Prior to January 1, 2021, the Company provides a qualified defined contribution retirement plan under Section 401(k) of the Internal Revenue Code. The 401(k) Plan qualifies under the Internal Revenue Service safe harbor provisions, as defined. Employees are eligible to participate in the 401(k) Plan at the beginning of each quarter (January 1, April 1, July 1 or October 1). The 401(k) Plan provides for elective employee/participant deferrals of income. Discretionary matching, profit-sharing, and safe harbor contributions, not to exceed 4% of employee compensation and profit-sharing contributions may be provided. The Company is currently making a safe harbor contributions of 3%. The 401(k) expenses recorded in the consolidated statements of operations amounted to $375,000, $580,000 and $331,000 for the years ended December 31, 2021, 2020 and 2019, respectively.

Effective January 1, 2021, the Company amended and restated its ESOP into a KSOP, Employee Stock Ownership Plan with 401(k) provision, to include substantially the same 401(k) provisions contained in the previously separate 401(k) plan. The Company made a safe harbor contribution of 3% into the 401(k) Plan. There were no changes to the provisions of the previously separately formed ESOP as discussed below.

In connection with the reorganization, the Company established an ESOP for the exclusive benefit of eligible employees. The ESOP borrowed $7.2 million from the Company, sufficient to purchase 723,751 shares (approximately 3.92% of the common stock sold in the stock offering). The loan is secured by the shares purchased and will be repaid by the ESOP with funds from contributions made by the Company and dividends received by the ESOP. Contributions will be applied to repay interest on the loan first, and then the remainder will be applied to principal. The loan is expected to be repaid over a period of 15 years. Shares purchased with the loan proceeds are held by the trustee in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion to their compensation, relative to total compensation of all active participants, subject to applicable regulations.

Contributions to the ESOP are to be sufficient to pay principal and interest currently due under the loan agreement. As shares are committed to be released from collateral, compensation expense equal to the average market price of the shares for the respective period are recognized, and the unallocated shares are taken into consideration when computing earnings per share. Refer to Note 11 Earnings Per Common Share for additional information.

	December 31, 2021		December 31, 2020
	(Dollars in thousands)
Shares committed-to-be-released ⁽¹⁾		96,500		48,250
Shares allocated to participants		170,145		129,270
Unallocated shares⁽¹⁾		434,251		530,751
Total		700,896		708,271
Fair value of unallocated shares	$	6,297	$	5,578

(1) During the year, the Company increased the shares committed-to-be-released by an additional 48,250 shares resulting in a total of 96,500 shares to be released as of December 31, 2021 compared to 48,250 shares as of December 31, 2020.

The Company recognized ESOP related compensation expense, including ESOP equalization expense, of $1.4 million, $538,000 and $766,000 for the years ended December 31, 2021, 2020 and 2019, respectively. Included in the $1.4 million was $700,000 related to the additional 48,250 shares committed-to-be-released as of December 31, 2021.

The Company maintains a non-qualified supplemental executive retirement plan (“SERP”) for the benefit of two key executive officers. The SERP expenses recognized were $261,000 for the year ended December 31, 2021 for the two key executive officers. For the years ended December 31, 2020 and 2019, the Company recognized SERP expenses in the amount of $59,000 and $62,000, respectively for the benefit of one key executive officer.

The Company’s stockholders approved the PDL Community Bancorp 2018 Long-Term Incentive Plan (the “2018 Incentive Plan”) at the Special Meeting of Stockholders on October 30, 2018. The maximum number of shares of common stock which can be issued under the 2018 Incentive Plan is 1,248,469. Of the 1,248,469 shares, the maximum number of shares that may be awarded under the 2018 Incentive Plan pursuant to the exercise of stock options or stock appreciation rights (“SARs”) is 891,764 shares (all of which may be granted as incentive stock options), and the number of shares of common stock that may be issued as restricted stock awards or restricted stock units is 356,705 shares. However, the 2018 Incentive Plan contains a flex feature that provides that awards of restricted stock and restricted stock units in excess of the 356,705 share limitation may be granted but each share of stock covered by such excess award shall reduce the 891,764 share limitation for awards of stock options and SARs by 3.0 shares of common stock. The Company converted 462,522 awards of stock options into 154,174 restricted stock units in 2018 and 45,000 awards of stock options into 15,000 restricted stock units in 2020.

Under the 2018 Incentive Plan, the Company made grants equal to 674,645 shares on December 4, 2018 which include 119,176 incentive options to executive officers, 44,590 non-qualified options to outside directors, 322,254 restricted stock units to executive officers, 40,000 restricted stock units to non-executive officers and 148,625 restricted stock units to outside directors. During the year ended December 31, 2020, the Company awarded 40,000 incentive options and 15,000 restricted stock units to non-executive officers under the 2018 Incentive Plan. Awards to directors generally vest 20% annually beginning with the first anniversary of the date of grant. Awards to a director with fewer than five years of service at the time of grant vest over a longer period and will not become fully vested until the director has completed ten years of service. Awards to the executive officer who is not a director vest 20% annually beginning on December 4, 2020. As of December 31, 2021 and 2020, the maximum number of stock options and SARs remaining to be awarded under the Incentive Plan was 189,476 for both periods. As of December 31, 2021 and 2020 the maximum number of shares of common stock that may be issued as restricted stock awards or restricted stock units remaining to be awarded under the Incentive Plan was none for both years. If the 2018 Incentive Plan’s flex feature described above were fully utilized, the maximum number of shares of common stock that may be awarded as restricted stock awards or restricted stock units would be 63,159 as of December 31, 2021 and 2020, but would eliminate the availability of stock options and SARs available for award.

The product of the number of units granted and the grant date market price of the Company’s common stock determine the fair value of restricted stock units under the Company’s 2018 Incentive Plan. Management recognizes compensation expense for the fair value of restricted stock units on a straight-line basis over the requisite service period for the entire award.

A summary of the Company’s restricted stock units activity and related information for the years ended December 31, 2021 and 2020 are as follows:

	December 31, 2021
	Number of Shares			Weighted- Average Grant Date Fair Value Per Share
Non-vested, beginning of year		335,919		$	12.66
Granted		—			—
Vested		(98,232	)		12.69
Forfeited		—			—
Non-vested at December 31		237,687		$	12.65

	December 31, 2020
	Number of Shares			Weighted- Average Grant Date Fair Value Per Share
Non-vested, beginning of year		420,744		$	12.78
Granted		15,000			10.05
Vested		(96,825	)		12.77
Forfeited		(3,000	)		12.77
Non-vested at December 31		335,919		$	12.66

Compensation expense related to restricted stock units for the years ended December 31, 2021, 2020 and 2019 was $1.3 million, $1.3 million and $1.2 million, respectively. As of December 31, 2021, the total remaining unrecognized compensation cost related to restricted stock units was $2.9 million, which is expected to be recognized over the next 24 quarters.

A summary of the Company’s stock options activity and related information for the years ended December 31, 2021 and 2020 are as follows:

	December 31, 2021
	Options		Weighted- Average Exercise Price Per Share
Outstanding, beginning of year		203,766	$	12.02
Granted		—		—
Exercised		—		—
Forfeited		—		—
Outstanding at December 31 (1)		203,766	$	12.02
Exercisable at December 31 (1)		94,904	$	12.45

	December 31, 2020
	Options		Weighted- Average Exercise Price Per Share
Outstanding, beginning of year		163,766	$	12.78
Granted		40,000		8.93
Exercised		—		—
Forfeited		—		—
Outstanding, December 31 (1)		203,766	$	12.02
Exercisable, December 31 (1)		55,938	$	12.77

The weighted-average exercise price for outstanding options as of December 31, 2021 was $12.02 per share and the weighted-average remaining contractual life is 6.8 years. The weighted-average period over which it is expected to be recognized is 3.7 years. There were 94,904 shares exercisable as of December 31, 2021. Total compensation costs related to stock options recognized was $132,000, $127,000 and $101,000 for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, the total remaining unrecognized compensation cost related to unvested stock options was $353,000, which is expected to be recognized over the next 24 quarters.

The fair value of each option grant is estimated on the date of grant using Black-Scholes option pricing model with the following weighted average assumptions:

	For the Years Ended December 31,
	2021			2020
Dividend yield		0.00	%		0.00	%
Expected life	6.5 years			6.5 years
Expected volatility		38.51	%		38.51	%
Risk-free interest rate		0.48	%		0.48	%
Weighted average grant date fair value	$	3.77		$	3.77

The expected volatility is based on the Company’s historical volatility. The expected life is an estimate based on management’s review of the various factors and calculated using the simplified method for plain vanilla options. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

The Company adopted a share repurchase program effective March 25, 2019 which expired on September 24, 2019. Under the repurchase program, the Company was authorized to repurchase up to 923,151 shares of the Company’s stock, or approximately 5% of the Company’s then current issued and outstanding shares. On November 13, 2019, the Company adopted a second share repurchase program. Under this second program, the Company was authorized to repurchase up to 878,835 shares of the Company’s stock, or approximately 5% of the Company’s then current issued and outstanding shares. The Company’s second share repurchase program was terminated on March 27, 2020 in response to the uncertainty related to the unfolding COVID-19 pandemic. On June 1, 2020, the Company adopted a third share repurchase program. Under this third program, the Company was authorized to repurchase up to 864,987 shares of the Company’s stock, or approximately 5% of the Company’s then current issued and outstanding shares. The Company’s third share repurchase program expired on November 30, 2020. On December 14, 2020, the Company adopted a fourth share repurchase program. Under this fourth program, the Company is authorized to repurchase up to 852,302 shares of the Company’s stock, or approximately 5% of the Company’s then current issued and outstanding shares. The fourth repurchase program was terminated on May 4, 2021.

As of December 31, 2021, the Company had repurchased a total of 1,670,619 shares under the repurchase programs at a weighted average price of $13.22 per share, of which 1,037,041 shares are reported as treasury stock. Of the 1,670,619 shares repurchased, a total of 285,192 shares have been used for grants given to directors, executive officers and non-executive officers under the Company’s 2018 Long-Term Incentive Plan pursuant to restricted stock units which vested on December 4, 2021, 2020 and 2019. Of the 285,192 shares, 353 shares were retained to satisfy a recipient’s taxes and other withholding obligations and these shares remain as part of treasury stock. In addition, during the year ended December 31, 2021, 348,739 shares were sold to Banc of America Strategic Investments Corporation in a privately negotiated transaction.