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, 2019

Share-based Payment Arrangement [Abstract]

Share-Based Compensation Expense

For the three months ended June 30, 2019 and 2018, share-based compensation expenses were $660,000 and $930,000, respectively, and net tax benefits recognized from stock option and restricted stock awards were $198,000 and $262,000, respectively. For the six months ended June 30, 2019 and 2018, share-based compensation expenses were $1.4 million and $1.8 million, respectively, and net tax benefits recognized from stock option and restricted stock awards were $411,000 and $512,000, respectively. Excess tax benefits (incremental tax charges) relating to the Company's vested or exercised share-based compensation are recognized as income tax expense in the consolidated statement of income.

Unrecognized Share-Based Compensation Expense

As of June 30, 2019, unrecognized share-based compensation expense was as follows:



	Unrecognized Expense		Average Expected Recognition Period
	(in thousands)
Restricted stock awards	$	5,809	2.2 years

There was no unrecognized share-based compensation expense for stock options at June 30, 2019.

Stock Option Awards

The table below provides stock option information for the three months ended June 30, 2019:



	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	337,688		$	17.53	4.6 years	$	1,356	⁽¹⁾
Options exercised	(1,250	)	$	10.80	0.0 years	—
Options outstanding at end of period	336,438		$	17.55	4.4 years	$	1,162	⁽²⁾

Options exercisable at end of period	336,438		$	17.55	4.4 years	$	1,162	⁽²⁾


⁽¹⁾	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $21.27 as of March 31, 2019, 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 $22.27 as of June 30, 2019, over the exercise price, multiplied by the number of options.

There were 1,250 stock options exercised during the three months ended June 30, 2019 and no stock options exercised during the three months ended June, 2018.

The table below provides stock option information for the six months ended June 30, 2019:



	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		$	17.52	4.6 years	$	1,356	⁽¹⁾
Options exercised	(1,900	)	$	11.40	1.0 year	18
Options outstanding at end of period	336,438		$	17.55	4.4 years	$	1,162	⁽²⁾

Options exercisable at end of period	336,438		$	17.55	4.4 years	$	1,162	⁽²⁾


⁽¹⁾	Intrinsic value represents the excess of the closing stock price on the last trading day of the period, which was $19.70 as of December 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 $22.27 as of June 30, 2019, over the exercise price, multiplied by the number of options.

There were 1,900 and 25,750 stock options exercised during the six months ended June 30, 2019 and 2018.

Restricted Stock Awards

Restricted stock awards under the outstanding equity plans become fully vested after a certain number of years or after certain performance criteria are met. 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. Restricted shares are forfeited if officers and employees terminate employment prior to the lapsing of restrictions or if performance criteria are not met. Forfeitures of restricted stock are treated as canceled shares.

The table below provides information for restricted stock awards for the period indicated:



	Three Months Ended June 30, 2019				Six Months Ended June 30, 2019
	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	186,294		$	22.31	304,595		$	21.98
Restricted stock granted	150,025		$	22.20	151,695		22.18
Restricted stock vested	(16,789	)	$	28.50	(85,959	)	28.09
Restricted stock forfeited	(33,331	)	$	10.91	(84,132	)	11.56
Restricted stock at end of period	286,199		$	23.19	286,199		23.19