SHAREHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

SHAREHOLDERS' EQUITY

12. 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 2019, the Company’s Board of Directors authorized a share repurchase program under which the Company may repurchase up to $10.0 million of its outstanding shares of common stock from January 1, 2020 through December 31, 2020. In March 2020, the Company’s Board of Directors authorized an additional $10.0 million increase to the share repurchase program. This increased authorization will allow the Company to purchase up to $20 million of shares outstanding through December 31, 2020. During the nine months ended September 30, 2020, the Company repurchased 800,235 shares of its common stock at a total

cost of $10.0 million, which is an average price per share of $12.50. As of September 30, 2020, and as of the filing of this report, 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.

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,
	2020		2019		2020		2019
	(In thousands)
Restricted stock	$	344	$	467	$	1,066	$	1,463
Performance stock	42		135		128		497
Total share-based compensation expense	$	386	$	602	$	1,194	$	1,960
Recognized tax benefit	$	95	$	137	$	293	$	481
Intrinsic value of options exercised	106		2		110		2
Fair value of restricted stock vested	19		482		1,659		1,715

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, 2020	38,850	$	3.80
Granted	—	—
Exercised	(13,100)	3.24
Cancelled	—	—
Outstanding at September 30, 2020	25,750	$	3.99

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 nine months ended September 30, 2020 and 2019, the Board of Directors granted 210,272 and 140,156 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, 2020	255,345	$	17.82
Granted	210,272	11.82
Vested	(89,839)	18.46
Cancelled	—	—
Outstanding at September 30, 2020	375,778	$	14.32

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,
	2020						2019
	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
	(In thousands)
Accumulated other comprehensive income (loss), beginning-of-period	$	19,065	$	(4,675)	$	14,390	$	12,404	$	(3,144)	$	9,260
Other comprehensive income (loss) before reclassification	2,618		(642)		1,976		3,921		(854)		3,067
Reclassification adjustment for realized losses (gains) included in net income	(798)		195		(603)		(893)		214		(679)
	1,820		(447)		1,373		3,028		(640)		2,388
Accumulated other comprehensive income (loss), end-of-period	$	20,885	$	(5,122)	$	15,763	$	15,432	$	(3,784)	$	11,648

	Nine Months Ended September 30,
	2020						2019
	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
	(In thousands)
Accumulated other comprehensive income (loss), beginning-of-period	$	13,621	$	(3,340)	$	10,281	$	(5,023)	$	1,273	$	(3,750)
Other comprehensive income (loss) due to debt securities - held to maturity reclassified to available-for-sale	(58)		14		(44)		—		—		—
Other comprehensive income (loss) before reclassification	16,422		(4,027)		12,395		21,979		(5,431)		16,548
Reclassification adjustment for realized losses (gains) included in net income	(9,100)		2,231		(6,869)		(1,524)		374		(1,150)
	7,264		(1,782)		5,482		20,455		(5,057)		15,398
Accumulated other comprehensive income (loss), end-of-period	$	20,885	$	(5,122)	$	15,763	$	15,432	$	(3,784)	$	11,648