Retirement Plans

12 Months Ended

Dec. 31, 2012

Retirement Plans [Abstract]

Retirement Plans

NOTE 11 RETIREMENT PLANS:

The Corporation has a noncontributory defined benefit retirement plan (the Retirement Account Plan (“RAP”)) covering substantially all full-time employees. 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. The 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. In connection with the First Federal acquisition in October 2004, the Corporation assumed the First Federal pension plan (the “First Federal Plan”). The First Federal Plan was frozen on December 31, 2004, and qualified participants in the First Federal Plan became eligible to participate in the RAP as of January 1, 2005. Additional discussion and information on the RAP and the First Federal Plan are collectively referred to below as the “Pension Plan.”

The Corporation also provides healthcare access for eligible retired employees in its Postretirement Plan (the “Postretirement Plan”). Retirees who are at least 55 years of age with 5 years of service are eligible to participate in the Postretirement Plan. Additionally, with the rise in healthcare costs for retirees under the age of 65, the Corporation changed its postretirement benefits to include a subsidy for those employees who are at least age 55 but less than age 65 with at least 15 years of service as of January 1, 2007. The Corporation has no plan assets attributable to the Postretirement Plan. The Corporation reserves the right to terminate or make changes to the Postretirement Plan at any time.

The funded status and amounts recognized in the 2012 and 2011 consolidated balance sheets, as measured on December 31, 2012 and 2011, respectively, for the Pension and Postretirement Plans were as follows.

		Pension		Postretirement		Pension		Postretirement
		Plan		Plan		Plan		Plan
		2012		2012		2011		2011
		($ in Thousands)
Change in Fair Value of Plan Assets
Fair value of plan assets at beginning of year		$	173,422	$	-	$	159,791	$	-
Actual return on plan assets			20,781		-		(2,481)		-
Employer contributions			40,000		495		26,000		502
Gross benefits paid			(9,777)		(495)		(9,888)		(502)
	Fair value of plan assets at end of year	$	224,426	$	-	$	173,422	$	-
Change in Benefit Obligation
Net benefit obligation at beginning of year		$	136,846	$	3,969	$	129,114	$	4,150
Service cost			10,287		-		9,898		-
Interest cost			6,547		182		6,414		198
Curtailments, Settlements, Special Termination Benefits			42		-		-		-
Actuarial loss			15,803		279		1,308		123
Gross benefits paid			(9,777)		(495)		(9,888)		(502)
	Net benefit obligation at end of year	$	159,748	$	3,935	$	136,846	$	3,969
Funded (unfunded) status		$	64,678	$	(3,935)	$	36,576	$	(3,969)
Noncurrent assets		$	67,878	$	-	$	39,802	$	-
Current liabilities			-		(458)		-		(495)
Noncurrent liabilities			(3,200)		(3,477)		(3,226)		(3,474)
Asset (Liability) Recognized in the Consolidated Balance Sheets		$	64,678	$	(3,935)	$	36,576	$	(3,969)

Amounts recognized in accumulated other comprehensive income (loss), net of tax, as of December 31, 2012 and 2011 follow.
		Pension		Postretirement		Pension		Postretirement
		Plan		Plan		Plan		Plan
		2012		2012		2011		2011
		($ in Thousands)
Prior service cost		$	232	$	-	$	274	$	103
Net actuarial (gain) loss			37,240		35		32,932		(135)
Amount not yet recognized in net periodic benefit cost, but
	recognized in accumulated other comprehensive income	$	37,472	$	35	$	33,206	$	(32)

Other changes in plan assets and benefit obligations recognized in other comprehensive income (“OCI”), net of tax, in 2012 and 2011 were as follows.
		Pension Plan		Postretirement Plan		Pension Plan		Postretirement Plan
		2012		2012		2011		2011
		($ in Thousands)
Net loss		$	(9,735)	$	(279)	$	(16,711)	$	(123)
Amortization of prior service cost			72		170		72		395
Amortization of actuarial gain			3,073		-		2,024		-
Income tax (expense) benefit			2,324		42		5,780		(106)
	Total Recognized in OCI	$	(4,266)	$	(67)	$	(8,835)	$	166

