ESOP Plan

9 Months Ended

Sep. 30, 2023

NOTE 9 – ESOP Plan

Employees participate in the ESOP after attaining certain age and service requirements. In 2022, the ESOP purchased 58,369 shares of the Company’s common stock at an average cost of $8.56 per share for a total cost of $500 thousand and during the first nine months of 2023 the ESOP purchased 369,958 shares of the Company’s common stock at an average cost of $9.19 per share for a total cost of $3.4 million. These purchases were funded with a $5.0 million line of credit 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. Any dividends on allocated shares increase participant accounts. Any dividends on unallocated shares will be used to repay the loan. Participants will receive shares for their vested balance at the end of their employment. Compensation expense related to the ESOP was $11 thousand and $11 thousand for the three months ended September 30, 2023 and 2022, respectively, and $33 thousand and $56 thousand for the nine months ended September 30, 2023 and 2022, respectively.

Shares held by the ESOP were as follows:

	September 30, 2023		December 31, 2022
	(Dollars in thousands)
Allocated to participants		132,188		132,188
Committed to be released		4,946		1,237
Suspense shares		484,800		118,561
Total ESOP shares		621,934		251,986
Fair value of unearned shares	$	4,460	$	1,016

The book value of unearned shares, which are reported as Unearned ESOP shares in the equity section of the consolidated statements of financial condition, were $4.8 million and $1.3 million at September 30, 2023 and December 31, 2022, respectively.

All common stock share amounts and per share amounts above have been retroactively adjusted for the 1-for-8 reverse stock split effective November 1, 2023. See Note 1.