STOCK-BASED COMPENSATION PLANS

6 Months Ended

Jun. 30, 2011

STOCK-BASED COMPENSATION PLANS

NOTE 2 – STOCK-BASED COMPENSATION PLANS

During the first six months of 2011, the Corporation granted 100,100 stock options to officers, directors, and employees under the 2009 Stock Option Plan (the “Plan”). Options granted under the Plan have an exercise price equal to the fair market value as of the grant date. Options granted have a vesting period of two and one half years and expire three and one half years after the issue date.  Stock–based compensation expense recognized in other operating expense during the first six months of 2011 and 2010 was approximately $119 thousand and $98 thousand, respectively. The fair value of options is estimated on the date of grant using a Black Scholes option-pricing model with the assumptions noted below.

The total unrecognized compensation cost related to non-vested share based compensation arrangements granted under the Plan as of June 30, 2011 was $324,108.  The cost is expected to be recognized over a weighted average period of 1.57 years.

A summary of stock option activity under the Plan for the six months ended June 30, 2011 and June 30, 2010 is presented as follows:

	Six Months Ended
	June 30, 2011
Expected life of options granted, in years		3.09
Risk-free interest rate		0.99	%
Expected volatility of stock		49	%
Annual expected dividend yield		1	%
Fair value of granted options	$	238,323
Non-vested options		285,200

						Weighted Avg.
	Number of			Weighted Avg.		Remaining Contractual		Aggregate Intrinsic
	Options			Exercise Price		Term, in Years		Value
Outstanding at beginning of year		418,525		$	5.98		1.34	$	290,583
Granted		100,100		$	6.72		3.09	$	-
Exercised		(4,250	)	$	6.11		-	$	-
Lapsed or Canceled		(86,100	)	$	7.33		-	$	-
Outstanding at June 30, 2011		428,275		$	5.88		1.57	$	565,064
Exercisable at June 30, 2011		143,075		$	6.41		0.44	$	112,368

	Six Months Ended
	June 30, 2010
Expected life of options granted, in years		3.15
Risk-free interest rate		1.39	%
Expected volatility of stock		48	%
Annual expected dividend yield		1	%
Fair value of granted options	$	214,552
Non-vested options		272,025

						Weighted Avg.
	Number of			Weighted Avg.		Remaining Contractual		Aggregate Intrinsic
	Options			Exercise Price		Term, in Years		Value
Outstanding at beginning of year		439,079		$	6.44		1.56	$	222,770
Granted		103,500		$	5.97		3.15	$	-
Exercised		(15,000	)	$	3.45		-	$	-
Lapsed or canceled		(38,820	)	$	6.43		-	$	-
Outstanding at June 30, 2010		488,759		$	6.43		1.61	$	179,517
Exercisable at June 30, 2010		216,734		$	7.77		0.84	$	-