Quarterly report pursuant to Section 13 or 15(d)

EMPLOYEE AND DIRECTOR BENEFITS

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EMPLOYEE AND DIRECTOR BENEFITS
 9 Months Ended
Sep. 30, 2015
Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]  
EMPLOYEE AND DIRECTOR BENEFITS
NOTE 7 - EMPLOYEE AND DIRECTOR BENEFITS
 
Stock Options
 
At September 30, 2015, the Company had stock-based compensation plans, as described below. The compensation cost that has been charged to earnings for the plans was approximately $293,000 and $857,000 for the three and nine months ended September 30, 2015 and $302,000 and $3.4 million for the three and nine months ended September 30, 2014. The Company recorded a non-routine expense of $703,000 for the first quarter of 2014 resulting from the correction of its accounting for vested stock options previously granted to members of its advisory boards, and recorded a non-routine expense of $1.8 million for the second quarter of 2014 resulting from an acceleration of vesting of all stock options granted to members of its advisory boards. Such stock options were historically accounted for under the provisions of Accounting Standards Codification (“ASC”) 718-10, Compensation – Stock Compensation, and now have been determined to be recorded as an expense at the fair value of such options in accordance with the provisions of ASC 505-50, Equity-based Payments to Non-employees.
 
The Company’s 2005 Amended and Restated Stock Option Plan allows for the grant of stock options to purchase up to 3,075,000 shares of the Company’s common stock. The Company’s 2009 Amended and Restated Stock Incentive Plan authorizes the grant of up to 2,775,000 shares and allows for the issuance of Stock Appreciation Rights, Restricted Stock, Stock Options, Performance Shares or Performance Units. In April 2014, the Company’s stockholders approved the amendment of the 2009 Plan to allow for an additional 1,500,000 shares, as adjusted. 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 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.
 
 
 
2015
 
2014
 
Expected volatility
 
 
24.00
%
 
19.25
%
Expected dividends
 
 
0.71
%
 
1.45
%
Expected term (in years)
 
 
6.25
 
 
7.75
 
Risk-free rate
 
 
1.85
%
 
2.33
%
 
The weighted average grant-date fair value of options granted during the nine months ended September 30, 2015 and September 30, 2014 was $8.40 and $2.95, respectively.
 
The following table summarizes stock option activity during the nine months ended September 30, 2015 and September 30, 2014:
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Weighted
 
Average
 
 
 
 
 
 
 
Average
 
Remaining
 
Aggregate
 
 
 
 
 
Exercise
 
Contractual
 
Intrinsic
 
 
 
Shares
 
Price
 
Term (years)
 
Value
 
 
 
 
 
 
 
 
 
 
 
 
(In Thousands)
 
Nine Months Ended September 30, 2015:
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at January 1, 2015
 
 
1,622,917
 
$
9.38
 
 
5.9
 
$
38,256
 
Granted
 
 
162,000
 
 
33.26
 
 
9.5
 
 
-
 
Exercised
 
 
(459,000)
 
 
7.24
 
 
3.0
 
 
16,495
 
Forfeited
 
 
(7,500)
 
 
10.00
 
 
6.6
 
 
226
 
Outstanding at September 30, 2015
 
 
1,318,417
 
 
13.05
 
 
6.4
 
$
35,697
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at September 30, 2015
 
 
256,918
 
$
8.96
 
 
4.9
 
$
8,008
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended September 30, 2014:
 
 
 
 
 
 
 
 
 
 
 
 
 
Outstanding at January 1, 2014
 
 
2,328,900
 
$
7.69
 
 
5.5
 
$
14,300
 
Granted
 
 
114,000
 
 
13.83
 
 
9.4
 
 
1,707
 
Exercised
 
 
(821,400)
 
 
5.77
 
 
2.6
 
 
18,920
 
Forfeited
 
 
-
 
 
-
 
 
-
 
 
-
 
Outstanding at September 30, 2014
 
 
1,621,500
 
 
9.10
 
 
6.1
 
$
31,942
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exercisable at September 30, 2014
 
 
609,000
 
$
7.17
 
 
4.7
 
$
13,174
 
 
As of September 30, 2015, there was approximately $2.1 million 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 1.5 years.
 
Restricted Stock
 
The Company has issued 237,088 shares of restricted stock to certain employees. 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. As of September 30, 2015, there was $770,000 of total unrecognized compensation cost related to non-vested restricted stock. The cost is expected to be recognized evenly over the remaining 1.1 years of the restricted stock’s vesting period. During the second quarter of 2015, 7,500 shares of restricted stock were forfeited by one recipient upon his termination from the Company.