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Employee Benefit Plans | 12 Months Ended
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Dec. 31, 2021
Employee Benefit Plans [Abstract] |
Employee Benefit Plans | 12. Employee Benefit Plans Defined Benefit Post-Retirement Plans The Company has a qualified, noncontributory, defined benefit pension plan (“the Plan”) covering substantially all of its employees at December 31, 2021. Benefits paid from the plan are based on age, years of service, compensation and social security benefits and are determined in accordance with defined formulas. The Company’s policy is to fund the Plan in accordance with Employee Retirement Income Security Act of 1974 standards. Assets of the Plan are invested in publicly traded stocks and mutual funds. Prior to January 1, 2000, the Plan was a traditional defined benefit plan based on final average compensation. On January 1, 2000, the Plan was converted to a cash balance plan with grandfathering provisions for existing participants. Effective March 1, 2013, the Plan was amended. Benefit accruals for participants who, as of January 1, 2000, elected to continue participating in the traditional defined benefit plan design were frozen as of March 1, 2013. In May 2013, the noncontributory, frozen, defined benefit pension plan assumed from Alliance in the acquisition was merged into the Plan. In addition to the Plan, the Company provides supplemental employee retirement plans to certain current and former executives. The Company also assumed supplemental retirement plans for certain former executives in the Alliance acquisition. These supplemental employee retirement plans and the Plan are collectively referred to herein as “Pension Benefits.” In addition, the Company provides certain health care benefits for retired employees. Benefits were accrued over the employees’ active service period. Only employees that were employed by the Company on or before January 1, 2000 are eligible to receive post-retirement health care benefits. The Plan is contributory for participating retirees, requiring participants to absorb certain deductibles and coinsurance amounts with contributions adjusted annually to reflect cost sharing provisions and benefit limitations called for in the Plan. Employees become eligible for these benefits if they reach normal retirement age while working for the Company. For eligible employees described above, the Company funds the cost of post-retirement health care as benefits are paid. The Company elected to recognize the transition obligation on a delayed basis over twenty years. In addition, the Company assumed post-retirement medical life insurance benefits for certain Alliance employees, retirees and their spouses, if applicable, in the Alliance acquisition. These post-retirement benefits are referred to herein as “Other Benefits.” Accounting standards require an employer to: (1) recognize the overfunded or underfunded status of defined benefit post-retirement plans, which is measured as the difference between plan assets at fair value and the benefit obligation, as an asset or liability in its balance sheet; (2) recognize changes in that funded status in the year in which the changes occur through comprehensive income; and (3) measure the defined benefit plan assets and obligations as of the date of its year-end balance sheet. In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans - General (Subtopic 715-20), provides changes to the disclosure requirements for defined benefit plans. The Company adopted the provisions of ASU 2018-14 as of December 31, 2020 and it did not have a material impact on its disclosures to the consolidated financial statements. The components of AOCI, which have not yet been recognized as components of net periodic benefit cost, related to pensions and other post-retirement benefits are summarized below:
