XML 19 R27.htm IDEA: XBRL DOCUMENT
v3.19.3.a.u2

Employee Benefit Plans | 12 Months Ended
--- | ---
Dec. 31, 2019
Defined Benefit Pension Plans And Defined Benefit Postretirement Plans Disclosure [Abstract] |
Employee Benefit Plans |
(1 9.) | EMPLOYEE BENEFIT PLANS
Supplemental Executive Retirement Agreements The Company has non-qualified Supplemental Executive Retirement Agreements (“SERPs”) covering certain former executives. The unfunded liability related to the SERPs was $1.7 million at December 31, 2019 and 2018. SERP expense was $366 thousand, $215 thousand and $194 thousand for 2019, 2018 and 2017, respectively. Defined Contribution Plan Employees that meet specified eligibility conditions are eligible to participate in the Company sponsored 401(k) plan. Under the plan, participants may make contributions, in the form of salary deferrals, up to the maximum Internal Revenue Code limit. The Company is also permitted to make additional discretionary contributions, although no such additional discretionary contributions were made in 2019, 2018 or 2017.
(1 9.) | EMPLOYEE BENEFIT PLANS (Continued)
Defined Benefit Pension Plan The Company participates in The New York State Bankers Retirement System (the “Plan”), a defined benefit pension plan covering substantially all employees. For employees hired prior to December 31, 2006, who met participation requirements on or before January 1, 2008 (“Tier 1 Participant”), the benefits are generally based on years of service and the employee’s highest average compensation during five consecutive years of employment. Effective January 1, 2016, the Plan was amended to open the Plan to eligible employees who were hired on and after January 1, 2007 (“Tier 2 Participant”) and provide these eligible participants with a cash balance benefit formula. The following table provides a reconciliation of the Company’s changes in the Plan’s benefit obligations, fair value of assets and a statement of the funded status as of and for the year ended December 31 (in thousands):
|  | 2019 |  |  | 2018 |
Change in projected benefit obligation: |  |  |  |  |  |  |  |
Projected benefit obligation at beginning of period |  | $ | 69,574 |  |  | $ | 70,436 |
Service cost |  |  | 3,207 |  |  |  | 3,346 |
Interest cost |  |  | 2,777 |  |  |  | 2,387 |
Actuarial (gain) loss |  |  | 11,993 |  |  |  | (3,298 | )
Benefits paid and plan expenses |  |  | (3,223 | ) |  |  | (3,297 | )
Projected benefit obligation at end of period |  |  | 84,328 |  |  |  | 69,574 |
Change in plan assets: |  |  |  |  |  |  |  |
Fair value of plan assets at beginning of period |  |  | 75,188 |  |  |  | 83,348 |
Actual return on plan assets |  |  | 15,862 |  |  |  | (4,863 | )
Employer contributions |  |  | - |  |  |  | - |
Benefits paid and plan expenses |  |  | (3,223 | ) |  |  | (3,297 | )
Fair value of plan assets at end of period |  |  | 87,827 |  |  |  | 75,188 |
Funded status at end of period |  | $ | 3,499 |  |  | $ | 5,614 |
The accumulated benefit obligation was $76.8 million and $63.3 million at December 31, 2019 and 2018, respectively. The Company’s funding policy is to contribute, at a minimum, an actuarially determined amount that will satisfy the minimum funding requirements determined under the appropriate sections of Internal Revenue Code. The Company has no minimum required contribution for the 2020 fiscal year. Estimated benefit payments under the Plan over the next ten years at December 31, 2019 are as follows (in thousands):
2020 |  | $ | 3,872 |
2021 |  |  | 3,475 |
2022 |  |  | 3,855 |
2023 |  |  | 4,127 |
2024 |  |  | 4,215 |
2025 - 2029 |  |  | 23,491 |
(1 9.) | EMPLOYEE BENEFIT PLANS (Continued)
Net periodic pension cost consists of the following components for the years ended December 31 (in thousands):
|  | 2019 |  |  | 2018 |  |  | 2017 |
