EMPLOYEE BENEFITS

9 Months Ended

Sep. 30, 2016

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

8. EMPLOYEE BENEFITS

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 trust are reflected on the Consolidated Balance Sheets of the Company.

There were $2.2 million in contributions to the pension plan during the nine months ended September 30, 2016. There were no contributions to the SERP during the nine months ended September 30, 2016. In accordance with the SERP, a retired executive received a distribution from the plan totaling $84,000 during the nine months ended September 30, 2016.

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.

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

	Three Months Ended September 30,										Nine Months Ended September 30,
	Pension Benefits						SERP Benefits				Pension Benefits						SERP Benefits
(In thousands)	2016			2015			2016		2015		2016			2015			2016		2015
Service cost	$	288		$	286		$	44	$	42	$	865		$	848		$	132	$	126
Interest cost		199			178			27		23		596			529			79		68
Expected return on plan assets		(482	)		(463	)		-		-		(1,447	)		(1,375	)		-		-
Amortization of net loss		102			95			6		8		305			281			20		24
Amortization of unrecognized prior service cost		(20	)		(19	)		-		-		(58	)		(58	)		-		-
Amortization of unrecognized transition obligation		-			-			7		7		-			-			21		21
Net periodic benefit cost	$	87		$	77		$	84	$	80	$	261		$	225		$	252	$	239