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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plans
Note 14: Employee Benefit Plans

Pension and Other Post-Retirement Benefit Plans

The Company has a frozen noncontributory defined benefit pension plan covering all employees who met the eligibility requirements prior to December 31, 2003. Compensation and service accruals were frozen at the same date. The Company’s funding policy is to make the minimum annual contribution that is required by applicable regulations, plus such amounts as the Company may determine to be appropriate from time to time.

The Company expects to contribute approximately $30,000 to the plan during 2017.

The Company uses a December 31 measurement date for the plan. Information about the plan’s funded status and pension cost follows:

   2016   2015 
   (In thousands) 
Change in benefit obligation          
     Beginning of year  $2,153   $2,221 
          Interest cost   92    86 
          Actuarial gain   (26)   (112)
          Benefits paid   (39)   (38)
          Settlements   (463)   (4)
     End of year   1,717    2,153 
           
Change in fair value of plan assets          
     Beginning of year   1,722    1,590 
          Actuarial return on plan assets   114    (11)
          Employer contribution   87    185 
          Benefits paid   (39)   (38)
          Settlements   (463)   (4)
     End of year   1,421    1,722 
Funded status at end of year  $(296)  $(431)

Amounts recognized in accumulated other comprehensive income (loss) not yet recognized as components of net periodic benefit cost consist of the following at December 31, 2016 and 2015:

   2016   2015 
   (In thousands) 
Net loss  $(750)  $(1,083)

 

The estimated net loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year is approximately $61,000.

The accumulated benefit obligation for the defined benefit pension plan was $1.7 million, and $2.2 million at December 31, 2016 and 2015, respectively.

   2016   2015 
   (In thousands) 
Components of net periodic benefit cost        
     Internal cost  $92   $86 
     Expected return on plan assets   (107)   (99)
     Amortization of net loss   98    105 
     Settlement charge   202    — 
Net periodic benefit cost  $285   $92 

 

Plan assets are held by a bank-administered trust fund, which invests the plan assets in accordance with the provisions of the plan agreement. The plan agreement permits investment in mutual funds that may invest in common stocks, corporate bonds and debentures, U.S. Government securities, certain insurance contracts, real estate and other specified investments, based on certain target allocation percentages.

Asset allocation is primarily based on a strategy to provide stable earnings while still permitting the plan to recognize potentially higher returns through an investment in equity securities. The target asset allocation percentages for 2016 are as follows:

SMID-Cap stocks 30-70%
Fixed income investments 30-70%
Cash  0-15%

 

At December 31, 2016 and 2015, the fair value of plan assets as a percentage of the total was invested in the following:

   2016   2015 
Equity Securities   61%   60%
Debt securities   37%   39%
Cash and cash equivalents   2%   1%
    100%   100%

 

Benefit payments expected to be paid from the plan as of December 31, 2016 are as follows:

   (In thousands) 
2017  $52 
2018   62 
2019   78 
2020   86 
2021   88 
Thereafter   491 
   $857 

 

Significant assumptions include the following as of December 31, 2016 and 2015:

   Pension Benefits 
   2016   2015 
Weighted-average assumptions used to
     determine benefit obligation:		        
          Discount rate   4.14%   4.95%
          Rate of compensation increase
               (frozen)		   N/A    N/A 
Weighted-average assumptions used to
     determine benefit cost:		          
          Discount rate   4.34%   4.95%
          Expected return on plan assets   6.00%   6.00%
          Rate of compensation increase
               (frozen)		   N/A    N/A 

 

The Company has estimated the long-term rate of return on plan assets based primarily on historical returns on plan assets, adjusted for changes in target portfolio allocations and recent changes in long-term interest rates based on publicly available information.

