Employee Benefits

12 Months Ended

Dec. 31, 2013

Note 17: Employee Benefits

The Bank provides pension benefits for substantially all of the Bank’s employees who were employed by the Bank prior to September 1, 2005, through its participation in a pension fund known as the Pentegra Group. The trustees of the Financial Institutions Retirement Fund administer the Pentegra Plan, employer identification number 13-5645888 and plan number 333. This plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra Plan. The Pentegra Plan is a single plan under Internal Revenue Code 413(c) and, as a result, all of the assets stand behind all of the liabilities.

The risks of participating in these multiemployer plans are different from single-employer plans in the following aspects:

Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of other participating employers.

If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers.

If the Company chooses to stop participating in some of its multiemployer plans, the Company may be required to pay those plans an amount based on the underfunded status of the plan, referred to as a withdrawal liability.

Pension expense related to this plan was $359,000 and $313,000 for the years ended December 31, 2013 and 2012. Funding status of the plan as of the beginning of the plan years for 2013 and 2012 (July 1st) was 103.85% and 106.71% respectively.

Total contributions to the Pentegra Plan were $196,473,000 and $299,729,000 for the plan years ended June 30, 2013 and 2012, respectively. The Company’s contributions for the fiscal years ending December 31, 2013 and 2012 were $74,000 and $327,000, respectively. The Company’s contributions to the Pentegra Plan were not more than 5% of the total contributions to the plan. There have been no significant changes that affect the comparability of the 2013 and 2012 contributions.

The Bank has a retirement savings 401(k) plan in which substantially all employees may participate. Prior to 2009, the Bank provided a match for employee contributions for all contributing employees with a match of 50% for the first 6% of W-2 earnings for employees hired prior to September 1, 2005 and a match of 100% for the first 6% of W-2 earnings contributed for employees hired on or after September 1, 2005. Due to economic conditions, in October of 2009 the employer match for pre-2005 employees was discontinued and the match rate for post-2005 employees was reduced to 50% of the first 6% of W-2 earnings. In 2011, this plan was again amended, with the employer match increased to 75% of the first 6% of W-2 earnings, only on post-2005 employees. The Bank’s expense for the plan was $78,000 and $65,000 for the years ended December 31, 2013 and 2012.

The Bank has a supplemental retirement plan which provides retirement benefits to all directors. The Bank’s obligations under the plan have been funded by the purchase of key man life insurance policies, of which the Bank is the beneficiary. Expense recognized under the supplemental retirement plan totaled approximately $82,000 and $78,000 for the years ended December 31, 2013 and 2012.

The Company has an ESOP covering substantially all employees of the Company and Bank. All contributions to the ESOP are determined annually by the Board of Directors of the Company and Bank. Compensation expense was recorded based on the annual contributions to the ESOP. ESOP expense for the years ended December 31, 2013 and 2012 was $100,000 and $120,000, respectively. At December 31, 2013, the ESOP had 163,600 of allocated shares, all in common stock, no suspense shares and no committed-to-be released shares. At December 31, 2013 and 2012, the fair value of the 163,600 and 162,101 allocated shares held by the ESOP was $4,254,000 and $3,099,000, respectively.

The Company also has a Recognition and Retention Plan (RRP) which provides for the award and issuance of up to 95,220 shares of the Company’s stock to members of the Board of Directors and management. Over the life of the plan, the RRP has purchased 84,490 shares of the Company’s common stock in the open market and had 400 shares forfeited back into the fund. A total of 84,890 shares has all been awarded. Common stock awarded under the RRP vests ratably over a five-year period, commencing with the date of the award. Expense recognized under the RRP plan totaled approximately $11,000 and $24,000 for the years ended December 31, 2013 and 2012.

Unvested RRP shares at December 31, 2013:

	Number of Shares			Grant Date Fair Value

Beginning of year		2,600		$	15.85
Granted		-			-
Vested		(700	)		15.79
End of year		1,900		$	15.87

Unearned compensation at December 31, 2013 related to RRP shares is $30,000 and will be recognized over a weighted average period of 2.7 years.