STOCK COMPENSATION PLANS

Share-based Compensation Expense

For the three months ended September 30, 2014 and 2013, share-based compensation expense was $1.7 million and $446 thousand, respectively, and the related tax benefits were $0 and $0, respectively. For the nine months ended September 30, 2014 and 2013, share-based compensation expense was $4.6 million and $1.3 million, respectively, and the related tax benefits were $0 and $0, respectively.

On July 16, 2013, the Company’s stockholders approved the Company’s 2013 Omnibus Stock Incentive Plan (the 2013 Omnibus Plan). Upon the approval of the 2013 Omnibus Plan, the Company ceased being able to grant new awards under the Company’s 2011 Omnibus Incentive Plan or any prior equity incentive plans. The 2013 Omnibus Plan provides that the aggregate number of shares of Company common stock that may be subject to awards under the 2013 Omnibus Plan will be 20 percent of the then outstanding shares of Company common stock (the Share Limit), provided that in no event will the Share Limit be less than the greater of 2,384,711 shares of Company common stock and the aggregate number of shares of Company common stock with respect to which awards have been properly granted under the 2013 Omnibus Plan up to that point in time. As of September 30, 2014, based on the number of shares registered for issuance under the 2013 Omnibus Plan, 821,782 shares were available for future awards under the 2013 Omnibus Plan.

Unrecognized Share-based Compensation Expense

The following table presents unrecognized share-based compensation expense as of September 30, 2014:



	Unrecognized Expense		Average Expected Recognition Period
	($ in thousands)
Stock option awards	$	1,193	3.3 years
Restricted stock awards and restricted stock units	11,079		3.5 years
Total	$	12,272	3.5 years

Stock Options

The Company has issued stock options to certain employees, officers and directors. Stock options are issued at the current market price on the date of grant, and generally have a three-to five-year vesting period and contractual terms of 7 to 10 years.

The following table represents stock option activity as of and for the three months ended September 30, 2014:



	Number of Shares		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contract Term	Aggregated Intrinsic Value (In thousands)
Outstanding at beginning of period	818,054		$	12.75	7.5 years	$	—
Granted	81,016		$	11.65	9.8 years	$	22
Exercised	(20,000	)	$	11.78
Outstanding at end of period	879,070		$	12.67	7.5 years	$	59
Exercisable at end of period	206,016		$	11.34	7.4 years	$	59

The following table represents stock option activity as of and for the nine months ended September 30, 2014:



	Number of Shares		Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contract Term	Aggregated Intrinsic Value (In thousands)
Outstanding at beginning of period	734,721		$	12.73	7.5 years	$	741
Granted	231,016		$	12.05	9.6 years	$	22
Exercised	(86,667	)	$	11.46
Outstanding at end of period	879,070		$	12.67	7.5 years	$	59
Exercisable at end of period	206,016		$	11.34	7.4 years	$	59

The following table represents changes in unvested stock options and related information as of and for the three and nine months ended September 30, 2014:



	Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
	Number of Shares		Weighted- Average Exercise Price per Share		Number of Shares		Weighted- Average Exercise Price per Share
Non-vested outstanding at beginning of period	544,569		$	12.93	419,569		$	13.16
Granted	81,016		$	11.65	231,016		$	12.05
Vested	(20,000	)	$	12.64	(45,000	)	$	12.76
Non-vested outstanding at end of period	605,585		$	12.77	605,585		$	12.77

Restricted Stock Awards and Restricted Stock Units

The Company also has granted restricted stock awards and restricted stock units to certain employees, officers and directors. The restricted stock awards and units are valued at the closing price of the Company’s stock on the date of award. The restricted stock awards and units fully vest after a specified number of years (ranging from one to five years) of continued employment from the date of grant. The Company recognizes an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted stock, generally when vested or, in the case of restricted stock units, when settled.

The following table represents restricted stock awards and restricted stock units activity as of and for the three and nine months ended September 30, 2014:



	Three Months Ended September 30, 2014				Nine Months Ended September 30, 2014
	Number of Shares		Weighted- Average Price per Share		Number of Shares		Weighted- Average Price per Share
Non-vested shares outstanding at beginning of period	1,276,453		$	12.93	893,886		$	13.78
Granted	154,981		$	11.47	798,460		$	11.83
Vested	(37,477	)	$	14.03	(137,268	)	$	13.55
Forfeited	(58,975	)	$	13.43	(220,096	)	$	13.31
Non-vested shares outstanding at end of period	1,334,982		$	12.70	1,334,982		$	12.70

Stock Appreciation Rights

On August 21, 2012, the Company granted to its chief executive officer a ten-year stock appreciation right (SAR) with respect to 500,000 shares (Initial SAR) of the Company’s common stock with a base price of $12.12 per share. One third of the Initial SAR vested on the grant date, one third vested on the first anniversary of the grant date and one-third vested on the second anniversary of the grant date such that the SAR was fully vested on the second anniversary of the grant date. Upon cessation of the chief executive officer’s service with the Company for “Cause” or without “Good Reason” (including a cessation of service following the expiration of the term of the chief executive officer’s employment agreement), the vested portion of all SARs will expire 90 days following the cessation of service. Except as otherwise described below for the Additional SAR VI, additional SARs (Additional SARs) have been issued to the Company’s chief executive officer with the same terms and conditions (including vesting and dividend equivalent rights) as the Initial SAR pursuant to the anti-dilution provisions under the SAR agreement with the Company due to the Company’s subsequent issuances of shares of common stock.

