Quarterly report pursuant to Section 13 or 15(d)

EMPLOYEE AND DIRECTOR BENEFITS

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EMPLOYEE AND DIRECTOR BENEFITS
 6 Months Ended
Jun. 30, 2013
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
EMPLOYEE AND DIRECTOR BENEFITS
NOTE 6 - EMPLOYEE AND DIRECTOR BENEFITS
 
Stock Options
 
At June 30, 2013, the Company had stock-based compensation plans, as described below. The compensation cost that has been charged to earnings for the plans was approximately $322,000 and $581,000 for the three and six months ended June 30, 2013 and $262,000 and $522,000 for the three and six months ended June 30, 2012.
 
The Company’s 2005 Amended and Restated Stock Option Plan allows for the grant of stock options to purchase up to 1,025,000 shares of the Company’s common stock. The Company’s 2009 Stock Incentive Plan authorizes the grant of up to 425,000 shares and allows for the issuance of Stock Appreciation Rights, Restricted Stock, Stock Options, Non-stock Share Equivalents, Performance Shares or Performance Units. Both plans allow for the grant of incentive stock options and non-qualified stock options, and awards are generally granted with an exercise price equal to the estimated fair market value of the Company’s common stock at the date of grant. The maximum term of the options granted under the plans is ten years.
 
The Company has granted non-plan options to certain persons representing key business relationships to purchase up to an aggregate amount of 55,000 shares of the Company’s common stock at prices between $15.00 and $20.00 per share with a term of ten years. These options are non-qualified and not part of either plan.
 
The Company estimates the fair value of each stock option award using a Black-Scholes-Merton valuation model that uses the assumptions noted in the following table. Expected volatilities are based on an index of southeastern United States publicly traded banks. The expected term for options granted is based on the short-cut method and represents the period of time that options granted are expected to be outstanding. The risk-free rate for periods within the contractual life of the option is based on the U. S. Treasury yield curve in effect at the time of grant.
 
 
 
2013
 
 
 
2012
 
 
Expected volatility
 
18.50
%
 
 
20.00
%
 
Expected term (in years)
 
7.5 years
 
 
 
6.0 years
 
 
Risk-free rate
 
1.39
%
 
 
1.02
%
 
  
The weighted average grant-date fair value of options granted during the six months ended June 30, 2013 and June 30, 2012 was $8.03 and $6.43, respectively.
 
The following table summarizes stock option activity during the six months ended June 30, 2013 and June 30, 2012:
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
 
 
Average
 
Remaining
 
Aggregate
 
 
 
 
 
 
Exercise
 
Contractual
 
Intrinsic
 
 
 
Shares
 
Price
 
Term (years)
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
(In Thousands)
 
Six Months Ended June 30, 2013:
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at January 1, 2013
 
 
816,500
 
$
20.87
 
 
5.8
 
$
9,905
 
Granted
 
 
25,000
 
 
33.00
 
 
9.7
 
 
-
 
Exercised
 
 
(43,000)
 
 
14.42
 
 
3.1
 
 
1,054
 
Forfeited
 
 
-
 
 
-
 
 
-
 
 
-
 
Outstanding at June 30, 2013
 
 
798,500
 
 
21.60
 
 
5.6
 
$
15,893
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at June 30, 2013
 
 
447,995
 
$
14.10
 
 
3.2
 
$
12,277
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2012:
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at January 1, 2011
 
 
1,073,800
 
$
18.33
 
 
6.0
 
$
12,508
 
Granted
 
 
36,500
 
 
30.00
 
 
9.7
 
 
-
 
Exercised
 
 
(52,136)
 
 
11.00
 
 
3.6
 
 
991
 
Forfeited
 
 
-
 
 
-
 
 
-
 
 
-
 
Outstanding at June 30, 2012
 
 
1,058,164
 
 
19.11
 
 
5.8
 
$
11,527
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at June 30, 2012
 
 
434,706
 
$
13.31
 
 
3.9
 
$
7,257
 
 
As of June 30, 2013, there was $1,620,000 of total unrecognized compensation cost related to non-vested stock options. The cost is expected to be recognized on the straight-line method over the next 1.7 years.
 
Restricted Stock
 
The Company has awarded 71,000 shares of restricted stock, of which  12,000 shares are vested. The value of restricted stock awards is determined to be the current value of the Company’s stock, and this total value will be recognized as compensation expense over the vesting period, which is five years from the date of grant. As of June 30, 2013, there was $1,424,000 of total unrecognized compensation cost related to non-vested restricted stock. The cost is expected to be recognized evenly over the remaining 3.7 years of the restricted stock’s vesting period.
 
Stock Warrants
 
The Company granted warrants to purchase common stock of the Company in connection with the issuance of debt. There were 79,000 warrants unexercised as of June 30, 2013, each with an exercise price of $25.00. 64,000 of the warrants expire in September 2013, and the remaining 15,000 expire in June 2016. There were 6,500 warrants exercised during the first quarter of 2013.