What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-08-10 compared with 2026-05-12 · 205 added, 147 removed, 682 unchanged (34% of the section changed)

6 unchanged sentences

Cash and cash equivalents $ 120,072 $ 138,453

Available-for-sale (“AFS”) securities, at fair value (amortized cost of $ 8,690 and $ 8,770 as of March 31, 2026 and December 31, 2025, respectively)

Held-to-maturity (“HTM”) securities, at amortized cost (fair value of $ 1,528 and $ 1,578 at March 31, 2026 and December 31, 2025, respectively)

Available-for-sale (“AFS”) securities, at fair value (amortized cost of $ 8,586 and $ 8,770 as of June 30, 2026 and December 31, 2025, respectively)

Held-to-maturity (“HTM”) securities, at amortized cost (fair value of $ 1,572 and $ 1,578 at June 30, 2026 and December 31, 2025, respectively)

Equity securities 5,000 —

25 unchanged sentences

Preferred stock, $ 0.01 par value, 10,000,000 shares authorized, none issued or outstanding

Common stock, $ 0.01 par value, 40,000,000 shares authorized, 2,568,043 and 2,567,953 shares issued and outstanding as of March 31, 2026 and December 31, 2025, respectively

Common stock, $ 0.01 par value, 40,000,000 shares authorized, 2,568,043 and 2,567,953 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively

Additional paid-in capital 28,846 28,737

8 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

INTEREST INCOME

8 unchanged sentences

Net interest income 9,591 9,255 18,637 17,327

PROVISION FOR (RELEASE OF) CREDIT LOSSES 123 ( 203 )

Net interest income after provision for (release of) credit losses 8,924 8,274

(RELEASE OF) PROVISION FOR CREDIT LOSSES ( 223 ) 170 ( 100 ) ( 33 )

Net interest income after (release of) provision for credit losses 9,814 9,085 18,737 17,360

NONINTEREST INCOME

28 unchanged sentences

(In thousands)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net income $ 2,518 $ 2,052 $ 4,091 $ 3,219

Available for sale securities:

Unrealized losses arising during the period ( 101 ) ( 21 )

Income tax benefit related to unrealized losses 21 4

Other comprehensive loss, net of tax benefit ( 80 ) ( 17 )

Unrealized gains (losses) arising during the period 161 ( 85 ) 59 ( 106 )

Income tax (expense) benefit related to unrealized gains (losses) ( 34 ) 18 ( 12 ) 22

Other comprehensive income (loss), net of tax 127 ( 67 ) 47 ( 84 )

Comprehensive income $ 2,645 $ 1,985 $ 4,138 $ 3,135

3 unchanged sentences

Condensed Consolidated Statements of Stockholders’ Equity

For the Three Months Ended March 31, 2026 and 2025 (unaudited)

For the Three and Six Months Ended June 30, 2026 and 2025 (unaudited)

(In thousands, except share and per share amounts)

4 unchanged sentences

Stockholders’

Balance, at March 31, 2026

2,568,043 $ 25 $ 28,797 $ 82,518 $ ( 926 ) $ 110,414

Net income — — — 2,518 — 2,518

Other comprehensive income, net of tax expense — — — — 127 127

Share-based compensation — — 49 — — 49

Cash dividends paid on common stock ($ 0.21 per share)

— — — ( 540 ) — ( 540 )

Balance, at June 30, 2026

2,568,043 $ 25 $ 28,846 $ 84,496 $ ( 799 ) $ 112,568

Balance, at December 31, 2025

1 unchanged sentence

Net income — — — 4,091 — 4,091

Other comprehensive loss, net of tax benefit — — — — ( 80 ) ( 80 )

Other comprehensive income, net of tax expense — — — — 47 47

Share-based compensation — — 106 — — 106

2 unchanged sentences

Common stock options exercised 90 — 3 — — 3

Balance, at March 31, 2026

Balance, at June 30, 2026

2,568,043 $ 25 $ 28,846 $ 84,496 $ ( 799 ) $ 112,568

4 unchanged sentences

Stockholders’

Balance, at March 31, 2025

2,566,069 $ 25 $ 28,515 $ 76,952 $ ( 1,061 ) $ 104,431

Net income — — — 2,052 — 2,052

Other comprehensive loss, net of tax benefit — — — — ( 67 ) ( 67 )

Share-based compensation — — 75 — — 75

Cash dividends paid on common stock ($ 0.19 per share)

— — — ( 487 ) — ( 487 )

Balance, at June 30, 2025

2,566,069 $ 25 $ 28,590 $ 78,517 $ ( 1,128 ) $ 106,004

Balance, at December 31, 2024

6 unchanged sentences

Common stock options exercised 1,162 — 21 — — 21

Balance, at March 31, 2025

Balance, at June 30, 2025

2,566,069 $ 25 $ 28,590 $ 78,517 $ ( 1,128 ) $ 106,004

4 unchanged sentences

(In thousands)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Amortization of net premiums on investments 42 42

Provision for (release of) credit losses 123 ( 203 )

(Release of) provision for credit losses ( 100 ) ( 33 )

Depreciation and amortization 202 261

5 unchanged sentences

Net change in advances from borrowers for taxes and insurance ( 268 ) ( 346 )

Deferred income tax 70 ( 273 )

Net loss on disposal of assets, net 53 —

2 unchanged sentences

Originations of loans held-for-sale ( 14,415 ) ( 8,314 )

