What changed in this filing

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Item 1. Financial Statements

2024-08-12 compared with 2024-05-13 · 347 added, 160 removed, 1374 unchanged (27% of the section changed)

3 unchanged sentences

(Dollars in thousands, except share information) (Unaudited)

March 31, 2024

June 30, 2024

December 31, 2023

11 unchanged sentences

Accrued interest receivable

Premises held for sale at cost, net

Premises and equipment, net

23 unchanged sentences

Common stock, $ 0.01 par value, authorized 75,000,000 shares;

issued and outstanding 9,442,796 shares at March 31, 2024, and 9,611,876 shares at December 31, 2023

issued and outstanding 9,453,247 shares at June 30, 2024, and 9,611,876 shares at December 31, 2023

Additional paid-in capital

15 unchanged sentences

Three Months Ended

Six Months Ended

INTEREST INCOME

Interest and fees on loans receivable

$ 22,767 $ 19,504

Interest on investment securities

2 unchanged sentences

Total interest income

27,326 23,282

INTEREST EXPENSE

1 unchanged sentence

Net interest income

13,928 16,305

PROVISION FOR CREDIT LOSSES

Provision for (recapture of) credit losses on loans

1,239 ( 515 )

(Recapture of) provision for credit losses on unfunded commitments

Provision for credit losses on loans

Provision for (recapture of) credit losses on unfunded commitments

Provision for (recapture of) credit losses

Net interest income after provision for (recapture of) credit losses

12,958 16,805

NONINTEREST INCOME

2 unchanged sentences

Net gain on sale of loans

Net (loss) gain on sale of investment securities

Net gain on sale of premises and equipment

Increase in cash surrender value of bank-owned life insurance

Other (loss) income

Total noninterest income

9 unchanged sentences

Total noninterest expense

14,303 14,871

Income before provision for income taxes

2 unchanged sentences

Net income attributable to parent

$ 396 $ 3,528

Basic and diluted earnings per common share

$ 0.04 $ 0.39

See selected notes to the consolidated financial statements.

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands) (Unaudited)

Three Months Ended

$ 396 $ 3,443

Other comprehensive income:

Six Months Ended

Other comprehensive income (loss):

Unrealized holding (losses) gains on investments available for sale arising during the period

( 747 ) 4,791

Income tax benefit (provision) related to unrealized holding (losses) gains on investments

159 ( 1,029 )

Income tax benefit related to unrealized holding (losses) gains on investments

Amortization of unrecognized DB plan prior service cost

1 unchanged sentence

Unrealized holding gains (losses) on derivatives

929 ( 1,728 )

Income tax (provision) benefit related to unrealized holding gains (losses) on derivatives

Other comprehensive income, net of tax

Comprehensive income

Reclassification adjustment for net losses on sales of securities realized in income

Income tax provision related to reclassification adjustment on sales of securities

Other comprehensive income (loss), net of tax

Comprehensive income (loss)

Comprehensive loss attributable to noncontrolling interest

Comprehensive income attributable to parent

Comprehensive income (loss) attributable to parent

See selected notes to the consolidated financial statements.

FIRST NORTHWEST BANCORP AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Three Months Ended June 30, 2024 and 2023

(Dollars in thousands, except share information) (Unaudited)

Additional Paid-in

Unearned ESOP

Accumulated Other Comprehensive Loss,

Noncontrolling

Total Shareholders'

Balance at March 31, 2023

9,674,055 $ 97 $ 95,333 $ 114,139 $ ( 7,749 ) $ ( 38,108 ) $ ( 3,376 ) $ 160,336

1,776 ( 75 ) 1,701

Common stock repurchased

( 30,176 ) ( 1 ) ( 301 ) ( 39 ) ( 341 )

Restricted stock award forfeitures net of grants

( 8,911 ) — — —

Restricted stock awards canceled

( 1,472 ) — ( 17 ) ( 17 )

Other comprehensive loss, net of tax

( 1,958 ) ( 1,958 )

Close out investment in Quin Ventures

( 3,451 ) 3,451 —

Share-based compensation expense

ESOP shares committed to be released

( 13 ) 166 153

Cash dividends declared ($ 0.07 per share)

( 675 ) ( 675 )

Balance at June 30, 2023

9,633,496 $ 96 $ 95,360 $ 111,750 $ ( 7,583 ) $ ( 40,066 ) $ — $ 159,557

Balance at March 31, 2024

9,442,796 $ 94 $ 93,763 $ 106,202 $ ( 7,088 ) $ ( 32,465 ) $ — $ 160,506

1,418 — 1,418

Restricted stock award grants net of forfeitures

Restricted stock awards canceled

( 1,700 ) — ( 18 ) ( 18 )

Other comprehensive income, net of tax

Share-based compensation expense

ESOP shares committed to be released

( 17 ) 165 148

Cash dividends declared ($ 0.07 per share)

( 661 ) ( 661 )

Balance at June 30, 2024

9,453,247 $ 94 $ 93,985 $ 106,959 $ ( 6,923 ) $ ( 31,597 ) $ — $ 162,518

See selected notes to the consolidated financial statements.

1 unchanged sentence

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

For the Three Months Ended March 31, 2024 and 2023

For the Six Months Ended June 30, 2024 and 2023

(Dollars in thousands, except share information) (Unaudited)

15 unchanged sentences

( 2,951 ) ( 2,951 )

Close out investment in Quin Ventures

( 3,451 ) 3,451 —

Share-based compensation expense

2 unchanged sentences

( 1,354 ) ( 1,354 )

Balance at March 31, 2023

Balance at June 30, 2023

9,633,496 $ 96 $ 95,360 $ 111,750 $ ( 7,583 ) $ ( 40,066 ) $ — $ 159,557

1 unchanged sentence

9,611,876 $ 96 $ 95,784 $ 107,349 $ ( 7,253 ) $ ( 32,636 ) $ — $ 163,340

1,814 — 1,814

Common stock repurchased

8 unchanged sentences

( 1,332 ) ( 1,332 )

