Employee Benefit Plans Research Articles

Fiduciary Responsibilities in the Face of ERISA

In the early 1960’s, Americans began to notice a problem with the way in which many employee benefit plans were being managed, and how the funds of those plans were ultimately being distributed. The problem arose when companies failed and many of those companies’ retirement benefit plan participants received pennies on the dollar compared to what they were promised upon their joining the plan; that is, if they received anything at all. Both President John F. Kennedy and members of the Senate recognized this problem and began to take steps to help create a solution by forming committees and proposing legislation, which ultimately led to President Gerald Ford signing the Employee Retirement Income Security Act of 1974 (“ERISA”) into law on September 2, 1974. Up until 1984, this Act saw very little litigation, especially related to breaches of fiduciary duties. There were, however, two distinct approaches that formed to the question of whether a breach occurred. In the landmark case of Leigh v. Engle the court faced that very question. There, the court analyzed these two approaches stating that “[the] first avenue focuses on the potential for conflicts of interest between the fiduciaries and the plan beneficiaries.... The second avenue involves a broader inquiry into the fiduciaries' actions where they may have substantial interests in a control contest.” Ultimately, the court unified the two approaches, adding in a third influence, by laying out a set of non-exhaustive factors to determine whether a breach occurred. These factors are:(1) The risk of conflicts between the interests of the fiduciaries and beneficiaries; (2) Whether fiduciaries with divided loyalties make an intensive and scrupulous investigation of the plan's investment options; and (3) Whether there is consistent management of plan assets in congruence with the fiduciaries' personal interests over a substantial period of time in control contests Leigh v. Engle, 727 F.2d 113.Since these factors were laid out, they have been adopted in every federal circuit court that has heard a case on the issue. Recently, courts have started shifting their focus from the first Leigh factor, involving the risk of potential conflicts, to the second factor requiring the fiduciary to administer an investigation into potential alternatives. This shift creates a positive environment for those directors who decide to retain an incident of management of an ERISA plan, and embrace the fiduciary responsibilities that follow such a decision. Courts should continue this shift and ultimately arrive at an “ERISA Judgment Rule” to allow directors who do retain fiduciary duties to make decisions in their role as a director without fear of litigation around every corner, so long as they conduct a thorough investigation into the possible alternatives.This article begins with a description of ERISA and why it is important. It continues with the fiduciary duties required under the Act, the ways to approach avoiding liability, and a description of the “ERISA Judgment Rule,” including support for its adoption. Finally, it finishes with a look at the consequences for a breach and a brief conclusion.

The ACA's 2017 State Innovation Waiver: Is ERISA a Roadblock to Meaningful Healthcare Reform?

In 2017, the Affordable Care Act’s (ACA) State Innovation Waiver (§ 1332) will enable states to waive many of the ACA’s provisions and to develop their own creative solutions to reign in healthcare spending. The Employee Retirement Income Security Act of 1974 (ERISA) was enacted to encourage employers to sponsor benefit plans and minimize potential conflicts with existing state laws. Because of ERISA, the regulation of employee benefit plans, including health plans, falls primarily under federal jurisdiction for about 131 million people. This Note explores the ways in which ERISA presents significant roadblocks to meaningful state level healthcare reform under § 1332. State laws cannot directly refer to ERISA, nor influence the benefits, administration, or structure of an ERISA plan. Also, if a state law limits employer choices too much, it will likely violate ERISA. This Note proposes that ERISA needs to be waived, amended or repealed so that states can implement meaningful healthcare reforms under § 1332.

Employee Benefit Plans Require Strong Internal Controls

Employee benefit plans require strong internal controls to operate effectively and efficiently. The Internal Revenue Service and the U.S. Department of Labor have given companies clear indication that they take note of plans that are governed by strong internal controls, and companies will notice more efficient, more focused examinations as a result. A strong system of internal control incorporates both preventive and detective controls to assure the plan is administered in an orderly manner, to safeguard plan assets, to deter wrongdoing, to ensure accuracy and completeness of information and to produce reliable and timely information. A strong control environment would be designed to assure the plan is run in accordance with the plan document and that funds are flowing to the correct trust or individual and according to the timing intended. This gives plan administrators a clear understanding of how the goals of the plan are being met. Good controls would assure policies and procedures are clearly established and are followed to keep the plan in compliance both with the plan document and with all relevant regulatory requirements.

Understanding employee preferences for investing in employer stock: evidence from France

In this article, we broaden the focus of existing research on employee stock purchase plans by analysing employee preferences for investing in employer stock as a construct distinct from actual investment behaviour. In our analysis of original survey data in a sample of 900 employees in four French companies, we find that employee preferences are influenced by two common cognitive heuristics (representativeness and familiarity), organisational commitment, the perceived quality of corporate communications about these plans and perceived managerial commitment to employee ownership. We did not find, however, that risk aversion, turnover intentions or perceived employee involvement in decision making influenced preferences for investing in employer stock. Our findings have both theoretical and practical implications for understanding and operating these types of employee benefit plans, which are becoming more common across the globe.

Do I Have a Bridge for You: Fiduciary Duties and Investment Advice

The debate about financial advice in the United States has taken a wrong turn. Instead of focusing on particular practices and the potential that these practices raise for conflicts of interest between advisers and their clients, the debate has focused recently on whether brokers, advisers to municipal and state issuers, and advisers to employee benefit plans regulated by ERISA should be held to a fiduciary duty standard. A fiduciary standard implies, in the words of Justice Cardozo, that “[a] trustee is held to something stricter that the morals of the market place. Not honesty alone, but the punctilio of an honor the most sensitive, is then the standard of behavior.” The thought is that brokers and ERISA advisers will be more attentive to their clients’ needs if such a fiduciary standard applies. Certainly, this is the basis upon which the Department of Labor is currently considering rules that apply fiduciary standards to ERISA advisers. This article argues that this reliance on fiduciary duties is misplaced. In part, this is because most fiduciary duties that arise with respect to financial advice can be modified by an agreement between the fiduciary and the beneficiary. There are procedural limits to ensure that a beneficiary has both the capacity and the information necessary to enter into a particular arrangement. But fiduciary duties turn out to be just a more punctilious version of contract law, with a few exceptions. This general contractual principle applies to both state fiduciary duties and to federal fiduciary duties that arise under statutes such as the Investment Advisers Act of 1940, the Investment Company Act of 1940 and ERISA.

How Do Firms Choose Legal Form of Organization?

In this study, we analyze the firm’s choice of legal form of organization (“LFO”). We find that only about one in three firms begins operations as a proprietorship, while almost as many begin as limited-liability companies and as corporations. Moreover, this distribution is remarkably stable over the first four years of the firm’s life. Fewer than one in ten firms changes LFO during its first four years. Those that do change LFO disproportionately move to a more complex form, primarily from proprietorship to a form with limited liability. Our analysis of the firm’s initial choice of LFO reveals that a firm is more likely to choose a more complex LFO when the firm is more complex as proxied by employment size, by offering more complex employee benefit plans, and by offering trade credit. A more complex initial LFO also is more likely when the firm is more highly levered and when its primary owner is more educated; but is less likely when the firm is more profitable, has more tangible assets, uses personal loans for firm financing and when its primary owner is female. Our analysis of the decision to change LFO finds that firms initially organized as LLCs or S-corporations are less likely, while Partnerships are more likely, to change LFO than are Proprietorships or C-corporations. Firms that increase employment or change location between a residence and rented/ purchased space, are more likely to change LFO, as are smaller and more profitable firms. Firms that experience a change in the number of owners (up or down), a decrease in the ownership of the primary owner or a change in industrial classification are more likely to change LFO. Of those firms changing LFO, the choice of a more complex LFO is more likely when the firm has changed location, experienced an increase in the number of owners or the ownership share of the primary owner, but is less likely when the firm has experienced a decrease in the number of owners.

Employee Benefit Plan Language And Sponsor Misconception

The employee benefit plan marketplace is a multi-trillion dollar industry as measured by assets under management. Previous research suggests that even sophisticated plan sponsors and participants are uncertain about the details of their plan. The variety of fee types, (wrap fees, transaction fees, participant fees, and set-up fees) and the use of industry jargon can lead to confusion and misunderstanding. This paper is a case study of an actual deferred compensation plan. We examine the business law aspects of the relationship, particularly how the complexity of the product, coupled with the contract language, could lead to plan sponsor and participant misunderstanding.

