Shareholders' Equity

12 Months Ended

Dec. 31, 2016

Shareholders' Equity

Shareholders' Equity

12. Shareholders’ Equity

Common Stock – At December 31, 2016 and 2015, the Company has reserved the following shares of its authorized but unissued common stock for possible future issuance in connection with the following:

	At December 31,
	2016	2015
Exercise of outstanding stock options	285,999	461,050
Exercise of outstanding stock warrants	895,968	895,968
Future granting of option and stock awards	2,421,120	2,642,346
Future stock purchases through ESPP	197,066	233,879
	3,800,153	4,233,243

Preferred Stock, Series C — On September 7, 2011, the Company amended its Articles of Incorporation to establish the Senior Non-Cumulative Perpetual Preferred Stock, Series C (Series C Preferred Stock) and fix the powers; preferences;  and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the shares of Series C Preferred Stock.

On September 8, 2011, the Company entered into and consummated the transactions contemplated by a Securities Purchase Agreement (Purchase Agreement) with the U.S. Secretary of the Treasury (Treasury) under the Small Business Lending Fund (SBLF), a $30 billion fund established under the Small Business Jobs Act of 2010 that was designed to encourage lending to small businesses by providing capital to qualified community banks with assets of less than $10 billion. Pursuant to the Purchase Agreement, the Company issued and sold to the Treasury, for an aggregate purchase price of $57.4 million, 57,366 shares of the Company’s Series C Preferred Stock, par value $0.01 per share, having a liquidation value of $1,000 per share.

On July 22, 2015, all Series C Preferred Stock was redeemed at the liquidation value of $1,000 per share plus accrued dividends with an aggregate payment of $57.4 million. 

Warrant — The Company issued a warrant on December 19, 2008 as part of the Company’s participation in the TARP Capital Purchase program.  The warrant has a 10-year term and allows for the purchase of 895,968 shares of the Company’s common stock at an exercise price of $10.79 per share.

Dividends — The Company’s ability to pay dividends to its shareholders is generally dependent upon the payment of dividends by the Bank to the Parent.  The Bank cannot pay dividends to the extent it would be deemed undercapitalized by the FDIC after making such dividend.  At December 31, 2016, the Bank was not otherwise restricted in its ability to pay a dividend to the Parent as its earnings in the current and prior two years, net of dividends paid during those years, was positive.

Dividends on the Company’s capital stock (common and preferred stock, if any) are prohibited under the terms of the junior subordinated debenture agreements (see Note 9 – Long-Term Debt) if the Company is in continuous default on its payment obligations to the capital trusts, has elected to defer interest payments on the debentures or extends the interest payment period.  At December 31, 2016, the Company was not in default on any of the junior subordinated debenture issuances.

Dividends declared per common share for the years ended December 31, 2016, 2015 and 2014 were $0.19,  $0.17 and $0.15, respectively.  Dividends on the Series C Preferred Stock for the years ended December 31, 2015 and 2014 were $0.3 million and $0.6 million, respectively.