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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2019
Retirement Benefits, Description [Abstract] |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS FCB sponsors benefit plans for its qualifying employees and former First Citizens Bancorporation, Inc. employees (“legacy Bancorporation”) including noncontributory defined benefit pension plans, a 401(k) savings plan and an enhanced 401(k) savings plan. These plans are qualified under the Internal Revenue Code. FCB also maintains agreements with certain executives providing supplemental benefits paid upon death or separation from service at an agreed-upon age. Defined Benefit Pension Plans BancShares employees who were hired prior to April 1, 2007 and qualified under length of service and other requirements are covered by the BancShares pension plan, which was closed to new participants as of April 1, 2007. Discretionary contributions of $71 thousand were made to the BancShares pension plan in 2019, while discretionary contributions of $50.0 million were made in 2018. Certain legacy Bancorporation employees who qualified under length of service and other requirements are covered by the Bancorporation pension plan, which was closed to new participants as of September 1, 2007. Discretionary contributions of $3.5 million were made to the Bancorporation pension plan for 2019, while no discretionary contributions were made for 2018. Participants in the noncontributory defined benefit pension plans (“the Plans”) were fully vested in the Plans after five years of service. Retirement benefits are based on years of service and highest annual compensation for five consecutive years during the last ten years of employment. FCB makes contributions to the Plans in amounts between the minimum required for funding and the maximum amount deductible for federal income tax purposes. Management evaluates the need for its pension plan contributions on a periodic basis based upon numerous factors including, but not limited to, the pension plan funded status, returns on plan assets, discount rates and the current economic environment. Due to the Plans having the same terms in both form and substance, the following tables and disclosures will report the Plans in total. Obligations and Funded Status The following table provides the changes in benefit obligation and plan assets and the funded status of the Plans at December 31, 2019 and 2018.
(Dollars in thousands) | 2019 |  | 2018
Change in benefit obligation |  |  |
Projected benefit obligation at January 1 | $ | 852,975 |  |  | $ | 919,428 |
Service cost | 12,767 |  |  | 16,154 |
Interest cost | 37,260 |  |  | 34,733 |
Actuarial loss (gain) | 118,964 |  |  | (87,752 | )
Benefits paid | (31,560 | ) |  | (29,588 | )
Projected benefit obligation at December 31 | 990,406 |  |  | 852,975 |
Change in plan assets |  |  |
Fair value of plan assets at January 1 | 842,534 |  |  | 881,590 |
Actual return on plan assets | 161,506 |  |  | (59,468 | )
Employer contributions | 3,592 |  |  | 50,000 |
Benefits paid | (31,560 | ) |  | (29,588 | )
Fair value of plan assets at December 31 | 976,072 |  |  | 842,534 |
Funded status at December 31 | $ | (14,334 | ) |  | $ | (10,441 | )
The amounts recognized in other liabilities at December 31, 2019 and 2018 were $14.3 million and $10.4 million, respectively. The following table details the amounts recognized in accumulated other comprehensive income at December 31, 2019 and 2018.
(Dollars in thousands) | 2019 |  | 2018
Net actuarial loss | $ | 172,098 |  |  | $ | 162,973 |
Prior service cost | — |  |  | 57 |
Accumulated other comprehensive loss, excluding income taxes | $ | 172,098 |  |  | $ | 163,030 |
The expected actuarial loss amortization for 2020 is $25.1 million. The accumulated benefit obligation for the Plans at December 31, 2019 and 2018, was $904.5 million and $779.1 million, respectively. The Plans use a measurement date of December 31. The following table shows the components of periodic benefit cost related to the Plans and changes in plan assets and benefit obligations recognized in other comprehensive income for the years ended December 31, 2019, 2018 and 2017.