Net gain on OREO and repossessed assets ( 1 ) —

Net loss on OREO and repossessed assets 9 —

Change in operating assets and liabilities:

9 unchanged sentences

Net change in loans 13,454 ( 3,257 )

FHLB stock purchased ( 60 ) ( 4 )

FHLB stock redeemed (purchased) 390 ( 4 )

Purchase of BOLI ( 321 ) —

1 unchanged sentence

Proceeds from sale of OREO and other repossessed assets 349 —

Net cash (used in)/provided by investing activities ( 21,062 ) 13,919

Net cash provided by/(used in) investing activities 8,960 ( 3,164 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Net increase in deposits 19,626 72,548

Net (decrease) increase in deposits ( 17,994 ) 61,660

Repayment of borrowings ( 10,000 ) —

Dividends paid on common stock ( 1,078 ) ( 974 )

Proceeds from common stock option exercises 3 21

Net cash provided by financing activities 19,088 72,082

Net cash (used in)/provided by financing activities ( 29,069 ) 60,707

Net change in cash and cash equivalents ( 18,380 ) 58,901

5 unchanged sentences

Noncash investing and financing activities:

Loans transferred from loans held-for-sale to loans held-for-portfolio — 1,200

Loans transferred from loans held-for-portfolio to OREO and repossessed assets 61 300

Cash paid for principal portion from finance leases 12 12

ROU assets obtained in exchange for new operating lease liabilities 66 583

ROU assets obtained in exchange for new finance lease liabilities — 130

Derecognition of ROU asset 98 —

44 unchanged sentences

Note 3 – Investments

At March 31, 2026, the Company did not own any debt securities classified as trading.

At June 30, 2026, the Company did not own any debt securities classified as trading.

Debt securities

1 unchanged sentence

Losses Estimated

March 31, 2026

June 30, 2026

Municipal bonds $ 6,292 $ 9 $ ( 768 ) $ 5,533

7 unchanged sentences

Losses Estimated

March 31, 2026

June 30, 2026

Municipal bonds $ 703 $ — $ ( 133 ) $ 570

5 unchanged sentences

Total $ 1,892 $ — $ ( 314 ) $ 1,578

The amortized cost and estimated fair value of AFS and HTM securities at March 31, 2026, by contractual maturity, are shown below (in thousands).

The amortized cost and estimated fair value of AFS and HTM securities at June 30, 2026, by contractual maturity, are shown below (in thousands).

Expected maturities of AFS securities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Investments not due at a single maturity date, consisting of agency mortgage-backed securities, are shown separately.

March 31, 2026

June 30, 2026

Available-for-sale Held-to-maturity

7 unchanged sentences

Total $ 8,586 $ 7,575 $ 1,876 $ 1,572

There were no pledged securities at March 31, 2026 or December 31, 2025.

There were no sales of AFS or HTM securities during the three months ended March 31, 2026 and 2025.

Accrued interest receivable on securities totaled $ 75 thousand at March 31, 2026 and $ 47 thousand at December 31, 2025, in the accompanying Condensed Consolidated Balance Sheets.

There were no pledged securities at June 30, 2026 or December 31, 2025.

There were no sales of AFS or HTM securities during the three and six months ended June 30, 2026 and 2025.

Accrued interest receivable on securities totaled $ 47 thousand at both June 30, 2026 and December 31, 2025, in the accompanying Condensed Consolidated Balance Sheets.

Accrued interest receivable is excluded from the allowance for credit losses.

The following table summarizes the aggregate fair value and gross unrealized loss by length of time of those investments for which an allowance for credit losses has not been recorded that have been in a continuous unrealized loss position at the dates indicated (in thousands):

March 31, 2026

June 30, 2026

Less Than 12 Months 12 Months or Longer Total

23 unchanged sentences

Total held-to-maturity securities $ — $ — $ 1,578 $ ( 314 ) $ 1,578 $ ( 314 )

There was no allowance for credit losses on securities at March 31, 2026 or December 31, 2025.

At both March 31, 2026 and December 31, 2025, the total securities portfolio consisted of 11 agency mortgage-backed securities and 11 municipal bonds.

There were no securities in an unrealized loss position for less than 12 months and 15 securities in an unrealized loss position

for more than 12 months at both March 31, 2026 and December 31, 2025.

There was no allowance for credit losses on securities at June 30, 2026 or December 31, 2025.

At both June 30, 2026 and December 31, 2025, the total securities portfolio consisted of 11 agency mortgage-backed securities and 11 municipal bonds.

There was one security in an unrealized loss position for less than 12 months and 15 securities in an unrealized loss position for

more than 12 months at June 30, 2026 and no securities in an unrealized loss position for less than 12 months and 15 securities in an unrealized loss position for more than 12 months at December 31, 2025.

The unrealized losses were caused by changes in market interest rates or the widening of market spreads subsequent to the initial purchase of these securities and not related to the underlying credit of the issuers or the underlying collateral.

It is expected that these securities will not be settled at a price less than the amortized cost of each investment.

There was no provision for credit losses recognized for investment securities during the three months ended March 31, 2026 and 2025, because the declines in fair value were not attributable to credit quality and because we do not intend, and it is not likely that we will be required, to sell these securities before recovery of their amortized cost basis.

There was no provision for credit losses recognized for investment securities during the three and six months ended June 30, 2026 and 2025, because the declines in fair value were not attributable to credit quality and because we do not intend, and it is not likely that we will be required, to sell these securities before recovery of their amortized cost basis.

