Annual report pursuant to Section 13 and 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2013
STOCK-BASED COMPENSATION [Abstract]  
STOCK-BASED COMPENSATION
NOTE 11 – STOCK-BASED COMPENSATION

The Company has stock-based compensation plans for its employees (the Employees’ Plans) and directors (the Directors’ Plans).  The Employees’ Plans permit the grant of stock options or the issuance of restricted stock for up to 1,917,210 shares of common stock.  The Directors’ Plans permit the grant of stock options or the issuance of restricted stock for up to 473,278 shares of common stock.  There were 337,432 shares under the Employees’ Plans and 165,375 shares under the Directors’ Plans available for future issuance as of December 31, 2013.  The Company issues new shares under its stock-based compensation plans from its authorized but unissued shares.

Stock Options

Option awards are granted with an exercise price equal to the market price at the date of grant.  Option awards have vesting periods ranging from one to three years and have ten year contractual terms.

The fair value of each option award is estimated on the date of grant using a closed form option valuation (Black-Scholes) model.  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 Company expects that all options granted will vest and become exercisable. 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 during 2013, 2012 and 2011.  A summary of option activity in the plans is as follows (dollars in thousands, except per option data):
 
Options
  
Number Outstanding
    
Weighted-Average Exercise Price
    
Weighted- Average Remaining Contractual Life in Years
  
Aggregate Intrinsic Value
  
Outstanding at January 1, 2013
    
472,719
    
$
16.44
      
---
  
 
Forfeited
    
---
      
---
      
---
  
 
Expired
    
(117,391
)
    
12.76
      
---
  
 
Outstanding at December 31, 2013
    
355,328
    
$
17.65
      
2.09
    
$
---
  
 
                                
Exerciseable at December 31, 2013
    
355,328
    
$
17.65
      
2.09
    
$
---
  
 
Information related to stock options during each year follows (dollars in thousands):
 
 
  
2013
    
2012
    
2011
  
Intrinsic value of options exercised
  
$
---
    
$
---
    
$
---
  
Cash received from option exercises
    
---
      
---
      
---
  
Tax benefit realized from option exercises
    
---
      
---
      
---
  

There was no compensation cost for stock options in 2013, 2012 and 2011.

As of December 31, 2013, there was no unrecognized cost related to nonvested stock options granted under the Company’s stock-based compensation plans.

Restricted Stock Awards

Restricted stock awards have vesting periods of up to three years.  A summary of changes in the Company’s nonvested restricted stock awards for the year follows:
 
Nonvested Stock Awards
 
Shares
  
Weighted-Average Grant-Date Fair Value
  
Aggregate Intrinsic Value
  
Outstanding at January 1, 2013
    
121,000
    
$
2.90
    
$
605,000
  
Granted
    
125,500
      
5.17
      
627,500
  
Vested
    
(40,329
)
    
2.90
      
201,645
  
Forfeited
    
---
      
---
          
Outstanding at December 31, 2013
    
206,171
    
$
4.28
    
$
1,030,855
  

Compensation cost related to restricted stock awards totaled $160,000, $9,000, and $66,000 for 2013, 2012 and 2011, respectively.

As of December 31, 2013, there was $895,260 of total remaining unrecognized compensation cost related to nonvested restricted stock awards granted under the Company’s stock-based compensation plans.  The cost is expected to be recognized over a weighted-average period of 1.79 years.  The total grant date fair value of restricted stock awards vested during 2013 was $116,954.  There were no restricted stock awards that vested during 2012.  The total grant date fair value of restricted stock awards vested during 2011 was $192,000.