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Represents changes due to collection/realization of expected cash flows and curtailments. These amounts include the amortized cost basis of a closed portfolio of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. At September 30, 2024 and December 31, 2023, the amortized cost basis of the closed portfolio used in this hedging relationship was $56.8 million and $57.4 million, respectively; the cumulative basis adjustments associated with this hedging relationship was $1.4 million and $1.1 million, respectively; and the amount of the designated hedged items was $50.0 million for both periods. Fair value hedge on loans initiated in 2024. Amounts presented for 2023 are limited to the fair value hedge on securities. A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation of the vested shares. The surrendered shares are canceled and are unavailable for reissue. These amounts include the amortized cost basis of a closed portfolio of loans receivable used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. At September 30, 2024, the amortized cost basis of the closed portfolio used in this hedging relationship was $283.2 million, the cumulative basis adjustments associated with this hedging relationship was $1.6 million, and the amount of the designated hedged items was $100.0 million. No prior year end information is provided as this hedging relationship was initiated in 2024. 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The ISO regularly updates executive and senior management, including the Bank's Enterprise Risk Management Committee, as well as the Board Audit Committee on cybersecurity risks and mitigation strategies. The Company has implemented internal controls to address the effectiveness of our cybersecurity program. These controls include risk assessments, vulnerability assessments and scans, periodic audits, and periodic penetration testing. The Board has oversight responsibility for enterprise-wide risks, including cybersecurity risks. The Audit Committee, a designated committee of the Board, is responsible for overseeing the Company's cybersecurity risk management program and reviewing its effectiveness. The Information Security Officer ("ISO") is responsible for assessing and managing material risks from cybersecurity threats, with a dedicated staff of internal and external information security professionals. The ISO is a Systems Security Certified Practitioner and Certified Information Systems Security Professional with over 13 years of education, training and experience managing technology and cybersecurity risks, including nine years of experience in the banking industry specifically. The ISO regularly updates executive and senior management, including the Bank's Enterprise Risk Management Committee, as well as the Board Audit Committee on cybersecurity risks and mitigation strategies. The Company has implemented internal controls to address the effectiveness of our cybersecurity program. These controls include risk assessments, vulnerability assessments and scans, periodic audits, and periodic penetration testing. The Board has oversight responsibility for enterprise-wide risks, including cybersecurity risks. The Audit Committee, a designated committee of the Board, is responsible for overseeing the Company's cybersecurity risk management program and reviewing its effectiveness. The Information Security Officer ("ISO") is responsible for assessing and managing material risks from cybersecurity threats, with a dedicated staff of internal and external information security professionals. The ISO is a Systems Security Certified Practitioner and Certified Information Systems Security Professional with over 13 years of education, training and experience managing technology and cybersecurity risks, including nine years of experience in the banking industry specifically. The ISO regularly updates executive and senior management, including the Bank's Enterprise Risk Management Committee, as well as the Board Audit Committee on cybersecurity risks and mitigation strategies. The Company has implemented internal controls to address the effectiveness of our cybersecurity program. These controls include risk assessments, vulnerability assessments and scans, periodic audits, and periodic penetration testing. The Board has oversight responsibility for enterprise-wide risks, including cybersecurity risks. The Audit Committee, a designated committee of the Board, is responsible for overseeing the Company's cybersecurity risk management program and reviewing its effectiveness. The Information Security Officer ("ISO") is responsible for assessing and managing material risks from cybersecurity threats, with a dedicated staff of internal and external information security professionals. The ISO is a Systems Security Certified Practitioner and Certified Information Systems Security Professional with over 13 years of education, training and experience managing technology and cybersecurity risks, including nine years of experience in the banking industry specifically. The ISO regularly updates executive and senior management, including the Bank's Enterprise Risk Management Committee, as well as the Board Audit Committee on cybersecurity risks and mitigation strategies. 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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2024~~2025 or


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

Commission File Number: 001-36741

FIRST NORTHWEST BANCORP

(Exact name of registrant as specified in its charter)

Washington		46-1259100
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer I.D. Number)

105 West 8th Street, Port Angeles, Washington		98362
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code:		(360) 457-0461

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

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

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

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ☐ No ☒

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

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

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

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

Smaller reporting company

☒

Emerging growth company

☐

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

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. Yes ☒ No ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

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Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b) ☐

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

At March 65, ~~2025~~2026, the registrant had 9,~~358~~450,~~008~~547 shares of common stock issued and outstanding. The aggregate market value of the ~~voting~~registrant's common stock held by non-affiliates of the registrant based on the closing price of ~~such~~the stock as quoted on The Nasdaq Stock Market, LLC as of June 30, ~~2024~~2025, was $8668,~~154~~632,~~236~~741.

DOCUMENTS INCORPORATED BY REFERENCE:

Portions of the registrant's Definitive Proxy Statement to be filed with the Securities and Exchange Commission pursuant to Regulation 14A for the ~~2025~~2026 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on Form 10-K.

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FIRST NORTHWEST BANCORP

~~2024~~2025 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS

Forward-Looking Statements	45
Available Information	5
PART I
Item 1. Business	6
General	6
Market Area	7
Lending Activities	8
Asset Quality	2423
Investment Activities	3029
Deposit Activities and Other Sources of Funds	3332
Subsidiary and Other Activities	3736
Competition	3837
Human Capital Resources	3837
How We Are Regulated	40
Information About Our Executive Officers	38
Taxation	47
Available Information	39
Item 1A. Risk Factors	47
Regulation and Supervision	39
Item 1B. Unresolved Staff Comments	56
Taxation	45
Item 1C. Cybersecurity	57
Item 1A. Risk Factors	46
Item 2. Properties	58
Item 1B. Unresolved Staff Comments	60
Item 3. Legal Proceedings	58
Item 1C. Cybersecurity	61
Item 4. Mine Safety Disclosures	58
Item 2. Properties	62
Item 3. Legal Proceedings	62
Item 4. Mine Safety Disclosures	62
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	5962
Item 6. [Reserved]	5962
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations	6063
General	6063
Our Business and Operating Strategy	6164
Critical Accounting Policies	6265
New Accounting Pronouncements	6366
Comparison of Financial Condition at December 31, 2024 and December 31, 2023	64
Comparison of Financial Condition at December 31, 2025 and December 31, 2024	66
Comparison of Results of Operations for the Years Ended December 31, 2024 and December 31, 2023	67
Comparison of Results of Operations for the Years Ended December 31, 2025 and December 31, 2024	69
Average Balances, Interest and Average Yields/Cost	7072
Rate/Volume Analysis	7173
Asset and Liability Management and Market Risk	7173
Liquidity Management	7375
Off-Balance Sheet Activities	7376
Commitments and Off-Balance Sheet Arrangements	7476
Capital Resources	7476
Effect of Inflation and Changing Prices	7577
Recent Accounting Pronouncements	7577
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	7577
Item 8. Financial Statements and Supplementary Data	7577

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FIRST NORTHWEST BANCORP

~~2024~~2025 ANNUAL REPORT ON FORM 10-K

TABLE OF CONTENTS (Continued)

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ~~132~~133 Item 9A. Controls and Procedures ~~132~~133 Item 9B. Other Information ~~133~~134 Item 9C. Disclosures Regarding Foreign Jurisdictions that Prevent Inspections ~~133~~134 PART III. Item 10. Directors, Executive Officers and Corporate Governance ~~133~~134 Item 11. Executive Compensation ~~133~~135 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters ~~133~~135 Item 13. Certain Relationships and Related Transactions, and Director Independence ~~134~~135 Item 14. Principal Accountant Fees and Services ~~134~~135 PART IV. Item 15. Exhibits and Financial Statement Schedules ~~134~~135 Item 16. Form 10-K Summary ~~135~~137 Signatures ~~136~~137

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

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Forward-Looking Statements

Certain matters in this Annual Report on Form 10-K ("Form 10-K"), including information included or incorporated by reference, constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements ~~include~~are not statements of historical fact, ~~but~~are based on certain assumptions and are ~~not~~generally ~~limited~~identified ~~to,~~by ~~statements~~the ~~about~~use ~~our~~of ~~plans~~words such as "anticipates," ~~objectives~~"assumes," ~~expectations~~"believes," ~~and~~"can," ~~intentions~~"continues," ~~that~~"could," ~~are~~"estimates," ~~not~~"expects," ~~historical~~"forecasts," ~~facts~~"goal," ~~and~~"intends," ~~other~~"likely," ~~statements~~"may," ~~often~~"might," ~~identified~~"objective," by"plans," ~~words~~"potential," ~~such~~"projects," as"remains," "~~believes~~should," "~~expects~~target," "~~anticipates~~trend," "~~estimates~~will," "would," or similar expressions. Forward-looking statements include, but are not limited to:

	•	statements of our goals, intentions and expectations;
	•	statements regarding our business plans, prospects, growth and operating strategies;
	•	statements regarding the quality of our loan and investment portfolios;
	•	statements regarding litigation; and
	•	estimates of our risks and future costs and benefits.

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

• risks associated with lending and potential adverse changes in the credit quality of our loan portfolio; • legislative, or regulatory ~~changes, including increased insurance rates~~ and ~~assessments~~policy orchanges; ~~expanded~~• ~~consumer~~uncertainties ~~protection~~relating ~~regulations, responses~~ to ~~recent~~litigation; ~~events~~• in the ~~banking~~effects ~~industry,~~of changes in interest rates ~~along~~on the ~~yield curve~~levels, composition and ~~inflation,~~costs ~~which~~of ~~could~~deposits, ~~adversely~~loan ~~affect~~demand and the ~~Company's~~values ~~business;~~and •liquidity ~~continued~~of ~~depressed~~loan ~~market~~collateral, ~~demand~~securities ~~for mortgage~~ and ~~Small~~interest-sensitive ~~Business~~assets ~~Administration~~and ~~("SBA") loans that we originate for sale~~liabilities; • changes in monetary and fiscal policies including interest rate policies of the Federal Reserve and the ~~relative~~impacts ~~differences~~of ~~between~~such ~~short~~changes ~~and~~on ~~long-term interest rates, deposit interest rates,~~ our ~~net interest margin and funding sources~~earnings; • our ability to control operating costs and expenses; • whether our management team can succeed in implementing our operational strategy, including but not limited to our efforts to achieve higher net interest income and noninterest revenue growth; • our ability to successfully execute on growth strategies ~~related~~and tointegrate ~~our~~technology ~~entry~~ into ~~new~~our ~~markets~~business; ~~and~~• ~~delivery~~pressures ~~channels,~~on ~~including~~liquidity ~~banking~~ as a ~~service;~~result •of ~~our~~withdrawals ~~ability~~of tocustomer ~~develop~~deposits ~~user-friendly~~or ~~digital~~declines ~~applications~~in tothe ~~serve~~value ~~existing~~of ~~customers~~our ~~and~~investment ~~attract~~portfolio; ~~new customers;~~ • the ~~use~~soundness of ~~estimates~~other infinancial ~~determining~~institutions ~~fair~~and ~~value~~the ofimpacts ~~certain~~related ofto ~~our~~or ~~assets,~~resulting ~~which~~from ~~estimates~~bank ~~may~~failures ~~prove~~and toother beeconomic ~~incorrect~~ and ~~result~~industry involatility, ~~significant~~including ~~declines~~increased inregulatory ~~valuation;~~requirements •and ~~pressures~~costs onand ~~liquidity~~potential asimpact ato ~~result~~macroeconomic ofconditions; ~~withdrawals of customer deposits or declines in the value of our investment portfolio;~~ • increased competitive pressures among financial services companies, particularly from non-traditional banking entities such as challenger banks, fintech, and mega technology companies; • ~~our ability to attract and retain deposits at a reasonable cost relative to the market; •~~ changes in consumer spending, borrowing and savings habits, resulting in reduced demand for banking products and services, particularly in the event of a recession that affects our market areas; • ~~results~~our ofability ~~examinations~~to bycomply ~~our~~with ~~primary~~various orgovernmental ~~other~~and regulatory ~~authorities~~requirements ~~could~~applicable ~~have~~to anfinancial ~~adverse~~institutions, ~~impact~~including onthose resulting from examinations by our ~~business~~primary ~~and~~or ~~operations~~other regulatory authorities; • ~~disruptions,~~our ~~security~~ability ~~breaches~~to implement, ormaintain, ~~other~~and ~~adverse~~improve ~~events,~~an ~~failures~~effective orrisk ~~interruptions~~management inframework, ordisclosure ~~attacks~~controls ~~on,~~and ~~our~~procedures ~~information~~and ~~technology~~internal ~~systems~~controls orover onfinancial ~~the~~reporting; ~~third-party~~• ~~vendors~~our ~~who~~ability ~~perform~~to ~~several~~attract ofand ~~our~~retain ~~critical~~executive ~~processing~~officers ~~functions~~and key employees; • ~~risks~~the ~~related~~costs toand ~~overall~~effects ~~economic~~of ~~conditions~~disruptions, ~~including~~security ~~the~~breaches, ~~impact~~or onother ~~the~~adverse ~~economy~~events, offailures anor ~~elevated~~interruptions ~~interest~~in, ~~rate~~or ~~environment~~attacks ~~and geopolitical instability~~on, ~~including~~information ~~the~~technology ~~wars~~systems; in• ~~Ukraine~~risks ~~and~~related ~~the~~to ~~Middle~~overall ~~East~~economic conditions; • any failure of key third-party vendors to perform their obligations to us; • risks related to natural disasters, including droughts, fires, floods, earthquakes, ~~pandemics~~geopolitical events, ~~and~~acts of war or terrorism or other ~~unexpected~~hostilities, public health crises, pandemics or other catastrophic events beyond our control; • fluctuation in our stock price and general volatility in the stock market; • the effects of any reputational damage to the Company, including resulting from any of the foregoing; and • other economic, competitive, governmental, regulatory and technical factors affecting our operations, pricing, products and services and other risks described elsewhere in our filings with the Securities and Exchange Commission, including risks discussed under "Item 1.A. -- Risk Factors" in this Form 10-K.

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

Available Information

The Company provides an Investor Relations link on its website (www.ourfirstfed.com) to the Securities and Exchange Commission’s ("SEC") website (www.sec.gov) for purposes of providing copies of its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and proxy statements and amendments thereto. Other than an investor’s own internet access charges, these filings are available free of charge. The information contained on our website is not included as part of, or incorporated by reference into, this Form 10-K.

Table of Contents

PART I

Item 1. Business

General

First Northwest ~~Bancorp~~, a Washington corporation, is a bank holding company and a financial holding company. First Northwest is engaged in banking activities through its wholly owned subsidiary, First Fed ~~Bank~~, as well as certain non-banking financial activities. Non-~~financial~~banking investments include several limited partnership investments,. ~~including a 33% interest in~~ The ~~Meriwether~~Company's ~~Group,~~business ~~LLC~~activities ~~("MWG"),~~are agenerally ~~boutique~~focused ~~investment bank focusing~~ on ~~providing~~passive ~~entrepreneurs~~investment ~~with~~activities ~~resources to help them succeed, including equity~~ and ~~debt~~oversight ~~raising~~of ~~services~~the ~~along~~activities ~~with strategic positioning~~ of ~~business~~First ~~through the United States~~Fed.

At December 31, 2024, the Company had total assets of $2.23 billion, net loans of $1.68 billion, total deposits of $1.69 billion, and total shareholders' equity of $153.9 million. The Company's business activities are generally focused on passive investment activities and oversight of the activities of First Fed. The Company has entered into several partnerships to strategically invest in financial technology-related businesses, which may result in the development of additional investment opportunities. Aside from these investments, the information set forth in this report, including consolidated financial statements and related data, relates primarily to First Fed.

First Northwest is subject to regulation by the Board of Governors of the Federal Reserve System ("Federal Reserve"). A financial holding company is a bank holding company that is permitted to engage in specified types of non-banking financial services. First Fed is examined and regulated by the Washington State Department of Financial Institutions, Division of Banks ("DFI") and by the Federal Deposit Insurance Corporation ("FDIC"). First Fed is required to have certain reserves set by the Federal Reserve and is a member of the Federal Home Loan Bank of Des Moines ("FHLB"), which is one of the 11 regional banks in the Federal Home Loan Bank System ("FHLB System").

First Fed ~~Bank~~ is a community-oriented ~~financial~~commercial ~~institution~~bank founded in 1923 in Port Angeles, Washington. The Bank operates in 1817 locations including twelve full-service branches and ~~six~~five business centers, including its headquarters, located in Clallam, Jefferson, King, Kitsap, Snohomish, and Whatcom counties. ~~First~~We ~~Fed’s~~offer ~~business and operating strategy is focused on building sustainable earnings by delivering~~ a ~~full array~~wide range of ~~financial~~ products and services ~~for~~focused ~~individuals,~~on ~~small~~the ~~business~~lending, deposit and ~~commercial~~money ~~customers.~~movement ~~Lending~~needs ~~activities~~of ~~include~~the ~~loan~~communities ~~originations~~we ~~generated~~serve. ~~through~~To ~~organic~~diversify ~~production and~~our ~~loan~~portfolio ~~referrals~~and asincrease ~~well~~interest asincome, ~~purchasing~~we ~~loans~~increased ~~to augment~~ our ~~loan~~origination ~~portfolios. Internal production is focused on originations~~ of ~~first~~commercial ~~lien~~real ~~one-to-four family mortgage loans~~estate, ~~commercial and~~ multi-family real estate ~~loans~~, ~~residential~~ and commercial ~~construction~~business ~~and land~~ loans,. ~~commercial~~We ~~business~~also ~~loans,~~increased ~~SBA~~our ~~loans,~~ auto and consumer loans, ~~consisting~~through ~~primarily~~purchased ofauto ~~home~~loan ~~equity~~programs ~~loans~~ and ~~lines~~purchased ofmanufactured ~~credit~~homes. ~~Over~~We ~~the~~continue ~~last~~to ~~five~~originate ~~years~~one-to-four family residential mortgage loans, weprimarily ~~have~~for ~~significantly~~sale ~~increased~~into the ~~origination~~secondary ofmarket ~~commercial~~to ~~real~~generate ~~estate,~~noninterest ~~multi-family~~gain ~~real~~on ~~estate,~~sale ~~construction,~~and servicing fee revenue and ~~commercial~~manage ~~business~~interest ~~loans.~~rate ~~Loans~~risk ~~are~~or ~~also~~retain ~~purchased~~select ~~from~~loans ~~experienced~~in ~~third-party~~our ~~lenders with~~portfolio ato ~~current~~enhance ~~focus~~interest onincome. ~~manufactured~~Home ~~home~~equity, ~~loans~~residential construction and ~~high-end~~commercial ~~auto~~construction loans toare ~~increase~~also ~~our~~originated ~~commercial~~primarily ~~business~~in ~~and~~Western ~~consumer loan portfolios~~Washington. We offer traditional consumer and business deposit products, including transaction accounts, savings and money market accounts and certificates of deposit ("CDs" or "term certificates") for individuals, businesses and ~~businesses~~nonprofit organizations. Deposits are our primary source of funding for our lending and investing activities. First Fed has a limited partnership investment in the Canapi Ventures SBIC Fund II, LP. First Fed also has a limited partnership investment in the Meriwether Group Capital Hero Fund LP ("Hero Fund") which was previously held by First Northwest. The Hero Fund is a private commercial lender focused on lower-middle market businesses, primarily in the Pacific Northwest. Subsequent to year end, the Bank signed a redemption agreement which sets forth the path to unwind its investment in the Hero Fund through capital distributions beginning in April 2026.

First Northwest's limited partnership investments include Canapi Ventures Fund, LP ("Canapi Ventures"); BankTech Ventures, LP; and JAM FINTOP ~~Blockchain~~Frontier Fund, LP. These limited partnerships invest in fintech-related businesses with a focus on developing digital solutions applicable to the banking industry. In 2022, First Northwest acquired a 33.3% interest in MWG, a boutique investment bank and consulting firm focused on providing entrepreneurs with resources to help them succeed. Also in 2022, the Company acquired a 25% equity interest as a general partner in Meriwether Group Capital, LLC ("MWGC"), which provides financial advice for borrowers and capital for the Hero Fund. MWG also holds a 20% general partner interest in MWGC. MWGC holds a 0.01% general partner interest in the Hero Fund. Subsequent to year end, the Company redeemed its interest in MWGC in full at par.

The executive office of the Company is located at 105 West 8th Street, Port Angeles, Washington 98362, and its telephone number is (360) 457-0461.

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Market Area

We operate through twelve full-service branch offices and ~~six~~five business centers located in Washington State. We have five branches in Clallam County, one in Jefferson County, one in King County, two in Kitsap County, and three in Whatcom County. We have two business centers located in Clallam County, ~~two~~one in King County, one in Snohomish County, and one in Whatcom County. ~~All~~ ~~population~~The ~~and~~branch ~~income~~located ~~data~~in ~~below~~King isCounty ~~derived~~will ~~from~~be ~~the~~closing ~~U.S.~~on ~~Census~~April ~~Bureau~~30, ~~website~~2026.

Clallam County has a population of approximately 77,~~616~~958 and estimated median family income of $6770,~~999~~370. The economic base in Clallam County is dependent on government, healthcare, education, tourism, marine services, forest products, agriculture, and technology industries. The primary employers in Clallam County include the Olympic Medical Center, Peninsula College, the Port Angeles School District, Clallam County government, Jamestown S'Klallam Tribe, Clallam Bay Corrections Center, and the Westport Shipyard. According to the U.S. Bureau of Labor Statistics, the unemployment rate for Clallam County was 56.90% at December 31, ~~2024~~2025, compared to 65.39% at December 31, ~~2023~~2024. By comparison, the unemployment rate for the state of Washington was 4.57%, and the national average was 4.14% at December 31, ~~2024~~2025.

Jefferson County has a population of approximately 33,~~714~~944 and estimated median family income of $7174,~~143~~048. The economic base in Jefferson County is dependent on government, healthcare, education, tourism, arts and culture, maritime and boat building, and small-scale manufacturing. The primary employers in Jefferson County include Port Townsend Paper, Jefferson Healthcare, Port Townsend School District, the Port Authority of Port Townsend and related marine trade, and the Jefferson County government. According to the U.S. Bureau of Labor Statistics, the unemployment rate for Jefferson County was 56.51% at December 31, ~~2024~~2025, compared to 5.85% at December 31, ~~2023~~2024.

Kitsap County has a population of approximately ~~277~~281,~~658~~420 and estimated median family income of $98104,~~546~~158. The economic base of Kitsap County is largely supported by the United States Navy through personnel stationed at Kitsap Naval Base along with other employers supporting the military. Private industries that support the economic base are healthcare, retail and tourism. Other primary employers in Kitsap County include the Department of Defense, Amazon, Walmart, St. Michael Medical Center, Catholic Health Initiatives, and Port Madison Enterprises, which owns and operates the Clearwater Casino and Resort, gas stations and other retail operations. According to the U.S. Bureau of Labor Statistics, the unemployment rate for Kitsap County was 45.30% at December 31, ~~2024~~2025, compared to 4.73% at December 31, ~~2023~~2024.

Whatcom County has a population of approximately ~~231~~234,~~919~~954 and estimated median family income of $8081,~~989~~784. The economic base of Whatcom County is largely supported by healthcare, education and crude oil refinery industries. There is some niche manufacturing and a large variety of other small businesses that create a well-rounded economy with a close proximity to the Canadian border bringing in shoppers seeking retail products and services. The primary employers in Whatcom County include PeaceHealth Medical Center, Western Washington University, Bellingham School District, Avamere Living, and BP Cherry Point Refinery. According to the U.S. Bureau of Labor Statistics, the unemployment rate for Whatcom County was 45.62% at December 31, ~~2024~~2025, compared to 54.16% at December 31, ~~2023~~2024.

King County, which includes the City of Seattle, has a population of approximately 2.3 million and estimated median family income of $~~122~~124,~~148~~746. The economic base of King County is largely supported by technology, services, and manufacturing industries. The primary employers in King County include Microsoft, Amazon, Boeing, University of Washington, Starbucks, Salesforce, and the King County government. According to the U.S. Bureau of Labor Statistics, the unemployment rate for King County was 34.89% at December 31, ~~2024~~2025, compared to 3.58% at December 31, ~~2023~~2024.

Table of Contents

As a part of our business plan, we intend to extend our traditional and digital operations ~~throughout~~in the Puget Sound Region ~~and beyond~~. This region dominates the economy of the Pacific Northwest and is broadly defined as the area surrounding the Puget Sound that extends into the northwestern quadrant of the state of Washington. Our current market area, described previously, has a population of 23.90 million, or 3637.31% , of the state's population. The population of the Puget Sound region beyond our current market area is approximately 2.4 million, or 29.53% of the state's population. The market area is a mix of urban, suburban and rural areas, with the Seattle metropolitan area representing a well-developed urban center. The region extends from Whatcom County in the north on the Canadian border to Thurston and Pierce counties to the south. Other key metropolitan areas within the Puget Sound region include Bellingham (Whatcom County), Mount Vernon (Skagit County), Everett (Snohomish County), Tacoma (Pierce County) and Olympia (Thurston County).

Key employment sectors in the Puget Sound region include aerospace, military, information technology, biotechnology, education, logistics, international trade, and tourism. The region is well known for the long-term presence of ~~The~~ Boeing ~~Company~~ and Microsoft, two major industry leaders, and since the turn of the century, Amazon. The military presence includes a number of large installations serving the U.S. Air Force, Army and Navy. Given the employment profile and the presence of the University of Washington and other universities, the region's workforce is highly educated. Washington's geographic proximity to the Pacific Rim along with multiple deep-water ports makes it a center for international trade, which contributes significantly to the regional economy. The local ports make Washington the ~~tenth~~ninth largest exporting state in the nation. The top five trading partners with Washington include China, Canada, ~~Japan~~South Korea, ~~Mexico~~Japan and ~~South Korea~~Mexico. Tourism ~~has~~is ~~also developed into~~ a major industry, due to the scenic beauty, temperate climate, and incredible food and culture. The maritime industry, supported by the trade and fishing industries, is also an important employment sector.

For a discussion regarding the competition in our primary market area, see "Competition."

Our Products and Services

Lending Activities

General. First Fed’s principal lending activities are concentrated in real estate secured loans with first lien one-to-four family mortgage, commercial, and multi-family loans. First Fed also makes construction and land loans (including lot loans and multi-family acquisition-renovation loans), commercial business loans, and consumer loans, consisting primarily of home-equity loans and lines of credit. The Bank also purchases automobile and manufactured home loans from known, experienced third-party originators. The Bank utilizes interest rate swaps designated as fair value hedges to manage its exposure to rate fluctuations which results in a derivative basis adjustment included in net loans receivable.

Loan Portfolio Analysis

The following table represents information concerning the composition of our loan portfolio, excluding loans held for sale, by the type of loan at the dates indicated:

December 31,

December 31, 2025

December 31, 2024

2024

2023

(dollars in thousands)

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Real estate:

One-to-four family

~~395~~376,~~315~~731

23.31

~~378~~395,~~432~~315

2223.83

Multi-family

~~332~~288,~~596~~529

1917.67

~~333~~332,~~094~~596

2019.16

Commercial real estate

~~390~~402,~~379~~683

2324.08

~~387~~390,~~983~~379

23.30

Construction and land

7861,~~110~~268

43.68

~~129~~78,~~691~~110

74.86

Total real estate loans

1,~~196~~129,~~400~~211

7069.54

1,~~229~~196,~~200~~400

7470.05

Consumer:

Home equity

7985,~~054~~088

45.72

6979,~~403~~054

4.27

Auto and other consumer

~~268~~283,~~876~~502

1517.94

~~249~~268,~~130~~876

15.09

Total consumer loans

~~347~~368,~~930~~590

2022.6

~~318~~347,~~533~~930

1920.26

Commercial business loans

~~151~~130,~~493~~311

8.90

~~112~~151,~~295~~493

6.8.9

Total loans

1,~~695~~628,~~823~~112

100.0

1,~~660~~695,~~028~~823

100.0

Less:

Derivative basis adjustment

~~188~~(903

)

—188

Allowance for credit losses on loans

2016,~~449~~987

1720,~~510~~449

Total loans, net

1,~~675~~612,~~186~~028

1,~~642~~675,~~518~~186

Table of Contents

Fixed-Rate and Adjustable-Rate Loans

The following table shows the composition of our loan portfolio, excluding loans held for sale, in dollar amounts and in percentages by fixed rates and adjustable rates at the dates indicated:

December 31,

December 31, 2025

December 31, 2024

2024

2023

(dollars in thousands)

Amount

Percent

Amount

Percent

Amount

Percent

Amount

Percent

(Dollars in thousands)

Fixed-rate loans:

Real estate:

One-to-four family

~~291~~273,~~237~~349

1716.28

~~287~~291,~~864~~237

17.2

Multi-family

~~112~~95,~~711~~610

65.69

~~121~~112,~~809~~711

76.36

Commercial real estate

~~136~~126,~~183~~541

87.08

~~152~~136,~~744~~183

98.20

Construction and land

75,~~337~~890

0.4

557,~~687~~337

30.4

Total real estate loans

~~547~~501,~~468~~390

3230.29

~~618~~547,~~104~~468

3732.12

Consumer:

Home equity

2829,~~413~~201

1.78

2628,~~951~~413

1.67

Auto and other consumer

~~268~~282,~~358~~677

1517.83

~~248~~268,~~741~~358

15.08

Total consumer loans

~~296~~311,~~771~~878

1719.51

~~275~~296,~~692~~771

1617.65

Commercial business loans

8561,~~852~~934

53.18

4685,~~576~~852

25.81

Total fixed-rate loans

~~930~~875,~~091~~202

5453.8

~~940~~930,~~372~~091

5654.58

Adjustable-rate loans:

Real estate:

One-to-four family

~~104~~103,~~078~~382

6.13

90104,~~568~~078

56.51

Multi-family

~~219~~192,~~885~~919

1311.08

~~211~~219,~~285~~885

1213.70

Commercial real estate

~~254~~276,~~196~~142

1517.0

~~235~~254,~~239~~196

1415.20

Construction and land

7055,~~773~~378

43.24

7470,~~004~~773

4.52

Total real estate loans

~~648~~627,~~932~~821

38.35

~~611~~648,~~096~~932

3638.93

Consumer:

Home equity

5055,~~641~~887

3.04

4250,~~452~~641

23.60

Auto and other consumer

~~518~~825

—0.1

~~389~~518

—

Total consumer loans

5156,~~159~~712

3.05

4251,~~841~~159

23.60

Commercial business loans

6568,~~641~~377

34.92

65,~~719~~641

43.09

Total adjustable-rate loans

~~765~~752,~~732~~910

4546.2

~~719~~765,~~656~~732

4345.52

Total loans

1,~~695~~628,~~823~~112

100.0

1,~~660~~695,~~028~~823

100.0

Less:

Derivative basis adjustment

~~188~~(903

)

—188

Allowance for credit losses on loans

2016,~~449~~987

1720,~~510~~449

Total loans, net

1,~~675~~612,~~186~~028

1,~~642~~675,~~518~~186

Table of Contents

Loan Maturity

The following tables illustrate the contractual maturity of our loan portfolio at December 31, ~~2024~~2025. Mortgages that have adjustable or renegotiable interest rates are shown as maturing in the period during which the contract is due. These tables do not reflect the effects of unscheduled principal prepayments.

	Within One Year (1)					After One Year Through Three Years					After Three Years Through Five Years					After Five Years Through Fifteen Years					Beyond Fifteen Years					Total
	One Year or Less (1)					After One Year Through Five Years					After Five Years Through Fifteen Years					Beyond Fifteen Years					Total
	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
(dollars in thousands)	Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate			Amount		Weighted Average Rate
	(Dollars in thousands)
Real estate:
Real estate:
One-to-four family	$	376		3.52	%	$	1,834		3.44	%	$	23,471		4.21	%	$	351,050		4.03	%	$	376,731		4.04	%
One-to-four family	$	33		3.58	%	$	1,505		3.40	%	$	1,563		3.62	%	$	28,622		4.41	%	$	363,592		3.94	%	$	395,315		3.97	%
Multi-family		22,958		5.54			118,488		5.33			142,295		4.98			4,788		6.98			288,529		5.20
Multi-family		22,092		3.70			64,847		4.49			52,078		4.07			182,148		5.11			11,431		7.20			332,596		4.81
Commercial real estate		29,655		4.25			141,236		5.60			228,483		5.84			3,309		5.06			402,683		5.63
Commercial real estate		7,791		5.65			56,596		4.74			60,626		5.80			262,085		5.85			3,281		5.29			390,379		5.67
Construction and land		50,089		7.61			10,967		7.50			11		—			201		6.38			61,268		7.58
Construction and land		52,721		7.81			12,840		6.96			1,271		8.29			10,988		7.87			290		7.02			78,110		7.69
Consumer:
Consumer:
Home equity		125		8.94			2,307		6.81			29,454		5.77			53,202		7.05			85,088		6.60
Home equity		6		3.99			219		8.57			1,838		7.47			29,433		5.55			47,558		7.79			79,054		6.95
Auto and other consumer		1,315		10.64			17,543		7.84			143,023		8.16			121,621		7.13			283,502		7.73
Auto and other consumer		1,326		11.00			6,159		10.48			10,773		7.54			125,861		7.79			124,757		6.92			268,876		7.48
Commercial business loans		42,766		6.79			24,692		7.31			62,853		7.27			—		—			130,311		7.12
Commercial business loans		65,738		7.69			10,122		6.97			6,517		6.76			69,116		7.31			—		—			151,493		7.43
Total loans receivable	$	147,284		6.39	%	$	317,067		5.81	%	$	629,590		6.23	%	$	534,171		5.00	%	$	1,628,112		5.77	%
Total loans receivable	$	149,707		7.06	%	$	152,288		5.19	%	$	134,666		5.33	%	$	708,253		6.10	%	$	550,909		4.97	%	$	1,695,823		5.68	%

_______________

(1) Includes demand loans, loans having no stated maturity, and overdraft loans.

