First Northwest Bancorp 10-Q

fnwb20260630_10q.htm Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2026 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number: 001-36741 FIRST NORTHWEST BANCORP (Exact name of registrant as specified in its charter) Washington 46-1259100 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer I.D. Number) 105 West 8th Street , Port Angeles , Washington 98362 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: ( 360 ) 457-0461 Securities registered pursuant to Section 12(b) of the Act: Title of each class: Trading Symbol(s): Name of each exchange on which registered: Common Stock, par value $0.01 per share FNWB The Nasdaq Stock Market LLC Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☒ Emerging growth company ☐ Non-accelerated filer ☐ Smaller reporting company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: As of July 30, 2026, there were 9,511,615 shares of common stock, $0.01 par value per share, outstanding. 1 Table of Contents FIRST NORTHWEST BANCORP FORM 10-Q TABLE OF CONTENTS PART 1 - FINANCIAL INFORMATION Page I tem 1 - Financial Statements (Unaudited) 3 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Item 3 - Quantitative and Qualitative Disclosures About Market Risk 53 Item 4 - Controls and Procedures 53 PART II - OTHER INFORMATION Item 1 - Legal Proceedings 54 Item 1A - Risk Factors 54 Item 2 - Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities 54 Item 3 - Defaults Upon Senior Securities 54 Item 4 - Mine Safety Disclosures 54 Item 5 - Other Information 54 Item 6 - Exhibits 55 SIGNATURES 56 As used in this report, "First Northwest" refers to First Northwest Bancorp and "First Fed" or "Bank" refers to First Fed Bank, the wholly owned subsidiary of First Northwest. The terms "we," "our," "us," and "Company" refer to First Northwest together with First Fed, unless the context indicates otherwise. 2 Table of Contents PART I - FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except share information) (Unaudited) June 30, 2026 December 31, 2025 ASSETS Cash and due from banks $ 14,649 $ 15,530 Interest-earning deposits in banks 83,709 69,587 Investment securities available for sale, at fair value (amortized cost of $ 313,215 and $ 295,849 , respectively) 287,028 270,310 Loans held for sale 1,286 1,063 Loans receivable (net of allowance for credit losses on loans of $ 16,309 and $ 16,987 , respectively) 1,597,082 1,612,028 Federal Home Loan Bank ("FHLB") stock, at cost 13,279 13,105 Accrued interest receivable 7,181 6,498 Premises and equipment, net 9,160 8,464 Servicing rights on sold loans, at fair value 3,012 3,014 Bank-owned life insurance ("BOLI"), net 43,305 42,382 Equity and partnership investments 15,441 15,489 Goodwill and other intangible assets, net 1,062 1,062 Deferred tax asset, net 13,664 13,638 Right-of-use ("ROU") asset, net 15,057 15,596 Prepaid expenses and other assets 19,920 20,129 Total assets $ 2,124,835 $ 2,107,895 LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $ 1,607,392 $ 1,599,101 Borrowings 313,177 308,143 Accrued interest payable 151 1,223 Lease liability, net 16,039 16,439 Accrued expenses and other liabilities 28,260 24,301 Advances from borrowers for taxes and insurance 1,503 1,424 Total liabilities 1,966,522 1,950,631 Shareholders' Equity Preferred stock, $ 0.01 par value; 5,000,000 shares authorized; no shares issued or outstanding — — Common stock, $ 0.01 par value; 75,000,000 shares authorized; 9,504,441 and 9,467,925 shares issued and outstanding, respectively 95 95 Additional paid-in capital 93,986 93,803 Retained earnings 92,015 91,699 Accumulated other comprehensive loss, net of tax ( 22,177 ) ( 22,398 ) Unearned employee stock ownership plan ("ESOP") shares ( 5,606 ) ( 5,935 ) Total shareholders' equity 158,313 157,264 Total liabilities and shareholders' equity $ 2,124,835 $ 2,107,895 See selected notes to the consolidated financial statements. 3 Table of Contents FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (Unaudited) Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 INTEREST INCOME Interest and fees on loans receivable $ 21,997 $ 22,814 $ 43,997 $ 45,045 Interest on investment securities 2,723 3,466 5,308 7,269 Interest on deposits in banks and other 453 520 920 1,002 FHLB dividends 282 331 564 638 Total interest income 25,455 27,131 50,789 53,954 INTEREST EXPENSE Deposits 8,033 9,552 15,963 19,289 Borrowings 3,249 3,386 6,213 6,625 Total interest expense 11,282 12,938 22,176 25,914 Net interest income 14,173 14,193 28,613 28,040 PROVISION FOR CREDIT LOSSES (Recapture of) provision for credit losses on loans ( 337 ) ( 296 ) ( 350 ) 7,474 Recapture of provision for credit losses on unfunded commitments ( 203 ) ( 64 ) ( 112 ) ( 49 ) (Recapture of) provision for credit losses ( 540 ) ( 360 ) ( 462 ) 7,425 Net interest income after (recapture of) provision for credit losses 14,713 14,553 29,075 20,615 NONINTEREST INCOME Loan and deposit service fees 1,107 1,095 2,229 2,201 Sold loan servicing fees and servicing rights mark-to-market 162 92 289 287 Net gain on sale of loans 73 44 149 55 Increase in BOLI cash surrender value 455 485 923 857 Income from BOLI death benefit, net — — — 1,059 Other income 208 454 423 1,488 Total noninterest income 2,005 2,170 4,013 5,947 NONINTEREST EXPENSE Compensation and benefits 8,054 4,698 16,286 12,413 Data processing 1,702 1,926 3,930 3,937 Occupancy and equipment 1,538 1,507 3,103 3,099 Supplies, postage, and telephone 384 346 682 644 Regulatory assessments and state taxes 581 501 1,115 980 Advertising 245 299 549 564 Professional fees 2,305 1,449 4,331 2,226 FDIC insurance premium 387 463 750 897 Legal settlement — — — 5,750 Other expense 1,197 1,576 2,331 2,255 Total noninterest expense 16,393 12,765 33,077 32,765 Income (loss) before provision for (benefit from) income taxes 325 3,958 11 ( 6,203 ) Provision for (benefit from) income taxes 17 297 ( 303 ) ( 828 ) Net income (loss) $ 308 $ 3,661 $ 314 $ ( 5,375 ) Basic and diluted earnings (loss) per common share $ 0.03 $ 0.42 $ 0.04 $ ( 0.61 ) See selected notes to the consolidated financial statements. 4 Table of Contents FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (Dollars in thousands) (Unaudited) Three Months Ended June 30, 2026 2025 Balance Tax Effect Net Balance Tax Effect Net Net income $ 308 $ 3,661 Other comprehensive income: Unrealized holding gains on investments available for sale arising during the period $ 535 $ ( 117 ) 418 $ 125 $ ( 28 ) 97 Amortization of unrecognized defined benefit ("DB") plan prior service cost 38 ( 8 ) 30 38 ( 8 ) 30 Reclassification adjustment for change in fair value of hedged items 377 ( 82 ) 295 ( 250 ) 54 ( 196 ) Other comprehensive income (loss), net of tax $ 950 $ ( 207 ) 743 $ ( 87 ) $ 18 ( 69 ) Comprehensive income $ 1,051 $ 3,592 For the Six Months Ended June 30, 2026 2025 Balance Tax Effect Net Balance Tax Effect Net Net income (loss) $ 314 $ ( 5,375 ) Other comprehensive income (loss): Unrealized holding (losses) gains on investments available for sale arising during the period $ ( 648 ) $ 220 ( 428 ) $ 3,230 $ ( 694 ) 2,536 Amortization of unrecognized defined benefit ("DB") plan prior service cost 75 ( 16 ) 59 75 ( 16 ) 59 Reclassification adjustment for change in fair value of hedged items 754 ( 164 ) 590 ( 791 ) 170 ( 621 ) Other comprehensive income, net of tax $ 181 $ 40 221 $ 2,514 $ ( 540 ) 1,974 Comprehensive income (loss) $ 535 $ ( 3,401 ) See selected notes to the consolidated financial statements. 5 Table of Contents FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Three Months Ended June 30, 2026 and 2025 (Dollars in thousands, except share information) (Unaudited) Common Stock Additional Paid-in Retained Unearned ESOP Accumulated Other Comprehensive Loss, Total Shareholders' Shares Amount Capital Earnings Shares Net of Tax Equity Balance at March 31, 2025 9,440,618 $ 94 $ 93,450 $ 87,506 $ ( 6,429 ) $ ( 28,129 ) $ 146,492 Net income 3,661 3,661 Restricted stock award grants, net of forfeitures 6,661 — — — Restricted stock awards canceled ( 2,316 ) — ( 23 ) ( 23 ) Other comprehensive loss, net of tax ( 69 ) ( 69 ) Share-based compensation expense 211 211 ESOP shares committed to be released ( 43 ) 165 122 Cash dividends declared ($ 0.07 per share) ( 661 ) ( 661 ) Balance at June 30, 2025 9,444,963 $ 94 $ 93,595 $ 90,506 $ ( 6,264 ) $ ( 28,198 ) $ 149,733 Balance at March 31, 2026 9,499,300 $ 95 $ 93,854 $ 91,707 $ ( 5,770 ) $ ( 22,920 ) $ 156,966 Net income 308 308 Restricted stock award grants, net of forfeitures 7,000 — — — Restricted stock awards canceled ( 1,859 ) — ( 19 ) ( 19 ) Other comprehensive income, net of tax 743 743 Share-based compensation expense 183 183 ESOP shares committed to be released ( 32 ) 164 132 Balance at June 30, 2026 9,504,441 $ 95 $ 93,986 $ 92,015 $ ( 5,606 ) $ ( 22,177 ) $ 158,313 See selected notes to the consolidated financial statements. 6 Table of Contents FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY For the Six Months Ended June 30, 2026 and 2025 (Dollars in thousands, except share information) (Unaudited) Common Stock Additional Paid-in Retained Unearned ESOP Accumulated Other Comprehensive Loss, Total Shareholders' Shares Amount Capital Earnings Shares Net of Tax Equity Balance at December 31, 2024 9,353,348 $ 93 $ 93,357 $ 97,198 $ ( 6,594 ) $ ( 30,172 ) $ 153,882 Net loss ( 5,375 ) ( 5,375 ) Restricted stock award grants, net of forfeitures 101,210 1 — 1 Restricted stock awards canceled ( 9,595 ) — ( 99 ) ( 99 ) Other comprehensive income, net of tax 1,974 1,974 Share-based compensation expense 405 405 ESOP shares committed to be released ( 68 ) 330 262 Cash dividends declared ($ 0.14 per share) ( 1,317 ) ( 1,317 ) Balance at June 30, 2025 9,444,963 $ 94 $ 93,595 $ 90,506 $ ( 6,264 ) $ ( 28,198 ) $ 149,733 Balance at December 31, 2025 9,467,925 $ 95 $ 93,803 $ 91,699 $ ( 5,935 ) $ ( 22,398 ) $ 157,264 Net income 314 314 Restricted stock award grants, net of forfeitures 40,237 — — — Restricted stock awards canceled ( 3,721 ) — ( 36 ) ( 36 ) Other comprehensive income, net of tax 221 221 Share-based compensation expense 289 289 ESOP shares committed to be released ( 70 ) 329 259 Canceled dividends payable on forfeited unvested restricted stock awards 2 2 Balance at June 30, 2026 9,504,441 $ 95 $ 93,986 $ 92,015 $ ( 5,606 ) $ ( 22,177 ) $ 158,313 See selected notes to the consolidated financial statements. 7 Table of Contents FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net income (loss) $ 314 $ ( 5,375 ) Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization of fixed assets 607 653 Amortization of core deposit intangible — 1 Amortization and accretion of premiums and discounts on investments, net 37 74 Accretion of deferred loan fees and purchased premiums, net ( 1,317 ) ( 745 ) Amortization of debt issuance costs 34 37 Amortization of ROU asset 539 1,229 Change in fair value of sold loan servicing rights 10 78 Additions to servicing rights on sold loans, net ( 8 ) ( 17 ) (Recapture of) provision for credit losses on loans ( 350 ) 7,474 Recapture of provision for credit losses on unfunded commitments ( 112 ) ( 49 ) Allocation of ESOP shares 259 262 Share-based compensation expense 289 405 Gain on sale of loans, net ( 149 ) ( 55 ) Gain on sale of real estate owned ( 26 ) — Write-down on real estate owned 69 — Gain on extinguishment of subordinated debt — ( 848 ) Increase in BOLI cash surrender value, net ( 923 ) ( 857 ) Income from BOLI death benefit, net — ( 1,059 ) Origination of loans held for sale ( 12,641 ) ( 11,963 ) Proceeds from sale of loans held for sale 12,567 12,333 Change in assets and liabilities: Increase in accrued interest receivable ( 683 ) ( 146 ) Increase in prepaid expenses and other assets ( 335 ) ( 10,609 ) Decrease in accrued interest payable ( 1,072 ) ( 1,781 ) Decrease in lease liabilities ( 400 ) ( 1,278 ) Increase (decrease) in accrued expenses and other liabilities 5,668 ( 5,535 ) Net cash provided (used) by operating activities 2,377 ( 17,771 ) Cash flows from investing activities: Purchase of securities available for sale ( 38,838 ) ( 5,534 ) Proceeds from maturities, calls, and principal repayments of securities available for sale 21,435 45,518 Purchase of FHLB stock ( 174 ) ( 471 ) Early surrender of BOLI policies — 9,381 Purchase of BOLI policies — ( 9,109 ) Proceeds from BOLI death benefit — 528 Purchase of loans ( 47,158 ) ( 44,693 ) Decrease in loans receivable, net 63,431 63,236 Net (purchase) sale of premises and equipment ( 1,303 ) 477 Capital contributions to partnership investments ( 296 ) ( 455 ) Redemption of partnership investment 150 — Capital disbursements received from partnership investments 519 350 Capital contributions to low-income housing tax credit partnerships ( 345 ) — Proceeds from sale of real estate owned 109 — Net cash (used) provided by investing activities ( 2,470 ) 59,228 See selected notes to the consolidated financial statements. 8 Table of Contents FIRST NORTHWEST BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) Six Months Ended June 30, 2026 2025 Cash flows from financing activities: Net increase (decrease) in deposits $ 8,291 $ ( 33,390 ) Proceeds from long-term FHLB advances — 30,000 Repayment of long-term FHLB advances ( 55,000 ) ( 20,000 ) Net increase in short-term FHLB advances 60,000 — Redemption of subordinated debt, net — ( 4,095 ) Net increase in line of credit — 3,000 Net increase (decrease) in advances from borrowers for taxes and insurance 79 ( 159 ) Payment of dividends — ( 1,299 ) Restricted stock awards canceled ( 36 ) ( 99 ) Net cash provided (used) by financing activities 13,334 ( 26,042 ) Net increase in cash and cash equivalents 13,241 15,415 Cash and cash equivalents at beginning of period 85,117 72,448 Cash and cash equivalents at end of period $ 98,358 $ 87,863 Supplemental disclosures of cash flow information: Cash paid for interest on deposits and borrowings $ 23,249 $ 27,753 Cash paid for income taxes — 10 Supplemental disclosures of noncash investing activities: Change in unrealized (loss) gain on securities available for sale $ ( 648 ) $ 3,230 Change in unrealized gain (loss) on fair value hedge 754 ( 791 ) Amortization of unrecognized DB plan prior service cost 75 75 Loan principal transferred from held-for-investment to held-for-sale — 1,400 Loan principal transferred to real estate owned and repossessed assets, net 340 1,297 Lease liabilities arising from obtaining right-of-use assets — 1,264 Transfer of BOLI receivable to prepaid expenses and other assets due to death benefit accrued but not paid at period end — 1,404 Transfer of BOLI receivable to prepaid expenses and other assets due to early surrender recorded but not paid at period end — 9,114 Series A equity investment acquired upon conversion of commercial business loan — 1,260 See selected notes to the consolidated financial statements. 9 Table of Contents FIRST NORTHWEST BANCORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1 - Basis of Presentation and Critical Accounting Policies Organization and nature of business - First Northwest Bancorp, a Washington corporation ("First Northwest"), became the holding company of First Fed Bank ("First Fed" or the "Bank") on January 29, 2015, upon completion of the Bank's conversion from a mutual to stock form of organization (the "Conversion"). First Northwest and the Bank are collectively referred to as the "Company." On August 5, 2022, First Northwest's election to be treated as a financial holding company became effective, allowing the Company to engage in non-banking activities that are financial in nature or incidental to financial activities. First Northwest's business activities generally are limited to passive investment activities and oversight of its investment in First Fed. Accordingly, the information set forth in this report, including the consolidated financial statements and related data, relates primarily to the Bank. The Bank is a community-oriented financial institution providing commercial and consumer banking services to individuals and businesses primarily in western Washington State with offices in Clallam, Jefferson, Kitsap, King, Snohomish and Whatcom counties. These services include deposit and lending transactions that are supplemented with borrowing and investing activities. On October 31, 2021, the Bank converted from a State Savings Bank Charter to a State Commercial Bank Charter and was simultaneously renamed First Fed Bank from First Federal Savings and Loan Association of Port Angeles. Basis of presentation - The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the information and footnotes required by U.S. Generally Accepted Accounting Principles ("GAAP") for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements and accompanying notes included in the Company's Annual Report on Form 10 -K for the year ended December 31, 2025 . 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, 2026 , are not necessarily indicative of the results that may be expected for future periods. In preparing the unaudited interim consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to a determination of the allowance for credit losses ("ACL"), fair value of financial instruments and derivatives, and deferred tax assets and liabilities. Principles of consolidation - The accompanying consolidated financial statements include the accounts of First Northwest and its wholly owned subsidiary, First Fed. All material intercompany accounts and transactions have been eliminated in consolidation. Subsequent events - The Company has evaluated subsequent events for potential recognition and disclosure. Recently adopted accounting pronouncements In November 2024, the FASB issued ASU 2024 - 04, Debt—Debt with Conversion and Other Options (Subtopic 470 - 20 ): Induced Conversions of Convertible Debt Instruments . ASU 2024 - 04 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments do not change the accounting for conversions that include the issuance of all equity securities upon conversion. ASU 2024 - 04 is effective for the Company for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU did not have a material impact on the consolidated financial statements and related disclosures. Recently issued accounting pronouncements not yet adopted In November 2024, the FASB issued ASU 2024 - 03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220 - 40 ): Disaggregation of Income Statement Expenses . ASU 2024 - 03 requires additional disclosure of the nature of expenses included in the income statement in response to requests from investors for more information to better understand an entity's performance and potential future cash flows. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU 2024 - 03 is effective for the Company for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU is not expected to have a material impact on the consolidated financial statements and related disclosures. 10 Table of Contents In September 2025, the FASB issued ASU 2025 - 06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350 - 40 ): Targeted Improvements to the Accounting for Internal-Use Software which clarifies the accounting for costs related to internal-use software. The new guidance clarifies the threshold entities apply to begin capitalizing costs and removes all references to project stages in ASC Subtopic 350 - 40. ASU 2025 - 06 is effective for the Company for fiscal years beginning after December 15, 2027, including interim periods within those fiscal years. The Company does not anticipate this ASU will have a material impact on its financial statements. In November 2025, the FASB issued ASU 2025 - 08, Financial instruments – Credit Losses (Topic 326 ): Purchased Loans , which amends the guidance in ASC 326 on the accounting for certain purchased loans. Under the ASU, entities must account for acquired loans (excluding credit cards) that meet certain criteria at acquisition ("purchased seasoned loans") by recognizing them at their purchase price plus an allowance for expected credit losses (the "gross-up approach"). ASU 2025 - 08 also introduces an accounting policy election related to the subsequent measurement of expected credit losses for entities that use a method other than a discounted cash flow analysis to estimate credit losses on purchased seasoned loans. If this accounting policy is elected, entities can use the amortized cost basis of the asset to subsequently measure their credit loss allowance. ASU 2025 - 08 is effective for annual reporting periods beginning after December 15, 2026, including interim periods within those fiscal years. Early adoption is permitted in an interim or annual reporting period in which financial statements have not yet been issued or made available for issuance. The Company is currently evaluating the impact of ASU 2025 - 08 on its consolidated financial statements. 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, 2026 are summarized as follows: (dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Allowance for Credit Losses Available for Sale Municipal bonds $ 91,713 $ — $ ( 11,723 ) $ 79,990 $ — U.S. government agency issued asset-backed securities (ABS agency) 11,371 22 ( 22 ) 11,371 — Corporate issued asset-backed securities (ABS corporate) 6,612 3 — 6,615 — Corporate issued debt securities (Corporate debt) 51,821 392 ( 1,222 ) 50,991 — U.S. Small Business Administration securities (SBA) 5,363 17 ( 18 ) 5,362 — Mortgage-backed securities: U.S. government agency issued mortgage-backed securities (MBS agency) 105,701 145 ( 10,844 ) 95,002 — Non-agency issued mortgage-backed securities (MBS non-agency) 40,634 1 ( 2,938 ) 37,697 — Total securities available for sale $ 313,215 $ 580 $ ( 26,767 ) $ 287,028 $ — The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at December 31, 2025 , are summarized as follows: (dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value Allowance for Credit Losses Available for Sale Municipal bonds $ 92,148 $ — $ ( 11,896 ) $ 80,252 $ — ABS agency 11,927 28 ( 12 ) 11,943 — ABS corporate 7,963 2 ( 4 ) 7,961 — Corporate debt 39,772 251 ( 1,222 ) 38,801 — SBA 6,293 18 ( 18 ) 6,293 — Mortgage-backed securities: MBS agency 101,618 379 ( 10,341 ) 91,656 — MBS non-agency 36,128 4 ( 2,728 ) 33,404 — Total securities available for sale $ 295,849 $ 682 $ ( 26,221 ) $ 270,310 $ — 11 Table of Contents There were no securities classified as held-to-maturity at June 30, 2026 and December 31, 2025 . There was no allowance for credit losses on investment securities recorded at June 30, 2026 and December 31, 2025 , based on analysis performed by the Company. Accrued interest receivable on available-for-sale debt securities totaled $ 1.6 million and $ 1.5 million as of June 30, 2026 and December 31, 2025 , 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, 2026 : Less Than Twelve Months Twelve Months or Longer Total (dollars in thousands) Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Available for Sale Municipal bonds $ — $ — $ ( 11,723 ) $ 79,890 $ ( 11,723 ) $ 79,890 ABS agency — — ( 22 ) 2,463 ( 22 ) 2,463 Corporate debt ( 77 ) 7,161 ( 1,145 ) 22,914 ( 1,222 ) 30,075 SBA ( 9 ) 2,741 ( 9 ) 637 ( 18 ) 3,378 Mortgage-backed securities: MBS agency ( 103 ) 15,678 ( 10,741 ) 54,627 ( 10,844 ) 70,305 MBS non-agency ( 84 ) 10,004 ( 2,854 ) 25,447 ( 2,938 ) 35,451 Total available-for-sale in a loss position $ ( 273 ) $ 35,584 $ ( 26,494 ) $ 185,978 $ ( 26,767 ) $ 221,562 The following shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of December 31, 2025 : Less Than Twelve Months Twelve Months or Longer Total (dollars in thousands) Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Gross Unrealized Losses Fair Value Available for Sale Municipal bonds $ — $ — $ ( 11,896 ) $ 80,252 $ ( 11,896 ) $ 80,252 ABS agency — — ( 12 ) 4,116 ( 12 ) 4,116 ABS corporate — — ( 4 ) 958 ( 4 ) 958 Corporate debt ( 8 ) 993 ( 1,214 ) 27,570 ( 1,222 ) 28,563 SBA ( 5 ) 643 ( 13 ) 2,380 ( 18 ) 3,023 Mortgage-backed securities: MBS agency ( 31 ) 3,871 ( 10,310 ) 57,375 ( 10,341 ) 61,246 MBS non-agency — — ( 2,728 ) 31,154 ( 2,728 ) 31,154 Total available-for-sale in a loss position $ ( 44 ) $ 5,507 $ ( 26,177 ) $ 203,805 $ ( 26,221 ) $ 209,312 Management believes that the unrealized losses on our investment securities relate principally to the general change in interest rates, market liquidity and demand, and market volatility that has occurred since the initial purchase, and such unrecognized losses or gains will continue to vary with general interest rate level and market fluctuations in the future. We do not believe the unrealized losses on our securities are related to a deterioration in credit quality. Certain investments in a loss position are guaranteed by government entities or government sponsored entities. The Company does not intend, and 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, 2026 , or December 31, 2025 . 12 Table of Contents The amortized cost and estimated fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated. Expected maturities of mortgage-backed securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties; therefore, these securities are shown separately. June 30, 2026 December 31, 2025 (dollars in thousands) Amortized Cost Estimated Fair Value Amortized Cost Estimated Fair Value Available for Sale Mortgage-backed securities: Due within one year $ 6,599 $ 6,580 $ 4,602 $ 4,603 Due after one through five years 15,212 14,825 6,912 6,856 Due after five through ten years 5,026 5,014 7,215 7,012 Due after ten years 119,498 106,280 119,017 106,589 Total mortgage-backed securities 146,335 132,699 137,746 125,060 All other investment securities: Due within one year 1,000 989 1,000 959 Due after one through five years 25,071 24,360 24,082 23,620 Due after five through ten years 57,497 53,313 45,356 41,453 Due after ten years 83,312 75,667 87,665 79,218 Total all other investment securities 166,880 154,329 158,103 145,250 Total investment securities $ 313,215 $ 287,028 $ 295,849 $ 270,310 Note 3 - Loans Receivable The Company has identified three segments of its loan portfolio that reflect the structure of the lending function, the Company's strategic plan and the manner in which management monitors performance and credit quality. The three loan portfolio segments are: Real Estate Loans, Consumer Loans and Commercial Business Loans. These segments are further disaggregated into classes based on similar attributes and risk characteristics. Loan amounts are 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 $ 22.7 million as of June 30, 2026 and $ 21.5 million as of December 31, 2025 . The amortized cost reflected in total loans receivable does not include accrued interest receivable. Accrued interest receivable on loans was $ 5.6 million as of June 30, 2026 and $ 5.0 million as of December 31, 2025 , 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: (dollars in thousands) June 30, 2026 December 31, 2025 Real Estate: One-to-four family $ 357,077 $ 376,731 Multi-family 255,813 288,529 Commercial real estate 402,798 402,683 Construction and land 61,697 61,268 Total real estate loans 1,077,385 1,129,211 Consumer: Home equity 90,014 85,088 Auto and other consumer 294,982 283,502 Total consumer loans 384,996 368,590 Commercial business loans 151,000 130,311 Total loans receivable 1,613,381 1,628,112 Less: Derivative basis adjustment ( 10 ) ( 903 ) Allowance for credit losses on loans 16,309 16,987 Total loans receivable, net $ 1,597,082 $ 1,612,028 13 Table of Contents Nonaccrual Loans. The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the credit is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful. All interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on either the cash basis or cost recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. For those loans placed on nonaccrual status due to payment delinquency, return to accrual status will generally not occur until the borrower demonstrates repayment ability over a period of not less than six months. The following table presents the amortized cost of nonaccrual loans by class of loan at the dates indicated: June 30, 2026 December 31, 2025 (dollars in thousands) Nonaccrual Loans with ACLL Nonaccrual Loans with No ACLL Total Nonaccrual Loans Nonaccrual Loans with ACLL Nonaccrual Loans with No ACLL Total Nonaccrual Loans One-to-four family $ 119 $ 1,508 $ 1,627 $ 91 $ 2,181 $ 2,272 Commercial real estate 38 9,411 9,449 5 9,740 9,745 Construction and land 4 4,160 4,164 7 5,139 5,146 Home equity 53 106 159 53 — 53 Auto and other consumer 22 1,310 1,332 25 1,061 1,086 Commercial business 377 3,620 3,997 303 3,990 4,293 Total nonaccrual loans $ 613 $ 20,115 $ 20,728 $ 484 $ 22,111 $ 22,595 Interest income recognized on a cash basis on nonaccrual loans for the three months ended June 30, 2026 and 2025 , was $ 33,000 and $ 24,000 , respectively. Interest income recognized on a cash basis on nonaccrual loans for the six months ended June 30, 2026 and 2025 , was $ 166,000 and $ 32,000 , 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, 2026 and December 31, 2025 . The following tables present the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of June 30, 2026 . 30-59 Days 60-89 Days 90 Days or More Total (dollars in thousands) Past Due Past Due Past Due Past Due Current Total Loans Real Estate: One-to-four family $ 312 $ 481 $ 456 $ 1,249 $ 355,828 $ 357,077 Multi-family — — — — 255,813 255,813 Commercial real estate 363 — 3,367 3,730 399,068 402,798 Construction and land — — 4,160 4,160 57,537 61,697 Total real estate loans 675 481 7,983 9,139 1,068,246 1,077,385 Consumer: Home equity 84 106 — 190 89,824 90,014 Auto and other consumer 1,966 1,131 1,311 4,408 290,574 294,982 Total consumer loans 2,050 1,237 1,311 4,598 380,398 384,996 Commercial business loans 526 268 2,823 3,617 147,383 151,000 Total loans $ 3,251 $ 1,986 $ 12,117 $ 17,354 $ 1,596,027 $ 1,613,381 14 Table of Contents The following tables present the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of December 31, 2025 . 30-59 Days 60-89 Days 90 Days or More Total (dollars in thousands) Past Due Past Due Past Due Past Due Current Total Loans Real Estate: One-to-four family $ 867 $ 1,288 $ 523 $ 2,678 $ 374,053 $ 376,731 Multi-family — — — — 288,529 288,529 Commercial real estate 3,435 — — 3,435 399,248 402,683 Construction and land 1 — 5,146 5,147 56,121 61,268 Total real estate loans 4,303 1,288 5,669 11,260 1,117,951 1,129,211 Consumer: Home equity — — 53 53 85,035 85,088 Auto and other consumer 3,565 528 1,062 5,155 278,347 283,502 Total consumer loans 3,565 528 1,115 5,208 363,382 368,590 Commercial business loans 19 2,686 270 2,975 127,336 130,311 Total loans $ 7,887 $ 4,502 $ 7,054 $ 19,443 $ 1,608,669 $ 1,628,112 Credit quality indicator. Federal regulations provide for the classification of lower quality loans and other assets, such as debt and equity securities, as substandard, doubtful, or loss; risk ratings 6, 7, and 8 in our 8 -point risk rating system, respectively. An asset is considered substandard if it is inadequately protected by the current net worth and paying capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected. Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted. When First Fed classifies problem assets as either substandard or doubtful, it may choose to individually evaluate the expected credit loss or may determine that the characteristics are not significantly different from those in pooled loan analysis. The Company evaluates individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. When an insured institution classifies problem assets as a loss, it is required to charge off such assets in the period in which they are deemed uncollectible. Assets that do not currently expose First Fed to sufficient risk to warrant classification as substandard or doubtful but possess identified weaknesses are designated as either watch or special mention assets; risk ratings 4 and 5 in our risk rating system, respectively. Loans not otherwise classified are considered pass graded loans and are rated 1 - 3 in our risk rating system. 15 Table of Contents The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of June 30, 2026 , as well as gross charge-off activity for the six months ended June 30, 2026 . Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension. Term Loans by Year of Origination or Most Recent Renewal or Extension (1) Revolving Total (dollars in thousands) 2026 2025 2024 2023 2022 Prior Loans Loans One-to-four family Pass (Grades 1-3) $ 3,234 $ 7,357 $ 2,644 $ 7,954 $ 121,236 $ 210,010 $ — $ 352,435 Watch (Grade 4) — — 172 — 290 2,485 — 2,947 Special Mention (Grade 5) — — — — — 68 — 68 Substandard (Grade 6) — — — — 456 1,171 — 1,627 Total one-to-four family 3,234 7,357 2,816 7,954 121,982 213,734 — 357,077 Gross charge-offs year-to-date — — — — — — — — Multi-family Pass (Grades 1-3) 40,736 3,459 17,617 6,784 61,097 54,395 — 184,088 Watch (Grade 4) 15,746 — 9,658 — 17,769 19,314 — 62,487 Special Mention (Grade 5) — 4,534 — — — — — 4,534 Substandard (Grade 6) — — — — 4,704 — — 4,704 Total multi-family 56,482 7,993 27,275 6,784 83,570 73,709 — 255,813 Gross charge-offs year-to-date — — — — — — — — Commercial Real Estate Pass (Grades 1-3) 80,110 57,649 13,952 42,230 38,110 103,880 — 335,931 Watch (Grade 4) 3,631 3,618 14,535 — 9,539 13,422 — 44,745 Special Mention (Grade 5) 3,262 — — — 5,157 4,254 — 12,673 Substandard (Grade 6) — 9,411 — — 38 — — 9,449 Total commercial real estate 87,003 70,678 28,487 42,230 52,844 121,556 — 402,798 Gross charge-offs year-to-date — 3 — — — — — 3 Construction and Land Pass (Grades 1-3) 15,255 27,971 11,653 262 769 1,623 — 57,533 Substandard (Grade 6) — — — 4,160 — 4 — 4,164 Total construction and land 15,255 27,971 11,653 4,422 769 1,627 — 61,697 Gross charge-offs year-to-date — — — 371 — — — 371 Home Equity Pass (Grades 1-3) 1,881 6,014 3,135 4,131 4,350 8,896 60,732 89,139 Watch (Grade 4) — 186 115 — 23 157 187 668 Special Mention (Grade 5) — — — — — — 53 53 Substandard (Grade 6) — — — — 106 48 — 154 Total home equity 1,881 6,200 3,250 4,131 4,479 9,101 60,972 90,014 Gross charge-offs year-to-date — — — — — — — — Auto and Other Consumer Pass (Grades 1-3) 43,621 56,284 47,996 28,077 37,049 75,935 930 289,892 Watch (Grade 4) 23 271 707 90 646 889 1 2,627 Special Mention (Grade 5) — 8 634 478 11 — — 1,131 Substandard (Grade 6) — — 85 956 195 96 — 1,332 Total auto and other consumer 43,644 56,563 49,422 29,601 37,901 76,920 931 294,982 Gross charge-offs year-to-date — — 7 106 115 47 126 401 Commercial business Pass (Grades 1-3) 8,052 11,043 19,712 10,374 4,498 48,027 34,199 135,905 Watch (Grade 4) 3 3,206 1,921 1 235 29 1,360 6,755 Special Mention (Grade 5) 728 — 1,458 80 108 4 1,878 4,256 Substandard (Grade 6) — 305 78 163 3,392 146 — 4,084 Total commercial business 8,783 14,554 23,169 10,618 8,233 48,206 37,437 151,000 Gross charge-offs year-to-date — 2 26 — 12 127 — 167 Total loans Pass (Grades 1-3) 192,889 169,777 116,709 99,812 267,109 502,766 95,861 1,444,923 Watch (Grade 4) 19,403 7,281 27,108 91 28,502 36,296 1,548 120,229 Special Mention (Grade 5) 3,990 4,542 2,092 558 5,276 4,326 1,931 22,715 Substandard (Grade 6) — 9,716 163 5,279 8,891 1,465 — 25,514 Total loans $ 216,282 $ 191,316 $ 146,072 $ 105,740 $ 309,778 $ 544,853 $ 99,340 $ 1,613,381 Total gross charge-offs year-to-date $ — $ 5 $ 33 $ 477 $ 127 $ 174 $ 126 $ 942 ( 1 ) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension. 16 Table of Contents The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of December 31, 2025 , as well as gross charge-off activity for the year then ended. