Stock-Based Compensation

12 Months Ended

Dec. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 15 – Stock-Based Compensation

Stock-based expense for the years ended December 31, 2024, and December 31, 2023, was $752,000 and $90,000, respectively.

The Company accounts for forfeitures when they occur by reversing any previously accrued compensation expense on forfeited options in accordance with ASC 718, Compensation – Stock Compensation.

On November 17, 2017, the Company’s stockholders approved the adoption of the 2017 Equity Incentive Plan (“2017 Plan”). The 2017 Plan provided 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 could be granted for stock options and 75,179 shares of common stock could be issued as restricted stock to Directors and employees of the Company. Stock options and restricted stock awards currently issued under the 2017 Plan vest at 20% per year beginning on the first anniversary of date of grant and the options expire seven years after the grant date.

On May 25, 2022, the Company’s stockholders approved the adoption of the 2022 Equity Incentive Plan (“2022 Plan”). The 2022 Plan provided for the grant of a maximum of 252,340 shares of the Company’s common stock of which up to 168,227 shares of common stock could be issued as restricted stock and 84,113 shares of common stock could be granted for stock options to directors and employees of the Company. The board of directors’ compensation committee specified the vesting schedules for the restricted stock and options. Option expiration dates were flexible as well but could not exceed ten years from the grant date.

On September 25, 2024, the Company’s Board of Directors approved the termination of the 2017 Plan and the 2022 Plan. While outstanding awards issued under those plans were not affected by the plans’ termination, no further awards may be granted under either the 2017 Plan or the 2022 Plan. In connection with the termination of the 2017 Plan and the 2022 Plan, the Board of Directors approved and adopted the Bancorp 34, Inc. 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan provides for the grant of a maximum of 525,000 shares of the Company’s common stock pursuant to a variety of equity incentive awards, including restricted stock, stock options, and other awards. Selected executives and other key employees were granted restricted stock unit awards whose vesting is contingent upon meeting Company-wide performance conditions, including tangible book value per share and return on average assets (performance restricted stock unit awards). Multiple performance conditions are established with a weighting of units. The performance restricted stock unit awards are earned upon the achievement of the performance condition for the Company. Once earned, a portion of the performance restricted stock unit awards vest in installments on anniversaries of the date on which the performance condition was achieved. As of December 31, 2024, 295,100 units of performance restricted stock awards have been issued under the 2024 Plan.

The stock option plans allow for net settlement of vested options. In a net settlement, the Company, at the direction of the optionee, net settles the options by issuing new shares to the optionee with a value, at the current per share trading price, equal to the total in-the-money or intrinsic value of the options less any necessary tax withholdings on the disqualifying disposition of Incentive Stock Options. The optionee is granted newly issued shares and a small amount of cash in lieu of partial shares. There were no net settlements in 2024 or 2023.

No stock compensation was issued under the 2017 Plan or the 2022 Plan in 2024. For the year ended December 31, 2023, 10,250 stock options were granted and 10,250 shares of restricted stock were issued. Stock option grant-date fair values for 2023 were computed using the Black Scholes Merton options pricing model with the following weighted-average inputs and assumptions:

	December 31,		December 31,
	2024		2023
Grant date stock price and exercise price	$	—	$	12.03
Dividend yield		—		2.89	%
Expected stock price volatility		—		23.37	%
Risk-free interest rate		—		3.50	%
Expected option life in years		—		6
Total weighted-average fair value of options granted	$	—	$	2.42

A summary of stock option activity in 2024 is presented below (Aggregate Intrinsic Value in thousands):

	Shares Subject to Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at beginning of year		137,500		$	13.86		2.1 years		—
Granted		—			—		—		—
Exercised		—			—		—		—
Forfeited or expired		(92,500	)		14.90		—		—
Outstanding on December 31, 2024		45,000		$	11.72		1.2 years	$	49
Exercisable on December 31, 2024		38,800		$	11.41		0.6 years	$	49

A summary of restricted stock activity for the year ended December 31, 2024, is presented below:

	Shares			Weighted- Average Grant Date Fair Value		Average Remaining Contractual Term
Non-vested on January 1, 2024		13,400		$	12.97		3.9 years
Granted		—			—		—
Vested		(8,700	)		8.44		—
Forfeited		—			—		—
Non-vested on December 31, 2024		4,700		$	12.91		3.0 years

A summary of performance restricted stock unit activity for the year ended December 31, 2024, is presented below:

	Shares		Weighted- Average Grant Date Fair Value		Average Remaining Contractual Term
Non-vested on January 1, 2024		—	$	—		—
Granted		346,200		11.81		3.0 years
Vested		51,100		11.81		—
Forfeited		—		—		—
Non-vested on December 31, 2024		295,100	$	11.81		3.0 years

The average remaining contractual term does not include those units with performance conditions that are not deemed probable to achieve as of December 31, 2024.

As of December 31, 2024, there was $13,000, $49,000 and $1,810,000 of total unrecognized equity-based expense related to unvested stock options, restricted stock awards, and performance restricted stock units, respectively, granted under the equity plans that is expected to be recognized over the next four years as follows (dollars in thousands):

Year
2025	$	625
2026		625
2027		618
2028		4
Totals	$	1,872

Expense for the performance restricted stock awards are recognized when it is probable that the performance conditions will be achieved. There are several performance conditions that are not deemed probable to achieve as of December 31, 2024, so no expense related to the unachieved grants is included in the table above. Should the performance conditions be met an additional $1.7 in expense would be recognized over the expected life the agreements.