UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
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Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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For the fiscal year ended December 31, 2008
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Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Commission File Number 1-34073
Huntington Bancshares Incorporated
(Exact name of registrant as specified in its charter)
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Maryland
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31-0724920
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification No.)
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41 S. High Street, Columbus, Ohio
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43287
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(Address of principal executive offices)
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(Zip Code)
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Registrants telephone number, including area code
(614) 480-8300
Securities registered pursuant to Section 12(b) of the Act:
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Title of class
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Name of exchange on which registered
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8.50% Series A non-voting, perpetual convertible preferred stock
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NASDAQ
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Common Stock Par Value $0.01 per Share
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NASDAQ
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Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Exchange Act.
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Yes
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No
Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Act.
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Yes
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No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
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Yes
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No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.
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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act)
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Yes
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No
The aggregate market value of voting and non-voting common equity held by non-affiliates of
the registrant as of June 30, 2008, determined by using a per share closing price of $5.77, as
quoted by NASDAQ on that date, was $2,046,310,882. As of January 31, 2009, there were 366,141,961
shares of common stock with a par value of $0.01 outstanding.
Documents Incorporated By Reference
Parts I and II of this Form 10-K incorporate by reference certain information from the
registrants Annual Report to shareholders for the period ended December 31, 2008.
Part III of this Form 10-K incorporates by reference certain information from the registrants
definitive Proxy Statement for the 2009 Annual Shareholders Meeting
HUNTINGTON BANCSHARES INCORPORATED
INDEX
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Huntington Bancshares Incorporated
PART I
When we refer to we, our, and us in this report, we mean Huntington Bancshares
Incorporated and our consolidated subsidiaries, unless the context indicates that we refer only to
the parent company, Huntington Bancshares Incorporated. When we refer to the Bank in this
report, we mean our only bank subsidiary The Huntington National Bank, and its subsidiaries.
Item 1: Business
We are a multi-state diversified financial holding company organized under Maryland law in
1966 and headquartered in Columbus, Ohio. Through our subsidiaries, we provide full-service
commercial and consumer banking services, mortgage banking services, automobile financing,
equipment leasing, investment management, trust services, brokerage services, customized insurance
service programs, and other financial products and services. The Bank, organized in 1866, is our
only bank subsidiary. At December 31, 2008, the Bank had:
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345 banking offices in Ohio
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115 banking offices in Michigan
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57 banking offices in Pennsylvania
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51 banking offices in Indiana
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28 banking offices in West Virginia
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13 banking offices in Kentucky
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4 private banking offices in Florida
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one foreign office in the Cayman Islands
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one foreign office in Hong Kong
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We conduct certain activities in other states including Arizona, Florida, Maryland, New
Jersey, Tennessee, Texas, and Virginia. Our foreign banking activities, in total or with any
individual country, are not significant. At December 31, 2008, we had 10,951 full-time equivalent
employees.
Our lines of business are discussed in our Managements Discussion and Analysis of Financial
Condition and Results of Operations and the financial statement results for each of our lines of
business can be found in Note 24 of the Notes to Consolidated Financial Statements, both are
included in our Annual Report to shareholders, which is incorporated into this report by
reference.
Competition
Competition is intense in most of our markets. We compete on price and service with other
banks and financial services companies such as savings and loans, credit unions, finance companies,
mortgage banking companies, insurance companies, and brokerage firms. Competition could intensify
in the future as a result of industry consolidation, the increasing availability of products and
services from non-banks, greater technological developments in the industry, and banking reform.
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Regulatory Matters
General
We are a bank holding company and are qualified as a financial holding company with the
Federal Reserve. We are subject to examination and supervision by the Federal Reserve pursuant to
the Bank Holding Company Act. We are required to file reports and other information regarding our
business operations and the business operations of our subsidiaries with the Federal Reserve.
Because we are a public company, we are also subject to regulation by the Securities and
Exchange Commission (SEC). The SEC has established three categories of issuers for the purpose of
filing periodic and annual reports. Under these regulations, we are considered to be a large
accelerated filer and, as such, must comply with SEC accelerated reporting requirements.
The Bank is subject to examination and supervision by the Office of the Comptroller of the
Currency (OCC). Its domestic deposits are insured by the Deposit Insurance Fund (DIF) of the
Federal Deposit Insurance Corporation (FDIC), which also has certain regulatory and supervisory
authority over it. Our non-bank subsidiaries are also subject to examination and supervision by
the Federal Reserve or, in the case of non-bank subsidiaries of the Bank, by the OCC. Our
subsidiaries are also subject to examination by other federal and state agencies, including, in
the case of certain securities and investment management activities, regulation by the SEC and the
Financial Industry Regulatory Authority.
In connection with emergency economic stabilization programs adopted in late 2008 as
described below under Recent Regulatory Developments, we are also subject for the foreseeable
future to certain direct oversight by the U.S. Treasury Department and to certain non-traditional
oversight by our normal banking regulators.
In addition to the impact of federal and state regulation, the Bank and our non-bank
subsidiaries are affected significantly by the actions of the Federal Reserve as it attempts to
control the money supply and credit availability in order to influence the economy.
Holding Company Structure
We have one national bank subsidiary and numerous non-bank subsidiaries. Exhibit 21.1 of this
report lists all of our subsidiaries.
The Bank is subject to affiliate transaction restrictions under federal laws, which limit the
transfer of funds by a subsidiary bank or its subsidiaries to its parent corporation or any
non-bank subsidiary of its parent corporation, whether in the form of loans, extensions of credit,
investments, or asset purchases. Such transfers by a subsidiary bank are limited to:
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10% of the subsidiary banks capital and surplus for transfers to its parent
corporation or to any individual non-bank subsidiary of the parent, and
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An aggregate of 20% of the subsidiary banks capital and surplus for transfers to such
parent together with all such non-bank subsidiaries of the parent.
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Furthermore, such loans and extensions of credit must be secured within specified amounts. In
addition, all affiliate transactions must be conducted on terms and under circumstances that are
substantially the same as such transactions with unaffiliated entities.
As a matter of policy, the Federal Reserve expects a bank holding company to act as a source
of financial and managerial strength to each of its subsidiary banks and to commit resources to
support each such subsidiary bank. Under this source of strength doctrine, the Federal Reserve may
require a bank holding company to make capital injections into a troubled subsidiary bank. They
may charge the bank holding company with engaging in unsafe and unsound practices if it fails to
commit resources to such a subsidiary bank or if it undertakes actions that the Federal Reserve
believes might jeopardize its ability to commit resources to such subsidiary bank. A capital
injection may be required at times when the holding company does not have the resources to provide
it.
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Any loans by a holding company to a subsidiary bank are subordinate in right of payment to
deposits and to certain other indebtedness of such subsidiary bank. In the event of a bank holding
companys bankruptcy, the bankruptcy trustee will assume any commitment by the holding company to
a federal bank regulatory agency to maintain the capital of a subsidiary bank. Moreover, the
bankruptcy law provides that claims based on any such commitment will be entitled to a priority of
payment over the claims of the institutions general unsecured creditors, including the holders of
its note obligations.
Federal law permits the OCC to order the pro rata assessment of shareholders of a national
bank whose capital stock has become impaired, by losses or otherwise, to relieve a deficiency in
such national banks capital stock. This statute also provides for the enforcement of any such pro
rata assessment of shareholders of such national bank to cover such impairment of capital stock by
sale, to the extent necessary, of the capital stock owned by any assessed shareholder failing to
pay the assessment. As the sole shareholder of the Bank, we are subject to such provisions.
Moreover, the claims of a receiver of an insured depository institution for administrative
expenses and the claims of holders of deposit liabilities of such an institution are accorded
priority over the claims of general unsecured creditors of such an institution, including the
holders of the institutions note obligations, in the event of liquidation or other resolution of
such institution. Claims of a receiver for administrative expenses and claims of holders of
deposit liabilities of the Bank, including the FDIC as the insurer of such holders, would receive
priority over the holders of notes and other senior debt of the Bank in the event of liquidation
or other resolution and over our interests as sole shareholder of the Bank.
The Federal Reserve maintains a bank holding company rating system that emphasizes risk
management, introduces a framework for analyzing and rating financial factors, and provides a
framework for assessing and rating the potential impact of non-depository entities of a holding
company on its subsidiary depository institution(s).
A composite rating is assigned based on the foregoing three components, but a fourth
component is also rated, reflecting generally the assessment of depository institution
subsidiaries by their principal regulators. Ratings are made on a scale of 1 to 5 (1 highest) and
are not made public. The bank holding company rating system, which became effective in 2005,
applies to us. The composite ratings assigned to us, like those assigned to other financial
institutions, are confidential and may not be directly disclosed, except to the extent required by
law.
Emergency Economic Stabilization Act of 2008, Federal Deposit Insurance Corporation,
Financial Stability Plan, American Recovery and Reinvestment Act of
2009, Homeowner Affordability and Stability Plan, and Other Regulatory Developments
Emergency Economic Stabilization Act of 2008
On October 3, 2008, the Emergency Economic Stabilization Act of 2008 (EESA) was enacted. EESA
enables the federal government, under terms and conditions to be developed by the Secretary of the
Treasury, to insure troubled assets, including mortgage-backed securities, and collect premiums
from participating financial institutions. EESA includes, among other provisions: (a) the $700
billion Troubled Assets Relief Program (TARP), under which the Secretary of the Treasury is
authorized to purchase, insure, hold, and sell a wide variety of financial instruments,
particularly those that are based on or related to residential or commercial mortgages originated
or issued on or before March 14, 2008; and (b) an increase in the amount of deposit insurance
provided by the Federal Deposit Insurance Corporation (FDIC). Both of these specific provisions
are discussed in the below sections.
Troubled Assets Relief Program (TARP)
Under the TARP, the Department of Treasury authorized a voluntary capital purchase program
(CPP) to purchase up to $250 billion of senior preferred shares of qualifying financial
institutions that elected to participate by November 14, 2008. Participating companies must adopt
certain standards for executive compensation, including (a) prohibiting golden parachute payments
as defined in EESA to senior Executive Officers; (b) requiring recovery of any compensation paid to
senior Executive Officers based on criteria that is later proven to be materially inaccurate; and
(c) prohibiting incentive compensation that encourages unnecessary and excessive risks that
threaten the value of the financial institution. The terms of the CPP also limit certain uses of
capital by the issuer, including repurchases of company stock, and increases in dividends.
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On November 14, 2008, we participated in the CPP and issued approximately $1.4 billion in
capital in the form of non-voting cumulative preferred stock that pays cash dividends at the rate
of 5% per annum for the first five years, and then pays cash dividends at the rate of 9% per annum
thereafter. In addition, the Department of Treasury received warrants to purchase shares of our
common stock having an aggregate market price equal to 15% of the preferred stock amount. The
proceeds of the $1.4 billion have been credited to the preferred stock and additional
paid-in-capital. The difference between the par value of the preferred stock and the amount
credited to the preferred stock account is amortized against retained earnings and is
reflected in our income statement as dividends on preferred shares, resulting in additional
dilution to our common stock. The exercise price for the warrant of $8.90, and the market price for
determining the number of shares of common stock subject to the warrants, was determined on the
date of the preferred investment (calculated on a 20-trading day trailing average). The warrants
are immediately exercisable, in whole or in part, over a term of 10 years. The warrants are
included in our diluted average common shares outstanding in periods when the effect of their
inclusion is dilutive to earnings per share.
Federal Deposit Insurance Corporation (FDIC)
EESA temporarily raised the limit on federal deposit insurance coverage from $100,000 to
$250,000 per depositor. Separate from EESA, in October 2008, the FDIC also announced the Temporary
Liquidity Guarantee Program. Under one component of this program, the FDIC temporarily provides
unlimited coverage for noninterest bearing transaction deposit accounts through December 31, 2009.
The limits are scheduled to return to $100,000 on January 1, 2010.
In addition, on February 3, 2009, the Bank completed the issuance and sale of $600 million of
Floating Rate Senior Bank Notes with a variable rate of three month LIBOR plus 40 basis points, due
June 1, 2012 (the Notes). The Notes are guaranteed by the FDIC under the FDICs Temporary
Liquidity Guarantee Program and are backed by the full faith and credit of the United States. The
FDICs guarantee cost $20 million, which will be amortized over the term of the notes.
(See Bank Liquidity discussion for additional details regarding the Temporary Liquidity
Guarantee Program.)
Financial Stability Plan
On February 10, 2009, the Financial Stability Plan (FSP) was announced by the U.S.
Treasury Department. The FSP is a comprehensive set of measures intended to shore up the
financial system. The core elements of the plan include making bank capital injections, creating a public-private investment fund to buy troubled assets, establishing guidelines for loan modification programs and expanding the Federal Reserve lending program.
The U.S. Treasury Department has indicated more details regarding the FSP are to be
announced on a newly created government website, FinancialStability.gov, in the
next several weeks. We continue to monitor these developments and assess their potential impact on our business.
American Recovery and Reinvestment Act of 2009
On February 17, 2009, the American Recovery and Reinvestment Act of 2009 (ARRA) was enacted.
ARRA is intended to provide a stimulus to the U.S. economy in the wake of the economic downturn
brought about by the subprime mortgage crisis and the resulting credit crunch. The bill includes
federal tax cuts, expansion of unemployment benefits and other social welfare provisions, and
domestic spending in education, healthcare, and infrastructure, including the energy structure.
The new law also includes numerous non-economic recovery related items, including a limitation
on executive compensation in federally aided banks.
Under ARRA, an institution will be subject to the following restrictions and standards
through out the period in which any obligation arising from financial assistance provided
under TARP remains outstanding:
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Limits on compensation incentives for risk taking by senior executive officers.
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Requirement of recovery of any compensation paid based on inaccurate financial information.
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Prohibition on Golden Parachute Payments.
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Prohibition on compensation plans that would encourage
manipulation of reported earnings to enhance the compensation of employees.
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Publicly registered TARP recipients must establish a board compensation
committee comprised entirely
of independent directors, for the purpose of reviewing employee compensation plans.
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Prohibition on bonus, retention award, or incentive compensation, except for
payments of long term restricted stock.
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Limitation on luxury expenditures.
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TARP recipients are required to permit a separate shareholder vote to approve the
compensation of executives, as disclosed pursuant to the SECs
compensation disclosure rules.
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The chief executive officer and chief financial officer of each TARP recipient will be required
to provide a written certification of compliance with these standards to the SEC.
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The foregoing is a summary of requirements to be included in
standards to be established by the Secretary of the U.S. Treasury Department.
Homeowner Affordability and Stability Plan
On February 18, 2009, the Homeowner Affordability and Stability
Plan (HASP) was announced by the President of the United States. HASP is intended to support a
recovery in the housing market and ensure that workers can continue to pay off their mortgages
through the following elements:
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Provide access to low-cost refinancing for
responsible homeowners suffering from falling home prices.
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A $75 billion homeowner stability initiative to prevent foreclosure and help responsible families stay in their homes.
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Support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.
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More details regarding HASP are to be announced on March 4, 2009.
We continue to monitor these
developments and assess their potential impact on our business
Other Regulatory Developments
The Basel Committee on Banking Supervisions Basel II regulatory capital guidelines
originally published in June 2004 and adopted in final form by U.S. regulatory agencies in
November 2007 are designed to promote improved risk measurement and management processes and
better align minimum capital requirements with risk. The Basel II guidelines became operational
in April 2008, but are mandatory only for core banks, i.e., banks with consolidated total assets
of $250 billion or more. They are thus not applicable to the Bank, which continues to operate
under U.S. risk-based capital guidelines consistent with Basel I guidelines published in 1988.
Federal regulators issued for public comment in December 2006 proposed rules (designated as
Basel IA rules) applicable to non-core banks that would have modified the existing U.S. Basel
I-based capital framework. In July 2008, however, these regulators issued
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instead of the Basel
1A proposals
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a new rulemaking involving a standardized approach that would implement some of
the simpler approaches for both credit risk and operational risk from the more advanced Basel II
framework. Non-core U.S. depository institutions would be allowed to opt in to the standardized
approach or elect to remain under the existing Basel 1-based regulatory capital framework. The
new rulemaking remained pending at the end of 2008.
Dividend Restrictions
Dividends from the Bank are the primary source of funds for payment of dividends to our
shareholders. However, there are statutory limits on the amount of dividends that the Bank can
pay to us without regulatory approval. The Bank may not, without prior regulatory approval, pay a
dividend in an amount greater than its undivided profits. In addition, the prior approval of the
OCC is required for the payment of a dividend by a national bank if the total of all dividends
declared in a calendar year would exceed the total of its net income for the year combined with
its retained net income for the two preceding years. As a result, for the year ended December 31,
2008, the Bank did not pay any cash dividends to Huntington. At December 31, 2008, the Bank could
not have declared and paid any additional dividends to the parent company without regulatory
approval.
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If, in the opinion of the applicable regulatory authority, a bank under its jurisdiction is
engaged in or is about to engage in an unsafe or unsound practice, such authority may require,
after notice and hearing, that such bank cease and desist from such practice. Depending on the
financial condition of the Bank, the applicable regulatory authority might deem us to be engaged
in an unsafe or unsound practice if the Bank were to pay dividends. The Federal Reserve and the
OCC have issued policy statements that provide that insured banks and bank holding companies
should generally only pay dividends out of current operating earnings. As previously described,
the CPP limits our ability to increase dividends to shareholders.
FDIC Insurance
With the enactment in February 2006 of the Federal Deposit Insurance Reform Act of 2005 and
related legislation, and the adoption by the FDIC of implementing regulations in November 2006,
major changes were introduced in FDIC deposit insurance, effective January 1, 2007.
Under the reformed deposit insurance regime, the FDIC designates annually a target reserve
ratio for the DIF within the range of 1.15 percent and 1.5 percent, instead of the prior fixed
requirement to manage the DIF so as to maintain a designated reserve ratio of 1.25 percent.
In addition, the FDIC adopted a new risk-based system for assessment of deposit insurance
premiums on depository institutions, under which all such institutions would pay at least a minimum
level of premiums. The new system is based on an institutions probability of causing a loss to
the DIF, and requires that each depository institution be placed in one of four risk categories,
depending on a combination of its capitalization and its supervisory ratings. Under the base rate
schedule adopted in late 2006, institutions in Risk Category I would be assessed between 2 and 4
basis points, while institutions in Risk Category IV could be assessed a maximum of 40 basis
points.
The FDIC set 2007 assessment rates at three basis points above the base schedule rates, i.e.,
between 5 and 7 basis points for Risk Category I institutions and up to 43 basis points for Risk
Category IV institutions. To assist the transition to the new system requiring assessment payments
by all insured institutions, the Bank and other depository institutions that were in existence on
and paid deposit insurance assessments prior to December 31, 1996, were made eligible for a
one-time assessment credit based on their shares of the aggregate 1996 assessment base. The Banks
assessment rate, like that of other financial institutions, is confidential and may not be directly
disclosed, except to the extent required by law.
For 2008, the FDIC resolved to maintain the designated reserve ratio at 1.25 percent, and to
leave risk-based assessments at the same rates as in 2007, that is between 5 and 43 basis points,
depending upon an institutions risk category.
As a participating FDIC insured bank, we were assessed deposit insurance premiums totaling
$24.1 million during 2008. However, the one-time assessment credit described above was fully
utilized to substantially offset our 2008 deposit insurance premium and, therefore, only $7.6
million of deposit insurance premium expense was recognized during 2008.
In late 2008, the FDIC raised assessment rates for the first quarter of 2009 by a uniform 7
basis points, resulting in a range between 12 and 50 basis points, depending upon the risk
category. At the same time, the FDIC proposed further changes in the assessment system beginning
in the second quarter of 2009. These changes commencing April 1, 2009, would set base assessment
rates between 10 and 45 basis points, depending on the risk category, but would apply adjustments
(relating to unsecured debt, secured liabilities, and brokered deposits) to individual institutions
that could result in assessment rates between 8 and 21 basis points for institutions in the lowest
risk category and 43 to 77.5 basis points for institutions in the highest risk category. A final
rule to be issued in early 2009 could adjust these assessment rates further in the light of
developing conditions. The purpose of the April 1, 2009, changes is to ensure that riskier
institutions will bear a greater share of the proposed increase in assessments, and will be
subsidized to a lesser degree by less risky institutions. The changes are also part of an FDIC
plan to restore the designated reserve ratio to 1.25% by 2013. That ratio was expected to fall to
0.65 to 0.70 percent during the course of 2009.
7
The Bank continues to be required to make payments for the servicing of obligations of the
Financing Corporation (FICO) that were issued in connection with the resolution of savings and loan
associations, so long as such obligations remain outstanding.
Capital Requirements
The Federal Reserve has issued risk-based capital ratio and leverage ratio guidelines for bank
holding companies. The risk-based capital ratio guidelines establish a systematic analytical
framework that:
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makes regulatory capital requirements sensitive to differences in risk profiles among
banking organizations,
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takes off-balance sheet exposures into explicit account in assessing capital adequacy,
and
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minimizes disincentives to holding liquid, low-risk assets.
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Under the guidelines and related policies, bank holding companies must maintain capital
sufficient to meet both a risk-based asset ratio test and a leverage ratio test on a consolidated
basis. The risk-based ratio is determined by allocating assets and specified off-balance sheet
commitments into four weighted categories, with higher weighting assigned to categories perceived
as representing greater risk. The risk-based ratio represents capital divided by total risk
weighted assets. The leverage ratio is core capital divided by total assets adjusted as specified
in the guidelines. The Bank is subject to substantially similar capital requirements.
Generally, under the applicable guidelines, a financial institutions capital is divided into
two tiers. Institutions that must incorporate market risk exposure into their risk-based capital
requirements may also have a third tier of capital in the form of restricted short-term
subordinated debt. These tiers are:
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Tier 1, or core capital, includes total equity plus qualifying capital securities and
minority interests, excluding unrealized gains and losses accumulated in other
comprehensive income, and non-qualifying intangible and servicing assets.
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Tier 2, or supplementary capital, includes, among other things, cumulative and
limited-life preferred stock, mandatory convertible securities, qualifying subordinated
debt, and the allowance for credit losses, up to 1.25% of risk-weighted assets.
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Total capital is Tier 1 plus Tier 2 capital.
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The Federal Reserve and the other federal banking regulators require that all intangible
assets (net of deferred tax), except originated or purchased mortgage-servicing rights,
non-mortgage servicing assets, and purchased credit card relationships, be deducted from Tier 1
capital. However, the total amount of these items included in capital cannot exceed 100% of its
Tier 1 capital.
Under the risk-based guidelines, financial institutions are required to maintain a risk-based
ratio of 8%, with 4% being Tier 1 capital. The appropriate regulatory authority may set higher
capital requirements when they believe an institutions circumstances warrant.
Under the leverage guidelines, financial institutions are required to maintain a leverage
ratio of at least 3%. The minimum ratio is applicable only to financial institutions that meet
certain specified criteria, including excellent asset quality, high liquidity, low interest rate
risk exposure, and the highest regulatory rating. Financial institutions not meeting these criteria
are required to maintain a minimum Tier 1 leverage ratio of 4%.
Special minimum capital requirements apply to equity investments in non-financial companies.
The requirements consist of a series of deductions from Tier 1 capital that increase within a range
from 8% to 25% of the adjusted carrying value of the investment.
Failure to meet applicable capital guidelines could subject the financial institution to a
variety of enforcement remedies available to the federal regulatory authorities. These include
limitations on the ability to pay dividends, the issuance by the regulatory authority of a capital
directive to increase capital, and the termination of deposit insurance by the FDIC. In addition,
the financial institution could be subject to the measures described below under Prompt Corrective
Action as applicable to under-capitalized institutions.
8
The risk-based capital standards of the Federal Reserve, the OCC, and the FDIC specify that
evaluations by the banking agencies of a banks capital adequacy will include an assessment of the
exposure to declines in the economic value of the banks capital due to changes in interest rates.
These banking agencies issued a joint policy statement on interest rate risk describing prudent
methods for monitoring such risk that rely principally on internal measures of exposure and active
oversight of risk management activities by senior management.
Prompt Corrective Action
The Federal Deposit Insurance Corporation Improvement Act of 1991, known as FDICIA, requires
federal banking regulatory authorities to take prompt corrective action with respect to
depository institutions that do not meet minimum capital requirements. For these purposes, FDICIA
establishes five capital tiers: well-capitalized, adequately-capitalized, under-capitalized,
significantly under-capitalized, and critically under-capitalized.
An institution is deemed to be:
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well-capitalized if it has a total risk-based capital ratio of 10% or greater, a Tier 1
risk-based capital ratio of 6% or greater, and a Tier 1 leverage ratio of 5% or greater and is
not subject to a regulatory order, agreement, or directive to meet and maintain a specific
capital level for any capital measure;
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adequately-capitalized if it has a total risk-based capital ratio of 8% or greater, a
Tier 1 risk-based capital ratio of 4% or greater, and, generally, a Tier 1 leverage ratio of
4% or greater and the institution does not meet the definition of a well-capitalized
institution;
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under-capitalized if it does not meet one or more of the adequately-capitalized tests;
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significantly under-capitalized if it has a total risk-based capital ratio that is less
than 6%, a Tier 1 risk-based capital ratio that is less than 3%, or a Tier 1 leverage ratio
that is less than 3%; and
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critically under-capitalized if it has a ratio of tangible equity, as defined in the
regulations, to total assets that is equal to or less than 2%.
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Throughout 2008, our regulatory capital ratios and those of the Bank were in excess of the
levels established for well-capitalized institutions.
