EMPLOYEE BENEFIT PLANS

12 Months Ended

Dec. 31, 2011

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFIT PLANS

EMPLOYEE BENEFIT PLANS

The Bank sponsors a noncontributory defined benefit cash balance pension plan (the “Cash Balance Plan”), covering all employees who qualify under length of service and other requirements. Under the Cash Balance Plan, retirement benefits are based on years of service and average earnings. The Bank’s funding policy is to contribute amounts to the Cash Balance Plan sufficient to meet the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), plus such additional amounts as the Bank may determine to be appropriate. The contributions to the Cash Balance Plan paid during the years ended December 31, 2011 and December 31, 2010 totaled $0.7 million and $0.4 million, respectively.   The Cash Balance Plan was not fully funded as of December 31, 2011 and December 31, 2010.  The measurement date for the Cash Balance Plan is December 31 and prior service costs and benefits are amortized on a straight-line basis over the average remaining service period of active participants.

The following table shows the type of assets held in the Cash Balance Plan:

	As of December 31,
Asset Category	2011		2010
Equity securities	64.9	%	56	%
Debt securities	30.7	%	32.7	%
All other assets	4.4	%	11.3	%
Total	100	%	100	%

The Bank sponsors a nonqualified Supplemental Executive Retirement Plan (“SERP”). The SERP, which is unfunded, provides certain individuals with pension benefits, outside the Bank’s noncontributory defined-benefit Cash Balance Plan, based on average earnings, years of service and age at retirement. Participation in the SERP is at the discretion of the Bank’s Board of Directors. The Company and Bank purchased bank owned life insurance (“BOLI”) in 2002, in the aggregate amount of approximately $12.9 million face value covering all the participants in the SERP. Increases in the cash surrender value of the BOLI policies totaled $0.2 million for the years ended December 31, 2011 and December 31, 2010.  The cash surrender value of the BOLI owned by the Bank was $5.8 million and $5.6 million as of December 31, 2011 and December 31, 2010, respectively. The Bank has the ability and the intent to keep this life insurance in force indefinitely. The insurance proceeds may be used, at the sole discretion of the Bank, to fund the benefits payable under the SERP. The Company sold its BOLI in 2010.

The SERP and the Cash Balance Plan components of the net periodic benefit cost reflected in salaries and employee benefits expense for the years ended December 31, 2011 and December 31, 2010 were:

	Cash Balance Plan						SERP				Total
(Dollars in thousands)	2011			2010			2011		2010		2011			2010
Service cost	$	137		$	134		$	—	$	—	$	137		$	134
Interest cost	249			253			95		111		344			364
Expected return on plan assets	(242		)	(212		)	—		—		(242		)	(212		)
Amortization of prior service costs and
recognized net actuarial gain	154			154			17		5		171			159
Net periodic cost	$	298		$	329		$	112	$	116	$	410		$	445

The following table shows the change in the projected benefit obligations and plan assets for the years ended December 31, 2011 and December 31, 2010:

	Cash Balance Plan						SERP						Total
(Dollars in thousands)	2011			2010			2011			2010			2011			2010
Change in projected benefit obligations:
Benefit obligation at beginning of year	$	5,143		$	4,729		$	2,103		$	2,011		$	7,246		$	6,740
Service cost	137			134			—			—			137			134
Interest cost	249			253			106			111			355			364
Actuarial gain	499			251			270			135			769			386
Benefits and expenses paid	(270		)	(224		)	(154		)	(154		)	(424		)	(378		)
Benefit obligation at end of year	5,758			5,143			2,325			2,103			8,083			7,246
Change in plan assets:
Fair value of plan assets at beginning of year	3,747			3,194			—			—			3,747			3,194
Actual return on plan assets	(1		)	366			—			—			(1		)	366
Employer contributions	670			411			154			154			824			565
Benefits and expenses paid	(271		)	(224		)	(154		)	(154		)	(425		)	(378		)
Fair value of plan assets at year end	4,145			3,747			—			—			4,145			3,747
Funded status - (under funded)	$	(1,613	)	$	(1,396	)	$	(2,325	)	$	(2,103	)	$	(3,938	)	$	(3,499	)

The Bank had a liability for the Cash Balance Plan of $1.6 million and $1.4 million for the periods ending December 31, 2011 and December 31, 2010, respectively.  The liability is included in Other Liabilities within the Consolidated Balance Sheets.  The accrued liability and accumulated benefit obligations for the SERP was $2.3 million and $2.1 million  for the periods ending December 31, 2011 and December 31, 2010, respectively.   The balance is included in Other Liabilities within the Consolidated Balance Sheets.  

The amounts in accumulated other comprehensive loss that have not been recognized as components of net periodic pension cost were:

	Cash Balance Plan				SERP				Total
(Dollars in thousands)	2011		2010		2011		2010		2011		2010
Unrecognized net actuarial loss	$	2,578	$	1,987	$	541	$	275	$	3,119	$	2,262
Unrecognized prior service cost	5		7		—		5		5		12
Total amount included in accumulated other comprehensive loss	$	2,583	$	1,994	$	541	$	280	$	3,124	$	2,274

	Cash Balance Plan				SERP
Weighted average assumptions as of December 31:	2011		2010		2011		2010
Discount rate	4.25	%	5.25	%	4.25	%	5.25	%
Expected return on plan assets	7	%	7	%	n/a		n/a
Rate of compensation increase	3	%	3	%	3	%	3	%

Amounts in accumulated other comprehensive loss expected to be recognized in net periodic costs in 2012:

	Cash Balance Plan		SERP		Total
Net actuarial loss	$	212	17		$	229
Prior service cost	2		—		2
Total expected to be recognized	$	214	$	17	$	231
Assets expected to be returned to the Company in 2011	—		—		—

The estimated expected benefit payments for the Cash Balance Plan and SERP are:

(Dollars in thousands)
For the Years Ending December 31:	Cash Balance Plan		SERP		TOTAL
2012	$	792	$	154	$	946
2013	390		153		543
2014	382		151		533
2015	356		149		505
2016	417		148		565
2017-2021	1,992		701		2,693
	$	4,329	$	1,456	$	5,785

Retirement Plan Assets— In general, the plan’s investment management organizations make reasonable efforts to control market fluctuations through appropriate techniques including, but not limited to, adequate diversification.   The specific investment strategy adopted by the plan, referred to as the Long Term Growth of Capital Strategy, attempts to achieve long-term growth of capital with little concern for current income.  Typical investors in this portfolio have a relatively aggressive investment philosophy, seeking long term growth, and are not looking for current dividend income.

Prohibited investments include commodities and futures contracts, private placements, options, transactions which would result in unrelated business taxable income, and other investments prohibited by ERISA.

The target range of allocation percentages for each major category of plan assets was:

Asset Category	Target Weight		Minimum Weight		Maximum Weight
Cash	—	%	—	%	10	%
Equities:
US	66	%	56	%	76	%
Non-US	7	%	—	%	14	%
Fixed Income	27	%	20	%	37	%

Equity investments must be listed on the New York, American, World, or other similar stock exchanges traded in the over-the-counter market with the requirement that such stocks have adequate liquidity relative to the size of the investment.

Fixed income investments must have a credit rating of B or better from Standard and Poor’s or Moody’s.  The fixed income portfolio should be constructed so as to have an average maturity not exceeding 10 years.  No more than 5% of the fixed income portfolio should be invested in any one issuer.  (U.S. Treasury and Agency securities are exempt from this restriction.)

Cash and equivalent instruments that are acceptable are repurchase agreements, bankers’ acceptances, U.S. treasury bills, money market funds, and certificates of deposit.

The portfolio shall be structured to meet financial objectives over a period of 11 or more years.  Over that time horizon, the total rate of return should equal at least 103% of the applicable blended benchmark returns and place in the top half of group performance.  Benchmarks which may be used for portfolio performance comparison are as follows:

• U.S. Large Cap Equities: S&P 500, Russell 1000, Russell 1000 Value, and Russell 1000 Growth

• U.S. Mid Cap Equities: S&P 400 Mid Cap, Russell Mid Cap Value, and Russell Mid Cap Growth

• U.S. Small Cap Equities: S&P 600 Small Cap, Russell 2000 Value, and Russell 2000 Growth

• Non-U.S. Equities: MSCI EAFE IL

• Fixed Income: Barclay's Capital Intermediate Government/Credit Index

• Cash:  U.S. 3-Month Treasury Bill

The Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels were:

			Level 1		Level 2		Level 3
			Quoted Prices in		Significant Other		Significant
(Dollars in thousands)			Active Markets for		Observable		Unobservable
Asset Category	December 31, 2011		Identical Assets		Inputs		Inputs
			(Level 1)		(Level 2)		(Level 3)
Cash	$	183	$	183	$	—	$	—
Equity Security:
Large-Cap	1,010		1,010		—		—
Mid-Cap	793		793		—		—
Small-Cap	437		437		—		—
Mixed-Cap	—		—		—		—
Global and International	391		391		—		—
Emerging Market	58		58		—		—
Fixed Income – Bonds	1,273		—		1,273		—
Other	—		—		—		—
	$	4,145	$	2,872	$	1,273	$	—

401(k) Plan —The Bank sponsors a 401(k) plan. Participation in the 401(k) plan is voluntary.  Employees become eligible after completing 90 days of service and attaining age 21. Employees may elect to contribute up to 12% of their compensation to the 401(k) plan. The Bank matches 100% of each employee’s contribution, up to a maximum of 6% of compensation. The Bank’s contributions to the 401(k) plan were $0.2 million and $0.1 million, respectively, for the years ended December 31, 2011 and December 31, 2010.  

Deferred Compensation Plan —The Bank sponsors a nonqualified deferred compensation plan. The plan, which is unfunded, permits certain management employees to defer compensation in order to provide retirement and death benefits. The plan allows participants to receive the balance of the 6% Bank matching contribution on the 401(k) plan that would otherwise be forfeited to comply with the Internal Revenue Code. At December 31, 2011 and December 31, 2010, the amount of the non-qualified deferred compensation plan liability was $0.3 million and $0.2 million, respectively.

Post-retirement Benefits —The Bank provides certain post-retirement benefits to select former executive officers. As of December 31, 2011 and December 31, 2010, the amount of the liability for these benefits was approximately $0.2 million.

Split Dollar Benefits —In 2002, upon investing in BOLI policies, the Company granted certain executives a split dollar life benefit by which the beneficiaries of the executive would receive a portion of the non-cash surrender value death benefit of the BOLI upon the executive’s demise.  Thereafter, amounts are accrued by a charge to employee benefits. As of December 31, 2011 and December 31, 2010, $0.2 million was recorded in other liabilities for the split dollar benefit.