18. STOCK COMPENSATION PLANS

The Company uses the modified prospective method for accounting for stock-based compensation and recognized $29,000 of pretax compensation expense for the year 2015, $42,000 in 2014 and $82,000 in 2013.

During 2011, the Company’s Board adopted, and its shareholders approved, the AmeriServ Financial, Inc. 2011 Stock Incentive Plan (the Plan) authorizing the grant of options or restricted stock covering 800,000 shares of common stock. This Plan replaced the expired 2001 Stock Option Plan. Under the Plan, options or restricted stock can be granted (the Grant Date) to directors, officers, and employees that provide services to the Company and its affiliates, as selected by the compensation committee of the Board. The option price at which a granted stock option may be exercised was not less than 100% of the fair market value per share of common stock on the Grant Date. The maximum term of any option granted under the Plan cannot exceed 10 years. Generally, options vest over a three year period and become exercisable in equal installments over the vesting period. At times, options with a one year vesting period may also be issued.

A summary of the status of the Company’s Stock Incentive Plan at December 31, 2015, 2014, and 2013, and changes during the years then ended is presented in the table and narrative following:


	YEAR ENDED DECEMBER 31,
	2015					2014					2013
	SHARES			WEIGHTED AVERAGE EXERCISE PRICE		SHARES			WEIGHTED AVERAGE EXERCISE PRICE		SHARES			WEIGHTED AVERAGE EXERCISE PRICE
Outstanding at beginning of year		559,909		$	2.66		487,349		$	2.55		398,371		$	2.43
Granted		32,500			2.96		115,000			3.18		102,445			3.19
Exercised		(75,923	)		2.07		(10,700	)		2.25		(3,467	)		1.81
Forfeited		(46,037	)		3.04		(31,740	)		3.08		(10,000	)		4.25
Outstanding at end of year		470,449			2.74		559,909			2.66		487,349			2.55
Exercisable at end of year		336,555			2.58		330,822			2.36		257,253			2.25
Weighted average fair value of options granted in current year				$	0.67				$	0.85				$	0.83

A total of 336,555 of the 470,449 options outstanding at December 31, 2015, are exercisable and have exercise prices between $1.53 and $4.70, with a weighted average exercise price of $2.58 and a weighted average remaining contractual life of 5.79 years. All of these options are exercisable. The remaining 133,894 options that are not yet exercisable have exercise prices between $2.96 and $3.23, with a weighted average exercise price of $3.13 and a weighted average remaining contractual life of 8.30 years. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions used for grants in 2015, 2014, and 2013.

YEAR ENDED DECEMBER 31,

BLACK-SCHOLES ASSUMPTION RANGES

2015

2014

2013

Risk-free interest rate

1.97%

2.43 – 2.74%

1.82 – 1.03%

Expected lives in years

Expected volatility

22%

28 – 29%

30 – 32%

Expected dividend rate

1.35%

1.25 – 1.30%

1.30%