Note 13 - Stock-based Compensation

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Share-based Payment Arrangement [Text Block]

Note 13 – Stock-Based Compensation

The Company's 2018 Stock Incentive Plan (the "2018 Plan") was adopted by the Board of Directors of the Company on February 20, 2018 and approved by shareholders on May 15, 2018 at the Company's 2018 Annual Meeting of Shareholders. The 2018 Plan provides for the granting of restricted stock awards, incentive and non-statutory options, and other equity-based awards to employees and directors at the discretion of the Compensation Committee of the Board of Directors. The 2018 Plan authorizes the issuance of up to 675,000 shares of common stock. 

Stock Options

Accounting guidance requires that compensation cost relating to share-based payment transactions be recognized in the financial statements with measurement based upon the fair value of the equity or liability instruments issued.

A summary of stock option transactions for the year ended December 31, 2021 is as follows:

						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
	Option			Exercise		Contractual Term		Value
	Shares			Price		(In Years)		($000)
Outstanding at December 31, 2020		10,541		$	16.63
Granted		—			—
Exercised		(5,346	)		16.63
Forfeited		(332	)		16.63
Expired		—			—
Outstanding at December 31, 2021		4,863		$	16.63		2.97	$	102
Exercisable at December 31, 2021		4,863		$	16.63		2.97	$	102

The aggregate intrinsic value of stock options in the table above represents the total pre-tax intrinsic value (the amount by which the current fair value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on December 31, 2021. This amount changes based on changes in the fair value of the Company's common stock.

The total proceeds of the in-the-money options exercised during the years ended December 31, 2021, 2020, and 2019 were $89,000, $43,000, and $688,000, respectively. Total intrinsic value of options exercised during the years ended December 31, 2021, 2020, and 2019 was $96,000, $42,000, and $616,000, respectively.

In connection with the HomeTown acquisition, there was $147,000 in recognized stock compensation expense attributable to outstanding stock options in the year ended December 31, 2019. There was no recognized stock compensation expense attributable to outstanding stock options in 2021 or 2020. As of December 31, 2021, 2020, and 2019, there was no unrecognized compensation expense attributable to the outstanding stock options.

The following table summarizes information related to stock options outstanding on December 31, 2021:

Options Outstanding and Exercisable
			Weighted-Average
	Number of		Remaining
Range of	Outstanding		Contractual Life		Weighted-Average
Exercise Prices	Options		(In Years)		Exercise Price
$15.00 to $20.00		4,863		2.97	$	16.63

No stock options were granted in 2021, 2020 and 2019.

Restricted Stock

The Company from time-to-time grants shares of restricted stock to key employees and non-employee directors. These awards help align the interests of these employees and directors with the interests of the shareholders of the Company by providing economic value directly related to increases in the value of the Company's common stock. The value of the stock awarded is established as the fair market value of the stock at the time of the grant. The Company recognizes expense, equal to the total value of such awards, ratably over the vesting period of the stock grants. Restricted stock granted in 2021 cliff vests at the end of a 36-month period beginning on the date of grant. Nonvested restricted stock activity for the year ended December 31, 2021 is summarized in the following table:

				Weighted
				Average Grant
	Shares			Date Value Per Share
Nonvested at December 31, 2020		58,539		$	34.81
Granted		27,712			29.39
Vested		(24,797	)		36.04
Forfeited		(2,993	)		31.14
Nonvested at December 31, 2021		58,461			31.91

As of December 31, 2021, 2020, and 2019, there was $782,000, $797,000, and $751,000, respectively, in unrecognized compensation cost related to nonvested restricted stock granted under the 2018 Plan. This cost is expected to be recognized over the next 12 to 36 months. The share based compensation expense for nonvested restricted stock was $749,000, $672,000, and $915,000 during 2021, 2020, and 2019, respectively. The expense for 2019 included $257,000 of accelerated compensation expense as a result of the HomeTown merger.

The Company offers its outside directors alternatives with respect to director compensation. For 2021 and 2020, the regular quarterly board retainer could be received in the form of shares of immediately vested but restricted stock with a market value of $10,000. Monthly meeting fees could be received as $800 per meeting in cash or $1,000 in immediately vested but restricted stock. For 2019, the regular monthly board retainer could be received quarterly in the form of immediately vested but restricted stock with a market value of $7,500. Monthly meeting fees could be received as $725 in cash or $900 in immediately vested but restricted stock. Only outside directors receive board fees. The Company issued 20,474, 27,986 and 17,373 shares and recognized share based compensation expense of $683,000, $779,000, and $626,000 during 2021, 2020 and 2019, respectively.