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension. Term Loans by Year of Origination or Most Recent Renewal or Extension (1) Revolving Total (dollars in thousands) 2025 2024 2023 2022 2021 Prior Loans Loans One-to-four family Pass (Grades 1-3) $ 7,571 $ 4,066 $ 8,065 $ 128,413 $ 109,134 $ 113,570 $ — $ 370,819 Watch (Grade 4) — 387 — 292 — 2,355 — 3,034 Special Mention (Grade 5) — — — 529 — 43 — 572 Substandard (Grade 6) — — — 259 — 2,047 — 2,306 Total one-to-four family 7,571 4,453 8,065 129,493 109,134 118,015 — 376,731 Gross charge-offs for the year — — — — — — — — Multi-family Pass (Grades 1-3) 8,081 17,738 17,820 80,638 51,091 37,775 — 213,143 Watch (Grade 4) 5,825 9,732 — 22,204 24,889 4,902 — 67,552 Special Mention (Grade 5) 4,531 — 3,303 — — — — 7,834 Total multi-family 18,437 27,470 21,123 102,842 75,980 42,677 — 288,529 Gross charge-offs for the year — — — — — — — — Commercial Real Estate Pass (Grades 1-3) 61,864 21,177 44,009 50,828 70,765 89,639 — 338,282 Watch (Grade 4) 3,671 7,572 — 12,118 6,204 3,120 — 32,685 Special Mention (Grade 5) — — — 4,251 3,419 1,771 — 9,441 Substandard (Grade 6) 9,740 — — 5 12,530 — — 22,275 Total commercial real estate 75,275 28,749 44,009 67,202 92,918 94,530 — 402,683 Gross charge-offs for the year 985 — — — 5,586 — — 6,571 Construction and Land Pass (Grades 1-3) 26,259 24,510 351 1,571 1,477 422 — 54,590 Watch (Grade 4) — 1,532 — — — — — 1,532 Substandard (Grade 6) — — 5,139 — — 7 — 5,146 Total construction and land 26,259 26,042 5,490 1,571 1,477 429 — 61,268 Gross charge-offs for the year — — 1,884 — — — — 1,884 Home Equity Pass (Grades 1-3) 6,552 4,290 4,257 4,841 3,641 6,138 54,422 84,141 Watch (Grade 4) — 117 182 132 — 23 280 734 Special Mention (Grade 5) — — — — — 9 101 110 Substandard (Grade 6) — — — — — 50 53 103 Total home equity 6,552 4,407 4,439 4,973 3,641 6,220 54,856 85,088 Gross charge-offs for the year — — — — — — — — Auto and Other Consumer Pass (Grades 1-3) 65,818 54,755 30,871 41,590 50,744 32,830 822 277,430 Watch (Grade 4) — 1,023 1,167 1,522 386 146 1 4,245 Special Mention (Grade 5) 79 126 393 43 24 76 — 741 Substandard (Grade 6) — 85 640 262 — 99 — 1,086 Total auto and other consumer 65,897 55,989 33,071 43,417 51,154 33,151 823 283,502 Gross charge-offs for the year — 22 228 313 13 32 137 745 Commercial business Pass (Grades 1-3) 11,921 21,923 12,145 5,452 2,889 19,955 41,274 115,559 Watch (Grade 4) 3,447 1,638 565 251 13 250 1,280 7,444 Special Mention (Grade 5) — 1,457 99 910 211 112 130 2,919 Substandard (Grade 6) 334 96 169 3,514 276 — — 4,389 Total commercial business 15,702 25,114 12,978 10,127 3,389 20,317 42,684 130,311 Gross charge-offs for the year 692 434 — 2,478 2,015 686 — 6,305 Total loans Pass (Grades 1-3) 188,066 148,459 117,518 313,333 289,741 300,329 96,518 1,453,964 Watch (Grade 4) 12,943 22,001 1,914 36,519 31,492 10,796 1,561 117,226 Special Mention (Grade 5) 4,610 1,583 3,795 5,733 3,654 2,011 231 21,617 Substandard (Grade 6) 10,074 181 5,948 4,040 12,806 2,203 53 35,305 Total loans $ 215,693 $ 172,224 $ 129,175 $ 359,625 $ 337,693 $ 315,339 $ 98,363 $ 1,628,112 Total Gross charge-offs for the year $ 1,677 $ 456 $ 2,112 $ 2,791 $ 7,614 $ 718 $ 137 $ 15,505 ( 1 ) Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension. 17 Table of Contents Individually Evaluated Loans. The Company evaluates loans collectively for purposes of determining the ACLL in accordance with ASC 326 by aggregating loans deemed to possess similar risk characteristics and individually evaluates loans that it believes no longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral. Loans that are deemed by management to possess unique risk characteristics are evaluated individually for purposes of determining an appropriate lifetime ACLL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent. Collateral dependent loans are evaluated based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company may increase or decrease the ACLL for collateral dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. In cases where the loan is well-secured and the estimated value of the collateral exceeds the amortized cost of the loan, no ACLL is recorded. Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans. As of June 30, 2026 , $ 23.9 million of loans were individually evaluated with $ 173,000 of ACLL attributed to such loans. At June 30, 2026 , two individually evaluated loans with recorded investments totaling $ 379,000 were evaluated using a discounted cash flow approach and the remaining loans totaling $ 23.5 million were evaluated based on the underlying value of the collateral. One $ 4.5 million multi-family loan was accruing interest at quarter end, while all other individually evaluated loans were on nonaccrual status at June 30, 2026 . As of December 31, 2025, $ 25.9 million of loans were individually evaluated with $ 151,000 of ACLL attributed to such loans. At December 31, 2025, two individually evaluated loans with recorded investments totaling $ 303,000 were evaluated using a discounted cash flow approach and the remaining loans totaling $ 25.6 million were evaluated based on the underlying value of the collateral. One $ 4.5 million multi-family loan was accruing interest at year end, while all other individually evaluated loans were on nonaccrual status at December 31, 2025. Collateral Dependent Loans. Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral. The following table summarizes individually evaluated collateral dependent loans by segment and collateral type as of June 30, 2026 . Collateral Type (dollars in thousands) Single Family Residence Condominium Multi-family Office Building Gas Station Auto Business Assets Total One-to-four family $ 1,508 $ — $ — $ — $ — $ — $ — $ 1,508 Multi-family — — 4,534 — — — — 4,534 Commercial real estate — — — 6,044 3,367 — — 9,411 Construction and land — 4,160 — — — — — 4,160 Home equity 106 — — — — — — 106 Auto and other consumer — — — — — 131 — 131 Commercial business 2,869 — — — — — 751 3,620 Total collateral-dependent loans $ 4,483 $ 4,160 $ 4,534 $ 6,044 $ 3,367 $ 131 $ 751 $ 23,470 18 Table of Contents The following table summarizes individually evaluated collateral dependent loans by segment and collateral type as of December 31, 2025 . Collateral Type (dollars in thousands) Single Family Residence Condominium Multi-family Office Building Gas Station Business Assets Total One-to-four family $ 2,181 $ — $ — $ — $ — $ — $ 2,181 Multi-family — — 4,531 — — — 4,531 Commercial real estate — — — 6,306 3,435 — 9,741 Construction and land — 5,139 — — — — 5,139 Commercial business 2,875 7 — — — 1,108 3,990 Total collateral-dependent loans $ 5,056 $ 5,146 $ 4,531 $ 6,306 $ 3,435 $ 1,108 $ 25,582 Modified Loans to Troubled Borrowers. Modified loans to troubled borrowers ("MLTB") refer to modifications of loans to borrowers experiencing financial difficulty. A MLTB arises from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following: principal forgiveness, interest rate reduction, other-than-insignificant payment delay, term extension, or any combination of the foregoing. The ACLL for MLTBs is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loans no longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACLL for a MLTB is determined through individual evaluation. There were no new MLTB during the six months ended June 30, 2026 . There was one new MLTB during the six months ended June 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 subsequently converted to an amortizing multi-family loan and was in compliance with the modified terms at June 30, 2026. Other Real Estate Owned ("OREO"). The Company held $ 1.6 million and $ 1.4 million at June 30, 2026 , and December 31, 2025 , 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 The Company has identified segments of loans with similar risk characteristics for which it then applies one of two loss methodologies. The Company uses a discounted cash flow ("DCF") methodology for most of its segments to calculate the ACLL. For certain segments with smaller portfolios or where data is prohibitive to running a DCF calculation, management has elected to use a Remaining Life methodology. The Company will evaluate individual loans for expected credit losses when those loans do not share similar risk characteristics with loans evaluated using a collective (pooled) basis. The allowance for individually evaluated loans is calculated using the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell, or another method such as the cash flow method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt. When the cash flow method is used, cash flows are discounted back by the effective interest rate and compared to the total recorded investment. If the present value of cash flows is less than the total recorded investment, a reserve is calculated. Determining the ACLL involves the use of significant management judgement and estimates, which are subject to change based on management’s ongoing assessment of the credit quality of the loan portfolio and changes in economic forecasts used in the Bank's Current Expected Credit Loss model. The reserve is an estimate based upon factors and trends at the time the financial statements are prepared. 19 Table of Contents 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, 2026 (dollars in thousands) Beginning Balance Charge-offs Recoveries (Recapture of) Provision for Credit Losses Ending Balance One-to-four family $ 3,495 $ — $ — $ ( 28 ) $ 3,467 Multi-family 2,370 — — ( 174 ) 2,196 Commercial real estate 3,563 — — ( 516 ) 3,047 Construction and land 875 ( 200 ) — 186 861 Home equity 1,286 — — 154 1,440 Auto and other consumer 1,957 ( 125 ) 109 28 1,969 Commercial business 3,277 ( 34 ) 73 13 3,329 Total $ 16,823 $ ( 359 ) $ 182 $ ( 337 ) $ 16,309 At or For the Six Months Ended June 30, 2026 (dollars in thousands) Beginning Balance Charge-offs Recoveries (Recapture of) Provision for Credit Losses Ending Balance One-to-four family $ 3,789 $ — $ — $ ( 322 ) $ 3,467 Multi-family 2,458 — — ( 262 ) 2,196 Commercial real estate 3,405 ( 3 ) — ( 355 ) 3,047 Construction and land 661 ( 371 ) — 571 861 Home equity 1,329 — — 111 1,440 Auto and other consumer 1,956 ( 401 ) 159 255 1,969 Commercial business 3,389 ( 167 ) 455 ( 348 ) 3,329 Total $ 16,987 $ ( 942 ) $ 614 $ ( 350 ) $ 16,309 At or For the Three Months Ended June 30, 2025 (dollars in thousands) Beginning Balance Charge-offs Recoveries Provision for (Recapture of) Credit Losses Ending Balance One-to-four family $ 4,876 $ — $ — $ 12 $ 4,888 Multi-family 2,645 — — ( 12 ) 2,633 Commercial real estate 2,427 ( 15 ) 20 30 2,462 Construction and land 461 — 5 33 499 Home equity 1,387 — — 54 1,441 Auto and other consumer 2,449 ( 273 ) 74 18 2,268 Commercial business 6,324 ( 2,823 ) 1,084 ( 431 ) 4,154 Total $ 20,569 $ ( 3,111 ) $ 1,183 $ ( 296 ) $ 18,345 At or For the Six Months Ended June 30, 2025 (dollars in thousands) Beginning Balance Charge-offs Recoveries Provision for (Recapture of) Credit Losses Ending Balance One-to-four family $ 4,757 $ — $ — $ 131 $ 4,888 Multi-family 2,493 — — 140 2,633 Commercial real estate 2,410 ( 5,586 ) 26 5,612 2,462 Construction and land 576 ( 374 ) 5 292 499 Home equity 1,322 — — 119 1,441 Auto and other consumer 2,687 ( 516 ) 117 ( 20 ) 2,268 Commercial business 6,204 ( 4,336 ) 1,086 1,200 4,154 Total $ 20,449 $ ( 10,812 ) $ 1,234 $ 7,474 $ 18,345 20 Table of Contents Allowance for Credit Losses on Unfunded Loan Commitments. The Company estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The Company has determined that no allowance is necessary for its home equity line of credit portfolio as it has the contractual ability to unconditionally cancel the available lines of credit. The allowance methodology is similar to the ACLL, but includes an additional estimate of the future utilization of the commitment as determined by historical commitment utilization. The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class. 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 $ 483,000 and $ 594,000 at June 30, 2026 , and December 31, 2025 , respectively. The related provision recapture was $ 112,000 and $ 49,000 for the six months ended June 30, 2026 and June 30, 2025 , respectively. Note 5 - Deposits Deposits and weighted-average interest rates at the dates indicated are as follows: June 30, 2026 December 31, 2025 (dollars in thousands) Amount Weighted-Average Interest Rate Amount Weighted-Average Interest Rate Noninterest-bearing demand deposits $ 244,699 — % $ 245,760 — % Interest-bearing demand deposits 147,019 0.23 143,166 0.19 Money market accounts 462,208 2.19 451,143 2.12 Savings accounts 241,711 1.51 239,258 1.39 Certificates of deposit, customer 453,140 3.59 433,264 3.63 Certificates of deposit, brokered 58,615 3.86 86,510 4.22 Total deposits $ 1,607,392 2.03 $ 1,599,101 2.04 The aggregate amount of time deposits issued in excess of the Federal Deposit Insurance Corporation ("FDIC") insured limit, currently $250,000, at June 30, 2026 and December 31, 2025 , was $ 175.5 million and $ 164.2 million, respectively. Maturities of certificates at the dates indicated are as follows: (dollars in thousands) June 30, 2026 December 31, 2025 Within one year or less $ 450,227 $ 450,819 After one year through two years 54,970 59,588 After two years through three years 3,919 5,483 After three years through four years 476 2,211 After four years through five years 2,163 1,673 Total certificates of deposit $ 511,755 $ 519,774 At June 30, 2026 and December 31, 2025 , deposits included $ 121.3 million and $ 113.6 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 $ 72.0 million at June 30, 2026 and December 31, 2025 , 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, 2026 and December 31, 2025 , were funds held by federally recognized tribes totaling $ 29.0 million and $ 31.3 million, respectively. Investment securities with a carrying value of $ 32.9 million and $ 40.7 million were pledged as collateral for these deposits at June 30, 2026 and December 31, 2025 , respectively. These investment securities exceed the minimum collateral requirements established by the Bureau of Indian Affairs. 21 Table of Contents Interest on deposits by type for the periods shown was as follows: Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands) 2026 2025 2026 2025 Demand deposits $ 83 $ 240 $ 155 $ 500 Money market accounts 2,451 2,660 4,794 5,005 Savings accounts 921 884 1,792 1,667 Certificates of deposit, customer 4,024 4,396 7,916 8,918 Certificates of deposit, brokered 554 1,372 1,306 3,199 Total interest expense on deposits $ 8,033 $ 9,552 $ 15,963 $ 19,289 Note 6 - Borrowings First Fed is a member of the FHLB. As a member, First Fed has a committed line of credit of up to 25 % of total assets, subject to the amount of FHLB stock ownership and certain collateral requirements. First Fed maintains borrowing arrangements with the FHLB to borrow funds primarily under long-term, fixed-rate advance agreements. First Fed also has overnight borrowings through FHLB which renew daily until paid. First Fed periodically uses fixed-rate advances maturing in less than one year as an alternative source of funds. Available borrowing capacity was $ 157.7 million and $ 204.4 million at June 30, 2026 and December 31, 2025 , 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 $ 832.2 million and $ 871.3 million at June 30, 2026 and December 31, 2025 , respectively. The Bank had outstanding letters of credit from the FHLB with notional amounts of $ 72.0 million to collateralize public deposits, $ 17.3 million to collateralize assumable rate conversion (ARC) loans and $ 772,000 to secure the Bellevue, Washington branch lease at both June 30, 2026 and December 31, 2025 . 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 $ 16.7 million and $ 17.3 million at June 30, 2026 and December 31, 2025 , respectively. Investment securities with a carrying value of $ 17.3 million and $ 18.0 million were pledged to the FRB at June 30, 2026 and December 31, 2025 , respectively. On March 25, 2021, the Company completed a private placement of $ 40.0 million of 3.75 % fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors. The net proceeds to the Company from the sale of the Notes were approximately $ 39.3 million after deducting placement agent fees and other offering expenses. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company used the net proceeds of the offering for general corporate purposes. In March 2025, the Company redeemed $ 5.0 million of the Notes at a discount, resulting in a reduction to the outstanding balance and a $ 905,000 gain on extinguishment of debt recorded in noninterest income. Beginning in March 2026, the Notes bear interest at a variable rate that resets quarterly on the 30th day of March, June, September and December based on the three -month Secured Overnight Financing Rate in effect on the applicable reset date, plus 300 basis points. Accordingly, the interest rate on the Notes increased from 3.75 % to 6.69 % on March 30, 2026, and increased to 6.73 % on June 30, 2026. On May 20, 2022, First Northwest began a borrowing arrangement with NexBank for a revolving line of credit. The agreement was modified in 2025 and the new terms allow a maximum extension of credit of $ 15.0 million. Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The Company was in compliance with all covenants at June 30, 2026 , including fixed coverage, Tier 1 leverage, and risk-based capital ratio minimum requirements and classified assets to Tier 1 capital and Texas ratio maximum requirements. Available borrowing capacity was $ 1.5 million at both June 30, 2026 and December 31, 2025 . The line of credit matures on November 16, 2026 . 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 both June 30, 2026 and December 31, 2025 . This credit facility is authorized for use through December 31, 2027 . 