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Employee Benefit Plans
 12 Months Ended
Dec. 31, 2016
Compensation and Retirement Disclosure [Abstract]  
Employee Benefit Plans
NOTE 13 – EMPLOYEE BENEFIT PLANS
The following summarizes the Corporation’s expense under its retirement plans for the years ended December 31:
 
2016
 
2015
 
2014
 
(in thousands)
401(k) Retirement Plan
$
7,418

 
$
6,423

 
$
8,643

Pension Plan
4,310

 
4,102

 
1,514

 
$
11,728

 
$
10,525

 
$
10,157


The 401(k) Retirement Plan is a defined contribution plan under which eligible employees may defer a portion of their pre-tax covered compensation on an annual basis, with employer matches of up to 5% of employee compensation. Employee and employer contributions under these features are 100% vested. Prior to January 1, 2015, this plan also included a profit sharing component whereby additional employer contributions not to exceed 5% of each eligible employee’s covered compensation, were provided for certain employees.

Contributions to the Defined Benefit Pension Plan ("Pension Plan") are actuarially determined and funded annually, if necessary. The Corporation recognizes the funded status of its Pension Plan on the consolidated balance sheets and recognizes the changes in that funded status through other comprehensive income. The Pension Plan has been curtailed, with no additional benefits accruing to participants.













Pension Plan

The net periodic pension cost for the Pension Plan, as determined by consulting actuaries, consisted of the following components for the years ended December 31:
 
2016
 
2015
 
2014
 
(in thousands)
Service cost (1)
$
688

 
$
579

 
$
367

Interest cost
3,520

 
3,405

 
3,413

Expected return on assets
(2,318
)
 
(3,009
)
 
(3,240
)
Net amortization and deferral
2,420

 
3,127

 
974

Net periodic pension cost
$
4,310

 
$
4,102

 
$
1,514

 
(1)
The Pension Plan was curtailed effective January 1, 2008. Pension plan service cost for all years presented was related to administrative costs associated with the plan and not due to the accrual of additional participant benefits.
The following table summarizes the changes in the projected benefit obligation and fair value of plan assets for the plan years ended December 31:
 
2016
 
2015
 
(in thousands)
Projected benefit obligation at beginning of year
$
84,736

 
$
93,079

Service cost
688

 
579

Interest cost
3,520

 
3,405

Benefit payments
(5,172
)
 
(3,904
)
Change in assumptions
1,635

 
(7,722
)
Experience gain
(44
)
 
(701
)
Projected benefit obligation at end of year
$
85,363

 
$
84,736

 
 
 
 
Fair value of plan assets at beginning of year
$
46,971

 
$
51,730

Employer contributions (1)
5,169

 
—

Actual return on plan assets
1,716

 
(855
)
Benefit payments
(5,172
)
 
(3,904
)
Fair value of plan assets at end of year
$
48,684

 
$
46,971


(1) The Corporation funds at least the minimum amount required by the funding requirements of federal law and regulations. The corporation contributed $5.2 million to the Pension Plan during 2016. There were no contributions to the Pension Plan in 2015.

The following table presents the funded status of the Pension Plan, included in other liabilities on the consolidated balance sheets, as of December 31:
 
2016
 
2015
 
(in thousands)
Projected benefit obligation
$
(85,363
)
 
$
(84,736
)
Fair value of plan assets
48,684

 
46,971

Funded status
$
(36,679
)
 
$
(37,765
)











The following table summarizes the changes in the unrecognized net loss included as a component of accumulated other comprehensive loss:

 
Unrecognized Net Loss 
 
Gross of tax
 
Net of tax
 
(in thousands)
Balance as of December 31, 2014
$
38,082

 
$
24,754

Recognized as a component of 2015 periodic pension cost
(3,127
)
 
(2,033
)
Unrecognized gains arising in 2015
(4,559
)
 
(2,963
)
Balance as of December 31, 2015
30,396

 
19,758

Recognized as a component of 2016 periodic pension cost
(2,420
)
 
(1,573
)
Unrecognized losses arising in 2016
2,193

 
1,425

Balance as of December 31, 2016
$
30,169

 
$
19,610



The total amount of unrecognized net loss that will be amortized as a component of net periodic pension cost in 2017 is expected to be $2.7 million.

The following rates were used to calculate net periodic pension cost and the present value of benefit obligations as of December 31:
 
2016
 
2015
 
2014
Discount rate-projected benefit obligation
4.00
%
 
4.25
%
 
3.75
%
Expected long-term rate of return on plan assets
5.00
%
 
6.00
%
 
6.00
%

As of December 31, 2016 and 2015, the discount rate used was determined using the Citigroup Average Life discount rate table, as adjusted based on the Pension Plan's expected benefit payments and rounded to the nearest 0.25%.
The 5.00% long-term rate of return on plan assets used to calculate the net periodic pension cost was based on historical returns, adjusted for expectations of long-term asset returns based on the December 31, 2016 weighted average asset allocations. The expected long-term return is considered to be appropriate based on the asset mix and the historical returns realized.

