Regions Bank 2008 Annual Report Download - page 145
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The weighted-average assumptions used to determine net periodic benefit cost for the years ended
December 31 are as follows:
Pension
Other
Postretirement
Benefits
2008 2007 2006 2008 2007 2006
Discount rate ............................................... 6.38% 6.02% 5.50% 6.20% 5.75% 5.50%
Expected long-term rate of return on plan assets ................... 8.50 8.33 8.00 5.00 5.00 4.00
Rate of annual compensation increase ........................... 4.99 4.89 4.50 N/A N/A N/A
The assumed health care cost trend rate for postretirement medical benefits was 7.5% for 2008 and is
assumed to decrease gradually to 5.0% by 2015 and remain at that level thereafter.
A one-percentage point change in assumed health care cost trend rates would have the following effects:
1-Percentage
Point Increase
1-Percentage
Point Decrease
(In thousands)
Effect on total of service cost and interest cost
components ..................................... $ 123 $ (115)
Effect on postretirement benefit obligations .............. 1,154 (1,081)
The asset allocation for the Regions pension plan at the end of 2008 and 2007, and the target allocation for
2009, by asset category, are as follows:
Target
Allocation
2009
Percentage of
Plan Assets
Asset Category 2008 2007
Equity securities ....................................... 55% 45% 57%
Debt securities ........................................ 25% 28% 26%
Real estate ............................................ 10% 9% 6%
Other ................................................ 10% 18% 11%
Regions’ investment strategy is to invest primarily in large-cap equity securities and intermediate term
investment grade domestic fixed-income securities. Regions will invest in small-cap, mid-cap and international
equities in smaller concentrations depending on the Company’s outlook for growth in those sectors. Further, the
Company may diversify the holdings of the plan through investments in real estate, hedge funds, private equity
funds and limited partnerships. The use of and allocation to these diversifying investments will depend largely on
expected returns and the overall risk of the plan’s other assets. The expected long-term return on plan assets
assumption is determined using the plan asset mix, historical returns and expert opinions.
The Regions pension plan has a portion of its investments in Regions common stock. The number of shares
held by the plan was 2,735,240, which represents approximately 2.1% of the plan assets, at December 31, 2008,
for a total market value of $21.8 million.
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