The PyraMax Bank, FSB 401(k) Savings Plan (the “Plan”) is a participant-directed defined contribution plan sponsored by PyraMax Bank, FSB (the “Sponsor”). The Plan is subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended (“ERISA”). The following brief description of the Plan provides only general information; participants should refer to the plan document or summary plan description for a more complete description of the Plan’s provisions.
Plan Administration
The Plan is administered by the Sponsor. The Plan trustee is Principal Trust Company. Peak Retirement Group is the third-party administrator of the Plan.
Eligibility
Substantially all employees are eligible to participate in the Plan after they have completed one month of service and attained the age of eighteen. Temporary employees are not eligible to participate in the Plan. Employees are eligible for the
Sponsor matching contributions after they have completed six consecutive months of service and attained the age of eighteen. In addition to these requirements, participants must be employed on the last day of the year and have completed 1,000 hours
of service during the Plan year to be eligible for any profit sharing contribution.
Contributions
Participants may elect to defer up to 100% of their annual compensation, as defined in the Plan, not to exceed the limits of the Internal Revenue Service (“IRS”). Eligible employees that do not make a deferral election are automatically
enrolled to contribute 6% of compensation. Participants may also contribute amounts representing distributions from other qualified plans (“rollovers”). The Plan includes a Roth 401(k) component in order for employees to make after-tax deferrals
into the Plan.
The Sponsor made matching contributions of 100% on the first 6% contributed by the participants during 2021. The Sponsor made true-up contributions during 2022 that are included in the sponsor contributions on the statement of changes in net
assets available for benefits. The Sponsor did not make any discretionary profit sharing contributions during 2021.
Investment Options
The Plan is intended to satisfy the requirements under Section 404(c) of ERISA, and therefore, provides that participants choose how to direct their contributions among the Plan’s investment alternatives. All investments are participant
directed. For a more complete description of the Plan’s investments, participants should refer to the summary plan description and investment prospectuses.
Participant Accounts
Each participant’s account is credited with the participant’s contributions, Sponsor contributions, and allocations of Plan earnings/losses thereon and charged with an allocation of administrative expenses. Allocations of the Sponsor’s
discretionary profit sharing contributions are based on a uniform percentage of the participant’s compensation. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
PyraMax Bank, FSB 401(k) Savings Plan
Notes to Financial Statements
Vesting
Participants are immediately vested in their contributions plus earnings thereon. Beginning January 1, 2013, the Sponsor amended the Plan to elect to contribute safe harbor contributions. Participants are, therefore, immediately vested in
matching contributions and any earnings thereon.
Forfeitures
Forfeitures are portions of participant account balances that participants surrender by terminating employment prior to becoming fully vested. Forfeitures from the Sponsor’s matching and profit sharing contributions are used to reduce the
Sponsor’s matching contributions or administrative expenses. During 2021, there were no forfeitures used to reduce the Sponsor’s matching contributions.
Payment of Benefits
Upon termination of service due to retirement, separation, death or disability, a participant may elect to receive the value of the vested interest in his or her account as a lump-sum distribution or in regular installment distributions over a
period not to exceed the joint life expectancy of the participant and his or her beneficiary. Under certain circumstances, participants may qualify to receive a hardship distribution from their account balance. In-service distributions may also
be made upon the participant reaching age 59 ½. In 2020, as part of the Coronavirus, Aid, Relief and Economic Security (CARES) Act, participants were allowed to receive a qualified distribution that could not exceed $100,000.
Notes Receivable from Participants
Participants may receive a loan from their account balances at the lesser of $50,000 or 50% of the participant’s vested account balance. During 2020, as part of the CARES Act, the allowable loan amount was increased to $100,000 or 100% of the
participant’s vested account balance. The CARES Act also allowed loan repayments to be delayed for one year. The minimum loan amount is $1,000. The loans are secured by the balance in the participant’s account and bear interest at rates ranging
from 4.25% to 6.50%. Interest rates are determined by the plan administrator to be commensurate with local prevailing rates. Principal and interest is paid through payroll deductions.
Basis of Accounting
The financial statements of the Plan are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates in Preparation of Financial Statements
The preparation of the accompanying financial statements in accordance with GAAP requires the Plan’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein and disclosure of
contingent assets and liabilities. Actual results could differ from those estimates and are subject to change in the near term.
PyraMax Bank, FSB 401(k) Savings Plan
Notes to Financial Statements
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest income is recorded on the accrual basis. Related fees are recorded as administrative expenses and are expensed when
they are incurred. Delinquent notes receivable from participants are reclassified as distributions based upon the terms of the Plan document.
Investment Valuation and Income Recognition
The Plan’s investments are reported at fair value (except for fully benefit-responsive investment contracts). Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation includes the Plan’s gains and losses on investments
bought and sold as well as held during the year.