Governance at a crossroads: A personal perspective

After 30 years of work in the field of corporate governance, I find myself reflecting on the origins of the idea and tracing the steps to where we are now. Much hard activist work has gone into furthering the ideals of corporate governance by so many who believed corporations could responsibly regulate themselves. After writing several books on the issue, submitting dozens of shareholder proposals and spending thousands on litigation, proxy issues and board campaigns, I am considering my work in an effort to see the way forward. Even when corporations fought every proposal to separate the chairman and CEO, or Sears spent millions of dollars to keep me off their board or the SEC issued no-action letters on proposals that were identical to those submitted in prior years, I kept pushing for greater corporate responsibility and self-regulation. Therefore, this moment after financial reform and Citizens United seems a good time to reflect upon the twilight of corporate governance and the failures of self-regulation – and where we go from here. This article examines 30 years of corporate self-regulation and its relationship to the recent economic crisis. If corporate governance is at a crossroads, what is needed to go forward? The business corporation has for some 30 years struggled with the challenge of regulating its own affairs and, thereby, liberating the unshackled genius of the capitalist system. Because the government has failed to define precisely the scope of the trustees’ responsibility with respect to portfolio companies and has signally declined to enforce the most blatant of fiduciary conflicts, a disincentive for responsible ownership has resulted. This has discouraged the conscientious and enabled disproportionate power for the ruthless. The struggle has, for the present, been lost as the various elements of corporate governance have failed effectively to make corporate power accountable to owners. In addition, as a result of government creation of investment funds and employee benefit plans, trustees whose authority can be derived from existing federal law now are the legal owners of controlling interests in the preponderance of publicly traded companies.

Do Stated Corporate Stock Repurchase Motives Impact Stock Repurchase Plan Results? Part II – KLA-Tencor Case Study

Do well-conceived stock repurchase plan motives correlate with good stock repurchase plan results? Do ill-conceived stated motives correlate with poor results? KLA-Tencor states it initiated a stock repurchase plan “…to reduce the dilution from KLA-Tencor’s employee benefit and incentive plans such as the stock option and employee stock purchase plans.” However, using stock buybacks to offset options dilution is unlikely to maximize the profitability of a stock repurchase program. At best, such a directive will result in a company repurchasing shares at the average price during a given period, and the directive may easily be interpreted in a fashion that causes a company to repurchase shares at far above the average price over time. Certainly, for the moment, the raw performance of KLA-Tencor’s stock repurchase program leaves something to be desired. From FY00 through FY10, KLA-Tencor paid $3.139 billion to repurchase 68.7 million shares at $45.69 apiece. Now trading at $32.81 apiece, KLA-Tencor’s buybacks during this period generated an $884.9 million economic loss, 28.2% of the cash invested, before consideration of foregone interest income. Absent buybacks, KLA-Tencor’s shares today would be trading more than 16.1% higher. Selling shareholders may have benefitted from KLA-Tencor’s buybacks, but, so far, ongoing shareholders definitely have not.As in an earlier study of National Semiconductor, KLA-Tencor’s stated buyback objectives (“offset dilution”, “distribute cash”) in combination with its buyback program’s subsequent raw performance (246th best among 276 companies surveyed) raise the question of whether ill-conceived stated motives for corporate stock repurchase programs correlate with poor stock repurchase program results. Do companies as a group run less effective stock repurchase programs when they cite “improve return on capital”, or “offset options dilution”, or “reduce excess cash” as operative buyback motives rather than a more logical goal – “repurchase undervalued shares”? Ideally, analysis of a company’s buyback program should consider adjusted performance, not just raw performance. The outline for a more definitive study is described.

Erisa Preemption: A Move Towards Defederalizing Claims for Patients' Rights

... There is no national health policy. ... But the Supreme Court may never have intended for ER-ISA preempt health care claims most instances, and recently reiterated: in the field of health care, a subject of traditional state regulation, there is no ERISA preemption without clear manifesta-tion of congressional purpose. ... If an employee wants bring a claim against the physician or the managed health care organization, the employee must consider whether the claim will fall under state law, or whether the state cause of action will be preempted by ERISA. ... The district court dismissed both vicarious and direct liability claims, stating that they were related to the employee benefit plan and were therefore preempted by ERISA. ... In 2003, Cicio v. Vytra Healthcare, the Second Circuit ruled HMOs and their medial directors could be sued for medical malpractice when authorization is refused for medically necessary treatment, recommended by the treating physician. ... In Kentucky Association of Health Plans, Inc. v. Miller, the petitioner health maintenance or-ganizations (HMOs) maintained exclusive provider networks with selected doctors, hospitals, and other health-care providers. ...

