On March 12, 2007, the Company's share-based compensation plan, the 1997 Stock Option Plan (the "1997 Plan") expired in accordance with its terms. In April 2008, the shareholders approved a new share-based incentive compensation plan, the SB Financial Group, Inc. 2008 Stock Incentive Plan (the "2008 Plan").

The 2008 Plan permits the grant or award of incentive stock options, nonqualified stock options, stock appreciation rights ("SARs"), and restricted stock for up to 250,000 Common Shares of the Company.

The 2008 Plan is intended to advance the interests of the Company and its shareholders by offering employees, directors and advisory board members of the Company and its subsidiaries an opportunity to acquire or increase their ownership interest in the Company through grants of equity-based awards. The 2008 Plan permits equity-based Awards to be used to attract, motivate, reward and retain highly competent individuals upon whose judgment, initiative, leadership and efforts are key to the success of the Company by encouraging those individuals to become shareholders of the Company.

Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant, and those option awards generally vest based on 5 years of continuous service and have 10-year contractual terms.

The compensation cost charged against income for both the 1997 and 2008 Plans was $0.1 million and $0.1 million for 2013 and 2012, respectively. The total income tax benefit recognized in the income statement for share-based compensation arrangements was $0.02 million and $0.02 million for 2013 and 2012, respectively.

The fair value of each option award was estimated on the date of grant using the Black-Scholes valuation model. No options were granted in either 2013 or 2012.

On February 5, 2013, the Company adopted a Long Term Incentive (LTI) Plan. The Plan awards restricted stock in the Company to certain key executives. These restricted stock awards vest over a four-year period and will assist the Company in retention of key executives. During 2013, the Company met certain performance targets and restricted stock awards were approved by the Board.

A summary of option activity under the Company’s plans as of December 31, 2013, and changes during the year then ended, is presented below:

	2013
	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value

Outstanding, beginning of year		299,349	$	9.86
Granted		-		-
Exercised		7,850		6.98
Forfeited		64,779		12.46
Expired		-		-
Outstanding, end of year		226,720		9.24		2.63	$	141,611

Exercisable, end of year		177,720		9.87		3.91	$	88,712

As of December 31, 2013, there was $0.04 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the 2008 Plan. That cost is expected to be recognized over a weighted-average period of 1.15 years.

2013	Shares		Weighted-Average Grant-Date Fair Value

Nonvested, beginning of year		-		-
Granted		12,400	$	93,000
Vested		-		-
Forfeited		-		-

Nonvested, end of year		12,400	$	93,000

As of December 31, 2013 and 2012, there was $0.07 million and $0.0 million of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the restricted stock Long Term Incentive (LTI) plan.