What changed in this filing

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Item 1. Financial Statements

2025-11-06 compared with 2025-08-07 · 298 added, 162 removed, 1320 unchanged (26% of the section changed)

3 unchanged sentences

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

June 30, 2025

September 30, 2025

December 31, 2024

3 unchanged sentences

63,482 55,637

Investment securities available for sale, at fair value (amortized cost of $ 336,206 and $ 376,265 at June 30, 2025 and December 31, 2024, respectively)

Investment securities available for sale, at fair value (amortized cost of $ 310,545 and $ 376,265 at September 30, 2025 and December 31, 2024, respectively)

282,608 340,344

Loans held for sale

Loans receivable (net of allowance for credit losses on loans of $ 18,345 and $ 20,449 at June 30, 2025 and December 31, 2024, respectively)

Loans receivable (net of allowance for credit losses on loans of $ 16,203 and $ 20,449 at September 30, 2025 and December 31, 2024, respectively)

1,607,825 1,675,186

33 unchanged sentences

75,000,000 shares authorized;

9,444,963 and 9,353,348 shares issued and outstanding at June 30, 2025 and December 31, 2024, respectively

9,462,150 and 9,353,348 shares issued and outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in capital

15 unchanged sentences

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

INTEREST INCOME

15 unchanged sentences

Sold loan servicing fees and servicing rights mark-to-market

Net gain on sale of loans

Net (loss) gain on sale of loans

Net loss on sale of investment securities

2 unchanged sentences

Income from BOLI death benefit, net

Other income (loss)

Total noninterest income

9 unchanged sentences

Total noninterest expense

Income (loss) before provision (benefit) for income taxes

Provision (benefit) for income taxes

Loss before (benefit) provision for income taxes

(Benefit) provision for income taxes

Net income (loss)

2 unchanged sentences

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands) (Unaudited)

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Net income (loss)

Other comprehensive income (loss):

Unrealized holding gains (losses) on investments available for sale arising during the period

Other comprehensive income:

Unrealized holding gains on investments available for sale arising during the period

Amortization of unrecognized defined benefit ("DB") plan prior service cost

1 unchanged sentence

Reclassification adjustment for net losses on sales of securities realized in income

Other comprehensive (loss) income, net of tax

Comprehensive income (loss)

Other comprehensive income, net of tax

Comprehensive income

See selected notes to the consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Three Months Ended June 30, 2025 and 2024

For the Three Months Ended September 30, 2025 and 2024

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

3 unchanged sentences

Total Shareholders'

Balance at March 31, 2024

Balance at June 30, 2024

9,453,247 $ 94 $ 93,985 $ 103,322 $ ( 6,923 ) $ ( 31,597 ) $ 158,881

( 1,980 ) ( 1,980 )

Common stock repurchased

( 98,156 ) — ( 991 ) ( 23 ) ( 1,014 )

Restricted stock award grants net of forfeitures

7 unchanged sentences

( 659 ) ( 659 )

Balance at June 30, 2024

Balance at September 30, 2024

9,365,979 $ 94 $ 93,218 $ 100,660 $ ( 6,759 ) $ ( 26,424 ) $ 160,789

Balance at March 31, 2025

Balance at June 30, 2025

9,444,963 $ 94 $ 93,595 $ 90,506 $ ( 6,264 ) $ ( 28,198 ) $ 149,733

2 unchanged sentences

( 1,626 ) (1 ) ( 13 ) ( 14 )

Other comprehensive loss, net of tax

( 69 ) ( 69 )

Other comprehensive income, net of tax

Share-based compensation expense

1 unchanged sentence

( 67 ) 164 97

Cash dividends declared ($ 0.07 per share)

( 661 ) ( 661 )

Balance at June 30, 2025

Canceled dividends payable on forfeited unvested restricted stock awards

Balance at September 30, 2025

9,462,150 $ 94 $ 93,646 $ 91,317 $ ( 6,100 ) $ ( 24,429 ) $ 154,528

2 unchanged sentences

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Six Months Ended June 30, 2025 and 2024

For the Nine Months Ended September 30, 2025 and 2024

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

14 unchanged sentences

ESOP shares committed to be released

( 13 ) 494 481

Cash dividends declared ($ 0.21 per share)

( 1,991 ) ( 1,991 )

Balance at June 30, 2024

Balance at September 30, 2024

9,365,979 $ 94 $ 93,218 $ 100,660 $ ( 6,759 ) $ ( 26,424 ) $ 160,789

2 unchanged sentences

( 4,573 ) ( 4,573 )

Common stock repurchased

Restricted stock award grants net of forfeitures

8 unchanged sentences

( 1,308 ) ( 1,308 )

Balance at June 30, 2025

Balance at September 30, 2025

9,462,150 $ 94 $ 93,646 $ 91,317 $ ( 6,100 ) $ ( 24,429 ) $ 154,528

3 unchanged sentences

(In thousands) (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

31 unchanged sentences

Proceeds from sales of securities available for sale

(Purchase) redemption of FHLB stock

Redemption (purchase) of FHLB stock

Early surrender of BOLI policies

2 unchanged sentences

Net decrease (increase) in loans receivable

Sale of premises and equipment, net of amortization

Proceeds from the sale of premises and equipment

Capital contributions to equity and partnership investments

Redemption of partnership investment

Capital disbursements received from equity and partnership investments

Capital contributions to low-income housing tax credit partnerships

4 unchanged sentences

(In thousands) (Unaudited)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from financing activities:

2 unchanged sentences

Repayment of long-term FHLB advances

Net increase (decrease) in short-term FHLB advances

Net decrease in short-term FHLB advances

Redemption of subordinated debt, net

Net increase (decrease) in line of credit

Net (decrease) increase in advances from borrowers for taxes and insurance

Net increase in advances from borrowers for taxes and insurance

Payment of dividends

10 unchanged sentences

Change in unrealized gain on securities available for sale

Change in unrealized (loss) gain on fair value hedge

Change in unrealized loss on fair value hedge

Amortization of unrecognized DB plan prior service cost

2 unchanged sentences

Lease liabilities arising from obtaining right-of-use assets

Transfer of BOLI receivable to prepaid expenses and other assets due to death benefit accrued but not paid at period end

Transfer of BOLI receivable to prepaid expenses and other assets due to early surrender recorded but not paid at period end

Series A equity investment acquired upon conversion of commercial business loan

22 unchanged sentences

In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial statements in accordance with GAAP have been included.

Operating results for the three and six months ended June 30, 2025 , are not necessarily indicative of the results that may be expected for future periods.

Operating results for the three and nine months ended September 30, 2025 , are not necessarily indicative of the results that may be expected for future periods.

In preparing the unaudited interim consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

4 unchanged sentences

Subsequent events - The Company has evaluated subsequent events for potential recognition and disclosure.

Material events are described in Note

Recently adopted accounting pronouncements

20 unchanged sentences

Note 2 - Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at June 30, 2025 are summarized as follows:

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at September 30, 2025 are summarized as follows:

Amortized Cost

44 unchanged sentences

$ 376,265 $ 238 $ ( 36,159 ) $ 340,344 $ —

There were no securities classified as held-to-maturity at June 30, 2025 and December 31, 2024 .

There was no allowance for credit losses on investment securities recorded at June 30, 2025 and December 31, 2024 , based on analysis performed by the Company.

Accrued interest receivable on available-for-sale debt securities totaled $ 2.0 million and $ 2.0 million as of June 30, 2025 and December 31, 2024 , respectively.

There were no securities classified as held-to-maturity at September 30, 2025 and December 31, 2024 .

There was no allowance for credit losses on investment securities recorded at September 30, 2025 and December 31, 2024 , based on analysis performed by the Company.

Accrued interest receivable on available-for-sale debt securities totaled $ 1.9 million and $ 2.0 million as of September 30, 2025 and December 31, 2024 , respectively.

Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Balance Sheets and is excluded from the calculation of the allowance for credit losses on investment securities.

The following shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of June 30, 2025 :

Less Than Twelve Months

41 unchanged sentences

$ ( 653 ) $ 41,933 $ ( 35,506 ) $ 241,991 $ ( 36,159 ) $ 283,924

There were 9 available-for-sale securities with unrealized losses of less than one year, and 139 available-for-sale securities with an unrealized loss of more than one year at June 30, 2025 .

There were 12 available-for-sale securities with unrealized losses of less than one year, and 128 available-for-sale securities with an unrealized loss of more than one year at September 30, 2025 .

There were 22 available-for-sale securities with unrealized losses of less than one year, and 144 available-for-sale securities with an unrealized loss of more than one year at December 31, 2024 .

3 unchanged sentences

The Company believes that it is unlikely that we would be required to sell these investments prior to a market price recovery or maturity.

Based on the Company’s evaluation of these securities, no credit impairment was recorded at June 30, 2025 , or December 31, 2024 .

Based on the Company’s evaluation of these securities, no credit impairment was recorded at September 30, 2025 , or December 31, 2024 .

The amortized cost and estimated fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated.

1 unchanged sentence

therefore, these securities are shown separately.

June 30, 2025

September 30, 2025

Available-for-Sale

56 unchanged sentences

These segments are further disaggregated into classes based on similar attributes and risk characteristics.

Loan amounts are presented at amortized cost which is comprised of the loan balance net of unearned loan fees in excess of unamortized costs and unamortized purchase premiums of $ 21.1 million as of June 30, 2025 and $ 19.1 million as of December 31, 2024 .

Loan amounts are presented at amortized cost which is comprised of the loan balance net of unearned loan fees in excess of unamortized costs and unamortized purchase premiums of $ 21.3 million as of September 30, 2025 and $ 19.1 million as of December 31, 2024 .

The amortized cost reflected in total loans receivable does not include accrued interest receivable.

Accrued interest receivable on loans was $ 6.3 million as of June 30, 2025 and $ 6.0 million as of December 31, 2024 , and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the calculation of the allowance for credit losses on loans.

Accrued interest receivable on loans was $ 6.2 million as of September 30, 2025 and $ 6.0 million as of December 31, 2024 , and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the calculation of the allowance for credit losses on loans.

The amortized cost of loans receivable, net of the allowance for credit losses on loans ("ACLL"), consisted of the following at the dates indicated:

June 30, 2025

September 30, 2025

December 31, 2024

31 unchanged sentences

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

June 30, 2025

September 30, 2025

December 31, 2024

19 unchanged sentences

$ 447 $ 12,925 $ 13,372 $ 2,970 $ 27,545 $ 30,515

Interest income recognized on a cash basis on nonaccrual loans for the three months ended June 30, 2025 and 2024 , was $ 24,000 and $ 66,000 , respectively.

Interest income recognized on a cash basis on nonaccrual loans for the six months ended June 30, 2025 and 2024 , was $ 32,000 and $ 141,000 , respectively.

Interest income recognized on a cash basis on nonaccrual loans for the three months ended September 30, 2025 and 2024 , was $ 14,000 and $ 1,000 , respectively.

Interest income recognized on a cash basis on nonaccrual loans for the nine months ended September 30, 2025 and 2024 , was $ 45,000 and $ 35,000 , respectively.

Past due loans.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.

There were no loans past due 90 days or more and still accruing interest at June 30, 2025 and December 31, 2024 .

There were no loans past due 90 days or more and still accruing interest at September 30, 2025 and December 31, 2024 .

The following tables present the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of the periods shown:

90 Days or More

June 30, 2025

September 30, 2025

Past Due Past Due Past Due Past Due Current Total Loans

51 unchanged sentences

Loans not otherwise classified are considered pass graded loans and are rated 1 - 3 in our risk rating system.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of June 30, 2025 , as well as gross charge-off activity for the six months ended June 30, 2025 .

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of September 30, 2025 , as well as gross charge-off activity for the nine months ended September 30, 2025 .

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

42 unchanged sentences

— 1,496 — — — 2 — 1,498

Special Mention (Grade 5)

4,530 — — — — — — 4,530

Substandard (Grade 6)

8 unchanged sentences

— — 184 135 — 24 248 591

Special Mention (Grade 5)

— — — — — — 154 154

Substandard (Grade 6)

151 unchanged sentences

Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of June 30, 2025 , $ 31.0 million of loans were individually evaluated with $ 79,000 of ACLL attributed to such loans.

