Common Stock Warrant and Equity Incentive Plans | 9 Months Ended |
Sep. 30, 2014 |
Text Block [Abstract] | ' |
Common Stock Warrant and Equity Incentive Plans | ' |
Note 9 – Common Stock Warrant and Equity Incentive Plans |
IBC has shareholder-approved equity incentive plans in place under which stock options, restricted stock and other forms of incentive compensation may be awarded from time to time to officers, employees and directors of IBC and its subsidiary. The maximum number of shares of common stock that may be awarded is 2,250,000. At September 30, 2014, 624,703 shares of common stock were available for award. |
Stock Options and Stock Warrant |
There were no awards of options during the quarterly and nine-month periods ended September 30, 2014 and 2013. |
A summary of outstanding common stock options and warrant and related information follows: |
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| | Exercise Price Per Warrant/Option | | | Wtd-Avg. | |
Exercise |
($ in thousands, except per share amounts) | | $5.42 (1) | | | $17.10 | | | $7.50 | | | $4.02 | | | $3.00 | | | $2.55 | | | Total | | | Price |
Outstanding at December 31, 2013 | | | 691,882 | | | | 110,640 | | | | 113,990 | | | | 57,400 | | | | 32,400 | | | | 35,133 | | | | 1,041,445 | | | $ | 6.64 | |
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Repurchased and cancelled | | | (691,882 | ) | | | — | | | | — | | | | — | | | | — | | | | — | | | | (691,882 | ) | | $ | 5.42 | |
Forfeited/expired (2) | | | — | | | | (600 | ) | | | (300 | ) | | | (300 | ) | | | (300 | ) | | | (900 | ) | | | (2,400 | ) | | $ | 7.05 | |
Options exercised | | | — | | | | — | | | | (600 | ) | | | (2,400 | ) | | | (7,500 | ) | | | (6,167 | ) | | | (16,667 | ) | | $ | 3.14 | |
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Outstanding at September 30, 2014 | | | — | | | | 110,040 | | | | 113,090 | | | | 54,700 | | | | 24,600 | | | | 28,066 | | | | 330,496 | | | $ | 9.37 | |
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Expiration date | | | — | | | | 12/13/17 | | | | 12/11/18 | | | | 12/10/19 | | | | 12/9/20 | | | | 12/8/21 | | | | | | | | | |
Vested and exercisable (3) | | | — | | | | 100 | % | | | 100 | % | | | 100 | % | | | 100 | % | | | 67 | % | | | 97 | % | | | | |
Wtd-avg contractual remaining term (in years) | | | — | | | | 3.2 | | | | 4.2 | | | | 5.2 | | | | 6.2 | | | | 7.2 | | | | 4.4 | | | | | |
Intrinsic value at September 30, 2014 (4) | | | — | | | $ | — | | | $ | 233 | | | $ | 303 | | | $ | 161 | | | $ | 197 | | | $ | 894 | | | | | |
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-1 | The U.S. Department of the Treasury, in connection with IBC’s prior participation in the Capital Purchase Program of TARP, had owned a warrant to purchase 691,882 shares of IBC’s common stock at an exercise price of $5.42 per share. On September 3, 2014, IBC repurchased the warrant for a purchase price of $2.9 million and cancelled the warrant. The purchase price was recorded as a reduction in IBC’s stockholders’ equity. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-2 | Represent options forfeited or expired unexercised. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-3 | The $2.55 options further vest and become 100% exercisable on December 8, 2014. Full vesting may occur earlier upon the occurrence of certain events as defined in the option agreement. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
-4 | Intrinsic value was calculated using the closing price of the common stock on September 30, 2014 of $9.56. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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Restricted Stock |
A summary of selected information regarding awards of restricted common stock during the periods covered by this report follows: |
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($ in thousands, except per share amounts) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Grant date of award | | | 1/23/14 | | | | 1/24/13 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total restricted shares of stock awarded (1) | | | 92,000 | | | | 330,700 | | | | | | | | | | | | | | | | | | | | | | | | | |
Grant date per share fair value (2) | | $ | 7.65 | | | $ | 4.5 | | | | | | | | | | | | | | | | | | | | | | | | | |
Total estimated fair value of award | | $ | 703,800 | | | $ | 1,488,150 | | | | | | | | | | | | | | | | | | | | | | | | | |
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Awards scheduled to vest as follows: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jan-14 | | | — | | | | 49,566 | | | | | | | | | | | | | | | | | | | | | | | | | |
Jan-15 | | | 30,664 | | | | 170,888 | | | | | | | | | | | | | | | | | | | | | | | | | |
Jan-16 | | | 30,664 | | | | 110,246 | | | | | | | | | | | | | | | | | | | | | | | | | |
Jan-17 | | | 30,672 | | | | — | | | | | | | | | | | | | | | | | | | | | | | | | |
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| | | 92,000 | | | | 330,700 | | | | | | | | | | | | | | | | | | | | | | | | | |
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-1 | For 2014, awards were as follows: a total of 12,000 shares to five executive officers and a total of 80,000 shares to eight non-employee directors (vesting in three equal installments, with one third on each of the next three anniversary dates of the grant). | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
For 2013, awards were as follows: a total of 182,000 shares to five executive officers (vesting in two installments, with two thirds vesting on the second anniversary of the grant and the remaining one third on the third anniversary of the grant); a total of 80,000 shares to eight non-employee directors and 68,700 shares to other officers and employees (vesting in three equal installments, with one third on each of the first three anniversary dates of the grant). |
-2 | Fair value of each award was based on the closing market price of IBC’s common stock on the grant date. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
A summary of outstanding restricted common stock and related information follows: |
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| | Price Per Share | | | | | | Wtd-Avg. | | | | | | | | | |
Price | | | | | | | | |
| | $2.90 | | | $4.50 | | | $7.21 | | | $7.65 | | | Total | | | Per Share | | | | | | | | |
Outstanding at December 31, 2013 | | | 158,317 | | | | 279,500 | | | | 135,500 | | | | — | | | | 573,317 | | | $ | 4.7 | | | | | | | | | |
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Shares granted | | | — | | | | — | | | | — | | | | 92,000 | | | | 92,000 | | | $ | 7.65 | | | | | | | | | |
Shares forfeited | | | (500 | ) | | | (2,800 | ) | | | — | | | | — | | | | (3,300 | ) | | $ | 4.26 | | | | | | | | | |
Shares vested and no longer restricted | | | (101,035 | ) | | | (47,664 | ) | | | (75,417 | ) | | | — | | | | (224,116 | ) | | $ | 4.69 | | | | | | | | | |
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Outstanding at September 30, 2014 (1) (2) | | | 56,782 | | | | 229,036 | | | | 60,083 | | | | 92,000 | | | | 437,901 | | | $ | 5.33 | | | | | | | | | |
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-1 | All outstanding shares of restricted common stock at September 30, 2014 were unvested and subject to forfeiture. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Shares issued at $2.90 vest: 56,782 on January 19, 2015. |
Shares issued at $4.50 vest: 137,264 on January 24, 2015; 91,772 on January 24, 2016. |
Shares issued at $7.21 vest: 14,584 on January 19, 2015; 30,333 on January 24, 2015; 15,166 on January 24, 2016. |
Shares issued at $7.65 vest: 30,664 on January 23, 2015; 30,664 on January 23, 2016; 30,672 on January 23, 2017. |
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-2 | Vesting is subject to the grantee’s continued employment with us or, in the case of non-employee directors, the grantee’s continued service as our director on the vesting dates. All of the awards are subject to accelerated vesting upon the death or disability of the grantee or upon a change in control of IBC, as defined in the restricted stock award agreements. The record holder of IBC’s restricted shares of common stock possesses all the rights of a holder of our common stock, including the right to receive dividends on the shares when declared and to vote the restricted shares. The restricted shares may not be sold, transferred, pledged, assigned, encumbered, or otherwise alienated or hypothecated until they become fully vested and transferable in accordance with the award agreements. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Stock Appreciations Rights |
On January 23, 2014, Cash-Settled Stock Appreciation Rights (or “SARs”) were awarded to five executive officers in the total amount of 78,000 shares. The SARs have an exercise price of $7.65 per share, a contractual term of 5 years from the date of grant, upon which they expire, and they vest in three equal installments on the first, second and third anniversaries of the grant date. The SARs are exercisable for thirty days after the holder terminates service to our Company, unless such termination is due to the holder’s death or disability, in which case the SARs are exercisable for one year after termination. The SARs give the executive the right to receive upon exercise, an amount payable in cash equal to the number of shares subject to the SAR that is being exercised multiplied by the excess of (a) the fair market value of a share of our common stock on the date the SAR is exercised, over (b) the exercise price specified in the SAR award agreement, which in the case of this award is $7.65. The estimated fair value of each SAR on the date of grant was $2.28, or a total estimated fair value of $178,000 as calculated using the Black-Scholes option pricing model with the following assumptions used as inputs into the model: expected dividend yield of 1.75%; expected stock volatility of 45%; risk-free interest rate of 0.98% and an expected term of 3.5 years. |
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Stock Compensation Expense and Excess Income Tax Benefit |
Stock-based compensation expense related to all equity awards totaled $278,000 and $229,000 for the third quarter of 2014 and 2013, respectively, and $1,052,000 and $731,000 for the nine-months ended September 30, 2014 and 2013, respectively. The expense for the 2014 third quarter and nine-month period included $19,000 and $45,000, respectively, attributable to outstanding cash-settled SARs (all of which were issued in January 2014). At September 30, 2014, pre-tax compensation expense related to all non-vested equity awards not yet recognized totaled $1.8 million and such amount is expected to be recognized in the future over a weighted-average period of approximately 1.7 years. |
Our income taxes payable was reduced by the excess income tax benefit arising from the vesting of restricted common stock awards and the exercise of stock option awards during the reporting periods in this report based on certain criteria as described in note 1 to the financial statements. The tax benefit amounted to $11,000 for the third quarter of 2014 and $5,000 for the third quarter of 2013, and $318,000 and $150,000 for the first nine-months of 2014 and 2013, respectively. |