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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract] |
Employee Benefit Plans |
NOTE M – EMPLOYEE BENEFIT PLANS
The following summarizes the Corporation’s expense under its retirement plans for the years ended December 31:
| 2014 |  | 2013 |  | 2012
| (in thousands)
401(k) Retirement Plan | $ | 8,643 |  |  | $ | 11,807 |  |  | $ | 11,983 |
Pension Plan | 1,514 |  |  | 2,477 |  |  | 1,834 |
| $ | 10,157 |  |  | $ | 14,284 |  |  | $ | 13,817 |
401(k) Retirement Plan – A defined contribution plan that includes two contribution features:
• | Employer Profit Sharing – elective contributions based on a formula providing for an amount not to exceed 5% of each eligible employee’s covered compensation. Employees hired after July 1, 2007 are not eligible for this contribution. Beginning January 1, 2015, the Corporation suspended all contributions to the plan.
• | 401(k) Contributions – eligible employees may defer a portion of their pre-tax covered compensation on an annual basis, with employer matches of up to 5% of employee contributions. Employee and employer contributions under these features are 100% vested.
Defined Benefit Pension Plan – Contributions to the Corporation’s defined benefit pension plan (Pension Plan) are actuarially determined and funded annually, if necessary. The Corporation recognizes the funded status of its Pension Plan and postretirement benefits plan on the consolidated balance sheets and recognizes the changes in that funded status through other comprehensive income. See the heading “Postretirement Benefits” below for a description of the Corporation’s postretirement benefits plan. Pension Plan The net periodic pension cost for the Pension Plan, as determined by consulting actuaries, consisted of the following components for the years ended December 31:
| 2014 |  | 2013 |  | 2012
| (in thousands)
Service cost (1) | $ | 367 |  |  | $ | 202 |  |  | $ | 157 |
Interest cost | 3,413 |  |  | 3,087 |  |  | 3,223 |
Expected return on assets | (3,240 | ) |  | (3,194 | ) |  | (3,230 | )
Net amortization and deferral | 974 |  |  | 2,382 |  |  | 1,684 |
Net periodic pension cost | $ | 1,514 |  |  | $ | 2,477 |  |  | $ | 1,834 |
(1) | The Pension Plan was curtailed effective January 1, 2008. Pension plan service cost for all years presented was related to administrative costs associated with the plan and not due to the accrual of additional participant benefits.
The following table summarizes the changes in the projected benefit obligation and fair value of plan assets for the plan years ended December 31:
| 2014 |  | 2013
| (in thousands)
Projected benefit obligation at beginning of year | $ | 73,362 |  |  | $ | 84,032 |
Service cost | 367 |  |  | 202 |
Interest cost | 3,413 |  |  | 3,087 |
Benefit payments | (5,164 | ) |  | (3,009 | )
Change due to change in assumptions | 22,055 |  |  | (10,773 | )
Experience gain | (954 | ) |  | (177 | )
Projected benefit obligation at end of year | $ | 93,079 |  |  | $ | 73,362 |
Fair value of plan assets at beginning of year | $ | 55,448 |  |  | $ | 54,772 |
Actual return on assets | 1,446 |  |  | 3,685 |
Benefit payments | (5,164 | ) |  | (3,009 | )
Fair value of plan assets at end of year | $ | 51,730 |  |  | $ | 55,448 |
The following table presents the funded status of the Pension Plan, included in other liabilities on the consolidated balance sheets, as of December 31:
| 2014 |  | 2013
| (in thousands)
Projected benefit obligation | $ | (93,079 | ) |  | $ | (73,362 | )
Fair value of plan assets | 51,730 |  |  | 55,448 |
Funded status | $ | (41,349 | ) |  | $ | (17,914 | )
The following table summarizes the changes in the unrecognized net loss included as a component of accumulated other comprehensive loss:
| Unrecognized Net Loss
| Gross of tax |  | Net of tax
| (in thousands)
Balance as of December 31, 2012 | $ | 29,984 |  |  | $ | 19,490 |
Recognized as a component of 2013 periodic pension cost | (2,382 | ) |  | (1,548 | )
Unrecognized gains arising in 2013 | (11,441 | ) |  | (7,437 | )
Balance as of December 31, 2013 | 16,161 |  |  | 10,505 |
Recognized as a component of 2014 periodic pension cost | (974 | ) |  | (633 | )
Unrecognized losses arising in 2014 | 22,895 |  |  | 14,882 |
Balance as of December 31, 2014 | $ | 38,082 |  |  | $ | 24,754 |
The total amount of unrecognized net loss that will be amortized as a component of net periodic pension cost in 2015 is expected to be $3.6 million. The following rates were used to calculate net periodic pension cost and the present value of benefit obligations as of December 31:
| 2014 |  | 2013 |  | 2012
Discount rate-projected benefit obligation | 3.75 | % |  | 4.75 | % |  | 3.75 | %
Expected long-term rate of return on plan assets | 6.00 | % |  | 6.00 | % |  | 6.00 | %
As of December 31, 2014, 2013 and 2012, the discount rate used to calculate the present value of benefit obligations was determined using the Citigroup Average Life discount rate table, as adjusted based on the Pension Plan's expected benefit payments and rounded to the nearest 0.25%. As of December 31, 2014, the mortality table used to calculate the present value of benefit obligations was determined using the RP-2014 White Collar Mortality Table, compared to the IRS 2014 Static Mortality Table as of December 31, 2013. The 6.00% long-term rate of return on plan assets used to calculate the net periodic pension cost was based on historical returns, adjusted for expectations of long-term asset returns based on the December 31, 2014 weighted average asset allocations. The expected long-term return is considered to be appropriate based on the asset mix and the historical returns realized. The following table presents a summary of the fair values of the Pension Plan’s assets as of December 31:
| 2014 |  | 2013
| Estimated Fair Value |  | % of Total Assets |  | Estimated Fair Value |  | % of Total Assets
| (dollars in thousands)
Equity mutual funds | $ | 8,503 |  |  |  |  | $ | 5,882 |  |  |
Equity common trust funds | 6,018 |  |  |  |  | 8,418 |  |  |
Equity securities | 14,521 |  |  | 28.1 | % |  | 14,300 |  |  | 25.8 | %
Cash and money market funds | 8,957 |  |  |  |  | 10,574 |  |  |
Fixed income mutual funds | 9,845 |  |  |  |  | 9,579 |  |  |
Corporate debt securities | 4,971 |  |  |  |  | 7,815 |  |  |
U.S. Government agency securities | 3,856 |  |  |  |  |  | 3,938 |  |  |  |
Fixed income securities and cash | 27,629 |  |  | 53.4 | % |  | 31,906 |  |  | 57.5 | %
Other alternative investment funds | 9,580 |  |  | 18.5 | % |  | 9,242 |  |  | 16.7 | %
| $ | 51,730 |  |  | 100.0 | % |  | $ | 55,448 |  |  | 100.0 | %
Investment allocation decisions are made by a retirement plan committee. The goal of the investment allocation strategy is to match certain benefit obligations with maturities of fixed income securities. Pension Plan assets are invested with a conservative growth objective, with target asset allocations of approximately 25% in equities, 55% in fixed income securities and cash and 20% in alternative investments. Alternative investments may include managed futures, commodities, real estate investment trusts, master limited partnerships, and long-short strategies with traditional stocks and bonds. All alternative investments are in the form of mutual funds, not individual contracts, to enable daily liquidity. The fair values for all assets held by the Pension Plan, excluding equity common trust funds, are based on quoted prices for identical instruments and would be categorized as Level 1 assets under FASB ASC Topic 810. Equity common trust funds would be categorized as Level 2 assets under FASB ASC Topic 810. Estimated future benefit payments are as follows (in thousands):
Year |
2015 | $ | 2,889 |
2016 | 3,123 |
2017 | 3,388 |
2018 | 3,758 |
2019 | 3,881 |
2020 – 2024 | 23,574 |
| $ | 40,613 |
Postretirement Benefits The Corporation provides medical benefits and life insurance benefits under a postretirement benefits plan (Postretirement Plan) to certain retired full-time employees who were employees of the Corporation prior to January 1, 1998. Prior to February 1, 2014 certain full-time employees became eligible for these discretionary benefits if they reached retirement age while working for the Corporation. Effective February 1, 2014, the Corporation amended the Postretirement Plan, making all active full-time employees ineligible for benefits under this plan. As a result of this amendment, the Corporation recorded a $1.5 million curtailment gain as a reduction to salaries and employee benefits in 2014, as determined by consulting actuaries. The curtailment gain resulted from the recognition of the remaining pre-curtailment prior service cost as of December 31, 2013. In addition, this amendment resulted in a $3.4 million decrease in the accumulated postretirement benefit obligation and a corresponding increase in unrecognized prior service cost credits. The components of the expense for postretirement benefits other than pensions are as follows:
| 2014 |  | 2013 |  | 2012
| (in thousands)
Service cost | $ | 15 |  |  | $ | 228 |  |  | $ | 211 |
Interest cost | 206 |  |  | 322 |  |  | 346 |