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Well-
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At December 31, 2008
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Capitalized
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Excess
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(in billions of dollars)
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Minimums
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Actual
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Capital
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Ratios:
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Tier 1 leverage ratio
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Consolidated
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5.00
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%
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9.82
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%
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$
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2.5
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Bank
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5.00
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5.99
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0.5
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Tier 1 risk-based capital ratio
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Consolidated
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6.00
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10.72
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2.2
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Bank
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6.00
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6.44
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0.2
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Total risk-based capital ratio
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Consolidated
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10.00
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13.91
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1.8
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Bank
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10.00
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10.71
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0.3
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FDICIA generally prohibits a depository institution from making any capital distribution,
including payment of a cash dividend or paying any management fee to its holding company, if the
depository institution would be under-capitalized after such payment. Under-capitalized
institutions are subject to growth limitations and are required by the appropriate federal banking
agency to submit a capital restoration plan. If any depository institution subsidiary of a holding
company is required to submit a capital restoration plan, the holding company would be required to
provide a limited guarantee regarding compliance with the plan as a condition of approval of such
plan.
If an under-capitalized institution fails to submit an acceptable plan, it is treated as if
it is significantly under-capitalized. Significantly under-capitalized institutions may be
subject to a number of requirements and
9
restrictions, including orders to sell sufficient voting
stock to become adequately-capitalized, requirements to reduce total assets, and cessation of
receipt of deposits from correspondent banks.
Critically under-capitalized institutions may not, beginning 60 days after becoming
critically under-capitalized, make any payment of principal or interest on their subordinated
debt. In addition, critically under-capitalized institutions are subject to appointment of a
receiver or conservator within 90 days of becoming so classified.
Under FDICIA, a depository institution that is not well-capitalized is generally prohibited
from accepting brokered deposits and offering interest rates on deposits higher than the prevailing
rate in its market. As previously stated, the Bank is well-capitalized and the FDICIA brokered
deposit rule did not adversely affect its ability to accept brokered deposits. The Bank had $3.4
billion of such brokered deposits at December 31, 2008.
Financial Holding Company Status
In order to maintain its status as a financial holding company, a bank holding companys
depository subsidiaries must all be both well capitalized and well managed, and must meet
their Community Reinvestment Act obligations.
Financial holding company powers relate to financial activities that are determined by the
Federal Reserve, in coordination with the Secretary of the Treasury, to be financial in nature,
incidental to an activity that is financial in nature, or complementary to a financial activity,
provided that the complementary activity does not pose a safety and soundness risk. The
Gramm-Leach-Bliley Act designates certain activities as financial in nature, including:
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underwriting insurance or annuities;
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providing financial or investment advice;
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underwriting, dealing in, or making markets in securities;
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merchant banking, subject to significant limitations;
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insurance company portfolio investing, subject to significant limitations; and
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any activities previously found by the Federal Reserve to be closely related to
banking.
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The Gramm-Leach-Bliley Act also authorizes the Federal Reserve, in coordination with the
Secretary of the Treasury, to determine that additional activities are financial in nature or
incidental to activities that are financial in nature.
We are required by the Bank Holding Company Act to obtain Federal Reserve approval prior to
acquiring, directly or indirectly, ownership or control of voting shares of any bank, if, after
such acquisition, we would own or control more than 5% of its voting stock. However, as a
financial holding company, we may commence any new financial activity, except for the acquisition
of a savings association, with notice to the Federal Reserve within 30 days after the commencement
of the new financial activity.
USA Patriot Act
The USA Patriot Act of 2001 and its related regulations require insured depository
institutions, broker-dealers, and certain other financial institutions to have policies,
procedures, and controls to detect, prevent, and report money laundering and terrorist financing.
The statute and its regulations also provide for information sharing, subject to conditions,
between federal law enforcement agencies and financial institutions, as well as among financial
institutions, for counter-terrorism purposes. Federal banking regulators are required, when
reviewing bank holding company acquisition and bank merger applications, to take into account the
effectiveness of the anti-money laundering activities of the applicants.
Customer Privacy and Other Consumer Protections
Pursuant to the Gramm-Leach-Bliley Act, we, like all other financial institutions, are
required to:
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provide notice to our customers regarding privacy policies and practices,
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10
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inform our customers regarding the conditions under which their non-public personal
information may be disclosed to non-affiliated third parties, and
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give our customers an option to prevent disclosure of such information to non-affiliated
third parties.
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Under the Fair and Accurate Credit Transactions Act of 2003, our customers may also opt out of
information sharing between and among us and our affiliates. We are also subject, in connection
with our lending and leasing activities, to numerous federal and state laws aimed at protecting
consumers, including the Home Mortgage Disclosure Act, the Real Estate Settlement Procedures Act,
the Equal Credit Opportunity Act, the Truth in Lending Act, and the Fair Credit Reporting Act.
Sarbanes-Oxley Act of 2002
The Sarbanes-Oxley Act of 2002 imposed new or revised corporate governance, accounting, and
reporting requirements on us and all other companies having securities registered with the SEC.
In addition to a requirement that chief executive officers and chief financial officers certify
financial statements in writing, the statute imposed requirements affecting, among other matters,
the composition and activities of audit committees, disclosures relating to corporate insiders and
insider transactions, codes of ethics, and the effectiveness of internal controls over financial
reporting.
Guide 3 Information
Information required by Industry Guide 3 relating to statistical disclosure by bank holding
companies is contained in the information incorporated by reference in response to Items 7 and 8 of
this report.
Available Information
We make available free of charge on our internet website, our Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and, if applicable, amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934, as amended, as soon as reasonably practicable after those reports have been electronically
filed or submitted to the SEC. These filings can be accessed under the Investor Relations link
found on the homepage of our website at www.huntington.com. These filings are also accessible on
the SECs website at
www.sec.gov.
The public may read and copy any materials we file with the SEC
at the SECs Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330.
Item 1A: Risk Factors
We, like other financial companies, are subject to a number of risks that may adversely affect
our financial condition or results of operation, many of which are outside of our direct control,
though efforts are made to manage those risks while optimizing returns. Among the risks assumed
are: (1)
credit risk
, which is the risk of loss due to loan and lease customers or other
counterparties not being able to meet their financial obligations under agreed upon terms, (2)
market risk
, which is the risk of loss due to changes in the market value of assets and
liabilities due to changes in market interest rates, foreign exchange rates, equity prices, and
credit spreads, (3)
liquidity risk
, which is the risk of loss due to the possibility that
funds may not be available to satisfy current or future commitments based on external macro market
issues, investor and customer perception of financial strength, and events unrelated to the Company
such as war, terrorism, or financial institution market specific issues, and (4)
operational
risk
, which is the risk of loss due to human error, inadequate or failed internal systems and
controls, violations of, or noncompliance with, laws, rules, regulations, prescribed practices, or
ethical standards, and external influences such as market conditions, fraudulent activities,
disasters, and security risks.
In addition to the other information included or incorporated by reference into this report,
readers should carefully consider that the following important factors, among others, could
materially impact our business, future results of operations, and future cash flows.
11
(1) Credit Risks:
The allowance for loan losses may prove inadequate or be negatively affected by credit risk
exposures.
Our business depends on the creditworthiness of our customers. We periodically review the
allowance for loan and lease losses for adequacy considering economic conditions and trends,
collateral values and credit quality indicators, including past charge-off experience and levels of
past due loans and nonperforming assets. There is no certainty that the allowance for loan losses
will be adequate over time to cover credit losses in the portfolio because of unanticipated adverse
changes in the economy, market conditions or events adversely affecting specific customers,
industries or markets. If the credit quality of the customer base materially decreases, if the
risk profile of a market, industry or group of customers changes materially, or if the allowance
for loan losses is not adequate, our business, financial condition, liquidity, capital, and results
of operations could be materially adversely affected.
The largest single contributor to our net loss in the fourth quarter of 2008, and our reduced net
income in 2008, was $438.0 million of provision expense relating to our credit relationship with
Franklin Credit Management Corporation (Franklin). This charge represents our best estimate of the
inherent loss within this credit relationship. However, there can be no assurance that we will not
incur further losses relating to the Franklin relationship.
We have a significant loan relationship with Franklin. Franklin describes itself as a
specialty consumer finance company primarily engaged in the servicing and resolution of performing,
re-performing, and nonperforming residential mortgage loans. Franklins portfolio consists of
loans secured by 1-4 family residential real estate that generally fall outside the underwriting
standards of Fannie Mae and Freddie Mac and involve elevated credit risk as a result of the nature
or absence of income documentation, limited credit histories, higher levels of consumer debt or
past credit difficulties. Franklin purchased these loan portfolios at a discount to the unpaid
principal balances and originated loans with interest rates and fees calculated to provide a rate
of return adjusted to reflect the elevated credit risk inherent in these types of loans. Franklin
originated non-prime loans through its wholly-owned subsidiary, Tribeca Lending Corp., and has
generally held for investment the loans acquired and a significant portion of the loans originated.
Through the 2008 third quarter, the Franklin relationship continued to perform and accrue
interest. While the cash flow generated by the underlying collateral declined slightly, it
continued to exceed the requirements of the restructuring agreement. However, during the 2008
fourth quarter the cash flows deteriorated significantly, reflecting a more severe than expected
deterioration in the overall economy. Principal payments associated with the first mortgage
portfolios contracted significantly as the availability of credit was further reduced. An
important source of principal reductions had been proceeds from the sale of properties in
foreclosure, so the tightening of credit standards had a direct negative impact on the cash flows
during the quarter. In addition, interest collections declined in the Franklin second mortgage
portfolio as delinquencies continued to increase. These factors, coupled with the significant
economic downturn in the 2008 fourth quarter, further weakened Franklins borrowers ability to
pay, which resulted in significant deterioration in the cash flow that we expected to receive from
these loans. As such, the changes in our estimates of the future expected cash flows led to the
following 2008 fourth quarter actions:
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$423.3 million of our loans to Franklin were charged-off,
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$9.0 million of interest income was reversed as the remaining loans were put on nonaccrual,
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$7.3 million of interest swap exposure was written off, and
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$438.0 million of provision expense was recorded to replenish and increase the remaining
specific loan loss reserve.
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As a result of these actions, at December 31, 2008, total loans outstanding to Franklin were
$650.2 million, down $444.3 million, or 41%, from $1.095 billion at September 30, 2008. The
specific allowance for loan losses on the Franklin exposure at December 31, 2008, was $130.0
million, up from $115.3 million at September 30, 2008, and represented 20% of the remaining loans
outstanding. Subtracting the specific reserve from total loans outstanding, our total net exposure
to Franklin at December 31, 2008, was $520.2 million.
For further discussion concerning our exposure to Franklin, see the Significant Items
Influencing Financial Performance and Comparisons section included in our 2008 Annual Report to
Shareholders, portions of which are filed as exhibit 13.1 to this report, and incorporated by
reference.
12
If Franklins financial or operating condition were to deteriorate further, we have
established alternatives for loan servicing. In the event of default by Franklin, we can terminate
servicing responsibilities and appoint a successor servicer. Franklin would be contractually
obligated to cooperate with us and incur the costs of transferring all documents, files, and
balances to the successor.
We do not control Franklin, and Franklins ability to collect payments of principal and
interest on its loans and other recoveries from its real estate assets depends upon the efforts of
its own employees and third-party servicers hired by it. Franklin, like other residential mortgage
lenders, is likely to be materially adversely affected by further declines in home prices and
disruptions in credit markets in many locales across the United States.
A sustained weakness or weakening in business and economic conditions generally or specifically in
the markets in which we do business could adversely affect our business and operating results.
Our business could be adversely affected to the extent that weaknesses in business and
economic conditions have direct or indirect impacts on us or on our customers and counterparties.
These conditions could lead, for example, to one or more of the following:
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A decrease in the demand for loans and other products and services offered by us;
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A decrease in customer savings generally and in the demand for savings and investment
products offered by us; and
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An increase in the number of customers and counterparties who become delinquent, file
for protection under bankruptcy laws, or default on their loans or other obligations to us.
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An increase in the number of delinquencies, bankruptcies or defaults could result in a higher
level of nonperforming assets, net charge-offs, provision for credit losses, and valuation
adjustments on loans held for sale. The markets we serve are dependent, indirectly, on industrial
businesses and thus particularly vulnerable to adverse changes in economic conditions in these
regions.
Our commercial real estate loan portfolio has and will continue to be affected by the on-going
correction in residential real estate prices and reduced levels of home sales.
At December 31, 2008, we had $10.1 billion of commercial real estate loans, including $1.6
billion of loans to builders of single family homes. There continues to be a general slowdown in
the housing market across our geographic footprint, reflecting declining prices and excess
inventories of houses to be sold. As a result, home builders have shown signs of financial
deterioration. We expect the home builder market to continue to be volatile and anticipate
continued pressure on the home builder segment in the coming months. As we continue our on-going
portfolio monitoring, we will make credit and reserve decisions based on the current conditions of
the borrower or project combined with our expectations for the future. If the slow down in the
housing market continues, we could experience higher charge-offs and delinquencies in this
portfolio.
Declines in home values and reduced levels of home sales in our markets could continue to adversely
affect us.
Like all banks, we are subject to the effects of any economic downturn. There has been a
slowdown in the housing market across our geographic footprint, reflecting declining prices and
excess inventories of houses to be sold. These developments have had, and further declines may
continue to have, a negative effect on our financial conditions and results of operations. At
December 31, 2008, we had:
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$7.6 billion of home equity loans and lines, representing 18% of total loans and
leases.
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$4.8 billion in residential real estate loans, representing 12% of total loans
and leases. Adjustable-rate mortgages, primarily mortgages that have a fixed rate
for the first 3 to 5 years and then adjust annually, comprised 63% of this
portfolio.
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$1.6 billion of loans to single family home builders, including loans made to
both middle market and small business home builders. These loans represented 4% of
total loans and leases.
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$0.7 billion of loans to Franklin, net of amounts charged-off, substantially all
of which is secured by and ultimately reflects exposures to residential real estate
loans. These loans represented 2% of total loans and leases.
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13
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$2.1 billion of mortgage-backed securities, including $1.6 billion of Federal Agency
mortgage-backed securities, $0.5 billion of private label collateralized mortgage
obligations, $0.3 billion of Alt-A mortgage backed securities, and $0.1 billion of
pooled trust preferred securities that could be negatively affected by a decline in
home values.
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Adverse economic conditions in the automobile manufacturing and related service industries may
impact our banking business.
Many of the banking markets we serve are dependent, directly or indirectly, on the automobile
manufacturing industry. We do not have any direct credit exposure to
automobile manufacturers. However, we do
have $288 million of exposure to companies that derive more than
25% of their revenues from contracts with the automobile
manufacturing companies. Also, these automobile manufacturers
or their suppliers employ many of our consumer customers. The automobile manufacturing industry
has experienced significant economic difficulties over the past five years, which, in turn, has
adversely impacted a number of related industries that serve the automobile manufacturing industry,
including automobile parts suppliers and other indirect businesses. We cannot provide assurance
that the economic conditions in the automobile manufacturing and related service industries will
improve at any time in the foreseeable future or that adverse economic conditions in these
industries will not impact the Bank.
We could experience losses on residual values related to our automobile lease portfolio.
Inherently, automobile lease portfolios are subject to residual risk, which arises when the
market price of the leased vehicle at the end of the lease term is below the estimated residual
value at the time the lease is originated. This situation arises due to a decline in used car
market values. A reduction in the expected proceeds from the residual values of our direct
financing leases would result in an immediate recognition of impairment on the lease whereas a
reduction in the expected proceeds from the residual values of our operating leases would result in
an increase in the depreciation of our operating lease assets over the remaining term of the lease.
For further discussion about our management of lease residual risk, see the Lease Residual Risk
section of Managements Discussion and Analysis of our 2008 Annual Report to Shareholders, portions
of which are filed as exhibit 13.1 to this report, and incorporated by reference.
(2) Market Risks:
If our stock price declines from levels at December 31, 2008, we will evaluate our goodwill
balances for impairment, and if the values of our businesses have declined, we could recognize an
impairment charge for our goodwill.
We performed interim evaluations of our goodwill balances at June 30, 2008, and December 31,
2008, and an annual goodwill impairment assessment as of October 1, 2008. Based on our analyses, we
concluded that the fair value of our reporting units exceeded the fair value of our assets and
liabilities and, therefore, goodwill was not considered impaired at any of those dates. The
valuation of each of these lines of business included determining the value of the assets and
liabilities we currently own, as well as an estimate of the future earnings that we expect from
each line of business. To validate our evaluation of the values of our businesses, we reconcile
the aggregate values of our lines of business to our total market capitalization, allowing for an
appropriate control premium, typically in a range of 20% to 50%. The estimated control premium was
determined by a review of premiums paid for similar companies over the past five years. It is
possible that our assumptions and conclusions regarding the valuation of our lines of business
could change adversely, which could result in the recognition of impairment for our goodwill, which
could have a material effect on our financial position and future results of operations.
The value of certain investment securities is volatile and future declines or other-than-temporary
impairments could materially adversely affect our future earnings and regulatory capital.
Continued volatility in the market value for certain of our investment securities, whether
caused by changes in market perceptions of credit risk, as reflected in the expected market yield of
the security, or actual defaults in the portfolio could result in significant fluctuations in the
value of the securities. This could have a material adverse impact on our accumulated other
comprehensive loss and shareholders equity depending on the direction of the fluctuations.
Furthermore, future downgrades or defaults in these securities could result in future
classifications as other than temporarily impaired. This could have a material impact on our
future earnings, although the impact on shareholders equity
will be offset by any amount already included
in other comprehensive income for securities where we have recorded temporary impairment.
14
Changes in interest rates could negatively impact our financial condition and results of
operations.
Our results of operations depend substantially on net interest income, which is the difference
between interest earned on interest-earning assets (such as investments, loans, and direct
financing leases) and interest paid on interest-bearing liabilities (such as deposits and
borrowings). Interest rates are highly sensitive to many factors, including governmental monetary
policies and domestic and international economic and political conditions. Conditions such as
inflation, recession, unemployment, money supply, and other factors beyond our control may also
affect interest rates. If our interest-earning assets mature or reprice more quickly than
interest-bearing liabilities in a declining interest rate environment, net interest income could be
adversely impacted. Likewise, if interest-bearing liabilities mature or reprice more quickly than
interest-earnings assets in a rising interest rate environment, net interest income could be
adversely impacted.
Changes in interest rates also can affect the value of loans, securities, and other assets,
including retained interests in securitizations, mortgage and non-mortgage servicing rights and
assets under management. A portion of our earnings results from transactional income. Examples of
transactional income include trust income, brokerage income, gain on sales of loans and other real
estate owned. This type of income can vary significantly from quarter-to-quarter and year-to-year
based on a number of different factors, including the interest rate environment. An increase in
interest rates that adversely affects the ability of borrowers to pay the principal or interest on
loans and leases may lead to an increase in nonperforming assets and a reduction of income
recognized, which could have a material, adverse effect on our results of operations and cash
flows. When we decide to stop accruing interest on a loan, we reverse any accrued but unpaid
interest receivable, which decreases interest income. Subsequently, we continue to have a cost to
fund the loan, which is reflected as interest expense, without any interest income to offset the
associated funding expense. Thus, an increase in the amount of loans on nonaccrual status could
have an adverse impact on net interest income.
Although fluctuations in market interest rates are neither completely predictable nor
controllable, our Market Risk Committee (MRC) meets periodically to monitor our interest rate
sensitivity position and oversee our financial risk management by establishing policies and
operating limits. For further discussion, see the Market Risk Interest Rate Risk section
included in our 2008 Annual Report to Shareholders, portions of which are filed as exhibit 13.1 to
this report, and incorporated by reference. If short-term interest rates remain at their
historically low levels for a prolonged period, and assuming longer-term interest rates fall
further, we could experience net interest margin compression as our interest-earning assets would
continue to reprice downward while our interest-bearing liability rates, especially customer
deposit rates, could remain at current levels.
(3) Liquidity Risks:
If the Bank or holding company were unable to borrow funds through access to capital markets, we
may not be able to meet the cash flow requirements of our depositors,
creditors, and borrowers, or the
operating cash needed to fund corporate expansion and other corporate activities.
Liquidity is the ability to meet cash flow needs on a timely basis at a reasonable cost. The
liquidity of the Bank is used to make loans and leases and to repay deposit liabilities as they
become due or are demanded by customers. Liquidity policies and limits are established by the board
of directors, with operating limits set by MRC, based upon the ratio of loans to deposits and
percentage of assets funded with non-core or wholesale funding. The Banks MRC regularly monitors
the overall liquidity position of the Bank and the parent company to ensure that various
alternative strategies exist to cover unanticipated events that could affect liquidity. MRC also
establishes policies and monitors guidelines to diversify the Banks wholesale funding sources to
avoid concentrations in any one market source. Wholesale funding sources include Federal funds
purchased, securities sold under repurchase agreements, non-core deposits, and medium- and
long-term debt, which includes a domestic bank note program and a Euronote program. The Bank is
also a member of the Federal Home Loan Bank of Cincinnati, Ohio (FHLB), which provides funding
through advances to members that are collateralized with mortgage-related assets.
We maintain a portfolio of securities that can be used as a secondary source of liquidity.
There are other sources of liquidity available to us should they be needed. These sources include
the sale or securitization of loans, the ability to acquire additional national market, non-core
deposits, issuance of additional collateralized borrowings such as FHLB advances, the issuance of
debt securities, and the issuance of preferred or common securities in public or private
transactions. The Bank also can borrow from the Federal Reserves discount window.
15
Starting in the middle of 2007, there has been significant turmoil and volatility in worldwide
financial markets which is, at present, ongoing. These conditions have resulted in a disruption in
the liquidity of financial markets, and could directly impact us to the extent we need to access
capital markets to raise funds to support our business and overall liquidity position. This
situation could affect the cost of such funds or our ability to raise such funds.
If we were unable to access any of these funding sources when needed, we might be unable to
meet customers needs, which could adversely impact our financial condition, results of operations,
cash flows, and level of regulatory-qualifying capital. We may, from
time to time, consider opportunistically retiring our outstanding
securities, including our subordinated debt, trust preferred
securities and preferred shares in privately negotiated or open
market transactions for cash or common shares. For further discussion, see the Liquidity
Risk section included in our 2008 Annual Report to Shareholders, portions of which are filed as
exhibit 13.1 to this report, and incorporated by reference.
If our credit ratings were downgraded, the ability to access funding sources may be negatively
impacted or eliminated, and our liquidity and the market price of our common stock could be
adversely impacted. The Bank has issued letters of credit that support $500 million of notes and
bonds issued by our customers. The majority of the bonds have been sold by The Huntington
Investment Company, our broker-dealer subsidiary. A downgrade in the Banks short term rating
might influence some of the bond investors to put the bonds back to the remarketing agent. A
failure to remarket would require the Bank to obtain funding for the amount of notes and bonds that
cannot be remarketed.
Credit ratings by the three major credit rating agencies are an important component of our
liquidity profile. Among other factors, the credit ratings are based on the financial strength,
credit quality and concentrations in the loan portfolio, the level and volatility of earnings,
capital adequacy, the quality of Management, the liquidity of the balance sheet, the availability
of a significant base of core retail and commercial deposits, and the ability to access a broad
array of wholesale funding sources. Adverse changes in these factors could result in a negative
change in credit ratings and impact not only the ability to raise funds in the capital markets, but
also the cost of these funds. In addition, certain financial on- and off-balance sheet arrangements
contain credit rating triggers that could increase funding needs should a negative rating change
occur. Letter of credit commitments for marketable securities, interest rate swap collateral
agreements, and certain asset securitization transactions contain credit rating provisions.
Credit ratings as of February 13, 2009, for the parent company and the Bank can be found in
Table 40 of Managements Discussion and Analysis of our 2008 Annual Report to Shareholders,
portions of which are filed as exhibit 13.1 to this report, and incorporated by reference.
We rely on certain funding sources such as large corporate deposits, public fund deposits,
federal funds, Euro deposits, FHLB advances, and bank notes. Although not contractually tied to
credit ratings, our ability to access these funding sources may be impacted by negative changes in
credit ratings. In the case of public funds or FHLB advances, a credit downgrade may also trigger a
requirement that we pledge additional collateral against outstanding borrowings. Credit rating
downgrades could result in a loss of equity investor confidence.
The OCC may impose dividend payment and other restrictions on the Bank, which could impact our
ability to pay dividends to shareholders or repurchase stock. Due to the significant loss that the
Bank incurred in the fourth quarter of 2008, at December 31, 2008, the Bank could not declare and
pay dividends to the holding company without regulatory approval.
The OCC is the primary regulatory agency that examines the Bank, its subsidiaries, and their
respective activities. Under certain circumstances, including any determination that the activities
of the Bank or its subsidiaries constitute an unsafe and unsound banking practice, the OCC has the
authority by statute to restrict the Banks ability to transfer assets, make shareholder
distributions, and redeem preferred securities.
Under applicable statutes and regulations, dividends by a national bank may be paid out of
current or retained net profits, but a national bank is prohibited from declaring a cash dividend
on shares of its common stock out of net profits until the surplus fund equals the amount of
capital stock or, if the surplus fund does not equal the amount of capital stock, until certain
amounts from net profits are transferred to the surplus fund. Moreover, the prior approval of the
OCC is required for the payment of a dividend if the total of all dividends declared by a national
bank in any calendar year would exceed the total of its net profits for the year combined with its
net profits for the two preceding years, less any required transfers to surplus or a fund for the
retirement of any preferred securities.
16
We do not anticipate that the holding company will receive dividends from the Bank during
2009, as we build the Banks regulatory capital levels above our
already well-capitalized level.
Payment of dividends could also be subject to regulatory limitations if the Bank became
under-capitalized for purposes of the OCC prompt corrective action regulations.
Under-capitalized is currently defined as having a total risk-based capital ratio of less than
8.0%, a Tier 1 risk-based capital ratio of less than 4.0%, or a core capital, or leverage, ratio of
less than 4.0%. If the Bank were unable to pay dividends to the parent company, it could impact
our ability to pay dividends to shareholders or repurchase stock. Throughout 2008, the Bank was in
compliance with all regulatory capital requirements and considered to be well-capitalized.
