Stock Compensation Plans

Under the Company’s prior stock compensation plans (1999 Stock Option Plan, 2003 Stock Option Plan and the MRDP), the Company was able to grant options and awards for restricted stock for up to 2,151,500 shares of common stock to employees, officers, directors and directors emeriti. Under the Company's 2014 Equity Incentive Plan, which was approved by shareholders on January 27, 2015, the Company is able to grant options and awards of restricted stock (with or without performance measures) for up to 352,366 shares of common stock to employees, officers, directors and directors emeriti. Shares issued may be purchased in the open market or may be issued from authorized and unissued shares. The exercise price of each option equals the fair market value of the Company’s common stock on the date of grant. Generally, options and restricted stock vest in 20% annual installments on each of the five anniversaries from the date of the grant. At September 30, 2015, there were 224,366 shares of restricted stock or options for common shares available for future grant under the 2014 Equity Incentive Plan. At September 30, 2015, there were no options or awards for restricted stock available for future grant under the 1999 Stock Option Plan, the 2003 Stock Option Plan, or the MRDP.

Stock Options

Stock option activity for the years ended September 30, 2015, 2014 and 2013 is summarized as follows:



	Number of Shares		Weighted Average Exercise Price
Outstanding September 30, 2012	195,626		$	7.97
Options granted	29,000		6.00
Options forfeited	(61,680	)	9.69
Outstanding September 30, 2013	162,946		6.96

Options granted	135,000		9.29
Options exercised	(5,000	)	4.66
Options forfeited	(71,546	)	9.87
Outstanding September 30, 2014	221,400		7.49

Options granted	128,000		10.62
Options exercised	(6,300	)	4.84
Options forfeited	(1,800	)	4.55
Outstanding September 30, 2015	341,300		$	8.73

The aggregate intrinsic value of options exercised during the years ended September 30, 2015 and 2014 was $36,000 and $25,000, respectively.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock-based awards with the weighted average assumptions noted in the following table. The risk-free interest rate is based on the U.S. Treasury rate of a similar term

as the stock option at the particular grant date. The expected life is based on historical data, vesting terms and estimated exercise dates. The expected dividend yield is based on the most recent quarterly dividend on an annualized basis in effect at the time the options were granted, adjusted, if appropriate, for management's expectations regarding future dividends. At the time the options were granted for the year ended September 30, 2013, the Company was under regulatory restrictions prohibiting the payment of dividends. Since management did not know when the Company would be allowed to pay dividends, an expected dividend yield of 0% was used. The expected volatility is based on historical volatility of the Company’s stock price. There were 29,000 options granted during the year ended September 30, 2013 with an aggregate grant date fair value of $69,000. There were 135,000 options granted during the year ended September 30, 2014 with an aggregate grant date fair value of $349,000. There were 128,000 options granted during the year ended September 30, 2015 with an aggregate grant date fair value of $241,000. The weighted average assumptions for options granted during the years ended September 30, 2015, 2014 and 2013 were as follows:



	2015			2014			2013
Expected volatility	28		%	39		%	45		%
Expected term (in years)	5			5			5
Expected dividend yield	3.31		%	2.51		%	—		%
Risk free interest rate	1.43		%	1.41		%	0.76		%
Grant date fair value per share	$	1.88		$	2.59		$	2.37

There were 42,900 options that vested during the year ended September 30, 2015 with a total fair value of $100,000. There were 43,800 options that vested during the year ended September 30, 2014 with a total fair value of $80,000. There were 17,300 options that vested during the year ended September 30, 2013 with a total fair value of $32,000.

At September 30, 2015 there were 262,700 unvested options with an aggregate grant date fair value of $574,000, all of which the Company assumes will vest. The unvested options had an aggregate intrinsic value of $390,000 at September 30, 2015. At September 30, 2014 there were 177,600 unvested options with an aggregate grant date fair value of $434,000.

Additional information regarding options outstanding at September 30, 2015 is as follows:



	Options Outstanding				Options Exercisable
Range of Exercise Prices ($)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
$ 4.01 - 4.55	31,600	$	4.23	5.3	24,000	$	4.30	5.0
5.86 - 6.00	59,700	5.92		7.0	30,200	5.91		7.0
9.00	96,000	9.00		8.1	19,200	9.00		8.1
10.26 - 10.71	154,000	10.57		9.6	5,200	10.34		8.6
	341,300	$	8.73	8.3	78,600	$	6.47	6.8

The aggregate intrinsic value of options outstanding at September 30, 2015, 2014 and 2013 was $738,000, $675,000, and $443,000, respectively.

Restricted Stock Grants

A summary of restricted stock grant shares vested for the years ended September 30, 2014 and 2013 were as follows:



	2014		2013
Shares vested	3,254		6,207
Aggregate vesting date fair value	$	30,000	$	38,000

At both September 30, 2015 and 2014 there were no unvested restricted stock grant shares. There were no restricted stock grants awarded during the years ended September 30, 2015, 2014 and 2013.

Expense for Stock Compensation Plans

Compensation expense recorded in the consolidated financial statements for all stock-based plans was as follows for the years ended September 30, 2015, 2014 and 2013 (dollars in thousands):



	2015			2014			2013
Stock options	$	127		$	112		$	49
Restricted stock grants	—			2			39
Less: related tax benefit recognized	(2		)	(10		)	(8		)
	$	125		$	104		$	80

The compensation expense to be recognized in the future years ending September 30 for stock options that had been awarded as of September 30, 2015 is as follows (in thousands):




2016	$	151
2017	144
2018	113
2019	55
2020	33
	$	496