Compensation cost is recognized for stock options and restricted stock awards issued to employees and non-employee directors. Compensation cost is measured as the fair value of these awards on their date of grant. A Black-Scholes model is utilized to estimate the fair value of stock options, while the market price of the Company’s common stock at the date of grant is used as the fair value of restricted stock awards. Compensation cost is recognized over the required service period, generally defined as the vesting period for stock option and restricted stock awards.

The Company’s stock incentive programs are long-term retention programs intended to attract, retain, and provide incentives for key employees and non-employee directors in the form of incentive and non-qualified stock options and restricted stock.

The Company’s 2010 Incentive Plan, as amended, had available for issuance a total of 566,025 shares (adjusted for the 10% stock dividends in 2013, 2012, and 2011). The Plan expired on March 16, 2020 and no further shares may be issued from the plan.

On March 15, 2016, the Company adopted the 2016 Equity Incentive Plan, making available for issuance 400,000 stock options. The options may be exercised at an exercise price per share based on the fair market value and determined on the date of grant and expire 10 years from the grant date. As of December 31, 2020, there were 123,827 options available for grant under the 2016 Equity Incentive Plan.

On March 17, 2020, the Company adopted the 2020 Equity Incentive Plan, making available for issuance up to 450,000 stock options. The options may be exercised at an exercise price per share based on the fair market value and determined on the date of grant and expire 10 years from the grant date. As of December 31, 2020, there were no shares issued under this plan.

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A summary of the status of the stock option plan and changes for the period is presented below:


	For the years ended December 31,
	2020							2019							2018
						Weighted						Weighted								Weighted
				Weighted		Average				Weighted		Average					Weighted		Average
				average		Remaining				average		Remaining					average		Remaining
				exercise		Contractual				exercise		Contractual					exercise		Contractual
	Shares			price		Life		Shares		price		Life		Shares			price		Life
Outstanding at beginning of year		541,414		$	26.65			648,311		$	20.74				662,841		$	15.70
Granted		101,700			37.77			101,350			32.81				94,700			43.13
Exercised		(93,870	)		14.79			(191,497	)		9.24				(105,630	)		8.51
Forfeited or expired		(54,049	)		38.15			(16,750	)		34.01				(3,600	)		40.03
Outstanding at end of year		495,195		$	29.93		6.4 years	541,414		$	26.65		6.3 years		648,311		$	20.74		5.6 years
Options exercisable at year-end		287,548		$	24.93		5.0 years	305,991		$	20.00		4.9 years		404,851		$	12.58		4.0 years
Weighted average fair value of options granted during the year				$	11.37					$	11.81						$	16.76
Shares available for grant		136,339						183,990							270,090

The aggregate intrinsic value (the difference between the Company’s closing stock price on the last trading day of the year and the exercise price, multiplied by the number of in-the-money options) of 495,570 and 541,414 stock options outstanding at December 31, 2020 and 2019 was $3.7 million and $8.6 million, respectively. The aggregate intrinsic value of 287,548 and 305,991 stock options exercisable at December 31, 2020 and 2019 was $3.3 million and $6.9 million, respectively.

The fair value of the option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were used for grants:


	2020			2019			2018
Dividend yield		-			-			-
Expected life		7 years			7 years			7 years
Expected volatility		25.51	%		28.21	%		32.07	%
Risk-free interest rate		1.29	%		2.59	%		2.50	%

At December 31, 2020, there was $1.6 million of total unrecognized compensation cost related to nonvested stock option grants. The cost is expected to be recognized over a weighted-average period of 2.5 years. The fair value of stock option grants that vested during 2020, 2019, and 2018 was $1.2 million, $1.2 million and $973,000, respectively.

Restricted Stock Grants

On May 17, 2016, the Company adopted the 2016 Equity Incentive Plan which included a provision for the issuance of 50,000 shares of common stock to be issuable as restricted stock grants. As of December 31, 2020, 25,524 shares of restricted stock were available for grant.

On May 12, 2020, the Company adopted the 2020 Equity Incentive Plan which included a provision for the issuance of 450,000 shares of common stock to be issuable as either stock options or restricted stock grants. As of December 31, 2020, there were no issuances of stock options or restricted stock under this plan.

Shares of restricted stock granted to employees under the stock plans are subject to restrictions as to continuous employment for a specified time period following the date of grant. During this period, the holder is entitled to full voting rights and dividends.

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A summary of the status of the Company’s nonvested restricted stock and changes for the years ended December 31, 2020, 2019, and 2018 is as follows:


	December 31,
	2020					2019					2018
				Weighted					Weighted					Weighted
				Average					Average					Average
	Restricted			Grant-Date		Restricted			Grant-Date		Restricted			Grant-Date
	Shares			Fair Value		Shares			Fair Value		Shares			Fair Value
Nonvested at beginning of year		32,825		$	34.78		29,625		$	34.00		25,000		$	26.43
Granted		13,200			39.87		14,700			33.64		13,000			42.87
Vested		(14,051	)		32.06		(10,375	)		31.61		(8,375	)		25.17
Forfeited		(5,875	)		37.74		(1,125	)		28.03		-			-
Nonvested at end of year		26,099		$	38.05		32,825		$	34.78		29,625		$	34.00

At December 31, 2020, there was $700,000 of total unrecognized compensation cost related to nonvested restricted stock grants. The cost is expected to be recognized over a weighted-average period of 2.5 years.