First Northwest Bancorp

To the Shareholders and the Board of Directors of

First Northwest Bancorp and Subsidiary

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanyingconsolidated balance sheets of First Northwest Bancorp and Subsidiary (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity and cash flows for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of December 31, 2025, based on criteria established inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2025 and 2024, and the consolidated results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established inInternal Control - Integrated Framework (2013) issued by COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether theconsolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control Over Financial Reporting

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Allowance for Credit Losses on Loans

Critical Audit Matter Description

As described in Notes 1 and 4 to the consolidated financial statements, the Company’s consolidated allowance for credit losses on loans (ACLL) balance was $17 million as of December 31, 2025. The ACLL is a valuation account that is deducted from the amortized cost of loans receivable to present the net amount expected to be collected. Management's estimate of the ACLL uses relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts.

We identified management's application of historical losses including reasonable and supportable forecasts of future economic conditions in the discounted cash flow model, and management's estimation of qualitative risk factors, which are both components of the ACLL calculation, as a critical audit matter. Baseline loss rates are calculated using peer institution data related to historical losses.

Historical losses are adjusted for management’s consideration of the forecasted direction of the economic and business environment. The Company also considers other qualitative risk factors to adjust the estimated ACLL.

How We Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. Our audit procedures related to the critical audit matter included the following, among others:

/s/ Baker Tilly US, LLP

Everett, Washington

March 12, 2026

We have served as the Company's auditor since 2002.

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

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FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

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FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

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Note1 - Summary of Significant Accounting Policies

Nature of operations - First Northwest Bancorp, a Washington corporation ("First Northwest"), became the holding company of First Fed Bank ("First Fed" or the "Bank") on* January**29,* 2015, upon completion of the Bank's conversion from a mutual to stock form of organization (the "Conversion"). First Northwest and the Bank are collectively referred to as the "Company." On* August 5, 2022,*First Northwest's election to be treated as a financial holding company became effective, allowing the Company to engage in non-banking activities that are financial in nature or incidental to financial activities. First Northwest's business activities generally are limited to passive investment activities and oversight of its investment in First Fed. Accordingly, the information set forth in this report, including the consolidated financial statements and related data, relates primarily to the Bank.

The Bank is a community-oriented financial institution providing commercial and consumer banking services to individuals and businesses primarily in western Washington State with offices in Clallam, Jefferson, Kitsap, King, Snohomish and Whatcom counties. These services include deposit and lending transactions that are supplemented with borrowing and investing activities. On* October 31, 2021,*the Bank converted from a State Savings Bank Charter to a State Commercial Bank Charter and was simultaneously renamed First Fed Bank from First Federal Savings and Loan Association of Port Angeles.

Use of estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make assumptions. These assumptions result in estimates that affect the reported amounts of assets and liabilities, revenues and expenses, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expense during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to a determination of the allowance for credit losses, fair value of financial instruments, deferred tax assets and liabilities, and the valuation of collateral-dependent loans.

Principles of consolidation - The accompanying consolidated financial statements include the accounts of First Northwest and its wholly owned subsidiary, First Fed. All material intercompany accounts and transactions have been eliminated in consolidation.

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

Cash and cash equivalents - Cash and cash equivalents consist of currency on hand, due from banks, and interest-bearing deposits with financial institutions with an original maturity ofthree months or less. The amounts on deposit fluctuate and, at times, exceed the insured limit by the FDIC, which potentially subjects First Fed to credit risk. First Fed hasnot experienced any losses due to balances exceeding FDIC insurance limits.

Restricted assets - Federal Reserve Board regulations require maintenance of certain minimum reserve balances on deposit with the Federal Reserve Bank of San Francisco. The deposit requirement waszero at both* December 31, 2025* and2024. First Fed was in compliance with its reserve requirements at* December 31, 2025and2024*.

Investment securities - Investments in debt securities are classified intoone ofthree categories: (1) held-to-maturity, (2) available-for-sale, or (3) trading. Investment securities are categorized as held-to-maturity when First Fed has the positive intent and ability to hold those securities to maturity. First Fed hadno held-to-maturity or trading securities at* December 31, 2025and2024*.

Securities that are held-to-maturity are stated at cost and adjusted for amortization of premiums and accretion of discounts, which are recognized as adjustments to interest income.

Investment securities categorized as available for sale are generally held for investment purposes (to maturity), although unanticipated future events* may*result in the sale of some securities. Available-for-sale securities are recorded at fair value, with the unrealized holding gain or loss reported in other comprehensive income, net of tax, as a separate component of shareholders' equity. Realized gains or losses are determined using the amortized cost basis of securities sold using the specific identification method and are included in earnings. Dividend and interest income on investments are recognized when earned. Premiums and discounts on securities without call features are recognized in interest income using the level yield method over the period to maturity. Premiums on securities with call features are amortized to the earliest call date.

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The Company reviews the need for an allowance for credit losses on investment securities ("ACLI") on at least a quarterly basis, and more frequently when economic or market conditions warrant such an evaluation. For investment securities available for sale in an unrealized loss position, the Companyfirst assesses whether it intends to sell, or it is more likely thannot that it will be required to sell the security before the recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For investment securities available for sale that donot meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency and adverse conditions specifically related to the security, among other factors. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an ACLI is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any decline in fair value that hasnot been recorded through an ACLI is recognized in other comprehensive income (loss). Changes in the ACLI are recorded as provision, or recapture of provision, for credit losses expense. Losses are charged against the allowance when management believes the uncollectibility of an investment security available for sale is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable on investment securities available for sale is excluded from the estimate of credit losses as interest accrued, butnot received, is reversed timely in accordance with the policy for investment securities above.

Federal Home Loan Bank stock - First Fed’s investment in Federal Home Loan Bank of Des Moines (FHLB) stock is carried at cost, which approximates fair value. As a member of the FHLB system, First Fed is required to maintain a minimum investment in FHLB stock based on specific percentages of its outstanding mortgages, total assets, or FHLB advances. At* December 31, 2025and2024*, First Fed’s minimum investment requirement was approximately $13.1 million and $14.4 million, respectively. First Fed was in compliance with the FHLB minimum investment requirement at* December 31, 2025and2024*. First Fed* may*request redemption at par value of any stock in excess of the amount First Fed is required to hold. Stock redemptions are granted at the discretion of the FHLB.

Management evaluates FHLB stock for impairment based on its assessment of the ultimate recoverability of cost rather than by recognizing temporary declines in value. The determination of whether a decline affects the ultimate recoverability of cost is influenced by criteria such as (1) the significance of any decline in net assets of the FHLB compared with the capital stock amount for the FHLB and the length of time this situation has persisted, (2) commitments by the FHLB to make payments required by law or regulation and the level of such payments in relation to the operating performance of the FHLB, (3) the impact of legislative and regulatory changes on institutions and, accordingly, the customer base of the FHLB, and (4) the liquidity position of the FHLB. Based on its evaluation, First Fed didnot recognize a loss on its FHLB stock at* December 31, 2025and2024*.

Loans held for sale - Mortgage loans originated and intended for sale in the secondary market are carried at the lower of aggregate cost or fair value. Fair value is determined based upon market prices fromthird-party purchasers and brokers. Net unrealized losses, if any, are recognized through a valuation allowance by charges to earnings. Gains or losses on the sale of loans are recognized at the time of sale and determined by the difference between net sale proceeds and the net book value of the loan less the estimated fair value of any retained mortgage servicing rights.

Loans receivable - Loans are stated at the amount of unpaid principal, net of charge-offs, unearned income, allowance for credit losses on loans ("ACLL") and any deferred fees or costs. Interest on loans is calculated using the simple interest method based on the month end balance of the principal amount outstanding and is credited to income as earned. The estimated life is adjusted for prepayments.

Each loan segment and class inherently contains differing credit risk profiles depending on the unique aspects of that segment or class of loans. For example, borrowers tend to consider their primary residence and access to transportation for employment-related purposes as basic requirements; accordingly, many consumers prioritize making payments on real estatefirst-mortgage loans and vehicle loans. Conversely,second-mortgage real estate loans or unsecured loans* maynot* be supported by sufficient collateral; thus, in the event of financial hardship, borrowers* maytend to place less importance on maintaining these loans as current and the Bank maynot* have adequate collateral to provide a secondary source of repayment in the event of default. Notwithstanding the various risk profiles unique to each class of loan, management believes that the credit risk for all loans is similarly dependent on essentially the same factors, including the financial strength of the borrower, the cash flow available to service maturing debt obligations, the condition and value of underlying collateral, the financial strength of any guarantors, and other factors.

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Problem loans are monitored and a portion or all of the balance is charged off when collectability is sufficiently questionable that the Bank canno longer justify showing the loan as an asset on the balance sheet. To determine if a loan should be charged off, all possible sources of repayment are analyzed. Possible sources of repayment include the potential for future cash flow, the value of the Bank’s collateral, and the strength of co-makers or guarantors. When these sources donot add up to a reasonable probability that the loan can be collected, charge off is processed.

The accrual of interest on loans is discontinued at the time the loan is90 days delinquent, unless the credit is well secured and in process of collection. In all cases, loans are placed on nonaccrual or charged off at an earlier date if collection of principal or interest is considered doubtful.

All interest accrued butnot collected for loans that are placed on nonaccrual or charged off is reversed against interest income. The interest on these loans is accounted for on the cash basis or cost recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. For those loans placed on non-accrual status due to payment delinquency, return to accrual status will generallynot occur until the borrower demonstrates repayment ability over a period ofnot less thansix months.

Loan fees and purchased premiums - Loan origination fees and certain direct origination costs are deferred and amortized as an adjustment to the yield of the loan over the contractual life using the effective interest method. In the event a loan is sold, the remaining deferred loan origination fees and/or costs are recognized as a component of gains or losses on the sale of loans. We* may*pay a purchase premium or receive a purchase discount on fully originated loans that we purchase. Premiums and discounts are capitalized at the time of purchase and amortized as an adjustment to the yield over the contractual life using the effective interest method and included in interest income.

