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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2020
Employee Benefit Plans |
Employee Benefit Plans | NOTE 15: Employee Benefit Plans ​ The Corporation’s subsidiaries maintain defined contribution plans that provide the opportunity for voluntary tax-qualified deferral to substantially all of its full-time employees who are at least 18 years of age. These plans also provide for employer contributions as a discretionary or non-discretionary matching contribution and in some cases as a discretionary profit-sharing contribution to the account of each partipant. The total expense recognized in connection with these qualified defined contribution plans for 2020, 2019 and 2018 were $2.09 million, $1.52 million and $1.31 million, respectively. ​ C&F Bank has a non-contributory, defined benefit pension plan (Cash Balance Plan) for all full-time employees over 21 years of age. Under the Cash Balance Plan, the benefit account for each participant will grow each year with annual pay credits based on age and years of service and monthly interest credits based on the prior year’s December average yield on 30-year Treasuries plus 150 basis points. C&F Bank funds pension costs in accordance with the funding provisions of the Employee Retirement Income Security Act. ​ The Corporation has a nonqualified deferred compensation plan for certain executives. The plan allows for elective salary and bonus deferrals. The plan also allows for employer contributions to make up for limitations on covered compensation imposed by the Internal Revenue Code with respect to qualified plans and to enhance retirement benefits by providing supplemental contributions from time to time. Expenses under this plan were $465,000, $294,000 and $297,000 in 2020, 2019 and 2018, respectively. Investments for this plan are held in a Rabbi trust. These investments are included in other assets and the related liability is included in other liabilities. ​ On December 16, 2014, the Corporation approved an additional compensation benefit for the Corporation’s then Chief Executive Officer at the time to provide post-retirement medical and dental insurance premiums for him and his spouse for life. There was no expense recognized for this arrangement in 2020 or 2019, and the expense recognized in 2018 was $88,000. The related liability is included in other liabilities. ​ The following table summarizes the projected benefit obligations, plan assets, funded status and related assumptions associated with the Cash Balance Plan based upon actuarial valuations. ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, |
(Dollars in thousands) |  | 2020 |  | 2019 |
Change in benefit obligation | ​ | ​ | ​ | ​ | ​ | ​ | ​
Projected benefit obligation, beginning | ​ | $ | 20,794 | ​ | $ | 17,205 | ​
Service cost | ​ |  | 1,603 | ​ |  | 1,218 | ​
Interest cost | ​ |  | 551 | ​ |  | 609 | ​
Actuarial loss | ​ |  | 2,996 | ​ |  | 2,834 | ​
Benefits paid | ​ |  | (1,301) | ​ |  | (1,072) | ​
Projected benefit obligation, ending | ​ | ​ | 24,643 | ​ | ​ | 20,794 | ​
Change in plan assets | ​ | ​ | ​ | ​ | ​ | ​ | ​
Fair value of plan assets, beginning | ​ | ​ | 22,806 | ​ | ​ | 20,156 | ​
Actual return on plan assets | ​ |  | 2,782 | ​ |  | 3,722 | ​
Employer contributions | ​ |  | 2,000 | ​ |  | — | ​
Benefits paid | ​ |  | (1,301) | ​ |  | (1,072) | ​
Fair value of plan assets, ending | ​ | ​ | 26,287 | ​ | ​ | 22,806 | ​
Funded status | ​ | $ | 1,644 | ​ | $ | 2,012 | ​
Amounts recognized as an other asset | ​ | $ | 1,644 | ​ | $ | 2,012 | ​
Amounts recognized in accumulated other comprehensive loss | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net loss | ​ | $ | 6,748 | ​ | $ | 5,239 | ​
Prior service credits | ​ |  | (438) | ​ |  | (504) | ​
Deferred taxes | ​ |  | (1,325) | ​ |  | (995) | ​
Total recognized in accumulated other comprehensive loss | ​ | $ | 4,985 | ​ | $ | 3,740 | ​
Weighted-average assumptions for benefit obligation at valuation date | ​ | ​ | ​ | ​ | ​ | ​ | ​
Discount rate | ​ |  | 2.1 | % |  | 2.9 | %
Rate of compensation increase | ​ |  | 3.0 | ​ |  | 3.0 | ​
Interest crediting rate | ​ |  | 5.0 | ​ |  | 5.0 | ​
​ The accumulated benefit obligation was $24.64 million and $20.79 million as of the actuarial valuation dates December 31, 2020 and 2019, respectively. The actuarial loss of $3.00 million on the projected benefit obligation for 2020 is due primarily to a decrease in the discount rate as well as demographic changes in the population. ​ The following table summarizes the components of net periodic benefit cost and related assumptions associated with the Cash Balance Plan. ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31, |
(Dollars in thousands) |  | 2020 |  | 2019 |  | 2018 |
Components of net periodic benefit cost: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Service cost, included in salaries and employee benefits | ​ | $ | 1,603 | ​ | $ | 1,218 | ​ | $ | 1,232 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Other components of net periodic benefit cost: | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Interest cost | ​ |  | 551 | ​ |  | 609 | ​ |  | 521 | ​
Expected return on plan assets | ​ |  | (1,492) | ​ |  | (1,297) | ​ |  | (1,413) | ​
Amortization of prior service credit | ​ |  | (66) | ​ |  | (68) | ​ |  | (62) | ​
Amortization of net obligation at transition | ​ |  | — | ​ |  | — | ​ |  | — | ​
Recognized net actuarial losses | ​ |  | 197 | ​ |  | 187 | ​ |  | 125 | ​
Other components of net periodic benefit cost, included in other noninterest income | ​ | ​ | (810) | ​ | ​ | (569) | ​ | ​ | (829) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Net periodic benefit cost | ​ | $ | 793 | ​ | $ | 649 | ​ |  | 403 | ​
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | January 1, |
​ |  | 2020 |  | 2019 |  | 2018 |
Weighted-average assumptions for net periodic benefit cost | ​ | ​ | ​ | ​ | ​ | ​ | ​
Discount rate |  | 2.9 | % | 4.0 | % | 3.3 | %
Expected return on plan assets |  | 7.3 | ​ | 7.3 | ​ | 7.3 | ​
Rate of compensation increase |  | 3.0 | ​ | 3.0 | ​ | 3.0 | ​
Interest crediting rate | ​ | 5.0 | ​ | 5.0 | ​ | 5.0 | ​
​ The benefits expected to be paid by the plan in the next ten years are as follows: ​ ​
​ | ​ | ​ | ​ | ​
(Dollars in thousands) |  |  | ​ |
2021 | ​ | $ | 4,059 | ​
2022 | ​ |  | 810 | ​
2023 | ​ |  | 1,560 | ​
2024 | ​ |  | 1,376 | ​
2025 | ​ |  | 2,251 | ​
2026 – 2030 | ​ |  | 7,515 | ​
​ C&F Bank selects the expected long-term rate of return on assets in consultation with its investment advisors and actuary. This rate is intended to reflect the average rate of earnings expected to be earned on the funds invested or to be invested to provide plan benefits. Historical performance is reviewed, especially with respect to real rates of return (net of inflation), for the major asset classes held or anticipated to be held by the trust and for the trust itself. Undue weight is not given to recent experience, which may not continue over the measurement period. Higher significance is placed on current forecasts of future long-term economic conditions. ​ Because assets are held in a qualified trust, anticipated returns are not reduced for taxes. Further, solely for this purpose, the plan is assumed to continue in force and not terminate during the period during which assets are invested. However, consideration is given to the potential impact of current and future investment policy, cash flow into and out of the trust, and expenses (both investment and non-investment) typically paid from plan assets (to the extent such expenses are not explicitly within periodic costs). ​ C&F Bank’s defined benefit pension plan’s weighted average asset allocations by asset category are as follows: ​ ​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, |
​ |  | 2020 |  | 2019 |
Mutual funds-fixed income |  | 37 | % | 38 | %
Mutual funds-equity |  | 63 | ​ | 62 | ​
Cash and equivalents | ​ | * | ​ | * | ​
​ |  | 100 | % | 100 | %
* Less than one percent. ​ The following table summarizes the fair value of the defined benefit plan assets as of December 31, 2020 and 2019. For more information about fair value measurements, see “Note 20: Fair Value of Assets and Liabilities.” ​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2020 |
​ | ​ | Fair Value Measurements Using | ​ | Assets at Fair |
(Dollars in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Value |
Mutual funds-fixed income 1 | ​ | $ | 9,726 | ​ | $ | — | ​ | $ | — | ​ | $ | 9,726 | ​
Mutual funds-equity 2 | ​ |  | 16,561 | ​ |  | — | ​ |  | — | ​ |  | 16,561 | ​
Cash and equivalents 3 | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​
Total pension plan assets | ​ | $ | 26,287 | ​ | $ | — | ​ | $ | — | ​ | $ | 26,287 | ​
​ ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2019 |
​ | ​ | Fair Value Measurements Using | ​ | Assets at Fair |
(Dollars in thousands) |  | Level 1 |  | Level 2 |  | Level 3 |  | Value |
Mutual funds-fixed income 1 | ​ | $ | 8,744 | ​ | $ | — | ​ | $ | — | ​ | $ | 8,744 | ​
Mutual funds-equity 2 | ​ |  | 14,062 | ​ |  | — | ​ |  | — | ​ |  | 14,062 | ​
Cash and equivalents 3 | ​ |  | — | ​ |  | — | ​ |  | — | ​ |  | — | ​
Total pension plan assets | ​ | $ | 22,806 | ​ | $ | — | ​ | $ | — | ​ | $ | 22,806 | ​
1 | This category includes investments in mutual funds focused on fixed income securities with both short-term and long-term investments. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the funds.
2 | This category includes investments in mutual funds focused on equity securities with a diversified portfolio and includes investments in large cap and small cap funds, growth funds, international focused funds and value funds. The funds are valued using the net asset value method in which an average of the market prices for the underlying investments is used to value the funds.
3 | This category comprises cash and short-term cash equivalent funds. The funds are valued at cost which approximates fair value.
​ The trust fund is sufficiently diversified to maintain a reasonable level of risk without imprudently sacrificing return, with a targeted asset allocation of 40 percent fixed income and 60 percent equities. The investment advisor selects investment fund managers with demonstrated experience and expertise, and funds with demonstrated historical performance, for the implementation of the plan’s investment strategy. The investment manager will consider both actively and passively managed investment strategies and will allocate funds across the asset classes to develop an efficient investment structure. ​ It is the responsibility of the trustee to administer the investments of the trust within reasonable costs, being careful to avoid sacrificing quality. These costs include, but are not limited to, management and custodial fees, consulting fees, transaction costs and other administrative costs chargeable to the trust.

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