At June 30, 2025 , two individually evaluated loans totaling $ 199,000 were evaluated using a discounted cash flow approach and the remaining loans totaling $ 30.8 million were evaluated based on the underlying value of the collateral.

One $ 6.7 million commercial real estate loan and one $ 5.3 million commercial construction loan were accruing interest at quarter end, while all other individually evaluated loans were on nonaccrual status at June 30, 2025 .

As of September 30, 2025 , $ 23.2 million of loans were individually evaluated based on the underlying value of the collateral with no ACLL attributed to such loans.

One $ 6.7 million commercial real estate loan and one $ 4.5 million commercial construction loan were accruing interest at quarter end, while all other individually evaluated loans were on nonaccrual status at September 30, 2025 .

As of December 31, 2024 , $ 35.8 million of loans were individually evaluated with $ 2.5 million of ACLL attributed to such loans.

5 unchanged sentences

Collateral Type

June 30, 2025

September 30, 2025

Single Family Residence

34 unchanged sentences

In those instances, the ACLL for a MLTB is determined through individual evaluation.

There was one new MLTB during the six months ended June 30, 2025 .

There were three new MLTB during the nine months ended September 30, 2025 .

The Bank agreed to modify the rate, extend the interest-only payment period and extend the term for a commercial construction loan which had a recorded investment of $ 5.5 million at the time of modification.

This commercial construction loan was in compliance with the modified terms at June 30, 2025 .

This commercial construction loan was in compliance with the modified terms at September 30, 2025 .

The Bank also agreed to defer payments on a commercial real estate loan with a recorded investment of $ 4.1 million at the time of modification.

The commercial real estate loan was in compliance with the modified terms at September 30, 2025 .

A previously charged-off commercial business loan was reinstated with term and rate modifications.

The commercial business loan was in compliance with the modified terms at September 30, 2025 .

During the year ended December 31, 2024, there were two new MLTB.

A commercial business loan with a recorded investment of $ 17,000 at the time of modification for which the Bank agreed to deferred principal payments and the borrower agreed to resume both principal and interest payments at the end of the deferral period.

The commercial business loan was not in compliance with the modified terms at December 31, 2024, and the balance was charged-off.

The commercial business loan was not in compliance with the modified terms at December 31, 2024, and the balance was charged-off in the fourth quarter of 2024.

The Bank also agreed to defer payments on a commercial real estate loan with a recorded investment of $ 6.4 million.

The commercial real estate loan was in compliance with the modified terms at both June 30, 2025 and December 31, 2024.

The commercial real estate loan was in compliance with the modified terms at both September 30, 2025 and December 31, 2024.

Other Real Estate Owned ("OREO").

At June 30, 2025 , and December 31, 2024 , the Company had $ 1.3 million and $ 0 , respectively, of OREO secured by residential real estate properties included in "prepaid expenses and other assets" on the Consolidated Balance Sheets.

At September 30, 2025 , and December 31, 2024 , the Company had $ 1.4 million and $ 0 , respectively, of OREO secured by residential real estate properties included in "prepaid expenses and other assets" on the Consolidated Balance Sheets.

Note 4 - Allowance for Credit Losses on Loans

13 unchanged sentences

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

At or For the Three Months Ended June 30, 2025

At or For the Three Months Ended September 30, 2025

Beginning Balance

Provision for (Recapture of) Credit Losses

(Recapture of) Provision for Credit Losses

Ending Balance

1 unchanged sentence

One-to-four family

$ 4,888 $ — $ — $ ( 1,012 ) $ 3,876

2,633 — — ( 71 ) 2,562

Commercial real estate

2,462 ( 656 ) 6 893 2,705

Construction and land

499 ( 483 ) — 633 649

1,441 — — ( 49 ) 1,392

Auto and other consumer

2,268 ( 106 ) 47 ( 172 ) 2,037

Commercial business

At or For the Six Months Ended June 30, 2025

4,154 ( 1,005 ) 675 ( 842 ) 2,982

$ 18,345 $ ( 2,250 ) $ 728 $ ( 620 ) $ 16,203

At or For the Nine Months Ended September 30, 2025

Beginning Balance

Provision for (Recapture of) Credit Losses

(Recapture of) Provision for Credit Losses

Ending Balance

1 unchanged sentence

One-to-four family

$ 4,757 $ — $ — $ ( 881 ) $ 3,876

2,493 — — 69 2,562

Commercial real estate

2,410 ( 6,242 ) 32 6,505 2,705

Construction and land

576 ( 857 ) 5 925 649

1,322 — — 70 1,392

Auto and other consumer

2,687 ( 622 ) 164 ( 192 ) 2,037

Commercial business

At or For the Three Months Ended June 30, 2024

6,204 ( 5,341 ) 1,761 358 2,982

$ 20,449 $ ( 13,062 ) $ 1,962 $ 6,854 $ 16,203

At or For the Three Months Ended September 30, 2024

Beginning Balance

Provision for (Recapture of) Credit Losses

(Recapture of) Provision for Credit Losses

Ending Balance

1 unchanged sentence

One-to-four family

$ 4,536 $ — $ 42 $ ( 270 ) $ 4,308

1,624 — — 965 2,589

Commercial real estate

3,132 — — ( 495 ) 2,637

Construction and land

801 — — ( 85 ) 716

1,692 — — ( 446 ) 1,246

Auto and other consumer

2,596 ( 492 ) 24 805 2,933

Commercial business

At or For the Six Months Ended June 30, 2024

4,962 ( 24 ) — 2,603 7,541

$ 19,343 $ ( 516 ) $ 66 $ 3,077 $ 21,970

At or For the Nine Months Ended September 30, 2024

Beginning Balance

Provision for (Recapture of) Credit Losses

Ending Balance

Provision for (Recapture of) Credit Losses Ending Balance

(In thousands)

One-to-four family

$ 2,975 $ — $ 44 $ 1,289 $ 4,308

1,154 — — 1,435 2,589

Commercial real estate

3,671 — — ( 1,034 ) 2,637

Construction and land

1,889 ( 3,978 ) — 2,805 716

1,077 — — 169 1,246

Auto and other consumer

4,409 ( 2,130 ) 268 386 2,933

Commercial business

2,335 ( 2,700 ) — 7,906 7,541

$ 17,510 $ ( 8,808 ) $ 312 $ 12,956 $ 21,970

Allowance for Credit Losses on Unfunded Loan Commitments.

3 unchanged sentences

The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class.

The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision, or recapture of provision, for credit losses on unfunded commitments on the Consolidated Statements of Operations.

The allowance for unfunded commitments was $ 550,000 and $ 599,000 at June 30, 2025 , and December 31, 2024 , respectively.

The related provision (recapture) expense was ($ 64,000 ) and $ 99,000 for the three months ended June 30, 2025 and June 30, 2024 , respectively.

The related provision recapture was ($ 49,000 ) and ($ 170,000 ) for the six months ended June 30, 2025 and June 30, 2024 , respectively.

This allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision, or recapture of provision, for credit losses on unfunded commitments on the Consolidated Statements of Operations.

The allowance for unfunded commitments was $ 497,000 and $ 599,000 at September 30, 2025 , and December 31, 2024 , respectively.

The related provision (recapture) expense was ($ 53,000 ) and $ 57,000 for the three months ended September 30, 2025 and September 30, 2024 , respectively.

The related provision recapture was ($ 102,000 ) and ($ 113,000 ) for the nine months ended September 30, 2025 and September 30, 2024 , respectively.

Note 5 - Deposits

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

June 30, 2025

September 30, 2025

December 31, 2024

16 unchanged sentences

$ 1,653,327 2.19 $ 1,688,026 2.42

The aggregate amount of time deposits in excess of the Federal Deposit Insurance Corporation ("FDIC") insured limit, currently $250,000, at June 30, 2025 and December 31, 2024 , was $ 170.0 million and $ 174.4 million, respectively.

The aggregate balance of time deposit accounts, including certificates of deposit, in excess of the Federal Deposit Insurance Corporation ("FDIC") insured limit, currently $250,000, at September 30, 2025 and December 31, 2024 , was $ 166.0 million and $ 174.4 million, respectively.

Maturities of certificates at the dates indicated are as follows:

June 30, 2025

September 30, 2025

December 31, 2024

10 unchanged sentences

$ 543,143 $ 647,842

At June 30, 2025 and December 31, 2024 , deposits included $ 120.9 million and $ 100.8 million, respectively, in public fund deposits.

The Bank had an outstanding letter of credit from the Federal Home Loan Bank of Des Moines ("FHLB") with a notional amount of $ 60.0 million at June 30, 2025 and December 31, 2024 , to collateralize public deposits.

At September 30, 2025 and December 31, 2024 , deposits included $ 116.4 million and $ 100.8 million, respectively, in public fund deposits.

The Bank had an outstanding letter of credit from the Federal Home Loan Bank of Des Moines ("FHLB") with a notional amount of $ 60.0 million at September 30, 2025 and December 31, 2024 , to collateralize public deposits.

This letter of credit exceeds the minimum collateral requirements established by the Washington Public Deposit Protection Commission.

Also included in deposits at June 30, 2025 and December 31, 2024 , were funds held by federally recognized tribes totaling $ 35.5 million and $ 20.1 million, respectively.

Investment securities with a carrying value of $ 38.9 million and $ 22.8 million were pledged as collateral for these deposits at June 30, 2025 and December 31, 2024 , respectively.

Also included in deposits at September 30, 2025 and December 31, 2024 , were funds held by federally recognized tribes totaling $ 37.6 million and $ 20.1 million, respectively.

Investment securities with a carrying value of $ 39.2 million and $ 22.8 million were pledged as collateral for these deposits at September 30, 2025 and December 31, 2024 , respectively.

These investment securities exceed the minimum collateral requirements established by the Bureau of Indian Affairs.

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

17 unchanged sentences

First Fed periodically uses fixed-rate advances maturing in less than one year as an alternative source of funds.

Available borrowing capacity was $ 179.9 million and $ 207.3 million at June 30, 2025 and December 31, 2024 , respectively.

All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $ 913.6 million and $ 951.8 million at June 30, 2025 and December 31, 2024 , respectively.

The Bank had outstanding letters of credit from the FHLB with notional amounts of $ 60.0 million to collateralize public deposits and $ 772,000 to secure the Bellevue, Washington branch lease at June 30, 2025 .

Available borrowing capacity was $ 272.0 million and $ 207.3 million at September 30, 2025 and December 31, 2024 , respectively.

All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $ 902.9 million and $ 951.8 million at September 30, 2025 and December 31, 2024 , respectively.

First Fed also has an established borrowing arrangement with the Federal Reserve Bank of San Francisco ("FRB") to utilize the discount window for short-term borrowing.

Available borrowing capacity was $ 17.6 million and $ 17.9 million at June 30, 2025 and December 31, 2024 , respectively.

Available borrowing capacity was $ 17.5 million and $ 17.9 million at September 30, 2025 and December 31, 2024 , respectively.

An overnight test of the line of credit was performed in June 2025.

Investment securities with a carrying value of $ 18.4 million and $ 18.6 million were pledged to the FRB at June 30, 2025 and December 31, 2024 , respectively.

Investment securities with a carrying value of $ 18.3 million and $ 18.6 million were pledged to the FRB at September 30, 2025 and December 31, 2024 , respectively.

On March 25, 2021, the Company completed a private placement of $ 40.0 million of 3.75 % fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors.

6 unchanged sentences

Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments.

Available borrowing capacity was $ 10.5 million and $ 13.5 million at June 30, 2025 and December 31, 2024 , respectively.

Available borrowing capacity was $ 5.0 million and $ 13.5 million at September 30, 2025 and December 31, 2024 , respectively.

The line of credit matures on November 17, 2025 .

2 unchanged sentences

Availability of funds are not guaranteed and facility usage is generally limited to ten consecutive days.

