On behalf of the Board of Directors 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, November 7, 2017May 8, 2018 at the Red Lion Hotel, Juan de FucaElwha Klallam Heritage Center, Eagle's Nest Room, located at 221 N. Lincoln401 E. First Street, Port Angeles, Washington.

The matters expected to be acted upon at the meeting are described in the attached Proxy Statement. In addition, we will report on our results of operations duringoperations. During the past year andmeeting, we will also address your questions and comments.

We 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 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.

Notice is hereby given that the 20172018 annual meeting of shareholders of First Northwest Bancorp will be held at the Red Lion Hotel, Juan de FucaElwha Klallam Heritage Center, Eagle's Nest Room, located at 221 N. Lincoln401 E. First Street, Port Angeles, Washington, on Tuesday, November 7, 2017,May 8, 2018, at 4:00 p.m., Pacific Time for. At the following purposes:meeting, shareholders will be asked to consider the following:

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, 2017,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.  Please

YOUR 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 your shares at your earliest convenience.promptly through the Internet, by telephone or by mail. This will ensure the presence of a quorum at the meeting. For instructions on voting, please refer to the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail. You can request to receive proxy materials by mail or e-mail. Promptly voting your shares via the Internet, by telephone, or by signing, dating, and returning the proxy card, which is solicited by the Board of Directors, will save us the expense and extra work for additional solicitation. If you attend and vote at the annual meeting in person, your proxy will not be used. Your vote is very important.important.

The Board of Directors of First Northwest Bancorp is using this Proxy Statement to solicit proxies from our shareholders for use at our 20172018 annual meeting of shareholders. We first provided access to this Proxy Statement and a form of proxy card to our shareholders on or about September 15, 2017.March 16, 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" and First Federal Savings and Loan Association of Port Angeles may also be referred to as "First Federal" or the "Bank." References to "we," "us" and "our" refer to First Northwest and, as the context requires, First Federal.

Our annual meeting will be held as follows:

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

Our proxy materials are available at https://www.snl.com/IRW/corporateprofile/4343673. The following materials are available for review:

We provided access to our proxy materials beginning on September 15, 2017.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 materials. It also reduces printing and mailing expenses and lessens the environmental impact of paper copies.

We have fixed the close of business on August 31, 2017,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'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'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'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, 2017,February 28, 2018, the voting record date, there were 11,908,50711,709,407 shares of First Northwest common stock outstanding and entitled to 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"), please see the instructions below, under "What if My Shares Are Held in Street Name?"

Shares of First Northwest common stock can only be voted 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 proxy even if you plan to attend the annual meeting. You can vote by telephone or the Internet by following the instructions on the Notice of Internet Availability of Proxy Materials you received in the mail. You may also vote by signing, dating, and returning the proxy card 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 the Notice of Internet Availability of Proxy Materials you received in the mail.  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'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.auditor for 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 Notice of Internet Availability of Proxy Materials depending on how your shares are held. For example, you may hold some of your shares individually, some jointly with your spouse and some in trust for your children. In this case, you will receive three separate notices of how to access the proxy materials and vote.

If you are the beneficial owner of shares held in "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

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.

We maintain the First Northwest Bancorp Employee Stock Ownership Plan ("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 proxy card distributed by the administrator. If a participant properly executes the proxy card, the administrator will instruct the trustee to vote the participant's shares in accordance with the participant's instructions. 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 November 2, 2017May 3, 2018 at 1:00 p.m., Pacific Time. The ESOP third party administrator is Pentegra.

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.

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.

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 three 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 three 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.

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.

As previously announced, we are changinghave 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 six-month transition periodyear ending December 31, 2017.2018. Ratification of the appointment of Moss Adams LLP as our independent auditor 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.

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.

Persons and groups who beneficially own in excess of five percent of First Northwest's common stock are required to file with the Securities and Exchange Commission ("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"). 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'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.

As of August 31, 2017,February 28, 2018, the voting record date, there were 11,908,50711,709,407 shares of First Northwest common stock outstanding.

Our Board of Directors currently consists of tennine members and, in accordance with our Articles of Incorporation, is divided into three classes.  Director Eisenman will retire effective as of the annual meeting of shareholders, at which time the size of the Board of Directors will be reduced to nine members. One-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.

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

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.

