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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
For the fiscal year ended December 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
Commission file Number 0-2525
Huntington Bancshares Incorporated
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(Exact name of registrant as specified in its charter)
Maryland 31-0724920
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Huntington Center, 41 S. High Street,Columbus, OH 43287
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 480-8300
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock - Without Par Value
(Title of class)
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 (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by non-affiliates of the
registrant as of December 31, 1995, was $2,873,757,326. As of January 31,
1996, 137,192,253 shares of common stock without par value were outstanding.
Documents Incorporated By Reference
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Parts I and II of this Form 10-K incorporate by reference certain
information from the registrant's 1995 Annual Report to Shareholders. Part III
of this Form 10-K incorporates by reference certain information from the
registrant's definitive Proxy Statement for the 1996 Annual Shareholders'
Meeting.
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Huntington Bancshares Incorporated
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Part I
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ITEM 1: BUSINESS
Huntington Bancshares Incorporated (Huntington), incorporated in
Maryland in 1966, is a multi-state bank holding company headquartered in
Columbus, Ohio. Its subsidiaries conduct a full-service commercial and
consumer banking business, engage in mortgage banking, lease financing, trust
services, discount brokerage services, underwriting credit life and disability
insurance, and issuing commercial paper guaranteed by Huntington, and provide
other financial products and services. At December 31, 1995, Huntington's
subsidiaries had 176 banking offices in Ohio, 45 banking offices in West
Virginia, 42 banking offices in Michigan, 25 banking offices in Indiana, 19
banking offices in Florida, 15 banking offices in Kentucky, and 1 foreign
office in the Cayman Islands. The Huntington Mortgage Company (a wholly-owned
subsidiary) has loan origination offices throughout the Midwest and East Coast
as well as one office in Houston, Texas. Foreign banking activities, in total
or with any individual country, are not significant to the operations of
Huntington. At December 31, 1995, Huntington and its subsidiaries had 7,551
full-time equivalent employees.
Competition in the form of price and service from other banks and
financial companies such as savings and loans, credit unions, finance
companies, and brokerage firms is intense in most of the markets served by
Huntington and its subsidiaries. Mergers between and the expansion of
financial institutions both within and outside Ohio have provided significant
competitive pressure in major markets. Since September 1995, when federal
interstate banking legislation became effective that made it permissible for
bank holding companies in any state to acquire banks in any other state, actual
or potential competition in each of Huntington's markets has been intensified.
The same federal legislation permits further competition through interstate
branching beginning in mid-1997, subject to certain limitations by individual
states.
Between May and September 1995, Huntington consummated the
acquisitions of Security National Corporation, a one-bank holding company
owning Security National Bank (Maitland, Florida); Reliance Bank of Florida
(Melbourne, Florida); First Seminole Bank (Lake Mary, Florida); and four
branches of Bank One, Dayton, National Association (Springfield , Ohio). A
combined total of $338 million of assets was acquired through the three bank
acquisitions and $138 million of deposits through the branch acquisitions. The
acquired banks, together with Huntington's Sebring, Florida location that
previously operated as a thrift subsidiary, now operate under one charter as
The Huntington National Bank of Florida. Also in 1995, Huntington sold its
national bank subsidiary in Pennsylvania and its thrift subsidiaries in
Jacksonville, Florida, and Chicago, Illinois. Total assets sold approximated
$180.3 million.
In August 1995, Huntington signed a definitive merger agreement with
Peoples Bank of Lakeland (Peoples), a $534 million commercial bank
headquartered in Lakeland, Florida. The purchase acquisition was completed on
January 23, 1996, with Huntington acquiring all of the common shares of Peoples
in exchange for 4.7 million shares of Huntington common stock and cash of
approximately $46.2 million.
REGULATORY MATTERS
GENERAL
As a registered bank holding company, Huntington is subject to the
supervision of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board") and is required to file with the Federal Reserve Board
reports and other information regarding its business operations and the
business operations of its subsidiaries. It is also subject to examination by
the Federal Reserve Board and is required to obtain Federal Reserve Board
approval prior to acquiring, directly or indirectly, ownership or control of
voting shares of any bank, if, after such acquisition, it would own or control
more than 5% of the voting stock of such bank. In addition, pursuant to
federal law and regulations promulgated by the Federal Reserve Board,
Huntington may only engage in, or own or control companies that engage in,
activities deemed by the Federal Reserve Board to be so closely related to
banking as to be a proper incident thereto. Prior to engaging in most new
business activities, Huntington must obtain approval from
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the Federal Reserve Board. As discussed above, Huntington sold, or converted to
a bank charter, its thrift subsidiaries during 1995 and thereby ceased to be a
savings and loan holding company.
