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Compensation Plans | 12 Months Ended
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Dec. 31, 2020
Share-based Payment Arrangement [Abstract] |
Compensation Plans | SHAREHOLDERS’ EQUITY AND COMPENSATION PLANS Shareholders’ Equity Common Stock At December 31, 2020 and 2019, the Company has reserved the following shares of its authorized but unissued common stock for possible future issuance in connection with the following:
| December 31, 2020 |  | December 31, 2019
Outstanding performance units (maximum issuance) | 125,176 |  |  | 73,172 |
Outstanding RSU’s | 157,428 |  |  | 117,369 |
Outstanding options and appreciation rights | — |  |  | 28,300 |
2018 Stock Incentive Plan | 339,691 |  |  | 521,573 |
Non-Management Director Plan | 86,616 |  |  | 96,031 |
2018 Employee Stock Purchase Plan | 635,890 |  |  | 694,085 |
Total | 1,344,801 |  |  | 1,530,530 |
Common Stock Repurchase Plan In May 2015, the Company’s board of directors authorized the repurchase of up to two million shares of the Company’s common stock. The repurchases may be made in open market or privately negotiated transactions and the stock repurchase program will remain in effect until fully utilized or until modified, superseded or terminated. At December 31, 2020, there were 95,907 shares available for repurchase under the plan. Preferred Stock The Company has 5,000,000 shares of authorized preferred stock with a par value of $0.01. The Board of Directors has the right to set for each series of preferred stock, subject to the laws of the State of Delaware, the dividend rate, conversion and redemption terms, voting rights and liquidation preferences, among others. At December 31, 2020 and 2019 there were no shares of preferred stock outstanding. Dividends The Company’s ability to pay dividends to its shareholders is generally dependent upon the payment of dividends by the Bank to the parent company. The Bank cannot pay dividends to the extent it would be deemed undercapitalized by the FDIC after making such dividend. Dividends on the Company’s capital stock are prohibited under the terms of the junior subordinated debenture agreements, see “Note 11 - Subordinated Debentures,” if the Company is in continuous default on its payment obligations to the capital trusts, has elected to defer interest payments on the debentures or extends the interest payment period. At December 31, 2020, the Company was not in default on any of the junior subordinated debenture issuances. Accumulated Other Comprehensive Income (Loss) The following table presents the changes in accumulated other comprehensive income (loss) after-tax by component:
($ in thousands) | Net Unrealized Gain (Loss) on Available-for-Sale Debt Securities |  | Unamortized Gain (Loss) on Held-to-Maturity Securities |  | Net Unrealized Loss on Cash Flow Hedges |  | Total
Balance, December 31, 2017 | $ | (3,622) |  |  | $ | (196) |  |  | $ | — |  |  | $ | (3,818) |
Net change | (4,633) |  |  | 3 |  |  | — |  |  | (4,630) |
Adjustment for change in accounting policies | (792) |  |  | (42) |  |  | — |  |  | (834) |
Balance, December 31, 2018 | (9,047) |  |  | (235) |  |  | — |  |  | (9,282) |
Net change | 29,226 |  |  | (33) |  |  | (2,162) |  |  | 27,031 |
Transfer from available-for-sale to held-to-maturity | (5,202) |  |  | 5,202 |  |  | — |  |  | — |
Balance, December 31, 2019 | 14,977 |  |  | 4,934 |  |  | (2,162) |  |  | 17,749 |
Net change | 23,627 |  |  | (1,910) |  |  | (2,346) |  |  | 19,371 |
Transfer from available-for-sale to held-to-maturity | (16,284) |  |  | 16,284 |  |  | — |  |  | — |
Balance, December 31, 2020 | $ | 22,320 |  |  | $ | 19,308 |  |  | $ | (4,508) |  |  | $ | 37,120 |
The following table presents the pre-tax and after-tax changes in the components of other comprehensive income:
| 2020 |  | 2019 |  | 2018
($ in thousands) | Pre-tax |  | Tax effect |  | After-tax |  | Pre-tax |  | Tax effect |  | After-tax |  | Pre-tax |  | Tax effect |  | After-tax
Change in unrealized gain (loss) on available-for-sale debt securities | $ | 31,798 |  |  | $ | 7,854 |  |  | $ | 23,944 |  |  | $ | 38,764 |  |  | $ | 9,575 |  |  | $ | 29,189 |  |  | $ | (6,143) |  |  | $ | (1,517) |  |  | $ | (4,626) |
Reclassification adjustment for realized (gain) loss on sale of available-for-sale debt securities(a) | (421) |  |  | (104) |  |  | (317) |  |  | 49 |  |  | 12 |  |  | 37 |  |  | (9) |  |  | (2) |  |  | (7) |