Allowance for credit losses - On* January 1, 2023,the Company adopted Financial Accounting Standards Board ("FASB") ASU2016*-13 Financial Instruments -Credit Losses (Topic326*): Measurement of Credit Losses on Financial Instruments*, as amended, which replaces the incurred loss methodology with a current expected credit loss ("CECL") methodology. The ACLL is a valuation account that is deducted from the amortized cost of loans receivable to present the net amount expected to be collected. Loans are charged against the allowance when management believes the collectability of a loan balance is unlikely. Subsequent recoveries, if any, are credited to the allowance. The Bank records the changes in the ACLL through earnings, as a provision for credit losses on the Consolidated Statements of Operations. Accrued interest receivable on loans receivable is excluded from the estimate of credit losses. Instead, interest accrued, butnot received, is reversed timely in accordance with the policy for loans receivable above.

The Company has identified segments of loans with similar risk characteristics for which it then appliesone oftwo loss methodologies. Management has adopted a discounted cash flow ("DCF") methodology for most of its segments to calculate the ACLL. For certain segments with smaller portfolios or where data is prohibitive to running a DCF calculation, management has elected to use a remaining life methodology. The Company will evaluate individual loans for expected credit losses when those loans donot share similar risk characteristics with loans evaluated using a collective (pooled) basis. The allowance for individually evaluated loans is calculated using the collateral value method, which considers the likely source of repayment as the value of the collateral, less estimated costs to sell, or another method such as the cash flow method, which considers the contractual principal and interest terms and estimated cash flows available from the borrower to satisfy the debt. When the cash flow method is used, cash flows are discounted back by the effective interest rate and compared to the total recorded investment. If the present value of cash flows is less than the total recorded investment, a reserve is calculated.

For each loan segment collectively measured, the baseline loss rates are calculated using peer institution data from Federal Financial Institutions Examinations Council ("FFIEC") Call Report filings. The Bank evaluates the historical period on a quarterly basis. The baseline loss rates are applied to each loan's estimated cash flows over the life of the loan to determine the baseline loss estimate for each loan. Estimated cashflows consider the principal and interest in accordance with the contractual term of the loan and estimated prepayments. Contractual cashflows are based on the amortized cost, as adjusted for balances guaranteed by governmental entities, such as the SBA or the United States Department of Agriculture, or the unguaranteed amortized cost. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies:1) management has a reasonable expectation at the reporting date that a modification agreement will be executed with an individual borrower or2) the extension or renewal options are included in the original or modified contract at the reporting date and arenot unconditionally cancellable by the Company. Prepayments are established for each segment based on historical averages for the segments, which management believes is an accurate representation of future prepayment activity. Management reviews the adequacy of the prepayment period assumption on a quarterly basis.

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The CECL methodology includes consideration of the forecasted direction of the economic and business environment and its likely impact to the estimated allowance as compared to the historical losses over the reasonable and supportable time frame. Economic forecast models for the current period are uploaded to the model, which targetstwo forecasted macroeconomic factors, which are national gross domestic product and unemployment figures. Each of the forecasted DCF segments is impacted by these macroeconomic factors. Further, each of the macroeconomic factors is utilized differently by segment, including the application of lagged factors and various transformations such as percent change year over year.

The Bank uses the Federal Open Market Committee ("FOMC") forecast via an application programming interface with our CECL software. FOMC provides various forecast scenarios used to determine the loan portfolio’s expected credit loss. Based on known/knowable information at the measurement date, management has determined that the FOMC scenarios and the underlying assumptions most closely align with current and expected conditions. The Bank has elected to forecast thefirst four quarters of the credit loss estimate and revert on a straight-line basis as permitted in ASC326-20-30-9. The Bank also considers other qualitative risk factors to adjust the estimated ACLL calculated by the above-mentioned model. While there are many factors available to incorporate into the quantitative model, the Bank has selected to use the most critical factors. Additional metrics will be included only if internal or external factors outside those considered in its historical losses or macroeconomic forecast indicate otherwise. The Bank has established metrics to estimate the qualitative risk factor by segment based on the identified risk.

In general, management's estimate of the ACLL uses relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. The allowance for credit losses on loans evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available. While management utilizes its best judgment and information available to recognize losses on loans, future additions to the allowance* maybe necessary based on further declines in local and national economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Bank’s ACLL. Such agencies mayrequire the Bank to make adjustments to the allowance based on their judgments about information available to them at the time of their examinations. The Company believes the ACLL at December 31, 2025*, is appropriate given the above considerations.

Allowance for credit losses on unfunded commitments - The Bank estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Bank is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The Bank has determined thatno allowance is necessary for its home equity line of credit portfolio as it has the ability to unconditionally cancel the available lines of credit. The allowance methodology is similar to the ACLL, but additionally includes an estimate of the future utilization of the commitment as determined by historical commitment utilization. The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class. The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision (reversal of provision) for credit losses on the Consolidated Statements of Operations.

Real estate owned and repossessed assets - Real estate owned and repossessed assets include real estate and personal property acquired through foreclosure or repossession and* mayinclude in-substance foreclosed properties. These properties are initially recorded at the fair market value of the property less selling costs. Properties are subsequently evaluated for impairment. In-substance foreclosed properties are those properties for which the Bank has taken physical possession, regardless of whether formal foreclosure proceedings have taken place. At December 31, 2025*, there was $1.4 million ofone-to-four family residential real estate included in other assets on the Consolidated Balance Sheets which was acquired during the year.

Loan servicing rights - Loan servicing rights are recorded at fair value when loans are originated and subsequently sold with the servicing rights retained. Management assesses the fair value of loan servicing rights based on recalculations of the present value of remaining future cash flows using updated market discount rates and prepayment speeds. Subsequent loan prepayments and changes in prepayment assumptions in excess of those forecasted can adversely impact the carrying value of the servicing rights. The servicing rights are stratified based on the predominant risk characteristics of the underlying loans: fixed-rate loans and adjustable-rate loans. The effect of changes in market interest rates on estimated rates of loan prepayments is the predominant risk characteristic for loan servicing rights. The valuation model incorporates assumptions that market participants would use in estimating future net servicing income, such as the cost to service, the discount rate, the custodial earnings rate, an inflation rate, ancillary income, prepayment speeds, and default rates and losses.

Sold loan servicing income represents fees earned for servicing loans. Fees for servicing sold loans are generally based upon a percentage of the principal balance of the loans serviced, as well as related ancillary income such as late charges. Servicing income is recognized as earned unless collection is doubtful. The caption in the Consolidated Statements of Operations "Sold loan servicing fees and servicing rights mark-to-market" includes sold loan servicing income and changes in fair value.

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Premises and equipment - Premises and equipment are stated at cost less accumulated depreciation. Depreciation is recognized and computed on the straight-line method over the estimated useful lives as follows:

Bank-owned life insurance - The carrying amount of life insurance approximates fair value. Fair value of life insurance is estimated using the cash surrender value, less applicable surrender charges. The change in cash surrender value is included in noninterest income.

Equity and partnership investments - Equity investments include amounts invested in non-publicly traded stock. Investments in non-publicly traded stock are measured at cost, less impairment, plus or minus changes resulting from observable price changes in ordinary transactions for the identical or similar investment of the same issuer. The recorded balance of these equity investments was $1.8 million and $500,000 at* December 31, 2025* and2024, respectively.

Partnership investments include limited partnerships in investment funds and other business ventures. Partnership investments that donot result in consolidation of the investee are accounted for under the equity method of accounting. The Company's allocated share of earnings or losses are recorded in other noninterest income. The recorded balance of these partnership investments was $13.7 million and $12.7 million at* December 31, 2025* and2024, respectively.

We assess whether impairment indicators exist to trigger the performance of an impairment analysis on equity and partnership investments throughout the year.

Goodwill- Goodwill is recorded from a business combination as the difference in the purchase price and fair value of assets acquired and liabilities assumed. Goodwill has an indefinite useful life, and as such, isnot amortized. The Company reviews goodwill for impairment annually, or more frequently if an indication of impairment exists between annual tests. Any impairment will be recorded as noninterest expense and corresponding reduction in intangible asset on the consolidated financial statements.

Core deposit intangible - A core deposit intangible ("CDI") asset is recognized from the assumption of core deposit liabilities in connection with the acquisition of deposits from another financial institution. The asset is valued by athird party and is amortized into noninterest expense over its estimated useful life. The CDI is evaluated for impairment annually with any additional decline recorded as noninterest expense on the Consolidated Statements of Operations.

Income taxes - First Fed accounts for income taxes in accordance with the provisions of ASC740-10, Income Taxes, which requires the use of the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for their future tax consequences, attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Leases - Operating lease right-of-use ("ROU") assets represent the Company's right to use the underlying asset during the lease term and operating lease liabilities represent the Company's obligation to make lease payments arising from the lease. ROU assets and operating lease liabilities are recognized at lease commencement based on the present value of the future lease payments using the Company's incremental borrowing rate. The discount rate used in determining the present value was the Company's incremental borrowing rate using the FHLB fixed advance rate based on the remaining lease term as of* January 1, 2019,or the commencement date for subsequent leases. The Company utilized Provident Financial Services, Inc.'s10* year fixed-to-floating rate on subordinated notes issued in* May 2024for the incremental borrowing rate to calculate the ROU asset for thesix* leases generated in the* May**2024* sale-leaseback transaction as that more closely aligned with the economic environment at that time. The Company doesnot capitalize short-term leases, which are leases with terms oftwelve months or less. ROU assets and related operating lease liabilities are remeasured when lease terms are amended, extended, or when management intends to exercise available extension options. We have lease agreements with lease and non-lease components, which are generally accounted for separately for real estate leases.

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Historic Tax Credit Investment - The Company holds an interest in an Historic Tax Credit investment ("HTC") partnership, also referred to as the Rehabilitation Credit, which met the National Park Service's requirements to qualify for a tax incentive on the rehabilitation of a certified historic structure. As a limited liability investor in this partnership, the Company receives a tax benefit in the form of a tax deduction from partnership operating losses and a federal income tax credit. The federal income tax credit is earned over a5-year period upon the qualified rehabilitated building being placed in service and having met all the requirements.

The Company uses the deferral method to amortize the initial cost of the investment over the life of the related tax credit and other tax benefits received and recognizes the net investment performance on the Consolidated Statements of Operations as a component of income tax expense. The Company reports the carrying value of the equity investment in the unconsolidated HTC in "Prepaid expenses and other assets" on the Company’s Consolidated Balance Sheets. The maximum exposure to loss in the HTC is the amount of equity invested by the Company. The Company has evaluated the variable interests held by the Company in the HTC investment and determined that the Company doesnot have controlling financial interests in such investment and isnot the primary beneficiary.

