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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2020
Employee Benefit Plans  
Employee Benefit Plans

(13)    Employee Benefit Plans

Employee benefits charged to operating expenses are summarized in the table below for the years ended December 31, as indicated.

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​

​

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(in thousands)

    

2020

    

2019

    

2018

Payroll taxes

​

$

1,273

​

$

1,112

​

$

1,156

Medical plans

​

 

1,854

​

 

1,826

​

 

2,109

401(k) match and profit sharing

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​

1,586

​

​

1,290

​

​

956

Periodic pension cost

​

 

1,614

​

 

1,430

​

 

1,707

Other

​

 

59

​

 

63

​

 

67

Total employee benefits

​

$

6,386

​

$

5,721

​

$

5,995

​

The Company's profit-sharing plan includes a matching 401(k) portion, in which the Company matches the first 3% of eligible employee contributions. The Company made annual contributions in an amount up to 6% of income before income taxes and before contributions to the profit-sharing and pension plans for all participants, limited to the maximum amount deductible for federal income tax purposes, for each of the years shown. In addition, employees were able to make additional tax-deferred contributions.

Other Plans

On November 7, 2018, the Board of Directors of the Company adopted a supplemental executive retirement plan (SERP) which became effective on January 1, 2018. The SERP provides select employees who satisfy certain eligibility requirement with certain benefits upon retirement, termination of employment or death.

As of December 31, 2020, the accrued liability was $960,000 and the expense for this plan of $320,000 for both the years ended December 31, 2020 and 2019, respectively, was accrued and recognized over the required service period.

Pension

The Company provides a noncontributory defined benefit pension plan for all full-time employees. Beginning January 1, 2018 and for all retrospective periods presented, the Company adopted the guidance under ASU 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. Under the new guidance, only the service cost component of the net periodic benefit cost is reported in the same income statement line item as salaries and benefits, and the remaining components are reported as other non-interest expense. An employer is required to recognize the funded status of a defined benefit postretirement plan as an asset or liability in its balance sheet and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. Under the Company’s funding policy for the defined benefit pension plan, contributions are made to a trust as necessary to provide for current service and for any unfunded accrued actuarial liabilities over a reasonable period. To the extent that these requirements are fully covered by assets in the trust, a contribution might not be made in a particular year. The Company made a pension contribution of $500,000 on March 25, 2020. Effective July 1, 2017, the Company amended the pension plan to effectuate a “soft freeze” such that no individual hired (or rehired in the case of a former employee) by the Company after September 30, 2017, whether or not such individual is or was a vested member in the plan, will be eligible to be an active member and be entitled to accrue any benefits under the plan.

Obligations and Funded Status at December 31,

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(in thousands)

    

2020

    

2019

Change in projected benefit obligation:

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​

​

​

​

​

Balance, January 1

​

$

34,009

 

$

26,892

Service cost

​

 

1,614

 

 

1,430

Interest cost

​

 

1,127

 

 

1,169

Actuarial loss

​

 

933

 

 

5,164

Benefits paid

​

 

(726)

 

 

(646)

Balance, December 31, 

​

$

36,957

 

$

34,009

Change in plan assets:

​

​

​

​

​

​

Fair value, January 1

​

$

25,689

 

$

19,672

Actual return on plan assets

​

 

4,725

 

 

5,164

Employer contribution

​

 

500

 

 

1,610

Expenses paid

​

 

(104)

 

 

(111)

Benefits paid

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(726)

 

 

(646)

Fair value, December 31, 

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$

30,084

 

$

25,689

Funded status at end of year

​

$

(6,873)

 

$

(8,320)

Accumulated benefit obligation

​

$

30,156

 

$

26,380

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​

​

​

​

​

​

Amounts recognized in the statement of financial position consist of the following:

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(in thousands)

    

2020

    

2019

Noncurrent assets

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$

—

 

$

—

Current liabilities

​

 

—

 

 

—

Noncurrent liabilities

​

 

(6,873)

 

 

(8,320)

Net liability at end of year

​

$

(6,873)

 

$

(8,320)

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Components of Net Pension Cost and Other Amounts Recognized in Accumulated Other Comprehensive Income

The following items are components of net pension cost for the years ended December 31, as indicated:

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(in thousands)

    

2020

    

2019

    

2018

Service cost - benefits earned during the year

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$

1,614

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$

1,430

​

$

1,707

Interest costs on projected benefit obligations (a)

​

 

1,127

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1,169

​

 

1,037

Expected return on plan assets (a)

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(1,598)

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(1,467)

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(1,327)

Expected administrative expenses (a)

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110

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122

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93

Amortization of prior service cost (a)

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50

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79

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79

Amortization of unrecognized net loss (a)

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164

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—

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140

Net periodic pension cost

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$

1,467

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$

1,333

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$

1,729

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(a)The components of net periodic pension cost other than the service cost component are included in other non-interest expense.

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Net periodic pension benefit costs include interest costs based on an assumed discount rate, the expected return on plan assets based on actuarially derived market-related values, and the amortization of net actuarial losses. Net periodic postretirement benefit costs include service costs, interest costs based on an assumed discount rate, and the amortization of prior service credits and net actuarial gains. Differences between expected and actual results in each year are included in the net actuarial gain or loss amount, which is recognized in other comprehensive income. The net actuarial gain or loss in excess of a 10% corridor is amortized in net periodic benefit cost over the average remaining service period of active participants in the Plans. The prior service credit is amortized over the average

remaining service period to full eligibility for participating employees expected to receive benefits.

Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive (loss) income at December 31, 2020 and 2019 are shown below, including amounts recognized in other comprehensive income during the periods. All amounts are shown on a pre-tax basis.

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(in thousands)

    

2020

    

2019

Prior service costs

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$

—

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$

(49)

Net accumulated actuarial net loss

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(2,311)

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(4,675)

Accumulated other comprehensive loss

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(2,311)

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(4,724)

Net periodic benefit cost in excess of cumulative employer contributions

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(4,562)

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(3,596)

Net amount recognized at December 31,  balance sheet

​

$

(6,873)

​

$

(8,320)

Net actuarial gain (loss) arising during period

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$

2,200

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$

(1,455)

Prior service cost amortization

​

 

50

​

 

79

Amortization of net actuarial loss

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164

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—

Total recognized in other comprehensive income (loss)

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$

2,414

​

$

(1,376)

Total recognized in net periodic pension cost and other comprehensive (loss) income

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$

(947)

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$

2,709

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The 2020 actuarial gain was primarily the result of the actual return on assets exceeding the expected asset return and updated assumptions. The 2019 actuarial loss was primarily the result of the decrease in the discount rate.

Assumptions utilized to determine benefit obligations as of December 31, 2020, 2019, and 2018 and to determine pension expense for the years then ended are as follows:

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2020

    

2019

    

2018

 

Determination of benefit obligation at year end:

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Discount rate

 

2.80

%

3.45

%

4.40

%

Annual rate of compensation increase

 

4.50

%

4.00

%

4.00

%

Determination of pension expense for year ended:

 

  

 

  

 

  

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Discount rate for the service cost

 

3.45

%

4.40

%

3.75

%

Annual rate of compensation increase

 

4.00

%

4.00

%

4.00

%

Expected long-term rate of return on plan assets

 

6.75

%

6.75

%

6.75

%

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The assumed overall expected long-term rate of return on pension plan assets used in calculating 2020 pension expense was 6.75%. Determination of the plan's rate of return is based upon historical returns for equities and fixed income indexes. During the past five years, the Company's plan assets have experienced the following annual returns: 19.7% in 2020, 25.8% in 2019, (6.2)% in 2018, 17.4% in 2017, and 8.2% in 2016. The rate used in plan calculations may be adjusted by management for current trends in the economic environment. With a traditional investment mix of over half of the plan's investments in equities, the actual return for any one plan year may fluctuate significantly with changes in the stock market. Primarily due to a decrease in the discount rate used in the actuarial calculation of plan income, the Company expects to incur $1.1 million of expense in 2021 compared to $1.8 million 2020.

Plan Assets

The investment policy of the pension plan is designed for growth in value while minimizing risk to the overall portfolio. The Company diversifies the assets through investments in domestic fixed income securities and domestic and international equity securities. The assets are readily marketable and can be sold to fund benefit payment obligations as they become payable. The Company regularly reviews its policies on the investment mix and may make changes depending on economic conditions and perceived investment mix.

The fair value of the Company's pension plan assets at December 31, 2020 and 2019 by asset category was as follows:

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Fair Value Measurements

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Quoted Prices

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in Active

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Markets for

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Other

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Significant

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Identical

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Observable

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Unobservable

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Assets

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Inputs

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Inputs

(in thousands)

    

Fair Value

    

(Level 1)

    

(Level 2)

    

(Level 3)

December 31, 2020

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Cash equivalents

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$

666

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$

666

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$

—

$

—

U.S government agency obligations

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311

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—

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311

 

—

Equity securities

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1,473

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1,473

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—

​

—

Mutual funds

​

 

27,634

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27,634

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—

 

—

Total

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$

30,084

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$

29,773

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$

311

$

—

December 31, 2019

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Cash equivalents

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$

1,940

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$

1,940

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$

—

$

—

U.S government agency obligations

​

 

300

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—

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300

 

—

Corporate bonds

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​

307

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—

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​

307

​

—

Equity securities

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​

1,436

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​

1,436

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—

​

—

Mutual funds

​

 

21,706

​

 

21,706

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—

 

—

Total

​

$

25,689

​

$

25,082

​

$

607

$

—

​

The following future benefit payments are expected to be paid:

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Pension

Year

​

benefits

(in thousands)

​

​

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2021

 

$

871

2022

 

​

1,007

2023

 

​

1,034

2024

 

​

1,037

2025

 

​

1,102

2026 to 2030

 

​

7,403

​