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. In May 2026, shareholders approved the First Northwest Bancorp Amended and Restated 2020 Equity Incentive Plan ("Amended 2020 EIP"), which increased the maximum number of shares that may be utilized for awards from 520,000 to 820,000 shares. As of September 30, 2026, there were 344,732 total shares available for grant under the Amended 2020 EIP, all of which are available to be granted as restricted shares, performance shares, options or stock appreciation rights. The Amended 2020 EIP will terminate in May 2036.

There were 10,820 and 72,538 shares of restricted stock awarded, respectively, during the three months ended September 30, 2026 and 2025. There were 50,921 and 145,875 shares of restricted stock awarded, respectively, during the nine months ended September 30, 2026 and 2025. 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. 

There were no performance shares awarded during the three months ended September 30, 2026 and 2025. In addition to the restricted stock awards, there were 16,045 and 33,251 performance shares awarded, respectively, during the nine months ended September 30, 2026 and 2025. 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 September 30, 2026 and 2025, total compensation expense for the equity incentive plans was $181,000 and $131,000, respectively. Included in the compensation expense for the three months ended September 30, 2026 and 2025, was directors' equity compensation of $59,000 and $60,000, respectively.

For the nine months ended September 30, 2026 and 2025, total compensation expense for the equity incentive plans was $470,000 and $536,000, respectively. Included in the compensation expense for the nine months ended September 30, 2026 and 2025, was directors' equity compensation of $175,000 and $181,000, respectively.

The following tables provide a summary of changes in non-vested restricted stock and performance share awards for the period shown:

As of September 30, 2026, there was $1.0 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock and performance share awards. The cost is expected to be recognized over the remaining weighted-average vesting period of approximately 1.9 years.