Huntington's bank subsidiaries have deposits insured by the Bank
Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC"),
and are subject to supervision, examination, and regulation by the Office of
the Comptroller of the Currency ("OCC") if a national bank, or by state banking
authorities and either the FDIC or the Federal Reserve Board if a
state-chartered bank. Certain deposits of Huntington's bank subsidiaries were
acquired from savings associations and are insured by the Savings Association
Insurance Fund ("SAIF") of the FDIC. Huntington's nonbank subsidiaries are also
subject to supervision, examination, and regulation by the Federal Reserve
Board and examination by applicable federal and state banking agencies. In
addition to the impact of federal and state supervision and regulation, the
bank and nonbank subsidiaries of Huntington are affected significantly by the
actions of the Federal Reserve Board as it attempts to control the money supply
and credit availability in order to influence the economy.
To the extent that the following information describes statutory or
regulatory provisions, it is qualified in its entirety by reference to such
statutory or regulatory provisions.
HOLDING COMPANY STRUCTURE
Huntington's depository institution subsidiaries are subject to
affiliate transaction restrictions under federal law which limit the transfer
of funds by the subsidiary banks to the parent and any nonbank subsidiaries of
the parent, whether in the form of loans, extensions of credit, investments, or
asset purchases. Such transfers by any subsidiary bank to its parent
corporation or to any nonbank subsidiary of the parent are limited in amount to
10% of the institution's capital and surplus and, with respect to such parent
and all such nonbank subsidiaries of the parent, to an aggregate of 20% of any
such institution's capital and surplus. Furthermore, such loans and extensions
of credit are required to be secured in specified amounts. In addition, all
affiliate transactions must be conducted on terms and under circumstances that
are substantially the same as such transactions with unaffiliated entities.
Under applicable regulations, at December 31, 1995, approximately $179 million
was available for loans to Huntington from its subsidiary banks.
The Federal Reserve Board has a policy to the effect that a bank
holding company is expected to act as a source of financial and managerial
strength to each of its subsidiary banks and to commit resources to support
each such subsidiary bank. Under the source of strength doctrine, the Federal
Reserve Board may require a bank holding company to make capital injections
into a troubled subsidiary bank, and may charge the bank holding company with
engaging in unsafe and unsound practices for failure to commit resources to
such a subsidiary bank. This capital injection may be required at times when
Huntington may not have the resources to provide it. Any loans by a holding
company to any of its subsidiary banks are subordinate in right of payment to
deposits and to certain other indebtedness of such subsidiary bank. Moreover,
in the event of a bank holding company's bankruptcy, any commitment by such
holding company to a federal bank regulatory agency to maintain the capital of
a subsidiary bank will be assumed by the bankruptcy trustee and entitled to a
priority of payment.
In 1989, the United States Congress passed comprehensive financial
institutions legislation known as the Financial Institutions Reform, Recovery,
and Enforcement Act ("FIRREA"). Among other things, FIRREA established a new
principle of liability on the part of depository institutions insured by the
FDIC for any losses incurred by, or reasonably expected to be incurred by, the
FDIC after August 9, 1989, in connection with (i) the default of a commonly
controlled FDIC-insured depository institution, or (ii) any assistance provided
by the FDIC to a commonly controlled FDIC-insured depository institution in
danger of default. "Default" is defined generally as the appointment of a
conservator or receiver and "in danger of default" is defined generally as the
existence of certain conditions indicating that a "default" is likely to occur
in the absence of regulatory assistance. Accordingly, in the event that any
insured bank subsidiary of Huntington causes a loss to the FDIC, other bank
subsidiaries of Huntington could be required to compensate the FDIC by
reimbursing to it the amount of such loss, and such reimbursement could cause a
loss of Huntington's investment in such other subsidiaries.
Federal law permits the OCC to order the pro rata assessment of
shareholders of a national bank whose capital stock has become impaired, by
losses or otherwise, to relieve a deficiency in such national bank's capital
stock. This statute also provides for the enforcement of any such pro rata
assessment of
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shareholders of such national bank to cover such impairment of capital stock by
sale, to the extent necessary, of the capital stock of any assessed shareholder
failing to pay the assessment. Similarly, the laws of certain states provide
for such assessment and sale with respect to the subsidiary banks chartered by
such states. Huntington, as the sole shareholder of its subsidiary banks, is
subject to such provisions. Moreover, under legislation that became effective
August 10, 1993, the claims of a receiver of an insured depository institution
for administrative expenses and the claims of holders of deposit liabilities of
such an institution are accorded priority over the claims of general unsecured
creditors of such an institution, including the holders of the institution's
note obligations, in the event of a liquidation or other resolution of such
institution. As a result of such legislation, claims of a receiver for
administrative expenses and claims of holders of deposit liabilities of
Huntington's depository subsidiaries (including the FDIC, as the subrogee of
such holders) would receive priority over the holders of notes and other senior
debt of such subsidiaries in the event of a liquidation or other resolution and
over the interests of Huntington as sole shareholder of its subsidiaries.
DIVIDEND RESTRICTIONS
Dividends from subsidiary banks are a significant source of funds for
payment of dividends to the shareholders of bank holding companies. There are,
however, statutory limits on the amount of dividends that Huntington's
depository institution subsidiaries can pay to Huntington without regulatory
approval.
