Employee Benefit Plans

12 Months Ended

Dec. 31, 2024

Employee Benefit Plans

Employee Benefit Plans

14.  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 stock option plans for 2024 and 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	(87,701)		19.03
Options forfeited	(666)		18.64
Options expired	—		—
Outstanding at December 31, 2023	471,132	$	17.92	4.9	$	5,500,080
Options granted	—		—
Options exercised	(130,733)		14.81
Options forfeited	—		—
Options expired	—		—
Outstanding at December 31, 2024	340,399	$	19.11	4.4	$	8,340,435
Exercisable at December 31, 2024	340,399	$	19.11	4.4	$	8,340,435

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 December 31, 2024, 281,500 options and 345,850 shares of restricted stock have been awarded from the plans. In addition, 16,162 unvested options and 24,537 unvested shares of restricted stock were cancelled and returned to the plans, leaving 402,574 shares available for future grants.

There were no options granted during 2024 and 2023.

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 2024 and 2023:

	For the years ended December 31,
	2024		2023
Number of options exercised		130,733		87,701
Total intrinsic value of options exercised	$	2,639,413	$	607,936
Cash received from options exercised		1,936,351		1,669,237
Tax deduction realized from options		741,939		182,898

The following table summarizes information about stock options outstanding at December 31, 2024:

		Options outstanding					Options exercisable
				Weighted average	Weighted			Weighted
	Range of		Options	remaining contractual	average		Options	average
	exercise prices		outstanding	life (in years)	exercise price		exercisable	exercise price
$	8.94-12.34		23,000	1.1	$	10.00	23,000	$	10.00
	12.35-15.75		7,333	2.0		15.70	7,333		15.70
	15.76-19.16		118,666	4.9		17.71	118,666		17.71
	19.17-22.57		191,400	4.6		21.20	191,400		21.20
	Total		340,399	4.4	$	19.11	340,399	$	19.11

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 years ended December 31, 2024 and 2023 are detailed in the following table:

	For the years ended December 31,
	2024		2023
Compensation expense	$	33	$	312
Income tax benefit		9		90

As of December 31, 2024, there was no unrecognized compensation costs related to nonvested share-based stock option compensation arrangements granted under the Company’s plans as all options were fully vested.

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 year ended December 31, 2024:

		Average grant
	Shares	date fair value
Nonvested restricted stock at December 31, 2023	164,634		24.46
Granted	77,950		28.84
Cancelled	(9,287)		27.02
Vested	(58,049)		23.87
Nonvested restricted stock at December 31, 2024	175,248		26.47

Restricted stock awards granted during the years ended December 31, 2024 and 2023 were as follows:

	For the years ended December 31,
	2024		2023
Number of shares granted		77,950		58,500
Average grant date fair value	$	28.84	$	22.93

Compensation expense related to the restricted stock for the years ended December 31, 2024 and 2023, is detailed in the following table:

	For the years ended December 31,
	2024		2023
Compensation expense	$	1,790	$	1,439
Income tax benefit		501		416

As of December 31, 2024, there was approximately $3.3 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 401(k) plan, an employee can contribute up to 75 percent of their salary on a tax deferred basis. The Bank may also make discretionary contributions to the 401(k) plan. The Bank contributed $0.9 million and $0.8 million to the Plan in 2024 and 2023, respectively.

Deferred Compensation Plan

The Company has a deferred compensation plan for Directors and eligible Management. 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 eligible member of Management has the option to elect to defer up to 100 percent of their cash based compensation. Director and Management deferred compensation totaled $1.0 million in 2024 and $1.0 million in 2023, and the interest paid on deferred balances totaled $0.5 million in 2024 and $0.4 million in 2023. The deferred balances distributed totaled $14 thousand in 2024 and $724 thousand in 2023. The total deferred balances included in the Company’s Consolidated Balance Sheet were $6.4 million and $4.8 million as of December 31, 2024 and 2023, respectively.

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 unfunded, non-qualified deferred retirement plans for certain other 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. The retirement benefit under the SERP is an amount equal to sixty percent (60%) of the average of the President and CEO’s base salary for the thirty-six (36) months immediately preceding the executive’s separation from service after age 66, adjusted annually thereafter by a percentage equal to the Consumer Price Index as reported by the U.S. Bureau of Labor Statistics for All Urban Consumers (CPI-U). The total benefit is to be made payable in fifteen annual installments. The future payments are estimated to total $8.8 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 fully vested on January 1, 2024.

No contributions or payments have been made for the year 2024 or 2023. The following table summarizes the components of the net periodic pension cost of the defined benefit plan recognized during the years ended December 31, 2024 and 2023:

	For the years ended December 31,
(In thousands)	2024		2023
Service cost	$	797	$	224
Interest cost		241		203
Net periodic benefit cost	$	1,038	$	427

For the years ended December 31, 2024 and 2023, service cost and interest cost were included in Compensation and benefits expense on the Consolidated Statements of Income.

The following table summarizes the changes in benefit obligations of the defined benefit plan recognized during the years ended December 31, 2024 and 2023:

	For the years ended December 31,
(In thousands)	2024		2023
Benefit obligation, beginning of year	$	5,284	$	4,857
Service cost		797		224
Interest cost		241		203
Benefit obligation, end of period	$	6,322	$	5,284

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

The EIRP is an unfunded, nonqualified deferred compensation plan. For any EIRP Year, a guaranteed annual Deferral Award, equal to seven and one half percent (7.5%) of the participant’s annual base salary, may 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 December 31, 2024, the Company had total expenses related to the EIRP of $124 thousand, compared to $132 thousand in 2023. The EIRP is reflected on the Company’s Consolidated Balance Sheet as Accrued expenses and other assets.

Certain members of  Management are also enrolled in a split-dollar life insurance plan with a post retirement death

benefit of $250 thousand.