Annual report pursuant to Section 13 and 15(d)

BENEFIT PLANS

v3.22.4
BENEFIT PLANS
12 Months Ended
Dec. 31, 2022
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 2022.
The following table shows the weighted-average assumptions used to determine the benefit obligation and the net periodic benefit cost:
At December 31,
2022 2021
Weighted-average assumptions used to determine benefit obligations
Discount rate
5.41  % 2.86  %
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate
2.86  2.50 
Expected return on plan assets
4.50  4.50 

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,
(dollar amounts in millions) 2022 2021
Projected benefit obligation at beginning of measurement year $ 956  $ 1,026 
Changes due to:
Service cost
Interest cost 22  19 
Benefits paid (32) (30)
Settlements (29) (25)
Actuarial gains (228) (37)
Total changes (264) (70)
Projected benefit obligation at end of measurement year $ 692  $ 956 
The following table reconciles the beginning and ending balances of the fair value of Plan assets:
At December 31,
(dollar amounts in millions) 2022 2021
Fair value of plan assets at beginning of measurement year $ 1,007  $ 1,050 
Changes due to:
Actual return on plan assets (197) 15 
Settlements (38) (28)
Benefits paid (32) (30)
Total changes (267) (43)
Fair value of plan assets at end of measurement year $ 740  $ 1,007 
As of December 31, 2022, the difference between the accumulated benefit obligation and the fair value of Plan assets was $48 million and is recorded in other assets.
The following table shows the components of net periodic benefit costs recognized:
Year Ended December 31, (1)
(dollar amounts in millions) 2022 2021 2020
Service cost $ $ $
Interest cost 22  19  26 
Expected return on plan assets (41) (40) (42)
Amortization of loss 12 
Settlements 15 
Benefit costs $ $ $
(1)    The pension costs are recognized in other noninterest income in the Consolidated Statements of Income.
At December 31, 2022 and 2021, 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 at December 31,
(dollar amounts in millions) 2022 2021
Cash equivalents:
Mutual funds-money market $ 23  % $ 45  %
Fixed income:
Corporate obligations 414  57  559  55 
U.S. Government obligations 154  21  208  21 
Municipal obligations —  — 
Collective trust funds 62  13 
Equities:
Common stock —  —  52 
Limited liability companies 36 
Collective trust funds 27  30 
Limited partnerships 48  58 
Fair value of plan assets $ 740  100  % $ 1,007  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, 2022, mutual money market funds 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 stock is 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, 2022, Plan assets were invested 3% in cash equivalents, 11% in equity investments, and 86% in fixed income investments, with an average duration of 10.9 years on investments. The estimated life of benefit obligations was 10.3 years. Although it may fluctuate with market conditions, Huntington has targeted a long-term allocation of Plan assets of 10% in equity investments and 90% in bond investments. The allocation of Plan assets between equity investments and fixed income investments will change from time to time.
At December 31, 2022, the following table shows when benefit payments are expected to be paid:
(dollar amounts in millions) Pension Benefits
2023 $ 50 
2024 50 
2025 50 
2026 50 
2027 50 
2027 through 2030 239 
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, 2022, 2021, and 2020 was $58 million, $70 million, and $47 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:
At December 31,
(dollar amounts in millions, share amounts in thousands) 2022 2021
Shares in Huntington common stock
9,451  9,526 
Market value of Huntington common stock
$ 133  $ 147 
Dividends received on shares of Huntington stock