Predetermined Interest Rate

Floating or Variable Rate

Total

(dollars in thousands)

Fixed Interest Rate

Floating or Variable Rate

Total

Loans above maturing after one year:

~~(Dollars in thousands)~~

Real estate:

One-to-four family

~~291~~272,~~204~~974

~~104~~103,~~078~~381

~~395~~376,~~282~~355

Multi-family

9073,~~619~~779

~~219~~191,~~885~~793

~~310~~265,~~504~~572

Commercial real estate

~~129~~101,~~877~~259

~~252~~271,~~711~~768

~~382~~373,~~588~~027

Construction and land

43,~~232~~674

217,~~157~~505

2511,~~389~~179

Consumer:

Home equity

2829,~~407~~194

5055,~~641~~769

7984,~~048~~963

Auto and other consumer

~~267~~282,~~550~~187

—

~~267~~282,~~550~~187

Commercial business loans

3839,~~684~~410

4748,~~071~~135

8587,~~755~~545

Total loans maturing after one year

~~850~~802,~~573~~477

~~695~~678,~~543~~351

1,~~546~~480,~~116~~828

Table of Contents

~~Geographic~~One-to-Four ~~Distribution~~Family Real Estate Lending. At December 31, 2025, one-to-four family residential mortgage loans (excluding loans held for sale) totaled $376.7 million, or 23.1%, of our ~~Loans~~total loan portfolio, including $12.0 million, or 3.2%, of loans secured by properties outside the state of Washington, primarily purchased loans in the state of California. We originate both fixed and adjustable-rate residential loans, which can be sold in the secondary market or retained in our portfolio, and supplement those originations with loan purchases, from time to time, depending on our balance sheet objectives. Residential loans are underwritten to either secondary market standards for sale or to internal underwriting standards, which may not meet Federal Home Loan Mortgage Corporation ("Freddie Mac") or Federal National Mortgage Association ("Fannie Mae") eligibility requirements.

The following table shows at December 31, 2024, the geographic distribution of our loan portfolio in dollar amounts and percentages.

	North Olympic Peninsula (1)					Puget Sound Region (2)					Other Washington					Total in Washington State					All Other States (3)					Total
	Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category
	(Dollars in thousands)
Real estate loans:
One-to-four family	$	125,809		31.8	%	$	237,661		60.2	%	$	15,520		3.9	%	$	378,990		95.9	%	$	16,325		4.1	%	$	395,315		23.3	%
Multi-family		7,494		2.3			286,137		86.0			22,676		6.8			316,307		95.1			16,289		4.9			332,596		19.6
Commercial real estate		71,226		18.2			290,098		74.4			22,327		5.7			383,651		98.3			6,728		1.7			390,379		23.0
Construction and land		5,846		7.5			64,939		83.1			7,325		9.4			78,110		100.0			—		—			78,110		4.6
Total real estate loans		210,375		17.6			878,835		73.4			67,848		5.7			1,157,058		96.7			39,342		3.3			1,196,400		70.5
Consumer loans:
Home equity		45,030		57.0			33,572		42.5			345		0.4			78,947		99.9			107		0.1			79,054		4.7
Auto and other consumer		3,678		1.4			7,595		2.8			3,446		1.3			14,719		5.5			254,157		94.5			268,876		15.9
Total consumer loans		48,708		14.0			41,167		11.8			3,791		1.1			93,666		26.9			254,264		73.1			347,930		20.6
Commercial business loans		31,143		20.6			32,843		21.7			4,726		3.1			68,712		45.4			82,781		54.6			151,493		8.9
Total loans receivable	$	290,226		17.1	%	$	952,845		56.2	%	$	76,365		4.5	%	$	1,319,436		77.8	%	$	376,387		22.2	%	$	1,695,823		100.0	%

____________

(1) Includes Clallam and Jefferson counties.

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

(3) Includes loans located primarily in California, Florida, Texas, and Oregon.

Table of Contents

One-to-Four Family Real Estate Lending. At December 31, 2024, one-to-four family residential mortgage loans (excluding loans held for sale) totaled $395.3 million, or 23.3%, of our total loan portfolio, including $16.3 million, or 4.1%, of loans secured by properties outside the state of Washington, primarily purchased loans in the state of California. We originate both fixed and adjustable-rate residential loans, which can be sold in the secondary market or retained in our portfolio, and supplement those originations with loan purchases, from time to time, depending on our balance sheet objectives. Residential loans are underwritten to either secondary market standards for sale or to internal underwriting standards, which may not meet Federal Home Loan Mortgage Corporation ("Freddie Mac") or Federal National Mortgage Association ("Fannie Mae") eligibility requirements.

Fixed-rate residential mortgages are offered with repayment terms between 10 and 30 years, priced from Freddie Mac posted daily pricing indications adjusted for economic and competitive considerations. Adjustable-rate residential mortgage products with similar amortization terms are also offered, with an interest rate that is typically fixed for an initial period ranging from one to seven years with annual adjustments thereafter. Future interest rate adjustments include periodic caps of no more than 2% and lifetime caps of 5% to 6% above the initial interest rate, with no borrower prepayment restrictions.

The credit risk on adjustable-rate mortgage loans could increase when interest rates rise. An increase to the borrower's loan payment may affect the borrower's ability to repay and could increase the probability of default. To mitigate this risk to both the borrower and First Fed, adjustable-rate loans contain both periodic and lifetime interest rate caps, limiting the amount of payment changes. In addition, depending on market conditions, we may underwrite the borrower at a higher interest rate and payment amount than the initial rate. At December 31, ~~2024~~2025, the average interest rate on our adjustable-rate mortgage loans was approximately ~~309~~170 basis points under the fully indexed rate. As of December 31, ~~2024~~2025, we had $~~104~~103.14 million, or 2627.34%, of adjustable-rate residential mortgage loans in our residential loan portfolio.

The underwriting process considers a variety of factors including credit history, debt to income ratios, property type, loan -to -value ratio, and occupancy. For loans with over 80% loan -to -value ratios, we typically require private mortgage insurance, which reduces our exposure to loss in the event of a loan default. Credit risk is also mitigated by obtaining title insurance, hazard insurance, and flood insurance. Residential mortgage loans which require appraisals are appraised by independent fee-based appraisers.

In connection with rules and regulations issued by the Consumer Financial Protection Bureau ("CFPB"), we are required to make a reasonable, good-faith determination before or when we consummate a mortgage loan that the borrower has a reasonable ability to repay the loan, and in some cases involving qualified mortgages, we are presumed to have complied with this requirement. We believe that mortgage loans originated by the bank meet these standards.

First Fed does not actively engage in subprime mortgage lending, either through advertising, marketing, underwriting and/or risk selection, and has no established program to originate or purchase subprime mortgage loans.

Commercial and Multi-Family Real Estate Lending. At December 31, ~~2024~~2025, $~~390~~402.47 million, or 2324.08%, and $~~332~~288.65 million, or 1917.67%, of our total loan portfolio was secured by commercial and multi-family real estate property, respectively. At December 31, ~~2024~~2025, we ~~have~~ identified $~~116~~115.1 million, or 16.07%, of our commercial and multi-family real estate portfolio as owner-occupied commercial real estate and $~~606~~576.91 million, or 8483.03%, is secured by income producing, or non-owner-occupied, commercial and multi-family real estate. Over 9597% of our commercial real estate and multi-family loans are secured by properties located in the state of Washington.

Commercial and multi-family real estate loans are generally priced at a higher rate of interest than one-to-four family residential loans, to compensate for the greater risk associated with higher loan balances and the complexity of underwriting and monitoring these loans. Repayment on loans secured by commercial or multi-family properties is dependent on successful management by the property owner to create sufficient net operating income to meet debt service requirements. Changes in economic and real estate market conditions can affect net operating income, capitalization rates, and ultimately the valuation and marketability of the collateral. As a result, we analyze market data including vacancy rates, absorption percentages, leasing rates, and competing projects under development. Interest rate, occupancy and capitalization rate stress testing are required as part of our underwriting analysis. If the borrower is a corporation, we generally require and obtain personal guarantees from principals, which include underwriting of their personal financial statements, tax returns, cash flows and individual credit reports, to provide us with additional support and a secondary source for repayment of the debt.

Table of Contents

We offer both fixed- and adjustable-rate loans on commercial and multi-family real estate, which may include balloon payments. As of December 31, 2025, we had $276.1 million in adjustable-rate commercial real estate loans, or 65.1% of commercial real estate, and $192.9 million in adjustable-rate multi-family loans, or 66.1% of total multi-family. Commercial and multi-family real estate loans with adjustable rates generally adjust after an initial period of three to five years and have maturity dates of three to ten years. Amortization terms are generally limited to terms up to 25 years on commercial real estate loans and up to 30 years on multi-family loans. Adjustable-rate multi-family residential and commercial real estate loans are generally priced to market indices with appropriate margins, which may include The Wall Street Journal prime rate, the U.S. Constant Maturity Treasury Rate, Term Secured Overnight Financing Rate ("TSOFR"), or a similar term FHLB borrowing rate. Adjustable-rate loans could have increased credit risk when interest rates rise. An increase to the borrower's loan payment may affect the borrower's ability to repay and could increase the probability of default. To mitigate this risk to both the borrower and First Fed, adjustable-rate loans may contain both periodic and lifetime interest rate caps, limiting the amount of payment changes.

Of the adjustable-rate commercial and multi-family real estate loans, 66.01% are subject to a floor rate and the weighted average floor rate on these loans was 3.66% at December 31, 2025. Of the adjustable-rate commercial loans, 28.51% are subject to a ceiling rate and the weighted average ceiling rate on those loans was 16.42% at December 31, 2025.

The maximum loan-to-value ratio for commercial and multi-family real estate loans is typically limited to 75% of an appraiser opinion of market value. The minimum debt service coverage ratio is 1.25 for non-owner-occupied and 1.20 for owner-occupied properties. We require independent appraisals or evaluations at origination on all loans secured by commercial or multi-family real estate from our internal list of approved appraisers.

We review most commercial real estate and multi-family loan relationships annually to ensure the borrower continues to meet certain loan requirements as set forth in loan covenants, which may include an annual inspection of the property. The scope of the annual review is generally based on relationship size, with those $1.5 million or greater subject to a full credit review, which includes detailed financial and cash flow analysis, property inspection, covenant compliance and annual risk rating certification. All commercial loans risk rated special mention or worse with exposure of $100,000 or more are also subject to the full credit review. Relationships with an aggregate credit exposure below $1.5 million are monitored for payment performance, changes in guarantor credit scores, and compliance with all other terms and conditions contained in the loan documents. All individuals that guarantee $3.0 million or more in aggregate commercial debt of any type are subject to annual financial reviews. Relationships with an aggregate credit exposure below $750,000 that have been paid as agreed for at least three years are exempt from the annual requirement, so long as the Borrower remains in compliance with all other terms and conditions noted in the loan documents. While we cannot prevent loans from becoming delinquent, we believe our monitoring and formal review processes provide us with the opportunity to better identify problem loans in a timely manner and to work with the borrower prior to the loan becoming delinquent.

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WeThe ~~offer~~following ~~both~~table ~~fixed-~~provides ~~and~~information ~~adjustable-rate loans~~ on ~~commercial and~~ multi-family ~~real estate, which may include balloon payments. As of December 31, 2024, we had $254.2 million in adjustable-rate commercial real estate loans, or 65.1% of commercial real estate,~~ and $219.9 million in adjustable-rate multi-family loans, or 66.1% of total multi-family. Commercial and multi-family real estate loans with adjustable rates generally adjust after an initial period of three to five years and have maturity dates of three to ten years. Amortization terms are generally limited to terms up to 25 years on commercial real estate loans ~~and~~by uptype toat 30 years on multi-family loans. Adjustable-rate multi-family residential and commercial real estate loans are generally priced to market indices with appropriate margins, which may include The Wall Street Journal prime rate, the ~~U.S.~~dates Constant Maturity Treasury Rate, or a similar term FHLB borrowing rate. Adjustable-rate loans could have increased credit risk when interest rates rise. An increase to the borrower's loan payment may affect the borrower's ability to repay and could increase the probability of default. To mitigate this risk to both the borrower and First Fed, adjustable-rate loans may contain both periodic and lifetime interest rate caps, limiting the amount of payment changes.indicated:

During 2023, the Bank successfully migrated away from the London Interbank Offered Rate ("LIBOR") as an index for all new and existing loans. Commercial loans previously tied to LIBOR converted to a similar termed Term Secured Overnight Financing Rate ("TSOFR") product with the recommended spread adjustment set by the Alternative Reference Rate Committee at that time. Of the adjustable-rate commercial and multi-family real estate loans, 66.01% are subject to a floor rate and the weighted average floor rate on these loans was 3.64% at December 31, 2024. Of the adjustable-rate commercial loans, 33.22% are subject to a ceiling rate and the weighted average ceiling rate on those loans was 16.17% at December 31, 2024.

	December 31, 2025					December 31, 2024
(dollars in thousands)	Amount		Percent			Amount		Percent
Non-owner occupied
Multi-family	$	288,529		41.7	%	$	332,596		46.0	%
Hospitality		64,751		9.4			63,611		8.8
Retail		48,088		7.0			51,065		7.1
Office building		42,193		6.1			50,819		7.0
Health care		32,003		4.6			19,027		2.6
Mixed use		20,411		3.0			20,772		2.9
Condominium		17,495		2.5			17,725		2.5
One-to-four family		10,686		1.5			9,877		1.4
Warehouse		6,932		1.0			7,114		1.0
Vehicle dealership		974		0.1			1,004		0.1
Other non-owner occupied		44,036		6.4			33,241		4.6
Total non-owner occupied		576,098		83.3			606,851		84.0

Owner occupied
Health care		21,473		3.1			22,139		3.1
Office building		17,329		2.5			16,356		2.3
Mixed use		11,882		1.7			10,460		1.4
Retail		11,191		1.6			10,578		1.5
Vehicle dealership		9,488		1.4			10,229		1.4
One-to-four family		8,921		1.3			4,567		0.6
Warehouse		6,761		1.0			14,078		1.9
Hospitality		669		0.1			793		0.1
Condominium		374		0.1			789		0.1
Other owner-occupied		27,026		3.9			26,135		3.6
Total owner occupied		115,114		16.7			116,124		16.0

Summary by type
Multi-family		288,529		41.7			332,596		46.0
Hospitality		65,420		9.5			64,404		8.9
Office building		59,522		8.6			67,175		9.3
Retail		59,279		8.6			61,643		8.6
Health care		53,476		7.7			41,166		5.7
Mixed use		32,293		4.7			31,232		4.3
One-to-four family		19,607		2.8			14,444		2.0
Condominium		17,869		2.6			18,514		2.6
Warehouse		13,693		2.0			21,192		2.9
Vehicle dealership		10,462		1.5			11,233		1.5
Other non-owner occupied		44,036		6.4			33,241		4.6
Other owner-occupied		27,026		3.9			26,135		3.6
Total multi-family and commercial real estate	$	691,212		100.0	%	$	722,975		100.0	%

The maximum loan to value ratio for commercial and multi-family real estate loans is typically limited to 75% of an appraiser opinion of market value. The minimum debt service coverage ratio is 1.25 for non-owner-occupied and 1.20 for owner-occupied properties. We require independent appraisals or evaluations on all loans secured by commercial or multi-family real estate from our internal list of approved appraisers.

We review most commercial real estate and multi-family loan relationships annually to ensure the borrower continues to meet certain loan requirements as set forth in loan covenants, which may include an annual inspection of the property. The scope of the annual review is generally based on relationship size, with those $1.5 million or greater subject to a full credit review, which includes detailed financial and cash flow analysis, property inspection, covenant compliance and annual risk rating certification. All commercial loans risk rated special mention or worse with exposure of $100,000 or more are also subject to the full credit review. Loans with less than three years remaining in term are exempt from the annual requirement. Relationships with an aggregate credit exposure below $1.5 million are monitored for payment performance, changes in guarantor credit scores, and compliance with all other terms and conditions contained in the loan documents. All individuals that guarantee $3.0 million or more in aggregate commercial debt of any type are subject to annual financial reviews. While we cannot prevent loans from becoming delinquent, we believe our monitoring and formal review processes provide us with the opportunity to better identify problem loans in a timely manner and to work with the borrower prior to the loan becoming delinquent.

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The following table provides information on multi-family and commercial real estate loans by type at the dates indicated:

	December 31,
	2024					2023					2022
	Amount		Percent			Amount		Percent			Amount		Percent
	(Dollars in thousands)
Non-owner occupied
Multi-family	$	332,596		46.0	%	$	333,094		46.2	%	$	253,551		39.4	%
Hospitality		63,611		8.8			69,076		9.6			48,387		7.5
Retail		51,065		7.1			53,368		7.4			56,701		8.8
Office building		50,819		7.0			54,743		7.6			60,541		9.4
Mixed use		20,772		2.9			18,180		2.5			19,022		3.0
Health care		19,027		2.6			11,972		1.7			12,208		1.9
Condominium		17,725		2.5			20,800		2.9			22,846		3.5
One-to-four family		9,877		1.4			11,699		1.6			13,378		2.1
Warehouse		7,114		1.0			8,262		1.1			8,954		1.4
Vehicle dealership		1,004		0.1			1,033		0.1			1,114		0.2
Other non-owner occupied		33,241		4.6			43,266		6.0			45,053		6.9
Total non-owner occupied		606,851		84.0			625,493		86.7			541,755		84.1
Owner occupied
Health care		22,139		3.1			22,523		3.1			23,547		3.7
Office building		16,356		2.3			17,274		2.4			21,365		3.3
Warehouse		14,078		1.9			13,869		1.9			19,434		3.0
Retail		10,578		1.5			9,792		1.4			11,031		1.7
Mixed use		10,460		1.4			4,013		0.6			4,412		0.7
Vehicle dealership		10,229		1.4			11,005		1.5			8,820		1.4
One-to-four family		4,567		0.6			2,622		0.4			2,387		0.4
Hospitality		793		0.1			853		0.1			1,011		0.2
Condominium		789		0.1			870		0.1			938		0.1
Other owner-occupied		26,135		3.6			12,763		1.8			9,097		1.4
Total owner occupied		116,124		16.0			95,584		13.3			102,042		15.9
Summary by type
Multi-family		332,596		46.0			333,094		46.2			253,551		39.4
Office building		67,175		9.3			72,017		10.0			81,906		12.7
Hospitality		64,404		8.9			69,929		9.7			49,398		7.7
Retail		61,643		8.6			63,160		8.8			67,732		10.5
Health care		41,166		5.7			34,495		4.8			35,755		5.6
Mixed use		31,232		4.3			22,193		3.1			23,434		3.7
Warehouse		21,192		2.9			22,131		3.0			28,388		4.4
Condominium		18,514		2.6			21,670		3.0			23,784		3.6
One-to-four family		14,444		2.0			14,321		2.0			15,765		2.5
Vehicle dealership		11,233		1.5			12,038		1.6			9,934		1.6
Other non-owner occupied		33,241		4.6			43,266		6.0			45,053		6.9
Other owner-occupied		26,135		3.6			12,763		1.8			9,097		1.4
Total multi-family and commercial real estate	$	722,975		100.0	%	$	721,077		100.0	%	$	643,797		100.0	%

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If we foreclose on a commercial or multi-family real estate loan, the marketing and liquidation period can be a lengthy process with substantial holding costs. Vacancies, deferred maintenance, repairs and market factors can result in losses during the time it takes to prepare the property for sale. Depending on the individual circumstances, initial charge-offs and subsequent losses relating to multi-family and commercial loans can be substantial and unpredictable.

The average outstanding loan amount in our commercial real estate portfolio, including multi-family loans, was $1.76 million as of December 31, ~~2024~~2025. We generally target individual commercial and multi-family real estate loans between $1.0 million and $10.0 million to small and mid-size operators and investors in our market areas as well as other parts of Washington. We ~~may~~typically ~~also~~require a ~~make~~pre-existing relationship with the borrower in order to originate commercial and multi-family real estate loans infor ~~other~~properties ~~states~~located ifin weother ~~have a pre-existing relationship with the borrower~~states.

Our three largest commercial and multi-family borrowing relationships, including current loan balances and unused commitments, at December 31, ~~2024~~2025 consisted of a $2319.28 million relationship secured by ~~construction~~multi-family ~~and commercial~~ real estate in ~~King~~Pierce ~~County,~~and Snohomish Counties, Washington; a $2019.01 million relationship secured by ~~construction and~~ multi-family real estate in Pierce ~~and~~County, ~~Snohomish Counties~~Washington; and a $1917.42 million relationship secured by construction and multi-family real estate in ~~Pierce~~King County, Washington. The construction loan balances are included in Construction and Land Lending below.

Construction and Land Lending. Our construction and land loans totaled $7861.13 million, or 43.68% of the total loan portfolio at December 31, ~~2024~~2025 and the undisbursed portion of construction loans in process totaled $5149.75 million.

First Fed offers an "all-in-one" residential custom construction loan product, which upon completion of construction may be held in our loan portfolio. We also originate construction loans for certain commercial real estate projects. These projects include, but are not limited to, subdivisions, multi-family, retail, office, warehouse, hotel, and office buildings. We also offer commercial acquisition-renovation loans that have a small construction component combined with a traditional real estate loan. Underwriting criteria on construction loans include, but are not limited to, minimum debt service coverage requirements of 1.25x or better, loan -to -value limitations, pre-leasing requirements, construction cost over-run contingency reserves, interest and absorption period reserves, occupancy, capitalization rates and interest rate stress testing, as well as other underwriting criteria. Underwriting criteria on commercial acquisition-renovation loans during the interest-only period include, but are not limited to, loan -to -value limitations and debt service coverage requirements of 1.00x or better, based on in-place rents and payment amortization of full commitment. These loans begin amortizing once renovations have been completed.

Construction loan applications generally require architectural and working plans, a material specifications list, a detailed cost breakdown and a construction contract. Custom and speculative construction valuations assume that the project will be built in accordance with plans and specifications submitted to us at the time of the loan application. The appraiser takes into consideration the proposed design and market appeal of the improvements, based on current market conditions and demand for homes, although the improvements may not be completed for twelve months or longer, depending on the complexity of the plans and specifications and market conditions.

Construction loan advances are based on progress payments for "work in place" based on detailed line-item construction budgets. Independent construction inspectors are used to evaluate the construction draw request relative to the progress. Our construction ~~administrator~~administrators ~~reviews~~ review all construction projects, inspection reports, and construction loan advance requests to ensure they are appropriate and in compliance with all loan conditions. Other risk management tools include title insurance, date down endorsements or periodic lien inspections prior to the payment of construction loan advances. In some cases, general contractors may be required to provide sub-contractor lien releases for any work performed prior to the filing of our deed of trust or prior to each construction loan advance.

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Land acquisition, development and construction loans are available to local contractors and developers for the purpose of holding and/or developing residential building sites and homes when market conditions warrant such activity. Land acquisition loans are secured by a first lien on the property and are generally limited to 65% of the acquisition price or the appraised value, whichever is less. Development land loans are generally limited to 75% of the discounted appraised value based on the projected lot sale absorption rate and associated carry and liquidation costs of the developed lots and homes. Underwriting criteria for acquisition and development loans include evidence of preliminary plat approval, and a review of compliance with state and Federal environmental protection and disclosure laws, engineering plans, detailed cost breakdowns and marketing plans. Other risk management tools include acquisition of title insurance and review of feasibility and market absorption reports. These loans have been limited to projects within the state of Washington.

At December 31, ~~2024~~2025, the average construction commitment was $~~868~~629,000 for single-family residential construction, $14.84 million for multi-family construction and $3.60 million for commercial real estate construction. The largest construction commitments for single-family residential, multi-family and commercial real estate were $2.35 million, $57.54 million and $1012.06 million, respectively, at December 31, ~~2024~~2025.

Substantially all of our adjustable-rate land acquisition, development and construction lending have rates of interest based on The Wall Street Journal prime rate. During the term of construction, the accumulated interest on the loan is either billed monthly, as is the case for acquisition and development loans, or added to the principal of the loan through an interest reserve. When original interest reserves set up at origination are exhausted, no additional reserves are permitted unless the loan is re-analyzed and it is determined that the additional reserves are appropriate.

The success of land acquisition, development and construction lending is dependent upon completion of the project and the sale or leasing of the property for repayment of the loan. Because of the uncertainties inherent in the estimates related to construction costs, the market value of the completed project, the demand for the property at completion, market conditions, the rates of interest paid, and other factors, actual results are difficult to predict and variations from expectations can have a significant adverse effect on a borrower's ability to repay loans and the value and marketability of the underlying collateral. In addition, because an incomplete construction project is difficult to sell in the event of default, we may be required to advance additional funds and/or contract with another builder in order to complete construction. There is a risk that we may not fully recover unpaid loan funds and associated construction and liquidation costs under these circumstances. Speculative construction loans carry additional risk associated with identifying an end-purchaser for the finished project. Our extension fee policy encourages commercial borrowers to finish projects on time, which we believe mitigates risk and enhances the return on these loans.

We also originate individual lot loans, which are secured by a first lien on the property, for borrowers who are planning to build on the lot within the next five years. Generally, these loans have a maximum loan -to -value ratio of 75% for improved lands (legal access, water and power). The interest rate on these loans is fixed with a 20-year amortization and a five-year term.

At the dates indicated, the composition of our construction and land portfolio was as follows:

	December 31,
(dollars in thousands)	December 31, 2025		December 31, 2024
	2024		2023		2022
One-to-four family residential	$	21,954	$	38,900
	(In thousands)
Multi-family residential		10,109		15,401
One-to-four family residential	$	38,900	$	43,719	$	58,596
Commercial real estate		23,005		17,282
Multi-family residential		15,401		66,723		76,301
Land		6,200		6,527
Commercial acquisition-renovation		—		—		19,247
Total construction and land	$	61,268	$	78,110
Commercial real estate		17,282		11,791		27,628
Land		6,527		7,458		11,874
Total construction and land	$	78,110	$	129,691	$	193,646

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Our construction and land loans are geographically disbursed primarily throughout the state of Washington and, as a result, these loans are susceptible to risks that may be different depending on the location of the project. We manage our construction lending by utilizing a licensed third-party vendor to assist us in monitoring our higher-risk construction projects while lower-risk projects are monitored by internal staff.

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

December 31, 2024	Olympic Peninsula		Puget Sound Region			Other Washington			Total
(dollars in thousands)	Olympic Peninsula		Puget Sound Region			Other Washington			California			Total
	(In thousands)
December 31, 2025
Construction Commitment
One-to-four family residential	$	65,~~897~~460	$	4540,~~945~~189		$	1,~~424~~081		$	~~54,266~~—		$	46,730
Multi-family residential		3,900		1418,~~828~~153			~~5,695~~—			~~24,423~~—			22,053
Commercial real estate		~~500~~480		4021,~~259~~855			4,~~215~~214			449,~~974~~706			36,255
Total commitment	$	119,~~297~~840	$	~~101~~80,~~032~~197		$	115,~~334~~295		$	~~123~~9,~~663~~706		$	105,038
Construction Funds Disbursed
One-to-four family residential	$	1,~~769~~857	$	3521,~~711~~045		$	~~1,424~~695		$	~~38,904~~—		$	23,597
Multi-family residential		~~709~~2,842		107,~~245~~449			~~4,582~~—			~~15,536~~—			10,291
Commercial real estate		9956		1615,~~508~~418			~~900~~3,177			172,~~507~~975			21,626
Total disbursed for construction		24,~~577~~755		6243,~~464~~912			63,~~906~~872			712,~~947~~975			55,514
Net deferred fees (costs)		220		(~~329~~441	)		~~(37~~2	)		(~~364~~26	)		(445	)
Amortized cost for construction	$	24,~~579~~775	$	6243,~~135~~471		$	63,~~869~~874		$	712,~~583~~949		$	55,069
Undisbursed Commitment
One-to-four family residential	$	53,~~128~~603	$	1019,~~234~~144		$	—386		$	~~15,362~~—		$	23,133
Multi-family residential		31,~~191~~058		410,~~583~~704			~~1,113~~—			~~8,887~~—			11,762
Commercial real estate		~~401~~424		236,~~751~~437			31,~~315~~037			276,~~467~~731			14,629
Total undisbursed	$	85,~~720~~085	$	3836,~~568~~285		$	41,~~428~~423		$	516,~~716~~731		$	49,524
Land Funds Disbursed
One-to-four family residential	$	21,~~349~~929	$	21,~~183~~792		$	~~213~~121		$	~~4,745~~—		$	3,842
Commercial real estate		~~900~~1,147		~~845~~1,158			—			~~1,745~~—			2,305
Total disbursed for land		3,~~249~~076		32,~~028~~950			~~213~~121			~~6,490~~—			6,147
Net deferred fees		1828		1421			53			37—			52
Amortized cost for land	$	3,~~267~~104	$	32,~~042~~971		$	~~218~~124		$	~~6,527~~—		$	6,199

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(dollars in thousands)	Olympic Peninsula		Puget Sound Region			Other Washington			Total
December 31, 2024
Construction Commitment
One-to-four family residential	$	6,897	$	45,945		$	1,424		$	54,266
Multi-family residential		3,900		14,828			5,695			24,423
Commercial real estate		500		40,259			4,215			44,974
Total commitment	$	11,297	$	101,032		$	11,334		$	123,663

Construction Funds Disbursed
One-to-four family residential	$	1,769	$	35,711		$	1,424		$	38,904
Multi-family residential		709		10,245			4,582			15,536
Commercial real estate		99		16,508			900			17,507
Total disbursed for construction		2,577		62,464			6,906			71,947
Net deferred fees (costs)		2		(329	)		(37	)		(364	)
Amortized cost for construction	$	2,579	$	62,135		$	6,869		$	71,583

Undisbursed Commitment
One-to-four family residential	$	5,128	$	10,234		$	—		$	15,362
Multi-family residential		3,191		4,583			1,113			8,887
Commercial real estate		401		23,751			3,315			27,467
Total undisbursed	$	8,720	$	38,568		$	4,428		$	51,716

Land Funds Disbursed
One-to-four family residential	$	2,349	$	2,183		$	213		$	4,745
Commercial real estate		900		845			—			1,745
Total disbursed for land		3,249		3,028			213			6,490
Net deferred fees		18		14			5			37
Amortized cost for land	$	3,267	$	3,042		$	218		$	6,527

Consumer Lending. We offer consumer loans, including home equity loans, home equity lines of credit and personal lines of credit. At December 31, 2025, home equity loans and lines of credit totaled $85.1 million, or 5.2%, of the loan portfolio. Our interest rates on home equity loans are priced based on risks including credit score, loan-to-value and overall payment capacity of the applicant. Home equity loans are made for the improvement of residential properties and other purposes. Some of these loans are secured by first liens; however, the majority of these loans are secured by a second deed of trust on the residential property. Fixed rate, fully amortizing home equity loans in first lien position are available with repayment periods ranging from 5 to 20 years. We also offer a ten-year home equity line of credit to qualifying borrowers, which includes an option for a discounted initial fixed interest rate for the first year with the interest rate adjusting monthly thereafter based on a margin over the prime rate; payments are interest-only during the ten-year draw period. The balance and rate are fixed after that period and the principal amortized over the remaining fifteen-year period of the loan. Options for equity loans on non-owner occupied properties are offered under more conservative requirements. Additionally, terms are available under a bridge loan product consisting of a short-term equity loan used to facilitate the acquisition of a separate residential property. Home equity fixed and line of credit products in second lien positions behind a non-First Fed mortgage have a maximum loan amount of $250,000. Home equity loans and lines of credit have greater risk than one-to-four family residential mortgage loans because they are secured by mortgages subordinated to the existing first mortgage on the property. We may or may not have private mortgage insurance coverage.

At December 31, 2025, auto loans totaled $146.7 million, of which $146.2 million were purchased. The remaining $545,000 were originated through our First Fed branches. Auto loans have a maximum term of up to 180 months for purchased classic or collector vehicles and up to 84 months for all other auto loans, depending on the age and condition of the vehicle and strength of the borrower. Loan rates for auto lending, as well as all other consumer loans, are priced based on the specific loan type and the risks involved. First Fed utilizes indirect lending sources to purchase auto loans. In-house and direct lending sources have been used to originate auto loans in prior years.

