The Company has incentive and nonqualified option plans, which allow for the grant of options to officers, employees and members of the Board of Directors. Grants under the Company’s incentive and nonqualified option plans generally vest over 3 years and must be exercised within 10 years of the date of grant. Transactions under the Company’s stock option plans for the nine months ended September 30, 2020 are summarized in the following table:

On April 25, 2019, the Company adopted the 2019 Equity Compensation Plan providing for grants of up to 500,000 shares to be allocated between incentive and non-qualified stock options, restricted stock awards, performance units and deferred stock. The Plan replaced all previously approved and established equity plans then currently in effect. As of September 30, 2020, 142,000 options and 32,900 shares of restricted stock have been awarded from the plan leaving 325,100 shares available for future grants.

The fair values of the options granted during the three and nine months ended September 30, 2020 and 2019 were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

Upon exercise, the Company issues shares from its authorized but unissued common stock to satisfy the options. The following table presents information about options exercised during the three and nine months ended September 30, 2020 and 2019:


	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Number of options exercised		—		4,800		54,611		57,234
Total intrinsic value of options exercised	$	—	$	38,127	$	475,222	$	742,737
Cash received from options exercised	$	—	$	61,134	$	395,518	$	424,198
Tax deduction realized from options	$	—	$	11,491	$	139,216	$	223,453

The following table summarizes information about stock options outstanding and exercisable at September 30, 2020:


	Options outstanding					Options exercisable
			Weighted average	Weighted			Weighted
		Options	remaining contractual	average		Options	average
Range of exercise prices		outstanding	life (in years)	exercise price		exercisable	exercise price
$0.00 - $6.00		44,000	1.7	$	5.65	44,000	$	5.65
$6.01 - $12.00		156,667	4.5		8.85	156,667		8.85
$12.01 - $18.00		92,533	7.5		15.86	57,533		15.61
$18.01 - $24.00		337,500	8.3		20.91	109,669		20.19
Total		630,700	6.8	$	16.11	367,869	$	12.90

Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718, “Compensation - Stock Compensation,” requires an entity to recognize the fair value of equity awards as compensation expense over the period during which an employee is required to provide service in exchange for such an award (vesting period). Compensation expense related to stock options and the related income tax benefit for the three and nine months ended September 30, 2020 and 2019 are detailed in the following table:


	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Compensation expense	$	185,408	$	155,942	$	558,682	$	446,544
Income tax benefit	$	53,583	$	45,067	$	161,459	$	129,051

As of September 30, 2020, unrecognized compensation costs related to nonvested share-based compensation arrangements granted under the Company’s stock option plans totaled approximately $1.0 million. That cost is expected to be recognized over a weighted average period of 1.8 years.

Restricted Stock Awards

Restricted stock is issued under the 2019 Equity Compensation Plan to reward employees and directors and to retain them by distributing stock over a period of time. Restricted stock awards granted to date vest over a period of 4 years and are recognized as compensation to the recipient over the vesting period. The awards are recorded at fair market value at the time of grant and amortized into salary expense on a straight line basis over the vesting period. The following table summarizes nonvested restricted stock activity for the nine months ended September 30, 2020:


		Average grant
	Shares	date fair value
Nonvested restricted stock at December 31, 2019	108,740	$	19.18
Granted	17,000		16.20
Cancelled	(6,062)		19.86
Vested	(35,593)		17.24
Nonvested restricted stock at September 30, 2020	84,085	$	19.35

Restricted stock awards granted during the three and nine months ended September 30, 2020 and 2019 were as follows:


	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Number of shares granted		2,000		7,500		17,000		37,650
Average grant date fair value	$	13.01	$	20.00	$	16.20	$	20.52

Compensation expense related to restricted stock for the three and nine months ended September 30, 2020 is detailed in the following table:


	For the three months ended September 30,				For the nine months ended September 30,
	2020		2019		2020		2019
Compensation expense	$	166,331	$	172,558	$	500,409	$	485,466
Income tax benefit	$	48,069	$	49,869	$	144,618	$	140,299

As of September 30, 2020, there was approximately $1.2 million of unrecognized compensation cost related to nonvested restricted stock awards granted under the Company’s stock incentive plans. That cost is expected to be recognized over a weighted average period of 2.4 years.

401(k) Savings Plan

The Bank has a 401(k) savings plan covering substantially all employees. Under the Plan, an employee can contribute up to 80 percent of their salary on a tax deferred basis. The Bank may also make discretionary contributions to the Plan. The Bank contributed $154 thousand and $150 thousand to the Plan during the three months ended September 30, 2020 and 2019, respectively, and $524 thousand and $490 thousand during the nine months ended September 30, 2020 and 2019, respectively.

