BANK’34
	Split Dollar Life Insurance Agreement


 


BANK’34


SPLIT DOLLAR LIFE INSURANCE AGREEMENT


 


This SPLIT DOLLAR LIFE INSURANCE AGREEMENT
(the “Agreement”) is entered into this 1st day of February, 2010, by and between BANK’34, a
federally-charted savings and loan association located in Alamogordo, New Mexico (the “Bank”), and JILL GUTIERREZ
(the “Executive”).


 


The purpose of this Agreement is to retain
and reward the Executive, by dividing the death proceeds of certain life insurance policies which are owned by the Bank on the
life of the Executive with the designated beneficiary of the Executive. The Bank will pay the life insurance premiums from its
general assets.


 


Article 1


Definitions


 


Whenever used in this
Agreement, the following terms shall have the meanings specified:


 


		1.1	“Bank’s Interest” means the benefit set forth in Section 2.1.



 


		1.2	“Beneficiary” means each designated person, or the estate of the deceased Executive,
entitled to benefits, if any, upon the death of the Executive.



 


		1.3	“Beneficiary Designation Form” means the form established from time to time
by the Plan Administrator that the Executive completes, signs and returns to the Plan Administrator to designate one or more Beneficiaries.



 


		1.4	“Board” means the Board of Directors of the Bank, as from time to time constituted.



 


		1.5	“Code” means the Internal Revenue Code of 1986, as amended, and all regulations
and guidance thereunder, including such regulations and guidance as may be promulgated hereafter.



 


		1.6	“Executive’s Interest” means the benefit set forth in Section 2.2.



 


		1.7	“Insurer” means any insurance company issuing a Policy on the life of the Executive.



 


		1.8	“Net Death Proceeds” means the total death proceeds of all Policies minus the
greater of (i) the cash surrender value or (ii) the aggregate premiums paid by the Bank.



 


		1.9	“Plan Administrator” means the plan administrator described in Article 11.



 


		1.10	“Policy” or “Policies” means the individual life insurance
policy or policies adopted by the Bank for purposes of insuring the Executive’s life under this Agreement.



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


		1.11	“Separation from Service” means termination of the Executive’s employment
with the Bank for reasons other than death. Whether a Separation from Service has occurred is determined in accordance with the
requirements of Code Section 409A based on whether the facts and circumstances indicate that the Bank and Executive reasonably
anticipated that no further services would be performed after a certain date or that the level of bona fide services the Executive
would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than
twenty percent (20%) of the average level of bona fide services performed (whether as an employee or an independent contractor)
over the immediately preceding thirty-six (36) month period (or the full period of services to the Bank if the Executive has been
providing services to the Bank less than thirty-six (36) months).



 


		1.12	“Termination for Cause” means a Separation from Service due to:



 


		(a)	personal dishonesty;



		(b)	incompetence;



		(c)	willful misconduct;



		(d)	breach of fiduciary duty involving personal profit;



		(e)	material breach of the Bank’s Code of Ethics;



		(f)	intentional failure to perform stated duties; or



		(g)	willful violation of any law, rule or regulation (other than traffic violations or similar offenses),
any felony conviction, any violation of law involving moral turpitude, or any violation of a final cease-and-desist order.



 


Notwithstanding the foregoing,
the Executive’s Termination for Cause will not become effective unless the Bank has delivered to the Executive a copy of
a resolution duly adopted by the affirmative vote of a majority of the independent directors of the Board (other than the Executive),
at a meeting of the Board called and held for the purpose of finding that, in the good faith opinion of the Board (after reasonable
notice to the Executive and an opportunity for the Executive to be heard before the Board), the Executive was guilty of the conduct
described above and specifying the particulars of such conduct.


 


Article 2 


Policy Ownership/Interests


 


		2.1	Bank’s Interest. The Bank shall own the Policies and shall have the right to exercise
all incidents of ownership and may terminate a Policy without the consent of the Executive. The Bank shall be the beneficiary of
the remaining death proceeds of the Policies after the Executive’s Interest is determined according to Section 2.2, below.



