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 2016.

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 $7.4 million in 2015, $7.1 million in 2014, and $7.0 million in 2013.

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, 2015, the plans assumed a 7.5% increase in the pre- and post-Medicare age health costs for 2016, declining over a period of five years to a 5.0% annual rate. 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 2014, the mortality assumption was based on the RP RP-2014 Bottom Quartile Table, with improvement using Scale MP-2014 projected 7 years beyond the valuation date.

The following tables detail the changes in the benefit obligations and plan assets of the defined benefit for the years ended December 31, 2015 and 2014 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.


	2015			2014			2015			2014
(in thousands)	Pension Benefits						Other Post- retirement Benefits
Change in benefit obligation
Benefit obligation:
at beginning of year	$	456,911		$	412,608		$	28,368		$	31,592
Service cost		13,511			12,920			117			126
Interest cost		18,635			19,251			891			1,140
Net actuarial (gain) loss		(8,154	)		29,738			(5,905	)		(3,467	)
Plan participants’ contributions		—			—			1,334			1,300
Benefits paid		(18,084	)		(17,606	)		(2,524	)		(2,323	)

Benefit obligation, end of year		462,819			456,911			22,281			28,368

Change in plan assets
Fair value of plan assets:
at beginning of year		438,708			437,829			—			—
Actual return on plan assets		(14,421	)		17,826			—			—
Employer contributions		86,123			1,123			1,190			1,023
Plan participants’ contributions		—			—			1,334			1,300
Benefit payments		(18,084	)		(17,606	)		(2,524	)		(2,323	)
Expenses		(776	)		(464	)		—			—

Fair value of plan assets, end of year		491,550			438,708			—			—

Funded status at end of year—net asset (liability)	$	28,731		$	(18,203	)	$	(22,281	)	$	(28,368	)

Amounts recognized in accumulated other comprehensive loss
Unrecognized loss:
at beginning of year	$	72,858		$	28,285		$	3,358		$	7,189
Net actuarial loss (gain)		36,707			44,573			(5,911	)		(3,831	)

Unrecognized loss at end of year	$	109,565		$	72,858		$	(2,553	)	$	3,358


Projected benefit obligation	$	462,819		$	456,911
Accumulated benefit obligation		429,338			426,073
Fair value of plan assets		491,550			438,708

The net funded status of $28.7 million for pension benefits plans includes an excess of plan assets over the benefit obligation of $44.0 million on the defined benefit pension plan, offset by an unfunded benefit obligation of $15.3 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 2015, 2014, and 2013.


	Years Ended December 31,
	2015			2014			2013			2015			2014			2013
($ in thousands)	Pension benefits									Other post-retirement benefits
Net periodic benefit cost
Service cost	$	13,511		$	12,920		$	16,118		$	117		$	126		$	215
Interest cost		18,635			19,251			16,678			891			1,140			1,317
Expected return on plan assets		(32,833	)		(32,222	)		(27,928	)		—			—			—
Amortization of net loss/ prior service cost		3,169			26			6,570			6			364			1,761

Net periodic benefit cost		2,482			(25	)		11,438			1,014			1,630			3,293

Other changes in plan assets and benefit obligations recognized in other comprehensive income, before taxes
Net (loss) gain recognized during the year		(3,169	)		(26	)		(6,570	)		(6	)		(364	)		(1,761	)
Net actuarial loss (gain)		39,876			44,599			(76,939	)		(5,905	)		(3,467	)		(5,563	)

Total recognized in other comprehensive income		36,707			44,573			(83,509	)		(5,911	)		(3,831	)		(7,324	)

Total recognized in net periodic benefit cost and other comprehensive income	$	39,189		$	44,548		$	(72,071	)	$	(4,897	)	$	(2,201	)	$	(4,031	)

Discount rate for benefit obligations		4.40	%		4.11	%		4.73	%		4.32	%		4.02	%		4.58	%
Discount rate for net periodic benefit cost		4.11	%		4.73	%		3.82	%		4.02	%		4.58	%		3.69	%
Expected long-term return on plan assets		7.50	%		7.50	%		7.50	%		n/a			n/a			n/a
Rate of compensation increase		scaled	*		scaled	*		4.00	%		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. At December 31, 2015, 2014, and 2013 the discount rate 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
2016	$	18,997	$	1,318	$	20,315
2017		19,992		1,289		21,281
2018		20,942		1,276		22,218
2019		21,750		1,290		23,040
2020		22,764		1,251		24,015
2021-2025		129,722		6,245		135,967

	$	234,167	$	12,669	$	246,836

The expected benefit payments are estimated based on the same assumptions used to measure the Company’s benefit obligations at December 31, 2015.