Low-Income Housing Tax Credit Investment - The Company has an equity investment in a Low-Income Housing Tax Credit Investment ("LIHTC") partnership which is an indirect federal subsidy that finances low-income housing projects. As a limited liability investor in this partnership, the Company receives a tax benefit in the form of a tax deduction from partnership operating losses and a federal income tax credit. The federal income tax credit is earned over a10-year period as a result of the investment properties meeting certain criteria and is subject to recapture for noncompliance with such criteria over a15-year period.

The Company accounts for the LIHTC under the proportional amortization method and amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance on the Consolidated Statements of Operations as a component of income tax expense. The Company reports the carrying value of the equity investment in the unconsolidated LIHTC in "Prepaid expenses and other assets" on the Company’s Consolidated Balance Sheets. The maximum exposure to loss in the LIHTC is the amount of equity invested and credit extended by the Company. The Company has evaluated the variable interests held by the Company in the LIHTC investment and determined that the Company doesnot have controlling financial interests in such investment and isnot the primary beneficiary.

Transfers of financial assets - Transfers of an entire financial asset, a group of financial assets, or a participating interest in an entire financial asset are accounted for as sales when control over the assets has been relinquished. Control over transferred assets is deemed to be surrendered when: (1) the assets have been isolated from First Fed, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) First Fed doesnot maintain effective control over the transferred assets through an agreement to repurchase them before their maturity. The mortgage loans that are sold with recourse provisions are accounted for as sales until such time as the loan defaults.

First Fed sold mortgage loans in the past with "life of the loan" recourse provisions, requiring First Fed to repurchase the loan at any time if it defaults. The remaining balance of such loans at* December 31, 2025and2024*, was approximately $1.2 million and $1.5 million, respectively. Of these loans, no loans were repurchased during the years ended* December 31, 2025* or2024.No reserve is recorded for these loans in other liabilities.

Off-balance-sheet credit-related financial instruments - In the ordinary course of business, First Fed has entered into commitments to extend credit, including commitments under lines of credit, commercial letters of credit, and standby letters of credit. Such financial instruments are recorded when they are funded.

Comprehensive income (loss) - Accounting principles generally require that recognized revenue, expenses, and gains and losses be included in net income (loss). Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheets, such items, along with net income (loss), are components of comprehensive income (loss).

Dividend restriction - Banking regulations require maintaining certain capital levels and* may*limit the dividends paid by the Bank to the Company or by the Company to shareholders.

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Components of noninterest income evaluated under Revenue Recognition (Topic606) - The Company recognizes revenue as it is earned and notedno impact to its revenue recognition policies as a result of the adoption of ASU2014-09. The following is a discussion of key revenues within the scope of the new revenue guidance.

Deposit fees- The Company earns fees from its deposit customers for account maintenance, transaction-based activity and overdraft services. Account maintenance fees consist primarily of account fees and analyzed account fees charged on deposit accounts on a monthly basis. The performance obligation is satisfied and the fees are recognized on a monthly basis as the service period is completed. Transaction-based fees on deposit accounts are charged to deposit customers for specific services provided to the customer, such as non-sufficient funds fees, overdraft fees, and wire fees. The performance obligation is completed as the transaction occurs and the fees are recognized at the time each specific service is provided to the customer. Deposit fees are included in Service Fees on the Consolidated Statements of Operations.

Debit card interchange income- Debit and Automated Teller Machine ("ATM") interchange income represent fees earned when a debit card issued by the Company is used. The Company earns interchange fees from debit cardholder transactions through card networks. In addition, the Company earns interchange fees for use of its ATMs by customers of other banking institutions. Interchange fees are based on purchase volumes and other factors and are recognized as transactions occur. The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the cardholder's debit card. Certain expenses directly associated with the credit and debit card are netted against interchange income. Debit card interchange income is included in Service Fees on the Consolidated Statements of Operations.

Third-party credit card interchange income - Third-party credit card interchange income represents fees earned when a credit card issued by the Bank through athird-party vendor is used. Similar to the debit card interchange, the Bank earns an interchange fee for each transaction made with a Bank-branded credit card. The performance obligation is satisfied and the fees are earned when the cost of the transaction is charged to the cardholder's credit card. Certain expenses directly related to thethird-party credit card interchange contract are netted against interchange income. Third-party credit card interchange income is included in Service Fees on the Consolidated Statements of Operations.

Gains/losses on the sale of real estate owned are included in noninterest income or expense, respectively, and are generally recognized when the performance obligation is complete. This accounting treatment is typically at delivery of control over the property to the buyer at the time of each real estate closing.

Advertising costs - First Fed expenses advertising costs as they are incurred.

Fair value measurements - Fair values of financial instruments are estimated using relevant market information and other assumptions (Note15). Fair value estimates involve uncertainties and matters of significant judgment regarding interest rates, credit risk, prepayments, and other factors, especially in the absence of broad markets for particular items. Changes in assumptions or in market conditions could significantly affect these estimates.

Derivative instruments and hedging activities - FASB ASC815, Derivatives and Hedging ("ASC815"), provides the disclosure requirements for derivatives and hedging activities with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how the entity accounts for derivative instruments and related hedged items, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. Further, qualitative disclosures are required that explain the Company’s objectives and strategies for using derivatives, as well as quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.

As required by ASC815, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives* may*also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation.

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Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company* mayenter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting doesnot* apply, or the Company electsnot to apply hedge accounting.

In accordance with the FASB’s fair value measurement guidance in ASU2011-04, the Company made an accounting policy election to measure the credit risk of its derivative financial instruments that are subject to master netting agreements on a net basis by counterparty portfolio.

Segment information - First Fed is engaged in the business of attracting deposits and providing lending services. Substantially all income is derived from a diverse base of commercial, mortgage, and consumer lending activities and investments. The Company’s activities are a single industry segment for financial reporting purposes based on our operations. See Note19 for additional information.

Employee Stock Ownership Plan - The cost of shares issued to the ESOP butnot yet allocated to participants is shown as a reduction of shareholders' equity. Compensation expense is based on the market price of shares as they are committed to be released to participants' accounts. Dividends on allocated and unallocated ESOP shares reduce debt and accrued interest.

Earnings per Common Share - Earn ings per share ("EPS") is computed using thetwo-class method. Thetwo-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating security according to dividends declared or accumulated and participation rights in undistributed earnings. Under thetwo-class method, basic EPS is computed by dividing earnings allocated to common shareholders by the weighted average number of common shares outstanding for the period. Earnings allocated to common shareholders represents net income reduced by earnings allocated to participating securities. ESOP shares that are committed to be released are outstanding for EPS calculation purposes, while unallocated ESOP shares arenot considered outstanding for basic or diluted EPS calculations. Diluted EPS is computed by dividing net income by the weighted average common shares outstanding plus the number of additional common shares that would have been outstanding if unvested restricted stock awards were included unless those additional shares would have been anti-dilutive. For the diluted EPS computation, the treasury stock method is applied and compared to thetwo-class method and whichever method results in a more dilutive impact is utilized to calculate diluted EPS.

Recently adopted accounting pronouncements

In* December 2023,the FASB issued ASUNo.* 2023-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures*. This ASU requires that public business entities disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. The ASU requires all entities to disclose on an annual basis (1) the amount of income taxes paid, disaggregated by federal, state and foreign taxes and (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal or greater than5 percent of total income taxes paid. The ASU also requires that all entities disclose income (loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic or foreign and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state and foreign. This ASU is effective for public business entities for annual periods beginning after* December 15, 2024.The adoption of this ASU is reflected in the presentation of Note10* of the Company's consolidated financial statements.

In* March 2024,the FASB issued ASU2024*-01, Compensation—Stock Compensation (Topic718*): Scope Application of Profits Interest and Similar Awards*. ASU2024-01 added an illustrative example to demonstrate how an entity should apply the scope guidance in paragraph718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic718. Awardsnot meeting the criteria should be accounted for in accordance with Topic710. The illustrative example providesfour fact patterns which are intended to reduce complexity in determining whether a profits interest award is subject to the guidance in Topic718 and reduce existing diversity in practice. ASU2024-01 is effective for the Company for fiscal years beginning after* December 15, 2024,including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU didnot* have a material impact on the consolidated financial statements and related disclosures.

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Recently issued accounting pronouncementsnot yet adopted

In* November 2024,the FASB issued ASU2024*-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220*-40): Disaggregation of Income Statement Expenses*. ASU2024-03 requires additional disclosure of the nature of expenses included in the income statement in response to requests from investors for more information to better understand an entity's performance and potential future cash flows. The new standard requires disclosures about specific types of expenses included in the expense captions presented on the face of the income statement as well as disclosures about selling expenses. ASU2024-03 is effective for the Company for fiscal years beginning after* December 15, 2026,including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU isnot* expected to have a material impact on the consolidated financial statements and related disclosures.

In* November 2024,the FASB issued ASU2024*-04, Debt—Debt with Conversion and Other Options (Subtopic470*-20): Induced Conversions of Convertible Debt Instruments*. ASU202404 clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments donot change the accounting for conversions that include the issuance of all equity securities upon conversion. ASU2024-04 is effective for the Company for fiscal years beginning after* December 15, 2025,including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU isnot* expected to have a material impact on the consolidated financial statements and related disclosures.

In* September 2025,the FASB issued ASU2025*-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic350*-40): Targeted Improvements to the Accounting for Internal-Use Software* which clarifies the accounting for costs related to internal-use software. The new guidance clarifies the threshold entities apply to begin capitalizing costs and removes all references to project stages in ASC Subtopic350-40. ASU2025-06 is effective for the Company for fiscal years beginning after* December 15, 2027,including interim periods within those fiscal years. The Company doesnot* anticipate this ASU will have a material impact on its financial statements.

In* November 2025,the FASB issued ASU2025*-08, Financial instruments – Credit Losses (Topic326*): Purchased Loans*, which amends the guidance in ASC326 on the accounting for certain purchased loans. Under the ASU, entities must account for acquired loans (excluding credit cards) that meet certain criteria at acquisition ("purchased seasoned loans") by recognizing them at their purchase price plus an allowance for expected credit losses (the "gross-up approach"). ASU2025-08 also introduces an accounting policy election related to the subsequent measurement of expected credit losses for entities that use a method other than a discounted cash flow analysis to estimate credit losses on purchased seasoned loans. If this accounting policy is elected, entities can use the amortized cost basis of the asset to subsequently measure their credit loss allowance. ASU2025-08 is effective for annual reporting periods beginning after* December 15, 2026,including interim periods within those fiscal years. Early adoption is permitted in an interim or annual reporting period in which financial statements havenot* yet been issued or made available for issuance. The Company is currently evaluating the impact of ASU2025-08 on its consolidated financial statements.

Reclassifications **- Certain amounts in prior periods have been reclassified to conform to the current audited financial statement presentation withno effect on net income or shareholders' equity.

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Note2 - Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at* December 31, 2025*, are summarized as follows:

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at* December 31, 2024*, are summarized as follows:

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There wereno securities classified as held-to-maturity at* December 31, 2025and2024*. There wasno allowance for credit losses on investment securities recorded at* December 31, 2025and2024*, based on analysis performed by the Company.

Accrued interest receivable on available-for-sale debt securities totaled $1.5 million and $2.0 million as of* December 31, 2025and2024*, respectively. Accrued interest receivable on securities is reported inaccrued interest receivable on the Consolidated Balance Sheets and is excluded from the calculation of the allowance for credit losses on investment securities.

The following table shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of* December 31, 2025*:

The following table shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of* December 31, 2024*:

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There were 4 available-for-sale securities with unrealized losses of less thanone year, and 131 available-for-sale securities with an unrealized loss of more thanone year at* December 31, 2025*. There were 22 available-for-sale securities with unrealized losses of less thanone year, and 144 available-for-sale securities with an unrealized loss of more thanone year at* December 31, 2024*. Management believes that the unrealized losses on our investment securities relate principally to the general change in interest rates, market liquidity and demand, and market volatility that has occurred since the initial purchase, and such unrecognized losses or gains will continue to vary with general interest rate level and market fluctuations in the future. Management doesnot believe the unrealized losses on our securities are related to a deterioration in credit quality. Certain investments in a loss position are guaranteed by government entities or government sponsored entities. The Company doesnot intend to sell the securities in an unrealized loss position and believes that it is unlikely that we will be required to sell these investments prior to a market price recovery or maturity. Based on the Company’s evaluation of these securities,no credit impairment was recorded at* December 31, 2025* or* December 31, 2024*.

The amortized cost and estimated fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated. Expected maturities of MBS* maydiffer from contractual maturities because borrowers may*have the right to call or prepay obligations with or without call or prepayment penalties; therefore, these securities are shown separately.

Sales of available-for-sale securities were as follows:

Note3 - Loans Receivable

The loan portfolio is comprised ofthree portfolio segments that reflect the Company’s lending strategy and risk management practices. These segments include Real Estate Loans, Consumer Loans, and Commercial Business Loans. Each portfolio segment is further disaggregated into classes of loans with similar attributes and risk characteristics. Management uses these segment and class groupings to evaluate portfolio performance and determine the allowance for credit losses.

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Loan amounts are presented at amortized cost which is comprised of the loan balance net of unearned loan fees in excess of unamortized costs and unamortized purchase premiums of $21.5 million and $19.1 million as of* December 31, 2025and2024*, respectively. The amortized cost reflected in total loans receivable doesnot include accrued interest receivable. Accrued interest receivable on loans was $5.0 million and $6.0 million as of* December 31, 2025and2024*, respectively, and was reported inaccrued interest receivable on the consolidated balance sheets and is excluded from the calculation of the allowance for credit losses on loans.

The amortized cost of loans receivable, net of derivative basis adjustment and ACLL, consisted of the following at the dates indicated:

Loans receivable by the earliest of next repricing date or maturity, at the dates indicated:

The adjustable-rate loans have interest rate adjustment limitations and are generally indexed to multiple indices. Future market factors* may*affect the correlation of adjustable loan interest rates with the rates First Fed pays on the short-term deposits that have been primarily used to fund such loans.

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

Interest income recognized on a cash basis on nonaccrual loans for the years ended* December 31, 2025and2024*, was $132,000 and $201,000, respectively.

Past due loans. Loans are considered past due if the required principal and interest payments havenot been received as of the date such payments were due. There wereno loans past due90 days or more and still accruing interest at* December 31, 2025and2024*.

The following table presents the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of* December 31, 2025*:

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The following table presents the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of* December 31, 2024*:

Credit quality indicator. Federal regulations provide for the classification of lower quality loans and other assets, such as debt and equity securities, as substandard, doubtful, or loss; risk ratings6, 7, and8 in our8-point risk rating system, respectively. An asset is considered substandard if it is inadequately protected by the current net worth and pay capacity of the borrower or of any collateral pledged. Substandard assets include those characterized by the distinct possibility that First Fed will sustain some loss if the deficiencies arenot corrected. Assets classified as doubtful have all the weaknesses inherent in those classified substandard with the added characteristic that the weaknesses present make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values. Assets classified as loss are those considered uncollectible and of such little value that their continuance as assets without the establishment of a credit loss reserve isnot warranted.

When First Fed classifies problem assets as either substandard or doubtful, it* maychoose to individually evaluate the expected credit loss or maydetermine that the characteristics arenot* significantly different from those in pooled loan analysis. The Company will evaluate individual loans for expected credit losses when those loans donot share similar risk characteristics with loans evaluated using a collective (pooled) basis. When an insured institution classifies problem assets as a loss, it is required to charge off such assets in the period in which they are deemed uncollectible. Assets that donot currently expose First Fed to sufficient risk to warrant classification as substandard or doubtful but possess identified weaknesses are designated as either watch or special mention assets; risk ratings4 and5 in our risk rating system, respectively. Loansnot otherwise classified are considered pass graded loans and are rated1-3 in our risk rating system.

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The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of* December 31, 2025*, as well as gross charge-off activity for the year ended* December 31, 2025*. Term loans that are renewed or extended for periods longer than90 days are presented as a new origination in the year of most recent renewal or extension.

(1) Term loans that are renewed or extended for periods longer than90 days are presented as a new origination in the year of the most recent renewal or extension.

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The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of* December 31, 2024*, as well as gross charge-off activity for the year ended* December 31, 2024*. Term loans that are renewed or extended for periods longer than90 days are presented as a new origination in the year of most recent renewal or extension.

(1) Term loans that are renewed or extended for periods longer than90 days are presented as a new origination in the year of the most recent renewal or extension.

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**Individually Evaluated Loans.The Company evaluates loans collectively for purposes of determining the ACLL in accordance with ASC326 by aggregating loans deemed to possess similar risk characteristics and individually evaluates loans that it believesno longer possess risk characteristics similar to other loans in the portfolio. These loans are typically identified from a substandard or worse internal risk grade, since the specific attributes and risks associated with such loans tend to become unique as the credit deteriorates. Such loans are typically nonperforming, modified loans made to borrowers experiencing financial difficulty, and/or are deemed collateral dependent, where the ultimate repayment of the loan is expected to come from the operation of or eventual sale of the collateral.

Loans that are deemed by management to possess unique risk characteristics are evaluated individually for purposes of determining an appropriate lifetime ACLL. The Company uses a discounted cash flow approach, using the loan’s effective interest rate, for determining the ACL on individually evaluated loans, unless the loan is deemed collateral dependent. Collateral-dependent loans are evaluated based on the estimated fair value of the underlying collateral, less estimated costs to sell. The Company* may*increase or decrease the ACLL for collateral-dependent individually evaluated loans based on changes in the estimated expected fair value of the collateral. In cases where the loan is well-secured and the estimated value of the collateral exceeds the amortized cost of the loan,no ACLL is recorded. Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of* December 31, 2025*, $25.9 million of loans were individually evaluated with $151,000 of ACLL attributed to such loans. At* December 31, 2025*,two individually evaluated loans with recorded investments totaling $303,000 were evaluated using a discounted cash flow approach and the remaining loans totaling $25.6 million were evaluated based on the underlying value of the collateral. One $4.5 million commercial real estate loan was accruing interest at year end, while all other individually evaluated loans were on nonaccrual status at* December 31, 2025*.

As of* December 31, 2024*, $35.8 million of loans were individually evaluated with $2.5 million of ACLL attributed to such loans. At* December 31, 2024*,three individually evaluated loans with recorded investments totaling $2.5 million were evaluated using a discounted cash flow approach and the remaining loans totaling $33.2 million were evaluated based on the underlying value of the collateral. One $6.4 million commercial real estate loan was accruing interest at year end, while the remaining individually evaluated loans were all on nonaccrual status at* December 31, 2024*.

Collateral-Dependent Loans. Loans that have been classified as collateral dependent are loans where substantially all repayment of the loan is expected to come from the operation of or eventual liquidation of the collateral.

The following table summarizes individually evaluated collateral-dependent loans by class and collateral type as of* December 31, 2025*:

The following table summarizes individually evaluated collateral dependent loans by class and collateral type as of* December 31, 2024*:

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Modified Loans to Troubled Borrowers. On* January 1, 2023,the Company adopted ASU2022*-02, which introduced new reporting requirements for modifications of loans to borrowers experiencing financial difficulty. The Company refers to these loans as modified loans to troubled borrowers ("MLTB"). A MLTB arises from a modification made to a loan in order to alleviate temporary difficulties in the borrower’s financial condition and/or constraints on the borrower’s ability to repay the loan, and to minimize potential losses to the Company. GAAP requires that certain types of modifications be reported, which consist of the following: (i) principal forgiveness, (ii) interest rate reduction, (iii) other-than-insignificant payment delay, (iv) term extension, or any combination of the foregoing. The ACLL for a MLTB is measured on a collective basis, as with other loans in the loan portfolio, unless management determines that such loansno longer possess risk characteristics similar to others in the loan portfolio. In those instances, the ACLL for a MLTB is determined through individual evaluation.

During the year ended* December 31, 2025*, there were three new MLTB. The Bank agreed to modify the rate, extend the interest-only payment period and extend the term for a commercial real estate loan which had a recorded investment of $5.5 million at the time of modification. This commercial real estate loan was in compliance with the modified terms at* December 31, 2025*. The Bank also agreed to defer payments on a commercial real estate loan with a recorded investment of $4.1 million at the time of modification. This commercial real estate loan wasnot in compliance with the modified terms at year end and was placed on nonaccrual status. A previously charged-off commercial business loan was reinstated with term and rate modifications. The commercial business loan wasnot in compliance with the modified terms at* December 31, 2025*, and was placed on nonaccrual status.

During the year ended* December 31, 2024*, there weretwo new MLTB. A commercial business loan with a recorded investment of $17,000 at the time of modification for which the Bank agreed to deferred principal payments and the borrower agreed to resume both principal and interest payments at the end of the deferral period. The commercial business loan wasnot in compliance with the modified terms at* December 31, 2024*, and the balance was charged-off. The Bank also agreed to defer payments on a commercial real estate loan with a recorded investment of $6.4 million. The commercial real estate loan was in compliance with the modified terms at* December 31, 2024*.

Note4 - Allowance for Credit Losses on Loans ("ACLL")

The Company maintains an ACLL in accordance with ASC326: Financial Instruments - Credit Losses. ASC326 requires the Company to recognize estimates for lifetime credit losses on loans at the time of origination or acquisition. The recognition of credit losses at origination or acquisition represents the Company’s best estimate of lifetime expected credit losses, given the facts and circumstances associated with a particular loan or group of loans with similar risk characteristics. The ACLL is recognized in loans receivable on the Consolidated Balance Sheets and is adjusted as a provision (recapture of provision) for credit losses on loans on the Consolidated Statements of Operations. The Company adopted ASU2016-13 effective* January 1, 2023,as discussed in Note1.*

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

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Allowance for Credit Losses on Unfunded Loan Commitments ("ACLUC").The Company maintains an ACLUC in accordance with ASC326: Financial Instruments - Credit Losses, as discussed in Note1. The Company estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company. The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision, or recapture of provision, for credit losses on unfunded commitments on the Consolidated Statements of Operations. The allowance for unfunded commitments was $594,000 and $599,000 at December 31, 2025and2024, respectively.

Note5 - Premises and Equipment

Premises and equipment consist of the following as of:

Depreciation expense was $1.2 million and $1.4 million for the years ended* December 31, 2025and2024*, respectively.

During the year ended* December 31, 2025,the Company recorded a $358,000 impairment loss on its Bellevue branch leasehold improvements and equipment related to the announced closure of the branch in April 2026.*These charges were recorded in other noninterest expense.

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Note6 - Leases

The Bank has lease agreements with unaffiliated parties forfifteen locations, comprised ofeleven full-service branches, three business centers, and a parking easement. Lease expirations range fromone totwenty years, with additional renewal options on certain leases ranging fromtwo toten years. If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability. At* December 31, 2025*, the Company's ROU assets and lease liabilities were $15.6 million and $16.4 million, respectively.

Total costs incurred by the Company, as a lessee, were $2.7 million and $2.3 million for the years ended* December 31, 2025and2024*, respectively, and principally related to contractual lease payments on operating leases. The Company's leases donot impose significant covenants or other restrictions on the Company. In thesecond quarter of2025, the Bank consolidated its Bellevue and Fremont business centers into a new location. As a result, the ROU asset and lease liability balances decreased $1.9 million for the terminated leases and increased $1.3 million related to the lease for the new Seattle business center. An additional decrease of $185,000 was recorded in thefourth quarter of2025 related to the announced closure of the Bellevue branch in* April 2026.*

The following table presents amounts relevant to the Company's assets leased for use in its operations for the years ended:

The following table presents the weighted-average remaining lease terms and discount rates of the Company's assets leased for use in its operations at:

All lease agreements require the Bank to pay its pro-rata share of building operating expenses. The minimum annual lease payments under non-cancellable operating leases with initial or remaining terms ofone year or more through the initial lease term are as follows:

Note7 - Servicing Rights on Sold Loans

Mortgage loans serviced for FHLB, Fannie Mae, and Freddie Mac arenot included in the accompanying consolidated balance sheets. Selected commercial loan balances have also been sold in whole or in part to various participants, including the Main Street Lending Program, with servicing retained by First Fed and arenot included in the accompanying consolidated balance sheets. The unpaid principal balances of serviced loans, primarily mortgage loans, were $301.6 million and $329.3 million at* December 31, 2025and2024*, respectively.

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Loan servicing rights for the periods shown are as follows:

The key economic assumptions used in determining the fair value of loan servicing rights for the periods shown are as follows:

The fair values of loan servicing rights were approximately $3.0 million and $3.3 million at* December 31, 2025and2024*, respectively. See Note15 Fair Value Measurement for additional information.

The following represents servicing and late fees earned in connection with loan servicing rights and is included in the accompanying consolidated financial statements as a component ofnoninterest income for the periods shown:

The following table represents the hypothetical effect on the fair value of the Company's loan servicing rights using unfavorable shock analyses of certain key valuation assumptions as of* December 31, 2025and2024*. This analysis is presented for hypothetical purposes only. As the amounts indicate, changes in fair value based on changes in assumptions generally cannot be extrapolated because the relationship of the change in assumptions to the change in fair value* may**not* be linear.

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Note8 - Deposits

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

The aggregate amount of time deposits issued in excess of the FDIC insured limit, currently*$250,000,* at* December 31, 2025and2024*, were $164.2 million and $174.4 million, respectively.

Maturities of certificates of deposit at the dates indicated are as follows:

At* December 31, 2025and2024*, deposits included $113.6 million and $100.8 million, respectively, in public fund deposits. The Bank had an outstanding letter of credit from the Federal Home Loan Bank of Des Moines ("FHLB") with a notional amount of $60.0 million at* December 31, 2025and2024*, to secure public deposits. The notional amount exceeds the minimum collateral requirements established by the Washington Public Deposit Protection Commission. Also included in deposits at* December 31, 2025and2024*, were funds held by federally recognized tribes totaling $31.3 million and $20.1 million, respectively. Investment securities with a carrying value of $40.7 million and $22.8 million were pledged as collateral for these deposits at* December 31, 2025and2024*, respectively. The pledged carrying value exceeds the minimum collateral requirements established by the Bureau of Indian Affairs.

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

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Note9 - Borrowings

First Fed is a member of the FHLB. As a member, First Fed has a committed line of credit of up to 25% of total assets, subject to the amount of FHLB stock ownership and certain collateral requirements.

First Fed maintains borrowing arrangements with the FHLB to borrow funds under long-term, fixed-rate advance agreements. First Fed also has overnight borrowings through FHLB which renew daily until paid. First Fed periodically uses fixed-rate advances maturing in less thanone year as an alternative source of funds. All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $871.3 million and $951.8 million at* December 31, 2025and2024*, respectively. The Bank had outstanding letters of credit from the FHLB with notional amounts of $60.0 million to secure public deposits and $772,000 to secure the Bellevue, Washington branch lease at* December 31, 2025*.

First Fed also has an established borrowing arrangement with the Federal Reserve Board of San Francisco ("FRB") to utilize the discount window for short-term borrowing. Available borrowing capacity was $17.3 million and $17.9 million at* December 31, 2025and2024*, respectively. A borrowing test was performed in* June 2025.Investment securities with a carrying value of $18.0 million and $18.6 million were pledged to the FRB at December 31, 2025and2024*, respectively.

On* March 25, 2021,the Company completed a private placement of $40.0 million of 3.75% fixed-to-floating rate subordinated notes due2031* (the "Notes") to certain qualified institutional buyers and institutional accredited investors. The net proceeds to the Company from the sale of the Notes were approximately $39.3 million after deducting placement agent fees and other offering expenses. The Notes have been structured to qualify as Tier2 capital for the Company for regulatory capital purposes. The Company used the net proceeds of the offering for general corporate purposes. Beginning in* April 2026,the interest rate will reset quarterly to thethree*-month SOFR plus 300-basis points. In* March 2025,*the Company redeemed $5.0 million of the Notes at a discount, resulting in a reduction to the outstanding balance and a $905,000 gain on extinguishment of debt recorded in noninterest income.

On* May 20, 2022,First Northwest began a borrowing arrangement with NexBank for a revolving line of credit. The agreement was modified in2025* and the new terms allow a maximum extension of credit of $15.0 million. Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The Company was in compliance with all covenants at* December 31, 2025*, including fixed coverage, Tier1 leverage, and risk-based capital ratio minimum requirements and classified assets to Tier1 capital and Texas ratio maximum requirements. The line of credit matures on* November 16, 2026*.

In* October 2023,PCBB extended a $50.0 million unsecured Fed Funds Borrowing Facility to the Bank. The Bank must maintain a minimum demand deposit account average balance of $250,000 with PCBB. Availability of funds arenot* guaranteed and facility usage is generally limited toten consecutive days. Available borrowing capacity was $50.0 million at* December 31, 2025*. A borrowing test was performed in* June 2025.This credit facility is authorized for use through December 2027.*

FHLB advances, line of credit, and subordinated debt outstanding by type of advance were as follows:

The maximum and average outstanding balances and average interest rates on FHLB overnight variable-rate advances were as follows:

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The maximum and average outstanding balances and average interest rates on FHLB long-term, fixed-rate advances were as follows:

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

The maximum and average outstanding balances and average interest rates on the line of credit were as follows:

The maximum and average outstanding balances and average interest rates on subordinated debt were as follows:

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Note10 - Income Taxes

Income tax expense is substantially due to Federal income taxes. The Company accrues a provision for income tax for certain states in which we have both employees and collateral for loans, thereby creating nexus in those states for income tax purposes. The provision for income taxes for the periods shown is summarized as follows:

A reconciliation of the tax provision (benefit) based on statutory corporate tax rates, estimated to be 21% for the year ended* December 31, 2025*, on pre-tax income and the provision (benefit) shown in the accompanying Consolidated Statements of Operations for the periods shown is summarized as follows:

The following table presents income taxes paid (net of refunds) by jurisdiction for the periods shown:

As a result of the bad debt deductions taken in years prior to1988, retained earnings include accumulated earnings of approximately $6.4 million, on which federal income taxes havenot been provided. If, in the future, this portion of retained earnings is used for any purpose other than to absorb losses on loans or on property acquired through foreclosure, federal income taxes* maybe imposed at the then-prevailing corporate tax rates. The Company doesnot* contemplate that such amounts will be used for any purpose that would create a federal income tax liability; therefore,no provision has been made.

