Note 5 — Stock Options

On April 5, 2012, the Board of Directors adopted the 2012 International Bancshares Corporation Stock Option Plan (the “2012 Plan”). There are 800,000 shares available for stock option grants under the 2012 Plan. Under the 2012 Plan, both qualified incentive stock options (“ISOs”) and non-qualified stock options (“NQSOs”) may be granted. Options granted may be exercisable for a period of up to 10 years from the date of grant, excluding ISOs granted to 10% shareholders, which may be exercisable for a period of up to only five years. As of March 31, 2014, 199,250 shares were available for future grants under the 2012 Plan.

A summary of option activity under the stock option plan for the three months ended March 31, 2014 is as follows:

	Number of options	Weighted average exercise price		Weighted average remaining contractual term (years)	Aggregate intrinsic value ($)
					(Dollars in Thousands)

Options outstanding at December 31, 2013	515,143	$	15.98
Plus: Options granted	549,750	21.42
Less:
Options exercised	8,399	14.23
Options expired	—	—
Options forfeited	500	10.40
Options outstanding at March 31, 2014	1,055,994	18.83		6.00	6,711

Options fully vested and exercisable at March 31, 2014	222,942	18.43		2.42	1,593

Stock-based compensation expense included in the consolidated statements of income for the three months ended March 31, 2014 and March 31, 2013 was approximately $161,000 and $114,000, respectively. As of March 31, 2014, there was approximately $4,831,000 of total unrecognized stock-based compensation cost related to non-vested options granted under the Company plans that will be recognized over a weighted average period of 2.6 years.