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Benefit Plans
 12 Months Ended
Dec. 31, 2020
Benefit Plans [Abstract]  
Benefit Plans Note 17. Benefit Plans

The Bank has a 401(k) plan includes an auto enrollment feature and covers all employees of the Bank who have completed four months of service. Employee contributions to the plan are matched at 100% up to 4% of each participant’s deferrals plus 50% of the next 2% of deferrals from participants’ eligible compensation. Under this plan, the maximum amount of employee contributions in any given year is defined by Internal Revenue Service regulations. In addition, a 100% discretionary profit-sharing contribution of up to 2% of each employee’s eligible compensation is possible provided net income targets are achieved. The related expense for the 401(k) plan, and the discretionary profit-sharing plan was $869 thousand in 2020 and $825 thousand in 2019. This expense is recorded in the Salary and employee benefits line of the Consolidated Statements of Income.

The Bank has a noncontributorydefined benefit pension plan covering employees hired prior to April 1, 2007. The pension plan was closed to new participants on April 1, 2007. Benefits are based on years of service and the employee’s compensation using a career average formula. The Bank’s funding policy is to contribute the annual amount required to meet the minimum funding requirements of the Employee Retirement Income Security Act of 1974. Contributions are intended to provide not only for the benefits attributed to service to date but also for those expected to be earned in the future. Employees who are eligible for pension benefits may elect to receive an annuity style payment or a lump-sum payout of their pension benefits. Pension service costs are recorded in Salary and benefits expense while all other components of net periodic pension costs are recorded in other expense. For the next fiscal year, the estimated net loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost are $1.1 million. The Bank uses December 31 as the measurement date for its pension plan.

The Committee reviews and determines all the assumptions used to determine the benefit obligations and expense annually. Historical investment returns play a significant role in determining the expected long-term rate of return on Plan assets.

The following table sets forth the plan’s funded status, based on the December 31, 2020 2019 actuarial valuations:

For the Years Ended December 31

(Dollars in thousands)

2020

2019

Change in projected benefit obligation

Benefit obligation at beginning of measurement year

$

20,779

$

17,937

Service cost

332

325

Interest cost

525

631

Actuarial loss (gain)

2,275

2,727

Benefits paid

(1,400)

(841)

Benefit obligation at end of measurement year

22,511

20,779

Change in plan assets

Fair value of plan assets at beginning of measurement year

18,135

16,549

Actual return on plan assets net of expenses

1,727

2,427

Employer contribution

1,000

—

Benefits paid

(1,400)

(841)

Fair value of plan assets at end of measurement year

19,462

18,135

Funded status of projected benefit obligation

$

(3,049)

$

(2,644)

For the Years Ended December 31

2020

2019

Assumptions used to determine benefit obligations:

Discount rate

2.33%

3.13%

Rate of compensation increase

4.00%

4.00%


‎

Amounts recognized in accumulated other comprehensive

For the Years Ended December 31

income (loss), net of tax

2020

2019

Net actuarial loss

$

(8,533)

$

(7,812)

Tax effect

1,792

1,641

Net amount recognized in accumulated other comprehensive loss

$

(6,741)

$

(6,171)

For the Years Ended December 31

Components of net periodic pension cost

2020

2019

Service cost

$

332

$

325

Interest cost

525

631

Expected return on plan assets

(1,079)

(1,087)

Recognized net actuarial loss

904

552

Net periodic pension cost

$

682

$

421

For the Years Ended December 31

2020

2019

Assumptions used to determine net periodic benefit cost:

Discount rate

3.13%

4.15%

Expected long-term return on plan assets

6.50%

6.50%

Rate of compensation increase

4.00%

4.00%

Asset allocations:

Cash and cash equivalents

12%

4%

Common stocks

22%

21%

Corporate bonds

13%

13%

Municipal bonds

26%

35%

Investment fund - debt

9%

9%

Investment fund - equity

12%

10%

Deposit in immediate participation guarantee contract

6%

6%

Other

0%

2%

Total

100%

100%

The following methods and assumptions were used to estimate the fair values of the assets held by the plan. See Note 21 for additional information on the fair value hierarchy.

Cash and Cash Equivalents: The carrying value of this asset is considered to approximate its fair value (Level 1).

Equity Securities, Investment Funds (Debt and Equity): The fair value of assets in these categories are determined using quoted market prices from nationally recognized markets (Level 1).

Bonds (Corporate and Municipal): Fair values of these assets was primarily measured using information from a third-party pricing service. This service provides pricing information by utilizing evaluated pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers, and reference data from market research publications. Fair values were estimated primarily by obtaining quoted prices for similar assets in active markets or through the use of pricing models (Level 2).

Immediate Participation Guarantee Contract: The carrying value of this asset is considered to approximate its fair value. (Level 1).

Cash Surrender Value of Life Insurance: The cash surrender value of this asset is considered to approximate its fair value. However, the inputs used to determine the cash surrender value are not readily observable in the market (Level 3)

Certificates of Deposit: The fair value of these assets are calculated by use of a pricing model that uses rate spreads to new market issue quotes and dealer quotes (Level 2).

The following table sets forth by level, within the fair value hierarchy, the Plan's investments at fair value as of December 31, 2020 and 2019. For more information on the levels within the fair value hierarchy, please refer to Note 21.

(Dollars in Thousands)

December 31, 2020

Asset Description

Fair Value

Level 1

Level 2

Level 3

Cash and cash equivalents

$

2,305

$

2,305

$

—

$

—

Equity securities

4,236

4,236

—

—

Corporate bonds

2,581

—

2,581

—

Municipal bonds

5,066

—

5,066

—

Investment fund - debt

1,757

—

1,757

—

Investment fund - equity

2,252

2,252

—

—

Deposit in immediate participation guarantee contract

1,187

1,187

—

—

Cash surrender value of life insurance

28

—

—

28

Certificates of deposit

50

—

50

—

Total assets

$

19,462

$

9,980

$

9,454

$

28

(Dollars in Thousands)

December 31, 2019

Asset Description

Fair Value

Level 1

Level 2

Level 3

Cash and cash equivalents

$

808

$

808

$

—

$

—

Equity securities

3,717

3,717

—

—

Corporate bonds

2,406

—

2,406

—

Municipal bonds

6,266

—

6,266

—

Investment fund - debt

1,605

—

1,605

—

Investment fund - equity

1,875

1,875

—

—

Deposit in immediate participation guarantee contract

1,129

1,129

—

—

Cash surrender value of life insurance

28

—

—

28

Certificates of deposit

301

—

301

—

Total assets

$

18,135

$

7,529

$

10,578

$

28

The following table sets forth a summary of the changes in the fair value of the Plan's level 3 investments for the years ended December 31, 2020 and 2019:

Cash Value of Life Insurance

December 31

2020

2019

Balance at the beginning of the period

$

28

$

25

Unrealized gain (loss) relating to investments held at the reporting date

—

3

Purchases, sales, issuances and settlement, net

—

—

Balance at the end of the period

$

28

$

28

Contributions

The Bank does not expect to make any additional contributions in 2021.

Estimated future benefit payments at December 31, 2020 (Dollars in Thousands)

2021

$

2,267

2022

1,293

2023

1,104

2024

1,037

2025

1,431

2026-2030

6,685

Total

$

13,817