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Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. These calculations are based on many complex factors including estimates of the timing of reversals of temporary differences, the interpretation of federal income tax laws, and a determination of the differences between the tax and the financial reporting basis of assets and liabilities. Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax assets and liabilities.

As of* December 31, 2025*, the Company has a cumulative Federal net operating loss of $19.9 million. This net operating loss isnot subject to expiration and is able to offset80% of taxable income in each future year. We believe there will be sufficient income in future years to utilize the loss and, therefore, a valuation allowance isnot necessary. In2023, the Company wrote off its investment in Quin Ventures. The $8.4 million tax loss as a result of the investment being written off contributed to an overall Federal net operating loss carryforward of $8.0 million which was included in the Company's consolidated tax provision for the year ended* December 31, 2024*.

The Company applies the provisions of FASB ASC740 that require the application of a more-likely-than-not recognition criterion for the reporting of uncertain tax positions on its financial statements. The Company hadno unrecognized tax assets at* December 31, 2025and2024*. Interest and penalties are recognized in income tax expense. The Company recognizedno interest or penalties during the years ended* December 31, 2025and2024*. The Company files consolidated income tax returns in the U.S. federal jurisdiction and isno longer subject to tax examinations for years ending before* December 31,*2022.

The components of net deferred tax assets and liabilities at the periods shown are summarized as follows:

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Note11 - Benefit Plans

Single-employer Pension Plan

Effective* March 23, 2021,the Company established the First Federal Defined Benefit Plan ("Bank DB Plan"), a single-employer plan. On March 23, 2021,*all assets and liabilities were transferred from the prior Pentegra Defined Benefit Plan for Financial Institutions to the newly established Bank DB Plan.

The Bank DB Plan is a defined benefit pension plan covering current and former employees. Benefits available under the plan are frozen. As a result,no new participants are allowed. The plan provides defined benefits based on years of service and final average salary prior to the freeze. The measurement date for this plan is* December 31.*

A related prior service cost of $1.2 million and $1.3 million, net of tax, was included in accumulated other comprehensive loss on the Company's balance sheet at* December 31, 2025* and2024, respectively. The prior service cost is expected to be amortized over 15 years.

The following table summarizes the changes in benefit obligations and plan assets for the periods shown:

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The Company doesnot expect to make a contribution to the Bank DB Plan in2026. It is the policy of the Company to fundno less than the minimum funding amount required by ERISA. The following table sets forth the components of net periodic benefit cost and other amounts recognized in accumulated other comprehensive loss for the periods shown:

The expected long-term return on plan assets assumption was developed as a weighted average rate based on the target asset allocation of the plan and the Long-Term Capital Market Assumptions for the corresponding fiscal year end. Gains and losses are recognized in accordance with the standard amortization provisions of the applicable accounting guidance. The Company's net periodic benefit income recognized for the Bank DB Plan is sensitive to the discount rate and expected return on plan assets.

From initial funding in thefirst quarter of2021 through* December 31, 2025*, the Bank DB Plan assets have been invested primarily in fixed income and large U.S. equity funds, with additional investments in international equity, real estate, and small/mid-range U.S. equity funds. The target allocations for2026 by asset category are presented in the table below.

Benefit payments projected to be made from the Bank DB Plan are as follows:

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Fair value measurements, including descriptions of Level1, 2, and3 of the fair value hierarchy and the valuation methods employed by the Company are provided in Note15 - Fair Value Measurements. Plan investment assets measured at fair value by level and in total are as follows:

Nonqualified Deferred Compensation Plan

First Fed also sponsors a nonqualified Deferred Compensation Plan ("DCP") for members of the Board of Directors and eligible officer-level employees. This plan, approved by the Board on* February 1, 2012,allows eligible participants to defer and invest a portion of their earnings in a selection of investment options identified in the plan atno* expense to First Fed. All deferrals are remitted to Principal, the Plan Administrator, and held in a trust. The aggregate balance held in trust at* December 31, 2025*, was $1.4 million. The Company's obligation to make payments under the DCP is a general obligation of the Company and is to be paid from the Company's general assets. As such, participants are general unsecured creditors of the Company with respect to their participation of the plan. The market value of the DCP assets is recorded in "other assets" and the related liability to participants is recorded in "other liabilities" on the Balance Sheet.

The Company also has agreements with certain key officers that provide for potential payments upon retirement, disability, termination, change in control and death.

401(k) Plan

First Fed maintains a single-employer401(k) plan. Employees* maycontribute up to 100% of their pre-tax compensation to the401*(k) plan, subject to regulatory limits. First Fed provides matching funds of 50% limited to thefirst 6% of salary contributed. First Fed's contributions were $554,000 and $543,000 during the years ended* December 31, 2025and December 31, 2024*, respectively.

Employee Stock Ownership Plan

In connection with the mutual to stock conversion, the Company established an ESOP for eligible employees of the Company and the Bank. Employees of the Company who have been credited with at least 1,000 hours of service during a 12-month period are eligible to participate in the ESOP.

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Pursuant to the Plan, the ESOP purchased in the open market 8% of the common stock originally issued in the mutual to stock conversion. As of* December 31, 2025*,1,048,029 shares, or 100% of the total, have been purchased in the open market at an average price of $12.45 per share with funds borrowed from First Northwest. The Bank will make contributions to the ESOP in amounts necessary to amortize the ESOP loan payable to First Northwest over a period of 20 years, bearing estimated interest at 2.46%.

Shares purchased by the ESOP with the loan proceeds are held in a suspense account and allocated to ESOP participants on a pro rata basis as principal and interest payments are made by the ESOP to the Company. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank's discretionary contributions to the ESOP and earnings on the ESOP assets. Annual principal and interest payments of $835,000 and $837,000 were made by the ESOP during the years ended* December 31, 2025and2024*, respectively.

As shares are committed to be released from collateral, the Company reports compensation expense equal to the average daily market prices of the shares and the shares become outstanding for EPS computations. The compensation expense is accrued monthly throughout the year. Dividends on allocated and unallocated ESOP shares will be recorded as a reduction of debt and accrued interest.

Compensation expense related to the ESOP for the years ended* December 31, 2025and2024*, was $376,000 and $353,000, respectively.

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

Stock-based Compensation

In* May 2020,the Company's shareholders approved the First Northwest Bancorp2020* Equity Incentive Plan ("2020 EIP"), which provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock shares or restricted stock units, and performance share awards to eligible participants through* May 2030.The cost of awards under the2020* EIP generally is based on the fair value of the awards on their grant date. The maximum number of shares that* maybe utilized for awards under the2020* EIP is 520,000. At* December 31, 2025*, there were 95,789 total shares available for grant under the2020 EIP, all of which are available to be granted as restricted shares, performance shares, options or stock appreciation rights.

As a result of the approval of the2020 EIP, the First Northwest Bancorp2015 Equity Incentive Plan (the*"2015* EIP") was frozen andno additional awards will be made. As of* December 31, 2025,there wereno shares available for grant under the2015* EIP. The final shares granted under the2015 EIP vested in thesecond quarter of2025.

There were 151,650 and 81,181 shares of restricted stock awarded, respectively, during the years ended* December 31, 2025and2024*. Restricted share awards vest ratably over periods ranging fromone tofive years from the date of grant provided the eligible participant remains in service to the Company. The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the grant date amortized over the vesting period.

In addition, there were 33,251 andno performance shares awarded, respectively, during the years ended* December 31, 2025and2024*. Performance share awards vest in accordance with the terms outlined in each award agreement. The Company recognizes compensation expense for the performance share awards based on the fair value of the shares at the grant date amortized over the performance period.

For the years ended* December 31, 2025and2024*, total stock compensation expense for the2015 and2020 EIPs was $733,000 and $957,000, respectively.

Included in the above stock compensation expense for the years ended* December 31, 2025and2024*, was directors' stock compensation of $248,000 and $242,000, respectively.

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The following tables provide a summary of changes in non-vested restricted awards for the year ended* December 31, 2025*:

(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the participant's tax obligation of the vested shares. The surrendered shares are canceled and are unavailable for reissue.

As of* December 31, 2025*, there was $1.1 million of total unrecognized compensation cost related to non-vested restricted shares. The cost is expected to be recognized over the remaining weighted-average vesting period which is approximately 2.20 years.

Note12 - Regulatory Capital Requirements

Under Federal regulations, pre-conversion retained earnings are restricted for the protection of pre-conversion depositors. The Company is a financial holding company under the supervision of the Federal Reserve Bank of San Francisco. Financial holding companies are subject to capital adequacy requirements of the Federal Reserve Board under the Bank Holding Company Act of1956, as amended, and the regulations of the Federal Reserve Board. The Bank is a federally insured institution and thereby is subject to the capital requirements established by the FDIC. The Federal Reserve Board capital requirements generally parallel the FDIC requirements. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions arenot applicable to financial holding companies.

The minimum requirements are a ratio of common equity Tier1 capital ("CET1 capital") to total risk-weighted assets the ("CET1 risk-based ratio") of 4.5%, a Tier1 capital ratio of 6.0%, a total capital ratio of 8.0%, and a leverage ratio of 4.0%. In addition to the minimum regulatory capital ratios, First Northwest and First Fed must maintain a capital conservation buffer consisting of additionalCET1 capital greater than 2.5% of risk-weighted assets in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of retained income that could be utilized for such actions. At* December 31, 2025*, the Bank's CETI capital exceeded the required capital conservation buffer.

At periodic intervals, banking regulators routinely examine First Northwest and First Fed as part of their legally prescribed oversight of the banking industry. A future examination could include a review of certain transactions or other amounts reported in the Company's consolidated financial statements. Based on these examinations, the regulators can direct that the Company's consolidated financial statements be adjusted in accordance with their findings. In view of the uncertain regulatory environment in which First Northwest and First Fed operate, the extent, if any, to which a forthcoming regulatory examination* may*ultimately result in adjustments to the accompanying consolidated financial statements cannot presently be determined.

