Note 11 — Share-Based Compensation

Share-Based Compensation Expense

For the three months ended June 30, 2014 and 2013, share-based compensation expense was $447,000 and $92,000, respectively, and the related tax benefits on non-qualified stock options were $72,000 and $21,000, respectively. For the six months ended June 30, 2014 and 2013, share-based compensation expense was $1.1 million and $189,000, respectively, and the related tax benefits on non-qualified stock options were $183,000 and $32,000, respectively.

 

Unrecognized Share-Based Compensation Expense

As of June 30, 2014, unrecognized share-based compensation expense was as follows:

 

		Unrecognized Expense				Average Expected Recognition Period
		(In thousands)
Stock option awards		$	1,606				2.1 years
Restricted stock awards			2,444				2.4 years
Total unrecognized share-based compensation expense		$	4,050				2.3 years

The table below provides stock option information for the three months ended June 30, 2014:

 

		Number of Shares				Weighted- Average Exercise Price Per Share				Weighted- Average Remaining Contractual Life				Aggregate Intrinsic Value of In-the- Money Options
		(In thousands, except share and per share data)
Options outstanding at beginning of period			502,188			$	24.31				8.6 years			$	3,873	(1)
Options granted			105,000			$	21.87				9.9 years
Options exercised			(18,500	)		$	12.54				8.0 years
Options forfeited			(6,500	)		$	12.54				8.5 years
Options expired			(275	)		$	144.00				1.8 years
Options outstanding at end of period			581,913			$	24.32				8.6 years			$	2,168	(2)
Options exercisable at end of period			96,663			$	61.05				5.6 years			$	560	(2)

 

(1)	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $23.30 as of March 31, 2014, 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 $21.08 as of June 30, 2014, over the exercise price, multiplied by the number of options.

The table below provides stock option information for the six months ended June 30, 2014:

 

		Number of Shares				Weighted- Average Exercise Price Per Share				Weighted Average Remaining Contractual Life				Aggregate Intrinsic Value of In-the- Money Options
		(In thousands, except share and per share data)
Options outstanding at beginning of period			546,595			$	28.09				8.4 years			$	3,384	(1)
Options granted			105,000			$	21.87				9.9 years
Options exercised			(33,695	)		$	12.54				8.2 years
Options forfeited			(7,875	)		$	12.54				8.5 years
Options expired			(28,112	)		$	105.91				.5 years
Options outstanding at end of period			581,913			$	24.32				8.6 years			$	2,168	(2)
Options exercisable at end of period			96,663			$	61.05				5.6 years			$	560	(2)

 

(1)	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $21.89 as of December 31, 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 $21.08 as of June 30, 2014, over the exercise price, multiplied by the number of options.

 

There were 18,500 and 33,695 stock options exercised during the three and six months ended June 30, 2014, compared to 562 and 2,241 stock options exercised during the same periods in 2013.

Restricted Stock Awards

Restricted stock awards granted under the 2013 Equity Compensation Plan, which replaced the 2007 Equity Compensation 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 six months ended June 30, 2014:

 

		Three Months Ended								Six Months Ended
		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			122,082			$	16.82				116,082			$	16.43
Restricted stock granted			48,348			$	22.30				66,348			$	22.46
Restricted stock vested			(3,098	)		$	12.42				(15,098	)		$	20.12
Restricted stock forfeited			(1,000	)		$	22.25				(1,000	)		$	22.25
Restricted stock at end of period			166,332			$	18.46				166,332			$	18.46