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December 31, 2023	Olympic Peninsula		Puget Sound Region			Other Washington			Oregon		Total
	(In thousands)
Construction Commitment
One-to-four family residential	$	10,260	$	54,320		$	6,489		$	540	$	71,609
Multi-family residential		—		78,196			11,076			—		89,272
Commercial real estate		—		17,332			1			—		17,333
Total commitment	$	10,260	$	149,848		$	17,566		$	540	$	178,214
Construction Funds Disbursed
One-to-four family residential	$	3,790	$	34,725		$	5,065		$	175	$	43,755
Multi-family residential		—		61,288			5,879			—		67,167
Commercial real estate		—		11,849			—			—		11,849
Total disbursed for construction		3,790		107,862			10,944			175		122,771
Net deferred fees (costs)		27		(544	)		(39	)		1		(555	)
Amortized cost for construction	$	3,817	$	107,318		$	10,905		$	176	$	122,216
Undisbursed Commitment
One-to-four family residential	$	6,470	$	19,595		$	1,424		$	365	$	27,854
Multi-family residential		—		16,908			5,197			—		22,105
Commercial real estate		—		5,483			1			—		5,484
Total undisbursed	$	6,470	$	41,986		$	6,622		$	365	$	55,443
Land Funds Disbursed
One-to-four family residential	$	3,310	$	3,002		$	272		$	—	$	6,584
Commercial real estate		—		845			—			—		845
Total disbursed for land		3,310		3,847			272			—		7,429
Net deferred fees		28		16			2			—		46
Amortized cost for land	$	3,338	$	3,863		$	274		$	—	$	7,475

We purchase auto loans through a relationship with Woodside Credit, LLC, a loan originator that operates in all 50 states, underwriting and funding loans for classic (25 years or older) and collector (premium price with limited production) vehicles. At December 31, 2025, $137.7 million of Woodside auto loans was included in consumer loans. These loans typically range from $10,000 to over $600,000 with terms that range from 84 to 180 months and generally require down payments of 10% to 20% of the cost of the vehicle. We receive loan pools each week with complete packages that we underwrite to determine whether to purchase or pass on the loans submitted. The average loan balance was $101,000 at December 31, 2025. These loans present unique risks with the collateral being located across the country; however, our loan originator mitigates risk of loss by providing an option to facilitate the collection efforts should repossession become necessary, for which we would incur a cost if we did it ourselves. Historically, losses on these types of loans have been less than 2% and First Fed experienced a loss rate of 1.18% and 0.36%, respectively, for each of the years ended December 31, 2025 and 2024.

~~Consumer~~We ~~Lending.~~have Wealso ~~offer~~purchased ~~consumer~~auto loans, ~~including~~through ~~home~~a ~~equity~~partnership ~~loans,~~with ~~home~~First ~~equity~~Help ~~lines of credit~~Financial, ~~auto~~a ~~loans~~loan ~~and~~originator ~~personal~~that ~~lines~~operates ofin ~~credit.~~selected ~~At December 31~~states, ~~2024,~~underwriting ~~home~~and ~~equity~~funding loans ~~and~~to ~~lines~~"superior ofsubprime" ~~credit~~customers ~~totaled~~who ~~$79.1~~have ~~million,~~a ordemonstrated ~~4.7%,~~capacity ofto ~~the~~pay ~~loan~~and ~~portfolio.~~have ~~Our~~limited ~~interest~~or ~~rates~~no onblemishes ~~home equity loans are priced based~~ on ~~risks~~their ~~including~~ credit ~~score~~report, ~~loan~~but tohave ~~value~~limited ~~and~~credit ~~overall~~experience. At ~~payment~~December ~~capacity~~31, ~~of the applicant~~2025, $8.5 ~~Home~~million ~~equity loans are made for the improvement~~ of ~~residential~~First ~~properties~~Help ~~and~~auto ~~other~~loans ~~purposes.~~was ~~Some~~included ofin ~~these~~consumer loans. Loans ~~are~~in ~~secured by first liens; however,~~ the ~~majority~~First ofHelp ~~these~~Auto ~~loans~~Loan ~~are~~Purchase ~~secured~~Program bytypically arange ~~second~~from ~~deed~~$10,000 ofto ~~trust on the residential property. Fixed rate~~$75,000 ~~fully amortizing home equity loans in first lien position are available~~ with ~~repayment~~terms ~~periods~~that ~~ranging~~range from 572 to 2084 ~~years~~months. We ~~also~~received ~~offer a~~loan ~~ten-year~~pools ~~home~~with ~~equity~~complete ~~line~~packages ofthat ~~credit~~we underwrote to ~~qualifying~~determine ~~borrowers,~~whether ~~which~~to ~~includes~~purchase anor ~~option~~pass ~~for a discounted initial fixed interest rate for the first year with the interest rate adjusting monthly thereafter based~~ on ~~a margin over~~ the ~~prime~~loans ~~rate; payments are interest-only during the ten-year draw period~~submitted. The ~~balance~~seller ~~and~~retains ~~rate are fixed after that period and~~ the ~~principal~~servicing ~~amortized over the remaining fifteen-year period of the loan. Options for equity loans~~ on ~~non-owner~~these ~~occupied properties are offered under more conservative requirements. Additionally~~loans, ~~terms~~including collection ~~are~~activities ~~available~~as ~~under~~well aas ~~bridge loan product consisting of a short-term equity loan used to facilitate~~ the ~~acquisition~~rehab ~~of a separate residential property. Home equity fixed~~ and ~~line~~marketing ofrelated ~~credit products in second lien positions behind a non-First Fed mortgage have a maximum loan amount of $250,000. Home equity loans and lines of credit have greater risk than one-~~to~~-four~~ ~~family residential mortgage loans because they are secured by mortgages subordinated to~~ the ~~existing~~sale ~~first~~of ~~mortgage~~any oncollateral ~~the~~that ~~property.~~was Werepossessed ~~may~~ or ~~may~~foreclosed ~~not have private mortgage insurance coverage~~upon.

AtWe ~~December~~purchase manufactured ~~31,~~home ~~2024~~loans through a partnership with Triad Financial Services, ~~auto~~a ~~loans~~loan ~~totaled $133~~originator that underwrites and funds these loans.9 ~~million,~~At ofDecember ~~which~~31, 2025, $132.3 million ~~were~~ ~~purchased~~of ~~and~~manufactured home loans was included in consumer loans. These loans range from $~~453~~18,000 ~~were~~ ~~originated~~to ~~through~~$425,000 ~~indirect~~with ~~dealer~~terms ~~programs~~that ~~described~~range ~~below; the~~from ~~remaining~~84 $1to 360 months.2 ~~million~~Loans ~~were~~are ~~originated~~submitted ~~through~~on ~~our~~a ~~First~~weekly ~~Fed~~flow ~~branches~~basis or as one-off pools. ~~Auto~~All loans ~~have~~are aconsidered ~~maximum~~"full ~~term~~document" ofand upcomplete packages are reviewed to ~~180~~determine ~~months~~if ~~for~~the ~~purchased~~loan ~~classic~~will ~~and~~be ~~collector~~purchased ~~vehicles,~~or upnot. toThe 96seller ~~months~~retains ~~for~~the ~~indirect~~servicing ~~auto~~on these loans, which includes the collection activities as well as the rehab and upmarketing related to 84the ~~months~~sale ~~for~~of ~~all~~any ~~other~~collateral ~~auto~~that was repossessed or foreclosed upon. The collateral for these loans is generally personal property; however, ~~depending~~ onloans where the ~~age~~title ~~and~~to ~~condition~~the ofmanufactured ~~the~~home ~~vehicle~~has ~~and~~been ~~strength~~permanently attached to a land parcel also include real estate collateral. The program has a credit enhancement in the form of a reserve account that can be used to protect the ~~borrower.~~bank ~~Loan~~from ~~rates~~charge ~~for~~offs ~~auto~~and ~~lending~~prepayments. The reserve account, aswhich ~~well~~is asheld ~~all~~in ~~other~~a ~~consumer~~limited-access ~~loans~~controlled deposit account at First Fed, represented ~~are~~5.4% of ~~priced~~related ~~based~~loan balances at year end. The funding of the reserve account will vary depending on the ~~specific~~pricing ~~loan~~options ~~type~~selected ~~and~~during the ~~risks~~acquisition ~~involved~~of the loans. First Fed ~~utilizes~~had ~~indirect~~five ~~lending~~loans ~~sources~~placed tointo ~~purchase~~repossession ~~auto~~inventory ~~loans~~in 2025 and three in 2024 for a variety of reasons. ~~In-house~~The ~~and~~Bank ~~direct~~was ~~lending~~made ~~sources~~whole ~~have~~through ~~been~~the ~~used~~credit toenhancement ~~originate~~reserve ~~auto~~for all loans inplaced ~~prior~~into ~~years~~repossession inventory.

Prior to September 2023, we purchased unsecured consumer loans through a partnership with Splash Financial who underwrote and funded these loans. We received individual loan packages that we underwrote to determine whether to purchase or pass on. The seller retained the servicing on these loans. At December 31, 2025, $1.2 million of purchased unsecured loans was included in consumer loans. Loans purchased between June 2022 and March 2023 ranged from $1,000 to $35,000 with terms that ranged from 36 to 60 months. Of the $11.1 million in loans purchased under the original program participation criteria, First Fed has experienced losses totaling $5.0 million. The originator paid First Fed $950,000 as a partial reimbursement of program losses incurred during 2023. Changes were made to the program participation criteria in April 2023 to reduce future losses, including a decrease in the maximum loan amount from $35,000 to $20,000 and an increase to the minimum FICO score. Splash also agreed to cover first payment defaults over 1.75% and the servicing fee charged to the Bank on new loans was reduced. The Bank purchased $3.7 million of loans after the change in criteria was made and has experienced losses totaling $778,000 related to this group of loans. Purchases of Splash loans were suspended in August 2023.

Consumer loans represent additional risks because of the mobility and rapidly depreciating nature of consumer assets in contrast to real estate-based collateral. If a borrower defaults, repossession and liquidation of the collateral may not provide sufficient proceeds to satisfy the outstanding loan balance. Other factors that may account for potential loan losses on consumer loans include deferred maintenance and damages. While subsequent legal actions and judgments against borrowers in default may be appropriate, such collection efforts and costs may not always be warranted and are evaluated on a case-by-case basis. Consumer loan collections are dependent on the borrower’s continuing financial stability and federal and state laws, including federal and state bankruptcy and insolvency laws, which may limit the amount that can be recovered on these loans.

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WeCommercial ~~purchase~~Business auto loans through a relationship with Woodside Credit, LLC, a loan originator that operates in all 50 states, underwriting and funding loans for classic (25 years or older) and collector (premium price with limited production) vehiclesLending. ~~These~~As ~~loans typically range from $10,000 to over $600,000 with terms that range from 84 to 180 months and generally require down payments~~ of 10% to 20% of the cost of the vehicle. We receive loan pools each week with complete packages that we underwrite to determine whether to purchase or pass on the loans submitted. The average loan balance was $94,000 at December 31, ~~2024. These loans present unique risks with the collateral being located across the country; however~~2025, ~~our~~commercial ~~loan~~business ~~originator~~loans ~~mitigates~~totaled ~~risk of loss by providing an option to facilitate the collection efforts should repossession become necessary, for which we would incur a cost if we did it ourselves~~$130.3 ~~Historically~~million, ~~losses on these types of loans have been less than 2% and First Fed~~or ~~experienced a loss rate of 0~~8.360% ~~and 1.07%,~~ ~~respectively, for each~~ of ~~the~~our ~~years~~loan ~~ended December 31, 2024 and 2023~~portfolio.

We also purchase auto loans through a partnership with First Help Financial, a loan originator that operates in selected states, underwriting and funding loans to "superior subprime" customers who have a demonstrated capacity to pay and have limited or no blemishes on their credit report, but have limited credit experience. Loans in the First Help Auto Loan Purchase Program typically range from $10,000 to $75,000 with terms that range from 72 to 84 months. We periodically receive loan pools with complete packages that we underwrite to determine whether to purchase or pass on the loans submitted. The seller retains the servicing on these loans which includes the collection activities as well as the rehab and marketing related to the sale of any collateral that was repossessed or foreclosed upon.

Indirect auto loans were previously originated with auto dealerships located throughout our market areas through CRIF Lending Solutions, a third-party service provider that also facilitated a portion of the underwriting and origination of these loans based on our underwriting and pricing criteria. We ended our relationship with that service provider in 2020, effectively eliminating new production. We may, however, work directly with local auto dealerships in the future. Indirect auto loan customers receive a fixed rate loan in an amount and at an interest rate that is based on review of their FICO credit score, age of the vehicle, and loan term. Our underwriting and pricing criteria for indirect auto loans focuses primarily on the ability of the borrower to repay the loan rather than the value of the underlying collateral. The loan term on indirect auto loans averages 70 months, which is comparable to national auto industry data.

We purchase manufactured home loans through a partnership with Triad Financial Services, a loan originator that underwrites and funds these loans. At December 31, 2024, $128.2 million of manufactured home loans was included in consumer loans. These loans range from $18,000 to $425,000 with terms that range from 84 to 360 months. Loans are submitted on a weekly flow basis or as one-off pools. All loans are considered “full doc” and complete packages are reviewed to determine if the loan will be purchased or not. The seller retains the servicing on these loans which includes the collection activities as well as the rehab and marketing related to the sale of any collateral that was repossessed or foreclosed upon. The collateral may include both real estate and personal property depending on whether or not the title to the subject property has been eliminated. The program has a credit enhancement in the form of a reserve account that can be used to protect the bank from charge offs and prepayments. The reserve represented 5.2% of related loan balances at year end; however, it will vary depending on the pricing options selected during the acquisition of the loans. First Fed had three loans placed into repossession inventory in 2024 and one in 2023 for a variety of reasons. The Bank was made whole through the credit enhancement reserve for all loans placed into repossession inventory.

In 2022, we began purchasing unsecured consumer loans through a partnership with Splash Financial who underwrites and funds these loans. At December 31, 2024, $3.1 million of purchased unsecured loans was included in consumer loans. These loans range from $1,000 to $35,000 with terms that range from 36 to 60 months. We received individual loan packages that we underwrote to determine whether to purchase or pass on. The seller retains the servicing on these loans. Of the $11.1 million in loans purchased between June 2022 and February 2023, First Fed has experienced losses totaling $4.7 million. The originator paid First Fed $950,000 as a partial reimbursement of program losses incurred during 2023. Changes were made to the program participation criteria in April 2023 to reduce future losses, including a decrease in the maximum loan amount from $35,000 to $20,000 and an increase to the minimum FICO score. Splash also agreed to cover first payment defaults over 1.75% and the servicing fee charged to the Bank on new loans was reduced. The Bank purchased $3.7 million of loans after the change in criteria was made and has experienced losses totaling $556,000 related to this group of loans. Purchases of Splash loans were suspended in August 2023.

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Commercial Business Lending. As of December 31, 2024, commercial business loans totaled $151.5 million, or 8.9% of our loan portfolio.

Commercial business loans include lines of credit, term loans, and letters of credit used for general business purposes, including seasonal and permanent working capital, equipment financing, and general investments. These loans are typically secured by business assets, and loan terms vary from one to seven years with either adjusting or floating rates indexed to similar FHLB advance rates, The Wall Street Journal prime rate, TSOFR or other indices. These loans typically have shorter maturity terms and higher interest spreads than real estate loans but generally involve more credit risk because of the type and nature of the collateral. Our commercial business lending underwriting includes an analysis of the borrower’s financial condition, past, present and future cash flows, and the collateral pledged as security. We generally obtain personal guarantees on our commercial business loans. We focus our commercial lending activities on small-to-medium sized, privately held companies with local or regional businesses that operate in our market area.

Commercial business loans are originated based on the cash flow of the borrowing entity, which may be unpredictable due to normal business cycles, industry changes, and economic and political conditions. Secondary and tertiary sources of repayment are guarantor cash flows and collateral liquidation. Collateral for commercial business loans most often consists of real estate, accounts receivable, inventory, or equipment. Collateral may fluctuate in value, which can reduce liquidation proceeds, and our ability to collect on accounts receivable or other third-party payments can affect the amount of losses we incur in the event of default. All borrowers with aggregate exposure of $750,000 or greater are subject to annual financial reviews and risk rating certification. All commercial loans risk rated special mention or worse with exposure of $100,000 or more are also subject to the full credit review. Relationships with an aggregate credit exposure below $750,000 are monitored for payment performance, changes in guarantor credit scores, and compliance with all other terms and conditions contained in the loan documents. All individuals that guarantee $3.0 million or more in aggregate commercial debt of any type are subject to annual financial reviews.

We purchase unsecured commercial loans to small businesses and professionals through a partnership with Bankers Healthcare Group, who underwrites and funds these loans. At December 31, ~~2024~~2025, $21.1 6 million of purchased loans were included in commercial business loans. These loans range from $24,000 to $530,000 with terms ranging from 60 to 144 months. We purchase individual loans on a flow basis that we underwrite to determine whether they fit our credit criteria. The seller retains the servicing on these loans. A reserve account, which is held in a limited-access controlled deposit account at First Fed, equal to approximately 3% of the unpaid balance serves as a credit enhancement to help protect against charge offs and prepaid loans. The loan originator has experienced a loss rate of 2.9% on the total portfolio of loans in this program. First Fed has not experienced any losses on these loans to-date.

~~Indirect~~First ~~commercial~~Fed ~~business~~periodically ~~loans were~~provides ~~referred~~funding to ~~the~~Northpointe Bank through ~~Waterstation~~participation ~~Management~~in their Northpointe Bank Mortgage Purchase Program ("Northpointe MPP"). At December 31, ~~LLC~~2025, a ~~third-party~~participation ~~broker~~balance ~~that~~of ~~assists~~$18.9 ~~borrowers~~million ~~with~~was ~~completing~~included ~~and~~in ~~submitting~~commercial anbusiness ~~electronic~~loans. ~~commercial~~The ~~loan~~Northpointe ~~application~~MPP toprovides ~~finance~~short-term ~~equipment.~~advances Atto ~~December~~well-qualified ~~31,~~mortgage ~~2024,~~companies $5throughout the U.0S. ~~million~~These ofadvances ~~these~~provide ~~brokered~~gap ~~loans~~financing ~~were~~for ~~included~~the inperiod ~~commercial~~between ~~business~~when ~~loans.~~a ~~Indirect~~loan ~~commercial~~funds ~~business~~and ~~loan~~when ~~customers~~it ~~received~~is apurchased ~~fixed~~by ~~rate~~the ~~loan~~end upinvestor. This typically ranges from 15 to ~~75%~~25 ofdays. Under the ~~equipment~~Northpointe ~~cost~~MPP, ~~based~~each onadvance ais ~~review~~secured ofby ~~their~~individual ~~FICO~~mortgages ~~credit~~funded ~~score,~~by ~~historical~~participating ~~cash~~community ~~flows and~~bank ~~overall~~partners, ~~financial~~including ~~strength~~First Fed. ~~Our~~Once ~~underwriting~~the ~~and~~loan ~~pricing~~is ~~criteria~~purchased ~~for~~by ~~this~~the ~~program~~end ~~focused primarily~~investor, onfunds ~~the~~are ~~ability~~sent ofdirectly ~~the~~to ~~borrower~~Northpointe toBank ~~repay~~who, ~~the~~in ~~loan~~turn, disburses it ~~rather~~out ~~than~~to the ~~value~~partner ofbanks ~~the~~on ~~underlying~~a ~~collateral~~pro rata basis. ~~These~~Only ~~loans~~prime, ~~ranged~~first ~~from~~lien ~~$170~~residential mortgage products which are agency eligible (such as Fannie Mae,~~000~~ toFreddie ~~$1.5~~Mac, ~~million~~or ~~with~~the ~~terms~~Department ~~ranging~~of ~~from~~Veterans ~~96 to~~Affairs) ~~132 months.~~are Ofincluded in the ~~$16~~program.5 ~~million~~Northpointe Bank underwrites all the loans ~~originated~~entering byinto ~~First~~the ~~Fed~~program ~~during~~to ~~2021~~ensure conformity with program and ~~2022,~~investor ~~the~~requirements. The Bank's ~~has~~participation ~~experienced~~level ~~losses~~in ~~totaling~~this program fluctuates, with a maximum daily limit of $620.3 0 million. Weat ~~ceased~~December ~~making~~31, ~~these~~2025. ~~loans~~The indaily ~~July~~limit ~~2022~~is periodically evaluated and ~~continue~~adjusted to ~~pursue~~align ~~satisfactory~~with ~~repayment~~strategic ~~of these loans~~goals.

First Fed periodically provides funding to Northpointe Bank through participation in their Northpointe Bank Mortgage Purchase Program ("Northpointe MPP"). At December 31, 2024, a participation balance of $36.2 million was included in commercial business loans. The Northpointe MPP provides short-term advances to well-qualified mortgage companies throughout the United States. These advances provide gap financing for the period between when a loan funds and when it is purchased by the end investor. This typically ranges from 15 to 25 days. Under the Northpointe MPP, each advance is secured by individual mortgages funded by participating community bank partners, including First Fed. Once the loan is purchased by the end investor, funds are sent directly to Northpointe Bank who, in turn, disburses it out to the partner banks on a pro rata basis. Only prime, first lien residential mortgage products which are agency eligible (such as Fannie Mae, Freddie Mac, or the VA) are included in the program. Northpointe Bank underwrites all the loans entering into the program to ensure conformity with program and investor requirements. The Bank's participation level in this program fluctuates, with a maximum daily limit of $40.0 million at December 31, 2024. The daily limit is periodically evaluated and adjusted to align with strategic goals.

Included in total commercial business loans is $4.0 million of loans originated by First Northwest. These loans contain clauses which allow for a portion of the debt to be converted into securities, mezzanine debt or other non-standard terms.

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Loan Origination and Underwriting. Our loans are obtained from a variety of sources, including existing or walk-in customers, business development, referrals, and advertising, among others. All our consumer loan products, including residential mortgage loans and secured and unsecured consumer loans, are processed through our centralized processing and underwriting center. Commercial business loans, including commercial and multi-family real estate loans, are originated by our relationship managers ("RMs") and underwritten centrally with credit presentations submitted for approval to the appropriate individuals and committee(s) with lending authority designated by the Board of Directors (the "Board").

Lending Authority. Through its current policy, the Board delegates lending authority to the Bank’s management and staff and to the Senior Loan Committee ("SLC"). Overdrafts and small business express loans require one signature. The Chief Banking Officer ("CBO") and the Chief Operating Officer ("COO") have the authority to approve overdrafts up to $100,000; the Chief Credit Officer ("CCO"), Chief Financial Officer ("CFO"), and Chief Executive Officer ("CEO") have the authority to approve overdrafts up to $250,000; and certain other staff and management have authority to approve overdrafts ranging from $5,000 to $50,000. Our small business express loans, which are commercial business loans of $100,000 or less, are approved by the CCO or designated personnel and management. In addition, the CCO may approve Automated Clearing House and Remote Deposit Capture transactions in any amount and has the authority to approve most modifications and extensions of credit in any amount for terms of less than one year. 19

~~Mortgage~~ Table ~~loan underwriters have approval authority up to $667,000. The Director~~ of ~~Mortgage and Consumer Credit has approval authority of $1.0 million, and the CCO has approval authority of $2.0 million. Mortgage loans over $2.0 million are approved by the SLC.~~Contents

Lending Authority. Through its current policy, the Board delegates lending authority to the Bank’s management and staff and to the Senior Loan Committee ("SLC"). Overdrafts require one signature. The Chief Banking Officer ("CBO") and the Chief Operating Officer ("COO") have the authority to approve overdrafts up to $100,000; the Chief Credit Officer ("CCO"), Chief Financial Officer ("CFO"), and Chief Executive Officer ("CEO") have the authority to approve overdrafts up to $250,000; and certain other staff and management have authority to approve overdrafts ranging from $5,000 to $50,000.

Mortgage loan underwriters have approval authority ranging from $250,000 for Junior Underwriters up to $850,000 for Senior Underwriters. The Director of Mortgage and Consumer Credit has approval authority of $2.0 million, and the CCO has approval authority of $3.0 million. Mortgage loans over $3.0 million are approved by the SLC.

For commercial loans, the CCO has approval authority of $10.0 million based on aggregate credit exposure, and other personnel have approval authority ranging from $500,000 to $4.0 million. Commercial loan relationships over $10.0 million are approved by the SLC.

The Director of Mortgage and Consumer Credit has approval authority for consumer loans up to $1.0 million and certain ~~named~~roles ~~individuals~~ have authority ranging from $150,000 to $500,000. Additionally, we have assigned authority to approve indirect auto loans and wholesale partnerships meeting our underwriting and pricing criteria to our third-party service providers.

The SLC (on a monthly basis) and the Board Loan Committee ("BLC") (on a quarterly basis) review loan portfolio quality, credit concentrations, production, and industry trends and provide directional oversight over our lending policies. The BLC also reviews policy exceptions and related risk concerns on a quarterly basis. Additionally, all loan approval policies are reviewed no less than annually.

Washington law imposes loans to one borrower restrictions limiting total loans and extensions of credit by a bank to 20% of its unimpaired capital and surplus, resulting in a legal limit of $4543.72 million at December 31, ~~2024~~2025. First Fed, however, restricts its loans to one borrower to no more than 6075% of the Bank's lending limit, unless specifically approved by the SLC as an exception to policy. The Bank's lending limit is adjusted quarterly and was $3440.35 million at December 31, ~~2024~~2025. The following table provides a summary of our five largest relationships at December 31, ~~2024~~2025.

Total Commitment	Number of Loans in Relationship	Primary Collateral Type
(In thousands)
(dollars in thousands)
$23,249	3	Commercial Construction
$19,846	10	Multi-family Real Estate
20,043	10	Multi-family Real Estate
19,063	2	Multi-family Real Estate
19,412	2	Multi-family Real Estate
17,210	3	Commercial Construction
16,632	2	Multi-family Real Estate
16,340	2	Multi-family Real Estate
16,536	3	Multi-family Real Estate
16,308	3	Multi-family Real Estate

Loan Originations, Servicing, Purchases and Sales. We originate mortgage, consumer, multi-family and commercial real estate, and commercial business loans for our portfolio utilizing fixed- and adjustable-rate loan terms. During the years ended December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, our total loan originations were $~~232~~213.41 million, ~~$221.9 million,~~ and $~~548~~232.34 million, respectively.

21 We purchase whole and participation loans on a servicing retained or released basis. During the years ended December 31, 2025 and 2024, we purchased $77.9 million and $88.9 million of loans, respectively. During the last year, the majority of purchases consisted of auto loans purchased through our partnership with an originator specializing in classic and collector vehicles, manufactured home loans purchased through our partnership with an originator specializing in that type of lending, and unsecured commercial business loans to borrowers primarily in the healthcare industry. A secondary source of purchased loans has been commercial real estate loans and participations, whereby we receive a portion of a loan originated by another lender who retains the servicing and customer relationship and may, depending on the terms of the agreement, retain a portion of the interest as a servicing fee. Purchased loans, loan pools, and participations are underwritten by our credit administration department and approved by the appropriate loan committee(s) prior to purchase, according to our lending authority guidelines. We may pay a purchase premium or receive a purchase discount on fully originated loans that we purchase. Premiums and discounts are capitalized at the time of purchase and amortized over the remaining contractual life of the loan. We had $22.1 million and $20.4 million of net premiums paid on purchased loans at December 31, 2025 and 2024.

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We also purchase whole and participation loans on a servicing retained or released basis. During the years ended December 31, 2024, 2023, and 2022, we purchased $88.9 million, $83.1 million, and $96.1 million of loans, respectively. During the last year, the majority of purchases consisted of auto loans purchased through our partnership with an originator specializing in classic and collector vehicles, manufactured home loans purchased through our partnership with an originator specializing in that type of lending, and unsecured commercial business loans to borrowers primarily in the healthcare industry. A secondary source of purchased loans has been commercial real estate loans and participations, whereby we receive a portion of a loan originated by another lender who retains the servicing and customer relationship and may, depending on the terms of the agreement, retain a portion of the interest as a servicing fee. Loan pools purchased prior to 2018 consisted mainly of loans exceeding conforming loan limits, or "jumbo loans," secured by single family residential properties located in the states of Washington and California. Purchased loans, loan pools, and participations are underwritten by our credit administration department and approved by the appropriate loan committee(s) prior to purchase, according to our lending authority guidelines. We may pay a purchase premium or receive a purchase discount on fully originated loans that we purchase. Premiums and discounts are capitalized at the time of purchase and amortized over the remaining contractual life of the loan. We had $20.4 million, $16.7 million, and $16.0 million of net premiums paid on purchased loans at December 31, 2024, 2023, and 2022.

The Olympic Peninsula region, which includes a substantial concentration of our depositors, has experienced limited population growth, and the region's unemployment rate is higher than both the state and national unemployment rates. As a result, it has been part of our strategy to originate and purchase loans outside of these areas in the counties surrounding the Puget Sound and elsewhere. As part of that strategy, we may purchase loans with different credit and underwriting criteria than those we originate directly.

We also sell residential first mortgage loans in the secondary market. The Bank has historically focused on originating fixed-rate residential mortgages, which we may sell to the secondary market to manage our interest rate risk and improve noninterest income. During the years ended December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, we sold $2224.56 million~~, $25.5 million,~~ and $2622.15 million of residential mortgage loans, respectively. Our secondary market relationship for residential loans is with Freddie Mac and other select third-party investors, which provides us with greater flexibility in choosing the best pricing, whether we are selling on a servicing retained or released basis.

At December 31, ~~2024~~2025, we were servicing $~~329~~301.36 million of loans ~~for~~which we originated and subsequently sold the principal to others. We earned servicing income on these loans of $~~736~~705,000, ~~$916,000,~~ and $~~972~~736,000 for the years ended December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, respectively. Servicing rights for these loans had a fair value of $3.30 million at December 31, ~~2024~~2025. See Note 7 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of this Form 10-K.

In general, loans are sold on a non-recourse basis to third-party purchasers, subject to a provision for repurchase in the event of a breach of representation, warranty or covenant made at the time of sale. During fiscal 2008, we sold loans with "life of the loan" recourse provisions to Freddie Mac, and beginning in May 2013, Freddie Mac has required loans guaranteed by the United States Department of Agriculture to be sold with "life of the loan" recourse provisions as well. These recourse provisions require us to repurchase the loan upon default. The balance of loans serviced for others with life of the loan recourse provisions was $1.52 million at December 31, ~~2024~~2025. There were no loans repurchased during the years ended December 31, ~~2024,~~2025 ~~2023,~~and ~~or 2022~~2024.

We may solicit one or more financial institutions to take a portion of a commercial real estate loan to manage risk, concentrations, or to generate income through gain on sale or servicing fees. In that case, a participation agreement outlines the indirect relationship between the Bank and the participant regarding borrower access, loan servicing, loan documentation, and other matters. The participant's involvement is typically limited, and the participation interest is generally sold without recourse. We typically retain an ownership interest in the loan as well as the loan servicing rights to maintain our direct relationship with the borrower and better manage our credit risk. NoDuring ~~commercial real estate loans were sold or participated during~~ the year ended December 31, ~~2024. During~~2025, ~~the~~we ~~year~~sold ~~ended~~one ~~December~~commercial ~~31,~~business ~~2023,~~loan weand one ~~sold~~commercial ~~$14~~construction loan.6 ~~million~~We inalso ~~multi-family~~participated ~~loan~~out ~~participations~~58% of another construction loan, retaining ~~both~~ the servicing. No ~~and~~commercial areal ~~portion~~estate ofloans were sold or participated during the ~~loan~~year ended ~~balances~~December 31, 2024.

InWe ~~2021,~~partner wewith ~~expanded~~the ~~our~~Small ~~relationship~~Business ~~with~~Administration ~~the~~ ("SBA") to ~~include~~originate ~~additional~~loans ~~products~~through their 7(a) and 504 programs. ~~The~~ SBA 7(a) loans generally carry a government guarantee ranging from 75%-90% of the loan balance. The Bank's intent is to sell the guaranteed portion and hold the remaining unguaranteed portion of the note. The Bank retains the servicing on these loans. We originated SBA loans totaling $349,000 but did not participate out any of the balances during the year ended December 31, 2025. We ~~sold~~originated SBA loans totaling $34.08 million~~, $852,000~~ and sold $53.70 million of SBA participations during the ~~years~~ year ended December 31, 2024~~, 2023, and 2022, respectively~~.

Gains, losses and transfer fees on sales of one-to-four family and commercial real estate loans are recognized at the time of the sale. Our net gain on sale of residential real estate, commercial real estate, and SBA loans was $~~312~~112,000~~, $438,000,~~ and $~~824~~312,000 for the years ended December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, respectively.

