SHARED-BASED COMPENSATION

On December 31, 2014, the Company had two share-based compensation plans, which are described below. The Plans do not provide for the settlement of awards in cash and new shares are issued upon option exercise or restricted share grants.

On November 15, 2000, the Company adopted, and subsequently amended on December 20, 2000, the Central Valley Community Bancorp 2000 Stock Option Plan (2000 Plan) for which 198,830 shares remain reserved for issuance for options already granted to employees and directors under incentive and nonstatutory agreements. The plan expired on November 15, 2010. Outstanding options under this plan are exercisable until their expiration, however, no new options will be granted under this plan. The plan required that the option price may not be less than the fair market value of the stock at the date the option was granted, and that the option price must be paid in full at the time it is exercised. The options under the plan expire on dates determined by the Board of Directors, but not later than 10 years from the date of grant. The vesting period was determined by the Board of Directors and was generally over 5 years.

In May 2005, the Company adopted the Central Valley Community Bancorp 2005 Omnibus Incentive Plan (2005 Plan). The plan provides for awards in the form of incentive stock options, non-statutory stock options, stock appreciation rights, and restricted stock. The plan also allows for performance awards that may be in the form of cash or shares of the Company, including restricted stock. The 2005 plan requires that the exercise price may not be less than the fair market value of the stock at the date the option is granted, and that the option price must be paid in full at the time it is exercised. The options and awards under the plan expire on dates determined by the Board of Directors, but not later than 10 years from the date of grant. The vesting period for the options, restricted common stock awards and option related stock appreciation rights is determined by the Board of Directors and is generally over five years. The maximum number of shares that can be issued with respect to all awards under the plan is 476,000. Currently under the 2005 Plan, there are 226,380 shares reserved for issuance for options and restricted common stock awards already granted to employees and 241,760 remain reserved for future grants as of December 31, 2014. The 2005 plan requires that the exercise price may not be less than the fair market value of the stock at the date the option is granted, and that the option price must be paid in full at the time it is exercised.

For the years ended December 31, 2014, 2013, and 2012, the compensation cost recognized for share based compensation was $173,000, $98,000, and $108,000, respectively. The recognized tax benefit for share based compensation expense was $12,000, $28,000, and $16,000 for 2014, 2013, and 2012, respectively.

Stock Option Plan - The Company bases the fair value of the options granted on the date of grant using a Black-Scholes Merton option pricing model that uses assumptions based on expected option life and the level of estimated forfeitures, expected stock volatility, risk free interest rate, and dividend yield. The expected term and level of estimated forfeitures of the Company’s options are based on the Company’s own historical experience. Stock volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U. S. Treasury yield curve for the periods within the contractual life of the options in effect at the time of grant. The compensation cost for options granted is based on the weighted average grant date fair value per share.

No options to purchase shares of the Company’s common stock were granted during the years ending December 31, 2014 and 2013 from any of the Company’s stock based compensation plans. In 2012, options to purchase 92,150 shares of common stock were granted from the 2005 Plan at exercise prices between $8.02 and $8.75. All options were granted with an exercise price equal to the market value on the grant date.

The fair value of each option is estimated on the date of grant using the following assumptions:



	2012
Dividend yield	0.00%
Expected volatility	42%
Risk-free interest rate	0.71%
Expected option term	6.5 years

A summary of the combined activity of the Plans for the year ended December 31, 2014 follows (dollars in thousands, except per share amounts):



	Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Options outstanding at January 1, 2014	380,430		$	8.83
Options exercised	(8,910	)	$	6.22
Options forfeited	(3,160	)	$	8.81
Options outstanding at December 31, 2014	368,360		$	8.89	3.68	$	1,081
Options vested or expected to vest at December 31, 2014	364,495		$	8.91	3.65	$	1,067
Options exercisable at December 31, 2014	302,780		$	9.19	2.90	$	848

Information related to the stock option plan during each year follows (in thousands, except per share amounts):



	2014		2013		2012
Weighted-average per share grant-date fair value of options granted	$	—	$	—	$	3.40
Intrinsic value of options exercised	$	45	$	82	$	93
Cash received from options exercised	$	55	$	789	$	385
Excess tax benefit realized for option exercises	$	7	$	17	$	26

As of December 31, 2014, there was $169,000 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under all Plans. The cost is expected to be recognized over a weighted average period of 2.36 years. The total fair value of options vested was $99,000 and $102,000 for the years ended December 31, 2014 and 2013, respectively.

Restricted Common Stock Awards - The 2005 Plan provides for the issuance of shares to directors and officers. Restricted common stock grants typically vest over a five-year period. Restricted common stock (all of which are shares of our common stock) is subject to forfeiture if employment terminates prior to vesting. The cost of these awards is recognized over the vesting period of the awards based on the fair value of our common stock on the date of the grant.

The following table summarizes restricted stock activity for the year ended December 31, 2014 as follows:



	Shares		Weighted Average Grant Date Fair Value
Nonvested outstanding shares at January 1, 2014	—		$	—
Granted	57,330		$	12.68
Vested	—		$	—
Forfeited	(480	)	$	12.95
Nonvested outstanding shares at December 31, 2014	56,850		$	12.68

During the year ended December 31, 2014, 57,330 shares of restricted common stock were granted from the 2005 Plan. The restricted common stock had a weighted average fair value of $12.68 per share on the date of grant. These restricted common stock awards vest 20% after Year 1. Thereafter, 20% of the remaining restricted stock will vest on each anniversary of the initial award commencement date and will be fully vested on the fifth such anniversary.

As of December 31, 2014, there were 56,850 shares of restricted stock that are nonvested and expected to vest. Share-based compensation cost charged against income for restricted stock awards was $82,000 for the year ended December 31, 2014. None was charged to income for the year ended December 31, 2013.

As of December 31, 2014, there was $640,000 of total unrecognized compensation cost related to nonvested restricted common stock. Restricted stock compensation expense is recognized on a straight-line basis over the vesting period. This cost is expected to be recognized over a weighted average remaining period of 4.48 years and will be adjusted for subsequent changes in estimated forfeitures. Restricted common stock awards had an intrinsic value of $630,000 at December 31, 2014.