Huntington National Bank 2003 Annual Report Download - page 139

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Tier 1 Risk-Based Capital consists of total equity plus qualifying capital securities and minority interest, less unrealized gains and losses
accumulated in other comprehensive income, and non-qualifying intangible and servicing assets. Total Risk-Based Capital is Tier 1
Risk-Based Capital plus qualifying subordinated notes and allowable allowance for loan and lease losses (limited to 1.25% of total risk-
weighted assets). Tier 1 Leverage Capital is equal to Tier 1 Capital. Both Tier 1 Capital and Total Capital ratios are derived by dividing
the respective capital amounts by net risk-weighted assets, which are calculated as prescribed by regulatory 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 2003 and 2002,
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 2003 and 2002, the average balance of these
deposits were $66.6 million and $70.0 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, 2003, the Bank could lend $298.3 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 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. The Bank could
declare, without regulatory approval, dividends in 2004 of approximately $332.7 million plus an additional amount equal to its net
income through the date of declaration in 2004.
HUNTINGTON BANCSHARES INCORPORATED 137