SHARE-BASED COMPENSATION

9 Months Ended

Sep. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

 NOTE 10- SHARE-BASED COMPENSATION

The Company has stock benefit plans that allow the Company to grant options and restricted stock to employees and directors. The awards, which have a term of up to 10 years when issued, vest over a three to five year period. The exercise price of each award equals the market price of the Company's stock on the date of the grant. At September 30, 2011, there was $56,000 of total unrecognized compensation cost, net of estimated forfeitures, related to non-vested awards under the Company stock option plan. That cost is expected to be recognized over a weighted average period of 12.7 months. Option activity under the Company's stock option plan as of September 30, 2011 was as follows:

	2011
	Number of shares		Weighted average exercise price per share		Weighted average remaining contractual term (in years)		Aggregate intrinsic value ($000)
Outstanding at January 1, 2011		126,257	$	24.04
Options granted		-		-
Options exercised		-		-
Options forfeited		-		-
Options expired		2,100		25.71
Outstanding at September 30, 2011		124,157	$	24.01		2.59	$	-
Options exercisable at September 30, 2011		97,263	$	25.19		2.19	$	-

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company's closing stock price on the last trading day of the third quarter and the exercise price, multiplied by the number of in-the-money options).

The aggregate intrinsic value and cash receipts of options exercised are as follows:

	September 30,
	2011		2010
	(in thousands)
Options Exercised
Aggregate intrinsic value of options exercised	$	-	$	76
Cash receipts from options exercised		-		177

 In July of 2011, the Company issued stock of the Company as payment for director fees as permitted by the 2011 Director Stock Compensation Plan and is included as a component of share-based compensation.  The following tables provide information regarding the Company's share-based compensation expense for the three months ended:

	September 30,
	2011		2010
	(in thousands)
Share-based compensation expense
Director fees	$	34	$	-
Stock grant expense		3		4
Stock option expense		8		13
Employee Stock Ownership Plan ("ESOP") expense		53		51
Total share-based compensation expense	$	98	$	68

The Bank reports ESOP expense in an amount equal to the fair value of shares released from the ESOP to employees less dividends received on the allocated shares in the plan used for debt service. Dividends on allocated shares used to reduce ESOP expense totaled $9,000 and $11,000 for the three months ended September 30, 2011 and 2010, respectively. Share-based compensation expense related to stock options resulted in a tax benefit of $2,000 and $5,000 for the three months ended September 30, 2011 and 2010, respectively.

The following tables provide information regarding the Company's share-based compensation expense for the nine months ended:

	September 30,
	2011		2010
	(in thousands)
Share-based compensation expense
Director fees	$	34	$	-
Stock grant expense		9		12
Stock option expense		24		39
Employee Stock Ownership Plan ("ESOP") expense		168		145
Total share-based compensation expense	$	235	$	196

The Bank reports ESOP expense in an amount equal to the fair value of shares released from the ESOP to employees less dividends received on the allocated shares in the plan used for debt service. Dividends on allocated shares used to reduce ESOP expense totaled $27,000 and $33,000 for the nine months ended September 30, 2011 and 2010, respectively.

Share-based compensation expense related to stock options resulted in a tax benefit of $9,000 and $13,000 for the nine months ended September 30, 2011 and 2010, respectively.