What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2025-12-09 compared with 2024-12-11 · 162 added, 177 removed, 980 unchanged (26% of the section changed)

16 unchanged sentences

Other than an investor’s own internet access charges, the Company makes available free of charge through that website the Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to these reports, as soon as reasonably practicable after these materials have been electronically filed with, or furnished to, the Securities and Exchange Commission (“SEC”).

These reports are also available on the SEC's website at http://www.sec.gov.

The Bank considers Grays Harbor, Pierce, Thurston, King, Kitsap and Lewis counties, Washington as its primary market areas.

2 unchanged sentences

• five branch offices in Grays Harbor County (Ocean Shores, Montesano, Elma and two branches in Aberdeen);

• five branch offices in Pierce County (Edgewood, Puyallup, Spanaway, Tacoma and Gig Harbor);

• five current branch offices in Pierce County (Edgewood, Puyallup, Spanaway, Tacoma, and Gig Harbor and another location opening soon (University Place));

• six branch offices in Thurston County (Tumwater, Yelm, two branches in Lacey and two branches in Olympia);

3 unchanged sentences

For additional information, see “Item 2.

Hoquiam, with a population of approximately 8,800, is located in Grays Harbor County which is situated along Washington State’s central Pacific coast.

Hoquiam is located approximately 110 miles southwest of Seattle, Washington and 145 miles northwest of Portland, Oregon.

Hoquiam, with a population of approximately 8,800, is located in Grays Harbor County along Washington State’s central Pacific coast.

Hoquiam is approximately 110 miles southwest of Seattle, Washington and 145 miles northwest of Portland, Oregon.

The Bank considers its primary market area to include six sub-markets:

primarily rural Grays Harbor County with its historical dependence on the timber and fishing industries;

Thurston and Kitsap counties with their dependence on state and federal government;

Thurston and Kitsap counties with their dependence on state and federal government employment;

Pierce and King counties with their broadly diversified economic bases;

1 unchanged sentence

Each of these markets presents operating risks to the Bank.

The Bank’s expansion into Pierce, Thurston, Kitsap, King and Lewis counties represents the Bank’s strategy to expand and diversify its primary market area to become less reliant on the economy of Grays Harbor County.

The Bank’s expansion into Pierce, Thurston, Kitsap, King and Lewis counties reflects the Bank’s strategy to expand and diversify its primary market area and to become less reliant on the economy of Grays Harbor County.

Grays Harbor County has a population of 78,000 according to the United States ("U.S.") Census Bureau 2024 estimates and a median family income of $94,800 according to 2025 estimates from the Department of Housing and Urban Development (“HUD”).

1 unchanged sentence

Other industries that support the economic base are tourism, agriculture, shipping, transportation and technology.

According to the Washington State Employment Security Department, the unemployment rate in Grays Harbor County increased to 5.5% at September 30, 2024 from 4.8% at September 30, 2023.

The median price of a resale home in Grays Harbor County for the quarter ended September 30, 2024 increased 4.0% to $365,400 from $351,300 for the comparable prior year period.

The number of home sales decreased 13.7% for the quarter ended September 30, 2024 compared to the same quarter one year earlier.

According to the Washington State Employment Security Department, the unemployment rate in Grays Harbor County increased to 5.6% at August 31, 2025 from 5.5% at September 30, 2024.

The median price of a resale home in Grays Harbor County for the quarter ended June 30, 2025 increased 2.9% to $368,400 from $358,100 for the comparable prior year period.

The number of home sales increased 9.2% for the quarter ended June 30, 2025 compared to the same quarter one year earlier.

The Bank has six branches (including its home office) located in the county.

3 unchanged sentences

The economy in Pierce County is diversified with the presence of military related government employment (Joint Base Lewis-McChord), transportation and shipping employment (Port of Tacoma), and aerospace related employment.

According to the Washington State Employment Security Department, the unemployment rate for the Pierce County area increased to 4.5% at September 30, 2024 from 3.9% at September 30, 2023.

The median price of a resale home in Pierce County for the quarter ended September 30, 2024 increased 5.7% to $576,400 from $545,200 for the comparable prior year period.

The number of home sales decreased 13.9% for the quarter ended September 30, 2024 compared to the same quarter one year earlier.

According to the Washington State Employment Security Department, the unemployment rate for the Pierce County area increased to 5.0% at August 31, 2025 from 4.5% at September 30, 2024.

The median price of a resale home in Pierce County for the quarter ended June 30, 2025 increased 1.7% to $579,500 from $569,600 for the comparable prior year period.

The number of home sales decreased 1.3% for the quarter ended June 30, 2025 compared to the same quarter one year earlier.

The Bank has five branches located in Pierce County, and these branches have historically been responsible for a substantial portion of the Bank’s construction lending activities.

2 unchanged sentences

Thurston County is home of Washington State’s capital (Olympia), and its economic base is largely driven by state government related employment.

According to the Washington State Employment Security Department, the unemployment rate for the Thurston County area increased to 3.8% at September 30, 2024 from 3.4% at September 30, 2023.

The median price of a resale home in Thurston County for the quarter ended September 30, 2024 increased 2.4% to $528,800 from $516,300 for the same quarter one year earlier.

The number of home sales decreased 12.2% for the quarter ended September 30, 2024 compared to the same quarter one year earlier.

According to the Washington State Employment Security Department, the unemployment rate for the Thurston County area increased to 4.5% at August 31, 2025 from 3.8% at September 30, 2024.

The median price of a resale home in Thurston County for the quarter ended June 30, 2025 increased 6.4% to $547,000 from $514,100 for the same quarter one year earlier.

The number of home sales increased 1.6% for the quarter ended June 30, 2025 compared to the same quarter one year earlier.

The Bank has six branches located in Thurston County.

4 unchanged sentences

The economic base of Kitsap County is largely supported by military related government employment through the U.S.

According to the Washington State Employment Security Department, the unemployment rate for the Kitsap County area increased to 3.8% at September 30, 2024 from 3.5% at September 30, 2023.

The median price of a resale home in Kitsap County for the quarter ended September 30, 2024 increased 0.3% to $554,100 from $552,700 for the same quarter one year earlier.

The number of home sales decreased 7.8% for the quarter ended September 30, 2024 compared to the same quarter one year earlier.

According to the Washington State Employment Security Department, the unemployment rate for the Kitsap County area increased to 4.3% at August 31, 2025 from 3.8% at September 30, 2024.

The median price of a resale home in Kitsap County for the quarter ended

June 30, 2025 increased 2.9% to $589,900 from $573,400 for the same quarter one year earlier.

The number of home sales increased 3.5% for the quarter ended June 30, 2025 compared to the same quarter one year earlier.

King County is the most populous county in the state and has a population of 2.3 million according to the U.S.

3 unchanged sentences

King County’s economic base is diversified with many industries including shipping, transportation, aerospace, computer technology and biotech.

According to the Washington State Employment Security Department, the unemployment rate for the King County area increased to 4.2% at September 30, 2024 from 3.6% at September 30, 2023.

The median price of a resale home in King County for the quarter ended September 30, 2024 increased 8.4% to $984,200 from $908,100 for the same quarter one year earlier.

The number of home sales decreased 6.1% for the quarter ended September 30, 2024 compared to the same quarter one year earlier.

According to the Washington State Employment Security Department, the unemployment rate for the King County area increased to 4.5% at August 31, 2025 from 4.2% at September 30, 2024.

The median price of a resale home in King County for the quarter ended June 30, 2025 increased 3.0% to $1.03 million from $999,300 for the same quarter one year earlier.

The number of home sales decreased 3.4% for the quarter ended June 30, 2025 compared to the same quarter one year earlier.

Lewis County has a population of 87,000 according to the U.S.

1 unchanged sentence

The economic base in Lewis County is supported by manufacturing, retail trade, local government and industrial services.

According to the Washington State Employment Security Department, the unemployment rate in Lewis County increased to 4.7% at September 30, 2024 from 4.3% at September 30, 2023.

The median price of a resale home in Lewis County for the quarter ended September 30, 2024 increased 3.6% to $425,800 from $410,900 for the same quarter one year earlier.

The number of home sales decreased 14.4% for the quarter ended September 30, 2024 compared to the same quarter one year earlier.

According to the Washington State Employment Security Department, the unemployment rate in Lewis County increased to 5.5% at August 31, 2025 from 4.7% at September 30, 2024.

The median price of a resale home in Lewis County for the quarter ended June 30, 2025 increased 3.0% to $424,000 from $411,600 for the same quarter one year earlier.

The number of home sales decreased 1.1% for the quarter ended June 30, 2025 compared to the same quarter one year earlier.

The Bank has three branches located in Lewis County.

Lending Activities

Historically, the principal lending activity of the Bank has consisted of the origination of loans secured by first mortgages on owner-occupied, one- to four-family residences, multi-family properties, commercial real estate, and on raw or developed land, and the origination of construction loans, primarily for the construction of one- to four-family residences.

The Bank’s net loans receivable totaled $1.42 billion at September 30, 2024, representing 73.9% of consolidated total assets, and at that date, commercial real estate, construction (including undisbursed loans in process), multi-family and land loans were $1.03 billion, or 67.7% of total loans.

Commercial real estate, construction, multi-family, and land loans typically have higher rates of return than one- to four-family loans;

Historically, the principal lending activity of the Bank has consisted of originating loans secured by first mortgages on owner-occupied, one- to four-family residences, multi-family properties, commercial real estate, raw or developed land, as well as originating construction loans.

The Bank’s net loans receivable totaled $1.46 billion at September 30, 2025, representing 72.7% of consolidated total assets.

At that date, commercial real estate, construction (including undisbursed loans in process), multi-family and land loans were $1.08 billion, or 73.4% of total loans.

Commercial real estate, construction, multi-family, and land loans typically have higher yields than one- to four-family loans;

however, they also present a higher degree of risk.

The Bank’s internal loan policy limits the maximum amount of loans to one borrower to 90% of its legal lending limit (which is 20% of its capital plus surplus).

According to the Washington Administrative Code, capital and surplus are defined as a bank's Tier 1 capital, Tier 2 capital and the balance of a bank's allowance for credit losses not included in the bank's Tier 2 capital as reported in the bank's call report.

According to the Washington Administrative Code, capital and surplus are defined as a bank's Tier 1 capital, Tier 2 capital and the balance of a bank's ACL not included in the bank's Tier 2 capital as reported in the bank's call report.

At September 30, 2025, the maximum amount which the Bank could have lent to any one borrower and the borrower’s related entities was approximately $47.10 million under this policy.

At September 30, 2024, the largest amount outstanding to any one borrower and the borrower’s related entities was $42.54 million (including $5.83 million in available lines of credit), which was secured by various commercial real estate and residential properties and other business assets located primarily in King and Pierce counties, and these loans were performing according to their repayment terms at September 30, 2024.

At September 30, 2025, the largest amount outstanding to any one borrower and the borrower’s related entities was $41.57 million (including $9.38 million in available lines of credit), which was secured by various commercial real estate and residential properties and other business assets located primarily in King and Pierce counties.

These loans were performing according to their repayment terms at September 30, 2025.

The next largest amount outstanding to any one borrower and the borrower’s related entities was $41.35 million (including $8.45 million of undisbursed construction loan proceeds).

31 unchanged sentences

Small Business Administration ("SBA") Paycheck Protection Program ("PPP") 58 — 260 0.02 466 0.03

Total commercial business and SBA PPP loans 139,003 9.18 136,268 9.55 126,040 10.05

Total commercial loans 126,995 8.06 139,003 9.18 136,268 9.55

Total loans receivable 1,575,498 100.00 % 1,514,304 100.00 % 1,426,558 100.00 %

3 unchanged sentences

(5,528) (5,425) (5,242)

Allowance for credit losses (2) (17,478) (15,817) (13,703)

ACL (2) (18,091) (17,478) (15,817)

Total loans receivable, net $ 1,463,590 $ 1,421,523 $ 1,302,305

(1) Does not include loans held for sale of $1,127, $0, and $400 at September 30, 2025, 2024, and 2023, respectively.

(2) Amounts for fiscal 2024 were calculated using the Current Expected Credit Loss (“CECL”) methodology to determine

the allowance for credit losses.

Amounts reported prior to October 1, 2023, were based on the previous incurred loss

methodology, which is not directly comparable to the allowance for credit losses calculated under the CECL

(2) Amounts for fiscal years 2025 and 2024 were calculated using the Current Expected Credit Loss (“CECL”) methodology to determine the ACL.

Amounts reported prior to October 1, 2023, were based on the previous incurred loss methodology, which is not directly comparable to the ACL calculated under the CECL methodology.

Residential One- to Four-Family Lending .

1 unchanged sentence

The Bank originates both fixed-rate loans and adjustable-rate loans.

Generally, one- to four-family fixed-rate loans are originated to meet the requirements for sale in the secondary market to the Federal Home Loan Mortgage Corporation ("Freddie Mac") or the Federal Home Loan Bank of Des Moines ("FHLB").

Generally, one- to four-family fixed-rate loans are originated to meet the requirements for sale in the secondary market to the Federal Home Loan Mortgage Corporation ("Freddie Mac").

From time to time, however, a portion of these fixed-rate loans may be retained in the loan portfolio to meet the Bank’s asset/liability management objectives.

31 unchanged sentences

However, the Bank usually obtains private mortgage insurance (“PMI”) on the portion of the principal amount that exceeds 80% of the appraised value of the security property.

The maximum loan-to-value ratio on mortgage loans secured by non-owner-occupied properties is generally 80%

(90% for loans originated for sale in the secondary market to Freddie Mac or the FHLB).

At September 30, 2024, one one- to four-family loan of $49,000 was on non-accrual status.

The maximum loan-to-value ratio on mortgage loans secured by non-owner-occupied properties is generally 80% (90% for loans originated for sale in the secondary market to Freddie Mac or the FHLB).

At September 30, 2025, there was one

one- to four-family loan totaling $1.78 million on non-accrual status.

See “Lending Activities - Non-performing Loans and Delinquencies.”

21 unchanged sentences

At September 30, 2025 , the largest commercial real estate loan was secured by a medical office building in Thurston County, had a balance of $7.41 million and was performing according to its repayment terms.

At September 30, 2024, six commercial real estate loans totaling $1.16 million were on non-accrual status.

At September 30, 2025, one commercial real estate loan of $159,000 was on non-accrual status.

See “Lending Activities - Non-performing Loans and Delinquencies.”

13 unchanged sentences

The Bank currently originates two types of residential construction loans:

(i) custom construction and owner/builder construction loans and (ii) speculative construction loans.

The Bank believes that its lengthy experience in providing residential construction loans has enabled it to establish processing and disbursement procedures to meet the needs of its borrowers while reducing many of the risks inherent with construction lending.

The Bank also originates construction loans

for commercial properties, multi-family properties, and land development projects.

The Bank's construction loans generally provide for the payment of interest only during the construction phase, which is billed monthly, although during the term of some construction loans, no payment from the borrower is required since the accumulated interest is added to the principal of the loan through an interest reserve.

(i) custom and owner/builder construction loans and (ii) speculative construction loans.

The Bank believes that its extensive experience in residential construction lending has allowed it to develop processing and disbursement procedures that address borrower needs while

mitigating many of the risks inherent in construction lending.

The Bank also originates construction loans for commercial properties, multi-family properties, and land development projects.

The Bank’s construction loans generally provide for interest-only payments during the construction phase, which are billed monthly.

In some cases, however, borrower payments are not required during construction because accrued interest is added to the loan principal through the use of an interest reserve.

At September 30, 2025, the Bank's construction loans totaled $223.89 million, or 14.2% of the Bank's total loan portfolio, including undisbursed loans in process of $88.29 million.

All construction loans were performing according to their repayment terms at September 30, 2024.

At September 30, 2025, one construction loan of $553,000 was on non-accrual.

See "Lending Activities - Non-performing Loans and Delinquencies."

10 unchanged sentences

Total $ 223,888 100.00 % $ 219,201 100.00 %

Custom and owner/builder construction loans are originated to home owners and are typically converted to or refinanced into permanent loans at the completion of construction.

The construction phase of these loans generally lasts up to 12 months with fixed interest rates typically ranging from 4.88% to 9.50% and with loan-to-value ratios of 80% (or up to 95% with PMI) of the appraised estimated value of the completed property.

At the completion of construction, the loan is converted to or refinanced into either a fixed-rate mortgage loan, which conforms to secondary market standards, or an ARM loan for retention in the Bank’s portfolio.

Custom and owner/builder construction loans are originated to homeowners and are typically converted to or refinanced into permanent mortgage loans upon completion of construction.

The construction phase generally lasts up to 12 months, with fixed-interest rates typically ranging from 4.88% to 9.00% and loan-to-value ratios of up to 80% (or up to 95% with PMI) of the appraised "as completed" value of the property.

Upon completion of construction, these loans are either converted to or refinanced into a fixed-rate mortgage loan that conforms to secondary market standards, or into an adjustable-rate mortgage loan retained in the Bank’s portfolio.

At September 30, 2025, the largest outstanding custom and owner/builder construction loan had an outstanding balance of $2.36 million (fully disbursed) and was performing according to its repayment terms.

Speculative one- to four-family construction loans are made to home builders and are termed “speculative” because the home builder does not have, at the time of loan origination, a signed contract with a home buyer who has a commitment for permanent financing with either the Bank or another lender for the finished home.

The home buyer may be identified either during or after the construction period, with the risk that the builder will have to debt service the speculative construction loan and pay real estate taxes and other carrying costs of the completed home for a significant time after the completion of construction until the home buyer is identified and a sale is consummated.

The home buyer may be identified either during or after the construction period, with the risk that the builder will have to debt service the speculative construction loan and pay real estate taxes and other carrying costs for a significant time after completion until the home buyer is identified and a sale is consummated.

Rather than originating lines of credit to home builders to construct several homes at once, the Bank generally originates and underwrites a separate loan for each home.

Speculative construction loans are generally originated for a term of 12 months, with current rates generally ranging fr om 8.00% to 9.25%, and with a loan-to-value ratio of no more than 80% of the appraised value of the completed property.

At September 30, 2024, the largest aggregate outstanding balance to one borrower for speculative one- to four-family construction loans to taled $2.38 million (including $897,000 of undisbursed loans in process) and was comprised of four loans that were performing according to their repayment terms.

At September 30, 2025, the largest aggregate outstanding balance to one borrower for speculative one- to four-family construction loans to taled $1.50 million (including $854,000 of undisbursed loans in process) and was comprised of two loans that were performing according to their repayment terms.

The Bank also provides construction financing for multi-family and commercial properties.

At September 30, 2024, these loans amounted to $57.86 million, or 26.4%, of co nstruction loan balances.

These loans are typically secured by apartment buildings, condominiums, mini-storage facilities, office buildings, hotels and retail rental space predominantly loc ated in the Bank’s primary market area.

At September 30, 2024, the largest outstanding multi-family construction loan was for $10.25 million (including $384,000 of undisbursed loans in process) secured by an apartment building project in Pierce County.

At September 30, 2024, the largest outstanding commercial real estat e construction loan was secured by a mini-storage facility in Snohomish County, Washington and had a balance of $5.92 million.

At September 30, 2025, these loans totaled $67.48 million, or 30.1%, of construction loan balances.

These loans are typically secured by apartment buildings, condominiums, mini-storage facilities, of fice buildings, hotels and retail rental space predominantly loc ated in the Bank’s primary market area.

At September 30, 2025, the largest outstanding multi-family construction loan was for $11.40 million (including $2.96 million of undisbursed loans in process) and secured by an apartment building project in Pierce County.

At September 30, 2025, the largest outstanding commercial real estat e construction loan was secured by a industrial warehouse facility in Thurston County, Washington and had a balance of $4.50 million (including $1.21 million of undisbursed loans in process).

These loans were performing according to their repayment terms at September 30, 2025.

All construction loans must be approved by a member of one of the Bank’s Loan Committees or the Bank’s Board of Directors, or in the case of one- to four-family construction loans that meet Freddie Mac guidelines, by the Regional Manager of Community Lending, the Loan Department Supervisor or a Bank underwriter.

See “Lending Activities - Loan Solicitation and Processing.” Prior to approval of any construction loan application, an independent fee appraiser inspects the site and prepares an appraisal on an "as completed" basis, and the Bank reviews the existing or proposed improvements, identifies the market for the proposed project and analyzes the pro-forma data and assumptions on the project.

All construction loans must be approved by a member of one of the Bank’s Loan Committees or the Bank’s Board of Directors, or in the case of one- to four-family construction loans that meet Freddie Mac guidelines, by the Chief Residential Loan Manager, the Loan Department Supervisor or a Bank underwriter.

In the case of a speculative or custom construction loan, the Bank reviews the experience and expertise of the builder.

After this preliminary review, the application is processed, which includes obtaining credit reports, financial statements and tax returns or verification of income on the

borrowers and guarantors, an independent appraisal of the project, and any other expert reports necessary to evaluate the proposed project.

In the event of cost overruns, the Bank generally requires that the borrower increase the funds available for construction by paying the cost of such overruns directly or by depositing its own funds into a secured savings account, the proceeds of which are used to pay construction costs or to, the extent available, authorizes disbursements from a loan contingency line in the construction budget.

After this preliminary review, the application is processed, which

includes obtaining credit reports, financial statements and tax returns or verification of income on the borrowers and guarantors, an independent appraisal of the project, and any other expert reports necessary to evaluate the proposed project.

In the event of cost overruns, the Bank generally requires the borrower to provide additional funds by paying the cost of such overruns directly or by depositing its own funds into a secured savings account or, to the extent available, authorizes disbursements from a loan contingency line in the construction budget.

Loan disbursements during the construction period are made to the builder, materials supplier or subcontractor, based on a line item budget.

2 unchanged sentences

The Bank originates construction loan applications primarily through customer referrals, contacts in the business community and, occasionally, real estate brokers seeking financing for their clients.

Construction lending affords the Bank the opportunity to achieve higher interest rates and fees with shorter terms to maturity than does its single-family permanent mortgage lending.

Construction lending, however, is generally considered to involve a higher degree of risk than single-family permanent mortgage lending, because funds are advanced upon the collateral for the project based on an estimate of the costs that will produce a future value at completion.

Construction lending affords the Bank the opportunity to achieve higher interest rates and fees with shorter terms to maturity than its single-family permanent mortgage lending.

Construction lending, however, is generally considered to involve a higher degree of risk than single-family permanent mortgage lending, because funds are advanced based on estimates of construction costs and the future value of the completed project.

Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation on real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the completed project loan-to-value ratio.

With regard to loans originated to builders for speculative projects, changes in the demand, such as for new housing and higher than anticipated building costs, may cause actual results to vary significantly from those estimated.

A downturn in the housing or the real estate market could increase loan delinquencies, defaults, and foreclosures, and significantly impair the value of our collateral and our ability to sell the collateral upon foreclosure.

With regard to loans originated to builders for speculative projects, changes in demand for new housing and higher than anticipated building costs, may cause actual results to vary significantly from those estimated.

A downturn in the housing or real estate market could increase loan delinquencies, defaults, and foreclosures, and significantly impair the value of our collateral and our ability to sell the collateral upon foreclosure.

Some builders who have borrowed from us to fund construction projects on a speculative basis have more than one loan outstanding with us.

2 unchanged sentences

As a result, these loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest.

If our appraisal of the value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction of the project and may incur a loss.

If our appraisal of the value of a completed project proves to be overstated, we may have inadequate security for the repayment of the loan upon completion of construction and may incur a loss.

Because construction loans require active monitoring of the building process, including cost comparisons and on-site inspections, these loans are more difficult and costly to monitor.

8 unchanged sentences

Land development loans are generally structured so that the Bank is repaid in full upon the sale by the borrower of approximately 80% of the subdivision lots.

In addition, in the case of a corporate borrower, the Bank also generally obtains personal guarantees from corporate principals (with ownership interests in the borrowing entity of 20% or more) and reviews their personal financial statements.

In addition, the Bank also generally obtains personal guarantees from corporate principals (with ownership interests in the borrowing entity of 20% or more) and reviews their personal financial statements.

Land development loans secured by land under development involve greater risks than one- to four-family residential mortgage loans, because these loan funds are advanced upon the predicted future value of the developed property upon completion.

2 unchanged sentences

At September 30, 2025 the largest land development loan was for $11.55 million for a mixed-use development, one- to four-family units and multi-family, located in Thurston County.

This loan was classified as watch and was performing in accordance with its repayment terms at September 30, 2024.

This loan was classified as substandard and was performing in accordance with its repayment terms at September 30, 2025.

This loan paid off in full subsequent to September 30, 2025.

Land Lending .

The Bank originates loans for the acquisition of land upon which the purchaser can then build or make improvements necessary to build or to use for recreational purposes.

Land loans originated by the Bank generally have maturities of one to ten years.

Land loans originated by the Bank generally have

maturities of one to ten years.

The largest land loan is secured by land in Multnomah County, Oregon, had an outstanding balance of $2.60 million and was performing according to its repayment terms at September 30, 2025.

24 unchanged sentences

These loans are underwritten to maintain credit risk comparable to one- to four-family residential mortgage loans.

At September 30, 2024, three consumer loans totaling $618,000 were on non-accrual status.

At September 30, 2025, five consumer loans totaling $624,000 were on non-accrual status.

One of these loans with a balance of $302,000 was paid off subsequent to September 30, 2025.

See “Lending Activities - Non-performing Loans and Delinquencies.”

Commercial Business Lending .

Commercial business loans (including SBA PPP loans) totaled $139.00 million, or 9.18%, of the loan portfolio at September 30, 2024.

Commercial business loans totaled $127.00 million, or 8.1%, of the loan portfolio at September 30, 2025.

Commercial business loans are generally secured by business equipment, accounts receivable, inventory and/or other property and are made at variable rates of interest equal to a negotiated margin above the Prime Rate.

1 unchanged sentence

The largest commercial business loan had an outstanding balance of $3.10 million at September 30, 2025 and was performing according to its repayment terms.

At September 30, 2024, eight commercial business loans totaling $2.06 million were on non-accrual status.

At September 30, 2025, nine commercial business loans totaling $1.29 million were on non-accrual status.

See “Lending Activities - Non-performing Loans and Delinquencies.”

8 unchanged sentences

SBA 7(a) loans are all adjustable-rate loans based on the Prime Rate.

Under the SBA 7(a) program, the Bank can sell in the secondary market the guaranteed portion of its SBA 7(a) loans and retain the related unguaranteed portion of these loans, as

well as the servicing on such loans, for which it is paid a fee.

Under the SBA 7(a) program, the Bank can sell in the secondary market the guaranteed portion of its SBA 7(a) loans and retain the related unguaranteed portion of these loans, as well as the servicing on such loans, for which it is paid a fee.

The loan servicing spread is generally a minimum of 1.00% on all SBA 7(a) loans.

27 unchanged sentences

Deferred loan origination fees, net (5,528)

Allowance for credit losses (17,478)

Total loans receivable, net $ 1,463,590

15 unchanged sentences

Commercial business 75,427 41,623 117,050

SBA PPP 260 — 260

Total $ 477,866 $ 812,666 $ 1,290,532

11 unchanged sentences

Construction loans must be approved by a member of one of the Bank's Loan Committees or the Bank's Board of Directors.

For one- to four-family construction loans meeting Freddie Mac guidelines, approval may be granted by the Regional Manager of Community Lending, the Loan Department Supervisor, or a Bank underwriter, subject to their individual or Loan Committee limits.

For one- to four-family construction loans meeting Freddie Mac guidelines, approval may be granted by the Chief Residential Loan Manager, the Loan Department Supervisor, or a Bank underwriter, subject to their individual or Loan Committee limits.

The Bank’s Commercial Loan Committee, composed of the Bank’s Chief Executive Officer, Chief Credit Officer, Chief Lending Officer, and a commercial underwriter may approve commercial real estate and business loans up to $3.00 million.

6 unchanged sentences

These participation loans are underwritten in accordance with the Bank’s underwriting guidelines and are without recourse to the seller other than for fraud.

During the years ended September 30, 2024, 2023 and 2022, the Bank did not purchase any loan participation interests.

During the years ended September 30, 2025, 2024 and 2023, the Bank did not purchase any loans or loan participation interests.

Consistent with its asset/liability management strategy, the Bank’s policy generally is to retain in its portfolio all ARM loans originated and to sell fixed-rate one- to four-family mortgage loans in the secondary market to Freddie Mac;

1 unchanged sentence

The Bank also sells the guaranteed portion of some of its SBA 7(a) loans in the secondary market.

Loans sold in the secondary

market are generally sold on a servicing retained basis.

Loans sold in the secondary market are generally sold on a servicing retained basis.

At September 30, 2025, the Bank’s loan servicing portfolio, which is not included in the Company’s consolidated financial statements, totaled $357.02 million.

The Bank also periodically sells participation interests in construction loans, commercial real estate loans, multi-family and commercial business loans to other lenders.

These sales are usually made to avoid concentrations in a particular loan type or concentrations to a particular borrower and to generate fee income.

During the year ended September 30, 2024, the Bank sold loan participation interests of $5.80 million.

The Bank did not sell loan participation interests during the year ended September 30, 2023.

These sales are usually made to avoid concentrations in a particular loan type or borrower, and to generate fee income.

The Bank did not sell loan participation interests during the years ended September 30, 2025 and 2023.

During the year ended September 30, 2024, the Bank sold loan participation interests of $5.80 million.

