EMPLOYEE BENEFIT PLANS

Pension Plans

The Company maintains a legacy, employer-sponsored defined benefit pension plan (the “Plan”) for which participation and benefit accruals were frozen on January 13, 2017. The Plan was assumed in connection with a business combination in 2017. 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, 2018, all minimum Employee Retirement Income Security Act (“ERISA”) funding requirements have been met. The Company did not have any defined benefit pension plans prior to 2017.

The following tables set forth information about the plan for the year ended December 31, 2018 and 2017:



(in thousands)	2018			2017
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	9,020		$	8,642
Service cost	—			—
Interest cost	315			334
Actuarial (gain) loss	(771		)	662
Benefits paid	(291		)	(269		)
Settlements	(264		)	(349		)
Projected benefit obligation at end of year	8,009			9,020

Change in fair value of plan assets:
Fair value of plan assets at beginning of year	11,026			10,622
Expected return on plan assets	(481		)	1,022
Contributions by employer	—			—
Benefits paid	(291		)	(269		)
Settlements	(264		)	(349		)
Fair value of plan assets at end of year	9,990			11,026

Overfunded status	$	(1,981	)	$	(2,006	)

Amounts recognized in consolidated balance sheet:
Other assets	$	1,981		$	2,006

Net periodic pension cost is comprised of the following for the year ended December 31, 2018 and 2017:



(in thousands)	2018			2017
Interest cost	$	315		$	334
Expected return on plan assets	(706		)	(706		)
Settlement Charge	—			13
Net periodic pension benefit cost (credit)	$	(391	)	$	(359	)



(in thousands)	2018			2017
Net actuarial loss (gain)	$	415		$	346
Settlement charge	—			(13		)
Net period pension benefit cost (credit)	(391		)	(359		)
Total recognized in net periodic benefit cost (credit) and other comprehensive loss (income)	$	24		$	(26	)

Change in plan assets and benefit obligations recognized in accumulated other comprehensive income as of December 31, 2018 and 2017 are as follows:



(in thousands)	2018		2017
Net actuarial loss (gain)	$	415	$	346
Settlement charge	—		(13		)
Prior service cost (credit)	333		—
Total accumulated other comprehensive loss (pre-tax)	$	748	$	333

The after tax components of accumulated other comprehensive loss, which have not yet been recognized in net periodic pension cost, related to the Plan are a net loss of $573 thousand. The Company expects to make no cash contributions to the pension trust during the 2019 fiscal year. The amount expected to be amortized from accumulated other comprehensive loss into net periodic pension cost over the next fiscal year is zero.

The principal actuarial assumptions used at December 31, 2018 and 2017 were as follows:



	2018		2017
Projected benefit obligation
Discount rate	4.23	%	3.56	%
Net periodic pension cost
Discount rate	3.56	%	4.09	%
Long-term rate of return on plan assets	6.50		7.00

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 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 expectations of future returns as applied to the plan’s target allocation of asset classes. In estimating that rate, appropriate consideration was given to historical returns earned by equities and fixed income securities.

The Company’s overall investment strategy with respect to the Plan’s assets is to maintain assets at a level that will sufficiently cover future beneficiary obligations while achieving long term growth in assets. The Plan’s targeted asset allocation is 48% equity securities and 52% fixed-income securities primarily consisting of intermediate-term products.

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 value of the Plan's assets by category and level within fair value hierarchy are as follows at December 31, 2018 and 2017:



	2018
(in thousands)	Total		Level 1		Level 2
Asset Category
Equity mutual funds:
Large-cap	$	1,730	$	1,730	$	—
Mid-cap	477		477		—
Small-cap	469		469		—
International	845		845
Fixed income funds:
Fixed-income - core plus	3,945		3,945		—
Intermediate duration	1,321		1,321		—
Common stock	506		506		—
Common/collective trusts - large-cap	469		—		469
Cash equivalents - money market	228		228		—
Total	$	9,990	$	9,521	$	469



	2017
(in thousands)	Total		Level 1		Level 2
Asset Category
Equity mutual funds:
Large-cap	$	2,143	$	2,143	$	—
Mid-cap	612		612		—
Small-cap	613		613		—
International	1,150		1,150
Fixed income funds:
Fixed-income - core plus	3,896		3,896		—
Intermediate duration	1,316		1,316		—
Common stock	610		610		—
Common/collective trusts - large-cap	555		—		555
Cash equivalents - money market	130		130		—
Total	$	11,025	$	10,470	$	555

The Plan did not hold any assets classified as Level 3, and there were no transfers between levels during 2018 and 2017.

Estimated benefit payments under the Company's pension plan over the next 10 years at December 31, 2018 are as follows:



Year	Payments in Thousands
2019	$	357
2020	383
2021	382
2022	400
2023	396
2024-2028	2,239

Non-qualified Supplemental Executive Retirement Plan

The Company has non-qualified supplemental executive retirement agreements with certain retired officers. The agreements provide supplemental retirement benefits payable in installments over a period of years upon retirement or death. This agreement provides a stream of future payments in accordance with individually defined vesting schedules upon retirement, termination, or in the event that the participating executive leaves the Company following a change of control event.

The following table sets forth changes in benefit obligation, changes in plan assets, and the funded status of the plan as of and for the years ended December 31, 2018 and December 31, 2017:



(in thousands)	2018			2017
Change in benefit obligation:
Projected benefit obligation at beginning of year	$	3,451		$	3,670
Service cost	—			—
Interest cost	102			116
Actuarial loss/(gain)	(142		)	16
Benefits paid	(378		)	(351		)
Projected benefit obligation at end of year	$	3,033		$	3,451

Change in fair value of plan assets:
Fair value of plan assets at beginning of year	$	—		$	—
Expected return on plan assets	—			—
Contributions by employer	378			351
Benefits paid	(378		)	(351		)
Fair value of plan assets at end of year	$	—		$	—

Underfunded status	$	3,033		$	3,451

Amounts recognized in consolidated balance sheet
Other liabilities	$	3,033		$	3,451

Net periodic benefit cost is comprised of the following for the years ended December 31, 2018 and 2017:



(in thousands)	2018		2017
Interest cost	$	102	$	116
Expected return on plan assets	—		—
Amortization of unrecognized actuarial loss	29		21
Net periodic benefit cost	$	131	$	137



(in thousands)	2018			2017
Net actuarial loss (gain)	$	(142	)	$	16
Amortization of unrecognized actuarial loss	(29		)	(21		)
Total recognized in net periodic benefit cost and other comprehensive loss	$	(171	)	$	(5	)

Change in plan assets and benefit obligations recognized in accumulated other comprehensive income in 2018 and 2017 are as follows:



(in thousands)	2018			2017
Accumulated other comprehensive income at beginning of the year (pre-tax)	$	585		$	590
Actuarial loss (gain)	(142		)	16
Amortization of actuarial loss	(29		)	(21		)
Accumulated other comprehensive income at end of year (pre-tax)	$	414		$	585

The after tax components of accumulated other comprehensive loss, which have not yet been recognized in net periodic benefit cost, related to the non-qualified supplemental executive retirement agreements are a net loss of $317 thousand. The amount expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over then next fiscal year is $15 thousand.

The principal actuarial assumptions used at December 31, 2018 and December 31, 2017 were as follows:

The discount rate used in the measurement of the non-qualified supplemental executive retirement plan obligation is determined by comparing the expected future retirement payment cash flows to the Citigroup Above Median Double-A Curve as of the measurement date.

The Company expects to contribute the following amounts to fund benefit payments under the supplemental executive retirement plans:



(in thousands)	Payments
2019	$	378
2020	293
2021	260
2022	260
2023	260
2024-2036	2,518

401(k) Plan

The Company maintains a Section 401(k) savings plan for substantially all of its employees. Employees are eligible to participate in the 401(k) Plan on the first day of any quarter following their date of hire and attainment of age 21 ½ . Under the plan, the Company makes a matching contribution of a portion of the amount contributed by each participating employee, up to a percentage of the employee’s annual salary. The plan allows for supplementary profit sharing contributions by the Company, at its discretion, for the benefit of participating employees. The total expense for this plan in 2018, 2017, and 2016 was $1.0 million , $970 thousand, and $439 thousand, respectively.

Other Plans

As a result of the acquisition of a business combination in 2017, the Company assumed salary continuation agreements for supplemental retirement income with certain prior executives and senior officers along with an executive indexed supplemental retirement plan for one prior executive. The total liability for these agreements included in other liabilities was $7.3 million at December 31, 2018 and $8.1 million at December 31, 2017. Expense recorded in 2018 and 2017 under these agreements was $752 thousand and $581 thousand, respectively.

The Company also assumed split-dollar life insurance agreements with the 2017 business combination with an accrued liability of $671 thousand as of year-end at December 31, 2018 and $687 thousand at December 31, 2017. Expense recorded for the split-dollar life insurance agreements in 2018 was $57 thousand. In 2017, a net benefit of $9 thousand relating to split-dollar life insurance agreements was recognized.

Discount rate beginning of year

Discount rate end of year