EMPLOYEE BENEFIT PLANS

3 Months Ended

Mar. 31, 2026

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

9. EMPLOYEE BENEFIT PLANS

Supplemental Executive Retirement Plan (SERP)

Beginning in 2016, the Company instituted a SERP for its executive officers. All benefits provided under the SERP are unfunded and, as the executive officers retire, the Company will make a payment to the participant. At March 31, 2026 and December 31, 2025, the Company recorded $247,000 and $219,000, respectively, for the SERP in other liabilities on the consolidated statements of financial condition. Expenses for the SERP are included in compensation and employee benefits on the consolidated statements of income and were approximately $28,000 and $6,000, respectively, for the three months ended March 31, 2026 and 2025.  

Defined Benefit Plan

The Company provides pension benefits for eligible employees through a noncontributory defined benefit pension plan (the “Pension Plan”). Substantially all employees participate in the retirement plan on a noncontributing basis and are fully vested after five years of service.

On October 13, 2017, the Compensation Committee elected to soft-freeze the defined benefit pension plan effective January 1, 2018. All employees hired after that date will not be eligible to participate in the defined benefit pension plan; they will, however, be able to participate in a 401(k) plan that the Company will match up to 50% of the employee elected contribution amount capped at 5% of the employee’s earnings. Expense for the 401(k) is included in compensation and employee benefits on the consolidated statements of income and was $27,000 and $19,000, respectively, for the three months ended March 31, 2026 and 2025.

Employee Stock Ownership Plan (“ESOP”)

Effective upon the completion of the Company’s initial public stock offering in October 2017, the Bank established an Employee Stock Ownership Plan (“ESOP”) for all eligible employees. The ESOP used $775,740 in proceeds from a term loan obtained from the Company to purchase 77,574 shares of common stock on the open market at an average price of  $10.00 per share. Also, as part of the recent Conversion, the Company sold 83,588 shares of its common stock to the ESOP at a price of $10.00 per share. The outstanding balance of the October 2017 ESOP loan ($687,687 and the new ESOP loan $835,880) were combined as of the date of the recent Conversion. The new ESOP loan will be repaid principally from the Bank’s contribution to the ESOP in annual payments through 2049 at a fixed interest rate of 7.25%. Shares are released to participants on a straight-line basis over the loan term and allocated based on participant compensation. The Bank recognizes the compensation benefit expense as shares are committed for release at their current market price. The difference between the market price and the cost of shares committed to be released is recorded as an adjustment to additional paid-in capital. Dividends on allocated shares, if applicable, are recorded as a reduction of retained earnings and dividends on unallocated shares are recorded as a reduction of debt. Compensation costs related to the employee stock ownership plan are dependent upon the average stock price and the shares committed to be released to the plan participants through the period in which income is reported. The Company recognized approximately $15,000 and $5,000 of compensation expense related to this plan for the three months ended March 31, 2026 and 2025, respectively.

At March 31, 2026 there were 134,286 shares not yet released having an aggregate market value of approximately $1.6 million. Participant vesting provisions for the ESOP are 20% per year and will be fully vested upon completion of six years of credited service. Eligible employees who were employed with the Bank shall receive credit for vesting purposes for each year of continuous employment prior to adoption of the ESOP.

Stock-Based Compensation

A summary of the Company’s stock option activity and related information for its equity incentive plan for the three months ended March 31, 2026 and 2025 is as follows:

	For the three months ended March 31,
	2026			2025
		Weighted			Weighted
		Average			Average
		Exercise			Exercise
		Price Per			Price Per
	Options	Share		Options	Share
Outstanding at the beginning of the period	61,186	$	9.32	59,034	$	9.27
Grants	—		—	—		—
Exercised	—		—	—		—
Forfeitures	—	$	—	—		—
Outstanding at period end	61,186	$	9.32	59,034	$	9.27
Vested at end of period	50,415	$	9.18	49,040	$	9.17
Exercisable	50,415	$	9.18	49,040	$	9.17

The intrinsic value of options outstanding at March 31, 2026 and December 31, 2025 was $145,000 and $76,000 respectively.

The grants to senior management and directors vest over a five-year period in equal installments, with the first installment vesting on the anniversary date of the grant and succeeding installments on each anniversary thereafter, through 2030.

The Company recorded compensation expense in the amount of $5,000 and $4,000 for the three months ended March 31, 2026 and 2025, respectively. The Company had $22,000 of compensation expense remaining to be recognized at March 31, 2026.

Compensation costs related to share-based payments transactions are recognized based on the grant-date fair value of the stock-based compensation issued. Compensation costs are recognized over the period that an employee provides service in exchange for the award.

In May 2023 and 2022, the Company awarded 12,000 original shares of restricted stock to senior management. The restricted stock vests 20% per year on the specified vesting date, until 100% vested on the specified vesting date of the fifth year after the restricted stock was granted. In November 2025, the Company awarded 10,000 shares of restricted stock to senior management. Of the total restricted shares, 5,000 will become 100% vested on the first anniversary of the grant date and the remaining 5,000 shares will become 50% vested on the first anniversary of the grant date and fully vested on the second anniversary of the grant date. The Company recorded compensation expense in the amount of $33,000 and $12,000 for the three months ended March 31, 2026 and 2025, respectively. The Company has $145,000 of compensation expenses remaining to be recognized at March 31, 2026.

The Company did not have any awards granted or forfeited during the three months ended March 31, 2026 and 2025.