22 Table of Contents The following table presents information regarding our borrowings as of June 30, 2026 . The table includes both long- and short-term borrowings. (dollars in thousands) FHLB Long-Term Advances FHLB Overnight Variable-Rate Advances NexBank Line of Credit Subordinated Debt, net Balance outstanding $ 105,000 $ 160,000 $ 13,500 $ 34,677 Weighted-average daily interest rates Annualized 4.03 % 3.66 % 7.25 % 5.59 % Period End 3.88 % 3.92 % 7.25 % 5.59 % The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at June 30, 2026 are as follows: (dollars in thousands) Amount Weighted- Average Interest Rate Within one year or less $ 70,000 3.96 % After one year through two years 35,000 3.72 Total FHLB long-term advances $ 105,000 3.88 Note 7 - Income Tax Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax assets and liabilities. Effectiv e tax rates differ from the statutory maximum federal tax rate for 2026 and 2025 of 21 %, largely due to the nontaxable earnings on BOLI and tax-exempt interest income earned on certain investment securities and loans. Included in the benefit from income tax for the first half of 2026 were additional adjustments related to unrealized gains and penalties. Included in the benefit from income tax for the first half of 2025 was an estimate for taxes and penalties on the early surrender of a BOLI contract. The effective tax rate does not include a valuation allowance against the net deferred tax asset. Based on its evaluation of cumulative earnings, including other comprehensive income, available tax planning strategies, projected future earnings and other relevant evidence regarding realizability, management concluded that it is more likely than not that the net deferred tax asset will be realized. Note 8 - Earnings (Loss) per Common Share The two -class method is used for computing basic and diluted earnings per share. Under the two -class method, EPS is determined for each class of common stock and participating security according to dividends declared and participating rights in undistributed earnings. The Company has issued restricted shares under share-based compensation plans which qualify as participating securities. 23 Table of Contents 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, (dollars in thousands, except share data) 2026 2025 2026 2025 Net income (loss): Net income (loss) available to common shareholders $ 308 $ 3,661 $ 314 $ ( 5,375 ) Dividends and undistributed earnings allocated to participating securities — — — — Earnings (loss) allocated to common shareholders $ 308 $ 3,661 $ 314 $ ( 5,375 ) Basic: Weighted average common shares outstanding 9,502,341 9,443,024 9,485,626 9,412,164 Weighted average unvested restricted stock awards ( 167,223 ) ( 152,707 ) ( 160,544 ) ( 132,955 ) Weighted average unallocated ESOP shares ( 454,454 ) ( 507,282 ) ( 461,028 ) ( 513,874 ) Total basic weighted average common shares outstanding 8,880,664 8,783,035 8,864,054 8,765,335 Diluted: Basic weighted average common shares outstanding 8,880,664 8,783,035 8,864,054 8,765,335 Dilutive restricted stock awards 49,999 8,443 47,911 — Total diluted weighted average common shares outstanding 8,930,663 8,791,478 8,911,965 8,765,335 Basic earnings (loss) per common share $ 0.03 $ 0.42 $ 0.04 $ ( 0.61 ) Diluted earnings (loss) per common share $ 0.03 $ 0.42 $ 0.04 $ ( 0.61 ) Potentially dilutive shares are excluded from the computation of EPS if their effect is anti-dilutive. At June 30, 2026 and 2025 , antidilutive shares as calculated under the treasury stock method totaled 3,774 and 23,270 , respectively. Note 9 - Employee Benefits Employee Stock Ownership Plan In connection with the Conversion, the Company established an ESOP for eligible employees of the Company and the Bank. Employees of the Company and the Bank who have been credited with at least 1,000 hours of service during a 12 -month period are eligible to participate in the ESOP. Pursuant to the Plan, the ESOP purchased shares in the open market with funds borrowed from First Northwest. The Bank will make contributions to the ESOP in amounts necessary to amortize the ESOP loan payable to First Northwest over a period of 20 years, bearing estimated interest at 2.46 %. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank's discretionary contributions to the ESOP and earnings on the ESOP assets. Principal and interest payments of $ 835,000 were made by the ESOP during the second quarter of both 2026 and 2025. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average daily market prices of the shares and the shares become outstanding for EPS computations. The compensation expense is accrued monthly throughout the year. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a reduction of debt and accrued interest. Compensation expense related to the ESOP for the three months ended June 30, 2026 and 2025 , was $ 132,000 and $ 122,000 , respectively. Compensation expense related to the ESOP for the six months ended June 30, 2026 and 2025 , was $ 259,000 and $ 262,000 , respectively. 24 Table of Contents Shares issued to the ESOP as of the dates indicated are as follows: (dollars in thousands, except share data) June 30, 2026 December 31, 2025 Allocated shares 597,986 545,097 Committed to be released shares — 26,442 Unallocated shares 450,043 476,490 Total ESOP shares issued 1,048,029 1,048,029 Fair value of unallocated shares $ 4,865 $ 4,469 Note 10 - Stock-based Compensation In May 2020, the Company's shareholders approved the First Northwest Bancorp 2020 Equity Incentive Plan ( "2020 EIP"), which provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock shares or restricted stock units, and performance share awards to eligible participants through May 2030. The cost of awards under the 2020 EIP generally is based on the fair value of the awards on their grant date. In May 2026, shareholders approved the First Northwest Bancorp Amended and Restated 2020 Equity Incentive Plan ("Amended 2020 EIP"), which increased the maximum number of shares that may be utilized for awards from 520,000 to 820,000 shares. As of June 30, 2026 , there were 355,552 total shares available for grant under the Amended 2020 EIP, all of which are available to be granted as restricted shares, performance shares, options or stock appreciation rights. The Amended 2020 EIP will terminate in May 2036. There were 40,101 and 73,337 shares of restricted stock awarded, respectively, during the six months ended June 30, 2026 and 2025 . 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 16,045 and 33,251 performance shares awarded, respectively, during the six months ended June 30, 2026 and 2025 . 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, 2026 and 2025 , total compensation expense for the equity incentive plans was $ 183,000 and $ 211,000 , respectively. Included in the compensation expense for the three months ended June 30, 2026 and 2025 , was directors' equity compensation of $ 59,000 and $ 65,000 , respectively. For the six months ended June 30, 2026 and 2025 , total compensation expense for the equity incentive plans was $ 289,000 and $ 405,000 , respectively. Included in the compensation expense for the six months ended June 30, 2026 and 2025 , was directors' equity compensation of $ 116,000 and $ 121,000 , respectively. The following tables provide a summary of changes in non-vested restricted stock and performance share awards for the period shown: Three Months Ended June 30, 2026 Shares Weighted-Average Grant Date Fair Value Non-vested at April 1, 2026 167,687 $ 8.95 Granted 7,000 9.97 Vested ( 5,923 ) 10.29 Canceled (1) ( 1,859 ) 10.29 Non-vested at June 30, 2026 166,905 8.93 (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. 25 Table of Contents Six Months Ended June 30, 2026 Shares Weighted-Average Grant Date Fair Value Non-vested at January 1, 2026 162,097 $ 9.53 Granted 56,146 9.29 Vested ( 31,708 ) 10.94 Canceled (1) ( 3,721 ) 10.94 Forfeited ( 15,909 ) 11.90 Non-vested at June 30, 2026 166,905 8.93 (1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation on the vested shares. The surrendered shares are canceled and are unavailable for reissue. As of June 30, 2026 , there was $ 1.1 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock and performance share awards. The cost is expected to be recognized over the remaining weighted-average vesting period of approximately 2.0 years. Note 11 - Fair Value Measurements Fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants in the Company’s principal market. The Company has established and documented its process for determining the fair values of its assets and liabilities, where applicable. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, management determines the fair value of the Company’s assets and liabilities using valuation models or third -party pricing services, both of which rely on market-based parameters when available, such as interest rate yield curves, option volatilities and credit spreads, or unobservable inputs. Unobservable inputs may be based on management’s judgment, assumptions, and estimates related to credit quality, liquidity, interest rates, and other relevant inputs. Any changes to valuation methodologies are reviewed by management to ensure they are relevant and justified. Valuation methodologies are refined as more market-based data becomes available. A three -level valuation hierarchy is used in determining fair value that is based on the transparency of the inputs used in the valuation process. The inputs used in determining fair value in each of the three levels of the hierarchy are as follows: Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 - Either: (i) quoted prices for similar assets or liabilities; (ii) observable inputs, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data. Level 3 - Unobservable inputs. The hierarchy gives the highest ranking to Level 1 inputs and the lowest ranking to Level 3 inputs. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the overall fair value measurement. The Company used the following methods to measure fair value on a recurring and nonrecurring basis. Securities available for sale : Where quoted prices are available in an active market, securities are classified as Level 1. Level 1 instruments include highly liquid government bonds, securities issued by the U.S. Treasury, and exchange-traded equity securities. If quoted prices are not available, management determines fair value using pricing models, quoted prices of similar securities, which are considered Level 2, or discounted cash flows. In certain cases, where there is limited activity in the market for an instrument, assumptions must be made to determine their fair value. Such instruments are classified as Level 3. Servicing rights on sold loan, at fair value : The fair value of servicing rights on sold loans is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds, discount rates, and delinquency rate assumptions as inputs. Servicing rights are classified as Level 3 due to reliance on assumptions used in the valuation. 26 Table of Contents Interest rate swap derivative : The fair values of interest rate swap agreements are based on valuation models using observable market data as of the measurement date (Level 2 ). The Company’s securities derivatives are traded in an over-the-counter market where quoted market prices are not always available. The Company also entered into pay-fixed and receive-floating interest rate swaps associated with certain fixed rate loans. The fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including market transactions and third -party pricing services. The fair values of all interest rate swaps are determined from third -party pricing services without adjustment. Assets and liabilities measured at fair value on a recurring basis - Assets and liabilities are considered to be valued on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly, or quarterly). The following tables show the Company’s assets and liabilities measured at fair value on a recurring basis at the dates indicated: June 30, 2026 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Significant Unobservable Inputs (dollars in thousands) (Level 1) (Level 2) (Level 3) Total Financial Assets Securities available-for-sale Municipal bonds $ 12,064 $ 67,926 $ — $ 79,990 ABS agency — 11,371 — 11,371 ABS corporate — 6,615 — 6,615 Corporate debt 1,967 49,024 — 50,991 SBA — 5,362 — 5,362 MBS agency — 95,002 — 95,002 MBS non-agency — 26,117 11,580 37,697 Servicing rights on sold loans — — 3,012 3,012 Interest rate swap derivative - loans — 24 — 24 Total assets measured at fair value $ 14,031 $ 261,441 $ 14,592 $ 290,064 Financial Liabilities Interest rate swap derivative - securities $ — $ 105 $ — $ 105 December 31, 2025 Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs Significant Unobservable Inputs (dollars in thousands) (Level 1) (Level 2) (Level 3) Total Financial Assets Securities available-for-sale Municipal bonds $ 11,908 $ 68,344 $ — $ 80,252 ABS agency — 11,943 — 11,943 ABS corporate — 7,961 — 7,961 Corporate debt 1,977 36,824 — 38,801 SBA — 6,293 — 6,293 MBS agency — 91,656 — 91,656 MBS non-agency — 26,805 6,599 33,404 Servicing rights on sold loans — — 3,014 3,014 Total assets measured at fair value $ 13,885 $ 249,826 $ 9,613 $ 273,324 Financial Liabilities Interest rate swap derivative - securities and loans $ — $ 1,703 $ — $ 1,703 27 Table of Contents 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, 2026 Fair Value (dollars in thousands) Valuation Technique Unobservable Input (1) Range (Weighted Average) Servicing rights on sold loans $ 3,012 Discounted cash flow Constant prepayment rate 3.05% - 50.59% (4.86%) Discount rate 10.38% - 14.13% (11.01%) MBS non-agency $ 11,580 Consensus pricing Offered quotes 98.25 - 100.17 (1) Unobservable inputs were weighted by the relative fair value of the instruments. December 31, 2025 Fair Value (dollars in thousands) Valuation Technique Unobservable Input (1) Range (Weighted Average) Servicing rights on sold loans $ 3,014 Discounted cash flow Constant prepayment rate 4.31% - 31.02% (5.88%) Discount rate 10.38% - 12.52% (10.99%) MBS non-agency $ 6,599 Consensus pricing Offered quotes 99.0 - 100.4 (1) Unobservable inputs were weighted by the relative fair value of the instruments. The following tables summarize the changes in Level 3 assets measured at fair value on a recurring basis, at the dates indicated: As of or For the Three Months Ended June 30, As of or For the Six Months Ended June 30, (dollars in thousands) 2026 2025 2026 2025 Servicing rights on sold loans: Balance at beginning of period $ 2,999 $ 3,301 $ 3,014 $ 3,281 Servicing rights that result from transfers and sale of financial assets 5 6 8 17 Changes in fair value due to changes in model inputs or assumptions (1) 8 ( 87 ) ( 10 ) ( 78 ) Balance at end of period $ 3,012 $ 3,220 $ 3,012 $ 3,220 (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, (dollars in thousands) 2026 2025 2026 2025 Securities available for sale: MBS non-agency Balance at beginning of period $ 6,583 $ 18,543 $ 6,599 $ 31,881 Purchases 5,000 — 5,000 — Principal payments and maturities — ( 5,349 ) — ( 18,773 ) Unrealized (Losses) Gains ( 3 ) 4 ( 19 ) 90 Balance at end of period $ 11,580 $ 13,198 $ 11,580 $ 13,198 Assets and liabilities measured at fair value on a nonrecurring basis - Assets are considered to be valued on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the consolidated balance sheets. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements that require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value. 28 Table of Contents The following tables present the Company’s assets measured at fair value on a nonrecurring basis at the dates indicated: June 30, 2026 (dollars in thousands) Level 1 Level 2 Level 3 Total Individually evaluated collateral-dependent loans $ — $ — $ 23,470 $ 23,470 Other real estate owned — — 1,568 1,568 December 31, 2025 (dollars in thousands) Level 1 Level 2 Level 3 Total Individually evaluated collateral-dependent loans $ — $ — $ 25,582 $ 25,582 Other real estate owned — — 1,380 1,380 At June 30, 2026 and December 31, 2025 , there were no individually evaluated loans with discounts to appraisal disposition value or other unobservable inputs. The following tables present the techniques used to value assets measured at fair value on a nonrecurring basis at the dates indicated: June 30, 2026 Fair Value (dollars in thousands) Valuation Technique Unobservable Input Range (Weighted Average) Other real estate owned $ 1,568 Market comparable Discount to appraisal 0% - 10% (5%) December 31, 2025 Fair Value (dollars in thousands) Valuation Technique Unobservable Input Range (Weighted Average) Other real estate owned $ 1,380 Market comparable Discount to appraisal 0% - 10% (5%) The following tables present the carrying value and estimated fair value of financial instruments at the dates indicated: June 30, 2026 Fair Value Measurements Using: (dollars in thousands) Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 98,358 $ 98,358 $ 98,358 $ — $ — Investment securities available for sale 287,028 287,028 14,031 261,417 11,580 Loans held for sale 1,286 1,286 — 1,286 — Loans receivable, net 1,597,082 1,499,192 — — 1,499,192 FHLB stock 13,279 13,279 — 13,279 — Accrued interest receivable 7,181 7,181 — 7,181 — Servicing rights on sold loans, at fair value 3,012 3,012 — — 3,012 Interest rate swap derivative - loans 24 24 — 24 — Financial liabilities Demand deposits $ 1,095,637 $ 1,095,637 $ 1,095,637 $ — $ — Time deposits 511,755 510,691 — — 510,691 FHLB Borrowings 265,000 264,571 — — 264,571 Line of Credit 13,500 13,595 — — 13,595 Subordinated debt, net 34,677 37,859 — — 37,859 Accrued interest payable 151 151 — 151 — Interest rate swap derivative - securities 105 105 — 105 — 29 Table of Contents December 31, 2025 Fair Value Measurements Using: (dollars in thousands) Carrying Amount Estimated Fair Value Level 1 Level 2 Level 3 Financial assets Cash and cash equivalents $ 85,117 $ 85,117 $ 85,117 $ — $ — Investment securities available for sale 270,310 270,310 13,885 249,826 6,599 Loans held for sale 1,063 1,063 — 1,063 — Loans receivable, net 1,612,028 1,504,219 — — 1,504,219 FHLB stock 13,105 13,105 — 13,105 — Accrued interest receivable 6,498 6,498 — 6,498 — Servicing rights on sold loans, at fair value 3,014 3,014 — — 3,014 Financial liabilities Demand deposits 1,079,327 $ 1,079,327 $ 1,079,327 $ — $ — Time deposits 519,774 520,033 — — 520,033 FHLB Borrowings 260,000 260,510 — — 260,510 Line of Credit 13,500 13,589 — — 13,589 Subordinated debt, net 34,643 35,973 — — 35,973 Accrued interest payable 1,223 1,223 — 1,223 — Interest rate swap derivative - securities and loans 1,703 1,703 — 1,703 — Note 12 - Change in Accumulated Other Comprehensive Income ("AOCI") Our AOCI includes unrealized gains (losses) on available-for-sale securities, defined benefit plan assets and derivatives as well as an unrecognized defined benefit plan prior service cost. The following table presents changes to accumulated other comprehensive income after-tax for the periods shown: (dollars in thousands) 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 Total Balance at March 31, 2025 $ ( 25,771 ) $ ( 486 ) $ ( 1,274 ) $ ( 598 ) $ ( 28,129 ) Other comprehensive income before reclassification 97 — — — 97 Amounts reclassified from accumulated other comprehensive income — — 30 ( 196 ) ( 166 ) Net other comprehensive income (loss) 97 — 30 ( 196 ) ( 69 ) Balance at June 30, 2025 $ ( 25,674 ) $ ( 486 ) $ ( 1,244 ) $ ( 794 ) $ ( 28,198 ) Balance at March 31, 2026 $ ( 20,904 ) $ ( 387 ) $ ( 1,155 ) $ ( 474 ) $ ( 22,920 ) Other comprehensive income before reclassification 418 — — — 418 Amounts reclassified from accumulated other comprehensive income — — 30 295 325 Net other comprehensive income 418 — 30 295 743 Balance at June 30, 2026 $ ( 20,486 ) $ ( 387 ) $ ( 1,125 ) $ ( 179 ) $ ( 22,177 ) 30 Table of Contents (dollars in thousands) 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 Total Balance at December 31, 2024 $ ( 28,210 ) $ ( 486 ) $ ( 1,303 ) $ ( 173 ) $ ( 30,172 ) Other comprehensive income before reclassification 2,536 — — — 2,536 Amounts reclassified from accumulated other comprehensive income — — 59 ( 621 ) ( 562 ) Net other comprehensive income (loss) 2,536 — 59 ( 621 ) 1,974 Balance at June 30, 2025 $ ( 25,674 ) $ ( 486 ) $ ( 1,244 ) $ ( 794 ) $ ( 28,198 ) Balance at December 31, 2025 $ ( 20,058 ) $ ( 387 ) $ ( 1,184 ) $ ( 769 ) $ ( 22,398 ) Other comprehensive loss before reclassification ( 428 ) — — — ( 428 ) Amounts reclassified from accumulated other comprehensive income — — 59 590 649 Net other comprehensive (loss) income ( 428 ) — 59 590 221 Balance at June 30, 2026 $ ( 20,486 ) $ ( 387 ) $ ( 1,125 ) $ ( 179 ) $ ( 22,177 ) Note 13 - Derivatives and Hedging Activities The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Fair Value Hedges of Interest Rate Risk The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreement without the exchange of the underlying notional amount. For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income. 