Shareholders' Equity and Stock Compensation

Stock-Based Compensation

The compensation cost related to stock options, restricted stock and restricted stock units in Company stock granted to employees and included in salaries and employee benefits was $1.6 million, for the three months ended March 31, 2018, as compared to $2.5 million, for the three months ended March 31, 2017. The total income tax benefit recognized related to stock-based compensation was $401,000 for the three months ended March 31, 2018, as compared to $977,000 for the three months ended March 31, 2017.

The following table summarizes information about stock option activity for the three months ended March 31, 2018:



(in thousands, except per share data)	Three Months Ended March 31, 2018
	Options Outstanding		Weighted-Avg Exercise Price		Weighted-Avg Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Balance, beginning of period	98		$	11.99
Exercised	(65	)	$	11.73
Balance, end of period	33		$	12.49	3.19	$	297
Options exercisable, end of period	33		$	12.49	3.19	$	297

The total intrinsic value (which is the amount by which the stock price exceeds the exercise price) of options exercised during the three months ended March 31, 2018 was $658,000, as compared to the three months ended March 31, 2017 of $112,000.

During the three months ended March 31, 2018, the amount of cash received from the exercise of stock options was $116,000, as compared to the three months ended March 31, 2017 of $49,000. Total consideration was $759,000, for the three months ended March 31, 2018 as compared to the three months ended March 31, 2017 of $230,000.

The Company grants restricted stock periodically for the benefit of employees and directors. Restricted shares generally vest over a three year period, subject to time or time plus performance vesting conditions. The following table summarizes information about nonvested restricted share activity for the three months ended March 31, 2018:



(in thousands, except per share data)	Three Months Ended March 31, 2018
	Restricted Shares Outstanding		Weighted Average Grant Date Fair Value
Balance, beginning of period	1,248		$	16.61
Granted	431		$	21.75
Vested/released	(449	)	$	15.67
Forfeited/expired	(82	)	$	15.02
Balance, end of period	1,148		$	19.02

The total fair value of restricted shares vested and released during the three months ended March 31, 2018 was $9.7 million, as compared to the three months ended March 31, 2017 of $4.5 million.

The Company granted restricted stock units in connection with the acquisition of Sterling as replacement awards, as well as part of the 2007 Long Term Incentive Plan for the benefit of certain executive officers. Restricted stock unit grants may be subject to performance-based vesting as well as other approved vesting 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 nonvested restricted stock unit activity for the three months ended March 31, 2018:



(in thousands, except per share data)	Three Months Ended March 31, 2018
	Restricted Stock Units Outstanding		Weighted Average Grant Date Fair Value
Balance, beginning of period	22		$	18.58
Forfeited/expired	(1	)	$	18.58
Balance, end of period	21		$	18.58

There were no restricted stock units vested and released during the three months ended March 31, 2018. The total fair value of restricted stock units vested and released during the three months ended March 31, 2017 was $41,000.

As of March 31, 2018, there was no unrecognized compensation cost related to nonvested stock options. As of March 31, 2018, there was $14.0 million of total unrecognized compensation cost related to nonvested restricted stock awards which is expected to be recognized over a weighted-average period of 2.00 years, assuming expected performance conditions are met for certain awards. As of March 31, 2018, there was $4,000 of total unrecognized compensation cost related to nonvested restricted stock units which is expected to be recognized over a weighted-average period of 0.01 years.

For the three months ended March 31, 2018, the Company received income tax benefits of $2.6 million, as compared to the three months ended March 31, 2017 of $1.8 million, related to the exercise of non-qualified employee stock options, disqualifying dispositions on the exercise of incentive stock options, the vesting of restricted shares and the vesting of restricted stock units. The tax deficiency or benefit is recorded as income tax expense or benefit in the period the shares are vested.