Note 8 - Stock-based Compensation

9 Months Ended

Sep. 30, 2020

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note 8 - 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. At September 30, 2020, there were 456,541 total shares available for grant under the 2020 EIP, all of which are available to be granted as restricted shares.

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. At September 30, 2020, there were no shares available for grant under the 2015 EIP. At this date, there are 273,800 shares granted under the 2015 EIP that are expected to vest subject to the 2015 EIP plan provisions.

During the three months ended September 30, 2020 and 2019, 63,459 and 23,400 shares of restricted stock were awarded, respectively, and no stock options were granted. There were 126,059 and 23,400 shares of restricted stock awarded, respectively, during the nine months ended September 30, 2020 and 2019. Awarded shares of restricted stock vest ratably over periods ranging from three 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 stated period.

For the three months ended September 30, 2020 and 2019, total compensation expense for the equity incentive plans was $362,000 and $251,000, respectively. For the nine months ended September 30, 2020 and 2019, total compensation expense for the equity incentive plans was $917,000 and $804,000, respectively.

Included in the above compensation expense for the three months ended September 30, 2020 and 2019, directors' compensation was $102,000 and $86,000, respectively. For the nine months ended September 30, 2020 and 2019, directors' compensation was $273,000 and $256,000, respectively.

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

	For the Three Months Ended
	September 30, 2020
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at July 1, 2020		277,400		$	14.68
Granted		63,459			11.93
Vested		(50,244	)		13.58
Canceled (1)		(10,088	)		13.58
Forfeited		(3,600	)		12.70
Non-vested at September 30, 2020		276,927		$	14.32
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the total cost of the vested shares. The surrendered shares are canceled and are unavailable for reissue.

	For the Nine Months Ended
	September 30, 2020
	Shares			Weighted-Average Grant Date Fair Value
Non-vested at January 1, 2020		264,300		$	14.60
Granted		126,059			12.97
Vested		(50,244	)		13.58
Canceled (1)		(10,088	)		13.58
Forfeited		(53,100	)		13.36
Non-vested at September 30, 2020		276,927		$	14.32
(1) A surrender of vested stock awards by a participant surrendering the number of shares valued at the current stock price at the vesting date to cover the total cost of the vested shares. The surrendered shares are canceled and are unavailable for reissue.

 

As of September 30, 2020, there was $3.4 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 3.20 years.