<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
QUARTERLY PERIOD ENDED JUNE 30, 1998
Commission File Number 0-2525
HUNTINGTON BANCSHARES INCORPORATED
MARYLAND 31-0724920
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
41 SOUTH HIGH STREET, COLUMBUS, OHIO 43287
Registrant's telephone number (614) 480-8300
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
----- -----
There were 211,688,612 shares of Registrant's without par value common stock
outstanding on July 31, 1998.
1
<PAGE> 2
PART I. FINANCIAL INFORMATION
1. FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) JUNE 30, December 31, June 30,
1998 1997 1997
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks............................................. $ 1,151,784 $ 1,142,450 $ 1,105,343
Interest bearing deposits in banks.................................. 278,400 39,618 1,776
Trading account securities.......................................... 30,244 7,082 6,585
Federal funds sold and securities
purchased under resale agreements.............................. 707,377 509,119 20,547
Mortgages held for sale............................................. 305,741 192,948 149,568
Securities available for sale - at fair value....................... 4,467,986 5,709,814 5,152,257
Investment securities - fair value $29,898; $33,383;
and $55,535, respectively...................................... 29,637 33,010 54,972
Total loans (1)..................................................... 19,061,839 17,738,248 17,821,299
Less allowance for loan losses................................. 286,864 258,171 247,867
----------- ----------- -----------
Net loans........................................................... 18,774,975 17,480,077 17,573,432
----------- ----------- -----------
Premises and equipment.............................................. 496,840 389,481 391,502
Customers' acceptance liability..................................... 25,906 27,818 42,573
Accrued income and other assets..................................... 1,918,329 1,199,123 758,578
----------- ----------- -----------
TOTAL ASSETS........................................................ $28,187,219 $26,730,540 $25,257,133
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total deposits (1).................................................. $19,666,248 $17,983,718 $17,637,871
Short-term borrowings............................................... 1,655,244 3,141,671 2,503,275
Bank acceptances outstanding........................................ 25,906 27,818 42,573
Medium-term notes................................................... 3,147,150 2,332,150 1,884,400
Subordinated notes and other long-term debt......................... 749,692 498,889 599,398
Company obligated mandatorily redeemable preferred capital
securities of subsidiary trusts holding solely the junior
subordinated debentures of the parent company..................... 300,000 200,000 200,000
Accrued expenses and other liabilities.............................. 509,130 520,903 459,616
----------- ----------- -----------
Total Liabilities.............................................. 26,053,370 24,705,149 23,327,133
----------- ----------- -----------
Shareholders' equity
Preferred stock - authorized 6,617,808 shares;
none outstanding
Common stock - without par value; authorized 500,000,000 shares;
issued and outstanding 193,279,797; 193,279,797; and
184,008,147 shares, respectively.......................... 1,528,768 1,528,768 1,292,477
Less 853,882; 1,543,371; and 7,076,546
treasury shares, respectively ............................ (22,832) (36,791) (160,557)
Capital surplus................................................ 393,296 404,235 455,641
Accumulated other comprehensive income......................... 15,376 14,800 (25,080)
Retained earnings.............................................. 219,241 114,379 367,519
----------- ----------- -----------
Total Shareholders' Equity..................................... 2,133,849 2,025,391 1,930,000
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY.......................... $28,187,219 $26,730,540 $25,257,133
=========== =========== ===========
</TABLE>
(1) See page 10 for detail of total loans and total deposits.
See notes to unaudited consolidated financial statements.
2
<PAGE> 3
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------ ------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest and fee income
Loans................................................................. $399,134 $409,740 $799,941 $792,708
Securities............................................................ 84,369 90,385 181,540 180,875
Other................................................................. 7,765 2,893 12,267 5,309
-------- -------- -------- --------
TOTAL INTEREST INCOME....................................... 491,268 503,018 993,748 978,892
-------- -------- -------- --------
Interest expense
Deposits.............................................................. 162,153 162,498 324,405 310,871
Short-term borrowings................................................. 24,343 37,421 58,165 78,957
Medium-term notes..................................................... 46,236 27,703 87,676 55,584
Subordinated notes and other long-term debt........................... 11,107 12,438 21,225 22,971
-------- -------- -------- --------
TOTAL INTEREST EXPENSE...................................... 243,839 240,060 491,471 468,383
-------- -------- -------- --------
NET INTEREST INCOME......................................... 247,429 262,958 502,277 510,509
Provision for loan and lease losses........................................ 24,595 30,831 46,776 53,211
-------- -------- -------- --------
NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES........................ 222,834 232,127 455,501 457,298
-------- -------- -------- --------
Total non-interest income (1).............................................. 121,269 81,501 218,036 158,232
Total non-interest expense (1)............................................. 208,291 185,805 406,081 369,666
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 135,812 127,823 267,456 245,864
Provision for income taxes................................................. 43,503 44,220 85,661 85,082
-------- -------- -------- --------
NET INCOME.................................................. $ 92,309 $ 83,603 $181,795 $160,782
======== ======== ======== ========
PER COMMON SHARE (2)
Net income
Basic............................................................ $0.44 $0.40 $0.86 $0.77
Diluted.......................................................... $0.43 $0.39 $0.85 $0.76
Cash dividends declared............................................... $0.18 $0.16 $0.36 $0.32
AVERAGE COMMON SHARES (2)
Basic............................................................211,599,836 210,481,123 211,489,136 209,244,218
Diluted..........................................................214,663,829 212,798,232 214,237,089 211,578,857
</TABLE>
(1) See page 11 for detail of non-interest income and non-interest expense.
(2) Adjusted for the ten percent stock dividend distributed July 1998.
See notes to unaudited consolidated financial statements.
3
<PAGE> 4
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- ------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
ACCUMULATED
OTHER
COMMON COMMON TREASURY TREASURY CAPITAL COMPREHENSIVE RETAINED
SHARES STOCK SHARES STOCK SURPLUS INCOME EARNINGS TOTAL
- -------------------------------- ------ ------ ------- -------- ------- ------------ -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six Months Ended June 30, 1997:
Balance, beginning of period 182,265 $1,290,968 (9,285) ($204,634) $401,176 ($13,931) $312,079 $1,785,658
Comprehensive Income:
Net income 160,782 160,782
Unrealized net holding
losses on securities
available for sale
arising during the period (11,149) (11,149)
--------
Total comprehensive income 149,633
--------
Stock issued for acquisition 2,881 65,220 12,560 77,780
Cash dividends declared (67,614) (67,614)
Stock options exercised 105 1,797 (957) 840
Treasury shares purchased (1,430) (37,581) (37,581)
Treasury shares sold:
Shareholder dividend
reinvestment plan 534 11,968 2,345 14,313
Employee benefit plans 118 2,673 672 3,345
Pre-merger transactions
of pooled subsidiary 1,743 1,509 39,845 (37,728) 3,626
------- ----------- ------ --------- -------- -------- ------- ----------
Balance, end of period 184,008 $1,292,477 (7,077) ($160,557) $455,641 ($25,080) $367,519 $1,930,000
======= ========== ====== ========= ======== ======== ======== =========
SIX MONTHS ENDED JUNE 30, 1998:
BALANCE, BEGINNING OF PERIOD 193,279 $1,528,768 (1,543) ($36,791) $404,235 $14,800 $114,379 $2,025,391
COMPREHENSIVE INCOME:
NET INCOME 181,795 181,795
UNREALIZED NET HOLDING
GAINS ON SECURITIES
AVAILABLE FOR SALE ARISING
DURING THE PERIOD 576 576
----------
TOTAL COMPREHENSIVE INCOME 182,371
----------
STOCK ISSUED FOR ACQUISITION 160 3,883 (3,815) 68
CASH DIVIDENDS DECLARED (76,933) (76,933)
STOCK OPTIONS EXERCISED 510 9,597 (7,328) 2,269
TREASURY SHARES SOLD TO
EMPLOYEE BENEFIT PLANS 19 479 204 683
------ ---------- ---- --------- -------- -------- -------- ----------
BALANCE, END OF PERIOD 193,279 $1,528,768 (854) ($22,832) $393,296 $15,376 $219,241 $2,133,849
======= ========== ==== ========= ======== ======== ======== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-----------------------------------------
(in thousands of dollars) 1998 1997
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income............................................................... $ 181,795 $ 160,782
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for loan losses............................................ 46,776 53,211
Provision for depreciation and amortization.......................... 34,922 30,663
Deferred income tax expense.......................................... 12,265 17,090
Increase in trading account securities............................... (23,162) (4,712)
Increase in mortgages held for sale.................................. (112,793) (28,146)
Net gains on sales of securities..................................... (17,405) (5,702)
Net gains on sales of loans.......................................... (9,857) (1,116)
Decrease in accrued income receivable................................ 16,575 5,685
Net increase in other assets......................................... (68,842) (64,195)
(Decrease) increase in accrued expenses.............................. (5,954) 3,386
Net (decrease) increase in other liabilities......................... (37,129) 25,672
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES........................ 17,191 192,618
----------- -----------
INVESTING ACTIVITIES
(Increase) decrease in interest bearing deposits in banks................ (238,782) 1,642
Proceeds from:
Maturities and calls of investment securities.......................... 3,319 67,831
Maturities and calls of securities available for sale.................. 387,959 419,317
Sales of securities ................................................... 2,606,218 1,203,312
Purchases of:
Investment securities.................................................. --- (2,962)
Securities available for sale.......................................... (1,611,060) (1,153,899)
Proceeds from sales of loans............................................. 132,712 25,667
Net loan originations, excluding sales................................... (53,807) (824,684)
Proceeds from disposal of premises and equipment......................... 776 6,152
Purchases of premises and equipment...................................... (66,492) (27,433)
Proceeds from sales of other real estate................................. 7,058 10,990
Purchase of Bank Owned Life Insurance.................................... (200,000) ---
Net cash received (paid) in purchase acquisitions........................ 344,046 (6,665)
----------- -----------
NET CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES............. 1,311,947 (280,732)
----------- -----------
FINANCING ACTIVITIES
(Decrease) increase in total deposits.................................... (728,747) 721,222
Decrease in short-term borrowings........................................ (1,486,427) (858,425)
Proceeds from issuance of long-term debt................................. 300,000 91,049
Payment of long-term debt................................................ (47,538) (42,298)
Proceeds from issuance of medium-term notes.............................. 1,020,000 602,500
Payment of medium-term notes............................................. (205,000) (510,000)
Proceeds from issuance of preferred capital securities................... 100,000 200,000
Dividends paid on common stock, including pre-merger dividends
of pooled subsidiary................................................... (76,786) (67,053)
Repurchase of common stock............................................... --- (37,581)
Proceeds from issuance of common stock................................... 2,952 22,163
----------- -----------
NET CASH (USED FOR) PROVIDED BY FINANCING ACTIVITIES............. (1,121,546) 121,577
----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS.............................. 207,592 33,463
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD................. 1,651,569 1,092,427
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD....................... $ 1,859,161 $ 1,125,890
=========== ===========
</TABLE>
See notes to unaudited consolidated financial statements.
5
<PAGE> 6
- --------------------------------------------------------------------------------
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
A. Basis of Presentation
The accompanying unaudited consolidated financial statements reflect
all adjustments (consisting of normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the consolidated
financial position, the results of operations and cash flows for the interim
periods presented. These unaudited consolidated financial statements have been
prepared according to the rules and regulations of the Securities and Exchange
Commission and, therefore, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted. The Notes to the Consolidated Financial
Statements appearing in Huntington's 1997 Annual Report to Shareholders on Form
10-K should be read in conjunction with these interim financial statements.
B. Reclassifications
Certain amounts in the prior year's financial statements have been
reclassified to conform with the 1998 presentation. These reclassifications had
no effect on net income.
C. Recent Accounting Pronouncements
Pursuant to the Financial Accounting Standards Board (FASB) Statement
No. 130, "Reporting Comprehensive Income", the Consolidated Statements of
Changes in Shareholders' Equity include a new measure called "Comprehensive
Income". Comprehensive Income includes net income as well as certain items that
are reported directly within a separate component of stockholders' equity that
bypass net income. Currently, Huntington's only component of Other Comprehensive
Income is the unrealized gains (losses) on securities available for sale.
The related before and after tax amounts are as follows ($ in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- -------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Unrealized holding losses arising during the period:
Gross $ 22,000 $ 63,515 $ 18,296 $(11,413)
Related tax expense/(benefit) 7,729 (25,328) 6,407 (3,971)
-------- -------- -------- --------
Net 14,271 38,187 11,889 (7,442)
-------- -------- -------- --------
Reclassification adjustment
for net gains realized
during the period:
Gross (14,316) (3,604) (17,405) (5,702)
Related tax expense 5,011 1,261 6,092 1,995
-------- -------- -------- --------
Net (9,305) (2,343) (11,313) (3,707)
-------- -------- -------- --------
Total Other Comprehensive
Income (Loss) $ 4,966 $ 35,844 $ 576 $(11,149)
======== ======== ======== ========
</TABLE>
6
<PAGE> 7
In June 1997, the FASB issued Statement No. 131, "Disclosure about
Segments of an Enterprise and Related Information". The provisions of this
Statement require disclosure of financial and descriptive information about an
enterprise's operating segments. The Statement defines an operating segment as a
component of an enterprise that engages in business activities that generate
revenue and incur expense. A segment is further defined as a component whose
operating results are reviewed by the chief operating decision maker in the
determination of resource allocation and performance, and for which discrete
financial information is available. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
This Statement is effective for fiscal years beginning after December 15, 1997;
however, it is not required to be applied for interim reporting in the initial
year of application. Accordingly, no segment information is included in the
notes to these unaudited consolidated financial statements.
In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities". This Statement establishes
accounting and reporting standards requiring that every derivative instrument
(including certain derivative instruments embedded in other contracts) be
recorded in the balance sheet as either an asset or liability measured at its
fair value. The Statement requires that changes in the derivative's fair value
be recognized currently in earnings unless specific hedge accounting criteria
are met. Special accounting for qualifying hedges allows gains and losses from
derivatives to offset related results on the hedged item in the income
statement, and requires that a company must formally document, designate, and
assess the effectiveness of transactions for which hedge accounting is applied.
Statement No. 133 is effective for fiscal years beginning after June
15, 1999. It may be implemented earlier provided adoption occurs as of the
beginning of any fiscal quarter after issuance (that is, fiscal quarters
beginning June 16, 1998 and thereafter). Statement 133 cannot be applied
retroactively. This Statement must be applied to (a) all free-standing
derivative instruments and (b) certain derivative instruments embedded in hybrid
contracts that were issued, acquired, or substantively modified after December
31, 1997.
Huntington has not yet quantified the impact of adopting Statement No.
133. Based on information available at this time, Huntington does not expect it
to be material to the consolidated financial statements.
D. Acquisitions
On June 26, 1998, Huntington completed the acquisition of sixty former
Barnett Banks banking offices in Florida from NationsBank Corporation. The
acquisition was accounted for as a purchase, and accordingly, the assets
acquired and liabilities assumed were recorded at estimated fair value. The
acquisition added approximately $1.3 billion in loans and $2.3 billion in
deposits. Intangible assets arising from the acquisition totaled approximately
$451.1 million. The acquired branches' results of operations have been included
in Huntington's consolidated totals from the date of the acquisition only.
On September 30, 1997, Huntington completed the acquisition of First
Michigan Bank Corporation (First Michigan), a $3.7 billion bank holding company
headquartered in Holland, Michigan. Huntington issued approximately 32.2 million
shares of its common stock in exchange for all of the outstanding common stock
of First Michigan. First Michigan had total loans and deposits of $2.7 billion
and $3.1 billion, respectively, and total equity of $286 million at the date of
acquisition. The transaction was accounted for as a pooling of interests;
accordingly, all financial information appearing in this report, except
dividends per share, has been restated to include the results of First Michigan.
7
<PAGE> 8
The separate results of operations for Huntington and First Michigan,
adjusted for the ten percent stock dividend distributed July 31, 1998, were as
follows ($ in millions, except per share):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1997 JUNE 30, 1997
------------------ ----------------
<S> <C> <C>
Net Interest Income:
Huntington $225.2 $436.7
First Michigan 37.8 73.8
------ ------
Combined $263.0 $510.5
====== ======
Net Income:
Huntington $ 72.5 $139.0
First Michigan 11.1 21.8
------ ------
Combined $ 83.6 $160.8
====== ======
Basic earnings per common share outstanding:
Huntington $ .41 $ .80
First Michigan .36 .71
------ ------
Combined $ .40 $ .77
====== ======
Diluted earnings per common share outstanding:
Huntington $ .41 $ .79
First Michigan .36 .70
------ ------
Combined $ .39 $ .76
====== ======
</TABLE>
E. Trust Preferred Securities
In January 1997, Huntington Capital I ("the Trust"), a Delaware
statutory business trust owned by Huntington, issued $200 million of company
obligated mandatorily redeemable capital securities. The proceeds from the
issuance of the capital securities ($200 million) and common securities ($6.2
million) were used by the Trust to purchase from Huntington $206.2 million of
Floating Rate Junior Subordinated Debentures.
In June 1998, an additional $100 million of company obligated
mandatorily redeemable capital securities were issued by Huntington Capital II
("the Series B Trust"), a statutory business trust also owned by Huntington. The
proceeds were used by the Series B Trust to purchase from Huntington $103.1
million of Series B Floating Rate Junior Subordinated Debentures.
The subordinated debentures are the sole assets of each trust and
Huntington owns all of the common securities of the trusts. Interest payments
made on the capital securities are reported as a component of interest expense
on long-term debt. The subordinated debentures bear interest and mature as
follows:
Variable Interest
Rate Maturity Date
----------------- -------------
Huntington Capital I LIBOR + .70% February 1, 2027
Huntington Capital II LIBOR + .625% June 15, 2028
8
<PAGE> 9
The net proceeds received by Huntington from the sale of the
subordinated debentures were used for general corporate purposes.
F. Earnings per Share
Basic earnings per share is the amount of earnings for the period
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 for the potential
issuance of common shares for stock options and the conversion impact of
convertible equity instruments.
The calculation of basic and diluted earnings per share for each of the
periods ended June 30, is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
(In thousands, except JUNE 30, JUNE 30,
per share amounts) ------------------------- -----------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $ 92,309 $ 83,603 $181,795 $160,782
======== ======== ======== ========
Average common shares outstanding 211,600 210,481 211,489 209,244
Dilutive effect of stock options 3,064 2,317 2,748 2,335
------- ------- ------- -------
Diluted common shares outstanding 214,664 212,798 214,237 211,579
======= ======= ======= =======
Earnings per share
Basic $ .44 $ .40 $ .86 $ .77
Diluted $ .43 $ .39 $ .85 $ .76
</TABLE>
Average common shares outstanding and the dilutive effect of stock options have
been adjusted for subsequent stock dividends and stock splits, as applicable.
9
<PAGE> 10
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
- --------------------------------------------------------------------------------
LOAN PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
JUNE 30, December 31, June 30,
1998 1997 1997
------------ ------------- -------------
<S> <C> <C> <C>
Commercial................................................. $ 5,843,190 $ 5,270,660 $ 5,400,980
Real Estate
Construction.......................................... 820,015 863,635 833,251
Commercial............................................ 2,281,330 2,370,652 2,249,034
Residential........................................... 1,536,510 1,228,446 1,605,945
Consumer
Loans.................................................. 6,885,693 6,462,716 6,305,315
Leases................................................. 1,695,101 1,542,139 1,426,774
----------- ----------- -----------
Total Loans........................................... $19,061,839 $17,738,248 $17,821,299
=========== =========== ===========
</TABLE>
- --------------------------------------------------------------------------------
DEPOSIT COMPOSITION
- --------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
JUNE 30, December 31, June 30,
1998 1997 1997
------------ ----------- -----------
<S> <C> <C> <C>
Demand deposits
Non-interest bearing.................................. $ 2,847,307 $ 2,549,518 $ 2,750,391
Interest bearing...................................... 4,618,674 3,762,862 3,342,631
Savings deposits........................................... 3,456,810 3,133,014 3,214,809
Other domestic time deposits............................... 6,694,770 6,115,534 5,927,501
----------- ----------- -----------
TOTAL CORE DEPOSITS................................... 17,617,561 15,560,928 15,235,332
----------- ----------- -----------
Certificates of deposit of $100,000 or more................ 2,008,887 1,903,657 2,011,539
Foreign time deposits...................................... 39,800 519,133 391,000
----------- ----------- -----------
Total Deposits........................................ $19,666,248 $17,983,718 $17,637,871
=========== =========== ===========
</TABLE>
10
<PAGE> 11
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
- --------------------------------------------------------------------------------
ANALYSIS OF NON-INTEREST INCOME
- --------------------------------------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------- PERCENT ------------------------ PERCENT
1998 1997 CHANGE 1998 1997 CHANGE
---------- -------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts ............... $ 32,042 $ 28,841 11.1% $ 62,879 $ 56,435 11.4%
Mortgage banking .................................. 15,191 10,157 49.6 29,348 19,154 53.2
Trust services .................................... 12,745 11,814 7.9 25,328 23,959 5.7
Brokerage and insurance income..................... 8,520 6,254 36.2 16,805 13,338 26.0
Electronic banking fees............................ 7,520 6,192 21.4 13,251 10,556 25.5
Credit card fees................................... 5,414 4,523 19.7 10,273 8,718 17.8
Other.............................................. 25,521 10,116 152.3 42,747 20,370 109.9
-------- -------- --------- --------
TOTAL NON-INTEREST INCOME BEFORE SECURITIES GAINS.. 106,953 77,897 37.3 200,631 152,530 31.5
-------- -------- --------- --------
Securities gains................................... 14,316 3,604 N.M. 17,405 5,702 N.M.
-------- -------- --------- --------
TOTAL NON-INTEREST INCOME ......................... $121,269 $ 81,501 48.8% $218,036 $158,232 37.8%
======== ======== ========= ========
</TABLE>
- ---------------------------------------------------
ANALYSIS OF NON-INTEREST EXPENSE
- ---------------------------------------------------
(in thousands of dollars)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
---------------------- PERCENT ------------------------ PERCENT
1998 1997 CHANGE 1998 1997 CHANGE
--------- -------- ----- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Personnel and related costs........................ $108,483 $ 97,000 11.8% $ 213,195 $194,241 9.8%
Outside data processing and other services......... 14,441 14,351 0.6 31,027 26,918 15.3
Equipment ......................................... 15,688 14,173 10.7 30,837 27,360 12.7
Net occupancy ..................................... 14,063 11,650 20.7 27,502 24,982 10.1
Marketing.......................................... 8,315 7,785 6.8 15,247 16,750 (9.0)
Telecommunications................................. 7,450 5,283 41.0 13,473 10,250 31.4
Legal and other professional services.............. 6,234 5,089 22.5 12,022 10,518 14.3
Printing and supplies.............................. 5,611 5,035 11.4 11,372 9,961 14.2
Franchise and other taxes.......................... 5,526 5,335 3.6 11,026 10,575 4.3
Amortization of intangible assets.................. 3,393 3,406 (0.4) 6,786 6,352 6.8
Other.............................................. 19,087 16,698 14.3 33,594 31,759 5.8
-------- ------- -------- -------
TOTAL NON-INTEREST EXPENSE ........................ $208,291 $185,805 12.1% $406,081 $369,666 9.9%
======== ======== ======== ========
</TABLE>
N.M. - Not meaningful.
11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
INTRODUCTION
FORWARD-LOOKING STATEMENTS
Congress passed the Private Securities Litigation Report Act of 1995 to
encourage corporations to provide investors with information about the company's
anticipated future financial performance, goals, and strategies. The act
provides a safe harbor for such disclosure, or in other words, protection from
unwarranted litigation if actual results are not the same as management's
expectations.
Huntington Bancshares Incorporated (Huntington) desires to provide its
shareholders with sound information about past performance and future trends.
Consequently, this Quarterly Report, including Management's Discussion and
Analysis of Financial Condition and Results of Operations, contains
forward-looking statements that are subject to numerous assumptions, risks, and
uncertainties. Actual results could differ materially from those contained in or
implied by Huntington's statements due to a variety of factors including:
changes in economic conditions; movements in interest rates; competitive
pressures on product pricing and services; success and timing of business
strategies; the successful integration of acquired businesses; the nature and
extent of governmental actions and reforms; and extended disruption of vital
infrastructure. The management of Huntington encourages readers of this report
to understand forward-looking statements to be strategic objectives rather than
absolute targets of future performance.
COMPLETION OF FLORIDA BRANCH PURCHASE
On June 26, 1998, Huntington completed the acquisition of sixty former
Barnett Banks banking offices in Florida from NationsBank Corporation. The
acquisition was accounted for as a purchase; accordingly, the assets acquired
and liabilities assumed were recorded at estimated fair value. The acquisition
added approximately $1.3 billion in loans and $2.3 billion in deposits.
Intangible assets arising from the acquisition totaled approximately $451.1
million. The acquired branches' results of operations have been included in
Huntington's consolidated totals from the date of the acquisition only.
OVERVIEW
Huntington reported net income of $92.3 million for the second quarter
and $181.8 million for the first six months of 1998, up 10.4% and 13.1%,
respectively, from the same periods in 1997. Diluted earnings per share for the
second quarter of 1998 was $.47, versus $.43 for the same period in 1997, an
increase of 9.3%. For the recent six months, diluted earnings per share was
$.93, up 10.7% from the first half of last year. After adjusting for the ten
percent stock dividend distributed July 31, 1998, diluted earnings per share for
the recent three and six months ended June 30, 1998, was $.43 and $.85,
respectively, compared with $.39 and $.76 for the same periods in 1997. On a
post-stock dividend basis, diluted earnings per share, exclusive of amortization
expense related to goodwill and other intangible assets (referred to as "cash
basis" or "tangible" results), was $.45 in the recent quarter, and $.41 for the
same period one year ago.
12
<PAGE> 13
For the first six months of 1998 and 1997, the cash basis per share amounts were
$.88 and $.79, respectively.
The following table presents Huntington's return on average equity
(ROE) and return on average assets (ROA) on a reported basis as well as a cash
basis.
<TABLE>
<CAPTION>
ROE ROA
-------------------------------------- ------------------------------------
2nd Qtr. YTD 2nd Qtr. YTD
---------------- --------------- ---------------- ---------------
1998 1997 1998 1997 1998 1997 1998 1997
------ ------- ------- ------- ----- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
REPORTED 17.70% 18.07% 17.72% 17.75% 1.42% 1.33% 1.40% 1.30%
CASH BASIS* 21.17% 21.90% 21.13% 21.24% 1.49% 1.40% 1.47% 1.37%
</TABLE>
* Unamortized goodwill and other intangible asset amounts excluded from average
total assets and shareholders' equity.
Total assets were $28.2 billion at June 30, 1998, up 5.4% from year end
and 11.6% from second quarter 1997. During the recent quarter, Huntington began
to strategically reposition its balance sheet by decreasing its investment
securities by $2.0 billion and exiting its out-of-market credit card operations
through the sale of approximately $100 million of outstanding receivables. These
initiatives, combined with the issuance of $300 million in subordinated debt and
$100 million in trust preferred securities, eliminated the need for the proposed
common stock offering. Accordingly, Huntington has withdrawn its registration
statement previously filed with the Securities and Exchange Commission in
connection with the offering.
Average total loans outstanding were up 3.9% in the recent quarter and
5.2% in the first six months of the year versus the same periods one year ago,
after adjusting for the impact of single-family residential real estate loans
sold in the past several months. Loan volumes improved somewhat in the second
quarter but growth remains slower than expected due to competitive pressures and
large commercial loan prepayments. An industry-wide increase in residential real
estate refinancing negatively impacted loan growth in the consumer portfolio as
well, particularly in Huntington's home equity lending products. Huntington
believes it is crucial to maintain its pricing discipline in the lending
process. Accordingly, should current trends in the marketplace continue, future
loan growth may also be suppressed. Average core deposits increased 3.4% and
5.3% in the respective periods, fueled by 7.2% growth in transaction accounts.
LINES OF BUSINESS
Huntington segments its operations into five distinct lines of
business: Retail Banking, Corporate Banking, Dealer Sales, Private Financial
Group, and Treasury/Other. Line of business results are determined based upon
Huntington's business profitability reporting system, which assigns balance
sheet and income statement items to each of the business segments. The process
13
<PAGE> 14
is designed around Huntington's organizational and management structure, and
accordingly, the results are not necessarily comparable with similar information
published by other financial institutions. Results are revised, as applicable,
to reflect enhancements to Huntington's profitability reporting system and
changes in organizational structure. For a detailed description of the lines of
business, please refer to Huntington's Annual Report on Form 10-K for the year
ended December 31, 1997.
The following summary contains selected financial information by
business segment for the three and six months ended June 30, 1998 (in thousands
of dollars):
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, 1998
--------------------------------------------------------------
Average Average
Revenues Net Income Total Assets Total Deposits
-------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Retail Banking $200,584 $38,550 $ 7,666,550 $15,216,322
Corporate Banking 78,526 24,532 6,048,646 973,444
Dealer Sales 40,278 10,152 5,131,435 65,855
Private Financial Group 19,914 5,849 588,465 508,807
Treasury / Other 29,396 13,226 6,636,672 689,122
-------- ------- ----------- -------------
Total $368,698 $92,309 $26,071,768 $17,453,550
======== ======= =========== =============
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1998
---------------------------------------------------------------
Average Average
Revenues Net Income Total Assets Total Deposits
-------- ---------- ------------ --------------
<S> <C> <C> <C> <C>
Retail Banking $397,635 $ 78,628 $ 8,112,062 $15,184,857
Corporate Banking 144,510 44,318 5,536,848 946,721
Dealer Sales 83,663 21,991 5,075,524 61,353
Private Financial Group 39,793 11,915 589,280 506,073
Treasury / Other 54,712 24,943 6,886,606 768,798
-------- ------- ----------- -----------
Total $720,313 $181,795 $26,200,320 $17,467,802
======== ======== =========== ===========
</TABLE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income for the three and six months ended June 30, 1998,
was $247.4 million and $502.3 million, respectively, a decrease of 5.9% and 1.6%
when compared with the same periods last year. The decrease was primarily
attributable to a decline in earning asset yields, as the highly competitive
marketplace continues to erode loan margins across much of the banking industry.
The net interest margin, on a fully tax equivalent basis, was 4.23% during the
three months just ended compared with 4.54% in the second quarter of 1997. On a
year-to-date
14
<PAGE> 15
basis, the net interest margin dropped from 4.47% a year ago to 4.27% for 1998.
Management expects margin compression to be a continuing challenge in the
ensuing quarters which may continue to depress growth in net interest income.
PROVISION FOR LOAN LOSSES
The provision for loan losses was $24.6 million in the second quarter
of 1998, down from $30.8 million in the same period of 1997. The provision for
the first half of the year was $46.8 million, compared with $53.2 million for
the first six months of 1997. Annualized net charge-offs as a percentage of
average total loans were .41% for the recent three months, compared with .56% in
the same period last year and .50% for full year 1997.
NON-INTEREST INCOME
Excluding securities gains, noninterest income was $107.0 million and
$200.6 million, respectively, in the recent three and six month periods.
Noninterest income continues to be a growing source of revenue for Huntington,
as it represented 28.3% of total (core basis) revenues in the recent three
months, versus 22.8% in the comparable period one year ago. When compared with
the respective 1997 periods, improvements occurred in all categories, led by
mortgage banking, brokerage, and electronic banking income. Mortgage loan
originations continued to be strong with volume up 85% from the same quarter a
year ago. Year-to-date loan production of $1.2 billion nearly equals the total
of all mortgage loans closed in 1997. Income from Bank Owned Life Insurance was
$7.2 million and $12.5 million, respectively, in the recent three months and
first half of the year. Huntington owned no such policies in the comparable
periods of 1997. Also included in the recent quarter's results is a gain of $9.5
million from the aforementioned sale of Huntington's out-of-market credit card
portfolio.
NON-INTEREST EXPENSE
Noninterest expense totaled $208.3 million in the second quarter and
$406.1 million for the first six months of 1998, increases of 12.1% and 9.9%
respectively, over the same periods in 1997. Much of the increase is
attributable to volume-driven expenses such as higher sales commissions related
to the growth in fee income and increased telecommunications costs resulting
from expansion of Huntington's ATM network.
The increase was also due, in part, to "Year 2000" expenses related to
professional fees for outside services (primarily programming) as well as
internal staff costs that have been incurred to alter programs that have
time-sensitive software which may recognize a "00" date as the year 1900 versus
2000. These costs are expensed as they are incurred. 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. The failure of certain third parties to adequately
address Year 2000 could also adversely impact Huntington. Consequently,
Huntington is communicating with customers, suppliers, and others to identify
any potential problems.
15
<PAGE> 16
Huntington's management estimates an additional $8.0 million of Year
2000 costs will be incurred in the future to get Huntington's systems fully
compliant. These costs, however, are not expected to materially impact
Huntington's results of operations in any one period.
INTEREST RATE RISK MANAGEMENT
Huntington seeks to achieve consistent growth in net interest income
and net income while managing volatility arising from shifts in interest rates.
The Asset and Liability Management Committee (ALCO) oversees financial risk
management, establishing broad policies and specific operating limits that
govern a variety of financial risks inherent in Huntington's operations,
including interest rate, liquidity, counterparty settlement, and market risks.
On and off-balance sheet strategies and tactics are reviewed and monitored
regularly by ALCO to ensure consistency with approved risk tolerances.
Interest rate risk management is a dynamic process, encompassing the
business flows onto the balance sheet, wholesale investment and funding, and the
changing market and business environment. Effective management of interest rate
risk begins with appropriately diversified investments and funding sources. To
accomplish its overall balance sheet objectives, Huntington regularly accesses a
variety of global markets--money, bond, and futures and options--as well as
numerous trading exchanges. In addition, dealers in over-the-counter financial
instruments provide availability of interest rate swaps as needed.
Measurement and monitoring of interest rate risk is an ongoing process.
A key element in this process is Huntington's estimation of the amount that net
interest income will change over a twelve to twenty-four month period given a
directional shift in interest rates. The income simulation model used by
Huntington captures all assets, liabilities, and off-balance sheet financial
instruments, accounting for significant variables that are believed to be
affected by interest rates. These include prepayment speeds on mortgages and
consumer installment loans, cash flows of loans and deposits, principal
amortization on revolving credit instruments, and balance sheet growth
assumptions. The model also captures embedded options, for example, interest
rate caps, floors, or call options, and accounts for changes in rate
relationships, as various rate indices lead or lag changes in market rates.
Management believes the model provides a reasonably accurate estimate of
Huntington's interest rate risk exposure at any point in time, even though these
assumptions are inherently uncertain. This information is regularly shared with
the Board of Directors.
At June 30, 1998, the results of Huntington's interest sensitivity
analysis indicated that net interest income would be relatively unchanged by a
100 basis point increase or a 100-200 basis point decrease in the federal funds
rate (assuming the change occurs evenly over the next year and that
corresponding changes in other market rates occur as forecasted). If interest
rates rose 200 basis points, net interest income would be expected to decrease
by 1.8%.
Active interest rate risk management necessitates the use of various
types of off-balance sheet financial instruments, primarily interest rate swaps.
Risk created by different indices on products, by unequal terms to maturity of
assets and liabilities, and by products that are appealing to customers but
incompatible with current risk limits can be eliminated or decreased in a cost
efficient manner by utilizing interest rate swaps. Often, the swap strategy has
enabled Huntington to lower the overall cost of raising wholesale funds.
Similarly, financial futures,
16
<PAGE> 17
interest rate caps and floors, options, and forward rate agreements are used to
control financial risk effectively. Off-balance sheet instruments perform
identically to similar cash instruments but are often preferable because they
require less capital while preserving access to the marketplace.
The following table illustrates the approximate market values,
estimated maturities, and weighted average rates of the interest rate swaps used
by Huntington in its interest rate risk management program at June 30, 1998.
<TABLE>
<CAPTION>
Average Average Rate
Notional Maturity Market ------------------
(Dollars in millions) Value (years) Value Receive Pay
------- -------- ------ ------- ---
<S> <C> <C> <C> <C> <C>
ASSET CONVERSION SWAPS
Received fixed $ 625 1.41 $ 1.3 6.19% 5.69%
======= =====
LIABILITY CONVERSION SWAPS
Receive fixed $2,580 2.81 $29.1 6.25% 5.72%
Receive fixed-amortizing 175 1.34 (0.2) 5.63% 5.66%
Pay fixed 400 0.40 0.5 5.75% 5.50%
------ -----
TOTAL LIABILITY CONVERSION
SWAPS $3,155 2.42 $29.4 6.16% 5.69%
====== ======
BASIS PROTECTION SWAPS $ 785 0.79 $(0.3) 5.74% 5.79%
======= ======
</TABLE>
As is the case with cash securities, the market value of interest rate
swaps is largely a function of the financial market's expectations regarding the
future direction of interest rates. Accordingly, current market values are not
necessarily indicative of the future impact of the swaps on net interest income.
This will depend, in large part, on the shape of the yield curve as well as
interest rate levels. Management made no assumptions regarding future changes in
interest rates with respect to the variable rate information and the indexed
amortizing swap maturities presented in the table above.
The pay rates on Huntington's receive-fixed swaps vary based on
movements in the applicable London interbank offered rate (LIBOR). Asset
conversion swaps and liability conversion swaps with notional values of $350
million and $450 million, respectively, have embedded written LIBOR-based call
options. The portfolio of amortizing swaps consists primarily of contracts that
are indexed to the prepayment experience of a specified pool of mortgage loans.
As market interest rates change, the amortization of the notional value of the
swap will also change, generally slowing as rates increase and accelerating when
rates fall. Basis swaps are contracts that provide for both parties to receive
interest payments according to different rate indices and are used to protect
against changes in spreads between market rates. The receive and pay amounts
applicable to Huntington's basis swaps are based predominantly on LIBOR.
The contractual interest payments are based on the notional values of
the swap portfolio. These notional values do not represent direct credit
exposures. At June 30, 1998, Huntington's credit risk from interest rate swaps
used for asset/liability management purposes was $98.7
17
<PAGE> 18
million, which represents the sum of the aggregate fair value of positions that
have become favorable to Huntington, including any accrued interest receivable
due from counterparties. In order to minimize the risk that a swap counterparty
will not satisfy its interest payment obligation under the terms of the
contract, Huntington performs credit reviews on all counterparties, restricts
the number of counterparties used to a select group of high quality
institutions, obtains collateral, and enters into formal netting arrangements.
Huntington has never experienced any past due amounts from a swap counterparty.
The total notional amount of off-balance sheet instruments used by
Huntington on behalf of customers (for which the related interest rate risk is
offset by third party contracts) was $325 million at June 30, 1998. Total credit
exposure from such contracts is not material. These separate activities, which
are accounted for at fair value, are not a significant part of Huntington's
operations. Accordingly, they have been excluded from the above discussion of
off-balance sheet financial instruments and the related table.
CREDIT RISK
Huntington's exposure to credit risk is managed through the use of
consistent underwriting standards that emphasize "in-market" lending to
established borrowers. Highly leveraged transactions as well as excessive
industry and other concentrations are avoided. The credit administration
function also employs extensive monitoring procedures to ensure problem loans
are promptly identified and that loans adhere to corporate policy. These
procedures provide executive management with the information necessary to
implement appropriate change and take corrective action as needed.
Huntington continues to compare favorably with its peers in terms of
asset quality. Non-performing assets, consisting of loans that are no longer
accruing interest, loans that have been renegotiated based upon financial
difficulties of the borrower, and real estate acquired through foreclosure,
totaled $101.7 million at June 30, 1998. Non-performing loans represented .42%
of total loans, and non-performing assets as a percentage of total loans and
other real estate were only .53%, as of this same date. Loans past due ninety
days or more but continuing to accrue interest, including consumer and
residential real estate credits were $50.6 million at June 30, 1998.
The allowance for loan losses (ALL) is maintained at a level considered
appropriate by management, based on its estimate of losses inherent in the loan
portfolio. The procedures employed by Huntington to evaluate the adequacy of the
ALL include an analysis of specific credits that are generally selected for
review on the basis of size and relative risk, portfolio trends, current and
historic loss experience, prevailing economic conditions, and other relevant
factors. The reserve ratio increased to 1.50% at the recent quarter end versus
1.46% at December 1997 and 1.39% one year ago. At June 30, 1998, the ALL covered
non-performing loans 3.6 times. When the ALL is combined with the allowance for
other real estate owned, the reserves were 281% of total non-performing assets.
18
<PAGE> 19
CAPITAL
Huntington recognizes the importance of managing capital and
continually strives to maintain an appropriate balance between capital adequacy
and returns to shareholders. Huntington places significant emphasis on the
maintenance of strong capital, which promotes investor confidence, provides
access to the national markets under favorable terms, and enhances business
growth and acquisition opportunities. Capital is managed at each subsidiary
based upon the respective risks and growth opportunities, as well as regulatory
requirements.
Huntington's ratio of average equity to average assets was 8.02% in the
recent quarter compared with 7.35% in the same three months one year ago. For
the six month period, the ratio was 7.90%, up from 7.33% in the first half of
1997. At June 30, 1998, Huntington's Tier 1 risk-based capital ratio was 7.22%,
its total risk-based capital ratio was 11.05%, and its Tier 1 leverage ratio was
6.76%. Huntington's two bank subsidiaries also had regulatory capital ratios in
excess of the levels established for "well-capitalized" institutions.
The Board of Directors authorized Huntington, on February 21, 1996, to
repurchase up to 13.3 million additional shares of its common stock (as adjusted
for subsequent stock dividends) through open market purchases and privately
negotiated transactions. The authorization represents a continuation of the
common stock repurchase program begun in August 1987 and provides that the
shares will be reserved for reissue in connection with Huntington's benefit
plans as well as for other corporate purposes. The repurchase program is
currently suspended but Huntington has approximately 2.9 million shares
remaining under the authorization.
19
<PAGE> 20
- --------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
- ------------------------------------------------------------- -------------- -------------- -------------
THREE MONTHS ENDED JUNE 30, 1998 1997 % Change
- ------------------------------------------------------------- -------------- -------------- -------------
<S> <C> <C> <C>
NET INCOME........................................................ $ 92,309 $ 83,603 10.4%
PER COMMON SHARE AMOUNTS (1)
Net income
Basic................................................... $ 0.44 $ 0.40 10.0
Diluted................................................. $ 0.43 $ 0.39 10.3
Cash dividends declared...................................... $ 0.18 $ 0.16 12.5
AVERAGE COMMON SHARES OUTSTANDING (1)............................. 211,600 210,481 0.5
KEY RATIOS
Return on:
Average total assets......................................... 1.42% 1.33% 6.8
Average shareholders' equity................................. 17.70% 18.07% (2.0)
Efficiency ratio.................................................. 58.97% 54.09% 9.0
Average equity/average assets..................................... 8.02% 7.35% 9.1
Net interest margin............................................... 4.23% 4.54% (6.8)
TANGIBLE OR "CASH BASIS" RATIOS (2)
Per Common Share Amounts (1)
Net income
Basic................................................... $ 0.45 $ 0.41 9.8
Diluted................................................. $ 0.45 $ 0.41 9.8
Return on:
Average total assets......................................... 1.49% 1.40% 6.4
Average shareholders' equity................................. 21.17% 21.90% (3.3)
- ------------------------------------------------------------- -------------- -------------- -------------
SIX MONTHS ENDED JUNE 30, 1998 1997 % Change
- ------------------------------------------------------------- -------------- -------------- -------------
NET INCOME........................................................ $181,795 $160,782 13.1%
PER COMMON SHARE AMOUNTS (1)
Net income
Basic................................................... $ 0.86 $ 0.77 11.7
Diluted................................................. $ 0.85 $ 0.76 11.8
Cash dividends declared...................................... $ 0.36 $ 0.32 12.5
AVERAGE COMMON SHARES OUTSTANDING (1)............................. 211,489 209,244 1.1
KEY RATIOS
Return on:
Average total assets......................................... 1.40% 1.30% 7.7
Average shareholders' equity................................. 17.72% 17.75% (0.2)
Efficiency ratio.................................................. 57.16% 55.33% 3.3
Average equity/average assets..................................... 7.90% 7.33% 7.7
Net interest margin............................................... 4.27% 4.47% (4.5)
TANGIBLE OR "CASH BASIS" RATIOS (2)
Per Common Share Amounts (1)
Net income
Basic................................................... $ 0.89 $ 0.80 11.2
Diluted................................................. $ 0.88 $ 0.79 11.4
Return on:
Average total assets......................................... 1.47% 1.37% 7.3
Average shareholders' equity................................. 21.13% 21.24% (0.5)
Period-End Shares Outstanding (1)................................. 211,669 210,554 0.5
Shareholders' Equity Per Common Share (1)......................... $ 10.08 $ 9.17 9.9
</TABLE>
(1) Adjusted for the ten percent stock dividend distributed July 1998.
(2) Tangible or "Cash Basis" net income excludes amortization of goodwill and
other intangibles. Related asset amounts excluded from total assets and
shareholders' equity.
20
<PAGE> 21
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
- --------------------------------------------------------------------------------
INVESTMENT SECURITIES - AMORTIZED COST & FAIR VALUES BY MATURITY AT JUNE 30,
1998 AND DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(in thousands of dollars) JUNE 30, 1998 December 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
AMORTIZED COST FAIR VALUE Amortized Cost Fair Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury and Federal Agencies
1-5 years................................. $ 656 $ 656 $ 656 $ 656
------- ------- ------- -------
Total.................................. 656 656 656 656
------- ------- ------- -------
States and political subdivisions
Under 1 year.............................. 6,266 6,232 6,311 6,310
1-5 years................................. 12,232 12,330 13,592 13,719
6-10 years................................ 8,222 8,380 9,605 9,788
Over 10 years............................. 2,261 2,300 2,846 2,910
------- ------- ------- -------
Total.................................. 28,981 29,242 32,354 32,727
------- ------- ------- -------
Total Investment Securities.................... $29,637 $29,898 $33,010 $33,383
======= ======= ======= =======
</TABLE>
21
<PAGE> 22
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
- --------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE - AMORTIZED COST & FAIR VALUES BY MATURITY AT
JUNE 30, 1998 AND DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(in thousands of dollars) JUNE 30, 1998 December 31, 1997
- -----------------------------------------------------------------------------------------------------------------------------------
AMORTIZED COST FAIR VALUE Amortized Cost Fair Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
Under 1 year......................... $ 2,199 $ 2,221 $ 1,001 $ 1,012
1-5 years............................ 7,917 8,064 409,364 407,936
6-10 years........................... 451,750 450,868 320,497 320,726
---------- ---------- ---------- ----------
Total............................. 461,866 461,153 730,862 729,674
---------- ---------- ---------- ----------
Federal agencies
Mortgage-backed securities
Under 1 year......................... 3 3 2,223 2,216
1-5 years............................ 223,520 222,401 169,877 170,177
6-10 years........................... 22,086 22,443 497,496 494,016
Over 10 years........................ 860,067 868,963 698,906 705,031
---------- ---------- ---------- ----------
Total............................. 1,105,676 1,113,810 1,368,502 1,371,440
---------- ---------- ---------- ----------
Other agencies
Under 1 year......................... 998 996 984 992
1-5 years............................ 1,057,368 1,061,400 1,590,592 1,594,409
6-10 years........................... 551,022 552,064 787,682 792,359
Over 10 years........................ 549,453 551,016 509,713 512,160
---------- ---------- ---------- ----------
Total............................. 2,158,841 2,165,476 2,888,971 2,899,920
---------- ---------- ---------- ----------
Other
Under 1 year......................... 8,408 8,370 13,940 13,925
1-5 years............................ 215,949 219,427 211,943 214,772
6-10 years........................... 219,042 223,763 199,849 205,771
Over 10 years........................ 266,059 268,420 210,688 213,183
Marketable equity securities......... 8,359 7,567 62,164 61,129
---------- ---------- ---------- ----------
Total............................. 717,817 727,547 698,584 708,780
---------- ---------- ---------- ----------
Total Securities Available for Sale....... $4,444,200 $4,467,986 $5,686,919 $5,709,814
========== ========== ========== ==========
</TABLE>
22
<PAGE> 23
- --------------------------------------------------------------------------------
FINANCIAL REVIEW
- --------------------------------------------------------------------------------
LOAN LOSS EXPERIENCE
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
(in thousands of dollars)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------- -------------------------
1998 1997 1998 1997
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES, BEGINNING OF PERIOD.............. $258,262 $241,647 $258,171 $230,778
Allowance of assets acquired/other.......................... 22,042 149 22,042 6,177
Loan losses................................................. (28,855) (30,281) (56,421) (53,005)
Recoveries of loans previously charged off.................. 10,820 5,521 16,296 10,706
Provision for loan losses................................... 24,595 30,831 46,776 53,211
-------- -------- -------- --------
ALLOWANCE FOR LOAN LOSSES END OF PERIOD..................... $286,864 $247,867 $286,864 $247,867
======== ======== ======== ========
AS A % OF AVERAGE TOTAL LOANS
Net loan losses--annualized............................... 0.41% 0.56% 0.46% 0.49%
Provision for loan losses--annualized..................... 0.55% 0.70% 0.53% 0.62%
Allowance for loan losses as a % of total loans............. 1.50% 1.39% 1.50% 1.39%
Net loan loss coverage (1).................................. 8.89x 6.41x 7.83x 7.07x
</TABLE>
(1) Income before taxes and the provision for loan losses to net loan losses.
- --------------------------------------------------------------------------------
NON-PERFORMING ASSETS AND PAST DUE LOANS
- --------------------------------------------------------------------------------
(Quarter-End)
(in thousands of dollars)
<TABLE>
<CAPTION>
1998 1997
------------------------- ----------------------------------------
IIQ IQ IVQ IIIQ IIQ
--------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Non-accrual loans............................. $ 75,367 $79,888 $65,981 $72,385 $61,105
Renegotiated loans............................ 4,770 3,173 5,822 6,069 4,449
-------- ------- ------- ------- -------
TOTAL NON-PERFORMING LOANS.................... 80,137 83,061 71,803 78,454 65,554
Other real estate, net........................ 21,516 12,005 15,343 13,762 14,434
-------- ------- ------- ------- -------
TOTAL NON-PERFORMING ASSETS................... $101,653 $95,066 $87,146 $92,216 $79,988
======== ======= ======= ======= =======
NON-PERFORMING LOANS AS A
% OF TOTAL LOANS............................ 0.42% 0.47% 0.40% 0.44% 0.37%
NON-PERFORMING ASSETS AS A
% OF TOTAL LOANS AND OTHER REAL ESTATE...... 0.53% 0.54% 0.49% 0.52% 0.45%
ALLOWANCE FOR LOAN LOSES AS A % OF
NON-PERFORMING LOANS........................ 357.97% 310.93% 345.20% 365.65% 378.11%
ALLOWANCE FOR LOAN LOSSES AND OTHER REAL
ESTATE AS A % OF NON-PERFORMING ASSETS...... 280.64% 270.07% 282.61% 308.33% 306.51%
ACCRUING LOANS PAST DUE 90 DAYS OR MORE....... $ 50,614 $64,959 $49,608 $43,120 $40,967
======== ======= ======= ======= =======
</TABLE>
23
<PAGE> 24
- --------------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES (QUARTERLY DATA)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fully Tax Equivalent Basis (1) 2ND QUARTER 1998 1ST QUARTER 1998
----------------------- -----------------------
(in millions of dollars) AVERAGE YIELD/ AVERAGE YIELD/
BALANCE RATE BALANCE RATE
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS
Interest bearing deposits in banks..................................... $ 8 5.26% $ 9 5.35%
Trading account securities............................................. 12 5.81 8 5.48
Federal funds sold and securities purchased under resale agreements.... 168 5.63 21 6.57
Mortgages held for sale................................................ 282 7.08 219 7.24
Securities:
Taxable.......................................................... 5,107 6.34 5,906 6.35
Tax exempt....................................................... 225 9.27 237 9.23
------- -------
Total Securities............................................ 5,332 6.47 6,143 6.46
------- -------
Loans:
Commercial........................................................ 5,482 8.46 5,306 8.58
Real Estate
Construction................................................. 816 8.73 823 8.85
Mortgage..................................................... 3,444 8.62 3,520 8.65
Consumer
Loans........................................................ 6,474 8.82 6,428 8.96
Leases....................................................... 1,627 7.15 1,564 7.13
------- -------
Total Consumer loans......................................... 8,101 8.48 7,992 8.61
------- -------
Total Loans............................................................ 17,843 8.51 17,641 8.78
------- -------
Allowance for loan losses/loan fees.................................... 266 265
------- -------
Net loans.............................................................. 17,577 8.99 17,376 9.20
------- -------
Total earning assets................................................... 23,645 8.37% 24,041 8.48%
------- -------
Cash and due from banks................................................ 907 917
All other assets....................................................... 1,786 1,637
------- -------
TOTAL ASSETS........................................................... $26,072 $26,330
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Core deposits
Non-interest bearing deposits..................................... $ 3,113 $ 2,979
Interest bearing demand deposits.................................. 3,216 2.72% 3,250 2.68%
Savings deposits.................................................. 3,099 3.51 3,028 3.44
Other domestic time deposits...................................... 5,985 5.62 6,093 5.64
------- -------
Total core deposits.......................................... 15,413 4.33 15,350 4.32
------- -------
Certificates of deposit of $100,000 or more............................ 1,909 5.74 1,935 5.78
Foreign time deposits.................................................. 132 5.80 198 5.85
------- -------
Total deposits.................................................... 17,454 4.53 17,483 4.54
------- -------
Short-term borrowings.................................................. 2,177 4.97 2,656 5.16
Medium-term notes...................................................... 3,222 5.71 2,914 5.77
Subordinated notes and other long-term debt,
including preferred capital securities.............................. 624 6.13 691 5.85
------- -------
Interest bearing liabilities...................................... 20,364 4.80% 20,765 4.83%
------- -------
All other liabilities.................................................. 503 539
Shareholders' equity................................................... 2,092 2,047
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............................. $26,072 $26,330
======= =======
Net interest rate spread............................................... 3.57% 3.65%
Impact of non-interest bearing funds on margin......................... 0.66% 0.65%
NET INTEREST MARGIN.................................................... 4.23% 4.30%
</TABLE>
(1) Fully tax equivalent yields are calculated assuming a 35% tax rate.
24
<PAGE> 25
---------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES (QUARTERLY DATA)
---------------------------------------------------------------------------
<TABLE>
<CAPTION>
4th Quarter 1997 3rd Quarter 1997 2nd Quarter 1997
-------------------- ---------------------- ----------------------
Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate
------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C>
$ 5 5.37% $ 17 5.51% $ 2 5.68%
12 5.89 8 5.90 11 5.67
20 5.48 75 5.50 39 5.71
177 8.27 146 7.30 115 7.63
5,308 6.37 5,241 6.36 5,422 6.36
246 9.39 255 9.10 275 9.05
------- ------- -------
5,554 6.51 5,496 6.49 5,697 6.50
------- ------- -------
5,312 8.55 5,264 8.65 5,405 8.65
875 8.93 862 9.10 788 9.17
3,639 8.65 3,865 8.72 3,845 8.74
6,441 9.22 6,366 9.15 6,242 9.24
1,521 7.43 1,465 7.53 1,382 7.63
------- ------- -------
7,962 8.88 7,831 8.85 7,624 8.95
------- ------- -------
17,788 8.74 17,822 8.77 17,662 8.82
------- ------- -------
268 254 250
------- ------- -------
17,520 9.14 17,568 9.18 17,412 9.32
------- ------- -------
23,556 8.51% 23,564 8.52% 23,526 8.62%
------- ------- -------
951 905 920
1,190 1,132 1,042
------- ------- -------
$25,429 $25,347 $25,238
======= ======= =======
$ 2,954 $ 2,775 $ 2,739
3,257 2.61% 3,193 2.78% 3,239 2.55%
3,017 3.40 3,048 3.19 3,121 3.34
6,089 5.66 5,995 5.65 5,809 5.61
------- ------- -------
15,317 4.31 15,011 4.29 14,908 4.21
------- ------- -------
2,004 5.79 2,085 5.76 1,940 5.68
248 5.91 379 5.83 501 5.79
------- ------- -------
17,569 4.54 17,475 4.54 17,349 4.46
------- ------- -------
2,424 5.22 2,692 5.42 2,897 5.24
2,189 5.96 1,915 6.03 1,878 5.98
704 6.23 793 6.23 777 6.42
------- ------- -------
19,932 4.81% 20,100 4.83% 20,162 4.77%
------- ------- -------
570 528 481
1,973 1,944 1,856
------- ------- -------
$25,429 $25,347 $25,238
======= ======= =======
3.70% 3.69% 3.85%
0.74% 0.72% 0.69%
4.44% 4.41% 4.54%
</TABLE>
25
<PAGE> 26
- --------------------------------------------------------------------------------
SELECTED QUARTERLY INCOME STATEMENT DATA
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
-------------------------- -------------------------------------------
(in thousands of dollars, except per share amounts) IIQ IQ IVQ IIIQ IIQ
- ---------------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
TOTAL INTEREST INCOME.............................. $491,268 $502,480 $499,760 $502,821 $503,018
TOTAL INTEREST EXPENSE............................. 243,839 247,632 240,197 245,663 240,060
-------- -------- -------- -------- --------
NET INTEREST INCOME................................ 247,429 254,848 259,563 257,158 262,958
Provision for loan losses.......................... 24,595 22,181 26,235 28,351 30,831
-------- -------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES........................ 222,834 232,667 233,328 228,807 232,127
-------- -------- -------- -------- --------
Service charges on deposit accounts ............... 32,042 30,837 31,035 30,382 28,841
Mortgage banking .................................. 15,191 14,157 15,889 20,672 10,157
Trust services .................................... 12,745 12,583 12,019 12,124 11,814
Brokerage and insurance income..................... 8,520 8,285 6,131 7,614 6,254
Electronic banking fees............................ 7,520 5,731 6,153 5,947 6,192
Credit card fees................................... 5,414 4,859 6,583 5,073 4,523
Other.............................................. 25,521 17,226 9,666 13,043 10,116
-------- -------- -------- -------- --------
TOTAL NON-INTEREST INCOME BEFORE SECURITIES GAINS.. 106,953 93,678 87,476 94,855 77,897
-------- -------- -------- -------- --------
Securities gains................................... 14,316 3,089 1,034 1,242 3,604
-------- -------- -------- -------- --------
TOTAL NON-INTEREST INCOME ......................... 121,269 96,767 88,510 96,097 81,501
-------- -------- -------- -------- --------
Personnel and related costs........................ 108,483 104,712 97,224 101,323 97,000
Outside data processing and other services......... 14,441 16,586 16,745 14,450 14,351
Equipment ......................................... 15,688 15,149 16,004 14,503 14,173
Net occupancy ..................................... 14,063 13,439 11,755 12,772 11,650
Marketing.......................................... 8,315 6,932 8,187 7,845 7,785
Telecommunications................................. 7,450 6,023 5,636 5,642 5,283
Legal and other professional services.............. 6,234 5,788 8,318 6,095 5,089
Printing and supplies.............................. 5,611 5,761 6,239 5,384 5,035
Franchise and other taxes.......................... 5,526 5,500 4,576 4,685 5,335
Amortization of intangible assets.................. 3,393 3,393 3,285 3,382 3,406
Special charges.................................... --- --- --- 47,163 ---
Other.............................................. 19,087 14,507 10,563 21,666 16,698
-------- -------- -------- -------- --------
TOTAL NON-INTEREST EXPENSE ....................... 208,291 197,790 188,532 244,910 185,805
-------- -------- -------- --------- --------
INCOME BEFORE INCOME TAXES ....................... 135,812 131,644 133,306 79,994 127,823
PROVISION FOR INCOME TAXES ....................... 43,503 42,158 42,657 38,762 44,220
--------- -------- -------- -------- --------
NET INCOME ....................................... $ 92,309 $ 89,486 $ 90,649 $ 41,232 $ 83,603
======== ======== ======== ======== ========
PER COMMON SHARE (1)
Net income
Basic......................................... $ 0.44 $ 0.42 $ 0.43 $ 0.20 $ 0.40
Diluted....................................... $ 0.43 $ 0.42 $ 0.42 $ 0.19 $ 0.39
Cash Dividends Declared........................... $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.16
FULLY TAX EQUIVALENT MARGIN:
Net Interest Income ............................... $247,429 $254,848 $259,563 $257,158 $262,958
Tax Equivalent Adjustment (2) ..................... 2,581 2,655 2,754 3,115 2,948
-------- -------- -------- -------- --------
Tax Equivalent Net Interest Income ............... $250,010 $257,503 $262,317 $260,273 $265,906
======== ======== ======== ======== ========
</TABLE>
(1) Adjusted for the ten percent stock dividend distributed July 1998.
(2) Calculated assuming a 35% tax rate.
26
<PAGE> 27
- ---------------------------------------------------------------
QUARTERLY COMMON STOCK SUMMARY (1)
<TABLE>
<CAPTION>
1998 1997
-------------------------- ------------------------------------
IIQ IQ IVQ IIIQ IIQ
- --------------------------------------------- -------- -------- -------- --------- --------
<S> <C> <C> <C> <C> <C>
High......................................... $34-1/16 $34 $35-5/16 $34-5/16 $24-3/4
Low.......................................... 29-3/4 29-1/16 28-5/8 24-3/4 21-1/2
Close........................................ 30-7/16 33-1/8 32-3/4 32-13/16 24-5/16
Cash dividends declared..................... $ 0.18 $ 0.18 $ 0.18 $ 0.18 $ 0.16
</TABLE>
Note: Stock price quotations were obtained from NASDAQ.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
KEY RATIOS AND STATISTICS 1998 1997
MARGIN ANALYSIS - AS A % ---------------------- ----------------------------------
OF AVERAGE EARNING ASSETS (2) IIQ IQ IVQ IIIQ IIQ
- --------------------------------------------------------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Interest Income.................................. 8.37% 8.48% 8.51% 8.52% 8.62%
Interest Expense................................. 4.14 4.18 4.07 4.11 4.08
------ ------ ------ ------ ------
Net Interest Margin......................... 4.23% 4.30% 4.44% 4.41% 4.54%
RETURN ON
Average total assets............................. 1.42% 1.38% 1.41% 0.65% 1.33%
Average total assets - cash basis................ 1.49% 1.44% 1.48% 0.71% 1.40%
Average shareholders' equity..................... 17.70% 17.73% 18.23% 8.41% 18.07%
Average shareholders' equity - cash basis........ 21.17% 21.09% 21.78% 10.49% 21.90%
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
REGULATORY CAPITAL DATA 1998 1997
-------------------------- ------------------------------------
(in millions of dollars) IIQ IQ IVQ IIIQ IIQ
- -------------------------------------------------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total Risk-Adjusted Assets........................ $23,728 $22,554 $22,128 $21,389 $21,130
Tier 1 Risk-Based Capital Ratio................... 7.18% 8.91% 8.83% 8.86% 8.99%
Total Risk-Based Capital Ratio.................... 11.01% 11.57% 11.68% 11.95% 12.07%
Tier 1 Leverage Ratio............................. 6.72% 7.72% 7.77% 7.54% 7.58%
</TABLE>
(1) Adjusted for the ten percent stock dividend distributed July 1998.
(2) Presented on a fully tax equivalent basis assuming a 35% tax rate.
27
<PAGE> 28
PART II. OTHER INFORMATION
In accordance with the instructions to Part II, the other specified items in
this part have been omitted because they are not applicable or the information
has been previously reported.
Item 4. Submission of Matters to a Vote of Security Holders
Huntington Bancshares Incorporated held its annual meeting of
shareholders on April 23, 1998. At that meeting, shareholders approved
the following management proposals:
<TABLE>
<CAPTION>
ABSTAIN/
FOR AGAINST WITHHELD
--- ------- --------
<S> <C> <C> <C>
1. Election of directors
to serve as Class II
Directors until the year 2001
Annual Meeting of
Shareholders as follows:
Don Conrad 162,579,748 1,896,765
George A. Skestos 162,655,963 1,820,549
Lewis R. Smoot, Sr. 162,987,409 1,489,104
Frank Wobst 162,952,161 1,524,352
2. Proposal to amend
Huntington Bancshares'
Charter to increase the
authorized Common Stock
of the Corporation from
300,000,000 to
500,000,000 shares 154,725,282 8,302,510 1,448,721
3. Ratification of Ernst &
Young LLP to serve as
independent auditors for
the Corporation for the
year 1998 162,659,260 1,028,866 788,386
</TABLE>
<PAGE> 29
Item 5. Other Information
Any shareholder proposal submitted outside the processes of Rule
14a-8 under the Securities Exchange Act of 1934 for presentation
to the 1999 Huntington Bancshares Incorporated Annual Meeting of
Shareholders will be considered untimely for purposes of Rule
14a-4 and 14a-5 if notice of such proposal is received by
Huntington Bancshares Incorporated after January 4, 1999.
Zuheir Sofia will resign as a Director of the Corporation
effective August 20, 1998, to devote full time and attention to
his new business, Sofia & Company, Inc.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3. (i)(a) Articles of Restatement of Charter, Articles
of Amendment to Articles of Restatement of Charter,
prevailed as exhibit 3(i) to form 10-K for the year
ended December 31, 1998, and incorporated by
reference, and Articles Supplementary -- previously
filed as Exhibit 3(i) to Annual Report on Form 10-K
for the year ended December 31, 1993, and
incorporated herein by reference.
(i)(b) Articles of Amendment to Articles of
Restatement of Charter -- previously filed as Exhibit
3(i)(b) to Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, and incorporated herein
by reference.
(i)(c) Articles of Amendment to Articles of
Restatement of Charter -- previously filed as Exhibit
3(i)(c) to Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998, and incorporated herein
by reference.
(ii) Bylaws -- previously filed as Exhibit 3(ii) to
Annual Report on Form 10-K for the year ended
December 31, 1997, and incorporated herein by
reference.
4. Instruments defining the Rights of Security Holders:
Reference is made to Articles Fifth, Eighth and Tenth
of Articles of Restatement of Charter, previously
filed as Exhibit 3(i) to form 10-K for the year ended
December 31, 1993 and incorporated by reference, as
amended and supplemented and to Amendment to Articles
of Restatement of Charter, previously filed as
Exhibit 3(i)(c) to Quarterly Report on Form 10-Q for
the quarter ended March 31, 1998, and incorporated
herein by reference. Also, reference is made to
Rights Plan, dated February 22, 1990, previously
filed as Exhibit 1 to Registration Statement on Form
8-A, and incorporated herein by reference and to
Amendment No. 1 to the Rights Agreement, dated as of
August 16, 1995, previously filed as Exhibit 4(b) to
Form 8-K filed with the Securities and Exchange
Commission on August 28, 1995, and incorporated
herein by reference. Instruments defining the rights
of holders of long-term debt will be furnished to the
Securities and Exchange Commission upon request.
<PAGE> 30
27. Financial Data Schedule
(b) Reports on Form 8-K
1. A report on Form 8-K, dated April 14, 1998, was filed
under report item numbers 5 and 7, concerning
Huntington's results of operations for the first
quarter of 1998.
<PAGE> 31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Huntington Bancshares Incorporated
----------------------------------
(Registrant)
Date: August 14, 1998 /s/ RICHARD A. CHEAP
--------------------
Richard A. Cheap
General Counsel and Secretary
Date: August 14, 1998 /s/ GERALD R. WILLIAMS
----------------------
Gerald R. Williams
Executive Vice President and
Chief Financial Officer
(principal accounting officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM HUNTINGTON
BANCSHARES INCORPORATED'S QUARTERLY REPORT ON FORM 10Q FOR THE QUARTER ENDED
JUNE 30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,151,784
<INT-BEARING-DEPOSITS> 278,400
<FED-FUNDS-SOLD> 707,377
<TRADING-ASSETS> 30,244
<INVESTMENTS-HELD-FOR-SALE> 4,467,986
<INVESTMENTS-CARRYING> 29,637
<INVESTMENTS-MARKET> 29,898
<LOANS> 19,367,580
<ALLOWANCE> 286,864
<TOTAL-ASSETS> 28,187,219
<DEPOSITS> 19,666,248
<SHORT-TERM> 1,655,244
<LIABILITIES-OTHER> 509,130
<LONG-TERM> 749,692
0
0
<COMMON> 1,528,768
<OTHER-SE> 605,081
<TOTAL-LIABILITIES-AND-EQUITY> 28,187,219
<INTEREST-LOAN> 799,941
<INTEREST-INVEST> 181,540
<INTEREST-OTHER> 12,267
<INTEREST-TOTAL> 993,748
<INTEREST-DEPOSIT> 324,405
<INTEREST-EXPENSE> 491,471
<INTEREST-INCOME-NET> 502,277
<LOAN-LOSSES> 46,776
<SECURITIES-GAINS> 17,405
<EXPENSE-OTHER> 406,081
<INCOME-PRETAX> 267,456
<INCOME-PRE-EXTRAORDINARY> 267,456
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 181,795
<EPS-PRIMARY> 0.86
<EPS-DILUTED> 0.85
<YIELD-ACTUAL> 4.27
<LOANS-NON> 75,367
<LOANS-PAST> 50,614
<LOANS-TROUBLED> 4,770
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 258,171
<CHARGE-OFFS> 56,421
<RECOVERIES> 16,296
<ALLOWANCE-CLOSE> 286,864
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
