Note 13 Employee Benefit Plans

The Company maintains noncontributory defined-benefit and defined-contribution retirement plans and covers substantially all employees of the Company with one of these plans. The benefits under the noncontributory defined-benefit plan (the “DB Pension Plan”) are based on years of service and percentage of the employees’ average final compensation. Assets of the Company’s DB Pension Plan are invested in common and preferred stock, U. S. Government securities, corporate bonds and notes, and mutual funds. At December 31, 2011and 2010, the plan assets included 42,192 shares of Tompkins’ common stock that had a fair value of $1.6 million and $1.7 million, respectively.

In the first quarter of 2010, the Company stopped admitting new employees to its noncontributory DB Pension Plan. The Company offered employees hired before January 1, 2010 a one-time opportunity to choose how they would earn future retirement benefits, either continuing in the DB Pension Plan or participating in the new noncontributory defined contribution Retirement Plan (the “DC Retirement Plan”). Elections were effective July 1, 2010. Employees hired after January 1, 2010 participate in the DC Retirement Plan when they have completed one year of service and reached the age of 21. For participants in the DC Retirement Plan, the Company makes contributions to an account set up in the participant’s name. The amount equals a percentage of base pay and varies based on the participant’s age plus service as of the previous January 1st. The DC Retirement Plan offers the participant a wide range of investment alternatives from which to choose. Expenses related to the DC Retirement Plan totaled $513,000 in 2011 and $284,000 in 2010.

Effective July 1, 2011 the Company split the DB Pension Plan, with no change in benefits to any participants. Current employees who are still receiving credits and/or benefit accruals remain in the existing plan. All other participants in the plan were placed into a new plan. The below disclosures reflect the combined costs of the two defined benefit plans.

The Company maintains supplemental employee retirement plans (the “SERP”) for certain executives. All benefits provided under the SERP are unfunded and the Company makes payments to plan participants.

The Company also maintains a post-retirement life and healthcare benefit plan (the “Life and Healthcare Plan”), which was amended in 2005. For employees commencing employment after January 1, 2005, the Company does not contribute towards the Life and Healthcare Plan. Retirees and employees who were eligible to retire when the Life and Healthcare Plan was amended were unaffected. Generally, all other employees were eligible for Health Savings Accounts (“HSA”) with an initial balance equal to the amount of the Company’s estimated then current liability. Contributions to the plan are limited to an annual contribution of 4% of the total HSA balances. Employees, upon retirement, will be able to utilize their HSA for qualified health costs and deductibles.

The Company engages independent, external actuaries to compute the amounts of liabilities and expenses relating to these plans, subject to the assumptions that the Company selects. The benefit obligation for these plans represents the liability of the Company for current and retired employees, and is affected primarily by the following: service cost (benefits attributed to employee service during the period); interest cost (interest on the liability due to the passage of time); actuarial gains/losses (experience during the year different from that assumed and changes in plan assumptions); and benefits paid to participants.

The following table sets forth the changes in the projected benefit obligation for the DB Pension Plans and SERP and the accumulated benefit obligation for the Life and Healthcare Plan; and the respective plan assets, and the plans’ funded status and amounts recognized in the Company’s Consolidated Statements of Condition at December 31, 2011 and 2010 (the measurement dates of the plans).

	Pension Plans						Life and Healthcare Plan						SERP Plan
(in thousands)	2011			2010			2011			2010			2011			2010
Change in benefit obligation:
Benefit obligation at beginning of year	$	49,417		$	44,416		$	7,243		$	6,555		$	10,951		$	10,055
Service cost		2,220			2,152			117			94			201			185
Interest Cost		2,714			2,584			380			384			620			589
Plan participants’ contributions		0			0			234			188			0			0
Amendments		0			(386	)		0			0			793			0
Curtailments		0			(139	)		0			0			0			0
Actuarial loss		11,547			2,751			1,092			525			3,485			445
Benefits paid		(2,144	)		(1,961	)		(556	)		(503	)		(323	)		(323	)
Benefit obligation at end of year	$	63,754		$	49,417		$	8,510		$	7,243		$	15,727		$	10,951
Change in plan assets:
Fair value of plan assets at beginning of year	$	48,094		$	38,386		$	0		$	0		$	0		$	0
Actual (loss) return on plan assets		(1,158	)		4,419			0			0			0			0
Plan participants’ contributions		0			0			234			188			0			0
Employer contributions		2,750			7,250			322			315			323			323
Benefits paid		(2,144	)		(1,961	)		(556	)		(503	)		(323	)		(323	)
Fair value of plan assets at end of year	$	47,542		$	48,094		$	0		$	0		$	0		$	0
Unfunded status	$	(16,212	)	$	(1,323	)	$	(8,510	)	$	(7,243	)	$	(15,727	)	$	(10,951	)

