At December 31, 2018, the Company had three share-based compensation plans: the 2011 Incentive Plan, the 2014 Incentive Plan, and the 2017 Incentive Plan (collectively, “the Plans”). Awards are no longer granted under the 2011 and 2014 plans; however, awards previously granted under such plans continue in accordance with their terms. Options to purchase common stock were granted to officers and key employees at exercise prices not less than the fair market value of the Company’s common stock on the date of the grant, and the Company also grants restricted stock awards. The Company issues new common stock to satisfy stock option exercises as well as the issuance of restricted stock awards.

Stock options and restricted stock awards were granted in the third quarters of both 2018 and 2017. Stock options and restricted stock awards are valued at fair market value based on the Company’s closing stock price on the date of grant. Stock options granted in 2018 and 2017 vest ratably over five years and expire 10 years from the grant date. Restricted stock granted in 2018 and 2017 vests ratably over four years. As of December 31, 2018, there were approximately

1.1 million shares remaining available for share-based awards under the 2017 Incentive Plan.

Stock option exercises can be net share settled such that the Company withholds shares with value equivalent to the exercise price of the stock option awards plus the employees’ minimum statutory obligation for the applicable income and other employment taxes. Total shares withheld were approximately 204,000 and 120,000 in 2018 and 2017, respectively, and were based on the value of the stock on the exercise dates. The net share settlement has the effect of share repurchases by the Company as they reduce the number of shares that would have otherwise been issued. Total payments made by the Company for the employees’ tax obligations to the taxing authorities were $699,000 and $154,000 in 2018 and 2017, respectively, and are reflected as a financing activity within the consolidated statements of cash flows.

In accordance with ASC 718, share-based compensation expense was recognized in the 2018 and 2017 consolidated financial statements for stock options and restricted stock awards granted since 2013. An estimate of forfeitures, based on historical data, was included in the calculation of share-based compensation. The effect of applying the expense recognition provisions of ASC 718 decreased Earnings before Provision for Income Taxes by $1,513,000 in 2018, and by $1,622,000 in 2017.

At December 31, 2018, there was $1.9 million of total unrecognized compensation cost related to non-vested stock options granted in the years 2015 through 2018 which is expected to be recognized over the weighted-average remaining vesting period of 2.9 years. At December 31, 2018, there was $1.7 million of total unrecognized compensation cost related to non-vested restricted stock awards granted in the years 2015 through 2018 which is expected to be recognized over the weighted-average remaining vesting period of 2.9 years.

The risk-free interest rate is based on U.S. Treasury bonds with a remaining term equal to the expected term of the award. The expected dividend yield is based on the Company’s expected annual dividend as a percentage of the market value of the Company’s common stock in the year of grant. The expected term of the stock options is determined using historical experience. The expected volatility is based upon historical stock prices over the most recent period equal to the expected term of the award.

	Years ended December 31,
	2018					2017
Stock Options	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding at beginning of year		1,502,493		$	26.57		1,486,257		$	26.13
Granted		129,200			37.22		211,200			27.94
Exercised		(429,047	)		25.96		(174,989	)		24.48
Forfeited or expired		(29,026	)		26.67		(19,975	)		26.53
Outstanding at end of year		1,173,620		$	27.96		1,502,493		$	26.57

Exercisable at end of year		692,007		$	26.92		877,131		$	26.59

Weighted average fair market value of options granted	$	7.07				$	4.05

	Weighted Average Remaining Contractual Life (in Years)	Aggregate Intrinsic Value
Outstanding - December 31, 2018	4.2	$	2,452,000
Exercisable - December 31, 2018	2.3	$	1,560,000

The aggregate intrinsic value of outstanding and exercisable stock options is defined as the difference between the market value of the Company’s stock on December 31, 2018 of $29.17 and the exercise price multiplied by the number of in-the-money outstanding and exercisable stock options.

	Number of Options			Weighted Average Exercise Price		Weighted Average Fair Value
Non-vested - December 31, 2016		724,125		$	26.20	$	3.07
Granted		211,200			27.94		4.05
Vested		(296,638	)		26.71		3.01
Forfeited		(13,325	)		26.16		3.12
Non-vested - December 31, 2017		625,362		$	26.55	$	3.43
Granted		129,200			37.22		7.07
Vested		(243,798	)		26.42		3.25
Forfeited		(29,151	)		26.67		3.46
Non-vested - December 31, 2018		481,613		$	29.46	$	4.49

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number of Options Outstanding		Weighted Average Remaining Contractual Life (in Years)		Weighted Average Exercise Price		Number of Options Exercisable		Weighted Average Exercise Price
$25.51 to $25.86		448,225		3.2	$	25.57		256,600	$	25.59
$27.04 to $37.22		725,395		4.8	$	29.43		435,407	$	27.70
		1,173,620		4.2	$	27.96		692,007	$	26.92

	2018		2017
	(Dollars in thousands)
Total intrinsic value of stock options exercised	$	3,822	$	618
Net proceeds from stock option exercises	$	4,403	$	4,284
Income tax benefit from the exercise of stock options	$	994	$	188
Total fair value of stock options vested	$	793	$	892

	Shares of Restricted Stock			Weighted Average Grant Date Fair Value
Non-vested - December 31, 2016		58,500		$	26.09
Issued		30,800			27.94
Vested		(23,250	)		26.54
Non-vested - December 31, 2017		66,050		$	26.79
Issued		25,319			37.22
Vested		(25,514	)		27.49
Forfeited		(4,375	)		26.60
Non-vested - December 31, 2018		61,480		$	30.74

At December 31, 2018, the Company expected 61,480 shares of restricted stock to vest over a weighted-average remaining contractual term of 2.7 years. These shares had an aggregate intrinsic value of $1.8 million at December 31, 2018. The aggregate intrinsic value was calculated using the market value of the Company’s stock on December 31, 2018 of $29.17 multiplied by the number of non-vested restricted shares outstanding. The income tax benefit from the vesting of restricted stock for the years ended December 31 was $249,000 in 2018 and $167,000 in 2017.