<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 March 31, 1999
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 210,018,446 shares of Registrant's without par value common stock
outstanding on April 30, 1999.
<PAGE> 2
<TABLE>
PART I. FINANCIAL INFORMATION
1. FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
(in thousands of dollars) 1999 1998 1998
- ---------------------------------------------------------------- ----------- ------------ -----------
<S> <C> <C> <C>
ASSETS
Cash and due from banks ........................................ $ 971,446 $ 1,215,814 $ 1,023,138
Interest bearing deposits in banks ............................. 8,143 102,564 2,378
Trading account securities ..................................... 27,755 3,839 19,489
Federal funds sold and securities
purchased under resale agreements ......................... 11,238 135,764 8,573
Mortgages held for sale ........................................ 279,794 466,664 314,034
Securities available for sale - at fair value .................. 5,367,871 4,781,415 6,345,104
Investment securities - fair value $23,415; $25,044; and
$33,631, respectively ..................................... 23,044 24,934 31,631
Total loans (1) ................................................ 19,731,593 19,454,551 17,748,389
Less allowance for loan losses ............................ 291,066 290,948 258,262
----------- ----------- -----------
Net loans ...................................................... 19,440,527 19,163,603 17,490,127
----------- ----------- -----------
Premises and equipment ......................................... 441,426 447,038 400,331
Customers' acceptance liability ................................ 19,402 22,591 26,518
Accrued income and other assets ................................ 1,987,262 1,932,110 1,147,156
----------- ----------- -----------
TOTAL ASSETS ................................................... $28,577,908 $28,296,336 $26,808,479
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total deposits (1) ............................................. $19,046,901 $19,722,772 $17,700,544
Short-term borrowings .......................................... 2,884,722 2,216,644 2,671,383
Bank acceptances outstanding ................................... 19,402 22,591 26,518
Medium-term notes .............................................. 2,864,900 2,539,900 3,147,150
Subordinated notes and other long-term debt .................... 707,438 707,359 483,854
Company obligated mandatorily redeemable preferred
capital securities of subsidiary trusts holding solely
the junior subordinated debentures of the parent company..... 300,000 300,000 200,000
Accrued expenses and other liabilities ......................... 616,488 638,275 504,936
----------- ----------- -----------
Total Liabilities ......................................... 26,439,851 26,147,541 24,734,385
----------- ----------- -----------
Shareholders' equity
Preferred stock - authorized 6,617,808 shares;
none outstanding
Common stock - without par value; authorized
500,000,000 shares; issued and outstanding
212,596,344; 212,596,344; and 193,279,797 shares,
respectively ......................................... 2,152,076 2,152,076 1,528,768
Less 2,425,491; 1,850,007; and 961,290 treasury
shares, respectively ................................. (68,535) (49,271) (25,218)
Capital surplus ........................................... (17,258) (14,161) 394,715
Accumulated other comprehensive income .................... (18,220) 24,693 10,410
Retained earnings ......................................... 89,994 35,458 165,419
----------- ----------- -----------
Total Shareholders' Equity ................................ 2,138,057 2,148,795 2,074,094
----------- ----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ..................... $28,577,908 $28,296,336 $26,808,479
=========== =========== ===========
</TABLE>
(1) See page 11 for detail of total loans and total deposits.
See notes to unaudited consolidated financial statements.
2
<PAGE> 3
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
- --------------------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------
(in thousands of dollars, except per share amounts) 1999 1998
- ---------------------------------------------------------- ------------ ------------
<S> <C> <C>
Interest and fee income
Loans ............................................... $ 410,181 $ 400,807
Securities .......................................... 78,852 97,171
Other ............................................... 6,659 4,502
------------ ------------
TOTAL INTEREST INCOME ..................... 495,692 502,480
------------ ------------
Interest expense
Deposits ............................................ 156,305 162,252
Short-term borrowings ............................... 30,475 33,822
Medium-term notes ................................... 34,754 41,440
Subordinated notes and other long-term debt ......... 14,637 10,118
------------ ------------
TOTAL INTEREST EXPENSE .................... 236,171 247,632
------------ ------------
NET INTEREST INCOME ....................... 259,521 254,848
Provision for loan losses ................................ 25,305 22,181
------------ ------------
NET INTEREST INCOME
AFTER PROVISION FOR LOAN LOSSES....... 234,216 232,667
------------ ------------
Total non-interest income (1) ............................ 109,872 95,419
Total non-interest expense (1) ........................... 202,106 196,442
------------ ------------
INCOME BEFORE INCOME TAXES ................ 141,982 131,644
Provision for income taxes ............................... 45,410 42,158
------------ ------------
NET INCOME ................................ $ 96,572 $ 89,486
============ ============
PER COMMON SHARE (2)
Net income
Basic .......................................... $ 0.46 $ 0.42
Diluted ........................................ $ 0.46 $ 0.42
Cash dividends declared ............................. $ 0.20 $ 0.18
AVERAGE COMMON SHARES OUTSTANDING (2)
Basic .......................................... 210,417,282 211,377,206
Diluted ........................................ 212,187,011 213,809,119
</TABLE>
(1) See page 12 for detail of non-interest income and non-interest expense.
(2) Adjusted for stock splits and stock dividends, as applicable.
See notes to unaudited consolidated financial statements.
3
<PAGE> 4
<TABLE>
- ------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
(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>
Three Months Ended March 31, 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 89,486 89,486
Unrealized net holding losses on
securities available for sale
arising during the period (4,390) (4,390)
----------
Total comprehensive income 85,096
----------
Cash dividends declared (38,446) (38,446)
Stock issued for acquisition 160 3,883 (3,815) 68
Stock options exercised 403 7,218 (5,907) 1,311
Treasury shares sold to
employee benefit plans 19 472 202 674
------- ---------- ------ -------- -------- -------- -------- ----------
Balance, end of period 193,279 $1,528,768 (961) $(25,218) $394,715 $ 10,410 $165,419 $2,074,094
======= ========== ====== ======== ======== ======== ======== ==========
THREE MONTHS ENDED MARCH 31, 1999:
BALANCE, BEGINNING OF PERIOD 212,596 $2,152,076 (1,850) $(49,271) $(14,161) $ 24,693 $ 35,458 $2,148,795
COMPREHENSIVE INCOME:
NET INCOME 96,572 96,572
UNREALIZED NET HOLDING LOSSES ON
SECURITIES AVAILABLE FOR SALE
ARISING DURING THE PERIOD (42,913) (42,913)
----------
TOTAL COMPREHENSIVE INCOME 53,659
----------
CASH DIVIDENDS DECLARED (42,036) (42,036)
STOCK OPTIONS EXERCISED 153 4,384 (3,097) 1,287
TREASURY SHARES PURCHASED (751) (24,349) (24,349)
TREASURY SHARES SOLD TO
EMPLOYEE BENEFIT PLANS 23 701 701
------- ---------- ------ -------- -------- -------- -------- ----------
BALANCE, END OF PERIOD 212,596 $2,152,076 (2,425) $(68,535) $(17,258) $(18,220) $ 89,994 $2,138,057
======= ========== ====== ======== ======== ======== ======== ==========
</TABLE>
See notes to unaudited consolidated financial statements.
