Employee Benefits

12 Months Ended

Dec. 31, 2021

Note 15:

Employee Benefits

401(k) Savings Plan

The Company has a retirement savings 401(k) plan covering substantially all employees. Employees may contribute up to the maximum legal limit with the Bank matching up to 5% of the employee’s salary. Employer contributions charged to expense for the years ended December 31, 2021, 2020 and 2019 totaled $267,000, $230,000 and $223,000, respectively.

Stock-Based Compensation

The Company adopted a nonqualified incentive stock option plan (the “Bank7 Corp. 2018 Equity Incentive Plan”) in September 2018 and amended the Bank7 Corp. 2018 Equity Plan on May 20, 2020 adding an additional 507,500 shares to the plan. The Bank7 Corp. 2018 Equity Incentive Plan will terminate in September 2028, if not extended. Compensation expense, net of settlement of shares for payroll withholding related to the Plan for the years ended December 31, 2021, 2020 and 2019 totaled $862,000, $771,000 and $628,000, respectively. There were 615,873 shares available for future grants as of December 31, 2021.

On September 5, 2019, our largest shareholders, the Haines Family Trusts, contributed approximately 6.5% of their shares (656,925 shares) to the Company. Subsequently, the Company immediately issued those shares to certain executive officers, which was charged as compensation expense of $11.8 million, including payroll taxes, through the income statement of the Company. Additionally, at the discretion of the employees receiving shares to assist in paying tax withholdings, 149,425 shares were withheld and subsequently canceled, resulting in a charge to retained earnings of $2.6 million.

The Company grants to employees and directors restricted stock units (RSUs) which vest ratably over either three or five years and stock options which vest ratably over four years. All RSUs and stock options are granted at the fair value of the common stock at the time of the award. The RSUs are considered fixed awards as the number of shares and fair value are known at the date of grant and the fair value at the grant date is amortized over the vesting and/or service period.

The Company uses newly issued shares for granting RSUs and stock options.

The following table is a summary of the stock option activity under the Bank7 Corp. 2018 Equity Incentive Plan (dollar amounts in thousands, except per share data):

	Options			Wgtd. Avg. Exercise Price		Wgtd. Avg. Remaining Contractual Term		Aggregate Intrinsic Value
Twelve Months Ended December 31, 2021
Outstanding at December 31, 2020		185,250		$	18.73
Options Granted		80,500			14.31
Options Exercised		-			-
Options Forfeited		(1,750	)		14.31
Outstanding at December 31, 2021		264,000			17.41		7.56	$	1,474,840
Exercisable at December 31, 2021		121,932		$	18.82		6.82	$	509,257
Twelve Months Ended December 31, 2020
Outstanding at December 31, 2019		163,000		$	18.75
Options Granted		26,500			18.49
Options Exercised		-			-
Options Forfeited		(4,250	)		17.73
Outstanding at December 31, 2020		185,250			18.73		7.94	$	0
Exercisable at December 31, 2020		75,625		$	18.88		7.75	$	0

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model and is based on certain assumptions including risk-free rate of return, dividend yield, stock price volatility and the expected term. The fair value of each option is expensed over its vesting period.

The following table shows the assumptions used for computing stock-based compensation expense under the fair value method on options granted during the period presented:

	For the Year Ended
	December 31, 2021			December 31, 2020
Risk-free interest rate		0.52	%		1.71	%
Dividend yield		2.89	%		2.20	%
Stock price volatility		66.67	%		41.27	%
Expected term		6.41			7.51
Weighted average grant date fair value	$	6.79		$	6.55

The following table summarizes share information about RSUs for the years ended December 31, 2021 and 2020:

	Number of Shares			Wgtd. Avg. Grant Date Fair Value
Twelve Months Ended December 31, 2021
Outstanding at December 31, 2020		118,000		$	18.09
Shares granted		90,575			19.95
Shares vested		(35,582	)		18.30
Shares forfeited		-			-
End of the period balance		172,993		$	19.02

Twelve Months Ended December 31, 2020
Outstanding at December 31, 2019		104,000		$	19.09
Shares granted		41,000			16.19
Shares vested		(26,000	)		19.09
Shares forfeited		(1,000	)		18.49
End of the period balance		118,000		$	18.09

As of December 31, 2021, there was approximately $2.9 million of unrecognized compensation expense related to 173,000 unvested RSUs and $591,000 of unrecognized compensation expense related to 264,000 unvested and/or unexercised stock options. The stock option expense is expected to be recognized over a weighted average period of 2.48 years, and the RSU expense is expected to be recognized over a weighted average period of 3.04 years.