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Employee Stock Ownership Plan
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
Employee Stock Ownership Plan Employee Stock Ownership Plan
The Bank maintains an Employee Stock Ownership Plan (“ESOP”). All full-time employees are eligible to participate in the ESOP after they attain age 21 and complete one year of service during which they work at least 1000 hours. ESOP shares are allocated among participants on the basis of compensation earned during the year. Employees are fully vested in their ESOP account after the completion of five years of credited service or completely, if service was terminated due to death, retirement, disability or change in control of the Company. ESOP participants are entitled to receive distributions from the ESOP account only upon termination of service, which includes retirement and death, except that a participant may elect to have dividends distributed as a cash payment on a quarterly basis.
The ESOP originally borrowed $13.4 million from the Company to purchase 2,013,137 shares of common stock. In 1998, the initial loan agreement was amended to allow the ESOP to borrow an additional $8.2 million in order to fund the purchase of 633,750 shares of common stock. At the same time, the term of the loan was extended from the initial 12 years to 30 years. In 2018, the loan agreement was amended (“amended loan”) to allow the ESOP to borrow an additional $8.4 million in order to fund the purchase of 292,592 shares of common stock. At the same time, the fixed interest rate of the loan was reduced from 8.25% to 3.25%. On November 9, 2021, the ESOP borrowed an additional $3.2 million from the Company to fund the purchase of 145,693 shares of common stock (“2021 loan”), and the loan had a fixed interest rate of 0.22% that matures on December 31, 2023. Both the amended loan and 2021 loan are to be repaid from contributions by the Bank to the ESOP trustee. The Bank is required to make contributions to the ESOP in amounts at least equal to the principal and interest requirement of both debts.
The Bank’s obligation to make such contributions is reduced to the extent of any dividends paid by the Company on unallocated shares and any investment earnings realized on such dividends. As of December 31, 2021 and 2020, contributions to the ESOP, which were used to fund principal and interest payments on the ESOP loans, totaled $2.3 million and $1.5 million, respectively. During 2021 and 2020, $268,000 and $313,000, respectively, of dividends paid on unallocated ESOP shares were used for debt service. At December 31, 2021 and 2020, the loan had an outstanding balance of $9.2 million and $8.1 million, respectively, and the ESOP had unallocated shares of 437,725 and 394,080, respectively. At December 31, 2021, the unallocated shares had a fair value of $9.7 million. The unamortized balance of the ESOP is shown as unallocated common stock held by the ESOP and is reflected as a reduction of stockholders’ equity.
For the years ended December 31, 2021, and 2019, the Bank recorded compensation expense related to the ESOP of $2.2 million and $1.6 million, respectively, which included $179,000 and $366,000, respectively, of additional compensation
expense to reflect the increase in the average fair value of shares committed to be released and allocated shares in access of the Bank’s cost. For the year ended December 31, 2020, the Bank recorded compensation expense related to the ESOP of $1.1 million including $80,000 related to a decrease in compensation expense to reflect the decrease in the average fair value of shares committed to be released and allocated shares below the Bank’s cost. As of December 31, 2021, 2,543,294 shares had been allocated to participants and 102,048 shares were committed to be released.