For further discussion, see the Parent Company Liquidity section included in our 2008 Annual
Report to Shareholders, portions of which are filed as exhibit 13.1 to this report, and
incorporated by reference.
(4) Operational Risks:
If our regulators deem it appropriate, they can take regulatory actions that could impact our
ability to compete for new business, constrain our ability to fund our liquidity needs, and
increase the cost of our services.
Huntington and its subsidiaries are subject to the supervision and regulation of various State
and Federal regulators, including the Office of the Comptroller of the Currency, the Federal
Reserve, the FDIC, SEC, FINRA, and various state regulatory agencies. As such, Huntington is
subject to a wide variety of laws and regulations, many of which are discussed in the Regulatory
Matters section. As part of their supervisory process, which includes
periodic examinations and continuous monitoring, the regulators have the authority to impose
restrictions or conditions on our activities and the manner in which we manage the organization.
These actions could impact the organization in a variety of ways, including subjecting us to
monetary fines, restricting our ability to pay dividends, precluding mergers or acquisitions,
limiting our ability to offer certain products or services, or imposing additional capital
requirements.
The resolution of significant pending litigation, if unfavorable, could have a material adverse
affect on our results of operations for a particular period.
Huntington faces legal risks in its businesses, and the volume of claims and amount of damages
and penalties claimed in litigation and regulatory proceedings against financial institutions
remain high. Substantial legal liability or significant regulatory action against Huntington could
have material adverse financial effects or cause significant reputational harm to Huntington, which
in turn could seriously harm Huntingtons business prospects. As more fully described in Note 21
of the Notes to Consolidated Financial Statements included in our 2008 Annual Report to
Shareholders, portions of which are filed as exhibit 13.1 to this report, and incorporated by
reference, three putative class actions and three shareholder derivative action were filed against
Huntington, certain affiliated committees, and / or certain of its current or former officers and
directors from December 2007 through February 2008 related to Huntingtons transactions with
Franklin and the financial disclosures relating to such transactions and, in one case, Huntington
stock being offered as an investment in a Huntington employee benefit plan. At this time, it is
not possible for management to assess the probability of an adverse outcome, or reasonably estimate
the amount of any potential loss in connection with these lawsuits. Although no assurance can be
given, based on information currently available, consultation with counsel, and available insurance
coverage, management believes that the eventual outcome of these claims against us will not,
individually or in the aggregate, have a material adverse effect on our consolidated financial
position or results of operations. However, it is possible that the ultimate resolution of these
matters, if unfavorable, may be material to the results of operations for a particular period.
17
Huntington faces significant operational risk.
Huntington is exposed to many types of operational risk, including reputational risk, legal
and compliance risk, the risk of fraud or theft by employees or outsiders, unauthorized
transactions by employees or operational errors, including clerical or record-keeping errors or
those resulting from faulty or disabled computer or telecommunications systems. Negative public
opinion can result from Huntingtons actual or alleged conduct in any number of activities,
including lending practices, corporate governance and acquisitions and from actions taken by
government regulators and community organizations in response to those activities. Negative public
opinion can adversely affect Huntingtons ability to attract and keep customers and can expose it
to litigation and regulatory action.
We establish and maintain systems of internal operational controls that provide us with timely
and accurate information about our level of operational risk. While not foolproof, these systems
have been designed to manage operational risk at appropriate, cost-effective levels. Procedures
exist that are designed to ensure that policies relating to conduct, ethics, and business practices
are followed. While we continually monitor and improve the system of internal controls, data
processing systems, and corporate-wide processes and procedures, there can be no assurance that
future losses will not occur.
Failure to maintain effective internal controls over financial reporting in the future could impair
our ability to accurately and timely report its financial results or prevent fraud, resulting in
loss of investor confidence and adversely affecting our business and stock price.
Effective internal controls over financial reporting are necessary to provide reliable
financial reports and prevent fraud. As a financial holding company, we are subject to regulation
that focuses on effective internal controls and procedures. Management continually seeks to improve
these controls and procedures.
Management believes that our key internal controls over financial reporting are currently
effective; however, such controls and procedures will be modified, supplemented, and changed from
time to time as necessitated by our growth and in reaction to external events and developments.
While Management will continue to assess our controls and procedures and take immediate action to
remediate any future perceived gaps, there can be no guarantee of the effectiveness of these
controls and procedures on an on-going basis. Any failure to maintain in the future an effective
internal control environment could impact our ability to report its financial results on an
accurate and timely basis, which could result in regulatory actions, loss of investor confidence,
and adversely impact its business and stock price.
18
Item 1B: Unresolved Staff Comments
None.
Item 2: Properties
Our headquarters, as well as the Banks, are located in the Huntington Center, a
thirty-seven-story office building located in Columbus, Ohio. Of the buildings total office space
available, we lease approximately 40%. The lease term expires in 2015, with nine five-year renewal
options for up to 45 years but with no purchase option. The Bank has an indirect minority equity
interest of 18.4% in the building.
Our other major properties consist of:
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a thirteen-story and a twelve-story office building, both of which are located
adjacent to the Huntington Center;
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a twenty-one story office building, known as the Huntington Building, located in
Cleveland, Ohio;
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an eighteen-story office building in Charleston, West Virginia;
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a three-story office building located in Holland, Michigan;
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a Business Service Center in Columbus, Ohio;
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The Crosswoods building, located in the greater Columbus area;
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a twelve story office building in Youngstown, Ohio
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a ten story office building in Warren, Ohio
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an office complex located in Troy, Michigan; and
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three data processing and operations centers (Easton and Northland) located in
Ohio and one in Indianapolis.
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The office buildings above serve as regional administrative offices occupied predominantly by
our Regional Banking and Private Financial, Capital Markets, and Insurance Group lines of business.
The Auto Finance and Dealer Services line of business is located in the Northland operations
center.
Of these properties, we own the thirteen-story and twelve-story office buildings, and the
Business Service Center in Columbus and the twelve-story office building in Youngstown, Ohio. All
of the other major properties are held under long-term leases. In 1998, we entered into a
sale/leaseback agreement that included the sale of 59 of our locations. The transaction included a
mix of branch banking offices, regional offices, and operational facilities, including certain
properties described above, which we will continue to operate under a long-term lease.
Item 3: Legal Proceedings
Information required by this item is set forth in Note 21 of the Notes to Consolidated
Financial Statements included in our 2008 Annual Report to Shareholders, portions of which are
filed as Exhibit 13.1 to this report, and incorporated herein by reference.
Item 4: Submission of Matters to a Vote of Security Holders
Not Applicable.
PART II
Item 5: Market for Registrants Common Equity, Related Shareholder Matters and Issuer Purchases of
Equity Securities
The common stock of Huntington Bancshares Incorporated is traded on the NASDAQ Stock Market
under the symbol HBAN. The stock is listed as HuntgBcshr or HuntBanc in most newspapers. As
of January 31, 2009, we had 41,153 shareholders of record.
19
Information regarding the high and low sale prices of our common stock and cash dividends
declared on such shares, as required by this item, is set forth in Table 52 entitled Quarterly
Stock Summary, Key Ratios and Statistics, and Capital Data included in our 2008 Annual Report to
Shareholders, portions of which are filed as exhibit 13.1 to this report, and incorporated by
reference. Information regarding restrictions on dividends, as required by this item, is set forth
in Item 1 Business-Regulatory Matters-Dividend Restrictions and in Note 22 of the Notes to
Consolidated Financial Statements included in our 2008 Annual Report to Shareholders, portions of
which are filed as exhibit 13.1 to this report, and incorporated by reference.
Huntington did not repurchase any shares under the 2006 Repurchase Program for the three-month
period ended December 31, 2008. At the end of the period, 3,850,000 shares may be purchased under
the 2006 Repurchase Program.
The line graph below compares the yearly percentage change in cumulative total shareholder
return on Huntington common stock and the cumulative total return of the S&P 500 Index and the KBW
50 Bank Index for the period December 31, 2003, through December 31, 2008. The KBW 50 Bank Index is
a market capitalization-weighted bank stock index published by Keefe, Bruyette & Woods. The index
is composed of the 50 largest banking companies and includes all money-center banks and most major
regional banks. An investment of $100 on December 31, 2003, and the reinvestment of all dividends
are assumed.
Item 6: Selected Financial Data
Information required by this item is set forth in Table 1 in our 2008 Annual Report to
Shareholders, portions of which are filed as exhibit 13.1 to this report, and incorporated by
reference.
Item 7: Managements Discussion and Analysis of Financial Condition and Results of Operations
Information required by this item is set forth in Managements Discussion and Analysis of
Financial Condition and Results of Operations included in the 2008 Annual Report to Shareholders,
portions of which are filed as Exhibit 13.1 to this report, and incorporated herein by reference.
20
Item 7a: Quantitative and Qualitative Disclosures About Market Risk
Information required by this item is set forth in the caption Market Risk included in the
2008 Annual Report to Shareholders, portions of which are filed as Exhibit 13.1 to this report,
and incorporated herein by reference.
Item 8: Financial Statements and Supplementary Data
Information required by this item is set forth in the Report of Independent Registered Public
Accounting Firm, Consolidated Financial Statements and Notes, and Selected Quarterly Income
Statements included in the 2008 Annual Report to Shareholders, portions of which are filed as
Exhibit 13.1 to this report, and incorporated herein by reference.
Item 9: Changes In and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A: Controls and Procedures
Disclosure Controls and Procedures
Huntington maintains disclosure controls and procedures designed to ensure that the
information required to be disclosed in the reports that it files or submits under the Securities
Exchange Act of 1934, as amended, are recorded, processed, summarized, and reported within the time
periods specified in the Commissions rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information required to be
disclosed by an issuer in the reports that it files or submits under the Act is accumulated and
communicated to the issuers management, including its principal executive and principal financial
officers, or persons performing similar functions, as appropriate to allow timely decisions
regarding required disclosure. Huntingtons Management, with the participation of its Chief
Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Huntingtons
disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Exchange Act) as of the end of the period covered by this report. Based upon such evaluation,
Huntingtons Chief Executive Officer and Chief Financial Officer have concluded that, as of the end
of such period, Huntingtons disclosure controls and procedures were effective.
There have not been any significant changes in Huntingtons internal control over financial
reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
the fiscal quarter to which this report relates that have materially affected, or are reasonably
likely to materially affect, Huntingtons internal control over financial reporting.
Internal Control Over Financial Reporting
Information required by this item is set forth in Report of Management and Report of
Independent Registered Public Accounting Firm included in the 2008 Annual Report to Shareholders,
portions of which are filed as Exhibit 13.1 to this report, and incorporated herein by reference.
Changes in Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting (as such term
is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended
December 31, 2008 to which this report relates that have materially affected, or are reasonably
likely to materially affect, internal control over financial reporting.
Item 9A(T): Controls and Procedures
Not applicable.
21
Item 9B: Other Information
Not applicable.
PART III
We refer in Part III of this report to relevant sections of our 2009 Proxy Statement for the
2009 annual meeting of shareholders, which will be filed with the SEC pursuant to Regulation 14A
within 120 days of the close of our 2008 fiscal year. Portions of our 2009 Proxy Statement,
including the sections we refer to in this report, are incorporated by reference into this report.
Item 10: Directors and Executive Officers and Corporate Governance
Information required by this item is set forth under the captions Election of Directors,
Corporate Governance, Executive Officers of Huntington, Board Committees, Report of the
Audit Committee, Involvement in Certain Legal Proceedings and Section 16(a) Beneficial
Ownership Reporting Compliance of our 2009 Proxy Statement.
Item 11: Executive Compensation
Information required by this item is set forth under the captions Executive Compensation and
Director Compensation of our 2009 Proxy Statement.
Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Equity Compensation Plan Information
The following table sets forth information about Huntington common stock authorized for issuance
under Huntingtons existing equity compensation plans as of December 31, 2008.
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Number of
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Number of securities
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securities to be
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remaining available for
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issued upon
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future issuance under
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exercise of
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Weighted-average
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equity compensation
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outstanding
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exercise price of
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plans (excluding
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options, warrants,
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outstanding options,
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securities reflected in
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and rights
(3)
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warrants, and rights
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column (a))
(4)
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Plan category
(1)
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(a)
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(b)
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(c)
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Equity compensation plans
approved by security
holders
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20,297,317
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$
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24.40
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3,865,385
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Equity compensation not
approved by security
holders
(2)
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7,814,021
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18.37
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438,341
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Total
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28,111,338
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$
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22.73
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4,303,726
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(1)
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All equity compensation plan authorizations for shares of common stock provide for
the number of shares to be adjusted for stock splits, stock dividends, and other changes in
capitalization. The Huntington Investment and Tax Savings Plan, a broad-based plan qualified under
Code Section 401(a) which includes Huntington common stock as one of a number of investment options
available to participants, is excluded from the table.
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(2)
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This category includes the Employee Stock Incentive Plan, a broad-based stock option
plan under which active employees, excluding executive officers, have received grants of stock
options, and the Executive Deferred Compensation Plan, which provides senior officers designated by
the Compensation Committee the opportunity to defer up to 90% of base salary, annual bonus
compensation and certain equity awards, and up to 100% of long-term incentive awards.
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(3)
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The figures in this column reflect shares of common stock subject to stock option
grants outstanding as of December 31, 2008.
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22
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(4)
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The figures in this column reflect shares reserved as of December 31, 2008 for
future issuance under employee benefit plans, including shares available for future grants of stock
options but excluding shares subject to outstanding options. Of these amounts, shares of common
stock available for future issuance other than upon exercise of options, warrants or rights are as
follows:
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438,341 shares reserved for the Executive Deferred Compensation Plan;
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No shares reserved for the Supplemental Plan under which voluntary participant
contributions made by payroll deduction are used to purchase shares;
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No shares reserved for the Deferred Compensation Plan for Huntington directors under
which directors may defer their director compensation and such amounts may be invested in
shares of Huntington common stock; and
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78,481 shares reserved for a similar plan (now inactive), the Deferred Compensation Plan
for Directors, under which directors of selected subsidiaries of Huntington may defer their
director compensation and such amounts may be invested in shares of Huntington common
stock.
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Other Information
The other information required by this item is set forth under the caption Ownership of
Voting Stock of our 2009 Proxy Statement.
Item 13: Certain Relationships and Related Transactions, and Director Independence
Information required by this item is set forth under the caption Transactions With Directors
and Executive Officers of our 2009 Proxy Statement.
Item 14: Principal Accounting Fees and Services
Information required by this item is set forth under the caption Proposal to Ratify the
Appointment of Independent Registered Public Accounting Firm of our 2009 Proxy Statement.
PART IV
Item 15: Exhibits, Financial Statement Schedules
(a) The following documents are filed as part of this report:
The report of independent registered public accounting firm and consolidated financial
statements appearing in our 2008 Annual Report on the pages indicated below are incorporated by
reference in Item 8.
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Annual
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Report Page
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Report of Independent Registered Public Accounting Firm
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81
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Consolidated Balance Sheets as of December 31, 2008 and 2007
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82
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Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006
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83
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Consolidated Statements of Changes in Shareholders Equity for the years ended
December 31, 2008, 2007 and 2006
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84
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Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
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85
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Notes to Consolidated Financial Statements
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86-129
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(1)
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We are not filing separately financial statement schedules because of the absence of
conditions under which they are required or because the required information is included in
the consolidated financial statements or the related notes.
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(2)
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The exhibits required by this item are listed in the Exhibit Index of this Form 10-K.
The management contracts and compensation plans or arrangements required to be filed as
exhibits to this Form 10-K are listed as Exhibits 10.1 through 10.39 in the Exhibit Index.
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(b)
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The exhibits to this Form 10-K begin on page 28 of this report.
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(c)
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See Item 15(a)(2) above.
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23
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized, on the 23rd day of February 2009.
HUNTINGTON BANCSHARES INCORPORATED
(Registrant)
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By:
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/s/ Stephen D. Steinour
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By:
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/s/ Donald R. Kimble
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Stephen D. Steinour
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Donald R. Kimble
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Chairman, President, Chief Executive
Officer, and Director (Principal Executive
Officer)
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Executive Vice President
Chief Financial Officer
(Principal Financial Officer)
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By:
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/s/ Thomas P. Reed
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Thomas P. Reed
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Senior Vice President and Controller
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(Principal Accounting Officer)
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Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Registrant and in the capacities indicated
on the 23rd day of February, 2009.
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Jonathan A. Levy *
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Raymond J. Biggs
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Jonathan A. Levy
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Director
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Director
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Don M. Casto III *
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Wm. J. Lhota *
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Don M. Casto III
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Wm. J. Lhota
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Director
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Director
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Michael J. Endres *
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Gene E. Little *
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Michael J. Endres
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Gene E. Little
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Director
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Director
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Marylouise Fennell *
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Gerard P. Mastroianni *
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Marylouise Fennell
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Gerard P. Mastroianni
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Director
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Director
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John B. Gerlach, Jr. *
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David L. Porteous *
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John B. Gerlach, Jr.
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David L. Porteous
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Director
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Director
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D. James Hilliker *
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Kathleen H. Ransier *
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D. James Hilliker
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Kathleen H. Ransier
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Director
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Director
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David P. Lauer *
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* /s/ Donald R. Kimble
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David P. Lauer
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Donald R. Kimble
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Director
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Attorney-in-fact for each of the persons indicated
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24
Exhibit Index
This report incorporates by reference the documents listed below that we have previously filed with
the SEC. The SEC allows us to incorporate by reference information in this document. The
information incorporated by reference is considered to be a part of this document, except for any
information that is superseded by information that is included directly in this document.
This information may be read and copied at the Public Reference Room of the SEC at 100 F Street,
N.E., Washington, D.C. 20549. The SEC also maintains an Internet web site that contains reports,
proxy statements, and other information about issuers, like us, who file electronically with the
SEC. The address of the site is
http://www.sec.gov
. The reports and other information filed by us
with the SEC are also available at our Internet web site. The address of the site is
http://www.huntington.com
. Except as specifically incorporated by reference into this Annual Report
on Form 10-K, information on those web sites is not part of this report. You also should be able to
inspect reports, proxy statements, and other information about us at the offices of the NASDAQ
National Market at 33 Whitehall Street, New York, New York.
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SEC File or
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Exhibit
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Registration
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Exhibit
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Number
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Document Description
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Report or Registration Statement
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Number
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Reference
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2.1
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Agreement and Plan of Merger, dated December 20,
2006 by and among Huntington Bancshares
Incorporated, Penguin Acquisition, LLC and Sky
Financial Group, Inc.
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Current Report on
Form 8-K dated
December 22, 2006.
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000-02525
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2.1
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3.1
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Articles of Restatement of Charter.
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Annual Report on
Form 10-K for the
year ended December
31, 1993.
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000-02525
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3
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(i)
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3.2
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Articles of Amendment to Articles of Restatement of
Charter.
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Current Report on
Form 8-K dated May
31, 2007
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000-02525
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3.1
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3.3
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Articles of Amendment to Articles of Restatement of
Charter
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Current Report on
Form 8-K dated May
7, 2008
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000-02525
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3.1
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3.4
|
|
Articles Supplementary of Huntington Bancshares Incorporated, as of April 22, 2008.
|
|
Current Report on Form 8-K dated April 22, 2008
|
|
000-02525
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
3.5
|
|
Articles Supplementary of Huntington Bancshares Incorporated, as of April 22, 2008.
|
|
Current Report on Form 8-K dated April 22, 2008
|
|
000-02525
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
|
3.6
|
|
Articles Supplementary of Huntington Bancshares
Incorporated, as of November 12, 2008.
|
|
Current Report on
Form 8-K dated
November 12, 2008
|
|
001-34073
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
3.7
|
|
Articles Supplementary of Huntington Bancshares Incorporated, as of December 31, 2006.
|
|
Annual Report on Form 10-K for the year ended December 31, 2006.
|
|
000-02525
|
|
|
3.4
|
|
|
|
|
|
|
|
|
|
|
|
|
3.8
|
|
Bylaws of Huntington Bancshares Incorporated, as
amended and restated, as of January 21, 2009.
|
|
Current Report on
Form 8-K dated
January 23, 2009.
|
|
001-34073
|
|
|
3.1
|
|
|
|
|
|
|
|
|
|
|
|
|
4.1
|
|
Instruments defining the Rights of Security Holders
reference is made to Articles Fifth, Eighth, and
Tenth of Articles of Restatement of Charter, as
amended and supplemented. Instruments defining the
rights of holders of long-term debt will be
furnished to the Securities and Exchange Commission
upon request.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
* Form of Executive Agreement for certain executive
officers.
|
|
Current Report on
Form 8-K dated
November 21, 2005.
|
|
000-02525
|
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
|
10.2
|
|
* Form of Executive Agreement for certain executive
officers.
|
|
Current Report on
Form 8-K dated
November 21, 2005.
|
|
000-02525
|
|
|
99.2
|
|
|
|
|
|
|
|
|
|
|
|
|
10.3
|
|
* Form of Executive Agreement for certain executive
officers.
|
|
Current Report on
Form 8-K dated
November 21, 2005.
|
|
000-02525
|
|
|
99.3
|
|
|
|
|
|
|
|
|
|
|
|
|
10.4
|
|
Amendment to the Huntington Bancshares Incorporated
Executive Agreements.
|
|
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2008.
|
|
001-34073
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
10.5
|
|
* Huntington Bancshares Incorporated Management
Incentive Plan, as amended and restated effective
for plan years beginning on or after January 1,
2004.
|
|
Quarterly Report on
Form 10-Q for the
quarter ended June
30, 2004.
|
|
000-02525
|
|
|
10
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
10.6
|
|
First Amendment to the Huntington Bancshares
Incorporated 2004 Management Incentive Plan
|
|
Definitive Proxy
Statement for the
2007 Annual Meeting
of Stockholders
|
|
000-02525
|
|
|
H
|
|
|
|
|
|
|
|
|
|
|
|
|
10.7
|
|
Second Amendment to the Huntington Bancshares
Incorporated 2004 Management Incentive Plan
|
|
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2008.
|
|
001-34073
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
|
|
10.8
|
|
* Huntington Supplemental Retirement Income Plan,
amended and restated, effective October 15, 2008.
|
|
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2008
|
|
001-34073
|
|
|
10.3
|
|
|
|
|
|
|
|
|
|
|
|
|
10.9
|
|
* Deferred Compensation Plan and Trust for Directors
|
|
Post-Effective
Amendment No. 2 to
Registration
Statement on Form
S-8 filed on
January 28, 1991.
|
|
33-10546
|
|
|
4
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
10.10
|
|
* Deferred Compensation Plan and Trust for
Huntington Bancshares Incorporated Directors
|
|
Registration
Statement on Form
S-8 filed on July
19, 1991.
|
|
33-41774
|
|
|
4
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
10.11
|
|
* First Amendment to Huntington Bancshares
Incorporated Deferred Compensation Plan and Trust
for Huntington Bancshares Incorporated Directors
|
|
Quarterly Report
10-Q for the
quarter ended March
31, 2001
|
|
000-02525
|
|
|
10
|
(q)
|
|
|
|
|
|
|
|
|
|
|
|
10.12
|
|
* Executive Deferred Compensation Plan, as amended
and restated on October 15, 2008.
|
|
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2008.
|
|
001-34073
|
|
|
10.4
|
|
25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEC File or
|
|
|
Exhibit
|
|
|
|
|
|
Registration
|
|
Exhibit
|
Number
|
|
Document Description
|
|
Report or Registration Statement
|
|
Number
|
|
Reference
|
10.13
|
|
* The Huntington Supplemental Stock Purchase and Tax
Savings Plan and Trust, amended and restated,
effective January 1, 2005
|
|
Quarterly Report on
Form 10-Q for the
quarter ended
September 30, 2007
|
|
000-02525
|
|
|
10.5
|
|
|
|
|
|
|
|
|
|
|
|
|
10.14
|
|
* Amended and Restated 1994 Stock Option Plan
|
|
Annual Report on
Form 10-K for the
year ended December
31, 1996
|
|
000-02525
|
|
|
10
|
(r)
|
|
|
|
|
|
|
|
|
|
|
|
10.15
|
|
* First Amendment to Huntington Bancshares
Incorporated 1994 Stock Option Plan
|
|
Quarterly Report on
Form 10-Q for the
quarter ended June
30, 2000
|
|
000-02525
|
|
|
10
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
10.16
|
|
* First Amendment to Huntington Bancshares
Incorporated Amended and Restated 1994 Stock Option
Plan
|
|
Quarterly Report on
Form 10-Q for the
quarter ended March
31, 2002
|
|
000-02525
|
|
|
10
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
10.17
|
|
* Second Amendment to Huntington Bancshares
Incorporated Amended and Restated 1994 Stock Option
Plan
|
|
Quarterly Report on
Form 10-Q for the
quarter ended March
31, 2002
|
|
000-02525
|
|
|
10
|
(d)
|
|
|
|
|
|
|
|
|
|
|
|
10.18
|
|
* Third Amendment to Huntington Bancshares
Incorporated Amended and Restated 1994 Stock Option
Plan
|
|
Quarterly Report on
Form 10-Q for the
quarter ended March
31, 2002
|
|
000-02525
|
|
|
10
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
10.19
|
|
* Huntington Bancshares Incorporated 2001 Stock and
Long-Term Incentive Plan
|
|
Quarterly Report
10-Q for the
quarter ended March
31, 2001
|
|
000-02525
|
|
|
10
|
(r)
|
|
|
|
|
|
|
|
|
|
|
|
10.20
|
|
* First Amendment to the Huntington Bancshares
Incorporated 2001 Stock and Long-Term Incentive Plan
|
|
Quarterly Report
10-Q for the
quarter ended March
31, 2002
|
|
000-02525
|
|
|
10
|
(h)
|
|
|
|
|
|
|
|
|
|
|
|
10.21
|
|
* Second Amendment to the Huntington Bancshares
Incorporated 2001 Stock and Long-Term Incentive Plan
|
|
Quarterly Report
10-Q for the
quarter ended March
31, 2002
|
|
000-02525
|
|
|
10
|
(i)
|
|
|
|
|
|
|
|
|
|
|
|
10.22
|
|
* Huntington Bancshares Incorporated 2004 Stock and
Long-Term Incentive Plan
|
|
Quarterly Report on
Form 10-Q for the
quarter ended June
30, 2004
|
|
000-02525
|
|
|
10
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
10.23
|
|
* First Amendment to the 2004 Stock and Long-Term
Incentive Plan
|
|
Quarterly Report on
Form 10-Q for the
quarter ended March
31, 2006
|
|
000-02525
|
|
|
10
|
(e)
|
|
|
|
|
|
|
|
|
|
|
|
10.24
|
|
* Huntington Bancshares Incorporated Employee Stock
Incentive Plan (incorporating changes made by first
amendment to Plan)
|
|
Registration
Statement on Form
S-8 filed on
December 13, 2001.
