Note 6 - Defined Benefit Plan

6 Months Ended

Jun. 30, 2020

Notes to Financial Statements

Defined Benefit Plan [Text Block]

NOTE

6

– DEFINED BENEFIT PLAN

Defined benefit pension plan expense for the

three

and

six

months ended

June 30, 2020

was

$83,000

and

$142,000,

and for the

three

and

six

months ended

June 30, 2019

was

$20,000

and

$41,000,

respectively.

Pentegra Defined Benefit Plan for Financial Institutions (“Pentegra DB Plan”, EIN

13

-

5645888

and Plan

No.

333

)

Through

March 31, 2020,

the Company was a participant in the Pentegra DB Plan, a multiple employer defined benefit pension plan.   On

June 1, 2006,

the Company froze the benefits available under the Pentegra DB Plan. The Company's cash contributions to the Pentegra DB Plan were

$225,000

and -

0

- during the year ended

December 31, 2019

and

six

months ended

June 30, 2020,

respectively, all of which represented less than

5%

of total plan contributions. As of

July 1, 2019 (

the most recent valuation report available), the unfunded pension liability was approximately

$572,000

(

87%

funded).

Bank

34

Employees DB Retirement Plan

Effective

April 1, 2020,

the Company withdrew from the Pentegra DB Plan and established the Bank

34

Employee Defined Benefit Retirement Plan (“Bank DB Plan”).  On

June 2, 2020,

all assets and liabilities were transferred from the Pentegra DB Plan to the newly established Bank DB Plan. 

The Bank DB Plan is a funded noncontributory defined benefit pension plan covering

50

current and former employees. Similar to its predecessor, benefits available under the Bank DB Plan are frozen. The plan provides defined benefits based on years of service and final average salary. The Company uses

December 31

as the measurement date for this plan.  The initial plan year will be

April 1, 2020

through

December 31, 2020.

The fair value of plan assets and projected benefit obligation on the

April 1, 2020

Bank DB Plan adoption date were

$2,392,111

and

$3,951,473,

respectively, and a

$1,387,186

contribution was made to the Bank DB Plan in

May 2020.

Accumulated other comprehensive income on our balance sheet included

$1,559,362

and

$1,542,112

prior service cost at

April 1, 2020

and

June 30, 2020,

respectively.

Weighted-average assumptions used to determine pension benefit obligations at year-end include a

3.50%

discount rate and a

0%

rate of compensation increase.  The weighted average assumptions used to determine net periodic pension cost include

3.50%

discount rate,

3.50%

expected return on plan assets and a

0%

rate of compensation increase.

The Bank DB Plan was

first

funded in the

second

quarter of

2020

and the overall investment strategy and target investment allocations have yet to be determined.  The

3.50%

weighted average expected long term rate of return is estimated based on current trends in similar plan assets as well as projected future rates of returns on similar assets. The plan does

not

have prohibited investments. 

From initial funding in the

second

quarter of

2020

through

June 30, 2020,

all assets of the Bank DB Plan have been invested in the MassMutual Premier U.S. Gov't Money Market Fund (“Fund”).  The fair value of the Bank

34

DB Plan investment in the Fund at

June 30, 2020

was

$3,744,342,

as determined by quoted market prices (Level

1

).