Benefit Plans

401(k) Plan

We have a 401(k) plan in which substantially all employees are eligible to participate. Employees may contribute up to 100% of their compensation subject to certain limits based on federal tax laws. The plan was amended in 2013 to provide a matching safe harbor contribution for all eligible employees equal to 100% of the first 5.0% of an employee's compensation contributed to the Plan during the year. Employees are 100% vested in the safe harbor matching contributions.

For 2019, 2018 and 2017, expenses attributable to the Plan were $764, $743, and $713, respectively.

Defined Benefit Pension Plan

We maintain a noncontributory defined benefit pension plan, which was curtailed effective March 1, 2007. As a result of the curtailment, future salary increases are no longer considered (the projected benefit obligation is equal to the accumulated benefit obligation), and plan benefits are based on years of service and the individual employee’s five highest consecutive years of compensation out of the last ten years of service through March 1, 2007.

Changes in the projected benefit obligation and plan assets during each year, the funded status of the plan, and the net amount recognized in our consolidated balance sheets using an actuarial measurement date of December 31, are summarized as follows during the years ended December 31:



	2019			2018
Change in benefit obligation
Benefit obligation, January 1	$	9,412		$	11,381
Interest cost	378			388
Actuarial loss (gain)	1,216			(1,194		)
Benefits paid, including plan expenses	(797		)	(1,163		)
Benefit obligation, December 31	10,209			9,412
Change in plan assets
Fair value of plan assets, January 1	7,765			9,469
Investment return (loss)	1,384			(541		)
Contributions	—			—
Benefits paid, including plan expenses	(797		)	(1,163		)
Fair value of plan assets, December 31	8,352			7,765
Deficiency in funded status at December 31, included on the consolidated balance sheets in accrued interest payable and other liabilities	$	(1,857	)	$	(1,647	)



	2019			2018
Change in accrued pension benefit costs
Accrued benefit cost at January 1	$	(1,647	)	$	(1,912	)
Contributions	—			—
Net periodic benefit cost	(268		)	(345		)
Net change in unrecognized actuarial loss and prior service cost	58			610
Accrued pension benefit cost at December 31	$	(1,857	)	$	(1,647	)

We have recorded the funded status of the plan in our consolidated balance sheets. We adjust the underfunded status in a liability account to reflect the current funded status of the plan. Any gains or losses that arise during the year but are not recognized as components of net periodic benefit cost are recognized as a component of other comprehensive income (loss). The components of net periodic benefit cost are as follows for the years ended December 31:



	2019			2018			2017
Interest cost on benefit obligation	$	378		$	388		$	444
Expected return on plan assets	(452		)	(554		)	(546		)
Amortization of unrecognized actuarial net loss	214			242			279
Settlement loss	128			269			235
Net periodic benefit cost	$	268		$	345		$	412

During 2019, 2018 and 2017, settlement losses of $128, $269 and $235 were recognized in connection with lump-sum benefit distributions, respectively. Many plan participants elect to receive their retirement benefit payments in the form of lump-sum settlements. Pro rata settlement losses, which can occasionally occur as a result of these lump-sum distributions, are recognized only in years when the total of such distributions exceed the sum of the service and interest expense components of net periodic benefit cost.

Accumulated other comprehensive income at December 31, 2019 includes net unrecognized pension costs before income taxes of $3,412, of which $23 is expected to be amortized into benefit cost during 2020.

The actuarial assumptions used in determining the benefit obligation are as follows for the years ended December 31:



	2019		2018		2017
Discount rate	3.07	%	4.11	%	3.48	%
Expected long-term rate of return on plan assets	6.00	%	6.00	%	6.00	%

The actuarial weighted average assumptions used in determining the net periodic pension costs are as follows for the years ended December 31:



	2019		2018		2017
Discount rate	4.11	%	3.48	%	3.96	%
Expected long-term rate of return on plan assets	6.00	%	6.00	%	6.00	%

As a result of the curtailment of the Plan, there is no rate of compensation increase considered in the above assumptions.

The expected long-term rate of return is an estimate of anticipated future long-term rates of return on plan assets as measured on a market value basis. Factors considered in arriving at this assumption include:


•	Historical long-term rates of return for broad asset classes.


•	Actual past rates of return achieved by the plan.


•	The general mix of assets held by the plan.


•	The stated investment policy for the plan.

The selected rate of return is net of anticipated investment related expenses.

Pension Plan Assets

Our overall investment strategy is to moderately grow the portfolio by investing 50% of the portfolio in equity securities and 50% in fixed income securities. This strategy is designed to generate a long-term rate of return of 6.00%. Equity securities primarily consist of the S&P 500 Index with a smaller allocation to the Small Cap and International Index. Fixed income securities are invested in the Bond Market Index. The Plan has appropriate assets invested in short-term investments to meet near term benefit payments.

