PENSION AND POSTRETIREMENT PLANS

3 Months Ended

Mar. 31, 2018

EMPLOYEE BENEFITS

PENSION AND POSTRETIREMENT PLANS

8. PENSION AND POSTRETIREMENT PLANS

The Bank maintains a noncontributory pension plan covering all eligible employees. The Bank uses a December 31^st measurement date for this plan in accordance with FASB ASC 715-30 “Compensation – Retirement Benefits – Defined Benefit Plans – Pension.” During 2012, the Company amended the pension plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered employees. Additionally, new employees hired on or after October 1, 2012 are not eligible for the pension plan.

During 2001, the Bank adopted the Bridgehampton National Bank Supplemental Executive Retirement Plan (“SERP”). As recommended by the Compensation Committee of the Board of Directors and approved by the full Board of Directors, the SERP provides benefits to certain employees, whose benefits under the pension plan are limited by the applicable provisions of the Internal Revenue Code. The benefit under the SERP is equal to the additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in the absence of such Internal Revenue Code limitations. The assets of the SERP are held in a rabbi trust to maintain the tax-deferred status of the plan and are subject to the general, unsecured creditors of the Company. As a result, the assets of the rabbi trust are reflected on the Consolidated Balance Sheets of the Company.

There were no contributions to the pension plan during the three months ended March 31, 2018 and 2017. There were no contributions to the SERP during the three months ended March 31, 2018 and 2017, respectively. In accordance with the SERP, a retired executive received a distribution from the plan totaling $28 thousand during the three months ended March 31, 2018 and 2017, respectively.

The Company’s funding policy with respect to its benefit plans is to contribute at least the minimum amounts required by applicable laws and regulations.

As described in Note 14. Recent Accounting Pronouncements, during the first quarter of 2018, the Company adopted ASU 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The Company adopted the guidance in the first quarter of 2018 using the practical expedient that permits an employer to use the amounts disclosed in its pension and postretirement benefit plan note for prior comparative periods as the estimation basis for applying retrospective presentation adjustments. The adoption of this Update resulted in the reclassification of $196 thousand of net periodic benefit credit components other than service cost from salaries and employee benefits expense to other operating expense for the three months ended March 31, 2017. The Company’s service cost component is reported in the Company’s income statement in salaries and employee benefits, which is the same line item as other compensation costs arising from services rendered by the pertinent employees during the period. All other components of net periodic benefit credit are reported in the other operating expenses income statement line. The change in presentation did not impact the Company’s operating results or financial condition.

The following table sets forth the components of net periodic benefit (credit) cost:

	Three Months Ended March 31,
	Pension Benefits						SERP Benefits
(In thousands)	2018			2017			2018		2017
Service cost	$	325		$	293		$	73	$	53
Interest cost		197			184			32		26
Expected return on plan assets		(625	)		(520	)		-		-
Amortization of net loss		83			113			30		13
Amortization of prior service credit		(19	)		(19	)		-		-
Amortization of transition obligation		-			-			1		7
Net periodic benefit (credit) cost	$	(39	)	$	51		$	136	$	99