Note 15. Retirement Benefit Plans

The Company offers a qualified defined benefit pension plan covering all eligible associates. Eligibility is based on minimum age and service-related requirements. The Company makes contributions to this pension plan in amounts sufficient to meet funding requirements set forth in federal employee benefit and tax laws, plus such additional amounts as the Company may determine to be appropriate. The Company does not anticipate making a contribution to the pension plan during 2017.

Certain associates who were designated executive officers of Whitney Holding Company and/or Whitney National Bank before the acquisition by the Company are also covered by an unfunded nonqualified defined benefit pension plan. The benefits under this nonqualified plan were designed to supplement amounts to be paid under the defined benefit plan previously maintained for employees of Whitney Holding Company and/or Whitney National Bank (the “Whitney Pension Plan”), and are calculated using the Whitney Pension Plan’s formula, but without applying the restrictions imposed on qualified plans by certain provisions of the Internal Revenue Code. Accrued benefits under this plan were frozen as of December 31, 2012 in connection with the merger of the Whitney Pension Plan into the Company’s qualified defined benefit pension plan, and no future benefits will be accrued under this plan.

The Company also offers a defined contribution retirement benefit plan (401(k) plan) that covers substantially all associates who have been employed 60 days and meet a minimum age requirement and employment classification criteria. The Company matches 100% of the first 1% of compensation saved by a participant, and 50% of the next 5% of compensation saved. Newly eligible associates are automatically enrolled at an initial 3% savings rate unless the associate actively opts out of participation in the plan.

The expense of the Company’s matching contributions to the 401(k) plan was $7.7 million in 2016, $7.4 million in 2015, and $7.1 million in 2014.

The Company also sponsors defined benefit postretirement plans for certain associates. The Hancock postretirement plans are available only to associates hired by the Company prior to January 1, 2000. The Hancock plans provide health care and life insurance benefits to retiring associates who participate in medical and/or group life insurance benefit plans for active associates and have reached 55 years of age with ten years of service, at the time of retirement. The postretirement health care plan is contributory, with retiree contributions adjusted annually and subject to certain employer contribution maximums.

The Whitney postretirement plans are available only to former employees of Whitney Holding Company and/or Whitney National Bank who meet the eligibility requirements, and offer health care and life insurance benefits for eligible retirees and their eligible dependents. Participant contributions are required under the health plan. These plans restrict eligibility for postretirement health benefits to retirees already receiving benefits as of the plan amendments in 2007 and to those active participants who were eligible to receive benefits as of December 31, 2007 (i.e., were age 55 with ten years of credited service). Life insurance benefits are currently only available to associates who retired before December 31, 2007.

The Company assumed certain trends in health care costs in the determination of the benefit obligations. At December 31, 2016, the plans assumed a 7.0% increase in the pre- and post-Medicare age health costs for 2017, declining over a period of four years to a 5.0% annual rate. At December 31, 2016, the mortality assumption was based on the Revised RP-2014 Employee Health Annuitants Bottom Quartile Table for Males and Females, with projected improvement MP-2016. At December 31, 2015, the mortality assumption was based on the Adjusted RP -2014 Bottom Quartile Table, with improvement using Scale MP-2015 Fully Generational Projection. In 2016, the post-retirement benefit plan was amended to change post-65 coverage resulting in a re-measurement of the benefit obligation.

The following tables detail the changes in the benefit obligations and plan assets of the defined benefit for the years ended December 31, 2016 and 2015 as well as the funded status of the plans at each year end and the amounts recognized in the Company’s balance sheets. The Company uses a December 31 measurement date for all defined benefit pension plans and other postretirement benefit plans.



