Huntington National Bank 2012 Annual Report Download

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2012 ANNUAL REPORT

Table of contents

  • Page 1
    2012 ANNUAL REPORT

  • Page 2
    ... holding company headquartered in Columbus, Ohio. The Huntington National Bank, founded in 1866, provides full-service commercial and consumer banking services, mortgage banking services, automobile financing, equipment leasing, investment management, trust services, brokerage services, insurance...

  • Page 3
    ...important are our funding costs. The 12% growth in consumer households and 9% growth in commercial relationships experienced in 2012 start with each customer's primary checking account. With each new relationship, we improve the quality of our deposits and the Huntington franchise. Near historically...

  • Page 4
    ... increase in mortgage banking income, a $26.2 million, or 82%, increase in gain on sale of loans, an $18.7 million, or 8%, increase in service charges on deposit accounts, an $11.6 million, or 32%, increase in capital market fees, and an $11.2 million bargain purchase gain related to the acquisition...

  • Page 5
    ... value. Approximately 90% continue to make payments as scheduled. Importantly, nonperforming assets declined by $144.5 million, or 25%, to $445.8 million and were at the lowest level since 2006. Our tangible common equity ratio improved 46 basis points to 8.76%, and our Tier 1 common risk-based...

  • Page 6
    ...size of our planned investments in order to drive positive operating leverage again in 2013. Commitment to Our Shareholders We are committed to delivering long-term value to our shareholders. At Huntington, we believe that balancing "doing the right thing" for our shareholders, colleagues, customers...

  • Page 7
    ...- our shareholders, customers, and colleagues - for your continued support. Stephen D. Steinour Chairman, President and Chief Executive Officer March 4, 2013 Copyright Notice and Disclaimer Huntington Bank received the highest numerical score in the proprietary J.D. Power and Associates 2012 Small...

  • Page 8
    ... to Item 1A "Risk Factors" and the "Additional Disclosure" sections in Huntington's Form 10-K for the year ending December 31, 2012, for additional information. 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...

  • Page 9
    ... 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. [X] Yes [ ] No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if...

  • Page 10
    ... reporting company [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act) [ ]Yes [X]No The aggregate market value of voting and non-voting common equity held by non-affiliates of the registrant as of June 30, 2012, determined by using a per share...

  • Page 11
    ...Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accountant Fees and Services...

  • Page 12
    ...Commercial Real Estate Dodd-Frank Wall Street Reform and Consumer Protection Act Earnings Per Share Employee Retirement Income Security Act Economic Value of Equity (see FNMA) Financial Accounting Standards Board Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation Improvement...

  • Page 13
    ...90 days or more (Table 15) Real Estate Investment Trust Regulation E, of the Electronic Fund Transfer Act Risk Oversight Committee Special Assets Division Small Business Administration Securities and Exchange Commission Sky Financial Group, Inc. Troubled Asset Relief Program Series B Preferred Stock...

  • Page 14
    ... to checking accounts, savings accounts, money market accounts, certificates of deposit, consumer loans, and small business loans and leases. Other financial services available to consumer and small business customers include investments, insurance services, interest rate risk protection products...

  • Page 15
    ... and other public sector entities in our primary banking markets. A locally based team of relationship managers works with clients to meet their trust, lending, and treasury management needs. Home Lending originates and services consumer loans and mortgages for customers who are generally located in...

  • Page 16
    ... and financial services companies such as savings and loans, credit unions, and finance and trust companies, as well as mortgage banking companies, automobile and equipment financing companies (including captive automobile finance companies), insurance companies, mutual funds, investment advisors...

  • Page 17
    ... corporate governance requirements for all public companies including financial institutions with regard to executive compensation, proxy access by shareholders, and certain whistleblower provisions, and restricts certain proprietary trading and hedge fund and private equity activities of banks...

  • Page 18
    ... federal banking agencies to apply to insured depository institutions under the Prompt Corrective Action provisions, regardless of total consolidated asset size or foreign financial exposure. Over a three year phase-out period, trust preferred securities will no longer qualify as Tier 1 risk-based...

  • Page 19
    ... bank holding companies. 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...

  • Page 20
    ...order, agreement, or directive to meet and maintain a specific capital level for any capital measure. (dollar amounts in billions) Well-capitalized minimums At December 31, 2012 Excess Actual Capital (1) Ratios: Tier 1 leverage ratio Tier 1 risk-based capital ratio Total risk-based capital ratio...

  • Page 21
    ...requirements to reduce total assets, cessation of receipt of deposits from correspondent banks, and restrictions on making any payment of principal or interest on their subordinated debt. Critically under-capitalized institutions are subject to appointment of a receiver or conservator within 90 days...

  • Page 22
    ... anti-money laundering and customer privacy regulations, as well as corporate governance, accounting, and reporting requirements. The USA Patriot Act of 2001 and its related regulations require insured depository institutions, broker-dealers, and certain other financial institutions to have policies...

  • Page 23
    ...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. Item 1A: Risk Factors Risk Governance...

  • Page 24
    ...oversee the quarterly self-assessment process. Segment risk officers report directly to the related segment manager with a dotted line to the Chief Risk Officer. Corporate Risk Management establishes policies, sets operating limits, reviews new or modified products/processes, ensures consistency and...

  • Page 25
    ... effect on our financial conditions and results of operations. At December 31, 2012, we had: x x x x $8.3 billion of home equity loans and lines, representing 20% of total loans and leases. $5.0 billion in residential real estate loans, representing 12% of total loans and leases. $4.3 billion of...

  • Page 26
    ... the parent company are the primary source of funds for the payment of dividends to our shareholders. Under applicable statutes and regulations, a national bank may not declare and pay dividends in any year greater than its undivided profits or in excess of an amount equal to the sum of the total of...

  • Page 27
    ... internet banking and mobile banking channels, and our plans to develop additional remote connectivity solutions to serve our customers. 3. Failure to maintain effective internal controls over financial reporting in the future could impair our ability to accurately and timely report our financial...

  • Page 28
    ... III capital reforms, will implement the application of the Federal Reserve's capital plans rule, including the requirement to maintain capital above 5% for the Tier 1 Common risk-based capital ratio under both expected and stressed conditions. 2. If our regulators deem it appropriate, they can take...

  • Page 29
    .... 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 33%. The lease term expires in 2030, with six five-year renewal...

  • Page 30
    ... largest banking companies and includes all money center banks and regional banks, including Huntington. An investment of $100 on December 31, 2007, and the reinvestment of all dividends are assumed. The plotted points represent the closing price on the last trading day of the fiscal year indicated...

  • Page 31
    ... Stock during the three-month period ended December 31, 2012: Total Number of Shares Maximum Number of Shares (or Total Number Average Purchased as Part of Approximate Dollar Value) that of Shares Price Paid Publicly Announced May Yet Be Purchased Under the Purchased Per Share Plans or Programs...

  • Page 32
    ...) per common share - diluted Cash dividends declared per common share Balance sheet highlights Total assets (period end) Total long-term debt (period end)(2) Total shareholders' equity (period end) Average long-term debt(2) Average shareholders' equity Average total assets Key ratios and statistics...

  • Page 33
    ... consumer banking services, mortgage banking services, automobile financing, equipment leasing, investment management, trust services, brokerage services, insurance service programs, and other financial products and services. Our over 690 branches are located in Ohio, Michigan, Pennsylvania, Indiana...

  • Page 34
    ... increase in mortgage banking income, a $26.2 million, or 82%, increase in gain on sale of loans, an $18.7 million, or 8%, increase in service charges on deposit accounts, an $11.6 million, or 32%, increase in capital market fees, and an $11.2 million bargain purchase gain related to the acquisition...

  • Page 35
    ...strengthen risk management, including sustained improvements in credit metrics, and (5) maintain strong capital and liquidity positions. We were pleased with the financial results in 2012, which reflected steady growth in a number of key areas including loans, deposits, and customer relationships as...

  • Page 36
    ... on the overall cost of funds, the continued shift towards low- and no-cost demand deposits and money market deposit accounts, and a reduction in balances with several larger relationships. Noninterest income over the course of 2013, excluding the impact of any automobile loan sales, any net MSR...

  • Page 37
    ... credit losses Service charges on deposit accounts Mortgage banking income Trust services Electronic banking Brokerage income Insurance income Gain on sale of loans Bank owned life insurance income Capital markets fees Securities gains (losses) Other income Total noninterest income Personnel costs...

  • Page 38
    ... of performance trends. Key consolidated balance sheet and income statement trends are discussed. All earnings per share data is reported on a diluted basis. For additional insight on financial performance, please read this section in conjunction with the Business Segment Discussion. Significant...

  • Page 39
    ...-related loans ($333.0 million of residential mortgages and $64.7 million of home equity loans) was transferred to loans held for sale. At the time of the transfer, the loans were marked to the lower of cost or fair value less costs to sell of $323.4 million, resulting in $75.5 million of charge...

  • Page 40
    ...(dollar amounts in millions) Loans and direct financing leases Investment securities Other earning assets Total interest income from earning assets Deposits Short-term borrowings Federal Home Loan Bank advances Subordinated notes and other long-term debt, including capital securities Total interest...

  • Page 41
    ...time deposits of $250,000 or more Brokered time deposits and negotiable CDs Deposits in foreign offices Total deposits Short-term borrowings Federal Home Loan Bank advances Subordinated notes and other long-term debt Total interest-bearing liabilities All other liabilities Shareholders' equity Total...

  • Page 42
    ... Commercial real estate: Construction Commercial Commercial real estate Total commercial Consumer: Automobile loans and leases Home equity Residential mortgage Other consumer Total consumer Total loans and leases Total earning assets Liabilities and Shareholders' Equity Deposits: Demand deposits...

  • Page 43
    ... 4%, increase in average total loans and leases from the prior year primarily reflected: x $1.2 billion, or 9%, increase in the average C&I portfolio due to a combination of factors. This included benefits from our strategic initiatives focusing on large corporate, asset based lending, and equipment...

  • Page 44
    ... Income Twelve Months Ended December 31, (dollar amounts in thousands) Service charges on deposit accounts Mortgage banking income Trust services Electronic banking Brokerage income Insurance income Gain on sale of loans Bank owned life insurance income Capital markets fees Securities gains (losses...

  • Page 45
    ... in 2012 compared to a net trading loss related to MSR hedging of $11.9 million in 2011. $26.2 million, or 82%, increase in gain on sale of loans. $18.7 million, or 8%, increase in service charges on deposits, due to continued strong customer growth. $11.6 million, or 32%, increase in capital market...

  • Page 46
    ... Net occupancy Equipment Deposit and other insurance expense Professional services Marketing Amortization of intangibles OREO and foreclosure expense Gain on early extinguishment of debt Other expense Total noninterest expense Number of employees (full-time equivalent), at period-end 2012 vs. 2011...

  • Page 47
    ..., or 20%, decrease in professional services, reflecting lower legal costs as collection activities declined and consulting expenses. $9.7 gain on the early extinguishment of debt related to the exchange of certain trust preferred securities. Provision for Income Taxes (This section should be read...

  • Page 48
    ... cash and unencumbered securities and the availability of contingent sources of funding, can have an impact on Huntington's ability to satisfy current or future funding commitments. We manage liquidity risk at both the Bank and the parent company. Operational risk arises from our inherent day-to-day...

  • Page 49
    ... trusts, and real estate developers. We mitigate our risk on these loans by requiring collateral values that exceed the loan amount and underwriting the loan with projected cash flow in excess of the debt service requirement. These loans are made to finance properties such as apartment buildings...

  • Page 50
    ...specific limits for CRE primary project types, loans secured by residential real estate, shared national credit exposure, and unsecured lending represent examples of specifically tracked components of our concentration management process. Our concentration management process is approved by our board...

  • Page 51
    ...to Consolidated Financial Statements) are managed by our SAD. The SAD is a specialized group of credit professionals that handle the day-to-day management of workouts, commercial recoveries, and problem loan sales. Its responsibilities include developing and implementing action plans, assessing risk...

  • Page 52
    ...manage the risks inherent in this portfolio specific to CRE lending, focusing on the quality of the developer, and the specifics associated with each project. Generally, we: (1) limit our loans to 80% of the appraised value of the commercial real estate at origination, (2) require net operating cash...

  • Page 53
    ...- SAD (2) Noncore - Other Total noncore Total commercial real estate (1) (2) $ $ $ $ $ Calculated as (Prior NCOs + ACL $) / (Ending Balance + Prior NCOs) Noncore loans are managed by SAD, the area responsible for managing loans and relationships designated as Classified loans. As shown in the...

  • Page 54
    .... Additional information regarding these securitization transactions is located in Note 21 of the Notes to Consolidated Financial Statements. RESIDENTIAL REAL ESTATE SECURED PORTFOLIOS The properties securing our residential mortgage and home equity portfolios are primarily located within our...

  • Page 55
    ...mortgage loans with underwriting criteria based on minimum credit scores, debt-to-income ratios, and LTV ratios. We offer closed-end home equity loans which are generally fixed-rate with principal and interest payments, and variable-rate interest-only home equity lines-of-credit which do not require...

  • Page 56
    ... of the migration from current status to charge-off represents a negative impact to the longer term performance of the portfolio. Although the collateral value assessment is an important component of the overall credit risk analysis, there are very few instances of available equity in junior-lien...

  • Page 57
    ... improvement in the commercial portfolio. The ACL to total loans ratio declined to 1.99% and our ACL coverage ratios improved as a result of asset quality improvement. NPAs, NALs, and TDRs (This section should be read in conjunction with Note 3 of the Notes to Consolidated Financial Statements...

  • Page 58
    ... five years: Table 14 - Nonaccrual Loans and Leases and Nonperforming Assets At December 31, (dollar amounts in thousands) 2012 2011 2010 2009 2008 Nonaccrual loans and leases: Commercial and industrial Commercial real estate Automobile Residential mortgages Home equity Total nonaccrual loans...

  • Page 59
    ...dollar amounts in thousands) 2012 2011 2010 2009 2008 Accruing loans and leases past due 90 days or more Commercial and industrial(1) Commercial real estate Automobile Residential mortgage (excluding loans guaranteed by the U.S. government) Home equity Other loans and leases Total, excl. loans...

  • Page 60
    ... years: Table 16 - Accruing and Nonaccruing Troubled Debt Restructured Loans (dollar amounts in thousands) Troubled debt restructured loans - accruing: Commercial and industrial Commercial real estate Automobile Home equity Residential mortgage Other consumer Total troubled debt restructured loans...

  • Page 61
    ... Huntington loan secured by residential real estate when the borrower has a significant delinquency on the most recent credit bureau report. Additionally, beginning in 2012, a reserve amount associated with estimated incurred losses due to maturity risk in the home equity line-of-credit portfolio...

  • Page 62
    ... real estate: Construction Commercial Total commercial real estate Total commercial Consumer: Automobile Home equity Residential mortgage Other consumer Total consumer Total recoveries Net loan and lease charge-offs Provision for loan and lease losses Economic reserve transfer Allowance for assets...

  • Page 63
    ... for Credit Losses (1) At December 31, (dollar amounts in thousands) 2012 2011 2010 2009 2008 Commercial: Commercial and industrial $ Commercial real estate Total commercial Consumer: Automobile Home equity Residential mortgage Other loans Total consumer Total allowance for loan and lease...

  • Page 64
    ...Net Loan and Lease Charge-offs Year Ended December 31, (dollar amounts in thousands) Net charge-offs by loan and lease type Commercial: Commercial and industrial Commercial real estate: Construction Commercial Total commercial real estate Total commercial Consumer: Automobile Home equity Residential...

  • Page 65
    ... mortgage loans greater than 150-days past due are charged-down to the estimated value of the collateral, less anticipated selling costs. The remaining balance is in delinquent status until a modification can be completed, or the loan goes through the foreclosure process. For the home equity...

  • Page 66
    ... optionality in the balance sheet from, among other things, faster or slower mortgage prepayments and changes in deposit mix. INCOME SIMULATION AND ECONOMIC VALUE ANALYSIS Interest rate risk measurement is calculated and reported to the ALCO and ROC monthly. The information reported includes the...

  • Page 67
    ..., the economic value of financial assets, liabilities and off-balance sheet instruments, is derived through the discounting of cash flows based on actual rates at the end of the period. The economic value of equity is calculated as the difference between the estimated market value of assets and...

  • Page 68
    ... subject to fair value accounting. We have price risk from trading securities, securities owned by our broker-dealer subsidiaries, foreign exchange positions, equity investments, investments in mortgage-backed securities, and marketable equity securities held by our insurance subsidiaries. We have...

  • Page 69
    ... with the Critical Accounting Policies and Use of Significant Estimates discussion, and Note 4 of the Notes to Consolidated Financial Statements.) Our investment securities portfolio is evaluated under established asset/liability management objectives. Changing market conditions could affect the...

  • Page 70
    ... stock holding carried at par. (3) Consists of certain mutual fund and equity security holdings. Bank Liquidity and Sources of Liquidity Our primary sources of funding for the Bank are retail and commercial core deposits. As of December 31, 2012, these core deposits funded 78% of total assets...

  • Page 71
    ...-bearing Money market deposits Savings and other domestic deposits Core certificates of deposit Total core deposits Other domestic deposits of $250,000 or more Brokered deposits and negotiable CDs Deposits in foreign offices Total deposits Total core deposits: Commercial Personal Total core deposits...

  • Page 72
    ... or asset securitization or sale. Sources of wholesale funding include other domestic time deposits of $250,000 or more, brokered deposits and negotiable CDs, deposits in foreign offices, short-term borrowings, FHLB advances, other long-term debt, and subordinated notes. At December 31, 2012, total...

  • Page 73
    ...our stock, and acquisitions. The parent company obtains funding to meet obligations from dividends received from direct subsidiaries, net taxes collected from subsidiaries included in the federal consolidated tax return, fees for services provided to subsidiaries, and the issuance of debt securities...

  • Page 74
    ... in this $514.7 million total are letters of credit issued by the Bank that support securities that were issued by our customers and remarketed by the Huntington Investment Company, our broker-dealer subsidiary. We enter into forward contracts relating to the mortgage banking business to hedge the...

  • Page 75
    ... 101 (3) (dollar amounts in millions) Deposits without a stated maturity Certificates of deposit and other time deposits FHLB advances Short-term borrowings Other long-term debt Subordinated notes Operating lease obligations Purchase commitments Pension minimum funding requirement (2) Total 37,543...

  • Page 76
    ... foreclosure processes are appropriate. Compliance Risk Financial institutions are subject to several laws, rules, and regulations at both the federal and state levels. These broad-based mandates include, but are not limited to, expectations relating to anti-money laundering, lending limits, client...

  • Page 77
    ... 14 of the Notes to Consolidated Financial Statements.) Both regulatory capital and shareholders' equity are managed at the Bank and on a consolidated basis. We have an active program for managing capital and maintain a comprehensive process for assessing the Company's overall capital adequacy. We...

  • Page 78
    ...be critical metrics with which to analyze and evaluate financial condition and capital strength. Other companies may calculate these financial measures differently. Our Tier 1 common equity risk-based ratio improved 48 basis points to 10.48% at December 31, 2012, compared with 10.00% at December 31...

  • Page 79
    ... our consolidated Tier 1 and Total risk-based capital ratios compared with December 31, 2011, primarily reflected an increase in risk-weighted assets of $1.9 billion, the redemption of $230.3 million in trust preferred securities, the repurchase of 23.3 million common shares, and the impacts related...

  • Page 80
    ... and Commercial Banking; Automobile Finance and Commercial Real Estate; and Wealth Advisors, Government Finance, and Home Lending. A Treasury / Other function also includes our insurance business and other unallocated assets, liabilities, revenue, and expenses. While this section reviews financial...

  • Page 81
    ... checking accounts and improved retention of existing commercial accounts. The overall objective is to grow the number of relationships, along with an increase in product service distribution. The commercial relationship is defined as a business banking or commercial banking customer with a checking...

  • Page 82
    ... 9.2%. Total commercial relationship revenue in 2012 was $724.4 million, up $49.2 million, or 7.3%, from 2011. This was primarily driven by increase in loan balances and increased spreads. Revenue Sharing Revenue is recorded in the business segment responsible for the related product or service. Fee...

  • Page 83
    .../ Other function includes revenue and expense related to our insurance business, and assets, liabilities, and equity not directly assigned or allocated to one of the four business segments. Other assets include investment securities and bank owned life insurance. The financial impact associated with...

  • Page 84
    ... Deposits by Business Segment Regional and Commercial Banking 9,657 $ 387 10,044 --19 8 5 32 10,076 $ 3,099 $ 107 1,871 13 25 5,115 209 5,324 $ (dollar amounts in millions) Average Loans/Leases Commercial and industrial Commercial real estate Total commercial Automobile loans and leases Home equity...

  • Page 85
    ... of employees (full-time equivalent) Total average assets (in millions) Total average loans/leases (in millions) Total average deposits (in millions) Net interest margin NCOs NCOs as a % of average loans and leases Return on average common equity 2012 vs. 2011 Retail and Business Banking reported...

  • Page 86
    ... debit card interchange income. $16.3 million, or 39%, decrease in other income, as the prior period reflected an increased value in a loan servicing asset. Partially offset by: x x $19.9 million, or 11%, increase in deposit service charge income due to strong household and checking account growth...

  • Page 87
    ... employees (full-time equivalent) Total average assets (in millions) Total average loans/leases (in millions) Total average deposits (in millions) Net interest margin NCOs NCOs as a % of average loans and leases Return on average common equity 2012 vs. 2011 Regional and Commercial Banking reported...

  • Page 88
    ... loans managed by SAD, which reflected improved credit quality in the portfolio. $0.2 billion, or 5%, decrease in the middle market portfolio average balance primarily due to a decline in the full year average utilization rate of commercial lines of credit. The increase in total average deposits...

  • Page 89
    ... taxes Net income Number of employees (full-time equivalent) Total average assets (in millions) Total average loans/leases (in millions) Total average deposits (in millions) Net interest margin NCOs NCOs as a % of average loans and leases Return on average common equity 2012 vs. 2011 AFCRE reported...

  • Page 90
    ... to reflect our managed reduction of this overall exposure, particularly in the noncore portfolio. The increase in average floor plan loans reflected new dealer relationships as well as strong line utilization levels. The increase in total average deposits from the year-ago period reflected...

  • Page 91
    ... deposits (in millions) Net interest margin NCOs NCOs as a % of average loans and leases Return on average common equity Mortgage banking origination volume (in millions) Noninterest income shared with other business segments(1) Total assets under management (in billions) - eop Total trust assets...

  • Page 92
    ... loans and leases from the year-ago period reflected: x $0.5 billion, or 13%, increase in the residential mortgage portfolio due to historically low interest rates. The increase in average total deposits from the year-ago period reflected: x $1.6 billion increase in short-term commercial deposits...

  • Page 93
    ... 46 - Average Loans/Leases - 2012 Fourth Quarter vs. 2011 Fourth Quarter (dollar amounts in millions) Average Loans/Leases Commercial and industrial Commercial real estate Total commercial Automobile Home equity Residential mortgage Other consumer Total consumer Total loans/leases 2012 $ Fourth...

  • Page 94
    ...or 13%, from the year-ago quarter, reflecting a reduction of the ACL as a result of the improvement in the underlying credit quality of the loan portfolio. The 2012 fourth quarter provision for credit losses was $30.6 million less than total NCOs, reflecting the resolution of problem loans for which...

  • Page 95
    ...878) 35,191 229,352 Service charges on deposit accounts Mortgage banking income Trust services Electronic banking Brokerage income Insurance income Gain on sale of loans Bank owned life insurance income Capital markets fees Securities gains (losses) Other income Total noninterest income $ 297,651...

  • Page 96
    ... regulatory related expense. Partially offset by: x $5.2 million, or 10%, decline in outside data processing and other services as the year ago quarter included costs associated with the conversion to a new debit card processor. Provision for Income Taxes The provision for income taxes in the 2012...

  • Page 97
    ... related loans, in the year-ago quarter. Total CRE NCOs for the 2012 fourth quarter were $21.4 million, or an annualized 1.56%, down from $28.4 million, or an annualized 1.91% in the year-ago quarter. These declines reflected improvement in the overall credit quality of the portfolio. Total consumer...

  • Page 98
    ... - diluted Cash dividends declared Common stock price, per share High(4) Low(4) Close Average closing price Return on average total assets Return on average common shareholders' equity Return on average tangible common shareholders' equity(5) Efficiency ratio(6) Effective tax rate Margin analysis...

  • Page 99
    ... Income Statement, Capital, and Other Data - Continued(1) Capital adequacy December 31, Total risk-weighted assets (in millions) Tier 1 leverage ratio Tier 1 risk-based capital ratio Total risk-based capital ratio Tier 1 common risk-based capital ratio Tangible common equity / tangible asset ratio...

  • Page 100
    ... - diluted Cash dividends declared Common stock price, per share High(4) Low(4) Close Average closing price Return on average total assets Return on average common shareholders' equity Return on average tangible common shareholders' equity(5) Efficiency ratio(6) Effective tax rate (benefit) Margin...

  • Page 101
    ... Deferred tax liability related to other intangible assets is calculated assuming a 35% tax rate. (4) High and low stock prices are intra-day quotes obtained from NASDAQ. (5) Net income excluding expense for amortization of intangibles for the period divided by average tangible shareholders' equity...

  • Page 102
    ... timing of our business strategies, including market acceptance of any new products or services implementing our "Fair Play" banking philosophy; (6) changes in accounting policies and principles and the accuracy of our assumptions and estimates used to prepare our financial statements; (7) extended...

  • Page 103
    ... loan and deposit growth, net interest margins, and efficiency ratios. Long-term growth rates were estimated to assist in determining the terminal values. The discount rates were estimated based on the Capital Asset Pricing Model, which considered the risk-free interest rate (20-year Treasury...

  • Page 104
    ... debt securities issued by banks, bank holding companies, and insurance companies. A full cash flow analysis is used to estimate fair values and assess impairment for each security within this portfolio. We engage a third party pricing specialist with direct industry experience in pooled-trust...

  • Page 105
    ... corporate bonds, US government bonds and our common stock. Investments are accounted for at cost on the trade date and are reported at fair value. Mutual funds are valued at quoted Net Asset Value. Our common stock is traded on a national securities exchange and is valued at the last reported sales...

  • Page 106
    ... of "Market Risk" in Item 7 (MD&A), which is incorporated by reference into this item. 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...

  • Page 107
    ... financial f report ting as of Dece ember 31, 2012 2 has been audi te & Touche LL LP, an ited by Deloitt indep pendent register red public acco ounting firm, as a stated in thei ir report appear ring on the nex xt page. Steph hen D. Steinour r - Chairman, President, P and Chief Executiv ve Officer...

  • Page 108
    ...Board (United State es), the consol lidated financ cial statement ts as of and fo or the year end ded Decembe er 31, 2012 of f the Compan ny and our repor rt dated Febru uary 15, 2013 3 expressed an n unqualified opinion on th hose financial l statements. Colu umbus, Ohio Febru uary 15, 2013 3 100

  • Page 109
    ... balance e sheets of Hu untington Ban ncshares Incorporated and subsidiaries (the " "Company") as of Decemb ber 31, 2012 and a 2011, and d the related c consolidated statements of f income, com mprehensive incom me, changes in i shareholder rs' equity, and cash flows for each of th he three years...

  • Page 110
    ... Deposits Short-term borrowings Federal Home Loan Bank advances Other long-term debt (includes $123,039 at December 31, 2011, measured at fair value)(2) Subordinated notes Accrued expenses and other liabilities Total liabilities Shareholders' equity Preferred stock - authorized 6,617,808 shares...