The accumulated benefit obligation for the DB Pension Plans for 2011 and 2010 was $62.2 million and $48.3 million, respectively. The accumulated benefit obligation for the SERP for 2011 and 2010 was $9.6 million and $7.0 million, respectively. The unfunded status of the DB Pension, life and healthcare and SERP plans has been recognized in other liabilities in the Consolidated Statement of Condition at December 31, 2011, in the amounts of $16.2 million, $8.5 million, and $15.7 million, respectively. The unfunded status of the DB Pension, life and healthcare and SERP plans has been recognized in other liabilities in the Consolidated Statement of Condition at December 31, 2010, in the amounts of $1.3 million, $7.2 million, and $11.0 million, respectively.

Net periodic benefit cost and other comprehensive income includes the following components:

(in thousands)	Pension Plan									Life and Healthcare Plan									SERP Plan
Components of net periodic benefit cost	2011			2010			2009			2011			2010			2009			2011			2010			2009
Service cost	$	2,220		$	2,152		$	2,178		$	117		$	94		$	98		$	201		$	185		$	164
Interest cost		2,715			2,584			2,410			380			384			372			619			589			559
Expected return on plan assets		(3,713	)		(2,700	)		(2,638	)		0			0			0			0			0			0
Amortization of prior service (credit) cost		(123	)		(117	)		(105	)		16			16			16			101			101			101
Recognized net actuarial loss		1,324			1,852			1,502			13			0			0			130			103			91
Recognized net actuarial gain due to curtailments		0			(155	)		0			0			0			0			0			0			0
Amortization of transition liability		0			0			0			67			67			67			0			0			0
Net periodic benefit cost	$	2,423			3,616		$	3,347		$	593		$	561			553		$	1,051			978		$	915
Other changes in plan assets and benefit obligations recognized in other comprehensive income
Net actuarial (gain) loss	$	16,417			893			(667	)		1,091			525			341			3,485			445			540
Recognized actuarial loss		(1,324	)		(1,852	)		(1,502	)		(13	)		0			0			(130	)		(103	)		(91	)
Prior service cost		0			(386	)		0			0			0			0			793			0			0
Recognized prior service cost (credit)		123			272			105			(16	)		(16	)		(16	)		(101	)		(101	)		(101	)
Recognized net initial obligation		0			0			0			(67	)		(67	)		(67	)		0			0			0
Recognized in other comprehensive income	$	15,216			(1,073	)	$	(2,064	)	$	995		$	442			258		$	4,047			241		$	348
Total recognized in net periodic benefit cost and other comprehensive income	$	17,639			2,543		$	1,283		$	1,588		$	1,003			811		$	5,098			1,219		$	1,263

Pre-tax amounts recognized as a component of accumulated other comprehensive income as of year-end that have not been recognized as a component of the Company’s combined net periodic benefit cost of the Company’s defined-benefit pension plan, post-retirement healthcare benefit plan and SERP are presented in the following table.

(in thousands)	Pension Plan									Life and Healthcare Plan						SERP Plan
	2011			2010			2009			2011		2010		2009		2011		2010		2009
Net actuarial loss (gain)	$	35,955		$	20,861		$	21,820		$	1,878	$	801	$	276	$	6,063	$	2,709	$	2,367
Prior service cost (credit)		(593	)		(715	)		(601	)		312		327		343		1,092		398		499
Unrecognized net initial obligation		0			0			0			117		185		252		0		0		0
Total	$	35,362			20,146		$	21,219		$	2,307	$	1,313		871	$	7,155		3,107	$	2,866

The pre-tax amounts included in accumulated other comprehensive income that are expected to be recognized in net periodic pension cost during the fiscal year ended December 31, 2012 are shown below.

