Stock-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATIONWe account for stock-based compensation under the fair value recognition provisions of ASC Topic 718 - Compensation - Stock Compensation. We recognize stock-based compensation cost over the award’s requisite service period on a straight-line

basis for time-based restricted stock grants and performance-based restricted stock grants. We record forfeitures as they occur for all stock-based compensation.

The following table presents our total stock-based compensation expense:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Employee stock-based compensation expense
Pre-tax	$	270	$	108	$	495	$	582
Post-tax (1)	213		86		391		460
Director stock-based compensation expense
Pre-tax	66		99		243		406
Post-tax (1)	52		78		192		321

(1) The after tax amounts are determined using the 21% corporate federal tax rate.

We had approximately $3,287,000 of unrecognized stock compensation expense at September 30, 2021 related to non-vested stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 2.5 years. We had approximately $156,000 of unrecognized director stock-based compensation expense at September 30, 2021 related to non-vested director stock-based compensation granted, which we expect to recognize over a weighted-average period of approximately 0.6 years.

Restricted stock, restricted stock units and performance stock units

Stock-based compensation cost for restricted stock awards, restricted stock units and performance stock units is measured based on the closing fair market value of our common stock on the date of grant, which vest in equal installments over the requisite service period of typically three years. Restricted stock awards granted to non-employee directors vest over a one-year period. Each restricted stock unit and performance stock unit represents our obligation to deliver to the holder one share of common stock upon vesting.

Performance stock units vest based on the Company's return on average equity compared to a defined group of peer companies. On the grant date, we issue the target number of performance stock units. They are subject to forfeitures if performance goals are not met. The actual number of performance stock units earned can vary from zero to 150 percent of the target for the 2021, 2020, and 2019 awards.

We granted 2,551 and 290,577 shares of restricted common stock during the three and nine-month periods ended September 30, 2021, respectively, which had a weighted-average grant date fair value of $3.76 and $6.02 per share, respectively. We granted 37,318 and 384,572 shares of restricted common stock during the three and nine-month periods ended September 30, 2020, respectively, which had a weighted-average grant date fair value of $7.31 and $9.35 per share, respectively.

The following table presents certain information related to the activity of our non-vested common stock grants:


	Number of Restricted Shares	Weighted Average Grant Date Fair Value
Outstanding as of December 31, 2020	259,006	$	10.06
Granted	290,577	6.02
Less: Forfeited	119,946	8.92
Less: Vested	92,910	9.99
Outstanding as of September 30, 2021	336,727	$	7.01

Stock options

Stock option fair value was estimated on the grant date using the Black-Scholes-Merton formula. Stock options vest in equal installments over the requisite service period of typically three years. The following weighted-average assumptions were used to value the stock options granted:


	2021
Expected annual dividend yield	1.23	%
Expected volatility	43.87	%
Risk-free interest rate	1.81	%
Expected term	6

Expected annual dividend yield for all grants, except our options granted in the current quarter, is based on the current quarterly dividend of $0.06 per share and the stock price on the grant date. The expected annual dividend yield of our options granted in the current quarter is based on no dividends being paid in future quarters. The expected volatility is a historical volatility calculated based on the daily closing prices over a period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date. Expected term takes into account the three-year graded vesting term and the 10-year contractual term of the option.

The following table presents certain information related to the activity of our non-vested stock option grants:


	Number of Stock Options	Weighted Average Exercise Prices		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value
Outstanding as of December 31, 2020	144,006	$	13.00	8.77	$	—
Granted	1,054,707	3.86		—
Less: Forfeited	48,995	8.08		—
Less: Expired	2,503	16.25		—
Less: Exercised	—	—		—
Outstanding as of September 30, 2021	1,147,215	$	4.80	9.74	$	153

Vested as of September 30, 2021(1)	120,638	$	15.31	7.71	$	—
Exercisable as of September 30, 2021	61,232	$	15.27	7.71	$	—