Note 13 - Stock Option Grants

9 Months Ended

Sep. 30, 2016

Notes to Financial Statements

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

13. STOCK OPTION GRANTS

In accordance with the Company

’s 2013 Incentive Plan, stock option awards have been granted to certain employees and non-employee directors. The awards were granted with an exercise price equal to the market price of the Company’s common stock on the date of grant and have vesting periods ranging from one to three years, with 10-year contractual terms. The Company expects to use shares held as treasury stock to satisfy share option exercises. Currently, the Company holds a sufficient number of treasury shares to satisfy potential exercises.

The Company recognizes the cost of services received in exchange for stock option awards based on the grant date fair value of the award, with compensation expense recognized on a straight-line b

asis over the award’s vesting period. The fair value of outstanding awards was determined using the Black-Scholes option pricing model based on the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock.

	2016			2015
Risk-free interest rate		1.58	%		1.52	%
Expected term	7.5 years			7.5 years
Expected stock price volatility		25.25	%		54.04	%
Dividend yield		1.50	%		1.50	%

The following table summarizes the Company's stock option activity for the periods presented.

	Nine Months Ended
	September 30 , 201 6				September 30 , 201 5
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of period		175,550	$	8.17		83,400	$	8.09
Granted		97,000		8.30		96,150		8.23
Exercised		—		—		—		—
Expired		—		—		—		—
Forfeited		—		—		2,500		8.09
Options outstanding, end of period		272,550	$	8.21		177,050	$	8.16
Options exercisable, end of period		175,550	$	8.17		81,900	$	8.09

Stock-based compensation expense related to stock options totaled $0.1 million and $0.2 million for the nine-month periods ended September 30, 2016 and 2015, respectively. The aggregate intrinsic value of stock options outstanding (calculated as the

amount by which the market value of underlying stock exceeds the exercise price of the option) was $0.4 million as of September 30, 2016 and $0.1 million as of  September 30, 2015.