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Note 13 - Stock-Based Compensation

12 Months Ended

Dec. 31, 2013

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

Note 13 – Stock-Based Compensation

The following discussion includes the effects of changes in stock options and restricted stock shares and exercise prices resulting from the 10% common stock dividend paid on June 14, 2013.

The Company maintains the 1998 Stock Option Plan (“1998 Plan”), the 2006 Stock Plan (“2006 Plan”) and the 2011 Employee Stock Purchase Plan (“2011 ESPP”). In connection with the acquisition of Fidelity, the Company assumed the Fidelity 2004 Long Term Incentive Plan and 2005 Long Term Incentive Plan (the “Fidelity Plans”). No additional options may be granted under the 1998 Plan or the Fidelity Plans.

The 2006 Plan provides for the issuance of awards of incentive stock options, non-qualifying stock options, restricted stock and stock appreciation rights to selected key employees and members of the Board. As amended, 1,996,500 shares of common stock are subject to issuance pursuant to awards under the 2006 Plan. Stock options awards are issued with an exercise price equal to the average of the high and low price of the Company’s shares at the date of grant.

For awards that are service based, compensation expense is being recognized over the service (vesting) period based on fair value, which for stock option grants is computed using the Black-Scholes model, and for restricted stock awards is based on the average of the high and low stock price of the Company’s shares on the date of grant. For awards that are performance-based, compensation expense is recorded based on the probability of achievement of the goals underlying the grant. No performance-based awards are outstanding at December 31, 2013.

In January 2013, the Company awarded an employee stock options to purchase 3,300 shares which have a ten-year term and vest in five substantially equal installments on the first through fifth anniversary of the date of grant.

In February 2013, the Company awarded 421,425 shares of restricted stock to senior officers, directors and employees. The shares vest in four substantially equal installments beginning on the first anniversary of the date of grant.

In May 2013, the Company awarded 3,025 shares of restricted stock to eight employees. The shares vest in four substantially equal installments beginning on the first anniversary of the date of grant.

Below is a summary of stock option activity for the twelve months ended December 31, 2013, 2012 and 2011. The information excludes restricted stock units and awards.

	2013					2012					2011
	Shares			Weighted-Average Exercise Price		Shares			Weighted-Average Exercise Price		Shares			Weighted-Average Exercise Price

Beginning Balance		722,155		$	10.18		919,371		$	10.23		1,099,306		$	9.63
Issued		3,300			20.03		5,500			15.48		4,950			11.78
Exercised		(198,588	)		9.99		(167,882	)		10.01		(150,237	)		6.32
Forfeited		(2,420	)		7.40		(3,493	)		6.22		(17,952	)		6.57
Expired		(23,113	)		10.05		(31,341	)		13.92		(16,696	)		10.48
Ending Balance		501,334		$	10.34		722,155		$	10.18		919,371		$	10.23

The following summarizes information about stock options outstanding at December 31, 2013. The information excludes restricted stock units and awards.

Outstanding: Range of Exercise Prices			Stock Options Outstanding		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life
$5.76	-	$8.00		242,770	$	5.76		5.02
$8.01	-	$10.00		73,242		9.67		0.88
$10.01	-	$20.00		109,994		12.55		3.79
$20.01	-	$24.46		75,328		22.52		1.90
				501,334	$	10.34		3.68


Exercisable:			Stock Options		Weighted-Average
Range of Exercise Prices			Exercisable		Exercise Price
$5.76	-	$8.00		143,147	$	5.76
$8.01	-	$10.00		73,242		9.67
$10.01	-	$20.00		78,517		12.97
$20.01	-	$24.46		72,028		22.64
				366,934	$	11.40

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with the assumptions as shown in the table below used for grants during the years ended December 31, 2013, 2012 and 2011.

	Year Ended December 31,
	2013			2012			2011
Expected Volatility		34.12	%		36.64	%	33.61%	-	36.64%
Weighted-Average Volatility		34.12	%		36.64	%		35.60%
Expected Dividends		0.0	%		0.0	%		0.0%
Expected Term (In years)		7.5			7.5		6.0	-	7.5
Risk-Free Rate		1.31	%		1.13	%		1.82%
Weighted-Average Fair Value (Grant date)	$	7.83		$	6.35			$4.61

The expected lives are based on the “simplified” method allowed by ASC Topic 718“Compensation,” whereby the expected term is equal to the midpoint between the vesting date and the end of the contractual term of the award.

The total intrinsic value of outstanding stock options and outstanding exercisable stock options was $10.2 million and $7.1 million, respectively, at December 31, 2013 and 2012. The total intrinsic value of stock options exercised during the years ended December 31, 2013, 2012 and 2011 was $3.1 million, $1.1 million and $855 thousand, respectively. The total fair value of stock options vested was $133 thousand, $136 thousand and $151 thousand for 2013, 2012 and 2011, respectively. Unrecognized stock-based compensation expense related to stock options totaled $135 thousand at December 31, 2013. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 3.70 years.

Cash proceeds, tax benefits and intrinsic value related to total stock options exercised is as follows:

	Year Ended December 31,
(dollars in thousands)	2013		2012		2011

Proceeds from stock options exercised	$	1,984	$	1,685	$	944
Tax benefits related to stock options exercised		410		369		143
Intrinsic value of stock options exercised		3,060		1,100		855

The Company has unvested restricted stock award grants of 614,580 shares from the 2006 Plan at December 31, 2013. Unrecognized stock based compensation expense related to restricted stock awards totaled $8.7 million at December 31, 2013. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 2.90 years. The following table summarizes the unvested restricted stock awards at December 31, 2013 and 2012:

	Year Ended December 31,
	2013					2012
	Shares			Weighted-Average Grant Date Fair Value		Shares			Weighted-Average Grant Date Fair Value

Unvested at Beginning		348,353		$	13.79		222,793		$	10.61
Issued		424,450			20.64		268,115			15.30
Forfeited		(1,318	)		13.23		(15,051	)		11.05
Vested		(156,905	)		13.04		(127,504	)		11.73
Unvested at End		614,580		$	18.71		348,353		$	13.79

Approved by shareholders in May 2011, the 2011 ESPP reserved 550,000 shares of common stock for issuance to employees. Whole shares are sold to participants in the plan at 85% of the lower of the stock price at the beginning or end of each quarterly offering period. The 2011 ESPP is available to all eligible employees who have completed at least one year of continuous employment, work at least 20 hours per week and at least five months a year. Participants may contribute a minimum of $10 per pay period to a maximum of $6,250 per offering period or $25,000 annually (not to exceed more than 10% of compensation per pay period). At December 31, 2013, the 2011 ESPP had 473,804 shares remaining for issuance.

Included in salaries and employee benefits the Company recognized $3.3 million, $2.5 million and $1.1 million in stock-based compensation expense for 2013, 2012 and 2011, respectively. Stock-based compensation expense is recognized ratably over the requisite service period for all awards.

- 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.

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