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Annual report pursuant to Section 13 and 15(d)

Note 5 - Employee Benefit Plans

v3.3.1.900
Note 5 - Employee Benefit Plans
 12 Months Ended
Dec. 31, 2015
Notes to Financial Statements Ìý
Pension and Other Postretirement Benefits Disclosure [Text Block]
(
5
)
Employee Benefit Plans
Ìý
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 $46,519, $41,172 and $49,327, in 2015, 2014 and 2013, respectively.
Ìý
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.
Ìý
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, 2015 and 2014 using a measurement date of December 31:
Ìý
Ìý
Ìý
201
5
Ìý
Ìý
20
14
Ìý
Change in projected benefits obligation:
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Projected benefit obligation at beginning of year
 Ìý $ 5,093,080 Ìý Ìý $ 3,887,518 Ìý
Service cost
 Ìý Ìý 160,133 Ìý Ìý Ìý 100,480 Ìý
Interest cost
 Ìý Ìý 199,538 Ìý Ìý Ìý 189,163 Ìý
Actuarial (gain) loss
 Ìý Ìý (355,346 ) Ìý Ìý 1,134,525 Ìý
Benefits paid
 Ìý Ìý (213,105 ) Ìý Ìý (218,606 )
Projected benefit obligation at end of year
 Ìý $ 4,884,300 Ìý Ìý $ 5,093,080 Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Change in plan assets:
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Fair value of plan assets at beginning of year
 Ìý $ 4,338,820 Ìý Ìý $ 4,082,642 Ìý
Actual return on plan assets
 Ìý Ìý (46,609 ) Ìý Ìý 224,784 Ìý
Contributions by employer
 Ìý Ìý 471,955 Ìý Ìý Ìý 250,000 Ìý
Benefits paid
 Ìý Ìý (213,105 ) Ìý Ìý (218,606 )
Fair value of plan assets at end of year
 Ìý $ 4,551,061 Ìý Ìý $ 4,338,820 Ìý
Funded (unfunded) status at end of year
 Ìý $ (333,239 ) Ìý $ (754,260 )
Ìý
Amounts recognized in the balance sheets as of December 31 consist of:
Ìý
Ìý
Ìý
201
5
Ìý
Ìý
20
14
Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Assets
 Ìý $ — Ìý Ìý $ — Ìý
Liabilities
 Ìý Ìý (333,239 ) Ìý Ìý (754,260 )
Ìý Ìý $ (333,239 ) Ìý $ (754,260 )
Ìý
Amounts recognized in accumulated other comprehensive income (loss) consist of the following at December 31:
Ìý
Ìý
Ìý
201
5
Ìý
Ìý
20
14
Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Net actuarial loss
 Ìý $ (1,930,079 ) Ìý $ (2,086,396 )
Prior service cost
 Ìý Ìý — Ìý Ìý Ìý (3,511 )
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Amounts recognized in accumulated other comprehensiveÌý income (loss), before taxes
 Ìý Ìý (1,930,079 ) Ìý Ìý (2,089,907 )
Income tax benefit
 Ìý Ìý 681,173 Ìý Ìý Ìý 737,113 Ìý
Amounts recognized in accumulated other comprehensiveÌý income (loss), after taxes
 Ìý $ (1,248,906 ) Ìý $ (1,352,794 )
Ìý
Net periodic benefit cost for the years ended December 31, 2015, 2014 and 2013 include the following components:
Ìý
Ìý
Ìý
201
5
Ìý
Ìý
20
14
Ìý
Ìý
20
13
Ìý
Components of net periodic benefit cost:
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Service cost
 Ìý $ 160,133 Ìý Ìý $ 100,480 Ìý Ìý $ 104,920 Ìý
Interest cost
 Ìý Ìý 199,538 Ìý Ìý Ìý 189,163 Ìý Ìý Ìý 166,865 Ìý
Expected return on plan assets
 Ìý Ìý (296,446 ) Ìý Ìý (278,521 ) Ìý Ìý (234,523 )
Amortization of net loss
 Ìý Ìý 144,026 Ìý Ìý Ìý 46,171 Ìý Ìý Ìý 104,854 Ìý
Amortization of prior service cost
 Ìý Ìý 3,511 Ìý Ìý Ìý 5,570 Ìý Ìý Ìý 6,840 Ìý
Net periodic benefit cost
 Ìý $ 210,762 Ìý Ìý $ 62,863 Ìý Ìý $ 148,956 Ìý
Ìý
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Ìý
Ìý
Ìý
20
15
Ìý
Ìý
20
14
Ìý
Ìý
20
13
Ìý
Net actuarial (gain) loss
 Ìý $ (12,291 ) Ìý $ 1,188,262 Ìý Ìý $ (404,563 )
Recognized actuarial loss
 Ìý Ìý (144,026 ) Ìý Ìý (46,171 ) Ìý Ìý (104,854 )
Recognized prior service cost
 Ìý Ìý (3,511 ) Ìý Ìý (5,570 ) Ìý Ìý (6,840 )
Total recognized in other comprehensive income, before taxes
 Ìý $ (159,828 ) Ìý $ 1,136,521 Ìý Ìý $ (516,257 )
Total recognized in net benefit cost and other comprehensive income, before taxes
 Ìý $ 50,934 Ìý Ìý $ 1,199,384 Ìý Ìý $ (367,301 )
Ìý
The Trust reclassified $95,899, $33,632 and $72,601, net of income tax of $51,638, $18,109 and $39,093, out of accumulated other comprehensive income (loss) for net periodic benefit cost in 2015, 2014 and 2013, 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 $140,649 and $0, respectively.
