Note 9. Share-based Compensation

3 Months Ended

Jun. 30, 2012

Note 9. Share-based Compensation:

Note 9. Share-based Compensation

9.             Share-Based Compensation

Total share-based compensation expense was $8,000 and $9,000 for the three months ended June 30, 2012 and 2011, respectively, and $16,000 and $25,000 for the six months ended June 30, 2012 and 2011, respectively.  Related tax benefits of $3,000 and $3,000 were recognized for the three months ended June 30, 2012 and 2011, respectively, and $6,000 and $9,000 for the six months ended June 30, 2012 and 2011, respectively.

Under the terms of the Company’s stock-based compensation plan, option exercise prices are equal to the quoted market price of the shares at the date of grant; option terms are ten years; and vesting periods range from three to four years.  The Company may also grant shares of restricted stock, stock appreciation rights and share-based performance awards.  Restricted shares are valued at the quoted market price of the shares at the date of grant, and have a three year vesting period.

Stock Options

The following table summarizes information regarding outstanding and exercisable options as of June 30, 2012:

		Outstanding		Exercisable
Number of options		317,288		299,509
Weighted average exercise price per share	$	10.40	$	10.70
Aggregate intrinsic value of options	$	5,312	$	2,956
Weighted average contractual term remaining		2.68 years		2.33 years

The Company’s stock option activity for the six months ended June 30, 2012 is as follows:

	No. of	Weighted
	Shares	Average
	Under	Exercise
	Option	Price
Balance, December 31, 2011	333,956	$	10.43
Forfeited	(16,668)		11.10
Balance, June 30, 2012	317,288	$	10.40

The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model.  The weighted average grant-date fair-value of options granted during the six months ended June 30, 2012 and 2011 was $0 and $3.24 per share, respectively.  The assumptions set forth in the table below were used to value the stock options granted during the six months ended June 30, 2012 and 2011:

	June 30,
	2012		2011
Weighted-average risk-free interest rate	-		2.95%
Annual dividend rate per share	-	$	-
Weighted-average volatility factor of the Company's common stock	-		37.07
Weighted-average expected term of options			5 years

No options were granted in 2012.

Compensation expense of $8,000 and $6,000 was recognized for the three months ended June 30, 2012 and 2011, respectively, and $16,000 and $18,000 for the six months ended June 30, 2012 and 2011, respectively for the portion of the fair value of stock options vesting during that period.

As of June 30, 2012, there was approximately $64,000 of total unrecognized compensation expense related to non-vested options which will be recognized over the remaining requisite service periods.

Restricted Stock

The Company issued 12,000 restricted stock awards in the second quarter of 2008, with a weighted average grant-date fair value of $6.92 per share.  No restricted stock awards have been issued since then.  Restricted stock expense was $0 and $3,000 for the three months ended June 30, 2012 and 2011, respectively, and $0 and $7,000 for the six months ended June 30, 2012 and 2011.  There were no restricted stock awards outstanding as of December 31, 2011.