31 Table of Contents The following amounts were recorded on the Consolidated Balance Sheet related to cumulative basis adjustment for fair value hedges for the periods shown. (dollars in thousands) Carrying Amount of the Hedged Assets Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Assets Line item in the Consolidated Balance Sheets where the hedged item is included: June 30, 2026 Investment securities (1) $ 50,228 $ 228 Loans receivable (2) 86,229 10 Total $ 136,457 $ 238 December 31, 2025 Investment securities (1) $ 50,980 $ 980 Loans receivable (2) 100,903 903 Total $ 151,883 $ 1,883 ( 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, 2026 and December 31, 2025 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 55.8 million and $ 56.1 million, respectively; the cumulative basis adjustments associated with this hedging relationship was $ 228,000 and $ 980,000 , respectively; and the amount of the designated hedged items was $ 50.0 million for both periods. ( 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, 2026 and December 31, 2025 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 195.1 million and $ 213.3 million, respectively; the cumulative basis adjustments associated with this hedging relationship was $ 10,000 and $ 903,000 , respectively; and the amount of the designated hedged items was $ 86.2 million and $ 100.0 million, respectively. The following table summarizes the Company’s derivative instruments at the date indicated. The Company has master netting agreements with derivative dealers with which it does business, but reflects gross assets and liabilities as “Other assets” and “Other liabilities,” respectively, on the Consolidated Balance Sheets, as follows: Fair Value (dollars in thousands) Notional Amount Other Assets Other Liabilities June 30, 2026 Fair value hedges: Interest rate swaps - securities $ 50,000 $ — $ 105 Interest rate swaps - loans 86,219 24 — December 31, 2025 Fair value hedges: Interest rate swaps - securities $ 50,000 $ — $ 860 Interest rate swaps - loans 100,000 — 843 32 Table of Contents 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, (dollars in thousands) 2026 2025 2026 2025 Total amounts recognized in interest on investment securities $ 2,723 $ 3,466 $ 5,308 $ 7,269 Total amounts recognized in interest and fees on loans receivable 21,997 22,814 43,997 45,045 Net gains (losses) on fair value hedging relationships Interest rate swaps - securities Recognized on hedged items $ 375 $ ( 250 ) $ 752 $ ( 791 ) Recognized on derivatives designated as hedging instruments ( 385 ) 230 ( 760 ) 761 Interest rate swaps - loans Recognized on hedged items 397 ( 295 ) 894 ( 1,049 ) Recognized on derivatives designated as hedging instruments ( 402 ) 279 ( 880 ) 1,036 Net (expense) income recognized on fair value hedges $ ( 15 ) $ ( 36 ) $ 6 $ ( 43 ) Credit Risk-related Contingent Features The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to all derivative transactions are major financial institutions with investment grade credit ratings. However, this does not eliminate the Company’s exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains in such contracts should any of these counterparties fail to perform as contracted. The Company 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, 2026 , the Company had derivatives on securities 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, 2026 , 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, 2026 , 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. Note 14 - Segment Reporting First Fed is engaged in the business of attracting deposits and providing lending services. Substantially all income is derived from a diverse base of commercial, mortgage, and consumer lending activities and investments. 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 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, 2025 (" 2025 Form 10 -K"). The CODM assesses performance for the Bank and decides how to allocate resources based on net income that is reported on the income statement as consolidated net income. The measurement of segment assets is reported on the balance sheet as total consolidated assets. The CODM uses net income to evaluate income generated from the segment assets (return on assets) in deciding whether to reinvest profits into the Bank or into other parts of the entity, such as to pay dividends or a share repurchase plan. Net income is used to monitor budget versus actual results and assess the performance of the Bank. The Company generates revenue from interest income, fee income and other noninterest income from investments and services. All operations are based in Washington State. No single customer accounts for more than 10% of total revenue. 33 Table of Contents Note 15 - Legal contingencies In the normal course of business, the Company may have various legal claims and other similar contingent matters outstanding for which a loss may be realized. For these claims, the Company establishes a liability for contingent losses when it is probable that a loss has been incurred and the amount of loss can be reasonably estimated. For claims determined to be reasonably possible but not probable of resulting in a loss, a liability will not be reserved but the amount of loss or a range of possible losses may be disclosed if the amount can be reasonably estimated. 3|5|2 Capital Litigation As the Company previously disclosed, 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. 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 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, most recently filing its Second Amendment Answer, Affirmative Defenses, and Counterclaims on July 22, 2026. Socotra REIT I Litigation On October 17, 2025, Socotra REIT I, LLC ("Socotra") 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 Property Investments LLC 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 strongly disputes the allegations contained in the Socotra Complaint and is vigorously defending against the claims made therein. On December 8, 2025, First Fed filed its Answer and Affirmative Defenses. The Bank and Socotra are currently engaged in discovery. 34 Table of Contents ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements Certain matters discussed in this Quarterly Report on Form 10-Q constitute forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by the use of words such as "anticipates," "assumes," "believes," "can," "continues," "could," "estimates," "expects," "forecasts," "goal," "intends," "likely," "may," "might," "objective," "plans," "potential," "projects," "remains," "should," "target," "trend," "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 the Company’s 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, regulatory and policy changes; • uncertainties relating to litigation; • the effects of changes in interest rates on the levels, composition and costs of deposits, loan demand and the values and liquidity of loan collateral, securities and interest-sensitive assets and liabilities; • changes in monetary and fiscal policies including interest rate policies of the Federal Reserve and the impacts of such changes on our earnings; • our ability to successfully execute on growth strategies and integrate technology into our business; • pressures on liquidity as a result of withdrawals of customer deposits or declines in the value of our investment portfolio; • the soundness of other financial institutions and the impacts related to or resulting from bank failures and other economic and industry volatility, including increased regulatory requirements and costs and potential impact to macroeconomic conditions; • increased competitive pressures among financial services companies, particularly from non-traditional banking entities such as challenger banks, fintech, and mega technology companies; • 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; • our ability to comply with various governmental and regulatory requirements applicable to financial institutions, including those resulting from examinations by our primary or other regulatory authorities; • our ability to implement, maintain, and improve an effective risk management framework, disclosure controls and procedures and internal controls over financial reporting; • our ability to attract and retain executive officers and key employees; • the costs and effects of disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, information technology systems; • risks related to overall 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, geopolitical events, acts of war or terrorism or other 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 this Form 10-Q and the Company's 2025 Form 10-K. 35 Table of Contents 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. General First Northwest, 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, as well as certain non-banking financial activities. Non-banking investments include several limited partnership investments. The Company's business activities are generally focused on passive investment activities and oversight of the activities of 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 is a community-oriented commercial bank founded in 1923 in Port Angeles, Washington. The Bank serves Clallam, Jefferson, King, Kitsap, Snohomish and Whatcom counties in Washington State through its ten full-service branches and five business centers, including our headquarters. We offer a wide range of products and services focused on the lending, deposit and money movement needs of the communities we serve. To diversify our portfolio and increase interest income, we increased our origination of commercial real estate, multi-family real estate, and commercial business loans. We also increased our auto and consumer loans through purchased auto loan programs and purchased manufactured homes. We continue to originate one-to-four family residential mortgage loans, primarily for sale into the secondary market to generate noninterest gain on sale and servicing fee revenue and manage interest rate risk or retain select loans in our portfolio to enhance interest income. Home equity, residential construction and commercial construction loans are also originated primarily in Western 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 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. The Bank signed a redemption agreement in February 2026 which sets forth the path to unwind its investment in the Hero Fund, with capital distributions anticipated to commence in the third quarter of 2026. First Northwest's limited partnership investments include BankTech Ventures, LP; Canapi Ventures Fund, LP; and JAM FINTOP 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% interest in The Meriwether Group, LLC ("MWG"), a boutique investment bank and consulting firm focused on providing entrepreneurs with resources to help them succeed, including equity and debt raising services. MWG holds a 20% general partner interest in Meriwether Group Capital, LLC ("MWGC"). MWGC holds a 0.01% general partner interest in the Hero Fund. The Company held a 25% equity interest as a general partner in MWGC prior to the February 2026 redemption of its interest. The Company is impacted by prevailing economic conditions as well as government policies and regulations concerning, among other things, monetary and fiscal policy, including fiscal stimulus, interest rate policy and open market operations, housing, and consumer protection. Deposit flows are influenced by various factors, including changes in market rates; sales and marketing efforts; interest rates paid by competitors; available alternative investments such as money market mutual funds, the stock and bond markets; account maturities; government stimulus and unemployment programs; and the overall level of personal income and savings. Lending activities are influenced by prevailing interest rates and property values in our markets, the demand for funds, the number and quality of lenders employed by First Fed, and both regional and national economic cycles. 36 Table of Contents Our primary source of pre-tax income is net interest income. Net interest income is interest income earned on our loans and investments less interest expense paid on our deposits and borrowings. Changes in levels of interest rates may impact our net interest income. A secondary source of income for the Company is noninterest income, which includes revenue we receive from providing products and services, including service charges on deposit accounts, debit card interchange income, mortgage banking income, treasury and other commercial banking related fees, earnings from bank-owned life insurance, loan servicing income, earnings from equity and partnership investments, and gains and losses from the sale of loans and securities. An offset to net interest income is the provision for credit losses, which represents the periodic charge to operations required to adequately provide for probable losses inherent in our loan, unfunded commitments and investment portfolios through the allowance for credit loss for each respective portfolio. A recapture of previously recognized provision for credit losses may be recorded if forecasted macroeconomic factors improve, underlying balances decrease, or recoveries of amounts previously charged off are received. Noninterest expenses incurred in operating our business consist of salaries and employee benefit costs, occupancy and equipment expenses, professional fees, deposit insurance premiums and regulatory assessments, digital delivery and data processing expenses, marketing and other customer acquisition expenses, expenses related to real estate and personal property owned, state and local taxes, federal income tax, and other miscellaneous expenses. Recent Regulatory Developments On March 19, 2026, the federal banking agencies issued several proposals to revise the U.S. regulatory capital framework. The proposals would, among other things, modify aspects of the standardized approach to risk-based capital that applies to the Company, including by making the risk weights for certain residential mortgage exposures more risk sensitive and decreasing the risk weights of corporate exposures, which could affect certain aspects of the Company’s regulatory capital calculations. The Company is continuing to evaluate these proposals and their potential impact on its regulatory capital position. Critical Accounting Policies There are no material changes to the critical accounting policies from those disclosed in the Company's 2025 Form 10-K. Comparison of Financial Condition at June 30, 2026 and December 31, 2025 Assets . Total assets increased to $2.12 billion, or 0.8%, at June 30, 2026, from $2.11 billion at December 31, 2025. Cash and cash equivalents increased by $13.2 million, or 15.6%, to $98.4 million as of June 30, 2026, compared to $85.1 million as of December 31, 2025. Investment securities increased $16.7 million, or 6.2%, to $287.0 million at June 30, 2026, from $270.3 million at December 31, 2025. Purchases totaling $38.9 million were partially offset by maturities totaling $13.1 million, regular principal payments totaling $8.4 million and a $649,000 increase in net unrealized losses during the six months ended June 30, 2026. The investment portfolio, including mortgage-backed securities, had an estimated projected average life of 6.4 years as of June 30, 2026 and 6.5 years as of December 31, 2025, and had an estimated average repricing term of 6.0 years as of June 30, 2026, compared to 6.7 years as of December 31, 2025, based on the interest rate environment at those times. The effective duration of the investment portfolio was 4.6 years at June 30, 2026, compared to 4.6 years at December 31, 2025. The investment portfolio was comprised of 51.0% in amortizing securities at June 30, 2026, compared to 54.2% at