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The following table shows total loans originated, purchased, sold, repaid and other changes for the periods indicated:

	Year Ended December 31,
(dollars in thousands)	2025			2024
Originations by type:
Fixed-rate:
One-to-four family	$	25,950		$	21,873
Commercial real estate		2,054			3,257
Construction and land		829			657
Home equity		6,690			6,670
Auto and other consumer		367			491
Commercial business		5,978			8,275
Total fixed-rate		41,868			41,223
Adjustable-rate:
One-to-four family		6,407			2,097
Multi-family		2,638			13,598
Commercial real estate		51,253			31,386
Construction and land		56,721			64,253
Home equity		34,641			30,964
Auto and other consumer		813			567
Commercial business		18,722			48,258
Total adjustable-rate		171,195			191,123
Total loans originated		213,063			232,346

Purchases by type:
One-to-four family		550			—
Multi-family		46			107
Commercial real estate		53			—
Commercial business		2,327			9,623
Auto		62,442			49,826
Manufactured homes		12,440			29,294
Total loans purchased		77,858			88,850
Sales and Repayments:
One-to-four family sold		24,575			22,478
Multi-family sold		—			—
Commercial business sold		6,480			—
Total loans sold		31,055			22,478
Total principal repayments, charge-offs and transfers to real estate owned and repossessed assets		329,939			267,290
Total reductions		360,994			289,768
Net loan activity	$	(70,073	)	$	31,428

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~~The~~Loan ~~following~~Origination ~~table~~and ~~shows~~Other ~~our~~Fees. Loan origination fees paid by borrowers generally are based on a percentage of the principal amount of the loan. Accounting standards require that certain fees received, net of certain origination costs, ~~sale~~be deferred and ~~repayment~~amortized ~~activities~~over ~~for~~the contractual life of the ~~periods~~loan. ~~indicated:~~Net deferred fees or costs associated with loans that are prepaid or sold are recognized as income or expense at the time of prepayment or sale. Net deferred loan fees included in net loans receivable on the balance sheet totaled $551,000 and $1.3 million at December 31, 2025 and 2024, respectively. In addition to deferred loan fees, we receive other fee income on loan commitments, late payments and miscellaneous services.

	Year Ended December 31,
	2024		2023		2022
	(In thousands)
Originations by type:
Fixed-rate:
One-to-four family	$	21,873	$	25,815	$	68,799
Multi-family		—		—		29,638
Commercial real estate		3,257		660		38,988
Construction and land		657		2,326		76,736
Home equity		6,670		7,442		8,768
Auto and other consumer		491		722		3,606
Commercial business		8,275		5,614		9,957
Total fixed-rate		41,223		42,579		236,492
Adjustable-rate:
One-to-four family		2,097		3,741		24,645
Multi-family		13,598		52,848		67,637
Commercial real estate		31,386		35,510		65,469
Construction and land		64,253		36,067		61,953
Home equity		30,964		34,598		32,956
Auto and other consumer		567		122		62
Commercial business		48,258		16,436		59,043
Total adjustable-rate		191,123		179,322		311,765
Total loans originated		232,346		221,901		548,257
Purchases by type:
One-to-four family		—		—		779
Multi-family		107		13		—
Commercial business		9,623		17,027		6,364
Auto		49,826		43,760		61,930
Manufactured homes		29,294		22,302		26,989
Total loans purchased		88,850		83,102		96,062
Sales and Repayments:
One-to-four family sold		22,478		25,456		26,088
Multi-family sold		—		14,613		—
Commercial real estate sold		—		—		750
Construction sold		—		—		3,144
Commercial business sold		—		852		11,670
Total loans sold		22,478		40,921		41,652
Total principal repayments, charge-offs and transfers to real estate owned and repossessed assets		267,290		123,664		425,448
Total reductions		289,768		164,585		467,100
Net loan activity	$	31,428	$	140,418	$	177,219

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Loan Origination and Other Fees. Loan origination fees paid by borrowers generally are based on a percentage of the principal amount of the loan. Accounting standards require that certain fees received, net of certain origination costs, be deferred and amortized over the contractual life of the loan. Net deferred fees or costs associated with loans that are prepaid or sold are recognized as income or expense at the time of prepayment or sale. Net deferred loan fees included in net loans receivable on the balance sheet totaled $1.3 million, $1.9 million, and $2.8 million at December 31, 2024, 2023, and 2022, respectively. In addition to deferred loan fees, we receive other fee income on loan commitments, late payments and miscellaneous services.

Asset Quality

Management of asset quality includes loan performance monitoring and reporting as well as utilization of both internal and independent third-party loan reviews. The primary objective of our loan review process is to measure borrower performance and assess risk for the purpose of identifying loan weakness to minimize loan loss exposure. From the time of origination through final repayment, all loans are assigned a risk rating based on pre-determined criteria. The risk rating is monitored annually for most loans and may change during the life of the loan as appropriate.

Loan reviews vary by loan type and complexity. Some loans may warrant detailed individual review, while other loans may have less risk based upon size, or be of a homogeneous nature, such as consumer loans and loans secured by residential real estate. Homogeneous loans may be reviewed based on indicators such as delinquency or credit rating. In cases of significant concern, re-evaluation of the loan and associated risks are documented by completing a loan risk assessment and action plan.

The following table shows our delinquent loans by type of loan and number of days delinquent as of December 31, ~~2024~~2025.

	Loans Delinquent For:
	60-89 Days							90 Days and Over							Total Loans Delinquent 60 Days or More
	Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category
(dollars in thousands)	Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category			Number		Amount		Percent of Loan Category
	(Dollars in thousands)
Real estate loans:
One-to-four family		13	$	~~321~~1,288		0.13	%		42	$	~~839~~523		0.21	%		5	$	1,~~160~~811		0.35	%
Commercial real estate		—		—		—			2		5,594		1.4			2		5,594		1.4
Construction and land		—		—		—			3		5,146		8.4			3		5,146		8.4
Construction and land		1		8,150		10.4			3		11,384		14.6			4		19,534		25.0
Total real estate loans		3		1,288		0.1			5		5,669		0.5			8		6,957		0.6
Total real estate loans		2		8,471		0.7			9		17,817		1.5			11		26,288		2.2
Consumer loans:
Auto and other consumer		14		437		0.2			20		700		0.3			34		1,137		0.4
Home equity		—		—		—			1		53		0.1			1		53		0.1
Commercial business loans		4		—		—			11		604		0.4			15		604		0.4
Auto and other consumer		18		528		0.2			11		1,062		0.4			29		1,590		0.6
Total delinquent loans		20	$	8,908		0.5	%		41	$	19,121		1.1	%		61	$	28,029		1.7	%
Total consumer loans		18		528		0.1			12		1,115		0.3			30		1,643		0.4
Commercial business loans		1		2,686		2.1			9		270		0.2			10		2,956		2.3
Total delinquent loans		22	$	4,502		0.3	%		26	$	7,054		0.4	%		48	$	11,556		0.7	%

Nonperforming Assets. Nonperforming assets include nonperforming loans, real estate owned, and other repossessed assets. Also presented below are totals, regardless of accrual status, for modified loans to troubled borrowers ("MLTB") ~~restructured during 2024 and 2023 and, for prior fiscal years, total troubled debt restructurings ("TDR")~~. Nonperforming assets as a percentage of total assets were 1.41%, ~~0.8%~~ and 0.1.4% at December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, respectively. At each of the dates indicated in the following table, there were no loans delinquent more than 90 days that were accruing interest.

The decrease in nonperforming loans during 2025 was primarily due to payments received followed by the sale of the $8.1 million commercial construction project placed on nonaccrual status in 2024. Other decreases from payment and charge-off activity were offset by loans that transitioned into nonaccrual status during 2025. The increase in nonperforming loans during 2024 primarily resulted from an $8.1 million commercial construction project which the Bank believes does not represent significant exposure to loss based on a recent third-party appraisal. The loan was placed on nonaccrual status and downgraded to a classified loan status, in line with applicable Bank policy. During the fourth quarter of 2023, the Bank downgraded a commercial loan relationship which totaled $9.3 million involving several commercial real estate and business loans, a $3.6 million SBA loan which has a 75% program guarantee, and a $104,000 commercial business loan.

2423

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The following table summarizes our nonperforming assets at the dates indicated:

	December 31,
(dollars in thousands)	December 31, 2025			December 31, 2024
	2024			2023			2022
Nonaccrual loans:
	(Dollars in thousands)
One-to-four family	$	2,272		$	1,477
Nonaccrual loans:
Commercial real estate		9,745			5,598
One-to-four family	$	1,477		$	1,844		$	954
Construction and land		5,146			19,544
Commercial real estate		5,598			28			53
Total real estate loans		17,163			26,619
Construction and land		19,544			14,986			15
Home equity		53			55
Total real estate loans		26,619			16,858			1,022
Auto and other consumer		1,086			700
Home equity		55			123			196
Total consumer loans		1,139			755
Auto and other consumer		700			786			575
Commercial business loans		4,293			3,141
Total consumer loans		755			909			771
Total nonaccrual loans		22,595			30,515
Commercial business loans		3,141			877			—
Real estate owned:
Total nonaccrual loans	$	30,515		$	18,644		$	1,793
Construction and land		1,380			—
MLTB (2024 and 2023) and TDR (2022) loans:
Total nonperforming assets	$	23,975		$	30,515
One-to-four family	$	—		$	—		$	1,726
MLTB loans:
Commercial real estate		6,402			—			—
Multi-family	$	4,531		$	—
Home equity		—			—			27
Commercial real estate		9,741			6,402
Commercial business		~~111~~7			~~119~~111			—
Total restructured loans	$	614,~~513~~279		$	~~119~~6,513		$	~~1,753~~
Nonaccrual and 90 days or more past due loans as a percentage of total loans		1.8	%		1.1	%		0.1	%
Nonaccrual loans as a percentage of total loans		1.4	%		1.8	%
Nonperforming MLTB or TDR loans included in total nonaccrual loans and total restructured loans above	$	111		$	119		$	29
Nonperforming MLTB loans included in total nonaccrual loans and total restructured loans above	$	9,748		$	111

For the years ended December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, gross interest income which would have been recorded had the nonaccrual loans been current in accordance with their original terms amounted to $34.03 million, ~~$710,000,~~ and $~~699~~2 million,~~000,~~ respectively. The amount that was included in interest income on a cash basis on nonaccrual loans was $~~201~~132,000, ~~$58,000,~~ and $28201,000 for the years ended December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, respectively.

Other Loans of Concern. In addition to nonperforming assets set forth in the table above, as of December 31, ~~2024~~2025, there were 4045 loans totaling $1629.79 million that continue to accrue interest but for which management has concerns about the ability of these borrowers to comply with loan repayment terms. These loans are classified as special mention or substandard.

Real Estate Owned and Repossessed Property. Real property we acquire through collection and foreclosure efforts is classified as real estate owned. These properties are recorded at the lower of cost, which is the unpaid principal balance of the related loan, or the fair market value of the property less selling costs. Real estate owned properties are generally listed with a real estate broker, included in the multiple listing service, and actively marketed. Other repossessed property, including automobiles, is also recorded at the lower of cost or fair market value less selling costs. As of December 31, ~~2024~~2025, we had $1.4 nomillion of repossessed real ~~or personal~~ property owned and no personal property.

Restructured Loans. According to ~~United~~U.S. ~~States~~ Generally Accepted Accounting Principles ("GAAP"), we are required to account for certain loan modifications or restructurings as a MLTB. In general, the modification or restructuring of a debt is considered a MLTB if we, for economic or legal reasons related to a borrower’s financial difficulties, grant a concession to the borrower under more favorable terms and conditions than we would grant to an ordinary bank customer under the normal course of business.

We engage in other general loan restructures and modifications not considered as MLTB loans, which may include lowering interest rates, extending the maturity date, deferring or re-amortizing monthly payments or other concessions, provided that such concessions are not below market rates or considered material and outside of the terms and conditions granted to other borrowers in the ordinary course of business. These general loan restructures and modifications are made on a case-by-case basis.

Adversely classified loans that are subsequently modified and placed in nonaccrual status are generally not returned to accrual status until a period of at least six months with consecutive satisfactory payment performance has occurred, and a return to accrual status is further supported by current financial information and analysis which demonstrates a particular borrower has the financial capacity to meet future debt service requirements. 24

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~~At December~~Adversely ~~31,~~classified ~~2024,~~loans wethat ~~had~~are ~~one~~subsequently ~~loan~~modified ~~with~~and anplaced ~~aggregate~~in ~~amortized~~nonaccrual ~~cost~~status ~~of $6.4~~are ~~million~~generally ~~that~~not ~~was~~returned ~~identified~~to asaccrual anstatus ~~MLTB loan restructured~~until ~~during~~a ~~the~~period ~~year~~of ~~ended~~at ~~December~~least ~~31,~~six ~~2024,~~months ~~which was performing in accordance~~ with ~~its~~consecutive ~~revised~~satisfactory payment ~~terms~~performance ~~and~~has ~~was accruing. There was no reserve included in the allowance for credit losses on loans at December 31~~occurred, ~~2024,~~and ~~for~~a ~~this~~return ~~individually~~to ~~evaluated~~accrual ~~MLTB~~status ~~loan.~~is ~~Nonaccrual~~further ~~MLTB~~supported ~~loans~~by ~~are~~current ~~classified~~financial asinformation ~~substandard~~and ~~while~~analysis ~~accruing~~which ~~MLTB~~demonstrates ~~loans~~a ~~may~~particular beborrower ~~classified~~has atthe ~~any~~financial ~~level~~capacity into ~~our~~meet ~~loan~~future ~~grading~~debt ~~system~~service ~~depending upon verified repayment sources, collateral values and repayment history~~requirements.

At December 31, 2025, we had three loans with an aggregate amortized cost of $8.0 million that were identified as MLTB loans restructured during the year ended December 31, 2025. Only one of the three modified loans was performing in accordance with its revised terms and was accruing interest at year end. No reserve was included in the allowance for credit losses on loans at December 31, 2025, for the two nonperforming, individually evaluated MLTB loans as the estimated value of the collateral fully covered the recorded loan balances. Nonaccrual MLTB loans are classified as substandard while accruing MLTB loans may be classified at any level in our loan grading system depending upon verified repayment sources, collateral values and repayment history.

Classified Assets. Federal regulations provide for the classification of lower quality loans and other assets as substandard, doubtful or loss. An asset is considered substandard when material conditions are identified which raise issues about the financial capacity, collateral or other conditions which may compromise the borrower’s ability to satisfactorily perform under the terms of the loan. Substandard assets include those characterized by the distinct possibility that we will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses present make near term collection or liquidation highly questionable and improbable. Assets classified as loss are those considered uncollectible or of no material value. Assets that do not currently expose us to sufficient risk to warrant classification as substandard or doubtful but possess identified weaknesses are classified by us as either watch or special mention assets. Our credit administration department, management, and the Board review the analysis and approve the specific loan loss allowance for these loans.

The allowance for credit losses on loans represents an estimate which has been established to recognize the inherent risk associated with lending activities. When an institution identifies a problem asset as an unavoidable and imminent loss, it is required to partially or fully charge-off such assets in the period in which they are deemed uncollectible. Our determination as to the classification of our assets and the amount of our valuation allowances is subject to review by the DFI and the FDIC, who can order specific charge-offs or the establishment of additional loan loss allowances.

We review, at least quarterly, the problem assets in our portfolio to determine whether any assets require reclassification. Based on our review, as of December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, we had classified loans of $~~42.5 million, $~~35.13 million, and $1642.95 million, respectively. We had no other classified assets at these dates. InOver ~~addition~~77% toof the classified ~~loans,~~loan webalance ~~had $11.1 million, $14.7 million and $20.7 million of special mention loans~~ at December 31, ~~2024~~2025, ~~2023,~~was comprised ~~and~~of ~~2022,~~the ~~respectively. Over~~following ~~61%~~relationships: ofa ~~the~~$12.5 ~~classified~~million ~~loan~~commercial ~~balance~~real atestate ~~December~~loan 31relationship, ~~2024,~~which isbecame ~~comprised~~classified ofin the ~~following~~fourth ~~relationships:~~quarter anof 2025; a $116.4 3 million ~~construction~~commercial real estate loan relationship, which became a classified ~~loan~~ in the ~~fourth~~third quarter of ~~2022~~2024; an a $85.1 million ~~commercial~~ construction loan relationship, which became a classified loan in the ~~second~~fourth quarter of ~~2024~~2022; and a $63.2 4 million commercial real estate loan relationship, which became classified in the ~~fourth~~second quarter of ~~2023~~2025. The Bank has exercised legal remedies, including the appointment of a third-party receiver and foreclosure actions, to liquidate the underlying collateral to satisfy the real estate loans in ~~two~~the third largest of these ~~three~~four collateral-dependent relationships. In ~~The~~addition ~~Bank~~to isthe ~~also~~classified ~~closely monitoring a group of commercial business~~ loans ~~that have similar collateral~~, ~~with~~we 15had $21.6 ~~loans totaling~~ million and $211.21 million ~~included~~of inspecial ~~classified~~mention loans at December 31, ~~2024,~~2025 and an2024, ~~additional eight loans totaling $2~~respectively.~~8 million included in the special mention risk grading category. The Bank continues to work with these borrowers to facilitate satisfactory repayment.~~

Classified loans, consisting solely of substandard loans, were as follows at the dates indicated:

	December 31,
(dollars in thousands)	December 31, 2025		December 31, 2024
	2024		2023		2022
Real estate loans:
	(In thousands)
One-to-four family	$	2,306	$	1,515
Real estate loans:
Commercial real estate		22,275		11,999
One-to-four family	$	1,515	$	2,064	$	1,486
Construction and land		5,146		19,544
Commercial real estate		11,999		9,848		1,136
Total real estate loans		29,727		33,058
Construction and land		19,544		14,987		14,001
Consumer loans:
Total real estate loans		33,058		26,899		16,623
Home equity		103		99
Consumer loans:
Auto and other consumer		1,086		700
Home equity		99		135		196
Total consumer loans		1,189		799
Auto and other consumer		700		785		94
Commercial business loans		4,389		8,686
Total consumer loans		799		920		290
Total classified loans	$	35,305	$	42,543
Commercial business loans		8,686		7,315		—
Total classified loans	$	42,543	$	35,134	$	16,913

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The following table shows at December 31, ~~2024~~2025, the geographic distribution of our classified loans in dollar amounts and percentages.

	North Olympic Peninsula (1)					Puget Sound Region (2)					Other Washington					Total in Washington State					All Other States					Total
	Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category
(dollars in thousands)	Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category			Amount		% of Total in Category
	(Dollars in thousands)
Real estate loans:
One-to-four family	$	~~674~~649		0.5	%	$	—287		—0.1	%	$	—		—	%	$	~~674~~936		0.23	%	$	~~841~~1,370		511.24	%	$	12,~~515~~306		0.46	%
Commercial real estate		45		—			1022,~~581~~270		37.68			—		—			1022,~~585~~275		25.86			~~1,414~~—		~~21.0~~—			1122,~~999~~275		35.15
Construction and land		107		0.21			195,~~534~~139		3011.1			—		—			195,~~544~~146		258.08			—		—			195,~~544~~146		258.04
Total real estate loans		~~688~~661		0.3			3027,~~115~~696		3.4			—		—			3028,~~803~~357		2.76			21,~~255~~370		56.72			3329,~~058~~727		2.86
Consumer loans:
Home equity		99103		0.2			—		—			—		—			99103		0.1			—		—			99103		0.1
Auto and other consumer		—25		—0.8			11—		~~0.1~~—			—		—			1125		0.12			~~689~~1,061		0.34			~~700~~1,086		0.34
Total consumer loans		99128		0.23			11—		—			—		—			~~110~~128		0.1			~~689~~1,061		0.34			~~799~~1,189		0.23
Commercial business loans		47250		01.20			~~863~~943		2.62			32,~~307~~686		7044.07			43,~~217~~879		65.14			~~4,469~~510		50.49			84,~~686~~389		53.74
Total classified loans	$	~~834~~1,039		0.34	%	$	3028,~~989~~639		3.32	%	$	32,~~307~~686		42.37	%	$	3532,~~130~~364		2.75	%	$	72,~~413~~941		2.0.8	%	$	4235,~~543~~305		2.52	%

(1) Includes Clallam and Jefferson counties.

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

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Allowance for Credit Losses on Loans. The allowance for credit losses on loans was $2017.50 million, or 1.2104% of total loans, at December 31, ~~2024~~2025, compared to $1720.5 million, or 1.0521%, at December 31, ~~2023~~2024. On January 1, 2023, the Company adopted ASU 2016-13 and recorded an increase to the allowance for credit losses on loans ("ACLL") of $2.2 million, an increase to the allowance for credit losses on unfunded commitments ("ACLUC") of $1.5 million, and a $3.0 million after-tax decrease to beginning retained earnings. The ACLL is a valuation account that is deducted from the amortized cost of loans receivable to present the net amount expected to be collected. Loans are charged against the allowance when management believes the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance. The Bank records the changes in the ACLL through earnings, as a provision for credit losses on the Consolidated Statements of Operations. Accrued interest receivable on loans receivable is excluded from the estimate of credit losses. Instead, interest accrued, but not received, is reversed timely in accordance with our loan policy. Our accounting policies are discussed in detail in Notes 1 and 4 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

The following table summarizes the distribution of our allowance for credit losses on loans at the dates indicated.

	December 31,
	December 31, 2025					December 31, 2024
	2024					2023					2022 (1)
(dollars in thousands)	Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans
	Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans			Amount		Percent of loans in each category to total loans
Balance at End of Period Applicable to:
	(Dollars in thousands)
One-to-four family	$	3,789		23.1	%	$	4,757		23.3	%
Balance at End of Period Applicable to:
Multi-family		2,458		17.7			2,493		19.6
One-to-four family	$	4,757		23.3	%	$	2,975		22.8	%	$	3,343		22.2	%
Commercial real estate		3,405		24.8			2,410		23.0
Multi-family		2,493		19.6			1,154		20.1			2,468		16.3
Construction and land		661		3.8			576		4.6
Commercial real estate		2,410		23.0			3,671		23.3			4,217		25.2
Home equity		1,329		5.2			1,322		4.7
Construction and land		576		4.6			1,889		7.8			2,344		12.5
Auto and other consumer		1,956		17.4			2,687		15.9
Home equity		1,322		4.7			1,077		4.2			549		3.4
Commercial business		3,389		8.0			6,204		8.9
Auto and other consumer		2,687		15.9			4,409		15.0			2,024		15.4
Total allowance	$	16,987		100.0	%	$	20,449		100.0	%
Commercial business		6,204		8.9			2,335		6.8			786		5.0
Unallocated		—		—			—		—			385		—
Total allowance	$	20,449		100.0	%	$	17,510		100.0	%	$	16,116		100.0	%
(1) Represents the allowance for loan losses by class under the incurred loss methodology.

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The following table sets forth an analysis of our allowance for credit losses on loans:

	Year Ended December 31,
	2024			2023			2022
(dollars in thousands)	2025			2024
	(Dollars in thousands)
Allowance at beginning of period	$	20,449		$	17,510
Allowance at beginning of period	$	17,510		$	16,116		$	15,124
Charge-offs:
Charge-offs:
Commercial real estate		(6,571	)		—
Construction and land		(41,~~389~~884	)		—(4,389	)		—
Home equity		—			(10	)		—
Auto and other consumer		(745	)		(2,494	)
Auto and other consumer		(2,494	)		(3,312	)		(1,025	)
Commercial business		(6,305	)		(7,296	)
Commercial business		(7,296	)		—			—
Total charge-offs		(15,505	)		(14,179	)
Total charge-offs		(14,179	)		(3,322	)		(1,025	)
Recoveries:
Recoveries:
One-to-four family		—			44
One-to-four family		44			9			114
Commercial real estate		32			2
Commercial real estate		2			—			—
Construction and land		5			—
Construction and land		—			—			2
Auto and other consumer		198			320
Home equity		—			15			30
Commercial business		4,488			36
Auto and other consumer		320			126			194
Total recoveries		4,723			402
Commercial business		36			—			142
Net (charge-offs) recoveries		(10,782	)		(13,777	)
Total recoveries		402			150			482
Provision for credit losses on loans		7,320			16,716
Net (charge-offs) recoveries		(13,777	)		(3,172	)		(543	)
Balance at end of period	$	16,987		$	20,449
Impact of Day 1 CECL adoption		—			2,209			—
Summary of key ratios regarding allowance activity and coverage
Provision for credit losses on loans		16,716			2,357			1,535
Net (charge-offs) recoveries as a percentage of average loans:
Balance at end of period	$	20,449		$	17,510		$	16,116
Total loans		(0.7	)%		(0.8	)%
Summary of key ratios regarding allowance activity and coverage
One-to-four family		—			—
Net (charge-offs) recoveries as a percentage of average loans:
Commercial real estate		(1.7	)		—
Total loans		(0.8	)%		(0.2	)%		—	%
Construction and land		(2.8	)		(4.1	)
One-to-four family		—			—			—
Auto and other consumer		(0.2	)		(1.6	)
Commercial real estate		—			—			—
Commercial business		(1.5	)		(2.6	)
Construction and land		(4.1	)		—			—
Net (charge-offs) recoveries as a percentage of average nonperforming assets		(39.6	)		(56.1	)
Home equity		—			—			0.1
Allowance as a percentage of nonperforming loans		75.2			67.0
Auto and other consumer		(1.6	)		(1.3	)		(0.4	)
Allowance as a percentage of total loans		1.04			1.21
Commercial business		(2.6	)		—			0.2
Average loans receivable, net of ACLL	$	1,629,888		$	1,686,972
Net (charge-offs) recoveries as a percentage of average nonperforming assets		(56.1	)		(31.0	)		(34.2	)
Average total loans receivable	$	1,648,305		$	1,705,878
Allowance as a percentage of nonperforming loans		67.0			93.9			900.3
Allowance as a percentage of total loans		1.21			1.05			1.05
Average loans receivable, net of ACLL	$	1,686,972		$	1,594,268		$	1,448,777
Average total loans receivable	$	1,705,878		$	1,611,352		$	1,464,448

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Investment Activities

General. Under Washington law, commercial banks are permitted, subject to certain limitations, to invest in various types of liquid assets, including U.S. Treasury obligations, securities of various federal agencies, certain certificates of deposit of insured banks and savings institutions, banker’s acceptances, repurchase agreements, federal funds, commercial paper, investment grade corporate debt, investment grade commercial and residential mortgage-related securities, and obligations of states and their political subdivisions.

Our ~~Treasurer,~~Chief ~~under~~Financial ~~the direction of the CFO,~~Officer has the responsibility for the management of our investment portfolio. Various factors are considered when making investment decisions, including the marketability, maturity, duration, and tax consequences of the proposed investment. The maturity structure of investments will be affected by various market conditions, including the current and anticipated slope of the yield curve, the level of interest rates, the trend of deposit inflows, and the anticipated demand for funds from deposit withdrawals and loan originations and purchases.

The general objective of our investment portfolio is to provide liquidity, generate earnings, and manage risk,. ~~including~~These risks include credit, reinvestment, liquidity and interest rate risks.

Securities. Total investment securities ~~increased~~decreased $4470.70 million, or 1520.16%, to $~~340~~270.3 million at December 31, ~~2024~~2025, from $~~295~~340.63 million at December 31, ~~2023~~2024, as a result of ~~purchases~~maturities and early redemptions totaling $65.8 million and $20.1 million of principal payments received. These reductions were partially offset by an ~~improvement~~increase in the portfolio market value of $10.4 million, ~~partially~~which ~~offset~~was mainly driven by ~~sales~~changes ~~and~~in ~~principal~~long-term ~~payments~~interest rates.

The issuers of mortgage-backed agency securities ("MBS") held in our portfolio, which include Fannie Mae, Freddie Mac, and Government National Mortgage Association ("Ginnie Mae"), and certain issuers of agency bonds held in our portfolio, which include FHLB and Fannie Mae, guarantee the timely principal and interest payments in the event of default. Municipal bonds consist of a mix of taxable and non-taxable revenue and general obligation bonds issued by various local and state government entities that use their revenue-generating and taxing authority as a source of repayment of their debt. Our municipal bonds are considered investment grade, and we monitor their credit quality on an ongoing basis.

Non-agency MBS securities have no guarantees in the event of default and therefore warrant continued monitoring for credit quality. Our non-agency MBS securities consist of fixed and variable rate mortgages issued by various corporations, which we believe have sufficient credit enhancements to mitigate the risk of loss on these investments, and certain corporate debt securities. Monitoring of these securities may include, but is not limited to, reviewing credit quality standards such as delinquency, subordination, and credit ratings. Our rated non-agency and corporate debt securities are considered investment grade and non-rated securities are subject to regular internal review to ensure they meet the Company's investment criteria.

As a member of the FHLB, we had an average balance of $1312.07 million in stock of the FHLB for the twelve months ended December 31, ~~2024~~2025. We received $1.2 million~~, $880,000,~~ and $~~502,000~~1.2 million in dividends from the FHLB during the years ended December 31, ~~2024,~~2025 ~~2023,~~ and ~~2022~~2024, respectively.

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The table below sets forth information regarding the composition of our securities portfolio and other investments at the dates indicated. At December 31, 2025, our securities portfolio contained securities issued by the United States Government and its agencies which had an aggregate book value in excess of 10% of our equity capital.

	December 31, 2025				December 31, 2024
(dollars in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Securities available for sale:
Municipal bonds	$	92,148	$	80,252	$	93,212	$	77,876
U.S. government agency issued asset-backed securities (ABS agency)		11,927		11,943		12,944		12,876
Corporate issued asset-backed securities (ABS corporate)		7,963		7,961		16,065		16,122
Corporate issued debt securities (Corporate debt)		39,772		38,801		58,106		54,491
U.S. Small Business Administration securities (SBA)		6,293		6,293		8,664		8,666
Mortgage-backed:
U.S. government agency issued mortgage-backed securities (MBS agency)		101,618		91,656		111,372		98,697
Non-agency issued mortgage-backed securities (MBS non-agency)		36,128		33,404		75,902		71,616
Total available for sale		295,849		270,310		376,265		340,344

FHLB stock		13,105		13,105		14,435		14,435

Total securities	$	308,954	$	283,415	$	390,700	$	354,779

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~~The~~Maturity ~~table~~of ~~below~~Securities. ~~sets~~The ~~forth~~composition ~~information~~and ~~regarding~~contractual ~~the~~maturities ~~composition~~ of our ~~securities~~investment portfolio ~~and other investments~~ at ~~the dates indicated. At~~ December 31, ~~2024~~2025, ~~our~~excluding ~~securities~~FHLB ~~portfolio~~stock, ~~contained~~are ~~securities~~indicated ~~issued~~in by the ~~United~~following ~~States Government and its agencies as well as securities issued by Capital Funding Mortgage Trust ("CFGMS") which had an aggregate book value in excess of 10% of our equity capital~~table. The ~~book~~yields ~~value~~on ~~and~~municipal ~~fair~~bonds ~~market~~have ~~value~~not ofbeen ~~CFGMS~~computed ~~securities~~on ~~were $34.9~~a ~~million~~tax ~~and~~equivalent ~~$34~~basis.~~8 million, respectively, at December 31, 2024, and are included in non-agency issued mortgage-backed securities below.~~

	December 31,
	December 31, 2025
	2024					2023					2022
	1 year or less					Over 1 year to 5 years					Over 5 to 10 years					Over 10 years					Total Securities
	Amortized Cost		Fair Value			Amortized Cost		Fair Value			Amortized Cost		Fair Value
(dollars in thousands)	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Fair Value
	(In thousands)
Securities available for sale:
Securities available for sale:
Municipal bonds	$	—		—	%	$	3,048		2.21	%	$	26,314		2.55	%	$	62,786		2.41	%	$	92,148		2.44	%	$	80,252
Municipal bonds	$	93,212	$	77,876		$	102,998	$	87,761		$	119,990	$	98,050
ABS agency		—		—			—		—			—		—			11,927		5.27			11,927		5.27			11,943
U.S. Treasury notes		—		—			—		—			2,469		2,364
ABS corporate		—		—			—		—			—		—			7,963		6.13			7,963		6.13			7,961
International agency issued bonds (Agency bonds)		—		—			—		—			1,955		1,702
Corporate debt		1,000		6.00			21,034		6.13			16,738		5.33			1,000		4.13			39,772		5.74			38,801
U.S. government agency issued asset-backed securities (ABS agency)		12,944		12,876			11,847		11,782			—		—
SBA		—		—			—		—			2,304		5.44			3,989		4.83			6,293		5.05			6,293
Corporate issued asset-backed securities (ABS corporate)		16,065		16,122			5,370		5,286			—		—
Mortgage-backed:
Corporate issued debt securities (Corporate debt)		58,106		54,491			56,515		51,454			60,700		55,499
MBS agency		—		—			3,147		3.81			7,215		3.46			91,256		4.01			101,618		3.97			91,656
U.S. Small Business Administration securities (SBA)		8,664		8,666			—		—			—		—
MBS non-agency		4,602		7.30			3,765		6.27			—		—			27,761		2.97			36,128		3.86			33,404
Mortgage-backed:
Total securities available for sale	$	5,602		7.06	%	$	30,994		5.53	%	$	52,571		3.69	%	$	206,682		3.56	%	$	295,849		3.85	%	$	270,310
U.S. government agency issued mortgage-backed securities (MBS agency)		111,372		98,697			75,665		63,247			88,930		75,648
Non-agency issued mortgage-backed securities (MBS non-agency)		75,902		71,616			81,555		76,093			101,139		93,306
Total available for sale		376,265		340,344			333,950		295,623			375,183		326,569
FHLB stock		14,435		14,435			13,664		13,664			11,681		11,681
Total securities	$	390,700	$	354,779		$	347,614	$	309,287		$	386,864	$	338,250

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~~Maturity~~At December 31, 2025, of ~~Securities~~the 167 investment securities held, there were 135 investment securities with $26.2 ~~The~~million ~~composition~~of unrealized losses and ~~contractual~~a ~~maturities~~fair value of ~~our~~approximately ~~investment~~$209.3 ~~portfolio~~million. atAt December 31, 2024, of the 191 investment securities held, there were 166 investment securities with $36.2 million of unrealized losses and ~~December~~a 31fair value of approximately $283.9 million. Management believes that the unrealized losses on our investment securities relate principally to the general changes in interest rates, ~~2023~~market liquidity and demand, ~~excluding~~and ~~FHLB~~market ~~stock~~volatility that have occurred since the initial purchase, ~~are~~and ~~indicated~~that such unrecognized losses or gains will continue to vary with general interest rate level and market fluctuations in the ~~following~~future. ~~table~~We do not believe the unrealized losses on our securities are related to a deterioration in credit quality. Certain investments in a loss position are guaranteed by government entities or government sponsored entities. The ~~yields~~Company ondoes ~~municipal~~not ~~bonds~~intend ~~have~~to sell the securities in an unrealized loss position and believes it is not ~~been~~likely ~~computed~~it onwill be required to sell these investments prior to a ~~tax~~market ~~equivalent~~price ~~basis~~recovery or maturity. Based on the Company’s evaluation of these securities, no credit impairment was recorded at December 31, 2025 and 2024.

