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Washington, D.C. 20549
(Mark One) | ||
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2010 | ||
or | ||
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 31-0724920 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
41 S. High Street, Columbus, Ohio | 43287 | |
(Address of principal executive offices) | (Zip Code) |
Title of Class | Name of Exchange on Which Registered | |
8.50% Series A non-voting, perpetual convertible preferred stock | NASDAQ | |
Common Stock — Par Value $0.01 per Share | NASDAQ |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o |
INDEX
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ABL | Asset Based Lending | |
ACL | Allowance for Credit Losses | |
AFCRE | Automobile Finance and Commercial Real Estate | |
ALCO | Asset-Liability Management Committee | |
ALLL | Allowance for Loan and Lease Losses | |
ARM | Adjustable Rate Mortgage | |
ARRA | American Recovery and Reinvestment Act of 2009 | |
ASC | Accounting Standards Codification | |
ATM | Automated Teller Machine | |
AULC | Allowance for Unfunded Loan Commitments | |
AVM | Automated Valuation Methodology | |
C&I | Commercial and Industrial | |
CDARS | Certificate of Deposit Account Registry Service | |
CDO | Collateralized Debt Obligations | |
CFPB | Bureau of Consumer Financial Protection | |
CMO | Collateralized Mortgage Obligations | |
CPP | Capital Purchase Program | |
CRE | Commercial Real Estate | |
DDA | Demand Deposit Account | |
DIF | Deposit Insurance Fund | |
Dodd-Frank Act | Dodd-Frank Wall Street Reform and Consumer Protection Act | |
EESA | Emergency Economic Stabilization Act of 2008 | |
ERISA | Employee Retirement Income Security Act | |
EVE | Economic Value of Equity | |
Fannie Mae | (see FNMA) | |
FASB | Financial Accounting Standards Board | |
FDIC | Federal Deposit Insurance Corporation | |
FDICIA | Federal Deposit Insurance Corporation Improvement Act of 1991 | |
FHA | Federal Housing Administration | |
FHLB | Federal Home Loan Bank | |
FHLMC | Federal Home Loan Mortgage Corporation | |
FICO | Fair Isaac Corporation | |
FNMA | Federal National Mortgage Association | |
Franklin | Franklin Credit Management Corporation | |
Freddie Mac | (see FHLMC) | |
FSP | Financial Stability Plan | |
FTE | Fully-Taxable Equivalent | |
FTP | Funds Transfer Pricing | |
GAAP | Generally Accepted Accounting Principles in the United States of America | |
HASP | Homeowner Affordability and Stability Plan | |
HCER Act | Health Care and Education Reconciliation Act of 2010 | |
IPO | Initial Public Offering |
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IRS | Internal Revenue Service | |
LIBOR | London Interbank Offered Rate | |
LTV | Loan to Value | |
MD&A | Management’s Discussion and Analysis of Financial Condition and Results of Operations | |
MRC | Market Risk Committee | |
MSR | Mortgage Servicing Rights | |
NALs | Nonaccrual Loans | |
NAV | Net Asset Value | |
NCO | Net Charge-off | |
NPAs | Nonperforming Assets | |
NSF / OD | Nonsufficient Funds and Overdraft | |
OCC | Office of the Comptroller of the Currency | |
OCI | Other Comprehensive Income (Loss) | |
OCR | Optimal Customer Relationship | |
OLEM | Other Loans Especially Mentioned | |
OREO | Other Real Estate Owned | |
OTTI | Other-Than-Temporary Impairment | |
PFG | Private Financial, Capital Markets, and Insurance Group | |
Reg E | Regulation E, of the Electronic Fund Transfer Act | |
SAD | Special Assets Division | |
SEC | Securities and Exchange Commission | |
Sky Financial | Sky Financial Group, Inc. | |
Sky Trust | Sky Bank and Sky Trust, National Association | |
TAGP | Transaction Account Guarantee Program | |
TARP | Troubled Asset Relief Program | |
TARP Capital | Series B Preferred Stock | |
TCE | Tangible Common Equity | |
TDR | Troubled Debt Restructured loan | |
TLGP | Temporary Liquidity Guarantee Program | |
Treasury | U.S. Department of the Treasury | |
UCS | Uniform Classification System | |
Unizan | Unizan Financial Corp. | |
USDA | U.S. Department of Agriculture | |
VA | U.S. Department of Veteran Affairs | |
VIE | Variable Interest Entity | |
WGH | Wealth Advisors, Government Finance, and Home Lending |
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Item 1: | Business |
• | 344 branches in Ohio | |
• | 119 branches in Michigan | |
• | 57 branches in Pennsylvania | |
• | 50 branches in Indiana | |
• | 28 branches in West Virginia | |
• | 13 branches in Kentucky |
• | Retail and Business Banking — This segment provides financial products and services to consumer and small business customers located within our primary banking markets consisting of five areas covering the six states of Ohio, Michigan, Pennsylvania, Indiana, West Virginia, and Kentucky. Its products include individual and small business checking accounts, savings accounts, money market accounts, certificates of deposit, consumer loans, and small business loans and leases. Other financial services available to consumers and small business customers include investments, insurance services, interest rate risk protection products, foreign exchange hedging, and treasury management services. Retail and |
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Business Banking provides these services through a banking network of over 600 traditional branches and convenience branches located in grocery stores and retirement centers. In addition, an array of alternative distribution channels is available to customers including internet and mobile banking, telephone banking, and over 1,300 ATMs. |
• | Commercial Banking — Our Commercial Banking group provides a wide array of products and services to the middle market and large corporate client base located primarily within our core geographic banking markets. Products and services are delivered through a relationship banking model and include commercial lending, as well as depository and liquidity management products. Dedicated teams collaborate with our primary bankers to deliver complex and customized treasury management solutions, equipment and technology leasing, international services, capital markets services such as interest rate protection, foreign exchange hedging and sales, trading of securities, and employee benefit programs (insurance, 410(k)). The Commercial Banking team specializes in serving a number of industry segments such as government entities,not-for-profit organizations, heath-care entities, and large, publicly traded companies. | |
• | Automobile Finance and Commercial Real Estate — This segment provides lending and other banking products and services to customers outside of our normal retail or commercial channels. More specifically, we serve automotive dealerships, retail customers who obtain financing at the dealerships, professional real estate developers, REITs, and other customers with lending needs that are secured by commercial properties. Most of our customers are located in our primary banking markets. Our products and services include financing for the purchase of automobiles by customers of automotive dealerships; financing for the purchase of new and used vehicle inventory by automotive dealerships; and financing for land, buildings, and other commercial real estate owned or constructed by real estate developers, automobile dealerships, or other customers with real estate project financing needs. We also provide other banking products and services to our customers as well as their owners or principals. These products and services are delivered through: (1) our relationships with developers in our primary banking markets believed to be experienced, well-managed, and well-capitalized and are capable of operating in all phases of the real estate cycle (top-tier developers), (2) relationships with established automobile dealerships, (3) our leads through community involvement, and (4) referrals from other professionals. | |
• | Wealth Advisors, Government Finance, and Home Lending — This segment consists primarily of fee-based businesses including home lending, wealth management, and government finance. We originate and service consumer loans to customers who are generally located in our primary banking markets. Consumer lending products are distributed to these customers primarily through the Retail and Business Banking segment and commissioned loan originators. We provide wealth management banking services to high net worth customers in our primary banking markets and in Florida by utilizing a cohesive model that employs a unified sales force to deliver products and services directly and through the other segments. We provide these products and services through a unified sales team, which consists of former private bankers, trust officers, and investment advisors; Huntington Asset Advisors, which provides investment management services; Huntington Asset Services, which offers administrative and operational support to fund complexes; retirement plan services, and the national settlements business. We also provide banking products and services to government entities across our primary banking markets by utilizing a team of relationship managers providing public finance, brokerage, trust, lending, and treasury management services. |
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MSA | Rank | Deposits | Market Share | |||||||||
(in millions) | ||||||||||||
Columbus, OH | 1 | $ | 9,124 | 22 | % | |||||||
Cleveland, OH | 5 | 3,941 | 8 | |||||||||
Detroit, MI | 8 | 3,607 | 4 | |||||||||
Toledo, OH | 1 | 2,306 | 23 | |||||||||
Pittsburgh, PA | 7 | 2,270 | 3 | |||||||||
Cincinnati, OH | 5 | 1,999 | 4 | |||||||||
Indianapolis, IN | 4 | 1,902 | 6 | |||||||||
Youngstown, OH | 1 | 1,877 | 20 | |||||||||
Canton, OH | 1 | 1,485 | 27 | |||||||||
Grand Rapids, MI | 3 | 1,280 | 10 | |||||||||
Akron, OH | 5 | 886 | 8 | |||||||||
Charleston, WV | 3 | 604 | 11 |
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• | Tier 1, or core capital, includes total equity plus qualifying capital securities and minority interests, excluding unrealized gains and losses accumulated in other comprehensive income, and nonqualifying intangible and servicing assets. | |
• | Tier 2, or supplementary capital, includes, among other things, cumulative and limited-life preferred stock, mandatory convertible securities, qualifying subordinated debt, and the allowance for credit losses, up to 1.25% of risk-weighted assets. | |
• | Total Capital is Tier 1 plus Tier 2 capital. |
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Well- | At December 31, 2010 | |||||||||||||
Capitalized | Excess | |||||||||||||
Minimums | Actual | Capital(1) | ||||||||||||
(Dollar amounts in billions) | ||||||||||||||
Ratios: | ||||||||||||||
Tier 1 leverage ratio | Consolidated | 5.00 | % | 9.41 | % | $ | 2.4 | |||||||
Bank | 5.00 | 6.97 | 1.0 | |||||||||||
Tier 1 risk-based capital ratio | Consolidated | 6.00 | 11.55 | 2.4 | ||||||||||
Bank | 6.00 | 8.51 | 1.1 | |||||||||||
Total risk-based capital ratio | Consolidated | 10.00 | 14.46 | 1.9 | ||||||||||
Bank | 10.00 | 12.82 | 1.2 |
(1) | Amount greater than the Well-capitalized minimum percentage. |
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• | lending, exchanging, transferring, investing for others, or safeguarding money or securities; | |
• | underwriting insurance or annuities; | |
• | providing financial or investment advice; | |
• | underwriting, dealing in, or making markets in securities; | |
• | merchant banking, subject to significant limitations; | |
• | insurance company portfolio investing, subject to significant limitations; and | |
• | any activities previously found by the Federal Reserve to be closely related to banking. |
• | provide notice to our customers regarding privacy policies and practices, | |
• | inform our customers regarding the conditions under which their nonpublic personal information may be disclosed to nonaffiliated third parties, and | |
• | give our customers an option to prevent certain disclosure of such information to nonaffiliated third parties. |
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Item 1A: | Risk Factors |
• | The Audit Committee is principally involved with overseeing the integrity of financial statements, providing oversight of the internal audit department, and selecting our external auditors. Our chief auditor reports directly to the Audit Committee. | |
• | The Risk Oversight Committee supervises our risk management processes which primarily cover credit, market, liquidity, operational, and compliance risks. It also approves the charters of executive management committees, sets risk limits on certain risk measures (e.g., economic value of equity), receives results of the risk self-assessment process, and routinely engages management in dialogues pertaining to key risk issues. Our credit review executive reports directly to the Risk Oversight Committee. |
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1. | Our ACL may prove inadequate or be negatively affected by credit risk exposures which could materially adversely affect our net income and capital. |
2. | A sustained weakness or further weakening in economic conditions could materially adversely affect our business. |
• | A decrease in the demand for loans and other products and services offered by us; | |
• | A decrease in customer savings generally and in the demand for savings and investment products offered by us; and | |
• | An increase in the number of customers and counterparties who become delinquent, file for protection under bankruptcy laws, or default on their loans or other obligations to us. |
3. | Further declines in home values or reduced levels of home sales in our markets could result in higher delinquencies, greater charge-offs, and increased losses on the sale of foreclosed real estate in future periods. |
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• | $7.7 billion of home equity loans and lines, representing 20% of total loans and leases. | |
• | $4.5 billion in residential real estate loans, representing 12% of total loans and leases. | |
• | $4.7 billion of Federal Agency mortgage-backed securities, $0.1 billion of private label CMOs, and $0.1 billion of Alt-A mortgage-backed securities that could be negatively affected by a decline in home values. | |
• | $0.3 billion of bank owned life insurance investments primarily in mortgage-backed securities. |
1. | Changes in interest rates could reduce our net interest income, reduce transactional income, and negatively impact the value of our loans, securities, and other assets. This could have a material adverse impact on our cash flows, financial condition, results of operations, and capital. |
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2. | The value of our Alt-A mortgage-backed, Pooled-Trust-Preferred and Private Label CMO investment securities are volatile and future valuation declines orother-than-temporary impairments could have a materially adverse affect on our future earnings and regulatory capital. |
3. | An issuance of additional capital would have a dilutive effect on the existing holders of our common stock and adversely affect the market price of our common stock. |
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1. | If we are unable to borrow funds through access to capital markets, we may not be able to meet the cash flow requirements of our depositors, creditors, and borrowers, or have the operating cash needed to fund corporate expansion and other corporate activities. |
2. | Due to the losses that the Bank incurred in 2008 and 2009, at December 31, 2010, the Bank and its subsidiaries could not declare and pay dividends to the holding company, any subsidiary of the holding company outside the Bank’s consolidated group, or any security holder outside the Bank’s consolidated group, without regulatory approval. |
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1. | The resolution of significant pending litigation, if unfavorable, could have a material adverse affect on our results of operations for a particular period. |
2. | We face significant operational risks which could lead to expensive litigation and loss of confidence by our customers, regulators, and capital markets. |
3. | We are subject to routine on-going tax examinations by the IRS and by various other jurisdictions, including the states of Ohio, Kentucky, Indiana, Michigan, Pennsylvania, West Virginia and Illinois. The IRS, Ohio, and Kentucky have proposed various adjustments to our previously filed tax returns. It is possible that the ultimate resolution of all proposed and future adjustments, if unfavorable, may be materially adverse to the results of operations in the period it occurs. |
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4. | Failure to maintain effective internal controls over financial reporting in the future could impair our ability to accurately and timely report our financial results or prevent fraud, resulting in loss of investor confidence and adversely affecting our business and stock price. |
1. | If our regulators deem it appropriate, they can take regulatory actions that could materially adversely impact our ability to compete for new business, constrain our ability to fund our liquidity needs or pay dividends, and increase the cost of our services. |
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2. | Legislative and regulatory actions taken now or in the future to address the current liquidity and credit crisis in the financial industry may materially adversely affect us by increasing our costs, adding complexity in doing business, impeding the efficiency of our internal business processes, negatively impacting the recoverability of certain of our recorded assets, requiring us to increase our regulatory capital, limiting our ability to pursue business opportunities, and otherwise materially adversely impacting our financial condition, results of operation, liquidity, or stock price. |
Item 1B: | Unresolved Staff Comments |
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Item 2: | Properties |
Description | Location | Own | Lease | |||
13 story office building, located adjacent to the Huntington Center | Columbus, Ohio | √ | ||||
12 story office building, located adjacent to the Huntington Center | Columbus, Ohio | √ | ||||
The Crosswoods building | Columbus, Ohio | √ | ||||
21 story office building, known as the Huntington Building | Cleveland, Ohio | √ | ||||
12 story office building | Youngstown, Ohio | √ | ||||
10 story office building | Warren, Ohio | √ | ||||
18 story office building | Charleston, West Virginia | √ | ||||
3 story office building | Holland, Michigan | √ | ||||
office complex | Troy, Michigan | √ | ||||
data processing and operations center (Easton) | Columbus, Ohio | √ | ||||
data processing and operations center (Northland) | Columbus, Ohio | √ | ||||
data processing and operations center (Parma) | Cleveland, Ohio | √ | ||||
data processing and operations center | Indianapolis, Indiana | √ |
Item 3: | Legal Proceedings |
Item 4: | Reserved. |
Item 5: | Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities |
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2005 | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||||||||||||
![]() | $ | 100 | $ | 104 | $ | 69 | $ | 39 | $ | 19 | $ | 35 | ||||||||||||||||||
![]() | $ | 100 | $ | 116 | $ | 122 | $ | 77 | $ | 97 | $ | 112 | ||||||||||||||||||
![]() | $ | 100 | $ | 117 | $ | 91 | $ | 48 | $ | 47 | $ | 58 | ||||||||||||||||||
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Item 6: | Selected Financial Data |
Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||||||||||
Interest income | $ | 2,145,392 | $ | 2,238,142 | $ | 2,798,322 | $ | 2,742,963 | $ | 2,070,519 | ||||||||||
Interest expense | 526,587 | 813,855 | 1,266,631 | 1,441,451 | 1,051,342 | |||||||||||||||
Net interest income | 1,618,805 | 1,424,287 | 1,531,691 | 1,301,512 | 1,019,177 | |||||||||||||||
Provision for credit losses | 634,547 | 2,074,671 | 1,057,463 | 643,628 | 65,191 | |||||||||||||||
Net interest income after provision for credit losses | 984,258 | (650,384 | ) | 474,228 | 657,884 | 953,986 | ||||||||||||||
Noninterest income | 1,041,858 | 1,005,644 | 707,138 | 676,603 | 561,069 | |||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Goodwill impairment | — | 2,606,944 | — | — | — | |||||||||||||||
Other noninterest expense | 1,673,805 | 1,426,499 | 1,477,374 | 1,311,844 | 1,000,994 | |||||||||||||||
Total noninterest expense | 1,673,805 | 4,033,443 | 1,477,374 | 1,311,844 | 1,000,994 | |||||||||||||||
Income (loss) before income taxes | 352,311 | (3,678,183 | ) | (296,008 | ) | 22,643 | 514,061 | |||||||||||||
Provision (benefit) for income taxes | 39,964 | (584,004 | ) | (182,202 | ) | (52,526 | ) | 52,840 | ||||||||||||
Net income (loss) | $ | 312,347 | $ | (3,094,179 | ) | $ | (113,806 | ) | $ | 75,169 | $ | 461,221 | ||||||||
Dividends on preferred shares | 172,032 | 174,756 | 46,400 | — | — | |||||||||||||||
Net income (loss) applicable to common shares | $ | 140,315 | $ | (3,268,935 | ) | $ | (160,206 | ) | $ | 75,169 | $ | 461,221 | ||||||||
Net income (loss) per common share — basic | $ | 0.19 | $ | (6.14 | ) | $ | (0.44 | ) | $ | 0.25 | $ | 1.95 | ||||||||
Net income (loss) per common share — diluted | 0.19 | (6.14 | ) | (0.44 | ) | 0.25 | 1.92 | |||||||||||||
Cash dividends declared per common share | 0.0400 | 0.0400 | 0.6625 | 1.0600 | 1.0000 | |||||||||||||||
Balance sheet highlights | ||||||||||||||||||||
Total assets (period end) | $ | 53,819,642 | $ | 51,554,665 | $ | 54,352,859 | $ | 54,697,468 | $ | 35,329,019 | ||||||||||
Total long-term debt (period end)(2) | 3,813,827 | 3,802,670 | 6,870,705 | 6,954,909 | 4,512,618 | |||||||||||||||
Total shareholders’ equity (period end) | 4,980,542 | 5,336,002 | 7,228,906 | 5,951,091 | 3,016,029 | |||||||||||||||
Average long-term debt(2) | 3,953,177 | 5,558,001 | 7,374,681 | 5,714,572 | 4,942,671 | |||||||||||||||
Average shareholders’ equity | 5,482,502 | 5,787,401 | 6,395,690 | 4,633,465 | 2,948,367 | |||||||||||||||
Average total assets | 52,574,231 | 52,440,268 | 54,921,419 | 44,711,676 | 35,111,236 |
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Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||||||||||
Key ratios and statistics | ||||||||||||||||||||
Margin analysis — as a % of average earnings assets | ||||||||||||||||||||
Interest income(3) | 4.52 | % | 4.88 | % | 5.90 | % | 7.02 | % | 6.63 | % | ||||||||||
Interest expense | 1.08 | 1.77 | 2.65 | 3.66 | 3.34 | |||||||||||||||
Net interest margin(3) | 3.44 | % | 3.11 | % | 3.25 | % | 3.36 | % | 3.29 | % | ||||||||||
Return on average total assets | 0.59 | % | (5.90 | )% | (0.21 | )% | 0.17 | % | 1.31 | % | ||||||||||
Return on average common shareholders’ equity | 3.7 | (80.8 | ) | (2.8 | ) | 1.6 | 15.6 | |||||||||||||
Return on average tangible common shareholders’ equity(4) | 5.6 | (22.4 | ) | (4.4 | ) | 3.9 | 19.5 | |||||||||||||
Efficiency ratio(5) | 60.4 | 55.4 | 57.0 | 62.5 | 59.4 | |||||||||||||||
Dividend payout ratio | 0.21 | N.R. | N.R. | 4.24 | 52.1 | |||||||||||||||
Average shareholders’ equity to average assets | 10.43 | 11.04 | 11.65 | 10.36 | 8.40 | |||||||||||||||
Effective tax rate (benefit) | 11.3 | (15.9 | ) | (61.6 | ) | N.R. | 10.3 | |||||||||||||
Tangible common equity to tangible assets (period end)(6),(8) | 7.56 | 5.92 | 4.04 | 5.09 | 6.93 | |||||||||||||||
Tangible equity to tangible assets (period end)(7),(8) | 8.24 | 9.24 | 7.72 | 5.09 | 6.93 | |||||||||||||||
Tier 1 leverage ratio (period end) | 9.41 | 10.09 | 9.82 | 6.77 | 8.00 | |||||||||||||||
Tier 1 risk-based capital ratio (period end) | 11.55 | 12.50 | 10.72 | 7.51 | 8.93 | |||||||||||||||
Total risk-based capital ratio (period end) | 14.46 | 14.55 | 13.91 | 10.85 | 12.79 | |||||||||||||||
Other data | ||||||||||||||||||||
Full-time equivalent employees (period end) | 11,341 | 10,272 | 10,951 | 11,925 | 8,081 | |||||||||||||||
Domestic banking offices (period end) | 620 | 611 | 613 | 625 | 381 |
(1) | Comparisons for presented periods are impacted by a number of factors. Refer to the Significant Items for additional discussion regarding these key factors. | |
(2) | Includes FHLB advances, subordinated notes, and other long-term debt. | |
(3) | On an FTE basis assuming a 35% tax rate. | |
(4) | Net income (loss) less expense excluding amortization of intangibles for the period divided by average tangible shareholders’ equity. Average tangible shareholders’ equity equals average total shareholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate. | |
(5) | Noninterest expense less amortization of intangibles divided by the sum of FTE net interest income and noninterest income excluding securities gains. | |
(6) | Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other intangible assets are net of deferred tax, and calculated assuming a 35% tax rate. |
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(7) | Tangible equity (total equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other intangible assets are net of deferred tax, and calculated assuming a 35% tax rate. | |
(8) | Tangible equity, tangible common equity, and tangible assets are non-GAAP financial measures. Additionally, any ratios utilizing these financial measures are also non-GAAP. These financial measures have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength. Other companies may calculate these financial measures differently. | |
(9) | Comparisons are affected by the Sky Financial acquisition in 2007, and the Unizan acquisition in 2006. |
Item 7: | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
• | Executive Overview — Provides a summary of our current financial performance, and business overview, including our thoughts on the impact of the economy, legislative and regulatory initiatives, and recent industry developments. This section also provides our outlook regarding our 2011 expectations. | |
• | Discussion of Results of Operations — Reviews financial performance from a consolidated Company perspective. It also includes a Significant Items section that summarizes key issues helpful for understanding performance trends. Key consolidated average balance sheet and income statement trends are also discussed in this section. | |
• | Risk Management and Capital — Discusses credit, market, liquidity, and operational risks, including how these are managed, as well as performance trends. It also includes a discussion of liquidity policies, how we obtain funding, and related performance. In addition, there is a discussion of guarantees and / or commitments made for items such as standby letters of credit and commitments to sell loans, and a discussion that reviews the adequacy of capital, including regulatory capital requirements. | |
• | Business Segment Discussion — Provides an overview of financial performance for each of our major business segments and provides additional discussion of trends underlying consolidated financial performance. | |
• | Results for the Fourth Quarter — Provides a discussion of results for the 2010 fourth quarter compared with the 2009 fourth quarter. |
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• | Additional Disclosures — Provides comments on important matters including forward-looking statements, critical accounting policies and use of significant estimates, recent accounting pronouncements and developments, and acquisitions. |
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Year Ended December 31, | ||||||||||||||||||||||||||||
Change from 2009 | Change from 2008 | |||||||||||||||||||||||||||
2010 | Amount | Percent | 2009 | Amount | Percent | 2008 | ||||||||||||||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||||||||||||||||||
Interest income | $ | 2,145,392 | $ | (92,750 | ) | (4 | )% | $ | 2,238,142 | $ | (560,180 | ) | (20 | )% | $ | 2,798,322 | ||||||||||||
Interest expense | 526,587 | (287,268 | ) | (35 | ) | 813,855 | (452,776 | ) | (36 | ) | 1,266,631 | |||||||||||||||||
Net interest income | 1,618,805 | 194,518 | 14 | 1,424,287 | (107,404 | ) | (7 | ) | 1,531,691 | |||||||||||||||||||
Provision for credit losses | 634,547 | (1,440,124 | ) | (69 | ) | 2,074,671 | 1,017,208 | 96 | 1,057,463 | |||||||||||||||||||
Net interest income after provision for credit losses | 984,258 | 1,634,642 | N.R. | (650,384 | ) | (1,124,612 | ) | N.R. | 474,228 | |||||||||||||||||||
Service charges on deposit accounts | 267,015 | (35,784 | ) | (12 | ) | 302,799 | (5,254 | ) | (2 | ) | 308,053 | |||||||||||||||||
Mortgage banking income | 175,782 | 63,484 | 57 | 112,298 | 103,304 | 1,149 | 8,994 | |||||||||||||||||||||
Trust services | 112,555 | 8,916 | 9 | 103,639 | (22,341 | ) | (18 | ) | 125,980 | |||||||||||||||||||
Electronic banking | 110,234 | 10,083 | 10 | 100,151 | 9,884 | 11 | 90,267 | |||||||||||||||||||||
Insurance income | 76,413 | 3,087 | 4 | 73,326 | 702 | 1 | 72,624 | |||||||||||||||||||||
Brokerage income | 68,855 | 4,012 | 6 | 64,843 | (329 | ) | (1 | ) | 65,172 | |||||||||||||||||||
Bank owned life insurance income | 61,066 | 6,194 | 11 | 54,872 | 96 | — | 54,776 | |||||||||||||||||||||
Automobile operating lease income | 45,964 | (5,846 | ) | (11 | ) | 51,810 | 11,959 | 30 | 39,851 | |||||||||||||||||||
Securities losses | (274 | ) | 9,975 | (97 | ) | (10,249 | ) | 187,121 | (95 | ) | (197,370 | ) | ||||||||||||||||
Other income | 124,248 | (27,907 | ) | (18 | ) | 152,155 | 13,364 | 10 | 138,791 | |||||||||||||||||||
Total noninterest income | 1,041,858 | 36,214 | 4 | 1,005,644 | 298,506 | 42 | 707,138 | |||||||||||||||||||||
Personnel costs | 798,973 | 98,491 | 14 | 700,482 | (83,064 | ) | (11 | ) | 783,546 | |||||||||||||||||||
Outside data processing and other services | 159,248 | 11,153 | 8 | 148,095 | 17,869 | 14 | 130,226 | |||||||||||||||||||||
Net occupancy | 107,862 | 2,589 | 2 | 105,273 | (3,155 | ) | (3 | ) | 108,428 | |||||||||||||||||||
Deposit and other insurance expense | 97,548 | (16,282 | ) | (14 | ) | 113,830 | 91,393 | 407 | 22,437 | |||||||||||||||||||
Professional services | 88,778 | 12,412 | 16 | 76,366 | 26,753 | 54 | 49,613 | |||||||||||||||||||||
Equipment | 85,920 | 2,803 | 3 | 83,117 | (10,848 | ) | (12 | ) | 93,965 | |||||||||||||||||||
Marketing | 65,924 | 32,875 | 99 | 33,049 | 385 | 1 | 32,664 | |||||||||||||||||||||
Amortization of intangibles | 60,478 | (7,829 | ) | (11 | ) | 68,307 | (8,587 | ) | (11 | ) | 76,894 | |||||||||||||||||
OREO and foreclosure expense | 39,049 | (54,850 | ) | (58 | ) | 93,899 | 60,444 | 181 | 33,455 | |||||||||||||||||||
Automobile operating lease expense | 37,034 | (6,326 | ) | (15 | ) | 43,360 | 12,078 | 39 | 31,282 | |||||||||||||||||||
Goodwill impairment | — | (2,606,944 | ) | (100 | ) | 2,606,944 | 2,606,944 | — | — | |||||||||||||||||||
Gain on early extinguishment of debt | — | 147,442 | (100 | ) | (147,442 | ) | (123,900 | ) | 526 | (23,542 | ) | |||||||||||||||||
Other expense | 132,991 | 24,828 | 23 | 108,163 | (30,243 | ) | (22 | ) | 138,406 | |||||||||||||||||||
Total noninterest expense | 1,673,805 | (2,359,638 | ) | (59 | ) | 4,033,443 | 2,556,069 | 173 | 1,477,374 | |||||||||||||||||||
Income (loss) before income taxes | 352,311 | 4,030,494 | N.R. | (3,678,183 | ) | (3,382,175 | ) | 1,143 | (296,008 | ) | ||||||||||||||||||
Provision (benefit) for income taxes | 39,964 | 623,968 | N.R. | (584,004 | ) | (401,802 | ) | 221 | (182,202 | ) | ||||||||||||||||||
Net income (loss) | 312,347 | 3,406,526 | N.R. | (3,094,179 | ) | (2,980,373 | ) | 2,619 | (113,806 | ) | ||||||||||||||||||
Dividends on preferred shares | 172,032 | (2,724 | ) | (2 | ) | 174,756 | 128,356 | 277 | 46,400 | |||||||||||||||||||
Net income (loss) applicable to common shares | $ | 140,315 | $ | 3,409,250 | N.R. | % | $ | (3,268,935 | ) | $ | (3,108,729 | ) | 1,940 | % | $ | (160,206 | ) | |||||||||||
Average common shares — basic | 726,934 | 194,132 | 36 | % | 532,802 | 166,647 | 46 | % | 366,155 | |||||||||||||||||||
Average common shares — diluted(2) | 729,532 | 196,730 | 37 | 532,802 | 166,647 | 46 | 366,155 | |||||||||||||||||||||
Per common share: | ||||||||||||||||||||||||||||
Net income — basic | $ | 0.19 | $ | 6.33 | N.R. | % | $ | (6.14 | ) | $ | (5.70 | ) | 1,295 | % | $ | (0.44 | ) | |||||||||||
Net income — diluted | 0.19 | 6.33 | N.R. | (6.14 | ) | (5.70 | ) | 1,295 | (0.44 | ) | ||||||||||||||||||
Cash dividends declared | 0.0400 | — | — | 0.0400 | (0.62 | ) | (94 | ) | 0.6625 | |||||||||||||||||||
Revenue — FTE | ||||||||||||||||||||||||||||
Net interest income | $ | 1,618,805 | $ | 194,518 | 14 | % | $ | 1,424,287 | $ | (107,404 | ) | (7 | )% | $ | 1,531,691 | |||||||||||||
FTE adjustment | 11,077 | (395 | ) | (3 | ) | 11,472 | (8,746 | ) | (43 | ) | 20,218 | |||||||||||||||||
Net interest income(3) | 1,629,882 | 194,123 | 14 | 1,435,759 | (116,150 | ) | (7 | ) | 1,551,909 | |||||||||||||||||||
Noninterest income | 1,041,858 | 36,214 | 4 | 1,005,644 | 298,506 | 42 | 707,138 | |||||||||||||||||||||
Total revenue(3) | $ | 2,671,740 | $ | 230,337 | 9 | % | $ | 2,441,403 | $ | 182,356 | 8 | % | $ | 2,259,047 | ||||||||||||||
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(1) | Comparisons for presented periods are impacted by a number of factors. Refer to Significant Items for additional discussion regarding these key factors. | |
(2) | For the years ended December 31, 2009, and December 31, 2008, the impact of the convertible preferred stock issued in April of 2008 was excluded from the diluted share calculation. It was excluded because the result would have been higher than basic earnings per common share (anti-dilutive) for the year. | |
(3) | On a FTE basis assuming a 35% tax rate. |
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• | During the 2009 first quarter, bank stock prices, including ours, experienced a steep decline. Our stock price declined 78% from $7.66 per share at December 31, 2008, to $1.66 per share at March 31, 2009. Given this significant decline, we conducted an interim test for goodwill impairment. As a result, we recorded a noncash $2,602.7 million ($4.88 per common share) pretax charge.(See Goodwill discussion located within the Critical Accounting Policies and Use of Significant Estimates section for additional information.) | |
• | During the 2009 second quarter, a pretax goodwill impairment of $4.2 million ($0.01 per common share) was recorded relating to the sale of a small payments-related business in July 2009. |
• | On March 31, 2009, we restructured our relationship with Franklin. As a result of this restructuring, a nonrecurring net tax benefit of $159.9 million ($0.30 per common share) was recorded in the 2009 first quarter. Also, and although earnings were not significantly impacted, commercial NCOs increased $128.3 million as the previously established $130.0 million Franklin-specific ALLL was utilized to writedown the acquired mortgages and OREO collateral to fair value. | |
• | During the 2010 first quarter, a $38.2 million ($0.05 per common share) net tax benefit was recognized, primarily reflecting the increase in the net deferred tax asset relating to the assets acquired from the March 31, 2009 restructuring. | |
• | During the 2010 second quarter, the portfolio of Franklin-related loans ($333.0 million of residential mortgages and $64.7 million of home equity loans) was transferred to loans held for sale. At the time of the transfer, the loans were marked to the lower of cost or fair value less costs to sell of $323.4 million, resulting in $75.5 million of charge-offs, and the provision for credit losses commensurately increased $75.5 million ($0.07 per common share). | |
• | During the 2010 third quarter, the remaining Franklin-related residential mortgage and home equity loans were sold at essentially book value. |
2010 | 2009 | 2008 | ||||||||||||||||||||||
Earnings | EPS | Earnings | EPS | Earnings | EPS | |||||||||||||||||||
(Dollar amounts in millions, except per share | ||||||||||||||||||||||||
amounts) | ||||||||||||||||||||||||
Gain related to sale of Visa® stock(1) | $ | — | $ | — | $ | 31.4 | $ | 0.04 | $ | 25.1 | $ | 0.04 | ||||||||||||
Visa® indemnification liability(2) | — | — | — | — | 17.0 | 0.03 |
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(1) | Pretax. Recorded to noninterest income, and represented a gain on the sale of ownership interest in Visa®. As part of the sale of our Visa® stock in 2009, we released $8.2 million, as of June 30, 2009, of the remaining indemnification liability. Concurrently, we established a swap liability associated with the conversion protection provided to the purchasers of the Visa® shares. | |
(2) | Pretax. Recorded to noninterest expense, and represented our pro-rata portion of an indemnification liability provided to Visa® by its member banks for various litigation filed against Visa®. Subsequently, in 2008, an escrow account was established by Visa® using a portion of the proceeds received from the IPO. This action resulted in a reversal of a portion of the liability as the escrow account reduced our potential exposure related to the indemnification. | |
7. | Other Significant Items Influencing Earnings Performance Comparisons. In addition to the items discussed separately in this section, a number of other items impacted financial results. These included: |
• | $23.6 million ($0.03 per common share) negative impact due to a special FDIC insurance premium assessment. This amount was recorded to noninterest expense. | |
• | $12.8 million ($0.02 per common share) benefit to provision for income taxes, representing a reduction to the previously established capital loss carry-forward valuation allowance. |
• | $20.4 million ($0.06 per common share) benefit to provision for income taxes, representing a reduction to the previously established capital loss carry-forward valuation allowance. | |
• | $21.8 million ($.04 per common share) negative impact due to the merger with Sky Financial completed on July 1, 2007. |
2010 | 2009 | 2008 | ||||||||||||||||||||||
After-tax | EPS | After-tax | EPS | After-tax | EPS | |||||||||||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||||||||||||||
Net income (loss) — GAAP | $ | 312,347 | $ | (3,094,179 | ) | $ | (113,806 | ) | ||||||||||||||||
Earnings per share, after-tax | $ | 0.19 | $ | (6.14 | ) | $ | (0.44 | ) | ||||||||||||||||
Change from prior year — $ | 6.33 | (5.70 | ) | (0.69 | ) | |||||||||||||||||||
Change from prior year — % | N.R. | % | N.R | % | N.R. | % |
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2010 | 2009 | 2008 | ||||||||||||||||||||||
Significant Items — Favorable (Unfavorable) Impact: | Earnings(2) | EPS(3) | Earnings(2) | EPS(3) | Earnings(2) | EPS(3) | ||||||||||||||||||
Franklin-related loans transferred to held for sale | $ | (75,500 | ) | $ | (0.07 | ) | $ | — | $ | — | $ | — | $ | — | ||||||||||
Net tax benefit recognized(4) | 38,222 | 0.05 | — | — | — | — | ||||||||||||||||||
Franklin relationship restructuring(4) | — | — | 159,895 | 0.30 | — | — | ||||||||||||||||||
Net gain on early extinguishment of debt | — | — | 141,024 | 0.18 | 23,542 | 0.04 | ||||||||||||||||||
Gain related to sale of Visa® stock | — | — | 31,362 | 0.04 | 25,087 | 0.04 | ||||||||||||||||||
Deferred tax valuation allowance benefit(4) | — | — | 12,847 | 0.02 | 20,357 | 0.06 | ||||||||||||||||||
Goodwill impairment | — | — | (2,606,944 | ) | (4.89 | ) | — | — | ||||||||||||||||
FDIC special assessment | — | — | (23,555 | ) | (0.03 | ) | — | — | ||||||||||||||||
Preferred stock conversion deemed dividend | — | (0.08 | ) | — | (0.11 | ) | — | — | ||||||||||||||||
Visa® indemnification liability | — | — | — | — | 16,995 | 0.03 | ||||||||||||||||||
Merger/Restructuring costs | — | — | — | — | (21,830 | ) | (0.04 | ) |
(1) | See Significant Factors Influencing Financial Performance discussion. | |
(2) | Pretax unless otherwise noted. | |
(3) | Based upon the annual average outstanding diluted common shares. | |
(4) | After-tax. |
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Twelve Months Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Income (Loss) Before Income Taxes | $ | 352,311 | $ | (3,678,183 | ) | $ | (296,008 | ) | ||||
Add: Provision for credit losses | 634,547 | 2,074,671 | 1,057,463 | |||||||||
Less: Securities gains (losses) | (274 | ) | (10,249 | ) | (197,370 | ) | ||||||
Add: Amortization of intangibles | 60,478 | 68,307 | 76,894 | |||||||||
Less: Significant Items | ||||||||||||
Gain on early extinguishment of debt | — | 141,024 | 23,542 | |||||||||
Goodwill impairment | — | (2,606,944 | ) | — | ||||||||
Gain related to Visa stock | — | 31,362 | 25,087 | |||||||||
Visa indemnification liability | — | — | 16,995 | |||||||||
FDIC special assessment | — | (23,555 | ) | — | ||||||||
Merger/restructuring costs | — | — | (21,830 | ) | ||||||||
Total pretax, pre-provision income | $ | 1,047,610 | $ | 933,157 | $ | 991,925 | ||||||
Change in total pretax, pre-provision income: | ||||||||||||
Amount | $ | 114,453 | $ | (58,768 | ) | |||||||
Percent | 12 | % | (6 | )% |
(1) | Pretax, pre-provision income is a non-GAAP financial measure. Any ratio utilizing this financial measure is also non-GAAP. This financial measure has been included as it is considered to be an important metric with which to analyze and evaluate our results of operations and financial strength. Other companies may calculate this financial measure differently. |
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2010 | 2009 | |||||||||||||||||||||||
Increase (Decrease) from | Increase (Decrease) from | |||||||||||||||||||||||
Previous Year Due to | Previous Year Due to | |||||||||||||||||||||||
Yield/ | Yield/ | |||||||||||||||||||||||
Fully-taxable equivalent basis(2) | Volume | Rate | Total | Volume | Rate | Total | ||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||
Loans and direct financing leases | $ | (71.3 | ) | $ | (9.6 | ) | $ | (80.9 | ) | $ | (130.2 | ) | $ | (371.3 | ) | $ | (501.5 | ) | ||||||
Investment securities | 96.8 | (103.2 | ) | (6.4 | ) | 84.4 | (86.3 | ) | (1.9 | ) | ||||||||||||||
Other earning assets | (3.8 | ) | (2.2 | ) | (6.0 | ) | (42.1 | ) | (23.4 | ) | (65.5 | ) | ||||||||||||
Total interest income from earning assets | 21.7 | (115.0 | ) | (93.3 | ) | (87.9 | ) | (481.0 | ) | (568.9 | ) | |||||||||||||
Deposits | 10.9 | (246.0 | ) | (235.1 | ) | 16.5 | (274.1 | ) | (257.6 | ) | ||||||||||||||
Short-term borrowings | 1.1 | (0.5 | ) | 0.6 | (16.6 | ) | (23.3 | ) | (39.9 | ) | ||||||||||||||
Federal Home Loan Bank advances | (15.4 | ) | 5.6 | (9.8 | ) | (45.3 | ) | (49.6 | ) | (94.9 | ) | |||||||||||||
Subordinated notes and other long-term debt, including capital securities | (14.3 | ) | (28.8 | ) | (43.1 | ) | 9.8 | (70.1 | ) | (60.3 | ) | |||||||||||||
Total interest expense of interest-bearing liabilities | (17.7 | ) | (269.7 | ) | (287.4 | ) | (35.6 | ) | (417.1 | ) | (452.7 | ) | ||||||||||||
Net interest income | $ | 39.4 | $ | 154.7 | $ | 194.1 | $ | (52.3 | ) | $ | (63.9 | ) | $ | (116.2 | ) | |||||||||
(1) | The change in interest rates due to both rate and volume has been allocated between the factors in proportion to the relationship of the absolute dollar amounts of the change in each. | |
(2) | Calculated assuming a 35% tax rate. |
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Twelve Months Ended | ||||||||||||||||
December 31, | Change | |||||||||||||||
2010 | 2009 | Amount | Percent | |||||||||||||
(Dollar amounts in millions) | ||||||||||||||||
Loans/Leases | ||||||||||||||||
Commercial and industrial | $ | 12,431 | $ | 13,136 | $ | (705 | ) | (5 | )% | |||||||
Commercial real estate | 7,225 | 9,156 | (1,931 | ) | (21 | ) | ||||||||||
Total commercial | 19,656 | 22,292 | (2,636 | ) | (12 | ) | ||||||||||
Automobile loans and leases | 4,890 | 3,546 | 1,344 | 38 | ||||||||||||
Home equity | 7,590 | 7,590 | — | — | ||||||||||||
Residential mortgage | 4,476 | 4,542 | (66 | ) | (1 | ) | ||||||||||
Other consumer | 661 | 722 | (61 | ) | (8 | ) | ||||||||||
Total consumer | 17,617 | 16,400 | 1,217 | 7 | ||||||||||||
Total loans and leases | $ | 37,273 | $ | 38,692 | $ | (1,419 | ) | (4 | )% | |||||||
Deposits | ||||||||||||||||
Demand deposits — noninterest-bearing | $ | 6,859 | $ | 6,057 | $ | 802 | 13 | % | ||||||||
Demand deposits — interest-bearing | 5,579 | 4,816 | 763 | 16 | ||||||||||||
Money market deposits | 11,743 | 7,216 | 4,527 | 63 | ||||||||||||
Savings and other domestic deposits | 4,642 | 4,881 | (239 | ) | (5 | ) | ||||||||||
Core certificates of deposit | 9,188 | 11,944 | (2,756 | ) | (23 | ) | ||||||||||
Total core deposits | 38,011 | 34,914 | 3,097 | 9 | ||||||||||||
Other deposits | 2,727 | 4,475 | (1,748 | ) | (39 | ) | ||||||||||
Total deposits | $ | 40,738 | $ | 39,389 | $ | 1,349 | 3 | % | ||||||||
• | $2.6 billion, or 12%, decline in average total commercial loans. The decline in average CRE loans reflected our planned efforts to shrink this portfolio through payoffs and paydowns, as well as the impact of NCOs. The decline in average C&I loans reflected a general decrease in borrowing as evidenced by a decline inline-of-credit utilization, NCO activity, and the reclassification in the 2010 first quarter of variable rate demand notes to municipal securities. |
• | $1.2 billion, or 7%, increase in average total consumer loans. This growth reflected a $1.3 billion, or 38%, increase in average automobile loans and leases. On January 1, 2010, we adopted the new accounting standard ASC — 810 Consolidation, resulting in the consolidation of an off balance sheet securitization and increasing our automobile loan portfolio by $0.5 billion at December 31, 2010. Underlying growth in automobile loans continued to be strong, reflecting a significant increase in loan originations in 2010 as compared to 2009 in all of our markets. Our recent expansion into Eastern Pennsylvania and the five New England states also began to have a positive impact on our volume. |
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• | $3.1 billion, or 9%, growth in total core deposits. The primary driver of this growth was a 63% increase in average money market deposits. Partially offsetting this growth was a 23% decline in average core certificates of deposit. |
• | $1.7 billion, or 39%, decline in average noncore deposits, reflecting a managed decline in public fund deposits as well as planned efforts to reduce our reliance on noncore funding sources. |
Twelve Months Ended | ||||||||||||||||
December 31, | Change | |||||||||||||||
2009 | 2008 | Amount | Percent | |||||||||||||
(Dollar amounts in millions) | ||||||||||||||||
Loans/Leases | ||||||||||||||||
Commercial and industrial | $ | 13,136 | $ | 13,588 | $ | (452 | ) | (3 | )% | |||||||
Commercial real estate | 9,156 | 9,732 | (576 | ) | (6 | ) | ||||||||||
Total commercial | 22,292 | 23,320 | (1,028 | ) | (4 | ) | ||||||||||
Automobile loans and leases | 3,546 | 4,527 | (981 | ) | (22 | ) | ||||||||||
Home equity | 7,590 | 7,404 | 186 | 3 | ||||||||||||
Residential mortgage | 4,542 | 5,018 | (476 | ) | (9 | ) | ||||||||||
Other consumer | 722 | 691 | 31 | 4 | ||||||||||||
Total consumer | 16,400 | 17,640 | (1,240 | ) | (7 | ) | ||||||||||
Total loans and leases | $ | 38,692 | $ | 40,960 | $ | (2,268 | ) | (6 | )% | |||||||
Deposits | ||||||||||||||||
Demand deposits — noninterest-bearing | $ | 6,057 | $ | 5,095 | $ | 962 | 19 | % | ||||||||
Demand deposits — interest-bearing | 4,816 | 4,003 | 813 | 20 | ||||||||||||
Money market deposits | 7,216 | 6,093 | 1,123 | 18 | ||||||||||||
Savings and other domestic deposits | 4,881 | 5,147 | (266 | ) | (5 | ) | ||||||||||
Core certificates of deposit | 11,944 | 11,637 | 307 | 3 | ||||||||||||
Total core deposits | 34,914 | 31,975 | 2,939 | 9 | ||||||||||||
Other deposits | 4,475 | 5,861 | (1,386 | ) | (24 | ) | ||||||||||
Total deposits | $ | 39,389 | $ | 37,836 | $ | 1,553 | 4 | % | ||||||||
• | $1.0 billion, or 4%, decline in average total commercial loans. The decline in average CRE loans reflected our planned efforts to shrink this portfolio through payoffs and paydowns, as well as the impact of NCOs and the 2009 reclassifications of CRE loans to C&I loans(see Commercial Credit section). The decline in average C&I loans reflected paydowns, the Franklin restructuring, and a |
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reduction in theline-of-credit utilization in our automobile dealer floorplan exposure, partially offset by the 2009 reclassifications. |
• | $1.0 billion, or 22%, decline in average automobile loans and leases due to the 2009 securitization of $1.0 billion of automobile loans, as well as the continued runoff of the automobile lease portfolio. | |
• | $0.5 billion, or 9%, decline in residential mortgages reflecting the impact of loan sales, as well as the continued refinance of portfolio loans. The majority of this refinance activity was fixed-rate loans, which we typically sell in the secondary market. |
• | $0.2 billion, or 3%, increase in average home equity loans reflecting higher utilization of existing lines resulting from higher quality borrowers taking advantage of the current relatively lower interest rate environment, as well as a slowdown in runoff. |
• | $2.9 billion, or 9%, growth in total core deposits, primarily reflecting increased sales efforts and initiatives for deposit accounts. |
• | $1.4 billion, or 24%, decline in average noncore deposits, reflecting a managed decline in public fund deposits as well as planned efforts to reduce our reliance on noncore funding sources. |
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Average Balances | ||||||||||||||||||||||||||||
Change from 2009 | Change from 2008 | |||||||||||||||||||||||||||
Fully-taxable equivalent basis(1) | 2010 | Amount | Percent | 2009 | Amount | Percent | 2008 | |||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||||||
Interest-bearing deposits in banks | $ | 289 | $ | (72 | ) | (20 | )% | $ | 361 | $ | 58 | 19 | % | $ | 303 | |||||||||||||
Trading account securities | 158 | 13 | 9 | 145 | (945 | ) | (87 | ) | 1,090 | |||||||||||||||||||
Federal funds sold and securities purchased under resale agreement | — | (10 | ) | (100 | ) | 10 | (425 | ) | (98 | ) | 435 | |||||||||||||||||
Loans held for sale | 529 | (53 | ) | (9 | ) | 582 | 166 | 40 | 416 | |||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||
Taxable | 8,760 | 2,659 | 44 | 6,101 | 2,223 | 57 | 3,878 | |||||||||||||||||||||
Tax-exempt | 411 | 197 | 92 | 214 | (491 | ) | (70 | ) | 705 | |||||||||||||||||||
Total investment securities | 9,171 | 2,856 | 45 | 6,315 | 1,732 | 38 | 4,583 | |||||||||||||||||||||
Loans and leases:(3) | ||||||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||
Commercial and industrial | 12,431 | (705 | ) | (5 | ) | 13,136 | (452 | ) | (3 | ) | 13,588 | |||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||
Construction | 1,096 | (762 | ) | (41 | ) | 1,858 | (203 | ) | (10 | ) | 2,061 | |||||||||||||||||
Commercial | 6,129 | (1,169 | ) | (16 | ) | 7,298 | (373 | ) | (5 | ) | 7,671 | |||||||||||||||||
Commercial real estate | 7,225 | (1,931 | ) | (21 | ) | 9,156 | (576 | ) | (6 | ) | 9,732 | |||||||||||||||||
Total commercial | 19,656 | (2,636 | ) | (12 | ) | 22,292 | (1,028 | ) | (4 | ) | 23,320 | |||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||
Automobile loans and leases | 4,890 | 1,344 | 38 | 3,546 | (981 | ) | (22 | ) | 4,527 | |||||||||||||||||||
Home equity | 7,590 | — | — | 7,590 | 186 | 3 | 7,404 | |||||||||||||||||||||
Residential mortgage | 4,476 | (66 | ) | (1 | ) | 4,542 | (476 | ) | (9 | ) | 5,018 | |||||||||||||||||
Other loans | 661 | (61 | ) | (8 | ) | 722 | 31 | 4 | 691 | |||||||||||||||||||
Total consumer | 17,617 | 1,217 | 7 | 16,400 | (1,240 | ) | (7 | ) | 17,640 | |||||||||||||||||||
Total loans and leases | 37,273 | (1,419 | ) | (4 | ) | 38,692 | (2,268 | ) | (6 | ) | 40,960 | |||||||||||||||||
Allowance for loan and lease losses | (1,430 | ) | (474 | ) | 50 | (956 | ) | (261 | ) | 38 | (695 | ) | ||||||||||||||||
Net loans and leases | 35,843 | (1,893 | ) | (5 | ) | 37,736 | (2,529 | ) | (6 | ) | 40,265 | |||||||||||||||||
Total earning assets | 47,420 | 1,315 | 3 | 46,105 | (1,682 | ) | (4 | ) | 47,787 | |||||||||||||||||||
Cash and due from banks | 1,518 | (614 | ) | (29 | ) | 2,132 | 1,174 | 123 | 958 | |||||||||||||||||||
Intangible assets | 702 | (700 | ) | (50 | ) | 1,402 | (2,044 | ) | (59 | ) | 3,446 | |||||||||||||||||
All other assets | 4,364 | 825 | 23 | 3,539 | 294 | 9 | 3,245 | |||||||||||||||||||||
Total Assets | $ | 52,574 | $ | 134 | — | % | $ | 52,440 | $ | (2,481 | ) | (5 | )% | $ | 54,921 | |||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||||||
Demand deposits — noninterest-bearing | $ | 6,859 | $ | 802 | 13 | % | $ | 6,057 | $ | 962 | 19 | % | $ | 5,095 | ||||||||||||||
Demand deposits — interest-bearing | 5,579 | 763 | 16 | 4,816 | 813 | 20 | 4,003 | |||||||||||||||||||||
Money market deposits | 11,743 | 4,527 | 63 | 7,216 | 1,123 | 18 | 6,093 | |||||||||||||||||||||
Savings and other domestic deposits | 4,642 | (239 | ) | (5 | ) | 4,881 | (266 | ) | (5 | ) | 5,147 | |||||||||||||||||
Core certificates of deposit | 9,188 | (2,756 | ) | (23 | ) | 11,944 | 307 | 3 | 11,637 | |||||||||||||||||||
Total core deposits | 38,011 | 3,097 | 9 | 34,914 | 2,939 | 9 | 31,975 | |||||||||||||||||||||
Other domestic time deposits of $250,000 or more | 697 | (144 | ) | (17 | ) | 841 | (802 | ) | (49 | ) | 1,643 | |||||||||||||||||
Brokered time deposits and negotiable CDs | 1,603 | (1,544 | ) | (49 | ) | 3,147 | (96 | ) | (3 | ) | 3,243 | |||||||||||||||||
Deposits in foreign offices | 427 | (60 | ) | (12 | ) | 487 | (488 | ) | (50 | ) | 975 | |||||||||||||||||
Total deposits | 40,738 | 1,349 | 3 | 39,389 | 1,553 | 4 | 37,836 | |||||||||||||||||||||
Short-term borrowings | 1,446 | 513 | 55 | 933 | (1,441 | ) | (61 | ) | 2,374 | |||||||||||||||||||
Federal Home Loan Bank advances | 173 | (1,063 | ) | (86 | ) | 1,236 | (2,045 | ) | (62 | ) | 3,281 | |||||||||||||||||
Subordinated notes and other long-term debt | 3,780 | (541 | ) | (13 | ) | 4,321 | 227 | 6 | 4,094 | |||||||||||||||||||
Total interest-bearing liabilities | 39,278 | (544 | ) | (1 | ) | 39,822 | (2,668 | ) | (6 | ) | 42,490 | |||||||||||||||||
All other liabilities | 956 | 182 | 24 | 774 | (166 | ) | (18 | ) | 940 | |||||||||||||||||||
Shareholders’ equity | 5,481 | (306 | ) | (5 | ) | 5,787 | (609 | ) | (10 | ) | 6,396 | |||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 52,574 | $ | 134 | — | % | $ | 52,440 | $ | (2,481 | ) | (5 | )% | $ | 54,921 | |||||||||||||
Continued |
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Interest Income / Expense | Average Rate(2) | |||||||||||||||||||||||
Fully-taxable equivalent basis(1) | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||
ASSETS | ||||||||||||||||||||||||
Interest-bearing deposits in banks | $ | 0.8 | $ | 1.1 | $ | 7.7 | 0.28 | % | 0.32 | % | 2.53 | % | ||||||||||||
Trading account securities | 2.9 | 4.3 | 57.5 | 1.82 | 2.99 | 5.28 | ||||||||||||||||||
Federal funds sold and securities purchased under resale agreement | — | 0.1 | 10.7 | — | 0.13 | 2.46 | ||||||||||||||||||
Loans held for sale | 25.7 | 30.0 | 25.0 | 4.85 | 5.15 | 6.01 | ||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||
Taxable | 239.1 | 250.0 | 217.9 | 2.73 | 4.10 | 5.62 | ||||||||||||||||||
Tax-exempt | 18.8 | 14.2 | 48.2 | 4.56 | 6.68 | 6.83 | ||||||||||||||||||
Total investment securities | 257.9 | 264.2 | 266.1 | 2.81 | 4.18 | 5.81 | ||||||||||||||||||
Loans and leases:(3) | ||||||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||
Commercial and industrial | 660.6 | 664.6 | 770.2 | 5.31 | 5.06 | 5.67 | ||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||
Construction | 30.6 | 50.8 | 104.2 | 2.79 | 2.74 | 5.05 | ||||||||||||||||||
Commercial | 234.9 | 262.3 | 430.1 | 3.83 | 3.59 | 5.61 | ||||||||||||||||||
Commercial real estate | 265.5 | 313.1 | 534.3 | 3.67 | 3.42 | 5.49 | ||||||||||||||||||
Total commercial | 926.1 | 977.7 | 1,304.5 | 4.71 | 4.39 | 5.59 | ||||||||||||||||||
Consumer: | ||||||||||||||||||||||||
Automobile loans and leases | 295.2 | 252.6 | 311.5 | 6.04 | 7.12 | 6.88 | ||||||||||||||||||
Home equity | 383.7 | 426.2 | 475.2 | 5.06 | 5.62 | 6.42 | ||||||||||||||||||
Residential mortgage | 216.8 | 237.4 | 292.4 | 4.84 | 5.23 | 5.83 | ||||||||||||||||||
Other loans | 47.5 | 56.1 | 68.0 | 7.18 | 7.78 | 9.85 | ||||||||||||||||||
Total consumer | 943.2 | 972.3 | 1,147.1 | 5.35 | 5.93 | 6.50 | ||||||||||||||||||
Total loans and leases | 1,869.3 | 1,950.0 | 2,451.6 | 5.02 | 5.04 | 5.99 | ||||||||||||||||||
Total earning assets | $ | 2,156.6 | $ | 2,249.7 | $ | 2,818.6 | 4.55 | % | 4.88 | % | 5.90 | % | ||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||||
Demand deposits — noninterest-bearing | $ | — | $ | — | $ | — | — | % | — | % | — | % | ||||||||||||
Demand deposits — interest-bearing | 10.4 | 9.5 | 22.2 | 0.19 | 0.20 | 0.55 | ||||||||||||||||||
Money market deposits | 103.5 | 83.6 | 117.5 | 0.88 | 1.16 | 1.93 | ||||||||||||||||||
Savings and other domestic deposits | 48.2 | 66.8 | 100.3 | 1.04 | 1.37 | 1.88 | ||||||||||||||||||
Core certificates of deposit | 231.6 | 409.4 | 495.7 | 2.52 | 3.43 | 4.27 | ||||||||||||||||||
Total core deposits | 393.7 | 569.3 | 735.7 | 1.26 | 1.97 | 2.73 | ||||||||||||||||||
Other domestic time deposits of $250,000 or more | 9.3 | 20.8 | 62.1 | 1.32 | 2.48 | 3.76 | ||||||||||||||||||
Brokered time deposits and negotiable CDs | 35.4 | 83.1 | 118.8 | 2.21 | 2.64 | 3.66 | ||||||||||||||||||
Deposits in foreign offices | 0.8 | 0.9 | 15.2 | 0.20 | 0.19 | 1.56 | ||||||||||||||||||
Total deposits | 439.2 | 674.1 | 931.8 | 1.30 | 2.02 | 2.85 | ||||||||||||||||||
Short-term borrowings | 3.0 | 2.4 | 42.3 | 0.21 | 0.25 | 1.78 | ||||||||||||||||||
Federal Home Loan Bank advances | 3.1 | 12.9 | 107.8 | 1.80 | 1.04 | 3.29 | ||||||||||||||||||
Subordinated notes and other long-term debt | 81.4 | 124.5 | 184.8 | 2.15 | 2.88 | 4.51 | ||||||||||||||||||
Total interest-bearing liabilities | 526.7 | 813.9 | 1,266.7 | 1.34 | 2.04 | 2.98 | ||||||||||||||||||
Net interest income | $ | 1,629.9 | $ | 1,435.8 | $ | 1,551.9 | ||||||||||||||||||
Net interest rate spread | 3.21 | 2.84 | 2.92 | |||||||||||||||||||||
Impact of noninterest-bearing funds on margin | 0.23 | 0.27 | 0.33 | |||||||||||||||||||||
Net Interest Margin | 3.44 | % | 3.11 | % | 3.25 | % | ||||||||||||||||||
(1) | FTE yields are calculated assuming a 35% tax rate. | |
(2) | Loan and lease and deposit average rates include impact of applicable derivatives, non-deferrable fees, and amortized fees. | |
(3) | For purposes of this analysis, nonaccrual loans are reflected in the average balances of loans. |
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2010 | 2009 | 2007 | 2008 | |||||||||||||
(Dollar amounts in millions) | ||||||||||||||||
Provision for credit losses | ||||||||||||||||
Franklin | $ | 87.0 | $ | (14.1 | ) | $ | 438.0 | $ | 410.8 | |||||||
Non-Franklin | 547.5 | 2,088.8 | 619.5 | 232.8 | ||||||||||||
Total | $ | 634.5 | $ | 2,074.7 | $ | 1,057.5 | $ | 643.6 | ||||||||
Total net charge-offs (recoveries) | ||||||||||||||||
Franklin | $ | 87.0 | $ | 115.9 | $ | 423.3 | $ | 308.5 | ||||||||
Non-Franklin | 787.5 | 1,360.7 | 334.8 | 169.1 | ||||||||||||
Total | $ | 874.5 | $ | 1,476.6 | $ | 758.1 | $ | 477.6 | ||||||||
Provision for credit losses in excess of net charge-offs | ||||||||||||||||
Franklin | $ | — | $ | (130.0 | ) | $ | 14.7 | $ | 102.3 | |||||||
Non-Franklin | (240.0 | ) | 728.1 | 284.8 | 63.7 | |||||||||||
Total | $ | (240.0 | ) | $ | 598.1 | $ | 299.4 | $ | 166.0 | |||||||
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Twelve Months Ended December 31, | ||||||||||||||||||||||||||||
Change from 2009 | Change from 2008 | |||||||||||||||||||||||||||
2010 | Amount | Percent | 2009 | Amount | Percent | 2008 | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Service charges on deposit accounts | $ | 267,015 | $ | (35,784 | ) | (12 | )% | $ | 302,799 | $ | (5,254 | ) | (2 | )% | $ | 308,053 | ||||||||||||
Mortgage banking income | 175,782 | 63,484 | 57 | 112,298 | 103,304 | 1,149 | 8,994 | |||||||||||||||||||||
Trust services | 112,555 | 8,916 | 9 | 103,639 | (22,341 | ) | (18 | ) | 125,980 | |||||||||||||||||||
Electronic banking | 110,234 | 10,083 | 10 | 100,151 | 9,884 | 11 | 90,267 | |||||||||||||||||||||
Insurance income | 76,413 | 3,087 | 4 | 73,326 | 702 | 1 | 72,624 | |||||||||||||||||||||
Brokerage income | 68,855 | 4,012 | 6 | 64,843 | (329 | ) | (1 | ) | 65,172 | |||||||||||||||||||
Bank owned life insurance income | 61,066 | 6,194 | 11 | 54,872 | 96 | — | 54,776 | |||||||||||||||||||||
Automobile operating lease income | 45,964 | (5,846 | ) | (11 | ) | 51,810 | 11,959 | 30 | 39,851 | |||||||||||||||||||
Securities losses | (274 | ) | 9,975 | (97 | ) | (10,249 | ) | 187,121 | (95 | ) | (197,370 | ) | ||||||||||||||||
Other income | 124,248 | (27,907 | ) | (18 | ) | 152,155 | 13,364 | 10 | 138,791 | |||||||||||||||||||
Total noninterest income | $ | 1,041,858 | $ | 36,214 | 4 | % | $ | 1,005,644 | $ | 298,506 | 42 | % | $ | 707,138 | ||||||||||||||
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Twelve Months Ended December 31, | ||||||||||||||||||||||||||||
Change from 2009 | Change from 2008 | |||||||||||||||||||||||||||
2010 | Amount | Percent | 2009 | Amount | Percent | 2008 | ||||||||||||||||||||||
(Dollar amounts in thousands, unless otherwise noted) | ||||||||||||||||||||||||||||
Mortgage Banking Income | ||||||||||||||||||||||||||||
Origination and secondary marketing | $ | 117,440 | $ | 22,729 | 24 | % | $ | 94,711 | $ | 57,454 | 154 | % | $ | 37,257 | ||||||||||||||
Servicing fees | 48,123 | (371 | ) | (1 | ) | 48,494 | 2,936 | 6 | 45,558 | |||||||||||||||||||
Amortization of capitalized servicing(1) | (47,165 | ) | 406 | (1 | ) | (47,571 | ) | (20,937 | ) | 79 | (26,634 | ) | ||||||||||||||||
Other mortgage banking income | 16,629 | (6,731 | ) | (29 | ) | 23,360 | 6,592 | 39 | 16,768 | |||||||||||||||||||
Sub-total | 135,027 | 16,033 | 13 | 118,994 | 46,045 | 63 | 72,949 | |||||||||||||||||||||
MSR valuation adjustment(1) | (12,721 | ) | (47,026 | ) | (137 | ) | 34,305 | 86,973 | N.R. | (52,668 | ) | |||||||||||||||||
Net trading gains (losses) related to MSR hedging | 53,476 | 94,477 | N.R. | (41,001 | ) | (29,714 | ) | 263 | (11,287 | ) | ||||||||||||||||||
Total mortgage banking income | $ | 175,782 | $ | 63,484 | 57 | % | $ | 112,298 | $ | 103,304 | 1,149 | % | $ | 8,994 | ||||||||||||||
Mortgage originations (in millions) | $ | 5,476 | $ | 214 | 4 | % | $ | 5,262 | $ | 1,489 | 39 | % | $ | 3,773 | ||||||||||||||
Average trading account securities used to hedge MSRs (in millions) | 64 | (6 | ) | (9 | ) | 70 | (961 | ) | (93 | ) | 1,031 | |||||||||||||||||
Capitalized MSRs(2) | 196,194 | (18,398 | ) | (9 | ) | 214,592 | 47,154 | 28 | 167,438 | |||||||||||||||||||
Total mortgages serviced for others (in millions)(2) | 15,933 | (77 | ) | — | 16,010 | 256 | 2 | 15,754 | ||||||||||||||||||||
MSR % of investor servicing portfolio | 1.23 | % | (0.11 | ) | (8 | )% | 1.34 | % | 0.28 | 26 | % | 1.06 | % | |||||||||||||||
Net Impact of MSR Hedging | ||||||||||||||||||||||||||||
MSR valuation adjustment(1) | $ | (12,721 | ) | $ | (47,026 | ) | N.R. | % | $ | 34,305 | $ | 86,973 | N.R. | % | $ | (52,668 | ) | |||||||||||
Net trading gains (losses) related to MSR hedging | 53,476 | 94,477 | N.R. | (41,001 | ) | (29,714 | ) | 263 | (11,287 | ) | ||||||||||||||||||
Net interest income related to MSR hedging | 972 | (2,027 | ) | (68 | ) | 2,999 | (30,140 | ) | (91 | ) | 33,139 | |||||||||||||||||
Net gain (loss) of MSR hedging | $ | 41,727 | $ | 45,424 | N.R. | % | $ | (3,697 | ) | $ | 27,119 | N.R. | % | $ | (30,816 | ) | ||||||||||||
(1) | The change in fair value for the period represents the MSR valuation adjustment, net of amortization of capitalized servicing. |
(2) | At period end. |
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• | $63.5 million, or 57%, increase in mortgage banking income. Net MSR hedging-related activities contributed a $45.4 million net increase. We use an independent outside third party to monitor our MSR asset valuation and assumptions. During 2010, interest rates were volatile and generally lower than 2009 rates resulting in higher prepayment speeds and lower MSR valuation, which was economically hedged and offset by hedging gains. However, the negative MSR valuation adjustment was partially offset by model assumption updates. Based on updated market data and trends, the prepayment assumptions were lowered, which increased the value of the MSR. The increase also reflected a $22.7 million increase in origination and secondary marketing income as loan sales and loan originations were substantially higher(see Table 12). (See MSR section located within Market Risk for additional information.) | |
• | $10.1 million, or 10%, increase in electronic banking, reflecting increased debit card transaction volume. | |
• | $10.0 million benefit from lower securities losses. | |
• | $8.9 million, or 9%, increase in trust services income, with 50% of the increase due to increases in asset market values, and the remainder reflecting growth in new business. | |
• | $6.2 million, or 11%, increase in insurance benefits associated with bank owned life insurance. | |
• | $4.0 million, or 6%, increase in brokerage income, primarily reflecting an increase in title insurance income due to higher mortgage refinance activity, and to a lesser degree an increase in fixed income product sales, partially offset by lower annuity income. |
• | $35.8 million, or 12%, decrease in service charges on deposit accounts. This decline represented a decrease in personal NSF / OD service charges and reflected a combination of factors. These included the implementation of changes to Regulation E and the introduction of our Fair Play banking philosophy during the 2010 third quarter, as well as the continued underlying decline in activity as customers better manage their account balances. As part of our Fair Play banking philosophy, we voluntary reduced certain NSF / OD fees and implemented our24-Hour Gracetm overdraft policy. The goal of our Fair Play banking philosophy is to introduce more customer friendly fee structures with the objective of accelerating the acquisition and retention of customers. | |
• | $27.9 million, or 18%, decline in other income. 2009 included a $31.4 million gain from the sale of Visa® Class B stock. |
• | $103.3 million increase in mortgage banking income, reflecting a $57.5 million increase in origination and secondary marketing income as loans sales and loan originations were substantially higher, and a $27.1 million improvement in MSR hedging(see Table 12). | |
• | $187.1 million, or 95%, reduction in securities losses as 2008 included $197.1 million of OTTI adjustments compared with $10.2 million in 2009. | |
• | $12.0 million, or 30%, increase in automobile operating lease income, reflecting a 21% increase in average operating lease balances as lease originations since the 2007 fourth quarter were recorded as operating leases. However, during the 2008 fourth quarter, we exited the automobile leasing business. |
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• | $13.4 million, or 10%, increase in other income, reflecting the net impact of a $22.4 million change in the fair value of derivatives that did not qualify for hedge accounting, partially offset by a $4.7 million decline in mezzanine lending income and a $4.1 million decline in customer derivatives income. | |
• | $9.9 million, or 11%, increase in electronic banking, reflecting increased transaction volumes and additional third party processing fees. |
• | $22.3 million, or 18%, decline in trust services income, reflecting the impact of reduced market values on asset management revenues, as well as lower yields on proprietary money market funds. |
Twelve Months Ended December 31, | ||||||||||||||||||||||||||||
Change from 2009 | Change from 2008 | |||||||||||||||||||||||||||
2010 | Amount | Percent | 2009 | Amount | Percent | 2008 | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Personnel costs | $ | 798,973 | $ | 98,491 | 14 | % | $ | 700,482 | $ | (83,064 | ) | (11 | )% | $ | 783,546 | |||||||||||||
Outside data processing and other services | 159,248 | 11,153 | 8 | 148,095 | 17,869 | 14 | 130,226 | |||||||||||||||||||||
Net occupancy | 107,862 | 2,589 | 2 | 105,273 | (3,155 | ) | (3 | ) | 108,428 | |||||||||||||||||||
Deposit and other insurance expense | 97,548 | (16,282 | ) | (14 | ) | 113,830 | 91,393 | 407 | 22,437 | |||||||||||||||||||
Professional services | 88,778 | 12,412 | 16 | 76,366 | 26,753 | 54 | 49,613 | |||||||||||||||||||||
Equipment | 85,920 | 2,803 | 3 | 83,117 | (10,848 | ) | (12 | ) | 93,965 | |||||||||||||||||||
Marketing | 65,924 | 32,875 | 99 | 33,049 | 385 | 1 | 32,664 | |||||||||||||||||||||
Amortization of intangibles | 60,478 | (7,829 | ) | (11 | ) | 68,307 | (8,587 | ) | (11 | ) | 76,894 | |||||||||||||||||
OREO and foreclosure expense | 39,049 | (54,850 | ) | (58 | ) | 93,899 | 60,444 | 181 | 33,455 | |||||||||||||||||||
Automobile operating lease expense | 37,034 | (6,326 | ) | (15 | ) | 43,360 | 12,078 | 39 | 31,282 | |||||||||||||||||||
Goodwill impairment | — | (2,606,944 | ) | (100 | ) | 2,606,944 | 2,606,944 | — | — | |||||||||||||||||||
Gain on early extinguishment of debt | — | 147,442 | (100 | ) | (147,442 | ) | (123,900 | ) | 526 | (23,542 | ) | |||||||||||||||||
Other expense | 132,991 | 24,828 | 23 | 108,163 | (30,243 | ) | (22 | ) | 138,406 | |||||||||||||||||||
Total noninterest expense | $ | 1,673,805 | $ | (2,359,638 | ) | (59 | )% | $ | 4,033,443 | $ | 2,556,069 | 173 | % | $ | 1,477,374 | |||||||||||||
• | The absence of $147.4 million in gains on early extinguishment of debt in 2009. |
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• | $98.5 million, or 14%, increase in personnel costs, primarily reflecting a 10% increase in full-time equivalent staff in support of strategic initiatives, as well as higher commissions and other incentive expenses, and the reinstatement of certain employee benefits such as 401(k) plan matching contribution, merit increases, and bonuses. | |
• | $32.9 million, or 99%, increase in marketing expense, reflecting increases in branding and product advertising activities in support of strategic initiatives. | |
• | $24.8 million, or 23%, increase in other expense, reflecting $13.1 million increase associated with the provision for repurchase losses related to representations and warranties made on mortgage loans sold, as well as increased travel and miscellaneous fees. |
• | $54.9 million, or 58%, decline in OREO and foreclosure expense. | |
• | $16.3 million, or 14%, decrease in deposit and other insurance expense. This decrease was comprised of two components: (1) $23.6 million FDIC special assessment during the 2009 second quarter, and (2) increased assessments due to higher levels of deposits. |
• | $2,606.9 million of goodwill impairment recorded in 2009. The majority of the goodwill impairment, $2,602.7 million, was recorded during the 2009 first quarter. The remaining $4.2 million of goodwill impairment was recorded in the 2009 second quarter, and was related to the sale of a small payments-related business in July 2009.(See Goodwill discussion located within the Critical Account Policies and Use of Significant Estimates for additional information). | |
• | $91.4 million increase in deposit and other insurance expense. This increase was comprised of two components: (1) $23.6 million FDIC special assessment during the 2009 second quarter, and (2) $67.8 million increase related to our 2008 FDIC assessments being significantly reduced by a nonrecurring deposit assessment credit provided by the FDIC that was depleted during the 2008 fourth quarter. This deposit insurance credit offset substantially all of our assessment in 2008. Higher levels of deposits also contributed to the increase. | |
• | $60.4 million increase in OREO and foreclosure expense, reflecting higher levels of problem assets, as well as loss mitigation activities. | |
• | $26.8 million, or 54%, increase in professional services, reflecting higher consulting and collection-related expenses. | |
• | $17.9 million, or 14%, increase in outside data processing and other services, primarily reflecting portfolio servicing fees paid to Franklin resulting from the 2009 first quarter restructuring of this relationship. | |
• | $12.1 million, or 39%, increase in automobile operating lease expense, primarily reflecting a 21% increase in average operating leases. However, we exited the automobile leasing business during the 2008 fourth quarter. |
• | $123.9 million positive impact related to gains on early extinguishment of debt. | |
• | $83.1 million, or 11%, decline in personnel expense, reflecting a decline in salaries, and lower benefits and commission expense. Full-time equivalent staff declined 6% from the comparable year-ago period. | |
• | $30.2 million, or 22%, decline in other noninterest expense primarily reflecting lower automobile lease residual value expense as used vehicle prices improved. |
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• | $10.8 million, or 12%, decline in equipment costs, reflecting lower depreciation costs, as well as lower repair and maintenance costs. |
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At December 31, | ||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||||||||||||||
Commercial:(1) | ||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 13,063 | 34 | % | $ | 12,888 | 35 | % | $ | 13,541 | 33 | % | $ | 13,126 | 33 | % | $ | 7,850 | 30 | % | ||||||||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||||||||||||||
Construction | 650 | 2 | 1,469 | 4 | 2,080 | 5 | 1,962 | 5 | 1,229 | 5 | ||||||||||||||||||||||||||||||
Commercial | 6,001 | 16 | 6,220 | 17 | 8,018 | 20 | 7,221 | 18 | 3,275 | 13 | ||||||||||||||||||||||||||||||
Total commercial real estate | 6,651 | 18 | 7,689 | 21 | 10,098 | 25 | 9,183 | 23 | 4,504 | 18 | ||||||||||||||||||||||||||||||
Total commercial | 19,714 | 52 | 20,577 | 56 | 23,639 | 58 | 22,309 | 56 | 12,354 | 48 | ||||||||||||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||||||||||||||
Automobile loans and leases(2) | 5,614 | 15 | 3,390 | 9 | 4,464 | 11 | 4,294 | 11 | 3,895 | 15 | ||||||||||||||||||||||||||||||
Home equity | 7,713 | 20 | 7,563 | 21 | 7,557 | 18 | 7,290 | 18 | 4,927 | 19 | ||||||||||||||||||||||||||||||
Residential mortgage | 4,500 | 12 | 4,510 | 12 | 4,761 | 12 | 5,447 | 14 | 4,549 | 17 | ||||||||||||||||||||||||||||||