At* December 31, 2025*, First Fed exceeded all regulatory capital requirements. As of* December 31, 2025*, the most recent regulatory notifications categorized First Fed as "well capitalized" under the regulatory framework for prompt corrective action. To be categorized as "well capitalized," the Bank must maintain minimum total risk-based,CET1 risk-based, Tier1 risk-based, and Tier1 leverage ratios as set forth in the following table. There areno conditions or events since that notification that management believes have changed First Fed’s category.

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Actual and required capital amounts and ratios are presented for First Fed in the following table:

Note13 - Related Party Transactions

Certain directors and executive officers are also customers who transact business with First Fed. All loans and commitments included in such transactions were made in compliance with applicable laws on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons and donot involve more than the normal risk of collectability or present any other unfavorable features.

The following table presents the activity in loans to directors and executive officers for the periods shown:

Deposits and certificates from related parties totaled $8.4 million and $7.0 million at* December 31, 2025and2024*, respectively.

Note14 - Commitments and Contingencies

First Fed is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments generally represent a commitment to extend credit in the form of loans. The instruments involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the consolidated balance sheets.

First Fed’s exposure to credit loss, in the event of nonperformance by the other party to the financial instrument for commitments to extend credit, is represented by the contractual notional amount of those instruments. First Fed uses the same credit policies in making commitments as it does for on-balance-sheet instruments. Management doesnot anticipate any material loss as a result of these transactions.

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Commitments to extend credit are agreements to lend to a customer as long as there isno violation of any condition established by the contract. Commitments generally have fixed expiration dates or other termination clauses and* mayrequire payment of a fee. Since many of these commitments are expected to expire without being drawn upon, the total commitment amounts donot* necessarily represent future cash requirements. First Fed evaluates each customer’s creditworthiness on a case-by-case basis. First Fed didnot incur any significant losses on its commitments for the years ended* December 31, 2025*, and2024.

The following financial instruments were outstanding whose contract amounts represent credit risk at:

The Company has future funding obligations related to partnership investments, with remaining off‑balance sheet commitments totaling $2.3 million.

Low-Income Housing Tax Credit Investments - The carrying value of the unconsolidated LIHTC investment was $4.1 million and $4.5 million at* December 31, 2025* and2024, respectively. During the years ended* December 31, 2025and2024*, the Company recognizedtax benefits of $14,000 and $292,000 and proportional amortization of $13,000 and $251,000, respectively.

Total unfunded contingent commitments related to the Company’s LIHTC investment totaled $1.4 million and $2.4 million, at* December 31, 2025* and2024, respectively. The Company expects to fund LIHTC commitments of $1.3 million during the year ending* December 31, 2026*, with the remaining commitment of $24,000 funded prior to* December 31, 2027*. There wereno impairment losses on the Company’s LIHTC investment during the years ended* December 31, 2025* and2024.

Legal contingencies - In the normal course of business, the Company* mayhave various legal claims and other similar contingent matters outstanding for which a loss maybe realized. For these claims, the Company establishes a liability for contingent losses when it is probable that a loss has been incurred and the amount of loss can be reasonably estimated. For claims determined to be reasonably possible butnot* probable of resulting in a loss, a liability willnot be reserved but the amount of loss or a range of possible losses* may*be disclosed if the amount can be reasonably estimated.

Water Station Management Litigation

As the Company previously disclosed, on* August 27, 2024,involuntary bankruptcy proceedings were commenced against Creative Technologies, LLC, Water Station Management, LLC ("Water Station Management") and Refreshing USA, LLC (collectively the "OpCo Debtors"), certain of which were borrowers of the Bank. In addition, on September 5, 2024,Ideal Property Investments LLC ("Ideal" and, together with the OpCo Debtors, the "Debtors"), also a borrower of the Bank, filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the Eastern District of Washington. On November 8, 2024,*Ideal commenced an adversary proceeding in such bankruptcy proceedings against the Bank, seeking to avoid certain transactions with the Bank under a theory of constructive fraudulent transfer or, in the alternative, to recharacterize them (the "Adversary Proceeding").

On* July 17, 2025,the Bank, the OpCo Debtors, Ideal and the Joint Official Committee of Unsecured Creditors of the Debtors entered into a Settlement Agreement, Plan Support Agreement and Release (the "Settlement Agreement") to resolve the Adversary Proceeding and any other claims of the parties. Pursuant to the Settlement Agreement, the Bank agreed, in exchange for, among other things, a release of all claims of the parties to the Settlement Agreement, to (i) release certain liens against the property of the Debtors and (ii) make certain cash payments ofnot* less than $2.87 million andnot more than $5.74 million, with the amount within that range to be determined by the percentage of certain unsecured creditors of the OpCo Debtors that enter into a mutual release of all claims related to the Debtors with the Bank and the Company under the OpCo Debtors’ Chapter11 plan of liquidation. The OpCo Debtors' Chapter11 plan of liquidation was confirmed on* September 9, 2025,with more than the 80% threshold of eligible creditors opting in to a mutual release under which they released claims against the Company in exchange for a reciprocal release, and the remainder of eligible creditors choosingnot* to release claims against the Company or obtain a reciprocal release.

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The Bank subsequently paid the amounts required under the Settlement Agreement, utilizing $5.74 million of the $5.75 million previously reserved in thefirst quarter of2025 as a noninterest expense. The Bank pursued reimbursement from its insurance carrier. The insurance carrier paid $3.3 million of legal and settlement fees directly tothird parties. In addition, the Bank received a $1.7 million insurance reimbursement in* October 2025*to offset costs associated with the litigation described above, which is included in other income.

Pursuant to the terms of the Settlement Agreement, the Bank maintains an unsecured creditors' claim in the amount of $30.6 million. The Bank is uncertain about the total amount that* maybe recovered from this claim through the bankruptcy proceeding and, therefore, hasnot* established a receivable or income for this matter.

3|5|2 Capital Litigation

On* June 10, 2025,3|5|2 Capital GP LLC, on behalf of3|5|2 Capital ABS Master Fund LP (collectively,"3|5|2 Capital"), filed a complaint (the"3|5|2* Complaint") against First Fed, in the Superior Court of the State of Washington for King County, arising from3|5|2 Capital’s alleged investment in bonds of Water Station Management. The3|5|2 Complaint alleges that Water Station Management and certain affiliated individuals and entities misappropriated over $100 million by using the proceeds from a bond offering to repay earlier investors and creditors, including the Bank, rather than for the disclosed purpose of expanding Water Station Management’s business. The3|5|2 Complaint asserts claims against the Bank for aiding and abetting the alleged fraud, conspiracy to commit fraud, unjust enrichment, and constructive trust, and seeks various forms of relief, includingnot less than $106.9 million in compensatory damages plus interest, unspecified punitive damages, and attorneys' fees and costs. The Company strongly disputes the allegations contained in the3|5|2 Complaint and is vigorously defending against the claims. On* September 30, 2025,First Fed filed its Answer, Affirmative Defenses, and Counterclaims, which include a counterclaim alleging that3|5|2* Capital aided and abetted a fraudulent scheme perpetrated by Ryan Wear, Water Station, and certain affiliated entities, causing damage to the Bank.

On* January 30, 2026,First Fed filed its Amended Answer, Affirmative Defenses, and Counterclaims adding Leucadia Asset Management, LLC to the litigation with3|5|2* Capital. The Bank is now waiting for a response.

Socotra REIT I Litigation

On* October 17, 2025,Socotra REIT I, LLC filed a complaint (the "Socotra Complaint") against First Fed, in the Superior Court of the State of Washington for King County. The Socotra Complaint alleges that First Fed made misrepresentations, committed fraudulent acts, converted funds, and violated Washington’s Consumer Protection Act in connection with a $7.7 million commercial loan from Socotra to Ideal that paid down $4.0 million in First Fed secured obligations, and seeks unspecified damages including restitution, statutory penalties, and attorneys' fees and costs. The Company strongly disputes the allegations contained in the Socotra Complaint and intends to vigorously defend against the claims made therein. On December 8, 2025,*First Fed filed its Answer and Affirmative Defenses. The Bank is now waiting for a response.

Significant group concentrations of credit risk - Concentration of credit risk is the risk associated with a lack of diversification, such as having substantial loan concentrations in a specific type of loan within First Fed’s loan portfolio, thereby exposing First Fed to greater risks resulting from adverse economic, political, regulatory, geographic, industrial, or credit developments. Loans toone borrower are subject to the state banking regulations general limitation of20 percent of First Fed’s equity, excluding accumulated other comprehensive income (loss). At* December 31, 2025and2024*, First Fed’s most significant concentration of credit risk was in loans secured by real estate. These loans totaled approximately $1.25 billion and $1.33 billion, or 76.9% and 78.3%, of First Fed’s total loan portfolio at* December 31, 2025and2024*, respectively. Real estate construction, including land acquisition and land development, commercial real estate, multi-family, home equity, andone-to-four family residential loans, are included in the total loans secured by real estate for purposes of this calculation.

At* December 31, 2025and2024*, First Fed’s most significant investment portfolio exposure was with U.S. Government, its agencies, and Government-Sponsored Enterprises ("GSEs"). First Fed’s exposure, which results from positions in securities issued by the U.S. Government, its agencies, and securities guaranteed by GSEs, was $123.0 million and $134.7 million, or 43.4% and 38.0% of First Fed’s total investment portfolio (including FHLB stock), at* December 31, 2025and2024*, respectively. At* December 31, 2025and2024*, First Fed'ssecond most significant investment concentration of credit risk was from municipal bonds totaling $80.3 million and $77.9 million, or 28.3% and 22.0% of the total investment portfolio, respectively.

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Note15 - Fair Value Measurements

Fair value is the price to sell an asset or transfer a liability in an orderly transaction between market participants in the Company’s principal market. The Company has established and documented its process for determining the fair values of its assets and liabilities, where applicable. Fair value is based on quoted market prices, when available, for identical or similar assets or liabilities. In the absence of quoted market prices, management determines the fair value of the Company’s assets and liabilities using valuation models orthird-party pricing services, both of which rely on market-based parameters when available, such as interest rate yield curves, option volatilities and credit spreads, or unobservable inputs. Unobservable inputs* may*be based on management’s judgment, assumptions, and estimates related to credit quality, liquidity, interest rates, and other relevant inputs.

