $250,000 FDIC insurance limit or fully collateralized. The remaining uninsured deposits represent less than 5% of depositors. Management believes that maintaining a diversified deposit base is an important factor in managing and maintaining adequate levels of liquidity.

The Company is a separate legal entity from the Bank and provides for its own liquidity. At June 30, 2023, the Company, on an unconsolidated basis, had liquid assets of $2.5 million. In addition to its operating expenses, the Company is responsible for paying dividends declared, if any, to its shareholders, funds paid for Company stock repurchases, payments on subordinated notes held at the Company level, payments on the NexBank revolving credit facility, and commitments to limited partnership investments. The Company may receive dividends or capital distributions from the Bank, although there may be regulatory limitations on the ability of the Bank to pay dividends. First Northwest previously contributed $8.0 million to Quin Ventures pursuant to the terms of a capital financing agreement and related promissory note. Quil Ventures Inc. agreed to repay the amount owed by Quin Ventures under the terms and conditions specified in a repayment and security agreement with First Northwest dated December 20, 2022.

Capital Resources

At June 30, 2023, shareholders' equity totaled $159.6 million, or 7.4% of total assets. Our book value per share of common stock was $16.56 at June 30, 2023, compared to $16.31 at December 31, 2022.

At June 30, 2023, the Bank exceeded all regulatory capital requirements and was considered "well capitalized" under FDIC regulatory capital guidelines.

The following table provides the capital requirements and actual results for First Fed at June 30, 2023.

	Actual					Minimum Capital Requirements					Minimum Required to be Well-Capitalized
	Amount		Ratio			Amount		Ratio			Amount		Ratio
						(Dollars in thousands)
Tier 1 leverage capital (to average assets)	$	217,444		10.2	%	$	85,578		4.0	%	$	106,972		5.0	%
Common equity tier 1 (to risk-weighted assets)	$	217,444		13.1			74,694		4.5			107,891		6.5
Tier 1 risk-based capital (to risk-weighted assets)	$	217,444		13.1			99,592		6.0			132,789		8.0
Total risk-based capital (to risk-weighted assets)	$	233,751		14.1			132,789		8.0			165,986		10.0

In order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses, the Bank must maintain common equity tier 1 capital ("CET1") at an amount greater than the required minimum levels plus a capital conservation buffer of 2.5%.

Effect of Inflation and Changing Prices

The consolidated financial statements and related financial data presented in this report have been prepared according to GAAP, which require the measurement of financial and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs and the effect that general inflation may have on both short-term and long-term interest rates. Unlike companies in many other industries, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution's performance than do general levels of inflation. Although inflation expectations do affect interest rates, interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services.

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

There has not been any material change in the market risk disclosures contained in the 2022 Form 10-K.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

An evaluation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")) was carried out under the supervision and with the participation of the Company's Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial and Accounting Officer), and other members of the Company's management team as of the end of the period covered by this quarterly report. The Company's Chief Executive Officer and Chief Financial Officer concluded that as of June 30, 2023, the Company's disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

(b) Changes in Internal Controls.

There have been no changes in the Company's internal control over financial reporting (as defined in 13a-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2023, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

The Company intends to continually review and evaluate the design and effectiveness of its disclosure controls and procedures and to improve its controls and procedures over time and to correct any deficiencies that it may discover in the future. The goal is to ensure that senior management has timely access to all material financial and non-financial information concerning the Company's business. While the Company believes the present design of its disclosure controls and procedures is effective to achieve its goal, future events affecting its business may cause the Company to modify its disclosure controls and procedures. The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent every error or instance of fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns in controls or procedures can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

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PART II - OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, the Company is engaged in legal proceedings in the ordinary course of business, none of which are currently considered to have a material impact on the Company’s financial position or results of operations.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Part I. Item 1A of the Company's 2022 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable.

(b) Not applicable.

(c) The following table summarizes common stock repurchases during the three months ended June 30, 2023:

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Repurchased as Part of Publicly Announced Plans (2)		Maximum Number of Shares that May Yet Be Repurchased Under the Plans
April 1, 2023 - April 30, 2023		—	$	—		—		257,586
May 1, 2023 - May 31, 2023		3,321		11.25		1,849		255,737
June 1, 2023 - June 30, 2023		28,327		11.27		28,327		227,410
Total		31,648	$	11.27		30,176
(1) Shares repurchased by the Company during the quarter include shares acquired from participants in connection with cancellation of restricted stock to pay withholding taxes totaling 0 shares, 1,472 shares, and 0 shares, respectively, for the periods indicated.
(2) On October 28, 2020, the Company announced that its Board of Directors had authorized the repurchase of up to an additional 1,023,420 shares of its common stock, or approximately 10% of its shares of common stock issued and outstanding as of October 27, 2020. As of June 30, 2023, a total of 796,010 shares, or 77.8% percent of the shares authorized in the October 2020 stock repurchase plan, have been purchased at an average cost of $15.82 per share, leaving 227,410 shares available for future purchases.

61

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

Exhibit No.	Exhibit Description	Filed Herewith	Form	Original Exhibit No.	Filing Date
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act	X
32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act	X
101	The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) Consolidated Balance Sheets; (2) Consolidated Statements of Income; (3) Consolidated Statements of Comprehensive (Loss) Income; (4) Consolidated Statements of Changes in Shareholders' Equity; (5) Consolidated Statements of Cash Flows; and (6) Selected Notes to Consolidated Financial Statements
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

62

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FIRST NORTHWEST BANCORP
Date: August 11, 2023	/s/ Matthew P. Deines
	Matthew P. Deines
	President, Chief Executive Officer and Director
	(Principal Executive Officer)
Date: August 11, 2023	/s/ Geraldine Bullard
	Geraldine Bullard
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

63

EX-31.1

EXHIBIT 31.1

Certification of Chief Executive Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Matthew P. Deines, President, Chief Executive Officer and Director of First Northwest Bancorp, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Northwest Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions);

a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 11, 2023	/s/Matthew P. Deines
	Matthew P. Deines President, Chief Executive Officer and Director (Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

Certification of Chief Financial Officer Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Geraldine Bullard, Executive Vice President and Chief Financial Officer of First Northwest Bancorp, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of First Northwest Bancorp;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fiscal fourth quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions);

a. All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial data information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 11, 2023	/s/Geraldine Bullard
	Geraldine Bullard Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

EX-32

EXHIBIT 32

Certification of Chief Executive Officer and Chief Financial Officer of First Northwest Bancorp

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Each of the undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on Form 10-Q, for the quarter ended June 30, 2023, that:

1. the report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

2. the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods presented in the financial statements included in the report.

/s/Matthew P. Deines	/s/Geraldine Bullard
Matthew P. Deines President, Chief Executive Officer and Director (Principal Executive Officer)	Geraldine Bullard Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

Dated: August 11, 2023

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2023	Aug. 04, 2023
Document Information [Line Items]
Entity Central Index Key	0001556727
Entity Registrant Name	First Northwest Bancorp
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2023
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2023
Document Transition Report	false
Entity File Number	001-36741
Entity Incorporation, State or Country Code	WA
Entity Tax Identification Number	46-1259100
Entity Address, Address Line One	105 West 8th Street
Entity Address, City or Town	Port Angeles
Entity Address, State or Province	WA
Entity Address, Postal Zip Code	98362
City Area Code	360
Local Phone Number	457-0461
Title of 12(b) Security	Common Stock, par value $0.01 per share
Trading Symbol	FNWB
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Emerging Growth Company	false
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		9,631,682

XML

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
ASSETS
Cash and due from banks	$ 19,294	$ 17,104
Interest-earning deposits in banks	59,008	28,492
Investment securities available for sale, at fair value	321,963	326,569
Loans held for sale	2,049	597
Loans receivable (net of allowance for credit losses on loans of $17,297 and $16,116)	1,620,863	1,531,435
Federal Home Loan Bank (FHLB) stock, at cost	12,621	11,681
Accrued interest receivable	7,480	6,743
Premises and equipment, net	18,140	18,089
Servicing rights on sold loans, at fair value	3,825	3,887
Bank-owned life insurance, net	40,066	39,665
Equity and partnership investments	14,569	14,289
Goodwill and other intangible assets, net	1,087	1,089
Deferred tax asset, net	15,031	14,091
Prepaid expenses and other assets	26,882	28,339
Total assets	2,162,878	2,042,070
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits	1,653,122	1,564,255
Borrowings	303,397	285,358
Accrued interest payable	1,367	455
Accrued expenses and other liabilities	44,286	32,344
Advances from borrowers for taxes and insurance	1,149	1,376
Total liabilities	2,003,321	1,883,788
Shareholders' Equity
Preferred stock, $0.01 par value, authorized 5,000,000 shares, no shares issued or outstanding	0	0
Common stock, $0.01 par value, authorized 75,000,000 shares; issued and outstanding 9,633,496 shares at June 30, 2023, and 9,703,581 shares at December 31, 2022	96	97
Additional paid-in capital	95,360	95,508
Retained earnings	111,750	114,424
Accumulated other comprehensive loss, net of tax	(40,066)	(40,543)
Unearned employee stock ownership plan (ESOP) shares	(7,583)	(7,913)
Total parent's shareholders' equity	159,557	161,573
Noncontrolling interest in Quin Ventures, Inc.	0	(3,291)
Total shareholders' equity	159,557	158,282
Total liabilities and shareholders' equity	$ 2,162,878	$ 2,042,070

XML

Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($) $ in Thousands		Jun. 30, 2023	Dec. 31, 2022
Allowance for Credit Loss	[1]	$ 17,297	$ 16,116
Preferred stock, par value (in dollars per share)		$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)		5,000,000	5,000,000
Preferred stock, shares issued (in shares)		0	0
Preferred stock, shares outstanding (in shares)		0	0
Common stock, par value (in dollars per share)		$ 0.01	$ 0.01
Common stock, shares authorized (in shares)		75,000,000	75,000,000
Common stock, shares issued (in shares)		9,633,496	9,703,581
Common stock, shares outstanding (in shares)		9,633,496	9,703,581

[1] Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

XML

Consolidated Statements of Income (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
INTEREST INCOME
Interest and fees on loans receivable	$ 21,299	$ 16,081	$ 40,803	$ 30,617
Interest on investment securities	3,336	2,715	6,518	4,990
Interest on deposits and other	617	46	1,021	84
FHLB dividends	222	119	414	171
Total interest income	25,474	18,961	48,756	35,862
INTEREST EXPENSE
Deposits	6,209	796	10,562	1,513
Borrowings	3,283	922	5,907	1,620
Total interest expense	9,492	1,718	16,469	3,133
Net interest income	15,982	17,243	32,287	32,729
(Recapture of) provision for credit losses	300	500	(200)	500
Net interest income after provision for (recapture of) credit losses	15,682	16,743	32,487	32,229
NONINTEREST INCOME
Loan and deposit service fees	1,064	1,091	2,205	2,264
Sold loan servicing fees and servicing rights mark-to-market	(191)	27	302	459
Net gain on sale of loans	58	231	234	484
Net (loss) gain on sale of investment securities	0	(8)	0	118
Increase in cash surrender value of bank-owned life insurance	190	213	416	465
Other income	590	668	888	835
Total noninterest income	1,711	2,222	4,045	4,625
NONINTEREST EXPENSE
Compensation and benefits	8,180	9,735	16,017	18,538
Data processing	2,080	1,870	4,118	3,642
Occupancy and equipment	1,214	1,432	2,423	2,599
Supplies, postage, and telephone	435	408	790	721
Regulatory assessments and state taxes	424	441	813	802
Advertising	929	1,405	1,970	2,157
Professional fees	884	629	1,690	1,188
FDIC insurance premium	313	211	570	434
Other expense	758	832	1,697	1,713
Total noninterest expense	15,217	16,963	30,088	31,794
Income before provision for income taxes	2,176	2,002	6,444	5,060
Provision for income taxes	475	467	1,300	1,021
Net income	1,701	1,535	5,144	4,039
Net loss attributable to noncontrolling interest in Quin Ventures, Inc.	75	953	160	1,255
Net income attributable to parent	$ 1,776	$ 2,488	$ 5,304	$ 5,294
Basic and diluted earnings per common share (in dollars per share)	$ 0.20	$ 0.27	$ 0.59	$ 0.58

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net income	$ 1,701	$ 1,535	$ 5,144	$ 4,039
Other comprehensive (loss) income:
Unrealized holding (losses) gains on investments available for sale arising during the period	4,152	16,875	(639)	36,329
Income tax benefit related to unrealized holding (losses) gains on investments	1,115	3,545	86	7,629
Amortization of unrecognized DB plan prior service cost	38	36	76	73
Income tax provision related to amortization of DB plan prior service cost	(8)	(7)	(16)	(15)
Unrealized holding gains (losses) on derivatives	1,336	0	(392)	0
Income tax (provision) benefit related to unrealized holding gains (losses) on derivatives	(287)	0	84	0
Reclassification adjustment for net (gains) losses on sales of securities realized in income	0	8	0	(118)
Income tax (provision) benefit related to reclassification adjustment on sales of securities	0	(1)	0	25
Other comprehensive (loss) income, net of tax	(1,958)	(13,294)	477	(28,735)
Comprehensive (loss) income	(257)	(11,759)	5,621	(24,696)
Comprehensive loss attributable to noncontrolling interest	(75)	(953)	(160)	(1,255)
Comprehensive (loss) income attributable to parent	$ (182)	$ (10,806)	$ 5,781	$ (23,441)

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) $ in Thousands	Cumulative Effect, Period of Adoption, Adjustment [Member] Common Stock [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Additional Paid-in Capital [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Retained Earnings [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Unearned ESOP Shares [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] AOCI Attributable to Parent [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member] Noncontrolling Interest [Member]	Cumulative Effect, Period of Adoption, Adjustment [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Unearned ESOP Shares [Member]	AOCI Attributable to Parent [Member]	Noncontrolling Interest [Member]	Total
BALANCE (in shares) at Dec. 31, 2021								9,972,698
BALANCE at Dec. 31, 2021			$ 424				$ 424	$ 100	$ 96,131	$ 103,014	$ (8,572)	$ 288	$ (481)	$ 190,480
Net income										5,294			(1,255)	4,039
Common stock repurchased (in shares)								(52,618)
Common stock repurchased								$ (1)	(525)	(333)				(859)
Restricted stock award grants net of forfeitures (in shares)								40,418
Restricted stock award grants net of forfeitures								$ 1	(1)					0
Restricted stock awards canceled (in shares)								(10,326)
Restricted stock awards canceled								$ 0	(222)					(222)
Other comprehensive loss, net of tax												(28,735)		(28,735)
Share-based compensation expense									890					890
ESOP shares committed to be released									206		330			536
Cash dividends declared ($0.07 per share)										(1,399)				(1,399)
Restricted stock award forfeitures net of grants (in shares)								(40,418)
ESOP shares committed to be released									(206)		(330)			(536)
BALANCE (in shares) at Jun. 30, 2022								9,950,172
BALANCE at Jun. 30, 2022								$ 100	96,479	107,000	(8,242)	(28,447)	(1,736)	165,154
BALANCE (in shares) at Mar. 31, 2022								10,003,622
BALANCE at Mar. 31, 2022								$ 100	96,473	105,546	(8,407)	(15,153)	(783)	177,776
Net income										2,488			(953)	1,535
Common stock repurchased (in shares)								(52,618)
Common stock repurchased								$ (1)	(525)	(333)				(859)
Restricted stock award grants net of forfeitures (in shares)								575
Restricted stock award grants net of forfeitures								$ 1	(1)					0
Restricted stock awards canceled (in shares)								(1,407)
Restricted stock awards canceled								$ 0	(27)					(27)
Other comprehensive loss, net of tax												(13,294)		(13,294)
Share-based compensation expense									479					479
ESOP shares committed to be released									80		165			245
Cash dividends declared ($0.07 per share)										(701)				(701)
Restricted stock award forfeitures net of grants (in shares)								(575)
ESOP shares committed to be released									(80)		(165)			(245)
BALANCE (in shares) at Jun. 30, 2022								9,950,172
BALANCE at Jun. 30, 2022								$ 100	96,479	107,000	(8,242)	(28,447)	(1,736)	$ 165,154
BALANCE (in shares) at Dec. 31, 2022								9,703,581						9,703,581
BALANCE (Accounting Standards Update 2016-13 [Member]) at Dec. 31, 2022			$ (2,951)				$ (2,951)
BALANCE at Dec. 31, 2022								$ 97	95,508	114,424	(7,913)	(40,543)	(3,291)	$ 158,282
Net income										5,304			(160)	5,144
Common stock repurchased (in shares)								(74,617)
Common stock repurchased								$ (1)	(745)	(222)				(968)
Restricted stock award grants net of forfeitures (in shares)								16,338
Restricted stock award grants net of forfeitures								$ 0	0					0
Restricted stock awards canceled (in shares)								(11,806)
Restricted stock awards canceled								$ 0	(162)					(162)
Other comprehensive loss, net of tax												477		477
Share-based compensation expense									749					749
ESOP shares committed to be released									10		330			340
Cash dividends declared ($0.07 per share)										(1,354)				(1,354)
Restricted stock award forfeitures net of grants (in shares)								(16,338)
Close out investment in Quin Ventures										(3,451)			3,451	0
ESOP shares committed to be released									(10)		(330)			$ (340)
BALANCE (in shares) at Jun. 30, 2023								9,633,496						9,633,496
BALANCE at Jun. 30, 2023								$ 96	95,360	111,750	(7,583)	(40,066)	0	$ 159,557
BALANCE (in shares) at Mar. 31, 2023								9,674,055
BALANCE at Mar. 31, 2023								$ 97	95,333	114,139	(7,749)	(38,108)	(3,376)	160,336
Net income										1,776			(75)	1,701
Common stock repurchased (in shares)								(30,176)
Common stock repurchased								$ (1)	(301)	(39)				(341)
Restricted stock award grants net of forfeitures (in shares)								8,911
Restricted stock award grants net of forfeitures								$ 0	0					0
Restricted stock awards canceled (in shares)								(1,472)
Restricted stock awards canceled								$ 0	(17)					(17)
Other comprehensive loss, net of tax												(1,958)		(1,958)
Share-based compensation expense									358					358
ESOP shares committed to be released									13		166			153
Cash dividends declared ($0.07 per share)										(675)				(675)
Restricted stock award forfeitures net of grants (in shares)								(8,911)
Close out investment in Quin Ventures										(3,451)			3,451	0
ESOP shares committed to be released									(13)		(166)			$ (153)
BALANCE (in shares) at Jun. 30, 2023								9,633,496						9,633,496
BALANCE at Jun. 30, 2023								$ 96	$ 95,360	$ 111,750	$ (7,583)	$ (40,066)	$ 0	$ 159,557

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) (Parentheticals) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Cash dividends declared, per share (in dollars per share)	$ 0.07	$ 0.07	$ 0.14	$ 0.14

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Cash flows from operating activities:
Net income before noncontrolling interest	$ 5,144	$ 4,039
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization	799	983
Amortization of core deposit intangible	2	7
Amortization and accretion of premiums and discounts on investments, net	711	898
(Accretion) amortization of deferred loan fees and purchased premiums, net	(160)	571
Amortization of debt issuance costs	39	39
Change in fair value of sold loan servicing rights	137	53
Additions to servicing rights on sold loans, net	(75)	(98)
(Recapture of) provision for credit losses	(200)	500
Allocation of ESOP shares	340	404
Share-based compensation expense	749	890
Gain on sale of loans, net	(234)	(484)
Gain on sale of securities available for sale, net	0	(118)
Increase in cash surrender value of life insurance, net	(416)	(465)
Origination of loans held for sale	(13,294)	(16,487)
Proceeds from sale of loans held for sale	12,076	17,035
Change in assets and liabilities:
Increase in accrued interest receivable	(737)	(513)
Decrease (increase) in prepaid expenses and other assets	1,299	(3,854)
Increase in accrued interest payable	912	68
Increase in accrued expenses and other liabilities	10,699	5,788
Net cash provided by operating activities	17,791	9,256
Cash flows from investing activities:
Purchase of securities available for sale	0	(78,409)
Proceeds from maturities, calls, and principal repayments of securities available for sale	4,535	19,565
Proceeds from sales of securities available for sale	0	12,685
Purchase of FHLB stock	(940)	(5,206)
Early surrender of bank-owned life insurance policy	15	0
Net increase in loans receivable	(91,792)	(112,363)
Purchase of premises and equipment, net	(850)	(2,442)
Capital contributions to equity and partnership investments	(209)	(6,979)
Capital disbursements received from equity and partnership investments	347	0
Capital contributions to historic tax credit partnerships	0	(1,829)
Net cash used by investing activities	(88,894)	(174,978)
Cash flows from financing activities:
Net increase in deposits	88,867	144
Proceeds from long-term FHLB advances	15,000	10,000
Repayment of long-term FHLB advances	(10,000)	0
Net increase in short-term FHLB advances	14,000	112,000
Net (decrease) increase in line of credit	(1,000)	8,000
Net decrease in advances from borrowers for taxes and insurance	(227)	(174)
Payment of dividends	(1,354)	(1,388)
Restricted stock awards canceled	(162)	(222)
Repurchase of common stock	(968)	(859)
Net cash provided by financing activities	104,156	127,501
Net increase (decrease) in cash and cash equivalents	33,053	(38,221)
Cash and cash equivalents at beginning of period	45,596	126,016
Cash and cash equivalents at end of period	78,649	87,795
Supplemental disclosures of cash flow information:
Cash paid for interest on deposits and borrowings	15,557	3,065
Cash paid for income taxes	1,811	1,110
Supplemental disclosures of noncash investing activities:
Change in unrealized gain (loss) on securities available for sale	639	(36,447)
Change in unrealized (loss) gain on cash flow hedges	(392)	0
Cumulative adjustment to servicing rights asset due to election of fair value option	0	538
Cumulative effect of adoption of ASU 2016-13 Financial Instruments - Credit Losses on January 1, 2023	$ (3,735)	$ 0

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Note 1 - Basis of Presentation and Critical Accounting Policies

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Business Description and Accounting Policies [Text Block]

Note 1 - Basis of Presentation and Critical Accounting Policies

Organization and nature of business - First Northwest Bancorp, a Washington corporation ("First Northwest"), became the holding company of First Fed Bank ("First Fed" or the "Bank") on January 29, 2015, upon completion of the Bank's conversion from a mutual to stock form of organization (the "Conversion").

In connection with the Conversion, the Company issued an aggregate of 12,167,000 shares of common stock at an offering price of $10.00 per share for gross proceeds of $121.7 million. An additional 933,360 shares of Company common stock and $400,000 in cash were contributed to the First Federal Community Foundation ("Foundation"), a charitable foundation that was established in connection with the Conversion, resulting in the issuance of a total of 13,100,360 shares. The Company received $117.6 million in net proceeds from the stock offering of which $58.4 million was contributed to the Bank upon Conversion.

Pursuant to the Bank's Plan of Conversion (the "Plan") adopted by its Board of Directors, and as approved by its members, the Company established an employee stock ownership plan ("ESOP"). On December 18, 2015, the ESOP completed its open market purchases, with funds borrowed from the Company, of 8% of the common stock issued in the Conversion for a total of 1,048,029 shares.

In April 2021, First Northwest entered into an Amended and Restated Joint Venture Agreement (the "Joint Venture Agreement") with the Bank, POM Peace of Mind, Inc. ("POM"), and Quin Ventures, Inc. ("Quin Ventures"). First Northwest extended $8.0 million to Quin Ventures under a capital financing agreement and related promissory note and issued 29,719 shares of the Company's common stock to POM with a value of $500,000. Quin Ventures sold substantially all of its assets in December 2022 to Quil Ventures Inc., at which time POM returned the 29,719 shares previously issued and the Joint Venture Agreement was terminated. As part of the sale transaction, the Company received a 5% ownership stake in Quil Ventures Inc. valued at $225,000 and recorded a $1.5 million commitment receivable. In June 2023, First Northwest determined that Quin Ventures was no longer a going concern. The Company wrote off the remaining investment in Quin Ventures through retained earnings in accordance with applicable non-controlling interest accounting methods. The noncontrolling interest in Quin Ventures balance was moved to retained earnings, with no change to total shareholders' equity as a result of the transaction.

On October 31, 2021, the Bank converted from a State Savings Bank Charter to a State Commercial Bank Charter and was simultaneously renamed First Fed Bank from First Federal Savings and Loan Association of Port Angeles.

On August 5, 2022, First Northwest's election to be treated as a financial holding company became effective, allowing the Company to engage in activities that are financial in nature or incidental to financial activities.

First Northwest and the Bank are collectively referred to as the "Company." For periods prior to June 30, 2023, Company references also include Quin Ventures.

First Northwest's business activities generally are limited to passive investment activities and oversight of its investment in First Fed and former controlling interest in Quin Ventures. Accordingly, the information set forth in this report, including the consolidated unaudited financial statements and related data, relates primarily to the Bank for balance sheet related disclosures and the Bank and Quin Ventures for income statement related disclosures.

The Bank is a community-oriented financial institution providing commercial and consumer banking services to individuals and businesses in western Washington State with offices in Clallam, Jefferson, Kitsap, King, and Whatcom counties. These services include deposit and lending transactions that are supplemented with borrowing and investing activities.

Basis of presentation - The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial statements in accordance with GAAP have been included. Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for future periods.

In preparing the unaudited interim consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to a determination of the allowance for credit losses ("ACL"), fair value of financial instruments and derivatives, and deferred tax assets and liabilities.

Principles of consolidation - The accompanying consolidated financial statements include the accounts of First Northwest; its wholly owned subsidiary, First Fed, and its former controlling interest in Quin Ventures. All material intercompany accounts and transactions have been eliminated in consolidation. Through June 2023, First Northwest and POM shared equal ownership in Quin Ventures; however, it was previously determined that First Northwest had a controlling interest for financial reporting purposes under Accounting Standards Codification 810. The Quin Ventures net loss allocable to POM is shown on the financial statements where applicable through a noncontrolling interest adjustment.

Subsequent events - The Company has evaluated subsequent events for potential recognition and disclosure and has included additional information where appropriate.

Recently adopted accounting pronouncements

Credit Losses

On January 1, 2023, the Company adopted FASB ASU 2016- 13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with a current expected credit loss ("CECL") methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable and held-to-maturity securities. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, the CECL adoption made changes to the accounting for investment securities available for sale.

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and unfunded commitments. This method resulted in recording a cumulative-effect adjustment as of the beginning of 2023 with no change to prior periods. The Company elected not to measure an ACL on accrued interest receivable on loans receivable or accrued interest receivable on investment securities available for sale as Company policy is to reverse interest income for uncollectible accrued interest receivable balances in a timely manner.

