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Employee Benefits
 12 Months Ended
Dec. 31, 2011
Compensation and Retirement Disclosure [Abstract]  
Employee Benefits
Employee Benefits
Defined Benefit Pension Plans
The Corporation offers a tax-qualified defined benefit pension plan for the benefit of certain eligible employees. Effective October 1, 2007, the pension plan was amended to freeze plan entry to new hires and rehires.  Existing employees hired prior to October 1, 2007 continue to accrue benefits under the plan.  Benefits are based on an employee’s years of service and compensation earned during the years of service.  The plan is funded on a current basis, in compliance with the requirements of ERISA.

The Corporation also has non-qualified retirement plans to provide supplemental retirement benefits to certain employees, as defined in the plans.  The supplemental retirement plans provide eligible participants with an additional retirement benefit.

The non-qualified retirement plans provide for the designation of assets in rabbi trusts.  Securities available for sale and other short-term investments designated for this purpose, with the carrying value of $8.9 million and $9.4 million are included in the Consolidated Balance Sheets at December 31, 2011 and 2010, respectively.

Pension benefit cost and benefit obligations are developed from actuarial valuations.  Two critical assumptions in determining pension expense and obligations are the discount rate and the expected long-term rate of return on plan assets.  We evaluate these assumptions at least annually.  The discount rate is used to calculate the present value of the expected future cash flows for benefit obligations under our pension plans.  Future decreases in discount rates would increase the present value of pension obligations and increase our pension costs.  Future decreases in the long-term rate of return assumption on plan assets would increase pension costs and, in general, increase the requirement to make funding contributions to the plans.

The following table sets forth the plans’ projected benefit obligations, fair value of plan assets and funded status as of December 31, 2011 and 2010.
(Dollars in thousands)
Qualified
Pension Plan
 
Non-Qualified
Retirement Plans
At December 31,
2011
 
2010
 
2011
 
2010
Change in Benefit Obligation:
 
 
 
 
 
 
 
Benefit obligation at beginning of period

$46,556

 

$42,414

 

$9,953

 

$9,496

Service cost
2,314

 
2,337

 
71

 
93

Interest cost
2,578

 
2,507

 
495

 
515

Actuarial loss
7,298

 
675

 
1,534

 
406

Benefits paid
(1,371
)
 
(1,234
)
 
(732
)
 
(556
)
Administrative expenses
(118
)
 
(143
)
 
—

 
—

Benefit obligation at end of period

$57,257

 

$46,556

 

$11,321

 

$9,954

Change in Plan Assets:
 
 
 
 
 
 
 
Fair value of plan assets at beginning of period

$36,070

 

$30,946

 

$—

 

$—

Actual return on plan assets
749

 
4,001

 
—

 
—

Employer contribution
3,000

 
2,500

 
732

 
556

Benefits paid
(1,371
)
 
(1,234
)
 
(732
)
 
(556
)
Administrative expenses
(118
)
 
(143
)
 
—

 
—

Fair value of plan assets at end of period

$38,330

 

$36,070

 

$—

 

$—

Unfunded status at end of period

($18,927
)
 

($10,486
)
 

($11,321
)
 

($9,954
)

The funded status of the qualified pension plan and non-qualified retirement plans has been recognized in other liabilities in the Consolidated Balance Sheets at December 31, 2011 and 2010.

The components of accumulated other comprehensive income related to the qualified pension plan and non-qualified retirement plans, on a pre-tax basis, are summarized below:
(Dollars in thousands)
Qualified
Pension Plan
 
Non-Qualified
Retirement Plans
 
 
At December 31,
2011
 
2010
 
2011
 
2010
Net actuarial loss

$15,928

 

$6,977

 

$2,743

 

$1,225

Prior service credit
(254
)
 
(287
)
 
(7
)
 
(7
)
Total pre-tax amounts recognized in accumulated other comprehensive income

$15,674

 

$6,690

 

$2,736

 

$1,218


The accumulated benefit obligation for the qualified pension plan was $45.3 million and $37.7 million at December 31, 2011 and 2010, respectively.  The accumulated benefit obligation for the non-qualified retirement plans amounted to $10.4 million and $9.7 million at December 31, 2011 and 2010, respectively.