14 unchanged sentences

Loans and loan participations purchased:

Total loans purchased — — —

Total loans and loan participations purchased — — —

Total loans originated, acquired and purchased 310,902 251,438 361,788

34 unchanged sentences

Commercial 159 1,158 683

Construction 553 — —

Consumer loans 624 618 177

4 unchanged sentences

Non-accrual investment securities 35 51 82

Other real estate owned and other repossessed assets 221 — —

Total non-performing assets (2) $ 4,663 $ 3,936 $ 1,596

Troubled debt restructured loans on accrual status (3) N/A $ 2,495 $ 2,472

Troubled debt restructured loans on accrual status N/A N/A $ 2,495

Non-accrual and 90 days or more past due loans as a percentage of loans receivable, net (3) 0.30 % 0.27 % 0.11 %

5 unchanged sentences

_______________

(1) Includes non-accrual one- to four-family properties in the process of foreclosure totaling $0, $0,

and $0 as of September 30, 2024, 2023, and 2022, respectively.

(2) For the years ended September 30, 2023 and 2022, does not include troubled debt restructured loans on accrual status.

(3) For the years ended September 30, 2023 and 2022 does not include troubled debt restructured loans totaling $0, and $142 recorded as non-accrual.

(1) Includes non-accrual one- to four-family properties in the process of foreclosure totaling $302, $0, and $0 as of September 30, 2025, 2024, and 2023, respectively.

(2) For the year ended September 30, 2023, does not include troubled debt restructured loans on accrual status.

(3) Loans receivable, net for purposes of this table includes the deductions for the undisbursed portion of construction loans in process and deferred loan origination fees and does not include the deduction for the ACL.

The Bank’s non-accrual loans increased by $2.37 million to $3.89 million at September 30, 2024 from $1.51 million at September 30, 2023, as a result of increases in non-accrual loans of $1.77 million in commercial business loans, $475,000 in commercial real estate loans and $441,000 in consumer loans, partially offset by a $319,000 decrease in one- to four-family mortgage loans on non-accrual status.

A discussion of the Bank's largest non-performing loans is set forth below under “Asset Classification.”

Non-accrual Loans.

The Bank’s non-accrual loans increased by $522,000 to $4.41 million at September 30, 2025 from $3.89 million at September 30, 2024, primarily due to increases of $1.73 million in one- to four-family loans and $6,000 in consumer loans, partially offset by decreases of $999,000 in commercial real estate loans and $770,000 in commercial business loans.

The Bank evaluates each loan on a case-by-case basis when determining non-accrual status, considering factors such as the borrower's financial strength, collateral value, payment history, reason for delay, the amount past due, and the number days past due.

A discussion of the Bank's largest non-performing loans is set forth below under “Asset Classification.” For additional information on non-accrual loans, see "Note 1 - Summary of Significant Accounting Policies" and "Note 4 - Loans Receivable and Allowance for Credit Losses" of the Notes to the Consolidated Financial Statements contained in Item 8 of this report.

Other Real Estate Owned and Other Repossessed Assets.

4 unchanged sentences

2022-02, Financial Instruments - Credit Losses (ASU 2016-13).

This ASU eliminated the accounting guidance for troubled debt restructured loans ("TDR") for creditors, while

enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower experiences financial difficulty.

This ASU eliminated the accounting guidance for troubled debt restructured loans ("TDR") for creditors, while enhancing disclosure requirements for certain loan refinancing and restructurings by creditors when a borrower experiences

financial difficulty.

Two loans to borrowers experiencing financial difficulties were modified in the year ended September 30.

No loans to borrowers experiencing financial difficulty were modified in the years ended September 30, 2024 and 2023.

The Bank had TDRs at September 30, 2023 and 2022 totaling $2.50 million and $2.61 million, none of which were on non-accrual status.

None of the ACL was allocated to TDRs at September 30, 2023 or 2022.

Non-accrual Loans.

The Bank considers all circumstances regarding the loan and borrower on an individual basis when determining whether a loan should remain on non-accrual status, such as the financial strength of the borrower, the collateral value, reasons for delay, payment record, the amount past due and the number of days past due.

At September 30, 2024, the Bank had $3.89 million in non-accrual loans.

For additional information on non-accrual loans, see "Note 1 - Summary of Significant Accounting Policies" and "Note 4 - Loans Receivable and Allowance for Credit Losses" of the Notes to the Consolidated Financial Statements contained in Item 8 of this report.

The Bank had TDRs at September 30, 2023 totaling $2.50 million, none of which were on non-accrual status.

None of the ACL was allocated to TDRs at September 30, 2023.

Asset Classification.

15 unchanged sentences

Assets in this category are not adversely classified and currently do not expose the Bank to sufficient risk to warrant a substandard classification.

The Bank’s determination of the classification of its assets and the amount of its valuation allowances is subject to review by the FDIC and the DFI which can require a different classification and the establishment of additional loss allowances.

The Bank’s determination of the classification of its assets and the amount of its ACL is subject to review by the FDIC and the DFI which can require a different classification and the establishment of additional loss allowances.

The aggregate amounts of the Bank’s classified and special mention loans (as determined by the Bank), and the ACL at the dates indicated, were as follows:

7 unchanged sentences

Total classified and special mention loans $ 38,577 $ 13,038 $ 6,386

Allowance for credit losses $ 17,478 $ 15,817 $ 13,703

ACL $ 18,091 $ 17,478 $ 15,817

_____________

1 unchanged sentence

Loans classified as substandard increased by $24.37 million to $32.81 million at September 30, 2025 from $8.44 million at September 30, 2024.

At September 30, 2024, 22 loans were classified as substandard.

Of the $8.44 million in loans classified as substandard at September 30, 2024, $3.68 million were on non-accrual status.

The largest loan classified as substandard at September 30, 2024 had a balance of $4.62 million and was secured by a commercial real estate property in King County.

This loan was not on non-accrual status at September 30, 2024, as the loan was making payments in accordance with its repayment terms and was adequately collateralized.

This loan was paid in full on December 2, 2024.

The next largest loan classified as substandard at September 30, 2024 had a balance of $1.19 million and was secured by a commercial real estate property in Snohomish County.

This loan was on non-accrual status at September 30, 2024 and has a 75% guarantee from the SBA.

One commercial business loan of $202,000 was classified as doubtful at September 30, 2024.

Timberland has charged off the unguaranteed portion of this loan and the remaining $202,000 balance represents the amount that is expected to be covered by

the SBA guarantee.

There were no loans classified as doubtful at September 30, 2023 and 2022.

Two commercial real estate loans were classified as special mention at September 30, 2024 and were performing according to repayment terms.

There were no loans classified as special mention at September 30, 2023 and 2022.

At September 30, 2025, 23 loans were classified as substandard, of which $4.20 million were on non-accrual status.

The largest substandard loan, with a balance of $11.55 million, was secured by a land development property in Thurston County.

This loan was not on non-accrual status as it was current and adequately collateralized at September 30, 2025, and was paid in full in October 2025.

The second largest substandard loan had a balance of $9.66 million, secured by an apartment property in Thurston County, and was also current and adequately collateralized.

One commercial business loan of $202,000 was classified as doubtful at September 30, 2025 and 2024;

the unguaranteed portion has been charged off and the remaining balance is expected to be recovered under the SBA guarantee.

Six loans were classified as special mention at September 30, 2025, all of which were performing in accordance with their repayment terms.

At September 30, 2024, two commercial real estate loans were classified as special mention and were performing according to terms.

