EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2024

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

19. EMPLOYEE BENEFIT PLANS

Long-Term Incentive Plan

The Company maintains the 2016 Long-Term Incentive Plan (the “Plan”), which amended and restated the former 2011 Stock Option Plan (the “2011 Plan”). The Plan continues in effect for any outstanding awards under the 2011 Plan in accordance with the terms and conditions governing such awards immediately prior to the effective date of the Plan but expanded the types of awards authorized to include, among others, restricted stock. Under the provisions of the Plan, while active, awards may consist of grants of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock and performance shares to officers and key employees of the Company, as well as directors.

Compensation expense for stock options granted and restricted stock awarded is measured using the fair value of the award on the grant date and is recognized over the vesting period. The Company recognized $142,000 and $143,000 of expense for the years ended December 31, 2024 and 2023, respectively, for stock-based compensation.

The Plan is administered by a committee of the Board of Directors. The Committee determines, among other things, the recipients of stock compensation, the number of shares to be subject to each award, the option price, the duration of the option and the restricted period, as appropriate. A recipient of the restricted shares will forfeit those shares in their entirety if employment is terminated prior to the vesting date for reasons other than retirement, death or disability. Forfeited awards are returned to the pool of shares available for grant for future awards. The maximum number of shares of common stock that may be issued under the Plan is 300,000 shares, and 180,600 shares were available for grant as of December 31, 2024. Shares of common stock issued under the Plan may be treasury shares or authorized but unissued shares.

During 2024, a total of 9,628 restricted shares were awarded to certain officers and all directors. In 2023, a total of 11,409 shares of restricted stock were awarded to certain officers and all directors. Each award vests after three-years, with interim vesting in the case of death, disability or retirement as approved by the Board of Directors.

The following table presents compensation expense and related tax benefits for restricted stock awards recognized on the consolidated statement of income.

(Dollars in thousands)
	2024		2023
Compensation expense	$	142	$	143
Tax benefit		(30)		(30)
Net income effect	$	112	$	113

At December 31, 2024, there was $159,000 of unrecognized compensation cost related to all non-vested restricted stock awards. This cost is expected to be recognized through February 2027.

The following table presents a summary of non-vested restricted shares activity for 2024.

		Weighted
		Average
		Grant Date
	Shares	Fair Value
Non-vested at January 1, 2024	25,322	$	16.21
Vested	(6,141)		16.55
Forfeited	—		—
Granted	9,628		12.35
Non-vested at December 31, 2024	28,809	$	14.85

No stock options were awarded in 2024. Outstanding options granted prior to 2024 have all vested and are exercisable at the grant price, which is at least the fair market value of the stock on the grant date. The Plan provides that the option price per share is not to be less than the fair market value of the stock on the day the option was granted, and in no event less than the par value of such stock. Options granted under the Plan are exercisable no earlier than one year after the date of grant and expire ten years after the date of the grant. Total options outstanding as of December 31, 2024 have an exercise price of $17.80 and are scheduled to expire on February 17, 2025. As of December 31, 2024, there was no unrecognized compensation cost related to options granted under the Plan. No options were exercised under the Plans for the years ended December 31, 2024 and 2023.

A summary of the status of the outstanding stock options as of December 31, 2024 and 2023, and changes during the years ending of those dates is presented below.

A summary of the status of the outstanding stock options as of December 31, 2024 and 2023, and changes during the years ending on those dates is presented below:
	2024			2023
		Weighted			Weighted
		Average			Average
		Exercise			Exercise
	Shares	Price		Shares	Price
Outstanding at beginning of year	50,425	$	17.76	60,347	$	17.78
Granted	—		—	—		—
Exercised	—		—	—		—
Cancelled/Forfeited	(3,500)		17.80	—		—
Expired	(24,225)		17.72	(9,922)		17.65
Outstanding at end of year	22,700	$	17.80	50,425	$	17.76
Options exercisable at year-end	22,700			50,425
Weighted-average fair value of options granted during the year		$	—		$	—
Intrinsic value of options exercised during the year		$	—		$	—
Intrinsic value of options cancelled during the year		$	—
Intrinsic value of options outstanding and exercisable at December 31, 2024		$	—

Defined Contribution Plan (“401(k) Plan”)

The Company has a 401(k) Plan under which employees, through payroll deductions, can defer portions of their compensation. The Company makes an annual non-elective fully vested contribution equal to 3% of compensation to each eligible participant. For the year ended December 31, 2024, the contribution amount totaled $268,000, which was credited to employee’s accounts by January 31, 2025. This liability at December 31, 2023 totaled $265,000 and was credited to employee accounts by January 31, 2024. Expense incurred under this plan was $268,000 and $262,000 in 2024 and 2023, respectively. The 401(k) Plan also includes an employer matching contribution for employees that elect to defer compensation into this program. The matching contribution in 2024 and 2023 was $250,000 and $231,000, respectively.

Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan under which employees, through payroll deductions, can purchase shares of Company stock annually. The option price of the stock purchases is between 95% and 100% of the fair market value of the stock on the offering termination date as determined annually by the Board of Directors. The maximum number of shares which employees may purchase under the Plan is 250,000; however, the annual issuance of shares may not exceed 5,000 shares plus any unissued shares from prior offerings. There were 2,866 shares issued in 2024 and 4,230 shares issued in 2023 under this plan. As of December 31, 2024, there were 149,554 shares reserved for issuance under the Employee Stock Purchase Plan.

Supplemental Retirement Plans

The Company has non-qualified supplemental retirement plans for directors and key employees. At December 31, 2024 and 2023, the present value of the future liability associated with these plans was $73,000 and $84,000, respectively. For the years ended December 31, 2024 and 2023, $6,000 and $7,000, respectively, was recorded as expense in connection with these plans. The Company offsets the cost of these plans through the purchase of bank-owned life insurance and annuities. See Note 7.

Deferred Compensation Plans

The Company has entered into deferred compensation agreements with certain directors to provide each director with an additional retirement benefit, or to provide their beneficiary with a benefit, in the event of pre-retirement death. At December 31, 2024 and 2023, the present value of the future liability was $830,000 and $1.0 million, respectively. For the years ended December 31, 2024 and 2023, $32,000 and $38,000, respectively, was recorded as expense in connection with these plans. Separate accounts are maintained for each participating director with interest credited on a quarterly basis at the then current rate offered on long-term certificates of deposit. The Company offsets the cost of these plans through the purchase of bank-owned life insurance. See Note 7.

Salary Continuation Plans

The Company has non-qualified salary continuation plans for key employees. At December 31, 2024 and December 31, 2023, the present value of the future liability was $922,000 and $1.0 million, respectively. For the years ended December 31, 2024 and 2023, $61,000 and $70,000, respectively, was recorded as expense in connection with these plans. The Company offsets the cost of these plans through the purchase of bank-owned life insurance. See Note 7.