8. Share Based Compensation

Share Options

The fair value of each option grant is separately estimated for each vesting date. The fair value of each option is amortized into compensation expense on a straight-line basis between the grant date for the award and each vesting date. The Company has estimated the fair value of all share option awards as of the date of the grant by applying the Black-Scholes-Merton multiple-option pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The adoption of ASC Topic 718 "Compensation - Stock Compensation" fair value method has resulted in share-based expenses (a component of salaries and benefits) in the amount of approximately $333 and $1,011 for the three and nine months ended September 30, 2011, respectively (2010 - $252 and $702, respectively).

The key assumptions used in determining the fair value of options granted in the three and nine months ended September 30, 2011 and a summary of the methodology applied to develop each assumption are as follows:

Assumptions:	September 30, 2011
Volatility		29.8-46.0	%
Risk-free interest rate		1.62-3.30	%
Weighted average expected lives in years	5-6.1 years
Forfeiture rate		0	%
Dividend yield rate		1-5.39	%

Expected Price Volatility – This is a measure of the amount by which a price has fluctuated or is expected to fluctuate. The common shares of the Company began trading on May 6, 2008 on NASDAQ. Since the Company does not have enough history over which to calculate an expected volatility representative of the volatility over the expected lives of the options, the Company also considered the historical and current implied volatilities of a set of comparable companies in the industry in which the Company operates.

Risk-Free Interest Rate – This is the U.S. treasury rate for the week of the grant having a term equal to the expected life of the option. An increase in the risk-free interest rate will increase compensation expense.

Expected Lives – This is the period of time over which the options granted are expected to remain outstanding giving consideration to vesting schedules, historical exercise and forfeiture patterns. The Company uses the simplified method outlined in SEC Staff Accounting Bulletin No. 107 to estimate expected lives for options granted during the period as historical exercise data is not available and the options meet the requirements set out in the Bulletin. Options granted have a maximum term of ten years. An increase in the expected life will increase compensation expense.

Forfeiture Rate – This is the estimated percentage of options granted that are expected to be forfeited or cancelled before becoming fully vested. An increase in the forfeiture rate will decrease compensation expense.

The following tables show all options granted, exercised, expired and exchanged under the Plan for the three and nine months ended September 30, 2011 and 2010:

For the three months ended September 30, 2011	Number of Share Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding, June 30, 2011		2,892,533		$	6.47	7.96 years
Granted		—			—		—
Exercised		(55,642	)		3.28		—
Cancelled		(1,750	)		7.66		—
Outstanding, September 30, 2011		2,835,141		$	6.54	7.72 years

For the three months ended September 30, 2010	Number of Share Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding, June 30, 2010		2,381,230		$	6.01	8.56 years
Granted		22,500			7.68	10.00 years
Exercised		(13,593	)		3.28		—
Cancelled		(4,251	)		3.28		—
Outstanding, September 30, 2010		2,385,886		$	6.05	8.32 years

For the nine months ended September 30, 2011	Number of Share Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding, December 31, 2010		2,940,876		$	6.41	8.40 years
Granted		36,500			8.81	9.61 years
Exercised		(99,172	)		3.50		—
Cancelled		(43,063	)		7.23		—
Outstanding, September 30, 2011		2,835,141		$	6.54	7.72 years

For the nine months ended September 30, 2010	Number of Share Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term
Outstanding, December 31, 2009		2,036,542		$	5.79	8.86 years
Granted		372,500			7.28	9.46 years
Exercised		(14,405	)		3.28		—
Cancelled		(8,751	)		3.28		—
Outstanding, September 30, 2010		2,385,886		$	6.05	8.32 years

The weighted average grant date fair value was $1.97 and $1.79 for all options outstanding at September 30, 2011 and 2010, respectively. There was approximately $2,411 and $2,324 of total unrecognized compensation cost related to non-vested share-based compensation arrangements as of September 30, 2011 and 2010, respectively.