Note 18 - Employee Benefit Plans

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Retirement Benefits [Text Block]

Note 18 – Employee Benefit Plans

Defined Benefit Plan

The Company previously maintained a non-contributory defined benefit pension plan which covered substantially all employees who were 21 years of age or older and who had at least one year of service. The Company froze its pension plan to new participants and converted its pension plan to a cash balance plan effective December 31, 2009. Each year, existing participants will receive, with some adjustments, income based on the yield of the 10 year U.S. Treasury Note in December of the preceding year. The Plan notified participants of the intent to apply for Internal Revenue Service approval to terminate the Pension Plan. Final determination can take 12-24 months for the projected benefit payments. Total projected payments of $3.5 million are estimated to be disbursed in 2024. Information pertaining to the activity in the plan is as follows (dollars in thousands):

	As of and for the Year Ended December 31,
	2023			2022			2021
Change in Benefit Obligation:
Projected benefit obligation at beginning of year	$	3,270		$	5,013		$	5,821
Service cost		—			—			—
Interest cost		166			107			91
Actuarial (gain) loss		185			(1,403	)		(259	)
Settlement gain (loss)		—			(10	)		6
Benefits paid		(78	)		(437	)		(646	)
Projected benefit obligation at end of year		3,543			3,270			5,013
Change in Plan Assets:
Fair value of plan assets at beginning of year		4,264			5,045			4,701
Actual return on plan assets		158			(344	)		190
Employer contributions		—			—			800
Benefits paid		(78	)		(437	)		(646	)
Fair value of plan assets at end of year		4,344			4,264			5,045
Funded Status at End of Year	$	801		$	994		$	32
Amounts Recognized in the Consolidated Balance Sheets
Other assets	$	801		$	994		$	32
Amounts Recognized in Accumulated Other Comprehensive Loss
Net actuarial loss	$	512		$	400		$	1,481
Deferred income taxes		(110	)		(86	)		(320	)
Amount recognized	$	402		$	314		$	1,161

	As of and for the Year Ended December 31,
	2023			2022			2021
Components of Net Periodic Benefit Cost
Service cost	$	—		$	—		$	—
Interest cost		166			107			91
Expected return on plan assets		(85	)		(245	)		(230	)
Recognized net loss due to settlement		—			112			195
Recognized net actuarial loss		—			145			182
Net periodic benefit cost	$	81		$	119		$	238
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss (Income)
Net actuarial loss (gain)	$	112		$	(1,082	)	$	(590	)
Amortization of prior service cost		—			—			—
Total recognized in other comprehensive loss	$	112		$	(1,082	)	$	(590	)
Total Recognized in Net Periodic Benefit Cost and Other Comprehensive Loss (Income)	$	193		$	(963	)	$	(352	)

The accumulated benefit obligation as of December 31, 2023, 2022, and 2021 was $3.5 million, $3.3 million, and $5.0 million, respectively. The rate of compensation increase is no longer applicable since the defined benefit plan was frozen and converted to a cash balance plan.

The plan sponsor selected the expected long-term rate-of-return-on-assets assumption in consultation with their investment advisors and actuary. This rate was intended to reflect the average rate of earnings expected to be earned on the funds invested or to be invested to provide plan benefits. Historical performance is reviewed, especially with respect to real rates of return (net of inflation), for the major asset classes held or anticipated to be held by the trust, and for the trust itself. Undue weight is not given to recent experience that may not continue over the measurement period, with higher significance placed on current forecasts of future long-term economic conditions.

Because assets are held in a qualified trust, anticipated returns are not reduced for taxes. Further, solely for this purpose, the plan is assumed to continue in force and not terminate during the period in which assets are invested. However, consideration is given to the potential impact of current and future investment policy, cash flow into and out of the trust, and expenses (both investment and non-investment) typically paid from plan assets (to the extent such expenses are not explicitly estimated within periodic cost).

