STOCK-BASED COMPENSATION

12 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

The Company has an equity incentive plan, the 2014 Plan, which provides for the granting of non-qualified and incentive stock options, restricted stock and RSUs, stock appreciation rights and other awards to employees, directors and consultants. The Plan is designed to encourage selected employees and directors to improve operations and increase profits, and to accept or continue employment or association with the Company through participation in the growth in the value of the common stock. RSUs have a grant price equal to the closing price of the Company’s common stock on the award date. RSUs granted generally vest over a three-year period based on service, with 33% of the underlying shares vesting on each annual anniversary of the award.

2014 Plan. In October 2021, the Company’s Board of Directors and stockholders, respectively, approved the 2014 Plan, as amended and restated. The number of shares authorized for issuance pursuant to awards under the 2014 Plan is 5,680,000, less RSU awards granted, plus any RSUs that become available upon the forfeiture, expiration, cancellation or settlement in cash awards outstanding under the 2014 Plan. At June 30, 2023, 1,426,865 shares of common stock remained available for issuance pursuant to grant awards under the 2014 Plan.

Effective July 1, 2017 the Company entered into an employment agreement with its Chief Executive Officer (the “Agreement”) that authorizes an award of RSUs (the “RSU award”). The RSU award is an equity-based award and carries a service condition and a market condition that incorporates a measurement of the Company’s total stock return to stockholders in comparison to the total stock return of the ABA Nasdaq Community Bank Index. The accounting grant date of the RSU award is July 1, 2017 and expensing of the RSU award began on this date at the fair value measurement amount as determined by the Company’s valuation process. The Company utilized a Monte Carlo simulation to estimate the value of path-dependent options and determined the fair value using an expected return based on the 5-year US Treasury constant maturity rate, an equity volatility based on 6-month and 1-year historical daily trading history, market capitalization, and stock price for the RSU award. On July 1, 2017, the estimated fair value of the RSU award was $20.5 million, which vests in five tranches over a total period of nine years.

Effective each of January 1, 2023 (the “2023 Award”) and 2022 (the “2022 Award”), the Agreement automatically renewed for one additional fiscal year with the accounting grant date the same as the renewal date of the respective award. For the 2023 Award and 2022 Award, the Company utilized a Monte Carlo simulation with key inputs of an expected return on the average of the 1 and 2 year U.S. Treasury constant maturity rate, an equity volatility based on 1.5 year historical daily trading history, market capitalization, and stock price. The estimated fair values for the 2023 Award and 2022 Award were $5.2 million and $8.8 million, respectively, on each award’s grant date. The actual award will be determined by the actual performance of the Company’s total stock return in comparison to the total stock return of the ABA Nasdaq Community Bank Index in the respective periods.

As of June 30, 2023, unrecognized compensation expense to be recognized over the remaining five years related to the Agreement and subsequent renewals is $10.9 million and is reflected in the table below.

At June 30, 2023 unrecognized compensation expense related to non-vested awards aggregated to $43.7 million and is expected to be recognized in future periods as follows:


(Dollars in thousands)	Stock Award Compensation Expense
For the fiscal year ending June 30:
2024	$	22,259
2025	14,512
2026	5,769
2027	928
2028	238

Total	$	43,706

The following table presents the status and changes in RSUs for the periods indicated:


	RSUs	Weighted-Average Grant-Date Fair Value












Non-vested balance at June 30, 2022	1,350,763	$	41.16
Granted	751,517	38.49
Vested	(605,724)	37.11
Forfeitures	(88,674)	40.22
Non-vested balance at June 30, 2023	1,407,882	$	41.53

The Company recognized $26.1 million, $21.2 million and $20.7 million of stock compensation in net income for the years ended June 30, 2023, 2022 and 2021. The related income tax benefit was $7.5 million, $6.2 million and $6.1 million in the respective years. The total fair value of shares vested during the year ended June 30, 2023 was $24.6 million. The weighted-average contractual term for RSUs as of June 30, 2023 was 1.2 years. The Company provides an employer matching contribution of stock to the Company’s 401(k) plan, based on an employee’s designated deferral of their eligible compensation. The contribution made during the year ended June 30, 2023, was 95,330 shares with a fair market value of $2.5 million.