14. EMPLOYEE BENEFIT PLANS

PENSION PLANS:

The Company has a noncontributory defined benefit pension plan covering all employees who work at least 1,000 hours per year. The participants shall have a vested interest in their accrued benefit after five full years of service. The benefits of the plan are based upon the employee's years of service and average annual earnings for the highest five consecutive calendar years during the final ten year period of employment. Plan assets are primarily debt securities (including U.S. Treasury and Agency securities, corporate notes and bonds), listed common stocks (including shares of AmeriServ Financial, Inc. common stock valued at $406,000 and is limited to 10% of the plan's assets), mutual funds, and short-term cash equivalent instruments. The following actuarial tables are based upon data provided by an independent third party as of December 31, 2011.

PENSION BENEFITS:


	YEAR ENDED DECEMBER 31,
	2011			2010
	(IN THOUSANDS)
CHANGE IN BENEFIT OBLIGATION:
Benefit obligation at beginning of year	$	23,337		$	19,855
Service cost		1,335			1,097
Interest cost		1,198			1,186
Actuarial loss		1,385			2,129
Benefits paid		(1,546	)		(930	)

Benefit obligation at end of year		25,709			23,337

CHANGE IN PLAN ASSETS:
Fair value of plan assets at beginning of year		17,749			15,479
Actual return on plan assets		(123	)		1,700
Employer contributions		2,100			1,500
Benefits paid		(1,546	)		(930	)

Fair value of plan assets at end of year		18,180			17,749

Funded status of the plan — under funded	$	(7,529	)	$	(5,588	)


	YEAR ENDED DECEMBER 31,
	2011			2010
	(IN THOUSANDS)
AMOUNTS NOT YET RECOGNIZED AS A COMPONENT OF NET PERIODIC PENSION COST:
Amounts recognized in accumulated other comprehensive loss consists of:
Transition asset	$	(25	)	$	(42	)
Prior service cost		(58	)		(51	)
Net actuarial loss		13,033			10,743

Total	$	12,950		$	10,650


	YEAR ENDED DECEMBER 31,
	2011		2010
	(IN THOUSANDS)
ACCUMULATED BENEFIT OBLIGATION:
Accumulated benefit obligation	$	23,016	$	21,678

The weighted-average assumptions used to determine benefit obligations at December 31, 2011 and 2010 were as follows:


	YEAR ENDED DECEMBER 31,
	2011			2010
	(PERCENTAGES)
WEIGHTED AVERAGE ASSUMPTIONS:
Discount rate		4.75	%		5.25	%
Salary scale		2.50			2.50


	YEAR ENDED DECEMBER 31,
	2011			2010			2009
	(IN THOUSANDS)
COMPONENTS OF NET PERIODIC BENEFIT COST:
Service cost	$	1,335		$	1,097		$	1,021
Interest cost		1,198			1,186			1,058
Expected return on plan assets		(1,582	)		(1,467	)		(1,234	)
Amortization of prior year service cost		7			15			11
Amortization of transition asset		(17	)		(17	)		(17	)
Recognized net actuarial loss		800			706			555

Net periodic pension cost	$	1,741		$	1,520		$	1,394


	YEAR ENDED DECEMBER 31,
	2011			2010			2009
	(IN THOUSANDS)
OTHER CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OTHER COMPREHENSIVE INCOME (LOSS)
Net loss	$	3,090		$	1,895		$	1,433
Recognized loss		(800	)		(705	)		(555	)
Recognized prior service cost		(7	)		(15	)		(11	)
Recognized net initial asset		17			17			17

Total recognized in other comprehensive income (loss) before tax effect	$	2,300		$	1,192		$	884

Total recognized in net benefit cost and other comprehensive income (loss) before tax effect	$	4,041		$	1,712		$	2,278

The estimated net loss, prior service cost and transition asset for the defined benefit pension plan that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost over the next year are $1,048,000, $(19,000), and ($17,000), respectively.

The weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31, 2011, 2010 and 2009 were as follows:


	YEAR ENDED DECEMBER 31,
	2011			2010			2009
	(PERCENTAGES)
WEIGHTED AVERAGE ASSUMPTIONS:
Discount rate		5.25	%		5.75	%		6.25	%
Expected return on plan assets		8.00			8.00			8.00
Rate of compensation increase		2.50			2.50			2.50

The Company has assumed an 8% long-term expected return on plan assets. This assumption was based upon the plan's historical investment performance over a longer-term period of 15 years combined with the plan's investment objective of balanced growth and income. Additionally, this assumption also incorporates a targeted range for equity securities of approximately 60% of plan assets.

PLAN ASSETS:

The plan's measurement date is December 31, 2011. This plan's asset allocations at December 31, 2011 and 2010, by asset category are as follows:


	2011			2010
	(PERCENTAGES)
ASSET CATEGORY:
Cash and cash equivalents		—	%		—	%
Domestic equities		19			9
Mutual funds/ETFs		71			78
Agencies		—			1
Corporate bonds		10			12

Total		100	%		100	%

The major categories of assets in the Company's Pension Plan as of year end are presented in the following table. Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value.


	YEAR ENDED DECEMBER 31,
	2011		2010
	(IN THOUSANDS)
Level 1:
Cash and cash equivalents	$	—	$	—
Domestic equities		3,402		1,550
Mutual funds/ETFs		12,918		13,909
Level 2:
Agencies		—		252
Corporate bonds		1,860		2,038

Total fair value of plan assets	$	18,180	$	17,749

Cash and cash equivalents may include uninvested cash balances along with money market mutual funds, treasury bills, or other assets normally categorized as cash equivalents. Domestic equities may include common or preferred stocks, covered options, rights or warrants, or ADRs which are traded on any U.S. equity market. Mutual funds/ETFs may include any equity, fixed income, balanced, international, or global mutual fund or exchange traded fund including any propriety fund managed by the Trust Company. Agencies may include any U.S. government agency security or asset-backed security. Collective investment funds may include equity, fixed income, or balanced collective investment funds managed by the Trust Company. Corporate bonds may include any corporate bond or note.

The investment strategy objective for the pension plan is a balance of growth and income. This objective seeks to develop a portfolio for acceptable levels of current income together with the opportunity for capital appreciation. The balanced growth and income objective reflects a relatively equal balance between equity and fixed income investments such as debt securities. The allocation between equity and fixed income assets may vary by a moderate degree but the plan typically targets a range of equity investments between 50% and 60% of the plan assets. This means that fixed income and cash investments typically approximate 40% to 50% of the plan assets. The plan is also able to invest in ASRV common stock up to a maximum level of 10% of the market value of the plan assets (at December 31, 2011, 2.2% of the plan assets were invested in ASRV common stock). This asset mix is intended to ensure that there is a steady stream of cash from maturing investments to fund benefit payments.

CASH FLOWS:

The Company presently expects that the contribution to be made to the Plan in 2012 will be approximately $1.5 million.

ESTIMATED FUTURE BENEFIT PAYMENTS:

The following benefit payments, which reflect future service, as appropriate, are expected to be paid.


YEAR:	ESTIMATED FUTURE BENEFIT PAYMENTS
	(IN THOUSANDS)
2012	$	2,061
2013		2,169
2014		2,245
2015		2,209
2016		2,497
Years 2017 — 2021		12,879

401(k) PLAN:

The Company maintains a qualified 401(k) plan that allows for participation by Company employees. Under the plan, employees may elect to make voluntary, pretax contributions to their accounts which the Company will match one half on the first 2% of contribution up to a maximum of 1%. The Company also contributes 4% of salaries for union members who are in the plan. Contributions by the Company charged to operations were $229,000 and $208,000 for the years ended December 31, 2011 and 2010, respectively. The fair value of plan assets includes $457,000 pertaining to the value of the Company's common stock and Trust Preferred securities that are held by the plan at December 31, 2011.

Except for the above benefit plans, the Company has no significant additional exposure for any other post-retirement or post-employment benefits.