	December 31, 2024
	1 year or less					Over 1 year to 5 years					Over 5 to 10 years					Over 10 years					Total Securities
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Fair Value
	(Dollars in thousands)
Securities available for sale:
Municipal bonds	$	—		—	%	$	103		1.73	%	$	17,961		2.57	%	$	75,148		2.42	%	$	93,212		2.44	%	$	77,876
ABS agency		—		—			—		—			—		—			12,944		6.03			12,944		6.03			12,876
ABS corporate		—		—			—		—			1,750		6.61			14,315		6.80			16,065		6.78			16,122
Corporate debt		—		—			21,456		5.76			35,650		5.00			1,000		4.13			58,106		5.27			54,491
SBA		—		—			—		—			3,174		5.34			5,490		5.85			8,664		5.66			8,666
Mortgage-backed:
MBS agency		—		—			—		—			8,080		3.85			103,292		3.67			111,372		3.68			98,697
MBS non-agency		26,690		8.54			11,564		5.69			—		—			37,648		3.77			75,902		5.74			71,616
Total securities available for sale	$	26,690		8.54	%	$	33,123		5.72	%	$	66,615		4.26	%	$	249,837		3.66	%	$	376,265		4.29	%	$	340,344

Subsequent to year end, the Company became aware that its $2.0 million investment in subordinated debt may be approaching payment default. The issuer has requested a loan modification in advance of the interest payment due on March 15, 2026. If a modification agreement is not reached, there is a strong likelihood that the issuer will not be able to meet the scheduled interest payment due no later than March 25, 2026, including the 10-day grace period, which would place the subordinated debt in default. Management is actively monitoring the situation. Management is also assessing the likelihood and timing of recovery, including possible legal actions. No adjustments have been made to the December 31, 2025, investment securities data provided above as this event occurred after the balance sheet date.

	December 31, 2023
	1 year or less					Over 1 year to 5 years					Over 5 to 10 years					Over 10 years					Total Securities
	Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Amortized Cost		Weighted Average Yield			Fair Value
	(Dollars in thousands)
Securities available for sale:
Municipal bonds	$	300		4.25	%	$	—		—	%	$	20,000		2.74	%	$	82,698		2.45	%	$	102,998		2.51	%	$	87,761
ABS agency		—		—			—		—			—		—			11,847		7.69			11,847		7.69			11,782
ABS corporate		—		—			—		—			—		—			5,370		9.15			5,370		9.15			5,286
Corporate debt		—		—			18,081		6.07			37,434		5.02			1,000		4.13			56,515		5.34			51,454
Mortgage-backed:
MBS agency		—		—			2,176		1.60			5,362		2.37			68,127		2.48			75,665		2.45			63,247
MBS non-agency		25,279		8.74			14,446		5.59			3,512		3.52			38,318		3.70			81,555		5.59			76,093
Total securities available for sale	$	25,579		8.69	%	$	34,703		5.59	%	$	66,308		4.04	%	$	207,360		3.17	%	$	333,950		4.02	%	$	295,623

Table of Contents

At December 31, 2024, of the 191 investment securities held, there were 166 investment securities with $36.2 million of unrealized losses and a fair value of approximately $283.9 million. At December 31, 2023, of the 164 investment securities held, there were 162 investment securities with $38.3 million of unrealized losses and a fair value of approximately $293.8 million. Management believes that the unrealized losses on our investment securities relate principally to the general changes in interest rates, market liquidity and demand, and market volatility that have occurred since the initial purchase, and that such unrecognized losses or gains will continue to vary with general interest rate level and market fluctuations in the future. We do not believe the unrealized losses on our securities are related to a deterioration in credit quality. Certain investments in a loss position are guaranteed by government entities or government sponsored entities. The Company does not intend to sell the securities in an unrealized loss position and believes it is not likely it will be required to sell these investments prior to a market price recovery or maturity. Based on the Company’s evaluation of these securities, no credit impairment was recorded at either December 31, 2024 or December 31, 2023.

Deposit Activities and Other Sources of Funds

General. Customer deposits, brokered deposits, borrowings and loan and investment cash flows are the major sources of our funds for lending, investment, and general business purposes. Scheduled loan and investment repayments are a relatively stable source of funds, while deposit inflows and outflows and loan prepayments are influenced significantly by general interest rates and other market conditions. Borrowings from the FHLB and subordinated debt are used to supplement the availability of funds from other sources and as a source of term funds to assist in the management of interest rate risk.

Our deposit composition consists of interest and noninterest-bearing checking, savings, money market accounts, and certificates of deposit. We rely on marketing activities, digital channels, branch facilities, mail and contact center services, relationship management, word of mouth referrals, and a broad range of deposit products and payment services to attract and retain customer deposits.

Deposits. Deposits are attracted from within our market area through the offering of a broad selection of deposit instruments, including checking accounts, money market deposit accounts, savings accounts and certificates of deposit with a variety of rates. Deposit account terms vary according to the minimum balance required, the time periods the funds must remain on deposit, and the interest rate, among other factors. In determining the terms of our deposit accounts, we consider the development of long-term profitable customer relationships, current market interest rates, current maturity structure and deposit mix, our customer preferences, and the profitability of acquiring customer deposits compared to alternative sources.

We also utilize wholesale deposits, including brokered deposits and listing service deposits, to augment customer deposit balances. At December 31, ~~2024~~2025, all of our brokered deposits were certificates. Balances at each of the periods presented reflect direct offerings issued by the Bank through contracts with third-party brokers. The Bank utilizes services provided to the Depository Trust and Clearing Corporation to disburse interest and principal payments on direct offerings. We also maintain a relationship with IntraFi that allows the Bank to participate in their certificate of deposit account registry service ("CDARS"), which pools large deposits placed with CDARS by financial institution customers and distributes the balances across the network of participants. The Bank also participates in IntraFi's Insured Cash Sweep ("ICS") program which pools and distributes transaction and savings account balances.

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Deposit Activity. The following table sets forth activity in our total deposit balance for the periods indicated.

	Year Ended December 31,
	2024			2023			2022
(dollars in thousands)	2025			2024
	(Dollars in thousands)
Beginning balance	$	1,688,026		$	1,676,892
Beginning balance	$	1,676,892		$	1,564,255		$	1,580,580
Net deposits		(125,945	)		(31,293	)
Net deposits		(31,293	)		85,618			(21,523	)
Interest credited		37,020			42,427
Interest credited		42,427			27,019			5,198
Ending balance	$	1,599,101		$	1,688,026
Ending balance	$	1,688,026		$	1,676,892		$	1,564,255
Net (decrease) increase	$	(88,925	)	$	11,134
Net increase (decrease)	$	11,134		$	112,637		$	(16,325	)
Percent (decrease) increase		(5.3	)%		0.7	%
Percent increase (decrease)		0.7	%		7.2	%		(1.0	)%

Types of Deposits. The following table sets forth the dollar amount of deposits in the various types of deposits programs we offered at the dates indicated.

	December 31, 2025					December 31, 2024
(dollars in thousands)	Amount		Percent of Total			Amount		Percent of Total
Transactions and Savings Deposits:
Noninterest-bearing transaction	$	245,760		15.4	%	$	256,416		15.2	%
Interest-bearing transaction		143,166		9.0			164,891		9.8
Money market accounts		451,143		28.2			413,822		24.5
Savings accounts		239,258		15.0			205,055		12.1
Total transaction and savings deposits		1,079,327		67.6			1,040,184		61.6

Certificates: ⁽¹⁾
0.00 – 0.99%		3,522		0.2			13,720		0.8
1.00 – 1.99%		7,139		0.4			9,607		0.6
2.00 – 2.99%		61,694		3.9			6,950		0.4
3.00 – 3.99%		326,946		20.4			108,921		6.5
4.00 – 4.99%		120,473		7.5			403,891		23.9
5.00 – 5.99%		—		—			104,753		6.2
Total certificates		519,774		32.4			647,842		38.4

Total deposits	$	1,599,101		100.0	%	$	1,688,026		100.0	%

(1) Brokered certificates of deposit included in certificates	$	86,510				$	182,914

Table of Contents

~~Types~~Deposit ~~of Deposits~~Maturities. The following table sets forth the ~~dollar~~rate ~~amount~~and ofmaturity ~~deposits~~information ~~in the various types~~ of ~~deposits~~our ~~programs~~time wedeposit ~~offered~~certificates at ~~the~~December ~~dates~~31, ~~indicated~~2025.

	December 31,
	Rate
	2024						2023						2022
(dollars in thousands)	0.00 - 0.99%			1.00 - 1.99%			2.00 - 2.99%			3.00 - 3.99%			4.00 - 4.99%			Total			Percent of Total
	Amount			Percent of Total			Amount			Percent of Total			Amount			Percent of Total
Certificate accounts maturing in quarter ending:
	(Dollars in thousands)
March 31, 2026	$	1,172		$	78		$	20,703		$	53,764		$	47,801		$	123,518			23.8	%
Transactions and Savings Deposits:
June 30, 2026		344			336			13,211			33,882			50,911			98,684			19.0
Noninterest-bearing transaction	$	256,416			15.2	%	$	252,083			15.0	%	$	315,083			20.1	%
September 30, 2026		665			288			12,721			85,419			8,807			107,900			20.8
Interest-bearing transaction		164,891			9.8			169,418			10.1			193,558			12.4
December 31, 2026		108			2,484			7,614			107,949			2,562			120,717			23.2
Money market accounts		413,822			24.5			362,205			21.7			473,009			30.3
March 31, 2027		588			81			3,906			26,375			2,492			33,442			6.4
Savings accounts		205,055			12.1			242,148			14.4			200,920			12.8
June 30, 2027		40			541			894			519			2,297			4,291			0.8
Total transaction and savings deposits		1,040,184			61.6			1,025,854			61.2			1,182,570			75.6
September 30, 2027		—			245			421			14,802			—			15,468			3.0
Certificates: (1)
December 31, 2027		—			144			253			387			5,603			6,387			1.2
0.00 – 0.99%		13,720			0.8			29,097			1.7			113,662			7.3
March 31, 2028		605			627			605			197			—			2,034			0.4
1.00 – 1.99%		9,607			0.6			25,396			1.5			44,200			2.8
June 30, 2028		—			509			53			825			—			1,387			0.3
2.00 – 2.99%		6,950			0.4			10,937			0.7			86,191			5.5
September 30, 2028		—			795			55			85			—			935			0.2
3.00 – 3.99%		108,921			6.5			100,577			6.0			99,009			6.3
December 31, 2028		—			312			85			730			—			1,127			0.2
4.00 – 4.99%		403,891			23.9			275,807			16.4			38,623			2.5
Thereafter		—			699			1,173			2,012			—			3,884			0.7
5.00 – 5.99%		104,753			6.2			209,224			12.5			—			—
Total certificates	$	3,522		$	7,139		$	61,694		$	326,946		$	120,473		$	519,774			100.0	%
Total certificates		647,842			38.4			651,038			38.8			381,685			24.4
Percent of total		0.7	%		1.4	%		11.9	%		62.8	%		23.2	%		100.0	%
Total deposits	$	1,688,026			100.0	%	$	1,676,892			100.0	%	$	1,564,255			100.0	%
(1) Brokered certificates of deposit included in certificates	$	182,914					$	207,626					$	133,861

Deposit ~~Flow~~Balances in Excess of the FDIC Insured Limit. The ~~following~~FDIC ~~table~~insures ~~sets~~up ~~forth~~to $250,000 per depositor for each account ownership category for which the ~~balances~~depositor ofqualifies. ~~deposits~~Depositors may qualify for coverage over the limit if they have funds in multiple ownership categories and all FDIC requirements are met. The uninsured amounts are estimates based on the ~~various~~methodologies ~~types~~and ofassumptions ~~deposit~~used ~~programs~~for ~~offered~~the byBank’s ~~First~~regulatory ~~Fed~~reporting requirements. The Company has an estimated $371.3 million and $390.5 million, or 23.2% and 23.1%, of total deposit balances were uninsured at ~~the~~December ~~dates~~31, ~~indicated~~2025 and 2024, respectively.

	December 31,
	2024								2023								2022
	Amount		Percent of Total			Increase/ (Decrease)			Amount		Percent of Total			Increase/ (Decrease)			Amount		Percent of Total			Increase/ (Decrease)
	(Dollars in thousands)
Savings accounts	$	205,055		12.1	%	$	(37,093	)	$	242,148		14.4	%	$	41,228		$	200,920		12.8	%	$	6,300
Transaction accounts		421,307		25.0			(194	)		421,501		25.1			(87,140	)		508,641		32.5			(32,261	)
Money market accounts		413,822		24.5			51,617			362,205		21.7			(110,804	)		473,009		30.3			(124,806	)
Fixed-rate certificates which mature in the year ending:
Within 1 year		527,486		31.3			31,881			495,605		29.5			233,416			262,189		16.8			108,717
After 1 year but within 3 years		96,145		5.7			(12,273	)		108,418		6.5			1,419			106,999		6.8			34,409
After 3 years but within 5 years		24,211		1.4			(22,804	)		47,015		2.8			34,518			12,497		0.8			(8,684	)
Total	$	1,688,026		100.0	%	$	11,134		$	1,676,892		100.0	%	$	112,637		$	1,564,255		100.0	%	$	(16,325	)

The following table sets forth the portion of our certificate accounts that were in excess of the FDIC insurance limit by time remaining until maturity as of December 31, 2025.

(dollars in thousands)
3 months or less	$	28,255
Over 3 through 6 months		13,594
Over 6 through 12 months		38,931
Over 12 months		14,641
Total	$	95,421

The Federal Reserve may require First Fed to maintain reserves on transaction accounts or non-personal time deposits. These reserves may be in the form of cash or noninterest-bearing deposits with the Federal Reserve Bank of San Francisco. Negotiable order of withdrawal accounts and other types of accounts that permit payments or transfers to third parties fall within the definition of transaction accounts and are subject to the reserve requirements, as are any non-personal time deposits at a commercial bank. As of December 31, 2025, our deposit with the Federal Reserve Bank of San Francisco and vault cash exceeded our reserve requirements.

Table of Contents

~~Deposit~~Borrowings. ~~Maturities~~We use advances from the FHLB, including short-term overnight, short-term advances with initial maturities of less than one year, and longer-term advances maturing in one year or more, to meet ongoing liquidity needs and to mitigate interest rate risk. ~~The~~As ~~following~~a ~~table~~member ~~sets~~of ~~forth~~the FHLB, we are authorized to apply for advances based on the value of certain pledged real estate loans. Advances are made under various terms pursuant to several different credit programs, each with its own interest rate and ~~maturity~~range ~~information~~of maturities. Depending on the program, limitations on the amount of ~~our~~advances ~~time~~are ~~deposit~~based ~~certificates~~on the financial condition of the member institution and the adequacy of collateral pledged to secure the credit. We maintain a committed credit facility with the FHLB, and at December 31, ~~2024~~2025, had pledged loan collateral to support a borrowing capacity of $525.1 million. In addition, the Bank had outstanding letters of credit from the FHLB to secure public deposits and the Bellevue, Washington branch lease liability. At December 31, 2025, outstanding advances from the FHLB totaled $260.0 million and the combined balance for the two letters of credit was $60.8 million, leaving a remaining borrowing capacity of $204.4 million.

	0.00 - 0.99%			1.00 - 1.99%			2.00 - 2.99%			3.00 - 3.99%			4.00 - 4.99%			5.00 - 5.99%			Total			Percent of Total
	(Dollars in thousands)
Certificate accounts maturing in quarter ending:
March 31, 2025	$	1,344		$	1,579		$	2,742		$	35,486		$	169,828		$	19,753		$	230,732			35.6	%
June 30, 2025		703			371			1,740			20,438			97,090			32,500			152,842			23.6
September 30, 2025		5,352			243			—			13,741			85,896			—			105,232			16.2
December 31, 2025		3,385			347			916			23,621			10,411			—			38,680			6.0
March 31, 2026		1,067			99			9			1,969			7,000			—			10,144			1.6
June 30, 2026		245			337			5			2,961			20,007			—			23,555			3.6
September 30, 2026		673			314			—			632			5,000			—			6,619			1.0
December 31, 2026		55			2,546			828			4,418			1,102			17,500			26,449			4.1
March 31, 2027		807			81			—			598			—			—			1,486			0.2
June 30, 2027		89			546			270			361			2,196			—			3,462			0.5
September 30, 2027		—			462			—			629			—			—			1,091			0.2
December 31, 2027		—			166			239			73			5,361			17,500			23,339			3.6
Thereafter		—			2,516			201			3,994			—			17,500			24,211			3.8
Total	$	13,720		$	9,607		$	6,950		$	108,921		$	403,891		$	104,753		$	647,842			100.0	%
Percent of total		2.1	%		1.5	%		1.1	%		16.8	%		62.3	%		16.2	%		100.0	%

First Fed maintains an established borrowing arrangement to use the Federal Reserve Board of San Francisco's ("FRB") discount window. At December 31, 2025, we had pledged securities with a carrying value of $18.0 million as collateral to support a borrowing capacity of $17.3 million. A borrowing test was performed in June 2025.

~~Deposit~~On ~~Balances~~March in25, ~~Excess~~2021, the Company completed a private placement of ~~the~~$40.0 ~~FDIC~~million ~~Insured~~of ~~Limit~~3.75% ~~The~~fixed-to-floating ~~FDIC~~rate ~~insures~~subordinated upnotes due 2031 (the "Notes") to ~~$250,000~~ ~~per~~certain ~~depositor~~qualified ~~for~~institutional ~~each~~buyers ~~account~~and ~~ownership~~institutional ~~category~~accredited ~~for~~investors. ~~which~~The net proceeds to the ~~depositor~~Company ~~qualifies~~from the sale of the Notes were approximately $39.3 ~~Depositors~~million ~~may~~after ~~qualify~~deducting ~~for~~placement ~~coverage~~agent ~~over~~fees ~~the~~and ~~limit~~other ifoffering ~~they~~expenses. The Notes have ~~funds~~been instructured ~~multiple~~to ~~ownership~~qualify ~~categories~~as ~~and~~Tier ~~all~~2 ~~FDIC~~capital ~~requirements~~for ~~are~~the ~~met~~Company for regulatory capital purposes. The Company ~~estimated that~~used ~~$390.5~~the ~~million and~~net ~~$363.7~~proceeds ~~million,~~of orthe 23offering for general corporate purposes.1% ~~and~~Beginning 21in April 2026, the interest rate will reset quarterly to the three-month SOFR plus 300-basis points.7% In March 2025, ofthe ~~total~~Company ~~deposit~~redeemed ~~balances~~$5.0 ~~were~~million ~~uninsured~~of the Notes at ~~December~~a 31discount, ~~2024~~resulting in a reduction to the outstanding balance and ~~2023~~a $905,000 ~~respectively~~gain on extinguishment of debt recorded in noninterest income.

On May 20, 2022, First Northwest began a borrowing arrangement with NexBank for a revolving line of credit. The ~~following~~agreement ~~table~~was ~~indicates~~modified in 2025 and the ~~amount~~new ofterms ~~our~~allow ~~certificates~~a maximum extension of ~~deposit~~credit of $15.0 million. Borrowings under the arrangement with NexBank are secured by ~~time~~a ~~remaining~~blanket ~~until~~lien ~~maturity~~on asFirst Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The line of credit matures on November 16, 2026. At December 31, ~~2024~~2025, the outstanding advance totaled $13.5 million, leaving a remaining borrowing capacity of $1.5 million.

	Maturity
	3 Months or Less		Over 3 to 6 Months		Over 6 to 12 Months		Over 12 Months		Total
	(In thousands)
Certificates of deposit less than $250,000	$	166,069	$	107,586	$	101,440	$	98,335	$	473,430
Certificates of deposit of $250,000 or more		64,663		45,256		42,472		22,021		174,412
Total certificates	$	230,732	$	152,842	$	143,912	$	120,356	$	647,842

In October 2023, Pacific Coast Bankers Bank ("PCBB") extended a $50.0 million unsecured Fed Funds Borrowing Facility to the Bank. The Bank must maintain a minimum demand deposit account average balance of $250,000 with PCBB. Availability of funds are not guaranteed and facility usage is generally limited to ten consecutive days. Available borrowing capacity was $50.0 million at December 31, 2025. A borrowing test was performed in June 2025. This credit facility is authorized for use through December 2027.

The ~~Federal~~following ~~Reserve~~tables ~~may~~set ~~require First~~forth ~~Fed to~~information ~~maintain~~regarding ~~reserves~~our onborrowings ~~transaction~~at ~~accounts or non-personal time deposits. These reserves may be in~~ the ~~form~~end of ~~cash~~and orduring ~~noninterest-bearing deposits with~~ the ~~Federal~~periods ~~Reserve Bank of San Francisco~~indicated. ~~Negotiable~~The ~~order~~tables ofinclude ~~withdrawal~~both ~~accounts~~long- and ~~other types of accounts that permit payments or transfers to third parties fall within the definition of transaction accounts and are subject to the reserve requirements, as are any non~~short-~~personal~~term ~~time deposits at a commercial bank~~borrowings. ~~As of December 31, 2024, our deposit with the Federal Reserve Bank of San Francisco and vault cash exceeded our reserve requirements.~~

	Year Ended December 31,
(dollars in thousands)	2025			2024
Maximum balance:
FHLB long-term advances	$	170,000		$	170,000
FHLB overnight borrowings		130,000			270,000
Line of credit		15,000			10,000
Subordinated debt, net		39,527			39,514

Average balances:
FHLB long-term advances	$	167,083		$	136,250
FHLB overnight borrowings		87,500			137,750
Line of credit		11,192			6,635
Subordinated debt, net		35,542			39,475

Weighted average interest rate:
FHLB long-term advances		3.86	%		3.35	%
FHLB overnight borrowings		4.18			5.38
Line of credit		8.07			9.41
Subordinated debt, net		3.99			4.00

Table of Contents

Borrowings. We use advances from the FHLB, including short-term overnight, short-term advances with initial maturities of less than one year, and longer-term advances maturing in one year or more, to meet ongoing liquidity needs and to mitigate interest rate risk. As a member of the FHLB, we are required to own capital stock in the FHLB and are authorized to apply for advances on the security of that stock and certain pledged assets including mortgage loans and investment securities. Advances are made under various terms pursuant to several different credit programs, each with its own interest rate and range of maturities. Depending on the program, limitations on the amount of advances are based on the financial condition of the member institution and the adequacy of collateral pledged to secure the credit. We maintain a committed credit facility with the FHLB, and at December 31, 2024, had pledged loan and security collateral to support a borrowing capacity of $558.0 million. In addition, the Bank had outstanding letters of credit from the FHLB to secure public deposits and the Bellevue, Washington branch lease liability. At December 31, 2024, outstanding advances from the FHLB totaled $290.0 million and the combined balance for the two letters of credit was $60.8 million, leaving a remaining borrowing capacity of $207.3 million.

	Year Ended December 31,
(dollars in thousands)	2025			2024
Balance outstanding at end of period:
FHLB long-term advances	$	160,000		$	160,000
FHLB overnight borrowings		100,000			130,000
Line of credit		13,500			6,500
Subordinated debt, net		34,643			39,514
Total borrowings	$	308,143		$	336,014

Weighted average interest rate at end of period:
FHLB long-term advances		4.03	%		3.63	%
FHLB overnight borrowings		4.00			4.64
Line of credit		7.25			8.00
Subordinated debt, net		4.10			3.99
Total borrowings		4.17			4.15

~~First~~Subsidiary ~~Fed maintains~~and anOther established borrowing arrangement to use the Federal Reserve Board of San Francisco's ("FRB") discount window. At December 31, 2024, we had pledged securities with a carrying value of $18.6 million as collateral to support a borrowing capacity of $17.9 million. No funds have been borrowed on this arrangement to date.Activities

OnIn ~~March~~December 252019, ~~2021,~~ the Company ~~completed~~invested ain ~~private~~Canapi ~~placement~~Ventures ofas ~~$40.0~~a ~~million~~limited ofpartner ~~3.75% fixed-~~to~~-floating~~ ~~rate~~strategically ~~subordinated~~invest ~~notes~~in ~~due~~fintech-related ~~2031~~businesses. ~~(the~~The ~~“Notes”)~~Company tois ~~certain~~dedicated ~~qualified~~to ~~institutional~~the ~~buyers~~discovery of, and ~~institutional~~investment ~~accredited~~in, ~~investors.~~those ~~The~~fintech-related ~~net~~companies ~~proceeds~~that towe ~~the~~expect ~~Company~~may ~~from~~also ~~the~~contribute ~~sale~~to of the ~~Notes~~evolution ~~were~~of ~~approximately~~digital ~~$39.3~~solutions ~~million~~applicable ~~after~~to ~~deducting~~the ~~placement~~banking ~~agent~~industry. ~~fees~~This ~~and~~commitment ~~other~~to ~~offering~~Canapi ~~expenses.~~Ventures ~~The~~will ~~Notes~~be ~~have~~for ~~been~~up ~~structured~~ to ~~qualify~~ten asyears, ~~Tier~~with 2cash ~~capital~~commitments ~~for~~totaling ~~the~~up ~~Company for regulatory capital purposes~~to $3.0 ~~The~~million ~~Company~~to ~~used~~be ~~the~~paid ~~net~~into ~~proceeds of~~ the ~~offering~~partnership ~~for~~through ~~general~~March ~~corporate purposes~~2026. ~~Beginning~~As inof ~~April~~December ~~2026~~31, ~~the~~2025, $2.5 ~~interest~~million ~~rate~~had ~~will~~been ~~reset~~contributed ~~quarterly~~ to ~~the~~this ~~three-month~~partnership. ~~SOFR~~The ~~plus~~recorded ~~300-basis~~investment ~~points~~was $2.6 million at December 31, 2025.

OnIn ~~May~~February 202021, ~~2022,~~ First ~~Northwest~~Fed ~~began~~invested ain ~~borrowing~~Makers ~~arrangement~~Square ~~with~~Master ~~NexBank~~Tenant, ~~for~~LLC as a ~~$20.0~~ ~~million~~limited ~~revolving~~partner in ~~line~~order to ofparticipate ~~credit.~~in ~~Borrowings~~an ~~under~~historic ~~the~~tax ~~arrangement~~credit ~~with~~transaction. ~~NexBank~~This entity meets ~~are~~the ~~secured~~criteria byfor areporting ~~blanket~~under ~~lien~~the onequity ~~First~~method ~~Northwest's~~of ~~personal~~accounting. ~~property~~The ~~assets~~tax ~~(with~~credit ~~certain~~generated ~~exclusions),~~by ~~including all~~ the ~~outstanding~~$2.2 ~~shares~~million ofinitial ~~First~~investment was ~~Fed,~~utilized ~~cash,~~on ~~loans~~the ~~receivable,~~Company's ~~and~~2021 ~~limited~~federal ~~partnership~~income ~~investments~~tax return. The ~~line~~Bank ofplans ~~credit~~to ~~matures~~exercise ~~on May 17, 2025. At December 31, 2024,~~ the ~~outstanding~~put ~~advance totaled~~option ~~$6.5~~when ~~million,~~it ~~leaving~~becomes aavailable ~~remaining~~in ~~borrowing capacity of $13~~2026.~~5 million.~~

In September 2021, the Company invested in BankTech Ventures, LP ("BankTech") as a limited partner to strategically invest in fintech-related businesses. The commitment ~~following~~to ~~tables~~BankTech ~~set~~will ~~forth~~be ~~information~~for ~~regarding~~up ~~our~~to ~~borrowings~~ten atyears, ~~the~~with ~~end~~cash ofinstallments ~~and~~totaling ~~during~~up to $1.0 million to be paid into the ~~periods~~partnership ~~indicated~~through October 2026. As of December 31, 2025, $740,000 had been contributed to this partnership. The ~~tables~~recorded ~~include~~investment ~~both~~was ~~long-~~$708,000 at ~~and~~December ~~short-term~~31, ~~borrowings~~2025.

	Year Ended December 31,
	2024			2023			2022
	(Dollars in thousands)
Maximum balance:
FHLB long-term advances	$	170,000		$	85,000		$	80,000
FHLB short-term advances		—			95,000			42,500
FHLB overnight borrowings		270,000			195,000			206,000
Line of credit		10,000			11,000			12,000
Subordinated debt, net		39,514			39,436			39,358
Average balances:
FHLB long-term advances	$	136,250		$	81,667		$	80,000
FHLB short-term advances		—			25,000			15,208
FHLB overnight borrowings		137,750			149,500			90,983
Line of credit		6,635			9,327			5,770
Subordinated debt, net		39,475			39,395			39,312
Weighted average interest rate:
FHLB long-term advances		3.35	%		2.00	%		1.52	%
FHLB short-term advances		—			5.08			1.82
FHLB overnight borrowings		5.38			5.26			2.83
Line of credit		9.41			9.15			6.76
Subordinated debt, net		4.00			4.01			4.01

In December 2021, the Company invested in JAM FINTOP Frontier Fund, LP as a limited partner to strategically invest in fintech-related businesses. This commitment will be for up to ten years, with cash installments totaling up to $1.0 million to be paid into the partnership through April 2027. As of December 31, 2025, $555,000 had been contributed to this partnership. The recorded investment was $515,000 at December 31, 2025.

In February 2022, the Bank invested in a Small Business Investment Company through Canapi Ventures (SBIC Fund II). This commitment will be for up to ten years with two possible one-year extensions, with cash installments totaling up to $2.0 million to be paid into the company over the commitment period, beginning in 2022. As of December 31, 2025, $925,000 has been contributed to this fund. The recorded investment was $777,000 at December 31, 2025.

In April 2022, First Northwest invested $3.0 million in Meriwether Group Capital Hero Fund LP, a private commercial lender focused on lower-middle market businesses, primarily in the Pacific Northwest. A second $3.0 million investment was made in May 2022, bringing the Company's total investment in the Hero Fund to $6.0 million. In June 2024, First Northwest redeemed its investment in the Hero Fund and First Fed made a subsequent $6.0 million limited partnership investment in the same entity. The recorded investment was $6.0 million at December 31, 2025. Subsequent to year end, the Bank signed a redemption agreement which sets forth the path to unwind its investment in the Hero Fund through capital distributions beginning in April 2026.

Table of Contents

	Year Ended December 31,
	2024			2023			2022
	(Dollars in thousands)
Balance outstanding at end of period:
FHLB long-term advances	$	160,000		$	80,000		$	80,000
FHLB short-term advances		—			—			10,000
FHLB overnight borrowings		130,000			195,000			144,000
Line of credit		6,500			6,500			12,000
Subordinated debt, net		39,514			39,436			39,358
Total borrowings	$	336,014		$	320,936		$	285,358
Weighted average interest rate at end of period:
FHLB long-term advances		3.63	%		2.09	%		1.52	%
FHLB short-term advances		—			—			2.12
FHLB overnight borrowings		4.64			5.52			4.30
Line of credit		8.00			9.00			8.00
Subordinated debt, net		3.99			4.00			4.01
Total borrowings		4.15			4.55			3.56

Also in April 2022, First Northwest made an initial investment for a 5% interest in Meriwether Group Capital, LLC, which provides financial advice for borrowers and capital for the Hero Fund. In October 2022, the Company completed an additional purchase and holds a 25% equity interest in MWGC valued at $150,000 at December 31, 2025. The recorded investment in MWGC was $150,000 at December 31, 2025. Subsequent to year end, the Company redeemed its interest in MWGC at par.

~~Subsidiary~~In June 2022, First Northwest made an initial investment for a 5% interest in The Meriwether Group, LLC, a boutique investment bank focusing on providing entrepreneurs with resources to help them succeed, including equity and ~~Other~~debt ~~Activities~~raising services along with strategic positioning of business throughout the U.S. In September 2022, the Company completed an additional purchase and holds a 33% interest in MWG valued at $2.8 million at December 31, 2025. First Northwest issued 115,777 shares of stock with a value of $1.9 million to the existing partners in MWG as consideration in the acquisition transaction. MWG also holds a 20% interest in MWGC. The recorded investment in MWG was $3.0 million at December 31, 2025.

