SHARED-BASED COMPENSATION

On December 31, 2011, the Company had two share-based compensation plans, which are described below. The Plans do not provide for the settlement of awards in cash and new shares are issued upon option exercise or restricted share grants.

On November 15, 2000, the Company adopted, and subsequently amended on December 20, 2000, the Central Valley Community Bancorp 2000 Stock Option Plan (2000 Plan) for which 416,769 shares remain reserved for issuance for options already granted to employees and directors under incentive and nonstatutory agreements. The plan expired on November 15, 2010. Outstanding options under this plan are exercisable until their expiration, however, no new options will be granted under this plan. The plan required that the option price may not be less than the fair market value of the stock at the date the option was granted, and that the option price must be paid in full at the time it is exercised. The options under the plan expire on dates determined by the Board of Directors, but not later than 10 years from the date of grant. The vesting period was determined by the Board of Directors and was generally over five years.

In May 2005, the Company adopted the Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan). The plan provides for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. The plan also allows for performance awards that may be in the form of cash or shares of the Company, including restricted stock. The maximum number of shares that can be issued with respect to all awards under the plan is 476,000. Currently under the 2005 Plan, there are 94,250 shares reserved for issuance for options already granted to employees and 381,750 remain reserved for future grants as of December 31, 2011. The 2005 plan requires that the exercise price may not be less than the fair market value of the stock at the date the option is granted, and that the option price must be paid in full at the time it is exercised. The options and awards under the plan expire on dates determined by the Board of Directors, but not later than 10 years from the date of grant. The vesting period for the options and option related stock appreciation rights is determined by the Board of Directors and is generally over five years.

No options to purchase shares of the Company’s common stock were issued during the year ending December 31, 2011 from any of the company's stock based compensation plans. In 2010, options to purchase 15,200 shares of the Company’s common stock were granted from the 2000 Plan at an exercise price of $5.76 and options to purchase 67,800 shares of common stock were granted from the 2005 Plan at exercise prices between $5.30 and $5.76. In 2009, options to purchase 13,500 shares of the Company’s common stock were granted at exercise prices of between $5.06 and $6.40 from the 2005 Plan. All options were granted with an exercise price equal to the market value on the grant date.

The Company bases the fair value of the options previously granted on the date of grant using a Black-Scholes-Merton option pricing model that uses assumptions based on expected option life, the level of estimated forfeitures, expected stock volatility and the risk-free interest rate. Stock volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve and the expected term of the options. Historical data is used to determine the expected term of its stock options.

The fair value of each option is estimated on the date of grant using the following assumptions.



	2010	2009
Dividend yield	0.00%	0.10%
Expected volatility	40% - 44%	31% - 38%
Risk-free interest rate	1.47% - 2.43%	1.52% - 1.87%
Expected option term	6.5 years	6.5 years

For the years ended December 31, 2011, 2010, and 2009, the compensation cost recognized for share based compensation was $196,000, $239,000, and $284,000, respectively. The recognized tax benefit for share based compensation expense was $36,000, $42,000, and $44,000 for 2011, 2010, and 2009, respectively.

A summary of the combined activity of the Plans for the years ended December 31, 2011, 2010, and 2009 follows:



	Number of Stock Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
	(Dollars in thousands, except per share amounts)
Options outstanding at January 1, 2009	823,881
Options granted	13,500		$	5.21
Options exercised	(42,522	)	$	4.11
Options canceled	(4,925	)	$	8.10
Options outstanding at December 31, 2009	789,934		$	6.70	3.29	$	668

Options vested or expected to vest at December 31, 2009	757,726		$	6.60	4.46	$	668

Options exercisable at December 31, 2009	679,507		$	6.46	2.65	$	668

Options outstanding at January 1, 2010	789,934
Options granted	83,000		$	5.75
Options exercised	(159,400	)	$	3.45
Options canceled	(6,405	)	$	8.59
Options outstanding at December 31, 2010	707,129		$	7.31	3.78	$	350

Options vested or expected to vest at December 31, 2010	687,832		$	7.34	6.04	$	350

Options exercisable at December 31, 2010	568,891		$	7.62	4.34	$	350

Options outstanding at January 1, 2011	707,129
Options exercised	(179,800	)	$	3.78
Options canceled	(16,310	)	$	6.93
Options outstanding at December 31, 2011	511,019		$	8.56	3.92	$	12

Options vested or expected to vest at December 31, 2011	494,692		$	8.64	5.44	$	12

Options exercisable at December 31, 2011	422,375		$	9.11	3.08	$	10

The weighted-average grant-date fair value of options granted during 2010, and 2009 was $2.58, and $1.33, respectively. There were no options granted in 2011.

The total intrinsic value of options exercised in the years ended December 31, 2011, 2010, and 2009 was $417,000, $349,000, and $51,000, respectively.

Cash received from options exercised for the years ended December 31, 2011, 2010, and 2009 was $680,000, $550,000, and $175,000, respectively. The tax benefit realized for the tax deductions from options exercised totaled $116,000, $28,000, and $7,000 for the years ended December 31, 2011, 2010, and 2009, respectively.

As of December 31, 2011, there was $197,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all Plans. The cost is expected to be recognized over a weighted average period of 2.85 years. The total fair value of options vested was $123,000 and $260,000 for the years ended December 31, 2011 and 2010, respectively.