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Employee Benefits | 12 Months Ended
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Dec. 31, 2019
Employee Benefits and Share-based Compensation, Noncash [Abstract] |
Employee Benefits | 10. Employee Benefits Employee Stock Ownership Plan On January 1, 2019, the Bank established an Employee Stock Ownership Plan (“ESOP”) to provide eligible employees the opportunity to own Company stock. The plan is a tax-qualified retirement plan for the benefit of Bank employees. On January 16, 2019, the Company granted a loan to the ESOP for the purchase of 436,425 shares of the Company’s common stock at a price of $10.00 per share. The loan obtained by the ESOP from the Company to purchase the common stock is payable annually over 20 years at a rate per annum equal to the Prime Rate, reset annually on January 1st (5.50% at January 16, 2019 and 4.25% on January 1, 2020). Loan payments are principally funded by cash contributions from the Bank. The loan is secured by the shares purchased, which are held in a suspense account for allocation among participants as the loan is repaid. The balance of the ESOP loan at December 31, 2019 was $4,229. Contributions are allocated to eligible participants on the basis of compensation, subject to federal tax limits. The number of shares committed to be released annually is 21,821 through 2039. Shares held by the ESOP include the following:
|  | December 31, 2019
Allocated |  | —
Committed to be allocated |  | 21,821
Unallocated |  | 414,604
Total shares |  | 436,425
The fair value of unallocated shares was $4,689 at December 31, 2019. Total compensation expense recognized in connection with the ESOP for the year ended December 31, 2019 was $243,000. Pension Plan The Bank maintains a noncontributory defined benefit pension plan covering substantially all of its employees 21 years of age or older who have completed at least one year of service. On April 24, 2012, the Board of Directors of Rhinebeck Bank voted to freeze the Bank’s defined benefit plan as of June 30, 2012. The following table sets forth the plan’s funded status and amounts recognized in the Company’s consolidated statements of financial condition:
|  | Years ended December 31,
|  | 2019 |  | 2018
Projected and accumulated benefit obligation |  | $ | (20,953) |  | $ | (18,241)
Plan assets at fair value |  |  | 20,628 |  |  | 17,459
Funded status included in other liabilities |  | $ | (325) |  | $ | (782)
Amounts recognized in accumulated other comprehensive loss consisted of the following:
|  | Years ended December 31,
|  | 2019 |  | 2018
Net actuarial loss |  | $ | 4,948 |  | $ | 5,616
The net periodic pension (benefit) cost and amounts recognized in other comprehensive income (loss) are as follows:
|  | Years ended December 31,
|  | 2019 |  | 2018
Interest cost |  | $ | 734 |  | $ | 689
Expected return on plan assets |  |  | (868) |  |  | (1,074)
Amortization of unrecognized loss |  |  | 345 |  |  | 374
Net periodic cost (benefit) |  | $ | 211 |  | $ | (11)
In 2019 and 2018, net actuarial loss resulted primarily from changes in the discount rate. Estimated net actuarial loss of $285 will be amortized from accumulated other comprehensive loss into net periodic pension cost in 2020. Weighted-average assumptions used by the Company to determine the pension benefit obligation consisted of the following:
|  | Years ended December 31, |
|  | 2019 |  | 2018 |
Discount rate |  | 3.25 | % | 4.14 | %
Rate of compensation increase |  | N/A |  | N/A |
Weighted-average assumptions used by the Company to determine the net periodic pension cost consisted of the following:
|  | Years ended December 31, |
|  | 2019 |  | 2018 |
Discount rate |  | 4.20 | % | 3.53 | %
Expected long-term return on plan assets |  | 5.50 | % | 6.00 | %
Rate of compensation increase |  | N/A |  | N/A |
The expected long-term rate of return on plan assets has been determined by applying historical average investment returns from published indexes relating to the current allocation of assets in the plan. Plan assets are invested in pooled separate accounts consisting of underlying investments in eleven diversified investment funds. As of December 31, 2019, the investment funds include seven equity funds, three bond funds and a real estate fund, each with its own investment objectives, investment strategies and risks, as detailed in the Plan’s investment policy statement. At December 31, 2018, the investment funds included six equity funds, three bond funds and a real estate fund. The Company determines the appropriate strategic asset allocation versus plan liabilities, as governed by the investment policy statement. The assets of the plan are invested under the supervision of the Company’s investment committee in accordance with the investment policy statement. The investment options of the plan are chosen in a manner consistent with generally accepted standards of fiduciary responsibility. The investment performance of the Company’s individual investment managers, with the assistance of the Company’s investment consultant, is monitored on a quarterly basis and is reviewed at least annually relative to the objectives and guidelines as stated in the Company’s investment policy statement. The fair value of the Company’s pension plan assets, by fair value hierarchy, are as follows:
|  | December 31, 2019
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Investment in separate accounts |  |  |  |  |  |  |  |  |  |  |  |
Fixed income |  | $ | 15,372 |  | $ | — |  | $ | — |  | $ | 15,372
Equity |  |  | 5,256 |  |  | — |  |  | — |  |  | 5,256
Total assets at fair value |  | $ | 20,628 |  | $ | — |  | $ | — |  | $ | 20,628
|  | December 31, 2018
|  | Level 1 |  | Level 2 |  | Level 3 |  | Total
Assets: |  |  |  |  |  |  |  |  |  |  |  |
Investment in separate accounts |  |  |  |  |  |  |  |  |  |  |  |
Fixed income |  | $ | 13,638 |  | $ | — |  | $ | — |  | $ | 13,638
Equity |  |  | 3,821 |  |  | — |  |  | — |  |  | 3,821
Total assets at fair value |  | $ | 17,459 |  | $ | — |  | $ | — |  | $ | 17,459
The pooled separate accounts are valued at the net asset per unit based on either the observable net asset value of the underlying investment or the net asset value of the underlying pool of securities. Net asset value is based on the value of the underlying assets owned by the fund, minus its liabilities and then divided by the number of shares outstanding. Pooled separate accounts were previously classified within level 2 of the valuation hierarchy, however, new guidance interpretation has prompted us to change our input level to level 1 as we believe the net asset value has a readily determinable fair value in a manner that is similar to that of a mutual fund. The December 31, 2018 table was updated to reflect this change. Employer contributions and benefit payments are as follows:
|  | Year ended December 31,
|  | 2019 |  | 2018
Employer Contribution |  | $ | — |  | $ | 570
Benefits paid |  | $ | 503 |  | $ | 453
As of December 31, 2019 the following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
Fiscal Year Ending |  | Pension Benefits
2020 |  | $ | 680
2021 |  |  | 720
2022 |  |  | 730
2023 |  |  | 750
2024 |  |  | 830
2025 – 2029 |  |  | 4,890
On August 14, 2018, the Company made a contribution to the plan in the amount of $570. The contribution was made to reduce the underfunded status of the plan and realize a higher tax deduction before the decrease of the federal tax rate in 2018. Defined Contribution Plan The Company sponsors a 401(k) defined contribution plan. Participants are permitted, in accordance with the provisions of Section 401(k) of the Internal Revenue Code, to contribute up to 25% of their earnings (as defined) into the plan with the Company matching up to 6%, subject to Internal Revenue Service limitations. The Company’s contributions charged to operations amounted to $828 and $782 for the years ended December 31, 2019 and 2018, respectively. Bank Owned Life Insurance The Company has an investment in and is the beneficiary of, life insurance policies on the lives of certain officers and directors. The purpose of these life insurance policies is to provide income through the appreciation in cash surrender value of the policies, which is expected to offset the cost of the deferred compensation plans. These policies have aggregate cash surrender values of $18,457 and $18,018 at December 31, 2019 and 2018, respectively. Net earnings on these policies aggregated $398 and $401 for the years ended December 31, 2019 and 2018, respectively, which are included in noninterest income in the consolidated statements of income. Deferred Compensation Arrangements Trustees’ Plan The Company’s 1991 Plan (the “Trustees’ Plan”) covers Trustees who elect to defer fees earned. Under the terms of the Trustees’ Plan, each participant may elect to defer all or part of their annual director’s fees. Upon resignation, retirement, or death, the participants’ total deferred compensation, including earnings thereon, will be paid out. At December 31, 2019 and 2018, $2,086 and $1,687, respectively, are included in accrued expenses and other liabilities, which represents cumulative amounts deferred and earnings thereon. Total expense related to the Trustees’ Plan years ended December 31, 2019 and 2018 were $126 and $129, respectively, which are included in noninterest expense in the consolidated statements of income. Executive Long-Term Incentive and Retention Plan The Company maintains an Executive Long-Term Incentive and Retention Plan (the “Executive Plan”). Participation in the Executive Plan is limited to officers of the Company designated as participants by the Board of Trustees and who filed a properly completed and executed participation agreement in accordance with the terms of the Executive Plan. Under the Executive Plan, the Board of Trustees may grant annual incentive awards equal to a percentage of a participant’s base salary at the rate in effect on the last day of the Plan year, as determined by the Board of Trustees based on the attainment of criteria established annually by the Board of Trustees. Incentive awards under the Executive Plan are credited to the participant’s incentive benefit account as of the last day of the Executive Plan year to which the award relates and earn interest at a rate determined annually by the Board of Trustees. Participants vest in their benefit accounts in accordance with the vesting schedule approved by the Board of Trustees, which ranges from one to five years of service. At December 31, 2019 and 2018, $1,163 and $975, respectively, is included in accrued expenses and other liabilities, which represents the cumulative amounts deferred and earnings thereon. The Company recognized expenses of $593 and $586 for the years ended December 31, 2019 and 2018, respectively, related to this plan and which are included in salaries and employee benefits expense in the consolidated statements of income. Group Term Replacement Plan Under the terms of the “Group Term Replacement Plan”, the Company provides postretirement life insurance benefits to certain officers. The liability related to these postretirement benefits is being accrued over the individual participants’ service period and aggregated $1,330 and $1,276, respectively, at December 31, 2019 and 2018. The Company recognized expenses of $54 and $16 for the years ended December 31, 2019 and 2018, respectively, related to this plan which are included in salaries and employee benefits expense in the consolidated statements of income. Other Director and Officer Postretirement Benefits The Company has individual fee continuation agreements with certain directors and a supplemental retirement agreement with an executive officer which provide for fixed postretirement benefits to be paid to the directors and the officer, or their beneficiaries, for periods ranging from 15 to 20 years. In addition, the Company has agreements with certain directors which provide for certain postretirement life insurance benefits. The liability related to these postretirement benefits is being accrued over the individual participants’ service period and aggregated $2,123 and $2,108, respectively, at December 31, 2019 and 2018. The Company recognized expenses of $78 and $94 for the years ended December 31, 2019 and 2018, respectively, related to these benefits which are included in other noninterest expenses in the consolidated statements of income.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI http://asc.fasb.org/topic&trid=2197446 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI http://asc.fasb.org/topic&trid=2127225 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
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