Stock Based Benefit Plans

6 Months Ended

Jun. 30, 2011

Stock Based Benefit Plans [Abstract]

Stock Based Benefit Plans

11.  Stock Based Benefit Plans

The Company established the 2003 Recognition and Retention Plan and Trust Agreement ("2003 RRP"), which is a stock-based incentive plan.  The 2003 RRP was approved by the shareholders at the Company's annual meeting held May 15, 2003.

The Company authorized 45,634 shares of the Company's common stock to be awarded under the 2003 RRP.  The Company had purchased 45,634 shares in the open market to fund the 2003 RRP as of December 31, 2004.  Shares subject to awards under the 2003 RRP vest at the rate of 20% per year.  As of June 30, 2011 and December 31, 2010, awards covering 43,741 shares had been made.  The Company did not issue any awards for the six months ending June 30, 2011 and 2010. Shares vested and issued during the six months ended June 30, 2011 and 2010 were 2,281 and 2,281 respectively. As a result, expense for this plan is being amortized over a 60-month period and is based upon the market value of the Company's stock as of the grant date of the awards which was $8.82 with respect to the outstanding awards through 2007.  The price for the 2008 awards was $11.96 and the 2009 awards was $6.31.  Compensation (in thousands) under the 2003 RRP for the six months ended June 30, 2011 and 2010 was $10,000 and $10,000, respectively, and is included in salaries and benefits.

The Company established the 2003 Stock Option Plan (“the 2003 Option Plan") under which 114,084 shares of Company stock are reserved for the grant of stock options to directors, officers and employees.  The 2003 Option Plan provides for vesting of options granted to participants at 20% per year.  The options expire in ten years.  The exercise price of the options is equal to the fair market value of the common stock on the grant date which was $8.82 with respect to the options prior to 2007; the price for the 2008 options was $11.96 and the 2009 option price was $6.31.  The Company issued 20,867 options in 2009 and 4,888 options in 2008 that vest over a five year period. As of June 30, 2011, options covering 102,910 shares were outstanding.  Options totaling 88,434 shares were exercisable as of June 30, 2011.

The fair value of each outstanding option is estimated on the date of the grant using the Black-Scholes option-pricing with the following weighted average assumptions; 1% dividend yield, 10 years expected life, 30.07% expected volatility and 3.53% risk free interest rate.  The majority of the options (86,934 shares) were granted in May 2003 and have fully vested.  The value of the 2008 option (4,888 shares) was considered immaterial and the 2009 option covering 20,867 shares had an approximate value of $50,000 under the Black-Scholes formula.

The expected volatility is based on 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 historical exercise experience.  The dividend yield assumption is based upon the Company's history and expectation of dividend payouts.

All share numbers and exercise prices have been adjusted to take into account the conversion of MBL Bank from the mutual holding company structure to the stock holding company.

The Company's Stock Benefits Administration Committee of the Board of Directors oversees the RRP and Option Plans.

A summary of the status of the Company's stock options under the 2003 Option Plan is presented below:

	Total Options
	Number of Shares			Average Exercise Price		Average Intrinsic Value
Outstanding-December 31, 2007		82,046		$	8.82
Granted		4,888		$	11.96
Outstanding-December 31, 2008		86,934		$	9.00
Granted		20,867		$	6.31
Outstanding-December 31, 2010 and
2009		107,801
Forfeited and exercised		( 4,891	)
Outstanding-June 30, 2011		102,910		$	8.46	$	467,211
Options exercisable at period end		88,434				$	401,490

Information pertaining to options outstanding at June 30, 2011 is as follows:

	Options Outstanding
Range of Exercise Prices	Number Outstanding		Weighted Average Remaining Contractual Life	Weighted Average Exercise Price
$5.00-$7.50		20,867	7.5 years	$	6.31
$7.51 - $10.00		77,155	2 years	$	8.82
$10.01 and above		4,888	7 years	$	11.96
Outstanding at end of period		102,910	3.4 years	$	8.46

As of June 30, 2011, there were options covering 88,434 shares exercisable at a weighted average price of $8.69.  The exercise prices of those options were between $6.31 and $11.96.

	Number of Shares			Weighted Grant Date Fair Value
Non-vested options, December 31, 2010		19,625		$	7.15
Vested		(5,149	)	$	7.38
Non-vested options, June 30, 2011		14,476		$	7.07