Note 13 - Share-based Compensation

6 Months Ended

Jun. 30, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

(13) Share-Based Compensation

The Company maintains the Provident Bancorp, Inc. 2020 Equity Incentive Plan (the “2020 Equity Plan”) and the Provident Bancorp, Inc. 2016 Equity Incentive Plan (the “2016 Equity Plan”, and collectively with the 2020 Equity Plan, the “Equity Plans”). Under the Equity Plans, the Company may grant options, restricted stock, restricted units or performance awards to its directors, officers, and employees. Both incentive stock options and non-qualified stock options may be granted under the Equity Plans, with 902,344 and 1,021,239 shares reserved for options under the 2016 Equity Plan and 2020 Equity Plan, respectively. The exercise price of each option equals the market price of the Company’s stock on the date of grant and the maximum term of each option is ten years. The total number of shares reserved for restricted stock or restricted units is 360,935 and 408,495 under the 2016 Equity Plan and 2020 Equity Plan, respectively. The value of restricted stock grants is based on the market price of the stock on grant date. Options and awards vest ratably over three to five years. The Company has elected to recognize forfeitures of awards as they occur.

Expense related to options and restricted stock granted to directors is recognized in directors’ compensation within non-interest expense.

Stock Options

The fair value of each option is estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:

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Expected volatility is based on historical volatility of the Company’s common stock price;

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Expected life represents the period of time that the option is expected to be outstanding, taking into account the contractual term, and the vesting period;

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The dividend yield assumption is based on the Company’s expectation of dividend payouts; and

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The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for a period equivalent to the expected life of the option.

There were no options granted during the six months ended June 30, 2025.

A summary of the status of the Company’s stock options for the six months ended June 30, 2025 is presented in the table below:

		Stock Option Awards				Weighted Average Exercise Price				Weighted Average Remaining Contractual Term (years)				Aggregate Intrinsic Value
Outstanding at December 31, 2024			1,116,092			$	11.17
Granted			—				—
Forfeited			(5,000	)			11.64
Expired			(3,000	)			15.00
Exercised			—				—
Outstanding at June 30, 2025			1,108,092			$	11.16				5.66			$	1,944,000
Outstanding and expected to vest at June 30, 2025			1,108,092			$	11.16				5.66			$	1,944,000
Vested and Exercisable at June 30, 2025			728,829			$	11.02				4.50			$	1,396,000
Unrecognized compensation cost		$	1,432,000
Weighted average remaining recognition period (years)			3.20

For the three months ended June 30, 2025 and 2024, expense for the stock options was $173,000 and $131,000, respectively. For the six months ended June 30, 2025 and 2024, expense for the stock options was $347,000 and $261,000, respectively. There were no stock options exercised during the three or six months ended June 30, 2025. There were 124,346 stock options exercised during the three and six months ended June 30, 2024 with an intrinsic value of $144,000.

Restricted Stock

Shares issued upon the granting of restricted stock may be either authorized but unissued shares or reacquired shares held by the Company. Any shares forfeited because vesting requirements are not met will be available for issuance under the Equity Plans. The fair market value of shares awarded, based on the market prices at the date of grant, is recorded as unearned compensation and amortized over the applicable vesting period.

The following table presents the activity in restricted stock awards under the Equity Plans for the six months ended June 30, 2025:

		Unvested Restricted Stock Awards				Weighted Average Grant Date Price
Unvested restricted stock awards at December 31, 2024			206,594			$	11.40
Granted			—				—
Forfeited			(2,500	)			11.64
Vested			(24,329	)			12.29
Unvested restricted stock awards at June 30, 2025			179,765			$	11.28
Unrecognized compensation cost		$	1,632,000
Weighted average remaining recognition period (years)			3.33

For the three months ended June 30, 2025 and 2024, expense for the restricted stock awards was $191,000 and $131,000, respectively. For the six months ended June 30, 2025 and 2024 expense for the restricted stock awards was $383,000 and $262,000, respectively. The tax benefit from restricted awards was $53,000 and $37,000 for the three months ended June 30, 2025 and 2024, respectively. The tax benefit from restricted awards was $107,000 and $77,000 for the six months ended June 30, 2025 and 2024, respectively. The total fair value of shares vested during the three months ended June 30, 2025 and 2024 was $120,000 and $79,000, respectively. The total fair value of shares vested during the six months ended June 30, 2025 and 2024 was $282,000 and $163,000, respectively.