Service cost |  | $ | 3,207 |  |  | $ | 3,346 |  |  | $ | 3,140 |
Interest cost on projected benefit obligation |  |  | 2,777 |  |  |  | 2,387 |  |  |  | 2,449 |
Expected return on plan assets |  |  | (4,736 | ) |  |  | (5,284 | ) |  |  | (4,775 | )
Amortization of unrecognized loss |  |  | 1,445 |  |  |  | 725 |  |  |  | 1,142 |
Amortization of unrecognized prior service (credit) cost |  |  | - |  |  |  | (5 | ) |  |  | 17 |
Net periodic pension cost |  | $ | 2,693 |  |  | $ | 1,169 |  |  | $ | 1,973 |
The actuarial assumptions used to determine the net periodic pension cost were as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Weighted average discount rate |  |  | 4.13 | % |  |  | 3.49 | % |  |  | 4.00 | %
Rate of compensation increase |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | %
Expected long-term rate of return |  |  | 6.50 | % |  |  | 6.50 | % |  |  | 6.50 | %
The actuarial assumptions used to determine the projected benefit obligation were as follows:
|  | 2019 |  |  | 2018 |  |  | 2017 |
Weighted average discount rate |  |  | 3.09 | % |  |  | 4.13 | % |  |  | 3.49 | %
Rate of compensation increase |  |  | 3.00 | % |  |  | 3.00 | % |  |  | 3.00 | %
The weighted average discount rate was based upon the projected benefit cash flows and the market yields of high grade corporate bonds that are available to pay such cash flows. The Plan’s overall investment strategy is to invest in a diversified portfolio while managing the variability between the assets and projected liabilities of underfunded pension plans. The Plan’s Board Members approved a migration (the “Migration”) of substantially all of the Plan’s assets to one fund, Commingled Pensions Trust Fund (LDI Diversified Balanced) of JPMorgan Chase Bank, N.A. (“JPMCB LDI Diversified Balanced Fund” or the “Fund”). The Board made the election in their December 2018 meeting and the Migration had an effective trade date of February 28, 2019. The Fund employs a liability driven investing (“LDI”) strategy for pension plans that are seeking a solution that is balanced between growth and hedging. The Bloomberg Barclays Long A U.S. Corporate Index, the Fund’s primary liability-performance benchmark, is used as a proxy for plan projected liabilities. The growth-oriented portion of the Fund invests in a mix of asset classes that the Fund’s Trustee believes will collectively maximize total risk-adjusted return through a combination of capital appreciation and income. This portion of the Fund will comprise between 35% and 90% of the portfolio and will invest directly or indirectly via underlying funds in a broad mix of global equity, credit, global fixed income, real estate and cash-plus strategies. The remaining portion of the Fund, between 10% and 65% of the portfolio, provides exposure to U.S. long duration fixed income and is used to minimize volatility relative to a plan’s projected liabilities. This portion of the Fund will invest directly or indirectly via underlying funds in investment grade corporate bonds and securities issued by the U.S. Treasury and its agencies or instrumentalities. The following table represents the Plan’s target asset allocation and actual asset allocation, respectively, as of December 31, 2019:
|  | Target |  | Actual
|  | Allocation |  | Allocation
Asset category: |  |  |  |  |  |  |  |
Cash and cash equivalents |  |  | 0.00 | % |  |  | 0.00 | %
Equity securities |  |  | 28.25 |  |  |  | 31.75 |
Fixed income securities |  |  | 59.75 |  |  |  | 57.65 |
Alternative investments |  |  | 12.00 |  |  |  | 10.60 |
Prior to the Migration, the Plan’s overall investment strategy was to achieve a mix of approximately 97% of investments for long-term growth and 3% for near-term benefit payments with a wide diversification of asset types, fund strategies, and fund managers.
