The Company accounts for stock-based compensation under the fair value recognition provisions of ASC Topic 718 - Compensation - Stock Compensation. The Company recognizes stock-based compensation cost over the award’s requisite service period on a straight-line basis for time-based restricted stock grants and performance-based restricted stock grants. The Company records forfeitures as they occur for all stock-based compensation.

The Company had approximately $4,819,000 of unrecognized stock compensation expense at September 30, 2025 related to non-vested stock-based compensation granted, which it expects to recognize over a weighted-average period of approximately 1.9 years. The Company had approximately $304,000 of unrecognized director stock-based compensation expense at September 30, 2025 related to non-vested director stock-based compensation granted, which it expects to recognize over a weighted-average period of approximately 0.6 years.

Restricted stock, restricted stock units and performance stock units

Stock-based compensation cost for restricted stock awards, restricted stock units and performance stock units is measured based on the closing fair market value of the Company's common stock on the date of grant, which vest in equal installments over the requisite service period of typically three years. Restricted stock awards granted to non-employee directors vest over a one-year period. Each restricted stock unit and performance stock unit represents the Company's obligation to deliver to the holder one share of common stock upon vesting.

Performance stock units vest based on the Company's return on average equity compared to a defined group of peer companies. On the grant date, the Company issues the target number of performance stock units. They are subject to forfeitures if performance goals are not met. The actual number of performance stock units earned can vary from zero to 150 percent of the target for the awards.

The Company granted 19,435 and 96,967 shares of restricted common stock during the three months ended September 30, 2025 and 2024, respectively, which had a weighted-average grant date fair value of $10.76 and $7.88, respectively. The Company granted 466,672 and 598,713 shares of restricted common stock during the nine months ended September 30, 2025 and 2024, respectively, which had a weighted-average grant date fair value of $11.48 and $7.41, respectively.

Stock options

Stock option fair value was estimated on the grant date using the Black-Scholes-Merton formula. Stock options vest in equal installments over the requisite service period of typically three years. The following weighted-average assumptions were used to value the stock options granted:

The expected annual dividend yield for options granted during 2025 and 2024 is based on no dividends being paid in future quarters. The expected volatility is a historical volatility calculated based on the daily closing prices over a period equal to the expected term. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date. Expected term takes into account the three-year graded vesting term and the 10-year contractual term of the option.

The Company granted 76,141 and 196,275 stock options for the nine months ended September 30, 2025 and 2024, respectively, which had a weighted average grant date fair value of $11.63 and $4.82 per share, respectively.