The following table presents a summary of the fair values of the Pension Plan’s assets as of December 31:
 
2016
 
2015
 
Estimated
Fair Value
 
% of Total
Assets
 
Estimated
Fair Value
 
% of Total
Assets
 
(dollars in thousands)
Equity mutual funds
$
12,689

 

 
$
8,269

 

Equity common trust funds
7,936

 

 
6,350

 

Equity securities
20,625

 
42.4
%
 
14,619

 
31.1
%
Cash and money market funds
7,149

 

 
8,196

 

Fixed income mutual funds
10,540

 

 
9,578

 

Corporate debt securities
3,252

 

 
3,749

 

U.S. Government agency securities
496

 


 
2,881

 


Fixed income securities and cash
21,437

 
44.0
%
 
24,404

 
52.0
%
Other alternative investment funds
6,622

 
13.6
%
 
7,948

 
16.9
%

$
48,684

 
100.0
%
 
$
46,971

 
100.0
%


Investment allocation decisions are made by a retirement plan committee. The goal of the investment allocation strategy is to match certain benefit obligations with maturities of fixed income securities. Pension Plan assets are invested with a balanced objective, with target asset allocations of approximately 50% in equities, 40% in fixed income securities and cash and 10% in alternative investments. Alternative investments may include managed futures, commodities, real estate investment trusts, master limited partnerships, and long-short strategies with traditional stocks and bonds. All alternative investments are in the form of mutual funds, not individual contracts, to enable daily liquidity.
The fair values for all assets held by the Pension Plan, excluding equity common trust funds, are based on quoted prices for identical instruments and would be categorized as Level 1 assets under FASB ASC Topic 810. Equity common trust funds would be categorized as Level 2 assets under FASB ASC Topic 810.
Estimated future benefit payments are as follows (in thousands):
Year
 
2017
$
3,409

2018
3,742

2019
3,831

2020
4,213

2021
4,410

2022 – 2026
24,219

 
$
43,824



Postretirement Benefits

The Corporation provides medical benefits and life insurance benefits under a postretirement benefits plan ("Postretirement Plan") to certain retired full-time employees who were employees of the Corporation prior to January 1, 1998. Prior to February 1, 2014, certain full-time employees became eligible for these discretionary benefits if they reached retirement age while working for the Corporation. The Corporation recognizes the funded status of the postretirement plan on the consolidated balance sheets and recognizes the changes in that funded status through other comprehensive income.

In 2015, the Corporation amended the postretirement plan to eliminate a death benefit provision and to fix the cost of health insurance premiums paid for by each participant. This amendment resulted in a $2.5 million decrease in the postretirement benefit obligation that will be amortized to income over the estimated average remaining life of plan participants, or approximately 14 years.

In 2014, the Corporation amended the Postretirement Plan, making all active full-time employees ineligible for benefits under this plan. As a result of this amendment, the Corporation recorded a $1.5 million curtailment gain as a reduction to salaries and employee benefits expense in 2014. The curtailment gain resulted from the recognition of the remaining pre-curtailment prior service cost as of December 31, 2013. In addition, this amendment resulted in a $3.4 million decrease in the accumulated postretirement benefit obligation and a corresponding increase in unrecognized prior service cost credits.



The components of the net (benefit) expense for postretirement benefits other than pensions are as follows:
 
2016
 
2015
 
2014
 
(in thousands)
Service cost
$
—

 
$
—

 
$
15

Interest cost
85

 
206

 
206

Net amortization and deferral
(551
)
 
(258
)
 
(347
)
Net postretirement benefit cost
$
(466
)
 
$
(52
)
 
$
(126
)
















The following table summarizes the changes in the accumulated postretirement benefit obligation and fair value of plan assets for the years ended December 31:
 
2016
 
2015
 
(in thousands)
Accumulated postretirement benefit obligation at beginning of year
$
2,875

 
$
5,552

Interest cost
85

 
206

Benefit payments
(282
)
 
(251
)
Experience gain
(732
)
 
189

Change in assumptions
(20
)
 
(2,821
)
Accumulated postretirement benefit obligation at end of year
$
1,926

 
$
2,875

 
 
 
 
Fair value of plan assets at beginning of year
$
15

 
$
8

Employer contributions
270

 
258

Benefit payments
(282
)
 
(251
)
Fair value of plan assets at end of year
$
3

 
$
15



The following table presents the funded status of the Postretirement Plan, included in other liabilities on the consolidated balance sheets as of December 31:
 
2016
 
2015
 
(in thousands)
Accumulated postretirement benefit obligation
$
(1,926
)
 
$
(2,875
)
Fair value of plan assets
3

 
15

Funded status
$
(1,923
)
 
$
(2,860
)


The following table summarizes the changes in items recognized as a component of accumulated other comprehensive loss:
 
Gross of tax
 
 
 
Unrecognized
Prior Service
Cost
 
Unrecognized
Net Loss (Gain)
 
Total
 
Net of tax
 
(in thousands)
Balance as of December 31, 2014
$
(3,123
)
 
$
(336
)
 
$
(3,459
)
 
$
(2,249
)
Recognized as a component of 2015 postretirement benefit cost
258

 
—

 
258

 
168

Unrecognized gains arising in 2015
(2,469
)
 
(172
)
 
(2,641
)
 
(1,717
)
Balance as of December 31, 2015
(5,334
)
 
(508
)
 
(5,842
)
 
(3,798
)
Recognized as a component of 2016 postretirement benefit cost
465

 
86

 
551

 
358

Unrecognized gains arising in 2016
—

 
(761
)
 
(761
)
 
(495
)
Balance as of December 31, 2016
$
(4,869
)
 
$
(1,183
)
 
$
(6,052
)
 
$
(3,935
)


The following rates were used to calculate net periodic postretirement benefit cost and the present value of benefit obligations as of December 31:
 
2016
 
2015
 
2014
Discount rate-projected benefit obligation
4.25
%
 
4.25
%
 
3.75
%
Expected long-term rate of return on plan assets
3.00
%
 
3.00
%
 
3.00
%

As of December 31, 2016 and 2015, the discount rate used to calculate the accumulated postretirement benefit obligation was determined using the Citigroup Average Life discount rate table, as adjusted based on the Postretirement Plan's expected benefit payments and rounded to the nearest 0.25%.





Estimated future benefit payments under the Postretirement Plan are as follows (in thousands):
Year
 
2017
$
237

2018
222

2019
207

2020
193

2021
178

2022 – 2026
695

 
$
1,732