On May 21, 2014, the Company issued additional SARs (Additional SAR VI) to the Company’s chief executive officer relating to a public offering of the Company’s tangible equity units (TEUs). Each TEU is comprised of a prepaid stock purchase contract (each, a Purchase Contract) and a junior subordinated amortizing note due May 15, 2017 issued by the Company (each, an Amortizing Note). Unless settled early at the holder’s option, each Purchase Contract will automatically settle and the Company will deliver a number of shares of its voting common stock based on the then applicable market value of the voting common stock, ranging from an initial minimum settlement rate of 4.4456 shares per Purchase Contract (subject to adjustment) if the applicable market value is equal to or greater than $11.247 per share to an initial maximum settlement rate of 5.1124 shares per Purchase Contract (subject to adjustment) if the applicable market value is less than or equal to $9.78 per share. The number of settlement shares underlying the Additional SAR VI was calculated using the initial maximum settlement rate and, therefore, the number of shares underlying the Additional SAR VI is subject to adjustment and forfeiture if the aggregate number of shares of stock issued in settlement of any single Purchase Contract is less than the initial maximum settlement rate.

Until each Purchase Contract settles and the voting common stock related thereto is issued, each corresponding Additional SAR VI has a vesting date of May 21, 2017 and has no dividend equivalent rights prior to vesting. The Additional SAR VI vests earlier as follows: (i) for any Purchase Contract settled before August 21, 2014, the Additional SAR VI corresponding to such Purchase Contract became 2/3 vested and exercisable on the date on which any such Purchase Contract was settled and the remaining 1/3 became vested and exercisable on August 21, 2014 and, until it became vested on August 21, 2014, the 1/3 unvested Additional SAR VI corresponding to such Purchase Contract was eligible for the same dividend equivalent rights as the Initial SAR; (ii) for any Purchase Contract settled in shares of voting common stock on or after August 21, 2014, then the Additional SAR VI corresponding to such Purchase Contract shall become 100% vested and exercisable on the date on which any such Purchase Contract is settled; and (iii) if the aggregate number of shares of voting common stock issued in settlement of any single Purchase Contract on the settlement date (the Actually Issued Common Shares) is less than the initial maximum settlement rate, then the Additional SAR VI related to that single Purchase Contract shall be recalculated and adjusted pursuant to the terms of the Initial SAR based on the Actually Issued Common Shares instead of the initial maximum settlement rate and the chief executive officer shall forfeit on such settlement date any Additional SAR VI granted in excess of those that would have been granted on the respective settlement date.

In conjunction with the pending acquisition of branches of Banco Popular North America which is anticipated to close on or about November 7, 2014, the Company will also sell and issue shares of voting common stock to OCM BOCA Investor, LLC (Oaktree), an entity owned by investment funds managed by Oaktree Capital Management, L.P., and (ii) Patriot Financial Partners, L.P., Patriot Financial Partners Parallel, L.P., Patriot Financial Partners II, L.P. and Patriot Financial Partners Parallel II, L.P, resulting in anticipated gross proceeds to the Company of approximately $50 million. It is estimated that the Company’s chief executive officer will be issued 216,263 additional SARs related to this new issuance.

The following table represents a summary of all outstanding SARs (Initial SAR, Additional SARs and Additional SAR VI, together the SARs):



	Initial SAR		Additional SAR I ⁽¹⁾		Additional SAR II ⁽²⁾		Additional SAR III ⁽³⁾		Additional SAR IV ⁽⁴⁾		Additional SAR V ⁽⁵⁾		Additional SAR VI ⁽⁶⁾
Grant Date	8/21/2012		6/21/2013		7/1/2013		7/2/2013		12/10/2013		5/21/2014		5/21/2014
Number of shares	500,000		150,933		88,366		15,275		70,877		252,023		289,116
Base price per share	$	12.12	$	13.06	$	13.60	$	13.55	$	12.83	$	10.09	$	10.09
Grant date fair value per share	$	3.58	$	1.86	$	1.94	$	1.93	$	1.86	$	1.22	$	1.58


(1)	Issued due to the Company’s common stock issuance for an underwritten public offering completed on June 21, 2013.


(2)	Issued due to the Company’s common stock issuance in connection with the PBOC acquisition completed on July 1, 2013.


(3)	Issued due to the Company’s common stock issuance for the exercise of over-allotment option granted to the underwriters of the Company’s public common stock offering initially completed on June 21, 2013.


(4)	Issued due to the Company’s common stock issuance in a private placement completed on December 10, 2013.


(5)	Issued due to the Company’s common stock issuance for an underwritten public offering completed on May 21, 2014.

(6)

The Additional SAR VI originally related to 300,219 shares of common stock with a scheduled vesting of May 21, 2017, as described above. As a result of the settlements of portions of the Purchase Contacts, the Additional SAR VI accelerated in vesting with respect to 81,979 shares and 11,103 shares were forfeited as of September 30, 2014. A portion of Additional SAR VI that has accelerated in vesting has the same terms and conditions as the Initial SAR.

The SARs originally were to be settled in cash and the compensation expense for the SARs was recognized over the vesting period based on the fair value as calculated using Black Scholes as of the grant date and adjusted each quarter. On December 13, 2013, the Company amended the Initial SAR agreement to provide that the SARs be settled in shares of voting common stock rather than cash, with all other terms remaining substantially the same. Currently, compensation expense is recognized over the vesting period based on the fair value as calculated using Black Scholes as of the conversion date for the SARs issued before the conversion date and grant dates for the SARs issued after the conversion date.