Stock Compensation Plans

Under the Company’s 2003 Stock Option Plan, the Company was able to grant options for up to 300,000 shares of common stock to employees, officers, directors and directors emeriti. Under the Company's 2014 Equity Incentive Plan, 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, and options generally have a maximum contractual term of ten years from the date of the grant. At September 30, 2019, there were 30,076 shares of common stock available which may be awarded as options or restricted stock pursuant to future grants under the 2014 Equity Incentive Plan.

At both September 30, 2019 and 2018, there were no unvested restricted stock awards. There were no restricted stock grants awarded during the years ended September 30, 2019, 2018 and 2017.

Stock option activity for the years ended September 30, 2019, 2018 and 2017 is summarized as follows:



	Number of Shares		Weighted Average Exercise Price
Outstanding September 30, 2016	373,130		$	9.82
Options granted	58,250		29.69
Options exercised	(46,310	)	7.17
Options forfeited	(4,950	)	6.28
Outstanding September 30, 2017	380,120		13.23

Options granted	45,950		31.80
Options exercised	(40,100	)	7.92
Options forfeited	(5,150	)	13.39
Outstanding September 30, 2018	380,820		16.03

Options granted	46,840		27.14
Options exercised	(43,856	)	9.14
Options forfeited	(5,500	)	19.89
Outstanding September 30, 2019	378,304		$	18.15

The aggregate intrinsic value of options exercised during the years ended September 30, 2019 and 2018 was $864,000 and $894,000, 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 rate of a U.S. Treasury security with a similar term as the expected life of 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. The expected volatility is based on historical volatility of the Company’s stock price. There were 58,250 options granted during the year ended September 30, 2017 with an aggregate grant date fair value of $224,000. There were 45,950 options granted during the year ended September 30, 2018 with an aggregate grant date fair value of $206,000. There were 46,840 options granted during the year ended September 30, 2019 with an aggregate grant date fair value of $240,000.

The weighted average assumptions for options granted during the years ended September 30, 2019, 2018 and 2017 were as follows:



	2019			2018			2017
Expected volatility	29		%	17		%	16		%
Expected life (in years)	5			5			5
Expected dividend yield	3.28		%	2.61		%	1.85		%
Risk free interest rate	1.53		%	2.97		%	1.89		%
Grant date fair value per share	$	5.12		$	4.48		$	3.84

There were 77,540 options that vested during the year ended September 30, 2019 with a total fair value of $203,000. There were 76,450 options that vested during the year ended September 30, 2018 with a total fair value of $181,000. There were 69,800 options that vested during the year ended September 30, 2017 with a total fair value of $145,000.

At September 30, 2019, there were 160,750 unvested options with an aggregate grant date fair value of $605,000, all of which the Company assumes will vest. The unvested options had an aggregate intrinsic value of $658,000 at September 30, 2019. At September 30, 2018, there were 196,750 unvested options with an aggregate grant date fair value of $582,000.

Additional information regarding options outstanding at September 30, 2019 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	2,500	$	4.33	0.9	2,500	$	4.33	0.9
5.86 - 6.00	19,100	5.97		3.1	19,100	5.97		3.1
9.00	49,975	9.00		4.1	49,975	9.00		4.1
10.26 - 10.71	110,839	10.58		5.5	87,589	10.57		5.5
15.67	48,000	15.67		7.0	27,000	15.67		7.0
27.14	46,840	27.14		10.0	—	N/A		N/A
29.69	55,600	29.69		8.0	22,300	29.69		8.0
31.80	45,450	31.80		9.0	9,090	31.80		9.0
	378,304	$	18.15	6.7	217,554	$	13.21	5.5

The aggregate intrinsic value of options outstanding at September 30, 2019, 2018 and 2017 was $3,854,000, $5,813,000, and $6,882,000, respectively.

As of September 30, 2019, unrecognized compensation cost related to non-vested stock options was $604,000, which is expected to be recognized over a weighted average period of 2.45 years.