Benefit Plans

Executive Retirement Plan

The Company has an Executive Retirement Plan under which three founding officers may receive pension benefits upon normal retirement (defined to be when the officer reaches age 65 and has completed five years of service with the Company) at an amount equal to 60% of the officer’s final average earnings (defined as the average of the executive’s highest three years’ earnings) plus 6% of final average earnings multiplied by the years of service after age 60 (but not more than five years), less 100% of certain other retirement benefits received by the officer to be paid either in lump sum or in monthly installments over a period not to exceed the greater of the life of the retired officer or his surviving spouse.

In December 2008, the Company froze the maximum annual benefits payable to a single participant under the plan at $896,000, plus cost of living increases, which resulted in a curtailment of benefits under the retirement plan for the Company’s chief executive officer. In 2008, the officers under the plan elected the manner in which they would receive retirement benefits upon retirement. The Company’s chief executive officer agreed to receive his retirement benefits under the plan in installment payments upon retirement, rather than in a lump sum. Of the two remaining officers in the plan, one has elected to receive benefits in monthly installments and one has elected a lump-sum payment upon retirement.

As of December 31, 2012, only the Company’s chief executive officer was eligible to retire under the plan. Upon retirement, the chief executive officer will be paid annual installments of approximately $0.9 million, increasing annually based on CPI.

Retirement Plan for Outside Directors

The Company terminated the Outside Director Plan in 2009 and in 2010 paid to each outside director who participated in the plan a lump sum payment, which aggregated to approximately $2.6 million, in full settlement of the directors’ benefits payable under the plan.

Retirement Plan Information

Net periodic benefit cost for both the Executive Retirement Plan and the Outside Director Plan for the three years in the period ended December 31, 2012 is comprised of the following:



(Dollars in thousands)	2012			2011			2010
Service cost	$	77		$	69		$	51
Interest cost	725			856			933
Effect of settlement	—			—			(243		)
Amortization of prior service cost	(723		)	—			—
Amortization of net gain/loss	990			929			671
	1,069			1,854			1,412
Net loss (gain) recognized in other comprehensive income	(1,240		)	(1,937		)	676
Total recognized in net periodic benefit cost (gain) and accumulated other comprehensive loss	$	(171	)	$	(83	)	$	2,088

The Company estimates that approximately $0.2 million of the amounts included in accumulated other comprehensive loss will be amortized to expense in 2013.

The Executive Retirement Plan is unfunded, and benefits will be paid from earnings of the Company. The following table sets forth the benefit obligations as of December 31, 2012 and 2011.



(Dollars in thousands)	2012			2011
Benefit obligation at beginning of year	$	15,414		$	15,545
Service cost	77			69
Interest cost	725			856
Benefits paid	(42		)	(48		)
Unrecognized prior service cost	(2,120		)	(2,169		)
Actuarial loss, net	1,147			1,161
Benefit obligation at end of year	$	15,201		$	15,414

Amounts recognized in the Consolidated Balance Sheets are as follows:



(Dollars in thousands)	2012			2011
Net liabilities included in other liabilities	$	(13,109	)	$	(12,082	)
Amounts recognized in accumulated other comprehensive loss	(2,092		)	(3,332		)

The Company's assumed discount rates and compensation increases, which are used to measure the year-end benefit obligations and earnings for the subsequent year related to the retirement plans, as applicable, are detailed in the following table for the three years ended December 31, 2012:



	2012		2011		2010
Discount rates	3.91	%	4.69	%	5.50	%
Compensation increases	2.7	%	2.7	%	2.7	%