STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

STOCK-BASED COMPENSATION

NOTE 11 - STOCK-BASED COMPENSATION

Stock-based compensation in the form of options to buy stock and restricted stock units (“RSUs”) are granted to directors, officers and employees under the Company’s incentive stock plan (the “Plan”), which provides for the issuance of up to 1,000,000 shares. The Company believes that such awards better align the interests of its employees with those of its shareholders. The specific terms of each option agreement are determined by the Compensation Committee at the date of the grant.

Stock Option Plan: The specific terms of each option agreement are determined by the Compensation Committee at the date of the grant. For current options outstanding, options granted to directors vest immediately and options granted to employees generally vest evenly over a five-year period.

The options’ lives are generally ten years for employees and five years for directors. Total compensation cost that has been charged against income for those plans was $50, $97, and $203 for 2013, 2012 and 2011, respectively. The total income tax benefit was $0, $0, and $0.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model that uses the assumptions noted in the table below. Expected volatilities are based on historical volatilities of the Company’s common stock. The risk-free interest rate for the expected term of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. Expected term is estimated based upon the contractual term and vesting period of the options including consideration of historical trends segregated by employees and directors. A forfeiture rate of 19% for employees and 0% for directors is used in the model and is based on historical experience.

There have been no options granted in 2013, 2012, or 2011.

A summary of the activity in the stock option plan for 2013 follows:

				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic
	Shares	Price		Years	Value
Outstanding at beginning of year	348,024	$	25.44
Granted	-		-
Exercised	(138,155)		25.39
Forfeited or expired	(47,850)		28.11
Outstanding at end of year	162,019	$	24.69	2.69	$	1,991
Exercisable at end of year	130,264	$	24.81	2.56	$	1,575

The Company expects all of the nonvested shares to become exercisable.

Information related to the stock option plan during each year follows:

	2013		2012		2011
Intrinsic value of options exercised	$	475	$	84	$	4
Cash received from option exercises		3,507		810		15
Tax benefit realized from option exercises		121		31		1

As of December 31, 2013, there was $39 of total unrecognized compensation cost related to nonvested stock options granted under the plan. The cost is expected to be recognized over a weighted-average period of 1.50 years.

Restricted Stock Units: The specific terms of each restricted stock unit (“RSU”) award are determined by the Compensation Committee at the date of the grant. Compensation expense is recognized over the vesting period of the awards based on the fair value of the stock at the issue date. The fair value of the stock was determined using the total number of RSUs granted multiplied by the fair market value of a share of Company stock at the grant date. RSU’s are fully vested on the first anniversary of the grant date.

A summary of changes in the Company’s nonvested shares for the year follows:

			Weighted-Average
			Grant-Date
Nonvested Shares	Shares		Fair Value
Nonvested at January 1, 2013	4,185	$	25.80
Granted	14,476		26.39
Vested	(13,714)		26.22
Forfeited	(453)		26.49
Nonvested at December 31, 2013	4,494	$	26.25

The Company recorded RSU expense of $387 and $67 in 2013 and 2012. As of December 31, 2013, there was $35 of total unrecognized compensation cost related to nonvested shares granted under the 2012 stock incentive plan. The cost is expected to be recognized in 2014.