Benefit Plans

12 Months Ended

Dec. 31, 2011

Benefit Plans

Benefit Plans

(11) Benefit Plans

• 401(k) Savings Plan

        The Company offers a 401(k) savings plan that allows employees to contribute up to a maximum percentage of their compensation, as established by the Internal Revenue Code. The Company made a discretionary matching contribution of up to $1,000 for each employee's contributions in 2011 and 2010. The Company suspended the discretionary matching contribution in 2009. Contribution expense was $183,000, $187,000, and $0 in 2011, 2010 and 2009, respectively.

• Employee Stock Ownership Plan

        The Company sponsors a non-contributory employee stock ownership plan. To participate in this plan, an employee must have worked at least 1,000 hours during the year and must be employed by the Company at year-end. Employer contributions to the ESOP are discretionary. The Company suspended contributions to the ESOP in 2011, 2010 and 2009. At December 31, 2011, the ESOP owned 140,590 shares of the Company's common stock.

• Deferred Compensation Plan

        The Company has a nonqualified deferred compensation plan for its directors ("Deferral Agreements"). Under the Deferral Agreements, a participating director may defer up to 100% of his or her board fees into a deferred account. The director may elect a distribution schedule of up to ten years. Amounts deferred earn interest. The Company's deferred compensation obligation of $314,000 and $397,000 as of December 31, 2011 and 2010 is included in "Accrued interest payable and other liabilities."

        The Company has purchased life insurance policies on the lives of directors who have Deferral Agreements. It is expected that the earnings on these policies will offset the cost of the program. In addition, the Company will receive death benefit payments upon the death of the director. The proceeds will permit the Company to "complete" the deferral program as the director originally intended if he dies prior to the completion of the deferral program. The disbursement of deferred fees is accelerated at death and commences one month after the director dies.

        In the event of the director's disability prior to attainment of his benefit eligibility date, the director may request that the Board permit him to receive an immediate disability benefit equal to the annualized value of the director's deferral account.

• Nonqualified Defined Benefit Pension Plan

        The Company has a supplemental retirement plan covering key executives and directors ("SERP"). The SERP is an unfunded, nonqualified defined benefit plan. The combined number of active and retired/terminated participants in the SERP was 53 at December 31, 2011. The defined benefit represents a stated amount for key executives and directors that generally vests over nine years and is reduced for early retirement. The projected benefit obligation is included in "Accrued interest payable and other liabilities" on the consolidated balance sheets. Since the SERP has no assets, the entire projected benefit obligation is unfunded. The measurement date of the SERP is December 31.

        The following table sets forth the SERP's status at December 31:

	2011			2010
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	16,229		$	14,591
Service cost		944			978
Actuarial loss		1,881			874
Interest cost		826			834
Benefits paid		(680	)		(1,048	)
Projected benefit obligation at end of year	$	19,200		$	16,229
Amounts recognized in accumulated other comprehensive loss
Net actuarial loss	$	5,189		$	3,430
Prior service cost		27			63
Accumulated other comprehensive loss	$	5,216		$	3,493

        Weighted-average assumption used to determine the benefit obligation at year-end:

	2011			2010
Discount rate		4.10	%		5.21	%

        Estimated benefit payments over the next ten years, which reflect anticipated future events, service and other assumptions, are as follows:

Year	Estimated Benefit Payments
	(Dollars in thousands)
2012	$	764
2013		873
2014		1,079
2015		1,165
2016		1,245
2017 to 2021		7,671

        The components of pension cost for the SERP follow:

	2011		2010
	(Dollars in thousands)
Components of net periodic benefit cost:
Service cost	$	944	$	978
Interest cost		826		834
Amortization of prior service cost		36		36
Amortization of net actuarial loss		123		68
Net periodic benefit cost	$	1,929	$	1,916

        The estimated net actuarial loss and prior service cost for the SERP that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $280,000 and $159,000 as of December 31, 2011 and 2010, respectively.

        Net periodic benefit cost was determined using the following assumption:

	2011			2010
Discount rate		5.21	%		5.85	%

• Split-Dollar Life Insurance Benefit Plan

        The Company maintains life insurance policies for current and former directors and officers that are subject to spit-dollar life insurance agreements, which continues after the participant's employment and retirement. All participants are fully vested in their split-dollar life insurance benefits. The accrued benefit liability for the split-dollar insurance agreements represents either the present value of the future death benefits payable to the participants' beneficiaries or the present value of the estimated cost to maintain life insurance, depending on the contractual terms of the participant's underlying agreement.

        The split-dollar life insurance projected benefit obligation is included in "Accrued interest payable and other liabilities" on the consolidated balance sheets. The measurement date of the split-dollar life insurance benefit plan is December 31.

        During 2011, participants in the split-dollar life insurance benefit plan agreed to amend their agreements related to the designation of beneficiaries for life insurance policies owned by the Company. The agreements were amended to provide a benefit for as long as the policies are in force, including a commitment to provide replacement coverage if the policies are ever surrendered.

        The following sets forth the funded status of the split dollar life insurance benefits.

	2011			2010
	(Dollars in thousands)
Change in projected benefit obligation:
Projected benefit obligation at beginning of year	$	6,361		$	6,957
Interest cost		306			392
Actuarial loss (gain)		831			(833	)
Benefits paid		—			(155	)
Amendments to split dollar agreements		(2,973	)		—
Projected benefit obligation at end of year	$	4,525		$	6,361

        Amounts recognized in accumulated other comprehensive loss at December 31 consist of:

	2011		2010
	(Dollars in thousands)
Net actuarial loss (gain)	$	454	$	(407	)
Prior transition obligation		1,776		4,049
Accumulated other comprehensive loss	$	2,230	$	3,642

        Components of net periodic benefit cost during the year are:

	2011		2010
	(Dollars in thousands)
Amortization of prior transition obligation	$	130	$	200
Interest cost		306		392
Net periodic benefit cost	$	436	$	592

        The estimated net actuarial loss and prior transition obligation for the split-dollar life insurance benefit plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year are $90,000 and $130,000 as of December 31, 2011 and 2010, respectively.

        Weighted-average assumption used to determine the benefit obligation at year-end follow:

	2011			2010
Discount rate		4.10	%		5.71	%

        Weighted-average assumption used to determine the net periodic benefit cost:

	2011			2010
Discount rate		5.71	%		6.16	%