Pensions

9 Months Ended

Sep. 30, 2013

Pensions [Abstract]

Pensions

Note 8. Pensions

The components of pension expense for the periods presented are as follows:

	Three Months Ended September 30				Nine Months Ended September 30
(Dollars in thousands)	2013		2012		2013		2012
Components of net periodic cost:
Service cost	$	114	$	115	$	342	$	345
Interest cost		179		179		537		537
Expected return on plan assets		(312)		(197)		(936)		(591)
Recognized net actuarial loss		159		171		477		514
Net period cost	$	140	$	268	$	420	$	805

The Bank expects its pension expense to decrease to approximately $560 thousand in 2013 compared to $1.1 million in 2012.  The Bank contributed $6.8 million to its pension plan in 2012 and does not expect to contribute any additional amounts in 2013.

Contributions are intended to provide not only for the benefits attributed to service to date but also for those expected to be earned in the future. However, due to the low rate environment, the funding status of the pension plan, and the Bank’s excess cash position earning a low return, the Bank made an additional contribution, above the required minimum contribution, of $6.0 million to the pension plan in December 2012. This action brought the plan to a fully funded status and will significantly reduce future pension expense.  In 2012, the Bank changed the source of the discount rate used to calculate the benefit obligation, to the Citigroup Above Median Pension Discount Curve from the Citigroup Pension Discount Curve and Liability Index.  The new curve represents bonds that are more like the pension plan assets in terms of duration and quality, and generally results in a higher discount rate.