STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2011

STOCK-BASED COMPENSATION [Abstract]

STOCK-BASED COMPENSATION

NOTE 9 – STOCK-BASED COMPENSATION

Under the terms of an incentive stock option plan adopted during 2001, shares of unissued common stock were reserved for options to officers and key employees at prices not less than the fair market value of the shares at the date of the grant.  These options expire 10 years after the grant date with the options scheduled to expire during 2011 and 2012.   No additional shares of common stock remain reserved for future grants under the option plan approved by the shareholders.  As of June 30, 2011, 2,181 options were outstanding and eligible to be exercised at a weighted average exercise price of $16.09 per share.  As of December 31, 2010, 3,645 options were outstanding and eligible to be exercised at a weighted average exercise price of $15.99 per share.  During the six months ended June 30, 2011, 1,464 options were exercised at $15.83 per share.  There were no options exercised during the six months ended June 30, 2010, although 636 options shares lapsed with an average exercise price of $15.84 per share.

PSB granted restricted stock to certain employees having an initial market value of $200 and $75 during the three months ended March 31, 2011, and 2010, respectively.  No restricted shares were granted during the three months ended June 30, 2011 or 2010.  Restricted shares vest to employees based on continued PSB service over a six-year period and are recognized as compensation expense over the vesting period.  Cash dividends are paid on unvested shares at the same time and amount as paid to PSB common shareholders.  Cash dividends paid on unvested restricted stock shares are charged to retained earnings as significantly all restricted shares are expected to vest to employees.  Unvested shares are subject to forfeiture upon employee termination.  During the six months ended June 30, compensation expense recorded from amortization of restricted shares expected to vest to employees was $45 and $21 during 2011 and 2010, respectively.

The following table summarizes information regarding restricted stock outstanding at June 30, 2011 and 2010 including activity during the six months then ended.

	Shares			Weighted Average Grant Price
January 1, 2010		14,332		$	17.44
Restricted stock granted		4,983			15.05
Restricted stock legally vested		(785	)		(25.53	)
June 30, 2010		18,530		$	16.46
January 1, 2011		18,530		$	16.46
Restricted stock granted		8,695			23.00
Restricted stock legally vested		(2,867	)		(17.45	)
June 30, 2011		24,358		$	18.67

Scheduled compensation expense per calendar year assuming all restricted shares eventually vest to employees would be as follows:

2011	$	78
2012		85
2013		105
2014		85
2015		55
Thereafter		40
Totals	$	448