Available borrowing capacity was $ 50.0 million at both June 30, 2025 and December 31, 2024 .

Available borrowing capacity was $ 50.0 million at both September 30, 2025 and December 31, 2024 .

A borrowing test was performed in June 2025.

This credit facility is authorized for use through June 30, 2026.

The following table sets forth information regarding our borrowings at the end of and during the six months ended June 30, 2025 .

The following table sets forth information regarding our borrowings at the end of and during the nine months ended September 30, 2025 .

The table includes both long- and short-term borrowings.

15 unchanged sentences

4,850 3,335 624 1,074

The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at June 30, 2025 are as follows:

The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at September 30, 2025 are as follows:

Weighted- Average Interest Rate

28 unchanged sentences

Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax assets and liabilities.

The effective tax rates were 13.3 % and 5.2 % for the six months ended June 30, 2025 and 2024 , respectively.

The effective tax rates were 28.0 % and 25.5 % for the nine months ended September 30, 2025 and 2024 , respectively.

The effective tax rates differ from the statutory maximum federal tax rate for 2025 and 2024 of 21 %, largely due to the nontaxable earnings on BOLI and tax-exempt interest income earned on certain investment securities and loans.

Estimates for taxes and penalties on the early surrender of BOLI contracts were recorded in both periods, further impacting the effective tax rate calculation.

The effective tax rate does not include a valuation allowance for the net deferred tax asset based on management’s evaluation of cumulative earnings inclusive of other comprehensive income and available tax planning strategies.

The effective tax rate does not include a valuation allowance for the net deferred tax asset based on management’s evaluation of cumulative earnings inclusive of other comprehensive income.

Available tax planning strategies support the realization of the net deferred tax asset;

furthermore, management has concluded that all deferred tax assets are realizable individually.

On July 4, 2025, President Trump signed H.R.

1, the "One Big Beautiful Bill Act," into law.

This legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the reinstatement of 100% bonus depreciation and more favorable rules for determining the limitation on business interest expense.

The Company is currently evaluating the impact on future periods.

This legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the reinstatement of 100% bonus depreciation, while disallowance of other expenses, such as limitations on charitable deductions and meals, may have an unfavorable impact.

There was no material impact in the current period, and the Company is currently evaluating the impact on future periods.

Note 8 - Earnings (Loss) per Common Share

3 unchanged sentences

The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the periods shown:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands, except share data)

Net income (loss) available to common shareholders

$ 802 $ ( 1,980 ) $ ( 4,573 ) $ ( 3,803 )

Dividends and undistributed earnings allocated to participating securities

— ( 1 ) — ( 3 )

Earnings (loss) allocated to common shareholders

$ 802 $ ( 1,981 ) $ ( 4,573 ) $ ( 3,806 )

Weighted average common shares outstanding

9,415,143 9,419,143 9,413,154 9,469,960

Weighted average unvested restricted stock awards

( 113,015 ) ( 115,322 ) ( 126,238 ) ( 104,622 )

Weighted average unallocated ESOP shares

( 494,092 ) ( 547,056 ) ( 507,208 ) ( 560,214 )

Total basic weighted average common shares outstanding

8,808,036 8,756,765 8,779,708 8,805,124

Basic weighted average common shares outstanding

8,808,036 8,756,765 8,779,708 8,805,124

Dilutive restricted stock awards

Total diluted weighted average common shares outstanding

8,813,632 8,756,765 8,779,708 8,805,124

Basic earnings (loss) per common share

$ 0.09 $ ( 0.23 ) $ ( 0.52 ) $ ( 0.43 )

Diluted earnings (loss) per common share

$ 0.09 $ ( 0.23 ) $ ( 0.52 ) $ ( 0.43 )

Potentially dilutive shares are excluded from the computation of EPS if their effect is anti-dilutive.

At June 30, 2025 and 2024 , antidilutive shares as calculated under the treasury stock method totaled 23,270 and 21,965 , respectively.

At September 30, 2025 and 2024 , antidilutive shares as calculated under the treasury stock method totaled 16,750 and 20,663 , respectively.

Note 9 - Employee Benefits

5 unchanged sentences

The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank's discretionary contributions to the ESOP and earnings on the ESOP assets.

Principal and interest payments of $ 835,000 and $ 837,000 were made by the ESOP during the six months ended June 30, 2025 and 2024 , respectively.

Principal and interest payments of $ 835,000 and $ 837,000 were made by the ESOP during the nine months ended September 30, 2025 and 2024 , respectively.

As shares are committed to be released from collateral, the Company reports compensation expense equal to the average daily market prices of the shares and the shares become outstanding for EPS computations.

2 unchanged sentences

dividends on unallocated ESOP shares are recorded as a reduction of debt and accrued interest.

Compensation expense related to the ESOP for the three months ended June 30, 2025 and 2024 , was $ 122,000 and $ 148,000 , respectively.

Compensation expense related to the ESOP for the six months ended June 30, 2025 and 2024 , was $ 262,000 and $ 345,000 , respectively.

Compensation expense related to the ESOP for the three months ended September 30, 2025 and 2024 , was $ 97,000 and $ 136,000 , respectively.

Compensation expense related to the ESOP for the nine months ended September 30, 2025 and 2024 , was $ 359,000 and $ 481,000 , respectively.

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

June 30, 2025

September 30, 2025

December 31, 2024

(Dollars in thousands)

Allocated shares

545,097 492,208

Committed to be released shares

13,221 26,442

Unallocated shares

489,711 529,379

Total ESOP shares issued

1,048,029 1,048,029

(Dollars in thousands)

Fair value of unallocated shares

$ 3,854 $ 5,400

Note 10 - Stock-based Compensation

2 unchanged sentences

The maximum number of shares that may be utilized for awards under the 2020 EIP is 520,000 .

As of June 30, 2025 , there were 120,377 total shares available for grant under the 2020 EIP, all of which are available to be granted as restricted shares, performance shares, options or stock appreciation rights.

As of September 30, 2025 , there were 101,564 total shares available for grant under the 2020 EIP, all of which are available to be granted as restricted shares, performance shares, options or stock appreciation rights.

