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FIRST NORTHWEST BANCORP
(Name of registrant as specified in its charter)

 

(Name of person(s) filing proxy statement, if other than the registrant)

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March 16, 2018



September 16, 2016Dear Shareholder:



Dear Shareholder:

You are cordially invited to attendOn behalf of the annual meetingBoard of shareholdersDirectors and management of First Northwest Bancorp, we cordially invite you to attend the 2018 annual meeting of shareholders. The meeting will be held at 4:00 p.m., Pacific Time, on Tuesday, May 8, 2018 at the Red Lion Hotel OlympicElwha Klallam Heritage Center, Eagle's Nest Room, located at 221 N. Lincoln401 E. First Street, Port Angeles, Washington, on Tuesday, November 8, 2016, at 10:00 a.m., Pacific Time.
Washington.

The Notice of Annual Meeting of Shareholders and Proxy Statement appearing on the following pages describe the formal businessmatters expected to be transactedacted upon at the meeting.meeting are described in the attached Proxy Statement. In addition, we will report on our results of operations. During the meeting, we will also report on our operations.  Directorsaddress your questions and officers of First Northwest Bancorp, as well as a representative of Moss Adams LLP, our independent auditor, will be present to respond to shareholder questions.
comments.

It is importantWe encourage you to attend the meeting in person. Whether or not you plan to attend, please take the time to read the Proxy Statement and vote via the Internet or telephone or by completing and mailing the proxy card (if you received one) as promptly as possible. This will save us the additional expense of soliciting proxies and will ensure that your shares are represented at the meeting, whether or not you attend in person and regardless of the number of shares you own.  To make sure your shares are represented, we urge you to complete and mail the enclosed proxy card as promptly as possible or to vote by telephone or the Internet, following the instructions on the proxy card.  If you attend the meeting, you may vote in person even if you have previously voted.
annual meeting.

Your Board of Directors and management are committed to the continued success of First Northwest Bancorp and the enhancement of your investment. We appreciate your confidence and support and look forward to seeing you at the meeting.
 
Sincerely,
/s/Laurence J. Hueth
Laurence J. Hueth
President and Chief Executive Officer
 
 
 
 
 





FIRST NORTHWEST BANCORP
105 W. EIGHTH STREET
PORT ANGELES, WASHINGTON 98362
(360) 457-0461


 
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBERMAY 8, 20162018
 


Notice is hereby given that the 20162018 annual meeting of shareholders of First Northwest Bancorp will be held at the Red Lion Hotel OlympicElwha Klallam Heritage Center, Eagle's Nest Room, located at 221 N. Lincoln401 E. First Street, Port Angeles, Washington, on Tuesday, NovemberMay 8, 2016,2018, at 10:4:00 a.m.p.m., Pacific Time for. At the following purposes:
meeting, shareholders will be asked to consider the following:

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

Proposal 2.An advisory (non-binding) vote to approve the compensation of our named executive officers, as disclosed in this Proxy Statement; and

Proposal 3.Ratification of the appointment of Moss Adams LLP as our independent auditor for 2017.the year ending December 31, 2018.

We will also consider and act upon such other business as may properly come before the meeting, or any adjournments or postponements thereof. As of the date of this notice, we are not aware of any other business to come before the annual meeting.

The Board of Directors has fixed the close of business on August 31, 2016,February 28, 2018 as the record date for the annual meeting. This means that shareholders of record at the close of business on that date are entitled to receive notice of, and to vote at the meeting and any adjournment thereof.

ToYOUR VOTE IS IMPORTANT. We urge you to read this Proxy Statement carefully. Whether or not you plan to attend the annual meeting in person, we urge you to vote promptly through the Internet, by telephone or by mail. This will ensure thatthe presence of a quorum at the meeting. For instructions on voting, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail. You can request to receive proxy materials by mail or e-mail. Promptly voting your shares are represented atvia the meeting, please take the time to voteInternet, by telephone, or by signing, dating, and mailingreturning the enclosed proxy card, which is solicited on behalf ofby the Board of Directors, will save us the expense and mail it promptly in the enclosed envelope.  Alternatively, you may vote by telephone or the Internet by following the instructions on the proxy card.  The proxy will not be used ifextra work for additional solicitation. If you attend and vote at the annual meeting in person.  Regardless of the number of shares you own,person, your proxy will not be used. Your vote is very important.  Please act today.important
.
 
BY ORDER OF THE BOARD OF DIRECTORS
/s/JOYCE RUIZ  CHRISTOPHER J. RIFFLE
JOYCE RUIZ
CHRISTOPHER J. RIFFLE
CORPORATE SECRETARY AND
SENIOR VICE PRESIDENT AND CORPORATE SECRETARY


Port Angeles, Washington
SeptemberMarch 16, 2016

IMPORTANT: The prompt return of proxies will save us the expense of further requests for proxies in order to ensure a quorum.  A proxy card and pre-addressed envelope are enclosed for your convenience.  No postage is required if mailed in the United States.  You may also vote by telephone or the Internet by following the instructions on the proxy card.
2018






 
PROXY STATEMENT
OF
FIRST NORTHWEST BANCORP
105 W. EIGHTH STREET
PORT ANGELES, WASHINGTON 98362
(360) 457-0461


ANNUAL MEETING OF SHAREHOLDERS
NOVEMBERMAY 8, 20162018


The Board of Directors of First Northwest Bancorp is using this Proxy Statement to solicit proxies from our shareholders for use at our 20162018 annual meeting of shareholders. We are first mailingprovided access to this Proxy Statement and a form of proxy card to our shareholders on or about SeptemberMarch 16, 2016.
2018.

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


INFORMATION ABOUT THE ANNUAL MEETING


Time and Place of the Annual Meeting

Our annual meeting will be held as follows:
 
Date:Tuesday, NovemberMay 8, 2016 2018
Time:10:4:00 a.m.p.m., Pacific Time
Place:Red Lion Hotel Olympic
Elwha Klallam Heritage Center, Eagle's Nest Room 221 N. Lincoln
401 E. First Street, Port Angeles, Washington
 

Matters to Be Considered at the Annual Meeting

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

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

Proposal 2.An advisory (non-binding) vote to approve the compensation of our named executive officers, as disclosed in this Proxy Statement; and

Proposal 3.Ratification of the appointment of Moss Adams LLP as our independent auditor for 2017.the year ending December 31, 2018.

We also will transact any other business that may properly come before the annual meeting. As of the date of this Proxy Statement, we are not aware of any other business to be presented for consideration at the annual meeting other than the matters described in this Proxy Statement.

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to Be Held on NovemberMay 8, 2016
2018

Our Proxy Statement and 2016 Annual Report to Shareholdersproxy materials are available at https://www.snl.com/IRWebLinkX/GenPage.aspx?IID=IRW/corporateprofile/4343673&GKP=1073750673. The following materials are available for review:

·Proxy Statement;
·Notice of Internet Availability of Proxy Materials;
 
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·proxyProxy card;
·Annual Report to Shareholders; and
·2016 Annual ReportDirections to Shareholders.the annual meeting, where you may vote in person.

DirectionsWe provided access to attendour proxy materials beginning on March 16, 2018. On that day, we mailed the Notice of Availability of Proxy Materials to our shareholders. The Securities and Exchange Commission allows us to deliver proxy materials to shareholders over the Internet. We believe that this offers a convenient way for shareholders to review the annual meeting where you may vote in person, can be found online at http://www.redlion.com/port-angeles/map-directions.
materials. It also reduces printing and mailing expenses and lessens the environmental impact of paper copies.

Who isIs Entitled to Vote?

We have fixed the close of business on August 31, 2016,February 28, 2018, as the record date for shareholders entitled to receive notice of and to vote at our annual meeting. Only holders of record of First Northwest’sNorthwest's common stock on that date are entitled to receive notice of and to vote at the annual meeting. You are entitled to one vote for each share of First Northwest common stock you own, unless you own more than 10ten percent of First Northwest’sNorthwest's outstanding shares. As provided in our Articles of Incorporation, record holders of common stock who beneficially own in excess of 10ten percent of First Northwest’sNorthwest's outstanding shares are not entitled to any vote with respect to the shares held in excess of the 10ten percent limit unless our Board of Directors has granted permission in advance. On August 31, 2016,February 28, 2018, the voting record date, there were 13,007,56011,709,407 shares of First Northwest common stock outstanding and entitled to vote at the annual meeting.

How Do I Vote at the Annual Meeting?

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

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

Voting instructions are included on your proxy card.  Shares of First Northwest common stock represented by properly executed proxies will be voted by the Proxy Committee of the Board of Directors in accordance with the shareholder’sshareholder's instructions. Where properly executed proxies are returned to us with no specific instruction as to how to vote at the annual meeting, the Proxy Committee will vote the shares for the election of each of our director nominees, for advisory approval of the compensation of our named executive officers as disclosed in this Proxy Statement, and for the ratification of the appointment of Moss Adams LLP as our independent auditor for 2017.2018. If any other matters are properly presented at the annual meeting for action, the Proxy Committee will have the discretion to vote on these matters in accordance with its best judgment. We do not currently expect that any other matters will be properly presented for action at the annual meeting.

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

What if My Shares Are Held in Street Name?

If you are the beneficial owner of shares held in “street name”"street name" by a broker, your broker, as the record holder of the shares, is required to vote the shares in accordance with your instructions. If you do not give instructions to your broker, your broker may nevertheless vote the shares with respect to discretionary items, but will not be permitted to
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vote your shares with respect to non-discretionary items, pursuant to current industry practice. In the case of non-discretionary items, the shares not voted will be treated as “broker"broker non-votes.”" The proposal to elect directors and the advisory vote on executive compensation are considered non-discretionary items; therefore, you must provide instructions to your broker in order to have your shares voted on these proposals.
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If your shares are held in street name, you will need proof of ownership to be admitted to the annual meeting. A recent brokerage statement or letter from the record holder of your shares are examples of proof of ownership. If you want to vote your shares of common stock held in street name in person at the annual meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.

How Will My Shares of Common Stock Held in the Employee Stock Ownership Plan Be Voted?

We maintain the First Northwest Bancorp Employee Stock Ownership Plan (“ESOP”("ESOP") for the benefit of our employees. Each participant may instruct the trustee how to vote the shares of First Northwest common stock allocated to his or her account under the ESOP by completing the voting instruction sheetproxy card distributed by the administrator. If a participant properly executes the voting instruction sheet,proxy card, the administrator will instruct the trustee to vote the participant’sparticipant's shares in accordance with the participant’sparticipant's instructions. Unallocated shares of First Northwest common stock held in the ESOP and allocated shares for which proper voting instructions are not received will be voted by the trustee in the same proportion as shares for which the trustee has received voting instructions. In order to give the trustee sufficient time to vote, all vote authorization forms must be received by the transfer agent on or before NovemberMay 3, 20162018 at 1:00 p.m., Pacific Time. The ESOP third party administrator is Pentegra.

How Many Shares Must Be Present to Hold the Annual Meeting?

A quorum must be present at the meeting for any business to be conducted. The presence at the meeting, in person or by proxy, of at least a majority of the shares of First Northwest common stock entitled to vote at the annual meeting as of the record date will constitute a quorum. Proxies received but marked as abstentions and broker non-votes will be included in the calculation of the number of shares considered to be present at the meeting.

What if a Quorum Is Not Present at the Annual Meeting?

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

Vote Required to Approve Proposal 1: Election of Directors

Directors are elected by a plurality of the votes cast, in person or by proxy, at the annual meeting by holders of First Northwest common stock. Accordingly, the fourthree nominees for election as directors who receive the highest number of votes actually cast will be elected. Pursuant to our Articles of Incorporation, shareholders are not permitted to cumulate their votes for the election of directors. Votes may be cast for or withheld from each nominee. Votes that are withheld and broker non-votes will have no effect on the outcome of the election because the fourthree nominees receiving the greatest number of votes will be elected. Our Board of Directors unanimously recommends that you vote FOR the election of each of its director nominees.

Vote Required to Approve Proposal 2: Advisory Approval of Executive Compensation

Advisory (non-binding) approval of the compensation of our named executive officers requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the annual meeting. Abstentions and broker non-votes do not constitute votes cast and therefore will have no effect on the outcome of the proposal. Our Board of Directors unanimously recommends that you vote FOR approval of the compensation of our named executive officers.


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3


Vote Required to Approve Proposal 3: Ratification of the Appointment of the Independent Auditor

As previously announced, we have changed our fiscal year end from June 30 to December 31. Accordingly, the Audit Committee has appointed Moss Adams LLP as our independent auditor for the year ending December 31, 2018. Ratification of the appointment of Moss Adams LLP as our independent auditor for the fiscal year ending June 30, 2017, requires the affirmative vote of a majority of the votes cast, in person or by proxy, at the annual meeting. Abstentions do not constitute votes cast and therefore will have no effect on the outcome of the proposal. Our Board of Directors unanimously recommends that you vote FOR the ratification of the appointment of the independent auditor.

May I Revoke My Proxy?

You may revoke your proxy before it is voted by:
    ●·
submitting a new proxy with a later date;
    ●·notifying the Secretary of First Northwest in writing (or if you hold your shares in street name, your broker, bank or other nominee) before the annual meeting that you have revoked your proxy; or
    ●·voting in person at the annual meeting.

