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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2022
Retirement Benefits [Abstract] |
Employee Benefit Plans | EMPLOYEE BENEFIT PLANS BancShares sponsors benefit plans for its qualifying employees and former employees of Bancorporation, Inc. (“Bancorporation”). The benefit plans include noncontributory defined benefit pension plans and 401(k) savings plans, which are qualified under the Internal Revenue Code. BancShares also maintains agreements with certain executives providing supplemental benefits paid upon death or separation from service at an agreed-upon age. Certain benefit plans of CIT were assumed by BancShares upon closing of the CIT Merger. CIT sponsored both funded and unfunded noncontributory defined benefit pension and postretirement plans, executive retirement plans, and a 401(k) savings plan covering certain employees as further discussed below. Retirement and Post-Retirement Plans Pension Plans BancShares sponsors three qualified noncontributory defined benefit pension plans (the “Pension Plans”), including the FCB-North Pension Plan (the “BancShares Pension Plan”), FCB-South (“Bancorporation”) Pension Plan (the “Bancorporation Pension Plan”), and a plan assumed upon completion of the CIT Merger (the “CIT Pension Plan”). 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. There was no discretionary contribution made to the BancShares Pension Plan during 2022, while discretionary contributions of $32 thousand were made during 2021. Certain legacy Bancorporation employees that 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. There were no discretionary contributions made to the Bancorporation Pension Plan during 2022 or 2021. Participants in the BancShares Pension Plan and Bancorporation Pension Plan were fully vested 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. BancShares assumed the CIT Pension Plan upon completion of the CIT Merger. There was no discretionary contribution made to the CIT Pension Plan during 2022. BancShares makes contributions to the Pension 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 contributions to these plans on a periodic basis based upon numerous factors including, but not limited to, funded status, returns on plan assets, discount rates and the current economic environment. Supplemental and Executive Retirement Plans Upon completion of the CIT Merger, BancShares assumed a frozen U.S. non-contributory supplemental retirement plan (the “Supplemental Retirement Plan”) and an additional retirement plan for certain executives (the “Executive Retirement Plan”), which had been closed to new participants since 2006 and whose participants were all inactive. There were no discretionary contributions made to the Executive Retirement Plan or the Supplemental Retirement Plan in 2022. Accumulated balances under the Executive Retirement Plan and the Supplemental Retirement Plan continue to receive periodic interest, subject to certain government limits. The interest credit was 1.9% for the year ended December 31, 2022. Postretirement Benefit Plans Upon completion of the CIT Merger, BancShares assumed four postretirement benefit plans (the “Postretirement Plans”) that provided healthcare and life insurance benefits to eligible retired employees. For most eligible retirees, healthcare was contributory and life insurance was non-contributory. The Postretirement Plans were funded on a “pay-as-you-go” basis. Certain Postretirement Plans were terminated during the first quarter of 2022. BancShares recognized a reduction in other noninterest expense of approximately $27 million in the first quarter of 2022 related to obligations previously accrued. Funding for Retirement and Postretirement Plans The funding policy for the Pension Plans is to contribute an amount each year to meet all Employee Retirement Income Security Act (“ERISA”) minimum requirements, including amounts to meet quarterly funding requirements, avoid “at-risk” status and avoid any benefit restrictions. BancShares may also contribute additional voluntary amounts each year (up to the maximum tax-deductible amount) in order to achieve certain target funding levels in the plans, with consideration also given to current and future cash flow and tax positions. No contributions are currently expected for the year ending December 31, 2023. The tables and disclosures below address the following: (i) the Pension Plans, the Supplemental Retirement Plan, and the Executive Retirement Plan (the “Retirement Plans”) and (ii) the Postretirement Plans (collectively with the Retirement Plans, the “Plans”). The Supplemental and Executive Retirement Plans are unfunded. Therefore, the tables and disclosures below regarding plan assets apply to the Pension Plans, which are funded. Obligations and Funded Status The following table provides the changes in benefit obligations, assets and the funded status of the Plans at December 31, 2022 and 2021.
Obligations and Funded Status | Retirement Plans |  | Postretirement Plans
dollars in millions | 2022 |  | 2021 |  | 2022
Change in benefit obligation |  |  |  |  |
Projected benefit obligation at January 1 | $ | 1,056 |  |  | $ | 1,078 |  |  | $ | — |
Projected benefit obligation of acquired plans | 389 |  |  | — |  |  | 28 |
Service cost | 14 |  |  | 15 |  |  | — |
Interest cost | 43 |  |  | 30 |  |  | — |
Actuarial (gain) loss | (324) |  |  | (31) |  |  | — |
Benefits paid | (63) |  |  | (36) |  |  | (1) |
Plan termination | — |  |  | — |  |  | (27) |
Projected benefit obligation at December 31 | 1,115 |  |  | 1,056 |  |  | — |
Change in plan assets |  |  |  |  |
Fair value of plan assets at January 1 | 1,345 |  |  | 1,236 |  |  | — |
Fair value of plan assets of acquired plans | 386 |  |  | — |  |  | — |
Actual (loss) return on plan assets | (270) |  |  | 145 |  |  | — |
Benefits paid | (57) |  |  | (36) |  |  | — |
Fair value of plan assets at December 31 | 1,404 |  |  | 1,345 |  |  | — |
Funded status at December 31 | $ | 289 |  |  | $ | 289 |  |  | $ | — |
Information for pension plans with a benefit obligation in excess of plan assets |  |  |  |  |
Projected and accumulated benefit obligations | $ | 54 |  |  | $ | — |  |  | $ | — |
The Consolidated Balance Sheets include $343 million and $289 million in other assets related to the Pension Plans at December 31, 2022 and 2021, respectively. The Consolidated Balance Sheet includes $54 million in other liabilities at December 31, 2022 for the unfunded Supplemental Retirement and Executive Retirement Plans. The following table details the amounts recognized in accumulated other comprehensive income, before income taxes, at December 31, 2022 and 2021. See Note 18 — Accumulated Other Comprehensive (Loss) Income for additional information.
| Retirement Plans |  | Postretirement Plans
dollars in millions | 2022 |  | 2021 |  | 2022
Net actuarial gain | $ | 13 |  |  | $ | 34 |  |  | $ | — |
The accumulated benefit obligation for the Plans at December 31, 2022 and 2021 was $1.1 billion and $973 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 assets and benefit obligations of the Plans recognized in other comprehensive income, before income taxes, for the years ended December 31, 2022, 2021 and 2020. See Note 18 — Accumulated Other Comprehensive (Loss) Income for additional information.
Net Periodic Benefit Costs and Other Amounts | Retirement Plans |  | Postretirement Plans
| Year ended December 31 |  | Year ended December 31
dollars in millions | 2022 |  | 2021 |  | 2020 |  | 2022
Service cost | $ | 14 |  |  | $ | 15 |  |  | $ | 14 |  |  | $ | — |
Interest cost | 43 |  |  | 30 |  |  | 34 |  |  | — |
Expected return on assets | (87) |  |  | (78) |  |  | (65) |  |  | — |
Net prior service credit amortization | — |  |  | — |  |  | — |  |  | (27) |
Amortization of net actuarial loss | 12 |  |  | 27 |  |  | 25 |  |  | — |
Total net periodic (benefit) cost | (18) |  |  | (6) |  |  | 8 |  |  | (27) |
Current year actuarial loss (gain) | 33 |  |  | (98) |  |  | (55) |  |  | — |
Amortization of actuarial loss | (12) |  |  | (27) |  |  | (25) |  |  | — |
Current year amortization of prior service cost | — |  |  | — |  |  | — |  |  | 27 |
Amortization of prior service cost | — |  |  | — |  |  | — |  |  | (27) |
Net loss (gain) recognized in other comprehensive income | 21 |  |  | (125) |  |  | (80) |  |  | — |
Total recognized in net periodic benefit cost and other comprehensive income | $ | 3 |  |  | $ | (131) |  |  | $ | (72) |  |  | $ | (27) |
The actuarial loss in 2022 was primarily due to lower than expected return on assets and higher interest crediting rate, partially offset by increased discount rates. Actuarial gains in 2021 and 2020 were primarily due to return on assets greater than expected, partially offset by the impact of a decreased discount rate. Service costs and the amortization of prior service costs are recorded in personnel expense, while interest cost, expected return on assets and the amortization of actuarial gains or losses are recorded in other noninterest expense. The assumptions used to determine the benefit obligations at December 31, 2022 and 2021 are as follows:
Weighted Average Assumptions | Retirement Plans |  | Postretirement Plans
| 2022 |  | 2021 |  | 2022
Discount rate | 5.57 | % |  | 3.04 | % |  | N/A
Rate of compensation increase | 5.60 |  |  | 5.60 |  |  | N/A
Interest crediting rate(1) | 4.25 |  |  | N/A |  | N/A
(1) Specific to cash investments in the CIT Pension Plan. The assumptions used to determine the net periodic benefit cost for the years ended December 31, 2022, 2021 and 2020, are as follows:
Weighted Average Assumptions | Retirement Plans |  | Postretirement Plans
| 2022 |  | 2021 |  | 2020 |  | 2022
Discount rate | 3.03 | % |  | 2.76 | % |  | 3.46 | % |  | 3.02 | %
Rate of compensation increase | 5.60 |  |  | 5.60 |  |  | 5.60 |  |  | N/A
Expected long-term return on plan assets | 5.87 |  |  | 7.50 |  |  | 7.50 |  |  | N/A
Interest crediting rate(1) | 1.50 |  |  | N/A |  | N/A |  | N/A
(1) Specific to cash investments in the CIT Pension Plan. 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 increase in discount rate from the prior year is reflective of the current market conditions. The weighted average expected long-term rate of return on Pension Plans’ assets represents the average rate of return expected to be earned on the Pension Plans’ assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return on the Pension Plans’ assets, historical and current returns, as well as investment allocation strategies, are considered. Assets of the Pension Plans For the Pension Plans, our primary total return objective is to achieve returns over the long term that will fund retirement liabilities and provide desired benefits of the Pension Plans in a manner that satisfies the fiduciary requirements of the ERISA. The Pension Plans’ assets have a long-term time horizon that runs concurrent with the average life expectancy of the participants. As such, the Pension 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 generate a consistent level 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 assets of the BancShares Pension Plan and Bancorporation Pension Plan are held by the BancShares’ trust department. Assets of the CIT Pension Plan were held by a third party servicer during 2022. Equity securities are measured at fair value using observable closing prices. These securities are classified as Level 1 as they are traded in an active market. Fixed income securities are generally estimated using a third party pricing service. The third party provider evaluates securities based on comparable investments with trades and market data and will utilize pricing models which use a variety of inputs, such as benchmark yields, reported trades, issuer spreads, benchmark securities, bids and offers as needed. These securities are generally classified as Level 2. In the following table, assets of the CIT Pension Plan are primarily included in the Common Collective Trust. These investments have been measured using the net asset value per share practical expedient and are not required to be classified in the fair value hierarchy. The following tables summarize the fair values and fair value hierarchy for the assets of the Pension Plans at December 31, 2022 and 2021.
Fair Value Measurements | December 31, 2022
dollars in millions | Market Value |  | Level 1 |  | Level 2 |  | Level 3 |  | Not Classified(1) |  | Weighted Average Target Allocation Pension Plans |  | Actual % of Plans' Assets
Cash and equivalents | $ | 25 |  |  | $ | 25 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | 0 - 5% |  | 2 | %
Equity securities |  |  |  |  |  |  |  |  |  |  | 25 - 60% |  | 46 | %
Common and preferred stock | 88 |  |  | 88 |  |  | — |  |  | — |  |  | — |  |  |  |  |
Mutual funds | 181 |  |  | 181 |  |  | — |  |  | — |  |  | — |  |  |  |  |
Exchange traded funds | 376 |  |  | 376 |  |  | — |  |  | — |  |  | — |  |  |  |  |
Fixed income |  |  |  |  |  |  |  |  |  |  | 25 - 60% |  | 31 | %
U.S. government and government agency securities | 198 |  |  | — |  |  | 198 |  |  | — |  |  | — |  |  |  |  |
Corporate bonds | 233 |  |  | — |  |  | 233 |  |  | — |  |  | — |  |  |  |  |
Alternative investments |  |  |  |  |  |  |  |  |  |  | 0 - 30% |  | 21 | %
Common collective trust, measured at NAV | 302 |  |  | — |  |  | — |  |  | — |  |  | 302 |  |  |  |  |
Limited partnerships | 1 |  |  | — |  |  | — |  |  | — |  |  | 1 |  |  |  |  |
Total pension assets | $ | 1,404 |  |  | $ | 670 |  |  | $ | 431 |  |  | $ | — |  |  | $ | 303 |  |  |  |  | 100 | %
(1) These investments have been measured using the net asset value per share practical expedient and are not required to be classified in the table above.
| December 31, 2021
| Market Value |  | Level 1 |  | Level 2 |  | Level 3 |  |  |  | Target Allocation |  | Actual % of Plan Assets
Cash and equivalents | $ | 17 |  |  | $ | 17 |  |  | $ | — |  |  | $ | — |  |  |  |  | 0 - 5% |  | 1 | %
Equity securities |  |  |  |  |  |  |  |  |  |  | 30 - 70% |  | 61 | %
Common and preferred stock | 76 |  |  | 76 |  |  | — |  |  | — |  |  |  |  |  |  |
Mutual funds | 482 |  |  | 482 |  |  | — |  |  | — |  |  |  |  |  |  |
Exchange traded funds | 263 |  |  | 263 |  |  | — |  |  | — |  |  |  |  |  |  |
Fixed income |  |  |  |  |  |  |  |  |  |  | 15 - 45% |  | 38 | %
U.S. government and government agency securities | 228 |  |  | — |  |  | 228 |  |  | — |  |  |  |  |  |  |
Corporate bonds | 279 |  |  | 3 |  |  | 276 |  |  | — |  |  |  |  |  |  |
Total pension assets | $ | 1,345 |  |  | $ | 841 |  |  | $ | 504 |  |  | $ | — |  |  |  |  |  |  | 100 | %
There were no direct investments in equity securities of BancShares included in the Pension Plans’ assets in any of the years presented. Cash Flows The following table presents estimated future benefits projected to be paid for the next ten years from the Pension Plans’ assets or from the Company's general assets calculated using current actuarial assumptions. Actual benefit payments may differ from projected benefit payments.