|
|
333-75032
|
|
|
4
|
(a)
|
|
|
|
|
|
|
|
|
|
|
|
10.25
|
|
* Second Amendment to Huntington Bancshares
Incorporated Employee Stock Incentive Plan
|
|
Annual Report on
Form 10-K for the
year ended December
31, 2002
|
|
000-02525
|
|
|
10
|
(s)
|
|
|
|
|
|
|
|
|
|
|
|
10.26
|
|
* Employment Agreement, dated January 14, 2009,
between Huntington Bancshares Incorporated and
Stephen D. Steinour.
|
|
Current Report on
Form 8-K dated
January 16, 2009.
|
|
001-34073
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
10.27
|
|
* Executive Agreement, dated January 14, 2009,
between Huntington Bancshares Incorporated and
Stephen D. Steinour.
|
|
Current Report on
Form 8-K dated
January 16, 2009.
|
|
001-34073
|
|
|
10.2
|
|
|
|
|
|
|
|
|
|
|
|
|
10.28
|
|
* Employment Agreement, dated December 20, 2006,
between Huntington Bancshares Incorporated and
Thomas E. Hoaglin
|
|
Registration
Statement on Form
S-4 filed February
26, 2007
|
|
333-140897
|
|
|
10.1
|
|
26
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEC File or
|
|
|
Exhibit
|
|
|
|
|
|
Registration
|
|
Exhibit
|
Number
|
|
Document Description
|
|
Report or Registration Statement
|
|
Number
|
|
Reference
|
10.29
|
|
* Letter Agreement between Huntington Bancshares
Incorporated and Raymond J. Biggs, acknowledged and
agreed to by Mr. Biggs on May 1, 2005
|
|
Annual Report on
Form 10-K for the
year ended December
31, 2005
|
|
000-02525
|
|
|
10
|
(t)
|
|
|
|
|
|
|
|
|
|
|
|
10.30
|
|
Schedule identifying material details of Executive
Agreements 2006
|
|
Annual Report on
Form 10-K for the
year ended December
31, 2006
|
|
000-02525
|
|
|
10.34
|
|
|
|
|
|
|
|
|
|
|
|
|
10.31
|
|
Letter Agreement including Securities Purchase
Agreement Standard Terms, dated November 14, 2008,
between Huntington Bancshares Incorporated and the
United States Department of the Treasury.
|
|
Current Report on
Form 8-K dated
November 14, 2008.
|
|
001-34073
|
|
|
10.1
|
|
|
|
|
|
|
|
|
|
|
|
|
10.32
|
|
* Performance criteria and potential awards for
executive officers for fiscal year 2006 under the
Management Incentive Plan and for a long-term
incentive award cycle beginning on January 1, 2006
and ending on December 31, 2008 under the 2004 Stock
and Long-Term Incentive Plan
|
|
Current Report on
Form 8-K dated
February 21, 2006
|
|
000-02525
|
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
|
10.33
|
|
* Restricted Stock Unit Grant Notice with three year
vesting
|
|
Current Report on
Form 8-K dated July
24, 2006
|
|
000-02525
|
|
|
99.1
|
|
|
|
|
|
|
|
|
|
|
|
|
10.34
|
|
* Restricted Stock Unit Grant Notice with six month
vesting
|
|
Current Report on
Form 8-K dated July
24, 2006
|
|
000-02525
|
|
|
99.2
|
|
|
|
|
|
|
|
|
|
|
|
|
10.35
|
|
* Restricted Stock Unit Deferral Agreement
|
|
Current Report on
Form 8-K dated July
24, 2006
|
|
000-02525
|
|
|
99.3
|
|
|
|
|
|
|
|
|
|
|
|
|
10.36
|
|
* Director Deferred Stock Award Notice
|
|
Current Report on
Form 8-K dated July
24, 2006
|
|
000-02525
|
|
|
99.4
|
|
|
|
|
|
|
|
|
|
|
|
|
10.37
|
|
* Huntington Bancshares Incorporated 2007 Stock and
Long-Term Incentive Plan
|
|
Definitive Proxy
Statement for the
2007 Annual Meeting
of Stockholders
|
|
000-02525
|
|
|
G
|
|
|
|
|
|
|
|
|
|
|
|
|
10.38
|
|
* First Amendment to the 2007 Stock and Long-Term
Incentive Plan
|
|
Quarterly report on
Form 10-Q for the
quarter ended
September 30, 2007
|
|
000-02525
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
10.39
|
|
* Retention Payment Agreement
|
|
Annual Report on Form 10-K for the year ended December 31, 2007
|
|
000-02525
|
|
|
10.43
|
|
|
|
|
|
|
|
|
|
|
|
|
12.1
|
|
Ratio of Earnings to Fixed Charges.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12.2
|
|
Ratio of Earnings to Fixed Charges and Preferred
Dividends.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13.1
|
|
Portions of our 2008 Annual Report to Shareholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14.1
|
|
Code of Business Conduct and Ethics dated January
14, 2003 and revised on February 14, 2006 and
Financial Code of Ethics for Chief Executive Officer
and Senior Financial Officers, adopted January 18,
2003 and revised on April 19, 2005, are available on
our website at
http://www.investquest.com/iq/h/hban/main/cg/cg.htm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21.1
|
|
Subsidiaries of the Registrant
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23.1
|
|
Consent of Deloitte & Touche LLP, Independent
Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
24.1
|
|
Power of Attorney
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.1
|
|
Rule 13a-14(a) Certification Chief Executive
Officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31.2
|
|
Rule 13a-14(a) Certification Chief Financial
Officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.1
|
|
Section 1350 Certification Chief Executive Officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32.2
|
|
Section 1350 Certification Chief Financial Officer.
|
|
|
|
|
|
|
|
|
|
|
|
*
|
|
Denotes management contract or compensatory plan or arrangement.
|
27
Exhibit 13.1
|
|
Selected
Financial Data
|
Huntington
Bancshares Incorporated
|
Table
1 Selected Financial
Data
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
(in thousands, except per share amounts)
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Interest income
|
|
$
|
2,798,322
|
|
|
$
|
2,742,963
|
|
|
$
|
2,070,519
|
|
|
$
|
1,641,765
|
|
|
$
|
1,347,315
|
|
Interest expense
|
|
|
1,266,631
|
|
|
|
1,441,451
|
|
|
|
1,051,342
|
|
|
|
679,354
|
|
|
|
435,941
|
|
|
Net interest income
|
|
|
1,531,691
|
|
|
|
1,301,512
|
|
|
|
1,019,177
|
|
|
|
962,411
|
|
|
|
911,374
|
|
Provision for credit losses
|
|
|
1,057,463
|
|
|
|
643,628
|
|
|
|
65,191
|
|
|
|
81,299
|
|
|
|
55,062
|
|
|
Net interest income after provision for credit losses
|
|
|
474,228
|
|
|
|
657,884
|
|
|
|
953,986
|
|
|
|
881,112
|
|
|
|
856,312
|
|
|
Service charges on deposit accounts
|
|
|
308,053
|
|
|
|
254,193
|
|
|
|
185,713
|
|
|
|
167,834
|
|
|
|
171,115
|
|
Automobile operating lease income
|
|
|
39,851
|
|
|
|
7,810
|
|
|
|
43,115
|
|
|
|
133,015
|
|
|
|
285,431
|
|
Securities (losses) gains
|
|
|
(197,370
|
)
|
|
|
(29,738
|
)
|
|
|
(73,191
|
)
|
|
|
(8,055
|
)
|
|
|
15,763
|
|
Other non-interest income
|
|
|
556,604
|
|
|
|
444,338
|
|
|
|
405,432
|
|
|
|
339,488
|
|
|
|
346,289
|
|
|
Total noninterest income
|
|
|
707,138
|
|
|
|
676,603
|
|
|
|
561,069
|
|
|
|
632,282
|
|
|
|
818,598
|
|
|
Personnel costs
|
|
|
783,546
|
|
|
|
686,828
|
|
|
|
541,228
|
|
|
|
481,658
|
|
|
|
485,806
|
|
Automobile operating lease expense
|
|
|
31,282
|
|
|
|
5,161
|
|
|
|
31,286
|
|
|
|
103,850
|
|
|
|
235,080
|
|
Other non-interest expense
|
|
|
662,546
|
|
|
|
619,855
|
|
|
|
428,480
|
|
|
|
384,312
|
|
|
|
401,358
|
|
|
Total noninterest expense
|
|
|
1,477,374
|
|
|
|
1,311,844
|
|
|
|
1,000,994
|
|
|
|
969,820
|
|
|
|
1,122,244
|
|
|
(Loss) Income before income taxes
|
|
|
(296,008
|
)
|
|
|
22,643
|
|
|
|
514,061
|
|
|
|
543,574
|
|
|
|
552,666
|
|
(Benefit) provision for income taxes
|
|
|
(182,202
|
)
|
|
|
(52,526
|
)
|
|
|
52,840
|
|
|
|
131,483
|
|
|
|
153,741
|
|
|
Net (loss) income
|
|
$
|
(113,806
|
)
|
|
$
|
75,169
|
|
|
$
|
461,221
|
|
|
$
|
412,091
|
|
|
$
|
398,925
|
|
|
Dividends on preferred shares
|
|
|
46,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income applicable to common shares
|
|
$
|
(160,206
|
)
|
|
$
|
75,169
|
|
|
$
|
461,221
|
|
|
$
|
412,091
|
|
|
$
|
398,925
|
|
|
Net (loss) income per common share basic
|
|
|
$(0.44
|
)
|
|
|
$0.25
|
|
|
|
$1.95
|
|
|
|
$1.79
|
|
|
|
$1.74
|
|
Net (loss) income per common share diluted
|
|
|
(0.44
|
)
|
|
|
0.25
|
|
|
|
1.92
|
|
|
|
1.77
|
|
|
|
1.71
|
|
Cash dividends declared per common share
|
|
|
0.6625
|
|
|
|
1.060
|
|
|
|
1.000
|
|
|
|
0.845
|
|
|
|
0.750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance sheet highlights
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets (period end)
|
|
$
|
54,352,859
|
|
|
$
|
54,697,468
|
|
|
$
|
35,329,019
|
|
|
$
|
32,764,805
|
|
|
$
|
32,565,497
|
|
Total long-term debt (period
end)
(2)
|
|
|
6,870,705
|
|
|
|
6,954,909
|
|
|
|
4,512,618
|
|
|
|
4,597,437
|
|
|
|
6,326,885
|
|
Total shareholders equity (period end)
|
|
|
7,227,141
|
|
|
|
5,949,140
|
|
|
|
3,014,326
|
|
|
|
2,557,501
|
|
|
|
2,537,638
|
|
Average long-term
debt
(2)
|
|
|
7,374,681
|
|
|
|
5,714,572
|
|
|
|
4,942,671
|
|
|
|
5,168,959
|
|
|
|
6,650,367
|
|
Average shareholders equity
|
|
|
6,393,788
|
|
|
|
4,631,912
|
|
|
|
2,945,597
|
|
|
|
2,582,721
|
|
|
|
2,374,137
|
|
Average total assets
|
|
|
54,921,419
|
|
|
|
44,711,676
|
|
|
|
35,111,236
|
|
|
|
32,639,011
|
|
|
|
31,432,746
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Key ratios and statistics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Margin analysis as a % of average earnings assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
(3)
|
|
|
5.90
|
%
|
|
|
7.02
|
%
|
|
|
6.63
|
%
|
|
|
5.65
|
%
|
|
|
4.89
|
%
|
Interest expense
|
|
|
2.65
|
|
|
|
3.66
|
|
|
|
3.34
|
|
|
|
2.32
|
|
|
|
1.56
|
|
|
Net interest
margin
(3)
|
|
|
3.25
|
%
|
|
|
3.36
|
%
|
|
|
3.29
|
%
|
|
|
3.33
|
%
|
|
|
3.33
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average total assets
|
|
|
(0.21
|
)%
|
|
|
0.17
|
%
|
|
|
1.31
|
%
|
|
|
1.26
|
%
|
|
|
1.27
|
%
|
Return on average total shareholders equity
|
|
|
(1.8
|
)
|
|
|
1.6
|
|
|
|
15.7
|
|
|
|
16.0
|
|
|
|
16.8
|
|
Return on average tangible shareholders
equity
(4)
|
|
|
(2.1
|
)
|
|
|
3.9
|
|
|
|
19.5
|
|
|
|
17.4
|
|
|
|
18.5
|
|
Efficiency
ratio
(5)
|
|
|
57.0
|
|
|
|
62.5
|
|
|
|
59.4
|
|
|
|
60.0
|
|
|
|
65.0
|
|
Dividend payout ratio
|
|
|
N.M.
|
|
|
|
N.M.
|
|
|
|
52.1
|
|
|
|
47.7
|
|
|
|
43.9
|
|
Average shareholders equity to average assets
|
|
|
11.64
|
|
|
|
10.36
|
|
|
|
8.39
|
|
|
|
7.91
|
|
|
|
7.55
|
|
Effective tax rate
|
|
|
N.M.
|
|
|
|
N.M.
|
|
|
|
10.3
|
|
|
|
24.2
|
|
|
|
27.8
|
|
Tangible common equity to tangible assets (period
end)
(6)
|
|
|
4.04
|
|
|
|
5.08
|
|
|
|
6.93
|
|
|
|
7.19
|
|
|
|
7.18
|
|
Tangible equity to tangible assets (period
end)
(7)
|
|
|
7.72
|
|
|
|
5.08
|
|
|
|
6.93
|
|
|
|
7.19
|
|
|
|
7.18
|
|
Tier 1 leverage ratio (period end)
|
|
|
9.82
|
|
|
|
6.77
|
|
|
|
8.00
|
|
|
|
8.34
|
|
|
|
8.42
|
|
Tier 1 risk-based capital ratio (period end)
|
|
|
10.72
|
|
|
|
7.51
|
|
|
|
8.93
|
|
|
|
9.13
|
|
|
|
9.08
|
|
Total risk-based capital ratio (period end)
|
|
|
13.91
|
|
|
|
10.85
|
|
|
|
12.79
|
|
|
|
12.42
|
|
|
|
12.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full-time equivalent employees (period end)
|
|
|
10,951
|
|
|
|
11,925
|
|
|
|
8,081
|
|
|
|
7,602
|
|
|
|
7,812
|
|
Domestic banking offices (period end)
|
|
|
613
|
|
|
|
625
|
|
|
|
381
|
|
|
|
344
|
|
|
|
342
|
|
N.M., not a meaningful value.
|
|
(1)
|
Comparisons for presented periods
are impacted by a number of factors. Refer to the
Significant Items for additional discussion
regarding these key factors.
|
|
(2)
|
Includes Federal Home Loan Bank
advances, subordinated notes, and other long-term debt.
|
|
(3)
|
On a fully taxable equivalent (FTE)
basis assuming a 35% tax rate.
|
|
(4)
|
Net (loss) income less expense
excluding amortization of intangibles for the period divided by
average tangible shareholders equity. Average tangible
shareholders equity equals average total
shareholders equity less average intangible assets and
goodwill. Expense for amortization of intangibles and average
intangible assets are net of deferred tax liability, and
calculated assuming a 35% tax rate.
|
|
(5)
|
Noninterest expense less
amortization of intangibles divided by the sum of FTE net
interest income and noninterest income excluding securities
gains.
|
|
(6)
|
Tangible common equity (total
common equity less goodwill and other intangible assets) divided
by tangible assets (total assets less goodwill and other
intangible assets). Other intangible assets are net of deferred
tax, and calculated assuming a 35% tax rate.
|
|
(7)
|
Tangible equity (total equity less
goodwill and other intangible assets) divided by tangible assets
(total assets less goodwill and other intangible assets). Other
intangible assets are net of deferred tax, and calculated
assuming a 35% tax rate.
|
12
TABLE OF CONTENTS
|
|
Managements
Discussion and Analysis of Financial Condition
|
Huntington
Bancshares Incorporated
|
and
Results of Operations
INTRODUCTION
Huntington Bancshares Incorporated (we or our) is a multi-state
diversified financial holding company organized under Maryland
law in 1966 and headquartered in Columbus, Ohio. Through our
subsidiaries, including our bank subsidiary, The Huntington
National Bank (the Bank), organized in 1866, we provide
full-service commercial and consumer banking services, mortgage
banking services, automobile financing, equipment leasing,
investment management, trust services, brokerage services,
customized insurance service programs, and other financial
products and services. Our banking offices are located in Ohio,
Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky.
Selected financial service activities are also conducted in
other states including: Auto Finance and Dealer Services (AFDS)
offices in Arizona, Florida, Tennessee, Texas, and Virginia;
Private Financial, Capital Markets, and Insurance Group (PFCMIG)
offices in Florida; and Mortgage Banking offices in Maryland and
New Jersey. International banking services are available through
the headquarters office in Columbus and a limited purpose office
located in both the Cayman Islands and Hong Kong.
The following Managements Discussion and Analysis of
Financial Condition and Results of Operations (MD&A)
provides you with information we believe necessary for
understanding our financial condition, changes in financial
condition, results of operations, and cash flows and should be
read in conjunction with the financial statements, notes, and
other information contained in this report.
Our discussion is divided into key segments:
|
|
|
|
|
Introduction
Provides overview comments on important matters including risk
factors, acquisitions, and other items. These are essential for
understanding our performance and prospects.
|
|
|
|
Discussion of Results
of Operations
Reviews financial
performance from a consolidated company perspective. It also
includes a Significant Items section that summarizes
key issues helpful for understanding performance trends. Key
consolidated average balance sheet and income statement trends
are also discussed in this section.
|
|
|
|
Risk Management and
Capital
Discusses credit, market,
liquidity, and operational risks, including how these are
managed, as well as performance trends. It also includes a
discussion of liquidity policies, how we obtain funding, and
related performance. In addition, there is a discussion of
guarantees
and/or
commitments made for items such as standby letters of credit and
commitments to sell loans, and a discussion that reviews the
adequacy of capital, including regulatory capital requirements.
|
|
|
|
Lines of Business
Discussion
Provides an overview of
financial performance for each of our major lines of business
and provides additional discussion of trends underlying
consolidated financial performance.
|
|
|
|
Results for the Fourth
Quarter
Provides a discussion of results
for the 2008 fourth quarter compared with the 2007 fourth
quarter.
|
A reading of each section is important to understand fully the
nature of our financial performance and prospects.
Forward-Looking
Statements
This report, including MD&A, contains certain
forward-looking statements, including certain plans,
expectations, goals, projections, and statements, which are
subject to numerous assumptions, risks, and uncertainties.
Statements that do not describe historical or current facts,
including statements about beliefs and expectations, are
forward-looking statements. The forward-looking statements are
intended to be subject to the safe harbor provided by
Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934.
Actual results could differ materially from those contained or
implied by such statements for a variety of factors including:
(a) deterioration in the loan portfolio could be worse than
expected due to a number of factors such as the underlying value
of the collateral could prove less valuable than otherwise
assumed and assumed cash flows may be worse than expected;
(b) changes in economic conditions; (c) movements in
interest rates and spreads; (d) competitive pressures on
product pricing and services; (e) success and timing of
other business strategies; (f) the nature, extent, and
timing of governmental actions and reforms, including the rules
of participation for the Trouble Asset Relief Program voluntary
Capital Purchase Plan under the Emergency Economic Stabilization
Act of 2008, which may be changed unilaterally and retroactively
by legislative or regulatory actions; and (g) extended
disruption of vital infrastructure. Additional factors that
could cause results to differ materially from those described
above can be found in Huntingtons 2008 Form 10-K.
All forward-looking statements speak only as of the date they
are made and are based on information available at that time. We
assume no obligation to update forward-looking statements to
reflect circumstances or events that occur after the date the
forward-looking statements were made or to reflect the
occurrence of unanticipated events except as required by federal
securities laws. As forward-looking statements involve
significant risks and uncertainties, caution should be exercised
against placing undue reliance on such statements.
13
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
Risk
Factors
We, like other financial companies, are subject to a number of
risks that may adversely affect our financial condition or
results of operation, many of which are outside of our direct
control, though efforts are made to manage those risks while
optimizing returns. Among the risks assumed are: (1)
credit
risk
, which is the risk of loss due to loan and lease
customers or other counterparties not being able to meet their
financial obligations under agreed upon terms, (2)
market
risk
, which is the risk of loss due to changes in the market
value of assets and liabilities due to changes in market
interest rates, foreign exchange rates, equity prices, and
credit spreads, (3)
liquidity risk
, which is the risk of
loss due to the possibility that funds may not be available to
satisfy current or future obligations based on external macro
market issues, investor and customer perception of financial
strength, and events unrelated to the company such as war,
terrorism, or financial institution market specific issues, and
(4)
operational risk
, which is the risk of loss due to
human error, inadequate or failed internal systems and controls,
violations of, or noncompliance with, laws, rules, regulations,
prescribed practices, or ethical standards, and external
influences such as market conditions, fraudulent activities,
disasters, and security risks.
Throughout 2008, we operated in what is now being labeled by
many industry observers as the most difficult environment for
financial institutions in many decades. What began as a subprime
lending crises in 2007, turned into a widespread housing,
banking, and capital markets crisis in 2008. As a result, 2008
represented a year of tremendous capital markets turmoil as
capital markets ceased to function and credit markets were
largely closed to businesses and consumers. The unavailability
of credit to many borrowers and lack of credit flow, even
between banks, contributed to the weakening of the economy,
especially in the second half of 2008, and the 2008 fourth
quarter in particular.
Concurrent with and reflecting this environment, the weakness
that had been centered primarily in the housing and capital
markets segments, spilled over into other segments of the
economy. The most visible sector negatively impacted was
manufacturing, and most notably, the automobile industry. As
2008 ended, it was estimated that the United States economy had
lost 3.6 million jobs, with approximately 50% of those
losses occurring in the fourth quarter. According to the United
States Labor Department, nationwide unemployment at
2008 year-end was 7.6%.
While the United States government took several actions in 2008
and into 2009, such as the largest stimulus plan in United
States history, and is considering even further actions,
no assurances can be given regarding their effectiveness in
strengthening the capital markets and improving the economy.
Therefore, for the foreseeable future, we believe we will be
operating in a heightened risk environment. Of the major risk
factors, those most likely to affect us are credit risk, market
risk, and liquidity risk.
As related to
credit risk
, we anticipate continued
pressure on credit quality performance, including higher loan
delinquencies, net charge-offs, and the level of nonaccrual
loans. All loan portfolios are expected to be impacted, although
we believe the impact will be more concentrated in our
commercial loan portfolio. Until unemployment levels decline,
and the economic outlook improves, we anticipate that we will
continue to build our allowance for credit losses in both
absolute and relative terms.
With regard to
market risk
, the continuation of volatile
capital markets is likely to be reflected in wide fluctuations
in the valuation of certain assets, most notably mortgage
asset-backed investment securities. Such fluctuations may result
in additional asset value write-downs and other-than-temporary
impairment (OTTI) charges.
We believe that actions taken by regulatory agencies and
government bodies in late 2008 have been effective in reducing
systemic
liquidity risk.
Specific actions included the
FDIC raising the deposit insurance limit to $250,000 and
providing full guarantees on noninterest bearing deposits at all
FDIC-insured financial institutions. Among other actions, the
most significant was the passage in October 2008 of the
$700 billion Emergency Economic Stabilization Act; the
cornerstone of which was the Troubled Asset Relief Program
(TARP). The TARPs voluntary Capital Purchase Plan (CPP)
made available $350 billion of funds to banks and other
financial institutions. We participated in TARP, which increased
capital by $1.4 billion, as well as other such programs.
More information on risk is set forth below, and under the
heading Risk Factors included in Item 1A of our
2008
Form 10-K
for the year ended December 31, 2008. Additional
information regarding risk factors can also be found in the
Risk Management and Capital discussion.
Critical
Accounting Policies and Use of Significant
Estimates
Our financial statements are prepared in accordance with
accounting principles generally accepted in the United States
(GAAP). The preparation of financial statements in conformity
with GAAP requires us to establish critical accounting policies
and make accounting estimates, assumptions, and judgments that
affect amounts recorded and reported in our financial
statements. Note 1 of the Notes to Consolidated Financial
Statements lists significant accounting policies we use in the
development and presentation of our financial statements. This
discussion and analysis, the significant accounting policies,
and other financial statement disclosures identify and address
key variables and other qualitative and quantitative factors
necessary for an understanding and evaluation of our company,
financial position, results of operations, and cash flows.
An accounting estimate requires assumptions about uncertain
matters that could have a material effect on the financial
statements if a different amount within a range of estimates
were used or if estimates changed from period to period.
Estimates are made
14
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
under facts and circumstances at a point in time, and changes in
those facts and circumstances could produce results that differ
from when those estimates were made. The most significant
accounting estimates and their related application are discussed
below. This analysis is included to emphasize that estimates are
used in connection with the critical and other accounting
policies and to illustrate the potential effect on the financial
statements if the actual amount were different from the
estimated amount.
|
|
|
Total Allowances for
Credit Losses
The allowance for credit
losses (ACL) is the sum of the allowance for loan and lease
losses (ALLL) and the allowance for unfunded loan commitments
and letters of credit (AULC). At December 31, 2008, the ACL
was $944.4 million. The amount of the ACL was determined by
judgments regarding the quality of the loan portfolio and loan
commitments. All known relevant internal and external factors
that affected loan collectibility were considered. The ACL
represents the estimate of the level of reserves appropriate to
absorb inherent credit losses in the loan and lease portfolio,
as well as unfunded loan commitments. We believe the process for
determining the ACL considers all of the potential factors that
could result in credit losses. However, the process includes
judgmental and quantitative elements that may be subject to
significant change. To the extent actual outcomes differ from
our estimates, additional provision for credit losses could be
required, which could adversely affect earnings or financial
performance in future periods.
|
At December 31, 2008, the ACL as a percent of total loans
and leases was 2.30%. To illustrate the potential effect on the
financial statements of our estimates of the ACL, a
10 basis point, or 4%, increase would have required
$41.1 million in additional reserves (funded by additional
provision for credit losses), which would have negatively
impacted 2008 net income by approximately
$26.7 million, or $0.07 per common share.
Additionally, in 2007, we established a specific reserve of
$115.3 million associated with our loans to Franklin Credit
Management Corporation (Franklin). At December 31, 2008,
our specific ALLL for Franklin loans increased to
$130.0 million, and represented approximately 20% of the
remaining loans outstanding. Table 21 details our
probability-of-default and recovery-after-default performance
assumptions for estimating anticipated cash flows from the
Franklin loans that were used to determine the appropriate
amount of specific ALLL for the Franklin loans. The calculation
of our specific ALLL for the Franklin portfolio is dependent,
among other factors, on the assumptions provided in the table,
as well as the current one-month LIBOR rate on the underlying
loans to Franklin. As the one-month LIBOR rate increases, the
specific ALLL for the Franklin portfolio could also increase.
Our relationship with Franklin is discussed in greater detail in
the Commercial Credit section of this report.
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Fair Value
Measurements
The fair value of a
financial instrument is defined as the amount at which the
instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. We
estimate the fair value of a financial instrument using a
variety of valuation methods. Where financial instruments are
actively traded and have quoted market prices, quoted market
prices are used for fair value. When the financial instruments
are not actively traded, other observable market inputs, such as
quoted prices of securities with similar characteristics, may be
used, if available, to determine fair value. When observable
market prices do not exist, we estimate fair value. Our
valuation methods consider factors such as liquidity and
concentration concerns and, for the derivatives portfolio,
counterparty credit risk. Other factors such as model
assumptions, market dislocations, and unexpected correlations
can affect estimates of fair value. Imprecision in estimating
these factors can impact the amount of revenue or loss recorded.
|
Many of our assets are carried at fair value, including
securities, mortgage loans held-for-sale, derivatives, mortgage
servicing rights (MSRs), and trading assets. At
December 31, 2008, approximately $5.1 billion of our
assets were recorded at fair value. In addition to the above
mentioned ongoing fair value measurements, fair value is also
the unit of measure for recording business combinations.
FASB Statement No. 157,
Fair Value Measurements
,
establishes a framework for measuring the fair value of
financial instruments that considers the attributes specific to
particular assets or liabilities and establishes a three-level
hierarchy for determining fair value based on the transparency
of inputs to each valuation as of the fair value measurement
date. The three levels are defined as follows:
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Level 1 quoted prices (unadjusted) for
identical assets or liabilities in active markets.
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Level 2 inputs include quoted prices for
similar assets and liabilities in active markets, quoted prices
of identical or similar assets or liabilities in markets that
are not active, and inputs that are observable for the asset or
liability, either directly or indirectly, for substantially the
full term of the financial instrument.
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Level 3 inputs that are unobservable and
significant to the fair value measurement.
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At the end of each quarter, we assess the valuation hierarchy
for each asset or liability measured. From time to time, assets
or liabilities may be transferred within hierarchy levels due to
changes in availability of observable market inputs to measure
fair value at the measurement date. Transfers into or out of
hierarchy levels are based upon the fair value at the beginning
of the reporting period.
15
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Managements
Discussion and Analysis
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Huntington
Bancshares Incorporated
|
The table below provides a description and the valuation
methodologies used for financial instruments measured at fair
value, as well as the general classification of such instruments
pursuant to the valuation hierarchy. The fair values measured at
each level of the fair value hierarchy can be found in
Note 19 of the Notes to the Consolidated Financial
Statements.
Table
2 Fair Value Measurement of Financial
Instruments
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Financial
Instrument
(1)
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Hierarchy
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Valuation methodology
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Loans held-for-sale
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Level 2
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Loans held-for-sale are estimated using security prices for
similar product types.
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Investment Securities & TradingAccount
Securities
(2)
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Level 1
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Consist of U.S. Treasury and other federal agency securities,
and money market mutual funds which generally have quoted prices.
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Level 2
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Consist of U.S. Government and agency mortgage-backed securities
and municipal securities for which an active market is not
available. Third-party pricing services provide a fair value
estimate based upon trades of similar financial instruments.
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Level 3
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Consist of asset-backed securities and certain private label
CMOs, for which we estimate the fair value. Assumptions used to
determine the fair value of these securities have greater
subjectivity due to the lack of observable market transactions.
Generally, there are only limited trades of similar instruments
and a discounted cash flow approach is used to determine fair
value.
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Mortgage Servicing Rights
(MSRs)
(3)
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Level 3
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MSRs do not trade in an active, open market with readily
observable prices. Although sales of MSRs do occur, the precise
terms and conditions typically are not readily available. Fair
value is based upon the final month-end valuation, which
utilizes the month-end rate curve and prepayment assumptions.
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Derivatives
(4)
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Level 1
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Consist of exchange traded options and forward commitments to
deliver mortgage-backed securities which have quoted prices.
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Level 2
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Consist of basic asset and liability conversion swaps and
options, and interest rate caps. These derivative positions are
valued using internally developed models that use readily
observable market parameters.
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Level 3
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Consist of interest rate lock agreements related to mortgage
loan commitments. The determinination of fair value includes
assumptions related to the likelihood that a commitment will
ultimately result in a closed loan, which is a significant
unobservable assumption.
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Equity
Investments
(5)
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Level 3
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Consist of equity investments via equity funds (holding both
private and publicly-traded equity securities), directly in
companies as a minority interest investor, and directly in
companies in conjunction with our mezzanine lending activities.
These investments do not have readily observable prices. Fair
value is based upon a variety of factors, including but not
limited to, current operating performance and future
expectations of the particular investment, industry valuations
of comparable public companies, and changes in market outlook.
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(1)
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Refer to Notes 1 and 19 of the
Notes to the Consolidated Financial Statements for additional
information.
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(2)
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Refer to Note 4 of the Notes
to the Consolidated Financial Statements for additional
information.
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(3)
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Refer to Note 6 of the Notes
to the Consolidated Financial Statements for additional
information.
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(4)
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Refer to Note 20 of the Notes
to the Consolidated Financial Statements for additional
information.
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(5)
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Certain equity investments are
accounted for under the equity method and, therefore, are not
subject to the fair value disclosure requirements.
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Alt-A mortgage-backed / Private-label
collateralized mortgage obligation (CMO) securities,
included within our Level 3 investment securities
portfolio, represent mortgage-backed securities collateralized
by first-lien residential mortgage loans. As the lowest level
input that is significant to the fair value measurement in its
entirety is Level 3, we classify all securities within this
portfolio as Level 3. The securities are priced with the
assistance of an outside third-party consultant using a
discounted cash flow approach
16
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Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
using the third-partys proprietary pricing model. The
model uses inputs such as estimated prepayment speeds, losses,
recoveries, default rates that are implied by the underlying
performance of collateral in the structure or similar
structures, discount rates that are implied by market prices for
similar securities, and collateral structure types and house
price depreciation and appreciation that are based upon
macroeconomic forecasts.
We analyzed both our Alt-A mortgage-backed and private-label CMO
securities portfolios to determine if the impairment in these
portfolios was other-than-temporary. We performed this analysis,
with the assistance of third-party consultants with knowledge of
the structures of these securities and expertise in the analysis
and pricing of mortgage-backed securities, and using the
guidance in FSP EITF 99-20-1, to determine whether we believed
it probable that we would have a loss of principal on a security
within the portfolio in the future. All securities in these
portfolios remained current with respect to interest and
principal at December 31, 2008.
(See Note 2 of the
Notes to the Consolidated Financial Statements for additional
information regarding FSP EITF 99-20-1.)
For each security with any indication of impairment, we analyzed
nine reasonably possible scenarios, based around the scenario
that we considered most likely. To develop these nine scenarios,
we analyzed the amount of principal loss that we would expect to
have if the expected default rate of the loans underlying the
security were 10% higher and 10% lower than the most likely
default scenario, a range we believe covers the reasonably
possible scenarios for these securities. We also analyzed, for
each of these default scenarios, the amount of principal loss
that we would expect to have if the severity of the losses that
we experienced at default were both 10% higher and 10% lower
than the most likely severity-of-loss scenario, a range we
believe covers the reasonably possible scenarios for these
securities.
For each security subject to this additional review, we analyzed
all nine of these scenarios to determine whether principal loss
was probable. As a result of this analysis, we believe that we
will experience a loss of principal on 19 Alt-A mortgage-backed
securities and one private-label CMO security. The analysis
indicated future expected losses of principal on these
other-than-temporarily impaired securities ranged from 0.5% to
75.2% of the par value of the securities in our most-likely
scenario. The average amount of expected principal loss was 9.6%
of the par value of the securities. These losses were projected
to occur beginning anywhere from 25 months to as many as
151 months in the future. We measured the amount of
impairment on these securities using the fair value of the
security in the scenario we considered to be most likely, using
discount rates ranging from 14% to 23%, depending on both the
potential variability of outcomes for each security and the
expected duration of cash flows for each security. As a result,
we recorded $176.9 million of OTTI for our Alt-A
mortgage-backed securities and $5.7 million of OTTI for our
private-label CMO security.
Recognition of additional OTTI could be required for our Alt-A
mortgage-backed and private-label CMO securities. To estimate
potential impairment losses, we perform stress testing under
which we increase probability-of-default and loss-given-default
performance assumptions related to the underlying collateral
mortgages. Increasing probability-of-default and
loss-given-default estimates to 150% and 125%, respectively, of
our current most-likely case estimates would result in: (a) the
recognition of additional OTTI of $74.3 million, or $0.13
per common share, and (b) a reduction to our equity position of
$17.1 million, as most of the decline in fair value would
already be reflected in our equity.
Pooled-trust-preferred securities
, also included within
our Level 3 investment securities portfolio, represent
collateralized debt obligations (CDOs) backed by a pool of debt
securities issued by financial institutions. As the lowest level
input that is significant to the fair value measurement in its
entirety is Level 3, we classify all securities within this
portfolio as Level 3. The collateral is generally trust
preferred securities and subordinated debt securities issued by
banks, bank holding companies, and insurance companies. The
first and second-tier bank trust preferred securities, which
comprise 80% of the pooled-trust-preferred securities portfolio,
are priced with the assistance of an outside third-party
consultant using a discounted cash flow approach, and the
independent third-partys proprietary pricing models. The
model uses inputs such as estimated default and deferral rates
that are implied from the underlying performance of the issuers
in the structure, and discount rates that are implied by market
prices for similar securities and collateral structure types.
Insurance company securities, which comprise 20% of the
pooled-trust-preferred securities portfolio, are priced by
utilizing a third-party pricing service that determines the fair
value based upon trades of similar financial instruments.
Cash flow analyses of the first and second-tier bank trust
preferred securities issued by banks and bank holding companies
were conducted to test for any OTTI, and in accordance with FSP
EITF 99-20-1, OTTI was recorded in certain securities
within these portfolios as we concluded it was probable that all
cash flows would not be collected. The discount rate used to
calculate the cash flows ranged from
11%-15%,
and
was heavily impacted by an illiquidity premium due to the lack
of an active market for these securities. We assumed that all
issuers deferring interest payments would ultimately default,
and we assumed a 10% recovery rate on such defaults. In
addition, future defaults were estimated based upon an analysis
of the financial strength of the issuers. As a result of this
testing, we recognized OTTI of $14.5 million in the
pooled-trust-preferred securities portfolio during 2008.
Recognition of additional OTTI could be required for our
pooled-trust-preferred securities. Our estimates of potential
OTTI are performed on a security-by-security basis. The
significant variable in estimating OTTI on these securities is
the probability of default by banks issuing underlying
collateral securities. Tripling the default assumptions we used
to evaluate these securities at December 31, 2008,
17
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Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
would result in: (a) the recognition of additional OTTI of
$64.3 million, or $0.11 per common share, and (b) a
reduction to our equity position of only $5.1 million as
most of the decline in fair value would already be reflected in
our equity.
Certain other assets and liabilities which are not financial
instruments also involve fair value measurements. A description
of these assets and liabilities, and the methodologies utilized
to determine fair value are discussed below:
Goodwill
Goodwill is tested for impairment annually, as of
October 1, based upon reporting units, to determine whether
any impairment exists. Goodwill is also tested for impairment on
an interim basis if an event occurs or circumstances change
between annual tests that would more likely than not reduce the
fair value of the reporting unit below its carrying amount.
Impairment losses, if any, would be reflected in noninterest
expense. For 2008, we performed interim evaluations of our
goodwill balances at June 30, 2008 and December 31,
2008 as well as our annual goodwill impairment assessment as of
October 1, 2008. Based on our analyses, we concluded that
the fair value of our reporting units exceeded the fair value of
our assets and liabilities and therefore goodwill was not
considered impaired at any of those dates.
Huntington identified four reporting units: Regional Banking,
Private Financial & Capital Markets Group, Insurance,
and AFDS. The reporting units were identified after establishing
Huntingtons operating segments. Components of the regional
banking segment have been aggregated as one reporting unit based
upon the similar economic and operating characteristics of the
components. Although Insurance is included within the Private
Financial & Capital Markets Group segment for 2008, it
is evaluated as a separate reporting unit since the nature of
the products and services differ from the rest of the Private
Financial & Capital Markets Group segment. The AFDS
unit does not have goodwill, and therefore, is not subject to
goodwill impairment testing.
The first step of impairment testing required a comparison of
each reporting units fair value to carrying value to
identify potential impairment. An independent third party was
engaged to assist with the impairment assessment.
To determine the fair value of the Private Financial &
Capital Markets Group and Insurance reporting units, a market
approach was utilized. Revenue, earnings and market
capitalization multiples of comparable public companies were
selected and applied to the reporting units results to
calculate fair value. Using this approach, the Private
Financial & Capital Markets Group and Insurance
reporting units passed the first step, and as a result, no
further impairment testing was required and goodwill was
determined to not be impaired for these reporting units.
At December 31, 2008, our goodwill totaled
$3.1 billion. Of this $3.1 billion, $2.9 billion,
or 95%, was allocated to Regional Banking. To determine the fair
value of the Regional Banking reporting unit, both an income
(discounted cash flows) and market approach were utilized. The
income approach is based on discounted cash flows derived from
assumptions of balance sheet and income statement activity. It
also factors in costs of equity and weighted-average costs of
capital to determine an appropriate discount rate. The market
approach is similar to the method for the Private
Financial & Capital Markets Group and Insurance units
as described above. The results of the income and market
approach were weighted to arrive at the final calculation of
fair value. As market capitalization has declined across the
banking industry, we believed that a heavier weighting on the
income approach was more representative of a market
participants view. The Regional Banking unit did not pass
the first step of the impairment test, and therefore, we
conducted the second step of the impairment testing. The second
step required a comparison of the implied fair value of goodwill
to the carrying amount of goodwill.
The aggregate fair values were compared to market capitalization
as an assessment of the appropriateness of the fair value
measurements. As our stock price fluctuated greatly during 2008,
we used our average stock price for the 30 days preceding
the valuation date to determine market capitalization. The
comparison between the aggregate fair values and market
capitalization indicates an implied premium. A control premium
analysis indicated that the implied premium was within range of
the overall premiums observed in the market place.
To determine the implied fair value of goodwill, the fair value
of Regional Banking (as determined in step one) is allocated to
all assets and liabilities of the reporting unit including any
recognized or unrecognized intangible assets. The allocation is
done as if the reporting unit had been acquired in a business
combination, and the fair value of the reporting unit was the
price paid to acquire the reporting unit. Key valuations were
the assessment of core deposit intangibles, the mark-to-fair
value of outstanding debt, and discount on the loan portfolio.
The mark adjustment on our outstanding debt is based upon
observable trades or modeled prices using current yield curves
and market spreads. The valuation of the loan portfolio
indicated discounts that we believe were consistent with
transactions occurring in the marketplace.
The results of this allocation indicated the implied fair value
of Regional Bankings goodwill exceeded the carrying amount
of goodwill for Regional Banking, and therefore, goodwill was
not impaired.
It is possible that our assumptions and conclusions regarding
the valuation of our reporting units could change adversely and
could result in impairment of our goodwill. Such impairment
could have a material effect on our financial position and
results of operations.
18
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Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
Pension
Pension plan assets consist of mutual funds and Huntington
common stock. Investments are accounted for at cost on the trade
date and are reported at fair value. Mutual funds are valued at
quoted redemption value. Huntington common stock is traded on a
national securities exchange and is valued at the last reported
sales price.
The discount rate and expected return on plan assets used to
determine the benefit obligation and pension expense for
December 31, 2008 are both assumptions. Any deviation from
these assumptions could cause actual results to change.
Other Real Estate Owned (OREO)
OREO obtained in satisfaction of a loan is recorded at its
estimated fair value less anticipated selling costs based upon
the propertys appraised value at the date of transfer,
with any difference between the fair value of the property and
the carrying value of the loan charged to the ALLL. Subsequent
declines in value are reported as adjustments to the carrying
amount, and are charged to noninterest expense. Gains or losses
not previously recognized resulting from the sale of OREO are
recognized in noninterest expense on the date of sale.
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Income
Taxes
The calculation of our provision
for federal income taxes is complex and requires the use of
estimates and judgments. We have two accruals for income taxes:
Our income tax receivable represents the estimated amount
currently due from the federal government, net of any reserve
for potential audit issues, and is reported as a component of
accrued income and other assets in our consolidated
balance sheet; our deferred federal income tax asset or
liability represents the estimated impact of temporary
differences between how we recognize our assets and liabilities
under GAAP, and how such assets and liabilities are recognized
under the federal tax code.
|
In the ordinary course of business, we operate in various taxing
jurisdictions and are subject to income and nonincome taxes. The
effective tax rate is based in part on our interpretation of the
relevant current tax laws. We believe the aggregate liabilities
related to taxes are appropriately reflected in the consolidated
financial statements. We review the appropriate tax treatment of
all transactions taking into consideration statutory, judicial,
and regulatory guidance in the context of our tax positions. In
addition, we rely on various tax opinions, recent tax audits,
and historical experience.
From time to time, we engage in business transactions that may
have an effect on our tax liabilities. Where appropriate, we
have obtained opinions of outside experts and have assessed the
relative merits and risks of the appropriate tax treatment of
business transactions taking into account statutory, judicial,
and regulatory guidance in the context of the tax position.
However, changes to our estimates of accrued taxes can occur due
to changes in tax rates, implementation of new business
strategies, resolution of issues with taxing authorities
regarding previously taken tax positions and newly enacted
statutory, judicial, and regulatory guidance. Such changes could
affect the amount of our accrued taxes and could be material to
our financial position
and/or
results of operations.
(See Note 17 of the Notes to the
Consolidated Financial Statements.)
Recent
Accounting Pronouncements and Developments
Note 2 to the Consolidated Financial Statements discusses
new accounting pronouncements adopted during 2008 and the
expected impact of accounting pronouncements recently issued but
not yet required to be adopted. To the extent the adoption of
new accounting standards materially affect financial condition,
results of operations, or liquidity, the impacts are discussed
in the applicable section of this MD&A and the Notes to the
Consolidated Financial Statements.
Acquisitions
Sky Financial Group,
Inc. (Sky Financial)
The merger with Sky Financial was completed on July 1,
2007. At the time of acquisition, Sky Financial had assets of
$16.8 billion, including $13.3 billion of loans, and
total deposits of $12.9 billion. The impact of this
acquisition was included in our consolidated results for the
last six months of 2007. Additionally, in September 2007, Sky
Bank and Sky Trust, National Association (Sky Trust), merged
into the Bank and systems integration was completed. As a
result, performance comparisons between 2008 and 2007, and 2007
and 2006, are affected.
As a result of this acquisition, we have a significant loan
relationship with Franklin. This relationship is discussed in
greater detail in the Commercial Credit section of
this report.
Unizan Financial Corp.
(Unizan)
The merger with Unizan was completed on March 1, 2006. At
the time of acquisition, Unizan had assets of $2.5 billion,
including $1.6 billion of loans and core deposits of
$1.5 billion. The impact of this acquisition was included
in our consolidated results for the last ten months of 2006. As
a result, performance comparisons between 2007 and 2006, and
2006 and 2005, are affected.
19
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Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
Impact
Methodology
For both the Sky Financial and Unizan acquisitions, comparisons
of the reported results are impacted as follows:
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Increased the absolute level of reported average balance sheet,
revenue, expense, and the absolute level of certain credit
quality results.
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Increased the absolute level of reported noninterest expense
items because of costs incurred as part of merger integration
activities, most notably employee retention bonuses, outside
programming services related to systems conversions, occupancy
expenses, and marketing expenses related to customer retention
initiatives.
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Given the significant impact of the mergers on reported results,
we believe that an understanding of the impacts of each merger
is necessary to understand better underlying performance trends.
When comparing post-merger period results to premerger periods,
we use the following terms when discussing financial performance:
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Merger-related refers to amounts and percentage
changes representing the impact attributable to the merger.
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Merger costs represent noninterest expenses
primarily associated with merger integration activities,
including severance expense for key executive personnel.
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Non-merger-related refers to performance not
attributable to the merger, and includes merger
efficiencies, which represent noninterest expense
reductions realized as a result of the merger.
|
After completion of our mergers, we combine the acquired
companies operations with ours, and do not monitor the
subsequent individual results of the acquired companies. As a
result, the following methodologies were implemented to estimate
the approximate effect of the mergers used to determine
merger-related impacts.
Balance Sheet Items
Sky Financial
For average loans and leases, as well as total average deposits,
Sky Financials balances as of June 30, 2007, adjusted
for purchase accounting adjustments, and transfers of loans to
loans held-for-sale, were used in the comparison. To estimate
the impact on 2007 average balances, it was assumed that the
June 30, 2007 balances, as adjusted, remained constant over
time.
Unizan
For average loans and leases, as well as core average deposits,
balances as of the acquisition date were pro-rated to the
post-merger period being used in the comparison. For example, to
estimate the impact on 2006 first quarter average balances,
one-third of the closing date balance was used as those balances
were in reported results for only one month of the quarter.
Quarterly estimated impacts for the 2006 second, third, and
fourth quarter results were developed using this same pro-rata
methodology. Full-year 2006 estimated results represent the
annual average of each quarters estimate. This methodology
assumed acquired balances remained constant over time.
Income Statement Items
Sky Financial
Sky Financials actual results for the first six months of
2007, adjusted for the impact of unusual items and purchase
accounting adjustments, were determined. This six-month adjusted
amount was multiplied by two to estimate an annual impact. This
methodology does not adjust for any market-related changes, or
seasonal factors in Sky Financials 2007 six-month results.
Nor does it consider any revenue or expense synergies realized
since the merger date. The one exception to this methodology of
holding the estimated annual impact constant relates to the
amortization of intangibles expense where the amount is known
and is therefore used.
Unizan
Unizans actual full-year 2005 results were used for
pro-rating the impact on post-merger periods. For example, to
estimate the 2006 first quarter impact of the merger on
personnel costs, one-twelfth of Unizans full-year
2005 personnel costs was used. Full quarter and
year-to-date estimated impacts for subsequent periods were
developed using this same pro-rata methodology. This results in
an approximate impact since the methodology does not adjust for
any unusual items or seasonal factors in Unizans 2005
reported results, or synergies realized since the merger date.
The one exception to this methodology relates to the
amortization of intangibles expense where the amount is known
and is therefore used.
Certain tables and comments contained within our discussion and
analysis provide detail of changes to reported results to
quantify the estimated impact of the Sky Financial merger using
this methodology.
20
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Managements
Discussion and Analysis
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Huntington
Bancshares Incorporated
|
Table
3 Selected Annual Income
Statements
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Year Ended December 31,
|
|
|
|
|
|
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Change from 2007
|
|
|
|
|
|
Change from 2006
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
2007
|
|
|
Amount
|
|
|
Percent
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Interest income
|
|
$
|
2,798,322
|
|
|
$
|
55,359
|
|
|
|
2.0
|
%
|
|
$
|
2,742,963
|
|
|
$
|
672,444
|
|
|
|
32.5
|
%
|
|
$
|
2,070,519
|
|
|
$
|
1,641,765
|
|
|
$
|
1,347,315
|
|
Interest expense
|
|
|
1,266,631
|
|
|
|
(174,820
|
)
|
|
|
(12.1
|
)
|
|
|
1,441,451
|
|
|
|
390,109
|
|
|
|
37.1
|
|
|
|
1,051,342
|
|
|
|
679,354
|
|
|
|
435,941
|
|
|
Net interest income
|
|
|
1,531,691
|
|
|
|
230,179
|
|
|
|
17.7
|
|
|
|
1,301,512
|
|
|
|
282,335
|
|
|
|
27.7
|
|
|
|
1,019,177
|
|
|
|
962,411
|
|
|
|
911,374
|
|
Provision for credit losses
|
|
|
1,057,463
|
|
|
|
413,835
|
|
|
|
64.3
|
|
|
|
643,628
|
|
|
|
578,437
|
|
|
|
N.M.
|
|
|
|
65,191
|
|
|
|
81,299
|
|
|
|
55,062
|
|
|
Net interest income after provision for credit losses
|
|
|
474,228
|
|
|
|
(183,656
|
)
|
|
|
(27.9
|
)
|
|
|
657,884
|
|
|
|
(296,102
|
)
|
|
|
(31.0
|
)
|
|
|
953,986
|
|
|
|
881,112
|
|
|
|
856,312
|
|
|
Service charges on deposit accounts
|
|
|
308,053
|
|
|
|
53,860
|
|
|
|
21.2
|
|
|
|
254,193
|
|
|
|
68,480
|
|
|
|
36.9
|
|
|
|
185,713
|
|
|
|
167,834
|
|
|
|
171,115
|
|
Brokerage and insurance income
|
|
|
137,796
|
|
|
|
45,421
|
|
|
|
49.2
|
|
|
|
92,375
|
|
|
|
33,540
|
|
|
|
57.0
|
|
|
|
58,835
|
|
|
|
53,619
|
|
|
|
54,799
|
|
Trust services
|
|
|
125,980
|
|
|
|
4,562
|
|
|
|
3.8
|
|
|
|
121,418
|
|
|
|
31,463
|
|
|
|
35.0
|
|
|
|
89,955
|
|
|
|
77,405
|
|
|
|
67,410
|
|
Electronic banking
|
|
|
90,267
|
|
|
|
19,200
|
|
|
|
27.0
|
|
|
|
71,067
|
|
|
|
19,713
|
|
|
|
38.4
|
|
|
|
51,354
|
|
|
|
44,348
|
|
|
|
41,574
|
|
Bank owned life insurance income
|
|
|
54,776
|
|
|
|
4,921
|
|
|
|
9.9
|
|
|
|
49,855
|
|
|
|
6,080
|
|
|
|
13.9
|
|
|
|
43,775
|
|
|
|
40,736
|
|
|
|
42,297
|
|
Automobile operating lease income
|
|
|
39,851
|
|
|
|
32,041
|
|
|
|
N.M.
|
|
|
|
7,810
|
|
|
|
(35,305
|
)
|
|
|
(81.9
|
)
|
|
|
43,115
|
|
|
|
133,015
|
|
|
|
285,431
|
|
Mortgage banking
|
|
|
8,994
|
|
|
|
(20,810
|
)
|
|
|
(69.8
|
)
|
|
|
29,804
|
|
|
|
(11,687
|
)
|
|
|
(28.2
|
)
|
|
|
41,491
|
|
|
|
28,333
|
|
|
|
26,786
|
|
Securities (losses) gains
|
|
|
(197,370
|
)
|
|
|
(167,632
|
)
|
|
|
N.M.
|
|
|
|
(29,738
|
)
|
|
|
43,453
|
|
|
|
(59.4
|
)
|
|
|
(73,191
|
)
|
|
|
(8,055
|
)
|
|
|
15,763
|
|
Other
|
|
|
138,791
|
|
|
|
58,972
|
|
|
|
73.9
|
|
|
|
79,819
|
|
|
|
(40,203
|
)
|
|
|
(33.5
|
)
|
|
|
120,022
|
|
|
|
95,047
|
|
|
|
113,423
|
|
|
Total noninterest income
|
|
|
707,138
|
|
|
|
30,535
|
|
|
|
4.5
|
|
|
|
676,603
|
|
|
|
115,534
|
|
|
|
20.6
|
|
|
|
561,069
|
|
|
|
632,282
|
|
|
|
818,598
|
|
|
Personnel costs
|
|
|
783,546
|
|
|
|
96,718
|
|
|
|
14.1
|
|
|
|
686,828
|
|
|
|
145,600
|
|
|
|
26.9
|
|
|
|
541,228
|
|
|
|
481,658
|
|
|
|
485,806
|
|
Outside data processing and other services
|
|
|
128,163
|
|
|
|
918
|
|
|
|
0.7
|
|
|
|
127,245
|
|
|
|
48,466
|
|
|
|
61.5
|
|
|
|
78,779
|
|
|
|
74,638
|
|
|
|
72,115
|
|
Net occupancy
|
|
|
108,428
|
|
|
|
9,055
|
|
|
|
9.1
|
|
|
|
99,373
|
|
|
|
28,092
|
|
|
|
39.4
|
|
|
|
71,281
|
|
|
|
71,092
|
|
|
|
75,941
|
|
Equipment
|
|
|
93,965
|
|
|
|
12,483
|
|
|
|
15.3
|
|
|
|
81,482
|
|
|
|
11,570
|
|
|
|
16.5
|
|
|
|
69,912
|
|
|
|
63,124
|
|
|
|
63,342
|
|
Amortization of intangibles
|
|
|
76,894
|
|
|
|
31,743
|
|
|
|
70.3
|
|
|
|
45,151
|
|
|
|
35,189
|
|
|
|
N.M.
|
|
|
|
9,962
|
|
|
|
829
|
|
|
|
817
|
|
Professional services
|
|
|
53,667
|
|
|
|
13,347
|
|
|
|
33.1
|
|
|
|
40,320
|
|
|
|
13,267
|
|
|
|
49.0
|
|
|
|
27,053
|
|
|
|
34,569
|
|
|
|
36,876
|
|
Marketing
|
|
|
32,664
|
|
|
|
(13,379
|
)
|
|
|
(29.1
|
)
|
|
|
46,043
|
|
|
|
14,315
|
|
|
|
45.1
|
|
|
|
31,728
|
|
|
|
26,279
|
|
|
|
24,600
|
|
Automobile operating lease expense
|
|
|
31,282
|
|
|
|
26,121
|
|
|
|
N.M.
|
|
|
|
5,161
|
|
|
|
(26,125
|
)
|
|
|
(83.5
|
)
|
|
|
31,286
|
|
|
|
103,850
|
|
|
|
235,080
|
|
Telecommunications
|
|
|
25,008
|
|
|
|
506
|
|
|
|
2.1
|
|
|
|
24,502
|
|
|
|
5,250
|
|
|
|
27.3
|
|
|
|
19,252
|
|
|
|
18,648
|
|
|
|
19,787
|
|
Printing and supplies
|
|
|
18,870
|
|
|
|
619
|
|
|
|
3.4
|
|
|
|
18,251
|
|
|
|
4,387
|
|
|
|
31.6
|
|
|
|
13,864
|
|
|
|
12,573
|
|
|
|
12,463
|
|
Other
|
|
|
124,887
|
|
|
|
(12,601
|
)
|
|
|
(9.2
|
)
|
|
|
137,488
|
|
|
|
30,839
|
|
|
|
28.9
|
|
|
|
106,649
|
|
|
|
82,560
|
|
|
|
95,417
|
|
|
Total noninterest expense
|
|
|
1,477,374
|
|
|
|
165,530
|
|
|
|
12.6
|
|
|
|
1,311,844
|
|
|
|
310,850
|
|
|
|
31.1
|
|
|
|
1,000,994
|
|
|
|
969,820
|
|
|
|
1,122,244
|
|
|
(Loss) Income before income taxes
|
|
|
(296,008
|
)
|
|
|
(318,651
|
)
|
|
|
N.M.
|
|
|
|
22,643
|
|
|
|
(491,418
|
)
|
|
|
(95.6
|
)
|
|
|
514,061
|
|
|
|
543,574
|
|
|
|
552,666
|
|
(Benefit) provision for income taxes
|
|
|
(182,202
|
)
|
|
|
(129,676
|
)
|
|
|
N.M.
|
|
|
|
(52,526
|
)
|
|
|
(105,366
|
)
|
|
|
N.M.
|
|
|
|
52,840
|
|
|
|
131,483
|
|
|
|
153,741
|
|
|
Net (Loss) Income
|
|
|
(113,806
|
)
|
|
|
(188,975
|
)
|
|
|
N.M.
|
|
|
|
75,169
|
|
|
|
(386,052
|
)
|
|
|
(83.7
|
)
|
|
|
461,221
|
|
|
|
412,091
|
|
|
|
398,925
|
|
|
Dividends on preferred shares
|
|
|
46,400
|
|
|
|
46,400
|
|
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income applicable to common shares
|
|
$
|
(160,206
|
)
|
|
$
|
(235,375
|
)
|
|
|
N.M.
|
%
|
|
$
|
75,169
|
|
|
$
|
(386,052
|
)
|
|
|
(83.7
|
)
%
|
|
$
|
461,221
|
|
|
$
|
412,091
|
|
|
$
|
398,925
|
|
|
Average common shares basic
|
|
|
366,155
|
|
|
|
65,247
|
|
|
|
21.7
|
%
|
|
|
300,908
|
|
|
|
64,209
|
|
|
|
27.1
|
%
|
|
|
236,699
|
|
|
|
230,142
|
|
|
|
229,913
|
|
Average common shares
diluted
(2)
|
|
|
366,155
|
|
|
|
62,700
|
|
|
|
20.7
|
|
|
|
303,455
|
|
|
|
63,535
|
|
|
|
26.5
|
|
|
|
239,920
|
|
|
|
233,475
|
|
|
|
233,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income basic
|
|
$
|
(0.44
|
)
|
|
$
|
(0.69
|
)
|
|
|
N.M.
|
%
|
|
$
|
0.25
|
|
|
$
|
(1.70
|
)
|
|
|
(87.2
|
)%
|
|
$
|
1.95
|
|
|
$
|
1.79
|
|
|
$
|
1.74
|
|
Net income diluted
|
|
|
(0.44
|
)
|
|
|
(0.69
|
)
|
|
|
N.M.
|
|
|
|
0.25
|
|
|
|
(1.67
|
)
|
|
|
(87.0
|
)
|
|
|
1.92
|
|
|
|
1.77
|
|
|
|
1.71
|
|
Cash dividends declared
|
|
|
0.6625
|
|
|
|
(0.40
|
)
|
|
|
(37.5
|
)
|
|
|
1.060
|
|
|
|
0.06
|
|
|
|
6.0
|
|
|
|
1.000
|
|
|
|
0.845
|
|
|
|
0.750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue fully taxable equivalent (FTE)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
1,531,691
|
|
|
$
|
230,179
|
|
|
|
17.7
|
%
|
|
$
|
1,301,512
|
|
|
$
|
282,335
|
|
|
|
27.7
|
%
|
|
$
|
1,019,177
|
|
|
$
|
962,411
|
|
|
$
|
911,374
|
|
FTE adjustment
|
|
|
20,218
|
|
|
|
969
|
|
|
|
5.0
|
|
|
|
19,249
|
|
|
|
3,224
|
|
|
|
20.1
|
|
|
|
16,025
|
|
|
|
13,393
|
|
|
|
11,653
|
|
|
Net interest
income
(3)
|
|
|
1,551,909
|
|
|
|
231,148
|
|
|
|
17.5
|
|
|
|
1,320,761
|
|
|
|
285,559
|
|
|
|
27.6
|
|
|
|
1,035,202
|
|
|
|
975,804
|
|
|
|
923,027
|
|
Noninterest income
|
|
|
707,138
|
|
|
|
30,535
|
|
|
|
4.5
|
|
|
|
676,603
|
|
|
|
115,534
|
|
|
|
20.6
|
|
|
|
561,069
|
|
|
|
632,282
|
|
|
|
818,598
|
|
|
Total
revenue
(3)
|
|
$
|
2,259,047
|
|
|
$
|
261,683
|
|
|
|
13.1
|
%
|
|
$
|
1,997,364
|
|
|
$
|
401,093
|
|
|
|
25.1
|
%
|
|
$
|
1,596,271
|
|
|
$
|
1,608,086
|
|
|
$
|
1,741,625
|
|
|
N.M., not a meaningful value.
|
|
(1)
|
Comparisons for presented periods
are impacted by a number of factors. Refer to Significant
Factors for additional discussion regarding these key
factors.
|
|
(2)
|
For the year ended
December 31, 2008, the impact of the convertible preferred
stock issued in April of 2008 was excluded from the diluted
share calculation. It was excluded because the result would have
been higher than basic earnings per common share (anti-dilutive)
for the year.
|
|
(3)
|
On a fully taxable equivalent (FTE)
basis assuming a 35% tax rate.
|
21
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
DISCUSSION
OF RESULTS OF OPERATIONS
This section provides a review of financial performance from a
consolidated perspective. It also includes a Significant
Items section that summarizes key issues important for a
complete understanding of performance trends. Key consolidated
balance sheet and income statement trends are discussed. All
earnings per share data are reported on a diluted basis. For
additional insight on financial performance, please read this
section in conjunction with the Lines of Business
discussion.
Summary
2008
versus 2007
We reported a net loss of $113.8 million in 2008,
representing a loss per common share of $0.44. These results
compared unfavorably with net income of $75.2 million, or
$0.25 per common share, in 2007. Comparisons with the prior year
were significantly impacted by a number of factors that are
discussed later in the Significant Items section.
During 2008, the primary focus within our industry continued to
be credit quality. The economy deteriorated substantially
throughout the year in our regions, and continued to put stress
on our borrowers. Our expectation is that the economy will
remain under stress, and that no improvement will be seen
through at least the end of 2009.
The largest setback to 2008 performance was the credit quality
deterioration of the Franklin relationship that occurred in the
2008 fourth quarter resulting in a negative impact of
$454.3 million, or $0.81 per common share. The loan
restructuring associated with our relationship with Franklin,
completed during the 2007 fourth quarter, continued to perform
consistent with the terms of the restructuring agreement through
the 2008 third quarter. However, cash flows that we received
deteriorated significantly during the 2008 fourth quarter,
reflecting a more severe than expected deterioration in the
overall economy. This, and other factors discussed in the
Franklin relationship section, resulted in a
significant partial charge-off of the loans to Franklin.
Although disappointing, and while we can give no further
assurances, this charge represents our best estimate of the
inherent loss within this credit relationship.
Non-Franklin-related net charge-offs (NCOs) and provision levels
increased substantially compared with 2007. During 2008, the
non-Franklin-related allowance for credit losses (ACL) as a
percentage of total loans and leases increased to 2.01% compared
with 1.36% at the prior year-end. Non-Franklin-related
nonaccrual loans (NALs) also significantly increased to
$851.9 million, compared with $319.8 million at the
prior year-end, reflecting increased NALs in our commercial real
estate (CRE) loans, particularly the single family home builder
and retail properties segments, and within our commercial and
industrial (C&I) portfolio related to businesses that
support residential development. We expect to see continued
levels of elevated charge-offs and provision expense during 2009.
Our year-end regulatory capital levels were strong. Our tangible
equity ratio improved 264 basis points to 7.72% compared
with the prior year-end, reflecting the benefits of a
$0.6 billion preferred stock issuance in the 2008 second
quarter and a $1.4 billion preferred stock issuance in the
2008 fourth quarter as a result of our participation in the
Troubled Assets Relief Program (TARP) voluntary Capital Purchase
Plan (CPP)
(see Risk Factors included in
Item 1A of our 2008
Form 10-K
for the year ended December 31, 2008)
. However, our
tangible common equity ratio declined 104 basis points
compared with the prior year-end, and we believe that it is
important that we begin rebuilding our common equity. To that
end, we reduced our quarterly common stock dividend to $0.01 per
common share, effective with the dividend declared on
January 22, 2009. Our period-end liquidity position was
sound, as we have conservatively managed our liquidity position
at both the parent company and bank levels. At December 31,
2008, the parent company had sufficient cash for operations and
does not have any debt maturities for several years. Further,
the Bank has a manageable level of debt maturities during the
next
12-month
period. In the 2008 fourth quarter, the FDIC introduced the
Temporary Liquidity Guarantee Program (TLGP). One component of
this program guarantees certain newly issued senior unsecured
debt. In the 2009 first quarter, the Bank issued
$600 million of debt as part of the TLGP.
Fully taxable net interest income in 2008 increased
$231.1 million, or 18%, compared with 2007. The prior year
reflected only six months of net interest income attributable to
the acquisition of Sky Financial compared with twelve months for
2008. The Sky Financial acquisition added $13.3 billion of
loans and $12.9 billion of deposits at July 1, 2007.
There was good non-merger-related growth in total average
commercial loans, partially offset by a decline in total average
residential mortgages reflecting the continued slowdown in the
housing market, as well as loan sales. Fully taxable net
interest income in 2008 was negatively impacted by an
11 basis point decline in the net interest margin compared
with 2007, primarily due to the interest accrual reversals
resulting from loans being placed on nonaccrual status, as well
as deposit pricing. We anticipate the net interest margin will
remain under modest pressure during 2009 resulting from the
absolute low-level of current interest rates and expected
continued aggressive deposit pricing in our markets.
Noninterest income in 2008 increased $30.5 million, or 5%,
compared with 2007. Comparisons with the prior year were
affected by: (a) $153.2 million of lower noninterest
income resulting from Significant Items
(see
Significant Items discussion),
and
(b) $137.4 million increase resulting from the Sky
Financial acquisition. Considering the impact of both of these
items, the remaining components of noninterest income increased
$45.0 million, or 6%. The increase primarily reflects
automobile operating
22
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
lease income, and a 9% increase in brokerage and insurance
income reflecting growth in annuity sales. These increases were
partially offset by a 7% decline in trust services income
reflecting the impact of lower market values on asset management
revenues.
Expenses were well controlled, with our efficiency ratio
improving to 57.0% in 2008 compared with 62.5% in 2007.
Noninterest expense in 2008 increased $165.5 million, or
13%, compared with 2007. Comparisons with the prior year were
affected by: (a) $62.4 million of net lower expenses
resulting from Significant Items
(see Significant
Items discussion)
, and (b) $208.1 million
increase resulting from the Sky Financial acquisition, including
the impact of restructuring and merger costs. Considering the
impact of both of these items, the remaining components of
noninterest expense increased $20.4 million, or 1%. The
increase primarily reflected increased collection and OREO
expenses as the economy continues to weaken, as well as
increased insurance expense and automobile operating lease
expense. These increases are partially offset by a decline in
personnel expense, as well as other expense categories, due to
merger/restructuring efficiencies.
2007
versus 2006
We reported 2007 net income of $75.2 million and
earnings per common share of $0.25. These results compared
unfavorably with net income of $461.2 million and earnings
per common share of $1.92 in 2006. Comparisons with the prior
year were significantly impacted by: (a) our acquisition of
Sky Financial, which closed on July 1, 2007, as well as the
credit deterioration of the Franklin relationship that was also
acquired with Sky Financial, (b) a 2006 reduction in the
provision for income taxes as a result of the favorable
resolution to certain federal income tax audits, and
(c) balance sheet restructuring charges taken in 2006.
The credit deterioration of the Franklin relationship late in
2007 was the largest setback to 2007 performance. A negative
impact of $423.6 million pretax ($275.4 million
after-tax, or $0.91 per common share based upon the annual
average outstanding diluted common shares) related to this
relationship. Other factors negatively impacting our 2007
performance included: (a) the building of the
non-Franklin-related allowance for loan losses due to continued
weakness in the residential real estate development markets and
(b) the volatility of the financial markets resulting in
net market-related losses.
The negative factors discussed above were partially offset by
the $47.5 million, or 4%, decline in non-merger-related
expenses, representing the realization of most of the merger
efficiencies that were targeted from the acquisition. Also,
commercial loans showed good non-merger-related growth, and
there was also strong non-merger-related growth in several key
noninterest income activities, including deposit service
charges, trust services, and electronic banking income.
Fully taxable net interest income for 2007 increased
$285.6 million, or 28%, from 2006. Six months of net
interest income attributable to the acquisition of Sky Financial
was included in 2007. There was good non-merger-related growth
in total average commercial loans. However, total average
automobile loans and leases declined, as expected, due to lower
consumer demand and competitive pricing. Additionally, the
non-merger-related declines in total average residential
mortgages, as well as the lack of growth in non-merger-related
total average home equity loans, reflected the continued
softness in the real estate markets, as well as loan sales.
Growth in non-merger-related average total deposits was good in
2007, driven by strong growth in interest-bearing demand
deposits. Our net interest margin increased seven basis points
to 3.36% from 3.29% in 2006.
In addition to the Franklin credit deterioration discussed
previously, credit quality generally weakened in 2007 compared
with 2006. The ALLL increased to 1.44% in 2007 from 1.04% in the
prior year. The ALLL coverage of NALs decreased to 181% at
December 31, 2007, from 189% at December 31, 2006.
Nonperforming assets (NPAs) also increased from the prior year,
including the NPAs acquired from Sky Financial. The
deterioration of all of these measures reflected the continued
economic weakness in our Midwest markets, most notably among our
borrowers in eastern Michigan and northern Ohio, and within the
residential real estate development portfolio.
Significant
Items
Definition
of Significant Items
Certain components of the income statement are naturally subject
to more volatility than others. As a result, readers of this
report may view such items differently in their assessment of
underlying or core earnings performance
compared with their expectations
and/or
any
implications resulting from them on their assessment of future
performance trends.
Therefore, we believe the disclosure of certain
Significant Items affecting current and prior period
results aids readers of this report in better understanding
corporate performance so that they can ascertain for themselves
what, if any, items they may wish to include or exclude from
their analysis of performance, within the context of determining
how that performance differed from their expectations, as well
as how, if at all, to adjust their estimates of future
performance accordingly.
23
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
To this end, we have adopted a practice of listing as
Significant Items, individual
and/or
particularly volatile items that impact the current period
results by $0.01 per share or more. Such Significant
Items generally fall within the categories discussed below:
Timing
Differences
Parts of our regular business activities are naturally volatile,
including capital markets income and sales of loans. While such
items may generally be expected to occur within a full-year
reporting period, they may vary significantly from period to
period. Such items are also typically a component of an income
statement line item and not, therefore, readily discernable. By
specifically disclosing such items, analysts/investors can
better assess how, if at all, to adjust their estimates of
future performance.
Other
Items
From time to time, an event or transaction might significantly
impact revenues or expenses in a particular reporting period
that is judged to be infrequent, short-term in nature,
and/or
materially outside typically expected performance. Examples
would be (1) merger costs as they typically impact expenses
for only a few quarters during the period of transition;
including related restructuring charges and asset valuation
adjustments; (2) changes in an accounting principle;
(3) large and infrequent tax assessments/refunds;
(4) a large gain/loss on the sale of an asset; and
(5) outsized commercial loan net charge-offs related to
fraud. In addition, for the periods covered by this report, the
impact of the Franklin relationship is deemed to be a
significant item due to its unusually large size and because it
was acquired in the Sky Financial merger and thus it is not
representative of our typical underwriting criteria. By
disclosing such items, analysts/investors can better assess how,
if at all, to adjust their estimates of future performance.
Provision
for Credit Losses
While the provision for credit losses may vary significantly
among periods, and often exceeds $0.01 per share, we typically
exclude it from the list of Significant Items
unless, in our view, there is a significant, specific credit (or
multiple significant, specific credits) affecting comparability
among periods. In determining whether any portion of the
provision for credit losses should be included as a significant
item, we consider, among other things, that the provision is a
major income statement caption rather than a component of
another caption and, therefore, the period-to-period variance
can be readily determined. We also consider the additional
historical volatility of the provision for credit losses.
Other
Exclusions
Significant Items for any particular period are not
intended to be a complete list of items that may significantly
impact future periods. A number of factors, including those
described in Huntingtons 2008 Annual Report on
Form 10-K
and other factors described from time to time in
Huntingtons other filings with the SEC, could also
significantly impact future periods.
Significant
Items Influencing Financial Performance
Comparisons
Earnings comparisons among the three years ended
December 31, 2008, 2007, and 2006 were impacted by a number
of significant items summarized below.
|
|
|
|
1.
|
Sky Financial
Acquisition.
The merger with Sky Financial
was completed on July 1, 2007. The impacts of Sky Financial
on the 2008 reported results compared with the 2007 reported
results are as follows:
|
|
|
|
|
|
Increased the absolute level of reported average balance sheet,
revenue, expense, and credit quality results (e.g., NCOs).
|
|
|
|
Increased reported noninterest expense items as a result of
costs incurred as part of merger integration and post- merger
restructuring activities, most notably employee retention
bonuses, outside programming services related to systems
conversions, and marketing expenses related to customer
retention initiatives. These net merger costs were
$21.8 million ($0.04 per common share) in 2008 and
$85.1 million ($0.18 per common share) in 2007.
|
|
|
|
|
2.
|
Franklin
Relationship.
Our relationship with
Franklin was acquired in the Sky Financial acquisition. The
impacts of the Franklin relationship on the 2008 reported
results compared with the 2007 reported results are as follows:
|
|
|
|
|
|
Performance for 2008 included a $454.3 million ($0.81 per
common share) negative impact. In the 2008 fourth quarter, the
cash flow from Franklins mortgages, which represent the
collateral for our loans, deteriorated significantly. This
deterioration resulted in a $438.0 million provision for
credit losses, $9.0 million reduction of net interest
income as the loans were placed on nonaccrual status, and
$7.3 million of interest-rate swap losses recorded to
noninterest income.
|
24
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
|
|
|
|
|
Performance for 2007 included a $423.6 million ($0.91 per
common share) negative impact. On December 28, 2007, the
loans associated with Franklin were restructured, resulting in a
$405.8 million provision for credit losses and a
$17.9 million reduction of net interest income.
|
|
|
|
|
3.
|
Visa
®
Initial Public Offering (IPO).
Prior to
the
Visa
®
IPO occurring in March 2008,
Visa
®
was owned by its member banks, which included the Bank. Impacts
related to the
Visa
®
IPO included a positive impact of $42.1 million ($0.07 per
common share) in 2008, and a negative impact of
$24.9 million ($0.04 per common share) in 2007. The impacts
included:
|
|
|
|
|
|
In 2007, we recorded a $24.9 million ($0.05 per common
share) for our pro-rata portion of an indemnification charge
provided to
Visa
®
by its member banks for various litigation filed against
Visa
®
.
Subsequently, in 2008, we reversed $17.0 million ($0.03 per
common share) of the $24.9 million, as an escrow account
was established by
Visa
®
using a portion of the proceeds received from the IPO. This
escrow accent was established for the potential settlements
relating to this litigation thereby mitigating our potential
liability from the indemnification. The accrual, and subsequent
reversal, was recorded to noninterest expense.
|
|
|
|
In 2008, a $25.1 million gain ($0.04 per common share), was
recorded in other noninterest income resulting from the proceeds
of the IPO in 2008 relating to the sale of a portion of our
ownership interest in
Visa
®
.
|
|
|
|
|
4.
|
Mortgage Servicing
Rights (MSRs) and Related
Hedging.
Included in total net
market-related losses are net losses or gains from our MSRs and
the related hedging.
(See Mortgage Servicing
Rights located within the Market Risk
section).
Net income included the following net impact of
MSR hedging activity
(see Table 10)
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per
|
|
|
|
Net interest
|
|
|
Noninterest
|
|
|
Pretax
|
|
|
Net
|
|
|
common
|
|
Period
|
|
income
|
|
|
income
|
|
|
(loss) income
|
|
|
(loss) income
|
|
|
share
|
|
2008
|
|
$
|
33,139
|
|
|
$
|
(63,955
|
)
|
|
$
|
(30,816
|
)
|
|
$
|
(20,030
|
)
|
|
$
|
(0.05
|
)
|
2007
|
|
|
5,797
|
|
|
|
(24,784
|
)
|
|
|
(18,987
|
)
|
|
|
(12,342
|
)
|
|
|
(0.04
|
)
|
2006
|
|
|
36
|
|
|
|
3,586
|
(1)
|
|
|
3,622
|
|
|
|
2,354
|
|
|
|
0.01
|
|
(1) Includes $5.1 million
related to the positive impact of adopting SFAS No 156.
|
|
|
|
5.
|
Other Net
Market-Related Gains or Losses.
Other net
market-related gains or losses included gains and losses related
to the following market-driven activities: net securities gains
and losses, gains and losses from public and private equity
investments included in other noninterest income, net losses
from the sale of loans included primarily in other noninterest
income (except as otherwise noted), and the impact from the
extinguishment of debt included in other noninterest expense.
Total net market-related losses also include the net impact of
MSRs and related hedging
(see item 4 above)
. Net income
included the following impact from other net market-related
losses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt
|
|
|
|
|
|
|
|
|
Per
|
|
|
|
Securities
|
|
|
Equity
|
|
|
Net loss on
|
|
|
extinguish-
|
|
|
Pretax
|
|
|
Net
|
|
|
common
|
|
Period
|
|
losses
|
|
|
investments
|
|
|
loans sold
|
|
|
ment
|
|
|
(loss) income
|
|
|
(loss) income
|
|
|
share
|
|
2008
|
|
$
|
(197,370
|
)
|
|
$
|
(5,892
|
)
|
|
$
|
(5,131
|
)
(1)
|
|
$
|
23,541
|
|
|
$
|
(184,852
|
)
|
|
$
|
(120,154
|
)
|
|
$
|
(0.33
|
)
|
2007
(2)
|
|
|
(30,486
|
)
|
|
|
(20,009
|
)
|
|
|
(34,003
|
)
|
|
|
8,058
|
|
|
|
(76,440
|
)
|
|
|
(49,686
|
)
|
|
|
(0.16
|
)
|
2006
|
|
|
(73,191
|
)
|
|
|
7,436
|
|
|
|
(859
|
)
(3)
|
|
|
|
|
|
|
(66,614
|
)
|
|
|
(43,299
|
)
|
|
|
(0.18
|
)
|
(1) This amount included a
$2.1 million gain reflected in mortgage banking income.
(2) $748 thousand of
securities losses related to debt extinguishment, therefore,
this amount is reflected as debt extinguishment in the above
table.
(3) This amount is reflected
entirely in mortgage banking income.
The 2008 securities losses total included OTTI adjustments of
$176.9 million in our Alt-A mortgage-backed securities
portfolio
(see Investment Portfolio discussion
within the Credit Risk section)
.
|
|
|
|
6.
|
Other Significant
Items Influencing Earnings Performance
Comparisons.
In addition to the items
discussed separately in this section, a number of other items
impacted financial results. These included:
|
2008
|
|
|
|
|
$12.4 million ($0.02 per common share) of asset impairment,
including (a) $5.9 million venture capital loss
included in other noninterest income, (b) $4.0 million
charge off of a receivable included in other noninterest
expense, and (c) $2.5 million write-down of leasehold
improvements in our Cleveland main office included in net
occupancy expense.
|
|
|
|
$7.9 million ($0.02 per common share) benefit to provision
for income taxes, representing a reduction to the previously
established capital loss carryforward valuation allowance as a
result of the 2008 first quarter
Visa
®
IPO.
|
2007
|
|
|
|
|
$10.8 million ($0.02 per common share) pretax negative
impact primarily due to increases in litigation reserves on
existing cases.
|
25
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
2006
|
|
|
|
|
$84.5 million ($0.35 per common share) reduction of
provision for income taxes from the release of tax reserves as a
result of the resolution of the federal income tax audit for
2002 and 2003, and recognition of a federal tax loss carryback.
|
|
|
|
$10.0 million ($0.03 per common share) pretax contribution
to the Huntington Foundation.
|
|
|
|
$4.8 million ($0.01 per common share) in severance and
consolidation pretax expenses. This reflected fourth quarter
severance-related expenses associated with a reduction of 75
Regional Banking staff positions, as well as costs associated
with the retirements of a vice chairman and an executive vice
president.
|
|
|
|
$3.7 million ($0.01 per common share) of Unizan pretax
merger costs, primarily associated with systems conversion
expenses.
|
|
|
|
$3.5 million ($0.01 per common share) pretax negative
impact associated with the refinancing of Federal Home Loan Bank
(FHLB) funding.
|
|
|
|
$3.3 million ($0.01 per common share) pretax gain on the
sale of
MasterCard
®
stock.
|
|
|
|
$3.2 million ($0.01 per common share) pretax negative
impact associated with the write-down of equity method
investments.
|
|
|
|
$2.3 million ($0.01 per common share) pretax unfavorable
impact due to a cumulative adjustment to defer home equity
annual fees.
|
Table 4 reflects the earnings impact of the above-mentioned
significant items for periods affected by this Results of
Operations discussion:
Table 4
Significant Items Influencing Earnings Performance
Comparison
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
(in thousands)
|
|
After-tax
|
|
|
EPS
|
|
|
After-tax
|
|
|
EPS
|
|
|
After-tax
|
|
|
EPS
|
|
Net income GAAP
|
|
$
|
(113,806
|
)
|
|
|
|
|
|
$
|
75,169
|
|
|
|
|
|
|
$
|
461,221
|
|
|
|
|
|
Earnings per share, after tax
|
|
|
|
|
|
$
|
(0.44
|
)
|
|
|
|
|
|
$
|
0.25
|
|
|
|
|
|
|
$
|
1.92
|
|
Change from prior year $
|
|
|
|
|
|
|
(0.69
|
)
|
|
|
|
|
|
|
(1.67
|
)
|
|
|
|
|
|
|
0.15
|
|
Change from prior year %
|
|
|
|
|
|
|
N.M.
|
%
|
|
|
|
|
|
|
(87.0
|
)%
|
|
|
|
|
|
|
8.5
|
%
|
Significant items favorable (unfavorable)
impact:
|
|
Earnings
(2)
|
|
|
EPS
(3)
|
|
|
Earnings
(2)
|
|
|
EPS
(3)
|
|
|
Earnings
(2)
|
|
|
EPS
(3)
|
|
Aggegate impact of Visa IPO
|
|
$
|
25,087
|
|
|
$
|
0.04
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Visa
®
anti-trust indemnification
|
|
|
16,995
|
|
|
|
0.03
|
|
|
|
(24,870
|
)
|
|
|
(0.05
|
)
|
|
|
|
|
|
|
|
|
Deferred tax valuation allowance
benefit
(4)
|
|
|
7,892
|
|
|
|
0.02
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Franklin Credit relationship
|
|
|
(454,278
|
)
|
|
|
(0.81
|
)
|
|
|
(423,645
|
)
|
|
|
(0.91
|
)
|
|
|
|
|
|
|
|
|
Net market-related losses
|
|
|
(215,667
|
)
|
|
|
(0.38
|
)
|
|
|
(95,427
|
)
|
|
|
(0.10
|
)
|
|
|
(62,992
|
)
|
|
|
(0.17
|
)
|
Merger/Restructuring costs
|
|
|
(21,830
|
)
|
|
|
(0.04
|
)
|
|
|
(85,084
|
)
|
|
|
(0.18
|
)
|
|
|
(3,749
|
)
|
|
|
(0.01
|
)
|
Asset impairment
|
|
|
(12,400
|
)
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Litigation losses
|
|
|
|
|
|
|
|
|
|
|
(10,767
|
)
|
|
|
(0.02
|
)
|
|
|
|
|
|
|
|
|
Reduction to federal income tax
expense
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,541
|
|
|
|
0.35
|
|
Gain on sale of
MasterCard
®
stock
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,341
|
|
|
|
0.01
|
|
Huntington Foundation contribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10,000
|
)
|
|
|
(0.03
|
)
|
Severance and consolidation expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4,750
|
)
|
|
|
(0.01
|
)
|
FHLB refinancing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,530
|
)
|
|
|
(0.01
|
)
|
Accounting adjustment for certain equity investments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,240
|
)
|
|
|
(0.01
|
)
|
Adjustment to defer home equity annual fees
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,254
|
)
|
|
|
(0.01
|
)
|
N.M., not a meaningful value.
|
|
(1)
|
See Significant Factors Influencing
Financial Performance discussion.
|
(2)
|
Pre-tax unless otherwise noted.
|
(3)
|
Based upon the annual average
outstanding diluted common shares.
|
(4)
|
After-tax.
|
Net
Interest Income / Average Balance Sheet
(This section should be read in conjunction with Significant
Items 1, 2, and 4.)
Our primary source of revenue is net interest income, which is
the difference between interest income from earning assets
(primarily loans, direct financing leases, and securities), and
interest expense of funding sources (primarily interest bearing
deposits and borrowings). Earning asset balances and related
funding, as well as changes in the levels of interest rates,
impact net interest income. The difference between the average
yield on earning assets and the average rate paid for
interest-bearing liabilities is the
26
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
net interest spread. Noninterest bearing sources of funds, such
as demand deposits and shareholders equity, also support
earning assets. The impact of the noninterest bearing sources of
funds, often referred to as free funds, is captured
in the net interest margin, which is calculated as net interest
income divided by average earning assets. Given the
free nature of noninterest bearing sources of funds,
the net interest margin is generally higher than the net
interest spread. Both the net interest spread and net interest
margin are presented on a fully taxable equivalent basis, which
means that tax-free interest income has been adjusted to a
pre-tax equivalent income, assuming a 35% tax rate.
The table below shows changes in fully taxable equivalent
interest income, interest expense, and net interest income due
to volume and rate variances for major categories of earning
assets and interest bearing liabilities.
Table
5 Change in Net Interest Income Due to Changes in
Average Volume and Interest
Rates
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
2007
|
|
|
|
Increase (Decrease) From
|
|
|
Increase (Decrease) From
|
|
|
|
Previous Year Due To
|
|
|
Previous Year Due To
|
|
Fully-taxable equivalent
basis
(2)
|
|
|
|
|
Yield/
|
|
|
|
|
|
|
|
|
Yield/
|
|
|
|
|
(in millions)
|
|
Volume
|
|
|
Rate
|
|
|
Total
|
|
|
Volume
|
|
|
Rate
|
|
|
Total
|
|
Loans and direct financing leases
|
|
$
|
504.7
|
|
|
$
|
(449.6
|
)
|
|
$
|
55.1
|
|
|
$
|
519.8
|
|
|
$
|
97.8
|
|
|
$
|
617.6
|
|
Securities
|
|
|
17.0
|
|
|
|
(16.2
|
)
|
|
|
0.8
|
|
|
|
(27.7
|
)
|
|
|
23.2
|
|
|
|
(4.5
|
)
|
Other earning assets
|
|
|
19.1
|
|
|
|
(18.7
|
)
|
|
|
0.4
|
|
|
|
60.2
|
|
|
|
2.4
|
|
|
|
62.6
|
|
|
Total interest income from earning assets
|
|
|
540.8
|
|
|
|
(484.5
|
)
|
|
|
56.3
|
|
|
|
552.3
|
|
|
|
123.4
|
|
|
|
675.7
|
|
|
Deposits
|
|
|
206.8
|
|
|
|
(301.5
|
)
|
|
|
(94.7)
|
|
|
|
224.0
|
|
|
|
85.2
|
|
|
|
309.2
|
|
Short-term borrowings
|
|
|
5.1
|
|
|
|
(55.6
|
)
|
|
|
(50.5)
|
|
|
|
18.3
|
|
|
|
2.3
|
|
|
|
20.6
|
|
Federal Home Loan Bank advances
|
|
|
49.3
|
|
|
|
(44.1
|
)
|
|
|
5.2
|
|
|
|
32.2
|
|
|
|
10.4
|
|
|
|
42.6
|
|
Subordinated notes and other long-term debt, including capital
securities
|
|
|
22.3
|
|
|
|
(57.1
|
)
|
|
|
(34.8)
|
|
|
|
6.6
|
|
|
|
11.1
|
|
|
|
17.7
|
|
|
Total interest expense of interest-bearing liabilities
|
|
|
283.5
|
|
|
|
(458.3
|
)
|
|
|
(174.8)
|
|
|
|
281.1
|
|
|
|
109.0
|
|
|
|
390.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
$
|
257.3
|
|
|
$
|
(26.2
|
)
|
|
$
|
231.1
|
|
|
$
|
271.2
|
|
|
$
|
14.4
|
|
|
$
|
285.6
|
|
|
(1) The change in interest
rates due to both rate and volume has been allocated between the
factors in proportion to the relationship of the absolute dollar
amounts of the change in each.
|
|
(2)
|
Calculated assuming a 35% tax rate.
|
2008
versus 2007
Fully taxable equivalent net interest income for 2008 increased
$231.1 million, or 18%, from 2007. This reflected the
favorable impact of a $8.4 billion, or 21%, increase in
average earning assets, of which $7.8 billion represented
an increase in average loans and leases, partially offset by a
decrease in the fully-taxable net interest margin of
11 basis points to 3.25%. The increase to average earning
assets, and to average loans and leases, reflected the Sky
Financial acquisition.
27
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
The following table details the estimated merger-related impacts
on our reported loans and deposits:
Table
6 Average Loans/Leases and Deposits
Estimated Merger-Related Impacts 2008 vs.
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change Attributable to:
|
|
|
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Change
|
|
|
|
|
|
Non-merger-related
|
|
|
|
|
|
|
|
|
|
Merger-
|
|
|
|
|
(in millions)
|
|
2008
|
|
|
2007
|
|
|
Amount
|
|
|
Percent
|
|
|
Related
|
|
|
Amount
|
|
|
Percent
(1)
|
|
Loans/Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
$
|
13,588
|
|
|
$
|
10,636
|
|
|
$
|
2,952
|
|
|
|
27.8
|
%
|
|
$
|
2,388
|
|
|
$
|
564
|
|
|
|
4.3
|
%
|
Commerical real estate
|
|
|
9,732
|
|
|
|
6,807
|
|
|
|
2,925
|
|
|
|
43.0
|
|
|
|
1,986
|
|
|
|
939
|
|
|
|
10.7
|
|
|
Total commercial
|
|
$
|
23,320
|
|
|
$
|
17,443
|
|
|
$
|
5,877
|
|
|
|
33.7
|
%
|
|
$
|
4,374
|
|
|
$
|
1,503
|
|
|
|
6.9
|
%
|
Automobile loans and leases
|
|
|
4,527
|
|
|
|
4,118
|
|
|
|
409
|
|
|
|
9.9
|
|
|
|
216
|
|
|
|
193
|
|
|
|
4.5
|
|
Home equity
|
|
|
7,404
|
|
|
|
6,173
|
|
|
|
1,231
|
|
|
|
19.9
|
|
|
|
1,193
|
|
|
|
38
|
|
|
|
0.5
|
|
Residential mortgage
|
|
|
5,018
|
|
|
|
4,939
|
|
|
|
79
|
|
|
|
1.6
|
|
|
|
556
|
|
|
|
(477
|
)
|
|
|
(8.7
|
)
|
Other consumer
|
|
|
691
|
|
|
|
529
|
|
|
|
162
|
|
|
|
30.6
|
|
|
|
72
|
|
|
|
90
|
|
|
|
15.0
|
|
|
Total consumer
|
|
|
17,640
|
|
|
|
15,759
|
|
|
|
1,881
|
|
|
|
11.9
|
|
|
|
2,037
|
|
|
|
(156
|
)
|
|
|
(0.9
|
)
|
|
Total loans and leases
|
|
$
|
40,960
|
|
|
$
|
33,202
|
|
|
$
|
7,758
|
|
|
|
23.4
|
%
|
|
$
|
6,411
|
|
|
$
|
1,347
|
|
|
|
3.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits noninterest bearing
|
|
$
|
5,095
|
|
|
$
|
4,438
|
|
|
$
|
657
|
|
|
|
14.8
|
%
|
|
$
|
915
|
|
|
$
|
(258
|
)
|
|
|
(4.8
|
)%
|
Demand deposits interest bearing
|
|
|
4,003
|
|
|
|
3,129
|
|
|
|
874
|
|
|
|
27.9
|
|
|
|
730
|
|
|
|
144
|
|
|
|
3.7
|
|
Money market deposits
|
|
|
6,093
|
|
|
|
6,173
|
|
|
|
(80
|
)
|
|
|
(1.3
|
)
|
|
|
498
|
|
|
|
(578
|
)
|
|
|
(8.7
|
)
|
Savings and other domestic time deposits
|
|
|
4,949
|
|
|
|
4,001
|
|
|
|
948
|
|
|
|
23.7
|
|
|
|
1,297
|
|
|
|
(349
|
)
|
|
|
(6.6
|
)
|
Core certificates of deposit
|
|
|
11,527
|
|
|
|
8,057
|
|
|
|
3,470
|
|
|
|
43.1
|
|
|
|
2,315
|
|
|
|
1,155
|
|
|
|
11.1
|
|
|
Total core deposits
|
|
|
31,667
|
|
|
|
25,798
|
|
|
|
5,869
|
|
|
|
22.7
|
|
|
|
5,755
|
|
|
|
114
|
|
|
|
0.4
|
|
Other deposits
|
|
|
6,169
|
|
|
|
5,268
|
|
|
|
901
|
|
|
|
17.1
|
|
|
|
672
|
|
|
|
229
|
|
|
|
3.9
|
|
|
Total deposits
|
|
$
|
37,836
|
|
|
$
|
31,066
|
|
|
$
|
6,770
|
|
|
|
21.8
|
%
|
|
$
|
6,427
|
|
|
$
|
343
|
|
|
|
0.9
|
%
|
|
(1) Calculated as non-merger
related / (prior period + merger-related)
The $1.3 billion, or 3%, non-merger-related increase in
average total loans and leases primarily reflected:
|
|
|
|
|
$1.5 billion, or 7%, growth in average total commercial
loans, with growth reflected in both the C&I and CRE
portfolios. The growth in CRE loans was primarily to existing
borrowers with a focus on traditional income producing property
types and was not related to the single family home builder
segment. The growth in C&I loans reflected a combination of
draws associated with existing commitments, new loans to
existing borrowers, and some originations to new high quality
borrowers.
|
Partially offset by:
|
|
|
|
|
$0.2 billion, or 1%, decline in total average consumer
loans reflecting a $0.5 billion, or 9%, decline in
residential mortgages due to loan sales, as well as the
continued slowdown in the housing markets. This decrease was
partially offset by a $0.2 billion, or 4%, increase in
average automobile loans and leases reflecting higher automobile
loan originations, although automobile loan origination volumes
have declined throughout 2008 due to the industry wide decline
in sales. Automobile lease origination volumes have also
declined throughout 2008. During the 2008 fourth quarter, we
exited the automobile leasing business.
|
Average other earning assets increased $0.6 billion,
primarily reflecting the increase in average trading account
securities. The increase in these assets reflected a change in
our strategy to use trading account securities to hedge the
change in fair value of our MSRs, however, the practice of
hedging the change in fair value of our MSRs using on-balance
sheet trading assets ceased at the end of 2008.
The $0.3 billion, or 1%, increase in average total deposits
reflected growth in other deposits. These deposits were
primarily other domestic time deposits of $100,000 or more
reflecting increases in commercial and public fund deposits.
Changes from the prior year also reflected customers
transferring funds from lower rate to higher rate accounts such
as certificates of deposit as short-term rates had fallen.
2007
versus 2006
Fully taxable equivalent net interest income for 2007 increased
$285.6 million, or 28%, from 2006. This reflected the
favorable impact of a $7.9 billion, or 25%, increase in
average earning assets, of which $7.3 billion represented
an increase in average loans and leases, as well as the benefit
of an increase in the fully-taxable net interest margin of seven
basis points to 3.36%. The increase to average earning assets,
and to average loans and leases, was primarily merger-related.
28
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
The following table details the estimated merger-related impacts
on our reported loans and deposits:
Table
7 Average Loans/Leases and Deposits
Estimated Merger-Related Impacts
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
Change
|
|
|
|
|
|
Non-merger-related
|
|
|
|
|
|
|
|
|
|
Merger-
|
|
|
|
|
(in millions)
|
|
2007
|
|
|
2006
|
|
|
Amount
|
|
|
Percent
|
|
|
Related
|
|
|
Amount
|
|
|
Percent
(1)
|
|
Loans/Leases
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
$
|
10,636
|
|
|
$
|
7,323
|
|
|
$
|
3,313
|
|
|
|
45.2
|
%
|
|
$
|
2,388
|
|
|
$
|
925
|
|
|
|
9.5
|
%
|
Commercial real estate
|
|
|
6,807
|
|
|
|
4,542
|
|
|
|
2,265
|
|
|
|
49.9
|
|
|
|
1,986
|
|
|
|
279
|
|
|
|
4.3
|
|
|
Total commercial
|
|
|
17,443
|
|
|
|
11,865
|
|
|
|
5,578
|
|
|
|
47.0
|
|
|
|
4,374
|
|
|
|
1,204
|
|
|
|
7.4
|
|
Automobile loans and leases
|
|
|
4,118
|
|
|
|
4,088
|
|
|
|
30
|
|
|
|
0.7
|
|
|
|
216
|
|
|
|
(186
|
)
|
|
|
(4.3
|
)
|
Home equity
|
|
|
6,173
|
|
|
|
4,970
|
|
|
|
1,203
|
|
|
|
24.2
|
|
|
|
1,193
|
|
|
|
10
|
|
|
|
0.2
|
|
Residential mortgage
|
|
|
4,939
|
|
|
|
4,581
|
|
|
|
358
|
|
|
|
7.8
|
|
|
|
556
|
|
|
|
(198
|
)
|
|
|
(3.9
|
)
|
Other consumer
|
|
|
529
|
|
|
|
439
|
|
|
|
90
|
|
|
|
20.5
|
|
|
|
72
|
|
|
|
18
|
|
|
|
3.5
|
|
|
Total consumer
|
|
|
15,759
|
|
|
|
14,078
|
|
|
|
1,681
|
|
|
|
11.9
|
|
|
|
2,037
|
|
|
|
(356
|
)
|
|
|
(2.2
|
)
|
|
Total loans and leases
|
|
$
|
33,202
|
|
|
$
|
25,943
|
|
|
$
|
7,259
|
|
|
|
28.0
|
%
|
|
$
|
6,411
|
|
|
$
|
848
|
|
|
|
2.6
|
%
|
|
Deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits noninterest bearing
|
|
$
|
4,438
|
|
|
$
|
3,530
|
|
|
$
|
908
|
|
|
|
25.7
|
%
|
|
$
|
915
|
|
|
$
|
(7
|
)
|
|
|
(0.2
|
)%
|
Demand deposits interest bearing
|
|
|
3,129
|
|
|
|
2,138
|
|
|
|
991
|
|
|
|
46.4
|
|
|
|
730
|
|
|
|
261
|
|
|
|
9.1
|
|
Money market deposits
|
|
|
6,173
|
|
|
|
5,604
|
|
|
|
569
|
|
|
|
10.2
|
|
|
|
498
|
|
|
|
71
|
|
|
|
1.2
|
|
Savings and other domestic time deposits
|
|
|
4,001
|
|
|
|
3,060
|
|
|
|
941
|
|
|
|
30.8
|
|
|
|
1,297
|
|
|
|
(356
|
)
|
|
|
(8.2
|
)
|
Core certificates of deposit
|
|
|
8,057
|
|
|
|
5,050
|
|
|
|
3,007
|
|
|
|
59.5
|
|
|
|
2,315
|
|
|
|
692
|
|
|
|
9.4
|
|
|
Total core deposits
|
|
|
25,798
|
|
|
|
19,382
|
|
|
|
6,416
|
|
|
|
33.1
|
|
|
|
5,755
|
|
|
|
661
|
|
|
|
2.6
|
|
Other deposits
|
|
|
5,268
|
|
|
|
4,802
|
|
|
|
466
|
|
|
|
9.7
|
|
|
|
672
|
|
|
|
(206
|
)
|
|
|
(3.8
|
)
|
|
Total deposits
|
|
$
|
31,066
|
|
|
$
|
24,184
|
|
|
$
|
6,882
|
|
|
|
28.5
|
%
|
|
$
|
6,427
|
|
|
$
|
455
|
|
|
|
1.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Calculated as non-merger related / (prior period +
merger-related)
|
The $0.8 billion, or 3%, non-merger-related increase in
total average loans compared with the prior year primarily
reflected a $1.2 billion, or 7%, increase in average total
commercial loans. This increase was the result of strong growth
in both C&I loans and CRE loans across substantially all
regions. This was partially offset by a $0.4 billion, or
2%, decrease in average total consumer loans reflecting declines
in automobile loans and leases and residential mortgages. These
declines reflect weaker demand, a softer economy, as well as the
continued impact of competitive pricing. In addition to these
factors, loan sales contributed to the decline in residential
mortgages.