(1 9.) | EMPLOYEE BENEFIT PLANS (Continued)
The Plan had target asset allocations, based on asset categories, and actual asset allocations, respectively, as of December 31, 2018, as shown in the following table:
|  | Target |  | Actual
|  | Allocation |  | Allocation
Asset category: |  |  |  |  |  |  |  |
Cash equivalents |  |  | 0 – 20 | % |  |  | 4.2 | %
Equity securities |  |  | 40 – 60 |  |  |  | 46.1 |
Fixed income securities |  |  | 40 – 60 |  |  |  | 45.8 |
Other financial instruments |  |  | 0 – 5 |  |  |  | 3.9 |
Cash equivalents consist primarily of government issues (maturing in less than three months) and short term investment funds. Equity securities primarily include investments in common stock, depository receipts, preferred stock, commingled pension trust funds, exchange traded funds and real estate investment trusts. Fixed income securities include corporate bonds, government issues, credit card receivables, mortgage backed securities, municipals, commingled pension trust funds and other asset backed securities. Other investments are real estate interests and related investments held within a commingled pension trust fund. The weighted average expected long-term rate of return is estimated based on current trends in the Plan’s assets as well as projected future rates of return on those assets. Prior to the Migration, the Plan also leveraged reasonable actuarial assumptions based on the guidance provided by Actuarial Standard of Practice No. 27, “Selection of Economic Assumptions for Measuring Pension Obligations” for long term inflation, and the real and nominal rate of investment return for a specific mix of asset classes. The following assumptions were used in determining the long-term rate of return:
Equity securities |  | Dividend discount model, the smoothed earnings yield model and the equity risk premium model
Fixed income securities |  | Current yield-to-maturity and forecasts of future yields
Other financial instruments |  | Comparison of the specific investment’s risk to that of fixed income and equity instruments and using other judgments
The long term rate of return considers historical returns. Adjustments were made to historical returns in order to reflect expectations of future returns. These adjustments were due to factor forecasts by economists and long-term U.S. Treasury yields to forecast long-term inflation. In addition, forecasts by economists and others for long-term GDP growth were factored into the development of assumptions for earnings growth and per capita income.
(1 9.) | EMPLOYEE BENEFIT PLANS (Continued)
Prior to the Migration, the Plan prohibited its investment managers from purchasing any security greater than 5% of the portfolio at the time of purchase or greater than 8% at market value in any one issuer. The issuers of any security purchased must be located in a country in the Morgan Stanley Capital International World Index. In addition, the following are prohibited:
Equity securities |  | Short sales Unregistered stocks Margin purchases
Fixed income securities |  | Mortgage backed derivatives that have an inverse floating rate coupon or that are interest only securities Any asset backed security that is not issued by the U.S. Government or its agencies or its instrumentalities Generally, securities of less than Baa2/BBB quality may not be purchased Securities of less than A-quality may not in the aggregate exceed 13% of the investment manager’s portfolio An investment manager’s portfolio of commercial mortgage backed securities and asset backed securities shall not exceed 10% of the portfolio at the time of purchase
Other financial instruments |  | Unhedged currency exposure in countries not defined as “high income economies” by the World Bank
Assets are segregated by the level of the valuation inputs within the fair value hierarchy established by ASC Topic 820 utilized to measure fair value (see Note 20 - Fair Value Measurements). In instances in which the inputs used to measure fair value fall into different levels of the fair value hierarchy, the fair value measurement has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. Investments valued using the NAV (Net Asset Value) are classified as Level 2 if the Plan can redeem its investment with the investee at the NAV at the measurement date. If the Plan can never redeem the investment with the investee at the NAV, it is considered a Level 3. If the Plan can redeem the investment at the NAV at a future date, the Plan’s assessment of the significance of a particular item to the fair value measurement in its entirety requires judgment, including the consideration of inputs specific to the asset. With the exception of the commingled pension trust funds (“CPTF”), the Plan uses the Thomson Reuters Pricing Service to determine the fair value of equities securities and the pricing service of IDC Corporate USA to determine the fair value of fixed income securities. The JP Morgan Chase Bank, N.A. (“JPMorgan”) CPTFs are valued utilizing the funds’ valuation policies set forth by JPMorgan’s asset management committee. Investments within CPTFs for which market quotations are readily available are valued at their market value. Investments within CPTFs for which market quotations are not readily available are fair valued by approved affiliated and/or unaffiliated pricing vendors, third-party broker-dealers or methodologies as approved by the fund’s governing committee. These methodologies may include the use of related or comparable assets or liabilities, recent transactions, market multiples, book values and other relevant information for the investment. An income-based valuation approach may be used in which the anticipated future cash flow of the invest are discounted to calculate fair value. During the years ended December 31, 2019 and 2018, there were no transfers in or out of Levels 1, 2 or 3. In addition, there were no changes in valuation methodologies during the years ended December 31, 2019 and 2018.
(1 9.) | EMPLOYEE BENEFIT PLANS (Continued)
The following is a table of the pricing methodology and unobservable inputs for Level 3 investments at December 31, 2019 and 2018 used by JPMorgan in pricing CPTF:
|  |  |  | Principal Valuation Technique(s) Used |  |  |  | Unobservable Inputs
CPTF – Other: |  |  |  |  |  |  |  |
CPTF (Strategic Property) of JPMorgan |  |  |  | Market, Income Approach, Debt Service and Sales Comparison |  |  |  | Credit Spreads, Discount Rate, Loan to Value Ratio, Terminal Capitalization Rate and Value per Square Foot
The major categories of Plan assets measured at fair value on a recurring basis as of December 31 are presented in the following tables (in thousands).
