Huntington National Bank 2005 Annual Report Download - page 134

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NOTES TOCONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED
As of December 31, 2005, Huntington and The Huntington National Bank (the Bank) met all capital adequacy requirements and
had regulatory capital ratios in excess of the levels established for ‘‘well-capitalized’’ institutions. The period-end capital amounts
and capital ratios of Huntington and the Bank are as follows:
Tier 1 Total Capital Tier 1 Leverage
(in millions of dollars) 2005 2004 2005 2004 2005 2004
Huntington Bancshares Incorporated
Amount $ 2,701 $ 2,683 $ 3,678 $ 3,687 $ 2,701 $ 2,683
Ratio 9.13% 9.08% 12.42% 12.48% 8.34% 8.42%
The Huntington National Bank
Amount $ 1,902 $ 1,770 $ 3,087 $ 2,955 $ 1,902 $ 1,770
Ratio 6.82% 6.08% 10.55% 10.16% 6.21% 5.66%
Tier 1 Risk-based Capital consists of total equity plus qualifying capital securities and minority interest, excluding 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 allowances for credit 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 2005 and 2004, 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 2005 and 2004, the average
balance of these deposits were $57.6 million and $70.4 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, 2005, the Bank could lend $308.7 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 2006 of approximately
$197.0 million plus an additional amount equal to its net income through the date of declaration in 2006.
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