|  | Pension Benefits |  |  | Other Benefits |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Net actuarial loss (gain) |  | $ | 21,608 |  |  | $ | 26,108 |  |  | $ | (226 | ) |  | $ | 317 |
Prior service cost (credit) |  |  | 320 |  |  |  | 378 |  |  |  | (8 | ) |  |  | 43 |
Total amounts recognized in AOCI (pre-tax) |  | $ | 21,928 |  |  | $ | 26,486 |  |  | $ | (234 | ) |  | $ | 360 |
A December 31 measurement date is used for the pension, supplemental pension and post-retirement benefit plans. The following table sets forth changes in benefit obligations, changes in plan assets and the funded status of the pension plans and other post-retirement benefits:
|  | Pension Benefits |  |  | Other Benefits |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Change in benefit obligation: |  |  |  |  |  |  |  |  |  |  |  |
Benefit obligation at beginning of year |  | $ | 90,194 |  |  | $ | 90,586 |  |  | $ | 5,999 |  |  | $ | 6,083 |
Service cost |  |  | 2,069 |  |  |  | 1,840 |  |  |  | 8 |  |  |  | 8 |
Interest cost |  |  | 2,717 |  |  |  | 3,237 |  |  |  | 163 |  |  |  | 213 |
Plan participants’ contributions |  |  | - |  |  |  | - |  |  |  | 160 |  |  |  | 173 |
Actuarial loss (gain) |  |  | 499 |  |  |  | 3,411 |  |  |  | (543 | ) |  |  | 191 |
Curtailments |  |  | - |  |  |  | (67 | ) |  |  | - |  |  |  | - |
Benefits paid |  |  | (6,560 | ) |  |  | (8,813 | ) |  |  | (635 | ) |  |  | (669 | )
Projected benefit obligation at end of year |  | $ | 88,919 |  |  | $ | 90,194 |  |  | $ | 5,152 |  |  | $ | 5,999 |
Change in plan assets: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of year |  | $ | 128,563 |  |  | $ | 122,995 |  |  | $ | - |  |  | $ | - |
Gain on plan assets |  |  | 12,523 |  |  |  | 12,449 |  |  |  | - |  |  |  | - |
Employer contributions |  |  | 1,341 |  |  |  | 1,932 |  |  |  | 475 |  |  |  | 496 |
Plan participants’ contributions |  |  | - |  |  |  | - |  |  |  | 160 |  |  |  | 173 |
Benefits paid |  |  | (6,560 | ) |  |  | (8,813 | ) |  |  | (635 | ) |  |  | (669 | )
Fair value of plan assets at end of year |  | $ | 135,867 |  |  | $ | 128,563 |  |  | $ | - |  |  | $ | - |
Funded (unfunded) status at year end |  | $ | 46,948 |  |  | $ | 38,369 |  |  | $ | (5,152 | ) |  | $ | (5,999 | )
An asset is recognized for an overfunded plan and a liability is recognized for an underfunded plan. The accumulated benefit obligation for pension benefits was $88.9 million and $90.2 million at December 31, 2021 and 2020, respectively. The accumulated benefit obligation for other post-retirement benefits was $5.2 million and $6.0 million at December 31, 2021 and 2020, respectively. The funded status of the pension and other post-retirement benefit plans has been recognized as follows in the consolidated balance sheets at December 31, 2021 and 2020.
|  | Pension Benefits |  |  | Other Benefits |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Other assets |  | $ | 65,638 |  |  | $ | 57,456 |  |  | $ | - |  |  | $ | - |
Other liabilities |  |  | (18,690 | ) |  |  | (19,087 | ) |  |  | (5,152 | ) |  |  | (5,999 | )
Funded status |  | $ | 46,948 |  |  | $ | 38,369 |  |  | $ | (5,152 | ) |  | $ | (5,999 | )
The following assumptions were used to determine the benefit obligation and the net periodic pension cost for the years indicated:
| Years Ended December 31,
| 2021 | 2020 | 2019
Weighted average assumptions: |  |  |
The following assumptions were used to determine benefit obligations: |  |  |
Discount rate | 3.23% - 3.35% | 3.08% - 3.25% | 3.69% - 3.73%
Expected long-term return on plan assets | 6.70% | 7.00% | 7.00%
Rate of compensation increase | 3.00% | 3.00% | 3.00%
Interest rate of credit for cash balance plan | 1.94% | 1.62% | 2.28%
The following assumptions were used to determine net periodic pension cost: |  |  |
