12 Months Ended
Dec. 31, 2011



Stock Option Plan


Options to buy stock are granted to directors, officers and employees under the Company’s stock option and incentive plan which provide for the issuance of up to 1,200,000 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. 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 $203, $307 and $494 for 2011, 2010 and 2009, respectively. The total income tax benefit was $0, $0 and $23 for 2011, 2010 and 2009, respectively.


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.


The fair value of options granted was determined using the following weighted-average assumptions as of grant date.

    2011     2010     2009  
Risk-free interest rate     0.0 %     0.0 %     1.64 %
Expected term     0 years       0 years       6.8 years  
Expected stock price volatility     0.0 %     0.0 %     18.49 %
Dividend yield     0.0 %     0.0 %     2.65 %


No options were granted in 2011 or 2010.


A summary of the activity in the stock option plan for 2011 follows:


          Weighted     Average        
          Average     Remaining     Aggregate  
          Exercise     Contractual     Intrinsic  
    Shares     Price     Term     Value  
Outstanding at beginning of year     523,730     $ 24.96                  
Granted     -       -                  
Exercised     700       19.10                  
Forfeited or expired     66,635       23.39                  
Outstanding at end of year     456,395     $ 25.20       3.34     $ 27  
Exercisable at end of year     331,273     $ 25.52       2.75     $ 27  


The Company expects approximately 58,200 of the nonvested shares to become exercisable.


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


    2011     2010     2009  
Intrinsic value of options exercised   $ 4     $ -     $ 39  
Cash received from option exercises     15       -       193  
Tax benefit realized from option exercises     1       -       13  
Weighted average fair value/share of options granted                   2.80  


As of December 31, 2011, there was $160,308 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 1.41 years.