Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Employee Benefit Plans

NOTE 8 – Employee Benefit Plans

The Company provides a contributory trusteed 401(k) deferred compensation and profit sharing plan, which covers substantially all employees. The Company agrees to match certain employee contributions under the 401(k) portion of the plan, while profit sharing contributions are discretionary and are subject to determination by the Board of Directors. Company contributions were $717, $608, and $562 for 2011, 2010, and 2009, respectively.

The Company self-insures employee health benefits. Stop loss insurance covers annual losses exceeding $100 per covered individual for 2011 and $85 per covered individual for 2010 and 2009. Management’s policy is to establish a reserve for claims not submitted by a charge to earnings based on prior experience. Charges to earnings were $1,620, $1,489, and $2,476 for 2011, 2010, and 2009, respectively.

The Company maintains deferred compensation plans for the benefit of certain directors and officers. Under the plans, the Company agrees in return for the directors and officers deferring the receipt of a portion of their current compensation, to pay a retirement benefit computed as the amount of the compensation deferred plus accrued interest at a variable rate. Accrued benefits payable totaled $2,240 and $2,492 at December 31, 2011 and 2010. Deferred compensation expense was $183, $223, and $429 for 2011, 2010, and 2009, respectively. In conjunction with the plans, the Company purchased life insurance on certain directors and officers.

The Company entered into early retirement agreements with certain officers of the Company during 2008 and 2010. Accrued benefits payable as a result of the agreements totaled $456 and $544 at December 31, 2011 and 2010, respectively. Expense associated with these agreements totaled $72 and $135 during 2011 and 2010, respectively. The benefits under the agreements will be paid through 2017.

The Company acquired through previous bank mergers a noncontributory defined benefit pension plan with benefits based on years of service and compensation prior to retirement. The benefits under the plan were suspended in 1998.

Accumulated plan benefit information for the Company’s plan as of December 31, 2011 and 2010 was as follows:

Changes in Benefit Obligation:	2011			2010
Obligation at Beginning of Year	$	712		$	674
Interest Cost		32			34
Benefits Paid		(33	)		(38	)
Actuarial (Gain) Loss		23			42
Obligation at End of Year		734			712
Changes in Plan Assets:
Fair Value at Beginning of Year		319			289
Actual Return on Plan Assets		1			1
Employer Contributions		66			67
Benefits Paid		(33	)		(38	)
Fair Value at End of Year		353			319
Funded Status:
Funded Status at End of Year	$	(381	)	$	(393	)
Amounts recognized in accumulated other comprehensive income at December 31 consist of:
Net Loss (Gain)	$	280		$	287
Prior Service Cost		14			15
	$	294		$	302

The accumulated benefit obligation was $734 and $712 at year-end 2011 and 2010, respectively.

Because the plan has been suspended, the projected benefit obligation and accumulated benefit obligation are the same. The accumulated benefit obligation for the defined benefit pension plan exceeds the fair value of the assets included in the plan.

Components of Net Periodic Benefit Cost and Other Amounts Recognized in Other Comprehensive Income

	2011			2010			2009
Interest Cost	$	32		$	34		$	36
Expected Return on Assets		(2	)		(3	)		(7	)
Amortization of Transition Amount		—			—			—
Amortization of Prior Service Cost		1			(3	)		(3	)
Recognition of Net Loss		31			25			16
Net Periodic Benefit Cost	$	62		$	53		$	42
Net Loss During the Period		24			43			91
Amortization of Unrecognized Loss		(30	)		(25	)		(16	)
Amortization of Transition Cost		—			—			—
Amortization of Prior Service Cost		(1	)		3			3
Total Recognized in Other Comprehensive Income		(7	)		21			78
Total Recognized in Net Periodic Benefit Cost and Other
Comprehensive Income	$	55		$	74		$	120

The estimated net loss, prior service costs, and net transition obligation (asset) for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are $30, $2, and $0, respectively.

Assumptions

Weighted-average assumptions used to determine benefit obligations at year-end:

	2011			2010			2009
Discount Rate		3.75	%		4.60	%		5.29	%
Rate of Compensation Increase (1)		N/A			N/A			N/A
Weighted-average assumptions used to determine net periodic pension cost:

	2011		2010		2009
Discount Rate	4.60	%	5.29	%	6.17	%
Expected Return on Plan Assets	0.50	%	1.00	%	2.20	%
Rate of Compensation Increase (1)	N/A		N/A		N/A

⁽¹⁾ Benefits under the plan were suspended in 1998; therefore, the weighted-average rate of increase in future compensation levels was not applicable for all years presented.

The expected return on plan assets was determined based upon rates that are expected to be available for future reinvestment of earnings and maturing investments along with consideration given to the current mix of plan assets.

Plan Assets

The Company’s defined benefit pension plan asset allocation at year-end 2011 and 2010 and target allocation for 2012 by asset category are as follows:

	Target			Percentage of Plan Assets
	Allocation			at Year-end
Asset Category	2012			2011			2010
Cash		30	%		28	%		38	%
Certificates of Deposit		70	%		72	%		62	%
Total		100	%		100	%		100	%

Plan benefits are suspended. Therefore, the Company has invested predominantly in relatively short-term investments over the past two years. No significant changes to investing strategies are anticipated.

Fair Value of Plan Assets

Fair value is the exchange price that would be received for an asset in the principal or most advantageous market for the asset in an orderly transaction between market participants on the measurement date. Since plan assets consist of cash and certificates of deposit, there are no estimates or assumptions applied to determine fair value.

Postretirement Medical and Life Benefit Plan

The Company has an unfunded postretirement benefit plan covering substantially all of its employees. The medical plan is contributory with the participants’ contributions adjusted annually; the life insurance plans are noncontributory.

Changes in Accumulated Postretirement Benefits Obligations

	2011			2010
Obligation at the Beginning of Year	$	560		$	446
Unrecognized Loss (Gain)		57			107
Components of Net Periodic Postretirement Benefit Cost
Service Cost		28			19
Interest Cost		25			26
Net Expected Benefit Payments		(46	)		(38	)
Obligation at End of Year	$	624		$	560

Components of Postretirement Benefit Expense

	2011		2010
Service Cost	$	28	$	19
Interest Cost		25		26
Net Postretirement Benefit Expense		53		45
Net Gain During Period Recognized in Other Comprehensive Income		—		—
Total Recognized in Net Postretirement Benefit Expense and Other Comprehensive Income	$	53	$	45

Assumptions Used to Determine Net Periodic Cost and Benefit Obligations:

	2011			2010			2009
Discount Rate		3.98	%		4.72	%		6.00	%

Assumed Health Care Cost Trend Rates at Year-end: 

	2011			2010
Health Care Cost Trend Rate Assumed for Next Year		8.00	%		8.00	%
Rate that the Cost Trend Rate Gradually Declines to		4.50	%		4.50	%
Year that the Rate Reaches the Rate it is Assumed to Remain at		2018			2017

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:

	One-Percentage-Point		One-Percentage-Point
	Increase		Decrease
Effect on Total of Service and Interest Cost	$	4	$	(4	)
Effect on Postretirement Benefit Obligation	$	39	$	(35	)

Pension and Other Benefit Plans

Contributions

The Company expects to contribute $80 to its defined benefit pension plan and $35 to its postretirement medical and life insurance plan in 2012.

Estimated Future Benefits

The following benefit payments, which reflect expected future service, are expected to be paid:

	Pension		Postretirement
Year	Benefits		Benefits
2012	$	46	$	35
2013		106		44
2014		39		46
2015		50		52
2016		111		51
2017-2021		232		352