Note 9 - Employee Benefits |
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Sep. 30, 2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| Compensation and Employee Benefit Plans [Text Block] |
Note 9 - Employee Benefits
Employee Stock Ownership Plan
Pursuant to the Plan, the ESOP purchased shares in the open market with funds borrowed from First Northwest. The Bank will make contributions to the ESOP in amounts necessary to amortize the ESOP loan payable to First Northwest over a period of 20 years, bearing estimated interest at 2.46%. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank's discretionary contributions to the ESOP and earnings on the ESOP assets. The annual principal and interest payments of $835,000 were made by the ESOP during the second quarter of the nine months ended September 30, 2026 and 2025. additional payments were made during the three months ended September 30, 2026 and 2025.
As shares are committed to be released from collateral, the Company reports compensation expense equal to the average daily market prices of the shares and the shares become outstanding for EPS computations. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a reduction of debt and accrued interest.
Compensation expense related to the ESOP for the three months ended September 30, 2026 and 2025, was $147,000 and $97,000, respectively. Compensation expense related to the ESOP for the nine months ended September 30, 2026 and 2025, was $406,000 and $359,000, respectively.
Shares issued to the ESOP as of the dates indicated are as follows:
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