The components of net periodic benefit cost and other amounts recognized in other comprehensive income, on a pre-tax basis, were as follows:
(Dollars in thousands)
Qualified
Pension Plan
 
Non-Qualified
Retirement Plans
Years ended December 31,
2011
 
2010
 
2009
 
2011
 
2010
 
2009
Net Periodic Benefit Cost:
 
 
 
 
 
 
 
 
 
 
 
Service cost

$2,314

 

$2,337

 

$2,371

 

$71

 

$93

 

$106

Interest cost
2,578

 
2,507

 
2,292

 
495

 
515

 
564

Expected return on plan assets
(2,794
)
 
(2,541
)
 
(2,451
)
 
—

 
—

 
—

Amortization of prior service (credit) cost
(33
)
 
(33
)
 
(33
)
 
(1
)
 
8

 
27

Recognized net actuarial loss
392

 
340

 
303

 
16

 
19

 
28

Curtailment loss
—

 
—

 
—

 
—

 
—

 
97

Net periodic benefit cost

$2,457

 

$2,610

 

$2,482

 

$581

 

$635

 

$822

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (on a pre-tax basis):
 
 
 
 
 
 
 
 
 
 
 
Net loss (gain)

$8,951

 

($1,104
)
 

($3,949
)
 

$1,517

 

$388

 

($133
)
Prior service cost (credit)
33

 
33

 
33

 
1

 
(8
)
 
(27
)
Curtailment loss
—

 
—

 
—

 
—

 
—

 
(406
)
Recognized in other comprehensive income

$8,984

 

($1,071
)
 

($3,916
)
 

$1,518

 

$380

 

($566
)
Total recognized in net periodic benefit cost and other comprehensive income

$11,441

 

$1,539

 

($1,434
)
 

$2,099

 

$1,015

 

$256


The estimated prior service credit and net loss for the qualified pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2012 are $(33) thousand and $982 thousand, respectively.  The estimated prior service cost and net loss for the non-qualified retirement plans that will be amortized from accumulated other comprehensive loss into net periodic benefit cost during 2012 are $(1) thousand and $118 thousand, respectively.

Assumptions
The measurement date and weighted-average assumptions used to determine benefit obligations at December 31, 2011 and 2010 were as follows:
 
Qualified Pension Plan
 
Non-Qualified Retirement Plans
 
2011
 
2010
 
2011
 
2010
Measurement date
Dec 31, 2011
 
Dec. 31, 2010
 
Dec 31, 2011
 
Dec. 31, 2010
Discount rate
5.000%
 
5.625%
 
4.625%
 
5.125%
Rate of compensation increase
3.750%
 
3.750%
 
3.750%
 
3.750%

The measurement date and weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31, 2011, 2010 and 2009 were as follows:
 
Qualified Pension Plan
 
Non-Qualified Retirement Plans
 
2011
 
2010
 
2009
 
2011
 
2010
 
2009
Measurement date
Dec 31, 2010
 
Dec. 31, 2009
 
Dec. 31, 2008
 
Dec. 31, 2010
 
Dec. 31, 2009
 
Dec. 31, 2008
Discount rate
5.625%
 
6.000%
 
5.875%
 
5.125%
 
5.625%
 
6.125%
Expected long-term return on plan assets
8.000%
 
8.000%
 
8.250%
 
—
 
—
 
—
Rate of compensation increase
3.750%
 
4.250%
 
4.250%
 
3.750%
 
4.250%
 
4.250%

The expected long-term rate of return on plan assets is based on what the Corporation believes is realistically achievable based on the types of assets held by the plan and the plan's investment practices.  The assumption is updated at least annually, taking into account the asset allocation, historical asset return trends on the types of assets held and the current and expected economic conditions.  At December 31, 2010, the measurement date used in the determination of net periodic benefit cost for 2011, the Corporation determined that a revision to the assumption was not necessary based upon expected market performance and the expected long-term rate of return assumption remained at 8.00%.

