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BENEFIT PLANS
 12 Months Ended
Dec. 31, 2021
BENEFIT PLANS  
BENEFIT PLANS

NOTE 14. BENEFIT PLANS

401(k) Plan

The Company’s 401(k) defined contribution plan allows active participants to elect to contribute, in a tax deferred basis, a portion of their compensation not to exceed the dollar limit set by law. During the year ended December 31, 2020, all full-time employees over the age of 21 who worked more than 1,000 hours in a year and were employed for one year were eligible to participate in the plan. During the year ended December 31, 2021, the plan was amended to allow employees to become eligible participants after completing one month of service and enter the 401(k) plan on a monthly basis. For the years ended December 31, 2021 and 2020, participants were permitted to make salary deferral contributions in any amount up to 100% of their plan salary up to the maximum percentage of compensation allowed by law and the Company made matching contributions in amount equal to 50% of the participant’s elective deferral. The Company made matching contributions of $148,000 and $112,000 for the years ended December 31, 2021 and 2020, respectively, in connection with the plan, which are included in salaries and employee benefits expense in the Consolidated Statements of Income.

Employee Stock Ownership Plan

In October 2021, the Company established an employee stock ownership plan (“ESOP”) for the benefit of all employees of the Company. Employees of the Company who have worked at least 500 hours in the first six months of employment and who have attained the age of 18 are eligible to participate in the ESOP. The Company made a loan to the ESOP in the amount of $4.2 million, which the ESOP used to purchase 423,200 shares. It is anticipated that contributions will be made to the ESOP in amounts necessary to amortize the debt to the Company over a period of 20 years.

The leveraged ESOP is accounted for in accordance with the guidance under ASC 718, Compensation – Stock Compensation. Under ASC 718, unearned ESOP shares are not considered outstanding for financial reporting purposes and are shown as a reduction of shareholders’ equity as unearned compensation. The Company recognizes compensation cost equal to the fair value of the ESOP shares during the periods in which they are committed to be released. To the extent that the fair value of the Company’s ESOP shares differs from the cost of such shares, the differential is credited to shareholders’ equity. The Company receives a tax deduction equal to the cost of the shares released. As the loan is internally leveraged, the loan receivable from the ESOP to the Company is not reported as an asset nor is the debt of the ESOP shown as a Company liability. During 2021, the ESOP allocated 5,290 shares and compensation expense related to the ESOP totaled $73,000. At December 31, 2021, unallocated ESOP shares totaled 417,910 and had fair value of approximately $5.7 million based on closing quoted market price per share as of year-end.