The Company recorded total stock-based compensation expense of $1.1 million and $0.5 million for the three months ended March 31, 2023 and 2022, respectively. In addition, the Company recognized $259 thousand and $126 thousand of income tax benefits related to stock-based compensation expense for the three months ended March 31, 2023 and 2022, respectively.

At March 31, 2023, the sole equity-based compensation plan of the Company was the First Bancorp 2014 Equity Plan (the "Equity Plan"), which was approved by shareholders on May 8, 2014. As of March 31, 2023, the Equity Plan had 267,803 shares remaining available for grant.

The Equity Plan is intended to serve as a means to attract, retain and motivate key employees and directors and to associate the interests of the plans' participants with those of the Company and its shareholders. The Equity Plan allows for both grants of stock options and other types of equity-based compensation, including stock appreciation rights, restricted stock, restricted performance stock, unrestricted stock, and performance units.

Recent equity awards to employees have been made in the form of shares of restricted stock awards with service vesting conditions only. Compensation expense for these awards is recorded over the requisite service periods. Upon forfeiture, any previously recognized compensation cost is reversed. Upon a change in control (as defined in the Equity Plan), unless the awards remain outstanding or substitute equivalent awards are provided, the awards become immediately vested.

Certain of the Company’s equity grants contain terms that provide for a graded vesting schedule whereby portions of the award vest in increments over the requisite service period. The Company recognizes compensation expense for awards with graded vesting schedules on a straight-line basis over the requisite service period for each incremental award. Compensation expense is based on the estimated number of stock awards that will ultimately vest. Over the past five years, there have been insignificant amounts of forfeitures, and therefore the Company assumes that all awards granted with service conditions only will vest.

In addition to employee equity awards, the Company's practice is to grant common shares, valued at approximately $37,500 for the current year, to each non-employee director (currently 14 in total) in June of each year. Compensation expense associated with these director awards is recognized on the date of award since there are no vesting conditions.

The following table presents information regarding the activity for the first three months of 2023 related to the Company’s outstanding restricted stock awards:


	Long-Term Restricted Stock Awards
	Number of Units	Weighted-Average Grant-Date Fair Value
Nonvested at January 1, 2023	223,012	$	36.14
Granted during the period	81,075	41.68
Vested during the period	(1,354)	36.69
Forfeited or expired during the period	(791)	37.88
Nonvested at March 31, 2023	301,942	$	37.33

Total unrecognized compensation expense as of March 31, 2023 amounted to $6.5 million with a weighted-average remaining term of 2.2 years. For the nonvested awards that are outstanding at March 31, 2023, the Company expects to record $3.8 million in compensation expense in the next twelve months, $3.1 million of which is expected to be recorded in the remaining quarters of 2023.

As discussed in Note 2, in conjunction with the GrandSouth acquisition, GrandSouth common stock options outstanding at January 1, 2023 became fully vested under the change in control provisions in the GrandSouth option plans and were converted into replacement options to acquire 0.91 shares of the Company's common stock.


	Options Outstanding
	Number of Shares	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (years)	Aggregate Intrinsic Value ($ in thousands)
Balance at January 1, 2023	—	$	—
Replacement options issued in conjunction with acquisition of GrandSouth	542,345	20.14
Exercised during the period	(169,718)	18.94
Forfeited or expired during the period	—	—


Outstanding at March 31, 2023	372,627	20.68		6.55	$	5,530

Exercisable at March 31, 2023	372,627	$	20.68	6.55	$	5,530


Shares	Range	Weighted Average Price	Weighted Average Remaining Life in Years
113,732	$13.79 - 18.18	15.63	4.89
133,770	$18.19	18.19	6.23
125,125	$18.20 - 31.32	27.94	8.40
372,627		20.68	6.55

In accordance with ASC 805-30, the fair value of the replacement options issued in conjunction with the GrandSouth acquisition as of January 1, 2023 was measured using the Black-Scholes option pricing model and the weighted average fair value of replacement options was $24.85.

The following table illustrates the assumptions for the Black-Scholes model used in determining the fair value of options granted:


	For the Three Months Ended
	March 31, 2023
Fair value per option, weighted average	$	24.85
Expected life (years)	1.4 - 4.7
Expected stock price volatility, weighted average	46.39		%
Expected dividend yield	2.05		%
Risk-free interest rate, weighted average	4.18		%
Expected forfeiture rate	—		%

The expected life is based on historical exercises and forfeitures experience of the grantees. The volatility is based on historical price volatility. The risk-free interest rate is based on a U.S. Treasury instrument with a life that is similar to the expected life of the option grant.

At March 31, 2023, the Company had no unrecognized compensation expense related to stock options. All unexercised options expire ten years after the applicable original grant dates under the GrandSouth stock option plan.