Huntington's subsidiary banks may not, without prior regulatory
approval, pay a dividend in an amount greater than such banks' undivided
profits. In addition, the prior approval of the OCC is required for the
payment of a dividend by a national bank if the total of all dividends declared
by the bank in a calendar year would exceed the total of its net income for the
year combined with its retained net income for the two preceding years. Under
these provisions and in accordance with the above-described formula,
Huntington's subsidiary banks could, without regulatory approval, declare
dividends to Huntington in 1996 of approximately $193.9 million plus an
additional amount equal to their net profits during 1996. In the year ended
December 31, 1995, Huntington declared cash dividends to its shareholders of
approximately $106.5 million.
If, in the opinion of the applicable regulatory authority, a bank
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the bank,
could include the payment of dividends), such authority may require, after
notice and hearing, that such bank cease and desist from such practice. The
Federal Reserve Board, the OCC, and the FDIC have issued policy statements
which provide that insured banks and bank holding companies should generally
only pay dividends out of current operating earnings.
FDIC INSURANCE
The level of deposit premiums affects the profitability of subsidiary
banks and thus the potential flow of dividends to parent companies. The FDIC
has the authority to raise the insurance premiums for institutions in the BIF
to a level necessary to achieve a target reserve level of 1.25% of insured
deposits within not more than 15 years from the enactment of FIRREA. Changes
in the fundamental features of the system of assessing insurance premiums are
also possible. In October 1994, the FDIC issued an advance notice of proposed
rule making seeking public comment on a possible redefinition of the base on
which insurance premiums are calculated. Such redefinition could have a
significant effect on individual institutions. In addition, the FDIC has the
authority to impose special assessments in certain circumstances.
Under the risk-based insurance assessment system that became effective
January 1, 1994, the FDIC places each insured depository institution in one of
nine risk categories based on its level of capital and other relevant
information (such as supervisory evaluations). Huntington's insured depository
subsidiaries are subject to this risk-based assessment system. From January 1,
1994, until May 31, 1995, assessment rates for deposit insurance premiums
ranged from 0.23 percent to 0.31 percent, depending on the assessment category
into which the insured institution was placed. On August 8, 1995, the FDIC
approved a rule widening the range for BIF insured institutions to 0.04 percent
for banks in the best risk classification to 0.31 percent for banks in the
riskiest classification, effective when the 1.25 percent target reserve level
for the BIF was attained.
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Subsequently, on September 5, 1995, the FDIC announced that the 1.25
percent target reserve level had been reached at the end of May 1995 and that
premium refunds would be made to banks for over-payment on assessment
installments paid through June 30, 1995. These refunds were made in late
September 1995. On November 14, 1995, the FDIC further announced that
assessments in 1996 would be zero for banks in the best risk classification and
to a maximum of 0.27 percent for banks in the riskiest classification. Banks
with zero rates will still be obligated to pay a statutory $2,000 annual
assessment. In addition, various proposals are currently under consideration
in Congress to authorize or require the FDIC to rebate premium payments to
banks in the event that, notwithstanding the zero rate, reserves accumulate in
excess of the 1.25 percent target reserve level.
Legislative proposals are also under consideration in Congress for
recapitalization of the SAIF, the FDIC fund that insures deposits in savings
associations, to bring it to the same 1.25 percent target reserve level as
applies to the BIF. These proposals generally involve the imposition of a
special assessment on all savings associations, as well as on so-called Oakar
banks, i.e., banks that have acquired deposits of savings associations by
merger, branch purchase, or otherwise. It is expected that the SAIF
recapitalization legislation, when enacted, will contain some relief for Oakar
banks from the amount of assessments payable by savings associations, but the
degree of such relief is not known at present. Certain of Huntington's bank
subsidiaries have at various times acquired deposits of savings associations
and will be subject as Oakar banks to whatever special assessment is enacted in
the SAIF recapitalization legislation. Huntington does not expect that the
effects of the SAIF recapitalization legislation will have a material adverse
effect on its consolidated financial statements.
CAPITAL REQUIREMENTS
The Federal Reserve Board has issued risk-based capital ratio and
leverage ratio guidelines for bank holding companies such as Huntington. The
risk-based capital ratio guidelines establish a systematic analytical framework
that makes regulatory capital requirements more sensitive to differences in
risk profiles among banking organizations, takes off-balance sheet exposures
into explicit account in assessing capital adequacy, and minimizes
disincentives to holding liquid, low-risk assets. Under the guidelines and
related policies, bank holding companies must maintain capital sufficient to
meet both a risk-based asset ratio test and a leverage ratio test on a
consolidated basis. The risk-based ratio is determined by allocating assets
and specified off-balance sheet commitments into four weighted categories, with
higher weighting being assigned to categories perceived as representing greater
risk. A bank holding company's capital (as described below) is then divided by
total risk weighted assets to yield the risk-based ratio. The leverage ratio
is determined by relating core capital (as described below) to total assets
adjusted as specified in the guidelines. Each of Huntington's subsidiary banks
is subject to substantially similar capital requirements adopted by applicable
regulatory agencies.