December 31, 2025. The projected average life of the securities portfolio may vary due to prepayment activity, particularly in the mortgage-backed securities portfolio, which is impacted by prevailing market interest rates. If prevailing market interest rates fall, we expect prepayments to accelerate due to the current coupons of fixed rate bonds. We anticipate the investment portfolio will continue to provide supplemental interest income and act as a source of liquidity. For additional information, see Note 2 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q. 37 Table of Contents Net loans, excluding loans held for sale, decreased $15.0 million, or 0.9%, to $1.60 billion at June 30, 2026, from $1.61 billion at December 31, 2025. During the six months ended June 30, 2026, one-to-four family loans decreased $19.7 million during the six months ended June 30, 2026, as repayment activity exceeded $1.8 million in residential construction loans that converted to permanent amortizing loans and new loan originations totaling $3.2 million. Multi-family loans decreased $32.7 million during the six months ended June 30, 2026, as prepayments and scheduled payments exceeded $3.7 million of new loan originations and $199,000 of construction loans converting into permanent amortizing loans. Commercial real estate loans decreased $115,000 during the six months ended June 30, 2026, with repayment activity exceeding $13.2 million of new loan originations and $8.6 million of construction loan conversions. Construction and land loans increased $429,000, or 0.7%, to $61.7 million at June 30, 2026, from $61.3 million at December 31, 2025, with draws on new and existing loan commitments totaling $25.5 million, partially offset by payment activity totaling $15.0 million, $10.4 million converting into fully amortizing loans and charge-offs totaling $371,000. Home equity loan outstanding balances increased $4.9 million over the prior year end due to $16.4 million of net draws on new and existing line of credit commitments and $1.9 million of home equity loan originations, partially offset by prepayments and scheduled payments. Auto and other consumer loans increased $11.5 million with auto loan purchases of $41.0 million and individual manufactured home loan purchases of $4.3 million, partially offset by prepayments and scheduled payments. Commercial business loans increased $20.7 million, including a $25.7 million increase to our Northpointe Bank Mortgage Purchase Program ("Northpointe MPP") participation, $12.4 million of organic originations and $3.5 million of draws on existing line of credit commitments, partially offset by charge-offs totaling $719,000 and other repayment activity. Construction projects in the portfolio are geographically dispersed throughout Western Washington as well as one project in California. The borrower associated with the California project has a longstanding history with the Bank. All construction projects are monitored by either a third-party firm or our internal construction administration team. Projects with larger loan commitments have more robust monitoring by firms with more services and expertise. The following tables show our construction commitments by type and geographic concentrations at the dates indicated: (dollars in thousands) North Olympic Peninsula (1) Puget Sound Region (2) Other Washington California Total June 30, 2026 Construction Commitment One-to-four family residential $ 7,855 $ 38,082 $ 1,081 $ — $ 47,018 Multi-family residential 3,900 18,152 — — 22,052 Commercial real estate — 13,811 4,214 10,221 28,246 Total commitment $ 11,755 $ 70,045 $ 5,295 $ 10,221 $ 97,316 Construction Funds Disbursed One-to-four family residential $ 3,390 $ 16,301 $ 1,037 $ — $ 20,728 Multi-family residential 3,689 11,305 — — 14,994 Commercial real estate — 9,808 3,828 7,304 20,940 Total disbursed for construction 7,079 37,414 4,865 7,304 56,662 Net deferred fees (costs) 22 (398 ) (5 ) (25 ) (406 ) Amortized cost for construction $ 7,101 $ 37,016 $ 4,860 $ 7,279 $ 56,256 Undisbursed Commitment One-to-four family residential $ 4,465 $ 21,781 $ 44 $ — $ 26,290 Multi-family residential 211 6,847 — — 7,058 Commercial real estate — 4,003 386 2,917 7,306 Total undisbursed $ 4,676 $ 32,631 $ 430 $ 2,917 $ 40,654 Land Funds Disbursed One-to-four family residential $ 1,513 $ 1,617 $ — $ — $ 3,130 Commercial real estate 1,138 1,138 — — 2,276 Total disbursed for land 2,651 2,755 — — 5,406 Net deferred fees 18 17 — — 35 Amortized cost for land $ 2,669 $ 2,772 $ — $ — $ 5,441 (1) Includes Clallam and Jefferson counties. (2) Includes Kitsap, Mason, Thurston, Pierce, King, Snohomish, Skagit, Whatcom, and Island counties. 38 Table of Contents (dollars in thousands) North Olympic Peninsula (1) Puget Sound Region (2) Other Washington California Total December 31, 2025 Construction Commitment One-to-four family residential $ 5,460 $ 40,189 $ 1,081 $ — $ 46,730 Multi-family residential 3,900 18,153 — — 22,053 Commercial real estate 480 21,855 4,214 9,706 36,255 Total commitment $ 9,840 $ 80,197 $ 5,295 $ 9,706 $ 105,038 Construction Funds Disbursed One-to-four family residential $ 1,857 $ 21,045 $ 695 $ — $ 23,597 Multi-family residential 2,842 7,449 — — 10,291 Commercial real estate 56 15,418 3,177 2,975 21,626 Total disbursed for construction 4,755 43,912 3,872 2,975 55,514 Net deferred fees (costs) 20 (441 ) 2 (26 ) (445 ) Amortized cost for construction $ 4,775 $ 43,471 $ 3,874 $ 2,949 $ 55,069 Undisbursed Commitment One-to-four family residential $ 3,603 $ 19,144 $ 386 $ — $ 23,133 Multi-family residential 1,058 10,704 — — 11,762 Commercial real estate 424 6,437 1,037 6,731 14,629 Total undisbursed $ 5,085 $ 36,285 $ 1,423 $ 6,731 $ 49,524 Land Funds Disbursed One-to-four family residential $ 1,929 $ 1,792 $ 121 $ — $ 3,842 Commercial real estate 1,147 1,158 — — 2,305 Total disbursed for land 3,076 2,950 121 — 6,147 Net deferred fees 28 21 3 — 52 Amortized cost for land $ 3,104 $ 2,971 $ 124 $ — $ 6,199 (1) Includes Clallam and Jefferson counties. (2) Includes Kitsap, Mason, Thurston, Pierce, King, Snohomish, Skagit, Whatcom, and Island counties. During the six months ended June 30, 2026, the Company added $79.8 million of organic loan originations, of which $41.9 million, or 52.6%, were located in the Puget Sound region, $31.7 million, or 39.7%, on the North Olympic Peninsula, and $4.1 million, or 5.2%, in other areas throughout Washington State. The Company purchased $41.0 million in auto loans and $4.4 million in manufactured home loans to borrowers located throughout the United States during the six months ended June 30, 2026. The total loan portfolio was composed of 76.9% organic originations and 23.1% purchased loans at June 30, 2026. We will continue to assess our lending strategies across all product lines and markets where we do business as well as evaluate opportunities to supplement organic growth through wholesale acquisitions with the goal of improving earnings while also prudently managing credit risk. The ACLL decreased to $16.3 million at June 30, 2026, compared to $17.0 million at December 31, 2025. A $703,000 reduction in the pooled loan reserve balance was driven by lower one-to-four family, multi-family and commercial business loan balances combined with lower loss factors applied to one-to-four family, commercial real estate, other consumer and commercial business loans. The decrease to the pooled loan reserve balance was partially offset by higher purchased auto balances and higher loss factors applied to construction and home equity loan balances at the end of the current quarter. The pooled loan reserve was impacted by a mild increase in gross domestic product, higher unemployment forecasts, net loan charge-offs and a reduction in nonaccrual loans. The reserve on individually analyzed loans increased $22,000 due to a commercial business loan new to the category with a reserve at period end. The ACLL as a percentage of total loans was 1.01% and 1.04% at June 30, 2026 and December 31, 2025, respectively. Management continues to monitor economic conditions for potential weaknesses that could expose the loan portfolio to losses. We believe the ACLL is adequate to cover current expected credit losses in the loan portfolio as of June 30, 2026. 39 Table of Contents Nonperforming loans decreased $1.9 million, or 8.3%, to $20.7 million at June 30, 2026, from $22.6 million at December 31, 2025. Current year activity included principal payments totaling $2.3 million and payoffs totaling $776,000 and net recoveries on nonperforming loans totaling $289,000. The decreases were partially offset by the transition into nonaccrual status of two residential mortgages, two auto loans, a commercial business loan, a home equity loan and six other consumer loans totaling $1.5 million. Nonperforming loans to total loans was 1.3% at June 30, 2026, compared to 1.4% at December 31, 2025. The ACLL as a percentage of nonaccrual loans increased to 78.7% at June 30, 2026, up from 75.2% at December 31, 2025. Classified loans decreased $9.8 million, or 27.7%, to $25.5 million at June 30, 2026, from $35.3 million at December 31, 2025, primarily due to payoffs totaling $14.9 million, principal payments totaling $1.5 million, net recoveries on previously charged-off loans totaling $285,000 and upgrades totaling $156,000. The decreases were partially offset by downgrades across multiple loan categories totaling $6.9 million. Four collateral-dependent loans totaling $18.3 million account for 72% of the classified loan balance at June 30, 2026. The Bank continues to work with all borrowers to facilitate satisfactory repayment. In the first half of 2026, the Bank recorded net recoveries of $288,000 in commercial business loans. Net charge-offs of $242,000 to auto and other consumer loans, $371,000 to a commercial construction loan and $3,000 to commercial real estate loans partially offset the recoveries. Charge-offs are based on individual loan evaluations and do not represent a universal decline in the collectability of all loans in these categories. Loans receivable, excluding loans held for sale, consisted of the following at the dates indicated : Increase (Decrease) (dollars in thousands) June 30, 2026 December 31, 2025 Amount Percent Real Estate: One-to-four family $ 357,077 $ 376,731 $ (19,654 ) (5.2 )% Multi-family 255,813 288,529 (32,716 ) (11.3 ) Commercial real estate 402,798 402,683 115 — Construction and land 61,697 61,268 429 0.7 Total real estate loans 1,077,385 1,129,211 (51,826 ) (4.6 ) Consumer: Home equity 90,014 85,088 4,926 5.8 Auto and other consumer 294,982 283,502 11,480 4.0 Total consumer loans 384,996 368,590 16,406 4.5 Commercial business loans 151,000 130,311 20,689 15.9 Total loans receivable 1,613,381 1,628,112 (14,731 ) (0.9 ) Less: Derivative basis adjustment (10 ) (903 ) 893 (98.9 ) Allowance for credit losses on loans 16,309 16,987 (678 ) (4.0 ) Loans receivable, net $ 1,597,082 $ 1,612,028 $ (14,946 ) (0.9 ) 40 Table of Contents The following table summarizes nonperforming assets at the dates indicated: Increase (Decrease) (dollars in thousands) June 30, 2026 December 31, 2025 Amount Percent Nonaccrual loans: Real estate loans: One-to-four family $ 1,627 $ 2,272 $ (645 ) (28.4 )% Commercial real estate 9,449 9,745 (296 ) (3.0 ) Construction and land 4,164 5,146 (982 ) (19.1 ) Total real estate loans 15,240 17,163 (1,923 ) (11.2 ) Consumer loans: Home equity 159 53 106 200.0 Auto and other consumer 1,332 1,086 246 22.7 Total consumer loans 1,491 1,139 352 30.9 Commercial business 3,997 4,293 (296 ) (6.9 ) Total nonaccrual loans 20,728 22,595 (1,867 ) (8.3 ) Real estate owned: One-to-four family 1,568 1,380 188 13.6 Total nonperforming assets $ 22,296 $ 23,975 $ (1,679 ) (7.0 ) MLTB loans: Multi-family $ 4,534 $ 4,531 3 0.1 Commercial real estate 9,410 9,741 $ (331 ) (3.4 ) Commercial business 8 7 1 14.3 Total restructured loans $ 13,952 $ 14,279 $ (327 ) (2.3 ) Nonaccrual loans as a percentage of total loans 1.28 % 1.39 % (0.11 )% (7.9 ) Nonperforming MLTB loans included in total nonaccrual loans and total restructured loans above $ 9,418 $ 9,748 $ (330 ) (3.4 )% Liabilities. Total liabilities increased to $1.97 billion at June 30, 2026, from $1.95 billion at December 31, 2025, due to increases in deposits of $8.3 million and borrowings of $5.0 million. Deposit account balances increased $8.3 million, or 0.5%, to $1.61 billion at June 30, 2026 from $1.60 billion at December 31, 2025. During the first six months of 2026, total customer deposit balances increased $36.2 million and brokered deposit balances decreased $27.9 million. All categories of customer deposits reflect increases, including customer CDs of $19.9 million, money market accounts of $11.1 million, demand deposit accounts of $2.8 million and savings accounts of $2.5 million. The Bank utilizes Brokered CDs as an additional funding source when it proves beneficial to provide liquidity, manage cost of funds, reduce reliance on FHLB advances, and manage interest rate risk. Competition for deposits across the industry continues to pose deposit retention challenges. Our focus continues to be on increasing core customer deposits, with an emphasis on small-to-medium sized business deposits, and maintaining a stable source of funding to reduce interest expense as a percentage of liabilities. FHLB advances increased $5.0 million, or 1.9% to $265.0 million at June 30, 2026, from $260.0 million at December 31, 2025. The short-term FHLB advances supported increased on balance sheet liquidity. Equity . Total shareholders' equity increased $1.1 million to $158.3 million for the six months ended June 30, 2026, due to an increase in the after-tax fair market values of the available-for-sale investment securities portfolio of $590,000, the allocation of compensation-related shares valued at $512,00 and net income of $314,000, partially offset by a $428,000 increase in the investment portfolio hedge post-tax fair market value. During the first six months of 2026, the Company did not repurchase any common stock under the Company's April 2024 stock repurchase plan, leaving 846,123 shares remaining in the current share repurchase program. 41 Table of Contents Comparison of Results of Operations for the Three Months Ended June 30, 2026 and 2025 General. The Company recorded net income of $308,000 for the three months ended June 30, 2026, compared to net income of $3.7 million for the three months ended June 30, 2025. A $3.6 million increase in noninterest expense, a $165,000 decrease in noninterest income and a $20,000 decrease in net interest income were partially offset by a $180,000 increase in recapture of provision for credit losses and a $280,000 decrease in income tax provision. Net Interest Income. Net interest income was flat at $14.2 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, with declines in loan, investment and interest-earning deposit income offset by reduced deposit and borrowing costs. The net interest margin increased 12 basis points to 2.95% for the three months ended June 30, 2026, compared to 2.83% for the same period in 2025. Interest Income. Total interest income decreased $1.7 million, or 6.2%, to $25.5 million for the three months ended June 30, 2026, from $27.1 million for the comparable period in 2025. Average earning assets decreased $85.2 million year-over-year. The yield on average interest-earning assets decreased 11 basis points to 5.30% for the three months ended June 30, 2026, compared to 5.41% for the same period in the prior year. Interest and fees on loans receivable decreased $817,000 primarily due to a decrease in the average balance of net loans receivable of $50.9 million, a change in the mix of loans compared to the prior year and a 3 basis point decrease in average loan yields. Interest from investment securities decreased $743,000 primarily due to the maturity of some higher-yielding investment securities during 2025 resulting in a 51 basis point decrease in average investment yields. While the Company's yields dropped period-over-period, the decrease was significantly lower than the 75 basis point Fed Funds decrease over the same period. The following table compares average earning asset balances, associated yields, and resulting changes in interest income for the periods shown: Three Months Ended June 30, 2026 2025 (dollars in thousands) Average Balance Outstanding Yield Average Balance Outstanding Yield (Decrease) Increase in Interest Income Loans receivable, net $ 1,588,321 5.55 % $ 1,639,236 5.58 % $ (817 ) Investment securities 276,147 3.96 311,078 4.47 (743 ) FHLB stock 12,020 9.41 13,313 9.97 (49 ) Interest-earning deposits in banks 48,783 3.72 46,807 4.46 (67 ) Total interest-earning assets $ 1,925,271 5.30 $ 2,010,434 5.41 $ (1,676 ) Interest Expense. Total interest expense decreased $1.7 million, or 12.8%, to $11.3 million for the three months ended June 30, 2026, compared to $12.9 million for the three months ended June 30, 2025. The average cost of interest-bearing liabilities decreased 23 basis points to 2.78% for the three months ended June 30, 2026, compared to 3.01% for the same period last year. Interest expense on deposits decreased $1.5 million due to a $77.3 million decrease in the average balance and a 31 basis point decrease in the cost of interest-bearing deposits reflecting a decreased reliance on brokered deposits. Interest expense on borrowings decreased $137,000 due to a $22.9 million decrease in the average balance of FHLB advances offset by a 16 basis point increase in the cost of borrowings due to the subordinated debt transition from a fixed to floating rate compared to the same period in 2025. During the three months ended June 30, 2026, interest expense on brokered CDs decreased due to lower average balances of $72.6 million along with a 13 basis point decrease in the average rate paid, compared to the three months ended June 30, 2025. Customer CDs represented 28.20% and 27.20% of total deposits at June 30, 2026 and 2025, respectively. Brokered CDs represented 3.60% and 6.50% of total deposits at June 30, 2026 and 2025, respectively. 