Note 9 - Borrowings

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Federal Home Loan Bank Advances, Disclosure [Text Block]

Note 9 - 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 than one 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, 2025 and 2024, 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, 2025 and 2024, 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, 2025 and 2024, respectively.

On March 25, 2021, the Company completed a private placement of $40.0 million of 3.75% fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors. The net proceeds to the Company from the sale of the Notes were approximately $39.3 million after deducting placement agent fees and other offering expenses. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory capital purposes. The Company used the net proceeds of the offering for general corporate purposes. Beginning in April 2026, the interest rate will reset quarterly to the three-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 in 2025 and the new terms allow a maximum extension of credit of $15.0 million. Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments. The Company was in compliance with all covenants at December 31, 2025, including fixed coverage, Tier 1 leverage, and risk-based capital ratio minimum requirements and classified assets to Tier 1 capital and Texas ratio maximum requirements. 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 are not guaranteed and facility usage is generally limited to ten 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:

(dollars in thousands)	December 31, 2025		December 31, 2024
Long-term advances	$	160,000	$	160,000
Overnight variable-rate advances		100,000		130,000
Line of credit		13,500		6,500
Subordinated debt, net		34,643		39,514

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

	For the Year Ended December 31,
(dollars in thousands)	2025			2024
Maximum outstanding at any month-end	$	130,000		$	270,000
Monthly average outstanding		87,500			137,750
Weighted-average daily interest rates
Annual		4.18	%		5.38	%
Period End		4.00	%		4.64	%
Interest expense during the period		3,832			6,937

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

	For the Year Ended December 31,
(dollars in thousands)	2025			2024
Maximum outstanding at any month-end	$	170,000		$	170,000
Monthly average outstanding		167,083			136,250
Weighted-average interest rates
Annual		3.86	%		3.35	%
Period End		4.03	%		3.63	%
Interest expense during the period		6,527			4,455

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

	December 31, 2025					December 31, 2024
(dollars in thousands)	Amount		Weighted- Average Interest Rate			Amount		Weighted- Average Interest Rate
Within one year or less	$	75,000		3.92	%	$	30,000		1.93	%
After one year through two years		60,000		3.97			55,000		3.86
After two years through three years		25,000		4.50			50,000		3.96
After three years through four years		—		—			25,000		4.50
Total FHLB long-term, fixed rate advances	$	160,000		4.03		$	160,000		3.63

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

	For the Year Ended December 31,
(dollars in thousands)	2025			2024
Maximum outstanding at any month-end	$	15,000		$	10,000
Monthly average outstanding		11,192			6,635
Weighted-average interest rates
Annual		8.07	%		9.41	%
Period End		7.25	%		8.00	%
Interest expense during the period		904			623

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

	For the Year Ended December 31,
(dollars in thousands)	2025			2024
Maximum outstanding at any month-end	$	39,527		$	39,514
Monthly average outstanding		35,542			39,475
Weighted-average interest yields
Annual		3.99	%		4.00	%
Period End		4.10	%		3.99	%
Interest expense during the period		1,419			1,578