NOTE I — SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN (SERP)

The Company’s unfunded noncontributory defined benefit plan (the “Plan”) covers certain senior executives, is administered by the Company and calls for annual payments upon retirement based on years of service and final average salary. Benefit costs and liabilities balances are calculated based on certain assumptions including benefits earned, discount rates, interest costs, mortality rates and other factors. Actual results that differ from the assumptions are accumulated and amortized over future periods, affecting the recorded obligation and expense in future periods.

The following assumptions were used in the calculation of the net benefit cost and obligation at March 31, 2014 and 2013:

	2014		2013
Discount rate	4.03	%	3.25	%
Average rate of increase in compensation	3.00	%	3.00	%

The Company believes the assumptions used are appropriate; however, changes in assumptions or differences in actual experience may affect our benefit obligation and future expenses. The change in the Plan’s net benefit obligation for the three months ended March 31, 2014 and 2013 is as follows:

	(in thousands)
Net benefit cost accrued at December 31, 2013	$	20,952
Service cost	129
Interest cost	199
Payments	(1,247		)
Net benefit cost accrued at March 31, 2014	$	20,033

	(in thousands)
Net benefit cost accrued at December 31, 2012	$	22,377
Service cost	169
Interest cost	173
Payments	(705		)
Net benefit cost accrued at March 31, 2013	$	22,014