The ERISA Eligibility of TALF and PPIP Loans and Securities: Do the Government’s Programs and ERISA Mesh?

The Term Asset-Backed Securities Loan Facility (TALF) and the Legacy Loan and Legacy Security Public-Private Investment Program (PPIP) were created anticipating investment by employee benefit plans and other retirement arrangements subject to ERISA (Plans), but there was no specific coordination of these programs with, or amendment of, ERISA-related provisions to facilitate this investment. This article describes the ERISA considerations that are relevant to a Plan’s use of a TALF loan to finance its purchase of assetbacked and commercial mortgage-backed securities (ABS/ CMBS), either via a direct purchase of ABS/CMBS or by means of an intervening fund. It then discusses the ability of Plans to become investors in PPIP funds established to purchase CMBS/MBS legacy loans or securities given the additional ERISA complications that are created when a Plan invests in a managed fund. The article concludes that while the economy, the credit markets, and Plans could all benefit from allowing greater Plan investment in PPIP funds, current ERISA provisions hamper such investment. The author suggests that the U.S. Treasury might explore with the U.S. Department of Labor the possibility of granting an administrative exemption that could allow greater Plan participation in PPIP funds than is currently available. <b>TOPICS:</b>Fundamental equity analysis, technical analysis

The Evolution of Employee Benefits at the Economical Insurance Group

Employee benefit plans can be an important part of an organization’s employment deal and can help differentiate one employer from another. This article defines employee benefits as an extensive offering of programs that is broader than the conventional definition. Not only does it include traditional benefits; it also includes pension and savings, time off work, wellness and flexible work arrangements. The article reviews one company’s experience as its employee benefit program has evolved from one of fixed and defined benefits to one that provides greater choice, flexibility and control to better support the organizational and human resource strategy and to better meet the needs of its diverse workforce. Several lessons have been learned by this company and are shared in this article. Although the company has focused on continual improvement of its employment deal over the past several years, it cannot halt the progress it has made thus far.

Insurance in the Courts

ERISA EMPLOYEE BENEFIT PLANS PERMITTED TO SEEK REIMBURSEMENT FROM BENEFICIARIES FOR RECOVERY OBTAINED FROM THIRD PARTIES Sereboff v. Mid Atlantic Medical Services, Inc., 126 S. Ct. 1869,164 L.Ed.Zd 612, 2006 U.S. LEXIS 3954 (Supreme Court of the United States, May 15,2006) Marlene Sereboff's employer sponsored a health insurance plan administered by Mid Atlantic Medical Services, Inc. that was subject to and covered by the Employee Retirement Income Security Act of 1974 (ERISA). Marlene and her husband Joel were beneficiaries under the plan, which provided medical coverage and contained an Acts of Third Parties provision, stated that it applied when a beneficiary was sick or injured as a result of the act or omission of another person or party, and required those under the plan due to the medical costs of the injuries to reimburse Mid Atlantic for those benefits from [a]ll recoveries from a third party (whether by lawsuit, settlement, or otherwise). The provision stated that Mid Atlantic's share of the recovery would not be reduced in cases where the beneficiary did not receive the full damages claimed, unless Mid Atlantic and the beneficiary agreed in writing to a reduction. The Sereboff s were involved in an automobile accident in California and suffered injuries. The plan paid the couple's medical expenses. The Sereboffs also filed a tort action in state court against several third parties that eventually obtained compensatory damages for injuries suffered as a result of the accident through a $750,000 settlement of the tort action. During the pendency of the suit, Mid Atlantic sent the Sereboffs' attorney a letter asserting a lien on the anticipated proceeds from the suit for the medical expenses that Mid Atlantic had paid on the Sereboffs' behalf. As the lawsuit progressed, Mid Atlantic reiterated its position that it was entitled to reimbursement from any obtained by the Sereboffs from the lawsuit. After receiving the settlement funds, the Sereboffs and counsel took that position that Mid Atlantic's claim for reimbursement-which sought a refund for the approximately $75,000 it had paid in Sereboff medical bills -was invalid. In response, Mid Atlantic filed suit in District Court under § 502(a)(3) of ERISA, seeking to collect from the Sereboffs the medical expenses it had paid on their behalf. Mid Atlantic sought a temporary restraining order and preliminary injunction requiring the couple to retain and set aside the amount at issue. The trial court and the parties agreed to preserve $74,869.37 of the settlement funds in an investment account until the [District] Court rules on the merits of this case and all appeals, if any, are exhausted. On the merits, the District Court found in Mid Atlantic's favor and ordered the Sereboffs to pay Mid Atlantic the $74,869.37, plus interest, with a deduction for Mid Atlantic's share of the attorney's fees and court costs the Sereboffs had incurred in state court. The Sereboffs appealed and the Fourth Circuit affirmed. Because the Fourth Circuit and other United States Courts of Appeal were divided on the question whether § 502(a)(3) authorized recovery by an ERISA benefit plan under these circumstances, the Supreme Court granted review. The case presented the Court with an opportunity to consider once again the circumstances under which an ERISA fiduciary can sue a beneficiary for reimbursement of medical expenses paid by the ERISA plan in cases where the beneficiary has also obtained a monetary recovery for its injuries from a third party. The Supreme Court affirmed the lower courts and in essence approved reimbursement under these circumstances, resolving doubts that had been raised by the Court's 2002 Knutson opinion, which had suggested considerable limits on an ERISA plan's rights to reimbursement. ERISA provides that a fiduciary may bring a civil action under § 502(a)(3) of ERISA (A) to enjoin any act or practice which violates any provision of this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this subchapter or the terms of the plan. …

