Huntington National Bank 2007 Annual Report Download - page 113

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agencies. Tier 1 Leverage Capital ratio is calculated by dividing the Tier 1 capital amount by average adjusted total assets for the
fourth quarter of 2007 and 2006, less non-qualifying intangibles and other adjustments.
Huntington and its subsidiaries are also subject to various regulatory requirements that impose restrictions on cash, debt, and
dividends. The Bank is required to maintain cash reserves based on the level of certain of its deposits. This reserve requirement
may be met by holding cash in banking offices or on deposit at the Federal Reserve Bank. During 2007 and 2006, the average
balance of these deposits were $39.7 million and $43.7 million, respectively.
Under current Federal Reserve regulations, the Bank is limited as to the amount and type of loans it may make to the parent
company and non-bank subsidiaries. At December 31, 2007, the Bank could lend $465.0 million to a single affiliate, subject to the
qualifying collateral requirements defined in the regulations. The Bank has committed to a plan to reduce its exposure to Franklin
to 15% of its total risk-based capital by September 30, 2008. Management anticipates that it can achieve this plan through a
combination of expected repayments of principal, the transfer of these balances to a subsidiary of the holding company, or through
the sale of the loans to third parties.
Dividends from the Bank are one of the major sources of funds for Huntington. These funds aid the parent company in the
payment of dividends to shareholders, expenses, and other obligations. Payment of dividends to the parent company is subject to
various legal and regulatory limitations. Regulatory approval is required prior to the declaration of any dividends in excess of
available retained earnings. The amount of dividends that may be declared without regulatory approval is further limited to the
sum of net income for the current year and retained net income for the preceding two years, less any required transfers to surplus
or common stock. At December 31, 2007, the bank could not have declared and paid additional dividends to the parent company
without regulatory approval.
23. PARENT COMPANY FINANCIAL STATEMENTS
The parent company condensed financial statements, which include transactions with subsidiaries, are as follows.
(in thousands) 2007 2006
Balance Sheets December 31,
ASSETS
Cash and cash equivalents $ 153,489 $ 412,724
Due from The Huntington National Bank 144,526 31,481
Due from non-bank subsidiaries 332,517 277,245
Investment in The Huntington National Bank 5,573,495 2,035,175
Investment in non-bank subsidiaries 878,409 725,875
Accrued interest receivable and other assets 165,416 45,592
Total assets $7,247,852 $3,528,092
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term borrowings $ 2,578 $ 3,252
Long-term borrowings 902,169 329,898
Dividends payable, accrued expenses, and other liabilities 393,965 180,616
Total liabilities 1,298,712 513,766
Shareholders’ equity 5,949,140 3,014,326
Total liabilities and shareholders’ equity
(1)
$7,247,852 $3,528,092
(1) See page 76 for Huntington’s Consolidated Statements of Changes in Shareholders’ Equity.
111
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED