BENEFITS

6 Months Ended

Jun. 30, 2020

Retirement Benefits [Abstract]

BENEFITS

NOTE 9 – BENEFITS

Salisbury's 401(k) Plan expense was $200 thousand and $192 thousand, respectively, for the three-month periods ended June 30, 2020 and 2019, and $438 thousand and $431 thousand, respectively, for the six-month periods ended June 30, 2020 and 2019. Other post-retirement benefit obligation expense for endorsement split-dollar life insurance arrangements was $14 thousand and $27 thousand, respectively, for the three-month periods ended June 30, 2020 and 2019, and $38 thousand and $48 thousand, respectively, for the six-month periods ended June 30, 2020 and 2019.

ESOP

Salisbury offers an ESOP to eligible employees. Under the Plan, Salisbury may make discretionary contributions to the Plan. Discretionary contributions vest in full upon six years and reflect the following schedule of qualified service: 20% after the second year, 20% per year thereafter, vesting at 100% after six full years of service. Salisbury's ESOP expense was $56 thousand and $53 thousand, respectively, for the three-month periods ended June 30, 2020 and 2019, and $113 thousand and $102 thousand, respectively, for the six-month periods ended June 30, 2020 and 2019.

Other Retirement Plans

A Non-Qualified Deferred Compensation Plan (the "Plan") was adopted effective January 1, 2013. This Plan was adopted by the Bank for the benefit of certain key employees ("Executive" or "Executives") who have been selected and approved by the Bank to participate in this Plan and have evidenced their participation by execution of a Non-Qualified Deferred Compensation Plan Participation Agreement ("Participation Agreement") in a form provided by the Bank. This Plan is intended to comply with Internal Revenue Code ("Code") Section 409A and any regulatory or other guidance issued under such Section. Salisbury's expense for this plan was $33 thousand and $29 thousand, respectively, for the three-month periods ended June 30, 2020 and 2019, and $67 thousand and $58 thousand, respectively, for the six-month periods ended June 30, 2020 and 2019.

Grants of Restricted Stock and Options

Restricted stock

Restricted stock expense was $135 thousand and $115 thousand, respectively; for the three-month periods ended June 30, 2020 and 2019, and $271 thousand and $215 thousand, respectively; for the six-month periods ended June 30, 2020 and 2019. The second quarter 2020 included an expense of $32 thousand for the accelerated vesting of restricted stock awards previously granted to certain Directors, who retired from Salisbury's Board of Directors during the quarter. The tax benefit from restricted stock expense was $25 thousand and $21 thousand, respectively; for the three-month periods ended June 30, 2020 and 2019, and $49 thousand and $39 thousand, respectively; for the six-month periods ended June 30, 2020 and 2019. In second quarter 2020, Salisbury granted a total of 14,975 shares of restricted stock to certain employees and Directors pursuant to its 2017 Long Term Incentive Plan. The fair value of the stock at grant date was approximately $536 thousand. The restricted stock will vest three years from the grant date. Unrecognized compensation cost relating to the awards as of June 30, 2020 and 2019 totaled $1,031 thousand and $1,075 thousand, respectively. There were forfeitures of $29 thousand or 700 shares in the second quarter of 2020 and forfeitures of $29 thousand or 700 shares for year to date. There were forfeitures of $16 thousand or 360 shares in the second quarter of 2019 and forfeitures of $21 thousand or 460 shares for year to date.

Performance-based restricted stock units

On March 29, 2019, the Compensation Committee granted performance-based restricted stock units (RSU) pursuant to the 2017 Long-Term Incentive Plan to further align compensation with the Bank's performance. This RSU plan replaced the Bank's Phantom Stock Appreciation Units plan. The performance goal is based on the increase in the Bank's tangible book value by $3.50 per share over the performance period for threshold performance. Vesting will range from 75% of target for achieving threshold performance, to 100% of target for achieving target payout performance ($5.00 increase in tangible book value per share) to 150% of target for achieving in excess of target payout performance and, if the performance goals are achieved, vesting will occur no later than March 29, 2022. A total of 6,800 performance-based restricted stock units were granted, including 3,500 units to three Named Executive Officers. Mr. Cantele received 1,500 units, Mr. Davies received 1,000 units and Mr. Albero received 1,000 units. Compensation expense was recorded with respect to these RSUs, for the quarter a total of $24 thousand and $21 thousand, and year to date $47 thousand and $39 thousand, were expensed in 2020 and 2019, respectively. No performance-based restricted stock units were awarded to date in 2020 and prior to March 29, 2019.

Options

Salisbury issued stock options in conjunction with its acquisition of Riverside Bank in 2014. In the second quarter 2020, there were no stock options exercised and year to date 2020, 1,755 stock options were exercised at $17.04 per share by one former Riverside Bank executive, who is currently a Named Executive Officer of Salisbury. Also, in the first quarter of 2020, a former Riverside employee exercised 1,350 stock options at $17.04 per share. In the second quarter 2019, a former Riverside employee exercised 2,025 at $17.04 per share, these was the only activity year to date in 2019.