Huntington National Bank 2003 Annual Report Download - page 68

MANAGEMENT’S DISCUSSION AND ANALYSIS
Table 18—Maturity Schedule of Selected Loans and Leases
December 31, 2003
(in millions of dollars)
One Year
or Less
One to
Five Years
After
Five Years Total
C&I $2,563 $2,209 $542 $ 5,314
CRE—construction 460 781 57 1,298
Automobile loans 289 2,638 65 2,992
Automobile leases 278 1,471 153 1,902
Operating lease assets 335 338 — 673
Total $3,925 $7,437 $817 $12,179
Variable interest rates $2,914 $2,506 $493 $ 5,913
Fixed interest rates 1,011 4,931 324 6,266
Total $3,925 $7,437 $817 $12,179
P ARENT C OMPANY L IQUIDITY
The parent company’s funding requirements consist primarily of dividends to shareholders, income taxes, funding of non-bank
subsidiaries, repurchases of the company’s stock, debt service, and operating expenses. The parent company obtains funding to meet
its obligations from dividends received from its direct subsidiaries, net taxes collected from its subsidiaries included in the consolidated
tax return, and the issuance of debt securities.
Management intends to maintain the Bank’s risk-based capital ratios at levels at which the Bank would be considered to be “well
capitalized” by its regulators. As a result, the amount of dividends that can be paid to the parent company depends on the Bank’s capital
needs. At December 31, 2003, the bank was “well capitalized” according to guidelines established by the Bank’s primary regulator, the
Office of the Comptroller of the Currency. At December 31, 2003, the Bank could declare and pay dividends to the parent company of
$101.6 million and still be considered “well capitalized.” The Bank could declare an additional $231.1 million of dividends without
regulatory approval at December 31, 2003, although such dividends would take the Bank below “well capitalized” levels.
At December 31, 2003, the parent company had issued $200 million under its medium-term note program, with $195 million available
for future funding needs. As mentioned earlier, the parent company shares a $2.0 billion Euronote program with the Bank. Availability
of funding through these two programs amounted to $1.3 billion at December 31, 2003.
At December 31, 2003, the parent company had $433 million in cash or cash equivalents available. Management believes that the
parent company has sufficient liquidity to meet its cash flow obligations in 2004, including its anticipated annual dividend payments,
without relying upon the capital markets for financing.
Off-Balance Sheet Arrangements
In the normal course of business, the company enters into various off-balance sheet arrangements. These arrangements include
financial guarantees contained in standby letters of credit issued by the Bank and commitments by the Bank to sell mortgage loans.
Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. These
guarantees are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing,
and similar transactions. Most of these arrangements mature within two years. Approximately 53% of standby letters of credit are
collateralized and nearly 95% are expected to expire without being drawn upon. There were $983 million and $880 million of
outstanding standby letters of credit at December 31, 2003 and 2002, respectively. Non-interest income was recognized from the
issuance of these standby letters of credit of $7.7 million and $11.6 million in 2003 and 2002, respectively. The decrease in non-interest
income in 2003 from 2002 was attributable to the adoption of FIN 45 in 2003, which required that fees received from the issuance of
standby letters of credit be deferred and recognized over the term of the guarantee, rather than the previous practice of being
recognized when the letter of credit is initiated. The carrying amount of deferred revenue related to standby letters of credit at
December 31, 2003, was $3.9 million. Standby letters of credit are included in the determination of the amount of risk-based capital
that the company and the Bank are required to hold.
66 HUNTINGTON BANCSHARES INCORPORATED