  • Page 111
    ... Deposits Short-term borrowings Federal Home Loan Bank advances Subordinated notes and other long-term debt Total interest expense Net interest income Provision for credit losses Net interest income after provision for credit losses Service charges on deposit accounts Mortgage banking income Trust...

  • Page 112
    ... Incorporated Consolidated Statements of Comprehensive Income Year Ended December 31, 2011 $ 542,613 $ (dollar amounts in thousands) 2012 $ 641,022 2010 312,347 Net income Other comprehensive income, net of tax: Unrealized gains on available-for-sale and other securities: Non-credit-related...

  • Page 113
    ... (loss) Repurchases of common stock Cash dividends declared: Common ($0.16 per share) Preferred Series A ($85.00 per share) Preferred Series B ($33.14 per share) Recognition of the fair value of share-based compensation Other share-based compensation activity Other Balance, end of year 363 $ 362,507...

  • Page 114
    ... Repurchase of warrants convertible to common stock Cash dividends declared: Common ($0.10 per share) Preferred Series A ($85.00 per share) Recognition of the fair value of share-based compensation Other share-based compensation activity Other Balance, end of year 363 $ 362,507 363 $ 362,507 --- 864...

  • Page 115
    ... B stock discount accretion and redemption 73,063 Cash dividends declared: Common ($0.04 per share) Preferred Series B ($48.75 per share) Preferred Series A ($85.00 per share) Recognition of the fair value of share-based compensation Other share-based compensation activity Other Balance, end of year...

  • Page 116
    ... from sale of operating lease assets Purchases of premises and equipment Proceeds from sales of other real estate Purchases of loans and leases Other, net Net cash provided by (used for) investing activities Financing activities Increase (decrease) in deposits Increase (decrease) in short-term...

  • Page 117
    ... activities Dividends accrued, paid in subsequent quarter Trust Preferred Securities exchange Transfer of securities to held-to-maturity from available for sale Loans transferred to loans held for sale See Notes to Consolidated Financial Statements. $ 6,389 $ 231,897 47,312 --278,748 306,261 80...

  • Page 118
    ... full-service commercial, small business, consumer banking services, mortgage banking services, automobile financing, equipment leasing, investment management, trust services, brokerage services, customized insurance programs, and other financial products and services. Huntington's banking offices...

  • Page 119
    .... Huntington assesses whether OTTI has occurred when the fair value of a debt security is less than the amortized cost basis at the balance sheet date. Management reviews the amount of unrealized loss, the length of time the security has been in an unrealized loss position, the credit rating history...

  • Page 120
    ... residential real estate values; the diversification of CRE loans; the development of new or expanded Commercial business segments such as healthcare, ABL, and energy, and the overall condition of the manufacturing industry. Also, the ACL assessment includes the on-going assessment of credit quality...

  • Page 121
    ... current financial statements, industry, management capabilities, and other qualitative measures. For all classes within the consumer loan portfolio, the determination of a borrower's ability to make the required principal and interest payments is based on multiple factors, including number of days...

  • Page 122
    ... the loans and leases sold and servicing rights associated with loan and lease sales are determined when the related loans or leases are sold to either a securitization trust or third party. For loan or lease sales with servicing retained, a servicing asset is recorded at fair value for the right to...

  • Page 123
    ...its mortgage loans held for sale. Mortgage loan sale commitments and the related interest rate lock commitments are carried at fair value on the Consolidated Balance Sheets with changes in fair value reflected in mortgage banking revenue. Huntington also uses certain derivative financial instruments...

  • Page 124
    ... repurchase agreements, public deposits, loan notes, derivative financial instruments, short-term borrowings and long-term borrowings. Assets that have been pledged as collateral, including those that can be sold or repledged by the secured party, continue to be reported on our Consolidated Balance...

  • Page 125
    ...The servicing rights are recorded in accrued income and other assets in the Consolidated Balance Sheets. Servicing revenues on mortgage loans are included in mortgage banking income. At the time of initial capitalization, MSRs may be grouped into servicing classes based on the availability of market...

  • Page 126
    ... with various related parties. These transactions occur at prevailing market rates and terms and include funding arrangements, transfers of financial assets, administrative and operational support, and other miscellaneous services. 2. ACCOUNTING STANDARDS UPDATE ASU 2011-04 - Fair Value Measurement...

  • Page 127
    ...-substance real estate. The amendments were effective for our financial statements beginning in the third quarter of 2012. The amendments did not have a material impact on Huntington's Consolidated Financial Statements. ASU 2011-11 - Balance Sheet (Topic 210): Disclosures about Offsetting Assets and...

  • Page 128
    ... Purchased credit-impaired Commercial real estate Automobile Home equity Residential mortgage Other consumer (1) Not applicable. The automobile loan portfolio is not further segregated into classes. Direct Financing Leases Huntington's loan and lease portfolio includes lease financing receivables...

  • Page 129
    ... applicable accounting guidance, ASC 805. The fair values for the loans were estimated using discounted cash flow analyses using interest rates currently being offered for loans with similar terms (Level 3), and reflected an estimate of probable losses and the credit risk associated with the loans...

  • Page 130
    ... Commercial real estate: Retail properties Multi family Office Industrial and warehouse Other commercial real estate Total commercial real estate Automobile Home equity: Secured by first-lien Secured by junior-lien Total home equity Residential mortgage Other consumer Total nonaccrual loans...

  • Page 131
    ...,967 Commercial real estate: Retail properties $ Multi family Office Industrial and warehouse Purchased creditimpaired Other commercial real estate Total commercial real estate $ Automobile Home equity: Secured by first-lien Secured by junior-lien Total home equity Residential mortgage Residential...

  • Page 132
    ... 21,152 Commercial real estate: Retail properties $ Multi family Office Industrial and warehouse Other commercial real estate Total commercial real estate $ Automobile Home equity: Secured by first-lien Secured by junior-lien Residential mortgage Other consumer Total loans and leases $ $ $ $ $ 48...

  • Page 133
    ... Commercial and Industrial Real Estate (dollar amounts in thousands) Year ended December 31, 2012: ALLL balance, beginning of period $ Loan charge-offs Recoveries of loans previously charged-off Provision for loan and lease losses Allowance for loans sold or transferred to loans held for sale...

  • Page 134
    (dollar amounts in thousands) Year Ended December 31, 2010: ALLL balance, beginning of period $ Loan charge-offs Recoveries of loans previously charged-off Provision for loan and lease losses Allowance for loans sold or transferred to loans held for sale ALLL balance, end of period $ AULC balance, ...

  • Page 135
    ... that are closely monitored in the overall credit risk management processes. The following table presents each loan and lease class by credit quality indicator for the years ended December 31, 2012 and 2011: December 31, 2012 Credit Risk Profile by UCS classification OLEM Substandard Doubtful 108...

  • Page 136
    ...568 (1) Reflects currently updated customer credit scores. (2) Reflects deferred fees and costs, loans in process, loans to legal entities, etc. (3) Includes $0.3 billion of loans reflected as loans held for sale related to an automobile securitization expected to be completed in 2013. (4) Includes...

  • Page 137
    ... loan agreement will be collected. The following tables present the balance of the ALLL attributable to loans by portfolio segment individually and collectively evaluated for impairment and the related loan and lease balance for the years ended December 31, 2012, 2011, and 2010 (1): Commercial and...

  • Page 138
    ...Loans and Leases at December 31, 2011: (dollar amounts in thousands) Portion of ending balance: Individually evaluated for impairment Collectively evaluated for impairment Total loans evaluated for impairment 153,724 14,545,647 $ Commercial Real Estate Automobile Home Equity Residential Mortgage...

  • Page 139
    ... no related allowance recorded: Commercial and industrial: Owner occupied Purchased credit-impaired Other commercial and industrial Total commercial and industrial Commercial real estate: Retail properties December 31, 2012 Unpaid Ending Principal Related Balance Balance (5) Allowance Year Ended...

  • Page 140
    ... Total commercial and industrial Commercial real estate: (4) Retail properties Multi family Office Industrial and warehouse Purchased credit-impaired Other commercial real estate Total commercial real estate Automobile Home equity: Secured by first-lien Secured by junior-lien Total home equity...

  • Page 141
    ... industrial Commercial real estate: Retail properties Multi family Office Industrial and warehouse Other commercial real estate Total commercial real estate Automobile Home equity loans and lines-ofcredit: Secured by first-lien Secured by junior-lien Residential mortgage Other consumer loans Year...

  • Page 142
    ...the different loan types: Commercial loan TDRs - Commercial accruing TDRs often result from loans receiving a concession with terms that are not considered a market transaction to Huntington. The TDR remains in accruing status as long as the customer is less than 90-days past due on payments per the...

  • Page 143
    .... Automobile, Home Equity, and Other Consumer loan TDRs - The Company may make similar interest rate, term, and principal concessions as with residential mortgage loan TDRs. TDR Impact on Credit Quality Huntington's ALLL is largely driven by updated risk ratings assigned to commercial loans, updated...

  • Page 144
    ... or principal payments received on that note are applied to first reduce the bank's outstanding book balance and then to recoveries of charged-off principal, unpaid interest, and/or fee expenses. Residential Mortgage, Automobile, Home Equity, and Other Consumer loan TDRs - Modified loans identified...

  • Page 145
    ... CRE - Office CRE - Industrial and warehouse:(3) Interest rate reduction Amortization or maturity date change Other Total CRE - Industrial and Warehouse CRE - Other commercial real estate:(3) Interest rate reduction Amortization or maturity date change Other Total CRE - Other commercial real estate...

  • Page 146
    ... balances were not significantly impacted by net charge-offs in 2012.  Any loan within any portfolio or class is considered as payment redefaulted at 90-days past due. The following table presents TDRs that have redefaulted within one year of modification during the years ended December 31, 2012...

  • Page 147
    ... commercial real estate Automobile: Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total Automobile Residential mortgage: Interest rate reduction Amortization or maturity date change Chapter 7 bankruptcy Other Total Residential mortgage First-lien home equity...

  • Page 148
    ... 329,150 7,566,175 December 31, 2012 U.S. Treasury Federal agencies: Mortgage-backed securities Other agencies Total U.S. government backed securities Municipal securities Private-label CMO Asset-backed securities (1) Covered bonds Corporate debt Other securities Total available-for-sale and other...

  • Page 149
    ...,768) (dollar amounts in thousands ) Fair Value December 31, 2012 U.S. Treasury $ Federal Agencies: Mortgage-backed securities Other agencies Total U.S. Government backed securities Municipal securities Private label CMO Asset-backed securities Covered bonds Corporate debt Other securities Total...

  • Page 150
    ...securities Covered bonds Corporate debt Other securities Total temporarily impaired securities $ At December 31, 2012, the carrying value of investment securities pledged to secure public and trust deposits, trading account liabilities, U.S. Treasury demand notes, and security repurchase agreements...

  • Page 151
    ...OTTI. Huntington assesses whether OTTI has occurred when the fair value of a debt security is less than the amortized cost basis at period-end. Management reviews the amount of unrealized loss, the length of time the security has been in an unrealized loss position, the credit rating history, market...

  • Page 152
    ... of trust-preferred securities and subordinated debt securities issued by banks, bank holding companies, and insurance companies. A full cash flow analysis is used to estimate fair values and assess impairment for each security within this portfolio. A third party pricing specialist with direct...

  • Page 153
    ... interest method. During 2012 and 2011, Huntington transferred $278.7 million and $469.1 million, respectively of federal agencies, mortgagebacked securities and other agency securities from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. At the time of the...

  • Page 154
    ... is required. 6. LOAN SALES AND SECURITIZATIONS Residential Mortgage Portfolio The following table summarizes activity relating to residential mortgage loans sold with servicing retained for the years ended December 31, 2012, 2011, and 2010: (dollar amounts in thousands) Residential mortgage loans...

  • Page 155
    ... readily available. Therefore, the fair value of MSRs is estimated using a discounted future cash flow model. The model considers portfolio characteristics, contractually specified servicing fees and assumptions related to prepayments, delinquency rates, late charges, other ancillary revenues, costs...

  • Page 156
    ... automobile loans and receives annual servicing fees and other ancillary fees on the outstanding loan balances. Automobile loan servicing rights are accounted for using the amortization method. A servicing asset is established at fair value at the time of the sale using a discounted future cash flow...

  • Page 157
    ...31, 2011 Core deposit intangible Customer relationship Other Total other intangible assets (1) $ $ $ $ Includes $3,403 thousand related to the FDIC-assisted acquisition of Fidelity Bank on March 30, 2012. The estimated amortization expense of other intangible assets for the next five years is as...

  • Page 158
    ...under agreements to repurchase Other borrowings Total short-term borrowings Other borrowings consist of borrowings from the Treasury and other notes payable. $ $ For each of the three years ended December 31, 2012, 2011, and 2010, weighted average interest rate at year-end, the maximum balance for...

  • Page 159
    ... debts and obligations of Huntington or any consolidated affiliates. The transfer did not meet the sale requirement of ASC 860 and therefore has been reflected as a secured financing on the Consolidated Financial Statements of Huntington. Other long-term debt maturities for the next five years...

  • Page 160
    ...to hedge the interest rate values of certain fixed-rate debt by converting the debt to a variable rate. See Note 20 for more information regarding such financial instruments. All principal is due upon maturity of the note as described in the table above. During 2012 and 2011, Huntington retired $230...

  • Page 161
    ... net income Net change in unrealized holding gains (losses) on available-for-sale debt securities Net change in unrealized holding gains (losses) on available-for-sale equity securities Unrealized gains and losses on derivatives used in cash flow hedging relationships arising during the period Less...

  • Page 162
    ... net income Net change in unrealized holding (losses) gains on available-for-sale debt securities Net change in unrealized holding (losses) gains on available-for-sale equity securities Unrealized gains and losses on derivatives used in cash flow hedging relationships arising during the period Less...

