Note 12.

Equity Compensation

Stock Incentive Plan (2009)

On May 19, 2009, the shareholders of the Company approved the Company's Stock Incentive Plan (the “Plan”), which superseded and replaced the Omnibus Stock Ownership and Long Term Incentive Plan.

Under the Plan, stock options, stock appreciation rights, non-vested and/or restricted shares, and long-term performance unit awards may be granted to directors and certain key employees for purchase of the Company's stock. The effective date of the plan was March 19, 2009 and a termination date no later than December 31, 2019. The Company's Board of Directors may terminate, suspend or modify the Plan within certain restrictions. The Plan authorized for issuance 350,000 shares of the Company's common stock. The Plan requires that options be granted at an exercise price equal to at least 100% of the fair market value of the common stock on the date of the grant. Such options are generally not exercisable until three years from the date of issuance and generally require continuous employment during the period prior to exercise. The options will expire in no more than ten years after the date of grant. The stock options, stock appreciation rights, restricted shares, and long-term performance unit awards for certain key employees are generally subject to vesting requirements and are subject to forfeiture if vesting and other contractual provision requirements are not met. The Company did not grant stock options in 2011, 2010 and 2009.

Non–employee Director Stock Options

The Company previously issued stock options to non-employee directors under its Omnibus Stock Ownership and Long Term Incentive Plan. Under that plan, each non-employee director of the Company or its subsidiary received an option grant covering 2,240 shares of Company common stock on April 1 of each year during the five-year term of the plan. The exercise price of awards was fixed at the fair market value of the shares on the date the option was granted. The Company did not grant stock options in 2011, 2010 and 2009.

Restricted Shares

Restricted shares are accounted for using the fair market value of the Company's common stock on the date the restricted shares are awarded. The restricted shares issued to certain officers are subject to a vesting period, whereby, the restrictions on the shares lapse on the third year anniversary of the date the restricted shares were awarded. Compensation expense for these shares is accrued over the three year period. During the quarter ended March 31, 2010, the restricted shares previously issued to non-employee directors were no longer subject to a vesting period, and the previously deferred compensation expense on these shares was fully recognized during 2010. In 2011, compensation expense for the non-employee director shares was recognized at the date the shares were granted.

During 2011, 2010, and 2009, the Company granted awards of non-vested shares to certain officers and vested shares (effective March 31, 2010) to non-employee directors under the above-described incentive plans: 9,714; 9,784; and 15,050 of non-vested restricted stock to executive officers and 4,752; 5,553; and 8,450 of vested restricted stock to directors on February 17, 2011; March 5, 2010; and February 18, 2009, respectively. Compensation expense for vested and non-vested shares, net of forfeiture and tax effect, amounted to $136,593 in 2011, $246,789 in 2010, including an acceleration for previously deferred expense, and $208,666 in 2009, respectively.

The Company granted 9,714 and 9,784 of performance-based stock rights to certain officers on February 17, 2011 and March 5, 2010, respectively, under the plan.

The performance-based stock rights are accounted for using the fair market value of the Company's common stock on the date the restricted shares were awarded, and adjusted as the market value of the stock changes. The performance-based stock rights shares issued to executive officers are subject to a vesting period, whereby, the restrictions on the shares lapse on the third year anniversary of the date the restricted shares were awarded. They are also subject to the Company reaching a predetermined three year performance average on the return on average equity ratio as compared to a predetermined peer group of banks. Compensation expense for performance-based stock rights amounted to $116,048 in 2011 and $105,890 in 2010.

A summary of the status of options granted under the Plans is presented below:

	2011							2010					2009
	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value (1)		Number of Shares			Weighted Average Exercise Price		Number of Shares			Weighted Average Exercise Price

Outstanding at January 1,		42,266		$	10.84				62,480		$	9.96		77,180		$	9.84
Granted		-							-					-
Exercised		(18,534	)		8.07				(20,214	)		8.12		(10,720	)		9.15
Expired														(3,980	)		9.75
Forfeited		-							-					-
Outstanding at December 31,		23,732		$	13.00	$	-		42,266		$	10.84		62,480		$	10.84
________________
Weighted-average fair value per option of options granted during the year	$	-						$	-							$	-

(1) The aggregate intrinsic value of stock options in the table above reflects the pre-tax intrinsic value (the amount by which the December 31, 2011 market value of the underlying stock option exceeded the exercise price of the option) that would have been received by the option holders had all option holders exercised their options on December 31, 2011. The aggregate intrinsic value will change based on the changes in the market value of the Company's stock.

Cash received from options exercised, exclusive of tax benefit, under all share based payment arrangements for the years ended December 31, 2011, 2010 and 2009, were $149,569, $164,160 and $98,040, respectively. The actual tax benefit realized for the tax deductions from options exercised were $33,083, $45,143 and $10,162 for 2011, 2010 and 2009, respectively.

The total intrinsic value of options exercised during the years ended December 31, 2011, 2010 and 2009 was $97,303, $161,271 and $35,838, respectively.

The status of the options outstanding as of December 31, 2011 for the Omnibus Stock Ownership and Long-Term Incentive Plan is as follows:

		Options Outstanding				Options Exercisable
Remaining Contractual Life		Number Outstanding		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
	0.08		23,732	$	13.00		23,732	$	13.00

A summary of the status of the Company's nonvested shares is presented below:

	2011					2010					2009
	Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value		Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1,		33,772					47,282					38,219

Granted		14,466		$	14.30		15,337		$	13.78		23,500		$	10.06
Vested		(15,666	)				(28,847	)				(10,585	)
Forfeited		-					-					(3,852	)
Nonvested at December 31,		32,572					33,772					47,282

A summary of the status of the Company's nonvested performance-based stock rights is presented below:

	2011				2010				2009
	Performance Based Stock Rights		Weighted Average Fair Value at 12/31/2011		Performance Based Stock Rights		Weighted Average Fair Value at 12/31/2010		Performance Based Stock Rights			Weighted Average Fair Value at 12/31/2009
Nonvested at January 1,		22,858				13,074

Granted		9,714				9,784				15,050
Vested		-				-				-
Forfeited		-				-				(1,976	)
Nonvested at December 31,		32,572	$	12.44		22,858	$	11.65		13,074			$	10.06

As of December 31, 2011, there was $101,950 of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted under the plans. This type of deferred compensation cost is recognized over a period of three years.