	2016		2015		2016		2015
(in thousands)	Pension Benefits				Other Post- retirement Benefits
Change in benefit obligation
Benefit obligation:
at beginning of year	$	462,819	$	456,911	$	22,281	$	28,368
Service cost		14,098		13,511		170		117
Interest cost		16,907		18,635		773		891
Plan participants' contributions		—		—		1,269		1,334
Plan amendments		—		—		(1,224)		—
Net actuarial (gain) loss		16,944		(8,154)		1,844		(5,905)
Benefits paid		(31,487)		(18,084)		(2,632)		(2,524)
Benefit obligation, end of year		479,281		462,819		22,481		22,281
Change in plan assets
Fair value of plan assets:
at beginning of year		491,550		438,708		—		—
Actual return on plan assets		40,375		(14,421)		—		—
Employer contributions		16,123		86,123		1,363		1,190
Plan participants' contributions		—		—		1,269		1,334
Benefit payments		(31,487)		(18,084)		(2,632)		(2,524)
Expenses		(1,006)		(776)		—		—
Fair value of plan assets, end of year		515,555		491,550		—		—
Funded status at end of year - net asset (liability)	$	36,274	$	28,731	$	(22,481)	$	(22,281)
Amounts recognized in accumulated other comprehensive loss
Unrecognized loss:
at beginning of year	$	109,565	$	72,858	$	(2,553)	$	3,358
Net actuarial loss (gain)		6,345		36,707		475		(5,911)
Unrecognized loss at end of year	$	115,910	$	109,565	$	(2,078)	$	(2,553)

Projected benefit obligation	$	479,281	$	462,819
Accumulated benefit obligation		443,261		429,338
Fair value of plan assets		515,555		491,550

The net funded status of $36.3 million for pension benefits plans includes an excess of plan assets over the benefit obligation of $51.9 million on the defined benefit pension plan, offset by an unfunded benefit obligation of $15.6 million for the nonqualified retirement plan.

The following table shows net periodic benefit cost included in expense and the changes in the amounts recognized in AOCI during 2016, 2015, and 2014.



	Years Ended December 31,
	2016		2015		2014		2016		2015		2014
($ in thousands)	Pension benefits						Other post-retirement benefits
Net periodic benefit cost
Service cost	$	14,098	$	13,511	$	12,920	$	170	$	117	$	126
Interest cost		16,907		18,635		19,251		773		891		1,140
Expected return on plan assets		(34,554)		(32,833)		(32,222)		—		—		—
Amortization of net loss/ prior service cost		5,783		3,169		26		145		6		364
Net periodic benefit cost		2,234		2,482		(25)		1,088		1,014		1,630
Other changes in plan assets and benefit obligations recognized in other comprehensive income, before taxes
Net (loss) gain recognized during the year		(5,783)		(3,169)		(26)		(145)		(6)		(364)
Net actuarial loss (gain)		12,128		39,876		44,599		620		(5,905)		(3,467)
Total recognized in other comprehensive income		6,345		36,707		44,573		475		(5,911)		(3,831)
Total recognized in net periodic benefit cost and other comprehensive income	$	8,579	$	39,189	$	44,548	$	1,563	$	(4,897)	$	(2,201)

Discount rate for benefit obligations		4.10%		4.40%		4.11%		3.95%		4.32%		4.02%
Discount rate for net periodic benefit cost		4.40%		4.11%		4.73%		4.32%		4.02%		4.58%
Expected long-term return on plan assets		7.25%		7.50%		7.50%		n/a		n/a		n/a
Rate of compensation increase		scaled *		scaled *		scaled *		n/a		n/a		n/a

* Graded scale, declining from 7.00% at age 20 to 2.00% at age 60

The long term rate of return on plan assets is determined by using the weighted-average of historical real returns for major asset classes based on target asset allocations. The discount rate for the benefit obligation was calculated by matching expected future cash flows to the Wells Fargo Pension Discount Curve Liability Index.

The following shows expected plan benefit payments over the next ten years:



(in thousands)	Pension		Post-retirement		Total
2017	$	19,978	$	1,421	$	21,399
2018		21,016		1,464		22,480
2019		21,887		1,469		23,356
2020		22,907		1,439		24,346
2021		23,818		1,492		25,310
2022-2026		134,294		6,775		141,069
	$	243,900	$	14,060	$	257,960

The expected benefit payments are estimated based on the same assumptions used to measure the Company’s benefit obligations at December 31, 2016.

