Note 12 - Stock Based Compensation

The Bancorp’s 2015 Stock Option and Incentive Plan (the “Plan”), which was adopted by the Bancorp’s Board of Directors on February 27, 2015, and approved by the Bancorp’s shareholders on April 24, 2015, permits the grant of equity awards for up to 250,000 shares of common stock. Awards granted under the Plan may be in the form of incentive stock options, non-qualified stock options, restricted stock, unrestricted stock, performance shares, or performance units.

As required by the Stock Compensation Topic, companies are required to record compensation cost for stock options and awards provided to employees in return for employment service. For the three months ended September 30, 2023, stock based compensation expense of $98 thousand was recorded, compared to $203 thousand for the three months ended September 30, 2022. For the nine months ended September 30, 2023, stock based compensation expense of $646 thousand was recorded, compared to $536 thousand for the nine months ended September 30, 2022. It is anticipated that current outstanding unvested awards will result in additional compensation expense of approximately $843 thousand through 2026 with an weighted average life of 1.5 years.

Restricted stock awards are issued with an award price equal to the market price of the Bancorp’s common stock on the award date and vest between three and five years after the grant date. Forfeiture provisions exist for personnel that separate employment before the vesting period expires. A summary of restricted stock activity under the Bancorp’s Plan described above for the nine months ended September 30, 2023, follows: