Note 16 - Stock Based Compensation -

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

Note 16 – Stock Based Compensation –

Equity Incentive Plan

The Company previously granted options to its employees under its 2006 Stock Option Plan which expired on December 22, 2016. On June 29, 2017, the Company’s shareholders approved its 2017 Equity Incentive Plan (the “Plan”). The Plan provides for the grant of various types of equity grants and awards, including incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock-based awards to eligible participants, which includes the Company’s employees, directors and consultants. During the year ended December 31, 2022, Company shareholders approved an additional 400,000 shares to be reserved for future awards under the Plan. In addition, the number of shares issuable under the Plan were increased by 143,908 shares as a result of the assumption of options to purchase shares of TCBI common stock that were converted into options to purchase shares of Company common stock upon the TCBI acquisition on March 1, 2022. In total, the Plan has reserved 1,043,908 shares of common stock for grant, award or issuance to eligible participants, all of which may be subject to incentive stock option treatment. The Plan is administered by the Compensation Committee of the Company’s board of directors, which determines, within the provisions of the Plan, those eligible participants to whom, and the times at which, grants and awards will be made. As of December 31, 2023, 745,620 awards have been granted under the Plan and 298,288 shares of common stock remain available for grant.

Restricted Stock Awards

The Company issues restricted stock under various plans for certain officers and other key employees. The restricted stock awards may not be sold or otherwise transferred until certain restrictions have lapsed. The holders of the restricted stock receive dividends and have full voting rights with respect to those shares as of the date of grant. The compensation expense for these awards is determined based upon the market value of the Company’s common stock at the grant date applied to the total number of shares awarded and is recognized over the requisite service period.

During the years ended December 31, 2023, 2022 and 2021, the Company issued shares of restricted stock which vest in three equal installments over the requisite service period. For the years ended December 31, 2023, 2022 and 2021, respectively, the Company recognized $4.7 million, $4.3 million and $2.6 million in compensation costs related to restricted stock awards. At December 31, 2023, 2022 and 2021, respectively, unrecognized share-based compensation associated with these awards totaled $3.4 million, $3.7 million and $2.4 million. The $3.7 million of unrecognized share-based compensation at December 31, 2023 is expected to be recognized over a weighted average period of 2.0 years.

The table below summarizes the restricted stock award activity for the period presented.

	Year Ended December 31, 2023					Year Ended December 31, 2022					Year Ended December 31, 2021
				Weighted Average					Weighted Average					Weighted Average
	Shares			Grant Date Fair Value		Shares			Grant Date Fair Value		Shares			Grant Date Fair Value
Balance, at Beginning of Period		131,624		$	24.45		94,245		$	21.60		53,756		$	24.49
Granted		280,101			20.29		141,646			26.34		111,687			20.73
Forfeited		(2,738	)		19.51		(6,709	)		27.13		(989	)		24.11
Earned and Issued		(177,951	)		16.97		(97,558	)		24.20		(70,209	)		22.43
Balance, at End of Period		231,036		$	21.43		131,624		$	24.45		94,245		$	21.60

Stock Grants

During the years ended December 31, 2022 and 2021, the Company issued a total of 11,700 and 7,301 shares of common stock, respectively, to non-employee directors as compensation for their board service. There were 2,442 shares issued during the year ended December 31, 2023 to employees. The shares were issued with weighted average grant date fair values of $20.48 per shares for the year ended December 31, 2023, $23.08 per share for the year ended December 31, 2022, and $23.35 per share for the year ended December 31, 2021. The total stock-based compensation expense was determined based upon the market value of the Company’s common stock at the grant date applied to the total number of shares granted. These grants resulted in an expense of $50,000 for the year ended December 31, 2023 and director fees expense of $120,000 and $276,000 for the years ended December 31, 2022 and 2021, respectively.

Stock Options

In 2006, the Company established a stock option plan with 1,500,000 shares available to be granted as options under the plan. Under the provisions of the plan, the option price cannot be less than the fair value of the underlying common stock as of the option grant date, and the maximum option term cannot exceed ten years. The 2006 Stock Option Plan expired on December 22, 2016 and the Company is no longer permitted to issue additional stock options under this plan. However, the Company did grant 143,908 stock option awards under the 2017 Equity Incentive Plan to former TCBI employees in conjunction with the acquisition during the year ended December 31, 2022.

The Company used the Black-Scholes option pricing model to estimate the calculated value of the various share-based awards for the year ended December 31, 2023.

The following is an analysis of the activity related to the stock options:

	Years Ended December 31,
	2023					2022					2021
	Number of			Weighted Average		Number of			Weighted Average		Number of			Weighted Average
	Options			Exercise Price		Options			Exercise Price		Options			Exercise Price
Outstanding Options, at Beginning of Period		130,924		$	18.59		113,547		$	17.06		385,300		$	14.67
Granted		-			-		143,908			22.01		-			-
Exercised		(7,500	)		17.11		(67,060	)		19.93		(261,753	)		13.62
Forfeited or Expired		(2,816	)		22.38		(59,471	)		22.45		(10,000	)		15.00
Outstanding Options, at End of Period		120,608		$	18.59		130,924		$	18.59		113,547		$	17.06
Exercisable, at End of Period		111,032		$	18.24		118,958		$	18.18		113,547		$	17.06

At December 31, 2023, options for 111,032 shares at a weighted average exercise price of $18.24 were vested and exercisable. The aggregate intrinsic value of both exercisable and outstanding awards at December 31, 2023 and 2022 is $731,000 and $472,000 with a weighted average remaining contractual life of 1.9 years and 2.9 years, respectively.