Employee Benefit Plans

6 Months Ended

Jun. 30, 2011

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Note 8 – Employee Benefit Plans

401(k) Plan

The Bank has a defined contribution plan available to substantially all employees who have completed nine months of service. Employees may contribute up to $16,500 of their compensation if under age 50 and $22,000 if age 50 or over, and the Bank may match employee contributions not to exceed 3.0% of compensation depending on contribution level. Subject to a vote of the Board of Directors, the Bank may also make a profit-sharing contribution to the Plan. Such contribution equaled 2.0% of each eligible employee’s compensation in 2010. The amount for 2011 has not been

established. The expense related to the 401(k) plan was $205,000 and $169,000 for the six months ended June 30, 2011 and 2010, respectively.

Supplemental Retirement Benefits

The Bank also provides unfunded, non-qualified supplemental retirement benefits for certain officers, payable in installments over 20 years upon retirement or death. The agreements consist of individual contracts with differing characteristics that, when taken together, do not constitute a postretirement plan. The costs for these benefits are recognized over the service periods of the participating officers in accordance with FASB ASC Topic 712 “Compensation – Nonretirement Postemployment Benefits”. The expense of these supplemental retirement benefits was $153,000 and $114,000 for the six months ended June 30, 2011 and 2010, respectively. As of June 30, 2011, the associated accrued liability included in other liabilities in the balance sheet was $1,721,000 compared to $1,596,000 and $1,509,000 at December 31, 2010 and June 30, 2010, respectively.

Post-Retirement Benefit Plans

The Bank sponsors two post-retirement benefit plans. One plan currently provides a subsidy for health insurance premiums to certain retired employees and a future subsidy for seven active employees who were age 50 and over in 1996. These subsidies are based on years of service and range between $40 and $1,200 per month per person. The other plan provides life insurance coverage to certain retired employees. The Bank also provides health insurance for retired directors. None of these plans are pre-funded. The Company utilizes FASB ASC Topic 712 “Compensation – Nonretirement Postemployment Benefits” to recognize the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its balance sheet and to recognize changes in the funded status in the year in which the changes occur through comprehensive income. The following table sets forth the accumulated postretirement benefit obligation and funded status:

	At and for the six months ended June 30,
	2011			2010
Change in benefit obligation
Benefit obligation at beginning of year	$	1,796,000		$	1,962,000
Service cost		8,000			11,000
Interest cost		58,000			67,000
Benefits paid		(78,000	)		(74,000	)
Benefit obligation at end of period		1,784,000			1,966,000
Funded status
Benefit obligation at end of period		(1,784,000	)		(1,966,000	)
Accrued benefit cost at end of period	$	(1,784,000	)	$	(1,966,000	)

The following table sets forth the net periodic pension cost:

	For six months ended June 30,					For quarters ended June 30,
	2011		2010			2011		2010
Components of net periodic benefit cost
Service cost	$	8,000	$	11,000		$	4,000	$	6,000
Interest cost		58,000		67,000			29,000		33,000
Amortization of unrecognized transition obligation		14,000		14,000			7,000		7,000
Amortization of prior service credit		-		(1,000	)		-		-
Amortization of accumulated losses		10,000		12,000			5,000		7,000
Net periodic benefit cost	$	90,000	$	103,000		$	45,000	$	53,000

    Amounts not yet reflected in net periodic benefit cost and included in accumulated other comprehensive income (loss) are as follows:

	June 30, 2011			December 31, 2010			June 30, 2010
Unamortized net actuarial loss	$	(49,000	)	$	(49,000	)	$	(233,000	)
Unrecognized transition obligation		(49,000	)		(63,000	)		(78,000	)
		(98,000	)		(112,000	)		(311,000	)
Deferred tax benefit at 35%		34,000			39,000			109,000
Net unrecognized postretirement benefits included in accumulated other comprehensive income (loss)	$	(64,000	)	$	(73,000	)	$	(202,000	)

A weighted average discount rate of 7.0% was used in determining the accumulated benefit obligation and the net periodic benefit cost. The assumed health care cost trend rate is 7.0%. The measurement date for benefit obligations was as of year-end for prior years presented. The expected benefit payments for the third quarter of 2011 are $37,000 and the expected benefit payments for all of 2011 are $147,000. There is no expected contribution for 2011. Plan expense for 2011 is estimated to be $165,000. A 1% change in trend assumptions would create an approximate change in the same direction of approximately $100,000 in the accumulated benefit obligation, $7,000 in the interest cost and $1,400 in the service cost.