Note 8:

Employee Benefits

401(k) Savings Plan

The Company has a retirement savings 401(k) plan covering substantially all employees. Employees may contribute up to the maximum legal limit with the Bank matching up to 5% of the employee’s salary. Employer contributions charged to expense for the three months ended June 30, 2019 and 2018 totaled $55,000 and $43,000, respectively. Employer contributions charged to expense for the six months ended June 30, 2019 and 2018 totaled $121,000 and $93,000, respectively.

Stock-Based Compensation

The Company adopted a nonqualified incentive stock option plan (the “Bank7 Corp. 2018 Equity Incentive Plan”) in September 2018. The Bank7 Corp. 2018 Equity Incentive Plan will terminate in September 2028, if not extended. Compensation expense related to the Plan for the three and six month periods ended June 30, 2019 totaled $158,000 and $329,000, respectively.

In connection with its IPO in September 2018, the Company granted to employees restricted stock units (RSUs) which vest ratably over five years and stock options which vest ratably over four years. All RSUs and stock options were granted at the fair value of the common stock at the time of the award. The RSUs are considered fixed awards as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period.

The Company uses newly issued shares for granting RSUs and stock options.

The following table is a summary of the stock option activity under the Bank7 Corp. 2018 Equity Incentive Plan (dollar amounts in thousands, except per share data):

	Options			Wgtd. Avg. Exercise Price		Wgtd. Avg. Remaining Contractual Term		Aggregate Intrinsic Value
Six Months Ended June 30, 2019
Outstanding at December 31, 2018		150,000		$	19.00
Options Granted		20,500			16.98
Options Exercised		-			-
Options Forfeited		(7,500	)		19.00
Outstanding at June 30, 2019		163,000		$	18.75		9.29	$	31
Exercisable at June 30, 2019		-					-		-

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility and the expected term. The fair value of each option is expensed over its vesting period.

The following table shows the assumptions used for computing stock-based compensation expense under the fair value method on options granted during the periods presented:

	Three Months Ended June 30, 2019			Six Months Ended June 30, 2019
Risk-free interest rate		2.44	%		2.48	%
Dividend yield		2.20	%		2.20	%
Stock price volatility		31.14	%		31.14	%
Expected term	7.01 yrs			7.01 yrs

The following table summarizes share information about RSUs for the six months ended June 30, 2019:

	Number of Shares		Wgtd. Avg. Grant Date Fair Value
Outstanding at December 31, 2018		130,000	$	19.09
Shares granted		-		-
Shares settled		-		-
Shares forfeited		-		-
End of the period balance		130,000	$	19.09

As of June 30, 2019, there was approximately $2.1 million of unrecognized compensation expense related to 130,000 unvested RSUs and $452,000 of unrecognized compensation expense related to 163,000 unvested stock options. The stock option expense is expected to be recognized over a weighted average period of four years, and the RSU expense is expected to be recognized over a weighted average period of five years. As of June 30, 2019, no RSUs or stock options were vested.