NOTE L — 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 liability 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 June 30, 2014 and 2013 is as follows:

	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 six months ended June 30, 2014 and 2013:

	(In thousands)
Net benefit cost accrued at December 31, 2013	$	20,952
Service cost	259
Interest cost	397
Payments	(1,247		)
Net benefit cost accrued at June 30, 2014	$	20,361

	(In thousands)
Net benefit cost accrued at December 31, 2012	$	22,377
Service cost	415
Interest cost	346
Payments	(705		)
Net benefit cost accrued at June 30, 2013	$	22,433