On May 19, 2009, the shareholders of the Company approved the Company’s Stock Incentive Plan (the “Plan”), which superseded and replaced the Omnibus Stock Ownership and Long-Term Incentive Plan.

Under the Plan, stock options, stock appreciation rights, unvested and/or restricted shares, and long-term performance unit awards may be granted to directors and certain employees for purchase of the Company’s common stock. The effective date of the Plan is March 19, 2009 with a termination date of December 31, 2019. The Company’s Board of Directors may terminate, suspend or modify the Plan within certain restrictions. The Plan authorizes for issuance 350,000 shares of the Company’s common stock.

Restricted shares are accounted for using the fair market value of the Company’s common stock on the date on which these shares were awarded. Restricted shares are issued to certain executive officers are subject to a vesting period, whereby the restrictions on the shares lapse on the third anniversary of the date the shares were awarded. Compensation expense for these shares is recognized over the three-year period. The restricted shares issued to nonemployee directors are not subject to a vesting period and compensation expense is recognized on the date the shares are granted. Compensation expense for restricted shares amounted to $129,000 and $116,000, net of forfeitures, for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019 and 2018, there was $284,000 and $249,000, respectively, of total unrecognized compensation expense related to restricted shares. This expense is expected to be recognized through 2022.

A summary of the status of the Company’s unvested restricted shares granted under the Plan is presented below:

	March 31, 2019					March 31, 2018
	Shares			Weighted Average Fair Value Per Share		Shares			Weighted Average Fair Value Per Share
Unvested shares, beginning		22,569		$	17.98		18,062		$	16.44
Granted		12,058			21.69		11,294			21.47
Vested		(10,553	)		21.46		(6,419	)		21.47
Forfeited or surrendered		(440	)		22.05		(368	)		21.47
Unvested shares, ending		23,634		$	20.10		22,569		$	17.98

The Company grants performance-based restricted stock units to certain executive officers. Performance-based restricted stock units are accounted for using the fair market value of the Company’s common stock on the date awarded, and adjusted as the market value of the stock changes. Performance-based restricted stock units issued to executive officers are subject to a vesting period, whereby the restrictions on the rights lapse on the third anniversary of the date the rights were awarded. Until vesting, the rights are not issued and are not included in shares outstanding. Vesting is contingent upon the Company reaching predetermined performance goals as compared with a predetermined peer group of banks. Compensation expense for performance-based restricted stock units totaled $25,000 and $19,000 for the three months ended March 31, 2019 and 2018, respectively. As of March 31, 2019 and 2018, there was $200,000 and $171,000 of unrecognized compensation expense, respectively, related to these performance-based restricted stock units. This expense is expected to be recognized through 2022 and is dependent upon management reaching the predetermined goals.

A summary of the status of the Company’s unvested performance-based restricted stock units is presented below:

	March 31, 2019				March 31, 2018
	Performance-based Restricted Stock Units		Weighted Average Fair Value Per Share		Performance-based Restricted Stock Units			Weighted Average Fair Value Per Share
Unvested shares, beginning		22,103	$	17.90		18,062		$	16.44
Granted		7,909		21.69		6,867			21.47
Vested		-		-		-			-
Forfeited		-		-		(2,826	)		21.47
Unvested shares, ending		30,012	$	18.98		22,103		$	17.90