Pensions

6 Months Ended

Jun. 30, 2012

Pensions [Abstract]

Pensions

Note 8 – Pensions

The components of pension expense for the periods presented are as follows:

	Three months ended		Six months ended
	June 30		June 30
(Dollars in thousands)	2012	2011	2012	2011
Components of net periodic (benefit) cost:
Service cost	$           115	$               84	$            230	$             187
Interest cost	179	180	358	362
Expected return on plan assets	(197)	(188)	(394)	(376)
Recognized net actuarial loss	171	91	342	180
Net periodic cost	$           268	$             167	$            536	$             353

The Bank expects its pension expense to increase to approximately $1.1 million in 2012 compared to $705 thousand in 2011.The Bank expects to contribute $1.2 million to its pension plan in 2012.This contribution will meet the minimum funding requirements.

In June 2012, Congress approved the Highway Expenditures Bill that included pension funding relief. The relief is in the form of interest rate stabilization by allowing the use of a 25-year average rate to calculate pension funding compared to a 2-year average rate currently used. This change is expected to reduce pension contributions, but will have no affect on the Corporation's financial statements for accounting purposes. The change is effective in 2013 with the option to implement in 2012. The Bank is currently reviewing the potential effects of this change.