(in thousands)	Pension Plan			Life and Healthcare Plan		SERP Plan
Actuarial loss	$	1,878		$	66	$	340
Prior service cost		(123	)		16		161
Net initital obligation		0			67		0
Total	$	1,755		$	149	$	501

Weighted-average assumptions used in accounting for the plans were as follows:

(in thousands)	Pension Plan									Life and Healthcare Plan									SERP Plan
	2011			2010			2009			2011			2010			2009			2011			2010			2009
Discount Rates
Benefit Cost for Plan Year		5.50	%		5.90	%		6.05	%		5.30	%		5.90	%		6.05	%		5.70	%		5.90	%		6.05	%
Benefit Obligation at End of Plan Year		4.38	%		5.50	%		5.90	%		4.30	%		5.30	%		5.90	%		4.60	%		5.70	%		5.90	%
Expected long-term return on plan assets		7.50	%		7.50	%		7.50	%		N/A			N/A			N/A			N/A			N/A			N/A
Rate of compensation increase
Benefit Cost for Plan Year		5.50	%		5.50	%		5.50	%		5.50	%		5.50	%		5.50	%		5.00	%		5.00	%		5.00	%
Benefit Obligation at End of Plan Year		5.50	%		5.50	%		5.50	%		5.50	%		5.50	%		5.50	%		5.00	%		5.00	%		5.00	%

Tompkins Trust Company offers post-retirement life and healthcare benefits, although as previously mentioned, has discontinued adding participants to the plan effective January 1, 2005. The weighted average annual assumed rate of increase in the per capita cost of covered benefits (the health care cost trend rate) is 7.5% beginning in 2011, and is assumed to decrease gradually to 5.0% in 2020 and beyond. A 1% increase in the assumed health care cost trend rate, would increase service and interest costs by approximately $9,400 and increase the Company’s benefit obligation by approximately $142,000. A 1% decrease in the assumed health care cost trend rate, would decrease service and interest costs by approximately $8,400 and decrease the Company’s benefit obligation by approximately $131,000.

To develop the expected long-term rate of return on assets assumption for the DB Pension Plan, the Company considered the historical returns and the future expectations for returns for each asset class, as well as target asset allocations of the pension portfolio. Based on this analysis, the Company selected 7.50% as the long-term rate of return on asset assumption.

The discount rates used to determine the Company’s DB Pension Plan and other post-retirement benefit obligations as of December 31, 2011, and December 31, 2010, were determined by matching estimated benefit cash flows to a yield curve derived from Citigroup’s regular bond yield and above-median bond yield curve at December 31, 2011 and December 31, 2010.

Cash Flows

Plan assets are amounts that have been segregated and restricted to provide benefits, and include amounts contributed by the Company and amounts earned from investing contributions, less benefits paid. The Company funds the cost of the SERP and the post-retirement medical and life insurance benefits on a pay-as-you-go basis.

The benefits as of December 31, 2011, expected to be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter were as follows:

(in thousands)	Pension Plan		Life and Healthcare Plan		SERP Plan
2012	$	2,374	$	418	$	318
2013		2,539		455		316
2014		2,903		486		306
2015		2,731		490		291
2016		2,950		537		288
2017-2021		18,597		2,612		2,940
Total	$	32,094	$	4,998	$	4,459

Plan Assets

The Company’s DB Pension Plan’s weighted-average asset allocations at December 31, 2011 and 2010, respectively, by asset category are as follows:

	2011			2010
Equity securities		77	%		74	%
Debt securities		22	%		21	%
Other		1	%		5	%
Total Allocation		100	%		100	%

It is the policy of the Trustees to invest the Pension Trust Fund (the “Fund”) for total return. The Trustees seek the maximum return consistent with the interests of the participants and beneficiaries and prudent investment management. The management of the Fund’s assets is in compliance with the guidelines established in the Company’s Pension Plan and Trust Investment Policy, which is reviewed and approved annually by the Tompkins Board of Directors, and the Pension Investment Review Committee.

The intention is for the Fund to be prudently diversified. The Fund’s investments will be invested among the fixed income, equity and cash equivalent sectors. The pension committee will designate minimum and maximum positions in any of the sectors. In no case shall more than 10% of the Fund assets consist of qualified securities or real estate of the Company. Unless otherwise approved by the Trustees, the following investments are prohibited:

	1.	Restricted stock, private placements, short positions, calls, puts, or margin transactions;

	2.	Commodities, oil and gas properties, real estate properties, or

	3.	Any investment that would constitute a prohibited transaction as described in the Employee Retirement Income Security Act of 1974 (“ERISA”), section 407, 29 U.S.C. 1106.

