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Employee Benefit Plans

12 Months Ended

Mar. 31, 2016

12. EMPLOYEE BENEFIT PLANS

Retirement Plan - The Riverview Bancorp, Inc. Employees’ Savings and Profit Sharing Plan (the “Plan”) is a defined contribution profit-sharing plan incorporating the provisions of Section 401(k) of the Internal Revenue Code. Company expenses related to the Plan for the years ended March 31, 2016, 2015 and 2014 were $292,000, $212,000 and $195,000, respectively.

Directors’ and Executive Officers’ Deferred Compensation Plan (“Deferred Compensation Plan”) – The Deferred Compensation Plan is a nonqualified deferred compensation plan. Directors may elect to defer their monthly directors’ fees until retirement with no income tax payable by the director until retirement benefits are received. The Chairman, President, and Executive and Senior Vice Presidents of the Company may also defer salary into the Deferred Compensation Plan. The Company accrues annual interest on the unfunded liability under the Deferred Compensation Plan based upon a formula relating to gross revenues, which was 3.64%, 3.36% and 3.18% for the years ended March 31, 2016, 2015 and 2014, respectively. The estimated liability under the plan is accrued as earned by the participant. At March 31, 2016 and 2015, the Company’s aggregate liability under the plan was $361,000 and $302,000, respectively, which is recorded in accrued expenses and other liabilities in the accompanying consolidated balance sheets.

Stock Option Plans - In July 1998, shareholders of the Company approved the adoption of the 1998 Stock Option Plan (“1998 Plan”). The 1998 Plan was effective October 1998 and expired in October 2008. Accordingly, no further option awards may be granted under the 1998 Plan; however, any awards granted prior to its expiration remain outstanding subject to their terms. Each option granted under the 1998 Plan has an exercise price equal to the fair market value of the Company’s common stock on the date of the grant, a maximum term of ten years and a vesting period from zero to five years.

In July 2003, shareholders of the Company approved the adoption of the 2003 Stock Option Plan (“2003 Plan”). The 2003 Plan was effective in July 2003 and expired in July 2013. Accordingly, no further option awards may be granted under the 2003 Plan; however, any awards granted prior to its expiration remain outstanding subject to their terms. Each option granted under the 2003 Plan has an exercise price equal to the fair market value of the Company’s common stock on the date of the grant, a maximum term of ten years and a vesting period from zero to five years.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes stock option valuation model. The fair value of all awards is amortized on a straight-line basis over the requisite service periods, which are generally the vesting periods. The expected life of options granted represents the period of time that they are expected to be outstanding. The expected life is determined based on historical experience with similar options, giving consideration to the contractual terms and vesting schedules. Expected volatility was estimated at the date of grant based on the historical volatility of the Company’s common stock. Expected dividends are based on dividend trends and the market value of the Company’s common stock at the time of grant. The risk-free interest rate for periods within the contractual life of the options is based on the U.S. Treasury yield curve in effect at the time of the grant. During the year ended March 31, 2014, the Company granted 87,154 stock options. The weighted average fair value of stock options granted during the year ended March 31, 2014 was $1.18. The Company did not grant stock options during the years ended March 31, 2016 and 2015.

The Black-Scholes model used the following assumptions for the stock options granted during the year ended March 31, 2014:

Risk Free Interest Rate

Expected

Life (years)

Expected

Volatility

Expected

Dividends

Fiscal 2014

1.95

6.25

51.87

2.04

As of March 31, 2016, all outstanding stock options were fully vested and there was no remaining unrecognized compensation expense. There was no stock-based compensation expense related to stock options for the year ended March 31, 2016. The Company recognized pre-tax compensation expense related to stock options of $26,000 and $78,000 for the years ended March 31, 2015 and 2014, respectively.

The following table presents the activity related to stock options under all plans for the years indicated.

	Year Ended March 31,
	2016				2015				2014
	Number of Shares			Weighted Average Exercise Price	Number of Shares			Weighted Average Exercise Price	Number of Shares			Weighted Average Exercise Price
Balance, beginning of period	424,654		$	8.00	474,654		$	7.91	407,500		$	9.05
Grants	-			-	-			-	87,154			2.78
Options exercised	(18,000	)		3.49	(18,000	)		2.69	-			-
Forfeited	(29,000	)		10.00	(32,000	)		9.55	-			-
Expired	(154,000	)		12.92	-			-	(20,000	)		8.98
Balance, end of period	223,654		$	4.73	424,654		$	8.00	474,654		$	7.91

Additional information regarding stock options outstanding as of March 31, 2016 is as follows:

		Options Outstanding			Options Exercisable
Range of Exercise Price	Weighted Avg Remaining Contractual Life (years)	Number		Weighted Average Exercise Price	Number		Weighted Average Exercise Price




$1.97 - $6.17	4.66	201,154	$	3.82	201,154	$	3.82
$7.49 - $9.51	2.22	2,500		8.12	2,500		8.12
$10.10 - $10.83	1.96	5,000		10.18	5,000		10.18
$12.98 - $14.52	1.23	15,000		14.49	15,000		14.49
	4.34	223,654	$	4.73	223,654	$	4.73

The following table presents information on stock options outstanding for the periods shown, less estimated forfeitures:

	Year Ended March 31, 2016		Year Ended March 31, 2015

Stock options fully vested and expected to vest:
Number		223,654		424,654
Weighted average exercise price	$	4.73	$	8.00
Aggregate intrinsic value ⁽¹⁾	$	147,000	$	225,000
Weighted average contractual term of options (years)		4.34		3.57
Stock options fully vested and currently exercisable:
Number		223,654		424,654
Weighted average exercise price	$	4.73	$	8.00
Aggregate intrinsic value ⁽¹⁾	$	147,000	$	225,000
Weighted average contractual term of options (years)		4.34		3.57

⁽¹⁾ The aggregate intrinsic value of a stock option in the table above represents the total pre-tax intrinsic value (the amount by which the current market value of the underlying stock exceeds the exercise price) that would have been received by the option holders had all option holders exercised. This amount changes based on changes in the market value of the Company’s stock.

The total intrinsic value of stock options exercised was $16,000 and $35,000 for the years ended March 31, 2016 and 2015, respectively. There were no stock options exercised for the year ended March 31, 2014.