Note 8 — Share-Based Compensation

Share-Based Compensation Expense

For the three months ended September 30, 2013 and 2012, share-based compensation expense was $197,000 and $42,000, respectively, and the related tax benefits on non-qualified stock options were $0 and $18,000, respectively. For the nine months ended September 30, 2013 and 2012, share-based compensation expense was $387,000 and $144,000, respectively, and the related tax benefits on non-qualified stock options were $32,000 and $61,000, respectively.

Unrecognized Share-Based Compensation Expense

As of September 30, 2013, unrecognized share-based compensation expense was as follows:

 

						Average Expected
		Unrecognized				Recognition
		Expense				Period
		(In thousands)
Stock option awards		$	2,158				2.7 years
Restricted stock awards			1,794				2.9 years
Total unrecognized share-based compensation expense		$	3,952				2.8 years

 

The table below provides stock option information for the three months ended September 30, 2013:

 

														Aggregate
						Weighted-				Weighted				Intrinsic
						Average				Average				Value of
						Exercise				Remaining				In-the-
		Number of				Price Per				Contractual				Money
		Shares				Share				Life				Options
		(In thousands, except share and per share data)
Options outstanding at beginning of period			329,970			$	37.43				7.5 years			$	1,015	(1)
Options granted			305,000			$	16.43				9.9 years
Options exercised			(38,437	)		$	11.18				7.7 years
Options forfeited			(16,125	)		$	12.46				9.0 years
Options expired			(8,750	)		$	45.28				4.7 years
Options outstanding at end of period			571,658			$	28.58				8.6 years			$	636	(2)
Options exercisable at end of period			124,220			$	76.83				4.9 years			$	258	(2)

 

(1)	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $17.67 as of June 30, 2013, over the exercise price, multiplied by the number of options.

(2)	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $16.57 as of September 30, 2013, over the exercise price, multiplied by the number of options.

The table below provides stock option information for the nine months ended September 30, 2013:

 

														Aggregate
						Weighted-				Weighted				Intrinsic
						Average				Average				Value of
						Exercise				Remaining				In-the-
		Number of				Price Per				Contractual				Money
		Shares				Share				Life				Options
		(In thousands, except share and per share data)
Options outstanding at beginning of period			342,950			$	37.44				8.0 years			$	359	(1)
Options granted			305,000			$	16.43				9.9 years
Options exercised			(40,678	)		$	11.25				7.7 years
Options forfeited			(22,501	)		$	12.48				9.1 years
Options expired			(13,113	)		$	59.36				4.3 years
Options outstanding at end of period			571,658			$	28.58				8.6 years			$	636	(2)
Options exercisable at end of period			124,220			$	76.83				4.9 years			$	258	(2)

 

(1)	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $13.59 as of December 31, 2012, over the exercise price, multiplied by the number of options.

(2)	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $16.57 as of September 30, 2013, over the exercise price, multiplied by the number of options.

There were 38,437 and 40,678 stock options exercised during the three and nine months ended September 30, 2013, respectively, compared to none during the same periods in 2012.

Restricted Stock Awards

Restricted stock awards under the 2013 Plan generally become fully vested after three to five years of continued employment from the date of grant. Hanmi Financial becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted stock awards when the restrictions are released and the shares are issued. Restricted stock awards are forfeited if officers and employees terminate prior to the lapsing of restrictions. Forfeitures of restricted stock awards are treated as cancelled shares.

 

The table below provides information for restricted stock awards for the three and nine months ended September 30, 2013:

 

		Three Months Ended								Nine Months Ended
						Weighted-								Weighted-
						Average								Average
						Grant Date								Grant Date
		Number of				Fair Value				Number of				Fair Value
		Shares				Per Share				Shares				Per Share
Restricted stock at beginning of period			3,500			$	10.99				10,500			$	10.83
Restricted stock granted			111,332			$	16.43				111,332			$	16.43
Restricted stock vested			—				—				(7,000	)		$	10.75
Restricted stock forfeited			(750	)		$	10.80				(750	)		$	10.80
Restricted stock at end of period			114,082			$	16.30				114,082			$	16.30