Note 12. Share-based Compensation Plans

As of December 31, 2015, the Company had one active share-based employee compensation plan, which was approved by the Company's shareholders in May 2015. This plan, referred to as the "2015 Equity Incentive Plan," authorizes the Company to grant various types of share-based compensation awards to the Company's employees and Board of Directors such as stock options, and restricted stock awards. Under the 2015 Equity Incentive Plan a maximum of 2,500,000 shares of the Company's common stock may be issued. Shares issued under this plan, other than stock options and stock appreciation rights, are counted against the plan on a two shares for every one share actually issued basis. Awards that are cancelled, expired, forfeited, fail to vest, or otherwise result in issued shares not being delivered to the grantee, are again made available for the issuance of future share-based compensation awards. Additionally, under this plan, no one individual may be granted shares in aggregate that exceed more than 250,000 shares during any calendar year. The Company's Board of Directors may terminate the 2015 Equity Incentive Plan at any time, and for any reason before the plan expires on December 3, 2024.

The Company also has two non-active share-based compensation plans. These plans are referred to as the "2005 Equity Based Compensation Plan," and the "1997 Stock Option Plan." As of December 31, 2015, no further grants can be made from either of these plans.

Restricted Stock Awards

The Company grants restricted stock periodically for the benefit of employees. Restricted stock issued typically vests ratably over a period of three to five years depending on the specific terms of the grant. Restricted stock grants may be subject to the achievement of certain performance goals. Compensation costs related to restricted stock awards are charged to earnings, included in salaries and employee benefits, over the vesting period of those awards. The fair value of performance-based grants is initially based on the assumption that performance goals will be achieved. If such performance conditions are not achieved, no compensation cost is recognized and previously recognized compensation cost is reversed.

The following table provides a summary of activity related to restricted stock granted for the year ended December 31, 2015:

	Number of Shares			Average Grant Date Fair Value
Balance December 31, 2014		206,443		$	6.65
Granted		85,664			7.88
Vested		(90,570	)		6.48
Forfeited		(39,143	)		7.03

Balance December 31, 2015		162,394		$	7.30

Included in the table above are performance-based grants of restricted stock totaling 23,408 shares as of December 31, 2015.

Stock Options

Stock options are granted periodically for the benefit of employees. The fair value of each stock option award is determined on the date of grant using the Black-Scholes option valuation model, which uses assumptions outlined in the table above. Expectations for volatility are based on the historical volatility of the Company's common stock. The Company estimates forfeiture rates based on historical employee option exercise and termination experience. The Company recognizes share-based compensation costs on a straight line basis over the vesting period of the award, which is typically a period of three to five years.

The following table provides information related to options that have vested or are expected to vest and exercisable options as of December 31, 2015:

		Options Outstanding
		Number of Shares			Weighted Average Exercise Price		Options Available for Grant (1)
Balance, December 31, 2014			742,557		$	6.83		2,003,176
Granted			385,519			7.72
Forfeited			(127,279	)		7.00
Exercised			(56,432	)		5.20
Expired			(11,812	)		13.18

Balance, December 31, 2015			932,553		$	7.19		2,228,601



(1)	Shares available for grant as of December 31, 2014 were from the 2005 Equity Based Compensation Plan, which expired in March 2015 and no further grant can be made from this plan. Shares available for grant as of December 31, 2015 are from the 2015 Equity Incentive Plan, which was approved by the Company's shareholders in May 2015.

	December 31, 2015
	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Vested or expected to vest		888,471	$	7.18		7.68	$	1,233,276
Exercisable at December 31, 2015		346,847	$	6.81		5.83	$	784,426

The total intrinsic value, the amount by which the stock price exceeded the exercise price on the date of exercise, of options exercised in all plans during the years ended December 31, 2015, 2014, and 2013 was $0.2 million, $0.2 million and $0.1 million, respectively. The tax benefit related to the exercise of stock options and disqualifying dispositions on the exercise of incentive stock options was $0.1 million for the year ended December 31, 2015. Tax benefits recognized on the exercise of options and disqualifying dispositions were not material for the years ended December 31, 2014 and 2013.

The following table presents the assumptions used in the calculation of the weighted average fair value of options granted at various dates during the years ended December 31, 2015, 2014 and 2013:

	For the Years Ended December 31,
	2015		2014		2013
Expected volatility		36.27%		49.38%		55.33%
Expected term (years)		5.00		5.61		6.00
Dividend yield		2.82%		0.67%		0.00%
Risk free rate		1.54%		1.75%		1.54%

Weighted-average grant date fair value	$	1.97	$	3.32	$	3.30

The fair value of each stock option award is determined on the date of grant using the Black-Scholes option valuation model, which uses assumptions outlined in the table above. Expectations for volatility are based on the historical volatility of the Company's common stock. The Company estimates forfeiture rates based on historical employee option exercise and termination experience. The Company recognizes share-based compensation costs on a straight line basis over the vesting period of the award, which is typically a period of three to five years.

Share-Based Compensation Expense

The following table provides a summary of the expense the Company recognized related to share-based compensation awards, as well as the remaining expense associated with those awards as of and for the years ended December 31, 2015, 2014 and 2013:

	For the Years Ended December 31,
	2015		2014		2013
		(dollars in thousands)
Share-based compensation expense:
Stock options	$	506	$	490	$	240
Restricted stock		586		503		293

Total expense	$	1,092	$	993	$	533


Unrecognized compensation expense:
Stock options	$	963	$	1,065	$	645
Restricted stock		799		967		651

Total unrecognized expense	$	1,762	$	2,032	$	1,296

Expense related to share-based compensation is charged to earnings over the period the awards are expected to vest, and is included in salaries and employee benefits in the consolidated financial statements. For the year ended December 31, 2015 and 2014, the total income tax benefit recognized related to share-based compensation was $0.1 million, and $0.2 million, respectively. The total income tax benefit recognized related to share-based compensation was less than $0.1 million for the year ended December 31, 2013. At December 31, 2015, compensation expense related to unvested stock options and restricted stock is expected to be recognized over 2.7 years and 1.7 years, respectively.