If you plan to attend the annual meeting and wish to vote in person, we will give you a ballot at the annual meeting. However, if your shares are held in street name, you must bring a validly executed proxy from the nominee indicating that you have the right to vote your shares.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth, as of August 31, 2016,February 28, 2018, the voting record date, information regarding share ownership of:
    ●·those persons or entities (or groups of affiliated persons or entities) known by management to beneficially own more than five percent of First Northwest’sNorthwest's common stock other than directors and executive officers;
    ●·each director and director nominee of First Northwest;
    ●·each executive officer of First Northwest or any of its subsidiaries named in the Summary Compensation Table appearing under “Executive Compensation”"Executive Compensation" below (known as “named"named executive officers”officers"); and
      ●  ·all current directors and executive officers of First Northwest and its subsidiaries as a group.
Persons and groups who beneficially own in excess of five percent of First Northwest’sNorthwest's common stock are required to file with the Securities and Exchange Commission (“SEC”("SEC"), and provide us a copy of the report disclosing their ownership pursuant to the Securities Exchange Act of 1934, as amended (“("Securities Exchange Act”Act"). To our knowledge, no other person or entity, other than the onesthose set forth below, beneficially owned more than five percent of the outstanding shares of First Northwest’sNorthwest's common stock as of the close of business on the voting record date.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In accordance with Rule 13d-3 of the Securities Exchange Act, a person is deemed to be the beneficial owner of any shares of common stock if he or she has voting and/or investment power with respect to those shares. Therefore, the table below includes shares owned by spouses, other immediate family members in trust, shares held in retirement accounts or funds for the benefit of the named individuals, shares held in the ESOP, and other forms of ownership, over which shares the persons named in the table may possess voting and/or investment power.
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As of August 31, 2016,February 28, 2018, the voting record date, there were 13,007,56011,709,407 shares of First Northwest common stock outstanding.
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Name
 
Number of shares
beneficially owned
 
Percent of shares
outstanding (%)
 
Number of shares
beneficially owned
 
Percent of shares
outstanding (%)
        
Beneficial Owners of More Than 5%    
        
First Northwest Bancorp Employee Stock Ownership Plan
105 W. Eighth Street
Port Angeles, Washington 98362
 1,048,029(1) 8.06 1,041,105(1) 8.89
        
First Federal Community Foundation (2)
105 W. Eighth Street
Port Angeles, Washington 98362
 813,600  6.25 742,500  6.34
        
FMR LLC
245 Summer Street
Boston, Massachusetts 02110
 1,177,722(3) 9.05 1,064,389(3) 9.09
          
Wellington Management Group LLP
280 Congress Street
Boston, Massachusetts 02110
 1,006,211(4) 7.74
     
Directors        
        
Stephen E. Oliver 25,500(5) * 24,600(4) *
Dana D. Behar 11,000(6) * 12,000(5) *
David A. Blake 24,872(7) * 24,872(6) *
Craig A. Curtis 20,100(8) * 21,100(7) *
Lloyd J. Eisenman 27,500(9) *
Cindy H. Finnie 25,000(10) * 26,000(8) *
David T. Flodstrom 22,000(11) * 21,100(9) *
Laurence J. Hueth** 93,813(12)(13) * 90,751(10)(11) *
Norman J. Tonina, Jr. 21,323(14) * 23,323(12) *
Jennifer Zaccardo 30,000(15) * 30,000(13) *
        
Named Executive Officers        
        
Regina M. Wood 34,809(12)(16) * 31,788(10)(14) *
Jeffrey S. Davis 29,489(12)(17) * 27,508(10)(15) *
Christopher A. Donohue 30,651(12)(18) * 27,524(10)(16) *
Kelly A. Liske 30,518(12)(19) * 27,291(10)(17) *
          
All executive officers and directors as a group (14 persons) 426,575  3.28 387,857  3.31%
 
____________
*Less than one percent of shares outstanding.
**Also a named executive officer.
(1)The ESOP has shared voting and dispositive power with respect to 70,356114,771 shares, and sole dispositive power with respect to 977,673926,334 shares.
(2)We established the First Federal Community Foundation in connection with the mutual to stock conversion of First Federal for the purpose of furtheringto further our commitment to the local community. Shares of common stock held by the Foundation will be voted in the same proportion as all other shares of common stock on all proposals considered by First Northwest’sNorthwest's shareholders.
(3)
Based solely on a Schedule 13G13G/A filed February 12, 2016.16, 2018. According to the filing, FMR LLC and Abigail P. Johnson have sole voting and dispositive power over the shares; however, neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co."), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co. carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.
shares.
(Footnotes continue on following page)

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(4)Based solely on a Schedule 13G filed February 11, 2016. According to the filing, Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP have shared voting and dispositive power over the shares.
(5)Consists ofIncludes 7,500 shares held jointly with spouse and 18,00014,400 shares of restricted stock, as to which Mr. Oliver has voting power.
(6)(5)Consists of 2,000Includes 3,000 shares held jointly with spouse and 9,0007,200 shares of restricted stock, as to which Mr. Behar has voting power.
(7)(6)Consists ofIncludes 6,872 shares held in an individual retirement account (“IRA”("IRA") and 18,00014,400 shares of restricted stock, as to which Mr. Blake has voting power.
(8)(7)Includes 18,0003,100 shares held jointly with spouse and 14,400 shares of restricted stock, as to which Mr. Curtis has voting power.
(9)(8)Consists of 9,500Includes 2,250 shares held in an IRA and 18,000 shares of restricted stock, as to which Mr. Eisenman has voting power.
(10)Consists of 5,750 shares held solely, 1,250 shares held in an IRA and 18,00014,400 shares of restricted stock, as to which Ms. Finnie has voting power.
(11)(9)Consists ofIncludes 4,000 shares held in an IRA and 18,00014,400 shares of restricted stock, as to which Mr. Flodstrom has voting power.
(12)(10)Includes units held in the First Federal 401(k) Plan and shares held in the ESOP, as follows: Mr. Hueth, 16,35421,344 units and 2,4594,404 shares; Ms. Wood, 8,2608,199 units and 1,5492,968 shares; Mr. Davis, 4,0073,977 units and 4821,428 shares; Mr. Donohue, 0 units and 1,6513,026 shares; and Ms. Liske, 3,9193,890 units and 1,5992,911 shares. The units consist of shares of First Northwest common stock and a liquidity cash component. As a result, the number of underlying shares may fluctuate from time to time.
(13)(11)In addition to 401(k) Plan units and ESOP shares described in footnote 12, includes 75,00060,000 shares of restricted stock, as to which Mr. Hueth has voting power.
(14)(12)Consists of 3,323 shares held in trust and 18,000Includes 14,400 shares of restricted stock, as to which Mr. Tonina has voting power.
(15)Consists of
(Footnotes continue on following page)
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(13)Includes 12,000 shares held jointly with spouse and 18,00014,400 shares of restricted stock, as to which Ms. Zaccardo has voting power.
(16)(14)In addition to 401(k) Plan units and ESOP shares described in footnote 12, includes 25,00020,000 shares of restricted stock, as to which Ms. Wood has voting power.
(17)(15)In addition to 401(k) Plan units and ESOP shares described in footnote 12, includes 25,00020,000 shares of restricted stock, as to which Mr. Davis has voting power.
(18)(16)In addition to the ESOP shares described in footnote 12, includes 25,00020,000 shares of restricted stock, as to which Mr. Donohue has voting power, and 4,000 shares held in an IRA.
(19)(17)In addition to 401(k) Plan units and ESOP shares described in footnote 12, includes 25,00020,000 shares of restricted stock, as to which Ms. Liske has voting power, and 100 shares held as custodian for minors.
 
 
PROPOSAL 1 – ELECTION OF DIRECTORS


Our Board of Directors currently consists of tennine members and, in accordance with our Articles of Incorporation, is divided into three classes. Approximately one-thirdOne-third of the directors are elected annually to serve for a three-year period or until their respective successors are elected and qualified. The table below sets forth information regarding each director of First Northwest and each Board nominee for director.

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

Director Lloyd J. Eisenman has reached the mandatory retirement age pursuant to First Northwest’s Bylaws.  The Board of Directors recognizes Mr. Eisenman as a valued member of the Board, and the many contributions he has made since 1985 as a director of First Federal and of First Northwest since its incorporation in 2012.  Mr. Eisenman is a certified public accountant, with a CPA license.  He was employed by First Federal in a variety of financial-related roles, including serving as Chief Financial Officer from 1998 until his retirement in 2006.  The Nominating and Corporate Governance Committee has considered the past and continuing contributions that Mr. Eisenman has made to the Board, his level of expertise, particularly in the areas of risk management and financial reporting, and determined that Mr. Eisenman possesses expertise vital to the proper functioning of the
7
Board, and has therefore recommended to the full Board that Mr. Eisenman be nominated at the 2016 annual meeting of shareholders to serve for an additional one-year term.  Based on the Nominating and Corporate Governance Committee’s recommendation and the exceptional circumstances related to Mr. Eisenman’s pending retirement, the Board of Directors believes it is in the best interests of First Northwest and its shareholders that Mr. Eisenman be appointed for an additional one-year term at the 2016 annual meeting of shareholders.  According to the procedure specified by the Bylaws, the Board of Directors, excluding Mr. Eisenman, voted by confidential ballot to nominate Mr. Eisenman to stand for election at the annual meeting of shareholders for an additional one-year term, which nomination was approved by a vote of a 75% majority of the Board of Directors.

The Board of Directorsunanimously recommends a vote “FOR”"FOR" the election of Cindy H. Finnie, David T. FlodstromA. Blake, Craig A. Curtis and Dana D. Behar,Norman J. Tonina, Jr., each for a three-year term, and Lloyd J. Eisenman for a one-year term.

Name
 
Age as of
June 30, 2016
  
Year first elected or
appointed director (1)
  
Term to expire
  
Age as of
December 31, 2017
 
Year first elected or
appointed director (1)
 Term to expire
               
BOARD NOMINEESBOARD NOMINEES BOARD NOMINEES
               
Cindy H. Finnie  66   2012   2019(2)
David T. Flodstrom  69   2002   2019(2)
Dana D. Behar  54   2015   2019(2)
Lloyd J. Eisenman  76   1985   2017(2)
David A. Blake 69 2005       2021 (2)
Craig A. Curtis 57 2014       2021 (2)
Norman J. Tonina, Jr. 53 2013       2021 (2)
                  
DIRECTORS CONTINUING IN OFFICEDIRECTORS CONTINUING IN OFFICE DIRECTORS CONTINUING IN OFFICE
                  
Dana D. Behar 55 2015 2019
Cindy H. Finnie 67 2012 2019
David T. Flodstrom 70 2002 2019
Laurence J. Hueth 55 2010 2020
Stephen E. Oliver  68   2001   2017  69 2001 2020
Laurence J. Hueth  53   2010   2017 
Jennifer Zaccardo  64   2011   2017  65 2011 2020
David A. Blake  68   2005   2018 
Norman J. Tonina, Jr.  52   2013   2018 
Craig A. Curtis  55   2014   2018 
____________            
 
____________
(1)For years prior to 2015, includes service on the Board of Directors of First Federal.
(2)Assuming reelection.

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

David A. Blake is the Chief Operations Officer of Blake Sand and Gravel, a producer of washed sand and aggregate and crushed rock and Secretary/Treasurer of Blake Tile & Stone, a landscaping and tile supplier. He joined
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the family business in 1969 and served as President and Chief Executive Officer from 1980 until 2010. He continues to serve on the Board of Directors of both companies. Mr. Blake is a member of the Board of Directors of the Albert Haller Foundation, a board member of the Olympic Medical Foundation, and served on the Sequim School Board of Directors for 31 years.

Craig A. Curtis is a registered architect and officer of Katerra, Inc. Mr. Curtis oversees the Building Design Division of the company as President of Katerra Architecture, LLC. Katerra is a multi-faceted real estate company founded by Silicon Valley entrepreneurs to reinvent the way buildings are delivered, through leveraging technology, supply chain and factory prefabrication. Prior to joining Katerra, Mr. Curtis was employed by The Miller Hull Partnership since 1987 and served as a partner from 1994 until 2016. In 2004, Miller Hull was awarded the American Institute of Architects (AIA) National Firm Award, and in 2008, Mr. Curtis was elected to the AIA College of Fellows, a distinction awarded to approximately 4% of its members. Mr. Curtis has degrees in Architecture and Construction Management from Washington State University and chairs the External Advisory Board for the WSU Center for Environmental Research, Education and Outreach (CEREO). He is a director of the First Federal Community Foundation. A resident of Kitsap County for 26 years, Mr. Curtis served on committees for the North Kitsap School District and Suquamish Community Advisory Council.

Norman J. Tonina, Jr. has served as the Chairman of the Fort Worden Public Development Authority in Port Townsend, Washington since 2015. Mr. Tonina is also an adjunct faculty member in Seattle Pacific University's graduate program in Industrial and Organizational Psychology. Mr. Tonina most recently worked at Grameen Foundation, a non-governmental organization focused on enabling the poor to create a world without poverty, where he served as an advisor to the Chief Executive Officer and Board of Directors (2012-16) and as its Chief Human Resources Officer (2010-12), focused on driving strategic alignment, organizational effectiveness, and human resource re-engineering initiatives. He began his career at Digital Equipment Corporation in 1987 and joined Microsoft in 1993 as a finance manager for its Systems products, rising to become Senior Director of Finance for Microsoft's Platforms and Applications business. In 1999, he transitioned to Human Resources, where he directed major strategic global HR initiatives, spending the majority of his time focused on culture, leadership, and talent strategies. Mr. Tonina earned his Bachelor of Arts degree in Business Administration from Northeastern University, a certificate in human resources from the University of Michigan, and a Master's degree in Organizational Psychology from Antioch University. Mr. Tonina continues to be actively involved in community organizations in both Seattle and Port Townsend, Washington, and is a director of the First Federal Community Foundation.