Below is a description of the plan's assets. The plan's weighted-average asset allocations by asset category are as follows as of December 31, 2023 and 2022:

Asset Category	December 31,
	2023			2022
Fixed Income		54.4	%		71.4	%
Cash and Accrued Income		45.6	%		28.6	%
Total		100.0	%		100.0	%

The investment policy and strategy for plan assets can best be described as a growth and income strategy. Diversification is accomplished by limiting the holding of any one equity issuer to no more than 5% of total equities. Exchange traded funds are used to provide diversified exposure to the small capitalization and international equity markets. All fixed income investments are rated as investment grade, with the majority of these assets invested in corporate issues. The assets are managed by the Company's Trust and Investment Services Division. No derivatives are used to manage the assets. Equity securities do not include holdings in the Company.

The fair value of the Company's pension plan assets at December 31, 2023 and 2022, by asset category are as follows (dollars in thousands):

			Fair Value Measurements at December 31, 2023 Using
			Quoted Prices		Significant
			in Active		Other		Significant
	Balance as of		Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
Asset Category	2023		Level 1		Level 2		Level 3
Cash	$	1,961	$	1,961	$	—	$	—
Fixed income securities
Government sponsored entities		1,267		—		1,267		—
Municipal bonds and notes		733		—		733		—
Corporate bonds and notes		383		—		383		—
	$	4,344	$	1,961	$	2,383	$	—

			Fair Value Measurements at December 31, 2022 Using
			Quoted Prices		Significant
			in Active		Other		Significant
	Balance as of		Markets for		Observable		Unobservable
	December 31,		Identical Assets		Inputs		Inputs
Asset Category	2022		Level 1		Level 2		Level 3
Cash	$	1,218	$	1,218	$	—	$	—
Fixed income securities
Government sponsored entities		1,532		—		1,532		—
Municipal bonds and notes		1,154		—		1,154		—
Corporate bonds and notes		360		—		360		—
	$	4,264	$	1,218	$	3,046	$	—

401(k) Plan

The Company maintains a 401(k) plan that covers substantially all full-time employees of the Company. The Company matches a portion of the contribution made by employee participants after at least one year of service. The Company contributed $1.4 million, $1.2 million, and $1.1 million to the 401(k) plan in 2023, 2022, and 2021, respectively. These amounts are included in employee benefits expense for the respective years.

Deferred Compensation Arrangements

Prior to 2015, the Company maintained deferred compensation agreements with former employees providing for annual payments to each ranging from $25,000 to $50,000 per year for 10 years upon their retirement. The liabilities under these agreements were accrued over the officers' remaining periods of employment so that, on the date of their retirement, the then-present value of the annual payments had been accrued. As of December 31, 2023, the Company only had one remaining agreement under which payments are being made to a former officer. The liabilities were $50 thousand and $100 thousand at December 31, 2023 and 2022, respectively. There was no expense for this agreement for the years ended December 31, 2023, 2022, and 2021. As a result of acquisitions, the Company has various agreements with current and former employees and executives with balances of $4.8 million and $5.4 million at December 31, 2023 and 2022, respectively that accrue through eligibility and are payable upon retirement. The Company recognized income of $143 thousand for the year ended December 31, 2023, due to the effect of rising interest rates on the actuarial liability. The Company recognized expenses of $159 thousand and $430 thousand for the years ended December 31, 2022 and 2021, respectively.

Certain named executive officers are eligible to participate in a voluntary, nonqualified deferred compensation plan pursuant to which the officers may defer any portion of their annual cash incentive payments. In addition, the Company may make discretionary cash bonus contributions to the deferred compensation plan. Such contributions, if any, are made on an annual basis after the Committee assesses the performance of each of the named executive officers and the Company during the most recently completed fiscal year. The contributions charged to salary expense were $90 thousand, $86 thousand and $184 for the years ended December 31, 2023, 2022, and 2021, respectively.

Incentive Arrangements

The Company maintains a cash incentive compensation plan for officers based on the Company's performance and individual officer goals. The total amount charged to salary expense for this plan was $3.3 million, $5.1 million, and $3.1 million for the years ended December 31, 2023, 2022, and 2021, respectively.