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720p medium quality

ffmpeg -i IN.MTS -threads 6 -y -vcodec libx264 -acodec aac -strict -2 -ab 128k -ar 44100 -ac 2 -s 1280x720 -b:v 1M out.mp4

720p high quality

ffmpeg -i IN.MTS -threads 6 -y -vcodec libx264 -acodec aac -strict -2 -ab 128k -ar 44100 -ac 2 -s 1280x720 -b:v 2M out.mp4

1080p medium quality

fmpeg -i IN.MTS -threads 6 -y -vcodec libx264 -acodec aac -strict -2 -ab 128k -ar 44100 -ac 2 -s 1920x1080 -b:v 1.5M out_1080.mp4

1080p high quality

fmpeg -i IN.MTS -threads 6 -y -vcodec libx264 -acodec aac -strict -2 -ab 128k -ar 44100 -ac 2 -s 1920x1080 -b:v 3M out_1080.mp4

ffmpeg version:

ffmpeg -version
ffmpeg version 2.3.1 Copyright (c) 2000-2014 the FFmpeg developers
built on Aug  5 2014 19:11:58 with Apple LLVM version 5.1 (clang-503.0.40) (based on LLVM 3.4svn)
configuration: --prefix=/opt/local --enable-swscale --enable-avfilter --enable-avresample --enable-libmp3lame --enable-libvorbis --enable-libopus --enable-libtheora --enable-libschroedinger --enable-libopenjpeg --enable-libmodplug --enable-libvpx --enable-libspeex --enable-libass --enable-libbluray --enable-gnutls --enable-fontconfig --enable-libfreetype --enable-libfribidi --disable-indev=jack --disable-outdev=xv --mandir=/opt/local/share/man --enable-shared --enable-pthreads --cc=/usr/bin/clang --enable-vda --arch=x86_64 --enable-yasm --enable-gpl --enable-postproc --enable-libx264 --enable-libxvid
libavutil      52. 92.100 / 52. 92.100
libavcodec     55. 69.100 / 55. 69.100
libavformat    55. 48.100 / 55. 48.100
libavdevice    55. 13.102 / 55. 13.102
libavfilter     4. 11.100 /  4. 11.100
libavresample   1.  3.  0 /  1.  3.  0
libswscale      2.  6.100 /  2.  6.100
libswresample   0. 19.100 /  0. 19.100
libpostproc    52.  3.100 / 52.  3.100