UNITED SECURITY BANCSHARESUBFO
UNITED SECURITY BANCSHARES Stock Compensation Disclosure
Stock Based Compensation
Options and restricted stock units and awards have been granted to directors, officers and key employees at an exercise price equal to estimated fair value at the date of grant as determined by the Board of Directors. All options, units, and awards granted are service awards, and are based solely upon fulfilling a requisite service period (the vesting period). At December 31, 2024, the Company had one shareholder approved stock based compensation plan.
In May 2015, the Company adopted the United Security Bancshares 2015 Equity Incentive Award Plan (2015 Plan). The 2015 Plan provides for the granting of up to 758,000 shares of authorized and unissued shares of common stock in the form of stock options, restricted stock units, and restricted stock awards. The 2015 Plan requires that the exercise price may not be less than the fair value of the stock at the date the option is granted, and that the option price must be paid in-full at the time it is exercised.
The options granted (incentive stock options for employees and non-qualified stock options for Directors) have an exercise price at the prevailing market price on the date of grant. All options granted are exercisable 20% each year commencing one year after the date of grant and expire ten years after the date of grant. Restricted stock units are granted at the prevailing market price of the Company’s stock, subject to time-based vesting. Restricted stock awards are subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of the common stock on the date of the grant.
Under the 2015 Plan, 235,991 granted stock instruments are outstanding as of December 31, 2024, of which 57,000 are exercisable. Of the 235,991 granted stock instruments, 15,538 are restricted stock units, 145,453 are restricted stock awards, and 75,000 are nonqualified stock options.
At December 31, 2024, there were 205,085 shares available for future issuance under equity compensation plans.
A summary of the status of the Company’s stock option plan and changes during the year are presented below:
| Shares | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | |||||||||||||||||||||||
Options outstanding December 31, 2022 | 119,022 | $ | 8.07 | |||||||||||||||||||||||
| Granted during the year | — | — | ||||||||||||||||||||||||
| Exercised during the year | (29,022) | 3.68 | ||||||||||||||||||||||||
| Forfeited during the year | (15,000) | 9.25 | ||||||||||||||||||||||||
Options outstanding December 31, 2023 | 75,000 | 9.54 | 5.50 | $ | 7,200 | |||||||||||||||||||||
| Granted during the year | — | — | ||||||||||||||||||||||||
| Exercised during the year | — | — | ||||||||||||||||||||||||
| Forfeited during the year | — | — | ||||||||||||||||||||||||
Options outstanding December 31, 2024 | 75,000 | $ | 9.54 | 4.49 | $ | 65,250 | ||||||||||||||||||||
As of December 31, 2024, and 2023 there was $53,000 and $78,000, respectively, of total unrecognized compensation expense related to non-vested stock options. Non-vested stock options totaled 18,000 shares at December 31, 2024, with a weighted average remaining vesting period of approximately 2.07 years. Non-vested stock options totaled 24,000 at December 31, 2023. The aggregate intrinsic value of the non-vested stock options was $32,580 at December 31, 2024 and $5,760 at December 31, 2023.
Included in total outstanding options at December 31, 2024, were 57,000 exercisable shares at a weighted average price of $9.97, a weighted average remaining contract term of 3.68, and intrinsic value of 32,670.
A summary of the status of the Company’s stock option values and activity is presented below:
| December 31, 2024 | December 31, 2023 | |||||||||||||
| Weighted average grant-date fair value per share of stock options granted | $ | — | $ | — | ||||||||||
| Weighted average fair value of stock options vested | $ | 26,000 | $ | 26,000 | ||||||||||
| Total intrinsic value of stock options exercised | $ | — | $ | 85,000 | ||||||||||
The Bank determines fair value of stock options at grant date using the Black-Scholes-Merton pricing model that takes into account the stock price at the grant date, the exercise price, the expected life of the option, the volatility of the underlying stock and the expected dividend yield and the risk-free interest rate over the expected life of the option.
The expected term of options granted is derived from management’s experience, which is based upon historical data on employee exercise and post-vesting behavior. The risk free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on the historical volatility of the Bank’s stock over a period commensurate with the expected term of the options. The Company believes that historical volatility is indicative of expectations about its future volatility over the expected term of the options. The Bank expenses the fair value of the option on a straight-line basis over the vesting period for each separate service period portion of the award.
The Black-Scholes-Merton option valuation model requires the input of highly subjective assumptions, including the expected life of the stock based award and stock price volatility. The assumptions listed above represent management’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if other assumptions had been used, the Bank’s recorded stock-based compensation expense could have been materially different from that previously reported in proforma disclosures.
A summary of the status of the Company’s restricted stock units and changes during the year are presented below:
| Shares | Weighted Average Grant-Date Fair Value | |||||||||||||
Non-vested units at December 31, 2022 | 13,974 | $ | 8.29 | |||||||||||
| Granted during the year | 52,477 | $ | 7.53 | |||||||||||
| Vested during the year | (59,451) | $ | 7.68 | |||||||||||
| Forfeited during the year | — | $ | — | |||||||||||
Non-vested units at December 31, 2023 | 7,000 | $ | 7.79 | |||||||||||
| Granted during the year | 15,733 | 9.15 | ||||||||||||
| Vested during the year | (6,172) | 9.10 | ||||||||||||
| Forfeited during the year | (1,023) | 7.46 | ||||||||||||
Non-vested units at December 31, 2024 | 15,538 | $ | 8.67 | |||||||||||
As of December 31, 2024, there was $122,898 of total unrecognized compensation expense related to restricted stock units. This cost is expected to be recognized over a weighted-average period of approximately 1.91 years. As of December 31, 2023, there was $40,000 of total unrecognized compensation expense related to restricted stock units. The Company determines fair value of restricted stock units based on the quoted stock price as of the grant date.
A summary of the status of the Company’s restricted stock awards and changes during the year are presented below:
| Shares | Weighted Average Grant-Date Fair Value | |||||||||||||
Non-vested awards at December 31, 2022 | — | |||||||||||||
| Granted during the year | 14,435 | 7.99 | ||||||||||||
| Vested during the year | — | |||||||||||||
| Forfeited during the year | — | |||||||||||||
Non-vested awards at December 31, 2023 | 14,435 | $ | 7.99 | |||||||||||
| Granted during the year | 191,795 | 8.24 | ||||||||||||
| Vested during the year | (60,777) | 8.26 | ||||||||||||
| Forfeited during the year | — | — | ||||||||||||
Non-vested awards at December 31, 2024 | 145,453 | 8.21 | ||||||||||||
As of December 31, 2024, there was $1.1 million of total unrecognized compensation expense related to restricted stock awards. This cost is expected to be recognized over a weighted-average period of approximately 6.88 years. At December 31, 2023, there was $113,000 of total unrecognized compensation expense related to restricted stock awards. The Company determines fair value of restricted stock awards based on the quoted stock price as of the grant date.
Included in salaries and employee benefits for the years ended December 31, 2024, and 2023 are $381,000 and $141,000 of stock-based compensation, respectively. Director’s fees totaling $311,000 and $337,000 for the same periods, respectively, are also included in stock-based compensation as reflected in the Consolidated Statement of Changes in Shareholders’ Equity. The related tax benefit on share-based compensation recorded in the provision for income taxes was not material to any year.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 20, 2025 | Showing above |
| 2020 | Mar 5, 2021 | |
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.