Balance at March 31, 2024

Balance at June 30, 2024

9,453,247 $ 94 $ 93,985 $ 106,959 $ ( 6,923 ) $ ( 31,597 ) $ — $ 162,518

3 unchanged sentences

(In thousands) (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities:

Net income before noncontrolling interest

$ 396 $ 3,443

Adjustments to reconcile net income to net cash from operating activities:

3 unchanged sentences

Accretion of deferred loan fees and purchased premiums, net

( 353 ) ( 111 )

Amortization of debt issuance costs

Change in fair value of sold loan servicing rights

( 17 ) ( 269 )

Additions to servicing rights on sold loans, net

( 10 ) ( 68 )

Provision for (recapture of) credit losses on loans

1,239 ( 515 )

Provision for credit losses on loans

Recapture of provision for credit losses on unfunded commitments

2 unchanged sentences

Gain on sale of loans, net

( 52 ) ( 176 )

Loss on sale of securities available for sale, net

Increase in cash surrender value of life insurance, net

( 243 ) ( 226 )

Origination of loans held for sale

( 5,421 ) ( 4,812 )

Proceeds from sale of loans held for sale

1 unchanged sentence

Increase in accrued interest receivable

( 1,015 ) ( 462 )

(Increase) decrease in prepaid expenses and other assets

( 6,303 ) 2,806

(Decrease) increase in accrued interest payable

Increase in accrued expenses and other liabilities

Net cash (used) provided by operating activities

( 4,865 ) 6,790

Net cash provided by operating activities

Cash flows from investing activities:

1 unchanged sentence

Proceeds from maturities, calls, and principal repayments of securities available for sale

Purchase of FHLB stock

( 2,212 ) ( 3,921 )

Proceeds from sales of securities available for sale

Redemption (purchase) of FHLB stock

Purchase of bank-owned life insurance, net of surrenders

Early surrender of bank-owned life insurance policy

Net increase in loans receivable

( 51,142 ) ( 32,746 )

Purchase of premises and equipment, net

( 113 ) ( 559 )

Net sale (purchase) of premises and equipment, net of amortization

Capital contributions to equity and partnership investments

2 unchanged sentences

Net cash used by investing activities

( 78,466 ) ( 35,313 )

See selected notes to the consolidated financial statements.

2 unchanged sentences

(In thousands) (Unaudited)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from financing activities:

Net (decrease) increase in deposits

Net increase in deposits

Proceeds from long-term FHLB advances

Repayment of long-term FHLB advances

Net increase in short-term FHLB advances

Net increase (decrease) in line of credit

Net increase in advances from borrowers for taxes and insurance

Net (decrease) increase in short-term FHLB advances

Net decrease in line of credit

Net increase (decrease) in advances from borrowers for taxes and insurance

Payment of dividends

7 unchanged sentences

Cash paid for interest on deposits and borrowings

Cash paid for income taxes

Supplemental disclosures of noncash investing activities:

Change in unrealized (loss) gain on securities available for sale

Change in unrealized gain on securities available for sale

Change in unrealized gain (loss) on fair value hedge

1 unchanged sentence

Cumulative effect of adoption of ASU 2016-13 Financial Instruments - Credit Losses on January 1, 2023

Lease liabilities arising from obtaining right-of-use assets

See selected notes to the consolidated financial statements.

33 unchanged sentences

In our opinion, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation of the consolidated financial statements in accordance with GAAP have been included.

Operating results for the three months ended March 31, 2024 , are not necessarily indicative of the results that may be expected for future periods.

Operating results for the three and six months ended June 30, 2024 , are not necessarily indicative of the results that may be expected for future periods.

In preparing the unaudited interim consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses.

7 unchanged sentences

The Quin Ventures net loss allocable to POM is shown on the financial statements where applicable through a noncontrolling interest adjustment.

Subsequent events - The Company has evaluated subsequent events for potential recognition and disclosure and has included additional information where appropriate.

Subsequent events - The Company has evaluated subsequent events for potential recognition and disclosure.

Recently adopted accounting pronouncements

40 unchanged sentences

Note 2 - Securities

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at March 31, 2024 are summarized as follows:

The amortized cost, gross unrealized gains and losses, and estimated fair value of securities classified as available-for-sale at June 30, 2024 are summarized as follows:

Amortized Cost

43 unchanged sentences

$ 333,950 $ — $ ( 38,327 ) $ 295,623 $ —

There were no securities classified as held-to-maturity at March 31, 2024 and December 31, 2023 .

There was no allowance for credit losses on investment securities recorded at March 31, 2024 and December 31, 2023 , based on analysis performed by the Company.

Accrued interest receivable on available-for-sale debt securities totaled $ 2.2 million and $ 1.9 million as of March 31, 2024 and December 31, 2023 , respectively.

There were no securities classified as held-to-maturity at June 30, 2024 and December 31, 2023 .

There was no allowance for credit losses on investment securities recorded at June 30, 2024 and December 31, 2023 , based on analysis performed by the Company.

Accrued interest receivable on available-for-sale debt securities totaled $ 2.3 million and $ 1.9 million as of June 30, 2024 and December 31, 2023 , respectively.

Accrued interest receivable on securities is reported in accrued interest receivable on the Consolidated Balance Sheets and is excluded from the calculation of the allowance for credit losses on investment securities.

The following shows the unrealized gross losses and fair value of the investment portfolio by length of time that individual securities in each category have been in a continuous loss position as of March 31, 2024 :

Less Than Twelve Months

40 unchanged sentences

$ ( 176 ) $ 19,494 $ ( 38,151 ) $ 274,306 $ ( 38,327 ) $ 293,800

There were 22 available-for-sale securities with unrealized losses of less than one year, and 155 available-for-sale securities with an unrealized loss of more than one year at March 31, 2024 .

There were 23 available-for-sale securities with unrealized losses of less than one year, and 146 available-for-sale securities with an unrealized loss of more than one year at June 30, 2024 .

There were 6 available-for-sale securities with unrealized losses of less than one year, and 156 available-for-sale securities with an unrealized loss of more than one year at December 31, 2023 .

