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%.

On June 19, 2017, the Company and MVB Mortgage approved a Supplemental Executive Retirement Plan (“SERP”), pursuant to which the Chief Executive Office of MVB Mortgage is entitled to receive certain supplemental nonqualified retirement benefits. The SERP shall take effect on December 31, 2017.

Pension expense was $256 thousand, $273 thousand and $256 thousand in 2017, 2016 and 2015, 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, 2017 and 2016 is as follows:



(Dollars in thousands)	2017			2016
Change in benefit obligation
Benefit obligation at beginning of year	$	9,021		$	8,662
Service cost	—			—
Interest cost	360			367
Actuarial loss	95			4
Assumption changes	775			179
Curtailment impact	—			—
Benefits paid	(193		)	(191		)
Benefit obligation at end of year	$	10,058		$	9,021

Change in plan assets:
Fair value of plan assets at beginning of year	$	4,573		$	4,486
Actual return on plan assets	467			96
Employer contribution	319			182
Benefits paid	(193		)	(191		)
Fair value of plan assets at end of year	$	5,166		$	4,573

Funded status	$	(4,892	)	$	(4,448	)
Unrecognized net actuarial loss	4,972			4,464
Unrecognized prior service cost	—			—
Prepaid pension cost recognized	$	80		$	16

Accumulated benefit obligation	$	10,058		$	9,021

At December 31, 2017, 2016 and 2015, the weighted average assumptions used to determine the benefit obligation are as follows:



	2017		2016		2015
Discount rate	3.55	%	4.05	%	4.30	%
Rate of compensation increase	n/a		n/a		n/a

The components of net periodic pension cost are as follows:

(Dollars in thousands)	2017			2016			2015
Service cost	$	—		$	—		$	—
Interest cost	360			367			315
Expected return on plan assets	(345		)	(330		)	(316		)
Amortization of prior service costs	—			—			—
Amortization of net actuarial loss	241			236			257
Net periodic pension cost	$	256		$	273		$	256

For the years December 31, 2017, 2016 and 2015, the weighted average assumptions used to determine net periodic pension cost are as follows:



	2017		2016		2015
Discount rate	4.05	%	4.30	%	3.90	%
Expected long-term rate of return on plan assets	6.75	%	6.75	%	6.75	%
Rate of compensation increase	n/a		n/a		n/a

The Company’s pension plan asset allocations at December 31, 2017 and 2016, as well as target allocations for 2017 are as follows:



	12/31/2017		12/31/2016
Plan Assets
Cash	9	%	16	%
Fixed income	23	%	28	%
Alternative investments	13	%	9	%
Domestic equities	32	%	28	%
Foreign equities	23	%	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 $306 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, 2017.



(Dollars in thousands)	Level I		Level II		Level III		Total
Assets:
Cash	$	465	$	—	$	—	$	465
Fixed income	1,188		—		—		1,188
Alternative investments	—		—		672		672
Domestic equities	1,653		—		—		1,653
Foreign equities	1,188		—		—		1,188

Total assets at fair value	$	4,494	$	—	$	672	$	5,166



(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

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 01/01/18 through 12/31/18	$	416

Estimated future benefit payments reflecting expected future service
2018	$	251
2019	$	259
2020	$	283
2021	$	299
2022	$	308
2023 through 2027	$	2,129