Reclassification of (gain) loss on held-to-maturity securities(b) | (2,537) |  |  | (627) |  |  | (1,910) |  |  | (44) |  |  | (11) |  |  | (33) |  |  | 4 |  |  | 1 |  |  | 3 |
Change in unrealized loss on cash flow hedges arising during the period(b) | (7,898) |  |  | (1,951) |  |  | (5,947) |  |  | (3,004) |  |  | (742) |  |  | (2,262) |  |  | — |  |  | — |  |  | — |
Reclassification of loss on cash flow hedges(b) | 4,782 |  |  | 1,181 |  |  | 3,601 |  |  | 133 |  |  | 33 |  |  | 100 |  |  | — |  |  | — |  |  | — |
Total other comprehensive income (loss) | $ | 25,724 |  |  | $ | 6,353 |  |  | $ | 19,371 |  |  | $ | 35,898 |  |  | $ | 8,867 |  |  | $ | 27,031 |  |  | $ | (6,148) |  |  | $ | (1,518) |  |  | $ | (4,630) |
(a)The pre-tax amount is reported in noninterest income/expense in the Consolidated Statements of Operations. (b)The pre-tax amount is reported in interest income/expense in the Consolidated Statements of Operations, except for a $3.2 million termination fee in 2020 recognized in noninterest expense. Compensation Plans The Company has adopted share-based compensation plans to reward and provide long-term incentive for directors and key employees of the Company including its subsidiaries. These plans provide for the granting of stock, stock options, stock-settled stock appreciation rights (“SSARs”), and restricted stock units (“RSUs”), and may contain performance terms as designated by the Company’s Board of Directors upon the recommendation of the Compensation Committee of the Board. The Company uses authorized and unissued shares to satisfy share award exercises. The total excess income tax benefit for share-based compensation arrangements was $0.2 million, $0.5 million, and $1.6 million for the years ended December 31, 2020, 2019, and 2018, respectively. At December 31, 2020, there was $5.0 million of total unrecognized compensation cost related to unvested share-based compensation awards. The cost is expected to be recognized over a weighted-average period of 2 years. The following table summarizes share-based compensation expense:
($ in thousands) | 2020 |  | 2019 |  | 2018
Performance stock units | $ | 1,097 |  |  | $ | 1,699 |  |  | $ | 2,067 |
Restricted stock units | 2,613 |  |  | 1,969 |  |  | 1,211 |
Employee stock purchase plan | 468 |  |  | 364 |  |  | 174 |
Total share-based compensation expense | $ | 4,178 |  |  | $ | 4,032 |  |  | $ | 3,452 |
Performance Units The Company has entered into long-term incentive agreements with certain key employees. These awards are conditioned on certain performance criteria and market criteria measured against a group of peer banks over a three-year period for each grant. The awards contain minimum (threshold), target, and maximum (exceptional) performance levels. In the event of a change in control, as defined in the plan, the awards will vest at a minimum of the target level. The amount of the awards is determined at the end of the three year vesting and performance period. In January 2021, the Company awarded 23,251 shares to employees upon completion of the 2018-2020 performance cycle. In January 2020, the Company awarded 62,649 shares to employees upon completion of the 2017-2019 performance cycle. In January 2019, the Company awarded 99,308 shares to employees upon completion of the 2016-2018 performance cycle. Information related to the outstanding grants at December 31, 2020 is shown below:
($ in thousands) | 2019 - 2021 Cycle |  | 2020 - 2022 Cycle
Shares issuable at target | 20,860 |  |  | 26,002 |
Maximum shares issuable | 41,720 |  |  | 52,004 |
Unrecognized compensation cost | $ | 366 |  |  | $ | 704 |
Weighted average grant date fair value | 47.46 |  |  | 38.09 |
Restricted Stock Units The Company awards nonvested stock, in the form of RSUs to employees. RSUs generally are subject to continued employment and generally vest ratably over two to five years. Shares issued to the Bank’s directors for compensation are not subject to vesting requirements. Vesting is accelerated upon a change in control or the employee meeting certain retirement criteria. RSUs do not carry voting or dividend rights until vested. Sales of the units are restricted prior to vesting. Various information related to the RSUs is shown below.
($ in thousands) | 2020 |  | 2019 |  | 2018
Total fair value at vesting date | $ | 1,702 |  |  | $ | 1,067 |  |  | $ | 1,544 |
Total unrecognized compensation cost for nonvested stock units | 3,899 |  |  | 3,417 |  |  | 2,175 |
Expected years to recognize unearned compensation | 1.9 years |  | 1.9 years |  | 2.0 years
A summary of the status of the Company’s RSU awards as of December 31, 2020 and changes during the year then ended is presented below
| Shares |  | Weighted Average Grant Date Fair Value
Outstanding at December 31, 2019 | 117,369 |  |  | $ | 45.86 |
Granted | 88,759 |  |  | 39.63 |
Vested | (44,351) |  |  | 45.68 |
Forfeited | (4,349) |  |  | 44.24 |
Outstanding at December 31, 2020 | 157,428 |  |  | $ | 42.44 |
Employee Stock Options and Stock-settled Stock Appreciation Rights In determining compensation cost for stock options and SSARs, the Black-Scholes option-pricing model is used to estimate the fair value on date of grant. There were no grants of employee stock options or SSARs during the years ended December 31, 2020, 2019, or 2018. Stock options have been granted to key employees with exercise prices equal to the market price of the Company’s common stock at the date of grant and 10-year contractual terms. Stock options have a vesting schedule of three to five years. The SSARs are subject to continued employment, have a 10-year contractual term and vest ratably over five years. Neither stock options nor SSARs carry voting or dividend rights until exercised. At December 31, 2020, there was no remaining unrecognized compensation expense related to stock options and SSARs and all outstanding awards are vested. Various information related to the stock options and SSARs is shown below.
($ in thousands) | 2020 |  | 2019 |  | 2018
Intrinsic value of option/SSAR exercises on date of exercise | $ | 597 |  |  | $ | 407 |  |  | $ | 2,469 |
Following is a summary of the SSAR activity for 2020.
($ in thousands, except per share data) | Shares |  | Weighted Average Exercise Price |  |  |  |
Outstanding at December 31, 2019 | 28,300 |  |  | $ | 10.14 |  |  |  |  |
Exercised | (28,300) |  |  | 10.14 |  |  |  |  |
Outstanding at December 31, 2020 | — |  |  | N/A |  |  |  |
Employee Stock Purchase Plan The Company adopted an Employee Stock Purchase Plan (“ESPP”) in 2018 to provide its eligible employees with an opportunity to purchase common stock through accumulated contributions. The ESPP provides for shares to be purchased at 85% of the lesser of the stock price at the enrollment date or the exercise date. The maximum number of shares of common stock available for sale under the ESPP is 750,000. In 2020, 2019, and 2018, employees purchased 58,195, 41,116, and 14,799 shares, respectively. Stock Plan for Non-Management Directors The Company has adopted a Stock Plan for Non-Management Directors, which provides for issuing up to 200,000 shares of common stock to non-management directors as compensation in lieu of cash. At December 31, 2020, there were 80,130 shares of stock available for grant under the Stock Plan for Non-Management Directors, exclusive of 6,486 shares to be issued upon deferral release. Various information related to the Director Plan is shown below.
| 2020 |  | 2019 |  | 2018
Shares granted | 15,901 |  |  | 11,382 |  |  | 11,750 |
Weighted average fair value | $ | 30.28 |  |  | $ | 41.63 |  |  | $ | 50.74 |
401(k) Plan The Company has a 401(k) savings plan which covers substantially all full-time employees over the age of 21 and matches 100% of the first 6% of employee contributions. The amount charged to expense for the Company’s contributions to the plan was $3.8 million, $3.2 million and $2.8 million for 2020, 2019, and 2018, respectively. Deferred Compensation Plan The Company’s Deferred Compensation Plan permits certain executives to participate and defer up to 25% of their base salary and/or up to 100% of their eligible bonus for a plan year. Participants make an irrevocable election when they elect to participate for a plan year to receive the vested account balance following their retirement date, or at a future date not less than five years after the beginning of the plan year. At December 31, 2020, the Company had assets and liabilities of $3.6 million and $4.9 million, respectively, related to the Deferred Compensation Plan.

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