42 Table of Contents The following table details average balances, cost of funds and the change in interest expense for the periods shown: Three Months Ended June 30, 2026 2025 (dollars in thousands) Average Balance Outstanding Rate Average Balance Outstanding Rate (Decrease) Increase in Interest Expense Interest-bearing demand deposits $ 141,339 0.24 % $ 164,475 0.59 % $ (157 ) Money market accounts 455,356 2.16 444,135 2.40 (209 ) Savings accounts 243,735 1.52 228,901 1.55 37 Certificates of deposit, customer 449,938 3.59 451,712 3.90 (372 ) Certificates of deposit, brokered 51,788 4.29 124,383 4.42 (818 ) Advances 252,230 4.19 275,176 4.43 (408 ) Subordinated debt 34,668 7.13 34,600 4.00 271 Total interest-bearing liabilities $ 1,629,054 2.78 $ 1,723,382 3.01 $ (1,656 ) Provision for Credit Losses. The Company recorded a $337,000 loan loss provision recapture and a $203,000 unfunded commitment provision recapture for the three months ended June 30, 2026. This compares to a $296,000 loan loss provision recapture and a $64,000 unfunded commitment provision recapture for the three months ended June 30, 2025. The current period recapture of provision for credit losses on loans reflects lower pooled reserve loan balances, a decrease in the reserve on individually evaluated loans, changes in the loan portfolio composition and lower loss factors at June 30, 2026, partially offset by net charge-offs totaling $177,000 for the three-month period. The higher unfunded commitment provision recapture compared to the same period in 2025 was primarily due to lower qualitative loss factors. The following table details activity and information related to the allowance for credit losses on loans and reserve for unfunded commitments for the periods shown: Three Months Ended June 30, (dollars in thousands) 2026 2025 Total loans receivable $ 1,613,381 $ 1,664,702 Net charge-offs (177 ) (1,928 ) Recapture of provision for credit losses on loans (337 ) (296 ) Allowance for credit losses on loans 16,309 18,345 Allowance for credit losses on loans as a percentage of total loans receivable at period end 1.01 % 1.10 % Total nonaccrual loans 20,728 20,366 Allowance for credit losses on loans as a percentage of nonaccrual loans at period end 78.68 % 90.08 % Nonaccrual loans as a percentage of total loans receivable 1.28 % 1.22 % Unfunded loan commitments $ 164,614 $ 166,589 Recapture of provision for credit losses on unfunded commitments (203 ) (64 ) Reserve for unfunded commitments 483 550 Noninterest Income. Noninterest income decreased $165,000, or 7.6%, to $2.0 million for the three months ended June 30, 2026, from $2.2 million for the three months ended June 30, 2025. Other income reflects period-over-period decreases in the recorded value of equity and fintech partnership investments of $63,000 and swap fee income of $48,000. Nonrecurring income for the second quarter of 2025 included $81,000 of interest related to the ERC recorded in other income. 43 Table of Contents The following table provides a detailed analysis of the changes in the components of noninterest income for the periods shown: Three Months Ended June 30, Increase (Decrease) (dollars in thousands) 2026 2025 Amount Percent Loan and deposit service fees $ 1,107 $ 1,095 $ 12 1.1 % Sold loan servicing fees and servicing rights mark-to-market 162 92 70 76.1 Net gain on sale of loans 73 44 29 65.9 Increase in BOLI cash surrender value 455 485 (30 ) (6.2 ) Other income 208 454 (246 ) (54.2 ) Total noninterest income $ 2,005 $ 2,170 $ (165 ) (7.6 ) Noninterest Expense. Noninterest expense increased $3.6 million, or 28.4%, to $16.4 million for the three months ended June 30, 2026, compared to $12.8 million for the three months ended June 30, 2025. The increase in expenses compared to the same period in 2025 is mainly due to a $2.6 million employee retention credit recorded in compensation during the second quarter of 2025. Other increases to compensation and benefits included period-over-period increases to incentive payments of $344,000 and medical insurance of $361,000. Data processing expenses decreased in 2026 compared to the same period in 2025 as the Bank advanced its operating efficiency initiative and implemented more integrated systems. Legal expense included in professional fees increased $639,000 period-over-period as the Company continues to defend against the claims detailed in Note 15 contained in Item 1 of this Form 10-Q. Consulting costs included in professional fees increased $219,000 compared to the same period in 2025 as the Bank initiated a process improvement project in the second quarter of 2026. The following table provides an analysis of the changes in the components of noninterest expense for the periods shown: Three Months Ended June 30, Increase (Decrease) (dollars in thousands) 2026 2025 Amount Percent Compensation and benefits $ 8,054 $ 4,698 $ 3,356 71.4 % Data processing 1,702 1,926 (224 ) (11.6 ) Occupancy and equipment 1,538 1,507 31 2.1 Supplies, postage, and telephone 384 346 38 11.0 Regulatory assessments and state taxes 581 501 80 16.0 Advertising 245 299 (54 ) (18.1 ) Professional fees 2,305 1,449 856 59.1 FDIC insurance premium 387 463 (76 ) (16.4 ) Other expense 1,197 1,576 (379 ) (24.0 ) Total noninterest expense $ 16,393 $ 12,765 $ 3,628 28.4 Provision for Income Tax. An income tax provision of $17,000 was recorded for the three months ended June 30, 2026, compared to a provision of $297,000 for the three months ended June 30, 2025, due to a period-over-period decrease in net income before taxes of $3.6 million. The provision includes accruals for both federal and state income taxes. For additional information, see Note 7 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q. 44 Table of Contents Comparison of Results of Operations for the Six Months Ended June 30, 2026 and 2025 General. The Company recorded net income of $314,000 for the six months ended June 30, 2026, compared to a net loss of $5.4 million for the six months ended June 30, 2025. A $7.9 million decrease in provision for credit losses, and a $573,000 increase in net interest income were partially offset by a $1.9 million decrease in noninterest income, a $525,000 decrease in income tax benefit and a $312,000 increase in noninterest expense. Net Interest Income. Net interest income increased $573,000 to $28.6 million for the six months ended June 30, 2026, from $28.0 million for the six months ended June 30, 2025, as reduced deposit and borrowing costs outpaced declines in loan, investment and interest-earning deposit income. The net interest margin increased by 19 basis points to 2.99% for the six months ended June 30, 2026, compared to 2.80% for the same period in 2025. Interest Income. Total interest income decreased $3.2 million, or 5.9%, to $50.8 million for the six months ended June 30, 2026, from $54.0 million for the comparable period in 2025. Average earning assets decreased $93.3 million year-over-year. The yield on average interest-earning assets decreased 7 basis points to 5.31% for the six months ended June 30, 2026, compared to 5.38% for the same period in the prior year. Interest from investment securities decreased $2.0 million primarily due to the maturity of some higher-yielding investment securities during 2025. Interest and fees on loans receivable decreased $1.1 million, to $44.0 million for the six months ended June 30, 2026, from $45.1 million for the six months ended June 30, 2025, primarily due to a decrease in the average balance of net loans receivable of $47.8 million and a change in the mix of loans compared to the prior year, partially offset by an increase in average loan yields to 5.57% for the six months ended June 30, 2026, from 5.54% for the same period in 2025. For context, the Fed Funds rate decreased 75 basis points over the same period. The following table compares average earning asset balances, associated yields, and resulting changes in interest income for the periods shown: Six Months Ended June 30, 2026 2025 (dollars in thousands) Average Balance Outstanding Yield Average Balance Outstanding Yield (Decrease) Increase in Interest Income Loans receivable, net $ 1,592,779 5.57 % $ 1,640,579 5.54 % $ (1,048 ) Investment securities 272,920 3.92 322,081 4.55 (1,961 ) FHLB stock 12,094 9.40 13,460 9.56 (74 ) Interest-earning deposits in banks 49,908 3.72 44,873 4.50 (82 ) Total interest-earning assets $ 1,927,701 5.31 $ 2,020,993 5.38 $ (3,165 ) Interest Expense. Total interest expense decreased $3.7 million, or 14.4%, to $22.2 million for the six months ended June 30, 2026, compared to $25.9 million for the six months ended June 30, 2025. The average cost of interest-bearing liabilities decreased 28 basis points to 2.75% for the six months ended June 30, 2026, compared to 3.03% for the same period last year. Interest expense on deposits decreased $3.3 million due to a $71.2 million decrease in the average balance and a 36 basis point decrease in the cost of interest-bearing deposits. A reduced reliance on brokered CDs and a shift in the deposit mix from interest-bearing demand and customer CDs to higher average balances of money market and savings accounts resulted in a lower cost of deposits. Interest expense on borrowings decreased $412,000 due to a $24.8 million decrease in the average balance of FHLB advances offset by a 10 basis point increase in the cost of borrowings due to the subordinated debt transition from a fixed to floating rate compared to the same period in 2025. During the six months ended June 30, 2026, interest expense on brokered CDs decreased due to lower average balances of $80.3 million along with a 25 basis point decrease in the average rate paid, compared to the six months ended June 30, 2025. Average deposit account balances were composed of 84.9% in interest-bearing deposits and 15.1% in noninterest-bearing deposits at June 30, 2026, compared to 85.3% and 14.7%, respectively, at June 30, 2025. Customer CDs represented 29.3% and 29.1% of customer deposits at June 30, 2026 and 2025, respectively. 45 Table of Contents The following table details average balances, cost of funds and the change in interest expense for the periods shown: Six Months Ended June 30, 2026 2025 (dollars in thousands) Average Balance Outstanding Rate Average Balance Outstanding Rate (Decrease) Increase in Interest Expense Interest-bearing demand deposits $ 140,961 0.22 % $ 166,433 0.61 % $ (345 ) Money market accounts 450,936 2.14 429,363 2.35 (211 ) Savings accounts 243,530 1.48 222,734 1.51 125 Certificates of deposit, customer 444,090 3.59 451,823 3.98 (1,002 ) Certificates of deposit, brokered 60,904 4.32 141,233 4.57 (1,893 ) Advances 252,502 4.19 277,326 4.29 (644 ) Subordinated debt 34,660 5.59 36,475 4.03 232 Total interest-bearing liabilities $ 1,627,583 2.75 $ 1,725,387 3.03 $ (3,738 ) Provision for Credit Losses. The Company recorded a $350,000 loan loss provision recapture and a $112,000 unfunded commitment provision recapture for the six months ended June 30, 2026. This compares to a $7.5 million loan loss provision and a $49,000 unfunded commitment provision recapture for the six months ended June 30, 2025. The current period recapture of provision for credit losses on loans reflects lower pooled reserve loan balances and reduced loss factors, partially offset by an increase in the reserve on individually evaluated loans. Net charge-offs recorded during the first half of 2026 totaled $328,000, compared to $9.6 million recorded during the first half of 2025. The higher provision recapture on unfunded commitments compared to the same period in 2025 was primarily due to lower qualitative loss factors. The following table details activity and information related to the allowance for credit losses on loans and reserve for unfunded commitments for the periods shown: Six Months Ended June 30, (dollars in thousands) 2026 2025 Total loans receivable $ 1,613,381 $ 1,664,702 Net charge-offs (328 ) (9,578 ) (Recapture of) provision for credit losses on loans (350 ) 7,474 Allowance for credit losses on loans 16,309 18,345 Allowance for credit losses on loans as a percentage of total loans receivable at period end 1.01 % 1.10 % Total nonaccrual loans 20,728 20,366 Allowance for credit losses on loans as a percentage of nonaccrual loans at period end 78.68 % 90.08 % Nonaccrual loans as a percentage of total loans receivable 1.28 % 1.22 % Unfunded loan commitments $ 164,614 $ 166,589 Recapture of provision for credit losses on unfunded commitments (112 ) (49 ) Reserve for unfunded commitments 483 550 Noninterest Income. Noninterest income decreased $1.9 million, or 32.5%, to $4.0 million for the six months ended June 30, 2026, from $6.0 million for the six months ended June 30, 2025. Nonrecurring income for the first half of 2025 included a $1.1 million BOLI death benefit, an $846,000 gain on the extinguishment of debt related to repurchasing $5.0 million of subordinated debt at a discount recorded in other income and $81,000 of interest related to an Employee Retention Credit recorded in other income. Also included in other income was a period-over-period decrease in swap fee income of $113,000. 46 Table of Contents The following table provides a detailed analysis of the changes in the components of noninterest income for the periods shown: Six Months Ended June 30, Increase (Decrease) (dollars in thousands) 2026 2025 Amount Percent Loan and deposit service fees $ 2,229 $ 2,201 $ 28 1.3 % Sold loan servicing fees and servicing rights mark-to-market 289 287 2 0.7 Net gain on sale of loans 149 55 94 170.9 Increase in BOLI cash surrender value 923 857 66 7.7 Income from BOLI death benefit, net — 1,059 (1,059 ) (100.0 ) Other income 423 1,488 (1,065 ) (71.6 ) Total noninterest income $ 4,013 $ 5,947 $ (1,934 ) (32.5 ) Noninterest Expense. Noninterest expense increased $312,000, or 1.0%, to $33.1 million for the six months ended June 30, 2026, compared to $32.8 million for the six months ended June 30, 2025. Nonrecurring expenses for the first half of 2025 included a $5.8 million legal settlement paid and a $2.6 million Employee Retention Credit reduction to compensation expense. Other increases to compensation and benefits included period-over-period increases to incentive payments of $616,000 and medical insurance of $354,000. Legal expense included in professional fees increased $1.5 million period-over-period as the Company continues to defend against the claims detailed in Note 15 contained in Item 1 of this Form 10-Q. Consulting costs included in professional fees increased $651,000 compared to the same period in 2025 as the Bank utilized outside resources to assist with key duties of certain open positions during the first quarter of 2026 and initiated a process improvement project in the second quarter of 2026. The following table provides an analysis of the changes in the components of noninterest expense for the periods shown: Six Months Ended June 30, Increase (Decrease) (dollars in thousands) 2026 2025 Amount Percent Compensation and benefits $ 16,286 $ 12,413 $ 3,873 31.2 % Data processing 3,930 3,937 (7 ) (0.2 ) Occupancy and equipment 3,103 3,099 4 0.1 Supplies, postage, and telephone 682 644 38 5.9 Regulatory assessments and state taxes 1,115 980 135 13.8 Advertising 549 564 (15 ) (2.7 ) Professional fees 4,331 2,226 2,105 94.6 FDIC insurance premium 750 897 (147 ) (16.4 ) Legal settlement — 5,750 (5,750 ) (100.0 ) Other expense 2,331 2,255 76 3.4 Total noninterest expense $ 33,077 $ 32,765 $ 312 1.0 Provision for Income Tax. An income tax benefit of $303,000 was recorded for the six months ended June 30, 2026, compared to a benefit of $828,000 for the six months ended June 30, 2025, due to a period-over-period decrease in net income before taxes of $6.2 million, partially offset by a tax penalty estimate for the early surrender of BOLI contracts recorded in 2025. The provision includes accruals for both federal and state income taxes. For additional information, see Note 7 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q. 47 Table of Contents Average Balances, Interest and Average Yields/Cost The following tables set forth, for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. Also presented is the weighted average yield on interest-earning assets, rates paid on interest-bearing liabilities and the net spread as of June 30, 2026 and 2025. Income and all average balances are monthly average balances, which management deems to be not materially different than daily averages. Nonaccrual loans have been included within loans receivable in the table as loans carrying a zero yield. Three Months Ended June 30, 2026 2025 Average Interest Average Interest Balance Earned/ Yield/ Balance Earned/ Yield/ (dollars in thousands) Outstanding Paid Rate Outstanding Paid Rate Interest-earning assets: Loans receivable, net (1) (2) $ 1,588,321 $ 21,997 5.55 % $ 1,639,236 $ 22,814 5.58 % Total investment securities 276,147 2,723 3.96 311,078 3,466 4.47 FHLB dividends 12,020 282 9.41 13,313 331 9.97 Interest-earning deposits in banks 48,783 453 3.72 46,807 520 4.46 Total interest-earning assets (3) 1,925,271 25,455 5.30 2,010,434 27,131 5.41 Noninterest-earning assets 143,007 154,145 Total average assets $ 2,068,278 $ 2,164,579 Interest-bearing liabilities: Interest-bearing demand deposits $ 141,339 $ 83 0.24 $ 164,475 $ 240 0.59 Money market accounts 455,356 2,451 2.16 444,135 2,660 2.40 Savings accounts 243,735 921 1.52 228,901 884 1.55 Certificates of deposit, customer 449,938 4,024 3.59 451,712 4,396 3.90 Certificates of deposit, brokered 51,788 554 4.29 124,383 1,372 4.42 Total interest-bearing deposits (4) 1,342,156 8,033 2.40 1,413,606 9,552 2.71 Advances 252,230 2,633 4.19 275,176 3,041 4.43 Subordinated debt 34,668 616 7.13 34,600 345 4.00 Total interest-bearing liabilities 1,629,054 11,282 2.78 1,723,382 12,938 3.01 Noninterest-bearing deposits (4) 237,762 243,655 Other noninterest-bearing liabilities 43,529 50,685 Total average liabilities 1,910,345 2,017,722 Average equity 157,933 146,857 Total average liabilities and equity $ 2,068,278 $ 2,164,579 Net interest income $ 14,173 $ 14,193 Net interest rate spread 2.52 2.40 Net earning assets $ 296,217 $ 287,052 Net interest margin (5) 2.95 2.83 Average interest-earning assets to average interest-bearing liabilities 118.2 % 116.7 % (1) The average loans receivable, net balances include nonaccrual loans. (2) Interest earned on loans receivable includes net deferred costs of $775,000 and $148,000 for the three months ended June 30, 2026 and 2025, respectively. (3) Includes interest-earning deposits (cash) at other financial institutions. (4) Cost of all deposits, including noninterest-bearing demand deposits, was 2.04% and 2.31% for the three months ended June 30, 2026 and 2025, respectively. (5) Net interest income divided by average interest-earning assets. 