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Note 8 - Employee Benefit Plan

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

Note 8: Employee Benefit Plans

401(k) Plan

The Company has a Retirement Accumulation Plan qualifying under IRS Code Section 401(k), in which NBI, NBB and NBFS are participating employers. Eligible participants may contribute up to 100% of their total annual compensation to the plan, subject to certain limits based on federal tax laws. Employee contributions are matched by the employer based on a percentage of an employee’s total annual compensation contributed to the plan. For the years ended December 31, 2013, 2012 and 2011, the Company contributed $282, $279 and $279, respectively, to the plan.

Employee Stock Ownership Plan

The Company has a nonleveraged Employee Stock Ownership Plan (ESOP) which enables employees of NBI and its subsidiaries who have one year of service and who have attained the age of 21 prior to the plan’s January 1 and July 1 enrollment dates to own NBI common stock. Contributions to the ESOP, which are not mandatory, are determined annually by the Board of Directors. Contribution expense amounted to $275, $370 and $420 in the years ended December 31, 2013, 2012 and 2011, respectively. Dividends on ESOP shares are charged to retained earnings. As of December 31, 2013, the number of shares held by the ESOP was 266,572. All shares held by the ESOP are treated as outstanding in computing the Company’s basic net income per share. Upon reaching age 55 with ten years of plan participation, a vested participant has the right to diversify 50% of his or her allocated ESOP shares and NBI or the ESOP, with the agreement of the Trustee, is obligated to purchase those shares. The ESOP contains a put option which allows a withdrawing participant to require the Company or the ESOP, if the plan administrator agrees, to purchase his or her allocated shares if the shares are not readily tradable on an established market at the time of distribution.

Salary Continuation Plan

The Company has a Salary Continuation Plan for certain key officers. The plan provides the participating officers with supplemental retirement income, payable for the greater of 15 years after retirement or the officer’s lifetime. The expense accrued for the plans in 2013, 2012, and 2011, based on the present value of the retirement benefits, amounted to $194, $151, and $197, respectively. The plan is unfunded. However bank-owned life insurance has been acquired on the life of the key employees in amounts sufficient to discharge the obligations of the agreement.

Defined Benefit Plan

The Company’s defined benefit pension plan covers substantially all employees. The plan benefit formula is based upon the length of service of retired employees and a percentage of qualified W-2 compensation during their final years of employment. Information pertaining to activity in the plan is as follows:

	December 31,
	2013			2012			2011
Change in benefit obligation
Projected benefit obligation at beginning of year	$	18,054		$	15,808		$	12,971
Service cost		596			468			435
Interest cost		617			738			704
Actuarial (gain) loss		(1,149	)		1,554			2,001
Benefits paid		(933	)		(514	)		(303	)
Projected benefit obligation at end of year	$	17,185		$	18,054		$	15,808

Change in plan assets
Fair value of plan assets at beginning of year	$	14,325		$	13,326		$	8,156
Actual return on plan assets		2,225			963			432
Employer contribution		988			550			5,041
Benefits paid		(933	)		(514	)		(303	)
Fair value of plan assets at end of year	$	16,605		$	14,325		$	13,326

Funded status at the end of the year	$	(580	)	$	(3,729	)	$	(2,482	)

Amounts recognized in the Consolidated Balance Sheet
Deferred tax asset	$	203		$	1,305		$	869
Other liabilities		(580	)		(3,729	)		(2,482	)
Total amounts recognized in the Consolidated Balance Sheet	$	(377	)	$	(2,424	)	$	(1,613	)

Amounts recognized in accumulated other comprehensive (loss), net
Net loss	$	(5,282	)	$	(8,202	)	$	(7,044	)
Prior service cost		779			879			979
Deferred tax asset		1,550			2,538			2,098
Amount recognized	$	(2,953	)	$	(4,785	)	$	(3,967	)

Accrued/Prepaid benefit cost, net
Benefit obligation	$	(17,185	)	$	(18,054	)	$	(15,808	)
Fair value of assets		16,605			14,325			13,326
Unrecognized net actuarial loss		5,282			8,202			7,044
Unrecognized prior service cost		(779	)		(879	)		(979	)
Deferred tax liability		(1,347	)		(1,233	)		(1,229	)
Prepaid benefit cost included in other liabilities	$	2,576		$	2,361		$	2,354

