EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2024

EMPLOYEE BENEFIT PLANS [Abstract]

EMPLOYEE BENEFIT PLANS

11. EMPLOYEE BENEFIT PLANS

Noncontributory Defined Benefit Pension Plan

The Bank sponsors a trusteed, noncontributory defined benefit pension plan covering substantially all employees and officers hired prior to January 1, 2007. The pension plan calls for benefits to be paid to eligible employees at retirement based primarily upon years of service with the Bank and compensation rates during employment. Upon retirement or other termination of employment, employees can elect either an annuity benefit or a lump sum distribution of vested benefits in the pension plan. The Bank’s funding policy is to make annual contributions, if needed, based upon the funding formula developed by the pension plans’ actuary. The Bank did not make any contributions to the pension plans in 2024, 2023 or 2022.

In lieu of the pension plan, employees with a hire date of January 1, 2007 or later are eligible to receive, after meeting length of service requirements, an annual discretionary 401(k) plan contribution from the Bank equal to a percentage of an employee’s base compensation.  The contribution amount is placed in a separate account within the 401(k) plan and is subject to a vesting requirement. Contributions by the Company totaled $539,000, $354,000 and $300,000 for 2024, 2023 and 2022, respectively.

The following table sets forth the obligation and funded status of the pension plan as of December 31 (in thousands):

	2024			2023
Change in benefit obligation
Benefit obligation at beginning of year	$	9,556		$	9,324
Service cost		329			306
Interest cost		422			433
Actuarial (Gain) / Loss		(395	)		280
Settlement gain		(18	)		-
Benefits paid		(1,023	)		(787	)
Benefit obligation at end of year		8,871			9,556
Change in plan assets
Fair value of plan assets at beginning of year		11,662			11,335
Actual return (loss) on plan assets		1,087			1,114
Employer contribution		-			-
Benefits paid		(1,023	)		(787	)
Fair value of plan assets at end of year		11,726			11,662
Funded status	$	2,855		$	2,106

Amounts not yet recognized as a component of net periodic pension cost as of December 31 (in thousands):

Amounts recognized in accumulated other comprehensive loss consists of:	2024		2023
Net loss	$	385	$	1,231
Prior service cost		-		-
Total	$	385	$	1,231

The accumulated benefit obligation for the defined benefit pension plan was $8,871,000 and $9,556,000 at December 31, 2024 and 2023 respectively.

The components of net periodic benefit costs for the years ended December 31 are as follows (in thousands):

	2024			2023			2022
Service cost	$	329		$	306		$	356
Interest cost		422			433			275
Return on plan assets		(791	)		(769	)		(935	)
Settlement loss (gain)		104			-			144
Net amortization and deferral		33			41			96
Net periodic benefit (income) cost	$	97		$	11		$	(64	)

The Company does not expect to amortize any estimated net loss from accumulated other comprehensive loss into the net periodic benefit cost (income) in 2025.

The weighted-average assumptions used to determine benefit obligations at December 31, 2024, 2023 and 2022 is summarized in the following table. The change in the discount rate is the primary driver of the actuarial gain that occurred in 2024 of $395,000.

	2024			2023			2022
Discount rate FCCB Plan		5.25	%		4.50	%		4.75	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

The weighted-average assumptions used to determine net periodic benefit cost (income) for the year ended December 31, 2024, 2023 and 2022 is summarized in the following table.