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | Inputs |  |  | Inputs |  |  | Inputs |  |  | Fair Value |
2019 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash (including foreign currencies) |  | $ | 16 |  |  | $ | - |  |  | $ | - |  |  | $ | 16 |
Short term investment funds |  |  | - |  |  |  | 1,829 |  |  |  | - |  |  |  | 1,829 |
Total cash equivalents |  |  | 16 |  |  |  | 1,829 |  |  |  | - |  |  |  | 1,845 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Depository receipts |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commingled pension trust funds |  |  | - |  |  |  | 30,685 |  |  |  | - |  |  |  | 30,685 |
Preferred stock |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total equity securities |  |  | - |  |  |  | 30,685 |  |  |  | - |  |  |  | 30,685 |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collateralized mortgage obligations |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Commingled pension trust funds |  |  | - |  |  |  | 49,566 |  |  |  | - |  |  |  | 49,566 |
Corporate bonds |  |  | - |  |  |  | 5 |  |  |  | - |  |  |  | 5 |
GNMA |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Government securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total fixed income securities |  |  | - |  |  |  | 49,571 |  |  |  | - |  |  |  | 49,571 |
Other investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commingled pension trust funds - Realty |  |  | - |  |  |  | 5,726 |  |  |  | - |  |  |  | 5,726 |
Total Plan investments |  | $ | 16 |  |  | $ | 87,811 |  |  | $ | - |  |  | $ | 87,827 |
At December 31, 2019, the portfolio was substantially managed by one investment firm, with control of approximately 98% of the Plan’s assets with the remaining 2% under the direct control of the Plan. A portfolio concentration of 98% in the JPMCB LDI Diversified Balanced Fund, a CPTF, existed at December 31, 2019.
(1 9.) | EMPLOYEE BENEFIT PLANS (Continued)
|  | Level 1 |  |  | Level 2 |  |  | Level 3 |  |  | Total |
|  | Inputs |  |  | Inputs |  |  | Inputs |  |  | Fair Value |
2018 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash equivalents: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cash (including foreign currencies) |  | $ | 28 |  |  | $ | - |  |  | $ | - |  |  | $ | 28 |
Short term investment funds |  |  | - |  |  |  | 3,094 |  |  |  | - |  |  |  | 3,094 |
Total cash equivalents |  |  | 28 |  |  |  | 3,094 |  |  |  | - |  |  |  | 3,122 |
Equity securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Common stock |  |  | 11,931 |  |  |  | - |  |  |  | - |  |  |  | 11,931 |
Depository receipts |  |  | 203 |  |  |  | - |  |  |  | - |  |  |  | 203 |
Commingled pension trust funds |  |  | - |  |  |  | 22,468 |  |  |  | - |  |  |  | 22,468 |
Preferred stock |  |  | 95 |  |  |  | - |  |  |  | - |  |  |  | 95 |
Total equity securities |  |  | 12,229 |  |  |  | 22,468 |  |  |  | - |  |  |  | 34,697 |
Fixed income securities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Collateralized mortgage obligations |  |  | - |  |  |  | 750 |  |  |  | - |  |  |  | 750 |
Commingled pension trust funds |  |  | - |  |  |  | 20,051 |  |  |  | - |  |  |  | 20,051 |
Corporate bonds |  |  | - |  |  |  | 2,928 |  |  |  | - |  |  |  | 2,928 |
GNMA |  |  | - |  |  |  | 144 |  |  |  | - |  |  |  | 144 |
Government securities |  |  | - |  |  |  | 10,599 |  |  |  | - |  |  |  | 10,599 |
Mortgage backed securities |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Total fixed income securities |  |  | - |  |  |  | 34,472 |  |  |  | - |  |  |  | 34,472 |
Other investments: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commingled pension trust funds - Realty |  |  | - |  |  |  | - |  |  |  | 2,897 |  |  |  | 2,897 |
Total Plan investments |  | $ | 12,257 |  |  | $ | 60,034 |  |  | $ | 2,897 |  |  | $ | 75,188 |
At December 31, 2018, the portfolio was managed by two investment firms, with control of the portfolio split approximately 62% and 36% under the control of the investment managers with the remaining 2% under the direct control of the Plan. A portfolio concentration in three commingled pension trust funds of 15%, 6% and 6%, respectively, existed at December 31, 2018. The following table sets forth a summary of the changes in the Plan’s Level 3 assets for the years ended December 31, 2019 and 2018:
Level 3 assets, January 1, 2018 |  | $ | 2,641 |
Unrealized gain |  |  | 256 |
Level 3 assets, December 31, 2018 |  |  | 2,897 |
Realized gain |  |  | 881 |
Sales |  |  | (2,873 | )
Unrealized gain |  |  | (905 | )
Level 3 assets, December 31, 2019 |  | $ | - |
(1 9.) | EMPLOYEE BENEFIT PLANS (Continued)
Postretirement Benefit Plan An entity acquired by the Company provided health and dental care benefits to retired employees who met specified age and service requirements through a postretirement health and dental care plan in which both the acquired entity and the retirees shared the cost. The plan provided for substantially the same medical insurance coverage as for active employees until their death and was integrated with Medicare for those retirees aged 65 or older. In 2001, the plan’s eligibility requirements were amended to curtail eligible benefit payments to only retired employees and active employees who had already met the then-applicable age and service requirements under the Plan. In 2003, retirees under age 65 began contributing to health coverage at the same cost-sharing level as that of active employees. Retirees ages 65 or older were offered new Medicare supplemental plans as alternatives to the plan historically offered. The cost sharing of medical coverage was standardized throughout the group of retirees aged 65 or older. In addition, to be consistent with the administration of the Company’s dental plan for active employees, all retirees who continued dental coverage began paying the full monthly premium. The accrued liability included in other liabilities in the consolidated statements of financial condition related to this plan amounted to $110 thousand and $109 thousand as of December 31, 2019 and 2018, respectively. The postretirement expense for the plan that was included in salaries and employee benefits in the consolidated statements of income was not significant for the years ended December 31, 2019, 2018 and 2017. The plan is not funded. The components of accumulated other comprehensive loss related to the defined benefit plan and postretirement benefit plan as of December 31 are summarized below (in thousands):
|  | 2019 |  |  | 2018 |
Defined benefit plan: |  |  |  |  |  |  |  |
Net actuarial loss |  | $ | (19,894 | ) |  | $ | (20,472 | )
Prior service credit (cost) |  |  | - |  |  |  | - |
|  |  | (19,894 | ) |  |  | (20,472 | )
Postretirement benefit plan: |  |  |  |  |  |  |  |
Net actuarial loss |  |  | (133 | ) |  |  | (139 | )
Prior service credit |  |  | 37 |  |  |  | 102 |
|  |  | (96 | ) |  |  | (37 | )
Total |  |  | (19,990 | ) |  |  | (20,509 | )
Deferred tax benefit |  |  | 5,122 |  |  |  | 7,273 |
Amounts included in accumulated other comprehensive loss |  | $ | (14,868 | ) |  | $ | (13,236 | )
Changes in plan assets and benefit obligations recognized in other comprehensive income on a pre-tax basis during the years ended December 31 are as follows (in thousands):
|  | 2019 |  |  | 2018 |
Defined benefit plan: |  |  |  |  |  |  |  |
Net actuarial loss |  | $ | (867 | ) |  | $ | (6,849 | )
Amortization of net loss |  |  | 1,445 |  |  |  | 725 |
Amortization of prior service credit |  |  | - |  |  |  | (5 | )
|  |  | 578 |  |  |  | (6,129 | )
Postretirement benefit plan: |  |  |  |  |  |  |  |
Net actuarial (loss) gain |  |  | (12 | ) |  |  | 26 |
Amortization of net loss |  |  | 18 |  |  |  | 25 |
Amortization of prior service credit |  |  | (65 | ) |  |  | (67 | )
|  |  | (59 | ) |  |  | (16 | )
Total recognized in other comprehensive income |  | $ | 519 |  |  | $ | (6,145 | )
For the year ending December 31, 2020, the estimated net loss and prior service credit for the plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost is $1.3 million and $34 thousand, respectively.

X
- References No definition available. + Details
Name: | us-gaap_DefinedBenefitPensionPlansAndDefinedBenefitPostretirementPlansDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for pension and other postretirement benefits. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 715 -URI http://asc.fasb.org/topic&trid=2235017 + Details
Name: | us-gaap_PensionAndOtherPostretirementBenefitsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration