Note 12 - Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

Note 12. Employee Benefit Plans

Defined Benefit Plans

The Company maintains two nonqualified domestic, noncontributory defined benefit plans (the “Benefit Plans”) for key members of senior management and non-management directors. The Company’s unfunded Benefit Plans include the Supplemental Executive Retention Plan (“SERP”) and the Directors’ Supplemental Retirement Plan (“Directors’ Plan”). The SERP provides for a defined benefit, at normal retirement age, targeted at 35% of the participant’s projected final average compensation, subject to a defined maximum annual benefit. Benefits under the SERP generally become payable at age 62. The Directors’ Plan provides for a defined benefit, at normal retirement age, up to 100% of the participant’s highest consecutive three-year average compensation. Benefits under the Directors’ Plan generally become payable at age 70. The SERP was frozen near the end of 2021; the Directors' Plan was fundamentally frozen at that time as well.   The following table presents the changes in the aggregate actuarial benefit obligation for the two plans combined during the periods indicated:

	December 31,
	2022			2021
(Amounts in thousands)
Beginning balance	$	11,458		$	12,579
Effect of curtailment		—			289
Service cost		—			352
Interest cost		332			315
Actuarial gain		(1,718	)		(1,472	)
Benefits paid		(584	)		(605	)
Ending balance	$	9,488		$	11,458

The following table presents the components of net periodic pension cost, the effect on the consolidated statements of income, and the assumed discount rate for the periods indicated:

	Year Ended December 31,
	2022			2021			2020			Income Statement Location
(Amounts in thousands)
Service cost	$	—		$	352		$	310		Salaries and employee benefits
Interest cost		332			315			355		Other expense
Effect of curtailment		—			289			—		Salaries and employee benefits
Amortization of prior service cost		—			124			201		Other expense
Amortization of losses		135			264			186		Other expense
Net periodic cost	$	467		$	1,344		$	1,052
Assumed discount rate		4.96	%		2.88	%		2.53	%

The following schedule presents the projected benefit payments to be paid under the Benefit Plans, by year, as of December 31, 2022:

(Amounts in thousands)
2023	$	697
2024		741
2025		736
2026		836
2027		816
2028 through 2032		3,496

Deferred Compensation Plan

The Company maintains deferred compensation agreements with certain current and former officers that provide benefit payments, over various periods, commencing at retirement or death. There were no accrued benefits, which are based on the present values of expected payments and estimated life expectancies, as of December 31, 2022 or 2021. There was no deferred compensation plan expense in 2022,  2021, or 2020.

The Company maintains a deferred compensation plan, referred to as the WRAP, and is a voluntary, non-tax qualified deferred compensation plan available to certain employees, including executive officers. Under the plan, participants may defer a portion of their base and/or annual incentive compensation. The plan is intended to mirror the Corporation's qualified KSOP, and may include discretionary match that coincides with a match made to the KSOP to the extent participants cannot otherwise receive the full match in the KSOP. The balance as of December 31, 2022 and 2021 was $5.14 million  and $5.25 million, respectively.

Employee Welfare Plan

The Company provides various medical, dental, vision, life, accidental death and dismemberment, and long-term disability insurance benefits to all full-time employees who elect coverage under this program. A third-party administrator manages the health plan. Monthly employer and employee contributions are made to a tax-exempt employee benefits trust where the third-party administrator processes and pays claims. As of December 31, 2022, stop-loss insurance coverage generally limits the Company’s risk of loss to $200 thousand for individual claims and $5.14 million for aggregate claims. Health plan expenses were $4.04 million in  2022, $3.98 million  in 2021, and $4.17 million  in 2020.

Employee Stock Ownership and Savings Plan

The Company maintains the Employee Stock Ownership and Savings Plan (“KSOP”) that consists of a 401(k) savings feature that covers all employees that meet minimum eligibility requirements. The Company matches employee contributions at levels determined by the Board of Directors annually. These contributions are made in the first quarter following each plan year and employees must be employed on the last day of the plan year to be eligible. Matching contributions to qualified deferrals under the 401(k) savings component of the KSOP totaled $1.82 million in 2022, $1.71 million in 2021, and $1.51 million in 2020. The KSOP held 309,019  shares of the Company’s common stock as of December 31, 2022, 320,164 shares as of December 31, 2021, and 351,222 shares as of December 31, 2020.

Equity-Based Compensation Plans

The Company maintains equity-based compensation plans to promote the long-term success of the Company by encouraging officers, employees, directors, and other individuals performing services for the Company to focus on critical long-range objectives. The Company’s equity-based compensation plans include the 2012 Omnibus Equity Compensation Plan (“2012 Plan”), 2004 Omnibus Stock Option Plan, 2001 Director’s Option Plan, 1999 Stock Option Plan, and various other plans obtained through acquisitions. As of December 31, 2022, the 2012 Plan was the only plan available for the issuance of future grants. All plans issued or obtained before the 2012 Plan are frozen and no new grants may be issued; however, any options or awards unexercised and outstanding under those plans remain in effect per their respective terms. The 2012 Plan authorized 600,000 shares available for potential grants of incentive stock options, nonqualified stock options, performance awards, restricted stock, restricted stock units, stock appreciation rights, bonus stock, and stock awards. Grants issued under the 2012 Plan state the period of time the grant may be exercised, not to exceed more than ten years from the date granted. The Company’s Compensation and Retirement Committee determines the vesting period for each grant; however, if no vesting period is specified the vesting occurs in 25% increments on the first four anniversaries of the grant date.

The following table presents the pre-tax compensation expense and excess tax benefit recognized in earnings for all equity-based compensation plans for the periods indicated:

	Year Ended December 31,
	2022		2021			2020
(Amounts in thousands)
Pre-tax compensation expense	$	718	$	1,282		$	1,643
Excess tax (benefit) expense		—		(633	)		202

Stock Options

The following table presents stock option activity and related information for the year ended December 31, 2022:

(Amounts in thousands, except share and per share data)	Option Shares			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding, January 1, 2022		204,878		$	29.35
Granted		—			—
Exercised		(7,575	)		22.63
Canceled/Expired		—			—
Outstanding, December 31, 2022		197,303		$	29.61		6.69	$	847
Exercisable, December 31, 2022		109,833		$	26.90		5.48	$	769

There were no options granted in 2022.  There were 7,575 options exercised in 2022  and 39,995 were exercised in 2021.  The intrinsic value of options exercised was $83 thousand in 2022, and $628 thousand   in 2021. As of December 31, 2022, unrecognized compensation cost related to nonvested stock options totaled $427 thousand with an expected weighted average recognition period of  1.25 years.  The actual compensation cost recognized might differ from this estimate due to various items, including new grants and changes in estimated forfeitures.

Restricted Stock Awards

The following table presents restricted stock activity and related information for the year ended December 31, 2022:

	Shares/Units			Weighted Average Grant-Date Fair Value
Nonvested, January 1, 2022		45,656		$	24.03
Granted		55,839			27.97
Vested		(27,414	)		25.79
Canceled		(476	)		22.89
Nonvested, December 31, 2022		73,605		$	30.87

As of December 31, 2022, unrecognized compensation cost related to nonvested restricted stock/unit awards totaled $1.41 million with an expected weighted average recognition period of  2.01 years. The actual compensation cost recognized might differ from this estimate due to various items, including new awards granted and changes in estimated forfeitures.