PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2023

PENSION, PROFIT SHARING, AND OTHER EMPLOYEE BENEFIT PLANS

Defined Benefit Pension Plan

Prior to September 30, 2023, the Company has maintained a qualified noncontributory, defined benefit pension plan (the “Plan”).

On March 30, 2022, the Board of Directors approved the termination of the Pension Plan to be effective of June 30, 2022. The Company executed plan amendments regarding the Plan termination and received a determination letter from the Internal Revenue Service (“IRS”) as to the tax-qualified status of the Plan at the time of termination. The Company also filed appropriate notices and documents related to the Plan’s termination and wind-down with the Pension Benefit Guaranty Corporation (“PBGC”).

Plan participants made elections for lump-sum distributions or annuity benefits. Both lump-sum distributions and transfer of annuity benefits to a highly-rated insurance company were completed in August 2023. In order to fully fund the Plan, the Company made a $1.3 million cash contribution. As a result of the pension termination, the Company incurred a one-time settlement expense of $8.2 million, which was recognized in salaries and employee benefits expense.

The Pension Plan’s funded status at December 31 is as follows:


(In thousands)	2023		2022
Reconciliation of Projected Benefit Obligation:
Projected obligation at January 1	$	35,539	$	48,079
Interest cost	1,021		1,301
Actuarial (gain)/ loss	(1,726)		376
Benefit payments	(1,102)		(2,106)
Increase/ (decrease) related to change in assumptions	—		(12,111)
Annuity Purchase	(33,732)		—
Projected obligation at December 31	—		35,539
Reconciliation of Fair Value of Plan Assets:
Fair value of plan assets at January 1	32,287		45,207
Actual return on plan assets	1,197		(10,814)
Employer contributions	1,350		—
Benefit payments	(1,102)		(2,106)
Annuity Purchase	(33,732)		—
Fair value of plan assets at December 31	$	—	$	32,287

Funded status at December 31	$	—	$	(3,252)

Accumulated benefit obligation at December 31	$	—	$	35,539

Unrecognized net actuarial loss	$	—	$	10,736
Net periodic pension cost not yet recognized	$	—	$	10,736

Weighted average assumptions used to determine benefit obligations at December 31 are presented in the following table:


	2023	2022	2021
Discount rate	N/A	5.10%	2.80%
Rate of compensation increase	N/A	N/A	N/A

The components of net periodic benefit cost for the years ended December 31 are presented in the following table:


(In thousands)	2023		2022		2021
Interest cost on projected benefit obligation	$	1,021	$	1,301	$	1,269
Expected return on plan assets	(870)		(1,410)		(1,247)
Recognized net actuarial loss	526		783		909
Settlement charge	8,157		—		560
Other	113		—		—
Net periodic benefit cost	$	8,947	$	674	$	1,491

Components of the net periodic benefit cost are recorded in salaries and employee benefits expense in the Consolidated Statement of Income.

Weighted average assumptions used to determine net periodic benefit cost for years ended December 31 are presented in the following table:


	2023	2022	2021
Discount rate	5.10%	2.80%	2.50%
Expected return on plan assets	5.25%	3.75%	3.25%
Rate of compensation increase	N/A	N/A	N/A

Sandy Spring Bank 401(k) Plan

The Sandy Spring Bank 401(k) Plan (“the 401(k)”) is voluntary and covers all eligible employees after 90 days of service. The 401(k) provides that employees contributing to the 401(k) receive a matching contribution of 100% of the first 4% of compensation and 50% of the next 2% of compensation subject to employee contribution limitations. The Company matching contribution vests immediately. The 401(k) permits employees to purchase shares of the Company’s common stock with their 401(k) contributions, Company match, and other contributions under the 401(k). The Company’s matching contribution to the 401(k), which is included in salaries and employee benefits in non-interest expenses in the Consolidated Statements of Income, totaled $6.3 million, $5.9 million, and $6.0 million in 2023, 2022 and 2021, respectively.

Deferred Compensation Plans

The Executive Incentive Retirement Plan ("Executive Plan") is a non-qualified deferred compensation plan that provides for contributions to be made to the participants’ plan accounts based on the attainment of a level of financial performance determined annually by the board of directors. The Company ceased making contributions to the Executive Plan after adoption of the Non-Qualified Deferred Compensation Plan (“NQDC Plan”) in late 2021. The NQDC Plan provides participants with the option to defer receipt of a portion of their base salary and annual cash incentives. Participant contributions are fully vested at all times. At its sole discretion, the Company may credit participant accounts with company contributions. In 2023, executive officers were selected by the board of directors for contributions to be made to their plan accounts based on the attainment of a level of financial performance compared to a selected group of peer banks. Benefit costs related to the Executive Plan and NQDC Plan included in salaries and employee benefits in non-interest expenses in the Consolidated Statements of Income for 2023, 2022 and 2021 were $0.4 million, $0.7 million, and $0.7 million, respectively.