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EMPLOYEE RETIREMENT PLANS
 12 Months Ended
Dec. 31, 2012
Asset Retirement Obligation Disclosure [Abstract]  
Pension and Other Postretirement Benefits Disclosure [Text Block]
12. EMPLOYEE RETIREMENT PLANS

 

The Company has a defined benefit pension plan covering substantially all employees, as well as an unfunded supplemental pension plan for key executives. Retirement benefits are provided based on employees’ years of credited service and average earnings or stated amounts for years of service. Normal retirement age is 65 with provisions for earlier retirement. The plan also has provisions for disability and death benefits. The plan closed to new participants as of August 1, 2011. The Company’s funding policy for the defined benefit pension plan is to make contributions to the plan such that all employees’ benefits will be fully provided by the time they retire. Plan assets are stated at market value and consist primarily of equity securities and fixed income securities, mainly U.S. government and corporate obligations.

 

The Company follows ASC 715, Compensation – Retirement Benefits (“ASC 715”) which requires employers to recognize the funded status of defined benefit pension and other postretirement benefit plans as an asset or liability in their statements of financial position and to recognize changes in the funded status in the year in which the changes occur as a component of comprehensive income. In addition, ASC 715 requires employers to measure the funded status of their plans as of the date of their year-end statements of financial position. ASC 715 also requires additional disclosures regarding amounts included in accumulated other comprehensive loss.

 

The Company’s pension plan’s weighted average asset allocation at December 31, 2012 and 2011, by asset category, was as follows:

 

    Plan Assets at December 31,  
    2012     2011  
Asset Category:                
Equity Securities     52 %     42 %
Fixed Income Securities     40 %     49 %
Other     8 %     9 %
Total     100 %     100 %

 

The Company has a Retirement Plan Committee, consisting of the Chief Executive Officer, Chief Operating Officer and Chief Financial Officer, to manage the operations and administration of all benefit plans and related trusts. The committee has an investment policy for the pension plan assets that establishes target asset allocation ranges for the above listed asset classes as follows: equity securities: 20% - 80%; fixed income securities: 20% - 80%; and other, principally cash: 0% - 20%. On a semi-annual basis, the committee reviews progress towards achieving the pension plan’s performance objectives.

 

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as the target asset allocation of the pension portfolio. This resulted in the selection of the 7.75% long-term rate of return on assets assumption.

 

Assumptions used in determining the funded status at December 31, 2012 and 2011 were:

 

    2012     2011  
Discount rate     4.23 %     4.60 %
Rate of compensation increase     4.50 %     4.50 %

 

The following is a reconciliation of the change in benefit obligation and plan assets of both the defined benefit pension plan and the unfunded supplemental pension plan for the years ended December 31, 2012 and 2011:

 

    Defined Benefit Pension Plan     Supplemental Pension Plan  
    2012     2011     2012     2011  
    (Dollars in thousands)  
Change in projected benefit obligation                                
Projected benefit obligation, beginning of year   $ 39,523     $ 34,407     $ 13,870     $ 10,754  
Service cost     1,236       977       236       235  
Interest cost     1,800       1,807       516       566  
Plan amendments     -       -       (1,415 )     -  
Actuarial loss (gain)     2,532       3,776       (576 )     2,494  
Benefits paid     (1,639 )     (1,444 )     (361 )     (179 )
Projected benefit obligation, end of year   $ 43,452     $ 39,523     $ 12,270     $ 13,870  
                                 
Change in plan assets                                
Fair value of plan assets, beginning of year     26,655       26,193       -       -  
Actual return on plan assets     2,932       400       -       -  
Administrative expenses     (129 )     (94 )     -       -  
Contributions     -       1,600       361       179  
Benefits paid     (1,639 )     (1,444 )     (361 )     (179 )
Fair value of plan assets, end of year   $ 27,819     $ 26,655     $ -     $ -  
Funded status of plan   $ (15,633 )   $ (12,868 )   $ (12,270 )   $ (13,870 )
                                 
Amounts recognized in the consolidated balance sheets consist of:                                
Accrued liabilities - other   $ -     $ -     $ (373 )   $ (394 )
Long-term pension liability     (15,633 )     (12,868 )     (11,897 )     (13,476 )
Net amount recognized   $ (15,633 )   $ (12,868 )   $ (12,270 )   $ (13,870 )
                                 
Amounts recognized in accumulated other comprehensive loss consist of:                                
Accumulated loss, net of income tax benefit of $6,735, $6,575, $2,102 and $2,487, respectively   $ 10,534     $ 10,283     $ 3,288     $ 3,891  
Prior service cost, net of income tax benefit of $1, $1, ($402) and $106, respectively     1       2       (628 )     166  
Net amount recognized   $ 10,535     $ 10,285     $ 2,660     $ 4,057  

 

The accumulated benefit obligation for the defined benefit pension plan and the supplemental pension plan was $38.2 million and $11.6 million, respectively, at December 31, 2012 and $35.3 million and $12.0 million, respectively, at December 31, 2011.

