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Earnings Per Common Share And Share Awards | 9 Months Ended
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Sep. 30, 2023
Earnings Per Share [Abstract] |
Earnings Per Common Share And Share Awards | Earnings Per Common Share and Share Awards Basic earnings per common share is computed by dividing net income by the weighted average number of common shares outstanding during the reporting period. Diluted earnings per common share is computed by dividing net income by the combination of dilutive potential common stock, comprised of shares issuable under the Company’s share-based compensation plans, and the weighted average number of common shares outstanding during the reporting period. Dilutive common share equivalents include the dilutive effect of in-the-money share-based awards, which are calculated based on the average share price for each period using the treasury stock method. Under the treasury stock method, when share-based awards are assumed to be exercised, (a) the exercise price of a share-based award and (b) the amount of compensation cost, if any, for future services that the Company has not yet recognized, are assumed to be used to repurchase shares in the current period. The following table sets forth the computation of basic and diluted earnings per share for the three- and nine-month periods ended September 30:
|  | Three Months Ended September 30, | Nine Months Ended September 30,
(in thousands, except per share amounts) |  | 2023 |  | 2022 | 2023 |  | 2022
Net income |  | $ | 7,084 |  |  | $ | 7,913 |  | $ | 15,850 |  |  | $ | 16,377 |
Weighted average common shares outstanding – Basic |  | 1,891 |  |  | 1,897 |  | 1,894 |  |  | 1,897 |
Incremental shares outstanding assuming the exercise of dilutive SARs (share-settled) |  | — |  |  | — |  | — |  |  | 1 |
Weighted average common shares outstanding – Diluted |  | 1,891 |  |  | 1,897 |  | 1,894 |  |  | 1,898 |
Basic earnings per common share |  | $ | 3.75 |  |  | $ | 4.17 |  | $ | 8.37 |  |  | $ | 8.63 |
Diluted earnings per common share |  | $ | 3.75 |  |  | $ | 4.17 |  | $ | 8.37 |  |  | $ | 8.63 |
There were 24 thousand and 26 thousand potential shares excluded from the computation of diluted earnings per share for the three-month periods ended September 30, 2023 and 2022, respectively, due to the out-of-the-money status of the related share-based awards. There were 24 thousand and 13 thousand potential shares excluded from the computation of diluted earnings per share for the nine-month periods ended September 30, 2023 and 2022, respectively, due to the out-of-the-money status of the related share-based awards. The Company historically has adopted employee stock award plans under which restricted stock, options or stock appreciation rights ("SARs") exercisable for the Company's stock may be granted to key employees or directors of the Company. There is currently one active plan from which the Company may grant share-based awards. The awards eligible to be granted under the active plan are limited to SARs, and the maximum aggregate number of shares of common stock of the Company available pursuant to the plan for the grant of SARs is 250 thousand shares. SARs give the holder the right to receive stock equal to the appreciation in the value of shares of stock from the grant date for a specified period of time, and as a result, are accounted for as equity instruments. As of September 30, 2023, the only outstanding awards under the plans were SARs, which expire within seven years or less from the date of grant. All outstanding SARs vest and are exercisable within five years or less from the date of grant, and all SARs issued to date have been share-settled only. There have been no stock options or SARs granted where the exercise price was less than the market price on the date of grant. A summary of share-based award transactions for all share-based award plans follows:
(in thousands, except weighted average exercise price and average remaining contractual term) | Number Of Shares |  | Weighted Average Exercise Price |  | Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Outstanding as of January 1, 2022 | 35 |  |  | $ | 150.36 |  |  | 3.96 |  | $ | 1,643 |
SARs granted | 10 |  |  | 155.16 |  |  |  |  |
SARs exercised | (6) |  |  | 94.44 |  |  |  |  |
Outstanding as of December 31, 2022 | 39 |  |  | $ | 159.39 |  |  | 4.10 |  | $ | 243 |
SARs granted | 5 |  |  | 142.88 |  |  |  |  |
SARs exercised | (2) |  |  | 93.87 |  |  |  |  |
Outstanding as of September 30, 2023 | 42 |  |  | $ | 160.83 |  |  | 3.94 |  | $ | 166 |
Exercisable as of September 30, 2023 | 32 |  |  | $ | 166.57 |  |  | 3.52 |  | $ | 110 |
Unvested as of September 30, 2023 | 10 |  |  | $ | 142.51 |  |  | 5.28 |  | $ | 56 |
During the third quarter of 2023, the Company did not issue share-settled SARs to either employees or directors of the Company. During the third quarter of 2022, the Company issued 5 thousand share-settled SARs to employees of the Company. During the first two quarters of 2023, the Company issued 5 thousand share-settled SARs to directors of the Company. During the first two quarters of 2022, the Company issued 5 thousand share-settled SARs to directors of the Company. The fair value of each award is estimated on the date of grant using the Black-Scholes option valuation model. Expected volatilities are based on both the implied and historical volatility of the Company’s stock. The Company uses historical data to project SAR exercises and pre-exercise forfeitures within the valuation model. The expected term of awards represents the period of time that SARs granted are expected to be outstanding. The interest rate assumed for the expected life of the award is based on the U.S. Treasury yield curve in effect at the time of the grant. The weighted average fair value for the SARs issued during 2023 and 2022 were $55.52 and $62.60, respectively, and were estimated using the weighted average assumptions shown in the table below:
| 2023 |  | 2022
Expected Life in Years | 6.2 | - | 7.0 |  | 7.0
Volatility | 36.6% |  | 35.6%
Interest Rate | 3.7% |  | 3.2%
Yield Rate | 1.2% |  | 0.6%
There was approximately $337 thousand and $259 thousand of compensation expense relating to SARs vesting on or before September 30, 2023 and 2022, respectively, included in personnel expenses in the unaudited Consolidated Statements of Operations. As of September 30, 2023, there was $494 thousand of unrecognized compensation expense related to unvested share-based compensation arrangements granted under the Company’s stock award plans.

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