The estimated amounts of actuarial loss that will be amortized from accumulated other comprehensive loss into net periodic benefit cost over the next year is $5.5 million.

The following table illustrates the effect on the annual periodic postretirement benefit costs and postretirement benefit obligation of a 1% increase or 1% decrease in the assumed health care cost trend rates from the rates assumed at December 31, 2016:



	1% Decrease		Assumed		1% Increase
(in thousands)	in Rates		Rates		in Rates
Aggregated service and interest cost	$	866	$	943	$	1,036
Postretirement benefit obligation		20,821		22,481		24,483

The fair values of pension plan assets at December 31, 2016 and 2015, by asset category, are shown in the following tables. The fair value is presented based on the Financial Accounting Standards Board’s fair value hierarchy that prioritizes inputs into the valuation techniques used to measure fair value. Level 1 uses quoted prices in active markets for identical assets, Level 2 uses significant observable inputs, and Level 3 uses significant unobservable inputs. No plan assets are classified as level 3. In accordance with Subtopic 820-10 common trust funds are reported at fair value using net asset value per share (or its equivalent) as a practical expedient and are not classified in the fair value hierarchy.

For all investments, the plan attempts to use quoted market prices of identical assets on active exchanges, or Level 1 measurements. Where such quoted market prices are not available, the plan will use quoted prices for similar instruments or discounted cash flows to estimate the value, reported as Level 2. Fair Value Measurements for 2015 have been restated to conform to current presentation.



	December 31, 2016
Fair Value Measurements by Asset Category / Fund		(Level 1)		(Level 2)	Total
(in thousands)
Cash and equivalents	$	15,568	$	—	$	15,568
Total cash and cash equivalents		15,568		—		15,568

Fixed income securities		—		136,085		136,085
Mutual fund-fixed income		48,805		—		48,805
Total fixed income		48,805		136,085		184,890

Domestic and foreign stock		104,455		6		104,461
Mutual funds-equity		157,630		—		157,630
Total equity		262,085		6		262,091

Real assets fund		27,690		—		27,690
Total assets at fair value		354,148		136,091		490,239
Common trust fund (fixed income)		—		—		25,316
Total	$	354,148	$	136,091	$	515,555



	December 31, 2015
Fair Value Measurements by Asset Category / Fund		(Level 1)		(Level 2)		Total
(in thousands)
Cash and equivalents	$	44,224	$	—	$	44,224
Total cash and cash equivalents		44,224		—		44,224

Fixed income securities		—		105,721		105,721
Mutual fund-fixed income		47,453		—		47,453
Total fixed income		47,453		105,721		153,174

Domestic and foreign stock		97,895		10		97,905
Mutual funds-equity		147,051		—		147,051
Total equity		244,946		10		244,956

Real assets fund		24,653		—		24,653
Total assets at fair value		361,276		105,731		467,007
Common trust fund (fixed income)		—		—		24,543
Total	$	361,276	$	105,731	$	491,550

The following table presents the percentage allocation of the plan assets by asset category and corresponding target allocations at December 31, 2016 and 2015.


	Plan Assets				Target Allocation
	at December 31,				at December 31,
Asset category	2016		2015		2016	2015
Cash and equivalents	3	%	9	%	0 - 5%	0 - 5%
Fixed income securities	41		36		25 - 65%	25 - 65%
Equity securities	51		50		30 - 60%	30 - 60%
Real assets	5		5		0 - 10%	0 - 10%
	100	%	100	%

Plan assets are invested in long-term strategies and evaluated within the context of a long-term investment horizon. Plan assets will be diversified across multiple asset classes so as to minimize the risk of large losses. Short-term fluctuations in value will be considered secondary to long-term results. The Company employs a total return approach whereby a diversified mix of asset class investments are used to maximize the long-term return of plan assets for an acceptable level of risk. Risk tolerance is established through careful consideration of the plan liabilities, plan funded status and the Company’s financial condition. The investment performance of the plan is regularly monitored to ensure that appropriate risk levels are being taken and to evaluate returns versus a suitable market benchmark. The benefits investment committee meets periodically to review the policy, strategy, and performance of the plans.