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Stock Option Plans | 12 Months Ended
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Dec. 31, 2012
Stock-Based Compensation [Abstract] |
Stock-Based Compensation | ## NOTE 11 - STOCK OPTION PLANS The Company's shareholders approved the Norwood Financial Corp 2006 Stock Option Plan at the Annual Meeting on April 26, 2006. An aggregate of 250,000 shares of authorized but unissued Common Stock of the Company were reserved for future issuance under the Plan. This includes up to 40,000 shares for awards to outside directors. Under this plan, the Company granted 27,500 options, which included 4,500 options granted to outside directors in 2012, 29,000 options, which included 4,500 options granted to outside directors in 2011, and 28,000 options, which included 4,000 options granted to outside directors in 2010. Total unrecognized compensation cost related to nonvested options under the Plan was $154,000 as of December 31, 2012, $130,000 as of December 31, 2011 and $165,000 as of December 31, 2010. Salaries and employee benefits expense includes $130,000, $170,000 and $163,000 of compensation costs related to options for the years ended December 31, 2012, 2011 and 2010, respectively. Net income was reduced by $123,000, $163,000 and $153,000 for the years ended December 31, 2012, 2011 and 2010, respectively. A summary of the Company's stock option activity and related information for the years ended December 31 follows:
| 2012 |  | 2011 |  | 2010
| Options |  | Weighted Average Exercise Price |  | Average Intrinsic Value |  | Options |  | Weighted Average Exercise Price |  | Average Intrinsic Value |  | Options |  | Weighted Average Exercise Price |  | Average Intrinsic Price
Outstanding, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
beginning of year | 209,914 |  | $ | 28.43 |  |  |  |  | 189,639 |  | $ | 28.52 |  |  |  |  | 170,915 |  | $ | 28.07 |  |  |
Granted | 27,500 |  |  | 29.75 |  |  |  |  | 29,000 |  |  | 27.43 |  |  |  |  | 28,000 |  |  | 27.74 |  |  |
Exercised | (18,577 | ) |  | 24.41 |  |  |  |  | (2,575 | ) |  | 19.69 |  |  |  |  | (9,276 | ) |  | 17.68 |  |  |
Forfeited | (12,711 | ) |  | 29.57 |  |  |  |  | (6,150 | ) |  | 30.25 |  |  |  |  | — |  |  | — |  |  |
Outstanding, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
end of year | 206,126 |  | $ | 28.90 |  | $ | 256,499 |  | 209,914 |  | $ | 28.43 |  | $ | 113,352 |  | 189,639 |  | $ | 28.52 |  | $ | 146,361
Exercisable, |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
end of year | 178,626 |  | $ | 28.76 |  | $ | 256,499 |  | 180,914 |  |  | 28.59 |  |  | 112,152 |  | 161,639 |  |  | 28.66 |  |  | 145,471
Exercise prices for options outstanding as of December 31, 2012 ranged from $23.95 to $31.50 per share. The weighted average remaining contractual life is 6.1 years. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing with the following weighted average assumptions:
|  | Years Ended December 31, |
|  | 2012 |  | 2011 |  | 2010 |
Dividend yield |  |  | 3.27% |  |  | 3.30% |  |  | 3.04% |
Expected life |  |  | 10 years |  |  | 7 years |  |  | 7 years |
Expected volatility |  |  | 25.37% |  |  | 25.35% |  |  | 27.18% |
Risk-free interest rate |  |  | 1.76% |  |  | 1.39% |  |  | 2.72% |
Weighted average fair value of options granted |  | $ | 5.61 |  | $ | 4.70 |  | $ | 6.12 |
The expected volatility is based on historical volatility. The risk-free interest rates for periods within the contractual life of the awards are based on the U.S. Treasury yield curve in effect at the time of the grant. The expected life is based on historical exercise experience. The dividend yield assumption is based on the Company's history and expectation of dividend payouts. Proceeds from stock option exercises totaled $455,000 in 2012. Shares issued in connection with stock options exercises are issued from available treasury shares. If no treasury shares are available, new shares are issued from available authorized shares. During 2012, all the shares issued in connection with stock option exercises, 18,577 shares in total, were issued from available treasury shares. As of December 31, 2012, outstanding stock options consist of the following:
|  | Options Outstanding |  | Average Exercise Price |  | Remaining Life, Years |  | Options Exercisable |  | Average Exercise Price |
|  | 13,426 |  | $ | 23.95 |  | 1.0 |  | 13,426 |  | $ | 23.95 |
|  | 14,700 |  |  | 30.00 |  | 2.0 |  | 14,700 |  |  | 30.00 |
|  | 21,000 |  |  | 30.38 |  | 3.3 |  | 21,000 |  |  | 30.38 |
|  | 19,500 |  |  | 31.50 |  | 4.0 |  | 19,500 |  |  | 31.50 |
|  | 19,500 |  |  | 31.25 |  | 5.0 |  | 19,500 |  |  | 31.25 |
|  | 19,000 |  |  | 27.50 |  | 6.0 |  | 19,000 |  |  | 27.50 |
|  | 1,000 |  |  | 28.90 |  | 6.3 |  | 1,000 |  |  | 28.90 |
|  | 18,500 |  |  | 28.59 |  | 7.0 |  | 18,500 |  |  | 28.59 |
|  | 1,000 |  |  | 26.88 |  | 7.2 |  | 1,000 |  |  | 26.88 |
|  | 22,500 |  |  | 27.77 |  | 8.0 |  | 22,500 |  |  | 27.77 |
|  | 1,000 |  |  | 26.27 |  | 8.5 |  | 1,000 |  |  | 26.27 |
|  | 27,500 |  |  | 27.47 |  | 9.0 |  | 27,500 |  |  | 27.47 |
|  | 27,500 |  |  | 29.75 |  | 10.0 |  | --- |  |  | --- |
Total |  | 206,126 |  | $ | 28.90 |  | 6.1 |  | 178,626 |  | $ | 28.76 |

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Staff Accounting Bulletin (SAB) -Number Topic 14 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6406099&loc=d3e25284-112666 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher AICPA -Name Statement of Position (SOP) -Number 93-6 -Paragraph 53 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6418621&loc=d3e17540-113929 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 123R -Paragraph 64, 65, A240 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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