Generally, under the applicable guidelines, a financial institution's
capital is divided into two tiers. "Tier 1", or core capital, includes common
equity, noncumulative perpetual preferred stock (excluding auction rate
issues), and minority interests in equity accounts of consolidated
subsidiaries, less goodwill and, with certain limited exceptions, all other
intangible assets. Bank holding companies, however, may include cumulative
preferred stock in their Tier 1 capital, up to a limit of 25% of such Tier 1
capital. "Tier 2", or supplementary capital, includes, among other things,
cumulative and limited-life preferred stock, hybrid capital instruments,
mandatory convertible securities, qualifying subordinated debt, and the
allowance for loan and lease losses, subject to certain limitations. "Total
capital" is the sum of Tier 1 and Tier 2 capital.
The Federal Reserve Board and the other federal banking regulators
require that all intangible assets, with certain limited exceptions, be
deducted from Tier 1 capital. Under the Federal Reserve Board's rules, the
only types of intangible assets that may be included in (i.e., not deducted
from) a bank holding company's capital are originated mortgage servicing rights
("OMSRs"), readily marketable purchased mortgage servicing rights ("PMSRs") and
purchased credit card relationships ("PCCRs"), provided that, in the aggregate,
the total amount of OMSRs/PMSRs and PCCRs included in capital does not exceed
50% of Tier 1 capital. PCCRs are subject to a separate sublimit of 25% of Tier
1 capital. The amount of OMSRs/PMSRs and PCCRs that a bank holding company may
include in its capital is limited to the lesser of (i) 90% of such assets' fair
market value (as determined under the guidelines), or (ii) 100% of such assets'
book value, each determined quarterly. Identifiable intangible assets (i.e.,
intangible assets other than goodwill) other than OMSRs/PMSRs and PCCRs,
including core deposit intangibles, acquired on or before February 19, 1992
(the date the Federal Reserve Board issued its original proposal for public
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comment), generally will not be deducted from capital for supervisory purposes,
although they will continue to be deducted for purposes of evaluating
applications filed by bank holding companies.
Under the risk-based guidelines, financial institutions are required
to maintain a risk-based ratio (total capital to risk-weighted assets) of 8%,
of which 4% must be Tier 1 capital. The appropriate regulatory authority may
set higher capital requirements when an institution's circumstances warrant.
Under the leverage guidelines, financial institutions are required to
maintain a leverage ratio (Tier 1 capital to adjusted total assets, as
specified in the guidelines) of at least 3%. The 3% minimum ratio is
applicable only to financial institutions that meet certain specified criteria,
including excellent asset quality, high liquidity, low interest rate exposure,
and the highest regulatory rating. Financial institutions not meeting these
criteria are required to maintain a leverage ratio which exceeds 3% by a
cushion of at least 100 to 200 basis points.
The guidelines also provide that financial institutions experiencing
internal growth or making acquisitions will be expected to maintain strong
capital positions substantially above the minimum supervisory level.
Furthermore, the Federal Reserve Board's guidelines indicate that the Federal
Reserve Board will continue to consider a "tangible Tier 1 leverage ratio" in
evaluating proposals for expansion or new activities. The tangible Tier 1
leverage ratio is the ratio of an institution's Tier 1 capital, less all
intangibles, to total assets, less all intangibles.
Failure to meet applicable capital guidelines could subject the
financial institution to a variety of enforcement remedies available to the
federal regulatory authorities, including limitations on the ability to pay
dividends, the issuance by the regulatory authority of a capital directive to
increase capital, and the termination of deposit insurance by the FDIC, as well
as to the measures described below under "Federal Deposit Insurance Corporation
Improvement Act of 1991" as applicable to undercapitalized institutions.
As of December 31, 1995, the Tier 1 risk-based capital ratio, total
risk-based capital ratio, and leverage ratio for Huntington were as follows:
Requirement Huntington
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Tier 1 Risk-Based Capital Ratio 4.00% 8.39%
Total Risk-Based Capital Ratio 8.00% 12.03%
Leverage Ratio 3.00% 6.87%
As of December 31, 1995, each of Huntington's bank subsidiaries had capital in
excess of the minimum requirements.
The Federal Reserve Board, the OCC, and the FDIC jointly announced a
final rule in August 1995, revising their risk-based capital standards to
specify that evaluations by the banking agencies of a bank's capital adequacy
will include an assessment of the exposure to declines in the economic value of
the bank's capital due to changes in interest rates. The final rule did not,
however, codify a measurement framework for assessing the level of a bank's
interest rate exposure. Instead, the banking agencies issued for comment a
joint policy statement describing a measurement process. After gaining
experience with the proposed process, the banking agencies intend to issue a
proposed rule establishing an explicit capital charge for interest rate risk
that will be based upon the level of a bank's measured interest rate risk
exposure. Pending issuance of such proposed rule, management cannot determine
what effect, if any, an explicit charge for interest rate risk would have on
the capital ratios of Huntington or its subsidiary banks.
FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
In December 1991, Congress enacted the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), which substantially revised the
bank regulatory and funding provisions of the Federal Deposit Insurance Act and
made revisions to several other federal banking statutes.
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Among other things, FDICIA requires federal banking regulatory
authorities to take "prompt corrective action" with respect to depository
institutions that do not meet minimum capital requirements. For these
purposes, FDICIA establishes five capital tiers: well capitalized, adequately
capitalized, undercapitalized, significantly undercapitalized, and critically
undercapitalized.
The federal banking regulatory agencies have adopted regulations to
implement the prompt corrective action provisions of FDICIA. Among other
things, the regulations define the relevant capital measures for the five
capital categories. An institution is deemed to be "well capitalized" if it
has a total risk-based capital ratio of 10% or greater, a Tier 1 risk-based
capital ratio of 6% or greater, and a leverage ratio of 5% or greater and is
not subject to a regulatory order, agreement, or directive to meet and maintain
a specific capital level for any capital measure. An institution is deemed to
be "adequately capitalized" if it has a total risk-based capital ratio of 8% or
greater, a Tier 1 risk-based capital ratio of 4% or greater, and, generally, a
leverage ratio of 4% or greater and the institution does not meet the
definition of a "well capitalized" institution. An institution that does not
meet one or more of the "adequately capitalized" tests is deemed to be
"undercapitalized". If the institution has a total risk-based capital ratio
that is less than 6%, a Tier 1 risk-based capital ratio that is less than 3%,
or a leverage ratio that is less than 3%, it is deemed to be "significantly
undercapitalized". Finally, an institution is deemed to be "critically
undercapitalized" if it has a ratio of tangible equity (as defined in the
regulations) to total assets that is equal to or less than 2%.
FDICIA generally prohibits a depository institution from making any
capital distribution (including payment of a cash dividend) or paying any
management fee to its holding company if the depository institution would
thereafter be undercapitalized. Undercapitalized institutions are subject to
growth limitations and are required to submit a capital restoration plan. If
any of Huntington's depository institution subsidiaries is required to submit a
capital restoration plan, Huntington would be required to provide a limited
guarantee regarding compliance with the plan as a condition of approval of such
plan by the appropriate federal banking agency. If an undercapitalized
institution fails to submit an acceptable plan, it is treated as if it is
significantly undercapitalized. Significantly undercapitalized institutions
may be subject to a number of requirements and restrictions, including orders
to sell sufficient voting stock to become adequately capitalized, requirements
to reduce total assets, and cessation of receipt of deposits from correspondent
banks. Critically undercapitalized institutions may not, beginning 60 days
after becoming critically undercapitalized, make any payment of principal or
interest on their subordinated debt. In addition, critically undercapitalized
institutions are subject to appointment of a receiver or conservator within 90
days of becoming critically undercapitalized.
Under FDICIA, a depository institution that is not well capitalized is
generally prohibited from accepting brokered deposits and offering interest
rates on deposits higher than the prevailing rate in its market. Huntington
expects that the FDIC's brokered deposit rule will not adversely affect the
ability of its depository institution subsidiaries to accept brokered deposits.
Under the regulatory definition of brokered deposits, as of December 31, 1995,
Huntington's depository subsidiaries had brokered deposits of $17.8 million,
compared to $56.7 million as of December 31, 1994.
FDICIA, as amended, directs that each federal banking regulatory
agency prescribe standards, by regulation or guideline, for depository
institutions relating to internal controls, information systems, internal audit
systems, loan documentation, credit underwriting, interest rate exposure, asset
growth, compensation, asset quality, earnings, and stock valuation. The
Federal Reserve Board has adopted a regulation in the form of guidelines
covering most of these items, and the other federal banking regulatory agencies
are expected to adopt identical regulations. Huntington believes that the
regulation and guidelines will not have a material effect on the operations of
its depository institution subsidiaries.
OTHER DEVELOPMENTS
The Riegle-Neal Interstate Banking and Branching Efficiency Act of
1994, enacted in September 1994, provides for nationwide interstate banking and
branching. Under the law, interstate acquisitions of banks or bank holding
companies in any state by bank holding companies in any other state became
permissible one year after enactment, i.e. on September 29, 1995. Interstate
branching and consolidations of existing bank subsidiaries in different states
will be permissible beginning June 1, 1997. The permissibility of
consolidations and branching may be accelerated by "opt-ins" by individual
states. A state may also, until June 1, 1997, adopt legislation to "opt-out"
of interstate branching and
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consolidations, but in that event the state's own banks become ineligible to
branch into, or consolidate their operations in, other states.
The Riegle Community Development and Regulatory Improvement Act of
1994, also enacted in September 1994, made several changes in existing law
affecting bank holding companies, including a reduction in the minimum
post-approval antitrust review waiting period for depository institution
mergers and acquisitions, and the substitution of a notice for an application
when a bank holding company proposes to engage in, or acquire a company to
engage in, nonbanking activities.
GUIDE 3 INFORMATION
Information required by Industry Guide 3 relating to statistical
disclosure by bank holding companies is set forth in Huntington's 1995 Annual
Report to Shareholders, and is incorporated herein by reference:
Table Page
Distribution of Assets, Liabilities and Shareholders'
Equity; Interest Rates and Interest Differential:
Average Balance Sheet 24, 25
Net Interest Earnings 24, 25
Analysis
Change in Net Interest Income Due to
Changes in Average Volume and
Interest Rates 2 13
Investment Securities:
Book Value of Investments 5 16
Maturity Distribution and Yields 5 16
Securities Available for Sale:
Book Value of Investments 6 17
Maturity Distribution and Yields 6 17
Loan Portfolio:
Types of Loans 13 22
Maturities and Sensitivities to
Changes in Interest Rates 14 22
Non-accrual, Past Due and
Renegotiated Loans 12 21
Potential Problem Loans 20, 21
Loan Concentrations 13 22
Summary of Loan Loss Experience:
Allowance for Loan Losses 3 14, 15
Allocation of Allowance for Loan Losses 4 15
Deposits:
Average Balances 24, 25
Large CD Maturities 10 20
Return on Equity and Assets 1 12
Short-Term Borrowings 11 21
ITEM 2: PROPERTIES
The headquarters of Huntington and its lead subsidiary, The Huntington
National Bank, are located in the Huntington Center, a thirty-seven story
office building located in Columbus, Ohio. Of the building's total office
space available, Huntington occupies approximately 39 percent. The original
lease term is 25 years, expiring in 2009, with renewal options for up to 50
years with no purchase option. The Huntington National Bank has an equity
interest in the entity that owns the building. In addition to these
headquarters, Huntington's other major properties consist of a thirteen-story
and a twelve-story office building, both of which are located adjacent to the
Huntington Center; a twenty-one story office building, known as the Huntington
Building, located in Cleveland, Ohio; The Huntington Mortgage Company's
building, located in the greater Columbus area; an office complex located in
Troy, Michigan; and two data processing and operations centers located
throughout Ohio. Of these properties, Huntington owns the twelve-story and
thirteen-story office buildings, The Huntington Mortgage Company building, the
building in Troy, Michigan, and the operations centers located in Cleveland and
Columbus. All of the other major properties are held under long-term leases.
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ITEM 3: LEGAL PROCEEDINGS
Information required by this item is set forth in Note 12 of Notes to
Consolidated Financial Statements on page 37 of the 1995 Annual Report to
Shareholders, and is incorporated herein by reference.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
Part II
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ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
The common stock of Huntington Bancshares Incorporated is traded on
the NASDAQ National Market System under the symbol "HBAN". The stock is listed
as "HuntgBcshr" or "HuntBanc" in most newspapers. As of January 31, 1996,
Huntington had 31,832 shareholders of record.
Information regarding the high and low sale prices of Huntington
Common Stock and cash dividends declared on such shares, as required by this
item, is set forth in a table entitled "Market Prices, Key Ratios and
Statistics, Non Performing Assets (Quarterly Data)" on page 26 of the 1995
Annual Report to Shareholders, and is incorporated herein by reference.
Information regarding restrictions on dividends, as required by this item, is
set forth under "Item 1: Business-Regulatory Matters-Dividend Restrictions"
above and in Notes 8 and 17 of Notes to Consolidated Financial Statements on
pages 35 and 39, respectively, of the 1995 Annual Report to Shareholders, and
is incorporated herein by reference.
ITEM 6: SELECTED FINANCIAL DATA
Information required by this item is set forth in Table 1 on page 12
of Huntington's 1995 Annual Report to Shareholders, and is incorporated herein
by reference.
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Information required by this item is set forth on pages 12 - 22 of
Huntington's 1995 Annual Report to Shareholders, and is incorporated herein by
reference.
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this item is set forth on pages 28 - 43
(consolidated financial statements), and on page 44 (report of independent
auditors), of Huntington's 1995 Annual Report to Shareholders, and is
incorporated herein by reference.
ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
Part III
--------
ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information required by this item is set forth under the captions
"Class I Directors," "Class II Directors," and "Class III Directors" on pages 3
through 5, under the caption "Executive Officers of the Corporation" on pages
25 through 26, and under the caption "Compliance with Section 16(a) of the
Securities Exchange Act of 1934" on page 32, of Huntington's 1996 Proxy
Statement, and is incorporated herein by reference.
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10
ITEM 11: EXECUTIVE COMPENSATION
Information required by this item is set forth under the caption
"Executive Compensation" on pages 10 through 18, and under the caption
"Compensation of Directors" on pages 6 through 8, of Huntington's 1996 Proxy
Statement, and is incorporated herein by reference.
ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information required by this item is set forth under the caption
"Ownership of Voting Stock" on pages 8 through 10, of Huntington's 1996 Proxy
Statement, and is incorporated herein by reference.
ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is set forth under the caption
"Transactions With Directors and Officers" on page 10 of Huntington's 1996
Proxy Statement, and is incorporated herein by reference.
Part IV
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ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8- K
(a) The following documents are filed as part of this report:
(1) The following consolidated financial statements and report of
independent auditors appearing in Huntington's 1995 Annual Report to
Shareholders on the pages indicated below are incorporated by reference in Item
8:
Annual
Report Page
-----------
Consolidated Balance Sheets as of 28
December 31, 1995 and 1994
Consolidated Statements of Income 29
for the years ended December 31,
1995, 1994, and 1993
Consolidated Statements of Changes 30
in Shareholders' Equity for the years --
ended December 31, 1995, 1994, and 1993
Consolidated Statements of Cash Flows 31
for the years ended December 31,
1995, 1994, and 1993
Notes to Consolidated Financial Statements 32 - 43
Report of Independent Auditors 44
(2) Huntington is not filing separately financial statement schedules
because of the absence of conditions under which they are required or because
the required information is included in the consolidated financial statements
or the notes thereto.
(3) The exhibits required by this item are listed in the Exhibit
Index on pages 13 through 15 of this Form 10-K. The management contracts and
compensatory plans or arrangements required to be filed as exhibits to this
Form 10-K are listed as Exhibits 10(a) through 10(s) in the Exhibit Index.
(b) During the quarter ended December 31, 1995, Huntington filed two Reports
on Form 8-K. The first report was dated October 11, 1995. The information
contained therein was filed under report item number five, "Other Events", and
contained Huntington's press release to announce the results of operations for
the quarter ended September 30, 1995. The second report was dated October 16,
1995. The information
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11
contained therein was filed under report item number five, "Other Events", and
included the forms of the Fixed and Floating Rate Medium Term Notes which are
to be issued under Huntington's Indenture.
(c) The exhibits to this Form 10-K begin on page 13.
(d) See Item 14(a)(2) above.
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Signatures
Pursuant to the requirements of Section 13 or 15(d) 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, on the 21st day of
February, 1996.
HUNTINGTON BANCSHARES INCORPORATED
(Registrant)
By: /s/Frank Wobst By: /s/Gerald R. Williams
------------------------------ -----------------------------
Frank Wobst Gerald R. Williams
Director, Chairman and Executive Vice President and
Chief Executive Officer Chief Financial Officer
(Principal Executive Officer) (Principal Financial Officer)
By: /s/John D. Van Fleet
------------------------------
John D. Van Fleet
Senior Vice President and
Corporate Controller
(Principal Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities indicated on the 21st day of February, 1996.
/s/ Don M. Casto, III /s/ George A. Skestos
- ----------------------------------- -------------------------------
Don M. Casto, III George A. Skestos
Director Director
/s/ Don Conrad /s/ Lewis R. Smoot, Sr.
- ----------------------------------- -------------------------------
Don Conrad Lewis R. Smoot, Sr.
Director Director
/s/ John B. Gerlach /s/ Timothy P. Smucker
- ----------------------------------- -------------------------------
John B. Gerlach Timothy P. Smucker
Director Director
/s/ W. Lee Hoskins /s/ Zuheir Sofia
- ----------------------------------- -------------------------------
W. Lee Hoskins Zuheir Sofia
Director Director
/s/ Wm. J. Lhota /s/ William J. Williams
- ----------------------------------- -------------------------------
Wm. J. Lhota William J. Williams
Director Director
/s/ Gerald E. Mayo
- -----------------------------------
Gerald E. Mayo
Director
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Exhibit Index
3(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.
(b). Bylaws -- previously filed as Exhibit 3(b) to Annual Report on Form
10-K for the year ended December 31, 1987, and incorporated herein by
reference.
4(a). Instruments defining the Rights of Security Holders -- reference is
made to Articles V, VIII and X of Articles of Restatement of Charter, as
amended and supplemented. Instruments defining the rights of holders of
long-term debt will be furnished to the Securities and Exchange Commission upon
request.
(b). Rights Plan, dated February 22, 1990, between Huntington Bancshares
Incorporated and The Huntington Trust Company, National Association --
previously filed as Exhibit 1 to Registration Statement on Form 8-A, filed with
the Securities and Exchange Commission on February 22, 1990, and incorporated
herein by reference.
(c). Amendment No. 1 to the Rights Agreement, dated 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.
10. Material contracts:
(a) Employment Agreement, dated September 16, 1991, between
Huntington Bancshares Incorporated and Frank Wobst --previously filed as
Exhibit 10(a) to Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
(b) Employment Agreement, dated September 16, 1991, between
Huntington Bancshares Incorporated and Zuheir Sofia --previously filed as
Exhibit 10(b) to Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
(c) Employment Agreement, dated September 16, 1991, between
Huntington Bancshares Incorporated and W. Lee Hoskins -- previously filed as
Exhibit 10(c) to Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
(d) Executive Agreement, dated September 16, 1991, between
Huntington Bancshares Incorporated and Frank Wobst -- previously filed as
Exhibit 10(f) to Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
(e) Executive Agreement, dated September 16, 1991, between
Huntington Bancshares Incorporated and Zuheir Sofia --previously filed as
Exhibit 10(g) to Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
(f) Executive Agreement, dated September 16, 1991, between
Huntington Bancshares Incorporated and W. Lee Hoskins -- previously filed as
Exhibit 10(h) to Annual Report on Form 10-K for the year ended December 31,
1991, and incorporated herein by reference.
(g) Form of Executive Agreement for certain executive officers --
previously filed as Exhibit 10(g) to Annual Report on Form 10-K for the year
ended December 31, 1993, and incorporated herein by reference.
(h) Schedule identifying material details of Executive Agreements,
substantially similar to 10(g).
(i) Huntington Bancshares Incorporated Incentive Compensation
Plan -- previously filed as Exhibit 10(i) to Quarterly Report on Form 10-Q for
the quarterly period ended March 31, 1995, and incorporated herein by reference.
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(j) Long-Term Incentive Compensation Plan, as amended and
effective for performance cycles beginning on or after January 1, 1992 --
previously filed as Exhibit 10(j) to Annual Report on Form 10-K for the year
ended December 31, 1993, and incorporated herein by reference.
(k) Supplemental Executive Retirement Plan -- previously filed as
Exhibit 10(g) to Annual Report on Form 10-K for the year ended December 31,
1987, and incorporated herein by reference.
(l) Deferred Compensation Plan and Trust for Directors --
reference is made to Exhibit 4(a) of Post-Effective Amendment No. 2 to
Registration Statement on Form S-8, Registration No. 33-10546, filed with the
Securities and Exchange Commission on January 28, 1991, and incorporated herein
by reference.
(m)(1) 1983 Stock Option Plan -- reference is made to Exhibit 4A of
Registration Statement on Form S-8, Registration No. 2-89672, filed with the
Securities and Exchange Commission on February 27, 1984, and incorporated
herein by reference.
(2) 1983 Stock Option Plan -- Second Amendment -- previously filed
as Exhibit 10(j)(2) to Annual Report on Form 10-K for the year ended December
31, 1987, and incorporated herein by reference.
(3) 1983 Stock Option Plan -- Third Amendment -- previously filed
as Exhibit 10(j)(3) to Annual Report on Form 10-K for the year ended December
31, 1987, and incorporated herein by reference.
(4) 1983 Stock Option Plan -- Fourth Amendment -- previously filed
as Exhibit (m)(4) to Annual Report on Form 10-K for the year ended December 31,
1993, and incorporated herein by reference.
(n)(1) 1990 Stock Option Plan -- reference is made to Exhibit 4(a)
of Registration Statement on Form S-8, Registration No. 33-37373, filed with
the Securities and Exchange Commission on October 18, 1990, and incorporated
herein by reference.
(2) First Amendment to Huntington Bancshares Incorporated 1990
Stock Option Plan -- previously filed as Exhibit 10(q)(2) to Annual Report on
Form 10-K for the year ended December 31, 1991, and incorporated herein by
reference.
(o) The Huntington Supplemental Stock Purchase and Tax Savings
Plan and Trust (as amended and restated as of February 9, 1990) -- previously
filed as Exhibit 4(a) to Registration Statement on Form S-8, Registration No.
33-44208, filed with the Securities and Exchange Commission on November 26,
1991, and incorporated herein by reference.
(p) Deferred Compensation Plan and Trust for Huntington Bancshares
Incorporated Directors -- reference is made to Exhibit 4(a) of Registration
Statement on Form S-8, Registration No. 33-41774, filed with the Securities and
Exchange Commission on July 19, 1991, and incorporated herein by reference.
(q) Huntington Bancshares Incorporated Retirement Plan For Outside
Directors, previously filed as Exhibit 10(t) to Annual Report on Form 10-K for
the year ended December 31, 1992, and incorporated herein by reference.
(r) 1994 Stock Option Plan -- reference is made to Exhibit 4(a) of
Registration Statement on Form S-8, Registration No. 33-52553, filed with the
Securities and Exchange Commission on March 8, 1994, and incorporated herein by
reference.
(s) Huntington Supplemental Retirement Income Plan -- previously
filed as Exhibit 10(s) to Annual Report on Form 10-K for the year ended
December 31, 1994, and incorporated herein by reference.
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11. Statement re: Computation of Earnings Per Share.
13. Portions of Huntington's 1995 Annual Report to Shareholders.
21. Subsidiaries of the Registrant.
23. Consent of Independent Auditors.
27. Financial Data Schedule.
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