Retirement Pension Plan

12 Months Ended

Dec. 31, 2011

Retirement Pension Plan/Benefit Plans [Abstract]

Retirement Pension Plan

(17)    Retirement Pension Plan

The Corporation’s non-contributory defined benefit pension plan (the Plan) covers a portion of its employees. In general, benefits are based on years of service and the employee’s level of compensation. The Corporation’s funding policy is to contribute annually an actuarially determined amount to cover current service cost plus amortization of prior service costs. Effective December 31, 2002, the benefits under the Plan were frozen and no additional benefits have been accrued under the Plan after December 31, 2002.

The net periodic pension costs charged to expense amounted to $11 in 2011, $148 in 2010 and $199 in 2009. The following table sets forth the defined benefit pension plan’s Change in Projected Benefit Obligation, Change in Plan Assets and Funded Status, including the Prepaid Asset or Accrued Liability for the years ended December 31, 2011, 2010, and 2009. There were no losses recognized due to settlement in 2011, 2010 and 2009.

	Year ended December 31,
	2011			2010			2009
	(Dollars in thousands)
Change in projected benefit obligation
Projected benefit obligation at the beginning of the year	$	(5,610	)	$	(5,716	)	$	(5,723	)
Interest Cost		(322	)		(314	)		(324	)
Actuarial gain (loss)		(312	)		(35	)		(218	)
Benefits paid		603			455			549
Projected benefit obligation at the end of the year	$	(5,641	)	$	(5,610	)	$	(5,716	)
Change in plan assets
Fair value of plan assets at beginning of year	$	5,756		$	4,221		$	3,969
Actual gain on plan assets		98			590			401
Employer contributions		—			1,400			400
Benefits paid		(603	)		(455	)		(549	)
Fair value of plan assets at end of year	$	5,251		$	5,756		$	4,221
Funded status (included in accrued liabilities or prepaid assets)	$	(390	)	$	146		$	(1,495	)
Unrecognized actuarial loss in accumulated other comprehensive income	$	2,754		$	2,230		$	2,619

Amounts recognized in the consolidated statements of income consist of:

	Year ended December 31,
	2011			2010			2009
	(Dollars in thousands)
Net Periodic Pension Cost
Interest cost on projected benefit obligation	$	322		$	314		$	324
Expected return on plan benefits		(442	)		(308	)		(275	)
Amortization of loss		131			142			150
Net Periodic Pension Cost	$	11		$	148		$	199

Pension liability adjustments recognized in other comprehensive income include:

	Year ended December 31,
	2011			2010			2009
	(Dollars in thousands)
Amortization of unrecognized actuarial loss	$	132		$	142		$	150
Current deferral of gains (losses)		392			247			(92	)
Pension liability adjustments recognized in comprehensive income		524			389			58
Tax effect		(178	)		(132	)		(20	)
Net pension liability adjustments	$	346		$	257		$	38

Weighted-average assumptions used to determine net periodic benefit cost for years ended December 31, 2011, 2010 and 2009:

	2011			2010			2009
Weighted average discount rate		5.75	%		5.75	%		5.75	%
Expected long-term rate of return on plan assets		7.50	%		7.50	%		7.50	%
Assumed rate of future compensation increases		0.00	%		0.00	%		0.00	%

The actuarial assumptions used in the pension plan valuation are reviewed annually. The plan reviews Moody’s Aaa and Aa corporate bond yields as of each plan year-end to determine the appropriate discount rate to calculate the year-end benefit plan obligation and the following year’s net periodic pension cost.

Plan Assets

The Bank’s Retirement Pension Plan’s weighted-average assets allocations at December 31, 2011, 2010 and 2009 by asset category are as follows:

	Plan Assets at December 31,
	2011			2010			2009
Asset Category:
Equity securities		63.52	%		62.61	%		57.48	%
Debt securities		34.91	%		35.53	%		41.82	%
Cash and cash equivalents		1.57	%		1.86	%		7.00	%
Total		100.00	%		100.00	%		100.00	%
LNB Bancorp, Inc. common stock to total plan assets		0.00	%		0.00	%		3.08	%

The investment strategy for 2012 will continue to be an equity security allocation percent of 60% and a debt security position of 40%. This strategy will be employed in order to position more assets to benefit from the anticipated increase in the equities market in 2012.

The following estimated future benefit payments, which reflect no expected future service as the plan is frozen, are expected to be paid as follows:

	Amount
	(Dollars in thousands)
2012	$    291
2013	279
2014	267
2015	257
2016	243
2017 and thereafter	1,116