Craig A. CurtisDana D. Behar ishas been the owner of Discovery Bay Investments, LLC, a registered architectprivate equity investment firm based in Seattle focused on agricultural land 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.since September 2015. Prior to joining Katerra, Mr. Curtis was employed by The Miller Hull Partnership since 1987that, 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 a partnerits President and Chief Executive Officer from 19942005 until September 2015. He also served as director of HAL Real Estate Investments Inc. from 2005 to 2016. In 2004, Miller Hull was awarded the American InstituteMr. Behar previously worked in brand management at Procter & Gamble, served as Director 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 BoardMarketing for the WSU Center for Environmental Research, Educationretail chain, Egghead Software, and Outreach (CEREO).was a management consultant with the Wharton Small Business Development Center. He is active in his community, serving as a directorboard member of Capitol Hill Housing and the Forterra Strong Communities Fund, and as a trustee of the First Federal CommunitySamis Foundation. A residentMr. Behar has a Bachelor of Kitsap County for 26 years, Mr. Curtis served on committees forArts in business with a concentration in finance from the North KitsapUniversity of Washington and a Master of Business Administration with a concentration in finance from the Wharton School District and Suquamish Community Advisory Council.of the University of Pennsylvania.

Cindy H. Finnie retired 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 former member of the Centrum Foundation, past Chair of the Washington State Arts Commission, Past Chair of the Fort Worden Public Development Authority, a former director of the Jefferson County Community Foundation, a member of the City of Port Townsend Lodging Tax Advisory Committee, 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

Dana D. BeharLaurence J. Hueth 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 aswas 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 September 2015.  He recentlyNovember 2008. Mr. Hueth is active with numerous charitable and civic organizations in Clallam and Jefferson counties.

Stephen E. Oliver has served as directorChairman of HAL Real Estate Investmentsthe 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. from 2005Prior to 2016.starting his consulting firm, Mr. Behar previously workedOliver was a stockholder in brand management at Procter & Gamble,the Platt Irwin Law Firm (which served as Director of Marketing for the retail chain, Egghead Software,general counsel to First Federal through 2017), beginning his affiliation in 1978 and was a management consultant with the Wharton Small Business Development Center.  He is active in his community,

Jennifer Zaccardo is Treasurer and Tax Partner of Baker, Overby & Moore Inc., P.S, a boardpublic 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 Capitol Hill Housingthe Washington Society of Certified Public Accountants and the Forterra Strong Communities Fund,American Institute of Certified Public Accountants. Ms. Zaccardo is a past president and as a trusteetreasurer of the Samis Foundation.  Mr. Behar has a BachelorPeninsula College Foundation Board of Arts in business with a concentration in finance fromGovernors and served on the UniversityQuillayute Valley School Board of Washington and a Master of Business Administration with a concentration in finance from the Wharton School of the University of Pennsylvania.Directors for 10 years.

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.

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's primary responsibilities are to: oversee the integrity of First Northwest'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'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

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 five timestwice during the year ended June 30,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 three timesonce during the year ended June 30,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,transition period from July 1, 2017 through December 31, 2017.

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

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'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.

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

Code of Ethics. On February 28, 2017, 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.

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

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 nineeight non-employee directors met the policy requirement at June 30,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'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,transition period from July 1, 2017 through December 31, 2017.

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,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" below.

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 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

This section provides an overview and analysis of First Federal'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 "named executive officers:"

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

Role of the Compensation Committee. The Compensation Committee is responsible for setting the policies and compensation levels for First Federal'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"), 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.

The 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'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:

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

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'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's level of experience, the responsibilities assigned to the officer and the officer's performance during the previous year. In 2017, the named executive officers received merit increases based on performance and changes in 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'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's individual participation agreement. Each participant is assigned a target award level and range that defines their incentive opportunity. Each executive's actual incentive compensation will be determined on whether the executive exceeds "threshold," "target" and "stretch" performance levels. Actual awards will be allocated based on specific performance goals defined for each participant and will range from 0% to 150% of their target incentive opportunity. Each participant's payout is calculated on eligible earnings, as defined in Cash Incentive Plan, and will be made in a cash lump sum.

On August 30, 2016,29, 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

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

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

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

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.

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 Plan was approved by shareholders in 2015 and allows for the grant of stock options and restricted stock awards to eligible participants. In July 2016, each of our named executive 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.  These awards are included in the Grants of Plan-based Awards table that appears on page 20.

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"). Participants are permitted to make pre-tax contributions to the 401(k) Plan of up to a maximum of $18,000 in 2017. In addition, participants who have attained age 50 may defer an additional $6,000 annually as a 401(k) "catch-up" contribution. First Federal matches 50% of the first six percent of participants' contributions to the 401(k) Plan, including catch-up contributions. All participant 401(k) contributions, rollovers and earnings are fully and immediately vested. Matching contributions and related earnings vest at a rate of 25% after one year of employment, 50% after two years of employment, 75% after three years of employment and 100% after four years of employment.

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 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.

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

The following table presents information regarding the compensation 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.

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, as of December 31, 2017, $288,907, $181,500, $177,000, $181,500 and $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

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

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, 2017.transition period from July 1, 2017 through December 31, 2017.

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

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. The following table shows, as of June 30,December 31, 2017, the value of potential payments and benefits following a termination of employment under a variety of scenarios.

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'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's employment is terminated other than for cause, without the executive's consent or by the executive for good reason, then for one year after the date of termination First Northwest and First Federal would be required to pay the executive's salary at the rate in effect immediately prior to the date of termination and the pro rata portion of any incentive award or bonus, the amount of which will be determined by First Federal's Board of Directors in its sole discretion, and continue the executive's and the executive's dependents' coverage under First Northwest's and First Federal's health, life and disability programs. "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'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's base salary other than as part of an overall reduction in the salaries of senior management personnel; (5) a material

The employment agreements also provide for severance payments and other benefits if an executive is involuntarily terminated not for cause (or terminates his or her employment for "good reason," as defined above) 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 in 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

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 after the date of termination an amount equal to a multiple of the average of executive's five prior years' annual salary (the multiple being 2.75 for Mr. Hueth and 2.00 for each of the other named executive officers); and (2) continue the executive's and the executive's dependents' coverage under First Northwest's and First Federal's health, life and disability programs for one year after the executive's termination of employment. Section 280G of the Internal Revenue Code provides that if payments made in connection with a change in control equal or exceed three times the individual's base amount, then a portion of those payments are deemed to be "excess parachute payments." An executive's "base amount" is generally the average of the executive's taxable compensation for the last five years preceding the year in which a change in control occurs. Individuals are subject to a 20% excise tax on the amount of such excess parachute payments, and First Northwest and First Federal would not be entitled to deduct the amount of such excess parachute payments. The employment agreements provide that severance and other payments 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's or First Federal's then-current disability plan, if any, or becomes otherwise unable to fulfill the duties required under the employment agreement, the executive shall be entitled to receive such group and other disability benefits as are then provided for executive employees. In the event of an executive's disability, the employment agreements will not be suspended, except that the obligation to pay the executive'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'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'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's death while employed under an employment agreement and prior to any termination of employment, First Northwest and First Federal will pay to the executive's estate, or such person as the executive may have previously designated, the salary which was not previously paid and which the executive would have earned if he or she had continued to be employed under the agreement through the last day of the month in which the executive died, together with the benefits provided under the employment agreement through that date.

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's bankruptcy or insolvency.

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.

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,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.

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" proposal, gives shareholders the opportunity to endorse or not endorse the compensation of First Northwest's executives as disclosed in the proxy statement.Proxy Statement. We currently hold our say-on-pay vote every year. The proposal will be presented at this year's annual meeting in the form of the following resolution:

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

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

As previously announced, we are changinghave 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's independent auditor for the six-month transition periodyear ending December 31, 2017.2018. 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, 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 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, 2017 and 2016.

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

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'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,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 one late Form 4 filing covering one transaction by Director Blake.with.

As previously announced, we are changing our fiscal year end from June 30 to December 31, following a six-month transition period from June 30, 2017 to December 31, 2017.  As a result, our next regularly scheduled annual meeting of shareholders will be accelerated in connection with the new fiscal year end.  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 February 1,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' 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 provided to shareholders. As specified in the Articles of Incorporation, the notice with respect to nominations for election of directors must set forth certain information regarding each nominee for election as a director, including the person's name, age, business address and number of shares of common stock held, a written consent to being named in the Proxy Statement as a nominee and to serving as a director, if elected, and certain other information regarding the shareholder giving such notice. The notice with respect to business proposals to be brought before the annual meeting must state the shareholder's name, address and number of shares of common stock held, a brief discussion of the business to be brought before the annual meeting, the reasons for conducting such business at the meeting, and any interest of the shareholder in the proposal.

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'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.