The Company’s Amended and Restated 2020 Omnibus Incentive Plan, or “the 2020 Plan”, authorizes grants of stock‑based compensation instruments including but not limited to non-qualified stock options, restricted stock awards (“RSAs”) and performance stock units (“PSUs”) to certain employees and non-employee directors of the Company, to purchase or issue up to 2,770,000 shares of the Company's common stock.

The Company recognized a total of $1.6 million and $1.0 million compensation expense related to the outstanding stock options, unvested RSAs, unvested PSU awards, and Employee Stock Purchase Plan (“ESPP”) granted to employees and non-employee directors for the quarter ended June 30, 2024 and 2023, respectively. Stock-based compensation expense related to awards granted to employees is included in “Compensation and employee benefits” on the consolidated statements of income. Stock-based compensation expense related to awards granted to non-employee directors is included in “Other operating expenses” on the consolidated statements of income. The amount of unrecognized compensation expense related to unvested RSAs, unvested PSU awards, and ESPP totaled $8.4 million and $5.7 million as of June 30, 2024 and 2023, respectively.

Stock options granted generally vest ratably over three years and are exercisable for a period up to ten years from the date of the grant. The Company uses the Black-Scholes option pricing model to value stock options in determining the stock-based compensation expense. Forfeitures are recognized as they occur. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. The expected dividend yield is zero as the Company is not expected to pay dividends in the foreseeable future. Expected volatility is based on historical volatility of the Company’s stock.

The table below summarizes stock option activity during the period ended June 30, 2024:


	Six Months Ended June 30, 2024
	Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value (2)
	($ in thousands, except per share amounts)
Options outstanding at December 31, 2023		752,964	$	12.88
Granted		100		15.86
Exercised		—		—
Forfeited		—		—
Options outstanding at June 30, 2024		753,064	$	12.88	5.6 years	$	3,804
Options exercisable at June 30, 2024		747,500	$	12.89	5.6 years	$	3,770
Options expected to vest (1)		5,564	$	12.89	9.2 years	$	34

(1)

The number of options expected to vest reflects no expected forfeiture.

(2)

The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the “in-the-money” option exercise price.

The fair value of RSAs is determined based on the fair market value of the Company's common shares on the grant date. The estimated fair value of RSA awards is amortized as an expense over the three-year requisite service period. The Company has elected to recognize forfeitures as they occurred rather than estimating service-based forfeitures over the requisite service period.

The table below summarizes RSA activity during the period ended June 30, 2024:


	Employee					Non-Employee Director					Total
June 30, 2024	Restricted Stock Awards					Restricted Stock Awards					Restricted Stock Awards
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Nonvested at December 31, 2023		409,137		$	9.39		61,276		$	9.31		470,413		$	9.38
Granted		189,679			15.86		15,939			17.88		205,618			16.02
Vested		(248,796	)		8.61		(29,785	)		9.57		(278,581	)		8.71
Forfeited		—			—		—			—		—			—
Nonvested at June 30, 2024		350,020		$	13.45		47,430		$	12.03		397,450		$	13.28

In February 2022, the Company began granting PSUs to certain employees, including named executive officers under the 2020 Plan. PSUs are linked to the average core net income annual growth over the three-year period from the year of grant. Settlement of vested PSUs will be made on the date that the Compensation Committee certifies the average core net income annual growth for the three-year period. PSUs are subject to forfeiture until predetermined performance conditions have been achieved. The number of shares issued at the end of any performance period could range between 0% and 200% of the original target award amount. Compensation expense related to PSUs is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using an estimate of the probability of achieving the performance target. Adjustments to compensation expense are made each year based on changes in estimate of the number of PSUs that are probable of vesting.

The table below summarizes PSU activity during the period ended June 30, 2024:


June 30, 2024	Shares			Weighted Average Grant Date Fair Value (per share)
Outstanding at December 31, 2023, nonvested		256,387	(1)	$	11.05
Granted		157,994	(1)		15.86
Performance adjustment		102,750			12.63
Vested		—			—
Forfeited		—			—
Outstanding at June 30, 2024, nonvested		517,131		$	12.83

(1)

The number of PSUs are presented at 100% of the specified target shares.

In July 2022, the Company initiated an ESPP which allows permitted eligible employees to purchase shares of the Company's common stock through payroll deductions of up to 15% of their eligible compensation, subject to certain limitations. The purchase price of the shares under the ESPP equals 85% of the lower of the fair market value of the Company's common stock on either the first or last day of each six-month offering period. Compensation expense for the ESPP is calculated as of the beginning of the offering period as the fair value of the employees’ purchase rights utilizing the Black-Scholes option valuation model and is recognized as a compensation expense over the offering period.

Treasury share purchases represent shares surrendered to the Company approximately equal in value to the statutory payroll tax withholding obligations and other estimated tax obligations arising from the vesting of employee and/or non-employee directors restricted stock awards. During the quarter ended June 30, 2024, the Company purchased 14,892 treasury shares at an average price of $17.88 per share. No treasury shares were purchased during the quarter ended June 30, 2023.