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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract] |
Employee Benefit Plans | Note 12. Employee Benefit Plans 401(k) Plan. The Company sponsors a retirement savings plan pursuant to Section 401(k) of the Internal Revenue Code. New employees who have met the age requirement are automatically enrolled in the plan at a 5% deferral rate on the next plan Entry Date. The automatic deferral can be modified by the employee at any time. An eligible employee may contribute up to 15% of annual salary to the plan. The Company contributes an amount equal to the sum of 1) 100% of the employee’s salary contributed up to 3% and 2) 50% of the employee’s salary contributed between 3% and 5%. Company contributions are 100% vested immediately. The Company’s matching contribution expense was $1.6 million for the year ended December 31, 2016 and $1.4 million for each of the years ended December 31, 2015 and 2014. Although discretionary contributions by the Company are permitted by the plan, the Company did not make any such contributions in 2016, 2015 or 2014. The Company’s matching and discretionary contributions are made according to the same investment elections each participant has established for their deferral contributions. Pension Plan. Historically, the Company offered a noncontributory defined benefit retirement plan (the “Pension Plan”) that qualified under Section 401(a) of the Internal Revenue Code. The Pension Plan provided for a monthly payment, at normal retirement age of 65, equal to one-twelfth of the sum of (i) 0.75% of Final Average Annual Compensation (5 highest consecutive calendar years’ earnings out of the last 10 years of employment) multiplied by the employee’s years of service not in excess of 40 years, and (ii) 0.65% of Final Average Annual Compensation in excess of the average social security wage base multiplied by years of service not in excess of 35 years. Benefits were fully vested after five years of service. Effective December 31, 2012, the Company froze the Pension Plan for all participants. The Company’s contributions to the Pension Plan are based on computations by independent actuarial consultants and are intended to be deductible for income tax purposes. As discussed below, the contributions are invested to provide for benefits under the Pension Plan. The Company did not make any contributions to the Pension Plan in 2016, 2015 or 2014. The Company does not expect to contribute to the Pension Plan in 2017. The following table reconciles the beginning and ending balances of the Pension Plan’s benefit obligation, as computed by the Company’s independent actuarial consultants, and its plan assets, with the difference between the two amounts representing the funded status of the Pension Plan as of the end of the respective year.
($ in thousands) |  | 2016 |  |  | 2015 |  |  | 2014 |
Change in benefit obligation |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 36,164 |  |  |  | 35,615 |  |  |  | 30,548 |
Service cost |  |  | — |  |  |  | — |  |  |  | — |
Interest cost |  |  | 1,502 |  |  |  | 1,364 |  |  |  | 1,461 |
Actuarial (gain) loss |  |  | 1,288 |  |  |  | 1,236 |  |  |  | 5,320 |
Benefits paid |  |  | (2,114 | ) |  |  | (2,051 | ) |  |  | (1,714 | )
Curtailment gain |  |  | — |  |  |  | — |  |  |  | — |
Benefit obligation at end of year |  |  | 36,840 |  |  |  | 36,164 |  |  |  | 35,615 |
Change in plan assets |  |  |  |  |  |  |  |  |  |  |  |
Plan assets at beginning of year |  |  | 35,489 |  |  |  | 37,282 |  |  |  | 36,333 |
Actual return on plan assets |  |  | 3,575 |  |  |  | 258 |  |  |  | 2,663 |
Employer contributions |  |  | — |  |  |  | — |  |  |  | — |
Benefits paid |  |  | (2,114 | ) |  |  | (2,051 | ) |  |  | (1,714 | )
Plan assets at end of year |  |  | 36,950 |  |  |  | 35,489 |  |  |  | 37,282 |
Funded status at end of year |  | $ | 110 |  |  |  | (675 | ) |  |  | 1,667 |
The accumulated benefit obligation related to the Pension Plan was $36,840,000, $36,164,000, and $35,615,000 at December 31, 2016, 2015, and 2014, respectively. The following table presents information regarding the amounts recognized in the consolidated balance sheets at December 31, 2016 and 2015 as it relates to the Pension Plan, excluding the related deferred tax assets.
($ in thousands) |  | 2016 |  |  | 2015 |
Other assets |  | $ | 110 |  |  |  | — |
Other liabilities |  |  | — |  |  |  | (675 | )
|  | $ | 110 |  |  |  | (675 | )
The following table presents information regarding the amounts recognized in accumulated other comprehensive income (“AOCI”) at December 31, 2016 and 2015, as it relates to the Pension Plan.