Dana D. Behar has been the owner of Discovery Bay Investments, LLC, a private equity investment firm based in Seattle focused on agricultural land and real estate since September 2015. Prior to that, he worked at HAL Real Estate Investments Inc., a private equity real estate investment entity based in Seattle, Washington, for 23 years and served as its President and Chief Executive Officer from 2005 until September 2015. He also served as director of HAL Real Estate Investments Inc. from 2005 to 2016. Mr. Behar previously worked in brand management at Procter & Gamble, served as Director of Marketing for the retail chain, Egghead Software, and was a management consultant with the Wharton Small Business Development Center. He is active in his community, serving as a board member of Capitol Hill Housing and the Forterra Strong Communities Fund, and as a trustee of the Samis Foundation. Mr. Behar has a Bachelor of Arts in business with a concentration in finance from the University of Washington and a Master of Business Administration with a concentration in finance from the Wharton School of the University of Pennsylvania.

Cindy H. Finnieretired in 2011 from Allstate Insurance Company after 38 years of leadership experience. Her range of responsibilities included property and casualty underwriting, sales management, business development, agency management, financial management and developing insurance agencies. Ms. Finnie was also responsible for introducing and developing the financial services market in her area. Ms. Finnie is the co-owner and President of Rainshadow Properties, Inc., a boutique hotel and property management company that she co-founded in 1995. Ms. Finnie is also a director and past presidentformer member of the Centrum Foundation, past Chair of the Washington State Arts Commission, pastPast Chair of the Fort Worden Public Development Authority, a former director of the Jefferson County Community Foundation, and a member of the City of Port Townsend Lodging Tax Advisory Committee, and director of the Fort Worden Foundation, and director of the First Federal Community Foundation.

David T. Flodstrom, P.E., is retired after a 36-year career in municipal management and industrial relations. During his career, he served as the City Engineer for Port Angeles for 5 years, the Port Angeles City Manager for 10 years and worked in industrial relations and human resources for private industries for 15 years. Mr. Flodstrom’s Flodstrom's
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career has provided him with expertise in management, human resources and governance. Mr. Flodstrom is aChairman of the Board of Directors of the First Federal Community Foundation, past Commissioner of the Peninsula Housing Authority, past president of Nor’Nor' Western Rotary Club and former board member of the Olympic Medical Foundation and the Washington Business Association, and has spent over 30 years as a coach and umpire for youth baseball clubs.

Dana D. Behar has been the owner of Discovery Bay Investments, LLC, Seattle, Washington, a private equity investment firm focusing on agricultural land and real estate since September 2015.  Prior to that, he worked at HAL Real Estate Investments Inc., a private equity real estate investment entity based in Seattle, Washington, for 23 years and most recently served as President and Chief Executive Officer from 2005 until September 2015.  He
8
recently served as director of HAL Real Estate Investments Inc. from 2005 to 2016.  Mr. Behar previously worked in brand management at Procter & Gamble, served as Director of Marketing for the retail chain, Egghead Software, and was a management consultant with the Wharton Small Business Development Center.  Mr. Behar has a Bachelor of Arts in business with a concentration in finance from the University of Washington and a Master of Business Administration with a concentration in finance from the Wharton School of the University of Pennsylvania.

Lloyd J. Eisenman is retired after a 39-year career in accounting and finance.  Prior to his retirement, he served as the Chief Financial Officer of First Federal from 1998 until 2005, and had been employed by First Federal since 1973.  Mr. Eisenman began his career as a Certified Public Accountant, working in public accounting for seven years and he possesses an active CPA license with the Tennessee State Board of Accountancy.  He is also a member of the American Institute of Certified Public Accountants.  His career has given him a wealth of expertise, particularly in the areas of risk management and financial reporting.  Mr. Eisenman is a past president of the Kiwanis Club of Port Angeles and also served as a Lt. Governor of the Pacific Northwest District of Kiwanis International.  He is currently a board member of the Olympic Peninsula Chapter of The American Red Cross.  He is a past director of the Feiro Marine Life Center and is a member of the Chamber of Commerce of Port Angeles.  Mr. Eisenman also serves as a director of Lumber Traders, Inc. and its affiliated companies.

Stephen E. Oliver has served as Chairman of the Board since January 2015.  Mr. Oliver is a retired attorney with over 35 years of experience in the areas of banking, real estate development, environmental and municipal law.  From 2010 until his retirement in December 2014, he owned the legal consulting firm, S.E. Oliver, Inc.  Prior to starting his consulting firm, Mr. Oliver was a stockholder in the Platt Irwin Law Firm (which serves as general counsel to First Federal), beginning his affiliation in 1978 and serving as President from 1991 through 2009.  Mr. Oliver is President of the Board of Directors of the Northwest Maritime Center, Port Townsend, Washington, and a member and past president of the Board of Directors of the Olympic Medical Center Foundation, Port Angeles, Washington.  Much of Mr. Oliver’s professional activity was devoted to assessing risk in banking and real estate development transactions, as well as general litigation risk.  He has served on bank boards continuously since 2001 and in that capacity, has chaired both audit and loan committees for extended periods.

Laurence J. Hueth was elected President and Chief Executive Officer on March 26, 2013, and has been a director since 2010. Mr. Hueth joined First Federal in 2008 and was promoted to Senior Vice President, Chief Financial Officer in March 2009. He assumed responsibility for operational and risk areas, serving as Chief Operating Officer from 2011 to 2012. Mr. Hueth has over 30 years of progressive responsibility in finance and risk management areas within the banking industry. Prior to joining First Federal, Mr. Hueth was employed for 15 years at PFF Bank & Trust located in Pomona, California where he held positions in finance, treasury and risk management, including serving as Vice President, Operational Risk Manager and Bank Treasurer from 2005 until November 2008. Mr. Hueth is active with numerous charitable and civic organizations in Clallam and Jefferson counties.

Stephen E. Oliver has served as Chairman of the Board since January 2015. Mr. Oliver is a retired attorney with over 35 years of experience in the areas of banking, real estate development, environmental and municipal law. From 2010 until his retirement in December 2014, he owned the legal consulting firm, S.E. Oliver, Inc. Prior to starting his consulting firm, Mr. Oliver was a stockholder in the Platt Irwin Law Firm (which served as general counsel to First Federal through 2017), beginning his affiliation in 1978 and serving as President from 1991 through 2009. Mr. Oliver is President of the Board of Directors of the Northwest Maritime Center located in Port Townsend, Washington, and past president of the Board of Directors of the Olympic Medical Center Foundation located in Port Angeles, Washington. Much of Mr. Oliver's professional activity was devoted to assessing risk in banking and real estate development transactions, as well as general litigation risk. He has served on bank boards continuously since 2001 and in that capacity, has chaired both audit and loan committees for extended periods.

Jennifer Zaccardo is Treasurer and Tax Partner of Baker, Overby & Moore Inc., P.S, a public accounting firm with which she has been affiliated since 1983. She is a Certified Public Accountant with particular expertise in the timber industry and small business financial reporting and taxation, and is a member of the Washington Society of Certified Public Accountants and the American Institute of Certified Public Accountants. Ms. Zaccardo is a past president and treasurer of the Peninsula College Foundation Board of Governors and served on the Quillayute Valley School Board of Directors for 10 years.

David A. Blake is the Chief Operations Officer of Blake Sand and Gravel, a producer of washed sand and aggregate and crushed rock.  He joined the family business in 1969 and served as President and Chief Executive Officer from 1980 until 2010.  Mr. Blake is a member of the Board of Directors of the Albert Haller Foundation and served on the Sequim School District Board of Directors for 31 years.

Norman J. Tonina, Jr. has served as the Chairman of the Fort Worden Public Development Authority in Port Townsend, Washington since 2015.  Mr. Tonina is also an adjunct faculty member in Seattle Pacific University’s graduate program in Industrial and Organizational Psychology.  Mr. Tonina most recently worked at Grameen Foundation, a non-governmental organization focused on enabling the poor to create a world without poverty, where he served as an advisor to the Chief Executive Officer and Board of Directors (2012-16) and as its Chief Human Resources Officer (2010-12), focused on driving strategic alignment, organizational effectiveness, and
9
human resource re-engineering initiatives.  He began his career at Digital Equipment Corporation in 1987 and joined Microsoft in 1993 as a finance manager for its Systems products, rising to become Senior Director of Finance for Microsoft’s Platforms and Applications business.  In 1999, he transitioned to Human Resources, where he directed major strategic global HR initiatives, spending the majority of his time focused on culture, leadership, and talent strategies.  Mr. Tonina earned his Bachelor of Arts degree in Business Administration from Northeastern University, a certificate in human resources from the University of Michigan, and a Master’s degree in Organizational Psychology from Antioch University.  Mr. Tonina continues to be actively involved in community organizations in both Seattle and Port Townsend, Washington.

Craig A. Curtis is a registered architect and Principal at The Miller Hull Partnership.  Mr. Curtis has been employed by Miller Hull since 1987 and served as a partner from 1994 until 2016.  In January 2016, he divested his ownership and is now working part time as principal designer for a five-year contract with the Department of State Overseas Embassies Program.  In 2004, Miller Hull was awarded the American Institute of Architects (AIA) National Firm Award, and in 2008, Mr. Curtis was elected to the AIA College of Fellows, a distinction awarded to approximately 4% of its members.  In 2016, Mr. Curtis joined Katerra, Inc., a real estate design, manufacturing and construction company, as President of Katerra Architecture, LLC.  Katerra’s vision is to make leading-edge buildings affordable and accessible to everyone in the world.  Mr. Curtis has degrees in Architecture and Construction Management from Washington State University and chairs the External Advisory Board for the WSU Center for Environmental Research, Education and Outreach (CEREO).  A resident of Kitsap County for 26 years, Mr. Curtis served on committees for the North Kitsap School District and Suquamish Community Advisory Council.

Director Qualifications and Experience

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

 BeharBlakeCurtisEisenmanFinnieFlodstromHuethOliverToninaZaccardo
Experience, Qualification, Skill or Attribute         
Professional standing in chosen field✓✓✓✓✓✓✓✓✓✓
Expertise in financial services or related industry✓  ✓✓ ✓  ✓
Audit committee financial expert   ✓     ✓
Civic and community involvement✓✓✓✓✓✓✓✓✓✓
Other public company experience✓  ✓ ✓ ✓ 
Leadership and team building skills✓✓✓✓✓✓✓✓✓✓
Diversity by race, gender or culture   ✓    ✓
Specific skills/knowledge:         
     Finance✓  ✓✓ ✓ ✓✓
     Technology  ✓  ✓ ✓✓
     Marketing✓✓✓✓✓     
     Public affairs✓✓✓✓ ✓    
     Human resources ✓ ✓✓  ✓✓
     Governance✓✓ ✓✓✓ ✓✓✓

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MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
AND CORPORATE GOVERNANCE MATTERS

On July 25, 2017, the Board of Directors determined to change our fiscal year end from June 30 to December 31. This change went into effect immediately and we are filing a Form 10-KT for the transition period from July 1, 2017 through December 31, 2017. Accordingly, the following information regarding the meetings and committees of the Board of Directors and our corporate governance matters is for the transition period from July 1, 2017 through December 31, 2017.
Board of Directors
The Boards of Directors of First Northwest and First Federal conduct their business through board and committee meetings. During the fiscal year ended June 30, 2016,transition period from July 1, 2017 through December 31, 2017, the Boards of Directors of First Northwest and the Bank each held 12seven meetings. No director of First Northwest or the Bank attended fewer than 75 percent of the total meetings of the boards and committees on which that person served during this period.
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Committees and Committee Charters

The Board of Directors of First Northwest has standing Audit, Compensation, Nominating and Corporate Governance, and Executive committees. The Board has adopted written charters for the Audit, Compensation, and Nominating and Corporate Governance committees, copies of which are available on our website at www.ourfirstfed.com. All members of the Audit, Compensation, and Nominating and Corporate Governance committees are independent, in accordance with the requirements for companies listed on NASDAQ.

The Audit Committee consists of Directors Zaccardo (Chair), Behar, Blake, Eisenman, Oliver and Tonina. This committee’scommittee's primary responsibilities are to: oversee the integrity of First Northwest’sNorthwest's financial reporting processes, financial statement audits and systems of internal controls regarding finance, accounting and legal compliance; oversee the independence and performance of First Northwest’sNorthwest's independent auditor and internal audit function; and provide an avenue of communication among the independent auditors, management and the Board of Directors. In addition, the Board of Directors has determined that Ms. Zaccardo meets the definition of “audit"audit committee financial expert,”" as defined by the SEC. The Audit Committee meets quarterly and on an as needed basis. The committee met seventhree times during the year ended June 30, 2016.
transition period from July 1, 2017 through December 31, 2017.

The Compensation Committee consists of Directors Finnie (Chair), Flodstrom, Oliver and Tonina. This committee meets semiannually and on an as needed basis, and provides general oversight regarding the personnel, compensation and benefits matters of First Northwest. In furtherance of this purpose, the committee is responsible for setting the compensation of our Chief Executive Officer and reviewing his performance, reviewing the compensation of senior executives and recommending board member compensation. The Compensation Committee met four timestwice during the year ended June 30, 2016.
transition period from July 1, 2017 through December 31, 2017.

The Nominating and Corporate Governance Committee consists of Directors Blake (Chair), Curtis, Finnie, Oliver and Tonina. This committee is responsible for assessing board and committee membership needs, succession planning, and implementing policies and processes regarding corporate governance matters. The Nominating and Corporate Governance Committee meets semiannually and on an as needed basis, and met seven timesonce during the year ended June 30, 2016.
transition period from July 1, 2017 through December 31, 2017.

The Executive Committee consists of Directors Oliver, Blake and Zaccardo. This committee acts for the Board of Directors when formal board action is required between regular meetings. The Executive Committee did not meet during the year ended June 30, 2016.
transition period from July 1, 2017 through December 31, 2017.

Leadership Structure

First Federal has separated the positions of Chairman and Chief Executive Officer. The Chairman, who is an independent director, leads the board and presides at all board meetings, while the President and Chief Executive Officer runs the day-to-day business of First Northwest. The board supports having an independent director in a board
9
leadership position. Having an independent chairman enables non-management directors to raise issues and concerns for board consideration without immediately involving management. The Chairman also serves as a liaison between the board and senior management.

Board Involvement in Risk Management Process

As part of its overall responsibility to oversee the management, business and strategy of our company, one of the primary responsibilities of our Board of Directors is to oversee the amount and types of risk taken by management in executing the corporate strategy, and to monitor our risk experience against the policies and procedures set to control those risks. The board’sboard's risk oversight function is carried out through its approval of various policies and procedures, such as our lending and investment policies;policies, and regular monitoring of risk such as interest rate risk exposure, liquidity and problem assets. Some oversight functions are delegated to committees of the board, with such committees regularly reporting to the full board the results of their oversight activities. For example, the Audit Committee is responsible for oversight of the independent auditors and meets directly with the auditors at various times during the course of the year.
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Corporate Governance Policy

First Northwest Bancorp has adopted a corporate governance policy. The policy covers the following matters:

•           
the role of the board;
•           the composition, responsibilities and operation of the Board of Directors;
               •           the establishment and operation of board committees, including audit, nominating and corporate governance, and compensation committees;
           committees;
•           succession planning;
•           convening executive sessions of independent directors;
•           the board’sboard's interaction with management and third parties;
•           the evaluation of the performance of the Board of Directors and the Chief Executive Officer;
•           communications with shareholders, and annual meeting attendance; and
•           director orientation and continuing education.
 

Director Independence. Our common stock is listed on the NasdaqNASDAQ Global Market. In accordance with NASDAQ requirements, at least a majority of our directors must be independent directors. The board has determined that nineeight of our tennine directors are independent, as defined by NASDAQ. Directors Behar, Blake, Curtis, Eisenman, Finnie, Flodstrom, Oliver, Tonina, and Zaccardo are all independent. Only Director Hueth, who is our President and Chief Executive Officer, is not independent.
Director Eisenman, who retired from the board on November 7, 2017, was also independent.

Code of Ethics. On April 26, 2016, the Board of Directors amended ourThe Code of Ethics. The CodeEthics is applicable to each of our directors, officers and employees, and requires individuals to maintain the highest standards of professional conduct. The Code is reviewed and updated from time to time. No updates to the Code were made in the period from July 1, 2017 to December 31, 2017. A copy of the Code of Ethics is available on our website at www.ourfirstfed.com.

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

Annual Meeting Attendance by Directors. First Northwest encourages, but does not require, its directors to attend the annual meeting of shareholders. All directors except Director Curtis attended last year’sthe annual meeting of shareholders.
shareholders held on November 7, 2017.

Transactions with Related Persons. First Federal has followed a policy of granting loans to executive officers and directors which fully complies with all applicable federal regulations. Loans to directors and executive officers are made in the ordinary course of business and on the same terms and conditions, including interest rates and collateral, as those of comparable transactions with persons not related to First Federal prevailing at the time (unless
10
made pursuant to the employee loan program described below), in accordance with our underwriting guidelines, and do not involve more than the normal risk of collectability or present other unfavorable features. All loans to directors and executive officers and their related persons at June 30, 2016December 31, 2017 were performing in accordance with their terms.

Stock Ownership Guidelines. In May 2017, the Board of Directors adopted a non-employee director stock ownership policy because it believes that it is in First Northwest's best interest to align the financial interests of our non-employee directors with those of First Northwest's shareholders. The policy requires non-employee directors to own shares of First Northwest's common stock equal in value to three times the respective director's annual cash retainer. Directors must meet these ownership guidelines by May 2020 or within three years of joining the Board, whichever is later. All of our eight non-employee directors met the policy requirement at December 31, 2017.

Employee Loan Program. First Federal offers an employee loan program to all employees to assist employees with loans for a variety of personal, family or household credit needs, or for the purchase, construction or refinancing of a home which is the employee’semployee's primary residence. All loans offered to employees are closed on the same terms as those available to members of the general public except following closing, the terms of employee loans are modified to reflect a preferential interest rate. Existing loans may be modified to conform to the terms of the employee loan program. If an employee terminates employment at First Federal, the interest rate on the loan reverts to the original rate for the general public. No director and executive officer had indebtedness and principal payable thereon pursuant to the employee loan program that exceeded $120,000 during the year ended June 30, 2016.
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transition period from July 1, 2017 through December 31, 2017.


DIRECTORS’DIRECTORS' COMPENSATION



TheIn connection with the change in our fiscal year end from June 30 to December 31, the following table providesshows the compensation informationpaid to our directors for each member of the Board of Directors of First Northwest during the year ended June 30, 2016,transition period from July 1, 2017 through December 31, 2017, except for Mr. Hueth, our President and Chief Executive Officer, whose compensation is presented in the Summary Compensation Table in the section entitled “Executive Compensation”"Executive Compensation" below.

Name 
Fees earned or
paid in cash ($)
 Total ($)
     
Stephen E. Oliver 23,775 23,775
Dana D. Behar 19,550 19,550
David A. Blake 20,100 20,100
Craig A. Curtis 19,063 19,063
Cindy H. Finnie 21,175 21,175
David T. Flodstrom 21,575 21,575
Norman J. Tonina, Jr. 18,900 18,900
Jennifer Zaccardo 18,875 18,875
Lloyd J. Eisenman (1) 13,175 13,175
Name
 
Fees earned or
paid in cash ($)
  
Total ($)
 
       
Stephen E. Oliver  40,375   40,375 
Dana D. Behar  17,925   17,925 
David A. Blake  36,225   36,225 
Craig A. Curtis  32,575   32,575 
Lloyd J. Eisenman  29,975   29,975 
Cindy H. Finnie  37,425   37,425 
David T. Flodstrom  36,738   36,738 
Norman J. Tonina, Jr.  33,388   33,388 
Jennifer Zaccardo  34,875   34,875 
__________ 
(1)Mr. Eisenman retired on November 7, 2017.

The non-employee (outside) directors of First Northwest receive compensation for their service on the board. In setting their compensation, the Board of Directors considers the significant amount of time and level of skill required for director service. For 2016,2017, outside directors received an annual retainer (paid monthly), as follows: Chairman, $36,300; Vice Chairman and Committee Chairs, $31,500; and all other directors, $28,500. Directors do not receive a fee for attending board meetings. Committee members received fees for committee meeting attendance of $325 per meeting for regular members and $425 per meeting for committee chairs, with the exception of the Audit Committee Chair, who receives $625 per meeting. Fees for interim committee meetings called for a particular purpose and not to discuss regular agenda items were paid at half the committee meeting fee.

Deferred Compensation Plan. In order to encourage the retention of qualified directors, we offer a deferred compensation plan whereby directors may defer all or a portion of their regular fees until a permitted distribution event occurs under the plan. Each director may direct the investment of the deferred fees among investment options made available by First Federal. We have established a grantor trust to hold the plan investments. Grantor trust assets
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are considered part of our general assets, and the directors have the status of unsecured creditors of First FederalNorthwest with respect to the trust assets. The plan permits the payment of benefits upon a separation from service (on account of termination of service, pre-retirement death or disability), a change in control, an unforeseeable emergency or upon a date specified by the director, in an amount equal to the value of the director’sdirector's account balance (or the amount necessary to satisfy the unforeseeable emergency, in that case). A director may elect, at the time he or she makes a deferral election, to receive the deferred amount and related earnings in a lump sum or in annual installments over a period not exceeding 15 years. A director may subsequently elect to change when or how he or she receives his or her plan benefit, if certain required conditions are met. At June 30, 2016,December 31, 2017, our estimated deferred compensation liability accrual with respect to non-employee directors under the deferred compensation plan was approximately $49,808.
$38,475.




COMPENSATION DISCUSSION AND ANALYSIS

General

General

This section provides an overview and analysis of First Federal’sFederal's compensation programs, the material compensation policy decisions it has made under those programs and the material factors considered in making those decisions. Following this discussion is a series of tables that contain specific information about compensation paid or payable to the following individuals, who are First Federal’s “namedFederal's "named executive officers:”
"

·Laurence J. Hueth, President and Chief Executive Officer;
·Regina M. Wood, Executive Vice President, Chief Financial Officer and Treasurer;
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·Jeffrey S. Davis, Executive Vice President and Chief Operating Officer;
·Christopher A. Donohue, Executive Vice President and Chief Credit Officer; and
·Kelly A. Liske, Executive Vice President and Chief Banking Officer.

Compensation Philosophy and Objectives. In general, First Federal’sFederal's executive compensation policies are designed to establish an appropriate relationship between executive pay and First Federal’sFederal's performance. The principles underlying the executive compensation policies include the following:

·attract and retain key executives who are vital to First Federal’sFederal's long-term success;
·provide levels of compensation competitive with First Federal’sFederal's peers and commensurate with its performance;
·compensate executives in ways that inspire and motivate them; and
·
properly align risk-taking and compensation.


Role of the Compensation Committee. The Compensation Committee is responsible for setting the policies and compensation levels for First Federal’sFederal's directors, officers and employees. The Committee is responsible for evaluating the performance of the Chief Executive Officer and setting his compensation, while the Chief Executive Officer evaluates the performance of other senior officers and makes recommendations to the Committee regarding compensation levels. The Chief Executive Officer is not involved in decisions regarding his own compensation.

Use of Compensation Consultants. From time to time, the Compensation Committee engages outside advisors to assist the Committee with its responsibilities. Since January 2014, the Committee has engaged Pearl Meyer & Partners, LLC (“("PM&P”&P"), an independent consulting firm, to serve as the independent consultant to the Committee regarding executive compensation matters. PM&P is retained by, and reports directly to, the Committee, and provides no other services to First Northwest or First Federal. Based on standards promulgated by the SEC and the NASDAQ to assess compensation advisor independence, as well as the analysis conducted by PM&P in its independence review, the Compensation Committee has concluded that PM&P is an independent and conflict-free advisor to the Compensation Committee.

In early 2015, theThe Compensation Committee engaged PM&P to conduct compensation benchmarking for executive management for 2016. Included in the analysis was a review and revision of First Federal’sFederal's peer group to include 21 financial holding companies ranging in total assets from $400 million to $1.5 billion headquartered in the Western United States and Washington, as follows:
 

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American River BanksharesOak Valley Bancorp
Anchor BancorpPacific Continental Corporation
Bank of Commerce HoldingsPacific Financial Corp.
Central Valley Community BancorpPacific Mercantile Bancorp
Eagle Bancorp Montana, Inc.Premier Valley Bank
First Financial Northwest, Inc.Provident Financial Holdings, Inc.
First Northern Community BancorpRiverview Bancorp, Inc.
FNB BancorpSound Financial Bancorp, Inc.
FS Bancorp, Inc.Timberland Bancorp, Inc.
Idaho Independent BankUnited Security Bancshares
Northrim BanCorp, Inc. 

The benchmarking analysis determined that the base salaries for Mr. Hueth, Ms. Wood and Mr. Davis each fell below the 25th percentile when compared to their peers’ salaries.  Accordingly, the Board of Directors voted to increase the base salary of Mr. Hueth by 10%, Ms. Wood by 12.6% and Mr. Davis by 18.8% in order to maintain equity with our peers in the market.  The increases were effective in February 2016.

Compensation Program Elements. The Compensation Committee focuses primarily on the following components in forming the total compensation package for First Federal’sFederal's named executive officers:

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Pay element
What it rewards
Purpose
   
Base salaryCore competency in the executive’sexecutive's role relative to skills, experience and contributions to First Northwest and First FederalProvide fixed compensation to attract and retain qualified individuals
   
Short-term incentiveContributions toward achieving corporate earnings, growth and risk management objectivesProvide annual performance-based cash incentive compensation
   
Long-term incentiveContributions toward increasing long-term shareholder valuePromote long-term growth and profitability

Base Salary. The Chief Executive Officer makes initial base salary recommendations for employees to the Compensation Committee based upon his assessment of individual performance and salary history, as well as compensation surveys conducted both internally and by PM&P. The Compensation Committee makes compensation decisions for the Chief Executive Officer based upon corporate and individual performance and information by the analyses and advice from its independent compensation consultant. Mr. Hueth does not participate in discussions of his own compensation. We provide the opportunity for our named executive officers and other executives to earn a competitive base salary. We do so in order to attract and retain key executives who are vital to First Federal’sFederal's success. The Compensation Committee takes a number of factors into account when setting the base salaries of the named executive officers. These factors include the officer’sofficer's level of experience, the responsibilities assigned to the officer and the officer’sofficer's performance during the previous year. In February 2016, Mr. Donohue2017, the named executive officers received merit increases based on performance and Ms. Liske both received salary increases of 3%changes in recognition of their superior performance during 2015.
responsibilities.

Short-term Incentive Compensation. We believe that the opportunity for performance-based pay for officers is a significant factor in aligning the interests of the officers with those of shareholders.  After having suspended incentive compensation for the named executive officers for the past several years due to the state of the economy and First Federal’s performance, the Compensation Committee reinstated incentive compensation for the 2016 fiscal year. With input and recommendations by the Chief Executive Officer, the Cash Incentive Plan is authorized by the Board of Directors and administered by the Compensation Committee, to ensure proper alignment with First Federal’sFederal's business objectives.

