Note 21 - Stock-based Compensation

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

NOTE

21

 – STOCK-BASED COMPENSATION

The United Bancshares,

Inc.2016

Stock Option Plan (the “Plan”) permits the Corporation to award non-qualified stock options to eligible participants. A total of

250,000

shares are available for issuance pursuant to the Plan.

The Corporation issued

30,151

options during

2017

at an exercise price of

$21.70,

31,267

options during

2018

at an exercise price of

$23.30,

and

33,853

options during

2019

at an exercise price

of

$22.97

 under the

Plan. Following is a summary of activity for stock options for the years ended

December 31, 2019,

2018

and

2017

 (number of shares):

	2019			2018			2017
Outstanding, beginning of year		93,069			63,503			33,352
Granted		33,853			31,267			30,151
Exercised		-			-			-
Forfeited		(9,275	)		(1,701	)		-
Outstanding, end of year		117,647			93,069			63,503
Weighted average exercise price at end of year	$	21.81		$	21.39		$	20.45

The options vest over a

three

-year period on the anniversary of the date of grant. At

December 31, 2019

,

57

,033

 options were vested and outstanding options had a weighted average remaining contractual term of

8.17

 years.

The fair value of options granted is estimated at the date of grant using the Black Scholes option pricing model. Following are assumptions used in calculating the fair value of the options granted in

2019,

2018

and

2017

:

	2019			2018			2017
Weighted-average fair value of options granted	$	7.77		$	7.87		$	7.35
Average dividend yield		2.26	%		2.18	%		2.23	%
Expected volatility		40.00	%		40.00	%		40.00	%
Rick-free interest rate		1.93	%		2.81	%		2.06	%
Expected term (years)		7			7			7
Shares Granted		33,853			31,267			30,151
Exercise Price	$	22.97		$	23.30		$	21.70

Total compensation expense related to the stock options granted in

2017

net of forfeitures, is expected to

be

$192,000

and is being recognized ratably over the

36

month period beginning

August 1, 2017. 

Total compensation expense related to the stock options granted in 2018

is expected to be

$213,000

and is being recognized ratably over the

36

month period beginning September 1, 2018.  Total compensation expense related to the stock options granted in 2019 is expected to be

$263,000

and is being recognized ratably over the

36

month period beg

inning July 1, 2019.

Stock option expense for outstanding awards amounted to

$266,000,

$165,000

and

$100,000

for the ye

ars ended

December 31, 2019,

2018

and

2017,

respectively.