($ in thousands) |  | 2016 |  |  | 2015 |
Net gain (loss) |  | $ | (5,856 | ) |  |  | (5,682 | )
Prior service cost |  |  | — |  |  |  | — |
Amount recognized in AOCI before tax effect |  |  | (5,856 | ) |  |  | (5,682 | )
Tax (expense) benefit |  |  | 2,164 |  |  |  | 2,216 |
Net amount recognized as increase (decrease) to AOCI |  | $ | (3,692 | ) |  |  | (3,466 | )
The following table reconciles the beginning and ending balances of AOCI at December 31, 2016 and 2015, as it relates to the Pension Plan:
($ in thousands) |  | 2016 |  |  | 2015 |
Accumulated other comprehensive loss at beginning of fiscal year |  | $ | (3,466 | ) |  |  | (1,133 | )
Net gain (loss) arising during period |  |  | (412 | ) |  |  | (3,825 | )
Prior service cost |  |  | ̶ |  |  |  | ̶ |
Transition Obligation |  |  | ̶ |  |  |  | ̶ |
Amortization of unrecognized actuarial loss |  |  | 238 |  |  |  | ̶ |
Amortization of prior service cost and transition obligation |  |  | ̶ |  |  |  | ̶ |
Tax (expense) benefit of changes during the year, net |  |  | (52 | ) |  |  | 1,492 |
Accumulated other comprehensive gain (loss) at end of fiscal year |  | $ | (3,692 | ) |  |  | (3,466 | )
The following table reconciles the beginning and ending balances of the prepaid pension cost related to the Pension Plan:
($ in thousands) |  | 2016 |  |  | 2015 |
Prepaid pension cost as of beginning of fiscal year |  | $ | 5,007 |  |  |  | 3,524 |
Net periodic pension income (cost) for fiscal year |  |  | 958 |  |  |  | 1,483 |
Actual employer contributions |  |  | — |  |  |  | — |
Prepaid pension asset as of end of fiscal year |  | $ | 5,965 |  |  |  | 5,007 |
Net pension (income) cost for the Pension Plan included the following components for the years ended December 31, 2016, 2015, and 2014:
($ in thousands) |  | 2016 |  |  | 2015 |  |  | 2014 |
Service cost – benefits earned during the period |  | $ | — |  |  |  | — |  |  |  | — |
Interest cost on projected benefit obligation |  |  | 1,502 |  |  |  | 1,364 |  |  |  | 1,461 |
Expected return on plan assets |  |  | (2,698 | ) |  |  | (2,847 | ) |  |  | (2,779 | )
Net amortization and deferral |  |  | 238 |  |  |  | — |  |  |  | — |
Net periodic pension (income) cost |  | $ | (958 | ) |  |  | (1,483 | ) |  |  | (1,318 | )
The following table is an estimate of the benefits that will be paid in accordance with the Pension Plan during the indicated time periods:
($ in thousands) |  | Estimated benefit payments |
Year ending December 31, 2017 |  | $ | 1,443 |
Year ending December 31, 2018 |  |  | 1,554 |
Year ending December 31, 2019 |  |  | 1,705 |
Year ending December 31, 2020 |  |  | 1,769 |
Year ending December 31, 2021 |  |  | 1,858 |
Years ending December 31, 2022-2026 |  |  | 9,920 |
For each of the years ended December 31, 2016, 2015, and 2014, the Company used an expected long-term rate-of-return-on-assets assumption of 7.75%. The Company arrived at this rate based primarily on a third-party investment consulting firm’s historical analysis of investment returns, which indicated that the mix of the Pension Plan’s assets (generally 75% equities and 25% fixed income) can be expected to return approximately 7.75% on a long term basis. Funds in the Pension Plan are invested in a mix of investment types in accordance with the Pension Plan’s investment policy, which is intended to provide an average annual rate of return of 7% to 10%, while maintaining proper diversification. Except for Company stock, all of the Pension Plan’s assets are invested in an unaffiliated bank money market account or mutual funds. The investment policy of the Pension Plan does not permit the use of derivatives, except to the extent that derivatives are used by any of the mutual funds invested in by the Pension Plan. The following table presents the targeted mix of the Pension Plan’s assets as of December 31, 2016, as set out by the Plan’s investment policy:
Investment type |  | Targeted % of Total Assets |  | Acceptable Range % of Total Assets
Fixed income investments |  |  |  |
Cash/money market account |  | 2% |  | 1%-5%
US government bond fund |  | 10% |  | 10%-20%
US corporate bond fund |  | 10% |  | 5%-15%
US corporate high yield bond fund |  | 5% |  | 0%-10%
Equity investments |  |  |  |
Large cap value fund |  | 40% |  | 30%-50%
Mid cap equity fund |  | 10% |  | 5%-15%
Small cap growth fund |  | 8% |  | 5%-15%
Foreign equity fund |  | 10% |  | 5%-15%
Company stock |  | 5% |  | 0%-10%
