Note 16 - Stock Awards

12 Months Ended

Dec. 31, 2018

Notes to Financial Statements

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

16. STOCK AWARDS

In accordance with the Company’s

2013

Incentive Plan, stock awards, including stock options and restricted stock, have been granted to certain employees and non-employee directors. Shares of common stock available for distribution to satisfy the grants

may

consist, in whole or in part, of authorized and unissued shares, treasury shares or shares reacquired by the Company in any manner. Stock-based compensation expense related to stock awards totaled

$0.3

million and

$0.2

million for the years ended

December 31, 2018

and

2017,

respectively.

Stock Options

Stock option awards have been granted with an exercise price equal to the market price of the Company’s common stock on the date of the grant and have vesting periods ranging from

one

to

three

years, with

10

-year contractual terms. 

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 basis 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.

	2018			2017
Risk-free interest rate		2.77	%		2.23	%
Expected term (in years)		7.5			7.5
Expected stock price volatility		28.3	%		25.36	%
Dividend yield		1.50	%		1.50	%
Fair value of stock option	$	3.51		$	3.68

The following table summarizes the Company’s stock option activity for the periods presented:

	December 31, 2018				December 31, 2017
	Number of Shares		Average Exercise Price		Number of Shares		Average Exercise Price
Options:
Outstanding, beginning of year		318,000	$	9.43		272,550	$	8.21
Granted		62,150		11.71		70,600		13.84
Exercised		500		8.12		21,816		8.15
Expired		—		—		—		—
Forfeited		1,700		11.15		3,334		11.79
Options outstanding, end of year		377,950	$	9.80		318,000	$	9.43
Options exercisable, end of year		249,467	$	8.72		206,133	$	8.20

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

zero

as of

December 31, 2018,

and approximately

$1.2

million as of

December 31, 2017

.

Restricted Stock

During the years ended

December 31, 2018

and

2017,

respectively, Bancshares granted

11,870

shares of restricted stock and

11,283

shares of restricted stock under its

2013

Incentive Plan. The Company recognizes the cost of services received in exchange for restricted stock awards based on the grant date closing price of the stock, with compensation expense recognized on a straight-line basis over the award’s vesting period.