Note 8 – Share Based Compensation

At September 30, 2014, the Company had two share based compensation plans in existence, the 1999 Stock Option Plan (expired but having outstanding options that may still be exercised) and the 2005 Omnibus Stock Plan, which is described below.

The Company’s 2005 Omnibus Stock Plan (“Omnibus Plan”) provides for the granting of non-qualifying stock options to the Company’s directors, and incentive and non-qualifying stock options, stock appreciation rights and restricted stock grants to selected key employees on a periodic basis at the discretion of the board. The Omnibus Plan authorizes the issuance of up to 1,800,000 shares of common stock of which 1,015,421 are available for issuance at September 30, 2014, 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. Options granted under the expired 1999 Stock Option Plan remain outstanding until exercised or they expire. 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 with the weighted-average assumptions for the periods shown are presented in the following table:



	Nine Months Ended September 30,
	2014		2013
Dividend yield	3.04	%	2.80	%
Weighted average expected volatility	46.78	%	53.87	%
Weighted average risk-free interest rate	1.56	%	0.83	%
Weighted average expected lives (in years)	5.08		5.34
Weighted average grant-date fair value	$ 8.05		$ 7.99

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 $0.4 million and $0.4 million for the three months ended September 30, 2014 and 2013, respectively, related to the awards of stock options and restricted stock grants. Compensation expense of $1.3 million and $1.2 million was recognized for the nine months ended September 30, 2014 and 2013, respectively. Stock options exercised were 13,834 and 10,964 for the nine months ended September 30, 2014 and 2013, respectively. The intrinsic value for the stock options exercised amounted to $0.1 million and $0.1 million for the nine months ended September 30, 2014 and 2013, respectively. The total of unrecognized compensation cost related to stock options was approximately $0.2 million as of September 30, 2014. 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 $4.0 million as of September 30, 2014. That cost is expected to be recognized over a weighted average period of approximately 3.3 years. The fair value of the options vested during the nine months ended September 30, 2014 and 2013, was $0.2 million and $0.2 million, respectively.

In the first quarter of 2014, 21,251 stock options were granted, subject to a three year vesting schedule with one third of the options vesting each year on the anniversary date of the grant. Additionally, 79,416 shares of restricted stock were granted, subject to a five year vesting schedule with one fifth of the shares vesting each year on the grant date anniversary. No shares were granted during the second or third quarter of 2014.

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, 2014	307,800	$	25.23		$	1,768
Granted	21,251	$	24.75
Exercised	(13,834)	$	13.72		$	147
Forfeited or expired	(2,500)		28.59
Balance at September 30, 2014	312,717	$	25.68	2.0	$	848

Exercisable at September 30, 2014	271,580	$	26.18	1.4	$	787

Weighted average fair value of options
granted during the year		$	8.05

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, 2014	227,064	$	18.61
Granted	79,416	$	24.75
Vested	(76,037)	$	17.53
Forfieted	(2,885)	$	21.95
Restricted stock at September 30, 2014	227,558	$	21.07