  • Page 163
    ... Rate Capital Securities, (2) Huntington Capital II Floating Rate Capital Securities, (3) Sky Financial Capital Trust III Floating Rate Capital Securities and (4) Sky Financial Capital Trust IV Floating Rate Capital Securities. As part of the exchange offer, Huntington issued depositary shares...

  • Page 164
    ... incentive share based compensation plans. These plans provide for the granting of stock options and other awards to officers, directors, and other employees. Compensation costs are included in personnel costs on the Consolidated Statements of Income. Stock options are granted at the closing market...

  • Page 165
    ... of Huntington's common stock Expected option term (years) Weighted-average grant date fair value per share $ 1.10 % 2.38 34.9 6.0 1.78 $ 2011 1.95 % 2.63 30.0 6.0 1.40 $ 2010 2.30 % 0.68 38.5 6.0 2.20 The following table illustrates total share-based compensation expense and related tax benefit...

  • Page 166
    ...69, $6.24, and $6.15, respectively. The total fair value of awards vested during the years ended December 31, 2012, 2011, and 2010, was $9.1 million, $11.2 million, and $3.0 million, respectively. As of December 31, 2012, the total unrecognized compensation cost related to nonvested awards was $32...

  • Page 167
    ... the current estimate of the tax liabilities. However, any ultimate settlement is not expected to be material to the Consolidated Financial Statements as a whole. Huntington does not anticipate the total amount of gross unrecognized tax benefits to significantly change within the next 12 months. The...

  • Page 168
    ... tax assets Deferred tax liabilities: Lease financing Loan origination costs Purchase accounting adjustments Operating assets Pension and other employee benefits Securities adjustments Mortgage servicing rights Partnership investments Other Total deferred tax liabilities Net deferred tax asset...

  • Page 169
    ... of forecasted state taxable income expected in applicable jurisdictions in order to utilize the state deferred tax asset and net operating loss carryforwards. Based on current analysis of both positive and negative evidence and projected forecasted state taxable income, the Company believes that...

  • Page 170
    ... covering substantially all employees hired or rehired prior to January 1, 2010. The Plan provides benefits based upon length of service and compensation levels. The funding policy of Huntington is to contribute an annual amount that is at least equal to the minimum funding requirements but not more...

  • Page 171
    ...of retiree contributions collected by Huntington. The actual contributions received in 2012 by Huntington for the retiree medical program were $2.8 million. The following table reconciles the beginning and ending balances of the fair value of Plan assets at the December 31, 2012 and 2011 measurement...

  • Page 172
    ...13 24 6 1 $ Cash Cash equivalents: Huntington funds - money market Fixed income: Huntington funds - fixed income funds Corporate obligations U.S. Government Obligations U.S. Government Agencies Equities: Huntington funds Huntington common stock Other common stock Fair value of plan assets (1) 2011...

  • Page 173
    ...31, 2012, Plan assets were invested less than 1% in cash and cash equivalents, 55% in equity investments, and 44% in bonds, with an average duration of 12.0 years on bond investments. The estimated life of benefit obligations was 14 years. Although it may fluctuate with market conditions, Management...

  • Page 174
    ..., 2011, and 2010, and the changes in accumulated OCI for the years ended December 31, 2012, 2011, and 2010: (dollar amounts in thousands) Net actuarial loss Prior service cost Transition liability Defined benefit pension plans 2011 2010 2012 $ (262,187) $ (215,628) $ (166,183) 30,261 34,688 25,788...

  • Page 175
    ... costs of providing the defined contribution plan as of December 31: December 31, 2011 2012 14,980 $ 16,926 $ (dollar amounts in thousands) Defined contribution plan $ 2010 8,787  The following table shows the number of shares, market value, and dividends received on shares of Huntington stock...

  • Page 176
    ... Securities accounted for at fair value include both the available-for-sale and trading portfolios. Huntington uses prices obtained from third party pricing services and recent trades to determine the fair value of securities. AFS and trading securities are classified as Level 1 using quoted market...

  • Page 177
    ...,415) --Balance at December 31, 2012 452,949 --15,218 75,987 91,205 52,311 4,264,670 359,626 501,000 71,568 1,029,083 290,625 668,142 21,075 7,258,100 142,762 35,202 385,697 --152,188 --- (dollar amounts in thousands) Assets Mortgage loans held for sale Trading account securities: Federal agencies...

  • Page 178
    .... (2) During 2012 and 2011, Huntington transferred $278.2 million and $469.1 million, respectively of federal agencies: mortgage-backed securities from the available-for-sale securities portfolio to the held-to-maturity securities portfolio. These securities are valued at amortized cost and no...

  • Page 179
    ... that are part of the valuation methodology: Level 3 Fair Value Measurements Year ended December 31, 2012 Available-for-sale securities AssetDerivative Municipal Privatebacked Automobile Equity MSRs instruments securities label CMO securities loans investments 65,001 $ (169)$ 95,092 $ 72,364 $ 121...

  • Page 180
    ...Issuances Settlements Transfers in / out of Level 3 (1) $ Balance, end of year Level 3 Fair Value Measurements Year ended December 31, 2010 Available-for-sale securities AssetDerivative Municipal Private backed Automobile Equity MSRs instruments securities label CMO securities loans investments 176...

  • Page 181
    ... Value Measurements Year ended December 31, 2011 Available-for-sale securities AssetMunicipal Private backed securities label CMO securities 2,551) 878 --(1,673)$ ---$ (4,159) 1,094 --(3,065)$ Automobile loans ---$ --(11,645) 5,068 (6,577)$ Equity investments ----------- Mortgage banking income...

  • Page 182
    ...specific credit risk for the years ended December 31, 2012, 2011 and 2010: Net gains (losses) from fair value changes Year ended December 31, 2011 2010 2012 $ 4,284 (1,231) (2,023) $ (dollar amounts in thousands) Assets Mortgage loans held for sale Automobile loans Liabilities Securitization trust...

  • Page 183
    ... within the provision for credit losses. Other real estate owned properties are included in accrued income and other assets and valued based on appraisals and third party price opinions, less estimated selling costs. During the year ended December 31, 2012, Huntington recorded $28.1 million of...

  • Page 184
    ...: Cash and short-term assets Trading account securities Loans held for sale Available-for-sale and other securities Held-to-maturity securities Net loans and direct financing leases Derivatives Financial Liabilities: Deposits Short-term borrowings Federal Home Loan Bank advances Other long term debt...

  • Page 185
    ...significant being operating lease assets, bank owned life insurance, and premises and equipment, do not meet the definition of a financial instrument and are excluded from this disclosure. Similarly, mortgage and nonmortgage servicing rights, deposit base, and other customer relationship intangibles...

  • Page 186
    ...Loans Deposits Subordinated notes Other long-term debt Total notional value at December 31, 2012 $ The following table presents additional information about the interest rate swaps and caps used in Huntington's asset and liability management activities at December 31, 2012: Average Maturity (years...

