Stock Option Plan

6 Months Ended

Jun. 30, 2012

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 six months of 2012 or 2011.

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 six months of 2012 and 2011, our stock compensation expense and related deferred taxes were insignificant.

A summary of activity in our Plans during the first six months of 2012 and 2011 is as follows:


	For the Six Months Ended June 30,
	2012				2011
	Options		Weighted- Average Exercise Price		Options	Weighted- Average Exercise Price
Outstanding, January 1	317,180		$	18.17	317,180	$	18.17
Granted	-			-	-		-
Exercised	-			-	-		-
Forfeited	-			-	-		-
Expired	(22,800	)		5.12	-		-
Outstanding, June 30	294,380		$	19.18	317,180	$	18.17

Other information regarding options outstanding and exercisable at June 30, 2012 is as follows:


	Options Outstanding						Options Exercisable
Range of exercise price	# of shares	WAEP		Wted. Avg. Remaining Contractual Life (yrs)	Aggregate Intrinsic Value (in thousands)		# of shares	WAEP		Aggregate Intrinsic Value (in thousands)
$2.54 - $6.00	41,350	$	5.16	2.89	$	17	37,350	$	5.44	$	6
6.01- 10.00	33,680		9.20	4.09		-	31,880		9.37		-
10.01- 17.50	2,300		17.43	1.67		-	2,300		17.43		-
17.51- 20.00	51,300		17.79	4.50		-	51,200		17.79		-
20.01- 25.93	165,750		25.15	3.37		-	165,750		25.15		-

	294,380		19.18		$	17	288,480		19.49	$	6

- 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.

+ References+ Details