13. Benefit Plans

401(k) Plan—The Bank maintains an Employee Savings Plan (the “401(k) Plan”) which qualifies under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, employees may contribute between 1% to 50% of their compensation. In 2014, 2013 and 2012, the Bank matched 100% of contributions for the first three percent contributed and 50% on the next two percent contributed. Contributions made to the 401(k) Plan by the Bank amounted to $540,000 for 2014, $401,000 for 2013 and $260,000 for 2012.

Pacific Premier Bancorp, Inc. 2004 Long-Term Incentive Plan (the “2004 Plan”)—The 2004 Plan was approved by the Corporation’s stockholders in May 2004. The 2004 Plan authorizes the granting of options equal to 525,500 shares of the common stock of the Corporation for issuances to executives, key employees, officers, and directors. The 2004 Plan will be in effect for a period of ten years from February 25, 2004, the date the 2004 Plan was adopted. Options granted under the 2004 Plan will be made at an exercise price equal to the fair market value of the stock on the date of grant. Awards granted to officers and employees may include incentive stock options, nonstatutory stock options and limited rights, which are exercisable only upon a change in control of the Corporation. The options granted pursuant to the 2004 Plan vest at a rate of 33.3% per year. As of December 31, 2014, there are 325,355 options outstanding on the 2004 Plan with zero available for grant. The 2004 Plan terminated in February 2014.

Pacific Premier Bancorp, Inc. 2012 Long-Term Incentive Plan (the “2012 Plan”)—The 2012 Plan was approved by the Corporation’s stockholders in May 2012. The 2012 Plan authorizes the granting of options equal to 620,000 shares of the common stock of the Corporation for issuances to executives, key employees, officers, and directors. The 2012 Plan will be in effect for a period of ten years from May 30, 2012, the date the 2012 Plan was adopted. Options granted under the 2012 Plan will be made at an exercise price equal to the fair market value of the stock on the date of grant. Awards granted to officers and employees may include incentive stock options, nonstatutory stock options and limited rights, which are exercisable only upon a change in control of the Corporation. The options granted pursuant to the 2012 Plan vest at a rate of 33.3% per year. In May 2014, the Corporation’s stockholders approved an amendment to the 2012 Plan to increase the shares available under the plan by 800,000 shares to total 1,420,000 shares. As of December 31, 2014, there are 599,729 options outstanding on the 2004 Plan with 816,105 available for grant.

The Pacific Premier Bancorp, Inc. 2004 Long-Term Incentive Plan, and the Pacific Premier Bancorp, Inc. 2012 Long-Term Incentive Plan are collectively the “Option Plans.”

Below is a summary of the activity in the Option Plans for the years ended December 31, 2014 and 2013:

	2014				2013
	Shares		Weighted Average Exercise Price Per Share		Shares		Weighted Average Exercise Price Per Share

Options outstanding at the beginning of the year	813,670		$	8.86	672,334		$	8.34
Granted	244,000		15.69		202,000		10.64
Exercised	(132,586	)	10.65		(57,164	)	9.16
Forfeited and expired	—		—		(3,500	)	5.91
Options outstanding at the end of the year	925,084		$	10.41	813,670		$	8.86

Options exercisable at the end of the year	483,110				470,687

Weighted average remaining contractual life of options outstanding at end of year	6.7 Years				6.0 Years

The aggregate intrinsic value (the amount by which a call option is in the money, calculated by taking the difference between the strike price and the market price of the underlying securities) of options outstanding was $9.6 million at December 31, 2014, $5.6 million at December 31, 2013, and $1.5 million at December 31, 2012.

The aggregate intrinsic value of vested options outstanding was $5.8 million at December 31, 2014, $3.4 million at December 31, 2013, and $695,000 at December 31, 2012.

The aggregate intrinsic value of options exercised during 2014 was $536,000. The aggregate intrinsic value of options exercised during 2013 was $277,000 and the aggregate intrinsic value of options forfeited and expired during 2013 was $24,000.

The amount charged against compensation expense in relation to the stock options was $514,000 for 2014 and $943,000 for 2013. At December 31, 2014, unrecognized compensation expense related to the options is approximately $515,000 for 2015 and $292,000 for 2016.

Options granted under the Option Plans during 2014, 2013 and 2012 were valued using the Black-Scholes model with the following average assumptions:

	Year Ended December 31,
	2014	2013	2012

Expected volatility	16.2% - 18.5%	22.2% - 25.82%	23.14%
Expected term	6.0 Years	10.0 Years	10.0 Years
Expected dividends	None	None	None
Risk free rate	1.81% - 2.10%	1.78% - 2.67%	1.57%
Weighted-average grant date fair value	$3.28 - $3.67	$3.93 - $5.87	$7.87

Salary Continuation Plan—The Bank implemented a non-qualified supplemental retirement plan in 2006 (the “Salary Continuation Plan”) for certain executive officers of the Bank. The Salary Continuation Plan is unfunded. The amounts expensed in 2014 and 2013 under the Salary Continuation Plan amounted to $200,000 and $122,000, respectively. As of December 31, 2014 and 2013, $3.3 million and $1.0 million, respectively, were recorded in other liabilities on the consolidated statements of condition for the Salary Continuation Plan.

Directors’ Deferred Compensation Plan—The Bank created a Directors’ Deferred Compensation Plan in September 2006 which allows directors to defer board of directors’ fees. The deferred compensation is credited with interest by the Bank at prime plus one percent and the accrued liability is payable upon retirement or resignation. The Directors’ Deferred Compensation Plan is unfunded. The Company is under no obligation to make matching contributions to the plan. At December 31, 2014 the liability for the plan was $1.2 million compared to $1.1 million at December 31, 2013. The expense for 2014 was $96,000 compared to $823,000 for 2013.

Long-Term Care Insurance Plan—The Bank implemented a Long-Term Care Insurance Plan in September 2006 for the executive officers and directors of the Bank. The non-employee directors may elect not to participate in the insurance plan. For those who opt out, the amount of the insurance premium, up to $4,000 annually, will be recorded each month to their deferred compensation account with interest. The expense for 2014 and 2013 was $22,000 and $19,000, respectively, for this plan. As of December 31, 2014 and 2013, $115,000 and $92,000, respectively, was recorded in other liabilities on the consolidated statements of condition for the insurance plan.