NOTE 8 – SHARE BASED COMPENSATION

In April 2008, the Company’s shareholders approved a 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. Option awards are granted with an exercise price equal to the market price of the Company’s stock at the date of grant and those option awards vest based on 5 years of continuous service and have 10-year contractual terms. 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 2017.

A summary of incentive option activity under the Company’s 2008 Plan as of June 30, 2017 and changes during the period then ended, is presented below:

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

Outstanding,
December 31, 2016		145,894		$	7.85
Granted		-			-
Exercised		(36,517	)		10.29
Forfeited		-			-
Expired		(10,127	)		11.50

Outstanding, June 30, 2017		99,250			6.97		2.65	$	691,773

Exercisable, June 30, 2017		99,250			6.97		2.65	$	691,773

During 2017, the 36,517 option shares exercised had a total intrinsic value of $0.38 million and the cash received from these exercised options was $0.33 million. The tax benefit from these transactions was immaterial. As of June 30, 2017, there was no unrecognized compensation cost related to incentive option share-based compensation arrangements granted under the 2008 Plan.

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 under the 2008 Plan. These restricted stock awards vest over a four-year period and are intended to assist the Company in retention of key executives. During 2016, the Company met certain performance targets and restricted stock awards were approved and issued in February of 2017. The compensation cost charged against income for the Long Term Incentive (LTI) Plan was $0.1 million, with a total income tax benefit recognized in the income statement of $0.03 million.

As of June 30, 2017, there was $0.75 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to the restricted stock awards under the 2008 Plan which were granted in accordance with the Long Term Incentive (LTI) plan. That cost is expected to be recognized over a weighted-average period of 3.0 years.

A summary of restricted stock activity under the Company’s plans as of June 30, 2017 and changes during the period then ended, is presented below:

	Shares			Weighted-Average Value per Share

Nonvested, December 31, 2016		35,498		$	9.44

Granted		24,352			18.84
Vested		(13,429	)		9.04
Forfeited		-			-

Nonvested, June 30, 2017		46,421		$	14.57

In April, 2017, the Company’s shareholders approved a new equity-based incentive compensation plan, the 2017 Stock Incentive Plan (the “2017). The 2017 Plan permits the company to grant stock options, restricted stock and other equity-based awards and cash-based awards to employees and directors of the Company and its subsidiaries. A total of 500,000 common shares of the Company are available for grants of awards under the 2017 Plan. As of June 30, 2017, no awards had been granted under the 2017 Plan.