Huntington National Bank 2011 Annual Report Download - page 92

Upon receipt of the aforementioned trust preferred securities, Huntington exchanged $32.5 million of the
trust preferred securities with the applicable Trust for a like amount of debentures issued by us. The debentures
were surrendered to the applicable trustee for cancellation. Huntington anticipates exchanging the remaining $3.0
million of trust preferred securities and retiring the related subordinated debt obligation in the first quarter of
2012.
In addition, during the fourth quarter the parent company received $325.0 million in funding from the Bank
based on the payment of intercompany subordinated debt. The parent company also received $30.0 million in
dividends from the Huntington Investment Company.
At December 31, 2011, the parent company had $0.9 billion in cash and cash equivalents, compared with
$0.6 billion at December 31, 2010. Appropriate limits and guidelines are in place to ensure the parent company
has sufficient cash to meet operating expenses and other commitments over the next 18 months without relying
on subsidiaries or capital markets for funding.
On January 19, 2012, we announced that the board of directors had declared a quarterly common stock cash
dividend of $0.04 per common share. The dividend is payable on April 2, 2012, to shareholders of record on
March 19, 2012. Based on the current quarterly dividend of $0.04 per common share, cash demands required for
common stock dividends are estimated to be approximately $34.6 million per quarter. Based on the current
dividend, cash demands required for Series A Preferred Stock are estimated to be approximately $7.7 million per
quarter. Cash demands required for Series B Preferred Stock are expected to be approximately $0.3 million per
quarter.
Based on a regulatory dividend limitation, the Bank could not have declared and paid a dividend to the
parent company at December 31, 2011, without regulatory approval. We do not anticipate that the Bank will
request regulatory approval to pay dividends in the near future as we continue to build Bank regulatory capital
above its already well-capitalized level. To help meet any additional liquidity needs, we have an open-ended,
automatic shelf registration statement filed and effective with the SEC, which permits us to issue an unspecified
amount of debt or equity securities.
With the exception of the common and preferred dividends previously discussed, the parent company does
not have any significant cash demands. There are no maturities of parent company obligations until 2013, when a
debt maturity of $50.0 million is payable. It is our policy to keep operating cash on hand at the parent company
to satisfy any cash demands for the next 18 months.
We sponsor a non-contributory defined benefit pension plan covering substantially all employees hired or
rehired prior to January 1, 2010. The Plan provides benefits based upon length of service and compensation
levels. Our policy is to contribute an annual amount that is at least equal to the minimum funding requirements.
The Bank and other subsidiaries fund approximately 90% of pension contributions. Although we contributed a
total of $90.0 million in 2011, there was no required minimum contribution for 2011. Funding requirements are
calculated annually as of the end of the year and are heavily dependent on the value of our pension plan assets
and the interest rate used to discount plan obligations. To the extent that the low interest rate environment
continues, including as a result of the Federal Reserve Maturity Extension Program, or the pension plan does not
earn the expected asset return rates, annual pension contribution requirements in future years could increase and
such increases could be significant. Any additional pension contributions are not expected to significantly impact
liquidity. See the contractual obligations table for our pension minimum funding requirement.
Considering the factors discussed above, and other analyses that we have performed, we believe the parent
company has sufficient liquidity to meet its cash flow obligations for the foreseeable future.
78