Shareholders' Equity

12 Months Ended

Dec. 31, 2021

Stockholders' Equity Note [Abstract]

Shareholders' Equity

Shareholders’ Equity

Common Stock Dividend: The Company paid a $0.16 per share quarterly cash dividend each quarter of 2021. During 2021, the Company paid a total of $7.6 million in common stock cash dividends.

The timing and amount of future dividends will be within the discretion of the Board of Directors and will depend on the consolidated earnings, financial condition, liquidity, and capital requirements of the Company and its subsidiaries, applicable governmental regulations and policies, and other factors deemed relevant by the Board.

Treasury Stock: No treasury stock was repurchased during 2021 and 2020.

Stock Options: After shareholder approval in 2020, the 2020 Equity Incentive Plan (the “2020 Plan”) became effective. In addition, the Company also has the 2015 Equity Incentive Plan (the “2015 Plan”). No future awards are being granted under the 2015 Plan. The 2020 Plan will terminate on the tenth anniversary of its effective date, after which no awards may be granted. Collectively, the 2015 Plan and the 2020 Plan are referred to as Stock Option Plans. Under the 2020 Plan, the Company may grant options to purchase up to 935,000 shares of Company's common stock and award up to 55,000 of restricted stock. At December 31, 2021, there were 628,000 shares remaining for future option grants, and 51,794 shares remaining for future restricted stock awards under the plan.

During 2020, options to purchase 307,000 shares of common stock at $12.29 per share were awarded and will expire no later than ten years following the grant date. The options granted vest over a five-year service period, with 20% of the awards vesting on each anniversary of the date of grant. The fair value of the options granted, as computed using the Black-Sholes option-pricing model, was determined to be $1.76 per option based upon the following underlying assumptions: a risk-free interest rate, expected option life, expected stock price volatility, and dividend yield of 0.60%, 6.5 years, 65.21%, and 4.85%, respectively. The Company did not grant any options in 2021.

The risk-free interest rate was based on the U.S. Treasury yield at the option grant date for securities with a term matching the expected life of the options granted. The expected life was calculated using the "simplified" method provided for under Staff

Accounting Bulletin No. 110. Expected volatility was calculated based upon the actual price history of the Company's common stock up until the date of the option grants. The dividend yield was calculated using the previous four quarter payment history.

A summary of stock options at December 31, 2021 and 2020 was as follows:

	Year Ended December 31, 2021		Year Ended December 31, 2020
Stock Options:	Shares	Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Outstanding at beginning of period	602,335	$12.87	270,676	$14.80
Granted	—	$—	307,000	$12.29
Exercised	(49,048)	$7.81	(176)	$7.81
Forfeited	(20,826)	$12.91	(2,233)	$7.81
10% assumed Stock dividend adjustment	—	$—	27,068	$—
Outstanding at end of period	532,461	$13.34	602,335	$12.87
Non-vested at end of period	282,700	$13.79	422,646	$13.43
Exercisable at end of period	249,761	$12.83	179,689	$11.55

The total amount of compensation cost remaining to be recognized relating to unvested employees and directors option grants as of December 31, 2021 was $516,600. The weighted-average period over which the expense is expected to be recognized is 2.8 years. At December 31, 2021, the intrinsic value of options exercisable and all options outstanding was approximately $2.0 million and $4.0 million, respectively.

The total amount of compensation cost remaining to be recognized relating to unvested option grants as of December 31, 2020 was $719,600. The weighted-average period over which the expense is expected to be recognized was 3.9 years. At December 31, 2020, the intrinsic value of options exercisable and all options outstanding was approximately $1.0 million and $2.3 million, respectively.

Under the 2020 Plan, the Company was authorized to issue 55,000 shares of restricted stock upon the grant of awards. All restricted stocks vests over five years. The Company granted 3,206 shares and 1,982 shares of the restricted stock in 2021 and 2020, respectively, in which 1,880 shares and 1,241 shares of restricted stock were vested and exercised in 2021 and 2020. Non-vested restricted shares were 4,693 shares and 3,367 at December 31, 2021 and 2020. The weighted average of the grant date fair values were $15.60 and $25.23 per share for the awards of 2021 and 2020, respectively. The Company recognized $32,006 and $21,300 compensation costs of the restricted shares during year 2021 and 2020.

Preferred Stock: In December of 2013, the Company completed a private placement of newly designated 6% Non-Cumulative Perpetual Convertible Preferred Stock, Series B, with a liquidation preference of $1,000 per share. The Company sold 20,000 shares in the placement for gross proceeds of $20.0 million. Each share of Series B Preferred Stock is convertible, at the option of the holder into approximately 137.6 shares of Common Stock at December 31, 2021. There were 445 shares of Series B Preferred Stock outstanding at December 31, 2021. Upon full conversion of the outstanding shares of the Series B Preferred Stock, the Company will issue approximately 61,232 shares of Common Stock assuming that the conversion rate does not change. The conversion rate and the total number of shares to be issued would be adjusted for future stock dividends, stock splits and other corporate actions. The conversion rate was set using a conversion price for the common stock of $10.64, which was approximately 20% over the closing price of the Common Stock on October 10, 2013, the day the Series B Preferred Stock was priced.

During 2021 and 2020, preferred stockholders converted 35 and 20 shares of preferred shares into 4,813 and 2,751 shares of common stock, respectively.

The Company has recorded dividends on preferred stock in the approximate amount of $28,000 and $29,000 for the years ended December 31, 2021 and 2020, respectively. The Company paid quarterly cash dividends of $15 per share on the

preferred stock for year 2021. The preferred stock qualifies for and is accounted for as equity securities and is included in the Company’s Tier I capital since issued.

Non-controlling interests: The Company had a joint venture with Bridgestone Capital LLC in PDL LLC, a joint venture formed in 2018 to originate short-term alternative real estate loan products. In 2021, the joint venture was liquidated and all earnings in the joint venture were distributed. Prior to liquidation, the Company had a 51% ownership interest in the joint venture. At December 31, 2021, the Company's interest in PDL LLC was zero.