STOCK INCENTIVE PLANS

Restricted Stock

The Corporation issues restricted stock awards, consisting of both restricted stock and restricted stock units, to key employees under its Incentive Compensation Plans (Plans). The grant date fair value of the restricted stock awards is equal to the price of the Corporation’s common stock on the grant date. For the three months ended March 31, 2014, the Corporation did not issue any restricted stock awards. For the three months ended March 31, 2013, the Corporation issued 295,705 restricted stock awards with aggregate weighted average grant date fair values of $3,472, under these Plans. As of March 31, 2014, the Corporation had available up to 2,467,326 shares of common stock to issue under these Plans.

Under the Plans, more than half of the restricted stock awards granted to management are earned if the Corporation meets or exceeds certain financial performance results when compared to its peers. These performance-related awards are expensed ratably from the date that the likelihood of meeting the performance measure is probable through the end of a four-year vesting period. The service-based awards are expensed ratably over a three-year vesting period. The Corporation also issues discretionary service-based awards to certain employees that vest over five years.

The unvested restricted stock awards are eligible to receive cash dividends or dividend equivalents which are ultimately used to purchase additional shares of stock. Any additional shares of stock received as a result of cash dividends are subject to forfeiture if the requisite service period is not completed or the specified performance criteria are not met. These awards are subject to certain accelerated vesting provisions upon retirement, death, disability or in the event of a change of control as defined in the award agreements.

Share-based compensation expense related to restricted stock awards was $532 and $1,083 for the three months ended March 31, 2014 and 2013, the tax benefit of which was $186 and $379, respectively.

The following table summarizes certain information concerning restricted stock awards:


	Three Months Ended March 31,
	2014					2013
	Awards			Weighted Average Grant Price		Awards			Weighted Average Grant Price
Unvested awards outstanding at beginning of period		1,729,033		$	10.23		1,913,073		$	9.17
Granted		—			—		295,705			11.74
Net adjustment due to performance		(19,002	)		8.48		—			—
Vested		(667,956	)		9.01		(734,130	)		7.90
Forfeited		(430	)		10.69		(622	)		9.23
Dividend reinvestment		9,612			13.01		12,008			11.78

Unvested awards outstanding at end of period		1,051,257			11.06		1,486,034			10.34

The total fair value of awards vested was $8,631 and $8,259 for the three months ended March 31, 2014 and 2013, respectively.

As of March 31, 2014, there was $4,159 of unrecognized compensation cost related to unvested restricted stock awards, including $56 that is subject to accelerated vesting under the Plan’s immediate vesting upon retirement provision for awards granted prior to the adoption of ASC 718, Compensation – Stock Compensation. The components of the restricted stock awards as of March 31, 2014 are as follows:


	Service- Based Awards		Performance- Based Awards		Total
Unvested awards		262,189		789,068		1,051,257
Unrecognized compensation expense	$	1,390	$	2,769	$	4,159
Intrinsic value	$	3,516	$	10,574	$	14,090
Weighted average remaining life (in years)		1.91		2.02		1.99

Stock Options

The Corporation did not grant stock options during the three months ended March 31, 2014 or 2013. All outstanding stock options were granted at prices equal to the fair market value at the date of the grant, are primarily exercisable within ten years from the date of the grant and are fully vested. The Corporation issues shares of treasury stock or authorized but unissued shares to satisfy stock options exercised. Shares issued upon the exercise of stock options were 87,332 for the three months ended March 31, 2014. No stock options were exercised during the three months ended March 31, 2013.

The following table summarizes certain information concerning stock option awards:


	Three Months Ended March 31,
	2014					2013
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Options outstanding at beginning of period		533,524		$	11.50		640,050		$	13.21
Assumed from acquisition		304,785			5.77		—			—
Exercised		(87,332	)		6.05		—			—
Forfeited		(48,172	)		25.79		(263,589	)		14.92

Options outstanding and exercisable at end of period		702,805			8.71		376,461			12.01

The intrinsic value of outstanding and exercisable stock options at March 31, 2014 was $3,012.

Warrants

In conjunction with its participation in the UST’s CPP, the Corporation issued to the UST a warrant to purchase up to 1,302,083 shares of the Corporation’s common stock. Pursuant to Section 13(H) of the Warrant to Purchase Common Stock, the number of shares of common stock issuable upon exercise of the warrant was reduced in half to 651,042 shares on June 16, 2009, the date the Corporation completed a public offering. The warrant, which expires in 2019, has an exercise price of $11.52 per share.

In conjunction with the Parkvale Financial Corporation (Parkvale) acquisition on January 1, 2012, the warrant issued by Parkvale to the UST under the CPP has been converted into a warrant to purchase up to 819,640 shares of the Corporation’s common stock. This warrant, which was recorded at its fair value on January 1, 2012, expires in 2018 and has an exercise price of $5.81 per share.

In conjunction with the ANNB acquisition, the warrant issued by ANNB to the UST under the CPP has been converted into a warrant to purchase up to 342,564 shares of the Corporation’s common stock. The warrant, which was recorded at its fair value on April 6, 2013, expires in 2019 and has an exercise price of $3.57 per share.