ERISA for securities professionals: 2008 update

PurposeThe purpose of this paper is to provide an overview of how the Employee Retirement Income Security Act (“ERISA”) of 1974, as amended , applies to securities professionals such as registered investment advisers, registered broker‐dealers and individual registered representatives and financial planners who advise, manage, or trade for investment portfolios of private employee benefit plans and individual retirement accounts.Design/methodology/approachThe paper is designed as a primer to familiarize securities professionals with the terminology, scope and subject‐matter of ERISA as it applies to benefit plan investment transactions. When appropriate, the regulatory framework of ERISA is compared and contrasted with the more familiar securities law regulatory scheme.FindingsThe various Federal laws loosely known as “ERISA” significantly impact securities professionals in connection with the marketing of financial products and services to employee benefit plans, including IRAs, and it is critical that securities professionals have a general overview of how they do so.Research limitations/implicationsThe research set out is only a broad summary, and covers an area of law that is rapidly developing. It should not be considered a definitive summary of the law but a starting‐point for further, in‐depth inquiry.Practical implicationsAny financial professional seeking to develop or market financial products and services to benefit plans can use the paper to become familiar with the framework and terminology of ERISA.Originality/valueThis is a reprint of a paper first published in 2004, with extensive revisions to reflect sweeping changes in the law and new developments in the financial marketplace, plus an overview of “hot topics”.

New ways of thinking about old crimes

PurposeThe objective of the paper is to describe how criminal prosecutors in the USA have expanded the reach of federal statutes punishing fraud and extortion to combat the influence of organized criminal groups in certain American labor unions and employee benefit plans from 1980 to 2006.Design/methodology/approachThe paper reviews newspaper accounts and published judicial decisions to explain how prosecutors have used fraud and extortion offenses in novel ways on a case‐by‐case basis to prosecute labor‐management corruption in the USA.FindingsAlthough the American federal prosecutor's arsenal is limited to statutory crimes, prosecutors are continually evolving new means of addressing corruption on a case‐specific basis in the best tradition of Anglo‐American common law. By diligently persuading trial judges, appellate courts, and the US Congress of the merit of looking at fraud and extortion in new ways, federal prosecutors have carried out the intent of the statutory laws which Congress enacted to deal with corruption in government, business, and labor unions.Practical implicationsThe federal criminal offense of “honest service fraud,” which was codified by Congress only following successful criminal prosecutions of public and private corruption, will continue to be used to address corruption on the part of persons holding fiduciary duties toward union members and employee pension and health benefit plan participants as the American retired population increases and the national government assumes greater oversight of employee health care.Originality/valueThe paper encourages the reader, especially those in law enforcement, to think creatively about the scope of existing criminal statutes while reviewing or enforcing their application to all forms of organizational corruption.

