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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 | EMPLOYEE BENEFIT PLANS Pension Plan The Company maintains a legacy, employer-sponsored defined benefit pension plan (the “Plan”) for which participation and benefit accruals were frozen on January 1, 2003. The Plan was assumed in connection with the Rome Bancorp acquisition in 2011. Accordingly, no employees are permitted to commence participation in the Plan and future salary increases and years of credited service are not considered when computing an employee’s benefits under the Plan. As of December 31, 2016, all minimum Employee Retirement Income Security Act (“ERISA”) funding requirements have been met. Information regarding the pension plan at December 31, 2016 and 2015 is as follows:
(In thousands) |  | 2016 |  | 2015
Change in projected benefit obligation: |  |  |  |  |  |
Projected benefit obligation at beginning of year |  | $ | 6,585 |  |  | $ | 7,193 |
Service Cost |  | 76 |  |  | — |
Interest cost |  | 267 |  |  | 268 |
Actuarial gain |  | (308 | ) |  | (454 | )
Benefits paid |  | (318 | ) |  | (351 | )
Settlements |  | (176 | ) |  | (71 | )
Projected benefit obligation at end of year |  | 6,126 |  |  | 6,585 |
Accumulated benefit obligation |  | 6,126 |  |  | 6,585 |
Change in fair value of plan assets: |  |  |  |  |  |
Fair value of plan assets at plan beginning of year |  | 5,211 |  |  | 5,756 |
Actual return on plan assets |  | 404 |  |  | (123 | )
Contributions by employer |  | — |  |  | — |
Benefits paid |  | (318 | ) |  | (351 | )
Settlements |  | (176 | ) |  | (71 | )
Fair value of plan assets at end of year |  | 5,121 |  |  | 5,211 |
Underfunded status |  | $ | 1,005 |  |  | $ | 1,374 |
Amounts Recognized in Consolidated Balance Sheet |  |  |  |
Other Liabilities |  | $ | 1,005 |  |  | $ | 1,374 |
Net periodic pension cost is comprised of the following for the years ended December 31, 2016 and 2015:
(In thousands) |  | 2016 |  | 2015
Service Cost |  | $ | 76 |  |  | $ | — |
Interest Cost |  | 267 |  |  | 268 |
Expected return on plan assets |  | (361 | ) |  | (455 | )
Amortization of unrecognized actuarial loss |  | 163 |  |  | 175 |
Net periodic pension costs |  | $ | 145 |  |  | $ | (12 | )
Changes in plan assets and benefit obligations recognized in accumulated other comprehensive income during 2016 and 2015 are as follows:
(In thousands) |  | 2016 |  | 2015
Amortization of actuarial (loss) |  | $ | (163 | ) |  | $ | (176 | )
Actuarial (gain) loss |  | (351 | ) |  | 125 |
Total recognized in accumulated other comprehensive income |  | (514 | ) |  | (51 | )
Total recognized in net periodic pension cost recognized and other comprehensive income |  | $ | (369 | ) |  | $ | (63 | )
The amounts in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost are a net loss of $1.5 million and $2.0 million in 2016 and 2015, respectively. The Company expects to make no cash contributions to the pension trust during the 2017 fiscal year. The amount expected to be amortized from other comprehensive income into net periodic pension cost over the next fiscal year is $100 thousand. The principal actuarial assumptions used at December 31, 2016 and 2015 were as follows:
|  | 2016 |  | 2015
Projected benefit obligation |  |  |  |  |  |
Discount rate |  | 3.980 | % |  | 4.170 | %
Net periodic pension cost |  |  |  |  |  |
Discount rate |  | 4.170 | % |  | 3.820 | %
Long term rate of return on plan assets |  | 7.000 | % |  | 8.000 | %
The discount rate that is used in the measurement of the pension obligation is determined by comparing the expected future retirement payment cash flows of the pension plan to the Citigroup Above Median Double-A Curve as of the measurement date. The expected long-term rate of return on Plan assets reflects long-term earnings expectations on existing Plan assets and those contributions expected to be received during the current plan year. In estimating that rate, appropriate consideration was given to historical returns earned by Plan assets in the fund and the rates of return expected to be available for reinvestment. The rates of return were adjusted to reflect current capital market assumptions and changes in investment allocations. The Company’s overall investment strategy with respect to the Plan’s assets is primarily for preservation of capital and to provide regular dividend and interest payments. The Plan’s targeted asset allocation is 63% equity securities via investment in the Long-Term Growth - Equity Portfolio (‘LTGE’), 36% intermediate-term investment grade bonds via investment in the Long-Term Growth - Fixed-Income Portfolio (‘LTGFI’), and 1% in cash equivalents portfolio (for liquidity). Equity securities include investments in a diverse mix of equity funds to gain exposure in the US and international markets. The fixed income portion of the Plan assets is a diversified portfolio that primarily invests in intermediate-term bond funds. The overall rate of return is based on the historical performance of the assets applied against the Plan’s target allocation, and is adjusted for the long-term inflation rate. The fair values for investment securities are determined by quoted prices in active markets, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). The fair values of the Plan’s assets by category and level within the fair value hierarchy are as follows at December 31, 2016:
Asset Category (In thousands) |  | Total |  | Level 1 |  | Level 2
Equity Mutual Funds: |  |  |  |  |  |  |  |
Large-Cap |  | $ | 1,624 |  |  | $ | — |  |  | $ | 1,624 |
Mid-Cap |  | 401 |  |  | — |  |  | 401 |
Small-Cap |  | 415 |  |  | — |  |  | 415 |
International |  | 757 |  |  | — |  |  | 757 |
Fixed Income Funds |  |  |  |  |  |
Fixed Income - US Core |  | 1,378 |  |  | — |  |  | 1,378 |
Intermediate Duration |  | 472 |  |  | — |  |  | 472 |
Cash Equivalents - money market |  | 74 |  |  | 30 |  |  | 44 |
Total |  | $ | 5,121 |  |  | $ | 30 |  |  | $ | 5,091 |
The fair values of the Plan’s assets by category and level within the fair value hierarchy are as follows at December 31, 2015:
Asset Category (In thousands) |  | Total |  | Level 1 |  | Level 2
Equity Mutual Funds: |  |  |  |  |  |  |  |  |
Large-Cap |  | $ | 1,516 |  |  | $ | — |  |  | $ | 1,516 |
Mid-Cap |  | 374 |  |  | — |  |  | 374 |
Small-Cap |  | 362 |  |  | — |  |  | 362 |
International |  | 760 |  |  | — |  |  | 760 |
Fixed Income Funds |  |  |  |  |  |  |  |  |
Fixed Income - US Core |  | 1,564 |  |  | — |  |  | 1,564 |
Intermediate Duration |  | 522 |  |  | — |  |  | 522 |
Cash Equivalents - money market |  | 113 |  |  | 62 |  |  | 51 |
Total |  | $ | 5,211 |  |  | $ | 62 |  |  | $ | 5,149 |
The Plan did not hold any assets classified as Level 3, and there were no transfers between levels during 2016 or 2015. Estimated benefit payments under the Company’s pension plans over the next ten years at December 31, 2016 are as follows:
Year |  | Payments (In thousands)
2017 |  | 342 |
2018 |  | 338 |
2019 |  | 375 |
2020 |  | 367 |
2021 |  | 357 |
2022-2026 |  | 1,829 |
Postretirement Benefits The Company has an unfunded post-retirement medical plan which was assumed in connection with the Rome Bancorp acquisition in 2011. The postretirement plan has been modified so that participation is closed to those employees who did not meet the retirement eligibility requirements by March 31, 2011. The Company contributes partially to medical benefits and life insurance coverage for retirees. Such retirees and their surviving spouses are responsible for the remainder of the medical benefits, including increases in premiums levels, between the total premium and the Company’s contribution. The Company also has an executive long-term care (“LTC”) postretirement benefit plan which started August 1, 2014. The LTC plan reimburses executives for certain costs in the event of a future chronic illness. Funding of the plan comes from Company paid insurance policies or direct payments. At plan’s inception, a $558 thousand benefit obligation was recorded against equity representing the prior service cost of plan participants. Information regarding the post-retirement plan at December 31, 2016 and 2015 is as follows:
(In thousands) |  | 2016 |  | 2015
Change in accumulated postretirement benefit obligation: |  |  |  |  |  |
Accumulated post-retirement benefit obligation at beginning of year |  | $ | 3,039 |  |  | $ | 1,604 |
Prior service cost of long-term care plan participants |  | — |  |  | 1,595 |
Service Cost |  | 32 |  |  | 34 |
Interest cost |  | 129 |  |  | 124 |
Participant contributions |  | 47 |  |  | 47 |
Actuarial loss (gain) |  | 130 |  |  | (284 | )
Benefits paid |  | (128 | ) |  | (81 | )
Amendments |  | — |  |  | — |
Accumulated post-retirement benefit obligation at end of year |  | $ | 3,249 |  |  | $ | 3,039 |
Change in plan assets: |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | — |  |  | $ | — |
Contributions by employer |  | 81 |  |  | 34 |
Contributions by participant |  | 47 |  |  | 47 |
Benefits paid |  | (128 | ) |  | (81 | )
Fair value of plan assets at end of year |  | $ | — |  |  | $ | — |
Amounts Recognized in Consolidated Balance Sheet |  |  |  |  |  |
Other Liabilities |  | $ | 3,249 |  |  | $ | 3,039 |
Net periodic post-retirement cost is comprised of the following for the year ended December 31, 2016 and 2015:
(In thousands) |  | 2016 |  | 2015
Service cost |  | $ | 32 |  |  | $ | 34 |
Interest costs |  | 129 |  |  | 124 |
Amortization of net prior service credit |  | 83 |  |  | 83 |
Amortization of net actuarial loss |  | — |  |  | — |
Net periodic post-retirement costs |  | $ | 244 |  |  | $ | 241 |
Changes in benefit obligations recognized in accumulated other comprehensive income during 2016 and 2015 are as follows:
(In thousands) |  | 2016 |  | 2015
Amortization of actuarial loss |  | $ | — |  |  | $ | — |
Amortization of prior service credit |  | (83 | ) |  | (83 | )
Net actuarial (gain) loss |  | (126 | ) |  | (257 | )
Total recognized in accumulated other comprehensive income |  | (209 | ) |  | (340 | )
Accrued post-retirement liability recognized |  | $ | 1,718 |  |  | $ | 1,555 |
The amounts in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit cost are as follows:
(In thousands) |  | 2016 |  | 2015
Net prior service cost (credit) |  | $ | 1,659 |  |  | $ | 1,742 |
Net actuarial (gain) loss |  | (126 | ) |  | (257 | )
Total recognized in accumulated other comprehensive income |  | 1,533 |  |  | 1,485 |
The amount expected to be amortized from other comprehensive income into net periodic postretirement cost over the next fiscal year is $83 thousand. The discount rates used in the measurement of the postretirement medical and LTC plan obligations are determined by comparing the expected future retirement payment cash flows of the plans to the Citigroup Above Median Double-A Curve as of the measurement date. The assumed discount rates on a weighted-average basis were 3.91% and 4.15% as of December 31, 2016 and December 31, 2015, respectively. The assumed health care cost trend rate used in measuring the accumulated post-retirement benefit medical obligation is expected to be 8.15% for 2016, and is gradually expected to decrease to 3.89% by 2075. This assumption may have a significant effect on the amounts reported. However, as noted above, increases in premium levels are the financial responsibility of the plan beneficiary. Thus an increase or decrease in 1% of the health care cost trend rates utilized would have had an immaterial effect on the service and interest cost as well as the accumulated post-retirement benefit obligation for the postretirement plan as of December 31, 2016. For participants in the LTC plan covered by insurance policies, no increase in annual premiums is assumed based on the history of the corresponding insurance provider. Estimated benefit payments under the post-retirement benefit plan over the next ten years at December 31, 2016 are as follows:
Year |  | Payments (In thousands)
2017 |  | 81 |
2018 |  | 100 |
2019 |  | 100 |
2020 |  | 99 |
2021 |  | 102 |
2022 - 2026 |  | 522 |
401(k) Plan The Company provides a 401(k) Plan in which most employees participate. The Company contributes a non-elective 3% of gross annual wages for each participant, regardless of the participant’s deferral, in addition to a 100% match up to 4% of gross annual wages. The Company’s contributions vest immediately. Expense related to the plan was $3.9 million in 2016, $3.6 million in 2015, and $3.0 million in 2014. Employee Stock Ownership Plan (“ESOP”) As part of the acquisition of Hampden in 2015, along with another merger in 2012 and two during 2011, the Company acquired ESOP plans that were frozen and terminated prior to the completion of those transactions. On the acquisition dates, all amounts in the plans were vested and the loans under the plans were repaid from the sale proceeds of unallocated shares. Other Plans The Company maintains a supplemental executive retirement plan (“SERP”) for a few select executives. Benefits generally commence no earlier than age sixty-two and are payable at the executive’s option, either as an annuity or as a lump sum. Some of these SERPs were assumed in connection with the Beacon acquisition in 2012. In 2015 a SERP was acquired in connection with the Hampden Bank acquisition with accrued liability of $1.4 million at acquisition date in April 2015 and $1.2 million at year-end 2016. At year-end 2016 and 2015, the accrued liability for these SERPs were $7.4 million and $6.5 million, respectively. SERP expense was $917 thousand in 2016, $752 thousand in 2015, and $583 thousand in 2014, and is recognized over the required service period. The Company assumed split-dollar life insurance agreements with the acquisition of Hampden Bank in 2015 with an accrued liability of $860 thousand at acquisition date in April 2015 and $1.2 million as of year-end 2016. The Company has endorsement split-dollar arrangements pertaining to certain current and prior executives. Under these arrangements, the Company purchased policies insuring the lives of the executives, and separately entered into agreements to split the policy benefits with the executive. There are no post-retirement benefits associated with these policies.

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