Note

Benefit Plans

The Company has stock-based employee compensation plans, which are described in the Company’s

2016

Annual Report.

The following tables below summarize transactions under the Company’s equity plans for the

six

months ended

June 30, 2017:

Stock Options	Number of shares
	Incentive Stock Option			Non- Incentive Stock Option			Weighted Average Exercise Price

Balance outstanding as of January 1, 2017		60,000			52,500		$	20.15
Granted		-			-			-
Exercised		-			-			-
Forfeited		(10,000	)		(25,000	)		29.49
Balance outstanding as of June 30, 2017		50,000			27,500		$	15.93
Options exercisable as of June 30, 2017		50,000			27,500		$	15.93

The total intrinsic value of stock options exercised for the

six

months ended

June 30, 2017

and

2016

was

and

$169,103,

respectively. The total intrinsic value of outstanding stock options (including exercisable) was

$618,320

and

$430,880

June 30, 2017

and

2016,

respectively.

Restricted Stock

	Number of Shares			Weighted Average Grant- Date Fair Value

Balance of shares non-vested as of January 1, 2017		60,955		$	13.62
Granted		13,386			20.33
Vested		(27,291	)		12.25
Forfeited		-			-
Balance of shares non-vested as of June 30, 2017		47,050		$	16.33

February 2017,

the Company granted

6,960

shares of restricted stock to directors pursuant to the

2015

Equity Plan of which

6,195

have a cliff vesting at the end of

one

year and thus, expensed over that same period and

765

shares have a cliff vesting at the end of

three

years, and thus, expensed over that same period. These shares had a grant date market price of

$20.35

per share. The total amount of expense for restricted stock grants to directors (including all previous years grants) during the

six

months ended

June 30, 2017

and

2016

was

$66,924

and

$62,240,

respectively.

For the

six

months ended

June 30, 2017

and

2016,

the Company granted

6,426

and

15,343

shares, respectively, of restricted stock to officers that have a cliff vesting at the end of

three

years. The expense is being recognized over the applicable vesting period. The total amount of expense for restricted stock grants to officers (including all previous years grants) during the

six

months ended

June 30, 2017

and

2016

was

$108,039

and

$151,020,

respectively.

Performance Stock Units

	Performance Stock Units		Weighted Average Grant- Date Fair Value

Balance of shares non-vested as of January 1, 2017		-	$	-
Granted		55,823		20.48
Vested		-		-
Forfeited		-		-
Balance of shares non-vested as of June 30, 2017		55,823	$	20.48

March 29, 2017,

the Company granted restricted stock units representing

55,823

hypothetical shares of common stock to officers. There are

three

possible levels of incentive awards: threshold (

25%

); target (

50%

); and maximum (

100%

). The restricted stock units vest based on

two

financial performance factors over the period from

March 29, 2017

December 31, 2019 (

the “Performance Period”). The

two

performance measurements of the Company (and the weight given to each measurement) applicable to each award level are as follows: (i) Total Assets (

50%

) and (ii) Return on Average Assets (

50%

). In determining compensation expense, the fair value of the restricted stock unit awards was determined based on the closing price of the Company’s common stock on the date of grant, which was

$20.48

per share. The expense is being recognized over the applicable vesting period. Due to the fact that the measurements cannot be determined at the time of the grant, the Company estimated that the most likely outcome is the achievement of the target level. If during the Performance Period, additional information becomes available to lead the Company to believe a different level will be achieved for the Performance Period, the Company will reassess the number of units that will vest for the grant and adjust its compensation expense accordingly on a prospective basis. The total amount of expense for restricted stock units during the

six

months ended

June

31,

2017

was

$51,816.

Total stock-based compensation expense recognized for the

three

months ended

June 30, 2017

and

2016

was

$134,318

and

$126,403,

respectively. Total stock-based compensation expense recognized for the

six

months ended

June 30, 2017

and

2016

was

$226,779

and

$213,260,

respectively. As of

June

30,

2017,

there was

$940,486

of unrecognized compensation expense related to nonvested restricted stock awards, which will be recognized over the remaining vesting period.