What the changes say
- Executive departures in 2025 and early 2026 create significant leadership continuity risks for the bank.
- Large loan concentrations and nonperforming assets of $24.0 million threaten financial stability.
What changed since the prior 10-K
New
- New
We may be impacted by the actions, soundness or creditworthiness of other financial institutions, which can cause disruption within the industry and increase expenses
The failure or distress of other financial institutions could cause industry disruptions, increased credit risk, withdrawals of uninsured deposits, and stricter regulations.
- New
Failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitability
Inability to keep pace with rapid technological changes in the financial services industry could harm our competitive position.
- New
We depend on the accuracy and completeness of information provided by customers and counterparties
Relying on inaccurate or fraudulent financial information provided by customers and counterparties could adversely affect credit decisions.
- New
We may not be able to measure and limit our credit risk adequately, which could adversely affect our profitability
Nonperforming assets stood at $24.0 million, or 1.1% of total assets, as of December 31, 2025.
- New
Our enterprise risk management program may not be effective at mitigating the risks to which we are subject, based upon our size, scope, and complexity
Our enterprise risk management program and analytical models may fail to identify or mitigate unknown risks.
- New
If we fail to maintain effective internal control over financial reporting or remediate any future material weakness in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraud
Failure to maintain effective internal control over financial reporting could result in undetected material misstatements or fraud.
- New
Our business may be adversely impacted by litigation and regulatory enforcement actions, which could expose us to significant liabilities and/or damage our reputation
We face ongoing litigation risks, including active legal proceedings with 3|5|2 Capital and Socotra.
- New
As a regulated entity, we are subject to capital requirements, and a failure to meet these standards could adversely affect our financial condition
Failure to meet regulatory capital and liquidity requirements could restrict dividend payments and stock repurchases.
- New
As a holding company, First Northwest depends on dividends and distributions from First Fed for liquidity and to pay dividends, if any
We suspended cash dividends on our common stock starting in May 2025 and depend on First Fed subsidiary dividends for liquidity.
- New
Our reputation is critical to our business, and damage to it could have an adverse effect on us
Reputational damage from litigation involving 3|5|2 Capital and Socotra or employee errors could harm our business.
- New
We are subject to laws regarding the privacy, information security, and protection of personal information, and any violation of these laws or other incidents involving personal, confidential, or proprietary information of individuals could damage our reputation and otherwise adversely affect our business
We are subject to the GLBA and privacy laws governing the protection of customer and employee personally identifiable information.
- New
We are subject to numerous fair lending laws and other laws and regulations designed to protect consumers, and failure to comply with these laws could lead to a wide variety of sanctions
Violation of fair lending laws such as the Equal Credit Opportunity Act could lead to FDIC or DOJ sanctions.
- New
The price of our common stock may be volatile or may decline
Dropped
- Dropped
An increase in unsecured lending exposes us to an increase in loan losses
- Dropped
The significant growth in our loan portfolio and expansion into new markets may increase our credit risk
- Dropped
If our nonperforming assets increase, our earnings will be adversely affected
Reworded
- 78% rewritten
We have a concentration of large loans outstanding to a limited number of borrowers that increases our risk of loss
Updated top borrower figures for December 31, 2025, showing top five borrower commitments at $88.8 million and top ten relationships at $146.5 million.
- 63% rewritten
We are dependent on key personnel and the loss of one or more of those key persons may materially and adversely affect our prospects
Added disclosures detailing the 2025 and 2026 departures of the President/CEO, Chief Banking Officer, Chief Strategy Officer, and Chief Operating Officer.
- 54% rewritten
Competition for deposits may limit our ability to grow
Text formatting and punctuation were adjusted with no material change to deposit competition disclosures.
- 38% rewritten
Public health crises , geopolitical developments, acts of terrorism, natural disasters, climate change and other events out of our control could harm our business
Expanded disaster impact scope to explicitly include disruptions to customers, counterparties, and service providers.
Was: Public health crises, geopolitical developments, acts of terrorism, natural disasters, climate change and other external factors could harm our business
- 38% rewritten
Our business may be adversely affected by credit risk associated with residential real estate
Updated residential mortgage portfolio figures to $461.8 million, representing 28.4% of total loans as of December 31, 2025.
- 24% rewritten
Our expansion strategy will cause our expenses to increase and may negatively affect our earnings
Updated branch and business center operational history to eight years and three business centers.
- 22% rewritten
We operate in a highly competitive industry
Expanded competitive landscape definitions to include community banks and alternative investment vehicles.
- 21% rewritten
A portion of our loan portfolio is serviced by third parties, which may limit our ability to foreclose on or repossess such loans
Updated third-party serviced loan balances to $141.9 million for consumer, $24.0 million for commercial real estate, and $13.3 million for one-to-four family loans.
- 21% rewritten
Our construction and land loans are based upon estimates of costs and the value of the completed project
All 38 risk factors
Headings as the filing states them, in filing order.
Other
- 01Our business and operations are concentrated in Washington, and adverse economic conditions in that area could adversely impact our earnings and could increase the credit risk associated with our loan portfolio
- 02The amount of our deposits may decrease and the composition of our deposits may be adversely affected
- 03Conditions in the financial markets may limit our access to additional funding to meet our liquidity needs, which could adversely affect our earnings and capital levels
- 04Competition for deposits may limit our ability to grow54% rewritten
- 05Public health crises , geopolitical developments, acts of terrorism, natural disasters, climate change and other events out of our control could harm our business38% rewritten
- 06We may be impacted by the actions, soundness or creditworthiness of other financial institutions, which can cause disruption within the industry and increase expensesNew
- 07We operate in a highly competitive industry22% rewritten
- 08Failure to keep up with the rapid technological changes in the financial services industry could have an adverse effect on our competitive position and profitabilityNew
- 09Our emphasis on commercial real estate lending subjects us to various risks that could adversely impact our results of operations and financial condition
- 10We have a concentration of large loans outstanding to a limited number of borrowers that increases our risk of loss78% rewritten
- 11Our construction and land loans are based upon estimates of costs and the value of the completed project21% rewritten
- 12Our business may be adversely affected by credit risk associated with residential real estate38% rewritten
- 13Repayment of our commercial business loans is often dependent on the cash flows of the borrower, which may be unpredictable, and the collateral securing these loans may fluctuate in value
- 14We depend on the accuracy and completeness of information provided by customers and counterpartiesNew
- 15Our allowance for credit losses on loans may prove to be insufficient to absorb losses in our loan portfolio
- 16We may not be able to measure and limit our credit risk adequately, which could adversely affect our profitabilityNew
- 17Our securities portfolio may be negatively impacted by fluctuations in market value and interest rates
- 18We may incur losses due to direct and indirect minority investments in fintech and specialty finance companies
- 19If our real estate owned is not properly valued or declines further in value, our earnings could be reduced
- 20We are subject to certain risks in connection with our use of networks and technology systems
- 21We support the ability of our customers to transact business through multiple automated methods. As such, we may be susceptible to fraud performed through these technologies
- 22We are subject to interest rate risk, which could adversely affect our earnings
- 23Our enterprise risk management program may not be effective at mitigating the risks to which we are subject, based upon our size, scope, and complexityNew
- 24If we fail to maintain effective internal control over financial reporting or remediate any future material weakness in our internal control over financial reporting, we may be unable to accurately report our financial results or prevent fraudNew
- 25Our business may be adversely impacted by litigation and regulatory enforcement actions, which could expose us to significant liabilities and/or damage our reputationNew
- 26Decreased volumes and lower gains on sales of loans could adversely impact our noninterest income
- 27A portion of our loan portfolio is serviced by third parties, which may limit our ability to foreclose on or repossess such loans21% rewritten
- 28As a regulated entity, we are subject to capital requirements, and a failure to meet these standards could adversely affect our financial conditionNew
- 29As a holding company, First Northwest depends on dividends and distributions from First Fed for liquidity and to pay dividends, if anyNew
- 30Our reputation is critical to our business, and damage to it could have an adverse effect on usNew
- 31Our lending limit may restrict our growth
- 32We operate in a highly regulated environment and may be adversely affected by changes in laws and regulations
- 33We are subject to laws regarding the privacy, information security, and protection of personal information, and any violation of these laws or other incidents involving personal, confidential, or proprietary information of individuals could damage our reputation and otherwise adversely affect our businessNew
- 34We are subject to numerous fair lending laws and other laws and regulations designed to protect consumers, and failure to comply with these laws could lead to a wide variety of sanctionsNew
- 35We are dependent on key personnel and the loss of one or more of those key persons may materially and adversely affect our prospects63% rewritten
- 36Our consideration of whole bank, branch acquisitions, or fintech partnerships in the future may expose us to financial, execution and operational risks that could adversely affect us
- 37Our expansion strategy will cause our expenses to increase and may negatively affect our earnings24% rewritten
- 38The price of our common stock may be volatile or may declineNew
Other First Northwest Bancorp 10-Ks
- FY2024 10-K risk factors28 risks
Concentrated exposure to Washington state real estate markets heavily influences credit risk and earnings potential. Commercial real estate loans total $723.0 million, representing 42.6% of the loan portfolio. Five largest borrowers account for $95.9 million in credit exposure.
Filed Mar 13, 2025
About this page
The headings are the filing's own. The one-line readings and the overview are automated and can be wrong: read Item 1A of the 10-K for the exact wording.