In December 2019, the Company invested in Canapi Ventures Fund, LP ("Canapi Ventures") as a limited partner to strategically invest in fintech-related businesses. The Company is dedicated to the discovery of, and investment in, those fintech-related companies that we expect may also contribute to the evolution of digital solutions applicable to the banking industry. This commitment to Canapi Ventures will be for up to ten years, with cash installments totaling up to $3.0 million to be paid into the partnership over a period not to exceed the first five years, beginning in 2020. As of December 31, 2024, $2.5 million had been contributed to this partnership. The recorded investment was $2.6 million at December 31, 2024.

In February 2021, First Fed invested in Makers Square Master Tenant, LLC as a limited partner in order to participate in an historic tax credit transaction. This entity meets the criteria for reporting under the equity method of accounting.

In April 2021, First Northwest extended $8.0 million to Quin Ventures, Inc. ("Quin Ventures") under a capital financing agreement and related promissory note. In December 2022, Quin Ventures sold substantially all of its assets to Quil Ventures, Inc. ("QUIL"). As part of the sale transaction, the Company received a 5% ownership stake in Quil valued at $225,000 and recorded a $1.5 million commitment receivable. In June 2023, First Northwest determined that Quin Ventures was no longer a going concern. The Company wrote off the remaining investment in Quin Ventures through retained earnings in accordance with applicable non-controlling interest accounting methods. The balance of the noncontrolling interest in Quin Ventures balance was moved to retained earnings, with no change to total shareholders' equity as a result of the transaction. In December 2023, the Company determined that QUIL was no longer a going concern and wrote off the related investment and commitment receivable.

In September 2021, the Company invested in BankTech Ventures, LP ("BankTech") as a limited partner to strategically invest in fintech-related businesses. The commitment to BankTech will be for up to ten years, with cash installments totaling up to $1.0 million to be paid into the partnership over a period not to exceed the first five years, beginning in 2021. As of December 31, 2024, $620,000 had been contributed to this partnership. The recorded investment was $617,000 at December 31, 2024.

In December 2021, the Company invested in JAM FINTOP Blockchain, LP as a limited partner to strategically invest in fintech-related businesses. This commitment will be for up to ten years, with cash installments totaling up to $1.0 million to be paid into the partnership over a period not to exceed the first five years, beginning in 2022. As of December 31, 2024, $330,000 had been contributed to this partnership. The recorded investment was $221,000 at December 31, 2024.

In February 2022, the Bank invested in a Small Business Investment Company through Canapi Ventures. This commitment will be for up to ten years with two possible one-year extensions, with cash installments totaling up to $2.0 million to be paid into the company over the commitment period, beginning in 2022. As of December 31, 2024 , $410,000 has been contributed to this fund. The recorded investment was $305,000 at December 31, 2024.

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Also in April 2022, First Northwest made an initial investment for a 5% interest in Meriwether Group Capital, LLC, which provides financial advice for borrowers and capital for the Hero Fund. In October 2022, the Company completed an additional purchase and holds a 25% equity interest in MWGC valued at $150,000 at December 31, 2024. The recorded investment in MWGC was $165,000 at December 31, 2024.

In June 2022, First Northwest made an initial investment for a 5% interest in The Meriwether Group, LLC, a boutique investment bank focusing on providing entrepreneurs with resources to help them succeed, including equity and debt raising services along with strategic positioning of business throughout the United States. In September 2022, the Company completed an additional purchase and holds a 33% interest in MWG valued at $2.8 million at December 31, 2024. First Northwest issued 115,777 shares of stock with a value of $1.9 million to the existing partners in MWG as consideration in the acquisition transaction. MWG also holds a 20% interest in MWGC. The recorded investment in MWG was $2.8 million at December 31, 2024.

Competition

We face competition in originating loans from other banks, credit unions, life insurance companies, mortgage bankers, public and private capital markets, and digital lenders. In general, the primary factors in competing for loans are interest rates and rate adjustment provisions, loan maturities, loan fees, and the quality of service. We offer competitive terms and conditions and compete by delivering high-quality, personal service to our customers. Competition for loans is also strong due to the number and variety of institutions competing in our market areas. For instance, competition for loans is particularly intense in the larger markets in the Puget Sound area, such as Seattle, Washington.

Competition for deposits is primarily from other banks, credit unions, mutual funds, and other alternative investment vehicles such as securities firms, insurance companies, etc., which may be offered locally or via the internet. We expect continued competition from such financial institutions and investment vehicles in the foreseeable future, including competition from digital banking competitors, challenger banks, and "Fintech" companies that rely on technology to provide financial services. We compete for these deposits by offering excellent service and a variety of deposit accounts at competitive rates and through our branch network. We also compete for deposits by offering a variety of financial services, including online and mobile banking capabilities. Based on the most recent branch data provided by the FDIC, as of June 30, ~~2024~~2025, First Fed’s share of bank, savings bank and savings and loan association deposits in Clallam and Jefferson counties was 4241.02% and 2122.25%, respectively, and was less than 4% in Whatcom, Kitsap and King counties.

Human Capital Resources

At December 31, ~~2024~~2025, we had ~~227~~242 full-time equivalent ~~employees~~team members. At that date, the average tenure of all our full-time ~~employees~~team members was approximately 5.6 years while the average tenure of our executive officers was approximately 52.59 years. ~~None~~Our ofteam ~~our~~members ~~employees~~ are not represented by any collective bargaining ~~agreements~~group. ~~We believe our employee relations to be excellent.~~

Our Board guides the implementation of our corporate mission, vision, and values as an important element of risk oversight ~~because our people are integral to the success of our corporate strategy~~. Our Board holds senior management accountable for embodying, maintaining, and communicating our culture to ~~employees~~team members. In that regard, our corporate mission, vision, and values are designed to promote commitment to making the lives of all those around us better and to uphold that principle in everything we do. That commitment has been a pillar in our approach to our ~~employees~~team members and the communities we have proudly served for over 100 years. Our culture is designed to adhere to the timeless values of optimism, respect, initiative, growth, and ownership. In keeping with that culture, we strive to be a force for good in everyday life and expect our ~~employees~~team members to treat each other and our customers with the highest level of care and respect, going out of their way to do the right thing.

We dedicate resources to promote a safe and inclusive workplace; attract, develop, and retain a diverse group of talented ~~employees~~team members; promote a culture of integrity, caring, and excellence; and reward and recognize ~~employees~~team members for both the results they deliver and, just as importantly, how they deliver them. We also seek to design fulfilling careers, with competitive compensation and benefits combined with a positive work-life balance. We dedicate resources to fostering professional and personal growth with continuing education, on-the-job training, and development programs.

38 Our team members are the cornerstone of our success as an organization. We are committed to attracting, retaining, and promoting highly qualified individuals from a wide array of backgrounds. We believe employing a talented and inclusive workforce enhances our ability to serve our customers and our communities. In 2025, we formed the First Fed Next Committee to act as a governing body for our cultural initiatives and to promote team member engagement.

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~~Our employees are the cornerstone of our success as an organization as they serve our customer base.~~ We are committed to attracting, retaining, and promoting highly qualified individuals from a wide array of backgrounds. We believe employing a talented and inclusive workforce enhances our ability to serve our customers and our communities. In late 2024, the Bank embarked on an endeavor to further evolve our culture to meet the needs of our changing workforce. We seek to better understand the financial needs of our prospective and current customers by promoting and fostering a workforce that reflects the communities we serve, along with providing relevant financial service products. As we move forward, we will continue to grow ~~our inclusion efforts~~ in a manner consistent with our company vision: to create well-being and prosperity for our ~~employees~~team members, customers, and communities.

Information About Our Executive Officers

The following is a description of the principal occupation and employment of the executive officers of the Company and the Bank as of December 31, ~~2024:~~2025. As previously disclosed in a Current Report on Form 8‑K filed on January 8, 2026, Geri Bullard resigned from her position as Chief Operating Officer, effective February 4, 2026. Accordingly, she is not included in the executive officer information presented below.

~~Matthew~~Curt ~~P. Deines~~Queyrouze, age 5164, ~~became~~is President and Chief Executive Officer ("CEO") ~~and~~of ~~Director~~the ofCompany and First Fed, ona ~~August~~position 1,he ~~2019,~~has ~~and~~held ~~was~~since ~~elected~~September ~~President,~~2025. ~~CEO,~~Mr. ~~and~~Queyrouze ~~director~~is ofa ~~the~~seasoned ~~Company~~community onbank ~~December~~leader 5,with ~~2019.~~more ~~With over~~than ~~20 years~~40 years of ~~banking,~~financial heservices ~~has~~ experience ~~in a variety of areas~~, including ~~strategic~~expertise ~~planning~~in ~~and~~strategic ~~acquisitions~~planning, ~~investor relations~~credit, ~~financial~~risk ~~reporting~~management, and ~~fintech,~~financial astechnology. ~~well~~Before asjoining ~~operations,~~First ~~information technology~~Northwest, ~~payments, internal controls and board governance.~~ Mr. ~~Deines~~Queyrouze served as ~~Executive~~President, ~~Vice~~Community ~~President~~Bank and ~~Chief~~Corporate ~~Financial~~Credit at ~~Officer~~Coastal ~~("CFO")~~Community ofBank ~~Liberty~~in ~~Bay~~Everett, ~~Bank~~Washington. from ~~November 2018 until~~ May ~~2019.~~2022 ~~Prior~~ to ~~that~~September 2025 Previously, he ~~began~~was ~~work~~President atand ~~Sound~~Chief ~~Community~~Executive ~~Bank~~Officer at asTAB ~~its CFO~~ Bank in ~~February~~Ogden, ~~2002~~Utah ~~and~~from ~~was~~January ~~promoted~~2014 to ~~Executive~~May ~~Vice~~2022. ~~President~~His incareer ~~January~~includes ~~2005.~~leadership Inroles ~~2008,~~at ~~Mr.~~a ~~Deines~~variety ~~also~~of ~~became~~institutions ~~Executive~~including ~~Vice President~~PNC, ~~CFO~~Hancock Whitney, ~~and~~National ~~Corporate~~Bank ~~Secretary~~ of ~~Sound~~Canada, ~~Financial~~and ~~Bancorp,~~community ~~Inc~~banks. ~~("SFBC").~~ He ~~held~~also ~~these~~served ~~roles~~as atChief ~~Sound~~Operating ~~Community~~Officer ~~Bank~~of ~~and~~a ~~SFBC~~fintech ~~until~~company. ~~March 2018~~Mr. InQueyrouze ~~2000,~~currently heserves ~~received~~on ~~his~~the ~~Washington~~board ~~Certified~~of ~~Public~~the ~~Accountant~~Cocoon ~~certificate~~House, ~~currently~~supporting ~~inactive~~youth homelessness intervention, ~~while~~and ~~working~~the ~~for~~University Oof Washington'~~Rourke,~~s ~~Sacher~~Global &Banking ~~Moulton,~~Program ~~LLP.~~at Mrthe Foster School of Business. ~~Deines~~He ~~serves~~has asalso aserved ~~Director~~on ~~for~~the board of directors of the ~~Washington~~Utah Bankers Association, ~~("WBA") and~~The ~~has~~Youth ~~been~~Impact aCenter ~~conference speaker~~ and ~~instructor~~the ~~for~~Utah ~~the~~AIDS ~~WBA. He~~Foundation and is ~~actively~~active ~~involved~~in ~~with~~many ~~several~~banking ~~non-profit~~and fintech industry organizations,. ~~including~~Mr. ~~the~~Queyrouze ~~Field~~holds ~~Hall~~a ~~Arts~~degree ~~and~~in ~~Events~~Accounting ~~Center~~from Louisiana State University.

~~Geri~~David ~~Bullard~~B. Edelstein, age 5956, is Executive Vice President, ~~Chief Financial Officer ("CFO")~~ and Chief ~~Operating~~Innovation Officer ("~~COO~~CIO"), ofa ~~the~~position ~~Company~~he ~~and First Fed. She~~ has held ~~the CFO position~~ since March ~~2020 and the COO position since October 2023~~ 2024. ~~Ms. Bullard joined First Fed~~ asPrior ~~Senior~~to ~~Vice~~becoming ~~President~~CIO, ~~and~~from ~~Treasurer~~November in2018 ~~January 2020. Prior~~ to ~~joining~~March ~~First Fed~~2024, Ms Mr. ~~Bullard~~Edelstein ~~served~~was asthe ~~Controller~~CEO atof ~~Salal~~Level ~~Credit Union~~Technology, ~~located~~a infinancial ~~Seattle,~~technology ~~from~~company ~~August~~which ~~2018~~provided financial services designed to ~~January~~empower ~~2020;~~very ~~CFO~~small ofbusinesses ~~First~~to ~~Sound~~thrive. This ~~Bank,~~built ~~also~~on inhis ~~Seattle,~~career ~~from~~at ~~February~~the ~~2017~~intersection toof ~~August~~financial ~~2018;~~services and ~~Controller~~technology, atas ~~Sound~~the ~~Community~~Director ~~Bank~~of ~~from~~the ~~October~~Grameen ~~2015~~Technology toCenter, ~~February~~a ~~2017.~~product ~~Ms.~~leader ~~Bullard~~at ~~also~~Microsoft ~~served~~and asan aengagement ~~bank~~manager ~~examiner~~at ~~for~~McKinsey ~~the~~& ~~State~~Company. ~~of Idaho~~Mr. ~~Ms.~~ ~~Bullard~~Edelstein holds a ~~Bachelor~~master’s ~~of Science~~ degree ~~from~~in ~~Humboldt~~Economics ~~State~~and ~~University,~~Public isPolicy afrom ~~graduate~~Princeton ~~of the Pacific Coast Banking School at the~~ University ofand ~~Washington,~~a ~~and~~bachelor’s isdegree afrom ~~licensed~~Colby ~~CPA~~College.

~~David~~Kyle BD. ~~Edelstein~~Henderson, age 5541, is Executive Vice President and Chief ~~Innovation~~Credit Officer ("~~CIO~~CCO") of First Fed, a position he has held since ~~March~~ July 2024. He joined First Fed in August 2023 as the Deputy Chief Credit Officer. Prior to ~~becoming~~joining ~~CIO~~First Fed, Mr. ~~Edelstein~~Henderson served ~~was~~as ~~the~~Executive ~~CEO~~Vice ofPresident ~~Level~~for ~~Technology~~FirstBank where he held positions in credit administration, acommercial ~~financial~~and ~~technology~~consumer ~~company~~lending, ~~which~~and ~~provided~~retail ~~financial~~banking. He ~~services~~served ~~designed~~in tothis ~~empower~~capacity ~~very~~from ~~small~~December ~~businesses~~2007 to ~~thrive~~July 2023. He holds a bachelor's degree ~~This~~from ~~built~~the onUniversity ~~his~~of ~~career~~Oregon and is a graduate of the American Bankers Association’s Stonier School of Banking at the ~~intersection~~University of ~~financial~~Pennsylvania. ~~services~~Mr. ~~and~~Henderson ~~technology,~~currently asserves on the ~~Director~~board of ~~the~~directors ~~Grameen~~for ~~Technology~~Peninsula ~~Center,~~Behavioral aHealth ~~product~~and ~~leader~~the atClallam ~~Microsoft~~County Economic Development Council, and anis ~~engagement~~active ~~manager~~with atthe ~~McKinsey~~Washington &Bankers ~~Company~~Association. He ~~Mr.~~has ~~Edelstein~~previously ~~holds~~served avarious ~~Master’s~~roles ~~degree~~with ingovernmental, ~~Economics~~ private and ~~Public~~non-profit ~~Policy~~agencies ~~from~~that ~~Princeton~~focus ~~University~~on ~~and~~economic adevelopment, ~~Bachelor’s~~workforce ~~degree~~development, ~~from~~education, ~~Colby~~conservation ~~College~~and at-risk youth services.

~~Kyle~~Allison DR. ~~Henderson~~Mahaney, age 4044, is Executive Vice President and Chief ~~Credit~~Legal Officer ("~~CCO~~CLO") of First Fed and First Northwest, a position heshe has held since ~~July~~October ~~2024~~2025. ~~Prior~~ toShe ~~becoming~~has ~~CCO,~~also he served as ~~Deputy~~the ~~Chief~~Company’s ~~Credit~~Corporate ~~Officer~~Secretary ~~beginning~~since inJune ~~August 2023~~2020. Prior to ~~joining~~becoming ~~First Fed~~CLO, MrMs. ~~Henderson~~ Mahaney served as ~~Executive~~General ~~Vice~~Counsel ~~President~~from ~~for~~January ~~FirstBank~~2022 ~~where~~to heOctober ~~held~~2025 ~~positions~~and inas ~~credit~~Assistant ~~administration,~~General ~~commercial~~Counsel ~~and~~from ~~consumer~~January ~~lending,~~2020 ~~and~~to ~~retail~~June ~~banking~~2022. He ~~served~~Before injoining ~~this~~First ~~capacity~~Fed, ~~from~~Ms. ~~December~~Mahaney ~~2007~~operated a private law practice where she provided legal counsel to ~~July~~municipalities, ~~2023~~nonprofits, businesses, and individuals across a range of matters. HeShe holds a ~~Bachelor's~~Juris Doctor degree from the ~~University~~Northwestern School of ~~Oregon~~Law ~~and is a graduate~~ of ~~the~~Lewis ~~American~~& ~~Bankers~~Clark ~~Association’s~~College ~~Stonier~~and ~~School~~a Master of ~~Banking~~Business atAdministration from the University of ~~Pennsylvania~~Washington.

~~Christopher~~Phyllis WR. ~~Neros~~Nomura, age 5556, is Executive Vice President and Chief Financial ~~Banking~~ Officer ("~~CBO~~CFO") of the Company and First Fed, a position heshe has held since ~~June~~March ~~2023~~2025. ~~Prior~~She tojoined ~~becoming~~First ~~CBO,~~Fed hein ~~served~~November 2024 as ~~Chief~~the ~~Lending~~Senior ~~Officer~~Director ~~beginning~~of inAccounting ~~April~~and ~~2022~~Finance. ~~Mr.~~Prior ~~Neros~~to ~~has~~joining ~~over~~First ~~29 years~~Fed, she served as CFO of ~~banking~~the ~~experience~~YWCA ~~with~~Seattle ~~experience~~King Snohomish, located in ~~lending~~Seattle, ~~commercial~~from ~~banking~~May 2023 to November 2024, and ~~retail~~CFO ~~banking.~~of ~~Prior~~Kosmos toManagement, ~~joining~~in ~~First Fed~~Seattle, hefrom ~~served~~August as2016 ato ~~lender,~~November ~~commercial~~2022. ~~banking~~Ms. ~~leader~~Nomura ~~and~~held ~~Executive~~other CFO positions prior to Kosmos Management at ~~Peoples~~four ~~Bank~~financial institutions from May ~~2006~~2005 to ~~April~~January ~~2022;~~2016. ~~and~~She asbegan aher ~~lender~~career in public accounting and ~~branch~~served ~~manager~~as atan ~~First~~Auditor ~~National~~and ~~Bank~~Senior ~~Alaska~~Audit Manager at Deloitte from ~~August~~January ~~1995~~1994 to ~~March~~September ~~2006~~2001. HeMs. ~~holds~~Nomura currently is a ~~Bachelor~~board ofmember ~~Business~~and ~~Administration~~Treasurer inof ~~Marketing~~Learning ~~from~~Communities ~~the~~Foundation, ~~University~~which ofhelps ~~Alaska~~ensure ~~Anchorage,~~educational asuccess ~~Master~~for ofchildren ~~Business~~in ~~Administration~~the ~~from~~Puget ~~Regis~~Sound ~~University,~~Region. Ms. ~~and~~Nomura isholds a ~~graduate~~Bachelor of ~~the~~Business ~~Pacific~~Administration ~~Coast~~degree ~~Banking~~from ~~School~~Grand atValley ~~the~~State University ofand ~~Washington~~is a licensed CPA.

Christopher J. Riffle, age 49, is Executive Vice President and Chief Strategy Officer ("CSO") of First Fed, an Officer of First Northwest, and General Counsel for the Company. Mr. Riffle has held the CSO position since March 2024 and has served as General Counsel since September 2017. He also served as Chief Digital Officer from January 2022 through March 2024 and COO from October 2018 through October 2023. Prior to joining First Fed, Mr. Riffle was a partner at the Platt Irwin Law Firm in Port Angeles, Washington, where he managed a civil legal practice representing clients in a variety of contexts. Mr. Riffle was at Platt Irwin Law Firm from 2008 to 2017 and served as outside general counsel for First Fed starting in 2009. 38

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~~How~~Available ~~We Are Regulated~~Information

~~First~~The ~~Northwest~~Company ~~Bancorp~~provides ~~and~~an ~~First~~Investor ~~Fed are~~Relations ~~subject~~link on its website (www.ourfirstfed.com) to ~~federal,~~the ~~state,~~Securities and ~~local~~Exchange ~~laws~~Commission’s ~~that~~("SEC") ~~may~~website ~~change~~(www.sec.gov) ~~from~~for ~~time~~purposes toof ~~time.~~providing ~~This~~copies ~~section~~of ~~provides~~its aAnnual ~~general~~Report ~~overview~~on ofForm ~~the~~10-K, ~~federal~~Quarterly ~~and~~Reports ~~state~~on ~~regulatory~~Form ~~framework~~10-Q, ~~applicable~~Current toReports ~~First~~on ~~Northwest~~Form ~~Bancorp~~8-K and ~~First~~proxy ~~Fed~~statements and amendments thereto. ~~The~~Other ~~descriptions~~than ofan ~~laws~~investor’s ~~and~~own ~~regulations~~internet ~~included~~access ~~herein~~charges, dothese ~~not~~filings ~~purport~~are toavailable befree ~~complete~~of ~~and~~charge. ~~are~~The ~~qualified~~information contained on the Company's website as referenced in ~~their~~this ~~entirety~~Form by10-K ~~reference~~should tonot ~~the~~be ~~actual~~considered ~~laws~~as ~~and~~part ~~regulations~~of this report.

~~These~~Regulation ~~statutes~~ and regulations, as well as related policies, continue to be subject to change by Congress, state legislatures, and federal and state regulators. Changes in statutes, regulations, or regulatory policies applicable to First Northwest Bancorp and First Fed (including their interpretation or implementation) cannot be predicted and could have a material effect on First Northwest Bancorp’s and First Fed’s business and operations. Numerous changes to the statutes, regulations, and regulatory policies applicable to First Northwest Bancorp and First Fed have been made or proposed in recent years. Any such legislation or regulatory changes in the future by the FDIC, DFI, Federal Reserve or the CFPB could adversely affect our operations and financial condition.Supervision

~~Regulation~~First Northwest and First Fed are subject to federal, state, and local laws that may change from time to time. This section provides a general overview of the federal and state regulatory framework applicable to First Northwest and First Fed. ~~Bank~~The descriptions of laws and regulations included herein do not purport to be complete and are qualified in their entirety by reference to the actual laws and regulations.

~~General.~~These ~~First~~statutes ~~Fed~~and regulations, as awell ~~state-chartered~~as ~~commercial~~related ~~bank~~policies, iscontinue ~~subject~~ to ~~applicable~~be ~~provisions of Washington law and to regulations and examinations of the DFI. It also is~~ subject to ~~examination~~change ~~and regulation~~ by ~~the FDIC~~Congress, ~~which~~state ~~insures~~legislatures, ~~the~~and ~~deposits~~federal ofand ~~First~~state ~~Fed to the maximum extent permitted by law~~regulators. ~~During~~Changes ~~these~~in ~~state~~statutes, regulations, or ~~federal~~ regulatory ~~examinations,~~policies ~~the~~applicable ~~examiners~~to ~~may,~~First ~~among~~Northwest ~~other~~and ~~things, require~~ First Fed to(including ~~provide~~their ~~for~~interpretation ~~higher general~~ or ~~specific~~implementation) ~~loan~~cannot ~~loss~~be ~~reserves,~~predicted ~~which~~and ~~can~~could ~~impact~~have ~~our~~a ~~capital~~material ~~and~~effect ~~earnings.~~on ~~This~~First ~~regulation~~Northwest’s ofand First Fed is’s ~~intended~~business ~~for the protection of depositors~~ and ~~the~~operations. ~~deposit~~Numerous ~~insurance~~changes ~~fund~~to ~~("DIF") of~~ the ~~FDIC~~statutes, regulations, and ~~not~~regulatory ~~for~~policies ~~the~~applicable ~~purpose~~to ofFirst ~~protecting~~Northwest ~~the~~and ~~shareholder(s) of~~ First Fed orhave ~~First~~been ~~Northwest~~made ~~Bancorp.~~or ~~First~~proposed ~~Fed is~~in ~~required~~recent toyears. ~~maintain~~Any ~~minimum~~such ~~levels~~legislation ofor regulatory ~~capital~~changes ~~and~~in isthe ~~subject~~future toby ~~some limitations on~~ the ~~payment~~FDIC, ofDFI, ~~dividends~~Federal toReserve ~~First~~or ~~Northwest~~the ~~Bancorp.~~CFPB ~~See~~could "–adversely ~~Capital~~affect ~~Requirements"~~our operations and "–financial ~~Dividends~~condition."

Regulation of First Fed

General. First Fed, as a state-chartered commercial bank, is subject to applicable provisions of Washington law and to regulations and examinations of the DFI. It also is subject to examination and regulation by the FDIC, which insures the deposits of First Fed to the maximum extent permitted by law. During these state or federal regulatory examinations, the examiners may, among other things, require First Fed to provide for higher general or specific loan loss reserves, which can impact our capital and earnings. This regulation of First Fed is intended for the protection of depositors and the deposit insurance fund ("DIF") of the FDIC and not for the purpose of protecting the shareholder(s) of First Fed or First Northwest. First Fed is required to maintain minimum levels of regulatory capital and is subject to some limitations on the payment of dividends to First Northwest. See "– Capital Requirements" and "– Dividends."

Federal and State Enforcement Authority and Actions. As part of its supervisory authority over Washington-chartered commercial banks, the DFI may initiate enforcement proceedings to obtain a cease-and-desist order against an institution believed to have engaged in unsafe and unsound practices or to have violated a law, regulation, or other regulatory limit, including a written agreement. The FDIC also has the authority to initiate enforcement actions against insured institutions for similar reasons and may terminate the deposit insurance of such an institution if, among other things, the FDIC determines that the institution has engaged in unsafe or unsound practices or is in an unsafe or unsound condition. Both agencies may utilize less formal supervisory tools to address their concerns about the condition, operations, or compliance status of a commercial bank.

Regulation by the Washington Department of Financial Institutions. State laws and regulations govern First Fed's ability to take deposits and pay interest, to make loans on or invest in residential and other real estate, to make consumer loans, to invest in securities, to offer various banking services to its customers, and to establish branch offices. As a state-chartered commercial bank, First Fed must pay semi-annual assessments, examination costs and certain other charges to the DFI. Washington law generally provides the same powers for Washington commercial banks as federally and other-state chartered banks and savings institutions with branches in Washington, subject to the approval of the DFI.

Insider Credit Transactions. Banks are subject to certain restrictions on extensions of credit to executive officers, directors, principal shareholders, and their related interests. These extensions of credit (1) must be made on substantially the same terms (including interest rates and collateral) and follow credit underwriting procedures that are at least as stringent as those prevailing at the time for comparable transactions with persons not related to the lending bank; and (2) must not involve more than the normal risk of repayment or present other unfavorable features. Banks are also subject to certain lending limits and restrictions on overdrafts to insiders. A violation of these restrictions may result in the assessment of substantial civil monetary penalties, regulatory enforcement actions, and other regulatory sanctions. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") and federal regulations place additional restrictions on loans to insiders and generally prohibit loans to senior officers other than for certain specified purposes.

Insurance of Accounts and Regulation by the FDIC. The DIF of the FDIC insures deposit accounts in First Fed up to $250,000 per separately insured depositor. As insurer, the FDIC imposes deposit insurance premiums and is authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions. Our deposit insurance premiums for the year ended December 31, 2024, were $1.9 million. No institution may pay a dividend to its parent holding company if it is in default on its federal deposit insurance assessment. 39

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Insurance of Accounts and Regulation by the FDIC. The DIF of the FDIC insures deposit accounts in First Fed up to $250,000 per separately insured depositor for each account ownership category for which the depositor qualifies. As insurer, the FDIC imposes deposit insurance premiums. The FDIC is also authorized to conduct examinations of, and to require reporting by, FDIC-insured institutions for which it is the primary federal regulator, and in certain other circumstances. Our deposit insurance premiums for the year ended December 31, 2025, were $1.7 million. No institution may pay a dividend to its parent holding company if it is in default on its federal deposit insurance assessment.

The FDIC determines the amount of insurance premiums based on each financial institution's deposit base and the applicable assessment rate. The assessment rate for small institutions, which are generally those with less than $10 billion in assets, is based on an institution’s weighted average CAMELS component ratings and certain financial ratios. Assessment rates currently range from 2.5 to 32 basis points for small institutions.

The FDIC has authority to increase assessment rates and most inrecently ~~October~~exercised ~~2022~~that ~~adopted~~authority afor ~~Final Rule, applicable to all insured depository institutions, increasing assessment rate schedules uniformly by two basis points beginning with~~ the first quarterly assessment period of 2023. Increases to insurance assessments have an adverse effect on the operating expenses and results of operations of First Fed. The FDIC communicated that the new assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds two percent. Progressively lower assessment rates can be expected when the reserve ratio reaches two percent. Management cannot predict what assessment rates will be in the future.

Insurance of deposits may be terminated by the FDIC upon a finding that an institution has engaged in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC. The FDIC may also prohibit any insured institution from engaging in any activity determined by regulation or order to pose a serious risk to the DIF. We do not currently know of any practice, condition, or violation that may lead to termination of our deposit insurance.

Prompt Corrective Action. Federal statutes establish a supervisory framework, designed to place restrictions on an insured depository institution if its capital levels begin to show signs of weakness, based on five capital categories: "well capitalized," "adequately capitalized," "undercapitalized," "significantly undercapitalized" and "critically undercapitalized." An institution’s category depends upon where its capital levels are in relation to relevant capital measures, which include risk-based capital measures, Tier 1 and common equity Tier 1 capital measures, a leverage ratio capital measure, and certain other factors. The federal banking agencies have adopted regulations that implement this statutory framework.

Under these regulations, an institution is treated as well capitalized if it has a ratio of total capital to risk-weighted assets of 10.0% or more (the total risk-based capital ratio); a ratio of Tier 1 capital to risk-weighted assets (the Tier 1 risk-based capital ratio) of 8.0% or more; a ratio of Tier 1 common equity capital to risk-weighted assets (the common equity Tier 1 capital ratio) of 6.5% or more; a ratio of Tier 1 capital to average consolidated assets (the leverage ratio) of 5.0% or more; and the institution is not subject to a federal order, agreement, or directive to meet a specific capital level. The classifications for "undercapitalized," "significantly undercapitalized" and "critically undercapitalized" institutions are also set forth in the regulations. An institution that is not well capitalized is subject to certain restrictions on brokered deposits and restrictions on the rates it can offer on its deposits generally. Any institution which is neither well capitalized nor adequately capitalized is considered undercapitalized. Further, an institution may be downgraded to a category lower than indicated by its capital ratios if it is determined to be in an unsafe or unsound condition, or if the institution receives an unsatisfactory examination rating.

Undercapitalized institutions are subject to certain prompt corrective action requirements, regulatory controls, and restrictions which become more extensive as an institution becomes more severely undercapitalized. At December 31, ~~2024~~2025, First Fed was categorized as "well capitalized." For additional information, see Note 12 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of this Form 10-K.

Capital Requirements. Federal regulations require insured depository institutions and bank holding companies (including financial holding companies) to meet several minimum capital standards. The minimum capital level requirements applicable to First Northwest ~~Bancorp~~ and First Fed are: (i) a common equity Tier 1 ("CET1") capital to risk-based assets ratio of 4.5%; (ii) a Tier 1 capital to risk-based assets ratio of 6%; (iii) a total capital to risk-based assets ratio of 8%; and (iv) a leverage ratio of Tier 1 capital to total assets of 4%.

In addition to the minimum capital ratios, the capital regulations require a banking organization to maintain a capital conservation buffer, designed to absorb losses during periods of economic stress, consisting of additional CET1 capital of more than 2.5% of risk-weighted assets above the required minimum risk-based capital ratios in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses.

As of December 31, 2024, First Northwest Bancorp and First Fed each met the minimum capital ratio requirements and exceeded the capital conservation buffer requirement. For additional information regarding First Northwest Bancorp’s and First Fed’s required and actual capital levels at December 31, 2024, see Note 12 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of this Form 10-K. 40

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~~Federal~~As ~~Home~~of ~~Loan~~December ~~Bank~~31, ~~System.~~2025, First ~~Fed~~Northwest isand aFirst ~~member~~Fed each ofmet the ~~FHLB~~minimum ofcapital ~~Des~~ratio ~~Moines.~~requirements ~~All~~and ~~advances~~exceeded ~~from~~ the ~~FHLB~~capital ~~are~~conservation ~~required~~buffer torequirement. beFor ~~fully~~additional ~~secured~~information byregarding ~~sufficient~~First ~~collateral~~Northwest’s ~~as determined by the FHLB,~~ and ~~all~~First ~~long-term~~Fed’s ~~advances are~~ required toand ~~provide~~actual ~~funds~~capital ~~for~~levels ~~residential~~at ~~home financing. At~~ December 31, ~~2024~~2025, ~~First~~see ~~Fed had $290.0~~Note ~~million~~12 of ~~outstanding~~the ~~advances~~Notes ~~from~~to ~~the~~Consolidated ~~FHLB~~Financial ofStatements ~~Des~~included ~~Moines.~~in ~~See~~ Item 18, "~~Business~~Financial –Statements ~~Deposit Activities~~ and ~~Other~~Supplementary ~~Sources~~Data," of ~~Funds~~this –Form ~~Borrowings~~10-K."

