Employee Benefits

12 Months Ended

Dec. 31, 2011

Employee Benefits [Abstract]

Employee Benefits

Note 11. Employee Benefits

401(k) Plan

The Bank has adopted a 401(k) plan covering substantially all employees. Employees are allowed to contribute up to 75% of earnings and, in addition, the Bank will match a portion of the employees’ contributions. The expenses incurred by the Bank for the plan totaled $217,039 and $318,988 for the years ended December 31, 2011 and 2010, respectively.

2010 Equity Incentive Plan

The Athens Bancshares Corporation 2010 Equity Incentive Plan (“the 2010 Plan”) was approved by the Company’s stockholders at the annual meeting of stockholders held on July 14, 2010. Under the terms of the 2010 Plan, the Company may grant restricted stock awards and stock options to its employees, officers, and directors. The purpose of the 2010 Plan is to promote the success of the Company by linking the personal interests of its employees, officers, and directors to the interest of the Company’s shareholders, and by providing participants with an incentive for remarkable performance. All of the Company’s employees, officers, and directors are eligible to participate in the 2010 Plan.

Under terms of the 2010 Plan, the Company is authorized to issue up to 277,725 stock options and up to 111,090 shares of restricted stock.

The Company granted stock options to its directors, officers, and employees on December 15, 2010. Both incentive stock options and non-qualified stock options were granted under the 2010 Plan. The exercise price for each option was equal to the market price of the Company’s stock on the date of grant and the maximum term of each option is ten years. The vesting period for all options is five years from the date of grant. The Company recognizes compensation expense over the vesting period, based on the grant-date fair value of the options granted. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model. For the year ended December 31, 2011 and 2010, the Company recorded stock compensation expense of $54,151 and $0, respectively. At December 31, 2011, the total remaining compensation cost to be recognized on non-vested options is approximately $217,000.

A summary of the activity in the 2010 Plan as of December 31, 2011 and 2010, is presented in the following table:

		September 30,		September 30,		September 30,		September 30,		September 30,
	Year Ended December 31, 2011						Year Ended December 31, 2010
			Average		Aggregate				Average
			Exercise		Intrinsic				Exercise
	Shares		Price		Value (1)		Shares		Price
Outstanding at beginning of year		236,062	$	11.50				—		N/A
Granted		—		N/A				236,062	$	11.50
Exercised		—		N/A				—		N/A
Forfeited		—		N/A				—		N/A
Outstanding at end of year		236,062		11.50	$	118,031		236,062		11.50
Options exercisable at year-end		47,212	$	11.50		23,606		—		N/A
Weighted-average fair value of options granted during the year	$	—					$	1.27

(1) The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds 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. This amount changes based on changes in the market value of the Company’s stock.

Other information regarding options outstanding and exercisable as of December 31, 2011, is as follows:

SEP30,

SEP30,

SEP30,

SEP30,

SEP30,

SEP30,

SEP30,

SEP30,

SEP30,

SEP30,

Options Outstanding

Options Exercisable

Weighted

Average

Weighted-

Remaining

Weighted-

Number

Average

Contractual

Number

Average

Exercise

Of

Exercise

Life

of

Exercise

Price

Shares

Price

In Years

Shares

Price

$

11.50

236,062

$

11.50

9.00

47,212

$

11.50

Information pertaining to non-vested options for the year ended December 31, 2011, is as follows:

		September 30,			September 30,
				Weighted Average
	Number			Grant Date Fair
	of Shares			Value
Non-vested options, December 31, 2010		236,062		$	1.27
Granted		—			—
Vested		(47,212	)		1.27
Forfeited		—			—
Non-vested options, December 31, 2011		188,850		$	1.27

The weighted-average assumptions used to determine the fair value of options granted during 2010 are detailed in the table below:

	September 30,
Risk-free interest rate	3.18	%
Dividend yield	2.00	%
Expected volatility	7.23	%
Expected life	8.00 Years

The expected volatility is based upon historical volatility. The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on industry trends and management’s expectations. The dividend yield assumption is based on the Company’s history and expectation of dividend payouts.

On January 19, 2011, the Company awarded 94,426 shares of restricted stock to its directors, officers, and employees pursuant to the terms of the 2010 Plan. Compensation expense associated with the performance-based share awards is recognized over the time period that the restrictions associated with the awards lapse based on the total cost of the award, which is the fair market value of the stock on the date of the grant. The closing price on the date of the grants issued on January 19, 2011 was $12.75 per share. For the year ended December 31, 2011, the Company recognized $240,786 in compensation expense attributable to the 94,426 shares that have been awarded.

A summary of activity for unvested restricted awards for the year ended December 31, 2011 is as follows:

		September 30,		September 30,
			Grant Date
			Weighted-Average
	Number		Cost
Unvested at January 1, 2011		—	$	—
Shares awarded		94,426		12.75
Restrictions lapsed and shares released		—		—
Shares forfeited		—		—
Unvested at December 31, 2011		94,426	$	12.75

Employee Stock Ownership Plan

The Bank sponsors a leveraged employee stock ownership plan that covers substantially all employees who meet certain age and eligibility requirements. As part of the Company’s initial public offering, the ESOP purchased 222,180 shares, or approximately 8% of the 2,777,250 shares issued, with the proceeds of a 15-year loan from the Company which is payable in annual installments and bears interest at 3.25%.

The Bank has committed to make contributions to the ESOP sufficient to support the debt service of the loan. The loan is secured by the unallocated shares, which are held in a suspense account, and are allocated among the participants as the loan is repaid. Cash dividends paid on allocated shares are distributed to the participants and cash dividends paid on unallocated shares are used to repay the outstanding debt of the ESOP.

ESOP shares are held by the plan trustee in a suspense account until allocated to participant accounts. Shares released from the suspense account are allocated to participants on the basis of their relative compensation in the year of allocation. Participants become vested in the allocated shares upon four years of employment with the Bank. Any forfeited shares are allocated to other participants in the same proportion as contributions.

As ESOP shares are allocated to participants, the Bank recognizes compensation expense equal to the fair value of the earned ESOP shares. Total compensation expense for the years ended December 31, 2011 and 2010, respectively was $190,482 and $163,525.

A detail of ESOP shares as of December 31, 2011 and 2010, is as follows:

		September 30,		September 30,
	2011		2010
Allocated shares		29,624		14,812
Unallocated shares		192,556		207,368
Total ESOP shares		222,180		222,180
Fair value of unreleased shares	$	2,310,672	$	2,590,026

Executive Benefit Plans

The Company has employment agreements with three of its executive officers for post-retirement compensation and other related benefits. As of December 31, 2011 and December 31, 2010, the net present value liability of these benefits was approximately $845,000 and $568,000, respectively. The expenses incurred by the Company for these executive benefits totaled $277,284 and $226,944 for the years ended December 31, 2011 and 2010, respectively.

The Bank has an agreement with its former president that resulted in a net present value liability of $345,402 and $380,618 at December 31, 2011 and 2010, respectively. The expenses incurred by the Bank for such benefits were $21,813 and $23,077 for the years ended December 31, 2011 and 2010, respectively.