PENSION PLAN

The Company participates in a trusteed pension plan known as the Allegheny Group Retirement Plan covering virtually all full-time employees. Benefits are based on years of service and the employee's compensation. Accruals under the Plan were frozen as of May 31, 2014. Freezing the plan resulted in a re-measurement of the pension obligations and plan assets as of the freeze date. The pension obligation was re-measured using the discount rate based on the Citigroup Above Median Pension Discount Curve in effect on May 31, 2014 of 4.46%.

Pension expense was $273 thousand, $256 thousand and $469 thousand in 2016, 2015 and 2014, respectively.

Information pertaining to the activity in the Company’s defined benefit plan, using the latest available actuarial valuations with a measurement date of December 31, 2016 and 2015 is as follows:



(Dollars in thousands)	2016			2015
Change in benefit obligation
Benefit obligation at beginning of year	$	8,662		$	8,173
Service cost	—			—
Interest cost	367			315
Actuarial loss	4			276
Assumption changes	179			97
Curtailment impact	—			—
Benefits paid	(191		)	(199		)
Benefit obligation at end of year	$	9,021		$	8,662

Change in plan assets:
Fair value of plan assets at beginning of year	$	4,486		$	4,471
Actual return on plan assets	96			(124		)
Employer contribution	182			338
Benefits paid	(191		)	(199		)
Fair value of plan assets at end of year	$	4,573		$	4,486

Funded status	$	(4,448	)	$	(4,176	)
Unrecognized net actuarial loss	4,464			4,283
Unrecognized prior service cost	—			—
Prepaid pension cost recognized	$	16		$	107

Accumulated benefit obligation	$	9,021		$	8,662

At December 31, 2016, 2015 and 2014, the weighted average assumptions used to determine the benefit obligation are as follows:



	2016		2015		2014
Discount rate	4.05	%	4.30	%	3.90	%
Rate of compensation increase	n/a		n/a		n/a

The components of net periodic pension cost are as follows:

(Dollars in thousands)	2016			2015			2014
Service cost	$	—		$	—		$	346
Interest cost	367			315			306
Expected return on plan assets	(330		)	(316		)	(319		)
Amortization of prior service costs	—			—			—
Amortization of net actuarial loss	236			257			136
Net periodic pension cost	$	273		$	256		$	469

For the years December 31, 2016, 2015 and 2014, the weighted average assumptions used to determine net periodic pension cost are as follows:



	2016		2015		2014
Discount rate	4.30	%	3.90	%	4.86	%
Expected long-term rate of return on plan assets	6.75	%	6.75	%	7.50	%
Rate of compensation increase	n/a		n/a		n/a

The Company’s pension plan asset allocations at December 31, 2016 and 2015, as well as target allocations for 2016 are as follows:



	12/31/2016		12/31/2015
Plan Assets
Cash	16	%	10	%
Fixed income	28	%	20	%
Alternative investments	9	%	19	%
Domestic equities	28	%	32	%
Foreign equities	19	%	19	%
Total	100	%	100	%

The estimated net loss (gain) for the plan that are expected to be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $241 thousand.

The following table sets forth by level, within the fair value hierarchy, as defined in Note 18, "Fair Value Measurements" of the Notes to the Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K, the Plan’s assets at fair value as of December 31, 2016.



(Dollars in thousands)	Level I		Level II		Level III		Total
Assets:
Cash	$	732	$	—	$	—	$	732
Fixed income	1,280		—		—		1,280
Alternative investments	—		—		412		412
Domestic equities	1,280		—		—		1,280
Foreign equities	869		—		—		869

Total assets at fair value	$	4,161	$	—	$	412	$	4,573



(Dollars in thousands)	Level I		Level II		Level III		Total
Assets:
Cash	$	449	$	—	$	—	$	449
Fixed income	897		—		—		897
Alternative investments	—		—		852		852
Domestic equities	1,436		—		—		1,436
Foreign equities	852		—		—		852

Total assets at fair value	$	3,634	$	—	$	852	$	4,486

Investment in government securities and short-term investments are valued at the closing price reported on the active market on which the individual securities are traded. Alternative investments and investment in debt securities are valued at quoted prices which are available but traded less frequently, and items that are fair valued using other financial instruments, the parameters of which can be directly observed. The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

Below we show the best estimate of the plan contribution for next fiscal year. We also show the benefits expected to be paid in each of the next five fiscal years, and in the aggregate for the five fiscal years thereafter.

(Dollars in thousands)	Cash Flow
Contributions for the period of 01/01/17 through 12/31/17	$	319

Estimated future benefit payments reflecting expected future service
2017	$	252
2018	$	260
2019	$	280
2020	$	298
2021	$	307
2022 through 2026	$	2,104