v3.26.1
Note 11 - Stock Based Compensation
 6 Months Ended
Jun. 30, 2026
Notes to Financial Statements  
Equity [Text Block]

Note 11: Stock Based Compensation

 

ESOP

 

Employees participate in an Employee Stock Ownership Plan ("ESOP"). The ESOP borrowed funds from the Company to purchase 431,836 shares of stock at $10 per share. The Bank makes discretionary contributions to the ESOP, as well as paying dividends on unallocated shares to the ESOP, and the ESOP uses funds it receives to repay the loan. When loan payments are made, ESOP shares are allocated to participants based on relative compensation. Participants receive the shares at the end of employment. Dividends on allocated shares increase participants accounts. 

 

There were no contributions to the ESOP during the first six months of 2026, as the annual loan payment will be made during the fourth quarter. Expense recorded was $72,000 and $63,000 for the three months ended June 30, 2026 and 2025, respectively, and is recognized over the service period. Expense recorded was $138,000 and $127,000 for the six months ended June 30, 2026 and 2025, respectively, and is recognized over the service period.

 

Shares held by the ESOP were as follows: 

 

  

As of June 30,

 
  

2026

  

2025

 
  

(Dollars in thousands)

 

Shares allocated

  85,669   64,844 

Shares committed for allocation

  10,806   10,610 

Shares distributed to plan participants

  (5,015)  (1,597)

Unallocated

  335,361   356,382 

Total ESOP shares

  426,821   430,239 
         

Fair value of unearned shares as of June 30, 2026 and 2025, respectively

 $4,615  $4,394 

 

Fair value of unearned shares is based on a stock price of $13.76 and $12.33 as of June 30, 2026 and 2025, respectively. 

 

Equity Incentive Plan

 

At the Company's annual meeting of stockholders held on May 24, 2023, stockholders approved the NSTS Bancorp, Inc. 2023 Equity Incentive Plan (“2023 Equity Plan”), which provides for the granting of up to 755,714 shares (215,918 shares of restricted stock and 539,796 shares available for future grants of stock options) of the Company’s common stock pursuant to equity awards made under the 2023 Equity Plan.

 

Stock options granted under the 2023 Equity Plan generally vest in equal annual installments over a service period of five years beginning on the date of grant. The vesting of the options accelerates upon death, disability or following a change in control of the Company. Stock options are generally granted at an exercise price equal to the fair value of the Company’s common stock on the grant date based on the closing market price of the Company's common stock on the date of grant, and have an expiration period of ten years. As of June 30, 2026, the Company has 26,296 shares available for future grants of stock options under the 2023 Equity Plan. 


The Company recognizes compensation expense for the fair values of these awards, which have graded vesting, on a straight-line basis over the requisite service period of the awards. Upon exercise of vested options, management expects to first draw on treasury stock as the source for shares. 

 

The following is a summary of the Company's stock option activity and related information for the periods presented. 

 

Stock Option

 

Shares

  

Weighted Average Exercise Price

  

Aggregate Intrinsic Value (1)

 
             

Outstanding at March 31, 2025

  492,500  $9.59     

Granted

  —   —     

Exercised

  —   —     

Forfeited

  (2,000)  9.36     

Outstanding at June 30, 2025

  490,500  $9.59  $1,344 

Exercisable - End of Period

  186,800   9.36   555 
             

Outstanding at March 31, 2026

  467,500  $9.61     

Granted

  —   —     

Exercised

  —   —     

Forfeited

  —   —     

Outstanding at June 30, 2026

  467,500  $9.61  $1,940 

Exercisable - End of Period

  291,300   9.44   1,258 

 

Stock Option

 

Shares

  

Weighted Average Exercise Price

  

Aggregate Intrinsic Value (1)

 
             

Outstanding at December 31, 2024

  500,500  $9.59     

Granted

  —   —     

Exercised

  —   —     

Forfeited

  (10,000)  9.36     

Outstanding at June 30, 2025

  490,500  $9.59  $1,344 

Exercisable - End of Period

  186,800   9.36   555 
             

Outstanding at December 31, 2025

  467,500  $9.61     

Granted

  —   —     

Exercised

  —   —     

Forfeited

  —   —     

Outstanding at June 30, 2026

  467,500  $9.61  $1,940 

Exercisable - End of Period

  291,300   9.44   1,258 

 

(1) Dollars in thousands. The aggregate intrinsic value of outstanding and exercisable options at June 30, 2026 and 2025 were calculated based on the closing market price of the Company's common stock of  June 30, 2026 and 2025 of $13.76 and $12.33, respectively, per share less the exercise price. 

 

Expected future expense relating to the non-vested options outstanding as of June 30, 2026 is $629,000 over a weighted average period of 2.1 years. As of June 30, 2026, the Company had 176,200 in nonvested stock options. As of June 30, 2026, the Company had 467,500 in outstanding stock options with a weighted average remaining life of 7.2 years outstanding. 

 

Restricted shares granted under the 2023 Equity Plan generally vest in equal annual installments over a service period of five years beginning on the date of grant. The vesting of the awards accelerates upon death, disability or following a change in control of the Company. The product of the number of shares granted and the grant date closing market price of the Company’s common stock determines the fair value of restricted shares under the 2023 Equity Plan. Management recognizes compensation expense for the fair value of restricted shares on a straight-line basis over the requisite service period.

 

As of June 30, 2026, the Company has 14,018 shares of restricted stock available for future grants under the 2023 Equity Plan. 

 

The following is a summary of the status of the Company's restricted shares as of and for the periods presented. 

 

Restricted Stock

 

Shares

  

Weighted Average Grant Date Fair Value

 
         

Non-vested balance as of March 31, 2025

  149,740  $9.57 

Granted

  —   — 

Vested

  33,260   9.36 

Forfeited

  —   — 

Non-vested balance as of June 30, 2025

  116,480  $9.63 
         

Non-vested balance as of March 31, 2026

  113,140  $9.58 

Granted

  —   — 

Vested

  46,860   9.36 

Forfeited

  —   — 

Non-vested balance as of June 30, 2026

  66,280  $9.75 

 

Restricted Stock

 

Shares

  

Weighted Average Grant Date Fair Value

 
         

Non-vested balance as of December 31, 2024

  151,740  $9.57 

Granted

  —   — 

Vested

  33,260   9.36 

Forfeited

  2,000   9.36 

Non-vested balance as of June 30, 2025

  116,480  $9.63 
         

Non-vested balance as of December 31, 2025

  113,140  $9.58 

Granted

  —   — 

Vested

  46,860   9.36 

Forfeited

  —   — 

Non-vested balance as of June 30, 2026

  66,280  $9.75 

 

Expected future expense related to the non-vested restricted shares outstanding as of period end is $616,000 over a weighted average period of 2.3 years. 

 

The following table presents the stock based compensation expense for the periods presented. On April 7, 2026, the Bank's President and CEO, Mr. Nathan Walker, passed away. Due to the passing of Mr. Walker, stock options to purchase 51,000 shares of the Company's common stock and 20,400 shares of restricted stock previously awarded to Mr. Walker under the 2023 Equity Plan vested during the quarter ended June 30, 2026, pursuant to the terms of the 2023 Equity Plan. The early vesting of the stock options and restricted stock awards resulted in an additional expense of $134,000 and $141,000, respectively, during the quarter ended June 30, 2026.

 

  

Three Months Ended June 30,

  

Six months ended June 30,

 
  

2026

  

2025

  

2026

  

2025

 
  

(Dollars in thousands)

  

(Dollars in thousands)

 

Stock option expense

 $204  $87  $290  $160 

Restricted stock expense

  211   88   298   172 

Total stock based compensation expense

 $415  $175  $588  $332