Results for the reporting period beginning after January 1, 2023, are presented under ASU 2016-13, while prior period amounts were not restated and continue to be reported in accordance with previously applicable GAAP. The accounting policies for prior periods are included in the Company's Annual Report on Form 10-K for the year ended  December 31, 2022.

The accounting policies for all financial instruments impacted by the CECL adoption are as follows:

Investment Securities

A debt security is placed on nonaccrual status at the time any principal or payments become more than 90 days delinquent. Interest accrued, but not received for a security placed on nonaccrual, is reversed against interest income during the period that the debt security is placed on nonaccrual status.

Allowance for Credit Losses on Investment Securities

Management evaluates the need for an ACL on investment securities ("ACLI") on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For investment securities available for sale in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For investment securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and adverse conditions specifically related to the security, among other factors. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACLI is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any decline in fair value that has not been recorded through an ACLI is recognized in other comprehensive income (loss).

Changes in the ACLI are recorded as provision, or reversal of provision, for credit losses expense. Losses are charged against the allowance when management believes the uncollectibility of an investment security available for sale is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on investment securities available for sale is excluded from the estimate of credit losses as interest accrued, but not received, is reversed timely in accordance with the policy for investment securities above.

Loans Receivable

Loans receivable include loans originated and indirect loans purchased by the Bank as well as loans acquired in business combinations.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the outstanding principal balance, net of purchased premiums and discounts, unearned discounts, and net deferred loan origination fees and costs. Accrued interest receivable for loans receivable is reported in prepaid expenses and other assets on the Consolidated Balance Sheets.

Allowance for Credit Losses on Loans

The ACL on loans ("ACLL") is a valuation account that is deducted from the amortized cost of loans receivable to present the net amount expected to be collected. Loans are charged against the allowance when management believes the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance. The Bank records the changes in the ACLL through earnings, as a provision for credit losses on the Consolidated Statements of Income.

Accrued interest receivable on loans receivable is excluded from the estimate of credit losses. Instead, interest accrued, but not received, is reversed timely in accordance with the policy for loans receivable above.

The Company has identified segments of loans with similar risk characteristics for which it then applies one of two loss methodologies. Management has adopted a discounted cash flow ("DCF") methodology for most of its segments to calculate the ACLL. For certain segments with smaller portfolios or where data is prohibitive to running a DCF calculation, management has elected to use a Remaining Life methodology. The Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. The allowance for individually evaluated loans is calculated using the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell, or another method such as the cash flow method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt. When the cash flow method is used, cash flows are discounted back by the effective interest rate and compared to the total recorded investment. If the present value of cash flows is less than the total recorded investment, a reserve is calculated.

For each loan segment collectively measured, the baseline loss rates are calculated using the Bank's own data and peer institution data from FFIEC Call Report filings. The Bank evaluates the historical period on a quarterly basis. The baseline loss rates are applied to each loan's estimated cash flows over the life of the loan to determine the baseline loss estimate for each loan. Estimated cash flows consider the principal and interest in accordance with the contractual term of the loan and estimated prepayments. Contractual cash flows are based on the amortized cost, as adjusted for balances guaranteed by governmental entities, such as the Small Business Administration ("SBA") or the United States Department of Agriculture ("USDA"), or the unguaranteed amortized cost. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: 1) management has a reasonable expectation at the reporting date that a modification agreement will be executed with an individual borrower or 2) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. Prepayments are established for each segment based on historical averages for the segments, which management believes is an accurate representation of future prepayment activity. Management reviews the adequacy of the prepayment period assumption on a quarterly basis.

The CECL methodology includes consideration of the forecasted direction of the economic and business environment and its likely impact to the estimated allowance as compared to the historical losses over the reasonable and supportable time frame. Economic forecast models for the current period are uploaded to the model, which targets two forecasted macroeconomic factors, which are national gross domestic product ("GDP") and unemployment figures. Each of the forecasted DCF segments is impacted by these macroeconomic factors. Further, each of the macroeconomic factors is utilized differently by segment, including the application of lagged factors and various transformations such as percent change year over year.

The Bank uses the Federal Open Market Committee ("FOMC") forecast via an application programming interface with our CECL software. FOMC provides various forecast scenarios used to determine the loan portfolio’s expected credit loss. Based on known/knowable information at the measurement date, management has determined that the FOMC scenarios and the underlying assumptions most closely align with current and expected conditions. The Bank has elected to forecast the first four quarters of the credit loss estimate and revert on a straight-line basis as permitted in ASC 326-20-30-9. The Bank also considers other qualitative risk factors to adjust the estimated ACL calculated by the above-mentioned model. While there are many factors available to incorporate into the quantitative model, the Bank has selected to use the most critical factors. Additional metrics will be included only if internal or external factors outside those considered in its historical losses or macroeconomic forecast indicate otherwise. The Bank has established metrics to estimate the qualitative risk factor by segment based on the identified risk.

In general, management's estimate of the ACLL uses relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

The allowance for loan losses evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. While management utilizes its best judgment and information available to recognize losses on loans, future additions to the allowance may be necessary based on further declines in local and national economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s ACLL. Such agencies may require the Bank to make adjustments to the allowance based on their judgments about information available to them at the time of their examinations. The Company believes the ACLL is appropriate given the above considerations.

Allowance for Credit Losses on Unfunded Commitments

The Bank estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Bank is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The Bank has determined that no allowance is necessary for its home equity line of credit portfolio as it has the ability to unconditionally cancel the available lines of credit.

The allowance methodology is similar to the ACLL, but additionally includes an estimate of the future utilization of the commitment as determined by historical commitment utilization. The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class.

The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision (reversal of provision) for credit losses on the Consolidated Statements of Income.

Provision for Credit Losses

The provision for credit losses as presented in the Company's Consolidated Statements of Income includes the provision for credit losses on loans and the provision for credit losses on unfunded commitments.

Summary of CECL Impact:

Investment Securities - As of December 31, 2022, the Company had no historical charge-off or recovery history and did not have any investment securities available for sale outstanding at the adoption date for which an other-than-temporary impairment was previously recorded. At the adoption date of ASU 2016-13, the unrealized losses present in the portfolio of investment securities available for sale were primarily due to decreases in market interest rates on floating rate investment securities since the purchase of the securities and the fair value of these securities was expected to recover as the securities approach their maturity dates. The basis of management’s conclusion was that at January 1, 2023, 23.9% of the investment securities were issued by or guaranteed by the United States government or its agencies, 30.0% were issued and guaranteed by State and local governments and the remainder of the portfolio was invested in at least investment-grade securities. As a result of the analysis, no allowance for credit losses on investment securities available for sale was recorded upon adoption. See Note 2 Investment Securities for more information.

Loan Receivable - ASU 2016-13 was applied prospectively and replaced the allowance for loan losses with the ACLL on the Consolidated Balance Sheet and replaced the related provision for loan losses with the provision for credit losses on loans as presented on the Consolidated Statements of Income, net of provision for credit losses on unfunded commitments.

The Bank recorded a pretax increase to the ACLL of $2.2 million to increase the reserve to the estimated credit losses at January 1, 2023 based on its CECL methodology as part of the cumulative-effect adjustment to beginning retained earnings. Upon adoption, the adjusted beginning balance of the ACLL as a percentage of loans receivable was 1.18% as compared to 1.04% at December 31, 2022 under the prior incurred loss methodology. At June 30, 2023, the ACLL as a percentage of loans receivable was 1.06%.

See Note 4 - Allowance for Credit Loss on Loans for more information.

Unfunded Commitments - ASU 2016-13 was applied prospectively and replaced the reserve for unfunded commitments with the ACL on unfunded commitments ("ACLU") as included in accrued liabilities and other expenses on the Consolidated Balance Sheet and replaced the provision for unfunded commitments with the provision for credit losses on unfunded commitments as presented on the Consolidated Statements of Income, net of provision for credit losses on loans. Upon adoption, the Bank recorded a pretax increase in the beginning ACLU of $1.5 million.

Overall CECL Impact - The adoption of ASU 2016-13, included an increase to the ACLL of $2.2 million and an increase to the ACLU of $1.5 million, which resulted in a pretax cumulative-effect adjustment of $3.7 million. The impact of this adjustment to beginning retained earnings on January 1, 2023 was $3.0 million, net of tax.

Troubled Debt Restructurings

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the accounting guidance for troubled debt restructured loans (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancing and restructuring activity by creditors when a borrower is experiencing financial difficulty. Additionally, the ASU requires public business entities to disclose current-period gross write offs by year of origination for financing receivables and net investments in leases. This ASU is effective upon adoption of ASU 2016-13. On January 1, 2023, the Company adopted this ASU at the same time ASU 2016-13 was adopted. The Company recorded gross charge-offs of $1.9 million in the first half of 2023 and recoveries for the same period were $594,000. See table in Note 3 for additional information.

Derivative Instruments and Hedging Activities

On March 28, 2022, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2022- 01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. The purpose of this updated guidance is to further align risk management objectives with hedge accounting results on the application of the last-of-layer method, which was first introduced in ASU 2017- 12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2022- 01 is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption in the interim period, permitted. For entities who have already adopted ASU 2017- 12, immediate adoption is allowed. ASU 2022- 01 requires a modified retrospective transition method for basis adjustments in which the entity will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company adopted this ASU on January 1, 2023 on a prospective basis; therefore, there was no impact to the consolidated financial statements.

Accounting Policy for Derivative Instruments and Hedging Activities - FASB ASC 815, Derivatives and Hedging ("ASC 815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting.

In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Recently issued accounting pronouncements not yet adopted

Other Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, which reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. This ASU is effective for all entities as of March 12, 2020 through December 31, 2022. On December 31, 2022, FASB issued ASU 2022-06, which deferred the sunset date for Topic 848 to December 31, 2024. The Company is implementing a transition plan to identify and modify its loans and other financial instruments that are either directly or indirectly influenced by LIBOR. The Company is in the process of evaluating ASU No. 2020-04 and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments, with no expected material impact on the Company's financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring fair value, nor should the contractual restriction be recognized and measured separately. Further, this ASU requires disclosure of the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, the nature and remaining duration of the restriction(s), and the circumstances that could cause a lapse in the restriction(s). ASU 2022-03 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect that ASU 2022-03 will have on its consolidated financial statements and related disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. ASU 2023-02 allows an entity the option to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits if certain conditions are met. Prior to this ASU, the application of the proportional amortization method of accounting was limited to investments in low-income housing tax credit structures. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the statements of income, income tax expense. Under this ASU, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis. In addition, the amendments in this ASU require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability to be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this ASU, low-income housing tax credit investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this ASU specifies that impairment of low-income housing tax credit investments not accounted for using the equity method must apply the impairment guidance in Subtopic 323-10: Investments - Equity Method and Joint Ventures - Overall. This ASU also clarifies that for low-income housing tax credit investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321: Investments - Equity Securities. The amendments in this ASU also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. ASU 2023-02 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect that ASU 2023-02 will have on its consolidated financial statements and related disclosures.

Reclassifications - Certain amounts in the unaudited interim consolidated financial statements for prior periods have been reclassified to conform to the current unaudited financial statement presentation with no effect on net income or shareholders' equity.

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Note 2 - Securities

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 2 - Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at June 30, 2023 are summarized as follows:

			Gross		Gross			Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	119,514	$	—	$	(19,011	)	$	100,503
U.S. Treasury notes		2,475		—		(111	)		2,364
International agency issued bonds (Agency bonds)		1,960		—		(243	)		1,717
Corporate issued debt securities (Corporate debt)		60,595		—		(6,921	)		53,674
Mortgage-backed securities:
U.S. government agency issued mortgage-backed securities (MBS agency)		85,613		—		(14,048	)		71,565
Non-agency issued mortgage-backed securities (MBS non-agency)		99,781		—		(7,641	)		92,140
Total securities available for sale	$	369,938	$	—	$	(47,975	)	$	321,963

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at December 31, 2022, are summarized as follows:

			Gross		Gross			Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	119,990	$	—	$	(21,940	)	$	98,050
U.S. Treasury notes		2,469		—		(105	)		2,364
Agency bonds		1,955		—		(253	)		1,702
Corporate debt		60,700		—		(5,201	)		55,499
Mortgage-backed securities:
MBS agency		88,930		1		(13,283	)		75,648
MBS non-agency		101,139		—		(7,833	)		93,306
Total securities available for sale	$	375,183	$	1	$	(48,615	)	$	326,569

There were no securities classified as held-to-maturity at  June 30, 2023 and  December 31, 2022.

Accrued interest receivable on available-for-sale debt securities totaled $2.1 million and $2.0 million as of June 30, 2023 and  December 31, 2022, respectively. Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Balance Sheets and is excluded from the calculation of the allowance for credit losses on investment securities.

The following shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of June 30, 2023:

	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	(10	)	$	435	$	(19,001	)	$	99,767	$	(19,011	)	$	100,202
U.S. Treasury notes		—			—		(111	)		2,364		(111	)		2,364
Agency bonds		—			—		(243	)		1,717		(243	)		1,717
Corporate debt		(723	)		7,777		(6,198	)		45,897		(6,921	)		53,674
Mortgage-backed securities:
MBS agency		(1	)		1,793		(14,047	)		69,772		(14,048	)		71,565
MBS non-agency		—			—		(7,641	)		92,140		(7,641	)		92,140
Total available for sale	$	(734	)	$	10,005	$	(47,241	)	$	311,657	$	(47,975	)	$	321,662

The following shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of December 31, 2022:

	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	(15,749	)	$	79,129	$	(6,191	)	$	18,621	$	(21,940	)	$	97,750
U.S. Treasury notes		(105	)		2,364		—			—		(105	)		2,364
Agency bonds		—			—		(253	)		1,702		(253	)		1,702
Corporate debt		(2,570	)		30,555		(2,631	)		24,944		(5,201	)		55,499
Mortgage-backed securities:
MBS agency		(5,079	)		40,099		(8,204	)		33,064		(13,283	)		73,163
MBS non-agency		(3,956	)		51,994		(3,877	)		41,311		(7,833	)		93,305
Total available for sale	$	(27,459	)	$	204,141	$	(21,156	)	$	119,642	$	(48,615	)	$	323,783

There were 8 available-for-sale securities with unrealized losses of less than one year, and 174 available-for-sale securities with an unrealized loss of more than one year at June 30, 2023. There were 113 available-for-sale securities with unrealized losses of less than one year, and 69 available-for-sale securities with an unrealized loss of more than one year at December 31, 2022. Management believes that the unrealized losses on our investment securities relate principally to the general change in interest rates, market liquidity and demand, and market volatility that has occurred since the initial purchase, and such unrecognized losses or gains will continue to vary with general interest rate level and market fluctuations in the future. We do not believe the unrealized losses on our securities are related to a deterioration in credit quality. Certain investments in a loss position are guaranteed by government entities or government sponsored entities. The Company does not intend to sell the securities in an unrealized loss position and believes that it is unlikely that we will be required to sell these investments prior to a market price recovery or maturity. Based on the Company’s evaluation of these securities, no credit impairment was recorded at June 30, 2023, or December 31, 2022.

The amortized cost and estimated fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated. Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties; therefore, these securities are shown separately.

	June 30, 2023
	Available-for-Sale
	Amortized Cost		Estimated Fair Value
	(In thousands)
Mortgage-backed securities:
Due within one year	$	27,322	$	26,940
Due after one through five years		17,148		16,315
Due after five through ten years		11,033		10,124
Due after ten years		129,891		110,326
Total mortgage-backed securities		185,394		163,705
All other investment securities:
Due within one year		—		—
Due after one through five years		20,711		19,151
Due after five through ten years		66,069		57,302
Due after ten years		97,764		81,805
Total all other investment securities		184,544		158,258
Total investment securities	$	369,938	$	321,963

	December 31, 2022
	Available-for-Sale
	Amortized Cost		Estimated Fair Value
	(In thousands)
Mortgage-backed securities:
Due within one year	$	13,762	$	13,490
Due after one through five years		28,890		27,808
Due after five through ten years		13,436		12,165
Due after ten years		133,981		115,491
Total mortgage-backed securities		190,069		168,954
All other investment securities:
Due within one year		—		—
Due after one through five years		20,700		18,957
Due after five through ten years		64,211		57,523
Due after ten years		100,203		81,135
Total all other investment securities		185,114		157,615
Total investment securities	$	375,183	$	326,569

Sales of securities available-for-sale for the periods shown are summarized as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023		2022
	(In thousands)
Proceeds from sales	$	—	$	2,233		$	—	$	12,685
Gross realized gains		—		—			—		128
Gross realized losses		—		(8	)		—		(10	)

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Note 3 - Loans Receivable

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

Note 3 - Loans Receivable

The Company has defined its loan portfolio into three segments that reflect the structure of the lending function, the Company's strategic plan and the manner in which management monitors performance and credit quality. The three loan portfolio segments are: Real Estate Loans, Consumer Loans and Commercial Business Loans. These segments are further disaggregated into classes based on similar attributes and risk characteristics.

Loan amounts are net of unearned loan fees in excess of unamortized costs and premiums of $14.2 million as of  June 30, 2023 and $13.2 million as of  December 31, 2022. Net loans do not include accrued interest receivable. Accrued interest receivable on loans was $5.4 million as of  June 30, 2023 and $4.7 million as of  December 31, 2022, and was reported in accrued interest receivable on the consolidated balance sheets.

The amortized cost of loans receivable, net of ACLL, consisted of the following at the dates indicated:

	June 30, 2023		December 31, 2022
	(In thousands)
Real Estate:
One-to-four family	$	365,600	$	343,559
Multi-family		296,561		252,745
Commercial real estate		375,961		388,884
Construction and land		157,060		193,646
Total real estate loans		1,195,182		1,178,834
Consumer:
Home equity		58,895		52,877
Auto and other consumer		253,950		238,913
Total consumer loans		312,845		291,790
Commercial business loans		130,133		76,927
Total loans receivable		1,638,160		1,547,551
Less:
Allowance for credit losses on loans (1)		17,297		16,116
Total loans receivable, net	$	1,620,863	$	1,531,435

(1) Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

Nonaccrual Loans. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. For those loans placed on non-accrual status due to payment delinquency, return to accrual status will generally not occur until the borrower demonstrates repayment ability over a period of not less than six months.

The following table presents the amortized cost of nonaccrual loans by class of loan at the dates indicated:

	June 30, 2023						December 31, 2022
	Collateral Dependent Loans		Non-Collateral Dependent Loans		Total Nonaccrual Loans		Total Nonaccrual Loans (1)
	(In thousands)
One-to-four family	$	1,475	$	305	$	1,780	$	954
Commercial real estate		41		—		41		53
Construction and land		—		12		12		15
Home equity		31		214		245		196
Auto and other consumer		—		476		476		575
Total nonaccrual loans	$	1,547	$	1,007	$	2,554	$	1,793
(1) Presentation of December 31, 2022, balances is in accordance with pre-CECL disclosure requirements.

Interest income recognized on a cash basis on nonaccrual loans for the three and six months ended June 30, 2023, was $18,000 and $26,000, respectively.

Prior to the implementation of CECL, the Bank categorized loans as performing or nonperforming based on payment activity. Loans that were more than 90 days past due and nonaccrual loans were considered nonperforming.

The following table represents the credit risk profile based on payment activity by class of loans as of December 31, 2022, in accordance with pre-CECL disclosure requirements:

	Nonperforming		Performing		Total
	(In thousands)
Real Estate:
One-to-four family	$	954	$	342,605	$	343,559
Multi-family		—		252,745		252,745
Commercial real estate		53		388,831		388,884
Construction and land		15		193,631		193,646
Consumer:
Home equity		196		52,681		52,877
Auto and other consumer		575		238,338		238,913
Commercial business		—		76,927		76,927
Total loans	$	1,793	$	1,545,758	$	1,547,551

Past due loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. There were no loans past due 90 days or more and still accruing interest at  June 30, 2023 or  December 31, 2022.

The following table presents the amortized cost of past due loans by segment and class as of June 30, 2023:

	30-59 Days		60-89 Days		90 Days or More		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
	(In thousands)
Real Estate:
One-to-four family	$	—	$	—	$	921	$	921	$	364,679	$	365,600
Multi-family		—		—		—		—		296,561		296,561
Commercial real estate		—		—		—		—		375,961		375,961
Construction and land		—		—		18		18		157,042		157,060
Total real estate loans		—		—		939		939		1,194,243		1,195,182
Consumer:
Home equity		—		14		91		105		58,790		58,895
Auto and other consumer		1,359		299		479		2,137		251,813		253,950
Total consumer loans		1,359		313		570		2,242		310,603		312,845
Commercial business loans		106		—		—		106		130,027		130,133
Total loans	$	1,465	$	313	$	1,509	$	3,287	$	1,634,873	$	1,638,160

The following table presents the amortized cost of past due loans by segment and class as of December 31, 2022, in accordance with pre-CECL disclosure requirements:

	30-59 Days		60-89 Days		90 Days or More		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
	(In thousands)
Real Estate:
One-to-four family	$	1,449	$	155	$	652	$	2,256	$	341,303	$	343,559
Multi-family		—		—		—		—		252,745		252,745
Commercial real estate		—		—		—		—		388,884		388,884
Construction and land		—		18		—		18		193,628		193,646
Total real estate loans		1,449		173		652		2,274		1,176,560		1,178,834
Consumer:
Home equity		153		—		11		164		52,713		52,877
Auto and other consumer		1,390		698		557		2,645		236,268		238,913
Total consumer loans		1,543		698		568		2,809		288,981		291,790
Commercial business loans		—		—		—		—		76,927		76,927
Total loans	$	2,992	$	871	$	1,220	$	5,083	$	1,542,468	$	1,547,551

Credit quality indicator. Federal regulations provide for the classification of lower quality loans and other assets, such as debt and equity securities, as substandard, doubtful, or loss; risk ratings 6, 7, and 8 in our 8-point risk rating system, respectively. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.

When the Bank classifies problem assets as either substandard or doubtful, it may establish a specific allowance to address the risk specifically or allow the loss to be addressed in the general allowance. General allowances represent loss allowances that have been established to recognize the inherent risk associated with lending activities but that, unlike specific allowances, have not been specifically allocated to certain problem assets. When an insured institution classifies problem assets as a loss, it is required to charge off such assets in the period in which they are deemed uncollectible. Assets that do not currently expose the Bank to enough risk to warrant classification as substandard or doubtful but do possess identified weaknesses are designated as either watch or special mention assets; risk ratings 4 and 5 in our risk rating system, respectively. Loans not otherwise classified are considered pass graded loans and are rated 1-3 in our risk rating system.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of  June 30, 2023, as well as gross charge-off activity for the six months ended June 30, 2023. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

	Term Loans by Year of Origination (1)												Revolving		Total
	2023		2022		2021		2020		2019		Prior		Loans		Loans
	(In thousands)
One-to-four family
Pass	$	2,990	$	83,795	$	118,693	$	72,169	$	14,247	$	69,979	$	—	$	361,873
Watch		—		—		—		592		—		723		—		1,315
Special Mention		—		—		—		303		—		106		—		409
Substandard		—		—		—		329		487		1,187		—		2,003
Total one-to-four family		2,990		83,795		118,693		73,393		14,734		71,995		—		365,600
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Multi-family
Pass		22,960		103,162		81,072		59,041		8,637		5,422		—		280,294
Watch		—		—		15,268		—		—		999		—		16,267
Total multi-family		22,960		103,162		96,340		59,041		8,637		6,421		—		296,561
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass		21,721		89,951		105,753		83,355		13,604		24,688		—		339,072
Watch		3,908		—		12,434		6,901		3,607		1,026		—		27,876
Special Mention		—		—		6,591		—		—		—		—		6,591
Substandard		—		40		—		2,382		—		—		—		2,422
Total commercial real estate		25,629		89,991		124,778		92,638		17,211		25,714		—		375,961
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Construction and Land
Pass		24,924		62,714		49,563		772		570		2,740		—		141,283
Watch		889		—		—		—		—		17		—		906
Substandard		14,859		—		—		—		—		12		—		14,871
Total construction and land		40,672		62,714		49,563		772		570		2,769		—		157,060
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Home Equity
Pass		3,663		7,566		5,014		3,249		1,655		3,928		33,191		58,266
Watch		—		—		—		—		—		—		200		200
Special Mention		—		—		—		—		—		71		113		184
Substandard		—		—		32		61		—		—		152		245
Total home equity		3,663		7,566		5,046		3,310		1,655		3,999		33,656		58,895
Gross charge-offs during the period		—		—		—		—		—		11		—		11
Other Consumer
Pass		29,846		80,899		70,123		32,924		16,962		20,269		443		251,466
Watch		16		727		630		194		33		85		—		1,685
Special Mention		—		236		20		61		4		—		—		321
Substandard		13		308		—		—		150		7		—		478
Total other consumer		29,875		82,170		70,773		33,179		17,149		20,361		443		253,950
Gross charge-offs during the period		—		1,760		4		1		11		91		59		1,926
Commercial business
Pass		18,543		24,350		11,783		3,024		523		28,300		33,363		119,886
Watch		—		10		485		1,008		—		—		—		1,503
Special Mention		—		—		—		315		—		1,989		3,741		6,045
Substandard		—		—		—		29		—		185		2,485		2,699
Total commercial business		18,543		24,360		12,268		4,376		523		30,474		39,589		130,133
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Total loans
Pass		124,647		452,437		442,001		254,534		56,198		155,326		66,997		1,552,140
Watch		4,813		737		28,817		8,695		3,640		2,850		200		49,752
Special Mention		—		236		6,611		679		4		2,166		3,854		13,550
Substandard		14,872		348		32		2,801		637		1,391		2,637		22,718
Total loans	$	144,332	$	453,758	$	477,461	$	266,709	$	60,479	$	161,733	$	73,688	$	1,638,160
Total gross charge-offs during the period	$	—	$	1,760	$	4	$	1	$	11	$	102	$	59	$	1,937

(1) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of December 31, 2022, in accordance with pre-CECL disclosure requirements:

	Pass		Watch		Special Mention		Substandard		Total
	(In thousands)
Real Estate:
One-to-four family	$	339,812	$	2,234	$	27	$	1,486	$	343,559
Multi-family		237,077		15,668		—		—		252,745
Commercial real estate		350,001		25,586		12,161		1,136		388,884
Construction and land		179,116		529		—		14,001		193,646
Total real estate loans		1,106,006		44,017		12,188		16,623		1,178,834
Consumer:
Home equity		52,295		372		14		196		52,877
Auto and other consumer		238,522		222		75		94		238,913
Total consumer loans		290,817		594		89		290		291,790
Commercial business loans		66,276		2,234		8,417		—		76,927
Total loans	$	1,463,099	$	46,845	$	20,694	$	16,913	$	1,547,551

Individually Evaluated Loans. The Company evaluates loans collectively for purposes of determining the ACLL in accordance with ASC 326. Collective evaluation is based on aggregating loans deemed to possess similar risk characteristics. In certain instances, the Company may identify loans that it believes no longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral. Loans that are deemed by management to no longer possess risk characteristics similar to other loans in the portfolio are evaluated individually for purposes of determining an appropriate lifetime ACLL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent, which requires evaluation based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company may increase or decrease the ACLL for collateral dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. In cases where the loan is well-secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACLL is recorded. Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of June 30, 2023, $1.5 million of loans were individually evaluated with no ACLL attributed to such loans. At June 30, 2023, all individually evaluated loans were evaluated based on the underlying value of the collateral and none were evaluated using a discounted cash flow approach. All individually evaluated loans were on nonaccrual status at June 30, 2023.

Collateral Dependent Loans. Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral.

The following table summarizes individually evaluated collateral dependent loans by segment and collateral type as of June 30, 2023:

	Collateral Type
	Single Family Residence		Warehouse		Total
	(In thousands)
One-to-four family	$	1,475	$	—	$	1,475
Commercial real estate		—		41		41
Home equity		31		—		31
Total collateral dependent loans	$	1,506	$	41	$	1,547

Troubled debt restructuring. Prior to the implementation of CECL on January 1, 2023, a loan was identified as a TDR when a loan to a borrower who was experiencing financial difficulty was modified from its original terms and conditions in such a way that the Bank granted the borrower a concession of some kind. First Fed had granted a variety of concessions to borrowers in the form of loan modifications. The modifications were generally related to the loan's interest rate, term and payment amount or a combination thereof.

The following table is a summary of information pertaining to TDR loans included in impaired loans at the date indicated, in accordance with pre-CECL disclosure requirements:

	December 31, 2022
	(In thousands)
Total TDR loans	$	1,753
Allowance for credit losses on loans related to TDR loans		21
Total nonaccrual TDR loans		29

There were no newly restructured, renewals, or modifications of existing TDR loans that occurred during the three and six months ended June 30, 2022.

There were no TDR loans that incurred a payment default within 12 months of the restructure date during the three and six months ended June 30, 2022.

The following table presents TDR loans by class by accrual and nonaccrual status at the date indicated, in accordance with pre-CECL disclosure requirements:

	December 31, 2022
	Accrual		Nonaccrual		Total
	(In thousands)
One-to-four family	$	1,697	$	29	$	1,726
Home equity		27		—		27
Total TDR loans	$	1,724	$	29	$	1,753

Modified Loans to Troubled Borrowers. On January 1, 2023, the Company adopted ASU 2022-02, which introduces new reporting requirements for modifications of loans to borrowers experiencing financial difficulty. The Company refers to these loans as modified loans to troubled borrowers ("MLTB"). A MLTB arises from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or any combination of the foregoing. The ACLL for a MLTB is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACLL for a MLTB is determined through individual evaluation.

During the three and six months ended June 30, 2023, there were no MLTB.

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Note 4 - Allowance for Credit Losses on Loans

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Credit Loss, Financial Instrument [Text Block]

Note 4 - Allowance for Credit Losses on Loans

The Company maintains an ACLL and an ACLU in accordance with ASC 326: Financial Instruments - Credit Losses. ASC 326 requires the Company to recognize estimates for lifetime credit losses on loans and unfunded loan commitments at the time of origination or acquisition. The recognition of credit losses at origination or acquisition represents the Company’s best estimate of lifetime expected credit losses, given the facts and circumstances associated with a particular loan or group of loans with similar risk characteristics. Determining the ACLL involves the use of significant management judgement and estimates, which are subject to change based on management’s ongoing assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the model. The reserve is an estimate based upon factors and trends at the time the financial statements are prepared. The Company adopted ASU 2016-13 effective January 1, 2023, which increased the beginning ACLL as discussed in Note 1. The incurred loss methodology presentation is used for periods prior to the adoption of ASU 2016-13.

The Company has identified segments of loans with similar risk characteristics for which it then applies one of two loss methodologies. The Company uses a DCF methodology for most of its segments to calculate the ACLL. For certain segments with smaller portfolios or where data is prohibitive to running a DCF calculation, management has elected to use a Remaining Life methodology. The Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. The allowance for individually evaluated loans is calculated using the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell, or another method such as the cash flow method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt. When the cash flow method is used, cash flows are discounted back by the effective interest rate and compared to the total recorded investment. If the present value of cash flows is less than the total recorded investment, a reserve is calculated.

The Company estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The Company has determined that no allowance is necessary for its home equity line of credit portfolio as it has the ability to unconditionally cancel the available lines of credit. The allowance methodology is similar to the ACLL, but additionally includes an estimate of the future utilization of the commitment as determined by historical commitment utilization. The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class. The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision (reversal of provision) for credit losses on the Consolidated Statements of Income.

The following tables detail activity in the allowance for credit losses on loans by class for the periods shown:

	At or For the Three Months Ended June 30, 2023
	Adjusted Beginning Balance		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance
	(In thousands)
One-to-four family	$	2,903	$	—		$	4	$	105		$	3,012
Multi-family		1,045		—			—		(4	)		1,041
Commercial real estate		2,979		—			—		(55	)		2,924
Construction and land		2,782		—			—		(247	)		2,535
Home equity		1,084		—			5		36			1,125
Auto and other consumer		4,689		(972	)		564		514			4,795
Commercial business		1,914		—			—		(49	)		1,865
Total	$	17,396	$	(972	)	$	573	$	300		$	17,297

	At or For the Six Months Ended June 30, 2023
	Beginning Balance		Impact of Day 1 CECL Adoption			Adjusted Beginning Balance		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance
	(In thousands)
One-to-four family	$	3,343	$	(429	)	$	2,914	$	—		$	4	$	94		$	3,012
Multi-family		2,468		(1,449	)		1,019		—			—		22			1,041
Commercial real estate		4,217		(604	)		3,613		—			—		(689	)		2,924
Construction and land		2,344		1,555			3,899		—			—		(1,364	)		2,535
Home equity		549		346			895		(11	)		5		236			1,125
Auto and other consumer		2,024		2,381			4,405		(1,926	)		585		1,731			4,795
Commercial business		786		794			1,580		—			—		285			1,865
Unallocated		385		(385	)		—		—			—		—			—
Total	$	16,116	$	2,209		$	18,325	$	(1,937	)	$	594	$	315		$	17,297

The increase in the ACLL during the three months ended June 30, 2023, of $300,000 is reflective of $399,000 in net charge-offs. Charge-offs during the second quarter of 2023 were mainly concentrated in unsecured consumer loans purchased through the Splash program.

The $315,000 provision for ACLL for the six months ended June 30, 2023, is reflective of $1.3 million of year-to-date net charge-offs, partially offset by the provision for credit losses estimate. The recovery of provision for credit losses during the six months ended June 30, 2023, can be attributed to an improvement in the U.S. gross domestic product assumption since the implementation of CECL at the beginning of 2023.

The following table details activity in the ALLL by class for the period shown under the incurred loss methodology:

	At or For the Three Months Ended June 30, 2022
	One-to-four family			Multi-family		Commercial real estate		Construction and land		Home equity		Auto and other consumer			Commercial business		Unallocated			Total
	(In thousands)
ALLL:
Beginning balance	$	3,039		$	2,092	$	4,038	$	2,481	$	405	$	2,229		$	526	$	317		$	15,127
(Recapture of) provision for loan losses		(13	)		76		116		69		81		160			12		(1	)		500
Charge-offs		—			—		—		—		—		(73	)		—		—			(73	)
Recoveries		—			—		—		—		—		51			142		—			193
Ending balance	$	3,026		$	2,168	$	4,154	$	2,550	$	486	$	2,367		$	680	$	316		$	15,747

	At or For the Six Months Ended June 30, 2022
	One-to-four family			Multi-family		Commercial real estate		Construction and land			Home equity		Auto and other consumer			Commercial business		Unallocated			Total
	(In thousands)
ALLL:
Beginning balance	$	3,184		$	1,816	$	3,996	$	2,672		$	407	$	2,221		$	470	$	358		$	15,124
(Recapture of) provision for loan losses		(190	)		352		158		(124	)		62		216			68		(42	)		500
Charge-offs		—			—		—		—			—		(210	)		—		—			(210	)
Recoveries		32			—		—		2			17		140			142		—			333
Ending balance	$	3,026		$	2,168	$	4,154	$	2,550		$	486	$	2,367		$	680	$	316		$	15,747

The following table details the ALLL and loan portfolio by class and impairment method for the period shown under the incurred loss methodology:

	At December 31, 2022
	One-to-four family		Multi-family		Commercial real estate		Construction and land		Home equity		Auto and other consumer		Commercial business		Unallocated		Total
	(In thousands)
Total ALLL	$	3,343	$	2,468	$	4,217	$	2,344	$	549	$	2,024	$	786	$	385	$	16,116
General reserve		3,321		2,468		4,217		2,343		545		2,019		786		385		16,084
Specific reserve		22		—		—		1		4		5		—		—		32
Gross loans	$	343,825	$	253,551	$	390,246	$	194,646	$	52,322	$	222,794	$	76,996	$	—	$	1,534,380
Loans collectively evaluated (1)		341,171		253,551		390,196		194,630		52,100		222,702		76,996		—		1,531,346
Loans individually evaluated (2)		2,654		—		50		16		222		92		—		—		3,034

⁽¹⁾ Loans collectively evaluated for general reserves.

⁽²⁾ Loans individually evaluated for specific reserves.

Impaired loans incurred loss model. Prior to the implementation of CECL on January 1, 2023, a loan was considered impaired when the Bank has determined that it may be unable to collect payments of principal or interest when due under the contractual terms of the loan. Impairment was measured on a loan-by-loan basis for all loans in the portfolio except smaller balance homogeneous loans and certain qualifying TDR loans.

The following table provides additional information on loans individually evaluated for impairment by portfolio class at the date indicated under the incurred loss methodology. Recorded investment includes the unpaid principal balance or carrying amount of loans less charge-offs.

	December 31, 2022
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With no allowance recorded:
One-to-four family	$	666	$	705	$	—
Commercial real estate		50		149		—
Construction and land		—		14		—
Auto and other consumer		—		2		—
Total		716		870		—
With an allowance recorded:
One-to-four family		1,988		2,129		22
Construction and land		16		19		1
Home equity		222		224		4
Auto and other consumer		92		95		5
Total		2,318		2,467		32
Total impaired loans:
One-to-four family		2,654		2,834		22
Commercial real estate		50		149		—
Construction and land		16		33		1
Home equity		222		224		4
Auto and other consumer		92		97		5
Total	$	3,034	$	3,337	$	32

The following table presents the average recorded investment in loans individually evaluated for impairment and the related interest income recognized for the period shown under the incurred loss methodology:

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With no allowance recorded:
One-to-four family	$	356	$	6	$	283	$	8
Commercial real estate		63		—		65		—
Construction and land		—		1		—		1
Home equity		—		—		5		—
Auto and other consumer		247		5		249		9
Total		666		12		602		18
With an allowance recorded:
One-to-four family		2,128		39		2,079		72
Commercial real estate		21		—		11		—
Construction and land		22		1		22		1
Home equity		284		4		293		7
Auto and other consumer		61		1		139		2
Total		2,516		45		2,544		82
Total impaired loans:
One-to-four family		2,484		45		2,362		80
Commercial real estate		84		—		76		—
Construction and land		22		2		22		2
Home equity		284		4		298		7
Auto and other consumer		308		6		388		11
Total	$	3,182	$	57	$	3,146	$	100

Interest income recognized on a cash basis on impaired loans for the three and six months ended June 30, 2022, was $41,000 and $100,000, respectively, under the incurred loss methodology.

Allowance for Credit Losses on Unfunded Loan Commitments. The Company maintains an ACL for off-balance sheet commitments related to unfunded loans and lines of credit, which is included in other liabilities on the consolidated balance sheets. The allowance for off-balance sheet commitments was $1.3 million at June 30, 2023, a decrease compared to $1.9 million at the adoption of CECL on January 1, 2023. Included in the year-to-date provision for credit loss expense was a provision recapture for off-balance sheet commitments of $515,000 for both the three and six months ended June 30, 2023, attributable to lower unfunded commitments, primarily due to construction loan disbursements.

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Note 5 - Deposits

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Deposit Liabilities Disclosures [Text Block]

Note 5 - Deposits

Deposits and weighted-average interest rates at the dates indicated are as follows:

	June 30, 2023					December 31, 2022
	Amount		Weighted-Average Interest Rate			Amount		Weighted-Average Interest Rate
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	280,475		—	%	$	315,083		—	%
Interest-bearing demand deposits		179,029		0.50	%		193,558		0.01	%
Money market accounts		374,269		1.10	%		473,009		0.58	%
Savings accounts		260,279		1.41	%		200,920		0.26	%
Certificates of deposit		559,070		3.55	%		381,685		2.19	%
Total deposits	$	1,653,122		1.73	%	$	1,564,255		0.74	%

Brokered certificates of deposit of $179.6 million and $133.9 million are included in the June 30, 2023 and December 31, 2022 certificates of deposit totals above, respectively. The aggregate amount of time deposits in excess of the Federal Deposit Insurance Corporation ("FDIC") insured limit, currently $250,000, at June 30, 2023 and December 31, 2022, were $157.1 million and $96.6 million, respectively.

Maturities of certificates at the dates indicated are as follows:

	June 30, 2023		December 31, 2022
	(In thousands)
Within one year or less	$	422,485	$	262,189
After one year through two years		104,285		69,967
After two years through three years		16,339		37,032
After three years through four years		11,195		7,409
After four years through five years		4,766		5,088
Total certificates of deposit	$	559,070	$	381,685

At  June 30, 2023 and December 31, 2022, deposits included $112.1 million and $93.3 million, respectively, in public fund deposits. The Bank had an outstanding letter of credit from the Federal Home Loan Bank of Des Moines ("FHLB") with a notional amount of $60.0 million at  June 30, 2023, to secure public deposits and pledged investment securities with a carrying value of $57.1 million were pledged as collateral for these deposits at  December 31, 2022. This exceeds the minimum collateral requirements established by the Washington Public Deposit Protection Commission. Also included in deposits at  June 30, 2023 and December 31, 2022, were funds held by federally recognized tribes totaling $18.9 million and $10.3 million, respectively. Investment securities with a carrying value of $21.9 million and $23.6 million were pledged as collateral for these deposits at  June 30, 2023 and December 31, 2022, respectively. This exceeds the minimum collateral requirements established by the Bureau of Indian Affairs. 

Interest on deposits by type for the periods shown was as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	(In thousands)
Demand deposits	$	201	$	25	$	395	$	42
Money market accounts		944		323		1,720		621
Savings accounts		762		26		1,138		52
Certificates of deposit		4,302		422		7,309		798
Total interest expense on deposits	$	6,209	$	796	$	10,562	$	1,513

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Note 6 - Borrowings

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

Note 6 - Borrowings

First Fed is a member of the FHLB. As a member, First Fed has a committed line of credit of up to 45% of total assets, subject to the amount of FHLB stock ownership and certain collateral requirements.

First Fed maintains borrowing arrangements with the FHLB to borrow funds primarily under long-term, fixed-rate advance agreements. First Fed also has overnight borrowings through FHLB which renew daily until paid. First Fed periodically uses fixed-rate advances maturing in less than one year as an alternative source of funds. All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $917.8 million and $753.7 million at  June 30, 2023 and December 31, 2022, respectively.

First Fed also has an established borrowing arrangement with the Federal Reserve Bank of San Francisco ("FRB") to utilize the discount window for short-term borrowing. Available borrowing capacity was $8.7 million and $8.6 million at  June 30, 2023 and December 31, 2022, respectively. No funds have been borrowed to date. Investment securities with a carrying value of $9.2 million and $9.0 million were pledged to the FRB at  June 30, 2023 and December 31, 2022, respectively.

On March 25, 2021, the Company completed a private placement of $40.0 million of 3.75% fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors. The net proceeds to the Company from the sale of the Notes were approximately $39.3 million after deducting placement agent fees and other offering expenses. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company used the net proceeds of the offering for general corporate purposes.

On May 20, 2022, First Northwest consummated a borrowing arrangement with NexBank for a $20.0 million revolving line of credit. Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The line of credit matures on May 18, 2024, with the option for one 364-day extension.

In June 2023, First Fed established a Bank Term Funding ("BTFP") borrowing arrangement with the FRB as an additional source of liquidity. Available borrowing capacity was $18.7 million at  June 30, 2023. No funds have been borrowed to date. Investment securities with a carrying value of $17.0 million were pledged to secure the BTFP at  June 30, 2023.

The following table sets forth information regarding our borrowings at the end of and during the six months ended June 30, 2023. The table includes both long- and short-term borrowings.

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FHLB Short-Term Fixed-Rate Advances			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	85,000		$	163,000		$	5,000		$	11,000		$	39,397
Maximum outstanding at any month-end		85,000			189,000			95,000			11,000			39,397
Average monthly outstanding during the period		82,500			133,500			45,833			10,718			39,374
Weighted-average daily interest rates
Annual		1.90	%		4.97	%		5.07	%		8.94	%		4.04	%
Period End		2.08	%		5.35	%		5.27	%		8.75	%		4.04	%

The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at June 30, 2023 are as follows:

	Amount		Weighted- Average Interest Rate
	(Dollars in thousands)
Within one year or less	$	20,000		2.30	%
After one year through two years		30,000		2.48
After two years through three years		15,000		1.49
After three years through four years		10,000		1.63
After four years through five years		10,000		1.76
Total FHLB long-term advances	$	85,000		2.08	%

The following table sets forth information regarding our borrowings at the end of and during the year ended December 31, 2022. The table includes both long- and short-term borrowings.

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FHLB Short-Term Fixed-Rate Advances			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	80,000		$	144,000		$	10,000		$	12,000		$	39,358
Maximum outstanding at any month-end		80,000			206,000			42,500			12,000			39,358
Average monthly outstanding during the period		80,000			90,983			15,208			5,770			39,312
Weighted-average daily interest rates
Annual		1.52	%		2.83	%		1.82	%		6.76	%		4.01	%
Period End		1.52	%		4.30	%		2.12	%		8.00	%		4.01	%

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Note 7 - Income Tax

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 7 - Income Tax

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax assets and liabilities.

The effective tax rates were 20.2% and 20.2% for the six months ended June 30, 2023 and 2022, respectively. The effective tax rates differ from the statutory maximum federal tax rate for 2023 and 2022 of 21%, largely due to the nontaxable earnings on bank-owned life insurance and tax-exempt interest income earned on certain investment securities and loans. In the second quarter of 2022, the Company began accruing a provision for income tax for certain states in which we have employees and collateral for loans, thereby creating a nexus in those states for income tax purposes.

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Note 8 - Earnings Per Common Share

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Earnings Per Share [Text Block]

Note 8 - Earnings per Common Share

The two-class method is used for computing basic and diluted earnings per share. Under the two-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participating rights in undistributed earnings. The Company has issued restricted shares under share-based compensation plans which qualify as participating securities.

The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the three and six months ended June 30, 2023 and 2022.

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
	(In thousands, except share data)
Net income:
Net income available to common shareholders	$	1,776		$	2,488		$	5,304		$	5,294
Earnings allocated to participating securities		(9	)		(25	)		(28	)		(55	)
Earnings allocated to common shareholders	$	1,767		$	2,463		$	5,276		$	5,239
Basic:
Weighted average common shares outstanding		9,667,380			9,849,265			9,684,673			9,846,086
Weighted average unvested restricted stock awards		(139,760	)		(92,626	)		(152,474	)		(95,390	)
Weighted average unallocated ESOP shares		(613,265	)		(661,745	)		(619,841	)		(668,323	)
Total basic weighted average common shares outstanding		8,914,355			9,094,894			8,912,358			9,082,373
Diluted:
Basic weighted average common shares outstanding		8,914,355			9,094,894			8,912,358			9,082,373
Dilutive restricted stock awards		17,031			71,237			19,759			84,942
Total diluted weighted average common shares outstanding		8,931,386			9,166,131			8,932,117			9,167,315
Basic earnings per common share	$	0.20		$	0.27		$	0.59		$	0.58
Diluted earnings per common share	$	0.20		$	0.27		$	0.59		$	0.58

Potentially dilutive shares are excluded from the computation of EPS if their effect is anti-dilutive. At  June 30, 2023 and 2022, antidilutive shares as calculated under the treasury stock method totaled 14,987 and 1,186, respectively.

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Note 9 - Employee Benefits

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

Note 9 - Employee Benefits

Employee Stock Ownership Plan

In connection with the Conversion, the Company established an ESOP for eligible employees of the Company and the Bank. Employees of the Company and the Bank who have been credited with at least 1,000 hours of service during a 12-month period are eligible to participate in the ESOP.

Pursuant to the Plan, the ESOP purchased shares in the open market with funds borrowed from First Northwest. The Bank will make contributions to the ESOP in amounts necessary to amortize the ESOP loan payable to First Northwest over a period of 20 years, bearing estimated interest at 2.46%. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank's discretionary contributions to the ESOP and earnings on the ESOP assets. A $835,000 principal and interest payment was made by the ESOP during the six months ended June 30, 2023.

As shares are committed to be released from collateral, the Company reports compensation expense equal to the average daily market prices of the shares and the shares become outstanding for EPS computations. The compensation expense is accrued monthly throughout the year. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a reduction of debt and accrued interest.

Compensation expense related to the ESOP for the three months ended June 30, 2023 and 2022, was $153,000 and $245,000, respectively. Compensation expense related to the ESOP for the six months ended June 30, 2023 and 2022, was $340,000 and $536,000, respectively.

Shares issued to the ESOP as of the dates indicated are as follows:

	June 30, 2023		December 31, 2022
	(Dollars in thousands)
Allocated shares		439,174		386,285
Committed to be released shares		—		26,442
Unallocated shares		608,855		635,302
Total ESOP shares issued		1,048,029		1,048,029
Fair value of unallocated shares	$	6,929	$	9,758

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Note 10 - Stock-based Compensation

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 10 - Stock-based Compensation

In May 2020, the Company's shareholders approved the First Northwest Bancorp 2020 Equity Incentive Plan ("2020 EIP"), which provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock shares or restricted stock units, and performance share awards to eligible participants through May 2030. The cost of awards under the 2020 EIP generally is based on the fair value of the awards on their grant date. The maximum number of shares that may be utilized for awards under the 2020 EIP is 520,000. As of  June 30, 2023, there were 290,029 total shares available for grant under the 2020 EIP, all of which are available to be granted as restricted shares.

As a result of the approval of the 2020 EIP, the First Northwest Bancorp 2015 Equity Incentive Plan (the "2015 EIP") was frozen and no additional awards will be made. As of  June 30, 2023, there were no shares available for grant under the 2015 EIP. At this date, there are 42,400 shares granted under the 2015 EIP that are expected to vest subject to the 2015 EIP plan provisions.

There were 29,349 and 53,343 shares of restricted stock awarded, respectively, during the six months ended June 30, 2023 and 2022. Awarded shares of restricted stock vest ratably over periods ranging from one to five years from the date of grant provided the eligible participant remains in service to the Company. The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the grant date amortized over the vesting period.

For the three months ended June 30, 2023 and 2022, total compensation expense for the equity incentive plans was $358,000 and $479,000, respectively. Included in the compensation expense for the three months ended June 30, 2023 and 2022, was directors' equity compensation of $73,000 and $84,000, respectively.

For the six months ended June 30, 2023 and 2022, total compensation expense for the equity incentive plans was $749,000 and $890,000, respectively. Included in the compensation expense for the six months ended June 30, 2023 and 2022, was directors' equity compensation of $131,000 and $139,000, respectively.

The following tables provide a summary of changes in non-vested restricted stock awards for the period shown:

	For the Three Months Ended
	June 30, 2023
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at April 1, 2023		149,054		$	16.56
Granted		2,300			10.68
Vested		(5,753	)		14.81
Canceled (1)		(1,472	)		14.81
Forfeited		(11,211	)		17.14
Non-vested at June 30, 2023		132,918		$	16.50
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue.

	For the Six Months Ended
	June 30, 2023
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2023		166,839		$	17.78
Granted		29,349			14.09
Vested		(38,453	)		19.12
Canceled (1)		(11,806	)		19.12
Forfeited		(13,011	)		17.29
Non-vested at June 30, 2023		132,918		$	16.50
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue.

As of June 30, 2023, there was $1.5 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards. The cost is expected to be recognized over the remaining weighted-average vesting period of approximately 1.43 years.

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Note 11 - Fair Value Accounting and Measurement

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Fair Value Disclosures [Text Block]

Note 11 - Fair Value Accounting and Measurement

Fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants in the Company’s principal market. The Company has established and documented its process for determining the fair values of its assets and liabilities, where applicable. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, management determines the fair value of the Company’s assets and liabilities using valuation models or third-party pricing services, both of which rely on market-based parameters when available, such as interest rate yield curves, option volatilities and credit spreads, or unobservable inputs. Unobservable inputs may be based on management’s judgment, assumptions, and estimates related to credit quality, liquidity, interest rates, and other relevant inputs.

Any changes to valuation methodologies are reviewed by management to ensure they are relevant and justified. Valuation methodologies are refined as more market-based data becomes available.

A three-level valuation hierarchy is used in determining fair value that is based on the transparency of the inputs used in the valuation process. The inputs used in determining fair value in each of the three levels of the hierarchy are as follows:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Either: (i) quoted prices for similar assets or liabilities; (ii) observable inputs, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data.

Level 3 - Unobservable inputs.

The hierarchy gives the highest ranking to Level 1 inputs and the lowest ranking to Level 3 inputs. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the overall fair value measurement.

The Company used the following methods to measure fair value on a recurring and nonrecurring basis.

Securities available for sale: Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 instruments include highly liquid government bonds, securities issued by the U.S. Treasury, and exchange-traded equity securities. If quoted prices are not available, management determines fair value using pricing models, quoted prices of similar securities, which are considered Level 2, or discounted cash flows. In certain cases, where there is limited activity in the market for an instrument, assumptions must be made to determine their fair value. Such instruments are classified as Level 3.