Deferred Compensation Plan

The Company has a deferred compensation plan for both non-employee members of the Board of Directors of the Bank or an officer of the Bank chosen by the Board to participate. Directors of the Company have the option to elect to defer up to 100 percent of their respective retainer and Board of Director fees, and each chosen officer has the option to elect to defer up to 100 percent of their year-end cash bonuses and salary. Director and executive deferred compensation totaled $34 thousand and $22 thousand during the three months ended September 30, 2020 and 2019, respectively, and $555 thousand and $354 thousand during the nine months ended September 30, 2020 and 2019, respectively. The interest paid on the deferred balances totaled $35 thousand and $28 thousand during the three months ended September 30, 2020 and 2019, respectively, and $96 thousand and $78 thousand during the nine months ended September 30, 2020 and 2019 respectively. The deferred balances distributed totaled $3 thousand and $2 thousand during the three months ended September 30, 2020 and 2019, respectively, and $9 thousand during the nine months ended September 30, 2020 and 2019.

Benefit Plans

In addition to the 401(k) savings plan which covers substantially all employees, in 2015 the Company established an unfunded supplemental defined benefit plan to provide additional retirement benefits for the President and Chief Executive Officer (“CEO”) and certain key executives.

On June 4, 2015, the Company approved the Supplemental Executive Retirement Plan (“SERP”) pursuant to which the President and CEO is entitled to receive certain supplemental nonqualified retirement benefits. On September 27, 2018 the Company approved a change in calculation of the Retirement Benefit payable under the SERP so that the Retirement Benefit shall be an amount equal to sixty percent (60%) of the average of the executive’s base salary for the thirty-six (36) months immediately preceding the executive’s separation from service after age 66, adjusted annually thereafter by two percent (2%). The total benefit is to be made payable in fifteen annual installments. The future payments are estimated to total $6.6 million. A discount rate of four percent (4%) was used to calculate the present value of the benefit obligation.

The President and CEO commenced vesting in this retirement benefit on January 1, 2014, and vests an additional three percent (3%) each year until fully vested on January 1, 2024. In the event that the President and CEO’s separation from service from the Company were to occur prior to full vesting, the President and CEO would be entitled to and shall be paid the vested portion of the retirement benefit calculated as of the date of separation from service. Notwithstanding the foregoing, upon a Change in Control, and provided that within 6 months following the Change in Control the President and CEO is involuntarily terminated for reasons other than “cause” or the President and CEO resigns for “good reason,” as such is defined in the SERP, or the President and CEO voluntarily terminates his employment after being offered continued employment in a position that is not a “Comparable Position,” as such is also defined in the SERP, the President and CEO shall become one hundred percent (100%) vested in the full retirement benefit.

No contributions or payments have been made during the three and nine months ended September 30, 2020. The following table summarizes the components of the net periodic pension cost of the defined benefit plan recognized during the three and nine months ended September 30, 2020 and 2019:


	For the three months ended September 30,				For the nine months ended September 30,
(In thousands)	2020		2019		2020		2019
Service cost	$	32	$	235	$	95	$	454
Interest cost		37		36		111		99
Amortization of prior service cost		20		20		62		62
Net periodic benefit cost	$	89	$	291	$	268	$	615

The following table summarizes the changes in benefit obligations of the defined benefit plan during the nine months ended September 30, 2020 and 2019:


	For the nine months ended September 30,
(In thousands)	2020		2019
Benefit obligation, beginning of year	$	3,571	$	2,747
Service cost		95		454
Interest cost		111		99
Benefit obligation, end of period	$	3,777	$	3,300

On October 22, 2015, the Company entered into an Executive Incentive Retirement Plan (the “Plan”) with certain key executive officers other than the President and CEO. The Plan has an effective date of January 1, 2015.

The Plan is an unfunded, nonqualified deferred compensation plan. For any Plan Year, a guaranteed annual Deferral Award percentage of seven and one half percent (7.5%) of the participant’s annual base salary will be credited to each Participant’s Deferred Benefit Account. A discretionary annual Deferral Award equal to seven and one half percent (7.5%) of the participant’s annual base salary may be credited to the Participant’s account in addition to the guaranteed Deferral Award, if the Bank exceeds the benchmarks set forth in the Annual Executive Bonus Matrix. The total Deferral Award shall never exceed fifteen percent (15%) of the participant’s base salary for any given Plan Year. Each Participant shall be one hundred percent (100%) vested in all Deferral Awards as of the date they are awarded.

As of September 30, 2020, the Company had total year to date expenses of $53 thousand related to the Plan. The Plan is reflected on the Company’s balance sheet as accrued expenses.

Certain members of management are also enrolled in a split-dollar life insurance plan with a post retirement death benefit of $250 thousand. Total expenses related to this plan were $1 thousand for the three months ended September 30, 2020 and 2019, and $4 thousand for the nine months ended September 30, 2020 and 2019, respectively.