Note 14 - Shareholders' Equity

3 Months Ended

Mar. 31, 2013

Stockholders' Equity Note Disclosure [Text Block]

Note 14 – Shareholders’ Equity

Share-Based Plans

Pursuant to the Park Sterling Corporation 2010 Long-Term Incentive Plan (the “LTIP”), the Company may grant share-based compensation to employees and non-employee directors in the form of stock options, restricted stock or other stock-based awards. Share-based compensation expense is measured based on the fair value of the award at the date of grant and is charged to earnings on a straight-line basis over the requisite service period, which is currently up to seven years. The fair value of stock options is estimated at the date of grant using a Black-Scholes option-pricing model and related assumptions and expensed over each option’s vesting period. The amortization of share-based compensation reflects estimated forfeitures, adjusted for actual forfeiture experience. The fair value of restricted stock awards subject to share price performance vesting requirements is estimated using a Monte Carlo simulation and related estimated assumptions for volatility and a risk free interest rate.  The fair value of restricted stock awards, not subject to share price performance, is estimated at the date of the grant based on the grant date closing stock price. As of March 31, 2013, there were 156,060 shares available for future grant under the LTIP.

As a result of the Citizens South merger, the Company assumed the Citizens South Bank 1999 Stock Option Plan (the “1999 Citizens South Plan”), the Citizens South Banking Corporation 2003 Stock Option Plan (the “2003 Citizens South Plan”) and the Citizens South Banking Corporation 2008 Equity Incentive Plan ( the “2008 Citizens South Plan”), each of which has been renamed as a Park Sterling Corporation plan, and the obligations of awards outstanding under the plans at the effective date of the merger.

Under the 2008 Citizens South Plan, the Company may grant future non-qualified stock options and stock appreciation rights (“SARs”) to eligible employees and directors of, or service providers to, the Company or the Bank who were not employees or directors of or service providers to the Company or the Bank at the effective time of the merger.  At March 31, 2013, there were options to purchase 250,955 shares of Common Stock outstanding and 85,247 shares remaining available for future grants under the 2008 Citizens South Plan.

Under the 2003 Citizens South Plan, the Company may grant future non-qualified stock options to eligible key employees and outside directors of the Company and the Bank who were not employees or directors of the Company or the Bank at the effective time of the merger, and may also grant limited rights in connection with option grants to eligible key employees.  At March 31, 2013, there were options to purchase 737,133 shares of Common Stock outstanding and 73,189 shares remaining available for future grants under the 2003 Citizens South Plan.

The 1999 Citizens South Plan is no longer an active plan and no future awards can be granted thereunder.  March 31, 2013, there were options to purchase 2,190 shares of Common Stock outstanding under the 1999 Citizens South Plan.

The exercise price of each option under these plans is not less than the market price of the Company’s Common Stock on the date of the grant. The exercise price of all options outstanding at March 31, 2013 under these plans ranges from $3.04 to $15.45 and the average exercise price was $7.84. The Company funds the option shares from authorized but unissued shares. The Company does not typically purchase shares to fulfill the obligations of the stock benefit plans. Options granted become exercisable in accordance with the plans’ vesting schedules that are generally three years. In connection with the retirement of certain directors following the Bank’s public offering, vesting of their director options previously awarded in December 2007 was accelerated from December 2010 to August 2010 at their original exercise price of $13.23 per share.  All unexercised options expire ten years after the date of the grant.

Additional information regarding the Company’s share-based plans is presented in Note 19 – Employee and Director Benefit Plans to the 2012 Audited Financial Statements.

Activity in the Company’s share-based plans is summarized in the following table:

			Outstanding Options									Nonvested Restricted Shares
	Options Available for Future Grants		Number Outstanding			Weighted Average Exercise Price		Weighted Average Contractual Term (Years)		Intrinsic Value		Number Outstanding		Weighted Average Grant Date Fair Value		Aggregate Intrinsic Value
At December 31, 2012		390,236		3,119,692		$	7.84		5.27	$	-		646,260	$	4.01	$	3,379,940
Options Granted		-		-			-		-		-		-		-		-
Restricted Shares Granted		-		-			-		-		-		72,000		5.60		406,080
Exercised		-		(312	)		3.22		-		-		-		-		-
Expired and forfeited		-		-			-		-		-		-		-		-
At March 31, 2013		390,236		3,119,380		$	7.84		5.02	$	27,555		718,260	$	4.17	$	4,050,986
Exercisable at March 31, 2013				2,596,635		$	8.15		4.51	$	-

There were no stock options granted during the three-month periods ended March 31, 2013 or March 31, 2012.  There were 312 stock options that were exercised during the three months ended March 31, 2013, at a weighted average exercise price of $3.22 per share.  There were 27,135 options which vested during the three months ended March 31, 2013 and 27,447 options which vested during the three months ended March 31, 2012. There were 72,000 shares of restricted stock granted during the three months ended March 31, 2013, of which a third of the shares will vest on the grant anniversary date for each of the next three years.  There were no shares of restricted stock granted during the three months ended March 31, 2012. The compensation expense for share-based plans was $525 thousand and $483 thousand for the three months ended March 31, 2013 and 2012, respectively.  At March 31, 2013, unrecognized compensation cost related to nonvested stock options of $0.7 million is expected to be recognized over a weighted-average period of 0.47 years, and unrecognized compensation cost related to nonvested restricted shares of $1.5 million is expected to be recognized over a weighted-average period of 1.49 years.