Note 11
Stock-based Compensation

The Amended and Restated Omnibus Stock and Performance Compensation Plan (the "Omnibus Plan") provides incentive opportunities for key employees and non-employee directors and to align the personal financial interests of such individuals with those of the Company's shareholders. The Omnibus Plan permits the issuance of up to 1,500,000 shares of the Company's common stock in the form of stock options, SARs, restricted stock, restricted stock units and performance awards.

All share and per share data have been restated to give effect to the 10% stock dividend issued on December 14, 2012.

Restricted Stock
Restricted shares granted prior to April 16, 2013 are amortized to expense over the three-year vesting period. Beginning on April 16, 2013, restricted shares granted to Company employees are amortized to expense over the three-year vesting period whereas restricted shares granted to members of the Board of Directors are amortized to expense over a one-year service period with the exception of those shares granted in lieu of cash payment for retainer fees which are expensed in the period earned. Changes in restricted shares outstanding for the year ended December 31, 2013 were as follows:

			Weighted Average
			Grant Date
	Shares		Fair Value
Balance at December 31, 2012	54,875		$	31.61
Granted	30,407		$	42.21
Vested	(26,633	)	$	30.86
Balance at December 31, 2013	58,649		$	37.45

During 2012 and 2011, 28,370 and 31,472 shares, respectively, were granted with weighted average per share market values at date of grant of $34.03 in 2012 and $30.05 in 2011. The fair value of such shares, which is based on the market price on the date of grant, is amortized to expense over the three-year vesting period. Amortization of the restricted stock bonus awards totaled $1,176,000 for 2013, $788,000 for 2012 and $787,000 for 2011. As of December 31, 2013, the total unrecognized compensation expense related to non-vested restricted stock awards was $1,131,000 and the related weighted average period over which it is expected to be recognized is approximately 0.64 years. The total fair value of shares vested during the years ended December 2013, 2012, and 2011 was $822,000, $788,000, and $812,000 respectively.

SARs

There were 85,943 SARs granted during the year ended December 31, 2013. The Company uses the Black-Scholes option-pricing model to determine the fair value of the SARs at the date of grant. Following are the assumptions used to estimate the $10.69 per share fair value.

	Year Ended December 31, 2013
Risk-free interest rate	1.29	%
Expected life	7 years
Expected volatility	28.72	%
Expected dividend yield	1.71	%

The risk-free interest rate is based on the zero-coupon U.S. Treasury yield for the period equal to the expected life of the SARs at the time of the grant. The expected life was derived using the historical exercise activity. The Company uses historical volatility for a period equal to the expected life of the SARs using average monthly closing market prices of the Company's stock. The expected dividend yield is determined based on the Company's current rate of annual dividends.

During 2013, the Company recognized SARs expense of $800,000. As of December 31, 2013, the total unrecognized compensation expense related to SARs was $945,000, and the related weighted average period over which it is expected to be recognized is 1.13 years. Changes in SARs outstanding for the year ended December 31, 2013 were as follows:

	SARs		Weighted Average Exercise Price
Balance at December 31, 2012	351,881		$	27.52
Granted	85,943		$	42.14
Exercised	(94,379	)	$	24.67
Balance at December 31, 2013	343,445		$	32.01
Exercisable at December 31, 2013	166,317		$	26.58

The total intrinsic value of SARs exercised during 2013 and 2012 was $2,328,000 and $1,769,000, respectively. The average remaining contractual term for SARs outstanding as of December 31, 2013 was 7.33 years and the aggregate intrinsic value was $12,137,000. The average remaining contractual term for SARs exercisable as of December 31, 2012 was 7.34 years and the aggregate intrinsic value was $4,988,000.

The total compensation cost for share-based payment arrangements was $1,976,000, $1,398,000, and $1,391,000 in 2013, 2012, and 2011, respectively. The total unrecognized tax benefit related to share based compensation was $55,000, $55,000, and $316,000 in 2013, 2012, and 2011, respectively.