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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2015
Employee Benefit Plans [Abstract] |
Employee Benefit Plans | (17.) EMPLOYEE BENEFIT PLANS Defined Contribution Plan Employees that meet specified eligibility conditions are eligible to participate in the Company sponsored 401(k) plan. Under the plan, participants may make contributions, in the form of salary deferrals, up to the maximum Internal Revenue Code limit. Until December 31, 2015, the Company matched a participant's contributions up to 4.5% of compensation, calculated at 100% of the first 3% of compensation and 50% of the next 3% of compensation deferred by the participant. The Company was also permitted to make additional discretionary matching contributions, although no such additional discretionary contributions were made in 2015, 2014 or 2013. The expense included in salaries and employee benefits in the consolidated statements of income for this plan amounted to $1.3 million in 2015 and $1.1 million in 2014 and 2013. Effective January 1, 2016, the 401(k) Plan was amended to discontinue the Company's matching contribution. Defined Benefit Pension Plan The Company participates in The New York State Bankers Retirement System (the "Plan"), a defined benefit pension plan covering substantially all employees, subject to the limitations related to the plan closure effective December 31, 2006. Prior to January 1, 2016, the benefits were generally based on years of service and the employee's highest average compensation during five consecutive years of employment. The defined benefit plan was closed to new participants effective December 31, 2006. Only employees hired on or before December 31, 2006 and who met participation requirements on or before January 1, 2008 were eligible to receive benefits. Effective January 1, 2016, the Plan was amended to open the Plan up to eligible employees who were hired on and after January 1, 2007, discontinue the Plan's prior formula and provide all eligible participants with a cash balance benefit formula. The following table provides a reconciliation of the Company's changes in the Plan's benefit obligations, fair value of assets and a statement of the funded status as of and for the year ended December 31 (in thousands):
|  | 2015 |  |  | 2014 |
Change in projected benefit obligation: |  |  |  |  |  |
Projected benefit obligation at beginning of period | $ | 61,732 |  | $ | 48,991 |
Service cost |  | 2,324 |  |  | 1,918 |
Interest cost |  | 2,328 |  |  | 2,291 |
Actuarial (gain) loss |  | (4,406 | ) |  | 10,938 |
Benefits paid and plan expenses |  | (2,746 | ) |  | (2,406 | )
Projected benefit obligation at end of period |  | 59,232 |  |  | 61,732 |
Change in plan assets: |  |  |  |  |  |
Fair value of plan assets at beginning of period |  | 75,584 |  |  | 64,603 |
Actual return on plan assets |  | (480 | ) |  | 5,387 |
Employer contributions |  | - |  |  | 8,000 |
Benefits paid and plan expenses |  | (2,746 | ) |  | (2,406 | )
Fair value of plan assets at end of period |  | 72,358 |  |  | 75,584 |
Funded status at end of period | $ | 13,126 |  | $ | 13,852 |
The accumulated benefit obligation was $53.5 million and $54.9 million at December 31, 2015 and 2014, respectively. The Company's funding policy is to contribute, at a minimum, an actuarially determined amount that will satisfy the minimum funding requirements determined under the appropriate sections of Internal Revenue Code. The Company had no minimum required contribution for the 2016 fiscal year. Estimated benefit payments under the Plan over the next ten years at December 31, 2015 are as follows (in thousands):
2016 | $ | 2,127
2017 |  | 2,288
2018 |  | 2,346
2019 |  | 2,472
2020 |  | 2,666
2021 - 2025 |  | 15,627
Net periodic pension cost consists of the following components for the years ended December 31 (in thousands):
|  | 2015 |  |  | 2014 |  |  | 2013 |
Service cost | $ | 2,324 |  | $ | 1,918 |  | $ | 2,063 |
Interest cost on projected benefit obligation |  | 2,328 |  |  | 2,291 |  |  | 2,017 |
Expected return on plan assets |  | (4,820 | ) |  | (4,117 | ) |  | (3,684 | )
Amortization of unrecognized loss |  | 926 |  |  | 159 |  |  | 1,344 |
Amortization of unrecognized prior service cost |  | 20 |  |  | 20 |  |  | 20 |
Net periodic pension cost | $ | 778 |  | $ | 271 |  | $ | 1,760 |
The actuarial assumptions used to determine the net periodic pension cost were as follows:
| 2015 |  | 2014 |  | 2013 |
Weighted average discount rate | 3.86 | % | 4.80 | % | 3.84 | %