Other loans | 566 | 1 | 751 | 2 | 671 | 1 | 715 | 1 | 428 | 1 | ||||||||||||||||||||||||||||||
Total consumer | 18,393 | 48 | 16,214 | 44 | 17,453 | 42 | 17,746 | 44 | 13,799 | 52 | ||||||||||||||||||||||||||||||
Total loans and leases | $ | 38,107 | 100 | % | $ | 36,791 | 100 | % | $ | 41,092 | 100 | % | $ | 40,055 | 100 | % | $ | 26,153 | 100 | % | ||||||||||||||||||||
(1) | There were no commercial loans outstanding that would be considered a concentration of lending to a particular industry or group of industries. | |
(2) | 2010 included an increase of $522.7 million resulting from the adoption of a new accounting standard to consolidate a previously off-balance automobile loan securitization transaction. |
At December 31, | ||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||||||||||||||
Real estate | $ | 22,603 | 59 | % | $ | 23,462 | 64 | % | $ | 25,439 | 62 | % | $ | 25,886 | 65 | % | $ | 15,831 | 60 | % | ||||||||||||||||||||
Vehicles | 7,134 | 19 | 4,600 | 13 | 6,063 | 15 | 5,722 | 14 | 5,003 | 19 | ||||||||||||||||||||||||||||||
Receivables/Inventory | 3,763 | 10 | 3,582 | 10 | 3,915 | 10 | 3,391 | 8 | 2,369 | 9 | ||||||||||||||||||||||||||||||
Machinery/Equipment | 1,766 | 5 | 1,772 | 5 | 1,916 | 5 | 1,715 | 4 | 1,206 | 5 | ||||||||||||||||||||||||||||||
Unsecured | 1,117 | 3 | 1,106 | 3 | 1,666 | 4 | 1,423 | 4 | 982 | 4 | ||||||||||||||||||||||||||||||
Securities/Deposits | 734 | 2 | 1,145 | 3 | 862 | 2 | 788 | 2 | 427 | 2 | ||||||||||||||||||||||||||||||
Other | 990 | 2 | 1,124 | 2 | 1,231 | 2 | 1,130 | 3 | 335 | 1 | ||||||||||||||||||||||||||||||
Total loans and leases | $ | 38,107 | 100 | % | $ | 36,791 | 100 | % | $ | 41,092 | 100 | % | $ | 40,055 | 100 | % | $ | 26,153 | 100 | % | ||||||||||||||||||||
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At December 31, 2010 | ||||||||||||||||
Commitments | Loans Outstanding | |||||||||||||||
Amount | Percent | Amount | Percent | |||||||||||||
(Dollar amounts in millions) | ||||||||||||||||
Class: | ||||||||||||||||
Owner-occupied | $ | 4,320 | 23 | % | $ | 3,823 | 29 | % | ||||||||
Other commercial and industrial | 14,676 | 77 | 9,240 | 71 | ||||||||||||
Total | $ | 18,996 | 100 | % | $ | 13,063 | 100 | % | ||||||||
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At December 31, 2010 | ||||||||||||||||||||||||||||||||||||||||
Ohio | Michigan | Pennsylvania | Indiana | Kentucky | Florida | West Virginia | Other | Total Amount | % | |||||||||||||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||||||||||||||
Core portfolio: | ||||||||||||||||||||||||||||||||||||||||
Retail properties | $ | 458 | $ | 90 | $ | 72 | $ | 75 | $ | 8 | $ | 38 | $ | 30 | $ | 364 | $ | 1,135 | 17 | % | ||||||||||||||||||||
Office | 347 | 151 | 83 | 22 | 12 | 1 | 39 | 53 | 708 | 11 | ||||||||||||||||||||||||||||||
Multi family | 277 | 87 | 40 | 33 | 29 | — | 42 | 58 | 566 | 9 | ||||||||||||||||||||||||||||||
Industrial and warehouse | 257 | 81 | 23 | 44 | 3 | 3 | 6 | 82 | 499 | 8 | ||||||||||||||||||||||||||||||
Other commercial real estate | 715 | 138 | 35 | 45 | 8 | 21 | 54 | 118 | 1,134 | 17 | ||||||||||||||||||||||||||||||
Total core portfolio | 2,054 | 547 | 253 | 219 | 60 | 63 | 171 | 675 | 4,042 | 61 | ||||||||||||||||||||||||||||||
Total noncore portfolio | 1,424 | 412 | 168 | 226 | 36 | 110 | 64 | 169 | 2,609 | 39 | ||||||||||||||||||||||||||||||
Total | $ | 3,478 | $ | 959 | $ | 421 | $ | 445 | $ | 96 | $ | 173 | $ | 235 | $ | 844 | $ | 6,651 | 100 | % | ||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||||||
Ending | Nonaccrual | |||||||||||||||||||||||
Balance | Prior NCOs | ACL $ | ACL % | Credit Mark(1) | Loans | |||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||
Total core | $ | 4,042 | $ | 5 | $ | 160 | 3.96 | % | 4.08 | % | $ | 15.7 | ||||||||||||
Noncore — SAD(2) | 1,400 | 379 | 329 | 23.50 | 39.80 | 307.2 | ||||||||||||||||||
Noncore — Other | 1,209 | 5 | 105 | 8.68 | 9.06 | 40.8 | ||||||||||||||||||
Total noncore | 2,609 | 384 | 434 | 16.63 | 27.33 | 348.0 | ||||||||||||||||||
Total commercial real estate | $ | 6,651 | $ | 389 | $ | 594 | 8.93 | % | 13.96 | % | $ | 363.7 | ||||||||||||
December 31, 2009 | ||||||||||||||||||||||||
Ending | Nonaccrual | |||||||||||||||||||||||
Balance | Prior NCOs | ACL $ | ACL % | Credit Mark(1) | Loans | |||||||||||||||||||
Total core | $ | 4,038 | $ | — | $ | 168 | 4.16 | % | 4.16 | % | $ | 3.8 | ||||||||||||
Noncore — SAD(2) | 1,809 | 511 | 410 | 22.66 | 39.70 | 861.0 | ||||||||||||||||||
Noncore — Other | 1,842 | 26 | 186 | 10.10 | 11.35 | 71.0 | ||||||||||||||||||
Total noncore | 3,651 | 537 | 596 | 16.32 | 27.05 | 932.0 | ||||||||||||||||||
Total commercial real estate | $ | 7,689 | $ | 537 | $ | 764 | 9.94 | % | 15.82 | % | $ | 935.8 | ||||||||||||
(1) | Calculated as (Prior NCOs + ACL $) / (Ending Balance + Prior NCOs) | |
(2) | Noncore loans managed by SAD, the area responsible for managing loans and relationships designated as Classified loans. |
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December 31, 2010 | ||||||||||||
Home Equity | ||||||||||||
Secured | Secured | |||||||||||
by | by | Residential | ||||||||||
first-lien | second-lien | Mortgages(3) | ||||||||||
(Dollar amounts in millions) | ||||||||||||
Ending balance | $ | 3,055 | $ | 4,658 | $ | 4,500 | ||||||
Portfolio weighted average LTV ratio(1) | 70 | % | 80 | % | 77 | % | ||||||
Portfolio weighted average FICO score(2) | 745 | 733 | 721 |
Year Ended December 31, 2010 | ||||||||||||
Home Equity | ||||||||||||
Secured | Secured | |||||||||||
by | by | Residential | ||||||||||
first-lien | second-lien | Mortgages(3) | ||||||||||
Originations | $ | 1,310 | $ | 754 | $ | 1,607 | ||||||
Origination weighted average LTV ratio(1) | 69 | % | 79 | % | 81 | % | ||||||
Origination weighted average FICO score(2) | 767 | 756 | 759 |
(1) | The LTV ratios for home equity loans and home equitylines-of-credit are cumulative and reflect the balance of any senior loans. LTV ratios reflect collateral values at the time of loan origination. | |
(2) | Portfolio weighted average FICO scores reflect currently updated customer credit scores whereas origination weighted average FICO scores reflect the customer credit scores at the time of loan origination. | |
(3) | Represents only owned-portfolio originations. |
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At December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Commercial and industrial(1) | $ | 346,720 | $ | 578,414 | $ | 932,648 | $ | 87,679 | $ | 58,393 | ||||||||||
Commercial real estate | 363,692 | 935,812 | 445,717 | 148,467 | 37,947 | |||||||||||||||
Total residential mortgages(1) | 45,010 | 362,630 | 98,951 | 59,557 | 32,527 | |||||||||||||||
Home equity | 22,526 | 40,122 | 24,831 | 24,068 | 15,266 | |||||||||||||||
Total nonaccrual loans and leases | 777,948 | 1,916,978 | 1,502,147 | 319,771 | 144,133 | |||||||||||||||
Other real estate owned, net | ||||||||||||||||||||
Residential | 31,649 | 71,427 | 63,058 | 60,804 | 47,898 | |||||||||||||||
Commercial | 35,155 | 68,717 | 59,440 | 14,467 | 1,589 | |||||||||||||||
Total other real estate, net | 66,804 | 140,144 | 122,498 | 75,271 | 49,487 | |||||||||||||||
Impaired loans held for sale(2) | — | 969 | 12,001 | 73,481 | — | |||||||||||||||
Other nonperforming assets(3) | — | — | — | 4,379 | — | |||||||||||||||
Total nonperforming assets | $ | 844,752 | $ | 2,058,091 | $ | 1,636,646 | $ | 472,902 | $ | 193,620 | ||||||||||
Nonaccrual loans as a % of total loans and leases | 2.04 | % | 5.21 | % | 3.66 | % | 0.80 | % | 0.55 | % | ||||||||||
Nonperforming assets ratio(4) | 2.21 | 5.57 | 3.97 | 1.18 | 0.74 | |||||||||||||||
Nonperforming Franklin assets(1) | ||||||||||||||||||||
Commercial | $ | — | $ | — | $ | 650,225 | $ | — | $ | — | ||||||||||
Residential mortgage | — | 299,670 | — | — | — | |||||||||||||||
Other real estate owned | 9,477 | 23,826 | — | — | — | |||||||||||||||
Home equity | — | 15,004 | — | — | — | |||||||||||||||
Total Nonperforming Franklin assets | $ | 9,477 | $ | 338,500 | $ | 650,225 | $ | — | $ | — | ||||||||||
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(1) | Franklin loans were reported as commercial accruing restructured loans at December 31, 2007. At December 31, 2008, Franklin loans were reported as nonaccrual commercial and industrial loans. At December 31, 2009, nonaccrual Franklin loans were reported as residential mortgage loans, home equity loans, and other real estate owned. | |
(2) | Represents impaired loans obtained from the Sky Financial acquisition. Held for sale loans are carried at the lower of cost or fair value less costs to sell. | |
(3) | Other nonperforming assets represent certain investment securities backed by mortgage loans to borrowers with lower FICO scores. | |
(4) | Nonperforming assets divided by the sum of loans and leases, impaired loans held for sale, net other real estate owned, and other nonperforming assets. |
December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
Nonaccrual loans | ||||||||||||||||||||
Franklin | $ | — | $ | 314.7 | $ | 650.2 | $ | — | $ | — | ||||||||||
Non-Franklin | 777.9 | 1,602.3 | 851.9 | 319.8 | 144.1 | |||||||||||||||
Total | $ | 777.9 | $ | 1,917.0 | $ | 1,502.1 | $ | 319.8 | $ | 144.1 | ||||||||||
Total loans and leases | ||||||||||||||||||||
Franklin | $ | — | $ | 443.9 | $ | 650.2 | $ | 1,187.0 | $ | — | ||||||||||
Non-Franklin | 38,106.5 | 36,346.8 | 40,441.8 | 38,867.3 | 26,153.4 | |||||||||||||||
Total | $ | 38,106.5 | $ | 36,790.7 | $ | 41,092.0 | $ | 40,054.3 | $ | 26,153.4 | ||||||||||
Nonaccrual loan ratio | ||||||||||||||||||||
Total | 2.04 | % | 5.21 | % | 3.66 | % | 0.80 | % | 0.55 | % | ||||||||||
Non-Franklin | 2.04 | 4.41 | 2.11 | 0.82 | 0.55 |
December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
Nonperforming assets | ||||||||||||||||||||
Franklin | $ | 9.5 | $ | 338.5 | $ | 650.2 | $ | — | $ | — | ||||||||||
Non-Franklin | 835.3 | 1,719.6 | 986.4 | 472.9 | 193.6 | |||||||||||||||
Total | $ | 844.8 | $ | 2,058.1 | $ | 1,636.6 | $ | 472.9 | $ | 193.6 | ||||||||||
Total loans and leases | $ | 38,106.5 | $ | 36,790.7 | $ | 41,092.0 | $ | 40,054.3 | $ | 26,153.4 | ||||||||||
Total other real estate owned, net | 66.8 | 140.1 | 122.5 | 75.3 | 49.5 | |||||||||||||||
Impaired loans held for sale | — | 1.0 | 12.0 | 73.5 | — | |||||||||||||||
Other nonperforming assets | — | — | — | 4.4 | — | |||||||||||||||
Total | 38,173.3 | 36,931.8 | 41,226.5 | 40,207.5 | 26,202.9 | |||||||||||||||
Franklin | 9.5 | 338.5 | 650.2 | 1,187.0 | — | |||||||||||||||
Non-Franklin | $ | 38,163.8 | $ | 36,593.3 | $ | 40,576.3 | $ | 39,020.5 | $ | 26,202.9 | ||||||||||
Nonperforming assets ratio | ||||||||||||||||||||
Total | 2.21 | % | 5.57 | % | 3.97 | % | 1.18 | % | 0.74 | % | ||||||||||
Non-Franklin | 2.19 | 4.72 | 2.43 | 1.21 | 0.74 |
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• | $572.1 million decrease in CRE NALs, primarily reflecting both NCO activity and problem loan resolutions including borrower payments and pay-offs. Payments and pay-offs received were substantial and are a direct result of our commitment to the on-going proactive management of these problem loans by our SAD. Also, inflow levels were significantly lower in 2010 compared to 2009. The level of inflows, or migration, is an important indicator of the future trend for this portfolio. | |
• | $317.6 million decrease in residential mortgage NALs, primarily reflecting the Franklin-related loan sales in 2010. | |
• | $231.7 million decrease in C&I NALs, primarily reflecting both NCO activity and problem loan resolutions, including pay-offs. The decline was associated with loans throughout our footprint, with no specific geographic or industry concentration. | |
• | $17.6 million decrease in home equity NALs, primarily reflecting the Franklin-related loans sales in 2010. |
• | $1,139.0 million decrease to NALs, discussed above. | |
• | $73.3 million decrease to OREO. This reflected a focused effort to reduce our level of OREO properties through active selling strategies during the year, as well as lower levels of new OREO properties resulting from an increase in loss mitigation activity and short sales prior to foreclosure. We do not believe there will be a meaningful improvement in property values in the near term, and believe it prudent to dispose of the property instead of incurring the on-going expenses associated with maintaining the property. |
At December 31, | ||||||||||||||||||||
(Dollar amounts in thousands) | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||
Nonperforming assets, beginning of year | $ | 2,058,091 | $ | 1,636,646 | $ | 472,902 | $ | 193,620 | $ | 117,155 | ||||||||||
New nonperforming assets | 925,699 | 2,767,295 | 1,082,063 | 468,056 | 222,043 | |||||||||||||||
Franklin-related impact, net(1) | (329,023 | ) | (311,726 | ) | 650,225 | — | — | |||||||||||||
Acquired nonperforming assets | — | — | — | 144,492 | 33,843 | |||||||||||||||
Returns to accruing status | (370,798 | ) | (215,336 | ) | (42,161 | ) | (24,952 | ) | (43,999 | ) | ||||||||||
Loan and lease losses | (639,766 | ) | (1,148,135 | ) | (202,249 | ) | (120,959 | ) | (45,648 | ) | ||||||||||
Other real estate owned losses | (7,936 | ) | (62,665 | ) | (19,582 | ) | (5,795 | ) | (543 | ) | ||||||||||
Payments | (650,429 | ) | (497,076 | ) | (194,692 | ) | (86,093 | ) | (59,469 | ) | ||||||||||
Sales | (141,086 | ) | (110,912 | ) | (109,860 | ) | (95,467 | ) | (29,762 | ) | ||||||||||
Nonperforming assets, end of year | $ | 844,752 | $ | 2,058,091 | $ | 1,636,646 | $ | 472,902 | $ | 193,620 | ||||||||||
(1) | The activity above excludes the 2007 impact of the placement of the loans to Franklin on nonaccrual status and their return to accrual status upon the restructuring of these loans. At 2007 year-end, the loans to |
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Franklin were not included in the nonperforming assets total. At 2008 year-end, the loans to Franklin were reported as nonaccrual commercial and industrial loans. At 2009 year-end, nonaccrual Franklin loans were reported as residential mortgage loans, home equity loans, and other real estate owned. The 2009 impact primarily reflects loan and lease losses, as well as payments. |
December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Restructured loans and leases — accruing: | �� | |||||||
Mortgage loans | $ | 328,411 | $ | 229,470 | ||||
Other consumer loans | 76,586 | 52,871 | ||||||
Commercial loans | 222,632 | 157,049 | ||||||
Total restructured loans and leases — accruing | 627,629 | 439,390 | ||||||
Restructured loans and leases — nonaccruing: | ||||||||
Mortgage loans | 5,789 | 4,988 | ||||||
Other consumer loans | — | — | ||||||
Commercial loans | 33,462 | 108,458 | ||||||
Total restructured loans and leases — nonaccruing | 39,251 | 113,446 | ||||||
Total restructured loans and leases | $ | 666,880 | $ | 552,836 | ||||
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At December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Accruing loans and leases past due 90 days or more | ||||||||||||||||||||
Commercial and industrial | $ | — | $ | — | $ | 10,889 | $ | 10,474 | $ | 170 | ||||||||||
Commercial real estate | — | — | 59,425 | 25,064 | 1,711 | |||||||||||||||
Residential mortgage (excluding loans guaranteed by the U.S. government) | 53,983 | 78,915 | 71,553 | 67,391 | 35,555 | |||||||||||||||
Home equity | 23,497 | 53,343 | 29,039 | 24,086 | 13,423 | |||||||||||||||
Other loans and leases | 10,177 | 13,400 | 18,039 | 13,962 | 6,650 | |||||||||||||||
Total, excl. loans guaranteed by the U.S. government | 87,657 | 145,658 | 188,945 | 140,977 | 57,509 | |||||||||||||||
Add: loans guaranteed by the U.S. government | 98,288 | 101,616 | 82,576 | 51,174 | 31,308 | |||||||||||||||
Total accruing loans and leases past due 90 days or more, including loans guaranteed by the U.S. government | $ | 185,945 | $ | 247,274 | $ | 271,521 | $ | 192,151 | $ | 88,817 | ||||||||||
Ratios:(1) | ||||||||||||||||||||
Excluding loans guaranteed by the U.S. government, as a percent of total loans and leases | 0.23 | % | 0.40 | % | 0.46 | % | 0.35 | % | 0.22 | % | ||||||||||
Guaranteed by the U.S. government, as a percent of total loans and leases | 0.26 | 0.28 | 0.20 | 0.13 | 0.12 | |||||||||||||||
Including loans guaranteed by the U.S. government, as a percent of total loans and leases | 0.49 | 0.68 | 0.66 | 0.48 | 0.34 | |||||||||||||||
Accruing troubled debt restructured loans | ||||||||||||||||||||
Commercial(2) | $ | 222,632 | $ | 157,049 | $ | 185,333 | $ | 1,187,368 | $ | — | ||||||||||
Total residential mortgages | 328,411 | 229,470 | 84,993 | 32,005 | 7,496 | |||||||||||||||
Other | 76,586 | 52,871 | 41,094 | — | — | |||||||||||||||
Total accruing troubled debt restructured loans | $ | 627,629 | $ | 439,390 | $ | 311,420 | $ | 1,219,373 | $ | 7,496 | ||||||||||
(1) | Percent of related loans and leases. | |
(2) | Franklin loans were reported as commercial accruing restructured loans at December 31, 2007. At December 31, 2008, Franklin loans were reported as nonaccrual commercial and industrial loans. At December 31, 2009, nonaccrual Franklin loans were reported as residential mortgage loans, home equity loans, and other real estate owned. |
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(This section should be read in conjunction with Significant Item 3, and Notes 1 and 6 of the Notes to the Consolidated Financial Statements.) |
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Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Allowance for loan and lease losses, beginning of year | $ | 1,482,479 | $ | 900,227 | $ | 578,442 | $ | 272,068 | $ | 268,347 | ||||||||||
Acquired allowance for loan and lease losses | — | — | — | 188,128 | 23,785 | |||||||||||||||
Loan and lease charge-offs | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | (316,771 | ) | (525,262 | ) | (538,434 | ) | (359,457 | ) | (33,244 | ) | ||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction | (116,428 | ) | (196,148 | ) | (6,631 | ) | (11,902 | ) | (4,156 | ) | ||||||||||
Commercial | (187,567 | ) | (500,534 | ) | (65,565 | ) | (29,152 | ) | (4,393 | ) | ||||||||||
Commercial real estate | (303,995 | ) | (696,682 | ) | (72,196 | ) | (41,054 | ) | (8,549 | ) | ||||||||||
Total commercial | (620,766 | ) | (1,221,944 | ) | (610,630 | ) | (400,511 | ) | (41,793 | ) | ||||||||||
Consumer: | ||||||||||||||||||||
Automobile loans and leases | (46,308 | ) | (76,141 | ) | (72,108 | ) | (41,241 | ) | (33,789 | ) | ||||||||||
Home equity | (140,831 | ) | (110,400 | ) | (70,457 | ) | (37,221 | ) | (24,950 | ) | ||||||||||
Residential mortgage | (163,427 | ) | (111,899 | ) | (23,012 | ) | (12,196 | ) | (4,767 | ) | ||||||||||
Other loans | (32,575 | ) | (40,993 | ) | (30,123 | ) | (26,773 | ) | (14,393 | ) | ||||||||||
Total consumer | (383,141 | ) | (339,433 | ) | (195,700 | ) | (117,431 | ) | (77,899 | ) | ||||||||||
Total charge-offs | (1,003,907 | ) | (1,561,378 | ) | (806,330 | ) | (517,942 | ) | (119,692 | ) | ||||||||||
Recoveries of loan and lease charge-offs | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | 61,839 | 37,656 | 12,269 | 13,617 | 12,376 | |||||||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction | 7,420 | 3,442 | 5 | 48 | 602 | |||||||||||||||
Commercial | 21,013 | 10,509 | 3,451 | 1,902 | 1,163 | |||||||||||||||
Total commercial real estate | 28,433 | 13,951 | 3,456 | 1,950 | 1,765 | |||||||||||||||
Total commercial | 90,272 | 51,607 | 15,725 | 15,567 | 14,141 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Automobile loans and leases | 19,736 | 19,809 | 17,543 | 13,549 | 15,014 | |||||||||||||||
Home equity | 1,458 | 4,224 | 2,901 | 2,795 | 3,096 | |||||||||||||||
Residential mortgage | 10,532 | 1,697 | 1,765 | 825 | 262 | |||||||||||||||
Other loans | 7,435 | 7,454 | 10,329 | 7,575 | 4,803 | |||||||||||||||
Total consumer | 39,161 | 33,184 | 32,538 | 24,744 | 23,175 | |||||||||||||||
Total recoveries | 129,433 | 84,791 | 48,263 | 40,311 | 37,316 | |||||||||||||||
Net loan and lease charge-offs | (874,474 | ) | (1,476,587 | ) | (758,067 | ) | (477,631 | ) | (82,376 | ) | ||||||||||
Provision for loan and lease losses | 641,299 | 2,069,931 | 1,067,789 | 628,802 | 62,312 | |||||||||||||||
Economic reserve transfer | — | — | 12,063 | — | — | |||||||||||||||
Allowance for assets sold and securitized | (296 | ) | (9,188 | ) | — | — | — | |||||||||||||
Allowance for loans transferred to held for sale | — | (1,904 | ) | — | (32,925 | ) | — | |||||||||||||
Allowance for loan and lease losses, end of year | 1,249,008 | 1,482,479 | 900,227 | 578,442 | 272,068 | |||||||||||||||
Allowance for unfunded loan commitments, beginning of year | 48,879 | 44,139 | 66,528 | 40,161 | 36,957 | |||||||||||||||
Acquired allowance for unfunded loan commitments | — | — | — | 11,541 | 325 | |||||||||||||||
(Reduction in) Provision for unfunded loan commitments and letters of credit losses | (6,752 | ) | 4,740 | (10,326 | ) | 14,826 | 2,879 | |||||||||||||
Economic reserve transfer | — | — | (12,063 | ) | — | — | ||||||||||||||
Allowance for unfunded loan commitments, end of year | 42,127 | 48,879 | 44,139 | 66,528 | 40,161 | |||||||||||||||
Allowance for credit losses, end of year | $ | 1,291,135 | $ | 1,531,358 | $ | 944,366 | $ | 644,970 | $ | 312,229 | ||||||||||
ALLL as a % of total period end loans and leases | 3.28 | % | 4.03 | % | 2.19 | % | 1.44 | % | 1.04 | % | ||||||||||
AULC as a % of total period end loans and leases | 0.11 | 0.13 | 0.11 | 0.17 | 0.15 | |||||||||||||||
ACL as a % of total period end loans and leases | 3.39 | % | 4.16 | % | 2.30 | % | 1.61 | % | 1.19 | % |
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December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
Allowance for loan and lease losses | ||||||||||||||||||||
Franklin | $ | — | $ | — | $ | 130.0 | $ | 115.3 | $ | — | ||||||||||
Non-Franklin | 1,249.0 | 1,482.5 | 770.2 | 463.1 | 272.1 | |||||||||||||||
Total | $ | 1,249.0 | $ | 1,482.5 | $ | 900.2 | $ | 578.4 | $ | 272.1 | ||||||||||
Allowance for credit losses | ||||||||||||||||||||
Franklin | $ | — | $ | — | $ | 130.0 | $ | 115.3 | $ | — | ||||||||||
Non-Franklin | 1,291.1 | 1,531.4 | 814.4 | 529.7 | 312.2 | |||||||||||||||
Total | $ | 1,291.1 | $ | 1,531.4 | $ | 944.4 | $ | 645.0 | $ | 312.2 | ||||||||||
Total loans and leases | ||||||||||||||||||||
Franklin | $ | — | $ | 443.9 | $ | 650.2 | $ | 1,187.0 | $ | — | ||||||||||
Non-Franklin | 38,106.5 | 36,346.8 | 40,441.8 | 38,868.0 | 26,153.4 | |||||||||||||||
Total | $ | 38,106.5 | $ | 36,790.7 | $ | 41,092.0 | $ | 40,055.0 | $ | 26,153.4 | ||||||||||
ALLL as % of total loans and leases | ||||||||||||||||||||
Total | 3.28 | % | 4.03 | % | 2.19 | % | 1.44 | % | 1.04 | % | ||||||||||
Non-Franklin | 3.28 | 4.08 | 1.90 | 1.19 | 1.04 | |||||||||||||||
ACL as % of total loans and leases | ||||||||||||||||||||
Total | 3.39 | % | 4.16 | % | 2.30 | % | 1.61 | % | 1.19 | % | ||||||||||
Non-Franklin | 3.39 | 4.21 | 2.01 | 1.36 | 1.19 | |||||||||||||||
Nonaccrual loans | ||||||||||||||||||||
Franklin | $ | — | $ | 314.7 | $ | 650.2 | $ | — | $ | — | ||||||||||
Non-Franklin | 777.9 | 1,602.3 | 851.9 | 319.8 | 144.1 | |||||||||||||||
Total | $ | 777.9 | $ | 1,917.0 | $ | 1,502.1 | $ | 319.8 | $ | 144.1 | ||||||||||
ALLL as % of NALs | ||||||||||||||||||||
Total | 161 | % | 77 | % | 60 | % | 181 | % | 189 | % | ||||||||||
Non-Franklin | 161 | 93 | 90 | 145 | 189 | |||||||||||||||
ACL as % of NALs | ||||||||||||||||||||
Total | 166 | % | 80 | % | 63 | % | 202 | % | 217 | % | ||||||||||
Non-Franklin | 166 | 96 | 96 | 166 | 217 |
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At December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Criticized commercial loans, beginning of period | $ | 4,971,637 | $ | 3,311,280 | $ | 2,736,166 | $ | 662,425 | $ | 646,925 | ||||||||||
New additions/increases | 1,284,216 | 4,707,518 | 1,688,022 | 2,670,616 | 573,246 | |||||||||||||||
Advances | 298,511 | 390,872 | 292,295 | 282,614 | 177,314 | |||||||||||||||
Upgrades to Pass | (1,456,132 | ) | (522,150 | ) | (378,027 | ) | (271,394 | ) | (279,413 | ) | ||||||||||
Payments | (1,465,374 | ) | (1,843,535 | ) | (858,996 | ) | (531,255 | ) | (456,110 | ) | ||||||||||
Loan losses | (558,377 | ) | (1,072,348 | ) | (168,180 | ) | (76,840 | ) | 463 | |||||||||||
Criticized commercial loans, end of period | $ | 3,074,481 | $ | 4,971,637 | $ | 3,311,280 | $ | 2,736,166 | $ | 662,425 | ||||||||||
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At December 31, | ||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||||||||||||||||||
Commercial and industrial | $ | 340,614 | 34 | % | $ | 492,205 | 35 | % | $ | 412,201 | 33 | % | $ | 295,555 | 33 | % | $ | 117,481 | 30 | % | ||||||||||||||||||||
Commercial real estate | 588,251 | 18 | 751,875 | 21 | 322,681 | 25 | 172,998 | 23 | 72,272 | 17 | ||||||||||||||||||||||||||||||
Total commercial | 928,865 | 52 | 1,244,080 | 56 | 734,882 | 58 | 468,553 | 56 | 189,753 | 47 | ||||||||||||||||||||||||||||||
Consumer | ||||||||||||||||||||||||||||||||||||||||
Automobile loans and leases | 49,488 | 15 | 57,951 | 9 | 44,712 | 11 | 28,635 | 11 | 28,400 | 15 | ||||||||||||||||||||||||||||||
Home equity | 150,630 | 20 | 102,039 | 21 | 63,538 | 18 | 45,957 | 18 | 32,572 | 19 | ||||||||||||||||||||||||||||||
Residential mortgage | 93,289 | 12 | 55,903 | 12 | 44,463 | 12 | 20,746 | 14 | 13,349 | 17 | ||||||||||||||||||||||||||||||
Other loans | 26,736 | 1 | 22,506 | 2 | 12,632 | 1 | 14,551 | 1 | 7,994 | 2 | ||||||||||||||||||||||||||||||
Total consumer | 320,143 | 48 | 238,399 | 44 | 165,345 | 42 | 109,889 | 44 | 82,315 | 53 | ||||||||||||||||||||||||||||||
Total allowance for loan and lease losses | 1,249,008 | 100 | % | 1,482,479 | 100 | % | 900,227 | 100 | % | 578,442 | 100 | % | 272,068 | 100 | % | |||||||||||||||||||||||||
Allowance for unfunded loan commitments | 42,127 | 48,879 | 44,139 | 66,528 | 40,161 | |||||||||||||||||||||||||||||||||||
Total allowance for credit losses | $ | 1,291,135 | $ | 1,531,358 | $ | 944,366 | $ | 644,970 | $ | 312,229 | ||||||||||||||||||||||||||||||
(1) | Percentages represent the percentage of each loan and lease category to total loans and leases. |
(This section should be read in conjunction with Significant Item 3.) |
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Year Ended December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Net charge-offs by loan and lease type | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | $ | 254,932 | $ | 487,606 | $ | 526,165 | $ | 345,840 | $ | 20,868 | ||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction | 109,008 | 192,706 | 6,626 | 11,854 | 3,553 | |||||||||||||||
Commercial | 166,554 | 490,025 | 62,114 | 27,250 | 3,230 | |||||||||||||||
Total commercial real estate | 275,562 | 682,731 | 68,740 | 39,104 | 6,783 | |||||||||||||||
Total commercial | 530,494 | 1,170,337 | 594,905 | 384,944 | 27,651 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Automobile loans and leases | 26,572 | 56,332 | 54,565 | 27,692 | 18,775 | |||||||||||||||
Home equity | 139,373 | 106,176 | 67,556 | 34,426 | 21,854 | |||||||||||||||
Residential mortgage | 152,895 | 110,202 | 21,247 | 11,371 | 4,505 | |||||||||||||||
Other loans | 25,140 | 33,540 | 19,794 | 19,198 | 9,591 | |||||||||||||||
Total consumer | 343,980 | 306,250 | 163,162 | 92,687 | 54,725 | |||||||||||||||
Total net charge-offs | $ | 874,474 | $ | 1,476,587 | $ | 758,067 | $ | 477,631 | $ | 82,376 | ||||||||||
Net charge-offs ratio:(1) | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
Commercial and industrial | 2.05 | % | 3.71 | % | 3.87 | % | 3.25 | % | 0.28 | % | ||||||||||
Commercial real estate: | ||||||||||||||||||||
Construction | 9.95 | 10.37 | 0.32 | 0.77 | 0.28 | |||||||||||||||
Commercial | 2.72 | 6.71 | 0.81 | 0.52 | 0.10 | |||||||||||||||
Commercial real estate | 3.81 | 7.46 | 0.71 | 0.57 | 0.15 | |||||||||||||||
Total commercial | 2.70 | 5.25 | 2.55 | 2.21 | 0.23 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Automobile loans and leases | 0.54 | 1.59 | 1.21 | 0.67 | 0.46 | |||||||||||||||
Home equity | 1.84 | 1.40 | 0.91 | 0.56 | 0.44 | |||||||||||||||
Residential mortgage | 3.42 | 2.43 | 0.42 | 0.23 | 0.10 | |||||||||||||||
Other loans | 3.80 | 4.65 | 2.86 | 3.63 | 2.18 | |||||||||||||||
Total consumer | 1.95 | 1.87 | 0.92 | 0.59 | 0.39 | |||||||||||||||
Net charge-offs as a % of average loans | 2.35 | % | 3.82 | % | 1.85 | % | 1.44 | % | 0.32 | % | ||||||||||
(1) | Percentage of related average loan balances. |
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December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
Commercial and industrial net charge-offs (recoveries) | ||||||||||||||||||||
Franklin | $ | (5.1 | ) | $ | 114.5 | $ | 423.3 | $ | 308.5 | (1) | $ | — | ||||||||
Non-Franklin | 260.0 | 373.1 | 102.9 | 37.3 | 20.9 | |||||||||||||||
Total | $ | 254.9 | $ | 487.6 | $ | 526.2 | $ | 345.8 | $ | 20.9 | ||||||||||
Commercial and industrial net charge-offs ratio | ||||||||||||||||||||
Total | 2.05 | % | 3.71 | % | 3.87 | % | 3.25 | % | 0.28 | % | ||||||||||
Non-Franklin | 2.09 | 2.87 | 0.83 | 0.38 | 0.28 | |||||||||||||||
Total commercial net charge-offs (recoveries) | ||||||||||||||||||||
Franklin | $ | (5.1 | ) | $ | 114.5 | $ | 423.3 | $ | 308.5 | $ | — | |||||||||
Non-Franklin | 535.6 | 1,055.8 | 171.6 | 76.4 | 27.7 | |||||||||||||||
Total | $ | 530.5 | $ | 1,170.3 | $ | 594.9 | $ | 384.9 | $ | 27.7 | ||||||||||
Total commercial loan net charge-offs ratio | ||||||||||||||||||||
Total | 2.70 | % | 5.25 | % | 2.55 | % | 2.21 | % | 0.23 | % | ||||||||||
Non-Franklin | 2.72 | 4.77 | 0.77 | 0.46 | 0.23 | |||||||||||||||
Total home equity net charge-offs (recoveries) | ||||||||||||||||||||
Franklin | $ | 20.8 | $ | (0.1 | ) | $ | — | $ | — | $ | — | |||||||||
Non-Franklin | 118.6 | 106.3 | 67.6 | 34.4 | 21.9 | |||||||||||||||
Total | $ | 139.4 | $ | 106.2 | $ | 67.6 | $ | 34.4 | $ | 21.9 | ||||||||||
Total home equity net charge-offs ratio | ||||||||||||||||||||
Total | 1.84 | % | 1.40 | % | 0.91 | % | 0.56 | % | 0.44 | % | ||||||||||
Non-Franklin | 1.57 | 1.41 | 0.91 | 0.56 | 0.44 | |||||||||||||||
Total residential mortgage net charge-offs (recoveries) | ||||||||||||||||||||
Franklin | $ | 71.3 | $ | 1.6 | $ | — | $ | — | $ | — | ||||||||||
Non-Franklin | 81.6 | 108.6 | 21.2 | 11.4 | 4.5 | |||||||||||||||
Total | $ | 152.9 | $ | 110.2 | $ | 21.2 | $ | 11.4 | $ | 4.5 | ||||||||||
Total residential mortgage net charge-offs ratio | ||||||||||||||||||||
Total | 3.42 | % | 2.43 | % | 0.42 | % | 0.23 | % | 0.10 | % | ||||||||||
Non-Franklin | 1.90 | 2.56 | 0.42 | 0.23 | 0.10 | |||||||||||||||
Total consumer loan net charge-offs (recoveries) | ||||||||||||||||||||
Franklin | $ | 92.1 | $ | 1.4 | $ | — | $ | — | $ | — | ||||||||||
Non-Franklin | 251.9 | 304.9 | 163.2 | 92.7 | 54.7 | |||||||||||||||
Total | $ | 344.0 | $ | 306.3 | $ | 163.2 | $ | 92.7 | $ | 54.7 | ||||||||||
Total consumer loan net charge-offs ratio | ||||||||||||||||||||
Total | 1.95 | % | 1.87 | % | 0.92 | % | 0.59 | % | 0.39 | % | ||||||||||
Non-Franklin | 1.45 | 1.90 | 0.92 | 0.59 | 0.39 | |||||||||||||||
Total net charge-offs (recoveries) | ||||||||||||||||||||
Franklin | $ | 87.0 | $ | 115.9 | $ | 423.3 | $ | 308.5 | $ | — | ||||||||||
Non-Franklin | 787.5 | 1,360.7 | 334.8 | 169.1 | 82.4 | |||||||||||||||
Total | $ | 874.5 | $ | 1,476.6 | $ | 758.1 | $ | 477.6 | $ | 82.4 | ||||||||||
Total net charge-offs ratio | ||||||||||||||||||||
Total | 2.35 | % | 3.82 | % | 1.85 | % | 1.44 | % | 0.32 | % | ||||||||||
Non-Franklin | 2.12 | 3.56 | 0.84 | 0.52 | 0.32 |
(1) | 2007 includes charge-offs totaling $397.0 million associated with the Franklin restructuring. These charge-offs were reduced by the unamortized discount associated with the loans, and by other amounts received by Franklin totaling $88.5 million, resulting in net charge-offs of $308.5 million. |
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(This section should be read in conjunction with the Critical Accounting Policies and Use of Significant Estimates discussion, and Notes 1 and 4 of the Notes to Consolidated Financial Statements.) |
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At December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
U.S. Government backed agencies | $ | 7,048,028 | $ | 6,566,653 | $ | 2,242,978 | ||||||
Other | 2,847,216 | 2,021,261 | 2,141,479 | |||||||||
Totalavailable-for-sale and other securities | $ | 9,895,244 | $ | 8,587,914 | $ | 4,384,457 | ||||||
Duration in years(1) | 3.0 | 2.4 | 5.2 | |||||||||
(1) | The average duration assumes a market driven pre-payment rate on securities subject to pre-payment. |
At December 31, 2010 | ||||||||||||
Amortized | ||||||||||||
Cost | Fair Value | Yield(1) | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
U.S. Treasury | ||||||||||||
Under 1 year | $ | — | $ | — | — | % | ||||||
1-5 years | 52,425 | 51,781 | 1.02 | |||||||||
6-10 years | — | — | — | |||||||||
Over 10 years | — | — | — | |||||||||
Total U.S. Treasury | 52,425 | 51,781 | 1.02 | |||||||||
Federal agencies — mortgage backed securities | ||||||||||||
Under 1 year | — | — | — | |||||||||
1-5 years | — | — | — | |||||||||
6-10 years | 656,176 | 664,793 | 2.72 | |||||||||
Over 10 years | 4,077,655 | 4,089,611 | 3.03 | |||||||||
Total Federal agencies — mortgage backed securities | 4,733,831 | 4,754,404 | 2.99 | |||||||||
TLGP securities | ||||||||||||
Under 1 year | 156,450 | 157,931 | 1.54 | |||||||||
1-5 years | 25,230 | 25,536 | 1.47 | |||||||||
6-10 years | — | — | — | |||||||||
Over 10 years | — | — | — | |||||||||
Total TLGP securities | 181,680 | 183,467 | 1.53 | |||||||||
Other agencies | ||||||||||||
Under 1 year | 158,273 | 159,288 | 1.45 | |||||||||
1-5 years | 1,898,867 | 1,885,230 | 1.27 | |||||||||
6-10 years | 13,082 | 13,359 | 3.08 | |||||||||
Over 10 years | 500 | 499 | 3.06 | |||||||||
Total other Federal agencies | 2,070,722 | 2,058,376 | 1.30 | |||||||||
Total U.S. Government backed agencies | 7,038,658 | 7,048,028 | 2.44 | |||||||||
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At December 31, 2010 | ||||||||||||
Amortized | ||||||||||||
Cost | Fair Value | Yield(1) | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Municipal securities | ||||||||||||
Under 1 year | — | — | — | |||||||||
1-5 years | 149,151 | 148,587 | 2.78 | |||||||||
6-10 years | 124,552 | 125,656 | 4.05 | |||||||||
Over 10 years | 182,341 | 181,472 | 4.89 | |||||||||
Total municipal securities | 456,044 | 455,715 | 3.97 | |||||||||
Private label CMO | ||||||||||||
Under 1 year | — | — | — | |||||||||
1-5 years | — | — | — | |||||||||
6-10 years | 10,429 | 10,887 | 6.15 | |||||||||
Over 10 years | 124,080 | 111,038 | 4.86 | |||||||||
Total private label CMO | 134,509 | 121,925 | 4.98 | |||||||||
Asset-backed securities | ||||||||||||
Under 1 year | 19,669 | 19,694 | 1.78 | |||||||||
1-5 years | 697,001 | 700,749 | 1.59 | |||||||||
6-10 years | 323,411 | 323,995 | 1.51 | |||||||||
Over 10 years | 301,326 | 162,684 | 2.10 | |||||||||
Total asset-backed securities | 1,341,407 | 1,207,122 | 1.64 | |||||||||
Other | ||||||||||||
Under 1 year | 800 | 802 | 3.94 | |||||||||
1-5 years | 717,509 | 698,607 | 1.95 | |||||||||
6-10 years | 1,007 | 1,037 | 2.43 | |||||||||
Over 10 years | — | — | — | |||||||||
Nonmarketable equity securities | 308,722 | 308,722 | 4.38 | |||||||||
Marketable equity securities | 53,944 | 53,286 | 0.16 | |||||||||
Total other | 1,081,982 | 1,062,454 | 2.57 | |||||||||
Totalavailable-for-sale and other securities | $ | 10,052,600 | $ | 9,895,244 | 2.46 | % | ||||||
(1) | Weighted average yields were calculated using amortized cost on a fully-taxable equivalent basis, assuming a 35% tax rate. |
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Amortized | Average Credit Rating of Fair Value Amount | |||||||||||||||||||||||||||
Cost | Fair Value | AAA | AA +/- | A +/- | BBB +/- | <BBB- | ||||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||
Private label CMO securities | $ | 134.5 | $ | 121.9 | $ | 25.4 | $ | 6.5 | $ | 5.0 | $ | 15.1 | $ | 69.9 | ||||||||||||||
Alt-A mortgage-backed securities | 68.9 | 60.4 | 15.8 | 27.3 | — | — | 17.3 | |||||||||||||||||||||
Pooled-trust-preferred securities | 232.4 | 102.3 | — | — | 24.7 | — | 77.6 | |||||||||||||||||||||
Total at December 31, 2010 | $ | 435.8 | $ | 284.6 | $ | 41.2 | $ | 33.8 | $ | 29.7 | $ | 15.1 | $ | 164.8 | ||||||||||||||
Total at December 31, 2009 | $ | 912.3 | $ | 700.3 | $ | 62.1 | $ | 72.9 | $ | 35.6 | $ | 121.3 | $ | 408.4 | ||||||||||||||
(1) | Credit ratings reflect the lowest current rating assigned by a nationally recognized credit rating agency. |
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Actual | ||||||||||||||||||||||||||||||||
Deferrals | Expected | |||||||||||||||||||||||||||||||
and | Defaults | |||||||||||||||||||||||||||||||
# of Issuers | Defaults | as a % of | ||||||||||||||||||||||||||||||
Lowest | Currently | as a % of | Remaining | |||||||||||||||||||||||||||||
Amortized | Fair | Unrealized | Credit | Performing/ | Original | Performing | Excess | |||||||||||||||||||||||||
Deal Name | Par Value | Cost | Value | Loss | Rating(2) | Remaining(3) | Collateral | Collateral | Subordination(4) | |||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||||||
