Note 5 - Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Disclosure of Compensation Related Costs, Share-based Payments [Text Block]

5. Stock-Based Compensation

Under the Company’s equity incentive plans, directors and eligible employees may be granted incentive or non-statutory stock options and/or restricted stock units, or awarded non-vested stock. As of September 30, 2014, the only options granted by the Company were non-statutory stock options to selected Bank officers and non-employee directors at exercise prices equal to the fair market value of a share of the Company’s common stock on the date of grant. Such options have a maximum ten-year term and vest in 20% annual increments (subject to early termination in certain events) except certain options granted to the Chief Executive Officer of the Company in 2005 and 2008. If such options expire or terminate without having been exercised, any shares not purchased will again be available for future grants or awards. There were no options granted during the first nine months of 2014 or the year ended December 31, 2013.

Option compensation expense was zero for the three months ended September 30, 2014, and for the three months ended September 30, 2013. For the nine months ended September 30, option compensation expense totaled zero for 2014 and $129,000 for 2013. Stock-based compensation is recognized ratably over the requisite service period for all awards.

No stock options were exercised in the first nine months of 2014 or in the first nine months of 2013. The table below summarizes stock option activity for the periods indicated:

				Weighted-average		Weighted-average Remaining Contractual Life		Aggregate Intrinsic Value
	Shares			exercise price		(in years)		(in thousands)
Balance, December 31, 2013		2,812,874		$	31.81		1.9	$	2,119
Forfeited		(438,000	)		28.70
Balance, March 31, 2014		2,374,874		$	32.38		2.0	$	1,148
Forfeited		(10,000	)		32.26
Balance, June 30, 2014		2,364,874		$	32.38		1.7	$	4,083
Forfeited		-			-
Balance, September 30, 2014		2,364,874		$	32.38		1.5	$	3,487
Exercisable, September 30, 2014		2,364,874		$	32.38		1.5	$	3,487

At September 30, 2014, 3,070,663 shares were available under the Company’s 2005 Incentive Plan for future grants.

The Company granted restricted stock units for 17,601 shares at an average closing price of $24.66 per share in the first nine months of 2014 and 25,037 shares at an average closing price of $20.68 per share in the year ended December 31, 2013. The restricted stock units granted in 2014 and 2013 are scheduled to vest two years from grant date.

The following table presents information relating to the restricted stock units as of September 30, 2014:

	Units
Balance at December 31, 2013		143,433
Granted		17,601
Forfeited		-
Vested		(42,520	)
Balance at September 30, 2014		118,514

The compensation expense related to the restricted stock units was $1.0 million for the three months ended September 30, 2014, compared to $476,000 for the three months ended September 30, 2013. For the nine months ended September 30, compensation expense recorded related to the restricted stock units was $2.9 million in 2014 and $1.6 million in 2013. Unrecognized stock-based compensation expense related to restricted stock units was $4.7 million at September 30, 2014, and is expected to be recognized over the next 2.0 years.

In December 2013, the Company granted performance-based restricted stock units in which the number of units earned is calculated based on the relative total stockholder return (“TSR”) of the Company’s common stock as compared to the TSR of the KBW Regional Banking Index. In addition, the Company granted performance stock units in which the number of units earned is determined by comparison to the targeted earnings per share (“EPS”) for the three years ending December 31, 2016. Performance TSR restricted stock units for 119,840 shares and performance EPS restricted stock units for 116,186 shares were granted to eight executive officers. Both the performance TSR and EPS stock units are scheduled to vest on December 31, 2016. In the first nine months of 2014, the Company did not grant any performance stock units.

The following table summarizes the tax excess (short-fall) from share-based payment arrangements:

	Three months ended September 30,					Nine months ended September 30,
(Dollars in thousands)	2014		2013			2014			2013
Short-fall of tax deductions in excess of grant-date fair value	$	-	$	(63	)	$	(1,177	)	$	(143	)
Benefit of tax deductions on grant-date fair value		-		95			1,177			702
Total benefit of tax deductions	$	-	$	32		$	-		$	559