Partnership investments: Management determines fair value using quoted prices of similar investments or discounted cash flows, which are considered Level 2, when available. In certain cases, where there is limited activity in the market for an instrument, assumptions must be made to determine their fair value. Such instruments are classified as Level 3.

Sold loan servicing rights, at fair value: The fair value of sold loan servicing rights is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds, discount rates, and delinquency rate assumptions as inputs. Servicing rights are classified as Level 3 due to reliance on assumptions used in the valuation.

Loans receivable, net: The fair value of loans is estimated by discounting the future cash flows using the current rate at which similar loans and leases would be made to borrowers with similar credit and for the same remaining maturities. Additionally, to be consistent with the requirements under FASB ASC Topic 820 for Fair Value Measurements and Disclosures, the loans were valued at a price that represents the Company’s exit price or the price at which these instruments would be sold or transferred.

Interest rate swap derivative: The fair values of interest rate swap agreements are based on valuation models using observable market data as of the measurement date (Level 2). The Company’s derivatives are traded in an over-the-counter market where quoted market prices are not always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including market transactions and third-party pricing services. The fair values of all interest rate swaps are determined from third-party pricing services without adjustment.

Assets and liabilities measured at fair value on a recurring basis - Assets and liabilities are considered to be valued on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly, or quarterly). The following tables show the Company’s assets and liabilities measured at fair value on a recurring basis at the dates indicated:

	June 30, 2023
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial Assets		(In thousands)
Securities available-for-sale
Municipal bonds	$	5,014	$	95,489	$	—	$	100,503
U.S. Treasury notes		2,364		—		—		2,364
Agency bonds		—		1,717		—		1,717
Corporate debt		5,414		48,260		—		53,674
MBS agency		—		71,565		—		71,565
MBS non-agency		—		62,762		29,378		92,140
Sold loan servicing rights		—		—		3,825		3,825
Partnership investments		—		—		12,733		12,733
Total assets measured at fair value	$	12,792	$	279,793	$	45,936	$	338,521
Financial Liabilities
Interest rate swap derivative	$	—	$	392	$	—	$	392

	December 31, 2022
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial Assets		(In thousands)
Securities available-for-sale
Municipal bonds	$	4,913	$	93,137	$	—	$	98,050
U.S. Treasury notes		2,364		—		—		2,364
Agency bonds		—		1,702		—		1,702
Corporate debt		5,326		50,173		—		55,499
MBS agency		—		75,648		—		75,648
MBS non-agency		—		63,707		29,599		93,306
Sold loan servicing rights		—		—		3,887		3,887
Partnership investments		—		—		12,563		12,563
Total assets measured at fair value	$	12,603	$	284,367	$	46,049	$	343,019

The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at the date indicated:

June 30, 2023	Fair Value (In thousands)	Valuation Technique	Unobservable Input (1)	Range (Weighted Average)
Sold loan servicing rights	$3,825	Discounted cash flow	Constant prepayment rate	4.84% - 40.04% (8.04%)
			Discount rate		11.63% - 14.35% (12.52%)
MBS non-agency	$29,378	Consensus pricing	Offered quotes	97.5 - 99.5
			Comparability adjustments (%)		-1.04% - 0.95%
(1) Unobservable inputs were weighted by the relative fair value of the instruments.

The following tables summarize the changes in Level 3 assets measured at fair value on a recurring basis at the dates indicated:

	As of or For the Three Months Ended June 30, 2023
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	4,224	$	7	$	(406	)	$	3,825
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2023
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	3,887	$	75	$	(137	)	$	3,825
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Three Months Ended June 30, 2022
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	4,046	$	42	$	(223	)	$	3,865
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2022
	Election of Fair Value Option for Servicing Rights at January 1, 2022		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	3,820	$	98	$	(53	)	$	3,865
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2023
	Balance at beginning of period		Transfers Into Level 3		Purchases		Unrealized (Losses) Gains			Balance at end of period
	(In thousands)
Securities available for sale:
MBS non-agency	$	29,599	$	—	$	—	$	(221	)	$	29,378
Partnership investments		12,563		—		—		170			12,733

	As of or For the Year Ended December 31, 2022
	Balance at beginning of period		Transfers Into Level 3 (1)		Purchases		Unrealized Gains		Balance at end of period
	(In thousands)
Securities available for sale:
MBS non-agency	$	—	$	29,599	$	—	$	—	$	29,599
Sold loan servicing rights		—		12,490		—		73		12,563
(1) Transferred from Level 2 to Level 3 because of a lack of observable market data, resulting from little to no market activity for the investments.

Assets and liabilities measured at fair value on a nonrecurring basis - Assets are considered to be valued on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the consolidated balance sheets. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements that require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value.

The following tables present the Company’s assets measured at fair value on a nonrecurring basis at the date indicated:

	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Impaired loans	$	—	$	—	$	3,034	$	3,034

At  June 30, 2023 and December 31, 2022, there were no impaired loans with discounts to appraisal disposition value or other unobservable inputs.

The following tables present the carrying value and estimated fair value of financial instruments at the dates indicated:

	June 30, 2023
					Fair Value Measurements Using:
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Cash and cash equivalents	$	78,302	$	78,302	$	78,302	$	—	$	—
Investment securities available for sale		321,963		321,963		12,792		279,793		29,378
Loans held for sale		2,049		2,049		—		2,049		—
Loans receivable, net		1,620,863		1,509,311		—		—		1,509,311
FHLB stock		12,621		12,621		—		12,621		—
Accrued interest receivable		7,480		7,480		—		7,480		—
Sold loan servicing rights, at fair value		3,825		3,825		—		—		3,825
Partnership investments		12,733		12,733		—		—		12,733
Financial liabilities
Demand deposits	$	1,094,052	$	1,094,052	$	1,094,052	$	—	$	—
Time deposits		559,070		551,012		—		—		551,012
FHLB Borrowings		253,000		247,846		—		—		247,846
Line of Credit		11,000		11,047		—		—		11,047
Subordinated debt, net		39,397		40,164		—		—		40,164
Accrued interest payable		1,367		1,367		—		1,367		—
Interest rate swap derivative		392		392		—		392		—

	December 31, 2022
					Fair Value Measurements Using:
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Cash and cash equivalents	$	45,596	$	45,596	$	45,596	$	—	$	—
Investment securities available for sale		326,569		326,569		12,603		284,367		29,599
Loans held for sale		597		597		—		597		—
Loans receivable, net		1,531,435		1,461,470		—		—		1,461,470
FHLB stock		11,681		11,681		—		11,681		—
Accrued interest receivable		6,743		6,743		—		6,743		—
Sold loan servicing rights, at fair value		3,887		3,887		—		—		3,887
Partnership investments		12,563		12,563		—		—		12,563
Financial liabilities
Demand deposits		1,182,570	$	1,182,570	$	1,182,570	$	—	$	—
Time deposits		381,685		372,865		—		—		372,865
FHLB Borrowings		234,000		229,103		—		—		229,103
Line of Credit		12,000		12,034		—		—		12,034
Subordinated debt, net		39,358		38,841		—		—		38,841
Accrued interest payable		455		455		—		455		—

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Note 12 - Change in Accumulated Other Comprehensive Income ("AOCI")

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

Note 12- Change in Accumulated Other Comprehensive Income ("AOCI")

Our AOCI includes unrealized gain (loss) on available-for-sale securities and an unrecognized defined benefit plan prior service cost. The following table presents changes to accumulated other comprehensive income after-tax for the periods shown:

	Unrealized Gains and Losses on Available-for-Sale Securities			Unrecognized Defined Benefit Plan Prior Service Cost, Net of Amortization			Unrealized Gains and Losses on Derivatives			Total
	(In thousands)
Balance at March 31, 2022	$	(13,330	)	$	(1,823	)	$	—		$	(15,153	)
Other comprehensive loss before reclassification		(13,330	)		—			—			(13,330	)
Amounts reclassified from accumulated other comprehensive income		7			29			—			36
Net other comprehensive (loss) income		(13,323	)		29			—			(13,294	)
Balance at June 30, 2022	$	(26,653	)	$	(1,794	)	$	—		$	(28,447	)
Balance at March 31, 2023	$	(34,642	)	$	(2,109	)	$	(1,357	)	$	(38,108	)
Other comprehensive loss before reclassification		(3,037	)		—			1,049			(1,988	)
Amounts reclassified from accumulated other comprehensive income		—			30			—			30
Net other comprehensive (loss) income		(3,037	)		30			1,049			(1,958	)
Balance at June 30, 2023	$	(37,679	)	$	(2,079	)	$	(308	)	$	(40,066	)
Balance at December 31, 2021	$	2,140		$	(1,852	)	$	—		$	288
Other comprehensive loss before reclassification		(28,700	)		—			—			(28,700	)
Amounts reclassified from accumulated other comprehensive income		(93	)		58			—			(35	)
Net other comprehensive (loss) income		(28,793	)		58			—			(28,735	)
Balance at June 30, 2022	$	(26,653	)	$	(1,794	)	$	—		$	(28,447	)
Balance at December 31, 2022	$	(38,404	)	$	(2,139	)	$	—		$	(40,543	)
Other comprehensive income before reclassification		725			—			(308	)		417
Amounts reclassified from accumulated other comprehensive income		—			60			—			60
Net other comprehensive income		725			60			(308	)		477
Balance at June 30, 2023	$	(37,679	)	$	(2,079	)	$	(308	)	$	(40,066	)

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Note 13 - Derivatives and Hedging Activities

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Derivative Instruments and Hedging Activities Disclosure [Text Block]

Note 13 - Derivatives and Hedging Activities

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreements without the exchange of the underlying notional amount.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

At June 30, 2023, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges. The Company had no fair value hedges at December 31, 2022.

Line item in the income statement in which the hedged item is included	Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)
	(In thousands)
June 30, 2023
Investment securities (1)	$	50,392	$	392
Total	$	50,392	$	392

(1) These amounts include the amortized cost basis of closed portfolios of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. At June 30, 2023, the amortized cost basis of the closed portfolios used in these hedging relationships was $50.1 million, the cumulative basis adjustments associated with these hedging relationships was $392,000, and the amounts of the designated hedged items were $50.0 million.

The following table summarizes the Company’s derivative instruments at the date indicated. The Company has master netting agreements with derivative dealers with which it does business, but reflects gross assets and liabilities as “Other assets” and “Other liabilities,” respectively, on the Consolidated Balance Sheets, as follows:

			Fair Value
	Notional Amount		Other Assets		Other Liabilities
		(In thousands)
June 30, 2023
Fair value hedges:
Interest rate swaps - securities	$	50,000	$	—	$	351

The following table summarizes the effect of fair value and cash flow hedge accounting on the Consolidated Statements of Income for the periods shown:

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
	(In thousands)
Total amounts recognized in interest on investment securities	$	3,336		$	2,715	$	6,518		$	4,990
Net gains (losses) on fair value hedging relationships
Interest rate swaps - securities
Recognized on hedged items	$	(1,336	)	$	—	$	392		$	—
Recognized on derivatives designated as hedging instruments		1,443			—		(254	)		—
Net income recognized on fair value	$	107		$	—	$	138		$	—

Credit Risk-related Contingent Features

The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to all derivative transactions are major financial institutions with investment grade credit ratings. However, this does not eliminate the Company’s exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains in such contracts should any of these counterparties fail to perform as contracted.

The Company’s derivative contracts contain credit risk-related contingent features designed to protect against significant deterioration in counterparties’ creditworthiness and their ultimate ability to settle outstanding derivative contracts in the normal course of business. The Company’s bilateral credit related contingent features generally require the owing entity, either the Company or the derivative counterparty, to post collateral for the portion of the fair value in excess of $50.0 million should the fair value of outstanding derivatives per counterparty be greater than $50.0 million. Additionally, a certain level of decline in credit rating of either the Company or the counterparty could also trigger collateral requirements. As of June 30, 2023, the Company was in compliance with all credit risk-related contingent features and had derivative instruments with credit risk-related contingent features in a net liability position of $351,000. Accordingly, the Company posted collateral in the form of restricted cash of $2.2 million as a result of these contingent features. Given the considerations described above, the Company considers the impact of the risk of counterparty default to be immaterial.

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Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2023

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of presentation - The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10-K for the year ended December 31, 2022. In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial statements in accordance with GAAP have been included. Operating results for the three and six months ended June 30, 2023, are not necessarily indicative of the results that may be expected for future periods.

In preparing the unaudited interim consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to a determination of the allowance for credit losses ("ACL"), fair value of financial instruments and derivatives, and deferred tax assets and liabilities.

Consolidation, Policy [Policy Text Block]

Principles of consolidation - The accompanying consolidated financial statements include the accounts of First Northwest; its wholly owned subsidiary, First Fed, and its former controlling interest in Quin Ventures. All material intercompany accounts and transactions have been eliminated in consolidation. Through June 2023, First Northwest and POM shared equal ownership in Quin Ventures; however, it was previously determined that First Northwest had a controlling interest for financial reporting purposes under Accounting Standards Codification 810. The Quin Ventures net loss allocable to POM is shown on the financial statements where applicable through a noncontrolling interest adjustment.

Subsequent Events, Policy [Policy Text Block]

Subsequent events - The Company has evaluated subsequent events for potential recognition and disclosure and has included additional information where appropriate.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently adopted accounting pronouncements

Credit Losses

On January 1, 2023, the Company adopted FASB ASU 2016- 13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, which replaces the incurred loss methodology with a current expected credit loss ("CECL") methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loans receivable and held-to-maturity securities. It also applies to off-balance sheet credit exposures such as loan commitments, standby letters of credit, financial guarantees, and other similar instruments. In addition, the CECL adoption made changes to the accounting for investment securities available for sale.

The Company adopted ASU 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and unfunded commitments. This method resulted in recording a cumulative-effect adjustment as of the beginning of 2023 with no change to prior periods. The Company elected not to measure an ACL on accrued interest receivable on loans receivable or accrued interest receivable on investment securities available for sale as Company policy is to reverse interest income for uncollectible accrued interest receivable balances in a timely manner.

Results for the reporting period beginning after January 1, 2023, are presented under ASU 2016-13, while prior period amounts were not restated and continue to be reported in accordance with previously applicable GAAP. The accounting policies for prior periods are included in the Company's Annual Report on Form 10-K for the year ended  December 31, 2022.

The accounting policies for all financial instruments impacted by the CECL adoption are as follows:

Investment Securities

A debt security is placed on nonaccrual status at the time any principal or payments become more than 90 days delinquent. Interest accrued, but not received for a security placed on nonaccrual, is reversed against interest income during the period that the debt security is placed on nonaccrual status.

Allowance for Credit Losses on Investment Securities

Management evaluates the need for an ACL on investment securities ("ACLI") on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For investment securities available for sale in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell the security before the recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For investment securities available for sale that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and adverse conditions specifically related to the security, among other factors. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACLI is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any decline in fair value that has not been recorded through an ACLI is recognized in other comprehensive income (loss).

Changes in the ACLI are recorded as provision, or reversal of provision, for credit losses expense. Losses are charged against the allowance when management believes the uncollectibility of an investment security available for sale is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Accrued interest receivable on investment securities available for sale is excluded from the estimate of credit losses as interest accrued, but not received, is reversed timely in accordance with the policy for investment securities above.

Loans Receivable

Loans receivable include loans originated and indirect loans purchased by the Bank as well as loans acquired in business combinations.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at amortized cost. Amortized cost is the outstanding principal balance, net of purchased premiums and discounts, unearned discounts, and net deferred loan origination fees and costs. Accrued interest receivable for loans receivable is reported in prepaid expenses and other assets on the Consolidated Balance Sheets.

Allowance for Credit Losses on Loans

The ACL on loans ("ACLL") is a valuation account that is deducted from the amortized cost of loans receivable to present the net amount expected to be collected. Loans are charged against the allowance when management believes the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance. The Bank records the changes in the ACLL through earnings, as a provision for credit losses on the Consolidated Statements of Income.

Accrued interest receivable on loans receivable is excluded from the estimate of credit losses. Instead, interest accrued, but not received, is reversed timely in accordance with the policy for loans receivable above.

The Company has identified segments of loans with similar risk characteristics for which it then applies one of two loss methodologies. Management has adopted a discounted cash flow ("DCF") methodology for most of its segments to calculate the ACLL. For certain segments with smaller portfolios or where data is prohibitive to running a DCF calculation, management has elected to use a Remaining Life methodology. The Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. The allowance for individually evaluated loans is calculated using the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell, or another method such as the cash flow method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt. When the cash flow method is used, cash flows are discounted back by the effective interest rate and compared to the total recorded investment. If the present value of cash flows is less than the total recorded investment, a reserve is calculated.

For each loan segment collectively measured, the baseline loss rates are calculated using the Bank's own data and peer institution data from FFIEC Call Report filings. The Bank evaluates the historical period on a quarterly basis. The baseline loss rates are applied to each loan's estimated cash flows over the life of the loan to determine the baseline loss estimate for each loan. Estimated cash flows consider the principal and interest in accordance with the contractual term of the loan and estimated prepayments. Contractual cash flows are based on the amortized cost, as adjusted for balances guaranteed by governmental entities, such as the Small Business Administration ("SBA") or the United States Department of Agriculture ("USDA"), or the unguaranteed amortized cost. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: 1) management has a reasonable expectation at the reporting date that a modification agreement will be executed with an individual borrower or 2) the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company. Prepayments are established for each segment based on historical averages for the segments, which management believes is an accurate representation of future prepayment activity. Management reviews the adequacy of the prepayment period assumption on a quarterly basis.

The CECL methodology includes consideration of the forecasted direction of the economic and business environment and its likely impact to the estimated allowance as compared to the historical losses over the reasonable and supportable time frame. Economic forecast models for the current period are uploaded to the model, which targets two forecasted macroeconomic factors, which are national gross domestic product ("GDP") and unemployment figures. Each of the forecasted DCF segments is impacted by these macroeconomic factors. Further, each of the macroeconomic factors is utilized differently by segment, including the application of lagged factors and various transformations such as percent change year over year.

The Bank uses the Federal Open Market Committee ("FOMC") forecast via an application programming interface with our CECL software. FOMC provides various forecast scenarios used to determine the loan portfolio’s expected credit loss. Based on known/knowable information at the measurement date, management has determined that the FOMC scenarios and the underlying assumptions most closely align with current and expected conditions. The Bank has elected to forecast the first four quarters of the credit loss estimate and revert on a straight-line basis as permitted in ASC 326-20-30-9. The Bank also considers other qualitative risk factors to adjust the estimated ACL calculated by the above-mentioned model. While there are many factors available to incorporate into the quantitative model, the Bank has selected to use the most critical factors. Additional metrics will be included only if internal or external factors outside those considered in its historical losses or macroeconomic forecast indicate otherwise. The Bank has established metrics to estimate the qualitative risk factor by segment based on the identified risk.

In general, management's estimate of the ACLL uses relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

The allowance for loan losses evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. While management utilizes its best judgment and information available to recognize losses on loans, future additions to the allowance may be necessary based on further declines in local and national economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s ACLL. Such agencies may require the Bank to make adjustments to the allowance based on their judgments about information available to them at the time of their examinations. The Company believes the ACLL is appropriate given the above considerations.

Allowance for Credit Losses on Unfunded Commitments

The Bank estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Bank is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The Bank has determined that no allowance is necessary for its home equity line of credit portfolio as it has the ability to unconditionally cancel the available lines of credit.

The allowance methodology is similar to the ACLL, but additionally includes an estimate of the future utilization of the commitment as determined by historical commitment utilization. The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class.

The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision (reversal of provision) for credit losses on the Consolidated Statements of Income.

Provision for Credit Losses

The provision for credit losses as presented in the Company's Consolidated Statements of Income includes the provision for credit losses on loans and the provision for credit losses on unfunded commitments.

Summary of CECL Impact:

Investment Securities - As of December 31, 2022, the Company had no historical charge-off or recovery history and did not have any investment securities available for sale outstanding at the adoption date for which an other-than-temporary impairment was previously recorded. At the adoption date of ASU 2016-13, the unrealized losses present in the portfolio of investment securities available for sale were primarily due to decreases in market interest rates on floating rate investment securities since the purchase of the securities and the fair value of these securities was expected to recover as the securities approach their maturity dates. The basis of management’s conclusion was that at January 1, 2023, 23.9% of the investment securities were issued by or guaranteed by the United States government or its agencies, 30.0% were issued and guaranteed by State and local governments and the remainder of the portfolio was invested in at least investment-grade securities. As a result of the analysis, no allowance for credit losses on investment securities available for sale was recorded upon adoption. See Note 2 Investment Securities for more information.

Loan Receivable - ASU 2016-13 was applied prospectively and replaced the allowance for loan losses with the ACLL on the Consolidated Balance Sheet and replaced the related provision for loan losses with the provision for credit losses on loans as presented on the Consolidated Statements of Income, net of provision for credit losses on unfunded commitments.

The Bank recorded a pretax increase to the ACLL of $2.2 million to increase the reserve to the estimated credit losses at January 1, 2023 based on its CECL methodology as part of the cumulative-effect adjustment to beginning retained earnings. Upon adoption, the adjusted beginning balance of the ACLL as a percentage of loans receivable was 1.18% as compared to 1.04% at December 31, 2022 under the prior incurred loss methodology. At June 30, 2023, the ACLL as a percentage of loans receivable was 1.06%.

See Note 4 - Allowance for Credit Loss on Loans for more information.

Unfunded Commitments - ASU 2016-13 was applied prospectively and replaced the reserve for unfunded commitments with the ACL on unfunded commitments ("ACLU") as included in accrued liabilities and other expenses on the Consolidated Balance Sheet and replaced the provision for unfunded commitments with the provision for credit losses on unfunded commitments as presented on the Consolidated Statements of Income, net of provision for credit losses on loans. Upon adoption, the Bank recorded a pretax increase in the beginning ACLU of $1.5 million.

Overall CECL Impact - The adoption of ASU 2016-13, included an increase to the ACLL of $2.2 million and an increase to the ACLU of $1.5 million, which resulted in a pretax cumulative-effect adjustment of $3.7 million. The impact of this adjustment to beginning retained earnings on January 1, 2023 was $3.0 million, net of tax.

Troubled Debt Restructurings

In March 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. This ASU eliminates the accounting guidance for troubled debt restructured loans (“TDRs”) by creditors while enhancing disclosure requirements for certain loan refinancing and restructuring activity by creditors when a borrower is experiencing financial difficulty. Additionally, the ASU requires public business entities to disclose current-period gross write offs by year of origination for financing receivables and net investments in leases. This ASU is effective upon adoption of ASU 2016-13. On January 1, 2023, the Company adopted this ASU at the same time ASU 2016-13 was adopted. The Company recorded gross charge-offs of $1.9 million in the first half of 2023 and recoveries for the same period were $594,000. See table in Note 3 for additional information.

Derivative Instruments and Hedging Activities

On March 28, 2022, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) 2022- 01, Derivatives and Hedging (Topic 815): Fair Value Hedging – Portfolio Layer Method. The purpose of this updated guidance is to further align risk management objectives with hedge accounting results on the application of the last-of-layer method, which was first introduced in ASU 2017- 12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. ASU 2022- 01 is effective for public business entities for fiscal years beginning after December 15, 2022, with early adoption in the interim period, permitted. For entities who have already adopted ASU 2017- 12, immediate adoption is allowed. ASU 2022- 01 requires a modified retrospective transition method for basis adjustments in which the entity will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company adopted this ASU on January 1, 2023 on a prospective basis; therefore, there was no impact to the consolidated financial statements.

Accounting Policy for Derivative Instruments and Hedging Activities - FASB ASC 815, Derivatives and Hedging ("ASC 815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC 815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply, or the Company elects not to apply hedge accounting.

In accordance with the FASB’s fair value measurement guidance in ASU 2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Recently issued accounting pronouncements not yet adopted

Other Pronouncements

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, which reference the London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. This ASU is effective for all entities as of March 12, 2020 through December 31, 2022. On December 31, 2022, FASB issued ASU 2022-06, which deferred the sunset date for Topic 848 to December 31, 2024. The Company is implementing a transition plan to identify and modify its loans and other financial instruments that are either directly or indirectly influenced by LIBOR. The Company is in the process of evaluating ASU No. 2020-04 and its impact on the Company’s transition away from LIBOR for its loan and other financial instruments, with no expected material impact on the Company's financial statements.

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security should not be considered in measuring fair value, nor should the contractual restriction be recognized and measured separately. Further, this ASU requires disclosure of the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, the nature and remaining duration of the restriction(s), and the circumstances that could cause a lapse in the restriction(s). ASU 2022-03 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect that ASU 2022-03 will have on its consolidated financial statements and related disclosures.

In March 2023, the FASB issued ASU 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method, a consensus of the Emerging Issues Task Force. ASU 2023-02 allows an entity the option to apply the proportional amortization method of accounting to other equity investments that are made for the primary purpose of receiving tax credits or other income tax benefits if certain conditions are met. Prior to this ASU, the application of the proportional amortization method of accounting was limited to investments in low-income housing tax credit structures. The proportional amortization method of accounting results in the amortization of applicable investments, as well as the related income tax credits or other income tax benefits received, being presented on a single line in the statements of income, income tax expense. Under this ASU, an entity has the option to apply the proportional amortization method of accounting to applicable investments on a tax-credit-program-by-tax-credit-program basis. In addition, the amendments in this ASU require that all tax equity investments accounted for using the proportional amortization method use the delayed equity contribution guidance in paragraph 323-740-25-3, requiring a liability to be recognized for delayed equity contributions that are unconditional and legally binding or for equity contributions that are contingent upon a future event when that contingent event becomes probable. Under this ASU, low-income housing tax credit investments for which the proportional amortization method is not applied can no longer be accounted for using the delayed equity contribution guidance. Further, this ASU specifies that impairment of low-income housing tax credit investments not accounted for using the equity method must apply the impairment guidance in Subtopic 323-10: Investments - Equity Method and Joint Ventures - Overall. This ASU also clarifies that for low-income housing tax credit investments not accounted for under the proportional amortization method or the equity method, an entity shall account for them under Topic 321: Investments - Equity Securities. The amendments in this ASU also require additional disclosures in interim and annual periods concerning investments for which the proportional amortization method is applied, including (i) the nature of tax equity investments, and (ii) the effect of tax equity investments and related income tax credits and other income tax benefits on the financial position and results of operations. ASU 2023-02 is effective for the Company for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years, with early adoption permitted. The Company is evaluating the effect that ASU 2023-02 will have on its consolidated financial statements and related disclosures.

Reclassification, Comparability Adjustment [Policy Text Block]

Reclassifications - Certain amounts in the unaudited interim consolidated financial statements for prior periods have been reclassified to conform to the current unaudited financial statement presentation with no effect on net income or shareholders' equity.