Ìý
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, 2015 and 2014:
Ìý
Ìý
Ìý
201
5
Ìý
Ìý
20
14
Ìý
Projected benefit obligation in excess of Plan assets:
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Projected benefit obligation
 Ìý $ 4,884,300 Ìý Ìý $ 5,093,080 Ìý
Fair value of plan assets
 Ìý $ 4,551,061 Ìý Ìý $ 4,338,820 Ìý
Plan assets in excess of accumulated benefit obligation:
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Accumulated benefit obligation
 Ìý $ 4,059,334 Ìý Ìý $ 4,157,653 Ìý
Fair value of plan assets
 Ìý $ 4,551,061 Ìý Ìý $ 4,338,820 Ìý
Ìý
The following are weighted-average assumptions used to determine benefit obligations and costs at December 31, 2015, 2014 and 2013
Ìý
Ìý
Ìý
Ìý
201
5
Ìý
Ìý
20
14
Ìý
Ìý
20
13
Ìý
Weighted average assumptions used toÌý determine benefit obligations as of December 31:
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Discount rate
 Ìý Ìý 4.50% Ìý Ìý Ìý 4.00% Ìý Ìý Ìý 5.00% Ìý
Rate of compensation increase
 Ìý Ìý 7.29 Ìý Ìý Ìý 7.29 Ìý Ìý Ìý 7.29 Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Weighted average assumptions used to determine benefit costs for the years ended December 31:
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Discount rate
 Ìý Ìý 4.00% Ìý Ìý Ìý 5.00% Ìý Ìý Ìý 4.25% Ìý
Expected return on plan assets
 Ìý Ìý 7.00 Ìý Ìý Ìý 7.00 Ìý Ìý Ìý 7.00 Ìý
Rate of compensation increase
 Ìý Ìý 7.29 Ìý Ìý Ìý 7.29 Ìý Ìý Ìý 7.29 Ìý
Ìý
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%.
Ìý
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.
Ìý
Fair Value Measurements
Ìý
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.
Ìý
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:
Ìý
Ìý
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.
Ìý
Ìý
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.
Ìý
Ìý
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.
Ìý
The fair values of plan assets by major asset category at December 31, 2015 and 2014, respectively, are as follows:
Ìý
Ìý
Ìý
Total
Ìý
Ìý
Quoted Prices in
Active Markets for
Identical Assets (Level 1)
Ìý
Ìý
Significant Other
Observable
Inputs (Level 2)
Ìý
Ìý
Significant
Unobservable
Inputs (Level 3)
Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Cash and Cash Equivalents
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Money Markets
 Ìý $ 827,692 Ìý Ìý $ 827,692 Ìý Ìý $ — Ìý Ìý $ — Ìý
Equities
 Ìý Ìý 196,380 Ìý Ìý Ìý 196,380 Ìý Ìý Ìý — Ìý Ìý Ìý — Ìý
Mutual Funds
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Equity Funds
 Ìý Ìý 1,730,404 Ìý Ìý Ìý 1,730,404 Ìý Ìý Ìý — Ìý Ìý Ìý — Ìý
Fixed Income Funds
 Ìý Ìý 1,796,585 Ìý Ìý Ìý 1,796,585 Ìý Ìý Ìý — Ìý Ìý Ìý — Ìý
Total
 Ìý $ 4,551,061 Ìý Ìý $ 4,551,061 Ìý Ìý $ — Ìý Ìý $ — Ìý
Ìý
Ìý
Ìý
Total
Ìý
Ìý
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
Ìý
Ìý
Significant Other
Observable
Inputs (Level 2)
Ìý
Ìý
Significant
Unobservable
Inputs (Level 3)
Ìý
Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Cash and Cash Equivalents
 Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Money Markets
 Ìý $ 430,755 Ìý Ìý $ 430,755 Ìý Ìý $ — Ìý Ìý $ — Ìý
Equities
 Ìý Ìý 177,000 Ìý Ìý Ìý 177,000 Ìý Ìý Ìý — Ìý Ìý Ìý — Ìý
Mutual Funds Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý Ìý
Equity Funds
 Ìý Ìý 1,817,935 Ìý Ìý Ìý 1,817,935 Ìý Ìý Ìý — Ìý Ìý Ìý — Ìý
Fixed Income Funds
 Ìý Ìý 1,913,130 Ìý Ìý Ìý 1,913,130 Ìý Ìý Ìý — Ìý Ìý Ìý — Ìý
Total
 Ìý $ 4,338,820 Ìý Ìý $ 4,338,820 Ìý Ìý $ — Ìý Ìý $ — Ìý
Ìý
Ìý
Management intends to fund the minimum ERISA amount for 2016. The Trust may make some discretionary contributions to the Plan, the amounts of which have not yet been determined.
Ìý
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for the following ten year period:
Ìý
Year ending December 31,
 Ìý
Amount
 Ìý
Ìý 2016 Ìý Ìý Ìý $ 215,184 Ìý
Ìý 2017 Ìý Ìý Ìý Ìý 212,812 Ìý
Ìý 2018 Ìý Ìý Ìý Ìý 243,354 Ìý
Ìý 2019 Ìý Ìý Ìý Ìý 267,752 Ìý
Ìý
 2020 Ìý Ìý Ìý Ìý 282,652 Ìý
Ìý 2021 to 2025 Ìý Ìý 1,342,944 Ìý