First Northwest Bancorp Leases Disclosure
Note 6 - Leases
The Bank has lease agreements with unaffiliated parties for fifteen locations, comprised of eleven full-service branches, business centers, and a parking easement. Lease expirations range from to years, with additional renewal options on certain leases ranging from to 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 December 31, 2025, the Company's ROU assets and lease liabilities were $15.6 million and $16.4 million, respectively.
Total costs incurred by the Company, as a lessee, were $2.7 million and $2.3 million for the years ended December 31, 2025 and 2024, 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. In the second quarter of 2025, the Bank consolidated its Bellevue and Fremont business centers into a new location. As a result, the ROU asset and lease liability balances decreased $1.9 million for the terminated leases and increased $1.3 million related to the lease for the new Seattle business center. An additional decrease of $185,000 was recorded in the fourth quarter of 2025 related to the announced closure of the Bellevue branch in April 2026.
The following table presents amounts relevant to the Company's assets leased for use in its operations for the years ended:
| (dollars in thousands) | December 31, 2025 | December 31, 2024 | ||||||
| Operating cash flows from operating leases | $ | 2,704 | $ | 2,256 | ||||
| Right of use assets obtained in exchange for new operating lease liabilities | 1,264 | 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:
| December 31, 2025 | December 31, 2024 | |||||||
| Weighted-average remaining lease term of operating leases (in years) | 12.0 | 12.4 | ||||||
| Weighted-average discount rate of operating leases | 7.8 | % | 7.3 | % | ||||
All lease agreements require the Bank to pay its pro-rata share of building operating expenses. The minimum annual lease payments under non-cancellable operating leases with initial or remaining terms of one year or more through the initial lease term are as follows:
| (dollars in thousands) | December 31, 2025 | |||
| Twelve-month period ending: | ||||
| 2026 | $ | 2,125 | ||
| 2027 | 2,197 | |||
| 2028 | 2,124 | |||
| 2029 | 2,102 | |||
| 2030 | 2,143 | |||
| Thereafter | 16,447 | |||
| Total minimum payments required | $ | 27,138 | ||
| Less imputed interest | 10,699 | |||
| Present value of lease liabilities | $ | 16,439 | ||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 12, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 15, 2024 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.