The discount rate assumption for defined benefit pension plans is reset annually on the measurement date.  A discount rate was selected for each plan by matching expected future benefit payments stream to a yield curve based on a selection of high-quality fixed-income debt securities.

Plan Assets
The following table presents the fair values of the qualified pension plan’s assets at December 31, 2011:
(Dollars in thousands)
 
 
 
 
Fair Value Measurements Using
 
Assets at
Fair Value
December 31, 2011
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents

$1,595

 

$—

 

$—

 

$1,595

Obligations of U.S. government agencies and U.S. government-sponsored enterprises
—

 
1,786

 


 
1,786

States and political subdivisions
—

 
1,720

 


 
1,720

Corporate bonds
—

 
10,283

 
—

 
10,283

Common stocks
15,487

 
—

 
—

 
15,487

Mutual funds
7,459

 
—

 
—

 
7,459

Total plan assets

$24,541

 

$13,789

 

$—

 

$38,330


The following table presents the fair values of the qualified pension plan’s assets at December 31, 2010:
(Dollars in thousands)
 
 
 
 
Fair Value Measurements Using
 
Assets at
Fair Value
December 31, 2010
Level 1
 
Level 2
 
Level 3
 
Assets:
 
 
 
 
 
 
 
Cash and cash equivalents

$748

 

$—

 

$—

 

$748

Obligations of U.S. government agencies and U.S. government-sponsored enterprises
—

 
1,299

 
—

 
1,299

Mortgage-backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises
—

 
1

 
—

 
1

States and political subdivisions
—

 
827

 
—

 
827

Corporate bonds
—

 
9,870

 
—

 
9,870

Common stocks
14,162

 
—

 
—

 
14,162

Mutual funds
9,163

 
—

 
—

 
9,163

Total plan assets

$24,073

 

$11,997

 

$—

 

$36,070


The qualified pension plan uses fair value measurements to record fair value adjustments to the securities held in its investment portfolio.

When available, the qualified pension plan uses quoted market prices to determine the fair value of securities; such items are classified as Level 1.  This category includes cash equivalents, common stock and mutual funds which are exchange-traded.

Level 2 securities in the qualified pension plan include debt securities with quoted prices, which are traded less frequently than exchange-traded instruments, whose values are determined using matrix pricing with inputs that are observable in the market or can be derived principally from or corroborated by observable market data.  This category includes corporate bonds, municipal bonds, obligations of U.S. government agencies and U.S. government-sponsored enterprises and mortgage backed securities issued by U.S. government agencies and U.S. government-sponsored enterprises.

In certain cases where there is limited activity or less transparency around inputs to the valuation, securities may be classified as Level 3.  As of December 31, 2011 and 2010, the qualified pension plan did not have any securities in the Level 3 category.

The asset allocations of the qualified pension plan at December 31, 2011 and 2010, by asset category were as follows:
December 31,
2011

 
2010

Asset Category:
 
 
 
Equity securities
56.4
%
 
64.2
%
Fixed securities
39.9
%
 
34.1
%
Cash and cash equivalents
3.7
%
 
1.7
%
Total
100.0
%
 
100.0
%

The assets of the qualified defined benefit pension plan trust (the “Pension Trust”) are managed to balance the needs of cash flow requirements and long-term rate of return.  Cash inflow is typically comprised of invested income from portfolio holdings and Bank contributions, while cash outflow is for the purpose of paying plan benefits.  As early as possible each year, the trustee is advised of the projected schedule of employer contributions and estimations of benefit payments.  As a general rule, the trustee shall invest the funds so as to produce sufficient income to cover benefit payments and maintain a funded status that exceeds the regulatory requirements for tax-qualified defined benefit plans.

The investment philosophy used for the Pension Trust emphasizes consistency of results over an extended market cycle, while reducing the impact of the volatility of the security markets upon investment results.  The assets of the Pension Trust should be protected by substantial diversification of investments, providing exposure to a wide range of quality investment opportunities in various asset classes.

