NOTE

20:

Employee Benefits

Profit Sharing Plan

The Company provides a noncontributory profit sharing plan for eligible employees who have completed

one

year of service. The amount of the Company’s annual contribution is determined by the Board. Profit sharing expense was

$573,000

and

$565,000

for the years ended

December 31, 2018

and

2017,

respectively.

The Company’s profit sharing plan includes a

401

(k) feature. At the discretion of the Board, the Company

may

match up to

50.00%

of participants’ contributions up to a maximum of

4.00%

of participants’ salaries. For the years ended

December 31, 2018

and

2017,

the Company’s match totaled

$270,000

and

$206,000,

respectively.

Deferred Compensation Plans

The Company has entered into deferred compensation contracts with current key employees. The contracts provide fixed benefits payable in equal annual installments upon retirement. The Company purchased life insurance contracts that

may

be used to fund the payments. The charge to expense is based on the present value computations of anticipated liabilities. For the years ended

December 31, 2018

and

2017,

the total expense was

$382,000

and

$272,000,

respectively. The Company recorded a liability for the deferred compensation plan of

$2,093,000

and

$1,833,000

December 31, 2018

and

2017,

respectively, which are included in accrued expenses and other liabilities in the consolidated statements of financial condition.

Employee Stock Ownership Plan

The Company has established an ESOP for eligible employees who meet certain age and service requirements. At inception, in

April 2000,

the ESOP borrowed

$368,000

from Eagle Bancorp and used the funds to purchase

46,006

shares of common stock, at

per share, in the initial offering. This borrowing was fully paid on

December 31, 2009.

Again, in conjunction with the subsequent offering in

April 2010,

the ESOP borrowed

$1,971,420

from Eagle Bancorp Montana, Inc. and used the funds to purchase

197,142

shares of common stock, at

$10

per share. The Bank makes periodic contributions to the ESOP sufficient to satisfy the debt service requirements of the loan that has a

twelve

-year term and bears interest at

8.00%.

The ESOP uses these contributions, and any dividends received by the ESOP on unallocated shares, to make principal and interest payments on the loan.

Shares purchased by the ESOP are held in a suspense account by the plan trustee until allocated to participant accounts. Shares released from the suspense account are allocated to participants on the basis of their relative compensation in the year of allocation. Participants become vested in the allocated shares over a period

not

to exceed

seven

years. Any forfeited shares are allocated to other participants in the same proportion as contributions.

Total ESOP expenses of

$293,000

and

$292,000

were recognized for the years ended

December 31, 2018

and

2017,

respectively. Shares totaling

16,616

were released and allocated to participants during the years ended

December 31, 2018

and

2017.

The cost of the

47,594

ESOP shares (

$477,000

December 31, 2018)

that have

not

yet been allocated or committed to be released to participants is deducted from shareholders’ equity. The fair value of these shares was approximately

$785,000

December 31, 2018.

Stock Incentive Plan

The Company adopted the stock incentive plan on

November 1, 2011

and the original number of shares of restricted stock for issuance under the plan was

98,571.

The plan provides for different types of awards including stock options, restricted stock and performance shares. Under the plan,

98,571

shares of restricted stock were granted to directors and certain officers during

November 2011.

The plan was amended during the year ended

December 31, 2015

to increase the number of shares of restricted stock for issuance under the plan from

98,571

168,571.

The plan was amended again during the year ended

December 31, 2017

to increase the number of shares of restricted stock for issuance under the plan from

168,571

218,571.

Shares of restricted stock vest in equal installments over

five

years beginning

one

year from the grant date.

Stock Incentive Plan – continued

The following table shows the activity of the awards granted:

	Number of
	Shares

Unvested awards as of January 1, 2017		64,268
Awards granted		30,700
Awards vested		(13,228	)
Awards forfeited		(17,280	)
Unvested awards as of December 31, 2017		64,460
Awards granted		12,900
Awards vested		(17,200	)
Awards forfeited		-
Unvested awards as of December 31, 2018		60,160

$287,000

and

$277,000

was recognized as expense during the years ended

December 31, 2018

and

2017,

respectively, and is included in salaries and employee benefits in the consolidated statements of income. As of

December 31, 2018,

60,160

shares of restricted stock remain unvested, for which the Company estimates to recognize expense of approximately

$914,000

November 2023.