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Stock Compensation Plan

12 Months Ended

Dec. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Compensation Plan

(17) Stock Compensation Plan

The Company has a stock-based employee compensation plan which allows for the issuance of stock options and restricted common stock, the purpose of which is to provide additional incentive to certain officers, directors, and key employees by facilitating their purchase of a stock interest in the Company. Compensation expense related to prior awards is recognized on a straight line basis over the vesting period, which is typically four or five years. The stock-based compensation cost related to these awards was $223,000, $172,000 and $59,000 for the years ended December 31, 2018, 2017 and 2016, respectively. The Company recognized tax benefits of $194,000, $180,000, and $330,000 for the years ended December 31, 2018, 2017 and 2016, respectively.

For stock options, the exercise price may not be less than 100% of the fair market value of the shares on the date of the grant, and no option shall be exercisable after the expiration of ten years from the grant date. In determining compensation cost, the Black-Scholes option-pricing model is used to estimate the fair value of options on date of grant. The Black-Scholes model is a closed-end model that uses the assumptions outlined below. Expected volatility is based on historical volatility of the Company’s stock. The Company uses historical exercise behavior and other qualitative factors to estimate the expected term of the options, which represents the period of time that the options granted are expected to be outstanding. The risk-free rate for the expected term is based on U.S. Treasury rates in effect at the time of grant.

At the annual meeting of stockholders on May 20, 2015, our stockholders approved the 2015 Stock Incentive Plan which authorized the issuance of equity awards covering 303,877 shares of common stock as adjusted for subsequent stock dividends. On August 1, 2016, the Company’s Compensation Committee awarded 14,355, as adjusted for subsequent stock dividends, shares of restricted common stock. These awards vest ratably over one or four years. The value of the 14,355, as adjusted for subsequent stock dividends, shares was based on a stock price of $22.24 per share on the date such shares were granted as adjusted for subsequent stock dividends. On August 1, 2017, the Compensation Committee awarded 3,016, as adjusted for subsequent stock dividends, shares of restricted common stock and options to acquire 35,757, as adjusted for subsequent stock dividends, shares of common stock. The restricted stock awards vest ratably over one year and the value was based on a stock price of $26.53 per share on the date such shares were granted as adjusted for subsequent stock dividends. The options vest ratably over four years. On August 1, 2018, the Compensation Committee awarded 11,319, as adjusted for subsequent stock dividends, shares of restricted common stock. The value of the 11,319, as adjusted for subsequent stock dividends, shares was based on a stock price of $27.63 on the date such shares were granted as adjusted for subsequent stock dividends. The fair value of the options granted were determined using the following weighted-average assumptions as of the grant date:

Years ended December 31,

2018

2017

2016

Risk-free interest rate

n/a

2.07

%

n/a

Expected term

n/a

7 years

n/a

Expected stock price volatility

n/a

33.30

%

n/a

Dividend yield

n/a

2.74

%

n/a

A summary of option activity during 2018 is presented below:

						Weighted				Weighted
						average				average
						exercise				remaining				Aggregate
(Dollars in thousands, except per share amounts)		Shares				price per share				contractual term				intrinsic value
Outstanding at January 1, 2018			173,448			$	16.09				2.8 years			$	2,237
Granted			-			$	-
Effect of 5% stock dividend			3,431			$
Forfeited/expired			(36,043	)		$	15.42
Exercised			(72,130	)		$	7.40
Outstanding at December 31, 2018			68,706			$	17.97				5.1 years			$	462
Exercisable at December 31, 2018			44,159			$	13.21				3.2 years			$	462
Fully vested options at December 31, 2018			44,159			$	13.21				3.2 years			$	462

Additional information about stock options exercised is presented below:

(Dollars in thousands)		Years ended December 31,
		2018				2017				2016
Intrinsic value of options exercised (on exercise date)		$	1,523			$	279			$	1,820
Cash received from options exercised			534				228				1,796
Excess tax benefit realized from options exercised		$	136			$	103			$	308

As of December 31, 2018, there was $160,000 of unrecognized compensation cost related to the 24,547 outstanding nonvested options.

(Dollars in thousands)
Year			Amount
2019			$	62
2020				62
2021				36
Total			$	160

A summary of nonvested restricted common stock activity during 2018 is presented below:

		Shares				Weighted average grant date price per share
Nonvested restricted common stock at January 1, 2018			9,834			$	24.67
Granted			10,780			$	27.63
Vested			(4,605	)		$	26.16
Effect of 5% stock dividend			791
Nonvested restricted common stock at December 31, 2018			16,800			$	25.87

As of December 31, 2018, there was $339,000 of total unrecognized compensation cost related to 16,800 outstanding unvested restricted shares that will be recognized over the following periods:

(Dollars in thousands)
Year			Amount
2019			$	155
2020				92
2021				58
2022				34
Total			$	339