Share-Based Compensation

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

The Company has four share-based compensation plans as described below. Share-based compensation cost recognized for those plans was $362,000 and $430,000 for the nine months ended September 30, 2020 and 2019, respectively. The recognized tax benefits for the share-based compensation expense, forfeitures of restricted stock, and exercise of stock options, resulted in the recognition of $78,000 and $25,000, respectively, for the nine months ended September 30, 2020 and 2019.

The Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan) was adopted in May 2005 and expired March 16, 2015. While outstanding arrangements to issue shares under this plan, including options, continue in force until their expiration, no new options will be granted under this plan.

The Central Valley Community Bancorp 2015 Omnibus Incentive Plan (2015 Plan) was adopted in May 2015. In October 2017, the Company assumed the Folsom Lake Bank 2007 Equity Incentive Plan (2007 Plan). The plans provide for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. Both plans allow for performance awards that may be in the form of cash or shares of the Company, including restricted stock.

Outstanding arrangements to issue shares under this plan including options, will continue in force until expiration according to their respective terms.

Effective June 2, 2017, the Company adopted an Employee Stock Purchase Plan (ESPP) whereby our employees may purchase Company common stock through payroll deductions of between one percent and 15 percent of pay in each pay period. Shares are purchased at the end of each of the three-month offering periods at a 10 percent discount from the lower of the closing market price on the Offering Date (first trading day of each offering period) or the Investment Date (last trading day of each offering period). The Company reserved 500,000 common shares to be set aside for the ESPP, and there were 461,392 shares available for future purchase under the plan as of September 30, 2020.

Stock Option Plan

The Company bases the fair value of the options granted on the date of grant using a Black-Scholes Merton option pricing model that uses assumptions based on expected option life and the level of estimated forfeitures, expected stock volatility, risk free interest rate, and dividend yield. The expected term and level of estimated forfeitures of the Company’s options are based on the Company’s own historical experience. Stock volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U. S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of grant. The compensation cost for options granted is based on the weighted average grant date fair value per share.

No options to purchase shares of the Company’s common stock were granted during the nine months ended September 30, 2020 and 2019.

A summary of the combined activity of the Company’s stock option compensation plans for the nine months ended September 30, 2020 follows (in thousands, except per share amounts):


	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (In thousands)
Options outstanding at January 1, 2020	121,120	$	8.73

Options exercised	(43,300)	$	6.38
Options forfeited	(550)	$	7.40
Options outstanding at September 30, 2020	77,270	$	10.05	1.77	$	182,699
Options vested or expected to vest at September 30, 2020	77,270	$	10.05	1.77	$	182,699
Options exercisable at September 30, 2020	77,270	$	10.05	1.77	$	182,699

Information related to the stock option plan is as follows (in thousands):


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2020		2019		2020		2019

Intrinsic value of options exercised	$	51	$	4	$	432	$	269
Cash received from options exercised	$	50	$	3	$	277	$	163
Excess tax benefit realized for option exercises	$	6	$	—	$	78	$	25

As of September 30, 2020, there was no remaining unrecognized compensation cost related to stock options granted under all plans.

Restricted and Performance Common Stock Awards

The 2015 Plan provides for the issuance of restricted common stock to directors and officers. In addition, performance awards may be granted in the form of cash or shares. Restricted common stock grants typically vest over a one to five-year period. Restricted common stock (all of which are shares of our common stock) is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant.

The following table summarizes restricted stock and performance award activity for the nine months ended September 30, 2020 as follows:


	Shares	Weighted Average Grant-Date Fair Value
Nonvested outstanding shares at January 1, 2020	45,160	$	17.38
Granted	21,397	$	16.42
Vested	(34,703)	$	18.23
Forfeited	(367)	$	18.42
Nonvested outstanding shares at September 30, 2020	31,487	$	15.78

During the nine months ended September 30, 2020, 21,397 shares of restricted or performance common stock awards were granted. The restricted and performance common stock awards had a weighted average grant date fair market value of $16.42 per share on the date of grant during the nine months ended September 30, 2020. Restricted common stock awards fully vest after year one, or vest ratably until fully vested in year three or year five depending on agreement terms. Performance common stock awards vest immediately.

As of September 30, 2020, there were 31,487 shares of restricted stock that are nonvested and expected to vest. As of September 30, 2020, there was $349,000 of total unrecognized compensation cost related to nonvested restricted common stock awards. Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted-average remaining period of 1.03 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $2,403,000 at September 30, 2020.