Rate of compensation increase | 3.00 | % | 3.00 | % | 3.00 | %
Expected long-term rate of return | 6.50 | % | 6.50 | % | 6.50 | %
The actuarial assumptions used to determine the projected benefit obligation were as follows:
| 2015 |  | 2014 |  | 2013 |
Weighted average discount rate | 4.21 | % | 3.86 | % | 4.80 | %
Rate of compensation increase | 3.00 | % | 3.00 | % | 3.00 | %
The weighted average discount rate was based upon the projected benefit cash flows and the market yields of high grade corporate bonds that are available to pay such cash flows. The weighted average expected longterm rate of return is estimated based on current trends in the Plan's assets as well as projected future rates of return on those assets and reasonable actuarial assumptions based on the guidance provided by Actuarial Standard of Practice No. 27, "Selection of Economic Assumptions for Measuring Pension Obligations" for long term inflation, and the real and nominal rate of investment return for a specific mix of asset classes. The following assumptions were used in determining the longterm rate of return:
Equity securities | Dividend discount model, the smoothed earnings yield model and the equity risk premium model
Fixed income securities | Current yieldtomaturity and forecasts of future yields
Other financial instruments | Comparison of the specific investment's risk to that of fixed income and equity instruments and using judgment
The long term rate of return considers historical returns. Adjustments were made to historical returns in order to reflect expectations of future returns. These adjustments were due to factor forecasts by economists and longterm U.S. Treasury yields to forecast longterm inflation. In addition, forecasts by economists and others for longterm GDP growth were factored into the development of assumptions for earnings growth and per capita income. The Plan's overall investment strategy is to achieve a mix of approximately 97% of investments for long-term growth and 3% for near-term benefit payments with a wide diversification of asset types, fund strategies, and fund managers. The target allocations for Plan assets are shown in the table below. Cash equivalents consist primarily of government issues (maturing in less than three months) and short term investment funds. Equity securities primarily include investments in common stock, depository receipts, preferred stock, commingled pension trust funds, exchange traded funds and real estate investment trusts. Fixed income securities include corporate bonds, government issues, credit card receivables, mortgage backed securities, municipals, commingled pension trust funds and other asset backed securities. Other investments are real estate interests and related investments held within a commingled pension trust fund. The Plan currently prohibits its investment managers from purchasing any security greater than 5% of the portfolio at the time of purchase or greater than 8% at market value in any one issuer. Effective June 2013, the issuer of any security purchased must be located in a country in the Morgan Stanley Capital International World Index. In addition, the following are prohibited:
Equity securities | Short sales Unregistered stocks Margin purchases
Fixed income securities | Mortgage backed derivatives that have an inverse floating rate coupon or that are interest only securities Any ABS that is not issued by the U.S. Government or its agencies or its instrumentalities Generally securities of less than Baa2/BBB quality may not be purchased Securities of less than A-quality may not in the aggregate exceed 13% of the investment manager's portfolio. An investment manager's portfolio of commercial MBS and ABS shall not exceed 10% of the portfolio at the time of purchase.
Other financial instruments | Unhedged currency exposure in countries not defined as "high income economies" by the World Bank
All other investments not prohibited by the Plan are permitted. At December 31, 2015 and 2014, the Plan held certain investments which are no longer deemed acceptable to acquire. These positions will be liquidated when the investment managers deem that such liquidation is in the best interest of the Plan. The target allocation range below is both historic and prospective in that it has not changed since prior to 2013. It is the asset allocation range that the investment managers have been advised to adhere to and within which they may make tactical asset allocation decisions.
