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Stock Compensation Plan
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock Compensation Plan

(18) 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 years. The stock-based compensation cost related to these awards was $323,000, $304,000 and $286,000 for the years ended December 31, 2021, 2020 and 2019, respectively. The Company recognized tax benefits of $113,000, $105,000, and $71,000 for the years ended December 31, 2021, 2020 and 2019, 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.

 

On May 20, 2015, our stockholders approved the 2015 Stock Incentive Plan which authorized the issuance of equity awards covering 351,775 shares of common stock, as adjusted for subsequent stock dividends. On August 1, 2019, the Compensation Committee awarded 3,954, shares of restricted common stock, as adjusted for subsequent stock dividends, and options to acquire 74,557 shares of common stock, as adjusted for subsequent stock dividends. The restricted stock awards vest ratably over one year and the value was based on a stock price of $20.25 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, 2020, the Compensation Committee awarded 19,128 shares of restricted common stock, as adjusted for subsequent stock dividends. The value of the 19,128 shares was based on a stock price of $18.69 on the date such shares were granted, as adjusted for subsequent stock dividends. On August 1, 2021, the Compensation Committee awarded 3,024 shares of restricted common stock, as adjusted for subsequent stock dividends and options to acquire 51,091 shares of common stock, as adjusted for subsequent stock dividends. The restricted stock awards vest ratably over one year and the value was based on a stock price of $26.43 per share on the date such shares were granted, as adjusted for subsequent stock dividends. The options vest ratably over four years. The fair value of the options granted were determined using the following weighted-average assumptions as of the grant date:

 

   2021   2020   2019 
   Years ended December 31, 
   2021   2020   2019 
Risk-free interest rate   1.00%   n/a    1.77%
Expected term   7 year    n/a    7 year 
Expected stock price volatility   28.51%   n/a    26.06%
Dividend yield   2.88%   n/a    3.41%

 

A summary of option activity during 2021 is presented below:

 

(Dollars in thousands, except per share amounts)            
   Weighted   Weighted     
       average   average     
       exercise   remaining   Aggregate 
       price   contractual   intrinsic 
   Shares   per share   term   value 
Outstanding at January 1, 2021   102,630   $21.26     7.3 years    $202 
Granted   48,658   $27.75           
Effect of 5% stock dividend   7,059                
Forfeited/expired   (3,964)  $15.62           
Exercised   (6,172)  $10.78           
Outstanding at December 31, 2021   148,211   $22.97     7.8 years    $848 
Exercisable at December 31, 2021   54,371   $21.85     6.4 years    $372 
Fully vested options at December 31, 2021   54,371   $21.85     6.4 years    $372 

 

 

Additional information about stock options exercised is presented below:

 

   2021   2020   2019 
(Dollars in thousands)  Years ended December 31, 
   2021   2020   2019 
Intrinsic value of options exercised (on exercise date)  $141   $430   $42 
Cash received from options exercised   22    42    36 
Excess tax benefit realized from options exercised  $21   $32   $- 

 

As of December 31, 2021, there was $342,000 of total unrecognized compensation cost related to the 93,840 outstanding unvested options that will be recognized over the following periods:

 

Year  Amount 
(Dollars in thousands)
 
Year  Amount 
2022  $129 
2023   104 
2024   69 
2025   40 
Total  $342 

 

 

The fair value of restricted stock on the vesting date was $229,000, $202,000 and $150,000 during the years ended December 31, 2021, 2020 and 2019 respectively. A summary of nonvested restricted common stock activity during 2021 is presented below:

 

   Shares   Weighted average grant date price per share 
Nonvested restricted common stock at January 1, 2021   22,125   $20.83 
Granted   2,880   $27.75 
Vested   (8,453)  $27.07 
Forfeited   -   $- 
Effect of 5% stock dividend   827      
Nonvested restricted common stock at December 31, 2021   17,379   $21.05 

 

As of December 31, 2021, there was $237,000 of total unrecognized compensation cost related to the 17,379 outstanding nonvested restricted shares that will be recognized over the following periods:

 

Year  Amount 
(Dollars in thousands)
 
Year  Amount 
2022  $136 
2023   64 
2024   37 
Total  $237