| Year ended December 31
(Dollars in thousands) | 2019 |  | 2018 |  | 2017
Service cost | $ | 12,767 |  |  | $ | 16,154 |  |  | $ | 15,186 |
Interest cost | 37,260 |  |  | 34,733 |  |  | 35,593 |
Expected return on assets | (62,590 | ) |  | (60,296 | ) |  | (53,244 | )
Amortization of prior service cost | 57 |  |  | 79 |  |  | 210 |
Amortization of net actuarial loss | 10,924 |  |  | 13,902 |  |  | 9,510 |
Total net periodic benefit (income) cost | (1,582 | ) |  | 4,572 |  |  | 7,255 |
Current year actuarial loss | 20,049 |  |  | 32,012 |  |  | 12,945 |
Amortization of actuarial loss | (10,924 | ) |  | (13,902 | ) |  | (9,510 | )
Amortization of prior service cost | (57 | ) |  | (79 | ) |  | (210 | )
Net loss recognized in other comprehensive income | 9,068 |  |  | 18,031 |  |  | 3,225 |
Total recognized in net periodic benefit cost and other comprehensive income | $ | 7,486 |  |  | $ | 22,603 |  |  | $ | 10,480 |
Service costs and the amortization of prior service costs are recorded in personnel expense, while interest cost, expected return on plan assets and the amortization of actuarial losses (gains) are recorded in other noninterest expense. The assumptions used to determine the benefit obligations at December 31, 2019 and 2018 are as follows:
| 2019 |  | 2018
Discount rate | 3.46 | % |  | 4.38 | %
Rate of compensation increase | 5.60 |  |  | 5.60 |
The assumptions used to determine the net periodic benefit cost for the years ended December 31, 2019, 2018 and 2017, are as follows:
| 2019 |  | 2018 |  | 2017
Discount rate | 4.38 | % |  | 3.76 | % |  | 4.30 | %
Rate of compensation increase | 5.60 |  |  | 4.00 |  |  | 4.00 |
Expected long-term return on plan assets | 7.50 |  |  | 7.50 |  |  | 7.50 |
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 plans are discounted based on this yield curve and a single discount rate is calculated to achieve the same present value. The weighted average expected long-term rate of return on the Plans’ assets represents the average rate of return expected to be earned on the Plans’ assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, historical and current returns, as well as investment allocation strategies, on the Plans’ assets are considered. Plan Assets For the Plans, our primary total return objective is to achieve returns over the long term that will fund retirement liabilities and provide desired plan benefits in a manner that satisfies the fiduciary requirements of the Employee Retirement Income Security Act. The Plans’ assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Plans 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 across global, economic and market risk factors in an attempt to reduce volatility and target multiple return sources. Within approved guidelines and restrictions, the investment manager has discretion over the timing and selection of individual investments. The Plans’ assets are currently held by the FCB trust department. The fair values of pension plan assets at December 31, 2019 and 2018, by asset class are as follows:
| December 31, 2019
(Dollars in thousands) | 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
Cash and equivalents | $ | 10,974 |  |  | $ | 10,974 |  |  | — |  |  | — |  |  | 0 - 5% |  | 1 | %
Equity securities |  |  |  |  |  |  |  |  | 30 - 70% |  | 73 | %
Common and preferred stock | 142,157 |  |  | 142,157 |  |  | — |  |  | — |  |  |  |  |
Mutual funds | 565,343 |  |  | 565,343 |  |  | — |  |  | — |  |  |  |  |
Fixed income |  |  |  |  |  |  |  |  | 15 - 45% |  | 23 | %
U.S. government and government agency securities | 78,175 |  |  | — |  |  | 78,175 |  |  | — |  |  |  |  |
Corporate bonds | 122,370 |  |  | — |  |  | 122,370 |  |  | — |  |  |  |  |
Mutual funds | 25,288 |  |  | 25,288 |  |  | — |  |  | — |  |  |  |  |
Alternative investments |  |  |  |  |  |  |  |  | 0 - 30% |  | 3 | %
Mutual funds | 31,765 |  |  | 31,765 |  |  | — |  |  | — |  |  |  |  |
Total pension assets | $ | 976,072 |  |  | $ | 775,527 |  |  | $ | 200,545 |  |  | $ | — |  |  |  |  | 100 | %
| December 31, 2018
| 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
Cash and equivalents | $ | 19,029 |  |  | $ | 19,029 |  |  | $ | — |  |  | $ | — |  |  | 0 - 5% |  | 2 | %
Equity securities |  |  |  |  |  |  |  |  | 30 - 70% |  | 64 | %
Common and preferred stock | 143,939 |  |  | 143,939 |  |  | — |  |  | — |  |  |  |  |