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Note 2 - Securities (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Available-for-sale and Held-to-Maturity Securities Reconciliation [Table Text Block]

			Gross		Gross			Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	119,514	$	—	$	(19,011	)	$	100,503
U.S. Treasury notes		2,475		—		(111	)		2,364
International agency issued bonds (Agency bonds)		1,960		—		(243	)		1,717
Corporate issued debt securities (Corporate debt)		60,595		—		(6,921	)		53,674
Mortgage-backed securities:
U.S. government agency issued mortgage-backed securities (MBS agency)		85,613		—		(14,048	)		71,565
Non-agency issued mortgage-backed securities (MBS non-agency)		99,781		—		(7,641	)		92,140
Total securities available for sale	$	369,938	$	—	$	(47,975	)	$	321,963

			Gross		Gross			Estimated
	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	119,990	$	—	$	(21,940	)	$	98,050
U.S. Treasury notes		2,469		—		(105	)		2,364
Agency bonds		1,955		—		(253	)		1,702
Corporate debt		60,700		—		(5,201	)		55,499
Mortgage-backed securities:
MBS agency		88,930		1		(13,283	)		75,648
MBS non-agency		101,139		—		(7,833	)		93,306
Total securities available for sale	$	375,183	$	1	$	(48,615	)	$	326,569

Debt Securities, Available-for-Sale, Unrealized Loss Position, Fair Value [Table Text Block]

	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	(10	)	$	435	$	(19,001	)	$	99,767	$	(19,011	)	$	100,202
U.S. Treasury notes		—			—		(111	)		2,364		(111	)		2,364
Agency bonds		—			—		(243	)		1,717		(243	)		1,717
Corporate debt		(723	)		7,777		(6,198	)		45,897		(6,921	)		53,674
Mortgage-backed securities:
MBS agency		(1	)		1,793		(14,047	)		69,772		(14,048	)		71,565
MBS non-agency		—			—		(7,641	)		92,140		(7,641	)		92,140
Total available for sale	$	(734	)	$	10,005	$	(47,241	)	$	311,657	$	(47,975	)	$	321,662

	Less Than Twelve Months					Twelve Months or Longer					Total
	Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value		Gross Unrealized Losses			Fair Value
	(In thousands)
Available for Sale
Municipal bonds	$	(15,749	)	$	79,129	$	(6,191	)	$	18,621	$	(21,940	)	$	97,750
U.S. Treasury notes		(105	)		2,364		—			—		(105	)		2,364
Agency bonds		—			—		(253	)		1,702		(253	)		1,702
Corporate debt		(2,570	)		30,555		(2,631	)		24,944		(5,201	)		55,499
Mortgage-backed securities:
MBS agency		(5,079	)		40,099		(8,204	)		33,064		(13,283	)		73,163
MBS non-agency		(3,956	)		51,994		(3,877	)		41,311		(7,833	)		93,305
Total available for sale	$	(27,459	)	$	204,141	$	(21,156	)	$	119,642	$	(48,615	)	$	323,783

Investments Classified by Contractual Maturity Date [Table Text Block]

	June 30, 2023
	Available-for-Sale
	Amortized Cost		Estimated Fair Value
	(In thousands)
Mortgage-backed securities:
Due within one year	$	27,322	$	26,940
Due after one through five years		17,148		16,315
Due after five through ten years		11,033		10,124
Due after ten years		129,891		110,326
Total mortgage-backed securities		185,394		163,705
All other investment securities:
Due within one year		—		—
Due after one through five years		20,711		19,151
Due after five through ten years		66,069		57,302
Due after ten years		97,764		81,805
Total all other investment securities		184,544		158,258
Total investment securities	$	369,938	$	321,963

	December 31, 2022
	Available-for-Sale
	Amortized Cost		Estimated Fair Value
	(In thousands)
Mortgage-backed securities:
Due within one year	$	13,762	$	13,490
Due after one through five years		28,890		27,808
Due after five through ten years		13,436		12,165
Due after ten years		133,981		115,491
Total mortgage-backed securities		190,069		168,954
All other investment securities:
Due within one year		—		—
Due after one through five years		20,700		18,957
Due after five through ten years		64,211		57,523
Due after ten years		100,203		81,135
Total all other investment securities		185,114		157,615
Total investment securities	$	375,183	$	326,569

Schedule of Realized Gain (Loss) [Table Text Block]

	Three Months Ended June 30,					Six Months Ended June 30,
	2023		2022			2023		2022
	(In thousands)
Proceeds from sales	$	—	$	2,233		$	—	$	12,685
Gross realized gains		—		—			—		128
Gross realized losses		—		(8	)		—		(10	)

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Note 3 - Loans Receivable (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	June 30, 2023		December 31, 2022
	(In thousands)
Real Estate:
One-to-four family	$	365,600	$	343,559
Multi-family		296,561		252,745
Commercial real estate		375,961		388,884
Construction and land		157,060		193,646
Total real estate loans		1,195,182		1,178,834
Consumer:
Home equity		58,895		52,877
Auto and other consumer		253,950		238,913
Total consumer loans		312,845		291,790
Commercial business loans		130,133		76,927
Total loans receivable		1,638,160		1,547,551
Less:
Allowance for credit losses on loans (1)		17,297		16,116
Total loans receivable, net	$	1,620,863	$	1,531,435

Financing Receivable, Nonaccrual [Table Text Block]

	June 30, 2023						December 31, 2022
	Collateral Dependent Loans		Non-Collateral Dependent Loans		Total Nonaccrual Loans		Total Nonaccrual Loans (1)
	(In thousands)
One-to-four family	$	1,475	$	305	$	1,780	$	954
Commercial real estate		41		—		41		53
Construction and land		—		12		12		15
Home equity		31		214		245		196
Auto and other consumer		—		476		476		575
Total nonaccrual loans	$	1,547	$	1,007	$	2,554	$	1,793
(1) Presentation of December 31, 2022, balances is in accordance with pre-CECL disclosure requirements.

	Collateral Type
	Single Family Residence		Warehouse		Total
	(In thousands)
One-to-four family	$	1,475	$	—	$	1,475
Commercial real estate		—		41		41
Home equity		31		—		31
Total collateral dependent loans	$	1,506	$	41	$	1,547

Financing Receivable Credit Quality Indicators [Table Text Block]

	Nonperforming		Performing		Total
	(In thousands)
Real Estate:
One-to-four family	$	954	$	342,605	$	343,559
Multi-family		—		252,745		252,745
Commercial real estate		53		388,831		388,884
Construction and land		15		193,631		193,646
Consumer:
Home equity		196		52,681		52,877
Auto and other consumer		575		238,338		238,913
Commercial business		—		76,927		76,927
Total loans	$	1,793	$	1,545,758	$	1,547,551

	Term Loans by Year of Origination (1)												Revolving		Total
	2023		2022		2021		2020		2019		Prior		Loans		Loans
	(In thousands)
One-to-four family
Pass	$	2,990	$	83,795	$	118,693	$	72,169	$	14,247	$	69,979	$	—	$	361,873
Watch		—		—		—		592		—		723		—		1,315
Special Mention		—		—		—		303		—		106		—		409
Substandard		—		—		—		329		487		1,187		—		2,003
Total one-to-four family		2,990		83,795		118,693		73,393		14,734		71,995		—		365,600
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Multi-family
Pass		22,960		103,162		81,072		59,041		8,637		5,422		—		280,294
Watch		—		—		15,268		—		—		999		—		16,267
Total multi-family		22,960		103,162		96,340		59,041		8,637		6,421		—		296,561
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Commercial Real Estate
Pass		21,721		89,951		105,753		83,355		13,604		24,688		—		339,072
Watch		3,908		—		12,434		6,901		3,607		1,026		—		27,876
Special Mention		—		—		6,591		—		—		—		—		6,591
Substandard		—		40		—		2,382		—		—		—		2,422
Total commercial real estate		25,629		89,991		124,778		92,638		17,211		25,714		—		375,961
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Construction and Land
Pass		24,924		62,714		49,563		772		570		2,740		—		141,283
Watch		889		—		—		—		—		17		—		906
Substandard		14,859		—		—		—		—		12		—		14,871
Total construction and land		40,672		62,714		49,563		772		570		2,769		—		157,060
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Home Equity
Pass		3,663		7,566		5,014		3,249		1,655		3,928		33,191		58,266
Watch		—		—		—		—		—		—		200		200
Special Mention		—		—		—		—		—		71		113		184
Substandard		—		—		32		61		—		—		152		245
Total home equity		3,663		7,566		5,046		3,310		1,655		3,999		33,656		58,895
Gross charge-offs during the period		—		—		—		—		—		11		—		11
Other Consumer
Pass		29,846		80,899		70,123		32,924		16,962		20,269		443		251,466
Watch		16		727		630		194		33		85		—		1,685
Special Mention		—		236		20		61		4		—		—		321
Substandard		13		308		—		—		150		7		—		478
Total other consumer		29,875		82,170		70,773		33,179		17,149		20,361		443		253,950
Gross charge-offs during the period		—		1,760		4		1		11		91		59		1,926
Commercial business
Pass		18,543		24,350		11,783		3,024		523		28,300		33,363		119,886
Watch		—		10		485		1,008		—		—		—		1,503
Special Mention		—		—		—		315		—		1,989		3,741		6,045
Substandard		—		—		—		29		—		185		2,485		2,699
Total commercial business		18,543		24,360		12,268		4,376		523		30,474		39,589		130,133
Gross charge-offs during the period		—		—		—		—		—		—		—		—
Total loans
Pass		124,647		452,437		442,001		254,534		56,198		155,326		66,997		1,552,140
Watch		4,813		737		28,817		8,695		3,640		2,850		200		49,752
Special Mention		—		236		6,611		679		4		2,166		3,854		13,550
Substandard		14,872		348		32		2,801		637		1,391		2,637		22,718
Total loans	$	144,332	$	453,758	$	477,461	$	266,709	$	60,479	$	161,733	$	73,688	$	1,638,160
Total gross charge-offs during the period	$	—	$	1,760	$	4	$	1	$	11	$	102	$	59	$	1,937

	Pass		Watch		Special Mention		Substandard		Total
	(In thousands)
Real Estate:
One-to-four family	$	339,812	$	2,234	$	27	$	1,486	$	343,559
Multi-family		237,077		15,668		—		—		252,745
Commercial real estate		350,001		25,586		12,161		1,136		388,884
Construction and land		179,116		529		—		14,001		193,646
Total real estate loans		1,106,006		44,017		12,188		16,623		1,178,834
Consumer:
Home equity		52,295		372		14		196		52,877
Auto and other consumer		238,522		222		75		94		238,913
Total consumer loans		290,817		594		89		290		291,790
Commercial business loans		66,276		2,234		8,417		—		76,927
Total loans	$	1,463,099	$	46,845	$	20,694	$	16,913	$	1,547,551

Financing Receivable, Past Due [Table Text Block]

	30-59 Days		60-89 Days		90 Days or More		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
	(In thousands)
Real Estate:
One-to-four family	$	—	$	—	$	921	$	921	$	364,679	$	365,600
Multi-family		—		—		—		—		296,561		296,561
Commercial real estate		—		—		—		—		375,961		375,961
Construction and land		—		—		18		18		157,042		157,060
Total real estate loans		—		—		939		939		1,194,243		1,195,182
Consumer:
Home equity		—		14		91		105		58,790		58,895
Auto and other consumer		1,359		299		479		2,137		251,813		253,950
Total consumer loans		1,359		313		570		2,242		310,603		312,845
Commercial business loans		106		—		—		106		130,027		130,133
Total loans	$	1,465	$	313	$	1,509	$	3,287	$	1,634,873	$	1,638,160

	30-59 Days		60-89 Days		90 Days or More		Total
	Past Due		Past Due		Past Due		Past Due		Current		Total Loans
	(In thousands)
Real Estate:
One-to-four family	$	1,449	$	155	$	652	$	2,256	$	341,303	$	343,559
Multi-family		—		—		—		—		252,745		252,745
Commercial real estate		—		—		—		—		388,884		388,884
Construction and land		—		18		—		18		193,628		193,646
Total real estate loans		1,449		173		652		2,274		1,176,560		1,178,834
Consumer:
Home equity		153		—		11		164		52,713		52,877
Auto and other consumer		1,390		698		557		2,645		236,268		238,913
Total consumer loans		1,543		698		568		2,809		288,981		291,790
Commercial business loans		—		—		—		—		76,927		76,927
Total loans	$	2,992	$	871	$	1,220	$	5,083	$	1,542,468	$	1,547,551

Financing Receivable, Modified [Table Text Block]

	December 31, 2022
	(In thousands)
Total TDR loans	$	1,753
Allowance for credit losses on loans related to TDR loans		21
Total nonaccrual TDR loans		29

	December 31, 2022
	Accrual		Nonaccrual		Total
	(In thousands)
One-to-four family	$	1,697	$	29	$	1,726
Home equity		27		—		27
Total TDR loans	$	1,724	$	29	$	1,753

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Note 4 - Allowance for Credit Losses on Loans (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Financing Receivable, Allowance for Credit Loss [Table Text Block]

	At or For the Three Months Ended June 30, 2023
	Adjusted Beginning Balance		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance
	(In thousands)
One-to-four family	$	2,903	$	—		$	4	$	105		$	3,012
Multi-family		1,045		—			—		(4	)		1,041
Commercial real estate		2,979		—			—		(55	)		2,924
Construction and land		2,782		—			—		(247	)		2,535
Home equity		1,084		—			5		36			1,125
Auto and other consumer		4,689		(972	)		564		514			4,795
Commercial business		1,914		—			—		(49	)		1,865
Total	$	17,396	$	(972	)	$	573	$	300		$	17,297

	At or For the Six Months Ended June 30, 2023
	Beginning Balance		Impact of Day 1 CECL Adoption			Adjusted Beginning Balance		Charge-offs			Recoveries		Provision for (Recapture of) Credit Losses			Ending Balance
	(In thousands)
One-to-four family	$	3,343	$	(429	)	$	2,914	$	—		$	4	$	94		$	3,012
Multi-family		2,468		(1,449	)		1,019		—			—		22			1,041
Commercial real estate		4,217		(604	)		3,613		—			—		(689	)		2,924
Construction and land		2,344		1,555			3,899		—			—		(1,364	)		2,535
Home equity		549		346			895		(11	)		5		236			1,125
Auto and other consumer		2,024		2,381			4,405		(1,926	)		585		1,731			4,795
Commercial business		786		794			1,580		—			—		285			1,865
Unallocated		385		(385	)		—		—			—		—			—
Total	$	16,116	$	2,209		$	18,325	$	(1,937	)	$	594	$	315		$	17,297

	At or For the Three Months Ended June 30, 2022
	One-to-four family			Multi-family		Commercial real estate		Construction and land		Home equity		Auto and other consumer			Commercial business		Unallocated			Total
	(In thousands)
ALLL:
Beginning balance	$	3,039		$	2,092	$	4,038	$	2,481	$	405	$	2,229		$	526	$	317		$	15,127
(Recapture of) provision for loan losses		(13	)		76		116		69		81		160			12		(1	)		500
Charge-offs		—			—		—		—		—		(73	)		—		—			(73	)
Recoveries		—			—		—		—		—		51			142		—			193
Ending balance	$	3,026		$	2,168	$	4,154	$	2,550	$	486	$	2,367		$	680	$	316		$	15,747

	At or For the Six Months Ended June 30, 2022
	One-to-four family			Multi-family		Commercial real estate		Construction and land			Home equity		Auto and other consumer			Commercial business		Unallocated			Total
	(In thousands)
ALLL:
Beginning balance	$	3,184		$	1,816	$	3,996	$	2,672		$	407	$	2,221		$	470	$	358		$	15,124
(Recapture of) provision for loan losses		(190	)		352		158		(124	)		62		216			68		(42	)		500
Charge-offs		—			—		—		—			—		(210	)		—		—			(210	)
Recoveries		32			—		—		2			17		140			142		—			333
Ending balance	$	3,026		$	2,168	$	4,154	$	2,550		$	486	$	2,367		$	680	$	316		$	15,747

	At December 31, 2022
	One-to-four family		Multi-family		Commercial real estate		Construction and land		Home equity		Auto and other consumer		Commercial business		Unallocated		Total
	(In thousands)
Total ALLL	$	3,343	$	2,468	$	4,217	$	2,344	$	549	$	2,024	$	786	$	385	$	16,116
General reserve		3,321		2,468		4,217		2,343		545		2,019		786		385		16,084
Specific reserve		22		—		—		1		4		5		—		—		32
Gross loans	$	343,825	$	253,551	$	390,246	$	194,646	$	52,322	$	222,794	$	76,996	$	—	$	1,534,380
Loans collectively evaluated (1)		341,171		253,551		390,196		194,630		52,100		222,702		76,996		—		1,531,346
Loans individually evaluated (2)		2,654		—		50		16		222		92		—		—		3,034

Impaired Financing Receivables [Table Text Block]

	December 31, 2022
	Recorded Investment		Unpaid Principal Balance		Related Allowance
	(In thousands)
With no allowance recorded:
One-to-four family	$	666	$	705	$	—
Commercial real estate		50		149		—
Construction and land		—		14		—
Auto and other consumer		—		2		—
Total		716		870		—
With an allowance recorded:
One-to-four family		1,988		2,129		22
Construction and land		16		19		1
Home equity		222		224		4
Auto and other consumer		92		95		5
Total		2,318		2,467		32
Total impaired loans:
One-to-four family		2,654		2,834		22
Commercial real estate		50		149		—
Construction and land		16		33		1
Home equity		222		224		4
Auto and other consumer		92		97		5
Total	$	3,034	$	3,337	$	32

	Three Months Ended				Six Months Ended
	June 30, 2022				June 30, 2022
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
	(In thousands)
With no allowance recorded:
One-to-four family	$	356	$	6	$	283	$	8
Commercial real estate		63		—		65		—
Construction and land		—		1		—		1
Home equity		—		—		5		—
Auto and other consumer		247		5		249		9
Total		666		12		602		18
With an allowance recorded:
One-to-four family		2,128		39		2,079		72
Commercial real estate		21		—		11		—
Construction and land		22		1		22		1
Home equity		284		4		293		7
Auto and other consumer		61		1		139		2
Total		2,516		45		2,544		82
Total impaired loans:
One-to-four family		2,484		45		2,362		80
Commercial real estate		84		—		76		—
Construction and land		22		2		22		2
Home equity		284		4		298		7
Auto and other consumer		308		6		388		11
Total	$	3,182	$	57	$	3,146	$	100

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Note 5 - Deposits (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Deposit Liabilities, Type [Table Text Block]

	June 30, 2023					December 31, 2022
	Amount		Weighted-Average Interest Rate			Amount		Weighted-Average Interest Rate
	(Dollars in thousands)
Noninterest-bearing demand deposits	$	280,475		—	%	$	315,083		—	%
Interest-bearing demand deposits		179,029		0.50	%		193,558		0.01	%
Money market accounts		374,269		1.10	%		473,009		0.58	%
Savings accounts		260,279		1.41	%		200,920		0.26	%
Certificates of deposit		559,070		3.55	%		381,685		2.19	%
Total deposits	$	1,653,122		1.73	%	$	1,564,255		0.74	%

Time Deposit Maturities [Table Text Block]

	June 30, 2023		December 31, 2022
	(In thousands)
Within one year or less	$	422,485	$	262,189
After one year through two years		104,285		69,967
After two years through three years		16,339		37,032
After three years through four years		11,195		7,409
After four years through five years		4,766		5,088
Total certificates of deposit	$	559,070	$	381,685

Schedule of Interest on Deposits Liabilities, Type [Table Text Block]

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
	(In thousands)
Demand deposits	$	201	$	25	$	395	$	42
Money market accounts		944		323		1,720		621
Savings accounts		762		26		1,138		52
Certificates of deposit		4,302		422		7,309		798
Total interest expense on deposits	$	6,209	$	796	$	10,562	$	1,513

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Note 6 - Borrowings (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Long-Term Debt Instruments [Table Text Block]

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FHLB Short-Term Fixed-Rate Advances			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	85,000		$	163,000		$	5,000		$	11,000		$	39,397
Maximum outstanding at any month-end		85,000			189,000			95,000			11,000			39,397
Average monthly outstanding during the period		82,500			133,500			45,833			10,718			39,374
Weighted-average daily interest rates
Annual		1.90	%		4.97	%		5.07	%		8.94	%		4.04	%
Period End		2.08	%		5.35	%		5.27	%		8.75	%		4.04	%

	Amount		Weighted- Average Interest Rate
	(Dollars in thousands)
Within one year or less	$	20,000		2.30	%
After one year through two years		30,000		2.48
After two years through three years		15,000		1.49
After three years through four years		10,000		1.63
After four years through five years		10,000		1.76
Total FHLB long-term advances	$	85,000		2.08	%

	FHLB Long-Term Advances			FHLB Overnight Variable-Rate Advances			FHLB Short-Term Fixed-Rate Advances			Line of Credit			Subordinated Debt, net
	(Dollars in thousands)
Balance outstanding	$	80,000		$	144,000		$	10,000		$	12,000		$	39,358
Maximum outstanding at any month-end		80,000			206,000			42,500			12,000			39,358
Average monthly outstanding during the period		80,000			90,983			15,208			5,770			39,312
Weighted-average daily interest rates
Annual		1.52	%		2.83	%		1.82	%		6.76	%		4.01	%
Period End		1.52	%		4.30	%		2.12	%		8.00	%		4.01	%

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Note 8 - Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2023			2022			2023			2022
	(In thousands, except share data)
Net income:
Net income available to common shareholders	$	1,776		$	2,488		$	5,304		$	5,294
Earnings allocated to participating securities		(9	)		(25	)		(28	)		(55	)
Earnings allocated to common shareholders	$	1,767		$	2,463		$	5,276		$	5,239
Basic:
Weighted average common shares outstanding		9,667,380			9,849,265			9,684,673			9,846,086
Weighted average unvested restricted stock awards		(139,760	)		(92,626	)		(152,474	)		(95,390	)
Weighted average unallocated ESOP shares		(613,265	)		(661,745	)		(619,841	)		(668,323	)
Total basic weighted average common shares outstanding		8,914,355			9,094,894			8,912,358			9,082,373
Diluted:
Basic weighted average common shares outstanding		8,914,355			9,094,894			8,912,358			9,082,373
Dilutive restricted stock awards		17,031			71,237			19,759			84,942
Total diluted weighted average common shares outstanding		8,931,386			9,166,131			8,932,117			9,167,315
Basic earnings per common share	$	0.20		$	0.27		$	0.59		$	0.58
Diluted earnings per common share	$	0.20		$	0.27		$	0.59		$	0.58

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Note 9 - Employee Benefits (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Employee Stock Ownership Plan (ESOP) Disclosures [Table Text Block]

	June 30, 2023		December 31, 2022
	(Dollars in thousands)
Allocated shares		439,174		386,285
Committed to be released shares		—		26,442
Unallocated shares		608,855		635,302
Total ESOP shares issued		1,048,029		1,048,029
Fair value of unallocated shares	$	6,929	$	9,758

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Note 10 - Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Nonvested Restricted Stock Shares Activity [Table Text Block]

	For the Three Months Ended
	June 30, 2023
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at April 1, 2023		149,054		$	16.56
Granted		2,300			10.68
Vested		(5,753	)		14.81
Canceled (1)		(1,472	)		14.81
Forfeited		(11,211	)		17.14
Non-vested at June 30, 2023		132,918		$	16.50
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue.

	For the Six Months Ended
	June 30, 2023
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2023		166,839		$	17.78
Granted		29,349			14.09
Vested		(38,453	)		19.12
Canceled (1)		(11,806	)		19.12
Forfeited		(13,011	)		17.29
Non-vested at June 30, 2023		132,918		$	16.50
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue.

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Note 11 - Fair Value Accounting and Measurement (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis [Table Text Block]

	June 30, 2023
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial Assets		(In thousands)
Securities available-for-sale
Municipal bonds	$	5,014	$	95,489	$	—	$	100,503
U.S. Treasury notes		2,364		—		—		2,364
Agency bonds		—		1,717		—		1,717
Corporate debt		5,414		48,260		—		53,674
MBS agency		—		71,565		—		71,565
MBS non-agency		—		62,762		29,378		92,140
Sold loan servicing rights		—		—		3,825		3,825
Partnership investments		—		—		12,733		12,733
Total assets measured at fair value	$	12,792	$	279,793	$	45,936	$	338,521
Financial Liabilities
Interest rate swap derivative	$	—	$	392	$	—	$	392

	December 31, 2022
	Quoted Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Financial Assets		(In thousands)
Securities available-for-sale
Municipal bonds	$	4,913	$	93,137	$	—	$	98,050
U.S. Treasury notes		2,364		—		—		2,364
Agency bonds		—		1,702		—		1,702
Corporate debt		5,326		50,173		—		55,499
MBS agency		—		75,648		—		75,648
MBS non-agency		—		63,707		29,599		93,306
Sold loan servicing rights		—		—		3,887		3,887
Partnership investments		—		—		12,563		12,563
Total assets measured at fair value	$	12,603	$	284,367	$	46,049	$	343,019

Fair Value Measurement Inputs and Valuation Techniques [Table Text Block]

June 30, 2023	Fair Value (In thousands)	Valuation Technique	Unobservable Input (1)	Range (Weighted Average)
Sold loan servicing rights	$3,825	Discounted cash flow	Constant prepayment rate	4.84% - 40.04% (8.04%)
			Discount rate		11.63% - 14.35% (12.52%)
MBS non-agency	$29,378	Consensus pricing	Offered quotes	97.5 - 99.5
			Comparability adjustments (%)		-1.04% - 0.95%
(1) Unobservable inputs were weighted by the relative fair value of the instruments.

Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]

	As of or For the Three Months Ended June 30, 2023
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	4,224	$	7	$	(406	)	$	3,825
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2023
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	3,887	$	75	$	(137	)	$	3,825
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Three Months Ended June 30, 2022
	Balance at beginning of period		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	4,046	$	42	$	(223	)	$	3,865
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2022
	Election of Fair Value Option for Servicing Rights at January 1, 2022		Servicing rights that result from transfers and sale of financial assets		Changes in fair value due to changes in model inputs or assumptions (1)			Balance at end of period
	(In thousands)
Sold loan servicing rights	$	3,820	$	98	$	(53	)	$	3,865
(1) Represents changes due to collection/realization of expected cash flows and curtailments.

