Employee Benefit Plans

12 Months Ended

Dec. 31, 2011

Employee Benefit Plan [Abstract]

Employee Benefit Plans

Note 7. Employee Benefit Plans

Defined Benefit Plan

The following tables provide a reconciliation of the changes in the defined benefit plan's obligations and fair value of assets over the two-year period ending December 31, 2010.  The defined benefit pension plan was terminated on December 31, 2009, and benefits were distributed in 2010.

	2010			2009
Change in Benefit Obligations
Benefit obligation, beginning	$	6,730,628		$	6,251,895
Service cost		-			250,828
Interest cost		318,090			295,307
Actuarial gain (loss)		-			5,765
Benefits paid		(7,203,754	)		(73,167	)
Decrease in obligation due to curtailment		-			-
Loss due to settlement		155,036			-
Prior service cost due to amendment		-			-
Benefit obligation, ending	$	-		$	6,730,628
Change in Plan Assets
Fair value of plan assets, beginning	$	6,451,614		$	6,537,913
Actual return on plan assets		(12,678	)		(13,132	)
Employer contributions		764,818			-
Benefits paid		(7,203,754	)		(73,167	)
Fair value of plan assets, ending	$	-		$	6,451,614
Funded status, ending	$	-		$	(279,014	)

	2010			2009
Amount recognized on the Balance Sheet
Other assets	$	-		$	-
Other liabilities		-			-
Other comprehensive income (loss)		279,014			(279,014	)
Amounts Recognized in accumulated other comprehensive loss
Net loss		(279,014	)		279,014
Prior service cost		-			-
Net obligation at transition		-			-
Deferred tax benefit expense		94,865			(94,865	)
Amount recognized	$	(184,149	)	$	184,149
Funded Status
Benefit Obligation	$	-		$	(6,730,628	)
Fair value of assets		-			6,451,614
Unrecognized net actuarial (gain)/loss		-			279,014
Unrecognized net obligation at transition		-			-
Unrecognized prior service cost		-			-
Prepaid (accrued) benefit cost included in other assets (liabilities)	$	-		$	-

	2010			2009
Components of Net Periodic Benefit Cost
Service cost	$	-		$	250,828
Interest cost		318,090			295,307
Expected return on plan assets		(256,702	)		(260,117	)
Amortization of prior service cost		-			-
Amortization of net obligation at transition		-			-
Recognized net loss due to curtailment or settlement		703,430			-
Recognized net actuarial loss		-			-
Net periodic benefit cost	$	764,818		$	286,018

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

	2010			2009
Net (gain)/loss	$	(279,014	)	$	279,014
Prior service cost		-			-
Amortization of prior service cost		-			-
Net obligation at transition		-			-
Amortization of Net Obligation at Transition		-			-
Total recognized		(279,014	)		279,014
Income tax expense (benefit)		(94,865	)		94,865
Net amount recognized in other comprehensive (income) loss	$	(184,149	)	$	184,149

Total Recognized in Net Periodic Benefit Costs and Other Comprehensive Loss:

2010		2009
$	485,804	$	565,032

The accumulated benefit obligation for the deferred benefit pension plan was distributed during 2010, and as a result, there was no accumulated benefit obligation at December 31, 2011 or 2010.The accumulated benefit obligation for the deferred benefit pension plan was $6,730,628 at December 31, 2009.

The assumptions used in the measurement of the Company's benefit obligations are shown in the following table:

	2010			2009
Weighted-Average Assumptions used in computing ending obligations as of December 31
Discount rate		N/A			4.75	%
Expected return on plan assets		4.00	%		4.00	%
Rate of compensation increase		4.00	%		4.00	%

The assumptions used in the measurement of the Company's Net Periodic Benefit Cost are shown in the following table:

	2010			2009
Weighted-Average Assumptions used in computing ending obligations as of December 31
Discount rate		4.75	%		4.75	%
Expected return on plan assets		4.00	%		4.00	%
Rate of compensation increase		4.00	%		4.00	%

The Company pension plan's weighted-average asset allocation at December 31, 2009 by asset category are as follows:

Asset Category as of December 31, 2009
Mutual Funds - Fixed Income	0	%
Mutual Funds - Equity	0	%
Cash and Cash Equivalents	100	%
Total	100	%

Beginning in January 2008, 100% of the Company's pension plan assets were invested in cash and cash equivalents. This decision was based on recognizing the need to preserve asset value until December 31, 2009, the effective date of the termination of the defined benefit pension plan. All of the plan's assets are considered level one in the fair value hierarchy.  Prior to January 2008, the investment manager of the trust fund selected investment fund managers with demonstrated experience and expertise, and the funds with demonstrated historical performance, for the implementation of the plan's investment strategy.  The investment manager both actively and passively managed investment strategies and allocated funds across the asset classes to develop an efficient investment structure.

The Company made a $764,818 contribution to its pension plan in 2010. The Company made no contribution to its pension plan in 2009.

On December 20, 2008, the Company's Board of Directors approved the termination of the defined benefit pension plan effective on December 31, 2009, and effective January 1, 2010 replace the defined benefit pension plan with an enhanced 401(k) plan.  On August 16, 2010, the Company received a favorable determination letter dated August 12, 2010 from the Internal Revenue Service for the December 31, 2009 termination date. Between January 1, 2010 and December 10, 2010, the Company distributed $7,203,754 of pension benefits, of which $7,086,067 was distributed between November 30, 2010 and December 10, 2010, and represented the final distribution upon the plan's termination. On February 1, 2011, the Company filed a Post-Distribution Certification for Standard Termination with the Pension Benefit Guaranty Corporation.

Supplemental Executive Retirement Plan

The following tables provide a reconciliation of the changes in the supplemental executive retirement plan's obligations over the three-year period ending December 31, 2011, computed as of December 31, 2011, 2010 and 2009.

	2011			2010			2009
Change in Benefit Obligations
Projected benefit obligation, beginning	$	1,314,506		$	1,410,954		$	1,740,590
Service cost		106,225			118,478			188,139
Interest cost		72,273			84,637			104,410
Actuarial gain (loss)		(274,786	)		256,582			(622,185	)
Benefits paid		-			-			-
Prior service cost due to amendment		-			(556,145	)		-
Benefit obligation, ending	$	1,218,218		$	1,314,506		$	1,410,954
Fair value of plan assets, ending	$	-		$	-		$	-
Funded status at December 31,	$	(1,218,218	)	$	(1,314,506	)	$	(1,410,954	)

		2011			2010			2009
Amount recognized on the Balance Sheet
Other assets, deferred income tax benefit	$	123,327		$	29,716		$	82,809
Other liabilities		1,218,218			1,314,506			1,410,277
Other comprehensive income (loss)		239,399			57,684			(160,746	)
Amounts Recognized in accumulated other comprehensive loss
Net gain (loss)	$	(345,219	)	$	(70,433	)	$	(342,508	)
Prior service cost		(17,507	)		(16,967	)		586,063
Net obligation at transition		-			-			-
Deferred tax benefit (expense)		123,327			29,716			(82,809	)
Amount recognized	$	(239,399	)	$	(57,684	)	$	160,746
Funded Status
Benefit obligation	$	(1,218,218	)	$	(1,314,506	)	$	(1,410,954	)
Fair value of assets		-			-			-
Unrecognized net actuarial (gain)/loss		-			-			-
Unrecognized net obligation at transition		-			-			-
Unrecognized prior service cost		-			-			-
(Accrued)/prepaid benefit cost included in other liabilities	$	(1,218,218	)	$	(1,314,506	)	$	(1,410,954	)

	2011		2010			2009
Components of Net Periodic Benefit Cost
Service cost	$	106,225	$	118,478		$	188,139
Interest cost		72,273		84,637			104,410
Expected return on plan assets		-		-			-
Amortization of prior service cost		540		46,885			46,885
Amortization of net obligation at transition		-		-			-
Recognized net actuarial (loss) gain		-		(15,493	)		8,125
Net periodic benefit cost	$	179,038	$	234,507		$	347,559

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income

	2011			2010			2009
Net (gain)/loss	$	(274,786	)	$	272,075		$	(630,310	)
Prior service cost		-			(556,145	)		-
Amortization of prior service cost		(540	)		(46,885	)		(46,885	)
Net obligation at transition		-			-			-
Amortization of net obligation a transition		-			-			-
Total recognized		(275,326	)		(330,955	)		(677,195	)
Less: Income tax effect		(93,613	)		(112,525	)		(230,246	)
Net amount recognized in other comprehensive (income) loss	$	(181,717	)	$	(218,430	)	$	(446,949	)

Total Recognized in Net Periodic Benefit Costs and Other Comprehensive (Income) Loss before Income Tax

2011			2010			2009
$	(96,288	)	$	(96,448	)	$	(329,636	)

The assumptions used in the measurement of the Company's benefit obligations are shown in the following table.

	2011			2010			2009
Weighted-Average Assumptions used in computing ending obligations as of December 31
Discount rate used for net periodic pension cost		5.50	%		6.00	%		6.00	%
Discount rate used for disclosures		4.50	%		5.50	%		6.00	%
Expected return on plan assets		N/A			N/A			N/A
Rate of compensation increase		4.00	%		4.00	%		4.00	%

Estimated future benefit payments which reflect expected future service, as appropriate, are as follows.

Payment Dates	Amount
For the 12 months ended:
December 31, 2012	$	1,016
December 31, 2013		2,220
December 31, 2014		3,645
December 31, 2015		3,674
December 31, 2016		89,857
Thereafter		654,170

401(k) Plan

The Company has a defined contribution retirement plan under Internal Revenue Code (“Code”) Section 401(k) covering employees who have completed 3 months of service and who are at least 18 years of age.  Under the plan, a participant may contribute an amount up to 100% of their covered compensation for the year, not to exceed the dollar limit set by law (Code Section 402(g)).  The Company will make, an annual matching contribution, equal to 100% on the first 1% of compensation deferred and 50% on the next 5% of compensation deferred for a maximum match of 3.5% of compensation. Beginning in 2010, the Company began making an additional safe harbor contribution equal to 6% of compensation to all eligible participants.   The Company's 401(k) expenses for the years ended December 31, 2011, 2010  and  2009 were $654,000, $662,000, and $154,000, respectively.

Deferred Compensation Plan

The Company also maintains a Director Deferred Compensation Plan (“Deferred Compensation Plan”). This plan provides that any non-employee director of the Company or the Bank may elect to defer receipt of all or any portion of his or her compensation as a director. A participating director may elect to have amounts deferred under the Deferred Compensation Plan held in a deferred cash account, which is credited on a quarterly basis with interest equal to the highest rate offered by the Bank at the end of the preceding quarter. Alternatively, a participant may elect to have a deferred stock account in which deferred amounts are treated as if invested in the Company's common stock at the fair market value on the date of deferral. The value of a stock account will increase and decrease based upon the fair market value of an equivalent number of shares of common stock. In addition, the deferred amounts deemed invested in common stock will be credited with dividends on an equivalent number of shares. Amounts considered invested in the Company's common stock are paid, at the election of the director, either in cash or in whole shares of the common stock and cash in lieu of fractional shares. Directors may elect to receive amounts contributed to their respective accounts in one or up to five installments.

The Company has a nonqualified deferred compensation program for a former key employee's retirement, in which the contribution expense is solely funded by the Company.  The retirement benefit to be provided is variable based upon the performance of underlying life insurance policy assets.  Deferred compensation expense amounted to $17,829, $5,532, and $9,409 for the years ended December 31, 2011, 2010, and 2009, respectively.

Concurrent with the establishment of the deferred compensation plan, the Company purchased life insurance policies on this employee with the Company named as owner and beneficiary.  These life insurance policies are intended to be utilized as a source of funding the deferred compensation plan.  The Company has recorded in other assets $1,145,876,  $1,112,442 and $1,077,553  representing cash surrender value of these policies for the years ended December 31, 2011, 2010, and 2009, respectively.