 


		2.2	Executive’s Interest. The Executive, or the Executive’s assignee, shall have
the right to designate the Beneficiary of an amount of death proceeds as specified in Section 2.2.1. The Executive shall also have
the right to elect and change settlement options with respect to the Executive’s Interest by providing written notice to
the Bank and the Insurer.



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


		2.2.1	Death Prior to Separation from Service. If the Executive dies prior to Separation from Service,
the Beneficiary shall be entitled to a benefit equal to one hundred percent (100%) of the Net Death Proceeds (if any).



 


		2.2.2	Death After Separation from Service. If the Executive dies after Separation from Service,
there is no benefit under this Agreement.



 


Article 3 


Comparable Coverage


 


		3.1	Insurance Policies. The Bank may provide any benefit due under this Agreement through Policies
purchased at the commencement of this Agreement, or may provide comparable insurance coverage to the Executive through whatever
means the Bank deems appropriate. If the Executive waives or forfeits his or her rights to the Executive’s Interest, the
Bank may choose to cancel any Policy on the Executive, or may continue such coverage and become the direct beneficiary of the entire
death proceeds.



 


		3.2	Offer to Purchase. If the Bank discontinues a Policy, the Bank shall give the Executive
at least thirty (30) days to purchase such Policy. The purchase price shall be the fair market value of the Policy, as determined
under Treasury Reg. §1.61-22(g)(2) or any subsequent applicable authority. Such notification shall be in writing.



 


Article 4


Premiums and Imputed Income


 


		4.1	Premium Payment. The Bank shall pay all premiums due on all Policies.



 


		4.2	Economic Benefit. The Bank shall determine the economic benefit attributable to the Executive
based on the life insurance premium factor for the Executive’s age multiplied by the aggregate death benefit payable to the
Beneficiary. The “life insurance premium factor” is the minimum factor applicable under guidance published pursuant
to Treasury Reg. § 1.61-22(d)(3)(ii) or any subsequent authority.



 


		4.3	Imputed Income. The Bank shall impute the economic benefit to the Executive on an annual
basis, by adding the economic benefit to the Executive’s W-2, or if applicable, Form 1099.



 


Article 5 


General Limitations


 


		5.1	Removal. Notwithstanding any provision of this Agreement to the contrary, the Executive
shall forfeit all rights and benefits under this Agreement if the Executive is subject to a final removal or prohibition order
issued by an appropriate federal banking agency pursuant to Section 8(e) of the Federal Deposit Insurance Act.



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


		5.2	Suicide or Misstatement. Notwithstanding any provision of this Agreement to the contrary,
the Executive shall forfeit all rights and benefits under this Agreement if the Executive commits suicide within two (2) years
after the date of this Agreement, or if the Insurer denies coverage (i) for material misstatements of fact made by the Executive
on any application for life insurance purchased by the Bank, or (ii) for any other reason; provided, however that the Bank shall
evaluate the reason for the denial, and upon advice of legal counsel and in its sole discretion, consider judicially challenging
any denial.



 


		5.3	Termination for Cause. Notwithstanding any provision of this Agreement to the contrary,
the Executive shall forfeit all rights and benefits under this Agreement if the Executive’s services with the Bank are terminated
by the Bank or by an applicable regulator due to a Termination for Cause.



 


Article 6


Beneficiaries


 


		6.1	Beneficiary. The Executive shall have the right, at any time, to designate a Beneficiary
to receive any benefits payable under the Agreement upon the death of the Executive. The Beneficiary designated under this Agreement
may be the same as or different from the beneficiary designated under any other Agreement of the Bank in which the Executive participates.



