STOCK PLANS AND STOCK-BASED COMPENSATION

9 Months Ended

Dec. 31, 2022

STOCK PLANS AND STOCK-BASED COMPENSATION

STOCK PLANS AND STOCK-BASED COMPENSATION

3.      STOCK PLANS AND STOCK-BASED COMPENSATION

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 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 reserved 1,800,000 shares of its common stock for issuance under the 2017 Plan. At December 31, 2022, there were 1,517,449 shares available for grant 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 under the 2017 Stock Option Plan during the nine months ended December 31, 2022 and 2021.

As of December 31, 2022, 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 nine months ended December 31, 2022 and 2021 under the Stock Option Plans.

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

	Nine Months Ended December 31,			Nine Months Ended December 31,
	2022			2021
		Weighted			Weighted
		Average			Average
	Number of	Exercise		Number of	Exercise
	Shares	Price		Shares	Price
Balance, beginning of period	17,332	$	2.78	23,332	$	2.78
Options exercised	(1,511)		2.78	(6,000)		2.78
Options forfeited	(1,511)		2.78	—		—
Balance, end of period	14,310	$	2.78	17,332	$	2.78

The following table presents information on stock options outstanding, less estimated forfeitures, as of December 31, 2022 and 2021:

	2022		2021
Stock options fully vested and expected to vest:
Number		14,310		17,332
Weighted average exercise price	$	2.78	$	2.78
Aggregate intrinsic value (1)	$	70,000	$	85,000
Weighted average contractual term of options (years)		0.54		1.54
Stock options fully vested and currently exercisable:
Number		14,310		17,332
Weighted average exercise price	$	2.78	$	2.78
Aggregate intrinsic value (1)	$	70,000	$	85,000
Weighted average contractual term of options (years)		0.54		1.54

(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 $7,000 and $25,000 for the nine months ended December 31, 2022 and 2021, respectively, under the Stock Option Plans.

The Company may grant restricted stock pursuant to the 2017 Plan of which vesting can either be time based or performance based. Performance based awards are subject to attaining certain performance metrics and all, or a portion of, the performance based awards can subsequently be cancelled for not attaining the predetermined 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 $100,000 and $112,000 for the three months ended December 31, 2022 and 2021, respectively. Stock-based compensation related to restricted stock grants was $292,000 and $289,000 for the nine months ended December 31, 2022 and 2021, respectively. The unrecognized stock-based compensation related to restricted stock was $539,000 and $549,000 at December 31, 2022 and 2021, respectively. The weighted average vesting period for the restricted stock was 1.33 years and 1.78 years at December 31, 2022 and 2021, respectively.

A summary of changes in nonvested restricted stock awards for the periods shown:

	Time Based			Performance Based			Total
	Number	Weighted		Number	Weighted		Number	Weighted
	of	Average		of	Average		of	Average
	Unvested	Grant Date		Unvested	Grant Date		Unvested	Grant Date
Nine Months Ended December 31, 2022	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Balance, beginning of period	26,855	$	6.02	121,492	$	5.70	148,347	$	5.76
Granted	15,571		6.30	56,125		6.30	71,696		6.30
Forfeited	—		—	(2,977)		7.56	(2,977)		7.56
Vested	(12,449)		6.07	(41,995)		5.26	(54,444)		5.45
Balance, end of period	29,977	$	6.14	132,645	$	6.05	162,622	$	6.07

	Time Based			Performance Based			Total
	Number	Weighted		Number	Weighted		Number	Weighted
	of	Average		of	Average		of	Average
	Unvested	Grant Date		Unvested	Grant Date		Unvested	Grant Date
Nine Months Ended December 31, 2021	Shares	Fair Value		Shares	Fair Value		Shares	Fair Value
Balance, beginning of period	45,616	$	6.57	96,772	$	5.27	142,388	$	5.69
Granted	15,274		7.08	54,011		7.06	69,285		7.06
Forfeited	—		—	—		—	—		—
Vested	(29,618)		7.43	(12,732)		8.35	(42,350)		7.71
Balance, end of period	31,272	$	6.00	138,051	$	5.69	169,323	$	5.75

Trust Company Stock Options – At both December 31, 2022 and 2021, there were no Trust Company stock options outstanding. There were no Trust Company stock options exercised during the nine months ended December 31, 2022. During the nine months ended December 31, 2021, 500 Trust Company stock options were exercised. There were no Trust Company stock options granted during the nine months ended December 31, 2022 and 2021.