Expected return on plan assets | — |  |  | (1 | ) |  | (2 | )
Net amortization and deferral | (347 | ) |  | (363 | ) |  | (363 | )
Net postretirement benefit cost | $ | (126 | ) |  | $ | 186 |  |  | $ | 192 |
The following table summarizes the changes in the accumulated postretirement benefit obligation and fair value of plan assets for the years ended December 31:
| 2014 |  | 2013
| (in thousands)
Accumulated postretirement benefit obligation at beginning of year | $ | 8,169 |  |  | $ | 9,272 |
Service cost | 15 |  |  | 228 |
Interest cost | 206 |  |  | 322 |
Benefit payments | (209 | ) |  | (230 | )
Experience gain | (532 | ) |  | (423 | )
Change due to change in assumptions | 1,261 |  |  | (1,000 | )
Effect of curtailment | (3,358 | ) |  | — |
Accumulated postretirement benefit obligation at end of year | $ | 5,552 |  |  | $ | 8,169 |
Fair value of plan assets at beginning of year | $ | 23 |  |  | $ | 45 |
Employer contributions | 194 |  |  | 208 |
Benefit payments | (209 | ) |  | (230 | )
Fair value of plan assets at end of year | $ | 8 |  |  | $ | 23 |
The following table presents the funded status of the Postretirement Plan, included in other liabilities on the consolidated balance sheets as of December 31:
| 2014 |  | 2013
| (in thousands)
Accumulated postretirement benefit obligation | $ | (5,552 | ) |  | $ | (8,169 | )
Fair value of plan assets | 8 |  |  | 23 |
Funded status | $ | (5,544 | ) |  | $ | (8,146 | )
The following table summarizes the changes in items recognized as a component of accumulated other comprehensive loss:
| Gross of tax |  |
| Unrecognized Prior Service Cost |  | Unrecognized Net Loss (Gain) |  | Total |  | Net of tax
| (in thousands)
Balance as of December 31, 2012 | $ | (1,847 | ) |  | $ | 297 |  |  | $ | (1,550 | ) |  | $ | (1,008 | )
Recognized as a component of 2013 postretirement benefit cost | 363 |  |  | — |  |  | 363 |  |  | 236 |
Unrecognized gains arising in 2013 | — |  |  | (1,434 | ) |  | (1,434 | ) |  | (932 | )
Balance as of December 31, 2013 | (1,484 | ) |  | (1,137 | ) |  | (2,621 | ) |  | (1,704 | )
Recognized as a component of 2014 postretirement benefit cost, before curtailment | 32 |  |  | 10 |  |  | 42 |  |  | 26 |
Unrecognized gains arising in 2014, prior to curtailment | — |  |  | (313 | ) |  | (313 | ) |  | (203 | )
Curtailment gain | 1,452 |  |  | — |  |  | 1,452 |  |  | 944 |
Recognized as a component of 2014 postretirement benefit cost, after curtailment | 235 |  |  | 70 |  |  | 305 |  |  | 199 |
Unrecognized gains arising in 2014, after curtailment | (3,358 | ) |  | 1,034 |  |  | (2,324 | ) |  | (1,511 | )
Balance as of December 31, 2014 | $ | (3,123 | ) |  | $ | (336 | ) |  | $ | (3,459 | ) |  | $ | (2,249 | )
For measuring the postretirement benefit obligation, the annual increase in the per capita cost of health care benefits was assumed to be 6% in year one, declining to an ultimate rate of 5.5% by year two. This health care cost trend rate has a significant impact on the amounts reported. Assuming a 1.0% increase in the health care cost trend rate above the assumed annual increase, the accumulated postretirement benefit obligation would increase by approximately $430,000 and the current period expense would increase by approximately $10,000. Conversely, a 1.0% decrease in the health care cost trend rate would decrease the accumulated postretirement benefit obligation by approximately $380,000 and the current period expense by approximately $10,000. The following rates were used to calculate net periodic postretirement benefit cost and the present value of benefit obligations as of December 31:
| 2014 |  | 2013 |  | 2012
Discount rate-projected benefit obligation | 3.75 | % |  | 4.75 | % |  | 3.75 | %
Expected long-term rate of return on plan assets | 3.00 | % |  | 3.00 | % |  | 3.00 | %
As of December 31, 2014 and 2013, the discount rate used to calculate the accumulated postretirement benefit obligation was determined using the Citigroup Average Life discount rate table, as adjusted based on the Postretirement Plan's expected benefit payments and rounded to the nearest 0.25%. As of December 31, 2014, the mortality table used to calculate the accumulated postretirement benefit obligation was determined using the RP-2014 White Collar Mortality Table, compared to the IRS 2014 Static Mortality Table as of December 31, 2013. Estimated future benefit payments under the Postretirement Plan are as follows (in thousands):
Year |
2015 | $ | 404 |
2016 | 400 |
2017 | 392 |
2018 | 389 |
2019 | 384 |
2020 – 2024 | 1,809 |
| $ | 3,778 |

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