2. STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2013

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

STOCK-BASED COMPENSATION

2. STOCK-BASED COMPENSATION

Equity Plans

On March 17, 2010, the Board of Directors adopted the 2010 Equity Incentive Plan (the “2010 Plan”). The 2010 Plan was approved by the Company’s shareholders on May 20, 2010. In 2000, the Board of Directors adopted and the Company’s shareholders approved a stock option plan (the “2000 Plan”), under which 261,521 options remain outstanding at June 30, 2013. At June 30, 2013, there were 17,329 stock options and 27,259 restricted shares outstanding and the total number of authorized shares that remain available for issuance under the 2010 Plan was 1,435,581. The 2010 Plan provides for the following types of stock-based awards: incentive stock options; nonqualified stock options; stock appreciation rights; restricted stock; restricted performance stock; unrestricted Company stock; and performance units. Awards granted under the 2000 Plan were either incentive stock options or nonqualified stock options. Under the 2010 Plan, the awards may be granted to employees and directors under incentive and nonstatutory agreements and other awards agreements. The 2010 Plan and the 2000 Plan (collectively the “Plans”) require that the option price may not be less than the fair market value of the stock at the date the option is granted. The option awards under the Plans expire on dates determined by the Board of Directors, but not later than ten years from the date of award. The vesting period is generally five years; however, the vesting period can be modified at the discretion of the Company’s Board of Directors. Outstanding option awards under the Plans are exercisable until their expiration, however, no new options will be awarded under the 2000 Plan. New shares are issued upon exercise of an option.

The grant date fair value of awards is determined by the market price of the Company’s common stock on the date of grant and is recognized ratably as compensation expense or director expense over the vesting periods. The shares of common stock granted pursuant to such agreements vest in increments over one to five years from the date of grant. The shares awarded to employees and directors under the restricted stock agreements vest on the applicable vesting dates only to the extent the recipient of the shares is then an employee or a director of the Company or one of its subsidiaries, and each recipient will forfeit all of the shares that have not vested on the date his or her employment or service is terminated.

Equity Compensation

For the three-month periods ended June 30, 2013 and 2012, the compensation cost recognized for equity compensation was $36,000 and $46,000, respectively. The recognized tax benefit for equity compensation expense was $14,000 for the three-month periods ended June 30, 2013 and 2012, respectively. For the six-month periods ended June 30, 2013 and 2012, the compensation cost recognized for equity compensation was $69,000 and $79,000, respectively. The recognized tax benefit for equity compensation expense was $22,000 for the six-month periods ended June 30, 2013 and 2012, respectively.

At June 30, 2013, the total compensation cost related to nonvested stock option awards not yet recorded was $39,000. This amount will be recognized over the next 4.0 years and the weighted average period of recognizing these costs is expected to be 1.6 years. At June 30, 2013, the total compensation cost related to restricted stock awards not yet recorded was $195,000. This amount will be recognized over the next 4.0 years and the weighted average period of recognizing these costs is expected to be 1.3 years.

Equity Plans Activity

Stock Options

There were no stock options awarded during the three and six-month periods ended June 30, 2013. There were 17,329 stock options awarded during the three and six-month periods ended June 30, 2012 at an average exercise price of $7.07. The weighted average grant date fair value of options granted for the three and six- month periods ended June 30, 2012 was $2.31. A summary of option activity under the Plans as of June 30, 2013 and changes during the period then ended is presented below:

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
			Exercise		Contractual		Intrinsic
Options	Shares		Price		Term		Value ($000)
Outstanding at January 1, 2013		305,670	$	16.71		4.0 years	$	—
Granted		—		—		—		—
Exercised		—		—		—		—
Cancelled		26,820		11.68		—		—
Outstanding at June 30, 2013		278,850	$	17.20		3.6 years	$	20
Vested at June 30, 2013		256,299	$	18.04		3.2 years	$	4
Non-vested at June 30, 2013		22,551	$	7.63		7.6 years	$	16

Restricted Stock

There were 11,448 shares of restricted stock awarded during the three- and six-month periods ended June 30, 2013. The 11,448 restricted common shares will vest one year from the date of the award. There were 16,207 shares of restricted stock awarded during the three- and six-month periods ended June 30, 2012. Of the 16,207 restricted common shares, 9,898 vested one year from the date of the award and 6,309 will vest over five years at 20% per year from the date of the award. Grant date fair value is determined by the market price of the Company’s common stock on the date of grant ($7.86 on May 16, 2013 and $7.07 on May 16, 2012).

There were 11,158 restricted awards that were fully vested during the three and six-month periods ended June 30, 2013 and zero restricted awards that were fully vested during the three and six-month periods ended June 30, 2012. There were zero awards that had been forfeited during the three and six-month periods ended June 30, 2013 and zero and 3,246 awards that had been forfeited during the three and six-month periods ended June 30, 2012. The intrinsic value of nonvested restricted stock at June 30, 2013 was $224,000.

			Weighted
			Average Grant
Restricted Stock	Shares		Date Fair Value
Nonvested at January 1, 2013		26,969	$	6.79
Awarded		11,448		7.86
Less: Vested		11,158		7.07
Less: Cancelled		—		—
Nonvested at June 30, 2013		27,259	$	7.12

Other Equity Awards

There were no stock appreciation rights; restricted performance stock; unrestricted Company stock; or performance units awarded during the three or six month periods ended June 30, 2013 or 2012.

The intrinsic value used for stock options and restricted stock was derived from the market price of the Company’s common stock of $8.22 as of June 30, 2013.