The Pension Plan’s investment strategy contains certain investment objectives and risks for each permitted investment category. To ensure that risk and return characteristics are consistently followed, the Pension Plan’s investments are reviewed at least semi-annually and rebalanced within the acceptable range. Performance measurement of the investments employs the use of certain investment category and peer group benchmarks. The investment category benchmarks as of December 31, 2016 are as follows:
Investment Category |  | Investment Category Benchmark |  | Range of Acceptable Deviation from Investment Category Benchmark
Fixed income investments |  |  |  |
Cash/money market account |  | BofAML USD LIBOR 3 Month Index |  | 0-50 basis points
US government bond fund |  | Barclays Intermediate Government Bond Index |  | 0-200 basis points
US corporate bond fund |  | Barclays Aggregate Index |  | 0-200 basis points
US corporate high yield bond fund |  | Barclays High Yield Index |  | 0-200 basis points
Equity investments |  |  |  |
Large cap fund |  | S&P 500 Index |  | 0-300 basis points
Mid cap fund |  | Russell Mid Cap Index |  | 0-300 basis points
Small cap fund |  | Russell 2000 Growth Index |  | 0-300 basis points
Foreign equity fund |  | MSCI EAFE Index |  | 0-300 basis points
Company stock |  | Russell 2000 Index |  | 0-300 basis points
Each of the investment fund’s average annualized return over a three-year period should be within the range of acceptable deviation from the benchmarked index shown above. In addition to the investment category benchmarks, the Pension Plan also utilizes certain Peer Group benchmarks, based on Morningstar percentile rankings for each investment category. Funds are generally considered to be underperformers if their category ranking is below the 75th percentile for the trailing one-year period; the 50th percentile for the trailing three-year period; and the 25th percentile for the trailing five-year period. The Pension Plan invests in various investment securities which are exposed to various risks such as interest rate, market, and credit risks. All of these risks are monitored and managed by the Company. No significant concentration of risk exists within the plan assets at December 31, 2016. The fair values of the Company’s pension plan assets at December 31, 2016, by asset category, are as follows:
($ in thousands) |  |  |  |  |  |
|  | Total Fair Value at December 31, 2016 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Fixed income investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 9,590 |  |  |  | — |  |  |  | 9,590 |  |  |  | — |
Equity investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Large cap value fund |  |  | 15,595 |  |  |  | 15,595 |  |  |  | — |  |  |  | — |
Small cap growth fund |  |  | 2,624 |  |  |  | 2,624 |  |  |  | — |  |  |  | — |
Mid cap equity fund |  |  | 3,220 |  |  |  | 3,220 |  |  |  | — |  |  |  | — |
Foreign equity fund |  |  | 2,669 |  |  |  | 2,669 |  |  |  | — |  |  |  | — |
Company stock |  |  | 3,252 |  |  |  | 3,252 |  |  |  | — |  |  |  | — |
Total |  | $ | 36,950 |  |  |  | 27,360 |  |  |  | 9,590 |  |  |  | — |
The fair values of the Company’s pension plan assets at December 31, 2015, by asset category, are as follows:
($ in thousands) |  |  |  |  |  |
|  | Total Fair Value at December 31, 2015 |  |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  |  | Significant Other Observable Inputs (Level 2) |  |  | Significant Unobservable Inputs (Level 3) |
Fixed income investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Money market funds |  | $ | 155 |  |  |  | — |  |  |  | 155 |  |  |  | — |
US government bond fund |  |  | 3,398 |  |  |  | 3,398 |  |  |  | — |  |  |  | — |
US corporate bond fund |  |  | 3,357 |  |  |  | 3,357 |  |  |  | — |  |  |  | — |
US corporate high yield bond fund |  |  | 1,700 |  |  |  | 1,700 |  |  |  | — |  |  |  | — |
Equity investments |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Large cap value fund |  |  | 14,703 |  |  |  | 14,703 |  |  |  | — |  |  |  | — |
Small cap growth fund |  |  | 2,845 |  |  |  | 2,845 |  |  |  | — |  |  |  | — |
Mid cap equity fund |  |  | 3,541 |  |  |  | 3,541 |  |  |  | — |  |  |  | — |
Foreign equity fund |  |  | 3,544 |  |  |  | 3,544 |  |  |  | — |  |  |  | — |
Company stock |  |  | 2,246 |  |  |  | 2,246 |  |  |  | — |  |  |  | — |
Total |  | $ | 35,489 |  |  |  | 35,334 |  |  |  | 155 |  |  |  | — |
The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2016 and 2015.
| - | Money market fund: Valued at net asset value (“NAV”), which can be validated with a sufficient level of observable activity (i.e. purchases and sales at NAV), and therefore, the funds were classified within Level 2 of the fair value hierarchy.
| - | Mutual funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are open-end mutual funds that are registered with the Securities and Exchange Commission and are deemed to be actively traded.
| - | Common stock: Valued at the closing price reported on the active market on which the individual securities are traded.
Supplemental Executive Retirement Plan. Historically, the Company sponsored a Supplemental Executive Retirement Plan (the “SERP”) for the benefit of certain senior management executives of the Company. The purpose of the SERP was to provide additional monthly pension benefits to ensure that each such senior management executive would receive lifetime monthly pension benefits equal to 3% of his or her final average compensation multiplied by his or her years of service (maximum of 20 years) to the Company or its subsidiaries, subject to a maximum of 60% of his or her final average compensation. The amount of a participant’s monthly SERP benefit is reduced by (i) the amount payable under the Company’s qualified Pension Plan (described above), and (ii) 50% of the participant’s primary social security benefit. Final average compensation means the average of the 5 highest consecutive calendar years of earnings during the last 10 years of service prior to termination of employment. The SERP is an unfunded plan. Payments are made from the general assets of the Company. Effective December 31, 2012, the Company froze the SERP to all participants. The following table reconciles the beginning and ending balances of the SERP’s benefit obligation, as computed by the Company’s independent actuarial consultants:
($ in thousands) |  | 2016 |  |  | 2015 |  |  | 2014 |
Change in benefit obligation |  |  |  |  |  |  |  |  |
Projected benefit obligation at beginning of year |  | $ | 5,778 |  |  |  | 5,216 |  |  |  | 5,292 |
Service cost |  |  | 106 |  |  |  | 201 |  |  |  | 272 |
Interest cost |  |  | 238 |  |  |  | 206 |  |  |  | 212 |
Actuarial (gain) loss |  |  | 145 |  |  |  | 497 |  |  |  | (265 | )
Benefits paid |  |  | (357 | ) |  |  | (342 | ) |  |  | (295 | )
Curtailment gain |  |  | — |  |  |  | — |  |  |  | — |
Projected benefit obligation at end of year |  |  | 5,910 |  |  |  | 5,778 |  |  |  | 5,216 |
Plan assets |  |  | — |  |  |  | — |  |  |  | — |
Funded status at end of year |  | $ | (5,910 | ) |  |  | (5,778 | ) |  |  | (5,216 | )
The accumulated benefit obligation related to the SERP was $5,910,000, $5,778,000, and $5,216,000 at December 31, 2016, 2015, and 2014, respectively. The following table presents information regarding the amounts recognized in the consolidated balance sheets at December 31, 2016 and 2015 as it relates to the SERP, excluding the related deferred tax assets.
