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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation The Company maintains the 2021 Stock Plan ("2021 Plan"), the 2016 Stock Plan (“2016 Plan”), the 2006 Stock Plan (“2006 Plan”), the 2021 Employee Stock Purchase Plan ("2021 ESPP") and the 2011 Employee Stock Purchase Plan (“2011 ESPP”). In connection with the acquisition of Virginia Heritage, the Company assumed the Virginia Heritage 2006 Stock Option Plan and the 2010 Long Term Incentive Plan (the “Virginia Heritage Plans”). No additional options may be granted under the 2016 Plan, 2006 Plan or the Virginia Heritage Plans. The Company adopted the 2021 Plan upon approval by the shareholders at the 2021 Annual Meeting held on May 20, 2021. The 2021 Plan provides directors and selected employees of the Bank, the Company and their affiliates with the opportunity to acquire shares of stock, through awards of options, time vested restricted stock, performance-based restricted stock and stock appreciation rights. Under the 2021 Plan, 1,300,000 shares of common stock were initially reserved for issuance. For awards that are service based, compensation expense is being recognized over the service (vesting) period based on fair value, which for stock option grants is computed using the Black-Scholes model. For restricted stock awards granted under the 2021 Plan, fair value is based on the Company’s closing price on the date of grant. For awards that are performance-based, compensation expense is initially recorded based on the probability of achievement of the goals underlying the grant at target. In February 2022, the Company awarded 165,248 shares of time vested restricted stock to senior officers, directors and certain employees. The shares vest in three substantially equal installments beginning on the first anniversary of the date of grant. In February 2022, the Company awarded senior officers a targeted number of 37,155 performance vested restricted stock units (“PRSUs”). The vesting of PRSUs is 100% after three years with payouts based on threshold, target or maximum average performance targets over a three year period. There are two performance metrics: 1) total shareholder's return; and 2) return on average assets. In February 2022, the 2019 performance award vested and 620 incremental shares were awarded. In March 2022, the Company awarded 168 shares of time vested restricted stock to an employee. The shares vest in three substantially equal installments beginning on February 14, 2023. In June 2022, the Company awarded 1,055 shares of time vested restricted stock to an employee. The shares vest in three substantially equal installments beginning on the first anniversary of the date of grant. The Company has unvested restricted stock awards and PRSU grants of 432,003 shares at December 31, 2022. Unrecognized stock based compensation expense related to restricted stock awards and PRSU grants totaled $11.6 million at December 31, 2022. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 1.84 years. The following tables summarize the unvested restricted stock awards at December 31, 2022, 2021 and 2020.
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Performance Awards |  | Shares |  | Weighted- Average Grant Date Fair Value |  | Shares |  | Weighted- Average Grant Date Fair Value |  | Shares |  | Weighted- Average Grant Date Fair Value
Unvested at beginning |  | 118,568 |  |  | $ | 44.71 |  |  | 90,642 |  |  | $ | 49.11 |  |  | 58,780 |  |  | $ | 57.74 |
Issued |  | 37,775 |  |  | 53.97 |  |  | 51,564 |  |  | 42.97 |  |  | 44,741 |  |  | 40.19 |
Forfeited |  | (1,966) |  |  | 55.76 |  |  | (580) |  |  | 60.45 |  |  | (8,586) |  |  | 54.89 |
Vested |  | (24,522) |  |  | 55.76 |  |  | (23,058) |  |  | 60.45 |  |  | (4,293) |  |  | 62.70 |
Unvested at end |  | 129,855 |  |  | $ | 45.15 |  |  | 118,568 |  |  | $ | 44.71 |  |  | 90,642 |  |  | $ | 49.11 |
|  | Years Ended December 31,
|  | 2022 |  | 2021 |  | 2020
Time Vested Awards |  | Shares |  | Weighted- Average Grant Date Fair Value |  | Shares |  | Weighted- Average Grant Date Fair Value |  | Shares |  | Weighted- Average Grant Date Fair Value
Unvested at beginning |  | 300,792 |  |  | $ | 46.24 |  |  | 218,031 |  |  | $ | 45.89 |  |  | 110,714 |  |  | $ | 57.84 |
Issued |  | 166,471 |  |  | 59.72 |  |  | 179,624 |  |  | 47.63 |  |  | 176,252 |  |  | 42.51 |
Forfeited |  | (12,064) |  |  | 53.10 |  |  | (8,489) |  |  | 47.38 |  |  | (18,385) |  |  | 50.06 |
Vested |  | (153,051) |  |  | 45.54 |  |  | (88,374) |  |  | 48.10 |  |  | (50,550) |  |  | 58.76 |
Unvested at end |  | 302,148 |  |  | $ | 53.75 |  |  | 300,792 |  |  | $ | 46.24 |  |  | 218,031 |  |  | $ | 45.89 |
Below is a summary of stock option activity for the twelve months ended December 31, 2022, 2021 and 2020. The information excludes restricted stock units and awards.
