Huntington National Bank 2008 Annual Report Download - page 64

Table 38 — Federal Funds Purchased and Repurchase Agreements
(in millions) 2008 2007 2006 2005 2004
At December 31,
Balance at year-end $1,389 $2,706 $1,632 $1,820 $1,124
Weighted average interest rate at year-end 0.44% 3.54% 4.25% 3.46% 1.31%
Maximum amount outstanding at month-end during the year $3,607 $2,961 $2,366 $1,820 $1,671
Average amount outstanding during the year 2,485 2,295 1,822 1,319 1,356
Weighted average interest rate during the year 1.75% 4.14% 4.02% 2.41% 0.88%
Other potential sources of liquidity include the sale or maturity of investment securities, the sale or securitization of loans, and the
issuance of common and preferred securities. During 2008, we reduced our dependency on overnight funding through: (a) an on-
balance sheet securitization transaction, which raised $887 million of longer-term funding, (b) the net proceeds of our perpetual
convertible preferred stock issuance, (c) the sale of $473 million of residential real estate loans, and (d) managing down of certain
nonrelationship collateralized public funds deposits and related collateral securities. These actions reduced the outstanding national
market maturities to $0.8 billion over the next 12 months. We anticipate that these maturities can be met through core deposit
growth, FHLB advances, and normal national market funding sources, including brokered deposits and additional securitizations.
The relatively short-term nature of our loans and leases also provides significant liquidity. As shown in the table below, of the
$23.6 billion total commercial loans at December 31, 2008, approximately 42% matures within one year.
Table 39 — Maturity Schedule of Commercial Loans
(in millions)
One Year
or Less
One to
Five Years
After
Five Years Total
Percent
of total
At December 31, 2008
Commercial and industrial $6,185 $5,245 $2,111 $13,541 57.3%
Commercial real estate - construction 1,007 979 94 2,080 8.8
Commercial real estate - commercial 2,646 3,547 1,825 8,018 33.9
Total $9,838 $9,771 $4,030 $23,639 100.0%
Variable interest rates $9,409 $7,617 $3,407 $20,433 86.4%
Fixed interest rates 429 2,154 623 3,206 13.6
Total $9,838 $9,771 $4,030 $23,639 100.0%
Percent of total 41.6% 41.3% 17.1% 100.0%
At December 31, 2008, the fair value of our portfolio of investment securities totaled $4.4 billion, of which $2.7 billion was pledged
to secure public and trust deposits, interest rate swap agreements, U.S. Treasury demand notes, and securities sold under
repurchase agreements. The composition and maturity of these securities were presented in Table 31. Another source of liquidity is
nonpledged securities, which decreased to $1.2 billion at December 31, 2008, from $1.7 billion at December 31, 2007.
In the 2008 fourth quarter, the FDIC introduced the TLGP. One component of this program guarantees certain newly issued senior
unsecured debt. In the 2009 first quarter, we issued $600 million of such debt, and anticipate using the resultant proceeds to satisfy
all of our maturing unsecured debt obligations in 2009.
PARENT COMPANY LIQUIDITY
The parent company’s funding requirements consist primarily of dividends to shareholders, income taxes, funding of non-bank
subsidiaries, repurchases of our stock, debt service, acquisitions, and operating expenses. The parent company obtains funding to
meet obligations from dividends received from direct subsidiaries, net taxes collected from subsidiaries included in the federal
consolidated tax return, fees for services provided to subsidiaries, and the issuance of debt securities.
At December 31, 2008, the parent company had $1.1 billion in cash or cash equivalents, compared with $0.2 billion at
December 31, 2007. The $0.9 billion change primarily reflected the receipt of the $1.4 billion proceeds resulting from our
participation in the TARP voluntary CPP, partially offset by a $0.5 billion subordinated note issued by the Bank to the parent
company. Quarterly cash dividends paid on our common stock totaled $291.1 million during 2008. Table 51 provides additional
detail regarding quarterly dividends declared per common share. Based on our most current quarterly common stock dividend
declared of $0.01 per common share, cash demands of $59.5 million will be required in 2009 to pay declared dividends.
During 2008, we issued an aggregate $569 million of Series A Preferred Stock. The Series A Preferred Stock will pay, as declared by
our board of directors, dividends in cash at a rate of 8.50% per annum, payable quarterly. (See Note 15 of the Notes to Consolidated
Financial Statements.) Cash dividends paid on the Series A Preferred Stock totaled $23.4 million during 2008. An additional cash
demand of $12.1 million is required in the 2009 first quarter, representing a quarterly cash dividend declared on our Series A
Preferred Stock that was not payable until after January 1, 2009.
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Management’s Discussion and Analysis Huntington Bancshares Incorporated