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Benefit Plans | 12 Months Ended
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Dec. 31, 2010
Benefit Plans [Abstract] |
Benefit Plans | 13. BENEFIT PLANS The Corporation has a noncontributory Defined Benefit Pension Plan (the "Pension Plan") covering substantially all of the employees of the Corporation and its subsidiaries. The Pension Plan provides benefits based on an employee's years of service and compensation. The Corporation's funding policy is to contribute annually an amount that can be deducted for federal income tax purposes using a different actuarial cost method and different assumptions from those used for financial reporting purposes. Management made a $20 million contribution in January 2009, which was deductible on the 2008 tax return and as such was reflected as part of the deferred tax liabilities at December 31, 2008. In addition, management made a $10 million contribution in November 2009, which was deductible on the 2009 tax return and as such is reflected as part of deferred tax liabilities at December 31, 2009. Management contributed $2 million in September 2010, which will be deductible on the 2010 tax return and is reflected in deferred tax liabilities at December 31, 2010. In January 2011, management contributed $14 million, of which $12.4 million will be deductible on the 2010 tax return and $1.6 million on the 2011 tax return. The entire $12.4 million deductible on the 2010 tax return is reflected as part of the deferred tax liabilities at December 31, 2010. See Note 14 of these Notes to Consolidated Financial Statements. Park does not expect to make any additional contributions to the Pension Plan in 2011. Using an accrual measurement date of December 31, 2010 and 2009, plan assets and benefit obligation activity for the Pension Plan are listed below:
(In thousands) |  | 2010 |  |  | 2009 |
Change in fair value of plan assets |  |  |  |  |  |
Fair value at beginning of measurement period |  | $ | 75,815 |  |  | $ | 38,506 |
Actual return on plan assets |  |  | 11,296 |  |  |  | 11,689 |
Company contributions |  |  | 2,000 |  |  |  | 30,000 |
Benefits paid |  |  | (3,647 | ) |  |  | (4,380 | )
Fair value at end of measurement period |  | $ | 85,464 |  |  | $ | 75,815 |
Change in benefit obligation |  |  |  |  |  |  |  |
Projected benefit obligation at beginning of measurement period |  | $ | 60,342 |  |  | $ | 57,804 |
Service cost |  |  | 3,671 |  |  |  | 3,813 |
Interest cost |  |  | 3,583 |  |  |  | 3,432 |
Actuarial loss or (gain) |  |  | 10,215 |  |  |  | (327 | )
Benefits paid |  |  | (3,647 | ) |  |  | (4,380 | )
Projected benefit obligation at the end of measurement period |  | $ | 74,164 |  |  | $ | 60,342 |
Funded status at end of year (assets less benefit obligation) |  | $ | 11,300 |  |  | $ | 15,473 |
The asset allocation for the Pension Plan as of the measurement date, by asset category, was as follows:
|  |  |  |  | Percentage of Plan Assets |
Asset Category |  | Target Allocation |  |  | 2010 |  |  | 2009 |
Equity securities |  | 50% – 100% |  |  |  | 86 | % |  |  | 83 | %
Fixed income and cash equivalents |  | remaining balance |  |  |  | 14 | % |  |  | 17 | %
Total |  | — |  |  |  | 100 | % |  |  | 100 | %
The investment policy, as established by the Retirement Plan Committee, is to invest assets according to the target allocation stated above. Assets will be reallocated periodically based on the investment strategy of the Retirement Plan Committee. The investment policy is reviewed periodically. The expected long-term rate of return on plan assets was 7.75% in 2010 and 2009. This return was based on the expected return of each of the asset categories, weighted based on the median of the target allocation for each class. The accumulated benefit obligation for the Pension Plan was $63.5 million and $52.6 million at December 31, 2010 and 2009, respectively. On November 17, 2009, the Park Pension Plan completed the purchase of 115,800 common shares of Park for $7.0 million or $60.45 per share. At December 31, 2010 and 2009, the fair value of the 115,800 common shares held by the Pension Plan was $8.4 million, or $72.67 per share and $6.8 million, or $58.88 per share, respectively. The weighted average assumptions used to determine benefit obligations at December 31, 2010 and December 31, 2009 were as follows:
|  | 2010 |  |  | 2009 |
Discount rate |  |  | 5.50 | % |  |  | 6.00 | %
Rate of compensation increase |  |  | 3.00 | % |  |  | 3.00 | %
The estimated future pension benefit payments reflecting expected future service for the next ten years are shown below in thousands:
2011 |  | $ | 4,114 |
2012 |  |  | 4,372 |
2013 |  |  | 5,432 |
2014 |  |  | 5,957 |
2015 |  |  | 6,146 |
2016 – 2020 |  |  | 35,867 |
Total |  | $ | 61,888 |
The following table shows ending balances of accumulated other comprehensive income (loss) at December 31, 2010 and 2009.
