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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
     
þ   Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2008
or
     
o   Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Commission File Number 1-34073
Huntington Bancshares Incorporated
(Exact name of registrant as specified in its charter)
     
Maryland   31-0724920
(State or other jurisdiction of incorporation or organization)

  (I.R.S. Employer Identification No.)

41 S. High Street, Columbus, Ohio   43287
(Address of principal executive offices)   (Zip Code)
Registrant’s telephone number, including area code (614) 480-8300
Securities registered pursuant to Section 12(b) of the Act:
     
Title of class   Name of exchange on which registered
8.50% Series A non-voting, perpetual convertible preferred stock   NASDAQ
Common Stock — Par Value $0.01 per Share   NASDAQ
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. þ Yes
o No
     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. o Yes þ 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. þ Yes o 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 registrant’s 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. o
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):
             
Large accelerated filer þ   Accelerated filer o   Non-accelerated filer o   Smaller reporting company o
        (Do not check if a smaller reporting company)    
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) o Yes þ 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 registrant’s 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 registrant’s definitive Proxy Statement for the 2009 Annual Shareholders’ Meeting
 
 

 


 

HUNTINGTON BANCSHARES INCORPORATED

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  EX-12.1
  EX-12.2
  EX-13.1
  EX-21.1
  EX-23.1
  EX-24.1
  EX-31.1
  EX-31.2
  EX-32.1
  EX-32.2

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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:
     
  345 banking offices in Ohio
 
   
  115 banking offices in Michigan
 
   
  57 banking offices in Pennsylvania
 
   
  51 banking offices in Indiana
 
   
  28 banking offices in West Virginia
     
  13 banking offices in Kentucky
     
  4 private banking offices in Florida
     
  one foreign office in the Cayman Islands
     
  one foreign office in Hong Kong
     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 Management’s 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:
    10% of the subsidiary bank’s capital and surplus for transfers to its parent corporation or to any individual non-bank subsidiary of the parent, and
 
    An aggregate of 20% of the subsidiary bank’s capital and surplus for transfers to such parent together with all such non-bank subsidiaries of the parent.
     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 company’s 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 institution’s 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 bank’s 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 institution’s 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 FDIC’s Temporary Liquidity Guarantee Program and are backed by the full faith and credit of the United States. The FDIC’s 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:
    Limits on compensation incentives for risk taking by senior executive officers.
 
    Requirement of recovery of any compensation paid based on inaccurate financial information.
 
    Prohibition on “Golden Parachute Payments”.
 
    Prohibition on compensation plans that would encourage manipulation of reported earnings to enhance the compensation of employees.
 
    Publicly registered TARP recipients must establish a board compensation committee comprised entirely of independent directors, for the purpose of reviewing employee compensation plans.
 
    Prohibition on bonus, retention award, or incentive compensation, except for payments of long term restricted stock.
 
    Limitation on luxury expenditures.
 
    TARP recipients are required to permit a separate shareholder vote to approve the compensation of executives, as disclosed pursuant to the SEC’s compensation disclosure rules.
 
    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.
     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:
    Provide access to low-cost refinancing for responsible homeowners suffering from falling home prices.
    A $75 billion homeowner stability initiative to prevent foreclosure and help responsible families stay in their homes.
    Support low mortgage rates by strengthening confidence in Fannie Mae and Freddie Mac.
     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 Supervision’s “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 , instead of the Basel 1A proposals , 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 institution’s 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 Bank’s 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 institution’s 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.

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     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:
    makes regulatory capital requirements sensitive to differences in risk profiles among banking organizations,
 
    takes off-balance sheet exposures into explicit account in assessing capital adequacy, and
 
    minimizes disincentives to holding liquid, low-risk assets.
     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 institution’s 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:
    “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.
 
    “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.
 
    “Total capital” is Tier 1 plus Tier 2 capital.
     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 institution’s 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.

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     The risk-based capital standards of the Federal Reserve, the OCC, and the FDIC specify that evaluations by the banking agencies of a bank’s capital adequacy will include an assessment of the exposure to declines in the economic value of the bank’s 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:
  “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;
  “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;
  “under-capitalized” if it does not meet one or more of the “adequately-capitalized” tests;
  “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
  “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%.
     Throughout 2008, our regulatory capital ratios and those of the Bank were in excess of the levels established for “well-capitalized” institutions.
                                 