Equity Securities

At March 31, 2026, the Company held equity securities without readily determinable fair values with a carrying value of $ 5.0 million, accounted for under the measurement alternative in accordance with ASC 321.

During the three months ended March 31, 2026, there was no impairment and no observable price changes.

At June 30, 2026, the Company held equity securities without readily determinable fair values with a carrying value of $ 5.0 million, accounted for under the measurement alternative in accordance with ASC 321.

During the three and six months ended June 30, 2026, there was no impairment and no observable price changes.

The Company held no equity securities at December 31, 2025.

20 unchanged sentences

Total loans held-for-portfolio, net $ 883,549 $ 896,928

(1) Includes premiums resulting from purchased loans of $ 361 thousand related to one-to-four family loans, $ 204 thousand related to commercial and multifamily loans, and $ 46 thousand related to commercial business loans as of March 31, 2026.

(1) Includes premiums resulting from purchased loans of $ 343 thousand related to one-to-four family loans, $ 196 thousand related to commercial and multifamily loans, and $ 43 thousand related to commercial business loans as of June 30, 2026.

Includes premiums resulting from purchased loans of $ 367 thousand related to one-to-four family loans, $ 212 thousand related to commercial and multifamily loans, and $ 49 thousand related to commercial business loans as of December 31, 2025.

As of March 31, 2026, there were five collateral dependent one-to-four-family real estate loans, totaling $ 1.1 million, that were in process of foreclosure .

As of June 30, 2026, there were six collateral dependent one-to-four-family real estate loans, totaling $ 1.2 million, that were in process of foreclosure .

The following table presents a summary of activity in the ACL on loans and the reserve for unfunded loan commitments for the periods indicated (in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

ACL - Loans Reserve for Unfunded Loan Commitments ACL ACL - Loans Reserve for Unfunded Loan Commitments ACL

Balance at beginning of period $ 8,635 $ 222 $ 8,857 $ 8,393 $ 116 $ 8,509

Provision for (release of) credit losses during the period 49 74 123 ( 85 ) ( 118 ) ( 203 )

(Release of) provision for credit losses during the period ( 185 ) ( 38 ) ( 223 ) 164 6 170

Net charge-offs during the period ( 30 ) — ( 30 ) ( 21 ) — ( 21 )

Balance at end of period $ 8,420 $ 184 $ 8,604 $ 8,536 $ 122 $ 8,658

Accrued interest receivable on loans receivable totaled $ 3.6 million at both March 31, 2026 and December 31, 2025, in the accompanying Condensed Consolidated Balance Sheets.

Six Months Ended June 30,

ACL - Loans Reserve for Unfunded Loan Commitments ACL ACL - Loans Reserve for Unfunded Loan Commitments ACL

Balance at beginning of period $ 8,605 $ 148 $ 8,753 $ 8,499 $ 234 $ 8,733

(Release of) provision for credit losses during the period ( 136 ) 36 ( 100 ) 79 ( 112 ) ( 33 )

Net charge-offs during the period ( 49 ) — ( 49 ) ( 42 ) — ( 42 )

Balance at end of period $ 8,420 $ 184 $ 8,604 $ 8,536 $ 122 $ 8,658

Accrued interest receivable on loans receivable totaled $ 3.5 million at June 30, 2026 and $ 3.6 million December 31, 2025, in the accompanying Condensed Consolidated Balance Sheets.

Accrued interest receivable is excluded from the ACL.

21 unchanged sentences

The following tables summarize the activity in the ACL - loans for the periods indicated (in thousands):

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

Allowance Charge-offs Recoveries Provision for (Release of) Credit Losses Ending

4 unchanged sentences

Manufactured homes 1,085 — — 70 1,155

Floating homes 1,225 — — 34 1,259

Other consumer (1)

332 ( 3 ) 3 ( 22 ) 310

Commercial business (2)

124 ( 30 ) — ( 3 ) 91

Total $ 8,635 $ ( 33 ) $ 3 $ ( 185 ) $ 8,420

(1) During the three months ended June 30,2026, gross charge-offs of other consumer loans related entirely to deposit overdrafts.

(2) During the three months ended June 30,2026, there was one commercial business loan for $ 30 thousand originated in 2024 that was charged off.

Three Months Ended June 30, 2025

Allowance Charge-offs Recoveries Provision for (Release of) Credit Losses Ending

One-to-four family $ 3,328 $ — $ — $ ( 1 ) $ 3,327

Home equity 362 — — ( 2 ) 360

Commercial and multifamily 1,181 — — 55 1,236

Construction and land 279 — — ( 10 ) 269

Manufactured homes 1,303 — — 92 1,395

Floating homes 1,409 — — 1 1,410

3 unchanged sentences

Total $ 8,393 $ ( 23 ) $ 2 $ 164 $ 8,536

(1) During the three months ended March 31,2026, there was one manufactured loan for $ 20 thousand originated in 2017 that was charged off.

(2) During the three months ended March 31,2026, gross charge-offs of other consumer loans related entirely to deposit overdrafts.

Three Months Ended March 31, 2025

(1) During the three months ended June 30, 2025, there was one other consumer loan for $ 16 thousand originated in 2024 related to a consumer line of credit that was charged off with the remainder of the gross charge-offs of other consumer loans related entirely to deposit overdrafts.

Six Months Ended June 30, 2026

Allowance Charge-offs Recoveries Provision for (Release of) Credit Losses Ending

9 unchanged sentences

Commercial business (3)

116 ( 30 ) — 5 91

Total $ 8,605 $ ( 59 ) $ 10 $ ( 136 ) $ 8,420

(1) During the three months ended March 31, 2025, there was one manufactured home loan originated in 2022 that was charged off and then subsequently foreclosed upon.