($ in thousands) |  | 2016 |  |  | 2015 |
Other assets – prepaid pension asset (liability) |  | $ | (6,754 | ) |  |  | (6,802 | )
Other assets (liabilities) |  |  | 844 |  |  |  | 1,024 |
|  | $ | (5,910 | ) |  |  | (5,778 | )
The following table presents information regarding the amounts recognized in AOCI at December 31, 2016 and 2015, as it relates to the SERP:
($ in thousands) |  | 2016 |  |  | 2015 |
Net gain (loss) |  | $ | 844 |  |  |  | 1,024 |
Prior service cost |  |  | — |  |  |  | — |
Amount recognized in AOCI before tax effect |  |  | 844 |  |  |  | 1,024 |
Tax (expense) benefit |  |  | (311 | ) |  |  | (399 | )
Net amount recognized as increase (decrease) to AOCI |  | $ | 533 |  |  |  | 625 |
The following table reconciles the beginning and ending balances of AOCI at December 31, 2016 and 2015, as it relates to the SERP:
($ in thousands) |  | 2016 |  |  | 2015 |
Accumulated other comprehensive income at beginning of fiscal year |  | $ | 625 |  |  |  | 976 |
Net gain (loss) arising during period |  |  | (145 | ) |  |  | (497 | )
Prior service cost |  |  | — |  |  |  | — |
Amortization of unrecognized actuarial loss |  |  | (35 | ) |  |  | (79 | )
Amortization of prior service cost and transition obligation |  |  | — |  |  |  | — |
Tax benefit (expense) related to changes during the year, net |  |  | 88 |  |  |  | 225 |
Accumulated other comprehensive income (loss) at end of fiscal year |  | $ | 533 |  |  |  | 625 |
The following table reconciles the beginning and ending balances of the prepaid pension cost related to the SERP:
($ in thousands) |  | 2016 |  |  | 2015 |
Prepaid pension cost (liability) as of beginning of fiscal year |  | $ | (6,802 | ) |  |  | (6,816 | )
Net periodic pension cost for fiscal year |  |  | (309 | ) |  |  | (328 | )
Benefits paid |  |  | 357 |  |  |  | 342 |
Prepaid pension cost (liability) as of end of fiscal year |  | $ | (6,754 | ) |  |  | (6,802 | )
Net pension cost for the SERP included the following components for the years ended December 31, 2016, 2015, and 2014:
($ in thousands) |  | 2016 |  |  | 2015 |  |  | 2014 |
Service cost – benefits earned during the period |  | $ | 106 |  |  |  | 201 |  |  |  | 272 |
Interest cost on projected benefit obligation |  |  | 238 |  |  |  | 206 |  |  |  | 212 |
Net amortization and deferral |  |  | (35 | ) |  |  | (79 | ) |  |  | (221 | )
Net periodic pension cost |  | $ | 309 |  |  |  | 328 |  |  |  | 263 |
The following table is an estimate of the benefits that will be paid in accordance with the SERP during the indicated time periods:
($ in thousands) |  | Estimated benefit payments |
Year ending December 31, 2017 |  | $ | 368 |
Year ending December 31, 2018 |  |  | 421 |
Year ending December 31, 2019 |  |  | 417 |
Year ending December 31, 2020 |  |  | 415 |
Year ending December 31, 2021 |  |  | 418 |
Years ending December 31, 2022-2026 |  |  | 2,052 |
The following assumptions were used in determining the actuarial information for the Pension Plan and the SERP for the years ended December 31, 2016, 2015, and 2014:
|  | 2016 |  |  | 2015 |  |  | 2014 |
|  | Pension Plan |  |  | SERP |  |  | Pension Plan |  |  | SERP |  |  | Pension Plan |  |  | SERP |
Discount rate used to determine net periodic pension cost |  |  | 4.17% |  |  |  | 4.17% |  |  |  | 3.82% |  |  |  | 3.82% |  |  |  | 4.78% |  |  |  | 4.78% |
Discount rate used to calculate end of year liability disclosures |  |  | 3.97% |  |  |  | 3.97% |  |  |  | 4.17% |  |  |  | 4.17% |  |  |  | 3.82% |  |  |  | 3.82% |
Expected long-term rate of return on assets |  |  | 7.75% |  |  |  | n/a |  |  |  | 7.75% |  |  |  | n/a |  |  |  | 7.75% |  |  |  | n/a |
Rate of compensation increase |  |  | n/a |  |  |  | n/a |  |  |  | n/a |  |  |  | n/a |  |  |  | n/a |  |  |  | n/a |
The Company’s discount rate policy is based on a calculation of the Company’s expected pension payments, with those payments discounted using the Citigroup Pension Index yield curve.

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