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EMPLOYEE BENEFIT PLANS
 12 Months Ended
Dec. 31, 2021
EMPLOYEE BENEFIT PLANS  
EMPLOYEE BENEFIT PLANS

17. EMPLOYEE BENEFIT PLANS

PENSION PLAN:

The Company has a noncontributory defined benefit pension plan covering certain 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. Effective January 1, 2013, the Company implemented a soft freeze of its defined benefit pension plan for non-union employees. A soft freeze means that all existing employees as of December 31, 2012 will remain in the defined benefit pension plan but any new non-union employees hired after January 1, 2013 will no longer be part of the defined benefit plan but instead will be offered retirement benefits under an enhanced 401(k) program. The Company implemented a similar soft freeze of its defined benefit pension plan for union employees effective January 1, 2014. The Company executed these changes to help reduce its pension costs in future years. Plan assets are primarily debt securities (including U.S. Treasury and Agency securities, corporate notes and bonds), listed common stocks (including shares of the Company’s common stock valued at $1.8 million 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.

PENSION BENEFITS:

​

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

​

    

2021

    

2020

​

​

(IN THOUSANDS)

CHANGE IN BENEFIT OBLIGATION:

 

​

  

 

​

  

Benefit obligation at beginning of year

​

$

54,861

​

$

49,561

Service cost

​

 

1,708

​

​

1,676

Interest cost

​

 

894

​

​

1,281

Actuarial loss

​

 

273

​

​

6,085

Settlements

​

 

(6,516)

​

​

—

Benefits paid

​

 

(933)

​

​

(3,742)

Benefit obligation at end of year

​

 

50,287

​

​

54,861

CHANGE IN PLAN ASSETS:

​

 

  

​

 

  

Fair value of plan assets at beginning of year

​

 

58,447

​

​

44,831

Actual return on plan assets

​

 

11,434

​

​

8,358

Employer contributions

​

 

8,000

​

​

9,000

Settlements

​

 

(6,516)

​

​

—

Benefits paid

​

 

(933)

​

​

(3,742)

Fair value of plan assets at end of year

​

 

70,432

​

​

58,447

Funded status of the plan

​

$

20,145

​

$

3,586

​

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

​

    

2021

    

2020

​

​

(IN THOUSANDS)

AMOUNTS NOT YET RECOGNIZED AS A COMPONENT OF NET PERIODIC PENSION COST:

 

​

  

 

​

​

Amounts recognized in accumulated other comprehensive loss consists of:

 

​

  

 

​

​

Net actuarial loss

​

$

9,319

​

$

20,628

Total

​

$

9,319

​

$

20,628

​

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

​

    

2021

    

2020

​

​

(IN THOUSANDS)

ACCUMULATED BENEFIT OBLIGATION:

 

​

  

 

​

  

Accumulated benefit obligation

​

$

46,319

​

$

50,435

​

The weighted-average assumptions used to determine benefit obligations at December 31, 2021 and 2020 were as follows:

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

 

​

    

2021

    

2020

 

WEIGHTED AVERAGE ASSUMPTIONS:

 

  

 

  

​

Discount rate

 

2.80

%  

2.47

%

Salary scale

 

2.50

 

2.50

​

​

​

​

​

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

​

    

2021

    

2020

    

2019

​

​

(IN THOUSANDS)

COMPONENTS OF NET PERIODIC BENEFIT COST:

​

​

  

 

​

  

 

​

  

Service cost

​

$

1,708

​

$

1,676

​

$

1,470

Interest cost

​

 

894

​

 

1,281

​

 

1,569

Expected return on plan assets

​

 

(4,008)

​

 

(3,241)

​

 

(3,025)

Amortization of net loss

​

 

2,421

​

 

2,453

​

 

1,649

Settlement charge

​

 

1,736

​

 

—

​

 

—

Net periodic pension cost

​

$

2,751

​

$

2,169

​

$

1,663

​

The service cost component of net periodic benefit cost is included in salaries and employee benefits and all other components of net periodic benefit cost are included in other expense on the Consolidated Statements of Operations.

​

The Company recognized a $1.7 million settlement charge in connection with its definded benefit pension plan in 2021. A settlement charge must be recognized when the total dollar amount of lump sum distributions paid from the pension plan to retired employees exceed a threshold of expected annual service and interest costs in the current year. In 2021, all but one employee that retired elected to take a lump sum distribution as opposed to collecting future monthly annuity payments since the value of the lump sums was elevated due to historically low interest rates. It is important to note that since the retired employees have chosen to take the lump sum payments, these individuals are no longer included in the pension plan. Therefore, we anticipate that the Company’s normal annual pension expense should be lower in the future.

​

The accrued pension liability, which had a positive (debit) balance of $19.5 million and $3.0 million, was reclassified to other assets on the Consolidated Balance Sheets as of December 31, 2021 and 2020, respectively. The

balance of the accrued pension liability became a positive value as a result of the Company’s contributions to the plan during the year and the revaluation of the obligation due to the recognition of the settlement charge in 2021.

​

​

​

​

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

​

    

2021

    

2020

    

2019

​

​

(IN THOUSANDS)

OTHER CHANGES IN PLAN ASSETS AND BENEFIT OBLIGATIONS RECOGNIZED IN OTHER COMPREHENSIVE LOSS

 

​

​

 

​

  

 

​

  

Net (gain) loss

​

$

(7,153)

​

$

968

​

$

5,300

Recognized loss

​

 

(4,157)

​

 

(2,453)

​

 

(1,649)

Total recognized in other comprehensive loss before tax effect

​

$

(11,310)

​

$

(1,485)

​

$

3,651

Total recognized in net benefit cost and other comprehensive loss before tax effect

​

$

(8,559)

​

$

684

​

$

5,314

​

For the year ended December 31, 2021, actuarial gains in the projected benefit obligation were primarily the result of the increase in discount rate. Other sources of gain/loss such as plan experience, updated census data and minor adjustments to actuarial assumptions, including updates to lump sum interest rates, lump sum mortality tables, and mortality improvement scales, generated a combined loss of less than 4% of expected year end obligations.

The weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31, 2021, 2020 and 2019 were as follows:

​

​

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

 

​

    

2021

    

2020

    

2019

 

WEIGHTED AVERAGE ASSUMPTIONS:

 

  

 

  

 

  

​

Discount rate

 

2.48

%  

3.20

%  

4.28

%

Expected return on plan assets

 

7.00

 

7.00

 

7.50

​

Rate of compensation increase

 

2.50

 

2.50

 

2.50

​

​

The Company has assumed a 7.00% long-term expected return on plan assets. This assumption was based upon the plan’s historical investment performance over a longer-term period of 20 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, 2021. This plan’s asset allocation at December 31, 2021 and 2020, by asset category are as follows:

​

​

​

​

​

​

​

​

​

YEAR ENDED DECEMBER 31, 

 

​

    

2021

    

2020

 

ASSET CATEGORY:

 

  

 

  

​

Cash and cash equivalents

 

0.1

%  

1.2

%

Domestic equities

 

12.1

 

10.6

​

Mutual funds/ETFs

 

84.1

 

82.2

​

International equities

 

0.3

 

—

​

Corporate bonds

 

3.4

 

6.0

​

Total

 

100.0

%  

100.0

%

​

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, 

​

    

2021

    

2020

​

​

(IN THOUSANDS)

Level 1:

 

​

  

 

​

  

Cash and cash equivalents

​

$

56

​

$

725

Domestic equities

​

 

8,488

​

​

6,219

Mutual funds/ETFs

​

 

59,306

​

​

48,009

International equities

​

 

199

​

​

—

Level 2:

​

 

​

​

​

​

Corporate bonds

​

 

2,383

​

​

3,494

Total fair value of plan assets

​

$

70,432

​

$

58,447

​

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 American Depository Receipts 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 West Chester Capital Advisors. 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, 2021, 2.6% 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 2022 will approximate $5.0 million. Funding requirements for subsequent years are uncertain and will significantly depend on whether the plan’s actuary changes any assumptions used to calculate plan funding levels, the actual return on plan assets, changes in the employee groups covered by the plan, and any legislative or regulatory changes affecting plan funding requirements. For tax planning, financial planning, cash flow management or cost reduction purposes the Company may increase, accelerate, decrease or delay contributions to the plan to the extent permitted by law.

ESTIMATED FUTURE BENEFIT PAYMENTS:

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

​

​

​

​

​

​

    

ESTIMATED FUTURE

YEAR:

​

BENEFIT PAYMENTS

​

​

(IN THOUSANDS)

2022

​

$

4,608

2023

​

 

4,302

2024

​

 

4,456

2025

​

 

3,944

2026

​

 

3,923

Years 2027-2031

​

 

12,088

​

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. Effective January 1, 2013, any new non-union employees receive a 4% non-elective contribution and these employees may elect to make voluntary, pretax contributions to their accounts which the Company will match one half on the first 6% of contribution up to a maximum of 3%. Effective January 1, 2014, any new union employees receive a 4% non-elective contribution and these employees may elect to make voluntary, pretax contributions to their accounts which the Company will match dollar for dollar up to a maximum of 4%. Contributions by the Company charged to operations were $704,000, $653,000 and $604,000 for the years ended December 31, 2021, 2020 and 2019, respectively. The fair value of plan assets includes $434,000 pertaining to the value of the Company’s common stock that was held by the plan at December 31, 2021.

DEFERRED COMPENSATION PLAN:

The Company maintains a nonqualified deferred compensation plan in which a select group of executives are permitted to participate. An eligible executive can defer a certain percentage of their current salary to be placed into the plan. The Company has established a rabbi trust to provide funding for the benefits payable under our deferred compensation plan. As of December 31, 2021 and 2020, the Company reported a deferred compensation liability of $526,000 and $443,000, respectively, within other liabilities on the Consolidated Balance Sheets. For the year ended December 31, 2021 and 2020, the Company recognized $44,000 and $7,000, respectively, of deferred compensation plan expense which is reported within other expense on the Consolidated Statements of Operations. See Note 5 (Investment Securities) for additional disclosures related to the nonqualified deferred compensation plan and assets held within the rabbi trust.

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