The Company has incentive and nonqualified option plans, which allow for the grant of options to officers, employees and members of the Board of Directors. Grants under the Company’s incentive and nonqualified option plans generally vest over 3 years and must be exercised within 10 years of the date of grant. Transactions under the Company’s stock option plans for the three months ended March 31, 2022 are summarized in the following table:

On April 25, 2019, the Company adopted the 2019 Equity Compensation Plan providing for grants of up to 500,000 shares to be allocated between incentive and non-qualified stock options, restricted stock awards, performance units and deferred stock. The Plan replaced all previously approved and established equity plans then currently in effect. As of March 31, 2022, 281,500 options and 181,700 shares of restricted stock have been awarded from the plan. In addition, 11,164 unvested options and 9,150 unvested shares of restricted stock were cancelled and returned to the plan leaving 57,114 shares available for future grants.

The fair values of the options granted during the three months ended March 31, 2021 were estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions. There were no options granted during the three months ended March 31, 2022:

Upon exercise, the Company issues shares from its authorized but unissued common stock to satisfy the options. The following table presents information about options exercised during the three months ended March 31, 2022 and 2021:


	For the three months ended March 31,
	2022		2021
Number of options exercised		47,374		12,467
Total intrinsic value of options exercised	$	746,292	$	170,023
Cash received from options exercised	$	639,214	$	80,113
Tax deduction realized from options	$	224,522	$	51,151

The following table summarizes information about stock options outstanding and exercisable at March 31, 2022:


	Options outstanding					Options exercisable
			Weighted average	Weighted			Weighted
		Options	remaining contractual	average		Options	average
Range of exercise prices		outstanding	life (in years)	exercise price		exercisable	exercise price
$6.01 - $12.00		108,261	3.3	$	9.06	108,261	$	9.06
$12.01 - $18.00		123,933	7.0		16.48	85,607		16.17
$18.01 - $24.00		399,801	7.3		20.62	308,311		20.60
Total		631,995	6.5	$	17.83	502,179	$	17.36

Financial Accounting Standards Board Accounting Standards Codification ("FASB ASC") Topic 718, “Compensation - Stock Compensation,” requires an entity to recognize the fair value of equity awards as compensation expense over the period during which an employee is required to provide service in exchange for such an award (vesting period). Compensation expense related to stock options and the related income tax benefit for the three months ended March 31, 2022 and 2021 are detailed in the following table:


	For the three months ended March 31,
	2022		2021
Compensation expense	$	163,327	$	207,602
Income tax benefit	$	47,201	$	59,997

As of March 31, 2022, unrecognized compensation costs related to nonvested share-based compensation arrangements granted under the Company’s stock option plans totaled approximately $811 thousand. That cost is expected to be recognized over a weighted average period of 1.6 years.

Restricted Stock Awards

Restricted stock is issued under the 2019 Equity Compensation Plan to reward employees and directors and to retain them by distributing stock over a period of time. Restricted stock awards granted to date vest over a period of 4 years and are recognized as compensation to the recipient over the vesting period. The awards are recorded at fair market value at the time of grant and amortized into salary expense on a straight line basis over the vesting period. The following table summarizes nonvested restricted stock activity for the three months ended March 31, 2022:


		Average grant
	Shares	date fair value
Nonvested restricted stock at December 31, 2021	119,487	$	21.00
Granted	70,000		27.52
Cancelled	(8,025)		22.89
Vested	(26,092)		19.72
Nonvested restricted stock at March 31, 2022	155,370	$	24.06

Restricted stock awards granted during the three months ended March 31, 2022 and 2021 were as follows:


	For the three months ended March 31,
	2022		2021
Number of shares granted		70,000		30,000
Average grant date fair value	$	27.52	$	19.46

Compensation expense related to restricted stock for the three months ended March 31, 2022 and 2021 is detailed in the following table:


	For the three months ended March 31,
	2022		2021
Compensation expense	$	231,003	$	166,349
Income tax benefit	$	66,760	$	48,075

As of March 31, 2022, there was approximately $2.3 million of unrecognized compensation cost related to nonvested restricted stock awards granted under the Company’s stock incentive plans. That cost is expected to be recognized over a weighted average period of 3.0 years.

401(k) Savings Plan

The Bank has a 401(k) savings plan covering substantially all employees. Under the Plan, an employee can contribute up to 75 percent of their salary on a tax deferred basis. The Bank may also make discretionary contributions to the Plan. The

Bank contributed $203 thousand and $261 thousand to the Plan during the three months ended March 31, 2022 and 2021.

Deferred Compensation Plan

The Company has a deferred fee plan for Directors and eligible management. Directors of the Company have the option

to elect to defer up to 100 percent of their respective retainer and Board of Director fees, and each eligible member of

management has the option to elect to defer up to 100 percent of their total compensation. Director and executive deferred compensation totaled $535 thousand and $128 thousand during the three months ended March 31, 2022 and 2021. The interest paid on the deferred balances totaled $36 thousand and $28 thousand during the three months ended March 31, 2022 and 2021. The deferred balances distributed totaled $2 thousand during the three months ended March 31, 2022 and $3 thousand during 2021.

Benefit Plans

In addition to the 401(k) savings plan which covers substantially all employees, in 2015 the Company established an unfunded supplemental defined benefit plan to provide additional retirement benefits for the President and Chief Executive Officer (“CEO”) and unfunded, non-qualified deferred retirement plans for certain other key executives.

On June 4, 2015, the Company approved the Supplemental Executive Retirement Plan (“SERP”) pursuant to which the President and CEO is entitled to receive certain supplemental nonqualified retirement benefits. The retirement benefit under the SERP is an amount equal to sixty percent (60%) of the average of the President and CEO’s base salary for the thirty-six (36) months immediately preceding the executive’s separation from service after age 66, adjusted annually thereafter by a percentage equal to the Consumer Price Index as reported by the U.S. Bureau of Labor Statistics for All Urban Consumers (CPI-U). The total benefit is to be made payable in fifteen annual installments. The future

payments are estimated to total $7.2 million. A discount rate of four percent (4%) was used to calculate the present value

of the benefit obligation.

The President and CEO commenced vesting in this retirement benefit on January 1, 2014, and vests an additional three percent (3%) each year until fully vested on January 1, 2024. In the event that the President and CEO’s separation from service from the Company were to occur prior to full vesting, the President and CEO would be entitled to and shall be paid the vested portion of the retirement benefit calculated as of the date of separation from service. Notwithstanding the foregoing, upon a Change in Control, and provided that within 6 months following the Change in Control the President and CEO is involuntarily terminated for reasons other than “cause” or the President and CEO resigns for “good reason,” as such is defined in the SERP, or the President and CEO voluntarily terminates his employment after being offered continued employment in a position that is not a “Comparable Position,” as such is also defined in the SERP, the President and CEO shall become one hundred percent (100%) vested in the full retirement benefit.

No contributions or payments have been made during the three months ended March 31, 2022. The following table summarizes the components of the net periodic pension cost of the defined benefit plan recognized during the three months ended March 31, 2022 and 2021:


	For the three months ended March 31,
(In thousands)	2022		2021
Service cost (1)	$	37	$	(34)
Interest cost		47		34
Amortization of prior service cost (2)		—		21
Net periodic benefit cost	$	84	$	21

(1)	Reduction in service in 2021 cost totaling $137 thousand to be recognized over one year due to the recalculation of the President and CEO’s salary projection.

The following table summarizes the changes in benefit obligations of the defined benefit plan during the three months ended March 31, 2022 and 2021:


	For the three months ended March 31,
(In thousands)	2022		2021
Benefit obligation, beginning of year	$	4,521	$	3,845
Service cost (1)		37		(34)
Interest cost		47		34
Benefit obligation, end of period	$	4,605	$	3,845

(1)	Reduction in service cost totaling $137 thousand to be recognized over one year due to the recalculation of the President and CEO’s salary projection.

On October 22, 2015, the Company entered into an Executive Incentive Retirement Plan (the “Plan”) with certain key executive officers other than the President and CEO. The Plan has an effective date of January 1, 2015.

The Plan is an unfunded, nonqualified deferred compensation plan. For any Plan Year, a guaranteed annual Deferral Award percentage of seven and one half percent (7.5%) of the participant’s annual base salary will be credited to each Participant’s Deferred Benefit Account. A discretionary annual Deferral Award equal to seven and one half percent (7.5%) of the participant’s annual base salary may be credited to the Participant’s account in addition to the guaranteed Deferral Award, if the Bank exceeds the benchmarks set forth in the Annual Executive Bonus Matrix. The total Deferral Award shall never exceed fifteen percent (15%) of the participant’s base salary for any given Plan Year. Each Participant shall be one hundred percent (100%) vested in all Deferral Awards as of the date they are awarded.

As of March 31, 2022, the Company had total year to date expenses of $28 thousand related to the Plan. The Plan is reflected on the Company’s balance sheet as accrued expenses.

Certain members of management are also enrolled in a split-dollar life insurance plan with a post retirement death benefit of $250 thousand. Total expenses related to this plan were $6 thousand and $1 thousand for the three months ended March 31, 2022 and 2021. Additionally, $55 thousand of prior period expense was reversed during the three months ended March 31, 2022. This was related to adjustments made to the members of management participating in the plan.