Note 17 - Employee Benefits and Retirement Plans

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE

17

. EMPLOYEE BENEFITS AND RETIREMENT PLANS

Profit sharing plan –

In

1985,

we adopted a profit sharing

401(k)

plan for eligible employees to be funded out of the earnings of the Company. The employees’ contributions are limited to the maximum amount allowable under IRS Section

402(G).

The Company’s contributions include a matching contribution of

100%

of the

first

3%

of salary deferred and

50%

of the next

2%

of salary deferred. Discretionary contributions are also permitted. We made matching contributions aggregating

$457

thousand,

$396

thousand, and

$368

thousand for the years ended

December

31,

2016,

2015

and

2014,

respectively.

No

discretionary contributions were made over the

three

year reporting period.

Salary continuation plan

– In

April

2001,

the Board of Directors approved the implementation of the Supplemental Executive Retirement Plan (SERP), which is a non-qualified executive benefit plan in which we agree to pay certain executives covered by the SERP plan additional benefits in the future in return for continued satisfactory performance by the executives.

Benefits under the salary continuation plan differ by participating executive and include a benefit generally payable commencing upon a designated retirement date for a fixed period of

ten

to

twenty

years, disability or termination of employment, and a death benefit for the participants designated beneficiaries. Whole life insurance policies were purchased as an investment to provide for our contractual obligation to pay pre-retirement death benefits and to recover our cost of providing benefits. The executive is the insured under the policy, while we are the owner and beneficiary.

The assets of the SERP, under Internal Revenue Service Regulations, are the Company’s property and are available to our general creditors. Except for employees covered by the death benefit agreement described above, the insured executive has no claim on the insurance policy, its cash value or the proceeds thereof.

The Company accrues for these future benefits from the effective date of the agreements until the executives’ expected final payment date. The amount of accrued benefits approximates the present value of the benefits expected to be provided at retirement. Compensation expense under the salary continuation plan totaled

$551

thousand,

$726

thousand, and

$741

thousand for the years ended

December

31,

2016,

2015

and

2014,

respectively. As of

December

31,

2016,

2015

and

2014,

the vested benefit payable was

$3.4

million,

$3.5

million, and

$3.3

million, respectively.

Directors deferred fee compensation –

On

December

19,

2013,

the Board of Directors adopted a Directors Deferred Compensation Plan (the

“2013

Plan”) to replace the Directors Deferred Compensation Plan dated

January

1,

1993

as amended

April

1,

2009

(the

“1993

Plan”). Both plans allow the eligible Director to voluntarily elect to defer some or all of his or her current fees in exchange for the Company’s promise to pay a deferred benefit. The deferred fees are credited with interest and the accrued liability is paid to the Director at retirement. Directors must stop the deferral of compensation once their total deferred benefit reaches

$500

thousand.

The interest rate in the

2013

Plan is equal to the Bloomberg

20

-year Investment Grade Financial Institutions Index (IGFII) rate (or a similar reference rate we select if that rate is not published) in effect on the interest accrual date, plus

two

percent. The

2013

Plan is only available to independent directors and, as a nonqualified deferred compensation plan, is not subject to nondiscrimination requirements applicable to qualified plans. No deferred compensation is payable to a director until the death, disability, unforeseeable emergency or separation from service, whereupon all such compensation, together with interest thereon shall be provided to such Director, or his beneficiary within

thirty

(30)

days. The Director

may

designate payments to be made in a lump sum or in monthly installments over a period not to exceed

120

months.

Although deferrals under the

1993

Plan have ceased; the

1993

Plan remains in effect for all amounts previously deferred in the plan. Under the

1993

Plan, at retirement, Directors are granted the option of continuing to accrue interest on deferred payments at a variable rate of prime plus

3.25%

or at a fixed rate of

10%.

The Director

may

designate payments to be made in a lump sum or in monthly installments over a period not to exceed

180

months.

Deferred compensation expense recorded in other expense totaled

$281

thousand,

$274

thousand, and

$254

thousand for the years ended

December

31,

2016,

2015,

and

2014,

respectively. As of

December

31,

2016,

2015

and

2014,

the vested benefit payable recorded in

Other Liabilities

in the

Consolidated Balance Sheets

was

$3.8

million,

$3.7

million, and

$3.6

million, respectively.