The Company maintains certain stock-based compensation plans, approved by the Company’s shareholders, that are administered by the Management Development and Compensation Committee (the “Compensation Committee”) of the Board. The share-based compensation plans were established to allow for the granting of compensation awards to attract, motivate and retain employees, executive officers and non-employee directors who contribute to the long-term growth and profitability of the Company and to give such persons a proprietary interest in the Company, thereby enhancing their personal interest in the Company’s success.

In May 2015, the Company’s shareholders approved the 2015 Long-Term Incentive Plan (the “2015 Plan”) to replace the 2009 Management Stock Incentive Plan and the 2009 Directors’ Stock Incentive Plan (collectively, the “2009 Plans”). A total of 438,076 shares transferred from the 2009 Plans were available for grant pursuant to the 2015 Plan. In addition, any shares subject to outstanding awards under the 2009 Plans that were canceled, expired, forfeited or otherwise not issued or are settled in cash became available for future award grants under the 2015 Plan. In June 2021, the Company’s shareholders approved the Amended and Restated 2015 Long-Term Incentive Plan (the “Plan”), which increased the total number of shares available for grant under the Plan by 734,000 shares. As of December 31, 2024, there were approximately 386,000 shares available for grant under the 2015 Plan.

Under the 2015 Plan, the Compensation Committee may establish and prescribe grant guidelines including various terms and conditions for the granting of stock-based compensation. For stock options, the exercise price of each option equals the closing market price of the Company’s common stock on the date of the grant. All options expire after a period of ten years from the date of grant and generally become fully exercisable over a period of 3 to 5 years from the grant date. When an option recipient exercises their options, the Company issues shares from treasury stock and records the proceeds as additions to capital. The Company uses the Black-Scholes valuation method to estimate the fair value of its stock option awards. Shares of restricted stock awards granted to employees generally vest over 2 to 3 years from the grant date. Fifty percent of the shares of restricted stock awards granted to non-employee directors generally vests on the date of grant and the remaining fifty percent generally vests the day before the next annual shareholder meeting. Vesting of the shares may be based on years of service, established performance measures or both. If restricted stock awards are forfeited before they vest, the shares are reacquired into treasury stock. The grant-date fair value for restricted stock awards is generally equal to the closing market price of the Company’s common stock on the date of grant. The grant-date fair value for restricted stock unit awards is generally equal to the closing market price of the Company’s common stock on the date of grant reduced by the present value of the dividends expected to be paid on the underlying shares.

The Company awards grants of performance-based restricted stock units (“PSUs”) to certain members of management. In 2020, the Compensation Committee approved new PSUs under the 2015 Plan. Fifty percent of the shares subject to each grant that ultimately vest are contingent on achieving specified return on average equity (“ROAE”) targets relative to the market index the Compensation Committee has selected as a peer group for this purpose. These shares will be earned based on the Company’s achievement of a relative ROAE performance requirement, on a percentile basis, compared to the market index over a three-year performance period. The shares earned based on the achievement of the ROAE performance requirement, if any, will vest on the third anniversary of the grant date assuming the recipient’s continuous service to the Company. The remaining fifty percent of the PSUs that ultimately vest are contingent upon achievement of an average return on average assets (“ROAA”) performance requirement over a three-year performance period. The shares earned based on the achievement of the ROAA performance requirement, if any, will vest on the third anniversary of the grant date assuming the recipient’s continuous service to the Company.

The restricted stock awards granted to the directors and the restricted stock units granted to employees in 2024, 2023 and 2022 do not have rights to dividends or dividend equivalents.

There were no stock options awarded during 2024, 2023 or 2022. There was no unrecognized compensation expense related to unvested stock options as of December 31, 2024. There was no stock option activity for the year ended December 31, 2024.

The following table is a summary of restricted stock award activity for the year ended December 31, 2024:


	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at beginning of year		10,087		$	16.34
Granted		22,011			17.49
Vested		(21,098	)		16.94
Forfeited		(1,000	)		17.49
Non-vested at end of year		10,000		$	17.49

The weighted average grant date fair value of restricted stock granted during the years ended December 31, 2024, 2023 and 2022 was $17.49, $16.34, and $26.53, respectively. The total fair value of restricted stock units that vested during the years ended December 31, 2024, 2023 and 2022 was $368 thousand, $265 thousand and $282 thousand, respectively.

The following is a summary of restricted stock units’ activity for the year ended December 31, 2024:


	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at beginning of year		228,386		$	21.89
Granted		146,147			16.34
Vested		(43,065	)		27.49
Forfeited		(41,420	)		17.78
Non-vested at end of year		290,048		$	18.85

The weighted average grant date fair value of restricted stock units granted during the years ended December 31, 2024, 2023 and 2022 was $16.34, $16.46, and $28.38, respectively. The total fair value of restricted stock units that vested during the years ended December 31, 2024, 2023 and 2022 was $808 thousand, $1.0 million and $1.1 million, respectively.

The following table is a summary of performance-based restricted stock units’ activity for the year ended December 31, 2024. Actual shares that have vested, or will vest depend on the level of attainment of the performance based criteria:


	Number of Shares			Weighted Average Grant Date Fair Value
Non-vested at beginning of year		77,766		$	22.22
Granted		54,754			15.59
Vested		(14,870	)		27.58
Forfeited		(11,454	)		17.62
Non-vested at end of year		106,196		$	18.55

The weighted average grant date fair value of PSUs granted during the years ended December 31, 2024, 2023 and 2022 was $15.59, $16.66, and $29.35, respectively. The total fair value of PSUs that vested during the years ended December 31, 2024 and 2023 was $401 thousand and $491 thousand respectively. As of December 31, 2024, the Company expects to pay out 0% of the 2022, 2023 and 2024 awards, as the threshold performance for any payout has not been met.

The Company amortizes the expense related to share-based compensation over the vesting period. Share-based compensation expense is recorded as a component of salaries and employee benefits in the consolidated statements of operations for awards granted to management and as a component of other noninterest expense for awards granted to directors. The share-based compensation expense and the total income tax benefit included in the statements on income for the years ended December 31 was as follows (in thousands):


	2024		2023		2022
Salaries and employee benefits	$	1,237	$	1,346	$	2,234
Other noninterest expense		373		328		317
Total share-based compensation expense	$	1,610	$	1,674	$	2,551

Income tax benefit realized for compensation costs	$	404	$	444	$	486

As of December 31, 2024, there was $2.6 million of unrecognized compensation expense related to unvested restricted stock awards and restricted stock units that is expected to be recognized over a weighted average period of 1.89 years.