Employee Benefit Plans

9 Months Ended

Sep. 30, 2011

Employee Benefit Plans [Abstract]

Schedule of Defined Benefit Plans Disclosures [Text Block]

Employee Benefit Plans

Peoples sponsors a noncontributory defined benefit pension plan that covers substantially all employees hired before January 1, 2010.  The plan provides retirement benefits based on an employee’s years of service and compensation.   For employees hired before January 1, 2003, the amount of postretirement benefit is based on the employee’s average monthly compensation pay over the highest five consecutive years out of the employee’s last ten years with Peoples while an eligible employee.  For employees hired on or after January 1, 2003, the amount of postretirement benefit is based on 2% of the employee’s annual compensation plus accrued interest.  Effective January 1, 2010, the pension plan was closed to new entrants.  On November 18, 2010, Peoples' Board of Directors authorized a freeze of the accrual of pension plans benefits, which was effective March 1, 2011. Peoples recognized this freeze as a curtailment as of December 31, 2010 and March 1, 2011, under the terms of the pension plan. Peoples also has a contributory post-retirement benefit plan for former employees who were retired as of December 31, 1992.  The plan provides health and life insurance benefits.  Peoples’ policy is to fund the cost of the benefits as they are incurred.

The following tables detail the components of the net periodic benefit cost for the plans:

	Pension Benefits
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in thousands)	2011			2010			2011			2010
Service cost	$	—		$	188		$	—		$	563
Interest cost	180			196			553			588
Expected return on plan assets	(254		)	(287		)	(810		)	(861		)
Amortization of prior service cost	—			1			—			3
Amortization of net loss	19			37			49			112
Settlement of benefit obligation	408			—			408			—
Net periodic benefit cost	$	353		$	135		$	200		$	405

Under US GAAP, Peoples is required to recognize a settlement gain or loss when the aggregate amount of lump-sum distributions to participants equals or exceeds the sum of the service and interest cost components of the net periodic pension cost. The amount of settlement gain or loss recognized is the pro rata amount of the unrealized gain or loss existing immediately prior to the settlement. In general, both the projected benefit obligation and fair value of plan assets are required to be remeasured in order to determine the settlement gain or loss.

In the third quarter of 2011, the total lump-sum distributions made to participants, when added to the lump-sum distributions made in the first two quarters of 2011, caused the total settlements through nine months of 2011 to exceed the recognition threshold for settlement gains or losses. As a result, Peoples remeasured its pension obligation and plan assets as of July 1, 2011 as part of the calculation of the settlement loss recognized. The following table summarizes the change in pension obligation and funded status as a result of this remeasurement and the aggregate settlements for the nine months ended September 30, 2011:

	As of			September 30, 2011
(Dollars in thousands)	December 31,			Before			Impact of			After
Funded status:	2010			Settlement			Settlements			Settlements
Projected benefit obligation	$	12,501		$	14,730		$	(820	)	$	13,910
Fair value of plan assets	12,543			11,433			(820		)	10,613
Funded status	$	42		$	(3,297	)	$	—		$	(3,297	)
Gross unrealized loss	$	3,723		$	7,290		$	(408	)	$	6,882
Assumptions:
Discount rate	5.70		%	5.10		%				5.10		%
Expected return on plan assets	8.50		%	7.50		%				7.50		%

The reduction in discount rate corresponds with the decrease in market interest rates experienced since year-end 2010. The determination of the expected return on plan assets continues to be based upon the expected return of each category of the plan's assets. Peoples' investment strategy for the plan's assets continues to allocate 60% to 75% to equity securities. The returns generated by equity securities over the last 10 years have been significantly lower than their long-term historical annual returns due in part to unfavorable economic conditions. Thus, Peoples lowered its expected return on equity securities from their long-term historical rate, which had a corresponding impact on overall expected return on plan assets. These assumption changes caused the net periodic expense for the third and fourth quarters of 2011 to increase by approximately $25,000 and $50,000, respectively, compared to the amounts that would have been recorded had the original assumptions been maintained.

	Postretirement Benefits
	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in thousands)	2011			2010			2011			2010
Service cost	$	—		$	—		$	—		$	—
Interest cost	3			4			9			10
Expected return on plan assets	—			—			—			—
Amortization of prior service cost	—			(1		)	—			(2		)
Amortization of net loss	(3		)	(2		)	(7		)	(7		)
Net periodic benefit cost	$	—		$	1		$	2		$	1