Annual report pursuant to Section 13 and 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2011
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 573,733 shares under the Employees' Plans and 165,375 shares under the Directors' Plans available for future issuance as of December 31, 2011.  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 2011 and 2010.
 
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, 2011
     722,564     $ 15.02              
Forfeited
     (72,769 )     15.70              
Expired
     (15,368 )     8.07              
                             
Outstanding at December 31, 2011
     634,427     $ 15.11       2.98     $ ---  
                                 
Exercisable at December 31, 2011
     634,427     $ 15.11       2.98     $ ---  

Information related to stock options during each year follows (dollars in thousands):

   
2011
    
2010
  
             
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 2011 and $36,000 in compensation cost for stock options (with no tax benefit), representing less than $0.01 per share for 2010.

As of December 31, 2011, there was no unrecognized compensation cost related to nonvested stock options granted under the Company's stock-based compensation plans.

Restricted Stock Awards

Stock awards have vesting periods of up to four years.  A summary of changes in the Company's nonvested stock awards for the year follows:

 
 
Nonvested Stock Awards
  
 
Shares
    
Weighted-Average
Grant-Date
Fair Value
  
Outstanding at January 1, 2011
     37,125     $ 5.23  
Vested
     (36,124 )     5.30  
Forfeited
     (1,001 )     2.68  
                 
Outstanding at December 31, 2011
     ---     $ ---  

Compensation cost related to stock awards totaled $66,000 and $102,000 for 2011 and 2010, respectively.

As of December 31, 2011, there was no remaining unrecognized compensation cost related to nonvested shares granted under the Company's stock-based compensation plans.  The total fair value of shares vested was $192,000 and $145,000 during 2011 and 2010, respectively.