Huntington National Bank 2007 Annual Report Download - page 112

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fiduciary duties in violation of the Employee Retirement Income Security Act (ERISA) relating to the Company’s stock being
offered as an investment alternative for participants in the Plan. The complaint seeks money damages and equitable relief. At this
early stage of this lawsuit, it is not possible for management to assess the probability of a material adverse outcome, or reasonably
estimate the amount of any potential loss.
It is possible that the ultimate resolution of these matters, if unfavorable, may be material to the results of operations for a
particular period. However, although no assurance can be given, based on information currently available, consultation with
counsel, and available insurance coverage, management believes that the eventual outcome of these claims against the Company
and its subsidiaries will not, individually or in the aggregate, have a material adverse effect on its consolidated financial position or
results of operations.
COMMITMENTS UNDER CAPITAL AND OPERATING LEASE OBLIGATIONS
At December 31, 2007, Huntington and its subsidiaries were obligated under noncancelable leases for land, buildings, and
equipment. Many of these leases contain renewal options and certain leases provide options to purchase the leased property during
or at the expiration of the lease period at specified prices. Some leases contain escalation clauses calling for rentals to be adjusted
for increased real estate taxes and other operating expenses or proportionately adjusted for increases in the consumer or other
price indices.
The future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in
excess of one year as of December 31, 2007, were $46.6 million in 2008, $43.6 million in 2009, $40.2 million in 2010, $37.7 million
in 2011, $34.6 million in 2012, and $160.2 million thereafter. At December 31, 2007, total minimum lease payments have not been
reduced by minimum sublease rentals of $52.8 million due in the future under noncancelable subleases. At December 31, 2007, the
future minimum sublease rental payments that Huntington expects to receive are $15.9 million in 2008; $14.1 million in 2009;
$11.6 million in 2010; $8.5 million in 2011; $1.0 million in 2012; and $1.7 million thereafter. The rental expense for all operating
leases was $51.3 million, $34.8 million, and $34.0 million for 2007, 2006, and 2005, respectively. Huntington had no material
obligations under capital leases.
22. OTHER REGULATORY MATTERS
Huntington and its bank subsidiary, The Huntington National Bank, are subject to various regulatory capital requirements
administered by federal and state banking agencies. These requirements involve qualitative judgments and quantitative measures of
assets, liabilities, capital amounts, and certain off-balance sheet items as calculated under regulatory accounting practices. Failure to
meet minimum capital requirements can initiate certain actions by regulators that, if undertaken, could have a material adverse
effect on Huntington’s and The Huntington National Bank’s financial statements. Applicable capital adequacy guidelines require
minimum ratios of 4.00% for Tier 1 Risk-based Capital, 8.00% for Total Risk-based Capital, and 4.00% for Tier 1 Leverage Capital.
To be considered “well-capitalized” under the regulatory framework for prompt corrective action, the ratios must be at least
6.00%, 10.00%, and 5.00%, respectively.
As of December 31, 2007, 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:
(in millions) 2007 2006 2007 2006 2007 2006
Tier 1 Total Capital Tier 1 Leverage
Huntington Bancshares Incorporated
Amount $3,460 $2,784 $4,995 $3,986 $3,460 $2,784
Ratio 7.51% 8.93% 10.85% 12.79% 6.77% 8.00%
The Huntington National Bank
Amount $3,037 $1,990 $4,650 $3,214 $3,037 $1,990
Ratio 6.64% 6.47% 10.17% 10.44% 5.99% 5.81%
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
110
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS HUNTINGTON BANCSHARES INCORPORATED