Huntington National Bank 2010 Annual Report Download - page 103
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Capital
(This section should be read in conjunction with Significant Items 1 and 5, and Notes 12 and 14 of the Notes
to the Consolidated Financial Statements.)
Capital is managed both at the Bank and on a consolidated basis. Capital levels are maintained based on
regulatory capital requirements and the economic capital required to support credit, market, liquidity, and
operational risks inherent in our business, and to provide the flexibility needed for future growth and new
business opportunities.
Shareholders’ equity totaled $5.0 billion at December 31, 2010. This represented a $0.4 billion decrease
compared with December 31, 2009, primarily reflecting the repurchase of all 1.4 million shares of TARP
Capital held by the Treasury as part of our participation in the TARP CPP,offset by the $920.0 million
common stock issuance and 2010 earnings.
We believe our current level of capital is adequate.
TARP Capital
During 2008, we received $1.4 billion of equity capital by issuing to the Treasury: (1) 1.4 million shares
of TARP Capital and, (2) a ten-year warrant to purchase up to 23.6 million shares of our common stock, par
value $0.01 per share, at an exercise price of $8.90 per share. Upon receipt of the TARP Capital in 2008, the
proceeds were allocated to the preferred stock and additional paid-in-capital. During the period of time that we
held the TARP Capital, the resulting discount was amortized which resulted in additional dilution to our
earnings per share. The TARP Capital was not a component of Tier 1 common equity.
In the 2010 fourth quarter, we issued $920.0 million of common stock and $300.0 million of 7.00% sub-
ordinated notes due in 2020. The net proceeds of these issuances, along with other funds, were used to
repurchase all $1.4 billion of the TARP Capital. The accretion of the remaining issuance discount on the
TARP Capital was accelerated, and a corresponding reduction to retained earnings of $56.3 million was
recorded. Subsequently, on January 19, 2011, we exited our TARP-related relationship by repurchasing the
ten-year warrant we had issued to the Treasury as part of the TARP CPP for $49.1 million.
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