Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

NOTE 8 – STOCK-BASED COMPENSATION

We currently have stock-based compensation plans in place for our directors, officers, employees, consultants and advisors. Under the terms of these plans we may grant restricted shares and stock options for the purchase of our common stock. The stock-based compensation is granted under terms determined by our Compensation Committee. Our standard stock option grants have a maximum term of 10 years, generally vest over periods ranging between one and four years, and are granted with an exercise price equal to the fair market value of the common stock on the date of grant. Restricted stock is valued at the market value of the common stock on the date of grant and generally vests over periods of two to seven years. All dividends paid on restricted stock, whether vested or unvested, are paid to the shareholder.

Information regarding our stock option plans for the nine months ended September 30, 2015 is as follows:



			Weighted
			Average	Weighted
			Exercise	Average		Aggregate
	Number of		Price per	Contractual		Intrinsic
	Shares		Share	Term		Value

Options outstanding, beginning of year	46,525	$	10.63
Options granted	15,985		10.25
Options expired	(3,817)		13.39
Options outstanding, end of quarter	58,693	$	10.35	8.1	$	126,526
Options exercisable, end of quarter	6,708	$	12.63	0.1	$	-
Option price range at end of quarter	$9.97 to $12.63
Option price of exercisable shares	$ 12.63

The following table summarizes information about stock option assumptions:


	September 30, 2015

Expected dividend yield		1.56%
Expected volatility		34.32%
Risk-free interest rate		1.37%
Expected option life		10.0 Years

During the three months ended September 30, 2015 we expensed $10 thousand in stock-based compensation under stock option awards. There was no stock-based compensation expensed under stock option awards during the three months ended September 30, 2014.

During the nine months ended September 30, 2015 we expensed $28 thousand in stock-based compensation under stock option awards. There was no stock-based compensation expensed under stock option awards during the nine months ended September 30, 2014.

The weighted average grant date fair value of options granted during the nine months ended September 30, 2015 was $3.56 per share. Expected future expense relating to the unvested options outstanding as of September 30, 2015 is $160 thousand over a weighted average period of 4.2 years. Upon exercise of vested options, management expects to draw on treasury stock as the source of the shares.

The summary of changes in unvested restricted stock awards for the nine months ended September 30, 2015, is as follows:


			Weighted
			Average
	Number of		Grant Date
	Shares		Fair Value

Unvested restricted stock, beginning of year	112,545	$	6.06
Granted	31,841		10.48
Vested	(50,166)		5.94
Unvested restricted stock, end of period	93,219	$	7.60

During the three months ended September 30, 2015 and 2014, we expensed $84 thousand and $74 thousand, respectively, in stock-based compensation under restricted stock awards. During the nine months ended September 30, 2015 and 2014, we expensed $251 thousand and $230 thousand, respectively, in stock-based compensation under restricted stock awards.

At September 30, 2015, unrecognized compensation expense for unvested restricted stock was $506 thousand, which is expected to be recognized over an average period of 1.6 years.