NOTE

: STOCK BASED COMPENSATION

The Company maintains a stock incentive plan (the “Plan”) under which incentive and nonqualified stock options and other stock awards

may

be granted. Under the Plan,

750,000

shares are reserved for the issuance of stock awards to directors, officers, key employees, and others. The stock option exercise price and the restricted stock purchase price under the Plan shall

not

be less than

85%

of the fair market value of the Company’s common stock on the date the award is granted. The fair market value is determined by the closing price of the Company’s common stock, on its primary exchange, on the same date that the option or award is granted.

January 2020,

the Company granted

7,000

shares of common stock to certain key employees. These stock awards have a grant date fair value of

$56.45

per share, based on the closing price of the Company’s stock on the date of grant, and vest on the

fourth

anniversary date in

January 2024.

March 2020,

the Company granted

2,608

shares of common stock to non-employee directors. These stock awards have a grant date fair value of

$30.75

per share, based on the closing price of the Company’s stock on the date of grant, and vested immediately.

The total grant date fair value of stock vested during the

first

three

months of

2020

was approximately

$80,000.

Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the

first

three

months of

2020

was approximately

$305,000

and includes approximately

$80,000

recognized as a result of grant of

326

shares to each non-employee director during the

first

quarter of

2020.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately

$0.04

during the

first

quarter of

2020.

As of

March 31, 2020,

the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately

$1,074,000

which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately

$266,000

in additional compensation expense related to unvested option awards during the remainder of

2020

and to recognize approximately

$354,000,

$92,000

and

$8,000

in additional compensation expense related to unvested option awards during the years

2021,

2022,

2023

and

2024,

respectively.

The total grant date fair value of stock and stock options vested during the

first

three

months of

2019

was approximately

$39,000.

Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the

first

three

months of

2019

was approximately

$306,000,

and included approximately

$90,000

recognized as a result of the accrual of

205

shares to each non-employee director during the

first

quarter of

2019.

The recognition of stock-based compensation expense decreased both diluted and basic earnings per common share by approximately

$0.04

during the

first

quarter

2019.

As of

March 31, 2019,

the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately

$1,648,000

which was being amortized on a straight-line basis over the remaining vesting period.

A summary of the status of the Company’s non-vested restricted stock as of

March 31, 2020

and changes during the

three

months ended

March 31, 2020,

is as follows:

	Restricted Stock
	Number of Shares			Weighted- Average Grant Date Fair Value
Non-vested at January 1, 2020		55,459		$	24.35
Granted		9,608			49.47
Canceled/forfeited/expired		(357	)		56.45
Vested		(2,608	)		30.75
Non-vested at March 31, 2020		62,102		$	27.78