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

On August 25, 2015,29, 2017, the Compensation Committee selected the participants under the Cash Incentive Plan, which include the Chief Executive Officer, all Executive and Senior Vice Presidents and selected Vice Presidents, and
13
established performance goals for all participants. The annual incentive opportunities for the named executive officers, expressed as a percentage of annualized base salary at June 30, 2016,December 31, 2017, were as follows:

Executive
 
Below threshold
  
Threshold (50%)
  
Target (100%)
  
Stretch (150%)
 
             
Laurence J. Hueth  0%  15.00%  30.00%  45.00%
Other named executive officers  0%  12.50%  25.00%  37.50%


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Executive 
Below
threshold
 
Threshold
(50%)
 Target (100%) Stretch (150%)
         
Laurence J. Hueth 0% 15.00% 30.00% 45.00%
Kelly A. Liske 0% 14.00% 28.00% 42.00%
Other named executive officers 0% 12.50% 25.00% 37.50%

For 2016,the transition period from July 1, 2017 through December 31, 2017, the named executive officers’officers' goals consisted entirely of corporate goals. TheThe Compensation Committee approved the following corporate performance measures for the named executive officers:

Performance measure Threshold  Target  Stretch 
            
     (dollars in thousands) 
            
Net income (1) Range  90%  100%  115%
   Plan $2,700  $3,044  $3,501 
               
Loan growth (2) Range  70%  100%  130%
   Plan  3.51%  5.01%  6.51%
               
Deposit growth (3) Range  80%  100%  120%
   Plan  3.03%  3.79%  4.55%
               
Non-performing assets (NPAs)/assets (4) Range  150%  100%  50%
   Plan  0.32%  0.21%  0.11%
               
Operating expenses/average assets (5) Range  110%  100%  90%
   Plan  2.98%  2.71%  2.44%
Performance measure
 
Threshold
  
Target
  
Stretch
 
           
Return on average assets (ROAA)(1)Range  N/A   100%  115%
 Plan  N/A   0.39%  0.45%
              
Loan growth (2)Range  80%  100%  120%
 Plan  7.04%  8.80%  10.56%
              
Deposit growth (3)Range  80%  100%  120%
 Plan  3.12%  3.90%  4.68%
              
Non-performing assets (NPAs)/assets (4)Range  110%  100%  90%
 Plan  0.80%  0.73%  0.66%
              
Operating expenses/average assets (5)Range  110%  100%  90%
 Plan  2.99%  2.72%  2.45%
____________ 
____________
(1)
Net income for the year ended June 30, 2016 divided by annual average total assets.transition period from July 1, 2017 through December 31, 2017.
(2)Net loans at June 30, 2016December 31, 2017 less net loans at JunJune 30, 2015,2017, divided by net loans at June 30, 2015.2017.
(3)Total deposits at June 30, 2016December 31, 2017 less total deposits at June 30, 2015,2017, divided by total deposits at June 30, 2015.2017.
(4)Nonperforming assets (excluding restructured loans and impaired securities) as of June 30, 2016,December 31, 2017, divided by total assets at June 30, 2016.December 31, 2017.
(5)Total noninterest expense divided by annual average total assets.

These corporate performance measures are based upon the consolidated performance of First Northwest.  Failure to reach target performance of return on average assets will result in no payment under the Cash Incentive Plan.

For the 2016 plan year,transition period from July 1, 2017 through December 31, 2017, the corporate performance weightings applicable to the named executive officers were as follows:

Executive
 
ROAA
  
Loan growth
  
Deposit
growth
  
NPAs/Assets
  
Operating expenses/
Assets
 
                
Laurence J. Hueth  25%  20%  20%  15%  20%
Regina M. Wood  25%  20%  20%  15%  20%
Jeffrey S. Davis  25%  20%  20%  15%  20%
Christopher A. Donohue  25%  20%  10%  30%  15%
Kelly A. Liske  25%  25%  25%  10%  15%
Executive Net income Loan growth Deposit growth NPAs/Assets 
Operating
expenses/
Assets
           
Laurence J. Hueth 30% 20% 15% 20% 15%
Regina M. Wood 15% 25% 25% 10% 25%
Jeffrey S. Davis 15% 25% 25% 10% 25%
Christopher A. Donohue 10% 25% 15% 25% 25%
Kelly A. Liske 10% 25% 25% 25% 15%

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The following table summarizes First Northwest’sNorthwest's performance and resulting payouts associated with the corporate goals for 2016:the transition period from July 1, 2017 through December 31, 2017:

Performance measure 
Performance
achieved
(in thousands)
  
Payout as a
percentage of
target
 
       
Net income $1,659   0%
Loan growth  7.31%  150%
Deposit growth  7.44%  150%
NPAs/assets  0.13%  140%
Operating expenses/average assets  2.80%  50%

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

Performance measure
 
Performance achieved
  
Payout as a percentage of target
 
       
ROAA  0.41%  117.0%
Loan growth  27.20%  150.0%
Deposit growth  11.76%  150.0%
NPAs/assets  0.34%  150.0%
Operating expenses/average assets  2.88%  50.0%

Long-term Incentive Compensation. The purpose of the First Northwest Bancorp 2015 Equity Incentive Plan is to promote the long-term growth and profitability of First Northwest, to provide plan participants with an incentive to achieve corporate objectives, to attract and retain individuals of outstanding competence and to provide plan participants with incentives that are closely linked to the interests of all shareholders of First Northwest. The
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Plan was approved by shareholders in 2015 and allows for the grant of stock options and restricted stock awards to eligible participants. Although we have not identified the amount or the individuals that will receive awards, we expect that the proposed equity incentive plan will play a significant role in our future compensation considerations, particularly forIn July 2016, each of our named executive officers.
officers received a restricted stock award with a five-year vesting schedule, with the first 20% vesting on the one-year anniversary of the grant date and an additional 20% vesting each year thereafter.

Retirement Benefits. We currently offer a qualified, tax-exempt savings plan to eligible employees with a cash or deferred feature qualifying under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”"401(k) Plan"). Participants are permitted to make pre-tax contributions to the 401(k) Plan of up to 20% of their annual salary and commissions up to $50,000, up to a maximum of $18,000 in 2016.2017. In addition, participants who have attained age 50 may defer an additional $6,000 annually as a 401(k) “catch-up”"catch-up" contribution. First Federal matches 50% of the first six percent of participants’participants' contributions to the 401(k) Plan, including catch-up contributions. All participant 401(k) contributions, rollovers and earnings are fully and immediately vested. Matching contributions and related earnings vest at a rate of 25% after one year of employment, 50% after two years of employment, 75% after three years of employment and 100% after four years of employment.

We also offer a deferred compensation plan whereby certain officers may defer all or a portion of their annual salary until a permitted distribution event occurs under the plan. Officers who participate may direct the investment of the deferred salary among investment options made available by First Federal. The plan is described in further detail below, under “Nonqualified"Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans.”
"

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

Health and Welfare Benefits. We offer a range of benefits, in which all employees generally may participate, including medical and dental insurance coverage, vision care coverage, group life insurance coverage and long-term disability insurance coverage.

CEO Pay Ratio. We believe executive pay must be internally consistent and equitable to motivate our employees to create shareholder value. We are committed to internal pay equity, and the Compensation Committee monitors the relationship between the pay our executive officers receive and the pay all other employees receive.

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In accordance with the requirements of the Dodd–Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), we are required to include an analysis of our Chief Executive Officer to median employee pay ratio in our Proxy Statement. This ratio is calculated in accordance with what the SEC requires pursuant to Item 402(u) of Regulation S-K. We identified the median employee by examining the 2017 total cash compensation for all individuals, excluding our Chief Executive Officer, who were employed by us on December 31, 2017. We included all employees, whether employed on a full-time, part-time, or seasonal basis. We annualized the compensation for full-time employees who were not employed with us for all of 2017, but did not annualize the compensation for any part-time or seasonal employees. We believe the use of total cash compensation for all employees is a consistently applied compensation measure.

After identifying the median employee based on total cash compensation, we calculated annual total compensation for such employee using the same methodology we use for our named executive officers, and specifically our Chief Executive Officer, as set forth in the 2017 Summary Compensation Table provided later in this Proxy Statement.

Based on this methodology, our calculated 2017 Chief Executive Officer to median employee pay ratio is 13.8:1.

Compensation Committee Report

The Compensation Committee of the Board of Directors has reviewed and discussed the Compensation Discussion and Analysis above with management. Based on that review and discussion, we recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement.

The foregoing report is provided by the following directors, who are the members of the Compensation Committee:

Compensation Committee:

Cindy H. Finnie (Chair)
David T. Flodstrom
Stephen E. Oliver
Norman J. Tonina, Jr.

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


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16


EXECUTIVE COMPENSATION


Summary Compensation Table

The following table presents information regarding the compensation for the fiscal years ended June 30, 2016, 2015 and 2014, of our named executive officers: (1) Laurence J. Hueth, our President and Chief Executive Officer; (2) Regina M. Wood, our Chief Financial Officer; and (3) our next three most highly compensated executive officers, who are Jeffrey S. Davis, Christopher A. Donohue and Kelly A. Liske.
As a result of our change in fiscal year from June 30 to December 31, this table includes compensation information for the transition period from July 1, 2017 through December 31, 2017, as well as the fiscal years ended June 30, 2017, 2016 and 2015.

Name and
Principal Position
 Period 
Salary
($)
 
Bonus
($)
 
Stock
Awards
($)(1)
 
Non-
equity
Incentive
Plan
Compen-
sation
($)(2)
 
All Other
Compen-
sation
($)(3)
 Total ($)
               
Laurence J. Hueth
President and Chief
 
Six months ended
December 31, 2017
 144,454 -- 240,000 -- 49,479    433,933
   Executive Officer Year ended June 30, 2017 293,739 -- 952,500 124,418 65,790 1,436,447
  Year ended June 30, 2016 260,785 -- -- 101,649 40,295    402,729
  Year ended June 30, 2015 230,154 25,000 -- -- 46,684    301,838
               
Regina M. Wood
Executive Vice President,
 
Six months ended
December 31, 2017
   90,750 --   80,000   23,028 22,933    216,711
   Chief Financial Officer Year ended June 30, 2017 186,449 -- 317,500   64,456 26,562    594,967
   and Treasurer Year ended June 30, 2016 164,252 -- --   54,179   9,886    228,317
  Year ended June 30, 2015 143,852 11,000 -- --   9,315    164,167
               
Jeffrey S. Davis (4)
Executive Vice President
 
Six months ended
December 31, 2017
   88,500 --   80,000   22,458 19,710    210,668
   and Chief Operating Officer Year ended June 30, 2017 164,881 -- 317,500   62,858 22,861    568,100
  Year ended June 30, 2016 133,731 -- --   45,657   2,147    181,535
  Year ended June 30, 2015   92,231   9,000 -- --      103    101,334
               
Christopher A. Donohue
Executive Vice President
 
Six months ended
December 31, 2017
   90,750 --   80,000   24,390 23,295    218,435
   and Chief Credit Officer Year ended June 30, 2017   84,922 -- 317,500   64,637 26,222    593,281
  Year ended June 30, 2016 170,833 -- --   55,246 10,614    236,693
  Year ended June 30, 2015 164,756   9,000 -- -- 10,496    184,252
               
Kelly A. Liske
Executive Vice President
 
Six months ended
December 31, 2017
   92,500 --  80,000   30,434 28,674    231,608
   and Chief Banking Officer Year ended June 30, 2017 177,820 -- 317,500   75,188 31,340    601,848
  Year ended June 30, 2016 165,602 -- --   51,615 15,975    233,192
  Year ended June 30, 2015 143,852   9,000 -- -- 11,065    163,917
Name and Principal Position
 
Year
 
Salary ($)
  
Bonus
($)
  
Non-equity
Incentive Plan Compensation ($)(1)
  
All Other
Compensation
($)(2)
  
Total ($)
 
                  
Laurence J. Hueth 2016  260,785   --   101,649   40,295   402,729 
President and Chief 2015  230,154   25,000   --   46,684   301,838 
   Executive Officer 2014  206,154   --   --   4,524   210,768 
                       
Regina M. Wood 2016  164,252   --   54,179   9,886   228,317 
Executive Vice President, 2015  143,852   11,000   --   9,315   164,167 
   Chief Financial Officer 2014  128,846   --   --   4,120   132,966 
   and Treasurer                      
                       
Jeffrey S. Davis (3) 2016  133,731   --   45,657   2,147   181,535 
Executive Vice President 2015  92,231   9,000   --   103   101,334 
   and Chief Operating Officer                      
                       
Christopher A. Donohue 2016  170,833   --   55,246   10,614   236,693 
Executive Vice President 2015  164,756   9,000   --   10,496   184,252 
   and Chief Credit Officer 2014  157,385   --   --   1,062   158,446 
                       
Kelly A. Liske 2016  165,602   --   51,615   15,975   233,192 
Executive Vice President 2015  143,852   9,000   --   11,065   163,917 
   and Chief Banking Officer 2014  128,858   --   --   3,999   132,859 
_____________ 
____________
(1)Represents the aggregate grant date fair value of awards, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, "Compensation – Stock Compensation" ("FASB ASC Topic 718"). For a discussion of valuation assumptions, see Note 10 of the Notes to Consolidated Financial Statements in First Federal's Annual Report on Form 10-KT for the transition period ended December 31, 2017.
(2)Reflects amounts earned under the Cash Incentive Plan. The material terms of the Cash Incentive Plan for 20162017 are described in the Compensation Discussion and Analysis under “Short-term"Short-term Incentive Compensation.”"
(2)(3)ConsistsFor the transition period from July 1, 2017 through December 31, 2017, consists of 401(k) matching contribution, ESOP contribution and payment of life insurance premiums.premiums and ESOP contributions of $29,518 for Mr. Hueth, $20,740 for Ms. Wood, $18,388 for Mr. Davis, $20,474 for Mr. Donohue and $19,798 for Ms. Liske. For Mr. Hueth, also includes a contribution to his deferred compensation plan account of $25,933.$16,853. For Ms. Liske, also includes payment of auto allowance.
(3)(4)Mr. Davis was hired in September 2014.
 
