EMPLOYEE BENEFIT PLANS

BancShares sponsors benefit plans for its qualifying employees including a noncontributory defined benefit pension plan, a 401(k) savings plan and an enhanced 401(k) savings plan. These plans are qualified under the Internal Revenue Code. BancShares also maintains agreements with certain executives that provide supplemental benefits that are paid upon death or separation from service at an agreed-upon age.

Defined Benefit Pension Plan

Employees who were hired prior to April 1, 2007, and who qualify under length of service and other requirements may participate in a noncontributory defined benefit pension plan (Plan). Under the Plan, benefits are based on years of service and average earnings. BancShares made no contributions to the plan during 2013 or 2012, and does not anticipate making any contribution during 2014.

Obligations and Funded Status

The following table provides the changes in benefit obligation and plan assets and the funded status of the plan at December 31, 2013, and 2012.



	2013			2012
	(dollars in thousands)
Change in benefit obligation
Benefit obligation at January 1	$	580,938		$	493,648
Service cost	16,332			14,241
Interest cost	23,686			23,711
Actuarial (gain) loss	(74,060		)	64,540
Benefits paid	(16,218		)	(15,202		)
Benefit obligation at December 31	530,678			580,938
Change in plan assets
Fair value of plan assets at January 1	463,005			429,505
Actual return on plan assets	77,230			48,702
Employer contributions	—			—
Benefits paid	(16,218		)	(15,202		)
Fair value of plan assets at December 31	524,017			463,005
Funded status at December 31	$	(6,661	)	$	(117,933	)

The amounts recognized in the consolidated balance sheets as of December 31, 2013, and 2012, consist of:



	2013			2012
	(dollars in thousands)
Other assets	$	—		$	—
Other liabilities	(6,661		)	(117,933		)
Net asset (liability) recognized	$	(6,661	)	$	(117,933	)

The following table details the amounts recognized in accumulated other comprehensive income at December 31, 2013, and 2012:



	2013		2012
	(dollars in thousands)
Net loss (gain)	$	16,605	$	157,147
Less prior service cost	977		1,187
Accumulated other comprehensive loss, excluding income taxes	$	17,582	$	158,334

The following table provides expected amortization amounts for 2014.




	(dollars in thousands)
Actuarial loss	$	6,184
Prior service cost	210
Total	$	6,394

The accumulated benefit obligation for the plan at December 31, 2013, and 2012, equaled $448.7 million and $485.6 million, respectively. The Plan uses a measurement date of December 31.

The projected benefit obligation exceeded the fair value of plan assets as of December 31, 2013, and 2012. The fair value of plan assets exceeded the accumulated benefit obligation as of December 31, 2013. The accumulated benefit obligation exceeded the fair value of plan assets as of December 31, 2012.

The following table shows the components of periodic benefit cost related to the pension plan and changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2013, 2012, and 2011.



	Year ended December 31
	2013			2012			2011
	(dollars in thousands)
Service cost	$	16,332		$	14,241		$	13,265
Interest cost	23,686			23,711			23,810
Expected return on assets	(27,733		)	(28,478		)	(29,184		)
Amortization of prior service cost	210			210			210
Amortization of net actuarial loss	16,985			11,026			6,861
Total net periodic benefit cost	29,480			20,710			14,962
Current year actuarial (loss) gain	(123,557		)	44,315			58,630
Amortization of actuarial loss	(16,985		)	(11,026		)	(6,861		)
Amortization of prior service cost	(210		)	(210		)	(210		)
Total recognized in other comprehensive income	(140,752		)	33,079			51,559
Total recognized in net periodic benefit cost and other comprehensive income	$	(111,272	)	$	53,789		$	66,521

The assumptions used to determine the benefit obligations as of December 31, 2013, and 2012, are as follows:



	2013		2012
	(dollars in thousands)
Discount rate	4.90	%	4.00	%
Rate of compensation increase	4.00		4.00

The assumptions used to determine the net periodic benefit cost for the years ended December 31, 2013, 2012, and 2011, are as follows:



	2013		2012		2011
	(dollars in thousands)
Discount rate	4.00	%	4.75	%	5.50	%
Rate of compensation increase	4.00		4.00		4.50
Expected long-term return on plan assets	7.25		7.50		7.75

The estimated discount rate, which represents the interest rate that could be obtained for a suitable investment used to fund the benefit obligations, is based on a yield curve developed from high-quality corporate bonds across a full maturity spectrum. The projected cash flows of the pension plan are discounted based on this yield curve and a single discount rate is calculated to achieve the same present value.

The estimated long-term rate of return on plan assets is used to calculate the value of plan assets over time. The methodology utilized to establish the estimated long-term rate of return on plan assets considers the actual return on plan assets for various time horizons since 1999 as a predictor of probable future returns. Historical returns are modified as appropriate by estimates of future market conditions that may positively or negatively affect estimated future returns. The return on plan assets for the 15-year, 10-year and 5-year periods ended December 31, 2013, equaled 6.99 percent, 8.39 percent and 13.37 percent, respectively. Based on expectations of modest returns over the next several years, the assumed rate of return for 2013 was 7.25 percent compared to 7.50 percent in 2012.

