STOCK-BASED COMPENSATION

Warrants

On October 1, 2011, in connection with the acquisition of South Louisiana Bankers Bank, the Bank issued 130,875 stock warrants with an exercise price of $13.33 per share. The warrants were later exchanged for a like amount of warrants to acquire shares of Company common stock at the same exercise price. These warrants, which are currently exercisable, expire on July 1, 2018. All other warrants to acquire shares of Company common stock expired on or before December 31, 2014.

The following table summarizes the Company’s warrant activity for the periods indicated.



	December 31,
	2017		2016		2015
$13.33 Per Share
Issued October 1, 2011, expire July 1, 2018
Balance, beginning of period	124,275		130,875		130,875
Issued	—		—		—
Forfeited	—		—		—
Exercised	(59,850	)	(6,600	)	—
Balance, end of period	64,425		124,275		130,875

Equity Incentive Plan. The Company previously granted equity awards to its employees and non-employee directors under its 2014 Long-Term Incentive Compensation Plan (the “2014 Plan”). Effective May 24, 2017, the Company’s shareholders approved its 2017 Long-Term Incentive Compensation Plan (the “Plan”) and ceased using the 2014 Plan. The Plan authorizes the grant of various types of equity grants and awards, such as restricted stock, stock options and stock appreciation rights to eligible participants, which include all of the Company’s employees, non-employee directors, and consultants. The Plan has reserved 600,000 shares of common stock for grant, award or issuance to eligible participants, including shares underlying granted options. The Plan is administered by the Compensation Committee of the Company’s Board of Directors, which determines, within the provisions of the Plan, those eligible employees to whom, and the times at which, grants and awards will be made. The Compensation Committee, in its discretion, may delegate its authority and duties under the Plan to specified officers; however, only the Compensation Committee may approve the terms of grants and awards to the Company’s executive officers and directors. At December 31, 2017 and 2016, no stock appreciation rights had been granted. At December 31, 2017, approximately 597,783 shares remain available for grant.

Stock Options

During the years ended December 31, 2017, 2016 and 2015, the Company issued 36,177, 46,512 and 64,333 stock options, respectively, to key personnel that vest at one-fifth increments on the grant date anniversary of each of the following five years.

The table below summarizes the Company’s stock option activity for the periods indicated.



Stock Options
	Shares		Weighted Average Price		Weighted Average Remaining Contractual Term (Years)
Outstanding at December 31, 2014	238,811		$	13.94	8.96
Issued	64,333		15.74
Forfeited	(14,667	)	14.00
Exercised	(10,125	)	13.33
Outstanding at December 31, 2015	278,352		14.37		8.42
Issued	46,512		14.28
Forfeited	—		—
Exercised	(5,500	)	14.00
Outstanding at December 31, 2016	319,364		14.36		7.67
Issued	36,177		20.25
Forfeited	(5,334	)	14.00
Exercised	(27,290	)	13.70
Outstanding at December 31, 2017	322,917		15.09		7.19
Exercisable at December 31, 2017	114,927		14.41		6.79

At December 31, 2017, the shares underlying total outstanding stock options had an intrinsic value of $2.9 million. The shares underlying exercisable stock options had an intrinsic value of approximately $1.1 million.

The Company uses a Black-Scholes option pricing model to estimate the fair value of stock-based awards. The Black-Scholes option pricing model incorporates various subjective assumptions, including expected term and expected volatility. Stock option expense in the accompanying consolidated statements of income for the years ended December 31, 2017, 2016, and 2015 was $223,000, $183,000 and $152,000, respectively. At December 31, 2017, there was $0.6 million of unrecognized compensation cost related to stock options that is expected to be recognized over a weighted average period of 2.7 years.

The table below shows the assumptions used for the stock options granted during the years ended December 31, 2017 and 2016.



	2017			2016
Dividend yield	0.22		%	0.22		%
Expected volatility	20.46		%	19.55		%
Risk-free interest rate	2.19		%	1.62		%
Expected term (in years)	7			7
Weighted-average grant date fair value	$	5.39		$	3.44

Time Vested Restricted Stock Awards. The Company has issued shares of time vested restricted stock with vesting terms ranging from two to six years. The total stock-based compensation expense for these awards is determined based on the market price of the Company’s common stock at the grant date applied to the total number of shares granted and is amortized over the vesting period. Restricted stock shares participate in voting rights and dividends declared by the Company.

The Company issued a total of 54,724 shares of restricted stock to employees and directors for the year ended December 31, 2017. Of the restricted stock granted in 2017, 48,288 shares will vest over five years and 6,436 shares will vest over two years.

The Company issued a total of 54,837 shares of restricted stock to employees and directors for the year ended December 31, 2016. Of the restricted stock granted in 2016, 49,139 shares will vest over five years and 5,698 shares will vest over two years.

The Company issued a total of 36,434 shares of restricted stock to employees for the year ended December 31, 2015. Of the restricted stock granted in 2015, 30,305 shares will vest over five years and 6,129 shares will vest over two years.

No shares of restricted stock may be sold, assigned, transferred or pledged until vested. The holders of the restricted stock receive dividends and have the right to vote the shares. The unearned compensation related to these awards is amortized to compensation expense over the vesting period.

As of December 31, 2017, 2016 and 2015, unearned stock-based compensation associated with these awards totaled approximately $1.5 million, $1.1 million and $0.8 million, respectively. The $1.5 million of unrecognized compensation cost related to time vested restricted stock at December 31, 2017 is expected to be recognized over a weighted average period of 3.1 years.

The following table summarizes the unvested restricted stock award activity for the years ended December 31, 2017 and December 31, 2016.



	December 31,
	2017				2016
	Shares		Weighted Avg Grant Date Fair Value		Shares		Weighted Avg Grant Date Fair Value
Balance, beginning of period	93,366		$	14.75	60,592		$	14.85
Granted	54,724		20.18		54,837		14.67
Forfeited	(8,802	)	15.97		(3,238	)	15.71
Earned and issued	(26,600	)	14.78		(18,825	)	14.72
Balance, end of period	112,688		$	17.28	93,366		$	14.75