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Employee Benefits
 12 Months Ended
Dec. 31, 2024
Retirement Benefits [Abstract]  
Employee Benefits

(11) Employee Benefits

 

We sponsor a pretax savings and profit sharing plan (the “401(k) Plan”) qualified under Section 401(k) of the Internal Revenue Code. Under the 401(k) Plan, eligible employees are able to contribute up to the maximum allowed under the law. We may, at our discretion, match 100% of employees’ contributions up to $2,000 per employee per calendar year. Our matching contributions to the 401(k) Plan were $1.5 million, $1.4 million, and $1.3 million respectively, for the years ended December 31, 2024, 2023 and 2022.

 

We also sponsor a defined benefit plan, the MFN Financial Corporation Pension Plan (the “Plan”). The Plan benefits were frozen on June 30, 2001.

 

The following tables represents a reconciliation of the change in the plan’s benefit obligations, fair value of plan assets, and funded status at December 31, 2024 and 2023:

          
   December 31, 
   2024   2023 
   (In thousands) 
Change in Projected Benefit Obligation        
Projected benefit obligation, beginning of year  $15,477   $15,952 
Interest cost   695    753 
Assumption changes   (564)   (3)
Actuarial (gain) loss   (223)   (271)
Settlements   –    – 
Benefits paid   (1,113)   (954)
Projected benefit obligation, end of year  $14,272   $15,477 
           
Change in Plan Assets          
Fair value of plan assets, beginning of year  $20,048   $18,768 
Return on assets   2,967    2,347 
Employer contribution   –    – 
Expenses   (122)   (113)
Settlements   –    – 
Benefits paid   (1,113)   (954)
Fair value of plan assets, end of year  $21,780   $20,048 
           
Funded Status at end of year  $7,508   $4,571 

 

Additional Information

 

Weighted average assumptions used to determine benefit obligations and cost at December 31, 2024 and 2023 were as follows:

          
   December, 31 
   2024   2023 
Weighted average assumptions used to determine benefit obligations        
Discount rate   5.32%    4.68% 
           
Weighted average assumptions used to determine net periodic benefit cost          
Discount rate   4.68%    4.87% 
Expected return on plan assets   6.75%    7.00% 

 

Our overall expected long-term rate of return on assets is 6.75% per annum as of December 31, 2024. The expected long-term rate of return is based on the weighted average of historical returns on individual asset categories, which are described in more detail below.

               
   December 31, 
   2024   2023   2022 
   (In thousands) 
Amounts recognized on Consolidated Balance Sheet               
Other assets  $7,508   $4,571   $2,816 
Other liabilities   –    –    – 
Net amount recognized  $7,508   $4,571   $2,816 
                
Amounts recognized in accumulated other comprehensive loss consists of:               
Net loss  $1,593   $4,130   $5,716 
Unrecognized transition asset  –    –    – 
Net amount recognized  $1,593   $4,130   $5,716 
                
Components of net periodic benefit cost               
Interest cost  $695   $753   $579 
Expected return on assets  (1,311)   (1,280)   (1,860)
Amortization of transition asset  –    –    – 
Amortization of net loss   216    358    105 
Net periodic benefit cost   (400)   (169)   (1,176)
Settlement (gain)/loss   –    –    256 
Total  $(400)  $(169)  $(920)
                
Benefit Obligation Recognized in Other Comprehensive Loss (Income)               
Net loss (gain)  $(2,937)  $(1,755)  $1,003 
Prior service cost (credit)   –    –    – 
Amortization of prior service cost   –    –    – 
Net amount recognized in other comprehensive loss (income)  $(2,937)  $(1,755)  $1,003 

 

 

The estimated net gain that will be amortized from accumulated other comprehensive income into net periodic benefit cost in 2025 is $703,000.

 

The weighted average asset allocation of our pension benefits at December 31, 2024 and 2023 were as follows:

          
   December 31, 
   2024   2023 
Weighted Average Asset Allocation at Year-End          
Asset Category          
Equity securities   87%    87% 
Debt securities   13%    13% 
Cash and cash equivalents   0%    0% 
Total   100%    100% 

 

Our investment policies and strategies for the pension benefits plan utilize a target allocation of 75% equity securities and 25% fixed income securities (excluding Company stock). Our investment goals are to maximize returns subject to specific risk management policies. We address risk management and diversification by the use of a professional investment advisor and several sub-advisors which invest in domestic and international equity securities and domestic fixed income securities. Each sub-advisor focuses its investments within a specific sector of the equity or fixed income market. For the sub-advisors focused on the equity markets, the sectors are differentiated by the market capitalization, the relative valuation and the location of the underlying issuer. For the sub-advisors focused on the fixed income markets, the sectors are differentiated by the credit quality and the maturity of the underlying fixed income investment. The investments made by the sub-advisors are readily marketable and can be sold to fund benefit payment obligations as they become payable.

     
Cash Flows    
     
Estimated Future Benefit Payments (In thousands)    
2025  $1,206 
2026   1,324 
2027   1,240 
2028   1,129 
2029   942 
Years 2030 - 2034  5,954 
      
Anticipated Contributions in 2025  $– 

 

 

The fair value of plan assets at December 31, 2024 and 2023, by asset category, is as follows:

                    
   December 31, 2024 
   Level 1 (1)   Level 2 (2)   Level 3 (3)   Total 
Investment Name:  (in thousands) 
Company Common Stock  $9,617   $–   $–   $9,617 
Large Cap Value   –    2,198    –    2,198 
Mid Cap Index   –    625    –    625 
Small Cap Growth   –    631    –    631 
Small Cap Value   –    599    –    599 
Large Cap Blend   –    722    –    722 
Growth   –    2,713    –    2,713 
International Growth   –    2,249    –    2,249 
Core Bond   –    1,656    –    1,656 
High Yield   –    348    –    348 
Inflation Protected Bond   –    407    –    407 
Money Market   –    15    –    15 
Total  $9,617   $12,163   $–   $21,780 

 

   December 31, 2023 
   Level 1 (1)   Level 2 (2)   Level 3 (3)   Total 
Investment Name:  (in thousands) 
Company Common Stock  $8,308   $    $–   $8,308 
Large Cap Value   –    2,121    –    2,121 
Mid Cap Index   –    606    –    606 
Small Cap Growth   –    604    –    604 
Small Cap Value   –    596    –    596 
Large Cap Blend   –    638    –    638 
Growth   –    2,278    –    2,278 
International Growth   –    2,330    –    2,330 
Core Bond   –    1,763    –    1,763 
High Yield   –    351    –    351 
Inflation Protected Bond   –    437    –    437 
Money Market   –    16    –    16 
Total  $8,308   $11,740   $–   $20,048 

________________________

(1)Company common stock is classified as level 1 and valued using quoted prices in active markets for identical assets.
(2)All other plan assets in stock, bond and money market funds are classified as level 2 and valued using significant observable inputs.
(3)There are no plan assets classified as level 3 in the fair value hierarchy as a result of having significant unobservable inputs.