Note 15 - Stock Based Compensation

12 Months Ended

Dec. 31, 2014

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

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

15.  Stock Based Compensation

The Company has a Stock Option and Restricted Stock Plan (“Plan”) which originally became effective in 1995 and was subsequently amended and restated in 2005. The Plan allows stock options, restricted stock or stock appreciation rights to be granted to the Company’s employees, directors, and certain consultants.  Under the terms of the Plan, 1.5 million shares of common stock, plus an annual increase equal to the number of shares needed to restore the maximum number of shares that may be available for grant under the Plan to 1.5 million shares, are available for such grants.  As of December 31, 2014, the only grants under the Plan have been option grants.  The Plan provides that the exercise price of each option granted equals the market price of the Company’s stock on the date of grant. Any option granted vests within one to four years and has a maximum term of ten years. The Plan terminates pursuant to its terms on November 14, 2015.

On April 29, 2014, the Company’s shareholders approved the 2014 Republic First Bancorp, Inc. Equity Incentive Plan (the “2014 Plan”), under which the Company may grant options, restricted stock, stock units, or stock appreciation rights to the Company’s employees, directors, independent contractors, and consultants.  Under the terms of the 2014 Plan, 2.6 million shares of common stock, plus an annual adjustment to be no less than 10% of the outstanding shares or such lower number as the Board of Directors may determine, are available for such grants.

During the twelve months ended December 31, 2014, 360,900 options were granted under the Plan. There were no options granted under the 2014 Plan.

The Company utilized the Black-Scholes option pricing model to calculate the estimated fair value of each stock option granted on the date of the grant.  A summary of the assumptions used in the Black-Scholes option pricing model for 2014, 2013, and 2012 is as follows:

	2014	2013	2012
Dividend yield(1)	0.0%	0.0%	0.0%
Expected volatility(2)	55.79% to 57.99%	54.88% to 55.61%	53.12% to 54.49%
Risk-free interest rate(3)	1.51% to 2.26%	1.28% to 2.03%	1.01% to 1.61%
Expected life(4)	5.5 to 7.0 years	7.0 years	7.0 years

(1) A dividend yield of 0.0% is utilized because cash dividends have never been paid.

(2) Expected volatility is based on Bloomberg’s five and one-half to seven year volatility calculation for “FRBK” stock.

(3) The risk-free interest rate is based on the five to seven year Treasury bond.

(4) The expected life reflects a 1 to 4 year vesting period, the maximum ten year term and review of historical behavior.

During 2014, 209,825 options vested as compared to 127,287 options in 2013 and 146,000 options in 2012.  Expense is recognized ratably over the period required to vest.  At December 31, 2014 the intrinsic value of the 1,494,399 options outstanding was $1,027,276, while the intrinsic value of the 454,761 exercisable (vested) options was $190,601.  During 2014, 81,531 options were forfeited with a weighted average grant date fair value of $40,369.

Information regarding stock based compensation for the years ended December 31, 2014, 2013, and 2012 is set forth below:

	2014		2013		2012
Stock based compensation expense recognized	$	420,000	$	325,000	$	370,000
Number of unvested stock options		1,039,638		909,313		710,600
Fair value of unvested stock options	$	1,548,840	$	1,245,679	$	1,091,948
Amount remaining to be recognized as expense	$	702,220	$	545,862	$	467,314

The remaining amount of $702,220 will be recognized ratably as expense through September 2018.

A summary of stock option activity under the Plan as of December 31, 2014, 2013 and 2012 is as follows:

	For the Years Ended December 31,
	2014					2013					2012
	Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price		Shares			Weighted Average Exercise Price
Outstanding, beginning of year		1,215,530		$	3.66		964,530		$	4.38		839,417		$	6.04
Granted		360,900			3.69		347,250			2.72		296,750			1.95
Exercised		(500	)		1.95		-			-		-			-
Forfeited		(81,531	)		5.15		(96,250	)		7.39		(171,637	)		8.32
Outstanding, end of year		1,494,399		$	3.59		1,215,530		$	3.66		964,530		$	4.38
Options exercisable at year-end		454,761		$	5.06		306,217		$	6.24		253,930		$	7.92
Weighted average fair value of options granted during the year				$	2.07				$	1.51				$	1.05

     A summary of stock option exercises and related proceeds during the years end December 31, 2014, 2013, and 2012 is as follows:

	For the Years Ended December 31,
	2014		2013		2012
Number of options exercised		500		-		-
Cash received	$	975	$	-	$	-
Intrinsic value	$	1,010	$	-	$	-
Tax benefit	$	-	$	-	$	-

The following table summarizes information about options outstanding at December 31, 2014:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted-Average Remaining Contractual Life		Weighted-Average Exercise Price		Shares		Weighted-Average Exercise Price
$1.39 to $2.95		635,125		7.7	$	2.33		129,637	$	2.33
$3.14 to $5.12		665,150		7.6		3.71		131,000		4.43
$5.70 to $8.00		170,350		3.9		6.74		170,350		6.74
$9.93 to $12.13		23,774		1.3		11.36		23,774		11.36
		1,494,399			$	3.59		454,761	$	5.06

A roll-forward of non-vested options during the year ended December 31, 2014 is as follows:

	Number of Shares			Weighted-Average Grant Date Fair Value
Nonvested, beginning of year		909,313		$	1.37
Granted		360,900			2.07
Vested		(209,825	)		1.65
Forfeited		(20,750	)		1.51
Nonvested, end of year		1,039,638		$	1.49