Note 10:

Stock-Based Compensation

On June 28, 2013, the Company registered with the SEC a stock-based compensation plan, which superseded all other plans. There are 311,209 shares available for grant under this plan at June 30, 2017.

Stock-based compensation expense related to stock option awards for the three months ended June 30, 2017 and 2016 was $8 thousand and zero, respectively. For the six months ended June 30, 2017 and 2016, stock-based compensation expense related to stock option awards was $24 thousand and $16 thousand, respectively. Compensation expense for stock options is the estimated fair value of options on the date granted using the Black-Scholes Model amortized on a straight-line basis over the vesting period of the award. There was no unrecognized compensation expense related to stock options as of June 30, 2017.

The variables used in these calculations of the fair value of the options are as follows:


	For the six months ended June 30,
	2017	2016
Risk free interest rate (5 year Treasury)	1.78% - 1.93%	1.49%
Expected dividend yield	0%	0%
Expected term (years)	5	5
Expected volatility	17.2% - 21.7%	40.1%

Stock option activity for the six months ended June 30, 2017 is summarized below:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value (1)
Options outstanding, January 1, 2017		218,300		$	6.35		5.9
Granted		13,000			8.54
Forfeited		(1,195	)		8.43
Exercised		(24,061	)		5.69
Expired		(9,625	)		13.96

Options outstanding and exercisable, June 30, 2017		196,419		$	6.20		5.9	$	629,496

(1)

The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on June 30, 2017. This amount changes based on changes in the market value of the Company’s common stock.

In the first six months of 2017, 14,000 shares of restricted stock were granted to three executives. Total unvested restricted shares were 9,000 as of June 30, 2017 and zero as of December 31, 2016. Stock based compensation related to restricted stock awards was $43 thousand and zero as of the six months ended June 30, 2017 and 2016, respectively.