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13) Stock Compensation Plans

12 Months Ended

Dec. 31, 2017

13) Stock Compensation Plans

13) Stock Compensation Plans

The Company has four fixed option plans (the “2003 Plan”, the “2006 Director Plan”, the “2013 Plan” and the “2014 Director Plan”). Compensation expense for options issued of $395,603 and $343,577 has been recognized under these plans for the years ended December 31, 2017 and 2016, respectively, and is included in personnel expenses on the consolidated statements of earnings. As of December 31, 2017, the total unrecognized compensation expense related to the options issued in December 2017 was $213,770, which is expected to be recognized over the vesting period of one year.

The fair value of each option granted is estimated on the date of grant using the Black Scholes Option Pricing Model. The Company estimates the expected life of the options using the simplified method. Future volatility is estimated based upon the weighted historical volatility of the Company’s Class A common stock over a period equal to the expected life of the options. The risk-free interest rate for the expected life of the options is based upon the Federal Reserve Board’s daily interest rates in effect at the time of the grant.

The following table summarizes the assumptions used in estimating the fair value of each option granted along with the weighted-average fair value of the options granted:

						Assumptions
Grant Date		Plan		Weighted-Average Fair Value of Each Option (1)		Expected Dividend Yield		Underlying stock FMV		Weighted-Average Volatility		Weighted-Average Risk-Free Interest Rate		Weighted-Average Expected Life (years)
December 1, 2017		All Plans		$ 1.20		5%		$ 4.80		41.07%		2.07%		4.35

December 21, 2016		2013 Plan		$ 2.17		5%		$ 6.62		54.42%		1.99%		5.31
December 7, 2016		2014 Director Plan		$ 2.41		5%		$ 7.36		54.60%		1.93%		5.31
December 2, 2016		2013 Plan		$ 1.89		5%		$ 6.68		47.05%		1.78%		4.33
December 2, 2016		2014 Director Plan		$ 1.89		5%		$ 6.68		47.05%		1.78%		4.33

Activity of the stock option plans is summarized as follows:
		Number of Class A Shares		Weighted Average Exercise Price		Number of Class C Shares		Weighted Average Exercise Price
Outstanding at December 31, 2015		618,261		$ 3.89		577,436		$ 3.54
Adjustment for the effect of stock dividends		35,346				26,491
Granted		133,500				80,000
Exercised		(42,634)				(127,629)
Cancelled		(2,500)				-

Outstanding at December 31, 2016		741,973		$ 4.33		556,298		$ 4.52
Adjustment for the effect of stock dividends		40,978				24,934
Granted		124,500				70,000
Exercised		(8,182)				(103,402)
Cancelled		(18,843)				(24,227)

Outstanding at December 31, 2017		880,426		$ 4.35		523,603		$ 5.24

Exercisable at end of year		749,701		$ 4.22		450,103		$ 5.31

Available options for future grant		421,241				165,638

Weighted average contractual term of options
outstanding at December 31, 2017		6.62 years				3.45 years

Weighted average contractual term of options
exercisable at December 31, 2017		6.55 years				2.38 years

Aggregated intrinsic value of options outstanding
at December 31, 2017 (1)		$915,293				$204,015

Aggregated intrinsic value of options exercisable
at December 31, 2017 (1)		$904,898				$189,315

(1) The Company used a stock price of $5.00 as of December 31, 2017 to derive intrinsic value.

The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the years ended December 31, 2017 and 2016 was $611,126 and $670,959, respectively.