Stock Based Compensation Plans

9 Months Ended

Jun. 30, 2013

Disclosure Of Compensation Related Costs, Share-Based Payments [Abstract]

Stock Based Compensation Plans

10. Stock Based Compensation Plans

The Company’s 2010 Equity Incentive Plan (“Plan”), which the Company’s shareholders approved in February 2010, provides for the award of stock options, restricted shares and performance shares.  The aggregate number of shares of the Company’s common stock available for issuance under the Plan may not exceed 355,885 shares.  The Company may grant both non-statutory and statutory (i.e., incentive) stock options that may not have a term exceeding ten years.  An award of a performance share is a grant of a right to receive shares of the Company’s common stock contingent upon the achievement of specific performance criteria or other objectives set at the grant date.  Awards granted under the Plan may be granted either alone, in addition to, or in tandem with any other award granted under the Plan.  The terms of the Plan include a provision whereby all unearned options and shares become immediately exercisable and fully vested upon a change in control.

In April 2010, the Company funded a trust, administered by an independent trustee, which acquired 101,681 common shares in the open market at a price per share of $13.60 for a total cost of $1.4 million. These acquired common shares were later granted to directors, officers and key employees in the form of restricted stock in May 2010 at a price per share of $13.25 for a total of $1.3 million. The difference between the purchase price and grant price of the common shares issued as restricted stock, totaling $41,000, was recognized by the Company as a reduction of additional paid in capital. The restricted stock vests ratably over a five-year period from the grant date. Compensation expense is measured based on the fair market value of the restricted stock at the grant date and is recognized ratably over the period during which the shares are earned (the vesting period). Compensation expense related to restricted stock recognized for both the three- and nine-month periods ended June 30, 2013 and 2012 amounted to $65,000 and $195,000, respectively. A summary of the Company’s nonvested restricted shares activity under the Plan as of June 30, 2013 and changes during the nine-month period then ended is presented below.

			Weighted
	Number		Average
	of		Grant Date
	Shares		Fair Value
Nonvested at October 1, 2012		58,850	$	13.25
Granted		-		-
Vested		(19,620)	$	13.25
Forfeited		-		-
Nonvested at June 30, 2013		39,230	$	13.25

At June 30, 2013, there was $487,000 of total unrecognized compensation expense related to nonvested restricted shares. The compensation expense is expected to be recognized over the remaining vesting period of 1.9 years.

In May 2010, the Company awarded 177,549 incentive and 76,655 non-statutory stock options to directors, officers and key employees. The options granted vest ratably over five years and are exercisable in whole or in part for a period up to ten years from the date of the grant. Compensation expense is measured based on the fair market value of the options at the grant date and is recognized ratably over the period during which the shares are earned (the vesting period). The weighted average fair value at the grant date for options granted in 2010 was $3.09, as determined at the date of grant using the Binomial option pricing model.

A summary of stock option activity under the Plan as of June 30, 2013, and changes during the nine-month period then ended is presented below.

			Weighted		Weighted
	Number		Average		Average
	Exercise		Exercise		Remaining		Aggregate
	of		Price		Contractual		Intrinsic
	Shares		Per Share		Term		Value
	(Dollars in thousands, except per share data)
Outstanding at October 1, 2012		245,232	$	13.25
Granted		-		-
Exercised		-		-
Forfeited or expired		-		-
Outstanding at June 30, 2013		245,232	$	13.25		6.9	$	2,474
Exercisable at June 30, 2013		147,141	$	13.25		6.9	$	1,485

The Company recognized compensation expense related to stock options of $38,000 and $114,000 for both the three- and nine-month periods ended June 30, 2013 and 2012, respectively. At June 30, 2013, there was $284,000 of unrecognized compensation expense related to nonvested stock options, which will be recognized over the remaining vesting period of 1.9 years.