	2024			2023			2022
Discount rate FCCB Plan		4.50	%		4.75	%		2.25	%
Expected long-term return on plan assets FCCB plan		7.00	%		7.00	%		7.00	%
Rate of compensation increase		3.00	%		3.00	%		3.00	%

The long-term rate of return on plan assets gives consideration to returns currently being earned on plan assets as well as future rates expected to be earned. The investment objective is to maximize total return consistent with the interests of the participants and beneficiaries, and prudent investment management. The allocation of the pension plan assets is determined on the basis of sound economic principles and is continually reviewed in light of changes in market conditions. Asset allocation favors equity securities, with a target allocation of 50-70%. The target allocation for debt securities is 30-50%. At December 31, 2024, the pension plan had a sufficient cash and money market position in order to re-allocate the equity portfolio for diversification purposes and reduce risk in the total portfolio. The following table sets forth by level, within the fair value hierarchy as defined in footnote 20, the Plan’s assets at fair value as of December 31, 2024 and 2023 (dollars in thousands):

2024	Level I		Level II		Level III		Total		Allocation
Assets
Cash and cash equivalents	$	312	$	-	$	-	$	312		2.7	%
Equity Securities		5,902		-		-		5,902		50.3	%
Mutual Funds and ETF’s		3,025		-		-		3,025		25.8	%
Corporate Bonds		-		2,487		-		2,487		21.2	%
Municipal Bonds		-		-		-		-		0.0	%
U.S. Agency Securities		-		-		-		-		0.0	%
Certificate of deposit		-		-		-		-		0.0	%
Total	$	9,239	$	2,487	$	-	$	11,726		100.0	%

2023	Level I		Level II		Level III		Total		Allocation
Assets
Cash and cash equivalents	$	380	$	-	$	-	$	380		3.3	%
Equity Securities		5,638		-		-		5,638		48.3	%
Mutual Funds and ETF’s		3,428		-		-		3,428		29.4	%
Corporate Bonds		-		2,167		-		2,167		18.6	%
Municipal Bonds		-		-		-		-		0.0	%
U.S. Agency Securities		-		49		-		49		0.4	%
Certificate of deposit		-		-		-		-		0.0	%
Total	$	9,446	$	2,216	$	-	$	11,662		100.0	%

Equity securities include the Company’s common stock in the amounts of $737,000 (6.3% of total plan assets) and $746,000 (6.4% of total plan assets) at December 31, 2024 and 2023, respectively.

The Bank does not expect to make a contribution to its pension plan in 2025.  Expected future benefit payments that the Bank estimates from its pension plan are as follows (in thousands):

2025	$	442
2026		1,867
2027		1,012
2028		639
2029		568
2030- 2034		5,152

Defined Contribution Plan

The Company sponsors a voluntary 401(k) savings plan which eligible employees can elect to contribute up to the maximum amount allowable not to exceed the limits of IRS Code Sections 401(k).  Under the plan, the Company also makes required contributions on behalf of the eligible employees.  The Company’s contributions vest immediately.  Contributions by the Company totaled $898,000, $769,000 and $623,000 for 2024, 2023 and 2022, respectively.

Directors’ Deferred Compensation Plan

The Company’s directors may elect to defer all or portions of their fees until their retirement or termination from service.  Amounts deferred under the deferred compensation plan earn interest based upon the highest current rate offered to certificate of deposit customers.  Amounts deferred under the deferred compensation plan are not guaranteed and represent a general liability of the Company.  As of December 31, 2024, and 2023, an obligation of $626,000 and $604,000, respectively, was included in other liabilities for this plan in the Consolidated Balance Sheet. Amounts included in interest expense on the deferred amounts totaled $30,000, $27,000 and $11,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

Restricted Stock Plan

The Company maintains a Restricted Stock Plan (the Plan) whereby employees and non-employee corporate directors are eligible to receive awards of restricted stock based upon performance related requirements.  Awards granted under the Plan are in the form of the Company’s common stock and may be subject to certain vesting requirements including in the case of employees, continuous employment or service with the Company.  In April 2016, the Company’s stockholder authorized a total of 150,000 shares of the Company’s common stock to be made available under the Plan. As of December 31, 2024, 104,212 shares remain available to be issued under the Plan. The Plan assists the Company in attracting, retaining and motivating employees to make substantial contributions to the success of the Company and to increase the emphasis on the use of equity as a key component of compensation. The following table details the vesting, awarding and forfeiting of unearned restricted shares during 2024:

