Retirement Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Retirement Benefit Plans

Retirement Benefit Plans

Defined Benefit Pension and Postretirement Benefit Plans

The Bank had offered a qualified noncontributory defined benefit Pension Plan and a non-qualified SERP to eligible employees and key executives who met certain age and service requirements, both of which were frozen effective December 31, 2007. Only those employees who were hired prior to January 1, 2007, and who became participants of the plans prior to January 1, 2008, have accrued benefits under the plans. The Bank also provides for OPEB to certain retired employees.

In connection with the merger with Sterling, on January 31, 2022, the Company assumed the benefit obligations of Sterling's non-qualified SERP and OPEB plans, which includes the Astoria Bank Excess Benefit and Supplemental Benefit Plans, Astoria Bank Directors' Retirement Plan, Retirement Plan of the Greater New York Savings Bank for Non-Employee Directors, Supplemental Executive Retirement Plan of Provident Bank, Supplemental Executive Retirement Plan of Provident Bank - Other, Sterling Bancorp Supplemental Postretirement Life Insurance Plan, Astoria Bank Postretirement Welfare Benefit Plans, and a Split Dollar Life Insurance Arrangement. Each of the plan's measurement dates, including the plans assumed from Sterling in the merger, coincides with the Company's December 31 year end.

The following table summarizes the changes in the benefit obligation, fair value of plan assets, and funded status of the defined benefit pension and postretirement benefit plans at December 31:

	Pension				SERP				OPEB
(In thousands)	2022		2021		2022		2021		2022		2021
Change in benefit obligation:
Beginning balance	$	250,263	$	266,414	$	1,873	$	2,046	$	1,904	$	1,998
Benefit obligation assumed from Sterling	—		—		4,517		—		26,030		—
Service cost	—		—		—		—		34		—
Interest cost	5,565		4,663		107		30		652		19
Actuarial (gain) loss	(57,751)		(11,131)		(581)		(77)		(4,992)		32
Benefits and administrative expenses paid	(10,241)		(9,683)		(1,671)		(126)		(806)		(145)
Ending balance	187,836		250,263		4,245		1,873		22,822		1,904
Change in plan assets:
Beginning balance	271,846		266,268		—		—		—		—
Actual return on plan assets	(60,223)		15,261		—		—		—		—
Employer contributions	—		—		1,671		126		806		145
Benefits paid	(10,241)		(9,683)		(1,671)		(126)		(806)		(145)
Ending balance	201,382		271,846		—		—		—		—
Funded status (1)	$	13,546	$	21,583	$	(4,245)	$	(1,873)	$	(22,822)	$	(1,904)

(1)The overfunded (underfunded) status of each plan is respectively included in Accrued interest receivable and other assets or Accrued expenses and other liabilities on the accompanying Consolidated Balance Sheets, as applicable.

Excluding the impact of the merger with Sterling, the change in the total funded status of the defined benefit pension and postretirement benefit plans is primarily attributed to higher actuarial gains due to the increase in discount rate and, for the pension plan only, a negative return on plan assets due to lower market valuations.

The following table summarizes the weighted-average assumptions used to determine the benefit obligation at December 31:

	Discount Rate
	2022		2021
Pension:
Webster Bank Pension Plan	4.96	%	2.65	%
SERP:
Webster Bank Supplemental Defined Benefit Plan for Executive Officers	4.88	%	2.45	%
Astoria Bank Excess Benefit and Supplemental Benefit Plans	4.77	%	n/a
Astoria Bank Directors' Retirement Plan	4.70	%	n/a
Retirement Plan of the Greater New York Savings Bank for Non-Employee Directors	4.70	%	n/a
Supplemental Executive Retirement Plan of Provident Bank	5.04	%	n/a
Supplemental Executive Retirement Plan of Provident Bank - Other	4.90	%	n/a
OPEB:
Webster Bank Postretirement Medical Benefit Plan	4.72	%	1.99	%
Sterling Bancorp Supplemental Postretirement Life Insurance Plan	4.70	%	n/a
Astoria Bank Postretirement Welfare Benefit Plans	4.94	%	n/a
Split Dollar Life Insurance Arrangement	4.63	%	n/a

The following table summarizes the amounts recorded in accumulated other comprehensive (loss) income that have not yet been recognized in net periodic benefit (income) cost at December 31:

	Pension				SERP				OPEB
(In thousands)	2022		2021		2022		2021		2022		2021
Net actuarial loss (gain)	$	56,717	$	41,792	$	50	$	658	$	(5,573)	$	(620)
Deferred tax benefit (expense)	15,383		8,636		14		136		(1,512)		(128)
Net amount recorded in (AOCL) AOCI	$	41,334	$	33,156	$	36	$	522	$	(4,061)	$	(492)

The following table summarizes the components of net periodic benefit (income) cost for the years ended December 31:

	Pension						SERP						OPEB
(In thousands)	2022		2021		2020		2022		2021		2020		2022		2021		2020
Service cost	$	—	$	—	$	—	$	—	$	—	$	—	$	34	$	—	$	—
Interest cost	5,565		4,663		6,511		107		30		46		652		19		46
Expected return on plan assets	(14,675)		(14,385)		(13,522)		—		—		—		—		—		—
Amortization of actuarial loss (gain)	2,224		4,102		4,027		26		38		23		(40)		(38)		(74)
Net periodic benefit (income) cost (1)	$	(6,886)	$	(5,620)	$	(2,984)	$	133	$	68	$	69	$	646	$	(19)	$	(28)

(1)Net periodic benefit (income) cost is included in Other expense on the accompanying Consolidated Statements of Income.

