Stock Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

NOTE 19 – 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 operations.

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 in the years ended December 31, 2021 and December 31, 2020:


	2021			2020
Dividend yield		0.00	%		0.00	%
Risk-free interest rate		0.96	%		0.45	%
Expected volatility		24.64	%		24.00	%
Weighted average expected life		6.5			6.5
Weighted average per share value of options	$	2.10		$	1.98

Based on the assumptions above, the estimated weighted average grant-date fair value of options granted was $78 during the year ended December 31, 2021.

A summary of the Company’s stock option activity for the years ended December 31, 2021 and 2020 is presented below.


Stock Options	Shares (1)			Weighted Average Exercise Price		Weighted Average Remaining in Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding and exercisable December 31, 2019		—		$	—		—		—
Granted		287,097			5.99		—		1,138,663
Exercised		—			—		—		—
Forfeited		—			—		—		—

Outstanding December 31, 2020		287,097			5.99		9.30		1,138,663

Options exercisable at December 31, 2020		—		$	—		—		—

Granted (2)		37,316			7.76		—		120,526
Exercised		(4,738	)		6.27		—		23,274
Forfeited		(18,955	)		6.27		—		91,574

Outstanding December 31, 2021		300,720			6.19		8.40		1,443,067

Options exercisable at December 31, 2021		52,677		$	5.97		8.30		264,489

(1)	Share amounts reflected in the tables are adjusted for the 1.3163 to 1 common share conversion ratio as part of the conversion and offering.

(2)	Includes 10,527 shares granted as a nonqualified stock option inducement award to the Company’s President and Chief Operating Officer.


Stock Options	Shares (1)			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019		—		$	—
Granted		287,097			1.98
Vested		—			—
Forfeited		—			—

Nonvested at December 31, 2020		287,097		$	1.98

Nonvested at December 31, 2020		287,097		$	1.98
Granted (2)		37,316			2.10
Vested		(57,415	)		1.50
Forfeited		(18,955	)		1.61

Nonvested at December 31, 2021		248,043		$	1.58

(1)	Share amounts reflected in the tables are adjusted for the 1.3163 to 1 common share conversion ratio as part of the conversion and offering.

(2)	Includes 10,527 shares granted as a nonqualified stock option inducement award to the Company’s President and Chief Operating Officer.

The Company amortizes the expense related to stock options as compensation expense over the vesting period. The Company recognized $95 and $61 in stock option expense during the years ended December 31, 2021 and December 31, 2020, respectively.

At December 31, 2021, the Company had $323 in estimated unrecognized compensation costs related to outstanding stock options that is expected to be recognized over a weighted average period of 3.5 years.

The following table summarizes information about the Company’s restricted stock activity for the years ended December 31, 2021 and 2020:


Restricted Stock	Shares (1)			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2019		—		$	—
Granted		111,802			5.98
Vested		—			—
Forfeited		—			—
Nonvested at December 31, 2020		111,802		$	5.98

Nonvested at December 31, 2020		111,802		$	5.98
Granted (2)		15,052			7.76
Vested (3)		(22,355	)		5.98
Forfeited		(7,371	)		6.06
Nonvested at December 31, 2021		97,128		$	6.25

(1)	Share amounts reflected in the tables are adjusted for the 1.3163 to 1 common share conversion ratio as part of the conversion and offering.

(2)	Includes 1,313 shares granted as a nonqualified stock option inducement award to the Company’s President and Chief Operating Officer.

(3)	Includes 6,305 shares surrendered by employees to cover payroll tax costs related to the vested shares.

The Company amortizes the expense related to restricted stock awards as compensation expense over the vesting period. The Company recognized $146 and $95 in restricted stock expense during the years ended December 31, 2021 and December 31, 2020, respectively. At December 31, 2021, the Company had $500 of unrecognized compensation expense related to restricted stock shares that is expected to be recognized over a weighted average period of 3.5 years.