Stock Based Compensation

3 Months Ended

Mar. 31, 2021

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

NOTE 15 – STOCK BASED COMPENSATION

Stock-Based Compensation Plan

On March 27, 2020, the Company’s stockholders approved the 1895 Bancorp of Wisconsin, Inc. 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan”). A total of 238,467 stock options and 95,387 restricted shares were approved for award. The stock options granted to employees and

non-employee

directors under this plan vest in five installments with the first installment vesting on the first anniversary of the date of grant. The exercise price for all stock options granted is equal to the quoted NASDAQ market close price on the date that the awards were granted and expire ten years after the grant date, if not exercised. The restricted stock awards granted to employees and

non-employee

directors under this plan vest in five installments with the first installment vesting on the first anniversary of the date of grant.

Accounting for Stock-Based Compensation Plan

The fair value of stock options granted is estimated on the grant date using a Black-Scholes pricing model. The fair value of restricted shares is equal to the quoted NASDAQ market closing price on the date of grant. The fair value of stock grants is recognized as compensation expense on a straight-line basis over the vesting period of the grants. Compensation expense is included in salaries and employee benefits in the consolidated statements of income.

Assumptions are used in estimating the fair value of stock options granted. The weighted average expected life of the stock options represent the period of time that the options are expected to be outstanding and is based on the historical results from the previous awards. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The expected volatility is based on the actual volatility of 1895 Bancorp of Wisconsin, Inc. stock for the weighted average life time period prior to issuance date. The following assumptions were used in estimating the fair value of options granted during the period ended March 31, 2021:


	March 31, 2021			March 31, 2020
Dividend yield		0.00	%		0.00	%
Risk-free interest rate		0.96	%		0.55	%
Expected volatility		24.64	%		22.30	%
Weighted average expected life		6.5			6.5
Weighted average per share value of options	$	2.76		$	1.84

A summary of the Company’s stock option activity for the period ended March 31, 2021 is presented below.


Stock Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining in Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding December 31, 2020		218,115	$	7.89		9.30		451,154
Granted (1)		28,350		10.21		6.50		—
Exercised		—		—		—		—
Forfeited		—		—		—		—

Outstanding March 31, 2021		246,465		8.16		9.15		1,498,801

Options exercisable at March 31, 2021		11,923		7.88		9.00		75,804

(1) Includes 7,998 shares granted as a nonqualified stock option inducement award to the Company’s President and Chief Operating Officer

The following table summarizes information about the Company’s nonvested stock option activity for the three months ended March 31, 2021:


Stock Options	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020		218,115		$	1.98
Granted		28,350			2.76
Vested		(11,923	)		1.83
Forfeited		—			—

Nonvested at March 31, 2021		234,542		$	2.06

The Company amortizes the expense related to stock options as compensation expense over the vesting period. The Company recognized $23,000 in stock option expense during the three month period ended March 31, 2021. At March 31, 2021, the Company had $426,000 in estimated unrecognized compensation costs related to outstanding stock options that is expected to be recognized over a weighted average period of 4.21 years.


Restricted Stock	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020		84,949		$	7.87
Granted (1)		11,436			10.21
Vested		(4,770	)		7.88
Forfeited		—			—

Nonvested at March 31, 2021		91,615		$	8.16

(1)	Includes 998 shares granted as a restricted stock inducement award to the Company’s President and Chief Operating Officer

The Company amortizes the expense related to restricted stock awards as compensation expense over the vesting period. The Company recognized $35,000 in restricted stock option expense during the three month period ended March 31, 2021. At March 31, 2021, the Company had $655,000 of unrecognized compensation expense related to restricted stock shares that is expected to be recognized over a weighted average period of 4.20 years.