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Stock Compensation Plan
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock Compensation Plan

(19) 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 $352,000, $295,000 and $323,000 for the years ended December 31, 2023, 2022 and 2021, respectively. The Company recognized tax benefits of $84,000, $77,000, and $113,000 for the years ended December 31, 2023, 2022 and 2021, 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 387,832 shares of common stock, as adjusted for subsequent stock dividends. On August 1, 2021, the Compensation Committee awarded 3,334 shares of restricted common stock, as adjusted for subsequent stock dividends and options to acquire 56,328 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 $23.97 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, 2022, the Compensation Committee awarded 19,350 shares of restricted common stock, as adjusted for subsequent stock dividends. The restricted stock awards vest ratably over one or four years and the value was based on a stock price of $23.12 per share on the date such shares were granted, as adjusted for subsequent stock dividends. On August 1, 2023, the Compensation Committee awarded 5,452 shares of restricted common stock, as adjusted for subsequent stock dividends and options to acquire 85,167 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 $20.16 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:

 

 

   2023   2022   2021 
   Years ended December 31, 
   2023   2022   2021 
Risk-free interest rate   4.15%   n/a    1.00%
Expected term   7 years    n/a    7 years 
Expected stock price volatility   26.31%   n/a    28.51%
Dividend yield   3.97%   n/a    2.88%

 

A summary of option activity during 2023 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, 2023   144,572   $21.87     6.8 years    $502 
Granted   81,111   $20.16           
Effect of 5% stock dividend   10,888                
Forfeited/expired   (5,470)  $22.90           
Exercised   (2,693)  $19.29           
Outstanding at December 31, 2023   228,408   $20.58     7.2 years    $88 
Exercisable at December 31, 2023   114,561   $20.05     5.4 years    $88 
Fully vested options at December 31, 2023   114,561   $20.05     5.4 years    $88 

 

 

Additional information about stock options exercised is presented below:

 

   2023   2022   2021 
(Dollars in thousands)  Years ended December 31, 
   2023   2022   2021 
Intrinsic value of options exercised (on exercise date)  $4   $3   $141 
Cash received from options exercised   52    -    22 
Excess tax benefit realized from options exercised  $1   $-   $21 

 

As of December 31, 2023, there was $418,000 of total unrecognized compensation cost related to the 113,847 outstanding unvested options that will be recognized over the following periods:

 

     
(Dollars in thousands)    
Year  Amount 
2024   150 
2025   125 
2026   90 
2027   53 
Total  $418 

 

The fair value of restricted stock on the vesting date was $187,000, $223,000 and $229,000 during the years ended December 31, 2023, 2022 and 2021 respectively. A summary of nonvested restricted common stock activity during 2023 is presented below:

 

 

   Shares   Weighted average grant date price per share 
Nonvested restricted common stock at January 1, 2023   26,057   $23.50 
Granted   5,192   $21.17 
Vested   (8,975)  $22.40 
Forfeited   (350)  $17.80 
Effect of 5% stock dividend   1,077      
Nonvested restricted common stock at December 31, 2023   23,001   $22.40 

 

As of December 31, 2023, there was $326,000 of total unrecognized compensation cost related to the 23,001 outstanding nonvested restricted shares that will be recognized over the following periods:

 

Schedule of Share-based Compensation Arrangements by Share-based Payment Award 

(Dollars in thousands)    
Year  Amount 
2024   181 
2025   92 
2026   53 
Total  $326