            “Well-   At December 31, 2008
            Capitalized”           Excess  
(in billions of dollars)           Minimums   Actual   Capital
 
Ratios:
                               
Tier 1 leverage ratio
  Consolidated     5.00 %     9.82 %   $ 2.5  
 
  Bank     5.00       5.99       0.5  
Tier 1 risk-based capital ratio
  Consolidated     6.00       10.72       2.2  
 
  Bank     6.00       6.44       0.2  
Total risk-based capital ratio
  Consolidated     10.00       13.91       1.8  
 
  Bank     10.00       10.71       0.3  
     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

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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 company’s 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:
    underwriting insurance or annuities;
 
    providing financial or investment advice;
 
    underwriting, dealing in, or making markets in securities;
 
    merchant banking, subject to significant limitations;
 
    insurance company portfolio investing, subject to significant limitations; and
 
    any activities previously found by the Federal Reserve to be closely related to banking.
     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:
    provide notice to our customers regarding privacy policies and practices,

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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
 
    give our customers an option to prevent disclosure of such information to non-affiliated third parties.
     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 SEC’s website at www.sec.gov. The public may read and copy any materials we file with the SEC at the SEC’s 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.

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(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. Franklin’s 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 Franklin’s 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:
    $423.3 million of our loans to Franklin were charged-off,
 
    $9.0 million of interest income was reversed as the remaining loans were put on nonaccrual,
 
    $7.3 million of interest swap exposure was written off, and
 
    $438.0 million of provision expense was recorded to replenish and increase the remaining specific loan loss reserve.
     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.

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     If Franklin’s 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 Franklin’s 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:
    A decrease in the demand for loans and other products and services offered by us;
 
    A decrease in customer savings generally and in the demand for savings and investment products offered by us; and
 
    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.
     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:
    $7.6 billion of home equity loans and lines, representing 18% of total loans and leases.
 
    $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.
 
    $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.
 
    $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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    $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.
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 Management’s 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.

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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 Bank’s 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 Bank’s 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 Reserve’s discount window.

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     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 Bank’s 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 Management’s 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 Bank’s 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.

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     We do not anticipate that the holding company will receive dividends from the Bank during 2009, as we build the Bank’s 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 Huntington’s 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 Huntington’s 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.

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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 Huntington’s 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 Huntington’s 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.

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Item 1B: Unresolved Staff Comments
     None.
Item 2: Properties
     Our headquarters, as well as the Bank’s, are located in the Huntington Center, a thirty-seven-story office building located in Columbus, Ohio. Of the building’s 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:
    a thirteen-story and a twelve-story office building, both of which are located adjacent to the Huntington Center;
 
    a twenty-one story office building, known as the Huntington Building, located in Cleveland, Ohio;
 
    an eighteen-story office building in Charleston, West Virginia;
 
    a three-story office building located in Holland, Michigan;
 
    a Business Service Center in Columbus, Ohio;
 
    The Crosswoods building, located in the greater Columbus area;
 
    a twelve story office building in Youngstown, Ohio
 
    a ten story office building in Warren, Ohio
 
    an office complex located in Troy, Michigan; and
 
    three data processing and operations centers (Easton and Northland) located in Ohio and one in Indianapolis.
     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 Registrant’s 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.

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     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.
(PERFORMANCE GRAPH)
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: Management’s Discussion and Analysis of Financial Condition and Results of Operations
     Information required by this item is set forth in “Management’s 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.

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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 Commission’s 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 issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Huntington’s Management, with the participation of its Chief Executive Officer and the Chief Financial Officer, evaluated the effectiveness of Huntington’s 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, Huntington’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, Huntington’s disclosure controls and procedures were effective.
     There have not been any significant changes in Huntington’s 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, Huntington’s 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.

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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 Huntington’s existing equity compensation plans as of December 31, 2008.
                         
    Number of           Number of securities
    securities to be           remaining available for
    issued upon           future issuance under
    exercise of   Weighted-average   equity compensation
    outstanding   exercise price of   plans (excluding
    options, warrants,   outstanding options,   securities reflected in
    and rights (3)   warrants, and rights   column (a)) (4)
Plan category (1)   (a)   (b)   (c)
 
Equity compensation plans approved by security holders
    20,297,317     $ 24.40       3,865,385  
Equity compensation not approved by security holders (2)
    7,814,021       18.37       438,341  
 
                       
 
Total
    28,111,338     $ 22.73       4,303,726  
 
(1)   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.
 
(2)   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.
 
(3)   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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(4)   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:
    438,341 shares reserved for the Executive Deferred Compensation Plan;
 
    No shares reserved for the Supplemental Plan under which voluntary participant contributions made by payroll deduction are used to purchase shares;
 
    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
 
    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.
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.
         
    Annual
    Report Page
Report of Independent Registered Public Accounting Firm
    81  
Consolidated Balance Sheets as of December 31, 2008 and 2007
    82  
Consolidated Statements of Income for the years ended December 31, 2008, 2007 and 2006
    83  
Consolidated Statements of Changes in Shareholders Equity for the years ended December 31, 2008, 2007 and 2006
    84  
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006
    85  
Notes to Consolidated Financial Statements
    86-129  
 
 
  (1)   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.
     
