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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2018
Retirement Benefits [Abstract] |
Employee Benefit Plans |
NOTE 13 – EMPLOYEE BENEFIT PLANS
The following summarizes the Corporation’s expense under its retirement plans for the years ended December 31:
| 2018 |  | 2017 |  | 2016
| (in thousands)
401(k) Retirement Plan | $ | 8,482 |  |  | $ | 8,121 |  |  | $ | 7,418 |
Pension Plan | 3,435 |  |  | 4,168 |  |  | 4,310 |
| $ | 11,917 |  |  | $ | 12,289 |  |  | $ | 11,728 |
The 401(k) Retirement Plan is a defined contribution plan under which 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 compensation. Employee and employer contributions under these features are 100% vested. Contributions to the Defined Benefit Pension Plan ("Pension Plan") are actuarially determined and funded annually, if necessary. The Corporation recognizes the funded status of its Pension Plan on the consolidated balance sheets and recognizes the changes in that funded status through other comprehensive income. The Pension Plan has been curtailed, with no additional benefits accruing to participants. 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:
| 2018 |  | 2017 |  | 2016
| (in thousands)
Service cost (1) | $ | — |  |  | $ | — |  |  | $ | 688 |
Interest cost | 3,053 |  |  | 3,320 |  |  | 3,520 |
Expected return on assets | (2,047 | ) |  | (1,804 | ) |  | (2,318 | )
Net amortization and deferral | 2,429 |  |  | 2,652 |  |  | 2,420 |
Net periodic pension cost | $ | 3,435 |  |  | $ | 4,168 |  |  | $ | 4,310 |
(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. Beginning January 1, 2017 the administrative costs were netted with the expected return on assets.
The following table summarizes the changes in the projected benefit obligation and fair value of plan assets for the plan years ended December 31:
| 2018 |  | 2017
| (in thousands)
Projected benefit obligation at beginning of year | $ | 89,482 |  |  | $ | 85,363 |
Interest cost | 3,053 |  |  | 3,320 |
Benefit payments | (5,796 | ) |  | (3,751 | )
Change in assumptions | (8,051 | ) |  | 5,008 |
Experience gain | 738 |  |  | (458 | )
Projected benefit obligation at end of year | $ | 79,426 |  |  | $ | 89,482 |
Fair value of plan assets at beginning of year | $ | 54,061 |  |  | $ | 48,684 |
Employer contributions (1) | 13,042 |  |  | 3,816 |
Actual return on plan assets | (3,482 | ) |  | 5,312 |
Benefit payments | (5,796 | ) |  | (3,751 | )
Fair value of plan assets at end of year | $ | 57,825 |  |  | $ | 54,061 |
(1) | The Corporation funds at least the minimum amount required by federal law and regulations. The Corporation contributed $13.0 million and $3.8 million to the Pension Plan during 2018 and 2017, respectively.
The following table presents the funded status of the Pension Plan, included in other liabilities on the consolidated balance sheets, as of December 31:
| 2018 |  | 2017
| (in thousands)
Projected benefit obligation | $ | (79,426 | ) |  | $ | (89,482 | )
Fair value of plan assets | 57,825 |  |  | 54,061 |
Funded status | $ | (21,601 | ) |  | $ | (35,421 | )
The following table summarizes the changes in the unrecognized net loss included as a component of accumulated other comprehensive loss:
| Unrecognized Net Loss
| Before tax |  | Net of tax
| (in thousands)
Balance as of December 31, 2016 | $ | 30,169 |  |  | $ | 19,610 |
Recognized as a component of 2017 periodic pension cost | (2,652 | ) |  | (1,724 | )
Unrecognized gains arising in 2017 | 1,042 |  |  | 678 |
Balance as of December 31, 2017 | 28,559 |  |  | 18,564 |
Recognized as a component of 2018 periodic pension cost | (2,429 | ) |  | (1,892 | )
Unrecognized losses arising in 2018 | (1,783 | ) |  | (1,389 | )
Re-measurement adjustments for tax rate changes | — |  |  | 3,678 |
Balance as of December 31, 2018 | $ | 24,347 |  |  | $ | 18,961 |
The total amount of unrecognized net loss that will be amortized as a component of net periodic pension cost in 2019 is expected to be $2.3 million. The following rates were used to calculate net periodic pension cost and the present value of benefit obligations as of December 31:
| 2018 |  | 2017 |  | 2016
Discount rate-projected benefit obligation | 4.25 | % |  | 3.50 | % |  | 4.00 | %
Expected long-term rate of return on plan assets | 5.00 | % |  | 5.00 | % |  | 5.00 | %
The discount rates used were 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%. The 5.00% 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, 2018 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:
| 2018 |  | 2017
| Estimated Fair Value |  | % of Total Assets |  | Estimated Fair Value |  | % of Total Assets
| (dollars in thousands)
Equity mutual funds | $ | 18,532 |  |  |  |  | $ | 19,219 |  |  |
Equity common trust funds | 9,062 |  |  |  |  | 9,612 |  |  |
Equity securities | 27,594 |  |  | 47.7 | % |  | 28,831 |  |  | 53.3 | %
Cash and money market funds | 10,754 |  |  |  |  | 5,675 |  |  |
Fixed income mutual funds | 11,523 |  |  |  |  | 11,136 |  |  |
Corporate debt securities | 2,985 |  |  |  |  | 2,999 |  |  |
U.S. Government agency securities | — |  |  |  |  |  | 249 |  |  |  |
Fixed income securities and cash | 25,262 |  |  | 43.7 | % |  | 20,059 |  |  | 37.1 | %
Other alternative investment funds | 4,969 |  |  | 8.6 | % |  | 5,171 |  |  | 9.6 | %
| $ | 57,825 |  |  | 100.0 | % |  | $ | 54,061 |  |  | 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 balanced objective, with target asset allocations of approximately 50% in equities, 40% in fixed income securities and cash and 10% 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 |
2019 | $ | 3,899 |
2020 | 4,203 |
2021 | 4,390 |
2022 | 4,500 |
2023 | 4,628 |
2024 – 2028 | 24,718 |
| $ | 46,338 |
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. The Corporation recognizes the funded status of the postretirement plan on the consolidated balance sheets and recognizes the changes in that funded status through other comprehensive income. The components of the net (benefit) expense for postretirement benefits other than pensions are as follows:
| 2018 |  | 2017 |  | 2016
| (in thousands)
Interest cost | $ | 57 |  |  | $ | 68 |  |  | $ | 85 |
Net amortization and deferral | (559 | ) |  | (565 | ) |  | (551 | )
Net postretirement benefit | $ | (502 | ) |  | $ | (497 | ) |  | $ | (466 | )
The following table summarizes the changes in the accumulated postretirement benefit obligation and fair value of plan assets for the years ended December 31:
| 2018 |  | 2017
| (in thousands)
Accumulated postretirement benefit obligation at beginning of year | $ | 1,700 |  |  | $ | 1,926 |
Interest cost | 57 |  |  | 68 |
Benefit payments | (205 | ) |  | (216 | )
Experience gain | 35 |  |  | (104 | )
Change in assumptions | (67 | ) |  | 26 |
Accumulated postretirement benefit obligation at end of year | $ | 1,520 |  |  | $ | 1,700 |
Fair value of plan assets at beginning of year | $ | — |  |  | $ | 3 |
Employer contributions | 205 |  |  | 213 |
Benefit payments | (205 | ) |  | (216 | )
Fair value of plan assets at end of year | $ | — |  |  | $ | — |
The funded status of the Postretirement Plan, included in other liabilities on the consolidated balance sheets as of December 31, 2018 and 2017 was $1.5 million and $1.7 million, respectively.
The following table summarizes the changes in items recognized as a component of accumulated other comprehensive loss:
| Before tax |  |
| Unrecognized Prior Service Cost |  | Unrecognized Net Loss (Gain) |  | Total |  | Net of tax
| (in thousands)
Balance as of December 31, 2016 | $ | (4,869 | ) |  | $ | (1,183 | ) |  | $ | (6,052 | ) |  | $ | (3,935 | )
Recognized as a component of 2017 postretirement benefit cost | 465 |  |  | 101 |  |  | 566 |  |  | 368 |
Unrecognized gains arising in 2017 | — |  |  | (77 | ) |  | (77 | ) |  | (50 | )
Balance as of December 31, 2017 | (4,404 | ) |  | (1,159 | ) |  | (5,563 | ) |  | (3,617 | )
Recognized as a component of 2018 postretirement benefit cost | 464 |  |  | 95 |  |  | 559 |  |  | 435 |
Unrecognized gains arising in 2018 | — |  |  | (32 | ) |  | (32 | ) |  | (25 | )
Re-measurement adjustments for tax rate changes | — |  |  | — |  |  | — |  |  | (721 | )
Balance as of December 31, 2018 | $ | (3,940 | ) |  | $ | (1,096 | ) |  | $ | (5,036 | ) |  | $ | (3,928 | )
The following rates were used to calculate net periodic postretirement benefit cost and the present value of benefit obligations as of December 31:
| 2018 |  | 2017 |  | 2016
Discount rate-projected benefit obligation | 4.25 | % |  | 3.50 | % |  | 4.25 | %
Expected long-term rate of return on plan assets | 3.00 | % |  | 3.00 | % |  | 3.00 | %
The discount rates used to calculate the accumulated postretirement benefit obligation were 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%. Estimated future benefit payments under the Postretirement Plan are as follows (in thousands):
Year |
2019 | $ | 189 |
2020 | 176 |
2021 | 164 |
2022 | 151 |
2023 | 140 |
2024 – 2028 | 534 |
| $ | 1,354 |

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