Employee Benefit Plans

401(k)/Profit Sharing Plan

The Company has a 401(k)/profit sharing plan and the majority of employees participate in the plan. Employees may contribute pre-tax contributions to the 401(k)/profit sharing plan up to the maximum amount allowed by federal tax laws. The Company makes matching contributions of up to 4% of an employee’s eligible compensation. The Company, at its discretion, may make additional matching and profit sharing contributions. For the year ended December 31, 2018, 2017 and 2016, these additional contributions totaled 3% of employee eligible compensation. For the year ended December 31, 2018, 2017 and 2016, expenses under the 401(k)/profit sharing plan were $2.3 million, $2.3 million, and $2.2 million, respectively.

SERP and Other Postretirement Benefit Plan

The Company sponsors unfunded, non-qualified SERPs for certain officers. These agreements are designed to make up the shortfall (when compared to a non-highly compensated employee) in replacing income at retirement due to IRS compensation and benefit limits under the 401(k) plan and Social Security. The SERP provides for a minimum 15-year guaranteed benefit for all vested participants.

The Company provides medical and life insurance to certain eligible retired employees under the other postretirement benefit plan.

The following table summarizes changes in the benefit obligation and plan assets for (i) SERP and (ii) the other postretirement benefit plan as of December 31:



	SERP						Other Postretirement Benefits
	2018			2017			2018			2017
Benefit obligations:
Beginning of year	$	13,790		$	11,523		$	3,791		$	3,635
Service cost	446			335			46			53
Interest cost	488			452			132			144
Actuarial (gain) loss	(1,534		)	1,955			(209		)	110
Benefits paid	(473		)	(475		)	(144		)	(151		)
End of year	12,717			13,790			3,616			3,791
Fair value of plan assets:
Beginning of year	—			—			—			—
Employer contributions	473			475			144			151
Benefits paid	(473		)	(475		)	(144		)	(151		)
End of year	—			—			—			—
Unfunded status at end of year⁽¹⁾	$	12,717		$	13,790		$	3,616		$	3,791
Amounts recognized in AOCI, net of tax:
Net actuarial loss	$	1,859		$	3,504		$	449		$	654
Prior service credit	—			—			(151		)	(170		)
Total	$	1,859		$	3,504		$	298		$	484


(1)	Presented within other liabilities on the consolidated statements of condition.

The accumulated benefit obligation for the SERP at December 31, 2018 and 2017 was $12.1 million and $12.3 million, respectively.

For the year ending December 31, 2019, the estimated actuarial loss on the SERP that will be amortized from AOCI into net periodic benefit cost is $244,000. All prior service costs have been fully amortized.

For the year ending December 31, 2019, the estimated actuarial loss and prior service credit on other postretirement benefits that will be amortized from AOCI into net periodic benefit cost is $26,000 and $24,000, respectively.

The components of net periodic benefit cost and other amounts recognized in OCI, before taxes, were as follows for the year ended December 31:



	SERP									Other Postretirement Benefits
	2018			2017			2016			2018			2017			2016
Net periodic benefit cost:
Service cost⁽¹⁾	$	446		$	335		$	308		$	46		$	53		$	59
Interest cost⁽²⁾	488			452			432			132			144			151
Recognized net actuarial loss⁽²⁾	561			246			220			52			41			30
Amortization of prior service cost (credit)⁽²⁾	—			—			7			(24		)	(24		)	(22		)
Net periodic benefit cost	1,495			1,033			967			206			214			218
Changes in funded status recognized in OCI, before taxes:
Net actuarial (gain) loss arising during period	(1,534		)	1,955			219			(209		)	110			143
Reclassifications to net periodic benefit cost:
Amortization of net unrecognized actuarial loss	(561		)	(246		)	(220		)	(52		)	(41		)	(30		)
Amortization of prior service (cost) credit	—			—			(7		)	24			24			22
Total recognized in OCI, before taxes	(2,095		)	1,709			(8		)	(237		)	93			135
Total recognized in net periodic benefit cost and OCI, before taxes	$	(600	)	$	2,742		$	959		$	(31	)	$	307		$	353


(1)	Presented in salaries and employee benefits on the consolidated statements of income.


(2)	Presented in other expenses on the consolidated statements of income.

The following assumptions were used in determining benefit obligations and net period benefit costs:



	SERP						Other Postretirement Benefits
	2018		2017		2016		2018		2017		2016
Weighted-average assumptions as of end of year:
Discount rate for benefit obligation	4.2	%	3.6	%	4.0	%	4.2	%	3.6	%	4.0	%
Discount rate for net periodic benefit cost	3.6	%	4.0	%	4.0	%	3.6	%	4.0	%	4.5	%
Rate of compensation increase for benefit obligation	3.0	%	5.0	%	4.0	%	—		—		—
Rate of compensation increase for net periodic benefit cost	3.0	%	5.0	%	4.0	%	—		—		—
Health care cost trend rate assumed for future years	—		—		—		6.0	%	6.5	%	7.0	%

A 1.0% increase or decrease in the assumed health care cost trend rate would not materially increase or decrease the Company's accumulated postretirement benefit obligation and the related service and interest cost as of December 31, 2018. The postretirement plan has a built-in cap on annual benefits to participants and, thus, the accumulated postretirement benefit obligation and the assumed health care cost trend are relatively stable each period.

For the year ending December 31, 2019, the expected contribution is $477,000 for the SERP and $166,000 for the other postretirement benefits plan. The expected benefit payments for the next ten years are presented in the following table:



	SERP		Other Postretirement Benefits
2019	$	477	$	166
2020	486		175
2021	536		183
2022	566		191
2023	526		197
Next 5 years	2,149		1,102