  (2)   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.
(b)   The exhibits to this Form 10-K begin on page 28 of this report.
 
(c)   See Item 15(a)(2) above.

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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)
                 
By:
  /s/ Stephen D. Steinour   By:   /s/ Donald R. Kimble    
 
               
 
  Stephen D. Steinour       Donald R. Kimble    
 
  Chairman, President, Chief Executive Officer, and Director (Principal Executive Officer)       Executive Vice President
Chief Financial Officer
(Principal Financial Officer)
   
 
               
 
      By:   /s/ Thomas P. Reed    
 
               
 
          Thomas P. Reed    
 
          Senior Vice President and Controller    
 
          (Principal Accounting Officer)    
     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.
             
Raymond J. Biggs *
 
      Jonathan A. Levy *
 
   
Raymond J. Biggs
      Jonathan A. Levy    
Director
      Director    
 
           
Don M. Casto III *
      Wm. J. Lhota *    
 
           
Don M. Casto III
      Wm. J. Lhota    
Director
      Director    
 
           
Michael J. Endres *
      Gene E. Little *    
 
           
Michael J. Endres
      Gene E. Little    
Director
      Director    
 
           
Marylouise Fennell *
      Gerard P. Mastroianni *    
 
           
Marylouise Fennell
      Gerard P. Mastroianni    
Director
      Director    
 
           
John B. Gerlach, Jr. *
      David L. Porteous *    
 
           
John B. Gerlach, Jr.
      David L. Porteous    
Director
      Director    
 
           
D. James Hilliker *
      Kathleen H. Ransier *    
 
           
D. James Hilliker
      Kathleen H. Ransier    
Director
      Director    
 
           
David P. Lauer *
      * /s/ Donald R. Kimble    
 
           
David P. Lauer
      Donald R. Kimble    
Director
      Attorney-in-fact for each of the persons indicated    

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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.
                     
          SEC File or    
Exhibit         Registration   Exhibit
Number   Document Description   Report or Registration Statement   Number   Reference
2.1
  Agreement and Plan of Merger, dated December 20, 2006 by and among Huntington Bancshares Incorporated, Penguin Acquisition, LLC and Sky Financial Group, Inc.   Current Report on Form 8-K dated December 22, 2006.   000-02525     2.1  
 
                   
3.1
  Articles of Restatement of Charter.   Annual Report on Form 10-K for the year ended December 31, 1993.   000-02525     3 (i)
 
                   
3.2
  Articles of Amendment to Articles of Restatement of Charter.   Current Report on Form 8-K dated May 31, 2007   000-02525     3.1  
 
                   
3.3
  Articles of Amendment to Articles of Restatement of Charter   Current Report on Form 8-K dated May 7, 2008   000-02525     3.1  
 
                   
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  

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          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  

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          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 12.1
Ratio of Earnings to Fixed Charges
                                         
    Twelve Months Ended December 31,
(in thousands of dollars)   2008   2007   2006   2005   2004
 
Earnings:
                                       
 
                                       
(Loss) income before income taxes
  $ (296,008 )   $ 22,643     $ 514,061     $ 543,574     $ 552,666  
 
Add: Fixed charges, excluding interest on deposits
    351,672       431,320       345,253       243,239       191,648  
 
Earnings available for fixed charges, excluding interest on deposits
    55,664       453,963       859,314       786,813       744,314  
Add: Interest on deposits
    931,679       1,026,388       717,167       446,919       257,099  
 
Earnings available for fixed charges, including interest on deposits
  $ 987,343     $ 1,480,351     $ 1,576,481     $ 1,233,732     $ 1,001,413  
 
 
                                       
Fixed Charges:
                                       
Interest expense, excluding interest on deposits
  $ 334,952     $ 415,063     $ 334,175     $ 232,435     $ 178,842  
Interest factor in net rental expense
    16,720       16,257       11,078       10,804       12,806  
 
Total fixed charges, excluding interest on deposits
    351,672       431,320       345,253       243,239       191,648  
Add: Interest on deposits
    931,679       1,026,388       717,167       446,919       257,099  
 
Total fixed charges, including interest on deposits
  $ 1,283,351     $ 1,457,708     $ 1,062,420     $ 690,158     $ 448,747  
 
 
                                       
Ratio of Earnings to Fixed Charges
                                       
Excluding interest on deposits
    0.16 x     1.05 x     2.49 x     3.23 x     3.88 x
Including interest on deposits
    0.77 x     1.02 x     1.48 x     1.79 x     2.23 x

 

Exhibit 12.2
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
                                         
    Twelve Months Ended December 31,
(in thousands of dollars)   2008   2007   2006   2005   2004
 
Earnings:
                                       
 
                                       
