6. STOCK-BASED COMPENSATION

Stock Options

Under the terms of the Company’s stock option plans adopted in 1999 and 2009, options have been granted to key employees and directors to purchase shares of the Company’s stock. Options are awarded by the Compensation Committee of the Board of Directors. Both plans provide that the option price shall not be less than the fair value of the common stock on the date the option is granted. All options are exercisable for a period of ten years or less.

No options were granted during the first nine months of 2014. Options granted in 2013 and 2012 are exercisable over a three-year period commencing one year from the date of grant at a rate of one-third per year. Options granted in 2011 are exercisable over a three-year period commencing three years from the date of grant at a rate of one-third per year.

The total intrinsic value of options exercised during the first nine months of 2014 and 2013 was $145 thousand and $15 thousand, respectively. The total cash received from such option exercises was $246 thousand and $92 thousand, respectively, excluding the tax benefit realized. In exercising those options, 18,735 shares and 6,667 new shares, respectively, of the Company’s common stock were issued.

Both plans provide for but do not require the grant of stock appreciation rights (“SARs”) that the holder may exercise instead of the underlying option. At September 30, 2014, there were 6,000 SARs outstanding related to options granted before 2011. The SARs had no intrinsic value at September 30, 2014. When the SAR is exercised, the underlying option is canceled. The optionee receives shares of common stock or cash with a fair market value equal to the excess of the fair value of the shares subject to the option at the time of exercise (or the portion thereof so exercised) over the aggregate option price of the shares set forth in the option agreement. The exercise of SARs is treated as the exercise of the underlying option.

A summary of stock option activity follows:

				Weighted-Average
	Number			Exercise Price
	of Shares			Per Share
Outstanding, January 1, 2014		291,000		$	16.18
Granted		-			-
Exercised		(18,735	)	$	13.18
Forfeited or expired		(19,165	)	$	16.82
Outstanding, September 30, 2014		253,100		$	16.35

The following summarizes shares subject to purchase from stock options outstanding and exercisable as of September 30, 2014:

		Outstanding					Exercisable
				Weighted-Average					Weighted-Average
Range of				Remaining	Weighted-Average				Remaining	Weighted-Average
Exercise Prices		Shares		Contractual Life	Exercise Price		Shares		Contractual Life	Exercise Price
$	10.00 - $14.00		120,000	7.4 years	$	11.97		46,669	7.5 years	$	12.81
$	14.01 - $20.00		106,100	8.8 years	$	17.35		30,604	8.7 years	$	17.02
$	20.01 - $30.00		5,000	4.3 years	$	28.30		5,000	4.3 years	$	28.30
$	30.01 - $40.00		22,000	1.8 years	$	32.69		22,000	1.8 years	$	32.69
			253,100	7.4 years	$	16.35		104,273	6.5 years	$	18.99

Restricted Stock Awards

Under the Company’s Amended and Restated 2009 Stock Incentive Plan (the “2009 Plan”), the Company can award options, SARs and restricted stock. During the first nine months of 2014, the Company awarded 77,000 shares of restricted stock to certain key employees. The restricted stock awards currently outstanding vest over a three-year period commencing one year from the date of grant at a rate of one-third per year. A summary of restricted stock activity follows:

				Weighted-Average
	Number			Grant-Date
	of Shares			Fair Value
Nonvested, January 1, 2014		-			-
Granted		77,000		$	22.51
Vested		-			-
Forfeited or expired		(3,450	)	$	22.51
Nonvested, September 30, 2014		73,550		$	22.51

The Company accounts for stock-based compensation on a modified prospective basis with the fair value of grants of employee stock options and restricted stock awards recognized in the financial statements. Compensation expense related to stock-based compensation amounted to $599 thousand and $367 thousand for the nine months ended September 30, 2014 and 2013, respectively. The remaining unrecognized compensation cost of approximately $1.8 million at September 30, 2014 will be expensed over the remaining weighted average vesting period of approximately 2.3 years.

Under the 2009 Plan, a total of 500,000 shares of the Company’s common stock were reserved for issuance, of which 204,948 shares remain for possible issuance at September 30, 2014. There are no remaining shares reserved for issuance under the 1999 Stock Option Plan.