Quarterly report pursuant to Section 13 or 15(d)

BENEFIT PLANS

v3.3.0.814
BENEFIT PLANS
 9 Months Ended
Sep. 30, 2015
Compensation and Retirement Disclosure [Abstract]  
BENEFIT PLANS
. 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, which was modified in 2013 and no longer accrues service benefits to participants, 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 2015. During the 2013 third quarter, the board of directors approved, and management communicated, a curtailment of the Company’s pension plan effective December 31, 2013.
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 additional information on benefit plans, see the Benefit Plan footnote in our 2014 Form 10-K.
On January 1, 2015, Huntington terminated the Company sponsored retiree health care plan for Medicare eligible retirees and their dependents. Instead, Huntington partnered with a third party to assist the retirees and their dependents in selecting individual policies from a variety of carriers on a private exchange. This plan amendment resulted in a measurement of the liability at the approval date. The result of the measurement was a $5.2 million reduction of the liability and increase in accumulated other comprehensive income during the 2014 third quarter. It also resulted in a reduction of expense over the estimated life of plan participants.
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 September 30,
 
Three Months Ended September 30,
(dollar amounts in thousands)
2015
 
2014
 
2015
 
2014
Service cost (1)
$
457

 
$
435

 
$
—

 
$
—

Interest cost
7,984

 
8,099

 
142

 
258

Expected return on plan assets
(11,044
)
 
(11,446
)
 
—

 
—

Amortization of prior service cost
—

 
—

 
(492
)
 
(338
)
Amortization of gain (loss)
1,984

 
1,442

 
(116
)
 
(144
)
Settlements
2,825

 
2,500

 
(2)
(3,090
)
 
—

Benefit expense
$
2,206

 
$
1,030

 
$
(3,556
)
 
$
(224
)
(1)
Since no participants will be earning benefits after December 31, 2013, the 2014 and 2015 service cost represents only administrative expenses.
(2)
During the 2015 third quarter, Huntington transferred the retiree life insurance obligation in a non-participating contract to an insurance carrier.
 
Pension Benefits
 
Post Retirement Benefits
 
Nine Months Ended September 30,
 
Nine Months Ended September 30,
(dollar amounts in thousands)
2015
 
2014
 
2015
 
2014
Service cost (1)
$
1,372

 
$
1,305

 
$
—

 
$
—

Interest cost
23,953

 
24,299

 
425

 
776

Expected return on plan assets
(33,131
)
 
(34,338
)
 
—

 
—

Amortization of prior service cost
—

 
—

 
(1,476
)
 
(1,016
)
Amortization of gain (loss)
5,950

 
4,326

 
(348
)
 
(432
)
Settlements
8,475

 
7,500

 
(2)
(3,090
)
 
—

Benefit expense
$
6,619

 
$
3,092

 
$
(4,489
)
 
$
(672
)
(1)
Since no participants will be earning benefits after December 31, 2013, the 2014 and 2015 service cost represents only administrative expenses.
(2)
During the 2015 third quarter, Huntington transferred the retiree life insurance obligation in a non-participating contract to an insurance carrier.
The Bank, as trustee, held all Plan assets at September 30, 2015 and December 31, 2014. The Plan assets consisted of the following investments:
 
Fair Value
(dollar amounts in thousands)
September 30, 2015
 
December 31, 2014
Cash equivalents:
 
 
 
 
 
 
 
Huntington funds—money market
$
8,937

 
1
%
 
$
16,136

 
2
%
Fixed income:
 
 
 
 
 
 
 
Corporate obligations
205,806

 
34

 
218,077

 
33

U.S. government obligations
61,987

 
11

 
62,627

 
10

Mutual funds—fixed income
34,123

 
6

 
34,761

 
5

U.S. government agencies
7,203

 
1

 
7,445

 
1

Equities:
 
 
 
 
 
 
 
Mutual funds—equities
134,939

 
23

 
147,191

 
23

Other common stock
114,594

 
19

 
118,970

 
18

Huntington funds
20,243

 
3

 
37,920

 
6

Exchange traded funds
6,306

 
1

 
6,840

 
1

Limited partnerships
5,431

 
1

 
3,046

 
1

Fair value of plan assets
$
599,569

 
100
%
 
$
653,013

 
100
%
Investments of the Plan are accounted for at cost on the trade date and are reported at fair value. The Plan’s investments at September 30, 2015, are classified as Level 1 within the fair value hierarchy, except for corporate obligations, U.S. government obligations, and U.S. government agencies, which are classified as Level 2, and limited partnerships, which are classified as Level 3. 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.
At September 30, 2015, Plan assets were invested 47% in equity investments, 52% in bonds, and 1% in cash with an average duration of 12.4 years on bond investments. The estimated life of benefit obligations was 12.8 years. Although it may fluctuate with market conditions, Management has targeted a long-term allocation of Plan assets of 20% to 50% in equity investments and 80% to 50% in bond investments. The allocation of Plan assets between equity investments and fixed income investments will change from time to time with the allocation to fixed income investments increasing as the funding level increases.
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 and former officers and directors of Huntington and its subsidiaries with defined pension benefits in excess of limits imposed by federal tax law. During the 2013 third quarter, the board of directors approved, and management communicated, a curtailment of the Company’s SRIP plan effective December 31, 2013.
Huntington has a defined contribution plan that is available to eligible employees. Huntington matches participant contributions, up to the first 4% of base pay contributed to the Plan. For 2014, a discretionary profit-sharing contribution equal to 1% of eligible participants’ 2014 base pay was awarded during the 2015 first quarter.
The following table shows the costs of providing the SERP, SRIP, and defined contribution plans:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(dollar amounts in thousands)
2015
 
2014
 
2015
 
2014
SERP & SRIP
$
578

 
$
504

 
$
1,735

 
$
1,467

Defined contribution plan
8,224

 
8,325

 
23,747

 
23,239

Benefit cost
$
8,802

 
$
8,829

 
$
25,482

 
$
24,706