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Note 9 - Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

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

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

Note 9. Stock-Based Compensation

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 and restricted stock awards are made 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 September 30, 2014.

In February 2014, the Company awarded three employees stock options to purchase 21,000 shares which have a ten-year term and vest in five substantially equal installments beginning on the first anniversary of the date of grant.

In February 2014, the Company awarded 58,187 shares of restricted stock to senior officers and employees. The shares vest in three substantially equal installments beginning on the first anniversary of the date of grant.

In March 2014, the Company awarded 20,760 shares of restricted stock to directors. The shares vest in three substantially equal installments beginning on the first anniversary of the date of grant.

Below is a summary of changes in shares pursuant to our equity compensation plans for the nine months ended September 30, 2014 and 2013. The information excludes restricted stock units and awards.

	Nine Months Ended September 30,
	2014					2013
	Shares			Weighted- Average Exercise Price		Shares			Weighted- Average Exercise Price

Beginning Balance		501,334		$	10.34		722,155		$	10.18
Issued		21,000			32.77		3,300			20.03
Exercised		(64,926	)		16.78		(117,791	)		10.58
Forfeited		(110	)		5.76		(2,090	)		7.65
Expired		(1,225	)		9.00		(23,113	)		10.05
Ending Balance		456,073		$	10.46		582,461		$	10.17

The following summarizes information about stock options outstanding at September 30, 2014. The information excludes restricted stock units and awards.

					Weighted-Average
Outstanding:	Stock Options		Weighted-Average		Remaining
Range of Exercise Prices	Outstanding		Exercise Price		Contractual Life
$5.76 - $8.00		236,369	$	5.76		4.25
$8.01 - $10.00		54,807		9.91		0.27
$10.01 - $20.00		109,994		12.55		3.02
$20.01 - $33.44		54,903		27.06		4.78
		456,073	$	10.46		3.54

Exercisable:	Stock Options		Weighted-Average
Range of Exercise Prices	Exercisable		Exercise Price
$5.76 - $8.00		179,459	$	5.76
$8.01 - $10.00		54,807		9.91
$10.01 - $20.00		89,656		12.77
$20.01 - $33.44		31,263		23.82
		355,185	$	9.76

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 nine months ended September 30, 2014 and the years ended December 31, 2013 and 2012.

	Nine Months Ended			Years Ended December 31,
	September 30, 2014			2013			2012
Expected Volatility		34.25	%		34.12	%		36.64	%
Weighted-Average Volatility		34.24	%		34.12	%		36.64	%
Expected Dividends		0.0	%		0.0	%		0.0	%
Expected Term (In years)		7.5			7.5			7.5
Risk-Free Rate		2.11	%		1.31	%		1.13	%
Weighted-Average Fair Value (Grant date)	$	13.49		$	7.83		$	6.35

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 period and the contractual term of the award.

The total intrinsic value of outstanding stock options was $9.9 million at September 30, 2014. The total intrinsic value of stock options exercised during the nine months ended September 30, 2014 and 2013 was $1.1 million and $1.3 million, respectively. The total fair value of stock options vested was $125 thousand and $126 thousand for the nine months ended September 30, 2014 and 2013, respectively. Unrecognized stock-based compensation expense related to stock options totaled $350 thousand at September 30, 2014. At such date, the weighted-average period over which this unrecognized stock option expense is expected to be recognized was 4.02 years.

The Company has unvested restricted stock award grants of 500,356 shares under the 2006 Plan at September 30, 2014. Unrecognized stock based compensation expense related to restricted stock awards totaled $8.4 million at September 30, 2014. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 2.24 years. The following table summarizes the unvested restricted stock awards at September 30, 2014 and 2013.

	Nine Months Ended September 30,
	2014					2013
	Shares			Weighted- Average Grant Date Fair Value		Shares			Weighted- Average Grant Date Fair Value

Unvested at Beginning		614,580		$	18.71		348,350		$	13.79
Issued		78,947			33.24		424,450			20.64
Forfeited		(8,250	)		25.28		(933	)		15.68
Vested		(184,921	)		17.54		(156,902	)		13.04
Unvested at End		500,356		$	21.33		614,965		$	18.71

Approved by shareholders in May 2011, the 2011 ESPP reserved 550,000 shares of common stock (as adjusted for stock dividends) 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 September 30, 2014, the 2011 ESPP had 458,373 shares remaining for issuance.

Included in salaries and employee benefits the Company recognized $3.0 million and $2.4 million in stock-based compensation expense (including the ESPP) for the nine months ended September 30, 2014 and 2013, 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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