Allowance for Credit Losses.

The ACL is maintained to absorb expected losses inherent in the loan portfolio.

The Bank adopted the new accounting standard for the ACL, commonly referred to current expected credit losses ("CECL") methodology, as of October 1, 2023.

The Bank adopted the new accounting standard for the ACL, commonly referred to as the CECL methodology, as of October 1, 2023.

The ACL is an estimate of the expected credit losses on financial assets measured at amortized cost.

12 unchanged sentences

The Bank’s ACL as a percentage of total loans receivable and as a percentage of non-performing loans was 1.22% and 410.51%, at September 30, 2025 and 1.21% and 449.88%, at September 30, 2024, respectively.

The $260,000 and $466,000 of SBA PPP loans were omitted from the foregoing percentages at September 30, 2024 and 2023, respectively, as these loans are fully guaranteed by the SBA.

Based on its comprehensive analysis, management believes that the amount maintained in the ACL is adequate to absorb expected losses inherent in the portfolio.

3 unchanged sentences

A further decline in national and local economic conditions, as a result of the effects of inflation, a recession or slowing economic growth, among other factors could result in a material increase in the ACL which may adversely affect the Company's financial condition and results of operations.

For further explanation of the CECL model, ACL calculation and the effects of adoption of the new accounting standard see "Note 1 - Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements in Item 8 of this report.

For further explanation of the CECL model, ACL calculation and the effects of adoption of the new accounting standards see "Note 1 - Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements in Item 8 of this report.

Credit Ratios

10 unchanged sentences

________________________________

(1) Amounts for fiscal 2024 were calculated using the CECL methodology to determine the allowance for credit losses.

Amounts reported prior to October 1, 2023, were based on the previous incurred loss methodology, which is not directly comparable to the allowance for credit losses calculated under the CECL methodology.

(1) Amounts for fiscal 2025 and 2024 were calculated using the CECL methodology to determine the ACL.

Amounts reported prior to October 1, 2023, were based on the previous incurred loss methodology, which is not directly comparable to the ACL calculated under the CECL methodology.

(2) Loans receivable, net for this table includes the deductions for the undisbursed portion of construction loans in process and net deferred loan origination fees and does not include the deduction for the ACL/allowance for loan losses.

20 unchanged sentences

2,597 8.06 2,640 9.18 1,967 9.55

Total allowance for credit losses (1) $ 17,478 100.00 % $ 15,817 100.00 % $ 13,703 100.00 %

Total ACL (1) $ 18,091 100.00 % $ 17,478 100.00 % $ 15,817 100.00 %

_______________________________

(1) Amounts for fiscal 2024 were calculated using the CECL methodology to determine the allowance for credit losses.

Amounts reported prior to October 1, 2023, were based on the previous incurred loss methodology, which is not

directly comparable to the allowance for credit losses calculated under the CECL methodology.

(1) Amounts for fiscal 2025 and 2024 were calculated using the CECL methodology to determine the ACL.

Amounts reported prior to October 1, 2023, were based on the previous incurred loss methodology, which is not directly comparable to the ACL calculated under the CECL methodology.

Analysis of ACL

28 unchanged sentences

At September 30, 2025, the Bank’s investment portfolio totaled $215.10 million, consisting of $69.65 million of U.S.

government agency securities held to maturity, $77.96 million of mortgage-backed securities held to maturity, $1.33 million of municipal securities held to maturity, $495,000 of bank issued trust preferred securities held to maturity, $3.94 million of U.S.

Treasury and U.S.

government agency securities held to maturity, $66.11 million of mortgage-backed securities held to maturity, $605,000 of municipal securities held to maturity, $499,000 of bank issued trust preferred securities held to maturity, $4.97 million of U.S.

government agency securities available for sale and $73.27 million of mortgage-backed securities available for sale.

1 unchanged sentence

This compares with a total investment portfolio of $244.35 million at September 30, 2024, consisting of $92.31 million of U.S.

government agency securities held to maturity, $96.31 million of mortgage-backed securities held to maturity, $1.79 million of municipal securities held to maturity, $500,000 of bank issued trust preferred securities held to maturity and $41.77 million of mortgage-backed securities available for sale.

Treasury and U.S.

government agency securities available for sale and $68.32 million of mortgage-backed securities available for sale.

The following table sets forth the maturities and weighted average yields of the investment securities in the Bank's portfolio at September 30, 2025.

The weighted average yields were calculated by multiplying each carrying value by its yield and dividing the sum of these results by the total carrying values.

One Year or Less After One to

25 unchanged sentences

Deposit Accounts .

Substantially all the Bank's depositors are residents of Washington.

Substantially all the Bank's depositors (excluding brokered deposits) are residents of Washington.

Deposits are attracted from within the Bank's market area through the offering of a broad selection of deposit instruments, including money market deposit accounts, checking accounts, regular savings accounts and certificates of deposit.

Deposit account terms vary, according to the

minimum balance required, the time periods the funds must remain on deposit and the interest rate, among other factors.

In determining the terms of its deposit accounts, the Bank considers current market interest rates, profitability to the Bank, matching deposit and loan products and its customer preferences and concerns.

Deposit account terms vary, according to the minimum balance required, the time periods the funds must remain on deposit and the interest rate, among other factors.

In determining the terms of its deposit accounts, the Bank considers current market interest rates and profitability to the Bank, matching deposit and loan products and its customer preferences and concerns.

The Bank actively seeks consumer and commercial checking accounts through checking account acquisition marketing programs.

The Bank also has checking accounts owned by businesses associated with the marijuana (or Initiative-502) industry in Washington State.

It is generally permissible in Washington State to handle accounts associated with this industry in compliance with federal regulatory guidelines.

At September 30, 2024, the Bank had $17.76 million, or 1.1% of total deposits, from businesses associated with the marijuana industry.

The Bank maintains checking accounts owned by businesses associated with the cannabis industry (or Initiative-502) in Washington State.

The Bank generally services these accounts in compliance with applicable federal and state regulatory guidance and monitors associated regulatory and compliance risks.

At September 30, 2025, the Bank had $14.76 million, or 0.9% of total deposits, from businesses associated with the cannabis industry.

See "Item 1A.

Risk Factors" - We operate in a highly regulated environment and may be adversely affected by changes in federal and state laws and regulations that could increase our costs of operations.

At September 30, 2024, the Bank had $113.58 million of jumbo certificates of deposit of $250,000 or more.

The Bank had $62.80 million in reciprocal negotiable order of withdrawal ("NOW") checking deposits and $30.67 million in reciprocal money market deposits at September 30, 2024.

At September 30, 2024, the Bank had $48.76 million in brokered certificates of deposit.

The Bank believes that its jumbo certificates of deposit, which represented 6.9% of total deposits at September 30, 2024, present similar interest rate risks as compared to its other deposits.

At September 30, 2025, the Bank's deposits included $142.81 million of jumbo certificates of deposit of $250,000 or more, $68.90 million in reciprocal negotiable order of withdrawal NOW checking deposits, $18.59 million in reciprocal money market deposits, and $43.11 million in brokered certificates of deposit.

Jumbo certificates of deposit represented 8.3% of total deposits at September 30, 2025, and the Bank believes they present similar interest rate risks as compared to its other deposits.

The following table sets forth information concerning the Bank's deposits at September 30, 2025:

92 unchanged sentences

Depending on the program, limitations on the amount of borrowings are based on the financial condition of the member institution and the adequacy of collateral pledged to secure the credit.

At September 30, 2024, the Bank maintained a credit facility with the FHLB that provided for immediately available borrowings up to an aggregate amount to 45% of the Bank’s total assets, limited by available collateral, under which long-term borrowings totaling $20.00 million and no short-term borrowings were outstanding at September 30, 2024.

At September 30, 2025, the Bank maintained a credit facility with the FHLB that provided for immediately available borrowings up to an aggregate amount to 45% of the Bank’s total assets, limited by available collateral, under which short-term borrowings totaling $20.00 million and no long-term borrowings were outstanding at September 30, 2025.

The Bank maintains one short-term borrowing line with the FRB with total credit based on eligible collateral.

15 unchanged sentences

Under state law, savings banks in Washington also generally have all the powers that federal savings banks have under federal laws and regulations.

The Bank is subject to periodic examination and reporting requirements by and of the DFI and the FDIC.

The Bank is subject to periodic examination by and reporting requirements of the DFI, as its state regulator and the FDIC, as the primary federal regulator.

The following is a brief description of certain laws and regulations applicable to Timberland Bancorp and the Bank.

18 unchanged sentences

Total base assessment rates currently range from 2.5 to 32 basis points subject to certain adjustments.

In October 2022, the FDIC finalized a rule that increased the initial base deposit insurance assessment rates by 2 basis points, beginning with the first quarterly assessment period of 2023 (January 1, 2023 through March 31, 2023).

The FDIC, as required under the Federal Deposit Insurance Act, established a plan in September 2020 to restore the DIF reserve ratio to meet or exceed the statutory minimum of 1.35% within eight years.

This plan did not include an increase in the deposit insurance assessment rate.

Based on the FDIC’s recent projections, however, the FDIC determined that the DIF reserve ratio is at risk of not reaching the statutory minimum by the statutory deadline of September 30, 2028 without increasing the deposit insurance assessment rates.

The increased assessment would improve the likelihood that the DIF reserve ratio would reach the required minimum by the statutory deadline, consistent with the FDIC’s Amended Restoration Plan.

The FDIC also concurrently

maintained the Designated Reserve Ratio (“DRR”) for the DIF at 2% for 2024 and will maintain it at that level for 2025.

The FDIC determined that without the increase, the DIF reserve ratio might not reach the statutory 1.35% minimum requirement by the September 30, 2028, deadline.

The FDIC also concurrently maintained the Designated Reserve Ratio (“DRR”) for the DIF at 2% for 2025 and will maintain it at that level for 2026.

The revised assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds 2% to support growth in the DIF in progressing toward the FDIC’s long-term goal of a 2% DRR.

21 unchanged sentences

Failure to meet the qualifying criteria within the grace period or maintain a leverage ratio of greater than 8% requires the institution to comply with the generally applicable capital requirements.

On November 25, 2025, federal banking regulators including the FDIC, issued a proposed rule that would lower the CBLR from 9% to 8% and extend the grace period for falling below the threshold from two to four quarters, reducing compliance pressure on smaller community banks, like the Bank.

No assurance can be made as to when and in what form the final rule will be adopted.

The Bank has not elected to use the CBLR framework as of September 30, 2025.

11 unchanged sentences

Undercapitalized institutions are subject to certain prompt corrective action requirements, regulatory controls and restrictions which become more extensive as an institution becomes more severely undercapitalized.

Failure by an institution to comply

with applicable capital requirements would, if unremedied, result in progressively more severe restrictions on its activities and lead to enforcement actions, including, but not limited to, the issuance of a capital directive to ensure the maintenance of required capital levels and, ultimately, the appointment of the FDIC as receiver or conservator.

Failure by an institution to comply with applicable capital requirements would, if unremedied, result in progressively more severe restrictions on its activities and

lead to enforcement actions, including, but not limited to, the issuance of a capital directive to ensure the maintenance of required capital levels and, ultimately, the appointment of the FDIC as receiver or conservator.

Banking regulators will take prompt corrective action with respect to depository institutions that do not meet minimum capital requirements.

48 unchanged sentences

Since the enactment of the CERCLA, this “secured creditor exemption” has been the subject of judicial interpretations which have left open the possibility that lenders could be liable for cleanup costs on contaminated property that they hold as collateral for a loan.

To the extent that legal uncertainty exists in this area, all creditors, including the Bank, that have made loans secured by properties with potentially hazardous waste contamination (such as petroleum contamination) could be subject to liability for cleanup costs, which costs often substantially exceed the value of the collateral property.

To the extent that legal uncertainty exists in this area, all creditors, including the Bank, which have made loans secured by properties with potentially hazardous waste contamination (such as petroleum contamination) could be subject to liability for cleanup costs, which costs often substantially exceed the value of the collateral property.

Federal Reserve System.

The Federal Reserve requires all depository institutions to maintain reserves at specified levels against their transaction accounts, primarily checking accounts.

The Federal Reserve reduced reserve requirement ratios to zero percent effective on March 26, 2020.

The Federal Reserve reduced the reserve requirement ratios to zero percent effective on March 26, 2020.

At September 30, 2025, the reserve requirement of zero percent was still in place.

12 unchanged sentences

The Bank received a “satisfactory” rating during its most recent examination.

On October 24, 2023, the federal banking agencies, including the FDIC, issued a final rule designed to strengthen and modernize regulations implementing the CRA.

The changes are designed to encourage banks to expand access to credit, investment and banking services in low and moderate income communities, adapt to changes in the banking industry including mobile and internet banking, provide greater clarity and consistency in the application of the CRA regulations and tailor CRA evaluations and data collection to bank size and type.

The Bank cannot predict the impact the changes to the CRA will have on its operations at this time.

Dividends from the Bank constitute the major source of funds available for dividends which may be paid to Company shareholders.

The amount of dividends payable by the Bank to the Company depends upon the Bank's earnings and capital position, and is limited by federal and state laws, regulations and policies.

According to Washington law, the Bank may not declare or pay a cash dividend on its capital stock if it would cause its net worth to be reduced below (i) the amount required for liquidation accounts or (ii) the net worth requirements, if any, imposed by the Director of the DFI.

According to Washington law, the Bank may not declare or pay a cash dividend on its capital stock if it would cause its net worth to be reduced below (i) the amount

required for liquidation accounts or (ii) the net worth requirements, if any, imposed by the Director of the DFI.

In addition, dividends on the Bank's capital stock may not be paid in an aggregate amount greater than the aggregate retained earnings of the Bank, without the approval of the Director of the DFI.

30 unchanged sentences

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") established the CFPB as an independent bureau of the Federal Reserve with responsibility for the implementation of federal financial consumer protection and fair lending laws and regulations.

The Bank is subject to consumer protection regulations issued by the CFPB, but as a smaller financial institution, is generally subject to supervision and enforcement by the FDIC and DFI with respect to its compliance with federal and state consumer financial protection laws and regulations.

The Bank is subject to consumer protection regulations issued by the CFPB, but as a smaller financial institution is subject to supervision and enforcement by the FDIC and DFI with respect to its compliance with federal and state consumer financial protection laws and regulations.

The Bank is subject to a broad array of federal and state consumer protection laws and regulations that govern almost every aspect of its business relationships with consumers.

While the list set forth below is not exhaustive, these include the Truth-in-Lending Act, the Truth in Savings Act, the Electronic Fund Transfer Act, the Expedited Funds Availability Act, the Equal Credit Opportunity Act, the Fair Housing Act, the Real Estate Settlement Procedures Act, the Home Mortgage Disclosure Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act, the Home Ownership and Equity Protection Act, the Consumer Leasing Act, the Fair Credit Billing Act, the Homeowners Protection Act, the Check Clearing for the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptive business practices, and various regulations that implement some or all of the foregoing.

the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the Right to Financial Privacy Act, the Home Ownership and Equity Protection Act, the Consumer Leasing Act, the Fair Credit Billing Act, the Homeowners Protection Act, the Check Clearing for the 21st Century Act, laws governing flood insurance, laws governing consumer protections in connection with the sale of insurance, federal and state laws prohibiting unfair and deceptive business practices, and various regulations that implement some or all of the foregoing.

These laws and regulations mandate certain disclosure requirements and regulate the manner in which financial institutions must deal with customers when taking deposits, making loans, collecting loans, and providing other services.

30 unchanged sentences

providing tax planning and preparation services;

and, subject to certain limitations, providing securities brokerage

services for customers.

and, subject to certain limitations, providing securities brokerage services for customers.

The Federal Reserve must approve the acquisition (or acquisition of control) of a bank or other FDIC-insured depository institution by a bank holding company, and the appropriate federal banking regulator must approve a bank’s acquisition (or acquisition of control) of another bank or other FDIC-insured institution.

34 unchanged sentences

government and agency securities is not subject to this tax.

The Bank operates in an intensely competitive market for the attraction of deposits and in the origination of loans.

The Bank competes for loans and deposits with other commercial banks, thrift institutions, credit unions, mortgage bankers and other providers of financial services, including finance companies, online-only banks, mutual funds, insurance companies, and more recently with financial technology companies that rely on technology to provide financial services.

Many of our competitors have substantially greater resources than we do.

Particularly in times of high or rising interest rates, the Bank also faces significant competition for investor's funds from short-term money market securities and other corporate and government securities.

The Bank competes for loans principally through the range and quality of services we provide, interest rates and loan fees, and robust delivery channels for our products and services.

The Bank actively solicits deposit-related clients and competes for deposits by offering depositors a variety of savings accounts, checking accounts, cash management and other services.

The Bank operates in an intensely competitive market for the attraction of deposits and the origination of loans.

It competes with other commercial banks, thrift institutions, credit unions, mortgage bankers, finance companies, insurance companies, mutual funds, and, increasingly, financial technology (“FinTech”) firms, including digital-only banks, online lending platforms, mobile wallets, and other technology-driven financial service providers.

Many competitors have substantially greater financial, technological, and operational resources than the Bank, and some offer nationwide products at lower cost.

Particularly in periods of high or rising interest rates, the Bank also competes for investor funds with money market instruments, government and corporate securities, exchange-traded funds, and other investment alternatives.

The Bank competes for loans primarily through the range and quality of services provided, pricing and loan fees, and convenient delivery channels, including branch offices, digital banking, mobile applications, and online platforms.

The Bank actively solicits deposits and competes by offering a variety of savings accounts, checking accounts, cash management solutions, and other financial services tailored to its customers.

Subsidiary Activities

13 unchanged sentences

We recognize that our ability to attract and retain employees is a key to our success, and we strive to offer competitive salaries and benefits while staying aligned with market standards.

The average tenure among employees was seven years at September 30, 2024, with women representing 76% of the workforce and holding 76% of management roles, including supervisors, managers, and executive leaders.

The average tenure among employees was 7.6 years at September 30, 2025, with women representing 75% of the workforce and holding 81% of management roles, including supervisors, managers, and executive leaders.

Management tenure averaged 14 years.

6 unchanged sentences

To promote diversity, we continue to refine our approach by advertising open positions on platforms that reach diverse audiences.

We are committed to a fair and equitable hiring process, ensuring all roles are posted both internally and externally.

Diversity, Equity, and Inclusion (“DEI”).

We are committed to a fair and equitable hiring process, ensuring roles are posted both internally and externally.

Corporate Citizenship.

The Company values the unique identities, perspectives, and contributions of its employees.

To support this, the Company implemented a formal program designed to create an inclusive environment that ensures equitable access to growth and development opportunities while building a workforce that reflects the communities we serve.

To support this, the Company implemented a formal program designed to create an inclusive environment that ensures access to growth and development opportunities while building a workforce that reflects the communities we serve.

This program is overseen by our Human Resources Director and focuses on education, training, recruitment, and hiring practices.

Key initiatives include unconscious bias training for hiring managers, DEI online training for all employees, and the introduction of an Employee Resource Group.

These efforts aim to promote equity, fairness, and inclusivity across the organization, fostering meaningful employee engagement.

Key initiatives include unconscious bias training for hiring managers, inclusive internal events, fair hiring practices, and an Employee Resource Group.

These efforts aim to promote fairness, and inclusivity across the organization, fostering meaningful employee engagement.

The Company provides competitive and comprehensive benefits to its employees.

We are committed to maintaining a safe and healthy workplace, implementing proactive measures to protect our team.

Benefit programs available to eligible employees may include 401(k) savings plan, employee stock ownership plan, health and life insurance, health savings accounts and flexible spending accounts, employee assistance program, paid holidays, paid time off, paid volunteer time, paid time off for the employee’s birthday and other leave as applicable.

To further promote wellness, we provide initiatives through DEI programs and benefits administration that emphasize self-care, nutrition, work-life balance, and financial education.

Benefit programs available to eligible employees may include 401(k) savings plan, employee stock ownership plan, health and life insurance, health savings accounts

and flexible spending accounts, employee assistance program, paid holidays, paid time off, paid volunteer time, paid time off for the employee’s birthday and other leave as applicable.

To further promote wellness, we provide initiatives through the programs and benefits administration that emphasize self-care, nutrition, work-life balance, and financial education.

This sustained focus on health and safety reflects our dedication to fostering a secure and supportive work environment.

8 unchanged sentences

To further support career development, employees are encouraged to shadow and observe other areas of the Company.

All employees receive semi-annual performance reviews, and new employees undergo a formal 90-day assessment at the end of their probationary period.

Employees receive semi-annual performance reviews, and new employees undergo a formal 90-day assessment at the end of their probationary period.

Additionally, we conduct an annual Employee Survey to gather feedback, with results informing ongoing engagement strategies.

24 unchanged sentences

DeBord 45 Executive Vice President and Chief Lending Officer Executive Vice President and Chief Lending Officer

Van Cise 53 Executive Vice President and Chief Credit Officer

Executive Vice President and Chief Credit Officer

Antich 42 Executive Vice President and Chief Technology Officer Executive Vice President and Chief Technology Officer

9 unchanged sentences

Prior to that, Mr.

Fischer had served as the Compliance Officer from January 2000 to October 2012 and the Chief Risk Officer from October 2010 to January 2014.

Fischer served as the Compliance Officer from January 2000 to October 2012 and the Chief Risk Officer from October 2010 to January 2014.

Basich has been affiliated with the Bank since 1999 and was promoted to Executive Vice President and Chief Financial Officer of the Bank and Company on February 1, 2023.

8 unchanged sentences

DeBord was a Vice President and Portfolio Manager with a local savings bank from April 2006 to January 2010 and was employed by the DFI as a Financial Examiner from June of 2003 to April 2006.

Van Cise has been affiliated with the Bank since 2012 and has served as Chief Credit Officer since January 2024.

Prior to that he had served as a Commercial Lending Team Leader.

Antich, has been affiliated with the Bank since 2007 and was promoted to Chief Technology Officer on January 25, 2022 and was promoted to Executive Vice President on February 1, 2023.

2 unchanged sentences

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-K

Item 1. Business