(2) During the three months ended March 31, 2025, the gross charge-offs of other consumer loans related entirely to deposit overdrafts that were charged off.

(1) During the six months ended June 30, 2026, there was one manufactured home loan for $ 20 thousand originated in 2017 that was charged off.

(2) During the six months ended June 30, 2026, gross charge-offs of other consumer loans related entirely to deposit overdrafts

(3) During the six months ended June 30, 2026, there was one commercial business loan for $ 30 thousand originated in 2024 that was charged off.

Six Months Ended June 30, 2025

Allowance Charge-offs Recoveries Provision for (Release of) Credit Losses Ending

One-to-four family $ 3,025 $ — $ — $ 302 $ 3,327

Home equity 307 — — 53 360

Commercial and multifamily 1,218 — — 18 1,236

Construction and land 992 — — ( 723 ) 269

Manufactured homes (1)

1,172 ( 19 ) — 242 1,395

Floating homes 1,282 — — 128 1,410

Other consumer (2)

401 ( 31 ) 8 73 451

Commercial business 102 — — ( 14 ) 88

Total $ 8,499 $ ( 50 ) $ 8 $ 79 $ 8,536

(1) During the six months ended June 30, 2025, there was one manufactured home loan for $ 19 thousand originated in 2022 that was charged off and then subsequently foreclosed upon.

(2) During the six months ended June 30, 2025, there was one other consumer loan for $ 16 thousand originated in 2024 related to a consumer line of credit that was charged off, with the remainder of the gross charge-offs of other consumer loans related entirely to deposit overdrafts.

Credit Quality Indicators.

Federal regulations provide for the classification of lower quality loans and other assets (such as OREO and repossessed assets), as well as debt and equity securities considered as "substandard," "doubtful" or "loss." An asset is considered "substandard" if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any.

"Substandard" assets include those characterized by the "distinct possibility" that the insured institution will sustain "some loss" if the deficiencies are not corrected.

Assets classified as "doubtful" have all of the weaknesses in those classified "substandard," with the added characteristic that the weaknesses present make "collection or liquidation in full," on the basis of currently existing facts, conditions and values, "highly questionable and improbable." 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.

Management regularly reviews loans in the portfolio to assess credit quality indicators and to determine appropriate loan classification and grading.

The grades for watch and special mention loans are used by the Company to identify and track potential problem loans which do not rise to the levels described for substandard, doubtful, or loss.

These are loans which have been criticized and deserve management's close attention based upon known characteristics such as periodic payment delinquency, failure to comply with contractual terms of the loan, or collateral concerns.

Loans identified as watch, special mention, substandard, doubtful, or loss are subject to additional problem loan reporting to management every three months.

When we classify problem assets as either substandard or doubtful, we may determine that these assets should be individually analyzed if they no longer share common risk characteristics with the rest of the portfolio.

Substandard assets have well-defined weaknesses that could result in loss if the deficiencies are not corrected.

Assets classified as "doubtful" have all of the weaknesses inherent in those classified as "substandard," with the added characteristic that the weaknesses make collection or liquidation in full, highly questionable and improbable.

Assets classified as "loss" are considered "uncollectible" and of such little value that their continuance as assets is not warranted.

Management regularly reviews loans in the portfolio to assess credit quality and to determine appropriate loan classification and grading.

The grades for "watch" and "special mention" loans are used by the Company to identify and track potential problem loans that warrant management’s close attention based upon known characteristics such as periodic payment delinquency, failure to comply with contractual terms of the loan, or collateral concerns.

These loans do not rise to the level of regulatory classifications such as substandard, doubtful, or loss.

Loans identified as watch, special mention, substandard, doubtful, or loss are subject to additional problem loan reporting to management quarterly.

When we classify problem assets as either substandard or doubtful, these assets are evaluated to determine whether they should be individually assessed if they no longer share common risk characteristics with the rest of the portfolio.

When we classify problem assets as a loss, we are required to charge off those assets in the period in which they are deemed uncollectible.

Our determination as to the classification of our assets and the amount of our valuation allowances is subject to review by the FDIC (the Bank’s federal banking regulator) and the Washington Department of Financial Institutions (the Bank’s state banking regulator), which can order the establishment of additional credit loss allowances.

Our determination as to the classification of our assets and the amount of our allowance for credit losses is subject to review by the FDIC (the Bank’s federal banking regulator) and the Washington Department of Financial Institutions (the Bank’s state banking regulator), which can order the establishment of additional credit loss allowance.

Assets which do not currently expose us to sufficient risk to warrant classification as substandard or doubtful but possess weaknesses are required to be designated as special mention.

There were no loans classified as doubtful or loss as of March 31, 2026 and December 31, 2025.

The following tables present the internally assigned grades as of March 31, 2026 and December 31, 2025, by type of loan and origination year (in thousands):

At March 31, 2026

There were no loans classified as doubtful or loss as of June 30, 2026 and December 31, 2025.

