9.DEFINED BENEFIT PENSION PLAN

The Corporation acquired the Peninsula Financial Corporation noncontributory defined benefit pension plan. Effective December 31, 2005, the plan was amended to freeze participation in the plan; therefore, no additional employees are eligible to become participants in the plan. The benefits are based on years of service and the employee’s compensation at the time of retirement. The Plan was amended effective December 31, 2010, to freeze benefit accrual for all participants. Expected contributions to the Plan in 2016 are $.063 million. The anticipated distributions over the next five years and through December 31, 2025 are detailed in the table below (dollars in thousands):


2016	$	134
2017		132
2018		129
2019		126
2020		125
2021-2025		690
Total	$	1,336

At September 30, 2016, the plan’s assets had a fair value of $2.033 million and the Corporation had a net liability of $1.147 million. The accumulated benefit obligation was $3.180 million. At September 30, 2015, the plan’s assets had a fair value of $2.107 million and the Corporation had a net liability of $1.183 million. The accumulated benefit obligation at September 30, 2015 was $3.290 million.

Assumptions in the actuarial valuation are:


	2016
Weighted average discount rate	3.99	%
Rate of increase in future compensation levels	N/A
Expected long-term rate of return on plan assets	8.00	%

The expected long-term rate of return on plan assets reflects management’s expectations of long-term average rates of return on funds invested to provide for benefits included in the projected benefit obligation. The expected return is based on the outlook for inflation, fixed income returns and equity returns, while also considering historical returns, asset allocation and investment strategy. The discount rate assumption is based on investment yields available on AA rated long-term corporate bonds.

The primary investment objective is to maximize growth of the pension plan assets to meet the projected obligations to the beneficiaries over a long period of time, and to do so in a manner that is consistent with the Corporation’s risk tolerance. The intention of the plan sponsor is to invest the plan assets in mutual funds with the following asset allocation:


	Target	Actual
	Allocation	Allocation
Equity securities	50% to 70%	60%
Fixed income securities	30% to 50%	40%