Employee Benefits

12 Months Ended

Dec. 31, 2011

Note 14: Employee Benefits

The Bank provides pension benefits for substantially all of the Bank’s employees who were employed by the Bank prior to September 1, 2005, through its participation in a pension fund known as the Pentegra Group. The trustees of the Financial Institutions Retirement Fund administer the Pentegra Plan, employer identification number 13-5645888 and plan number 333. This plan operates as a multi-employer plan for accounting purposes and as a multiple-employer plan under the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code. There are no collective bargaining agreements in place that require contributions to the Pentegra Plan. The Pentegra Plan is a single plan under Internal Revenue Code 413(c) and, as a result, all of the assets stand behind all of the liabilities. Accordingly, under the Pentegra Plan, contributions made by a participating employer may be used to provide benefits to participants of other participating employers. There is no separate actuarial valuation made with respect to each participating employer. Pension expense related to this plan was $279,000 and $193,000 for the years ended December 31, 2011 and 2010. Funding status of the plan as of the beginning of the plan years for 2011 and 2010 (July 1st) was 86.47% and 89.29% respectively. The Company’s contributions for the fiscal years ending December 31, 2011 and 2010 were $476,000 and $84,000, respectively. Total contributions to the Pentegra Plan were $203,582,000 and $133,930,000 for the plan years ended June 30, 2010 and 2009, respectively. The Company’s contributions to the Pentegra Plan were not more than 5% of the total contributions to the plan.

The Bank has a retirement savings 401(k) plan in which substantially all employees may participate. Prior to 2009, the Bank provided a match for employee contributions for all contributing employees with a match of 50% for the first 6% of W-2 earnings for employees hired prior to September 1, 2005 and a match of 100% for the first 6% of W-2 earnings contributed for employees hired on or after September 1, 2005. Due to economic conditions, in October of 2009 the employer match for pre-2005 employees was discontinued and the match rate for post-2005 employees was reduced to 50% of the first 6% of W-2 earnings. In 2011, this plan was again amended, with the employer match increased to 75% of the first 6% of W-2 earnings, only on post-2005 employees. The Bank’s expense for the plan was $45,000 and $21,000 for the years ended December 31, 2011 and 2010.

The Bank has a supplemental retirement plan which provides retirement benefits to all directors. The Bank’s obligations under the plan have been funded by the purchase of key man life insurance policies, of which the Bank is the beneficiary. Expense recognized under the supplemental retirement plan totaled approximately $80,000 and $84,000 for the years ended December 31, 2011 and 2010.

The Company has an ESOP covering substantially all employees of the Company and Bank. All contributions to the ESOP are determined annually by the Board of Directors of the Company and Bank. Compensation expense was recorded based on the annual contributions to the ESOP. ESOP expense for the years ended December 31, 2011 and 2010 was $150,000 and $100,000, respectively. At December 31, 2011 the ESOP had 148,248 allocated shares, no suspense shares and no committed-to-be released shares. At December 31, 2011 and 2010, the fair value of the 148,248 and 135,261 allocated shares held by the ESOP was $2,300,000 and $2,200,000, respectively.

The Company also has a Recognition and Retention Plan (RRP) which provides for the award and issuance of up to 95,220 shares of the Company’s stock to members of the Board of Directors and management. Over the life of the plan, the RRP has purchased 84,490 shares of the Company’s common stock in the open market and had 400 shares forfeited back into the fund. A total of 84,890 shares has all been awarded. Common stock awarded under the RRP vests ratably over a five-year period, commencing with the date of the award. Expense recognized under the RRP plan totaled approximately $29,000 and $27,000 for the years ended December 31, 2011 and 2010.

Unvested RRP shares at December 31, 2011:

	Number of Shares			Grant Date Fair Value

Beginning of year		3,400		$	17.82
Granted		2,500			16.1
Vested		(1,400	)		18.43
End of year		4,500		$	16.68

Unearned compensation at December 31, 2011 related to RRP shares is $75,000 and will be recognized over a weighted average period of 2.4 years.