SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 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 2017, the Company’s Board of Directors authorized an additional share repurchase program under which the Company may repurchase up to $10.0 million (plus $0.8 million remaining from previous authorization which was fully expended as of March 31, 2018) of its outstanding shares of common stock through December 31, 2018. The unused portion of this authorization expired on December 31, 2018.

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. During the year ended December 31, 2019, the Company repurchased 237,647 shares of its common stock at a total cost of $3.9 million, which is an average price per share of $16.27. The unused portion of this authorization expired on December 31, 2019.

In December 2019, the Company's Board of Directors authorized a new share repurchase program under which the Company may repurchase up to $10 million of its outstanding shares of common stock from January 1, 2020 through December 31, 2020. As of December 31, 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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	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Restricted stock	$	1,841	$	2,134	$	2,639
Performance stock	335		233		207
Total share-based compensation expense	$	2,176	$	2,367	$	2,846

Recognized tax benefit	$	534	$	600	$	1,098
Intrinsic value of options exercised	$	2	$	229	$	371
Fair value of restricted stock vested	$	1,977	$	2,360	$	2,328

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.

The unamortized share-based compensation expense is $2.8 million as of December 31, 2019, which will be recognized over the remaining weighted average vesting period of approximately 1.68 years.

Stock Option Awards

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


		Weighted
		Average
	Number of	Option
	Shares	Exercise Price
Outstanding at January 1, 2017	79,484	$	3.70
Granted	—	—
Exercised	(29,133)	3.68
Cancelled	—	—
Outstanding at December 31, 2017	50,351	3.72
Granted	—	—
Exercised	(10,834)	3.47
Cancelled	(500)	2.45
Outstanding at December 31, 2018	39,017	3.80
Granted	—	—
Exercised	(167)	2.45
Cancelled	—	—
Outstanding at December 31, 2019	38,850	$	3.80

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Stock options outstanding and exercisable in a select price range is as follows:

Options Outstanding and Exercisable

Weighted Average

Remaining

Shares Outstanding

Contractual Life

Weighted Average

Aggregate

Range of Exercise Price

and Exercisable

(years)

Exercise Price

Intrinsic Value

$2.45 - $4.40

38,850

1.89

$3.80

495,541

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 grants based on total relative 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-based 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 years ended December 31, 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:

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		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Outstanding at January 1, 2017	337,203	$	19.69
Granted	106,454	17.95
Vested	(140,514)	16.57
Cancelled	(5,600)	19.80
Outstanding at December 31, 2017	297,543	20.54
Granted	133,060	16.31
Vested	(112,071)	21.06
Cancelled	(56,198)	17.87
Outstanding at December 31, 2018	262,334	18.78
Granted	140,156	18.03
Vested	(94,755)	20.87
Cancelled	(52,390)	17.66
Outstanding at December 31, 2019	255,345	$	17.82

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:


	Year Ended December 31,
	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	20,809		(5,144)		15,665		(8,747)		2,217		(6,530)
Reclassification adjustment for realized losses (gains) included in net income	(2,165)		531		(1,634)		2,786		(706)		2,080
	18,644		(4,613)		14,031		(5,961)		1,511		(4,450)
Accumulated other comprehensive income (loss), end-of-period	$	13,621	$	(3,340)	$	10,281	$	(5,023)	$	1,273	$	(3,750)