CB Financial Services, Inc.CBFV
CB Financial Services, Inc. Stock Compensation Disclosure
EMPLOYEE BENEFITS
Savings and Profit Sharing Plan
The Company maintains a Cash or Deferred Profit-sharing Section 401(k) Plan with contributions matching those by eligible employees for the first 4% of an employee’s contribution at the rate of $0.25 on the dollar. All employees who are over the age of 18 and completed three months of employment are eligible to participate in the plan. The Company made contributions of $168,000 and $302,000 for the years ended December 31, 2024 and 2023, respectively, to this plan. The 401(k) Plan includes a “safe harbor” provision and a discretionary retirement contribution. The Company made contributions of $461,000 and $485,000 for the “safe harbor” provision and discretionary retirement contribution for the years ended December 31, 2024 and 2023, respectively.
Equity Incentive Plan
Details of the restricted stock award and stock option grants under the 2021 Equity Incentive Plan are summarized for the years ended December 31, 2024 and 2023 as follows.
| 2024 | 2023 | ||||||||||
| Number of Restricted Shares Granted | 25,410 | 40,225 | |||||||||
| Weighted Average Grant Date Common Stock Price | $ | 22.12 | $ | 22.11 | |||||||
| Restricted Shares Market Value Before Tax | $ | 562,000 | $ | 889,000 | |||||||
| Number of Stock Options Granted | 93,950 | 78,975 | |||||||||
| Stock Options Market Value Before Tax | $ | 452,000 | $ | 358,000 | |||||||
| Summary of Significant Assumptions for Newly Issued Stock Options | |||||||||||
| Expected Life in Years | 6.5 | 6.5 | |||||||||
| Expected Dividend Yield | 4.52% | 4.56% | |||||||||
| Risk-free Interest Rate | 3.98% | 3.74% | |||||||||
| Expected Volatility | 30.43% | 29.56% | |||||||||
| Weighted Average Grant Date Fair Value | $ | 4.81 | $ | 4.54 | |||||||
The Company recognizes expense over a five-year vesting period for the restricted stock awards and stock options. Stock-based compensation expense related to restricted stock awards and stock options was $812,000 and $1.1 million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024 and 2023, total unrecognized compensation expense was $701,000 and $505,000, respectively, related to stock options, and $1.2 million and $1.4 million, respectively, related to restricted stock awards for December 31, 2024 and 2023, respectively. At December 31, 2024, the unrecognized compensation expense related to stock options and restricted stock is expected to be recognized over the weighted average remaining vesting period of 3.33 years. In conjunction with non-qualified stock options, the Company recognized a tax benefit of $27,000 due to exercises of non-qualified stock options for the year ended December 31, 2024, compared to no tax benefit recognized for the year ended December 31, 2023. In the current year, there were exercises of non-qualified stock options with a tax benefit of $29,000 partially offset by tax expense of $2,000.
Intrinsic value represents the amount by which the fair value of the underlying stock at December 31, 2024 and 2023, exceeds the exercise price of the stock options. The intrinsic value of outstanding stock options was $1.9 million and $335,000 at December 31, 2024 and 2023, respectively.
At December 31, 2024, there were 287,500 shares of common stock available and reserved under the 2024 Plan to be issued as restricted stock awards or units based on the terms of the terms of the Plan. At December 31, 2024, no shares have been granted under the 2024 Plan. Under the 2021 Plan, there were 25,410 restricted shares and 93,950 options granted in 2024. Under the 2021 Plan, there were 161,464 or 64,586 shares available at December 31, 2023 to be issued in connection with the exercise of stock options and restricted stock awards or units. The 2021 and 2015 Plans shall remain in effect as long as any awards are outstanding, but as a result of the approval of the 2024 Plan, no more awards can be granted under the 2015 or 2021 Plans.
The following table presents stock option data for the period indicated:
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Life in Years | ||||||||||||||||||||||||||||||
| Outstanding Options at Beginning of Year | 337,444 | $ | 24.11 | 5.6 | 283,748 | $ | 24.52 | 5.6 | |||||||||||||||||||||||||||
| Granted | 93,950 | 22.12 | 78,975 | 21.93 | |||||||||||||||||||||||||||||||
| Exercised | (31,490) | 22.95 | (18,000) | 20.63 | |||||||||||||||||||||||||||||||
| Forfeited | (22,816) | 24.98 | (7,279) | 24.95 | |||||||||||||||||||||||||||||||
| Outstanding Options at End of Year | 377,088 | 23.65 | 5.7 | 337,444 | 24.11 | 5.6 | |||||||||||||||||||||||||||||
| Exercisable Options at End of Year | 189,774 | $ | 24.40 | 3.1 | 203,202 | $ | 24.46 | 3.6 | |||||||||||||||||||||||||||
| Number of Shares | Weighted Average Exercise Price | Weighted Average Remaining Service Period in Years | |||||||||||||||
Nonvested Options December 31, 2022 | 109,065 | $ | 24.67 | 9.1 | |||||||||||||
| Granted | 78,975 | $ | 21.93 | ||||||||||||||
| Vested | (48,313) | $ | 24.46 | ||||||||||||||
| Forfeited | (5,485) | $ | 24.37 | ||||||||||||||
| Nonvested Options December 31, 2023 | 134,242 | $ | 23.58 | 8.5 | |||||||||||||
| Granted | 93,950 | 22.12 | |||||||||||||||
| Vested | (33,083) | 23.49 | |||||||||||||||
| Forfeited | (8,136) | 22.87 | |||||||||||||||
| Nonvested Options at December 31, 2024 | 186,973 | $ | 22.90 | 8.3 | |||||||||||||
The following table presents restricted stock award data for the period indicated.
| Number of Shares | Weighted Average Grant Date Fair Value Price | Weighted Average Remaining Service Period in Years | |||||||||||||||
| Nonvested Restricted Stock at December 31, 2022 | 64,125 | $ | 24.32 | 4.3 | |||||||||||||
| Granted | 40,225 | 22.11 | 4.4 | ||||||||||||||
| Vested | (32,773) | 24.07 | 3.7 | ||||||||||||||
| Forfeited | (2,800) | 24.15 | |||||||||||||||
| Nonvested Restricted Stock at December 31, 2023 | 68,777 | $ | 23.16 | 3.8 | |||||||||||||
| Granted | 25,410 | 22.12 | 4.1 | ||||||||||||||
| Vested | (21,918) | 23.87 | 1.7 | ||||||||||||||
| Forfeited | (7,240) | 21.96 | |||||||||||||||
| Nonvested Restricted Stock at December 31, 2024 | 65,029 | $ | 22.64 | 3.0 | |||||||||||||
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.