BENEFIT PLANS

Employee stock plans. As of December 31, 2013, the Company has four employee stock plans: the 1997 Plan, the 1999 Plan, the 2002 Plan and the 2005 Plan. Equity awards from these plans generally become exercisable 25% per year after the date of grant but may vest immediately at management’s discretion and expire no later than ten years from the date of grant.

The employee stock plans allow for grants of the Company’s common stock in the form of incentive stock options (“ISOs”), non-qualified stock options, and stock appreciation rights. Under the 2005 Plan, the Company may also grant restricted stock, stock units, performance shares, stock awards, dividend equivalents and other stock-based awards. The Company does not record a tax benefit for option awards at the grant date since the options it issues are generally ISOs and employees have typically held the stock received on exercise for the requisite holding period.

Employee stock options. The Company did not grant any options during 2013, 2012 or 2011. As of December 31, 2012, options outstanding have been fully amortized. For 2012 and 2011, the Company recorded option compensation expense of $29,000 and $125,000, respectively.

Restricted stock. During 2013, 2012 and 2011, the Company awarded a total of 39,081, 239,291 and 210,423 shares of restricted stock, respectively, valued at $335,000, $1.6 million and $1.4 million, respectively, and recorded compensation expense for outstanding restricted stock of $1.2 million, $1.0 million and $1.7 million (of which $0, $27,000 and $44,000 related to the accelerated vesting of awards for certain terminated employees), respectively.

In January 2011, in connection with the formation of LEAF, all of the outstanding restricted stock of LEAF Financial held by its senior management were exchanged for 1,000 shares of restricted stock of LEAF. The Company recorded equity-based compensation expense related to the LEAF and LEAF Financial restricted stock of $82,000 for 2011. No expense was recorded for 2013 or 2012.

Performance-based awards. The Company issues performance-based awards which are earned based on the achievement of specified goals as of a designated measurement date. The goals typically include such measures as earnings per share, return on equity, revenues and assets under management. During 2013, 2012 and 2011, the Company awarded 0, 36,000, and 0 shares of performance-based restricted stock, respectively, and recorded compensation expense (benefit) of $68,000, $36,000 and $(8,000) during 2013, 2012 and 2011, respectively, related to performance awards that had been earned. There were 4,000, 4,000, and 12,000 nonvested earned performance-based restricted shares outstanding as of December 31, 2013, 2012 and 2011, respectively.



Unearned Performance-based Restricted Stock	Shares
Outstanding, beginning of year	24,000
Awarded	—
Earned	(12,000	)
Forfeited	—
Outstanding, end of year	12,000

Aggregate information regarding the activity for the Company’s employee stock options as of December 31, 2013 is as follows:



Stock Options Outstanding	Shares			Weighted Average Exercise Price			Weighted Average Contractual Life	Aggregate Intrinsic Value
Balance, beginning of year	1,045,226			$	16.12		2.74	$	19,628
Exercised	(17,063	)		$	(5.99	)
Forfeited and/or expired	(13,000	)		$	(18.67	)
Balance, end of year	1,015,163			$	16.26		1.72	$	50,250

Exercisable, December 31, 2013	1,015,163			$	16.26
Available for grant	637,272		⁽¹⁾


(1)	The shares available for grant are reduced by restricted stock award grants, net of forfeitures.

The following table summarizes the activity for nonvested restricted stock (excluding performance-based awards) during 2013. All options outstanding are vested.



	Shares		Weighted Average Grant Date Fair Value
Nonvested Restricted Stock
Outstanding, beginning of year	600,352		$	5.79
Granted	39,081		$	8.57
Vested and issued	(238,024	)	$	(5.27	)
Forfeited	(5,215	)	$	(5.59	)
Outstanding, end of year	396,194		$	6.38

Deferred stock and deferred compensation plans. In addition to the employee stock plans, the Company has three plans for its non-employee directors (“Eligible Directors”), the 1997 Director Plan, the 2002 Director Plan, and the 2012 Director Plan. Each unit granted under these plans represents the right to receive one share of the Company’s common stock.

The 1997 Director Plan has issued all of its authorized 134,073 units. As of December 31, 2013 and 2012, there were 104,070 units vested and outstanding under this plan.

Eligible Directors are eligible to participate in the 2002 and 2012 Director Plans. Upon becoming a director, each Eligible Director receives units equal to a share compensation amount divided by the closing price of the Company’s common stock on the date of grant. Eligible Directors receive an additional unit award on each anniversary of the date of initial grant equal to their share compensation divided by the closing price of the Company’s common stock on the date of grant. Units vest on the later of: (i) the fifth anniversary of the date the recipient became an Eligible Director and (ii) the first anniversary of the grant of those units, except that units will vest sooner upon a change in control or death or disability of an Eligible Director, provided the Eligible Director has completed at least six months of service. Upon termination of service by an Eligible Director, shares of common stock are issued for vested units and all nonvested units are forfeited.

