Annual report pursuant to Section 13 and 15(d)

Note 5 - Employee Benefit Plans

v2.4.1.9
Note 5 - Employee Benefit Plans
 12 Months Ended
Dec. 31, 2014
Notes to Financial Statements  
Pension and Other Postretirement Benefits Disclosure [Text Block]
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5
)
Employee Benefit Plans
 
The Trust has a defined contribution plan available to all regular employees having one or more years of continuous service. Contributions are at the discretion of the Trustees of the Trust. The Trust contributed $41,172, $49,327, and $42,454, in 2014, 2013 and 2012, respectively.
 
The Trust has a noncontributory pension plan (Plan) available to all regular employees having one or more years of continuous service. The Plan provides for normal retirement at age 65. Contributions to the Plan reflect benefits attributed to employees’ services to date, as well as services expected in the future.
 
The following table sets forth the Plan’s changes in benefit obligation, changes in fair value of plan assets, and funded status as of December 31, 2014 and 2013 using a measurement date of December 31:
 
 
 
201
4
 
 
20
13
 
Change in projected benefits obligation:
                
Projected benefit obligation at beginning of year
   $ 3,887,518     $ 4,030,848  
Service cost
     100,480       104,920  
Interest cost
     189,163       166,865  
Actuarial (gain) loss
     1,134,525       (271,978 )
Benefits paid
     (218,606 )     (143,137 )
Projected benefit obligation at end of year
   $ 5,093,080     $ 3,887,518  
                 
Change in plan assets:
                
Fair value of plan assets at beginning of year
   $ 4,082,642     $ 3,157,269  
Actual return on plan assets
     224,784       367,108  
Contributions by employer
     250,000       701,402  
Benefits paid
     (218,606 )     (143,137 )
Fair value of plan assets at end of year
   $ 4,338,820     $ 4,082,642  
Funded (unfunded) status at end of year
   $ (754,260 )   $ 195,124  

Amounts recognized in the balance sheets as of December 31 consist of:
 
 
 
201
4
 
 
20
13
 
                 
Assets
   $ —     $ 195,124  
Liabilities
     (754,260 )     —  
    $ (754,260 )     195,124  
 
Amounts recognized in accumulated other comprehensive income (loss) consist of the following at December 31:
 
 
 
201
4
 
 
20
13
 
                 
Net actuarial loss
   $ (2,086,396 )   $ (944,305 )
Prior service cost
     (3,511 )     (9,081 )
                 
Amounts recognized in accumulated other comprehensive
income (loss), before taxes
     (2,089,907 )     (953,386 )
Income tax benefit
     737,113       331,374  
Amounts recognized in accumulated other comprehensive
income (loss), after taxes
   $ (1,352,794 )   $ (622,012 )
 
Net periodic benefit cost for the years ended December 31, 2014, 2013 and 2012 include the following components:
 
 
 
201
4
 
 
20
13
 
 
20
12
 
Components of net periodic benefit cost:
                        
Service cost
   $ 100,480     $ 104,920     $ 67,083  
Interest cost
     189,163       166,865       168,122  
Expected return on plan assets
     (278,521 )     (234,523 )     (209,999 )
Amortization of net loss
     46,171       104,854       113,723  
Amortization of prior service cost
     5,570       6,840       8,596  
Net periodic benefit cost
   $ 62,863     $ 148,956     $ 147,525  
 
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
 
 
 
20
14
 
 
20
13
 
 
20
12
 
Net actuarial (gain) loss
   $ 1,188,262     $ (404,563 )   $ 308,402  
Recognized actuarial loss
     (46,171 )     (104,854 )     (113,723 )
Recognized prior service cost
     (5,570 )     (6,840 )     (8,596 )
Total recognized in other comprehensive income, before taxes
   $ 1,136,521     $ (516,257 )   $ 186,083  
Total recognized in net benefit cost and other comprehensive income, before taxes
   $ 1,199,384     $ (367,301 )   $ 333,608  
 
The Trust reclassified $33,632, $72,601 and $79,507, net of income tax of $18,109, $39,093 and $42,812 , out of accumulated other comprehensive income (loss) for net periodic benefit cost in 2014, 2013 and 2012 respectively. This amount is reflected in our Statements of Income and Total Comprehensive Income within salaries and related employee benefits. The estimated net actuarial loss and prior service cost for the Plan that will be amortized from accumulated other comprehensive income (loss) into salaries and related employee benefits over the next fiscal year are $144,026 and $3,511, respectively.
 
The following table summarizes the projected benefit obligation in excess of Plan assets and the Plan assets in excess of accumulated benefit obligation at December 31, 2014, and the Plan assets in excess of projected benefit obligation and accumulated benefit obligation at December 31, 2013:
 
 
 
201
4
 
 
20
13
 
Projected benefit obligation in excess of Plan assets:
                
Projected benefit obligation
   $ 5,093,080     $ 3,887,518  
Fair value of plan assets
   $ 4,338,820     $ 4,082,642  
Plan assets in excess of accumulated benefit obligation:
                
Accumulated benefit obligation
   $ 4,157,653     $ 3,312,631  
Fair value of plan assets
   $ 4,338,820     $ 4,082,642  
 
The following are weighted-average assumptions used to determine benefit obligations and costs at December 31, 2014, 2013 and 2012
 
 
 
 
201
4
 
 
20
13
 
 
20
12
 
Weighted average assumptions used to
determine benefit obligations as of December 31:
                        
Discount rate
     4.00%       5.00%       4.25%  
Rate of compensation increase
     7.29       7.29       7.29  
                         
Weighted average assumptions used to determine
benefit costs for the years ended December 31:
                        
Discount rate
     5.00%       4.25%       4.75%  
Expected return on plan assets
     7.00       7.00       7.00  
Rate of compensation increase
     7.29       7.29       7.29  
 
The expected return on Plan assets assumption of 7.0% was selected by the Trust based on historical real rates of return for the current asset mix and an assumption with respect to future inflation. The rate was determined based on a long-term allocation of about two-thirds fixed income and one-third equity securities; historical real rates of return of about 2.5% and 8.5% for fixed income and equity securities, respectively; and assuming a long-term inflation rate of 2.5%.
 
The Plan has a formal investment policy statement. The Plan’s investment objective is balanced income, with a moderate risk tolerance. This objective emphasizes current income through a 30% to 80% allocation to fixed income securities, complemented by a secondary consideration for capital appreciation through an equity allocation in the range of 20% to 60%. Diversification is achieved through investment in mutual funds and bonds. The asset allocation is reviewed annually with respect to the target allocations and rebalancing adjustments and/or target allocation changes are made as appropriate. The Trust’s current funding policy is to maintain the Plan’s fully funded status on an ERISA minimum funding basis.
 
Fair Value Measurements
 
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date.
 
The fair value accounting standards establish a fair value hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from independent sources. Unobservable inputs reflect our assumptions about the inputs market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels based on the inputs used in measuring fair value, as follows:
 
Level 1
– Inputs are based on unadjusted quoted prices in active markets for identical assets or liabilities that we have the ability to access. Since inputs are based on quoted prices that are readily and regularly available in an active market, Level 1 inputs require the least judgment.
 
Level 2
– Inputs are based on quoted prices for similar instruments in active markets, or are observable either directly or indirectly. Inputs are obtained from various sources including financial institutions and brokers.
 
Level 3
– Inputs that are unobservable and significant to the overall fair value measurement. The degree of judgment exercised by us in determining fair value is greatest for fair value measurements categorized in Level 3.
 
The fair values of plan assets by major asset category at December 31, 2014 and 2013, respectively, are as follows:
 
 
 
Total
 
 
Quoted Prices in
Active Markets for
Identical Assets (Level 1)
 
 
Significant Other
Observable Inputs (Level 2)
 
 
Significant
Unobservable Inputs (Level 3)
 
                                 
Cash and Cash Equivalents
                                
Money Markets
   $ 430,755     $ 430,755     $ —     $ —  
Equities
     177,000       177,000       —       —  
Mutual Funds
                                
Equity Funds
     1,817,935       1,817,935       —       —  
Fixed Income Funds
     1,913,130       1,913,130       —       —  
Total
   $ 4,338,820     $ 4,338,820     $ —     $ —  
 
 
 
Total
 
 
Quoted Prices in
Active Markets for
Identical Assets (Level 1)
 
 
Significant Other
Observable Inputs (Level 2)
 
 
Significant
Unobservable Inputs (Level 3)
 
                                 
Cash and Cash Equivalents
                                
Money Markets
   $ 722,888     $ 722,888     $ —     $ —  
Equities     109,989       109,989       —       —  
Mutual Funds
                                
Equity Funds
     1,628,020       1,628,020       —       —  
Fixed Income Funds
     1,621,745       1,621,745       —       —  
Total
   $ 4,082,642     $ 4,082,642     $ —     $ —  
 
 
Management intends to fund the minimum ERISA amount for 2015. The Trust may make some discretionary contributions to the Plan, the amounts of which have not yet been determined.
 
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following ten year period:
 
Year ending December 31,
  
Amount
  
2015
   $ 211,312  
2016
     212,323  
2017
     210,159  
2018
     240,621  
2019
    265,253  
2020 to 2024
     1,357,259