The following tables present the internally assigned grades as of June 30, 2026 and December 31, 2025, by type of loan and origination year (in thousands):

At June 30, 2026

Term Loans Amortized Cost Basis by Origination Year Revolving Loans Amortized Cost Basis Revolving Loans Amortized Cost Basis Converted to Term

73 unchanged sentences

The following table presents the amortized cost of nonaccrual loans as of the dates indicated, by type of loan (in thousands):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

with no ACL Total

8 unchanged sentences

The following tables present the aging of past due loans, based on amortized cost, as of the dates indicated, by type of loan (in thousands):

March 31, 2026

June 30, 2026

Past Due 60-89 Days

36 unchanged sentences

Any other type of modification, including the use of multiple categories above.

At March 31, 2026, the Company had no commitments to extend additional credit to borrowers owing loan receivables with modified terms.

There were no loans modified within the three months ended March 31, 2026 and 2025.

We have no modified loan receivables that have subsequently defaulted at March 31, 2026 and December 31, 2025.

At June 30, 2026, the Company had no commitments to extend additional credit to borrowers owing loan receivables with modified terms.

There were no loans modified within the three and six months ended June 30, 2026 and 2025.

We have no modified loan receivables that have subsequently defaulted within 12 months of modification at June 30, 2026 and December 31, 2025.

Troubled debt restructurings (“TDRs”).

1 unchanged sentence

Troubled Debt Restructurings and Vintage Disclosures , the Company had granted a variety of concessions to borrowers in the form of loan modifications that were considered TDRs.

Loans classified as legacy TDRs totaled $ 1.1 million at both March 31, 2026 and December 31, 2025 .

Loans classified as legacy TDRs totaled $ 1.1 million at both June 30, 2026 and December 31, 2025 .

Collateral Dependent Loans .

4 unchanged sentences

The following tables summarize collateral dependent loans by collateral type as of the dates indicated (in thousands):

March 31, 2026

June 30, 2026

Commercial Real Estate Residential Real Estate Land Other Residential RVs/Automobiles Business Assets Total

27 unchanged sentences

The Company determines the fair values of its financial instruments based on the requirements established in ASC 820 , Fair Value Measurements (“ASC 820”), which provides a framework for measuring fair value in accordance with U.S.

GAAP and requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

ASC 820 defines fair values for financial instruments as the exit price, the price that would be received for an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date under current market conditions.

The Company’s fair values for financial instruments at March 31, 2026 and December 31, 2025 were determined based on these requirements.

GAAP and requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

ASC 820 defines fair value as the exit price that would be received to sell an asset or paid to transfer a liability in the principal (or most advantageous) market in an orderly transaction between market participants at the measurement date.

The Company’s fair values for financial instruments at June 30, 2026 and December 31, 2025 were determined based on this guidance.

The following methods and assumptions were used to estimate the fair value of the Company’s financial instruments:

Cash and cash equivalents - The estimated fair value is equal to the carrying amount.

Available-for-sale securities – AFS securities are recorded at fair value based on quoted market prices, if available (Level 1).

If quoted market prices are not available, management utilizes third-party pricing services or broker quotations from dealers

in the specific instruments (Level 2).

Level 2 securities include those traded on an active exchange, as well as U.S.

government securities.

Held-to-maturity securities – The fair value is based on quoted market prices, if available.

If quoted market prices are not available, management utilizes third-party pricing services or broker quotations from dealers in the specific instruments.

Level 2 securities include those traded on an active exchange, as well as U.S.

government securities.

Cash and cash equivalents - The estimated fair value equals the carrying amount.

Available-for-sale securities – The fair value is based on quoted market prices, if available (Level 1).

If quoted market prices are not available, management utilizes third-party pricing services or broker quotations (Level 2).

Level 2 measurements generally include U.S.

government and agency securities and other securities valued using observable market inputs.

Held-to-maturity securities – The estimated fair value is determined using quoted market prices, if available.

If quoted market prices are not available, management utilizes third-party pricing services or broker quotations.

Equity investments - Equity investments consist of securities without readily determinable fair values and are accounted for under the measurement alternative in accordance with ASC 321.

Accordingly, these investments are carried at cost, less impairment, and adjusted for observable price changes in orderly transactions for identical or similar investments, with any such adjustments and impairment recognized in net income.

Loans held-for-sale - The fair value of fixed-rate one-to-four family loans is based on whole loan forward prices obtained from government sponsored enterprises.

Loans held-for-portfolio - The estimated fair value of loans held-for-portfolio consists of a credit adjustment to reflect the estimated adjustment to the carrying value of the loans due to credit-related factors and a yield adjustment to reflect the estimated adjustment to the carrying value of the loans due to a differential in yield between the portfolio loan yields and estimated current market rate yields on loans with similar characteristics.

The estimated fair values of loans held-for-portfolio reflect exit price assumptions.

The liquidity premiums/discounts are part of the valuation for exit pricing.

Mortgage servicing rights –The fair value of MSRs is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds, discount rates, and delinquency rate assumptions as inputs.

Time deposits - The estimated fair value of time deposits is based on the difference between interest rates paid on the Company’s time deposits and current market rates for time deposits with comparable characteristics.

Borrowings - The fair value of borrowings is estimated using the contractual cash flows of each debt instrument discounted using the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Subordinated notes - The fair value of subordinated notes is estimated using discounted cash flows based on current borrowing rates for similar long-term debt instruments with similar terms and remaining time to maturity.

Loans held-for-sale - The fair value of is based on whole loan forward prices obtained from government-sponsored enterprises.

Loans held-for-portfolio - The estimated fair value is determined by applying adjustments for credit-related factors and differences between the contractual yields on the portfolio and current market yields for loans with similar characteristics.

The estimated fair value reflects exit price assumptions, including liquidity premiums or discounts.

