STOCK BASED COMPENSATION

On March 15, 2018, the Company’s Board of Directors approved the 2018 Equity Incentive Plan ("2018 Plan"). The 2018 Plan became effective upon shareholder approval at the annual shareholders meeting held on April 17, 2018. Under the 2018 Plan, the Company can grant incentive and non-qualified stock options, stock awards, stock appreciation rights, and other incentive awards to directors and employees of, and certain service providers to, the Company and its subsidiaries. Once the 2018 Plan became effective, no further awards could be granted from the 2007 Stock Option Plan ("Stock Option Plan") or the 2014 Equity Incentive Plan ("2014 Plan"). However, any outstanding equity awards granted under the Stock Option Plan or the 2014 Plan will remain subject to the terms of such plans until the time such awards are no longer outstanding.

The Company has reserved 250,000 shares of common stock for issuance under the 2018 Plan. During the three months ended March 31, 2020 and 2019, the Company issued 38,170 and 35,633 restricted stock awards, respectively, under the 2018 Plan. There were 165,597 shares available for issuance as of March 31, 2020.

Stock Options

As of March 31, 2020, all of the Company's outstanding options were granted under the Stock Option Plan. The term of these options is ten years, and they vest one-third each year, over a three year period. The Company will use authorized, but unissued shares to satisfy share option exercises. The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model.

Expected volatilities are based on historical volatilities of the Company's common stock. The Company assumes all awards will vest. The expected term of options granted represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant.. There were no stock options granted during the three months ended March 31, 2020 or March 31, 2019.

The summary of our stock option activity for the three months ended March 31, 2020 is as follows:



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Options outstanding, beginning of period	355,218		$	16.63	5.0
Exercised	(6,500	)	9.46
Options outstanding, end of period	348,718		16.76		4.8
Options exercisable	338,716		$	16.52	4.7

The aggregate intrinsic value was $904 thousand for both options outstanding and exercisable as of March 31, 2020. As of March 31, 2020, there was $39 thousand of total unrecognized compensation cost related to stock options granted under the Stock Option Plan. The cost is expected to be recognized over a weighted-average period of 0.88 year.

Share-based compensation expense charged against income was $11 thousand and $20 thousand for the three months ended March 31, 2020 and 2019, respectively.

Restricted Stock Awards

A summary of changes in the Company's nonvested shares for the three months ended March 31, 2020 is as follows:



Nonvested Shares	Shares		Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2020	80,370		$	24.28
Granted	38,170		24.90
Vested	(19,850	)	23.10
Forfeited	(1,400	)	24.46
Nonvested at March 31, 2020	97,290		$	24.76

As of March 31, 2020, there was $1.6 million of total unrecognized compensation cost related to nonvested shares granted under the 2014 Plan and 2018 Plan. The cost is expected to be recognized over a weighted average period of 2.24 years. The total fair value of shares vested during the three months ended March 31, 2020 was $459 thousand.

Total expense for restricted stock awards totaled $177 thousand and $134 thousand for the three months ended March 31, 2020 and 2019, respectively. For the three months ended March 31, 2020 and 2019, there was $64 thousand and $43 thousand, respectively, of restricted stock redeemed to cover the payroll taxes due at the time of vesting.