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EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2023

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

NOTE 8. EMPLOYEE BENEFIT PLANS

Pension Plans

We maintain a legacy, employer-sponsored defined benefit pension plan (the “Plan”) for which participation and benefit accruals were frozen on January 13, 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, 2023, all minimum Employee Retirement Income Security Act (“ERISA”) funding requirements have been met.

The following tables set forth information about the plan for the year ended December 31, 2023 and 2022:


(in thousands)		2023			2022
Change in projected benefit obligation:
Projected benefit obligation at beginning of year		$	6,245		$	8,601
Interest cost			318			236
Actuarial Gain/(loss)			119			(2,114)
Benefits paid			(317)			(326)
Settlements			—			(152)
Projected benefit obligation at end of year			6,365			6,245

Change in fair value of plan assets:
Fair value of plan assets at beginning of year			9,044			12,422
Expected return on plan assets			622			(2,900)
Benefits paid			(317)			(326)
Settlements			—			(152)
Fair value of plan assets at end of year			9,349			9,044

Overfunded status		$	(2,984)		$	(2,799)

Amounts recognized in consolidated balance sheet:
Other assets		$	2,984		$	2,799

Net periodic pension cost/(benefit) is comprised of the following for the years ended December 31, 2023 and 2022:


(in thousands)		2023			2022
Interest cost		$	318		$	236
Expected return on plan assets			(355)			(612)
Unrecognized loss			53			—
Net periodic pension benefit		$	16		$	(376)

Amounts recognized in other comprehensive income for the years ended December 31, 2023 and 2022 included:


(in thousands)		2023			2022
Net actuarial loss (gain)		$	(148)		$	1,391
Recognized loss			(53)			—
Net period pension benefit (credit)			16			(376)
Total recognized in other comprehensive income		$	(185)		$	1,015

Change in plan assets and benefit obligations recognized in accumulated other comprehensive income as of December 31, 2023 and 2022 are as follows:


(in thousands)		2023			2022
Net actuarial (gain) loss		$	(148)		$	1,391
Recognized loss			(53)			—
Prior service cost			—			—
Amounts Recognized in accumulated other comprehensive (gain) loss (pre-tax)		$	(201)		$	1,391

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 $1.2 million. We expect to make no cash contributions to the pension trust during the 2024 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, 2023 and 2022 were as follows:


		2023			2022
Projected benefit obligation
Discount rate		5.00	%		5.23	%
Net periodic pension cost
Discount rate		5.23	%		2.80	%
Long-term rate of return on plan assets		4.00			5.00

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.

Our 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 20% equity securities and 80% fixed-income securities primarily consisting of long-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, 2023 and 2022:


		2023
(in thousands)		Total			Level 1			Level 2
Equity mutual funds:
Large-cap		$	680		$	680		$	—
Mid-cap			195			195			—
Small-cap			199			199			—
International			391			391			—
Fixed income funds:
Fixed-income - core plus			—			—			—
Intermediate duration			—			—			—
Long duration			6,698			6,698			—
Common stock			663			663			—
Common/collective trusts - large-cap			180			—			180
Cash equivalents - money market			343			343			—
Total		$	9,349		$	9,169		$	180


		2022
(in thousands)		Total			Level 1			Level 2
Equity mutual funds:
Large-cap		$	660		$	660		$	—
Mid-cap			210			210			—
Small-cap			214			214			—
International			420			420			—
Fixed income funds:
Long duration			6,294			6,294			—
Common stock			724			724			—
Common/collective trusts - large-cap			206			—			206
Cash equivalents - money market			316			316			—
Total		$	9,044		$	8,838		$	206

The Plan did not hold any assets classified as Level 3, and there were no transfers between levels during 2023 and 2022.

Estimated benefit payments under our pension plan over the next 10 years at December 31, 2023 are as follows:


(in thousands)		Payments
2024		$	342
2025			337
2026			402
2027			404
2028			423
2029-2033			2,233
Total		$	4,141

Non-qualified Supplemental Executive Retirement Plan

We have 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, 2023 and December 31, 2022:


(in thousands)		2023			2022
Change in benefit obligation:
Projected benefit obligation at beginning of year		$	2,093		$	2,606
Service cost			—			—
Interest cost			97			54
Actuarial (gain) loss			(5)			(307)
Benefits paid			(260)			(260)
Projected benefit obligation at end of year		$	1,925		$	2,093

Change in fair value of plan assets:
Fair value of plan assets at beginning of year		$	—		$	—
Expected return on plan assets			—			—
Contributions by employer			260			260
Benefits paid			(260)			(260)
Fair value of plan assets at end of year		$	—		$	—

Underfunded status		$	1,925		$	2,093

Amounts recognized in consolidated balance sheet
Other liabilities		$	1,925		$	2,093

Net periodic benefit cost is comprised of the following for the years ended December 31, 2023 and 2022:


(in thousands)		2023			2022
Interest cost		$	97		$	54
Expected return on plan assets			—			—
Amortization of unrecognized actuarial loss			7			37
Net periodic benefit cost		$	104		$	91

Amounts recognized in other comprehensive income for the years ended December 31, 2023 and 2022 included:


(in thousands)		2023			2022
Net actuarial loss (gain)		$	100		$	(382)
Amortization of unrecognized actuarial loss			(7)			(37)
Total recognized in other comprehensive loss (gain)		$	93		$	(419)

Change in plan assets and benefit obligations recognized in accumulated other comprehensive income in 2023 and 2022 are as follows:


(in thousands)		2023			2022
Accumulated other comprehensive loss at beginning of the year (pre-tax)			180			599
Actuarial loss (gain)			100			(382)
Amortization of actuarial loss			(7)			(37)
Accumulated other comprehensive loss at end of year (pre-tax)		$	273		$	180

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 $204 thousand. The amount expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $10 thousand.

The principal actuarial assumptions used at December 31, 2023 and December 31, 2022 were as follows:


		2023		2022
Discount rate beginning of year		4.92	%	2.12	%
Discount rate end of year		4.72		4.92

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.

We expect to contribute the following amounts to fund benefit payments under the supplemental executive retirement plans:


(in thousands)		Payments
2024		$	260
2025			231
2026			221
2027			221
2028			221
2029-2033			1,104
Total		$	2,258

401(k) Plan

We maintain 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, we make 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 Bar Harbor, at its discretion, for the benefit of participating employees. The total expense for this plan in 2023, 2022, and 2021 was $1.2 million.

Other Plans

As a result of the acquisition of a business combination in 2017, we 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 $6.3 million at December 31, 2023 and $6.5 million at December 31, 2022. Expense recorded in 2023 was $255 thousand compared to Income recorded in 2022 was $1.2 million. We recorded income in 2021 under these agreements of $312 thousand.

We also assumed split-dollar life insurance agreements from the 2017 business combination with an accrued liability of $709 thousand at December 31, 2023 and $679 thousand at December 31, 2022. We recorded expense for the split-dollar life insurance agreements of $30 thousand in 2023 and income of $197 thousand in 2022. We recorded expense of $22 thousand in 2021.