EMPLOYEE BENEFITS

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

401(k) Plan. The Company’s 401(k) plan is a self-administered savings and incentive plan covering substantially all employees. Employer match contributions are determined annually under the plan by the Company’s Board of Directors. Employee contributions were limited to $17,000 of gross compensation for 2012. Total employer contributions under the plan were $2.3 million, $2.3 million and zero for the years ended December 31, 2012, 2011 and 2010, respectively. The plan assets are held and managed under a trust agreement with First Bank’s trust department.

Nonqualified Deferred Compensation Plan. The Company’s nonqualified deferred compensation plan (the NQDC Plan), which covers a select group of employees, is administered by an independent third party. The NQDC Plan is exempt from the participation, vesting, funding and fiduciary requirements of the Employee Retirement Income Security Act of 1974. Although the NQDC Plan allows the Company to credit the accounts of any participant with discretionary contributions, no such discretionary contributions have been made since the NQDC Plan’s inception. Participants may contribute from 1% to 25% of their salary and up to 100% of their bonuses on a pre-tax basis. The Company elected to suspend the availability of deferrals under the NQDC Plan for the years ended December 31, 2011 and 2010 but reinstated the availability of such deferrals beginning in January 2012.

Balances outstanding under the NQDC Plan, which are reflected in accrued and other liabilities in the consolidated balance sheets, were $6.4 million and $6.5 million at December 31, 2012 and 2011, respectively. The Company recognized salaries and employee benefits expense related to the NQDC Plan of $614,000 and $685,000 for the years ended December 31, 2012 and 2010, respectively, resulting from net earnings incurred by participants on the underlying investments in the plan. The Company recognized a decrease in salaries and employee benefits expense related to the NQDC Plan of $64,000 for the year ended December 31, 2011 resulting from net losses incurred by participants on the underlying investments in the plan.

Noncontributory Defined Benefit Pension Plan. The Company has a noncontributory defined benefit pension plan covering certain current and former employees of a bank holding company acquired by the Company in 1994 and subsequently merged with and into the Company on December 31, 2002. The Company discontinued the accumulation of benefits under the Plan in 1994, and as such, there is no longer any service cost being accrued by Plan participants.

A summary of the Plan’s change in the projected benefit obligation and change in the fair value of Plan assets for the years ended December 31, 2012 and 2011 and amounts recognized in the Company’s consolidated balance sheets as of December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Change in Projected Benefit Obligation:
Projected benefit obligation at beginning of year	$	12,467		12,334
Interest cost	516			587
Actuarial loss	1,765			970
Benefit payments	(761		)	(1,424	)
Projected benefit obligation at end of year	$	13,987		12,467
Change in Fair Value of Plan Assets:
Fair value at beginning of year	$	8,848		9,210
Actual return on plan assets	666			774
Employer contributions	666			288
Benefit payments	(761		)	(1,424	)
Fair value at end of year	$	9,419		8,848
Amount Recognized in Consolidated Balance Sheets:
Accrued pension liability	$	4,568		3,619
Amounts Recognized in Accumulated Other Comprehensive Income:
Loss	$	(5,940	)	(4,370	)
Deferred tax liability	2,396			1,737
Loss, net of tax	$	(3,544	)	(2,633	)

The Company’s accrued pension liability of $4.6 million and $3.6 million at December 31, 2012 and 2011, respectively, represents the difference between the fair value of the Plan assets and the projected benefit obligation of the Plan, and is reflected in accrued expenses and other liabilities in the consolidated balance sheets.

The following table reflects the weighted average assumptions used to determine the net periodic benefit cost for the years ended December 31, 2012 and 2011:

	2012		2011
Discount rate	4.28	%	4.93	%
Expected long-term rate of return on Plan assets	7.00		7.00

The discount rate used to determine benefit obligations was 3.31% and 4.28% for the years ended December 31, 2012 and 2011, respectively.

A summary of the components of net periodic benefit cost for the years ended December 31, 2012 and 2011 is as follows:

	2012			2011
	(dollars expressed in thousands)
Interest cost	$	516		587
Expected return on Plan assets	(617		)	(625	)
Amortization of net actuarial loss	145			109
Net periodic benefit cost	$	44		71

Amounts recognized in accumulated other comprehensive income consist of:

	2012			2011
	(dollars expressed in thousands)
Net loss	$	1,715		821
Amortization of net actuarial loss	(145		)	(109	)
Total recognized in accumulated other comprehensive income	$	1,570		712

The Plan’s investment strategy is focused on maximizing asset returns. The target allocations for Plan assets are 52% fixed income, 40% equity securities and 8% cash. Asset allocations can fluctuate between acceptable ranges commensurate with market volatility. Debt securities include U.S. Treasuries, investment-grade corporate bonds of companies from diversified industries and mortgage-backed securities. Equity securities primarily include investments in large capitalization companies located in the United States.

The fair value of Plan assets at December 31, 2012 and 2011 was comprised of the following:

	Fair Value Measurements
	Level 1		Level 2	Level 3	Fair Value
	(dollars expressed in thousands)
Plan Assets - December 31, 2012:
Cash and cash equivalents	$	361	—	—	361
Equity securities	—		3,959	—	3,959
Debt securities	—		4,603	—	4,603
Other	—		496	—	496
Total	$	361	9,058	—	9,419
Plan Assets - December 31, 2011:
Cash and cash equivalents	$	287	—	—	287
Equity securities	—		3,635	—	3,635
Debt securities	—		4,463	—	4,463
Other	—		463	—	463
Total	$	287	8,561	—	8,848

Equity and debt securities included in Level 1 are valued using quoted market prices. Where quoted market prices are unavailable, the fair value of equity and debt securities included in Level 2 is based on quoted market prices of comparable instruments obtained from independent pricing vendors based on recent trading activity and other relevant information.

The Company expects to contribute $360,000 to the Plan in 2013. Pension benefit payments are expected to be paid to Plan participants by the Plan as follows:

	(dollars expressed in thousands)
Year ending December 31:
2013	$	821
2014	834
2015	849
2016	849
2017	844
2018 – 2022	4,256