Note 16 - Benefit Plans

12 Months Ended

Dec. 31, 2013

Compensation and Retirement Disclosure [Abstract]

Pension and Other Postretirement Benefits Disclosure [Text Block]

16.     Benefit Plans

401(k) Plan

Teammates are given the opportunity to participate in The Palmetto Bank 401(k) Retirement Plan (the “401(k) Plan”) which is designed to supplement a teammate’s retirement income. Teammates are eligible to participate in the 401(k) Plan immediately when hired. Under the 401(k) Plan, participants are able to defer a portion of their salary into the 401(k) Plan. During 2011, the Company matched teammate contributions at a rate of $0.60 per dollar up to 6% of a teammate’s eligible compensation. Matching contributions are contributed to the 401(k) Plan prior to the end of each plan year. From January 1, 2012 through June 30, 2013, the Company suspended its regular ongoing matching of teammate contributions to the 401(k) Plan. Effective July 1, 2013, the Company reinstated an employer match of teammate contributions at a rate of $0.10 per dollar up to 6% of a teammate’s eligible compensation. This reinstatement resulted in employer matching contributions of $28 thousand for the year ended December 31, 2013. During the year ended December 31, 2011, the Company made matching contributions to the 401(k) Plan of $392 thousand.

Defined Benefit Pension Plan

Prior to 2008, the Company offered a noncontributory, Pension Plan that covered all full-time teammates having at least 12 months of continuous service and having attained age 21. Effective 2008, the Company ceased accruing pension benefits for teammates under the Pension Plan. Although no previously accrued benefits were lost, teammates no longer accrue benefits for service subsequent to 2007.

The Company accounts for the Pension Plan using an actuarial model. This model allocates pension costs over the service period of teammates in the Pension Plan. The underlying principle is that teammates render services ratably over this period; therefore, the income statement impacts of pension benefits should follow a similar pattern.    

Defined Benefit Pension Plan Funded Status. The Company recognizes the funded status of the Pension Plan in the Consolidated Balance Sheets. The funded status is the difference between the Pension Plan assets and the projected benefit obligation at the balance sheet date. The following table summarizes the combined change in benefit obligation, Pension Plan assets, and funded status of the Pension Plan at the dates and for the periods indicated (in thousands).

	At and for the years ended December 31,
	2013			2012			2011
Change in benefit obligation
Benefit obligation, beginning of period	$	18,507		$	19,786		$	19,082
Interest cost		848			958			1,002
Net actuarial loss		80			668			904
Benefits paid		(1,313	)		(2,905	)		(1,202	)
Benefit obligation, end of period		18,122			18,507			19,786
Change in Pension Plan assets
Fair value of Pension Plan assets, beginning of period		14,540			13,663			13,868
Return on Pension Plan assets		1,678			2,182			(575	)
Employer contribution		1,893			1,600			1,572
Benefits paid		(1,313	)		(2,905	)		(1,202	)
Fair value of Pension Plan assets, end of period		16,798			14,540			13,663
Underfunded status	$	(1,324	)	$	(3,967	)	$	(6,123	)
Net actuarial loss	$	(11,235	)	$	(12,627	)	$	(13,919	)
Income tax benefit		(3,932	)		(4,419	)		(4,871	)
Accumulated other comprehensive loss impact	$	(7,303	)	$	(8,208	)	$	(9,048	)

Cost of the Pension Plan. The following table summarizes the components of net periodic pension expense, which is included in Salaries and other personnel expense in the Consolidated Statements of Income (Loss), for the periods indicated (in thousands).

	For the years ended December 31,
	2013			2012			2011
Interest cost	$	848		$	958		$	1,002
Expected return on plan assets		(1,186	)		(1,133	)		(1,162	)
Amortization of net actuarial loss		980			911			788
Net periodic pension expense	$	642		$	736		$	628

As a result of the decision to curtail the Pension Plan effective December 31, 2007, no costs relative to service have been necessary since that date as teammates no longer accrue benefits for services rendered.

Actuarial gains and losses also result from changes in the discount rate used to measure plan obligations and other variances in demographic experience such as retirements and mortality. Actuarial gains and losses, prior service costs and credits and any remaining transition amounts that had not yet been recognized through net periodic pension expense since the Pension Plan was frozen are amortized as a component of net periodic pension expense.

Defined Benefit Pension Plan Assumptions. One of the principal components of the net periodic pension expense calculation is the expected long-term rate of return on plan assets. The use of an expected long-term rate of return on plan assets may cause the recognition of income returns that are greater or less than the actual returns of plan assets in any given year. The expected long-term rate of return is designed to approximate the actual long-term rate of return over time and is not expected to change significantly. Therefore, the pattern of income / expense recognition should match the stable pattern of services provided by teammates over the life of the pension obligation. Expected returns on Pension Plan assets are developed in conjunction with input from external advisors and take into account the investment policy, actual investment allocation, long-term expected rates of return on the relevant asset classes and considers any material forward-looking return expectations for these major asset classes. Differences between expected and actual returns in each year, if any, are included in the net actuarial gain or loss amount, which is recognized in other comprehensive income.

A discount rate is used to determine the present value of future benefit obligations. The discount rate is determined in consultation with the third-party actuary and is set by matching the projected benefit cash flow to a yield curve consisting of the 50% highest yielding issuances within each defined maturity tranche of a AA-only universe of bonds monitored by the third-party actuary. The yield curve provides transparency with respect to the underlying bonds and provides matching of future benefit obligations to the payment of benefits. This yield curve was also used during 2011 and 2012, and reflects the Pension Plan specific duration.

The following table summarizes the assumptions used in computing the benefit obligation and the adjusted net periodic expense for the periods indicated.

	For the years ended December 31,
	2013			2012			2011
Assumptions used in computing benefit obligation:
Discount rate		5.04	%		4.19	%		5.02	%
Rate of increase in compensation levels	n/a			n/a			n/a
Assumptions used in computing net periodic benefit expense:
Discount rate		4.19			5.02			5.35
Expected long-term rate of return on Pension Plan assets		8.00			8.00			8.00
Rate of compensation increase	n/a			n/a			n/a

Defined Benefit Pension Plan Assets. The following table summarizes the fair value of Pension Plan assets by major category at the dates indicated (in thousands).

	December 31,
	2013		2012
Cash and cash equivalents	$	4,440	$	1,498
U.S. government and agency securities		549		1,262
Municipal securities		470		799
Corporate bonds		3,398		3,146
Mutual funds		3,596		-
Corporate stocks		3,329		133
Exchange traded funds		287		-
Foreign equities		694		-
Equity funds		-		7,660
Accrued interest receivable		30		42
Other		5		-
Total Pension Plan assets	$	16,798	$	14,540

The investment objectives of the Pension Plan assets are designed to fund the projected benefit obligation and to maximize returns in order to minimize contributions within reasonable and prudent levels of risk. The precise amount for which these obligations will be settled depends on future events, including the life expectancy of the Pension Plan participants. The Pension Plan’s investment strategy balances the requirement to generate return, using higher returning assets, with the need to control risk using less volatile assets. Risks include, but are not limited to, inflation, volatility in equity values and changes in interest rates that could cause the Pension Plan to become underfunded, thereby increasing the Pension Plan’s dependence on contributions from the Company.

Pension Plan assets are managed by a third-party firm as approved by the Board of Directors. The Compensation Committee of the Board of Directors is responsible for maintaining the investment policy of the Pension Plan, approving the appointment of the investment manager and reviewing the performance of the Pension Plan assets at least annually.

Investments within the Pension Plan are diversified with the intent to minimize the risk of large losses to the Pension Plan. The total portfolio is constructed and maintained to provide prudent diversification within each investment category, and the Company assumes that the volatility of the portfolio will be similar to the market as a whole. The asset allocation ranges represent a long-term perspective. Therefore, rapid unanticipated market shifts may cause the asset mix to fall outside the policy range. Such divergences are expected to be short-term in nature.

Fair Value Measurements. Following is a description of the valuation methodology used in determining fair value measurements of Pension Plan assets:

● Cash and cash equivalents: Valued at the net asset value of units held by the Pension Plan.

● U.S. government and agency securities: Valued at the closing price reported in the active market in which the individual securities are traded.

● Municipal securities: Valued at the closing price reported in the active market in which the individual securities are traded.

● Corporate bonds: Valued at the closing price reported in the active market in which the bond is traded.

● Mutual funds: Valued at the closing price reported in the active market in which the instrument is traded.

● Corporate stocks: Valued at the closing price reported in the active market in which the individual securities are traded.

● Exchange traded funds: Valued at the closing price reported in the active market in which the instrument is traded.

● Foreign equities: Valued at the closing price reported in the active market in which the instrument is traded.

● Equity funds: Valued at the net asset value of units held by the Pension Plan.

The preceding methods described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Company believes the 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 summarize Pension Plan assets measured at fair value at the dates indicated aggregated by the level in the fair value hierarchy within which those measurements fall (in thousands).

	December 31,
	2013		2012
Level 1	$	7,804	$	1,673
Level 2		8,994		12,867
Level 3		-		-
Total Pension Plan assets	$	16,798	$	14,540

There were no changes in Level 3 assets measured at fair value on a recurring basis during 2012 or 2013.

Current and Future Expected Contributions. The Company expects to contribute $507 thousand to the Pension Plan during 2014.

Expected Future Defined Benefit Pension Plan Payments. The following table summarizes the estimated future benefit payments expected to be paid from the Pension Plan at December 31, 2013 for the periods indicated (in thousands).

For the years ended December 31,
2014	$	899
2015		925
2016		948
2017		1,010
2018		1,064
2019-2023		5,947

The expected benefits to be paid are based on the same assumptions used to measure the Company’s benefit obligation at December 31, 2013.