Hanmi Financial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Share-Based Compensation

Share-Based Compensation

6 Months Ended

Jun. 30, 2018

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

Share-Based Compensation Expense

For the three months ended June 30, 2018 and 2017, share-based compensation expenses were $930,000 and $670,000, respectively, and net tax benefits recognized from stock option and restricted stock awards were $262,000 and $274,000, respectively. For the six months ended June 30, 2018 and 2017, share-based compensation expenses were $1.8 million and $1.4 million, respectively, and net tax benefits recognized from stock option and restricted stock awards were $512,000 and $550,000, respectively. Excess tax benefits related to the Company's share-based compensation are recognized as income tax expense in the consolidated statement of income.

Unrecognized Share-Based Compensation Expense

As of June 30, 2018, unrecognized share-based compensation expense was as follows:



	Unrecognized Expense		Average Expected Recognition Period
	(in thousands)
Restricted stock awards	$	5,756	2.2 years

There was no unrecognized share-based compensation expense for stock options at June 30, 2018.

Stock Option Awards

The table below provides stock option information for the three months ended June 30, 2018:



	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	338,338	$	17.54	5.5 years	$	4,469	⁽¹⁾

Options outstanding at end of period	338,338	$	17.54	5.5 years	$	3,657	⁽²⁾

Options exercisable at end of period	338,338	$	17.54	5.5 years	$	3,657	⁽²⁾


⁽¹⁾	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $30.75 as of March 31, 2018, 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 $28.35 as of June 30, 2018, over the exercise price, multiplied by the number of options.

There were 10,500 stock options exercised during the three months ended June 30, 2017 and no stock option exercises during the three months ended June 30, 2018.

The table below provides stock option information for the six months ended June 30, 2018:



	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	364,088		$	17.86	5.9 years	$	4,548	⁽¹⁾
Options exercised	(25,750	)	$	22.06	5.9 years	—
Options outstanding at end of period	338,338		$	17.54	5.5 years	$	3,657	⁽²⁾

Options exercisable at end of period	338,338		$	17.54	5.5 years	$	3,657	⁽²⁾


⁽¹⁾	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $30.35 as of December 31, 2017, 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 $28.35 as of June 30, 2018, over the exercise price, multiplied by the number of options.

There were 25,750 and 11,500 stock options exercised during the six months ended June 30, 2018 and 2017, 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 six months ended June 30, 2018:



	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
	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	324,096		$	22.38	317,783		$	21.09
Restricted stock granted	21,670		29.10		119,394		24.99
Restricted stock vested	(25,741	)	25.87		(78,654	)	26.54
Restricted stock forfeited	(4,520	)	29.89		(43,018	)	12.06
Restricted stock at end of period	315,505		22.44		315,505		22.44