LOANS AND ACL

3 Months Ended

Jun. 30, 2026

6. LOANS AND ACL

Loans receivable are reported net of deferred loan fees and discounts, and inclusive of premiums. Deferred loan fees totaled $4.2 million and $4.3 million at June 30, 2026 and March 31, 2026, respectively. Discounts and premiums on loans receivable totaled $988,000 and $1.5 million, respectively, at June 30, 2026, compared to $1.0 million and $1.6 million, respectively, at March 31, 2026. Loans receivable consisted of the following at the dates indicated (in thousands):


		June 30,			March 31,
		2026			2026
Commercial and construction
Commercial business		$	222,902		$	219,846
Commercial real estate			611,710			611,634
Land			13,168			9,143
Multi-family			102,956			103,614
Real estate construction			21,660			24,040
Total commercial and construction			972,396			968,277

Consumer
Real estate one-to-four family			95,056			96,698
Other installment			25,847			27,509
Total consumer			120,903			124,207

Total loans			1,093,299			1,092,484

Less: ACL for loans			15,336			15,248
Loans receivable, net		$	1,077,963		$	1,077,236

The Company considers its loan portfolio to have very little exposure to sub-prime mortgage loans since the Company has not historically engaged in this type of lending. At June 30, 2026, loans carried at $739.7 million were pledged as collateral to the FHLB and FRB pursuant to borrowing agreements.

Substantially all the Company’s business activity is with clients located in the states of Washington and Oregon. Loans and extensions of credit outstanding at one time to one borrower are generally limited by federal regulation to 15% of the Bank’s shareholders’ equity, excluding AOCI. As of June 30, 2026 and March 31, 2026, the Bank had no loans to any one borrower in excess of the regulatory limit.

Troubled Loan Modifications (“TLM”) – Occasionally, the Company offers modifications of loans to borrowers experiencing financial difficulty by providing principal forgiveness, interest rate reductions, other-than-insignificant payment delays, term extensions or any combination of these. When principal forgiveness is provided, the amount of the forgiveness is charged off against the ACL for loans. Upon the Company’s determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or a portion of the loan) is charged off. Therefore, the amortized cost basis of the loan is reduced by the uncollectible amount and the ACL for loans is adjusted by the same amount. The ACL on modified loans is measured using the same credit loss estimation methods used to determine the ACL for all other loans held for investment. These methods incorporate the post-modification loan terms, as well as defaults and charge-offs associated with historical modified loans.

At June 30, 2026, a $3.0 million or 1% of CRE loan type was modified due to borrowers experiencing diminished cashflow. The Company agreed to modify payments for 6 month to be interest only, reducing the monthly principal payment to zero during those months. There were no loans past due at June 30, 2026 that had been modified in the previous 12 months.

Credit quality indicators: The Company monitors credit risk in its loan portfolio using a risk rating system (on a scale of one to nine) for all commercial (non-consumer) loans. The risk rating system is a measure of the credit risk of the borrower

based on their historical, current and anticipated future financial characteristics. The Company assigns a risk rating to each commercial loan at origination and subsequently updates these ratings, as necessary, so that the risk rating continues to reflect the appropriate risk characteristics of the loan. Application of appropriate risk ratings is key to management of loan portfolio risk. In determining the appropriate risk rating, the Company considers the following factors: delinquency, payment history, quality of management, liquidity, leverage, earnings trends, alternative funding sources, geographic risk, industry risk, cash flow adequacy, account practices, asset protection and extraordinary risks. Consumer loans, including custom construction loans, are not assigned a risk rating but rather are grouped into homogeneous pools with similar risk characteristics. When a consumer loan is delinquent 90 days, it is placed on non-accrual status and assigned a substandard risk rating. Loss factors are assigned to each risk rating and homogeneous pool based on historical loss experience for similar loans. This historical loss experience is adjusted for qualitative factors that are likely to cause the estimated credit losses to differ from the Company’s historical loss experience. The Company uses these loss factors to estimate the general component of its ACL.

