California Bank of Commerce NOTES TO FINANCIAL STATEMENTS 11.  SHARE-BASED COMPENSATION (Continued) Stock Option Awards (Continued) Restricted Stock Award 12.  SHAREHOLDERS’ EQUITY Dividends The weighted average grant date fair value and significant fair value assumptions above are for 64,400  shares of new options granted during 2011. There were also 347,250 shares of exchanged options  as described on the previous page. The exchanged options had a weighted average incremental fair  value of $0.55 per share over the awards’ original grant date fair values. During 2011, no restricted stock awards were granted. Compensation cost related to the one  outstanding restricted Stock award of $3,892 was recognized for the year ended December 31,  2011. As of December 31, 2011, the unrecognized compensation cost related to the restricted stock  award totaled $5,837. That cost is expected to be amortized over 1.6 years and will be adjusted for  subsequent changes in forfeitures. None of the restricted stock was vested as of December 31, 2011. During 2010, the Bank granted one award of 3,243 shares of restricted stock under the Plan with a  grant date fair value of $7.00 per share. Compensation cost of $1,948 was recognized for the year  ended December 31, 2010. As of December 31, 2010, the unrecognized compensation cost related  to non-vested restricted stock awards totaled $9,729. None of the restricted stock was vested as of  December 31, 2010. Upon declaration by the Board of Directors, all shareholders of record will be entitled to receive  dividends. The California Financial Code restricts the total dividend payment of any state banking  association in any calendar year to the lesser of (1) the bank’s retained earnings or (2) the bank’s net  income for its last three fiscal years, less distributions made to shareholders during the same three- year period. At December 31, 2011, no amounts were free of such restrictions, however, the Bank  has received regulatory approval from the State of California Department of Financial Institutions to  pay quarterly dividends on its Series C Preferred Stock issued under the Small Business Lending  Fund, without restriction. 44 2011 2010 Weighted average grant date fair value per share of options granted  $  3.94 $  3.59 Significant fair value assumptions: Expected term in years  6 years 6 years Expected annual volatility  66.98% 53.96% Expected annual dividend yield  0% 0% Risk-free interest rate  1.32% 2.12%