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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
Employee Benefit Plans | Employee Benefit Plans Employee benefits charged to operating expenses are summarized in the table below for the years ended December 31, as indicated.
(in thousands) | 2023 |  | 2022 |  | 2021
Payroll taxes | $ | 1,585 |  |  | $ | 1,443 |  |  | $ | 1,403 |
Medical plans | 1,841 |  |  | 1,771 |  |  | 1,860 |
401(k) match and profit sharing | 1,167 |  |  | 1,574 |  |  | 1,829 |
Periodic pension cost | 1,061 |  |  | 1,608 |  |  | 1,796 |
Other | 44 |  |  | 50 |  |  | 52 |
Total employee benefits | $ | 5,698 |  |  | $ | 6,446 |  |  | $ | 6,940 |
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 for the discretionary portion 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), effective on January 1, 2018. The SERP provides select employees who satisfy certain eligibility requirements with certain benefits upon retirement, termination of employment or death. As of December 31, 2023, the accrued liability was $1.8 million and the expense for this plan was $39,000 and $0.4 million for the years ended December 31, 2023 and 2022, respectively, and is recognized over the required service period. Pension The Company provides a noncontributory defined benefit pension plan for all full-time and eligible 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 did not elect to make a pension contribution in 2023. 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, 2023 and 2022
(in thousands) | 2023 |  | 2022
Change in projected benefit obligation: |  |  |
Balance, January 1 | $ | 29,131 |  |  | $ | 38,661 |
Service cost | 946 |  |  | 1,491 |
Interest cost | 1,428 |  |  | 1,174 |
Actuarial loss (gain) | 49 |  |  | (11,301) |
Benefits paid | (931) |  |  | (894) |
Balance, December 31, | $ | 30,623 |  |  | $ | 29,131 |
Change in plan assets: |  |  |
Fair value, January 1 | $ | 30,932 |  |  | $ | 37,416 |
Actual return on plan assets | 6,350 |  |  | (6,475) |
Employer contribution | — |  |  | 1,000 |
Expenses paid | (109) |  |  | (115) |
Benefits paid | (931) |  |  | (894) |
Fair value, December 31, | $ | 36,242 |  |  | $ | 30,932 |
Funded status at end of year | $ | 5,619 |  |  | $ | 1,801 |
Accumulated benefit obligation | $ | 25,897 |  |  | $ | 24,265 |
Amounts recognized in the statement of financial position consist of the following: |  |  |
(in thousands) | 2023 |  | 2022
Non-current assets | $ | 5,619 |  |  | $ | 1,801 |
Current liabilities | — |  |  | — |
Non-current liabilities | — |  |  | — |
Net asset (liability) at end of year | $ | 5,619 |  |  | $ | 1,801 |
Components of Net Pension Cost and Other Amounts Recognized in Accumulated Other Comprehensive Income (Loss) The following items are components of net pension cost for the years ended December 31, as indicated:
(in thousands) | 2023 |  | 2022 |  | 2021
Service cost - benefits earned during the year | $ | 946 |  |  | $ | 1,491 |  |  | $ | 1,692 |
Interest costs on projected benefit obligations (a) | 1,428 |  |  | 1,174 |  |  | 1,072 |
Expected return on plan assets (a) | (2,178) |  |  | (2,282) |  |  | (1,843) |
Expected administrative expenses (a) | 115 |  |  | 118 |  |  | 104 |
Amortization of prior service cost (a) | — |  |  | — |  |  | — |
Amortization of unrecognized net (gain) loss (a) | (640) |  |  | — |  |  | 367 |
Net periodic pension cost | $ | (329) |  |  | $ | 501 |  |  | $ | 1,392 |
(a) | The components of net periodic pension cost other than the service cost component are included in other non-interest expense.
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 income (loss) at December 31, 2023 and 2022 are shown below, including amounts recognized in other comprehensive income during the periods. All amounts are shown on a pre-tax basis.
(in thousands) | 2023 |  | 2022
Net accumulated actuarial net gain | $ | 9,745 |  |  | $ | 6,256 |
Accumulated other comprehensive gain | 9,745 |  |  | 6,256 |
Net periodic benefit cost in excess of cumulative employer contributions | (4,126) |  |  | (4,455) |
Net amount recognized at December 31, balance sheet | $ | 5,619 |  |  | $ | 1,801 |
Net actuarial gain arising during period | $ | 4,129 |  |  | $ | 2,547 |
Amortization of net actuarial gain | (640) |  |  | — |
Total recognized in other comprehensive income (loss) | $ | 3,489 |  |  | $ | 2,547 |
Total recognized in net periodic pension cost and other comprehensive income (loss) | $ | (3,818) |  |  | $ | (2,046) |
Assumptions utilized to determine benefit obligations as of December 31, 2023, 2022, and 2021 and to determine pension expense for the years then ended are as follows:
| 2023 |  | 2022 |  | 2021
Determination of benefit obligation at year end: |  |  |  |  |
Discount rate | 4.95 | % |  | 5.10 | % |  | 3.10 | %
Annual rate of compensation increase | 4.50 | % |  | 4.50 | % |  | 4.50 | %
Determination of pension expense for year ended: |  |  |  |  |
Discount rate for the service cost | 5.10 | % |  | 3.10 | % |  | 2.80 | %
Annual rate of compensation increase | 4.50 | % |  | 4.50 | % |  | 4.50 | %
Expected long-term rate of return on plan assets | 6.75 | % |  | 6.75 | % |  | 6.75 | %
The assumed overall expected long-term rate of return on pension plan assets used in calculating 2023 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:
(in thousands) | 2023 | 2022 | 2021 | 2020 | 2019
Plan Assets: |  |  |  |  |
Actual rate of return | 21.1% | (17.0)% | 22.1% | 19.7% | 25.8%
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 $0.4 million of income in 2024 compared to $0.3 million of income in 2023. 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, 2023 and 2022 by asset category was as follows:
|  |  | Fair Value Measurements
(in thousands) | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
December 31, 2023 |  |  |  |  |  |  |
Cash equivalents | $ | 1,521 |  |  | $ | 1,521 |  |  | $ | — |  |  | $ | — |
U.S government agency obligations | 2,587 |  |  | — |  |  | 2,587 |  |  | — |
Mutual funds | 32,134 |  |  | 32,134 |  |  | — |  |  | — |
Total | $ | 36,242 |  |  | $ | 33,655 |  |  | $ | 2,587 |  |  | $ | — |
December 31, 2022 |  |  |  |  |  |  |
Cash equivalents | $ | 1,772 |  |  | $ | 1,772 |  |  | $ | — |  |  | $ | — |
U.S government agency obligations | 491 |  |  | — |  |  | 491 |  |  | — |
Equity securities | 1,518 |  |  | 1,518 |  |  | — |  |  | — |
Mutual funds | 27,151 |  |  | 27,151 |  |  | — |  |  | — |
Total | $ | 30,932 |  |  | $ | 30,441 |  |  | $ | 491 |  |  | $ | — |
The following future benefit payments are expected to be paid:
Year | Pension benefits
(in thousands) |
2024 | $ | 1,061 |
2025 | 1,109 |
2026 | 1,194 |
2027 | 1,335 |
2028 | 1,460 |
2028 to 2032 | 9,450 |

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