Retirement Plan

The Corporation has a noncontributory defined benefit retirement plan (the Retirement Account Plan (“RAP”)) covering substantially all full-time employees. The benefits are based primarily on years of service and the employee’s compensation paid. Employees of acquired entities generally participate in the RAP after consummation of the business combinations. Any retirement plans of acquired entities are typically merged into the RAP after completion of the mergers, and credit is usually given to employees for years of service at the acquired institution for vesting and eligibility purposes.

The Corporation also provided healthcare access for eligible retired employees in its Postretirement Plan (the “Postretirement Plan”). The Postretirement Plan was frozen during 2016. The Corporation has no plan assets attributable to the Postretirement Plan. The Corporation reserves the right to make changes to the Postretirement Plan at any time.

The funded status and amounts recognized in the 2016 and 2015 consolidated balance sheets, as measured on December 31, 2016 and 2015, respectively, for the Retirement Account and Postretirement Plans were as follows.



	Retirement Account Plan			Postretirement Plan			Retirement Account Plan			Postretirement Plan
	2016			2016			2015			2015
	($ in Thousands)
Change in Fair Value of Plan Assets
Fair value of plan assets at beginning of year	$	289,599		$	—		$	303,496		$	—
Actual return on plan assets	17,097			—			495			—
Employer contributions	—			248			—			264
Gross benefits paid	(10,978		)	(248		)	(14,392		)	(264		)
Fair value of plan assets at end of year*	$	295,718		$	—		$	289,599		$	—
Change in Benefit Obligation
Net benefit obligation at beginning of year	$	171,783		$	3,436		$	171,333		$	3,578
Service cost	6,780			—			11,257			—
Interest cost	7,121			142			6,617			141
Plan amendments	(823		)	(936		)	—			—
Actuarial (gain) loss	2,942			9			(3,032		)	(19		)
Gross benefits paid	(10,978		)	(248		)	(14,392		)	(264		)
Net benefit obligation at end of year*	$	176,825		$	2,403		$	171,783		$	3,436
Funded (unfunded) status	$	118,893		$	(2,403	)	$	117,816		$	(3,436	)
Noncurrent assets	118,893			—			117,816			—
Current liabilities	—			(215		)	—			(274		)
Noncurrent liabilities	—			(2,188		)	—			(3,162		)
Asset (Liability) Recognized in the Consolidated Balance Sheets	$	118,893		$	(2,403	)	$	117,816		$	(3,436	)


*	The fair value of the plan assets represented 167% and 169% of the net benefit obligation of the pension plan at December 31, 2016 and 2015, respectively.

Amounts recognized in accumulated other comprehensive loss, net of tax, as of December 31, 2016 and 2015 follow.



	Retirement Account Plan			Postretirement Plan			Retirement Account Plan		Postretirement Plan
	2016			2016			2015		2015
	($ in Thousands)
Prior service cost	$	(342	)	$	(580	)	$	122	$	—
Net actuarial loss	35,443			79			32,879		73
Amount not yet recognized in net periodic benefit cost, but recognized in accumulated other comprehensive loss	$	35,101		$	(501	)	$	33,001	$	73

Other changes in plan assets and benefit obligations recognized in other comprehensive income (loss) (“OCI”), net of tax, in 2016 and 2015 were as follows.



	Retirement Account Plan			Postretirement Plan			Retirement Account Plan			Postretirement Plan
	2016			2016			2015			2015
	($ in Thousands)
Net gain (loss)	$	(6,132	)	$	(9	)	$	(17,911	)	$	19
Amortization of prior service cost	(73		)	—			50			—
Amortization of actuarial gain	2,115			—			2,256			—
Plan amendments	823			936			—			—
Income tax (expense) benefit	1,168			(353		)	5,880			(7		)
Total Recognized in OCI	$	(2,099	)	$	574		$	(9,725	)	$	12

The components of net periodic benefit cost for the Retirement Account Plan and Postretirement Plans for 2016, 2015, and 2014 were as follows.



	Retirement Account Plan			Postretirement Plan		Retirement Account Plan			Postretirement Plan		Retirement Account Plan			Postretirement Plan
	2016			2016		2015			2015		2014			2014
						($ in Thousands)
Service cost	$	6,780		$	—	$	11,257		$	—	$	11,058		$	—
Interest cost	7,121			142		6,617			141		7,132			150
Expected return on plan assets	(20,287		)	—		(21,438		)	—		(19,922		)	—
Amortization of:
Prior service cost	(73		)	—		50			—		58			—
Actuarial (gain) loss	2,115			—		2,256			—		1,384			(35		)
Total net pension cost	$	(4,344	)	$	142	$	(1,258	)	$	141	$	(290	)	$	115

As of December 31, 2016, the estimated actuarial losses and prior service cost that will be amortized during 2017 from accumulated other comprehensive income into net periodic benefit cost for the Retirement Account Plan include expense of $2 million for actuarial losses and income of $0.1 million for the prior service cost. For the Postretirement Plan, the estimated prior service cost that will be amortized during 2017 from accumulated other comprehensive income into periodic net benefit cost was income of $0.1 million.