3 unchanged sentences

The Company believes that it is unlikely that we would be required to sell these investments prior to a market price recovery or maturity.

Based on the Company’s evaluation of these securities, no credit impairment was recorded at March 31, 2024 , or December 31, 2023 .

Based on the Company’s evaluation of these securities, no credit impairment was recorded at June 30, 2024 , or December 31, 2023 .

The amortized cost and estimated fair value of investment securities by contractual maturity are shown in the following tables at the dates indicated.

1 unchanged sentence

therefore, these securities are shown separately.

March 31, 2024

June 30, 2024

Available-for-Sale

6 unchanged sentences

Due after one through five years

16,351 15,759

Due after five through ten years

42 unchanged sentences

$ 333,950 $ 295,623

There were no sales of securities available-for-sale during the three months ended March 31, 2024 and 2023.

Sales of available-for-sale securities were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Proceeds from sales

$ 21,048 $ — $ 21,048 $ —

Gross realized gains

Gross realized losses

( 2,117 ) — ( 2,117 ) —

Note 3 - Loans Receivable

The Company has defined its loan portfolio into three segments that reflect the structure of the lending function, the Company's strategic plan and the manner in which management monitors performance and credit quality.

The Company has identified three segments of its loan portfolio that reflect the structure of the lending function, the Company's strategic plan and the manner in which management monitors performance and credit quality.

The three loan portfolio segments are:

1 unchanged sentence

These segments are further disaggregated into classes based on similar attributes and risk characteristics.

Loan amounts are presented at amortized cost which is comprised of the loan balance net of unearned loan fees in excess of unamortized costs and premiums of $ 17.2 million as of March 31, 2024 and $ 14.8 million as of December 31, 2023 .

Loan amounts are presented at amortized cost which is comprised of the loan balance net of unearned loan fees in excess of unamortized costs and premiums of $ 19.1 million as of June 30, 2024 and $ 14.8 million as of December 31, 2023 .

The amortized cost reflected in total loans receivable does not include accrued interest receivable.

Accrued interest receivable on loans was $ 6.6 million as of March 31, 2024 and $ 6.0 million as of December 31, 2023 , and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the calculation of the allowance for credit losses on loans.

Accrued interest receivable on loans was $ 7.1 million as of June 30, 2024 and $ 6.0 million as of December 31, 2023 , and was reported in accrued interest receivable on the consolidated balance sheets and is excluded from the calculation of the allowance for credit losses on loans.

The amortized cost of loans receivable, net of the allowance for credit losses on loans ("ACLL"), consisted of the following at the dates indicated:

March 31, 2024

June 30, 2024

December 31, 2023

31 unchanged sentences

The following table presents the amortized cost of nonaccrual loans by class of loan at the dates indicated:

March 31, 2024

June 30, 2024

December 31, 2023

20 unchanged sentences

$ 17,761 $ 12,507 $ 30,268 $ 747 $ 17,897 $ 18,644

Interest income recognized on a cash basis on nonaccrual loans for the three months ended March 31, 2024 and 2023 , was $ 75,000 and $ 9,000 , respectively.

Interest income recognized on a cash basis on nonaccrual loans for the three months ended June 30, 2024 and 2023 , was $ 66,000 and $ 18,000 , respectively.

Interest income recognized on a cash basis on nonaccrual loans for the six months ended June 30, 2024 and 2023 , was $ 141,000 and $ 26,000 , respectively.

Past due loans.

Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due.

There were three loans with a total amortized cost of $ 8.5 million that were past due 90 days or more and still accruing interest at March 31, 2024 .

There were three loans with a total amortized cost of $ 8.5 million that were past due 90 days or more and still accruing interest at June 30, 2024 .

The loans were well secured and met the regulatory criteria for continuing to accrue interest.

There were no loans past due 90 days or more and still accruing interest at December 31, 2023 .

The following tables present the amortized cost of past due loans by segment and class as of the periods shown:

The following tables present the amortized cost of past due loans (including both accruing and nonaccruing loans) by segment and class as of the periods shown:

90 Days or More

March 31, 2024

June 30, 2024

Past Due Past Due Past Due Past Due Current Total Loans

51 unchanged sentences

Loans not otherwise classified are considered pass graded loans and are rated 1 - 3 in our risk rating system.

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of March 31, 2024 , as well as gross charge-off activity for the three months ended March 31, 2024 .

The following table presents the amortized cost of loans receivable by internally assigned risk grade and class of loans as of June 30, 2024 , as well as gross charge-off activity for the six months ended June 30, 2024 .

Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

Term Loans by Year of Origination (1)

Term Loans by Year of Origination or Most Recent Renewal or Extension (1)

(In thousands)

76 unchanged sentences

1,687 190 3,839 3,788 — — ( 38 ) 9,466

Special Mention (Grade 5)

— — 14 — — — — 14

Substandard (Grade 6)

— 273 4,559 1,908 724 — 2,493 9,957

Loss (Grade 8)

— — — — 24 — 3 27

Total commercial business

10 unchanged sentences

8,153 15,496 4,573 10,854 3,774 1,013 2,525 46,388

Loss (Grade 8)

— — — — 24 — 3 27

$ 105,378 $ 239,665 $ 452,394 $ 412,832 $ 228,246 $ 191,947 $ 74,299 $ 1,704,761

Total gross charge-offs year-to-date

3 unchanged sentences

Term loans that are renewed or extended for periods longer than 90 days are presented as a new origination in the year of most recent renewal or extension.

Term Loans by Year of Origination (1)

Term Loans by Year of Origination or Most Recent Renewal or Extension (1)

(In thousands)

102 unchanged sentences

Changes in the ACLL for all other individually evaluated loans is based substantially on the Company’s evaluation of cash flows expected to be received from such loans.

As of March 31, 2024 , $ 20.6 million of loans were individually evaluated with $ 500,000 of ACLL attributed to such loans.

At March 31, 2024 , one individually evaluated loan totaling $ 2.5 million was evaluated using a discounted cash flow approach and the remaining loans totaling $ 18.1 million were evaluated based on the underlying value of the collateral.

