Huntington National Bank 2008 Annual Report Download - page 106

(4) Variable effective rate at December 31, 2008, based on three month LIBOR + 2.95.
(5) Variable effective rate at December 31, 2008, based on three month LIBOR + 1.40.
(6) The junior subordinated debentures due 2067 are subordinate to all other junior subordinated debentures.
Amounts above are reported net of unamortized discounts and adjustments related to hedging with derivative financial
instruments. The derivative instruments, principally interest rate swaps, are used to match the funding rates on certain assets 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.
In 2008 and 2007, $48.5 million and $31.4 million of the junior subordinated debentures due in 2027 and 2028 were repurchased
resulting in gains of $21.4 million and $2.9 million, respectively, recorded in other non-interest expense.
TRUST PREFERRED SECURITIES
Under FIN 46R, certain wholly-owned trusts are not consolidated. The trusts have been formed for the sole purpose of issuing
trust preferred securities, from which the proceeds are then invested in Huntington junior subordinated debentures, which are
reflected in Huntington’s consolidated balance sheet as subordinated notes included in the table on the previous page under Parent
Company. The trust securities are the obligations of the trusts and are not consolidated within Huntington’s balance sheet. A list of
trust preferred securities outstanding at December 31, 2008 follows:
(in thousands) issued to trust
(1)
subsidiary
Principal amount
of subordinated
note/debenture
Investment in
unconsolidated
Huntington Capital I $158,366 $ 6,186
Huntington Capital II 71,093 3,093
Huntington Capital III 249,408 10
BankFirst Ohio Trust Preferred 23,347 619
Sky Financial Capital Trust I 65,910 1,856
Sky Financial Capital Trust II 30,929 929
Sky Financial Capital Trust III 78,136 2,320
Sky Financial Capital Trust IV 78,137 2,320
Prospect Trust I 6,186 186
Total $761,512 $17,519
(1) Represents the principal amount of debentures issued to each trust, including unamortized original issue discount.
Huntington’s investment in the unconsolidated trust represents the only risk of loss.
Each issue of the junior subordinated debentures has an interest rate equal to the corresponding trust securities distribution rate.
Huntington has the right to defer payment of interest on the debentures at any time, or from time to time for a period not
exceeding five years, provided that no extension period may extend beyond the stated maturity of the related debentures. During
any such extension period, distributions to the trust securities will also be deferred and Huntington’s ability to pay dividends on its
common stock will be restricted. Periodic cash payments and payments upon liquidation or redemption with respect to trust
securities are guaranteed by Huntington to the extent of funds held by the trusts. The guarantee ranks subordinate and junior in
right of payment to all indebtedness of the company to the same extent as the junior subordinated debt. The guarantee does not
place a limitation of the amount of additional indebtedness that may be incurred by Huntington.
14. SHAREHOLDERS’ EQUITY
ISSUANCE OF CONVERTIBLE PREFERRED STOCK
In the second quarter of 2008, Huntington completed the public offering of 569,000 shares of 8.50% Series A Non-Cumulative
Perpetual Convertible Preferred Stock (Series A Preferred Stock) with a liquidation preference of $1,000 per share, resulting in an
aggregate liquidation preference of $569 million.
Each share of the Series A Preferred Stock is non-voting and may be convertible at any time, at the option of the holder, into
83.6680 shares of common stock of Huntington, which represents an approximate initial conversion price of $11.95 per share of
common stock (for a total of approximately 47.6 million shares at December 31, 2008). The conversion rate and conversion price
will be subject to adjustments in certain circumstances. On or after April 15, 2013, at the option of Huntington, the Series A
Preferred Stock will be subject to mandatory conversion into Huntington’s common stock at the prevailing conversion rate, if the
closing price of Huntington’s common stock exceeds 130% of the then applicable conversion price for 20 trading days during any
30 consecutive trading day period.
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Notes to Consolidated Financial Statements Huntington Bancshares Incorporated