Equity Plan

6 Months Ended

Jun. 30, 2024

Equity Plan

Equity Plan

10) Equity Plan

The Company maintained an Amended and Restated 2004 Equity Plan (the “2004 Plan”) for directors, officers, and key employees. The 2004 Plan was terminated on May 23, 2013. On May 23, 2013, the Company’s shareholders approved the 2013 Equity Incentive Plan (the “2013 Plan”). On May 21, 2020, the shareholders approved an amendment to the 2013 Plan to increase the number of shares available from 3,000,000 to 5,000,000 shares. The 2013 Plan was terminated on May 25, 2023. The shareholders approved the 2023 Equity Incentive Plan (the “2023 Plan”) on May 25, 2023, which reserved for issuance 600,000 shares, plus the number of shares available for issuance under the 2013 Plan that had not been made subject to outstanding awards as of the effective date of the 2023 Plan. These plans are collectively referred to as “Equity Plans.” The Equity Plans provide for the grant of incentive and nonqualified stock options, restricted stock, restricted stock units (“RSUs”) and performance-based restricted stock units (“PRSUs”). The Equity Plans provide that the option price for both incentive and nonqualified stock options will be determined by the Board of Directors at no less than the fair value at the date of grant. Each RSU granted to non-executive employees generally vests ratably over three years. For the six months ended June 30, 2024, the Company granted 271,699 RSUs. Options granted vest on a schedule determined by the Board of Directors at the time of grant. Generally, options vest over four years. All options expire no later than ten years from the date of grant. There were 941,668 shares available for the issuance of equity awards under the 2023 Plan as of June 30, 2024.

The Company’s Executive Officer Cash Incentive Plan is comprised of formula-based financial measures. The executive officers that participate in the plan receive 50% of their award value in RSUs and 50% of their award value in PRSUs contingent on relative return on average tangible common equity (“ROATCE”) performance compared to a peer group at the end of a three year performance period. PRSUs are subject to cliff vesting after a three year performance period commencing in the initial year of grant. The earned PRSUs, if any, shall vest on the date on which the Board of Directors certifies whether and to what extent the performance goal has been achieved following the end of the performance period. For the six months ended June 30, 2024, the Company granted 149,923 shares of PRSUs.

Restricted stock is subject to time vesting. Restricted stock granted to the Board of Directors generally vests in one year. For the six months ended June 30, 2024, the Company granted 57,123 shares of restricted stock.

Stock option activity under the Equity Plans is as follows:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
	Number	Exercise		Contractual	Intrinsic
Total Stock Options	of Shares	Price		Life (Years)	Value
Outstanding at January 1, 2024	2,637,356	$	10.40
Exercised	(83,514)	$	5.31
Forfeited or expired	(178,949)	$	10.48
Outstanding at June 30, 2024	2,374,893	$	10.58	5.38	$	839,424
Vested or expected to vest	2,232,399			5.38	$	789,058
Exercisable at June 30, 2024	1,873,560			4.60	$	634,787

Information related to the Equity Plans for the periods indicated:

	Six Months Ended June 30,
	2024		2023
Intrinsic value of options exercised	$	296,873	$	620,013
Cash received from option exercise	$	443,552	$	996,453
Tax (expense) benefit realized from option exercises	$	(17,996)	$	(5,902)
Weighted average fair value of options granted	$	—	$	1.32

As of June 30, 2024, there was $881,000 of total unrecognized compensation cost related to unvested stock options granted under the Equity Plans. That cost is expected to be recognized over a weighted-average period of approximately 2.29 years.

Restricted stock activity under the Equity Plans is as follows:

		Weighted
		Average Grant
	Number	Date Fair
Total Restricted Stock Award	of Shares	Value
Nonvested shares at January 1, 2024	185,413	$	10.87
Granted	57,123	$	8.49
Vested	(106,372)	$	8.98
Forfeited or expired	(31,215)	$	11.43
Nonvested shares at June 30, 2024	104,949	$	10.08

As of June 30, 2024, there was $721,000 of total unrecognized compensation cost related to unvested restricted stock awards granted under the Equity Plans. The cost is expected to be recognized over a weighted-average period of approximately 0.93 years.

RSU activity under the Equity Plans is as follows:

		Weighted
		Average Grant
	Number	Date Fair
Total RSUs	of Shares	Value
Nonvested shares at January 1, 2024	119,362	$	7.41
Granted	271,699	$	8.45
Vested	(35,837)	$	8.21
Forfeited or expired	(38,934)	$	7.81
Nonvested shares at June 30, 2024	316,290	$	8.21

As of June 30, 2024, there were $2,365,000 of total unrecognized compensation cost related to unvested RSUs granted under the Equity Plans. The cost is expected to be recognized over a weighted average period of 2.55 years.

PRSU activity under the Equity Plans is as follows:

		Weighted
		Average Grant
	Number	Date Fair
Total PRSUs	of Shares	Value
Nonvested shares at January 1, 2024	119,358	$	7.41
Granted	149,923	$	8.49
Forfeited or expired	(39,862)	$	7.75
Nonvested shares at June 30, 2024	229,419	$	8.21

As of June 30, 2024, there were $1,461,000 of total unrecognized compensation cost related to unvested PRSUs granted under the Equity Plans. The cost is expected to be recognized over a weighted average period of 2.35 years.