First Northwest settles loan dispute for $1.3M

First Northwest Bancorp’s bank subsidiary agreed to pay $1.3 million to fully settle disputed litigation with Socotra REIT I, LLC, with the case to be dismissed with prejudice.

Rhea-AI Filing Summary

First Northwest Bancorp (FNWB) reported that its subsidiary First Fed Bank entered into a Settlement Agreement & Mutual Release with Socotra REIT I, LLC on September 15, 2026, resolving litigation related to a commercial loan transaction.

Under the agreement, First Fed Bank will make a $1.3 million cash payment within 30 days in exchange for a full release of claims and dismissal of the lawsuit with prejudice. The company states that the settlement avoids estimated costs, uncertainties, and distraction of continued litigation and that it represents a compromise of disputed claims without any admission of liability or wrongdoing by the bank, the company, or any other party.

Positive

• Resolution of contested litigation with Socotra REIT I, LLC via a full release of claims and dismissal with prejudice, removing ongoing legal uncertainty and distraction.
• Settlement avoids the estimated costs and uncertainties of continued litigation, as stated by the company, potentially reducing future legal expense volatility.

Negative

• First Fed Bank will make a $1.3 million cash payment under the settlement, representing an immediate outflow of funds.
• The dispute involved significant contested allegations that required formal litigation before being resolved through a compromise settlement.

8-K Event Classification

Item 8.01 — Other Events

1 item

Item 8.01 Other Events Other

Voluntary disclosure of events the company deems important to shareholders but not covered by other items.

Key Figures

Settlement cash payment: $1.3 million Complaint filing date: October 17, 2025 Settlement date: September 15, 2026 +1 more

4 metrics

Settlement cash payment $1.3 million Cash payment First Fed Bank agreed to make within 30 days of September 15, 2026 under the Settlement Agreement

Complaint filing date October 17, 2025 Date Socotra REIT I, LLC filed its complaint against First Fed Bank in Washington state court

Settlement date September 15, 2026 Date First Fed Bank and Socotra REIT I, LLC entered into the Settlement Agreement & Mutual Release

Payment window 30 days Timeframe for First Fed Bank to make the $1.3 million cash payment after the Settlement Agreement date

Key Terms

Settlement Agreement & Mutual Release, dismissal with prejudice, Washington Consumer Protection Act, full release of claims

4 terms

Settlement Agreement & Mutual Release regulatory

"entered into a Settlement Agreement & Mutual Release to resolve the claims"

dismissal with prejudice regulatory

"in exchange for a full release of claims and dismissal of the complaint with prejudice"

A dismissal with prejudice is a court ruling that ends a lawsuit permanently and prevents the same claim from being filed again. For investors, it matters because it removes ongoing legal uncertainty and potential future liability for the company, much like locking a file cabinet so a problem can’t be reopened; that clarity can affect a company’s risk profile, legal costs and valuation.

Washington Consumer Protection Act regulatory

"alleging, among other things, violations of the Washington Consumer Protection Act"

full release of claims regulatory

"in exchange for a full release of claims and dismissal of the complaint"

FAQ

AI-generated questions and answers. How Rhea-AI works. Not financial advice.

What litigation did First Northwest Bancorp (FNWB) resolve with Socotra REIT I, LLC?

First Northwest Bancorp disclosed that its subsidiary First Fed Bank and Socotra REIT I, LLC entered into a Settlement Agreement & Mutual Release on September 15, 2026, resolving disputed claims related to a commercial loan transaction involving Ideal Property Investments LLC, with the lawsuit to be dismissed with prejudice.

How much will First Northwest Bancorp’s bank subsidiary pay under the settlement?

Under the Settlement Agreement, First Fed Bank agreed to make a $1.3 million cash payment within 30 days of September 15, 2026, in exchange for a full release of claims and dismissal of the complaint with prejudice.

Does the Socotra settlement include an admission of liability by FNWB or First Fed Bank?

No. The company states that the Settlement Agreement reflects a compromise of disputed claims and does not constitute an admission of liability, wrongdoing, or fault by First Fed Bank, First Northwest Bancorp, or any other party.

Why did First Northwest Bancorp say the $1.3 million settlement is in shareholders’ interests?

First Northwest Bancorp believes resolving the dispute is in the best interests of the bank, the company, and shareholders because it avoids estimated costs, uncertainties, and distraction associated with continued litigation, and provides finality through a full release and dismissal with prejudice.

When was the complaint against First Fed Bank originally filed?

The complaint by Socotra REIT I, LLC against First Fed Bank was filed on October 17, 2025 in the Superior Court of the State of Washington for King County, and has now been resolved through the Settlement Agreement dated September 15, 2026.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 15, 2026

FIRST NORTHWEST BANCORP

(Exact name of registrant as specified in its charter)

Washington		001-36741		46-1259100
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

105 West 8th Street, Port Angeles, Washington		98362
(Address of principal executive offices)		(Zip Code)

Registrant's telephone number, including area code:  (360) 457-0461

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:		Trading Symbol(s):		Name of each exchange on which registered:
Common Stock, par value $0.01 per share		FNWB		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

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.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

			FIRST NORTHWEST BANCORP
Date:	September 17, 2026		/s/ Curt T. Queyrouze
			Curt T. Queyrouze
			President and Chief Executive Officer

Filing Exhibits & Attachments

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• EX-101 XBRL TAXONOMY EXTENSION SCHEMA 3.5 KB
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• EX-101 XBRL TAXONOMY EXTENSION LABEL LINKBASE 15.0 KB
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