 


		6.2	Beneficiary Designation; Change. The Executive shall designate a Beneficiary by completing
and signing the Beneficiary Designation Form, and delivering it to the Bank or its designated agent. The Executive’s beneficiary
designation shall be deemed automatically revoked if the Beneficiary predeceases the Executive or if the Executive names a spouse
as Beneficiary and the marriage is subsequently dissolved. The Executive shall have the right to change a Beneficiary by completing,
signing and otherwise complying with the terms of the Beneficiary Designation Form and the Bank’s rules and procedures, as
in effect from time to time. Upon the acceptance by the Bank of a new Beneficiary Designation Form, all Beneficiary designations
previously filed shall be cancelled. The Bank shall be entitled to rely on the last Beneficiary Designation Form filed by the Executive
and accepted by the Bank prior to the Executive’s death.



 


		6.3	Acknowledgment. No designation or change in designation of a Beneficiary shall be effective
until received, accepted and acknowledged in writing by the Bank or its designated agent.



 


		6.4	No Beneficiary Designation. If the Executive dies without a valid designation of beneficiary,
or if all designated Beneficiaries predecease the Executive, then the Executive’s surviving spouse shall be the designated
Beneficiary. If the Executive has no surviving spouse, the benefits shall be made payable to the Executive’s estate.



 


		6.5	Facility of Payment. If the Bank determines in its discretion that a benefit is to be paid
to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of that person’s property,
the Bank may direct payment of such benefit to the guardian, legal representative or person having the care or custody of such
minor, incompetent person or incapable person. The Bank may require proof of incompetence, minority or guardianship as it may deem
appropriate prior to distribution of the benefit. Any payment of a benefit shall be a payment for the account of the Executive
and the Executive’s Beneficiary, as the case may be, and shall be a complete discharge of any liability under the Agreement
for such payment amount.



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


Article 7


Assignment


 


The Executive may irrevocably
assign without consideration all of the Executive’s Interest in this Agreement to any person, entity, or trust. In the event
the Executive shall transfer all of the Executive’s Interest, then all of the Executive’s Interest in this Agreement
shall be vested in the Executive’s transferee, who shall be substituted as a party hereunder, and the Executive shall have
no further interest in this Agreement.


 


Article 8


Insurer


 


The Insurer shall be
bound only by the terms of its given Policy. The Insurer shall not be bound by or deemed to have notice of the provisions of this
Agreement. The Insurer shall have the right to rely on the Bank’s representations with regard to any definitions, interpretations
or Policy interests as specified under this Agreement.


 


Article 9


Claims And Review Procedure


 


		9.1	Claims Procedure. The Executive or Beneficiary (“claimant”) who has not received
benefits under the Agreement that he or she believes should be paid shall make a claim for such benefits as follows:



 


		9.1.1	Initiation – Written Claim. The claimant initiates a claim by submitting to the Plan Administrator
a written claim for the benefits. If such a claim relates to the contents of a notice received by the claimant, the claim must
be made within sixty (60) days after such notice was received by the claimant. All other claims must be made within one hundred
eighty (180) days of the date on which the event that caused the claim to arise occurred. The claim must state with particularity
the determination desired by the claimant.



 


		9.1.2	Timing of Plan Administrator Response. The Plan Administrator shall respond to such claimant
within ninety (90) days after receiving the claim. If the Plan Administrator determines that special circumstances require additional
time for processing the claim, the Plan Administrator can extend the response period by an additional ninety (90) days by notifying
the claimant in writing, prior to the end of the initial ninety (90) day period, that an additional period is required. The notice
of extension must set forth the special circumstances and the date by which the Plan Administrator expects to render its decision.



 


		9.1.3	Notice of Decision. If the Plan Administrator denies part or all of the claim, the Plan
Administrator shall notify the claimant in writing of such denial. The Plan Administrator shall write the notification in a manner
calculated to be understood by the claimant. The notification shall set forth:



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


		(a)	The specific reasons for the denial;



		(b)	A reference to the specific provisions of the Agreement on which the denial is based;



		(c)	A description of any additional information or material necessary for the claimant to perfect the
claim and an explanation of why it is needed;



		(d)	An explanation of the Agreement’s review procedures and the time limits applicable to such procedures; and



		(e)	A statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following
an adverse benefit determination on review.



 


		9.2	Review Procedure. If the Plan Administrator denies part or all of the claim, the claimant
shall have the opportunity for a full and fair review by the Plan Administrator of the denial, as follows:



 


		9.2.1	Initiation – Written Request. To initiate the review, the claimant, within sixty (60) days
after receiving the Plan Administrator’s notice of denial, must file with the Plan Administrator a written request for review.



 


		9.2.2	Additional Submissions – Information Access. The claimant shall then have the opportunity
to submit written comments, documents, records and other information relating to the claim. The Plan Administrator shall also provide
the claimant, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information
relevant (as defined in applicable ERISA regulations) to the claimant’s claim for benefits.



 


		9.2.3	Considerations on Review. In considering the review, the Plan Administrator shall take into
account all materials and information the claimant submits relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.



 


		9.2.4	Timing of Plan Administrator’s Response. The Plan Administrator shall respond in writing
to such claimant within sixty (60) days after receiving the request for review. If the Plan Administrator determines that special
circumstances require additional time for processing the claim, the Plan Administrator can extend the response period by an additional
sixty (60) days by notifying the claimant in writing, prior to the end of the initial sixty (60) day period, that an additional
period is required. The notice of extension must set forth the special circumstances and the date by which the Plan Administrator
expects to render its decision.



 


		9.2.5	Notice of Decision. The Plan Administrator shall notify the claimant in writing of its decision
on review. The Plan Administrator shall write the notification in a manner calculated to be understood by the claimant. The notification
shall set forth:



 


		(a)	The specific reasons for the denial;



		(b)	A reference to the specific provisions of the Agreement on which the denial is based;



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


		(c)	A statement that the claimant is entitled to receive, upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant (as defined in applicable ERISA regulations) to
the claimant’s claim for benefits; and



		(d)	A statement of the claimant’s right to bring a civil action under ERISA Section 502(a).



 


Article 10


Amendments And Termination


 


The Bank
may amend or terminate the Agreement at any time, or may amend or terminate the Executive’s rights under the Agreement at
any time prior to the Executive’s death, by providing written notice of such to the Executive. In the event that the Bank
decides to maintain a Policy after termination of the Agreement, the Bank shall be the direct beneficiary of the entire death proceeds
of the Policy.


 


Article 11


Administration


 


		11.1	Plan Administrator Duties. This Agreement shall be administered by a Plan Administrator
which shall consist of the Board, or such committee or persons as the Board may choose. The Plan Administrator shall also have
the discretion and authority to (i) make, amend, interpret and enforce all appropriate rules and regulations for the administration
of this Agreement and (ii) decide or resolve any and all questions including interpretations of this Agreement, as may arise in
connection with this Agreement.



 


		11.2	Agents. In the administration of this Agreement, the Plan Administrator may employ agents
and delegate to them such administrative duties as it sees fit, (including acting through a duly appointed representative), and
may from time to time consult with counsel who may be counsel to the Bank.



 


		11.3	Binding Effect of Decisions. The decision or action of the Plan Administrator with respect
to any question arising out of or in connection with the administration, interpretation and application of this Agreement and the
rules and regulations promulgated hereunder shall be final and conclusive and binding upon all persons having any interest in this
Agreement.



 


		11.4	Indemnity of Plan Administrator. The Bank shall indemnify and hold harmless the members
of the Plan Administrator against any and all claims, losses, damages, expenses or liabilities arising from any action or failure
to act with respect to this Agreement, except in the case of willful misconduct by the Plan Administrator or any of its members.



 


		11.5	Information. To enable the Plan Administrator to perform its functions, the Bank shall supply
full and timely information to the Plan Administrator on all matters relating to the date and circumstances of the death or Separation
from Service of the Executive, and such other pertinent information as the Plan Administrator may reasonably require.



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


Article 12


Miscellaneous


 


		12.1	Binding Effect. This Agreement shall bind the Executive and the Bank, their beneficiaries,
survivors, executors, administrators and transferees and any Beneficiary.



 


		12.2	No Guarantee of Employment. This Agreement is not an employment policy or contract. It does
not give the Executive the right to remain an employee of the Bank, nor does it interfere with the Bank’s right to discharge
the Executive. It also does not require the Executive to remain an employee nor interfere with the Executive’s right to terminate
employment at any time.



 


		12.3	Applicable Law. The Agreement and all rights hereunder shall be governed by and construed
according to the laws of the State of New Mexico, except to the extent preempted by the laws of the United States of America.



 


		12.4	Reorganization. The Bank shall not merge or consolidate into or with another company, or
reorganize, or sell substantially all of its assets to another company, firm or person unless such succeeding or continuing company,
firm or person agrees to assume and discharge the obligations of the Bank under this Agreement. Upon the occurrence of such event,
the term “Bank” as used in this Agreement shall be deemed to refer to the successor or survivor company.



 


		12.5	Notice. Any notice or filing required or permitted to be given to the Bank or the Plan Administrator
under this Agreement shall be sufficient if in writing and hand-delivered, or sent by registered or certified mail, to the address
below:



 


	BANK’34
	C/O                               
	500 10th STREET 
	ALAMOGORDO, NM 88310


 


Such notice shall be deemed given
as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark or the receipt for registration
or certification.


 


Any notice or filing required
or permitted to be given to the Executive under this Agreement shall be sufficient if in writing and hand-delivered, or sent by
mail, to the last known address of the Executive.


 


		12.6	Entire Agreement. This Agreement, along with the Executive’s Beneficiary Designation
Form, constitutes the entire agreement between the Bank and the Executive as to the subject matter hereof. No rights are granted
to the Executive under this Agreement other than those specifically set forth herein.



 




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	BANK’34
	Split Dollar Life Insurance Agreement


 


IN WITNESS WHEREOF, the parties have
executed this Agreement as of the date indicated above.


 


	EXECUTIVE: 	 	BANK:
	 	 	 	 
	/s/ JILL
    GUTIERREZ	 	By:	/s/ Karlon Cox
	JILL GUTIERREZ 	 	Title:	President & CEO


 




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	BANK’34
	Split Dollar Life Insurance Agreement
	Beneficiary Designation Form


 


		{ }	New Designation



		{ }	Change in Designation



 


I, JILL GUTIERREZ, designate the
following as Beneficiary under the Agreement:


 


	Primary:	 	 
	 	 	100%
	Stephen G. Gutierrez	 	    %
	 	 	    %
	 	 	 
	Contingent: 	 	 
	William Eric Gutierrez	 	33.3%
	Raul R. Gutierrez	 	33.3%
	Angela R. May	 	33.3%




 


Notes:


		·	Please
                                         PRINT CLEARLY or TYPE the names of the beneficiaries.



		·	To name a trust as beneficiary, please provide the name of the trustee(s) and the exact
                                                                                                                      name and date of the trust agreement.



		·	To
                                         name your estate as beneficiary, please write “Estate of [your name]”.



		·	Be
                                         aware that none of the contingent beneficiaries will receive anything unless ALL of the
                                         primary beneficiaries predecease you.



 


I understand that I may change these beneficiary
designations by delivering a new written designation to the Plan Administrator, which shall be effective only upon receipt and
acknowledgment by the Plan Administrator prior to my death. I further understand that the designations will be automatically revoked
if the beneficiary predeceases me, or, if I have named my spouse as beneficiary and our marriage is subsequently dissolved.


 


	Name:	JILL GUTIERREZ	 	 	 
	 	 	 	 	 
	Signature:	/s/ Jill Gutierrez	 	Date:	3-5-2010


 


Received by the Plan Administrator this
5th day of March, 2010


 


	By:	/s/
    Karlon Cox	 
	Title:	President & CEO