NOTE 10. 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%.

The plan freeze lowered the pension cost in 2014 by $347 versus 2013.

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, 2014 and 2013 is as follows:


(in thousands)	2014		2013
Change in benefit obligation
Benefit obligation at beginning of year	$	6,492	$	5,798
Service cost		346		651
Interest cost		306		247
Actuarial loss		2,194		(65)
Assumption changes		1,270		—
Curtailment impact		(2,299)		—
Benefits paid		(136)		(139)
Benefit obligation at end of year	$	8,173	$	6,492

Change in plan assets:
Fair value of plan assets at beginning of year	$	4,071	$	3,366
Actual return on plan assets		96		435
Employer contribution		440		409
Benefits paid		(136)		(139)
Fair value of plan assets at end of year	$	4,471	$	4,071

Funded status	$	(3,702)	$	(2,421)
Unrecognized net actuarial loss		3,727		2,475
Unrecognized prior service cost		—		—
Prepaid pension cost recognized	$	25	$	54

Accumulated benefit obligation	$	8,173	$	4,983

At December 31, 2014 and 2013, the weighted average assumptions used to determine the benefit obligation are as follows:


	2014		2013
Discount rate	3.90	%	4.86	%
Rate of compensation increase	n/a	%	3.00	%

The components of net periodic pension cost are as follows (in thousands):


Service cost	$	346	$	651
Interest cost		306		247
Expected return on plan assets		(319)		(271)
Amortization of prior service costs		—		2
Amortization of loss		136		186
Net periodic pension cost	$	469	$	815

For the years December 31, 2014 and 2013, the weighted average assumptions used to determine net periodic pension cost are as follows:


	2014		2013
Discount rate	4.86	%	4.31	%
Expected long-term rate of return on plan assets	7.50	%	7.46	%
Rate of compensation increase	n/a	%	3.00	%

The Company’s pension plan asset allocations at December 31, 2014 and 2013, as well as target allocations for 2015 are as follows:


	12/31/2014		12/31/2013
Plan Assets
Cash	9	%	7	%
Fixed income	27	%	28	%
Alternative investments	15	%	12	%
Domestic equities	32	%	33	%
Foreign equities	16	%	17	%
Real estate inv. trusts (REITs)	1	%	3	%
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 $257.

The following table sets forth by level, within the fair value hierarchy, as defined in Note 18 - Fair Value Measurements, the Plan’s assets at fair value as of December 31, 2014.


(in thousands)	Level I		Level II		Level III		Total
Assets:
Cash	$	402	$	—		—		402
Fixed income		1,207		—		—		1,207
Alternative investments		—		671		—		671
Domestic equities		1,431		—		—		1,431
Foreign equities		715		—		—		715
Real estate inv. Trusts		45		—		—		45

Total assets at fair value	$	3,800	$	671	$	—	$	4,471

The fair value of MVB’s pension plan assets at December 31, 2013 by asset class are as follows:

The following table sets forth by level, within the fair value hierarchy, as defined in Note 18 - Fair Value Measurements, the Plan’s assets at fair value as of December 31, 2013.


(in thousands)	Level I		Level II		Level III		Total
Assets:
Cash	$	285	$	—		—		285
Fixed income		1,140		—		—		1,140
Alternative investments		—		489		—		489
Domestic equities		1,343		—		—		1,343
Foreign equities		692		—		—		692
Real estate inv. Trusts		122		—		—		122

Total assets at fair value	$	3,582	$	489	$	—	$	4,071

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.


(in thousands)	Cash Flow

Contributions for the period of 01/01/15 through 12/31/15	$	338
Estimated future benefit payments reflecting expected future service

2015	$	221
2016	$	229
2017	$	252
2018	$	258
2019	$	277
2020 through 2024	$	1,718