13.	Employee Benefit Plans

Defined Benefit Plan

The Corporation provides pension benefits for eligible employees through a defined benefit pension plan. Substantially all employees participate in the retirement plan on a non-contributing basis, and are fully vested after

three

years of service. Effective

January 1, 2009,

the plan was closed to new participants. The Corporation provided the requisite notice to plan participants on

March 12, 2013

of the determination to freeze the plan (curtailment). While the freeze was

not

effective until

April 30, 2013,

management determined that participants would

not

satisfy, within the provisions of the plan,

2013

eligibility requirements based on minimum hours worked for

2013.

Therefore, employees ceased to earn benefits as of

January 1, 2013.

This amendment to the plan will

not

affect benefits earned by the participant prior to the date of the freeze. The Corporation measures the funded status of the plan as of

December 31.

Information pertaining to changes in obligations and funded status of the defined benefit pension plan for the years ended

December 31

is as follows:

(Dollar amounts in thousands)	2018			2017
Change in plan assets:
Fair value of plan assets at beginning of year	$	10,159		$	9,331
Actual return on plan assets		(479	)		1,218
Employer contribution		500			-
Benefits paid		(698	)		(390	)
Fair value of plan assets at end of year		9,482			10,159
Change in benefit obligation:
Benefit obligation at beginning of year		11,801			10,609
Interest cost		423			438
Actuarial loss		85			71
Effect of change in assumptions		(983	)		1,073
Benefits paid		(698	)		(390	)
Benefit obligation at end of year		10,628			11,801
Funded status (plan assets less benefit obligation)	$	(1,146	)	$	(1,642	)
Amounts recognized in accumulated other comprehensive loss consists of:
Accumulated net actuarial loss	$	6,126		$	6,125
Accumulated prior service benefit		-			-
Amount recognized, end of year	$	6,126		$	6,125

The following table presents the Corporation’s pension plan assets measured and recorded at estimated fair value on a recurring basis and their level within the estimated fair value hierarchy as described in Note

15:

(Dollar amounts in thousands)			(Level 1)		(Level 2)		(Level 3)
			Quoted Prices in		Significant		Significant
			Active Markets		Other		Unobservable
			for Identical		Observable		Inputs
Description	Total		Assets		Inputs
December 31, 2018:
Money markets	$	77	$	77	$	-	$	-
Mutual funds - debt		4,183		4,183		-		-
Mutual funds - equity		4,373		4,373		-		-
Emclaire stock		849		849		-		-
	$	9,482	$	9,482	$	-	$	-
December 31, 2017:
Money markets	$	720	$	720	$	-	$	-
Mutual funds - debt		3,368		3,368		-		-
Mutual funds - equity		5,221		5,221		-		-
Emclaire stock		850		850		-		-
	$	10,159	$	10,159	$	-	$	-

There were

transfers between Level

and Level

during

2018.

The accumulated benefit obligation for the defined benefit pension plan was

$10.6

million and

$11.8

million at

December

31,

2018

and

2017,

respectively.

The components of the periodic pension costs and other amounts recognized in other comprehensive income for the years ended

December 31

are as follows:

(Dollar amounts in thousands)	2018			2017
Interest cost	$	423		$	438
Expected return on plan assets		(672	)		(661	)
Amortization of prior service beneft and net loss		252			239
Net periodic pension benefit		3			16
Amortization of prior service benefit and net loss		(252	)		(239	)
Net loss		253			588
Total recognized in other comprehensive loss		1			349
Total recognized in net periodic benefit and other comprehensive loss	$	4		$	365

The estimated net loss and prior service benefit for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is

$253,000

as of

December

31,

2018.

Weighted-average actuarial assumptions for the years ended

December 31

include the following:

	2018			2017
Discount rate for net periodic benefit cost		3.62	%		4.19	%
Discount rate for benefit obligations		4.26	%		3.62	%
Expected rate of return on plan assets		6.75	%		7.25	%

The Corporation’s pension plan asset allocation at

December

31,

2018

and

2017,

target allocation for

2019,

and expected long-term rate of return by asset category are as follows:

Asset Category	Target Allocation		Percentage of Plan Assets at Year End				Weighted-Average Expected Long-Term Rate of Return
	2019		2018		2017		2018
Equity securities		55%		55%		56%		5.02%
Debt securities		37%		44%		37%		1.70%
Money markets		8%		1%		7%		0.03%
		100%		100%		100%		6.75%

Investment Strategy

The intent of the pension plan is to provide a range of investment options for building a diversified asset allocation strategy that will provide the highest likelihood of meeting the aggregate actuarial projections. In selecting the options and asset allocation strategy, the Corporation has determined that the benefits of reduced portfolio risk are best achieved through diversification. The following asset classes or investment categories are utilized to meet the Pension plan’s objectives: Small company stock, International stock, Mid-cap stock, Large company stock, Diversified bond, Money Market/Stable Value and Cash. The pension plan does

not

prohibit any certain investments.

The Corporation does currently

not

expect to make a contribution to its pension plan in

2019.

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows:

(Dollar amounts in thousands)	Pension
For year ended December 31,	Benefits
2019	$	397
2020		444
2021		448
2022		490
2023		493
2024-2028		2,718
Thereafter		5,638
Benefit Obligation	$	10,628

Defined Contribution Plan

The Corporation maintains a defined contribution

401

(k) Plan. Employees are eligible to participate by providing tax-deferred contributions up to

20%

of qualified compensation. Employee contributions are vested at all times. The Corporation provides a matching contribution of up to

of the participant’s salary. For the years ended

2018

and

2017,

matching contributions were

$235,000

and

$206,000,

respectively. The Corporation

may

also make, at the sole discretion of its Board of Directors, a profit sharing contribution. For the years ended

2018

and

2017,

the Corporation made profit sharing contributions of

$124,000

and

$109,000,

respectively.

Supplemental Executive Retirement Plan

The Corporation maintains a Supplemental Executive Retirement Plan (SERP) to provide certain additional retirement benefits to participating officers. The SERP is subject to certain vesting provisions and provides that the officers shall receive a supplemental retirement benefit if the officer’s employment is terminated after reaching the normal retirement age of

65,

with benefits also payable upon death, disability, a change of control or a termination of employment prior to normal retirement age. As of

December

31,

2018

and

2017,

the Corporation’s SERP liability was

$1.8

million and

$1.2

million, respectively. For the years ended

December

31,

2018

and

2017,

the Corporation recognized expense of

$156,000

and

$167,000,

respectively, related to the SERP.