4
<PAGE> 5
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------
(in thousands of dollars) 1999 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income ................................................................. $ 96,572 $ 89,486
Adjustments to reconcile net income to net cash
provided by operating activities
Provision for loan losses ........................................ 25,305 22,181
Provision for depreciation and amortization ...................... 29,572 17,768
Deferred income tax expense ...................................... 18,970 5,358
Increase in trading account securities ........................... (23,916) (12,407)
Decrease (increase) in mortgages held for sale ................... 186,870 (121,086)
Net gains on sales of securities ................................. (2,310) (3,089)
(Increase) decrease in accrued income receivable ................. (12,172) 4,758
Net (increase) decrease in other assets .......................... (65,739) 22,500
(Decrease) increase in accrued expenses .......................... (1,861) 11,907
Net increase (decrease) in other liabilities ..................... 695 (30,835)
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES ................ 251,986 6,541
----------- -----------
INVESTING ACTIVITIES
Decrease in interest bearing deposits in banks ............................. 94,421 37,240
Proceeds from:
Maturities and calls of investment securities .......................... 1,883 1,348
Maturities and calls of securities available for sale .................. 245,678 191,087
Sales of securities .................................................... 322,062 485,158
Purchases of securities available for sale ................................. (1,219,206) (1,300,626)
Proceeds from sales of loans ............................................... 1,348 24,548
Net loan originations, excluding sales ..................................... (304,343) (56,882)
Purchases of premises and equipment ........................................ (18,220) (21,788)
Proceeds from sales of other real estate ................................... 2,794 4,802
----------- -----------
NET CASH USED FOR INVESTING ACTIVITIES ................... (873,583) (635,113)
----------- -----------
FINANCING ACTIVITIES
Decrease in total deposits ................................................. (675,856) (284,643)
Increase in short-term borrowings .......................................... 668,078 99,712
Payment of long-term debt .................................................. -- (15,000)
Proceeds from issuance of medium-term notes ................................ 1,085,000 325,000
Payment of medium-term notes ............................................... (760,000) (80,000)
Dividends paid on common stock ............................................. (42,158) (38,339)
Repurchase of common stock ................................................. (24,349) --
Proceeds from issuance of common stock ..................................... 1,988 1,984
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES ................ 252,703 8,714
----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS ...................... (368,894) (619,858)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD.......... 1,351,578 1,651,569
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ............... $ 982,684 $ 1,031,711
=========== ===========
</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 1998 Annual Report 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 1999 presentation. These reclassifications had
no effect on net income.
C. 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:
<TABLE>
<CAPTION>
(in thousands) THREE MONTHS ENDED
MARCH 31
-------------------
1999 1998
-------- -------
<S> <C> <C>
Unrealized holding losses
Arising during the period:
Unrealized net losses $(64,066) $(3,704)
Related tax benefit 22,654 1,322
-------- -------
Net (41,412) (2,382)
-------- -------
Reclassification adjustment for net
Losses realized during the period
Realized net losses (2,310) (3,089)
Related tax benefit 809 1,081
-------- -------
Net (1,501) (2,008)
-------- -------
Total Other Comprehensive Income $(42,913) $(4,390)
======== =======
</TABLE>
6
<PAGE> 7
D. New Accounting Pronouncements
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. 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 expects to adopt FAS 133 in the first quarter of 2000. Based
on information available, the impact of adoption is not expected to be material
to the Consolidated Financial Statements.
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, including $3.1 million of common securities purchased by Huntington,
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 capital securities bear interest and mature as follows:
<TABLE>
<CAPTION>
Variable Interest
Rate Maturity Date
----------------- -------------
<S> <C> <C>
Huntington Capital I LIBOR + .70% February 1, 2027
Huntington Capital II LIBOR + .625% June 15, 2028
</TABLE>
7
<PAGE> 8
The net proceeds received by Huntington from the sale of the capital
securities were used for general corporate purposes.
F. Special Charge
In October 1998, Huntington announced several initiatives to strengthen
its financial performance. These initiatives included the realignment of the
banking network; the exit of underperforming product lines and delivery
channels; the reduction of 1,000 work force positions, or approximately 10% of
the total employee base; and other cost savings measures. As a result of the
above initiatives, Huntington incurred a special charge of $90 million in the
fourth quarter of 1998. Refer to Note 2 in the Notes to the Consolidated
Financial Statements appearing in Huntington's 1998 Annual Report on Form 10-K
for further information.
The table below summarizes the major components of the special charge,
as well as the related amounts applied against the reserve through March 31,
1999. Huntington expects that the remaining reserve of $41 million, which
represents estimated future cash outlays, will be substantially utilized by the
end of 1999.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
EMPLOYEE OPERATIONS RETAIL EXIT
(in millions of dollars) COSTS EQUIPMENT BANK OFFICES COSTS TOTAL
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Special Charge $26 $ 12 $20 $32 $ 90
Utilization:
Cash (8) -- -- (7) (15)
Non-cash -- (12) (5) (4) (21)
--- ---- --- --- ----
Balance as of December 31, 1998 18 -- 15 21 54
--- ---- --- --- ----
Utilization (4) -- (4) (5) (13)
--- ---- --- --- ----
Balance as of March 31, 1999 $14 -- $11 $16 $ 41
=== ==== === === ====
</TABLE>
G. 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.
8
<PAGE> 9
The calculation of basic and diluted earnings per share for each of the
periods ended March 31, is as follows:
<TABLE>
<CAPTION>
(In thousands, except per share amounts) THREE MONTHS ENDED
MARCH 31
---------------------
1999 1998
-------- --------
<S> <C> <C>
Net Income $ 96,572 $ 89,486
======== ========
Average common shares outstanding 210,417 211,377
Dilutive effect of stock options 1,770 2,432
-------- --------
Diluted common shares outstanding 212,187 213,809
======== ========
Earnings per share
Basic $ .46 $ .42
Diluted $ .46 $ .42
</TABLE>
Average common shares outstanding and the dilutive effect of stock options have
been adjusted for subsequent stock dividends and stock splits, as applicable.
H. 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 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 periodically to reflect
enhancements to Huntington's profitability reporting system and changes in its
organizational structure. For a detailed description of the individual segments,
refer to Huntington's Management Discussion and Analysis.