(Loss) income before income taxes
  $ (296,008 )   $ 22,643     $ 514,061     $ 543,574     $ 552,666  
 
Add: Fixed charges, excluding interest on deposits and preferred stock dividends
    351,672       431,320       345,253       243,239       191,648  
 
Earnings available for fixed charges, excluding interest on deposits
    55,664       453,963       859,314       786,813       744,314  
Add: Interest on deposits
    931,679       1,026,388       717,167       446,919       257,099  
 
Earnings available for fixed charges, including interest on deposits
  $ 987,343     $ 1,480,351     $ 1,576,481     $ 1,233,732     $ 1,001,413  
 
 
                                       
Fixed Charges:
                                       
Interest expense, excluding interest on deposits
  $ 334,952     $ 415,063     $ 334,175     $ 232,435     $ 178,842  
Interest factor in net rental expense
    16,720       16,257       11,078       10,804       12,806  
Preferred stock dividends
    46,400       0       0       0       0  
 
Total fixed charges, excluding interest on deposits
    398,072       431,320       345,253       243,239       191,648  
Add: Interest on deposits
    931,679       1,026,388       717,167       446,919       257,099  
 
Total fixed charges, including interest on deposits
  $ 1,329,751     $ 1,457,708     $ 1,062,420     $ 690,158     $ 448,747  
 
 
                                       
Ratio of Earnings to Fixed Charges and Preferred Stock Dividends
                                       
Excluding interest on deposits
    0.14 x     1.05 x     2.49 x     3.23 x     3.88 x
Including interest on deposits
    0.74 x     1.02 x     1.48 x     1.79 x     2.23 x

 

Table of Contents

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.

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TABLE OF CONTENTS

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Table of Contents

Management’s 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 Management’s 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 Huntington’s 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.

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Table of Contents

Management’s 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 TARP’s 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

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Management’s 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.
 
–  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:
 
  –  Level 1 — quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
  –  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.
 
  –  Level 3 — inputs that are unobservable and significant to the fair value measurement.
 
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


Table of Contents

Management’s Discussion and Analysis 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
 
 
         
Financial Instrument (1)   Hierarchy   Valuation methodology
         
Loans held-for-sale
  Level 2   Loans held-for-sale are estimated using security prices for similar product types.
         
Investment Securities & TradingAccount Securities (2)
  Level 1   Consist of U.S. Treasury and other federal agency securities, and money market mutual funds which generally have quoted prices.
         
    Level 2   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.
         
    Level 3   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.
         
Mortgage Servicing Rights (MSRs) (3)
  Level 3   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.
         
Derivatives (4)
  Level 1   Consist of exchange traded options and forward commitments to deliver mortgage-backed securities which have quoted prices.
         
    Level 2   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.
         
    Level 3   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.
         
Equity Investments (5)
  Level 3   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.
 
(1)  Refer to Notes 1 and 19 of the Notes to the Consolidated Financial Statements for additional information.
 
(2)  Refer to Note 4 of the Notes to the Consolidated Financial Statements for additional information.
 
(3)  Refer to Note 6 of the Notes to the Consolidated Financial Statements for additional information.
 
(4)  Refer to Note 20 of the Notes to the Consolidated Financial Statements for additional information.
 
(5)  Certain equity investments are accounted for under the equity method and, therefore, are not subject to the fair value disclosure requirements.
 
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

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using the third-party’s 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-party’s 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,

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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 Huntington’s 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 unit’s 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 participant’s 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 Banking’s 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.

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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 property’s 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.
 
–  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.

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Impact Methodology
 
For both the Sky Financial and Unizan acquisitions, comparisons of the reported results are impacted as follows:
 
  –  Increased the absolute level of reported average balance sheet, revenue, expense, and the absolute level of certain credit quality results.
 
  –  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.
 
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:
 
  –  “Merger-related” refers to amounts and percentage changes representing the impact attributable to the merger.
 
  –  “Merger costs” represent noninterest expenses primarily associated with merger integration activities, including severance expense for key executive personnel.
 
  –  “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 Financial’s 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 quarter’s estimate. This methodology assumed acquired balances remained constant over time.
 
Income Statement Items
 
Sky Financial
 
Sky Financial’s 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 Financial’s 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
 
Unizan’s 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 Unizan’s 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 Unizan’s 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.

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Table 3 — Selected Annual Income Statements (1)
                                                                         
    Year Ended December 31,  
          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.

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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

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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.

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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 Huntington’s 2008 Annual Report on Form 10-K and other factors described from time to time in Huntington’s 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 Franklin’s 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.

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  –  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.

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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

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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.

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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.

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Management’s 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.

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Management’s 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.

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Management’s 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  
                                                                             
                                                                             
                                                                             
                                                                             
  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  
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
                                                                             
                                                         
  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