Employee Benefits

12 Months Ended

Dec. 31, 2023

Note 15:

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 years ended December 31, 2023, 2022 and 2021 totaled $399,000, $366,000 and $267,000, respectively.

Stock-Based Compensation

The Company adopted a nonqualified incentive stock option plan (the “Bank7 Corp. 2018 Equity Incentive Plan”) in September 2018 and amended the Bank7 Corp. 2018 Equity Plan on May 20, 2020 adding an additional 507,500 shares to the plan. The Bank7 Corp. 2018 Equity Incentive Plan will terminate in September 2028, if not extended. Compensation expense, net of settlement of shares for payroll withholding related to the Plan for the years ended December 31, 2023, 2022 and 2021 totaled $2,164,000, $1,384,000 and $1,040,000, respectively. There were 637,371 shares available for future grants as of December 31, 2023.

The Company grants to employees and directors restricted stock units (RSUs) which vest ratably over one, three, four, five, or eight years and stock options which vest ratably over four years. All RSUs and stock options are 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
Year Ended December 31, 2023
Outstanding at December 31, 2022		251,550		$	17.52
Options Granted		-			-
Options Exercised		(28,423	)		17.71
Options Forfeited		(2,188	)		15.15
Outstanding at December 31, 2023		220,939			17.52		5.64		$	2,172,070
Exercisable at December 31, 2023		173,684			18.04		5.27		$	1,616,278

	Options			Wgtd. Avg. Exercise Price		Wgtd. Avg. Remaining Contractual Term		Aggregate Intrinsic Value
Year Ended December 31, 2022
Outstanding at December 31, 2021		264,000		$	17.41
Options Granted		5,000			23.87
Options Exercised		(17,450	)		17.73
Options Forfeited		-			-
Outstanding at December 31, 2022		251,550			17.52		6.64		$	2,032,509
Exercisable at December 31, 2022		170,485			18.39		6.05		$	1,229,200

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 year ended December 31, 2022, there were no options granted during the year ended December 2023:

	For the Year Ended December 31, 2022
Risk-free interest rate		3.47	%
Dividend yield		1.96	%
Stock price volatility		34.92	%
Expected term		7.01

The following table summarizes share information about RSUs for the years ended December 31, 2023 and 2022:

	Number of Shares			Wgtd. Avg. Grant Date Fair Value
Year Ended December 31, 2023
Outstanding at December 31, 2022		112,591		$	19.15
Shares granted		163,311			29.76
Shares vested		(57,354	)		19.48
Shares forfeited		(7,087	)		27.34
End of the period balance		211,461		$	26.98

	Number of Shares			Wgtd. Avg. Grant Date Fair Value
Year Ended December 31, 2022
Outstanding at December 31, 2021		172,993		$	19.02
Shares granted		3,000			22.66
Shares vested		(61,902	)		18.88
Shares forfeited		(1,500	)		22.13
End of the period balance		112,591		$	19.15

As of December 31, 2023, there was approximately $4.5 million of unrecognized compensation expense related to 211,000 unvested RSUs and $156,000 of unrecognized compensation expense related to 221,000 unvested and/or unexercised stock options. The RSU expense is expected to be recognized over a weighted average period of 3.85 years, the stock option expense is expected to be recognized over a weighted average period of 1.29 years.