The loan evaluated using the discounted cash flow method and one of the collateral dependent loans were accruing at quarter end, while the remaining collateral dependent loans were all on nonaccrual status at March 31, 2024 .

As of June 30, 2024 , $ 31.9 million of loans were individually evaluated with $ 3.7 million of ACLL attributed to such loans.

At June 30, 2024 , four individually evaluated loans totaling $ 2.8 million were evaluated using a discounted cash flow approach and the remaining loans totaling $ 29.1 million were evaluated based on the underlying value of the collateral.

Two of the loans evaluated using the discounted cash flow method were accruing at quarter end, while the remaining loans evaluated using the discounted cash flow method and collateral dependent loans were all on nonaccrual status at June 30, 2024 .

At December 31, 2023 , $ 20.0 million of loans were individually evaluated with $ 165,000 of ACLL attributed to such loans.

5 unchanged sentences

Collateral Type

March 31, 2024

June 30, 2024

Single Family Residence Multi-family Housing Condominium Automobile Business Assets Total

34 unchanged sentences

In those instances, the ACLL for a MLTB is determined through individual evaluation.

During the three months ended March 31, 2024 and 2023 , there were no new MLTB to report.

During the year ended December 31, 2023, there was one new MLTB, a commercial business loan with a recorded investment of $ 119,000 for which the Bank agreed to deferred principal payments.

During the six months ended June 30, 2024 , there was one new MLTB, a commercial business loan with a recorded investment of $ 16,000 for which the Bank agreed to defer payments.

The borrower has agreed to resume principal and interest payments at the end of the deferral period.

The loan was current at June 30, 2024 , based on the modified terms.

During the year ended December 31, 2023, there was one new MLTB, a commercial business loan with a recorded investment of $ 119,000 for which the Bank agreed to defer principal payments.

The borrower continues to make interest-only payments and the loan was current at year end based on the modified terms.

15 unchanged sentences

The following tables detail activity in the allowance for credit losses on loans by class for the periods shown:

At or For the Three Months Ended March 31, 2024

At or For the Three Months Ended June 30, 2024

Beginning Balance

15 unchanged sentences

$ 17,958 $ ( 832 ) $ 198 $ 4,138 $ 21,462

At or For the Three Months Ended March 31, 2023

At or For the Six Months Ended June 30, 2024

Beginning Balance

Provision for (Recapture of) Credit Losses

Ending Balance

(In thousands)

One-to-four family

$ 2,975 $ — $ 2 $ 1,559 $ 4,536

1,154 — — 470 1,624

Commercial real estate

3,671 — — ( 539 ) 3,132

Construction and land

1,889 — — 74 1,963

1,077 — — 615 1,692

Auto and other consumer

4,409 ( 1,638 ) 244 ( 148 ) 2,867

Commercial business

2,335 ( 33 ) — 3,346 5,648

$ 17,510 $ ( 1,671 ) $ 246 $ 5,377 $ 21,462

At or For the Three Months Ended June 30, 2023

Beginning Balance

Provision for (Recapture of) Credit Losses

Ending Balance

(In thousands)

One-to-four family

$ 2,903 $ — $ 4 $ 105 $ 3,012

1,045 — — ( 4 ) 1,041

Commercial real estate

2,979 — — ( 55 ) 2,924

Construction and land

2,782 — — ( 247 ) 2,535

1,084 — 5 36 1,125

Auto and other consumer

4,689 ( 972 ) 564 514 4,795

Commercial business

1,914 — — ( 49 ) 1,865

$ 17,396 $ ( 972 ) $ 573 $ 300 $ 17,297

At or For the Six Months Ended June 30, 2023

Beginning Balance

Impact of Day 1 CECL Adoption

Adjusted Beginning Balance

(Recapture of) Provision for Credit Losses

Provision for (Recapture of) Credit Losses

Ending Balance

16 unchanged sentences

The Company estimates expected credit losses on unfunded, off-balance sheet commitments over the contractual period in which the Company is exposed to credit risk from a contractual obligation to extend credit, unless the obligation is unconditionally cancellable by the Company.

The Company has determined that no allowance is necessary for its home equity line of credit portfolio as it has the ability to unconditionally cancel the available lines of credit.

The Company has determined that no allowance is necessary for its home equity line of credit portfolio as it has the contractual ability to unconditionally cancel the available lines of credit.

The allowance methodology is similar to the ACLL, but additionally includes an estimate of the future utilization of the commitment as determined by historical commitment utilization.

The credit risks associated with the unfunded commitments are consistent with the risks outlined for each loan class.

The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision (reversal of provision) for credit losses on the Consolidated Statements of Income.

The allowance for unfunded commitments was $ 548,000 and $ 817,000 at March 31, 2024 , and December 31, 2023 , respectively.

The allowance is recognized in accrued expenses and other liabilities on the Consolidated Balance Sheets and is adjusted as a provision, or recapture of provision, for credit losses on the Consolidated Statements of Income.

The allowance for unfunded commitments was $ 647,000 and $ 817,000 at June 30, 2024 , and December 31, 2023 , respectively.

Note 5 - Premises and Equipment

Premises and equipment consist of the following as of:

June 30, 2024

December 31, 2023

(In thousands)

$ 676 $ 2,907

Building improvements

11,235 17,945

Furniture, fixtures, and equipment

Construction in progress

Total premises and equipment

23,809 35,618

Less accumulated depreciation and amortization

( 13,095 ) ( 17,569 )

Premises and equipment, net of accumulated depreciation and amortization

$ 10,714 $ 18,049

Depreciation expense for the three months ended June 30, 2024 and 2023 , was $ 364,000 and $ 404,000 , respectively.

Depreciation expense for the six months ended June 30, 2024 and 2023 , was $ 745,000 and $ 799,000 , respectively.

Note 6 - Leases

The Bank has lease agreements with unaffiliated parties for fifteen locations, comprised of eleven full-service branches, three business centers, and a parking easement.

Lease expirations range from one to twenty years, with additional renewal options on certain leases ranging from two to ten years.