 

Assumptions used in determining net periodic pension cost for the years ended December 31, 2012, 2011 and 2010 were:

 

    2012     2011     2010  
Discount rate     4.60 %     5.40 %     5.95 %
Rate of compensation increase     4.50 %     4.50 %     4.50 %
Long-term rate of return on plan assets     7.75 %     8.00 %     8.00 %

 

The components of net periodic pension cost for the years ended December 31, 2012, 2011 and 2010, were:

 

    2012     2011     2010  
    (Dollars in thousands)  
Benefits earned during the period   $ 1,472     $ 1,212     $ 1,187  
Interest cost on projected benefit obligation     2,317       2,373       2,449  
Expected return on plan assets     (1,994 )     (2,021 )     (1,836 )
Net amortization and deferral     1,612       1,272       1,448  
Net pension expense   $ 3,407     $ 2,836     $ 3,248  

 

The Company expects to recognize $1.6 million of amortization of unrecognized loss and $111,000 of amortization of prior service cost as components of net periodic benefit cost in 2013, which are included in accumulated other comprehensive loss at December 31, 2012.

 

It is the Company’s intention to satisfy the minimum funding requirements and maintain at least an 80% funding percentage in its defined benefit retirement plan in future years. At this time, the level of cash contribution that will be required in 2013 to maintain the minimum funding balance is unknown.

 

Projected benefit payments for the plans as of December 31, 2012 were estimated as follows:

 

    Defined Benefit
Pension Plan		     Supplemental
Pension Plan		  
    (Dollars in thousands)  
2013   $ 1,834     $ 373  
2014   $ 1,905     $ 390  
2015   $ 1,968     $ 398  
2016   $ 2,057     $ 421  
2017   $ 2,125     $ 427  
2018 - 2022   $ 11,990     $ 2,534  

 

The following table summarizes the fair value of the Company’s pension plan assets as of December 31, 2012 by asset category within the fair value hierarchy (for further level information, see Note 4):

 

    December 31, 2012  
    Quoted Prices     Significant     Significant        
    in Active Markets     Observable Inputs     Unobservable Inputs        
    Level 1     Level 2     Level 3     Total  
    (Dollars in thousands)  
Common stocks   $ 10,169     $ 1,118     $ -     $ 11,287  
Preferred stocks     1,038       -       -       1,038  
Exchange traded funds     3,194       -       -       3,194  
Corporate obligations     -       4,573       -       4,573  
State and municipal obligations     -       574       -       574  
Foreign obligations     -       16       -       16  
Pooled fixed income funds     3,212       -       -       3,212  
U.S. government securities     -       1,584       -       1,584  
Cash and cash equivalents     2,264       -       -       2,264  
Subtotal     19,877       7,865       -       27,742  
Other assets (1)                             77  
Total                           $ 27,819  

 

(1) This category represents trust receivables that are not leveled.

 

The following table summarizes the fair value of the Company’s pension plan assets as of December 31, 2011 by asset category within the fair value hierarchy (for further level information, see Note 4):

 

    December 31, 2011  
    Quoted Prices     Significant     Significant        
    in Active Markets     Observable Inputs     Unobservable Inputs        
    Level 1     Level 2     Level 3     Total  
    (Dollars in thousands)  
Common stocks   $ 8,329     $ 582     $ -     $ 8,911  
Preferred stocks     859       -       -       859  
Exchange traded funds     2,180       -       -       2,180  
Corporate obligations     -       4,747       -       4,747  
State and municipal obligations     -       806       -       806  
Foreign obligations     -       51       -       51  
Pooled fixed income funds     4,378       -       -       4,378  
U.S. government securities     -       2,288       -       2,288  
Cash and cash equivalents     2,337       -       -       2,337  
Subtotal     18,083       8,474       -       26,557  
Other assets (1)                             98  
Total                           $ 26,655  

 

(1) This category represents trust receivables that are not leveled.

 

The Company also has a defined contribution plan covering substantially all employees. The Company contributed approximately $221,000, $212,000 and $200,000 in 2012, 2011 and 2010, respectively.