XML 43 R27.htm IDEA: XBRL DOCUMENT v3.6.0.2
Note 19 - Supplemental Executive Retirement Plan
12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
Pension and Other Postretirement Benefits Disclosure [Text Block]
Note
1
9
Supplemental Executive Retirement Plan
 
The Bank has entered into Supplemental Executive Retirement and Death Benefit Agreements (the “SERP Agreements”) with certain of the Bank’s executive officers other than Mr. Paul, which upon the executive’s retirement, will provide for a stated monthly payment for such executive’s lifetime subject to certain death benefits described below. The retirement benefit is computed as a percentage of each executive’s projected average base salary over the
five
years preceding retirement, assuming retirement at age
67.
The SERP Agreements provide that (a) the benefits vest ratably over
six
years of service to the Bank, with the executive receiving credit for years of service prior to entering into the SERP Agreement (b) death, disability and change-in-control shall result in immediate vesting, and (c) the monthly amount will be reduced if retirement occurs earlier than age
67
for any reason other than death, disability or change-in-control. The SERP Agreements further provide for a death benefit in the event the retired executive dies prior to receiving
180
monthly installments, paid either in a lump sum payment or continued monthly installment payments, such that the executive’s beneficiary has received payment(s) sufficient to equate to a cumulative
180
monthly installments.
 
The SERP Agreements are unfunded arrangements maintained primarily to provide supplemental retirement benefits and comply with Section
409A
of the Internal Revenue Code. The Bank financed the retirement benefits by purchasing fixed annuity contracts with
four
insurance carriers in
2013
totaling
$11.4
million that have been designed to provide a future source of funds for the lifetime retirement benefits of the SERP Agreements. The primary impetus for utilizing fixed annuities is a substantial savings in compensation expenses for the Bank as opposed to a traditional SERP Agreement. The annuity contracts accrued
$46
thousand and
$84
thousand respectively of income for the years ended
December
31,
2016
and
2015,
which is included in other noninterest income on the Consolidated Statement of Operations. The cash surrender value of the annuity contracts is
$11.9
million at
December
31,
2016
and is included in other assets on the Consolidated Balance Sheet. For the years ended
December
31,
2016
and
2015,
the Company recorded benefit expense accruals of
$933
thousand and
$953
thousand respectively for this post retirement benefit.
 
Upon death of a named executive, the annuity contract related to such executive terminates. The Bank has purchased additional bank owned life insurance contracts, which would effectively finance payments (up to a
15
year certain amount) to the executives’ named beneficiaries.