Compensation and Employee Benefit Plans [Text Block]

6 Months Ended

Jun. 30, 2017

Notes

Compensation and Employee Benefit Plans

The fair value of an option award is estimated on the date of grant using the Black-Scholes option valuation model. In general, the vesting period for an option grant is 3years. Restricted share units are valued at the quoted market price of the shares at the date of grant and generally vest over 3years. Compensation costs for options and restricted share units are recognized over the stated vesting periods on a straight-line basis. The fair value of a SAR is calculated using the Black-Scholes valuation model at the grant date and each subsequent reporting period until settlement. Compensation cost is based on the proportionate amount of the requisite service that has been rendered to date. Once fully vested, changes in the fair value of a SAR continue to be recognized as compensation expense in the period of the change until settlement. The

Company accounts for forfeitures of share-based compensation awards in the period that they occur.

At June 30, 2017, there were 1,133,100 shares available for future stock-based compensation grants under IHC’s stock incentive plan. The following table summarizes share-based compensation expense, which is included in selling, general and administrative expenses on the Condensed Consolidated Statements of Income, applicable to the IHC plans, by award type for each of the periods indicated (in thousands):

		Three Months Ended				Six Months Ended
		June 30,				June 30,
		2017		2016		2017		2016
IHC’s Share-based Compensation Plan:
Stock options	$	35	$	-	$	69	$	170
Restricted stock units		27		21		58		44
SARs		119		209		53		467
Share-based compensation expense, pre-tax		181		230		180		681
Tax benefits		72		91		72		271
Share-based compensation expense, net	$	109	$	139	$	108	$	410

Stock Options

The IHC’s stock option activity during 2017 was as follows:

	Shares	Weighted- Average
	Under Option	Exercise Price
December 31, 2016	697,180	$	11.75
Exercised	-		-
June 30, 2017	697,180	$	11.75

In 2016, option agreements affecting 13 employees were modified to extend the expirations of their terms from 2017 to 2019 and, as a result, the Company recorded incremental compensation costs of $170,000. In 2016, IHC received $70,000 in cash from the exercise of stock options with an aggregate intrinsic value of $56,000 and realized $12,000 of tax benefits.

The following table summarizes information regarding IHC’s outstanding and exercisable options:

		June 30, 2017
		Outstanding		Exercisable
Number of options		697,180		540,180
Weighted average exercise price per share	$	11.75	$	9.37
Aggregate intrinsic value for all options (in thousands)	$	6,066	$	5,987
Weighted average contractual term remaining		2.0 years		1.3 years

At June 30, 2017, the total unrecognized compensation cost related to IHC’s non-vested stock options was $335,000 and it is expected to be recognized as compensation expense over a weighted average period of 2.4 years.

Restricted Stock

The following table summarizes restricted stock activity for the six months ended June 30, 2017:

	No. of	Weighted-Average
	Non-vested	Grant-Date
	Shares	Fair Value
December 31, 2016	17,325	$	16.20
Vested	(4,950)		12.53
June 30, 2017	12,375	$	17.68

AMIC received $262,000 in cash from the exercise of stock options with an intrinsic value of $212,000.