RBB Bancorp Stock Compensation Disclosure

NOTE 16 - STOCK BASED COMPENSATION

 

Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan

 

The Amended and Restated RBB Bancorp 2017 Omnibus Stock Incentive Plan (the “Amended OSIP”) was approved by our board of directors in  January 2022 and approved by our shareholders in  May 2022. The Amended OSIP was designed to ensure continued availability of equity awards that will assist us in attracting and retaining competent managerial personnel and rewarding key employees, directors and other service providers for high levels of performance. Pursuant to the Amended OSIP, our board of directors are allowed to grant awards to eligible persons in the form of qualified and non-qualified stock options, restricted stock, restricted stock units, stock appreciation rights and other incentive awards. We have reserved up to 30% of issued and outstanding shares of common stock as of the date we adopted the Amended OSIP, or 3,848,341 shares. As of  December 31, 2025, there were 878,916 shares of common stock available for issuance under the Amended OSIP. This represents 5.2% of the issued and outstanding shares of the Company’s common stock as of December 31, 2025. Awards vest, become exercisable and contain such other terms and conditions as determined by the board of directors and set forth in individual agreements with the employees receiving the awards. The Amended OSIP enables the board of directors to set specific performance criteria that must be met before an award vests. The Amended OSIP allows for acceleration of vesting and exercise privileges of grants if a participant’s termination of employment is due to a change in control, death or total disability. If a participant’s job is terminated for cause, then all awards expire at the date of termination.

 

We recognized total stock-based compensation expense of $1.4 million, $1.1 million, and $750,000 in 2025, 2024, and 2023. The total unrecognized stock-based expense totaled $2.2 million, $1.9 million, and $517,000 as of December 31, 2025, 2024, and 2023.

 

Stock Options

 

Compensation expense for stock options was $44,000, $62,000, and $246,000 for the years ended December 31, 2025, 2024, and 2023. Unrecognized stock-based compensation expense related to options was $73,000, $117,000, and $179,000 as of December 31, 2025, 2024, and 2023. Unrecognized compensation expense related to stock options, as of December 31, 2025, is expected to be recognized over the next 1.4 years.

 

The fair value of each option grant was estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions presented below for 2023. No stock options have been granted after March 31, 2023.

 

		March 2023
Expected volatility			28.4	%
Expected term (years)			8.0
Expected dividends			2.92	%
Risk free rate			4.27	%
Grant date fair value		$	5.49

 

The expected volatility was based on the historical volatility of our stock trading history. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding. The risk free rate of return reflects the grant date interest rate offered for zero coupon U.S. Treasury bonds over the expected term of the options.

 

The table below presents a summary of our stock option awards and activity as of and for the year ended  December 31, 2025:

 

										Weighted-
						Weighted-				Average
						Average				Remaining				Aggregate
						Exercise				Contractual				Intrinsic
		Shares				Price				Term in years				Value
Outstanding at beginning of year			174,500			$	18.29
Exercised			(23,500	)			17.76
Outstanding at end of year			151,000			$	18.37				4.67			$	360
Options exercisable			139,000			$	18.13				4.48			$	360

 

The total fair value of the shares vested was $193,000, $581,000, and $1.1 million in 2025, 2024, and 2023. Unvested stock options totaled 12,000, 21,333, and 65,671 with a weighted average grant date fair value of $6.16, $6.02, and $4.99 as of December 31, 2025, 2024, and 2023. The decrease of unvested stock options during 2025 was due to 9,333 stock options vested with a weighted average grant date fair value of $5.84.

 

Cash received from the exercise of 23,500 share options was $417,000 for the year ended December 31, 2025. Cash received from the exercise of 112,250 share options was $1.8 million for the year ended December 31, 2024. Cash received from the exercise of 19,403 share options was $295,000 for the year ended December 31, 2023. The intrinsic value of options exercised was $21,000, $429,000, and $90,000 in 2025, 2024, and 2023.

 

Restricted Stock Units

 

We award time-based restricted stock units (“TRSUs”) and performance-based restricted stock units (“PRSUs”), which we also refer to collectively as restricted stock units (“RSUs”). The TRSUs have original lives ranging from 1 to 4 years and PRSUs have an original life of 3 years.

 

We granted 138,922 RSUs during the year ended December 31, 2025, with a weighted average price of $15.70. The RSUs granted during the year ended December 31, 2025, included 28,833 PRSUs subject to pre-established performance metrics including market conditions that will be measured in the future and subject to oversight and approval by the Board of Director’s Compensation Committee. As of December 31, 2025, there were 191,091 unvested RSUs outstanding. 

 

We granted 138,668 RSUs during the year ended December 31, 2024, with a weighted average price of $18.37. The RSUs granted during the year ended December 31, 2024, included 31,270 PRSUs subject to pre-established performance metrics with market conditions that will be measured in the future and subject to oversight and approval by the Board of Director’s Compensation Committee. As of December 31, 2024, there were 140,475 unvested RSUs outstanding.

 

The vesting date fair value of RSUs that vested during 2025, 2024, and 2023 was $1.3 million, $780,000, and $375,000.

 

The recorded compensation expense for RSUs was $1.3 million, $994,000, and $504,000 for the years ended  December 31, 2025, 2024, and 2023. Unrecognized stock-based compensation expense related to RSUs was $2.1 million and $1.8 million as of  December 31, 2025 and 2024. As of  December 31, 2025, unrecognized stock-based compensation expense related to RSUs is expected to be recognized over the next 2.3 years. 

 

The following table presents restricted stock unit activity during the twelve months ended  December 31, 2025. 

 

						Weighted-Average
						Grant Date
		Shares				Fair Value
Outstanding at beginning of year			140,475			$	18.33
Granted			138,922				15.70
Vested			(75,126	)			17.65
Forfeited/cancelled			(13,180	)			18.74
Outstanding at end of year			191,091				16.66