15. Employee benefit plans:

The Company sponsors a separate Employee Stock Ownership Plan (“ESOP”) and Retirement Profit Sharing 401(k) Plan. The Company also maintains Supplemental Executive Retirement Plans (“SERP”), and an Employees’ Pension Plan, which is currently frozen.

Under the ESOP, amounts voted by the Company’s Board of Directors are paid into the ESOP and each employee is credited with a share in proportion to their annual compensation. All contributions to the ESOP are invested in or will be invested primarily in Company stock. Distribution of a participant’s ESOP account occurs upon retirement, death or termination in accordance with the plan provisions.

Under the Retirement Profit Sharing Plan, amounts approved by the Board of Directors have been paid into a fund and each employee was credited with a share in proportion to their annual compensation. Upon retirement, death or termination, each employee is paid the total amount of their credits in the fund in one of a number of optional ways in accordance with the plan provisions. Eligible employees may elect deferrals of up to the maximum amounts permitted by law.

The Company contributed $185, $156 and $144 to the ESOP in 2017, 2016 and 2015. In addition, the Company contribution of $923, $786 and $778 to the Retirement Profit Sharing Plan in 2017, 2016 and 2015, was comprised of a safe harbor contribution of $509, $446 and $430 and a discretionary match of $414, $340 and $348.

Peoples Bank established a SERP Plan to replace 401(k) plan benefits lost due to compensation limits imposed on qualified plans by Federal tax law. The annual benefit is a maximum of 6% of the executive compensation in excess of Federal limits. The total liability associated with this plan was $96 and $76 at December 31, 2017 and 2016, respectively. The expense associated with the plan was $20, $13 and $15 for 2017, 2016 and 2015 respectively.

The Company has SERPs for the benefit of certain officers of the Company. At December 31, 2017 and 2016, other liabilities include $1,594 and $1,416 accrued under the Plans. Compensation expense includes approximately $314, $254, and $157 relating to these SERPs for the years ended December 31, 2017, 2016 and 2015, respectively.

Under the Employees’ Pension Plan, currently under curtailment, amounts computed on an actuarial basis were being paid by the Company into a trust fund. The plan provided for fixed benefits payable for life upon retirement at the age of 65, based on length of service and compensation levels as defined in the plan. As of June 22, 2008 no further benefits are being accrued in this plan. Plan assets of the trust fund are invested and administered by the Trust Department of Peoples Bank.

Information related to the Employees’ Pension Plan is as follows:



	Pension Benefits
December 31	2017		2016
Change in benefit obligation:
Benefit obligation, beginning	$	16,703	$	17,380
Interest cost		650		665
Change in experience gain		(13)		(322)
Change in actuarial assumptions loss (gain)		395		(256)
Benefits paid		(800)		(764)
Benefit obligation, ending		16,935		16,703
Change in plan assets:
Fair value of plan assets, beginning		12,644		12,331
Actual return on plan assets		1,420		1,023
Employer contributions				54
Benefits paid		(800)		(764)
Fair value of plan assets, ending		13,264		12,644
Funded status at end of year	$	(3,671)	$	(4,059)

The Society of Actuaries released new mortality tables in 2017 and 2016 which the Company utilized in its pension plan remeasurements at December 31, 2017 and 2016. The change in mortality assumption resulted in an increase to the benefit obligation of $395 in 2017 and a decrease of $256 in 2016.

Amounts recognized in the consolidated balance sheets are as follows:



	Pension Benefits
December 31	2017		2016

Liabilities	$	3,671	$	4,059
Amounts recognized in the accumulated other comprehensive loss consist of:
Net actuarial loss (gain)		(6,628)		(6,946)
Deferred taxes		1,392		2,431

Net amount recognized	$	(5,236)	$	(4,515)

The accumulated benefit obligation for the defined benefit pension plan was $16,935 and $16,703 at December 31, 2017 and 2016, respectively.

Components of net periodic pension income and other amounts recognized in other comprehensive income are as follows:


	Pension Benefits
Years Ended December 31,	2017		2016		2015
Net periodic pension income:
Interest cost	$	650	$	665	$	696
Expected return on plan assets		(915)		(893)		(931)
Amortization of unrecognized net loss		195		209		198
Net periodic pension income:		(70)		(19)		(37)
Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss):
Net loss (gain)		318		917		296
Deferred tax		(67)		(321)		(104)
Total recognized in other comprehensive income		251		596		192
Total recognized in net period pension cost and other comprehensive income	$	181	$	577	$	155

The estimated net loss for the defined benefit pension plan that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year is $190.

Weighted-average assumptions used to determine benefit obligations and related expenses were as follows:



	Pension Benefits
December 31,	2017		2016		2015
Discount rate:
Obligation	4.00	%	4.00	%	4.00	%
Expense	3.75		4.00		4.00
Expected long-term return on plan assets	7.50	%	7.50	%	7.50	%

The expected long-term return on plan assets was determined using average historical returns of the Company’s plan assets.

The Company’s pension plan weighted-average asset allocations at December 31, 2017 and 2016, by asset category are as follows:


December 31,	2017		2016
Asset Category:
Cash and cash equivalents	4.1	%	4.2	%
Equity securities	57.4		58.0
Corporate bonds	27.6		26.2
U.S. Government securities	10.9		11.6
	100.0	%	100.0	%

Fair value measurement of pension plan assets at December 31, 2017 and 2016 is as follows:


			Quoted Prices in
			Active Markets		Significant		Significant
			for Identical		Observable		Observable
			Assets		Inputs		Inputs
December 31, 2017	Total		(Level 1)		(Level 2)		(Level 3)
Cash	$	539	$	539			$
Equity securities:
U.S. large cap		7,269		7,269
International		350		350
Fixed income securities:
U.S. Treasuries		198			$	198
U.S. Government agencies		1,247				1,247
Corporate bonds		3,661				3,661
Total	$	13,264	$	8,158	$	5,106	$


			Quoted Prices in
			Active Markets		Significant		Significant
			for Identical		Observable		Observable
			Assets		Inputs		Inputs
December 31, 2016	Total		(Level 1)		(Level 2)		(Level 3)
Cash	$	529	$	529			$
Equity securities:
U.S. large cap		7,046		7,046
International		282		282
Fixed income securities:
U.S. Treasuries		498			$	498
U.S. Government agencies		977				977
Corporate bonds		3,312				3,312
Total	$	12,644	$	7,857	$	4,787	$

The Company investment policies and strategies with respect to the pension plan include: (i) the Trust and Investment Division’s equity philosophy is Large-Cap Core with a value bias. We invest in individual high-grade common stocks that are selected from our approved list; (ii) diversification is maintained by having no more than 20% in any industry sector and no individual equity representing more than 10% of the portfolio; and (iii) the fixed income style is conservative but also responsive to the various needs of our individual clients. Fixed income securities consist of U.S. Government Agencies or corporate bonds rated “A” or better. The Company targets the following allocation percentages: (i) cash equivalents 10%; (ii) fixed income 40% ; and (iii) equities 50%.

There is no Company stock included in equity securities at December 31, 2017 or 2016. The Company has not determined the amount of the expected contribution to the Employees’ Pension Plan for 2018.

The following benefit payments are expected to be paid in the next five years and in the aggregate for the five years thereafter:


	Pension Benefits
2018	$	835
2019		832
2020		846
2021		847
2022		885
Thereafter		4,869