(14) PENSION, OTHER POST RETIREMENT BENEFIT AND PROFIT SHARING PLANS

The Basic Plan is a non-contributory defined benefit pension plan managed by a trustee covering substantially all full-time employees who have at least one year of service and have attained the age of 21. For such employees hired prior to January 1, 2006, benefits are based on years of service and the employee’s compensation until January 1, 2017, at which time benefits will be based on a 2.5% cash balance formula. For such employees hired on or after January 1, 2006, benefits accrue based on a cash balance formula, effective January 1, 2012. The Company's funding policy is to contribute to the Basic Plan the amount that meets the minimum funding requirements set forth in the Employee Retirement Income Security Act of 1974, plus such additional amounts as the Company determines to be appropriate. The difference between the plan assets and projected benefit obligation is included in other assets or other liabilities, as appropriate. Actuarial assumptions are evaluated periodically.

The Restoration Plan provides for the payment of retirement benefits to certain participants in the Basic Plan. The Restoration Plan is a non-qualified plan that covers any employee whose benefit under the Basic Plan is limited by the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), and any employee who elects to participate in the BancorpSouth, Inc. Deferred Compensation Plan, which reduces the employee’s benefit under the Basic Plan. For such employees hired prior to January 1, 2006, benefits are based on years of service and the employee’s compensation until January 1, 2017, at which time benefits will be based on a 2.5% cash balance formula. For such employees hired on or after January 1, 2006, benefits accrue based on a cash balance formula, effective January 1, 2012. The Supplemental Plan is a non-qualified defined benefit supplemental retirement plan for certain key employees. Benefits commence when the employee retires and are payable over a period of ten years.

The Company measured benefit obligations using the most recent RP-2014 mortality tables and MP-2014 mortality improvement scale in selecting mortality assumptions as of December 31, 2014.

The Company uses a December 31 measurement date for its pension and other benefit plans.

A summary of the three defined benefit retirement plans at and for the years ended December 31, 2014, 2013 and 2012 follows:


	Pension Benefits
	2014	2013	2012
Change in benefit obligations:	(In thousands)
Projected benefit obligations at beginning of year	$ 201,696	$ 213,804	$ 182,362
Service cost	8,936	10,735	9,670
Interest cost	9,358	8,212	8,104
Amendments	-	10,850	300
Actuarial loss	53,131	(18,794)	22,417
Benefits paid	(9,029)	(22,116)	(8,232)
Administrative expenses paid	(595)	(995)	(817)
Projected benefit obligations at end of year	$ 263,497	$ 201,696	$ 213,804
Change in plans' assets:
Fair value of plans' assets at beginning of year	$ 196,447	$ 203,704	$ 195,004
Actual return on assets	12,525	13,960	16,631
Employer contributions	2,004	1,894	1,118
Benefits paid	(9,029)	(22,116)	(8,232)
Administrative expenses paid	(595)	(995)	(817)
Fair value of plans' assets at end of year	$ 201,352	$ 196,447	$ 203,704
Funded status:
Projected benefit obligations	$ (263,497)	$ (201,696)	$ (213,804)
Fair value of plans' assets	201,352	196,447	203,704
Net amount recognized	$ (62,145)	$ (5,249)	$ (10,100)

Amounts recognized in the consolidated balance sheets consisted of:


	Pension Benefits
	2014	2013	2012
	(In thousands)
Prepaid benefit cost	$ 64,838	$ 72,886	$ 94,046
Accrued benefit liability	(23,902)	(23,241)	(22,123)
Intangible asset	-	-	-
Accumulated other comprehensive
income adjustment	(103,081)	(54,894)	(82,023)
Net amount recognized	$ (62,145)	$ (5,249)	$ (10,100)

Pre-tax amounts recognized in accumulated other comprehensive income consisted of:


	December 31,
	2014	2013
	(In thousands)

Net transition obligation	$ -	$ 19
Net prior service benefit	(4,598)	(5,366)
Net actuarial loss	107,679	60,241
Total accumulated other comprehensive income	$ 103,081	$ 54,894

The net prior service credit and net actuarial loss that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are approximately ($718,000) and $7.9 million, respectively. No further transition obligation remains to be amortized.

The components of net periodic benefit cost for the years ended December 31, 2014, 2013 and 2012 were as follows:


	Pension Benefits
	2014	2013	2012
Components of net periodic benefit cost:	(In thousands)
Service cost	$ 8,936	$ 10,735	$ 9,670
Interest cost	9,358	8,212	8,104
Expected return on assets	(10,534)	(10,974)	(11,263)
Amortization of unrecognized transition amount	18	18	18
Recognized prior service (benefit) cost	(768)	(768)	(768)
Recognized net loss	3,702	6,099	4,868
Special termination benefit	-	10,850	300
Net periodic benefit cost	$ 10,712	$ 24,172	$ 10,929

The weighted-average assumptions used to determine benefit obligations at December 31, 2014 and 2013 were as follows:


	Basic Plan		Restoration Plan		Supplemental Plan
	2014	2013	2014	2013	2014	2013
Discount rate	4.10%	4.90%	3.90%	4.50%	3.10%	3.65%
Rate of compensation increase	3.00%	3.00%	3.00%	3.00%	3.00%	3.00%

The weighted-average assumptions used to determine net periodic benefit cost for the years ended December 31, 2014, 2013 and 2012 were as follows:


	Basic Plan
	2014	2013	2012
Discount rate	4.90%	4.05%	4.80%
Rate of compensation increase	3.00%	3.00%	3.00%
Expected rate of return on plan assets	5.50%	5.50%	6.00%

