Share-Based Compensation

9 Months Ended

Sep. 30, 2015

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

SHARE-BASED COMPENSATION

During the nine months ended September 30, 2015, options to purchase an aggregate of 596,995 shares of Customers Bancorp voting common stock were granted to certain officers and team members. The exercise price for the options granted is equal to the closing price of Customers Bancorp's voting common stock on the date of grant. The options are subject to a five-year cliff vesting and expire after ten years. In addition to the five-year service requirement, one of the following conditions must be met in order for the options to become exercisable:


•	Total shareholder returns over the five-year vesting period must be a minimum of 50%, or


•	Customers Bancorp must have achieved a compound annual growth rate in diluted EPS of at least 10% over the five-year vesting period.

Customers evaluated the likelihood that at least one of these conditions would be met over the requisite service period and determined that it was more likely than not that one of the conditions would be satisfied (based upon historical performance). Accordingly, the grant-date fair value of these awards is being recognized as expense over the five-year vesting period. The fair value of the options was estimated using the Black-Scholes option pricing model.

The following table presents the weighted-average assumptions used and the resulting weighted-average fair value of each option granted.



	September 30, 2015
Weighted-average risk-free interest rate	1.90		%
Expected dividend yield	0.00		%
Weighted-average expected volatility	21.18		%
Weighted-average expected life (in years)	7
Weighted-average fair value of each option granted	$	6.42

Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2015.



	Number of Options		Weighted- average Exercise Price		Weighted- average Remaining Contractual Term in Years	Aggregate Intrinsic Value
(amounts in thousands, except Weighted-average exercise price)
Outstanding at January 1, 2015	3,168,067		$	12.61
Granted	596,995		23.36
Exercised	(31,168	)	10.53			$	455
Forfeited	(2,200	)	17.65
Outstanding at September 30, 2015	3,731,694		$	14.34	7.03	$	42,392
Exercisable at September 30, 2015	607,118		$	8.97	4.51	$	10,165

Cash received from the exercise of options during the nine months ended September 30, 2015 was $0.3 million with a related tax benefit of $0.2 million.

Restricted Stock Units

There were 158,581 restricted stock units granted during the nine months ended September 30, 2015. Of the aggregate restricted stock units granted, 84,392 were granted under the Bonus Recognition and Retention Program and are subject to five-year cliff vesting. The remaining units were granted under the Bancorp's Restated and Amended 2004 Incentive Equity and Deferred Compensation Plan and are subject to either a three-year waterfall vesting with one third of the amount vesting annually or a three-year cliff vesting. The following table summarizes restricted stock unit activity for the nine months ended September 30, 2015.



	Restricted Stock Units		Weighted- average Grant- date Fair Value
Outstanding and unvested at January 1, 2015	788,971		$	13.00
Granted	158,581		19.67
Vested	(65,166	)	12.01
Forfeited	(8,214	)	17.23
Outstanding and unvested at September 30, 2015	874,172		$	14.24

Total share-based compensation expense for the three months ended September 30, 2015 and 2014 was $1.2 million and $1.1 million, respectively. Total share-based compensation expense for the nine months ended September 30, 2015 and 2014 was $3.6 million and $3.1 million, respectively.

Customers Bancorp has a policy that permits its directors to elect to receive shares of voting common stock in lieu of their cash retainers. During the nine months ended September 30, 2015, Customers Bancorp issued 21,993 shares of voting common stock with a fair value of $0.6 million to directors as compensation for their services during the first nine months of 2015. The fair values were determined based on the opening price of the common stock on the day the shares were issued.