  • Page 187
    ... the security holders. Interest rate caps were also sold totaling $0.6 billion outside the securitization structure. Both the purchased and sold caps are marked to market through income. In connection with the sale of Huntington's Class B Visa£ shares, Huntington entered into a swap agreement with...

  • Page 188
    ... 2011 (dollar amounts in thousands) 2012 2010 Derivatives in cash flow hedging relationships Interest rate contracts Loans Derivatives used in trading activities $ (179) $ 98 $ 947 Various derivative financial instruments are offered to enable customers to meet their financing and investing...

  • Page 189
    ... in mortgage banking income in the Consolidated Statements of Income. 21. VIEs Consolidated VIEs Consolidated VIEs at December 31, 2012 consisted of automobile loan and lease securitization trusts formed in 2009 and 2006. Huntington has determined the trusts are VIEs. Huntington has concluded...

  • Page 190
    ... Balance Sheets at December 31, 2012 and 2011: 2009 Automobile Trust (dollar amounts in thousands) 2006 Other Automobile Consolidated Trust Trusts December 31, 2012 91,113 $ 356,162 (2,671) 353,491 1,353 445,957 $ 2,086 $ 1 2,087 288 288 $ --- $ 288 288 $ Total Assets: Cash Loans and leases...

  • Page 191
    ... Consolidated Balance Sheets. The maximum exposure to loss is equal to the carrying value of the servicing asset. TOWER HILL SECURITIES, INC. In 2010, we transferred approximately $92.1 million of municipal securities, $86.0 million in Huntington Preferred Capital, Inc. (Real Estate Investment Trust...

  • Page 192
    ..., and operation of multi family housing that is leased to qualifying residential tenants. Generally, these types of investments are funded through a combination of debt and equity. Huntington is a limited partner in each Low Income Housing Tax Credit Partnership. A separate unrelated third party is...

  • Page 193
    ... total are letters-of-credit issued by the Bank that support securities that were issued by customers and remarketed by The Huntington Investment Company, the Company's broker-dealer subsidiary. Huntington uses an internal loan grading system to assess an estimate of loss on its loan and lease...

  • Page 194
    ... of certain legal matters and events occurring through the date of this filing: The Bank is a defendant in three lawsuits, which collectively may be material, arising from its commercial lending, depository, and equipment leasing relationships with Cyberco Holdings, Inc. (Cyberco), based in Grand...

  • Page 195
    ... the checks and the deposits, totaling approximately $73.0 million. The Bankruptcy Court ruled the Bank may be entitled to a credit of approximately $4.0 million for the Cyberco trustee's recoveries in preference actions filed against third parties that received payments from Cyberco within 90 days...

  • Page 196
    ... the Bank's risk-based capital ratios at levels at which would be considered well-capitalized. The FRB requires bank holding companies with assets over $50.0 billion to submit capital plans annually. Per the FRB's rule, our submission included a comprehensive capital plan supported by an assessment...

  • Page 197
    ... and type of loans it may make to the parent company and nonbank subsidiaries. At December 31, 2012, the Bank could lend $609.4 million to a single affiliate, subject to the qualifying collateral requirements defined in the regulations. Dividends from the Bank are one of the major sources of funds...

  • Page 198
    ...,581 Assets Cash and cash equivalents (1) Due from The Huntington National Bank (2) Due from non-bank subsidiaries Investment in The Huntington National Bank Investment in non-bank subsidiaries Accrued interest receivable and other assets Total assets Liabilities and shareholders' equity Long-term...

  • Page 199
    ... provided by operating activities Investing activities Repayments from (advances to) subsidiaries Advances to subsidiaries Net cash (used for) provided by investing activities Financing activities Proceeds from issuance of long-term borrowings Payment of borrowings Dividends paid on stock Payment to...

  • Page 200
    ... to checking accounts, savings accounts, money market accounts, certificates of deposit, consumer loans, and small business loans and leases. Other financial services available to consumer and small business customers include investments, insurance services, interest rate risk protection products...

  • Page 201
    ... and other public sector entities in our primary banking markets. A locally based team of relationship managers works with clients to meet their trust, lending, and treasury management needs. Home Lending originates and services consumer loans and mortgages for customers who are generally located in...

  • Page 202
    ... rates currently being offered for loans with similar terms (Level 3). This value was reduced by an estimate of probable losses and the credit risk associated with the loans. The fair values of deposits were estimated by discounting cash flows using interest rates currently being offered on deposits...

  • Page 203
    ... (UNAUDITED) The following is a summary of the unaudited quarterly results of operations, for the years ended December 31, 2012 and 2011: 2012 (dollar amounts in thousands, except per share data) Fourth $ 478,995 $ 44,940 434,055 39,458 297,651 470,628 221,620 54,341 167,279 7,973 159,306 $ 0.19...

  • Page 204
    ...9B: Other Information Not applicable. PART III We refer in Part III of this report to relevant sections of our 2013 Proxy Statement for the 2013 annual meeting of shareholders, which will be filed with the SEC pursuant to Regulation 14A within 120 days of the close of our 2012 fiscal year. Portions...

  • Page 205
    ...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, 2012. Number of securities remaining available...

  • Page 206
    ... Chief Financial Officer (Principal Financial Officer) By: /s/ David S. Anderson David S. Anderson Executive Vice President, 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...

  • Page 207
    ...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 Registration Number...

  • Page 208
    ... 2007 Stock and LongTerm Incentive Plan * 2009 Stock Option Grant Notice to Stephen D. Steinour. * Form of Consolidated 2012 Stock Grant Agreement for Executive Officers Pursuant to Huntington's 2012 Long-Term Incentive Plan. Ratio of Earnings to Fixed Charges. Ratio of Earnings to Fixed Charges and...

  • Page 209
    ... Form 10-K Report for the year ended December 31, 2012, formatted in XBRL: (1) Consolidated Balance Sheets, (2) Consolidated Statements of Income, (3), Consolidated Statements of Comprehensive Income, (4) Consolidated Statements of Changes in Shareholders' Equity, (5) Consolidated Statements of Cash...

  • Page 210
    ..., and Chief Executive Officer, Lancaster Colony Corporation Joined Board: 1999 Peter J. Kight(3) Co-Chairman and Managing Partner, Comvest Advisors, LLC Joined Board: 2012 David P. Lauer(1) Certified Public Accountant Joined Board: 2003 COMMITTEES (1) Audit (2) Community Development (3) Compensation...

  • Page 211
    ... CUSTOMER CONTACTS Corporate Headquarters (614) 480-8300 Customer Service Center (800) 480-BANK (2265) Business Direct (800) 480-2001 Auto Loan & Lease (800) 445-8460 The Huntington Investment Company (800) 322-4600 Mortgage Direct (800) 562-6871 Huntington Wealth Advisors (800) 544-8347 Insurance...

  • Page 212
    ...Incorp Incorporated. ora ed. TM Huntingt ton n We Welcome. i W is a service s vice mark of Huntington H ntington B Ban Bancshares cshares ares Incorpor Incorpora Incor Incorporated at d. © 2013 20 3 H Huntingt Huntington gton on Bancshares Bancsha Ban ancshares ares s Inco Incorpo I Incorp porated...