Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation

v3.5.0.2
Share-Based Compensation
 9 Months Ended
Sep. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Share-Based Compensation
Share-Based Compensation

Share-Based Compensation Expense

The Company adopted Accounting Standards Update ("ASU") 2016-09, Compensation - Stock Compensation, during the three months ended March 31, 2016. Adoption of this ASU did not have a material impact on the Company's financial statements. As a result of adoption of this ASU, excess tax benefits related to the Company's share-based compensation were recognized as income tax expense in the consolidated statement of income during the nine months ended September 30, 2016. For the three months ended September 30, 2016 and 2015, share-based compensation expenses were $787,000 and $658,000, respectively, and net tax benefits recognized from stock option exercises and restricted stock awards were $313,000 and $229,000, respectively. For the nine months ended September 30, 2016 and 2015, share-based compensation expenses were $2.3 million and $1.7 million, respectively, and net tax benefits recognized from stock option exercises and restricted stock awards were $917,000 and $567,000, respectively.

Unrecognized Share-Based Compensation Expense

As of September 30, 2016, unrecognized share-based compensation expense was as follows:
 
Unrecognized
Expense
 
Average Expected
Recognition
Period
 
(in thousands)
 
 
Stock option awards
$
148

 
1.0 years
Restricted stock awards
3,755

 
2.3 years
Total unrecognized share-based compensation expense
$
3,903

 
2.2 years


The table below provides stock option information for the three months ended September 30, 2016:
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Weighted-
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value of
In-the-
Money
Options
 
 
 
 
 
 
 
 
(in thousands)
 
Options outstanding at beginning of period
450,564

 
$
19.97

 
7.2 years
 
$
2,727

(1) 
Options exercised
(2,375
)
 
$
12.54

 
6.2 years
 
—

 
Options expired
(1,875
)
 
$
152.24

 
0.0 years
 
—

 
Options outstanding at end of period
446,314

 
$
19.46

 
6.9 years
 
$
3,952

(2) 
 
 
 
 
 
 
 
 
 
Options exercisable at end of period
391,642

 
$
19.14

 
6.8 years
 
$
3,666

(2) 
                              
(1) 
Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $23.49 as of June 30, 2016, 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 $26.34 as of September 30, 2016, over the exercise price, multiplied by the number of options.

The table below provides stock option information for the nine months ended September 30, 2016:
 
Number of
Shares
 
Weighted-
Average
Exercise
Price Per
Share
 
Weighted-
Average
Remaining
Contractual
Life
 
Aggregate
Intrinsic
Value of
In-the-
Money
Options
 
 
 
 
 
 
 
 
(in thousands)
 
Options outstanding at beginning of period
510,148

 
$
24.38

 
7.3 years
 
$
3,219

(1) 
Options exercised
(42,584
)
 
$
13.90

 
6.1 years
 
—

 
Options forfeited
(125
)
 
$
144.00

 
0.0 years
 
—

 
Options expired
(21,125
)
 
$
148.70

 
0.0 years
 
—

 
Options outstanding at end of period
446,314

 
$
19.46

 
6.9 years
 
$
3,952

(2) 
 
 
 
 
 
 
 
 
 
Options exercisable at end of period
391,642

 
$
19.14

 
6.8 years
 
$
3,666

(2) 
                              
(1) 
Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $23.72 as of December 31, 2015, 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 $26.34 as of September 30, 2016, over the exercise price, multiplied by the number of options.

There were 2,375 and 13,311 stock options exercised during the three months ended September 30, 2016 and 2015, respectively, and 42,584 and 39,766 stock options exercised during the nine months ended September 30, 2016 and 2015, respectively.

Restricted Stock Awards

Restricted stock awards under the Company’s 2007 and 2013 Equity Compensation Plans typically vest over three years and are subject to forfeiture if employment terminates prior to the lapse of restrictions. Hanmi Financial becomes entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Forfeited shares of restricted stock become available for future grants upon forfeiture.

The table below provides information for restricted stock awards for the three and nine months ended September 30, 2016:
 
Three Months Ended 
 September 30, 2016
 
Nine Months Ended 
 September 30, 2016
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
Per Share
 
Number of
Shares
 
Weighted-
Average
Grant Date
Fair Value
Per Share
Restricted stock at beginning of period
358,871

 
$
16.04

 
136,795

 
$
20.74

Restricted stock granted
1,345

 
$
24.92

 
258,288

 
$
14.47

Restricted stock vested
(33,956
)
 
$
16.85

 
(68,156
)
 
$
19.68

Restricted stock forfeited
(1,334
)
 
$
20.99

 
(2,001
)
 
$
21.41

Restricted stock at end of period
324,926

 
$
15.97

 
324,926

 
$
15.97