Federal Home Loan Bank System. First Fed is a member of the FHLB of Des Moines. All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB, and all long-term advances are required to provide funds for residential home financing. At December 31, 2025, First Fed had $260.0 million of outstanding advances from the FHLB of Des Moines. See Item 1, "Business – Deposit Activities and Other Sources of Funds – Borrowings."

Activities and Investments of Insured State-Chartered Financial Institutions. Federal law generally limits the activities and equity investments of FDIC insured, state-chartered banks to those that are permissible for national banks.

Dividends. Dividends from First Fed, which are subject to regulation and limitation, constitute a major source of funds for dividends paid by First Northwest ~~Bancorp~~ to shareholders. As a general rule, regulatory authorities may prohibit banks and financial holding companies from paying dividends in a manner that would constitute an unsafe or unsound banking practice. For example, regulators have stated that paying dividends that deplete an institution's capital base to an inadequate level would be an unsafe and unsound banking practice and that an institution should generally pay dividends only out of current operating earnings. In addition, a bank may not pay cash dividends if that payment could reduce the amount of its capital below the minimum applicable regulatory capital requirements. According to Washington law, First Fed may not declare or pay a cash dividend on its capital stock if it would cause its net worth to be reduced below (1) the amount required for liquidation accounts or (2) the net worth requirements, if any, imposed by the Director of the DFI. Additionally, dividends on First Fed’s capital stock may not be paid in an aggregate amount greater than the aggregate retained earnings of First Fed without the approval of the Director of the DFI.

Affiliate Transactions. Federal laws strictly limit the ability of banks to engage in certain transactions with their affiliates, including their financial holding companies. Transactions deemed to be a "covered transaction" under Section 23A of the Federal Reserve Act and between a bank and its parent company or the nonbank subsidiaries of the bank holding company are limited to 10% of the bank’s capital and surplus to a single affiliate and, with respect to all affiliates, to an aggregate of 20% of the bank’s capital and surplus. Further, covered transactions that are loans and extensions of credit generally are required to be secured by eligible collateral in specified amounts. Federal law also requires that most transactions between a bank and its affiliates be on terms at least as favorable to the bank as transactions with non-affiliates.

Community Reinvestment Act. First Fed is subject to the provisions of the Community Reinvestment Act of 1977 (the "CRA"). Under the CRA, federal bank regulators assess a bank’s performance under the CRA in meeting the credit needs of the communities serviced by the bank, including low-and moderate -income neighborhoods. The regulatory agency’s assessment of a bank’s record is made available to the public. Further, a bank’s CRA performance rating must be considered in connection with a bank’s application, among other things, to establish a new branch office that will accept deposits; to relocate an existing office; or to merge or consolidate with, or acquire the assets or assume the liabilities of, a federally regulated financial institution. In some cases, a bank's failure to perform satisfactorily under the CRA, or CRA-related protests filed by interested parties during applicable comment periods, can result in the denial or delay of such transactions. First Fed received a "satisfactory" rating during its most recent CRA examination. In October 2023, federal bank regulators released a final rule to revise their CRA regulations, which could impact the Bank’s rating if and when it becomes effective. However, industry groups have challenged the final rule, and in March 2024, the District Court for the Northern District of Texas issued a preliminary injunction against enforcement of the final rule.

On October 24, 2023, the federal banking agencies issued a final rule revising their framework for evaluating banks’ records of community reinvestment under the CRA. On July 16, 2025, these bank regulatory agencies issued a proposal to rescind the October 2023 final rule and reinstate the CRA framework that existed prior to the October 2023 final rule, which has remained in effect. The Bank’s most recent performance evaluation was conducted using the CRA framework that existed prior to the October 2023 final rule.

Commercial Real Estate Ratios. The federal banking regulators have issued guidance regarding concentrations in commercial real estate lending, including acquisition, development and construction lending. The purpose of the guidance is to guide banks in developing risk management practices and capital levels commensurate with the level and nature of real estate concentrations. The guidance provides that the strength of an institution’s lending and risk management practices with respect to such concentrations will be considered in evaluating capital adequacy and provides supervisory criteria that identifies institutions that are potentially exposed to significant commercial real estate concentration risk, but does not specifically limit a bank’s commercial real estate lending to a specified concentration level.

Privacy Standards. The Gramm-Leach-Bliley Financial Services Modernization Act of 1999 ("GLBA") modernized the financial services industry by, among other things, establishing a comprehensive framework to permit affiliations among commercial banks, insurance companies, securities firms and other financial service providers. First Fed is subject to FDIC regulations implementing the privacy protection provisions of the GLBA. These regulations require First Fed to disclose its privacy policy, including informing consumers of its information sharing practices and informing consumers of their rights to opt out of certain practices. 41

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~~Federal~~Privacy ~~Reserve System~~Standards. The ~~Federal Reserve Board has historically required that all depository institutions maintain reserves on transaction accounts or non~~Gramm-~~personal~~Leach-Bliley ~~time~~Financial ~~deposits.~~Services ~~These~~Modernization ~~reserves~~Act ~~may be in the form~~ of ~~cash~~1999 or("GLBA") ~~noninterest-bearing~~modernized ~~deposits with~~ the ~~regional~~financial ~~Federal~~services ~~Reserve~~industry ~~Bank.~~by, ~~Negotiable~~among ~~order of withdrawal (NOW) accounts and~~ other ~~types~~things, establishing ofa ~~accounts~~comprehensive ~~that~~framework to permit ~~payments~~affiliations oramong ~~transfers~~commercial tobanks, ~~third~~insurance ~~parties~~companies, ~~fall~~securities ~~within~~firms ~~the~~and ~~definition~~other offinancial ~~transaction~~service ~~accounts~~providers. ~~and~~First ~~are~~Fed is subject to ~~the~~FDIC ~~reserve~~regulations ~~requirements,~~implementing asthe ~~are~~privacy ~~any~~protection ~~non-personal~~provisions ~~time~~of ~~deposits~~the atGLBA. aThese ~~commercial~~regulations ~~bank. In~~require ~~response~~First Fed to ~~the~~disclose ~~COVID-19~~its ~~pandemic~~privacy policy, ~~the~~including ~~Federal~~informing ~~Reserve~~consumers ~~reduced the~~of ~~reserve~~its ~~requirement~~information ~~ratios~~sharing topractices ~~zero~~and ~~percent~~informing ~~effective~~consumers onof ~~March~~their ~~26,~~rights ~~2020,~~ to ~~support~~opt ~~lending~~out toof ~~households~~certain ~~and businesses~~practices.

Federal Reserve System. The Federal Reserve Board has historically required that all depository institutions maintain reserves on transaction accounts, primarily checking accounts. These reserves may be in the form of cash or noninterest-bearing deposits with the regional Federal Reserve Bank. The Federal Reserve reduced the reserve requirement ratios to zero percent effective on March 26, 2020, effectively eliminating the requirements. The Federal Reserve took that action due to a change in its approach to monetary policy; it has indicated that it has no plans to reimpose reserve requirements but could in the future if conditions warrant.

Anti-Money Laundering and Anti-Terrorism. The Bank Secrecy Act ("BSA") requires all financial institutions to establish a risk-based system of internal controls reasonably designed to prevent money laundering and the financing of terrorism. The BSA also sets forth various recordkeeping and reporting requirements (such as reporting suspicious activities that might signal criminal activity) and certain due diligence and "know your customer" documentation requirements.

The Anti-Money Laundering Act of 2020 (“"AMLA”"), which amends the BSA, was enacted in January 2021. The AMLA is intended to be a comprehensive reform and modernization to U.S. bank secrecy and anti-money laundering laws. Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the U.S. Department of the Treasury to promulgate priorities for anti-money laundering and countering the financing of terrorism policy; requires the development of standards for testing technology and internal processes for BSA compliance; expands enforcement- and investigation-related authority, including increasing available sanctions for certain BSA violations; and expands BSA whistleblower incentives and protections. Many of the statutory provisions in the AMLA will require additional rulemakings, reports and other measures, and the impact of the AMLA will depend on, among other things, rulemaking and implementation guidance. In June 2021, the Financial Crimes Enforcement Network, a bureau of the U.S. Department of the Treasury, issued the priorities for anti-money laundering and countering the financing of terrorism policy required under the AMLA. The priorities include corruption, cybercrime, terrorist financing, fraud, transnational crime, drug trafficking, human trafficking and proliferation financing.

The Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("Patriot Act"), intended to combat terrorism, was renewed with certain amendments in 2006. In relevant part, the Patriot Act (1) prohibits banks from providing correspondent accounts directly to foreign shell banks; (2) imposes due diligence requirements on banks opening or holding accounts for foreign financial institutions or wealthy foreign individuals; (3) requires financial institutions to establish an anti-money laundering compliance program; and (4) eliminates civil liability for persons who file suspicious activity reports. The Patriot Act also includes provisions providing the government with power to investigate terrorism, including expanded government access to bank account records.

Regulators are directed to consider a bank holding company’s and a bank’s effectiveness in combating money laundering when reviewing and ruling on applications under the Bank Holding Company Act of 1956, as amended ("BHCA") and the Bank Merger Act. First Northwest ~~Bancorp~~ and First Fed have established comprehensive compliance programs designed to comply with the requirements of the BSA and Patriot Act.

Consumer Protection Laws and Regulations. The Dodd-Frank Act, among other things, established the CFPB as an independent bureau of the Federal Reserve Board. The CFPB assumed responsibility for the implementation of the federal financial consumer protection and fair lending laws and regulations and has authority to impose new requirements. First Fed is subject to consumer protection regulations issued by the CFPB, but as a smaller financial institution, it is generally subject to supervision and enforcement by the FDIC ~~and the DFI~~ with respect to our compliance with federal consumer financial protection laws and CFPB regulations. First Fed is also subject to supervision and enforcement by the DFI with respect to applicable state consumer protection laws and regulations. The CFPB has issued and continues to issue numerous regulations under which we may incur additional expense in connection with our ongoing compliance obligations. ~~Significant recent CFPB developments that may affect operations and compliance costs include:~~

• Positions taken by the CFPB on fair lending, most recently expanding its supervisory approach to prevent discrimination by using the unfairness standard under the unfair, deceptive, or abuse acts or practices framework in the Dodd-Frank Act in addition to the historical reliance on regulatory requirements under the Equal Credit Opportunity Act (“ECOA”) and the Fair Housing Act (“FHA”); • The CFPB's Final Rule amending Regulation C, which implements the Home Mortgage Disclosure Act, requiring most lenders to report expanded information in order for the CFPB to more effectively monitor fair lending concerns and other information shortcomings identified by the CFPB; • Positions taken by the CFPB regarding the Electronic Fund Transfer Act and Federal Reserve Regulation E, which require companies to obtain consumer authorizations before automatically debiting a consumer’s account for pre-authorized electronic funds transfers; • Efforts focused on enforcing certain compliance obligations the CFPB has deemed a priority, such as automobile and student loan servicing, debt collection, collateral repossession, mortgage origination and servicing, remittances, and fair lending, among others; and • Positions and focused efforts on enforcing compliance obligations related to deposit account fees, including overdraft, non-sufficient funds, and returned deposit fees. 42

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~~There~~First Fed is ~~continued~~subject ~~uncertainty~~to ~~about~~a ~~the~~broad ~~CFPB's~~array ~~priorities~~of federal and ~~how~~state ~~they~~consumer ~~will~~protection ~~change~~laws ~~under~~and ~~the~~regulations ~~current~~that ~~administration~~govern almost every aspect of its business relationships with consumers. ~~For~~While ~~example~~the list set forth below is not exhaustive, some of these laws and regulations include the Truth-in-Lending ~~February~~Act, ~~2025~~the Truth in Savings Act, the ~~Acting~~Electronic ~~Director~~Fund ofTransfer Act, the ~~CFPB~~Expedited ~~instructed~~Funds ~~agency~~Availability ~~staff~~Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Home Mortgage Disclosure Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Right to ~~pause~~Financial ~~most~~Privacy ~~activity~~Act, ~~including~~the ~~supervision~~Home Ownership and ~~enforcement.~~Equity ~~While~~Protection itAct, isthe ~~presently~~Consumer ~~unclear~~Leasing ~~when~~Act, ~~and~~the toFair ~~what~~Credit ~~extent~~Billing Act, the ~~CFPB~~Homeowners ~~will~~Protection ~~resume~~Act, ~~its~~the ~~activities~~Check Clearing for the 21st Century Act, ~~other~~laws ~~governmental~~governing ~~authorities~~flood insurance, ~~including~~laws governing consumer protections in connection with the sale of insurance, federal and state ~~attorneys~~ ~~general~~laws orprohibiting ~~banking~~unfair ~~regulators~~and deceptive business practices, ~~may~~and ~~seek~~various toregulations ~~increase~~that ~~their~~implement ~~regulation~~some or all of the foregoing. These laws and regulations mandate certain disclosure requirements and regulate the way financial institutions must deal with customers when taking deposits, ~~supervision~~making loans, collecting loans, and providing other services. In recent years, examination and enforcement ofby ~~providers~~federal ofand state banking agencies for compliance with consumer ~~financial~~protection ~~products~~laws and ~~services~~regulations inhave ~~response~~increased and become more intense. Failure to ~~changes~~comply atwith ~~the~~these ~~CFPB.~~laws ~~Moreover~~and regulations can subject First Fed to various penalties including, ~~changes~~but atnot limited to, enforcement actions, injunctions, fines, civil liability, criminal penalties, punitive damages, and the ~~CFPB~~loss ~~may~~of ~~lead~~certain tocontractual ~~federal~~rights. ~~legislative~~First ~~efforts~~Fed has established a comprehensive compliance system to ~~alter~~promote ~~the~~compliance ~~framework~~with ~~for~~applicable consumer ~~financial~~protection ~~services~~laws ~~regulation~~and regulations.

~~First~~Regulation ~~Fed is subject to a broad array of federal~~ and ~~state~~Supervision ~~consumer protection laws and regulations that govern almost every aspect~~ of its business relationships with consumers. While the list set forth below is not exhaustive, some of these laws and regulations include the Truth-in-Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Home Mortgage Disclosure Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act, the Home Ownership and Equity Protection Act, the Consumer Leasing Act, the Fair Credit Billing Act, the Homeowners Protection Act, the Check Clearing for the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptive business practices, and various regulations that implement some or all of the foregoing. These laws and regulations mandate certain disclosure requirements and regulate the way financial institutions must deal with customers when taking deposits, making loans, collecting loans, and providing other services. In recent years, examination and enforcement by federal and state banking agencies for compliance with consumer protection laws and regulations have increased and become more intense. Failure to comply with these laws and regulations can subject First Fed to various penalties including, but not limited to, enforcement actions, injunctions, fines, civil liability, criminal penalties, punitive damages, and the loss of certain contractual rights. First Fed has established a comprehensive compliance system to ensure consumer protection.Northwest

~~Regulation~~General. First Northwest is a bank holding company registered with the Federal Reserve and ~~Supervision~~the sole shareholder of First Fed. Bank holding companies are subject to comprehensive regulation by the Federal Reserve under the BHCA, and the regulations promulgated thereunder. This regulation and oversight is generally intended to ensure that First Northwest ~~Bancorp~~limits its activities to those allowed by law and that it operates in a safe and sound manner without endangering the financial health of First Fed. During 2022, First Northwest elected to be treated as a financial holding company (a type of bank holding company), allowing the Company to engage in non-banking activities that are financial in nature or incidental to financial activities.

~~General.~~Under the BHCA, First Northwest ~~Bancorp~~ is asupervised ~~bank~~by ~~holding company registered with~~ the Federal Reserve. ~~and~~As ~~the~~a ~~sole~~bank ~~shareholder~~holding ofcompany, First ~~Fed.~~Northwest ~~Bank~~is ~~holding~~required ~~companies~~to ~~are~~file ~~subject~~semi-annual toand ~~comprehensive~~annual ~~regulation~~reports bywith the Federal Reserve ~~under~~and ~~the~~any ~~Bank~~additional ~~Holding~~information ~~Company~~required ~~Act~~by ~~of 1956, as amended ("BHCA"), and~~ the ~~regulations~~Federal ~~promulgated~~Reserve ~~thereunder. This regulation~~ and ~~oversight~~ is ~~generally~~subject ~~intended~~ to ~~ensure~~regular ~~that~~examinations ~~First~~by ~~Northwest~~the ~~Bancorp~~Federal ~~limits~~Reserve. ~~its~~The ~~activities~~Federal toReserve ~~those~~also ~~allowed~~has byextensive ~~law~~enforcement ~~and~~authority ~~that~~over itbank ~~operates~~holding incompanies, aincluding ~~safe~~the ~~and~~ability ~~sound~~to ~~manner~~assess ~~without~~civil ~~endangering~~money ~~the~~penalties, ~~financial~~to ~~health~~issue ofcease-and-desist ~~First~~or ~~Fed.~~removal ~~During~~orders ~~2022,~~and ~~First Northwest elected~~ to berequire ~~treated~~that as a ~~financial~~bank holding company (adivest ~~type~~subsidiaries of(including its bank ~~holding company~~subsidiaries),. ~~allowing~~In ~~the~~general, ~~Company~~enforcement toactions ~~engage~~may inbe ~~non-banking~~initiated ~~activities~~for ~~that~~violations ~~are~~of ~~financial~~law inand ~~nature~~regulations and/or ~~incidental~~for tounsafe ~~financial~~or ~~activities~~unsound practices.

~~Under~~Source ~~the~~of ~~BHCA,~~Strength ~~First~~Doctrine. ~~Northwest~~Under ~~Bancorp~~the isDodd-Frank ~~supervised~~Act byand ~~the~~ Federal Reserve. Aspolicy, a bank holding company, must ~~First~~serve ~~Northwest~~as ~~Bancorp~~a issource ~~required~~of tofinancial ~~file~~and ~~semi-annual~~managerial ~~and~~strength ~~annual~~to ~~reports~~its ~~with~~subsidiary banks, and the Federal Reserve ~~and~~may ~~any~~expect ~~additional~~a ~~information~~bank ~~required~~holding bycompany to ~~the~~use ~~Federal~~available ~~Reserve~~resources ~~and~~to isprovide ~~subject~~adequate capital funds to ~~regular~~its ~~examinations~~subsidiary bybanks ~~the~~during ~~Federal~~periods ~~Reserve.~~of ~~The~~financial ~~Federal~~stress ~~Reserve~~or ~~also~~adversity ~~has~~(including ~~extensive~~at ~~enforcement~~times ~~authority~~when ~~over~~a bank holding ~~companies,~~company ~~including~~may ~~the~~not ~~ability~~be toin ~~assess~~a ~~civil~~financial ~~money~~position ~~penalties,~~ to ~~issue~~provide ~~cease~~such ~~and~~resources ~~desist~~ or ~~removal~~when ~~orders~~it ~~and~~may tonot ~~require~~be ~~that~~in athe bank holding company’s ~~divest~~or ~~subsidiaries~~its ~~(including~~shareholders' ~~its~~best ~~bank~~interests ~~subsidiaries).~~to Indo ~~general,~~so) and ~~enforcement~~to ~~actions~~maintain ~~may~~the befinancial ~~initiated~~flexibility ~~for~~and ~~violations~~capital ofraising ~~law~~capacity ~~and~~to ~~regulations~~obtain ~~and/or~~additional resources for ~~unsafe~~assisting orits ~~unsound~~subsidiary ~~practices~~banks.

Source of Strength Doctrine. Under the Dodd-Frank Act and Federal Reserve policy, a bank holding company should serve as a source of financial and managerial strength to its subsidiary banks, and the Federal Reserve may expect a bank holding company to use available resources to provide adequate capital funds to its subsidiary banks during periods of financial stress or adversity (including at times when a bank holding company may not be in a financial position to provide such resources or when it may not be in the bank holding company’s or its shareholders' best interests to do so) and to maintain the financial flexibility and capital raising capacity to obtain additional resources for assisting its subsidiary banks.

Acquisitions. With certain exceptions, the BHCA prohibits a bank holding company from acquiring ownership or control of more than 5% of the voting shares of any company that is not a bank or bank holding company and from engaging in activities other than those of banking, managing or controlling banks, or providing services for its subsidiaries. The Federal Reserve may approve a bank holding company's ownership of another company which engages in activities closely related to the business of banking, as determined by the Federal Reserve. A bank holding company that meets certain supervisory and financial standards and elects to be designated as a financial holding company may also engage in certain securities, insurance and merchant banking activities, and other activities determined to be financial in nature or incidental to financial activities.

44 Regulatory Capital Requirements. As part of the review of applications under the BHCA and the supervision of bank holding companies, the Federal Reserve assesses the adequacy of a bank holding company's capital pursuant to the capital rules the Federal Reserve has adopted. These rules apply to bank holding companies with $3.0 billion or more in assets on a consolidated basis, or to bank holding companies with fewer assets but certain risky activities, or to bank-only companies. When applicable, the bank holding company capital adequacy and conservation buffer rules are the same as those imposed by the FDIC. For additional information, see the section above entitled "- Regulation of First Fed - Capital Requirements" and Note 12 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of this Form 10-K.

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~~Regulatory~~Interstate ~~Capital Requirements~~Banking. As ~~part~~The ofBHCA, ~~the~~as ~~review~~amended ofby ~~applications~~the ~~under~~interstate ~~the~~banking ~~BHCA~~provisions ~~and~~of the ~~supervision~~Riegle-Neal ofInterstate ~~bank~~Banking ~~holding~~and ~~companies,~~Branching ~~the~~Efficiency ~~Federal~~Act ~~Reserve~~of ~~assesses~~1994 ~~the~~("Interstate ~~adequacy~~Act"), ofpermits a bank holding company's ~~capital pursuant~~ to ~~the~~acquire ~~capital~~control ~~rules~~of, ~~the~~or ~~Federal~~acquire ~~Reserve~~all ~~has~~or ~~adopted. These~~substantially ~~rules~~all ~~apply~~of tothe ~~bank holding companies with $3.0 billion or more in~~ assets onof, a ~~consolidated basis, or to~~ bank ~~holding~~located ~~companies~~in ~~with~~a ~~fewer~~state ~~assets~~other ~~but~~than ~~certain risky activities, or to bank-only companies. When applicable,~~ the bank holding company's ~~capital~~home ~~adequacy~~state, ~~and~~without ~~conservation~~regard ~~buffer~~to ~~rules~~whether ~~are~~ the ~~same~~transaction asis ~~those~~prohibited ~~imposed~~ by the ~~FDIC.~~laws ~~For~~of ~~additional~~any ~~information~~state, ~~see~~subject ~~the~~to ~~section~~certain ~~above~~restrictions. ~~entitled~~The "-Interstate ~~Regulation~~Act ofalso ~~First~~generally ~~Fed Bank~~permits national- ~~Capital Regulation"~~ and ~~Note 12~~state-chartered ofbanks ~~the~~to ~~Notes~~branch tointerstate ~~Consolidated~~through ~~Financial~~acquisitions ~~Statements~~of ~~included~~banks in ~~Item~~other 8states, ~~"Financial~~subject ~~Statements~~to ~~and~~certain ~~Supplementary Data," of this Form 10-K~~restrictions.

~~Interstate~~Interchange ~~Banking~~Fees. ~~The~~Under the Durbin Amendment to the Dodd-Frank Act, ~~eliminated~~the ~~certain~~Federal ~~interstate~~Reserve ~~branching~~adopted ~~restrictions~~rules ~~that~~establishing ~~were~~standards ~~implemented~~for asassessing ~~part~~whether of the ~~Riegle-Neal~~interchange ~~Interstate~~fees ~~Banking~~that ~~and~~may ~~Branching~~be ~~Efficiency~~charged ~~Act~~with ofrespect ~~1994~~to (certain electronic transactions are "~~Interstate~~reasonable ~~Act~~and proportional") to the costs incurred by issuers for processing such transactions. ~~The~~Notably, the Federal Reserve's ~~may~~rules ~~approve~~set ana ~~application~~maximum permissible interchange fee, among other requirements. As of aDecember ~~bank~~31, ~~holding~~2025, ~~company~~First toNorthwest ~~acquire~~and ~~control~~First ofFed qualified for the small issuer exemption from the Federal Reserve’s interchange fee cap, orwhich ~~acquire~~applies ~~all~~to orany ~~substantially~~debit ~~all~~card issuer that has total consolidated assets of less than $10 billion as of the ~~assets~~end of the previous calendar year. In October 2023, the Federal Reserve requested comments on a ~~bank~~proposed ~~located~~rule that would lower the interchange fee cap that applies to debit card issuers with $10 billion or more in assets and establish a ~~state~~regular ~~other~~process ~~than~~for updating the ~~bank~~cap ~~holding~~every ~~company's~~other ~~home~~year ~~state,~~going ~~without~~forward. Future ~~regard~~changes to ~~whether~~ the ~~transaction~~interchange isfee ~~prohibited~~cap bycould ~~the~~have ~~laws~~a ofnegative ~~any~~effect ~~state~~on the Bank’s fee revenue.

~~Interchange~~Restrictions ~~Fees~~on Dividends. ~~Under~~First ~~the~~Northwest's ~~Durbin~~ability ~~Amendment~~ to ~~the~~declare ~~Dodd-Frank~~and ~~Act,~~pay ~~the~~dividends ~~Federal~~is ~~Reserve~~subject ~~adopted rules establishing standards for assessing whether the interchange fees that may be charged with respect~~ to ~~certain electronic transactions are "reasonable and proportional" to~~ the ~~costs incurred by issuers for processing such transactions. Notably, the~~ Federal Reserve's ~~rules~~limits ~~set~~and aWashington ~~maximum permissible interchange fee~~law, ~~among~~and ~~other~~may ~~requirements.~~also Asdepend ofon ~~December~~its ~~31,~~ability ~~2024,~~to ~~First~~receive ~~Northwest~~dividends ~~Bancorp~~from ~~and~~ First Fed ~~qualified for the small issuer exemption from the Federal Reserve’s interchange fee cap~~, ~~which applies to any debit card issuer that has total consolidated assets of less than $10 billion~~ as ofdiscussed ~~the end of the previous calendar year~~above. In October 2023, the Federal Reserve requested comments on a proposed rule that would lower the interchange fee cap that applies to debit card issuers with $10 billion or more in assets and establish a regular process for updating the cap every other year going forward. Future changes to the interchange fee cap could have a negative effect on the Bank’s fee revenue.

Restrictions on Dividends. First Northwest Bancorp's ability to declare and pay dividends is subject to the Federal Reserve limits and Washington law, and may also depend on its ability to receive dividends from First Fed, as discussed above.

The Federal Reserve has issued a policy statement on the payment of cash dividends by bank holding companies. In particular, the policy limits the payment of a cash dividend by a bank holding company if the holding company's net income for the past year is not sufficient to cover both the cash dividend and a rate of earnings retention that is consistent with capital needs, asset quality, and overall financial condition. A bank holding company that does not meet any applicable capital standard would not be able to pay any cash dividends under this policy. A bank holding company not subject to consolidated capital requirements is expected not to pay dividends unless its debt-to-equity ratio is less than 1:1, and it meets certain additional criteria. The Federal Reserve also has indicated that it would be inappropriate for a company experiencing serious financial problems to borrow funds to pay dividends.

Except for a company that meets the well-capitalized standard for bank holding companies, is well managed, and is not subject to any unresolved supervisory issues, a bank holding company is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding 12 months, is equal to 10.0% or more of the company's consolidated net worth. The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation or regulatory order, condition, or written agreement.

Under Washington corporate law, First Northwest ~~Bancorp~~ generally may not pay dividends if after that payment it would not be able to pay its liabilities as they become due in the usual course of business, or its total assets would be less than the sum of its total liabilities. These various laws and regulatory policies may affect First Northwest ~~Bancorp~~’s ability to pay dividends or otherwise engage in capital distributions.

Recent and Proposed Legislation. The economic and political environment of the past several years has led to a number of proposed legislative, governmental, and regulatory initiatives that may significantly impact the banking industry. Other regulatory initiatives by federal and state agencies may also significantly impact First Northwest ~~Bancorp~~'s and First Fed’s business. First Northwest ~~Bancorp~~ and First Fed cannot predict whether these or any other proposals will be enacted or the ultimate impact of any such initiatives on its operations, competitive situation, financial conditions, or results of operations.

45 Effects of Federal Government Monetary Policy. First Northwest’s earnings and growth are affected not only by general economic conditions, but also by the fiscal and monetary policies of the federal government, particularly the Federal Reserve. The Federal Reserve implements national monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates. Through its open market operations in U.S. government securities, control of the discount rate applicable to borrowings, establishment of reserve requirements against certain deposits, and control of the interest rate applicable to excess reserve balances and reverse repurchase agreements, the Federal Reserve influences the availability and cost of money and credit and, ultimately, a range of economic variables including employment, output, and the prices of goods and services.

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~~Recent~~The ~~executive~~Federal ~~orders~~Reserve ~~have~~has ~~the~~reaffirmed ~~potential~~that toits ~~alter~~strategy ~~the~~for ~~supervisory,~~monetary ~~regulatory,~~policy ~~and~~is ~~enforcement~~focused ~~frameworks~~on ~~and~~long-term ~~priorities~~goals ofand ~~federal~~addressing ~~financial~~continued ~~regulatory~~concerns ~~agencies~~with ~~such~~inflation. asThe ~~the OCC,~~ Federal Reserve, ~~and~~increased ~~FDIC,~~the asfederal ~~well~~funds asrate ~~decrease~~by ~~the~~100 ~~stability~~basis ofpoints ~~regulatory~~in ~~policy over time~~2023. ~~For~~ ~~example,~~In aSeptember ~~February 2025 executive order directs independent agencies~~2024, ~~including~~ the ~~federal financial regulatory agencies (but excluding the monetary policy function of the~~ Federal Reserve), toreversed ~~submit significant regulatory actions to~~ the ~~White~~upward ~~House~~trend ~~Office~~and ofbegan ~~Management~~lowering ~~and~~the ~~Budget~~federal ~~(“OMB”)~~funds rate for ~~its~~a ~~review.~~total ~~Additionally,~~decrease ~~OMB~~in is2024 ~~directed~~of to100 ~~provide~~basis ~~"performance~~points ~~standards~~with ~~and~~an ~~management~~additional ~~objectives"~~total todecrease ~~the~~in ~~heads~~2025 of ~~independent~~75 basis ~~agencies,~~points. ~~and~~Changes ~~review~~in ~~and~~monetary ~~adjust~~policy, ~~their~~including ~~budgets. These~~ changes toin the ~~operation~~federal offunds ~~independent agencies~~rate, ifcan ~~carried~~affect ~~through,~~net ~~may~~interest ~~cause~~income ~~financial~~and ~~regulatory~~margin, ~~policy~~overall toprofitability, ~~change~~and ~~more~~shareholders' ~~significantly across different presidential administrations than it has historically~~equity. ~~Additionally,~~ asThe anature ~~result~~and impact of ~~these~~future changes, itin ~~may~~monetary ~~take~~policies ~~longer~~and ~~for the federal financial regulatory agencies to establish~~ their ~~supervisory~~impact ~~and~~on ~~enforcement~~First ~~priorities~~Northwest and ~~develop~~First ~~and~~Fed cannot ~~adopt~~be ~~new~~predicted ~~rules~~with ~~and regulations~~certainty.

Effects of Federal Government Monetary Policy. First Northwest Bancorp’s earnings and growth are affected not only by general economic conditions, but also by the fiscal and monetary policies of the federal government, particularly the Federal Reserve. The Federal Reserve implements national monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates. Through its open market operations in U.S. government securities, control of the discount rate applicable to borrowings, establishment of reserve requirements against certain deposits, and control of the interest rate applicable to excess reserve balances and reverse repurchase agreements, the Federal Reserve influences the availability and cost of money and credit and, ultimately, a range of economic variables including employment, output, and the prices of goods and services.

The Federal Reserve has reaffirmed that its strategy for monetary policy is focused on long-term goals and addressing continued concerns with inflation. After increasing the federal funds rate by 425 basis points in 2022, the Federal Reserve continued the trend, albeit at a slower pace, for a total increase in 2023 of 100 basis points. In September 2024, the Federal Reserve reversed the upward trend and began lowering the federal funds rate for a total decrease in 2024 of 100 basis points. Changes in monetary policy, including changes in the federal funds rate, can affect net interest income and margin, overall profitability, and shareholders' equity. The nature and impact of future changes in monetary policies and their impact on First Northwest Bancorp and First Fed cannot be predicted with certainty.

Cybersecurity. Federal banking regulators issue new guidance and standards, and update existing guidance and standards, intended to enhance cyber risk management among financial institutions from time to time. Financial institutions are expected to comply with such guidance and standards and to accordingly develop appropriate security controls and risk management processes. If First Fed fails to observe such regulatory guidance or standards, it could be subject to various regulatory sanctions, including financial penalties.

