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Shareholders' Equity and Compensation Plans | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Shareholders' Equity and Compensation Plans | SHAREHOLDERS’ EQUITY AND COMPENSATION PLANS Shareholders’ Equity Common Stock At December 31, 2023 and 2022, 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, 2023 |  | December 31, 2022
Outstanding performance units (maximum issuance) | 273,202 |  |  | 209,702 |
Outstanding RSU’s | 290,141 |  |  | 269,868 |
Outstanding options | 333,608 |  |  | 222,032 |
2018 Stock Incentive Plan | 732,427 |  |  | 342,157 |
Non-Management Director Plan | 130,162 |  |  | 55,878 |
2018 Employee Stock Purchase Plan | 447,655 |  |  | 515,941 |
Total | 2,207,195 |  |  | 1,615,578 |
Common Stock Repurchase Plan In April 2021, the Company’s board of directors authorized the repurchase of up to two million shares of the Company’s common stock. As of May 2022, this plan was depleted. In May 2022, 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negotiated transactions and the stock repurchase program will remain in effect until fully utilized or until modified, superseded or terminated.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, 2023, there were two million 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 with 75,000 shares issued and outstanding at the end of 2023 and 2022. 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. In the fourth quarter 2021, the Company issued and sold 3,000,000 depositary shares, each representing 1/40th interest in a share of the Company’s 5% Noncumulative, Perpetual Preferred Stock, Series A (“Series A Preferred Stock”), totaling $72.0 million, net of issuance costs. The depositary shares trade under the ticker “EFSCP”. The Series A Preferred Stock may be redeemed at the Company’s option, subject to prior regulatory approval, in whole or in part on any dividend payment date on or after December 15, 2026 or within 90 days following a regulatory capital event, as defined in the offering documents. If any Series A Preferred Stock are redeemed, a proportionate number of depositary shares will also be redeemed. 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. Preferred stock dividends, when and if declared by the board of directors, are payable, quarterly in arrears, on March 15, June 15, September 15 and December 15 of each year. If dividends on the Series A Preferred stock have not been declared or paid in six quarterly periods, whether or not consecutive, the number of directors on the board will automatically be increased by two and the holders of the Series A preferred stock will be entitled to vote for the additional directors. Quarterly dividends have been declared and paid in all periods since the preferred stock was issued. Dividends on the Company’s capital stock are prohibited under the terms of the junior subordinated debenture agreements, see “Note 10 – Subordinated Debentures and Notes,” 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. Furthermore, unless dividends on all outstanding shares of the Series A Preferred Stock for the most recently completed dividend period have been paid or declared, dividends on, and repurchases of, common stock is prohibited. At December 31, 2023, the Company was not in default on any of the junior subordinated debenture issuances or preferred stock. 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 Gain (Loss) on Cash Flow Hedges |  | Total
Balance, December 31, 2020 | $ | 22,320 |  |  | $ | 19,308 |  |  | $ | (4,508) |  |  | $ | 37,120 |
Net change | (17,049) |  |  | (3,624) |  |  | 2,330 |  |  | (18,343) |
Balance, December 31, 2021 | $ | 5,271 |  |  | $ | 15,684 |  |  | $ | (2,178) |  |  | $ | 18,777 |
Net change | (149,623) |  |  | (2,696) |  |  | 3,210 |  |  | (149,109) |
Transfer from available-for-sale to held-to-maturity | (197) |  |  | 197 |  |  | — |  |  | — |
Balance, December 31, 2022 | $ | (144,549) |  |  | $ | 13,185 |  |  | $ | 1,032 |  |  | $ | (130,332) |
Net change | 31,705 |  |  | (2,605) |  |  | 217 |  |  | 29,317 |
Balance, December 31, 2023 | $ | (112,844) |  |  | $ | 10,580 |  |  | $ | 1,249 |  |  | $ | (101,015) |
The following table presents the pre-tax and after-tax changes in the components of other comprehensive income:
| 2023 |  | 2022 |  | 2021
($ 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 securities | $ | 42,988 |  |  | $ | 10,833 |  |  | $ | 32,155 |  |  | $ | (200,030) |  |  | $ | (50,407) |  |  | $ | (149,623) |  |  | $ | (22,701) |  |  | $ | (5,652) |  |  | $ | (17,049) |
Reclassification of gain on sale of available-for-sale securities(a) | (601) |  |  | (151) |  |  | (450) |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Reclassification of gain on held-to-maturity securities(a) | (3,483) |  |  | (878) |  |  | (2,605) |  |  | (3,605) |  |  | (909) |  |  | (2,696) |  |  | (4,672) |  |  | (1,048) |  |  | (3,624) |
Change in unrealized gain (loss) on cash flow hedges | (656) |  |  | (165) |  |  | (491) |  |  | 3,741 |  |  | 943 |  |  | 2,798 |  |  | 1,533 |  |  | 372 |  |  | 1,161 |
Reclassification of loss on cash flow hedges(b) | 945 |  |  | 237 |  |  | 708 |  |  | 551 |  |  | 139 |  |  | 412 |  |  | 1,543 |  |  | 374 |  |  | 1,169 |
Total other comprehensive income (loss) | $ | 39,193 |  |  | $ | 9,876 |  |  | $ | 29,317 |  |  | $ | (199,343) |  |  | $ | (50,234) |  |  | $ | (149,109) |  |  | $ | (24,297) |  |  | $ | (5,954) |  |  | $ | (18,343) |