US DOL regulations may challenge private investment funds

PurposeThe purpose of this paper is to analyze recent regulations and proposed regulations issued by the US Department of Labor (DOL) that relate to the reporting of compensation paid to service providers to employee benefit plans.Design/methodology/approachThe paper reviews the statutory provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA), applicable DOL regulations as available in the Federal Register and certain public comments and a DOL FAQs document regarding the applicable regulations available on the DOL's web site. The paper also relies on observations of common market practice based on actual experience.FindingsRecent DOL regulations – in particular those related to Form 5500 reporting and the “Necessary Services Exemption” – may significantly affect the reporting obligations of certain private investment fund sponsors with respect to their employee benefit plan investors. It shows that, although the scope of these regulations is understandable in the context of participant‐directed defined contribution plans, they may be less so in the context of defined benefit plans, which invest more frequently in private investment funds. There are some potential exceptions, on which private investment fund sponsors may be able to rely. Achieving compliance with the rules as drafted, however, may be time‐consuming and costly.Practical implicationsPrivate investment fund sponsors may wish to begin looking at their compensation and service provider arrangements in light of these regulations and consider how best to respond.Originality/valueThe paper contains two experienced ERISA practitioners' analysis of recent regulations on which relatively few stakeholders have seemed to focus to date.

Community Bank System, Inc.

AbstractCommercial Banking (MIC: SIC: 6021 NAIC: 522110)Community Bank System is a bank holding company. Co. operates a community bank business through its Community Bank, N.A. subsidiary, whose branches are generally located in smaller towns and cities within its geographic market areas of Upstate New York and Northeastern Pennsylvania. In addition, Co. provides administration, consulting and actuarial services to sponsors of employee benefit plans through its Benefit Plans Administrative Services, Inc. subsidiary. As of Dec 31 2007, Co. had total assets of $4.70 billion and total deposits of $3.23 billion.

Why No Prospectus Required for Pension Plans

The SEC has considered whether the federal securities laws should apply to Collective Trusts and Separate Accounts that are investment vehicles for employee benefit plans in 1992 and 1996. Thus far, the SEC has declined to take action necessary to ensure Congress amends the federal securities laws to remove existing exemptions. Lawyers and accountants are not the preferred parties to speak on behalf of investors or employee participants in regards to whether amendments are needed due to the conflict of interest between protection of investors and their own interest in new fee generating activities. The SEC has implemented employee education programs and prospectus simplification for those investment vehicles that already require the issuance of a prospectus, such as interests in mutual funds. The values of the SEC Chairman shall ultimately guide the proper course of action in whether reforms of the current exemptions are needed. It is the authors hope that the SEC Chairman will, indeed, adopt policies that favor reforms eliminating the current exemptions in a manner that is consistent with the ICI proposals of 1996.

Not All Plan Failures are Created Equal: Inventing the Code Section 409A Correction Program

The new requirements under Code §409A have created compliance issues for executives and their corporations. All nonqualified deferred compensation plans must comply with the requirements under Code §409A(a) in form and in operation. The esoteric nature of Code §409A(a) and its regulations make administration difficult. Consequently, the U.S. Department of the Treasury and the Internal Revenue Service have decided to create a program for correcting certain nonqualified deferred compensation plan failures. Instituting a correction program for employee benefit plan failures is not a new concept. For several years, the Service has administered the Employee Plans Compliance Resolution System (EPCRS) to allow a plan qualified under Code §401(a) to correct certain failures that would otherwise cause the plan to be disqualified. While the current EPCRS program has undergone several reconstructions, the current Code §409A(a) correction program is in its infant stage. On December 20, 2007, the Treasury Department and the Service released Notice 2007-100 outlining a limited self-correction program. This article reviews the current Code §409A(a) correction program and analyzes several issues related to creating the program, including whether the Treasury Department and the Service have legal authority to create it.

Community Bank System, Inc.

AbstractCommercial Banking (MIC: SIC: 6021 NAIC: 522110)Community Bank System is a bank holding company. Co. operates a community bank business through its Community Bank, N.A. subsidiary, whose branches are generally located in smaller towns and cities within its geographic market areas of Upstate New York and Northeastern Pennsylvania. In addition, Co. provides administration, consulting and actuarial services to sponsors of employee benefit plans through its Benefit Plans Administrative Services, Inc. subsidiary. As of Dec 31 2007, Co. had total assets of $4.70 billion and total deposits of $3.23 billion.