Note 13.

Employee Benefit Plans

Defined Benefit Plans

The Company maintains two nonqualified domestic, noncontributory defined benefit plans (the “Benefit Plans”) for key members of senior management and non-management directors. The Company’s unfunded Benefit Plans include the Supplemental Executive Retention Plan (“SERP”) and the Directors’ Supplemental Retirement Plan (“Directors’ Plan”). The SERP provides for a defined benefit, at normal retirement age, targeted at 35% of the participant’s projected final average compensation, subject to a defined maximum annual benefit. Benefits under the SERP generally become payable at age 62. The Directors’ Plan provides for a defined benefit, at normal retirement age, up to 100% of the participant’s highest consecutive three-year average compensation. Benefits under the Directors’ Plan generally become payable at age 70. The following table presents the changes in the aggregate actuarial benefit obligation during the periods indicated:


	December 31,
(Amounts in thousands)	2016			2015
Beginning balance	$	8,390		$	7,631
Plan change		69			—
Service cost		184			180
Interest cost		382			334
Actuarial loss		367			363
Benefits paid		(211	)		(118	)

Ending balance	$	9,181		$	8,390

The following table presents the components of net periodic pension cost and the assumed discount rate for the periods indicated:


	Year Ended December 31,
(Amounts in thousands, except discount rate)	2016			2015			2014
Service cost	$	184		$	180		$	128
Interest cost		382			334			336
Amortization of prior service cost		226			260			260
Amortization of losses		47			66			—

Net periodic cost	$	839		$	840		$	724

Assumed discount rate		4.22	%		4.62	%		4.41	%

The following schedule presents the projected benefit payments to be paid under the Benefit Plans, by year, as of December 31, 2016:


(Amounts in thousands)
2017	$	465
2018		462
2019		458
2020		529
2021		587
2022 through 2026		2,937

Employee Welfare Plan

The Company provides various medical, dental, vision, life, accidental death and dismemberment, and long-term disability insurance benefits to all full-time employees who elect coverage under this program. A third-party administrator manages the health plan. Monthly employer and employee contributions are made to a tax-exempt employee benefits trust where the third-party administrator processes and pays claims. As of December 31, 2016, stop-loss insurance coverage generally limits the Company’s risk of loss to $125 thousand for individual claims and $3.92 million for aggregate claims. Expenses related to the health plan totaled $3.48 million in 2016, $3.06 million in 2015, and $2.88 million in 2014.

Deferred Compensation Plan

The Company maintains deferred compensation agreements with certain current and former officers that provide benefit payments, over various periods, commencing at retirement or death. Accrued benefits are based on the present values of expected payments and estimated life expectancies and totaled $458 thousand as of December 31, 2016 and 2015. Expenses related to the deferred compensation plan totaled $60 thousand in each of the three years ended December 31, 2016.

Employee Stock Ownership and Savings Plan

The Company maintains the Employee Stock Ownership and Savings Plan (“KSOP”) that consists of a 401(k) savings feature that covers all employees that meet minimum eligibility requirements. The Company matches employee contributions at levels determined by the Board of Directors annually. These contributions are made in the first quarter following each plan year and employees must be employed on the last day of the plan year to be eligible. Matching contributions to qualified deferrals under the 401(k) savings component of the KSOP totaled $1.50 million in 2016, $1.53 million in 2015, and $1.58 million in 2014. The KSOP held 410,384 shares of the Company’s common stock as of December 31, 2016, 428,785 shares as of December 31, 2015, and 457,765 shares as of December 31, 2014. Substantially all plan assets are invested in the Company’s common stock.

