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Share-Based Compensation | 12 Months Ended
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Dec. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Share-Based Compensation | Share-Based Compensation The Company has a share-based incentive plan described below that allows it to offer a variety of equity compensation awards, subject to approval. Total compensation expense that has been charged against income for the share-based awards granted was $2.9 million, $2.4 million, and $2.0 million for 2024, 2023, and 2022, respectively. The total income tax benefit was $605 thousand, $506 thousand, and $421 thousand for 2024, 2023, and 2022, respectively. 2019 Stock Incentive Plan In 2019, the Company’s Stock Incentive Plan (“2019 SIP”) was approved by the Bank’s Board. The 2019 SIP provides for the issuance of share-based awards to directors and employees of the Company. The 2019 SIP authorized 240,000 units to be issued and the Company’s practice is using authorized unissued shares to satisfy these awards. Each unit represents a contingent right to receive one common share or an equivalent amount of cash, or a combination of the two, at the discretion of the Company. Currently, we have a sufficient number of authorized unissued shares to satisfy outstanding equity awards. Under the 2019 SIP, the Company has issued restricted stock unit (“RSU”) awards that are both time-based and performance-based. Each RSU award will indicate the number of shares, the conditions (e.g., service, performance, and/or a combination), and the grant date. Compensation expense is recognized over the vesting period of the awards based on the fair value of the award at grant date. 2023 Stock Incentive Plan In 2023, a new stock incentive plan (“2023 SIP”) was approved by the Board and shareholders. Upon the plan’s shareholder approval date of March 30, 2023, no further share-based awards have been issued under the 2019 SIP. The 2023 SIP provides for the issuance of share-based awards to directors and employees of the Company. The 2023 SIP authorized the issuance of 250,000 shares, subject to an annual increase in available shares and shares recycled from the 2019 SIP that were cancelled. Based on our shares outstanding as of December 31, 2023, and awards that were recycled from the 2019 SIP, the total shares authorized for issuance under the plan as of December 31, 2024 was 324,887. A total of 100,665, 25,705, and 13,160 shares were issued in 2024, 2023, and 2022, respectively. For time-based RSUs, the fair value was determined by using the closing stock price on the date prior to the grant date. These RSUs vest over three to five years. The Board, from time to time, approves performance-based RSU awards that may be earned between a three to five year performance period. Whether units are earned at the end of the performance period will be determined based on the achievement of performance and/or market targets (e.g., market capitalization target) over the performance period. If the conditions are achieved, the grant recipient will receive 100% of the units granted as these awards do not provide for a multiplier effect. The performance/market targets are determined by the Board. The fair value for performance-based RSU awards was determined by using a Monte Carlo simulation analysis to estimate the achievement of the market capitalization target determined by the Board. The Monte Carlo simulation analysis required the following inputs: (1) expected term, (2) expected volatility, (3) risk-free rate, and (4) dividend yield. The expected term was based on the stated performance period. Management used the expected volatility from a peer group. The risk-free interest rate is based on the U.S. Treasury yield curve over the performance period. The dividend yield assumption was based on historical and anticipated dividend payouts. The following is a summary of all the Company’s RSU awards issued under both the 2019 SIP and 2023 SIP:
Non-vested Shares |  | Shares |  | Weighted-Average Grant-Date Fair Value
Non-vested at January 1, 2024 |  | 143,585 |  |  | $ | 51.21 |
Granted |  | 100,665 |  |  | 55.71 |
Vested |  | (108,293) |  |  | 47.27 |
Forfeited |  | (1,755) |  |  | 58.61 |
Non-vested at December 31, 2024 |  | 134,202 |  |  | $ | 57.67 |
As of December 31, 2024, there was $5.1 million of total unrecognized compensation costs related to non-vested shares granted under the 2019 SIP and 2023 SIP. The cost is expected to be recognized over a weighted average period of 1.47 years. 2023 Employee Stock Purchase Plan In 2023, a new employee stock purchase plan (“2023 ESPP”) was approved by the Board and shareholders. Upon the 2023 ESPP’s shareholder approval date of March 30, 2023, the 2023 ESPP reserved 250,000 shares of common stock for issuance to employees, subject to an annual increase in reserved shares. At December 31, 2024, 312,230 shares were available to be issued. Whole shares are sold to participants in the plan at 85% of the lower of the stock price at the beginning or end of each semi-annual offering period. The first semi-annual offering period began on September 1, 2023 and the current semi-annual offering period began on September 1, 2024. Eligible employees may purchase shares in an amount that does not exceed the lesser of the IRS limit of $25,000 or 15% of their annual salary.
|  | December 31, 2024
Shares purchased |  | 12,057
Weighted average price of shares purchased |  | $ | 44.93 |
Compensation expense recognized (in 000's) |  | 179.3 |
Stock Appreciation Rights (“SAR”) Upon completion of the Merger and as a part of the Merger Agreement, the Company assumed SAR awards that had been issued to existing employees that would continue with the same terms and conditions adjusted for the exchange ratio of 0.5043. As part of the Merger, a significant portion of SAR awards accelerated their vesting and thus did not require any future service component. Management used the Black-Scholes option-pricing model to fair value these accelerated SAR awards and included this value as part of the purchase price consideration discussed in Note 25 - Business Combination. The Company also used the Black-Scholes option-pricing model to fair value the non-accelerated SAR awards that were not fully vested. The SAR awards that have been assumed by the Company were issued in 2019, 2021, and 2023, and these SAR awards become exercisable ratably over 7 years (14.3% per year) and contractually expire 10 years after the grant date. Upon completion of the Merger, the Company determined the fair value per SAR using the following assumptions:
|  | 2019 SAR |  | 2021 SAR |  | 2023 SAR
# of years to full vesting |  | 7 years |  | 7 years |  | 7 years
Fair value |  | $ | 14.89 |  |  | $ | 16.92 |  |  | $ | 14.56 |
Risk-free interest rate |  | 4.51 | % |  | 4.32 | % |  | 4.14 | %
Expected dividend yield |  | 3.95 | % |  | 3.95 | % |  | 3.95 | %
Expected common stock volatility |  | 32.56 | % |  | 32.56 | % |  | 32.56 | %
Expected contractual life (in years) |  | 4.77 |  | 7.20 |  | 8.77
A summary of SAR and option activity during the year ended December 31, 2024, is as follows:
|  |  |  |  |  | Weighted Average
Dollars in thousands, except per share information |  | SARs |  | Aggregate Fair Value |  | Remaining Contractual Term (Yrs.) |  | Exercise Price
Outstanding, December 31, 2023 |  | — |  | $ | — |  |  | — |  | $ | — |
Granted (or acquired) |  | 299,556 |  | 4,996 |  |  | 5.67 |  | 45.24 |
Exercised |  | 70,041 |  | 1,387 |  |  | — |  | 39.90 |
Forfeited |  | 5,642 |  | 86 |  |  | — |  | 47.96 |
Expired |  | — |  | — |  |  | — |  | — |
Outstanding, December 31, 2024 |  | 223,873 |  | $ | 3,523 |  |  | 5.44 |  | $ | 46.87 |
Exercisable SARs: |  |  |  |  |  |  |  |
At December 31, 2024 |  | 183,971 |  | 2,931 |  |  | 5.04 |  | 46.39 |
The total fair value of SARs exercised was $1.4 million during the year ended December 31, 2024. The total fair value of SARs vested was $67.0 thousand during the year ended December 31, 2024. As of December 31, 2024, there was $538.2 thousand of total unrecognized compensation costs related to non-vested SARs acquired through the Merger. The cost is expected to be recognized over a weighted average period of 2.27 years years.

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