	As of or For the Six Months Ended June 30, 2023
	Balance at beginning of period		Transfers Into Level 3		Purchases		Unrealized (Losses) Gains			Balance at end of period
	(In thousands)
Securities available for sale:
MBS non-agency	$	29,599	$	—	$	—	$	(221	)	$	29,378
Partnership investments		12,563		—		—		170			12,733

	As of or For the Year Ended December 31, 2022
	Balance at beginning of period		Transfers Into Level 3 (1)		Purchases		Unrealized Gains		Balance at end of period
	(In thousands)
Securities available for sale:
MBS non-agency	$	—	$	29,599	$	—	$	—	$	29,599
Sold loan servicing rights		—		12,490		—		73		12,563
(1) Transferred from Level 2 to Level 3 because of a lack of observable market data, resulting from little to no market activity for the investments.

Fair Value Measurements, Nonrecurring [Table Text Block]

	December 31, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Impaired loans	$	—	$	—	$	3,034	$	3,034

Fair Value, by Balance Sheet Grouping [Table Text Block]

	June 30, 2023
					Fair Value Measurements Using:
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Cash and cash equivalents	$	78,302	$	78,302	$	78,302	$	—	$	—
Investment securities available for sale		321,963		321,963		12,792		279,793		29,378
Loans held for sale		2,049		2,049		—		2,049		—
Loans receivable, net		1,620,863		1,509,311		—		—		1,509,311
FHLB stock		12,621		12,621		—		12,621		—
Accrued interest receivable		7,480		7,480		—		7,480		—
Sold loan servicing rights, at fair value		3,825		3,825		—		—		3,825
Partnership investments		12,733		12,733		—		—		12,733
Financial liabilities
Demand deposits	$	1,094,052	$	1,094,052	$	1,094,052	$	—	$	—
Time deposits		559,070		551,012		—		—		551,012
FHLB Borrowings		253,000		247,846		—		—		247,846
Line of Credit		11,000		11,047		—		—		11,047
Subordinated debt, net		39,397		40,164		—		—		40,164
Accrued interest payable		1,367		1,367		—		1,367		—
Interest rate swap derivative		392		392		—		392		—

	December 31, 2022
					Fair Value Measurements Using:
	Carrying Amount		Estimated Fair Value		Level 1		Level 2		Level 3
	(In thousands)
Financial assets
Cash and cash equivalents	$	45,596	$	45,596	$	45,596	$	—	$	—
Investment securities available for sale		326,569		326,569		12,603		284,367		29,599
Loans held for sale		597		597		—		597		—
Loans receivable, net		1,531,435		1,461,470		—		—		1,461,470
FHLB stock		11,681		11,681		—		11,681		—
Accrued interest receivable		6,743		6,743		—		6,743		—
Sold loan servicing rights, at fair value		3,887		3,887		—		—		3,887
Partnership investments		12,563		12,563		—		—		12,563
Financial liabilities
Demand deposits		1,182,570	$	1,182,570	$	1,182,570	$	—	$	—
Time deposits		381,685		372,865		—		—		372,865
FHLB Borrowings		234,000		229,103		—		—		229,103
Line of Credit		12,000		12,034		—		—		12,034
Subordinated debt, net		39,358		38,841		—		—		38,841
Accrued interest payable		455		455		—		455		—

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Note 12 - Change in Accumulated Other Comprehensive Income ("AOCI") (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Unrealized Gains and Losses on Available-for-Sale Securities			Unrecognized Defined Benefit Plan Prior Service Cost, Net of Amortization			Unrealized Gains and Losses on Derivatives			Total
	(In thousands)
Balance at March 31, 2022	$	(13,330	)	$	(1,823	)	$	—		$	(15,153	)
Other comprehensive loss before reclassification		(13,330	)		—			—			(13,330	)
Amounts reclassified from accumulated other comprehensive income		7			29			—			36
Net other comprehensive (loss) income		(13,323	)		29			—			(13,294	)
Balance at June 30, 2022	$	(26,653	)	$	(1,794	)	$	—		$	(28,447	)
Balance at March 31, 2023	$	(34,642	)	$	(2,109	)	$	(1,357	)	$	(38,108	)
Other comprehensive loss before reclassification		(3,037	)		—			1,049			(1,988	)
Amounts reclassified from accumulated other comprehensive income		—			30			—			30
Net other comprehensive (loss) income		(3,037	)		30			1,049			(1,958	)
Balance at June 30, 2023	$	(37,679	)	$	(2,079	)	$	(308	)	$	(40,066	)
Balance at December 31, 2021	$	2,140		$	(1,852	)	$	—		$	288
Other comprehensive loss before reclassification		(28,700	)		—			—			(28,700	)
Amounts reclassified from accumulated other comprehensive income		(93	)		58			—			(35	)
Net other comprehensive (loss) income		(28,793	)		58			—			(28,735	)
Balance at June 30, 2022	$	(26,653	)	$	(1,794	)	$	—		$	(28,447	)
Balance at December 31, 2022	$	(38,404	)	$	(2,139	)	$	—		$	(40,543	)
Other comprehensive income before reclassification		725			—			(308	)		417
Amounts reclassified from accumulated other comprehensive income		—			60			—			60
Net other comprehensive income		725			60			(308	)		477
Balance at June 30, 2023	$	(37,679	)	$	(2,079	)	$	(308	)	$	(40,066	)

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Note 13 - Derivatives and Hedging Activities (Tables)

6 Months Ended

Jun. 30, 2023

Notes Tables

Schedule of Derivative Instruments [Table Text Block]

Line item in the income statement in which the hedged item is included	Carrying Amount of the Hedged Assets (Liabilities)		Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets (Liabilities)
	(In thousands)
June 30, 2023
Investment securities (1)	$	50,392	$	392
Total	$	50,392	$	392

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block]

			Fair Value
	Notional Amount		Other Assets		Other Liabilities
		(In thousands)
June 30, 2023
Fair value hedges:
Interest rate swaps - securities	$	50,000	$	—	$	351

Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location [Table Text Block]

	Three Months Ended June 30,					Six Months Ended June 30,
	2023			2022		2023			2022
	(In thousands)
Total amounts recognized in interest on investment securities	$	3,336		$	2,715	$	6,518		$	4,990
Net gains (losses) on fair value hedging relationships
Interest rate swaps - securities
Recognized on hedged items	$	(1,336	)	$	—	$	392		$	—
Recognized on derivatives designated as hedging instruments		1,443			—		(254	)		—
Net income recognized on fair value	$	107		$	—	$	138		$	—

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Note 1 - Basis of Presentation and Critical Accounting Policies (Details Textual) - USD ($)				1 Months Ended			3 Months Ended			6 Months Ended
	Jan. 01, 2023	Dec. 18, 2015	Jan. 29, 2015	Dec. 31, 2022		Apr. 30, 2021	Jun. 30, 2023		Jun. 30, 2022	Jun. 30, 2023		Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Stock Issued During Period, Shares, New Issues (in shares)			13,100,360
Proceeds from Issuance of Common Stock, Net			$ 117,600,000
Proceeds from Issuance Initial Public Offering			58,400,000
Employee Stock Ownership Plan (ESOP), Issued, Percentage of Common Stock Issued		8.00%
Stock Issued During Period, Shares, Employee Stock Ownership Plan (in shares)		1,048,029
Financing Receivable, after Allowance for Credit Loss				$ 1,531,435,000			$ 1,620,863,000			$ 1,620,863,000
Financing Receivable, Allowance for Credit Loss				$ 16,116,000	[1]		$ 17,297,000	[1]	$ 15,747,000	$ 17,297,000	[1]	$ 15,747,000	$ 15,127,000	$ 15,124,000
Financing Receivable, Allowance for Credit Loss to Outstanding, Percent	1.18%			1.04%			1.06%			1.06%
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)							$ 300,000			$ 315,000
Cumulative Effect of Adoption of New Accounting Standard										(3,735,000)		0
Retained Earnings (Accumulated Deficit)				$ 114,424,000			111,750,000			111,750,000
Financing Receivable, Allowance for Credit Loss, Writeoff							972,000		73,000	1,937,000		210,000
Financing Receivable, Allowance for Credit Loss, Recovery							573,000		$ 193,000	594,000		$ 333,000
Cumulative Effect, Period of Adoption, Adjustment [Member]
Financing Receivable, Allowance for Credit Loss				$ 2,209,000
Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss	$ 2,200,000
Cumulative Effect of Adoption of New Accounting Standard										3,700,000
Retained Earnings (Accumulated Deficit)	$ 3,000,000.0
Government Contracts Concentration Risk [Member] | Investment Concentration Risk [Member] | US Government Agencies Debt Securities [Member]
Concentration Risk, Percentage	23.90%
Government Contracts Concentration Risk [Member] | Investment Concentration Risk [Member] | US States and Political Subdivisions Debt Securities [Member]
Concentration Risk, Percentage	30.00%
Quil Ventures, Inc. [Member]
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners				5.00%
Investments, Total				$ 225,000
Commitment Receivable				$ 1,500,000
Unfunded Loan Commitment [Member]
Financing Receivable, Allowance for Credit Loss	$ 1,900,000						$ 1,300,000			$ 1,300,000
Unfunded Loan Commitment [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member] | Accounting Standards Update 2016-13 [Member]
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	$ 1,500,000
First Federal Community Foundation [Member]
Payments for Contributions to Charity			$ 400,000
Quin Ventures, Inc [Member] | Joint Venture Agreement [Member] | Partially Unfunded Loan Commitment [Member]
Financing Receivable, after Allowance for Credit Loss						$ 8,000,000.0
POM Peace of Mind, Inc [Member] | Joint Venture Agreement [Member]
Stock Issued During Period, Shares, New Issues (in shares)						29,719
Stock Issued During Period, Value, New Issues						$ 500,000
Stock Returned During Period, Shares (in shares)				29,719
Contribution of Nonmonetary Assets to Charitable Organization [Member] | First Federal Community Foundation [Member]
Stock Issued During Period, Shares, New Issues (in shares)			933,360
IPO [Member]
Stock Issued During Period, Shares, New Issues (in shares)			12,167,000
Shares Issued, Price Per Share (in dollars per share)			$ 10.00
Proceeds from Issuance of Common Stock			$ 121,700,000

[1] Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

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Note 2 - Securities (Details Textual) $ in Thousands	Jun. 30, 2023 USD ($)	Dec. 31, 2022 USD ($)
Debt Securities, Held-to-Maturity, Amortized Cost, before Allowance for Credit Loss	$ 0
Debt Securities, Available-for-Sale, Accrued Interest, after Allowance for Credit Loss	$ 2,100	$ 2,000
Debt Securities, Available-for-Sale, Continuous Unrealized Loss Position, Less than 12 Months, Number of Positions	8	113
Debt Securities, Available-for-Sale, Continuous Unrealized Loss Position, 12 Months or Longer, Number of Positions	174	69

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Note 2 - Securities - Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Value of Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Securities available for sale, amortized cost	$ 369,938	$ 375,183
Securities available for sale, gross unrealized gains	0	1
Securities available for sale, gross unrealized losses	(47,975)	(48,615)
Investment securities available for sale, at fair value	321,963	326,569
Securities available for sale, gross unrealized losses	(47,975)	(48,615)
US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, amortized cost	119,514	119,990
Securities available for sale, gross unrealized gains	0	0
Securities available for sale, gross unrealized losses	(19,011)	(21,940)
Investment securities available for sale, at fair value	100,503	98,050
Securities available for sale, gross unrealized losses	(19,011)	(21,940)
US Treasury Securities [Member]
Securities available for sale, amortized cost	2,475
Securities available for sale, gross unrealized gains	0
Securities available for sale, gross unrealized losses	(111)
Investment securities available for sale, at fair value	2,364
Securities available for sale, gross unrealized losses	(111)
US Treasury Notes Securities [Member]
Securities available for sale, amortized cost		2,469
Securities available for sale, gross unrealized gains		0
Securities available for sale, gross unrealized losses		(105)
Investment securities available for sale, at fair value		2,364
Securities available for sale, gross unrealized losses		(105)
International Agency Bonds [Member]
Securities available for sale, amortized cost	1,960	1,955
Securities available for sale, gross unrealized gains	0	0
Securities available for sale, gross unrealized losses	(243)	(253)
Investment securities available for sale, at fair value	1,717	1,702
Securities available for sale, gross unrealized losses	(243)	(253)
Corporate Debt Securities [Member]
Securities available for sale, amortized cost	60,595	60,700
Securities available for sale, gross unrealized gains	0	0
Securities available for sale, gross unrealized losses	(6,921)	(5,201)
Investment securities available for sale, at fair value	53,674	55,499
Securities available for sale, gross unrealized losses	(6,921)	(5,201)
Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities available for sale, amortized cost	85,613	88,930
Securities available for sale, gross unrealized gains	0	1
Securities available for sale, gross unrealized losses	(14,048)	(13,283)
Investment securities available for sale, at fair value	71,565	75,648
Securities available for sale, gross unrealized losses	(14,048)	(13,283)
Mortgage-Backed Securities, Issued by Private Enterprises [Member]
Securities available for sale, amortized cost	99,781	101,139
Securities available for sale, gross unrealized gains		0
Securities available for sale, gross unrealized losses	(7,641)	(7,833)
Investment securities available for sale, at fair value	92,140	93,306
Securities available for sale, gross unrealized losses	$ (7,641)	$ (7,833)

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Note 2 - Securities - Unrealized Gross Losses and Fair Value of Securities in a Continuous Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Securities available for sale, gross unrealized losses, less than twelve months	$ (734)	$ (27,459)
Securities available for sale, fair value, less than twelve months	10,005	204,141
Securities available for sale, gross unrealized losses, twelve months or longer	(47,241)	(21,156)
Securities available for sale, fair value, twelve months or longer	311,657	119,642
Securities available for sale, gross unrealized losses, total	(47,975)	(48,615)
Securities available for sale, fair value, total	321,662	323,783
US States and Political Subdivisions Debt Securities [Member]
Securities available for sale, gross unrealized losses, less than twelve months	(10)	(15,749)
Securities available for sale, fair value, less than twelve months	435	79,129
Securities available for sale, gross unrealized losses, twelve months or longer	(19,001)	(6,191)
Securities available for sale, fair value, twelve months or longer	99,767	18,621
Securities available for sale, gross unrealized losses, total	(19,011)	(21,940)
Securities available for sale, fair value, total	100,202	97,750
US Treasury Securities [Member]
Securities available for sale, gross unrealized losses, less than twelve months	0	(105)
Securities available for sale, fair value, less than twelve months	0	2,364
Securities available for sale, gross unrealized losses, twelve months or longer	(111)	0
Securities available for sale, fair value, twelve months or longer	2,364	0
Securities available for sale, gross unrealized losses, total	(111)	(105)
Securities available for sale, fair value, total	2,364	2,364
US Government-sponsored Enterprises Debt Securities [Member]
Securities available for sale, gross unrealized losses, less than twelve months	0	0
Securities available for sale, fair value, less than twelve months	0	0
Securities available for sale, gross unrealized losses, twelve months or longer	(243)	(253)
Securities available for sale, fair value, twelve months or longer	1,717	1,702
Securities available for sale, gross unrealized losses, total	(243)	(253)
Securities available for sale, fair value, total	1,717	1,702
Corporate Debt Securities [Member]
Securities available for sale, gross unrealized losses, less than twelve months	(723)	(2,570)
Securities available for sale, fair value, less than twelve months	7,777	30,555
Securities available for sale, gross unrealized losses, twelve months or longer	(6,198)	(2,631)
Securities available for sale, fair value, twelve months or longer	45,897	24,944
Securities available for sale, gross unrealized losses, total	(6,921)	(5,201)
Securities available for sale, fair value, total	53,674	55,499
Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member]
Securities available for sale, gross unrealized losses, less than twelve months	(1)	(5,079)
Securities available for sale, fair value, less than twelve months	1,793	40,099
Securities available for sale, gross unrealized losses, twelve months or longer	(14,047)	(8,204)
Securities available for sale, fair value, twelve months or longer	69,772	33,064
Securities available for sale, gross unrealized losses, total	(14,048)	(13,283)
Securities available for sale, fair value, total	71,565	73,163
Mortgage-Backed Securities, Issued by Private Enterprises [Member]
Securities available for sale, gross unrealized losses, less than twelve months	0	(3,956)
Securities available for sale, fair value, less than twelve months	0	51,994
Securities available for sale, gross unrealized losses, twelve months or longer	(7,641)	(3,877)
Securities available for sale, fair value, twelve months or longer	92,140	41,311
Securities available for sale, gross unrealized losses, total	(7,641)	(7,833)
Securities available for sale, fair value, total	$ 92,140	$ 93,305

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Note 2 - Securities - Amortized Cost and Estimated Fair Value of Investment Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Securities available for sale, amortized cost	$ 369,938	$ 375,183
Investment securities available for sale, at fair value	321,963	326,569
Collateralized Mortgage-Backed Securities [Member]
Due within one year, amortized cost	27,322	13,762
Due within one year, estimated fair value	26,940	13,490
Due after one through five years, amortized cost	17,148	28,890
Due after one through five years, estimated fair value	16,315	27,808
Due after five through ten years, amortized cost	11,033	13,436
Due after five through ten years, estimated fair value	10,124	12,165
Due after ten years, amortized cost	129,891	133,981
Due after ten years, estimated fair value	110,326	115,491
Securities available for sale, amortized cost	185,394	190,069
Investment securities available for sale, at fair value	163,705	168,954
Investment Securities, Excluding Mortgage Backed Securities [Member]
Due within one year, amortized cost	0	0
Due within one year, estimated fair value	0	0
Due after one through five years, amortized cost	20,711	20,700
Due after one through five years, estimated fair value	19,151	18,957
Due after five through ten years, amortized cost	66,069	64,211
Due after five through ten years, estimated fair value	57,302	57,523
Due after ten years, amortized cost	97,764	100,203
Due after ten years, estimated fair value	81,805	81,135
Securities available for sale, amortized cost	184,544	185,114
Investment securities available for sale, at fair value	$ 158,258	$ 157,615

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Note 2 - Securities - Sales of Securities Available for Sale (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Proceeds from sales of securities available for sale	$ 0	$ 2,233	$ 0	$ 12,685
Gross realized gains	0	0	0	128
Gross realized losses	$ 0	$ (8)	$ 0	$ (10)

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Note 3 - Loans Receivable (Details Textual) Pure in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Financing Receivable, Unamortized Loan Cost (Fee) and Purchase Premium (Discount)	$ 14,200,000		$ 14,200,000		$ 13,200,000
Financing Receivable, Accrued Interest, after Allowance for Credit Loss	5,400,000		5,400,000		4,700,000
Financing Receivable, Nonaccrual, Interest Income	18,000	$ 41,000	26,000	$ 100,000
Financing Receivable, Individually Evaluated for Impairment	$ 1,500,000		$ 1,500,000		$ 3,034,000
Financing Receivable, Modified, Number of Contracts			0

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Note 3 - Loans Receivable - Loans Receivable (Details) - USD ($) $ in Thousands	Jun. 30, 2023		Dec. 31, 2022		Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Loan receivable, gross	$ 1,638,160		$ 1,547,551
Allowance for Credit Loss	17,297	[1]	16,116	[1]	$ 15,747	$ 15,127	$ 15,124
Total loans receivable, net	1,620,863		1,531,435
Real Estate Portfolio Segment [Member]
Loan receivable, gross	1,195,182		1,178,834
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member]
Loan receivable, gross	365,600		343,559
Allowance for Credit Loss	3,012		3,343		3,026	3,039	3,184
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member]
Loan receivable, gross	296,561		252,745
Allowance for Credit Loss	1,041		2,468		2,168	2,092	1,816
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Loan receivable, gross	375,961		388,884
Allowance for Credit Loss	2,924		4,217		4,154	4,038	3,996
Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loan receivable, gross	157,060		193,646
Allowance for Credit Loss	2,535		2,344		2,550	2,481	2,672
Consumer Portfolio Segment [Member]
Loan receivable, gross	312,845		291,790
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loan receivable, gross	58,895		52,877
Allowance for Credit Loss	1,125		549		486	405	407
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member]
Loan receivable, gross	253,950		238,913
Allowance for Credit Loss	4,795		2,024		2,367	2,229	2,221
Commercial Portfolio Segment [Member]
Loan receivable, gross	130,133		76,927
Allowance for Credit Loss	$ 1,865		$ 786		$ 680	$ 526	$ 470

[1] Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

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Note 3 - Loans Receivable - Nonaccrual Loans by Class (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Total nonaccrual loans	$ 2,554	$ 1,793
Collateral Pledged [Member]
Total nonaccrual loans	1,547
Uncollateralized [Member]
Total nonaccrual loans	1,007
Residential Real Estate [Member]
Total nonaccrual loans	1,506
Commercial Real Estate [Member]
Total nonaccrual loans	41
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member]
Total nonaccrual loans	1,780	954
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Collateral Pledged [Member]
Total nonaccrual loans	1,475
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Uncollateralized [Member]
Total nonaccrual loans	305
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Residential Real Estate [Member]
Total nonaccrual loans	1,475
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Commercial Real Estate [Member]
Total nonaccrual loans	0
Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Total nonaccrual loans	12	15
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Collateral Pledged [Member]
Total nonaccrual loans	0
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Uncollateralized [Member]
Total nonaccrual loans	12
Commercial Real Estate Portfolio Segment [Member]
Total nonaccrual loans	41	53
Commercial Real Estate Portfolio Segment [Member] | Collateral Pledged [Member]
Total nonaccrual loans	41
Commercial Real Estate Portfolio Segment [Member] | Uncollateralized [Member]
Total nonaccrual loans	0
Commercial Real Estate Portfolio Segment [Member] | Residential Real Estate [Member]
Total nonaccrual loans	0
Commercial Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Total nonaccrual loans	41
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Total nonaccrual loans	245	196
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Collateral Pledged [Member]
Total nonaccrual loans	31
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Uncollateralized [Member]
Total nonaccrual loans	214
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Residential Real Estate [Member]
Total nonaccrual loans	31
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Commercial Real Estate [Member]
Total nonaccrual loans	0
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member]
Total nonaccrual loans	476	$ 575
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Collateral Pledged [Member]
Total nonaccrual loans	0
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Uncollateralized [Member]
Total nonaccrual loans	$ 476