As a result of the approval of the 2020 EIP, the First Northwest Bancorp 2015 Equity Incentive Plan (the "2015 EIP") was frozen and no additional awards will be made.

As of June 30, 2025 , there were no shares available for grant under the 2015 EIP.

As of September 30, 2025 , there were no shares available for grant under the 2015 EIP.

The final shares granted under the 2015 EIP vested in the second quarter of 2025.

There were 73,337 and 68,138 shares of restricted stock awarded, respectively, during the six months ended June 30, 2025 and 2024 .

There were 145,875 and 81,181 shares of restricted stock awarded, respectively, during the nine months ended September 30, 2025 and 2024 .

Restricted share awards vest ratably over periods ranging from one to five years from the date of grant provided the eligible participant remains in service to the Company.

The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the grant date amortized over the vesting period.

In addition, there were 33,251 and no performance shares awarded, respectively, during the six months ended June 30, 2025 and 2024 .

In addition, there were 33,251 and no performance shares awarded, respectively, during the nine months ended September 30, 2025 and 2024 .

Performance share awards vest in accordance with the terms outlined in each award agreement.

The Company recognizes compensation expense for the performance share awards based on the fair value of the shares at the grant date amortized over the performance period.

For the three months ended June 30, 2025 and 2024 , total compensation expense for the equity incentive plans was $ 211,000 and $ 257,000 , respectively.

Included in the compensation expense for the three months ended June 30, 2025 and 2024 , was directors' equity compensation of $ 65,000 and $ 56,000 , respectively.

For the six months ended June 30, 2025 and 2024 , total compensation expense for the equity incentive plans was $ 405,000 and $ 521,000 , respectively.

Included in the compensation expense for the six months ended June 30, 2025 and 2024 , was directors' equity compensation of $ 121,000 and $ 110,000 , respectively.

For the three months ended September 30, 2025 and 2024 , total compensation expense for the equity incentive plans was $ 131,000 and $ 260,000 , respectively.

Included in the compensation expense for the three months ended September 30, 2025 and 2024 , was directors' equity compensation of $ 60,000 and $ 75,000 , respectively.

For the nine months ended September 30, 2025 and 2024 , total compensation expense for the equity incentive plans was $ 536,000 and $ 781,000 , respectively.

Included in the compensation expense for the nine months ended September 30, 2025 and 2024 , was directors' equity compensation of $ 181,000 and $ 185,000 , respectively.

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

Three Months Ended June 30, 2025

Three Months Ended September 30, 2025

Weighted-Average Grant Date Fair Value

Non-vested at April 1, 2025

Non-vested at June 30, 2025

Non-vested at July 1, 2025

157,463 $ 11.24

( 10,113 ) 10.18

( 1,626 ) 10.18

( 53,725 ) 12.22

Non-vested at September 30, 2025

(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares.

The surrendered shares are canceled and are unavailable for reissue.

Six Months Ended June 30, 2025

Weighted-Average Grant Date Fair Value

Nine Months Ended September 30, 2025

Shares Weighted-Average Grant Date Fair Value

Non-vested at January 1, 2025

Non-vested at June 30, 2025

97,064 $ 14.46

( 47,325 ) 14.81

( 11,221 ) 14.81

( 59,103 ) 12.06

Non-vested at September 30, 2025

The surrendered shares are canceled and are unavailable for reissue.

As of June 30, 2025 , there was $ 1.4 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards.

As of September 30, 2025 , there was $ 1.2 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards.

The cost is expected to be recognized over the remaining weighted-average vesting period of approximately 2.3 years.

38 unchanged sentences

The following tables show the Company’s assets and liabilities measured at fair value on a recurring basis at the dates indicated:

June 30, 2025

September 30, 2025

Quoted Prices in Active Markets for Identical Assets or Liabilities

5 unchanged sentences

Municipal bonds

$ 11,669 $ 67,952 $ — $ 79,621

— 12,169 — 12,169

ABS corporate

— 9,881 — 9,881

Corporate debt

1,970 41,369 — 43,339

— 6,977 — 6,977

— 94,203 — 94,203

MBS non-agency

— 27,114 9,304 36,418

Sold loan servicing rights

— — 3,093 3,093

Total assets measured at fair value

$ 13,639 $ 259,665 $ 12,397 $ 285,701

Financial Liabilities

Interest rate swap derivative

$ — $ 1,676 $ — $ 1,676

December 31, 2024

6 unchanged sentences

Municipal bonds

$ 12,059 $ 65,817 $ — $ 77,876

— 12,876 — 12,876

ABS corporate

— 16,122 — 16,122

Corporate debt

1,917 52,574 — 54,491

— 8,666 — 8,666

— 98,697 — 98,697

MBS non-agency

— 39,735 31,881 71,616

Sold loan servicing rights

— — 3,281 3,281

Interest rate swap derivative

Total assets measured at fair value

$ 13,976 $ 294,754 $ 35,162 $ 343,892

Financial Liabilities

Interest rate swap derivative

$ — $ 123 $ — $ 123

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

June 30, 2025

September 30, 2025

Fair Value (In thousands)

28 unchanged sentences

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

As of or For the Three Months Ended June 30,

As of or For the Six Months Ended June 30,

As of or For the Three Months Ended September 30,

As of or For the Nine Months Ended September 30,

Sold loan servicing rights:

1 unchanged sentence

Balance at beginning of period

$ 3,220 $ 3,740 $ 3,281 $ 3,793

Servicing rights that result from transfers and sale of financial assets

( 4 ) 5 13 38

Changes in fair value due to changes in model inputs or assumptions (1)

( 123 ) ( 161 ) ( 201 ) ( 247 )

Balance at end of period

$ 3,093 $ 3,584 $ 3,093 $ 3,584

(1) Represents changes due to collection/realization of expected cash flows and curtailments.