The 2002 Director Plan provides for the issuance of 173,450 units and terminated on April 29, 2012, such that the plan can no longer make any additional grants (grants outstanding remain unaffected). As of December 31, 2013, there were 130,956 units outstanding (of which 123,394 were vested) under the 2002 Director Plan.

The 2012 Director Plan provides for the issuance of up to a maximum of 200,000 units and will terminate on March 8, 2022, except with respect to previously awarded grants. As of December 31, 2013, there were 27,517 units outstanding (9,654 of which were vested) under the 2012 Director Plan.

Aggregate information regarding the Company’s three director plans at December 31, 2013 was as follows:



	Shares	Weighted Average Grant Date Fair Value
Director Units
Outstanding, beginning of year	244,683	$	6.38
Granted	17,863	$	8.82
Issued	—	$	—
Forfeited	—	$	—
Outstanding, end of year	262,546	$	6.55

Vested units	237,121	$	6.39
Available for grant	172,483

The following table summarizes the activity for outstanding nonvested director units during 2013:



	Shares		Weighted Average Grant Date Fair Value
Nonvested Director Units
Outstanding, beginning of year	25,558		$	6.16
Granted	17,863		$	8.82
Vested	(17,996	)	$	(6.25	)
Forfeited	—		$	—
Outstanding, end of year	25,425		$	7.96

Employee 401(k) Plan. The Company sponsors a qualified 401(k) Plan to enable employees to save for their retirement on a tax deferred basis. Employees are eligible to make elective deferrals commencing on the first day of the month after their date of hire. Prior to January 1, 2012, the Company matched 50% of such deferrals, limited to 10% of an employee’s annual compensation, after the completion of 1000 hours of service and having been employed by the Company for one year. The match earned prior to January 1, 2012 vests over a period of five years. On January 1, 2012, the Plan was amended to become a Safe Harbor Plan and the match was changed to equal (1) 100% of participant contributions up to the first 3% of participant compensation, plus (2) 50% of participant contributions on the next 2% of participant compensation. In addition, matching contributions made after January 1, 2012 are 100% vested. The Company has recorded compensation expense of $490,000, $443,000 and $683,000 for matching contributions during 2013, 2012 and 2011, respectively.

SERP. The Company established a SERP, which has Rabbi and Secular Trust components, for Mr. Edward E. Cohen (“Mr. E. Cohen”), while he was the Company’s Chief Executive Officer. The Company pays an annual benefit equal to $838,000 during his lifetime or for a period of 10 years from June 2004, whichever is longer. The 1999 Trust, a secular trust, purchased and holds 100,000 shares of the common stock of TBBK ($1.8 million fair value at December 31, 2013). The Company anticipates funding $838,000 to the Plan during 2014 in order for the Plan to pay the annual benefit.

The components of net periodic benefit costs for the SERP were as follows (in thousands):



	Years Ended December 31,
	2013			2012			2011
Interest cost	$	225		$	275		$	354
Less: expected return on plan assets	(100		)	(75		)	(67		)
Plus: Amortization of unrecognized loss	381			295			305
Net cost	$	506		$	495		$	592

The reconciliation of the beginning and ending balances for the SERP benefit obligation and fair value of plan assets, comprised entirely of equity securities, as well as the funded status of the Company’s SERP liability, is as follows (in thousands):



	December 31,
	2013				2012
Projected benefit obligation, beginning of year	$	8,471			$	8,313
Interest cost	226				296
Actuarial loss	(288		)		700
Benefit payments	(838		)		(838		)
Projected benefit obligation, end of year	$	7,571			$	8,471

Fair value of plan assets, beginning of year	$	1,665			$	1,176
Actual gain on plan assets	908				489
Fair value of plan assets, end of year	$	2,573			$	1,665

Unfunded status	$	(4,998	)		$	(6,806	)
Unrecognized net actuarial loss	3,879				5,355
Net accrued cost	$	(1,119	)		$	(1,451	)

Amounts recognized in the consolidated balance sheets consist of:
Accrued benefit liability	$	(4,998	)		$	(6,806	)
Accumulated other comprehensive loss	2,026			⁽¹⁾	3,030
Deferred tax asset	1,853				2,325
Net liability recognized	$	(1,119	)		$	(1,451	)


(1)	The estimated net loss for the plan that is expected to be amortized from accumulated other comprehensive loss into net periodic pension benefit cost over the next year is $279,000.

As of December 31, 2013, the fair value of the SERP plan asset by level within the fair value hierarchy was as follows (in thousands):



	Level 1		Level 2		Level 3		Total
Asset:
Equity securities - TBBK	$	2,573	$	—	$	—	$	2,573

The SERP is expected to make benefit payments based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2013 (2.8% discount rate, 6% expected return on assets) over the next five years ending December 31, and thereafter, as follows (in thousands):



2014	$	831
2015	801
2016	775
2017	745
2018	714
Thereafter	2,994
Total	$	6,860