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, 2015:


(in thousands)	1% Decrease in Rates		Assumed Rates		1% Increase in Rates
Aggregated service and interest cost	$	886	$	1,008	$	1,159
Postretirement benefit obligation		19,820		22,281		25,287

The fair values of pension plan assets at December 31, 2015 and 2014, by asset category, are shown in the following tables. The fair value is presented based on a the Financial Accounting Standards Board’s fair value hierarchy that prioritizes inputs into the valuation techniques used to measure fair value, with Level 1 using quoted prices in active markets for identical assets, Level 2 using significant observable inputs, and Level 3 using significant unobservable inputs.


Fair Value Measurements by Asset Category / Fund	Total		(Level 1)		(Level 2)		(Level 3)
(in thousands)
Fair Value Measurements at December 31, 2015
Cash and cash-equivalents:
Cash and equivalents	$	44,224	$	44,224	$	—	$	—

Total cash and cash-equivalents		44,224		44,224		—		—

Fixed income:
US government and agency securities		11,192		—		11,192		—
Municipal securities		31,190		—		31,190		—
Emerging market debt fund		24,482		—		—		24,482
Foreign bonds, notes and debentures		1,743		—		1,743		—
Hancock Horizon Core Bond Fund		47,453		—		47,453		—
Corporate debt		61,481		—		61,481		—
Other fixed income		186		—		125		61

Total fixed income		177,727		—		153,184		24,543

Real assets:
Real assets fund		24,653		24,653		—		—

Total real assets		24,653		24,653		—		—

Equity:
Hancock Horizon Quantitative Long/Short Fund		5,620		5,620		—		—
Hancock Horizon Diversified International Fund		73,478		73,478		—		—
Hancock Horizon Burkenroad Small Cap Fund		9,129		9,129		—		—
Hancock Horizon Growth Fund		29,447		29,447		—		—
Hancock Horizon Value Fund		29,378		29,378		—		—
Equity securities		97,894		97,894		—		—

Total equity		244,946		244,946		—		—

Total	$	491,550	$	313,823	$	153,184	$	24,543


Fair Value Measurements by Asset Category / Fund	Total		(Level 1)		(Level 2)		(Level 3)
(in thousands)
Fair Value Measurements at December 31, 2014
Cash and cash-equivalents:
Cash and equivalents	$	10,243	$	10,243	$	—	$	—

Total cash and cash-equivalents		10,243		10,243		—		—

Fixed income:
US government and agency securities		15,518		1,082		14,436		—
Municipal securities		33,980		—		33,980		—
Emerging market debt fund		19,505		—		—		19,505
Foreign bonds, notes and debentures		2,588		—		2,588		—
Hancock Horizon Core Bond Fund		51,529		—		51,529		—
Corporate debt		62,429		—		62,429		—

Total fixed income		185,549		1,082		164,962		19,505

Real assets:
Real assets fund		24,151		24,151		—		—

Total real assets		24,151		24,151		—		—

Equity:
Hancock Horizon Quantitative Long/Short Fund		5,603		5,603		—		—
Hancock Horizon Diversified International Fund		62,750		62,750		—		—
Hancock Horizon Burkenroad Small Cap Fund		9,296		9,296		—		—
Hancock Horizon Growth Fund		26,469		26,469		—		—
Hancock Horizon Value Fund		30,321		30,321		—		—
Equity securities		84,325		84,325		—		—
Mineral Interests		1		—		—		1

Total equity		218,765		218,764		—		1

Total	$	438,708	$	254,240	$	164,962	$	19,506

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. Level 3 measurements for the plan are common trust funds that are valued based on pricing obtained from the funds’ investment companies. Changes in Level 3 valuation adjustments are not material.

The percentage allocations of the plan assets by asset category and corresponding target allocations at December 31, 2015 and 2014 follow:


	Plan Assets at December 31,						Target Allocation at December 31,
	2015			2014			2015			2014
Asset category
Equity securities		50	%		50	%		30 - 60	%		30 - 60	%
Fixed income securities		36			42			25 - 65	%		25 - 65	%
Real assets		5			6			0 - 10	%		0 - 10	%
Cash equivalents		9			2			0 - 5	%		0 - 5	%

		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.