8. STOCK OPTIONS

3 Months Ended

Mar. 31, 2015

Stock Options

STOCK OPTIONS

8. STOCK OPTIONS

Stock based compensation expense is recognized using the fair-value method for all awards. During the three months ended March 31, 2015 the Company granted options to purchase 3,000 shares of the Company’s common stock to one director. The exercise price of the option is equal to $12.75 per share, the market price of the stock on the date of grant and the option expires on August 26, 2016. The Company determined the fair value of its option awards using the Black-Scholes option pricing model. The following assumptions were used to value the options granted during the three months ended March 31, 2015: 1.6 year expected life; expected volatility of approximately 37%; risk-free of .17% and annual dividend yield of 4%. The expected life for options granted during the period represents the period of time that options are to be outstanding based on the expiration date of the Plan. Expected volatilities are based upon historical volatility of the Company’s stock over a period equal to the 1.6 year expected life.

The weighted average fair value for options granted during the three months ended March 31, 2015 was $12.04 per share. For the three months ended March 31, 2015 the Company recorded approximately $6,000 in non-employee stock option expense relating to the options granted in 2015.

The following table summarizes stock option activity during the three months ended March 31, 2015.

	Options Outstanding	Weighted Average Exercise Price
Outstanding at January 1, 2015	17,700	$   18.35
Granted	3,000	$   12.75
Outstanding at March 31, 2015	20,700	$   17.54

The following table summarizes information concerning outstanding and exercisable options as of March 31, 2015:

	Number Outstanding	Weighted Average
Strike Price	and exercisable	Strike Price
$        12.75	3,000	$                    12.75
$        17.84	9,500	$                    17.84
$        18.89	7,500	$                    18.89
$        19.50	700	$                    19.50
	20,700	$                    17.54

As of March 31, 2015 the options outstanding and exercisable had no intrinsic value.