Employee Benefit Plans

6 Months Ended

Jun. 30, 2023

Employee Benefit Plans

Employee Benefit Plans

NOTE 10. Employee Benefit Plans

Stock Option Plans

The Company has maintained option plans and maintains an equity incentive plan, which allow for the grant of options to officers, employees and members of the Board of Directors. Grants of options under the Company’s plans generally vest over 3 years and must be exercised within 10 years of the date of grant. Transactions under the Company’s plans for the six months ended June 30, 2023 are summarized in the following table:

				Weighted
		Weighted		average
		average		remaining	Aggregate
		exercise		contractual	intrinsic
	Shares	price		life in years	value
Outstanding at December 31, 2022	559,499	$	18.09	5.9	$	5,168,740
Options granted	—		—
Options exercised	(50,935)		19.61
Options forfeited	(666)		18.64
Options expired	—		—
Outstanding at June 30, 2023	507,898	$	17.94	5.4	$	2,870,246
Exercisable at June 30, 2023	468,074	$	17.84	5.2	$	2,689,947

On May 5, 2023, the Company adopted the 2023 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, along with the 2019 Equity Compensation Plan adopted on April 25, 2019, replaced all previously approved and established equity plans then currently in effect. As of June 30, 2023, 281,500 options and 264,900 shares of restricted stock have been awarded from the plans. In addition, 16,162 unvested options and 15,250

unvested shares of restricted stock were cancelled and returned to the plan leaving 485,012 shares available for future grants.

The fair values of the options granted are estimated on the date of grant using the Black-Scholes option-pricing model. There were no options granted during the six months ended June 30, 2023 or 2022.

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 six months ended June 30, 2023 and 2022:

	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Number of options exercised		13,734		15,335		50,935		62,709
Total intrinsic value of options exercised	$	74,099	$	120,065	$	316,003	$	866,357
Cash received from options exercised	$	244,991	$	314,323	$	998,885	$	953,537
Tax deduction realized from options	$	22,292	$	36,121	$	95,069	$	260,643

The following table summarizes information about stock options outstanding and exercisable at June 30, 2023:

	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
$7.25 - 16.51		136,233	3.6	$	11.97	136,233	$	11.97
16.52 - 19.26		121,165	6.2		18.03	97,674		18.04
19.27 - 20.88		132,300	6.1		20.34	115,967		20.31
20.89 - 22.57		118,200	5.9		22.03	118,200		22.03
Total		507,898	5.4	$	17.94	468,074	$	17.84

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 six months ended June 30, 2023 and 2022 are detailed in the following table:

	For the three months ended June 30,				For the six months ended June 30,
(In thousands)	2023		2022		2023		2022
Compensation expense	$	79	$	138	$	164	$	302
Income tax benefit	$	23	$	40	$	47	$	87

As of June 30, 2023, unrecognized compensation costs related to nonvested share-based stock option compensation arrangements granted under the Company’s plans totaled approximately $181 thousand. That cost is expected to be recognized over a weighted average period of 0.6 years.

Restricted Stock Awards

Restricted stock is issued under the Company’s active Equity Compensation Plans 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 six months ended June 30, 2023:

		Average grant
	Shares	date fair value
Nonvested restricted stock at December 31, 2022	164,570	$	24.77
Granted	55,500		22.81
Cancelled	(2,850)		26.70
Vested	(37,723)		23.26
Nonvested restricted stock at June 30, 2023	179,497	$	24.45

Restricted stock awards granted during the three and six months ended June 30, 2023 and 2022 were as follows:

	For the three months ended June 30,				For the six months ended June 30,
	2023		2022		2023		2022
Number of shares granted		37,500		1,000		55,500		71,000
Average grant date fair value	$	20.64	$	28.20	$	22.81	$	27.53

Compensation expense related to restricted stock for the three and six months ended June 30, 2023 and 2022 is detailed in the following table:

	For the three months ended June 30,				For the six months ended June 30,
(In thousands)	2023		2022		2023		2022
Compensation expense	$	344	$	301	$	676	$	532
Income tax benefit	$	100	$	87	$	195	$	154

As of June 30, 2023, there was approximately $3.8 million of unrecognized compensation cost related to nonvested restricted stock awards granted under the Company’s equity plans. That cost is expected to be recognized over a weighted average period of 2.9 years.