Huntington National Bank 2004 Annual Report Download - page 6

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4
When I was appointed CEO in 2001, I said I would keep you updated on the financial performance
and prospects of your company and advise you of all the positives and negatives as they unfold. Through my
quarterly shareholder letters and other communications, you know that one of the most significant challenges
we faced last year was the continuation of the SEC formal investigation that began in 2003 and continued
throughout 2004. You will recall this was an investigation into certain financial accounting matters relating
to fiscal years 2002 and earlier and certain related disclosure matters.
We continue to have ongoing discussions with the staff of the SEC, and as previously announced, it is
anticipated that a settlement of this matter, which is subject to approval by the SEC, will involve the entry of
an order by the SEC requiring Huntington to comply with various provisions of the Securities Exchange Act
of 1934 and the Securities Act of 1933, along with the imposition of a civil money penalty. At year end, we had
reserves related to the expectation of the imposition of a civil money penalty, which we viewed as sufficient
given negotiations with the SEC. However, no assurances can be made that any assessed penalty may not
exceed this amount.
On March 1, 2005, we announced that Huntington entered into formal written agreements with its
banking regulators, the Federal Reserve Bank of Cleveland and the Office of the Comptroller of the Currency.
These agreements provide for a comprehensive action plan designed to enhance our corporate governance,
internal audit, risk management, accounting policies and procedures, and financial and regulatory reporting.
They call for independent third-party reviews, as well as the submission of written plans and progress reports
by management. They remain in effect until terminated by the banking regulators.
Entering into these formal written agreements is consistent with our expectations announced last
November and in line with steps that we have been taking to ensure that our corporate governance and controls
are best in class. We have been working extensively with our banking regulators over the past several months.
While there is work yet to be done, we have devoted significant resources in order to address the issues raised.
We are confident that we are on the right path to address fully and comprehensively all of their concerns in a
timely manner. We also believe that the changes we have made, and are in the process of making, are positive
for our organization and will position us to be a stronger company in the future.
In November 2004, we withdrew our application with our banking regulators to acquire Unizan
Financial Corp. and intend to resubmit the application once the regulators are fully satisfied that we have
addressed all of their concerns. How soon that may happen, we cannot say. We have extended the merger
agreement to January 2006, and we intend to move forward on this acquisition as soon as possible.
The board of directors and your management team are strongly committed to assuring that the highest
of ethical standards are followed. We are also fully committed to full, fair, and transparent financial disclosure
and to assuring that our policies and practices in these areas meet all best-in-class standards. We fell short of
that mark for which I, and your management team, accept responsibility. We will not be satisfied simply with
compliance; we must excel.
Three and a half years ago, we began the transformation of Huntington into the “local bank with
national resources.” This model places decision-making in our local markets, close to customers. Regional
presidents have accountability and responsibility for commercial and retail businesses within their markets.
This is where we believe we have developed a competitive advantage. We have invested in systems, staffing,
and training and will continue to do so. And the financial performance results in 2004 clearly indicate that
our business model is working.
SEC Formal Investigation and
Formal Regulatory Supervisory Agreements
Where We Are