If the exercise of a renewal option is considered to be reasonably certain, the Company includes the extended term in the calculation of the right-of-use asset and lease liability.

At June 30, 2024 , the Company's right of use assets included in other assets and lease liabilities included in other liabilities were $ 17.6 million and $ 18.0 million, respectively.

Total costs incurred by the Company, as a lessee, were $ 864,000 and $ 573,000 for the six months ended June 30, 2024 and 2023 , respectively, and principally related to contractual lease payments on operating leases.

The Company's leases do not impose significant covenants or other restrictions on the Company.

The following table presents amounts relevant to the Company's assets leased for use in its operations at the dates indicated:

Three Months Ended June 30,

Six Months Ended June 30,

(In Thousands)

Operating cash flows from operating leases

$ 551 $ 292 $ 864 $ 573

Right of use assets obtained in exchange for new operating lease liabilities

12,158 — 12,158 —

The following table presents the weighted-average remaining lease terms and discount rates of the Company's assets leased for use in its operations at the dates indicated:

June 30, 2024

December 31, 2023

Weighted-average remaining lease term of operating leases (in years)

Weighted-average discount rate of operating leases

All lease agreements require the Bank to pay its pro-rata share of building operating expenses.

The minimum annual lease payments under non-cancelable operating leases with initial or remaining terms of one year or more through the initial lease term are as follows:

Twelve-month period ending:

(In Thousands)

June 30, 2025

June 30, 2026

June 30, 2027

June 30, 2028

June 30, 2029

Total minimum payments required

Less imputed interest

Present value of lease liabilities

Note 7 - Deposits

Deposits and weighted-average interest rates at the dates indicated are as follows:

March 31, 2024

June 30, 2024

December 31, 2023

16 unchanged sentences

$ 1,708,288 2.67 $ 1,676,892 2.34

The aggregate amount of time deposits in excess of the Federal Deposit Insurance Corporation ("FDIC") insured limit, currently $250,000, at March 31, 2024 and December 31, 2023 , were $ 159.1 million and $ 173.8 million, respectively.

The aggregate amount of time deposits in excess of the Federal Deposit Insurance Corporation ("FDIC") insured limit, currently $250,000, at June 30, 2024 and December 31, 2023 , were $ 151.2 million and $ 173.8 million, respectively.

Maturities of certificates at the dates indicated are as follows:

March 31, 2024

June 30, 2024

December 31, 2023

12 unchanged sentences

$ 621,866 $ 651,038

At March 31, 2024 and December 31, 2023 , deposits included $ 115.8 million and $ 114.2 million, respectively, in public fund deposits.

The Bank had an outstanding letter of credit from the Federal Home Loan Bank of Des Moines ("FHLB") with a notional amount of $ 60.0 million at March 31, 2024 and December 31, 2023 , to secure public deposits.

At June 30, 2024 and December 31, 2023 , deposits included $ 120.0 million and $ 114.2 million, respectively, in public fund deposits.

The Bank had an outstanding letter of credit from the Federal Home Loan Bank of Des Moines ("FHLB") with a notional amount of $ 60.0 million at June 30, 2024 and December 31, 2023 , to secure public deposits.

This exceeds the minimum collateral requirements established by the Washington Public Deposit Protection Commission.

Also included in deposits at March 31, 2024 and December 31, 2023 , were funds held by federally recognized tribes totaling $ 18.3 million and $ 18.4 million, respectively.

Investment securities with a carrying value of $ 23.0 million and $ 23.8 million were pledged as collateral for these deposits at March 31, 2024 and December 31, 2023 , respectively.

Also included in deposits at June 30, 2024 and December 31, 2023 , were funds held by federally recognized tribes totaling $ 18.5 million and $ 18.4 million, respectively.

Investment securities with a carrying value of $ 22.2 million and $ 23.8 million were pledged as collateral for these deposits at June 30, 2024 and December 31, 2023 , respectively.

This exceeds the minimum collateral requirements established by the Bureau of Indian Affairs.

Interest on deposits by type for the periods shown was as follows:

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

Demand deposits

$ 193 $ 201 $ 380 $ 395

Money market accounts

2,420 944 4,369 1,720

Savings accounts

915 762 1,868 1,138

Certificates of deposit, retail

4,079 2,947 8,573 4,818

Certificates of deposit, brokered

2,573 1,355 5,102 2,491

Total interest expense on deposits

6 unchanged sentences

First Fed periodically uses fixed-rate advances maturing in less than one year as an alternative source of funds.

Available borrowing capacity was $ 213.0 million and $ 253.8 million at March 31, 2024 and December 31, 2023 , respectively.

All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $ 905.9 million and $ 896.2 million at March 31, 2024 and December 31, 2023 , respectively.

The Bank had outstanding letters of credit from the FHLB with notional amounts of $ 60.0 million to secure public deposits and $ 772,000 to secure the Bellevue, Washington branch lease at March 31, 2024 .

Available borrowing capacity was $ 257.6 million and $ 253.8 million at June 30, 2024 and December 31, 2023 , respectively.

All borrowings are secured by collateral consisting of single-family, home equity, commercial real estate, and multi-family loans receivable in the amounts of $ 909.4 million and $ 896.2 million at June 30, 2024 and December 31, 2023 , respectively.

First Fed also has an established borrowing arrangement with the Federal Reserve Bank of San Francisco ("FRB") to utilize the discount window for short-term borrowing.

Available borrowing capacity was $ 17.4 million and $ 6.6 million at March 31, 2024 and December 31, 2023 , respectively.

No funds have been borrowed to date.

Investment securities with a carrying value of $ 18.2 million and $ 6.9 million were pledged to the FRB at March 31, 2024 and December 31, 2023 , respectively.

Available borrowing capacity was $ 17.0 million and $ 6.6 million at June 30, 2024 and December 31, 2023 , respectively.

An overnight test of the line of credit was performed at the end of June 2024.

Investment securities with a carrying value of $ 17.8 million and $ 6.9 million were pledged to the FRB at June 30, 2024 and December 31, 2023 , respectively.