| Years Ended December 31,
| 2022 |  | 2021 |  | 2020
| Shares |  | Weighted- Average Exercise Price |  | Shares |  | Weighted- Average Exercise Price |  | Shares |  | Weighted- Average Exercise Price
Beginning balance | 5,789 |  |  | $ | 36.96 |  |  | 5,789 |  |  | $ | 36.96 |  |  | 6,589 |  |  | $ | 19.99 |
Issued | — |  |  | — |  |  | — |  |  | — |  |  | 2,500 |  |  | 47.96 |
Exercised | (3,289) |  |  | 28.60 |  |  | — |  |  | — |  |  | (3,300) |  |  | 11.40 |
Forfeited | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Ending balance | 2,500 |  |  | $ | 47.95 |  |  | 5,789 |  |  | $ | 36.96 |  |  | 5,789 |  |  | $ | 36.96 |
Exercisable end of year | 1,666 |  |  | $ | 47.95 |  |  | 4,122 |  |  | $ | 32.51 |  |  | 3,289 |  |  | $ | 28.60 |
There were no grants of stock options during the years ended December 31, 2022 and 2021. For 2020, there was one grant to an executive officer for 2,500 incentive stock options in January 2020, which has a ten-year term and vests in three equal installments beginning on the first anniversary of the date of grant. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with the assumptions shown in the table below used for the grants during 2020.
|  | Year Ended December 31, 2020
Expected volatility |  | 42.3 | %
Weighted-Average volatility |  | 42.3 | %
Expected dividends |  | —
Expected term (in years) |  | 6.5
Risk-free rate |  | 1.67 | %
Weighted-average fair value (grant date) |  | $ | 21.06 |
The expected lives were based on the "simplified" method allowed by ASC 718 "Compensation," whereby the expected term is equal to the midpoint between the vesting date and the end of the contractual term of the award. The total intrinsic value of outstanding stock options was $0 and $123 thousand, respectively, at December 31, 2022 and 2021. The total fair value of stock options vested was $18 thousand, $18 thousand and $6 thousand, for 2022, 2021 and 2020, respectively. At December 31, 2022, there is no unrecognized stock-based compensation expense related to stock options. Cash proceeds, tax benefits and intrinsic value related to total stock options exercised is as follows:
|  | Years Ended December 31,
(dollars in thousands) |  | 2022 |  | 2021 |  | 2020
Proceeds from stock options exercised |  | $ | 97 |  |  | $ | — |  |  | $ | 63 |
Tax benefits realized from stock compensation |  | 3 |  |  | — |  |  | 24 |
Intrinsic value of stock options exercised |  | 98 |  |  | — |  |  | 91 |
Approved by shareholders in May 2021, the 2021 ESPP reserved 200,000 shares of common stock for issuance to employees. 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 quarterly offering period. The 2021 ESPP is available to all eligible employees who have completed at least one year of continuous employment, work at least 20 hours per week and at least five months a year. Participants may contribute a minimum of $10 per pay period to a maximum of $25,000 annually (not to exceed more than 10% of compensation per pay period). At December 31, 2022, the 2021 ESPP had 179,415 shares reserved for issuance. Included in salaries and employee benefits in the accompanying Consolidated Statements of Income, the Company recognized $6.0 million, $7.8 million and $5.3 million in stock-based compensation expense for 2022, 2021 and 2020, respectively. Stock-based compensation expense is recognized ratably over the requisite service period for all awards.

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