Share-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

The Company’s share-based incentive plans (“Stock Plans”) authorize the issuance of an aggregate of 459,322 shares of the Company’s common stock (as adjusted for stock dividends) pursuant to awards that may be granted in the form of stock options to purchase common stock (“Options”) and awards of shares of common stock (“Stock Awards”).  The purpose of the Stock Plans is to attract and retain personnel for positions of substantial responsibility and to provide additional incentive to certain officers, directors, employees and other persons to promote the success of the Company.  Under the Stock Plans, options may have a term of not more than ten years after the date of grant, subject to earlier termination in certain circumstances.  Options are granted with an exercise price at the closing price of the Company’s common stock on the date of grant or otherwise as provided for in the Stock Plans.  The grant date fair value is calculated using the Black – Scholes option valuation model.

As of June 30, 2016, there were 230,865 shares of common stock available for future grants under the Stock Plans, of which 191,155 shares were available for future grants under the 2013 Equity Incentive Plan and 39,710 shares were available for future grant under the 2015 Directors Stock Plan.

Share-based compensation expense related to options was $22,000 and $23,000 for the six months ended June 30, 2016 and 2015, respectively.

Transactions under the Stock Plans during the six months ended June 30, 2016 are summarized as follows:

(Dollars in thousands, except share amounts)	Number of		Weighted Average		Weighted Average Remaining Contractual	Aggregate Intrinsic
Stock Options	Shares		Exercise Price		Term (years)	Value
Outstanding at January 1, 2016	177,594		$	7.41
Granted	11,655		11.98
Exercised	(3,564	)	6.49
Forfeited	—		—
Expired	—		—
Outstanding at June 30, 2016	185,685		$	7.65	4.9	$	811
Exercisable at June 30, 2016	167,631		$	7.64	4.7	$	735

The fair value of each option and the significant weighted average assumptions used to calculate the fair value of the options granted for the six months ended June 30, 2016 are as follows:

	January 2016
Fair value of options granted	$	4.65
Risk-free rate of return	2.25		%
Expected option life in years	7
Expected volatility	30.66		%
Expected dividends (1)	—

(1)To date, the Company has not paid cash dividends on its common stock.

As of June 30, 2016, there was approximately $89,000 of unrecognized compensation cost related to non-vested stock option-based compensation arrangements granted under the Stock Plans. That cost is expected to be recognized over the next four years.

The following table summarizes the activity in non-vested restricted shares for the six months ended June 30, 2016:

	Number of		Average Grant-Date
Non-vested shares	Shares		Fair Value
Non-vested at January 1, 2016	143,879		$	8.32
Granted	45,950		12.16
Vested	(23,742	)	10.41
Forfeited	(3,000	)	12.69
Non-vested at June 30, 2016	163,087		$	9.04

The value of restricted shares is based upon the closing price of the common stock on the date of grant. The shares generally vest over a 4 year service period for employees and a 2 year service period for non-employee directors with compensation expense recognized on a straight-line basis.

Share-based compensation expense related to stock grants was $340,000 and $303,000 for the six months ended June 30, 2016 and 2015, respectively.

As of June 30, 2016, there was approximately $1.3 million of unrecognized compensation cost related to non-vested stock grants.  Compensation costs related to non-vested stock grants are recognized over four years for employees and two years for non-employee directors from the date of grant.