First Northwest Bancorp

Item 8.01 Other Events As previously disclosed by First Northwest Bancorp (the "Company"), Socotra REIT I, LLC ("Socotra") filed a complaint on October 17, 2025, against the Company’s wholly owned subsidiary, First Fed Bank (the "Bank"), in the Superior Court of the State of Washington for King County alleging, among other things, misrepresentation, fraud, conversion, and violations of the Washington Consumer Protection Act in connection with a commercial loan transaction involving Ideal Property Investments LLC. The complaint sought unspecified damages, restitution, statutory penalties, attorneys' fees, and costs. On September 15, 2026, the Bank and Socotra entered into a Settlement Agreement & Mutual Release (the "Settlement Agreement") to resolve the claims asserted in the complaint, as well as certain related claims between the parties. Pursuant to the Settlement Agreement, the Bank agreed to make a cash payment of $1.3 million within 30 days of the date of the Settlement Agreement in exchange for a full release of claims and dismissal of the complaint with prejudice. The Company believes that resolving the dispute is in the best interests of the Bank, the Company, and its shareholders and avoids the estimated costs, uncertainties, and distraction associated with continued litigation. The Settlement Agreement reflects a compromise of disputed claims and does not constitute an admission of liability, wrongdoing, or fault by the Bank, the Company, or any other party.