Alesco II(1) | $ | 41,040 | $ | 31,540 | $ | 9,870 | $ | (21,670 | ) | C | 32/43 | 25 | % | 17 | % | — | % | |||||||||||||||
Alesco IV(1) | 20,659 | 10,571 | 2,370 | (8,201 | ) | C | 35/53 | 34 | 21 | — | ||||||||||||||||||||||
ICONS | 20,000 | 20,000 | 12,846 | (7,154 | ) | BB | 28/29 | 3 | 14 | 54 | ||||||||||||||||||||||
I-Pre TSL II | 36,916 | 36,814 | 24,681 | (12,133 | ) | A | 29/29 | — | 15 | 71 | ||||||||||||||||||||||
MM Comm II | 21,085 | 20,150 | 18,675 | (1,475 | ) | BB | 4/7 | 5 | 3 | — | ||||||||||||||||||||||
MM Comm III(1) | 11,150 | 10,653 | 5,450 | (5,203 | ) | CC | 5/11 | 12 | 15 | — | ||||||||||||||||||||||
Pre TSL IX(1) | 5,000 | 4,035 | 1,428 | (2,607 | ) | C | 34/49 | 27 | 21 | — | ||||||||||||||||||||||
Pre TSL X(1) | 17,506 | 9,915 | 3,254 | (6,661 | ) | C | 35/55 | 40 | 30 | — | ||||||||||||||||||||||
Pre TSL XI(1) | 25,119 | 23,038 | 7,609 | (15,429 | ) | C | 47/65 | 27 | 21 | — | ||||||||||||||||||||||
Pre TSL XIII(1) | 27,809 | 23,269 | 6,265 | (17,004 | ) | C | 47/65 | 30 | 25 | — | ||||||||||||||||||||||
Reg Diversified(1) | 25,500 | 7,499 | 472 | (7,027 | ) | D | 24/45 | 46 | 37 | — | ||||||||||||||||||||||
Soloso(1) | 12,500 | 3,906 | 393 | (3,513 | ) | C | 42/69 | 31 | 28 | — | ||||||||||||||||||||||
Tropic III | 31,000 | 31,000 | 8,983 | (22,017 | ) | CC | 26/45 | 36 | 25 | 18 | ||||||||||||||||||||||
Total | $ | 295,284 | $ | 232,390 | $ | 102,296 | $ | (130,094 | ) | |||||||||||||||||||||||
(1) | Security was determined to haveother-than-temporary impairment. As such, the book value is net of recorded credit impairment. | |
(2) | For purposes of comparability, the lowest credit rating expressed is equivalent to Fitch ratings even where lowest rating is based on another nationally recognized credit rating agency. | |
(3) | Includes both banks and/or insurance companies. | |
(4) | Excess subordination percentage represents the additional defaults in excess of both current and projected defaults that the CDO can absorb before the bond experiences credit impairment. Excess subordinated percentage is calculated by (a) determining what percentage of defaults a deal can experience before the bond has credit impairment, and (b) subtracting from this default breakage percentage both total current and expected future default percentages. |
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Net Interest Income at Risk (%) | ||||||||||||||||
Basis point change scenario | −200 | −100 | +100 | +200 | ||||||||||||
Board policy limits | −4.0 | % | −2.0 | % | −2.0 | % | −4.0 | % | ||||||||
December 31, 2010 | −3.2 | −1.8 | 0.3 | 0.0 | ||||||||||||
December 31, 2009 | −0.3 | 0.2 | −0.1 | −0.4 |
Percent of | ||||||||||||||||||||
Total Earning | Percent Change in Interest Income/Expense for a Given Change in Interest Rates | |||||||||||||||||||
Assets(1) | Over / (Under) Base Case Parallel Ramp | |||||||||||||||||||
Basis point change scenario | −200 | −100 | +100 | +200 | ||||||||||||||||
Total loans | 78 | % | −19.2 | % | −25.8 | % | 35.8 | % | 37.1 | % | ||||||||||
Total investments and other earning assets | 22 | −24.6 | −33.0 | 41.3 | 28.9 | |||||||||||||||
Total interest sensitive income | −19.7 | −26.7 | 36.1 | 34.6 | ||||||||||||||||
Total interest-bearing deposits | 72 | −11.3 | −16.5 | 39.8 | 39.8 | |||||||||||||||
Total borrowings | 12 | −20.5 | −38.0 | 65.9 | 67.8 | |||||||||||||||
Total interest-sensitive expense | −12.6 | −19.6 | 43.5 | 43.8 | ||||||||||||||||
(1) | At December 31, 2010 |
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Economic Value of Equity at Risk (%) | ||||||||||||||||
Basis point change scenario | −200 | −100 | +100 | +200 | ||||||||||||
Board policy limits | −12.0 | % | −5.0 | % | −5.0 | % | −12.0 | % | ||||||||
December 31, 2010 | −0.5 | 1.3 | −4.0 | −8.9 | ||||||||||||
December 31, 2009 | 0.8 | 2.7 | −3.7 | −9.1 |
Percent of | ||||||||||||||||||||
Total Net | ||||||||||||||||||||
Tangible | Percent Change in Economic Value for a Given Change in Interest Rates | |||||||||||||||||||
Assets(1) | Over / (Under) Base Case Parallel Shocks | |||||||||||||||||||
Basis point change scenario | −200 | −100 | +100 | +200 | ||||||||||||||||
Total loans | 71 | % | 1.4 | % | 1.0 | % | −1.4 | % | −2.9 | % | ||||||||||
Total investments and other earning assets | 20 | 3.7 | 2.4 | −2.9 | −5.8 | |||||||||||||||
Total net tangible assets(2) | 1.8 | 1.2 | −1.7 | −3.4 | ||||||||||||||||
Total deposits | 78 | −2.2 | −1.3 | 1.3 | 2.6 | |||||||||||||||
Total borrowings | 11 | −2.0 | −1.1 | 1.0 | 1.9 | |||||||||||||||
Total net tangible liabilities(3) | −2.2 | −1.2 | 1.3 | 2.5 | ||||||||||||||||
(1) | At December 31, 2010. | |
(2) | Tangible assets excluding ALLL. | |
(3) | Tangible liabilities excluding AULC. |
(This section should be read in conjunction with Note 5 of the Notes to the Consolidated Financial Statements.) |
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At December 31, | ||||||||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||||||||||||||
By Type | ||||||||||||||||||||||||||||||||||||||||
Demand deposits — noninterest-bearing | $ | 7,217 | 17 | % | $ | 6,907 | 17 | % | $ | 5,477 | 14 | % | $ | 5,138 | 14 | % | $ | 3,616 | 14 | % | ||||||||||||||||||||
Demand deposits — interest-bearing | 5,469 | 13 | 5,890 | 15 | 4,083 | 11 | 4,049 | 11 | 2,389 | 10 | ||||||||||||||||||||||||||||||
Money market deposits | 13,410 | 32 | 9,485 | 23 | 5,182 | 14 | 6,643 | 18 | 5,362 | 21 | ||||||||||||||||||||||||||||||
Savings and other domestic deposits | 4,643 | 11 | 4,652 | 11 | 4,930 | 13 | 5,282 | 14 | 3,101 | 12 | ||||||||||||||||||||||||||||||
Core certificates of deposit | 8,525 | 20 | 10,453 | 26 | 12,856 | 34 | 10,851 | 29 | 5,430 | 22 | ||||||||||||||||||||||||||||||
Total core deposits | 39,264 | 93 | 37,387 | 92 | 32,528 | 86 | 31,963 | 86 | 19,898 | 79 | ||||||||||||||||||||||||||||||
Other domestic deposits of $250,000 or more | 675 | 2 | 652 | 2 | 1,328 | 3 | 1,676 | 4 | 1,012 | 4 | ||||||||||||||||||||||||||||||
Brokered deposits and negotiable CDs | 1,532 | 4 | 2,098 | 5 | 3,354 | 9 | 3,377 | 9 | 3,346 | 13 | ||||||||||||||||||||||||||||||
Deposits in foreign offices | 383 | 1 | 357 | 1 | 733 | 2 | 727 | 1 | 792 | 4 | ||||||||||||||||||||||||||||||
Total deposits | $ | 41,854 | 100 | % | $ | 40,494 | 100 | % | $ | 37,943 | 100 | % | $ | 37,743 | 100 | % | $ | 25,048 | 100 | % | ||||||||||||||||||||
Total core deposits: | ||||||||||||||||||||||||||||||||||||||||
Commercial | $ | 12,476 | 32 | % | $ | 11,368 | 30 | % | $ | 7,971 | 25 | % | $ | 9,018 | 28 | % | $ | 6,063 | 30 | % | ||||||||||||||||||||
Personal | 26,788 | 68 | 26,019 | 70 | 24,557 | 75 | 22,945 | 72 | 13,835 | 70 | ||||||||||||||||||||||||||||||
Total core deposits | $ | 39,264 | 100 | % | $ | 37,387 | 100 | % | $ | 32,528 | 100 | % | $ | 31,963 | 100 | % | $ | 19,898 | 100 | % | ||||||||||||||||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in billions) | ||||||||
Loans and Securities Pledged: | ||||||||
Federal Reserve Bank | $ | 9.7 | $ | 8.5 | ||||
FHLB | 7.8 | 8.0 | ||||||
Total loans and securities pledged | $ | 17.5 | $ | 16.5 | ||||
Total unused borrowing capacity at Federal Reserve Bank and FHLB | $ | 8.8 | $ | 7.9 |
December 31, 2010 | ||||||||||||||||||||
One Year | One to | After | Percent of | |||||||||||||||||
or Less | Five Years | Five Years | Total | total | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
Commercial and industrial | $ | 4,736 | $ | 6,589 | $ | 1,738 | $ | 13,063 | 67 | % | ||||||||||
Commercial real estate — construction | 418 | 226 | 6 | 650 | 3 | |||||||||||||||
Commercial real estate — commercial | 2,510 | 2,763 | 728 | 6,001 | 30 | |||||||||||||||
Total | $ | 7,664 | $ | 9,578 | $ | 2,472 | $ | 19,714 | 100 | % | ||||||||||
Variable-interest rates | $ | 7,223 | $ | 7,818 | $ | 2,043 | $ | 17,084 | 87 | % | ||||||||||
Fixed-interest rates | 441 | 1,760 | 429 | 2,630 | 13 | |||||||||||||||
Total | $ | 7,664 | $ | 9,578 | $ | 2,472 | $ | 19,714 | 100 | % | ||||||||||
Percent of total | 39 | % | 49 | % | 12 | % | 100 | % |
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December 31, 2010 | ||||||||||||||||||||
One Year | 1 to 3 | 3 to 5 | More than | |||||||||||||||||
or Less | Years | Years | 5 Years | Total | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
Deposits without a stated maturity | $ | 29,526 | $ | — | $ | — | $ | — | $ | 29,526 | ||||||||||
Certificates of deposit and other time deposits | 6,773 | 4,729 | 562 | 264 | 12,328 | |||||||||||||||
FHLB advances | 155 | 10 | — | 8 | 173 | |||||||||||||||
Short-term borrowings | 2,041 | — | — | — | 2,041 | |||||||||||||||
Other long-term debt | 5 | 1,000 | 108 | 1,031 | 2,144 | |||||||||||||||
Subordinated notes | — | 114 | 137 | 1,246 | 1,497 | |||||||||||||||
Operating lease obligations | 43 | 80 | 71 | 306 | 500 | |||||||||||||||
Purchase commitments | 87 | 67 | 20 | 14 | 188 |
(1) | Amounts do not include associated interest payments. |
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Reserve for representations and warranties, beginning of year | $ | 5,916 | $ | 5,270 | $ | 2,934 | ||||||
Acquired reserve for representations and warranties | 7,000 | — | — | |||||||||
Reserve charges | (9,012 | ) | (2,516 | ) | (3,586 | ) | ||||||
Provision for representations and warranties | 16,267 | 3,162 | 5,922 | |||||||||
Reserve for representations and warranties, end of year | $ | 20,171 | $ | 5,916 | $ | 5,270 | ||||||
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December 31, | ||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
Consolidated capital calculations: | ||||||||||||||||||||
Common shareholders’ equity | $ | 4,618 | $ | 3,648 | $ | 5,351 | $ | 5,951 | $ | 3,016 | ||||||||||
Preferred shareholders’ equity | 363 | 1,688 | 1,878 | — | — | |||||||||||||||
Total shareholders’ equity | 4,981 | 5,336 | 7,229 | 5,951 | 3,016 | |||||||||||||||
Goodwill | (444 | ) | (444 | ) | (3,055 | ) | (3,059 | ) | (571 | ) | ||||||||||
Intangible assets | (229 | ) | (289 | ) | (357 | ) | (428 | ) | (59 | ) | ||||||||||
Intangible asset deferred tax liability(1) | 80 | 101 | 125 | 150 | 21 | |||||||||||||||
Total tangible equity(2) | 4,388 | 4,704 | 3,942 | 2,614 | 2,407 | |||||||||||||||
Preferred shareholders’ equity | (363 | ) | (1,688 | ) | (1,878 | ) | — | — | ||||||||||||
Total tangible common equity(2) | $ | 4,025 | $ | 3,016 | $ | 2,064 | $ | 2,614 | $ | 2,407 | ||||||||||
Total assets | $ | 53,820 | $ | 51,555 | $ | 54,353 | $ | 54,697 | $ | 35,329 | ||||||||||
Goodwill | (444 | ) | (444 | ) | (3,055 | ) | (3,059 | ) | (571 | ) | ||||||||||
Other intangible assets | (229 | ) | (289 | ) | (357 | ) | (428 | ) | (59 | ) | ||||||||||
Intangible asset deferred tax liability(1) | 80 | 101 | 125 | 150 | 21 | |||||||||||||||
Total tangible assets(2) | $ | 53,227 | $ | 50,923 | $ | 51,066 | $ | 51,360 | $ | 34,720 | ||||||||||
Tier 1 equity | $ | 5,022 | $ | 5,201 | $ | 5,036 | $ | 3,460 | $ | 2,784 | ||||||||||
Preferred shareholders’ equity | (363 | ) | (1,688 | ) | (1,878 | ) | — | — | ||||||||||||
Trust-preferred securities | (570 | ) | (570 | ) | (736 | ) | (785 | ) | (320 | ) | ||||||||||
REIT preferred stock | (50 | ) | (50 | ) | (50 | ) | (50 | ) | (50 | ) | ||||||||||
Tier 1 common equity(2) | $ | 4,039 | $ | 2,893 | $ | 2,372 | $ | 2,625 | $ | 2,414 | ||||||||||
Risk-weighted assets (RWA) | $ | 43,471 | $ | 43,248 | $ | 46,994 | $ | 46,044 | $ | 31,155 | ||||||||||
Tier 1 common equity / RWA ratio(2) | 9.29 | % | 6.69 | % | 5.05 | % | 5.70 | % | 7.75 | % | ||||||||||
Tangible equity / tangible asset ratio(2) | 8.24 | 9.24 | 7.72 | 5.09 | 6.93 | |||||||||||||||
Tangible common equity / tangible asset ratio(2) | 7.56 | 5.92 | 4.04 | 5.09 | 6.93 | |||||||||||||||
Tangible common equity / RWA ratio(2) | 9.26 | 6.97 | 4.39 | 5.68 | 7.73 |
(1) | Intangible assets are net of deferred tax liability and calculated assuming a 35% tax rate. | |
(2) | Tangible equity, Tier 1 common equity, tangible common equity, and tangible assets are non-GAAP financial measures. Additionally, any ratios utilizing these financial measures are also non-GAAP. These financial measures have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength. Other companies may calculate these financial measures differently. |
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Common | Preferred | Disallowed | Disallowed | |||||||||||||||||||||
Shareholders’ | Shareholders’ | Qualifying | Goodwill & | Other | Tier 1 | |||||||||||||||||||
Equity(1) | Equity | Core Capital(2) | Intangible Assets | Adjustments (net) | Capital | |||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||
Balance at December 31, 2009 | $ | 3,804.9 | $ | 1,687.5 | $ | 620.5 | $ | (632.2 | ) | $ | (279.5 | ) | $ | 5,201.2 | ||||||||||
Cumulative effect of accounting changes | (1.8 | ) | — | — | — | — | (1.8 | ) | ||||||||||||||||
Earnings | 312.3 | — | — | — | — | 312.3 | ||||||||||||||||||
Changes to disallowed adjustments | — | — | — | 25.0 | 11.7 | 36.7 | ||||||||||||||||||
Cash dividends declared | (129.1 | ) | — | — | — | — | (129.1 | ) | ||||||||||||||||
Issuance of common stock | 886.2 | — | — | — | — | 886.2 | ||||||||||||||||||
Repurchase of TARP Capital | — | (1,398.1 | ) | — | — | — | (1,398.1 | ) | ||||||||||||||||
Preferred stock discount accretion and repurchase | (73.1 | ) | 73.1 | — | — | — | — | |||||||||||||||||
Disallowance of deferred tax assets | — | — | — | — | 98.9 | 98.9 | ||||||||||||||||||
Change in minority interest | — | — | (0.2 | ) | — | — | (0.2 | ) | ||||||||||||||||
Other | 15.7 | — | — | — | — | 15.7 | ||||||||||||||||||
Balance at December 31, 2010 | $ | 4,815.1 | $ | 362.5 | $ | 620.3 | $ | (607.2 | ) | $ | (168.9 | ) | $ | 5,021.8 | ||||||||||
Qualifying | ||||||||||||||||||||
Qualifying | Subordinated | Tier 1 Capital | Total Risk-Based | |||||||||||||||||
ACL | Debt | Tier 2 capital | (from above) | Capital | ||||||||||||||||
Balance at December 31, 2009 | $ | 556.3 | $ | 473.2 | $ | 1,029.5 | $ | 5,201.2 | $ | 6,230.7 | ||||||||||
Change in qualifying subordinated debt | — | 237.3 | 237.3 | — | 237.3 | |||||||||||||||
Change in qualifying ACL | (4.0 | ) | — | (4.0 | ) | — | (4.0 | ) | ||||||||||||
Changes to Tier 1 capital (see above) | — | — | — | (179.4 | ) | (179.4 | ) | |||||||||||||
Balance at December 31, 2010 | $ | 552.3 | $ | 710.5 | $ | 1,262.8 | $ | 5,021.8 | $ | 6,284.6 | ||||||||||
(1) | Excludes OCI and minority interest. | |
(2) | Includes minority interest. |
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At December 31, | ||||||||||||||||||||||
2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||
Total risk-weighted assets | Consolidated | $ | 43,471 | $ | 43,248 | $ | 46,994 | $ | 46,044 | $ | 31,155 | |||||||||||
Bank | 43,281 | 43,149 | 46,477 | 45,731 | 30,779 | |||||||||||||||||
Tier 1 leverage ratio | Consolidated | 9.41 | % | 10.09 | % | 9.82 | % | 6.77 | % | 8.00 | % | |||||||||||
Bank | 6.97 | 5.59 | 5.99 | 5.99 | 5.81 | |||||||||||||||||
Tier 1 risk-based capital ratio | Consolidated | 11.55 | 12.03 | 10.72 | 7.51 | 8.93 | ||||||||||||||||
Bank | 8.51 | 6.66 | 6.44 | 6.64 | 6.47 | |||||||||||||||||
Total risk-based capital ratio | Consolidated | 14.46 | 14.41 | 13.91 | 10.85 | 12.79 | ||||||||||||||||
Bank | 12.82 | 11.08 | 10.71 | 10.17 | 10.44 |
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Retail and Business Banking | $ | 131,036 | $ | (26,479 | ) | $ | 257,844 | |||||
Commercial Banking | 38,462 | (158,736 | ) | 80,313 | ||||||||
AFCRE | 46,492 | (588,154 | ) | (14,158 | ) | |||||||
WGH | 34,801 | 1,743 | 42,994 | |||||||||
Treasury / Other | 61,556 | 251,265 | (480,799 | ) | ||||||||
Unallocated goodwill impairment(1) | — | (2,573,818 | ) | — | ||||||||
Total net income (loss) | $ | 312,347 | $ | (3,094,179 | ) | $ | (113,806 | ) | ||||
(1) | Represents the 2009 first quarter impairment charge, net of tax, associated with the former Regional Banking business segment. See the Goodwill section located in Critical Accounting Policies and Use of Significant Estimates section for additional information. |
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Retail and | ||||||||||||||||||||||||||||
Business | Commercial | Treasury/ | ||||||||||||||||||||||||||
Banking | Banking | AFCRE | WGH | Other | TOTAL | |||||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||
Average Loans/Leases | ||||||||||||||||||||||||||||
Commercial and industrial | $ | 2,906 | $ | 7,103 | $ | 1,728 | $ | 694 | $ | — | $ | 12,431 | ||||||||||||||||
Commercial real estate | 527 | 286 | 6,247 | 165 | — | 7,225 | ||||||||||||||||||||||
Total commercial | 3,433 | 7,389 | 7,975 | 859 | — | 19,656 | ||||||||||||||||||||||
Automobile loans and leases | — | — | 4,890 | — | — | 4,890 | ||||||||||||||||||||||
Home equity | 6,747 | 16 | — | 776 | 51 | 7,590 | ||||||||||||||||||||||
Residential mortgage | 1,160 | 3 | — | 3,151 | 162 | 4,476 | ||||||||||||||||||||||
Other consumer | 328 | 6 | 159 | 43 | 125 | 661 | ||||||||||||||||||||||
Total consumer | 8,235 | 25 | 5,049 | 3,970 | 338 | 17,617 | ||||||||||||||||||||||
Total loans | $ | 11,668 | $ | 7,414 | $ | 13,024 | $ | 4,829 | $ | 338 | $ | 37,273 | ||||||||||||||||
Average Deposits | ||||||||||||||||||||||||||||
Demand deposits — noninterest-bearing | $ | 3,303 | $ | 1,834 | $ | 362 | $ | 1,238 | $ | 122 | $ | 6,859 | ||||||||||||||||
Demand deposits — interest-bearing | 4,196 | 123 | 43 | 1,214 | 3 | 5,579 | ||||||||||||||||||||||
Money market deposits | 7,566 | 892 | 242 | 3,043 | — | 11,743 | ||||||||||||||||||||||
Savings and other domestic deposits | 4,483 | 19 | 3 | 137 | — | 4,642 | ||||||||||||||||||||||
Core certificates of deposit | 8,982 | 28 | 2 | 175 | 1 | 9,188 | ||||||||||||||||||||||
Total core deposits | 28,530 | 2,896 | 652 | 5,807 | 126 | 38,011 | ||||||||||||||||||||||
Other deposits | 244 | 278 | 40 | 1,183 | 982 | 2,727 | ||||||||||||||||||||||
Total deposits | $ | 28,774 | $ | 3,174 | $ | 692 | $ | 6,990 | $ | 1,108 | $ | 40,738 | ||||||||||||||||
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Change from 2009 | ||||||||||||||||||||||||
2010 | 2009 | Amount | Percent | 2008 | ||||||||||||||||||||
(Dollar amounts in thousands unless otherwise noted) | ||||||||||||||||||||||||
Net interest income | $ | 867,069 | $ | 810,658 | $ | 56,411 | 7 | % | $ | 859,477 | ||||||||||||||
Provision for credit losses | 157,994 | 470,152 | (312,158 | ) | (66 | ) | 196,224 | |||||||||||||||||
Noninterest income | 394,705 | 415,471 | (20,766 | ) | (5 | ) | 409,151 | |||||||||||||||||
Noninterest expense | 902,186 | 796,714 | 105,472 | 13 | 675,720 | |||||||||||||||||||
Provision (benefit) for income taxes | 70,558 | (14,258 | ) | 84,816 | N.R. | 138,840 | ||||||||||||||||||
Net income (loss) | $ | 131,036 | $ | (26,479 | ) | $ | 157,515 | N.R. | % | $ | 257,844 | |||||||||||||
Number of employees (full-time equivalent) | 5,501 | 4,911 | 590 | 12 | % | 5,348 | ||||||||||||||||||
Total average assets (in millions) | $ | 13,161 | $ | 13,413 | $ | (252 | ) | (2 | ) | $ | 14,084 | |||||||||||||
Total average loans/leases (in millions) | 11,668 | 12,269 | (601 | ) | (5 | ) | 12,850 | |||||||||||||||||
Total average deposits (in millions) | 28,774 | 27,604 | 1,170 | 4 | 25,994 | |||||||||||||||||||
Net interest margin | 3.00 | % | 2.93 | % | 0.07 | % | 2 | 3.32 | % | |||||||||||||||
NCOs | $ | 287,320 | $ | 325,210 | $ | (37,890 | ) | (12 | ) | $ | 134,094 | |||||||||||||
NCOs as a % of average loans and leases | 2.46 | % | 2.65 | % | (0.19 | )% | (7 | ) | 1.04 | % | ||||||||||||||
Return on average common equity | 9.1 | (2.4 | ) | 11.5 | N.R. | 28.8 | ||||||||||||||||||
Retail banking # demand deposit account (DDA) households (eop) | 982,610 | 921,695 | 60,915 | 7 | 896,412 | |||||||||||||||||||
Retail bankingNew-to-Bank DDA relationships90-day cross-sell (eop) | 3.68 | 3.27 | 0.41 | 13 | 2.12 | |||||||||||||||||||
Business banking # business DDA relationships (eop) | 118,843 | 113,009 | 5,834 | 5 | 107,241 | |||||||||||||||||||
Business bankingNew-to-Bank DDA relationships90-day cross-sell (eop) | 2.67 | 1.94 | 0.73 | 38 | 2.03 | |||||||||||||||||||
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Change from 2009 | ||||||||||||||||||||
2010 | 2009 | Amount | Percent | 2008 | ||||||||||||||||
(Dollar amounts in thousands unless otherwise noted) | ||||||||||||||||||||
Net interest income | $ | 211,511 | $ | 190,955 | $ | 20,556 | 11 | % | $ | 279,014 | ||||||||||
Provision for credit losses | 104,705 | 393,984 | (289,279 | ) | (73 | ) | 102,587 | |||||||||||||
Noninterest income | 111,237 | 95,705 | 15,532 | 16 | 102,929 | |||||||||||||||
Noninterest expense | 158,871 | 136,885 | 21,986 | 16 | 155,798 | |||||||||||||||
Provision (benefit) for income taxes | 20,710 | (85,473 | ) | 106,183 | N.R. | 43,245 | ||||||||||||||
Net income (loss) | $ | 38,462 | $ | (158,736 | ) | $ | 197,198 | N.R. | % | $ | 80,313 | |||||||||
Number of employees (full-time equivalent) | 538 | 467 | 71 | 15 | % | 466 | ||||||||||||||
Total average assets (in millions) | $ | 8,213 | $ | 8,730 | $ | (517 | ) | (6 | ) | $ | 8,648 | |||||||||
Total average loans/leases (in millions) | 7,414 | 8,113 | (699 | ) | (9 | ) | 7,932 | |||||||||||||
Total average deposits (in millions) | 3,174 | 3,030 | 144 | 5 | 3,452 | |||||||||||||||
Net interest margin | 2.85 | % | 2.42 | % | 0.43 | % | 18 | 3.47 | % | |||||||||||
NCOs | $ | 66,267 | $ | 262,887 | $ | (196,620 | ) | (75 | ) | $ | 75,650 | |||||||||
NCOs as a % of average loans and leases | 0.89 | % | 3.24 | % | (2.35 | )% | (73 | ) | 0.95 | % | ||||||||||
Return on average common equity | 5.8 | (20.7 | ) | 26.5 | N.R. | 10.4 | ||||||||||||||
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Change from 2009 | ||||||||||||||||||||
2010 | 2009 | Amount | Percent | 2008 | ||||||||||||||||
(Dollar amounts in thousands unless otherwise noted) | ||||||||||||||||||||
Net interest income | $ | 338,312 | $ | 277,450 | $ | 60,862 | 22 | % | $ | 352,328 | ||||||||||
Provision for credit losses | 184,757 | 1,096,030 | (911,273 | ) | (83 | ) | 284,691 | |||||||||||||
Noninterest income | 73,933 | 63,929 | 10,004 | 16 | 64,114 | |||||||||||||||
Noninterest expense | 155,963 | 150,200 | 5,763 | 4 | 153,533 | |||||||||||||||
Provision (benefit) for income taxes | 25,033 | (316,697 | ) | 341,730 | N.R. | (7,624 | ) | |||||||||||||
Net income (loss) | $ | 46,492 | $ | (588,154 | ) | $ | 634,646 | N.R. | % | $ | (14,158 | ) | ||||||||
Number of employees (full-time equivalent) | 270 | 219 | 51 | 23 | % | 261 | ||||||||||||||
Total average assets (in millions) | $ | 12,908 | $ | 13,163 | $ | (255 | ) | (2 | ) | $ | 13,523 | |||||||||
Total average loans/leases (in millions) | 13,024 | 13,076 | (52 | ) | — | 13,760 | ||||||||||||||
Total average deposits (in millions) | 692 | 572 | 120 | 21 | 612 | |||||||||||||||
Net interest margin | 2.54 | % | 2.07 | % | 0.47 | % | 23 | 2.54 | % | |||||||||||
NCOs | $ | 349,869 | $ | 670,327 | $ | (320,458 | ) | (48 | ) | $ | 103,913 | |||||||||
NCOs as a % of average loans and leases | 2.69 | % | 5.13 | % | (2.44 | )% | (48 | ) | 0.76 | % | ||||||||||
Return on average common equity | 5.5 | (78.3 | ) | 83.8 | N.R. | (2.4 | ) | |||||||||||||
Automobile loans production (in millions) | $ | 3,427 | $ | 1,589 | $ | 1,838 | 116 | $ | 2,213 | |||||||||||
Noninterest Income | 73,933 | 63,929 | 10,004 | 16 | 64,114 | |||||||||||||||
Operating lease income | 45,963 | 51,811 | (5,848 | ) | (11 | ) | 39,828 | |||||||||||||
Noninterest income, excluding operating lease income | $ | 27,970 | $ | 12,118 | $ | 15,852 | 131 | % | $ | 24,286 | ||||||||||
Noninterest expense | $ | 155,963 | $ | 150,200 | $ | 5,763 | 4 | % | $ | 153,533 | ||||||||||
Operating lease expense | 37,034 | 43,360 | (6,326 | ) | (15 | ) | 31,282 | |||||||||||||
Noninterest expense, excluding operating lease expense | $ | 118,929 | $ | 106,840 | $ | 12,089 | 11 | % | $ | 122,251 | ||||||||||
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Change from 2009 | ||||||||||||||||||||
2010 | 2009 | Amount | Percent | 2008 | ||||||||||||||||
(Dollar amounts in thousands unless otherwise noted) | ||||||||||||||||||||
Net interest income | $ | 169,201 | $ | 164,335 | $ | 4,866 | 3 | % | $ | 189,191 | ||||||||||
Provision for credit losses | 95,586 | 128,551 | (32,965 | ) | (26 | ) | 35,960 | |||||||||||||
Noninterest income | 338,633 | 267,695 | 70,938 | 26 | 186,682 | |||||||||||||||
Noninterest expense | 358,707 | 300,799 | 57,908 | 19 | 273,769 | |||||||||||||||
Provision for income taxes | 18,740 | 937 | 17,803 | 1,900 | 23,150 | |||||||||||||||
Net income | $ | 34,801 | $ | 1,743 | $ | 33,058 | 1,897 | % | $ | 42,994 | ||||||||||
Number of employees (full-time equivalent) | 2,211 | 1,963 | 248 | 13 | % | 1,907 | ||||||||||||||
Total average assets (in millions) | $ | 6,317 | $ | 6,164 | $ | 153 | 2 | $ | 6,363 | |||||||||||
Total average loans/leases (in millions) | 4,829 | 4,725 | 104 | 2 | 5,200 | |||||||||||||||
Total average deposits (in millions) | 6,990 | 5,855 | 1,135 | 19 | 4,502 | |||||||||||||||
Net interest margin | 2.23 | % | 2.69 | % | (0.46 | )% | (17 | ) | 3.36 | % | ||||||||||
NCOs | $ | 79,647 | $ | 102,264 | $ | (22,617 | ) | (22 | ) | $ | 20,864 | |||||||||
NCOs as a % of average loans and leases | 1.65 | % | 2.16 | % | (0.51 | )% | (24 | ) | 0.40 | % | ||||||||||
Return on average common equity | 5.7 | 0.4 | 5.3 | 1,325 | 11.5 | |||||||||||||||
Mortgage banking origination volume (in millions) | $ | 5,476 | $ | 5,262 | $ | 214 | 4 | $ | 3,773 | |||||||||||
Noninterest income shared with other | ||||||||||||||||||||
business segments(1) | $ | 43,779 | $ | 39,994 | $ | 3,785 | 9 | $ | 34,954 | |||||||||||
Total assets under management (in billions)- eop | 14.4 | 13.0 | 1.4 | 11 | 13.3 | |||||||||||||||
Total trust assets (in billions)- eop | 60.3 | 49.4 | 10.9 | 22 | 44.0 | |||||||||||||||
(1) | Amount is not included in noninterest income reported above. |
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Impact(1) | ||||||||
After-tax | EPS(2) | |||||||
(Dollar amounts in millions, except per share amounts) | ||||||||
Three Months Ended: | ||||||||
December 31, 2010 — GAAP income | $ | 122.9 | $ | 0.05 | ||||
• Preferred stock conversion deemed dividend | — | (0.07 | ) | |||||
December 31, 2009 — GAAP loss | $ | (369.7 | ) | $ | (0.56 | ) | ||
• Gain on the early extinguishment of debt | 73.6 | 0.07 | ||||||
• Deferred tax valuation allowance benefit | 11.3 | (2) | 0.02 |
(1) | Favorable (unfavorable) impact on GAAP earnings; pretax unless otherwise noted. | |
(2) | After-tax. EPS is reflected on a fully diluted basis. |
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Fourth Quarter | Change | |||||||||||||||
2010 | 2009 | Amount | Percent | |||||||||||||
(Dollar amounts in millions) | ||||||||||||||||
Average Loans/Leases | ||||||||||||||||
Commercial and industrial | $ | 12,767 | $ | 12,570 | $ | 197 | 2 | % | ||||||||
Commercial real estate | 6,798 | 8,458 | (1,660 | ) | (20 | ) | ||||||||||
Total commercial | 19,565 | 21,028 | (1,463 | ) | (7 | ) | ||||||||||
Automobile loans and leases | 5,520 | 3,326 | 2,194 | 66 | ||||||||||||
Home equity | 7,709 | 7,561 | 148 | 2 | ||||||||||||
Residential mortgage | 4,430 | 4,417 | 13 | — | ||||||||||||
Other consumer | 576 | 757 | (181 | ) | (24 | ) | ||||||||||
Total consumer | 18,235 | 16,061 | 2,174 | 14 | ||||||||||||
Total loans/leases | $ | 37,800 | $ | 37,089 | $ | 711 | 2 | % | ||||||||
• | $2.2 billion, or 66%, increase in average automobile loans and leases. In early 2009, we transferred automobile loans to a trust in a securitization transaction. With the adoption of ASC 810 — Consolidation, that trust was consolidated as of January 1, 2010. At December 31, 2010, these securitized loans had a remaining balance of $0.5 billion. Underlying growth in automobile loans continued to be strong, reflecting a significant increase in loan originations compared to the year-ago period. The growth has come while maintaining our commitment to excellent credit quality and an appropriate return. | |
• | $0.1 billion, or 2%, increase in average home equity loans, reflecting slightly higherline-of-credit utilization and slower runoff experience, partially offset by lower origination volume. | |
• | $0.2 billion, or 2%, increase in average C&I loans, reflecting our efforts to expand our portfolio within our primary markets, and to a lesser degree the benefit of the 2009 reclassifications of certain CRE loans, primarily owner occupied properties, to C&I loans. These benefits were partially offset by the reclassification in the 2010 first quarter of variable-rate demand notes to municipal securities. We continue to believe there are opportunities for C&I growth in the coming quarters. |
• | $1.7 billion, or 20%, decrease in average CRE loans reflecting the impact of 2009 reclassifications of certain CRE loans, primarily representing owner occupied properties, to C&I loans, as well as our on-going commitment to lower our overall CRE exposure. We continue to effectively execute our plan to reduce the noncore CRE exposure while maintaining a commitment to our core CRE borrowers. The decrease in average balances is associated with the noncore portfolio, as we have maintained relatively consistent balances with good performance in the core portfolio. |
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Fourth Quarter | Change | |||||||||||||||
2010 | 2009 | Amount | Percent | |||||||||||||
(Dollar amounts in millions) | ||||||||||||||||
Average Deposits | ||||||||||||||||
Demand deposits: noninterest-bearing | $ | 7,188 | $ | 6,466 | $ | 722 | 11 | % | ||||||||
Demand deposits: interest-bearing | 5,317 | 5,482 | (165 | ) | (3 | ) | ||||||||||
Money market deposits | 13,158 | 9,271 | 3,887 | 42 | ||||||||||||
Savings and other domestic deposits | 4,640 | 4,686 | (46 | ) | (1 | ) | ||||||||||
Core certificates of deposit | 8,646 | 10,867 | (2,221 | ) | (20 | ) | ||||||||||
Total core deposits | 38,949 | 36,772 | 2,177 | 6 | ||||||||||||
Other deposits | 2,755 | 3,442 | (687 | ) | (20 | ) | ||||||||||
Total deposits | $ | 41,704 | $ | 40,214 | $ | 1,490 | 4 | % | ||||||||
• | $2.2 billion, or 6%, growth in average total core deposits. The drivers of this change were a $3.9 billion, or 42%, growth in average money market deposits, and a $0.7 billion, or 11%, growth in average noninterest-bearing demand deposits. These increases were partially offset by a $2.2 billion, or 20%, decline in average core certificates of deposit and a $0.2 billion, or 3%, decrease in average interest-bearing demand deposits. | |
• | $0.8 billion, or 33%, decline in brokered deposits and negotiable CDs, primarily reflecting a reduction of noncore funding sources. |
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Fourth Quarter | Change | |||||||||||||||
2010 | 2009 | Amount | Percent | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Service charges on deposit accounts | $ | 55,810 | $ | 76,757 | $ | (20,947 | ) | (27 | )% | |||||||
Mortgage banking income | 53,170 | 24,618 | 28,552 | 116 | ||||||||||||
Trust services | 29,394 | 27,275 | 2,119 | 8 | ||||||||||||
Electronic banking | 28,900 | 25,173 | 3,727 | 15 | ||||||||||||
Insurance income | 19,678 | 16,128 | 3,550 | 22 | ||||||||||||
Brokerage income | 16,953 | 16,045 | 908 | 6 | ||||||||||||
Bank owned life insurance income | 16,113 | 14,055 | 2,058 | 15 | ||||||||||||
Automobile operating lease income | 10,463 | 12,671 | (2,208 | ) | (17 | ) | ||||||||||
Securities losses | (103 | ) | (2,602 | ) | 2,499 | (96 | ) | |||||||||
Other income | 33,842 | 34,426 | (584 | ) | (2 | ) | ||||||||||
Total noninterest income | $ | 264,220 | $ | 244,546 | $ | 19,674 | 8 | % | ||||||||
• | $28.6 million, or 116%, increase in mortgage banking income. This reflected a $31.8 million increase in origination and secondary marketing income, as originations increased 62% from the year-ago quarter, partially offset by a $3.2 million increase in amortization of capitalized servicing expense. | |
• | $3.7 million, or 15%, increase in electronic banking income, reflecting an increase in debit card transaction volume. | |
• | $3.6 million, or 22%, increase in insurance income, primarily reflecting an increase in title insurance income due to higher mortgage refinance activity. | |
• | $2.5 million benefit from lower securities losses in the 2010 fourth quarter compared with the year-ago quarter. | |
• | $2.1 million, or 15%, increase in bank owned life insurance income. | |
• | $2.1 million, or 8%, increase in trust services income, with 50% of the increase due to increases in asset market values and the remainder reflecting growth in new business. |
• | $20.9 million, or 27%, decline in service charges on deposit accounts, reflecting lower personal service charges due to a combination of factors including the implementation of the amendment to Reg E, our Fair Play banking philosophy, and lower underlying activity levels. | |
• | $2.2 million, or 17%, decline in automobile operating lease income reflecting the impact of a declining portfolio, having exited that business in 2008. |
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Fourth Quarter | Change | |||||||||||||||
2010 | 2009 | Amount | Percent | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Personnel costs | $ | 212,184 | $ | 180,663 | $ | 31,521 | 17 | % | ||||||||
Outside data processing and other services | 40,943 | 36,812 | 4,131 | 11 | ||||||||||||
Net occupancy | 26,670 | 26,273 | 397 | 2 | ||||||||||||
Deposit and other insurance expense | 23,320 | 24,420 | (1,100 | ) | (5 | ) | ||||||||||
Professional services | 21,021 | 25,146 | (4,125 | ) | (16 | ) | ||||||||||
Equipment | 22,060 | 20,454 | 1,606 | 8 | ||||||||||||
Marketing | 16,168 | 9,074 | 7,094 | 78 | ||||||||||||
Amortization of intangibles | 15,046 | 17,060 | (2,014 | ) | (12 | ) | ||||||||||
OREO and foreclosure expense | 10,502 | 18,520 | (8,018 | ) | (43 | ) | ||||||||||
Automobile operating lease expense | 8,142 | 10,440 | (2,298 | ) | (22 | ) | ||||||||||
Gain on early extinguishment of debt | — | (73,615 | ) | 73,615 | (100 | ) | ||||||||||
Other expense | 38,537 | 27,349 | 11,188 | 41 | ||||||||||||
Total noninterest expense | $ | 434,593 | $ | 322,596 | $ | 111,997 | 35 | % | ||||||||
Full-time equivalent employees, at period-end | 11,341 | 10,272 | 1,069 | 10 | % |
• | $73.6 million gain on early extinguishment of debt that reduced expenses in the year-ago quarter. | |
• | $31.5 million, or 17%, increase in personnel costs, primarily reflecting a 10% increase in full-time equivalent staff in support of strategic initiatives, as well as higher commissions and other incentive expenses, and the re-instatement of our 401(k) plan matching contribution in 2010. | |
• | $11.2 million, or 41%, increase in other expense, reflecting $5.9 million associated with increases in repurchase reserves related to representations and warranties made on mortgage loans sold, as well as increased travel and miscellaneous fees. | |
• | $7.1 million, or 78%, increase in marketing expense, reflecting increases in branding and product advertising activities in support of strategic initiatives. | |
• | $4.1 million, or 11%, increase in outside data processing and other services, reflecting higher outside programming and other costs associated with the implementation of strategic initiatives, partially offset by lower Franklin-related servicing costs. |
• | $8.0 million, or 43%, decline in OREO and foreclosure expense. | |
• | $4.1 million, or 16%, decrease in professional services, reflecting lower legal expenses. | |
• | $2.3 million, or 22%, decline in automobile operating lease expense as that portfolio continued to runoff. | |
• | $2.0 million, or 12%, decrease in the amortization of intangibles expense. |
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2010 | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||||||
Interest income | $ | 528,291 | $ | 534,669 | $ | 535,653 | $ | 546,779 | ||||||||
Interest expense | 112,997 | 124,707 | 135,997 | 152,886 | ||||||||||||
Net interest income | 415,294 | 409,962 | 399,656 | 393,893 | ||||||||||||
Provision for credit losses | 86,973 | 119,160 | 193,406 | 235,008 | ||||||||||||
Net interest income after provision for credit losses | 328,321 | 290,802 | 206,250 | 158,885 | ||||||||||||
Total noninterest income | 264,220 | 267,143 | 269,643 | 240,852 | ||||||||||||
Total noninterest expense | 434,593 | 427,309 | 413,810 | 398,093 | ||||||||||||
Income before income taxes | 157,948 | 130,636 | 62,083 | 1,644 | ||||||||||||
Provision (benefit) for income taxes | 35,048 | 29,690 | 13,319 | (38,093 | ) | |||||||||||
Net income | $ | 122,900 | $ | 100,946 | $ | 48,764 | $ | 39,737 | ||||||||
Dividends on preferred shares | 83,754 | 29,495 | 29,426 | 29,357 | ||||||||||||
Net income applicable to common shares | $ | 39,146 | $ | 71,451 | $ | 19,338 | $ | 10,380 | ||||||||
Common shares outstanding | ||||||||||||||||
Average — basic | 757,924 | 716,911 | 716,580 | 716,320 | ||||||||||||
Average — diluted(2) | 760,582 | 719,567 | 719,387 | 718,593 | ||||||||||||
Ending | 863,319 | 717,132 | 716,623 | 716,557 | ||||||||||||
Book value per common share | $ | 5.35 | $ | 5.39 | $ | 5.22 | $ | 5.13 | ||||||||
Tangible book value per common share(3) | 4.66 | 4.55 | 4.37 | 4.26 | ||||||||||||
