Note 10 - Stock-based Compensation

In May 2020, the Company's shareholders approved the First Northwest Bancorp 2020 Equity Incentive Plan ("2020 EIP"), which provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock shares or restricted stock units, and performance share awards to eligible participants through May 2030. The cost of awards under the 2020 EIP generally is based on the fair value of the awards on their grant date. The maximum number of shares that may be utilized for awards under the 2020 EIP is 520,000. As of June 30, 2025, there were 120,377 total shares available for grant under the 2020 EIP, all of which are available to be granted as restricted shares, performance shares, options or stock appreciation rights.

As a result of the approval of the 2020 EIP, the First Northwest Bancorp 2015 Equity Incentive Plan (the "2015 EIP") was frozen and no additional awards will be made. As of June 30, 2025, there were no shares available for grant under the 2015 EIP. The final shares granted under the 2015 EIP vested in the second quarter of 2025.

There were 73,337 and 68,138 shares of restricted stock awarded, respectively, during the six months ended June 30, 2025 and 2024. Restricted share awards vest ratably over periods ranging from one to five years from the date of grant provided the eligible participant remains in service to the Company. The Company recognizes compensation expense for the restricted stock awards based on the fair value of the shares at the grant date amortized over the vesting period. 

In addition, there were 33,251 and no performance shares awarded, respectively, during the six months ended June 30, 2025 and 2024. Performance share awards vest in accordance with the terms outlined in each award agreement. The Company recognizes compensation expense for the performance share awards based on the fair value of the shares at the grant date amortized over the performance period.

For the three months ended June 30, 2025 and 2024, total compensation expense for the equity incentive plans was $211,000 and $257,000, respectively. Included in the compensation expense for the three months ended June 30, 2025 and 2024, was directors' equity compensation of $65,000 and $56,000, respectively.

For the six months ended June 30, 2025 and 2024, total compensation expense for the equity incentive plans was $405,000 and $521,000, respectively. Included in the compensation expense for the six months ended June 30, 2025 and 2024, was directors' equity compensation of $121,000 and $110,000, respectively.

The following tables provide a summary of changes in non-vested restricted stock awards for the periods shown:

As of June 30, 2025, there was $1.4 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards. The cost is expected to be recognized over the remaining weighted-average vesting period of approximately 2.2 years.