Discount rate | 3.08% - 3.25% | 3.69% - 3.73% | 4.79% - 4.80%
Expected long-term return on plan assets | 7.00% | 7.00% | 7.00%
Rate of compensation increase | 3.00% | 3.00% | 3.00%
Interest rate of credit for cash balance plan | 1.62% | 2.28% | 3.36%
Net periodic benefit cost and other amounts recognized in OCI for the years ended December 31 included the following components:
|  | Pension Benefits |  |  | Other Benefits |
(In thousands) |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2021 |  |  | 2020 |  |  | 2019 |
Components of net periodic (benefit) cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Service cost |  | $ | 2,069 |  |  | $ | 1,840 |  |  | $ | 1,723 |  |  | $ | 8 |  |  | $ | 8 |  |  | $ | 7 |
Interest cost |  |  | 2,717 |  |  |  | 3,237 |  |  |  | 3,942 |  |  |  | 163 |  |  |  | 213 |  |  |  | 272 |
Expected return on plan assets |  |  | (8,786 | ) |  |  | (8,410 | ) |  |  | (7,480 | ) |  |  | - |  |  |  | - |  |  |  | - |
Additional gain due to curtailment |  |  | - |  |  |  | (74 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Amortization of prior service cost |  |  | 59 |  |  |  | 41 |  |  |  | 43 |  |  |  | 51 |  |  |  | 51 |  |  |  | 50 |
Amortization of unrecognized net loss |  |  | 1,263 |  |  |  | 1,535 |  |  |  | 2,593 |  |  |  | - |  |  |  | - |  |  |  | - |
Net periodic pension (benefit) cost |  | $ | (2,678 | ) |  | $ | (1,831 | ) |  | $ | 821 |  |  | $ | 222 |  |  | $ | 272 |  |  | $ | 329 |
Other changes in plan assets and benefit obligations recognized in OCI (pre-tax): |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net (gain) loss |  | $ | (3,237 | ) |  | $ | (628 | ) |  | $ | (4,611 | ) |  | $ | (543 | ) |  | $ | 192 |  |  | $ | (720 | )
Prior service cost |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Additional gain due to curtailment |  |  | - |  |  |  | 7 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Amortization of prior service cost |  |  | (59 | ) |  |  | (41 | ) |  |  | (43 | ) |  |  | (51 | ) |  |  | (51 | ) |  |  | (50 | )
Amortization of unrecognized net (loss) |  |  | (1,263 | ) |  |  | (1,535 | ) |  |  | (2,593 | ) |  |  | - |  |  |  | - |  |  |  | - |
Total recognized in OCI |  | $ | (4,559 | ) |  | $ | (2,197 | ) |  | $ | (7,247 | ) |  | $ | (594 | ) |  | $ | 141 |  |  | $ | (770 | )
Total recognized in net periodic (benefit) cost and OCI, pre-tax |  | $ | (7,237 | ) |  | $ | (4,028 | ) |  | $ | (6,426 | ) |  | $ | (372 | ) |  | $ | 413 |  |  | $ | (441 | )
The service cost component of the net periodic (benefit) cost is included in Salaries and Employee Benefits and the interest cost, expected return on plan assets and net amortization components are included in Other Noninterest Expense on the consolidated statements of income. The following table sets forth estimated future benefit payments for the pension plans and other post-retirement benefit plans as of December 31, 2021:
(In thousands) |  | Pension Benefits |  |  | Other Benefits |
2022 |  | $ | 7,185 |  |  | $ | 397 |
2023 |  |  | 6,831 |  |  |  | 394 |
2024 |  |  | 7,111 |  |  |  | 390 |
2025 |  |  | 7,460 |  |  |  | 385 |
2026 |  |  | 6,951 |  |  |  | 380 |
2027 - 2031 |  |  | 32,437 |  |  |  | 1,690 |
The Company made no voluntary contributions to the pension and other benefit plans during the year ended December 31, 2021 and 2020. For measurement purposes, the annual rates of increase in the per capita cost of covered medical and prescription drug benefits for fiscal year 2021 were assumed to be 4.5% to 7.0%. The rates were assumed to decrease gradually to 3.8% for fiscal year 2075 and remain at that level thereafter. Assumed health care cost trend rates have a significant effect on amounts reported for health care plans. Plan Investment Policy The Company’s key investment objectives in managing its defined benefit plan assets are to ensure that present and future benefit