PENSIONS AND OTHER BENEFITS

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

PENSIONS AND OTHER BENEFITS

NOTE 14 – PENSION AND OTHER BENEFITS

Salisbury had an insured noncontributory defined benefit retirement plan which was available to employees prior to December 31, 2012 based upon age and length of service. Effective December 31, 2012, the pension plan was frozen by amending the plan to freeze retirement benefits at current levels and discontinue future benefit accruals. The plan was terminated effective October 15, 2014.  During 2012, Salisbury decided to complete its transition from providing retirement benefits under a defined benefit pension plan to a defined contribution 401(k) plan, which is discussed below.

Years ended December 31, (in thousands)		2014
Change in projected benefit obligation
Benefit obligation at beginning of year	$	5,250
Actuarial gain		(977	)
Service cost		—
Interest cost		277
Curtailments and settlements		—
Benefits paid		(4,550	)
Benefit obligation at end of year		—
Change in plan assets
Plan assets at estimated fair value at beginning of year		6,868
Actual return on plan assets		(2,318	)
Contributions by employer		—
Curtailments and settlements		—
Benefits paid		(4,550	)
Fair value of plan assets at end of year		—
Funded status and recognized asset
included in other assets on the balance sheet	$	—

The components of net periodic cost are as follows:

Years ended December 31, (in thousands)		2014
Service cost	$	—
Interest cost on benefit obligation		277
Expected return on plan assets		(297	)
Amortization of net gain		(1	)
Net periodic benefit cost		(21	)
Additional amount recognized due to settlement or curtailment		—
		(21	)
Other changes in plan assets and benefit obligations recognized
in other comprehensive loss (income):
Net actuarial loss		923
Amortization of net gain		1
Total recognized in other comprehensive loss (income)		924
Total recognized in net periodic benefit and other comprehensive loss	$	903

The discount rate used to determine the net periodic benefit cost was 5.10% for 2014; and the expected return on plan assets was 4.35% for 2014.

In 2014, Salisbury terminated the Defined Benefit Pension Plan.  Excess assets in the amount of $1,018,000 were distributed to the Bank's Defined Contribution Plan (401(k)) and the Employee Stock Ownership Plan (ESOP) for future allocations to employees.  The division of the excess pension assets was 66.67% to the 401(k) account (or $679,000) and 33.33% to the ESOP account (or $339,000).

401(k) Plan

Salisbury offers a 401(k) Plan to eligible employees. Under the 401(k) Plan, eligible participants may contribute a percentage of their pay subject to IRS limitations. Salisbury may make discretionary contributions to the Plan.Effective December 31, 2012, and simultaneously with the freezing of the pension plan, the 401(k) Plan was amended to include a safe harbor contribution of 4% for all qualifying employees. The Bank’s safe harbor contribution percentage is reviewed annually and, under provisions of the 401(k) Plan, is subject to change in the future. An additional discretionary match may also be made for all employees that meet the 401(k) Plan’s qualifying requirements for such a match. This discretionary matching percentage, if any, is also subject to review under the provisions of the 401(k) Plan.

Both the safe harbor and additional discretionary match, if any, vest immediately.

Salisbury’s 401(k) Plan contribution expense for 2016, 2015 and 2014 was $832,000, $679,000 and $331,000, respectively.

Employee Stock Ownership Plan (ESOP)

Salisbury offers an ESOP to eligible employees.  Under the Plan, Salisbury may make discretionary contributions to the Plan. Discretionary contributions vest in full upon six years and reflect the following schedule of qualified service:

20% after the second year, 20% per year thereafter, vesting at 100% after six full years of service. Benefit expenses totaled $173,000, $323,000, and $15,000 in 2016, 2015, and 2014, respectively.

Other Retirement Plans

Salisbury adopted ASC 715-60, “Compensation - Retirement Benefits - Defined Benefit Plans - Other Postretirement" and recognized a liability for Salisbury’s future postretirement benefit obligations under endorsement split-dollar life insurance arrangements. The total liability for the arrangements included in other liabilities was $746,000 and $672,000 at December 31, 2016, and 2015, respectively. Expense under this arrangement was $74,000 for 2016, $91,000 for 2015, and $53,000 for 2014.

The Bank entered into a Supplemental Retirement Plan Agreement with its former Chief Executive Officer that provides for supplemental post retirement payments for a ten year period as described in the agreement. The related liability was $68,000 and $88,000 at December 31, 2016, and 2015, respectively. The related expense amounted to $5,000, $7,000 and $8,000 for 2016, 2015 and 2014, respectively.

The Bank assumed a Supplemental Retirement Plan Agreement with a former Chief Executive Officer of Riverside Bank that provides for supplemental post retirement payments for a fifteen year period as described in the agreement. The related liability was $589,000 and $629,000 at December 31, 2016 and December 31, 2015, respectively. The related expenses were immaterial for all periods presented.

A Non-Qualified Deferred Compensation Plan (the "Plan") was adopted effective January 1, 2013. This Plan was adopted by the Bank for the benefit of certain key employees ("Executive" or "Executives") who have been selected and approved by the Bank to participate in this Plan and who have evidenced their participation by execution of a Non-Qualified Deferred Compensation Plan Participation Agreement ("Participation Agreement") in a form provided by the Bank. This Plan is intended to comply with Internal Revenue Code ("Code") Section 409A and any regulatory or other guidance issued under such Section.

In 2016, 2015, and 2014, the Bank awarded nine (9), six (6) and seven (7) Executives, respectively, with discretionary contributions to the plan. Expenses related to this plan amounted to $46,000 in 2016, $39,000 in 2015, and $0 in 2014. In 2014, there was also a recovery of $8,000 of prior expenses from contributions in 2013. Based on the Executive’s date of retirement, the vesting schedule ranges from 7.7% per year to 50% per year.

Management Agreements: Salisbury or the Bank has entered into various management agreements with its named executive officers, including a severance agreement with Mr. Cantele, President and Chief Executive Officer, a change in control agreement with Mr. White, Executive Vice President and Chief Financial Officer, and an employment agreement with Mr. Davies, President of the New York Region and Chief Lending Officer. Such agreements are designed to allow Salisbury to retain the services of the designated executives while reducing, to the extent possible, unnecessary disruptions to Salisbury’s operations.