Stock-Based Compensation

For the

three

months ended

September 30, 2018

and

2017,

the Company’s net income, as reported, includes

$1.1

million and

$1.1

million, respectively, of stock-based compensation costs and

$0.2

million and

$0.4

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

nine

months ended

September 30, 2018

and

2017,

the Company’s net income, as reported, includes

$5.7

million and

$5.2

million, respectively, of stock-based compensation costs and

$1.2

million and

$1.7

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

grant any restricted stock units during the

three

months ended

September 30, 2018

and

2017.

During the

nine

months ended

September 30, 2018

and

2017,

the Company granted

280,590

and

276,900

restricted stock units, respectively. The Company has

not

granted stock options since

2009.

September 30, 2018,

the Company had

600

stock options, all

100%

vested, outstanding, at an average exercise price of

$8.44

per share.

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

nine

months ended

September 30, 2018:

	Shares			Weighted-Average Grant-Date Fair Value

Non-vested at December 31, 2017		497,322		$	22.46
Granted		280,590			28.19
Vested		(248,319	)		23.68
Forfeited		(11,955	)		25.31
Non-vested at September 30, 2018		517,638		$	24.91

Vested but unissued at September 30, 2018		234,799		$	25.14

As of

September 30, 2018,

there was

$9.4

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

3.0

years. The total fair value of awards vested for the

three

months ended

September 30, 2018

and

2017

was

$0.2

million and

$14,000,

respectively. The total fair value of awards vested for each of the

nine

month periods ended

September 30, 2018

and

2017

was

$7.0

million. 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.

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, 2018:

Phantom Stock Plan	Shares			Fair Value

Outstanding at December 31, 2017		89,180		$	27.50
Granted		9,750			27.47
Forfeited		-			-
Distributions		(65	)		26.16
Outstanding at September 30, 2018		98,865		$	24.40
Vested at September 30, 2018		98,397		$	24.40

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

$0.1

million and

$0.2

million for the

three

months ended

September 30, 2018

and

2017,

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

$1,000

and

$0.2

million for the

three

months ended

September 30, 2018

and

2017,

respectively.

For the

nine

months ended

September 30, 2018

and

2017,

the company recorded stock-based compensation benefit for the Phantom Stock Plan of

$0.2

million and

$0.1

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

$2,000

and

$0.2

million for the

nine

months ended

September 30, 2018

and

2017,

respectively.