obligations to all participants and beneficiaries are met as they become due; to provide a total return that, over the long-term, maximizes the ratio of the plan assets to liabilities, while minimizing the present value of required Company contributions, at the appropriate levels of risk; to meet statutory requirements and regulatory agencies’ requirements; and to satisfy applicable accounting standards. The Company periodically evaluates the asset allocations, funded status, rate of return assumption and contribution strategy for satisfaction of our investment objectives. The target and actual allocations expressed as a percentage of the defined benefit pension plan’s assets are as follows:
| Target 2021 | 2021 | 2020
Cash and cash equivalents | 0 - 15% | 2% | 3%
Fixed income securities | 30 - 60% | 37% | 38%
Equities | 40 - 70% | 61% | 59%
Total |  | 100% | 100%
Only high-quality bonds are to be included in the portfolio. All issues that are rated lower than A by Standard and Poor’s are to be excluded. Equity securities at December 31, 2021 and 2020 do not include any Company common stock. The following table presents the financial instruments recorded at fair value on a recurring basis by the Plan:
(In thousands) |  | Level 1 |  |  | Level 2 |  |  | December 31, 2021 |
Cash and cash equivalents |  | $ | 3,298 |  |  | $ | - |  |  | $ | 3,298 |
Foreign equity mutual funds |  |  | 46,385 |  |  |  | - |  |  |  | 46,385 |
Equity mutual funds |  |  | 36,034 |  |  |  | - |  |  |  | 36,034 |
U.S. government bonds |  |  | - |  |  |  | 33 |  |  |  | 33 |
Corporate bonds |  |  | - |  |  |  | 50,117 |  |  |  | 50,117 |
Total |  | $ | 85,717 |  |  | $ | 50,150 |  |  | $ | 135,867 |
|  | Level 1 |  |  | Level 2 |  |  | December 31, 2020 |
Cash and cash equivalents |  | $ | 3,461 |  |  | $ | - |  |  | $ | 3,461 |
Foreign equity mutual funds |  |  | 41,000 |  |  |  | - |  |  |  | 41,000 |
Equity mutual funds |  |  | 35,637 |  |  |  | - |  |  |  | 35,637 |
U.S. government bonds |  |  | - |  |  |  | 47 |  |  |  | 47 |
Corporate bonds |  |  | - |  |  |  | 48,418 |  |  |  | 48,418 |
Total |  | $ | 80,098 |  |  | $ | 48,465 |  |  | $ | 128,563 |
The plan had no financial instruments recorded at fair value on a non-recurring basis as of December 31, 2021 and 2020. Determination of Assumed Rate of Return The expected long-term rate-of-return on assets was 6.7% and 7.0% at December 31, 2021 and 2020, respectively. This assumption represents the rate of return on plan assets reflecting the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation. The assumption has been determined by reflecting expectations regarding future rates of return for the portfolio considering the asset distribution and related historical rates of return. The appropriateness of the assumption is reviewed annually. Employee 401(k) and Employee Stock Ownership Plans The Company maintains a 401(k) and employee stock ownership plan (the “401(k) Plan”). The Company contributes to the 401(k) Plan based on employees’ contributions out of their annual salaries. In addition, the Company may also make discretionary contributions to the 401(k) Plan based on profitability. Participation in the 401(k) Plan is contingent upon certain age and service requirements. The employer contributions associated with the 401(k) Plan were $3.9 million in 2021, $3.6 million in 2020 and $3.6 million in 2019. Other Retirement Benefits Included in other liabilities is $1.3 million and $1.6 million at December 31, 2021 and 2020, respectively, for supplemental retirement benefits for retired executives from legacy plans assumed in acquisitions. The Company recognized $0.2 million, $0.2 million and $0.1 million in expense for each of the years ended December 31, 2021, 2020 and 2019 respectively, related to these plans.

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