|  |  |  |  |  |  | Weighted |
|  |  |  |  |  |  | Average |
| 2015 |  | Percentage of Plan Assets |  | Expected |
| Target |  | at December 31, |  | Long-term |
| Allocation |  | 2015 |  | 2014 |  | Rate of Return |
Asset category: |  |  |  |  |  |  |  |
Cash equivalents | 0– 20% |  | 5.2 | % | 8.7 | % | 0.16 | %
Equity securities | 40– 60 |  | 47.2 |  | 48.2 |  | 3.97 |
Fixed income securities | 40– 60 |  | 43.9 |  | 43.1 |  | 2.01 |
Other financial instruments | 0– 5 |  | 3.7 |  | - |  | 0.28 |
Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value (see Note 18 - Fair Value Measurements). In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments valued using the NAV (Net Asset Value) are classified as level 2 if the Plan can redeem its investment with the investee at the NAV at the measurement date. If the Plan can never redeem the investment with the investee at the NAV, it is considered a level 3. If the Plan can redeem the investment at the NAV at a future date, the Plan's assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset. The Plan uses the Thomson Reuters Pricing Service to determine the fair value of equities excluding commingled pension trust funds, the pricing service of IDC Corporate USA to determine the fair value of fixed income securities excluding commingled pension trust funds and JP Morgan Chase Bank, N.A. ("JPMorgan") to determine the fair value of commingled pension trust funds. The following is a table of the pricing methodology and unobservable inputs used by JPMorgan in pricing commingled pension trust funds ("CPTF"):
Principal Valuation
| Technique(s) Used | Unobservable Inputs
CPTF - Fixed Income: |  |
CPTF (Corporate High Yield) of | Market | None
JPMorgan |  |
CPTF (High Yield) of JPMorgan | Market Comparables Companies | EBITDA multiple and discounts for lack
|  | of marketability
CPTF (Extended Duration) of JPMorgan | Market and Income | Constant prepayment rate, Constant
|  | default rate and Yield
CPTF (Long Duration Investment | Market | None
Grade) of JPMorgan |  |
CPTF (Emerging Markets Currency | Market | None
Debt) of JPMorgan |  |
CPTF (Emerging Markets - Fixed | Market | None
Income) of JPMorgan |  |
CPTF – Other: |  |
CPTF (Strategic Property) of JPMorgan | Market, Income, Debt Service and | Credit Spreads, Discount Rate, Loan to
| Sales Comparison | Value Ratio, Terminal Capitalization
|  | Rate and Value per Square Foot
When valuing Commingled Pension Trust Funds (Equity) JPMorgan uses a market methodology and does not rely on unobservable inputs in those valuations. The following table sets forth a summary of the changes in the Plan's level 3 assets for the year ended December 31, 2015:
Level 3 assets, beginning of year | $ | -
Purchases |  | 2,334
Unrealized gains |  | 336
Level 3 assets, end of year | $ | 2,670
The major categories of Plan assets measured at fair value on a recurring basis as of December 31 are presented in the following tables (in thousands).
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | Inputs |  | Inputs |  | Inputs |  | Fair Value
2015 |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |
Foreign currencies | $ | 35 | $ | - | $ | - | $ | 35
Short term investment funds |  | - |  | 3,745 |  | - |  | 3,745
Total cash equivalents |  | 35 |  | 3,745 |  | - |  | 3,780
Equity securities: |  |  |  |  |  |  |  |
Common stock |  | 13,083 |  | - |  | - |  | 13,083
Depository receipts |  | 336 |  | - |  | - |  | 336
Commingled pension trust funds |  | - |  | 10,557 |  | - |  | 10,557
Exchange traded funds |  | 10,190 |  | - |  | - |  | 10,190
Total equity securities |  | 23,609 |  | 10,557 |  | - |  | 34,166
Fixed income securities: |  |  |  |  |  |  |  |
Collateralized mortgage obligations |  | - |  | 608 |  | - |  | 608
Commingled pension trust funds |  | - |  | 17,889 |  | - |  | 17,889
Corporate bonds |  | - |  | 3,439 |  | - |  | 3,439
FHLMC |  | - |  | 276 |  | - |  | 276
FNMA |  | - |  | 1,966 |  | - |  | 1,966
GNMA II |  | - |  | 384 |  | - |  | 384
Government issues |  | - |  | 7,180 |  | - |  | 7,180
Total fixed income securities |  | - |  | 31,742 |  | - |  | 31,742
Other investments: |  |  |  |  |  |  |  |
Commingled pension trust funds – Realty |  | - |  | - |  | 2,670 |  | 2,670
Total Plan investments | $ | 23,644 | $ | 46,044 | $ | 2,670 | $ | 72,358
At December 31, 2015, the portfolio was managed by two investment firms, with control of the portfolio split approximately 58% and 38% under the control of the investment managers with the remaining 4% under the direct control of the Plan. A portfolio concentration in two of the commingled pension trust funds, an exchange traded fund and a short term investment fund of 11%, 7%, 7% and 5%, respectively, existed at December 31, 2015.