On March 25, 2021, the Company completed a private placement of $ 40.0 million of 3.75 % fixed-to-floating rate subordinated notes due 2031 (the "Notes") to certain qualified institutional buyers and institutional accredited investors.

4 unchanged sentences

Borrowings are secured by a blanket lien on First Northwest's personal property assets (with certain exclusions), including all the outstanding shares of First Fed, cash, loans receivable, and limited partnership investments.

The line of credit matures on May 18, 2024 , with the option for one 364 -day extension.

The line of credit matures on May 17, 2025 .

In June 2023, First Fed established a Bank Term Funding Program ("BTFP") borrowing arrangement with the FRB as an additional source of liquidity.

Available borrowing capacity was $ 15.2 million at December 31, 2023.

No funds were borrowed prior to the new loan cutoff date in March 2024, effectively ending the Bank's participation in the program.

No funds were borrowed between June 2023 and March 2024, when the BTFP stopped funding new loans, effectively ending the Bank's participation in the program.

Investment securities with a carrying value of $ 12.9 million were pledged to secure the BTFP at December 31, 2023.

The following table sets forth information regarding our borrowings at the end of and during the three months ended March 31, 2024 .

The following table sets forth information regarding our borrowings at the end of and during the six months ended June 30, 2024 .

The table includes both long- and short-term borrowings.

1 unchanged sentence

FHLB Overnight Variable-Rate Advances

FHLB Short-Term Fixed-Rate Advances

FRB Discount Window

Line of Credit

10 unchanged sentences

3.60 % 5.53 % 5.27 % 9.00 % 4.02 %

The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at March 31, 2024 are as follows:

The amounts by year of maturity and weighted-average interest rate of FHLB long-term, fixed-rate advances at June 30, 2024 are as follows:

Weighted- Average Interest Rate

30 unchanged sentences

Actual results could differ significantly from the estimates and interpretations used in determining the current and deferred income tax assets and liabilities.

The effective tax rates were 53.0 % and 19.3 % for the three months ended March 31, 2024 and 2023 , respectively.

The effective tax rates were 30.1 % and 20.2 % for the six months ended June 30, 2024 and 2023 , respectively.

The effective tax rates differ from the statutory maximum federal tax rate for 2024 and 2023 of 21 %, largely due to the nontaxable earnings on bank-owned life insurance ("BOLI") and tax-exempt interest income earned on certain investment securities and loans.

The current quarter rate includes an estimate for taxes and penalties on the early surrender of a BOLI contract which was recorded in the first quarter of 2024.

The current period rate includes an estimate for taxes and penalties on the early surrender of a BOLI contract which was recorded in the first quarter of 2024.

Note 10 - Earnings per Common Share

3 unchanged sentences

The following table presents a reconciliation of the components used to compute basic and diluted earnings per share for the periods shown:

Three Months Ended

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands, except share data)

2 unchanged sentences

Earnings allocated to participating securities

( 2 ) ( 9 ) ( 3 ) ( 28 )

Earnings allocated to common shareholders

19 unchanged sentences

Potentially dilutive shares are excluded from the computation of EPS if their effect is anti-dilutive.

At March 31, 2024 and 2023 , antidilutive shares as calculated under the treasury stock method totaled 582 and 7,934 , respectively.

At June 30, 2024 and 2023 , antidilutive shares as calculated under the treasury stock method totaled 6,715 and 14,987 , respectively.

Note 11 - Employee Benefits

5 unchanged sentences

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.

No principal and interest payment was made by the ESOP during the three months ended March 31, 2024 .

Principal and interest payments of $ 837,000 and $ 835,000 , respectively, were made by the ESOP during the six months ended June 30, 2024 and 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.

2 unchanged sentences

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 March 31, 2024 and 2023 , was $ 197,000 and $ 187,000 , respectively.

Compensation expense related to the ESOP for the three months ended June 30, 2024 and 2023 , was $ 148,000 and $ 153,000 , respectively.

Compensation expense related to the ESOP for the six months ended June 30, 2024 and 2023 , was $ 345,000 and $ 340,000 , respectively.

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

March 31, 2024

June 30, 2024

December 31, 2023

3 unchanged sentences

Committed to be released shares

39,771 26,514

Unallocated shares

8 unchanged sentences

The maximum number of shares that may be utilized for awards under the 2020 EIP is 520,000 .

As of March 31, 2024 , there were 234,599 total shares available for grant under the 2020 EIP, all of which are available to be granted as restricted shares.

As of June 30, 2024 , there were 222,448 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.

As of March 31, 2024 , there were no shares available for grant under the 2015 EIP.

As of June 30, 2024 , there were no shares available for grant under the 2015 EIP.

At this date, there are 14,300 shares granted under the 2015 EIP that are expected to vest subject to the 2015 EIP plan provisions.

There were 55,987 and 27,049 shares of restricted stock awarded, respectively, during the three months ended March 31, 2024 and 2023 .

There were 68,138 and 29,349 shares of restricted stock awarded, respectively, during the six months ended June 30, 2024 and 2023 .

Awarded shares of restricted stock 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.

For the three months ended March 31, 2024 and 2023 , total compensation expense for the equity incentive plans was $ 264,000 and $ 391,000 , respectively.

Included in the compensation expense for the three months ended March 31, 2024 and 2023 , was directors' equity compensation of $ 54,000 and $ 58,000 , respectively.

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

For the Three Months Ended

March 31, 2024

Weighted-Average Grant Date Fair Value

For the three months ended June 30, 2024 and 2023 , total compensation expense for the equity incentive plans was $ 257,000 and $ 358,000 , respectively.

Included in the compensation expense for the three months ended June 30, 2024 and 2023 , was directors' equity compensation of $ 56,000 and $ 73,000 , respectively.

For the six months ended June 30, 2024 and 2023 , total compensation expense for the equity incentive plans was $ 521,000 and $ 749,000 , respectively.

Included in the compensation expense for the six months ended June 30, 2024 and 2023 , was directors' equity compensation of $ 110,000 and $ 131,000 , respectively.

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

Three Months Ended June 30, 2024

Shares Weighted-Average Grant Date Fair Value

Non-vested at April 1, 2024

102,358 $ 16.12

( 4,666 ) 14.54

( 1,700 ) 14.54

Non-vested at June 30, 2024

108,143 15.60

(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 participant's tax obligation on the vested shares.

The surrendered shares are canceled and are unavailable for reissue.

Six Months Ended June 30, 2024

Shares Weighted-Average Grant Date Fair Value

Non-vested at January 1, 2024

3 unchanged sentences

( 1,475 ) 13.50

Non-vested at March 31, 2024

Non-vested at June 30, 2024

108,143 15.60

1 unchanged sentence

The surrendered shares are canceled and are unavailable for reissue.

As of March 31, 2024 , there was $ 1.4 million of total unrecognized compensation cost related to non-vested shares granted as restricted stock awards.

As of June 30, 2024 , there was $ 1.3 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 1.94 years.

46 unchanged sentences

The following tables show the Company’s assets and liabilities measured at fair value on a recurring basis at the dates indicated:

March 31, 2024

June 30, 2024

Quoted Prices in Active Markets for Identical Assets or Liabilities

20 unchanged sentences

Interest rate swap derivative

Total assets measured at fair value

— 1,318 — 1,318

Financial Liabilities

Interest rate swap derivative

Total assets measured at fair value

$ 6,897 $ 285,666 $ 33,794 $ 326,357

December 31, 2023

Quoted Prices in Active Markets for Identical Assets or Liabilities Significant Other Observable Inputs

Quoted Prices in Active Markets for Identical Assets or Liabilities

Significant Other Observable Inputs

Significant Unobservable Inputs

22 unchanged sentences

The following tables provide a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at the dates indicated:

March 31, 2024

June 30, 2024

Fair Value (In thousands)

34 unchanged sentences

The following tables summarize the changes in Level 3 assets measured at fair value on a recurring basis, at the dates indicated:

As of or For the Three Months Ended March 31,

As of or For the Three Months Ended June 30,

As of or For the Six Months Ended June 30,

Sold loan servicing rights:

4 unchanged sentences

Changes in fair value due to changes in model inputs or assumptions (1)

( 103 ) ( 406 ) ( 86 ) ( 137 )

Balance at end of period

1 unchanged sentence

(1) Represents changes due to collection/realization of expected cash flows and curtailments.

As of or For the Three Months Ended March 31,

As of or For the Three Months Ended June 30,

As of or For the Six Months Ended June 30,

Securities available for sale:

4 unchanged sentences

Principal payments received

Unrealized Gains

( 134 ) — ( 10,382 ) —

Unrealized Gains (Losses)

14 ( 244 ) 144 ( 221 )

Balance at end of period

$ 17,231 $ 29,378 $ 17,231 $ 29,378

As of or For the Three Months Ended March 31,

(In thousands)

As of or For the Three Months Ended June 30,

As of or For the Six Months Ended June 30,

Partnership investments:

(In thousands)

Balance at beginning of period

1 unchanged sentence

Funding contributions (1)

6,256 209 6,306 209

Distributions received (1)

Unrealized Losses

( 6,236 ) ( 347 ) ( 6,499 ) ( 347 )

Unrealized (Losses) Gains

( 57 ) 315 ( 167 ) 308

Balance at end of period

$ 12,823 $ 12,733 $ 12,823 $ 12,733

( 1 ) In the second quarter of 2024, a redemption of First Northwest's limited partnership investment in Meriwether Group Hero Fund LP was offset by a subsequent limited partnership investment in the same entity by First Fed.

Assets and liabilities measured at fair value on a nonrecurring basis - Assets are considered to be valued on a nonrecurring basis if the fair value measurement of the instrument does not necessarily result in a change in the amount recorded on the consolidated balance sheets.

1 unchanged sentence

The following tables present the Company’s assets measured at fair value on a nonrecurring basis at the dates indicated:

March 31, 2024

June 30, 2024

(In thousands)

5 unchanged sentences

$ — $ — $ 17,388 $ 17,388

At March 31, 2024 and December 31, 2023 , there were no individually evaluated loans with discounts to appraisal disposition value or other unobservable inputs.

At June 30, 2024 and December 31, 2023 , there were no individually evaluated loans with discounts to appraisal disposition value or other unobservable inputs.

The following tables present the carrying value and estimated fair value of financial instruments at the dates indicated:

March 31, 2024

June 30, 2024

Fair Value Measurements Using:

33 unchanged sentences

3,143 3,143 — 3,143 —

Interest rate swap derivative

December 31, 2023

42 unchanged sentences

(In thousands)

Balance at March 31, 2023

$ ( 34,642 ) $ ( 600 ) $ ( 1,509 ) $ ( 1,357 ) $ ( 38,108 )

Other comprehensive (loss) income before reclassification

( 3,037 ) — — 1,049 ( 1,988 )

Amounts reclassified from accumulated other comprehensive income

Net other comprehensive (loss) income

( 3,037 ) — 30 1,049 ( 1,958 )

Balance at June 30, 2023

$ ( 37,679 ) $ ( 600 ) $ ( 1,479 ) $ ( 308 ) $ ( 40,066 )

Balance at March 31, 2024

$ ( 30,687 ) $ ( 288 ) $ ( 1,392 ) $ ( 98 ) $ ( 32,465 )

Other comprehensive (loss) income before reclassification

( 997 ) — — 172 ( 825 )

Amounts reclassified from accumulated other comprehensive income

1,663 — 30 — 1,693

Net other comprehensive income

666 — 30 172 868

Balance at June 30, 2024

$ ( 30,021 ) $ ( 288 ) $ ( 1,362 ) $ 74 $ ( 31,597 )

Balance at December 31, 2022

5 unchanged sentences

725 — 60 ( 308 ) 477

Balance at March 31, 2023

Balance at June 30, 2023

$ ( 37,679 ) $ ( 600 ) $ ( 1,479 ) $ ( 308 ) $ ( 40,066 )

4 unchanged sentences

Amounts reclassified from accumulated other comprehensive income

Net other comprehensive (loss) income

1,663 — 59 — 1,722

Balance at March 31, 2024

Net other comprehensive income

78 — 59 902 1,039

Balance at June 30, 2024

$ ( 30,021 ) $ ( 288 ) $ ( 1,362 ) $ 74 $ ( 31,597 )

Note 15 - Derivatives and Hedging Activities

13 unchanged sentences

Line item in the Consolidated Balance Sheets where the hedged item is included:

March 31, 2024

June 30, 2024

Investment securities (1)

8 unchanged sentences

( 1 ) These amounts include the amortized cost basis of a closed portfolio of AFS securities used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period.

At March 31, 2024 and December 31, 2023 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 57.1 million and $ 57.4 million, respectively;

At June 30, 2024 and December 31, 2023 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 57.0 million and $ 57.4 million, respectively;

the cumulative basis adjustments associated with this hedging relationship was ($ 95,000 ) and $ 1.1 million, respectively;

1 unchanged sentence

( 2 ) These amounts include the amortized cost basis of a closed portfolio of loans receivable used to designate hedging relationships in which the hedged item is the stated amount of assets in the closed portfolio anticipated to be outstanding for the designated hedged period.

At March 31, 2024 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 297.2 million, the cumulative basis adjustments associated with this hedging relationship was ($ 711,000 ), and the amount of the designated hedged items was $100.0 million.

At June 30, 2024 , the amortized cost basis of the closed portfolio used in this hedging relationship was $ 289.8 million, the cumulative basis adjustments associated with this hedging relationship was $( 1.0 ) million, and the amount of the designated hedged items was $ 100.0 million.

No prior year end information is provided as this hedging relationship was initiated in 2024.

4 unchanged sentences

(In thousands)

March 31, 2024

June 30, 2024

Fair value hedges:

8 unchanged sentences

The following table summarizes the effect of fair value accounting on the Consolidated Statements of Income for the periods shown:

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

(In thousands)

2 unchanged sentences

Total amounts recognized in interest and fees on loans receivable (1)

23,749 — 46,516 —

Net gains (losses) on fair value hedging relationships

6 unchanged sentences

Recognized on hedged items (1)

1,728 — 1,017 —

Recognized on derivatives designated as hedging instruments (1)

Net income recognized on fair value

( 2,128 ) — ( 1,244 ) —

Net (expense) income recognized on fair value

$ ( 741 ) $ 107 $ ( 380 ) $ 138

(1) Fair value hedge on loans initiated in 2024.

Amounts presented for 2023 are limited to the fair value hedge on securities.

Credit Risk-related Contingent Features

4 unchanged sentences

The Company has interest rate swap agreements with its derivative counterparties that contain provisions where if the Company either defaults or fails to maintain its status as a well or adequately capitalized institution, then the Company could be required to terminate the contract or post additional collateral.

At March 31, 2024 , the Company had $ 44,000 of derivatives in a net liability position related to these agreements.

The Company has minimum collateral posting thresholds with its derivative counterparties and has posted cash of $ 1.1 million to secure the related interest rate swap agreements at March 31, 2024 .

At June 30, 2024 , the Company had no derivatives in a net liability position related to these agreements.

The Company has minimum collateral posting thresholds with its derivative counterparties and has posted cash of $ 1.1 million at June 30, 2024 , to secure the related interest rate swap agreements as needed.

In certain cases, the Company will have posted excess collateral compared to total exposure due to initial margin requirements or day-to-day rate volatility.

As of March 31, 2024 , the Company was in compliance with all credit risk-related contingent features.

As of June 30, 2024 , the Company was in compliance with all credit risk-related contingent features.

Given the considerations described above, the Company considers the impact of the risk of counterparty default to be immaterial.

9 unchanged sentences

Net income is used to monitor budget versus actual results and assess the performance of the Bank.

Note 15 - Premises Held for Sale

Note 17 - Sale and Leaseback of Premises

On January 30, 2024, the Bank entered into an agreement for the purchase and sale of real property (the "Sale Agreement") with Mountainseed Real Estate Services, LLC, a Georgia limited liability company ("Mountainseed"), providing for the Bank’s sale to Mountainseed of up to six properties (the "Properties").

1 unchanged sentence

Upon signing the agreement, the Company classified the related properties as held for sale and presented them separately on the Consolidated Balance Sheets at cost, net of accumulated amortization.

The sale of all six properties was finalized on May 7, 2024, for an aggregate cash sales price of $ 14.7 million.

An estimated pre-tax gain on sale of $ 7.9 million will be recorded in noninterest income for the second quarter of 2024.

The sale of all six properties was completed on May 7, 2024, for an aggregate cash sales price of $ 14.7 million.

A pre-tax gain on sale of $ 7.9 million was recorded in noninterest income for the second quarter of 2024.

Premises and equipment, net of depreciation, decreased by $ 6.8 million in the second quarter of 2024.

Concurrent with the closing of the sale of the Properties, the Bank entered into triple net lease agreements (the "Lease Agreements") to lease back each of the Properties sold.

Each Lease Agreement has an initial term of 15 years with one 15 -year renewal option.

Monthly rent expense of approximately $ 130,000 in the aggregate for all Properties will be recorded in Occupancy and Equipment for a total expense of $ 1.0 million in 2024.

The increase in rent will be partially oﬀset by the elimination of annualized depreciation expense on the buildings of $ 204,000 .

The executed Lease Agreements also generated right of use assets totaling $ 12.2 million and lease liabilities of $ 12.2 million resulting in increases to other assets and other liabilities, respectively, on the Consolidated Balance Sheets that will be recorded during the second quarter of 2024.

Going forward, a monthly rent expense of $ 130,000 in the aggregate for all Properties will be recorded in Occupancy and Equipment.

The total estimated rent expense for the leaseback of these properties for 2024 is $ 1.0 million.

The annual increase in rent is expected to be partially oﬀset by the elimination of annualized depreciation expense on the buildings of $ 204,000 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements