Stock Option Plans

12 Months Ended

Dec. 31, 2011

Stock Option Plans

Note 21: Stock Option Plans

Under the Company’s stock option plans, which are accounted for in accordance with FASB ASC 718, Stock Compensation, the Company grants selected executives and other key employees and directors incentive and non-qualified stock option awards that vest and become fully exercisable at the discretion of the Compensation Committee as the options are granted. The Company is authorized to grant options for up to 934,702 shares of the Company’s common stock under two separate stock option plans. Under certain provisions of the plans, the number of shares available for grant may be increased without shareholder approval by the amount of shares surrendered as payment of the exercise price of the stock option and by the number of shares of common stock of the Company that could be repurchased by the Company using proceeds from the exercise of stock options.

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted in the following table. Expected volatility is based on historical volatility of the Company’s stock and other factors. The Company uses historical data to estimate timing of option exercises and employee terminations within the valuation model; separate groups of employees that have similar historical exercise behavior are considered separately for valuation purposes. The expected term of options granted represents the period of time that options are expected to be outstanding; the range given below results from certain groups of employees exhibiting different behavior. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The discount rate for post-vesting restrictions is estimated based on the Company’s credit-adjusted risk-free rate of return. There were no options granted in 2010.

The following is a summary of the status of the Company’s stock option plan and changes in that plan during 2011.

	2011
Options	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding, beginning of year		629,718	$	11.58
Granted		324,600		7.40
Exercised		2,832		5.98
Forfeited/expired		133,671		13.88
Outstanding, end of year		817,815	$	11.09		3.1 years	$	79
Options exercisable at year end		648,015	$	12.03

There were 2,832, 0 and 0 options exercised during the years ended December 31, 2011, 2010 and 2009. The weighted-average grant-date fair value of options granted during 2011 and 2009 was $1.33 and $1.34. No options were granted in 2010. The Company will fulfill options with authorized but unissued shares of stock from the 934,702 shares the Company has authorized under the shareholder approved equity compensation plans. There were 116,003 shares remaining to be granted under the current plans. As of December 31, 2011, there was approximately $167,000 of total unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the plans. The cost is expected to be recognized over a weighted-average period of 1.41 years.

The incentive stock options were granted with the exercise price equal to market price on the day of the grant. The following assumptions were used to determine the fair value of options granted in 2011:

	2011
Risk-free interest rate		1.96	%
Expected option life		9.3 yrs
Dividend yield		3.55	%
Expected volatility of stock price		32.05	%

Cash received from options exercised under all share-based payment arrangements for years ended December 31, 2011, 2010 and 2009 was $17,000, $0 and $0, respectively. The actual tax benefit (expense) realized for the tax deductions from options exercised and RRP shares vested totaled $0, $0 and ($36,000), respectively, for the years ended December 31, 2011, 2010 and 2009.