Any changes to valuation methodologies are reviewed by management to ensure they are relevant and justified. Valuation methodologies are refined as more market-based data becomes available.

Athree-level valuation hierarchy is used in determining fair value that is based on the transparency of the inputs used in the valuation process. The inputs used in determining fair value in each of thethree levels of the hierarchy are as follows:

Level1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level2 - Either: (i) quoted prices for similar assets or liabilities; (ii) observable inputs, such as interest rates or yield curves; or (iii) inputs derived principally from or corroborated by observable market data.

Level3 - Unobservable inputs.

The hierarchy gives the highest ranking to Level1 inputs and the lowest ranking to Level3 inputs. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the overall fair value measurement.

The Company used the following methods to measure fair value on a recurring and nonrecurring basis.

Securities available for sale: Where quoted prices are available in an active market, securities are classified as Level1. Level1 instruments include highly liquid government bonds, securities issued by the U.S. Treasury, and exchange-traded equity securities. If quoted prices arenot available, management determines fair value using pricing models, quoted prices of similar securities, which are considered Level2, or discounted cash flows. In certain cases, where there is limited activity in the market for an instrument, assumptions must be made to determine their fair value. Such instruments are classified as Level3.

Sold loan servicing rights, at fair value: The fair value of sold loan servicing rights is determined through a discounted cash flow analysis, which uses interest rates, prepayment speeds, discount rates, and delinquency rate assumptions as inputs. Servicing rights are classified as Level3 due to reliance on assumptions used in the valuation.

Loans receivable, net: The fair value of loans is estimated by discounting the future cash flows using the current rate at which similar loans and leases would be made to borrowers with similar credit and for the same remaining maturities. Additionally, to be consistent with the requirements under FASB ASC Topic820 for Fair Value Measurements and Disclosures, the loans were valued at a price that represents the Company’s exit price or the price at which these instruments would be sold or transferred.

Interest rate swap derivative: The fair values of interest rate swap agreements are based on valuation models using observable market data as of the measurement date (Level2). The Company’s derivatives are traded in an over-the-counter market where quoted market prices arenot always available. Therefore, the fair values of derivatives are determined using quantitative models that utilize multiple market inputs. The inputs will vary based on the type of derivative, but could include interest rates, prices and indices to generate continuous yield or pricing curves, prepayment rates, and volatility factors to value the position. The majority of market inputs are actively quoted and can be validated through external sources, including market transactions andthird-party pricing services. The fair values of all interest rate swaps are determined fromthird-party pricing services without adjustment.

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Assets and liabilities measured at fair value on a recurring basis - Assets and liabilities are considered to be fair valued on a recurring basis if fair value is measured regularly (i.e., daily, weekly, monthly, or quarterly). The following tables show the Company’s assets and liabilities measured at fair value on a recurring basis at the dates indicated:

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The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level3 and measured at fair value on a recurring basis at the date indicated:

The following tables summarize the changes in Level3 assets measured at fair value on a recurring basis, at the dates indicated:

Assets measured at fair value on a nonrecurring basis - Assets are considered to be fair valued on a nonrecurring basis if the fair value measurement of the instrument doesnot necessarily result in a change in the amount recorded on the consolidated balance sheets. Generally, nonrecurring valuation is the result of the application of other accounting pronouncements that require assets or liabilities to be assessed for impairment or recorded at the lower of cost or fair value.

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

At* December 31, 2025and2024*, there wereno collateral-dependent loans with discounts to appraisal disposition value or other unobservable inputs.

(1) Discount to appraisal disposition value.

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

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Note16 - Earnings per Common Share

Thetwo-class method is used for computing basic and diluted earnings per share. Under thetwo-class method, EPS is determined for each class of common stock and participating security according to dividends declared and participating rights in undistributed earnings. The Company has issued restricted shares under share-based compensation plans which qualify as participating securities.

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

Potentially dilutive shares are excluded from the computation of EPS if their effect is anti-dilutive. For the years ended* December 31, 2025and2024*, anti-dilutive shares as calculated under the treasury stock method totaled 27,365 and 20,468, respectively. All potentially dilutive shares are anti-dilutive when a loss per share is recorded and, as a result, are excluded from the diluted earnings per share calculation.

Note17 - Derivatives and Hedging Activities

The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.

Fair Value Hedges of Interest Rate Risk

The Company is exposed to changes in the fair value of certain of its fixed-rate assets due to changes in benchmark interest rates. The Company uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the designated benchmark interest rate. Interest rate swaps designated as fair value hedges involve the payment of fixed-rate amounts to a counterparty in exchange for the Company receiving variable-rate payments over the life of the agreement without the exchange of the underlying notional amount.

For derivatives designated and that qualify as fair value hedges, the gain or loss on the derivative as well as the offsetting loss or gain on the hedged item attributable to the hedged risk are recognized in interest income.

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At* December 31, 2025and2024*, the following amounts were recorded on the balance sheet related to cumulative basis adjustment for fair value hedges.

(1) These amounts include the amortized cost basis of a closed portfolio of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. At* December 31, 2025and2024*, the amortized cost basis of the closed portfolio used in this hedging relationship was $56.1 million, and $56.7 million, respectively; the cumulative basis adjustments associated with this hedging relationship was $980,000 and $220,000, respectively; and the amount of the designated hedged items was $50.0 million for both periods.

(2) These amounts include the amortized cost basis of a closed portfolio of loans receivable used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period. At* December 31, 2025and2024*, the amortized cost basis of the closed portfolio used in this hedging relationship was $213.3 million and $258.1 million, respectively; the cumulative basis adjustments associated with this hedging relationship was $903,000 and $188,000, respectively; and the amount of the designated hedged items was $100.0 million for both periods.

The following table summarizes the Company’s derivative instruments at the date indicated. The Company has master netting agreements with derivative dealers with which it does business, but reflects gross assets and liabilities as "Other assets" and "Other liabilities," respectively, on the Consolidated Balance Sheets, as follows:

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

Credit Risk-related Contingent Features

The Company is exposed to credit-related losses in the event of nonperformance by counterparties to hedging instruments. The counterparties to all derivative transactions are major financial institutions with investment grade credit ratings. However, this doesnot eliminate the Company’s exposure to credit risk with these institutions. This credit risk is limited to the unrealized gains in such contracts should any of these counterparties fail to perform as contracted.

The Company has interest rate swap agreements with its derivative counterparty that contain provisions where if the Company either defaults or fails to maintain its status as a well or adequately capitalized institution, then the Company could be required to terminate the contract or post additional collateral. At* December 31, 2025*, the Company had derivatives in a net liability position related to this agreement. The Company has minimum collateral posting thresholds with its derivative counterparty and has posted cash of $3.5 million at* December 31, 2025*, to secure the interest rate swap agreements as needed. In certain cases, the Company will have posted excess collateral compared to total exposure due to initial margin requirements or day-to-day rate volatility.

As of* December 31, 2025*, the Company was in compliance with all credit risk-related contingent features. Given the considerations described above, the Company considers the impact of the risk of counterparty default to be immaterial.

Note18 - Change in Accumulated Other Comprehensive Loss ("AOCI")

AOCI includes unrealized gain (loss) on available-for-sale securities, defined benefit plan assets and derivatives as well as an unrecognized defined benefit plan prior service cost. The following table presents changes to accumulated other comprehensive loss after-tax for the periods shown:

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Note19 - Segment Reporting

First Fed is engaged in the business of attracting deposits and providing lending services. Substantially all income is derived from a diverse base of commercial, mortgage, and consumer lending activities and investments. The Company’s activities are considered to be a single industry segment for financial reporting purposes. The chief operating decision maker ("CODM") is comprised of the chief executive officer and the chief financial officer.

The accounting policies of the Bank are the same as those described in the summary of significant accounting policies in Note1. The CODM assesses performance for the Bank and decides how to allocate resources based on net income that is reported on the income statement as consolidated net income. The measurement of segment assets is reported on the balance sheet as total consolidated assets.

The CODM uses net income to evaluate income generated from the segment assets (return on assets) in deciding whether to reinvest profits into the Bank or into other parts of the entity, such as to pay dividends or a share repurchase plan. Net income is used to monitor budget versus actual results and assess the performance of the Bank.

The Company generates revenue from interest income, fee income and other noninterest income from investments and services. All operations are based in Washington State.No single customer accounts for more than10% of total revenue.

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Note20 - Parent Company Only Financial Statements

Presented below are the condensed balance sheets, statements of operations, and statements of cash flows for First Northwest.

Condensed Balance Sheets

Condensed Statements of Operations

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Condensed Statements of Cash Flows

Note21 - Subsequent Events

Subsequent to* December 31, 2025,the Bank announced the closure of its Bellevue branch, with operations scheduled to cease on April 30, 2026.The decision followed management’s evaluation of branch performance, customer migration to digital channels, and alignment of the Company’s long‑term strategic objectives. The Company recorded $631,000 in other noninterest expense and $50,000 in compensation expense for the year ended December**31,2025,* which included one‑time closure‑related expenses for anticipated lease termination costs, severance, and equipment decommissioning. Additional costs* may*be recognized in future periods. The branch’s deposits and customer relationships will continue to be serviced through the Bank's online and mobile platforms, ATM network and branches with minimal service disruption.

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Also subsequent to* December 31, 2025,the Company signed an agreement to redeem its general partnership interest in MWGC in full at par and received the cash distribution of $150,000 in February 2026.No gain or loss was recorded as a result of this redemption. At the same time, the Bank signed a redemption agreement which sets forth the path to unwind its $6.0 million limited partnership investment in the Hero Fund through capital distributions beginning in April 2026.The Bank anticipates receiving the full amount invested, withno* gain or loss recorded, as a result of the future redemption.

On* March 10, 2026,the Company became aware that its $2.0 million investment in subordinated debt maybe approaching payment default. The issuer has requested a loan modification in advance of the interest payment due on March 15, 2026.If a modification agreement isnot* reached, there is a strong likelihood that the issuer willnot be able to meet the scheduled interest payment dueno later than* March 25, 2026,including the10*-day grace period, which would place the subordinated debt in default. Management is actively monitoring the situation. Management is also assessing the likelihood and timing of recovery, including possible legal actions.No adjustments have been made to the* December 31, 2025,*financial statements as this event occurred after the balance sheet date.

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