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, 2020, 2019 and 2018 were $561,000, $527,000 and $547,000, 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 4.46%, 4.28% and 3.99% for the years ended March 31, 2020, 2019 and 2018, respectively. The estimated liability under the Deferred Compensation Plan is accrued as earned by the participants. At March 31, 2020 and 2019, the Company’s aggregate liability under the Deferred Compensation Plan was $263,000 and $186,000, respectively, which is recorded in accrued expenses and other liabilities in the accompanying consolidated balance sheets.

Stock Option Plans – 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 their respective expiration dates 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.

In July 2017, the shareholders of the Company approved the Riverview Bancorp, Inc. 2017 Equity Incentive Plan (“2017 Plan”). The 2017 Plan provides for the grant of incentive stock options, non-qualified stock options, restricted stock and restricted stock units. The Company has reserved 1,800,000 shares of its common stock for issuance under the 2017 Plan. The 2003 Plan and the 2017 Plan are collectively referred to as “the Stock Option Plans.”

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 is 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. There were no stock options granted during the years ended March 31, 2020, 2019 and 2018 under the Stock Option Plans.

As of March 31, 2020, all outstanding stock options were fully vested and there was no remaining unrecognized compensation expense related to stock options granted under the Stock Option Plans. There was no stock-based compensation expense related to stock options for the years ended March 31, 2020, 2019 and 2018 under the Stock Option Plans.

The following table presents the activity related to stock options under the Stock Option Plans for the years indicated:


	Year Ended March 31,
	2020			2019			2018
			Weighted			Weighted			Weighted
			Average			Average			Average
	Number of		Exercise	Number of		Exercise	Number of		Exercise
	Shares		Price	Shares		Price	Shares		Price
Balance, beginning of year	101,332	$	3.26	141,365	$	3.77	220,654	$	4.74
Options exercised	(58,000)		3.69	(37,533)		4.84	(59,289)		4.13
Options expired	—		—	(2,500)		8.12	(20,000)		13.42
Balance, end of year	43,332	$	2.69	101,332	$	3.26	141,365	$	3.77

Additional information regarding stock options outstanding as of March 31, 2020 is as follows:

Options Outstanding

Options Exercisable

Weighted Avg

Weighted

Remaining

Average

Range of

Contractual

Exercise

Exercise Price

Life (years)

Number

Price

Number

Price

$1.00 - $3.00

2.80

43,332

2.69

43,332

2.69

The following table presents information on stock options outstanding, less estimated forfeitures, as of March 31, 2020 and 2019:


	March 31, 2020		March 31, 2019
Stock options fully vested and expected to vest:
Number		43,332		101,332
Weighted average exercise price	$	2.69	$	3.26
Aggregate intrinsic value (1)	$	101,000	$	410,000
Weighted average contractual term of options (years)		2.80		2.20
Stock options fully vested and currently exercisable:
Number		43,332		101,332
Weighted average exercise price	$	2.69	$	3.26
Aggregate intrinsic value (1)	$	101,000	$	410,000
Weighted average contractual term of options (years)		2.80		2.20

(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 $238,000, $153,000 and $257,000 for the years ended March 31, 2020, 2019 and 2018, respectively.

During the year ended March 31, 2020, the Company granted a total of 82,673 shares of restricted stock pursuant to the 2017 Plan of which vesting for 49,298 shares of restricted stock were time based and vesting for 33,375 shares of restricted stock were performance based subject to attaining certain performance metrics.

The fair value of restricted stock awards is equal to the fair value of the Company's stock on the date of grant. The related stock-based compensation expense is recorded over the requisite service period. Stock-based compensation related to restricted stock grants was $302,000 for the year ended March 31, 2020. There was no stock-based compensation related to restricted stock for the years ended March 31, 2019 and 2018. The unrecognized stock-based compensation related to restricted stock was $323,000 at March 31, 2020. The weighted average vesting period for the restricted stock was 1.68 years at March 31, 2020.

The following table presents the activity related to restricted stock for the year ended March 31, 2020:


	Time-Based			Performance-Based			Total
		Weighted			Weighted			Weighted
	Number of	Average		Number of	Average		Number of	Average
	Unvested	Market		Unvested	Market		Unvested	Market
	Shares	Price		Shares	Price		Shares	Price
Balance, beginning of period	—	$	—	—	$	—	—	$	—
Granted	49,298		8.35	33,375		8.35	82,673		8.35
Forfeited	—		—	—		—	—		—
Vested	—		—	—		—	—		—
Cancelled	—		—	—		—	—		—
Balance, end of period	49,298	$	8.35	33,375	$	8.35	82,673	$	8.35

The Company anticipates cancelling approximately 8,000 shares of performance-based restricted stock subsequent to March 31, 2020 due to not achieving certain performance metrics.

Employee Stock Ownership Plan - The Company sponsors an ESOP that covers all employees with at least one year and 1,000 hours of service who are over the age of 21. During the year ended March 31, 2018, all remaining unreleased ESOP shares were allocated to participants. Accordingly, as of March 31, 2018, all of the original 962,584 ESOP shares had been released and allocated to participant accounts. ESOP compensation expense included in salaries and employee benefits was $148,000 for the year ended March 31, 2018.

For the years ended March 31, 2020 and 2019, the Bank purchased 43,545 and 25,000 shares of common stock, respectively, on the open market and contributed such shares to the ESOP as a discretionary employer contribution. As of March 31, 2020, there were approximately 19,000 shares which had not been allocated to participant accounts under the Company’s ESOP. As of March 31, 2019, there were an insignificant number of shares which had not been allocated to participant accounts under the Company’s ESOP. The Company recorded employee benefits expense of $195,000 and $197,000 for these contributions for the years ended March 31, 2020 and 2019, respectively, which represented the fair value of the related common stock on the date it was acquired. Shares held by the ESOP at March 31, 2020 and 2019 totaled 410,045 and 441,966, respectively.

Trust Company Stock Options – At March 31, 2020 and 2019, there were 1,000 and 2,500 Trust Company stock options outstanding, respectively, which had been granted to the President and Chief Executive Officer of the Trust Company. During each of the years ended March 31, 2020 and 2019, the Trust Company incurred $44,000 of stock-based compensation expense related to these options. For the year ended March 31, 2020, 1,500 Trust Company stock options were exercised. For the year ended March 31, 2019, no Trust Company stock options were exercised. There were no Trust Company stock options granted during the years ended March 31, 2020, 2019 and 2018.