Employee Benefit Plans

12 Months Ended

Dec. 31, 2021

Compensation And Retirement Disclosure [Abstract]

Employee Benefit Plans

Note 11. Employee Benefit Plans

The Company has a 401(k) plan that covers eligible employees (the "401(k) Plan"). Employees may make voluntary contributions subject to certain limits based on federal tax laws. The Bank contributes a matching contribution equal to 100% of an employee's contribution up to 5% of his or her elective deferral. This matching contribution is subject to a vesting schedule of six years. For the years ended December 31, 2021 and 2020, total expenses attributable to the 401(k) Plan were $2.5 million and $1.2 million, respectively.

The Company has an Employee Stock Ownership Plan (the “ESOP”) that covers eligible employees. Contributions to the ESOP are made at the discretion of the board of directors and may include both the matching component to employees’ elective deferrals into the 401(k) Plan and discretionary profit contributions. Contributions from the Company are subject to a vesting schedule of six years. The ESOP held 192,066 and 156,087 total shares of Company common stock at December 31, 2021 and December 31, 2020, respectively. All shares issued to and held by the ESOP are considered outstanding in the computation of EPS.

The Company assumed the Bay Banks of Virginia, Inc. ESOP pursuant to the Bay Banks Merger (the "Bay Banks ESOP"). The Bay Banks ESOP remained a separate plan from the ESOP after the Bay Banks Merger, and no new participants were permitted to the Bay Banks ESOP beginning with the effective date of the merger. The Bay Banks ESOP held 361,500 total shares of Company common stock at December 31, 2021, which were considered outstanding in the computation of EPS.

In the Bay Banks Merger, the Company assumed a non-contributory, cash balance defined benefit pension plan (the “Pension Plan”) for employees who were vested in the plan as of December 31, 2012, the date the plan was frozen (i.e., curtailed). Each participant’s account balance grows based on monthly interest credits. The Pension Plan is partially funded by assets invested for the benefit of the plan participants. The Pension Plan assets are held by a third-party qualified trust and are not included in the Company’s consolidated balance sheets. The Company made contributions totaling $703 thousand to the Pension Plan for the 2021 plan year. The accumulated benefit obligation for the Pension Plan was $1.1 million as of December 31, 2021. The funded assets for the Pension Plan, included in other assets in the Company’s consolidated balance sheets, were $10 thousand as of December 31, 2021. In 2021, the Company began the process of terminating the Pension Plan, which would result in the liquidation of plan assets and the complete settlement of the benefit obligation owed to all remaining participants. The termination of the Pension Plan is contingent on Company obtaining certain regulatory approvals, including from the Internal Revenue Service. The Company anticipates that the termination will be effective during 2022.

The Pension Plan sponsor selects the assumption for the expected long-term rate of return on assets held by the qualified trust in consultation with its investment advisors and actuary. This rate is intended to reflect the average rate of earnings expected to be earned on the funds invested or to be invested to provide plan benefits. Historical performance is reviewed, especially with respect to real rates of return (i.e., net of inflation), for the major asset classes held or anticipated to be held by the qualified trust and for the qualified trust itself. Undue weight is not given to recent experience that may not continue over the measurement period, with higher significance placed on current forecasts of future long-term economic conditions.

Because assets are held in a qualified trust, anticipated returns are not reduced for taxes. Further, solely for this purpose, the Pension Plan is assumed to continue in force and not terminate during the period during which assets are invested. However, consideration is given to the potential impact of current and future investment policy, cash flow into and out of the qualified trust, and expenses (both investment and non-investment) typically paid from the Pension Plan’s assets (to the extent such expenses are not explicitly estimated within periodic cost).

The qualified trust assets are sufficiently diversified to maintain a reasonable level of risk without imprudently sacrificing return. The investment manager of the qualified trust selects investment fund managers with demonstrated experience and expertise and funds with demonstrated historical performance for the implementation of the plan’s investment strategy. The qualified trust assets are not included in the Company’s consolidated balance sheets as of December 31, 2021 and are considered Level 1 from a fair value hierarchy perspective.

The following table presents the Pension Plan’s assets by asset type as of the dates stated.

	December 31, 2021
	Amount		%
Mutual funds - equity	$	869		75	%
Mutual funds - fixed income		290		25	%
Total	$	1,159		100	%

In the Bay Banks Merger, the Company also assumed a post-retirement benefit plan (the “PRB Plan”) covering retirees who were age 55 with 10 years of service or age 65 with five years of service prior to March 1, 2018, when the plan was curtailed. The PRB Plan provides coverage toward a retiree’s eligible medical and life insurance benefits. The PRB Plan is unfunded and benefits are expensed as incurred. The Company expects to make no contributions to the PRB Plan in future periods. The accumulated (unfunded) benefit obligation for the PRB Plan was $52 thousand as of December 31, 2021.

The following table provides a reconciliation of changes in the accumulated benefit obligations and fair value of qualified trust assets (Pension Plan only) and a statement of funded (unfunded) status for the Pension Plan and the PRB Plan as of and for the period stated.

	December 31, 2021
	Pension Plan			PRB Plan
Change in benefit obligation
Benefit obligation, beginning of year	$	—		$	—
Assumed in business combination		2,041			65
Service cost		—			—
Interest cost		45			2
Actuarial loss (gain)		34			(9	)
Benefit payments		(971	)		(6	)
Settlement (gain) loss		—			—
Benefit obligation, end of year		1,149			52
Change in plan assets
Fair value of plan assets, beginning of year		—			—
Acquired in business combination		1,330			—
Actual return on plan assets		97			—
Employer contributions		703			6
Benefits payments		(971	)		(6	)
Fair value of plan assets, end of year		1,159			—
Funded (unfunded) status, end of year	$	10		$	(52	)

	For the year ended December 31, 2021
	Pension Plan		PRB Plan
Amounts recognized in accumulated other comprehensive loss (income)
Net loss (gain)	$	11	$	(9	)
Prior service cost		—		—
Net obligation at transition		—		—
Amount recognized	$	11	$	(9	)

Components of net periodic benefit (gain) cost
Service cost	$	—		$	—
Interest cost		45			2
Expected return on plan assets		(73	)		—
Amortization of prior service cost		—			—
Amortization of net obligation at transition		—			—
Recognized net loss due to settlement		—			—
Recognized net actuarial loss		—			—
Net periodic benefit (gain) cost		(28	)		2

Other changes in plan assets and benefit obligations recognized in accumulated other comprehensive (income) loss
Net loss (gain)		11			(9	)
Amortization of prior service cost		—			—
Amortization of net obligation at transition		—			—
Total recognized in other comprehensive loss (income)		11			(9	)
Total recognized in net periodic benefit cost and other comprehensive loss (income)	$	(17	)	$	(7	)

The following table presents the assumptions used in the valuation of and disclosures for the Pension Plan and the PRB Plan for the period stated.

	December 31, 2021
	Pension Plan			PRB Plan
Discount rate used for net periodic pension cost		2.75	%		2.50	%
Discount rate used for disclosure (range)	1.02% - 3.08%				2.75	%
Expected return on plan assets		7.25	%	N/A
Rate of compensation increase	N/A			N/A
Rate of compensation increase for net periodic    pension cost	N/A			N/A
Expected future interest crediting rate		3.00	%	N/A

The following table presents the expected benefit payments to be made from the Pension Plan and PRB Plan for the periods following the date stated.

	December 31, 2021
	Pension Plan		PRB Plan
2022	$	1,149	$	6
2023		—		6
2024		—		5
2025		—		5
2026		—		5
2027 - 2031		—		28