Note 9 - Stock Options

3 Months Ended

Mar. 31, 2022

Share-Based Payment Arrangement [Text Block]

NOTE 9 – STOCK OPTIONS

The United Bancshares, Inc. 2016 Stock Option Plan (the “Plan”) permits the Corporation to award non-qualified stock options to eligible participants. A total of 250,000 shares are available for issuance pursuant to the Plan.

The Corporation issued 21,958 options during 2021 at an exercise price of $34.60, 63,858 options during 2020 at an exercise price of $19.83, and 33,853 options during 2019 at an average exercise price of $22.97 under the Plan. Following is a summary of activity for stock options for the three month periods ended March 31, 2022 and March 31, 2021:

	*March 31,*			*March 31,*
	*2022*			*2021*
Outstanding, beginning of period		133,792			157,817
Granted		-			-
Exercised		(19,396	)		(2,520	)
Forfeited		-			-
Outstanding, end of period		114,396			155,297
Weighted average exercise price at end of quarter	$	22.58		$	19.80

Options vest over a three-year period on the anniversary of the date of grant. At March 31, 2022, 53,914 options were vested compared to 65,749 options vested at March 31, 2021 and outstanding options had a weighted average remaining contractual term of 7.8 years.

The fair value of options granted is estimated at the date of grant using the Black Scholes option pricing model. Following are assumptions used in calculating the fair value of the options granted that are still vesting:

	*2021*			*2020*			*2019*
Weighted-average fair value of options granted	$	11.19		$	4.83		$	7.77
Average dividend yield		2.23	%		2.93	%		2.26	%
Expected volatility		40.00	%		40.00	%		40.00	%
Risk-free interest rate		1.00	%		0.49	%		1.93	%
Expected term (years)		7			7			7

Total compensation expense related to the stock options granted in 2021, net of forfeitures, is expected to be $246,000 and is being recognized ratably over the 36 month period beginning July 1, 2021. Total compensation expense related to the stock options granted in 2020, net of forfeitures, is expected to be $255,000 and is being recognized ratably over the 36 month period beginning July 1, 2020. Total compensation expense related to the stock options granted in 2019, net of forfeitures, is expected to be $214,000 and is being recognized ratably over the 36 month period beginning July 1, 2019. Stock option expense for outstanding awards amounted to $56,000 for the three months ended March 31, 2022 and $45,000 for the three months ended March 31, 2021.

UNITED BANCSHARES INC/OH 10-Q