Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

Note 2 – Stock-Based Compensation

CTBI's compensation expense related to stock option grants was $8 thousand and $4 thousand, respectively for the three months ended March 31, 2015 and 2014, respectively. Restricted stock expense for the three months ended March 31, 2015 and 2014 was $189 thousand and $187 thousand, respectively, including $20 thousand and $30 thousand in dividends paid for each period. As of March 31, 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 4.6 years and a total of $1.0 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 2.2 years.

There were 10,582 and 4,561 shares of restricted stock granted during the three months ended March 31, 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 20,000 options granted to purchase shares of CTBI common stock during the three months ended March 31, 2015. No options were granted during the three months ended March 31, 2014.

The fair value of options granted during the three months ended March 31, 2015, were established at the date of grant using a Black-Scholes option pricing model with the weighted average assumptions as follows:

	Three Months Ended
	March 31
	2015
Expected dividend yield		3.72	%
Risk-free interest rate		1.54	%
Expected volatility		30.77	%
Expected term (in years)		7.0
Weighted average fair value of options	$	6.60

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

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