(a)The pre-tax amount is reported in noninterest income/expense in the Consolidated Statements of Income. (b)The pre-tax amount is reported in interest income/expense in the Consolidated Statements of Income. 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, and restricted stock units (“RSUs”), and may contain performance terms for key employees 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 (expense) for share-based compensation arrangements was $0.3 million, $0.1 million, and $(0.1) million for the years ended December 31, 2023, 2022, and 2021, respectively. At December 31, 2023, there was $14.5 million of total unrecognized compensation cost related to unvested share-based compensation awards. The cost is expected to be recognized over a weighted-average term of approximately 2 years. The following table summarizes share-based compensation expense:
($ in thousands) | 2023 |  | 2022 |  | 2021
Performance stock units | $ | 2,879 |  |  | $ | 2,391 |  |  | $ | 1,777 |
Restricted stock units | 5,014 |  |  | 4,156 |  |  | 3,109 |
Stock options | 1,609 |  |  | 916 |  |  | 396 |
Employee stock purchase plan | 644 |  |  | 543 |  |  | 735 |
Total share-based compensation expense | $ | 10,146 |  |  | $ | 8,006 |  |  | $ | 6,017 |
Performance Stock 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 least at the target level. The amount of the awards is determined at the end of the three-year vesting and performance period. The fair value of performance units issued upon vesting in 2023, 2022, and 2021 were $1.6 million, $0.5 million, and $0.9 million, respectively. Information related to the outstanding grants at December 31, 2023 is shown below:
($ in thousands, except per share data) | 2021 - 2023 Cycle |  | 2022 - 2024 Cycle |  | 2023 - 2025 Cycle
Shares issuable at target | 38,412 |  |  | 41,765 |  |  | 56,424 |
Maximum shares issuable | 76,824 |  |  | 83,530 |  |  | 112,848 |
Unrecognized compensation cost | $ | 77 |  |  | $ | 1,001 |  |  | $ | 2,340 |
Weighted average grant date fair value (per share) | $ | 47.16 |  |  | $ | 51.91 |  |  | $ | 62.19 |
| Maximum Shares Issuable
Outstanding at December 31, 2022 | 209,702 |
Granted | 112,848 |
Vested (issued 31,142 shares) | (49,348) |
Outstanding at December 31, 2023 | 273,202 |
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 three to five years. 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) | 2023 |  | 2022 |  | 2021
Total fair value of awards vesting during the year | $ | 3,894 |  |  | $ | 3,888 |  |  | $ | 2,855 |
Unrecognized compensation cost | 8,438 |  |  | 8,507 |  |  | 4,622 |
Expected years to recognize unearned compensation | 1.7 years |  | 2.0 years |  | 1.9 years
Weighted average grant date fair value | $ | 50.46 |  |  | $ | 47.96 |  |  | $ | 44.01 |
A summary of the status of the Company’s RSU awards as of December 31, 2023 and changes during the year then ended is presented below.
|  | Shares |  | Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022 |  | 269,868 |  |  | $ | 46.49 |
Granted |  | 107,353 |  |  | 50.46 |
Vested |  | (77,195) |  |  | 43.60 |
Forfeited |  | (9,885) |  |  | 47.65 |
Outstanding at December 31, 2023 |  | 290,141 |  |  | $ | 48.69 |
Stock Options In determining compensation cost for stock options, the Black-Scholes option-pricing model is used to estimate the fair value on date of grant. The model utilizes several assumptions in its calculations. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield in effect at the time of the grant. The expected term of options granted is based on the option's vesting schedule and expected exercise patterns and represent the period of time options granted are expected to be outstanding. The expected volatility is based on the historical volatility of the Company's stock and expected term of the option. The dividend yield is determined by annualizing the dividend rate as a percentage of the Company's stock price. The following weighted average assumptions were used for grants issued during the year ended December 31, 2023.
| Weighted Average
Risk Free Interest Rate | 4.09%
Expected Dividend Yield | 1.84%
Expected Volatility | 34.74%
Expected Term (years) | 6.3
Non-qualified 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. Following is a summary of stock option activity for 2023.
| Shares |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Term
Outstanding at December 31, 2022 | 222,032 |  |  | $ | 46.12 |  |  |
Granted | 122,161 |  |  | 54.46 |  |  |
Exercised | (909) |  |  | 45.28 |  |  |
Forfeited | (9,676) |  |  | 48.30 |  |  |
Outstanding at December 31, 2023 | 333,608 |  |  | $ | 49.11 |  |  | 8.2 years
Exercisable at December 31, 2023 | 53,208 |  |  | $ | 45.30 |  |  | 7.5 years
The intrinsic value of options exercised totaled $0.1 million and $0.1 million in 2023 and 2022, respectively. Employee Stock Purchase Plan The Company’s Employee Stock Purchase Plan (“ESPP”) provides its eligible employees with an opportunity to purchase common stock through accumulated payroll 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 2023, 2022, and 2021, employees purchased 68,286, 55,123, and 64,826 shares, respectively, and there are 447,655 remaining shares available under the ESPP at December 31, 2023. Stock Plan for Non-Management Directors The Company has adopted a Stock Plan for Non-Management Directors, which provides for issuing up to 400,000 shares of common stock to non-management directors as compensation. At December 31, 2023, there were 108,893 shares of stock available for grant under the Stock Plan for Non-Management Directors, exclusive of 21,269 shares to be issued upon deferral release. Various information related to the Director Plan is shown below.
| 2023 |  | 2022 |  | 2021
Shares granted | 27,016 |  |  | 23,343 |  |  | 12,998 |
Weighted average grant date fair value | $ | 41.31 |  |  | $ | 42.17 |  |  | $ | 46.05 |
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 $6.5 million, $5.8 million and $4.9 million for 2023, 2022, and 2021, respectively. Deferred Compensation Plan The Company has a nonqualified deferred compensation plan that 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, 2023, the Company had a liability of $3.7 million related to the deferred compensation plan.

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