NOTE 10 - Employees’ Benefit Plans NOTE 11 - Regulatory Capital 35 The Bancorp and Bank are subject to regulatory capital requirements administered by federal banking agencies. Capital adequacy guidelines and prompt corrective action regulations involve quantitative measures of assets, liabilities, and certain off-balance-sheet items calculated under  regulatory accounting practices. Capital amounts and  classifications are also subject to qualitative judgments by regulators. Failure to meet various capital requirements can initiate regulatory action. Prompt corrective action regula- tions provide five classifications, including well capitalized, adequately capitalized, undercapitalized, significantly under- capitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition.  If adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital  distributions are limited, as is asset growth and expansion, and capital restoration plans are required. At December 31, 2010 and 2009, the most recent regulatory notifications categorized the Bancorp and Bank as well capitalized under the regulatory framework for prompt corrective action. There are no conditions or events since that notification that management believes have changed the Bancorp’s or the Bank’s category. The Bancorp sponsors a defined benefit postretirement plan that provides comprehensive major medical benefits  to all eligible retirees. Eligible retirees are those who have attained age 65, have completed at least 18 years of service and are eligible for coverage under the employee group medical plan as of the date of their retirement. Spouses of eligible retirees are covered if they were covered as of the employee’s date of retirement. Surviving spouses are covered if they were covered at the time of the retiree’s death. Dependent children of eligible retirees are generally covered to the later of age 19 or until the child ceases being a full- time student. Surviving dependent children are subject to the same eligibility restrictions if they were covered at the time of the retiree’s death. Currently, the Bancorp pays $143.00 of the retiree monthly medical coverage premium. This amount will remain fixed over the benefit period. The Bancorp maintains an Unqualified Deferred Compensation Plan (the Plan). The purpose of the Plan is  to provide deferred compensation to key senior management employees of the Bancorp in order to recognize their substantial contributions to the Bank and provide them with additional financial security as inducement to remain with the Bank. The Compensation Committee selects which persons shall be participants in the Plan. Participants’ accounts are credited each year with an amount based on  a formula involving the participant’s employer funded contributions under all qualified plans and the limitations imposed by Internal Revenue Code subsection 401(a)(17) and Code section 415. The unqualified deferred compensa- tion plan liability at December 31, 2010 and 2009 was $114,000 and $107,000, respectively. The Plan expense amounted to $8,000 for 2010 and 2009. The Bancorp maintains an Employees’ Savings and Profit Sharing Plan and Trust for all employees who meet the plan qualifications. Employees are eligible to participate in the Employees’ Savings and Profit Sharing Plan and Trust on the next January 1 or July 1 following the completion of one year of employment, age 18, and completion of 1,000 hours of employment. The Employees’ Savings Plan feature allows employees to make pre-tax contributions to the Employees’ Savings Plan of 1% to 50% of Plan Salary, subject to limitations imposed by Internal Revenue Code section 401(k). The Profit Sharing Plan and Trust feature is noncontributory on the part of the employee. Contributions to the Employees’ Profit Sharing Plan and Trust are made  at the discretion of the Bancorp’s Board of Directors. Contributions for the year ended December 31, 2010 and 2009, were based on 4% and 3% of the participants’ total compensation excluding incentives, respectively. Participants in the plan become 100% vested upon completion of five years of service. The benefit plan expense amounted to $288,000 and $199,000 for 2010 and 2009, respectively.  Retirees pay 100% of the premiums for all dependent medical coverage. The Bancorp uses December 31 as the measurement date for its postretirement plan. The benefit obligation for this plan was $36,000 and $30,000 at December 31, 2010 and 2009, respectively. Benefit plan expense was $6,000 and $5,000 for 2010 and 2009,  respectively, and contains no significant components,  and thus details are not presented due to immateriality.  Since future expected payments over the next ten years  are approximately $15,000, detail by year is not presented  due to immateriality. Also, future benefit plan obligations, funded status, and expense are considered immaterial. Directors have deferred some of their fees in considera- tion of future payments. Fee deferrals, including interest, totaled $111,000 and $122,000 for 2010 and 2009,  respectively. The deferred fee liability at December 31, 2010 and 2009 was $1,646,000 and $1,618,000, respectively.