XML 34 R20.htm IDEA: XBRL DOCUMENT v3.8.0.1
Retirement Plans
 12 Months Ended
Dec. 31, 2017
Defined Benefit Plan [Abstract]  
Retirement Plans Retirement Plan
The Corporation has a noncontributory defined benefit retirement plan (the Retirement Account Plan) covering substantially all employees who meet participation requirements. The benefits are based primarily on years of service and the employee’s compensation paid. Employees of acquired entities generally participate in the RAP after consummation of the business combinations. Any retirement plans of acquired entities are typically merged into the RAP after completion of the mergers, and credit is usually given to employees for years of service at the acquired institution for vesting and eligibility purposes.
The Corporation also provides legacy healthcare access to a limited group of retired employees from a previous acquisition in the Postretirement Plan. There are no other active retiree healthcare plans.
The funded status and amounts recognized in the 2017 and 2016 consolidated balance sheets, as measured on December 31, 2017 and 2016, respectively, for the Retirement Account and Postretirement Plan were as follows.
 
Retirement Account Plan
Postretirement
Plan
Retirement Account Plan
Postretirement
Plan
($ in Thousands)
2017
2017
2016
2016
Change in Fair Value of Plan Assets
 
 
 
 
Fair value of plan assets at beginning of year
$
295,718

$
—

$
289,599

$
—

Actual return on plan assets
41,490

—

17,097

—

Employer contributions
6,242

235

—

248

Gross benefits paid
(11,841
)
(235
)
(10,978
)
(248
)
Fair value of plan assets at end of year (a)
$
331,609

$
—

$
295,718

$
—

Change in Benefit Obligation
 
 
 
 
Net benefit obligation at beginning of year
$
176,825

$
2,403

$
171,783

$
3,436

Service cost
6,955

—

6,780

—

Interest cost
7,121

101

7,121

142

Plan amendments
—

—

(823
)
(936
)
Actuarial (gain) loss
7,363

209

2,942

9

Gross benefits paid
(11,841
)
(235
)
(10,978
)
(248
)
Net benefit obligation at end of year (a)
$
186,423

$
2,478

$
176,825

$
2,403

Funded (unfunded) status
$
145,186

$
(2,478
)
$
118,893

$
(2,403
)
Noncurrent assets
145,186

—

118,893

—

Current liabilities
—

(233
)
—

(215
)
Noncurrent liabilities
—

(2,245
)
—

(2,188
)
Asset (Liability) Recognized in the Consolidated Balance Sheets
$
145,186

$
(2,478
)
$
118,893

$
(2,403
)
(a)
The fair value of the plan assets represented 178% and 167% of the net benefit obligation of the pension plan at December 31, 2017 and 2016, respectively.

Amounts recognized in accumulated other comprehensive loss, net of tax, as of December 31, 2017 and 2016 follow.
 
Retirement Account Plan
Postretirement
Plan
Retirement Account Plan
Postretirement
Plan
($ in Thousands)
2017
2017
2016
2016
Prior service cost
$
(295
)
$
(531
)
$
(342
)
$
(580
)
Net actuarial loss
24,926

205

35,443

79

Amount not yet recognized in net periodic benefit cost, but recognized in accumulated other comprehensive loss
$
24,631

$
(326
)
$
35,101

$
(501
)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) (“OCI”), net of tax, in 2017 and 2016 were as follows.
 
Retirement Account Plan
Postretirement
Plan
Retirement Account Plan
Postretirement
Plan
($ in Thousands)
2017
2017
2016
2016
Net gain (loss)
$
14,482

$
(209
)
$
(6,132
)
$
(9
)
Amortization of prior service cost
(73
)
(75
)
(73
)
—

Amortization of actuarial loss (gain)
2,278

4

2,115

—

Plan amendments
—

—

823

936

Income tax (expense) benefit
(6,219
)
107

1,168

(353
)
Total Recognized in OCI
$
10,468

$
(173
)
$
(2,099
)
$
574


The components of net periodic benefit cost for the Retirement Account Plan and Postretirement Plans for 2017, 2016, and 2015 were as follows.
 
Retirement Account Plan
Postretirement
Plan
Retirement Account Plan
Postretirement
Plan
Retirement Account Plan
Postretirement
Plan
($ in Thousands)
2017
2017
2016
2016
2015
2015
Service cost
$
6,955

$
—

$
6,780

$
—

$
11,257

$
—

Interest cost
7,121

101

7,121

142

6,617

141

Expected return on plan assets
(19,646
)
—

(20,287
)
—

(21,438
)
—

Amortization of:
 
 
 
 
 
 
Prior service cost
(73
)
(75
)
(73
)
—

50

—

Actuarial (gain) loss
2,278

4

2,115

—

2,256

—

Total net pension cost
$
(3,365
)
$
30

$
(4,344
)
$
142

$
(1,258
)
$
141


As of December 31, 2017, the estimated actuarial losses and prior service cost that will be amortized during 2018 from accumulated other comprehensive income into net periodic benefit cost for the Retirement Account Plan includes expense of $1.9 million for actuarial losses and income of $75,000 for the prior service cost. For the Postretirement Plan, the estimated actuarial losses and prior service cost that will be amortized during 2018 from accumulated other comprehensive income into net periodic benefit cost includes income of $75,000 for the prior service cost. Actuarial loss expense is estimated to be negligible.
 
