EMPLOYEE BENEFITS

6 Months Ended

Jun. 30, 2011

EMPLOYEE BENEFITS

EMPLOYEE BENEFITS

8. EMPLOYEE BENEFITS

The Bank maintains a noncontributory pension plan through the New York State Bankers Association Retirement System covering all eligible employees. The Bank uses a December 31st measurement date for this plan in accordance with FASB ASC 715-30 “Compensation — Retirement Benefits — Defined Benefit Plans — Pension”.

The Bridgehampton National Bank Supplemental Executive Retirement Plan (“SERP”) provides benefits to certain employees, as recommended by the Compensation Committee of the Board of Directors and approved by the full Board of Directors, whose benefits under the Pension Plan are limited by the applicable provisions of the Internal Revenue Code.  The benefit under the SERP is equal to the additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in the absence of such Internal Revenue Code limitations.  The assets of the SERP are held in a rabbi trust to maintain the tax-deferred status of the plan and are subject to the general, unsecured creditors of the Company. As a result, the assets of the trust are reflected on the Consolidated Balance Sheets of the Company.  The effective date of the SERP was January 1, 2001.

The Company made a $227,833 contribution to the pension plan during the six months ended June 30, 2011.  There were no contributions made to the SERP during the six months ended June 30, 2011. In accordance with the SERP, a retired executive received a distribution from the Plan totaling $56,000 during the six months ended June 30, 2011.

The Company’s funding policy with respect to its benefit plans is to contribute at least the minimum amounts required by applicable laws and regulations.

The following table sets forth the components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income:

	Three months ended June 30,										Six months ended June 30,
	Pension Benefits						SERP Benefits				Pension Benefits						SERP Benefits
(In thousands)	2011			2010			2011		2010		2011			2010			2011		2010
Service cost	$	229		$	192		$	27	$	23	$	456		$	382		$	54	$	47
Interest cost	121			108			14		16		240			215			28		31
Expected return on plan assets	(189		)	(170		)	—		—		(377		)	(338		)	—		—
Amortization of net loss	25			26			—		—		50			52			—		—
Amortization of unrecognized prior service cost	2			2			—		—		4			4			—		—
Amortization of unrecognized transition (asset) obligation	—			—			7		7		—			—			14		14
Net periodic benefit cost	$	188		$	158		$	48	$	46	$	373		$	315		$	96	$	92