(In thousands) |  | 2010 |  |  | 2009 |
Prior service cost |  | $ | (93 | ) |  | $ | (115 | )
Net actuarial loss |  |  | (24,410 | ) |  |  | (20,654 | )
Total |  |  | (24,503 | ) |  |  | (20,769 | )
Deferred taxes |  |  | 8,576 |  |  |  | 7,269 |
Accumulated other comprehensive loss |  | $ | (15,927 | ) |  | $ | (13,500 | )
Using an actuarial measurement date of December 31 for 2010, 2009 and 2008, components of net periodic benefit cost and other amounts recognized in other comprehensive income (loss) were as follows:
(In thousands) |  | 2010 |  |  | 2009 |  |  | 2008 |
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |
Service cost |  | $ | (3,671 | ) |  | $ | (3,813 | ) |  | $ | (3,451 | )
Interest cost |  |  | (3,583 | ) |  |  | (3,432 | ) |  |  | (3,157 | )
Expected return on plan assets |  |  | 5,867 |  |  |  | 4,487 |  |  |  | 4,608 |
Amortization of prior service cost |  |  | (22 | ) |  |  | (34 | ) |  |  | (34 | )
Recognized net actuarial loss |  |  | (1,079 | ) |  |  | (2,041 | ) |  |  | — |
Net periodic benefit cost |  | $ | (2,488 | ) |  | $ | (4,833 | ) |  | $ | (2,034 | )
Change to net actuarial (loss)/gain for the period |  | $ | (4,835 | ) |  | $ | 7,591 |  |  | $ | (25,000 | )
Amortization of prior service cost |  |  | 22 |  |  |  | 34 |  |  |  | 42 |
Amortization of net loss |  |  | 1,079 |  |  |  | 2,041 |  |  |  | — |
Total recognized in other comprehensive (loss)/income |  |  | (3,734 | ) |  |  | 9,666 |  |  |  | (24,958 | )
Total recognized in net benefit cost and other comprehensive (loss)/income |  | $ | (6,222 | ) |  | $ | 4,833 |  |  | $ | (26,992 | )
The estimated prior service costs for the Pension Plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $20 thousand. The estimated net actuarial (loss) expected to be recognized in the next fiscal year is ($1.4) million. The weighted average assumptions used to determine net periodic benefit cost for the years ended December 31, 2010 and 2009, are listed below:
|  | 2010 |  |  | 2009 |
Discount rate |  |  | 6.00 | % |  |  | 6.00 | %
Rate of compensation increase |  |  | 3.00 | % |  |  | 3.00 | %
Expected long-term return on plan assets |  |  | 7.75 | % |  |  | 7.75 | %
Management believes the 7.75% expected long-term rate of return is an appropriate assumption given historical performance of the S&P 500 Index, which management believes is a good indicator of future performance of Pension Plan assets. The Pension Plan maintains cash in a Park National Bank savings account, with a balance of $0.7 million at December 31, 2010. GAAP defines fair value as the price that would be received by Park for an asset or paid by Park to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date, using the most advantageous market for the asset or liability. The fair values of equity securities, consisting of mutual fund investments and common stock held by the Pension Plan and the fixed income and cash equivalents, are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). The market value of Pension Plan assets at December 31, 2010 was $85.5 million. At December 31, 2010, $73.5 million of equity investments in the Pension Plan were categorized as Level 1 inputs; $12.0 million of plan investments in corporate and U.S. government agency bonds are categorized as Level 2 inputs, as fair value is based on quoted market prices of comparable instruments; and no investments are categorized as Level 3 inputs. The market value of Pension Plan assets was $75.8 million at December 31, 2009. At December 31, 2009, $63.0 million of investments in the Pension Plan were categorized as Level 1 inputs; $12.8 million were categorized as Level 2; and no investments were categorized as Level 3. The Corporation has a voluntary salary deferral plan covering substantially all of the employees of the Corporation and its subsidiaries. Eligible employees may contribute a portion of their compensation subject to a maximum statutory limitation. The Corporation provides a matching contribution established annually by the Corporation. Contribution expense for the Corporation was $1.0 million, $1.5 million, and $2.0 million for 2010, 2009 and 2008, respectively. The Corporation has a Supplemental Executive Retirement Plan (SERP) covering certain key officers of the Corporation and its subsidiaries with defined pension benefits in excess of limits imposed by federal tax law. At December 31, 2010 and 2009, the accrued benefit cost for the SERP totaled $7.2 million and $7.4 million, respectively. The expense for the Corporation was $0.5 million for both 2010 and 2009 and $0.6 million for 2008.

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