Note 6 - Employee Benefit Plans

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Compensation and Employee Benefit Plans [Text Block]

6.    Employee Benefit Plans

Employee Stock Ownership Plan (ESOP)

In 1985, the Company established an employee stock ownership plan (ESOP or the Plan) for the benefit of employees who meet certain minimum age and service requirements. Upon inception of the ESOP, the Company borrowed $2,000,000 from a bank and lent the proceeds to the Plan in accordance with the Trust Agreement (the Trust) established under the ESOP to purchase shares of the Company’s common stock. The Company’s original loan to the Trust is at interest rates approximating the prime rate and is repayable to the Company over a 40-year term ending in December 2024. During 1987 and 1988, the Company loaned an additional amount of $1,942,000 to the Trust under terms similar to those under the original loan, with term ending in December 2028.

Company shares are held by the Plan’s trustees (per Trust Agreement) in a suspense account until allocated to participant accounts in the Plan.  Contributions are determined annually by the Company according to the ESOP plan formula.  Each year the Company makes contributions to the Trust sufficient to enable the Trust to repay the principal and interest due to the Company under the terms of the Trust. As the loans are repaid, shares are released from the suspense account pro rata based on the portion of the aggregate loan payments that are paid during the year. The Plan allows dividends (if applicable) on unallocated shares to be distributed to participants in cash, unless otherwise directed.  Shares released from the suspense account are allocated to participants in the ESOP based on their relative taxable compensation in the year of allocation and/or on the participants’ account balances.

If the Company’s shares are not readily tradeable on an established securities market when an ESOP participant’s termination of employment or retirement occurs, and if such ESOP participant requests that his/her ESOP distributed shares be repurchased by the Company, the Company is obligated to do so. The Company’s shares currently trade on NYSE American. There were no outstanding ESOP shares subject to the repurchase obligation at December 31, 2024.

Company shares allocated to the Plan are 291,980 and 321,141 as of December 31, 2024, and 2023, respectively. As of December 31, 2024 and 2023, 15,786 and 26,752 shares, respectively, remain unallocated in the suspense account.

Related compensation expense associated with the Plan, which is equal to the principal reduction on the loans receivable from the trust, amounted to approximately $56,000 and $101,000 for the years ended December 31, 2024, and 2023, respectively. Included as a reduction to Company’s shareholders’ equity is the ESOP trust commitment which represents the remaining indebtedness of the Trust to the Company.  ESOP participants are entitled to vote allocated shares and the Trust is entitled to vote unallocated shares and any allocated shares not voted by the participants.

Other Postretirement Benefit Plans

The Company provides certain postretirement health and life insurance benefits for two former executives (retirees) of the Company (the Plan). Upon ceasing employment with the Company, the Company pays the annual cost of health insurance coverage and provides continuing life insurance at the same level of coverage at the time of terminating employment with the Company. The Plan also provides a benefit to reimburse the retirees for certain out-of-pocket medical and/or health-related costs. The retirees’ benefits cease upon their death. The Plan is unfunded and the actuarially-determined projected postretirement benefit obligation was approximately $4,097,000 and $4,262,000 as of December 31, 2024 and 2023, respectively.

Amounts recognized in the Consolidated Balance Sheets as of December 31, 2024 and 2023 consist of the following:

	Years Ended December 31,
(in thousands)	2024		2023
Current portion - retirement benefits and other	$	84	$	97
Long-term liabilities - retirement benefits and other		4,013		4,165
Post-retirement benefit obligation	$	4,097	$	4,262
Accumulated other comprehensive loss, before income taxes:
Net actuarial loss	$	2,694	$	3,024

The estimated net loss to be amortized from accumulated other comprehensive income ("AOCI") to benefit cost during 2025 is approximately $84,000. The decrease in the projected postretirement benefit obligation was due to changes in actuarial assumptions.  The actuarial loss is being amortized based on the expected lifetimes of the two former executives.

A reconciliation of the beginning and ending balances of accumulated postretirement benefit obligations as of December 31, 2024 and 2023 is as follows:

	Years Ended December 31,
(in thousands)	2024			2023
Accumulated post-retirement benefit obligations at the beginning of the year	$	4,262		$	4,062
Interest cost		216			192
Actuarial (gain)/loss		(231	)		152
Benefits paid		(150	)		(144	)
Accumulated post-retirement benefit obligations at the end of the year	$	4,097		$	4,262

Financial information for this Plan for the years ended December 31, 2024 and 2023 are as follows:

	Years Ended December 31,
(in thousands)	2024		2023
Interest cost	$	216	$	192
Recognized actuarial loss		97		87
Benefit cost	$	313	$	279
Benefits paid	$	150	$	144

Actuarial assumptions used as of and for the years ended December 31, 2024 and 2023 are as follows:

	Years Ended December 31,
	2024			2023
Discount rate used in determining:
Benefit obligation		5.000	%		5.250	%
Benefit cost		5.250	%		4.875	%

Assumed healthcare cost trend rate is estimated at 10% for the first year and then grading down by 0.5% for each year subsequent until a floor of 5% is reached. The actuarial assumptions for mortality include the use of PriH – 2012 mortality tables with generational mortality improvement scale 2024 and adjusted scale MP 2021.

The effect of a one-percentage-point increase, and a one-percentage-point decrease in the assumed health care cost trend rates on the aggregate of the service and interest cost components of net periodic postretirement health care benefit costs and the accumulated postretirement benefit obligation for health care benefits are as follows:

	Years Ended December 31,
(in thousands)	2024			2023
Effect of 1% increase in health care trend rates:
Change in benefit obligation	$	603		$	543
Change in combined service and interest cost	$	32		$	31
Effect of 1% decrease of health care trend rates:
Change in benefit obligation	$	(497	)	$	(450	)
Change in combined service and interest cost	$	(26	)	$	(25	)

Based on actuarial assumptions, the Company is expected to make benefit payments for the next ten years ending December 31, as follows (in thousands):

Years Ending December 31,	Amount
2025	$	145
2026		156
2027		167
2028		178
2029		188
2030-2034	$	1,084