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Employee benefit plans | 9 Months Ended
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Sep. 30, 2018
Employee benefit plans |
Employee benefit plans | 8. Employee benefit plans: The Company provides an Employee Stock Ownership Plan (“ESOP”) and a Retirement Profit Sharing Plan. The Company also maintains Supplemental Executive Retirement Plans (“SERPs”) and an Employees’ Pension Plan, which is currently frozen. For the three and nine months ended September 30, salaries and employee benefits expense includes approximately $330 and $1,073, respectively in 2018 and $311 and $982, respectively in 2017 relating to the employee benefit plans.
|  | Pension Benefits
Three Months Ended September 30, |  | 2018 |  | 2017
Components of net periodic pension cost: |  |  |  |  |  |
Interest cost |  | $ | 233 |  | $ | 217
Expected return on plan assets |  |  | (360) |  |  | (305)
Amortization of unrecognized net gain |  |  | 73 |  |  | 65
Net periodic other benefit cost |  | $ | (54) |  | $ | (23)
|  | Pension Benefits
Nine Months Ended September 30, |  | 2018 |  | 2017
Components of net periodic pension cost: |  |  |  |  |  |
Interest cost |  | $ | 389 |  | $ | 433
Expected return on plan assets |  |  | (600) |  |  | (610)
Amortization of unrecognized net gain |  |  | 122 |  |  | 130
Net periodic other benefit cost |  | $ | (89) |  | $ | (47)
The Company contributed $2,700 to the pension plan during the third quarter of 2018. This contribution lessens the unfunded portion of the pension plan and will reduce future premium costs associated with the plan. Currently, the Company pays a fixed premium cost of $18 annually with an additional $92 for the variable portion of the premium. This will be reduced to $0 with the current funding status of the pension. The 2008 long-term incentive plan (“2008 Plan”) allowed for eligible participants to be granted equity awards. The 2008 Plan was a legacy plan of Penseco Financial Services Corporation and no awards may be made under the 2008 Plan after January 15, 2018. Under the 2008 Plan the Compensation Committee of the Board of Directors had broad authority with respect to awards granted under the 2008 Plan, including, without limitation, the authority to:
| · |  | Designate the individuals eligible to receive awards under the 2008 Plan.
| · |  | Determine the size, type and date of grant for individual awards, provided that awards approved by the Committee are not effective unless and until ratified by the board of directors.
| · |  | Interpret the 2008 Plan and award agreements issued with respect to individual participants.
In May 2017, the Company’s stockholders approved the 2017 equity incentive plan (“2017 Plan”). The 2017 Plan allows for eligible participants to be granted equity awards. Under the 2017 Plan the Compensation Committee of the Board of Directors has the authority to, among other things:
| · |  | Select the persons to be granted awards under the 2017 Plan.
| · |  | Determine the type, size and term of awards.
| · |  | Determine whether such performance objectives and conditions have been met.
| · |  | Accelerate the vesting or excercisability of an award.
Persons eligible to receive awards under the 2017 Plan include directors, officers, employees, consultants and other service providers of the Company and its subsidiaries. As of September 30, 2018, there were 86,994 shares of the Company’s common stock available for grant as awards pursuant to the 2017 Plan. The 2008 Plan expired in January 2018 but will remain in effect in accordance with its terms to govern outstanding awards under that plan. If any outstanding awards under the 2017 Plan are forfeited by the holder or canceled by the Company, the underlying shares would be available for regrant to others. The 2017 Plan authorizes grants of stock options, stock appreciation rights, cash awards, performance awards, restricted stock and restricted stock units. In 2018, the Company awarded 2,548 shares of non-performance-based restricted stock, bringing the total of nonvested restricted stock awards to 2,890 shares, and 8,920 performance-based restricted stock units under the 2017 Plan. In 2017, the Company awarded 2,020 shares of non-performance-based restricted stock, bringing the total of nonvested restricted stock awards to 14,382 shares, and 7,071 performance-based restricted stock units under the 2008 Plan. Also in 2017, the Company awarded 342 shares of non-performance based restricted stock and 1,196 performance based restricted stock units under the 2017 Plan. The non-performance restricted stock grants made in 2017 and 2018 vest equally over three years from the grant date. Grants of restricted stock made in prior periods cliff vest after five years. The performance-based restricted stock units vest three years after the grant date and include conditions based on the Company’s three year cumulative diluted earnings per share and three-year average return on equity that determines the number of restricted stock units that may vest. The Company expenses the fair value of all-share based compensation over the requisite service period commencing at grant date. The fair value of restricted stock is expensed on a straight-line basis. The Company periodically assesses the probability of achievement of the performance criteria and adjusts the amount of compensation expense accordingly. Compensation is recognized over the vesting period and adjusted for the probability of achievement of the performance criteria. The Company classifies share-based compensation for employees within “salaries and employee benefits expense” on the Consolidated Statements of Income and Comprehensive Income. The Company recognized compensation expense of $31 and $93 for the three and nine months ended September 30, 2018 for awards granted under the 2008 Plan and $52 and $95 for awards granted under the 2017 Plan. The Company recognized compensation expense of $41 and $89 for the three and nine months ended September 30, 2017 for awards granted under the 2008 Plan and did not recognize any compensation expense for the three and nine months ended September 30, 2017 for awards granted under the 2017 Plan. As of September 30, 2018, the Company had $609 of unrecognized compensation expense associated with restricted stock awards. The remaining cost is expected to be recognized over a weighted average vesting period of 2 years.

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