Benefit Plans

12 Months Ended

Dec. 31, 2020

Benefit Plans

Benefit Plans

14) 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 $3,000 for each employee’s contributions in 2020 and 2019. Contribution expense was $942,000, $934,000, and $749,000 in 2020, 2019 and 2018, respectively.

Employee Stock Ownership Plan

The Company sponsors a non-contributory employee stock ownership plan (“ESOP”). 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. The Plan was “frozen” as of January 1, 2019.  At December 31, 2020, the ESOP owned 101,231 shares of the Company’s common stock.

Deferred Compensation Plan

The Company has a nonqualified deferred compensation plan for some of its employees. Under the deferred compensation plan, an employee may defer up to 100% of their bonus and 50% of their regular salary into a deferred account. Amounts deferred are invested in a portfolio of approved investment choices as directed by the employee. Amounts deferred by employees to the deferred compensation plan will be distributed at a future date they have selected or upon termination of employment. There were eight and five employees who elected to participate in the deferred compensation plan during 2020 and 2019, respectively.

Nonqualified Defined Benefit Pension Plan

The Company has a supplemental retirement plan (“SERP”) covering some current and some former key executives and directors. The SERP is an unfunded, nonqualified defined benefit plan. The combined number of active and retired/terminated participants in the SERP was 53 at December 31, 2020. 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 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:

	2020		2019
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	33,689	$	26,781
Projected benefit obligation of SERP agreements acquired from Presidio		—		2,541
Service cost		492		263
Actuarial loss (gain)		3,008		4,182
Interest cost		935		1,059
Benefits paid		(3,118)		(1,137)
Plan amendment		398		—
Projected benefit obligation at end of year	$	35,404	$	33,689
Amounts recognized in accumulated other comprehensive loss:
Net actuarial loss	$	12,445	$	9,714

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

	2020		2019
Discount rate	2.26	%	3.01	%
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)
2021	$	2,123
2022		1,814
2023		1,918
2024		1,954
2025		2,026
2026 to 2030		11,465

The components of pension cost for the SERP follow:

	2020		2019
	(Dollars in thousands)
Components of net periodic benefit cost:
Service cost	$	492	$	263
Interest cost		935		1,059
Amortization of prior transition obligation		299		—
Amortization of net actuarial loss		387		184
Accelerated benefits for Presidio SERP agreements
due to change in control		—		1,465
Net periodic benefit cost	$	2,113	$	2,971
Amount recognized in other comprehensive income	$	1,924	$	2,847

The components of net periodic benefit cost other than the service cost component are included in the line item “other noninterest expense” in the Consolidated Statements of Income. 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 $643,000 as of December 31, 2020.

Net periodic benefit cost for the years ended December 31, 2020 and 2019 were determined using the following assumption:

	2020		2019
Discount rate	3.01	%	4.03	%
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, some of which continues after the participant’s employment and retirement. The policies acquired from Focus and Presidio do not include a post retirement benefit. 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:

	December 31,		December 31,
	2020		2019
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	8,198	$	6,903
Interest cost		246		278
Actuarial loss (gain)		1,245		1,017
Projected benefit obligation at end of period	$	9,689	$	8,198

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

	December 31,		December 31,
	2020		2019
	(Dollars in thousands)
Net actuarial loss	$	5,170	$	3,776
Prior transition obligation		970		1,059
Accumulated other comprehensive loss	$	6,140	$	4,835

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

	2020		2019
Discount rate	2.26	%	3.01	%

Components of net periodic benefit cost during the year are:

	2020		2019
	(Dollars in thousands)
Amortization of prior transition obligation and actuarial losses	$	(60)	$	(96)
Interest cost		246		278
Net periodic benefit cost	$	186	$	182
Amount recognized in other comprehensive income	$	1,305	$	1,113

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, 2020 and 2019.

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

	2020		2019
Discount rate	3.01	%	4.03	%