9
<PAGE> 10
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1999
- -------------------------------------------------------------------------------------------------------------------------
Private
Retail Corporate Dealer Financial Treasury/ Huntington
Banking Banking Sales Group Other Consolidated
------- ------- ----- ----- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
(IN THOUSANDS OF DOLLARS)
- -------------------------
Net Interest Income (FTE) $137,017 $62,586 $45,632 $ 7,626 $ 9,164 $262,025
Provision for Loan Losses 11,582 2,275 11,373 75 -- 25,305
Non-Interest Income 66,329 15,571 391 11,512 16,069 109,872
Non-Interest Expense 135,952 29,831 11,568 9,768 14,987 202,106
Income Taxes and FTE 19,382 15,932 7,978 3,217 1,405 47,914
Adjustment
-------- ------- ------- ------- ------- --------
Net Income $ 36,430 $30,119 $15,104 6,078 8,841 $ 96,572
======== ======= ======= ======= ======= ========
Depreciation & Amortization $ 16,764 $ 2,036 $ 348 $ 421 $10,003 $ 29,572
======== ======= ======= ======= ======= ========
OTHER FINANCIAL DATA
(IN MILLIONS OF DOLLARS)
- ------------------------
Average Identifiable Assets $ 7,814 $ 6,676 $ 5,778 $ 579 $ 7,575 $ 28,422
Average Total Deposits 17,116 1,008 60 570 377 19,131
Capital Expenditures 5 1 -- -- 12 18
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
- -------------------------------------------------------------------------------------------------------------------------
Private
Retail Corporate Dealer Financial Treasury/ Huntington
Banking Banking Sales Group Other Consolidated
------- ------- ----- ----- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
(IN THOUSANDS OF DOLLARS)
- -------------------------
Net Interest Income (FTE) $141,972 $50,048 $41,710 $ 8,022 $15,751 $257,503
Provision for Loan Losses 7,180 3,771 10,930 300 -- 22,181
Non-Interest Income 54,687 16,785 1,676 10,457 11,814 95,419
Non-Interest Expense 136,137 29,344 12,566 9,872 8,523 196,442
Income Taxes and FTE 18,067 11,417 6,735 2,813 5,781 44,813
Adjustment
-------- ------- ------- ------- ------- --------
Net Income $ 35,275 $22,301 $13,155 $ 5,494 $13,261 $ 89,486
======== ======= ======= ======= ======= ========
Depreciation & Amortization $ 11,887 $ 1,407 $ 269 $ 286 $ 3,919 $ 17,768
======== ======= ======= ======= ======= ========
OTHER FINANCIAL DATA
(IN MILLIONS OF DOLLARS)
- ------------------------
Average Identifiable Assets $ 8,126 $ 5,056 $ 5,019 $ 592 $ 7,537 $ 26,330
Average Total Deposits 15,199 923 57 510 794 17,483
Capital Expenditures 7 1 -- -- 14 22
</TABLE>
10
<PAGE> 11
<TABLE>
- -----------------------------------------------------------------------------------------------------------
FINANCIAL REVIEW
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
LOAN PORTFOLIO COMPOSITION
- -----------------------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, MARCH 31,
(in thousands of dollars) 1999 1998 1998
- ------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Commercial ..................................... $ 6,150,490 $ 6,026,736 $ 5,441,107
Real Estate
Construction............................... 996,267 919,326 846,715
Commercial ................................ 2,242,700 2,231,786 2,367,823
Residential ............................... 1,426,455 1,408,289 1,083,566
Consumer
Loans ...................................... 6,812,242 6,957,772 6,423,582
Leases ..................................... 2,103,439 1,910,642 1,585,596
----------- ----------- -----------
TOTAL LOANS ............................... $19,731,593 $19,454,551 $17,748,389
=========== =========== ===========
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
DEPOSIT COMPOSITION
- -----------------------------------------------------------------------------------------------------------
MARCH 31, DECEMBER 31, MARCH 31,
(in thousands of dollars) 1999 1998 1998
- ------------------------------------------------ ----------- ----------- -----------
<S> <C> <C> <C>
Demand deposits
Non-interest bearing ...................... $ 2,881,991 $ 3,129,199 $ 2,516,765
Interest bearing .......................... 4,514,407 4,642,147 3,785,550
Savings deposits ............................... 3,924,658 3,690,040 3,229,359
Other domestic time deposits ................... 5,876,672 6,186,985 6,012,135
----------- ----------- -----------
TOTAL CORE DEPOSITS ....................... 17,197,728 17,648,371 15,543,809
----------- ----------- -----------
Certificates of deposit of $100,000 or more..... 1,757,303 1,699,261 2,018,818
Foreign time deposits .......................... 91,870 375,140 137,917
----------- ----------- -----------
TOTAL DEPOSITS ............................ $19,046,901 $19,722,772 $17,700,544
=========== =========== ===========
</TABLE>
11
<PAGE> 12
<TABLE>
- ---------------------------------------------------------------------------------------------------------
FINANCIAL REVIEW
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ANALYSIS OF NON-INTEREST INCOME
- ---------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
---------------------------------------
PERCENT
(in thousands of dollars) 1999 1998 CHANGE
- ---------------------------------------------------------- -------- ------- -------
<S> <C> <C> <C>
Service charges on deposit accounts ...................... $ 35,776 $29,490 21.3%
Mortgage banking ......................................... 15,958 14,157 12.7
Trust services ........................................... 13,434 12,583 6.8
Brokerage and insurance income ........................... 11,543 8,285 39.3
Bank Owned Life Insurance income ......................... 9,390 5,348 75.6
Electronic banking fees .................................. 8,038 5,748 39.8
Credit card fees ......................................... 5,342 4,895 9.1
Other .................................................... 8,081 11,824 (31.7)
-------- -------
TOTAL NON-INTEREST INCOME BEFORE SECURITIES GAINS......... 107,562 92,330 16.5
-------- -------
Securities gains ......................................... 2,310 3,089 (25.2)
-------- -------
TOTAL NON-INTEREST INCOME ................................ $109,872 $95,419 15.1%
======== =======
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ANALYSIS OF NON-INTEREST EXPENSE
- ---------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED MARCH 31,
---------------------------------------
PERCENT
(in thousands of dollars) 1999 1998 CHANGE
- ---------------------------------------------------------- -------- ------- -------
<S> <C> <C> <C>
Personnel and related costs .............................. $107,254 $104,712 2.4%
Equipment ................................................ 16,873 15,149 11.4
Outside data processing and other services................ 15,392 19,342 (20.4)
Net occupancy ............................................ 13,917 13,439 3.6
Amortization of intangible assets ........................ 9,328 3,393 174.9
Telecommunications ....................................... 7,064 6,013 17.5
Marketing ................................................ 6,298 6,932 (9.1)
Printing and supplies .................................... 4,756 5,761 (17.4)
Legal and other professional services .................... 4,744 5,788 (18.0)
Franchise and other taxes ................................ 4,387 5,500 (20.2)
Other .................................................... 12,093 10,413 16.1
-------- --------
TOTAL NON-INTEREST EXPENSE ............................... $202,106 $196,442 2.9%
======== ========
</TABLE>
12
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
INTRODUCTION
FORWARD-LOOKING STATEMENTS
- --------------------------
Congress passed the Private Securities Litigation Reform 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 Form 10-Q, including Management's Discussion and Analysis of
Financial Condition and Results of Operations, contains forward-looking
statements including certain plans, expectations, goals, and
projections--including without limitation those relating to Huntington's Year
2000 readiness--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,
extent, and timing of governmental actions and reforms; the risks of Year 2000
disruption; and extended disruption of vital infrastructure. The management of
Huntington encourages readers of this Form 10-Q to understand forward-looking
statements to be strategic objectives rather than absolute targets of future
performance.
OVERVIEW
Huntington reported earnings of $96.6 million for the first quarter of
1999, compared with $89.5 million for the same period last year. Earnings per
share were $.46 on a diluted basis, an increase of 9.5% from $.42 per share for
the first three months of 1998. Huntington's return on average assets (ROA) was
1.38% for the first quarter of both 1999 and 1998 while return on average equity
(ROE) increased to 18.47%, versus 17.73% in the first quarter a year ago.
Huntington's "cash basis" diluted earnings per share, which excludes the effect
of amortization of goodwill and other intangibles rose to $.49, compared with
$.43 per share in the same period last year. Cash basis ROA and ROE for the
first quarter of 1999 were 1.52% and 29.58%, respectively. Huntington's
efficiency ratio of 52.16% showed improvement for the third consecutive quarter.
Total assets were $28.6 billion at March 31, 1999, an increase of 6.7%
from one year ago. Much of the growth was attributable to the purchase of sixty
former Barnett Banks banking offices in Florida in June 1998, which added
approximately $1.3 billion in loans. Asset growth was also complemented by new
loan production. After adjusting for the impact of the banking office
acquisition, average total loans outstanding for the recent quarter grew 4.4%
over the same period last year, despite the continued softness in residential
mortgage lending. The decrease in the investment securities portfolio from a
year ago is the result of a strategic repositioning of the balance sheet that
began in the first half of 1998 and has driven higher equity returns.
Core deposits of $17.2 billion declined slightly from March 31, 1998,
after adjusting for the aforementioned banking office acquisition in Florida.
Average core deposits declined 1.4%, versus the first quarter of last year. This
decline was primarily due to runoff in the retail certificate of deposit
portfolio, fueled by customer reinvestment at maturity into alternative
13
<PAGE> 14
investments such as mutual funds and annuities, including those sold by
Huntington. Excluding retail certification of deposit, deposits grew 4% over
this same period.
Huntington's wholesale liability position changed from the prior year
as $300 million of subordinated notes were issued in the second quarter 1998 as
well as an additional $100 million of capital securities through Huntington
Capital II, a special-purpose subsidiary.
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 is designed around
Huntington's organizational and management structure, and accordingly, the
results are not necessarily comparable to similar information published by other
financial institutions. Below is a discussion of the results, which can be found
in the notes to the unaudited consolidated financial statements, for the three
months ended March 31, 1999 and 1998.
Retail Banking - Retail Banking net income was $36.4 million, a 3.2% increase
over 1998. The increase was attained despite compression in the net interest
margin, as non-interest income showed strong growth in service charges,
brokerage and insurance income, and electronic banking income. This segment
contributes 38% of Huntington's net income and comprises 34% of the
organization's loan portfolio.
Corporate Banking - Corporate Banking continued to post strong results. Net
income of $30.1 million represented a 35% increase over 1998. Loan and deposit
growth of 34.2% and 9.2%, respectively, fueled the higher earnings. This segment
contributes 31% of Huntington's net income and comprises 33% of the
organization's loan portfolio.
Dealer Sales - Net income totaled $15.1 million for the quarter, up 14.8% over
1998. Loan growth of 14.8% drove net interest income higher. This business line
constitutes 16% of Huntington's net income and 30% of its outstanding loans.
Private Financial Group - Private Financial Group achieved net income of $6.1
million for the recent quarter, 10.6% increase over the same period a year ago.
This was due in large part to non-interest income growth in mortgage banking and
brokerage services. This segment represents 6% of Huntington's total net income
and 2% of total loans.
Treasury/Other - This segment reported a $4.4 million decrease in net income
over the first quarter of 1998. Included in this segment is Huntington's
amortization of intangibles, which increased subsequent to the acquisition of
sixty branches in Florida in June 1998.
RESULTS OF OPERATIONS
NET INTEREST INCOME
Net interest income for the quarter was $259.5 million, up $4.7 million,
or 1.8%, from the same period a year ago. The increase in net interest income
was the result of an increase in earning assets as well as a shift in asset mix
towards loans versus lower-yielding investment securities. Net interest rate
spread for the current quarter was relatively flat when compared to the same
period last year. Huntington's net interest margin dropped from 4.30% in the
first three months of 1998 to 4.18% in the quarter just ended due to the lower
contribution of non-interest
14
<PAGE> 15
bearing funds, in large part the result of intangible assets added in the
acquisition of the banking offices in Florida.
PROVISION FOR LOAN LOSSES
The provision for loan losses was $25.3 million in the first quarter of
1999, up from $22.2 million in the same period last year. Annualized net
charge-offs, as a percentage of average total loans were .52% for the recent
three months, roughly flat with one year ago.
NON-INTEREST INCOME
Non-interest income, excluding securities gains, was $107.6 million for
the first quarter of 1999, compared with $92.3 million for the first three
months of 1998. The 16.5% increase is attributable to a 21.3% growth in service
charges on deposit accounts driven by increased volume in new business banking
checking accounts as well as the Florida expansion. Mortgage banking income
continued to be strong, as were brokerage and insurance and electronic banking
income. Brokerage income increased primarily because of higher sales of a
proprietary annuity product. The electronic banking increase resulted from the
institution of competitive fee pricing on Huntington's alternative delivery
systems. Additional investments in Bank Owned Life Insurance helped drive the
growth in Non-Interest Income.
NON-INTEREST EXPENSE
Despite the significant expansion in Florida, non-interest expense
increased only 2.9%, or $5.7 million, from one year ago. After adjusting for the
acquired offices in Florida, personnel and related costs declined 3.5%.
Corporate-wide purchasing and related efficiency initiatives also resulted in
reductions in outside services, printing and supplies, and legal and other
professional fees.
Huntington announced several strategic actions in 1998, including the
closing of approximately 39 underperforming banking offices. During the first
quarter of 1999, Huntington closed 19 of these offices; the remainder are
expected to be sold or closed by the end of the second quarter. Huntington also
exited certain business activities, as discussed in the 1998 Annual Report on
Form 10-K.
15
<PAGE> 16
YEAR 2000
The Year 2000 problem is the result of many existing computer programs
using only the last two-digits, as opposed to four digits, to indicate the year.
Such computer systems may be unable to recognize a year that begins with "20"
instead of "19". If not corrected, many computer programs could cause systems to
fail or other computer errors, leading to possible disruptions in operations or
creation of erroneous results.
Huntington, in an enterprise-wide effort, is taking steps to ensure that
its internal systems are secure from such failure and that its current products
will perform. The company's Year 2000 Plan (the Plan) addresses all systems,
software, hardware, and infrastructure components. In addition, business
processes are being assessed and validated throughout the organization.
The Plan identifies and addresses "Mission Critical" and "Non-mission
Critical" components for Information Technology (IT) systems, Non-information
Technology (Non-IT) systems, and business processes. IT includes, for example,
systems that service loan and deposit customers. Non-IT systems include, among
other things, security systems, elevators, utilities, and voice/data
communications. An application, system, or process is Mission Critical if it is
vital to the successful continuance of a core business activity.
Huntington's progress towards meeting the Plan's goals for both IT and
Non-IT systems, which follows a five phase approach recommended by federal bank
regulators, is as follows:
<TABLE>
<CAPTION>
MISSION CRITICAL NON-MISSION CRITICAL
----------------------- -----------------------
Percent Completion Percent Completion
Phase Complete Date Complete Date
- ---------------------- -------- ---------- -------- ----------
<S> <C> <C> <C> <C>
Awareness 100% 06/30/1998 100% 06/30/1998
Assessment 100% 09/30/1998 100% 12/31/1998
Renovation 95% 06/30/1999 95% 06/30/1999
Testing/Validation 95% 06/30/1999 75% 06/30/1999
Implementation 90% 06/30/1999 67% 10/31/1999
</TABLE>
Huntington depends on various third-party vendors, suppliers, and
service providers. The activities undertaken by these third parties can vary
from processing and settlement of automated teller transactions to mortgage loan
processing. Huntington will be dependent on the continued service by its
vendors, suppliers, service providers, and ultimately its customers' continued
operations in order to avoid business interruptions. Any interruption in a third
party's ability to provide goods and services, such as issues with
telecommunication links, power, and transportation, could present problems.
Huntington has identified approximately ten material third-party relationships
with a focus on those considered "Mission Critical." Huntington is presently
working with each of these parties to test transactions and/or interfaces
between its processors, obtain appropriate information from each party, or
assess each party's ability to be prepared for the Year 2000.
Over forty full-time staff members are dedicated to the Year 2000 effort
and, on a part-time basis, multitudes of internal personnel from various
disciplines throughout the Huntington organization are also working on this
project. Furthermore, Huntington has engaged an independent consultant to
establish a Year 2000 Program Management Office (PMO). The PMO organizes
Huntington's Year 2000 project management activities beyond the technical
information services group into all business units. The PMO creates the
methodology that is used in every business unit and also brings a quality
assurance process that reviews the thoroughness of the actions taken to remedy
the Year 2000 problem.
16
<PAGE> 17
Identifiable costs for the Year 2000 project incurred in the first
quarter of 1999 were $4.8 million. Management estimates it will cost up to an
additional $12 million to bring its systems and business processes into
compliance and to implement elements of its contingency plan. However, these
expenses are not expected to materially impact operating results in any one
period. These estimated costs incorporate not only incremental third-party
expenses but also include salary and benefit costs of employees redeployed and
full implementation of a call center to handle increased customer inquiries
before and after January 1, 2000.
Major business risks associated with the Year 2000 problem include, but
are not limited to, infrastructure failures, disruptions to the economy in
general, excessive cash withdrawal activity, closure of government offices,
foreign banks, and clearing houses, and increased problem loans and credit
losses in the event that borrowers fail to properly respond to the problem.
