Huntington National Bank 2008 Annual Report Download - page 115

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At December 31, 2008 and September 30, 2007, the end of each measurement year, The Huntington National Bank, as trustee, held
all Plan assets. The Plan assets consisted of investments in a variety of Huntington mutual funds and Huntington common stock as
follows:
(in thousands) Balance % Balance %
December 31,
2008
September 30,
2007
Fair Value
Cash $ 50,000 12% $— —%
Huntington funds — money market 295 — 65 —
Huntington funds — equity funds 197,583 48 375,883 73
Huntington funds — fixed income funds 128,655 32 129,867 25
Huntington common stock 30,546 8 11,078 2
Fair value of plan assets $407,079 100% $516,893 100%
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 December 31, 2008, Plan assets were invested 12% in cash, 56% in equity investments and 32% in bonds, with an
average duration of 3.2 years on bond investments. The balance in cash represents Huntington’s contribution to the Plan at
December 31, 2008. The contribution will be invested in a combination of equity and fixed-income investments that satisfy the
long-term objectives of the Plan. The estimated life of benefit obligations was 11 years. Although it may fluctuate with market
conditions, management has targeted a long-term allocation of Plan assets of 70% in equity investments and 30% in bond
investments.
The number of shares of Huntington common stock held by the Plan at December 31, 2008 and September 30, 2007 was 3,919,986
and 642,364, respectively. The Plan has acquired and held Huntington common stock in compliance at all times with Section 407
of the Employee Retirement Income Security Act of 1978.
Dividends and interest received by the Plan during 2008 and 2007 were $21.0 million and $52.2 million, respectively.
At December 31, 2008, the following table shows when benefit payments, which include expected future service, as appropriate,
were expected to be paid:
(in thousands) Pension Benefits Post-Retirement Benefits
2009 $ 24,549 $ 5,047
2010 26,585 5,169
2011 29,404 5,428
2012 33,069 5,684
2013 35,151 5,832
2014 through 2018 202,037 30,459
Although not required, Huntington made a $50 million contribution to the plan in December 2008. There is no expected
minimum contribution for 2009 to the Plan. However, Huntington may choose to make a contribution to the Plan up to the
maximum deductible limit in the 2009 plan year. Expected contributions for 2009 to the post-retirement benefit plan are
$4.2 million.
The assumed health-care cost trend rate has an effect on the amounts reported. A one percentage point increase would decrease
service and interest costs and the post-retirement benefit obligation by $0.1 million and $0.8 million, respectively. A one-percentage
point decrease would increase service and interest costs and the post-retirement benefit obligation by $0.1 million, and $0.7 million
respectively. The 2009 health-care cost trend rate was projected to be 8.8% for pre-65 participants and 9.8% for post-65
participants compared with an estimate of 9.2% for pre-65 participants and 10.0% for post-65 participants in 2008. These rates are
assumed to decrease gradually until they reach 4.5% for both pre-65 participants and post-65 participants in the year 2019 and
remain at that level thereafter. Huntington updated the immediate health-care cost trend rate assumption based on current market
data and Huntington’s claims experience. This trend rate is expected to decline over time to a trend level consistent with medical
inflation and long-term economic assumptions.
Huntington also sponsors other retirement plans, the most significant being the Supplemental Executive Retirement Plan and the
Supplemental Retirement Income Plan. These plans are nonqualified plans that provide 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. At
December 31, 2008 and 2007, Huntington has an accrued pension liability of $38.5 million and $49.3 million, respectively
associated with these plans. Pension expense for the plans was $2.4 million, $2.5 million, and $2.6 million in 2008, 2007, and 2006,
respectively. Huntington recorded a ($0.3 million), net of tax, minimum pension liability adjustment within other comprehensive
113
Notes to Consolidated Financial Statements Huntington Bancshares Incorporated