48 Table of Contents Six Months Ended June 30, 2026 2025 Average Interest Average Interest Balance Earned/ Yield/ Balance Earned/ Yield/ (dollars in thousands) Outstanding Paid Rate Outstanding Paid Rate Interest-earning assets: Loans receivable, net (1) (2) $ 1,592,779 $ 43,997 5.57 % $ 1,640,579 $ 45,045 5.54 % Total investment securities 272,920 5,308 3.92 322,081 7,269 4.55 FHLB dividends 12,094 564 9.40 13,460 638 9.56 Interest-earning deposits in banks 49,908 920 3.72 44,873 1,002 4.50 Total interest-earning assets (3) 1,927,701 50,789 5.31 2,020,993 53,954 5.38 Noninterest-earning assets 141,658 148,628 Total average assets $ 2,069,359 $ 2,169,621 Interest-bearing liabilities: Interest-bearing demand deposits $ 140,961 $ 155 0.22 $ 166,433 $ 500 0.61 Money market accounts 450,936 4,794 2.14 429,363 5,005 2.35 Savings accounts 243,530 1,792 1.48 222,734 1,667 1.51 Certificates of deposit, customer 444,090 7,916 3.59 451,823 8,918 3.98 Certificates of deposit, brokered 60,904 1,306 4.32 141,233 3,199 4.57 Total interest-bearing deposits (4) 1,340,421 15,963 2.40 1,411,586 19,289 2.76 Advances 252,502 5,252 4.19 277,326 5,896 4.29 Subordinated debt 34,660 961 5.59 36,475 729 4.03 Total interest-bearing liabilities 1,627,583 22,176 2.75 1,725,387 25,914 3.03 Noninterest-bearing deposits (4) 239,189 243,612 Other noninterest-bearing liabilities 43,859 49,002 Total average liabilities 1,910,631 2,018,001 Average equity 158,728 151,620 Total average liabilities and equity $ 2,069,359 $ 2,169,621 Net interest income $ 28,613 $ 28,040 Net interest rate spread 2.56 2.35 Net earning assets $ 300,118 $ 295,606 Net interest margin (5) 2.99 2.80 Average interest-earning assets to average interest-bearing liabilities 118.4 % 117.1 % (1) The average loans receivable, net balances include nonaccrual loans. (2) Interest earned on loans receivable includes net deferred costs of $1.4 million and $486,000 for the six months ended June 30, 2026 and 2025, respectively. (3) Includes interest-earning deposits (cash) at other financial institutions. (4) Cost of all deposits, including noninterest-bearing demand deposits, was 2.04% and 2.35% for the six months ended June 30, 2026 and 2025, respectively. (5) Net interest income divided by average interest-earning assets. 49 Table of Contents Rate/Volume Analysis The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i)changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate. Three Months Ended Six Months Ended June 30, 2026 Compared to June 30, 2025 June 30, 2026 Compared to June 30, 2025 Increase (Decrease) Due to Increase (Decrease) Due to (dollars in thousands) Volume Rate Total Increase (Decrease) Volume Rate Total Increase (Decrease) Interest-earning assets: Loans receivable, net $ (703 ) $ (114 ) $ (817 ) $ (1,299 ) $ 251 $ (1,048 ) Investments (391 ) (352 ) (743 ) (1,108 ) (853 ) (1,961 ) FHLB stock (32 ) (17 ) (49 ) (64 ) (10 ) (74 ) Other (1) 22 (89 ) (67 ) 111 (193 ) (82 ) Total interest-earning assets $ (1,104 ) $ (572 ) $ (1,676 ) $ (2,360 ) $ (805 ) $ (3,165 ) Interest-bearing liabilities: Interest-bearing demand deposits $ (34 ) $ (123 ) $ (157 ) $ (74 ) $ (271 ) $ (345 ) Money market accounts 65 (274 ) (209 ) 255 (466 ) (211 ) Savings accounts 56 (19 ) 37 158 (33 ) 125 Certificates of deposit, customer (21 ) (351 ) (372 ) (148 ) (854 ) (1,002 ) Certificates of deposit, brokered (800 ) (18 ) (818 ) (1,818 ) (75 ) (1,893 ) Advances (255 ) (153 ) (408 ) (523 ) (121 ) (644 ) Subordinated debt 1 270 271 (36 ) 268 232 Total interest-bearing liabilities $ (988 ) $ (668 ) $ (1,656 ) $ (2,186 ) $ (1,552 ) $ (3,738 ) Change in net interest income $ (116 ) $ 96 $ (20 ) $ (174 ) $ 747 $ 573 (1) Includes interest-earning deposits (cash) at other financial institutions. Off-Balance Sheet Activities In the normal course of operations, First Fed engages in a variety of financial transactions that are not recorded in the financial statements. These transactions involve varying degrees of off-balance sheet credit, interest rate and liquidity risks. These transactions are used primarily to manage customers’ requests for funding and take the form of loan commitments and lines of credit. For the six months ended June 30, 2026 and the year ended December 31, 2025, we engaged in no off-balance sheet transactions likely to have a material effect on our financial condition, results of operations or cash flows. 50 Table of Contents Contractual Obligations At June 30, 2026, our scheduled maturities of contractual obligations were as follows: Within After 1 Year Through After 3 Years Through Beyond Total (dollars in thousands) 1 Year 3 Years 5 Years 5 Years Balance Certificates of deposit $ 450,227 $ 58,889 $ 2,639 $ — $ 511,755 FHLB advances 230,000 35,000 — — 265,000 Line of credit 13,500 — — — 13,500 Subordinated debt obligation — — 34,677 — 34,677 Operating leases 2,201 4,268 4,287 15,360 26,116 Borrower taxes and insurance 1,503 — — — 1,503 Deferred compensation 197 361 334 575 1,467 Total contractual obligations $ 697,628 $ 98,518 $ 41,937 $ 15,935 $ 854,018 Commitments and Off-Balance Sheet Arrangements The following table summarizes our commitments and contingent liabilities with off-balance sheet risks as of June 30, 2026: Amount of Commitment by Expiration Within After 1 Year Through After 3 Years Through Beyond Total Amounts (dollars in thousands) 1 Year 3 Years 5 Years 5 Years Committed Commitments to originate loans: Fixed-rate $ 330 $ — $ — $ — $ 330 Variable-rate 376 — — — 376 Unfunded commitments under lines of credit 23,807 11,310 11,790 77,053 123,960 Unfunded commitments under existing construction loans 37,358 3,296 — — 40,654 Standby letters of credit 208 — — 200 408 Unfunded commitments under partnership agreements 2,074 — — — 2,074 Total commitments $ 64,153 $ 14,606 $ 11,790 $ 77,253 $ 167,802 Liquidity Management Liquidity is the ability to meet current and future short-term and long-term financial obligations. Our primary sources of funds consist of investment security principal and interest payments, customer and brokered deposit inflows, loan repayments and maturities, sales of securities, borrowings from the FHLB and utilization of the NexBank line of credit. While maturities and scheduled amortization of loans and securities are usually predictable sources of funds, deposit flows, calls of investment securities and borrowed funds, and prepayments on loans and investment securities are greatly influenced by general interest rates, economic conditions and competition, which can cause those sources of funds to fluctuate. Management regularly adjusts investments in liquid assets based upon an assessment of expected loan demand, expected deposit flows, yields available on interest-earning deposits and securities, and the objectives of our liquidity management, interest-rate risk and investment policies. 51 Table of Contents The Company's most liquid assets are cash and cash equivalents followed by available-for-sale securities. The levels of these assets depend on our operating, financing, lending and investing activities during any given period. At June 30, 2026, cash and cash equivalents totaled $98.4 million and unpledged securities classified as available-for-sale had a market value of $236.8 million. The Bank pledged collateral of $512.7 million to support borrowings from the FHLB, with a remaining borrowing capacity of $157.7 million at June 30, 2026. The Bank also has an established discount window borrowing arrangement with the FRB, for which available-for-sale securities with a market value of $17.3 million were pledged as of June 30, 2026, providing a borrowing capacity of $16.7 million. Another source of short-term funding for the Bank is through PCBB's Fed Funds Borrowing Facility, which provides up to $50.0 million of unsecured borrowing for up to ten consecutive days. First Northwest has a $15.0 million borrowing arrangement with NexBank which is secured by First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The remaining borrowing capacity of the NexBank line of credit was $1.5 million at June 30, 2026. At June 30, 2026, we had commitments to fund $408,000 in standby letters of credit and $164.6 million in undisbursed loans, including $40.7 million in undisbursed construction loan commitments. CDs due within one year as of June 30, 2026, totaled $450.2 million, or 88.0% of CDs with a weighted-average rate of 3.60%. If these maturing deposits are not renewed, we will seek other sources of funds, including other CDs, non-maturity deposits, and borrowings. We can attract and retain deposits by adjusting the interest rates offered and through sales and marketing efforts in the markets we serve. Depending on market conditions, we may be required to pay higher rates on such deposits or other borrowings than we currently pay on CDs. We believe that our branch network, and the general cash flows from our existing lending and investment activities, will provide adequate short-term and long-term liquidity. For additional information, see the Consolidated Statements of Cash Flows in Item 1 of this Form 10-Q. First Fed has a diversified deposit base with approximately 64% of deposit account balances held by consumers, 23% held by business and 9% by public fund depositors, and 4% in brokered deposits. The average deposit account balance, excluding brokered and public fund accounts, was $29,000 at June 30, 2026. We estimate that 20-25% of our customer deposit balances are over the $250,000 FDIC insurance limit, representing less than 5% of deposit customers. Management believes that maintaining a diversified deposit base is an important factor in managing and maintaining adequate levels of liquidity. The Company is a separate legal entity from the Bank and provides for its own liquidity. At June 30, 2026, the Company, on an unconsolidated basis, had liquid assets of $7.3 million. In addition to its operating expenses, the Company is responsible for paying dividends declared, if any, to its shareholders, and for Company stock repurchases, interest payments on subordinated notes held at the Company level, payments on the NexBank revolving credit facility, and commitments related to limited partnership investments. The Company may receive dividends or capital distributions from the Bank, although there may be regulatory limitations on the ability of the Bank to pay dividends. Capital Resources At June 30, 2026, shareholders' equity totaled $158.3 million, or 7.5% of total assets. Our book value per share of common stock was $16.66 at June 30, 2026, compared to $16.61 at December 31, 2025. At June 30, 2026, the Bank exceeded all regulatory capital requirements and was considered "well capitalized" under FDIC regulatory capital guidelines. The following table provides the capital requirements and actual results for First Fed at June 30, 2026. Actual Minimum Capital Requirements Minimum Required to be Well-Capitalized (dollars in thousands) Amount Ratio Amount Ratio Amount Ratio Tier 1 leverage capital (to average assets) $ 199,832 9.6 % $ 82,931 4.0 % $ 103,664 5.0 % Common equity tier 1 (to risk-weighted assets) 199,832 12.4 72,504 4.5 104,728 6.5 Tier 1 risk-based capital (to risk-weighted assets) 199,832 12.4 96,672 6.0 128,896 8.0 Total risk-based capital (to risk-weighted assets) 216,624 13.4 128,896 8.0 161,121 10.0 52 Table of Contents In order to avoid limitations, based on percentages of eligible retained income, on paying dividends, engaging in share repurchases, and paying discretionary bonuses, the Bank must maintain risk-based capital in an amount greater than the required minimum levels plus a capital conservation buffer, comprised of common equity tier 1 capital ("CET1"), of 2.5% of risk-weighted assets. The Bank's capital conservation buffer was 5.4% at June 30, 2026, exceeding this requirement. Effect of Inflation and Changing Prices The consolidated financial statements and related financial data presented in this report have been prepared according to GAAP, which require the measurement of financial and operating results in terms of historical dollars without considering the change in the relative purchasing power of money over time due to inflation. The primary impact of inflation on our operations is reflected in increased operating costs and the effect that general inflation may have on both short-term and long-term interest rates. Unlike companies in many other industries, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution's performance than do general levels of inflation. Although inflation expectations do affect interest rates, interest rates do not necessarily move in the same direction or to the same extent as the prices of goods and services. Item 3. Quantitative and Qualitative Disclosures about Market Risk There has not been any material change in the market risk disclosures contained in the 2025 Form 10-K. Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures. An evaluation of the Company's disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Exchange Act")) was carried out under the supervision and with the participation of the Company's Chief Executive Officer (Principal Executive Officer), Chief Financial Officer (Principal Financial and Accounting Officer), and other members of the Company's management team as of the end of the period covered by this quarterly report. The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures in effect as of June 30, 2026, were effective. (b) Changes in Internal Controls. There have been no changes in the Company's internal control over financial reporting (as defined in 13a-15(f) of the Exchange Act) that occurred during the quarter ended June 30, 2026, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. 53 Table of Contents PART II - OTHER INFORMATION Item 1. Legal Proceedings From time to time, the Company is engaged in legal proceedings in the ordinary course of business, none of which are currently considered to have a material impact on the Company’s financial position or results of operations other than the matters discussed in Note 15 of the Notes to Consolidated Financial Statements contained in Item 1 of this Form 10-Q. Item 1A. Risk Factors There have been no material changes to the risk factors set forth in Part I. Item 1A of the Company's 2025 Form 10-K. Item 2. Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities (a) Not applicable. (b) Not applicable. (c) The following table summarizes common stock repurchases during the three months ended June 30, 2026: Period Total Number of Shares Purchased (1) Average Price Paid per Share Total Number of Shares Repurchased as Part of Publicly Announced Plans (2) Maximum Number of Shares that May Yet Be Repurchased Under the Plans April 1, 2026 - April 30, 2026 — $ — — 846,123 May 1, 2026 - May 31, 2026 1,859 — — 846,123 June 1, 2026 - June 30, 2026 — — — 846,123 Total 1,859 $ — — (1) Shares repurchased by the Company during the quarter represent shares acquired from restricted stock award participants in connection with the cancellation of restricted stock to pay withholding taxes upon vesting totaling 0 shares, 1,859 shares, and 0 shares, respectively, for the periods indicated. (2) On April 25, 2024, the Company announced that its Board of Directors had authorized the repurchase of up to an additional 944,279 shares of its common stock, or approximately 10% of its shares of common stock issued and outstanding as of April 24, 2024. As of June 30, 2026, a total of 98,156 shares, or 10.4% percent of the shares authorized in the April 2024 stock repurchase plan, have been purchased at an average cost of $10.23 per share, leaving 846,123 shares available for future purchases. No shares were repurchased pursuant to the Company's April 2024 stock repurchase plan during the periods indicated. Item 3. Defaults Upon Senior Securities Not applicable. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information During the fiscal quarter ended June 30, 2026 , no director or officer of First Northwest adopted or terminated a "Rule 10b5 - 1 trading arrangement" or "non-Rule 10b5 - 1 trading arrangement," as each term is defined in Item 408 (a) of Regulation S-K. 54 Table of Contents Item 6. Exhibits Exhibit No. Exhibit Description Filed Herewith Form Original Exhibit No. Filing Date 31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act X 31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act X 32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act X 101 The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, formatted in Inline Extensible Business Reporting Language (iXBRL): (1) Consolidated Balance Sheets; (2) Consolidated Statements of Operations; (3) Consolidated Statements of Comprehensive Income (Loss); (4) Consolidated Statements of Changes in Shareholders' Equity; (5) Consolidated Statements of Cash Flows; and (6) Selected Notes to Consolidated Financial Statements 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) 55 Table of Contents SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FIRST NORTHWEST BANCORP Date: August 6, 2026 /s/ Curt T. Queyrouze Curt T. Queyrouze President and Chief Executive Officer (Principal Executive Officer) Date: August 6, 2026 /s/ Phyllis R. Nomura Phyllis R. Nomura Chief Financial Officer and Executive Vice President (Principal Financial and Accounting Officer) 56