Texas Community Bancshares, Inc. Stock Compensation Disclosure

Note 15 - Stock-Based Compensation

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The Company has one equity incentive plan with two share-based compensation awards as described below. Total compensation cost that has been charged against income for those plans was $607 and $757 for the years ended December 31, 2025 and 2024, respectively.

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Stock Option Awards

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The Company’s 2022 Equity Incentive Plan (the Equity Plan), which was approved by shareholders, permits the grant of stock options to its directors, executive officers and other officers for up to 325,775 shares of common stock. Stock option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have vesting periods of five years and have 10-year contractual terms. The Company has a policy of using shares held as treasury stock to satisfy share option exercises.

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The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions determined by management. Expected volatility is based on historical volatility of the Company’s common stock. The Company uses historical data when available to estimate option exercise

and post-vesting termination behavior. Due to lack of historical data, the Company estimated the expected term of options granted is 7.5 years. This represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The Company’s accounting policy is to recognize forfeitures as they occur. The risk-free interest rate for the expected term of the options is based on the 7-year U.S. Treasury yield curve in effect at the time of the grants.

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On August 31, 2022, the non-employee directors of the Company were granted 97,728 stock options with a cost of $6.50 per option and an exercise price of $16.00. These options will vest annually over a five year period ending August 31, 2027 and will expire on August 31, 2032. During the year ended December 31, 2025 and 2024, 14,661 and 8,144 of these options were forfeited or expired, respectively.

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On February 28, 2023, the executive officers of the Company were granted 192,204 stock options with a cost of $6.14 per option and an exercise price of $15.67. These options will vest annually over a five year period ending February 28, 2028 and will expire on February 28, 2033. During the years ended December 31, 2025 and 2024, 22,477 and 24,758, of these options were forfeited or expired, respectively.

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On February 28, 2024, an executive officer of the Company was granted 58,639 stock options with a cost of $6.41 per option and an exercise price of $13.75. The Company accelerated the first vesting period to vest 20% of the awards at grant date and the remaining awards will vest in four equal annual installments through February 28, 2028, and will expire on February 28, 2033.

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On August 30, 2024, certain officers of the Company were granted 19,030 stock options with a cost of $6.27 per option and an exercise price of $14.31. These options will vest annually over a five year period ending August 31, 2029, and will expire on August 31, 2034.

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Compensation expense for the stock options for the years ended December 31, 2025 and 2024, was $296 and $377, respectively.

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There were no additional grants during the year ended December 31, 2025.

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The fair value of options granted during the year ended December 31, 2024, was determined using the following weighted-average assumptions as of grant date.

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A summary of the activity in the stock option awards for 2025 and 2024 follows:

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As of December 31, 2025 and 2024, there was $621 and $1,079, respectively, of total unrecognized compensation cost related to nonvested stock options granted under the plan. The cost is expected to be recognized over a weighted-average period of five years.

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Restricted Stock Awards

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The Equity Plan also permits the grant of restricted stock to its directors, executive officers, and other officers. Compensation expense for restricted stock awards is recognized over the vesting period of the awards based on the fair value of the stock at issue date. The fair value of the stock was determined using the closing stock price of the Company on grant date. Restricted shares fully vest on the fifth anniversary of the grant date.

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On August 31, 2022, the non-employee directors of the Company were granted 39,084 shares of Company stock at a fair market value of $16.00 per share. These stock awards will vest in five equal annual installments through August 31, 2027. During the year ended December 31, 2024, 2,606 of these awards were forfeited.

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On February 28, 2023, executive officers of the Company were granted 76,880 shares of Company stock at a fair market value of $15.67 per share. These stock awards will vest in five equal annual installments through February 28, 2028. During the years ended December 31, 2025 and 2024, 3,909 and 9,903, respectively, of these awards were forfeited.

On February 28, 2024, an executive officer of the Company was granted 23,455 shares of Company stock when the stock price was $13.75 per share. The Company accelerated the first vesting period to vest 20% of the awards at grant date and the remaining awards will vest in four equal annual installments through February 28, 2028.

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On August 30, 2024 certain officers of the Company were granted 9,212 shares of Company stock when the stock price was $14.31 per share. These stock awards will vest in five equal annual installments through August 31, 2029.

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Compensation expense for the restricted stock awards for the years ended December 31, 2025 and 2024 was $311 and $380, respectively.

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A summary of changes in the Company’s nonvested shares for the years ended December 31, 2025 and 2024 follows:

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As of December 31, 2025 and 2024, there was $662 and $1,040 of total unrecognized compensation cost related to nonvested restricted stock granted under the plan. The cost is expected to be recognized over a weighted-average period of five years.