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Stock-based Compensation | 6 Months Ended
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Dec. 31, 2022
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] |
Stock-based Compensation |
Note 3: | Stock-based Compensation
In connection with the conversion to stock form, the Association established an ESOP for the exclusive benefit of eligible employees (all salaried employees who have completed at least 1,000 hours of service in a twelve-month period and have attained the age of 21). The ESOP borrowed funds from the Company in an amount sufficient to purchase 384,900 shares (approximately 8% of the common stock issued in the stock offering). The loan is secured by the shares purchased and will be repaid by the ESOP with funds from contributions made by the Association and dividends received by the ESOP. Contributions will be applied to repay interest on the loan first, and then the remainder will be applied to principal. The loan is expected to be repaid over a period of up to 20 years. Shares purchased with the loan proceeds are held in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion to their compensation, relative to total compensation of all active participants. Participants will vest 100% in their accrued benefits under the employee stock ownership plan after six vesting years, with prorated vesting in years two through five. Vesting is accelerated upon retirement, death or disability of the participant or a change in control of the Association. Forfeitures will be reallocated to remaining plan participants. Benefits may be payable upon retirement, death, disability, separation from service, or termination of the ESOP. Since the Association’s annual contributions are discretionary, benefits payable under the ESOP cannot be estimated. Participants receive the shares at the end of employment. The Company is accounting for its ESOP in accordance with ASC Topic 718, Employers Accounting for Employee Stock Ownership Plans . Accordingly, the debt of the ESOP is eliminated in consolidation and the shares pledged as collateral are reported as unearned ESOP shares in the consolidated balance sheets. Contributions to the ESOP shall be sufficient to pay principal and interest currently due under the loan agreement. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average market price of the shares for the respective period, and the shares become outstanding for earnings per share computations. Dividends, if any, on unallocated ESOP shares are recorded as a reduction of debt and accrued interest. A summary of ESOP shares at December 31, 2022 and June 30, 2022 are as follows (dollars in thousands):
|  | December 31, 2022 |  |  | June 30, 2022 |
Allocated shares |  |  | 164,894 |  |  |  | 160,772 |
Shares committed for release |  |  | 9,622 |  |  |  | 19,245 |
Unearned shares |  |  | 163,583 |  |  |  | 173,205 |
Total ESOP shares |  |  | 338,099 |  |  |  | 353,222 |
Fair value of unearned ESOP shares (1) |  | $ | 2,822 |  |  | $ | 3,291 |
(1) | Based on closing price of $17.25 and $19.00 per share on December 31, 2022, and June 30, 2022, respectively.
During the six months ended December 31, 2022, 7,440 ESOP shares were paid to ESOP participants due to separation from service and 7,683 shares were transferred out as a result of participant diversification. During the six months ended December 31, 2021, 1,137 ESOP shares were paid to ESOP participants due to separation from service. The IF Bancorp, Inc. 2012 Equity Incentive Plan (the “Equity Incentive Plan”) was approved by stockholders in 2012 for a ten-year period which ended in November 2022. The purpose of the Equity Incentive Plan was to promote the long-term financial success of the Company and its Subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s stockholders. The Equity Incentive Plan authorized the issuance or delivery to participants of up to 673,575 shares of the Company common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock unit awards, provided that the maximum number of shares of Company common stock that may be delivered pursuant to the exercise of stock options (all of which may be granted as incentive stock options) was 481,125 and the maximum number of shares of Company stock that may be issued as restricted stock awards or restricted stock units was 192,450. This plan was replaced by the 2022 Equity Incentive Plan when the stockholders approved the new plan on November 21, 2022. The new plan authorizes the issuance or delivery to participants of up to 264,850 shares of the Company common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock unit awards, provided that the maximum number of shares of Company common stock that may be delivered pursuant to the exercise of stock options (all of which may be granted as incentive stock options) was 52,970 and the maximum number of shares of Company stock that may be issued as restricted stock awards or restricted stock units was 211,888. On December 10, 2013, 85,500 shares of restricted stock and 167,000 in stock options were awarded to senior officers and directors of the Association. These shares of restricted stock vest in equal installments over 10 years and the stock options vest in equal installments over 7 years. Vesting of both the restricted stock and options started in December 2014. On December 10, 2015, 16,900 shares of restricted stock were awarded to senior officers and directors of the Association. These shares of restricted stock vest in equal installments over 8 years, starting in December 2016. On September 9, 2022, 53,000 shares of restricted stock were awarded to senior officers and directors of the Association. These shares of restricted stock will vest in equal installments over 5 years, starting in September 2023. No shares have been granted from the 2022 Equity Incentive Plan as of December 31, 2022, so there are 211,888 shares of restricted stock and 52,970 stock option shares available for future grants under this plan. The following table summarizes stock option activity for the six months ended December 31, 2022 (dollars in thousands):
|  | Options |  |  | Weighted-Average Exercise Price/Share |  |  | Weighted-Average Remaining Contractual Life (in years) |  |  | Aggregate Intrinsic Value |
Outstanding, June 30, 2022 |  |  | 134,143 |  |  | $ | 16.63 |  |  |  |  |  |  |  |  |
Granted |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Exercised |  |  | 27,000 |  |  |  | 16.63 |  |  |  |  |  |  |  |  |
Forfeited |  |  | — |  |  |  | — |  |  |  |  |  |  |  |  |
Outstanding, December 31, 2022 |  |  | 107,143 |  |  | $ | 16.63 |  |  |  | 1.0 |  |  | $ | 66 | (1)
Exercisable, December 31, 2022 |  |  | 107,143 |  |  | $ | 16.63 |  |  |  | 1.0 |  |  | $ | 66 | (1)
(1) | Based on closing price of $17.25 per share on December 31, 2022.
Intrinsic value for stock options is defined as the difference between the current market value and the exercise price. There were no stock options granted during the six months ended December 31, 2022. No stock options vested during the six month periods ended December 31, 2022 and 2021. Stock-based compensation expense and related tax benefit was considered nominal for stock options for the six month periods ended December 31, 2022 and 2021. Compensation cost related to non-vested stock options was recognized over the seven year vesting period ending in December, 2020, leaving no unrecognized compensation cost at December 31, 2022. The following table summarizes non-vested restricted stock activity for the six months ended December 31, 2022:
|  | Shares |  |  | Weighted-Average Grant- Date Fair Value |
Balance, June 30, 2022 |  |  | 18,876 |  |  | $ | 16.79 |
Granted |  |  | 53,000 |  |  |  | 19.10 |
Forfeited |  |  | — |  |  |  | — |
Earned and issued |  |  | 9,562 |  |  |  | 16.83 |
Balance, December 31, 2022 |  |  | 62,314 |  |  | $ | 17.57 |
The fair value of the restricted stock awards is amortized to compensation expense over the vesting period and is based on the market price of the Company’s common stock at the date of grant multiplied by the number of shares granted that are expected to vest. At the date of grant the par value of the shares granted was recorded in equity as a credit to common stock and a debit to paid-in capital. Stock-based compensation expense and related tax benefit for restricted stock, which was recognized in non-interest expense, was $145,000 and $41,000, respectively, for the six months ended December 31, 2022, and was $80,000 and $23,000, respectively, for the six months ended December 31, 2021. Unrecognized compensation expense for non-vested restricted stock awards was $1,119,000 at December 31, 2022, and is expected to be recognized over 4.7 years with a corresponding credit to paid-in capital.

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