Components of net periodic benefit cost
Service cost	$	596		$	468		$	435
Interest cost		617			738			704
Expected return on plan assets		(984	)		(1,075	)		(810	)
Amortization of prior service cost		(101	)		(101	)		(101	)
Recognized net actuarial loss		532			508			292
Net periodic benefit cost	$	660		$	538		$	520

Other changes in plan assets and benefit obligations recognized in other comprehensive loss
Net (gain) loss	$	(2,921	)	$	1,157		$	2,087
Amortization of prior service cost		101			101			101
Deferred income tax expense (benefit)		987			(440	)		(766	)
Total recognized	$	(1,833	)	$	818		$	1,422

Total recognized in net periodic benefit cost and other comprehensive loss, net of income tax expense (benefit)	$	(2,160	)	$	1,796		$	2,708

Weighted average assumptions at end of the year
Discount rate used for net periodic pension cost		3.75	%		4.50	%		5.50	%
Discount rate used for disclosure		4.50	%		3.75	%		4.50	%
Expected return on plan assets		7.50	%		8.00	%		8.00	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

Long Term Rate of Return

The Company, as plan sponsor, selects the expected long-term rate-of-return-on-assets assumption 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, but 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, and 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 estimated within periodic cost).

The Company, as plan sponsor, has adopted a Pension Administrative Committee Policy (the Policy) for monitoring the investment management of its qualified plans. The Policy includes a statement of general investment principles and a listing of specific investment guidelines, to which the committee may make documented exceptions. The guidelines state that, unless otherwise indicated, all investments that are permitted under the Prudent Investor Rule shall be permissible investments for the defined benefit pension plan. All plan assets are to be invested in marketable securities. Certain investments are prohibited, including commodities and future contracts, private placements, repurchase agreements, options and derivatives. The Policy establishes quality standards for fixed income investments and mutual funds included in the pension plan trust. The Policy also outlines diversification standards.

The preferred target allocation for the assets of the defined benefit pension plan is 65% in equity securities and 35% in fixed income securities. Equity securities include investments in large-cap and mid-cap companies primarily located in the United States, although a small number of international large-cap companies are included. There are also investments in mutual funds holding the equities of large-cap and mid-cap U.S. companies. Fixed income securities include U.S. government agency securities and corporate bonds from companies representing diversified industries. There are no investments in hedge funds, private equity funds or real estate.

Fair value measurements of the pension plan’s assets at December 31, 2013 follow:

Fair Value Measurements at December 31, 2013

Asset Category

Total

Quoted Prices in Active Markets for Identical Assets (Level 1)

Significant Observable Inputs (Level 2)

Significant Unobservable Inputs (Level 3)

Cash

1,319

---

Equity securities:

U. S. companies

8,091

---

International companies

137

---

Equities mutual funds ⁽¹⁾

2,490

---

U. S. government agencies and corporations

358

---

358

---

State and political subdivisions

398

---

398

---

Corporate bonds – investment grade ⁽²⁾

3,812

---

3,812

---

Total pension plan assets

16,605

12,037

4,568

---

(1)

This category comprises actively managed equity funds invested in large-cap and mid-cap U.S. companies.

(2)

This category represents investment grade bonds of U.S. issuers from diverse industries.

	Fair Value Measurements at December 31, 2012
Asset Category	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash	$	462	$	462	$	---	$	---
Equity securities:
U. S. companies		6,470		6,470		---		---
International companies		112		112		---		---
Equities mutual funds ⁽¹⁾		1,411		1,411		---		---
U. S. government agencies and corporations		366		---		366		---
State and political subdivisions		435		---		435		---
Corporate bonds – investment grade ⁽²⁾		4,956		---		4,956		---
Corporate bonds – below investment grade ⁽³⁾		113		---		113		---
Total pension plan assets	$	14,325	$	8,455	$	5,870	$	---

(1)

This category comprises actively managed equity funds invested in large-cap and mid-cap U.S. companies.

(2)

This category represents investment grade bonds of U.S. issuers from diverse industries.

(3)

This category represents bonds from U.S. issuers from diverse industries that were purchased at investment grade, but which have fallen below investment grade.

The Company’s required minimum pension contribution for 2014 has not yet been determined.

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows:

2014	$	4,079
2015	$	656
2016	$	1,472
2017	$	1,868
2018	$	965
2019 - 2023	$	3,633