XML

Note 3 - Loans Receivable - Credit Quality Indicators by Class of Loan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Total Loans					$ 1,547,551
Originated current year	$ 144,332		$ 144,332
Originated prior year	453,758		453,758
Originated two years prior	477,461		477,461
Originated three years prior	266,709		266,709
Originated four years prior	60,479		60,479
Originated years prior	161,733		161,733
Revolving	73,688		73,688
Loan receivable, gross	1,638,160		1,638,160		1,547,551
Originated current year, writeoffs			0
Originated prior year, write offs			1,760
Originated two years prior, write offs			4
Originated three years prior, write offs			1
Originated four years prior, write offs			11
Originated years prior, write offs			102
Revolving, write offs			59
Gross charge-offs during the period	972	$ 73	1,937	$ 210
Pass [Member]
Originated current year	124,647		124,647
Originated prior year	452,437		452,437
Originated two years prior	442,001		442,001
Originated three years prior	254,534		254,534
Originated four years prior	56,198		56,198
Originated years prior	155,326		155,326
Revolving	66,997		66,997
Loan receivable, gross	1,552,140		1,552,140		1,463,099
Watch [Member]
Originated current year	4,813		4,813
Originated prior year	737		737
Originated two years prior	28,817		28,817
Originated three years prior	8,695		8,695
Originated four years prior	3,640		3,640
Originated years prior	2,850		2,850
Revolving	200		200
Loan receivable, gross	49,752		49,752		46,845
Special Mention [Member]
Originated current year	0		0
Originated prior year	236		236
Originated two years prior	6,611		6,611
Originated three years prior	679		679
Originated four years prior	4		4
Originated years prior	2,166		2,166
Revolving	3,854		3,854
Loan receivable, gross	13,550		13,550		20,694
Substandard [Member]
Originated current year	14,872		14,872
Originated prior year	348		348
Originated two years prior	32		32
Originated three years prior	2,801		2,801
Originated four years prior	637		637
Originated years prior	1,391		1,391
Revolving	2,637		2,637
Loan receivable, gross	22,718		22,718		16,913
Nonperforming Financial Instruments [Member]
Total Loans					1,793
Performing Financial Instruments [Member]
Total Loans					1,545,758
Real Estate Portfolio Segment [Member]
Loan receivable, gross	1,195,182		1,195,182		1,178,834
Real Estate Portfolio Segment [Member] | Pass [Member]
Loan receivable, gross					1,106,006
Real Estate Portfolio Segment [Member] | Watch [Member]
Loan receivable, gross					44,017
Real Estate Portfolio Segment [Member] | Special Mention [Member]
Loan receivable, gross					12,188
Real Estate Portfolio Segment [Member] | Substandard [Member]
Loan receivable, gross					16,623
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member]
Total Loans					343,559
Originated current year	2,990		2,990
Originated prior year	83,795		83,795
Originated two years prior	118,693		118,693
Originated three years prior	73,393		73,393
Originated four years prior	14,734		14,734
Originated years prior	71,995		71,995
Revolving	0		0
Loan receivable, gross	365,600		365,600		343,559
Originated current year, writeoffs			0
Originated prior year, write offs			0
Originated two years prior, write offs			0
Originated three years prior, write offs			0
Originated four years prior, write offs			0
Originated years prior, write offs			0
Revolving, write offs			0
Gross charge-offs during the period	(0)	(0)	0	(0)
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Pass [Member]
Originated current year	2,990		2,990
Originated prior year	83,795		83,795
Originated two years prior	118,693		118,693
Originated three years prior	72,169		72,169
Originated four years prior	14,247		14,247
Originated years prior	69,979		69,979
Revolving	0		0
Loan receivable, gross	361,873		361,873		339,812
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Watch [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	592		592
Originated four years prior	0		0
Originated years prior	723		723
Revolving	0		0
Loan receivable, gross	1,315		1,315		2,234
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Special Mention [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	303		303
Originated four years prior	0		0
Originated years prior	106		106
Revolving	0		0
Loan receivable, gross	409		409		27
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Substandard [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	329		329
Originated four years prior	487		487
Originated years prior	1,187		1,187
Revolving	0		0
Loan receivable, gross	2,003		2,003		1,486
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Nonperforming Financial Instruments [Member]
Total Loans					954
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Performing Financial Instruments [Member]
Total Loans					342,605
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member]
Total Loans					252,745
Originated current year	22,960		22,960
Originated prior year	103,162		103,162
Originated two years prior	96,340		96,340
Originated three years prior	59,041		59,041
Originated four years prior	8,637		8,637
Originated years prior	6,421		6,421
Revolving	0		0
Loan receivable, gross	296,561		296,561		252,745
Originated current year, writeoffs			0
Originated prior year, write offs			0
Originated two years prior, write offs			0
Originated three years prior, write offs			0
Originated four years prior, write offs			0
Originated years prior, write offs			0
Revolving, write offs			0
Gross charge-offs during the period	(0)	(0)	0	(0)
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Pass [Member]
Originated current year	22,960		22,960
Originated prior year	103,162		103,162
Originated two years prior	81,072		81,072
Originated three years prior	59,041		59,041
Originated four years prior	8,637		8,637
Originated years prior	5,422		5,422
Revolving	0		0
Loan receivable, gross	280,294		280,294		237,077
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Watch [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	15,268		15,268
Originated three years prior	0		0
Originated four years prior	0		0
Originated years prior	999		999
Revolving	0		0
Loan receivable, gross	16,267		16,267		15,668
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Special Mention [Member]
Loan receivable, gross					0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Substandard [Member]
Loan receivable, gross					0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Nonperforming Financial Instruments [Member]
Total Loans					0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Performing Financial Instruments [Member]
Total Loans					252,745
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Total Loans					388,884
Originated current year	25,629		25,629
Originated prior year	89,991		89,991
Originated two years prior	124,778		124,778
Originated three years prior	92,638		92,638
Originated four years prior	17,211		17,211
Originated years prior	25,714		25,714
Revolving	0		0
Loan receivable, gross	375,961		375,961		388,884
Originated current year, writeoffs			0
Originated prior year, write offs			0
Originated two years prior, write offs			0
Originated three years prior, write offs			0
Originated four years prior, write offs			0
Originated years prior, write offs			0
Revolving, write offs			0
Gross charge-offs during the period	(0)	(0)	0	(0)
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Pass [Member]
Originated current year	21,721		21,721
Originated prior year	89,951		89,951
Originated two years prior	105,753		105,753
Originated three years prior	83,355		83,355
Originated four years prior	13,604		13,604
Originated years prior	24,688		24,688
Revolving	0		0
Loan receivable, gross	339,072		339,072		350,001
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Watch [Member]
Originated current year	3,908		3,908
Originated prior year	0		0
Originated two years prior	12,434		12,434
Originated three years prior	6,901		6,901
Originated four years prior	3,607		3,607
Originated years prior	1,026		1,026
Revolving	0		0
Loan receivable, gross	27,876		27,876		25,586
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Special Mention [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	6,591		6,591
Originated three years prior	0		0
Originated four years prior	0		0
Originated years prior	0		0
Revolving	0		0
Loan receivable, gross	6,591		6,591		12,161
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Substandard [Member]
Originated current year	0		0
Originated prior year	40		40
Originated two years prior	0		0
Originated three years prior	2,382		2,382
Originated four years prior	0		0
Originated years prior	0		0
Revolving	0		0
Loan receivable, gross	2,422		2,422		1,136
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Nonperforming Financial Instruments [Member]
Total Loans					53
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Performing Financial Instruments [Member]
Total Loans					388,831
Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Total Loans					193,646
Originated current year	40,672		40,672
Originated prior year	62,714		62,714
Originated two years prior	49,563		49,563
Originated three years prior	772		772
Originated four years prior	570		570
Originated years prior	2,769		2,769
Revolving	0		0
Loan receivable, gross	157,060		157,060		193,646
Originated current year, writeoffs			0
Originated prior year, write offs			0
Originated two years prior, write offs			0
Originated three years prior, write offs			0
Originated four years prior, write offs			0
Originated years prior, write offs			0
Revolving, write offs			0
Gross charge-offs during the period	(0)	(0)	0	(0)
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Pass [Member]
Originated current year	24,924		24,924
Originated prior year	62,714		62,714
Originated two years prior	49,563		49,563
Originated three years prior	772		772
Originated four years prior	570		570
Originated years prior	2,740		2,740
Revolving	0		0
Loan receivable, gross	141,283		141,283		179,116
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Watch [Member]
Originated current year	889		889
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	0		0
Originated four years prior	0		0
Originated years prior	17		17
Revolving	0		0
Loan receivable, gross	906		906		529
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Special Mention [Member]
Loan receivable, gross					0
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Substandard [Member]
Originated current year	14,859		14,859
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	0		0
Originated four years prior	0		0
Originated years prior	12		12
Revolving	0		0
Loan receivable, gross	14,871		14,871		14,001
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Nonperforming Financial Instruments [Member]
Total Loans					15
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Performing Financial Instruments [Member]
Total Loans					193,631
Consumer Portfolio Segment [Member]
Loan receivable, gross	312,845		312,845		291,790
Consumer Portfolio Segment [Member] | Pass [Member]
Loan receivable, gross					290,817
Consumer Portfolio Segment [Member] | Watch [Member]
Loan receivable, gross					594
Consumer Portfolio Segment [Member] | Special Mention [Member]
Loan receivable, gross					89
Consumer Portfolio Segment [Member] | Substandard [Member]
Loan receivable, gross					290
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Total Loans					52,877
Originated current year	3,663		3,663
Originated prior year	7,566		7,566
Originated two years prior	5,046		5,046
Originated three years prior	3,310		3,310
Originated four years prior	1,655		1,655
Originated years prior	3,999		3,999
Revolving	33,656		33,656
Loan receivable, gross	58,895		58,895		52,877
Originated current year, writeoffs			0
Originated prior year, write offs			0
Originated two years prior, write offs			0
Originated three years prior, write offs			0
Originated four years prior, write offs			0
Originated years prior, write offs			11
Revolving, write offs			0
Gross charge-offs during the period	(0)	(0)	11	(0)
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Pass [Member]
Originated current year	3,663		3,663
Originated prior year	7,566		7,566
Originated two years prior	5,014		5,014
Originated three years prior	3,249		3,249
Originated four years prior	1,655		1,655
Originated years prior	3,928		3,928
Revolving	33,191		33,191
Loan receivable, gross	58,266		58,266		52,295
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Watch [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	0		0
Originated four years prior	0		0
Originated years prior	0		0
Revolving	200		200
Loan receivable, gross	200		200		372
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Special Mention [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	0		0
Originated four years prior	0		0
Originated years prior	71		71
Revolving	113		113
Loan receivable, gross	184		184		14
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Substandard [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	32		32
Originated three years prior	61		61
Originated four years prior	0		0
Originated years prior	0		0
Revolving	152		152
Loan receivable, gross	245		245		196
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Nonperforming Financial Instruments [Member]
Total Loans					196
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Performing Financial Instruments [Member]
Total Loans					52,681
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member]
Total Loans					238,913
Loan receivable, gross	253,950		253,950		238,913
Gross charge-offs during the period	972	73	1,926	210
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Pass [Member]
Loan receivable, gross					238,522
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Watch [Member]
Loan receivable, gross					222
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Special Mention [Member]
Loan receivable, gross					75
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Substandard [Member]
Loan receivable, gross					94
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Nonperforming Financial Instruments [Member]
Total Loans					575
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Performing Financial Instruments [Member]
Total Loans					238,338
Consumer Portfolio Segment [Member] | Other Consumer [Member]
Originated current year	29,875		29,875
Originated prior year	82,170		82,170
Originated two years prior	70,773		70,773
Originated three years prior	33,179		33,179
Originated four years prior	17,149		17,149
Originated years prior	20,361		20,361
Revolving	443		443
Loan receivable, gross	253,950		253,950
Originated current year, writeoffs			0
Originated prior year, write offs			1,760
Originated two years prior, write offs			4
Originated three years prior, write offs			1
Originated four years prior, write offs			11
Originated years prior, write offs			91
Revolving, write offs			59
Gross charge-offs during the period			1,926
Consumer Portfolio Segment [Member] | Other Consumer [Member] | Pass [Member]
Originated current year	29,846		29,846
Originated prior year	80,899		80,899
Originated two years prior	70,123		70,123
Originated three years prior	32,924		32,924
Originated four years prior	16,962		16,962
Originated years prior	20,269		20,269
Revolving	443		443
Loan receivable, gross	251,466		251,466
Consumer Portfolio Segment [Member] | Other Consumer [Member] | Watch [Member]
Originated current year	16		16
Originated prior year	727		727
Originated two years prior	630		630
Originated three years prior	194		194
Originated four years prior	33		33
Originated years prior	85		85
Revolving	0		0
Loan receivable, gross	1,685		1,685
Consumer Portfolio Segment [Member] | Other Consumer [Member] | Special Mention [Member]
Originated current year	0		0
Originated prior year	236		236
Originated two years prior	20		20
Originated three years prior	61		61
Originated four years prior	4		4
Originated years prior	0		0
Revolving	0		0
Loan receivable, gross	321		321
Consumer Portfolio Segment [Member] | Other Consumer [Member] | Substandard [Member]
Originated current year	13		13
Originated prior year	308		308
Originated two years prior	0		0
Originated three years prior	0		0
Originated four years prior	150		150
Originated years prior	7		7
Revolving	0		0
Loan receivable, gross	478		478
Commercial Portfolio Segment [Member]
Total Loans					76,927
Originated current year	18,543		18,543
Originated prior year	24,360		24,360
Originated two years prior	12,268		12,268
Originated three years prior	4,376		4,376
Originated four years prior	523		523
Originated years prior	30,474		30,474
Revolving	39,589		39,589
Loan receivable, gross	130,133		130,133		76,927
Originated current year, writeoffs			0
Originated prior year, write offs			0
Originated two years prior, write offs			0
Originated three years prior, write offs			0
Originated four years prior, write offs			0
Originated years prior, write offs			0
Revolving, write offs			0
Gross charge-offs during the period	(0)	$ (0)	0	$ (0)
Commercial Portfolio Segment [Member] | Pass [Member]
Originated current year	18,543		18,543
Originated prior year	24,350		24,350
Originated two years prior	11,783		11,783
Originated three years prior	3,024		3,024
Originated four years prior	523		523
Originated years prior	28,300		28,300
Revolving	33,363		33,363
Loan receivable, gross	119,886		119,886		66,276
Commercial Portfolio Segment [Member] | Watch [Member]
Originated current year	0		0
Originated prior year	10		10
Originated two years prior	485		485
Originated three years prior	1,008		1,008
Originated four years prior	0		0
Revolving	0		0
Loan receivable, gross	1,503		1,503		2,234
Originated years prior, net of deferred fees	0		0
Commercial Portfolio Segment [Member] | Special Mention [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	315		315
Originated four years prior	0		0
Originated years prior	1,989		1,989
Revolving	3,741		3,741
Loan receivable, gross	6,045		6,045		8,417
Commercial Portfolio Segment [Member] | Substandard [Member]
Originated current year	0		0
Originated prior year	0		0
Originated two years prior	0		0
Originated three years prior	29		29
Originated four years prior	0		0
Originated years prior	185		185
Revolving	2,485		2,485
Loan receivable, gross	$ 2,699		$ 2,699		0
Commercial Portfolio Segment [Member] | Nonperforming Financial Instruments [Member]
Total Loans					0
Commercial Portfolio Segment [Member] | Performing Financial Instruments [Member]
Total Loans					$ 76,927

XML

Note 3 - Loans Receivable - Past Due Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Loan receivable, gross	$ 1,638,160	$ 1,547,551
Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	1,465	2,992
Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	313	871
Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	1,509	1,220
Financial Asset, Past Due [Member]
Loan receivable, gross	3,287	5,083
Financial Asset, Not Past Due [Member]
Loan receivable, gross	1,634,873	1,542,468
Real Estate Portfolio Segment [Member]
Loan receivable, gross	1,195,182	1,178,834
Real Estate Portfolio Segment [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	0	1,449
Real Estate Portfolio Segment [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	0	173
Real Estate Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	939	652
Real Estate Portfolio Segment [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	939	2,274
Real Estate Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	1,194,243	1,176,560
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member]
Loan receivable, gross	365,600	343,559
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	0	1,449
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	0	155
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	921	652
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	921	2,256
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	364,679	341,303
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member]
Loan receivable, gross	296,561	252,745
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	296,561	252,745
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Loan receivable, gross	375,961	388,884
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	375,961	388,884
Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Loan receivable, gross	157,060	193,646
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	0	0
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	0	18
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	18	0
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	18	18
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	157,042	193,628
Consumer Portfolio Segment [Member]
Loan receivable, gross	312,845	291,790
Consumer Portfolio Segment [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	1,359	1,543
Consumer Portfolio Segment [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	313	698
Consumer Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	570	568
Consumer Portfolio Segment [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	2,242	2,809
Consumer Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	310,603	288,981
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Loan receivable, gross	58,895	52,877
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	0	153
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	14	0
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	91	11
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	105	164
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	58,790	52,713
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member]
Loan receivable, gross	253,950	238,913
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	1,359	1,390
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	299	698
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	479	557
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	2,137	2,645
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	251,813	236,268
Commercial Portfolio Segment [Member]
Loan receivable, gross	130,133	76,927
Commercial Portfolio Segment [Member] | Financial Asset, 30 to 59 Days Past Due [Member]
Loan receivable, gross	106	0
Commercial Portfolio Segment [Member] | Financial Asset, 60 to 89 Days Past Due [Member]
Loan receivable, gross	0	0
Commercial Portfolio Segment [Member] | Financial Asset, Equal to or Greater than 90 Days Past Due [Member]
Loan receivable, gross	0	0
Commercial Portfolio Segment [Member] | Financial Asset, Past Due [Member]
Loan receivable, gross	106	0
Commercial Portfolio Segment [Member] | Financial Asset, Not Past Due [Member]
Loan receivable, gross	$ 130,027	$ 76,927

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Note 3 - Loans Receivable - Troubled Debt Restructurings (Details) - USD ($) $ in Thousands	Jun. 30, 2023		Dec. 31, 2022		Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Total TDR loans			$ 1,753
Allowance for credit losses on loans related to TDR loans	$ 17,297	[1]	16,116	[1]	$ 15,747	$ 15,127	$ 15,124
Total nonaccrual TDR loans			29
Total accrual TDR loans			1,724
Troubled Debt Restructurings [Member]
Allowance for credit losses on loans related to TDR loans			21
One-to-four Family Loan [Member] | Real Estate Portfolio Segment [Member]
Total TDR loans			1,726
Allowance for credit losses on loans related to TDR loans	3,012		3,343		3,026	3,039	3,184
Total nonaccrual TDR loans			29
Total accrual TDR loans			1,697
Home Equity Loan [Member] | Consumer Portfolio Segment [Member]
Total TDR loans			27
Allowance for credit losses on loans related to TDR loans	$ 1,125		549		$ 486	$ 405	$ 407
Total nonaccrual TDR loans			0
Total accrual TDR loans			$ 27

[1] Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

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Note 4 - Allowance for Credit Losses on Loans (Details Textual) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2023		Jun. 30, 2022	Jun. 30, 2023		Jun. 30, 2023		Jun. 30, 2022	Jan. 01, 2023	Dec. 31, 2022	[1]	Mar. 31, 2022	Dec. 31, 2021
Financing Receivable, Allowance for Credit Loss, Period Increase (Decrease)	$ 300,000			$ 315,000
Financing Receivable, Allowance for Credit Loss, Writeoff, after Recovery	399,000			1,300,000
Financing Receivable, Nonaccrual, Interest Income	18,000		$ 41,000	26,000				$ 100,000
Financing Receivable, Allowance for Credit Loss	17,297,000	[1]	15,747,000	17,297,000	[1]	$ 17,297,000	[1]	15,747,000		$ 16,116,000		$ 15,127,000	$ 15,124,000
Financing Receivable, Credit Loss, Expense (Reversal)	300,000		$ 500,000	315,000				$ 500,000
Unfunded Loan Commitment [Member]
Financing Receivable, Allowance for Credit Loss	$ 1,300,000			$ 1,300,000		1,300,000			$ 1,900,000
Financing Receivable, Credit Loss, Expense (Reversal)						$ 515,000

[1] Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

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Note 4 - Allowance for Credit Losses on Loans - Allowance for Loan Losses (Details) - USD ($)	3 Months Ended			6 Months Ended
	Jun. 30, 2023		Jun. 30, 2022	Jun. 30, 2023		Jun. 30, 2022	Dec. 31, 2022
Balance			$ 15,127,000	$ 16,116,000	[1]	$ 15,124,000
Write-offs	$ (972,000)		(73,000)	(1,937,000)		(210,000)
Recoveries	573,000		193,000	594,000		333,000
Provision for credit losses	300,000		500,000	315,000		500,000
Balance	17,297,000	[1]	15,747,000	17,297,000	[1]	15,747,000
Allowance for Credit Loss	17,297,000	[1]	15,747,000	17,297,000	[1]	15,747,000	$ 16,116,000	[1]
General reserve							16,084,000
Specific reserve							32,000
Gross loans							1,534,380,000
Loans collectively evaluated (1)							1,531,346,000
Loans individually evaluated (2)	1,500,000			1,500,000			3,034,000
Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	17,396,000			18,325,000
Allowance for Credit Loss							18,325,000
Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				2,209,000
Allowance for Credit Loss							2,209,000
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member]
Balance			3,039,000	3,343,000		3,184,000
Write-offs	0		0	0		0
Recoveries	4,000		0	4,000		32,000
Provision for credit losses	105,000		(13,000)	94,000		(190,000)
Balance	3,012,000		3,026,000	3,012,000		3,026,000
Allowance for Credit Loss	3,012,000		3,026,000	3,012,000		3,026,000	3,343,000
General reserve							3,321,000
Specific reserve							22,000
Gross loans							343,825,000
Loans collectively evaluated (1)							341,171,000
Loans individually evaluated (2)							2,654,000
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	2,903,000			2,914,000
Allowance for Credit Loss							2,914,000
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				(429,000)
Allowance for Credit Loss							(429,000)
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member]
Balance			2,092,000	2,468,000		1,816,000
Write-offs	0		0	0		0
Recoveries	0		0	0		0
Provision for credit losses	(4,000)		76,000	22,000		352,000
Balance	1,041,000		2,168,000	1,041,000		2,168,000
Allowance for Credit Loss	1,041,000		2,168,000	1,041,000		2,168,000	2,468,000
General reserve							2,468,000
Specific reserve							0
Gross loans							253,551,000
Loans collectively evaluated (1)							253,551,000
Loans individually evaluated (2)							0
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	1,045,000			1,019,000
Allowance for Credit Loss							1,019,000
Real Estate Portfolio Segment [Member] | Multi-family Loan [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				(1,449,000)
Allowance for Credit Loss							(1,449,000)
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Balance			4,038,000	4,217,000		3,996,000
Write-offs	0		0	0		0
Recoveries	0		0	0		0
Provision for credit losses	(55,000)		116,000	(689,000)		158,000
Balance	2,924,000		4,154,000	2,924,000		4,154,000
Allowance for Credit Loss	2,924,000		4,154,000	2,924,000		4,154,000	4,217,000
General reserve							4,217,000
Specific reserve							0
Gross loans							390,246,000
Loans collectively evaluated (1)							390,196,000
Loans individually evaluated (2)							50,000
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	2,979,000			3,613,000
Allowance for Credit Loss							3,613,000
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				(604,000)
Allowance for Credit Loss							(604,000)
Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Balance			2,481,000	2,344,000		2,672,000
Write-offs	0		0	0		0
Recoveries	0		0	0		2,000
Provision for credit losses	(247,000)		69,000	(1,364,000)		(124,000)
Balance	2,535,000		2,550,000	2,535,000		2,550,000
Allowance for Credit Loss	2,535,000		2,550,000	2,535,000		2,550,000	2,344,000
General reserve							2,343,000
Specific reserve							1,000
Gross loans							194,646,000
Loans collectively evaluated (1)							194,630,000
Loans individually evaluated (2)							16,000
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	2,782,000			3,899,000
Allowance for Credit Loss							3,899,000
Real Estate Portfolio Segment [Member] | Construction Loans [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				1,555,000
Allowance for Credit Loss							1,555,000
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Balance			405,000	549,000		407,000
Write-offs	0		0	(11,000)		0
Recoveries	5,000		0	5,000		17,000
Provision for credit losses	36,000		81,000	236,000		62,000
Balance	1,125,000		486,000	1,125,000		486,000
Allowance for Credit Loss	1,125,000		486,000	1,125,000		486,000	549,000
General reserve							545,000
Specific reserve							4,000
Gross loans							52,322,000
Loans collectively evaluated (1)							52,100,000
Loans individually evaluated (2)							222,000
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	1,084,000			895,000
Allowance for Credit Loss							895,000
Consumer Portfolio Segment [Member] | Home Equity Loan [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				346,000
Allowance for Credit Loss							346,000
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member]
Balance			2,229,000	2,024,000		2,221,000
Write-offs	(972,000)		(73,000)	(1,926,000)		(210,000)
Recoveries	564,000		51,000	585,000		140,000
Provision for credit losses	514,000		160,000	1,731,000		216,000
Balance	4,795,000		2,367,000	4,795,000		2,367,000
Allowance for Credit Loss	4,795,000		2,367,000	4,795,000		2,367,000	2,024,000
General reserve							2,019,000
Specific reserve							5,000
Gross loans							222,794,000
Loans collectively evaluated (1)							222,702,000
Loans individually evaluated (2)							92,000
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	4,689,000			4,405,000
Allowance for Credit Loss							4,405,000
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				2,381,000
Allowance for Credit Loss							2,381,000
Commercial Portfolio Segment [Member]
Balance			526,000	786,000		470,000
Write-offs	0		0	0		0
Recoveries	0		142,000	0		142,000
Provision for credit losses	(49,000)		12,000	285,000		68,000
Balance	1,865,000		680,000	1,865,000		680,000
Allowance for Credit Loss	1,865,000		680,000	1,865,000		680,000	786,000
General reserve							786,000
Specific reserve							0
Gross loans							76,996,000
Loans collectively evaluated (1)							76,996,000
Loans individually evaluated (2)							0
Commercial Portfolio Segment [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance	1,914,000			1,580,000
Allowance for Credit Loss							1,580,000
Commercial Portfolio Segment [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				794,000
Allowance for Credit Loss							794,000
Unallocated Financing Receivables [Member]
Balance			317,000	385,000		358,000
Write-offs			0	0		0
Recoveries			0	0		0
Provision for credit losses			(1,000)	0		(42,000)
Balance	0		316,000	0		316,000
Allowance for Credit Loss	$ 0		$ 316,000	0		$ 316,000	385,000
General reserve							385,000
Specific reserve							0
Gross loans							0
Loans collectively evaluated (1)							0
Loans individually evaluated (2)							0
Unallocated Financing Receivables [Member] | Cumulative Effect, Period of Adoption, Adjusted Balance [Member]
Balance				0
Allowance for Credit Loss							0
Unallocated Financing Receivables [Member] | Cumulative Effect, Period of Adoption, Adjustment [Member]
Balance				$ (385,000)
Allowance for Credit Loss							$ (385,000)

[1] Allowance for credit losses on loans in 2023 reported using the CECL method and in 2022 reported using the incurred loss method.