The following table summarizes the weighted-average assumptions used to determine net periodic benefit (income) cost for the years ended December 31:

	Discount Rate
	2022		2021		2020
Pension:
Webster Bank Pension Plan	2.65	%	2.29	%	3.07	%
SERP:
Webster Bank Supplemental Defined Benefit Plan for Executive Officers	2.45	%	1.91	%	2.82	%
Astoria Bank Excess Benefit and Supplemental Benefit Plans	2.58	%	n/a		n/a
Astoria Bank Directors' Retirement Plan	2.23	%	n/a		n/a
Retirement Plan of the Greater New York Savings Bank for Non-Employee Directors	2.37	%	n/a		n/a
Supplemental Executive Retirement Plan of Provident Bank	2.76	%	n/a		n/a
Supplemental Executive Retirement Plan of Provident Bank - Other	2.38	%	n/a		n/a
OPEB:
Webster Bank Postretirement Medical Benefit Plan	1.99	%	1.40	%	2.50	%
Sterling Bancorp Supplemental Postretirement Life Insurance Plan	2.35	%	n/a		n/a
Astoria Bank Postretirement Welfare Benefit Plans	2.93	%	n/a		n/a
Split Dollar Life Insurance Arrangement	2.20	%	n/a		n/a
	Expected Long-Term Rate of Return on Plan Assets
	2022		2021		2020
Pension:
Webster Bank Pension Plan	5.50	%	5.50	%	5.75	%
	Assumed Health Care Cost Trend Rate (1)
	2022		2021		2020
OPEB:
Webster Bank Postretirement Medical Benefit Plan	6.25	%	6.50	%	6.50	%
Astoria Bank Postretirement Welfare Benefit Plans	6.60	%	n/a		n/a

(1)The rates to which the healthcare cost trend rates are assumed to decline (ultimate trend rates) along with the year that the ultimate trend rates will be reached for the Webster Bank Postretirement Medical Benefit Plan and the Astoria Bank Postretirement Welfare Benefit Plans are 4.40% in 2030, and 4.75% in 2033, respectively.

The discount rates used to determine the benefit obligation and net periodic benefit (income) cost for the Company's defined benefit pension and postretirement benefit plans were generally selected by reference to a high-quality bond yield curve, using a full yield curve approach, and matched to the timing and amount of each plan's expected benefit payments.

The following table summarizes amounts recognized in other comprehensive (loss) income, including reclassification adjustments, for the years ended December 31:

	Pension							SERP						OPEB
(In thousands)	2022		2021		2020			2022		2021		2020		2022		2021		2020
Net actuarial loss (gain)	$	17,148	$	(12,008)	$	5,375		$	(581)	$	(77)	$	194	$	(4,992)	$	33	$	(307)
Amounts reclassified from (AOCL) AOCI	(2,224)		(4,102)		(4,027)		-4027000	(26)		(38)		(23)		40		38		74
Total loss (gain) recognized in (OCL) OCI	$	14,924	$	(16,110)	$	1,348		$	(607)	$	(115)	$	171	$	(4,952)	$	71	$	(233)

At December 31, 2022, the expected future benefit payments for the Company's defined benefit pension and postretirement benefits plans are as follows:

(In thousands)	Pension		SERP		OPEB
2023	$	10,224	$	475	$	2,850
2024	10,804		478		2,669
2025	11,236		460		2,522
2026	11,644		440		2,330
2027	12,046		419		2,153
Thereafter	63,884		1,724		7,800

Asset Management

The Pension Plan invests primarily in common collective trusts and registered investment companies. However, the Pension Plan's investment policy guidelines also allow for the investment in cash and cash equivalents, fixed income securities, and equity securities. Common collective trusts and registered investment companies are both benchmarked against the Standard & Poor's 500 Index. Incremental benchmarks used to assess the common collective trusts include the S&P 400 Mid Cap Index, Russell 200 Index, MSCI ACWI ex U.S. Index, and the Barclay's Capital U.S. Long Credit Index. The standard deviation should not exceed that of the composite index. The Pension Plan's investment strategy and asset allocations are monitored by the Company's Retirement Plans Committee with the assistance of external investment advisors, and the investment portfolio is rebalanced, as appropriate. The target asset allocation percentages for the year ended December 31, 2022, were 64.5%
fixed-income investments and 35.5% equity investments. The actual asset allocation percentages for the year ended
December 31, 2022, were 63.8% fixed-income investments, 35.4% equity investments, and 0.8% cash and cash equivalents.

The overall investment objective of the Pension Plan is to maintain a diversified portfolio with a targeted expected long-term rate of return on plan assets of approximately 5.50%. The expected long-term rate of return on plans assets is the average rate of return expected to be realized on funds invested or expected to be invested to provide for the benefits included in the benefit obligation. The expected long-term rate of return on plans assets is established at the beginning of the year based upon historical and projected returns for each asset category. Depending on market conditions, the expected long-term rate of return on plan assets may exceed or fall short of the targeted percentage.

Fair Value Measurement

The following is a description of the valuation methodologies used for the Pension Plan's assets measured at fair value:

Common Collective Trusts. Common collective trusts are valued based on the NAV as reported by the trustee of the funds. The funds' underlying investments, which primarily comprise fixed-income debt securities and open-end mutual funds, are valued using quoted market prices in active markets or unobservable inputs for similar assets. Therefore, common collective trusts are classified as Level 2 within the fair value hierarchy. Transactions may occur daily within a trust. If a full redemption of the trust were to be initiated, the investment advisor reserves the right to temporarily delay withdrawals from the trust in order to ensure that the liquidation of securities is carried out in an orderly business manner.

Registered Investment Companies. Registered investment companies are valued at the daily closing price as reported by the funds. Registered investment companies held by the Pension Plan are quoted in an active market and are classified as Level 1 within the fair value hierarchy.

Cash and Cash Equivalents. Cash and cash equivalents are recorded at cost plus accrued interest, which approximates fair value given the short time frame to maturity, and are classified as Level 1 within the fair value hierarchy.

The following table sets forth by level within the fair value hierarchy the Pension Plan's assets at fair value:

	At December 31,
	2022								2021
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Common collective trusts	—		172,941		—		172,941		—		230,923		—		230,923
Registered investment companies	$	26,923	$	—	$	—	$	26,923	$	39,082	$	—	$	—	$	39,082
Cash and cash equivalents	1,518		—		—		1,518		1,841		—		—		1,841
Total pension plan assets	$	28,441	$	172,941	$	—	$	201,382	$	40,923	$	230,923	$	—	$	271,846

Multiple-Employer Defined Benefit Pension Plan

The Bank participates in a multi-employer plan that provides pension benefits to former employees of a bank acquired by the Company. Participation in the plan was frozen as of September 1, 2004. The plan maintains a single trust and does not segregate the assets or liabilities of its participating employers. Minimum required employer contributions are determined by an independent actuary and are calculated using a 7-year shortfall amortization factor. There are no collective bargaining agreements or other obligations requiring contributions to the plan, nor has a funding improvement plan been implemented.

The following table summarizes information related to the Bank's participation in the multi-employer plan:

(In thousands)				Contributions Years Ended December 31,			Funded Status At December 31,
Plan Name	Employer Identification Number	Plan Number	Surcharge Imposed	2022	2021	2020	2022	2021
Pentegra Defined Benefit Plan for Financial Institutions	13-5645888	333	No	$448	$692	$998	At least 80 percent	At least 80 percent

The Bank's contributions to the multi-employer plan for the years ended December 31, 2022, 2021, and 2020, did not exceed more than 5% of total plan contributions for the plan years ended June 30, 2021, 2020, and 2019. The plan's Form 5500 was not available for the plan year ended June 30, 2022, as of the date the Company's Consolidated Financial Statements were issued. As of July 1, 2022, the date of the most recent actuarial valuation, the plan administrator confirmed that the Bank’s portion of the multi-employer plan was $2.1 million underfunded.

Defined Contribution Postretirement Benefit Plans

The Bank also sponsors defined contribution postretirement benefit plans established under Section 401(k) of the Internal Revenue Code:

Webster Bank Retirement Savings Plan. Employees who have attained age 21 may elect to contribute up to 75% of their eligible compensation on either a pre-tax or post-tax basis. The Bank makes matching contributions equal to 100% of the first 2% and 50% of the next 6% of employees contributions after employees have completed one year of eligible service. If an employee fails to enroll in the plan within 90 days of hire, the employee will be automatically enrolled on a pre-tax basis with a deferral rate set at 3% of eligible compensation. Individuals who became employees of the Company as a result of the merger with Sterling are not eligible to participate in the plan.

Sterling National Bank 401k and Profit Sharing Plan. Eligible legacy Sterling employees as January 31, 2022, who are now employees of the Company may elect to contribute up to 50% of their eligible compensation to the plan. The Bank makes matching contributions equal to 50% of employee contributions up to 4% of eligible compensation, for a maximum match of 2%, and a profit sharing contribution equal to 3% of eligible compensation for all eligible legacy Sterling employees, regardless of whether they had contributed to the plan in the current year. The plan also includes an automatic employee deferral increase provision, whereby deferral contributions for participants who had been automatically enrolled in the plan will increase by 1% every January 1 up to 10%.

Compensation and benefits expense included total employer contributions under the plans of $18.2 million, $13.1 million, and $13.8 million for the years ended December 31, 2022, 2021, and 2020, respectively.