Note

Stock Compensation

Management recognition plan

A Management Recognition and Retention Plan (“MRP”) provides for the issuance of shares to directors and officers. Pursuant to the Ottawa Savings Bancorp, Inc.

2018

Equity Incentive Plan,

333,753

shares were authorized by the Company in

May, 2018.

Additionally,

30,000

of incentive stock options were also authorized. Granted shares vest in equal installments over a

five

-year period, with ownership of the share transferring to the recipient upon vesting. During

2019,

there were

2,520

shares granted all of which vested immediately. There were

5,250

shares granted in

2018.

Of these,

2,190

vested immediately. As of

December 31, 2019,

there were

2,445

not

yet vested. At

December 31, 2018,

there were

3,060

not

yet vested.

A summary of the status of the MRP stock awards is as follows:

				Weighted
				Average Grant
				Date Fair
Year ended December 31, 2019	Shares			Value
Outstanding and non-vested at beginning of year	$	3,060		$	13.19
Granted		2,520			13.75
Vested and transferred to recipients		(3,135	)		13.63
Outstanding and non-vested at end of year		2,445			13.19

				Weighted
				Average Grant
				Date Fair
Year ended December 31, 2018	Shares			Value
Outstanding and non-vested at beginning of year		-		$	-
Granted		5,250			13.19
Vested and transferred to recipients		(2,190	)		13.19
Outstanding and non-vested at end of year		3,060		$	13.19

December 31, 2019

there were

3,135

shares vested and

2,445

not

vested. Therefore, there was

$30,944

of future compensation cost related to non-vested shares

not

yet recognized at

December 31, 2019.

The Company recognized compensation expense of

$44,067

for the year ended

December 31, 2019.

For

December 31, 2018,

there were

2,190

shares vested and

3,060

not

vested. Therefore, there was

$40,361

of future compensation cost related to non-vested shares

not

yet recognized at

December, 2018.

The Company recognized compensation expense of approximately

$29,000

for the year ended

December 31, 2018.

Stock option plan

A Recognition and Retention Plan (“RRP”) provides for the issuance of stock options to directors, officers and employees. Pursuant to the Ottawa Savings Bancorp, Inc.

2006

Equity Incentive Plan, on

November 21, 2006,

the Company granted stock options to purchase

92,666

shares of the Company’s common stock, at an exercise price of

$12.35

per share. Under the same plan, the Company granted stock options to purchase

5,451

shares of the Company’s common stock, at an exercise price of

$9.90

per share on

December 21, 2008,

8,722

shares of the Company’s common stock, at an exercise price of

$6.00

per share

November 17, 2010,

and

13,083

shares of the Company’s common stock, at an exercise price of

$4.25

per share on

November 16, 2011.

The options become exercisable in equal installments over a

five

-year period from the grant date. The options expire

ten

years from the grant date.

The fair value of the stock options granted has been estimated using a Black-Scholes option pricing model. This option pricing model requires management to make subjective assumptions, such as expected stock price volatility, dividend rates, and expected time to exercise. There were

options granted during

2019

and

2018.

A summary of the status of the outstanding RRP stock options is as follows:

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
Year ended December 31, 2019	Shares			Price		Term (years)		Value
Outstanding at beginning of year		10,000		$	3.57		2.88	$	97,600
Forfeited		-			-		-		-
Granted		-			-		-	$	-
Exercised		(2,500	)	$	3.57			$	25,650

Outstanding at end of year		7,500		$	3.57		1.88	$	76,950
Exercisable at year end		7,500		$	3.57		1.88	$	76,950

						Weighted
				Weighted		Average
				Average		Remaining		Aggregate
				Exercise		Contractual		Intrinsic
Year ended December 31, 2018	Shares			Price		Term (years)		Value
Outstanding at beginning of year		30,491		$	5.08		2.92	$	285,522
Forfeited		-			-		-		-
Granted		-			-			$	-
Exercised		(20,491	)	$	5.81			$	163,905

Outstanding at end of year		10,000		$	3.57		2.88	$	97,600
Exercisable at year end		10,000		$	3.57		2.88	$	97,600