Employee Benefit Plans

401(k)/Profit Sharing Plan

The Company has a 401(k)/profit sharing plan and the majority of employees participate in the plan. Employees may contribute pre-tax contributions to the 401(k)/profit sharing plan up to the maximum amount allowed by federal tax laws. The Company makes matching contributions of up to 4% of an employee’s eligible compensation. The Company may make additional matching contributions subject to the discretion of the board of directors. For the years ended December 31, 2013, 2012, and 2011, these contributions amounted to 3% of pre-tax compensation each year. For the years ended December 31, 2013, 2012 and 2011, expenses under the 401(k)/Profit Sharing plan amounted to $1.4 million, $1.2 million, and $1.1 million, respectively.

SERP and Other Postretirement Benefit Plan

The Company sponsors unfunded, non-qualified SERPs for certain officers. These agreements are designed to make up the shortfall (when compared to a non-highly compensated employee) in replacing income at retirement due to IRS compensation and benefit limits under the 401(k) plan and Social Security. With a SERP in place, participants should be able to replace 65 – 75% of their final average compensation. For those eligible for benefits, the SERP provides for a minimum 15-year guaranteed benefit for all vested participants. In addition, the Company provides medical and life insurance to certain eligible retired employees under the other postretirement benefit plan.

The following table summarizes changes in the benefit obligation and plan assets for (i) the supplemental executive retirement plan and (ii) the other postretirement benefit plan as of December 31, 2013 and 2012:



	SERP						Other Postretirement Benefits
	2013			2012			2013			2012
Benefit obligations:
Beginning of year	$	10,346		$	8,868		$	3,536		$	3,187
Service cost	326			269			42			70
Interest cost	377			408			173			148
Actuarial (gain) loss	(579		)	1,334			(538		)	275
Benefits paid	(543		)	(533		)	(119		)	(144		)
End of year	9,927			10,346			3,094			3,536
Fair value of plan assets:
Beginning of year	—			—			—			—
Employer contributions	543			533			119			144
Benefits paid	(543		)	(533		)	(119		)	(144		)
End of year	—			—			—			—
Funded status at end of year, included in other liabilities	$	9,927		$	10,346		$	3,094		$	3,536
Amounts recognized in AOCI, net of tax:
Net actuarial loss	$	1,539		$	2,061		$	458		$	639
Prior service cost (credit)	29			41			(185		)	—
Total	$	1,568		$	2,102		$	273		$	639

The accumulated benefit obligation for the SERP was $8.0 million and $7.9 million at December 31, 2013 and 2012, respectively. In 2014, approximately $140,000 and $19,000 in net actuarial losses and prior service cost, respectively, are expected to be recognized as components of net period benefit cost for the SERP, and approximately $10,000 and $22,000 in net actuarial loss and prior service credit, respectively, are expected to be recognized for the other postretirement benefit plan.

The components of net period benefit cost and other amounts recognized in OCI, before taxes, were as follows:



	SERP									Other Postretirement Benefits
	2013			2012			2011			2013			2012			2011
Net period benefit cost:
Service cost	$	326		$	269		$	232		$	42		$	70		$	65
Interest cost	377			408			431			173			148			150
Recognized net actuarial loss	224			114			67			48			31			5
Amortization of prior service cost (credit)	19			19			19			(23		)	—			—
Net period benefit cost	946			810			749			240			249			220
Changes in funded status recognized in OCI, before taxes:
Net actuarial (gain) loss	(579		)	1,334			615			(538		)	275			417
Reclassifications to net period benefit cost:
Amortization of net unrecognized actuarial loss	(224		)	(114		)	(67		)	(48		)	(31		)	(5		)
Amortization of prior service (cost) credit	(19		)	(19		)	(19		)	23			—			—
Total recognized in OCI, before taxes	(822		)	1,201			529			(563		)	244			412
Total recognized in net period benefit cost and OCI, before taxes	$	124		$	2,011		$	1,278		$	(323	)	$	493		$	632

The following assumptions were used in determining benefit obligations and net period benefit costs:



	SERP						Other Postretirement Benefits
	2013		2012		2011		2013		2012		2011
Weighted-average assumptions as of end of year:
Discount rate for benefit obligation	4.75	%	3.75	%	4.75	%	5.02	%	4.05	%	4.75	%
Discount rate for net period benefit cost	3.75	%	4.75	%	5.50	%	4.05	%	4.75	%	5.45	%
Rate of compensation increase	4.50	%	4.50	%	4.50	%	—		—		—
Health care cost trend rate assumed for future years	—		—		—		7.00	%	7.00	%	7.00	%

A 1.0% increase in the assumed health care cost trend rate would increase the accumulated postretirement benefit obligation and the related service and interest cost $378,000 and $28,000, respectively, while a 1.0% decrease in the assumed health care cost trend rate would decrease the accumulated postretirement benefit obligation and the related service and interest cost $345,000 and $26,000, respectively. The postretirement plan has a built-in cap on annual benefits to participants and, thus, the accumulated postretirement benefit obligation and the assumed health care cost trend are relatively stable each period.

In 2014, the expected contribution is $594,000 for the SERP and $145,000 for the other postretirement benefit plan. The expected benefit payments for the next ten years are presented in the following table:



	SERP		Other Postretirement Benefits
2014	$	594	$	145
2015	480		140
2016	487		137
2017	471		134
2018	471		130
2019-2023	3,021		775

In December 2003, the Act was signed into law. The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. The effects of the Act on the accumulated projected benefit obligation or net period post-retirement benefit cost are not reflected in the financial statements or accompanying notes because the Company has not concluded whether the benefits provided by the plan are actuarially equivalent to Medicare Part D under the Act.