Note 18 - Stock-based Compensation

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

NOTE

1

8

– STOCK-BASED COMPENSATION

Stock-based expense for the year ended

December 31, 2017

was

$25,000

of which

$16,000

was charged to stock-based compensation

expense and

$9,000

was charged to stock-based other noninterest expense. There was

no

stock-based expense for the year ended

December 31, 2016.

On

November 17, 2017

the stockholders approved the adoption of the

2017

Equity Incentive Plan (“

Incentive Plan”). The Incentive Plan provides for the grant of a maximum of

263,127

shares of the Company’s common stock of which up to

187,948

shares of common stock

may

be granted for stock options and

75,179

shares of common stock

may

be issued as restricted stock to Directors and employees of the Company.

On

December 6, 2017

the Company awarded

options to purchase

178,650

shares of the Company’s common stock and issued

74,750

shares of restricted stock. Stock option awards were granted with an exercise price equal to the grant date closing price of the Company’s common stock of

$14.90

per share. Stock options and restricted stock awards under the Incentive Plan vest at

20%

per year beginning on the

first

university of date of grant and have a maximum term of

seven

years.

The Company also has vested and outstanding stock options issued

under the

2001

Stock Option Plan (“Prior Plan”).

No

options were granted under the Prior Plan in

2017

or

2016

and

no

further options can be granted under this plan. There was

no

stock-based compensation expense under this plan in

2017

or

2016.

The grant-date fair value of stock option awards granted on

December 6, 2017 

was

$3.66

using the Black-Scholes-Merton options pricing model with the following inputs and assumptions:

Grant date stock price	$	14.90
Dividend yield		0.00	%
Expected volatility		19.55	%
Risk-free interest rate		2.18	%
Expected life in years		6

The expected volatility represents

the average volatility of a peer group of publicly traded financial institutions with

2

nd

step conversions prior to the company’s

2016

conversion. The Company hasn't paid dividends in the past

5

years. The expected life is the mid-point between the latest vesting period and the contractual term as allowed by GAAP.   The risk-free interest rate is based on U.S. Treasury rates on the grant date for bonds with a maturity equal to the expected term.

A summary of

stock option activity during the years ended

December 31, 2017

and

2016

is presented below:

	For the Year Ended December 31, 2017
						Average
				Weighted-		Remaining
				Average		Contractual
	Shares			Exercise Price		Term
Outstanding, beginning of period		34,190		$	9.65		2.3
Granted		178,650			14.90		6.9
Exercised		(5,732	)		9.65		-
Forfeited or expired		-			-		-
Outstanding, end of period		207,108		$	14.18		6.2
Exercisable, end of period		28,458		$	9.65		1.3

	For the Year Ended December 31, 2016
						Average
				Weighted-		Remaining
				Average		Contractual
	Shares			Exercise Price		Term
Outstanding, beginning of period		36,892		$	9.65		3.1
Granted		-
Exercised		-
Forfeited or expired		(2,702	)		9.65		-
Outstanding, end of period		34,190		$	9.65		2.3
Exercisable, end of period		34,190		$	9.65		2.3

Share

s in the above tables for all periods prior to

October 2016

have been restated at the

second

-step conversion exchange rate of

2.0473

-to-

1.

Information related to stock options during each year is as follows:

	2017		2016
Intrinsic value of options exercised	$	25,909	$	-
Cash Received from option exercise	$	55,314	$	-
Tax benefit from option exercise	$	21,240	$	-
Weighted average fair value of options granted	$	653,859	$	-

As of

December 31, 2017,

there was

$581,000

of total unrecognized cost related to unvested stock options granted under the Incentive Plan that is expected to be recognized over a

5

-year period.

The only restricted stock activity in the years ended

December 31, 2017

and

2016

was the awarding of

74,750

shares on

December 6, 2017

and all of those restricted stock awards were

considered outstanding at

December 31, 2017.

No

shares were vested during

2017

under the incentive Plan.  

As of

December 31, 2017,

there was

$1,002,000

of total unrecognized cost related to non-vested restricted stock awarded under the Incentive Plan that is expected to be recognized over a period of

5

years.