SHARE BASED COMPENSATION

9 Months Ended

Sep. 30, 2018

Note 9 – Share Based Compensation

At September 30, 2018, the Company had two share based compensation plans in existence, the 2005 Omnibus Stock Plan (“Omnibus Stock Plan”) and the 2015 Omnibus Incentive Plan (“Omnibus Incentive Plan”). The Omnibus Stock Plan expired during the second quarter of 2015 but has outstanding options that may still be exercised. The Omnibus Incentive Plan is described in the following paragraph.

The Company’s Omnibus Incentive Plan was approved on May 6, 2015 and provides for the granting of incentive stock options, non-qualifying stock options, stock appreciation rights, restricted stock grants, restricted stock units and performance awards to selected employees on a periodic basis at the discretion of the board. The Omnibus Incentive Plan authorizes the issuance of up to 1,500,000 shares of common stock, of which 1,244,015 are available for issuance at September 30, 2018, has a term of ten years, and is administered by a committee of at least three directors appointed by the board of directors. Options granted under the plan have an exercise price which may not be less than 100% of the fair market value of the common stock on the date of the grant and must be exercised within seven to ten years from the date of grant. The exercise price of stock options must be paid for in full in cash or shares of common stock, or a combination of both. The board committee has the discretion when making a grant of stock options to impose restrictions on the shares to be purchased upon the exercise of such options. The Company generally issues authorized but previously unissued shares to satisfy option exercises.

The fair values of all of the options granted for the periods indicated have been estimated using a binomial option-pricing model. The weighted-average assumptions for the periods shown are presented in the following table:

	Nine Months Ended September 30,
	2018		2017
Dividend yield	2.64	%	2.45	%
Weighted average expected volatility	39.13	%	40.27	%
Weighted average risk-free interest rate	2.61	%	2.14	%
Weighted average expected lives (in years)	5.61		5.67
Weighted average grant-date fair value	$11.73		$13.42

The dividend yield is based on estimated future dividend yields. The risk-free rate for periods within the contractual term of the share option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatilities are generally based on historical volatilities. The expected term of share options granted is generally derived from historical experience.

Compensation expense is recognized on a straight-line basis over the vesting period of the respective stock option or restricted stock grant. The Company recognized compensation expense of $0.6 million and $0.5 million for the three months ended September 30, 2018 and 2017, respectively, related to the awards of stock options and restricted stock grants. Compensation expense of $1.8 million and $1.5 million was recognized for the nine months ended September 30, 2018 and 2017, respectively. The intrinsic value of stock options exercised in the nine months ended September 30, 2018 and 2017 was $0.4 million and $0.6 million, respectively. The total of unrecognized compensation cost related to stock options was approximately $0.3 million as of September 30, 2018. That cost is expected to be recognized over a weighted average period of approximately 2.0 years. The total of unrecognized compensation cost related to restricted stock was approximately $5.8 million as of September 30, 2018. That cost is expected to be recognized over a weighted average period of approximately 3.1 years. The fair value of the options vested during the nine months ended September 30, 2018 and 2017, was not significant.

In the first quarter of 2018, 16,212 stock options were granted, subject to a three year vesting schedule with one third of the options vesting on April 1^st of each year. The Company granted 36,003 shares of restricted stock in the first quarter of 2018, of which 9,170 shares are subject to a three year vesting schedule with one third of the shares vesting each year and 26,833 shares subject to a five year vesting schedule with one fifth of the shares vesting each year. During the second quarter of 2018, the Company granted 46,582 shares of restricted stock, all of which are subject to a five year vesting schedule with one fifth of shares vesting on April 1^st of each year.

A summary of share option activity for the period indicated is reflected in the following table:

				Weighted
	Number	Weighted		Average	Aggregate
	of	Average		Contractual	Intrinsic
	Common	Exercise		Remaining	Value
	Shares	Share Price		Life (Years)	(in thousands)
Balance at January 1, 2018	87,300	$	26.22		$	1,160
Granted	16,212	$	38.15
Exercised	(19,918)	$	21.24		$	367
Forfeited	(920)	$	36.19
Expired	(196)	$	42.48
Balance at September 30, 2018	82,478	$	29.61	3.9	$	837

Exercisable at September 30, 2018	52,771	$	25.36	2.9	$	749

Weighted average fair value of options
granted during the year		$	11.73

A summary of the activity for the Company’s restricted stock for the period indicated is presented in the following table:

	Number	Weighted
	of	Average
	Common	Grant-Date
(In dollars, except share data):	Shares	Fair Value
Restricted stock at January 1, 2018	189,035	$	30.92
Granted	82,585	$	38.93
Vested	(64,875)	$	27.74
Forfeited	(1,892)	$	32.44
Restricted stock at September 30, 2018	204,853	$	35.14