Employee benefit plans

12 Months Ended

Dec. 31, 2023

Employee benefit plans

Employee benefit plans

15. Employee benefit plans:

The Company sponsors a separate ESOP and Retirement Profit Sharing 401(k) Plan. The Company also maintains SERPs and an employees’ pension plan, which is currently frozen.

Under the ESOP, amounts voted by the Company’s Board of Directors are paid into the ESOP and each eligible participant is credited with an amount in proportion to their annual compensation or a fixed dollar amount. All contributions to the ESOP are invested in or will be invested primarily in Company stock. Distribution of a participant’s ESOP account occurs upon retirement, death or termination in accordance with the plan provisions.

Under the Retirement Profit Sharing Plan, amounts approved by the Board of Directors have been paid into a fund and each participant was credited with an amount in proportion to their annual compensation. Upon retirement, death or termination, each participant is paid the total amount of their credits in the fund in one of a number of optional ways in accordance with the plan provisions. Eligible participants may elect deferrals of up to the maximum amounts permitted by law.

The Company contributed $0.2 million and $0.3 million to the ESOP for 2022 and 2021. There was no ESOP contribution in 2023. The Company contributed $1.4 million in 2023, $1.3 million in 2022 and $1.2 million in 2021, to the Retirement Profit Sharing Plan, which was comprised of a safe harbor contribution of $0.8 million, $0.7 million and $0.7 million, respectively and a discretionary match of $0.6 million, $0.6 million and $0.6 million, respectively.

The Company established a SERP Plan to replace certain 401(k) plan benefits lost due to compensation limits imposed on qualified plans by federal tax law. The annual benefit is a maximum of 6 percent of the executive compensation in excess of Federal limits. The total liability associated with this plan was $180 thousand at December 31, 2023 and 2022, respectively. The expense associated with the plan was $19 thousand, $20 thousand and $19 thousand for 2023, 2022 and 2021 respectively.

The Company has SERPs for the benefit of certain officers. At December 31, 2023 and 2022, other liabilities include $3.1 million and $2.8 million accrued under the plans. Compensation expense includes approximately $0.4 million, $0.4 million and $0.4 million relating to these SERPs for the years ended December 31, 2023, 2022 and 2021, respectively.

Under the Employees’ Pension Plan, currently frozen, amounts computed on an actuarial basis were being paid by the Company into a trust fund. The plan provided for fixed benefits payable for life upon retirement at the age of 65, based on length of service and compensation levels as defined in the plan. As of June 22, 2008 no further benefits are being accrued in this plan. Plan assets of the trust fund are invested and administered by the Trust Department of the Company.

Information related to the Employees’ Pension Plan at December 31, 2023 and 2022 is as follows:

	Pension Benefits
(Dollars in thousands)	2023		2022
Change in benefit obligation:
Benefit obligation, beginning	$	13,792	$	18,066
Interest cost		655		456
Change in experience gain		2		26
Change in actuarial assumptions		306		(3,899)
Benefits paid		(910)		(857)
Benefit obligation, ending		13,845		13,792
Change in plan assets:
Fair value of plan assets, beginning		16,106		19,257
Actual return on plan assets		2,413		(2,294)
Employer contributions
Benefits paid		(910)		(857)
Fair value of plan assets, ending		17,609		16,106
Funded status at end of year	$	3,764	$	2,314

The Company utilized the mortality scale within the mortality tables from MP 2021 to re-measure its pension plan at December 31, 2023 and 2022. The change in the discount rate from 4.93 percent to 4.73 percent resulted in an increase to the benefit obligation of $0.3 million in 2023 and a decrease of $3.9 million in 2022.

Amounts recognized in the consolidated balance sheets at December 31, 2023 and 2022 are as follows:

	Pension Benefits
(Dollars in thousands)	2023		2022
(Other Assets)/Other Liabilities	$	(3,764)	$	(2,314)
Amounts recognized in the accumulated other comprehensive loss consist of:
Net actuarial gain		(4,370)		(5,499)
Deferred taxes		956		1,184
Net amount recognized	$	(3,414)	$	(4,315)

The accumulated benefit obligation for the defined benefit pension plan was $13.8 million at December 31, 2023 and 2022.

Components of net periodic pension income and other amounts recognized in other comprehensive income (loss) are as follows:

(Dollars in thousands)	Pension Benefits
Twelve Months Ended December 31,	2023		2022		2021
Net periodic pension income:
Interest cost	$	655	$	456	$	419
Expected return on plan assets		(1,170)		(1,407)		(1,288)
Amortization of unrecognized net loss		194		198		301
Net periodic pension income:		(321)		(753)		(568)
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Net loss		655		456		419
Deferred tax		(141)		(96)		(88)
Total recognized in other comprehensive income (loss)		514		360		331
Total recognized in net period pension cost and other comprehensive income (loss)	$	193	$	(393)	$	(237)

Weighted-average assumptions used to determine benefit obligations and related expenses were as follows:

	Pension Benefits
	2023		2022		2021
Discount rate:
Obligation	4.73	%	4.93	%	2.59	%
Expense	4.93		2.59		2.25
Expected long-term return on plan assets	7.50	%	7.50	%	7.50	%

The expected long-term return on plan assets was determined using average historical returns of the Company’s plan assets.

The Company’s pension plan weighted-average asset allocations at December 31, 2023 and 2022, by asset category are as follows:

	2023		2022
Asset Category:
Cash and cash equivalents	4.4	%	4.7	%
Equity securities	63.3		60.3
Corporate bonds	18.1		19.5
U.S. government securities	14.2		15.5
	100.0	%	100.0	%

Fair value measurement of pension plan assets at December 31, 2023 and 2022 is as follows:  

	December 31, 2023
			Quoted Prices in
			Active Markets		Significant		Significant
			for Identical		Observable		Observable
			Assets		Inputs		Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	783	$	783	$		$
Equity securities:
U.S. large cap		9,482		9,482
International		1,671		1,671
Fixed income securities:
U.S. Treasuries		343				343
U.S. government agencies		2,149				2,149
Corporate bonds		3,181				3,181
Total	$	17,609	$	11,936	$	5,673	$

	December 31, 2022
			Quoted Prices in
			Active Markets		Significant		Significant
			for Identical		Observable		Observable
			Assets		Inputs		Inputs
(Dollars in thousands)	Total		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	759	$	759	$		$
Equity securities:
U.S. large cap		7,365		7,365
International		2,338		2,338
Fixed income securities:
U.S. Treasuries		511				511
U.S. government agencies		1,991				1,991
Corporate bonds		3,142				3,142
Total	$	16,106	$	10,462	$	5,644	$

The Company investment policies and strategies with respect to the pension plan include: (i) the Trust and Investment Division’s equity philosophy is large-cap core with a value bias (we invest in individual high-grade common stocks that are selected from our approved list); (ii) diversification is maintained by having no more than 20 percent in any industry sector and no individual equity representing more than 10 percent of the portfolio; and (iii) the fixed income style is conservative but also responsive to the various needs of our individual clients. Fixed income securities consist of U.S. government agencies or corporate bonds rated “A” or better. The Company targets the following allocation percentages: (i) cash equivalents 10 percent; (ii) fixed income 40 percent; and (iii) equities 50 percent.

There is no Company stock included in equity securities at December 31, 2023 or 2022. The Company has not determined the amount of the expected contribution to the Employees’ Pension Plan for 2024.

The following benefit payments are expected to be paid in the next five years and in the aggregate for the five years thereafter:

(Dollars in thousands)	Pension Benefits
2024	$	966
2025		999
2026		1,022
2027		1,030
2028		1,024
Thereafter		4,946