XML 31 R17.htm IDEA: XBRL DOCUMENT v3.20.4
Note 8 - Employee Benefit Plans
 12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Retirement Benefits [Text Block]

Note 8: Employee Benefit Plans

401(k) Plan

The Company has a Retirement Accumulation Plan qualifying under Internal Revenue Code Section 401(k), in which 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, 2020, 2019 and 2018, the Company contributed $394, $379 and $364, respectively, to the plan.

 

Employee Stock Ownership Plan

The Company has a non-leveraged 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 NBI Board of Directors. Contribution expense amounted to $300 in each of the years ended December 31, 2020, 2019 and 2018, respectively. Dividends on ESOP shares are charged to retained earnings. As of December 31, 2020, the number of shares held by the ESOP was 184,503. 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 10 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 non-qualified 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 2020, 2019, and 2018, based on the present value of the retirement benefits, amounted to $304, $270, and $255, 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 during the years indicated, is as follows:

 

  

December 31,

 
  

2020

  

2019

  

2018

 

Change in benefit obligation

            

Projected benefit obligation at beginning of year

 $29,641  $23,688  $23,492 

Service cost (1)

  1,080   801   868 

Interest cost

  820   884   802 

Actuarial loss (gain)

  4,621   5,162   (423

)

Benefits paid

  (1,310

)

  (894

)

  (1,051

)

Projected benefit obligation at end of year

 $34,852  $29,641  $23,688 
             

Change in plan assets

            

Fair value of plan assets at beginning of year

 $25,007  $21,786  $23,428 

Actual return on plan assets

  3,718   4,115   (591

)

Employer contribution

  5,000   -   - 

Benefits paid

  (1,310

)

  (894

)

  (1,051

)

Fair value of plan assets at end of year

 $32,415  $25,007  $21,786 
             

Funded status at the end of the year

 $(2,437

)

 $(4,634

)

 $(1,902

)

             

Amounts recognized in the Consolidated Balance Sheet

            

Deferred tax asset

 $512  $973  $399 

Other liabilities

  (2,437

)

  (4,634

)

  (1,902

)

Total amounts recognized in the Consolidated Balance Sheet

 $(1,925

)

 $(3,661

)

 $(1,503

)

             

Amounts recognized in accumulated other comprehensive (loss), net

            

Net loss

 $(12,855

)

 $(10,983

)

 $(9,107

)

Prior service cost

  11   120   230 

Deferred tax asset

  2,697   2,281   1,864 

Amount recognized

 $(10,147

)

 $(8,582

)

 $(7,013

)

             

Accrued/Prepaid benefit cost, net

            

Benefit obligation

 $(34,852

)

 $(29,641

)

 $(23,688

)

Fair value of assets

  32,415   25,007   21,789 

Unrecognized net actuarial loss

  12,855   10,983   9,107 

Unrecognized prior service cost

  (11

)

  (120

)

  (230

)

Deferred tax liability

  (2,185

)

  (1,308

)

  (1,465

)

Prepaid benefit cost included in other assets

 $8,222  $4,921  $5,510 

(continued)

 

 

Components of net periodic benefit cost

            

Service cost

 $1,080  $801  $868 

Interest cost

  820   884   802 

Expected return on plan assets

  (1,679

)

  (1,461

)

  (1,601

)

Amortization of prior service cost

  (110

)

  (110

)

  (110

)

Recognized net actuarial loss

  710   632   585 

Net periodic benefit cost

 $821  $746  $544 
             

Other changes in plan assets and benefit obligations recognized in other comprehensive income

            

Net loss

 $1,871  $1,876  $1,184 

Amortization of prior service cost

  110   110   110 

Deferred income tax benefit

  (416

)

  (417

)

  (272

)

Total recognized

 $1,565  $1,569  $1,022 
             

Total recognized in net periodic benefit cost and other comprehensive income

 $2,802  $2,732  $1,838 
             

Weighted average assumptions at end of the year

            

Discount rate used for net periodic pension cost

  3.00

%

  4.00

%

  3.50

%

Discount rate used for disclosure

  2.25

%

  3.00

%

  4.00

%

Expected return on plan assets

  7.50

%

  7.50

%

  7.50

%

Rate of compensation increase

  3.00

%

  3.00

%

  3.00

%

 

 

(1)

Cost is included in Salaries and Employee Benefits expense.

 

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, 2020 and December 31, 2019 are presented below:

 

  

Fair Value Measurements at December 31, 2020

 




Asset Category

 

Total

  

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

  

Significant

Observable Inputs

(Level 2)

  

Significant

Unobservable Inputs

(Level 3)

 

Cash

 $4,336  $4,336  $-  $- 

Equity securities:

                

U. S. companies

  15,129   15,129   -   - 

International companies

  2,735   2,735   -   - 

Equities mutual funds (1)

  3,840   3,840   -   - 

State and political subdivisions

  152   -   152   - 

Corporate bonds – investment grade (2)

  6,223   -   6,223   - 

Total pension plan assets

 $32,415  $26,040  $6,375  $- 

 

 

(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, 2019

 




Asset Category

 

Total

  

Quoted Prices in

Active Markets for

Identical Assets

(Level 1)

  

Significant

Observable Inputs

(Level 2)

  

Significant

Unobservable Inputs

(Level 3)

 

Cash

 $4,350  $4,350  $-  $- 

Equity securities:

                

U. S. companies

  11,098   11,098   -   - 

International companies

  2,334   2,334   -   - 

Equities mutual funds (1)

  1,343   1,343   -   - 

State and political subdivisions

  202   -   202   - 

Corporate bonds – investment grade (2)

  5,680   -   5,680   - 

Total pension plan assets

 $25,007  $19,125  $5,882  $- 

 

 

(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.

 

The Company’s required minimum pension contribution for 2021 has not yet been determined.

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

 

2021

  $5,235 

2022

  $1,436 

2023

  $992 

2024

  $1,823 

2025

  $839 
2026 - 2030  $10,725