	Retirement Account Plan		Postretirement Plan		Retirement Account Plan		Postretirement Plan
	2016		2016		2015		2015
Weighted average assumptions used to determine benefit obligations:
Discount rate	4.10	%	4.10	%	4.30	%	4.30	%
Rate of increase in compensation levels	4.00	%	NA		4.00	%	NA
Weighted average assumptions used to determine net periodic benefit costs:
Discount rate	4.30	%	4.30	%	4.00	%	4.00	%
Rate of increase in compensation levels	4.00	%	NA		4.00	%	NA
Expected long-term rate of return on plan assets	7.00	%	NA		7.50	%	NA

The overall expected long-term rates of return on the Retirement Account Plan assets were 7.00% for 2016 and 7.50% for 2015, respectively. The expected long-term (more than 20 years) rate of return was estimated using market benchmarks for equities and bonds applied to the Retirement Account Plan’s anticipated asset allocations. The expected return on equities was computed utilizing a valuation framework, which projected future returns based on current equity valuations rather than historical returns. The actual rate of return for the Retirement Account Plan assets was 6.36% and 0.43% for 2016 and 2015, respectively.

The Retirement Account Plan’s investments are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risks associated with certain investments and the level of uncertainty related to changes in the value of the investments, it is at least reasonably possible that changes in risks in the near term could materially affect the amounts reported. The investment objective for the Retirement Account Plan is to maximize total return with a tolerance for average risk. The plan has a diversified portfolio designed to provide liquidity, current income, and growth of income and principal, with anticipated asset allocation ranges of: equity securities 50-70%, fixed income securities 30-50%, other cash equivalents 0-5%, and alternative securities 0-15%. Based on changes in economic and market conditions, the Corporation could be outside of the allocation ranges for brief periods of time. The asset allocation for the Retirement Account Plan as of the December 31, 2016 and 2015 measurement dates, respectively, by asset category were as follows.



Asset Category	2016		2015
Equity securities	60	%	60	%
Fixed income securities	39	%	40	%
Other	1	%	—	%
Total	100	%	100	%

The Retirement Account Plan assets include cash equivalents, such as money market accounts, mutual funds, and common / collective trust funds (which include investments in equity and bond securities). Money market accounts are stated at cost plus accrued interest, mutual funds are valued at quoted market prices and investments in common / collective trust funds are valued at the amount at which units in the funds can be withdrawn. Based on these inputs, the following table summarizes the fair value of the Retirement Account Plan’s investments as of December 31, 2016 and 2015.



			Fair Value Measurements Using
	December 31, 2016		Level 1		Level 2		Level 3
	($ in Thousands)
Retirement Account Plan Investments:
Money market account	$	3,624	$	3,624	$	—	$	—
Common /collective trust funds	126,741		126,741		—		—
Mutual funds	165,353		165,353		—		—
Total Retirement Account Plan Investments	$	295,718	$	295,718	$	—	$	—
			Fair Value Measurements Using
	December 31, 2015		Level 1		Level 2		Level 3
	($ in Thousands)
Retirement Account Plan Investments:
Money market account	$	481	$	481	$	—	$	—
Common /collective trust funds	120,136		120,136		—		—
Mutual funds	168,982		168,982		—		—
Total Retirement Account Plan Investments	$	289,599	$	289,599	$	—	$	—

The Corporation’s funding policy is to pay at least the minimum amount required by the funding requirements of federal law and regulations, with consideration given to the maximum funding amounts allowed. The Corporation regularly reviews the funding of its Retirement Account Plan.

The projected benefit payments for the Retirement Account and Postretirement Plans at December 31, 2016, reflecting expected future services, were as follows. The projected benefit payments were calculated using the same assumptions as those used to calculate the benefit obligations listed above.



	Retirement Account Plan		Postretirement Plan
	($ in Thousands)
Estimated future benefit payments:
2017	$	14,829	$	215
2018	14,538		199
2019	14,169		179
2020	13,815		177
2021	13,651		174
2022-2026	71,433		815

The health care trend rate is an assumption as to how much the Postretirement Plan’s medical costs will increase each year in the future. The health care trend rate assumption for pre-65 coverage is 8.0% for 2016, and 0.5%-0.25% lower in each succeeding year, to an ultimate rate of 5% for 2024 and future years. The health care trend rate assumption for post-65 coverage is 7.5% for 2016, and 0.5%-0.25% lower in each succeeding year, to an ultimate rate of 5% for 2023 and future years.

A one percentage point change in the assumed health care cost trend rate would have the following effect.



	2016					2015
	100 bp Increase		100 bp Decrease			100 bp Increase		100 bp Decrease
	($ in Thousands)
Effect on total of service and interest cost	$	7	$	(6	)	$	15	$	(13	)
Effect on postretirement benefit obligation	$	173	$	(149	)	$	357	$	(310	)

The Corporation also has a 401(k) and Employee Stock Ownership Plan (the “401(k) plan”). The Corporation’s contribution is determined by the Compensation and Benefits Committee of the Board of Directors. Total expense related to contributions to the 401(k) plan was $14 million, $11 million, and $10 million in 2016, 2015, and 2014, respectively.