Stock-Based Compensation Plan

During the first nine months of 2017, the Corporation granted 130,600 stock options to officers, directors, and employees under the 2009 Stock Option Plan (the “2009 Plan”). Options granted under the 2009 Plan have an exercise price equal to the fair market value as of the grant date. Options granted vest over various periods ranging from 2.5 years to 4.0 years and expire one year after the full vesting date. Stock-based compensation expense recognized in other operating expense during the nine month periods ended September 30, 2017 and 2016 was $310 thousand and $251 thousand, respectively. The fair value of options is estimated on the date of grant using a Black Scholes option-pricing model with the assumptions noted below.

Total unrecognized compensation cost related to non-vested stock-based compensation arrangements granted under the 2009 Plan as of September 30, 2017 was $975 thousand. The cost is expected to be recognized over a weighted average period of 1.41 years.

A summary of stock option activity under the 2009 Plan as of and for the nine months ended September 30, 2017 and 2016 is presented as follows:



	For the Nine Months Ended September 30,
	2017			2016
Expected life of options granted, in years	4.42			4.33
Risk-free interest rate	1.49		%	1.26		%
Expected volatility of stock	29.64		%	29.67		%
Annual expected dividend yield	3.00		%	3.00		%
Fair value of granted options	$	806,422		$	433,479
Non-vested options	316,946			303,539

The following table summarizes options outstanding under the 2009 Plan for the nine months ended September 30, 2017 and 2016:



	September 30, 2017
	Number of Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at beginning of period	481,381		$	16.52	2.50	$	5,412,143
Granted	130,600		27.76		4.42	—
Exercised	(143,092	)	14.40		0.95	1,815,112
Lapsed or canceled	(3,720	)	15.69		1.44	—
Outstanding September 30, 2017	465,169		$	20.34	2.82	$	3,872,525
Exercisable at September 30, 2017	148,223		$	16.51	1.51	$	1,801,644



	September 30, 2016
	Number of Options		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at beginning of period	407,832		$	15.33	2.81	$	2,091,196
Granted	122,050		18.39		4.33	—
Exercised	(41,351	)	12.18		1.02	301,198
Lapsed or canceled	(8,700	)	16.16		2.59	—
Outstanding September 30, 2016	479,831		$	16.37	2.72	$	3,614,016
Exercisable at September 30, 2016	176,292		$	14.43	1.67	$	1,669,471

At the Corporation’s 2017 Annual Meeting of Shareholders held on October 26, 2017 (the “Annual Meeting”), shareholders approved the Access National Corporation 2017 Equity Compensation Plan (the “2017 Plan”). The 2017 Plan provides for the grant to key employees, non-employee directors, consultants and advisors of awards that may include one or more of the following: stock options, restricted stock, restricted stock units, stock appreciation rights, performance units and performance cash awards. No awards may be granted under the 2017 Plan after October 25, 2027. Awards previously granted under the 2009 Plan will remain outstanding and valid in accordance with their terms, but no new awards will be granted under the 2009 Plan following the Annual Meeting. Complete details of the 2017 Plan are contained in Exhibit 10.18 to Form 8-K filed November 1, 2017. As of the date of this Quarterly Report on Form 10-Q, there were no awards outstanding under the 2017 Plan.