Huntington National Bank 2015 Annual Report Download - page 162

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12. SHAREHOLDERS’ EQUITY
Preferred Stock issued and outstanding
In 2008, Huntington issued 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. Each share of the Series A Preferred Stock is non-voting and may
be converted at any time, at the option of the holder, into 83.668 shares of common stock of Huntington, which represents an
approximate initial conversion price of $11.95 per share of common stock. Since April 15, 2013, at the option of Huntington, the
Series A Preferred Stock is 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 conversion price for 20 trading days during any 30 consecutive
trading-day period. At the option of the holder, one share was converted to common stock during the fourth quarter of 2015.
In 2011, Huntington issued $36 million par value Floating Rate Series B Non-Cumulative Perpetual Preferred Stock with a
liquidation preference of $1,000 per share (the Series B Preferred Stock) and, in certain cases, an additional amount of cash
consideration, in exchange for $36 million of (1) Huntington Capital I Floating Rate Capital Securities, (2) Huntington Capital II
Floating Rate Capital Securities, (3) Sky Financial Capital Trust III Floating Rate Capital Securities and (4) Sky Financial Capital
Trust IV Floating Rate Capital Securities.
As part of the exchange offer, Huntington issued depositary shares. Each depositary share represents a 1/40th ownership interest
in a share of the Series B Preferred Stock. Each holder of a depositary share will be entitled, in proportion to the applicable fraction of
a share of Series B Preferred Stock and all the related rights and preferences. Huntington will pay dividends on the Series B Preferred
Stock at a floating rate equal to three-month LIBOR plus a spread of 2.70%. The preferred stock was recorded at the par amount of
$36 million, with the difference between par amount of the shares and their fair value of $24 million recorded as a discount.
2015 Share Repurchase Program
On March 11, 2015, Huntington announced that the Federal Reserve did not object to the proposed capital actions included in
Huntington’s capital plan submitted to the Federal Reserve in January 2015. These actions included a potential repurchase of up to
$366 million of common stock from the second quarter of 2015 through the second quarter of 2016. Purchases of common stock may
include open market purchases, privately negotiated transactions, and accelerated repurchase programs. Huntington’s board of
directors authorized a share repurchase program consistent with Huntington’s capital plan. This program replaced the previously
authorized share repurchase program authorized by Huntington’s board of directors in 2014.
During 2015, Huntington repurchased a total of 23.0 million shares of common stock at a weighted average price of $10.93.
Huntington has the ability to repurchase up to $166 million of additional common stock through the second quarter of 2016.
On January 26, 2016, Huntington announced the signing of a definitive merger agreement under which Ohio-based FirstMerit
Corporation, the parent company of FirstMerit Bank, will merge into Huntington in a stock and cash transaction. The transaction is
expected to be completed in the 2016 third quarter, subject to the satisfaction of customary closing conditions, including regulatory
approvals and the approval of the shareholders of Huntington and FirstMerit Corporation. As a result, Huntington no longer has the
intent to repurchase shares under the current authorization.
2014 Share Repurchase Program
During 2014, Huntington repurchased a total of 35.7 million shares of common stock at a weighted average price of $9.37.
13. EARNINGS PER SHARE
Basic earnings per share is the amount of earnings (adjusted for dividends declared on preferred stock) available to each share of
common stock outstanding during the reporting period. Diluted earnings per share is the amount of earnings available to each share of
common stock outstanding during the reporting period adjusted to include the effect of potentially dilutive common shares. Potentially
dilutive common shares include incremental shares issued for stock options, restricted stock units and awards, distributions from
deferred compensation plans, and the conversion of the Company’s convertible preferred stock (See Note 12). Potentially dilutive
common shares are excluded from the computation of diluted earnings per share in periods in which the effect would be antidilutive.
For diluted earnings per share, net income available to common shares can be affected by the conversion of the Company’s convertible
preferred stock. Where the effect of this conversion would be dilutive, net income available to common shareholders is adjusted by the
associated preferred dividends and deemed dividend. The calculation of basic and diluted earnings per share for each of the three years
ended December 31 was as follows: