Stock Options

12 Months Ended

Dec. 31, 2011

Stock Options [Abstract]

STOCK OPTIONS

NOTE 11—STOCK OPTIONS

The Company’s Stock Option Plan, which was shareholder-approved, permitted the grant of share options to its directors, officers and employees for up to 375 thousand shares of common stock. The Company believes that such awards better align the interests of its employees with those of its shareholders. Option awards were granted with an exercise price equal to the market price of the Company's common stock at the date of grant; those option awards have vesting periods of 5 years and have 10-year contractual terms. Option exercises are expected to be satisfied with either newly issued shares or treasury shares. The fair value of the Company's stock at December 31, 2011 and 2010 was less than the option exercise price, therefore the outstanding and exercisable options had no intrinsic value.

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 Company uses historical data to estimate option exercise and post-vesting termination behavior. The expected term of options granted is based on historical data and represents the period of time that options granted are expected to be outstanding, which takes into account that the options are not transferable. 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.

There were no options granted or exercised in 2011, 2010 or 2009.

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

		September 30,			September 30,		September 30,
						Weighted
				Weighted		Average
				Average		Remaining
				Exercise		Contractual
	Shares			Price		Life
Outstanding at beginning of year		28,500		$	10.22		2.0 yrs
Granted		0
Exercised		0
Forfeited or expired		(23,500	)		11.00
Outstanding at end of year		5,000		$	6.55		6.5 yrs
Exercisable at end of year		3,000		$	6.55		6.5 yrs

The Company expects all outstanding options to vest. As of December 31, 2011, the total unrecognized compensation cost related to nonvested stock options granted under the Plan was immaterial.