Interagency rules require banks to notify their primary banking regulator within 36 hours of determining that a “"computer-security incident” " rising to the level of a "notification incident" has occurred. Among other types of computer-security incidents, a "notification incident" includes one that has materially disrupted or degraded the banking organization’s ability to carry out banking operations to a material portion of its customer base in the ordinary course of business.

State regulators have also been increasingly active in implementing privacy and cybersecurity standards and regulations. Recently, several states have adopted regulations requiring certain financial institutions to implement cybersecurity programs and many states, including Washington, have also recently implemented or modified their data breach notification, information security and data privacy requirements. We expect this trend of state-level activity in those areas to continue, and are continually monitoring developments in the states in which our customers are located.

Risks and exposures related to cybersecurity attacks, including litigation and enforcement risks, are expected to be elevated for the foreseeable future due to the rapidly evolving nature and sophistication of these threats, as well as the expanding use of internet banking, mobile banking and other technology-based products and services by us and our customers. Cybersecurity concerns are further heightened by Russia's current invasion of Ukraine.

In addition to guidance and standards implemented by banking regulators, in July 2023, the SEC adopted final rules requiring an annual disclosure of registrants’ cybersecurity risk management strategy and governance. Additionally, registrants are required to disclose cybersecurity incidents, including the nature, scope, timing, and impact of the incident, within four business days of determining them to be material.

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Taxation

Federal Taxation

General. First Northwest ~~Bancorp~~ and First Fed are subject to federal income taxation in the same general manner as other corporations, with some exceptions discussed below. The following discussion of federal taxation is intended only to summarize certain pertinent federal income tax matters and is not a comprehensive description of the tax rules applicable to First Northwest ~~Bancorp~~ or First Fed. First Fed is no longer subject to U.S. federal income tax examinations by tax authorities for years ended before December 31, ~~2021~~2022. See Note 10 of the Notes to Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data," of this Form 10-K.

~~First~~Method ~~Northwest~~of ~~Bancorp~~Accounting. ~~will~~For ~~file a consolidated~~ federal income tax ~~return with First Fed. Accordingly~~purposes, ~~any~~we ~~cash~~currently ~~distributions~~report ~~made~~income byand ~~First~~expenses ~~Northwest~~on ~~Bancorp~~the toaccrual ~~its~~method ~~shareholders~~of ~~would~~accounting. beFederal ~~considered~~income ~~taxable~~tax ~~dividends~~returns ~~and~~are ~~not~~filed asusing a ~~non-taxable~~December ~~return~~31 ofyear ~~capital to shareholders for federal and state tax purposes~~end.

~~Method~~Intercompany ofDividends-Received ~~Accounting~~Deduction. ~~For~~First ~~federal~~Northwest ~~income~~will ~~tax~~file ~~purposes,~~a ~~First~~consolidated ~~Fed currently~~federal ~~reports~~income ~~its~~tax ~~income~~return ~~and~~with ~~expenses~~First onFed. ~~the~~Accordingly, ~~accrual~~any ~~method~~dividends ofFirst ~~accounting.~~Northwest ~~Federal~~receives ~~income~~from ~~tax~~First ~~returns~~Fed ~~are~~will ~~filed~~not ~~using~~be aincluded ~~December~~as 31income ~~year~~to ~~end~~First Northwest.

Corporate Dividends-Received Deduction. First Northwest Bancorp may eliminate from its income dividends received from First Fed as a wholly owned subsidiary of First Northwest Bancorp if it elects to file a consolidated return with First Fed. The corporate dividends-received deduction is 100%, or 65%, in the case of dividends received from corporations with which a corporate recipient does not file a consolidated tax return, depending on the level of stock ownership of the payor of the dividend. Corporations that own less than 20% of the stock of a corporation distributing a dividend may deduct 50% of dividends received or accrued on their behalf.

Washington Taxation

~~The~~First ~~Company~~Northwest and First Fed are subject to a business and occupation tax imposed under Washington law at the rate of 12.7510% of gross receipts, as well as personal property and sales tax. Interest received on loans secured by mortgages or deeds of trust on residential properties and certain investment securities are exempt from this tax.

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Item 1A. Risk Factors.

The following is a discussion of what we currently believe are the most significant risks and uncertainties that may affect our business, financial condition, and future results. You should carefully consider the following risks, together with all of the other information contained in this Form 10-K, including the sections entitled "Forward-Looking Statements" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements and the related notes thereto. Any of the following risks could have an adverse effect on our business, financial condition, and results of operations and could cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. Our business, financial condition, and results of operations could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.

Economy and Our Markets

~~Adverse~~Our ~~economic~~business ~~conditions~~and operations are concentrated in ~~market~~Washington, ~~areas~~and weadverse ~~serve~~economic conditions in that area could adversely impact our earnings and could increase the credit risk associated with our loan portfolio.

A significant portion of our loans are to businesses and individuals in the state of Washington. An economic decline affecting our region could have a material adverse effect on our business, financial condition, results of operations, and prospects. Weakness in the global economy has adversely affected many businesses operating in our markets that are dependent on international trade. Deterioration in the national economy may also have an adverse effect on the region.

Any future deterioration in economic conditions in the market areas we serve, in particular the North Olympic Peninsula and Puget Sound area of Washington State, could result in the following consequences, any of which could have a materially adverse impact on our business, financial condition, and results of operations:

	•	Loan delinquencies, problem assets and foreclosures may increase;
	•	Demand for our products and services may decline, possibly resulting in a decrease in our total loans or assets;
	•	Loan collateral may decline in value, exposing us to increased risk of loss on existing loans and reducing customers’ borrowing power;
	•	The net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and
	•	The amount of our deposits may decrease and the composition of our deposits may be adversely affected.

A decline in local economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are geographically diverse. If we are required to liquidate a significant amount of collateral during a period of reduced real estate values, our financial condition and profitability could be adversely affected. Adverse changes in the regional and general economy could reduce our growth rate, impair our ability to collect loans, and generally have a negative effect on our business, financial condition and results of operations.

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Conditions in the financial markets may limit our access to additional funding to meet our liquidity needs, which could adversely affect our earnings and capital levels.

Liquidity is essential to our business. We rely on a variety of sources in order to meet our potential liquidity demands. We require enough liquidity to meet customer loan requests, customer deposit maturities and withdrawals, payments on our debt obligations as they come due and other cash commitments under both normal operating conditions and other unpredictable circumstances, including events causing industry or general financial market stress. A tightening of the credit markets and the inability to obtain adequate funding may negatively affect our liquidity, asset growth and, consequently, our earnings capability and capital levels. In addition to any deposit growth, and the sale of loans or investment securities, maturity of investment securities and loan payments, we rely from time to time on advances from the FHLB and certain other wholesale funding sources to meet liquidity demands. Our liquidity position could be significantly constrained if we were unable to access funds from the FHLB or other wholesale funding sources.

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Factors that could detrimentally impact our access to liquidity sources include actions by the FRB, a decrease in the level of our business activity as a result of a downturn in the markets in which our loans are concentrated, negative operating results, or adverse regulatory action against us. Our ability to borrow could also be impaired by factors that are not specific to us, such as consumer and business behavior utilizing funds on deposit to pay down higher cost debt or to seek higher yielding investments, a disruption in the financial markets or negative views and expectations about the prospects for the financial services industry or deterioration in credit markets. Any decline in available funding could adversely impact our ability to originate loans, invest in securities, meet our expenses, or fulfill obligations such as repaying our borrowings or meeting deposit withdrawal demands, any of which could, in turn, have a material adverse effect on our business, financial condition and results of operations.

Additionally, collateralized public funds are bank deposits of state and local municipalities. These deposits are required to be secured by certain investment grade securities or other collateral to ensure repayment, which on the one hand tends to reduce our contingent liquidity risk by making these funds somewhat less credit sensitive, but on the other hand reduces standby liquidity by restricting the potential liquidity of the pledged collateral. Although these funds historically have been a relatively stable source of funds for us, availability depends on the individual municipality's fiscal policies and cash flow needs.

Competition for deposits may limit our ability to grow.

Our loan growth is primarily dependent on retaining and attracting additional customer deposits. While we emphasize the generation of low-cost core deposits as a source of funding, there is strong competition for such deposits in our market area, including from internet-based banking institutions, which have grown rapidly in recent years.

Deposit flows are influenced by various factors, including customer relationships, sales and marketing efforts, interest rates paid by competitors, alternative investments such as money market mutual funds, equities and bonds, government stimulus programs, and the overall levels of business and personal income and savings. The ~~current elevated~~ interest rate environment ~~has~~impacts ~~increased~~ competition for deposits across the banking industry, and deposit balances may decrease if customers perceive alternative investments as providing a better risk/return tradeoff or if customers turn to other alternatives to deposits, such as stablecoins.

Additionally, negative news about us or the banking industry in general could negatively impact market and/or customer perceptions of the Company, which could lead to a loss of depositor confidence and an increase in deposit withdrawals, particularly among those with uninsured deposits. Furthermore, as banking organizations experienced in the Spring of 2023, the failure of other financial institutions may cause deposit outflows as customers spread deposits among several different banks so as to maximize their amount of FDIC insurance, move deposits to banks deemed "too big to fail" or remove deposits from the banking system entirely. We may not be able to replace maturing deposits and advances as necessary in the future, especially if a large number of our depositors sought to withdraw their accounts, regardless of the reason.

Our failure to grow or retain deposits may result in a loss of market share and slower or negative loan growth, which likely would have an adverse effect on our financial condition and results of operations.

Public health crises, geopolitical developments, acts of terrorism, natural disasters, climate change and other ~~external~~events ~~factors~~out of our control could harm our business.

Public health crises, domestic or geopolitical crises, such as the current wars in Ukraine and the Middle East, political instability or civil unrest, terrorism, ~~human error~~ or other events outside of our control, could cause disruptions to our business and those of our customers, counterparties and service providers or the ~~United States~~U.S.' economy, resulting in potentially adverse operating results. Natural disasters may disrupt our operations and those of our customers, counterparties and service providers, result in damage to our properties, reduce or destroy the value of the collateral for our loans and negatively affect the economies in which we operate. Climate change may worsen the severity and impact of future natural disasters and other extreme weather-related events that could cause disruption to our business and operations. Chronic results of climate change such as shifting weather patterns could also cause disruption to the business and operations of our customers, with potentially negative effects on our loan portfolio and growth opportunities. A significant natural disaster, such as a tsunami, earthquake, drought, fire or flood, where we or our customers live and do business, could have a material adverse impact on our local market areas and our ability to conduct business, especially if our insurance coverage is insufficient to compensate for losses that may occur. We also could be adversely affected if our key personnel or a significant number of our employees were to become unavailable due to a public health crisis (such as an outbreak of a contagious disease), natural disaster, war, act of terrorism, accident or other reason. The effects of any of the foregoing factors could have a material adverse effect on our business, ~~operations,~~financial condition and ~~financial~~results ~~condition~~of operations.

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We may be impacted by the actions, soundness or creditworthiness of other financial institutions, which can cause disruption within the industry and increase expenses.

Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We execute transactions with various counterparties in the financial industry, including broker-dealers, commercial banks, and investment banks. Defaults or failures of financial services institutions and instability in the financial services industry in general can lead to market-wide liquidity problems, increased credit risk and withdrawals of uninsured deposits. Such events could adversely affect our business, results of operations, and financial condition, as well as the market price and volatility of our common stock.

Bank failures may increase the risk of a recession or lead to regulatory changes and initiatives, such as enhanced capital, liquidity, or risk management requirements, which could adversely impact us. Changes to laws or regulations, or the imposition of additional restrictions through supervisory or enforcement activities, could have a material impact on our business. Regulatory changes could also adversely impact our ability to access funding, increase the cost of funding, limit our access to capital markets, and negatively impact our overall financial condition. For example, certain bank failures in 2023 resulted in a special assessment by the FDIC to replenish the DIF.

We operate in a highly competitive industry.

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources. These competitors primarily include national, regional, community and digital banks within the various markets in which we operate. We also face competition from many other types of financial institutions, including savings and loans, credit unions, mutual funds, mortgage banking finance companies, brokerage firms, insurance companies and other financial intermediaries or alternative investment vehicles. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Further, clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies, non-fungible tokens, and other digital assets. For example, financial technology companies and other firms have begun to offer services such as stablecoins that may serve as alternatives to traditional banking products such as deposits. Additionally, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Competitors in these nonbank sectors may have fewer regulatory constraints, as well as lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.

Failure to perform in any of these areas could significantly weaken our competitive position, which could adversely affect our growth and profitability and result in a material adverse effect on our financial condition and results of operations.

Failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability.

The financial services industry is undergoing rapid technological changes, with frequent introductions of new technology-driven products and services. The effective use of technology increases efficiency and enables financial institutions to better serve customers and reduce costs. Our future success will depend, in part, upon our ability to address the needs of our customers by using technology to provide products and services that will satisfy customer demands for convenience, as well as to create additional efficiencies in our operations. Many of our competitors have substantially greater resources to invest in technological improvements than we do. We may not be able to implement new technology-driven products and services effectively or be successful in marketing these products and services to our customers. Failure to keep pace successfully with technological change affecting the financial services industry could harm our ability to compete effectively and could have an adverse effect on our business, financial condition, and results of operations. As these technologies improve in the future, we may be required to make significant capital expenditures in order to remain competitive, which may increase our overall expenses and have an adverse effect on our business, financial condition, and results of operations.

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Credit and Asset Quality

Our ~~increased~~ emphasis on commercial real estate lending subjects us to various risks that could adversely impact our results of operations and financial condition.

WeOur ~~have increased the amount of our~~ commercial real estate and multi-family loans torepresent a significant portion of our portfolio, with balances of $~~723~~691.02 million, or 42.65%, of our total loan portfolio, at December 31, ~~2024~~2025, ~~from~~ and $~~721~~723.10 million, or 4342.46%, of our total loan portfolio at December 31, ~~2023~~2024. We intend to continue ~~to increase~~, subject to market demand, our origination and purchase of commercial real estate loans. As an institution’s concentration in commercial real estate lending increases, it becomes subject to more scrutiny under the FDIC's policies for management of its commercial real estate loan portfolio.

Our ~~increased~~ focus on this type of lending has increased our risk profile. Commercial real estate loans are intended to enhance the average yield of our earning assets; however, they do involve a different level of risk compared to one-to-four family loans. The repayment of commercial real estate loans typically depends on the successful operation and income stream of the borrowers’ operating business, or their ability to lease the commercial property at sufficient rates. The value of the commercial real estate securing the loan as collateral is a secondary source of repayment in case of default, which can be significantly affected by economic conditions. The FDIC has issued pronouncements alerting banks of its concerns about banks with a heavy concentration of commercial real estate loans. Moreover, federal bank regulators have highlighted the increased risk associated with commercial real estate loans, including with respect to the higher vulnerability of these credits to pressure as interest rates remain elevated and market conditions in many metropolitan areas continue to show signs of stress. These loans also involve larger balances to a single borrower or groups of related borrowers. Some of our commercial borrowers have more than one loan outstanding with us. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to a significantly greater risk of loss compared to an adverse development on a single one-to-four family residential mortgage loan.

Since commercial real estate loans generally have large balances, deterioration in the quality of commercial loans may result in the need to significantly increase our provision for credit losses on loans and charge-offs will likely be larger on a per loan basis compared to consumer loans. As a result, deterioration of this portfolio could have a materially adverse effect on our future earnings. Collateral evaluation and financial statement analysis for commercial loans also requires a more detailed review at origination and on an ongoing basis. Finally, if we foreclose on a commercial real estate loan, our holding period for the collateral is typically longer than for a one-to-four family residence because the market for most types of commercial real estate is not readily liquid, resulting in less opportunity to mitigate credit risk by selling part or all of our interest in these assets. At December 31, ~~2024~~2025, we had $~~5,598,000~~9.8 million of nonperforming commercial real estate loans ~~and $0 of nonperforming multi-family loans~~ in our portfolio.

An increase in unsecured lending exposes us to an increase in loan losses.

We have increased our commercial business loan portfolio by purchasing unsecured loans to small businesses and professionals and our consumer loan portfolio through purchases from Splash Financial. Our exposure on these purchased loan portfolios was $21.1 million and $7.3 million, respectively, at December 31, 2024. Unsecured loans present additional risks to us because if a borrower defaults on an unsecured loan, there is no collateral to repossess and liquidate in order to satisfy the outstanding loan balance. Also, the application of various federal and state laws, including federal and state bankruptcy and insolvency laws, may limit the amount that can be recovered on an unsecured loan in default. Our efforts to mitigate this risk include carefully assessing a borrower’s creditworthiness, including their income, employment history, and debt-to-income ratio.

In 2022, we began purchasing unsecured consumer loans through a partnership with Splash Financial, a private lender that underwrites and funds personal loans. First Fed has experienced losses of $3.4 million on the Splash Financial loans to date. We made changes to the program participation criteria for these loans in 2023 with the goal of reducing additional losses. Purchases of Splash loans were suspended in August 2023. Additional losses in our unsecured lending portfolio would negatively affect our profitability and capital.

The significant growth in our loan portfolio and expansion into new markets may increase our credit risk.

Since the completion of our initial public offering in January 2015, we have grown substantially in terms of total assets, total loans, total deposits, employees, and locations, expanding our business activities throughout the Puget Sound region. Our commercial loan portfolio, which includes loans for commercial and multi-family real estate as well as other business loans, has increased to $874.5 million, or 51.6% of total loans, at December 31, 2024, from $833.4 million, or 50.2% of total loans, at December 31, 2023. One-to-four family loans have increased to $395.3 million, or 23.3% of total loans, at December 31, 2024, from $378.4 million, or 22.8% of total loans, at December 31, 2023. Total consumer loans have increased to $347.9 million, or 20.6% of total loans, at December 31, 2024, from $318.5 million, or 19.2% of total loans, at December 31, 2023.

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Rapidly growing loan portfolios are, by their nature, less seasoned and our experience with these loans may not provide us with a useful payment history pattern. Rapid growth combined with the geographic expansion of our lending area may make estimating loan loss allowances more difficult and more susceptible to changes in estimates, and to losses exceeding estimates, than our more seasoned portfolio of loans in our traditional lending area. As a result, it is difficult to predict the future performance of these parts of our loan portfolio. These loans may develop delinquency or charge-off levels above our historical experience, which could adversely affect our future performance.

We plan to continue both strategic and opportunistic growth, understanding that we may see a slowing of growth as we mature and manage capital down to more efficient levels. Continued growth can present substantial demands on management personnel, line employees, and other aspects of our operations, especially if our growth occurs rapidly. We may face difficulties in managing that growth effectively, which could damage our reputation, limit our growth, and negatively affect our operating results. Also see "Our expansion strategy will cause our expenses to increase and may negatively affect our earnings."

We have a concentration of large loans outstanding to a limited number of borrowers that increases our risk of loss.

First Fed has extended significant amounts of credit to ~~certain~~ borrowers, ~~largely~~connected ~~in connection~~ with high-end residential real estate and commercial and multi-family real estate loans. These types of loans generally are viewed as having more risk of default than residential real estate loans or certain other types of loans or investments. In fact, the FDIC has issued pronouncements alerting banks of its concern about significant loan concentrations. At December 31, ~~2024~~2025, the aggregate amount of loans, including unused commitments, to First Fed's five largest borrowers (including related entities) amounted to approximately $9588.98 million. Outstanding loan balances for the ten largest borrowing relationships at December 31, ~~2024~~2025, totaled $~~165~~146.75 million, or 9.80% of total loans. Although ~~only~~none ~~one~~ of the loans to First Fed's 20 largest borrowers ~~was~~ were nonperforming as of December 31, ~~2024~~2025, concentration of credit to a limited number of borrowers increases the risk in First Fed's loan portfolio. IfThe deterioration of one or ~~more~~a few of these ~~borrowers~~loans ismay ~~not~~cause ~~able~~a tosignificant ~~service~~increase ~~the~~in ~~contractual~~our ~~repayment~~non-performing loans. An increase in non-performing loans could result in a loss of earnings from these loans, an increase in the ~~potential~~provision ~~loss~~for toloan ~~First~~losses, ~~Fed is~~or ~~more~~an ~~likely~~increase toin ~~have~~loan acharge-offs, ~~material~~any of which would have an adverse impact, which could be material, on our business, financial condition and results of operations.

Our construction and land loans are based upon estimates of costs and the value of the completed project.

During the year ended December 31, ~~2024~~2025, our construction and land loans decreased $5116.68 million, or 3921.86%, to $7861.13 million, or 43.68%, of the total loan portfolio at December 31, ~~2024~~2025 and consisted of properties secured by ~~multi-family~~commercial real estate of $1523.40 million, one-to-four family residential of $3822.90 million, ~~commercial~~multi-family ~~real estate~~ of $1710.31 million, and land of $6.52 million. Land loans include raw land and land acquisition and development loans.

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Construction and land development lending generally involves additional risks when compared with permanent residential lending because funds are advanced upon estimates of costs in relation to values associated with the completed project that will produce a future value at completion. Because of the uncertainties inherent in estimating construction costs, the market value of the completed project, the effects of governmental regulation on real property, and changes in demand, it is relatively difficult to evaluate accurately the total funds required to complete a project and the completed project loan-to-value ratio, which may cause actual results to vary significantly from those estimated. For these reasons, this type of lending also typically involves higher loan principal amounts and is often concentrated with a small number of builders.

A downturn in housing, or the real estate market, could increase loan delinquencies, defaults and foreclosures, and significantly impair the value of our collateral and our ability to sell the collateral upon foreclosure. Some of our builders have more than one loan outstanding with us, and an adverse development with respect to one loan or one credit relationship may expose us to a significantly greater risk of loss.

In addition, during the term of most of our construction loans, no payment from the borrower is required since the accumulated interest is added to the principal of the loan through an interest reserve. As a result, these loans often involve the disbursement of funds with repayment substantially dependent on the successful outcome of the project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest. If our appraisal of the value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss. Because construction loans require active monitoring of the building process, including cost comparisons and on-site inspections, these loans are more difficult and costly to monitor. Increases in market rates of interest may have a more pronounced effect on construction loans by rapidly increasing the end-purchasers' borrowing costs, thereby reducing the overall demand for the project. Properties under construction are often difficult to sell and typically must be completed in order to be successfully sold, which also complicates the process of working out problem construction loans. Under these circumstances we may be required to advance additional funds and/or contract with another builder to complete construction and assume the market risk of selling the project at a future market price, which may or may not enable us to fully recover unpaid loan funds and associated construction and liquidation costs. Any of these results could have a material and adverse effect on our business, financial condition and results of operations.

Our business may be adversely affected by credit risk associated with residential real estate.

At December 31, 2025, $461.8 million, or 28.4% of our total loan portfolio, consisted of one-to-four family mortgage loans and home equity loans secured by residential properties. Lending on residential property is sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Declines in residential real estate values securing these types of loans may increase the level of borrower defaults and losses above the recent charge-off experience on these loans. Jumbo one-to-four family residential loans that do not conform to secondary market mortgage requirements for our market areas would not be immediately saleable to Freddie Mac or other investors and may expose us to increased risk because of their larger balances. Further, a significant amount of our home equity lines of credit consist of loans in a subordinate lien position to a first lienholder.

For home equity lines secured by a second mortgage, it is unlikely that we will be successful in recovering all or a portion of our loan balances in the event of default unless we repay the first mortgage loan and such repayment and the costs associated with a foreclosure are justified by the value of the property. For these reasons we may experience higher rates of delinquencies, default and losses on loans secured by junior liens. Any of these results could have a material and adverse effect on our business, financial condition and results of operations.

In addition, if we foreclose on and take title to real property securing loans, there is a risk that hazardous or toxic substances could be found on these properties and that we could be liable for remediation costs, as well as personal injury and property damage. Environmental laws may require us to incur substantial expenses and may materially reduce the affected property’s value or limit our ability to sell the affected property. The remediation costs and any other financial liabilities associated with an environmental hazard could have an adverse effect on our business, financial condition, and results of operations.

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Our business may be adversely affected by credit risk associated with residential real estate.

At December 31, 2024, $474.4 million, or 28.0% of our total loan portfolio, consisted of one-to-four family mortgage loans and home equity loans secured by residential properties. Lending on residential property is sensitive to regional and local economic conditions that significantly impact the ability of borrowers to meet their loan payment obligations, making loss levels difficult to predict. Declines in residential real estate values securing these types of loans may increase the level of borrower defaults and losses above the recent charge-off experience on these loans. Jumbo one-to-four family residential loans that do not conform to secondary market mortgage requirements for our market areas would not be immediately saleable to Freddie Mac or other investors and may expose us to increased risk because of their larger balances. Further, a significant amount of our home equity lines of credit consist of loans in a subordinate lien position to a first lienholder.

Repayment of our commercial business loans is often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value.

At December 31, ~~2024~~2025, we had $~~151~~130.53 million, or 8.90% of total loans, in commercial business loans. Commercial business lending involves risks that are different from those associated with residential and commercial real estate lending. Real estate lending is generally considered to be collateral-based lending with loan amounts based on the value of the collateral and predetermined loan to collateral ratios; liquidation of the underlying real estate collateral is the primary source of repayment in the event of borrower default. Our commercial business loans are primarily supported by the cash flow of the borrower and secondarily by the underlying collateral provided by the borrower. The borrowers' cash flows may be unpredictable, and the collateral securing these loans may fluctuate in value. Although commercial business loans are often collateralized by equipment, inventory, accounts receivable, or other business assets, the liquidation of collateral in the event of default is often an insufficient source of repayment. Factors affecting the value of this type of collateral include uncollectable accounts receivable and obsolete or limited use inventory, among others.

We depend on the accuracy and completeness of information provided by customers and counterparties.

In deciding whether to extend credit or enter into other transactions with customers and counterparties, we may rely on information furnished by or on behalf of customers and counterparties, including financial information. We may also rely on representations of customers and counterparties as to the accuracy and completeness of that information. In deciding whether to extend credit, we may rely upon customers’ representations that their financial statements conform to GAAP and present fairly the financial condition, results of operations, and cash flows of the customer. We also may rely on customer representations and certifications, or other audit or accountants’ reports, with respect to the business and financial condition of our customers. Our business, financial condition, and results of operations could be adversely affected if we rely on misleading, false, inaccurate, or fraudulent information.

Our allowance for credit losses on loans may prove to be insufficient to absorb losses in our loan portfolio.

We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. In determining the allowance for credit losses on loans, we review our loan portfolios, loss and delinquency trends, and economic conditions. If our assumptions are incorrect, our allowance for credit losses on loans may not be sufficient to cover incurred losses, resulting in additions to our allowance for credit losses on loans through the provision for credit losses on loans which is charged against income.

Additionally, pursuant to our growth strategy, management recognizes that significant new loan growth, new loan products, new market areas, and the refinancing of existing loans, resulting in portfolios composed of unseasoned loans that may not perform in a historical or projected manner, may increase the risk that our allowance may be insufficient to absorb losses without significant additional provisions. Significant provisions to our allowance could materially decrease our net income. In addition, bank regulatory agencies periodically review our allowance for credit losses on loans and may require an increase in the provision for possible loan losses or the recognition of further loan charge-offs, based on judgments different than those of management.

In addition, if charge-offs in future periods exceed the allowance for credit losses on loans, we will need additional provisions to replenish the allowance for credit losses on loans. Any additional provisions will result in a decrease in net income, and possibly capital, and may have a material adverse effect on our financial condition and results of operations.

IfWe ~~our~~may ~~nonperforming~~not ~~assets~~be ~~increase,~~able to measure and limit our ~~earnings~~credit ~~will~~risk beadequately, which could adversely ~~affected~~affect our profitability.

At December 31, ~~2024~~2025, our nonperforming assets, which consist of nonaccrual loans, real estate owned and repossessed assets, were $3024.50 million, or 1.41% of total assets. Our level of nonperforming assets is closely tied to the overall credit quality of our loan portfolio and the creditworthiness of our borrowers. Adverse changes in economic conditions, borrower financial performance, collateral values or other factors affecting credit risk could result in an increase in delinquencies, defaults and nonaccrual loans. Nonperforming assets adversely affect our net income in various ways. If additional borrowers become delinquent and do not pay their loans and we are unable to successfully manage our nonperforming assets, our losses and troubled assets could increase significantly, which could have a material adverse effect on our financial condition and results of operations.

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Our securities portfolio may be negatively impacted by fluctuations in market value and interest rates.

Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities. These factors include, but are not limited to, ratings agency actions, defaults or other adverse events affecting the issuer or the underlying collateral, if any, of the security, changes in market interest rates, and continued instability in the capital markets. Additionally, financial markets may be adversely affected by the current or anticipated impact of military conflict, including the current wars in Ukraine and the Middle East, terrorism, or other geopolitical events. A need for additional liquidity may also require us to sell investment securities at depressed prices. These factors, among others, could result in an allowance for credit losses on investment securities, realized and/or unrealized losses in future periods, and declines in other comprehensive income, which could materially affect our business, financial condition, and results of operations. Determining an allowance for credit losses on investment securities requires complex, subjective judgments about the future financial performance and liquidity of the security's issuer and underlying collateral, if any, to assess the probability of receiving all contractual principal and interest payments due, and these estimates may differ significantly from actual future performance of the security.

We may incur losses due to direct and indirect minority investments in fintech and specialty finance companies.

We have and may continue to make minority investments in fintech and specialty finance companies or make investments in funds that do the same. ~~For~~We ~~example, we~~ currently have investments in Canapi Venture ~~Fund~~, ~~LP,~~ BankTech Ventures, LP and JAM FINTOP ~~Blockchain~~Frontier Fund, LP to strategically invest in fintech-related businesses. In addition, we have invested in Meriwether Group Capital Hero Fund LP, Meriwether Group Capital, LLC and The Meriwether Group, LLC, which provide funding and services to lower-middle market businesses and entrepreneurs. We generally are not able to influence the activities of companies or funds in which we invest and may suffer losses due to these activities. ~~For example, in 2021 we entered into a joint venture with Quin Ventures, Inc. and Peace of Mind, Inc., which ultimately resulted in the Company writing off the related investment.~~ In addition, the companies or funds we invest in may have economic or business interests, values, or goals that are inconsistent or conflict with ours, which could damage our reputation or business. Additionally, the companies or funds we invest in may experience financial difficulties, default on their obligations, diminished liquidity or insolvency; or our management team’s distraction relative to the potential financial benefit may be disproportional. If the companies we invest in, directly or indirectly, seek additional financing in the future to fund their growth strategies, these financing transactions may result in dilution to our ownership stakes and these transactions may occur at lower valuations than the investment transaction through which we acquired such ownership interest, which could significantly decrease the fair value of our investment in those entities. We may also be unable to dispose of our minority investments within our contemplated time horizon or at all or withdraw our investment from funds in which we participate. Our inability to dispose of our minority investment in an entity, a downward adjustment to or impairment of an equity investment or our inability to access funds otherwise invested could adversely impact our business, financial condition, results of operations, or cash flows.

If our real estate owned is not properly valued or declines further in value, our earnings could be reduced.

We ~~obtain~~update ~~updated~~our valuation ~~valuations~~ assessments in the form of appraisals and tax assessed values when a loan has been foreclosed and the property taken in as real estate owned and at certain other times during the asset’s holding period. Our net book value of the loan at the time of foreclosure and thereafter is compared to the updated market value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded for any excess in the asset’s net book value over its fair value. If our valuation process is incorrect, or if property values decline, the fair value of our real estate owned may not be sufficient to recover our carrying value in such assets, resulting in the need for additional charge-offs. In addition, bank regulators periodically review our real estate owned and may require us to recognize further charge-offs. Significant charge-offs to our real estate owned could have a material adverse effect on our financial condition and results of operations.

We operate in a highly competitive industry.

We face substantial competition in all areas of our operations from a variety of different competitors, many of which are larger and may have more financial resources. These competitors primarily include national, regional and digital banks within the various markets in which we operate. We also face competition from many other types of financial institutions, including savings and loans, credit unions, mortgage banking finance companies, brokerage firms, insurance companies and other financial intermediaries. The financial services industry could become even more competitive as a result of legislative, regulatory and technological changes and continued consolidation. Further, clients may choose to conduct business with other market participants who engage in business or offer products in areas we deem speculative or risky, such as cryptocurrencies, non-fungible tokens, and other digital assets. Additionally, technology has lowered barriers to entry and made it possible for nonbanks to offer products and services traditionally provided by banks, such as automatic transfer and automatic payment systems. Competitors in these nonbank sectors may have fewer regulatory constraints, as well as lower cost structures. Additionally, due to their size, many competitors may be able to achieve economies of scale and, as a result, may offer a broader range of products and services as well as better pricing for those products and services than we can.

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~~Failure~~We toare ~~perform~~subject into ~~any~~certain ofrisks ~~these~~in ~~areas~~connection ~~could~~with ~~significantly weaken~~ our ~~competitive~~use ~~position,~~of ~~which~~networks ~~could adversely affect our growth~~ and ~~profitability~~technology ~~and result in a material adverse effect on our financial condition and results of operations~~systems.

Our Wesecurity ~~are~~measures ~~subject~~may not be sufficient to ~~certain~~mitigate ~~risks~~the inrisk ~~connection~~of ~~with~~a cyber-attack. Communications and information systems are essential to the conduct of our business, as we use such systems to manage our customer relationships, our general ledger and virtually all other aspects of

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