Huntington National Bank 2008 Annual Report Download - page 125

LOW INCOME HOUSING TAX CREDIT PARTNERSHIPS
Huntington makes certain equity investments in various limited partnerships that sponsor affordable housing projects utilizing the
Low Income Housing Tax Credit (“LIHTC”) pursuant to Section 42 of the Internal Revenue Code. The purpose of these
investments is to achieve a satisfactory return on capital, to facilitate the sale of additional affordable housing product offerings
and to assist us in achieving goals associated with the Community Reinvestment Act. The primary activities of the limited
partnerships include the identification, development, and operation of multi-family housing that is leased to qualifying residential
tenants. Generally, these types of investments are funded through a combination of debt and equity.
Huntington does not own a majority of the limited partnership interests in these entities and is not the primary beneficiary.
Huntington uses the equity method to account for our investment in these entities. These investments are included in accrued
income and other assets. At December 31, 2008, we have commitments of $216 million of which $166 million are funded. The
unfunded portion is included in accrued expenses and other liabilities.
COMMITMENTS UNDER CAPITAL AND OPERATING LEASE OBLIGATIONS
At December 31, 2008, 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, 2008, were $47.3 million in 2009, $44.4 million in 2010, $42.0 million in 2011, $40.0 million
in 2012, $37.2 million in 2013, and $186.6 million thereafter. At December 31, 2008, total minimum lease payments have not been
reduced by minimum sublease rentals of $49.7 million due in the future under noncancelable subleases. At December 31, 2008, the
future minimum sublease rental payments that Huntington expects to receive are $17.5 million in 2009; $13.9 million in 2010;
$10.4 million in 2011; $2.7 million in 2012; $2.3 million in 2013; and $2.9 million thereafter. The rental expense for all operating
leases was $53.4 million, $51.3 million, and $34.8 million for 2008, 2007, and 2006, 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, 2008, 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) 2008 2007 2008 2007 2008 2007
Tier 1 Total Capital Tier 1 Leverage
Huntington Bancshares Incorporated
Amount $5,036 $3,460 $6,535 $4,995 $5,036 $3,460
Ratio 10.72% 7.51% 13.91% 10.85% 9.82% 6.77%
The Huntington National Bank
Amount $2,995 $3,037 $4,978 $4,650 $2,995 $3,037
Ratio 6.44% 6.64% 10.71% 10.17% 5.99% 5.99%
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 2008 and 2007, less non-qualifying intangibles and other adjustments.
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Notes to Consolidated Financial Statements Huntington Bancshares Incorporated