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
|  | Inputs |  | Inputs |  | Inputs |  | Fair Value
2014 |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |
Foreign currencies | $ | 31 | $ | - | $ | - | $ | 31
Government issues |  | - |  | 249 |  | - |  | 249
Short term investment funds |  | - |  | 6,327 |  | - |  | 6,327
Total cash equivalents |  | 31 |  | 6,576 |  | - |  | 6,607
Equity securities: |  |  |  |  |  |  |  |
Common stock |  | 14,732 |  | - |  | - |  | 14,732
Depository receipts |  | 185 |  | - |  | - |  | 185
Commingled pension trust funds |  | - |  | 10,802 |  | - |  | 10,802
Exchange traded funds |  | 10,573 |  | - |  | - |  | 10,573
Preferred stock |  | 140 |  | - |  | - |  | 140
Total equity securities |  | 25,630 |  | 10,802 |  | - |  | 36,432
Fixed income securities: |  |  |  |  |  |  |  |
Auto loan receivable |  | - |  | 330 |  | - |  | 330
Collateralized mortgage obligations |  | - |  | 682 |  | - |  | 682
Commingled pension trust funds |  | - |  | 21,083 |  | - |  | 21,083
Corporate bonds |  | - |  | 2,971 |  | - |  | 2,971
FHLMC |  | - |  | 73 |  | - |  | 73
FNMA |  | - |  | 1,951 |  | - |  | 1,951
GNMA II |  | - |  | 123 |  | - |  | 123
Government issues |  | - |  | 5,139 |  | - |  | 5,139
Other asset backed securities |  | - |  | 160 |  | - |  | 160
Other securities |  | - |  | 33 |  | - |  | 33
Total fixed income securities |  | - |  | 32,545 |  | - |  | 32,545
Total Plan investments | $ | 25,661 | $ | 49,923 | $ | - | $ | 75,584
At December 31, 2014, the portfolio was managed by two investment firms, with control of the portfolio split approximately 57% and 39% under the control of the investment managers with the remaining 4% under the direct control of the Plan. A portfolio concentration in two of the commingled pension trust funds and a short term investment fund of 13%, 9% and 8%, respectively, existed at December 31, 2014. Postretirement Benefit Plan An entity acquired by the Company provided health and dental care benefits to retired employees who met specified age and service requirements through a postretirement health and dental care plan in which both the acquired entity and the retirees shared the cost. The plan provided for substantially the same medical insurance coverage as for active employees until their death and was integrated with Medicare for those retirees aged 65 or older. In 2001, the plan's eligibility requirements were amended to curtail eligible benefit payments to only retired employees and active employees who had already met the then-applicable age and service requirements under the Plan. In 2003, retirees under age 65 began contributing to health coverage at the same cost-sharing level as that of active employees. Retirees ages 65 or older were offered new Medicare supplemental plans as alternatives to the plan historically offered. The cost sharing of medical coverage was standardized throughout the group of retirees aged 65 or older. In addition, to be consistent with the administration of the Company's dental plan for active employees, all retirees who continued dental coverage began paying the full monthly premium. The accrued liability included in other liabilities in the consolidated statements of financial condition related to this plan amounted to $107 thousand and $124 thousand as of December 31, 2015 and 2014, respectively. The postretirement expense for the plan that was included in salaries and employee benefits in the consolidated statements of income was not significant for the years ended December 31, 2015, 2014 and 2013. The plan is not funded. The components of accumulated other comprehensive loss related to the defined benefit plan and postretirement benefit plan as of December 31 are summarized below (in thousands):
|  | 2015 |  |  | 2014 |
Defined benefit plan: |  |  |  |  |  |
Net actuarial loss | $ | (17,715 | ) | $ | (17,747 | )
Prior service cost |  | (32 | ) |  | (52 | )
|  | (17,747 | ) |  | (17,799 | )
Postretirement benefit plan: |  |  |  |  |  |
Net actuarial loss |  | (162 | ) |  | (186 | )
Prior service credit |  | 304 |  |  | 372 |
|  | 142 |  |  | 186 |
|  | (17,605 | ) |  | (17,613 | )
Deferred tax benefit |  | 6,974 |  |  | 6,977 |
Amounts included in accumulated other comprehensive loss | $ | (10,631 | ) | $ | (10,636 | )
Changes in plan assets and benefit obligations recognized in other comprehensive income on a pre-tax basis during the years ended December 31 are as follows (in thousands):
|  | 2015 |  |  | 2014 |
Defined benefit plan: |  |  |  |  |  |
Net actuarial (loss) gain | $ | (894 | ) | $ | (9,669 | )
Amortization of net loss |  | 926 |  |  | 159 |
Amortization of prior service cost |  | 20 |  |  | 20 |
|  | 52 |  |  | (9,490 | )
Postretirement benefit plan: |  |  |  |  |  |
Net actuarial (loss) gain |  | 7 |  |  | (40 | )
Amortization of net loss |  | 17 |  |  | 17 |
Amortization of prior service credit |  | (68 | ) |  | (68 | )
|  | (44 | ) |  | (91 | )
Total recognized in other comprehensive income | $ | 8 |  | $ | (9,581 | )
For the year ending December 31, 2016, the estimated net loss and prior service credit for the plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost is $955 thousand and $47 thousand, respectively. Supplemental Executive Retirement Agreements The Company has non-qualified Supplemental Executive Retirement Agreements ("SERPs") covering one current and four former executives. The unfunded pension liability related to the SERPs was $2.3 million and $2.2 million at December 31, 2015 and 2014, respectively. SERP expense was $408 thousand, $295 thousand, and $95 thousand for 2015, 2014 and 2013, respectively.

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