The components of net periodic benefit cost for the Pension and Postretirement Plans for 2012, 2011, and 2010 were as follows.
		Pension		Postretirement		Pension		Postretirement		Pension		Postretirement
		Plan		Plan		Plan		Plan		Plan		Plan
		2012		2012		2011		2011		2010		2010
						($ in Thousands)
Service cost		$	10,287	$	-	$	9,898	$	-	$	9,622	$	-
Interest cost			6,547		182		6,414		198		6,377		227
Expected return on plan assets			(14,713)		-		(12,896)		-		(12,152)		-
Amortization of:
	Prior service cost		72		170		72		395		72		395
	Actuarial (gain) loss		2,708		-		2,024		-		1,601		(3)
Settlement charge			408		-		-		-		-		-
Total net pension cost		$	5,309	$	352	$	5,512	$	593	$	5,520	$	619

As of December 31, 2012, the estimated actuarial losses and prior service cost that will be amortized during 2013 from accumulated other comprehensive income into net periodic benefit cost for the Pension Plan are $4 million and $0.1 million, respectively.

		Pension Plan		Postretirement Plan		Pension Plan		Postretirement Plan
		2012		2012		2011		2011
Weighted average assumptions used to determine
	benefit obligations:
Discount rate		4.00	%	4.00	%	4.90	%	4.90	%
Rate of increase in compensation levels		4.00		N/A		5.00		N/A
Weighted average assumptions used to determine net
	periodic benefit costs:
Discount rate		4.90	%	4.90	%	5.10	%	5.10	%
Rate of increase in compensation levels		4.00		N/A		5.00		N/A
Expected long-term rate of return on plan assets		7.50		N/A		7.75		N/A

The overall expected long-term rates of return on the Pension Plan assets were 7.50% at December 31, 2012 and 7.75% at December 31, 2011, respectively. The expected long-term (more than 20 years) rate of return was estimated using market benchmarks for equities and bonds applied to the Pension 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 Pension Plan assets was 12.46% and (1.42)% for 2012 and 2011, respectively.

The Pension 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 Pension Plan is to maximize total return with a tolerance for average risk. The plan has a diversified portfolio that will provide liquidity, current income, and growth of income and principal, with anticipated asset allocation ranges of: equity securities 55-65%, debt securities 35-45%, other cash equivalents 0-5%, and alternative securities 0-15%. Given current market conditions, the Corporation could be outside of the allocation ranges for brief periods of time. The asset allocation for the Pension Plan as of the December 31, 2012 and 2011 measurement dates, respectively, by asset category were as follows.

Asset Category		2012		2011
Equity securities		66	%	65	%
Debt securities		30		34
Other		4		1
	Total	100	%	100	%

The Pension 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 Pension Plan's investments as of December 31, 2012 and 2011.

				Fair Value Measurements Using
		December 31, 2012		Level 1		Level 2		Level 3
		($ in Thousands)
Pension Plan Investments:
Money market account		$	9,958	$	9,958	$	-	$	-
Mutual funds			124,620		124,620		-		-
Common /collective trust funds			89,848		-		89,848		-
	Total Pension Plan Investments	$	224,426	$	134,578	$	89,848	$	-
				Fair Value Measurements Using
		December 31, 2011		Level 1		Level 2		Level 3
		($ in Thousands)
Pension Plan Investments:
Money market account		$	1,690	$	1,690	$	-	$	-
Mutual funds			92,026		92,026		-		-
Common /collective trust funds			79,706		-		79,706		-
	Total Pension Plan Investments	$	173,422	$	93,716	$	79,706	$	$ -

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 contributed $40 million and $26 million to its Pension Plan during 2012 and 2011, respectively. The Corporation regularly reviews the funding of its Pension Plan. At this time, the Corporation expects to make a contribution of at least $10 million in 2013.

The projected benefit payments for the Pension and Postretirement Plans at December 31, 2012, 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.

	Pension Plan		Postretirement Plan
	($ in Thousands)
Estimated future benefit payments:
2013	$	13,176	$	458
2014		12,109		393
2015		12,939		355
2016		12,611		308
2017		12,688		278
2018-2022		67,831		1,232

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 8.5% for 2012, and 0.5% lower in each succeeding year, to an ultimate rate of 5% for 2019 and future years. The health care trend rate assumption for post-65 coverage is 9.5% for 2012, and 0.5% lower in each succeeding year, to an ultimate rate of 5% for 2021 and future years.

A one percentage point change in the assumed health care cost trend rate would have the following effect.

	2012				2011
	100 bp Increase		100 bp Decrease		100 bp Increase		100 bp Decrease
	($ in Thousands)
Effect on total of service and interest cost	$	15	$	(13)	$	15	$	(13)
Effect on postretirement benefit obligation	$	364	$	(315)	$	305	$	(266)

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 $10 million, $9 million, and $8 million in 2012, 2011, and 2010, respectively.