Note 4 – Pension and Other Postretirement Plans

The Company assumed, through the merger with Pamrapo Bancorp, Inc., a non-contributory defined benefit pension plan covering all eligible employees of Pamrapo Savings Bank. Effective January 1, 2010, the defined benefit pension plan (“Pension Plan”), was frozen by Pamrapo Savings Bank. All benefits for eligible participants accrued in the Pension Plan to the freeze date have been retained. Accordingly, no employees are permitted to commence participation in the Pension Plan and future salary increases and future years of service are not considered when computing an employee’s benefits under the Pension Plan. The Pension Plan is funded in conformity with the funding requirements of applicable government regulations. The Company also acquired through the merger with Pamrapo Bancorp, Inc. a supplemental executive retirement plan (“SERP”) in which certain former employees of Pamrapo Savings Bank are covered. A SERP is an unfunded non-qualified deferred retirement plan. Participants who retire at the age of 65 (the “Normal Retirement Age”), are entitled to an annual retirement benefit equal to 75% of compensation reduced by their retirement plan annual benefits. Participants retiring before the Normal Retirement Age receive the same benefits reduced by a percentage based on years of service to the Company and the number of years prior to the Normal Retirement Age that participants retire.

Net periodic pension benefit for the three and six months ended June 30, 2018 and June 30, 2017 was $10,000, $20,000, $9,000, and $18,000 respectively. Net periodic postretirement cost for the SERP plan for the three and six months ended June 30, 2018 and June 30, 2017 was $3,000, $6,000, $4,000, and $8,000 respectively.

Share – Based Compensation

The Company, under the plan approved by its stockholders on April 26, 2018 (“2018 Equity Incentive Plan”), authorized the issuance of up to 1,000,000 shares of common stock of the Company pursuant to grants of stock options, restricted stock or restricted stock units. Employees and directors of the Company and the Bank are eligible to participate in the 2018 Equity Incentive Plan. All stock options will be granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are permitted to receive incentive stock options. Restricted stock units are similar to restricted stock awards, except that no share of stock is actually awarded on the date of grant of a restricted stock unit. A restricted stock unit will be settled in shares of Common Stock, provided, however, that in the sole discretion of the Committee, a restricted stock unit may be settled in cash. Shares of stock issued pursuant to the exercise of stock options will count against the share limit as one share of stock for every one share of stock to which such exercise relates. Shares of stock issued pursuant to restricted stock awards or restricted stock units will count against the Share Limit as two shares of stock for every one share of stock issued in connection with the award.

The Company, under the plan approved by its stockholders on April 28, 2011 (“2011 Stock Plan”), authorized the issuance of up to 900,000 shares of common stock of the Company pursuant to grants of stock options. Employees and directors of the Company and the Bank are eligible to participate in the 2011 Stock Plan. All stock options will be granted in the form of either "incentive" stock options or "non-qualified" stock options. Incentive stock options have certain tax advantages that must comply with the requirements of Section 422 of the Internal Revenue Code. Only employees are permitted to receive incentive stock options.

On September 13, 2017, a grant of 350,000 options was declared for members of the Board of Directors and Executive Officers which vest at a rate of 10% per year and 20% per year, respectively, commencing on the first anniversary of the grant date. On September 16, 2016, a grant of 160,000 options was declared for members of the Board of Directors and the Chief Executive Officer, which vest at a rate of 10% per year and 33% per year, respectively, commencing on the first anniversary of the grant date. On December 2, 2015, a grant of 120,000 options and on March 7, 2014, a grant of 110,000 options was declared for certain members of the Board of Directors which vest at a rate of 10% per year, over ten years commencing on the first anniversary of the grant date.


	Number of Option
	Shares		Range of Exercise Prices		Weighted Average Exercise Price

Outstanding at December 31, 2017	889,300	$	8.93-13.32	$	11.42

Options granted	-		-		-
Options exercised	(200)		10.55		10.55
Options forfeited	-		-		-
Options expired	-		-		-

Outstanding at June 30, 2018	889,100	$	8.93-13.32	$	10.91

As of June 30, 2018, stock options which were granted and were exercisable totaled 183,867 stock options.

It is Company policy to issue new shares upon share option exercise. Expected future compensation expense relating to the 705,233 shares of unvested options outstanding as of June 30, 2018 was $1.2 million over a weighted average period of 7.00 years.



	Number of Option
	Shares		Range of Exercise Prices		Weighted Average Exercise Price

Outstanding at December 31, 2016	575,000	$	8.93-13.32	$	10.78

Options granted	-
Options exercised	(700)		10.55		0.00
Options forfeited	(35,000)		8.93-13.32		-
Options expired	-

Outstanding at June 30, 2017	539,300	$	8.93-13.32	$	10.78

As of June 30, 2017, stock options which were granted and were exercisable totaled 107,700 stock options.

It is Company policy to issue new shares upon share option exercise. Expected future compensation expense relating to 431,600 shares of unvested options outstanding as of June 30, 2017 was $1.0 million over a weighted average period of 6.80 years.