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Exhibit 99.1
HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
FOR THE YEAR ENDED DECEMBER 31, 1999
INDEX
Page
----
Audited Financial Statements
----------------------------
Report of Independent Auditors 5
Statements of Net Assets Available for Benefits 6
December 31, 1999 and 1998
Statements of Changes in Net Assets Available for Benefits
For the Years Ended December 31, 1999 and 1998 7
Notes to Financial Statements 8
Supplemental Schedule
---------------------
Schedule of Assets Held for Investment Purposes at End of Year 14
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Report of Independent Auditors
Huntington Investment and Tax Savings
Plan Committee
We have audited the accompanying statements of net assets available for benefits
of the Huntington Investment and Tax Savings Plan as of December 31, 1999 and
1998, and the related statements of changes in net assets available for benefits
for the years then ended. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Huntington
Investment and Tax Savings Plan at December 31, 1999 and 1998, and the changes
in its net assets available for benefits for the years then ended, in conformity
with generally accepted accounting principles in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
held for investment purposes at the end of year as of December 31, 1999, is
presented for purposes of additional analysis and is not a required part of the
financial statements but is supplementary information required by the Department
of Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule has been
subjected to the auditing procedures applied in our audits of the financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the financial statements taken as a whole.
s/ Ernst & Young LLP
Columbus, Ohio
June 28, 2000
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
December 31,
1999 1998
---- ----
<S> <C> <C>
ASSETS
Investments, at market value:
Huntington Bancshares Incorporated Common
Stock (Cost: $143,573,156 in 1999, and $143,550,760 in 1998) $259,894,605 $328,677,822
Mutual Funds 53,234,816 36,100,609
------------ ------------
Total Investments 313,129,421 364,778,431
Contributions receivable
From participants -- 585,186
From Huntington Bancshares Incorporated -- 322,880
Participants notes receivable 304,827 584,630
Accrued dividends, interest receivable, and
other assets 2,660,673 2,201,648
Cash and cash equivalents 2,964,181 165,503
------------ ------------
TOTAL ASSETS 319,059,102 368,638,278
LIABILITIES
Investment purchases payable and other liabilities 2,018,888 405,512
------------ ------------
NET ASSETS AVAILABLE FOR BENEFITS $317,040,214 $368,232,766
============ ============
</TABLE>
See notes to financial statements.
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
<TABLE>
<CAPTION>
Years Ended December 31,
1999 1998
---- ----
<S> <C> <C>
ADDITIONS
Investment income:
Cash dividends on Huntington
Bancshares Incorporated Common Stock $ 10,328,583 $ 9,909,536
Interest 364,989 164,371
------------ ------------
10,693,572 10,073,907
Contributions:
Employees 15,652,357 14,296,646
Employer 7,708,056 8,239,405
------------ ------------
23,360,413 22,536,051
Assets of merged plans -- 47,491,634
------------ ------------
Total Additions 34,053,985 80,101,592
DEDUCTIONS
Benefit distributions and other withdrawals 53,984,564 62,142,383
------------ ------------
Total Deductions 53,984,564 62,142,383
Net realized and unrealized depreciation
in market value of investments (31,261,973) (33,745,000)
------------ ------------
Net decrease (51,192,552) (15,785,791)
Net assets available for benefits at beginning of year 368,232,766 384,018,557
------------ ------------
Net assets available for benefits at end of year $317,040,214 $368,232,766
============ ============
</TABLE>
See notes to financial statements.
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HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 1 - Plan Description and Accounting Policies
The financial statements of the Huntington Investment and Tax Savings Plan (the
"Plan") are presented on the accrual basis and are prepared in conformity with
generally accepted accounting principles, which requires management to make
estimates and assumptions that affect amounts reported in the financial
statements. Actual results could differ from those estimates.
Statement of Position 99-3 (SOP 99-3), "Accounting for and Reporting of Certain
Defined Contribution Plan Investments and Other Disclosure Matters" was issued
on September 15, 1999, as an Amendment to the AICPA Audit and Accounting Guide -
Audits of Employee Benefit Plans. The primary impact of SOP 99-3 was the
elimination of the requirement to disclose participant-directed investment
programs. The Plan has adopted SOP 99-3 for the plan year ended December 31,
1999, and thus certain prior year amounts have been reclassified to conform with
the current year presentation.
Description of the Plan
The Plan, formerly the Huntington Stock Purchase and Tax Savings Plan and Trust,
was initially adopted by the Board of Directors of Huntington Bancshares
Incorporated ("Huntington") on September 29, 1977, to be effective January 1,
1978. On August 19, 1992, the Plan was amended and restated, effective January
1, 1987, to comply with the Internal Revenue Code of 1986, as amended. The Plan
was again restated October 13, 1994, with a general effective date of January 1,
1987, to incorporate provisions concerning merged plans. The Plan was again
amended and restated November 19, 1997, effective at April 1, 1998. The
following summary describes the provisions of the Plan in effect as of the Plan
year ending December 31, 1999.
Funding and Vesting
Eligible employees may enroll on the first day of the month following six months
of employment and attainment of age 21. Participants may elect to make pre-tax
matched contributions of up to 15% of their eligible compensation. Huntington
will make a matching contribution equal to 100% on the first 3% of participant
elective deferrals and 50% on the next 2% of participant elective deferrals.
Employee and employer contributions are fully vested at all times. Prior to
April 1, 1998, Plan assets were invested primarily in Huntington Bancshares
Incorporated Common Stock. Subsequently, the Plan participants are permitted to
direct pre-tax elective deferrals and employer matching contributions to any
combination of ten investment options, including Huntington Bancshares
Incorporated Common Stock. An active participant may change or suspend pre-tax
elective deferrals pursuant to the terms set forth in the Plan document.
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Prior to the April 1, 1998 amendment, eligible employees of Huntington and its
participating affiliates could choose between a pre-tax, after-tax, or a
combined pre-tax and after-tax employee contribution. Participants could elect
to make pre-tax matched contributions of up to 6% of their eligible
compensation. Participants could also elect to make after-tax matched
contributions of up to 3% of their eligible compensation, provided the sum of
the participant's pre-tax matched and after-tax non-matched contributions
equaled at least 3% of their eligible compensation. A participant's combined
pre-tax and after-tax matched contributions could not exceed 6% of the
participant's eligible compensation. A participant who designated the maximum 6%
matched contribution could make voluntary "after-tax non-matched" contributions
to the Plan up to an additional 10% of eligible compensation. A participant who
designated less than a 6% matched contribution could make after-tax non-matched
contributions to the Plan subject to the following rules. If the pre-tax matched
contributions of a participant were less than 3% of eligible compensation,
after-tax contributions were treated first as after-tax non-matched
contributions until the sum of the pre-tax matched contributions and the
after-tax non-matched contributions equaled 3% of eligible compensation.
Thereafter, after-tax contributions were treated as after-tax matched
contributions, up to the limits described above, and then as after-tax
non-matched contributions. Huntington made a matching contribution equal to 75%
of an employee's contribution up to 6% of eligible compensation provided that no
more than 3% of compensation was contributed on an after-tax basis. In addition,
Huntington could make additional matching contributions, up to 25% of pre-tax
and after-tax matched contributions, at the discretion of the Board of
Directors.
Administration
The Plan administrator is Huntington Bancshares Incorporated. Administration of
the Plan has been delegated by the Plan administrator to a committee of
employees appointed by the Board of Directors of Huntington.
Employee and Employer contributions to participants' accounts in the Plan are
invested pursuant to the participants' investment direction elections on file at
the time the contributions are allocated to the participants' accounts. Plan
assets are held in mutual funds or Huntington Bancshares Incorporated Common
Stock by the trust division of The Huntington National Bank (the "Plan
Trustee"), a wholly-owned subsidiary of Huntington. The Plan Trustee purchases
and sells shares of these mutual funds or Huntington Bancshares Incorporated
Common Stock on the open market at market prices. Additionally, the Plan Trustee
may directly purchase from, and sell to, Huntington at market prices shares of
Huntington Bancshares Incorporated Common Stock.
Trustee and most administrative fees are paid from the general assets of
Huntington. However, participants are charged a nominal amount for
administration of the Plan.