Retirement Account Plan
Postretirement
 Plan
Retirement Account Plan
Postretirement
Plan
 
2017
2017
2016
2016
Weighted average assumptions used to determine benefit obligations
 
 
 
 
Discount rate
3.70
%
3.70
%
4.10
%
4.10
%
Rate of increase in compensation levels
3.00
%
N/A

4.00
%
N/A

Weighted average assumptions used to determine net periodic benefit costs
 
 
 
 
Discount rate
4.10
%
4.10
%
4.30
%
4.30
%
Rate of increase in compensation levels
4.00
%
N/A

4.00
%
N/A

Expected long-term rate of return on plan assets
6.50
%
N/A

7.00
%
N/A


The overall expected long-term rates of return on the Retirement Account Plan assets were 6.50% for 2017 and 7.00% for 2016. The expected long-term (more than 20 years) rate of return was estimated using market benchmarks for equities and bonds applied to the Retirement Account Plan’s anticipated asset allocations. The expected return on equities was computed utilizing a valuation framework, which projected future returns based on current equity valuations rather than historical returns. The actual rate of return for the Retirement Account Plan assets was 14.60% and 6.36% for 2017 and 2016, respectively.
The Retirement Account Plan’s investments are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risks associated with certain investments and the level of uncertainty related to changes in the value of the investments, it is at least reasonably possible that changes in risks in the near term could materially affect the amounts reported. The investment objective for the Retirement Account Plan is to maximize total return with a tolerance for average risk. The plan has a diversified portfolio designed to provide liquidity, current income, and growth of income and principal, with anticipated asset allocation ranges of: equity securities 50 to 70%, fixed income securities 30 to 50%, other cash equivalents 0 to 10%, and alternative securities 0 to 15%. Based on changes in economic and market conditions, the Corporation could be outside of the allocation ranges for brief periods of time. The asset allocation for the Retirement Account Plan as of the December 31, 2017 and 2016 measurement dates, respectively, by asset category were as follows.
Asset Category
2017
2016
Equity securities
60
%
60
%
Fixed income securities
37
%
39
%
Other
3
%
1
%
Total
100
%
100
%

The Retirement Account Plan assets include cash equivalents, such as money market accounts, mutual funds, and common / collective trust funds (which include investments in equity and bond securities). Money market accounts are stated at cost plus accrued interest, mutual funds are valued at quoted market prices and investments in common / collective trust funds are valued at the amount at which units in the funds can be withdrawn. Based on these inputs, the following table summarizes the fair value of the Retirement Account Plan’s investments as of December 31, 2017 and 2016.
 
 
Fair Value Measurements Using
($ in Thousands)
December 31, 2017
Level 1
Level 2
Level 3
Retirement Account Plan Investments
 
 
 
 
Money market account
$
9,577

$
9,577

$
—

$
—

Common /collective trust funds
133,210

133,210

—

—

Mutual funds
188,823

188,823

—

—

Total Retirement Account Plan Investments
$
331,610

$
331,610

$
—

$
—

 
 
Fair Value Measurements Using
($ in Thousands)
December 31, 2016
Level 1
Level 2
Level 3
Retirement Account Plan Investments
 
 
 
 
Money market account
$
3,624

$
3,624

$
—

$
—

Common /collective trust funds
126,741

126,741

—

—

Mutual funds
165,353

165,353

—

—

Total Retirement Account Plan Investments
$
295,718

$
295,718

$
—

$
—


The Corporation’s funding policy is to pay at least the minimum amount required by the funding requirements of federal law and regulations, with consideration given to the maximum funding amounts allowed. The Corporation regularly reviews the funding of its Retirement Account Plan. The Corporation made contributions of $6 million to its Retirement Account Plan in 2017.
The projected benefit payments for the Retirement Account and Postretirement Plans at December 31, 2017, reflecting expected future services, were as follows. The projected benefit payments were calculated using the same assumptions as those used to calculate the benefit obligations listed above.
($ in Thousands)
Retirement Account Plan
Postretirement Plan
Estimated future benefit payments
 
 
2018
$
14,697

$
237

2019
14,436

197

2020
15,096

194

2021
15,278

190

2022
16,020

186

2023-2027
71,781

839


The health care trend rate is an assumption as to how much the Postretirement Plan’s medical costs will increase each year in the future. The health care trend rate assumption for pre-65 coverage is 7.5% for 2017, and 0.5% to 0.25% lower in each succeeding year, to an ultimate rate of 5% for 2024 and future years. The actual increase in 2017 health care premium rates for post-65 coverage was 17%. The health care trend rate assumption for post-65 coverage is 6.5% in 2018 and 0.5% to 0.25% lower in each succeeding year, to an ultimate rate of 5% for 2024 and future years.
A one percentage point change in the assumed health care cost trend rate would have the following effect.
 
2017
2016
($ in Thousands)
100 bp Increase
100 bp Decrease
100 bp Increase
100 bp Decrease
Effect on total of service and interest cost
$
7

$
(6
)
$
7

$
(6
)
Effect on postretirement benefit obligation
$
162

$
(140
)
$
173

$
(149
)

The Corporation also has a 401(k) and Employee Stock Ownership Plan (the “401(k) plan”). The Corporation’s contribution is determined by the Compensation and Benefits Committee of the Board of Directors. Total expense related to contributions to the 401(k) plan was $14 million, $14 million, and $11 million in 2017, 2016, and 2015, respectively.