As of or For the Three Months Ended June 30,

As of or For the Six Months Ended June 30,

As of or For the Three Months Ended September 30,

As of or For the Nine Months Ended September 30,

Securities available for sale:

2 unchanged sentences

Balance at beginning of period

$ 13,198 $ 17,231 $ 31,881 $ 27,469

Principal payments and maturities

( 3,944 ) ( 148 ) ( 22,717 ) ( 10,530 )

Unrealized Gains

50 12 140 156

Balance at end of period

$ 9,304 $ 17,095 $ 9,304 $ 17,095

Assets and liabilities measured at fair value on a nonrecurring basis - Assets are considered to be valued on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the consolidated balance sheets.

1 unchanged sentence

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

June 30, 2025

September 30, 2025

(In thousands)

Individually evaluated collateral dependent loans

$ — $ — $ 23,174 $ 23,174

Other real estate owned

— — 1,377 1,377

December 31, 2024

1 unchanged sentence

Individually evaluated collateral dependent loans

At June 30, 2025 and December 31, 2024 , there were no individually evaluated loans with discounts to appraisal disposition value or other unobservable inputs.

$ — $ — $ 33,246 $ 33,246

At September 30, 2025 and December 31, 2024 , there were no individually evaluated loans with discounts to appraisal disposition value or other unobservable inputs.

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

June 30, 2025

September 30, 2025

Fair Value Measurements Using:

4 unchanged sentences

Cash and cash equivalents

$ 79,170 $ 79,170 $ 79,170 $ — $ —

Investment securities available for sale

282,608 282,608 13,639 259,665 9,304

Loans held for sale

2,154 2,154 — 2,154 —

Loans receivable, net

1,607,825 1,493,529 — — 1,493,529

10,856 10,856 — 10,856 —

Accrued interest receivable

8,160 8,160 — 8,160 —

Sold loan servicing rights, at fair value

3,093 3,093 — — 3,093

Financial liabilities

Demand deposits

$ 1,110,184 $ 1,110,184 $ 1,110,184 $ — $ —

Time deposits

543,143 543,143 — — 543,143

FHLB Borrowings

210,000 210,403 — — 210,403

Line of Credit

15,000 15,059 — — 15,059

Subordinated debt, net

34,625 36,265 — — 36,265

Accrued interest payable

1,145 1,145 — 1,145 —

Interest rate swap derivative

1,676 1,676 — 1,676 —

December 31, 2024

5 unchanged sentences

Cash and cash equivalents

$ 72,448 $ 72,448 $ 72,448 $ — $ —

Investment securities available for sale

340,344 340,344 13,976 294,487 31,881

Loans held for sale

472 472 — 472 —

Loans receivable, net

1,675,186 1,536,748 — — 1,536,748

14,435 14,435 — 14,435 —

Accrued interest receivable

8,159 8,159 — 8,159 —

Sold loan servicing rights, at fair value

3,281 3,281 — — 3,281

Interest rate swap derivative

267 267 — 267 —

Financial liabilities

Demand deposits

1,040,184 $ 1,040,184 $ 1,040,184 $ — $ —

Time deposits

647,842 648,232 — — 648,232

FHLB Borrowings

290,000 288,512 — — 288,512

Line of Credit

6,500 6,526 — — 6,526

Subordinated debt, net

39,514 39,974 — — 39,974

Accrued interest payable

3,295 3,295 — 3,295 —

Interest rate swap derivative

123 123 — 123 —

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

4 unchanged sentences

Unrecognized DB Plan Prior Service Cost, Net of Amortization

Unrealized (Losses) Gains on Fair Value of Hedged Items

Unrealized Gains (Losses) on Fair Value of Hedged Items

(In thousands)

Balance at March 31, 2024

Other comprehensive loss before reclassification

Amounts reclassified from accumulated other comprehensive income

Net other comprehensive income

Balance at June 30, 2024

Balance at March 31, 2025

Other comprehensive income before reclassification

1 unchanged sentence

Net other comprehensive income (loss)

Balance at September 30, 2024

Balance at June 30, 2025

Balance at December 31, 2023

Other comprehensive loss before reclassification

Other comprehensive income before reclassification

Amounts reclassified from accumulated other comprehensive income

Net other comprehensive income

Balance at June 30, 2024

Balance at September 30, 2025

Unrealized Gains and Losses on Available-for-Sale Securities

Net Actuarial Gains (Losses) on DB Plan Assets

Unrecognized DB Plan Prior Service Cost, Net of Amortization

Unrealized Losses on Fair Value of Hedged Items

(In thousands)

Balance at December 31, 2023

2 unchanged sentences

Net other comprehensive income (loss)

Balance at June 30, 2025

Balance at September 30, 2024

Balance at December 31, 2024

Other comprehensive income before reclassification

Amounts reclassified from accumulated other comprehensive income

Net other comprehensive income (loss)

Balance at September 30, 2025

Note 13 - Derivatives and Hedging Activities

12 unchanged sentences

Line item in the Consolidated Balance Sheets where the hedged item is included:

June 30, 2025

September 30, 2025

Investment securities (1)

9 unchanged sentences

( 1 ) 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 June 30, 2025 and December 31, 2024 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 56.4 million and $ 56.7 million, respectively;

At September 30, 2025 and December 31, 2024 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 51.0 million and $ 56.7 million, respectively;

the cumulative basis adjustments associated with this hedging relationship was $ 1.0 million and $ 220,000 , respectively;

1 unchanged sentence

( 2 ) 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 June 30, 2025 and December 31, 2024 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 240.9 million and $ 258.1 million, respectively;

At September 30, 2025 and December 31, 2024 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 227.7 million and $ 258.1 million, respectively;

the cumulative basis adjustments associated with this hedging relationship was $ 896,000 and ($ 188,000 ), respectively;

and the amount of the designated hedged items was $ 100.0 million.

for both periods.

and the amount of the designated hedged items was $ 100.0 million for both periods.

The following table summarizes the Company’s derivative instruments at the date indicated.

3 unchanged sentences

(In thousands)

June 30, 2025

September 30, 2025

Fair value hedges:

10 unchanged sentences

The following table summarizes the effect of fair value accounting on the Consolidated Statements of Operations for the periods shown:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(In thousands)

14 unchanged sentences

14 ( 300 ) 1,050 ( 1,544 )

Net expense recognized on fair value hedges

Net (expense) income recognized on fair value hedges

$ ( 34 ) $ 498 $ ( 77 ) $ 118

5 unchanged sentences

The Company has interest rate swap agreements with its derivative counterparties that contain provisions where if the Company either defaults or fails to maintain its status as a well or adequately capitalized institution, then the Company could be required to terminate the contract or post additional collateral.

At June 30, 2025 , the Company had derivatives in a net liability position related to these agreements.

The Company has minimum collateral posting thresholds with its derivative counterparties and has posted cash of $ 3.5 million at June 30, 2025 , to secure the related interest rate swap agreements as needed.

At September 30, 2025 , the Company had derivatives in a net liability position related to these agreements.

The Company has minimum collateral posting thresholds with its derivative counterparties and has posted cash of $ 3.5 million at September 30, 2025 , to secure the related interest rate swap agreements as needed.

In certain cases, the Company will have posted excess collateral compared to total exposure due to initial margin requirements or day-to-day rate volatility.

As of June 30, 2025 , the Company was in compliance with all credit risk-related contingent features.

As of September 30, 2025 , the Company was in compliance with all credit risk-related contingent features.

Given the considerations described above, the Company considers the impact of the risk of counterparty default to be immaterial.

3 unchanged sentences

The Company’s activities are considered to be a single industry segment for financial reporting purposes.

The chief operating decision maker ("CODM") is comprised of the interim chief executive officer and the chief financial officer.

The chief operating decision maker ("CODM") is comprised of the chief executive officer and the chief financial officer.

The accounting policies of the Bank are the same as those described in the summary of significant accounting policies in Note 1 of the Company's Annual Report on Form 10 -K for the year ended December 31, 2024 (" 2024 Form 10 -K").

16 unchanged sentences

Pursuant to the Settlement Agreement, the Bank agreed, in exchange for, among other things, a release of all claims of the parties to the Settlement Agreement, to (i) release certain liens against the property of the Debtors and (ii) make certain cash payments of not less than $ 2.87 million and not more than $ 5.74 million, with the amount within that range to be determined by the percentage of certain unsecured creditors of the OpCo Debtors that enter into a mutual release of all claims related to the Debtors with the Bank and the Company under the OpCo Debtors’ Chapter 11 plan of liquidation.

The deadline for creditors to enter into such releases is August 29, 2025.

A hearing to consider confirmation of the OpCo Debtors' Chapter 11 plan of liquidation is scheduled for September 8 and 9, 2025.

The Bank reserved $ 5.8 million for this matter in the first quarter of 2025 as a noninterest expense.

The Bank intends to pursue reimbursement from its insurance carriers.

On June 10, 2025, 3|5|2 Capital GP LLC, on behalf of 3|5|2 Capital ABS Master Fund LP (collectively, "3|5|2 Capital"), filed a complaint (the "Complaint") against First Fed, in the Superior Court of the State of Washington, arising from 3|5|2 Capital’s alleged investment in bonds of Water Station Management, along with certain affiliated entities, in the United States Bankruptcy Court for the Eastern District of Washington.

The OpCo Debtors' Chapter 11 plan of liquidation was confirmed on September 9, 2025, with more than the 80 % threshold of eligible creditors opting in to the release of the Company.

The Bank subsequently paid the amounts required under the Settlement Agreement, utilizing the $ 5.74 million of the $ 5.8 million previously reserved in the first quarter of 2025 as a noninterest expense.

The Bank pursued reimbursement from its insurance carrier.

3|5|2 Capital Litigation

On June 10, 2025, 3|5|2 Capital GP LLC, on behalf of 3|5|2 Capital ABS Master Fund LP (collectively, "3|5|2 Capital"), filed a complaint (the "3|5|2 Complaint") against First Fed, in the Superior Court of the State of Washington for King County, arising from 3|5|2 Capital’s alleged investment in bonds of Water Station Management, along with certain affiliated entities, in the United States Bankruptcy Court for the Eastern District of Washington.

The 3|5|2 Complaint alleges that Water Station Management and certain affiliated individuals and entities misappropriated over $ 100 million by using the proceeds from a bond offering to repay earlier investors and creditors, including the Bank, rather than for the disclosed purpose of expanding Water Station Management’s business.

The Complaint asserts claims against the Bank for aiding and abetting the alleged fraud, conspiracy to commit fraud, unjust enrichment, and constructive trust, and seeks various forms of relief, including not less than $ 106.9 million in compensatory damages plus interest, unspecified punitive damages, and attorney fees and costs.

The Company and the Bank strongly dispute the allegations contained in the Complaint, and intend to vigorously defend against the claims.

The 3|5|2 Complaint asserts claims against the Bank for aiding and abetting the alleged fraud, conspiracy to commit fraud, unjust enrichment, and constructive trust, and seeks various forms of relief, including not less than $ 106.9 million in compensatory damages plus interest, unspecified punitive damages, and attorneys' fees and costs.

The Company strongly disputes the allegations contained in the 3|5|2 Complaint and is vigorously defending against the claims.

On September 30, 2025, First Fed filed its Answer, Affirmative Defenses, and Counterclaims, which include a counterclaim alleging that 3|5|2 Capital aided and abetted a fraudulent scheme perpetrated by Ryan Wear, Water Station, and certain affiliated entities, causing damage to the Bank.

Note 16 - Subsequent Event

In October 2025, the Bank received a $ 1.6 million reimbursement from its insurance carrier to offset costs associated with the litigation described above.

Management is currently reviewing the related expenditures to determine the appropriate allocation of the funds received.

On October 17, 2025, Socotra REIT I, LLC filed a complaint (the "Socotra Complaint") against First Fed, in the Superior Court of the State of Washington for King County.

The Socotra Complaint alleges that First Fed made misrepresentations, committed fraudulent acts, converted funds, and violated Washington’s Consumer Protection Act in connection with a $ 7.7 million commercial loan from Socotra to Ideal that paid down $ 4.0 million in First Fed secured obligations, and seeks unspecified damages including restitution, statutory penalties, and attorneys' fees and costs.

The Company is reviewing the claims, strongly disputes the allegations contained in the Socotra Complaint and intends to vigorously defend against the claims.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements