401(k) Retirement Plan. The Bank has a 401(k) retirement plan that covers substantially all eligible employees. During fiscal 2012, the Bank amended the plan to make “safe harbor” matching contributions of up to 4% of eligible compensation, depending upon the percentage of eligible pay deferred into the plan by the employee. Additional profit-sharing contributions of 4% of eligible salary have been accrued for the plan year ended June 30, 2014, based on financial performance for fiscal 2014. Total 401(k) expense for fiscal 2014, 2013, and 2012 was $485,000, $446,000, and $413,000, respectively. At June 30, 2014, 401(k) plan participants held approximately 214,000 shares of the Company’s stock in the plan. Employee deferrals and safe harbor contributions are fully vested. Profit-sharing or other contributions vest over a period of five years.

Management Recognition Plan (MRP). The Bank adopted an MRP for the benefit of non-employee directors and two MRPs for officers and key employees (who may also be directors) in April 1994. During fiscal 2008, the Bank granted 2,500 MRP shares to employees, and during fiscal 2012, the Bank granted 3,036 shares to employees. The shares granted are in the form of restricted stock vested at the rate of 20% of such shares per year. During fiscal 2014, 2013 and 2012, 607, 607 and 500 MRP shares vested, respectively. Compensation expense, in the amount of the fair market value of the common stock at the date of grant, is recognized pro-rata over the five years during which the shares vest.

The Board of Directors can terminate the MRP plan at any time, and if it does so, any shares not allocated will revert to the Company. The MRP expense for fiscal 2014, 2013, and 2012, was $13,000, $13,000, and $11,000, respectively. At June 30, 2014, unvested compensation expense related to the MRP was approximately $39,000.

Equity Incentive Plan. The Company adopted an Equity Incentive Plan (EIP) in 2008, reserving for award 66,000 shares. EIP shares are available for award to directors, officers, and employees of the Company and its affiliates by a committee of outside directors. The committee has the power to set vesting requirements for each award under the EIP. During fiscal 2012, the Company awarded 36,964 shares, and during fiscal 2014, the Company awarded 12,000 shares, all in the form of restricted stock, which will vest at the rate of 20% of such shares per year. During fiscal 2014 and 2013, 7,393 EIP shares vested each year. Compensation expense, in the amount of the fair market value of the common stock at the date of grant, is recognized pro-rata over the five years during which the shares vest.

The Board of Directors can terminate EIP awards at any time, and if it does so, any shares not allocated will revert to the Company. The EIP expense for fiscal 2014 and 2013 was $202,000 and $159,000, respectively, with no expense recognized in fiscal 2012. At June 30, 2014, unvested compensation expense related to the EIP was approximately $864,000.

Stock Option Plans. The Company adopted a stock option plan in October 2003. Under the plan, the Company has granted 116,000 options to employees and directors, of which, 43,500 have been exercised, 22,500 have been forfeited, and 50,000 remain outstanding. Under the 2003 Plan, exercised options may be issued from either authorized but unissued shares, or treasury shares.

As of June 30, 2014, there was $18,000 in remaining unrecognized compensation expense related to nonvested stock options, which will be recognized over the remaining weighted average vesting period. The aggregate intrinsic value of stock options outstanding at June 30, 2014, was $1.1 million, and the aggregate intrinsic value of stock options exercisable at June 30, 2014, was $924,000. During fiscal 2014, options to purchase 34,400 shares were exercised. The intrinsic value of these options, based on the Company’s closing stock price of $35.69, was $704,000. The intrinsic value of options vested in fiscal 2014, 2013, and 2012, was $129,000, $65,000, and $44,000, respectively.

	2014		2013		2012
	Weighted		Weighted		Weighted
	Average		Average		Average
	Price	Number	Price	Number	Price	Number
Outstanding at beginning of year	$14.84	84,400	$14.87	91,000	$14.44	87,500
Granted	-	-	-	-	22.35	5,000
Exercised	15.23	(34,400)	15.23	(6,600)	15.23	(1,500)
Forfeited	-	-	-	-	-	-
Outstanding at year-end	$14.57	50,000	$14.84	84,400	$14.87	91,000
Options exercisable at year-end	$14.19	43,000	$14.69	71,400	$14.77	72,000

The following is a summary of the assumptions used in the Black-Scholes pricing model in determining the fair values of options granted during fiscal year 2012. (No options were granted in fiscal 2014 or 2013):

	2014		2013		2012
Assumptions:
Expected dividend yield		-		-		2.15%
Expected volatility		-		-		20.75%
Risk-free interest rate		-		-		2.18%
Weighted-average expected life (years)		-		-		10.00
Weighted average fair value of		-		-		$4.66

The table below summarizes information about stock options outstanding under the plan at June 30, 2014:

			Options Exercisable
	Options Outstanding		Options Exercisable
Weighted
Average		Weighted
Remaining		Average		Weighted
Contractual	Number	Exercise	Number	Average
Life	Outstanding	Price	Exercisable	Exercise Price

3.6 mo.	15,000	15.30	15,000	15.30
14.4 mo.	5,000	14.26	5,000	14.26
52.6 mo.	5,000	12.15	5,000	12.15
66.6 mo.	20,000	12.75	16,000	12.75
88.7 mo.	5,000	22.35	2,000	22.35