Quarterly report pursuant to Section 13 or 15(d)

Benefit Plans

v2.3.0.15
Benefit Plans
 9 Months Ended
Sep. 30, 2011
Benefit Plans [Abstract]  
BENEFIT PLANS

12. Benefit Plans

 

Huntington sponsors the Plan, a non-contributory defined benefit pension plan covering substantially all employees hired or rehired prior to January 1, 2010. The Plan provides benefits based upon length of service and compensation levels. The funding policy of Huntington 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 is no required minimum contribution for 2011, although Huntington contributed $50.0 million to the Plan in March 2011.

 

In addition, Huntington has an unfunded defined benefit post-retirement plan that provides certain healthcare and life insurance benefits to retired employees who have attained the age of 55 and have at least 10 years of vesting service under this plan. For any employee retiring on or after January 1, 1993, post-retirement healthcare benefits are based upon the employee's number of months of service and are limited to the actual cost of coverage. Life insurance benefits are a percentage of the employee's base salary at the time of retirement, with a maximum of $50,000 of coverage. The employer paid portion of the post-retirement health and life insurance plan was eliminated for employees retiring on and after March 1, 2010. Eligible employees retiring on and after March 1, 2010, who elect retiree medical coverage, will pay the full cost of this coverage. Huntington will not provide any employer paid life insurance to employees retiring on and after March 1, 2010. Eligible employees will be able to convert or port their existing life insurance at their own expense under the same terms that are available to all terminated employees.

 

The following table shows the components of net periodic benefit expense of the Plan and the Post-Retirement Benefit Plan:

    Pension Benefits     Post Retirement Benefits  
    Three Months Ended     Three Months Ended  
    September 30,     September 30,  
(dollar amounts in thousands)   2011     2010     2011     2010  
Service cost $ 5,412   $ 5,051   $ ---   $ ---  
Interest cost   7,518     7,217     404     433  
Expected return on plan assets   (10,822)     (10,528)     ---     ---  
Amortization of transition asset   (1)     1     ---     ---  
Amortization of prior service cost   (1,442)     (1,442)     (338)     (339)  
Amortization of gains   5,873     3,748     (106)     (174)  
Settlements   1,750     3,925     ---     ---  
Benefit expense $ 8,288   $ 7,972   $ (40)   $ (80)  
                         
    Pension Benefits     Post Retirement Benefits  
    Nine Months Ended     Nine Months Ended  
    September 30,     September 30,  
(dollar amounts in thousands)   2011     2010     2011     2010  
Service cost $ 16,238   $ 15,153   $ ---   $ ---  
Interest cost   22,554     21,651     1,214     1,299  
Expected return on plan assets   (32,468)     (31,584)     ---     ---  
Amortization of transition asset   (3)     5     ---     ---  
Amortization of prior service cost   (4,326)     (4,326)     (1,014)     (1,014)  
Amortization of gains   17,621     11,242     (318)     (525)  
Settlements   5,250     7,375     ---     ---  
Benefit expense $ 24,866   $ 19,516   $ (118)   $ (240)  

The Bank, as trustee, held all Plan assets at September 30, 2011, and December 31, 2010. The Plan assets consisted of investments in a variety of Huntington mutual funds and Huntington common stock as follows:

    Fair Value
(dollar amounts in thousands) September 30, 2011   December 31, 2010   September 30, 2010
Cash $ 36 --- %   $ --- --- %   $ --- --- %
Cash equivalents:                            
  Huntington funds - money market   55 ---       25 ---       204 ---  
Fixed income:                            
  Huntington funds - fixed income funds   173,355 37       133,330 28       134,523 30  
  Corporate obligations   --- ---       --- ---       1,097 ---  
  U.S. Government Agencies   --- ---       --- ---       506 ---  
Equities:                            
  Huntington funds   264,074 56       318,155 66       293,956 64  
  Other - equity mutual funds   --- ---       --- ---       4,029 1  
  Huntington common stock   35,380 7       26,969 6       22,344 5  
Fair value of plan assets $ 472,900 100 %   $ 478,479 100 %   $ 456,659 100 %

Investments of the Plan are accounted for at cost on the trade date and are reported at fair value. All of the Plan's investments at September 30, 2011, are classified as Level 1 within the fair value hierarchy. In general, investments of the Plan are exposed to various risks, such as interest rate risk, credit risk, and overall market volatility. Due to the level of risk associated with certain investments, it is reasonably possible changes in the values of investments will occur in the near term and such changes could materially affect the amounts reported in the Plan assets.

 

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 September 30, 2011, Plan assets were invested 63% in equity investments and 37% in bonds, with an average duration of 3.6 years on bond investments. Although it may fluctuate with market conditions, Management has targeted a long-term allocation of Plan assets of 69% in equity investments and 31% in bond investments.

 

Huntington also sponsors other nonqualified retirement plans, the most significant being the SERP and the SRIP. The SERP provides certain former officers and directors, and the SRIP provides certain current officers and directors of Huntington and its subsidiaries with defined pension benefits in excess of limits imposed by federal tax law.

 

Huntington has a defined contribution plan that is available to eligible employees. In the 2009 first quarter, the Plan was amended to eliminate employer matching contributions effective on or after March 15, 2009. Prior to March 15, 2009, Huntington matched participant contributions, up to the first 3% of base pay contributed to the Plan. Half of the employee contribution was matched on the 4th and 5th percent of base pay contributed to the Plan. Effective May 1, 2010, Huntington reinstated the employer matching contribution to the defined contribution Plan.

 

The following table shows the costs of providing the SERP, SRIP, and defined contribution plans:

 

           
    Three Months Ended     Nine Months Ended
    September 30,     September 30,
(dollar amounts in millions)   2011     2010     2011     2010
SERP & SRIP $ 0.7   $ 0.7   $ 2.1   $ 2.3
Defined contribution plan   3.8     3.3     11.3     5.4
Benefit cost $ 4.5   $ 4.0   $ 13.4   $ 7.7