Annual report pursuant to Section 13 and 15(d)

BENEFIT PLANS

v3.24.0.1
BENEFIT PLANS
 12 Months Ended
Dec. 31, 2023
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 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 2023.
The following table shows the weighted-average assumptions used to determine the benefit obligation and the net periodic benefit cost:
At December 31,
2023 2022
Weighted-average assumptions used to determine benefit obligations
Discount rate 5.15  % 5.41  %
Weighted-average assumptions used to determine net periodic benefit cost
Discount rate 5.41  2.86 
Expected return on plan assets 5.00  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) 2023 2022
Projected benefit obligation at beginning of measurement year $ 692  $ 956 
Changes due to:
Service cost 3  3 
Interest cost 36  22 
Benefits paid (33) (32)
Settlements (16) (29)
Actuarial gains 5  (228)
Total changes (5) (264)
Projected benefit obligation at end of measurement year $ 687  $ 692 
The following table reconciles the beginning and ending balances of the fair value of Plan assets:
At December 31,
(dollar amounts in millions) 2023 2022
Fair value of plan assets at beginning of measurement year $ 740  $ 1,007 
Changes due to:
Actual return on plan assets 39  (197)
Settlements (17) (38)
Benefits paid (33) (32)
Total changes (11) (267)
Fair value of plan assets at end of measurement year $ 729  $ 740 
As of December 31, 2023, the difference between the accumulated benefit obligation and the fair value of Plan assets was $42 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) 2023 2022 2021
Service cost $ 3  $ 3  $ 3 
Interest cost 36  22  19 
Expected return on plan assets (43) (41) (40)
Amortization of loss 1  9  12 
Settlements 7  15  8 
Benefit costs $ 4  $ 8  $ 2 
(1)    The pension costs are recognized in other noninterest income in the Consolidated Statements of Income.
During 2023, all Plan assets were transferred to Northern Trust who held them as trustee at December 31, 2023. At December 31, 2022, 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) 2023 2022
Cash equivalents:
Mutual funds-money market $ 17  2  % $ 23  3  %
Fixed income:
Corporate obligations 234  32  414  57 
U.S. Government obligations 70  10  154  21 
Municipal obligations 1  —  3  — 
Collective trust funds 297  42  62  8 
Equities:
Limited liability companies 10  1  9  1 
Collective trust funds 76  10  27  4 
Limited partnerships 24  3  48  6 
Fair value of plan assets $ 729  100  % $ 740  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, 2023, 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, 2023, Plan assets were invested 2% in cash equivalents, 14% in equity investments, and 84% in fixed income investments, with an average duration of 13.0 years on investments. The estimated life of benefit obligations was 10.4 years. Although it may fluctuate with market conditions, Huntington has targeted a long-term allocation of Plan assets of 1% in cash equivalents, 10% in equity investments, and 89% in bond investments. The allocation of Plan assets between equity investments and fixed income investments will change from time to time.
At December 31, 2023, the following table shows when benefit payments are expected to be paid:
(dollar amounts in millions) Pension Benefits
2024 $ 51 
2025 52 
2026 53 
2027 53 
2028 53 
2029 through 2033 253 
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, 2023, 2022, and 2021 was $61 million, $58 million, and $70 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) 2023 2022
Shares in Huntington common stock 11,899  9,451 
Market value of Huntington common stock $ 151  $ 133 
Dividends received on shares of Huntington stock 7  6