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Benefit Plans
 12 Months Ended
Dec. 31, 2017
Defined Benefit Plan [Abstract]  
Benefit Plans
Benefit Plans
The Corporation has a noncontributory Defined Benefit Pension Plan (the “Pension Plan”) covering substantially all of the employees of the Corporation and its subsidiaries. The Pension Plan provides benefits based on an employee’s years of service and compensation.
 
There was no pension contribution in 2016. During 2017, management contributed $15.0 million, of which $15.0 million was deductible on the 2017 tax return. There is no contribution expected in 2018.
 
Using an accrual measurement date of December 31, 2017 and 2016, plan assets and benefit obligation activity for the Pension Plan are listed below:

(In thousands)
 
2017
 
2016
Change in fair value of plan assets
 
 
 
 
Fair value at beginning of measurement period
 
$
167,047

 
$
153,498

Actual return on plan assets
 
21,573

 
19,256

Employer contributions
 
15,000

 
—

Benefits paid
 
(7,885
)
 
(5,707
)
Fair value at end of measurement period
 
$
195,735

 
$
167,047

Change in benefit obligation
 
 
 
 
Projected benefit obligation at beginning of measurement period
 
$
114,455

 
$
102,245

Service cost
 
5,270

 
5,055

Interest cost
 
5,085

 
4,869

Actuarial loss
 
21,773

 
7,993

Benefits paid
 
(7,885
)
 
(5,707
)
Projected benefit obligation at the end of measurement period
 
$
138,698

 
$
114,455

Funded status at end of year (fair value of plan assets less benefit obligation)
 
$
57,037

 
$
52,592


 
The increase in the actuarial loss from $8.0 million as of December 31, 2016 to $21.8 million as of December 31, 2017, was the result of changes in actuarial assumptions partially offset by greater than projected returns on pension plan assets during 2017. Changes in actuarial assumptions included a change in the discount rate from 4.58% to 3.89% as well as a change in the generational mortality improvement projection scale from scale MP-2016 to scale MP-2017.

The asset allocation for the Pension Plan as of each measurement date, by asset category, was as follows:
 
 
 
 
 
Percentage of Plan Assets
Asset category
 
Target Allocation
 
2017
 
2016
Equity securities
 
50% - 100%
 
79
%
 
84
%
Fixed income and cash equivalents
 
remaining balance
 
21
%
 
16
%
Total
 
 
 
100
%
 
100
%

 
The investment policy, as established by the Retirement Plan Committee, is to invest assets according to the target allocation stated above. Assets will be reallocated periodically based on the investment strategy of the Retirement Plan Committee. The investment policy is reviewed periodically.

The expected long-term rate of return on plan assets used to measure the benefit obligation was 7.00% at both December 31, 2017 and December 31, 2016. This return was based on the expected return of each of the asset categories, weighted based on the median of the target allocation for each class.

The accumulated benefit obligation for the Pension Plan was $116.0 million and $97.2 million at December 31, 2017 and 2016, respectively.
 
On November 17, 2009, the Park Pension Plan completed the purchase of 115,800 common shares of Park for $7.0 million or $60.45 per share. At December 31, 2017 and 2016, the fair value of the 115,800 common shares held by the Pension Plan was $12.0 million, or $104.00 per share and $13.9 million, or $119.66 per share, respectively.
 
The weighted average assumptions used to determine benefit obligations at December 31, 2017, 2016 and 2015 were as follows:
 
 
 
2017
 
2016
 
2015
Discount rate
 
3.89
%
 
4.58
%
 
4.88
%
Rate of compensation increase
 
 
 


 

Under age 30
 
10.00
%
 
10.00
%
 
10.00
%
Ages 30-39
 
6.00
%
 
6.00
%
 
6.00
%
Ages 40-49
 
4.00
%
 
4.00
%
 
3.00
%
Ages 50 and over
 
3.00
%
 
3.00
%
 
3.00
%


The estimated future pension benefit payments reflecting expected future service for the next ten years are shown below (in thousands):

2018
$
8,274

2019
8,404

2020
9,320

2021
10,526

2022
10,937

2023-2027
53,456

Total
$
100,917


 
The following table shows ending balances of accumulated other comprehensive loss at December 31, 2017 and 2016.
 
(In thousands)
 
2017
 
2016
Prior service cost
 
$
—

 
$
—

Net actuarial loss
 
(33,799
)
 
(22,677
)
Total
 
(33,799
)
 
(22,677
)
Deferred taxes
 
7,098

 
7,937

  Disparate tax effect (1)
 
3,175

 
—

Accumulated other comprehensive loss
 
$
(23,526
)
 
$
(14,740
)

 (1) In accordance with U.S. GAAP, Park revalued the deferred tax asset related to net actuarial loss upon the enactment of the Tax Cuts and Jobs Act on December 22, 2017. U.S. GAAP does not allow for a similar revaluation of accumulated other comprehensive loss, resulting in a disparate tax effect. Park adopted ASU 2018-02 on January 1, 2018, which allows for the reclassification of the disparate tax effect to retained earnings.
Using an actuarial measurement date of December 31 for 2017, 2016 and 2015, components of net periodic benefit income and other amounts recognized in other comprehensive income were as follows:
 
(In thousands)
 
2017
 
2016
 
2015
Components of net periodic benefit income and other amounts recognized in other comprehensive income
 
 
 
 
 
 
Service cost
 
$
(5,270
)
 
$
(5,055
)
 
$
(5,368
)
Interest cost
 
(5,085
)
 
(4,869
)
 
(4,695
)
Expected return on plan assets
 
11,455

 
10,950

 
11,420

Amortization of prior service cost
 
—

 
—

 
(15
)
Recognized net actuarial loss
 
(576
)
 
(773
)
 
(637
)
Net periodic benefit income
 
$
524

 
$
253

 
$
705

Change to net actuarial (loss) gain for the period
 
$
(11,698
)
 
$
168

 
$
(1,400
)
Amortization of prior service cost
 
—

 
—

 
15

Amortization of net loss
 
576

 
773

 
637

Total recognized in other comprehensive income
 
(11,122
)
 
941

 
(748
)
Total recognized in net benefit income and other comprehensive income
 
$
(10,598
)
 
$
1,194

 
$
(43
)

 
There are no estimated prior service costs for the Pension Plan to be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal year. The estimated net actuarial loss expected to be recognized in the next fiscal year is $1.4 million.

The weighted average assumptions used to determine net periodic benefit income for the years ended December 31, 2017, 2016 and 2015 are listed below:
 
 
 
2017
 
2016
 
2015
Discount Rate
 
4.58
%
 
4.88
%
 
4.42
%
Rate of compensation increase
 


 


 


     Under age 30
 
10.00
%
 
10.00
%
 
10.00
%
     Ages 30-39
 
6.00
%
 
6.00
%
 
6.00
%
     Ages 40-49
 
4.00
%
 
3.00
%
 
3.00
%
     Ages 50 and over
 
3.00
%
 
3.00
%
 
3.00
%
Expected long-term return on plan assets
 
7.00
%
 
7.25
%
 
7.25
%

 
The Pension Plan maintains cash in a PNB savings account. The Pension Plan cash balance was $12.2 million at December 31, 2017.
 
GAAP defines fair value as the price that would be received by Park for an asset or paid by Park to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date, using the most advantageous market for the asset or liability. The fair values of equity securities, consisting of mutual fund investments and common stock (U.S. large cap) held by the Pension Plan and the fixed income and cash equivalents, are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs). The fair value of Pension Plan assets at December 31, 2017 was $195.7 million. At December 31, 2017, $169.6 million of equity investments and cash in the Pension Plan were categorized as Level 1 inputs; $26.1 million of plan investments in corporate (U.S. large cap) and U.S. Government sponsored entity bonds were categorized as Level 2 inputs, as fair value was based on quoted market prices of comparable instruments; and no investments were categorized as Level 3 inputs. The fair value of Pension Plan assets was $167.0 million at December 31, 2016. At December 31, 2016, $145.9 million of investments in the Pension Plan were categorized as Level 1 inputs; $21.1 million were categorized as Level 2; and no investments were categorized as Level 3.
 
The Corporation has a voluntary salary deferral plan covering substantially all of the employees of the Corporation and its subsidiaries. Eligible employees may contribute a portion of their compensation subject to a maximum statutory limitation. The Corporation provides a matching contribution established annually by the Corporation. Contribution expense for the Corporation was $1.3 million, $1.3 million, and $1.2 million for 2017, 2016 and 2015, respectively.

The Corporation has entered into Supplemental Executive Retirement Plan Agreements (the "SERP Agreements") with certain key officers of the Corporation and its subsidiaries which provide defined pension benefits in excess of limits imposed by federal tax law. The accrued benefit cost for the SERP Agreements totaled $9.9 million and $8.8 million for 2017 and 2016, respectively. The expense for the Corporation was $1.7 million for 2017, $1.5 million for 2016 and $1.1 million for 2015.