13) Benefit Plans

401(k) Savings Plan

The Company offers a 401(k) savings plan that allows employees to contribute up to a maximum percentage of their compensation, as established by the Internal Revenue Code. The Company made a discretionary matching contribution of up to $2,000 for each employee’s contributions in 2017 and 2016. Contribution expense was $535,000, $454,000, and $342,000 in 2017, 2016 and 2015, respectively.

Employee Stock Ownership Plan

The Company sponsors a non‑contributory employee stock ownership plan. To participate in this plan, an employee must have worked at least 1,000 hours during the year and must be employed by the Company at year‑end. Employer contributions to the ESOP are discretionary. The Company has suspended contributions to the ESOP since 2010. At December 31, 2017, the ESOP owned 115,838 shares of the Company’s common stock.

Deferred Compensation Plan

The Company has a nonqualified deferred compensation plan for some of its employees (“Deferral Agreements”). Under the Deferral Agreements, a participant may defer up to 100% of his or her board fees into a deferred account. The participant may elect a distribution schedule of up to ten years. Amounts deferred earn interest. The Company did not have any deferred compensation obligation of December 31, 2017 and 2016, which is included in “Accrued interest payable and other liabilities.”

Nonqualified Defined Benefit Pension Plan

The Company has a supplemental retirement plan covering some current and some former key executives and directors (“SERP”). The SERP is an unfunded, nonqualified defined benefit plan. The combined number of active and retired/terminated participants in the SERP was 52 at December 31, 2017. The defined benefit represents a stated amount for key executives and directors that generally vests over nine years and is reduced for early retirement. The projected benefit obligation is included in “Accrued interest payable and other liabilities” on the consolidated balance sheets. The SERP has no assets and the entire projected benefit obligation is unfunded. The measurement date of the SERP is December 31.

The following table sets forth the SERP’s status at December 31:


	2017		2016
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	27,376	$	26,287
Service cost		325		534
Actuarial loss (gain)		790		425
Interest cost		1,034		1,035
Benefits paid		(1,015)		(905)
Projected benefit obligation at end of year	$	28,510	$	27,376
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	$	7,849	$	7,335

Weighted‑average assumptions used to determine the benefit obligation at year‑end:


	2017		2016
Discount rate	3.38	%	3.85	%
Rate of compensation increase	N/A		N/A

Estimated benefit payments over the next ten years, which reflect anticipated future events, service and other assumptions, are as follows:


	Estimated
	Benefit
Year	Payments
	(Dollars in thousands)
2018	$	1,085
2019		1,592
2020		1,604
2021		1,648
2022		1,814
2023 to 2027		9,970
	$	17,713

The components of pension cost for the SERP follow:




	2017		2016
	(Dollars in thousands)
Components of net periodic benefit cost:
Service cost	$	325	$	534
Interest cost		1,034		1,035
Amortization of net actuarial loss		276		239
Net periodic benefit cost	$	1,635	$	1,808

The estimated net actuarial loss and prior service cost for the SERP that will be amortized from Accumulated Other Comprehensive Loss into net periodic benefit cost over the next fiscal year are $292,000 and $276,000 as of December 31, 2017 and 2016, respectively.

Net periodic benefit cost was determined using the following assumption:


	2017		2016
Discount rate	3.85	%	4.00	%
Rate of compensation increase	N/A		N/A

Split‑Dollar Life Insurance Benefit Plan

The Company maintains life insurance policies for some current and some former directors and officers that are subject to split‑dollar life insurance agreements, which continues after the participant’s employment and retirement. All participants are fully vested in their split‑dollar life insurance benefits. The accrued benefit liability for the split‑dollar insurance agreements represents either the present value of the future death benefits payable to the participants’ beneficiaries or the present value of the estimated cost to maintain life insurance, depending on the contractual terms of the participant’s underlying agreement.

The split‑dollar life insurance projected benefit obligation is included in “Accrued interest payable and other liabilities” on the consolidated balance sheets. The measurement date of the split‑dollar life insurance benefit plan is December 31.

The following sets forth the funded status of the split dollar life insurance benefits:


	2017		2016
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	6,301	$	6,215
Interest cost		243		248
Actuarial (gain) loss		167		(162)
Projected benefit obligation at end of period	$	6,711	$	6,301

Amounts recognized in accumulated other comprehensive loss at December 31 consist of:


	2017		2016
	(Dollars in thousands)
Net actuarial loss	$	2,453	$	2,126
Prior transition obligation		1,238		1,328
Accumulated other comprehensive loss	$	3,691	$	3,454

Weighted‑average assumption used to determine the benefit obligation at year‑end follow:


	2017		2016
Discount rate	3.38	%	3.85	%

Components of net periodic benefit cost during the year are:




	2017		2016
	(Dollars in thousands)
Amortization of prior transition obligation	$	(71)	$	(51)
Interest cost		243		248
Net periodic benefit cost	$	172	$	197

The estimated net actuarial loss and prior transition obligation for the split‑dollar life insurance benefit plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $90,000 as of December 31, 2017 and 2016.

Weighted‑average assumption used to determine the net periodic benefit cost:


	2017		2016
Discount rate	3.85	%	4.00	%