NOTE (9) – ESOP Plan

Employees participate in an Employee Stock Option Plan (“ESOP”) after attaining certain age and service requirements. In December 2016, the ESOP purchased 1,493,679 shares of the Company’s common stock at $1.59 per share, for a total cost of $2.4 million, of which $1.2 million was funded with a loan from the Company. The loan will be repaid from the Bank’s annual discretionary contributions to the ESOP, net of dividends paid, over a period of 20 years. Shares of the Company’s common stock purchased by the ESOP are held in a suspense account until released for allocation to participants. When loan payments are made, shares are allocated to each eligible participant based on the ratio of each such participant’s compensation, as defined in the ESOP, to the total compensation of all eligible plan participants. As the unearned shares are released from the suspense account, the Company recognizes compensation expense equal to the fair value of the ESOP shares during the periods in which they become committed to be released. To the extent that the fair value of the ESOP shares released differs from the cost of such shares, the difference is charged or credited to equity as additional paid-in capital. Dividends on allocated shares increase participant accounts. At the end of employment, participants will receive shares for their vested balance. Compensation expense related to the ESOP was $25 thousand and $19 thousand for the three months ended June 30, 2017 and 2016, respectively, and $47 thousand and $45 thousand for the six months ended June 30, 2017 and 2016, respectively.

Shares held by the ESOP were as follows:

	June 30, 2017		December 31, 2016
	(Dollars in thousands)

Allocated to participants	1,114,683		1,114,683
Suspense shares	739,748		739,748
Total ESOP shares	1,854,431		1,854,431

Fair value of unearned shares	$	1,512	$	1,213

The outstanding balance of unallocated shares at June 30, 2017 and December 31, 2016, was $1.1 million and $1.2 million, respectively, which is shown as Unearned ESOP shares in the equity section of the consolidated statements of financial condition. As of June 30, 2017, 26,750 shares were committed to be released.