These risks, along with the risk of Huntington failing to adequately complete
the remaining phases of its project work and the resulting possible inability to
properly process core business transactions and meet contractual servicing
agreements, could expose Huntington to loss of revenues, litigation, and asset
quality deterioration.
The Year 2000 problem is unique in that it has never previously
occurred; thus, it is not possible to completely foresee or quantify the overall
or any specific financial or operational impacts to Huntington or to third
parties which provide Mission Critical services to the company. Huntington has,
however, implemented several proactive processes to identify and mitigate risk
involving systems and processes over which it has control, including
strengthening its Business Resumption Plan for the Year 2000 by adding
alternatives for systems and networks in support of critical applications. The
modifications to Huntington's contingency plan are now complete and have been
tested and validated for all core business processes. Huntington's senior
management believes successful modifications to existing systems and conversions
to new systems will substantially reduce the risk of Year 2000 disruption.
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 may 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
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<PAGE> 18
or lag changes in market rates. Management believes, at any point in time, the
model provides a reasonably accurate estimate of Huntington's interest rate risk
exposure even though these assumptions are inherently uncertain. This
information is regularly shared with the Board of Directors.
At March 31, 1999, the results of Huntington's interest sensitivity
analysis indicated that net interest income would benefit by approximately 3%
given a 200 basis point reduction 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 approximately 4%.
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, 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 March 31, 1999:
<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 $1,241 3.37 $ .9 6.01% 5.01%
====== =====
LIABILITY CONVERSION SWAPS
Receive fixed $1,770 3.83 $17.9 6.13% 5.08%
Receive fixed-amortizing 141 0.65 .1 5.63% 4.94%
Pay fixed 1,025 2.30 (3.9) 5.00% 5.14%
------ -----
TOTAL LIABILITY CONVERSION
SWAPS $2,936 3.14 $14.1 5.72% 5.09%
====== =====
BASIS PROTECTION SWAPS $ 825 1.36 $ (.1) 4.97% 4.99%
====== =====
</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). Receive-fixed
asset conversion swaps and pay-fixed liability conversion swaps with notional
values of $1 billion and $800 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
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<PAGE> 19
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 March 31, 1999, Huntington's credit risk from interest rate swaps
used for asset/liability management purposes was $71.1 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 $637 million at March 31, 1999. 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.
Non-performing assets consist 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. Total non-performing
assets were $94.7 million and $95.1 million, respectively, at March 31, 1999 and
1998. As of the recent quarter, non-performing loans represented .39% of total
loans, and non-performing assets as a percent of total loans and other real
estate were .48%. Loans past due ninety days or more but continuing to accrue
interest were $51.0 million at March 1999, down from $65.0 million one year ago.
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 was 1.48% at the recent quarter end versus 1.46% at
March 1998. The ALL covered non-performing loans nearly 3.8 times and when
combined with the allowance for other real estate owned, was 305% of total
nonperforming assets.
CAPITAL
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. Huntington also recognizes the
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<PAGE> 20
importance of managing capital and continually strives to maintain an
appropriate balance between capital adequacy and returns to shareholders.
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 7.46% in the recent quarter compared with 7.77% in
the same three months of last year.
Risk-based capital guidelines established by the Federal Reserve Board
set minimum capital requirements and require institutions to calculate
risk-based capital ratios by assigning risk weightings to assets and off-balance
sheet items, such as interest rate swaps and loan commitments. These guidelines
further define "well-capitalized" levels for Tier 1, Total Capital and Leverage
ratio purposes at 6%, 10%, and 5%, respectively. At the recent quarter-end,
Huntington's Tier 1 risk-based capital ratio was 7.20%, its total risk-based
capital ratio was 10.70%, and its leverage ratio was 6.32%, each of which
exceeds the well-capitalized requirements. Huntington's bank subsidiary also had
regulatory capital ratios in excess of the levels established for
well-capitalized institutions.
In the third quarter of 1998, the Board of Directors authorized the
reactivation of Huntington's common stock repurchase program. In connection with
the reinstatement of the program, the Board of Directors also increased the
number of shares authorized for repurchase to 15 million, up from approximately
3 million shares remaining when the plan was suspended. The shares are to be
purchased through open market and privately negotiated transactions. Repurchased
shares will be reserved for reissue in connection with Huntington's dividend
reinvestment, stock option, and other benefit plans as well as for stock
dividends and other corporate purposes. Through March 31, 1999, Huntington
repurchased approximately 2.0 million shares.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risk exposures that affect
the quantitative and qualitative disclosures presented in Huntington's Annual
Report on Form 10-K for the year ended December 31, 1998. Quantitative and
qualitative disclosures for the current period are found on pages 18 through 21.
20
<PAGE> 21
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
CONSOLIDATED FINANCIAL HIGHLIGHTS
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------
(in thousands, except per share amounts) 1999 1998 % Change
- -------------------------------------------------------- ------- ------- --------
<S> <C> <C> <C>
NET INCOME ............................................. $96,572 $89,486 7.9%
PER COMMON SHARE AMOUNTS (1)
Net income
Basic ........................................ $ 0.46 $ 0.42 9.5
Diluted ...................................... $ 0.46 $ 0.42 9.5
Cash dividends declared ........................... $ 0.20 $ 0.18 11.1
AVERAGE COMMON SHARES OUTSTANDING-DILUTED (1)........... 212,187 213,809 (0.8)
KEY RATIOS
Return on:
Average total assets .............................. 1.38% 1.38% --
Average shareholders' equity ...................... 18.47% 17.73% 4.2
Efficiency ratio ....................................... 52.16% 56.32% (7.4)
Average equity/average assets .......................... 7.46% 7.77% (4.0)
Net interest margin .................................... 4.18% 4.30% (2.8)
TANGIBLE OR "CASH BASIS" RESULTS (2)
Per Common Share Amounts (1)
Net income -- Diluted ............................. $ 0.49 $ 0.43 14.0
Return on:
Average total assets .............................. 1.52% 1.44% 5.6
Average shareholders' equity ...................... 29.58% 21.09% 40.3
</TABLE>
(1) Adjusted for stock splits and stock dividends, as applicable.
(2) Tangible or "Cash Basis" net income excludes amortization of goodwill and
other intangibles. Related asset amounts also excluded from total assets
and shareholders' equity.
21
<PAGE> 22
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
FINANCIAL REVIEW
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SECURITIES AVAILABLE FOR SALE - AMORTIZED COST & FAIR VALUES BY MATURITY AT
MARCH 31, 1999 AND DECEMBER 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
(in thousands of dollars) MARCH 31, 1999 December 31, 1998
- ---------------------------------------------------------------------------------------------------------------------
AMORTIZED COST FAIR VALUE Amortized Cost Fair Value
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. Treasury
Under 1 year ............................ $ 1,000 $ 1,000 $ 1,000 $ 1,007
1-5 years ............................... 264,458 262,661 63,537 65,364
6-10 years .............................. 489,669 483,251 169,959 176,945
---------- ---------- ---------- ----------
Total ................................ 755,127 746,912 234,496 243,316
---------- ---------- ---------- ----------
Federal agencies
Mortgage-backed securities
1-5 years ............................... 9 9 11 11
6-10 years .............................. 89,280 90,988 87,342 89,162
Over 10 years ........................... 1,490,254 1,480,587 1,356,722 1,363,015
---------- ---------- ---------- ----------
Total ................................ 1,579,543 1,571,584 1,444,075 1,452,188
---------- ---------- ---------- ----------
Other agencies
1-5 years ............................... 1,012,247 1,006,438 968,753 975,253
6-10 years .............................. 596,845 591,884 678,245 684,230
Over 10 years ........................... 782,449 780,079 740,139 741,147
---------- ---------- ---------- ----------
Total ................................ 2,391,541 2,378,401 2,387,137 2,400,630
---------- ---------- ---------- ----------
Other
Under 1 year ............................ 7,921 7,894 7,492 7,478
1-5 years ............................... 200,820 203,290 188,551 190,871
6-10 years .............................. 176,703 179,705 204,788 210,698
Over 10 years ........................... 275,681 272,492 268,319 268,930
Marketable equity securities ............ 8,714 7,593 8,359 7,304
---------- ---------- ---------- ----------
Total ................................ 669,839 670,974 677,509 685,281
---------- ---------- ---------- ----------
Total Securities Available for Sale........... $5,396,050 $5,367,871 $4,743,217 4,781,415
========== ========== ========== ==========
</TABLE>
22
<PAGE> 23
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------
FINANCIAL REVIEW
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
LOAN LOSS EXPERIENCE
- -------------------------------------------------------------------------------------------------------------------------
1999 1998
-------- ---------------------------------------------
(in thousands of dollars) I Q IV Q III Q II Q I Q
- ---------------------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES, BEGINNING OF PERIOD ........... $290,948 $286,122 $286,864 $258,262 $258,171
Allowance of assets acquired/other ....................... -- -- -- 22,042 --
Loan losses .............................................. (32,531) (36,839) (33,095) (28,855) (27,566)
Recoveries of loans previously charged off ............... 7,344 7,359 8,193 10,820 5,476
Provision for loan losses ................................ 25,305 34,306 24,160 24,595 22,181
-------- -------- -------- -------- --------
ALLOWANCE FOR LOAN LOSSES END OF PERIOD .................. $291,066 $290,948 $286,122 $286,864 $258,262
======== ======== ======== ======== ========
AS A % OF AVERAGE TOTAL LOANS
Net loan losses--annualized ............................ 0.52% 0.61% 0.52% 0.41% 0.51%
Provision for loan losses--annualized .................. 0.52% 0.71% 0.51% 0.55% 0.51%
Allowance for loan losses as a % of total loans........... 1.48% 1.50% 1.50% 1.50% 1.46%
Net loan loss coverage (1) ............................... 6.64x 5.66x 6.20x 8.89x 6.96x
</TABLE>
(1) Income before taxes (excluding special charges) and the provision for loan
losses to net loan losses.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NON-PERFORMING ASSETS AND PAST DUE LOANS
- ---------------------------------------------------------------------------------------------------------------------------
(Quarter-End)
1999 1998
------- -----------------------------------------------
(in thousands of dollars) I Q IV Q III Q II Q I Q
- ---------------------------------------------------------- ------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Non-accrual loans ........................................ $74,116 $72,429 $70,210 $ 75,367 $79,888
Renegotiated loans ....................................... 2,764 4,706 4,798 4,770 3,173
------- ------- ------- -------- -------
TOTAL NON-PERFORMING LOANS ............................... 76,880 77,135 75,008 80,137 83,061
Other real estate, net ................................... 17,853 18,964 20,812 21,516 12,005
------- ------- ------- -------- -------
TOTAL NON-PERFORMING ASSETS .............................. $94,733 $96,099 $95,820 $101,653 $95,066
======= ======= ======= ======== =======
NON-PERFORMING LOANS AS A
% OF TOTAL LOANS ....................................... 0.39% 0.40% 0.39% 0.42% 0.47%
NON-PERFORMING ASSETS AS A
% OF TOTAL LOANS AND OTHER REAL ESTATE ................. 0.48% 0.49% 0.50% 0.53% 0.54%
ALLOWANCE FOR LOAN LOSSES AS A % OF
NON-PERFORMING LOANS ................................... 378.60% 377.19% 381.46% 357.97% 310.93%
ALLOWANCE FOR LOAN LOSSES AND OTHER REAL
ESTATE AS A % OF NON-PERFORMING ASSETS ................. 305.33% 301.00% 296.69% 280.64% 270.07%
ACCRUING LOANS PAST DUE 90 DAYS OR MORE................... $51,039 $51,037 $63,998 $ 50,614 $64,959
======= ======= ======= ======== =======
</TABLE>
23
<PAGE> 24
<TABLE>
- ------------------------------------------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES (QUARTERLY DATA)
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Fully Tax Equivalent Basis (1) 1ST QUARTER 1999 4th Quarter 1998
----------------- -----------------
AVERAGE YIELD/ Average Yield/
(in millions of dollars) BALANCE RATE Balance Rate
- ------------------------------------------------------- ------- ------ ------- ------
<S> <C> <C> <C> <C>
ASSETS
Interest bearing deposits in banks..................... $ 8 4.93% $ 4 5.00%
Trading account securities............................. 18 5.20 12 5.62
Federal funds sold and securities purchased
under resale agreements............................. 18 5.64 34 5.48
Mortgages held for sale................................ 359 6.75 377 6.73
Securities:
Taxable.......................................... 4,926 6.05 4,518 6.16
Tax exempt....................................... 304 8.17 292 8.16
------- -------
Total Securities............................ 5,230 6.17 4,810 6.28
------- -------
Loans:
Commercial........................................ 6,067 7.90 5,954 7.99
Real Estate
Construction................................. 957 8.14 864 8.24
Mortgage..................................... 3,651 7.97 3,689 8.21
Consumer
Loans....................................... 6,873 8.38 6,912 8.62
Leases...................................... 2,015 6.94 1,850 7.00
------- -------
Total Consumer loans........................ 8,888 8.05 8,762 8.28
------- -------
Total Loans............................................ 19,563 7.99 19,269 8.17
------- -------
Allowance for loan losses/loan fees.................... 299 296
------- -------
Net loans.............................................. 19,264 8.49 18,973 8.68
------- -------
Total earning assets................................... 25,196 7.98% 24,506 8.17%
------- -------
Cash and due from banks................................ 1,064 1,056
All other assets....................................... 2,461 2,448
------- -------
TOTAL ASSETS........................................... $28,422 $27,714
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Core deposits
Non-interest bearing deposits..................... $ 3,505 $ 3,577
Interest bearing demand deposits.................. 4,061 2.46% 3,967 2.60%
Savings deposits.................................. 3,627 3.17 3,546 3.38
Other domestic time deposits...................... 6,047 5.27 6,459 5.43
------- -------
Total core deposits.......................... 17,240 3.88 17,549 4.10
------- -------
Certificates of deposit of $100,000 or more............ 1,730 5.35 1,755 5.65
Foreign time deposits.................................. 161 4.80 56 4.86
------- -------
Total deposits.................................... 19,131 4.06 19,360 4.27
------- -------
Short-term borrowings.................................. 3,647 4.33 2,123 4.36
Medium-term notes...................................... 1,872 5.29 2,526 5.48
Subordinated notes and other long-term debt,
including capital securities........................ 1,007 5.81 1,020 5.88(2)
------- -------
Interest bearing liabilities...................... 22,152 4.32% 21,452 4.49%
------- -------
All other liabilities.................................. 644 653
Shareholders' equity................................... 2,121 2,032
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY............. $28,422 $27,714
======= =======
Net interest rate spread............................... 3.66% 3.68%
Impact of non-interest bearing funds on margin......... 0.52% 0.56%
NET INTEREST MARGIN.................................... 4.18% 4.24%(2)
</TABLE>
(1) Fully tax equivalent yields are calculated assuming a 35% tax rate.
(2) Excludes nonrecurring interest rate swap adjustment of $9.2 million.
24
<PAGE> 25
<TABLE>
-------------------------------------------------------------------
CONSOLIDATED AVERAGE BALANCES AND INTEREST RATES (QUARTERLY DATA)
<CAPTION>
-------------------------------------------------------------------
3rd Quarter 1998 2nd Quarter 1998 1st Quarter 1998
----------------- ----------------- -----------------
Average Yield/ Average Yield/ Average Yield/
Balance Rate Balance Rate Balance Rate
------- ------ ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
$ 31 5.20% $ 8 5.26% $ 9 5.35%
11 5.87 12 5.81 8 5.48
689 5.62 168 5.63 21 6.57
275 7.10 282 7.08 219 7.24
4,077 6.34 5,107 6.34 5,906 6.35
234 8.86 225 9.27 237 9.23
------- ------- -------
4,311 6.47 5,332 6.47 6,143 6.46
------- ------- -------
5,763 8.36 5,482 8.46 5,306 8.58
811 8.83 816 8.73 823 8.85
3,760 8.43 3,444 8.62 3,520 8.65
6,896 8.77 6,474 8.82 6,428 8.96
1,728 7.11 1,627 7.15 1,564 7.13
------- ------- -------
8,624 8.44 8,101 8.48 7,992 8.61
------- ------- -------
18,958 8.43 17,843 8.51 17,641 8.78
------- ------- -------
293 266 265
------- ------- -------
18,665 8.87 17,577 8.99 17,376 9.20
------- ------- -------
24,275 8.33% 23,645 8.37% 24,041 8.48%
------- ------- -------
1,017 907 917
2,516 1,786 1,637
------- ------- -------
$27,515 $26,072 $26,330
======= ======= =======
$ 3,466 $ 3,113 $ 2,979
3,898 2.77% 3,216 2.72% 3,250 2.68%
3,428 3.56 3,099 3.51 3,028 3.44
6,619 5.53 5,985 5.62 6,093 5.64
------- ------- -------
17,411 4.27 15,413 4.33 15,350 4.32
------- ------- -------
1,884 5.71 1,909 5.74 1,935 5.78
30 5.39 132 5.80 198 5.85
------- ------- -------
19,325 4.45 17,454 4.53 17,483 4.54
------- ------- -------
1,515 4.75 2,044 4.97 2,656 5.16
2,952 5.70 3,222 5.71 2,914 5.77
1,041 6.37 757 6.13 691 5.85
------- ------- -------
21,367 4.72% 20,364 4.80% 20,765 4.83%
------- ------- -------
539 503 539
2,143 2,092 2,047
------- ------- -------
$27,515 $26,072 $26,330
======= ======= =======
3.61% 3.57% 3.65%
0.57% 0.66% 0.65%
4.18% 4.23% 4.30%
</TABLE>
25
<PAGE> 26
<TABLE>
- ------------------------------------------------------------------------------------------------------------------------------
SELECTED QUARTERLY INCOME STATEMENT DATA
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
1999 1998
-------- -----------------------------------------------
(in thousands of dollars, except per share amounts) I Q IV Q III Q II Q I Q
- ------------------------------------------------------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
TOTAL INTEREST INCOME ....................................... $495,692 $500,395 $505,221 $491,268 $502,480
TOTAL INTEREST EXPENSE ...................................... 236,171 233,094 253,706 243,839 247,632
-------- -------- -------- -------- --------
NET INTEREST INCOME ......................................... 259,521 267,301 251,515 247,429 254,848
Provision for loan losses ................................... 25,305 34,306 24,160 24,595 22,181
-------- -------- -------- -------- --------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES ................................. 234,216 232,995 227,355 222,834 232,667
-------- -------- -------- -------- --------
Service charges on deposit accounts ......................... 35,776 33,992 32,493 30,428 29,490
Mortgage banking ............................................ 15,958 15,388 15,270 15,191 14,157
Trust services .............................................. 13,434 12,924 12,502 12,745 12,583
Brokerage and insurance income .............................. 11,543 9,848 10,057 8,520 8,285
Bank Owned Life Insurance income ............................ 9,390 8,098 8,098 7,168 5,348
Electronic banking fees ..................................... 8,038 8,037 7,897 7,520 5,748
Credit card fees ............................................ 5,342 6,367 5,197 5,450 4,895
Other ....................................................... 8,081 12,057 12,512 18,318 11,824
-------- -------- -------- -------- --------
TOTAL NON-INTEREST INCOME BEFORE SECURITIES GAINS............ 107,562 106,711 104,026 105,340 92,330
-------- -------- -------- -------- --------
Securities gains ............................................ 2,310 1,773 10,615 14,316 3,089
-------- -------- -------- -------- --------
TOTAL NON-INTEREST INCOME ................................... 109,872 108,484 114,641 119,656 95,419
-------- -------- -------- -------- --------
Personnel and related costs ................................. 107,254 103,600 111,744 108,483 104,712
Equipment ................................................... 16,873 16,202 15,001 15,688 15,149
Outside data processing and other services .................. 15,392 20,915 17,550 16,988 19,342
Net occupancy ............................................... 13,917 11,602 15,019 14,063 13,439
Amortization of intangible assets ........................... 9,328 9,436 9,467 3,393 3,393
Telecommunications .......................................... 7,064 8,173 7,793 7,450 6,013
Marketing ................................................... 6,298 8,251 8,762 8,315 6,932
Printing and supplies ....................................... 4,756 6,450 5,851 5,611 5,761
Legal and other professional services ....................... 4,744 7,847 5,291 6,234 5,788
Franchise and other taxes ................................... 4,387 5,554 5,523 5,526 5,500
Other ....................................................... 12,093 10,902 9,876 14,927 10,413
-------- -------- -------- -------- --------
TOTAL NON-INTEREST EXPENSE BEFORE SPECIAL CHARGES ........... 202,106 208,932 211,877 206,678 196,442
-------- -------- -------- -------- --------
Special charges ............................................. -- 90,000 -- -- --
-------- -------- -------- -------- --------
TOTAL NON-INTEREST EXPENSE .................................. 202,106 298,932 211,877 206,678 196,442
-------- -------- -------- -------- --------
INCOME BEFORE INCOME TAXES .................................. 141,982 42,547 130,119 135,812 131,644
Provision for income taxes .................................. 45,410 11,329 41,364 43,503 42,158
-------- -------- -------- -------- --------
NET INCOME .................................................. $ 96,572 $ 31,218 $ 88,755 $ 92,309 $ 89,486
======== ======== ======== ======== ========
PER COMMON SHARE (1)
Net income - Diluted ....................................... $ 0.46 $ 0.15 $ 0.42 $ 0.43 $ 0.42
Net income - Diluted--Cash Basis ........................... $ 0.49 $ 0.18 $ 0.45 $ 0.45 $ 0.43
Cash Dividends Declared .................................... $ 0.20 $ 0.20 $ 0.20 $ 0.18 $ 0.18
FULLY TAX EQUIVALENT MARGIN:
Net Interest Income ......................................... $259,521 $267,301 $251,515 $247,429 $254,848
Tax Equivalent Adjustment (2) ............................... 2,504 2,504 2,567 2,581 2,655
-------- -------- -------- -------- --------
Tax Equivalent Net Interest Income .......................... $262,025 $269,805 $254,082 $250,010 $257,503
======== ======== ======== ======== ========
</TABLE>
(1) Adjusted for stock splits and stock dividends, as applicable.
(2) Calculated assuming a 35% tax rate.
26
<PAGE> 27
<TABLE>
HUNTINGTON BANCSHARES INCORPORATED
- ---------------------------------------------------------------------------------------------------------------------
QUARTERLY COMMON STOCK SUMMARY (1)
<CAPTION>
1999 1998
--------- ----------------------------------------------
I Q IV Q III Q II Q I Q
- ------------------------------------------------------ --------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
High ................................................. $33 1/2 $31 1/2 $33 7/8 $34 9/16 $34 7/32
Low .................................................. 29 7/8 23 5/8 22 29 9/16 29 1/16
Close ................................................ 30 15/16 30 1/16 25 1/8 30 9/16 33 1/8
Cash dividends declared............................... $0.20 $0.20 $0.20 $0.18 $0.18
</TABLE>
Note: Stock price quotations were obtained from NASDAQ.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------------
KEY RATIOS AND STATISTICS
<CAPTION>
1999 1998
------- ---------------------------------------------
I Q IV Q III Q II Q I Q
- ------------------------------------------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
MARGIN ANALYSIS - AS A %
OF AVERAGE EARNING ASSETS (2)
Interest Income ...................................... 7.98% 8.17% 8.33% 8.37% 8.48%
Interest Expense ..................................... 3.80 3.93 4.15 4.14 4.18
------- ------- ------- ------- -------
Net Interest Margin ............................. 4.18% 4.24% 4.18% 4.23% 4.30%
======= ======= ======= ======= =======
RETURN ON
Average total assets ................................. 1.38% 1.31% 1.28% 1.42% 1.38%
Average total assets-cash basis ...................... 1.52% 1.45% 1.43% 1.49% 1.44%
Average shareholders' equity ......................... 18.47% 17.87% 16.43% 17.70% 17.73%
Average shareholders' equity-cash basis............... 29.58% 29.44% 26.59% 21.17% 21.09%
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
REGULATORY CAPITAL DATA 1999 1998
------- ---------------------------------------------
(in millions of dollars) I Q IV Q III Q II Q I Q
- ------------------------------------------------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total Risk-Adjusted Assets............................ $24,345 $24,239 $23,695 $23,728 $22,554
Tier 1 Risk-Based Capital Ratio....................... 7.20% 7.10% 7.35% 7.18% 8.91%
Total Risk-Based Capital Ratio........................ 10.70% 10.73% 11.18% 11.01% 11.57%
Tier 1 Leverage Ratio................................. 6.32% 6.37% 6.51% 6.72% 7.72%
</TABLE>
(1) Adjusted for stock splits and stock dividends, as applicable.
(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 2. Changes in securities and use of proceeds
(c) Unregistered shares
In conjunction with Deferred Compensation Agreements
associated with the January 6, 1998, acquisition by
Huntington of Pollock and Pollock, an insurance agency
headquartered in Cleveland, Ohio ("Pollock"), Huntington
issued 22,714 unregistered shares of Huntington common
stock, without par value, to five shareholders of Pollock
and Pollock on February 24, 1999. This is in addition to
the shares of common stock previously issued to these
shareholders in prior periods in connection with the
acquisition. The issuance of shares in this transaction
was deemed to be exempt from registration under the
Securities Act of 1933, as amended, in reliance on
Section 4(2) since this was a transaction by an issuer
not involving a public offering.
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, 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 ) Amended and Restated Bylaws -- previously
filed as Exhibit 3(ii) to Annual Report on Form
10-K for the year ended December 31, 1998, 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 Annual Report
on Form 10-K for the year ended December 31, 1993,
and incorporated herein by reference, as amended
and supplemented by 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. 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
<PAGE> 29
rights of holders of long-term debt will be
furnished to the Securities and Exchange
Commission upon request.
27. Financial Data Schedule
99. Earnings to Fixed Charges
(b) Reports on Form 8-K
1. A report on Form 8-K, dated January 13, 1999, was
filed under report item numbers 5 and 7,
concerning Huntington's results of operations for
the fourth quarter and year ended December 31,
1998.
<PAGE> 30
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: May 14, 1999 /s/ Richard A. Cheap
----------------------------------
Richard A. Cheap
General Counsel and Secretary
Date: May 14, 1999 /s/ Anne W. Creek
----------------------------------
Anne W. Creek
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
MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERNCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 971,446
<INT-BEARING-DEPOSITS> 8,143
<FED-FUNDS-SOLD> 11,238
<TRADING-ASSETS> 27,755
<INVESTMENTS-HELD-FOR-SALE> 5,367,871
<INVESTMENTS-CARRYING> 23,044
<INVESTMENTS-MARKET> 23,415
<LOANS> 19,731,593
<ALLOWANCE> 291,066
<TOTAL-ASSETS> 28,577,908
<DEPOSITS> 19,046,901
<SHORT-TERM> 2,884,722
<LIABILITIES-OTHER> 635,890
<LONG-TERM> 707,438
0
0
<COMMON> 2,152,076
<OTHER-SE> (14,019)
<TOTAL-LIABILITIES-AND-EQUITY> 28,577,908
<INTEREST-LOAN> 410,181
<INTEREST-INVEST> 78,852
<INTEREST-OTHER> 6,659
<INTEREST-TOTAL> 495,692
<INTEREST-DEPOSIT> 156,305
<INTEREST-EXPENSE> 236,171
<INTEREST-INCOME-NET> 259,521
<LOAN-LOSSES> 25,305
<SECURITIES-GAINS> 2,310
<EXPENSE-OTHER> 202,106
<INCOME-PRETAX> 141,982
<INCOME-PRE-EXTRAORDINARY> 141,982
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 96,572
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.46
<YIELD-ACTUAL> 4.18
<LOANS-NON> 74,116
<LOANS-PAST> 51,039
<LOANS-TROUBLED> 2,764
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 290,948
<CHARGE-OFFS> 32,531
<RECOVERIES> 7,344
<ALLOWANCE-CLOSE> 291,066
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE> 1
EXHIBIT 99.
<TABLE>
HUNTINGTON BANCSHARES INCORPORATED
RATIO OF EARNINGS TO FIXED CHARGES
<CAPTION>
THREE MONTHS
ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
------------ --------------------------------------------------------------------
1999 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EXCLUDING INTEREST ON DEPOSITS
Income before taxes ........................ $141,982 $ 440,122 $ 459,164 $ 457,268 $ 429,084 $410,970
Fixed charges:
Interest expense ..................... 79,916 305,838 308,122 299,962 318,192 174,143
Interest factor of rent expense ...... 2,465 10,237 9,572 9,166 8,657 9,034
-------- ---------- ---------- ---------- ---------- --------
Total fixed charges ............... 82,381 316,075 317,694 309,128 326,849 183,177
-------- ---------- ---------- ---------- ---------- --------
Earnings ................................... $224,363 $ 756,197 $ 776,858 $ 766,396 $ 755,933 $594,147
======== ========== ========== ========== ========== ========
Fixed charges .............................. $ 82,381 $ 316,075 $ 317,694 $ 309,128 $ 326,849 $183,177
======== ========== ========== ========== ========== ========
RATIO OF EARNINGS
TO FIXED CHARGES ..................... 2.72X 2.39X 2.45X 2.48X 2.31X 3.24X
INCLUDING INTEREST ON DEPOSITS
Income before taxes ........................ $141,982 $ 440,122 $ 459,164 $ 457,268 $ 429,084 $410,970
Fixed charges:
Interest expense ..................... 242,168 978,271 954,243 880,648 856,860 546,880
Interest factor of rent expense....... 2,465 10,237 9,572 9,166 8,657 9,034
-------- ---------- ---------- ---------- ---------- --------
Total fixed charges ............... 244,633 988,508 963,815 889,814 865,517 555,914
-------- ---------- ---------- ---------- ---------- --------
Earnings ................................... $386,615 $1,428,630 $1,422,979 $1,347,082 $1,294,601 $966,884
======== ========== ========== ========== ========== ========
Fixed charges .............................. $244,633 $ 988,508 $ 963,815 $ 889,814 $ 865,517 $555,914
======== ========== ========== ========== ========== ========
RATIO OF EARNINGS
TO FIXED CHARGES ..................... 1.58X 1.45X 1.48X 1.51X 1.50X 1.74X
</TABLE>