Fully benefit-responsive contracts are reported at contract value, which is the amount participants would normally receive if they were to initiate permitted transactions under the terms of the Plan.
Payment of Benefits
Benefits are recorded when paid.
Administrative Expenses
Certain administrative expenses of the Plan are paid by the Plan. The majority of the Plan’s administrative expenses are paid by the Sponsor and are excluded from these financial statements.
Subsequent Events
The Sponsor has evaluated subsequent events through the date of this report.
PyraMax Bank, FSB 401(k) Savings Plan
Notes to Financial Statements
The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least
reasonably possible that changes in values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and the amounts reported in the statements of net assets available for
benefits.
Note 4. |
Fair Value Measurements
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GAAP establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy are described below:
If the asset or liability has a specified (contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the best level of input that is significant to the fair value measurement. Valuation techniques maximize the use of relevant observable inputs
and minimize the use of unobservable inputs.
Mutual Funds: Valued at the daily closing price as reported by the fund. Mutual funds held by the Plan are generally open-end mutual funds that are registered with the Securities and
Exchange Commission. These funds are required to publish their daily net asset value (NAV) and to transact at that price. The mutual funds held by the Plan are deemed to be actively traded.
Common Stock: Shares of common stock are valued at their quoted price in an active market.
Collective Investment Trust: Fair value is estimated using NAV per unit by the issuer and is based on the NAV of the underlying investments held in the collective investment trust.
Investments in the collective investment trusts can be purchased or sold continuously. These funds generally invest in open-ended mutual funds, insurance company separate accounts, unaffiliated mutual funds and unaffiliated collective trust funds.
A notice of redemption is not required. The Plan has no obligation to buy additional units.
PyraMax Bank, FSB 401(k) Savings Plan
Notes to Financial Statements
The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent
with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following tables set forth by level, within the fair value hierarchy, the Plan’s investments at fair value as of December 31, 2021 and 2020:
To assess the appropriate classification of investments within the fair value hierarchy, the availability of market data is monitored. Changes in economic conditions or valuation techniques may require the transfer of investments from one fair
value level to another. In such instances, the transfer is reported at the beginning of the reporting period. The Plan evaluates the significance of transfers between
levels based upon the nature of the investment and size of the transfer relative to total net assets available for benefits.
The Plan’s investment options include the Principal Fixed Income Guaranteed Option (FIGO) which is a guaranteed general account-backed group annuity contract issued by Principal Life Insurance Company (Principal) to Principal Trust Company as
custodian. The FIGO has a contractually guaranteed rate of interest which is credited to participants’ accounts. The FIGO is considered a fully benefit-responsive investment and, therefore, is reported at contract value. Participants may
ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value.
There are no reserves against contract value for credit risk of the contract issuer or otherwise. The crediting interest rate is based on the earnings of the underlying assets in the entire medium-long term new portfolio compared to the minimum
interest crediting rate, as stated in the contract, and prevailing market conditions. Interest crediting rate is reset quarterly.
Certain events may limit the ability of the Plan to transact at contract value with the issuer. The plan administrator does not believe that any events which would limit the Plan’s ability to transact at contract value with participants are
probable of occurring.
PyraMax Bank, FSB 401(k) Savings Plan
Notes to Financial Statements
Although the Sponsor has not expressed any intent to do so at the present time, the Sponsor has the right under the Plan to discontinue its contributions at any time and to terminate or partially terminate the Plan subject to the provisions of
ERISA. In the event of Plan termination, participants would become fully vested in their accounts.
The IRS has determined and informed the Plan by a letter that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (“IRC”). Although the Plan has been amended since receiving the
determination letter, the plan administrator believes that the Plan is designed, and is currently being operated, in compliance with the applicable requirements of the IRC and, therefore, believes that the Plan is qualified and the related trust is
tax exempt.
Note 8. |
Related Party and Party-In-Interest
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As of December 31, 2021, the Plan held 67,486 shares of 1895 Bancorp of Wisconsin, Inc. common stock, valued at $741,665. As of December 31, 2020 the Plan held 45,520 shares of 1895 Bancorp of Wisconsin, Inc. common stock, valued at $453,386.
During the year ended December 31, 2021, Plan purchases of 1895 Bancorp of Wisconsin, Inc. common stock totaled $922,938 and Plan sales of 1895 Bancorp of Wisconsin, Inc. common stock totaled $853,529. Transactions involving notes receivable from
participants and investment funds administered by affiliates of Principal Trust Company are considered party-in-interest transactions. The purchases of and investment in common stock of 1895 Bancorp of Wisconsin, Inc. are also considered
party-in-interest transactions and related party transactions. These transactions are not, however, considered prohibited transactions under ERISA regulation.