committee of the board of directors who approves employees to whom awards are granted and the number of shares granted. Compensation expense is recognized on a straight line basis over the vesting period, which is typically four or five years. The stock-based compensation cost related to these awards was $82,000, $107,000 and $100,000 for the years ended  December 31, 2012, 2011 and 2010, respectively. The Company recognized tax benefits of $6,000, $23,000 and $15,000  for the years ended December 31, 2012, 2011 and 2010, respectively. For stock options, the exercise price may not be less than 100% of the fair market value of the shares on the date of  the grant, and no option shall be exercisable subsequent to the contractual term of the award. In determining compensation  cost, the Black-Scholes option-pricing model is used to estimate the fair value of options on the date of grant. The Black- Scholes model is a closed-end model that uses the assumptions outlined below. Expected volatility is based on historical  volatility of the Company’s stock. The Company uses historical exercise behavior and other qualitative factors to estimate  the expected term of the options, which represents the period of time that the options granted are expected to be outstanding. The risk-free rate for the expected term is based on U.S. Treasury rates in effect at the time of grant. On April 20, 2011, the Company’s Compensation Committee awarded 8,600 shares of restricted common stock  and options to acquire 59,131 shares of common stock. These awards vest ratably over four years. As a result, all awards  available under the Company’s 2001 Stock Incentive Plan have been made. The fair value of options granted were  estimated utilizing the following weighted average assumptions:  A summary of option activity during 2012 is presented below:  89  2012 2011 2010 Dividend rate n/a 6.33% n/a Volatility  n/a 23.58% n/a Risk-free interest rate n/a 2.15% n/a Expected term n/a 5 years n/a Fair value per option at grant date n/a  $ 1.59  n/a Years ended December 31, (Dollars in thousands, except per share amounts) Weighted Weighted average average exercise remaining Aggregate price contractual intrinsic Shares per share term value Outstanding at December 31, 2011 476,753 $ 19.09  5.0 years $ 199  Effect of 5% stock dividend 23,217 $ - -   n/a  Forfeited/expired (12,085) $ 19.18 -   n/a  Exercised (554) $ 16.21 -   n/a  Outstanding at December 31, 2012 487,331 $ 18.18  4.0 years $ 355  Exercisable at December 31, 2012 437,957 $ 18.54  3.6 years $ 169  Vested and expected to vest at December 31, 2012 464,254 $ 18.18  4.0 years $ 337 