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STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

2. STOCK-BASED COMPENSATION

Equity Plans

On March 18, 2020, the Board of Directors adopted the 2020 Equity Incentive Plan (the “2020 Plan”). The 2020 Plan was approved by the Company’s shareholders on May 21, 2020. At September 30, 2020 there were 19,634 restricted shares outstanding, zero stock options outstanding, and the total number of authorized shares that remain available for issuance under the 2020 Plan, including the 19,634 restricted shares that have not yet vested, was 250,000. The 2020 Plan provides for the following types of stock-based awards: incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted performance stock, unrestricted Company stock, and performance units. Under the 2020 Plan, the awards may be granted to employees and directors under incentive and nonqualified option agreements, restricted stock agreements, and other award agreements. The unvested restricted stock under the 2020 Plan have dividend and voting rights. The 2020 Plan requires that the option price may not be less than the fair market value of the stock at the date the option is awarded. The option awards expire on dates determined by the Board of Directors, but not later than ten years from the date of award. The vesting period is generally one to five years; however, the vesting period can be modified at the discretion of the Company’s Board of Directors. Outstanding option awards are exercisable until their expiration. New shares are issued upon exercise of an option.

On March 17, 2010, the Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan was approved by the Company’s shareholders on May 20, 2010. At September 30, 2020 there were 29,958 stock options and 41,790 restricted shares outstanding. The 2010 Plan expired by its term on March 17, 2020. Accordingly, outstanding awards under the 2010 Plan are exercisable and will continue to vest until their expiration, but no new awards may be granted under the 2010 Plan. The unvested restricted stock under the 2010 Plan have dividend and voting rights. The 2010 Plan required that the option price may not be less than the fair market value of the stock at the date the option is awarded. The option awards expire on dates determined by the Board of Directors, but not later than ten years from the date of award. All of the stock options previously awarded under the 2010 Plan are fully vested. New shares are issued upon exercise of an option. The initial vesting period for restricted stock issued under the 2010 Plan was generally three to five years; however, the vesting period can be modified at the discretion of the Company’s Board of Directors.

The award date fair value of awards is determined by the market price of the Company’s common stock on the date of award and is recognized ratably as compensation expense or director expense over the vesting periods. The shares of common stock awarded pursuant to such agreements vest in increments over one to five years from the date of award. The shares awarded to employees and directors under the restricted stock agreements vest on the applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated.

Equity Compensation

For the three-month periods ended September 30, 2020 and 2019, the compensation cost recognized for equity compensation was $110,000 and $93,000, respectively, and the recognized tax benefit for equity compensation expense was $30,000 and $25,000, respectively, for the same three-month periods. For the nine-month periods ended September 30, 2020 and 2019, the compensation cost recognized for equity compensation was $319,000 and $268,000, respectively, and the recognized tax benefit for equity compensation expense was $85,000 and $69,000, respectively, for the nine-month periods ended September 30, 2020 and 2019.

At September 30, 2020, there was no unrecognized pre-tax compensation cost related to nonvested stock option awards. At September 30, 2020, the total compensation cost related to restricted stock awards not yet recorded was $573,000. This amount will be recognized over the next 4.7 years and the weighted average period of recognizing these costs is expected to be 1.2 years.

Equity Plans Activity

Stock Options

There were no stock options awarded during the three-month and nine-month periods ended September 30, 2020 or September 30, 2019. A summary of option activity under the Plans as of September 30, 2020 and changes during the period then ended is presented below:

Options	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value ($000)
Outstanding at January 1, 2020		29,958	$	8.79		4.4 years	$	182
Awarded		—		—		—		—
Exercised		—		—		—		—
Expired, forfeited or cancelled		—		—		—		—
Outstanding at September 30, 2020		29,958	$	8.79		3.6 years	$	35

Vested at September 30, 2020		29,958	$	8.79		3.6 years	$	35

Non-vested at September 30, 2020		—	$	—		—	$	—

Restricted Stock

There were no shares of restricted stock awarded during the three-month periods ended September 30, 2020 and 2019. There were 39,131 and 33,968 shares of restricted stock awarded during the nine-month periods ended September 30, 2020 and 2019, respectively.

There were no restricted share awards that were fully vested during the three-month periods ended September 30, 2020 and 2019. There were 21,678 restricted share awards that were fully vested during the nine-month period ended September 30, 2020 and 15,423 restricted share awards that were fully vested during the nine-month period ended September 30, 2019. There were zero restricted share awards forfeited during the three-month and nine-month periods ended September 30, 2020, respectively. There were zero restricted share awards forfeited during the three-month and nine-month periods ended September 30, 2019, respectively. The intrinsic value of nonvested restricted shares at September 30, 2020 was $612,000.

Restricted Stock	Shares			Weighted Average Award Date Fair Value
Nonvested at January 1, 2020		43,971		$	13.95
Awarded		39,131			12.45
Less: Vested		(21,678	)		13.63
Less: Expired, forfeited or cancelled		—			—
Nonvested at September 30, 2020		61,424		$	13.11

Other Equity Awards

There were no stock appreciation rights, restricted performance stock, unrestricted Company stock, or performance units awarded during the three-month or nine-month month periods ended September 30, 2020 or 2019 or outstanding at September 30, 2020 or December 31, 2019.

The intrinsic value used for stock options and restricted stock awards was derived from the market price of the Company’s common stock of $9.96 as of September 30, 2020.