Equity-Based Compensation Plans

The Company maintains equity-based compensation plans to promote the long-term success of the Company by encouraging officers, employees, directors, and other individuals performing services for the Company to focus on critical long-range objectives. The Company’s equity-based compensation plans include the 2012 Omnibus Equity Compensation Plan (“2012 Plan”), 2004 Omnibus Stock Option Plan, 2001 Director’s Option Plan, 1999 Stock Option Plan, and various other plans obtained through acquisitions. As of December 31, 2016, the 2012 Plan was the only plan available for the issuance of future grants. All plans issued or obtained before the 2012 Plan are frozen and no new grants may be issued; however, any options or awards unexercised and outstanding under those plans remain in effect per their respective terms. The 2012 Plan authorized 600,000 shares available for potential grants of incentive stock options, nonqualified stock options, performance awards, restricted stock, restricted stock units, stock appreciation rights, bonus stock, and stock awards. Grants issued under the 2012 Plan state the period of time the grant may be exercised, not to exceed more than ten years from the date granted. The Company’s Compensation and Retirement Committee determines the vesting period for each grant; however, if no vesting period is specified the vesting occurs in 25% increments on the first four anniversaries of the grant date.

The following table presents the pre-tax compensation expense and excess tax benefit recognized in earnings for all equity-based compensation plans for the periods indicated:


	Year Ended December 31,
(Amounts in thousands)	2016		2015		2014
Pre-tax compensation expense	$	209	$	110	$	332
Excess tax benefit		174		8		5

Stock Options

The following table presents stock option activity and related information for the year ended December 31, 2016:


(Amounts in thousands, except share and per share data)	Option			Weighted Average Exercise Price		Weighted Average Remaining Contractual		Aggregate Intrinsic
	Shares			Per Share		Term (Years)		Value
Outstanding, January 1, 2016		236,404		$	20.17
Granted		32,768			20.15
Exercised		(43,463	)		17.26
Canceled		(25,313	)		28.56

Outstanding, December 31, 2016		200,396		$	19.73		6.1	$	2,123

Exercisable, December 31, 2016		167,628		$	19.65		5.5	$	1,790

The following table presents the total options granted and the weighted average assumptions used to estimate the fair value of those options during the periods indicated:


	Year Ended December 31,
	2016			2015		2014
Stock options granted	$	32,768		$	—	$	—
Grant-date fair value per share		10.16			—		—
Volatility		25.04	%		—		—
Risk-free rate		1.56	%		—		—
Expected dividend yield		3.09	%		—		—
Expected term (in years)		6.50			—		—

The intrinsic value of options exercised totaled $434 thousand in 2016, $20 thousand in 2015, and $13 thousand in 2014. As of December 31, 2016, unrecognized compensation cost related to nonvested stock options was $101 thousand with an expected weighted average recognition period of 1.11 years. The actual compensation cost recognized might differ from this estimate due to various items, including new grants and changes in estimated forfeitures.

Restricted Stock Awards

The following table presents restricted stock activity and related information for the year ended December 31, 2016:


				Weighted Average
	Shares			Grant-Date Fair Value
Nonvested, January 1, 2016		5,327		$	16.85
Granted		46,033			19.97
Vested		(21,533	)		17.90
Canceled		(2,024	)		19.27

Nonvested, December 31, 2016		27,803		$	20.59

As of December 31, 2016, unrecognized compensation cost related to nonvested restricted stock awards was $447 thousand with an expected weighted average recognition period of 2.03 years. The actual compensation cost recognized might differ from this estimate due to various items, including new awards granted and changes in estimated forfeitures.

Performance Stock Awards

Performance stock awards represent restricted stock that may be issuable in the future if specific performance criteria are met. The following table presents performance stock activity and related information for the year ended December 31, 2016:


	Shares			Weighted Average Grant-Date Fair Value
Nonvested, January 1, 2016		9,848		$	15.83
Granted		—			—
Vested		(9,848	)		15.83
Canceled		—			—

Nonvested, December 31, 2016		—		$	—

As of December 31, 2016, there was no unrecognized compensation cost related to nonvested performance stock awards. The actual compensation cost recognized might differ from this estimate due to various items, including new awards granted, changes in estimated forfeitures, and resolution of performance contingencies.