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Pension Plans
 9 Months Ended
Sep. 30, 2012
Pension Plans  
Pension Plans

Note 12 – Pension Plans

 

The Company sponsors two defined benefit pension plans – a qualified retirement plan (the “Pension Plan”) which is generally available to all employees, and a Supplemental Executive Retirement Plan (the “SERP”), which is for the benefit of certain senior management executives of the Company. In October 2012, the Company froze the benefits associated with each of our two pension plans effective December 31, 2012, which will substantially reduce pension expense beginning in 2013. It is expected that the Company will increase the amounts contributed to the Company’s 401(k) plan, which will partially offset the pension expense savings.

 

The Company recorded pension expense totaling $410,000 and $816,000 for the three months ended September 30, 2012 and 2011, respectively, related to the Pension Plan and the SERP. The following table contains the components of the pension expense.

 

   For the Three Months Ended September 30, 
   2012   2011   2012   2011   2012 Total   2011 Total 
($ in thousands)  Pension Plan   Pension Plan   SERP   SERP   Both Plans   Both Plans 
Service cost – benefits earned during the period  $386    478    67    99    453    577 
Interest cost   326    432    61    102    387    534 
Expected return on plan assets   (492)   (444)   ─    ─    (492)   (444)
Amortization of transition obligation   —    1    ─    ─    —    1 
Amortization of net (gain)/loss   71    114    (17)   26    54    140 
Amortization of prior service cost   3    3    5    5    8    8 
Net periodic pension cost  $294    584    116    232    410    816 

 

The Company recorded pension expense totaling $2,068,000 and $2,496,000 for the nine months ended September 30, 2012 and 2011, respectively, related to the Pension Plan and the SERP. The following table contains the components of the pension expense.

 

   For the Nine Months Ended September 30, 
   2012   2011   2012   2011   2012 Total   2011 Total 
($ in thousands)  Pension Plan   Pension Plan   SERP   SERP   Both Plans   Both Plans 
Service cost – benefits earned during the period  $1,449    1,434    236    345    1,685    1,779 
Interest cost   1,125    1,296    219    306    1,344    1,602 
Expected return on plan assets   (1,477)   (1,332)   ─    ─    (1,477)   (1,332)
Amortization of transition obligation   2    3    ─    ─    2    3 
Amortization of net (gain)/loss   474    342    17    78    491    420 
Amortization of prior service cost   9    9    14    15    23    24 
Net periodic pension cost  $1,582    1,752    486    744    2,068    2,496 

 

The Company’s contributions to the Pension Plan are based on computations by independent actuarial consultants and are intended to provide the Company with the maximum deduction for income tax purposes. The contributions are invested to provide for benefits under the Pension Plan. The Company contributed $2,500,000 to the Pension Plan in the third quarter of 2012 and does not expect any further contributions the remainder of the year.

 

The Company’s funding policy with respect to the SERP is to fund the related benefits from the operating cash flow of the Company.