Stock-Based Compensation

9 Months Ended

Sep. 30, 2015

Note 2 – Stock-Based Compensation

CTBI's compensation expense related to stock option grants was $10 thousand and $3 thousand, respectively, for the three months ended September 30, 2015 and 2014, and $29 thousand and $8 thousand, respectively, for the nine months ended September 30, 2015 and 2014. Restricted stock expense for the three months ended September 30, 2015 and 2014 was $186 thousand and $202 thousand, respectively, including $20 thousand and $30 thousand in dividends paid for each period. Restricted stock expense for the nine months ended September 30, 2015 and 2014 was $554 thousand and $540 thousand, respectively, including $59 thousand and $90 thousand in dividends. As of September 30, 2015, there was a total of $0.2 million of unrecognized compensation expense related to unvested stock option awards that will be recognized as expense as the awards vest over a weighted average period of 4.1 years and a total of $0.5 million of unrecognized compensation expense related to restricted stock grants that will be recognized as expense as the awards vest over a weighted average period of 2.0 years.

There were no shares of restricted stock granted during the three months ended September 30, 2015 and 2014. There were 10,582 and 4,561 shares of restricted stock granted during the nine months ended September 30, 2015 and 2014, respectively. The restrictions on the restricted stock lapse ratably over four years or in the event of a change in control of CTBI or the death of the participant. In the event of the disability of the participant, the restrictions will lapse on a pro rata basis. The Compensation Committee of the Board of Directors will have discretion to review and revise restrictions applicable to a participant's restricted stock in the event of the participant's retirement. There were no options granted to purchase shares of CTBI common stock during the three months ended September 30, 2015. There were 20,000 options granted during the nine months ended September 30, 2015. There were 10,000 options granted during the three and nine months ended September 30, 2014.

The fair value of options granted during the nine months ended September 30, 2015, were established at the date of grant using a Black-Scholes option pricing model with the weighted average assumptions as follows:

	Nine Months Ended September 30
	2015			2014
Expected dividend yield		3.72	%		3.40	%
Risk-free interest rate		1.54	%		2.01	%
Expected volatility		30.77	%		30.77	%
Expected term (in years)		7.0			7.0
Weighted average fair value of options	$	6.60		$	7.76