Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Employee Benefit Plans

Employee Benefit Plans

(17)Employee Benefit Plans

The Company has a noncontributory defined benefit pension plan (Pension Plan) that covers certain employees with at least one year of service. The benefits are based on years of service and the employees’ compensation during the service period. The Company’s policy is to accrue the actuarially determined pension costs and to fund pension costs within regulatory guidelines. The Company reviews its assumptions on an annual basis and makes modifications to the assumptions based on current rates and trends when it is appropriate to do so. The effect of modifications to those assumptions is recorded in accumulated other comprehensive income beginning in 2006 and amortized to net periodic benefit cost over future periods using the corridor method. The Company believes that the assumptions utilized in recording its obligations under the plan are reasonable based on its experience and market conditions.

In 2008, the Board of Directors approved changes to the Company’s Pension Plan. Effective December 31, 2008, there are no further accruals of benefits for any participants and benefits do not increase with any additional years of service. Employees already enrolled in the Pension Plan as of December 31, 2008 will be 100% vested if they have at least five years of service. For employees with less than five years of service, vesting would occur at the employee’s five-year anniversary date.

In addition, the Company sponsors a Supplemental Employee Retirement Plan (SERP), a noncontributory supplemental retirement benefit plan, which covers certain current and former employees of the Company for amounts in addition to those provided under the Pension Plan.

The following table sets forth the status of the Pension Plan and SERP at the dates indicated:

	Pension Plan				SERP
	December 31,
(Dollars in thousands)	2023		2022		2023		2022
Accumulated benefit obligation at end of year	$	15,953	$	15,865	$	9,927	$	9,947
Change in projected benefit obligation:
Benefit obligation at beginning of year	$	15,866	$	20,943	$	9,948	$	9,915
Service cost (income)		191		118		(200)		(135)
Interest cost		822		597		179		179
Actuarial loss (gain)		94		(4,802)		—		—
Benefits paid		(1,020)		(990)		—		(11)
Benefit obligation at end of year		15,953		15,866		9,927		9,948
Change in plan assets:
Fair value of plan assets at beginning of year		18,336		23,125		—		—
Actual return on plan assets		2,789		(3,799)		—		—
Employer contributions		—		—		—		11
Benefits paid		(1,020)		(990)		—		(11)
Fair value of plan assets at end of year		20,105		18,336		—		—
Funded status at end of year	$	4,152	$	2,470	$	(9,927)	$	(9,948)
Amounts recognized in the Consolidated Balance Sheets:
Prepaid expenses and other assets (Accounts payable and accrued expenses)	$	4,152	$	2,470	$	(9,927)	$	(9,948)
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	$	5,968	$	7,708	$	—	$	—
Prior service cost		119		124		—		—
Accumulated other comprehensive loss, before tax	$	6,087	$	7,832	$	—	$	—

The accumulated benefit obligation experienced an actuarial loss of $95,000 in 2023 and an actuarial gain of $4.8 million in 2022. The actuarial loss in 2023 was attributed to a decline in the discount rate used to calculate the benefit obligation. The actuarial gain in 2022 was attributed to an increase in the discount rate used to calculate the benefit obligation.

The following table sets forth the changes recognized in accumulated other comprehensive loss for the years indicated:

	Pension Plan
	Year Ended December 31,
(Dollars in thousands)	2023		2022
Accumulated other comprehensive loss at beginning of year, before tax	$	7,832	$	7,530
Actuarial net (gain) loss arising during the period		(1,503)		517
Amortizations (recognized in net periodic benefit cost):
Actuarial loss		(237)		(210)
Prior service cost		(5)		(5)
Total recognized in other comprehensive loss		(1,745)		302
Accumulated other comprehensive loss at end of year, before tax	$	6,087	$	7,832

For the years ended December 31, 2023 and 2022, the following weighted average assumptions were used to determine benefit obligations at the end of the year:

	Pension Plan				SERP
	Year Ended December 31,
	2023		2022		2023		2022
Assumptions used to determine the year-end benefit obligations:
Discount rate	5.10	%	5.40	%	5.00	%	5.00	%
Rate of compensation increase	N/A		N/A		5.00	%	5.00	%

The dates used to determine retirement measurements for the Pension Plan were December 31, 2023 and 2022.

The Company’s investment strategy for the Pension Plan is to maintain a consistent rate of return with primary emphasis on capital appreciation and secondary emphasis on income to enhance the purchasing power of the plan’s assets over the long-term and to preserve capital. The investment policy establishes a target allocation for each asset class that is reviewed periodically and rebalanced when considered appropriate. Normal target allocations at December 31, 2023 were 55% domestic equity securities, 10% international equity securities and 35% bonds. Equity securities primarily include stocks, investment in exchange traded funds and large-cap, mid-cap and small-cap mutual funds. Bonds include U.S. Treasuries, mortgage-backed securities and corporate bonds of companies in diversified industries. Other types of investments include money market funds and savings accounts opened with the Company.

As of December 31, 2023 and 2022, the Pension Plan’s assets measured at fair value were classified as follows:

			Fair Value of Measurements at Report Date Using:
			Quoted Prices
			in Active		Significant
			Markets for		Other		Significant
			Identical		Observable		Unobservable
	Total Fair		Assets		Inputs		Inputs
(Dollars in thousands)	Value		(Level 1)		(Level 2)		(Level 3)
December 31, 2023:
Cash	$	622	$	622	$	—	$	—
Equities		13,742		13,742		—		—
Mutual funds (1)		5,741		5,741		—		—
Total	$	20,105	$	20,105	$	—	$	—
December 31, 2022:
Cash	$	1,452	$	1,452	$	—	$	—
Equities		11,659		11,659		—		—
Mutual funds (1)		5,225		5,225		—		—
Total	$	18,336	$	18,336	$	—	$	—

(1) This category includes mutual funds that invest in equities and bonds. The mutual fund managers have the ability to change the amounts invested in equities and bonds depending on their investment outlook.

Estimated future benefit payments reflecting expected future service at December 31, 2023 are as follows:

	Pension
(Dollars in thousands)	Plan		SERP
2024	$	1,001	$	319
2025		1,122		8,696
2026		1,195		95
2027		1,216		95
2028		1,224		95
2029 - 2033		6,017		473
Total	$	11,775	$	9,773

For the years ended December 31, 2023 and 2022, the following weighted average assumptions were used to determine net periodic benefit cost for the fiscal years shown:

	Pension Plan				SERP
	Year Ended December 31,
	2023		2022		2023		2022
Assumptions used to determine the net periodic benefit cost:
Discount rate	5.40	%	2.90	%	5.00	%	5.00	%
Expected return on plan assets	6.75		6.75		—		—
Rate of compensation increase	N/A		N/A		5.00		5.00

The components of net periodic benefit cost were as follows:

	Pension Plan				SERP
	Year Ended December 31,
(Dollars in thousands)	2023		2022		2023		2022
Net periodic benefit (income) cost for the year:
Service cost (income)	$	191	$	118	$	(200)	$	(135)
Interest cost		822		597		179		179
Expected return on plan assets		(1,192)		(1,520)		—		—
Amortization of prior service cost		5		5		—		—
Recognized actuarial loss		237		210		—		—
Recognized curtailment loss		—		—		—		—
Net periodic benefit (income) cost for the year:	$	63	$	(590)	$	(21)	$	44

The service cost component of net periodic benefit cost is included in salaries and employee benefits in the Consolidated Statements of Income. The other components of net periodic benefit cost including interest cost, the return on plan assets and amortization of net loss are reported in other income.

The expected return on plan assets is based on the weighted-average long-term rates of return for the types of assets held in the plan. The expected return on plan assets is adjusted when there is a change in the expected long-term rate of return or in the composition of assets held in the plan. The discount rate is based on the return of high-quality fixed-income investments that can be used to fund the benefit payments under the Company’s defined benefit plan.

The Company does not expect to make any contributions to the Pension Plan or the SERP in 2024.

The Company also has a 401(k) defined contribution plan and profit sharing plan covering all employees after one year of service. The 401(k) plan provides for employer matching contributions, as determined by the Company, based on a percentage of employees’ contributions subject to a maximum amount defined in the plan agreement. The Company’s 401(k) matching contributions are based on 5% of employees’ contributions. The Company’s contributions amounted to $64,000 each for the years 2023 and 2022. Matching contributions. The Company contributes to the profit sharing plan an amount determined by the Board of Directors. No contributions were made to the profit sharing plan for years ended December 31, 2023 and 2022.