The investment objective with respect to the Pension Trust assets is to provide capital appreciation with a current income component.  At any time, the portfolio will typically be invested in the following ranges:  50% to 70% in equities; 30% to 50% in fixed income; and 0% to 10% in cash and cash equivalents.  The trustee investment manager will have authorization to invest within these ranges, making decisions based upon market conditions.

Fixed income bond investments should be limited to those in the top four categories used by the major credit rating agencies.  High yield bond funds may be used to provide exposure to this asset class as a diversification tool provided they do not exceed 10% of the portfolio.  In order to reduce the volatility of the annual rate of return of the bond portfolio, attention will be given to the maturity structure of the portfolio in the light of money market conditions and interest rate forecasts.  The assets of the Pension Trust will typically have a laddered maturity structure, avoiding large concentrations in any single year.  Common stock and equity holdings provide opportunities for dividend and capital appreciation returns.  Holdings will be appropriately diversified by maintaining broad exposure to large-, mid- and small-cap stocks as well as international equities.  Concentration in small-cap, mid-cap and international equities is limited to 20%, 20% and 30% of the equity portfolio, respectively.  Investment selection and mix of equity holdings should be influenced by forecasts of economic activity, corporate profits and allocation among different segments of the economy while ensuring efficient diversification.  The fair value of equity securities of any one issuer will not be permitted to exceed 10% of the total fair value of equity holdings of the Pension Trust.  Investments in publicly traded real estate investment trust securities and low-risk derivatives securities such as callable securities, floating rate notes, mortgage backed securities and treasury inflation protected securities, are permitted.

Cash Flows
Contributions
The Internal Revenue Code permits flexibility in plan contributions so that normally a range of contributions is possible.  The Corporation’s current funding policy has been generally to contribute the minimum required contribution and additional amounts up to the maximum deductible contribution.  The Corporation expects to contribute $3.0 million to the qualified pension plan in 2012.  In addition, the Corporation expects to contribute $723 thousand in benefit payments to the non-qualified retirement plans in 2012.

Estimated Future Benefit Payments
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid as follows:
(Dollars in thousands)
Qualified
Pension Plan
 
Non-Qualified
Plans
2012

$1,584

 

$723

2013
1,835

 
735

2014
1,950

 
742

2015
2,209

 
765

2016
2,396

 
765

Years 2017 - 2020
13,716

 
3,780


401(k) Plan
The Corporation’s 401(k) Plan provides a specified match of employee contributions for substantially all employees.  In addition, substantially all employees hired after September 30, 2007, who are ineligible for participation in the qualified defined benefit pension plan, will receive a non-elective employer contribution of 4%.  Total employer matching contributions under this plan amounted to $1.2 million, $1.0 million and $837 thousand in 2011, 2010 and 2009, respectively.

Other Incentive Plans
The Corporation maintains several non-qualified incentive compensation plans.  Substantially all employees participate in one of the incentive compensation plans.  Incentive plans provide for annual or more frequent payments based on individual, business line and/or corporate performance targets (measured in terms of the Corporation's net income, earnings per share and return on equity).  Total incentive based compensation amounted to $10.7 million, $9.6 million and $6.3 million in 2011, 2010 and 2009, respectively.  In general, the terms of incentive plans are subject to annual renewal and may be terminated at any time by the Board of Directors.

Deferred Compensation Plan
The Amended and Restated Nonqualified Deferred Compensation Plan provides supplemental retirement and tax benefits to directors and certain officers.  The plan is funded primarily through pre-tax contributions made by the participants.  The assets and liabilities of the Deferred Compensation Plan are recorded at fair value in the Corporation’s Consolidated Balance Sheets.  The participants in the plan bear the risk of market fluctuations of the underlying assets.  The accrued liability related to this plan amounted to $5.4 million and $5.6 million at December 31, 2011 and 2010, respectively, and is included in other liabilities on the accompanying Consolidated Balance Sheets.  The corresponding invested assets are reported in other assets.