Huntington National Bank 2012 Annual Report Download - page 73

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We can also obtain funding through other methods including: (1) purchasing federal funds, (2) selling securities under repurchase
agreements, (3) selling or maturity of investment securities, (4) selling or securitization of loans, (5) selling of national market
certificates of deposit, (6) the relatively shorter-term structure of our commercial loans (see table below) and automobile loans, and (7)
issuing of common and preferred stock.
At December 31, 2012, we believe the Bank had sufficient liquidity to meet its cash flow obligations for the foreseeable future.
Table 31 - Maturity Schedule of Commercial Loans
December 31, 2012
One Year One to After
Percent
of
(dollar amounts in millions) or Less Five Years Five Years Total total
Commercial and industrial $ 4,752 $ 9,486 $ 2,733 $ 16,971 76 %
Commercial real estate - construction 293 299 56 648 3
Commercial real estate - commercial 1,790 2,377 584 4,751 21
Total $ 6,835 $ 12,162 $ 3,373 $ 22,370 100 %
Variable-interest rates $ 6,192 $ 9,785 $ 2,261 $ 18,238 82 %
Fixed-interest rates 643 2,377 1,112 4,132 18
Total $ 6,835 $ 12,162 $ 3,373 $ 22,370 100 %
Percent of total 31 % 54 % 15 % 100 %
At December 31, 2012, AFS and held-to-maturity securities, with a fair value of $3.1 billion, were pledged to secure public and
trust deposits, interest rate swap agreements, U.S. Treasury demand notes, and securities sold under repurchase agreements.
Parent Company Liquidity
The parent company’s funding requirements consist primarily of dividends to shareholders, debt service, income taxes, operating
expenses, funding of nonbank subsidiaries, repurchases of our stock, and acquisitions. 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, 2012 and December 31, 2011, the parent company had $0.9 billion in cash and cash equivalents. Appropriate
limits and guidelines are in place to ensure the parent company has sufficient cash to meet operating expenses and other commitments
over the next 18 months without relying on subsidiaries or capital markets for funding.
During 2012, Huntington redeemed $230.3 million of trust preferred securities. $194.3 million of these redeemed trust preferred
securities were redeemed at the redemption price (as a percentage of the liquidation amount) plus accrued and unpaid distributions to
the redemption date, and $36.0 million were redeemed at par value. These redemptions were funded from our existing cash and
resulted in a net gain of $0.8 million.
On January 17, 2013, we announced that the board of directors had declared a quarterly common stock cash dividend of $0.04 per
common share. The dividend is payable on April 1, 2013, to shareholders of record on March 18, 2013. Based on the current
quarterly dividend of $0.04 per common share, cash demands required for common stock dividends are estimated to be approximately
$33.7 million per quarter. Based on the current dividend, cash demands required for Series A Preferred Stock and Series B Preferred
Stock are estimated to be approximately $7.7 million and $0.3 million, respectively, per quarter.
Based on a regulatory dividend limitation, the Bank could not have declared and paid a dividend to the parent company at
December 31, 2012, without regulatory approval due to the deficit position of its undivided profits. We do not anticipate that the
Bank will request regulatory approval to pay dividends in the near future as we continue to build Bank regulatory capital above its
already well-capitalized level. To help meet any additional liquidity needs, we have an open-ended, automatic shelf registration
statement filed and effective with the SEC, which permits us to issue an unspecified amount of debt or equity securities.
Other parent company obligations due in the next 12 months include a $50 million subordinated note due in April 2013.
With the exception of the items discussed above, the parent company does not have any significant cash demands. It is our policy
to keep operating cash on hand at the parent company to satisfy expected cash demands for the next 18 months.