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ESOP

Substantially all of the Company’s employees who are at least 21 years old and have one year of employment with the Company participate in the 2015 HopFed Bancorp, Inc. Employee Stock Ownership Plan (“ESOP”). The ESOP purchased 600,000 shares of the Company’s common stock from the Company on March 2, 2015 at $13.14 per share. The ESOP borrowed $7.9 million from an open-end line of credit from the Company for the purchase of the stock, using the 600,000 shares of common stock as collateral. The Company makes discretionary contributions to the ESOP. The ESOP utilizes these contributions along with the dividends on unearned shares held by the ESOP to repay the loan from the Company. When loan payments are made, ESOP shares are released based on reductions in the principal balance of the loan. The shares are allocated to participants based on relative compensation.

Employees may withdraw proceeds from the ESOP in the year after their employment with the Company is terminated. Former employees have the option of selling Company shares back into the ESOP or withdrawing shares. Employees who are not employed on December 31st of each year are not eligible for participation in the ESOP. The Company anticipates that loan payments will be made at the end of each year. Participants receive shares at the end of employment. The Company has the option to repurchase the shares or provide the shares directly to the employee.

The Company made its fourth ESOP loan payment in December 2018. At March 31, 2019 and December 31, 2018, shares held by the ESOP were as follows:


	March 31, 2019		December 31, 2018
Accrued for allocation to participants
Earned ESOP shares		226,508		215,510
Unearned ESOP shares		371,693		382,691

Total ESOP shares		598,201		598,201

Share price at end of period	$	19.70	$	13.29

Fair value of unearned shares	$	7,322,352	$	5,085,963