Stock-Based Compensation

For the

three

months ended

September 30, 2017

and

2016,

the Company’s net income, as reported, includes

$1.1

million of stock-based compensation costs and

$0.4

of income tax benefits related to the stock-based compensation plans in each of the periods. For the

nine

months ended

September 30, 2017

and

2016,

the Company’s net income, as reported, includes

$5.2

million and

$4.7

million, respectively, of stock-based compensation costs and

$1.7

million and

$1.8

million, respectively, of income tax benefits related to the stock-based compensation plans. The Company did

not

issue any restricted stock units during the

three

months ended

September 30, 2017

and

2016.

During the

nine

months ended

September 30, 2017

and

2016,

the Company granted

276,900

and

337,175

restricted stock units, respectively. The Company has

not

granted stock options since

2009.

September 30, 2017,

the Company had

1,200

stock options, all

100%

vested, outstanding.

The Company uses the fair value of the common stock on the date of award to measure compensation cost for restricted stock unit awards. Compensation cost is recognized over the vesting period of the award using the straight-line method.

The

2014

Omnibus Incentive Plan (

“2014

Omnibus Plan”) became effective on

May 20, 2014

after adoption by the Board of Directors and approval by the stockholders. The

2014

Omnibus Plan authorizes the Compensation Committee of the Company’s Board of Directors to grant a variety of equity compensation awards as well as long-term and annual cash incentive awards, all of which can, but need

not,

be structured so as to comply with Section

162

(m) of the Internal Revenue Code of

1986,

as amended. On

May 31, 2017,

stockholders approved an amendment to the

2014

Omnibus Plan (the “Amendment”) authorizing an additional

672,000

shares available for future issuance. In addition, to increasing the number of shares for future grants, the Amendment eliminates, in the case of stock options and SARs, the ability to recycle shares used to satisfy the exercise price or taxes for such awards.

other amendments to the

2014

Omnibus Plan were made. Including the additional shares authorized from the Amendment,

953,268

shares are available for future issuance under the

2014

Omnibus Plan at

September 30, 2017.

The following table summarizes the Company’s restricted stock unit (“RSU”) awards at or for the

nine

months ended

September 30, 2017:

	Shares			Weighted-Average Grant-Date Fair Value

Non-vested at December 31, 2016		488,779		$	18.99
Granted		276,900			28.21
Vested		(244,762	)		21.93
Forfeited		(22,860	)		23.61
Non-vested at September 30, 2017		498,057		$	22.46

Vested but unissued at September 30, 2017		244,077		$	22.67

As of

September 30, 2017,

there was

$8.7

million of total unrecognized compensation cost related to RSU awards granted. That cost is expected to be recognized over a weighted-average period of

3.1

years. The total fair value of awards vested for the

three

months ended

September 30, 2017

and

2016

was

$14,000

and

$4,000,

respectively. The total fair value of awards vested for the

nine

months ended

September 30, 2017

and

2016

was

$7.0

million and

$4.8

million, respectively. The vested but unissued RSU awards consist of awards made to employees and directors who are eligible for retirement. According to the terms of these awards, which provide for vesting upon retirement, these employees and directors have

risk of forfeiture. These shares will be issued at the original contractual vesting and settlement dates.

Cash proceeds, fair value received, tax benefits, and intrinsic value related to stock options exercised, and the weighted average grant date fair value for options granted, during the

three

and

nine

months ended

September 30, 2017

and

2016

are provided in the following table:

	For the three months ended September 30,					For the nine months ended September 30,
(In thousands)	2017		2016			2017		2016
Proceeds from stock options exercised	$	-	$	5		$	-	$	132
Fair value of shares received upon exercise of stock options		-		262			37		612
Tax benefit (expense) related to stock options exercised		-		(10	)		39		(12	)
Intrinsic value of stock options exercised		-		44			96		156

Phantom Stock Plan:

The Company maintains a non-qualified phantom stock plan as a supplement to its profit sharing plan for officers who have achieved the designated level and completed

one

year of service. The Company adjusts its liability under this plan to the fair value of the shares at the end of each period.

The following table summarizes the Phantom Stock Plan at or for the

nine

months ended

September 30, 2017:

Phantom Stock Plan	Shares			Fair Value

Outstanding at December 31, 2016		89,339		$	29.39
Granted		7,889			27.42
Forfeited		(10	)		28.95
Distributions		(8,471	)		28.69
Outstanding at September 30, 2017		88,747		$	29.72
Vested at September 30, 2017		88,431		$	29.72

The Company recorded stock-based compensation expense for the Phantom Stock Plan of

$0.2

million and

$0.4

million for the

three

months ended

September 30, 2017

and

2016,

respectively. The total fair value of the distributions from the Phantom Stock Plan was

$0.2

million for the

three

months ended

September 30, 2017.

There were

distributions for the

three

months ended

September 30, 2016.

For the

nine

months ended

September 30, 2017

and

2016,

the Company recorded stock-based compensation expense for the Phantom Stock Plan of

$0.1

million and

$0.2

million, respectively. The total fair value of the distributions from the Phantom Stock Plan during the

nine

months ended

September 30, 2017

and

2016

was

$0.2

million and

$28,000,

respectively.