Stock-based Compensation

12 Months Ended

Jun. 30, 2021

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

Stock-based Compensation

Note 16: Stock-based Compensation

In connection with the conversion to stock form, the Association established an ESOP for the exclusive benefit of eligible employees (all salaried employees who have completed at least 1,000 hours of service in a twelve-month period and have attained the age of 21). The ESOP borrowed funds from the Company in an amount sufficient to purchase 384,900 shares (approximately 8% of the Common Stock issued in the stock offering). The loan is secured by the shares purchased and will be repaid by the ESOP with funds from contributions made by the Association and dividends received by the ESOP, with funds from any contributions on ESOP assets. Contributions will be applied to repay interest on the loan first, and the remainder will be applied to principal. The loan is expected to be repaid over a period of up to 20 years. Shares purchased with the loan proceeds are held in a suspense account for allocation among participants as the loan is repaid. Contributions to the ESOP and shares released from the suspense account are allocated among participants in proportion to their compensation, relative to total compensation of all active participants. Participants will vest 100% in their accrued benefits under the employee stock ownership plan after six vesting years, with prorated vesting in years two through five. Vesting is accelerated upon retirement, death or disability of the participant or a change in control of the Association. Forfeitures will be reallocated to remaining plan participants. Benefits may be payable upon retirement, death, disability, separation from service, or termination of the ESOP. Since the Association’s annual contributions are discretionary, benefits payable under the ESOP cannot be estimated. Participants receive the shares at the end of employment.

The Company is accounting for its ESOP in accordance with ASC Topic 718, Employers Accounting for Employee Stock Ownership Plans. Accordingly, the debt of the ESOP is eliminated in consolidation and the shares pledged as collateral are reported as unearned ESOP shares in the consolidated balance sheets. Contributions to the ESOP shall be sufficient to pay principal and interest currently due under the loan agreement. As shares are committed to be released from collateral, the Company reports compensation expense equal to the average market price of the shares for the respective period, and the shares become outstanding for earnings per share computations. Dividends, if any, on unallocated ESOP shares are recorded as a reduction of debt and accrued interest.

A summary of ESOP shares at June 30, 2021 and 2020 are as follows (dollars in thousands):

	2021		2020
Allocated shares		145,389		127,102
Shares committed for release		19,245		19,245
Unearned shares		192,450		211,695
Total ESOP shares		357,084		358,042
Fair value of unearned ESOP shares (1)	$	4,388	$	3,652

(1) Based on closing price of $22.80 and $17.25 per share on June 30, 2021, and 2020, respectively.

During the year ended June 30, 2021 and 2020, 958 and 1,161 ESOP shares, respectively, were paid to ESOP participants due to separation from service.

The IF Bancorp, Inc. 2012 Equity Incentive Plan (the “Equity Incentive Plan”) was approved by stockholders in 2012. The purpose of the Equity Incentive Plan is to promote the long-term financial success of the Company and its Subsidiaries by providing a means to attract, retain and reward individuals who contribute to such success and to further align their interests with those of the Company’s stockholders. The Equity Incentive Plan authorizes the issuance or delivery to participants of up to 673,575 shares of the Company common stock pursuant to grants of incentive and non-qualified stock options, restricted stock awards and restricted stock unit awards, provided that the maximum number of shares of Company common stock that may be delivered pursuant to the exercise of stock options (all of which may be granted as incentive stock options) is 481,125

and the maximum number of shares of Company stock that may be issued as restricted stock awards or restricted stock units is 192,450.

On December 10, 2013, the Board of Directors approved grants of 85,500 shares of restricted stock and 167,000 in stock options to be awarded to senior officers and directors of the Association. The restricted stock will vest in equal installments over 10 years and the stock options will vest in equal installments over 7 years, both starting in December 2014. On December 10, 2015, the Board of Directors approved grants of 16,900 shares of restricted stock to be awarded to senior officers and directors of the Association. The restricted stock will vest in equal installments over 8 years, starting in December 2016. As of June 30, 2021, there were 90,050 shares of restricted stock and 314,125 stock option shares available for future grants under this plan.

The following table summarizes stock option activity for the year ended June 30, 2021 (dollars in thousands):

	Shares		Weighted- Average Exercise Price/Share		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding, June 30, 2020		153,143	$	16.63
Granted		—		—
Exercised		—		—
Forfeited		—		—
Outstanding, June 30, 2021		153,143	$	16.63		2.4	$	945	(1)
Exercisable, June 30, 2021		153,143	$	16.63		2.4	$	945	(1)

(1) Based on closing price of $22.80 per share on June 30, 2021.

Intrinsic value for stock options is defined as the difference between the current market value and the exercise price. There were no options granted during the year ended June 30, 2021.

There were 22,286 options that vested during the year ended June 30, 2021 compared to 22,286 stock options that vested during the year ended June 30, 2020. Stock-based compensation expense and related tax benefit was $24,000 and $57,000, respectively, for the year ended June 30, 2021, and the year ended June 30, 2020, and was recognized in non-interest expense. Compensation cost related to non-vested stock options was recognized over the seven year vesting period ending in December, 2020, leaving no unrecognized compensation cost at June 30, 2021.

The following table summarizes non-vested restricted stock activity for the year ended June 30, 2021:

	Shares		Weighted- Average Grant-Date Fair Value
Balance, June 30, 2020		40,250	$	16.79
Granted		—		—
Forfeited		—		—
Earned and issued		10,062		16.79
Balance, June 30, 2021		30,188		16.79

The fair value of the restricted stock awards is amortized to compensation expense over the vesting period (ten years) and is based on the market price of the Company’s common stock at the date of grant multiplied by the number of shares granted that are expected to vest. At the date of grant the par value of the shares granted was recorded in equity as a credit to common stock and a debit to paid-in capital. Stock-based compensation expense and related tax benefit for restricted stock was $169,000 and $48,000, respectively, for both the year ended June 30, 2021, and for the year ended June 30, 2020, and was recognized in non-interest expense. Unrecognized compensation expense for non-vested restricted stock awards was $409,000 and is expected to be recognized over 2.4 years with a corresponding credit to paid-in capital.