11. Stock Option Plan

9 Months Ended

Sep. 30, 2013

Shares Held in Employee Stock Ownership Plan [Abstract]

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 2013 or 2012.

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 2013 and 2012, our stock compensation expense and related deferred taxes were insignificant.

A summary of activity in our Plans during the first nine months of 2013 and 2012 is as follows:

	For the Nine Months Ended September 30,
	2013					2012
				Weighted-					Weighted-
				Average					Average
				Exercise					Exercise
	Options			Price		Options			Price
Outstanding, January 1		249,700		$	18.98		317,180		$	18.17
Granted		-			-		-			-
Exercised		(15,200	)		5.27		-			-
Forfeited		(1,750	)		19.69		-			-
Expired		(39,700	)		23.41		(22,800	)		5.12
Outstanding, September 30		193,050		$	19.14		294,380		$	19.18

Other information regarding options outstanding and exercisable at September 30, 2013 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		19,550	$	4.86		3.50	$	74		17,550	$	5.13	$	62
	6.01 - 10.00		28,200		9.14		2.89		7		27,600		9.20		6
	10.01 - 17.50		2,300		17.43		0.42		-		2,300		17.43		-
	17.51 - 20.00		38,500		17.80		3.25		-		38,500		17.80		-
	20.01 - 25.93		104,500		25.04		2.99		-		104,500		25.04		-
			193,050		19.14			$	81		190,450		19.35	$	68