Note 9 - Employee Benefits

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

Note 9 - Employee Benefits

Employee Stock Ownership Plan

In connection with the Conversion, the Company established an ESOP for eligible employees of the Company and the Bank. Employees of the Company and the Bank who have been credited with at least 1,000 hours of service during a 12-month period are eligible to participate in the ESOP.

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. A $835,000 principal and interest payment was made by the ESOP during the six months ended June 30, 2023.

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. The compensation expense is accrued monthly throughout the year. 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 June 30, 2023 and 2022, was $153,000 and $245,000, respectively. Compensation expense related to the ESOP for the six months ended June 30, 2023 and 2022, was $340,000 and $536,000, respectively.

Shares issued to the ESOP as of the dates indicated are as follows:

	June 30, 2023		December 31, 2022
	(Dollars in thousands)
Allocated shares		439,174		386,285
Committed to be released shares		—		26,442
Unallocated shares		608,855		635,302
Total ESOP shares issued		1,048,029		1,048,029
Fair value of unallocated shares	$	6,929	$	9,758