Per common share | ||||||||||||||||
Net income — basic | $ | 0.05 | $ | 0.10 | $ | 0.03 | $ | 0.01 | ||||||||
Net income — diluted | 0.05 | 0.10 | 0.03 | 0.01 | ||||||||||||
Cash dividends declared | 0.0100 | 0.0100 | 0.0100 | 0.0100 | ||||||||||||
Common stock price, per share | ||||||||||||||||
High(4) | $ | 7.00 | $ | 6.45 | $ | 7.40 | $ | 5.81 | ||||||||
Low(4) | 5.43 | 5.04 | 5.26 | 3.65 | ||||||||||||
Close | 6.87 | 5.69 | 5.54 | 5.39 | ||||||||||||
Average closing price | 6.05 | 5.79 | 6.13 | 4.84 | ||||||||||||
Return on average total assets | 0.90 | % | 0.76 | % | 0.38 | % | 0.31 | % | ||||||||
Return on average common shareholders’ equity | 3.8 | 7.4 | 2.1 | 1.1 | ||||||||||||
Return on average tangible common shareholders’ equity(5) | 5.6 | 10.0 | 3.8 | 2.7 | ||||||||||||
Efficiency ratio(6) | 61.4 | 60.6 | 59.4 | 60.1 | ||||||||||||
Effective tax rate (benefit) | 22.2 | 22.7 | 21.5 | N.R. | ||||||||||||
Margin analysis-as a % of average earning assets(7) | ||||||||||||||||
Interest income(7) | 4.29 | % | 4.49 | % | 4.63 | % | 4.82 | % | ||||||||
Interest expense | 0.92 | 1.04 | 1.17 | 1.35 | ||||||||||||
Net interest margin(7) | 3.37 | % | 3.45 | % | 3.46 | % | 3.47 | % | ||||||||
Revenue — FTE | ||||||||||||||||
Net interest income | $ | 415,294 | $ | 409,962 | $ | 399,656 | $ | 393,893 | ||||||||
FTE adjustment | 3,708 | 2,631 | 2,490 | 2,248 | ||||||||||||
Net interest income(7) | 419,002 | 412,593 | 402,146 | 396,141 | ||||||||||||
Noninterest income | 264,220 | 267,143 | 269,643 | 240,852 | ||||||||||||
Total revenue(7) | $ | 683,222 | $ | 679,736 | $ | 671,789 | $ | 636,993 | ||||||||
(1) | N.R. — not relevant. The denominator of the calculation is a positive value and the numerator is a negative value. |
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2010 | ||||||||||||||||
Capital Adequacy | December 31, | September 30, | June 30, | March 31, | ||||||||||||
Total risk-weighted assets (in millions) | $ | 43,471 | $ | 42,759 | $ | 42,486 | $ | 42,418 | ||||||||
Tier 1 leverage ratio | 9.41 | % | 10.54 | % | 10.45 | % | 10.05 | % | ||||||||
Tier 1 risk-based capital ratio | 11.55 | 12.82 | 12.51 | 12.00 | ||||||||||||
Total risk-based capital ratio | 14.46 | 15.08 | 14.79 | 14.31 | ||||||||||||
Tangible common equity/asset ratio(8) | 7.56 | 6.20 | 6.12 | 5.96 | ||||||||||||
Tangible equity/asset ratio(9) | 8.24 | 9.43 | 9.43 | 9.26 | ||||||||||||
Tangible common equity/risk-weighted assets ratio | 9.26 | 7.63 | 7.37 | 7.20 |
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2009 | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||||||
Interest income | $ | 551,335 | $ | 553,846 | $ | 563,004 | $ | 569,957 | ||||||||
Interest expense | 177,271 | 191,027 | 213,105 | 232,452 | ||||||||||||
Net interest income | 374,064 | 362,819 | 349,899 | 337,505 | ||||||||||||
Provision for credit losses | 893,991 | 475,136 | 413,707 | 291,837 | ||||||||||||
Net interest (loss) income after provision for credit losses | (519,927 | ) | (112,317 | ) | (63,808 | ) | 45,668 | |||||||||
Total noninterest income | 244,546 | 256,052 | 265,945 | 239,102 | ||||||||||||
Total noninterest expense | 322,596 | 401,097 | 339,982 | 2,969,769 | ||||||||||||
Loss before income taxes | (597,977 | ) | (257,362 | ) | (137,845 | ) | (2,684,999 | ) | ||||||||
Benefit for income taxes | (228,290 | ) | (91,172 | ) | (12,750 | ) | (251,792 | ) | ||||||||
Net loss | $ | (369,687 | ) | $ | (166,190 | ) | $ | (125,095 | ) | $ | (2,433,207 | ) | ||||
Dividends on preferred shares | 29,289 | 29,223 | 57,451 | 58,793 | ||||||||||||
Net loss applicable to common shares | $ | (398,976 | ) | $ | (195,413 | ) | $ | (182,546 | ) | $ | (2,492,000 | ) | ||||
Common shares outstanding | ||||||||||||||||
Average — basic | 715,336 | 589,708 | 459,246 | 366,919 | ||||||||||||
Average — diluted(2) | 715,336 | 589,708 | 459,246 | 366,919 | ||||||||||||
Ending | 715,762 | 714,469 | 568,741 | 390,682 | ||||||||||||
Book value per share | $ | 5.10 | $ | 5.59 | $ | 6.23 | $ | 7.80 | ||||||||
Tangible book value per share(3) | 4.21 | 4.69 | 5.07 | 6.08 | ||||||||||||
Per common share | ||||||||||||||||
Net loss- basic | $ | (0.56 | ) | $ | (0.33 | ) | $ | (0.40 | ) | $ | (6.79 | ) | ||||
Net loss — diluted | (0.56 | ) | (0.33 | ) | (0.40 | ) | (6.79 | ) | ||||||||
Cash dividends declared | 0.0100 | 0.0100 | 0.0100 | 0.0100 | ||||||||||||
Common stock price, per share | ||||||||||||||||
High(4) | $ | 4.770 | $ | 4.970 | $ | 6.180 | $ | 8.000 | ||||||||
Low(4) | 3.500 | 3.260 | 1.550 | 1.000 | ||||||||||||
Close | 3.650 | 4.710 | 4.180 | 1.660 | ||||||||||||
Average closing price | 3.970 | 4.209 | 3.727 | 2.733 | ||||||||||||
Return on average total assets | (2.80 | )% | (1.28 | )% | (0.97 | )% | (18.22 | )% | ||||||||
Return on average common shareholders’ equity | (39.1 | ) | (21.5 | ) | (23.0 | ) | (188.9 | ) | ||||||||
Return on average tangible common shareholders’ equity(5) | (45.1 | ) | (24.7 | ) | (27.2 | ) | (479.2 | ) | ||||||||
Efficiency ratio(6) | 49.0 | 61.4 | 51.0 | 60.5 | ||||||||||||
Effective tax rate (benefit) | (38.2 | ) | (35.4 | ) | (9.2 | ) | (9.4 | ) | ||||||||
Margin analysis-as a % of average earning assets(7) | ||||||||||||||||
Interest income(7) | 4.70 | % | 4.86 | % | 4.99 | % | 4.99 | % | ||||||||
Interest expense | 1.51 | 1.66 | 1.89 | 2.02 | ||||||||||||
Net interest margin(7) | 3.19 | % | 3.20 | % | 3.10 | % | 2.97 | % | ||||||||
Revenue — FTE | ||||||||||||||||
Net interest income | $ | 374,064 | $ | 362,819 | $ | 349,899 | $ | 337,505 | ||||||||
FTE adjustment | 2,497 | 4,177 | 1,216 | 3,582 | ||||||||||||
Net interest income(7) | 376,561 | 366,996 | 351,115 | 341,087 | ||||||||||||
Noninterest income | 244,546 | 256,052 | 265,945 | 239,102 | ||||||||||||
Total revenue(7) | $ | 621,107 | $ | 623,048 | $ | 617,060 | $ | 580,189 | ||||||||
Continued |
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2009 | ||||||||||||||||
Capital Adequacy | December 31, | September 30, | June 30, | March 31, | ||||||||||||
Total risk-weighted assets (in millions) | $ | 43,248 | $ | 44,142 | $ | 45,463 | $ | 46,383 | ||||||||
Tier 1 leverage ratio | 10.09 | % | 11.30 | % | 10.62 | % | 9.67 | % | ||||||||
Tier 1 risk-based capital ratio | 12.03 | 13.04 | 11.85 | 11.14 | ||||||||||||
Total risk-based capital ratio | 14.41 | 16.23 | 14.94 | 14.26 | ||||||||||||
Tangible common equity/asset ratio(8) | 5.92 | 6.46 | 5.68 | 4.65 | ||||||||||||
Tangible equity/asset ratio(9) | 9.24 | 9.71 | 8.99 | 8.12 | ||||||||||||
Tangible common equity/risk-weighted assets ratio | 6.97 | 7.59 | 6.34 | 5.12 |
(1) | Comparisons for presented periods are impacted by a number of factors. Refer to the Significant Items section for additional discussion regarding these items. | |
(2) | For all quarterly periods presented above, the impact of the convertible preferred stock issued in April of 2008 was excluded from the diluted share calculation because the result would have been higher than basic earnings per common share (anti-dilutive) for the periods. | |
(3) | Deferred tax liability related to other intangible assets is calculated assuming a 35% tax rate. | |
(4) | High and low stock prices areintra-day quotes obtained from NASDAQ. | |
(5) | Net income excluding expense for amortization of intangibles for the period divided by average tangible shareholders’ equity. Average tangible shareholders’ equity equals average total stockholders’ equity less average intangible assets and goodwill. Expense for amortization of intangibles and average intangible assets are net of deferred tax liability, and calculated assuming a 35% tax rate. | |
(6) | Noninterest expense less amortization of intangibles divided by the sum of FTE net interest income and noninterest income excluding securities (losses) gains. | |
(7) | Presented on a FTE basis assuming a 35% tax rate. | |
(8) | Tangible common equity (total common equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other intangible assets are net of deferred tax, and calculated assuming a 35% tax rate. | |
(9) | Tangible equity (total equity less goodwill and other intangible assets) divided by tangible assets (total assets less goodwill and other intangible assets). Other intangible assets are net of deferred tax, and calculated assuming a 35% tax rate. |
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• | Level 1 — quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
• | Level 2 — inputs include quoted prices for similar assets and liabilities in active markets, quoted prices of identical or similar assets or liabilities in markets that are not active, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | |
• | Level 3 — inputs that are unobservable and significant to the fair value measurement. Financial instruments are considered Level 3 when values are determined using pricing models, discounted cash flow methodologies, or similar techniques, and at least one significant model assumption or input is unobservable. |
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Financial Instrument(1) | Hierarchy | Valuation methodology | ||
Mortgage loans held for sale | Level 2 | Huntington elected to apply the fair value option for mortgage loans originated with the intent to sell which are included in loans held for sale. Mortgage loans held for sale are estimated using security prices for similar product types. At December 31, 2010, mortgage loans held for sale had an aggregate fair value of $754.1 million and an aggregate outstanding principal balance of $750.0 million. Interest income on these loans is recorded in interest and fee income - loans and leases. Included in mortgage banking income were net gains resulting from origination and sale of these loans, including net realized gains of $109.2 million, $90.6 million, and $32.2 million for the years ended December 31, 2010, 2009, and 2008, respectively. Of such gains, the change in fair value while held as loans were $(5.6) million, $(6.3) million and $6.6 million for the years ended December 31, 2010, 2009, and 2008, respectively. | ||
Available-for-sale Securities & Trading Account Securities(2) | Level 1 | Consist primarily of U.S. Treasury and money market mutual funds, which generally have quoted prices. | ||
Level 2 | Consist of U.S. Government and agency mortgage-backed and other federal agency securities, municipal securities, and other securities for which an active market is not available. Third party pricing services provide a fair value estimate based upon trades of similar financial instruments. | |||
Level 3 | Consist of certain asset-backed securities, pooled-trust-preferred securities, private-label CMOs, and municipal securities for which fair value is estimated. Assumptions used to determine the fair value of these securities have greater subjectivity due to the lack of observable market transactions. Generally, there are only limited trades of similar instruments and a discounted cash flow approach is used to determine fair value. | |||
Automobile loans(3) | Level 3 | Consists of automobile loan receivables measured at fair value. The key assumptions used to determine the fair value of the automobile loan receivables included projections of expected losses and prepayment of the underlying loans in the portfolio and a market assumption of interest rate spreads. The net gains and losses, before tax, from fair value changes reflected in earnings for the year ended December 31, 2010 was a net loss of $2.3 million which is net of a $3.4 million net gain associated with instrument specific credit risk. Instrument specific credit risk was determined based on estimated credit losses inherent in the January 1, 2010 fair value calculation as compared to actual credit losses incurred in 2010 plus estimated credit losses inherent in the December 31, 2010 fair value calculation. |
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Financial Instrument(1) | Hierarchy | Valuation methodology | ||
MSRs(3) | Level 3 | MSRs do not trade in an active, open market with readily observable prices. Although sales of MSRs do occur, the precise terms and conditions typically are not readily available. Fair value is determined on an income approach model based upon month-end interest rate curve and prepayment assumptions. | ||
Derivatives(4) | Level 1 | Consist of exchange traded options and forward commitments to deliver mortgage-backed securities which are valued using quoted prices. | ||
Level 2 | Consist of basic asset and liability conversion swaps and options, and interest rate caps. These derivative positions are valued using a discounted cash flow method that incorporates current market interest rates. | |||
Level 3 | Consist primarily of interest rate lock agreements related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. | |||
Securitization trust notes payable(4) | Level 2 | Consists of certain securitization trust notes payable related to the automobile loans measured at fair value. The notes payable are valued based on interest rates for similar financial instruments. The change in fair value for the year ended December 31, 2010 was $9.6 million. |
(1) | Refer to Note 1 of the Notes to Consolidated Financial Statements for additional information. | |
(2) | Refer to Note 4 of the Notes to Consolidated Financial Statements for additional information. | |
(3) | Refer to Note 5 of the Notes to Consolidated Financial Statements for additional information. | |
(4) | Refer to Note 20 of the Notes to Consolidated Financial Statements for additional information. |
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Item 7A: | Quantitative and Qualitative Disclosures About Market Risk |
Item 8: | Financial Statements and Supplementary Data |
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December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands, except number of shares) | ||||||||
ASSETS | ||||||||
Cash and due from banks | $ | 847,888 | $ | 1,521,344 | ||||
Interest-bearing deposits in banks | 135,038 | 319,375 | ||||||
Trading account securities | 185,404 | 83,657 | ||||||
Loans held for sale (includes $754,117 and $459,719 respectively, measured at fair value)(1) | 793,285 | 461,647 | ||||||
Available-for-sale and other securities | 9,895,244 | 8,587,914 | ||||||
Loans and leases (includes $522,717 at December 31, 2010 measured at fair value):(2) | ||||||||
Commercial and industrial loans and leases | 13,063,293 | 12,888,100 | ||||||
Commercial real estate loans | 6,651,156 | 7,688,827 | ||||||
Automobile loans and leases | 5,614,711 | 3,390,594 | ||||||
Home equity loans | 7,713,154 | 7,562,060 | ||||||
Residential mortgage loans | 4,500,366 | 4,510,347 | ||||||
Other consumer loans | 563,827 | 750,735 | ||||||
Loans and leases | 38,106,507 | 36,790,663 | ||||||
Allowance for loan and lease losses | (1,249,008 | ) | (1,482,479 | ) | ||||
Net loans and leases | 36,857,499 | 35,308,184 | ||||||
Bank owned life insurance | 1,458,224 | 1,412,333 | ||||||
Premises and equipment | 491,602 | 496,021 | ||||||
Goodwill | 444,268 | 444,268 | ||||||
Other intangible assets | 228,620 | 289,098 | ||||||
Accrued income and other assets | 2,482,570 | 2,630,824 | ||||||
Total assets | $ | 53,819,642 | $ | 51,554,665 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Liabilities | ||||||||
Deposits in domestic offices | ||||||||
Demand deposits — noninterest-bearing | $ | 7,216,751 | $ | 6,907,238 | ||||
Interest-bearing | 34,254,807 | 33,229,726 | ||||||
Deposits in foreign offices | 382,340 | 356,963 | ||||||
Deposits | 41,853,898 | 40,493,927 | ||||||
Short-term borrowings | 2,040,732 | 876,241 | ||||||
Federal Home Loan Bank advances | 172,519 | 168,977 | ||||||
Other long-term debt (includes $356,089 at December 31, 2010, measured at fair value)(2) | 2,144,092 | 2,369,491 | ||||||
Subordinated notes | 1,497,216 | 1,264,202 | ||||||
Accrued expenses and other liabilities | 1,130,643 | 1,045,825 | ||||||
Total liabilities | 48,839,100 | 46,218,663 | ||||||
Shareholders’ equity | ||||||||
Preferred stock — authorized 6,617,808 shares; | ||||||||
5.00% Series B Non-voting, Cumulative Preferred Stock, par value of $0.01 and liquidation value per share of $1,000 | — | 1,325,008 | ||||||
8.50% Series A Non-cumulative Perpetual Convertible Preferred Stock, par value of $0.01 and liquidation value per share of $1,000 | 362,507 | 362,507 | ||||||
Common stock — | ||||||||
Par value of $0.01 and authorized 1,500,000,000 shares | 8,642 | 7,167 | ||||||
Capital surplus | 7,630,093 | 6,731,796 | ||||||
Less treasury shares, at cost | (8,771 | ) | (11,465 | ) | ||||
Accumulated other comprehensive loss | (197,496 | ) | (156,985 | ) | ||||
Retained (deficit) earnings | (2,814,433 | ) | (2,922,026 | ) | ||||
Total shareholders’ equity | 4,980,542 | 5,336,002 | ||||||
Total liabilities and shareholders’ equity | $ | 53,819,642 | $ | 51,554,665 | ||||
Common shares issued | 864,195,369 | 716,741,249 | ||||||
Common shares outstanding | 863,319,435 | 715,761,672 | ||||||
Treasury shares outstanding | 875,934 | 979,577 | ||||||
Preferred shares issued | 1,967,071 | 1,967,071 | ||||||
Preferred shares outstanding | 362,507 | 1,760,578 |
(1) | Amounts represent loans for which Huntington has elected the fair value option. See Note 19. | |
(2) | Amounts represent certain assets and liabilities of a consolidated VIE for which Huntington has elected the fair value option. See Note 21. |
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||
Interest and fee income | ||||||||||||
Loans and leases | ||||||||||||
Taxable | $ | 1,859,495 | $ | 1,933,639 | $ | 2,447,362 | ||||||
Tax-exempt | 6,353 | 10,630 | 2,748 | |||||||||
Available-for-sale and other securities | ||||||||||||
Taxable | 239,065 | 249,968 | 217,882 | |||||||||
Tax-exempt | 11,680 | 8,824 | 29,869 | |||||||||
Other | 28,799 | 35,081 | 100,461 | |||||||||
Total interest income | 2,145,392 | 2,238,142 | 2,798,322 | |||||||||
Interest expense | ||||||||||||
Deposits | 439,050 | 674,101 | 931,679 | |||||||||
Short-term borrowings | 3,007 | 2,366 | 42,261 | |||||||||
Federal Home Loan Bank advances | 3,121 | 12,882 | 107,848 | |||||||||
Subordinated notes and other long-term debt | 81,409 | 124,506 | 184,843 | |||||||||
Total interest expense | 526,587 | 813,855 | 1,266,631 | |||||||||
Net interest income | 1,618,805 | 1,424,287 | 1,531,691 | |||||||||
Provision for credit losses | 634,547 | 2,074,671 | 1,057,463 | |||||||||
Net interest income after provision for credit losses | 984,258 | (650,384 | ) | 474,228 | ||||||||
Service charges on deposit accounts | 267,015 | 302,799 | 308,053 | |||||||||
Mortgage banking income | 175,782 | 112,298 | 8,994 | |||||||||
Trust services | 112,555 | 103,639 | 125,980 | |||||||||
Electronic banking | 110,234 | 100,151 | 90,267 | |||||||||
Insurance income | 76,413 | 73,326 | 72,624 | |||||||||
Brokerage income | 68,855 | 64,843 | 65,172 | |||||||||
Bank owned life insurance income | 61,066 | 54,872 | 54,776 | |||||||||
Automobile operating lease income | 45,964 | 51,810 | 39,851 | |||||||||
Net gains (losses) on sales ofavailable-for-sale and other securities | 13,448 | 48,815 | (197,370 | ) | ||||||||
Impairment losses onavailable-for-sale and other securities: | ||||||||||||
Impairment losses onavailable-for-sale and other securities | 9,847 | (183,472 | ) | — | ||||||||
Noncredit-related losses on securities not expected to be sold (recognized in other comprehensive income) | (23,569 | ) | 124,408 | — | ||||||||
Net impairment losses on investment securities | (13,722 | ) | (59,064 | ) | — | |||||||
Other income | 124,248 | 152,155 | 138,791 | |||||||||
Total noninterest income | 1,041,858 | 1,005,644 | 707,138 | |||||||||
Personnel costs | 798,973 | 700,482 | 783,546 | |||||||||
Outside data processing and other services | 159,248 | 148,095 | 130,226 | |||||||||
Net occupancy | 107,862 | 105,273 | 108,428 | |||||||||
Deposit and other insurance expense | 97,548 | 113,830 | 22,437 | |||||||||
Professional services | 88,778 | 76,366 | 49,613 | |||||||||
Equipment | 85,920 | 83,117 | 93,965 | |||||||||
Marketing | 65,924 | 33,049 | 32,664 | |||||||||
Amortization of intangibles | 60,478 | 68,307 | 76,894 | |||||||||
OREO and foreclosure expense | 39,049 | 93,899 | 33,455 | |||||||||
Automobile operating lease expense | 37,034 | 43,360 | 31,282 | |||||||||
Goodwill impairment | — | 2,606,944 | — | |||||||||
Gain on early extinguishment of debt | — | (147,442 | ) | (23,542 | ) | |||||||
Other expense | 132,991 | 108,163 | 138,406 | |||||||||
Total noninterest expense | 1,673,805 | 4,033,443 | 1,477,374 | |||||||||
Income (Loss) before income taxes | 352,311 | (3,678,183 | ) | (296,008 | ) | |||||||
Provision (Benefit) for income taxes | 39,964 | (584,004 | ) | (182,202 | ) | |||||||
Net income (loss) | 312,347 | (3,094,179 | ) | (113,806 | ) | |||||||
Dividends on preferred shares | 172,032 | 174,756 | 46,400 | |||||||||
Net income (loss) applicable to common shares | $ | 140,315 | $ | (3,268,935 | ) | $ | (160,206 | ) | ||||
Average common shares — basic | 726,934 | 532,802 | 366,155 | |||||||||
Average common shares — diluted | 729,532 | 532,802 | 366,155 | |||||||||
Per common share | ||||||||||||
Net income (loss) — basic | $ | 0.19 | $ | (6.14 | ) | $ | (0.44 | ) | ||||
Net income (loss) — diluted | 0.19 | (6.14 | ) | (0.44 | ) | |||||||
Cash dividends declared | 0.0400 | 0.0400 | 0.6625 |
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Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Other | Retained | ||||||||||||||||||||||||||||||||||||||||||||||
Series B | Series A | Common Stock | Capital | Treasury Stock | Comprehensive | Earnings | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Surplus | Shares | Amount | Loss | (Deficit) | Total | |||||||||||||||||||||||||||||||||||||
(All amounts in thousands, | ||||||||||||||||||||||||||||||||||||||||||||||||
except for per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2010 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | 1,398 | $ | 1,325,008 | 363 | $ | 362,507 | 716,741 | $ | 7,167 | $ | 6,731,796 | (980 | ) | $ | (11,465 | ) | $ | (156,985 | ) | $ | (2,922,026 | ) | $ | 5,336,002 | ||||||||||||||||||||||||
Cumulative effect of change in accounting principle for consolidation of variable interest entities, net of tax of $3,097 | (4,249 | ) | (1,821 | ) | (6,070 | ) | ||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | 1,398 | 1,325,008 | 363 | 362,507 | 716,741 | 7,167 | 6,731,796 | (980 | ) | (11,465 | ) | (161,234 | ) | (2,923,847 | ) | 5,329,932 | ||||||||||||||||||||||||||||||||
Comprehensive Income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | 312,347 | 312,347 | ||||||||||||||||||||||||||||||||||||||||||||||
Non-credit-related impairment recoveries (losses) on debt securities not expected to be sold | 15,320 | 15,320 | ||||||||||||||||||||||||||||||||||||||||||||||
Unrealized net gains (losses) onavailable-for-sale and other securities arising during the period, net of reclassification for net realized gains | (9,406 | ) | (9,406 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedging derivatives | (23,155 | ) | (23,155 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Change in accumulated unrealized losses for pension and other post-retirement obligations | (19,021 | ) | (19,021 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | 276,085 | |||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | 146,568 | 1,465 | 884,707 | 886,172 | ||||||||||||||||||||||||||||||||||||||||||||
Repurchase of Preferred Series B stock | (1,398 | ) | (1,398,071 | ) | (1,398,071 | ) | ||||||||||||||||||||||||||||||||||||||||||
Preferred Series B stock discount accretion and redemption | 73,063 | (73,063 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||
Common ($0.04 per share) | (30,139 | ) | (30,139 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Series B ($48.75 per share) | (68,156 | ) | (68,156 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Series A ($85.00 per share) | (30,813 | ) | (30,813 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Recognition of the fair value of share-based compensation | 4 | 15,449 | 15,453 | |||||||||||||||||||||||||||||||||||||||||||||
Other share-based compensation activity | 886 | 6 | 482 | (535 | ) | (47 | ) | |||||||||||||||||||||||||||||||||||||||||
Other | (2,341 | ) | 104 | 2,694 | (227 | ) | 126 | |||||||||||||||||||||||||||||||||||||||||
Balance, end of year | — | $ | — | 363 | $ | 362,507 | 864,195 | $ | 8,642 | $ | 7,630,093 | (876 | ) | $ | (8,771 | ) | $ | (197,496 | ) | $ | (2,814,433 | ) | $ | 4,980,542 | ||||||||||||||||||||||||
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Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Other | Retained | ||||||||||||||||||||||||||||||||||||||||||||||
Series B | Series A | Common Stock | Capital | Treasury Stock | Comprehensive | Earnings | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Surplus | Shares | Amount | Loss | (Deficit) | Total | |||||||||||||||||||||||||||||||||||||
(All amounts in thousands, | ||||||||||||||||||||||||||||||||||||||||||||||||
except for per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | 1,398 | $ | 1,308,667 | 569 | $ | 569,000 | 366,972 | $ | 3,670 | $ | 5,322,428 | (915 | ) | $ | (15,530 | ) | $ | (326,693 | ) | $ | 367,364 | $ | 7,228,906 | |||||||||||||||||||||||||
Comprehensive Income: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | (3,094,179 | ) | (3,094,179 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of change in | ||||||||||||||||||||||||||||||||||||||||||||||||
accounting principle for other-than- | ||||||||||||||||||||||||||||||||||||||||||||||||
temporarily impaired debt securities | (3,541 | ) | 3,541 | — | ||||||||||||||||||||||||||||||||||||||||||||
Non-credit-related impairment | ||||||||||||||||||||||||||||||||||||||||||||||||
recoveries (losses) on debt | ||||||||||||||||||||||||||||||||||||||||||||||||
securities not expected to be sold | (80,865 | ) | (80,865 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Unrealized net gains (losses) on | ||||||||||||||||||||||||||||||||||||||||||||||||
available-for-sale and other | ||||||||||||||||||||||||||||||||||||||||||||||||
securities arising during the period, | ||||||||||||||||||||||||||||||||||||||||||||||||
net of reclassification for net | ||||||||||||||||||||||||||||||||||||||||||||||||
realized gains (losses) | 188,780 | 188,780 | ||||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedging derivatives | 14,227 | 14,227 | ||||||||||||||||||||||||||||||||||||||||||||||
Change in accumulated unrealized | ||||||||||||||||||||||||||||||||||||||||||||||||
losses for pension and other post- | ||||||||||||||||||||||||||||||||||||||||||||||||
retirement obligations | 51,107 | 51,107 | ||||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | (2,920,930 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock | 308,226 | 3,081 | 1,142,670 | 1,145,751 | ||||||||||||||||||||||||||||||||||||||||||||
Conversion of Preferred Series A stock | (206 | ) | (206,493 | ) | 41,072 | 411 | 262,117 | (56,035 | ) | — | ||||||||||||||||||||||||||||||||||||||
Preferred Series B Stock discount accretion | 16,041 | (16,041 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||
Common ($0.04 per share) | (22,020 | ) | (22,020 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Series B ($50.00 per share) | (69,904 | ) | (69,904 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Series A ($85.00 per share) | (32,776 | ) | (32,776 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Recognition of the fair value of share-based compensation | 8,547 | 8,547 | ||||||||||||||||||||||||||||||||||||||||||||||
Other share-based compensation activity | 471 | 5 | 635 | (838 | ) | (198 | ) | |||||||||||||||||||||||||||||||||||||||||
Other | 300 | (4,601 | ) | (65 | ) | 4,065 | (1,138 | ) | (1,374 | ) | ||||||||||||||||||||||||||||||||||||||
Balance, end of year | 1,398 | $ | 1,325,008 | 363 | $ | 362,507 | 716,741 | $ | 7,167 | $ | 6,731,796 | (980 | ) | $ | (11,465 | ) | $ | (156,985 | ) | $ | (2,922,026 | ) | $ | 5,336,002 | ||||||||||||||||||||||||
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Accumulated | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred Stock | Other | |||||||||||||||||||||||||||||||||||||||||||||||
Series B | Series A | Common Stock | Capital | Treasury Stock | Comprehensive | Retained | ||||||||||||||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Surplus | Shares | Amount | Loss | Earnings | Total | |||||||||||||||||||||||||||||||||||||
(All amounts in thousands, | ||||||||||||||||||||||||||||||||||||||||||||||||
except for per share amounts) | ||||||||||||||||||||||||||||||||||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year | — | $ | — | — | $ | — | 367,002 | $ | 3,670 | $ | 5,237,783 | (740 | ) | $ | (14,391 | ) | $ | (49,611 | ) | $ | 773,639 | $ | 5,951,090 | |||||||||||||||||||||||||
Cumulative effect of change in accounting principle for fair value of assets and liabilities, net of tax of ($803) | 1,491 | 1,491 | ||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of changing measurement date provisions for pension and post-retirement assets and obligations, net of tax of $2,064 | (3,834 | ) | (3,834 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of changing measurement date provisions for pension and post-retirement assets and obligations, net of tax of $2,260 | (4,654 | ) | (4,654 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Balance, beginning of year — as adjusted | — | —— | — | — | 367,002 | 3,670 | 5,237,783 | (740 | ) | (14,391 | ) | (53,445 | ) | 770,476 | 5,944,093 | |||||||||||||||||||||||||||||||||
Comprehensive Loss: | ||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) | (113,806 | ) | (113,806 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Unrealized net gains (losses) onavailable-for-sale and other securities arising during the period, net of reclassification for net realized gains (losses) | (197,745 | ) | (197,745 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Unrealized gains (losses) on cash flow hedging derivatives | 40,085 | 40,085 | ||||||||||||||||||||||||||||||||||||||||||||||
Change in accumulated unrealized losses for pension and other post-retirement obligations | (115,588 | ) | (115,588 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Total comprehensive gain (loss) | (387,054 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Issuance of Preferred Class B Stock | 1,398 | 1,306,726 | 1,306,726 | |||||||||||||||||||||||||||||||||||||||||||||
Issuance of Preferred Class A Stock | 569 | 569,000 | (18,866 | ) | 550,134 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of warrants convertible to common stock | 90,765 | 90,765 | ||||||||||||||||||||||||||||||||||||||||||||||
Preferred Series B stock discount accretion | 1,941 | (1,941 | ) | — | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared: | ||||||||||||||||||||||||||||||||||||||||||||||||
Common ($0.6625 per share) | (242,522 | ) | (242,522 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Class B ($6.528 per share) | (9,126 | ) | (9,126 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Preferred Series A ($62.097 per share) | (35,333 | ) | (35,333 | ) | ||||||||||||||||||||||||||||||||||||||||||||
Recognition of the fair value of share-based compensation | 14,091 | 14,091 | ||||||||||||||||||||||||||||||||||||||||||||||
Other share-based compensation activity | (30 | ) | — | (874 | ) | (199 | ) | (1,073 | ) | |||||||||||||||||||||||||||||||||||||||
Other | (471 | ) | (175 | ) | (1,139 | ) | (185 | ) | (1,795 | ) | ||||||||||||||||||||||||||||||||||||||
Balance, end of year | 1,398 | $ | 1,308,667 | 569 | $ | 569,000 | 366,972 | $ | 3,670 | $ | 5,322,428 | (915 | ) | $ | (15,530 | ) | $ | (326,693 | ) | $ | 367,364 | $ | 7,228,906 | |||||||||||||||||||||||||
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | 312,347 | $ | (3,094,179 | ) | $ | (113,806 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Impairment of goodwill | — | 2,606,944 | — | |||||||||
Provision for credit losses | 634,547 | 2,074,671 | 1,057,463 | |||||||||
Depreciation and amortization | 286,186 | 228,041 | 244,860 | |||||||||
Change in current and deferred income taxes | 161,367 | (471,592 | ) | (251,827 | ) | |||||||
Net sales (purchases) of trading account securities | (101,747 | ) | 856,112 | 92,976 | ||||||||
Originations of loans held for sale | (3,864,273 | ) | (4,786,043 | ) | (3,063,375 | ) | ||||||
Principal payments on and proceeds from loans held for sale | 3,535,550 | 4,667,792 | 3,096,129 | |||||||||
Gain on early extinguishment of debt | — | (147,442 | ) | (23,542 | ) | |||||||
Losses onavailable-for-sale and other securities | 274 | 10,249 | 197,370 | |||||||||
Other, net | (123,428 | ) | 21,709 | 1,081 | ||||||||
Net cash provided by (used for) operating activities | 840,823 | 1,966,262 | 1,237,329 | |||||||||
Investing activities | ||||||||||||
Decrease (increase) in interest-bearing deposits in banks | 162,913 | (319,989 | ) | (228,554 | ) | |||||||
Proceeds from: | ||||||||||||
Maturities and calls of investment securities | 3,288,714 | 1,004,293 | 386,232 | |||||||||
Sales of investment securities | 4,280,518 | 3,585,644 | 555,719 | |||||||||
Purchases of investment securities | (8,769,767 | ) | (8,386,223 | ) | (1,338,274 | ) | ||||||
Net proceeds from sales of loans | 941,615 | 949,398 | 471,362 | |||||||||
Net loan and lease activity, excluding sales | (2,764,575 | ) | 1,544,524 | (2,358,653 | ) | |||||||
Purchases of operating lease assets | — | (119 | ) | (226,378 | ) | |||||||
Proceeds from sale of operating lease assets | 34,930 | 11,216 | 25,091 | |||||||||
Purchases of premises and equipment | (68,200 | ) | (49,223 | ) | (59,945 | ) | ||||||
Proceeds from sales of other real estate | 113,298 | 60,499 | 54,520 | |||||||||
Other, net | 3,770 | 4,619 | 19,172 | |||||||||
Net cash provided by (used for) investing activities | (2,776,784 | ) | (1,595,361 | ) | (2,699,708 | ) | ||||||
Financing activities | ||||||||||||
Increase (decrease) in deposits | 1,353,227 | 2,559,633 | 195,142 | |||||||||
Increase (decrease) in short-term borrowings | 1,128,887 | (277,215 | ) | (1,316,155 | ) | |||||||
Net proceeds from issuance of subordinated notes | 297,375 | — | — | |||||||||
Maturity/redemption of subordinated notes | (83,870 | ) | (484,966 | ) | (76,659 | ) | ||||||
Proceeds from Federal Home Loan Bank advances | 450,000 | 207,394 | 1,865,294 | |||||||||
Maturity/redemption of Federal Home Loan Bank advances | (446,718 | ) | (2,627,786 | ) | (2,360,368 | ) | ||||||
Proceeds from issuance of long-term debt | 60,805 | 598,200 | 887,111 | |||||||||
Maturity/redemption of long-term debt | (848,756 | ) | (642,644 | ) | (540,266 | ) | ||||||
Dividends paid on preferred stock | (107,901 | ) | (107,262 | ) | (23,242 | ) | ||||||
Dividends paid on common stock | (28,598 | ) | (55,026 | ) | (279,608 | ) | ||||||
Net proceeds from issuance of preferred stock | — | — | 1,947,625 | |||||||||
Payment to repurchase preferred stock | (1,398,071 | ) | ||||||||||
Net proceeds from issuance of common stock | 886,172 | 1,135,645 | — | |||||||||
Other, net | (47 | ) | (198 | ) | (1,073 | ) | ||||||
Net cash provided by (used for) financing activities | 1,262,505 | 305,775 | 297,801 | |||||||||
Increase (decrease) in cash and cash equivalents | (673,456 | ) | 676,676 | (1,164,578 | ) | |||||||
Cash and cash equivalents at beginning of period | 1,521,344 | 844,668 | 2,009,246 | |||||||||
Cash and cash equivalents at end of period | $ | 847,888 | $ | 1,521,344 | $ | 844,668 | ||||||
Supplemental disclosures: | ||||||||||||
Income taxes paid (refunded) | $ | (121,401 | ) | $ | (112,412 | ) | $ | 69,625 | ||||
Interest paid | 552,955 | 869,503 | 1,282,877 | |||||||||
Non-cash activities | ||||||||||||
Dividends accrued, paid in subsequent quarter | 23,373 | 23,305 | 60,893 |
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1. | SIGNIFICANT ACCOUNTING POLICIES |
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134
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135
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136
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137
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2. | ACCOUNTING STANDARDS UPDATE |
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3. | LOANS AND LEASES |
At December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Commercial and industrial | ||||||||
Lease payments receivable | $ | 748,377 | $ | 934,470 | ||||
Estimated residual value of leased assets | 94,665 | 54,635 | ||||||
Gross investment in commercial lease financing receivables | 843,042 | 989,105 | ||||||
Net deferred origination costs | 2,472 | 3,207 | ||||||
Unearned income | (109,962 | ) | (109,090 | ) | ||||
Total net investment in commercial lease financing receivables | $ | 735,552 | $ | 883,222 | ||||
Consumer | ||||||||
Lease payments receivable | $ | 22,063 | $ | 91,099 | ||||
Estimated residual value of leased assets | 47,050 | 171,610 | ||||||
Gross investment in consumer lease financing receivables | 69,113 | 262,709 | ||||||
Net deferred origination fees | (95 | ) | (384 | ) | ||||
Unearned income | (3,788 | ) | (16,060 | ) | ||||
Total net investment in consumer lease financing receivables | $ | 65,230 | $ | 246,265 | ||||
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2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Balance at January 1, | $ | 35,286 | $ | — | ||||
Impact of Franklin restructuring on March 31, 2009 | — | 39,781 | ||||||
Accretion | (1,773 | ) | (4,495 | ) | ||||
Reclassification to nonaccretable difference(1) | (7,460 | ) | — | |||||
Transfer to loans held for sale | (26,053 | ) | — | |||||
Balance at December 31, | $ | — | $ | 35,286 | ||||
(1) | Result of the reclassification of loans to nonaccrual status. |
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4. | AVAILABLE-FOR-SALE AND OTHER SECURITIES |
Unrealized | ||||||||||||||||
Amortized | Gross | Gross | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
December 31, 2010 | ||||||||||||||||
U.S. Treasury | $ | 52,425 | $ | — | $ | (644 | ) | $ | 51,781 | |||||||
Federal agencies: | ||||||||||||||||
Mortgage-backed securities | 4,733,831 | 71,901 | (51,328 | ) | 4,754,404 | |||||||||||
TLGP securities | 181,680 | 1,787 | — | 183,467 | ||||||||||||
Other agencies | 2,070,722 | 4,874 | (17,220 | ) | 2,058,376 | |||||||||||
Total U.S. government backed securities | 7,038,658 | 78,562 | (69,192 | ) | 7,048,028 | |||||||||||
Municipal securities | 456,044 | 6,154 | (6,483 | ) | 455,715 | |||||||||||
Private-label CMO | 134,509 | 1,236 | (13,820 | ) | 121,925 | |||||||||||
Asset-backed securities(1) | 1,341,407 | 6,563 | (140,848 | ) | 1,207,122 | |||||||||||
Other securities | 1,081,982 | 388 | (19,916 | ) | 1,062,454 | |||||||||||
Totalavailable-for-sale and other securities | $ | 10,052,600 | $ | 92,903 | $ | (250,259 | ) | $ | 9,895,244 | |||||||
(1) | Amounts at December 31, 2010 include securities backed by automobile loans with a fair value of $509 million which meet the eligibility requirements for the Term Asset-Backed Securities Loan Facility, administered by the Federal Reserve Bank. |
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Unrealized | ||||||||||||||||
Amortized | Gross | Gross | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
December 31, 2009 | ||||||||||||||||
U.S. Treasury | $ | 99,735 | $ | — | $ | (581 | ) | $ | 99,154 | |||||||
Federal agencies: | ||||||||||||||||
Mortgage-backed securities | 3,444,436 | 44,835 | (9,163 | ) | 3,480,108 | |||||||||||
TLGP securities | 258,672 | 2,037 | (321 | ) | 260,388 | |||||||||||
Other agencies | 2,724,815 | 6,346 | (4,158 | ) | 2,727,003 | |||||||||||
Total U.S. government backed securities | 6,527,658 | 53,218 | (14,223 | ) | 6,566,653 | |||||||||||
Municipal securities | 118,447 | 6,424 | (86 | ) | 124,785 | |||||||||||
Private-label CMO | 534,377 | 99 | (57,157 | ) | 477,319 | |||||||||||
Asset-backed securities(2) | 1,128,474 | 7,709 | (155,867 | ) | 980,316 | |||||||||||
Other securities | 439,132 | 296 | (587 | ) | 438,841 | |||||||||||
Totalavailable-for-sale and other securities | $ | 8,748,088 | $ | 67,746 | $ | (227,920 | ) | $ | 8,587,914 | |||||||
(2) | Amounts at December 31, 2009 include securities backed by automobile loans with a fair value of $309.4 million which meet the eligibility requirements for the Term Asset-Backed Securities Loan Facility, administered by the Federal Reserve Bank, and securities with a fair value of $161.0 million backed by student loans with a minimum 97% government guarantee. |
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Less than 12 Months | Over 12 Months | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||||||
U.S. Treasury | $ | 51,781 | $ | (644 | ) | $ | — | $ | — | $ | 51,781 | $ | (644 | ) | ||||||||||
Federal Agencies: | ||||||||||||||||||||||||
Mortgage-backed securities | 1,424,431 | (51,328 | ) | — | — | 1,424,431 | (51,328 | ) | ||||||||||||||||
TLGP securities | — | — | — | — | — | — | ||||||||||||||||||
Other agencies | 1,217,074 | (17,134 | ) | 4,771 | (86 | ) | 1,221,845 | (17,220 | ) | |||||||||||||||
Total U.S. Government | ||||||||||||||||||||||||
backed securities | 2,693,286 | (69,106 | ) | 4,771 | (86 | ) | 2,698,057 | (69,192 | ) | |||||||||||||||
Municipal securities | 201,370 | (6,363 | ) | 3,700 | (120 | ) | 205,070 | (6,483 | ) | |||||||||||||||
Private label CMO | — | — | 85,617 | (13,820 | ) | 85,617 | (13,820 | ) | ||||||||||||||||
Asset-backed securities | 214,983 | (2,129 | ) | 146,866 | (138,719 | ) | 361,849 | (140,848 | ) | |||||||||||||||
Other securities | 655,869 | (19,125 | ) | 41,218 | (791 | ) | 697,087 | (19,916 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 3,765,508 | $ | (96,723 | ) | $ | 282,172 | $ | (153,536 | ) | $ | 4,047,680 | $ | (250,259 | ) | |||||||||
Less than 12 Months | Over 12 Months | Total | ||||||||||||||||||||||
Fair | Unrealized | Fair | Unrealized | Fair | Unrealized | |||||||||||||||||||
Value | Losses | Value | Losses | Value | Losses | |||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||
December 31, 2009 | ||||||||||||||||||||||||
U.S. Treasury | $ | 99,154 | $ | (581 | ) | $ | — | $ | — | $ | 99,154 | $ | (581 | ) | ||||||||||
Federal Agencies | ||||||||||||||||||||||||
Mortgage-backed securities | 1,324,960 | (9,163 | ) | — | — | 1,324,960 | (9,163 | ) | ||||||||||||||||
TLGP securities | 49,675 | (321 | ) | — | — | 49,675 | (321 | ) | ||||||||||||||||
Other agencies | 1,443,309 | (4,081 | ) | 6,475 | (77 | ) | 1,449,784 | (4,158 | ) | |||||||||||||||
Total U.S. Government | ||||||||||||||||||||||||
backed securities | 2,917,098 | (14,146 | ) | 6,475 | (77 | ) | 2,923,573 | (14,223 | ) | |||||||||||||||
Municipal securities | 3,993 | (7 | ) | 3,741 | (79 | ) | 7,734 | (86 | ) | |||||||||||||||
Private label CMO | 15,280 | (3,831 | ) | 452,439 | (53,326 | ) | 467,719 | (57,157 | ) | |||||||||||||||
Asset-backed securities | 236,451 | (8,822 | ) | 207,581 | (147,045 | ) | 444,032 | (155,867 | ) | |||||||||||||||
Other securities | 39,413 | (372 | ) | 410 | (215 | ) | 39,823 | (587 | ) | |||||||||||||||
Total temporarily impaired securities | $ | 3,212,235 | $ | (27,178 | ) | $ | 670,646 | $ | (200,742 | ) | $ | 3,882,881 | $ | (227,920 | ) | |||||||||
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2010 | 2009 | |||||||||||||||
Amortized | Fair | Amortized | Fair | |||||||||||||
Cost | Value | Cost | Value | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Under 1 year | $ | 335,192 | $ | 337,715 | $ | 162,238 | $ | 164,768 | ||||||||
1 — 5 years | 3,540,183 | 3,510,490 | 3,278,176 | 3,279,359 | ||||||||||||
6 — 10 years | 1,128,657 | 1,139,727 | 1,013,065 | 1,019,152 | ||||||||||||
Over 10 years | 4,685,902 | 4,545,304 | 3,863,487 | 3,694,008 | ||||||||||||
Nonmarketable equity securities | 308,722 | 308,722 | 376,640 | 376,640 | ||||||||||||
Marketable equity securities | 53,944 | 53,286 | 54,482 | 53,987 | ||||||||||||
Totalavailable-for-sale and other securities | $ | 10,052,600 | $ | 9,895,244 | $ | 8,748,088 | $ | 8,587,914 | ||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Gross gains on sales of securities | $ | 28,992 | $ | 59,762 | $ | 9,364 | ||||||
Gross (losses) on sales of securities | (15,544 | ) | (10,947 | ) | (10 | ) | ||||||
Net gain (loss) on sales of securities | 13,448 | 48,815 | 9,354 | |||||||||
OTTI recorded — pre adoption(1) | — | (3,937 | ) | (206,724 | ) | |||||||
OTTI recorded — post adoption(1) | (13,722 | ) | (55,127 | ) | — | |||||||
Net OTTI recorded | (13,722 | ) | (59,064 | ) | (206,724 | ) | ||||||
Total securities gain (loss) | $ | (274 | ) | $ | (10,249 | ) | $ | (197,370 | ) | |||
(1) | Huntington adopted the current OTTI provisions of ASC Topic 320 on April 1, 2009. |
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Year Ended December 31, 2010 | ||||||||||||||||
Alt-A | Pooled- | Private | ||||||||||||||
Mortgage-Backed | Trust-Preferred | Label CMO | Total | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Total OTTI recoveries (losses) (unrealized and realized) | $ | 566 | $ | 1,254 | $ | 8,046 | $ | 9,866 | ||||||||
Unrealized OTTI (recoveries) losses recognized in OCI | (2,198 | ) | (6,176 | ) | (15,195 | ) | (23,569 | ) | ||||||||
Net impairment losses recognized in earnings | $ | (1,632 | ) | $ | (4,922 | ) | $ | (7,149 | ) | $ | (13,703 | ) | ||||
Year Ended December 31, 2009(1) | ||||||||||||||||
Alt-A | Pooled- | Private | ||||||||||||||
Mortgage-Backed | Trust-Preferred | Label CMO | Total | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Total OTTI (losses) recoveries (unrealized and realized) | $ | (16,906 | ) | $ | (131,902 | ) | $ | (30,727 | ) | $ | (179,535 | ) | ||||
Unrealized OTTI losses (recoveries) recognized in OCI | 6,186 | 93,491 | 24,731 | 124,408 | ||||||||||||
Net impairment losses recognized in earnings | $ | (10,720 | ) | $ | (38,411 | ) | $ | (5,996 | ) | $ | (55,127 | ) | ||||
(1) | Huntington adopted the updated OTTI provisions on April 1, 2009. Amounts represent activity from adoption date through December 31, 2009. |
Year Ended December 31, | ||||||||
2010 | 2009(1) | |||||||
(Dollar amounts in thousands) | ||||||||
Balance, beginning of year | $ | 124,408 | $ | — | ||||
Reductions from sales | (12,907 | ) | — | |||||
Credit losses not previous recognized | 30,215 | 128,892 | ||||||
Change in expected cash flows | (49,802 | ) | (11,201 | ) | ||||
Additional credit losses | 8,924 | 6,717 | ||||||
Balance, end of year | $ | 100,838 | $ | 124,408 | ||||
(1) | Huntington adopted the updated OTTI provisions on April 1, 2009. Amounts represent activity from adoption date through December 31, 2009. |
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Year Ended December 31, | ||||||||
2010 | 2009(1) | |||||||
(Dollar amounts in thousands) | ||||||||
Balance, beginning of year | $ | 53,801 | $ | — | ||||
Reductions from sales | (12,968 | ) | (1,326 | ) | ||||
Credit losses not previous recognized | 2,381 | 55,127 | ||||||
Additional credit losses | 11,322 | — | ||||||
Balance, end of year | $ | 54,536 | $ | 53,801 | ||||
(1) | Huntington adopted the updated OTTI provisions on April 1, 2009. Amounts represent activity from adoption date through December 31, 2009. |
5. | LOAN SALES AND SECURITIZATIONS |
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Fair Value Method | 2010 | 2009 | ||||||
(Dollar amounts in thousands) | ||||||||
Fair value, beginning of year | $ | 176,427 | $ | 167,438 | ||||
New servicing assets created | — | 23,074 | ||||||
Change in fair value during the period due to: | ||||||||
Time decay(1) | (5,359 | ) | (6,798 | ) | ||||
Payoffs(2) | (32,668 | ) | (38,486 | ) | ||||
Changes in valuation inputs or assumptions(3) | (12,721 | ) | 34,305 | |||||
Other changes | — | (3,106 | ) | |||||
Fair value, end of year | $ | 125,679 | $ | 176,427 | ||||
(1) | Represents decrease in value due to passage of time, including the impact from both regularly scheduled loan principal payments and partial loan paydowns. | |
(2) | Represents decrease in value associated with loans that paid off during the period. | |
(3) | Represents change in value resulting primarily from market-driven changes in interest rates and prepayment spreads. |
Amortization Method | 2010 | 2009 | ||||||
(Dollar amounts in thousands) | ||||||||
Carrying value, beginning of year | $ | 38,165 | $ | — | ||||
New servicing assets created | 41,489 | 40,452 | ||||||
Amortization and other | (9,138 | ) | (2,287 | ) | ||||
Carrying value, end of year | $ | 70,516 | $ | 38,165 | ||||
Fair value, end of year | $ | 87,461 | $ | 43,769 | ||||
Decline in Fair Value Due to | ||||||||||||
10% | 20% | |||||||||||
Adverse | Adverse | |||||||||||
Actual | Change | Change | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Constant prepayment rate | 10.74 | % | $ | (7,235 | ) | $ | (13,311 | ) | ||||
Spread over forward interest rate swap rates | 511 bps | (2,791 | ) | (5,583 | ) |
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2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Carrying value, beginning of year | $ | 12,912 | $ | 1,656 | ||||
New servicing assets created | — | 19,538 | ||||||
Amortization and other | (12,815 | )(1) | (8,282 | ) | ||||
Carrying value, end of year | $ | 97 | $ | 12,912 | ||||
Fair value, end of year | $ | 278 | $ | 14,985 | ||||
(1) | Included a $12.4 million reduction related to the consolidation of the VIE as noted above. |
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6. | ALLOWANCE FOR CREDIT LOSSES |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Allowance for loan and leases losses, beginning of year (ALLL) | $ | 1,482,479 | $ | 900,227 | $ | 578,442 | ||||||
Loan charge-offs | (1,003,907 | ) | (1,561,378 | ) | (806,330 | ) | ||||||
Recoveries of loans previously charged-off | 129,433 | 84,791 | 48,263 | |||||||||
Net loan and lease charge-offs | (874,474 | ) | (1,476,587 | ) | (758,067 | ) | ||||||
Provision for loan and lease losses | 641,299 | 2,069,931 | 1,067,789 | |||||||||
Economic reserve transfer | — | — | 12,063 | |||||||||
Allowance for assets sold and securitized | (296 | ) | (9,188 | ) | — | |||||||
Allowance for loans transferred to loans held for sale | — | (1,904 | ) | — | ||||||||
Allowance for loan and lease losses, end of year | $ | 1,249,008 | $ | 1,482,479 | $ | 900,227 | ||||||
Allowance for unfunded loan commitments and letters of credit, beginning of year (AULC) | $ | 48,879 | $ | 44,139 | $ | 66,528 | ||||||
(Reduction in) provision for unfunded loan commitments and letters of credit losses | (6,752 | ) | 4,740 | (10,326 | ) | |||||||
Economic reserve transfer | — | — | (12,063 | ) | ||||||||
Allowance for unfunded loan commitments and letters of credit, end of year | $ | 42,127 | $ | 48,879 | $ | 44,139 | ||||||
Total allowance for credit losses (ACL) | $ | 1,291,135 | $ | 1,531,358 | $ | 944,366 | ||||||
Recorded balance of impaired loans, at end of year(1): | ||||||||||||
With specific reserves assigned to the loan and lease balances(2) | $ | 825,292 | $ | 873,215 | $ | 1,122,575 | ||||||
With no specific reserves assigned to the loan and lease balances | 94,290 | 221,384 | 75,799 | |||||||||
Total | $ | 919,582 | $ | 1,094,599 | $ | 1,198,374 | ||||||
Average balance of impaired loans for the year(1) | $ | 1,064,235 | $ | 1,010,044 | $ | 1,369,857 | ||||||
Allowance for loan and lease losses on impaired loans(1) | 143,860 | 175,442 | 301,457 |
(1) | 2010 and 2009 includes impaired C&I and CRE loans with outstanding balances greater than $1 million. 2008 includes impaired C&I and CRE loans with outstanding balances greater than $1 million for business-banking loans, and $500,000 for all other loans. A loan is impaired when it is probable that Huntington will be unable to collect all amounts due according to the contractual terms of the loan agreement. The recovery of the investment in impaired loans with no specific reserves generally is expected from the sale of collateral, net of costs to sell that collateral. | |
(2) | As a result of the troubled debt restructuring, the loans to Franklin of $0.7 billion are included in impaired loans at the end of 2008. |
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Commercial | Automobile | |||||||||||||||||||||||||||
and | Commercial | Loans and | Home | Residential | Other | |||||||||||||||||||||||
Industrial | Real Estate | Leases | Equity(1) | Mortgage(2) | Consumer | Total | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Allowance for Loan and Lease Losses: | ||||||||||||||||||||||||||||
Balance at January 1, 2010: | $ | 492,205 | $ | 751,875 | $ | 57,951 | $ | 102,039 | $ | 55,903 | $ | 22,506 | $ | 1,482,479 | ||||||||||||||
Loan charge-offs | (316,771 | ) | (303,995 | ) | (46,308 | ) | (140,831 | ) | (163,427 | ) | (32,575 | ) | (1,003,907 | ) | ||||||||||||||
Recoveries of loans previously charged-off | 61,839 | 28,433 | 19,736 | 1,458 | 10,532 | 7,435 | 129,433 | |||||||||||||||||||||
Provision for loan and lease losses | 103,341 | 111,938 | 18,109 | 187,964 | 190,577 | 29,370 | 641,299 | |||||||||||||||||||||
Allowance for loans sold or transferred to loans held for sale | — | — | — | — | (296 | ) | — | (296 | ) | |||||||||||||||||||
Balance at December 31, 2010: | $ | 340,614 | $ | 588,251 | $ | 49,488 | $ | 150,630 | $ | 93,289 | $ | 26,736 | $ | 1,249,008 | ||||||||||||||
Portion of ending balance: | ||||||||||||||||||||||||||||
Individually evaluated for impairment | $ | 63,307 | $ | 65,130 | $ | 1,477 | $ | 1,498 | $ | 11,780 | $ | 668 | $ | 143,860 | ||||||||||||||
Collectively evaluated for impairment | 277,307 | 523,121 | 48,011 | 149,132 | 81,509 | 26,068 | 1,105,148 | |||||||||||||||||||||
Total ALLL evaluated for impairment | $ | 340,614 | $ | 588,251 | $ | 49,488 | $ | 150,630 | $ | 93,289 | $ | 26,736 | $ | 1,249,008 | ||||||||||||||
ALLL associated with portfolio loans acquired with deteriorated credit quality | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Loans and Leases at December 31, 2010: | ||||||||||||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||||||
Ending balance | $ | 13,063 | $ | 6,651 | $ | 5,615 | $ | 7,713 | $ | 4,500 | $ | 564 | $ | 38,106 | ||||||||||||||
Portion of ending balance: | ||||||||||||||||||||||||||||
Individually evaluated for impairment | 198 | 311 | 30 | 37 | 334 | 10 | 920 | |||||||||||||||||||||
Collectively evaluated for impairment | 12,865 | 6,340 | 5,585 | 7,676 | 4,166 | 554 | 37,186 | |||||||||||||||||||||
Total loans evaluated for impairment | $ | 13,063 | $ | 6,651 | $ | 5,615 | $ | 7,713 | $ | 4,500 | $ | 564 | $ | 38,106 | ||||||||||||||
Portfolio loans acquired with deteriorated credit quality | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Portfolio loans purchased (during 2010) | — | — | — | — | — | — | — | |||||||||||||||||||||
Portfolio loans with ALLL sold or transferred to loans held for sale (during 2010) | — | — | — | — | 311 | — | 311 | |||||||||||||||||||||
Portfolio loans without ALLL sold or transferred to loans held for sale (during 2010)(3) | 124 | 137 | — | 48 | 505 | — | 814 |
(1) | Reflects $21 million of Franklin-related net charge-offs. | |
(2) | Reflects $71 million of Franklin-related net charge-offs. | |
(3) | Reflects $323 million of Franklin-related loans. |
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Credit Risk Profile by UCS classification | ||||||||||||||||||||
Pass | OLEM | Substandard | Doubtful | Total | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||
Owner occupied | $ | 3,265 | $ | 159 | $ | 393 | $ | 6 | $ | 3,823 | ||||||||||
Other commercial and industrial | 8,435 | 265 | 525 | 15 | 9,240 | |||||||||||||||
Total C&I | $ | 11,700 | $ | 424 | $ | 918 | $ | 21 | $ | 13,063 | ||||||||||
Commercial real estate: | ||||||||||||||||||||
Retail properties | $ | 1,284 | $ | 128 | $ | 350 | $ | — | $ | 1,762 | ||||||||||
Multi family | 899 | 79 | 144 | — | 1,122 | |||||||||||||||
Office | 868 | 122 | 133 | — | 1,123 | |||||||||||||||
Industrial and warehouse | 668 | 72 | 113 | — | 853 | |||||||||||||||
Other commercial real estate | 1,221 | 88 | 481 | 1 | 1,791 | |||||||||||||||
Total CRE | $ | 4,940 | $ | 489 | $ | 1,221 | $ | 1 | $ | 6,651 |
Credit Risk Profile by FICO score(1) | ||||||||||||||||||||
750+ | 650-749 | <650 | Other(2) | Total | ||||||||||||||||
Automobile loans and leases | $ | 2,516 | $ | 2,267 | $ | 725 | $ | 107 | $ | 5,615 | ||||||||||
Home equity loans andlines-of-credit: | ||||||||||||||||||||
Secured by first-lien | 1,644 | 1,082 | 314 | 1 | 3,041 | |||||||||||||||
Secured by second-lien | 2,224 | 1,768 | 679 | 1 | 4,672 | |||||||||||||||
Residential mortgage | 1,978 | 1,580 | 796 | 146 | 4,500 | |||||||||||||||
Other consumer loans | 207 | 235 | 102 | 20 | 564 |
(1) | Reflects currently updated customer credit scores. | |
(2) | Reflects deferred fees and costs, loans in process, loans to legal entities, etc. |
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(Dollar amounts in thousands) | ||||
December 31, 2010 | ||||
Commercial and Industrial: | ||||
Owner occupied | $ | 139 | ||
Other commercial and industrial | 208 | |||
Total C&I | $ | 347 | ||
Commercial real estate: | ||||
Retail properties | $ | 97 | ||
Multi family | 45 | |||
Office | 48 | |||
Industrial and warehouse | 40 | |||
Other commercial real estate | 134 | |||
Total CRE | $ | 364 | ||
Automobile loans and leases | $ | — | ||
Home equity loans andlines-of-credit: | ||||
Secured by first-lien | 10 | |||
Secured by second-lien | 12 | |||
Residential mortgage | 45 | |||
Other consumer loans | — | |||
Total nonaccrual loans | $ | 778 | ||
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Total | 90 or More Days | |||||||||||||||||||||||||||
Past Due | Loans and | Past Due and | ||||||||||||||||||||||||||
30-59 Days | 60-89 Days | 90 or More Days | Total | Current | Leases | Accruing | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
December 31, 2010 | ||||||||||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||||||||||
Owner occupied | $ | 16 | $ | 9 | $ | 80 | $ | 105 | $ | 3,718 | $ | 3,823 | $ | — | ||||||||||||||
Other commercial and industrial | 35 | 36 | 110 | 181 | 9,059 | 9,240 | — | |||||||||||||||||||||
Total C&I | $ | 51 | $ | 45 | $ | 190 | $ | 286 | $ | 12,777 | $ | 13,063 | $ | — | ||||||||||||||
Commercial real estate: | ||||||||||||||||||||||||||||
Retail properties | $ | 24 | $ | 1 | $ | 73 | $ | 98 | $ | 1,665 | $ | 1,763 | $ | — | ||||||||||||||
Multi family | 9 | 8 | 32 | 49 | 1,073 | 1,122 | — | |||||||||||||||||||||
Office | 21 | 6 | 36 | 63 | 1,060 | 1,123 | — | |||||||||||||||||||||
Industrial and warehouse | 4 | 8 | 13 | 25 | 828 | 853 | — | |||||||||||||||||||||
Other commercial real estate | 47 | 8 | 90 | 145 | 1,645 | 1,790 | — | |||||||||||||||||||||
Total CRE | $ | 105 | $ | 31 | $ | 244 | $ | 380 | $ | 6,271 | $ | 6,651 | $ | — | ||||||||||||||
Automobile loans and leases | $ | 48 | 12 | $ | 8 | $ | 68 | $ | 5,547 | $ | 5,615 | $ | 8 | |||||||||||||||
Home equity loans andlines-of-credit: | ||||||||||||||||||||||||||||
Secured by first-lien | 15 | 8 | 19 | 42 | 2,999 | 3,041 | 8 | |||||||||||||||||||||
Secured by second-lien | 36 | 17 | 27 | 80 | 4,592 | 4,672 | 16 | |||||||||||||||||||||
Residential mortgage | 115 | 58 | 197 | 370 | 4,130 | 4,500 | 152 | |||||||||||||||||||||
Other consumer loans | 7 | 2 | 3 | 12 | 552 | 564 | 2 |
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Year Ended | ||||||||||||||||||||
December 31, 2010 | December 31, 2010 | |||||||||||||||||||
Unpaid | Interest | |||||||||||||||||||
Ending | Principal | Related | Average | Income | ||||||||||||||||
Balance | Balance | Allowance | Balance | Recognized | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
With no related allowance recorded: | ||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||
Owner occupied | $ | 13.8 | $ | 26.6 | $ | — | $ | 8.5 | $ | — | ||||||||||
Other commercial and industrial | 11.1 | 22.7 | — | 14.0 | 0.1 | |||||||||||||||
Total C&I | $ | 24.9 | $ | 49.3 | $ | — | $ | 22.5 | $ | 0.1 | ||||||||||
Commercial real estate: | ||||||||||||||||||||
Retail properties | $ | 32.0 | $ | 67.5 | $ | — | $ | 43.0 | $ | 0.1 | ||||||||||
Multi family | 5.1 | 5.7 | — | 3.5 | 0.1 | |||||||||||||||
Office | 2.3 | 3.6 | — | 6.8 | — | |||||||||||||||
Industrial and warehouse | 3.3 | 6.9 | — | 7.4 | — | |||||||||||||||
Other commercial real estate | 26.7 | 58.9 | — | 38.0 | 0.2 | |||||||||||||||
Total CRE | $ | 69.4 | $ | 142.6 | $ | — | $ | 98.7 | $ | 0.4 | ||||||||||
Automobile loans and leases | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Home equity loans andlines-of-credit: | ||||||||||||||||||||
Secured by first-lien | — | — | — | — | — | |||||||||||||||
Secured by second-lien | — | — | — | — | — | |||||||||||||||
Residential mortgage | — | — | — | — | — | |||||||||||||||
Other consumer loans | — | — | — | — | — | |||||||||||||||
With an allowance recorded: | ||||||||||||||||||||
Commercial and Industrial: | ||||||||||||||||||||
Owner occupied | $ | 64.0 | $ | 85.3 | $ | 14.3 | $ | 51.6 | $ | 0.1 | ||||||||||
Other commercial and industrial | 109.2 | 154.4 | 49.0 | 156.5 | 0.4 | |||||||||||||||
Total C&I | $ | 173.2 | $ | 239.7 | $ | 63.3 | $ | 208.1 | $ | 0.5 | ||||||||||
Commercial real estate: | ||||||||||||||||||||
Retail properties | $ | 74.7 | $ | 120.1 | $ | 14.8 | $ | 114.3 | $ | 0.8 | ||||||||||
Multi family | 38.8 | 39.3 | 7.8 | 55.4 | 0.4 | |||||||||||||||
Office | 26.6 | 31.3 | 9.5 | 30.3 | — | |||||||||||||||
Industrial and warehouse | 34.6 | 44.2 | 10.5 | 59.0 | 0.3 | |||||||||||||||
Other commercial real estate | 66.6 | 104.4 | 22.5 | 113.4 | — | |||||||||||||||
Total CRE | $ | 241.3 | $ | 339.3 | $ | 65.1 | $ | 372.4 | $ | 1.5 | ||||||||||
Automobile loans and leases | $ | 29.7 | $ | 29.7 | $ | 1.5 | $ | 26.3 | $ | 2.3 | ||||||||||
Home equity loans andlines-of-credit: | ||||||||||||||||||||
Secured by first-lien | 20.5 | 20.6 | 0.5 | 16.7 | 0.7 | |||||||||||||||
Secured by second-lien | 16.7 | 17.1 | 1.0 | 17.1 | 0.6 | |||||||||||||||
Residential mortgage | 334.2 | 347.6 | 11.8 | 293.3 | 12.2 | |||||||||||||||
Other consumer loans | 9.7 | 9.7 | 0.7 | 9.2 | 0.8 |
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7. | GOODWILL AND OTHER INTANGIBLE ASSETS |
Retail & | Auto Finance | |||||||||||||||||||||||||||
Regional | Business | Commercial | & Commercial | Treasury/ | Huntington | |||||||||||||||||||||||
Banking | Banking | Banking | Real Estate | WGH | Other | Consolidated | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Balance, January 1, 2009 | $ | 2,888,344 | $ | — | $ | — | $ | — | $ | 153,178 | $ | 13,463 | $ | 3,054,985 | ||||||||||||||
Impairment, March 31, 2009 | (2,573,818 | ) | — | — | — | (28,895 | ) | — | (2,602,713 | ) | ||||||||||||||||||
Reallocation of goodwill | (314,526 | ) | 309,518 | 5,008 | — | — | — | — | ||||||||||||||||||||
Balance, April 1, 2009 | — | 309,518 | 5,008 | — | 124,283 | 13,463 | 452,272 | |||||||||||||||||||||
Goodwill acquired during the period | — | 620 | — | — | — | — | 620 | |||||||||||||||||||||
Impairment | — | — | — | — | — | (4,231 | ) | (4,231 | ) | |||||||||||||||||||
Other adjustments | — | — | — | — | — | (4,393 | ) | (4,393 | ) | |||||||||||||||||||
Balance, December 31, 2009 | $ | — | $ | 310,138 | $ | 5,008 | $ | — | $ | 124,283 | $ | 4,839 | $ | 444,268 | ||||||||||||||
Reallocation of goodwill | (23,314 | ) | 11,161 | — | (25,332 | ) | 37,485 | — | ||||||||||||||||||||
Balance, December 31, 2010 | $ | — | $ | 286,824 | $ | 16,169 | $ | — | $ | 98,951 | $ | 42,324 | $ | 444,268 | ||||||||||||||
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Gross | Net | |||||||||||
Carrying | Accumulated | Carrying | ||||||||||
Amount | Amortization | Value | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
December 31, 2010 | ||||||||||||
Core deposit intangible | $ | 376,846 | $ | (219,311 | ) | $ | 157,535 | |||||
Customer relationship | 104,574 | (34,751 | ) | 69,823 | ||||||||
Other | 25,164 | (23,902 | ) | 1,262 | ||||||||
Total other intangible assets | $ | 506,584 | $ | (277,964 | ) | $ | 228,620 | |||||
December 31, 2009 | ||||||||||||
Core deposit intangible | $ | 376,846 | $ | (168,651 | ) | $ | 208,195 | |||||
Customer relationship | 104,574 | (26,000 | ) | 78,574 | ||||||||
Other | 26,465 | (24,136 | ) | 2,329 | ||||||||
Total other intangible assets | $ | 507,885 | $ | (218,787 | ) | $ | 289,098 | |||||
Amortization | ||||
Expense | ||||
(Dollar amounts in thousands) | ||||
2011 | $ | 53,325 | ||
2012 | 46,075 | |||
2013 | 40,511 | |||
2014 | 35,858 | |||
2015 | 19,756 |
8. | PREMISES AND EQUIPMENT |
At December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Land and land improvements | $ | 120,069 | $ | 118,875 | ||||
Buildings | 367,003 | 355,352 | ||||||
Leasehold improvements | 204,830 | 194,405 | ||||||
Equipment | 613,301 | 571,307 | ||||||
Total premises and equipment | 1,305,203 | 1,239,939 | ||||||
Less accumulated depreciation and amortization | (813,601 | ) | (743,918 | ) | ||||
Net premises and equipment | $ | 491,602 | $ | 496,021 | ||||
2010 | 2009 | 2008 | ||||||||||
(In thousands) | ||||||||||||
Total depreciation and amortization of premises and equipment | $ | 64,934 | $ | 66,089 | $ | 77,956 | ||||||
Rental income credited to occupancy expense | 10,108 | 11,755 | 12,917 |
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9. | SHORT-TERM BORROWINGS |
At December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Federal funds purchased and securities sold under agreements to repurchase | $ | 1,965,677 | $ | 851,285 | ||||
Commercial paper | 100 | 700 | ||||||
Other borrowings | 74,955 | 24,256 | ||||||
Total short-term borrowings | $ | 2,040,732 | $ | 876,241 | ||||
10. | FEDERAL HOME LOAN BANK ADVANCES |
11. | OTHER LONG-TERM DEBT |
At December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
1.05% The Huntington National Bank medium-term notes due through 2018(1) | $ | 638,950 | $ | 788,397 | ||||
0.93% Securitization trust notes payable due through 2013(2) | 877,270 | 1,059,249 | ||||||
4.52% Securitization trust note payable due 2014(3) | 356,089 | — | ||||||
5.10% Securitization trust note payable due 2018(4) | 151,937 | 391,954 | ||||||
2.61% Class B preferred securities of subsidiary, no maturity(5) | 65,000 | — | ||||||
7.88% Class C preferred securities of subsidiary, no maturity | 50,000 | 50,000 | ||||||
Franklin 2009 Trust liability(6) | 4,846 | 79,891 | ||||||
Total other long-term debt | $ | 2,144,092 | $ | 2,369,491 | ||||
(1) | Bank notes had fixed rates and variable rates with a weighted-average interest rate of 1.05% at December 31, 2010. | |
(2) | Variable effective rate at December 31, 2010, based on one month LIBOR + 0.67 or 0.93%. | |
(3) | Combination of fixed rates with a weighted average rate at December 31, 2010 of 4.52%. | |
(4) | Combination of fixed and variable rates with a weighted average interest rate of 5.10% at December 31, 2010. | |
(5) | Variable effective rate at December 31, 2010, based on one month LIBOR + 2.35 or 2.61%. | |
(6) | Franklin 2009 Trust liability was a result of the consolidation of Franklin 2009 Trust on March 31, 2009. |
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Other Long-Term | ||||
Debt Maturities | ||||
(Dollar amounts in thousands) | ||||
2011 | $ | 4,846 | ||
2012 | 661,847 | |||
2013 | 328,048 | |||
2014 | 108,377 | |||
2015 | — | |||
and thereafter | 1,027,270 |
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12. | SUBORDINATED NOTES |
At December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Parent company: | ||||||||
6.21% subordinated notes due 2013 | $ | 49,095 | $ | 48,732 | ||||
7.00% subordinated notes due 2020 | 308,289 | — | ||||||
0.99% junior subordinated debentures due 2027(1) | 138,816 | 138,816 | ||||||
0.93% junior subordinated debentures due 2028(2) | 60,093 | 60,093 | ||||||
8.54% junior subordinated debentures due 2029 | 23,248 | 23,299 | ||||||
8.52% junior subordinated debentures due 2030 | 64,474 | 64,971 | ||||||
3.52% junior subordinated debentures due 2033(3) | 30,929 | 30,929 | ||||||
3.54% junior subordinated debentures due 2033(4) | 6,186 | 6,186 | ||||||
1.28% junior subordinated debentures due 2036(5) | 77,481 | 77,809 | ||||||
1.27% junior subordinated debentures due 2036(5) | 77,482 | 77,810 | ||||||
6.69% junior subordinated debentures due 2067(6) | 114,072 | 114,045 | ||||||
The Huntington National Bank: | ||||||||
8.18% subordinated notes due 2010 | — | 84,144 | ||||||
6.21% subordinated notes due 2012 | 64,909 | 64,861 | ||||||
5.00% subordinated notes due 2014 | 136,639 | 133,930 | ||||||
5.59% subordinated notes due 2016 | 112,420 | 112,385 | ||||||
6.67% subordinated notes due 2018 | 147,071 | 144,202 | ||||||
5.45% subordinated notes due 2019 | 86,012 | 81,990 | ||||||
Total subordinated notes | $ | 1,497,216 | $ | 1,264,202 | ||||
(1) | Variable effective rate at December 31, 2010, based on three month LIBOR + 0.70. | |
(2) | Variable effective rate at December 31, 2010, based on three month LIBOR + 0.625. | |
(3) | Variable effective rate at December 31, 2010, based on three month LIBOR + 2.95. | |
(4) | Variable effective rate at December 31, 2010, based on three month LIBOR + 3.25. | |
(5) | Variable effective rate at December 31, 2010, based on three month LIBOR + 1.40. | |
(6) | The junior subordinated debentures due 2067 are subordinate to all other junior subordinated debentures. |
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13. | OTHER COMPREHENSIVE INCOME |
2010 | ||||||||||||
Tax (Expense) | ||||||||||||
Pretax | Benefit | After-Tax | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Cumulative effect of change in accounting principle for consolidation of variable interest entities | $ | (6,365 | ) | $ | 2,116 | $ | (4,249 | ) | ||||
Non credit related impairment recoveries (losses) on debt securities not expected to be sold | 23,569 | (8,249 | ) | 15,320 | ||||||||
Unrealized holding gains (losses) onavailable-for-sale debt securities arising during the period | (14,498 | ) | 5,019 | (9,479 | ) | |||||||
Less: Reclassification adjustment for net losses (gains) included in net income | 274 | (96 | ) | 178 | ||||||||
Net change in unrealized holding gains (losses) onavailable-for-sale debt securities | 9,345 | (3,326 | ) | 6,019 | ||||||||
Net change in unrealized holding gains (losses) onavailable-for-sale equity securities | (162 | ) | 57 | (105 | ) | |||||||
Unrealized gains and losses on derivatives used in cash flow hedging relationships arising during the period | (35,623 | ) | 12,468 | (23,155 | ) | |||||||
Change in pension and post-retirement benefit plan assets and liabilities | (29,263 | ) | 10,242 | (19,021 | ) | |||||||
Total other comprehensive (loss) income | $ | (62,068 | ) | $ | 21,557 | $ | (40,511 | ) | ||||
2009 | ||||||||||||
Tax (Expense) | ||||||||||||
Pretax | Benefit | After-Tax | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Cumulative effect of change in accounting principle for OTTI debt securities | $ | (5,448 | ) | $ | 1,907 | $ | (3,541 | ) | ||||
Non credit related impairment (losses) recoveries on debt securities not expected to be sold | (124,408 | ) | 43,543 | (80,865 | ) | |||||||
Unrealized holding gains (losses) onavailable-for-sale debt securities arising during the period | 280,789 | (98,678 | ) | 182,111 | ||||||||
Less: Reclassification adjustment for net losses (gains) included in net income | 10,249 | (3,587 | ) | 6,662 | ||||||||
Net change in unrealized holding gains (losses) onavailable-for-sale debt securities | 166,630 | (58,722 | ) | 107,908 | ||||||||
Net change in unrealized holding gains (losses) onavailable-for-sale equity securities | 10 | (3 | ) | 7 | ||||||||
Unrealized gains and losses on derivatives used in cash flow hedging relationships arising during the period | 21,888 | (7,661 | ) | 14,227 | ||||||||
Change in pension and post-retirement benefit plan assets and liabilities | 78,626 | (27,519 | ) | 51,107 | ||||||||
Total other comprehensive income (loss) | $ | 261,706 | $ | (91,998 | ) | $ | 169,708 | |||||
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2008 | ||||||||||||
Tax (Expense) | ||||||||||||
Pretax | Benefit | After-Tax | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Unrealized holding (losses) gains onavailable-for-sale debt securities arising during the period | $ | (502,756 | ) | $ | 177,040 | $ | (325,716 | ) | ||||
Less: Reclassification adjustment for net losses (gains) included in net income | 197,370 | (69,080 | ) | 128,290 | ||||||||
Net change in unrealized holding (losses) gains onavailable-for-sale debt securities | (305,386 | ) | 107,960 | (197,426 | ) | |||||||
Net change in unrealized holding (losses) gains onavailable-for-sale equity securities | (490 | ) | 171 | (319 | ) | |||||||
Unrealized gains and losses on derivatives used in cash flow hedging relationships arising during the period | 61,669 | (21,584 | ) | 40,085 | ||||||||
Cumulative effect of changing measurement date provisions for pension and post-retirement assets and obligations | (5,898 | ) | 2,064 | (3,834 | ) | |||||||
Change in pension and post-retirement benefit plan assets and liabilities | (177,828 | ) | 62,240 | (115,588 | ) | |||||||
Total other comprehensive (loss) income | $ | (427,933 | ) | $ | 150,851 | $ | (277,082 | ) | ||||
Unrealized | Unrealized | |||||||||||||||||||
Gains and | Gains (Losses) | |||||||||||||||||||
Unrealized | Unrealized | (Losses) on | for Pension | |||||||||||||||||
Gains and | Gains and | Cash Flow | and Other | |||||||||||||||||
(Losses) on Debt | (Losses) on | Hedging | Post-Retirement | |||||||||||||||||
Securities | Equity securities | Derivatives | Obligations | Total | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Balance, January 1, 2008 | $ | (10,001 | ) | $ | (10 | ) | $ | 4,553 | $ | (44,153 | ) | $ | (49,611 | ) | ||||||
Cumulative effect of change in measurement date provisions for pension and post-retirement assets and obligations, net of tax | — | — | — | (3,834 | ) | (3,834 | ) | |||||||||||||
Period change | (197,426 | ) | (319 | ) | 40,085 | (115,588 | ) | (273,248 | ) | |||||||||||
Balance, December 31, 2008 | (207,427 | ) | (329 | ) | 44,638 | (163,575 | ) | (326,693 | ) | |||||||||||
Cumulative effect of change in accounting principle for OTTI debt securities, net of tax | (3,541 | ) | — | — | — | (3,541 | ) | |||||||||||||
Period change | 107,908 | 7 | 14,227 | 51,107 | 173,249 | |||||||||||||||
Balance, December 31, 2009 | (103,060 | ) | (322 | ) | 58,865 | (112,468 | ) | (156,985 | ) | |||||||||||
Cumulative effect of change in accounting principle for consolidation of variable interest entities, net of tax | (4,249 | ) | — | — | — | (4,249 | ) | |||||||||||||
Period change | 6,019 | (105 | ) | (23,155 | ) | (19,021 | ) | (36,262 | ) | |||||||||||
Balance, December 31, 2010 | $ | (101,290 | ) | $ | (427 | ) | $ | 35,710 | $ | (131,489 | ) | $ | (197,496 | ) | ||||||
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14. | SHAREHOLDERS’ EQUITY |
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15. | EARNINGS (LOSS) PER SHARE |
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands, except per share amounts) | ||||||||||||
Basic earnings (loss) per common share: | ||||||||||||
Net income (loss) | $ | 312,347 | $ | (3,094,179 | ) | $ | (113,806 | ) | ||||
Preferred stock dividends, deemed dividends and accretion of discount | (172,032 | ) | (174,756 | ) | (46,400 | ) | ||||||
Net income (loss) available to common shareholders | $ | 140,315 | $ | (3,268,935 | ) | $ | (160,206 | ) | ||||
Average common shares issued and outstanding | 726,934 | 532,802 | 366,155 | |||||||||
Basic earnings (loss) per common share | $ | 0.19 | $ | (6.14 | ) | $ | (0.44 | ) | ||||
Diluted earnings (loss) per common share | ||||||||||||
Net income (loss) available to common shareholders | $ | 140,315 | $ | (3,268,935 | ) | $ | (160,206 | ) | ||||
Effect of assumed preferred stock conversion | — | — | — | |||||||||
Net income (loss) applicable to diluted earnings per share | $ | 140,315 | $ | (3,268,935 | ) | $ | (160,206 | ) | ||||
Average common shares issued and outstanding | 726,934 | 532,802 | 366,155 | |||||||||
Dilutive potential common shares: | ||||||||||||
Stock options and restricted stock units and awards | 1,722 | — | — | |||||||||
Shares held in deferred compensation plans | 876 | — | — | |||||||||
Conversion of preferred stock | — | — | — | |||||||||
Dilutive potential common shares: | 2,598 | — | — | |||||||||
Total diluted average common shares issued and outstanding | 729,532 | 532,802 | 366,155 | |||||||||
Diluted earnings (loss) per common share | $ | 0.19 | $ | (6.14 | ) | $ | (0.44 | ) |
16. | SHARE-BASED COMPENSATION |
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2010 | 2009 | 2008 | ||||||||||
Assumptions | ||||||||||||
Risk-free interest rate | 2.30 | % | 2.70 | % | 3.41 | % | ||||||
Expected dividend yield | 0.68 | 0.96 | 5.28 | |||||||||
Expected volatility of Huntington’s common stock | 38.5 | 51.8 | 34.8 | |||||||||
Expected option term (years) | 6.0 | 6.0 | 6.0 | |||||||||
Weighted-average grant date fair value per share | $ | 2.20 | $ | 1.95 | $ | 1.54 |
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Share-based compensation expense | $ | 15,453 | $ | 8,492 | $ | 14,142 | ||||||
Tax benefit | 5,408 | 2,972 | 4,950 |
Weighted- | ||||||||||||||||
Weighted- | Average | |||||||||||||||
Average | Remaining | Aggregate | ||||||||||||||
Exercise | Contractual | Intrinsic | ||||||||||||||
Options | Price | Life (Years) | Value | |||||||||||||
(Amounts in thousands, except years and per share amounts) | ||||||||||||||||
Outstanding at January 1, 2010 | 23,722 | $ | 17.21 | |||||||||||||
Granted | 2,694 | 6.00 | ||||||||||||||
Exercised | (61 | ) | 3.85 | |||||||||||||
Forfeited/expired | (4,493 | ) | 16.74 | |||||||||||||
Outstanding at December 31, 2010 | 21,862 | $ | 15.96 | 3.0 | $ | 9,533 | ||||||||||
Vested and expected to vest at December 31, 2010(1) | 20,367 | $ | 16.73 | 2.8 | $ | 7,392 | ||||||||||
Exercisable at December 31, 2010 | 16,829 | $ | 19.11 | 2.1 | $ | 2,110 | ||||||||||
(1) | The number of options expected to vest includes an estimate of expected forfeitures. |
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Weighted- | Weighted- | |||||||||||||||
Average | Average | |||||||||||||||
Restricted | Grant Date | Restricted | Grant Date | |||||||||||||
Stock | Fair Value | Stock | Fair Value | |||||||||||||
Units | per Share | Awards(1) | per Share | |||||||||||||
(Amounts in thousands, except per share amounts) | ||||||||||||||||
Nonvested at January 1, 2010 | 2,717 | $ | 7.50 | 175 | $ | 3.45 | ||||||||||
Granted | 3,420 | 6.19 | 368 | 5.77 | ||||||||||||
Vested | (448 | ) | 18.90 | (77 | ) | 3.71 | ||||||||||
Forfeited | (178 | ) | 7.02 | — | — | |||||||||||
Nonvested at December 31, 2010 | 5,511 | $ | 5.78 | 466 | $ | 5.24 | ||||||||||
(1) | Includes restricted stock awards granted under the Amended and Restated 2007 Stock and Long-Term Incentive Plan to certain executives as a portion of their annual base salary. These awards are 100% vested as of the grant date and are not subject to any requirement of future service. However, the shares are subject to restrictions regarding sale, transfer, pledge, or disposition until certain conditions are met. |
Options Outstanding | ||||||||||||||||||||
Weighted- | Exercisable Options | |||||||||||||||||||
Average | Weighted- | Weighted- | ||||||||||||||||||
Remaining | Average | Average | ||||||||||||||||||
Range of | Contractual | Exercise | Exercise | |||||||||||||||||
Exercise Prices | Shares | Life (Years) | Price | Shares | Price | |||||||||||||||
(Amounts in thousands, except years and per share amounts) | ||||||||||||||||||||
$1.28 to $6.31 | 5,344 | 5.9 | $ | 5.09 | 783 | $ | 4.18 | |||||||||||||
$6.32 to $18.15 | 5,133 | 2.0 | 14.27 | 4,662 | 15.00 | |||||||||||||||
$18.16 to $20.41 | 4,897 | 2.3 | 19.99 | 4,898 | 19.99 | |||||||||||||||
$20.42 to $25.01 | 6,488 | 1.8 | 23.20 | 6,486 | 23.20 | |||||||||||||||
Total | 21,862 | 3.0 | $ | 15.96 | 16,829 | $ | 19.11 | |||||||||||||
17. | INCOME TAXES |
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2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Unrecognized tax benefits at beginning of year | $ | 17,214 | $ | — | ||||
Gross increases for tax positions taken during prior years | 32,292 | 10,750 | ||||||
Gross increases for tax positions taken during the current years | — | 6,464 | ||||||
Unrecognized tax benefits at end of year | $ | 49,506 | $ | 17,214 | ||||
Year Ended December 31, | ||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Current tax provision (benefit) | ||||||||||||||||
Federal | $ | 40,675 | $ | (326,659 | ) | $ | (30,164 | ) | ||||||||
State | 29,539 | 9,860 | (102 | ) | ||||||||||||
Total current tax provision (benefit) | 70,214 | (316,799 | ) | (30,266 | ) | |||||||||||
Deferred tax provision (benefit) | ||||||||||||||||
Federal | (30,243 | ) | (267,872 | ) | (152,306 | ) | ||||||||||
State | (7 | ) | 667 | 370 | ||||||||||||
Total deferred tax provision (benefit) | (30,250 | ) | (267,205 | ) | (151,936 | ) | ||||||||||
Provision (benefit) for income taxes | $ | 39,964 | $ | (584,004 | ) | $ | (182,202 | ) | ||||||||
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Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Provision (benefit) for income taxes computed at the statutory rate | $ | 123,310 | $ | (1,287,364 | ) | $ | (103,603 | ) | ||||
Increases (decreases): | ||||||||||||
Tax-exempt interest income | (6,680 | ) | (5,561 | ) | (12,484 | ) | ||||||
Tax-exempt bank owned life insurance income | (20,595 | ) | (19,205 | ) | (19,172 | ) | ||||||
Asset securitization activities | 46,160 | (3,179 | ) | (14,198 | ) | |||||||
Federal tax loss carryforward /carryback | — | (12,847 | ) | (12,465 | ) | |||||||
General business credits | (23,360 | ) | (17,602 | ) | (10,481 | ) | ||||||
Reversals of valuation allowance | (899 | ) | — | (7,101 | ) | |||||||
Capital loss | (62,681 | ) | — | — | ||||||||
Loan acquisitions | (43,650 | ) | (159,895 | ) | — | |||||||
Goodwill impairment | — | 908,263 | — | |||||||||
State income taxes, net | 19,196 | 6,842 | 289 | |||||||||
Other, net | 9,163 | 6,544 | (2,987 | ) | ||||||||
Provision (benefit) for income taxes | $ | 39,964 | $ | (584,004 | ) | $ | (182,202 | ) | ||||
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At December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Deferred tax assets: | ||||||||
Allowances for credit losses | $ | 457,692 | $ | 555,276 | ||||
Loss and other carryforwards | 262,504 | 19,211 | ||||||
Fair value adjustments | 106,855 | 123,860 | ||||||
Accrued expense/prepaid | 39,685 | 42,478 | ||||||
Purchase accounting adjustments | 11,773 | — | ||||||
Pension and other employee benefits | 5,671 | 1,009 | ||||||
Loan acquisitions | 605 | 159,895 | ||||||
Other | 19,704 | 4,738 | ||||||
Total deferred tax assets | 904,489 | 906,467 | ||||||
Deferred tax liabilities: | ||||||||
Lease financing | 87,735 | 154,088 | ||||||
Securities adjustments | 66,090 | 57,700 | ||||||
Purchase accounting adjustments | 65,787 | 70,820 | ||||||
Mortgage servicing rights | 43,541 | 62,867 | ||||||
Loan origination costs | 43,182 | 39,004 | ||||||
Operating assets | 15,161 | 15,163 | ||||||
Partnership investments | 8,429 | 13,563 | ||||||
Other | 4,441 | 11,832 | ||||||
Total deferred tax liabilities | 334,366 | 425,037 | ||||||
Net deferred tax asset before valuation allowance | 570,123 | 481,430 | ||||||
Valuation allowance | (31,817 | ) | (899 | ) | ||||
Net deferred tax asset | $ | 538,306 | $ | 480,531 | ||||
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18. | BENEFIT PLANS |
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Pension | Post-Retirement | |||||||||||||||
Benefits | Benefits | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Weighted-average assumptions used to determine benefit obligations | ||||||||||||||||
Discount rate | 5.35 | % | 5.88 | % | 5.00 | % | 5.54 | % | ||||||||
Rate of compensation increase | 4.50 | 4.50 | N/A | N/A | ||||||||||||
Weighted-average assumptions used to determine net periodic benefit cost | ||||||||||||||||
Discount rate: | ||||||||||||||||
2010 | 5.88 | % | N/A | % | 5.54 | % | N/A | % | ||||||||
January 1, 2009 through October 31, 2009 | N/A | 6.17 | N/A | 6.17 | ||||||||||||
November 1, 2009 through December 31, 2009 | N/A | 5.83 | N/A | 5.46 | ||||||||||||
Expected return on plan assets | 8.00 | 8.00 | N/A | N/A | ||||||||||||
Rate of compensation increase | 4.50 | 4.00 | N/A | N/A |
Post-Retirement | ||||||||||||||||
Pension Benefits | Benefits | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Projected benefit obligation at beginning of measurement year | $ | 504,859 | $ | 469,696 | $ | 33,173 | $ | 60,433 | ||||||||
Changes due to: | ||||||||||||||||
Service cost | 20,205 | 23,692 | — | 1,550 | ||||||||||||
Interest cost | 28,869 | 28,036 | 1,731 | 3,274 | ||||||||||||
Benefits paid | (11,367 | ) | (9,233 | ) | (5,103 | ) | (5,285 | ) | ||||||||
Settlements | (20,582 | ) | (12,071 | ) | — | — | ||||||||||
Effect of plan combinations | 896 | 24,411 | — | — | ||||||||||||
Plan amendments | — | (45,413 | ) | —— | (25,947 | ) | ||||||||||
Plan curtailments | — | — | — | (527 | ) | |||||||||||
Medicare subsidies | — | — | 753 | 550 | ||||||||||||
Actuarial assumptions and gains and losses | 54,890 | 25,741 | 3,687 | (875 | ) | |||||||||||
Total changes | 72,911 | 35,163 | 1,068 | (27,260 | ) | |||||||||||
Projected benefit obligation at end of measurement year | $ | 577,770 | $ | 504,859 | $ | 34,241 | $ | 33,173 | ||||||||
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Pension Benefits | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Fair value of plan assets at beginning of measurement year | $ | 454,114 | $ | 407,079 | ||||
Changes due to: | ||||||||
Actual return on plan assets | 55,583 | 51,202 | ||||||
Employer contributions | 79 | — | ||||||
Settlements | (20,911 | ) | (12,394 | ) | ||||
Plan combinations | 981 | 17,460 | ||||||
Benefits paid | (11,367 | ) | (9,233 | ) | ||||
Total changes | 24,365 | 47,035 | ||||||
Fair value of plan assets at end of measurement year | $ | 478,479 | $ | 454,114 | ||||
Pension Benefits | Post-Retirement Benefits | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||
Service cost | $ | 20,205 | $ | 23,692 | $ | 23,680 | $ | — | $ | 1,550 | $ | 1,679 | ||||||||||||
Interest cost | 28,869 | 28,036 | 26,804 | 1,731 | 3,274 | 3,612 | ||||||||||||||||||
Expected return on plan assets | (42,113 | ) | (41,960 | ) | (39,145 | ) | — | — | — | |||||||||||||||
Amortization of transition asset | 5 | 6 | 5 | — | 920 | 1,104 | ||||||||||||||||||
Amortization of prior service cost | (5,766 | ) | (553 | ) | 314 | (1,353 | ) | 91 | 379 | |||||||||||||||
Amortization of loss | 14,989 | 8,689 | — | (699 | ) | (888 | ) | (1,095 | ) | |||||||||||||||
Curtailments | — | — | — | — | (527 | ) | — | |||||||||||||||||
Settlements | 9,694 | 6,213 | 7,099 | — | — | — | ||||||||||||||||||
Recognized net actuarial loss | — | — | 3,550 | — | — | — | ||||||||||||||||||
Benefit cost | $ | 25,883 | $ | 24,123 | $ | 22,307 | $ | (321 | ) | $ | 4,420 | $ | 5,679 | |||||||||||
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Fair Value | ||||||||||||||||
2010 | 2009 | |||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Cash | $ | — | — | % | $ | — | — | % | ||||||||
Cash equivalents: | ||||||||||||||||
Huntington funds — money market | 25 | — | 11,304 | 2 | ||||||||||||
Other | — | — | 2,777 | 1 | ||||||||||||
Fixed income: | ||||||||||||||||
Huntington funds — fixed income funds | 133,330 | 28 | 125,323 | 28 | ||||||||||||
Corporate obligations | — | — | 1,315 | — | ||||||||||||
U.S. Government Agencies | — | — | 497 | — | ||||||||||||
Equities: | ||||||||||||||||
Huntington funds | 318,155 | 66 | 288,074 | 64 | ||||||||||||
Other — equity mutual funds | — | — | 122 | |||||||||||||
Huntington common stock | 26,969 | 6 | 14,347 | 3 | ||||||||||||
Other common stock | — | — | 10,355 | 2 | ||||||||||||
Fair value of plan assets | $ | 478,479 | 100 | % | $ | 454,114 | 100 | % | ||||||||
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Post- | ||||||||
Pension | Retirement | |||||||
Benefits | Benefits | |||||||
(Dollar amounts in thousands) | ||||||||
2011 | $ | 31,319 | $ | 4,577 | ||||
2012 | 33,983 | 4,393 | ||||||
2013 | 35,462 | 4,221 | ||||||
2014 | 37,018 | 4,050 | ||||||
2015 | 38,905 | 3,891 | ||||||
2016 through 2020 | 214,900 | 17,140 |
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Accrued expenses and other liabilities | $ | 156,551 | $ | 106,738 |
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Net actuarial loss | $ | (166,183 | ) | $ | (151,564 | ) | $ | (156,762 | ) | |||
Prior service cost | 34,688 | 39,093 | (4,123 | ) | ||||||||
Transition liability | 6 | 3 | (2,690 | ) | ||||||||
Defined benefit pension plans | $ | (131,489 | ) | $ | (112,468 | ) | $ | (163,575 | ) | |||
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2010 | ||||||||||||
Tax (Expense) | ||||||||||||
Pretax | Benefit | After-tax | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Balance, beginning of year | $ | (173,029 | ) | $ | 60,561 | $ | (112,468 | ) | ||||
Net actuarial (loss) gain: | ||||||||||||
Amounts arising during the year | (45,804 | ) | 16,031 | (29,773 | ) | |||||||
Amortization included in net periodic benefit costs | 23,313 | (8,159 | ) | 15,154 | ||||||||
Prior service cost: | ||||||||||||
Amounts arising during the year | — | — | — | |||||||||
Amortization included in net periodic benefit costs | (6,777 | ) | 2,372 | (4,405 | ) | |||||||
Transition obligation: | ||||||||||||
Amounts arising during the year | — | — | — | |||||||||
Amortization included in net periodic benefit costs | 5 | (2 | ) | 3 | ||||||||
Balance, end of year | $ | (202,292 | ) | $ | 70,803 | $ | (131,489 | ) | ||||
2009 | ||||||||||||
Tax (Expense) | ||||||||||||
Pretax | Benefit | After-tax | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Balance, beginning of year | $ | (251,655 | ) | $ | 88,080 | $ | (163,575 | ) | ||||
Net actuarial (loss) gain: | ||||||||||||
Amounts arising during the year | (6,155 | ) | 2,154 | (4,001 | ) | |||||||
Amortization included in net periodic benefit costs | 14,153 | (4,954 | ) | 9,199 | ||||||||
Prior service cost: | ||||||||||||
Amounts arising during the year | 69,986 | (24,494 | ) | 45,492 | ||||||||
Amortization included in net periodic benefit costs | (283 | ) | 99 | (184 | ) | |||||||
Transition obligation: | ||||||||||||
Amounts arising during the year | — | — | — | |||||||||
Amortization included in net periodic benefit costs | 925 | (324 | ) | 601 | ||||||||
Balance, end of year | $ | (173,029 | ) | $ | 60,561 | $ | (112,468 | ) | ||||
2008 | ||||||||||||
Tax (Expense) | ||||||||||||
Pretax | Benefit | After-tax | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Balance, beginning of year | $ | (67,928 | ) | $ | 23,775 | $ | (44,153 | ) | ||||
Impact of change in measurement date | (1,485 | ) | 520 | (965 | ) | |||||||
Net actuarial (loss) gain: | ||||||||||||
Amounts arising during the year | (186,922 | ) | 65,423 | (121,499 | ) | |||||||
Amortization included in net periodic benefit costs | 2,608 | (913 | ) | 1,695 | ||||||||
Prior service cost: | ||||||||||||
Amortization included in net periodic benefit costs | 964 | (337 | ) | 627 | ||||||||
Transition obligation: | ||||||||||||
Amounts arising during the year | (1 | ) | — | (1 | ) | |||||||
Amortization included in net periodic benefit costs | 1,109 | (388 | ) | 721 | ||||||||
Balance, end of year | $ | (251,655 | ) | $ | 88,080 | $ | (163,575 | ) | ||||
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19. | FAIR VALUES OF ASSETS AND LIABILITIES |
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Financial Instrument(1) | Hierarchy | Valuation methodology | ||||
Mortgage loans held for sale | Level 2 | Huntington elected to apply the fair value option for mortgage loans originated with the intent to sell which are included in loans held for sale. Mortgage loans held for sale are estimated using security prices for similar product types. At December 31, 2010, mortgage loans held for sale had an aggregate fair value of $754.1 million and an aggregate outstanding principal balance of $750.0 million. Interest income on these loans is recorded in interest and fee income - loans and leases. Included in mortgage banking income were net gains resulting from origination and sale of these loans, including net realized gains of $109.2 million, $90.6 million, and $32.2 million for the years ended December 31, 2010, 2009, and 2008, respectively. Of such gains, the change in fair value while held as loans were $(5.6) million, $(6.3) million and $6.6 million for the years ended December 31, 2010, 2009, and 2008, respectively. | ||||
Available-for-sale Securities & Trading Account Securities(2) | Level 1 | Consist primarily of U.S. Treasury and money market mutual funds, which generally have quoted prices. | ||||
Level 2 | Consist of U.S. Government and agency mortgage-backed and other federal agency securities, municipal securities, and other securities for which an active market is not available. Third party pricing services provide a fair value estimate based upon trades of similar financial instruments. | |||||
Level 3 | Consist of certain asset-backed securities, pooled-trust-preferred securities, private-label CMOs, and municipal securities for which fair value is estimated. Assumptions used to determine the fair value of these securities have greater subjectivity due to the lack of observable market transactions. Generally, there are only limited trades of similar instruments and a discounted cash flow approach is used to determine fair value. |
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Financial Instrument(1) | Hierarchy | Valuation methodology | ||||
Automobile loans(3) | Level 3 | Consists of automobile loan receivables measured at fair value. The key assumptions used to determine the fair value of the automobile loan receivables included projections of expected losses and prepayment of the underlying loans in the portfolio and a market assumption of interest rate spreads. The net gains and losses, before tax, from fair value changes reflected in earnings for the year ended December 31, 2010 was a net loss of $2.3 million which is net of a $3.4 million net gain associated with instrument specific credit risk. Instrument specific credit risk was determined based on estimated credit losses inherent in the January 1, 2010 fair value calculation as compared to actual credit losses incurred in 2010 plus estimated credit losses inherent in the December 31, 2010 fair value calculation. | ||||
MSRs(3) | Level 3 | MSRs do not trade in an active, open market with readily observable prices. Although sales of MSRs do occur, the precise terms and conditions typically are not readily available. Fair value is determined on an income approach model based upon month-end interest rate curve and prepayment assumptions. | ||||
Derivatives(4) | Level 1 | Consist of exchange traded options and forward commitments to deliver mortgage-backed securities which are valued using quoted prices. | ||||
Level 2 | Consist of basic asset and liability conversion swaps and options, and interest rate caps. These derivative positions are valued using a discounted cash flow method that incorporates current market interest rates. | |||||
Level 3 | Consist primarily of interest rate lock agreements related to mortgage loan commitments. The determination of fair value includes assumptions related to the likelihood that a commitment will ultimately result in a closed loan, which is a significant unobservable assumption. | |||||
Securitization trust notes payable(4) | Level 2 | Consists of certain securitization trust notes payable related to the automobile loans measured at fair value. The notes payable are valued based on interest rates for similar financial instruments. The change in fair value for the year ended December 31, 2010 was $9.6 million. |
(1) | Refer to Note 1 for additional information. | |
(2) | Refer to Note 4 for additional information. | |
(3) | Refer to Note 5 for additional information. | |
(4) | Refer to Note 20 for additional information. |
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Balance at | ||||||||||||||||||||
Fair Value Measurements at Reporting Date Using | Netting | December 31, | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Adjustments(1) | 2010 | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 754,117 | $ | — | $ | — | $ | 754,117 | ||||||||||
Trading account securities: | ||||||||||||||||||||
U.S. Treasury securities | 47,430 | — | — | — | 47,430 | |||||||||||||||
Federal agencies: Mortgage-backed | — | 10,860 | — | — | 10,860 | |||||||||||||||
Federal agencies: Other agencies | — | 24,853 | — | — | 24,853 | |||||||||||||||
Municipal securities | — | 30,205 | — | — | 30,205 | |||||||||||||||
Other securities | 69,017 | 3,039 | — | — | 72,056 | |||||||||||||||
116,447 | 68,957 | — | — | 185,404 | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||
U.S. Treasury securities | 51,781 | — | — | — | 51,781 | |||||||||||||||
Federal agencies: Mortgage-backed | — | 4,754,404 | — | — | 4,754,404 | |||||||||||||||
TLGP securities | — | 183,467 | — | — | 183,467 | |||||||||||||||
Federal agencies: Other agencies | — | 2,058,376 | — | — | 2,058,376 | |||||||||||||||
Municipal securities | — | 305,909 | 149,806 | — | 455,715 | |||||||||||||||
Private-label CMO | — | — | 121,925 | — | 121,925 | |||||||||||||||
Asset-backed securities | — | 1,044,438 | 162,684 | — | 1,207,122 | |||||||||||||||
Other securities | 53,286 | 700,446 | — | — | 753,732 | |||||||||||||||
105,067 | 9,047,040 | 434,415 | — | 9,586,522 | ||||||||||||||||
Automobile loans | — | — | 522,717 | — | 522,717 | |||||||||||||||
MSRs | — | — | 125,679 | — | 125,679 | |||||||||||||||
Derivative assets | 23,514 | 390,361 | 2,817 | (70,559 | ) | 346,133 | ||||||||||||||
Liabilities | ||||||||||||||||||||
Securitization trust notes payable | — | 356,089 | — | — | 356,089 | |||||||||||||||
Derivative liabilities | 3,990 | 233,399 | 1,851 | — | 239,240 |
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Balance at | ||||||||||||||||||||
Fair Value Measurements at Reporting Date Using | Netting | December 31, | ||||||||||||||||||
Level 1 | Level 2 | Level 3 | Adjustments (1) | 2009 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Mortgage loans held for sale | $ | — | $ | 459,719 | $ | — | $ | — | $ | 459,719 | ||||||||||
Trading account securities: | ||||||||||||||||||||
U.S. Treasury securities | ||||||||||||||||||||
Federal agencies: Mortgage-backed | 75 | 18,150 | — | — | 18,225 | |||||||||||||||
Municipal securities | — | 5,234 | — | — | 5,234 | |||||||||||||||
Other securities | 55,934 | 4,264 | — | — | 60,198 | |||||||||||||||
56,009 | 27,648 | — | — | 83,657 | ||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||
U.S. Treasury securities | 99,154 | — | — | — | 99,154 | |||||||||||||||
Federal agencies: Mortgage-backed | — | 3,480,108 | — | — | 3,480,108 | |||||||||||||||
TLGP securities | 260,388 | — | — | — | 260,388 | |||||||||||||||
Federal agencies: Other agencies | 2,698,316 | 28,687 | — | — | 2,727,003 | |||||||||||||||
Municipal securities | — | 113,270 | 11,515 | — | 124,785 | |||||||||||||||
Private-label CMO | — | — | 477,319 | — | 477,319 | |||||||||||||||
Asset-backed securities | — | 573,218 | 407,098 | — | 980,316 | |||||||||||||||
Other securities | 53,987 | 8,214 | — | — | 62,201 | |||||||||||||||
3,111,845 | 4,203,497 | 895,932 | — | 8,211,274 | ||||||||||||||||
MSRs | — | — | 176,427 | — | 176,427 | |||||||||||||||
Derivative assets | 7,711 | 341,676 | 995 | (62,626 | ) | 287,756 | ||||||||||||||
Equity investments | — | — | 25,872 | — | 25,872 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Derivative liabilities | 119 | 233,597 | 5,231 | — | 238,947 |
(1) | Amounts represent the impact of legally enforceable master netting agreements that allow the Company to settle positive and negative positions and cash collateral held or placed with the same counterparties. |
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Level 3 Fair Value Measurements | ||||||||||||||||||||||||||||
Year Ended December 31, 2010 | ||||||||||||||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||||||||||||||
Asset- | ||||||||||||||||||||||||||||
Derivative | Municipal | Private- | Backed | Automobile | Equity | |||||||||||||||||||||||
MSRs | Instruments | Securities | Label CMO | Securities | Loans | Investments | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Balance, beginning of year | $ | 176,427 | $ | (4,236 | ) | $ | 11,515 | $ | 477,319 | $ | 407,098 | $ | — | $ | 25,872 | |||||||||||||
Total gains/losses: | ||||||||||||||||||||||||||||
Included in earnings | (50,748 | ) | 4,413 | — | (5,117 | ) | (6,160 | ) | (2,267 | ) | — | |||||||||||||||||
Included in OCI | — | — | — | 44,475 | 16,191 | — | — | |||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | |||||||||||||||||||||
Sales | — | — | (112,322 | ) | (312,460 | ) | (53,806 | ) | — | — | ||||||||||||||||||
Repayments | — | — | — | — | — | (266,381 | ) | — | ||||||||||||||||||||
Issuances | — | (1,741 | ) | — | — | — | — | — | ||||||||||||||||||||
Settlements | — | 2,530 | (73,024 | ) | (82,292 | ) | (16,566 | ) | — | — | ||||||||||||||||||
Transfers in/out of Level 3(1) | — | — | 323,637 | — | (184,073 | ) | 791,365 | (25,872 | ) | |||||||||||||||||||
Balance, end of year | $ | 125,679 | $ | 966 | $ | 149,806 | $ | 121,925 | $ | 162,684 | $ | 522,717 | $ | — | ||||||||||||||
The amount of total gains or losses for the period included in earnings (or OCI) attributable to the change in unrealized gains or losses relating to assets still held at reporting date | $ | (50,748 | ) | $ | 1,715 | $ | — | $ | 5,565 | $ | 15,113 | $ | (2,267 | ) | $ | — | ||||||||||||
(1) | Transfers in / out of Level 3 include a transfer in of $323.6 million relating to municipal securities, due to lack of observable market data, a transfer out of $184.1 million of securities related to the consolidation of the 2009 Trust (see Notes 2, 5 and 21) and a transfer in of $791.4 million of loans related to the 2009 Trust (see Notes 5 and 21). |
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Level 3 Fair Value Measurements | ||||||||||||||||||||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||||||||||||||
Asset- | ||||||||||||||||||||||||||||
Derivative | Municipal | Private | Backed | Automobile | Equity | |||||||||||||||||||||||
MSRs | Instruments | Securities | Label CMO | Securities | Loans | Investments | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Balance, beginning of year | $ | 167,438 | $ | 8,132 | $ | — | $ | 523,515 | $ | 464,027 | $ | — | $ | 36,893 | ||||||||||||||
Total gains/losses: | ||||||||||||||||||||||||||||
Included in earnings | 9,707 | (5,976 | ) | — | (3,606 | ) | (40,039 | ) | — | 408 | ||||||||||||||||||
Included in OCI | — | — | — | 93,934 | 40,385 | — | — | |||||||||||||||||||||
Purchases | 2,388 | (7,100 | ) | — | 5,448 | 211,296 | — | 1,688 | ||||||||||||||||||||
Sales | — | — | — | — | (295,033 | ) | — | — | ||||||||||||||||||||
Repayments | — | — | — | — | — | — | — | |||||||||||||||||||||
Issuances | — | — | — | — | 47,119 | — | — | |||||||||||||||||||||
Settlements | (3,106 | ) | 708 | (185 | ) | (141,972 | ) | (20,657 | ) | — | (13,117 | ) | ||||||||||||||||
Transfers in/out of Level 3(2) | — | — | 11,700 | — | — | — | — | |||||||||||||||||||||
Balance, end of year | $ | 176,427 | $ | (4,236 | ) | $ | 11,515 | $ | 477,319 | $ | 407,098 | $ | — | $ | 25,872 | |||||||||||||
The amount of total gains or losses for the period included in earnings (or OCI) attributable to the change in unrealized gains or losses relating to assets still held at reporting date | $ | 9,707 | $ | (8,475 | ) | $ | — | $ | 90,328 | $ | (7,406 | ) | $ | — | $ | 408 | ||||||||||||
(2) | Transferred in to Level 3 as a result of a lack of observable market data due to a decrease in market activity. |
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Level 3 Fair Value Measurements | ||||||||||||||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||||||||||||||
Asset- | ||||||||||||||||||||||||||||
Derivative | Municipal | Private | Backed | Automobile | Equity | |||||||||||||||||||||||
MSRs | Instruments | Securities | Label CMO | Securities | Loans | Investments | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Balance, beginning of year | $ | 207,894 | $ | (46 | ) | $ | — | $ | — | $ | 834,489 | $ | — | $ | 41,516 | |||||||||||||
Total gains/losses: | ||||||||||||||||||||||||||||
Included in earnings | (40,769 | ) | 8,683 | — | (3,435 | ) | (195,377 | ) | — | (9,242 | ) | |||||||||||||||||
Included in OCI | — | — | — | (149,699 | ) | (153,690 | ) | — | — | |||||||||||||||||||
Purchases | — | — | — | — | — | — | 4,619 | |||||||||||||||||||||
Sales | 313 | — | — | — | — | — | — | |||||||||||||||||||||
Repayments | — | — | — | — | — | — | — | |||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | |||||||||||||||||||||
Settlements | — | (505 | ) | — | (97,126 | ) | (30,667 | ) | — | — | ||||||||||||||||||
Transfers in/out of Level 3(2) | — | — | — | 773,775 | 9,272 | — | — | |||||||||||||||||||||
Balance, end of year | $ | 167,438 | $ | 8,132 | $ | — | $ | 523,515 | $ | 464,027 | $ | — | $ | 36,893 | ||||||||||||||
The amount of total gains or losses for the period included in earnings (or OCI) attributable to the change in unrealized gains or losses relating to assets still held at reporting date | $ | (40,769 | ) | $ | 8,179 | $ | — | $ | (153,134 | ) | $ | (349,067 | ) | $ | — | $ | (3,469 | ) | ||||||||||
(2) | Transferred in to Level 3 as a result of a lack of observable market data due to a decrease in market activity. |
Level 3 Fair Value Measurements | ||||||||||||||||||||||||||||
Year Ended December 31, 2010 | ||||||||||||||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||||||||||||||
Asset- | ||||||||||||||||||||||||||||
Derivative | Municipal | Private | Backed | Automobile | Equity | |||||||||||||||||||||||
MSRs | Instruments | Securities | Label CMO | Securities | Loans | Investments | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Classification of gains and losses in earnings: | ||||||||||||||||||||||||||||
Mortgage banking income (loss) | $ | (50,748 | ) | $ | 4,413 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Securities gains (losses) | — | — | — | (7,149 | ) | (6,554 | ) | — | — | |||||||||||||||||||
Interest and fee income | — | — | — | 2,032 | 394 | (11,202 | ) | — | ||||||||||||||||||||
Noninterest income | — | — | — | — | — | 8,935 | — | |||||||||||||||||||||
Total | $ | (50,748 | ) | $ | 4,413 | $ | — | $ | (5,117 | ) | $ | (6,160 | ) | $ | (2,267 | ) | $ | — | ||||||||||
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Level 3 Fair Value Measurements | ||||||||||||||||||||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||||||||||||||
Asset- | ||||||||||||||||||||||||||||
Derivative | Municipal | Private | Backed | Automobile | Equity | |||||||||||||||||||||||
MSRs | Instruments | Securities | Label CMO | Securities | Loans | Investments | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Classification of gains and losses in earnings: | ||||||||||||||||||||||||||||
Mortgage banking income (loss) | $ | 9,707 | $ | (5,976 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Securities gains (losses) | — | — | — | (5,996 | ) | (53,068 | ) | — | — | |||||||||||||||||||
Interest and fee income | — | — | — | 2,390 | 13,029 | — | — | |||||||||||||||||||||
Noninterest income | — | — | — | — | — | — | 408 | |||||||||||||||||||||
Total | $ | 9,707 | $ | (5,976 | ) | $ | — | $ | (3,606 | ) | $ | (40,039 | ) | $ | — | $ | 408 | |||||||||||
Level 3 Fair Value Measurements | ||||||||||||||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||||||||
Available-for-Sale Securities | ||||||||||||||||||||||||||||
Asset- | ||||||||||||||||||||||||||||
Derivative | Municipal | Private | backed | Automobile | Equity | |||||||||||||||||||||||
MSRs | instruments | securities | label CMO | securities | loans | investments | ||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||
Classification of gains and losses in earnings: | ||||||||||||||||||||||||||||
Mortgage banking income (loss) | $ | (40,769 | ) | $ | 8,683 | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Securities gains (losses) | — | — | — | (5,728 | ) | (196,893 | ) | — | — | |||||||||||||||||||
Interest and fee income | — | — | — | 2,293 | 1,516 | — | — | |||||||||||||||||||||
Noninterest income | — | — | — | — | — | — | (9,242 | ) | ||||||||||||||||||||
Total | $ | (40,769 | ) | $ | 8,683 | $ | — | $ | (3,435 | ) | $ | (195,377 | ) | $ | — | $ | (9,242 | ) | ||||||||||
Fair Value Measurements Using | ||||||||||||||||||||
Quoted Prices | Significant | Significant | ||||||||||||||||||
In Active | Other | Other | ||||||||||||||||||
Markets for | Observable | Unobservable | Total | |||||||||||||||||
Year Ended | Identical Assets | Inputs | Inputs | Gains/ | ||||||||||||||||
December 31, | (Level 1) | (Level 2) | (Level 3) | (Losses) | ||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||
2010 | ||||||||||||||||||||
Impaired loans | $ | 80.4 | $ | — | $ | — | $ | 80.4 | $ | (39.6 | ) | |||||||||
Accrued income and other assets | 66.8 | — | — | 66.8 | $ | (6.9 | ) |
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December 31, 2010 | December 31, 2009 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Amount | Value | Amount | Value | |||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||
Financial Assets: | ||||||||||||||||
Cash and short-term assets | $ | 982,926 | $ | 982,926 | $ | 1,840,719 | $ | 1,840,719 | ||||||||
Trading account securities | 185,404 | 185,404 | 83,657 | 83,657 | ||||||||||||
Loans held for sale | 793,285 | 793,285 | 461,647 | 461,647 | ||||||||||||
Investment securities | 9,895,244 | 9,895,244 | 8,587,914 | 8,587,914 | ||||||||||||
Net loans and direct financing leases | 36,857,499 | 35,403,910 | 35,308,184 | 32,598,423 | ||||||||||||
Derivatives | 346,133 | 346,133 | 287,756 | 287,756 | ||||||||||||
Financial Liabilities: | ||||||||||||||||
Deposits | (41,853,898 | ) | (41,993,567 | ) | (40,493,927 | ) | (40,753,365 | ) | ||||||||
Short-term borrowings | (2,040,732 | ) | (1,982,545 | ) | (876,241 | ) | (857,254 | ) | ||||||||
Federal Home Loan Bank advances | (172,519 | ) | (172,519 | ) | (168,977 | ) | (168,977 | ) | ||||||||
Other long term debt | (2,144,092 | ) | (2,157,358 | ) | (2,369,491 | ) | (2,332,300 | ) | ||||||||
Subordinated notes | (1,497,216 | ) | (1,377,851 | ) | (1,264,202 | ) | (989,989 | ) | ||||||||
Derivatives | (239,240 | ) | (239,240 | ) | (238,947 | ) | (238,947 | ) |
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20. | DERIVATIVE FINANCIAL INSTRUMENTS |
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Fair Value | Cash Flow | |||||||||||
Hedges | Hedges | Total | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Instruments associated with: | ||||||||||||
Loans | $ | — | $ | 9,235,000 | $ | 9,235,000 | ||||||
Deposits | 1,830,264 | — | 1,830,264 | |||||||||
Subordinated notes | 598,000 | — | 598,000 | |||||||||
Other long-term debt | 35,000 | — | 35,000 | |||||||||
Total notional value at December 31, 2010 | $ | 2,463,264 | $ | 9,235,000 | $ | 11,698,264 | ||||||
Average | Weighted-Average | |||||||||||||||||||
Notional | Maturity | Fair | Rate | |||||||||||||||||
Value | (Years) | Value | Receive | Pay | ||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||
Asset conversion swaps — receive fixed — generic | $ | 9,235,000 | 1.8 | $ | 64,596 | 1.50 | % | 0.62 | % | |||||||||||
Liability conversion swaps — receive fixed — generic | 2,463,264 | 3.2 | 62,750 | 2.02 | 0.32 | |||||||||||||||
Total swap portfolio | $ | 11,698,264 | 2.1 | $ | 127,346 | 1.61 | % | 0.56 | % | |||||||||||
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December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Interest rate contracts designated as hedging instruments | $ | 127,346 | $ | 85,984 | ||||
Interest rate contracts not designated as hedging instruments | 263,015 | 255,692 | ||||||
Foreign exchange contracts not designated as hedging instruments | 2,845 | — | ||||||
Total contracts | $ | 393,206 | $ | 341,676 | ||||
December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in thousands) | ||||||||
Interest rate contracts designated as hedging instruments | $ | — | $ | 3,464 | ||||
Interest rate contracts not designated as hedging instruments | 233,805 | 234,026 | ||||||
Foreign exchange contracts not designated as hedging instruments | 3,107 | — | ||||||
Total contracts | $ | 236,912 | $ | 237,490 | ||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(dollar amounts in thousands) | ||||||||||||
Interest rate contracts | ||||||||||||
Change in fair value of interest rate swaps hedging deposits(1) | $ | 6,108 | $ | 1,430 | $ | 4,941 | ||||||
Change in fair value of hedged deposits(1) | (6,744 | ) | 9,417 | (5,215 | ) | |||||||
Change in fair value of interest rate swaps hedging subordinated notes(2) | 19,319 | (99,913 | ) | 113,083 | ||||||||
Change in fair value of hedged subordinated notes(2) | (19,319 | ) | 99,913 | (113,083 | ) | |||||||
Change in fair value of interest rate swaps hedging other long-term debt(2) | 1,847 | (6,201 | ) | 9,859 | ||||||||
Change in fair value of hedged other long-term debt(2) | (1,847 | ) | 6,201 | (9,859 | ) |
(1) | Effective portion of the hedging relationship is recognized in Interest expense — deposits in the Consolidated Statements of Income. Any resulting ineffective portion of the hedging relationship is recognized in noninterest income in the Consolidated Statements of Income. | |
(2) | Effective portion of the hedging relationship is recognized in Interest expense — subordinated notes and other-long-term debt in the Consolidated Statements of Income. Any resulting ineffective portion of the hedging relationship is recognized in noninterest income in the Consolidated Statements of Income. |
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Amount of | Amount of Gain | |||||||||||||||||||||||||
Gain or (Loss) | Location of Gain or (Loss) | or (Loss) Reclassified | ||||||||||||||||||||||||
Derivatives in Cash | Recognized in | Reclassified from Accumulated | from Accumulated | |||||||||||||||||||||||
Flow Hedging | OCI on Derivatives | OCI into Earnings | OCI into Earnings | |||||||||||||||||||||||
Relationships | (Effective Portion) | (Effective Portion) | (Effective Portion) | |||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | |||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||
Loans | $ | 51,943 | $ | (68,365 | ) | $ | 54,887 | Interest and fee income — loans and leases | $ | (116,881 | ) | $ | 117,669 | $ | (9,207 | ) | ||||||||||
FHLB Advances | — | 1,338 | 2,394 | Interest expense — FHLB Advances | 2,580 | 6,890 | (12,490 | ) | ||||||||||||||||||
Deposits | — | 326 | 2,842 | Interest expense — deposits | — | 4,153 | (4,169 | ) | ||||||||||||||||||
Subordinated notes | — | 101 | (101 | ) | Interest expense — subordinated notes and other long-term debt | (1,391 | ) | (2,717 | ) | (4,408 | ) | |||||||||||||||
Other long-term debt | — | — | 239 | Interest expense — subordinated notes and other long-term debt | — | (899 | ) | (865 | ) | |||||||||||||||||
Total | $ | 51,943 | $ | (66,600 | ) | $ | 60,261 | $ | (115,692 | ) | $ | 125,096 | $ | (31,139 | ) | |||||||||||
December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollar amounts in thousands) | ||||||||||||
Derivatives in cash flow hedging relationships Interest rate contracts | ||||||||||||
Loans | 947 | 16,638 | 3,821 | |||||||||
FHLB Deposits | — | (792 | ) | 783 |
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At December 31, | ||||||||
(Dollar amounts in thousands) | 2010 | 2009 | ||||||
Derivative assets: | ||||||||
Interest rate lock agreements | $ | 2,817 | $ | 995 | ||||
Forward trades and options | 20,669 | 7,711 | ||||||
Total derivative assets | 23,486 | 8,706 | ||||||
Derivative liabilities: | ||||||||
Interest rate lock agreements | (1,445 | ) | (1,338 | ) | ||||
Forward trades and options | (883 | ) | (119 | ) | ||||
Total derivative liabilities | (2,328 | ) | (1,457 | ) | ||||
Net derivative asset (liability) | $ | 21,158 | $ | 7,249 | ||||
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21. | VIEs |
December 31, 2010 | ||||||||||||||||||||
Franklin | ||||||||||||||||||||
(Dollar amounts in thousands) | 2009 Trust | 2009 Trust | 2008 Trust | 2006 Trust | Total | |||||||||||||||
Assets | ||||||||||||||||||||
Cash | $ | — | $ | 24,513 | $ | 19,921 | $ | 64,827 | $ | 109,261 | ||||||||||
Loans and leases | — | 522,717 | 295,464 | 1,196,024 | 2,014,205 | |||||||||||||||
Allowance for loan and lease losses | — | — | (2,541 | ) | (10,286 | ) | (12,827 | ) | ||||||||||||
Net loans and leases | — | 522,717 | 292,923 | 1,185,738 | 2,001,378 | |||||||||||||||
Accrued income and other assets | 20,447 | 2,510 | 1,436 | 5,131 | 29,524 | |||||||||||||||
Total assets | $ | 20,447 | $ | 549,740 | $ | 314,280 | $ | 1,255,696 | $ | 2,140,163 | ||||||||||
Liabilities | ||||||||||||||||||||
Other long-term debt | $ | — | $ | 356,089 | $ | 151,937 | $ | 877,270 | $ | 1,385,296 | ||||||||||
Accrued interest and other liabilities | 7,431 | 693 | 308 | 224 | 8,656 | |||||||||||||||
Total liabilities | $ | 7,431 | $ | 356,782 | $ | 152,245 | $ | 877,494 | $ | 1,393,952 | ||||||||||
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Principal Amount of | Investment in | |||||||||||
Subordinated Note/ | Unconsolidated | |||||||||||
(Dollar amounts in thousands) | Rate | Debenture Issued to Trust (1) | Subsidiary (2) | |||||||||
Huntington Capital I | 0.99 | (3) | $ | 138,816 | $ | 6,186 | ||||||
Huntington Capital II | 0.93 | (4) | 60,093 | 3,093 | ||||||||
Huntington Capital III | 6.69 | 114,072 | 10 | |||||||||
BancFirst Ohio Trust Preferred | 8.54 | 23,248 | 619 | |||||||||
Sky Financial Capital Trust I | 8.52 | 64,474 | 1,856 | |||||||||
Sky Financial Capital Trust II | 3.52 | (5) | 30,929 | 929 | ||||||||
Sky Financial Capital Trust III | 1.28 | (6) | 77,481 | 2,320 | ||||||||
Sky Financial Capital Trust IV | 1.27 | (6) | 77,482 | 2,320 | ||||||||
Prospect Trust I | 3.54 | (7) | 6,186 | 186 | ||||||||
Total | $ | 592,781 | $ | 17,519 | ||||||||
(1) | Represents the principal amount of debentures issued to each trust, including unamortized original issue discount. | |
(2) | Huntington’s investment in the unconsolidated trusts represents the only risk of loss. | |
(3) | Variable effective rate at December 31, 2010, based on three month LIBOR + 0.70. | |
(4) | Variable effective rate at December 31, 2010, based on three month LIBOR + 0.625. | |
(5) | Variable effective rate at December 31, 2010, based on three month LIBOR + 2.95. | |
(6) | Variable effective rate at December 31, 2010, based on three month LIBOR + 1.40. | |
(7) | Variable effective rate at December 31, 2010, based on three month LIBOR + 3.25. |
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22. | COMMITMENTS AND CONTINGENT LIABILITIES |
At December 31, | ||||||||
2010 | 2009 | |||||||
(Dollar amounts in millions) | ||||||||
Contract amount represents credit risk | ||||||||
Commitments to extend credit | ||||||||
Commercial | $ | 5,933 | $ | 5,834 | ||||
Consumer | 5,406 | 5,028 | ||||||
Commercial real estate | 546 | 1,075 | ||||||
Standby letters of credit | 607 | 577 |
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23. | OTHER REGULATORY MATTERS |
Tier 1 | Total Risk-Based Capital | Tier 1 Leverage | ||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||
(Dollar amounts in millions) | ||||||||||||||||||||||||
Huntington Bancshares Incorporated | ||||||||||||||||||||||||
Amount | $ | 5,022 | $ | 5,201 | $ | 6,285 | $ | 6,231 | $ | 5,022 | $ | 5,201 | ||||||||||||
Ratio | 11.55 | % | 12.03 | % | 14.46 | % | 14.41 | % | 9.41 | % | 10.09 | % | ||||||||||||
The Huntington National Bank | ||||||||||||||||||||||||
Amount | $ | 3,683 | $ | 2,873 | $ | 5,549 | $ | 4,780 | $ | 3,683 | $ | 2,873 | ||||||||||||
Ratio | 8.51 | % | 6.66 | % | 12.82 | % | 11.08 | % | 6.97 | % | 5.59 | % |
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24. | PARENT COMPANY FINANCIAL STATEMENTS |
December 31, | ||||||||
Balance Sheets | 2010 | 2009 | ||||||
(Dollar amounts in thousands) | ||||||||
ASSETS | ||||||||
Cash and cash equivalents(1) | $ | 615,167 | $ | 1,376,539 | ||||
Due from The Huntington National Bank(2) | 954,565 | 955,695 | ||||||
Due from non-bank subsidiaries | 225,560 | 273,317 | ||||||
Investment in The Huntington National Bank | 3,515,597 | 2,821,181 | ||||||
Investment in non-bank subsidiaries | 790,248 | 815,730 | ||||||
Accrued interest receivable and other assets | 110,181 | 112,557 | ||||||
Total assets | $ | 6,211,318 | $ | 6,355,019 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Short-term borrowings | $ | 100 | $ | 1,291 | ||||
Long-term borrowings | 937,434 | 637,434 | ||||||
Dividends payable, accrued expenses, and other liabilities | 293,242 | 380,292 | ||||||
�� | ||||||||
Total liabilities | 1,230,776 | 1,019,017 | ||||||
Shareholders’ equity(3) | 4,980,542 | 5,336,002 | ||||||
Total liabilities and shareholders’ equity | $ | 6,211,318 | $ | 6,355,019 | ||||
(1) | Includes restricted cash of $125,000 at December 31, 2010 and December 31, 2009. | |
(2) | Related to subordinated notes described in Note 12. | |
(3) | See Huntington’s Consolidated Statements of Changes in Shareholders’ Equity. |
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Year Ended December 31, | ||||||||||||
Statements of Income | 2010 | 2009 | 2008 | |||||||||
(Dollar amounts in thousands) | ||||||||||||
Income | ||||||||||||
Dividends from | ||||||||||||
The Huntington National Bank | $ | — | $ | — | $ | 142,254 | ||||||
Non-bank subsidiaries | 33,000 | 70,600 | 69,645 | |||||||||
Interest from | ||||||||||||
The Huntington National Bank | 82,749 | 51,620 | 19,749 | |||||||||
Non-bank subsidiaries | 12,185 | 14,662 | 12,700 | |||||||||
Other | 2,987 | 68,352 | 108 | |||||||||
Total income | 130,921 | 205,234 | 244,456 | |||||||||
Expense | ||||||||||||
Personnel costs | 30,334 | 21,206 | 24,398 | |||||||||
Interest on borrowings | 23,765 | 29,357 | 44,890 | |||||||||
Other | 49,019 | 28,398 | 240 | |||||||||
Total expense | 103,118 | 78,961 | 69,528 | |||||||||
Income before income taxes and equity in undistributed net income of subsidiaries | 27,803 | 126,273 | 174,928 | |||||||||
Income taxes (benefit) | 48,505 | 20,675 | (120,371 | ) | ||||||||
Income (loss) before equity in undistributed net income of subsidiaries | (20,702 | ) | 105,598 | 295,299 | ||||||||
Increase (decrease) in undistributed net income (loss) of: | ||||||||||||
The Huntington National Bank | 344,961 | (3,130,329 | ) | (98,863 | ) | |||||||
Non-bank subsidiaries | (11,912 | ) | (69,448 | ) | (310,242 | ) | ||||||
Net income (loss) | $ | 312,347 | $ | (3,094,179 | ) | $ | (113,806 | ) | ||||
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Year Ended December 31, | ||||||||||||
Statements of Cash Flows | 2010 | 2009 | 2008 | |||||||||
(Dollar amounts in thousands) | ||||||||||||
Operating activities | ||||||||||||
Net income (loss) | $ | 312,347 | $ | (3,094,179 | ) | $ | (113,806 | ) | ||||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
Equity in undistributed net income (loss) of subsidiaries | (351,049 | ) | 3,199,777 | 266,851 | ||||||||
Depreciation and amortization | 685 | 3,458 | 2,071 | |||||||||
Other, net | (74,802 | ) | (103,464 | ) | 65,076 | |||||||
Net cash (used for) provided by operating activities | (112,819 | ) | 5,592 | 220,192 | ||||||||
Investing activities | ||||||||||||
Repayments from subsidiaries | 129,081 | 393,041 | 540,308 | |||||||||
Advances to subsidiaries | (425,600 | ) | (1,017,892 | ) | (1,337,165 | ) | ||||||
Net cash used for investing activities | (296,519 | ) | (624,851 | ) | (796,857 | ) | ||||||
Financing activities | ||||||||||||
Proceeds from issuance of long-term borrowings | 297,375 | — | — | |||||||||
Payment of borrowings | (1,191 | ) | (99,417 | ) | (98,470 | ) | ||||||
Dividends paid on preferred stock | — | (107,262 | ) | (23,242 | ) | |||||||
Dividends paid on common stock | (136,499 | ) | (55,026 | ) | (279,608 | ) | ||||||
Proceeds from issuance of preferred stock | — | — | 1,947,625 | |||||||||
Payment to repurchase preferred stock | (1,398,071 | ) | ||||||||||
Proceeds from issuance of common stock | 886,172 | 1,135,645 | — | |||||||||
Other, net | 180 | (198 | ) | (1,073 | ) | |||||||
Net cash provided by (used for) financing activities | (352,034 | ) | 873,742 | 1,545,232 | ||||||||
Change in cash and cash equivalents | (761,372 | ) | 254,483 | 968,567 | ||||||||
Cash and cash equivalents at beginning of year | 1,376,539 | 1,122,056 | 153,489 | |||||||||
Cash and cash equivalents at end of year | $ | 615,167 | $ | 1,376,539 | $ | 1,122,056 | ||||||
Supplemental disclosure: | ||||||||||||
Interest paid | $ | 23,765 | $ | 29,357 | $ | 44,890 | ||||||
Dividends in-kind received from The Huntington National Bank | — | — | 124,689 |
25. | SEGMENT REPORTING |
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Retail & | Former | |||||||||||||||||||||||||||||
Business | Regional | Treasury/ | Huntington | |||||||||||||||||||||||||||
Income Statements | Banking | Commercial | Banking | AFCRE | WGH | Other | Consolidated | |||||||||||||||||||||||
(Dollar amounts in thousands) | ||||||||||||||||||||||||||||||
2010 | ||||||||||||||||||||||||||||||
Net interest income | $ | 867,069 | $ | 211,511 | $ | 1,078,580 | $ | 338,312 | $ | 169,201 | $ | 32,712 | $ | 1,618,805 | ||||||||||||||||
Provision for credit losses | 157,994 | 104,705 | 262,699 | 184,757 | 95,586 | 91,505 | 634,547 | |||||||||||||||||||||||
NonInterest income | 394,705 | 111,237 | 505,942 | 73,933 | 338,633 | 123,350 | 1,041,858 | |||||||||||||||||||||||
NonInterest expense | 902,186 | 158,871 | 1,061,057 | 155,963 | 358,707 | 98,078 | 1,673,805 | |||||||||||||||||||||||
Provision (benefit) for income taxes | 70,558 | 20,710 | 91,268 | 25,033 | 18,740 | (95,077 | ) | 39,964 | ||||||||||||||||||||||
Operating/reported net income | $ | 131,036 | $ | 38,462 | $ | 169,498 | $ | 46,492 | $ | 34,801 | $ | 61,556 | $ | 312,347 | ||||||||||||||||
2009 | ||||||||||||||||||||||||||||||
Net interest income | $ | 810,658 | $ | 190,955 | $ | 1,001,613 | $ | 277,450 | $ | 164,335 | $ | (19,111 | ) | $ | 1,424,287 | |||||||||||||||
Provision for credit losses | 470,152 | 393,984 | 864,136 | 1,096,030 | 128,551 | (14,046 | ) | 2,074,671 | ||||||||||||||||||||||
Noninterest income | 415,471 | 95,705 | 511,176 | 63,929 | 267,695 | 162,844 | 1,005,644 | |||||||||||||||||||||||
Noninterest expense, excluding goodwill impairment | 796,714 | 136,885 | 933,599 | 150,200 | 300,799 | 41,901 | 1,426,499 | |||||||||||||||||||||||
Goodwill impairment | 2,573,818(1 | ) | 33,126 | 2,606,944 | �� | |||||||||||||||||||||||||
Provision (benefit) for income taxes | (14,258 | ) | (85,473 | ) | (99,731 | ) | (316,697 | ) | 937 | (168,513 | ) | (584,004 | ) | |||||||||||||||||
Operating/reported net income (loss) | $ | (26,479 | ) | $ | (158,736 | ) | $ | (2,759,033 | ) | $ | (588,154 | ) | $ | 1,743 | $ | 251,265 | $ | (3,094,179 | ) | |||||||||||
2008 | ||||||||||||||||||||||||||||||
Net interest income | $ | 859,477 | $ | 279,014 | $ | 1,138,491 | $ | 352,328 | $ | 189,191 | $ | (148,319 | ) | $ | 1,531,691 | |||||||||||||||
Provision for credit losses | 196,224 | 102,587 | 298,811 | 284,691 | 35,960 | 438,001 | 1,057,463 | |||||||||||||||||||||||
Noninterest income | 409,151 | 102,929 | 512,080 | 64,114 | 186,682 | (55,738 | ) | 707,138 | ||||||||||||||||||||||
Noninterest expense | 675,720 | 155,798 | 831,518 | 153,533 | 273,769 | 218,554 | 1,477,374 | |||||||||||||||||||||||
Provision (benefit) for income taxes | 138,840 | 43,245 | 182,085 | (7,624 | ) | 23,150 | (379,813 | ) | (182,202 | ) | ||||||||||||||||||||
Operating/reported net income (loss) | $ | 257,844 | $ | 80,313 | $ | 338,157 | $ | (14,158 | ) | $ | 42,994 | $ | (480,799 | ) | $ | (113,806 | ) | |||||||||||||
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(1) | Represents the 2009 first quarter goodwill impairment charge associated with the former Regional Banking segment. The allocation of this amount to the new business segments was not practical. |
Assets at | Deposits at | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
(Dollar amounts in millions) | ||||||||||||||||
Retail and Business Banking | $ | 13,088 | $ | 12,972 | $ | 29,298 | $ | 28,512 | ||||||||
Commercial Banking | 8,720 | 8,214 | 3,538 | 3,056 | ||||||||||||
AFCRE | 13,233 | 12,361 | 753 | 618 | ||||||||||||
WGH | 6,971 | 6,125 | 7,449 | 6,749 | ||||||||||||
Treasury / Other | 11,808 | 11,883 | 816 | 1,559 | ||||||||||||
Total | $ | 53,820 | $ | 51,555 | $ | 41,854 | $ | 40,494 | ||||||||
26. | QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) |
2010 | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
(Dollar amounts in thousands, except per share data) | ||||||||||||||||
Interest income | $ | 528,291 | $ | 534,669 | $ | 535,653 | �� | $ | 546,779 | |||||||
Interest expense | 112,997 | 124,707 | 135,997 | 152,886 | ||||||||||||
Net interest income | 415,294 | 409,962 | 399,656 | 393,893 | ||||||||||||
Provision for credit losses | 86,973 | 119,160 | 193,406 | 235,008 | ||||||||||||
Noninterest income | 264,220 | 267,143 | 269,643 | 240,852 | ||||||||||||
Noninterest expense | 434,593 | 427,309 | 413,810 | 398,093 | ||||||||||||
Income before income taxes | 157,948 | 130,636 | 62,083 | 1,644 | ||||||||||||
Provision (benefit) for income taxes | 35,048 | 29,690 | 13,319 | (38,093 | ) | |||||||||||
Net income | 122,900 | 100,946 | 48,764 | 39,737 | ||||||||||||
Dividends on preferred shares | 83,754 | 29,495 | 29,426 | 29,357 | ||||||||||||
Net income applicable to common shares | $ | 39,146 | $ | 71,451 | $ | 19,338 | $ | 10,380 | ||||||||
Net income per common share — Basic | $ | 0.05 | $ | 0.10 | $ | 0.03 | $ | 0.01 | ||||||||
Net income per common share — Diluted | 0.05 | 0.10 | 0.03 | 0.01 |
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2009 | ||||||||||||||||
Fourth | Third | Second | First | |||||||||||||
(Dollar amounts in thousands, except per share data) | ||||||||||||||||
Interest income | $ | 551,335 | $ | 553,846 | $ | 563,004 | $ | 569,957 | ||||||||
Interest expense | 177,271 | 191,027 | 213,105 | 232,452 | ||||||||||||
Net interest income | 374,064 | 362,819 | 349,899 | 337,505 | ||||||||||||
Provision for credit losses | 893,991 | 475,136 | 413,707 | 291,837 | ||||||||||||
Noninterest income | 244,546 | 256,052 | 265,945 | 239,102 | ||||||||||||
Noninterest expense | 322,596 | 401,097 | 339,982 | 2,969,769 | ||||||||||||
Loss before income taxes | (597,977 | ) | (257,362 | ) | (137,845 | ) | (2,684,999 | ) | ||||||||
Benefit for income taxes | 228,290 | 91,172 | 12,750 | 251,792 | ||||||||||||
Net loss | (369,687 | ) | (166,190 | ) | (125,095 | ) | (2,433,207 | ) | ||||||||
Dividends declared on preferred shares | 29,289 | 29,223 | 57,451 | 58,793 | ||||||||||||
Net loss applicable to common shares | $ | (398,976 | ) | $ | (195,413 | ) | $ | (182,546 | ) | $ | (2,492,000 | ) | ||||
Net loss per common share — Basic | $ | (0.56 | ) | $ | (0.33 | ) | $ | (0.40 | ) | $ | (6.79 | ) | ||||
Net loss per common share — Diluted | (0.56 | ) | (0.33 | ) | (0.40 | ) | (6.79 | ) |
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Item 9: | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure |
Item 9A: | Controls and Procedures |
Item 9B: | Other Information |
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Item 10: | Directors, Executive Officers and Corporate Governance |
Item 11: | Executive Compensation |
Item 12: | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Number of | ||||||||||||
securities | ||||||||||||
Number of | remaining available | |||||||||||
securities to be | for future issuance | |||||||||||
issued upon | Weighted-average | under equity | ||||||||||
exercise of | exercise price of | compensation plans | ||||||||||
outstanding | outstanding | (excluding | ||||||||||
options, warrants, | options, warrants, | securities reflected | ||||||||||
and rights(2) | and rights(3) | in column (a))(4) | ||||||||||
Plan Category(1) | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | 22,065,940 | $ | 13.81 | 16,931,746 | ||||||||
Equity compensation plans not approved by security holders | 5,773,453 | 16.21 | — | |||||||||
Total | 27,839,393 | $ | 14.31 | 16,931,746 | ||||||||
(1) | All equity compensation plan authorizations for shares of common stock provide for the number of shares to be adjusted for stock splits, stock dividends, and other changes in capitalization. The Huntington Investment and Tax Savings Plan, a broad-based plan qualified under Code Section 401(a) which includes Huntington common stock as one of a number of investment options available to participants, is excluded from the table. | |
(2) | The numbers in this column (a) reflect shares of common stock to be issued upon exercise of outstanding stock options and the vesting of outstanding awards of RSUs and RSAs. The shares of common stock to be issued upon exercise or vesting under equity compensation plans not approved by shareholders include several inducement grants issued outside of the Company’s stock plans, and awards granted under the following plans which are no longer active and for which Huntington has not reserved the right to make subsequent grants or awards: the Employee Stock Incentive Plan, a broad-based stock option plan under which employees have received grants of stock options, and employee and director stock plans of Unizan Financial Corp. and Sky Financial Group, Inc. assumed in the acquisitions of these companies. | |
(3) | The weighted-average exercise prices in this column are based on outstanding options and do not take into account unvested awards of RSUs and RSAs as these awards do not have an exercise price. |
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(4) | The number of shares in this column (c) reflects the number of shares remaining available for future issuance under Huntington’s Amended 2007 Stock and Long-Term Incentive Plan, excluding shares reflected in column (a). The number of shares in this column (c) does not include shares of common stock to be issued under the following compensation plans: the Executive Deferred Compensation Plan, which provides senior officers designated by the Compensation Committee the opportunity to defer up to 90% of base salary, annual bonus compensation and certain equity awards, and up to 100% of long-term incentive awards; the Supplemental Plan under which voluntary participant contributions made by payroll deduction are used to purchase shares; the Deferred Compensation for Huntington Bancshares Incorporated Directors under which directors my defer their director compensation and such amounts may be invested in shares of common stock; and the Deferred Compensation Plan for directors (now inactive) under which directors of selected subsidiaries may defer their director compensation and such amounts may be invested in shares of Huntington common stock. These plans do not contain a limit on the number of shares that may be issued under them. |
Item 13: | Certain Relationships and Related Transactions, and Director Independence |
Item 14: | Principal Accountant Fees and Services |
Item 15: | Exhibits and Financial Statement Schedules |
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(Registrant)
By: | /s/ Stephen D. Steinour Stephen D. Steinour Chairman, President, Chief Executive Officer, and Director (Principal Executive Officer) | By: | /s/ Donald R. Kimble Donald R. Kimble Senior Executive Vice President Chief Financial Officer (Principal Financial Officer) | |||
By: | /s/ David S. Anderson David S. Anderson Executive Vice President, Controller (Principal Accounting Officer) |
Don M. Casto III * Don M. Casto III Director | Jonathan A. Levy * Jonathan A. Levy Director | |
Ann B. Crane * Ann B. Crane Director | Wm. J. Lhota * Wm. J. Lhota Director | |
Steven G. Elliott * Steven G. Elliott Director | Gerard P. Mastroianni * Gerard P. Mastroianni Director | |
Michael J. Endres * Michael J. Endres Director | Richard W. Neu * Richard W. Neu Director | |
John B. Gerlach, Jr. * John B. Gerlach, Jr. Director | David L. Porteous * David L. Porteous Director | |
D. James Hilliker * D. James Hilliker Director | Kathleen H. Ransier * Kathleen H. Ransier Director | |
David P. Lauer * David P. Lauer Director | William R. Robertson * William R. Robertson Director | |
* /s/ Donald R. Kimble Donald R. Kimble Attorney-in-fact for each of the persons indicated |
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SEC File or | ||||||||||
Exhibit | Registration | Exhibit | ||||||||
Number | Document Description | Report or Registration Statement | Number | Reference | ||||||
2 | .1 | Agreement and Plan of Merger, dated December 20, 2006 by and among Huntington Bancshares Incorporated, Penguin Acquisition, LLC and Sky Financial Group, Inc. | Current Report onForm 8-K dated December 22, 2006. | 000-02525 | 2.1 | |||||
3 | .1 | Articles of Restatement of Charter. | Annual Report onForm 10-K for the year ended December 31, 1993. | 000-02525 | 3(i) | |||||
3 | .2 | Articles of Amendment to Articles of Restatement of Charter. | Current Report onForm 8-K dated May 31, 2007 | 000-02525 | 3.1 | |||||
3 | .3 | Articles of Amendment to Articles of Restatement of Charter | Current Report onForm 8-K dated May 7, 2008 | 000-02525 | 3.1 | |||||
3 | .4 | Articles of Amendment to Articles of Restatement of Charter | Current Report onForm 8-K dated April 27, 2010 | 001-34073 | 3.1 | |||||
3 | .5 | Articles Supplementary of Huntington Bancshares Incorporated, as of April 22, 2008. | Current Report onForm 8-K dated April 22, 2008 | 000-02525 | 3.1 | |||||
3 | .6 | Articles Supplementary of Huntington Bancshares Incorporated, as of April 22, 2008. | Current Report onForm 8-K dated April 22, 2008 | 000-02525 | 3.2 | |||||
3 | .7 | Articles Supplementary of Huntington Bancshares Incorporated, as of November 12, 2008. | Current Report onForm 8-K dated November 12, 2008 | 001-34073 | 3.1 | |||||
3 | .8 | Articles Supplementary of Huntington Bancshares Incorporated, as of December 31, 2006. | Annual Report onForm 10-K for the year ended December 31, 2006 | 000-02525 | 3.4 | |||||
3 | .9 | Bylaws of Huntington Bancshares Incorporated, as amended and restated, as of April 22, 2010. | Current Report onForm 8-K dated April 27, 2010. | 001-34073 | 3.2 | |||||
4 | .1 | Instruments defining the Rights of Security Holders -- reference is made to Articles Fifth, Eighth, and Tenth 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. | ||||||||
10 | .1 | * Form of Executive Agreement for certain executive officers. | Quarterly Report onForm 10-Q for the quarter ended March 30, 2010. | 001-34073 | 10.2 | |||||
10 | .2 | Amendment to the Huntington Bancshares Incorporated Executive Agreements. | Quarterly Report onForm 10-Q for the quarter ended September 30, 2009. | 001-34073 | 10.4 | |||||
10 | .3 | * Huntington Bancshares Incorporated Management Incentive Plan, as amended and restated effective for plan years beginning on or after January 1, 2004. | Quarterly Report onForm 10-Q for the quarter ended June 30, 2004. | 000-02525 | 10 (a) | |||||
10 | .4 | First Amendment to the Huntington Bancshares Incorporated 2004 Management Incentive Plan | Definitive Proxy Statement for the 2007 Annual Meeting of Stockholders | 000-02525 | H | |||||
10 | .5 | Second Amendment to the Huntington Bancshares Incorporated 2004 Management Incentive Plan | Quarterly Report onForm 10-Q for the quarter ended September 30, 2008. | 001-34073 | 10.2 |
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SEC File or | ||||||||||
Exhibit | Registration | Exhibit | ||||||||
Number | Document Description | Report or Registration Statement | Number | Reference | ||||||
10 | .6 | * Huntington Supplemental Retirement Income Plan, amended and restated, effective October 15, 2008. | Quarterly Report onForm 10-Q for the quarter ended September 30, 2008 | 001-34073 | 10.3 | |||||
10 | .7 | * Deferred Compensation Plan and Trust for Directors | Post-Effective Amendment No. 2 to Registration Statement onForm S-8 filed on January 28, 1991. | 33-10546 | 4(a) | |||||
10 | .8 | * Deferred Compensation Plan and Trust for Huntington Bancshares Incorporated Directors | Registration Statement onForm S-8 filed on July 19, 1991. | 33-41774 | 4(a) | |||||
10 | .9 | * First Amendment to Huntington Bancshares Incorporated Deferred Compensation Plan and Trust for Huntington Bancshares Incorporated Directors | Quarterly Report10-Q for the quarter ended March 31, 2001 | 000-02525 | 10(q) | |||||
10 | .10 | * Executive Deferred Compensation Plan, as amended and restated on October 15, 2008. | Quarterly Report onForm 10-Q for the quarter ended September 30, 2008. | 001-34073 | 10.4 | |||||
10 | .11 | * The Huntington Supplemental Stock Purchase and Tax Savings Plan and Trust, amended and restated, effective January 1, 2005 | Quarterly Report onForm 10-Q for the quarter ended September 30, 2007 | 000-02525 | 10.5 | |||||
10 | .12 | * Amended and Restated 1994 Stock Option Plan | Annual Report onForm 10-K for the year ended December 31, 1996 | 000-02525 | 10(r) | |||||
10 | .13 | * First Amendment to Huntington Bancshares Incorporated 1994 Stock Option Plan | Quarterly Report onForm 10-Q for the quarter ended June 30, 2000 | 000-02525 | 10(a) | |||||
10 | .14 | * First Amendment to Huntington Bancshares Incorporated Amended and Restated 1994 Stock Option Plan | Quarterly Report onForm 10-Q for the quarter ended March 31, 2002 | 000-02525 | 10(c) | |||||
10 | .15 | * Second Amendment to Huntington Bancshares Incorporated Amended and Restated 1994 Stock Option Plan | Quarterly Report onForm 10-Q for the quarter ended March 31, 2002 | 000-02525 | 10(d) | |||||
10 | .16 | * Third Amendment to Huntington Bancshares Incorporated Amended and Restated 1994 Stock Option Plan | Quarterly Report onForm 10-Q for the quarter ended March 31, 2002 | 000-02525 | 10(e) | |||||
10 | .17 | * Huntington Bancshares Incorporated 2001 Stock and Long-Term Incentive Plan | Quarterly Report10-Q for the quarter ended March 31, 2001 | 000-02525 | 10(r) | |||||
10 | .18 | * First Amendment to the Huntington Bancshares Incorporated 2001 Stock and Long-Term Incentive Plan | Quarterly Report10-Q for the quarter ended March 31, 2002 | 000-02525 | 10(h) | |||||
10 | .19 | * Second Amendment to the Huntington Bancshares Incorporated 2001 Stock and Long-Term Incentive Plan | Quarterly Report10-Q for the quarter ended March 31, 2002 | 000-02525 | 10(i) | |||||
10 | .20 | * Huntington Bancshares Incorporated 2004 Stock and Long-Term Incentive Plan | Quarterly Report onForm 10-Q for the quarter ended June 30, 2004 | 000-02525 | 10(b) | |||||
10 | .21 | * First Amendment to the 2004 Stock and Long-Term Incentive Plan | Quarterly Report onForm 10-Q for the quarter ended March 31, 2006 | 000-02525 | 10(e) | |||||
10 | .22 | * Huntington Bancshares Incorporated Employee Stock Incentive Plan (incorporating changes made by first amendment to Plan) | Registration Statement onForm S-8 filed on December 13, 2001. | 333-75032 | 4(a) | |||||
10 | .23 | * Second Amendment to Huntington Bancshares Incorporated Employee Stock Incentive Plan | Annual Report onForm 10-K for the year ended December 31, 2002 | 000-02525 | 10(s) | |||||
10 | .24 | * Employment Agreement, dated January 14, 2009, between Huntington Bancshares Incorporated and Stephen D. Steinour. | Current Report onForm 8-K dated January 16, 2009. | 001-34073 | 10.1 | |||||
10 | .25 | * Executive Agreement, dated January 14, 2009, between Huntington Bancshares Incorporated and Stephen D. Steinour. | Current Report onForm 8-K dated January 16, 2009. | 001-34073 | 10.2 | |||||
10 | .26 | * Employment Agreement, dated December 20, 2006, between Huntington Bancshares Incorporated and Thomas E. Hoaglin | Registration Statement onForm S-4 filed February 26, 2007 | 333-140897 | 10.1 | |||||
10 | .27 | * Letter Agreement between Huntington Bancshares Incorporated and Raymond J. Biggs, acknowledged and agreed to by Mr. Biggs on May 1, 2005 | Annual Report onForm 10-K for the year ended December 31, 2005 | 000-02525 | 10(t) | |||||
10 | .28 | Schedule identifying material details of Executive Agreements | Quarterly Report onForm 10-Q for the quarter ended September 30, 2009. | 001-34073 | 10.1 | |||||
10 | .29 | Letter Agreement including Securities Purchase Agreement — Standard Terms, dated November 14, 2008, between Huntington Bancshares Incorporated and the United States Department of the Treasury. | Current Report onForm 8-K dated November 14, 2008. | 001-34073 | 10.1 |
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SEC File or | ||||||||||
Exhibit | Registration | Exhibit | ||||||||
Number | Document Description | Report or Registration Statement | Number | Reference | ||||||
10 | .30 | * Performance criteria and potential awards for executive officers for fiscal year 2006 under the Management Incentive Plan and for a long-term incentive award cycle beginning on January 1, 2006 and ending on December 31, 2008 under the 2004 Stock and Long-Term Incentive Plan | Current Report onForm 8-K dated February 21, 2006 | 000-02525 | 99.1 | |||||
10 | .31 | * Restricted Stock Unit Grant Notice with three year vesting | Current Report onForm 8-K dated July 24, 2006 | 000-02525 | 99.1 | |||||
10 | .32 | * Restricted Stock Unit Grant Notice with six month vesting | Current Report onForm 8-K dated July 24, 2006 | 000-02525 | 99.2 | |||||
10 | .33 | * Restricted Stock Unit Deferral Agreement | Current Report onForm 8-K dated July 24, 2006 | 000-02525 | 99.3 | |||||
10 | .34 | * Director Deferred Stock Award Notice | Current Report onForm 8-K dated July 24, 2006 | 000-02525 | 99.4 | |||||
10 | .35 | * Huntington Bancshares Incorporated 2007 Stock and Long-Term Incentive Plan | Definitive Proxy Statement for the 2007 Annual Meeting of Stockholders | 000-02525 | G | |||||
10 | .36 | * First Amendment to the 2007 Stock and Long-Term Incentive Plan | Quarterly report onForm 10-Q for the quarter ended September 30, 2007 | 000-02525 | 10.7 | |||||
10 | .37 | * Second Amendment to the 2007 Stock and Long-Term Incentive Plan | Definitive Proxy Statement for the 2010 Annual Meeting of Shareholders | 001-34073 | A | |||||
10 | .38 | * Retention Payment Agreement | Annual Report onForm 10-K for the year ended December 31, 2007 | 000-02525 | 10.43 | |||||
10 | .39 | * 2009 Stock Option Grant Notice to Stephen D. Steinour. | Quarterly Report onForm 10-Q for the quarter ended March 31, 2009. | 001-34073 | 10.1 | |||||
10 | .40 | * Relocation assistance reimbursement agreement with Mark E. Thompson dated May 7, 2009. | Quarterly Report onForm 10-Q for the quarter ended June 30, 2009. | 001-34073 | 10.3 | |||||
10 | .41 | * Form of Salary Restricted Stock Award Grant Notice | ||||||||
12 | .1 | Ratio of Earnings to Fixed Charges. | ||||||||
12 | .2 | Ratio of Earnings to Fixed Charges and Preferred Dividends. | ||||||||
14 | .1 | Code of Business Conduct and Ethics dated January 14, 2003 and revised on February 14, 2006 and Financial Code of Ethics for Chief Executive Officer and Senior Financial Officers, adopted January 18, 2003 and revised on October 21, 2009, are available on our website athttp://www.investquest.com/iq/h/hban/main/cg/cg.htm | ||||||||
21 | .1 | Subsidiaries of the Registrant | ||||||||
23 | .1 | Consent of Deloitte & Touche LLP, Independent Registered Public Accounting Firm. | ||||||||
24 | .1 | Power of Attorney | ||||||||
31 | .1 | Rule 13a-14(a) Certification — Chief Executive Officer. | ||||||||
31 | .2 | Rule 13a-14(a) Certification — Chief Financial Officer. | ||||||||
32 | .1 | Section 1350 Certification — Chief Executive Officer. | ||||||||
32 | .2 | Section 1350 Certification — Chief Financial Officer. | ||||||||
99 | .1 | Certification of Chief Executive Officer pursuant to Section 111(b)(4) of the Emergency Stabilization Act of 2008. | ||||||||
99 | .2 | Certification of Chief Financial Officer pursuant to Section 111(b)(4) of the Emergency Stabilization Act of 2008. | ||||||||
101 | ** The following material from Huntington’s Form 10-K Report for the year ended December 31, 2010, formatted in XBRL: (1) Consolidated Balance Sheets, (2) Consolidated Statements of Income, (3), Consolidated Statements of Changes in Shareholders’ Equity, (4) Consolidated Statements of Cash Flows, and (5) the Notes to the Consolidated Financial Statements, tagged as blocks of text. | |||||||||
* | Denotes management contract or compensatory plan or arrangement. | |||||||||
** | Furnished, not filed. |
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