Plan Assets

BancShares' primary total return objective is to achieve returns that, over the long term, will fund retirement liabilities and provide for the desired plan benefits in a manner that satisfies the fiduciary requirements of the Employee Retirement Income Security Act. The plan assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plan can assume a time horizon that extends well beyond a full market cycle and can assume a reasonable level of risk. It is expected, however, that both professional investment management and sufficient portfolio diversification will smooth volatility and help to generate a reasonable consistency of return. The investments are broadly diversified among economic sector, industry, quality and size in order to reduce risk and to produce incremental return. Within approved guidelines and restrictions, the investment manager has discretion over the timing and selection of individual investments. Plan assets are currently held by FCB Trust Department.

The fair values of pension plan assets at December 31, 2013, and 2012, by asset class are as follows:



Asset Class	Market Value		Quoted prices in Active Markets for Identical Assets (Level 1)		Significant Observable Inputs (Level 2)		Significant Nonobservable Inputs (Level 3)		Target Allocation	Actual % of Plan Assets
	(dollars in thousands)
December 31, 2013
Cash and equivalents	$	2,517	$	2,517	$	—	$	—	0 - 1%	1	%
Equity securities									55 - 65%	62	%
Large cap	218,023		218,023		—		—
Mid cap	10,724		10,724		—		—
Small cap	43,928		43,928		—		—
International equity (developed)	10,535		10,535		—		—
International equity (emerging)	40,643		40,643		—		—
Fixed income					—		—		25-40%	28	%
Investment grade bonds	74,501		—		74,501		—
Intermediate bonds	48,746		—		48,746		—
High-yield corporate bonds	10,111		—		10,111		—
TIPS	4,395		4,395		—		—
International emerging bond	10,119		—		10,119		—
Alternative investments									0-10%	10	%
Commodities	19,014		19,014		—		—
Hedge fund composite	30,761		30,761				—
Total pension assets	$	524,017	$	380,540	$	143,477	$	—		100	%
December 31, 2012
Cash and equivalents	$	3,088	$	3,088	—		—		0 - 1%	1	%
Equity securities									55 - 65%	56	%
Large cap	172,512		172,512		—		—
Mid cap	21,451		21,451		—		—
Small cap	31,053		31,053		—		—
International equity (developed)	9,537		9,537		—		—
International equity (emerging)	24,276		24,276		—		—
Fixed income									36-44%	36	%
Investment grade bonds	71,986		—		71,986		—
Intermediate bonds	59,052		—		59,052		—
High-yield corporate bonds	18,487		—		18,487		—
TIPS	7,613		7,613		—		—
International emerging bond	9,348		—		9,348		—
Alternative investments			—		—		—		0-8%	8	%
Commodities	17,376		17,376		—		—
Hedge fund composite	17,226		17,226				—
Total pension assets	$	463,005	$	304,132	$	158,873	$	—		100	%

Cash Flows

BancShares anticipates making no contributions to the pension plan during 2014. Following are estimated payments to pension plan participants in the indicated periods:



Year	Projected benefit payments
(dollars in thousands)
2014	$	18,070
2015	19,662
2016	21,484
2017	23,244
2018	24,937
2019-2023	150,638

401(k) Savings Plans

Certain employees enrolled in the defined benefit plan are also eligible to participate in a 401(k) savings plan after 31 days of service through deferral of portions of their salary. For employees who participate in the 401(k) savings plan who also continue to accrue additional years of service under the defined benefit plan, based on the employee’s contribution, BancShares matches up to 75 percent of the employee contribution.

At the end of 2007, current employees were given the option to continue to accrue additional years of service under the defined benefit plan or to elect to join an enhanced 401(k) savings plan. Under the enhanced 401(k) savings plan, based on the employee’s contribution, BancShares matches up to 100 percent of the employee contribution. In addition to the employer match of the employee contributions, the enhanced 401(k) savings plan provides a guaranteed contribution to plan participants if they remain employed at the end of each calendar year. Employees who elected to enroll in the enhanced 401(k) savings plan discontinued the accrual of additional years of service under the defined benefit plan and became enrolled in the enhanced 401(k) savings plan effective January 1, 2008. Eligible employees hired after January 1, 2008, have the option to elect to participate in the enhanced 401(k) savings plan.

BancShares made participating contributions to both 401(k) plans totaling $14.9 million, $14.1 million and $13.6 million during 2013, 2012 and 2011, respectively.

Additional Benefits for Executives and Directors and Officers of Acquired Entities

FCB has entered into contractual agreements with certain executives that provide payments for a period of ten years following separation from service at an agreed-upon age. These agreements also provide a death benefit in the event a participant dies before the term of the agreement ends. FCB has also assumed liability for contractual obligations to directors and officers of previously-acquired entities.

The following table provides the accrued liability as of December 31, 2013, and 2012, and the changes in the accrued liability during the years then ended:



	2013			2012
	(dollars in thousands)
Present value of accrued liability as of January 1	$	25,851		$	25,586
Benefit expense	959			462
Benefits paid	(3,042		)	(3,241		)
Benefits forfeited	—			554
Interest cost	192			2,490
Present value of accrued liability as of December 31	$	23,960		$	25,851
Discount rate at December 31	4.90		%	4.00		%