STOCK BASED COMPENSATION

3 Months Ended

Mar. 31, 2013

STOCK BASED COMPENSATION

STOCK BASED COMPENSATION

NOTE 8 – STOCK BASED COMPENSATION

During the three months ended March 31, 2013, the Company recorded $203,000 of stock based compensation expense comprised of stock option expense of $82,000 and restricted stock expense of $121,000.

The following is a summary of the Bancorp’s stock option activity and related information for the three months ended March 31, 2013.

					Weighted
			Weighted		Average
	Number of		Average		Remaining	Aggregate
	Stock		Exercise		Contractual	Intrinsic
	Options		Price		Life	Value
	(Unaudited)
Outstanding at December 31, 2012	877,669		$	11.57	6.3 years	$	4,461,000
Granted	254,650		17.00
Exercised	(4,608	)	11.11
Forfeited / Cancelled	(100	)	12.94
Outstanding at March 31, 2013	1,127,611		$	12.80	6.9 years	$	4,645,000
Exercisable at March 31, 2013	588,976		$	11.20	4.9 years	$	3,353,000

The following is a summary of the Company’s unvested options as of March 31, 2013 and the changes therein during the three months then ended.

			Weighted
	Number of		Average
	Stock		Grant Date
	Options		Fair Value
	(Unaudited)
Unvested at December 31, 2012	310,661		$	3.36
Granted	254,650		4.20
Vested	(26,676	)	2.72
Forfeited / Cancelled	-		-
Unvested at March 31, 2013	538,635		$	3.79

Expected future expense relating to the 538,635 non-vested options outstanding as of March 31, 2013 is $1.9 million over a weighted average period of 4.4 years.

The fair value of the options granted during the three months ended March 31, 2013 was estimated to be $4.20.  The fair value was based on the following assumptions:

Expected Dividend Yield	2.22	%
Expected Volatility	31.12	%
Risk-Free Interest Rate	1.19	%
Expected Option Life in Years	6.50

The following is a summary of the status of the Company’s restricted stock as of March 31, 2013 and changes therein during the three months then ended.

		Weighted
	Number of	Average
	Restricted	Grant Date
	Shares	Fair Value
	(Unaudited)
Unvested at December 31, 2012	130,557	$	12.41
Granted	122,450	17.00
Vested	(6,127)	11.09
Forfeited / Cancelled	-	-
Unvested at March 31, 2013	246,880	$	14.72

Expected future compensation expense relating to the 246,880 restricted shares at March 31, 2013 is $3.3 million over a weighted average period of 4.4 years.

During the three months ended March 31, 2013, the Company granted 39,250 shares of performance based restricted stock to certain executive officers of the Company.