The asset mix and the sector weighting of the investments are determined by our benefits committee, which is comprised of members of our management. To manage the Plan, we retain a third party investment advisor to conduct consultations. We review the performance of the advisor at least annually.

The fair values of our pension plan assets by asset category were as follows as of December 31:



	2019				2018
	Total		(Level 2)		Total		(Level 2)
Short-term investments	$	218	$	218	$	98	$	98
Common collective trusts
Fixed income	3,823		3,823		2,924		2,924
Equity investments	4,311		4,311		4,743		4,743
Total	$	8,352	$	8,352	$	7,765	$	7,765

The following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2019 and 2018:


•	Short-term investments: Shares of a money market portfolio valued at amortized cost, which approximates fair value.


•	Common collective trusts: These investments are public investment securities valued using the NAV provided by a third party investment advisor. The NAV is quoted on a private market that is not active; however, the unit price is based on underlying investments which are traded on an active market.

We anticipate contributions to the Plan in 2020 to approximate net contribution costs.

The components of projected net periodic benefit cost are as follows for the year ending:



	December 31, 2020
Interest cost on projected benefit obligation	$	306
Expected return on plan assets	(488		)
Amortization of unrecognized actuarial net loss	205
Net periodic benefit cost	$	23

Estimated future benefit payments are as follows for the next ten years:



	Estimated Benefit Payments
2020	$	466
2021	459
2022	462
2023	460
2024	454
2025 - 2029	2,465

Directors Plan

Pursuant to the terms of the Directors Plan, our directors are required to invest at least 25% of their board fees in our common stock. These stock investments can be made either through deferred fees or through the purchase of shares through the Dividend Reinvestment Plan. Deferred fees, under the Directors Plan, are converted on a quarterly basis into stock units of our common stock based on the fair value of a share of our common stock as of the relevant valuation date. Stock units credited to a participant’s account are eligible for stock and cash dividends as declared. Dividend Reinvestment Plan shares are purchased pursuant to the Dividend Reinvestment Plan.

Distribution of deferred fees from the Directors Plan occurs when the participant retires from the Board or upon the occurrence of certain other events. The participant is eligible to receive a distribution in the form of shares of our common stock of all of the stock units that are then in his or her account, and any unconverted cash will be converted to and rounded up to whole shares of stock and distributed, as well. The Directors Plan does not allow for cash settlement, and therefore, such share-based payment awards qualify for classification as equity. We may use authorized but unissued shares or purchase shares of common stock on the open market to meet our obligations under the Directors Plan.

We maintain the Rabbi Trust to fund the Directors Plan. The Rabbi Trust is an irrevocable grantor trust to which we may contribute assets for the limited purpose of funding a nonqualified deferred compensation plan. Although we may not use the assets of the Rabbi Trust for any purpose other than meeting our obligations under the Directors Plan, the assets of the Rabbi Trust remain subject to the claims of our creditors and are included in the consolidated financial statements. We may contribute cash or common stock to the Rabbi Trust from time to time for the sole purpose of funding the Directors Plan. The Rabbi Trust will use any cash that we contribute to purchase shares of our common stock on the open market. Shares held in the Rabbi Trust are included in the calculation of earnings per share.

The components of shares eligible to be issued under the Directors Plan were as follows as of December 31:



	2019			2018
	Eligible Shares	Market Value		Eligible Shares	Market Value
Unissued	177,935	$	4,326	203,498	$	4,591
Shares held in Rabbi Trust	27,069	658		16,673	376
Total	205,004	$	4,984	220,171	$	4,967

Cash Incentive Plans

We provide cash incentive plans to reward employees above and beyond their base salaries when our performance and operating profitability exceed established annual targets. Incentives are also awarded for achievement of personal performance goals. Expenses related to this plan for 2019, 2018 and 2017 were $1,070, $500, and $454, respectively.

Stock Award Incentive Plan

We maintain an equity incentive plan for the purpose of promoting growth and operating profitability, as well as attracting and retaining executive officers of outstanding competence, through ownership of equity. Stock may be granted to specified individuals subject to certain conditions, and transfer of shares granted under the plan is restricted. Expenses related to this plan for 2019, 2018 and 2017 were $171, $45, and $38, respectively.

Other Employee Benefit Plans

We maintain nonqualified defined contribution retirement plans to provide supplemental retirement benefits to specified participants. Expenses related to these programs for 2019, 2018 and 2017 were $355, $356, and $473, respectively. Expenses are recognized over the participants’ expected years of service.

We maintain a self-funded medical plan under which we are responsible for the first $75 per year of claims made by a covered family. Expenses are accrued based on estimates of the aggregate liability for claims incurred and our experience. Expenses were $2,445 in 2019, $2,695 in 2018 and $2,324 in 2017.