Average other earning assets increased $0.6 billion,
primarily reflecting the increase in average trading account
securities. The increase in these assets reflected a change in
our strategy to use trading account securities to hedge the
change in fair value of our MSRs.
The $0.5 billion, or 1%, increase in total
non-merger-related average deposits primarily reflected a
$0.7 billion, or 3%, increase in average total core
deposits as interest bearing demand deposits grew
$0.3 billion, or 9%. While there was also strong growth in
core certificates of deposit, this was partially offset by the
decline in savings and other domestic deposits, as customers
transferred funds from lower rate to higher rate accounts. In
2007, we reduced our dependence on noncore funds (total
liabilities less core deposits and accrued expenses and other
liabilities) to 30% of total assets, down from 33% in 2006.
Table 8 shows average annual balance sheets and fully taxable
equivalent net interest margin analysis for the last five years.
It details average balances for total assets and liabilities, as
well as shareholders equity, and their various components,
most notably loans and leases, deposits, and borrowings. It also
shows the corresponding interest income or interest expense
associated with each earning asset and interest bearing
liability category along with the average rate with the
difference resulting in the net interest spread. The net
interest spread plus the positive impact from the noninterest
bearing funds represents the net interest margin.
29
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
Table
8 Consolidated Average Balance Sheet and Net
Interest Margin Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average Balances
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change from 2007
|
|
|
|
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
Fully-taxable equivalent
basis
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
2007
|
|
|
Amount
|
|
|
Percent
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest bearing deposits in banks
|
|
$
|
303
|
|
|
$
|
43
|
|
|
|
16.5
|
%
|
|
$
|
260
|
|
|
$
|
207
|
|
|
|
N.M.
|
%
|
|
$
|
53
|
|
|
$
|
53
|
|
|
$
|
66
|
|
Trading account securities
|
|
|
1,090
|
|
|
|
448
|
|
|
|
69.8
|
|
|
|
642
|
|
|
|
550
|
|
|
|
N.M.
|
|
|
|
92
|
|
|
|
207
|
|
|
|
105
|
|
Federal funds sold and securities purchased under resale
agreement
|
|
|
435
|
|
|
|
(156
|
)
|
|
|
(26.4
|
)
|
|
|
591
|
|
|
|
270
|
|
|
|
84.1
|
|
|
|
321
|
|
|
|
262
|
|
|
|
319
|
|
Loans held for sale
|
|
|
416
|
|
|
|
54
|
|
|
|
14.9
|
|
|
|
362
|
|
|
|
87
|
|
|
|
31.6
|
|
|
|
275
|
|
|
|
318
|
|
|
|
243
|
|
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxable
|
|
|
3,878
|
|
|
|
225
|
|
|
|
6.2
|
|
|
|
3,653
|
|
|
|
(544
|
)
|
|
|
(13.0
|
)
|
|
|
4,197
|
|
|
|
3,683
|
|
|
|
4,425
|
|
Tax-exempt
|
|
|
705
|
|
|
|
59
|
|
|
|
9.1
|
|
|
|
646
|
|
|
|
76
|
|
|
|
13.3
|
|
|
|
570
|
|
|
|
475
|
|
|
|
412
|
|
|
Total investment securities
|
|
|
4,583
|
|
|
|
284
|
|
|
|
6.6
|
|
|
|
4,299
|
|
|
|
(468
|
)
|
|
|
(9.8
|
)
|
|
|
4,767
|
|
|
|
4,158
|
|
|
|
4,837
|
|
Loans and
leases:
(3)
Commercial:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial and industrial
|
|
|
13,588
|
|
|
|
2,953
|
|
|
|
27.8
|
|
|
|
10,636
|
|
|
|
3,308
|
|
|
|
45.1
|
|
|
|
7,327
|
|
|
|
6,171
|
|
|
|
5,466
|
|
Construction
|
|
|
2,061
|
|
|
|
527
|
|
|
|
34.4
|
|
|
|
1,533
|
|
|
|
275
|
|
|
|
21.8
|
|
|
|
1,259
|
|
|
|
1,738
|
|
|
|
1,468
|
|
Commercial
|
|
|
7,671
|
|
|
|
2,397
|
|
|
|
45.4
|
|
|
|
5,274
|
|
|
|
1,995
|
|
|
|
60.8
|
|
|
|
3,279
|
|
|
|
2,718
|
|
|
|
2,867
|
|
|
Commercial real estate
|
|
|
9,732
|
|
|
|
2,924
|
|
|
|
42.9
|
|
|
|
6,807
|
|
|
|
2,270
|
|
|
|
50.0
|
|
|
|
4,538
|
|
|
|
4,456
|
|
|
|
4,335
|
|
|
Total commercial
|
|
|
23,320
|
|
|
|
5,877
|
|
|
|
33.7
|
|
|
|
17,443
|
|
|
|
5,578
|
|
|
|
47.0
|
|
|
|
11,865
|
|
|
|
10,627
|
|
|
|
9,801
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile loans
|
|
|
3,676
|
|
|
|
1,043
|
|
|
|
39.6
|
|
|
|
2,633
|
|
|
|
576
|
|
|
|
28.0
|
|
|
|
2,057
|
|
|
|
2,043
|
|
|
|
2,285
|
|
Automobile leases
|
|
|
851
|
|
|
|
(634
|
)
|
|
|
(42.7
|
)
|
|
|
1,485
|
|
|
|
(546
|
)
|
|
|
(26.9
|
)
|
|
|
2,031
|
|
|
|
2,422
|
|
|
|
2,192
|
|
|
Automobile loans and leases
|
|
|
4,527
|
|
|
|
409
|
|
|
|
9.9
|
|
|
|
4,118
|
|
|
|
30
|
|
|
|
0.7
|
|
|
|
4,088
|
|
|
|
4,465
|
|
|
|
4,477
|
|
Home equity
|
|
|
7,404
|
|
|
|
1,231
|
|
|
|
19.9
|
|
|
|
6,173
|
|
|
|
1,203
|
|
|
|
24.2
|
|
|
|
4,970
|
|
|
|
4,752
|
|
|
|
4,244
|
|
Residential mortgage
|
|
|
5,018
|
|
|
|
79
|
|
|
|
1.6
|
|
|
|
4,939
|
|
|
|
358
|
|
|
|
7.8
|
|
|
|
4,581
|
|
|
|
4,081
|
|
|
|
3,212
|
|
Other loans
|
|
|
691
|
|
|
|
162
|
|
|
|
30.6
|
|
|
|
529
|
|
|
|
90
|
|
|
|
20.5
|
|
|
|
439
|
|
|
|
385
|
|
|
|
393
|
|
|
Total consumer
|
|
|
17,640
|
|
|
|
1,881
|
|
|
|
11.9
|
|
|
|
15,759
|
|
|
|
1,681
|
|
|
|
11.9
|
|
|
|
14,078
|
|
|
|
13,683
|
|
|
|
12,326
|
|
|
Total loans and leases
|
|
|
40,960
|
|
|
|
7,758
|
|
|
|
23.4
|
|
|
|
33,202
|
|
|
|
7,259
|
|
|
|
28.0
|
|
|
|
25,943
|
|
|
|
24,310
|
|
|
|
22,127
|
|
Allowance for loan and lease losses
|
|
|
(695
|
)
|
|
|
(313
|
)
|
|
|
81.9
|
|
|
|
(382
|
)
|
|
|
(95
|
)
|
|
|
33.1
|
|
|
|
(287
|
)
|
|
|
(268
|
)
|
|
|
(298
|
)
|
|
Net loans and leases
|
|
|
40,265
|
|
|
|
7,445
|
|
|
|
22.7
|
|
|
|
32,820
|
|
|
|
7,164
|
|
|
|
27.9
|
|
|
|
25,656
|
|
|
|
24,042
|
|
|
|
21,829
|
|
|
Total earning assets
|
|
|
47,787
|
|
|
|
8,431
|
|
|
|
21.4
|
|
|
|
39,356
|
|
|
|
7,905
|
|
|
|
25.1
|
|
|
|
31,451
|
|
|
|
29,308
|
|
|
|
27,697
|
|
|
Automobile operating lease assets
|
|
|
180
|
|
|
|
163
|
|
|
|
N.M.
|
|
|
|
17
|
|
|
|
(76
|
)
|
|
|
(81.7
|
)
|
|
|
93
|
|
|
|
351
|
|
|
|
891
|
|
Cash and due from banks
|
|
|
958
|
|
|
|
28
|
|
|
|
3.0
|
|
|
|
930
|
|
|
|
105
|
|
|
|
12.7
|
|
|
|
825
|
|
|
|
845
|
|
|
|
843
|
|
Intangible assets
|
|
|
3,446
|
|
|
|
1,427
|
|
|
|
70.7
|
|
|
|
2,019
|
|
|
|
1,452
|
|
|
|
N.M.
|
|
|
|
567
|
|
|
|
218
|
|
|
|
216
|
|
All other assets
|
|
|
3,245
|
|
|
|
473
|
|
|
|
17.1
|
|
|
|
2,772
|
|
|
|
309
|
|
|
|
12.5
|
|
|
|
2,462
|
|
|
|
2,185
|
|
|
|
2,084
|
|
|
Total Assets
|
|
$
|
54,921
|
|
|
$
|
10,209
|
|
|
|
22.8
|
%
|
|
$
|
44,712
|
|
|
$
|
9,600
|
|
|
|
27.3
|
%
|
|
$
|
35,111
|
|
|
$
|
32,639
|
|
|
$
|
31,433
|
|
|
Liabilities and Shareholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits noninterest bearing
|
|
$
|
5,095
|
|
|
$
|
657
|
|
|
|
14.8
|
%
|
|
$
|
4,438
|
|
|
$
|
908
|
|
|
|
25.7
|
%
|
|
$
|
3,530
|
|
|
$
|
3,379
|
|
|
$
|
3,230
|
|
Demand deposits interest bearing
|
|
|
4,003
|
|
|
|
874
|
|
|
|
27.9
|
|
|
|
3,129
|
|
|
|
991
|
|
|
|
46.4
|
|
|
|
2,138
|
|
|
|
1,920
|
|
|
|
1,953
|
|
Money market deposits
|
|
|
6,093
|
|
|
|
(80
|
)
|
|
|
(1.3
|
)
|
|
|
6,173
|
|
|
|
569
|
|
|
|
10.2
|
|
|
|
5,604
|
|
|
|
5,738
|
|
|
|
5,254
|
|
Savings and other domestic time deposits
|
|
|
4,949
|
|
|
|
948
|
|
|
|
23.7
|
|
|
|
4,001
|
|
|
|
941
|
|
|
|
30.8
|
|
|
|
3,060
|
|
|
|
3,206
|
|
|
|
3,434
|
|
Core certificates of deposit
|
|
|
11,527
|
|
|
|
3,470
|
|
|
|
43.1
|
|
|
|
8,057
|
|
|
|
3,007
|
|
|
|
59.5
|
|
|
|
5,050
|
|
|
|
3,334
|
|
|
|
2,689
|
|
|
Total core deposits
|
|
|
31,667
|
|
|
|
5,869
|
|
|
|
22.7
|
|
|
|
25,798
|
|
|
|
6,416
|
|
|
|
33.1
|
|
|
|
19,382
|
|
|
|
17,577
|
|
|
|
16,560
|
|
Other domestic time deposits of $100,000 or more
|
|
|
1,951
|
|
|
|
563
|
|
|
|
40.6
|
|
|
|
1,388
|
|
|
|
343
|
|
|
|
32.8
|
|
|
|
1,045
|
|
|
|
859
|
|
|
|
590
|
|
Brokered time deposits and negotiable CDs
|
|
|
3,243
|
|
|
|
4
|
|
|
|
0.1
|
|
|
|
3,239
|
|
|
|
(3
|
)
|
|
|
(0.1
|
)
|
|
|
3,242
|
|
|
|
3,119
|
|
|
|
1,837
|
|
Deposits in foreign offices
|
|
|
975
|
|
|
|
334
|
|
|
|
52.1
|
|
|
|
641
|
|
|
|
126
|
|
|
|
24.5
|
|
|
|
515
|
|
|
|
457
|
|
|
|
508
|
|
|
Total deposits
|
|
|
37,836
|
|
|
|
6,770
|
|
|
|
21.8
|
|
|
|
31,066
|
|
|
|
6,882
|
|
|
|
28.5
|
|
|
|
24,184
|
|
|
|
22,012
|
|
|
|
19,495
|
|
Short-term borrowings
|
|
|
2,374
|
|
|
|
129
|
|
|
|
5.7
|
|
|
|
2,245
|
|
|
|
445
|
|
|
|
24.7
|
|
|
|
1,800
|
|
|
|
1,379
|
|
|
|
1,410
|
|
Federal Home Loan Bank advances
|
|
|
3,281
|
|
|
|
1,254
|
|
|
|
61.9
|
|
|
|
2,027
|
|
|
|
658
|
|
|
|
48.1
|
|
|
|
1,369
|
|
|
|
1,105
|
|
|
|
1,271
|
|
Subordinated notes and other long-term debt
|
|
|
4,094
|
|
|
|
406
|
|
|
|
11.0
|
|
|
|
3,688
|
|
|
|
114
|
|
|
|
3.2
|
|
|
|
3,574
|
|
|
|
4,064
|
|
|
|
5,379
|
|
|
Total interest bearing liabilities
|
|
|
42,490
|
|
|
|
7,902
|
|
|
|
22.8
|
|
|
|
34,588
|
|
|
|
7,191
|
|
|
|
26.2
|
|
|
|
27,397
|
|
|
|
25,181
|
|
|
|
24,325
|
|
|
All other liabilities
|
|
|
942
|
|
|
|
(112
|
)
|
|
|
(10.6
|
)
|
|
|
1,054
|
|
|
|
(185
|
)
|
|
|
(14.9
|
)
|
|
|
1,239
|
|
|
|
1,496
|
|
|
|
1,504
|
|
Shareholders equity
|
|
|
6,394
|
|
|
|
1,762
|
|
|
|
38.0
|
|
|
|
4,632
|
|
|
|
1,686
|
|
|
|
57.2
|
|
|
|
2,945
|
|
|
|
2,583
|
|
|
|
2,374
|
|
|
Total Liabilities and Shareholders Equity
|
|
$
|
54,921
|
|
|
$
|
10,209
|
|
|
|
22.8
|
%
|
|
$
|
44,712
|
|
|
$
|
9,600
|
|
|
|
27.3
|
%
|
|
$
|
35,111
|
|
|
$
|
32,639
|
|
|
$
|
31,433
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest rate spread
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact of noninterest bearing funds on margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N.M., not a meaningful value.
|
|
(1)
|
Fully-taxable equivalent (FTE)
yields are calculated assuming a 35% tax rate.
|
(2)
|
Loan and lease and deposit average
rates include impact of applicable derivatives and
non-deferrable fees.
|
(3)
|
For purposes of this analysis,
non-accrual loans are reflected in the average balances of loans.
|
30
|
|
Managements
Discussion and Analysis
|
Huntington
Bancshares Incorporated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest Income/Expense
|
|
|
Average
Rate
(2)
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
$
|
7.7
|
|
|
$
|
12.5
|
|
|
$
|
3.2
|
|
|
$
|
1.1
|
|
|
$
|
0.7
|
|
|
|
2.53
|
%
|
|
|
4.80
|
%
|
|
|
6.00
|
%
|
|
|
2.16
|
%
|
|
|
1.05
|
%
|
|
57.5
|
|
|
|
37.5
|
|
|
|
3.8
|
|
|
|
8.5
|
|
|
|
4.4
|
|
|
|
5.28
|
|
|
|
5.84
|
|
|
|
4.19
|
|
|
|
4.08
|
|
|
|
4.15
|
|
|
10.7
|
|
|
|
29.9
|
|
|
|
16.1
|
|
|
|
6.0
|
|
|
|
5.5
|
|
|
|
2.46
|
|
|
|
5.05
|
|
|
|
5.00
|
|
|
|
2.27
|
|
|
|
1.73
|
|
|
25.0
|
|
|
|
20.6
|
|
|
|
16.8
|
|
|
|
17.9
|
|
|
|
13.0
|
|
|
|
6.01
|
|
|
|
5.69
|
|
|
|
6.10
|
|
|
|
5.64
|
|
|
|
5.35
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
217.9
|
|
|
|
221.9
|
|
|
|
229.4
|
|
|
|
158.7
|
|
|
|
171.7
|
|
|
|
5.62
|
|
|
|
6.07
|
|
|
|
5.47
|
|
|
|
4.31
|
|
|
|
3.88
|
|
|
48.2
|
|
|
|
43.4
|
|
|
|
38.5
|
|
|
|
31.9
|
|
|
|
28.8
|
|
|
|
6.83
|
|
|
|
6.72
|
|
|
|
6.75
|
|
|
|
6.71
|
|
|
|
6.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
266.1
|
|
|
|
265.3
|
|
|
|
267.9
|
|
|
|
190.6
|
|
|
|
200.5
|
|
|
|
5.81
|
|
|
|
6.17
|
|
|
|
5.62
|
|
|
|
4.58
|
|
|
|
4.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
770.2
|
|
|
|
791.0
|
|
|
|
536.3
|
|
|
|
362.9
|
|
|
|
250.6
|
|
|
|
5.67
|
|
|
|
7.44
|
|
|
|
7.32
|
|
|
|
5.88
|
|
|
|
4.58
|
|
|
104.2
|
|
|
|
119.4
|
|
|
|
101.5
|
|
|
|
111.7
|
|
|
|
66.9
|
|
|
|
5.05
|
|
|
|
7.80
|
|
|
|
8.07
|
|
|
|
6.42
|
|
|
|
4.55
|
|
|
430.1
|
|
|
|
395.8
|
|
|
|
244.3
|
|
|
|
162.9
|
|
|
|
141.5
|
|
|
|
5.61
|
|
|
|
7.50
|
|
|
|
7.45
|
|
|
|
5.99
|
|
|
|
4.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
534.3
|
|
|
|
515.2
|
|
|
|
345.8
|
|
|
|
274.6
|
|
|
|
208.4
|
|
|
|
5.49
|
|
|
|
7.57
|
|
|
|
7.61
|
|
|
|
6.16
|
|
|
|
4.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,304.5
|
|
|
|
1,306.2
|
|
|
|
882.1
|
|
|
|
637.5
|
|
|
|
459.0
|
|
|
|
5.59
|
|
|
|
7.49
|
|
|
|
7.43
|
|
|
|
6.00
|
|
|
|
4.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
263.4
|
|
|
|
188.7
|
|
|
|
135.1
|
|
|
|
133.3
|
|
|
|
165.1
|
|
|
|
7.17
|
|
|
|
7.17
|
|
|
|
6.57
|
|
|
|
6.52
|
|
|
|
7.22
|
|
|
48.1
|
|
|
|
80.3
|
|
|
|
102.9
|
|
|
|
119.6
|
|
|
|
109.6
|
|
|
|
5.65
|
|
|
|
5.41
|
|
|
|
5.07
|
|
|
|
4.94
|
|
|
|
5.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
311.5
|
|
|
|
269.0
|
|
|
|
238.0
|
|
|
|
252.9
|
|
|
|
274.7
|
|
|
|
6.88
|
|
|
|
6.53
|
|
|
|
5.82
|
|
|
|
5.66
|
|
|
|
6.14
|
|
|
475.2
|
|
|
|
479.8
|
|
|
|
369.7
|
|
|
|
288.6
|
|
|
|
208.6
|
|
|
|
6.42
|
|
|
|
7.77
|
|
|
|
7.44
|
|
|
|
6.07
|
|
|
|
4.92
|
|
|
292.4
|
|
|
|
285.9
|
|
|
|
249.1
|
|
|
|
212.9
|
|
|
|
163.0
|
|
|
|
5.83
|
|
|
|
5.79
|
|
|
|
5.44
|
|
|
|
5.22
|
|
|
|
5.07
|
|
|
68.0
|
|
|
|
55.5
|
|
|
|
39.8
|
|
|
|
39.2
|
|
|
|
29.5
|
|
|
|
9.85
|
|
|
|
10.51
|
|
|
|
9.07
|
|
|
|
10.23
|
|
|
|
7.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,147.1
|
|
|
|
1,090.2
|
|
|
|
896.6
|
|
|
|
793.6
|
|
|
|
675.8
|
|
|
|
6.50
|
|
|
|
6.92
|
|
|
|
6.37
|
|
|
|
5.80
|
|
|
|
5.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,451.6
|
|
|
|
2,396.4
|
|
|
|
1,778.7
|
|
|
|
1,431.1
|
|
|
|
1,134.8
|
|
|
|
5.99
|
|
|
|
7.22
|
|
|
|
6.86
|
|
|
|
5.89
|
|
|
|
5.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
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|
|
|
|
|
|
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|
|
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|
|
|
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|
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|
|
|
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|
|
|
|
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|
|
|
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|
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|
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|
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|
|
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|
|
|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,818.6
|
|
|
|
2,762.2
|
|
|
|
2,086.5
|
|
|
|
1,655.2
|
|
|
|
1,358.9
|
|
|
|
5.90
|
|
|
|
7.02
|
|
|
|
6.63
|
|
|
|
5.65
|
|
|
|
4.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
22.2
|
|
|
|
40.3
|
|
|
|
19.3
|
|
|
|
10.6
|
|
|
|
8.3
|
|
|
|
0.55
|
|
|
|
1.29
|
|
|
|
0.90
|
|
|
|
0.55
|
|
|
|
0.42
|
|
|
117.5
|
|
|
|
232.5
|
|
|
|
193.1
|
|
|
|
124.9
|
|
|
|
65.8
|
|
|
|
1.93
|
|
|
|
3.77
|
|
|
|
3.45
|
|
|
|
2.18
|
|
|
|
1.25
|
|
|
92.9
|
|
|
|
96.1
|
|
|
|
53.5
|
|
|
|
45.2
|
|
|
|
44.2
|
|
|
|
1.88
|
|
|
|
2.40
|
|
|
|
1.75
|
|
|
|
1.41
|
|
|
|
1.29
|
|
|
491.6
|
|
|
|
391.1
|
|
|
|
214.8
|
|
|
|
118.7
|
|
|
|
90.4
|
|
|
|
4.27
|
|
|
|
4.85
|
|
|
|
4.25
|
|
|
|
3.56
|
|
|
|
3.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
724.2
|
|
|
|
760.0
|
|
|
|
480.7
|
|
|
|
299.4
|
|
|
|
208.7
|
|
|
|
2.73
|
|
|
|
3.55
|
|
|
|
3.02
|
|
|
|
2.10
|
|
|
|
1.56
|
|
|
73.6
|
|
|
|
70.5
|
|
|
|
52.3
|
|
|
|
28.5
|
|
|
|
11.2
|
|
|
|
3.76
|
|
|
|
5.08
|
|
|
|
5.00
|
|
|
|
3.32
|
|
|
|
1.88
|
|
|
118.8
|
|
|
|
175.4
|
|
|
|
169.1
|
|
|
|
109.4
|
|
|
|
33.1
|
|
|
|
3.66
|
|
|
|
5.41
|
|
|
|
5.22
|
|
|
|
3.51
|
|
|
|
1.80
|
|
|
15.2
|
|
|
|
20.5
|
|
|
|
15.1
|
|
|
|
9.6
|
|
|
|
4.1
|
|
|
|
1.56
|
|
|
|
3.19
|
|
|
|
2.93
|
|
|
|
2.10
|
|
|
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
931.8
|
|
|
|
1,026.4
|
|
|
|
717.2
|
|
|
|
446.9
|
|
|
|
257.1
|
|
|
|
2.85
|
|
|
|
3.85
|
|
|
|
3.47
|
|
|
|
2.40
|
|
|
|
1.58
|
|
|
42.3
|
|
|
|
92.8
|
|
|
|
72.2
|
|
|
|
34.3
|
|
|
|
13.0
|
|
|
|
1.78
|
|
|
|
4.13
|
|
|
|
4.01
|
|
|
|
2.49
|
|
|
|
0.93
|
|
|
107.8
|
|
|
|
102.6
|
|
|
|
60.0
|
|
|
|
34.7
|
|
|
|
33.3
|
|
|
|
3.29
|
|
|
|
5.06
|
|
|
|
4.38
|
|
|
|
3.13
|
|
|
|
2.62
|
|
|
184.8
|
|
|
|
219.6
|
|
|
|
201.9
|
|
|
|
163.5
|
|
|
|
132.5
|
|
|
|
4.51
|
|
|
|
5.96
|
|
|
|
5.65
|
|
|
|
4.02
|
|
|
|
2.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,266.7
|
|
|
|
1,441.4
|
|
|
|
1,051.3
|
|
|
|
679.4
|
|
|
|
435.9
|
|
|
|
2.98
|
|
|
|
4.17
|
|
|
|
3.84
|
|
|
|
2.70
|
|
|
|
1.79
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|