NOTE 15 – Defined Benefit Pension Plan

The Bank’s Plan covers substantially all employees hired prior to March 31, 2012. The benefits are based on years of service and the employee’s average monthly pay received during the five highest consecutive calendar years in the last 10 years of employment under the Plan. Management contributes annually the amounts necessary to provide for defined benefit payments upon retirement or death as determined by the Plan’s actuary. The Plan was frozen effective March 31, 2012 for all employees. No additional benefits are being accrued for active participants after this date, and no new participants will be entered into the Plan.

In accordance with accounting guidance for defined benefit plans, the Bank recognizes the funded status of defined benefit pension and other post-retirement plans as a net asset or liability on its consolidated balance sheet.

The following table sets forth the Plan’s funded status and amounts recognized in the Company’s consolidated balance sheets:


	June 30, 2019		June 30, 2018
Change in projected benefit obligation
Projected benefit obligation at beginning of year	$	9,453,322	$	9,732,735
Interest cost		398,439		287,227
Benefits paid		(144,765)		(93,032)
Actuarial (gain) loss		894,036		(473,608)
Settlement		—		—
Projected benefit obligation at end of year		10,601,032		9,453,322

Change in plan assets
Fair value of plan assets at beginning of year		9,691,252		9,131,715
Actual return on assets		223,683		652,520
Employer contributions		—		4,603
Expenses paid from trust		—		(4,554)
Benefits paid		(144,765)		(93,032)
Fair value of plan assets at end of year		9,770,170		9,691,252

Funded status at end of year	$	(830,862)	$	237,930

Amounts recognized in the consolidated balance sheets in accrued interest payable and other liabilities consist of:


	June 30, 2019		June 30, 2018
Pension (liability) asset	$	(830,862)	$	237,930

Amounts recognized in accumulated other comprehensive loss consist of:


	June 30, 2019		June 30, 2018
Accumulated pension actuarial loss, net of income tax benefit of $1,522,485 and $1,522,485, respectively	$	2,506,295	$	1,285,024

The accumulated benefit obligation for the Plan was $10,601,032 and $9,453,322 at June 30, 2019 and 2018, respectively.

The components of net periodic pension cost (income) included in compensation and benefits on the statements of operations are as follows:


	June 30, 2019		June 30, 2018
Interest cost	$	398,439	$	287,227
Expected return on plan assets		(672,908)		(477,617)
Amortization of net actuarial loss		121,990		125,330

Net periodic pension income	$	(152,479)	$	(65,060)

For the year ended June 30, 2019 and the nine months ended June 30, 2018, actuarial assumptions include an assumed discount rate on benefit obligations of 3.57% and 4.25% respectively, and an expected long‑term rate of return of 7.0% for June 30, 2019 and June 30, 2018. The expected long-term rate of return for the Plan’s total assets is based on the expected returns of each of the below asset categories, weighted based on the current target allocation for each class. The trustees evaluate whether adjustments are needed based on historical returns to more accurately reflect expectations of future returns. An annual salary increase of 0% was utilized for the year ended June 30, 2019 and for the nine months ended June 30, 2018.

Contributions paid to the Plan were $0 during the year ended June 30, 2019 and $4,603 during the nine months ended June 30, 2018.

At June 30, 2019, the projected benefit payments for future fiscal years were estimated as follows:


2020	$	3,310,900
2021		142,700
2022		142,500
2023		512,600
2024		510,100
2025-2029		4,513,300
	$	9,132,100

At June 30, 2019 and June 30, 2018, all Plan assets supporting the Bank’s defined benefit plan are held at fair value and represent Level 1 classified investments.

The percentage of the fair value of total Plan assets for each major category is as follows:


	June 30, 2019		June 30, 2018
Cash Equivalents	5.6	%	0.9	%
Equities
Large Cap	43.0	%	59.9	%
Mid Cap	3.4	%	3.4	%
Small Cap	33.7	%	31.3	%
International	2.1	%	2.5	%
Other	8.5	%	—
Alternatives/Multi-Asset	3.7	%	—
Fixed Income
Certificates of deposit	—		2.0	%

Total	100.0	%	100.0	%

The Bank’s investment policies and strategies for the Plan use target allocations for the individual asset categories. The Bank’s investment goals are to maximize returns subject to specific risk management policies.

The Bank anticipates making at least the minimum required contribution in fiscal year 2020.