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Share Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

NOTE 14 – SHARE BASED COMPENSATION

In April 2017, the Company’s 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 (the “2008 Plan” and, together with the 2017 Plan, the “Plans”). The 2017 Plan permits the Company to grant or award incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, and restricted stock units to employees and directors of the Company and its subsidiaries. A total of 500,000 common shares of the Company are available for grants or awards under the 2017 Plan, of which 56,324 shares had been granted under the plan as of September 30, 2020.

The 2008 Plan, which was approved by the Company’s shareholders in April 2008, permitted the grant or award of incentive stock options, nonqualified stock options, stock appreciation rights, and restricted stock for up to 250,000 common shares of the Company. While awards granted under the 2008 Plan remain outstanding, no further awards could be granted under the 2008 Plan after April 2018.

The 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.

Stock 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 the first nine months of 2020.

A summary of stock option activity under the Company’s plans as of September 30, 2020 and changes during the quarter then ended, is presented below:

($ in thousands - except per share data)	Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Term		Aggregate Intrinsic Value

Outstanding, December 31, 2019		28,250		$	6.98
Granted		-			-
Exercised		(26,950	)		6.98
Forfeited		-			-
Expired		(1,300	)		6.98

Outstanding, September 30, 2020		-			-		-		-

Exercisable, September 30, 2020		-		$	-		-	$	-

All stock options included in the table above were granted under the 2008 Plan. These shares had an expiration date of February 17, 2020. During the first nine months, the 26,950 option shares exercised had a total intrinsic value of $0.3 million and the cash received from these exercised options was $0.2 million. The tax benefit from these transactions was immaterial. On February 17, 2020, the remaining 1,300 unexercised option shares expired. As of September 30, 2020, there were no outstanding or exercisable options remaining, and no unrecognized compensation cost related to stock option awards 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 Plans. These restricted stock awards vest over a four-year period and are intended to assist the Company in retention of key executives. During 2019, the Company met certain performance targets under the LTI Plan and a total of 16,442 shares of restricted stock were approved and issued in February of 2020. The compensation cost charged against income for the LTI Plan was $0.3 million, with a total income tax benefit recognized in the income statement of $0.07 million.

As of September 30, 2020, there was $0.47 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements related to the restricted stock awards under the Plans which were granted in accordance with the LTI plan. That cost is expected to be recognized over a weighted-average period of 2.3 years.

A summary of restricted stock activity under the Company’s plans as of September 30, 2020 and changes during the quarter then ended, is presented below:

	Shares			Weighted- Average Value per Share

Nonvested, December 31, 2019		43,741		$	17.41

Granted		16,442			19.57
Vested		(22,426	)		17.17
Forfeited		(1,839	)		17.61

Nonvested, September 30, 2020		35,918		$	18.53