NOTE 18 - EMPLOYEE BENEFIT PLANS

Retirement Plan

Old National had a funded noncontributory defined benefit plan (the “Retirement Plan”) that had been frozen since December 31, 2005. During the first quarter of 2016, the Company notified plan participants of its intent to terminate the Retirement Plan effective May 15, 2016. During October 2016, the Retirement Plan settled plan liabilities through either lump sum distributions to plan participants or annuity contracts purchased from a third-party insurance company that provided for the payment of vested benefits to those participants that did not elect the lump sum option. As of December 31, 2016, there were no remaining plan assets. Old National made contributions totaling $7.6 million, $0.1 million, and $0.3 million to the Retirement Plan during 2016, 2015, and 2014, respectively.

As a result of the pension termination, unrecognized losses, which previously were recorded in accumulated other comprehensive loss on the consolidated balance sheets, were recognized as expense and the pension plan settlement loss of $9.8 million was recorded in the consolidated statements of income for the year ended December 31, 2016. Including this settlement charge, the total expense under the Retirement Plan was $11.6 million in 2016.

Restoration Plan

Old National maintains an unfunded pension restoration plan (the “Restoration Plan”) which provides benefits for eligible employees that are in excess of the limits under Section 415 of the Internal Revenue Code of 1986, as amended, that apply to the Retirement Plan. The Restoration Plan is designed to comply with the requirements of ERISA. The entire cost of the plan, which was also frozen as of December 31, 2005, is supported by contributions from the Company. The Restoration Plan is unfunded.

Old National uses a December 31 measurement date. The following table presents the activity of the Restoration Plan for the years ended December 31, 2016 and 2015:


(dollars in thousands)	2016			2015
Change in Projected Benefit Obligation
Balance at January 1,	$	1,239		$	1,346
Interest cost		52			45
Benefits paid		(39	)		(65	)
Actuarial loss (gain)		103			(87	)
Settlement		(219	)		—

Projected benefit obligation at December 31,	$	1,136		$	1,239

Change in Plan Assets
Fair value at January 1,		—			—
Employer contributions		257			65
Benefits paid		(39	)		(65	)
Settlement		(218	)		—

Fair value of plan assets at December 31,		—			—

Funded status at December 31,	$	(1,136	)	$	(1,239	)

Amounts recognized in the statement of financial position at December 31:
Accrued benefit liability	$	(1,136	)	$	(1,239	)

Net amount recognized	$	(1,136	)	$	(1,239	)

Amounts recognized in accumulated other comprehensive income at December 31:
Net actuarial loss	$	538		$	646

Total	$	538		$	646

The estimated net loss for the Restoration Plan that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year is $0.1 million.

The accumulated benefit obligation and the projected benefit obligation were equivalent for the Restoration Plan and were $1.1 million at December 31, 2016 and $1.2 million at December 31, 2015.

The net periodic benefit cost and its components were as follows for the years ended December 31:


(dollars in thousands)	2016			2015			2014
Net Periodic Benefit Cost
Interest cost	$	52		$	45		$	52
Recognized actuarial loss		108			122			102

Net periodic benefit cost	$	160		$	167		$	154
Settlement loss		103			—			—

Total net periodic benefit cost	$	263		$	167		$	154

Other Changes in Benefit Obligations
Recognized in Other Comprehensive Income
Net actuarial (gain)/loss	$	103		$	(87	)	$	145
Amortization of net actuarial loss		(108	)		(122	)		(102	)
Settlement loss		(103	)		—			—

Total recognized in other comprehensive income	$	(108	)	$	(209	)	$	43

Total recognized in net periodic benefit cost and other comprehensive income	$	155		$	(42	)	$	197

The weighted-average assumptions used to determine the benefit obligation as of the end of the years indicated and the net periodic benefit cost for the years indicated are presented in the table below. Because the plan is frozen, increases in compensation are not considered.


	2016			2015			2014
Benefit obligations:
Discount rate at the end of the period		4.00	%		4.50	%		4.00	%
Net periodic benefit cost:
Discount rate at the beginning of the period		4.50	%		4.00	%		4.75	%
Rate of compensation increase		N/A			N/A			N/A

N/A = not applicable

The discount rate used reflects the expected future cash flow based on Old National’s funding valuation assumptions and participant data as of the beginning of the plan year. The expected future cash flow is discounted by the Principal Pension Discount yield curve as of December 31, 2016.

As of December 31, 2015, expected future benefit payments related to Old National’s Restoration Plan were as follows:


(dollars in thousands)
2017	$	210
2018		18
2019		230
2020		21
2021		52
Years 2022 - 2026		610

Old National expects to contribute cash of $0.2 million to the Restoration Plan in 2017.

Employee Stock Ownership Plan

The Employee Stock Ownership and Savings Plan (401k) (the “401(k) Plan”) permits employees to participate the first month following one month of service. Effective as of April 1, 2010, we suspended safe harbor matching contributions to the 401(k) Plan. However, we may make discretionary matching contributions to the 401(k) Plan. For 2016, 2015, and 2014, we matched 50% of employee compensation deferral contributions, up to 6% of compensation. In addition to matching contributions, Old National may contribute to the 401(k) Plan an amount designated as a profit sharing contribution in the form of Old National stock or cash. Our Board of Directors designated no discretionary profit sharing contributions in 2016, 2015, or 2014. All contributions vest immediately and plan participants may elect to redirect funds among any of the investment options provided under the 401(k) plan. The number of Old National shares in the 401(k) plan were 0.8 million at December 31, 2016 and 1.0 million at December 31, 2015. All shares owned through the 401(k) plan are included in the calculation of weighted-average shares outstanding for purposes of calculating diluted and basic earnings per share. Contribution expense under the 401(k) plan was $5.0 million in 2016, $4.6 million in 2015, and $4.3 million in 2014.