ASSOCIATE BENEFIT PLANS

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

ASSOCIATE BENEFIT PLANS

15. ASSOCIATE BENEFIT PLANS

Associate 401(k) Savings Plan

Certain subsidiaries of ours maintain a qualified plan in which Associates may participate. Participants in the plan may elect to direct a portion of their wages into investment accounts that include professionally managed mutual and money market funds and the Company's common stock. Generally, the principal and related earnings are tax deferred until withdrawn. The Company matches a portion of the Associates’ contributions. As a result, the Company's total cash contributions to the plan on behalf of its Associates resulted in an expense of $9.1 million, $7.0 million, and $6.6 million for 2022, 2021, and 2020, respectively.

All contributions are invested in accordance with the Associates’ selection of investments. If Associates do not designate how discretionary contributions are to be invested, 100% is invested in target-date fund that corresponds with the participant’s age. Associates may generally make transfers to various other investment vehicles within the plan. The plan’s yearly activity includes net sales of 8,000, 33,000 and 14,000 shares of the Company's common stock in 2022, 2021 and 2020 respectively. There were no purchases in 2022, 2021 or 2020.

Postretirement Medical Benefits

The Company shares certain costs of providing health and life insurance benefits to eligible retired Associates (employees) and their eligible dependents. Previously, all Associates were eligible for these benefits if they reached normal retirement age while working for the Company. Effective March 31, 2014, the Company changed the eligibility of this plan to include only those Associates who have achieved ten years of service as of March 31, 2014. The Company uses the mortality table issued by the Office of the Actuary of the U.S. Bureau of Census in its calculation.

The Company accounts for its obligations under the provisions of ASC 715, Compensation - Retirement Benefits (ASC 715). ASC 715 requires that the Company recognized the costs of these benefits over an Associate's active working career. Amortization of unrecognized net gains or losses resulting from experience different from that assumed and from changes in assumptions is included as a component of net periodic benefit cost over the remaining service period of active employees to the extent that such gains and losses exceed 10% of the accumulated postretirement benefit obligation, as of the beginning of the year. The Company recognizes its service cost in Salaries, benefits and other compensation and the other components of net periodic benefit cost in Other operating expenses in the Consolidated Statements of Income.

ASC 715 requires that the Company recognizes the funded status of its defined benefit postretirement plan in the statement of financial condition, with a corresponding adjustment to accumulated other comprehensive income (loss), net of tax. The adjustment to accumulated other comprehensive income (loss) at adoption represented the net unrecognized actuarial losses and unrecognized transition obligation remaining from the initial adoption of ASC 715, all of which were previously netted against the plan’s funded status in the statement of financial condition pursuant to the provisions of ASC 715. These amounts will be subsequently recognized as net periodic pension costs pursuant to the Company's historical accounting policy for amortizing such amounts. Further, actuarial gains and losses that arise in subsequent periods, and are not recognized as net periodic pension cost in the same periods, will be recognized as a component of other comprehensive income (loss). Those amounts will be subsequently recognized as a component of net periodic pension cost on the same basis as the amounts recognized in accumulated other comprehensive income (loss) at adoption of ASC 715.

The following disclosures relating to postretirement medical benefits were measured at December 31:

 

(Dollars in thousands)	2022			2021			2020
Change in benefit obligation:
Benefit obligation at beginning of year	$	2,138		$	2,288		$	2,170
Service cost	52			67			61
Interest cost	51			54			67
Actuarial (gain) loss	(833)			(216)			80
Benefits paid	(77)			(55)			(90)
Benefit obligation at end of year	$	1,331		$	2,138		$	2,288
Change in plan assets:
Fair value of plan assets at beginning of year	$	—		$	—		$	—
Employer contributions	77			55			90
Benefits paid	(77)			(55)			(90)
Fair value of plan assets at end of year	$	—		$	—		$	—
Unfunded status	$	(1,331)		$	(2,138)		$	(2,288)
Amounts recognized in accumulated other comprehensive income(1):
Net prior service credit	$	283		$	359		$	435
Net gain	1,625			607			376
Net amount recognized	$	1,908		$	966		$	811
Components of net periodic (benefit) cost:
Service cost	$	52		$	67		$	61
Interest cost	51			54			67
Amortization of prior service cost	(76)			(76)			(76)
Net gain recognition	(84)			(20)			(36)
Net periodic (benefit) cost	$	(57)		$	25		$	16
Assumption used to determine net periodic benefit cost:
Discount rate	2.80		%	2.40		%	3.20		%
Assumption used to value the Accumulated Postretirement Benefit Obligation (APBO):
Discount rate	5.00		%	2.70		%	2.40		%

(1)Before tax effects

Estimated future benefit payments:

The following table shows the expected future payments for the next 10 years:

(Dollars in thousands)
During 2023	$	55
During 2024	58
During 2025	62
During 2026	65
During 2027	68
During 2028 through 2032	390
	$	698

The Company assumes medical benefits will increase at an average rate of less than 10% per annum. The costs incurred for retirees’ health care are limited since certain current and all future retirees are restricted to an annual medical premium cap indexed (since 1995) by the lesser of 4% or the actual increase in medical premiums paid by us. For 2022, this annual premium cap amounted to $4,157 per retiree. The Company estimates that it will contribute approximately $4,323 per retiree to the plan during fiscal 2023.

Alliance Associate Pension Plan

During the fourth quarter of 2015, the Company completed the acquisition of Alliance. At the time of the acquisition the Company assumed the Alliance pension plan offered to current Alliance associates.

During the fourth quarter of 2018, the Company notified the Alliance pension plan participants, the Internal Revenue Service (IRS), and the Pension Benefit Guaranty Corporation (PBGC) of its intention to terminate the plan and received IRS and PBGC approval in the first quarter of 2020. The Company completed the termination and contributed $0.5 million to the plan to settle the obligation during the three months ended June 30, 2020.

The following disclosures relating to Alliance pension benefits were measured at:

(Dollars in thousands)	June 30, 2020
Change in benefit obligation:
Benefit obligation at beginning of year	$	6,893
Interest cost	105
Settlements	(7,272)
Actuarial loss	274
Benefit obligation at end of period	$	—
Change in plan assets:
Fair value of plan assets at beginning of year	$	7,431
Actual return on plan assets	(159)
Settlements	(7,272)
Fair value of plan assets at end of period	$	—
Funded status	$	—
Amounts recognized in accumulated other comprehensive income(1):
Net loss	$	—
Components of net periodic cost:
Service cost	$	17
Interest cost	105
Expected return on plan assets	(196)
Plan settlement loss	1,431
Net periodic cost	$	1,357

(1)Before tax effects

Beneficial Associate Pension and other postretirement benefit plans

On March 1, 2019, the Company closed the acquisition of Beneficial. At the time of acquisition, the Company assumed the pension plan covering certain eligible Beneficial Associates. The plan was frozen in 2008.

The following disclosures relating to Beneficial pension benefits and other postretirement benefit plans were measured at December 31, 2022:

	2022				2021
(Dollars in thousands)	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
Change in benefit obligation:
Benefit obligation at beginning of year	$	104,695	$	18,105	$	112,283	$	19,302
Service cost	—		33		—		39
Interest cost	2,425		383		2,100		309
Plan participants' contributions	—		55		—		68
Amendments	—		—		(83)		—
Actuarial gain	(26,233)		(3,346)		(4,420)		(442)
Benefits paid	(5,736)		(1,336)		(5,185)		(1,171)
Benefit obligation at end of year	$	75,151	$	13,894	$	104,695	$	18,105
Change in plan assets:
Fair value of plan assets at beginning of year	$	108,242	$	—	$	111,129	$	—
Actual return on Plan Assets	(22,867)		—		2,734		—
Employer contribution	225		1,281		308		1,103
Participants' contributions	—		55		—		68
Settlements	—		—		(83)		—
Benefits paid	(5,736)		(1,336)		(5,185)		(1,171)
Administrative expenses	(577)		—		(661)		—
Fair value of plan assets at end of year	$	79,287	$	—	$	108,242	$	—
Funded (unfunded) status	$	4,136	$	(13,894)	$	3,547	$	(18,105)
Amounts recognized in accumulated other comprehensive income(1):
Net loss (gain)	$	10,658	$	(3,259)	$	6,882	$	87
Components of net periodic (benefit) cost:
Service cost	$	—	$	33	$	—	$	39
Interest cost	2,425		383		2,100		309
Expected return on plan assets	(6,586)		—		(6,783)		—
Net loss (gain) recognition	16		—		27		(11)
Net periodic (benefit) cost	$	(4,145)	$	416	$	(4,656)	$	337

(1)Before tax effects

Significant assumptions used to calculate the net periodic benefit cost and obligation for Beneficial postretirement plans as of December 31, 2022 are as follows:

Consolidated Pension Plan	2022		2021
Discount rate for net periodic benefit cost	2.82	%	2.50	%
Expected return on plan assets	6.25	%	6.25	%
Discount rate for disclosure obligations	5.24	%	2.82	%
Beneficial Bank Other Postretirement
Discount rate for net periodic benefit cost	2.69	%	2.32	%
Discount rate for disclosure obligations	5.18	%	2.70	%
FMS Other Postretirement
Discount rate for net periodic benefit cost	2.07	%	1.47	%
Discount rate for disclosure obligations	4.93	%	2.07	%
Split-Dollar Plan
Discount rate for net periodic benefit cost	2.05	%	1.44	%
Discount rate for disclosure obligations	4.92	%	2.04	%

Estimated future benefit payments:

The following table shows the expected future payments for the next 10 years:

(Dollars in thousands)	Pension Benefits		Other Postretirement Benefits
During 2023	$	4,846	$	1,081
During 2024	6,398		1,122
During 2025	5,043		1,167
During 2026	6,561		1,170
During 2027	6,067		1,159
During 2028 through 2032	27,458		5,400
	$	56,373	$	11,099

The fair values and weighted average asset allocations in plan assets of all pension and postretirement plan assets at December 31, 2022 and 2021 by asset category are as follows:

	Category Used for Fair Value Measurement
	December 31, 2022
(Dollars in thousands)	Level 1		Level 2		Level 3		Total		Percent
Assets:
Mutual Funds:
Large cap	$	3,721	$	—	$	—	$	3,721	4.7	%
International	6,651		—		—		6,651		8.4
Global Managed Volatility	5,901		—		—		5,901		7.4
U.S. Managed Volatility	2,216		—		—		2,216		2.8
Fixed Income	43,255		—		—		43,255		54.6
U.S. Government Agencies	—		17,259		—		17,259		21.8
Pooled separate accounts	123		—		—		123		0.2
Accrued Income	161		—		—		161		0.1
Total	$	62,028	$	17,259	$	—	$	79,287	100.0	%

	Category Used for Fair Value Measurement
	December 31, 2021
(Dollars in thousands)	Level 1		Level 2		Level 3		Total		Percent
Assets:
Mutual Funds:
Large cap	$	5,610	$	—	$	—	$	5,610	5.2	%
Mid cap	75		—		—		75		0.1
Small cap	59		—		—		59		0.1
International	9,728		—		—		9,728		9.0
Global Managed Volatility	8,640		—		—		8,640		8.0
U.S. Managed Volatility	3,243		—		—		3,243		3.0
Fixed Income	69,194		—		—		69,194		63.9
U.S. Government Agencies	—		11,524		—		11,524		10.6
Accrued Income	169		—		—		169		0.1
Total	$	96,718	$	11,524	$	—	$	108,242	100.0	%

As of December 31, 2022, pension and postretirement plan assets were comprised of investments in equity mutual funds, fixed income mutual funds, and pooled separate accounts. The Bank’s consolidated pension plan investment policy provides that assets are to be managed over a long-term investment horizon to ensure that the chances and duration of investment losses are carefully weighed against the long-term potential for asset appreciation. The primary objective of managing a plan’s assets is to improve the plan’s funded status. A secondary financial objective is, where possible, to minimize pension expense volatility. The Company’s pension plan allocates assets based on the plan’s funded status to risk management and return enhancement asset classes. The risk management class is comprised of a long duration fixed income fund while the return enhancement class consists of equity and other fixed income funds. Asset allocation ranges are generally 40% to 80% for risk management and 20% to 60% for return enhancement when the funded status is less than 110%, and 50% to 90% in risk management and 10% to 50% for return enhancement when the funded status reaches 110%, subject to the discretion of the Company. Also, a small portion is maintained in cash reserves when appropriate.

The Company has four additional plans which are no longer being provided to current Associates: (1) a Supplemental Pension Plan with a corresponding liability of $0.3 million and $0.4 million for December 31, 2022 and 2021 respectively; (2) an Early Retirement Window Plan with a corresponding liability of $0.1 million for both December 31, 2022 and 2021; (3) a Supplemental Executive Retirement Plan with a corresponding liability of $1.3 million and $1.4 million for December 31, 2022 and 2021, respectively, and; (4) a Post-Retirement Medical Plan with a corresponding liability of $0.1 million for both December 31, 2022 and 2021.