Postretirement Benefits

6 Months Ended

Jun. 30, 2012

Postretirement Benefits

Postretirement Benefits

Note 12.  Postretirement Benefits

The Company has a supplemental nonqualified retirement plan, which generally vests over five-year periods beginning in 2003, pursuant to which it will pay supplemental pension benefits to key employees upon retirement. In connection with this plan, the Company has purchased cost-recovery life insurance on the lives of certain employees. Insurance contracts associated with the plan are held by trusts established as part of the plan to implement and carry out its provisions and finance its related benefits. The trusts are owners and beneficiaries of such contracts. The amount of coverage is designed to provide sufficient revenue to cover all costs of the plan if assumptions made as to employment term, mortality experience, policy earnings and other factors are realized.

At June 30, 2012, the cash surrender value of these contracts was $11.7 million, compared to $11.1 million at December 31, 2011, and was included in “Other” assets within the Consolidated Balance Sheets. The net periodic benefit cost of this plan for the three months ended June 30, 2012, totaled $860,000, which included service costs of $30,000, interest costs of $402,000 and an investment loss of $428,000. The net periodic benefit cost for the three months ended June 30, 2011, totaled $223,000, which included service costs of $28,000, interest costs of $183,000 and an investment loss of $12,000. The net periodic benefit cost of this plan for the six months ended June 30, 2012, totaled $154,000, which included service costs of $60,000 and interest costs of $602,000, offset by an investment gain of $508,000. The net periodic benefit cost for the six months ended June 30, 2011, totaled $367,000, which included service costs of $290,000 and interest costs of $366,000, offset by an investment gain of $289,000. The $12.0 million and $11.3 million projected benefit obligations at June 30, 2012 and December 31, 2011, respectively, were equal to the net liabilities recognized in the Consolidated Balance Sheets at those dates. The weighted-average discount rates used for the plan were 6.6 percent and 7.0 percent for the six-month periods ended June 30, 2012 and 2011, respectively.