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Employee Benefit Plans
 9 Months Ended
Sep. 30, 2012
Defined Benefit Pension Plans and Defined Benefit Postretirement Plans Disclosure [Abstract]  
Employee Benefit Plans
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.  Effective March 1, 2011, the accrual of pension plan benefits for all participants was frozen. 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 provides post-retirement health and life insurance benefits to former employees and directors. Only those individuals who retired before January 27, 2012 were eligible for life insurance benefits. All retirees are eligible for health benefits, however, Peoples only pays 100% of the cost for those individuals who retired before January 1, 1993. For all others, the retiree is responsible for most, if not all, of the cost of health benefits.  Peoples’ policy is to fund the cost of the benefits as they arise.
The following tables detail the components of the net periodic cost for the plans:
 
 
Pension Benefits
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(Dollars in thousands)
2012
2011
 
2012
2011
Interest cost
$
148

$
180

 
$
452

$
553

Expected return on plan assets
(182
)
(254
)
 
(574
)
(810
)
Amortization of net loss
41

19

 
120

49

Settlement of benefit obligation
—

408

 
353

408

Net periodic cost
$
7

$
353

 
$
351

$
200


 
Postretirement Benefits
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(Dollars in thousands)
2012
2011
 
2012
2011
Interest cost
$
2

$
3

 
$
7

$
9

Expected return on plan assets
—

—

 
—

—

Amortization of net loss
—

(3
)
 
(1
)
(7
)
Settlement of benefit obligation
—

—

 
—

—

Net periodic cost
$
2

$
—

 
$
6

$
2


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 second quarter of 2012, the total lump-sum distributions made to participants, when added to the lump-sum distributions made in the first quarter of 2012, caused the total settlements through six months of 2012 to exceed the recognition threshold for settlement gains or losses. As a result, Peoples remeasured its pension obligation and plan assets as of April 1, 2012 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 six months ended June 30, 2012:
 
As of
June 30, 2012
(Dollars in thousands)
December 31,
Before
Impact of
After
Funded status:
2011
Settlement
Settlements
Settlements
Projected benefit obligation
$
16,505

$
16,681

$
(650
)
$
16,031

Fair value of plan assets
10,409

10,816

(650
)
10,166

Funded status
$
(6,096
)
$
(5,865
)
$
—

$
(5,865
)
 
 
 
 
 
Gross unrealized loss
$
9,280

$
9,057

$
(353
)
$
8,704

 
 
 
 
 
Assumptions:
 
 
 
 
Discount rate
4.00
%
4.00
%
 
4.00
%
Expected return on plan assets
7.50
%
7.50
%
 
7.50
%
During the third quarter of 2012, there was an inconsequential amount of lump-sum distributions and as a result, no additional settlement charge was recorded.