Note 10 - Stock Based Compensation

The Bancorp’s 2015 Stock Option and Incentive Plan (the “Plan”), which was adopted by the Bancorp’s Board of Directors on February 27, 2015, and approved by the Bancorp’s shareholders on April 24, 2015, permits the grant of equity awards for up to 250,000 shares of common stock. Awards granted under the Plan may be in the form of incentive stock options, non-qualified stock options, restricted stock, unrestricted stock, performance shares, or performance units.

As required by the Stock Compensation Topic, companies are required to record compensation cost for stock options and awards provided to employees in return for employment service. For the nine months ended September 30, 2020, stock based compensation expense of $309 thousand was recorded, compared to $232 thousand for the nine months ended September 30, 2019. It is anticipated that current outstanding unvested awards will result in additional compensation expense of approximately $687 thousand through 2023 with an additional $107 thousand in 2020, $339 thousand in 2021, $209 thousand in 2022, and $32 thousand in 2023.

There were no incentive stock options granted during the first nine months of 2020 or 2019. When options are granted, the cost is measured at the fair value of the options when granted, and this cost is expensed over the employment service period, which is normally the vesting period of the options or awards. At September 30, 2020, there were no outstanding incentive stock options.

There were 13,243 shares of restricted stock granted during the first nine months of 2020 compared to 7,407 shares granted during the first nine months of 2019. Restricted stock awards are issued with an award price equal to the market price of the Bancorp’s common stock on the award date and vest between three and five years after the grant date. Forfeiture provisions exist for personnel that separate employment before the vesting period expires. A summary of restricted stock activity under the Bancorp’s Plan described above for the year ended December 31, 2019, and nine months ended September 30, 2020, follows: