Pension and Other Benefits

12 Months Ended

Dec. 31, 2015

Compensation and Retirement Disclosure [Abstract]

Pension and Other Benefits Disclosure [Text Block]

Note 18 - Pension and Other Benefits

Defined Benefit Plans

The Company maintains a frozen noncontributory pension plan covering employees of the Company prior to the Merger. The benefits are based on years of service and the employee’s compensation over the prior five-year period. The plan’s benefits are payable in the form of a ten year certain and life annuity. The plan is intended to be a tax-qualified defined benefit plan under Section 401(a) of the Internal Revenue Code. Payments may be made under the Pension Plan once attaining the normal retirement age of 65 and are generally equal to 44% of a participant’s highest average compensation over a 5-year period.

The following table sets forth changes in projected benefit obligation, changes in fair value of plan assets, funded status, and amounts recognized in the consolidated statements of condition for the Company’s pension plans at December 31, 2015 and 2014.

	2015		2014
	(dollars in thousands)
Change in Benefit Obligation:
Projected benefit obligation at beginning of year	$	15,074	$	13,569
Interest cost		519		576
Actuarial (gain) loss		(466)		2,023
Benefits paid		(717)		(701)
Settlements		(1,342)		(393)
Projected benefit obligation at end of year	$	13,068	$	15,074
Change in Plan Assets:
Fair value of plan assets at beginning year	$	10,414	$	11,026
Actual return on plan assets		(296)		413
Employer contributions		2,000		-
Benefits paid		(717)		(701)
Settlements		(1,114)		(324)
Fair value of plan assets at end of year	$	10,287	$	10,414
Funded status	$	(2,781)	$	(4,660)

The accumulated benefit obligation was $13.1 million and $15.1 million as of the year ended December 31, 2015 and 2014, respectively.

Amounts recognized as a component of accumulated other comprehensive loss as of year-end that have not been recognized as a component of the net periodic pension expense for the plan are presented in the following table. The Company expects to recognize approximately $295,000 of the net actuarial loss reported in the following table as of December 31, 2015 as a component of net periodic pension expense during 2016.

	2015		2014
Net actuarial loss recognized in accumulated other
comprehensive income	$	6,677	$	7,595

The net periodic pension expense and other comprehensive income (before tax) for 2015, 2014 and 2013 includes the following:

	2015		2014		2013
	(dollars in thousands)
Interest cost	$	519	$	576	$	529
Expected return on plan assets		(562)		(596)		(488)
Net amortization		433		223		375
Recognized settlement loss		650		1		-
Total net periodic pension expense	$	1,040	$	204	$	416
Total (gain) loss recognized in other comprehensive        income		(918)		1,896		(654)
Total recognized in net periodic expense and other        comprehensive income (before tax)	$	122	$	2,100	$	(238)

The following table presents the assumptions used to calculate the projected benefit obligation in each of the last three years.

	2015	2014	2013
Discount rate	4.06%	3.76%	4.84%
Rate of compensation increase	N/A	N/A	N/A
Expected long-term rate of return on plan assets	5.50%	5.50%	5.50%

The following information is provided for the year ended December 31:

	2015	2014	2013
	(dollars in thousands)
Weighted average assumptions used to determine net
periodic benefit cost for years ended December 31
Discount rate	3.76%	4.84%	4.03%
Expected long-term return on plan assets	5.50%	5.50%	5.50%
Rate of compensation increase	N/A	N/A	N/A

The process of determining the overall expected long-term rate of return on plan assets begins with a review of appropriate investment data, including current yields on fixed income securities, historical investment data, historical plan performance and forecasts of inflation and future total returns for the various asset classes. This data forms the basis for the construction of a best-estimate range of real investment return for each asset class. An average, weighted real-return range is computed reflecting the plan’s expected asset mix, and that range, when combined with an expected inflation range, produces an overall best-estimate expected return range. Specific factors such as the plan’s investment policy, reinvestment risk and investment volatility are taken into consideration during the construction of the best estimate real return range, as well as in the selection of the final return assumption from within the range.

Plan Assets

The general investment policy of the Pension Trust is for the fund to experience growth in assets that will allow the market value to exceed the value of benefit obligations over time. The Company’s pension plan asset allocation as of December 31, 2015 and 2014, target allocation for 2016, and expected long-term rate of return by asset are as follows:

						Weighted
						Average
		% of Plan		% of Plan		Expected
		Assets –		Assets –		Long-Term
	Target	Year Ended		Year Ended		Rate of
No Related Allowance Recorded	Allocation	2015		2014		Return
Equity Securities
Domestic	48%		47%		42%		2.9%
International	13%		15%		13%		0.8%
Debt and/or fixed income securities	29%		28%		36%		1.3%
Mutual funds	8%		8%		-		0.5%
Cash and other alternative investments,
including real estate funds, hedge funds and
equity structured notes	2%		2%		9%		0%
Total	100%	$	100%	$	100%	$	5.5%

The fair values of the Company’s pension plan assets at December 31, 2015 and 2014, by asset class, are as follows:

	December 31,
	2015		Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
Asset Class			(Level 1)		(Level 2)		(Level 3)
	(dollars in thousands)
Cash	$	114	$	114	$	-	$	-
Equity securities:
U.S. companies		4,832		4,832		-		-
International
companies		1,584		1,584		-		-
Debt and/or fixed
income securities		2,904		2,904
Real estate funds		73		73		-		-
Mutual funds		780		780		-		-
Total	$	10,287	$	10,287	$	-	$	-
	December 31,
	2014		Fair Value Measurements at Reporting Date Using
			Quoted Prices		Significant
			in Active		Other		Significant
			Markets for		Observable		Unobservable
			Identical Assets		Inputs		Inputs
Asset Class			(Level 1)		(Level 2)		(Level 3)
	(dollars in thousands)
Cash	$	869	$	869	$	-	$	-
Equity securities:
U.S. companies		4,304		4,304		-		-
International
companies		1,394		1,394		-		-
Debt and/or fixed
income securities		3,754		3,754
Real estate funds		93		93		-		-
Total	$	10,414	$	10,414	$	-	$	-

Fair Value of Plan Assets

The Company used the following valuation methods and assumptions to estimate the fair value of assets held by the plan:

Equity securities and real estate funds: The fair values for equity securities and real estate funds are determined by quoted market prices, if available (Level 1). For securities where quoted prices are not available, fair values are calculated based on market prices of similar securities (Level 2).

Debt and fixed income securities: Certain debt securities are valued at the closing price reported in the active market in which the bond is traded (Level 1 inputs). Other debt securities are valued based upon recent bid prices or the average of recent bid and asked prices when available (Level 2 inputs) and, if not available, they are valued through matrix pricing models developed by sources considered by management to be reliable. Matrix pricing, which is a mathematical technique commonly used to price debt securities that are not actively traded, values debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs). For securities where quoted prices or market prices of similar securities are not available, fair values are calculated using discounted cash flows or other market indicators (Level 3). Discounted cash flows are calculated using spread to swap and LIBOR curves that are updated to incorporate loss severities, volatility, credit spread and optionality. During times when trading is more liquid, broker quotes are used (if available) to validate the model. Rating agency and industry research reports as well as defaults and deferrals on individual securities are reviewed and incorporated into the calculations.

The investment manager is not authorized to purchase, acquire or otherwise hold certain types of market securities (subordinated bonds, real estate investment trusts, limited partnerships, naked puts, naked calls, stock index futures, oil, gas or mineral exploration ventures or unregistered securities) or to employ certain types of market techniques (margin purchases or short sales) or to mortgage, pledge, hypothecate, or in any manner transfer as security for indebtedness, any security owned or held by the Plan.

Cash Flows

Contributions

The Bank expects to contribute $2.0 million to its Pension Trust in 2016.

The Moving Ahead for Progress in the 21^st Century Act, which was enacted on July 6, 2012, contained special rules related to funding stabilization for single employer defined benefit plans. Under these provisions, the interest rates used to calculate the plan’s funding percentages and minimum required contribution are adjusted as necessary to fall within a specified range that is determined based on an average of rates for the 25 year period ending on September 30 of the calendar year preceding the first day of the Plan year. For Plan years beginning in 2013, the range is 85 % - 115 % of the 25 year average. The application of the adjusted rates produced a 2013 required minimum contribution to the Plan to approximately $400,000. However, a decision was made to contribute a total of $3,700,000 for the 2013 plan year in order to make significant progress toward fully funding Plan liabilities and that amount has been contributed for the 2013 Plan Year.

Estimated Future Benefit Payments

The following benefit payments, which reflect expected future service, as appropriate, for the following years are as follows (in thousands):

2016	$	744
2017		744
2018		733
2019		744
2020		751
2021-2025		3,765

401(k) Benefit Plan

The Company maintains a 401(k) employee savings plan to provide for defined contributions which covers substantially all employees of the Company. Beginning with the 2013 Plan Year, the Plan was amended to provide for a 3% nonelective safe harbor contribution for all participants. For 2015, 2014 and 2013, employer contributions amounted to $338,000, $291,000 and $265,000, respectively.