Unassociated Document
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 10-Q


(Mark One)
( X )            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                              OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2009

OR

(   )            TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                               OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from               to______

Commission File Number 0-25923

Eagle Bancorp, Inc.
(Exact name of registrant as specified in its charter)
 
Maryland
52-2061461
(State or other jurisdiction of
(I.R.S. Employer
incorporation or organization)
Identification No.)
 
 
7815 Woodmont Avenue, Bethesda, Maryland
20814
(Address of principal executive offices)
(Zip Code)
          
(301) 986-1800
(Registrant's telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes [x]       No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ]
Accelerated filer [x]
Non-accelerated filer [ ]
Smaller Reporting Company [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act
Yes [ ]           No [x]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.


As of May 8, 2009, the registrant had 12,745,118 shares of Common Stock outstanding.

1
EAGLE BANCORP, INC.
TABLE OF CONTENTS

PART I.
    
       
Item 1.
    
     
     
     
     
     
       
Item 2.
    
     
     
     
       
Item 3.
    
       
Item 4.
    
       
PART II.
    
       
Item 1.
    
       
Item 1A.
    
       
Item 2.
    
       
Item 3.
    
       
Item 4.
    
       
Item 5.
    
       
Item 6.
    
       
     



2
Item 1 – Financial Statements
EAGLE BANCORP, INC.
Consolidated Balance Sheets
March 31, 2009 and December 31, 2008
(dollars in thousands, except per share data)
 
   
March 31,
    
December 31,
  
   
2009
    
2008
  
ASSETS
  
(unaudited)
    
(audited)
  
Cash and due from banks
   $ 27,322     $ 27,157  
Federal funds sold
     6,147       191  
Interest bearing deposits with banks and other short-term investments
     3,538       2,489  
Investment securities available for sale, at fair value
     158,976       169,079  
Loans held for sale
     2,832       2,718  
Loans
     1,267,958       1,265,640  
Less allowance for credit losses
     (19,051 )     (18,403 )
Loans, net
     1,248,907       1,247,237  
Premises and equipment, net
     9,488       9,666  
Deferred income taxes
     10,878       11,106  
Bank owned life insurance
     12,564       12,450  
Other real estate owned
     3,289       909  
Other assets
     11,833       13,825  
           TOTAL ASSETS
   $ 1,495,774     $ 1,496,827  
                 
LIABILITIES
                
Deposits:
                
Noninterest bearing demand
   $ 232,725     $ 223,580  
Interest bearing transaction
     47,840       54,801  
Savings and money market
     303,022       271,791  
Time, $100,000 or more
     256,506       249,516  
Other time
     308,625       329,692  
Total deposits
     1,148,718       1,129,380  
Customer repurchase agreements
                
and federal funds purchased
     120,918       98,802  
Other short-term borrowings
     10,000       55,000  
Long-term borrowings
     62,150       62,150  
Other liabilities
     9,459       9,124  
Total liabilities
     1,351,245       1,354,456  
                 
STOCKHOLDERS' EQUITY
                
Preferred stock, par value $.01 per share, shares authorized
                
     1,000,000, Series A, $1,000 per share liquidation preference,
                
     shares issued and outstanding 38,235 and 38,235 respectively,
                
     discount of $1,809 and $1,892, respectively, net
     36,374       36,312  
Common stock, $.01 par value; shares authorized 50,000,000, shares
                
 issued and outstanding  12,745,118 (2009) and 12,714,355 (2008)
     127       127  
Warrants
     1,892       1,892  
Additional paid in capital
     76,958       76,822  
Retained earnings
     26,486       24,866  
Accumulated other comprehensive income
     2,692       2,352  
Total stockholders' equity
     144,529       142,371  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 1,495,774     $ 1,496,827  
 
See notes to consolidated financial statements.
 
3
EAGLE BANCORP, INC.
Consolidated Statements of Operations
For the Three Month Periods Ended March 31, 2009 and 2008 (unaudited)
 (dollars in thousands, except per share data)

Interest Income
  
2009
    
2008
  
Interest and fees on loans
   $ 18,113     $ 12,880  
Interest and dividends on investment securities
     1,929       1,052  
Interest on balances with other banks and short-term investments
     19       43  
Interest on federal funds sold
     6       39  
Total interest income
     20,067       14,014  
Interest Expense
                
Interest on deposits
     5,557       4,428  
Interest on customer repurchase agreements and
                
federal funds purchased
     281       394  
Interest on other short-term borrowings
     40       190  
Interest on long-term borrowings
     726       402  
Total interest expense
     6,604       5,414  
Net Interest Income
     13,463       8,600  
Provision for Credit Losses
     1,566       720  
Net Interest Income After Provision For Credit Losses
     11,897       7,880  
                 
Noninterest Income
                
Service charges on deposits
     738       358  
Gain on sale of loans
     131       127  
Gain on sale of investment securities
     132       10  
Increase in the cash surrender value of bank owned life insurance
     114       116  
Other income
     317       329  
Total noninterest income
     1,432       940  
Noninterest Expense
                
Salaries and employee benefits
     5,305       3,640  
Premises and equipment expenses
     1,875       1,080  
Marketing and advertising
     315       81  
Data processing
     547       340  
Legal, accounting and professional fees
     590       170  
FDIC insurance and regulatory assessments
     476       126  
Other expenses
     1,185       771  
Total noninterest expense
     10,293       6,208  
Income Before Income Tax Expense
     3,036       2,612  
Income Tax Expense
     961       961  
Net Income
     2,075       1,651  
Preferred Stock Dividends and Discount Accretion
     583       -  
Net Income Available to Common Shareholders
   $ 1,492     $ 1,651  
                 
Earnings Per Common Share
                
Basic
   $ 0.12     $ 0.15  
Diluted
   $ 0.12     $ 0.15  
Dividends Declared Per Common Share
   $ -     $ 0.0545  
 
See notes to consolidated financial statements.
 
4
EAGLE BANCORP, INC.
Consolidated Statements of Cash Flows
For the Three Month Periods Ended March 31, 2009 and 2008 (unaudited)
 (dollars in thousands, except per share data)

   
2009
    
2008
  
Cash Flows From Operating Activities:
            
Net income
   $ 2,075     $ 1,651  
Adjustments to reconcile net income to net cash
                
provided by (used in) operating activities:
                
Provision for credit losses
     1,566       720  
Depreciation and amortization
     580       332  
Gains on sale of loans
     (131 )     (127 )
Origination of loans held for sale
     (10,405 )     (10,423 )
Proceeds from sale of loans held for sale
     10,422       10,782  
Increase in cash surrender value of BOLI
     (114 )     (116 )
Gain on sale of investment securities
     (132 )     (10 )
Stock-based compensation expense
     136       33  
Excess tax benefit from exercise of non-qualified stock options
     -       (132 )
Decrease in other assets
     159       268  
Increase in other liabilities
     335       705  
Net cash provided by operating activities
     4,491       3,683  
                 
Cash Flows From Investing Activities:
                
(Increase) decrease in interest bearing deposits with other banks
          
 and short term investments
     (1,049 )     2,260  
Purchases of available for sale investment securities
     (6,366 )     (5,351 )
Proceeds from maturities of available for sale securities
     1,000       2,755  
Proceeds from sale/call of available for sale securities
     15,601       8,010  
Net increase in loans
     (3,236 )     (42,894 )
Bank premises and equipment acquired
     (402 )     (76 )
Net cash provided by (used in)  investing activities
     5,548       (35,296 )
                 
Cash Flows From Financing Activities:
                
Increase in deposits
     19,338       54,804  
Increase (decrease) in customer repurchase agreements and
          
 federal funds purchased
     22,116       (14,681 )
Decrease in other short-term borrowings
     (45,000 )     -  
Increase in long-term borrowings
     -       10,000  
Payment of dividends on preferred stock
     (372 )     -  
Issuance of common stock
     -       424  
Excess tax benefit from exercise of non-qualified stock options
     -       132  
Payment of dividends and payment in lieu of fractional shares
     -       (588 )
Net cash (used in) provided by financing activities
     (3,918 )     50,091  
                 
Net Increase In Cash And Due From Banks
     6,121       18,478  
                 
Cash And Due From Banks At Beginning Of Period
     27,348       15,652  
                 
Cash and Due from Banks At End Of Period
   $ 33,469     $ 34,130  
                 
Supplemental Cash Flows Information:
                
    Interest paid
   $ 6,244     $ 5,124  
    Income taxes paid
   $ 306     $ 675  
Non-Cash Investing Activities
                
  Transfers from loans to other real estate owned
   $ 2,380     $ -  
 
See notes to consolidated financial statements.
 
5
EAGLE BANCORP, INC.
Consolidated Statements of Changes in Stockholders’ Equity
For the Three Month Periods Ended March 31, 2009 and 2008 (unaudited)
 (dollars in thousands, except per share data)

                                 
Accumulated
        
                                 
Other
    
Total
  
   
Preferred
  
Common
          
Additional Paid
    
Retained
    
Comprehensive
    
Stockholders'
  
   
Stock
    
Stock
    
Warrants
  
in Capital
    
Earnings
    
Income (Loss)
    
Equity
  
Balance, January 1, 2009
   $ 36,312     $ 127     $ 1,892     $ 76,822     $ 24,866     $ 2,352     $ 142,371  
Comprehensive Income
                                                        
Net Income
                                     2,075               2,075  
Other comprehensive income:
                                                        
Unrealized gain on securities available for sale
(net of taxes)
                               424       424  
Less: reclassification adjustment for gains net
of taxes of $48 included in net income
               (84 )     (84 )
Total Comprehensive Income
                          
`
                       2,415  
Preferred stock dividends  ($9.72 per share)
                                     (372 )             (372 )
Stock-based compensation
                             136                       136  
Preferred stock issued pursuant to:
                                                        
     Issuance costs
     (21 )                                             (21 )
     Discount accretion
     83                               (83 )             -  
Balance, March  31, 2009
   $ 36,374     $ 127     $ 1,892     $ 76,958     $ 26,486     $ 2,692     $ 144,529  
                                                         
Balance, January 1, 2008
   $ -     $ 97     $ -     $ 52,290     $ 28,195     $ 584     $ 81,166  
Comprehensive Income
                                                        
Net Income
                                     1,651               1,651  
Other comprehensive income:
                                                        
Unrealized gain on securities available for sale
(net of taxes)
                               725       725  
Less: reclassification adjustment for gains net
of taxes of $4 included in net income
               (6 )     (6 )
Total Comprehensive Income
                          
`
                       2,370  
Cash Dividend ($0.0545 per share)
                                     (588 )             (588 )
Shares issued under dividend reinvestment plan -
                               .                  
22,134 shares
                             261                       261  
Stock-based compensation
                             33                       33  
Exercise of options for 46,803 shares of common stock
     -       1       -       162                       163  
Tax benefit on non-qualified options exercise
                             132                       132  
Balance, March  31, 2008
   $ -     $ 98     $ -     $ 52,878     $ 29,258     $ 1,303     $ 83,537  
 
See notes to consolidated financial statements.
 
6
EAGLE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ended March 31, 2009 and 2008 (unaudited)


1. BASIS OF PRESENTATION

The consolidated financial statements of Eagle Bancorp, Inc. (the “Company”) included herein are unaudited.  The consolidated financial statements reflect all adjustments, consisting only of normal recurring accruals that in the opinion of Management, are necessary to present fairly the results for the periods presented. The amounts as of and for the year ended December 31, 2008 were derived from audited consolidated financial statements. Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. There have been no significant changes to the Company’s Accounting Policies as disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.  The Company believes that the disclosures are adequate to make the information presented not misleading. The results of operations for the three months ended March 31, 2009 are not necessarily indicative of the results of operations to be expected for the remainder of the year, or for any other period. Certain reclassifications have been made to amounts previously reported to conform to the classifications made in 2009.

2. NATURE OF OPERATIONS

The Company, through EagleBank, its bank subsidiary (the “Bank”), conducts a full service community banking business, primarily in Montgomery County, Maryland, Washington, D.C. and Fairfax County in Northern Virginia. On August 31, 2008, the Company completed the acquisition of Fidelity & Trust Financial Corporation (“Fidelity”) and Fidelity & Trust Bank (“F&T Bank”).  The primary financial services offered by the Bank include real estate, commercial and consumer lending, as well as traditional deposit and repurchase agreement products. The Bank is also active in the origination and sale of residential mortgage loans and the origination of small business loans. The guaranteed portion of small business loans is typically sold through the Small Business Administration, in a transaction apart from the loan’s origination. The Bank currently offers its products and services through thirteen banking offices and various electronic capabilities, including remote deposit services. Eagle Commercial Ventures, LLC (“ECV”), a direct subsidiary of the Company provides subordinated financing for the acquisition, development and construction of real estate projects, where the primary financing is provided by the Bank. Refer to Note 4 - Higher Risk Lending – Revenue Recognition below.

3. CASH FLOWS

For purposes of reporting cash flows, cash and cash equivalents include cash and due from banks, and federal funds sold (items with an original maturity of three months or less).

 
4. HIGHER RISK LENDING – REVENUE RECOGNITION

The Company has occasionally made higher risk acquisition, development, and construction (“ADC”) loans that entail higher risks than ADC loans made following normal underwriting practices (“higher risk loan transactions”). These higher risk loan transactions are made through the Company’s subsidiary, ECV. This activity is limited as to individual transaction amount and total exposure amounts based on capital levels and is carefully monitored. The loans are carried on the balance sheet at amounts outstanding and meet the loan classification requirements of the Accounting Standards Executive Committee (“AcSEC”) guidance reprinted from the CPA Letter, Special Supplement, dated February 10, 1986 (also referred to as Exhibit 1 to AcSEC Practice Bulletin No. 1). Additional interest earned on these higher risk loan transactions (as defined in the individual loan agreements) is recognized as realized under the provisions contained in  Exhibit 1 to AcSEC Practice Bulletin No.1 and Staff Accounting Bulletin No. 101 (Revenue Recognition in Financial Statements). The additional interest is included as a component of noninterest income. The Bank had one higher risk lending transaction, amounting to $1.7 million and $1.8 million, outstanding as of March 31, 2009 and December 31, 2008, respectively.
 
7
5. OTHER REAL ESTATE OWNED (OREO)

Assets acquired through loan foreclosure are held for sale and are initially recorded at the lower of cost or fair value less estimated selling costs when acquired, establishing a new cost basis. The new basis is supported by recent appraisals. Costs after acquisition are generally expensed. If the fair value of the asset declines, a write-down is recorded through expense. The valuation of foreclosed assets is subjective in nature and may be adjusted in the future because of changes in economic conditions or review by regulatory examiners.

 
6. INVESTMENT SECURITIES AVAILABLE FOR SALE
 
Amortized cost and estimated fair value of securities available for sale are summarized as follows:
 
         
Gross
    
Gross
    
Estimated
  
   
Amortized
    
Unrealized
    
Unrealized
    
Fair
  
March 31, 2009
  
Cost
    
Gains
    
Losses
    
Value
  
(dollars in thousands)
                        
U. S. Government agency securities
   $ 59,467     $ 1,711     $ -     $ 61,178  
Mortgage backed securities - GSEs
     81,070       3,048       -       84,118  
Municipal bonds
     5,060       -       217       4,843  
Federal Reserve and Federal Home Loan Bank stock
     8,470       -       -       8,470  
Other equity investments
     396       -       29       367  
    $ 154,463     $ 4,759     $ 246     $ 158,976  
 
         
Gross
    
Gross
    
Estimated
  
   
Amortized
    
Unrealized
    
Unrealized
    
Fair
  
December 31, 2008
  
Cost
    
Gains
    
Losses
    
Value
  
(dollars in thousands)
                        
U. S. Government agency securities
   $ 71,837     $ 2,197     $ 5     $ 74,029  
Mortgage backed securities - GSEs
     77,242       2,559       31       79,770  
Municipal bonds
     5,061       -       353       4,708  
Federal Reserve and Federal Home Loan Bank stock
     9,599       -       -       9,599  
Other equity investments
     1,396       -       423       973  
    $ 165,135     $ 4,756     $ 812     $ 169,079  
 
8
Gross unrealized losses and fair value by length of time that the individual available securities have been in a continuous unrealized loss position are as follows:
 
   
Estimated
                
Gross
  
   
Fair
    
Less than
    
More than
    
Unrealized
  
March 31, 2009
  
Value
    
12 months
    
12 months
    
Losses
  
(dollars in thousands)
                        
Municipal bonds
   $ 4,843     $ 217     $ -     $ 217  
Other equity investments
     149       29       -       29  
    $ 4,992     $ 246     $ -     $ 246  
 
   
Estimated
                
Gross
  
   
Fair
    
Less than
    
More than
    
Unrealized
  
December 31, 2008
  
Value
    
12 months
    
12 months
    
Losses
  
(dollars in thousands)
                        
U. S. Government agency securities
   $ 4,480     $ 5     $ -     $ 5  
Mortgage backed securities - GSEs
     7,715       31       -       31  
Municipal bonds
     4,707       353       -       353  
Other equity investments
     576       423       -       423  
    $ 17,478     $ 812     $ -     $ 812  
 
The unrealized losses that exist are the result of changes in market interest rates since original purchases.  Except for one municipal bond issue which has an underlying rating of AA, all of the remaining bonds are rated AAA. The weighted average duration of debt securities, which comprise 94% of total investment securities, is relatively short at 1.8 years. These factors, coupled with the Company’s ability and intent to hold these investments for a period of time sufficient to allow for any anticipated recovery in fair value substantiates that the unrealized losses are temporary in nature.
 
7. INCOME TAXES
 
The Company employs the liability method of accounting for income taxes as required by Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes.” Under the liability method, deferred tax assets and liabilities are determined based on differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities (i.e., temporary differences) and are measured at the enacted rates that will be in effect when these differences reverse. The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” in the first quarter of 2007. The Company utilizes statutory requirements for its income tax accounting, and avoids risks associated with potentially problematic tax positions that may incur challenge upon audit, where an adverse outcome is more likely than not. Therefore, no provisions are made for either uncertain tax positions or accompanying potential tax penalties and interest for underpayments of income taxes in the Company’s tax reserves. In accordance with SFAS No.109, the Company may establish a reserve against deferred tax assets in those cases where realization is less than certain.
 
9
8. EARNINGS PER SHARE

The calculation of net income per common share for the three months ended March 31 was as follows:
 
(dollars and shares in thousands)
  
2009
    
2008
  
Basic:
            
Net income allocable to common stockholders
   $ 1,492     $ 1,651  
Average common shares outstanding
     12,743       10,759  
Basic net income per common  share
   $ 0.12     $ 0.15  
                 
Diluted:
                
Net income allocable to common stockholders
   $ 1,492     $ 1,651  
Average common shares outstanding
     12,743       10,759  
Adjustment for common share equivalents
     51       91  
Average common shares outstanding-diluted
     12,794       10,850  
Diluted net income per common share
   $ 0.12     $ 0.15  
 
Per share amounts and the number of outstanding shares have been adjusted to give effect to the 10% stock dividend paid on October 1, 2008.
 
There were 1,616,466 and 325,518 common share equivalents at March 31, 2009 and March 31, 2008, respectively, that were excluded from the diluted net income per common share computation because their effects were anti-dilutive.

9. STOCK-BASED COMPENSATION

The Company maintains the 1998 Stock Option Plan (“1998 Plan”) and the 2006 Stock Plan (“2006 Plan”). No additional options may be granted under the 1998 Plan. ..

The 2006 Plan provides for the issuance of awards of incentive options, nonqualifying options, restricted stock and stock appreciation rights with respect to up to 650,000 shares to selected key employees and members of the Board. Option awards were made with an exercise price equal to the market price of the Company’s shares at the date of grant.

In January 2009, the Company awarded options to purchase 315,437 shares of common stock and 30,763 shares of restricted stock to employees, senior officers and to a Director. Of the total options awarded, 263,700 have a ten-year term and vest in five substantially equal installments beginning on the first year anniversary of the date of grant. The remaining options have a ten-year term and vest over a four-year period beginning on the seventh year anniversary of the date of grant. The restricted stock is service based, which vest in five substantially equal installments beginning on the first year anniversary of the date of grant. The restricted stock is being recognized as compensation expense over a five-year period based on the market value of shares at the date of grant.

 The fair value of each option grant and other equity based award is estimated on the date of grant using the Black-Scholes option pricing model with the assumptions as shown in the table below used for grants during the three months ended March 31, 2009 and the twelve months ended December 31, 2008 and 2007.

Below is a summary of changes in shares under option (split adjusted) for the three months ended March 31, 2009. The information excludes restricted stock unit awards.
 
10
               
Weighted-Average
    
Weighted-Average
    
Aggregate
  
         
Weighted-Average
    
Remaining
    
Grant Date
    
Intrinsic
  
As of 1/1/2009
  
Stock Options
    
Exercise Price
    
Contractual Life
    
Fair Value
    
Value
  
Outstanding
     1,029,067     $ 13.01       -     $ 2.57       -  
Vested
     800,058       13.05       -       2.43       -  
Nonvested
     229,009       12.85       -       3.07       -  
                                         
Period Activity
                                        
Issued
     315,437     $ 6.34       -     $ 1.99       -  
Exercised
     -       -       -       -       -  
Forfeited
     1,596       13.50       -       2.56       -  
Expired
     659       12.66       -       2.36       -  
                                         
As of 3/31/2009
                                        
Outstanding
     1,342,249     $ 11.44       5.54     $ 2.44     $ 327,206  
Vested
     865,128       13.04       4.10       2.44       327,086  
Nonvested
     477,121       8.53       8.14       2.44       120  
 
Outstanding:
      
Weighted-Average
Range of
    
Stock Options
Weighted-Average
Remaining
Exercise Prices
  
Outstanding
Exercise Price
Contractual Life
$2.98      -
$8.10
  
560,972
$  5.90
  6.58
$8.11      -
$11.07
  
250,675
  10.25
  5.20
$11.08    -
$15.43
  
250,863
  13.01
  4.32
$15.44    -
$26.86
  
279,739
  22.21
  4.84
     
1,342,249
  11.44
  5.54
           
Exercisable:
          
Range of
    
Stock Options
Weighted-Average
  
Exercise Prices
  
Exercisable
Exercise Price
  
$2.98      -
$8.10
  
222,189
$  5.05
  
$8.11      -
$11.07
  
248,674
  10.25
  
$11.08    -
$15.43
  
134,838
  12.93
  
$15.44    -
$26.86
  
259,427
  22.62
  
     
865,128
  13.04
  
 
Assumptions:
        
     
Three Months Ended
Year Ended
Year Ended
     
March 31, 2009
2008
2007
Expected Volatility
  
25.9% - 25.9%
23.7% - 78.5%
18.5% - 24.4%
Weighted-Average Volatility
25.90%
35.47%
20.12%
Expected Dividends
  
0.0%
0.8%
1.4%
Expected Term (In years)
7.0 - 8.5
0.1 - 9.0
3.1 - 4.0
Risk-Free Rate
  
0.83%
2.54%
4.73%
Weighted-Average Fair Value (Grant date)
$  1.99
$  1.30
$  4.40
 
Total intrinsic value of options exercised:
   $ -  
Total fair value of shares vested:
   $           203,016  
Weighted-average period over which nonvested awards are expected to be recognized:
    
3.02 years
  
 
11
The expected lives are based on the “simplified” method allowed by SAB No. 107, whereby the expected term is equal to the midpoint between the vesting date and the end of the contractual term of the award.

Included in salaries and employee benefits the Company recognized $136 thousand ($0.01 per share) and $33 thousand ($0.00 per share) in share based compensation expense for the three months ended March 31, 2009 and 2008, respectively. As of March 31, 2009 there was $1.3 million of total unrecognized compensation cost related to non-vested equity awards under the Company’s various share based compensation plans. The $1.3 million of unrecognized compensation expense is being amortized over the remaining requisite service (vesting) periods through 2018.

10. NEW ACCOUNTING PRONOUNCEMENTS

 
Recent Accounting Pronouncements Adopted
 
In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS 141(R), “Business Combinations (Revised 2007) (“SFAS 141R”).  SFAS 141R replaces SFAS 141, “Business Combinations,” and applies to all transactions and other events in which one entity obtains control over one or more other businesses. SFAS 141R requires an acquirer, upon initially obtaining control of another entity, to recognize the assets, liabilities and any non-controlling interest in the acquiree at fair value as of the acquisition date. Contingent consideration is required to be recognized and measured at fair value on the date of acquisition rather than at a later date when the amount of that consideration may be determinable beyond a reasonable doubt. This fair value approach replaces the cost-allocation process required under SFAS 141 whereby the cost of an acquisition was allocated to the individual assets acquired and liabilities assumed based on their estimated fair value. SFAS 141R requires acquirers to expense acquisition-related costs as incurred rather than allocating such costs to the assets acquired and liabilities assumed, as was previously the case under SFAS 141. Under SFAS 141R, the requirements of SFAS 146, “Accounting for Costs Associated with Exit or Disposal Activities,” would have to be met in order to accrue for a restructuring plan in purchase accounting. Pre-acquisition contingencies are to be recognized at fair value, unless it is a non-contractual contingency that is not likely to materialize, in which case, nothing should be recognized in purchase accounting and, instead, that contingency would be subject to the probable and estimable recognition criteria of SFAS 5, “Accounting for Contingencies.” SFAS 141R is expected to have a significant impact on the Company’s accounting for business combinations closing on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interest in Consolidated Financial Statements, an amendment of ARB Statement No. 51. (“SFAS 160”).  SFAS 160 amends Accounting Research Bulletin (ARB) No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the non-controlling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a non-controlling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the non-controlling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the non-controlling interest. SFAS 160 was effective for the Company on January 1, 2009 and did not have a significant impact on the Company’s financial statements.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133” (“SFAS 161”).  SFAS 161 is intended to enhance the current disclosure framework previously required for derivative instruments and hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activ