	Restoration Plan
	2014	2013	2012
Discount rate	4.50%	3.65%	4.45%
Rate of compensation increase	3.00%	3.00%	3.00%
Expected rate of return on plan assets	N/A	N/A	N/A

	Supplemental Plan
	2014	2013	2012
Discount rate	3.65%	2.85%	3.85%
Rate of compensation increase	3.00%	3.00%	3.00%
Expected rate of return on plan assets	N/A	N/A	N/A

The following table presents information related to the defined benefit plans that had accumulated benefit obligations in excess of plan assets at December 31, 2014 and 2013:


	2014	2013
	(In thousands)
Projected benefit obligation	$ 263,497	$ 31,512
Accumulated benefit obligation	252,227	29,191
Fair value of assets	201,352	-

In selecting the expected long-term rate of return on assets used for the Basic Plan, the Company considered the average rate of earnings expected on the funds invested or to be invested to provide for the benefits of the plan. This included considering the trust asset allocation and the expected returns likely to be earned over the life of the plan. This basis is consistent with the prior year. The discount rate is the rate used to determine the present value of the Company’s future benefit obligations for its pension and other postretirement benefit plans. The discount rate used to discount plan liabilities is determined by matching the timing and duration of expected cash flows of the Company’s pension obligations to a yield curve generated from a broad portfolio of high-quality fixed income debt instruments.

The Company’s pension plan weighted-average asset allocations at December 31, 2014 and 2013 and the Company’s target allocations for 2015, by asset category, were as follows:


	Plan assets at December 31		Target for
Asset category:	2014	2013	2015

Equity securities	32.80%	34.50%	33%
Debt securities	64.60%	62.10%	67%
Cash and equivalents	2.60%	3.40%	0%
Total	100.00%	100.00%

Equity securities held in the Basic Plan included shares of the Company’s common stock with a fair value of $1.9 million (0.92% of total plan assets) and $2.1 million (1.06% of total plan assets) at December 31, 2014 and 2013, respectively. An analysis by management is performed annually to determine whether the Company will make a contribution to the Basic Plan.

The following table presents information regarding expected future benefit payments, which reflect expected service, as appropriate:


		Pension
		Benefits
Expected future benefit payments:		(In thousands)
2015		$ 13,584
2016		12,586
2017		12,988
2018		14,327
2019		15,346
2020-2024		79,151

The following table presents the fair value of each major category of plan assets held in the Basic Plan at December 31, 2014 and 2013:


	Pension Benefits
	2014	2013
Investments, at fair value:	(In thousands)
Cash	$ -	$ 57
U.S. agency debt obligations	69,413	64,298
Mutual funds	123,239	121,178
Common stock of BancorpSouth, Inc.	1,852	2,091
Money market funds	4,225	5,303
Brokered certificates of deposit	2,009	2,973
Total investments, at fair value	200,738	195,900
Accrued interest and dividends	614	547
Fair value of plan assets	$ 201,352	$ 196,447

Fair values are determined based on valuation techniques categorized as follows: Level 1 means the use of quoted prices for identical instruments in active markets; Level 2 means the use of quoted prices for identical or similar instruments in markets that are not active or are directly or indirectly observable; Level 3 means the use of unobservable inputs. Quoted market prices, when available, are used to value investments. Pension plan investments include funds which invest in various types of investment securities and in various companies within various markets. Investment securities are exposed to several risks, such as interest rate, market and credit risks. Because of the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported.

The following tables set forth by level, within the FASB ASC 820, Fair Value Measurements and Disclosure (“FASB ASC 820”), fair value hierarchy, the plan investments at fair value as of December 31, 2014 and 2013:


	December 31, 2014
	Level 1	Level 2	Level 3	Total
	(In thousands)
U.S. agency debt obligations	$ -	$ 69,413	$ -	$ 69,413
Mutual funds	123,239	-	-	123,239
Common stock of BancorpSouth, Inc.	1,852	-	-	1,852
Money market funds	-	4,225	-	4,225
Brokered certificates of deposit	-	2,009	-	2,009
Total	$ 125,091	$ 75,647	$ -	$ 200,738


	December 31, 2013
	Level 1	Level 2	Level 3	Total
	(In thousands)
U.S. agency debt obligations	$ -	$ 64,298	$ -	$ 64,298
Mutual funds	121,178	-	-	121,178
Common stock of BancorpSouth, Inc.	2,091	-	-	2,091
Money market funds	-	5,303	-	5,303
Brokered certificates of deposit	-	2,973	-	2,973
Total	$ 123,269	$ 72,574	$ -	$ 195,843

There were no transfers between Levels of the fair value hierarchy in 2014 or 2013.

The following investments represented 5% or more of the total plan asset value as of December 31, 2014:


		2014
		(In thousands)
Fidelity Advisor New Insights Institutional Fund		$ 10,715
Fidelity Low Price Stock Fund		14,594
Franklin Mutual Discovery Z Fund		11,597
Pioneer Multi-Asset Floating Rate Fund		24,934

The Company has a defined contribution plan (commonly referred to as a “401(k) Plan”). Pursuant to the 401(k) Plan, employees may contribute a portion of their compensation, as set forth in the 401(k) Plan, subject to the limitations as established by the Code. Employee contributions (up to 5% of defined compensation) are matched dollar-for-dollar by the Company. Employer contributions were $9.5 million, $9.8 million and $9.2 million for the years ended December 31, 2014, 2013 and 2012, respectively.