RETIREMENT PLANS

The Company sponsors a defined benefit retirement plan that covers eligible employees hired prior to February 1, 2007. The benefits are based on years of service and the employee’s five-year final average salary. The accounting for the defined benefit plan requires the use of assumptions and estimates in order to calculate periodic benefit cost and the value of the plan's assets and benefit obligation. These assumptions include discount rates, investment returns, and project salary increases, amongst others. The discount rates used in valuing the plan's benefits obligations was determined with reference to high quality corporate and government bonds that are appropriately matched to the duration of the plan's obligation.

Contributions are intended to provide for benefits attributable to service both to date and expected to be provided in the future. The Company funds the plan in accordance with the Employee Retirement Income Security Act of 1974, or ERISA. The following table sets forth changes in the plan's net benefit obligation and accumulated benefit information as of December 31:



($ in thousands)	2015			2014
Change in benefit obligation - Pension
Benefit obligation at beginning of year	$	11,051		$	9,326
Service cost	265			248
Interest cost	466			392
Actuarial gain/assumption changes	(1,239		)	2,804
Benefits paid	(33		)	(1,719		)
Settlements paid	(1,540		)	—
Benefit obligation at end of year	$	8,970		$	11,051
Accumulated benefit obligation at end of year	$	7,661		$	9,473
Change in Plan Assets
Fair value of plan assets at beginning of year	$	7,972		$	8,633
Actual return on plan assets	(142		)	407
Employer contribution	450			650
Benefits/expenses paid	(33		)	(1,718		)
Settlements paid	(1,540		)	—
Fair value of plan assets at end of year	$	6,707		$	7,972
Funded status - liability	$	(2,263	)	$	(3,079	)

Amounts recorded in equity
Net actuarial loss	$	3,123		$	4,453
Prior service cost	(90		)	(119		)
Total amount recorded	$	3,033		$	4,334
Amount recorded, net taxes	$	1,820		$	2,600

Other changes in plan assets and benefit obligations recognized in other comprehensive income for 2015 and 2014 include the following components:



($ in thousands)	2015			2014
Net (gain) loss	$	(482	)	$	2,973
Recognition of net actuarial loss	(849		)	(481		)
Recognized prior service cost	29			29
Total changes	$	(1,302	)	$	2,521
Changes, net of taxes	$	(781	)	$	1,511

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year:



Amortization net actuarial gain	$	213
Amortization prior service cost	$	(29	)

At December 31, 2015 and 2014 the Company had a long-term pension liability. The Company has always valued its plan assets as of December 31 each year so there were no additional transition impacts upon implementation of a year-end measurement date for plan assets as required by ASC 715 "Compensation - Retirement Benefits." For 2016, the Company is estimating that contributions to the pension plan will be approximately $450,000.

Based on actuarial estimates, it is expected that annual benefit payments from the pension trust will be as follows:



2016		2017		2018		2019		2020		Thereafter
$	94	$	185	$	232	$	249	$	259	$	1,833

Plan assets consist of equity, debt and short-term money market investment funds. The plan’s current investment policy targets 65% equities, 25% debt and 10% money market funds. Equity and debt investment percentages are allowed to fluctuate plus or minus 20% around the respective targets to take advantage of market conditions. As an example, equities can fluctuate from 78% to 52% of plan assets. At December 31, 2015, the investment mix was approximately 61% equity, 33% debt, and 6% money market funds. At December 31, 2014, the investment mix was approximately 59% equity, 30% debt and 11% money market funds. Equity investments consist of a combination of individual equity securities plus value funds, growth funds, large cap funds and international stock funds. Debt investments consist of U.S. Treasury securities and investment grade corporate debt. The weighted-average discount rate and rate of increase in future compensation levels used in determining the periodic pension cost is 4.6% in 2015 and 4.3% in 2014. The expected long-term rate of return on plan assets is 7.5% in 2015 and 2014. The long-term rate of return on plan assets is based on the historical returns within the plan and expectations for future returns. See the following table for fair value hierarchy by investment type at December 31:



($ in thousands)	Fair Value Hierarchy	2015		2014
Pension Plan Assets:
Cash and Cash Equivalents	Level 1	$	459	$	858
Collective Funds	Level 2	2,726		3,575
Treasury/Corporate Notes	Level 2	1,181		1,372
Corporate Equities	Level 1	2,341		2,167
		$	6,707	$	7,972

Total pension and retirement expense was as follows for each of the years ended December 31:



($ in thousands)	2015			2014			2013
Cost components:
Service cost	$	(265	)	$	(248	)	$	(359	)
Interest cost	(466		)	(392		)	(402		)
Expected return on plan assets	615			576			542
Net amortization and deferral	(284		)	(45		)	(253		)
Settlement recognition	(536		)	(407		)	—
Total net periodic pension cost	$	(936	)	$	(516	)	$	(472	)

The Company has a Supplemental Executive Retirement Plan, or SERP, to restore to executives designated by the Compensation Committee of the Board of Directors the full benefits under the pension plan that would otherwise be restricted by certain limitations now imposed under the Internal Revenue Code. The SERP is currently unfunded. The following SERP benefit information is as of December 31:



($ in thousands)	2015			2014
Change in benefit obligation - SERP
Benefit obligation at beginning of year	$	7,431		$	6,131
Service cost	—			26
Interest cost	278			258
Actuarial gain/assumption changes	726			1,399
Benefits paid	(436		)	(383		)
Benefit obligation at end of year	$	7,999		$	7,431
Accumulated benefit obligation at end of year	$	7,117		$	6,937
Funded status - liability	$	(7,999	)	$	(7,431	)



($ in thousands)	2015		2014
Amounts recorded in stockholders’ equity
Net actuarial (gain)	$	2,462	$	2,072
Prior service cost	—		—
Total amount recorded	$	2,462	$	2,072
Amount recorded, net taxes	$	1,477	$	1,243

Other changes in benefit obligations recognized in other comprehensive income for 2015 and 2014 include the following components:



($ in thousands)	2015		2014
Net (gain) loss	$	726	$	1,399
Recognition of net actuarial gain or (loss)	337		(23		)
Total changes	$	1,063	$	1,376
Changes, net of taxes	$	638	$	826

The Company expects to recognize the following amounts as a component of net periodic pension costs during the next fiscal year ($ in thousands):



Amortization net actuarial gain or (loss)	$	343

Based on actuarial estimates, it is expected that annual SERP benefit payments will be as follows ($ in thousands):



2016		2017		2018		2019		2020		Thereafter
$	437	$	502	$	498	$	493	$	487	$	2,469

The weighted-average discount rate and rate of increase in future compensation levels used in determining the actuarial present value of projected benefits obligation was 4.15% and 3.5% for 2015, 3.85% and 3.5% for 2014, and 4.35% and 3.5% for 2013. Total pension and retirement expense was as follows for each of the years ended December 31:



($ in thousands)	2015		2014		2013
Cost components:
Service cost	$	—	$	26	$	318
Interest cost	278		258		219
Net amortization and deferral	337		23		229
Total net periodic pension cost	$	615	$	307	$	766