Note 10 - Retirement Plans

12 Months Ended

Dec. 31, 2011

Retirement Plans

10. Retirement Plans

The Company maintains a salary savings plan that covers substantially all of its employees. Beginning in 2010, the Company matched voluntary tax deferred employee contributions at 50% of eligible deferrals up to a maximum of 6% of the participants’ compensation. During 2009, the Company matched all eligible voluntary tax deferred employee contributions up to 6% of the participant’s compensation. The Company may, at the discretion of its Board, contribute an additional amount based upon a percentage of covered employees’ salaries. The Company did not make a discretionary contribution during 2011, 2010, or 2009. Discretionary contributions are allocated among participants in the ratio that each participant’s compensation bears to all participants’ compensation. Eligible employees are presented with various investment alternatives related to the salary savings plan. Those alternatives include various stock and bond mutual funds that vary from traditional growth funds to more stable income funds as well as an option to invest in bank certificates of deposits. Company shares are not an available investment alternative in the salary savings plan. The total retirement plan expense for 2011, 2010, and 2009 was $470 thousand, $514 thousand, and $1.1 million, respectively.

In connection with the acquisition of Citizens Northern, the Company acquired nonqualified supplemental retirement plans for certain key employees. Benefits provided under these plans are unfunded, and payments to plan participants are made by the Company.

The following schedules set forth a reconciliation of the changes in the supplemental retirement plans’ benefit obligation and funded status for the years ended December 31, 2011 and 2010.

(In thousands)	2011			2010
Change in Benefit Obligation
Obligation at beginning of year	$	646		$	565
Service cost		22			35
Interest cost		32			33
Actuarial loss		33			29
Benefit payments		(27	)		(16	)
Obligation at end of year	$	706		$	646

The following table provides disclosure of the net periodic benefit cost as of December 31 for the years indicated.

(In thousands)	2011			2010
Service cost	$	22		$	35
Interest cost		32			33
Recognized net actuarial loss		2			4
Net periodic benefit cost	$	56		$	72
Major assumptions:
Discount rate used to determine net period benefit cost		5.55	%		6.00	%
Discount rate used to determine benefit obligation at year end		4.39			5.55

The following table presents estimated future benefit payments in the period indicated.

(In thousands)	Supplemental Retirement Plan
2012	$	28
2013		28
2014		28
2015		28
2016		28
2017-2021		260
Total	$	400

Amounts recognized in accumulated other comprehensive income as of December 31, 2011 and 2010 are as follows:

(In thousands)	2011		2010
Unrecognized net actuarial loss	$	157	$	125
Total	$	157	$	125

The estimated cost that will be amortized from accumulated other comprehensive income into net periodic cost over the next fiscal year is as follows:

(In thousands)	Supplemental Retirement Plan
Unrecognized net actuarial loss	$	8
Total	$	8