Pass – These loans have a risk rating between 1 and 4 and are to borrowers that meet normal credit standards. Any deficiencies in satisfactory asset quality, liquidity, debt servicing capacity and coverage are offset by strengths in other areas. The borrower currently has the capacity to perform according to the loan terms. Any concerns about risk factors such as stability of margins, stability of cash flows, liquidity, dependence on a single product/supplier/client, depth of management, etc. are offset by strengths in other areas. Typically, these loans are secured by the operating assets of the borrower and/or real estate. The borrower’s management is considered competent. The borrower has the ability to repay the debt in the normal course of business.

Watch – These loans have a risk rating of 5 and are included in the “pass” rating. However, there would typically be some reason for additional management oversight, such as the borrower’s recent financial setbacks and/or deteriorating financial position, industry concerns and failure to perform on other borrowing obligations. Loans with this rating are monitored closely in an effort to correct deficiencies.

Special mention – These loans have a risk rating of 6 and are rated in accordance with regulatory guidelines. These loans have potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the credit position at some future date. These loans pose elevated risk, but their weakness does not yet justify a “substandard” classification.

Substandard – These loans have a risk rating of 7 and are rated in accordance with regulatory guidelines, for which the accrual of interest may or may not be discontinued. Under regulatory guidelines, a “substandard” loan has defined weaknesses which make payment default or principal exposure likely but not yet certain. Repayment of such loans is likely to be dependent upon collateral liquidation, a secondary source of repayment, or an event outside of the normal course of business.

Doubtful – These loans have a risk rating of 8 and are rated in accordance with regulatory guidelines. Such loans are placed on non-accrual status and repayment may be dependent upon collateral which has value that is difficult to determine or upon some near-term event which lacks certainty.

Loss – These loans have a risk rating of 9 and are rated in accordance with regulatory guidelines. Such loans are charged-off, or partially charged-off, when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. Such loans are generally fully reserved in the ACL prior to charge-off.

The following table sets forth the Company’s loan portfolio at June 30, 2026 and March 31, 2026 by risk attribute and year of origination as well as current period gross charge-offs (in thousands). Revolving loans that are converted to term loans are treated as new originations in the table below and are presented by year of origination. Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of the most recent renewal or extension.


		June 30, 2026
		Term Loans Amortized Cost Basis by Origination Fiscal Year
																Total
														Revolving		Loans
		2027		2026		2025		2024		2023		Prior		Loans		Receivable

Commercial business
Risk rating
Pass		$	2,492	$	10,970	$	15,291	$	16,133	$	45,014	$	112,145	$	16,540	$	218,585
Special Mention			—		—		1,066		—		—		680		1,965		3,711
Substandard			—		—		119		—		—		487		—		606
Total commercial business		$	2,492	$	10,970	$	16,476	$	16,133	$	45,014	$	113,312	$	18,505	$	222,902
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Commercial real estate
Risk rating
Pass		$	670	$	76,602	$	46,718	$	39,441	$	46,813	$	324,784	$	—	$	535,028
Special Mention			—		2,509		—		2,546		10,419		32,099		—		47,573
Substandard			—		1,843		—		—		4,934		22,332		—		29,109
Total commercial real estate		$	670	$	80,954	$	46,718	$	41,987	$	62,166	$	379,215	$	—	$	611,710
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Land
Risk rating
Pass		$	101	$	12,075	$	596	$	—	$	—	$	197	$	199	$	13,168
Total land		$	101	$	12,075	$	596	$	—	$	—	$	197	$	199	$	13,168
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Multi-family
Risk rating
Pass		$	1,594	$	13,610	$	1,003	$	917	$	38,190	$	46,700	$	—	$	102,014
Special Mention			—		—		—		—		274		471		—		745
Substandard			—		—		100		—		—		62		—		162
Doubtful			—		—		—		—		—		35		—		35
Total multi-family		$	1,594	$	13,610	$	1,103	$	917	$	38,464	$	47,268	$	—	$	102,956
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


		June 30, 2026
		Term Loans Amortized Cost Basis by Origination Fiscal Year
																	Total
														Revolving			Loans
		2027		2026		2025		2024		2023		Prior		Loans			Receivable

Real estate construction
Risk rating
Pass		$	6,591	$	14,067	$	1,002	$	—	$	—	$	—	$	—		$	21,660
Total real estate construction		$	6,591	$	14,067	$	1,002	$	—	$	—	$	—	$	—		$	21,660
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—

Real estate one-to-four family
Risk rating
Pass		$	—	$	—	$	—	$	—	$	—	$	70,760	$	24,296		$	95,056
Total real estate one-to-four family		$	—	$	—	$	—	$	—	$	—	$	70,760	$	24,296		$	95,056
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—

Other installment
Risk rating
Pass		$	879	$	13,711	$	10,458	$	219	$	156	$	51	$	373		$	25,847
Total other installment		$	879	$	13,711	$	10,458	$	219	$	156	$	51	$	373		$	25,847
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—

Total loans receivable, gross
Risk rating
Pass		$	12,327	$	141,035	$	75,068	$	56,710	$	130,173	$	554,637	$	41,408		$	1,011,358
Special Mention			—		2,509		1,066		2,546		10,693		33,250		1,965			52,029
Substandard			—		1,843		219		—		4,934		22,881		—			29,877
Doubtful			—		—		—		—		—		35		—			35
Total loans receivable, gross		$	12,327	$	145,387	$	76,353	$	59,256	$	145,800	$	610,803	$	43,373		$	1,093,299
Total current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—


		March 31, 2026
		Term Loans Amortized Cost Basis by Origination Fiscal Year
																Total
														Revolving		Loans
		2026		2025		2024		2023		2022		Prior		Loans		Receivable

Commercial business
Risk rating
Pass		$	6,270	$	15,664	$	16,776	$	46,668	$	77,604	$	38,064	$	13,459	$	214,505
Special Mention			—		1,253		—		—		404		—		3,039		4,696
Substandard			—		126		—		—		—		519		—		645
Total commercial business		$	6,270	$	17,043	$	16,776	$	46,668	$	78,008	$	38,583	$	16,498	$	219,846
Current YTD gross write-offs		$	—	$	—	$	—	$	398	$	—	$	—	$	1	$	399

Commercial real estate
Risk rating
Pass		$	70,158	$	46,935	$	40,035	$	56,434	$	132,992	$	216,215	$	—	$	562,769
Special Mention			2,296		237		2,560		6,230		2,598		23,132		—		37,053
Substandard			1,856		93		—		—		2,490		7,373		—		11,812
Total commercial real estate		$	74,310	$	47,265	$	42,595	$	62,664	$	138,080	$	246,720	$	—	$	611,634
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	911	$	—	$	911

Land
Risk rating
Pass		$	7,441	$	600	$	—	$	886	$	72	$	148	$	(4)	$	9,143
Total land		$	7,441	$	600	$	—	$	886	$	72	$	148	$	(4)	$	9,143
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Multi-family
Risk rating
Pass		$	10,609	$	1,008	$	923	$	42,920	$	34,957	$	12,487	$	—	$	102,904
Special Mention			—		—		—		322		—		183		—		505
Substandard			—		100		—		—		17		52		—		169
Doubtful			—		—		—		—		—		36		—		36
Total multi-family		$	10,609	$	1,108	$	923	$	43,242	$	34,974	$	12,758	$	—	$	103,614
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—


		March 31, 2026
		Term Loans Amortized Cost Basis by Origination Fiscal Year
																	Total
														Revolving			Loans
		2026		2025		2024		2023		2022		Prior		Loans			Receivable

Real estate construction
Risk rating
Pass		$	22,010	$	2,030	$	—	$	—	$	—	$	—	$	—		$	24,040
Total real estate construction		$	22,010	$	2,030	$	—	$	—	$	—	$	—	$	—		$	24,040
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	—		$	—

Real estate one-to-four family
Risk rating
Pass		$	—	$	—	$	—	$	—	$	54,684	$	18,140	$	23,867		$	96,691
Substandard			—		—		—		—		—		—		7			7
Total real estate one-to-four family		$	—	$	—	$	—	$	—	$	54,684	$	18,140	$	23,874		$	96,698
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	28	$	—		$	28

Other installment
Risk rating
Pass		$	14,912	$	11,641	$	240	$	177	$	34	$	34	$	471		$	27,509
Total other installment		$	14,912	$	11,641	$	240	$	177	$	34	$	34	$	471		$	27,509
Current YTD gross write-offs		$	—	$	—	$	—	$	—	$	—	$	—	$	18		$	18

Total loans receivable, gross
Risk rating
Pass		$	131,400	$	77,878	$	57,974	$	147,085	$	300,343	$	285,088	$	37,793		$	1,037,561
Special Mention			2,296		1,490		2,560		6,552		3,002		23,315		3,039			42,254
Substandard			1,856		319		—		—		2,507		7,944		7			12,633
Doubtful			—		—		—		—		—		36		—			36
Total loans receivable, gross		$	135,552	$	79,687	$	60,534	$	153,637	$	305,852	$	316,383	$	40,839		$	1,092,484
Total current YTD gross write-offs		$	—	$	—	$	—	$	398	$	—	$	939	$	19		$	1,356

ACL on Loans - The ACL for loans is an estimate of the expected credit losses on financial assets measured at amortized cost. The ACL for loans is evaluated based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amounts. Historical loss experience is generally the starting point for estimating expected credit losses. The Company then considers whether the historical loss experience should be adjusted for asset-specific risk characteristics or current conditions at the reporting date that did not exist over the period that historical experience was based for each loan type. Finally, the Company considers forecasts about future economic conditions or changes in collateral values that are reasonable and supportable. The Company estimates the expected credit losses over the loans’ contractual terms, adjusted for expected prepayments. The ACL for loans is calculated for loan segments utilizing loan level information and relevant information from internal and external sources related to past events and current conditions.

The methodology for estimating the amount of expected credit losses has two basic components: (i) a general component for pools of loans that share similar risk characteristics; and (ii) an individual component for loans that do not share risk characteristics with other loans and are evaluated individually. The Company’s ACL model methodology is to build a reserve rate using historical life-of-loan default rates combined with assessments of current loan portfolio information and current and forecasted economic environment and business cycle information. The model uses statistical analysis to determine the life of loan default rates for the quantitative component and analyzes qualitative factors (Q-Factors) that assess the current loan portfolio conditions and forecasted economic environment and collateral values. For loans that are individually evaluated, an allowance is established when the discounted cash flows or collateral value (less estimated selling costs, if applicable) is lower than the carrying value of the loan.

When available information confirms that specific loans or portions thereof are uncollectible, identified amounts are charged against the ACL. The existence of some or all of the following criteria will generally confirm that a loss has been incurred: the loan is significantly delinquent and the borrower has not demonstrated the ability or intent to bring the loan current; the Company has no recourse to the borrower, or if it does, the borrower has insufficient assets to pay the debt; and/or the estimated fair value of the loan collateral is significantly below the current loan balance, and there is little or no near-term prospect for improvement.

Management’s evaluation of the ACL for loans is based on ongoing, quarterly assessments of the known and inherent risks in the loan portfolio. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s ACL for loans and may require the Company to make additions to the ACL for loans based on their judgment about information available to them at the time of their examinations.

The following tables detail activity in the ACL for loans for the three months ended June 30, 2026 and 2025, by loan category (in thousands):


Three months ended		Commercial			Commercial						Multi-			Real Estate
June 30, 2026		Business			Real Estate			Land			Family			Construction			Consumer			Total

Beginning balance		$	4,587		$	7,527		$	192		$	468		$	432		$	2,042	$	15,248
(Recapture of) provision for credit losses			(211)			(230)			304			103			172			(138)		—
Charge-offs			—			—			—			—			—			—		—
Recoveries			—			—			—			—			—			88		88
Ending balance		$	4,376		$	7,297		$	496		$	571		$	604		$	1,992	$	15,336

Three months ended
June 30, 2025

Beginning balance		$	5,033		$	7,492		$	83		$	444		$	480		$	1,842	$	15,374
(Recapture of) provision for credit losses			(174)			158			(11)			(4)			(147)			178		—
Charge-offs			—			—			—			—			—			—		—
Recoveries			—			—			—			—			—			52		52
Ending balance		$	4,859		$	7,650		$	72		$	440		$	333		$	2,072	$	15,426

Non-accrual loans: Loans are reviewed regularly, and it is the Company’s general policy that a loan is past due when it is 30 to 89 days delinquent. In general, when a loan is 90 days or more delinquent or when collection of principal or interest

appears doubtful, it is placed on non-accrual status, at which time the accrual of interest ceases, and previously accrued but uncollected interest is reversed against interest income. As a general practice, payments received on non-accrual loans are applied to reduce the outstanding principal balance under the cost recovery method, whereby payments are not recognized as interest income until the principal balance has been fully recovered. A loan is not removed from non-accrual status until all delinquent principal, interest and late fees have been brought current and the borrower has demonstrated a sustained history of performance in accordance with the contractual terms of the note, generally a minimum of six months. Interest income foregone on non-accrual loans was $148,000 and $4,000 for the three months ended June 30, 2026 and 2025, respectively.

The following tables present an analysis of loans by aging category at the dates indicated (in thousands):


											Total
					90 Days						Past
					Or						Due and						Total
		30-89 Days			More						Non-						Loans
June 30, 2026		Past Due			Past Due			Non-accrual			accrual			Current			Receivable

Commercial business		$	1,005		$	—		$	607		$	1,612		$	221,290		$	222,902
Commercial real estate			14,107			—			8,132			22,239			589,471			611,710
Land			—			—			—			—			13,168			13,168
Multi-family			—			—			—			—			102,956			102,956
Real estate construction			607			—			—			607			21,053			21,660
Consumer			117			—			—			117			120,786			120,903
Total		$	15,836		$	—		$	8,739		$	24,575		$	1,068,724		$	1,093,299

March 31, 2026

Commercial business		$	2,346		$	—		$	645		$	2,991		$	216,855		$	219,846
Commercial real estate			4,118			—			7,112			11,230			600,404			611,634
Land			—			—			—			—			9,143			9,143
Multi-family			—			—			—			—			103,614			103,614
Real estate construction			—			—			—			—			24,040			24,040
Consumer			44			—			7			51			124,156			124,207
Total		$	6,508		$	—		$	7,764		$	14,272		$	1,078,212		$	1,092,484

Loans 90 days or more past due are generally placed on non-accrual status and are therefore reflected in the non-accrual column rather than the 90 days and greater past due column in the table above.

The increase in 30-89 days past due loans at June 30, 2026 was primarily driven by three commercial real estate loans totaling $11.4 million compared to $3.9 million at March 31, 2026. The Company continues to actively monitor and work with the borrowers to address performance issues.

Included in the 30-89 days past due loans at June 30, 2026 and March 31, 2026 were commercial business loans totaling $29,000 and $1.2 million, respectively, fully guaranteed by the SBA or United States Department of Agriculture (“USDA”). These government guaranteed loans are classified as pass-rated and are excluded from the ACL calculation because the Company expects to receive all principal and interest in accordance with the contractual terms of the loan based on the applicable guarantees.

At June 30, 2026, the Company had $8.6 million of non-accrual loans with no ACL and $119,000 of non-accrual loans with an ACL of $3,000. At March 31, 2026, the Company had $7.5 million of non-accrual loans with no ACL and $226,000 of non-accrual loans with an ACL of $5,000. The amortized cost of collateral-dependent loans as of June 30, 2026, was $487,000 and $8.1 million for commercial business and commercial real estate, respectively, compared to $519,000 and $7.0 million, respectively, at March 31, 2026.