STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

The Company established an Ownership Incentive Plan (the "Plan") during 2002 that allowed for stock-based awards to eligible employees, as determined by the Board of Directors.  The awards were in the form of stock options, share awards, and/or appreciation rights.  The Plan provided for the issuance of up to 200,000 shares. The plan expired on April 16, 2012. Any outstanding unexercized options, however, continue to be exercisable in accordance with their terms.

Options granted to date vest ratably over a five year period and expire ten years after the date of grant. Stock options outstanding at December 31, 2013 were as follows:

	Outstanding Stock Options				Exercisable Stock Options
Exercise Price Range	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
9.00 - $10.99	23,494	$	9.00	5.1	18,419	$	9.00	5.1
11.00 - $12.99	63,354	12.05		6.6	31,362	12.06		5.8
17.00 - $18.99	18,118	18.19		1.9	18,118	18.19		1.9
	104,966	12.43		5.4	67,899	12.86		4.6

The following table summarizes stock option activity for the years indicated:

	Year ended December 31,
	2013				2012				2011
	Options		Weighted Average Exercise Price		Options		Weighted Average Exercise Price		Options	Weighted Average Exercise Price
Outstanding, beginning of year	110,586		$	12.42	124,123		$	12.54	99,040	$	12.71
Granted	—		—		14,491		12.60		25,083	11.85
Exercised or cancelled	(5,620	)	12.32		(8,676	)	13.09		—	—
Expired	—		—		(19,352	)	13.01		—	—
Outstanding, end of year	104,966		12.43		110,586		12.42		124,123	12.54
Exercisable, end of year	67,899		12.86		55,309		13.36		66,709	13.69

During 2013, the Company received cash of $70,000 in connection with the exercise of 5,620 stock options. During 2012, the Company received cash of $28,000 in connection with the exercise of 2,144 stock options and paid approximately $6,000 to certain option holders in connection with the cancellation of 6,532 options.

The aggregate intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price of the option) for options outstanding at December 31, 2013 that were “in the money” (market price greater than exercise price) was $578,000.  The aggregate intrinsic value at that date for only the options that were exercisable was $347,000.  The aggregate intrinsic value for options outstanding at December 31, 2012 that were in the money was $228,000 and the aggregate intrinsic value at that date for only the options that were exercisable was $106,000.  The intrinsic value changes based on changes in the market value of the Company’s stock.

The fair value of options granted is estimated at the date of grant using the Black-Scholes option-pricing model.  The following table shows the estimated weighted-average fair value of options granted and the assumptions used in calculating that value for the years indicated:

	2013			2012		2011
Estimated weighted-average fair value of options granted	$	—		2.80		2.09
Risk-free interest rate	—		%	0.84	%	2.84	%
Average dividend	$	—		0.64		0.64
Volatility factor of the expected market price of the Company's common stock	—		%	39.56	%	27.37	%
Average life in years	0.0			6.5		6.5

Total expense related to options included in salaries and wages in the consolidated statements of income for the years ended December 31, 2013, 2012, and 2011 was $37,000, $41,000, and $45,000, respectively. Total compensation cost related to option awards to be recognized ratably through the first quarter of 2017 is approximately $51,000.