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 (313,894 stock options adjusted for the conversion) stock options and 95,387 (125,557 shares adjusted for the conversion) restricted shares were approved for award. As of September 30, 2024, no shares of common stock remained available for grant as stock options, restricted stock or restricted stock units under the 2020 Equity Incentive Plan. 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.

On August 26, 2022, the Company’s shareholders approved the 1895 Bancorp of Wisconsin, Inc. 2022 Equity Incentive Plan (the “2022 Equity Incentive Plan”). A total of 354,200 stock options and 141,680 restricted shares were approved for award. As of September 30, 2024, 51,955 shares of common stock remain available for grant as stock options and 23,382 shares remain available for grant as restricted stock or stock units under the 2022 Equity Incentive Plan. 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.

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 represents 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 lifetime period prior to issuance date. The following assumptions were used in estimating the fair value of options granted during the nine months ended September 30, 2024 and September 30, 2023, respectively:


	For the Nine Months Ended
	September 30, 2024	September 30, 2023

Dividend yield	N/A(1)		0.00	%
Risk-free interest rate	N/A(1)		3.59	%
Expected volatility	N/A(1)		24.64	%
Weighted average expected life (years)	N/A(1)		6.5
Weighted average per share value of options	N/A(1)	$	3.37

(1) There were no stock options granted during the nine months ended September 30, 2024.

A summary of the Company’s stock option activity for the nine months ended September 30, 2024 is presented below.


Stock Options	Shares			Weighted Average Exercise Price		Weighted Average Remaining in Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding December 31, 2023		600,110		$	8.30		7.49	$	238,951
Granted		—			—	N/A		N/A
Exercised		(13,821	)		5.96	N/A		36,843
Forfeited		(6,000	)		10.05	N/A		N/A
Vested shares expired		(10,917	)		6.55	N/A		N/A
Outstanding September 30, 2024		569,372			8.37	7.00		985,168
Options exercisable at September 30, 2024	273,278			$	7.33	6.35		$	757,855

The following table summarizes information about the Company’s nonvested stock option activity for the nine months ended September 30, 2024:


Stock Options	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2023		370,292		$	2.94
Granted		—			—
Vested(1)		(68,198	)	$	2.04
Forfeited		(6,000	)	$	10.05
Nonvested at September 30, 2024		296,094		$	3.13

(1)

Includes 2,105 shares vested under a nonqualified stock option inducement award to the Company’s President and Chief Executive Officer.

The Company amortizes the expense related to stock options as compensation expense over the vesting period. The Company recognized $76,000 and $79,000 in stock option expense during the three months ended September 30, 2024 and 2023, respectively, and $225,000 and $228,000 in stock option expense during the nine months ended September 30, 2024 and 2023, respectively.

At September 30, 2024, the Company had $731,000 in estimated unrecognized compensation costs related to outstanding stock options that is expected to be recognized over a weighted average period of 2.87 years.

The following table summarizes information about the Company’s restricted stock activity for the nine months ended September 30, 2024:


Restricted Stock	Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2023		144,297		$	8.95
Granted		—			—
Vested(1)(2)		(26,723	)		7.23
Forfeited		(2,000	)		10.05
Nonvested at September 30, 2024		115,574		$	9.33

(1)

Includes 262 shares vested under a restricted stock inducement award to the Company’s President and Chief Executive Officer.

(2)

Includes 3,420 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 $94,000 and $99,000 in restricted stock expense during the three months ended September 30, 2024 and 2023, respectively and recognized $279,000 and $287,000 in restricted stock expense during the nine months ended September 30, 2024 and 2023, respectively. At September 30, 2024, the Company had $843,000 of unrecognized compensation expense related to restricted stock shares that is expected to be recognized over a weighted average period of 2.8 years.