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PENSION PLANS
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
PENSION PLANS
17. PENSION PLANS
 
Defined Benefit Retirement Plan
 
The bank has a defined benefit retirement plan that covered substantially all of its employees who were employed during the period that the plan was in effect. The plan was initially curtailed in 1986, and accordingly, plan benefits were fixed as of that date. Effective January 1, 1991, the bank reactivated its defined benefit retirement plan. As a result of the reactivation, employees for whom benefits were fixed in 1986 began to accrue additional benefits under a new formula that became effective January 1, 1991. Employees who were not participants at curtailment, but who were subsequently eligible to join, became participants effective January 1, 1991. Under the reactivated plan, benefits are based upon the employees' years of service and their highest average annual salaries in a 60-consecutive-month period of service, reduced by benefits provided from the bank's terminated money purchase pension plan. The reactivation of the defined benefit retirement plan resulted in an increase of $5.9 million in the unrecognized prior service cost, which was amortized over a period of 13 years. Effective December 31, 2002, the bank curtailed its defined benefit retirement plan, and accordingly, plan benefits were fixed as of that date.

In January 2021, the Board of Directors approved termination of, and authorized Company management to commence taking action to terminate, the defined benefit retirement plan. The Company received a favorable determination letter from the IRS and no objection from the Pension Benefit Guaranty Corporation on the Form 500 standard termination notice in January 2022. The Company intends to settle the plan in the second quarter of 2022. Upon final plan termination and settlement, we expect to recognize a one-time settlement expense of approximately $4.5 to $6.5 million.
The following tables set forth information pertaining to the defined benefit retirement plan:
 
 Year Ended December 31,
(Dollars in thousands)20212020
Change in benefit obligation:  
Benefit obligation at beginning of year$21,919 $21,603 
Interest cost485 641 
Actuarial (gains) losses(427)1,288 
Benefits paid(1,557)(1,613)
Benefit obligation at end of the year20,420 21,919 
Change in plan assets, at fair value:  
Fair value of plan assets at beginning of year21,153 21,309 
Actual return on plan assets1,189 1,457 
Benefits paid(1,557)(1,613)
Fair value of plan assets at end of year20,785 21,153 
Funded status at end of year$365 $(766)
Amounts recognized in AOCI:  
Net actuarial losses$(4,699)$(6,467)
Benefit obligation actuarial assumptions:  
Weighted-average discount rate2.4 % (*)2.3 %
* Plan termination assumptions were utilized, including combination of lump sum values and estimated annuity purchase rates for other participants not electing or eligible to take lump sum.
 Year Ended December 31,
(Dollars in thousands)202120202019
Components of net periodic benefit cost:   
Interest cost$485 $641 $828 
Expected return on plan assets(549)(920)(996)
Amortization of net actuarial losses701 909 1,101 
Net periodic benefit cost$637 $630 $933 
Net periodic cost actuarial assumptions:   
Weighted-average discount rate2.3 %3.1 %4.2 %
Expected long-term rate of return on plan assets2.7 %4.5 %5.3 %

The long-term rate of return on plan assets reflects the weighted-average long-term rates of return for the various categories of investments held in the plan. The expected long-term rate of return is adjusted when there are fundamental changes in expected returns on the plan investments.
 
The defined benefit retirement plan assets consist of equity and debt securities and money market funds. Our asset allocations by asset category were as follows:
 
 December 31,
 20212020
Equity securities— %39.5 %
Debt securities85.9 56.1 
Money market funds14.1 4.4 
Total100.0 %100.0 %
 
Equity securities included the Company's common stock in the amount of $0.1 million at December 31, 2020.

In conjunction with the upcoming defined benefit retirement plan termination, in 2021 the plan asset allocations were adjusted to minimize market risk, which included eliminating all equity securities and adjusting the portfolio duration.
 
The fair values of the defined benefit retirement plan as of December 31, 2021 and 2020 by asset category were as follows:
 
(Dollars in thousands)Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
December 31, 2021    
Money market funds$2,938 $— $— $2,938 
Exchange traded funds10,712 — — 10,712 
Government obligations— 1,899 — 1,899 
Common stocks— — — — 
Preferred stocks— — — — 
Corporate bonds and debentures— 5,236 — 5,236 
Total$13,650 $7,135 $— $20,785 

(Dollars in thousands)Quoted Prices
in Active 
Markets for 
Identical
Assets
(Level 1)		Significant
Other
Observable
Inputs
(Level 2)		Significant
Unobservable
Inputs
(Level 3)		Total
December 31, 2020    
Money market funds$928 $— $— $928 
Exchange traded funds13,462 — — 13,462 
Government obligations— 2,334 — 2,334 
Common stocks1,993 — — 1,993 
Preferred stocks260 — — 260 
Corporate bonds and debentures— 2,176 — 2,176 
Total$16,643 $4,510 $— $21,153 
 
We are not required by funding regulations or laws to make any contributions to our defined benefit retirement plan in 2022.

The Company intends to terminate its defined benefit retirement plan in the second quarter of 2022. As a result, estimated future benefit payments in each of the next five years and in the aggregate for the five years thereafter are as follows:
 
(Dollars in thousands)
Year Ending December 31: 
2022$20,672 
2023— 
2024— 
2025— 
2026— 
2027-2031— 
Total$20,672 
 
Supplemental Executive Retirement Plans
 
In 1995, 2001, 2004 and 2006, our bank established Supplemental Executive Retirement Plans ("SERP") that provide certain officers of the Company with supplemental retirement benefits. On December 31, 2002, the 1995 and 2001 SERP were curtailed. In conjunction with the merger with CB Bancshares, Inc. ("CBBI"), we assumed CBBI's SERP obligation.
 
The following tables set forth information pertaining to the SERP:
 
 Year Ended December 31,
(Dollars in thousands)20212020
Change in benefit obligation  
Benefit obligation at beginning of year$12,740 $11,971 
Interest cost264 341 
Actuarial (gains) losses(398)737 
Benefits paid(309)(309)
Benefit obligation at end of year12,297 12,740 
Change in plan assets  
Fair value of plan assets at beginning of year— — 
Employer contributions309 309 
Benefits paid(309)(309)
Fair value of plan assets at end of year— — 
Funded status at end of year$(12,297)$(12,740)
Amounts recognized in AOCI 
Net transition obligation$(26)$(44)
Prior service cost— — 
Net actuarial losses(2,337)(3,070)
Total amounts recognized in AOCI$(2,363)$(3,114)
Benefit obligation actuarial assumptions  
Weighted-average discount rate2.5 %2.1 %
 Year Ended December 31,
(Dollars in thousands)202120202019
Components of net periodic benefit cost   
Interest cost$264 $341 $430 
Amortization of net actuarial (gains) losses335 251 16 
Amortization of net transition obligation18 18 18 
Amortization of prior service cost— 14 18 
Net periodic benefit cost$617 $624 $482 
Net periodic cost actuarial assumptions   
Weighted-average discount rate2.1 %3.1 %4.2 %
 
The SERP holds no plan assets other than employer contributions that are paid as benefits during the year. We expect to contribute $0.5 million to the SERP in 2022.
 
Estimated future benefit payments reflecting expected future service for the SERP in each of the next five years and in the aggregate for the five years thereafter are as follows:
 
(Dollars in thousands)
Year Ending December 31:
2022$481 
2023649 
2024638 
2025626 
2026612 
2027-20314,699 
Total$7,705