Distributions and Withdrawals
Distributions from the Plan are paid in cash. A participant may request that the
portion of his or her account that is invested in the Huntington Bancshares
Incorporated Common Stock Fund be
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distributed in shares of Huntington Bancshares Incorporated Common Stock with
cash paid in lieu of any fractional shares. Distributions and withdrawals are
reported at market value.
Participants are permitted to take distributions and withdrawals from their
accounts in the Plan under the circumstances set forth in the Plan document.
Generally, participants may request withdrawal of funds in their account
attributable to: (i) rollover contributions; (ii) after-tax contributions; and
(iii) pre-April 1, 1998 Employer contributions that have been in the
participants' accounts for at least 24 months. Employee pre-tax elective
deferrals and post April 1, 1998, Employer matching contributions are subject to
special withdrawal rules and generally may not be withdrawn from the Plan prior
to a participant's death, disability, termination of employment, or attainment
of age 59 1/2. Certain distributions of Employee pre-tax deferrals may be made,
however, in the event a participant requests a distribution due to financial
hardship as defined by the Plan. Participants should refer to the Summary Plan
Description for a complete summary of the Plan provisions.
Participants may withdraw up to 100% of their account balances in the Plan for
any reason after they have reached age 59 1/2.
Dividends and Interest Income
Dividends are recognized as of the record date. Interest is recorded on an
accrual basis when earned.
Investments
At December 31, 1999, the separate investment options offered by the Plan are as
follows:
Huntington Bancshares Incorporated Common Stock Fund: This fund is invested
primarily in Huntington Bancshares Incorporated Common Stock. A small percentage
of this fund (usually 1% or less) is invested in a money market fund to maintain
liquidity for Plan distributions and participant fund reallocations. Unit values
are assigned to participants.
Huntington Money Market Fund: This fund seeks to provide safety of principal and
interest, a reasonable rate of interest income, little or no fluctuation of
principal, and liquidity. Investments typically include short-term debt
securities, including commercial paper, certificates of deposit, bankers
acceptances and government securities.
Bond Fund of America: This fund seeks to provide as high a level of current
income as is consistent with the preservation of capital by investing primarily
in bonds. The fund invests substantially all of its assets in marketable
corporate debt securities, U.S. government securities, mortgage-related
securities, other asset-backed securities and cash or money market instruments.
Normally, at least 65% of the fund assets will be invested in bonds.
Vanguard Wellington Fund: This fund seeks to conserve capital and to provide
moderate long-term growth and moderate income by investing in stocks, bonds and
money market instruments. The fund invests 60% to 70% of its assets in
dividend-paying stocks of large and medium sized companies. The
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remaining 30% to 40% of assets are invested in high-quality longer-term
corporate bonds, with some investment in Treasury, government agency and
mortgage backed bonds.
Huntington Income-Equity Trust Fund: This fund seeks to achieve current income
and moderate appreciation of both capital and income by investing in
income-producing securities, such as stocks of companies having the potential to
pay attractive dividends.
Vanguard Index 500 Fund: This fund seeks to mirror, as closely as possible, the
performance of the Standard and Poor's 500 Composite Stock Price Index, which
emphasizes stocks of large U.S. companies. Accordingly, the fund invests in
stocks which are included in the Standard and Poor's 500 Composite Stock Price
Index.
MFS Massachusetts Investors Fund: This fund seeks to provide current income and
long-term growth of capital and income. Investments include stocks and other
equity securities of companies emphasizing above average growth potential.
Neuberger & Berman Partners Trust Fund: This fund is designed to achieve
long-term capital growth by investing in common stocks of established medium to
large capitalization companies.
Franklin Small Cap Growth I Fund: This fund seeks long-term growth of capital by
investing in common stocks of smaller capitalization companies.
EuroPacific Growth Fund: This fund seeks long-term growth of capital by
investing in securities of companies domiciled outside of the United States,
usually located in Europe and the Pacific Basin. However, the fund may invest in
securities of developing countries as well.
Participant Notes Receivable
In conjunction with the merger of First Michigan Bank Corporation into
Huntington, the First Michigan Bank Corporation Cash Option Plan (the "First
Michigan Plan") merged into the Plan effective as of April 1, 1998. The loan
fund represents the transfer of the outstanding participant loan balances in the
First Michigan Plan to the Plan. While the Plan does not allow participants to
take loans against their account balances, participants with outstanding loans
in the First Michigan Plan at the time of its merger into the Plan are permitted
to repay outstanding loans. The First Michigan Plan was amended in 1997 to
discontinue participant loans. Therefore, no loans were made from the First
Michigan Plan during 1999 and 1998. Each loan, by its terms, must be repaid
within 5 years, unless it is a loan for a participant's principal residence. The
loans bear interest at a market rate fixed at the date of origination. Principal
and interest is paid by participants through payroll deductions authorized by
the participant currently employed by Huntington. Individuals terminated from
employment repay principal and interest on an installment basis.
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Note 2 - Cash and Cash Equivalents
Cash and cash equivalents primarily represent funds temporarily invested in the
Huntington Money Market Fund to provide liquidity for fund reallocations and
distributions from the Huntington Bancshares Incorporated Common Stock Fund.
Note 3 - Federal Income Taxes
The Plan has received a determination letter from the Internal Revenue Service
dated April 20, 2000, stating that the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and, therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
Note 4 - Investments
The following individual investments represent 5 percent or more of the fair
value of assets available for benefits as of December 31:
1999 1998
---- ----
Huntington Bancshares Incorporated
Common Stock Fund $259,894,605 $328,677,822
Vanguard Index 500 Fund 17,405,955 --
The Plan's investments (including investments purchased, sold and held during
the year) appreciated (depreciated) in carrying value for the years ended
December 31, as follows:
1999 1998
---- ----
Common Stock $(35,858,322) $(33,991,480)
Equity Mutual Funds 4,756,736 337,455
Fixed Income Mutual Fund (160,387) (90,975)
------------ ------------
$(31,261,973) $(33,745,000)
============ ============
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Note 5 - Plan Mergers
During 1998, approximately $47.3 million was transferred to the Plan as a result
of the previous acquisition of First Michigan Bank Corporation, Holland,
Michigan. In addition, approximately $.2 million was transferred to the Plan as
a result of the previous acquisition of the Bank of Winter Park, Winter Park,
Florida.
Note 6 - Terminated Participants
Included in net assets available for benefits are amounts allocated to
individuals who have withdrawn from the Plan. Amounts allocated to these
participants were $512,312 and $1,620,153 at December 31, 1999 and 1998,
respectively.
Note 7 - Party-In-Interest Transactions
The Plan held the following party-in-interest investments (at fair value) at
December 31:
1999 1998
---- ----
Huntington Bancshares Incorporated
Common Stock Fund $259,894,605 $328,677,822
Huntington Money Market Fund 9,267,965 4,827,073
Huntington Income-Equity Trust Fund 1,470,021 939,604
Costs and expenses incurred in administering the Plan paid by Huntington,
including brokerage commissions and fees in connection with each purchase of
securities, totaled $813,890, and $894,357 for 1999 and 1998, respectively.
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Supplemental Schedule 27(a)
HUNTINGTON INVESTMENT AND TAX SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES AT END OF YEAR
December 31, 1999
EIN: 31-0724920
Plan Number: 002
<TABLE>
<CAPTION>
Current
Issuer Description of Investment Cost Value
------ ------------------------- ---- -----
<S> <C> <C> <C>
Huntington Bancshares Incorporated
Common Stock* 10,885,154 shares $143,573,156 $259,894,605
Huntington Money Market Fund* 9,267,965 units 9,267,965 9,267,965
Bond Fund of America 236,385 units 3,237,266 3,068,236
Vanguard Wellington Fund 234,047 units 7,114,885 6,543,954
Huntington Income-Equity Trust Fund* 40,044 units 1,595,397 1,470,021
Vanguard Index 500 Fund 128,619 units 14,421,530 17,405,955
MFS Massachusetts Investors Fund 357,603 units 7,158,678 7,491,784
Neuberger & Berman Trust Fund 244,159 units 4,626,097 4,389,974
Franklin Small Cap Growth I Fund 93,108 units 2,334,820 4,108,869
Europacific Growth Fund 56,370 units 1,757,355 2,404,749
Participant loans 6.00% to 10.00% 304,827
</TABLE>
* Indicates party-in-interest to the Plan.
14