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Employment Agreements for Named Executive Officers. On July 28, 2015, we entered into amended three-year employment agreements with Mr. Hueth, Ms. Wood, Mr. Donohue and Ms. Liske, and a new employment agreement with Mr. Davis. Under the employment agreements, the base salary levels for Mr. Hueth, Ms. Wood, Mr. Davis, Mr. Donohue and Ms. Liske have been updated and reviewed and are, $278,300, $178,000, $150,000, $174,348,as of December 31, 2017, $288,907, $181,500, $177,000, $181,500 and $162,886,$185,000, respectively, which amounts will be paid by First Northwest and First Federal and may be increased at the discretion of the Board of Directors or an authorized committee of the board. On each anniversary of the initial date of the employment agreements, the term of the agreements will be extended for an additional year upon review and approval by the board or an authorized committee, unless notice is given by First Northwest or First Federal to the executive, or by the executive to First Northwest or First Federal, at least 90 days prior to the anniversary date.

The agreements provide that the executives may participate, to the same extent as executive officers of First Northwest and First Federal generally, in all plans of First Northwest and First Federal relating to pension, retirement, thrift, profit-sharing, savings, group or other life insurance, hospitalization, medical and dental coverage, travel and accident insurance, education, cash bonuses, and other retirement or employee benefits or combinations thereof. In addition, the executives are entitled to participate in any other fringe benefit plans or perquisites which are generally available to executive officers of First Northwest Bancorp or First Federal, including supplemental retirement, deferred compensation programs, supplemental medical or life insurance plans, company cars, club dues, physical examinations, financial planning and tax preparation services. The executives also will receive an annual paid vacation, and voluntary leaves of absence, with or without pay, from time to time at such times and upon such conditions as the board or an authorized committee of the board may determine. The agreements also provide that
18
compensation may be paid in the event of disability, death, involuntary termination (including a voluntary termination for good reason) or a change in control, as described below under “Potential"Potential Payments Upon Termination or Change in Control.”
"

Grants of Plan-based Awards

The following table shows information regarding grants of plan-based awards made to our named executive officers for the year ended June 30, 2016.
transition period from July 1, 2017 through December 31, 2017.

  
Estimated possible payouts under
non-equity incentive plan awards (1)
Name Threshold ($) Target ($) Maximum ($)
       
Laurence J. Hueth 21,668 43,336 65,004
Regina M. Wood 11,344 22,688 34,031
Jeffrey S. Davis 11,063 22,125 33,188
Christopher A. Donohue 11,344 22,688 34,031
Kelly A. Liske 12,950 25,900 38,850
  
Estimated possible payouts under
non-equity incentive plan awards (1)
 
Name
 
Threshold ($)
  
Target ($)
  
Maximum ($)
 
          
Laurence J. Hueth  52,182   83,491   125,235 
Regina M. Wood  27,813   44,500   66,751 
Jeffrey S. Davis  23,438   37,500   56,251 
Christopher A. Donohue  27,242   43,587   65,380 
Kelly A. Liske  25,450   40,720   61,083 
______________ 
____________
(1)Represents the potential range of awards payable under our Cash Incentive Plan. The performance goals and measurements associated with this plan that generate the awards set forth above are provided in the “Short-term"Short-term Incentive Compensation”Compensation" section beginning on page 15.

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Outstanding Equity Awards

The following information with respect to outstanding stock awards as of December 31, 2017, is presented for the named executive officers.

Name Grant date Stock Awards (1)
Number of Shares or
Units of Stock That
Have Not Vested (#)
 
Market Value of Shares
or Units of Stock That
Have Not Vested ($)
       
Laurence J. Hueth 07/07/16 60,000 978,000
Regina M. Wood 07/07/16 20,000 326,000
Jeffrey S. Davis 07/07/16 20,000 326,000
Christopher A. Donohue 07/07/16 20,000 326,000
Kelly A. Liske 07/07/16 20,000 326,000
_____________ 
(1)Awards vest pro rata over a five-year period from the grant date, with the first 20 percent vesting one year after the grant date.

Option Exercises and Stock Vested

The following table shows the value realized upon the vesting of stock awards for the named executive officers for the transition period from July 1, 2017 through December 31, 2017. The named executive officers did not exercise any stock options during the transition period from July 1, 2017 through December 31, 2017.

  Stock awards
Name 
Number of
shares acquired
on vesting (#)
 
Value realized
on vesting ($)
     
Laurence J. Hueth 15,000 240,000
Regina M. Wood   5,000   80,000
Jeffrey S. Davis   5,000   80,000
Christopher A. Donohue   5,000   80,000
Kelly A. Liske   5,000   80,000

Nonqualified Defined Contribution and Other Nonqualified Deferred Compensation Plans

The following table provides information regarding each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified for the year ended June 30, 2016.transition period from July 1, 2017 through December 31, 2017
.

Name
 
Executive contributions in last FY ($)
  
Registrant contributions in last FY ($)
  
Aggregate
 earnings in last
FY ($)
  
Aggregate
withdrawals/ distributions ($)
 
Aggregate balance at FYE ($)
 
                
Laurence J. Hueth  17,600   --   1,241   --   58,892 
Regina M. Wood  --   --   --   --   -- 
Jeffrey S. Davis  --   --   --   --   -- 
Christopher A. Donohue  --   --   --   --   -- 
Kelly A. Liske  --   --   --   --   -- 
Name 
Executive
contributions
($)
 
Registrant
contributions
($)
 
Aggregate
earnings ($)
 
Aggregate
withdrawals/
distributions
($)
 
 
Aggregate
balance at
December 31,
2017 ($)
           
Laurence J. Hueth 16,000 -- 10,302 -- 119,247
Regina M. Wood -- -- -- -- --
Jeffrey S. Davis -- -- -- -- --
Christopher A. Donohue -- -- -- -- --
Kelly A. Liske -- -- -- -- --

In order to encourage the retention of qualified officers, we offer a deferred compensation plan whereby certain officers may defer all or a portion of their annual salary until a permitted distribution event occurs under the plan. Each officer may direct the investment of the deferred salary among investment options made available by First Federal. We have established a grantor trust to hold the plan investments. Grantor trust assets are considered part of our general assets, and the officers have the status of unsecured creditors of First Federal with respect to the trust
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assets. The plan permits the payment of benefits upon a separation from service (whether on account of termination of employment, pre-retirement death, disability), a change in control, an unforeseeable emergency or upon a date specified by the officer, in an amount equal to the value of the officer's account balance (or the amount necessary to satisfy the unforeseeable emergency, in that case). An officer may elect, at the time of the deferral election, to receive the deferred amount and related earnings in a lump sum or in annual installments over a period not exceeding 15 years. An officer may subsequently elect to change when or how he or she receives his or her plan benefit, if certain required conditions are met. Currently, Mr. Hueth is the only named executive officer who participates in this plan. In 2014, the Board of Directors voted to begin making an annual contribution to Mr. Hueth’sHueth's deferred compensation plan account in an amount equal to ten percent of his base salary.

Potential Payments Upon Termination or Change in Control

We have entered into agreements with the named executive officers that provide for potential payments upon disability, termination and death. These agreements are discussed in further detail following the table below.
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The following table shows, as of June 30, 2016,December 31, 2017, the value of potential payments and benefits following a termination of employment under a variety of scenarios.

Name
 
Without
cause by
 employer or
for good
reason by
employee ($)
  
Change in
control ($)
  
Early
retirement
($)
  
Normal
retirement
($)
  
Disability
($)
  
Death
($)
 
                   
Laurence J. Hueth                  
Employment Agreement  289,646   776,671   --   --   57,929   -- 
Deferred Compensation Plan  58,892   58,892   58,892   58,892   58,892   58,892 
                         
Regina M. Wood                        
Employment Agreement  188,896   366,896   --   --   37,779   -- 
                         
Jeffrey S. Davis                        
Employment Agreement  161,346   311,346   --   --   32,269   -- 
                         
Christopher A. Donahue                        
Employment Agreement  185,694   360,042   --   --   37,139   -- 
                         
Kelly A. Liske                        
Employment Agreement  175,798   338,684   --   --   35,159   -- 
Name 
Without
cause by
employer or
for good
reason by
employee ($)
 
Involuntary
termination
in connection
with change
in control
($)
 
Early
retirement
($)
 
Normal
retirement
($)
 
 
Disability
($)
 
Death
($)
             
Laurence J. Hueth
            
Employment Agreement 295,637 713,077 -- --   57,781 --
Deferred Compensation Plan 119,247 119,247 119,247 119,247 119,247 119,247
Equity Incentive Plan -- 978,000 -- -- 978,000 978,000
             
Regina M. Wood
            
Employment Agreement 191,510 326,290 -- --   37,380 --
Equity Incentive Plan -- 326,000 -- -- 326,000 326,000
             
Jeffrey S. Davis
            
Employment Agreement 190,741 292,167 -- --   36,820 --
Equity Incentive Plan -- 326,000 -- -- 326,000 326,000
             
Christopher A. Donohue
            
Employment Agreement 196,088 349,385 -- --   37,760 --
Equity Incentive Plan -- 326,000 -- -- 326,000 326,000
             
Kelly A. Liske
            
Employment Agreement 204,212 323,228 -- --   38,480 --
Equity Incentive Plan -- 326,000 -- -- 326,000 326,000

Employment Agreements. We have entered into three-yearThe employment agreements with each of the named executive officers.  These agreementsofficers provide for potential payments upon an executive’sexecutive's involuntary termination in certain situations, or upon death or disability. The agreements may be terminated by the Board of Directors at any time. If an executive’sexecutive's employment is terminated other than for cause, without the executive’sexecutive's consent or by the executive for good reason, then for one year after the date of termination First Northwest and First Federal would be required to pay the executive’sexecutive's salary at the rate in effect immediately prior to the date of termination and the pro rata portion of any incentive award or bonus, the amount of which will be determined by First Federal’sFederal's Board of Directors in its sole discretion, and continue the executive’sexecutive's and the executive’s dependents’executive's dependents' coverage under First Northwest’sNorthwest's and First Federal’sFederal's health, life and disability programs. “Good reason”"Good reason" generally means any of the following, unless consented to in writing by the executive: (1) a requirement that the executive be based at any place other than Port Angeles, Washington, or within a radius of 35 miles from the location of First Federal’sFederal's administrative offices; (2) a material demotion; (3) a material reduction in the number or seniority of personnel reporting to the executive; (4) a 20 percent or more reduction in the executive’sexecutive's base salary other than as part of an overall reduction in the salaries of senior management personnel; (5) a material
20
permanent increase in the required hours of work or workload; or (6) the failure of the First Federal Board of Directors to elect the executive to the position(s) specified in the executive’sexecutive's employment agreement.

The employment agreements also provide for severance payments and other benefits if an executive is involuntarily terminated not for cause (or terminates his or her employment for “good"good reason,”" as defined above) during the period that begins six months prior to the effective time of a change in control and ends on the second anniversary of the effective time of the change in control. The agreements define the term “change"change in control”control" as having occurred when, among other things: (1) an offeror other than First Northwest purchases shares of stock of First Northwest or First Federal pursuant to a tender or exchange offer for the shares; (2) certain events occur as specified by federal regulations in connection with a change in control of First Northwest or First Federal; (3) any person, as that term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act, is or becomes the beneficial owner of securities of First Northwest or First Federal representing 25% or more of the combined voting power of First Northwest’sNorthwest's or First Federal’sFederal's outstanding securities; (4) a majority of the membership of the Board of Directors of First Northwest or First Federal changes as the result of a contested election; or (5) upon the consummation of a plan of reorganization, merger, acquisition, consolidation, sale of all or substantially all of the assets of First Northwest or a similar transaction in which First Northwest is not the resulting entity.

In the event of a termination in connection with a change in control, the employment agreements provide that First Northwest and First Federal jointly shall: (1) pay to the executive in a lump sum within 25 business days
20
after the date of termination an amount equal to a multiple of the average of executive’sexecutive's five prior years’years' annual salary (the multiple being 2.75 for Mr. Hueth and 22.00 for each of the other named executive officers); and (2) continue the executive’sexecutive's and the executive’s dependents’executive's dependents' coverage under First Northwest’sNorthwest's and First Federal’sFederal's health, life and disability programs for one year after the executive’sexecutive's termination of employment. Section 280G of the Internal Revenue Code provides that if payments made in connection with a change in control equal or exceed three times the individual’sindividual's base amount, then a portion of those payments are deemed to be “excess"excess parachute payments.”" An executive’s “base amount”executive's "base amount" is generally the average of the executive’sexecutive's taxable compensation for the last five years preceding the year in which a change in control occurs. Individuals are subject to a 20% excise tax on the amount of such excess parachute payments, and First Northwest and First Federal would not be entitled to deduct the amount of such excess parachute payments. The employment agreements provide that severance and other payments that are subject to a change in control will be reduced to the extent necessary to ensure that no amounts payable to the executives will be considered excess parachute payments.

If an executive becomes entitled to benefits under the terms of First Northwest’sNorthwest's or First Federal’sFederal's then-current disability plan, if any, or becomes otherwise unable to fulfill the duties required under the employment agreement, the executive shall be entitled to receive such group and other disability benefits as are then provided for executive employees. In the event of an executive’sexecutive's disability, the employment agreements will not be suspended, except that the obligation to pay the executive’sexecutive's salary will be reduced in accordance with the amount of any disability income benefits received such that, on an after-tax basis, the executive realizes from the sum of disability income benefits and salary the same amount as the executive would realize on an after-tax basis from the executive’sexecutive's salary if the executive had not become disabled. Upon a resolution adopted by a majority of the disinterested members of the Board of Directors or an authorized committee, First Northwest and First Federal may discontinue payment of an executive’sexecutive's salary beginning six months after a determination that the executive become entitled to benefits under the disability plan or is otherwise unable to fulfill his or her duties under the employment agreement.

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

Deferred Compensation Plan. First Federal offers a deferred compensation plan whereby certain officers may defer all or a portion of their annual salary until a permitted distribution event occurs under the plan. Currently, Mr. Hueth is the only named executive officer who participates in this plan. Payment will be made to Mr. Hueth of the then value of his account (adjusted for gains and losses) upon his separation from service from First Federal or at a later date selected by Mr. Hueth, in a cash lump sum. Payment is made from the general assets of First Federal, subject to claims of creditors in the event of First Federal’sFederal's bankruptcy or insolvency.
 
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Equity Incentive Plan. The 2015 Equity Incentive Plan provide for accelerated vesting of awards in the event of a recipient's death or disability, or a change in control. The plan provides that unvested awards will become exercisable or vest upon the date of the recipient's death or disability. With respect to a change in control, unvested awards will become exercisable or vest only if the participant experiences an involuntary termination within 365 days following the change in control event or the acquiring company does not either assume the outstanding award or replace the outstanding award with an equivalently-valued award.

Compensation and Awards Committee Interlocks and Insider Participation

The members of the Compensation Committee are Cindy H. Finnie (Chair), David T. Flodstrom, Stephen E. Oliver and Norman J. Tonina, Jr. No members of the Compensation Committee were officers or employees of First Northwest or any of its subsidiaries during the year ended June 30, 2016.transition period from July 1, 2017 through December 31, 2017. No member of the committee is a former officer of First Northwest or any of its subsidiaries, or had any relationships otherwise requiring disclosure.
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PROPOSAL 2 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION


Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, (“Dodd-Frank Act”), we are required to periodically include in our annual meeting proxy statement and present at the annual meeting of shareholders a non-binding shareholder resolution to approve the compensation of our named executive officers, as disclosed in the proxy statement pursuant to the compensation disclosure rules of the SEC. This proposal, commonly known as a “say-on-pay”"say-on-pay" proposal, gives shareholders the opportunity to endorse or not endorse the compensation of First Northwest’sNorthwest's executives as disclosed in the proxy statement.  At last year’s annual meeting of shareholders, we were also required under the Dodd-Frank Act to include non-binding shareholder resolution regarding the frequency of future votes on executive compensation.  The Board of Directors recommended that shareholdersProxy Statement. We currently hold our say-on-pay vote in favor of holding an annual say-on-pay vote.  Shareholders voted strongly in favor of holding an annual vote and the Board of Directors determined to hold an annual shareholder advisory vote to approve the compensation of our named executive officers, beginning with this year’s annual meeting of shareholders, and continuing until such time that the frequency vote is next presented to shareholders or until the Board determines that a different frequency is in the best interest of First Northwest and its shareholders.every year. The proposal will be presented at this year’syear's annual meeting in the form of the following resolution:

RESOLVED, that the shareholders approve the compensation of First Northwest Bancorp’sBancorp's named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables and related material in First Northwest’sNorthwest's Proxy Statement for the 20162018 annual meeting of shareholders.

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

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

The Board of Directors unanimously recommends that you vote FOR approval of the compensation of our named executive officers as disclosed in this Proxy Statement.
 

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AUDIT COMMITTEE REPORT

The Audit Committee of the First Northwest Board of Directors reports as follows with respect to First Northwest’sNorthwest's audited financial statements for the fiscal year ended June 30, 2016:
transition period from July 1, 2017 through December 31, 2017:

·the Audit Committee has completed its review and discussion with management of the 2016 audited financial statements with management;for the transition period from July 1, 2017 through December 31, 2017;

·
the Audit Committee has discussed with the independent auditor, Moss Adams LLP, the matters required to be discussed by Auditing Standard No. 16, 1301, Communications with Audit Committees,, as amended;

·the Audit Committee has received written disclosures and the letter from the independent auditor required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’sauditor's communications with the Audit Committee concerning independence, and has discussed with the independent auditor the independent auditor’sauditor's independence; and
22

·the Audit Committee has, based on its review and discussions with management of the 2016 audited financial statements and discussions with the independent auditor, recommended to the Board of Directors that First Northwest’sNorthwest's audited financial statements for the year ended June 30, 2016,transition period from July 1, 2017 through December 31, 2017, be included in its Annual Report on Form 10-K.10-KT.

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

Audit Committee:

Jennifer Zaccardo (Chair)
Dana D. Behar
David A. Blake
Lloyd J. Eisenman
Stephen E. Oliver
Norman J. Tonina, Jr.

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



PROPOSAL 3 – RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR


TheAs previously announced, we have changed our fiscal year end from June 30 to December 31. Accordingly, the Audit Committee of the Board of Directors has appointed Moss Adams LLP as First Northwest’sNorthwest's independent auditor for the year ending June 30, 2017.December 31, 2018. You are asked to ratify the appointment of Moss Adams LLP at the annual meeting. Although shareholder ratification of the appointment of Moss Adams LLP is not required by our bylaws or otherwise, our Board of Directors is submitting this appointment to shareholders for their ratification at the annual meeting as a matter of good corporate practice. If the appointment of Moss Adams LLP is not ratified by our shareholders, the Audit Committee may appoint another independent auditor or it may decide to maintain its appointment of Moss Adams LLP. Even if the appointment of Moss Adams LLP is ratified by the shareholders at the annual meeting, the Audit Committee, in its discretion, may select a different independent auditor at any time during the year. Moss Adams LLP served as our independent auditor for the year ended June 30, 2016,2017 and for the transition period from July 1, 2017 through December 31, 2017, and a representative of the firm is expected to attend the annual meeting to respond to appropriate questions and will have an opportunity to make a statement if he or she so desires.

The Board of Directors unanimously recommends that you vote FOR ratification of the appointment of Moss Adams LLP as our independent auditor.
 
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The following table sets forth the aggregate fees billed to First Northwest and First Federal for professional services rendered by Moss Adams LLP for the transition period from July 1, 2017 through December 31, 2017 and the fiscal years ended June 30, 20162017 and 2015.
2016.

  
Year Ended
June 30,
 
  2016  2015 
       
Audit Fees                                                               $320,300  $211,000 
Audit-Related Fees                                                                41,500   218,000 
Tax Fees                                                                26,270   24,000 
All Other Fees                                                                --   -- 
   Year ended June 30, 
Name 
July 1, 2017 –
December 31, 2017
  2017  2016 
          
Audit Fees $312,839  $340,381  $320,300 
Audit-Related Fees  10,500   36,500   41,500 
Tax Fees  21,340   25,020   26,270 
All Other Fees  --   --   -- 

The Audit Committee pre-approves all audit and permissible non-audit services to be provided by the independent auditor and the estimated fees for these services in connection with its annual review of its charter. In considering non-audit services, the Audit Committee will consider various factors, including but not limited to, whether it would be beneficial to have the service provided by the independent auditor and whether the service could compromise the independence of the independent auditor. All of the services provided by Moss Adams LLP in the year ended June 30, 2016,transition period from July 1, 2017 through December 31, 2017, were approved by the Audit Committee.
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


Section 16(a) of the Securities Exchange Act requires our directors and executive officers, and persons who own more than 10 percent of First Northwest’sNorthwest's common stock to report their initial ownership of the common stock and any subsequent changes in that ownership to the SEC. Directors, executive officers and greater than 10 percent shareholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. The SEC has established filing deadlines for these reports and we are required to disclose in this Proxy Statement any late filings or failures to file. Based solely on our review of the copies of such forms we have received and written representations provided to us by the above referenced persons, we believe that, during the fiscal year ended June 30, 2016,transition period from July 1, 2017 through December 31, 2017, all filing requirements applicable to our reporting officers, directors and greater than 10 percent shareholders were properly and timely complied with, with the exception of inadvertent late filings by Director Behar on Form 3 (reporting initial ownership) and on Form 4 (reporting an additional purchase of shares).
with.


SHAREHOLDER PROPOSALS


Proposals of shareholders intended to be presented at next year’sthe 2019 annual meeting of shareholders must be received at the executive office at 105 W. Eighth Street, Port Angeles, Washington 98362, no later than May 19, 2017,November 16, 2018, in order to be eligible for inclusion in our printed proxy materials. Any such proposals shall be subject to the requirements of the proxy rules adopted under the Securities Exchange Act, and as with any shareholder proposal (regardless of whether included in our proxy materials), our Articles of Incorporation and Bylaws.

Our Articles of Incorporation provide that in order for a shareholder to make nominations for the election of directors or proposals for business to be brought before a meeting, a shareholder must deliver notice of such nominations and/or proposals to the Secretary not less than 90 nor more than 120 days prior to the date of the meeting; provided that if less than 100 days’days' notice of the meeting is given to shareholders, such written notice must be delivered not later than the close of business on the tenth day following the day on which notice of the meeting was mailedprovided to shareholders. As specified in the Articles of Incorporation, the notice with respect to nominations for election of directors must set forth certain information regarding each nominee for election as a director, including the person’sperson's name, age, business address and number of shares of common stock held, a written consent to being named in the Proxy Statement as a nominee and to serving as a director, if elected, and certain other information regarding the shareholder giving such notice. The notice with respect to business proposals to be brought before the annual meeting must state the shareholder’sshareholder's name, address and number of shares of common stock held, a brief discussion of the business to be brought before the annual meeting, the reasons for conducting such business at the meeting, and any interest of the shareholder in the proposal.

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MISCELLANEOUS



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

We will bear the cost of solicitation of proxies and will reimburse brokerage firms and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of First Northwest’sNorthwest's common stock. In addition to solicitations via the Internet and by mail, our directors, officers and regular employees may solicit proxies personally or electronically or by telephone without additional compensation.
 
24
Our Annual Report to Shareholders, including the Annual Report on Form 10-K, has been mailedmade available to all shareholders of record as of the close of business on the voting record date. Any shareholder who has not receivedmay obtain a copy of the Annual Report may obtain a copy by writing to the Secretary, First Northwest Bancorp, 105 W. Eighth Street, Port Angeles, Washington 98362. The Annual Report is not to be treated as part of the proxy solicitation material or as having been incorporated herein by reference.
 
BY ORDER OF THE BOARD OF DIRECTORS
/s/JOYCE RUIZ CHRISTOPHER J. RIFFLE
JOYCE RUIZ
CHRISTOPHER J. RIFFLE
CORPORATE SECRETARY AND
SENIOR VICE PRESIDENT AND CORPORATE SECRETARY


Port Angeles, Washington
SeptemberMarch 16, 20162018


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. 25
 
Admission Ticket
IMPORTANT ANNUAL MEETING INFORMATION
IMPORTANT ANNUAL MEETING INFORMATION
Using a black ink pen, mark your [X]
votes with an X as shown in  this[X]
this example. Please do not write
outside the designated areas.
Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Pacific Time, on NovemberMay 8, 2016.2018.
                   Vote by Internet
                                                               ·                      • Go to www.investorvote.com/FNWB
                                                               ·                      • Or scan the QR code with your smartphone
                                                               ·                      • Follow the steps outlined on the secure website
 
Vote by telephone
·• Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone
                                                 ·• Follow the instructions provided by the recorded message

Annual Meeting Proxy Card

Annual Meeting Proxy Card
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.ENVELOPE
A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.
 
1. Election of Directors:     For a three-year term                                             01 – David A. Blake02 – Craig A. Curtis                                                      03 – Norman J. Tonina, Jr.
□
Mark here to vote
1. Election of Directors:FOR all nominees
□
Mark here to WITHHOLD
vote from all nominees
□
For a one-year term:All EXCEPT – To withhold authority to vote for any nominee(s), write the name(s) of such nominee(s) below.
01 - Lloyd J. Eisenman
   
For a three-year term:   02 - Dana D. Behar 03 - Cindy H. Finnie04 - David T. Flodstrom   
      

o   Mark here to vote
FOR all nominees
o   Mark here to WITHHOLD
       vote from all nominees
  o
 For All EXCEPT - To withhold
authority to vote for any
nominee(s), write the name(s) of such
nominee(s) below.
 ForAgainstAbstain ForAgainstAbstain
2.Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in the Proxy Statement
 o□ o□ o□
3.Ratification of the appointment of Moss Adams LLP as the independent auditor for the year ending June 30, 2017December 31, 2018
 o□o□ o□
        
4.In their discretion, upon such other matters as may properly come before the meeting.
       
 
B   Non-Voting Items
Change of Address— - Please print your new address below.
below                            Comments— - Please print your comments below.belowMeeting Attendance                        [   ]
 
 
Meeting Attendance  Mark the box to
the right if you
plan to attend the
Annual Meeting. Meeting                     [   ]
C   Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as your name(s) appear on this proxy card. When signing as attorney, executor, administrator, corporate officer, trustee, guardian or custodian, please give your full title. If shares are held jointly, each holder should sign.
Date (mm/dd/yyyy) -— Please print date below.Signature 1 — Please keep signature within the box.Signature 2 — Please keep signature within the box.
 
 
 
  
 
 
20162018 Annual Meeting Admission Ticket
20162018 Annual Meeting of

First Northwest Bancorp Shareholders

Tuesday, NovemberMay 8, 2016, 10:2018, 4:00 a.m.p.m., Pacific Time
Red Lion Hotel Olympic
Elwha Klallam Heritage Center, Eagle's Nest Room
221 N. Lincoln401 E. First Street, Port Angeles, Washington
Upon arrival, please present this admission ticket

and photo identification at the registration desk.
 
 
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM
PORTION IN THE ENCLOSED ENVELOPE.
Revocable Proxy – First Northwest Bancorp
Revocable Proxy – First Northwest Bancorp
Notice of 20162018 Annual Meeting of Shareholders
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBERMAY 8, 2016
2018
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of First Northwest Bancorp (“("First Northwest”Northwest") with full powers of substitution to act as attorneys and proxies for the undersigned, to vote all shares of First Northwest common stock that the undersigned is entitled to vote at the annual meeting of shareholders, to be held at the Red Lion Hotel OlympicElwha Klallam Heritage Center, Eagle's Nest Room, located at 221 N. Lincoln401 E. First Street, Port Angeles, Washington, on Tuesday, NovemberMay 8, 2016,2018, at 10:4:00 a.m.p.m., Pacific Time, and at any and all adjournments thereof, as indicated.

The undersigned acknowledges receipt from First Northwest prior to the execution of this proxy of the Notice of Annual Meeting of Shareholders, a Proxy Statement dated SeptemberMarch 16, 20162018 and the 20162018 Annual Report to Shareholders.

This proxy will be voted as directed, but if no instructions are specified, this proxy will be voted FOR all the nominees listed and FOR proposals 2 and 3. If any other business is presented at the annual meeting, this proxy will be voted by the Board of Directors in its best judgment. At the present time, the Board of Directors knows of no other business to be presented at the annual meeting. This proxy also confers discretionary authority on the Board of Directors to vote with respect to the election of any person as director where the nominees are unable to serve or for good cause will not serve and matters incident to the conduct of the annual meeting.

Should the undersigned be present and elect to vote at the annual meeting or any adjournment thereof, and after notification to the Secretary of First Northwest at the annual meeting of the shareholder’sshareholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.

.Notice to Participants in the First Northwest Bancorp Employee Stock Ownership Plan ("ESOP") and First Federal Savings & Loan Association of Port Angeles 401(k) Plan ("401(k) Plan"): Please be advised that each participant will be entitled to vote those shares allocated to his or her account. This proxy, when properly executed, will be voted as specified therein. If this proxy is not properly completed and signed or if it is not timely received by the designated tabulator, shares allocated to a participant's account will be voted as follows: 401(k) Plan shares will be voted by the Trustee as directed by the Plan Administrator, and ESOP shares will be voted by the Trustee in the same proportion as shares for which the Trustee has received voting instructions.  The proxies are authorized to vote upon such other matters as may properly come before the meeting.  The deadline to provide voting instructions for shares held in the foregoing plans is Thursday, May 3, 2018 at 1:00 p.m. PDT.
.IMPORTANT ANNUAL MEETING INFORMATION
 
 
 



IMPORTANT ANNUAL MEETING INFORMATION

Using a black ink pen, mark your votes with an X as shown in  [X]
this example. Please do not write outside the designated areas.
[X]

Annual Meeting Proxy Card

Annual Meeting Proxy Card
PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
ENVELOPE
A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.
 
1. Election of Directors:     For a three-year term                                             01 – David A. Blake02 – Craig A. Curtis                                                      03 – Norman J. Tonina, Jr.
[ ]
Mark here to vote
1. Election of Directors:FOR all nominees
[ ]
Mark here to WITHHOLD
vote from all nominees
[ ]
For a one-year term:All EXCEPT
01 - Lloyd J. Eisenman
For a three-year term:   02 - Dana D. Behar03 - Cindy H. Finnie    04 - David T. Flodstrom – To withhold authority to vote for any
nominee(s), write the name(s) of such nominee(s) below.
    
o   Mark here to vote
FOR all nominees
o   Mark here to WITHHOLD
       vote from all nominees
  o
 For All EXCEPT - To withhold
authority to vote for any
nominee(s), write the name(s) of such
nominee(s) below.
  
      

 ForAgainstAbstain For ForAgainst  AgainstAbstain
2.Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in the Proxy Statement
 o□ o□ o□
3.Ratification of the appointment of Moss Adams LLP as the independent auditor for the year ending June 30, 2017December 31, 2018
 o□o□ o□
        
4.In their discretion, upon such other matters as may properly come before the meeting.
       
 
B Authorized Signatures —Signatures— This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as your name(s) appear on this proxy card. When signing as attorney, executor, administrator, corporate officer, trustee, guardian or custodian, please give your full title. If shares are held jointly, each holder should sign.
Date (mm/dd/yyyy) — Please print date below.        Signature 1 — Please keep signature within the box.    Signature 2 — Please keep signature within the box.
 
 
  
 
 

PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
ENVELOPE
Revocable Proxy – First Northwest Bancorp
Revocable Proxy – First Northwest Bancorp
Notice of 20162018 Annual Meeting of Shareholders
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBERMAY 8, 2016
2018
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints the Board of Directors of First Northwest Bancorp (“("First Northwest”Northwest") with full powers of substitution to act as attorneys and proxies for the undersigned, to vote all shares of First Northwest common stock that the undersigned is entitled to vote at the annual meeting of shareholders, to be held at the Red Lion Hotel OlympicElwha Klallam Heritage Center, Eagle's Nest Room, located at 221 N. Lincoln401 E. First Street, Port Angeles, Washington, on Tuesday, NovemberMay 8, 2016,2018, at 10:4:00 a.m.p.m., Pacific Time, and at any and all adjournments thereof, as indicated.

The undersigned acknowledges receipt from First Northwest prior to the execution of this proxy of the Notice of Annual Meeting of Shareholders, a Proxy Statement dated SeptemberMarch 16, 20162018 and the 20162018 Annual Report to Shareholders.

This proxy will be voted as directed, but if no instructions are specified, this proxy will be voted FOR all the nominees listed and FOR proposals 2 and 3. If any other business is presented at the annual meeting, this proxy will be voted by the Board of Directors in its best judgment. At the present time, the Board of Directors knows of no other business to be presented at the annual meeting. This proxy also confers discretionary authority on the Board of Directors to vote with respect to the election of any person as director where the nominees are unable to serve or for good cause will not serve and matters incident to the conduct of the annual meeting.

Should the undersigned be present and elect to vote at the annual meeting or any adjournment thereof, and after notification to the Secretary of First Northwest at the annual meeting of the shareholder’sshareholder's decision to terminate this proxy, then the power of said attorneys and proxies shall be deemed terminated and of no further force and effect.

.
Admission Ticket
IMPORTANT ANNUAL MEETING INFORMATION
Using a black ink pen, mark your votes    [X]
with an X as shown in this example.
Please do not write outside the
designated areas.
Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 p.m., Pacific Time, on November 3, 2016.
Vote by Internet
                  ·Go to www.investorvote.com/FNWB
                  ·Or scan the QR code with your smartphone
                  ·Follow the steps outlined on the secure website
Vote by telephone
·Call toll free 1-800-652-VOTE (8683) within the
USA, US territories & Canada on a touch tone
telephone
·Follow the instructions provided by the recorded message

VOTE AUTHORIZATION FORM
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.
1. Election of Directors:
For a one-year term:      01 - Lloyd J. Eisenman
For a three-year term:   02 - Dana D. Behar03 - Cindy H. Finnie    04 - David T. Flodstrom 
o   Mark here to vote
FOR all nominees
o   Mark here to WITHHOLD
       vote from all nominees
  o
 For All EXCEPT - To withhold
authority to vote for any
nominee(s), write the name(s) of such
nominee(s) below.
 For  Against Abstain For Against Abstain 
2.  Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in the Proxy Statement o o o 3.  Ratification of the appointment of Moss Adams LLP as the independent auditor for the year ending June 30, 2017 oo o
4. In their discretion, upon such other matters as may properly come before the meeting.  
B Non-Voting Items
Change of Address — Please print your new address below.Comments — Please print your comments below.Meeting Attendance o
Mark the box to the right if you plan to attend the Annual Meeting.
C Authorized Signature — This section must be completed for your voteNotice to be counted. — Date and Sign Below
Please sign exactly as your name(s) appear on this proxy card. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give your full title.  If shares are held jointly, each holder should sign.
Date (mm/dd/yyyy) — Please print date below.    Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
.
2016 Annual Meeting Admission Ticket
2016 Annual Meeting of
First Northwest Bancorp Shareholders
Tuesday, November 8, 2016, 10:00 a.m., Pacific Time
Red Lion Hotel Olympic Room
221 N. Lincoln Street, Port Angeles, Washington
Upon arrival, please present this admission ticket
and photo identification at the registration desk.
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
VOTE AUTHORIZATION FORM – FIRST NORTHWEST BANCORP
   EMPLOYEE STOCK OWNERSHIP PLAN
FIRST NORTHWEST BANCORP
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 8, 2016
The undersigned, being a participantParticipants in the First Northwest Bancorp Employee Stock Ownership Plan does hereby instruct the Trustee thereof("ESOP") and First Federal Savings & Loan Association of Port Angeles 401(k) Plan ("401(k) Plan"): Please be advised that each participant will be entitled to vote with respect to allthose shares allocated to his or her account. This proxy, when properly executed, will be voted as specified therein. If this proxy is not properly completed and signed or if it is not timely received by the undersigned indesignated tabulator, shares allocated to a participant's account will be voted as follows: 401(k) Plan shares will be voted by the Trustee as directed by the Plan as of August 31, 2016, at the annual meeting of shareholders to be held at the Red Lion Hotel Olympic Room, located at 221 N. Lincoln Street, Port Angeles, Washington, on Tuesday, November 8, 2016, at 10:00 a.m., Pacific Time,Administrator, and at any and all adjournments and postponements thereof.
The Board of Directors recommends you vote FOR the election of each of the nominees listed and FOR Proposals 2 and 3.
The undersigned hereby acknowledges receipt of First Northwest Bancorp’s Notice of Annual Meeting of Shareholders, a Proxy Statement dated September 16, 2016 and the 2016 Annual Report to Shareholders.
We will follow your voting instructions, however, if no instructions are specified, theseESOP shares will be voted by the Trustee in the same proportion as shares for which the Trustee has received voting instructions.

  The proxies are authorized to vote upon such other matters as may properly come before the meeting.  The deadline to provide voting instructions for shares held in the foregoing plans is Thursday, May 3, 2018 at 1:00 p.m. PDT.
 
Admission Ticket
IMPORTANT ANNUAL MEETING INFORMATION
Using a black ink pen, mark your votes      [X]
with an X as shown in this example.
Please do not write outside the
designated areas.
Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 p.m., Pacific Time, on November 3, 2016.
Vote by Internet
                 ·Go to www.investorvote.com/FNWB
                 ·Or scan the QR code with your smartphone
                               ·Follow the steps outlined on the secure website
Vote by telephone
·Call toll free 1-800-652-VOTE (8683) within the
USA, US territories & Canada on a touch tone
telephone
·Follow the instructions provided by the recorded message
VOTE AUTHORIZATION FORM
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals — The Board of Directors recommends a vote FOR all the nominees listed and FOR Proposals 2 and 3.
1. Election of Directors:
For a one-year term:      01 - Lloyd J. Eisenman
For a three-year term:   02 - Dana D. Behar03 - Cindy H. Finnie   04 - David T. Flodstrom
o   Mark here to vote
FOR all nominees
o   Mark here to WITHHOLD
       vote from all nominees
  o
 For All EXCEPT - To withhold
authority to vote for any
nominee(s), write the name(s) of such
nominee(s) below.
 For  Against Abstain  For   Against Abstain
2.  Advisory (non-binding) approval of the compensation of our named executive officers as disclosed in the Proxy Statement o o o 3.  Ratification of the appointment of Moss Adams LLP as the independent auditor for the year ending June 30, 2017 oo o
4. In their discretion, upon such other matters as may properly come before the meeting.
B Non-Voting Items
Change of Address — Please print your new address below.Comments — Please print your comments below.
Meeting Attendance                              [   ]
Mark the box to the right if you plan
to attend the Annual Meeting.
C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as your name(s) appear on this proxy card. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give your full title.  If shares are held jointly, each holder should sign.
Date (mm/dd/yyyy) — Please print date below.  Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
.
2016 Annual Meeting Admission Ticket
2016 Annual Meeting of
First Northwest Bancorp Shareholders
Tuesday, November 8, 2016, 10:00 a.m., Pacific Time
Red Lion Hotel Olympic Room
221 N. Lincoln Street, Port Angeles, Washington
Upon arrival, please present this admission ticket
and photo identification at the registration desk.
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
VOTE AUTHORIZATION FORM – FIRST NORTHWEST BANCORP
401(k) PLAN
FIRST NORTHWEST BANCORP
ANNUAL MEETING OF SHAREHOLDERS
NOVEMBER 8, 2016
The undersigned, being a participant in the First Federal Savings & Loan Association of Port Angeles 401(k) Plan, does hereby instruct the Trustee thereof to vote with respect to all shares held by the undersigned in the Plan as of August 31, 2016, at the annual meeting of shareholders to be held at the Red Lion Hotel Olympic Room, located at 221 N. Lincoln Street, Port Angeles, Washington, on Tuesday, November 8, 2016, at 10:00 a.m., Pacific Time, and at any and all adjournments and postponements thereof.
The Board of Directors recommends you vote FOR the election of each of the nominees listed and FOR Proposals 2 and 3.
The undersigned hereby acknowledges receipt of First Northwest Bancorp’s Notice of Annual Meeting of Shareholders, a Proxy Statement dated September 16, 2016 and the 2016 Annual Report to Shareholders.
We will follow your voting instructions, however, if no instructions are specified, these shares will be voted by the Trustee as directed by the Plan Administrator.