Stock Option Plan

9 Months Ended

Sep. 30, 2011

NOTE 11. STOCK OPTION PLAN

The 2009 Officer Stock Option Plan was adopted by our shareholders in May 2009 and provides for the granting of stock options for up to 350,000 shares of common stock to our key officers. Each option granted under the Plan vests according to a schedule designated at the grant date and has a term of no more than 10 years following the vesting date. Also, the option price per share was not to be less than the fair market value of our common stock on the date of grant. The 2009 Officer Stock Option Plan, which expires in May 2019, replaces the 1998 Officer Stock Option Plan (collectively the "Plans") that expired in May 2008.

The fair value of our employee stock options granted is estimated at the date of grant using the Black-Scholes option-pricing model. This model requires the input of highly subjective assumptions, changes to which can materially affect the fair value estimate. Additionally, there may be other factors that would otherwise have a significant effect on the value of employee stock options granted but are not considered by the model. Because our employee stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options at the time of grant. There were no options granted during the first nine months of 2011 or 2010.

We recognize compensation expense based on the estimated number of stock awards expected to actually vest, exclusive of the awards expected to be forfeited. During the first nine months of 2011 and 2010, our stock compensation expense and related deferred taxes were insignificant.

A summary of activity in our Plans during the first nine months of 2011 and 2010 is as follows:

	For the Nine Months Ended September 30,
	2011				2010
			Weighted-				Weighted-
			Average				Average
			Exercise				Exercise
	Options		Price		Options		Price
Outstanding, January 1		317,180	$	18.17		309,180	$	18.54
Granted		-		-		8,000		3.92
Exercised		-		-		-		-
Forfeited		-		-		-		-
Outstanding, September 30		317,180	$	18.17		317,180	$	18.17

Other information regarding options outstanding and exercisable at September 30, 2011 is as follows:


		Options Outstanding								Options Exercisable
						Wted. Avg.		Aggregate						Aggregate
						Remaining		Intrinsic						Intrinsic
Range of		# of				Contractual		Value		# of				Value
exercise price		shares		WAEP		Life (yrs)		(in thousands)		shares		WAEP		(in thousands)
$	2.54 - $6.00		64,150	$	5.15		2.43	$	1		60,150	$	5.32	$	-
	6.01 - 10.00		33,680		9.20		4.84		-		31,880		9.37		-
	10.01 - 17.50		2,300		17.43		2.42		-		2,300		17.43		-
	17.51 - 20.00		51,300		17.79		5.25		-		51,100		17.79		-
	20.01 - 25.93		165,750		25.15		4.03		-		165,750		25.15		-

			317,180		18.17			$	1		311,180		18.44	$	-

- Definition

Tabular disclosure of components of a stock option or other award plan under which equity-based compensation is awarded to employees, typically comprised of the amount of unearned compensation (deferred compensation cost), compensation expense, and changes in the quantity and fair value of the shares (or other type of equity) granted, exercised, forfeited, and issued and outstanding pertaining to that plan. Disclosure may also include nature and general terms of such arrangements that existed during the period and potential effects of those arrangements on shareholders, effect of compensation cost arising from equity-based payment arrangements on the income statement, method of estimating the fair value of the goods or services received, or the fair value of the equity instruments granted, during the period, cash flow effects resulting from equity-based payment arrangements and, for registrants that accelerate vesting of out of the money share options, reasons for the decision to accelerate.

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