Mortgage servicing rights –The fair value is determined using a discounted cash flow model that incorporated interest rates, prepayment speeds, discount rates, and delinquency assumptions as inputs.

Time deposits - The estimated fair value is based on the difference between interest rates paid on the Company’s time deposits and current market rates for time deposits with comparable characteristics.

Borrowings - The estimated fair value is determined using the contractual cash flows of each debt instrument discounted at the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Subordinated notes - The estimated fair value is determined using the contractual cash flows discounted at current borrowing rates for similar long-term debt instruments with similar terms and remaining time to maturity.

A description of the valuation methodologies used for collateral dependent loans, OREO and repossessed assets, and off-balance sheet loan commitments is as follows:

Collateral dependent loans - The fair value of collateral dependent loans is based on the current appraised value of the collateral less estimated costs to sell.

OREO and repossessed assets – The fair value of OREO and repossessed assets is based on the current appraised value of the collateral less estimated costs to sell.

Off-balance sheet financial instruments - The fair value of off-balance sheet financial instruments, which consisted entirely of loan commitments at March 31, 2026 and December 31, 2025, is estimated based on fees charged to others to enter into similar agreements, taking into account the remaining terms of the agreements and credit standing of the Company’s clients.

The estimated fair value of these commitments was not significant at March 31, 2026 and December 31, 2025.

Collateral dependent loans - The estimated fair value is determined using the current appraised value of the collateral, less estimated costs to sell.

OREO and repossessed assets – The fair value is determined using the current appraised value of the collateral less estimated costs to sell.

Off-balance sheet financial instruments - The estimated fair value, which consisted entirely of loan commitments at June 30, 2026 and December 31, 2025, is determined based on fees charged to others to enter into similar agreements, taking into account the remaining terms of the agreements and credit standing of the counterparties.

The estimated fair value of these commitments was not significant at June 30, 2026 and December 31, 2025.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

1 unchanged sentence

Transfers between levels of the fair value hierarchy are recognized on the actual date of the event or circumstances that caused the transfer, which generally coincides with the Company’s quarterly valuation process.

There were no transfers between levels during the three months ended March 31, 2026 and 2025.

There were no transfers between levels during the three and six months ended June 30, 2026 and 2025.

The following tables present information about the level in the fair value hierarchy for the Company’s financial assets and liabilities, whether recognized or recorded at fair value or not as of the dates indicated (in thousands):

March 31, 2026 Fair Value Measurements Using:

June 30, 2026 Fair Value Measurements Using:

Value Estimated

10 unchanged sentences

Time deposits 298,045 298,072 — 298,072 —

Borrowings 10,000 10,000 — 10,000 —

Subordinated notes 7,822 8,227 — 8,227 —

14 unchanged sentences

The following tables present the balance of assets measured at fair value on a recurring basis as of the dates indicated (in thousands):

Fair Value at March 31, 2026

Fair Value at June 30, 2026

Description Total Level 1 Level 2 Level 3

8 unchanged sentences

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 as of the dates indicated:

March 31, 2026

June 30, 2026

Financial Instrument Valuation Technique Unobservable Input(s) Range

9 unchanged sentences

Average debt service cost per residential loan $ 96.00

Generally, any significant increases in the prepayment speed assumption and discount rate utilized in the fair value measurement of the MSRs will result in a negative fair value adjustment (and decrease in the fair value measurement).

Conversely, a significant decrease in the prepayment speed assumption and discount rate will result in a positive fair value adjustment (and increase in the fair value measurement).

An increase in the weighted average life assumptions will result in a decrease in the prepayment speed assumption and conversely, a decrease in the weighted average life assumptions will result in an increase in the prepayment speed assumption.

As a result of the difficulty in observing certain significant valuation inputs affecting our “Level 3” fair value assets, we are required to make judgments regarding these items’ fair values.

There were no assets or liabilities (excluding MSRs) measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three months ended March 31, 2026 and 2025.

MSRs are measured at fair value using significant unobservable inputs (Level 3) on a recurring basis, and a reconciliation of these assets can be found in “Note 6—Mortgage Servicing Rights.

Generally, significant increases in the prepayment speed assumption or discount rate utilized in the fair value measurement of the MSRs will result in a negative fair value adjustment (and a decrease in fair value).

Conversely, a significant decrease in the prepayment speed assumption and discount rate will result in a positive fair value adjustment (and an increase in fair value).

An increase in the weighted average life assumption will result in a decrease in the prepayment speed assumption and, conversely, a decrease in the weighted average life assumption will result in an increase in the prepayment speed assumption.

Because certain significant valuation inputs used to measure Level 3 assets are unobservable, management is required to make judgments in estimating their fair values.

There were no assets or liabilities (excluding MSRs) measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the three and six months ended June 30, 2026 and 2025.

MSRs are measured at fair value using significant unobservable inputs (Level 3) on a recurring basis, and a reconciliation of changes in the carrying amount of MSRs in presented in “Note 6—Mortgage Servicing Rights.

The following tables present the balance of assets measured at fair value on a nonrecurring basis at the dates indicated (in thousands):

Fair Value at March 31, 2026

Fair Value at June 30, 2026

Total Level 1 Level 2 Level 3

6 unchanged sentences

Collateral dependent loans 5,934 — — 5,934

There were no liabilities carried at fair value, measured on a recurring or nonrecurring basis at both March 31, 2026 and December 31, 2025.

There were no liabilities carried at fair value, measured on a recurring or nonrecurring basis at both June 30, 2026 and December 31, 2025.

Note 6 – Mortgage Servicing Rights

The unpaid principal balance of the Company’s mortgage servicing rights portfolio totaled $ 393.8 million at March 31, 2026 compared to $ 398.4 million at December 31, 2025.

Of these total balances, the unpaid principal balances of loans serviced for Federal National Mortgage Association (“Fannie Mae”) at March 31, 2026 and December 31, 2025 were $ 392.1 million and $ 396.3 million, respectively.

The unpaid principal balance of loans serviced for other financial institutions totaled $ 1.8 million at March 31, 2026 compared to $ 2.0 million at December 31, 2025.

The unpaid principal balance of the Company’s mortgage servicing rights portfolio totaled $ 392.4 million at June 30, 2026, compared to $ 398.4 million at December 31, 2025.

Of these total balances, the unpaid principal balances of loans serviced for Federal National Mortgage Association (“Fannie Mae”) at June 30, 2026 and December 31, 2025 were $ 390.6 million and $ 396.3 million, respectively.

The unpaid principal balance of loans serviced for other financial institutions totaled $ 1.8 million at June 30, 2026 compared to $ 2.0 million at December 31, 2025.

Loans serviced for Fannie Mae and others are not included in the Company’s financial statements as they are not assets of the Company.

A summary of the change in the balance of mortgage servicing assets during the periods indicated were as follows (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Beginning balance, at fair value $ 4,096 $ 4,688 $ 4,183 $ 4,769

6 unchanged sentences

The key economic assumptions used in determining the fair value of mortgage servicing rights at the dates indicated are as follows:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Prepayment speed (Public Securities Association “PSA” model) 125 % 125 %

2 unchanged sentences

Average debt service cost per residential loan $ 96.00 $ 96.00

The amount of contractually specified servicing, late and ancillary fees earned on mortgage servicing rights, which are included in mortgage servicing income on the Condensed Consolidated Statements of Income, totaled $ 248 thousand and $ 269 thousand for three months ended March 31, 2026 and 2025, respectively.

for the three and six months ended June 30, 2026, respectively, and $ 263 thousand and $ 531 thousand for the three and six months ended June 30, 2025, respectively.

Note 7 – Commitments and Contingencies

5 unchanged sentences

The following tables present advances from the FHLB as of the dates indicated (dollars in thousands):

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

FHLB advances:

1 unchanged sentence

Long-term advances (over one year) — 10,000

$ 10,000 $ 10,000

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Outstanding balance $ — $ 10,000

2 unchanged sentences

Weighted average interest rate — % 4.06 %

The following table presents the maturity of our FHLB advances (dollars in thousands):

March 31, 2026

Remainder of 2026 $ —

FHLB Des Moines Borrowing Capacity

1 unchanged sentence

The terms of the agreement call for a blanket pledge of a portion of the Company’s mortgage and commercial and multifamily loan portfolio based on the Company’s outstanding borrowing balance.

Additionally, the Company had outstanding letters of credit from the FHLB of Des Moines to secure public deposits.

Additionally, at June 30, 2026 and December 31, 2025, the Company had outstanding letters of credit from the FHLB of Des Moines to secure public deposits.

The following table presents the Company’s borrowing capacity from the FHLB as of the dates indicated:

March 31, 2026 December 31, 2025

June 30, 2026 December 31, 2025

Amount available to borrow under credit facility (1)

10 unchanged sentences

As a member of the FHLB, the Company is required to maintain a minimum level of investment in FHLB of Des Moines stock based on specific percentages of its outstanding FHLB advances.

At both March 31, 2026 and December 31, 2025, the Company had an investment of $ 1.1 million in FHLB of Des Moines stock.

At June 30, 2026 and December 31, 2025, the Company had an investment of $ 670 thousand and $ 1.1 million, respectively, in FHLB of Des Moines stock.

Federal Reserve Bank of San Francisco (“FRB SF”) Borrowings

The Company has a borrowing agreement with the FRB SF.

The terms of the agreement call for a blanket pledge of a portion of the Company’s consumer and commercial business loans based on the Company’s outstanding borrowing balance.

At March 31, 2026 and December 31, 2025, the amount available to borrow under this credit facility was $ 19.1 million and $ 18.5 million, respectively, subject to eligible pledged collateral.

The Company had no outstanding borrowings under this arrangement at March 31, 2026 and December 31, 2025.

The terms of the agreement call for a blanket pledge of a portion of the Company’s consumer and commercial business loans as collateral for borrowings under this arrangement.

At June 30, 2026 and December 31, 2025, the amount available to borrow under this credit facility was $ 21.1 million and $ 18.5 million, respectively, subject to eligible pledged collateral.

The Company had no outstanding borrowings under this arrangement at June 30, 2026 and December 31, 2025.

Other Borrowings

The Company has access to an unsecured Fed Funds line of credit from Pacific Coast Banker’s Bank (“PCBB”).

The line has a one year term maturing on June 30, 2026 and is renewable annually.

As of March 31, 2026, the amount available under this line of credit was $ 20.0 million.

There was no balance on this line of credit as of March 31, 2026 and December 31, 2025.

The line has a 1.5 years term maturing on December 31, 2027, and is renewable upon conclusion of its term.

As of June 30, 2026, the amount available under this line of credit was $ 20.0 million.

There were no outstanding borrowings under this line of credit as of June 30, 2026 and December 31, 2025.

Subordinated Debt

In September 2020, the Company issued $ 12.0 million of fixed -to -floating rate subordinated notes that mature in 2030.

