Employee Benefit Plans

401(k)/Profit Sharing Plan

The Company has a 401(k)/profit sharing plan and the majority of employees participate in the plan. Employees may contribute pre-tax contributions to the 401(k)/profit sharing plan up to the maximum amount allowed by federal tax laws. The Company makes matching contributions of up to 4% of an employee’s eligible compensation. The Company may make additional matching contributions subject to the discretion of the board of directors. For the years ended December 31, 2014, 2013, and 2012, these contributions amounted to 3% of pre-tax compensation each year. For the years ended December 31, 2014, 2013 and 2012, expenses under the 401(k)/Profit Sharing plan amounted to $1.4 million, $1.4 million, and $1.2 million, respectively.

SERP and Other Postretirement Benefit Plan

The Company sponsors unfunded, non-qualified SERPs for certain officers. These agreements are designed to make up the shortfall (when compared to a non-highly compensated employee) in replacing income at retirement due to IRS compensation and benefit limits under the 401(k) plan and Social Security. With a SERP in place, participants should be able to replace 65 –75% of their final average compensation. For those eligible for benefits, the SERP provides for a minimum 15-year guaranteed benefit for all vested participants. In addition, the Company provides medical and life insurance to certain eligible retired employees under the other postretirement benefit plan.

The following table summarizes changes in the benefit obligation and plan assets for (i) SERP and (ii) the other postretirement benefit plan as of December 31, 2014 and 2013:



	SERP						Other Postretirement Benefits
	2014			2013			2014			2013
Benefit obligations:
Beginning of year	$	9,927		$	10,346		$	3,094		$	3,536
Service cost	270			326			45			42
Interest cost	456			377			132			173
Actuarial (gain) loss	777			(579		)	(134		)	(538		)
Benefits paid	(596		)	(543		)	(140		)	(119		)
End of year	10,834			9,927			2,997			3,094
Fair value of plan assets:
Beginning of year	—			—			—			—
Employer contributions	596			543			140			119
Benefits paid	(596		)	(543		)	(140		)	(119		)
End of year	—			—			—			—
Funded status at end of year, included in other liabilities	$	10,834		$	9,927		$	2,997		$	3,094
Amounts recognized in AOCI, net of tax:
Net actuarial loss	$	1,953		$	1,539		$	378		$	458
Prior service cost (credit)	17			29			(185		)	(185		)
Total	$	1,970		$	1,568		$	193		$	273

The accumulated benefit obligation for the SERP was $8.5 million and $8.0 million at December 31, 2014 and 2013, respectively. In 2015, approximately $218,000 and $19,000 in net actuarial losses and prior service cost, respectively, are expected to be recognized as components of net period benefit cost for the SERP, and approximately $24,000 and $22,000 in net actuarial loss and prior service credit, respectively, are expected to be recognized for the other postretirement benefit plan.

The components of net period benefit cost and other amounts recognized in OCI, before taxes, were as follows:



	SERP									Other Postretirement Benefits
	2014			2013			2012			2014			2013			2012
Net period benefit cost:
Service cost	$	270		$	326		$	269		$	45		$	42		$	70
Interest cost	456			377			408			132			173			148
Recognized net actuarial loss	140			224			114			10			48			31
Amortization of prior service cost (credit)	19			19			19			(22		)	(23		)	—
Net period benefit cost	885			946			810			165			240			249
Changes in funded status recognized in OCI, before taxes:
Net actuarial (gain) loss	777			(579		)	1,334			(134		)	(538		)	275
Reclassifications to net period benefit cost:
Amortization of net unrecognized actuarial loss	(140		)	(224		)	(114		)	(10		)	(48		)	(31		)
Amortization of prior service (cost) credit	(19		)	(19		)	(19		)	22			23			—
Total recognized in OCI, before taxes	618			(822		)	1,201			(122		)	(563		)	244
Total recognized in net period benefit cost and OCI, before taxes	$	1,503		$	124		$	2,011		$	43		$	(323	)	$	493

In the first quarter of 2014, the Company amended the terms of its other postretirement benefit plan impacting the eligibility of employees. The amendment to the plan reduced the Company's benefit obligation by $308,000 at December 31, 2014 and is reflected within the year ended December 31, 2014 other postretirement benefits plan net actuarial gain.

The following assumptions were used in determining benefit obligations and net period benefit costs:



	SERP						Other Postretirement Benefits
	2014		2013		2012		2014		2013		2012
Weighted-average assumptions as of end of year:
Discount rate for benefit obligation	4.00	%	4.75	%	3.75	%	4.00	%	5.02	%	4.05	%
Discount rate for net period benefit cost	4.75	%	3.75	%	4.75	%	5.02	%	4.05	%	4.75	%
Rate of compensation increase for benefit obligation	4.00	%	4.50	%	4.50	%	—		—		—
Rate of compensation increase for net periodic benefit cost	4.50	%	4.50	%	4.50	%	—		—		—
Health care cost trend rate assumed for future years	—		—		—		7.00	%	7.00	%	7.00	%

A 1.0% increase in the assumed health care cost trend rate would increase the accumulated postretirement benefit obligation and the related service and interest cost $154,000 and $20,000, respectively, while a 1.0% decrease in the assumed health care cost trend rate would decrease the accumulated postretirement benefit obligation and the related service and interest cost $363,000 and $26,000, respectively. The postretirement plan has a built-in cap on annual benefits to participants and, thus, the accumulated postretirement benefit obligation and the assumed health care cost trend are relatively stable each period.

In 2015, the expected contribution is $421,000 for the SERP and $138,000 for the other postretirement benefits plan. The expected benefit payments for the next ten years are presented in the following table:



	SERP		Other Postretirement Benefits
2015	$	421	$	138
2016	489		135
2017	473		133
2018	473		128
2019	477		131
2020-2024	3,408		750

In December 2003, the Act was signed into law. The Act introduces a prescription drug benefit under Medicare as well as a federal subsidy to sponsors of retiree health care plans that provide a benefit that is at least actuarially equivalent to Medicare Part D. The effects of the Act on the accumulated projected benefit obligation or net period post-retirement benefit cost are not reflected in the financial statements or accompanying notes because the Company has not concluded whether the benefits provided by the plan are actuarially equivalent to Medicare Part D under the Act.