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, at its discretion, may make additional matching and profit sharing contributions. For the year ended December 31, 2017, 2016 and 2015, these additional contributions totaled 3% of employee eligible compensation. For the year ended December 31, 2017, 2016 and 2015, expenses under the 401(k)/profit sharing plan were $2.3 million, $2.2 million, and $1.5 million, respectively. The increase in expense for the year ended December 31, 2017 compared to the year ended December 31, 2016 was due to an increase in employee eligible compensation, while the expense increase for the year ended December 31, 2016 compared to the year ended December 31, 2015 was driven by the SBM acquisition in the fourth quarter of 2015.

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, 2017 and 2016:



	SERP						Other Postretirement Benefits
	2017			2016			2017			2016
Benefit obligations:
Beginning of year	$	11,523		$	11,052		$	3,635		$	3,447
Service cost	335			308			53			59
Interest cost	452			432			144			151
Actuarial loss	1,955			219			110			143
Benefits paid	(475		)	(488		)	(151		)	(165		)
End of year	13,790			11,523			3,791			3,635
Fair value of plan assets:
Beginning of year	—			—			—			—
Employer contributions	475			488			151			165
Benefits paid	(475		)	(488		)	(151		)	(165		)
End of year	—			—			—			—
Unfunded status at end of year⁽¹⁾	$	13,790		$	11,523		$	3,791		$	3,635
Amounts recognized in AOCI, net of tax:
Net actuarial loss	$	3,504		$	1,791		$	654		$	495
Prior service credit	—			—			(170		)	(156		)
Total	$	3,504		$	1,791		$	484		$	339


(1)	Presented within other liabilities on the consolidated statements of condition.

The accumulated benefit obligation for the SERP at December 31, 2017 and 2016 was $12.3 million and $10.7 million, respectively.

For the year ending December 31, 2018, the estimated actuarial loss on the SERP that will be amortized from AOCI into net periodic benefit cost is $561,000. All prior service costs have been fully amortized.

For the year ending December 31, 2018, the estimated actuarial loss and prior service credit on other postretirement benefits that will be amortized from AOCI into net periodic benefit cost is $53,000 and $24,000, respectively.

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



	SERP									Other Postretirement Benefits
	2017			2016			2015			2017			2016			2015
Net periodic benefit cost:
Service cost	$	335		$	308		$	307		$	53		$	59		$	62
Interest cost	452			432			424			144			151			117
Recognized net actuarial loss	246			220			218			41			30			24
Amortization of prior service cost (credit)	—			7			19			(24		)	(22		)	(22		)
Net periodic benefit cost	1,033			967			968			214			218			181
Changes in funded status recognized in OCI, before taxes:
Net actuarial (gain) loss arising during period	1,955			219			(32		)	110			143			92
Reclassifications to net period benefit cost:
Amortization of net unrecognized actuarial loss	(246		)	(220		)	(218		)	(41		)	(30		)	(24		)
Amortization of prior service (cost) credit	—			(7		)	(19		)	24			22			22
Total recognized in OCI, before taxes	1,709			(8		)	(269		)	93			135			90
Total recognized in net periodic benefit cost and OCI, before taxes	$	2,742		$	959		$	699		$	307		$	353		$	271

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



	SERP						Other Postretirement Benefits
	2017		2016		2015		2017		2016		2015
Weighted-average assumptions as of end of year:
Discount rate for benefit obligation	3.60	%	4.00	%	4.00	%	3.55	%	4.00	%	4.50	%
Discount rate for net periodic benefit cost	4.00	%	4.00	%	4.00	%	4.00	%	4.50	%	4.00	%
Rate of compensation increase for benefit obligation	5.00	%	4.00	%	4.00	%	—		—		—
Rate of compensation increase for net periodic benefit cost	5.00	%	4.00	%	4.00	%	—		—		—
Health care cost trend rate assumed for future years	—		—		—		6.50	%	7.00	%	7.00	%

A 1.0% increase or decrease in the assumed health care cost trend rate would not materially increase or decrease the Company's accumulated postretirement benefit obligation and the related service and interest cost as of December 31, 2017. 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.

For the year ending December 31, 2018, the expected contribution is $473,000 for the SERP and $156,000 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
2018	473	156
2019	477	168
2020	486	173
2021	536	175
2022	566	187
2023-2027	2,246	1,061