Projected Benefits dollars in millions | Retirement Plans
2023 | $ | 72 |
2024 | 74 |
2025 | 77 |
2026 | 79 |
2027 | 82 |
2028-2032 | 420 |
401(k) Savings Plans Certain employees enrolled in the BancShares or Bancorporation Pension Plans are also eligible to participate in a 401(k) savings plan (the “401(k) Plan”) through deferral of portions of their salary. For employees who participate in the 401(k) Plan who also continue to accrue additional years of service under the BancShares or Bancorporation Pension Plans, BancShares 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, employees were given the option to continue to accrue additional years of service under the BancShares or Bancorporation Pension Plans or to elect to join an enhanced 401(k) savings plan (the “Enhanced 401(k) Plan”). Under the Enhanced 401(k) Plan, BancShares matches participants’ contributions in an amount equal to 100% of the first 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) 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. Effective January 1, 2023 this non-elective contribution will be discretionary. This employer contribution vests after three years of service. Employees who elected to enroll in the Enhanced 401(k) Plan discontinued the accrual of additional years of service under the BancShares or Bancorporation Pension Plans and became enrolled in the Enhanced 401(k) Plan effective January 1, 2008. Eligible employees hired after January 1, 2008, are eligible to participate in the Enhanced 401(k) Plan. CIT sponsored a 401(k) plan (the “CIT 401(k) Plan”), which was assumed by BancShares upon completion of the CIT Merger. Under the CIT 401(k) Plan, BancShares matched 100% of the participants’ contributions up to 4% of the participant’s eligible compensation. In January 2023, the CIT 401(k) Plan was merged into the Enhanced 401(k) Plan. BancShares recognized expense related to contributions to all 401(k) plans of $55 million, $36 million, and $36 million during 2022, 2021 and 2020, respectively. Additional Benefits for Executives, Directors, and Officers BancShares 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. BancShares 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, 2022 and 2021, and the changes in the accrued liability during the years then ended:
dollars in millions | 2022 |  | 2021
Accrued liability as of January 1 | $ | 39 |  |  | $ | 43 |
Accrued liability of acquired banks | 2 |  |  | — |
Discount rate adjustment | (2) |  |  | (1) |
Benefit expense and interest cost | 2 |  |  | 2 |
Benefits paid | (5) |  |  | (5) |
Benefits forfeited | — |  |  | — |
Accrued liability as of December 31 | $ | 36 |  |  | $ | 39 |
Discount rate at December 31 | 4.67 | % |  | 3.04 | %
Other Compensation Plans BancShares 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 BancShares’ success. As of December 31, 2022 and 2021, the accrued liability for incentive compensation was $267 million and $84 million, respectively. CIT had compensation awards that either converted to BancShares RSUs or immediately vested at completion of the CIT Merger as further described in the “Stock-Based Compensation” discussion in Note 1 — Significant Accounting Policies and Basis of Presentation. In February 2016, CIT adopted the CIT Group Inc. 2016 Omnibus Incentive Plan (the "2016 Plan"), which provided for grants of stock-based awards to employees, executive officers, and directors. The BancShares RSUs are the only outstanding awards subject to the terms of the 2016 Plan and no further awards will be made under the 2016 Plan. Compensation expense is recognized over the vesting period or the requisite service period, which is generally three years for BancShares RSUs, under the graded vesting method, whereby each vesting tranche of the award is amortized separately as if each were a separate award. The following table presents the unvested BancShares RSUs at December 31, 2022, which have vesting periods through 2024. There were no grants of stock-based compensation awards during 2022. The fair value of RSUs that vested and settled in stock during 2022 was $64 million.
Stock-Settled Awards Outstanding share amounts in whole dollars | Stock-Settled Awards
| Number of Shares |  | Weighted Average Grant Date Value (1)
Unvested BancShares at December 31, 2021 | — |  |  | $ | — |
Unvested CIT RSUs converted to BancShares RSUs at Merger Date | 116,958 |  |  | 859.76 |
Unvested CIT PSUs converted to BancShares RSUs at Merger Date | 10,678 |  |  | 859.76 |
Forfeitures | (5,194) |  |  | 859.76 |
Vested / settled awards | (79,453) |  |  | 859.76 |
Unvested BancShares RSUs at December 31, 2022 | 42,989 |  |  | $ | 859.76 |
(1) Represents the share price of BancShares as of the CIT Merger Date.

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- Definition The entire disclosure for an entity's employee compensation and benefit plans, including, but not limited to, postemployment and postretirement benefit plans, defined benefit pension plans, defined contribution plans, non-qualified and supplemental benefit plans, deferred compensation, share-based compensation, life insurance, severance, health care, unemployment and other benefit plans. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 712 -URI https://asc.fasb.org/topic&trid=2197446 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 710 -URI https://asc.fasb.org/topic&trid=2127225 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI https://asc.fasb.org/topic&trid=2235017 + Details
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