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EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2020

Retirement Benefits [Abstract]

EMPLOYEE BENEFIT PLANS

NOTE 9. 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, 2020, 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, 2020 and 2019:


(in thousands)		2020			2019
Change in projected benefit obligation:
Projected benefit obligation at beginning of year		$	8,926		$	8,009
Service cost			—			—
Interest cost			282			331
Actuarial loss			913			1,068
Benefits paid			(319)			(300)
Settlements			(152)			(182)
Projected benefit obligation at end of year			9,650			8,926

Change in fair value of plan assets:
Fair value of plan assets at beginning of year			11,078			9,990
Expected return on plan assets			1,433			1,570
Contributions by employer			—			—
Benefits paid			(319)			(300)
Settlements			(152)			(182)
Fair value of plan assets at end of year			12,040			11,078

Overfunded status		$	(2,390)		$	(2,152)

Amounts recognized in consolidated balance sheet:
Other assets		$	2,390		$	2,152

Net periodic pension cost is comprised of the following for the year ended December 31, 2020 and 2019:


(in thousands)		2020			2019
Interest cost		$	282		$	331
Expected return on plan assets			(708)			(638)
Settlement Charge			—			—
Net periodic pension benefit credit		$	(426)		$	(307)


(in thousands)		2020			2019
Net actuarial loss		$	178		$	145
Settlement charge			—			—
Net period pension benefit credit			(426)			(307)
Total recognized in net periodic benefit (credit) cost and other comprehensive income		$	(248)		$	(162)

Change in plan assets and benefit obligations recognized in accumulated other comprehensive income as of December 31, 2020 and 2019 are as follows:


(in thousands)		2020			2019
Net actuarial loss		$	178		$	145
Settlement charge			—			—
Prior service cost			893			748
Total accumulated other comprehensive loss (pre-tax)		$	1,071		$	893

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 $822 thousand. The Company expects to make no cash contributions to the pension trust during the 2021 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, 2020 and 2019 were as follows:


		2020			2019
Projected benefit obligation
Discount rate		2.46	%		3.23	%
Net periodic pension cost
Discount rate		3.23	%		4.23	%
Long-term rate of return on plan assets		6.00			6.50

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 54% equity securities and 46% 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, 2020 and 2019:


		2020
(in thousands)		Total			Level 1			Level 2
Equity mutual funds:
Large-cap		$	2,364		$	2,364		$	—
Mid-cap			744			744			—
Small-cap			765			765			—
International			1,499			1,499
Fixed income funds:
Fixed-income - core plus			3,880			3,880			—
Intermediate duration			1,338			1,338			—
Common stock			510			510			—
Common/collective trusts - large-cap			620			—			620
Cash equivalents - money market			320			320			—
Total		$	12,040		$	11,420		$	620


		2019
(in thousands)		Total			Level 1			Level 2
Equity mutual funds:
Large-cap		$	2,144		$	2,144		$	—
Mid-cap			590			590			—
Small-cap			557			557			—
International			1,009			1,009
Fixed income funds:
Fixed-income - core plus			4,028			4,028			—
Intermediate duration			1,371			1,371			—
Common stock			574			574			—
Common/collective trusts - large-cap			566			—			566
Cash equivalents - money market			230			230			—
Total		$	11,069		$	10,503		$	566

The Plan did not hold any assets classified as Level 3, and there were no transfers between levels during 2020 and 2019.

Estimated benefit payments under the Company’s pension plan over the next 10 years at December 31, 2020 are as follows:


(in thousands)		Payments
2021		$	354
2022			372
2023			369
2024			384
2025			379
2026-2030			2,321
Total		$	4,179

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, 2020 and December 31, 2019:


(in thousands)		2020			2019
Change in benefit obligation:
Projected benefit obligation at beginning of year		$	2,979		$	3,033
Service cost			—			—
Interest cost			81			103
Actuarial loss			202			221
Benefits paid			(293)			(378)
Projected benefit obligation at end of year		$	2,969		$	2,979

Change in fair value of plan assets:
Fair value of plan assets at beginning of year		$	—		$	—
Expected return on plan assets			—			—
Contributions by employer			293			378
Benefits paid			(293)			(378)
Fair value of plan assets at end of year		$	—		$	—

Underfunded status		$	2,969		$	2,979

Amounts recognized in consolidated balance sheet
Other liabilities		$	2,969		$	2,979

Net periodic benefit cost is comprised of the following for the years ended December 31, 2020 and 2019:


(in thousands)		2020			2019
Interest cost		$	81		$	103
Expected return on plan assets			—			—
Amortization of unrecognized actuarial loss			42			15
Net periodic benefit cost		$	123		$	118


(in thousands)		2020			2019
Net actuarial loss		$	202		$	220
Amortization of unrecognized actuarial loss			(42)			(15)
Total recognized in net periodic benefit cost and other comprehensive loss		$	160		$	205

Change in plan assets and benefit obligations recognized in accumulated other comprehensive income in 2020 and 2019 are as follows:


(in thousands)		2020			2019
Accumulated other comprehensive loss at beginning of the year (pre-tax)		$	619		$	414
Actuarial loss			202			220
Amortization of actuarial loss			(42)			(15)
Accumulated other comprehensive loss at end of year (pre-tax)		$	779		$	619

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 $597 thousand. The amount expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $43 thousand.

The principal actuarial assumptions used at December 31, 2020 and December 31, 2019 were as follows:


		2020		2019
Discount rate beginning of year		2.65	%	3.83	%
Discount rate end of year		1.56		2.65

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
2021		$	260
2022			260
2023			260
2024			260
2025			260
2026-2037			2,018
Total		$	3,318

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 21½ . 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 2020, 2019, and 2018 was $1.2 million, $1.1 million, and $1.0 million, 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 $8.8 million at December 31, 2020 and $8.1 million at December 31, 2019. Expense recorded in 2020, 2019 and 2018 under these agreements was $793 thousand, $779 thousand and $752 thousand, respectively.

The Company also assumed split-dollar life insurance agreements with the 2017 business combination with an accrued liability of $919 thousand at December 31, 2020 and $834 thousand at December 31, 2019. Expense recorded for the split-dollar life insurance agreements was $65 thousand and $163 thousand and $57 thousand in 2020, 2019 and 2018, respectively.