NOTE 13. Pension Plan

The Company provides pension benefits for eligible participants through a non-contributory defined-benefit pension plan. The plan was frozen effective September 30, 2006; therefore no additional participants will be added to the plan.

Information pertaining to the activity in the plan, using a measurement date of December 31, is as follows:

	Years ended December 31,
	2012			2011
	(in thousands)
Change in benefit obligation
Benefit obligation at beginning of year	$	5,875		$	5,896
Service cost		0			0
Interest cost		289			305
Benefits paid		(852	)		(572	)
Actuarial loss		950			246
Benefit obligation at end of year	$	6,262		$	5,875

Change in plan assets
Fair value of plan assets at beginning of year	$	5,721		$	6,156
Actual return on plan assets		299			137
Employer contribution		0			0
Benefits paid		(852	)		(572	)
Fair value of plan assets at end of year	$	5,168		$	5,721

Funded Status at end of year	$	(1,094	)	$	(154	)


Amounts recognized in the consolidated balance sheets at December 31,
Accrued pension liability	$	(1,094	)	$	(154	)

Amounts recognized in other comprehensive income (loss)
Loss	$	3,309		$	2,842
Deferred taxes		(1,125	)		(966	)
Net loss	$	2,184		$	1,876


Accumulated benefit obligation		$	6,262			$	5,875

Assumptions used to determine the benefit obligations at December 31,		2012				2011
Discount rate			4.10	%			5.00	%

	Years ended December 31,
Components of net periodic pension cost	2012			2011
	(in thousands)
Interest cost	$	289		$	305
Expected return on plan assets		(371	)		(418	)
Amortization of unrecognized loss		262			175
Preliminary Net periodic pension cost		180			62
Settlement/Curtailment Expense		292			0
Net Periodic Pension Cost	$	472		$	62

Components of other amounts recognized in other comprehensive income
Net actuarial loss	$	1,022		$	527
Settlement loss		(292	)		0
Amortization of actuarial loss		(262	)		(175	)
Total recognized in other comprehensive income	$	468		$	352

Total recognized in net periodic benefit cost and other comprehensive income	$	940		$	414

The estimated net loss for the pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next year is $196 thousand.

	Years ended December 31,
Weighted-average assumptions used to determine net periodic pension cost	2012			2011
Discount rate		5.00	%		5.30	%
Expected long-term rate of return on plan assets		7.00	%		7.00	%

The overall expected long-term rate of return on plan assets was determined based on the current asset allocation and the related volatility of those investments.

The Company's overall investment strategy is growth with income. The emphasis of the objective is on both capital appreciation and income. The portfolio contains a blend of securities expected to grow in value over the long term and those expected to produce income. Moderate market value volatility is expected.

The pension plan invests primarily in large and mid-cap equities and government and corporate bonds, with the following target allocations: equities 55 percent, fixed income 40 percent and cash 5 percent. The pension plan has a very small investment in emerging markets equity mutual funds, representing approximately 1 percent of the total account value.

Fair value is discussed in detail in Note 15. The fair value of the Company's pension plan assets by asset category are as follows:

	Assets at Fair Value as of December 31, 2012
	(in thousands)
Asset Category	Level 1		Level 2		Level 3		Total
Money market funds	$	356	$	0	$	0	$	356
Mutual Funds		35		0		0		35
Common Stock		2,846		0		0		2,846
Corporate bonds		0		1,931		0		1,931
Total assets at fair value	$	3,237	$	1,931	$	0	$	5,168

	Assets at Fair Value as of December 31, 2011
	(in thousands)
Asset Category	Level 1		Level 2		Level 3		Total
Money market funds	$	311	$	0	$	0	$	311
U.S. Government securities		100		0		0		100
Mutual Funds		123		0		0		123
Common Stock		3,232		0		0		3,232
Corporate bonds		0		1,955		0		1,955
Total assets at fair value	$	3,766	$	1,955	$	0	$	5,721

The Company did not contribute to the pension plan in 2012 or 2011. Management has not determined at this time how much, if any, contributions to the plan will be for the year ended December 31, 2013.

Estimated future benefit payments, which reflect expected future service, as appropriate, are as follows (in thousands):

2013	$	238
2014		244
2015		300
2016		229
2017		435
Thereafter		2,119
Total	$	3,565

401(K) PLAN

The Company has a 401(k) Plan in which substantially all employees are eligible to participate. Employees may contribute to the plan subject to certain limits based on federal tax laws. The Company makes matching contributions equal to 100 percent of the first 4 percent of an employee's compensation contributed to the plan. Matching contributions vest to the employee immediately. The Company may make profit sharing contributions to the plan as determined by the Board of Directors. Profit sharing contributions vest to the employee over a six-year period. For the years ended December 31, 2012 and 2011, expense attributable to the plan amounted to $646 thousand and $530 thousand, respectively.