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Note 4 - Allowance for Credit Losses on Loans - Impaired Loans by Segment (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2022	Jun. 30, 2022	Dec. 31, 2022
Recorded investment, with no allowance recorded			$ 716
Unpaid principal balance, with no allowance recorded			870
Recorded investment, with an allowance recorded			2,318
Unpaid principal balance, with an allowance recorded			2,467
Related allowance			32
Recorded investment, total			3,034
Unpaid principal balance, total			3,337
Average recorded investment, with no allowance recorded	$ 666	$ 602
Interest income recognized, with no allowance recorded	12	18
Average recorded investment, with an allowance recorded	2,516	2,544
Interest income recognized, with an allowance recorded	45	82
Average recorded investment, total	3,182	3,146
Interest income recognized, total	57	100
Real Estate Portfolio Segment [Member] | One-to-four Family Loan [Member]
Recorded investment, with no allowance recorded			666
Unpaid principal balance, with no allowance recorded			705
Recorded investment, with an allowance recorded			1,988
Unpaid principal balance, with an allowance recorded			2,129
Related allowance			22
Recorded investment, total			2,654
Unpaid principal balance, total			2,834
Average recorded investment, with no allowance recorded	356	283
Interest income recognized, with no allowance recorded	6	8
Average recorded investment, with an allowance recorded	2,128	2,079
Interest income recognized, with an allowance recorded	39	72
Average recorded investment, total	2,484	2,362
Interest income recognized, total	45	80
Real Estate Portfolio Segment [Member] | Commercial Real Estate [Member]
Recorded investment, with no allowance recorded			50
Unpaid principal balance, with no allowance recorded			149
Recorded investment, with an allowance recorded			50
Unpaid principal balance, with an allowance recorded			149
Related allowance			0
Average recorded investment, with no allowance recorded	63	65
Interest income recognized, with no allowance recorded	0	0
Average recorded investment, with an allowance recorded	21	11
Interest income recognized, with an allowance recorded	0	0
Average recorded investment, total	84	76
Interest income recognized, total	0	0
Real Estate Portfolio Segment [Member] | Construction Loans [Member]
Recorded investment, with no allowance recorded			0
Unpaid principal balance, with no allowance recorded			14
Recorded investment, with an allowance recorded			16
Unpaid principal balance, with an allowance recorded			19
Related allowance			1
Recorded investment, total			16
Unpaid principal balance, total			33
Average recorded investment, with no allowance recorded	0	0
Interest income recognized, with no allowance recorded	1	1
Average recorded investment, with an allowance recorded	22	22
Interest income recognized, with an allowance recorded	1	1
Average recorded investment, total	22	22
Interest income recognized, total	2	2
Consumer Portfolio Segment [Member] | Home Equity Loan [Member]
Recorded investment, with no allowance recorded			222
Unpaid principal balance, with no allowance recorded			224
Recorded investment, with an allowance recorded			222
Unpaid principal balance, with an allowance recorded			224
Related allowance			4
Average recorded investment, with no allowance recorded	0	5
Interest income recognized, with no allowance recorded	0	0
Average recorded investment, with an allowance recorded	284	293
Interest income recognized, with an allowance recorded	4	7
Average recorded investment, total	284	298
Interest income recognized, total	4	7
Consumer Portfolio Segment [Member] | Automobile and Other Loan [Member]
Recorded investment, with no allowance recorded			0
Unpaid principal balance, with no allowance recorded			2
Recorded investment, with an allowance recorded			92
Unpaid principal balance, with an allowance recorded			95
Related allowance			5
Recorded investment, total			92
Unpaid principal balance, total			$ 97
Average recorded investment, with no allowance recorded	247	249
Interest income recognized, with no allowance recorded	5	9
Average recorded investment, with an allowance recorded	61	139
Interest income recognized, with an allowance recorded	1	2
Average recorded investment, total	308	388
Interest income recognized, total	$ 6	$ 11

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Note 5 - Deposits (Details Textual) - USD ($) $ in Millions	Jun. 30, 2023	Dec. 31, 2022
Interest-Bearing Domestic Deposit, Brokered	$ 179.6	$ 133.9
Time Deposits, at or Above FDIC Insurance Limit	157.1	96.6
Deposits, Public Fund	112.1	93.3
Deposits, Funds Held by Federally Recognized Tribes	18.9	10.3
Asset Pledged as Collateral [Member]
Debt Securities		57.1
Asset Pledged as Collateral [Member] | Funds Held by Federally Recognized Tribes [Member]
Debt Securities	21.9	$ 23.6
Federal Home Loan Bank of Des Moines [Member]
Letters of Credit Outstanding, Amount	$ 60.0

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Note 5 - Deposits - Deposits (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Noninterest-bearing demand deposits	$ 280,475	$ 315,083
Interest-bearing demand deposits	$ 179,029	$ 193,558
Interest-bearing demand deposits, weighted-average interest rate	0.50%	0.01%
Money market accounts	$ 374,269	$ 473,009
Money market accounts, weighted-average interest rate	1.10%	0.58%
Savings accounts	$ 260,279	$ 200,920
Savings accounts, weighted-average interest rate	1.41%	0.26%
Certificates of deposit	$ 559,070	$ 381,685
Certificates of deposit, weighted-average interest rate	3.55%	2.19%
Deposits	$ 1,653,122	$ 1,564,255
Total deposits, weighted-average interest rate	1.73%	0.74%

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Note 5 - Deposits - Maturities of Certificates (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Within one year or less	$ 422,485	$ 262,189
After one year through two years	104,285	69,967
After two years through three years	16,339	37,032
After three years through four years	11,195	7,409
After four years through five years	4,766	5,088
Total certificates of deposit	$ 559,070	$ 381,685

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Note 5 - Deposits - Interest on Deposits by Type (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Demand deposits	$ 201	$ 25	$ 395	$ 42
Money market accounts	944	323	1,720	621
Savings accounts	762	26	1,138	52
Certificates of deposit	4,302	422	7,309	798
Total interest expense on deposits	$ 6,209	$ 796	$ 10,562	$ 1,513

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Note 6 - Borrowings (Details Textual) - USD ($) $ in Thousands	Mar. 25, 2021	Jun. 30, 2023	Dec. 31, 2022	May 20, 2022
Federal Home Loan Bank, Advances, Maximum Available Credit to Bank Assets, Percentage		45.00%
Federal Home Loan Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged		$ 917,800	$ 753,700
Asset Pledged as Collateral [Member]
Debt Securities			57,100
Asset Pledged as Collateral [Member] | Letter of Credit [Member]
Debt Securities		17,000
Revolving Credit Facility [Member] | NexBank [Member]
Line of Credit Facility, Maximum Borrowing Capacity				$ 20,000
Revolving Credit Facility [Member] | Bank Term Funding [Member]
Line of Credit Facility, Maximum Borrowing Capacity		18,700
Line of Credit, Current		0
Debt Instrument, Notes Due 2031 [Member]
Subordinated Debt, Ending Balance	$ 40,000
Debt Instrument, Interest Rate, Stated Percentage	3.75%
Proceeds from Issuance of Subordinated Long-Term Debt	$ 39,300
Federal Home Loan Bank of San Francisco [Member]
Federal Reserve Bank Advances, Available Amount		8,700	8,600
Federal Reserve Bank Advances		0
Federal Home Loan Bank of San Francisco [Member] | Securities Investment [Member]
Federal Reserve Bank, Advances, General Debt Obligations, Disclosures, Collateral Pledged		$ 9,200	$ 9,000

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Note 6 - Borrowings - Advances from FHLB (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2023	Dec. 31, 2022
Balance outstanding	$ 11,000
Maximum outstanding at any month-end	11,000
Average monthly outstanding during the period	$ 10,718
Annual	8.94%
Period End	8.75%
Line of Credit [Member]
Balance outstanding		$ 12,000
Maximum outstanding at any month-end		12,000
Average monthly outstanding during the period		$ 5,770
Annual		6.76%
Period End		8.00%
Subordinated Debt [Member]
Balance outstanding	$ 39,397	$ 39,358
Maximum outstanding at any month-end	39,397	39,358
Average monthly outstanding during the period	$ 39,374	$ 39,312
Annual	4.04%	4.01%
Period End	4.04%	4.01%
Federal Home Loan Bank, Long-term Advances [Member]
Balance outstanding	$ 85,000	$ 80,000
Maximum outstanding at any month-end	85,000	80,000
Average monthly outstanding during the period	$ 82,500	$ 80,000
Annual	1.90%	1.52%
Period End	2.08%	1.52%
Within one year or less	$ 20,000
Within one year or less, weighted-average interest rate	2.30%
After one year through two years	$ 30,000
After one year through two years, weighted-average interest rate	2.48%
After two years through three years	$ 15,000
After two years through three years, weighted-average interest rate	1.49%
After three years through four years	$ 10,000
After three years through four years, weighted-average interest rate	1.63%
After four years through five years	$ 10,000
After four years through five years, weighted-average interest rate	1.76%
Total FHLB long-term advances	$ 85,000
Total FHLB long-term advances, weighted-average interest rate	2.08%
Federal Home Loan Bank, Overnight Variable-rate Advances [Member]
Balance outstanding	$ 163,000	$ 144,000
Maximum outstanding at any month-end	189,000	206,000
Average monthly outstanding during the period	$ 133,500	$ 90,983
Annual	4.97%	2.83%
Period End	5.35%	4.30%
Federal Home Loan Bank, Short-term, Fixed-rate Advances [Member]
Balance outstanding	$ 5,000	$ 10,000
Maximum outstanding at any month-end	95,000	42,500
Average monthly outstanding during the period	$ 45,833	$ 15,208
Annual	5.07%	1.82%
Period End	5.27%	2.12%

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Note 7 - Income Tax (Details Textual)	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Effective Income Tax Rate Reconciliation, Percent	20.20%	20.20%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent	21.00%	21.00%

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Note 8 - Earnings Per Common Share (Details Textual) - shares	6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount (in shares)	14,987	1,186

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Note 8 - Earnings Per Common Share - Components Used to Compute Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Net income available to common shareholders	$ 1,776	$ 2,488	$ 5,304	$ 5,294
Earnings allocated to participating securities	(9)	(25)	(28)	(55)
Earnings allocated to common shareholders	$ 1,767	$ 2,463	$ 5,276	$ 5,239
Weighted average common shares outstanding (in shares)	9,667,380	9,849,265	9,684,673	9,846,086
Weighted average unvested restricted stock awards (in shares)	(139,760)	(92,626)	(152,474)	(95,390)
Weighted average unallocated ESOP shares (in shares)	(613,265)	(661,745)	(619,841)	(668,323)
Total basic weighted average common shares outstanding (in shares)	8,914,355	9,094,894	8,912,358	9,082,373
Basic weighted average common shares outstanding (in shares)	8,914,355	9,094,894	8,912,358	9,082,373
Dilutive restricted stock awards (in shares)	17,031	71,237	19,759	84,942
Total diluted weighted average common shares outstanding (in shares)	8,931,386	9,166,131	8,932,117	9,167,315
Basic and diluted earnings per common share (in dollars per share)	$ 0.20	$ 0.27	$ 0.59	$ 0.58
Diluted earnings per common share (in dollars per share)	$ 0.20	$ 0.27	$ 0.59	$ 0.58

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Note 9 - Employee Benefits (Details Textual)	3 Months Ended			6 Months Ended
	Jun. 30, 2023 USD ($)	Mar. 31, 2023	Jun. 30, 2022 USD ($)	Jun. 30, 2023 USD ($)	Jun. 30, 2022 USD ($)
Employee Stock Ownership Plan (ESOP), Minimum Service Period, Hours		1,000
Employee Stock Ownership Plan (ESOP), Requisite Service Period (Month)		12 months
Employee Stock Ownership Plan (ESOP), Debt Structure, Amortization Period (Year)		20 years
Employee Stock Ownership Plan (ESOP), Debt Structure, Estimated Interest Rate		2.46%
Employee Stock Ownership Plan (ESOP), Principal and Interest Payments from ESOP				$ 835,000
Employee Stock Ownership Plan (ESOP), Compensation Expense, Net of Dividends Received	$ 153,000		$ 245,000	$ 340,000	$ 536,000

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Note 9 - Employee Benefits - Shares Issued to the ESOP (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Allocated shares (in shares)	439,174	386,285
Committed to be released shares (in shares)	0	26,442
Unallocated shares (in shares)	608,855	635,302
Total ESOP shares issued (in shares)	1,048,029	1,048,029
Fair value of unallocated shares	$ 6,929	$ 9,758

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Note 10 - Stock-based Compensation (Details Textual) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Mar. 31, 2023	Dec. 31, 2022	May 31, 2020
Employee Stock Ownership Plan (ESOP), Compensation Expense, Net of Dividends Received	$ 153,000	$ 245,000	$ 340,000	$ 536,000
Restricted Stock [Member]
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in shares)	132,918		132,918		149,054	166,839
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Grants in Period (in shares)	2,300		29,349	53,343
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount	$ 1,500,000		$ 1,500,000
Share-Based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition (Year)			1 year 5 months 4 days
Restricted Stock [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			1 year
Restricted Stock [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period (Year)			5 years
First Northwest Bancorp 2020 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized (in shares)							520,000
Employee Stock Ownership Plan (ESOP), Compensation Expense, Net of Dividends Received			$ 290,029
First Northwest Bancorp 2015 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant (in shares)	0		0
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number (in shares)	42,400		42,400
The Equity Incentive Plans [Member]
Share-Based Payment Arrangement, Expense	$ 358,000	479,000	$ 749,000	$ 890,000
The Equity Incentive Plans [Member] | Director [Member]
Share-Based Payment Arrangement, Expense	$ 73,000	$ 84,000	$ 131,000	$ 139,000

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Note 10 - Stock-based Compensation - Non-vested Restricted Stock Awards (Details) - Restricted Stock [Member] - $ / shares		3 Months Ended	6 Months Ended
		Jun. 30, 2023	Jun. 30, 2023	Jun. 30, 2022
Non-vested, shares (in shares)		149,054	166,839
Non-vested, weighted-average grant date fair value (in dollars per share)		$ 16.56	$ 17.78
Granted, shares (in shares)		2,300	29,349	53,343
Granted, weighted-average grant date fair value (in dollars per share)		$ 10.68	$ 14.09
Vested, shares (in shares)		(5,753)	(38,453)
Vested, weighted-average grant date fair value (in dollars per share)		$ 14.81	$ 19.12
Canceled, shares (in shares)	[1]	(1,472)	(11,806)
Canceled, weighted-average grant date fair value (in dollars per share)	[1]	$ 14.81	$ 19.12
Forfeited, shares (in shares)		(11,211)	(13,011)
Forfeited, weighted-average grant date fair value (in dollars per share)		$ 17.14	$ 17.29
Non-vested, shares (in shares)		132,918	132,918
Non-vested, weighted-average grant date fair value (in dollars per share)		$ 16.50	$ 16.50

[1] A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue.

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Note 11 - Fair Value Accounting and Measurement (Details Textual) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Fair Value, Measurement with Unobservable Inputs Reconciliation, Discount	$ 0	$ 0

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Note 11 - Fair Value Accounting and Measurement - Assets and Liabilities Measured at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Mar. 31, 2023	Dec. 31, 2022	Jun. 30, 2022	Mar. 31, 2022	Dec. 31, 2021
Investment securities available for sale, at fair value	$ 321,963		$ 326,569
Sold loan servicing rights	3,825		3,887
Servicing rights on sold loans, at fair value	3,825		3,887
Fair Value, Recurring [Member]
Sold loan servicing rights	3,825		3,887
Partnership investments	12,733		12,563
Total assets measured at fair value	338,521		343,019
Servicing rights on sold loans, at fair value	3,825		3,887
Fair Value, Recurring [Member] | Derivative Financial Instruments, Liabilities [Member]
Interest rate swap derivative	392
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Sold loan servicing rights	0		0
Partnership investments	0		0
Total assets measured at fair value	12,792		12,603
Servicing rights on sold loans, at fair value	0		0
Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member] | Derivative Financial Instruments, Liabilities [Member]
Interest rate swap derivative	0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Sold loan servicing rights	0		0
Partnership investments	0		0
Total assets measured at fair value	279,793		284,367
Servicing rights on sold loans, at fair value	0		0
Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member] | Derivative Financial Instruments, Liabilities [Member]
Interest rate swap derivative	392
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Sold loan servicing rights	3,825	$ 4,224	3,887	$ 3,865	$ 4,046	$ 3,820
Partnership investments	12,733		12,563
Total assets measured at fair value	45,936		46,049
Servicing rights on sold loans, at fair value	3,825	$ 4,224	3,887	$ 3,865	$ 4,046	$ 3,820
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Derivative Financial Instruments, Liabilities [Member]
Interest rate swap derivative	0
US States and Political Subdivisions Debt Securities [Member]
Investment securities available for sale, at fair value	100,503		98,050
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	100,503		98,050
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	5,014		4,913
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	95,489		93,137
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0		0
US Treasury Securities [Member]
Investment securities available for sale, at fair value	2,364
US Treasury Securities [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	2,364		2,364
US Treasury Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	2,364		2,364
US Treasury Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0		0
US Treasury Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0		0
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	1,717
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	1,717
US Government-sponsored Enterprises Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0
International Agency Bonds [Member]
Investment securities available for sale, at fair value	1,717		1,702
International Agency Bonds [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value			1,702
International Agency Bonds [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value			0
International Agency Bonds [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value			1,702
International Agency Bonds [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value			0
Corporate Debt Securities [Member]
Investment securities available for sale, at fair value	53,674		55,499
Corporate Debt Securities [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	53,674		55,499
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	5,414		5,326
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	48,260		50,173
Corporate Debt Securities [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0		0
Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member]
Investment securities available for sale, at fair value	71,565		75,648
Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	71,565		75,648
Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0		0
Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	71,565		75,648
Mortgage-Backed Securities, Issued by US Government Sponsored Enterprises [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0		0
Mortgage-Backed Securities, Issued by Private Enterprises [Member]
Investment securities available for sale, at fair value	92,140		93,306
Mortgage-Backed Securities, Issued by Private Enterprises [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	92,140		93,306
Mortgage-Backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 1 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	0		0
Mortgage-Backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 2 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	62,762		63,707
Mortgage-Backed Securities, Issued by Private Enterprises [Member] | Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Investment securities available for sale, at fair value	$ 29,378		$ 29,599

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Note 11 - Fair Value Accounting and Measurement - Quantitative Information (Details)	Jun. 30, 2023 USD ($)	Mar. 31, 2023 USD ($)	Dec. 31, 2022 USD ($)	Jun. 30, 2022 USD ($)	Mar. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Servicing rights on sold loans, at fair value	$ 3,825,000		$ 3,887,000
Fair Value, Recurring [Member]
Servicing rights on sold loans, at fair value	3,825,000		3,887,000
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member]
Servicing rights on sold loans, at fair value	$ 3,825,000	$ 4,224,000	$ 3,887,000	$ 3,865,000	$ 4,046,000	$ 3,820,000
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Measurement Input, Discount Rate [Member] | Weighted Average [Member]
Sold loan servicing rights, measurement input	0.1252
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Valuation Technique, Discounted Cash Flow [Member] | Sold Loan Servicing Rights [Member]
Servicing rights on sold loans, at fair value	$ 3,825,000
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Valuation Technique, Consensus Pricing Model [Member] | Mortgage-Backed Securities, Issued by Private Enterprises [Member]
Assets, fair value	$ 29,378
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Valuation Technique, Consensus Pricing Model [Member] | Measurement Input, Offered Price [Member] | Minimum [Member]
Measurement input	97.5
Debt Securities, Available-for-Sale, Measurement Input	97.5
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Valuation Technique, Consensus Pricing Model [Member] | Measurement Input, Offered Price [Member] | Maximum [Member]
Measurement input	99.5
Debt Securities, Available-for-Sale, Measurement Input	99.5
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Valuation Technique, Consensus Pricing Model [Member] | Measurement Input, Comparability Adjustment [Member] | Minimum [Member]
Measurement input	(1.04)
Debt Securities, Available-for-Sale, Measurement Input	(1.04)
Fair Value, Inputs, Level 3 [Member] | Fair Value, Recurring [Member] | Valuation Technique, Consensus Pricing Model [Member] | Measurement Input, Comparability Adjustment [Member] | Maximum [Member]
Measurement input	0.95
Debt Securities, Available-for-Sale, Measurement Input	0.95

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Note 11 - Fair Value Accounting and Measurement - Changes in Level 3 Assets (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended		12 Months Ended
		Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022	Dec. 31, 2022
Sold loan servicing rights				$ 3,887
Sold loan servicing rights		$ 3,825		3,825		$ 3,887
Balance at Beginning of Period				12,563	$ 0	0
Transfers Into Level 3						12,490
Purchases						0
Unrealized						73
Total						12,563
Fair Value, Recurring [Member]
Sold loan servicing rights				3,887
Sold loan servicing rights		3,825		3,825		3,887
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member]
Sold loan servicing rights		4,224	$ 4,046	3,887	3,820	3,820
Servicing rights that result from transfers and sale of financial assets		7	42	75	98
Changes in fair value due to changes in model inputs or assumptions	[1]	(406)	(223)	(137)	(53)
Sold loan servicing rights		3,825	$ 3,865	3,825	3,865	3,887
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Mortgage-Backed Securities, Issued by Private Enterprises [Member]
Balance at Beginning of Period				29,599	$ 0	0
Transfers Into Level 3				0		29,599
Purchases				0		0
Unrealized				(221)		0
Total		29,378		29,378		29,599
Fair Value, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | Partnership Investments [Member]
Balance at Beginning of Period				12,563
Transfers Into Level 3				0
Purchases				0
Unrealized				170
Total		$ 12,733		$ 12,733		$ 12,563

[1] Represents changes due to collection/realization of expected cash flows and curtailments.

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Note 11 - Fair Value Accounting and Measurement - Assets Measured at Fair Value on a Nonrecurring Basis (Details) - Fair Value, Nonrecurring [Member] $ in Thousands	Dec. 31, 2022 USD ($)
Impaired loans	$ 3,034
Fair Value, Inputs, Level 1 [Member]
Impaired loans	0
Fair Value, Inputs, Level 2 [Member]
Impaired loans	0
Fair Value, Inputs, Level 3 [Member]
Impaired loans	$ 3,034

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Note 11 - Fair Value Accounting and Measurement - Carrying Values and Estimated Fair Values of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2023	Dec. 31, 2022
Investment securities available for sale	$ 321,963	$ 326,569
Accrued interest receivable	7,480	6,743
Sold loan servicing rights	3,825	3,887
Reported Value Measurement [Member]
Cash and cash equivalents	78,302	45,596
Investment securities available for sale	321,963	326,569
Loans held for sale	2,049	597
Loans receivable, net	1,620,863	1,531,435
FHLB stock	12,621	11,681
Accrued interest receivable	7,480	6,743
Sold loan servicing rights	3,825	3,887
Partnership investments	12,733	12,563
FHLB Borrowings	253,000	234,000
Line of Credit	11,000	12,000
Subordinated debt, net	39,397	39,358
Accrued interest payable	1,367	455
Interest rate swap derivative	392
Reported Value Measurement [Member] | Demand Deposits [Member]
deposits	1,094,052	1,182,570
Reported Value Measurement [Member] | Time Deposits [Member]
deposits	559,070	381,685
Estimate of Fair Value Measurement [Member]
Cash and cash equivalents	78,302	45,596
Investment securities available for sale	321,963	326,569
Loans held for sale	2,049	597
Loans receivable, net	1,509,311	1,461,470
FHLB stock	12,621	11,681
Accrued interest receivable	7,480	6,743
Sold loan servicing rights	3,825	3,887
Partnership investments	12,733	12,563
FHLB Borrowings	247,846	229,103
Line of Credit	11,047	12,034
Subordinated debt, net	40,164	38,841
Accrued interest payable	1,367	455
Interest rate swap derivative	392
Estimate of Fair Value Measurement [Member] | Demand Deposits [Member]
deposits	1,094,052	1,182,570
Estimate of Fair Value Measurement [Member] | Time Deposits [Member]
deposits	551,012	372,865
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member]
Cash and cash equivalents	78,302	45,596
Investment securities available for sale	12,792	12,603
Loans held for sale	0	0
Loans receivable, net	0	0
FHLB stock	0	0
Accrued interest receivable	0	0
Sold loan servicing rights	0	0
Partnership investments	0	0
FHLB Borrowings	0	0
Line of Credit	0	0
Subordinated debt, net	0	0
Accrued interest payable	0	0
Interest rate swap derivative	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Demand Deposits [Member]
deposits	1,094,052	1,182,570
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 1 [Member] | Time Deposits [Member]
deposits	0	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member]
Cash and cash equivalents	0	0
Investment securities available for sale	279,793	284,367
Loans held for sale	2,049	597
Loans receivable, net	0	0
FHLB stock	12,621	11,681
Accrued interest receivable	7,480	6,743
Sold loan servicing rights	0	0
Partnership investments	0	0
FHLB Borrowings	0	0
Line of Credit	0	0
Subordinated debt, net	0	0
Accrued interest payable	1,367	455
Interest rate swap derivative	392
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | Demand Deposits [Member]
deposits	0	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 2 [Member] | Time Deposits [Member]
deposits	0	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member]
Cash and cash equivalents	0	0
Investment securities available for sale	29,378	29,599
Loans held for sale	0	0
Loans receivable, net	1,509,311	1,461,470
FHLB stock	0	0
Accrued interest receivable	0	0
Sold loan servicing rights	3,825	3,887
Partnership investments	12,733	12,563
FHLB Borrowings	247,846	229,103
Line of Credit	11,047	12,034
Subordinated debt, net	40,164	38,841
Accrued interest payable	0	0
Interest rate swap derivative	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | Demand Deposits [Member]
deposits	0	0
Estimate of Fair Value Measurement [Member] | Fair Value, Inputs, Level 3 [Member] | Time Deposits [Member]
deposits	$ 551,012	$ 372,865

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Note 12 - Change in Accumulated Other Comprehensive Income ("AOCI") - Change in Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
BALANCE			$ 161,573
Other comprehensive loss, net of tax	$ (1,958)	$ (13,294)	477	$ (28,735)
BALANCE	159,557		159,557
AOCI, Accumulated Gain (Loss), Debt Securities, Available-for-Sale, Parent [Member]
BALANCE	(34,642)	(13,330)	(38,404)	2,140
Other comprehensive loss before reclassification	(3,037)	(13,330)	725	(28,700)
Amounts reclassified from accumulated other comprehensive income	0	7	0	(93)
Other comprehensive loss, net of tax	(3,037)	(13,323)	725	(28,793)
BALANCE	(37,679)	(26,653)	(37,679)	(26,653)
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]
BALANCE	(2,109)	(1,823)	(2,139)	(1,852)
Other comprehensive loss before reclassification	0	0	0	0
Amounts reclassified from accumulated other comprehensive income	30	29	60	58
Other comprehensive loss, net of tax	30	29	60	58
BALANCE	(2,079)	(1,794)	(2,079)	(1,794)
Accumulated Gain (Loss), Net, Fair Value Hedge, Parent [Member]
BALANCE	(1,357)	0	0	0
Other comprehensive loss before reclassification	1,049	0	(308)	0
Amounts reclassified from accumulated other comprehensive income	0	0	0	0
Other comprehensive loss, net of tax	1,049	0	(308)	0
BALANCE	(308)	0	(308)	0
AOCI Attributable to Parent [Member]
BALANCE	(38,108)	(15,153)	(40,543)	288
Other comprehensive loss before reclassification	(1,988)	(13,330)	417	(28,700)
Amounts reclassified from accumulated other comprehensive income	30	36	60	(35)
Other comprehensive loss, net of tax	(1,958)	(13,294)	477	(28,735)
BALANCE	$ (40,066)	$ (28,447)	$ (40,066)	$ (28,447)

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Note 13 - Derivatives and Hedging Activities (Details Textual) - USD ($)	Jun. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-Sale, Amortized Cost	$ 369,938,000	$ 375,183,000
Credit Risk Derivatives, at Fair Value, Net	392,000
Derivative, Notional Amount	50,000,000.0
Derivative Credit Risk Valuation, Amount of Collateral Posted On Credit Deterioration	50,000,000.0
Credit Risk Derivative Liabilities, at Fair Value	351,000
Derivative Liability, Fair Value of Collateral	2,200,000
Designated as Hedging Instrument [Member]
Debt Securities, Available-for-Sale, Amortized Cost	50,100,000
Credit Risk Derivatives, at Fair Value, Net	392,000
Derivative, Notional Amount	$ 50,392,000

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Note 13 - Derivatives and Hedging Activities - Derivatives (Details)	Jun. 30, 2023 USD ($)
Derivative, carrying amount	$ 50,000,000.0
Derivative, fair value	392,000
Designated as Hedging Instrument [Member]
Derivative, carrying amount	50,392,000
Derivative, fair value	392,000
Interest Rate Contract [Member] | Designated as Hedging Instrument [Member]
Derivative, carrying amount	50,392,000
Derivative, fair value	$ 392,000

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Note 13 - Derivatives and Hedging Activities - Derivatives in Statement of Financial Position (Details) $ in Thousands	Jun. 30, 2023 USD ($)
Derivative, Notional Amount	$ 50,000
Interest Rate Swap [Member]
Derivative, Notional Amount	50,000
Interest Rate Swap [Member] | Other Assets [Member]
Interest rate swaps - securities	0
Interest Rate Swap [Member] | Other Liabilities [Member]
Interest rate swaps - securities	$ 351

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Note 13 - Derivatives and Hedging Activities - Derivatives on the Income Statement (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2023	Jun. 30, 2022	Jun. 30, 2023	Jun. 30, 2022
Total amounts recognized in interest on investment securities	$ 3,336	$ 2,715	$ 6,518	$ 4,990
Recognized on hedged items	1,336	0	(392)	0
Designated as Hedging Instrument [Member]
Derivative, gain (loss)	107	0	138	0
Interest Rate Swap [Member]
Total amounts recognized in interest on investment securities	3,336	2,715	6,518	4,990
Recognized on hedged items	(1,336)	0	392	0
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative, gain (loss)	$ 1,443	$ 0	$ (254)	$ 0