STOCK OPTIONS

The MVB Financial Corp. Incentive Stock Plan (the "Plan") provides for the issuance of stock options to selected employees. Under the provisions of the plan, the option price per share shall not be less than the fair market value of the common stock on the date of the grant. These options also expire 10 years from the date of the grant. With the exception of 22,000 shares granted in 2010 that vest in 3 years and expire 10 years from the date of grant, all options granted vest in 5 years and expire 10 years from the date of the grant. As of December 31, 2016, the Plan had 2.2 million shares authorized and 400,825 shares remaining available for issuance.

Total compensation expense recorded on stock options during 2016, 2015 and 2014 was $568 thousand, $413 thousand and $321 thousand, respectively. Proceeds from stock options exercised were $32 thousand, $(448) thousand and $63 thousand during 2016, 2015 and 2014 respectively. During both 2016 and 2015, certain options were exercised in cashless transactions. Shares were forfeited related to exercise price and tax withholdings and the Company paid tax authorities amounts due resulting in a net cash outflow.

The following summarizes MVB’s stock options as of and for the year ended December 31, 2016, and the changes for the year then ended:



	2016				2015
	Number of Shares		Weighted Average Exercise Price		Number of Shares		Weighted Average Exercise Price
Outstanding at beginning of year	1,190,295		$	13.15	1,355,905		$	12.21
Granted	432,000		12.72		45,500		14.80
Exercised	(55,000	)	9.02		(204,670	)	7.31
Forfeited/expired	(67,500	)	14.59		(6,440	)	13.33

Outstanding at end of year	1,499,795		$	13.11	1,190,295		$	13.15

Exercisable at end of year	768,598		$	12.75	542,499		$	11.82

Weighted-average fair value of options granted during 2016			$	2.98
Weighted-average fair value of options granted during 2015			$	2.72
Weighted-average fair value of options granted during 2014			$	3.05

The intrinsic value of options exercised during 2016, 2015 and 2014 was $108 thousand, $1.6 million and $37 thousand, respectively.

The fair value for the options was estimated at the date of grant using a Black-Scholes option-pricing model with average risk-free interest rates of 1.31%, 2.16% and 2.65% for 2016, 2015 and 2014, respectively, and a weighted average expected life of the options of 7 years for all three years. The expected volatility of MVB’s stock price used for 2016 options was 19.07%, while for the 2015 options it was 13.90% and 2014 options it was 10.23%. The expected dividend yield used was 0.43% for 2016 and 0.51% for both 2015 and 2014.

The following summarizes information related to the total outstanding and exercisable options at December 31, 2016:



Options Outstanding						Options Exercisable
Total Options	Weighted-Average Exercise Price		Intrinsic Value		Weighted-Average Remaining Life	Total Options	Weighted-Average Exercise Price		Intrinsic Value	Weighted-Average Remaining Life
1,499,795	$	13.11	(465,921	)	6.03	768,598	$	12.75	37,711	4.35