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STOCK BASED COMPENSATION
 3 Months Ended
Mar. 31, 2012
STOCK BASED COMPENSATION [Abstract]  
STOCK BASED COMPENSATION
NOTE D:  STOCK BASED COMPENSATION
 
The Company maintains a stock option plan under which incentive stock options and nonqualified stock options may be granted. On March 2, 2006, the Company's Board of Director's (the "Board") adopted, and shareholders later approved, the 2006 Stock Option Plan (the "2006 Plan"). Under the 2006 Plan 750,000 shares are reserved for the issuance of stock options to directors, officers, key employees, and others. The option exercise price under the 2006 Plan is the fair market value of the stock on the date the option is granted. The fair market value is determined by the average of the highest and lowest sales prices for a share of the Company's common stock, on its primary exchange, on the same date that the option is granted.

Outstanding incentive stock options at March 31, 2012, must be exercised within either five or ten years from the date of grant and vest in increments of 20% each year. Outstanding nonqualified stock options at March 31, 2012, must be exercised within either five or ten years from the date of grant.

During the first three months of 2012, options for 14,000 shares were issued under the 2006 Plan at an option exercise price of $11.54 per share, and at March 31, 2012, 526,000 shares were available for granting future options.

The total grant date fair value of options vested during the first three months of 2012 was approximately $82,000. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the first three months of 2012 was approximately $99,000 and includes approximately $82,000 recognized as a result of the annual grant of 2,000 shares to each non-employee director during the first quarter of 2012. The recognition of stock-based compensation expense did not have a recognizable impact on diluted or basic earnings per share reported for the first quarter ending March 31, 2012. As of March 31, 2012, the Company had stock-based compensation plans with total unvested stock-based compensation expense of approximately $255,000 which is being amortized on a straight-line basis over the remaining vesting period. As a result, the Company expects to recognize approximately $51,000 in additional compensation expense related to unvested option awards during the remainder of 2012 and to recognize approximately $68,000 in additional compensation expense related to unvested option awards during each of the years 2013 through 2014, $63,000 in additional compensation expense related to unvested option awards during 2015, and $5,000 in additional compensation expense related to unvested option awards during 2016.
 
The total grant date fair value of options vested during the first three months of 2011 was approximately $98,000. Total pre-tax stock-based compensation expense, recognized in Salaries, wages and benefits during the first three months of 2011 was approximately $116,000 and includes approximately $98,000 recognized as a result of the annual grant of 2,000 shares to each non-employee director during the first quarter of 2011. The recognition of stock-based compensation expense increased diluted and basic loss per common share by approximately $0.01 during the three months ending March 31, 2011.

The weighted average grant date fair value of options granted during the first three months of 2012 and 2011 was $5.88 per share and $6.14 per share, respectively.

The fair value of the Company's employee stock options was estimated at the date of grant using a Black-Scholes-Merton ("BSM") option-pricing model using the following assumptions:

   
Three Months Ended
 
   
March 31,
 
   
2012
  
2011
 
Dividend yield
  0%  0%
Volatility
  64.92%  65.81%
Risk-free rate
  0.68%  1.79%
Expected life
 
4.3 years
  
4.3 years
 
Fair value of options
 $5.88  $6.14 

The Company does not anticipate paying any additional cash dividends in the foreseeable future other than those dividends declared in March 2012 to be paid in April 2012. The estimated volatility is based on the historical volatility of our stock. The risk free rate for the periods within the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of grant. The expected life of the options was calculated based on the historical exercise behavior.

Information related to option activity for the three months ended March 31, 2012 is as follows:

   
Shares
Under
Options
  
Weighted-
Average
 Exercise Price
  
Weighted-
Average
Remaining
Contractual
Term
  
Aggregate
Intrinsic
Value*
 
      
(per share)
  
(in years)
    
Outstanding-beginning of year
  180,942  $16.50       
Granted
  14,000   11.54       
Exercised
  (6,000)  9.04       
Cancelled/forfeited/expired
  (12,000)  22.92       
Outstanding at March 31, 2012
  176,942  $15.93   3.8  $29,400 
                  
Exercisable at March 31, 2012
  132,500  $17.51   2.1  $29,400 
 
* The intrinsic value of a stock option is the amount by which the market value of the underlying stock exceeds the exercise price of the option. The per share market value of our common stock, as determined by the closing price on March 31, 2012, was $11.19.

The number, weighted average exercise price and weighted average remaining contractual life of options outstanding as of March 31, 2012 and the number and weighted average exercise price of options exercisable as of March 31, 2012 are as follows:

Exercise Price
  
Shares Under
 Outstanding
 Options
  
Weighted-Average
 Remaining Contractual
Term
  
Shares Under
Exercisable
Options
 
      
(in years)
    
$3.84   4,000   1.9   4,000 
$11.22   54,442   8.7   10,000 
$11.54   12,000   4.9   12,000 
$11.75   12,000   3.9   12,000 
$14.32   14,000   2.9   14,000 
$14.98   14,000   0.9   14,000 
$19.88   12,500   0.5   12,500 
$23.22   54,000   0.4   54,000 
     176,942   3.8   132,500 

Cash received from option exercises totaled approximately $55,000 and $8,000 during the three months ended March 31, 2012 and March 31, 2011, respectively. The Company issues new shares upon option exercise.