Stock-Based Compensation

12 Months Ended

Dec. 31, 2012

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 13- Stock-Based Compensation

Bancorp has a stock-based compensation plan for directors, officers, and other key employees of Bancorp. The aggregate number of shares of common stock that may be issued with respect to the awards granted under the plan is 500,000 plus any shares forfeited under Bancorp's old stock-based compensation plan. Under the terms of the plan, Bancorp has the ability to grant various stock compensation incentives, including stock options, stock appreciation rights, and restricted stock. The stock-based compensation is granted under terms and conditions determined by the Compensation Committee of the Board of Directors. Under the stock based compensation plan, stock options generally have a maximum term of ten years, and are granted with an exercise price at least equal to the fair market value of the common stock on the date the options are granted. Generally, options granted to directors of Bancorp vest immediately, and options granted to officers and employees vest over a five-year period, although the Compensation Committee has the authority to provide for different vesting schedules.

Bancorp follows FASB ASC 718, Compensation – Stock Compensation (FASB ASC 718) to account for stock-based compensation. FASB ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized as compensation expense in the statement of operations at fair value. FASB ASC 718 requires an entity to recognize the expense of employee services received in share-based payment transactions and measure the expense based on the grant date fair value of the award. The expense is recognized over the period during which an employee is required to provide service in exchange for the award. Stock-based compensation expense included in the consolidated statements of operations for the years ended December 31, 2012, 2011 and 2010 totaled $43,000, $61,000 and $162,000, respectively. There was no income tax benefit recognized in the consolidated statements of operations for stock-based compensation for the years ended December 31, 2012, 2011 and 2010.

There were 0 options granted in both 2012 and 2011 and 100,000 options granted in 2010.

Information regarding Bancorp's stock option plan as of and for the years ended December 31, 2012, 2011 and 2010 is as follows:

						Weighted
				Weighted		Average	Aggregate
				Average		Remaining	Intrinsic
	Shares			Price		Life	Value
Options outstanding, December 31, 2009		110,715		$	15.88
Options granted		100,000			4.21
Options exercised		-			-
Options forfeited		(19,965	)		15.62		$	-
Options outstanding, December 31, 2010		190,750			9.79
Options granted		-			-
Options exercised		-			-
Options forfeited		(90,750	)		15.93		$	-
Options outstanding, December 31, 2011		100,000			4.21
Options granted		-			-
Options exercised		-			-
Options forfeited		(19,000	)		4.13
Options outstanding, December 31, 2012		81,000		$	4.23	4.23	$	-
Options exercisable, December 31, 2012		45,225		$	4.23	2.20	$	-
Option price range at December 31, 2012	$	4.13 to $4.54

The stock-based compensation expense amounts were derived using the Black-Scholes option-pricing model. The following weighted average assumptions were used to value options granted in current and prior periods presented.

Expected life of options	5.0 years
Risk-free interest rate		3.60	%
Expected volatility		55.94	%
Expected dividend yield		2.52	%

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because Bancorp's 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.

The following table summarizes the nonvested options in Bancorp's stock option plan as of December 31, 2012.

				Weighted
				Average
	Shares			Grant Date Fair Value
Nonvested options outstanding, December 31, 2011		64,166		$	4.21
Nonvested options granted		-			-
Nonvested options vested		(16,200	)		4.23
Nonvested options forfeited		(12,191	)		4.13
Nonvested options outstanding, December 31, 2012		35,775		$	4.23

As of December 31, 2012, there was $94,000 of total unrecognized stock-based compensation cost related to non-vested stock options, which is expected to be recognized over a period of twenty-seven months.