In general, the investment in debt securities is limited to readily marketable debt securities having a Standard & Poor’s rating of “A” or Moody’s rating of “A”, securities of, or guaranteed by the United States Government or its agencies, or obligations of banks or their holding companies that are rated in the three highest ratings assigned by Fitch Investor Service, Inc. In addition, investments in equity securities must be listed on the NYSE or traded on the national Over The Counter market or listed on the NASDAQ. Cash equivalents generally may be United States Treasury obligations, commercial paper having a Standard & Poor’s rating of “A-1” or Moody’s National Credit Officer rating of “P-1”or higher.

The major categories of assets in the Company’s Pension Plan as of year-end are presented in the following table. Assets are segregated by the level of valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value (see Note 19-Fair Value Measurements).

Fair Value Measurements
December 31, 2011
	Fair Value
(in thousands)	2011		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	806	$	806	$	0	$	0
U.S. Treasury securities		2,153		2,153		0		0
U.S. Government sponsored entities securities		1,238		0		1,238		0
Corporate bonds and notes		7,131		0		7,131		0
Common stocks		12,216		12,216		0		0
Mutual funds		23,248		23,248		0		0
Preferred stocks		750		0		750		0
Total Fair Value of Plan Assets	$	47,542	$	38,423	$	9,119	$	0

Fair Value Measurements
December 31, 2010
	Fair Value
(in thousands)	2010		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	2,499	$	2,499	$	0	$	0
U.S. Treasury securities		1,911		1,911		0		0
U.S. Government sponsored entities securities		1,140		0		1,140		0
Corporate bonds and notes		6,890		0		6,890		0
Common stocks		14,983		14,983		0		0
Mutual funds		19,791		19,791		0		0
Preferred stocks		880		0		880		0
Total Fair Value of Plan Assets	$	48,094	$	39,184	$	8,910	$	0

The Company determines the fair value for its pension plan assets using an independent pricing service. The pricing service uses a variety of techniques to determine fair value, including market maker bids, quotes and pricing models. Inputs to the model include recent trades, benchmark interest rates, spreads, and actual and projected cash flows. Based on the inputs used by our independent pricing services, the Company identifies the appropriate level within the fair value hierarchy to report these fair values. U.S. Treasury securities, common stocks and mutual funds are considered Level 1 based on quoted prices in active markets.

The Company has an Employee Stock Ownership Plan (ESOP) and a 401(k) Investment and Stock Ownership Plan (ISOP) covering substantially all employees of the Company. The ESOP allows for Company contributions in the form of common stock of the Company. Annually, the Tompkins Board of Directors determines a profit-sharing payout to its employees in accordance with a performance-based formula. A percentage of the approved amount is paid in Company common stock into the ESOP. Contributions are limited to a maximum amount as stipulated in the ESOP. The remaining percentage is either paid out in cash or deferred into the ISOP at the direction of the employee. Compensation expense related to the ESOP and ISOP totaled $2.5 million in 2011, $2.6 million in 2010, and $2.7 million in 2009.

Under the ISOP, employees may contribute a percentage of their eligible compensation with a Company match of such contributions up to a maximum match of 4%. Participation in the 401(k) Plan is contingent upon certain age and service requirements. The Company’s expense associated with these matching provisions was $1.4 million in 2011, $1.3 million in 2010, and $1.2 million in 2009.

Life insurance benefits are provided to certain officers of the Company. In connection with these policies, the Company reflects life insurance assets on its Consolidated Statements of Condition of $43.0 million at December 31, 2011, and $40.0 million at December 31, 2010. The insurance is carried at its cash surrender value on the Consolidated Statements of Condition. Increases in the cash surrender value of the insurance are reflected as noninterest income, net of any related mortality expense.

The Company provides split dollar life insurance benefits to certain employees. The plan is unfunded and the estimated liability of the plan of $863,000 and $882,000 is recorded in other liabilities in the Consolidated Statements of Condition at December 31, 2011 and 2010, respectively. Compensation expense related to the split dollar life insurance was approximately $68,000 in 2011 and $67,000 in 2010.