STOCK BASED COMPENSATION

12 Months Ended

Dec. 31, 2014

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 Plan expired on April 16, 2012. Any outstanding unexercized options, however, continue to be exercisable in accordance with their terms. 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. Option awards were granted with an exercise price equal to the market price of the Company's stock at the date of grant and vest ratably over a five year period and expire ten years after the date of grant. Certain option awards provide for accelerated vesting if there is a change in control, as defined in the Plan. Option exercises could be fulfilled either through available treasury shares or the issuance of new shares.

Stock options outstanding at December 31, 2014 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	4.1	23,494	$	9.00	4.1
$11.00 - 12.99	63,354	12.05		5.5	43,453	12.04		5.2
$17.00 - 18.99	12,962	18.41		1.6	12,962	18.41		1.6
	99,810	12.16		4.7	79,909	12.18		4.3

The following table summarizes stock option activity for 2014:

	Options		Weighted Average Exercise Price
Outstanding at December 31, 2013	104,966		$	12.43
Granted	—		—
Exercised or canceled	—		—
Expired	(5,156	)	17.66
Outstanding at December 31, 2014	99,810		12.16
Exercisable at December 31, 2014	79,909		12.18

The weighted average remaining contractual life for options exercisable at December 31, 2014 was 4.3 years.

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, 2014 that were “in the money” (market price greater than exercise price) was $334,000.  The aggregate intrinsic value at that date for only the options that were exercisable was $274,000.  The intrinsic value changes based on changes in the market value of the Company’s stock.

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 of stock options exercised during the year ended December 31, 2013 was $41,000. Stock options exercised in 2012 did not have a material intrinsic value.

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 year indicated:

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

Total expense related to options included in salaries and wages in the consolidated statements of income for the years ended December 31, 2014, 2013, and 2012 was $24,000, $37,000, and $41,000, respectively. The related tax benefit for 2014, 2013, and 2012 was $8,000, $13,000, and $14,000, respectively. Total compensation cost related to option awards to be recognized through the first quarter of 2017 is approximately $27,000.