Shareholders' Equity

12 Months Ended

Dec. 31, 2012

Shareholders' Equity [Abstract]

Shareholders' Equity

NOTE 22. SHAREHOLDERS’ EQUITY 

Stock Plans—The Company’s 2007 Long Term Incentive Plan (“2007 LTI Plan”) authorizes the award of up to 1 million restricted stock unit grants, which are subject to performance-based vesting as well as other approved vesting conditions.The Company’s 2003 Stock Incentive Plan (“2003 Plan”) provides for grants of up to 4 million shares. The 2003 Plan terminates June 30, 2015, but it may be extended with the approval of the board and shareholders.  The 2003 Plan further provides that no grants may be issued if existing options and subsequent grants under the 2003 Plan exceed 10% of the Company's outstanding shares on a diluted basis. Under the terms of the 2003 Plan, options and awards generally vest ratably over a period of three to five years, the exercise price of each option equals the market price of the Company's common stock on the date of the grant, and the maximum term is ten years.

The Company has options outstanding under two prior plans adopted in 1995 and 2000, respectively. With the adoption of the 2003 Plan, no additional grants can be issued under the previous plans. The Company also assumed various plans in connection with mergers and acquisitions but does not make grants under those plans.

On June 17, 2011, the Company’s Compensation Committee modified restricted stock awards and option grants that were originally issued to fourteen executive officers on January 31, 2011, as follows:

· Added performance vesting conditions linking total shareholder return, compared to the return of a regional bank stock total return index;

· Awards will cliff vest after three years instead of time vest over a four year period, but only to the extent that the performance conditions are met; and

· The modified grants will vest in whole or in part only if total shareholder return achieves specified targets, subject to prorated vesting upon death, disability, qualifying retirement, termination for good reason or a change of control.

As a result of the modification, there was no incremental compensation cost.

The following table summarizes information about stock option activity for the years ended December 31, 2012, 2011 and 2010:

(shares in thousands)
	2012			2011			2010
	Options	Weighted-Avg		Options	Weighted-Avg		Options	Weighted-Avg
	Outstanding	Exercise Price		Outstanding	Exercise Price		Outstanding	Exercise Price
Balance, beginning of year	2,151	$	14.48	2,067	$	14.82	1,763	$	15.05
Granted	20	$	11.98	237	$	11.01	450	$	12.39
Exercised	(174)	$	5.63	(40)	$	7.67	(112)	$	8.97
Forfeited/expired	(147)	$	13.45	(113)	$	15.72	(34)	$	13.83
Balance, end of year	1,850	$	15.37	2,151	$	14.48	2,067	$	14.82
Options exercisable, end of year	1,263	$	17.11	1,334	$	16.13	1,217	$	16.65

The following table summarizes information about outstanding stock options issued under all plans as of December 31, 2012:

(shares in thousands)

	Options Outstanding				Options Exercisable
		Weighted Avg.
		Remaining
Range of	Options	Contractual Life		Weighted Avg.	Options		Weighted Avg.
Exercise Prices	Outstanding	(Years)		Exercise Price	Exercisable		Exercise Price
$4.58 to $11.59	592	6.7	$	10.52	274	$	10.31
$11.89 to $15.50	681	6.3	$	13.62	412	$	14.20
$16.93 to $24.71	502	1.4	$	21.74	502	$	21.74
$26.12 to $28.43	75	3.8	$	26.89	75	$	26.89
	1,850	5.0	$	15.37	1,263	$	17.11

The compensation cost related to stock options, including costs related to unvested options assumed in connection with acquisitions, that has been charged against income (included in salaries and employee benefits) was $1.1 million, $1.2 million, and $861,000 for the years ended December 31, 2012, 2011 and 2010, respectively. The total income tax benefit recognized in the income statement related to stock options was $448,000, $463,000, and $344,000 for the years ended December 31, 2012, 2011 and 2010, respectively.

The total intrinsic value (which is the amount by which the stock price exceeds the exercise price) of both options outstanding and options exercisable as of December 31, 2012, was $749,000 and $404,000, respectively. The weighted average remaining contractual term of options exercisable was 3.9 years as of December 31, 2012. The total intrinsic value of options exercised was $1.2 million,  $147,000, and $420,000, in the years ended December 31, 2012, 2011 and 2010, respectively. During the years ended December 31, 2012, 2011 and 2010, the amount of cash received from the exercise of stock options was $981,000, $309,000, and $1.0 million, respectively. As of December 31, 2012, there was $1.6 million of total unrecognized compensation cost related to nonvested stock options which is expected to be recognized over a weighted-average period of 1.6 years.

The Company grants restricted stock awards periodically as a part of the 2003 Plan for the benefit of employees. Restricted shares issued prior to 2011 generally vest on an annual basis over five years. Restricted shares issued since 2011 generally vest over a three year period, subject to performance conditions stated above. A deferred restricted stock award was granted to an executive in 2007 and is now fully vested. The Company will issue certificates for the vested award within the seventh month following termination of the executive’s employment. The following table summarizes information about nonvested restricted shares outstanding at December 31:

(shares in thousands)
	2012			2011			2010
		Weighted			Weighted			Weighted
	Restricted	Average Grant		Restricted	Average Grant		Restricted	Average Grant
	Shares	Date		Shares	Date		Shares	Date
	Outstanding	Fair Value		Outstanding	Fair Value		Outstanding	Fair Value
Balance, beginning of year	585	$	12.98	401	$	15.29	187	$	21.46
Granted	369	$	11.80	282	$	11.02	274	$	12.16
Released	(147)	$	13.50	(82)	$	17.58	(46)	$	22.23
Forfeited/expired	(44)	$	11.52	(16)	$	12.91	(14)	$	13.32
Balance, end of year	763	$	12.39	585	$	12.98	401	$	15.29

The compensation cost related to restricted stock awards that has been charged against income (included in salaries and employee benefits) was $2.7 million, $2.3 million, and $1.9 million for the years ended December 31, 2012, 2011 and 2010, respectively.  The total income tax benefit recognized in the income statement related to restricted stock awards was $1.1 million,  $899,000, and $746,000 for the years ended December 31, 2012, 2011 and 2010, respectively. The total fair value of restricted shares vested was $1.9 million, $919,000, and $571,000, for the years ended December 31, 2012, 2011 and 2010, respectively. As of December 31, 2012, there was $4.8 million of total unrecognized compensation cost related to nonvested restricted stock awards which is expected to be recognized over a weighted-average period of 1.9 years.

The Company grants restricted stock units as a part of the 2007 Long Term Incentive Plan for the benefit of certain executive officers.  Restricted stock unit grants are subject to performance-based vesting as well as other approved vesting conditions.  In the first quarter of 2008, 2009 and 2011, restricted stock units were granted to executives that cliff vest after three years based on performance and service conditions.  The total number of restricted stock units granted represents the maximum number of restricted stock units eligible to vest based upon the performance and service conditions set forth in the grant agreements.  The following table summarizes information about restricted stock units outstanding at December 31:

(shares in thousands)
	2012			2011			2010
			Weighted			Weighted			Weighted
	Restricted		Average Grant	Restricted		Average Grant	Restricted		Average Grant
	Stock Units		Date	Stock Units		Date	Stock Units		Date
	Outstanding		Fair Value	Outstanding		Fair Value	Outstanding		Fair Value
Balance, beginning of period	219	$	9.17	225	$	11.13	335	$	15.54
Granted	25	$	10.39	105	$	10.42	-	$	-
Released	-	$	-	(63)	$	14.33	(16)	$	24.52
Forfeited/expired	(114)	$	8.01	(48)	$	14.33	(94)	$	24.52
Balance, end of period	130	$	10.41	219	$	9.17	225	$	11.13

The compensation cost related to restricted stock units that has been charged against income (included in salaries and employee benefits) was $237,000, $391,000, and $778,000 for the years ended December 31, 2012, 2011 and 2010, respectively.  The total income tax benefit recognized in the income statement related to restricted stock units was $95,000, $156,000 and $311,000 for the years ended December 31, 2012, 2011 and 2010, respectively. The total fair value of restricted stock units vested and released was none,  $677,000 and $213,000 for the years ended December 31, 2012, 2011 and 2010, respectively. As of December 31, 2012, there was $549,000 of total unrecognized compensation cost related to nonvested restricted stock units which is expected to be recognized over a weighted-average period of 1.3 years, assuming the current expectation of performance conditions are met.

For the years ended December 31, 2012, 2011 and 2010, the Company received income tax benefits of $1.2 million,  $694,000, and $406,000, respectively, related to the exercise of non-qualified employee stock options, disqualifying dispositions in the exercise of incentive stock options, the vesting of restricted shares and the vesting of restricted stock units.  For the year ended December 31, 2012, the Company had net tax deficiencies (tax deficiency resulting from tax deductions less than the compensation cost recognized) of $59,000, compared to net tax deficiencies of $261,000 and $216,000 for the years ended December 31, 2011 and 2010, respectively. Only cash flows from gross excess tax benefits are classified as financing cash flows.

Share Repurchase Plan— The Company’s share repurchase plan, which was first approved by the Board and announced in August 2003, was amended on September 29, 2011 to increase the number of common shares available for repurchase under the plan to 15 million shares. The repurchase program will run through June 2013. As of December 31, 2012, a total of 12.1 million shares remained available for repurchase. The Company repurchased 512,280shares under the repurchase plan in 2012, 2.5 million shares under the repurchase plan in 2011 and no shares in 2010. The timing and amount of future repurchases will depend upon the market price for our common stock, securities laws restricting repurchases, asset growth, earnings, and our capital plan.

We also have certain stock option and restricted stock plans which provide for the payment of the option exercise price or withholding taxes by tendering previously owned or recently vested shares. During the years ended December 31, 2012 and 2011, there were 37,720 and 8,135 shares tendered in connection with option exercises, respectively. Restricted shares cancelled to pay withholding taxes totaled 45,873 and 23,158 shares during the years ended December 31, 2012 and 2011, respectively.  There were no restricted stock units cancelled to pay withholding taxes for the year ended December 31, 2012 and 22,439 during the year ended December 31, 2011.