Annual report pursuant to Section 13 and 15(d)

BENEFIT PLANS

v3.22.0.1
BENEFIT PLANS
 12 Months Ended
Dec. 31, 2021
Retirement Benefits [Abstract]  
BENEFIT PLANS BENEFIT PLANS
Huntington sponsors a non-contributory defined benefit pension plan covering substantially all employees hired or rehired prior to January 1, 2010. The Plan, which was modified in 2013, no longer accrues service benefits to participants and provides benefits based upon length of service and compensation levels. Huntington’s funding policy is to contribute an annual amount that is at least equal to the minimum funding requirements but not more than the amount deductible under the Internal Revenue Code. There were no required minimum contributions during 2021.
The following table shows the weighted-average assumptions used to determine the benefit obligation at December 31, 2021 and 2020, and the net periodic benefit cost for the years then ended:
Pension Benefits
2021 2020
Weighted-average assumptions used to determine benefit obligations
Discount rate
 2.86  % 2.50  %
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate
 2.50  3.40 
Expected return on plan assets
 4.50  5.00 
The expected long-term rate of return on plan assets is an assumption reflecting the average rate of earnings expected on the funds invested or to be invested to provide for the benefits included in the projected benefit obligation. The expected long-term rate of return is established at the beginning of the plan year based upon historical returns and projected returns on the underlying mix of invested assets.
The following table reconciles the beginning and ending balances of the benefit obligation of the Plan with the amounts recognized in the consolidated balance sheets at December 31:
Pension Benefits
(dollar amounts in millions) 2021 2020
Projected benefit obligation at beginning of measurement year $ 1,026  $ 923 
Changes due to:
Service cost 3  3 
Interest cost 19  26 
Benefits paid (30) (29)
Settlements (25) (19)
Actuarial assumptions and gains (losses) (37) 122 
Total changes (70) 103 
Projected benefit obligation at end of measurement year $ 956  $ 1,026 
The following table reconciles the beginning and ending balances of the fair value of Plan assets at the December 31, 2021 and 2020 measurement dates:
Pension Benefits
(dollar amounts in millions) 2021 2020
Fair value of plan assets at beginning of measurement year $ 1,050  $ 931 
Changes due to:
Actual return on plan assets 15  164 
Settlements (28) (16)
Benefits paid (30) (29)
Total changes (43) 119 
Fair value of plan assets at end of measurement year $ 1,007  $ 1,050 
As of December 31, 2021, the difference between the accumulated benefit obligation and the fair value of Plan assets was $51 million and is recorded in other assets.
The following table shows the components of net periodic benefit costs recognized in the three years ended December 31, 2021, 2020 and 2019:
Pension Benefits (1)
(dollar amounts in millions) 2021 2020 2019
Service cost $ 3  $ 3  $ 2 
Interest cost 19  26  32 
Expected return on plan assets (40) (42) (44)
Amortization of loss 12  9  6 
Settlements 8  5  5 
Benefit costs $ 2  $ 1  $ 1 
(1)    The pension costs are recognized in other noninterest income in the Consolidated Statements of Income.
At December 31, 2021 and 2020, The Huntington National Bank, as trustee, held all Plan assets. The Plan assets consisted of investments in a variety of cash equivalent, corporate and government fixed income, and equity investments as follows:
Fair Value
(dollar amounts in millions) 2021 2020
Cash equivalents:
Mutual funds-money market $ 45  5  % $ 20  2  %
Fixed income:
Corporate obligations 559  55  522  50 
U.S. Government obligations 208  21  208  20 
Municipal obligations 5  —  6  — 
Collective trust funds 13  1  118  11 
Equities:
Common stock 52  5  48  5 
Preferred stock —  —  5  — 
Limited liability companies 36  4  39  4 
Collective trust funds 30  3  33  3 
Limited partnerships 58  6  51  5 
Fair value of plan assets $ 1,007  100  % $ 1,050  100  %
Investments of the Plan are accounted for at cost on the trade date and are reported at fair value. The valuation methodologies used to measure the fair value of pension plan assets vary depending on the type of asset. At December 31, 2021, cash equivalent money market funds and U.S. Treasury bills are valued at the closing price reported from an actively traded exchange and are classified as Level 1. Fixed income investments are valued using unadjusted quoted prices from active markets for similar assets are classified as Level 2. Common and preferred stock are valued using the year-end closing price as determined by a national securities exchange and are classified as Level 1. Collective trust funds and limited liability companies are valued at net asset value per unit as a practical expedient, which is calculated based on the fair values of the underlying investments held by the fund less its liabilities as reported by the issuer of the fund. The investment in the limited partnerships is reported at net asset value per share as determined by the general partners of each limited partnership, based on their proportionate share of the partnership’s fair value as recorded in the partnership’s audited financial statements.
The investment objective of the Plan is to maximize the return on Plan assets over a long-time period, while meeting the Plan obligations. At December 31, 2021, Plan assets were invested 5% in cash equivalents, 18% in equity investments, and 77% in bonds, with an average duration of 13.7 years on investments. The estimated life of benefit obligations was 12.9 years. Although it may fluctuate with market conditions, Huntington has targeted a long-term allocation of Plan assets of 20% in equity investments and 80% in bond investments. The allocation of Plan assets between equity investments and fixed income investments will change from time to time.
At December 31, 2021, the following table shows when benefit payments are expected to be paid:
(dollar amounts in millions) Pension Benefits
2022 $ 56 
2023 54 
2024 52 
2025 50 
2026 50 
2027 through 2030 240 
The following tables present the amounts recognized in OCI as of December 31, 2021, 2020, and 2019, and the changes in accumulated OCI for the years ended December 31, 2021, 2020, and 2019: 
(dollar amounts in millions) 2021 2020 2019
Net actuarial loss $ (225) $ (253) $ (261)
Prior service cost —  —  10 
Defined benefit pension plans $ (225) $ (253) $ (251)
2021
(dollar amounts in millions) Pretax Tax (expense) Benefit After-tax
Net actuarial gain (loss):
Amounts arising during the year $ 18  $ (4) $ 14 
Amortization included in net periodic benefit costs 18  (4) 14 
Total recognized in OCI $ 36  $ (8) $ 28 
2020
(dollar amounts in millions) Pretax Tax (expense) Benefit After-tax
Net actuarial (loss) gain:
Amounts arising during the year $ (7) $ 2  $ (5)
Amortization included in net periodic benefit costs 17  (4) 13 
Prior service cost:
Amounts arising during the year (11) 3  (8)
Amortization included in net periodic benefit costs (2) —  (2)
Total recognized in OCI $ (3) $ 1  $ (2)
2019
(dollar amounts in millions) Pretax Tax (expense) Benefit After-tax
Net actuarial (loss) gain:
Amounts arising during the year $ (17) $ 5  $ (12)
Amortization included in net periodic benefit costs 12  (3) 9 
Prior service cost:
Amortization included in net periodic benefit costs (2) —  (2)
Total recognized in OCI $ (7) $ 2  $ (5)
Huntington has a defined contribution plan that is available to eligible employees. Huntington’s expense related to the defined contribution plans for the years ended December 31, 2021, 2020, and 2019 was $70 million, $47 million, and $51 million, respectively.
The following table shows the number of shares, market value, and dividends received on shares of Huntington stock held by the defined contribution plan:
December 31,
(dollar amounts in millions, share amounts in thousands) 2021 2020
Shares in Huntington common stock
9,526  10,121 
Market value of Huntington common stock
 $ 147  $ 128 
Dividends received on shares of Huntington stock
 6  6