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SECURITIES AND EXCHANGE COMMISSION
Washington D.C., 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934 FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES AND EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-2525
A. Full Title of the Plan and the address of the Plan, if different from that
of the issuer named below:
Huntington Investment and Tax Savings Plan (formerly, Huntington
stock purchase and tax savings plan and trust)
B. Name of issuer of the securities held pursuant to the Plan and the address
of its principal executive office:
Huntington Bancshares Incorporated
41 South High Street
Columbus, Ohio 43287
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
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INDEX
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Page
Audited Financial Statements
Report of Independent Auditors 3
Statements of Net Assets Available for Benefits 4
December 31, 1997 and 1996
Statements of Changes in Net Assets Available for Benefits 5
For the Years Ended December 31, 1997, 1996 and 1995
Notes to Financial Statements 6
Schedules
Assets Held for Investment Purposes as of December 31, 1997 10
Schedule of Reportable Transactions 11
Signature 12
Exhibit
Consent of Independent Auditors 13
2
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Report of Independent Auditors
Huntington Investment and Tax Savings
Plan Committee
We have audited the accompanying statements of net assets available for benefits
of the Huntington Investment and Tax Savings Plan as of December 31, 1997 and
1996, and the related statements of changes in net assets available for benefits
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Huntington
Investment and Tax Savings Plan at December 31, 1997 and 1996 and the changes in
its net assets available for benefits for each of the three years in the period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1997, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974, and are
not a required part of the basic financial statements. The supplemental
schedules have been subjected to the auditing procedures applied in our audit
of the basic financial statements and, in our opinion, are fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ Ernst & Young LLP
Columbus, Ohio
June 29, 1998
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Investments, at market value:
Huntington Bancshares Incorporated
Common Stock: 10,545,569 shares in
1997 and 10,096,966 shares in 1996
Cost: $130,274,025 in 1997 and
$119,832,053 in 1996 (Note 4) $379,640,497 $266,307,490
The Huntington National Bank sponsored
Common Trust Fund (Note 4) 2,341,818 2,395,425
Accrued dividends, interest receivable
and other assets 2,120,482 2,044,705
Cash and cash equivalents (Note 2) 1,574,561 1,500,492
------------ ------------
TOTAL ASSETS 385,677,358 272,248,112
LIABILITIES
Stock purchase payable 1,658,801 202,990
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $384,018,557 $272,045,122
============ ============
</TABLE>
See notes to financial statements.
4
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Years Ended December 31,
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
ADDITIONS
- ---------
Investment income:
Cash dividends on
Huntington Bancshares
Incorporated Common Stock $ 8,283,293 $ 7,730,005 $ 7,279,105
Interest 27,074 25,939 31,912
------------ ------------ ------------
8,310,367 7,755,944 7,311,017
Contributions:
Employees 10,430,340 9,902,941 9,346,756
Employer 8,586,785 7,872,953 6,594,892
------------ ------------ ------------
19,017,125 17,775,894 15,941,648
Assets of merged plans -- -- 1,437,667
------------ ------------ ------------
Total Additions 27,327,492 25,531,838 24,690,332
DEDUCTIONS
- ----------
Distributions and Withdrawals 47,533,239 28,052,979 21,519,190
------------ ------------ ------------
Total Deductions 47,533,239 28,052,979 21,519,190
Net realized and unrealized
appreciation in market value
of investments (Note 4) 132,179,182 46,623,096 71,559,958
------------ ------------ ------------
Net increases 111,973,435 44,101,955 74,731,100
Net assets available for
benefits at beginning of year 272,045,122 227,943,167 153,212,067
------------ ------------ ------------
Net assets available for
benefits at end of year $384,018,557 $272,045,122 $227,943,167
============ ============ ============
</TABLE>
See notes to financial statements.
5
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
Note 1 - Plan Description and Accounting Policies
- -------------------------------------------------
Description of the Plan
- -----------------------
The Huntington Investment and Tax Savings Plan (the "Plan"), formerly the
Huntington Stock Purchase and Tax Savings Plan and Trust, was initially adopted
by the Board of Directors of Huntington Bancshares Incorporated ("Huntington")
on September 29, 1977, to be effective January 1, 1978. On August 19, 1992, the
Plan was amended and restated, effective January 1, 1987, to comply with the
Internal Revenue Code of 1986, as amended. The Plan was again restated October
13, 1994, with a general effective date of January 1, 1987, to incorporate
provisions concerning merged plans. The plan was again amended and restated
effective April 1, 1998 (see "Recent Amendments" below). The following summary
describes the provisions of the Plan in effect as of the Plan year ending
December 31, 1997.
Eligible employees may enroll on the first day of the month following six months
of employment and attainment of age 21. Eligible employees of Huntington and its
participating affiliates may choose between a pre-tax, after-tax, or a combined
pre-tax and after-tax employee contribution. Participants may elect to make
pre-tax matched contributions of up to 6% of their eligible compensation.
Participants may also elect to make after-tax matched contributions of up to 3%
of their eligible compensation, provided the sum of the participant's pre-tax
matched and after-tax non-matched contributions equals at least 3% of their
eligible compensation. A participant's combined pre-tax and after-tax matched
contributions may not exceed 6% of the participant's eligible compensation. A
participant who designates the maximum 6% matched contribution may make
voluntary "after-tax non-matched" contributions to the Plan up to an additional
10% of eligible compensation. A participant who designates less than a 6%
matched contribution may make after-tax non-matched contributions to the Plan
subject to the following rules. If the pre-tax matched contributions of a
participant are less than 3% of eligible compensation, after-tax contributions
will be treated first as after-tax non-matched contributions until the sum of
the pre-tax matched contributions and the after-tax non-matched contributions
equals 3% of eligible compensation. Thereafter, after-tax contributions shall be
treated as after-tax matched contributions, up to the limits described above,
and then as after-tax non-matched contributions. Huntington makes a matching
contribution equal to 75% of an employee's contribution up to 6% of eligible
compensation provided that no more than 3% of compensation is contributed on an
after-tax basis. In addition, Huntington may make additional matching
contributions, up to 25% of pre-tax and after-tax matched contributions, at the
discretion of the Board of Directors.
The trust division of The Huntington National Bank (the "Plan Trustee"), a
wholly-owned subsidiary of Huntington, purchases shares of Huntington common
stock for the Plan directly from Huntington or on the open market at market
prices. Each participant's account is credited with the amount of dividends
received attributable to the shares of common stock held in his or her account.
Cash dividends are reinvested in Huntington common stock through the Huntington
Dividend Reinvestment and Common Stock Purchase Plan (the "DRP").
6
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An active participant may suspend contributions to the Plan in a prescribed
manner. An active participant may withdraw a portion of his or her account
pursuant to the terms of the Plan. Employee and employer contributions are fully
vested at all times. Employer contributions may not be withdrawn from the Plan
by active participants during the 24 month period following their contribution
to the Plan. Upon distribution, participants who have invested in Huntington
common stock will be paid in Huntington common stock, with cash paid in lieu of
fractional shares based upon the prevailing market value of Huntington common
stock at the date of distribution, or if specified conditions are met,
participants may elect to receive the distribution of their account balance in
cash. For participants who have elected to invest in The Huntington National
Bank sponsored Common Trust Fund (the "Common Trust Fund"), distribution of the
portion of their account attributable to the Common Trust Fund is made in cash.
Contributions made on a pre-tax basis are subject to special withdrawal rules
prescribed by the Internal Revenue Code, and generally may not be distributed
from the Plan prior to a participant's death, disability, termination of
employment, or attainment of age 59 1/2. Certain distributions may be made,
however, in the event a participant requests a distribution due to financial
hardship, and the request is approved by the administrative committee of the
Plan. Participants should refer to the Summary Plan Description for a complete
summary of the Plan provisions.
Recent Amendments
- -----------------
On November 19, 1997, the Plan was restated and approved by the Huntington Board
of Directors. The restated Plan is effective as of April 1, 1998 and was renamed
the Huntington Investment and Tax Savings Plan. The employer matching
contribution has been changed such that the Huntington will make a matching
contribution equal to 100% on the first 3% of participant elective deferrals and
50% on the next 2% of participant elective deferrals. There is no longer a
provision for an additional matching at the discretion of the Huntington Board
of Directors. Participant after-tax contributions are eliminated and participant
pre-tax elective deferrals will now be permitted up to 15% of pay. Plan
participants will now be permitted to direct elective deferrals and employer
matching contributions made after April 1, 1998, to any combination of nine
mutual funds and Huntington Bancshares Incorporated common stock. Trustee and
most administrative fees will continue to be paid from the general assets of
Huntington. However, participants will be charged a nominal amount for
administration of the Plan.
Distributions and Withdrawals
- -----------------------------
Distributions and withdrawals in the form of Huntington Common Stock are
reported at market value.
Income and Expenses
- -------------------
Cash dividends are recognized as of the record date. All costs and expenses
incurred in administering the Plan, including brokerage commissions and fees in
connection with each purchase of securities, are paid by Huntington. Expenses
incurred in administering the Plan, which were entirely borne by Huntington,
totaled $735,545, $540,450, and $467,253 for 1997, 1996, and 1995, respectively.
7
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Investments
- -----------
The investment in Huntington common stock is carried at market value based upon
quoted prices as reported by the NASDAQ Stock Market. The Plan temporarily
invests in cash and cash equivalents in The Huntington National Bank sponsored
Monitor Money Market funds (the "Monitor Funds") to maximize the use of
available funds in the Plan. All proceeds from these temporary investments,
including interest received, are later invested in Huntington common stock on
behalf of the participants in accordance with the Plan's provisions. In
conjunction with prior plan mergers, affected employees were permitted to make a
one-time election to invest their pre-merger accounts in the Common Trust Fund.
Note 2 - Cash Equivalents
- -------------------------
Cash and cash equivalents primarily represent funds temporarily invested in the
Monitor Funds.
Note 3 - Federal Income Taxes
- -----------------------------
The Plan is in the form of a trust agreement between Huntington and the Trustee.
The trust is a qualified trust within the meaning of Section 401(a) and as such,
is exempt from taxation under Section 501(a) of the Internal Revenue Code of
1986. Huntington has received a favorable determination letter dated June 13,
1995, from the Internal Revenue Service concerning the tax status of the Plan.
Withdrawals or other distributions from the Plan to participants in excess of
their after-tax contributions may be considered taxable income to the
participants by the Internal Revenue Service. Pre-tax matched contributions and
related earnings thereon, generally are not includable in a participant's income
for federal tax purposes until distributed from the Plan. All taxes relating to
these transactions are the responsibility of the participants.
Note 4 - Net Realized and Unrealized Appreciation of Investments
- ----------------------------------------------------------------
During each of the three years in the period ended December 31, 1997, the Plan's
investments, including investments bought, sold, as well as held during the
year, appreciated in market value as follows:
<TABLE>
<CAPTION>
Net
Appreciation Market Value
in Market Value at End
During Year of Year
------------ ------------
<S> <C> <C>
Year ended December 31, 1997
- ----------------------------
Huntington Bancshares Incorporated
Common Stock $131,773,663 $379,640,497
The Huntington National Bank sponsored
Common Trust Fund 405,519 2,341,818
------------ ------------
$132,179,182 $381,982,315
============ ============
</TABLE>
8
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<TABLE>
<CAPTION>
Net
Appreciation Market Value
in Market Value at End
During Year of Year
----------- ------------
<S> <C> <C>
Year ended December 31, 1996
- ----------------------------
Huntington Bancshares Incorporated
Common Stock $46,345,414 $266,307,490
The Huntington National Bank sponsored
Common Trust Fund 277,682 2,395,425
----------- ------------
$46,623,096 $268,702,915
=========== ============
Year ended December 31, 1995
- ----------------------------
Huntington Bancshares Incorporated
Common Stock $71,163,813 $222,970,119
Huntington National Bank sponsored
Common Trust Fund 396,145 2,341,011
----------- ------------
$71,559,958 $225,311,130
=========== ============
</TABLE>
Note 5 - Year 2000 Issue (Unaudited)
- ------------------------------------
Huntington has developed a plan to modify its internal information technology to
be ready for the year 2000 and has begun converting critical data processing
systems. The project also includes determining whether third party service
providers have reasonable plans in place to become year 2000 compliant.
Huntington anticipates substantially all reprogramming will be completed by
December 31, 1998, allowing the opportunity in 1999 to fully test the systems
and make any further refinements that are needed. Huntington does not expect
this project to have a significant effect on Plan operations.
9
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
ASSETS HELD FOR INVESTMENT PURPOSES
December 31, 1997
<TABLE>
<CAPTION>
Current
Issuer Description of Investment Cost Value
- ---------------------- ------------------------- ---- -----
<S> <C> <C> <C>
Huntington Bancshares Incorporated* 10,545,569 shares of common stock $130,274,025 $379,640,497
Common Trust Fund* 103,677 units 1,514,862 2,341,818
Monitor Funds* 1,568,691 units 1,568,691 1,568,691
</TABLE>
* Indicates party-in-interest to the Plan.
10
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Identity Total
of Party Description Number of Purchase Selling
Involved of Asset Transactions Price Price
- -------- -------- ------------ ----- -----
Category (iii) - A series of securities transactions in excess of 5% of plan assets
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
** Huntington Bancshares Incorporated 56 $14,154,713 --
common stock, 479,869 shares
Monitor Funds 105 $14,169,121 --
Monitor Funds 93 -- $14,060,196
</TABLE>
The purchase price of securities acquired represented the fair value at the
dates of the above transactions.
** Purchased directly from Huntington Bancshares Incorporated or on the open
market at market prices.
There were no category (i), (ii) or (iv) reportable transactions during 1997.
11
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SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee of the Huntington Investment and Tax Savings Plan has duly caused this
annual report to be signed by the undersigned thereunto duly authorized.
HUNTINGTON INVESTMENT
AND TAX SAVINGS PLAN
Date: By: /s/ Brenda Warne
------------------------- ---------------------------------
Brenda Warne
Member of the Committee
12
<PAGE> 1
Exhibit to the Annual Report
(Form 10-K) of the
Huntington Investment
and Tax Savings Plan for the
fiscal year ended December 31, 1997.
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Post-effective Amendment No. 1
to the Registration Statement (Forms S-8 No. 33-46327) pertaining to the
Huntington Investment and Tax Savings Plan of Huntington Bancshares Incorporated
and in the related Prospectus of our report dated June 29, 1998 with respect to
the financial statements and schedules of the Huntington Investment and Tax
Savings Plan included in this Annual Report (Form 11-K) for the year ended
December 31, 1997.
/s/ Ernst & Young LLP
Columbus, Ohio
June 29, 1998
