Employee Benefit Plans

401(k) Plan

The Bank has a defined contribution plan available to substantially all employees who have completed 3 months of service. Employees may contribute up to Internal Revenue Service ("IRS") determined limits and the Bank may match employee contributions not to exceed 3.0% of compensation depending on contribution level. Subject to a vote of the Board of Directors, the Bank may also make a profit-sharing contribution to the Plan. Such contribution equaled 2.0% of each eligible employee's compensation in 2014. The amount for 2015 has not been established. The expense related to the 401(k) plan was $333,000 and $327,000 for the nine months ended September 30, 2015 and 2014, respectively.

Deferred Compensation and Supplemental Retirement Benefits

The Bank also provides unfunded, non-qualified deferred compensation payable over two years, as well as unfunded supplemental retirement benefits for certain officers, payable in installments over 20 years upon retirement or death. The agreements consist of individual contracts with differing characteristics that, when taken together, do not constitute a postretirement plan. The costs for these benefits are recognized over the service periods of the participating officers in accordance with FASB ASC Topic 712 "Compensation – Nonretirement Postemployment Benefits". The expense of these supplemental retirement benefits was $234,000 for the nine months ended September 30, 2015 and $629,000 for the same period in 2014. As of September 30, 2015, the associated accrued liability included in other liabilities in the balance sheet was $3,074,000 compared to $2,999,000 and $2,920,000 at December 31, 2014 and September 30, 2014, respectively.

Post-Retirement Benefit Plans

The Bank sponsors two post-retirement benefit plans. One plan currently provides a subsidy for health insurance premiums to certain retired employees and a future subsidy for seven active employees who were age 50 and over in 1996. These subsidies are based on years of service and range between $40 and $1,200 per month per person. The other plan provides life insurance coverage to certain retired employees and health insurance for retired directors. None of these plans are pre-funded. The Company utilizes FASB ASC Topic 712 "Compensation – Nonretirement Postemployment Benefits" to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its balance sheet and to recognize changes in the funded status in the year in which the changes occur through comprehensive income. The following table sets forth the accumulated postretirement benefit obligation and funded status:



	At or for the nine months ended September 30,
	2015			2014
Change in benefit obligation
Benefit obligation at beginning of year	$	1,928,000		$	1,479,000
Service cost	—			15,000
Interest cost	54,000			66,000
Benefits paid	(78,000		)	(78,000		)
Benefit obligation at end of period	$	1,904,000		$	1,482,000
Funded status
Benefit obligation at end of period	$	(1,904,000	)	$	(1,482,000	)
Unamortized (gain) loss	192,000			(289,000		)
Accrued benefit cost at end of period	$	(1,712,000	)	$	(1,771,000	)

The following table sets forth the net periodic pension cost:



	For the nine months ended September 30,				For the quarters ended September 30,
	2015		2014		2015		2014
Components of net periodic benefit cost
Service cost	$	—	$	15,000	$	—	$	5,000
Interest cost	54,000		66,000		18,000		22,000
Net periodic benefit cost	$	54,000	$	81,000	$	18,000	$	27,000

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) are as follows:



	September 30, 2015			December 31, 2014			September 30, 2014
Unamortized net actuarial gain (loss)	$	(192,000	)	$	(192,000	)	$	289,000
Deferred tax (expense) benefit at 35%	67,000			67,000			(101,000		)
Net unrecognized postretirement benefits included in accumulated other comprehensive income (loss)	$	(125,000	)	$	(125,000	)	$	188,000

A weighted average discount rate of 4.25% was used in determining the accumulated benefit obligation and the net periodic benefit cost. The assumed health care cost trend rate is 7.0%. The measurement date for benefit obligations was as of year-end for prior years presented. The expected benefit payments for the third quarter of 2015 are $30,000 and the expected benefit payments for all of 2015 are $120,000. Plan expense for 2015 is estimated to be $80,000. A 1% change in trend assumptions would create an approximate change in the same direction of $100,000 in the accumulated benefit obligation, $7,000 in the interest cost and $1,000 in the service cost.