SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2019

11. SHAREHOLDERS' EQUITY

Common Stock Repurchases

The Company may repurchase shares in open market transactions in accordance with Rule 10b-18 or under Rule 10b5-1 of the Exchange Act from time to time in its discretion, based on ongoing assessments of the Company’s capital needs, the market price of its common stock and general market conditions. The amount and timing of all repurchase transactions are contingent upon market conditions, applicable legal requirements and other factors.

In December 2018, the Company’s Board of Directors authorized an additional share repurchase program under which the Company may repurchase up to $10.0 million of its outstanding shares of common stock through December 31, 2019. As of September 30, 2019, the remaining availability for future repurchases of our common stock under this program was $10.0 million.

Securities Offerings

In June 2018, the Company filed with the Securities and Exchange Commission (“SEC”) on Form S-3, a shelf registration statement enabling the Company to offer and sell, from time to time, up to an aggregate of $150.0 million of securities. No securities have been offered or sold under this registration statement.

Stock Compensation Plan

In June 2018, the Company filed with the SEC on Form S-8, a registration statement registering 800,000 shares of common stock reserved for issuance under the Company’s 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”). The 2018 Plan, which was approved by the Company’s shareholders at the 2018 annual meeting, is an equity compensation plan that may be used for our employees, non-employee directors, consultants and advisors.

Share-Based Compensation Expense

Share-based compensation arrangements include the following:

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	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2019		2018		2019		2018
	(In thousands)
Restricted stock	$	467	$	512	$	1,463	$	1,660
Performance stock	135		(28)		497		187
Total share-based compensation expense	$	602	$	484	$	1,960	$	1,847

Recognized tax benefit	$	137	$	123	$	481	$	468
Intrinsic value of options exercised	2		151		2		229
Fair value of restricted stock vested	$	482	$	622	$	1,715	$	2,098

The intrinsic value of options exercised represents the difference between the stock option exercise price and the weighted average closing stock price of FNHC common stock on the exercise dates, as reported on the NASDAQ Global Market.

Stock Option Awards

A summary of the Company’s stock option activity includes the following:

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	Number of Shares	Weighted Average Option Exercise Price
Outstanding at January 1, 2019	39,017	$	3.80
Granted	—	—
Exercised	(167)	2.45
Cancelled	—	—
Outstanding at September 30, 2019	38,850	$	3.80

Restricted Stock Awards

The Company recognizes share-based compensation expense for all restricted stock awards (“RSAs”) held by the Company’s directors, executives and other key employees. For all RSA awards, excluding relative total shareholder return ("TSR"), the accounting charge is measured at the grant date as the fair value of FNHC common stock and expensed as non-cash compensation over the vesting term using the straight-line basis for service awards and over successive one-year requisite service periods for performance-based awards. Our expense for our performance awards depends on achievement of specified results; therefore, the ultimate expense can range from 0% to 250% of target. Our TSR cliff vesting awards contain performance criteria which are tied to the achievement of certain market conditions. The TSR grant date fair value was determined using a Monte Carlo simulation and, unlike the performance condition awards, the expense is not reversed if the performance condition is not met. This value is recognized as expense over the requisite service period using the straight-line recognition method.

During the nine months ended September 30, 2019 and 2018, the Board of Directors granted 140,156 and 133,060 RSAs, respectively, vesting over three or five years, to the Company’s directors, executives and other key employees.

RSA activity includes the following:


	Number of Shares	Weighted Average Grant Date Fair Value
Outstanding at January 1, 2019	262,334	$	18.78
Granted	140,156	18.03
Vested	(84,755)	20.24
Cancelled	(12,960)	18.15
Outstanding at September 30, 2019	304,775	$	18.06

The weighted average grant date fair value is measured using the closing price of FNHC common stock on the grant date, as reported on the NASDAQ Global Market.

Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) associated with debt securities - available-for-sale consisted of the following:

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	Three Months Ended September 30,
	2019										2018
	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
	(In thousands)
Accumulated other comprehensive income (loss), beginning-of-period	$	12,404	$	(3,144)	$	9,260	$	(7,166)	$	1,816	$	(5,350)

Other comprehensive income (loss) before reclassification	3,921		(854)		3,067		(575)		145		(430)
Reclassification adjustment for realized losses (gains) included in net income	(893)		214		(679)		(162)		41		(121)
	3,028		(640)		2,388		(737)		186		(551)
Accumulated other comprehensive income (loss), end-of-period	$	15,432	$	(3,784)	$	11,648	$	(7,903)	$	2,002	$	(5,901)

Stockholders Equity Note Disclosure1


	Nine Months Ended September 30,
	2019										2018
	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
	(In thousands)
Accumulated other comprehensive income (loss), beginning-of-period	$	(5,023)	$	1,273	$	(3,750)	$	2,287	$	(593)	$	1,694
Cumulative effect of new accounting standards	—		—		—		(1,349)		355		(994)

Other comprehensive income (loss) before reclassification	21,979		(5,431)		16,548		(10,573)		2,679		(7,894)
Reclassification adjustment for realized losses (gains) included in net income	(1,524)		374		(1,150)		1,732		(439)		1,293
	20,455		(5,057)		15,398		(8,841)		2,240		(6,601)
Accumulated other comprehensive income (loss), end-of-period	$	15,432	$	(3,784)	$	11,648	$	(7,903)	$	2,002	$	(5,901)