Note 13 - Pension and SERP Plans

The following table presents the components of the net periodic pension plan cost for First United Corporation’s Defined Benefit Pension Plan (the “Pension Plan”) and the Bank’s Supplemental Executive Retirement Plan (“SERP”) for the periods indicated:



Pension	For the six months ended				For the three months ended
	June 30,				June 30,
(In thousands)	2014		2013		2014		2013
Service cost	$	129	$	114	$	64	$	57
Interest cost		737		635		371		305
Expected return on assets		(1,328)		(1,188)		(663)		(594)
Amortization of transition asset		(20)		(20)		(10)		(10)
Amortization of net actuarial loss		187		266		94		133
Amortization of prior service cost		6		6		3		3
Net pension credit included in employee benefits	$	(289)	$	(187)	$	(141)	$	(106)



SERP	For the six months ended				For the three months ended
	June 30,				June 30,
(In thousands)	2014		2013		2014		2013
Service cost	$	48	$	60	$	24	$	30
Interest cost		114		128		57		64
Amortization of recognized (gain)/loss		(9)		2		(5)		1
Amortization of prior service cost		10		10		5		5
Net SERP expense included in employee benefits	$	163	$	200	$	81	$	100

Effective April 30, 2010, the Pension Plan was amended, resulting in a “soft freeze”. The effects of the amendment were to prohibit new entrants into the plan and to cease crediting additional years of service after that date. Effective January 1, 2013, the plan was amended to unfreeze the plan for those employees for whom the sum of (a) their ages, at their closest birthday, plus (b) years of service for vesting purposes equal 80 or greater. The “soft freeze” continues to apply to all other plan participants. Pension benefits for these participants will be managed through discretionary contributions to the 401(k) Profit Sharing Plan. The Corporation anticipates that the plan changes will have a minimal impact on the consolidated financial statements.

The Corporation will assess the need for future annual contributions to the pension plan based upon its funded status and an evaluation of the future benefits to be provided thereunder. The Corporation expects to fund the annual projected benefit payments for the SERP from operations.