(14)	Stock Compensation Plans

As of December 31, 2013, the Company has the following share-based compensation plans:

The Company has one fixed stock option plan. Under the 2006 Stock Incentive Plan, the Company may grant option grants, stock appreciation rights, restricted stock, or stock units to an employee for an amount up to 25,000 total shares in any calendar year. With respect to awards granted to non-employee directors under the Plan, no outside director can receive option grants, stock appreciation rights, restricted stock, or stock units in excess of 3,000 total shares in any calendar year. There are 945,125 shares authorized under the plan. The total number of shares authorized has been adjusted to give retroactive effect to stock dividends and stock splits, including the 3% stock dividend declared on January 23, 2014, payable March 31, 2014 to shareholders of record as of February 28, 2014. The plan will terminate March 15, 2016. The Compensation Committee of the Board of Directors is authorized to prescribe the terms and conditions of each option, including exercise price, vestings, or duration of the option. Generally, option grants vest at a rate of 25% per year after the first anniversary of the date of grant and restricted stock awards vest at a rate of 100% after four years. Options are granted with an exercise price of the fair value of the related common stock on the date of grant.

Stock option activity for the Company’s Stock Incentive Plan during the years indicated is as follows:


	Stock Options
	Number of shares			Weighted average exercise price

Balance at December 31, 2012		383,045		$	11.71
Granted		22,950			5.88
Exercised		—			—
Cancelled		—			—
Expired		(48,502	)		7.74

Balance at December 31, 2013		357,493		$	11.87

The 2006 Stock Incentive Plan permits stock-for-stock exercises of shares. During 2013, employees tendered no mature shares in stock-for-stock exercises. Matured shares are those held by employees longer than six months.

The following table presents information on stock options for the year ended December 31, 2013:

	Number of Shares		Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted Average Remaining Contractual Term

Options exercised		—	$	—	$	—

Stock options outstanding and expected to vest:		357,493	$	11.87	$	181		2.73

Stock options vested and currently exercisable:		311,503	$	12.84	$	92		1.90

The weighted average grant date fair value per share of options granted during the years ended December 31 was $2.75 in 2013, $2.40 in 2012, and $2.18 in 2011.

At December 31, 2013, the range of exercise prices for all outstanding options ranged from $4.13 to $23.05.

As of December 31, 2013, there was $79 of total unrecognized compensation related to non-vested stock options. This cost is expected to be recognized over a weighted average period of approximately 2.6 years.

For the years ended December 31, 2013, 2012, and 2011 there was $39, $29, and $29, respectively of recognized compensation related to stock options.

The Company determines fair value at grant date using the Black-Scholes-Merton pricing model that takes into account the stock price at the grant date, the exercise price, the risk-free interest rate, the volatility of the underlying stock and the expected life of the option.

The weighted average assumptions used in the pricing model are noted in the following table. The expected term of options granted is derived from historical data on employee exercise and post-vesting employment termination behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected volatility is based on both the implied volatilities from the traded option on the Company’s stock and historical volatility on the Company’s stock.

The Company expenses the fair value of the option on a straight line basis over the vesting period. The Company estimates forfeitures and only recognizes expense for those shares expected to vest.

The following table shows our weighted average assumptions used in valuing stock options granted for the years ended December 31:


	2013			2012			2011
Risk-Free Interest Rate		0.86	%		0.87	%		1.91	%

Expected Dividend Yield		0.00	%		0.00	%		0.00	%

Expected Life in Years		5.00			5.00			5.00

Expected Price Volatility		54.36	%		53.06	%		50.98	%

In addition to stock options, the Company also grants restricted stock awards to directors, certain officers and employees. The restricted shares awarded become fully vested after one to four years of continued employment or service from the date of grant. Restricted shares are forfeited if officers and employees terminate prior to the lapsing of restrictions.

The following table presents information about non-vested restricted stock awards outstanding for the year ended December 31, 2013:

	Restricted Stock Awards
	Number of shares			Weighted average grant date fair value

Balance at December 31, 2012		47,707		$	4.53
Granted		20,880			5.89
Vested		(8,805	)		4.37
Cancelled/Forfeited		—			—

Balance at December 31, 2013		59,782		$	5.03

The aggregate intrinsic value of restricted stock awards vested in calendar year 2013, 2012, and 2011 was $50, $59, and $32, respectively.

The weighted average fair value per share of restricted stock awards granted during the years ended December 31 was $5.89 in 2013, $5.00 in 2012, and $4.75 in 2011.

As of December 31, 2013, there was $153 of total unrecognized compensation related to non-vested restricted stock awards. This cost is expected to be recognized over a weighted average period of approximately 2.6 years.

For the year ended December 31, 2013, 2012, and 2011 there was $73, $58, and $98, respectively of recognized compensation related to restricted stock awards.

Employee Stock Purchase Plan

Under the First Northern Community Bancorp 2006 Amended Employee Stock Purchase Plan (“Plan”), the Company is authorized to issue to an eligible employee shares of common stock. There are 309,986 shares (adjusted for the 3% stock dividend declared on January 23, 2014, payable March 31, 2014 to shareholders of record as of February 28, 2014) authorized under the Plan. The Plan will terminate March 15, 2016. The Plan is implemented by participation periods of not more than twenty-seven months each. The Board of Directors determines the commencement date and duration of each participation period. An eligible employee is one who has been continually employed for at least ninety (90) days prior to commencement of a participation period. Under the terms of the Plan, employees can choose to have up to 10 percent of their compensation withheld to purchase the Company’s common stock each participation period. The purchase price of the stock is 85 percent of the lower of the fair value on the last trading day before the Date of Participation or the fair value on the last trading day during the participation period. Approximately 47 percent of eligible employees are participating in the Plan in the current participation period, which began November 24, 2013 and will end November 23, 2014.

Under the Plan, at the annual stock purchase date of November 23, 2013, there were $76 in contributions, and 17,374 shares were purchased at an average price of $4.36. For the year ended December 31, 2013, 2012, and 2011 there was $45, $28, and $25, respectively of recognized compensation related to ESPP issuances. Compensation cost is reported in salaries and employee benefits expense in the consolidated statements of income.