Employee Benefit Plans

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Compensation and Employee Benefit Plans [Text Block]

15. Employee Benefit Plans

Defined Benefit Plan

The Corporation provides pension benefits for eligible employees through a defined benefit pension plan. Substantially all employees participate in the retirement plan on a non-contributing basis, and are fully vested after three years of service. Effective January 1, 2009, the plan was closed to new participants. Information pertaining to changes in obligations and funded status of the defined benefit pension plan for the years ended December 31 is as follows:

(Dollar amounts in thousands)	2012			2011
Change in plan assets:
Fair value of plan assets at beginning of year	$	4,892		$	4,497
Actual return on plan assets		529			192
Employer contribution		500			419
Benefits paid		(265	)		(216	)
Fair value of plan assets at end of year		5,656			4,892
Change in benefit obligation:
Benefit obligation at beginning of year		7,010			5,855
Service cost		272			295
Interest cost		331			327
Actuarial loss		145			-
Effect of change in assumptions		496			749
Benefits paid		(265	)		(216	)
Benefit obligation at end of year		7,989			7,010
Funded status (plan assets less benefit obligation)	$	(2,333	)	$	(2,118	)
Amounts recognized in accumulated other comprehensive loss, net of tax, consists of:
Accumulated net actuarial loss	$	1,872		$	1,620
Accumulated prior service benefit		(77	)		(97	)
Amount recognized, end of year	$	1,795		$	1,523

The following table presents the Corporation’s pension plan assets measured and recorded at estimated fair value on a recurring basis and their level within the estimated fair value hierarchy as described in Note 17:

(Dollar amounts in thousands)			(Level 1)		(Level 2)
			Quoted Prices in		Significant		(Level 3)
			Active Markets		Other		Significant
			for Identical		Observable		Unobservable
Description	Total		Assets		Inputs		Inputs
December 31, 2012:
Cash and cash equivalents	$	531	$	531	$	-	$	-
Fixed income		2,626		-		2,626		-
Equity mutual funds - domestic		2,203		2,203		-		-
Equity mutual funds - international		296		296		-		-
	$	5,656	$	3,030	$	2,626	$	-
December 31, 2011:
Cash and cash equivalents	$	454	$	454	$	-	$	-
Fixed income		2,471		-		2,471		-
Equity mutual funds - domestic		1,758		1,758		-		-
Equity mutual funds - international		209		209		-		-
	$	4,892	$	2,421	$	2,471	$	-

There were no significant transfers between Level 1 and Level 2 during 2012.

Amounts recognized in the balance sheet as of December 31 consist of:

(Dollar amounts in thousands)	Pension Benefits
	2012			2011
Prepaid benefit cost	$	386		$	190
Accumulated other comprehensive loss		(2,719	)		(2,308	)
Net amount recognized	$	(2,333	)	$	(2,118	)

The accumulated benefit obligation for the defined benefit pension plan was $8.0 million and $7.0 million at December 31, 2012 and 2011, respectively.

The components of the periodic pension costs for the years ended December 31 are as follows:

(Dollar amounts in thousands)	2012			2011
Service cost	$	272		$	295
Interest cost		331			327
Expected return on plan assets		(391	)		(357	)
Amortization of prior service cost and actuarial expense		92			30
Net periodic pension cost		304			295
Amortization of prior service cost		31			31
Amortization of net loss		381			852
Total recognized in other comprehensive (income) loss		412			883
Total recognized in net periodic benefit cost and other comprehensive income	$	716		$	1,178

The estimated net loss and prior service costs for the defined benefit pension plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $111,000 as of December 31, 2012.

Weighted-average actuarial assumptions for the years ended December 31 include the following:

	2012			2011
Discount rate for net periodic benefit cost		4.70	%		5.70	%
Discount rate for benefit obligations		4.17	%		4.70	%
Rate of increase in future compensation levels		3.50	%		3.50	%
Expected rate of return on plan assets		7.75	%		7.75	%

The Corporation’s pension plan asset allocation at December 31, 2012 and 2011, target allocation for 2013, and expected long-term rate of return by asset category are as follows:

Asset Category	Target Allocation			Percentage of Plan Assets at Year End						Weighted-Average Expected Long-Term Rate of Return
	2012			2012			2011			2012
Equity Securities		40	%		41	%		40	%		5.5	%
Debt Securities		50	%		50	%		51	%		1.8	%
Other		10	%		9	%		9	%		0.5	%
		100	%		100	%		100	%		7.75	%

Investment Strategy

The intent of the Plan is to provide a range of investment options for building a diversified asset allocation strategy that will provide the highest likelihood of meeting the aggregate actuarial projections. In selecting the options and asset allocation strategy, the Corporation has determined that the benefits of reduced portfolio risk are best achieved through diversification. The following asset classes or investment categories are utilized to meet the Plan’s objectives: Small company stock, International stock, Mid-cap stock, Large company stock, Diversified bond, Money Market/Stable Value and Cash. The Plan does not prohibit any certain investments.

The Corporation expects to contribute approximately $325,000 to its pension plan in 2013.

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

(Dollar amounts in thousands)	Pension
For year ended December 31,	Benefits
2013	$	236
2014		233
2015		220
2016		258
2017		264
2018-2022		1,681
Thereafter		5,097
Benefit Obligation	$	7,989

Certain accounting guidance requires an employer to recognize the funded status of its defined benefit pension plan as a net asset or liability in its consolidated balance sheet with an offsetting amount in accumulated other comprehensive income, and to recognize changes in that funded status in the year in which changes occur through comprehensive income. As of December 31, 2012, the Corporation’s liability under this guidance was $2.7 million and the charge to accumulated other comprehensive income was $1.8 million, net of taxes. Additionally, the guidance requires an employer to measure the funded status of its defined benefit pension plan as of the date of its year-end financial statements. The Corporation measures the funded status at December 31.

Defined Contribution Plan

The Corporation maintains a defined contribution 401(k) Plan. Employees are eligible to participate by providing tax-deferred contributions up to 20% of qualified compensation. Employee contributions are vested at all times. The Corporation provides a matching contribution of up to 4% of the participant’s salary. For the years ended 2012 and 2011, matching contributions were $179,000 and $176,000, respectively.

Supplemental Executive Retirement Plan

During 2003, the Corporation established a Supplemental Executive Retirement Plan (SERP) to provide certain additional retirement benefits to participating executive officers. The SERP was adopted in order to provide benefits to such executives whose benefits are reduced under the Corporation’s tax-qualified benefit plans pursuant to limitations under the Internal Revenue Code. The SERP is subject to certain vesting provisions and provides that the executives shall receive a supplemental retirement benefit if the executive’s employment is terminated after reaching the normal retirement age of 65. As of December 31, 2012 and 2011, the Corporation’s SERP liability was $736,000 and $627,000, respectively. For the years ended December 31, 2012 and 2011, the Corporation recognized expense of $120,000 and $124,000, respectively, related to the SERP.