The fair value of the Company’s pension plan assets, and the related investment references, at December 31, 2016, and 2015 by asset category are as follows:

December 31, 2016      Fair Value Measurements Using 
Asset Category  Total Fair
Value		  

Quoted Prices
in Active
Markets for
Identical Assets

(Level 1)

  

Significant
Other
Observable
Inputs

(Level 2)

  

Significant
Unobservable
Inputs

(Level 3)

 
Mutual funds-Equity  (In thousands) 
     Large Cap Value (a)  $86   $86   $—   $— 
     Large Cap Core (b)   114    114    —    — 
     Mid Cap Core (c)   100    100    —    — 
     Small-Cap Core (d)   52    52    —    — 
     International Core (e)   208    208    —    — 
     Large Cap Growth (f)   158    158    —    — 
     Small/Midcap Growth (g)   55    55    —    — 
Mutual funds-Fixed Income                    
     Fixed Income-Core Plus (h)   398    398    —    — 
     Intermediate Duration (i)   134    134    —    — 
Common/Collective Trusts-
     Equity		                    
          Large Cap Value (j)   90    —    90    — 
Cash                    
     Money Market (k)   26    26    —    — 
          Total  $1,421   $1,331   $90   $— 
(a)This category consists of a mutual fund holding 100-160 stocks, designed to track and outperform the Russell 1000 Value Index.
(b)This category contains stocks of the S&P 500 Index. The stocks are maintained in approximately the same weightings as the index.
(c)This category contains stocks of the MSCI U.S. Mid Cap 450 index Index. The stocks are maintained in approximately the same weightings as the index.
(d)This category contains stocks whose sector weightings are maintained within a narrow band around those of the Russell 2000 Index. The portfolio will typically hold more than 150 stocks.
(e)This category consists of investments with long-term growth potential located primarily in Europe, the Pacific Basin, and other developed emerging countries.
(f)This category consists of two mutual funds, one which invests primarily of large U.S. – based growth companies, the other in fast-growing large cap growth companies with sustainable franchises and positive price momentum.
(g)This category seeks capital appreciation through investments in common stock of small-capitalization companies, defined as those with a total market value of no more than $2 billion at the time the fund first invests in them.
(h)This category currently includes equal investments in three mutual funds, two of which usually hold at least 80% of fund assets in investment grade fixed income securities, seeking to outperform the Barclays US Aggregate Bond Index while maintaining a similar duration to that Index. The third fund targets investments of 50% or more in mortgage-backed securities guaranteed by the US government and its agencies.
(i)This category consists of a mutual fund which invest in a diversified portfolio of high-quality bonds and other fixed income securities, including U.S. Government obligations, mortgage-related and asset-backed securities, corporate and municipal bonds, CMOs, and other securities mostly rated A or better.
(j)This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.
(k)This category consists of a money market fund and is used for liquidity purposes.

December 31, 2015      Fair Value Measurements Using 
Asset Category  Total Fair Value   Quoted Prices in
Active Markets for
Identical Assets
(Level 1)		   Significant Other
Observable Inputs
(Level 2)		   Significant
Unobservable
Inputs (Level 3)		 
   (In thousands) 
Mutual funds-Equity                    
     Large Cap Value (a)  $96   $96   $—   $— 
     Large Cap Core (b)   132    132    —    — 
     Mid Cap Core (c)   118    118    —    — 
     Small-Cap Core (d)   57    57    —    — 
     International Core (e)   271    271    —    — 
     Large Cap Growth (f)   205    205    —    — 
     Small/Midcap Growth (g)   60    60    —    — 
Mutual funds-Fixed Income                    
     Fixed Income-Core Plus (h)   501    501    —    — 
     Intermediate Duration (i)   166    166    —    — 
Common/Collective Trusts-Equity                    
     Large Cap Value (j)   91    —    91    — 
Cash                    
     Money Market   25    25    —    — 
          Total  $1,722   $1,631   $91   $— 

 

(a)This category consists of a mutual fund holding 100-160 stocks, designed to track and outperform the Russell 1000 Value Index.
(b)This category contains stocks of the S&P 500 Index. The stocks are maintained in approximately the same weightings as the index.
(c)This category contains stocks of the MSCI U.S. Mid Cap 450 index Index. The stocks are maintained in approximately the same weightings as the index.
(d)This category contains stocks whose sector weightings are maintained within a narrow band around those of the Russell 2000 Index. The portfolio will typically hold more than 150 stocks.
(e)This category consists of investments with long-term growth potential located primarily in Europe, the Pacific Basin, and other developed emerging countries.
(f)This category consists of two mutual funds, one which invests primarily of large U.S. – based growth companies, the other in fast-growing large cap growth companies with sustainable franchises and positive price momentum.
(g)This category seeks capital appreciation through investments in common stock of small-capitalization companies, defined as those with a total market value of no more than $2 billion at the time the fund first invests in them.
(h)This category currently includes equal investments in three mutual funds, two of which usually hold at least 80% of fund assets in investment grade fixed income securities, seeking to outperform the Barclays US Aggregate Bond Index while maintaining a similar duration to that Index. The third fund targets investments of 50% or more in mortgage--backed securities guaranteed by the US government and its agencies.
(i)This category consists of a mutual fund which invest in a diversified portfolio of high-quality bonds and other fixed income securities, including U.S. Government obligations, mortgage-related and asset-backed securities, corporate and municipal bonds, CMOs, and other securities mostly rated A or better.
(j)This category contains large-cap stocks with above-average yield. The portfolio typically holds between 60 and 70 stocks.

Also, the Company provides post-retirement benefits to certain officers of the Company under split-dollar life insurance policies. The Company accounts for the policies in accordance with ASC 715-60, which requires companies to recognize a liability and related compensation costs for endorsement split-dollar life insurance policies that provide a benefit to an employee extending to post-retirement periods. The liability is recognized based on the substantive agreement with the employee.

The Company uses a December 31 measurement date for the plan. Information about the plan’s funded status and pension cost follows:

   2016   2015 
   (In thousands) 
Change in benefit obligation          
     Beginning of year  $879   $901 
          Service cost   8    7 
          Interest cost   37    37 
          Loss /(Gain)   34    (44)
          Benefits Paid   (25)   (22)
End of year  $933   $879 

 

Amounts recognized in accumulated other comprehensive income (loss) not yet recognized as components of net periodic benefit cost consist of:

   2016   2015 
   (In thousands) 
Prior service cost  $69   $83 
Net loss(gain)   62    6 

 

The accumulated benefit obligation for the split-dollar benefit plan was $933,000 and $879,000 at December 31, 2016 and 2015, respectively.

 

The estimated net gain for the split-dollar plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is approximately $43,000.

   2016   2015 
   (In thousands) 
Components of net periodic benefit cost        
     Service cost  $8   $7 
     Interest cost   37    37 
     (Gain)/Loss recognized   (22)   98 
     Prior service cost   14    14 
     Net periodic benefit cost  $37   $156 

 

The retiree accrued liability expected to be reversed from the plan as of December 31, 2016 is as follows:

   (In thousands) 
2017  $28 
2018   31 
2019   33 
2020   37 
2021   43 
Thereafter   300 
   $472 

 

Significant assumptions for the split-dollar plan liability include the following as of December 31, 2016 and 2015:

   2016   2015 
Weighted-average assumptions used to
     determine benefit cost obligation:		          
          Discount rate   4.14%   4.34%
          Rate of compensation increase   1.50%   1.50%
Weighted-average assumptions used to
     determine benefit cost:		          
          Discount rate   4.14%   4.34%
          Rate of compensation increase   1.50%   1.50%

 

The Company has an Employee Stock Ownership Plan (“ESOP”) covering substantially all employees of the Company. The ESOP acquired 163,265 shares of Company common stock at $10.00 per share in 2003 with funds provided by a loan from the Company. Accordingly, $1.6 million of common stock acquired by the ESOP was shown as a reduction of stockholders’ equity. Shares are released to participants proportionately as the loan is repaid. Dividends on allocated shares are recorded as dividends and charged to retained earnings. Dividends on unallocated shares, which will be distributed to participants, are treated as compensation expense. Compensation expense is recorded equal to the average fair market value of the stock during the year when contributions, which are determined annually by the Board of Directors of the Company, are made to the ESOP.

ESOP expense was approximately $109,000 for both years ended December 31, 2016 and December 31, 2015.

Share information for the ESOP is as follows at December 31, 2016 and 2015:

   2016   2015 
Allocated shares   135,999    128,993 
Unearned shares   27,266    34,272 
     Total ESOP shares   163,265    163,265 
           
Fair value of unearned shares at end of period  $449,889   $452,733 

 

At December 31, 2016, the fair value of the 135,999 allocated shares held by the ESOP was approximately $2.2 million.

In addition to the defined benefit plan and ESOP, the Company has a 401(k) plan covering substantially all employees. The Company’s 401(k) matching percentage was 100% of the first 4% contributed by the employee and 50% of the employees’ next 2% of contributions. Expense related to the 401(k) plan totaled approximately $154,000 and $148,000 for the years ended December 31, 2016 and December 31, 2015, respectively.