The subordinated notes had an initial fixed interest rate of 5.25 % to, but excluding, October 1, 2025, payable semi-annually in arrears.

The subordinated notes had an initial fixed interest rate of 5.25 % through September 30, 2025, payable semi-annually in arrears.

From, and including, October 1, 2025, the interest rate on the subordinated notes reset quarterly to a floating rate per annum equal to the then-current three-month term Secured Overnight Financing Rate, or SOFR, plus 513 basis points, payable quarterly in arrears.

The subordinated notes mature on May 15, 2030, and are redeemable by the Company, in whole or in part, on any interest payment date on or after October 1, 2025.

The Company completed a partial redemption of $ 4.0 million on October 1, 2025, the first date on which partial redemptions were allowed.

The Company completed a partial redemption of $ 4.0 million on October 1, 2025, the first date on which partial redemptions were permitted, and completed another partial redemption of $ 2.0 million subsequent to June 30, 2026.

The subordinated notes may be included in Tier 2 capital for Sound Financial Bancorp under current regulatory guidelines and interpretations.

The balance of the subordinated notes, net of debt issuance costs, was $ 7.8 million at both March 31, 2026 and December 31, 2025.

The balance of the subordinated notes, net of debt issuance costs, was $ 7.8 million at both June 30, 2026 and December 31, 2025, prior to giving effect to the $ 2.0 million partial redemption completed subsequent to June 30, 2026.

Note 9 – Earnings Per Common Share

The following table summarizes the calculation of earnings per share for the periods indicated (dollars in thousands, except per share data):

Three Months Ended

Three Months Ended Six Months Ended

2026 2025 2026 2025

Net income $ 2,518 $ 2,052 $ 4,091 $ 3,219

10 unchanged sentences

Earnings per share, diluted $ 0.98 $ 0.79 $ 1.59 $ 1.24

There were no anti-dilutive securities during the three months ended March 31, 2026 and March 31, 2025.

There were no anti-dilutive securities during the three and six months ended June 30, 2026 and June 30, 2025.

Note 10 – Leases

We currently have operating leases for branch locations, a loan production office and our corporate office.

The term for our leases generally begins on the date we become legally obligated for the rent payments or we take possession of the building

premises, whichever is earlier.

Our real estate leases have initial terms ranging from one to 10.5 years and typically include one renewal option.

As of March 31, 2026, our leases had remaining terms ranging from 11 months to 4.2 years.

The operating leases require us to pay property taxes and operating expenses for the properties.

We also have finance leases for certain equipment, including copier machines, which had an initial term of five years and a remaining term of approximately 3.75 years as of March 31, 2026 .

During the three months ended March 31, 2026, we provided notice that our Tacoma branch would close in April 2026 as part of ongoing strategic consolidation efforts.

In connection with this closure, the lease was modified to a shorter term ending in the second quarter of 2026.

The modification resulted in the derecognition of $ 98 thousand in both our operating right-of-use asset and operating lease liability.

The Company currently has operating leases for branch locations, a loan production office, and its corporate office.

The lease term generally begins on the date the Company becomes legally obligated for the rent payments or takes possession of the building premises, whichever is earlier.

The Company’s real estate leases have initial terms ranging from one to 10.5 years and typically include one renewal option.

As of June 30, 2026, The Company’s leases had remaining terms ranging from 8 months to 3.9 years.

The operating leases require the Company to pay property taxes and operating expenses for the properties.

The Company also has finance leases for certain equipment, including copier machines, which had an initial term of five years and a remaining term of approximately 3.5 years as of June 30, 2026.

During the three months ended June 30, 2026, the Company completed the closure of the Tacoma branch as part of ongoing strategic consolidation efforts.

In connection with this closure, the lease was modified in the first quarter of 2026 to a shorten the lease term, which expired during ended in the second quarter of 2026.

The modification resulted in the derecognition of $ 98 thousand of the operating right-of-use asset and corresponding operating lease liability during the six months ended June 30, 2026.

The following table presents the lease right-of-use assets and lease liabilities recorded on the Condensed Consolidated Balance Sheets at the dates indicated (in thousands):

5 unchanged sentences

The following table presents the components of lease expense for the periods indicated (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Lease expense

6 unchanged sentences

The following table presents the schedule of lease liability payments at the date indicated (in thousands):

March 31, Finance Leases Operating Leases Total Lease Payments

June 30, Finance Leases Operating Leases Total Lease Payments

Remainder of 2026 $ 14 $ 565 $ 579

14 unchanged sentences

Supplemental cash flow information related to leases was as follows for the periods indicated (in thousands):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Cash paid for amounts included in the measurement of lease liabilities for operating leases:

5 unchanged sentences

Note 11 – Subsequent Events

On April 28, 2026, the Company announced that its Board of Directors declared a quarterly cash dividend of $ 0.21 per common share, payable on May 26, 2026 to stockholders of record at the close of business on May 11, 2026.

On July 1, 2026, the Company redeemed $ 2.0 million of its $ 8.0 million outstanding subordinated notes.

This transaction represented a partial redemption under the terms of the subordinated notes.

Refer to “Note-8 Borrowings” for additional information regarding the terms of the redemption.

On July 28, 2026, the Company announced that its Board of Directors declared a quarterly cash dividend of $ 0.21 per common share, payable on August 21, 2026, to stockholders of record at the close of business on August 7, 2026.

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

What changed 10-Q

Item 1. Financial Statements