Huntington National Bank 2004 Annual Report Download - page 122

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED
The following table shows the weighted-average assumptions used to determine the benefit obligation at December 31, 2004 and 2003,
and the net periodic benefit cost for the years then ended. Huntington selected September 30, 2004 as the measurement date for all
calculations and contracted an actuary to provide measurement services.
Post-Retirement
Pension Benefits Benefits
2004 2003 2004 2003
Weighted-average assumptions used to determine
benefit obligations at December 31
Discount rate 5.81% 6.00% 5.81% 6.00%
Rate of compensation increase 5.00 5.00 N/A N/A
Weighted-average assumptions used to determine net
periodic benefit cost for the years ended December 31
Discount rate 6.00 6.75 6.00 6.75
Expected return on plan assets 7.00 8.50 N/A N/A
Rate of compensation increase 5.00 5.00 N/A N/A
N/A, not applicable.
The investment objective of the Plan is to maximize the return on Plan assets over a long time horizon, while meeting the Plan
obligations. At September 30, 2004, Plan assets were invested 73% in equity investments and 27% in bonds, with an average duration
of four years on bond investments. The estimated life of benefit obligations was 12 years. Management believes that this mix is
appropriate for the current economic environment. In 2004, Huntington lowered its assumptions for the discount rate. The 5.81%
assumed discount rate was based upon the Moody’s daily long-term corporate Aa bond yield as of the Plan’s measurement date. The
impact of lowering this assumption will increase Huntington’s 2005 pension expense.
The following table reconciles the beginning and ending balances of the benefit obligation of the Plan and the post-retirement benefit
plan with the amounts recognized in the consolidated balance sheets at December 31:
Post-Retirement
Pension Benefits Benefits
(in thousands of dollars) 2004 2003 2004 2003
Change in Benefit Obligation:
Projected Benefit Obligation at beginning of measurement year $299,028 $253,456 $55,490 $53,552
Changes due to:
Service cost 11,819 9,567 1,302 1,121
Interest cost 17,482 16,647 3,209 3,479
Benefits paid (6,900) (6,542) (2,986) (2,967)
Settlements (8,977) (9,684) ——
Actuarial assumptions and gains and losses 23,555 35,584 (1,511) 305
Total changes 36,979 45,572 14 1,938
Projected Benefit Obligation at end of measurement year (September 30) $336,007 $299,028 $55,504 $55,490
120