14) Benefit Plans

401(k) Savings Plan

The Company offers a 401(k) savings plan that allows employees to contribute up to a maximum percentage of their compensation, as established by the Internal Revenue Code. The Company made a discretionary matching contribution of up to $3,000 and $2,500 for each employee’s contributions in 2019 and 2018, respectively. Contribution expense was $934,000, $749,000, and $535,000 in 2019, 2018 and 2017, respectively.

Employee Stock Ownership Plan

The Company sponsors a non‑contributory employee stock ownership plan. To participate in this plan, an employee must have worked at least 1,000 hours during the year and must be employed by the Company at year‑end. Employer contributions to the ESOP are discretionary. The Company has suspended contributions to the ESOP since 2010. The Plan was “frozen” as of January 1, 2019. At December 31, 2019, the ESOP owned 102,834 shares of the Company’s common stock.

Deferred Compensation Plan

The Company has a nonqualified deferred compensation plan for some of its employees. Under the deferred compensation plan, an employee may defer up to 100% of his or her bonus and 50% of their regular salary into a deferred account. Amounts deferred are invested in a portfolio of approved investment choices as directed by the employee. Amounts deferred by employees to the deferred compensation plan will be distributed at a future date they have selected or upon termination of employment. There were five and seven employees who elected to participate in the deferred compensation plan during 2019 and 2018, respectively.

Nonqualified Defined Benefit Pension Plan

The Company has a supplemental retirement plan (“SERP”) covering some current and some former key executives and directors. The SERP is an unfunded, nonqualified defined benefit plan. The combined number of active and retired/terminated participants in the SERP was 60 at December 31, 2019. The defined benefit represents a stated amount for key executives and directors that generally vests over nine years and is reduced for early retirement. The projected benefit obligation is included in “Accrued interest payable and other liabilities” on the consolidated balance sheets. The SERP has no assets and the projected benefit obligation is unfunded. The measurement date of the SERP is December 31.

The following table sets forth the SERP’s status at December 31:


	2019		2018
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	26,781	$	28,510
Projected benefit obligation of SERP agreements acquired from Presidio		2,541		—
Service cost		263		249
Actuarial loss (gain)		4,182		(1,885)
Interest cost		1,059		947
Benefits paid		(1,137)		(1,040)
Projected benefit obligation at end of year	$	33,689	$	26,781
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	$	9,670	$	5,672

Weighted‑average assumptions used to determine the benefit obligation at year‑end:


	2019		2018
Discount rate	3.01	%	4.03	%
Rate of compensation increase	N/A		N/A

Estimated benefit payments over the next ten years, which reflect anticipated future events, service and other assumptions, are as follows:


	Estimated
	Benefit
Year	Payments
	(Dollars in thousands)
2020	$	1,509
2021		1,717
2022		1,863
2023		1,974
2024		2,011
2025 to 2029		11,366
	$	20,440

The components of pension cost for the SERP follow:




	2019		2018
	(Dollars in thousands)
Components of net periodic benefit cost:
Service cost	$	263	$	249
Interest cost		1,059		947
Amortization of net actuarial loss		184		292
Accelerated benefits for Presidio SERP agreements
due to change in control		1,465		—
Net periodic benefit cost	$	2,971	$	1,488

Amount recognized in other comprehensive income	$	2,847	$	1,577

The components of net periodic benefit cost other than the service cost component are included in the line item “other noninterest expense” in the Consolidated Statements of Income. The estimated net actuarial loss and prior service cost for the SERP that will be amortized from Accumulated Other Comprehensive Loss into net periodic benefit cost over the next fiscal year are $387,000 and $183,000 as of December 31, 2019 and 2018, respectively.

Net periodic benefit cost for the years ended December 31, 2019 and 2018 were determined using the following assumption:


	2019		2018
Discount rate	4.03	%	3.38	%
Rate of compensation increase	N/A		N/A

Split‑Dollar Life Insurance Benefit Plan

The Company maintains life insurance policies for some current and some former directors and officers that are subject to split‑dollar life insurance agreements, some of which continues after the participant’s employment and retirement. The policies acquired from Focus and Presidio do not include a post retirement benefit. All participants are fully vested in their split‑dollar life insurance benefits. The accrued benefit liability for the split‑dollar insurance agreements represents either the present value of the future death benefits payable to the participants’ beneficiaries or the present value of the estimated cost to maintain life insurance, depending on the contractual terms of the participant’s underlying agreement.

The split‑dollar life insurance projected benefit obligation is included in “Accrued interest payable and other liabilities” on the consolidated balance sheets. The measurement date of the split‑dollar life insurance benefit plan is December 31.

The following sets forth the funded status of the split dollar life insurance benefits:


	December 31,		December 31,
	2019		2018
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	6,903	$	6,711
Interest cost		278		227
Actuarial loss (gain)		1,017		(35)
Projected benefit obligation at end of period	$	8,198	$	6,903

Amounts recognized in accumulated other comprehensive loss at December 31 consist of:


	December 31,		December 31,
	2019		2018
	(Dollars in thousands)
Net actuarial loss	$	3,776	$	2,573
Prior transition obligation		1,059		1,149
Accumulated other comprehensive loss	$	4,835	$	3,722

Weighted‑average assumption used to determine the benefit obligation at year‑end follow:


	2019		2018
Discount rate	3.01	%	4.03	%

Components of net periodic benefit cost during the year are:




	2019		2018
	(Dollars in thousands)
Amortization of prior transition obligation	$	(96)	$	(65)
Interest cost		278		227
Net periodic benefit cost	$	182	$	162

Amount recognized in other comprehensive income	$	1,113	$	(30)

The estimated net actuarial loss and prior transition obligation for the split‑dollar life insurance benefit plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $90,000 as of December 31, 2019 and 2018.

Weighted‑average assumption used to determine the net periodic benefit cost:


	2019		2018
Discount rate	4.03	%	3.38	%