EQUITY AWARDS

12 Months Ended

Dec. 31, 2022

Share-Based Payment Arrangement [Abstract]

NOTE 10 – EQUITY AWARDS

The Company’s 2015 Equity Incentive Plan (the “Plan”) was adopted by the Company and approved by its shareholders in April 2015. The maximum number of shares of common stock that may be issued pursuant to stock-based awards under the Plan equals 1,100,000 shares, all of which may be subject to incentive stock option treatment. 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 ranging from 5 to 10 years and have 10-year contractual terms. Restricted stock awards vest under the period of restriction specified within their respective award agreements as determined by the Company. Forfeitures are recognized as they occur, subject to a 90-day grace period for vested options.

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 noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock and similar peer group averages. The Company uses historical data to estimate option exercise and post-vesting termination behavior. 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, which takes in to account that the options are not transferable. The dividend yield is the total dividends per share paid during the period divided by the average of the Company's stock price on each date a grant was issued. The risk-free interest rate for the expected term of the option is based on U.S. Treasury yield curve in effect at the time of the grant.

The fair value of options granted was determined using the following weighted-average assumptions as of grant date, for the years ended December 31:


	2022			2021			2020
Risk-free interest rate		2.90	%		0.98	%		0.79	%
Expected term (in years)		6.50			6.50			6.50
Expected stock price volatility		21.70	%		23.98	%		22.26	%
Dividend yield		2.47	%		2.35	%		2.56	%

A summary of stock option activity in the Plan during the years ended December 31, 2022 and 2021 follows:


2022	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Outstanding at beginning of year		502,780		$	25.77		5.59	$	5,936
Granted		102,500			35.58
Exercised		(69,580	)		22.49
Forfeited		(37,880	)		28.16
Balance, December 31, 2022		497,820		$	28.07		5.87	$	3,402

Exercisable at end of period		281,340		$	25.25		4.32	$	2,648


2021	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life in Years		Aggregate Intrinsic Value
Outstanding at beginning of year		506,200		$	26.81		5.82	$	1,805
Effect of 10% stock dividend		50,770
Granted		58,000			34.30
Exercised		(89,870	)		22.47
Forfeited		(22,320	)		26.16
Balance, December 31, 2021		502,780		$	25.77		5.59	$	5,936

Exercisable at end of period		295,696		$	24.09		4.40	$	3,989

A summary of nonvested stock option activity in the Plan during the years ended December 31, 2022 and 2021 follows:


2022	Number of Shares			Weighted-Average Grant Date Fair Value
Outstanding at beginning of year		207,084		$	5.23
Granted		102,500			6.98
Vested		(71,944	)		(5.50	)
Forfeited		(21,160	)		(8.86	)
Balance, December 31, 2022		216,480		$	5.95


2021	Number of Shares			Weighted-Average Grant Date Fair Value
Outstanding at beginning of year		214,680		$	4.46
Effect of 10% stock dividend		23,218
Granted		58,000			5.92
Vested		(76,494	)		(5.39	)
Forfeited		(12,320	)		(6.99	)
Balance, December 31, 2021		207,084		$	5.23

Information related to stock options in the Plan is as follows for the years ended:


	2022		2021		2020
Intrinsic value of options exercised	$	846	$	1,273	$	158
Cash received from options exercised		1,565		2,019		638
Weighted average fair value of options granted		6.98		5.92		4.46

Restricted Stock Awards and Units

A summary of restricted stock activity in the Plan during the years ended December 31, 2022 and 2021 follows:


2022	Number of Shares			Weighted-Average Grant Date Fair Value
Outstanding at beginning of year		30,190		$	27.52
Vested		(11,260	)		(27.52	)
Balance, December 31, 2022		18,930		$	27.51


2021	Number of Shares			Weighted-Average Grant Date Fair Value
Outstanding at beginning of year		35,300		$	29.72
Effect of 10% stock dividend		3,530
Granted		3,500			33.09
Vested		(12,140	)		(27.05	)
Balance, December 31, 2021		30,190		$	27.52

Restricted stock granted to employees typically vests over five years, but vesting periods may vary. Compensation expense for these grants is recognized over the vesting period of the awards based on the fair value of the stock at the issue date.

As of December 31, 2022, there was $1,659 of total unrecognized compensation expense related to unvested stock options and restricted stock granted under the Plan. The expense is expected to be recognized over a weighted-average period of 3.29 years.

The Company granted options and restricted stock under the Plan during both 2022 and 2021. Expense of $688, $733 and $749 was recorded during the years ended December 31, 2022, 2021 and 2020, respectively, which represents the fair value of shares vested during those periods.