Retirement Plans

12 Months Ended

Dec. 31, 2012

Compensation and Retirement Disclosure [Abstract]

Retirement Plans

RETIREMENT PLANS

The Company has a defined benefit retirement plan that covers the majority of employees hired prior to February 1, 2007. The benefits are based on years of service and the employee’s five-year final average salary.

Contributions are intended to provide for benefits attributable to service both to date and expected to be provided in the future. The Company funds the plan in accordance with the Employee Retirement Income Security Act of 1974, or ERISA. The following accumulated benefit information is as of December 31:

($ in thousands)	2012			2011
Change in benefit obligation
Benefit obligation at beginning of year	$	8,701		$	7,110
Service cost	284			251
Interest cost	375			384
Actuarial gain/assumption changes	1,344			1,591
Benefits paid	(489		)	(635		)
Benefit obligation at end of year	$	10,215		$	8,701
Accumulated benefit obligation at end of year	$	9,195		$	7,659
Change in Plan Assets
Fair value of plan assets at beginning of year	$	5,722		$	5,591
Actual return on plan assets	706			26
Employer contribution	860			791
Benefits/expenses paid	(489		)	(686		)
Fair value of plan assets at end of year	$	6,799		$	5,722
Funded status - liability	$	(3,416	)	$	(2,979	)
Amounts recorded in equity
Net actuarial (gain)	$	(4,110	)	$	(3,236	)
Prior service cost	176			205
Total amount recorded	$	(3,934	)	$	(3,031	)
Amount recorded, net taxes	$	(2,360	)	$	(1,819	)

Other changes in plan assets and benefit obligations recognized in other comprehensive income for 2012 and 2011 include the following components:

($ in thousands)	2012			2011
Net (gain) loss	$	(1,092	)	$	(537	)
Recognition of net actuarial gain or (loss)	218			249
Recognized prior service cost	(29		)	(29		)
Total changes	$	(903	)	$	(317	)
Changes, net of taxes	$	(542	)	$	(190	)

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year ($ in thousands):

($ in thousands)
Amortization net actuarial gain or (loss)	$	282
Amortization prior service cost	$	(29	)

At December 31, 2012 and 2011 the Company has a long-term pension liability. The Company has always valued its plan assets as of December 31 each year so there were no additional transition impacts upon implementation of a year-end measurement date for plan assets as required by ASC 715 "Compensation - Retirement Benefits." For 2013, the Company is estimating that contributions to the pension plan will be approximately $850,000.

Based on actuarial estimates, it is expected that annual benefit payments from the pension trust will be as follows:

2013		2014		2015		2016		2017		2018 - 2020
$	201,000	$	217,000	$	294,000	$	381,000	$	377,000	$	2,256,000

Plan assets consist of equity, debt and short-term money market investment funds. The plan’s current investment policy targets 65% equities, 25% debt and 10% money market funds. Equity and debt investment percentages are allowed to fluctuate plus or minus 20% around the respective targets to take advantage of market conditions. As an example, equities can fluctuate from 78% to 52% of plan assets. At December 31, 2012, the investment mix was approximately 71% equity, 26% debt, and 3% money market funds. At December 31, 2011, the investment mix was approximately 66% equity, 29% debt and 5% money market funds. Equity investments consist of a combination of individual equity securities plus value funds, growth funds, large cap funds and international stock funds. Debt investments consist of U.S. Treasury securities and investment grade corporate debt. The weighted-average discount rate and rate of increase in future compensation levels used in determining the periodic pension cost is 4.0% in 2012 and 4.4% in 2011. The expected long-term rate of return on plan assets is 7.5% in 2012 and 2011. The long-term rate of return on plan assets is based on the historical returns within the plan and expectations for future returns. See the following table for fair value hierarchy by investment type at December 31:

($ in thousands)	Fair Value Hierarchy	December 31, 2012		December 31, 2011
Pension Plan Assets:
Cash and Cash Equivalents	Level 1	$	231	$	190
Collective Funds	Level 2	3,449		2,619
Treasury/Corporate Notes	Level 2	1,129		1,263
Corporate Equities	Level 1	1,990		1,650
		$	6,799	$	5,722

Total pension and retirement expense was as follows for each of the years ended December 31:

($ in thousands)	2012			2011			2010
Cost components:
Service cost	$	(284	)	$	(251	)	$	(239	)
Interest cost	(375		)	(384		)	(316		)
Expected return on plan assets	454			446			342
Net amortization and deferral	(190		)	(220		)	(186		)
Total net periodic pension cost	$	(395	)	$	(409	)	$	(399	)

The Company has a Supplemental Executive Retirement Plan, or SERP, to restore to executives designated by the Compensation Committee of the Board of Directors the full benefits under the pension plan that would otherwise be restricted by certain limitations now imposed under the Internal Revenue Code. The SERP is currently unfunded. The following SERP benefit information is as of December 31:

($ in thousands)	2012			2011
Change in benefit obligation - SERP
Benefit obligation at beginning of year	$	5,474		$	3,196
Service cost	525			172
Interest cost	208			215
Actuarial gain/assumption changes	300			1,891
Benefit obligation at end of year	$	6,507		$	5,474
Accumulated benefit obligation at end of year	$	6,339		$	5,317
Funded status - liability	$	(6,507	)	$	(5,474	)

($ in thousands)	2012		2011
Amounts recorded in stockholders’ equity
Net actuarial (gain)	$	1,671	$	1,825
Prior service cost	—		—
Total amount recorded	$	1,671	$	1,825
Amount recorded, net taxes	$	1,003	$	1,098

Other changes in benefit obligations recognized in other comprehensive income for 2012 and 2011 include the following components:

($ in thousands)	2012			2011
Net (gain) loss	$	133		$	1,170
Recognition of net actuarial gain or (loss)	(287		)	(66		)
Recognized prior service cost	—			—
Total changes	$	(154	)	$	1,104
Changes, net of taxes	$	(92	)	$	662

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year ($ in thousands):

Amortization net actuarial gain or (loss) $ 229

Based on actuarial estimates, it is expected that annual benefit payments will be as follows:

2013		2014		2015		2016		2017		2018 - 2020
$	419,000	$	415,000	$	409,000	$	403,000	$	397,000	$	1,867,000

The weighted-average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of projected benefits obligation was 3.45% and 3.5% for 2012, 3.95% and 3.5% for 2011, and 5.5% and 3% for 2010. Total pension and retirement expense was as follows for each of the years ended December 31:

($ in thousands)	2012		2011			2010
Cost components:
Service cost	$	525	$	(172	)	$	(223	)
Interest cost	208		(215		)	(226		)
Net amortization and deferral	287		(66		)	—
Total net periodic pension cost	$	1,020	$	(453	)	$	(449	)

The Company also provides a 401(k) plan to its employees and contributed $115,000 to the plan for 2012 and $75,000 to the plan for 2011.