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Share Based Compensation Plan

12 Months Ended

Dec. 31, 2017

Share Based Compensation Plan [Abstract]

Share Based Compensation Plan

Note 17: Share Based Compensation Plan

In April 2017, the shareholders approved a new share-based incentive compensation plan, the SB Financial Group, Inc. 2017 Stock Incentive Plan (the “2017 Plan”), which replaced the Company’s 2008 Stock Incentive Plan. This plan permits the grant or award of incentive stock options, nonqualified stock options, stock appreciation rights (“SAR’s”), restricted stock, and restricted stock units (“RSU’s”) for up to 500,000 Common Shares of the Company.

The 2008 Plan, which was approved by the shareholders in April 2008, 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 and 2017 Plans are 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 Plans permit 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 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, 2016 or 2015.

There was no compensation expense charged against income with respect to option awards under the Plans for 2017, 2016 and 2015, respectively.

A summary of incentive stock option activity under the Company’s plans as of December 31, 2017 and changes during the year then ended, is presented below:

		Shares				Weighted- Average Exercise Price				Weighted- Average Remaining Term				Aggregate Intrinsic Value
Outstanding, beginning of year			145,894			$	8.12
Granted			-				-
Exercised			(42,517	)			9.83
Forfeited			(750	)			6.98
Expired			(10,127	)			11.50
Outstanding, end of year			92,500			$	6.97				2.12			$	1,065,420
Exercisable, end of year			92,500			$	6.97				2.12			$	1,065,420

During 2017, the 42,517 option shares exercised had a total intrinsic value of $0.33 million and the cash received from these exercised options was $0.38 million. The tax benefit from these transactions was immaterial.

As of December 31, 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 LTI Plan awards restricted stock in the Company to certain key executives under the 2008 and 2017 Plans. These restricted stock awards vest over a four-year period and are intended to assist the Company in retention of key executives. During 2017 and 2016, the Company met certain performance targets and restricted stock awards were approved by the Board. The compensation cost charged against income for the Long Term Incentive (LTI) Plan was $0.30, $0.13 and $0.08 million for 2017, 2016 and 2015, respectively. The total income tax benefit recognized in the income statement for share-based compensation arrangements was $0.10, $0.04 and $0.03 million for 2017, 2016 and 2015, respectively.

A summary of restricted stock activity under the Company’s LTI Plan as of December 31, 2017 (issued under both the 2008 and 2017 plan) and changes during the year ended is presented below:

		Shares				Weighted- Average Value per Share
Nonvested, beginning of year			35,503			$	9.44
Granted			32,752				18.30
Vested			(13,433	)			9.03
Forfeited			(2,564	)			13.29
Nonvested, end of year			52,258			$	14.91

As of December 31, 2017, there was $0.52 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to the restricted stock awards under the 2008 and 2017 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 1.91 years.