Pension Plan

6 Months Ended

Jun. 30, 2011

Pension Plan

Pension Plan

Note 11. Pension Plan

The Bank has a non-contributory defined benefit plan ("qualified plan") covering most of its employees. Effective July 1, 2011, the Bank closed the qualified plan to new employees hired on or after such date. The Plan will continue to operate and accrue normal benefits for existing participants. In conjunction with the eligibility change for the qualified plan, the Bank amended its 401(k) plan to increase the Bank's matching percentage of employee contributions for non-pension participants, within certain statutory limits.

The qualified plan benefits are based upon years of credited service and the employee's highest average compensation as defined. It is the Bank's funding policy to contribute annually an amount that can be deducted for federal income tax purposes. Additionally, the Bank has a supplemental non-qualified, non-funded retirement plan ("non-qualified plan") which is designed to supplement the pension plan for key officers.

The following table sets forth the components of net periodic pension expense related to the qualified and non-qualified plans for the three and six months ended June 30, 2011 and 2010:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(in thousands)
Service cost	$	1,563		$	1,450		$	3,126		$	2,900
Interest cost		1,525			1,433			3,049			2,866
Expected return on plan assets		(1,665	)		(1,581	)		(3,330	)		(3,163	)
Amortization of prior service cost		160			160			320			320
Amortization of actuarial loss		342			275			685			551
Total net periodic pension expense		1,925			1,737			3,850			3,474
Other changes in plan assets and benefit obligations recognized in other comprehensive income:
Amortization of prior service cost		(160	)		(160	)		(320	)		(320	)
Amortization of actuarial loss		(342	)		(275	)		(685	)		(551	)
		(502	)		(435	)		(1,005	)		(871	)
Total amount recognized in net periodic benefit cost and other comprehensive income (before tax)	$	1,423		$	1,302		$	2,845		$	2,603

The fair value of qualified plan assets increased approximately $7.4 million, or 8.8 percent to $91.3 million at June 30, 2011 from $83.9 million at December 31, 2010. Valley contributed $5.0 million to the qualified plan during the quarter ended June 30, 2011. Valley does not expect to make any additional contributions to the qualified plan for the remainder of 2011.