Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

STOCK-BASED COMPENSATION

We currently have stock-based compensation plans in place for our directors, officers, employees, consultants and advisors. Under the terms of these plans we may grant restricted shares and stock options for the purchase of our common stock. The stock-based compensation is granted under terms determined by our Compensation Committee. Our standard stock option grants have a maximum term of 10 years, generally vest over periods ranging between one and five years, and are granted with an exercise price equal to the fair market value of the common stock on the date of grant. Restricted stock is valued at the market value of the common stock on the date of grant and generally vests over periods of three to five years. All dividends paid on restricted stock, whether vested or unvested, are paid to the shareholder.

Information regarding our stock option plans for the nine months ended September 30, 2016 is as follows:

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	Number of Shares		Weighted Average Exercise Price per Share		Weighted Average Contractual Term	Aggregate Intrinsic Value
Options outstanding, beginning of year	51,985		$	10.06
Options granted	26,216		12.83
Options expired	(8,629	)	10.12
Options exercised	(449	)	$	10.25
Options outstanding, end of quarter	69,123		$	11.10	8.6	$	361,591
Options exercisable, end of quarter	8,581		$	10.04	8.2	$	53,964
Option price range at end of quarter	$9.97 to $12.83
Option price of exercisable shares	$9.97 to $12.83

The following table summarizes information about stock option assumptions:

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	2016		2015
Expected dividend yield	1.25	%	1.56	%
Expected volatility	22.72	%	34.32	%
Risk-free interest rate	1.71	%	1.37	%
Expected option life	7.5 years		7.5 years

During the three months ended September 30, 2016 and 2015, we expensed $10 thousand and $10 thousand, respectively, in stock-based compensation under stock option awards.

During the nine month ended September 30, 2016 and 2015, we expensed $34 thousand and $28 thousand, respectively, in stock-based compensation under stock option awards.

The weighted average grant date fair values of options granted during the nine months ended September 30, 2016 and 2015, were $3.37 per share and $3.56 per share, respectively. Expected future expense relating to the unvested options outstanding as of September 30, 2016 is $178 thousand over a weighted average period of 3.6 years. Upon exercise of vested options, management expects to draw on treasury stock as the source of the shares.

The summary of changes in unvested restricted stock awards for the nine months ended September 30, 2016, is as follows:



	Number of Shares		Weighted Average Grant Date Fair Value
Unvested restricted stock, beginning of year	93,570		$	7.67
Granted	41,619		12.85
Forfeited	(5,379	)	10.66
Vested	(47,754	)	7.06
Unvested restricted stock, end of period	82,056		$	10.46

During the three months ended September 30, 2016 and 2015, we expensed $82 thousand and $84 thousand, respectively, in stock-based compensation under restricted stock awards. During the nine months ended September 30, 2016 and 2015, we expensed $268 thousand and $251 thousand, respectively, in stock-based compensation under restricted stock awards.

At September 30, 2016, unrecognized compensation expense for unvested restricted stock was $620 thousand, which is expected to be recognized over an average period of 1.7 years.