Stock Options and Restricted Stock

12 Months Ended

Dec. 31, 2011

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

Stock Options and Restricted Stock

STOCK OPTIONS AND RESTRICTED STOCK

The Company has stock option plans for directors, selected executive officers and other key employees. The plans provide for the granting of options to purchase shares of the Company’s common stock at a price not less than the fair market value at the date of grant of the option. Option exercise prices are established at market value on the grant date. Vesting schedules are determined by the Board of Directors. Upon termination, unexercised options held by employees are forfeited and made available for future grants.

On May 22, 2008, the shareholders approved the 2008 Omnibus Stock Ownership and Long Term Incentive Plan (the “Omnibus Plan”). An aggregate of 700,000 shares has been reserved for issuance by the Company under the terms of the Omnibus Plan pursuant to the grant of incentive stock options (not to exceed 200,000 shares), non-statutory stock options, restricted stock and restricted stock units, long-term incentive compensation units and stock appreciation rights.

During 2011, 18,400 options were vested resulting in 22,100 unvested options at December 31, 2011. There were no options granted or exercised during 2011. In 2011, 145,000 shares of restricted stock were granted at a weighted average fair value of $2.34 per share. The fair value of each share grant is based on the closing market price of the stock on the date of issuance. Restricted shares vest over a three-year period. A total of 152,834 shares of restricted stock are nonvested as of December 31, 2011. There are 337,000 shares of restricted stock available for issuance as of December 31, 2011.

During 2010, 24,300 options were vested resulting in 53,900 unvested options at December 31, 2010. There were no options granted or exercised during 2011. In 2010, 18,000 shares of restricted stock were granted at a weighted average fair value of $4.18 per share. The fair value of each share grant is based on the closing market price of the stock on the date of issuance. Restricted shares vest over a three-year period. A total of 18,000 shares of restricted stock are nonvested as of December 31, 2010. There are 482,000 shares of restricted stock available for issuance as of December 31, 2010.

The following table presents certain option information for the year ended December 31, 2011:

		Outstanding Options				Exercisable Options
	Shares available for future grants	Number of options		Weighted-average exercise price		Number of options		Weighted-average exercise price
At December 31, 2010	197,862	421,130		$	13.42	367,230		$	13.41
Options authorized	—	—		—		—		—
Options granted/vested	—	—		—		18,400		14.42
Options exercised	—	—		—		—		—
Options expired	—	(47,991	)	9.50		(47,991	)	9.50
Options forfeited	—	(95,944	)	14.71		(82,544	)	14.59
At December 31, 2011	197,862	277,195		$	13.65	255,095		$	13.83

At December 31, 2011, the weighted-average remaining contractual life of outstanding and exercisable options was 3.8 years and 3.6 years, respectively. At December 31, 2010, the weighted average remaining contractual life of outstanding and exercisable options was 4.2 years and 3.7 years, respectively.

There was no aggregate intrinsic value of options outstanding and exercisable at December 31, 2011 and December 31, 2010, since the exercise price of options outstanding exceeded the market share price of $1.61 and $1.81, respectively, at year end. The following table segregates the shares outstanding at December 31, 2011 into meaningful ranges:

Shares	Option Price per share	Weighted-average remaining contractual life (years)	Weighted-average exercise price	Shares excerisable December 31, 2011
5,000	$3.84	7.94	$3.84	2,000
11,833	6.36-6.90	5.30	6.68	7,033
28,106	9.31-10.46	4.74	9.81	28,106
52,894	11.56-13.86	3.53	13.58	52,894
171,862	13.91-15.65	3.45	14.83	159,062
7,500	19.07	5.05	19.07	6,000
277,195				255,095

All options expire ten years after date of grant and are made available for future grants at expiration.

The Bank recorded compensation expense totaling $76,903 in 2011, $76,939 in 2010 and $73,820 in 2009 for the options in the process of vesting based on amortization of the fair value of options granted (See “Share-Based Payment” under Note 1). The Bank recorded compensation expense totaling $133,072 in 2011 and $16,619 in 2010 for restricted stock in the process of vesting based on amortization of the fair value of shares granted. Unrecognized compensation expenserelated to nonvested share-based compensation arrangements granted under all of the Company’s stock benefit plans totaling $325,707 at December 31, 2011 will be recognized over the remaining vesting period, 2011 through 2014. There were 95,944 shares forfeited and 47,991 shares expired during the year ended December 31, 2011. There were 146,172 shares forfeited and 12,061 shares expired during the year ended December 31, 2010.