NOTE 13 – STOCK BASED COMPENSATION

Stock based compensation expense that has been charged against income was $323,000 and $1,025,000 for the three and six months ended June 30, 2017, respectively, and $926,000 and $1,279,000 for the three and six months ended June 30, 2016, respectively.

2014 Omnibus Incentive Plan

The Company’s 2014 Omnibus Incentive Plan (“Omnibus Incentive Plan”) provides for the grant of nonqualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other awards that may be settled in, or based upon the value of, the Company’s common stock. The aggregate number of shares of common stock available for issuance under the Omnibus Incentive Plan is 1,200,000 shares.

Restricted Stock Awards

A summary of changes in the Company’s nonvested Restricted Stock Awards (“RSAs”) under the Omnibus Incentive Plan for the six months ended June 30, 2017 and 2016 were as follows:

				Weighted-Average
				Grant-Date
Nonvested RSAs	Shares			Fair Value
Nonvested at January 1, 2017		126,644		$	14.92
Granted		40,541			25.96
Vested		(62,773	)		15.84
Forfeited		(843	)		14.92
Nonvested at June 30, 2017		103,569		$	18.68

RSAs granted to employees under the Omnibus Incentive Plan typically vest over three to four years. Compensation expense for RSAs granted under the Omnibus Incentive Program will be recognized over the vesting period of the awards based on the fair value of the stock at the issue date. As of June 30, 2017, there was $1,231,000 of unrecognized compensation cost related to nonvested RSAs granted under the Omnibus Incentive Plan. The cost is expected to be recognized over a remaining period of 3.19 years.

Stock Options

A summary of the changes in the Company’s stock options under the Omnibus Incentive Plan for the six months ended June 30, 2017 were as follows:

						Weighted-Average
						Remaining		Aggregate
				Weighted-Average		Contractual Term		Intrinsic Value
Stock Options	Shares			Exercise Price		(In Years)		(In Thousands)
Outstanding at January 1, 2017		163,661		$	15.87
Granted		58,729			25.80
Exercised		(34,433	)		15.87
Forfeited or expired		(287	)		25.80
Outstanding at June 30, 2017		187,670		$	18.96		9.07	$	1,122

Fully vested shares and shares expected to vest at June 30, 2017		187,670		$	18.96		9.07	$	1,122

Shares exercisable at June 30, 2017		32,286		$	15.87		8.76	$	280

Information related to the stock options for the six months ended June 30, 2017 and 2016 follows:

	Six Months Ended June 30,
(Dollars in thousands, except per share amounts)	2017		2016
Aggregate intrinsic value of options exercised	$	243	$	—
Cash received from option exercises		281		—
Tax benefit realized from options exercises		85		—
Weighted average fair value of options granted	$	8.71	$	5.85

Stock options awarded to employees under the Omnibus Incentive Plan are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant, vest over four years, and have ten year contractual terms. The fair value of stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model. Expected volatilities were determined based on a blend of the Company’s historical volatility and historical volatilities of a peer group of companies with a similar size, industry, stage of life cycle, and capital structure. The expected term of the options granted was determined based on the SEC simplified method, which calculates the expected term as the mid-point between the weighted average time to vesting and the contractual term. The risk-free interest rate for the expected term of the options was derived from the Treasury constant maturity yield curve on the valuation date.

The fair value of the stock options granted was determined using the following weighted-average assumptions:

	Six Months Ended June 30,
	2017			2016
Risk-free interest rate		2.11	%		1.49	%
Expected term	6.25 Years			6.25 Years
Expected stock price volatility		29.70	%		34.96	%
Dividend yield		—			—

As of June 30, 2017, there was $753,000 of unrecognized compensation cost related to nonvested stock options granted under the Omnibus Incentive Plan. The cost is expected to be recognized over a remaining period of 3.34 years.