Mutual funds | 395,328 |  |  | 393,104 |  |  | 2,224 |  |  | — |  |  |  |  |
Fixed income |  |  |  |  |  |  |  |  | 15 - 45% |  | 30 | %
U.S. government and government agency securities | 79,294 |  |  | — |  |  | 79,294 |  |  | — |  |  |  |  |
Corporate bonds | 140,358 |  |  | — |  |  | 140,358 |  |  | — |  |  |  |  |
Mutual funds | 29,561 |  |  | 29,561 |  |  | — |  |  | — |  |  |  |  |
Alternative investments |  |  |  |  |  |  |  |  |  |  | 0 - 30% |  | 4 | %
Mutual funds | 35,025 |  |  | 35,025 |  |  | — |  |  | — |  |  |  |  |
Total pension assets | $ | 842,534 |  |  | $ | 620,658 |  |  | $ | 221,876 |  |  | $ | — |  |  |  |  | 100 | %
Cash Flows The following are estimated payments to pension plan participants in the indicated periods:
(Dollars in thousands) | Estimated Payments
2020 | $ | 36,251 |
2021 | 38,980 |
2022 | 41,511 |
2023 | 43,891 |
2024 | 46,234 |
2025-2029 | 261,027 |
401(k) Savings Plans Certain employees enrolled in the defined benefit plan are also eligible to participate in a 401(k) savings plan 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, FCB makes a matching contribution equal to 100% of the first 3% and 50% of the next 3% of the participant’s deferral up to and including a maximum contribution of 4.5% of the participant’s eligible compensation. The matching contribution immediately vests. At the end of 2007, current employees were given the option to continue to accrue additional years of service under the defined benefit plans or to elect to join an enhanced 401(k) savings plan. Under the enhanced 401(k) savings plan, FCB matches up to 100% of the participant’s deferrals not to exceed 6% of the participant’s eligible compensation. The matching contribution immediately vests. In addition to the employer match of the employee contributions, the enhanced 401(k) savings plan provides a required employer non-elective contribution equal to 3% of the compensation of a participant who remains employed at the end of the calendar year. This employer contribution vests after three years of service. Employees who elected to enroll in the enhanced 401(k) savings plan discontinued the accrual of additional years of service under the defined benefit plans and became enrolled in the enhanced 401(k) savings plan effective January 1, 2008. Eligible employees hired after January 1, 2008, are eligible to participate in the enhanced 401(k) savings plan. FCB recognized expense related to contributions to the 401(k) plans of $30.8 million, $28.6 million and $25.3 million during 2019, 2018 and 2017, respectively. Additional Benefits for Executives, Directors, and Officers of Acquired Entities FCB has entered into contractual agreements with certain executives providing payments for a period of no more than ten years following separation from service occurring no earlier than an agreed-upon age. These agreements also provide a death benefit in the event a participant dies prior to separation from service or during the payment period following separation from service. 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, 2019 and 2018, and the changes in the accrued liability during the years then ended:
(Dollars in thousands) | 2019 |  | 2018
Present value of accrued liability as of January 1 | $ | 34,063 |  |  | $ | 37,299 |
Liability assumed in the Biscayne Bancshares acquisition | 1,138 |  |  | — |
Liability assumed in the First South Bancorp acquisition | 1,067 |  |  | — |
Liability assumed in the Entegra acquisition | 9,738 |  |  | — |
Liability assumed in the Capital Commerce acquisition | — |  |  | 808 |
Benefit expense and interest cost | 3,970 |  |  | 535 |
Benefits paid | (4,681 | ) |  | (4,579 | )
Present value of accrued liability as of December 31 | $ | 45,295 |  |  | $ | 34,063 |
Discount rate at December 31 | 3.46 | % |  | 4.38 | %
Other Compensation Plans FCB offers various short-term and long-term incentive plans for certain employees. Compensation awarded under these plans may be based on defined formulas, performance criteria, or at the discretion of management. The incentive compensation programs were designed to motivate employees through a balanced approach of risk and reward for their contributions toward FCB’s success. As of December 31, 2019 and 2018, the accrued liability for incentive compensation was $57.0 million and $46.4 million, respectively.

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