	2024
	Shares			Weighted Average Market Price
Outstanding, beginning of year		6,707		$	71.94
Granted		8,351			45.59
Forfeited		(568	)		59.03
Vested		(3,563	)		67.84
Outstanding, end of year		10,927		$	53.81

Compensation cost related to restricted stock is recognized based on the market price of the stock at the grant date over the vesting period.  Compensation expense related to restricted stock was $264,000, $239,000 and $279,000 for the years ended December 31, 2024, 2023 and 2022, respectively. The per share weighted-average grant-date fair value of restricted shares granted during 2024, 2023 and 2022 was $45.59, $77.77 and $68.69, respectively.  At December 31, 2024, the total compensation cost related to nonvested awards that has not yet been recognized was $482,000, which is expected to be recognized over the next 3 years.

Supplemental Executive Retirement Plan

The Company maintains a non-qualified supplemental executive retirement plan (“SERP”) for certain executives to compensate those executive participants in the Company’s noncontributory defined benefit pension plan whose benefits are limited by compensation limitations under current tax law. At December 31, 2024 and 2023, an obligation of $2,131,000 and $2,897,000, respectively, for the SERP was included in other liabilities in the Consolidated Balance Sheet. Expenses related to the SERP totaled $124,000, $233,000 and $240,000 for the years ended December 31, 2024, 2023 and 2022, respectively. Benefit payments for  2024, 2023 and 2022 were$889,000, $42,000 and $42,000, respectively.

Deferred Compensation Plan

In 2018, the Company initiated a non-qualified executive deferred compensation plan for eligible employees designated by the Board of Directors. At December 31, 2024 and 2023, an obligation of $1,757,000 and $1,503,000, respectively, was included in other liabilities for the deferred compensation plan in the Consolidated Balance Sheet. Expenses related to the deferred compensation plan totaled $254,000, $268,000 and $296,000 for the years ended December 31, 2024, 2023 and 2022, respectively. There were no benefit payments in 2024, 2023 and 2022.

Employee Stock Purchase Plan

The Company maintains an employee stock purchase plan (“ESPP”)  in which most employees are eligible to participate. Employees in the United States who choose to participate are granted an opportunity to purchase common stock at 95 percent of market value on the last day of the quarterly purchase period. The ESPP authorizes the issuance, and the purchase by employees, of up to 100,000 shares of common stock through payroll deductions. No employee is allowed to buy more than $25,000 of common stock in any year, based on the market value of the common stock at the beginning of the purchase period. Employees purchased 234 shares at a weighted average price of $70.61 under the ESPP during 2024. At December 31, 2024, 99,766 shares remained available to be issued through the ESPP.

Salary Continuation Plan

The Company maintains a salary continuation plan for certain employees acquired through the acquisition of FNB. At December 31, 2024 and 2023 an obligation of $525,000 and $575,000 respectively, was included in other liabilities for this plan in the Consolidated Balance Sheet.  Expenses related to the salary continuation plan totaled $41,000, $44,000 and $47,000 for the years ended December 31, 2024, 2023 and 2022, respectively. Benefit payments related to the salary continuation plan totaled $91,000, $87,000 and $76,000 for the years ended December 31, 2024, 2023 and 2022, respectively.

Continuation of Life Insurance Plan

The Company has promised a continuation of life insurance coverage to certain persons post-retirement. GAAP requires the recording of post-retirement costs and a liability equal to the present value of the cost of post-retirement insurance during the person’s term of service. The estimated present value of future benefits to be paid totaled $514,000 and $610,000 at December 31, 2024 and 2023, respectively, which is included in other liabilities in the Consolidated Balance Sheet. (Benefits)/Expenses for the plan totaled ($96,000), ($50,000) and ($36,000) for the years ended December 31, 2024, 2023 and 2022, respectively.