Cash and stock-based compensation plans

12 Months Ended

Dec. 31, 2017

Disclosure of share-based payment arrangements [Abstract]

Disclosure of share-based payment arrangements [text block]

16.

Cash and stock-based compensation plans

The Bank has established equity compensation plans under which it manages restricted stock, restricted stock units and stock purchase option plans to attract, retain and motivate directors and top employees and compensate them for their contributions to the growth and profitability of the Bank. Vesting conditions for each of the Bank’s plans are only comprised of specified requisite service periods.

A. 2008 Stock Incentive Plan – Directors and Executives

In February 2008, the Board of Directors of the Bank approved an incentive plan for directors and executives allowing the Bank to grant restricted stock, restricted stock units, stock purchase options, and/or other similar compensation instruments. The maximum aggregate number of shares which may be granted under this plan is three million “Class E” common shares. The 2008 Stock Incentive Plan is administered by the Board of Directors which has the authority in its discretion to select the directors and executives to whom the awards may be granted; to determine whether and to what extent awards are granted, and to amend the terms of any outstanding award under this plan.

Restricted stocks are issued at the grant date, but are withheld by the Bank until the vesting date. Restricted stocks are entitled to receive dividends. A restricted stock unit is a grant valued in terms of the Bank’s stock, but no stock is issued at the grant date. Restricted stock units are not entitled to dividends. The Bank issues and delivers common stock at the vesting date of the restricted stock units.

During 2017 and 2016, the Board of Directors approved the grant of restricted stock to directors and stock options and restricted stock units to certain executives of the Bank, as follows:

Restricted stock – Directors

During the years 2017 and 2016 the Board of Directors granted 57,000 of “Class E” common shares. The fair value of restricted stock granted was based on the stock closing price in the New York Stock Exchange of the “Class E” shares on April 19, 2017 and April 13, 2016. The fair value of restricted stock granted totaled $1,585 in 2017 and $1,376 in 2016, of which $788 y $617 were charged against income during 2017 and 2016, respectively.

The total expense recorded during 2017, 2016 and 2015 of restricted stock – directors $1,697, $1,548 and $1,553. The remaining cost pending amortization of $1,033 at December 31, 2017 will be amortized over 2.3 years.

The stocks lose their restriction from the year following the anniversary date, as follows: 35% in the first and second year, and 30% in the third year.

A summary of the restricted stock granted to Directors is presented below:

	Shares		Weighted average grant date fair value
Outstanding at January 1, 2015		78,336		24.37
Granted		57,000		33.78
Vested		(39,015)		22.69
Outstanding at December 31, 2015		96,321		30.62
Granted		57,000		24.14
Vested		(56,421)		28.80
Outstanding at December 31, 2016		96,900		27.86
Granted		57,000		27.80
Vested		(61,950)		28.50
Outstanding at December 31, 2017		91,950		27.40
Expected to vest		91,950

The fair value of vested stock during the years 2017 and 2016 was $1,765 and $1,625, respectively.

Restricted Stock Units and Stock Purchase Options granted to certain Executives

The Board of Directors approved the grant of stock purchase options and restricted stock units to certain executives of the Bank with a grant date fair value of $650 in 2017 and $1,670 in 2016. The distribution of the fair value was in units of restricted shares.

Restricted stock units

The fair value of the stock units was based on the “Class E” stock closing price in the New York Stock Exchange on the grants date. These stock units vest 25% each year on the grant date’s anniversary. The restricted stock units are exchanged at a ratio of 1: 1 for common shares "Class E".

Compensation costs of the restricted stock units are amortized during the period of restriction by accelerated method. Costs charged against income during 2017, 2016 and 2015 due to the amortization of these grants totaled $811, $1,295 and $1,282, respectively. The remaining compensation cost pending amortization of $381 in 2017 will be amortized over 2.5 years.

A summary of the restricted stock units granted to certain executives is presented below:

	Shares		Weighted average grand date fair value		Weighted average remaining contractual term		Aggregate Intrinsic value
Outstanding at January 1, 2015		163,712		18.18
Granted		63,244		21.67
Forfeited		-
Vested		(64,208)		17.67
Outstanding at December 31, 2015		162,748		19.74
Granted		91,454		18.26
Forfeited		(21,408)		17.69
Vested		(65,358)		18.83
Outstanding at December 31, 2016		167,436		19.35
Granted		25,289		25.70
Forfeited		(71,401)		18.61
Vested		(70,519)		19.76
Outstanding at December 31, 2017		50,805		21.07		2.02 years	$	518
Expected to vest		50,805		21.07		2.02 years	$	296

The fair value of vested stock during the years 2017 and 2016 is $1,394, and $1,230, respectively.

Stock purchase options

The fair value of stock purchase options granted to certain Executives during 2017 was estimated using a binomial option-pricing model, based on the following factors:

	Measuring unit	2017		2016		2015

Weighted average fair value per option	$		-		-		1.95 - 2.06
Weighted average expected term, in years	Year		-		-		5.5
Expected volatility	%		-		-		22	%
Risk-free rate	%		-		-		0.02 – 1.52
Expected dividend	%		-		-		5.00	%

These options expire seven years after the grant date and are exercisable at a rate of 25% each year on the grant date’s anniversary.

Related cost charged against income during 2017, 2016 and 2015 as a result of the amortization of these plans amounted to $118, $251 and $454, respectively. The remaining compensation cost pending amortization of $30 in 2017 will be amortized over a period of 1.11 years.

A summary of stock options granted is presented below:

	Options		Weighted average exercise price		Weighted average remaining contractual term		Aggregate Intrinsic value
Outstanding at January 1, 2015		391,696		23.65
Granted		233,418		29.25
Forfeited		-		-
Exercised		(70,358)		20.86
Outstanding at December 31, 2015		554,756		26.36
Granted		-		-
Forfeited		(126)		18.93
Exercised		(68,785)		22.78
Outstanding at December 31, 2016		485,845		26.87
Granted		-
Forfeited		(69,934)		28.63
Exercised		(142,268)		24.84
Outstanding at December 31, 2017		273,643		27.48		3.66 years	$	242
Exercisable		121,840		27.73		3.70 years	$	115
Expected to vest		151,803		27.28		3.63 years	$	128

The intrinsic value of exercised options during the years 2017 and 2016 was $593 and $412, respectively. During the years 2017 and 2016 the Bank received $3,533 and $1,565, respectively, from exercised options.

B. Other plans - Expatriate Top Executives Plan

The Bank sponsors a defined contribution plan for its expatriate top executives based in Panama, which are not eligible to participate in the Panamanian social security system. The Bank’s contributions are determined as a percentage of the annual salaries of top executives eligible for the plan, each contributing an additional amount withheld from their salary. Contributions to this plan are managed by a fund manager through a trust. The executives are entitled to the Bank’s contributions after completing at least three years of service in the Bank. During the years 2017, 2016 and 2015, the Bank charged to salaries expense $163, $121 and $171, respectively, that correspond to the Bank’s contributions to this plan.