SHAREHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2021

Equity [Abstract]

SHAREHOLDERS' EQUITY

13. SHAREHOLDERS’ EQUITY

Common Stock Repurchases

The Company has previously repurchased shares of its common stock in open market transactions complying with Rules 10b-18 and 10b5-1 under the Exchange Act. These repurchases were based on assessments of the Company’s capital needs at the time, the market prices of the Company’s common stock, and general market conditions. The amount and timing of such repurchases were subject to market conditions, applicable legal requirements and other factors. At the present time, the Company is prohibited from undertaking any share repurchases under the terms of its senior note indenture.

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. In March 2020, the Company’s Board of Directors authorized an additional $10.0 million increase to the share repurchase program. This increased authorization allowed the Company to purchase up to $20 million of shares outstanding through December 31, 2020.

During the year ended December 31, 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. The unused portion of this authorization expired on December 31, 2020.

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. On March 15, 2021, the Company closed on an underwritten public offering of 3,500,000 shares of its common stock at a price of $4.75 per share for gross proceeds of $16.6 million. The offering generated net proceeds to the Company of approximately $15.1 million, after deducting the underwriter's discount and offering expenses payable by the Company. In April 2021, the Company sold an additional 100,650 shares upon partial exercise of the underwriter's allotment option and received net proceeds of $0.4 million.

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:

	Year Ended December 31,
	2021		2020		2019
	(In thousands)
Restricted stock	$	1,079	$	1,409	$	1,841
Performance stock	85		171		335
Total share-based compensation expense	$	1,164	$	1,580	$	2,176
Recognized tax benefit	$	—	$	634	$	534
Intrinsic value of options exercised	2		110		2
Fair value of restricted stock vested	1,700		1,659		1,977

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 $2.5 million as of December 31, 2021, which will be recognized over the remaining weighted average vesting period of approximately 1.73 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, 2019	39,017	$	3.80
Granted	—	—
Exercised	(167)	2.45
Cancelled	—	—
Outstanding at December 31, 2019	38,850	3.80
Granted	—	—
Exercised	(13,433)	3.16
Cancelled	—	—
Outstanding at December 31, 2020	25,417	4.01
Granted	—	—
Exercised	(4,085)	2.45
Cancelled	(1,500)	3.10
Outstanding at December 31, 2021	19,832	$	4.40

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
$4.40	19,832	0.26	$4.40	—

Restricted Stock Awards

The Company recognizes share-based compensation expense for all 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, 2021 and 2020, the Board of Directors granted 171,576 and 210,272 RSAs, respectively, vesting over three or five years, to the Company’s directors, executives and other key employees. The RSA grants include performance-based RSAs, which reflect the number of shares that would vest based on achieving the "Target" level of performance (as opposed to "Threshold" or "Maximum" performance levels). The actual number of performance-based RSAs that will vest depend on the Company's achievement of specified performance criteria in the future.

RSA activity includes the following:

		Weighted
		Average
	Number of	Grant Date
	Shares	Fair Value
Outstanding at January 1, 2019	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
Granted	210,272	11.82
Vested	(89,889)	18.46
Cancelled	—	—
Outstanding at December 31, 2020	375,728	14.32
Granted	171,576	4.63
Vested	(124,287)	13.68
Cancelled	(79,334)	13.16
Outstanding at December 31, 2021	343,683	$	9.98

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,
	2021						2020
	Before Tax		Income Tax		Net		Before Tax		Income Tax		Net
	(In thousands)
Accumulated other comprehensive income (loss), beginning-of-period	$	15,086	$	(3,700)	$	11,386	$	13,621	$	(3,340)	$	10,281
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	(10,826)		—		(10,826)		19,114		(4,688)		14,426
Reclassification adjustment for realized losses (gains) included in net income	(1,589)		(5)		(1,594)		(17,591)		4,314		(13,277)
	(12,415)		(5)		(12,420)		1,523		(374)		1,149
Accumulated other comprehensive income (loss), end-of-period	$	2,671	$	(3,705)	$	(1,034)	$	15,086	$	(3,700)	$	11,386